DrumBeat: August 11, 2008
Posted by Leanan on August 11, 2008 - 10:05am
A big surprise on gas: You may not believe it, but fuel is more affordable than it was during the early '60s.
Barack Obama thinks the government should intervene on gas prices to "give families some relief," and last week called for releasing 70 million barrels of crude from the Strategic Petroleum Reserve. John McCain proposes an end to the ban on offshore drilling and has pushed for a gas-tax holiday because "we need it, we need it very badly."But both candidates and the public are evidently unaware of a basic fact: Gasoline is more affordable for American families now than it was in the days of the gas-guzzling muscle cars of the early 1960s. Prices are beginning to come down somewhat, but this was true even when the national average was at its summer peak.
NEW YORK (CNNMoney.com) -- Oil prices fell Monday after Iran called for renewed nuclear talks and China reported a decline in crude imports, countering threats to supplies in Eastern Europe from the Georgia-Russia conflict.U.S. crude for September delivery fell 75 cents to settle at $114.45 a barrel on the New York Mercantile Exchange, extending a multi-week slide that has knocked oil 22%, or about $34, from its peak.
Crude briefly dipped below $113 Monday before recovering some ground later in the session.
Media Ignores Russia's Role in Oil's Decline
Did you hear this weekend about that giant country that invaded the other country? The business media apparently haven't -- or at least they don't think it's worth a mention.But we'll get to their oily oversight in a moment. First, a review, because it's all part of a pattern.
Did you see oil's top?One didn't have to be a rocket scientist to know oil was in a speculative bubble. The price of a barrel had doubled from August 2007 to July 2008. This jump was too quick, too high to be explained by growing global demand.
Bubbles are really easy to see. Calling a bubble's top, of course, is much harder. Bubbles follow their own mad logic.
An upside to high prices at the pump: Why paying less for fuel could mean paying more for your next trip
Soaring fuel costs can potentially save us real money on our next vacation — if not in the short term, then down the road. The effects were already being seen across the board: hotel rooms, car rentals and counterintuitively, even airline tickets. If nothing else, paying more at the pump would have encouraged travelers to do things that will make travel more sustainable in the future.
Giant Retailers Look to Sun for Energy Savings
Retailers are typically obsessed with what to put under their roofs, not on them. Yet the nation’s biggest store chains are coming to see their immense, flat roofs as an untapped resource.In recent months, chains including Wal-Mart Stores, Kohl’s, Safeway and Whole Foods Market have installed solar panels on roofs of their stores to generate electricity on a large scale. One reason they are racing is to beat a Dec. 31 deadline to gain tax advantages for these projects.
The Arctic Hotel in Ilulissat, Greenland, is a charming little place on the West Coast, but no one would ever confuse it for a Four Seasons — maybe a One Seasons. But when my wife and I walked back to our room after dinner the other night and turned down our dim hallway, the hall light went on. It was triggered by an energy-saving motion detector. Our toilet even had two different flushing powers depending on — how do I say this delicately — what exactly you’re flushing. A two-gear toilet! I’ve never found any of this at an American hotel. Oh, if only we could be as energy efficient as Greenland!
Does queueing theory explain oil's wild price swings?
To paraphrase Mark Twain, rumors of the oil bull market's demise have been greatly exaggerated. With crude oil down a mere $30 from its recent peak, many economists and financial analysts are proclaiming the end of the oil bull market. They seem to have forgotten that not too long ago the entire distance from zero to the oil price was only $30. While no one can predict the future of oil prices with certainty, there are explanations for the recent price decline consistent with an ongoing bull market.
Iranian Foreign Minister Manouchehr Mottaki said the "root causes" of the oil bubble must be investigated before blaming producers for a price hike that sent a barrel of oil rocketing to $147 in 2008, Fars News Agency reported."Exactly at the very same time Saudi Arabia provided the market with a further 350,000 barrels of oil, we witnessed the increase in oil price," Mottaki told journalists in Colombo after a summit meeting of South Asian leaders who had raised concerns of an "energy crisis".
"It proves that the increase of oil and petroleum (prices) is not following the rules of demand and supply," he said.
Kuwait: Oil revenues lift budget surplus last fiscal year 2007/08 to an all-time high
In its latest economic brief on public finance, National Bank of Kuwait reports that the Ministry of Finance has recently released the closing accounts of the government budget for the 2007/08 fiscal year (FY07/08). It showed the fiscal surplus reaching a record high KD 9.3 billion, before the allocation of 10% of revenues to the Reserve Fund for Future Generations (RFFG). The surplus was up 23% from last fiscal year, and equivalent to 29% of 2007 GDP. Oil revenues were the major contributor to the growing surplus. A smaller contribution came from the fall in government spending due to the absence of extraordinary transfers to the Public Institution for Social Security (PIFSS). Non-oil revenues recorded remarkable growth as well, besting their strong performance of last year.
Iran Announces 3.7B Barrel Oil Discovery in Four Fields
Iran has discovered four new oil and gas fields holding about 3.7 billion barrels of oil and 1.5 million cubic meters of gas, the country's oil ministry's Web site, or Shana, reported Saturday.
CNOOC, Sinopec to Bid for Marathon Oil Angola Assets for $1.5B
China National Offshore Oil Corp., or Cnooc, and China National Petrochemical Corp., or Sinopec, are joining forces to bid for an Angolan oil and gas asset owned by U.S.-based Marathon Oil Corp. (MRO) that is expected to fetch about US$1.5 billion, the South China Morning Post reported Monday, citing unnamed sources.
A toxic combination of $4 gasoline, voter anxiety and presidential ambition is making it impossible for this country to have the grown-up conversation it needs about energy.
We need to end our phone addiction!
Ridiculous, you say? Is it really any more ridiculous than the statement "We need to end our oil addiction?" Just look at the hazards being created by telephones today; avoidable auto accidents, filling our landfills with non-biodegradable plastics and electronics from disposable phones, polluting our air with radiation from cellphones and cellphone towers, loss of productivity due to excessive phone babble, and disruption of peace and quiet by people walking around in public places talking loudly into these tiny boxes.So you see, if you want to make a case for the need to end our addiction to telephones, you can do that. But the truth is - we are not addicted to phones anymore than we are addicted to oil. Both provide us with the means to maintain our comfortable standard of living and productive economy. We depend on them in our daily lives - we are not "addicted" to them.
Always cycling with the wind behind you
You still need to peddle but the battery helps. The electric bike is all the rage on Dutch cycle paths this summer, and enthusiasts have nothing but praise for it. "This invention deserves a Nobel prize."
Lead may lurk in backyard gardens
As backyard vegetable gardens undergo a renaissance, environmental officials and scientists are warning homeowners to be careful before planting the carrots and chard: There might be lead in the soil.Flakes of lead paint from old homes often create a halo of contamination around houses that vegetables can take up. Remnants of leaded gasoline might also be in the soil, especially near busy roads. While the problem is pervasive in urban areas, suburban homes that were built on or near apple orchards are also at risk because lead arsenate was once used regularly as a pesticide. The heavy metal can remain in soil for hundreds of years.
China July crude imports in biggest fall since Jan 05
BEIJING (Reuters) - China's crude imports unexpectedly fell 7 percent in July to a seven-month low, its steepest monthly drop since January 2005 as refiners balked at soaring crude costs amid lagging domestic fuel prices.The July decline follows a weak 3 percent rise in June imports at a time of mounting concern that the U.S. economic slow-down is taking a bigger than expected toll on other markets, potentially undercutting oil use in the world's No. 2 consumer and weighing on world prices still partly buoyed by Asian demand.
Saudi keeps Sept crude supply steady to Asia
TOKYO (Reuters) - Saudi Arabia, the world's top crude exporter, will supply full contracted volumes of crude oil to Asia in September, steady from August levels, sources at the refiners said on Monday.Traders had expected no change in supply for September, although the market has been looking for signs of where incremental volumes are headed since the kingdom began raising output earlier this year in response to more demand and to quell what it sees as unacceptably high prices.
Energy crisis to be spotlighted
The United States is based on "the presumption of everlasting cheap oil, and that day has come to an end," said author Michael Klare, a political science professor, in advance of his address in Waterville."It's not that oil is disappearing exactly," he said, "but cheap oil is gone forever, and we'll never get back to that place. And we haven't really planned for this day."
While consumers and manufacturers welcome the drop of oil and other commodities, most experts believe prices would remain at levels higher than those of two or more years ago. Oil, for instance, is not expected to fall far below US$100.The “peak oil” theory still holds, which retains the view that the supply of oil is not being increased but demand in the emerging economies would continue to increase.
