DrumBeat: August 13, 2008

Modern Marvels: Secrets of Oil

Airs Wednesday August 13 08:00 PM, on The History Channel

Rubber, Plastic, Nylon, Aerosols, Resins, Solvents, and Lubricants--none can exist without oil. If we stopped driving our cars tomorrow, America would still need five million barrels of oil a day. Visit Vulcan Materials, where oil tanks are emptied into massive double-barrel mixers to make asphalt and then continue to the Rolls Royce Aerospace Facility where complex jet fuels are blended. Travel back to the 1870's to see how an unemployed whale oil salesman turned a greasy oil-drilling by-product into a household staple: Vaseline. Finally discover how cutting-edge recycling techniques can breathe new life into used motor oil, and where a number of renewable fuels and technologies take aim at oil sovereignty.

U.S. auto fleet hits mpg record

TRAVERSE CITY -- The nation's cars and light trucks are expected to set a record for fuel efficiency for the 2008 model year, according to a government report.

The National Highway Traffic Safety Administration said Tuesday in a report posted on a government Web site that the nation's fleet of passenger cars and light trucks averaged an estimated 26.8 miles per gallon through March, up from 26.6 mpg for the entire 2007 model year. That's up from a 25.7 mpg average in 2006, which also was a record.

Ford needs different mind-set, Fields says

Fields is expected to talk up Ford’s plans for bringing a slew of new small-car designs to the U.S. market in a speech today at the Management Briefing Seminars staged by the Center for Automotive Research.

But making enough money on those small cars to offset slower sales and plummeting profits on big trucks will be a tall order, Fields conceded.

Turkey wants to boost gas supplies through Iran

ANKARA (KUNA) -- Turkey will increase gas imports from Iran to compensate reduction in supplies from Azerbaijan resulting from the conflict in Georgia, a senior source from the Turkish pipeline company Botas on Wednesday.

How moon rocks could power the future

The moon is once again a popular destination, as several space-faring nations are talking about setting up bases there. One reason would be to mine fuel for future fusion reactors.

The fuel in this case is helium-3, a lighter isotope of the helium used in balloons. In high energy collisions, helium-3 fuses with other nuclei to release more energy and less waste than the reactions in traditional nuclear reactors.

Oil: What the drilling advocates say

Supporters saying there could be much more oil offshore than the government predicts as they fight for access to new supplies in order to lower the price of oil.

..."We think the estimates are extremely conservative," said Brian Kennedy, a spokesman for the Institute for Energy Research, a Washington, D.C.-based think tank that supports more drilling.

Kennedy said the government thought Alaska's Prudhoe Bay field originally held 6 billion barrels of oil. Since the field began producing in 1977, Kennedy said it has provided about 14 billion barrels of oil.

Other reports have shown the discrepancy between estimated production and actual production in Prudhoe Bay to be smaller, but still it ended up producing more oil than initial projections.

"They have a bit of a weatherman's track record when it comes to forecasting," Kennedy said.

GOP sees advantage in offshore oil drilling

Washington - The lights are dim, the mikes are off, and the television cameras dark in the US House of Representatives. But minority Republicans – sensing traction with voters on the issue of offshore drilling – aren't giving up the floor.

Energy's silver lining

High oil prices are painful. But they're forcing positive changes in our economy and lifestyle.

BP's output cut by 100,000 boepd in Caspian - source

LONDON (Reuters) - BP Plc's share of oil and gas output cut at fields in the Caspian Sea is about 100,000 barrels of oil equivalent per day (boepd), a source close to the company said on Wednesday.

The amount affected is less than that implied by BP's equity stake in fields such as Azeri-Chirag-Gunashli and is because of the way the barrels are assigned under production-sharing contracts (PSCs). BP has lowered production at ACG oilfields in the Caspian Sea and has stopped pumping gas from the Shah Deniz field into a pipeline that runs to Turkey. It has not specified by how much output has been cut. "BP's net share is about 100,000 boe per day," said the source, who declined to be identified by name.

Aluminum giant Rusal sues Lukoil over oil coke

The world's biggest aluminum producer, Rusal, said Wednesday it was suing oil firm Lukoil in a Russian court for cutting the supply of oil coke to Rusal's facilities by almost half.

Insight: Oil prices have peaked

Thanks in no small degree to a drop in global demand, oil prices, after breaching $147 per barrel, have tumbled more than 23 per cent to below $113. Barring a big hurricane in the Gulf of Mexico or a disruptive geopolitical event, oil prices appear to have peaked.

World oil consumption is now growing at a significantly lower pace than had been imagined a year ago. Last October, the International Energy Agency was forecasting global demand growth for 2008 of 2.1m barrels a day, with 750kb/d from the OECD and 1.33mb/d from emerging markets. In their latest monthly report, the IEA has slashed this by more than 60 per cent to 800kb/d, with OECD demand actually forecast to decline by over 600kb/d and emerging markets demand to grow by 1.4mb/d.

In our judgment, the IEA’s forecasts for emerging markets will turn out to have been far too optimistic by year’s end and OPEC countries will again complain about the inability of oil importers to guarantee sufficient demand growth to warrant investments in expanded production capacity.

Steve LeVine: A Roadblock to Russian Oil and Gas

The Russian assault on Georgia has injected a specter of doubt into a U.S.-backed oil and natural gas route that had until now seemed safer than almost any other on which the West relies, analysts say.

Rush to Arctic as warming opens oil deposits

It's a scramble for the spoils of global warming as the rapid melting of Arctic sea ice is opening access to previously unreachable deposits of oil and gas, setting off a race by northern nations - including the United States, Canada and Russia - to claim them.

Crude Oil Price Retreat: Sunrise or a Lull Before the Storm?

Notwithstanding, many saw this July/August 2008 price retreat as a continuing stable trend to much lower levels and rejoiced over the permanent relief that much cheaper oil would bring. However, Robert Hirsch and his associates stated that as Peak Oil “is approached, liquid fuel prices and price volatility will increase dramatically” (2005, p. 4). We would be well warned to expect price volatility, with dramatic peaks and troughs, and that even if the oil price significantly retreats at times, this should not lull us into complacency. There have also been several precedents of oil retreating in price over recent decades, only to spring back again into new record price hikes (see graphs in Williams, 2007). The likely overall trend for oil will be aggressive price rises from the underlying causes of low supply and high demand.

Raymond J. Learsy: Oil's Big Dirty Secret as Producers Rake in Hundreds of Billions

...The Peak Oil Pranksters are ever ready to carry the message for the oil patch both here and everywhere working near overtime to heighten our anxieties about oil supply, programming us to pay ever more to the oil barons and sheiks.

But wait, suppose, just suppose they are wrong and willfully misleading us. That oil's origins are not, to repeat, not biological, according to the gospel we have been taught to believe. That in effect oil originates from deep carbon deposits dating to the very beginnings of the Earth's formation in quantities vastly greater than commonly thought. The very presence of methane in the solar system is cited as one of the key underpinnings of this theory's seriousness. Then by seepage through the earth's mantle, Abiotic oil becomes in essence a renewing resource migrating toward the Earth's crust until it escapes to the surface (i.e. Canada's tar sands as theorized by some) or trapped by impermeable strata forming petroleum reservoirs.

Heating oil dealers get loan guarantees

HARTFORD, CT — Fearing high prices might force a heating oil shortage this winter, the state is guaranteeing loans to dealers.

"The ripple effect of high fuel prices is having a tremendous impact on everyone," Gov. M. Jodi Rell said in a news release Tuesday. "It is likely that half of the 549 fuel oil dealers in Connecticut will need some assistance to buy their home heating oil from wholesalers."

Ditching Oil, Converting to Gas

Suzanne and Dave Francione figured they could reduce their heating bill by $1,300 this winter by switching from oil to natural gas, so they called the utility company and plumbers. That was in May. Today, the couple is still waiting on their conversion, which won't be done until September because of a growing backlog of other Northeasterners desperate to abandon costly heating oil.

Shell forced to withdraw two ads in U.K.

LONDON — Royal Dutch Shell PLC violated industry rules by claiming in a newspaper ad that two oil projects in Canada and the United States involved sustainable forms of energy, Britain's advertising watchdog ruled Wednesday.

The Advertising Standards Authority investigated the Shell ad after a complaint from the World Wildlife Federation.

ANALYSIS - India power woes, pricing trigger diesel surge

NEW DELHI (Reuters) - Indian diesel demand is surging ahead at its fastest rate in a decade this year with little sign of abating soon as more companies and homeowners use it to generate emergency power supplies.

While India's endemic power shortages have been a fact of life for decades, only recently has the prospering middle class been able to afford diesel generators in order to keep their homes air-conditioned, or have domestic firms been profitable enough to buy units for fall-back electricity supplies.

And India's policy of subsidising diesel and petrol prices to control inflation -- helping keep it cheaper than other types of power fuel, such as fuel oil -- has helped maintain the momentum in diesel consumption, which may grow by 15 percent this year.

Crude can make you cry and laugh

It is estimated that over 75% of the oil produced today comes from oil fields older than 20 years, again underlining the fact that while there is no shortage today, and we’re skating on thin ice in the longer term. Crude oil is a crucial energy source over which wars have been – and will continue to be – fought and it is a news and price volatile commodity. So far there is not much on the energy horizon which makes it seem that crude prices will come down in a hurry.

6 sippin' hybrid alternatives

Check out these not-too-thirsty vehicles that give you fuel economy without giving up style and value.

Cars that cut your gas bill in half

(Fortune) -- Attention, horsepower-hungry: Fear not the exploding array of environmentally friendly alternative vehicles. They are a hopeful signal of the potentially mind-blowing stuff to come.

What Is the Future of Suburbia? A Freakonomics Quorum

Why do you like suburbs over [the] city? Be honest please, I never understood it, still don’t. I might have serious problems, because I hate even looking at pictures of suburbs.

Respondents cited backyards, quiet and cheap living, and congestion-free commutes — the very sort of suburban characteristics that have started to change due to higher gas prices, more single-person households, and even refugees.

What will the future hold for suburbs? In an interesting article about Clifton Park, a suburb of Albany, N.Y., that has swollen mightily in past decades (and where I, during one long, hot summer, helped build new houses), here’s what a local architect and urban planner, Dominick Ranieri, thinks may happen to suburbia: “If we don’t change the patterns, we’re in for a long and slow and arduous collapse.”

Peak Population

We are faced with a crisis not because there are too many of us for the planet to sustain, but because we are collectively using up more resources than the planet can produce. This isn’t just true with valuable commodities, like oil and ore. The most basic of resources are growing scarce as well—food, potable water, wood. While reducing consumption in first-world countries will go a long way in addressing this problem, a population that just keeps growing will eventually overwhelm the planet, regardless of consumption. And as formerly impoverished nations achieve moderate prosperity, their consumption grows, likely negating any environmental benefits from reduced population growth via poverty aid. Therefore, a two-pronged solution is needed: reduced consumption and staved population growth.

Energy woes stir passions in Monied ‘Burb

Among Patchwork Nation’s types of communities, Bucks County is a “Monied ’Burb.” Its median household income ­ at $70,406 ­ is well above the national median, according to the latest census figures from 2006. Despite the residents’ complaints at the farmers’ market, most wouldn’t say this “Monied ’Burb” has taken a huge economic hit.

Still, high food and gasoline prices have put a crimp in residents’ lifestyles and have begun to take a chunk out of their pocketbooks.

Rigged: Why Does Offshore Drilling Dominate the Debate?

If de Toqueville were to update his treatise on American politics, it would carry a new chapter: “Drilling in America.” How on earth, in the middle of a war and an economic slowdown, did a handful of offshore oil rigs come to be the wedge issue of American politics?

Inside the Nation's Largest Oil Refinery: Profits Total Only Three to Four Cents a Gallon, Refineries Say

As gas prices rose last year, refineries couldn't produce enough gasoline to meet demand. The result was substantial profits. But in 2008, even after a summer of record gasoline prices, some of the nation's refiners have seen profits drop by as much 85 percent from a year ago.

As demand for refined products like gasoline has fallen while oil prices have soared above $100 a barrel, refineries have suffered. The cost of oil, the basic ingredient refineries need to make gasoline, has risen faster than gasoline prices.

Schools consider shorter work week

OTTUMWA, IOWA -- As prices continue to rise on everything from groceries to gasoline, many are making cuts elsewhere in the budget.

In fact, our Fact-Finder team has learned that some schools across the country are considering cutting their five day work week to a four day work week to save on cash.

Australia: Chamber chief goes nuclear over trading hours

Chamber of Commerce and Industry WA chief executive James Pearson said Russia was considering "two dozen" nuclear power plants to WA's nil.

"Nuclear is real, but not in WA," Mr Pearson said.

"It may be too much to ask from politicians who can't even deregulate shopping hours, but we live in hope."

Council Would Fine Stores if They Cool the Sidewalks

For many concerned about energy conservation, it’s a pet peeve: Shopkeepers who blast the sidewalk with air-conditioning as a way to lure customers on hot days.

Now the City Council is expected to pass legislation on Thursday that would impose fines on stores that leave their doors wide open with the air-conditioning on.

Mexico Sugar Output May Fall 3.1 Percent on Fertilizer Prices

(Bloomberg) -- Mexico's sugar production may drop 3.1 percent next year because drier-than-normal weather limited crop growth and farmers used fewer nutrients after the cost of fertilizer jumped to a record, an industry group said.

U.S. Retools Economy, Curbing Thirst for Oil

The U.S. economy is starting to figure out how to curb its legendary appetite for energy.

Consumers are buying fewer sport-utility vehicles and more energy-saving washing machines. Some trucking companies have rejiggered their engines to max out at lower speeds. Gridlock is easing in California. Americans drove 9.66 billion fewer miles in May than they did a year earlier, a 3.7% decline, according to the Transportation Department.

With shipping costs surging, companies are rethinking overseas production, slimming down packaging and retooling distribution networks. Yogurt maker Stonyfield Farm is only sending out fully loaded delivery trucks. Procter & Gamble Co. is filling smaller bottles with more-powerful laundry detergent. Locally made products, from beets to beer, are becoming a more attractive choice.

Black Hole: Oil prices aren't soaring because of speculators. They're gyrating because the fundamentals of the market have disappeared.

Back in January, when the price of crude was just below $100 a barrel, I predicted a crash in the oil market. That would be the same oil market that has since superspiked its way toward $150 before falling nearly $20 over the course of a few days in July. Some readers have demanded a retraction; others have offered to sell me their S.U.V.’s. However, I am sticking with my prediction: Within two or three years, the price of oil will drop to below $50 a barrel. Indeed, I’m more bearish than ever.

Gasoline prices tumble in U.S., California

The escalating military conflict between Russia and Georgia and damage to a strategic pipeline in Turkey weren't enough to stop crude oil from continuing its downward slide Monday.

The drop reignited speculation that rocketing oil prices earlier this summer had more to do with speculative trading than with supply issues.

BP shuts oil pipeline in Georgia, supplies still get through

LONDON (AFP) - Energy giant BP announced Tuesday it had closed an oil pipeline because of fighting in Georgia but said oil and gas supplies continued to flow from the Caspian Sea to the West by other routes.

A BP spokesman confirmed the company had shut the Baku-Supsa oil pipeline in Georgia as a precaution, but said oil was still being transported to the Georgian Black Sea port of Batumi by train and through an Azeri-operated pipeline.

Georgia On Our Minds

Mission accomplished. By playing with the former Soviet republic of Georgia like a cat with a mouse, Vladimir Putin established who controls this valuable piece of real estate--and sent a message to the U.S. and anybody else who would find a secure route for Central Asian oil past Russian gatekeepers.

India: Diesel demand soars, no fuel price cut

NEW DELHI (Reuters) - India's diesel demand is growing at an unexpectedly high rate of 23-24 percent, the oil minister said on Wednesday, causing shortages in some regions.

8 Ways to Profit if OPEC Dumps the Dollar

Iranian President Mahmoud Ahmadinejad dropped a bombshell. And while it wasn’t a nuclear one, it might as well have been.

He stated on the record at a rare gathering of the heads of the Organization of Petroleum Exporting Countries [OPEC] member nations have expressed a real interest in converting their cash reserves from the beleaguered U.S. greenback to the European euro. More specifically, Ahmadinejad referred to the U.S. dollar as "a worthless piece of paper."

Curse of ancient Rome hangs over modern societies

At the end of the day, the energy cost of the complexity of the Roman Empire was too great for a food-based energy system. Failure was inevitable.

It is tempting to apply Tainter's model to the predicament faced by the world today. There is seemingly a similarity between the declining marginal returns from the prevailing fossil fuel energy system and the declining marginal returns from defending the periphery of the Roman Empire.

Fall in nuclear production hits British Energy

LONDON: British Energy Group, the electricity producer part-owned by the government, announced a 65 percent fall in profit for the second-quarter on Wednesday, as the group's aging nuclear power stations' production declined.

U.S. power grid in better shape 5 years after blackout

Five years after the worst blackout in U.S. history, the nation's electrical system is far better equipped to prevent another big outage, but significant shortcomings remain, federal officials, grid operators and consultants agree.

Over 33,000 buyers signed up for GM electric car

DETROIT (Reuters) - In a bid to show the demand for the upcoming all-electric Chevrolet Volt, a proponent of the car has released details of an unofficial waiting list for the vehicle with over 33,000 prospective buyers.

Heating oil prices turn firewood into hot commodity

DURHAM, Maine — On a recent scorching-hot summer day, workers at Reed's Firewood used heavy equipment to cut and split logs into firewood until it was too dark to see.

Despite its relentless pace, the family-run business is failing to keep up with demand as homeowners shellshocked by the price of heating oil look to firewood as a way to lower their bills this winter.

The cost of seasoned firewood in Maine has jumped about 50% from a year ago, but it remains a relative bargain compared with heating oil, which is nearly $2 a gallon more than it was last year. Many customers are doubling their usual orders, and some firewood dealers are turning away customers. "We've really never seen anything like this before," said Lloyd Irland, who teaches forestry economics at Yale University.

Improved Reaction Data Heat Up The Biofuels Harvest

High food prices, concern over dwindling supplies of fossil fuels and the desire for clean, renewable energy have led many to seek ways to make ethanol out of cellulosic sources such as wood, hay and switchgrass. But today's processes are notoriously inefficient.

Farmers mend their watering ways

Since 2003, farmers in southwest Georgia have conserved more than 10 billion gallons of water over 75,000 acres — enough to meet the annual water needs of more than 250,000 people, according to the Flint River Basin Program.

"What's encouraging about what they're doing in Georgia is that it can be duplicated elsewhere," says Doug Toews, national water management engineer with the U.S. Department of Agriculture's Natural Resources Conservation Service. "It's been a success, and it's very workable. The impacts are significant."

Threat to elderly as climate changes

ACTION is needed to better protect elderly people from the future effects of climate change, claim leading academics.

They made their call in the first national report to examine the impact of climate change on an ageing population The report, Growing Old in a Changing Climate, aims to stimulate wider debate on the issue, and appropriate policy responses from institutions, politicians and older people.

Hot subways to floods, all part of NYC climate risk

NEW YORK (Reuters) - New York City Mayor Michael Bloomberg on Tuesday announced an in-depth study of perils the city faces from climate change, ranging from overly hot subways to shoreline floods.

Human activity, El Nino warming West Antarctic: study

NEW YORK (Reuters) - Human activity and the El Nino weather pattern over the last century have warmed West Antarctica, part of the world's coldest continent, according to a study based on four years of collecting ice core data.

The West Antarctic warmed in response to higher temperatures in the tropical Pacific, which itself has been warming due to weather patterns like a major El Nino event from 1939 to 1942 and greenhouse emissions from cars and factories, according to the study.

"An increasingly large part of the signal is becoming due to human activity," said the study's lead author David Schneider of the National Center for Atmospheric Research.

RE: Human activity, El Nino warming West Antarctic: study

This is an important finding, given that warming in the Antarctic has been somewhat less than that predicted by climate models. The apparent reason is the depletion of the Ozone over the Antarctic, which produced a "Hole" in the ozone layer.