Thirty Reasons Why Organizations Must Get Off Petroleum Now
Don't get me wrong -- I am very concerned about global warming and climate change. In the long run, that's one of the most serious challenges that humans face as a species. But in the short run, the world is no longer able to produce petroleum in sufficient volume to satisfy its demand. Soon it will not be able to produce petroleum in sufficient volume to satisfy its needs.
Energy debates need long-term context
Peak oil is real. There is a finite volume of oil and we are approaching the point where half of the world's possible supply will have been consumed. At the peak, oil prices will escalate regardless of how much effort there is to produce unless demand drops in ways inconsistent with all historical data. Advocates of the peak oil perspective project a range of possible points for the global peak. Pessimistic estimates indicate 2010 to 2012. More optimistic projections indicate the peak would not arrive until after 2030.
Rising costs fuel economic stress
Economic stress caused by rising fuel and mortgage costs is creating the need for massive investment in public transport systems, according to research undertaken by Griffith university....Researchers Dr Jago Dodson and Dr Neil Sipe said fuel and mortgage stress had crept steadily inward from the fringes.
"In our earlier study, areas of stress were largely located at the outer suburban mortgage belts where car dependency is high," Dr Dodson said.
"In this study we have seen the number and geographical range of vulnerable households creep inwards as fuel costs and interest rates rise."
Georgian oil ports Batumi, Supsa partly operating
LONDON (Reuters) - Georgia's oil port of Supsa is operating only partially and oil tankers are not going into its Batumi port, a shipping agent said on Monday following fighting between Russia and Georgia.The slowdown of activity follows an unrelated explosion last week in Turkey on the Baku-Tbilisi-Ceyhan (BTC) pipeline, which has cut Azeri oil supply to world markets. Supsa and Batumi are also outlets for Azeri oil.
Opec crude supply faces disruptions
TEHRAN: Rising Opec output has cut the group's spare capacity and left the oil market vulnerable to any surprise supply disruptions, Iran's Opec governor said yesterday...."The drop in oil price has come at the expense of supply security," Iran's Opec governor Muhammad Ali Khatibi said.
Consuming countries benefiting from the price fall should be aware that it could easily be reversed by any surprise supply outages, he said.
Jordan, Shell in talks to extract oil from huge shale reserves
AMMAN (AFP) - Energy-poor Jordan said on Sunday it was in talks with Anglo-Dutch group Royal Dutch Shell on an agreement to extract oil from the desert kingdom's 40-billion-tonne oil shale reserves.
Gas drops 15 cents in the last two weeks
CAMARILLO, Calif. - A national survey shows gas prices continue dropping across the nation.The average price of a gallon of regular gasoline at self-serve stations was $3.85 Friday, down almost 15 cents from two weeks ago.
Slept Through Rice Age, Awoke to Commodity Bear
``We have to invent a rationale,'' says Aronstein, who thinks the seven-year bull market in commodities is over, not taking a breather.He thinks the real price of oil should be the equivalent of the real price of plow horses.
``The crux of the matter is, can we replace a 100-year-old technology -- the internal combustion engine -- that has way outlived its place in the world?'' Aronstein says. ``There are hordes of people with 140-plus IQs working on this. It's absurd to be against it.''
Slump in demand should offset peak oil
Warnings that the supply of oil has peaked have supported the meteoric rise in the price of oil and gasoline this past year. But amid the clamor, less attention is being paid to the concept of peak demand—and it is on that side of the supply-demand equation that relief will appear over the next year. We've seen this before, as almost exactly 30 years ago the high price of oil drove a reduction in global demand of stunning proportions. We aren't there yet, but contrary to popular opinion, we believe the world will reach similarly low demand in the months and years to come.
Russia's relations with countries that host pipelines shipping oil and gas westwards, many former Soviet Union states, have been characterised by frequent disputes.
Earthquake shakes Venezuelan oil region
CARACAS (Reuters) - A 5.1 magnitude earthquake shook eastern Venezuela early on Monday morning, the U.S. Geological Survey said, but no damage or injures were reported in the oil producing region.
EPA to Crack Down on Ethanol Cheats
The Environmental Protection Agency (EPA) is stepping up its policing of ethanol in gasoline. With ethanol prices running about $1.30 a gallon less than gasoline, oil companies and fuel distributors have tremendous incentive to put more ethanol in gasoline than the 10% allowed under current Clean Air Act regulations."We believe some retailers are either taking inadequate precautions to assure that fuel containing greater than 10% ethanol is not dispensed into motor vehicles and engines certified for gasoline only -- or are selling fuel labeled as 'gasoline' that actually contains greater than 10% ethanol in violation of the Clean Air Act," an EPA spokesman says.
21 US cities will measure and disclose their CO2 emissions
WASHINGTON (AFP) - Twenty-one US cities, including New York and New Orleans, have announced they will measure their greenhouse gases emissions, in a joint effort to seek ways to halt and reverse global warming.
World Bank criticized for helping fossil fuel plants
WASHINGTON: When the new Tata Ultra Mega power plant in western India is fired up in 2012 and fully operational, it will be one of the world's 50 largest greenhouse-gas emitters. And the World Bank is helping to make it possible.
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Thanks for comments to eastex, hardhat, cowpoke on August the 1st.
I made some small changes to my sketch of a peak oil related news service
http://peak-oil-crisis.org/
Now the site has a real time crude price info box (thanks to oil-price.net) and a little less disturbing section header graphics. I'm sure everybody can see that I'm no graphic designer :)
I'd be happy to hear more comments from you good ppl.
I think it is excellent - very easy to navigate and very simple.
Marco.
China July crude imports in biggest fall since Jan 05
http://www.guardian.co.uk/business/feedarticle/7716081
OK.
This is the number we've been waiting for.
It's a cca. 500 tbpd drop from June. It is not due to prices. It's the Olympics. 500 tbpd drop ---> lower demand ---> lower proces ---> strengthening dollar (petrodollar effect).
Look for prices to rebound in September when Chnina returns.
So, between lower demand in China and the present geopolitical troubles, September will likely be BAU -- i.e. resumption of a climb to higher oil prices.
Just in time for the onset of autumn and winter in the northern hemisphere.
Bundle up folks.
The oil bull is dead. Even today, nothing doing.
Eventually, demand for oil is elastic. We are there.
Time will tell.
I am now the proud owner of some DBO. Purchased today @ 43.00
what is a DBO?
An ETF that is long oil futures.
Millard, just for the record: How low is it going to go and what is a reasonable price for oil in 2008? In 2010?
Peak Oil Tarzan- I am scared of your moniker, and, of course, who knows exactly what the price of any commodity will be in 2010.
So with some trembling, let me say my stong sentiment is the oil bull has been gored, and hard. Demand is withering. The EVs are coming online.
In the future, look for a rough replay of oil prices after the 1979-80 spike. A long secular decline. Up and downs, to be sure, but the general drift is southerly. The $147 a barrel was a blow-out top, a speculator's heaven.
True, thug states control the world's oil today, and that makes things difficlt. On the other hand, the alterntaive technologies coming online today are wonderful.
The GM Volt, and similar cars, mean that oil demand can fall continously worldwide, even as we obtain higher living standards. Such cars are game-changes, OPEC-killers, death rays for speculators. And they are coming. The only way to stop them is to crash oil prices. And that may happen.
you have presented various arguments that demand is going to decline. and surely it will longer term. are you claiming that the price decline in the past few weeks is due to reduced demand ?
how 'bout supply ?
GM claims 70,000 GM Volts by 1/1/2012. USA has more than 240 million registered vehicles.
Project oil production on 1/1/2012 for Mexico, UK, Norway, Denmark, Australia, Saudi Arabia, Russia, Yemen, Venezuela, etc. Also project # of registered cars in China on 1/1/2012. Kashagan in Kazakhstan will not yet be on-line at that date (but close ?).
Your claims are *WAY* overblown.
Alan
Is Iran a "thug state" ????
Who have they invaded in the last thousand years?
I thought the Iranian women shopped at Victoria Secrets and wore makeup...maybe you know something I dont?
Doesnt Canada have oil and sell it too America?
And how about Mexico? you tellin me I gotta be worried
about Juan Valdez and his (peqito)Sp. for "little" burro?
Gosh and golly gee willikers Wally!!!...you got me thinkin now.
I sure hope the Canucks dont cut off that maple syrup
at $60.00 a gallon...ehh!
Millie, Iam shaking my Persian rug in anger right now.
That goes to show how you convinced me that Iran is
a thug state....Inshallah! and Allah Akbar!
And Iam boycotting Taco Bell too hombre!
Those thug Canadians who use Canadian coins must be
that 5th column Iam always hearin about ehh?