For those interested, the ozone layer is measured in Dobson Units and is typically about 300 Dobson units. At that level, if all the ozone were brought down to the surface as a single layer, it would be only 3 mm thick. If that layer were a liquid with the density of water, instead of a gas, the layer would be thinner than a sheet of plastic food wrap. It's a good thing the world's governments agreed to limit emissions of FREONS, which were destroying the ozone layer, else we'd be headed for extinction.

E. Swanson

Southern Hemisphere sea ice trends in extent

This should interest you. Note that the current year had dropped below BOTH the long-term baseline and last year.


This past year, after the astounding melt in the Arctic, the maximum extent was greater than the previous maximum, but somewhat less than that seen in the long term average. The sea-ice situation around the Antarctic looks a bit different, with the minimum being above both last years and the long term average, but (from your link), the maximum extent appears to be heading to a bit less than the long term average. Since the Antarctic ozone hole appears in the spring before the melt season, it would be reasonable to point to the climate impact of ozone for the increase in minimum extent around the Antarctic. One must remember that ozone is a Greenhouse Gas and it's decline could well produce a local cooling. There are also reports that suggest a connection between the strength of the Antarctic Polar Vortex and the decline in the ozone.

E. Swanson

This past year, after the astounding melt in the Arctic, the maximum extent was greater than the previous maximum, but somewhat less than that seen in the long term average.

The important thing is the mass, not just extent. Greater extent is good in that the higher albedo reflects more energy, but it being winter the benefit is mitigated. But we should not discuss extent without discussing concentration and thickness. The ice that grew was thin. (Also, the max extent wasn't "somewhat less" than the baseline, it was significantly less. 1 million sq. miles or more.) Thus, even though we had a larger extent, it melts quickly under any stress, which is why we saw strong melt in early spring and then this August.

The sea-ice situation around the Antarctic looks a bit different, with the minimum being above both last years and the long term average, but (from your link), the maximum extent appears to be heading to a bit less than the long term average.

As of this writing, they are all three tied. What interests me about the large drop in Antarctica is that it 1. was a drop of about 750,000 sq. m in a short time, and that the second large drop after the initial roughly equaled the timing in the Arctic August melt. I don't think the two are considered closely connected, but it is curious. Almost certainly serendipitous, but still...

The main effect on the Antarctic weather from the ozone whole is thought to be that it enhances the meridional cirulation (the strong winds that blow around the continent just to the south of it). This tends to bottle up the cold air formed over the continent. The effect of this is that the continent cools, because its exports of cold air are reduced. Presumably as the ozne hole heals, this mode will weaken somewhat.

The winds which make up the Antarctic polar vortex are zonal winds, that is, they flow along the lines of latitude, west to east, AIUI. Meridional winds blow north-south. I don't quite understand the reason for those zonal winds, something to do with the Hadley and Ferrel "cells" and the resulting jet stream. Anyway, as the CFC's (and other ozone destroying chemicals) in the stratosphere continue to decline, it's to be hoped that the "hole" will no longer appear.

E. Swanson

More unintended consequences from the push for biofuels, as changes in crop plantings worsen the plight of bees.

Honeybee deaths reaching crisis point

Britain's honeybees have suffered catastrophic losses this year, according to a survey of the nation's beekeepers, contributing to a shortage of honey and putting at risk the pollination of fruits and vegetables.

The survey by the British Beekeepers' Association (BBKA) revealed that nearly one in three of the UK's 240,000 honeybee hives did not survive this winter and spring.

Rowse's clear English honey comes mainly from the borage plant, also known as starflower, which has been grown increasingly as a source of a fatty acid rich in omega-6 for pharmaceutical products. But farmers have planted much less borage this year as ready-processed borage oil is being imported and wheat is more profitable to grow due to the increase in demand for biofuels.

Nectar-rich crops are being replaced by others such as wheat (wind pollenated, hence no nectar) which, coupled with parasite infestation and changing weather patterns (as well as the mysterious 'Colony Collapse Disorder'), is decimating bee populations.

A decline in oil supplies is frightening enough, but the loss of irreplacable ecosystem services like pollination is truly terrifying.

SE Pennsylvania, where I live, hasn't had any wild honey bees for years. I think commercial apple growers would be in trouble if it weren't for domesticated hives. However, my garden and fruit trees are doing spectacularly well. Bumblebees, butterflies, hummingbirds, and at least two species of bee/wasp-like critters I don't recognize have stepped in to snap up the pollen the honeybees no longer take.

I don't mean to minimize the loss of honeybees, but nature does adapt (not always to our liking, of course).

There must be a natural hive near my land, as there is a veritable army of honeybees that buzz around everywhere working in the clover flowers. Bumblebees, butterflies, and all sorts of other insects are also at task with the clover. I never so quickly became accustomed to honeybees buzzing all around me, and bumblebees coming up to me to see what I was before I bought this place. It's quite amazing. I'm pleased at the level of honeybees, as they will help me out once I have my fruit trees.

There may be someone with a hive nearby that you don't know about. The bees can travel up to two miles if necessary to collect nectar and pollen.

nature does adapt (not always to our liking, of course)

That's what I'm afraid of! I'm glad that pollenating insects are doing well in your area. I believe that many areas of the UK have been affected by the recent increases in the amount of wet weather which causes bees to remain in their hives for longer. This puts them under increased stress and makes them more prone to infections and parasites. It's been really wet in my area recently: great for slugs and snails (which love to munch on my plants), not so great for pollenators.

I suppose I'll just have to adapt too, and cultivate a liking for escargots. :)

Escargots with some garlic/herb butter from the oven will do for me :-)

The situation is particularly dire this year in Switzerland, England, Germany and France. When I visited isolated New Zealand last year they were reporting their first die-offs there too. The beekeepers here in Europe are pretty sure where the problem is coming from:

Die-Off Hits German Hives

Germany's beekeepers were pointing fingers at one of Germany's largest companies, blaming a popular, recently-introduced pesticide called clothianidin for the recent die-off. Produced by Monheim-based Bayer CropScience, a subsidiary of German chemical giant Bayer AG, clothianidin is sold in Europe under the trade name Poncho. It's designed to attack the nervous systems of insects "like nerve gas," says Hederer. The chemical was used last year to fight an outbreak of corn rootworm, and its success against the pest led to a much wider application this spring up and down the Rhine.

That's right, Bayer, the same company that brought you heroin is distributing the neurotoxin clothianidin into the biosphere in products such as Gaucho 600. The chemical is a highly toxic nicotinoid (PDF).

Read what Bayer has done to try prevent the news getting out:

"How is it conceivable that all our lauded technological progress -our very civilisation- is like the axe in the hand of a pathological criminal?" - Albert Einstein

There is a question about whether the importation of Australian stock has brought CCD to the rest of us.

Used to be all we were worried about was Killer Bees. Now this...

Interestingly... apparently my not-so-little Vancouver Island had been free of the Bee Disease (which apparently consists of mites) until last year or maybe the year before there was apparently someone who transported live bees to the Island without following the proper procedures.

The result has been the decimation of bee keepers swarms across the Island.

Everything must run its course...

Here in the USA beekeepers have responded by using the natural abilities of bees to propagate,with a well established Queen-rearing industry

I can multiply my bees by using a number of techniques,Hive splits,making "nucs"[nucleus hives]natural swarm capture ect.Upwards to 250% increase possible.

What hurts is winterkill...sometimes 30-80%.A lot of beekeepers are thinking a variation of Nosema is responsible for colony-collapse ,some believe pesticide use is the culprit,some that GMO corn....beekeeping is a art form in some ways.The trick now is to keep them alive{I am up to 40 hives now}

Here's one for totonelia, from the Guardian.

Soaring fertiliser prices threaten world's poorest farmers

A world fertiliser forecast report, due to be published by the UN this week but seen by the Guardian, states that prices will remain high for at least three years and possibly longer.

World fertiliser prices have risen more than oil or any other commodities in the last 18 months. Of the three main types, diammonium phosphate (Dap) sold for US $250 per tonne in January 2007 but has risen to $1,230 per tonne. Potash-based fertilisers have risen from $172 to over $500 a tonne, and nitrogen based fertilisers have risen from $277 to over $450 per tonne.

Much of the price rise is attributed to first world farmers who have applied high levels of fertilisers to maximise harvests of grain to take advantage of record grain prices, said Dr Balu Bumb, policy leader at the International centre for Soil Fertility and Agricultural Development (IFDC) in the US.

The UN fertiliser forecast blames capacity constraints for the price rises. "Strong global demand for fertilisers is stretching current production capacity to its technical limits. This situation will persist until new capacity comes on line", it states.

Hello Violinist,

Thxs for this info. I will look forward to reading the updated UN fertilizer forecast when it is finally released.

Just a reminder that Russia isn't thru
until saahkashvili is gone.

"They shot their brother Russian peacekeepers, then they finished them off with bayonets, so we are not going to see them there any more," said Dmitri Rogozin, the Russian ambassador to Nato in Brussels.

Medvedev spoke by phone with the EU foreign policy chief, Javier Solana and told him "there are a few things that need to be discussed to get a full ceasefire," said a European official.

"The Russians are saying that they will never again accept Georgians in any form in South Ossetia. They see them as a Trojan horse that started the attacks last week."


COL. SAM GARDINER: Absolutely. Let me just say that if you were to rate how serious the strategic situations have been in the past few years, this would be above Iraq, this would be above Afghanistan, and this would be above Iran.

On little notice to Americans, the Russians learned at the end of the first Gulf War that they couldn’t—they didn’t think they could deal with the United States, given the value and the quality of American precision conventional weapons. The Russians put into their doctrine a statement, and have broadcast it very loudly, that if the United States were to use precision conventional weapons against Russian troops, the Russians would be forced to respond with tactical nuclear weapons. They continue to state this. They practice this in their exercise. They’ve even had exercises that very closely paralleled what went on in Ossetia, where there was an independence movement, they intervene conventionally to put down the independence movement, the United States and NATO responds with conventional air strikes, they then respond with tactical nuclear weapons.

It appears to me as if the Russians were preparing themselves to do that in this case. First of all, I think they believe the United States was going to intervene. At a news conference on Sunday, the deputy national security adviser said we have noted that the Russians have introduced two SS-21 medium-range ballistic missile launchers into South Ossetia. Now, let me say a little footnote about those. They’re both conventional and nuclear. They have a relatively small conventional warhead, however. So, the military significance, if they were to be conventional, was almost trivial compared to what the Russians could deliver with the aircraft that they were using to strike the Georgians.