(No Burro's,Taco's,Iranian women,Canadians with Maple
leaf hockey shirts were harmed in this dramatization)
Yes, EV's are coming online. But Winter is coming faster, China may be 'back online' in a month, and Cantarell, Prudhoe and North Sea are listing hard to port- taking on water. etc, etc, etc..
The falling price might look like a reprieve, but unless there was news of significant new production somewhere, I'd say the price can be anywhere it wants, and we won't be able to avoid the hurt now.
I was recently reminded of a statement I made when Chrysler(who was struggling at the time) first released the Caravan/Voyager line.
"This vehicle is a game changer, it should be enough to fix Chrysler and pay back its loans."
My roomie at the time chided me about that but loaded up on Chrysler stock anyway, he is still living comfortably on the proceeds, I believe.
A radio program I heard recently claimed that GM had worked on a gas powered, electrically generator driven vehicle, sponsored by the good ol' USA, decades ago.
While the results were impressive, as so often happens, the program died an ignoble death.
IMO you will be finding greater benis from this combo than previously conjectured.
Volts, Prius plug-ins, and ramped domestic production of base Prius are coming in a few years. In the mean time there are many good choices for a fuel efficient auto including the Corolla and Focus. Other folks are simply parking their SUVs if they have a second more fuel efficient vehicle to drive. Strong demand for some models of fuel efficient used cars has actually caused price appreciation (not the customary continuous price depreciated normally expected with used vehicles). So far we've just skimmed some fat off the oil demand stew. The next dip could take a much larger volume. The current fleet of vehicles is certainly large but the median age of a vehicle in this country is approximately 9 years so about half the fleet will be replaced in the next decade. I have no doubt this batch will be far more efficient than the existing fleet. If the U.S. manages to achieve a measly 4 mpg (20%) increase in fuel economy domestic oil demand would fall by nearly 10% and there is little reason to think that number cannot be drastically higher should EV technology evolve as an affordable alternative and I see little reason to doubt it will not.
domestic oil demand would fall by nearly 10%
Not up to TOD standards.
Of the 20.x million b/day burned by the USA, slightly over 9 (9.0 to 9.3 million b/day in 2007 depending on time of year from memory) are burned by cars & SUVs. Increased fleet fuel economy by 10% over ten years will be slightly better than the increase in VMT (Vehicle miles traveled), but if we do not shrink VMT (as we are doing), then this savings will be just a couple of percent of USA oil use.
Not much better than statistical noise quite frankly.
The USA increases population by 0.8% or so every year. Add sprawl, economic growth ? and just driving more fuel efficient cars WILL NOT BE ENOUGH !
Best Hopes for Non-Oil Transportation,
Alan
Yer' talkin from yer tushie.
"Even today, nothing doing."
What's so special about today? Keep trying to grow those long-range sensors, bud. You might need them.
Well, Millie of Fillie, I'm not oil expert but I saw this price cycle at the beginning of the year. I didn't think it would go as high as $147, maybe $130 to $140, and then fall back to around $105 to $115 in the August soft season.
Daily price fluctuations prove nothing, however it does speak volumes for those that chose to predict the trends on this basis. How do these people walk anywhere when they are always looking at the tops of their shoes?
I have a high degree of certainty we won't see double digit prices again. If we do, you are hoping for very rough times. Like all the rest, we now see difficult times ahead with the winter heating season.
And I can't believe the mass stupidity as the $CDN gets downgraded because oil prices are dropping. Hello folks! It's still over $100/bbl and the energy export business is quite healthy. Market Intelligence, another oxymoron fading into the sunset...
How much of this is Olympics and how much is reduced demand due to economic recession/slowdown? If this is predominantly a function of the Olympics, then it is time to go long oil. Otherwise, I wouldn't be forecasting a resumption of oil increases.
In the case of China it is all Olympics-related. There is a worldwide slowdown/recession, but not in Chine. Chinese demand falling in July is 100% Olympics. It has been rising and their GDP growth was 10.1% in Q2. It's voluntary demand destruction... but a temporary one.
4-500 thousand barrels is 1% of net exports. With an elasticity of -0.04 it is a 25% prompt reduction in the prices.
That's it folks, the game is up.
I'm not sure how you can be so certain that it is all Olympics. Take a look at the Shanghai stock exchange.
Yep
The Chinese are very shrewd people. You can bet your life on it that they will ramp up fairly quickly after the games are done to try and make up for lost money/production.
The shrewd thing to do is fight inflation. China was falling into the inflation trap like the rest of Asia, and its government did everything it could to crash the stock market and speculators by forcing banks to do what American banks don't do: keep cash on hand. Beijing may not originally have intended the Olympics as a way to slam the emergency brakes on the economy, but it can be adapted for that purpose.
The Para-Olympics follow the Olympics Sept. 6-17 and all will not be back to normal till Sept. 18.
Alan
You are right. Look for prices to rebound in late September early October.
Marco: True indeed the Chinese are shrewed people
collectively.
I will express that also as a culture of people they
tend to play the stock markets like non Asians would
play bingo or the lottery.
Please dont mistake my remarks as racist...any casual
observence of the Chinese public will show this to be
a severe under statement.
Its right up there with women in general liking shoes
or mens facination with womens breasts.
Turning the Chinese into consumers will be as easy as
making worms eat dirt. America was started by puritans
and minimalists and there was a learning curve to the
rampant consumerism you see today...China wont be near
as difficult.
Imports were down by 295,000 bpd. Net exports are approximately 42 million bpd.
So I get drop in imports = 295,000/42,000,000 = 0.7% of net exports.
If elasticity is -0.04, then reduction in price should be around 17.5% (0.7/0.04 = 17.5).
I think we are close to the bottom here in terms of price.
If you account for the 8% y.o.y. growth than it is 350,000 barels. And net exports are 45 mbpd (the top 20 exporters export 42 mbpd, but that's only 93% of the total).
So it is 0.8 of net exports. Elasticity being at -0.04 that is 20%
Anyway, it's in the ballpark. All this happened between 11th July - 25th July. The rest of the price decline was dou to the change in EUR:USD (in other words the petrodollar effect).
The market works just fine. (In the short run.)
It is all visible here:
First came the drop in demand, afterwards the strengthening of the dollar.
Why did you use the WTI spot for August 4 and not August 8?
On August 8, the WTI spot was around $114.
That is a decline of around 6% (nominal) for the July 25- August 8 period and not 0.9%.
Because I didn't want to litter this thread with too many charts. You can find the original post here: http://www.theoildrum.com/node/4397
There are some other charts there (and among those also the one you were asking) as well as some reasoning.
:-)
Since July 25, oil has dropped around 8% in US $ (it is at $113 today), whereas the Euro has dropped around 5% versus the US $. So I agree that the bulk of the drop in price since July 25 is due to the weakening of Euro.
What is your opinion of gold? It has crashed quite a bit today.
I don't know anything of precious metals, sorry.
I'm into energy security, thus oil, gas and coal interest me (as well as do alternative technologies). As for gold... I'm surprised a bit. But since I don't really follow that market, I cannot form a reasonable opinion.
Harry Truman once said, "Give me a one-handed economist! All my economists say, On the one hand ... on the other hand."
So ... where are we?
The China issue is pretty straightforward. The Chinese have been promising 'clear, smog free skies' for the Olympics for several years. They finally had to bite the bullet and shut down factories and get cars and smoky diesel trucks off the road. This will end as soon as the Olympics are done and the international pussycats (the news media) are gone.
In China, retail prices for liquid fuels is set by the government. Sinopec must buy expensive crude, refine it and resell the products at prices that are below cost. The government pays Sinopec and other refiners a rebate but this is not particularly profitable and is untenable when prices are skyrocketing. There have been shortages of gas and diesel in China .... that are unrelated to the Olympics. They relate to the low prices fixed by the government.
I don't THINK the Chinese have been that active in the futures market, preferring to buy in the spot market. Why? The Chinese have an aversion to complex markets. Markets have been unfriendly to the Chinese, see the Shanghai stock market. The Chinese bankers are still smarting over their 'investments' in Wall Street Banks. The Chinese tend to view international markets - that don't play by Chinese government 'rules' - as being hostile the China. They are right, of course. I believe one reason the Chinese have accumulated such a large stake in US currency and US denominated debt, and have pegged their currency through thick and thin to the dollar, is because of a fundamental Chinese fear of US currency speculators. Their fear is understandible; the speculators beginning with George Soros and his raid on the Bank of England in 1992 can wipe out governments' currency reserves! Currency pirates have raided the cash reserves of Mexico (twice), Russia, Thailand, Indonesia, S. Korea, Argentina, and Brazil. China rather would just pay cash and walk away with the product, thank you ...
Now ... price of crude in what context. There is fundamental disagreement about the current state of affairs in both the US and Eurozone economies: inflation or deflation. First, some definitions. Inflation is an increase in the amount of a currency and CREDIT in relation to the goods available for purchase. Deflation is the opposite, a decrease in the amount of currency and credit available.
This is important, because in the context of deflation, the decline of ten or twenty percent or more ... in the (nominal) price of any commodity say oil may represent a contextual increase; that is, the relation between the value of the currency and the commodity has the commodity increasing in value. In other words, if the dollar was to decline in value to one tenth of today's value (in a short period of time) yet the crude price averaged $114 a barrel, obviously crude would be a (nominal) drop- dead bargain.
There are compelling arguments to be made on both sides of the inflation/deflation topic. Doug Noland is very articulate in supporting the inflation scenario:
http://www.prudentbear.com/index.php/commentary/creditbubblebulletin?art...
Inflation is simple: the prices keep going up! Jean-Claude Trichet and several Federal Reserve governors agree, that we are facing incipient inflation.
On the other hand, there is an even more convincing argument to be made for deflation:
http://globaleconomicanalysis.blogspot.com/2008/04/deflation-in-fiat-reg...
The biggest factor is the shrinkage of available credit ... worldwide! While ALL the central banks are pumping currency into the world economic system in order to keep the 'growth machine' going, little of that credit is reaching the parts of the economies where productive activities take place. In the US, that area is in mortgages and real estate, ditto parts of Europe; demand for manufactured goods from Japan is declining; both long bond rates (US 30yr Treasury, mortgage and Investment grade securities) and short (LIBOR) are rising, which means credit is hard and harder to get. Another factor is declining employment. The unemployed cannot demand wage increases nor can they afford gasoline - at any price.
In a deflationary regime, 'things' (like oil) will become 'cheaper' when priced in a currency, but will actually become more expensive as that curreny becomes harder and harder to get. I believe this will become more apparent beginning next year as more banks fail and the cumulative effects of that and the failure of the 'bailouts' to trickle down and really increase production and earning. In the US, one more big bailout will be the end of US government stimulus ... party is then over. (US hasn't really spent any money on Freddie or Fannie ... yet. It's just talked about it.)
>>>>>>>
An upshot in oil; the US and the West MUST coordinate on interest rates and credit. OPEC and the other producers are absolutely dependent on the consuming world for money and credit, without money, Saudi Arabia, Russia, Venezuela, Nigeria, Kuwait, Iran ... are paupers! The hardest thing to find in any business is a CUSTOMER. These countries have no economies or production to speak of ... other than pumping and selling oil. They cannot even grow sufficient food ... or any food ... in then case of Saudi Arabia and Kuwait!
If the US was smart and tough and didn't have a president who was a tough- talking wimp, they would repay all of the outstanding dollar denominated debt in foreign hands ($5 trillion or so) with dollars. The Treasury would print as many dollars needed to repay ALL the out-of-the-country debt. (the foreign holders would have no choice to take this deal, this or nothing). The US could then eliminate the dollar and make a new currecy - The Obama - that would not trade overseas (just like the Chinese Renmimbi). Sorry Saudi Arabia, the oil party is over!
We could trade the Saudis one shipload of food for a shipload of oil. Five shiploads of food for fifty shiploads of oil - or any number of our choosing. We have enough oil (as do the Brits and the rest of Europe) to withstand our side of a credit embargo. I guarantee you Saudi Arabia cannot go a year without food or the dollars to buy it! Europe could do the same thing and not even bother with inventing a 'new Euro'. Since 'Euro' is a meaningless currency (which country backs it, exactly?) and China would never risk trading its own currency .. the producers would have little to trade oil for. Mexican Peso? Rupee? South African Rand? Yen? Gimme a break. The Yen is even more worthless than the Peso. If credit is closely held to the 'consuming' countries ... well, what exactly is being consumed? Anyway? Money - real, valuable money - is just as scarce as oil is becoming.
... none of this would never happen, it's a fantasy. The western economies will go into a severe credit deflation beginning next year and the bosses will wring their hands. Oil prices will decline in nominal terms but the relative price will continue to increase.
Rambling over ... (Edited for spelling and grammar.)
I read it. :-)
You make some good points, so I think I'm gonna rate you up. Bartering food for energy is one of the things to come, and count me in the deflation camp - though I think we will see inflation until 2010 and deflation with rising energy costs (or stagflation, if you will) afterwards.
You are dead wrong about Russia though. The are able to grow their food and happen to have (not very energy effective) factories as well. Plus they have virtually all the raw materials they need. The EU is worse off w/o russia than the other way round.
Other than that, still an interesting analysis.
No surprise there. It is the only thing that made sense. Imports should rise in September, however I don't expect them to go back to where they were before.
Would the Chinese maintain the measures of taking cars of the road and close factories to increase air quality for the Paralympic athletes as well??
I don't think they're doing it for the athletes -- I think they're doing it for the press corps & public image. How much press coverage will there be of the Para-olympics? My guess is the Chinese's main concern will be that air quality doesn't get so much worse during the Para-olympics that it becomes a news item.
Yes. The Olympics and Paralympics are a package deal.
Alan
What I'm wondering is...where is it going? OPEC supposedly boosted production, so where is it going? Not to China, and not to other parts of Asia, it would seem.
Isn1t supposedly a keyword here? Do we really know how much oil these countries export, let alone, produce? I mean net oil, EROEI adjusted.
I'm not sure OPEC production increased. Their numbers seem 1-2% inflated to me.
Some buyers previously priced out of the market coming back in?
If you've followed the oil biz for more than 10 years, it is interesting to note that OPEC lying about production was accepted and expected when the quota busting went on.
FF
Which also happens to tie into the massive increase in OPEC reserves in the middle 1980s. OPEC has interests, and truth has never been one of them.
I think that the current price runup kicked off in June last year. Following a price decline in August, the average price for September rebounded by more than 10%.
I'm looking forward to seeing WTI at USD 150 in November.
I created a price projection table last year (under revision at the moment) that had average prices at USD 120 in 2008, USD 180 in 2009 and USD 270 in 2010. We shall see.
Prices are rather irrelevant in the short term. What matters is monthly prices and - to an even greater extent quarterly and yearly averages. It's been UP. It is going to be up. No other place to go.
Declining net exports are the story, as you and Khebab pointed out excellently. At the moment I'm working on an extended version of your top 5 exporter export projections in the 2008-2015 window.
As for my price projections, I have been on track since last summer. I never faild by more than USD 1 and my projections were always for the naxt 6-12 months. I'm redoing the numbers this week and will tell you the results.
More people are paying attention to the net exports story. I'm in NYC this week, making our net exports presentation to a large investment firm.
Yes, it is interesting. I've been preaching this for a year and a half and people (and among those people: some investors) are just about to listen this summer.
The grapes of wrath.
Going over to the Dark Side are ya? Great, now investors with bags of still damp printed funny money are going to exacerbate the already volatile market. A little bit of knowledge can be dangerous.
The invite came at an opportune time--it corresponded with our wedding anniversary. We have had a great time in the Big Apple--really nice hotel in the midtown area. New Yorkers probably could not have been friendlier.
Interesting that Shell are still gung ho about their in situ conversion process for shale oil reserves.
I thought water was one of the main obstacles. If Jordan has enough water, it would seem like it might be possible to use the process in Jordan, but not in the US West. Also, the cost of the land may be close to $0 and there may be other incentives involved.
Jordan increasing it's water take from the river Jordan seems to me to be the shortest route they could possibly employ to get themselves bombed back to the stone age by Israel.
Israel lives or dies by the water supplied by the Jordan river.
I believe that Israel and Jordan are working on a joint desal project to take water from the Med, desal it and pump it into the Jordan river. Water to be shared by Israel, Jordan and West Bank. Not sure if this would be enough for an oil shale project.
Interesting plan.
The desalination plant would be run by electricity from water turbines. These would be driven by sea water flowing from the Med down hill to the Dead Sea. To get to the Dead Sea it would need to be pumped over the surrounding hills, which would also be powered by the water turbines.
Nice idea if you can get to work. Big infrastructure costs up front. Not sure the returns would justify the investment. If they pumped too much water they might raise the Dead Sea too much and start flooding the area!
(Also an easy terrorist target, like a pipeline... )
I searched the news of Shell's interests in Jordanian OS's and discovered an Estonian company involved. Estonia??? I was surprised too and then I learned:
Põlevkivi (oil shale) provides over 75% of Estonia's total energy supply, making Estonia the only country in the world where oil shale is the primary source of energy.