I think this was a signal. I think this was an implementation on their part of their doctrine.

Democracy Now Interviews Col. Sam Gardiner, retired Air Force Colonel. - Transcript and Audio


The Russian local authorities should never, ever have sent in Cossack volunteers. Moscow had a good plan; they didn't need tribal militias to help.

The beauty of the cease-fire is not that Russia got everything it wanted, but that it was negotiated by America-lusting neocon Sarkozy on the basis of European Union peacekeepers, not NATO. That is a vast achievement, far more valuable than anything in Georgia, even the pipeline. NATO has been turned into an offensive weapon to do America's dirty work, insulated by a Pentagon-controlled bureaucracy from the will of Europe's voter/cannon fodder. It's time Europeans learned how to take care of their own defense, and got a say in their own foreign policy.

The Democracy Now interview is quite revealing:

COL. SAM GARDINER: I must say that I have not heard a lot of good words from the McCain campaign about how to deal with this. It’s painful that the standard answer one gets is the testosterone-based foreign policy that we’ve seen for the last eight years. This is a very complex situation. And John McCain has said earlier that he wants to throw Russia out of the G8. That is absolutely the worst thing the United States could do. Russians have been saying—and the White House has not been listening—“We are a major player, and you have to listen to us.” This is the way the President said the Chinese are major players, and we now listen to them. The Russians have been saying that. The White House has ignored that.

I also would say, on the other hand, that this is one of those situations where Obama’s talk about it is probably not a good solution, either. The United States made some errors when it left the impression with the Georgians that our support somehow meant they were free to undertake this operation. That was clearly a bad idea that we communicated with them.

The other thing that is significant here is, there is an Israeli dimension to the problem. Israel has been training and supplying the army of Georgia. That’s caused some tensions within Israel, because there are those who believe that this just encourages the Russians to provide conventional arms to the Iranians. Israel has talked about it over the weekend, decided not to stop providing arms to the Georgians.

It isn’t over. There are a lot of strategic things that are going to fall out of this. Probably most important is that it’s not now Iraq, Afghanistan and Iran, it’s now Russia, Iraq, Afghanistan and Iran that our new president is going to have to deal with.

My sense, from Col. Gardiner's tone and words, is that the military brass in the US is getting a tad bit tired of armed chair warriors who, with no experience themselves and no children in uniform, continue to try to prove how tough they are as commander-in-chief.

Nothing new. http://www.huffingtonpost.com/jon-soltz/bring-them-on-day_b_54655.html

However, the last thing either the US public or military needs is more posturing.

Nor is needed for the next 8 years to be anything like the last.

Word to McCain: start thinking like a soldier.

Word to Obama: stop trying to out bluster the GOP on the lie that they have any advantage on toughness in the White House.

It's easy to be tough... and stupid... if your ass is not on the firing line.

Time to wake up and smell the coffee. You're not in Kansas anymore. It's called the real world.

CNN seems to think this is a big boost to McCain. They think it proves that he was right about Russia all along. And they praised his immediate tough stand, while claiming Obama took three different positions before finally ending up with the same one McCain had staked out at the beginning.

I don't see any good coming out of this for anyone. Except Russia.

I'd argue that CNN is correct because this stand allows McCain to retrench and consolidate his position with a couple key GOP constituencies. His appeal to certain parts the Rovian coalition had been waning the past few months. His position helps redress some of that falloff.

If Georgia remains on the front pages until the Nov. elections, it will be McCain by a landslide. In Middle America "tough talk" trumps a more nuanced diplomatic approach every time. So, it looks like a repeat of the 2004 election with the neo-con propoganda machine working overtime to stoke people's fears and the oppostion standing helplessly by fecklessly attempting to prove that they are "tough enough for the job."

I think people will be bored of Georgia if it's still news in November. Americans have short attention spans, especially for countries they probably never heard of until now. The white males who like "tough talk" probably aren't going to vote for Obama anyway. They'll stick with the "Daddy party."

I do think Obama has a tougher row to hoe than many think. As this article put it:

For many Democrats, Obama’s eventual residence [in the White House] has long seemed a foregone conclusion. But cast your mind forward twenty years and imagine looking back on this election. Would it really seem strange from that vantage point if the first black major-party nominee—a guy with a thin résumé, no foreign-policy credentials in an era scarred by terrorism, a background alien to much of Wonder Bread America, and the full name Barack Hussein Obama—lost? No, it would seem inevitable. That Obama has convinced us that the opposite outcome is even possible is testament to his many gifts.

McCain now to put up or shut up.


“Well, very nice, you know, very cheering for us to hear that, but OK, it’s time to pass from this. From words to deeds.”

McCain is only a senator, and not in any position to do anything.

Bush is doing something, though.

I realize that, the point is the Georgian president is calling the hypocrisy. And it would be interesting to see the timing-I saw the Georgian statement prior to Bush's. Not that it makes a hill of beans.

Looks like Dubya, Condi, and Dick are on top of things again.

The new all-seeing, all-knowing trinity (which replaced the old one of Dubya, Dick, & Rummy)is setting out to do their own version of gunboat diplomacy.

Theo Roosevelt must be spinning: they've highjacked old fashioned US diplomacy and now "speak loudly and carry whatever stick they can find."

And they obviously can't tell the difference between a puppet dictator and a master of realpolitik.

Putin is a ball bustin' bully who has his own very, very big stick.

Should anyone doubt Putin's character I would suggest they ask former KGB agent Alexander Litvinenko or journalist Anna Politkovskaya -- except, of course, that the dead tell no tales.

One of Mr. Putin's unfortunates even glowed a little from the marvels of nuclear technology.

Keep this up and America won't have to worry about who's impressing the natives in November. ICBMs carrying WMDs will put a nice finish on the American dream.

These are freak'n high rolling stakes being played here. And in the game of brinkmanship, I'm sorry to say that I don't place much hope in a White House version of Larry, Curly and Moe going eyeball to eyeball with Vladamir the Vicious.

Nor do I place much hope in the infotainment MSM having either the perspective or intelligence to forewarn the public of the dangers.

As someone suggested a few days ago, everyone should chill and read Barbara Tuchman's Guns of August. Sadly, the difference between 1914 and 2008 is that the Kaiser and Czar had scruples.

You sound like McCain. Bush famously said he looked into Putin's eyes, got a sense of his soul, and found it honest and trustworthy. McCain likes to make fun of that by saying. "I looked into Mr. Putin’s eyes and I saw three things — a K and a G and a B."

These are freak'n high rolling stakes being played here.

This is nonsense. What Russia does next to its border isn't WWIII. Now... if they occupied Venezuela and Brazil, or put their terrorist missle shield in Guatemala, I'd see your point.

At least the Russians aren't lying about promoting "democracy".

Will, I see what you're saying... but I think you missed the point.

The concern is not where Russia trespasses. It's where America may be stupid enough to trespass.

Putin knows how to play the game. He likes to play rough. He knows when his cards spell a flush and when his opponents are holding duds.

Cowboy Bush is holding duds. The danger lies in upping the ante.

Obama's ascent is remarkable -- no doubt about it. It has given me a tiny glimmer of hope that things really could change in the U.S. (whether an Obama team would be up to the challenge is another question, of course). But the reactionary forces still remain in large numbers and they are well funded and organized.

On the other hand, I think the Republicans deserve to win in November...^..^

I don't know who is going to win in November, but I already know for certain who is going to lose: "We, the people".

We are all so $crewed. . .

Obama's ascent is remarkable -- no doubt about it. It has given me a tiny glimmer of hope that things really could change in the U.S. (whether an Obama team would be up to the challenge is another question, of course).

Obama has always set my Spidey Sense tingling. Events - meaning his actions and statements - since he "won" the nomination have borne this out. He's about as much of an independent man and original thinker as the local dog catcher. (No offense to the dog catcher.) And what a wonderful thing it might have been to have a defender of the Constitution and a person of some color in the White House...

I think you need no more proof of how bad things are than the current election cycle. After nearly a decade of a criminal Executive, America still sees Obama/McCain as a horse race. With as little meaningful change as Obama offers, it's not a huge improvement over McCain in and of itself, but that Americans might actually see the difference and vote overwhelmingly to at least move a LITTLE back towards the Constitutional foundations of the nation would have offered hope.

But Americans are stupid when taken in their entirety.

And, yes, the best way for the neo-con/PNAC cadre to die a swift and ugly death would be for McCain to win. Except that those concentration camps Halliburton is contracted for might end up being built in a quick hurry if he does.


Casting my mind forward 20 years, I would find it odd that while 80% think we are headed in the wrong direction, they would vote to keep going in that wrong direction.

20 years hence, we will be deep into the effects of peak oil, we'll be viewing photos from space of an ice-free arctic sea, and the news will be about food shortages (but the commentators will not dare to blame overpopulation).

Overpopulation. I blame the Catholic church. Be fruitful and multiply. But then, that's not being politically correct, but neither am I.

This political correctness will be the death of America.
you are right, the commentators will never discuss overpopulation.

People can talk tough all the way up to the moment that the ICBM warheads start raining down. Smart beats tough if survival is your goal.

"COL. SAM GARDINER: Absolutely. Let me just say that if you were to rate how serious the strategic situations have been in the past few years, this would be above Iraq, this would be above Afghanistan, and this would be above Iran.

On little notice to Americans, the Russians learned at the end of the first Gulf War that they couldn’t—they didn’t think they could deal with the United States, given the value and the quality of American precision conventional weapons."

I don't know what rock Col. Gardiner has been sleeping under but the 'strategic event' that defined warfare for the Soviet Union/Russia was not the Gulf War but the Soviet's war in Afghanistan. The Soviets lost that war and there is no reason to think the Russians won't lose this one. Remember, the Soviets looked invincible when they rolled into Kabul, too.

While it's too early to tell how all this will 'shake out' strategically, I suspect and the end of the day Russia will be far less secure than it was in the beginning.

A big problem for Russia is an unproductive economy. They make money by pumping oil and gas, little else. Russia therefore 'looks good on paper' but has little in the way of economic infrastructure to support an effective military. They cannot certainly afford a nuclear arms race with the US or Europe. It is far more in the Russian interest to keep the nuclear genie in the bottle rather than let it out again and and bankrupt the country ... again.