The rest of the article follows. Apparently, at least initially, they burned the OS directly to fuel the extraction effort. There's not enough info to say exactly what process they plan to use but given the desparate Jordanian need for oil I suspect preventing environmental damage would be a low priority
Oil Shale
Põlevkivi (oil shale) provides over 75% of Estonia's total energy supply, making Estonia the only country in the world where oil shale is the primary source of energy. Oil shale is produced by majority state-owned Eesti Põlevkivi (Estonian Oil Shale) in the northeast portion of the country near Kohtla-Järve. Oil shale is consumed for power generation by the Eesti Energia and Kohtla-Järve Soojus electric companies and for shale-to-oil processing by Kiviter AS, which processes the oil shale to produce about 8,000 bbl/d of distillate liquid fuels.
In March 2000, Narva Power Plants and Eesti Põlevkivi signed a contract for the supply of oil shale for 2000 and 2001 under which Narva Power Plants will buy 8.7 million tons of oil shale for $69 million. In 1999, Narva Power Plants used 85% of the total output of Eesti Põlevkivi. According to the terms of NRG Energy's purchase of 49% of Narva Power Plants from Eesti Energia, Eesti Põlevkivi is now a subsidiary of Narva Power Plants. The accord ensures NRG a 51% controlling share in Eesti Põlevkivi, and the U.S. energy firm has committed up to $80 million in investment in the oil shale company, including modernizing the technology used at Eesti Põlevkivi and renovating its infrastructure.
Eesti Põlevkivi's production volume in 2001 is projected to remain stable at around 12 million tons a year. The firm's 2001 development strategy is to continue mining oil shale in the Viru and Estonia mines, as well as to bring its Narva and Sirgala quarries under one firm and the Kohtla mine and Aidu quarry under another. Unification of the Narva and Sirgala quarries into AS Narva Karjaar (Narva Quarry Ltd.) is nearing completion. In addition, the company plans to merge the Ahtme mine with either the Viru or the Estonia mine and stop extraction there at the start of next year.
The impending closure of another mine follows on the 1999 closure of the Tammiku mine and foreshadows the industry's downturn. Eesti Põlevkivi forecasts stable production of about 12 million tons per year for the next five years, but after 2006 production likely will fall as Estonia tries to curb pollution from the oil shale industry in an effort to meet EU environmental regulations. Eesti Põlevkivi has indicated that it expects the oil shale industry to continue for another 40 years, but no new mines are scheduled to be built, and Estonia will come under heavy pressure from the EU to cut back significantly on oil shale production. Negotiations between Suncor Energy (Canada) and the Estonian government on building a $147-million shale oil plant in northeastern Estonia were suspended in September 2000 due to environment-related problems, albeit with Suncor's Australian pilot plant.
There are two big problems with Shell's in situ process. Power and water.
The first is power. Shell's process requires building a freeze wall around the area where the kerogen is, then heating the rock inside the perimeter of the freeze wall to 700F for a couple of years using what amounts to big bread toasters. In Colorado, Shell is working to figure out how to use some of the gas that is released in the process to provide heat instead of the big toasters.
The second issue is water. Water is pumped into the holes and extracted and filtered to get the kerogen out, and water is used to provide hydrogen to turn the kerogen into syncrude. Not a lot of water in western Colorado, and too far from any ocean for a desal plant to help.
I saw an estimate in the RAND paper about shale that said it took a 1.2 gigawatt power plant to produce enough power to extract and process shale into 100,000 barrels a day of syncrude. 1.2 gigawatts is bigger than any of the last five nuclear plants built in the US. This is why the ultimate 3 million barrel a day production estimate from the shale in Colorado seems to be such a crock. What are they going to do, build 30 nuclear power plants out there? Which by the way, need a lot of water!
Is there a surplus of electrical power in Jordan, or are they planning a nuclear plant (or two, or three), too?
I'm sure this has been referenced here before, but RAND created a totally fascinating document in 2005 about the prospects for shale development in the US. Lots of ifs, buts and maybes in the document!
http://www.rand.org/pubs/monographs/2005/RAND_MG414.pdf
Two points.
Nuclear power plants don't need water per se, but rather a heat sink. You can use cooling ponds or the water that will be required for fuel production from shale anyways. Or they can use direct heat exchangers instead of electric heaters if they're going to build nuclear power plants and get a 300% energy savings from avoiding the thermodynamic losses of energy conversion at the expense of plumbing. (Which I'm not saying is insignificant by the way.) So certainly they could build 30 nuclear power plants to power shale fuel production.
The second point is the estimated costs are over double that of coal liquefaction so by the time we need shale production it will be because we're drawing down coal resources fast enough to make it look attractive. I imagine nuclear thermochemical hydrogen production for coal upgrading will be done even before shale production, so if we need 30 nuclear power plants in the rockies to do it, it'll probably be an old hat for liquid fuel production by then.
And thats only if its cheaper than just making gasoline from nuclear generated hydrogen and limestone, which it may not be.
Heat for shale oil need not be constant. Jordan could build 3 large nukes (SWAG) to meet 96% of their Peak demand and use the "surplus" power for oil shale as a sink off-Peak.
The USA could do the same with vast wind farms or nukes or both.
Alan
The only nuclear power plant in the history of Colorado was Fort St. Vrain north of Denver. It was a gas cooled reactor, and was a huge money sink. Hopefully there is better technology now.
havent lived in colo for a while, but as of 11 or so yrs ago ft st vrain was never completed. have they restarted that money pit ?
and speaking of money pits, dia is also north of denver. your federal tax dollars at work. stapleton could have been upgraded at a fraction of the costs and would have been adequate for the crashing (oops) airline and housing industry.
Ft. St, Vrain nuke was finished, operated a few years and has now been scrapped.
Doubtful if it had an EROEI of 1.0
Alan
A historical collection by the people who worked at Fort Saint Vrain is here: http://www.fsvfolks.org/ . There is a detailed chronology of the various issues. It sounds to me like they were engineering the plant on the fly.
As an aside, the plant was successfully converted to gas after the nuke generator was decommissioned.
As for the comment about DIA. I agree 100%. It will be a huge white elephant in a few years. Both United and Frontier are sinking, and between them they have about 65% of the flights there. Both carriers have announced massive cuts in personnel and flights this fall. I expect airfares out of Denver to be quite pricey by Christmas.
You dont need the reactor now. You need it in 20 years at the very earliest.
On a planet 4C hotter, all we can prepare for is extinction
http://www.guardian.co.uk/commentisfree/2008/aug/11/climatechange
And that will continue as long as there is no unification of the worlds various governments on the issue.
And to me this is the insurmountable problem. It aint going to happen. So for better or worse we've all got to kiss the world as we know it goodbye.
Marco.
The Alfred e Neuman Election of 2008
What? Me worry?
There will be no debate. At All.
On anything important.
The MSM could not talk less about
Georgia.
"Let us be under no illusions. This is not a civil war. The attacks are an integral part of the broader Middle East Central Asian war, including US-NATO-Israeli war preparations in relation to Iran.
The Role of Israeli Military Advisers
While NATO and US military advisers did not partake in the military operation per se, they were actively involved in the planning and logistics of the attacks. According to Israeli sources (Debka.com, August 8, 2008), the ground assault on August 7-8, using tanks and artillery was "aided by Israeli military advisers". Israel also supplied Georgia with Hermes-450 and Skylark unmanned aerial vehicles, which were used in the weeks leading up to the August 7 attacks.
Georgia has also acquired, according to a report in Rezonansi (August 6, in Georgian, BBC translation) "some powerful weapons through the upgrade of Su-25 planes and artillery systems in Israel". According to Haaretz (August 10, 2008), Israelis are active in military manufacturing and security consulting in Georgia.
And if you don't like Debka-
http://www.ynetnews.com/articles/0,7340,L-3580136,00.html
War in Georgia: The Israeli connection
For past seven years, Israeli companies have been helping Gerogian army to preparer for war against Russia through arms deals, training of infantry units and security advice
Arie Egozi
Latest Update: 08.10.08, 11:53 / Israel News
The fighting which broke out over the weekend between Russia and Georgia has brought Israel's intensive involvement in the region into the limelight. This involvement includes the sale of advanced weapons to Georgia and the training of the Georgian army's infantry forces.
The Defense Ministry held a special meeting Sunday to discuss the various arms deals held by Israelis in Georgia, but no change in policy has been announced as of yet."