The Russians are not militarily effective. Yes, the drove the Georgians out of S. Ossetia. Big deal. What forces did the Georgians possess? The Georgians come across as being woefully unprepared ... particularly for an invasion attempt. Keep in mind, most of the press/news media information comes from the Russians who make this and that claim. The 'capital' of S. Ossetia is within easy walking distance of the Georgia province boundary. The Russians make it all sound like they repelled an attack by the Wehrmacht! All the way from Germany!

To respond to an 'invasion' usually takes weeks to organize and transport men and equipment to the 'front'. In S. Ossetia the Georgians 'invade' (their own territory) on Wednesday and by Friday the Russians were responding in force. By Sunday, they were inside Georgia, proper ... HUH!!! How'd that happen?! Who are they 'battling' - The Three Stooges?!

A good question is; were the Russians preparing to invade all along? Did the Georgians attempt to preempt a Russian incursion? In Abkhazia, there were no Georgian maneuvers, yet the Russians were inside Abkhazis in force, within days. Keep in mind, neither Abkhazia nor S. Ossetia are part of Russia, they are part of an independent country, Georgia. The Russians did not even have the invitation of an aligned 'ruler' to cross the border, as they had in Afghanistan.

The Russians claim that their peacekeepers were fired upon and that this was the reason for the Russian response; this claim has not be independently verified. I suspect it is not true.

There is a lot more to all this than meets the eye. This war is just beginning and the Russians risk a low-intensity conflict that would be more damaging to them than to the inhabitants of the Causcasus region. That's right, the entire region is a hotbed and what is broken cannot be easily mended.

can't say your views of this conflict really reflect a good understanding of the historical, regional, ethnic, military and world power nuances of the situation

and with Georgia desperately suing for peace, your speculation that "this war is just beginning" seems dubious

in the various threads here on the The Oil Drum devoted to this conflict there have been links to excellent articles written by experts in the area that give a lot of useful info that aids in understanding what has and is happening

this is far more complex than: Big Russian Bear puts boot on neck of hapless pro-western Democracy - although the US media would loooove for everybody to buy into that

"can't say your views of this conflict really reflect a good understanding of the historical, regional, ethnic, military and world power nuances of the situation"

Nonsense. Russians have been trying - and failing - to gain control over this region since the time of the Czars. What, exactly, has changed?

" ... and with Georgia desperately suing for peace, your speculation that "this war is just beginning" seems dubious."

The Georgian government is suing for a cease- fire. There is a difference.

The Georgians need time, what better way, when their conventional forces are in disarray than to ask for a cease- fire?

In ther early '70's the Vietnam government held peace talks with the US in Paris while launching massive offensives at the same time. Ditto, Korea. Talks lasted in Panmunjom for almost three years ... long enough to kill at least 2 million Koreans. Talking is just another tactic.

The standard tactic for fighting a strong conventional force on your ground is to use 'unconventional' means: Guerrilla war, 'bush' war, insurgency. You use car bombs, roadside bombs, suicide bombers, small teams with rocket propelled grenades and machine guns set in ambush, along with nighttime rocket and mortar attacks on enemy bases. The Georgians know how to do this. First, you need to know where the enemy is and what his tendencies are. Right now, nobody knows that, even the Russians! The war just started last week, give it some time to develop!

Lessee ... Chechnya, Azerbaijan, Nagorno-Karabakh, Armenia ... and Georgia are all within a day's drive ... all have seen warfare since 1991, all unconventional, all have involved Russia to some degree, none has been resolved. Georgia's disputes with Russia predate the Soviet Union's formation and Stalin's consolidation of Caucasus states.

I personally would like to be wrong, bur is suspect this particular war will last a long, long time. Blood has been shed which requires reprisals! We'll see what happens ...


In 1991, I started researching and then started writing a story about the Great Caucasian Revolt, centered around Cechnya and Dhagestan, that I saw happening around 1994-5. It was to be in the form of historical-fiction, but set in the near future. Dudayev had already declared Chechnya independent and spoke of the final triumph of Shamil over Russia. The history of the region is fascinating, as is its linguistic structure, and the geography/geology is astounding. I had almost 300 pages of manuscript when Yeltsin attacked Chechnya in 1994, thus ending my project.

Regarding Georgia, histroically it cowered behind the skirt pleats of Mother Russia for defense against the Ottoman Turks. Armenia didn't exist as a state until the beginning of the Russian Civil War. Azerbaijan was a province of Tsarist Russia and was never independent until 1991. Nagorno-Karabakh's situation is well explained here. And yes, none have a history of getting along with their neighbors, which is why they've always existed as part of a more powerful state, until 1991. Aside from Nagorno-Karabakh, Azerbaijan is the most stable, and the most wealthy; oil, as we all know. The other states are rather poor, especially Armenia, followed by Georgia (you can see how much the pipeline transit monies have already corrupted the Georgian government).

Soon, the oil and gas will run low, and by 2100 the region will be back doing what it did in 1900--trying to make a living in a rather unproductive part of the world, and with Climate Change making it all the more challenging. As for Russia needing control of this region, that will fade with the oil. Russia's future is in the East; it is an Asian country that has always tried to make itself European--and failed.

Seems like you're describing the US rather than Russia.

So, CNN propagandizes the wherewithall of the affair, then announces that McCain gained the most from its propaganda.

You're a candidate for office--any office--and the media presents an out-and-out lie as the basis for the current crisis. How do you respond--to the lie or to the truth of the matter?

I would say that McCain is a captive of the Propaganda System and its preferred candidate. Obama isn't "experienced" in this type of subterfuge, so he provides muddled responses, which at bottom are no better than McCain's.

For me, the biggest message from this crisis is that the Propaganda System has too much power and must be destroyed before it provokes a crisis that destroys us all.

I think the opposite is true. Obama is the chosen one. Not for any political reason, but just because it's a better story. CNN wants it to be close - again, because that's a better story - but they want Obama to win.

CNN pays taxes too. Big Business wants to pay zero taxes. That's truly a bottom line.

True, but what does that have to do with it? Both parties are corporately owned. Which is why Big Business doesn't pay taxes - whether the President and Congress are Democratic or Republican.

You've just explained why the Propaganda System is so dangerous. It creates a false reality in order to make more profit. CNN and its fellows, no longer report news, they create "movies", which would fall into the genre of "docudramas."

For several years, one of our (DrumHeads) questions was (generally): When will the MSM "get" peak oil and start doing its duty to inform? I just called for the MSM/Propaganda System's destruction because they cannot be trusted at all on any topic of import. With several exceptions, the same sort of distortions and obfuscations made about Climate Change (and a great many other things) are being made about Peak Oil and energy in general. I don't think it wise to rely on an entity that is unreliable and moreover decietful. This was a point of dicscussion at previous ASPO-USA Conferneces, and I expect it will be again this year. We have TOD, Global Public Media and the various ASPO newsletters as media platforms; do we need a TV-based platform, like a daily 30 minute news and discussion formatted program that would air on a network like FSTV?

CNN and its fellows, no longer report news, they create "movies", which would fall into the genre of "docudramas.

Once, when vacationing in Europe, I spent several days ill in bed. To pass the time, I watched news channels from England, France, Germany, Spain and Italy - along with CNN and Fox.

Fox is in a league by itself for being bad and CNN is only slightly better.

All the European channels actually gave people enough time to talk when they were being interviewed. Also, they had onsite reporters and presented a lot of background to their stories.

TV news doesn't have to be bad.

Several of the local news stations in New Orleans are better than the national news. Much less flash, more real interviews, investigative reporting (Mayor almost declared WWL reporter Public Enemy #1 for his reporting. The Mayor refuses interviews with that station because of their tough/ inappropriate questions). Even their "fluff" stories are better than national news (this is New Orleans) and often have some true moral.

Good before Katrina, better since.

Best Hopes for Better TV news,


Good for NOLA.

TV news doesn't have to be bad.

I agree that it isn't the medium's fault; a TV is only a machine, no more harmful than an unloaded gun.

I know Global Public Media does a lot of video. What I'm suggesting is that its productions need wider exposure. If anyone from GPM is reading this thread, please provide a response. Thanks.

The problem is that American television, even the news, is "for profit." That means they end up giving us what we want to see, rather than what we need to see. Because if it's not exciting and entertaining enough, we'll change the channel.

GPM does put some of their stuff on YouTube, which is about as wide an exposure as you can get on a budget. But it's hard for serious videos to compete with the likes of Paris Hilton, or that man dressed up like Britney Spears, or the guy taking a bath in the sink at Burger King.

But at least it's "Fair and Balanced."

I don't want to debate the matter, but the Propaganda System does not "end up giving us what we want to see;" rather, it gives us a very twisted version of what it THINKs we want to see. I don't know about you or the rest of the Drumheads, but I get excited by getting an opportunity to LEARN about events, peoples in other places, etc. There was actually a time in my life when I couldn't wait for the evening TV news. But that seemed to stop when Ford pardoned Nixon.

It's a compromise between what they think we want to see, and what they think their sponsors want us to see. The later is even more distorting than the former.

The channel I watch the most is KSPS (PBS in Spokane):
- BBC News
- Nightly Business Report
- Jim Lehrer News Hour

They also have good science programs (Nova, Science Now) and some outstanding documentaries like The War by Ken Burns. American TV can be truly world class.

McCain has Israel's support. Georgia had the "support" of Israel and the US. Obama may just turn out to be a patsy for events playing out at a level beyond his ability to effect his message of so-called change. That doesn't bode well for Obama.

The first 18 mins was enough for me! Impressive presentation, lots of nice graphs, good speaker... "Proven reserves; oil 41 years, gas 67 years, coal 164 years ('perhaps up to 1000 years, when we start really looking for it'). Plus yet-to-find and unconventional. Oil; another 4.5 trillion barrels all up... Not running out anytime soon". And so on.

If the presenter's "facts" carry any weight at all, no wonder MS media has no interest in Peak Oil discussions! signed confused

I saw this post yesterday on the Drumbeat and I didn't have the time to respond but I think it's worth looking at again. The U.S. market for gasoline is down 3.7% and China (for different reasons) is down dramatically as well. Rising gas and oil prices are creating demand destruction around the globe which has been well documented on this site by some of the brightest people anywhere. OPEC is producing flat-out so the price drops seem consistent with the extrapolations of WestTexas and other posters here.

What confuses me is why would the recent fall in prices lead people to conclude that perhaps Peak Oil is decades away and we should listen to the MSM propaganda telling us not to worry?

You should have posted this comment in the thread where it started. It's confusing to answer in a different thread.

"You should have posted this comment in the thread where it started." Do you mean respond to the post in yesterday's drumbeat? I'm not sure what you mean.

Yes, that is what I mean. People who were following the conversation in yesterday's thread may not be following today's thread. People who were not following yesterday's thread have no idea where you pulled that quote from.

"People who were not following yesterday's thread have no idea where you pulled that quote from."

Hmmm! I referenced the quote to a previous post so it would be understood that it was a follow-up to that earlier post. Could I have linked that post in todays Drumbeat? I also felt that it is entirely on topic with what is today's current events: Peak Oil de-bunkers crowing in response to falling prices for crude oil.

One thing I'm curious about. What has been the relative amount of recent activity on The Oil Drum to say a month ago? Are the prices affecting the interest in Peak Oil?

It's not that it's off-topic. It's that it was discussed yesterday.

Everyone always wants to move their posts to the newest thread to get more eyeballs. But often, other people are tired of that discussion, and want to talk about something else...at least for a couple of days.

It's not that big a deal right now, because traffic is down due to the drop in prices. (And it's not just here. PeakOil.com is also seeing a drop, and Bart says Energy Bulletin is, too.) However, just as I don't expect oil prices to stay low, I don't expect traffic here to stay low. I don't want people getting into bad habits.

I think that is an inherent limitation in the Drupal system, is that old Drumbeats are pretty much ignored by users, and once a new one comes along, the old one is practically "dead." Sadly I don't know of any good replacement for Drupal to accomplish the general format that TOD currently has while still maintaining older discussions that need to continue.

Yes, I think part of the problem is we've outgrown this format a bit. The DrumBeat is the "commons," and we're facing the Tragedy of the Commons here. Everyone wants to use it, and everyone thinks it's those other people that are clogging up the thread and ruining the signal to noise ratio.

Other sites have solved the problem by allowing user diaries, but they don't seem to want to do that here. Perhaps because it doesn't really solve the signal to noise problem, it just spreads it out more.

In any case, the same topics seem to arise again and again in the DrumBeat, so chances are, older discussions will eventually be reincarnated.

I haven't thought a lot about possible solutions, but it seems that any approach would be somewhat uncomfortable. Personally, I'd like to see forums created to allow threads. The threading abilities of Drupal are truly inadequate for the types of conversations we're having now. I think a lot of discussions die prematurely because of this. When I have the time to search threads repeatedly for posts marked "new", Drupal is fine... but sometimes I just want to get back to a conversation and it takes too much effort if I only have a moderate amount of time available.

That has been suggested before, but I really don't see the need to repeat what sites are already doing. PeakOil.com has forums and a large and busy staff of moderators. LATOC also has forums and mods. If we had forums, they would be a heck of a lot of work, and I don't see how the result would be any different from what PO.com and LATOC offer.

I may be in the minority(like that's unusual), but I like the present format. Given the time lag between posts, I think Drupal works tolerably well. Perhaps it matches the way I use it; read through the whole drumbeat in the morning when it first starts, then check the "new" during the day as workload and time allow.

Of course it's now 21:30 PDT and the drumbeat is, for all practical purposes dead...maybe Drupal sucks after all? :)

I've gotten to like it, too, imperfect as it is. We're sharing a crowded space, with all the benefits and drawbacks that entails.

We can't be all things to all people. There are plenty of other sites on the net for when you want something different.

Although many times I want to track a particular thread, I find that the current system has me read/learn things I would never have come across if they were "avoidable."

That cross-pollination would be lost if the conversations were more specialized, just like what's happening with hyper-specialization in science and other areas.

Maybe the people of TOD just collectively choose to keep it this way for that reason alone.

That being said, there might be a few way to have it all.

* Place a little toggle switch ("Track this!") that sets whether I receive emails when a particular top-level thread has a new reply
* and/or a different switch that moves conversations to the top

I'm partial to the first idea. The notifications module might help with it:


Notifications would be a huge improvement! A photography site I follow has them and it makes a world of difference in being able to hold a "conversation". It often takes a few days to pull together resources or look something up. And those responses are missed.

Problems with DB due to activity

For me with very limited internet access and mostly none at all or very very slow dialup the problem is........

Say I post a comment to a thread. I don't have the access to sit there like some here posting and replying over and over and over and debating a thread in a very lengthy manner.

In my case, and I can think of others here in the same situation, I only have time and resources to reply just a few times and then the next day the thread is totally dead so my chance to rebut is therefore pretty much non-existant.

The only way around this is to reopen the subject in the current DB or just write it off.

Like for instance a few days ago in the Georgia Open Thread I posted that I fought(so to speak) in the Cold War against Russia. Another poster was very quick to inform me that "I had not dealt with Russia"(korea and china and whatnot but NOT Russia).........in fact that poster was very wrong and I was right but no way for me to prove it unless I went to someone elses house to post my replies so I just had to let the whole issue go.

Those with very good broadband access therefore can beat up on those who have very slow or poor access and they can do little about it.

Right now I am not posting on my computer but the one I can sometimes use at a location where I do some work sometimes.

I cancelled my home dialup. There was only one provider available and he was letting dialup die on the vine.

Airdale-just my experiences on the subject........BTW a lot of others got the biggie chance to give me a -19 for daring to post my somewhat conserative (and true ) views on the issue......right now those who hate Bush and Co. are having a real field day with the neocon bashing they seem to delight in. Just for the record I am a REALOCON....not a NEWCON(neocon)..always have been and always will be...

Gooooo McCain!!!!!!!!!!

And I might also add that many out here in the outback are not that active on the net so those who are engaging in the Obama frenzy are not getting a very good picture of exacly how a lot of rural Americans feel about Obama....It ain't gonna happen ppl!

Hi Airdale,

I'm very interested in

re: "about Obama....It ain't gonna happen ppl!"

How come?

What's going on with this? What is the picture you speak of?

Anybody, and I do mean **anybody**, who supports McCain is going to have a hard time convincing anyone that they are not a neo-con. What we all thought McCain was four years ago? OK. No problem. But since then he's turned into a hypocritical, self-important, ass-kissing, brown-nosing, doormat just to get elected.

And that's the good news. Look at how this guy is campaigning. There's not a shred ethical standards coming out his campaign.

How can anyone support that? How can anyone support even the chance of four more years of what we've been through with the current administration?

Are you AMERICAN or republican?

Just to be clear here: your political ideology can be, and is, separable from your Peak Oil observations. I think most here can make that distinction. That is, lose the persecution complex. It's not helping you.


What we all thought McCain was four years ago? OK. No problem. But since then he's turned into a hypocritical, self-important, ass-kissing, brown-nosing, doormat just to get elected.

The problem I see is that Obama is no different in that respect.

No third-party candidate has a chance in our system, and you have to be a brown-nosing doormat to become the nominee of either of the major parties.

I'm on record here stating Obama isn't much of an improvement, but he is an improvement over Bush or McCain, but that's like saying a 2nd degree sunburn is an improvement over a 3rd degree sunburn. But with McCain, it's the same sunburn.

I'll take the slight improvement.

The day Kucinich dropped out was a very bad day for this nation.


I think for most voters, it's a choice between a 2nd degree sunburn, and an unknown burn that could be slightly better, or could be a lot worse. You won't find out until it's too late.


If you get to read this reply.

American? My ancestors fought as officers in the Continental Army.
Others came thru the wilderness to establish homes here in the early 19th century. The county seat here is on land my GGG Grandfather was given as a military land grant for his service in the War of 1812.

Politics? Republican but vote as I see fit. Not a 'party' person.
A diehard conserative.

Read some of my posts from a couple years ago if you wish more info on my thoughts.

Your rather new here so I will give you that you haven't seen any of my hundreds of past posts since I was having personal problems and now lack of net access.

Your gnashing and wailing of teeth and use of trashy invectives portray to me that you are a fastdraw shoot from the hip type. There is a multitude of those on the net.

Good luck in your endeavors.

Those who I can't convince?

Apparently you are totally unfamiliar with folks who live in the outback rural areas of this nation. I have many many kinfolk and know almost everyone and how they think and what they say.

Therefore MY observations are mine to speak on. Its not your typical INFOSHIT.

Airdale-don't bother to reply...its already toast for this DB and I won't read it after it hits two days of age(like everyone else) and the content of my diatribe or perhaps as you would think of as my persecution complex.

Sadly, you didn't appear to understand my post and certainly didn't respond to it. You saw my question about Am/rep and responded viscerally. This is what I expect from most "die hard conservatives."

First, I have already separated your observations wrt PO, etc., from your political comments. Perhaps it was that visceral reaction that confused the issue? Second, my juxtaposition didn't really ask if you were an American, but whether you put ideology above country. You appear to. This is what I hate about political parties. I think they should be banned. The right to assemble, I think, is used to widely allow the concentration of power rather than the mutual sharing of information and the call to action **for the greater good**, which was the intent, imho. Political parties are nothing, at least in their present forms, but concentrations of power.

Like Kucinich and Paul, I believe our allegiance to our nation = allegiance to the Constitution, not a party or an ideology, but the system of values and beliefs inherent in that document. Imnsho, supporting McCain speaks to being a partisan before being an American. There were only two people in the race that represented allegiance to the Constitution, Kucinich and Paul. Anyone else is a partisan pick. So, my vote in November will go to the lesser of two evils, not to an American.

As for shooting from the hip, if you can find a **flaw in my logic,** I will accept your criticism. Otherwise, I suggest you reflect on what I actually said rather than what you reacted to.