Russian forces are now directly fighting a NATO-US trained Georgian army integrated by US and Israeli advisers. And Russian warplanes have attacked the military jet factory on the outskirts of Tbilisi, which produces the upgraded Su-25 fighter jet, with technical support from Israel. (CTV.ca, August 10, 2008)
Link: www.globalresearch.ca/index.php?context=va&aid=9788
This is extremely interesting Dave, but I think Leanen put up a 2nd thread for the Georgia (soon to be WWIII) conflict. I have more pressing matters like how to convice Canada to leave all of it's tar sands in the ground!!!
"like how to convice Canada to leave all of it's tar sands in the ground!!!"
Canada decides either to stop sending NatGas South,
or East or
stop making steam for tar.
In the next two years.
So nothin got worry about there. ;}
Apologies, your name is Dave is it not?
I thought you posted that some time in the past! Can't remember. If it is not dave, sorry about that!!
Marco.
You might get more support figuring out how to pay Tim Horton's employees in Ft. McMurray more ;-)
Last time I checked a year ago, single-wide mobile home $345K!
Streams of ATCO trailers and mining equipment tires ($50K a pop) are driving past the highway at my parents daily.
The only way you are going to convince Canada to leave the Tar Sands in the ground is to convince Americans and Canadians to stop driving cars. "A" follows "B".
If it makes you feel any better, it's all insane.
I think you missed what mcgowanmc wrote:
Canada needs abundant supplies of NatGas to extract oil from the tar sands. Since Canada is rapidly depleting its NatGas reserves, its likely that they will be forced to stop tar-sands production in two years unless Canada finds another hugh gas field real soon. While Nuclear and Coal might be an option it takes time to build a new nuke or coal fired steam plant.
And there is global demand destruction of Oil consumption which could cause prices for oil to fall lower, killing or eliminating Tar-sand production margins. If they can't make a profit, they aren't going to continue production.
I skimmed through the Globalresearch article. I find it hard to believe that the US & NATO had ANYthing to do with this. If they did I would expect to have seen more defensive capabilty provided to the Georgian armed forces. From what I heard on the BBC this morning the Russians are pretty much rolling over the Georgian positions; (Peter Dobby got pretty tough with his interview... I'd like to know what he had for breakfast today).
If you look up Shakashvilli on Wikipedia (not the most accurate of sources, I'll admit) the article references Amnesty International a few times. Interesting background info.
Perhaps this is a case of miscalculating ego, and not of intrigue nor conspiratory strategic planning on ANYone's part. An accident of history.
The neocons' first love was the Cold War, and every new mistress must conform to her appearance.
In 1948 the Soviets overthrew a democracy in Czechoslovakia.
In recent years the neocons functioned as Saakashvili's Karl Rove, pouring in support and propaganda expertise to get him elected. He shouldn't have attacked unless he was sure the US would back him with force. Why? Perhaps Cheney was setting Georgia up to be the new martyr of the new Cold War, with or without Saakashvili's collusion.
If Saakashvili is removed from power by Russian coercion, I expect he will live very comfortably in exile, perhaps alongside anti-Putin gangsters on the Riviera. Where will the money come from?
"An accident of history."
Please.
I'll be moving over/up to Gail's Georgia thread now.
FBI: Death of the Georgian Prime Minister was an accident ...
Friday, April 1, 2005. The death of the Georgian Prime Minister, ... Bryan Paarman, legal attaché at the U.S. Embassy in Georgia who also leads the FBI ...
en.wikinews.org/wiki/FBI:_Death_of_the_Georgian_Prime_Minister_was_an_accident
"I think the crime was committed in a different place," Giorgi Zhvania said during a recent interview on the privately owned television channel Imedi. " I don▓t know about [Raul] Usupov, but my brother▓s body was brought there from a different place."
Discrepancies also dog reports about the natural gas supply in Saburtalo, the Tbilisi district where the apartment in which Zhvania and Usupov reportedly died is located. Zhvania▓s bodyguards stated that they heard a "hiss" of gas when they broke into the apartment after Zhvania failed to answer repeated phone calls. However, according to Tbilgazi, the city▓s gas company, supplies of natural gas to Saburtalo had been temporarily cut more than an hour and a half before the guards found Zhvania."
In politics, nothing happens by accident. If it happens, you can bet it was planned that way. Franklin D. Roosevelt.
One can certainly hope. The implications are pretty scary if it is a "great game" move on the US's part. On the other hand, it wouldn't be the first time a US proxy strong man over-estimated the degree of US support and got himself in over his head.
Shove Russia and Iran into an anti-Israeli camp - brilliant strategic move! That should solve things!
Well, we have to get the enemies list matching the Book of Revelation... Gog 'n' Magog, Persia and all that.
I'm slowly coming to the conclusion that 2 - 4 degrees and a minimum of 5 meters of sea level are what we must learn to live with. We may stop it there or we may not. If we do, then many generations from now my descendants may get to start lowering it back down, and their descendants may live in a world somewhat similar to today.
For my part, I'm building a passive solar, renewable - literally - home. If we get a couple degrees warmer, we'll dig out a subterranean home underneath complete with greenhouse.
Cheers
I know this is going to come across as ignorant, or misinformed at best, but these last few days in central-north BC has created a few global warming doubters. First week of August and a scorching 9C. It seems like Summer lasted about 3 weeks.
Then you only have to look out the window and see the damage to the pine trees from pine beetle (in part responsible from temperature rise as the winters are no longer cold enough) to remind yourself that it is real and happening now.
In case you missed it, here's the shameless self-promotion on the subject:
http://www.youtube.com/watch?v=bf99OW9UyVw
One of the few, and ironically so, good things the BuCheney administration has done with regard to climate and environment is to create the term Climate Change. They thought it sounded less threatening, but it is a perfect description. While the trend is up *now*, that very warming could just as easily send us into a mini-ice age as march stoically to +4C.
Just remind them all, as with oil prices, volatility is the word of the day, even the century. After some future change, N, there will be no more nice linear changes. We are seeing that already in the Arctic; the rest of the world to follow.
Cheers
There's a companion article in the Guardian about the rapid melting of sea-ice this summer, which may result in a new record low extent at the end of the melt season.
Meltdown in the Arctic is speeding up: Scientists warn that the North Pole could be free of ice in just five years' time instead of 60
And, this is happening NOW PEOPLE! No need to wait until the temperature is 4 C above pre-industrial levels. All that warm air pushing toward the Arctic results a colder than normal return flow. The weather over the Eastern U.S. looks like fall, with cool air masses flowing southward and colder than normal temperatures as a result. If this keeps up, I would not be surprised to see a rather nasty Winter. And, yes, I would blame it on Global Warming...
E. Swanson
http://nsidc.org/data/seaice_index/images/daily_images/N_timeseries.png
Extent isn't the key to **current** melt (but it is to heat absorption and next year's ice), concentration is:
http://nsidc.org/data/seaice_index/images/daily_images/N_daily_concentra...
Here is the main daily images page:
http://nsidc.org/data/seaice_index/daily.html
At this rate, the current trend line will go below last year's by the end of this month. Note how little of the ice is even at 50% percent. I am now expecting virtually all of the ice in the western (from US/Can perspective) Arctic to melt by the middle of September. The scariest thing is, it's looking like we're going to lose even more of the multi-year ice. Most of that is/was north of Canada, but look at how much of that ice is gone already. If we lose another 50% of that and trends continue over the next couple years, we'll have an ice-free Arctic Ocean BEFORE 2013. And that will play hell with climate.
Those of you who think AGW is a distant threat may need to reassess that stance.
Cheers
Maybe we could get war-lovers worried about AGW by pointing out the implications of an ice-free Russia for world trade. The Arctic coast will become the fast new trade route for Russian oil and grain to everyplace from Britain to Japan.
Actually, wouldn't total volume be the best measure to go by?
Yes, particularly long-term. Of the two measures, extent and concentration, the latter better reflects volume. But you are correct: the fact that ice volume has decreased by 80% from recent decades is a number that should scare hell out of everybody, but is blithely ignored by most, particularly deniers.
What I was trying to point out was that the best way to guess what will be happening over the next few weeks is to look at concentration because we don't have daily images for or numbers for volume. The trend over the next few years is best measured by both extent and concentration.
Cheers
At some point BP will find that they're doing exactly what Russia wants or they're no longer with TNK.
"Exports are continuing via the two routes," BP spokesman Robert Wine said. Asked if the fighting in Georgia had affected BP operations, he said: "Not currently, but we will monitor the situation."(I bet they are)
Baku-Supsa (output – 135 thousand barrels daily)
The main oil provider in the BTJ is Azeri-Chirag-Guneshli (ACG) oil field, where more than 800 thousand barrels of oil is extracted a day.