For the record, I have spent the vast majority of my life among the gray areas and helping others find **their** way through things as they saw them. That is, I *am* a teacher and *have been* a counselor. In those worlds, there is a tiny bit of white on one end, a tiny bit of black on the other and a whole lot of gray in the middle. However, we are at a point in time where existing in the gray may well lead to massive disruptions and even threaten our survival. The gray zone may kill us. These things we have no choice in and must change with all deliberate speed:

- Living sustainably on the land

- Controlling population

- ridding ourselves of usury

- ridding ourselves of massive government in favor of the preeminence of local


- sustainable energy

- living in community while maintaining/expanding our knowledge base and learning to manage our use of technology to help us live in greater harmony with the Earth and each other rather than the other way around

There are other options, but I don't like their long-term odds. My response to you may seem extreme and perhaps it is in the sense that when the pendulum swings to the furthest end of it's arc it has no choice but to swing all or most of the way to the other. It does not, and cannot, simply stop and balance in the middle. I recognize that we are at one end of the pendulum's swing, so am willing to speak as if that were the case.

Finally, I won't say I didn't mean to offend, though true, because one man's offense is another's challenge. I did intend to challenge your statements and support of McCain as something driven by other than American ideals and support of the Constitution, and I stand by that.


Airdale-just my experiences on the subject........BTW a lot of others got the biggie chance to give me a -19 for daring to post my somewhat conserative (and true ) views on the issue......right now those who hate Bush and Co. are having a real field day with the neocon bashing they seem to delight in. Just for the record I am a REALOCON....not a NEWCON(neocon)..always have been and always will be...

Gooooo McCain!!!!!!!!!!

Airdale, look at the -19 as a badge of honour. Seriously.

You spark something in people with a number like that.

Besides, one unintended consequence with all the rude thumbs-down is that your posting gets more airtime.

When I see -19 I've gotta look!

BTW, your viewpoint whether its realcon or any other con/lib, fits somewhere on the spectrum of opinion on this site. After following this site for a couple of years, I haven't yet figured out where's its ideological center lies.

My grandfather would say, "we discover more from our disagreements than friendly opinions". He was a coal miner and as proudly contrary as a hornet. Couldn't help but like him. As much as he liked to argue, he treated people with respect.

When the rating system was first introduced, I thought "how Romanesque?" You fire something off and wait for the Colosseum crowd to react.

I've sent postings that I figured would get slammed. And then watched in amazement as the numbers rose. Other times, I've sent what I thought was a fairly safe doomerish comment and watched it go to the negative. Go figure!

As the notorious British spy Kim Philby once quipped: "Famous or infamous? Doesn't matter. I'll be remembered. I wasn't ignored!"

Airdale, you "wasn't ignored."

Keep posting. Cheers!

Thanks Zadok ..appreciate your reply
Are you Jewish? Reason for the handle?

Jewish? Nice insight. Would make a good handle for someone of that faith tradition.

Actually has to do with my vocation.

Anglican priest. Traditional high church persuasion.

Why would the recent fall in prices lead people to conclude that peak oil is decades away??

Because the alternative is unthinkable. That it's now.

For example, in the recent past building a parking lot for monthly or hourly hire was a very easy sure way to guarantee stable return on your investment in asphalt and land and fencing (that is all you really needed besides the machines to do the work). Many thousands of people in Japan turned their extra land into parking lots so they could partake in this wonderful easy money.

Only now the monthly rates and hourly parking rates are falling because people aren't using their cars or they're not buying cars because gas is so expensive. (Article in Asahi Shinbun 2 days ago)

It's an unpleasant shock to realize you're going to have to do something more than process your incoming checks in order to get a return on your money.

People love an easy life spent sitting on a comfortable sofa while watching TV. Should there be an hint this way of life may not be feasible any longer, the brain won't process the information soon. It's too painful. WHAT can you do with your empty parking lot?? And if price signals change....if there is a hint that the easy life may return, then this message is welcome!

The Lehman Bros Chief Economist piece from FT linked above is very interesting.

It is very much against IEA and many TOD posters position, that China energy demand will rebound after Olympics.

His main point is that mid-distillate diesel demand for power generation was the main driver of distillate and oil prices and that real demand destruction is happening there (i.e. structural changes removing the demand from the market completely).

Further he argues that demand response is happening and will result in efficiency savings.

IF he is right - and only time will tell - then we may have a bit longer breather in regards to prices than expected. At least probably longer than mere early fall '08.

However, I'm still undecided. Theories are dime in a dozen right now and only real world can prove some or none of them right.

What I find peculiar is how absolutely convinced Ed Morse is of his theory being correct. He gives no data to back up the actual changes in demand patterns happening now, just uses historicism as a way of proving what will happen next. He may turn out to be right, but his methodology is wanting, imho.

However, if demand does not rebound, the energy for China has to come from somewhere else (coal?). If not, then it's likely that the economy will slow down esp. within the big metal industries considerably.

The rest of the year and early next year is sure going to be interesting.

That's why Ed Morse works for Lehman rather than Goldman. Shoddy work.

Heh, I was thinking the same :)

For me late September - October will be decisive. By all account prices should start to head up at that time, barring any unforeseen consequences.

If it does not, I need to recalibrate.

Memmel's post on the extra energy needed to refine heavy sour, etc. seems important to me. That is something I never thought about. It definitely complicates the impact of the new refineries coming online, like India's Reliance refinery (coming online in October, reportedly).

Indeed Relaince refinery is starting the trial runs in September:


I wonder how many of its crude refined crude will be exported, considering that Indian diesel demand is growing by 25% a year...!!!


Watch India's NG prices when this bad boy starts up :)


It should be enough to cause some serious problems in India.

One other thing about this plant. NG prices are controlled in India and I suspect that Reliance realized that they could make a lot more money using the NG to upgrade oil vs selling it at state controlled prices. This move is effectively a trick to do a end run around the controlled NG market. And it will probably result in India being forced to remove NG price controls as this plant uses up NG India simply does not have.

They can always export the gasoline and diesel so India would be forced to either effectively take over the refinery from one of its most powerful companies or open up its gasoline diesel markets also I think they also have price controls here.

So all and all its a fairly cynical play in my opinion. Reliance stands to make some serious money off of this on all sides as price controls are dropped. I bet they have enough power to prevent India from curtailing diesel/gasoline exports. So overall Reliance does a end run around price controls.
Since the factory can produce gasoline to US specs it looks like its primarily targeted at exports to the US in the first place.

My understanding is that Reliance is also a big NG producer so the NG going into the refinery will be at cost.

I could well be wrong on the above maybe someone from India can give us their thoughts on the matter.

Would you have the link to memmel post on the matter?. thanks, Nawar.

Good point, has there been an investment house with a worse logic/record on predicting the oil market in the last 4 years than Lehman? I work with a Chinese American that runs his business in China, he indicates that transport diesel has only recently become readily available and that the pricing was roughly $4.50 a gallon. He was glad prices increased as availability did too the supply rationing resulting from the prior subsidy was a pain in the arse. Of course he can afford the higher price vs. the hassle factor. As far as the diesel price that's pretty minimal subsidy compared to what we are paying in Kansas. Did fill up here on Monday for $3.29 for 87 octane up about $.10 cents since then. I was kinda shocked last week to see gas was still over $4.20 when I was in D.C.

It was pretty stupid even by MSM standards. His China comments were ridiculous. Just today it is noted that retail sales are up 23% YOY in China. There has never been an economy that size growing at that rate, ever. When the USA economy grew at that rate, it was a lot smaller than China's economy is right now (actually just a fraction of the size). Morons like this guy talk like 9% YOY growth in an economy the size of China's is a recession. This guy is a great example of the reason why economists are ridiculed.

I think SamuM pretty much nailed it. I've noticed that Ed Morse tends to start with a belief and then focus on evidence that fits the belief. He tends to ignore evidence that doesn't fit the belief. So he gets the story sort of close, but misses enough key details to be wrong more often than he's right.

For example, he's been pointing out for a long time how the new refineries and production coming online this year are going to increase supply. He's right that new refineries and production are coming online. But he has consistently missed the story about how new projects are virtually always late, and he doesn't seem to understand how important these delays are to overall supply when you have a significant decline rate in existing production. That is a critical mistake.

I read FT all the time and I like their viewpoint, but they aren't any better at forcasting than anyone else.

I think one issue is the constant focus on price over value. Relative to the prices of other things the VALUE of oil has increased and will continue to do so. Whether its 'fossil fuel' or 'abiotic' or whatever, it's scarce compared to ... dirt!

If oil declines in price, it will be because ALL things are declining in price. Having said that, oil hasn't declined MUCH in price from its high ... and it will remain expensive, relative to other things.

If demand - that is, how it is used - remains at it is now, oil will be considered undervalued and its price MAY increase.

Inside the nation's largest oil refinery

Before a barrel of oil can become a gallon of gas, or diesel, or jet fuel, it has to be refined. It is broken down and purified under intense heat and pressure and then mixed with additives to become consumable fuel.


The world's most popular kind of crude oil, what the industry calls "light sweet," is not only expensive but increasingly scarce.

"The light sweet crudes are not as prevalent as they once were," said Forrest Lauher, the project manager for the expansion at the Motiva refinery.

Refineries believe that the future of oil production rests on being able to refine cheaper oils, what they call "nasty" crudes, which are in greater supply. This has prompted Motiva and other refiners to invest billions in expansions in order to handle this oil along with unconventional oil sources, like oil sands from Canada.

Nasty crudes have "heavy, high-sulfur, lots of asphalt kind of material in the crude. Some of them are solids at room temperature," Lauher said, making them more difficult and costly to refine into useable gasoline.

memmel, in a series of comments the other day on TOD, talked about the amount of heat needed to refine a barrel of heavy sour crude. If I remember correctly, he said you take 6 MMBTU of heavy sour crude and add 3 MMBTU of energy, ususally from natural gas since on a heat content basis it sells for less than half what oil does, and you end up with 6 MMBTU of gasoline, diesel or jet fuel.

But if you burned oil to produce the heat for the refining, you would use 1 barrel of oil plus burn 1/2 barrel of oil to refine a barrel of gasoline, diesel and jet fuel. Or in other words, 1.5 barrels in = 1 barrel out, as I understood it.

He did not comment on how that compares with refining light sweet crude.

I think there needs to be more analysis and discussion of this. For not only is the absolute number of barrels produced going forward important, but the mix of light sweet vs. sour heavy, since it appears more and more of that mix in the future will be sour heavy.

IMO, the decline in net energy is at least as important as the decline in net exports. In a sense, you could define peak oil as a decline in net energy. The problem is that it is very difficult to quantify, so there's not much you can do but wave your arms.