BTW-if azeri oil is not being pumped zero oil is going to
the "partially operating terminals".
Azerbaijan stops oil exports via Georgian ports: report - MarketWatch
Aug 11, 2008 ... NEW YORK (MarketWatch) -- Azerbaijan has stopped oil exports via the Georgian ports of Batumi and Kulevi because of the escalating military ...
www.marketwatch.com/.../story.aspx?guid=%7B5A3AC5D0-3A84-471A-B45E-B9024...
An interesting project that could be usefull to city dwellers in a post peak world:
http://nysunworks.org/?page_id=9
This looks like fun. Can they dredge up nutrients from the river?
Sounds like an idea! God only knows what can be dredged up from that river!
Wow, JHK is even more upbeat than usual today! I wonder if he ever sneaks out of his house and goes to the McDonalds drive through when nobody is looking.
Down thread comment from Clusterfuck Nation:
Looking into the fall election I have reached the personal conclusion that I don't support either party or their respective candidates. The paleo-cons believe that the current systems are non-reformable.
Doomers like Paleo-cons aren't really wishing for extinction, instead they want a collapse of Empire.
With future years' oil contracts selling at $110 and below, I'd be tempted to invest...
But I have a queasy feeling as I see fertilizer, gold & silver, other commodities dropping even while Russia rolls over Georgia, and I wonder if this is what deflation looks like. In other words, is this some kind of reflection of the contraction of credit and the big loss in paper value of real estate, etc?
The supply and demand of oil are rather intuitive; the number of dollars/debt is to me less so. Is the "real value" of dollars and other currencies going up relative to commodities because the former is getting scarce more rapidly than the latter?
I'd like to see a little discussion of this by those who have a clue; I don't. Thanks.
Remember that on a day to day basis that these are investors markets, not unlike the markets for equities. They are essentially a confidence game in the form of a legitimate casino. What we are watching now, I believe, is the exit of large amounts of money on the belief that the commodity bull is over. In other words, its an investment "play" and nothing more or less. If you want to invest for the mid term (and one year is really only mid term) just make sure that you really do understand what can happen in a year to the market you are looking at.
Personally, I expect to see a series of recessions followed by short lived "recoveries" for the next 3-5 years. During that time I would expect that the rise in commodity prices will be tempered by the fall in incomes (read, increase in poverty) world wide. At that point I would expect that the value of commodities will begin to become detached from their investment value; gold and silver will be more important for what they can buy; oil and other fossil fuels will demand increasingly larger portions of our income irregardless of the relative monetary value; food will become increasingly expensive relatively AND absolutely; non-precious metals will lose value as their industrial uses unwind. This process could take decades.
So much for my armchair collapse analysis.
There are several underlying truths to our very unusual OECD way of life - the people in OECD countries live very differently to the other 4,000,000,000 people on the planet.
We have an unsustainable growth based paradigm - this has been fueled by ever cheaper one-time use fossil fuels - at some stage the production rate of all of these will peak. After peak we will have to use less and less FF on an ongoing basis. If alternates can't be found that mimic the 'ever cheaper' FF model (so that we can afford to use more and more) economic growth must stop and be replaced by ongoing contraction.
Our OECD agricultural system is also unsustainable since it largely relies on the one-time use of FF and one-time use of inorganic fertilisers, fossil water and agri-chemicals. This implies that food production will also peak and hence human population.
If we don't have growth our financial system also doesn't work as advertised - pensions systems won't work as expected, and mortgages and other debt can't be paid off (this is why many religions ban payment of interest - you can only pay interest if there is real growth.)
Once you start down the Fossil Fueled way of life for any length of time the economy becomes so complex it is very difficult to adapt to any other system - failure modes will likely have very unexpected chaotic consequences.
...for the next 3-5 years. During that time I would expect that the rise in commodity prices will be tempered by the fall in incomes (read, increase in poverty) world wide.
do you expect the same (increase in poverty) in China?
First, I need to point out that increasing poverty world wide does not necessarily mean that it is evenly distributed. There are clever people who always find ways to make money out of other people's suffering.
And just as globalization has made those national borders less important in the waning days of the current mode of capitalism, borders will mean little in the coming localization efforts.
To speak of China as if everyone there is suddenly joining the wealthy of the world is to misunderstand what is happening there.
That said, even the current Chinese economic "miracle" is a very precarious balancing act. Their growth is still primarily being driven by exports and wage differentials. What happens to that model when those exports are no longer in demand? What happens when there are enough desperate unemployed in the "developed" world that the entire wage structure for unskilled labor changes?
No, China is not immune.
so do you expect the majority of the people there who are still very poor but do have the aspiration of joining the wealthy of the world to let their government sit on the trillions of USD reserve while their poverty is increasing?
Only 68 comments at 3:37pm central- may be a new record low for the Drum Beat- have we reached "peak comment"? Is there a chart showing the relationship between post volume and price swings? Or is everyone out on the shore as portrayed by Kunstler?
Traffic has slowed quite a bit, here and at PeakOil.com, probably because of the drop in oil prices.
And there's an open thread about the Russia/Georgia situation today which is likely siphoning off some of the action.
Taken together this thread and one for the Georgia Conflict has about 170 comments.
Not heavy traffic but not too bad either.
Besides the drop in oil prices, it's August and any sensible person is at work, the cottage, or the beach.
Yikes... what am I doing here?? Time to head out for ice cream!!
Yes, August is a big vacation month, in the US and in Europe. I'd probably be out hiking today, except the weather has been uncooperative. (Major lightning storms.)
We've also had some serious technical difficulties today. (No, I don't know what the problem was, but it seems to be fixed now.)
Americans taking vacation?? How unpatriotic. I thought vacation was something Americans asked for and then spent their summers letting everyone know they weren't taking them.
This rings especially true in "At Will" states.
It's too bad you're not in the DC area Leanan, unreal cool august weather! (global cooling? kidding! ;) i'd be out hiking and exploring but alas it was a workday.
Everybody's busy watching the Olympics.
I'm watching some, but I don't know why I bother. TV coverage in the US is so parochial - only events in which US athletes are competing get any coverage at all, and even then only if the US athletes have any chance at all of finishing in the top 10 or better. The only exception to that rule would be gymnastics and beach vollyball - even if the USA had not been a contender, I'm sure that the TV cameras would provide plenty of air time for the shapely young things.
The hype is really silly - all the constant talk about so-and-so "going for the gold" without even mentioning the fact that they are up against a whole slew of world-class competitors from other countries, any one of which could probably win on a given day if the breaks go their way.
Part of the reason I don't like summer olympics as much as winter olympics is that there are just too many things going on. One feels overwhelmed trying to take it all in. Adding to the frustration, the TV ends up just giving you little bits and then flits on to something else. Part of it, too, is that if you have been on a pair of ice skates and a pair of skis even just a few times, you've got something of a personal handle on much of what is going on in the winter olympics, and can relate at some basic level to most of the events. When it comes to the summer olympics, though, how many of us have even dabbled in more than a small fraction of all the different sports involved?
At least NBC seems to be doing a little better this time about actually showing us the events. I can remember past olympics where most of the air time was taken up in features about the athletes and the host country, with a few minutes of actual event coverage sandwiched in-between the wall-to-wall features. This time they are actually keeping the features pretty minimal.
And its the only time I get to watch indoor volleyball. But they changed the rules so much, and have mutated the players to almost inhuman heights I hardly recognize the game anymore. Some 25 years ago I played at the national level. It was in the day when we played beach volleyball for fun - go figure.
Now I exist as a harbinger to current athletes of what happens when you retire and get older. I don't think they can envision me 40 lbs. lighter with a 42" vertical jump. Good thing I have few pictures!
This weekend my kids and I got a real kick out of watching swimming and cycling (something we do a lot of). Of course, we're nowhere near the freakishly fast level of olympic competition, but who is?
I agree, the "heartwarming stories" get in the way, and I really really cannot stand Bob Costas. They also have a very short attention span and try to please everyone by bouncing around, the only "event" that gets a ton of coverage is Chevrolet, it seemed to me.
Traffic has also slowed at Energy Bulletin.
- Bart (EB)
Calm before the storm? Or eye of the hurricane?
I remember when the price of oil fell so low, OPEC had to cut production twice. Then it rose so high it had to fall again because people find ways to avoid using expensive gasoline.
Saw a motorscooter accident Saturday night. I stopped to try to help. He had drifted too far to the left and sideswiped a gaurdrail. The helmet may not have been secured properly as it flew off and his head hit the asphalt. Blood was flowing out of his ear; probable fractured skull. He was yet breathing, but unable to answer. The paramedics transported him to the hospital. A huge price to pay for an 80 mpg scooter.
That's so sad. It's probably the result of not being taught how to turn a bike. Many riders think you turn by leaning. You turn by pushing on the handlebar in the direction you want to turn. Push right handlebar, right turn; push left handlebar, left turn. If you don't understand this you can easily drift into the other lane on a turn and not know how to tighten your turn.
Is it any different if its operator error? Or, maybe we should get smart and start reformatting our byways so people on smaller vehicles aren't endangered?
I'm ranting back a bit because it's the paradigm, the thought structure that is out of alignment, not the mode of transportation. We need to stop constructing and maintaining the infrastructure for the automobile as a proxy for our individual convenience.
I rode a motorcycle on a regular basis in a large N. American city about 25 years ago and I will not do it again. It's too dangerous. I feel lucky to survive the year. The blind hegemony of the car has to end. And, I'm as guilty as the rest.
Trading Places by Alan Ehrenhalt
The demographic inversion of the American city
http://www.tnr.com/politics/story.html?id=264510ca-2170-49cd-bad5-a0be12...
For BC_EE:
"Last month, a splice failed in a major power cable in downtown Vancouver. The resulting explosion and fire also knocked out the utility’s backup cable, which quickly clicked off the lights for 4,400 customers, including several office towers.
"...[T]his happened in British Columbia, which has dammed innumerable mountain valleys to create massive hydroelectric plants, and profited for decades from exporting hydro power. If any province should be a poster child for renewable energy, even surplus renewable energy, B.C. is it.
Yet Vancouver Sun business writer Scott Simpson reported that B.C. Hydro’s "entire system, from the dams that capture water to generate power, to the wires distributing electricity to people’s homes, is maxed out...."
http://www.thechronicleherald.ca/NovaScotian/1072329.html
Cheers,
Paul
Thanks Paul, I live this almost every day. Aging urban distribution systems are going to be a universal problem in themselves. That's one problem with putting things in the ground - out of site out of mind. I agree with Cameron's opinion.
The other problem associated with our older generation and transmission facilities is the mindset that accompanies the rates. We have one of the lowest rates on the continent, (can you believe transmission connected customers pay $0.029/kWh for their first 90%), so many are of the belief this is the way things will always be. Our rates are too low.
Then there's the enviro-nazis and nimby's. I am convinced we are going to object our way into the dark ages. And then when we get there they will be arguing whether we are really in a dark age or just shades of grey age.
Undoubtedly BC has huge hydro electric development potential. This was covered in the recent IEEE Canada Power and Energy journal. To put things in perspective, I compared the Colorado River and the Fraser River. Both rivers run north to south through the centre of the geographical water shed, might be of similar length, and have many communities dependent on them.
Flow rate of Colorado = 85,000 cf/s
(source: http://www.bobspixels.com/kaibab.org/misc/gc_coriv.htm)
But it varies, so here is another source:
Inflow to Lake Powell is currently 11,100 cfs (March 2, 2008). Total unregulated inflow to Lake Powell so far in water year 2008 (October through February) is 84 percent of average with February measured at 102 % of average.
Population dependent ~ 30 million
Number of dams = lots (I dunna know, Hoover, Glen Canyon, etc)
Flow rate of Fraser = 5,777,000 cf/s (mean 2726 m3/s)
4.719E-4 m3/s = 1 cf/s
(source: http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V6C-45MDT1M-8...)
Population dependent ~ 3 million
Number of dams = 0
And that's just one river. The estimates for potential hydro electric development in Canada is twice the existing capacity. So I would ditch those plans for the nuke stations and clean coal, and put the money into Canadian hydro electric with HVDC links - and be nice to your neighbors.
Still want to depend on grid for all these PHEVs and other electric powered cars yet to come?? I do sleep most nights...
Hi BC_EE,
We could also be doing far more in the way of DSM. I'm providing "new supplies" of electricity with 100% uptime, zero operating costs and minimal environmental impact for less than $1,200.00 per kW -- typically, in fewer than 30 days from the initial point of contact to the last fixture upgraded while, at the same time, reducing the stress on the utility's transmission and distribution networks, lowering customers' operating expenses and providing tangible benefits to all ratepayers.
Cheers,
Paul
I agree Paul, the "negawatt" is the cheapest energy investment we will make in the near term. I am a strong proponent for DSM with TOU metering and marginal rate pricing. I think the most powerful energy source we have at our disposal right now is information.
Yet, DSM can only accomplish so much, so we still have to plan for more. I can take a drive along BC's main 500 kV backbone transmission system and get quite discouraged by the age of the equipment.
The other large scale event that occurred in our province in the last couple of months was the notion of fuel switching entering into the utility's long term planning. Earlier in the year they forecast BAU based on historical growth and GDP growth. Then I asked the question at a conference if they had accounted for people switching from fossil fuels to electricity in a FF constrained world. Well, now they have.
BULLETIN When it comes to water, here's the skinny. Canadians don't want to sell water to the U.S. because they have demonstrated a gross misuse of the resource. I don't know if we would have been any better - and perhaps Alberta is evidence of that - but, we haven't needed to be nearly as conservative. Furthermore, we get the impression there is an entitlement or Manifest Destiny attitude at work here and that is just a poor initial bargaining position. If it could be agreed upon to share the water resource in a sustainable way, I'm sure Canada would be willing to enter into agreements.
Because in our hearts we know that we are cojoined like it or not and we better work out solutions that are continent wide (BUT NOT THE SPP!!). There is absolutely no possibility that the lower 48 would suffer in extreme water deprivation and energy shortages while we bask in the abundance. The world doesn't work that way...
Hi BC_EE,
Price and demand are intimately related and TOU metering and real-time/marginal cost pricing are powerful instruments in limiting or otherwise shaping demand. That said, the transition from a traditional, low-cost pricing environment to a more rational and resource-efficient one will not be easy -- witness the political fallout in your own province in response to the modest steps taken thus far. Job losses and plant closures and the devastating impact this can have on smaller communities are very real concerns (B.C.'s pulp and paper industry comes to mind). It needs to be done, but it takes foresight, a lot of guts and an intelligent hand (good luck to us all!).
Cheers,
Paul
To reply to my own post - is that gauche? - I wanted to point out the most important factoid in the numbers. 30 million. 1/10th of the population of the U.S. relies on the Colorado for water supply. If that doesn't scare you, you're not sober.
The lead LA Times editorial at the top of the DrumBeat is laughable in its falsehoods and is extremely easy to debunk. Consider http://www.dol.gov/ESA/minwage/chart.htm, the historic chart of minimum wages since 1938, graphed against average yearly gasoline prices (available on the EIA website), which I graphed in an Excel spreadsheet showing the number of gallons of gasoline one could purchase per hour worked at minimum wage. Before you get all reactionary on me and say "nobody works for minimum wage anymore" -actually 2.2 percent of US wage earners do, consider that what we think of as a middle class, or living wage is some constant multiple of that minimum wage, which currently is about 3 times the minimum wage, or about $20 per hour in current dollars.
When we divide the money per hour worked at the federal minimum wage by the price of fuel, we get the following information:
1960 - 3.22 gallons per hour worked at minimum wage
1961 - 3.71 gallons per hour worked at minimum wage
1962 - 3.71 gallons per hour worked at min. wage
1963 - 4.17 gallons per hour worked " " "
1964 - 4.17 gallons per hour worked
Compare this to the past 3 years (average fuel prices)
2006 - 1.99 gallons of gasoline per hour worked at federal minimum
2007 - 1.98 gallons of gasoline per hour worked at federal minimum wage
2008 - 1.62 gallons of gasoline per hour worked at federal minimum wage
Now, to get the purchasing power of a middle class income, multiply the numbers by a factor of 3 or 4. You will find that on a whole, purchasing power of wages at the lower and middle ends of the spectrum with respect to fuel have declined by a factor of 2 or 2.5 to 1 since the fat years of the first half of the 1960s. Therefore, gasoline is emphatically NOT more affordable now since it was in the early '60s. To find a period where it was as unaffordable as it is now given my metric, you would have to go all the way back to 1949.
At any rate, can we safely assume there is less oil in the world than there was in 1960?
The short answer is yes.
Thanks for the analysis, IdealistCynic.
The authors of the LA Times op-ed piece compare gasoline prices with the average US resident's disposable income. Since 1980 or so, increases in earnings have been largely confined to the wealthiest. Average income is not a good measure of how the economy affects most people. (As the old story goes, if Bill Gates moved to Montpelier, Vermont, the average wealth of everyone in the city would go up by $7 million.)
Your analysis based on minimum wage or multiples thereof better captures what most people are feeling.