Because it is invisible, it corrupts many analyses of oil. For example, imagine a place that produces 50 million barrels of oil at an EROEI of 20:1. That leaves about 47.6 million barrels to run the economy. Now suppose the EROEI delines to 19:1. There are now only 47.5 million barrels to run the economy. The price of oil will rise, the economy will slow, and 100,000 barrels worth of demand will be squeezed out of the economy.

But the oil analysts in our imaginary place will blame speculators for the rise in oil. It can't be fundamentals, they will say, because oil production is the same while demand has declined. They will be clueless as to the actual cause, just as most oil analysts are clueless today.

I don't agree that these "oil analysts" are clueless. A lot of them are just salesmen-it is no secret to anyone that the ave cost of production/extraction of oil is increasing at a pretty good clip. CHEAP oil has peaked and is in steady decline-everyone who looks at the situation for 5 minutes realizes this, but a salesman can't necessarily sell this info-especially if it conflicts with what he is employed to sell.

They're clueless salesmen.

If they were any good, they'd be trading their own money.

That Galileo, Kepler, Bacon, Jung, Pascal, and Descartes--all men of the 17C--are better known than their elders in science is the kind of wrong that happens repeatedly in all fields of culture. The pioneers, the first who struggle out of the established systems and who form new and useful conceptions, appear only half right, incomplete; and their names stay remote. But they are perhaps more to be cherished than those who come after, who clear off the debris and offer a neater, more fullblown view...

The road to the present was hard and long because the old systems were good. They had consistency and completeness; only at a few points did contrary facts or gaps in explanation theaten their validity. One such fact was the odd behavior of the planets, especially Mars, which at times went backward instead of forward. Another ill-explained phenomenon was that of horizontal motion: what keeps an arrow flying so far and no farther? Does the push of the bowstring put something into the arrow? Or, as some thought, does the air get displaced around the head and keep propelling it? Lastly, why do these forces give out?

William of Occasm's principle of economy, that the best explation is the one that calls for the least number of assumptions, was an argument against Ptolemy, in addition to the awkward facts. It impelled Copernicus to revise--not destroy--the system, by supposing the sun to be the center instead of the Earth. He was thereby able to reduce the epicycles from 84 to 30. But even his scheme is not quite sun-centered. His work, published in the mid-16C after his death, proposed an important change indeed, but it was not the shattering blow it is commonly taken for; it raised new difficulties, and those who rejected it were not simply diehards refusing evidence...

The Middle Ages did not "neglect observation." They examined the heavens minutely (mostly for astrological prediction) and the earth eagerly for what it could yield of food, medicines, materials, and elemental power for use in machines. But observation is rarely neutral; it rests on pre-conceptions and pre-perceptions; and it was these that had to change. In fact, close observation can be a hindrance to scientific thought if it fastens too hard on outward appearances.

Jacques Barzun, From Dawn to Decadence: 1500 to the Present

I think that the "decline in net energy", is only, "as important as the decline in net exports", if you are an exporting country. If you are an importing country, like the U.S., then those proximal exporting countries, like VenMex, dropping like a rock, make a much more rapid impact.

I don't disagree with that. I reworked that phrase about 3 times before settling on "at least as important". In my post I was taking the view of the world as a whole. In that case, what net exports takes from the US it gives to Russia or KSA. What is lost to EROEI is taken from everyone.

"...you could define peak oil as a decline in net energy"

Which highlights even more how unique a period the past sixty years have been. Not only have there been freely flowing oil reserves near to warm water ports (Texas, Maracaibo, Ghawar), but the quality of the oil was very high.

For new oil supplies, the costs (in energy) of development, extraction, transportation and refining are all going to be much higher. Net result is less available energy to run civilization.

WT had post the other day comparing Ghawar to the largest Texas oilfield and Prudoe Bay. Basically, an order of magnitude difference in size. There won't be (almost certainly) any more Ghawars ... we are coming to the end of a very special era.

As Ghawar goes, so goes the world.

Light sweet is fantastic stuff :) As near as I can tell the input energy is more like 10-20% or about 0.1:1.0

Also you get a lot more volatile components out of light sweet these can be burned if its cheaper then buying a lot of NG. The overall volatile fraction of heavy sour oils is often a lot lower then the light sweets when you refine them.

The big problem is refineries don't break down costs in such a way that its easy to do energy analysis.

A small example is the heavy crudes often need steam heated pipes to flow this steam requirement is not formulated in terms of the energy source used although its often NG. Steam is also used to drive a lot or reactions either as a heating agent or to produce vacuum or pressure.

The list of additional energy inputs into a complex refinery vs a simple one for light sweet is itself complex :) And its difficult to discount use of internally produced volatile components.

The problem with volatiles is that they are generally used in Petrochemical synthesis with the exception of propane and very small amounts of butane used for heat. So burning your volatiles puts more pressure on other volatile carbon sources like Methane and NGL's. From the synthesis side.


Houston based Texas Petrochemicals Inc. (TPC) announced a price increase on its polyisobutylene product line. TPC provides a diverse range of quality products and services into performance, specialty and intermediate manufacturing markets worldwide. With effect from September 1, 2008, TPC will raise polyisobutylene pricing by up to 12%, depending on grade, and make adjustments to off-list pricing as contracts allow. These changes are driven by the recent rapid increase in isobutane feedstock and natural gas costs.
"The sustained high prices for hydrocarbon based raw materials continue to adversely impact our business, requiring TPC to implement an increase at this time," said Vice President and General Manager for Performance Products Sandra Davis. "We are focused on maintaining a viable PIB business that can supply our customers over the long term. TPC plans to begin commissioning its new plant in August and expects to startup in the fourth quarter, effectively doubling the capacity once on-line."

Also it has profound effects on the aluminum industry.


Peak aluminum is also at hand but not talked about.

The fact that energy costs from NG are having a profound effect on our metal industries and petrochemical synthesis industries should scare the living piss out of people. If we can't afford to make cheap plastic bags we certainly can't afford to burn oil for transportation.

Not that the demise of plastic bags is a bad thing but the fact is these products generally have a higher markup then gasoline for fuel the fact that we are seeing serious problems in this area says that total energy is already becoming a very serious problem.

Just imagine the implications of that.

Light Sweet: 1.1 barrels in = 1.0 barrels out

Heavy Sour: 1.5 barrels in = 1.0 barrels out

In a world of 100% light sweet: 85 million/1.1 = 77.3 million

In a world of 100% heavy sour: 116 million/1.5 = 77.3 million

In a 50/50 world: 49 million/1.5 + 49 million/1.1 = 77.3 million

Yeah I think as far as economics are concerned the only thing that really matters is the supply of light sweet oil. I tend to dismiss the effects of the decline of the super giants since generally they are slow and act to force the crisis while secondary issues such as small field decline probably have a bigger short term impact. Our life style will end well before we see significant declines from the super giants.

However one exception stands out and thats the decline of Ghawar which is the biggest source of light sweet oil. I think earlier this summer two things happened real production from Ghawar is in decline and KSA also stored production for a number of months probably about six months to surge some light sweet on the market in time for the US elections. Also we happened to have problems in Nigeria at the same time. The removal of between 1 -2 mbpd of light sweet production had a profound impact on the markets. So I think if Ghawar is really in decline we will see some serious price action as its obvious we cannot even come close to making up for shortages in light sweet with more heavy sour.

Every 1mbd drop in light sweet needs about 1.5 mbd in heavy sour just to stay even. But as far as I can tell all we have worldwide is about 2mbpd of spare heavy sour production if that. With the decline of Cantrell its not clear we have any real excess production. Games can and will be played with storage but this does not stop the relentless decline as we consume more then we produce.

So in any case if Ghawar is now really in decline and Nigeria continues to have problems I think we will see oil prices move to a new level as the impact of declining light sweet production is felt.
Coupled with this of course is the NG/Heavy sour connection.

If you look at price graphs we have firmly entered the exponential/hyper exponential growth phase I think it will be a drop in light sweet production that finally sends us into real post peak pricing where supply is simply not available to customers even if they have the money.

By this I mean that KSA will say sell all its light sweet and a potential customer is forced to the spot market but actually fails to get light sweet oil for delivery despite a willingness to buy at market price.

These failures will signal a new paradigm where the futures market is unable to settle some contracts with real oil. Making money is not the issue failure to deliver is.


The Maine potato futures contract, on the other hand, had been the mainstay of the Exchange since World War II. Eighty percent of the membership was in the potato business.

Problems began to develop in the potato futures contract during the 1970s as the role of the Maine crop diminished in the national market. Maine production was falling as a share of overall volume and in absolute numbers. The nature of the crop was changing with early maturing varieties, and deliveries were limited to rail transportation at a time when deliveries were increasingly being made by truck. The result was a diminishing supply of physicals deliverable against certain contract months, and the occasional failure of cash and futures prices to converge as delivery approached.

The default in 1977 on the delivery of nearly 50 million pounds of potatoes had a devastating impact on the Exchange, damaging its standing with the potato industry, regulatory authorities, and Wall Street.

“The days of potato trading were numbered, platinum was essentially the only viable commodity traded,” Mr. Marks said.

We can expect this same problem will eventually occur in the oil futures markets.

Interesting, Memmel.

We are already seeing "significant declines from the super giants," and the related problem of small fields inability to maintain flow rates. Yet, your prediction, "Our life style will end," hasn't occured.

Now I'm an Early Peakist, but have never bought into the Catastrophist's scenario because there are far too many variables to arrive at their Seldon-like predictions. I would predict our lifestyle will end because of fiscal/financial greed and mismanagement and the politics that has driven it/them, and that they are the main causes as to why the US economy was unable to adapt to rising oil and liquid transport fuel prices.

Its tough to split cheap oil and our debt based fiat currencies I actually don't try.

I agree with what your saying 100% but I also feel that the underlying cause is spiraling living costs and stagnant and falling wages. This situation driving underneath the covers by falling oil exports and production in net oil importers. The financial bubble in many ways was caused by a attempt to spur the economy as oil prices increased. They are wedded at the hip.

The problem is the recent bubble was in real estate both commercial and residential. The reason this is a problem is that as your disposable income steadily declines the amount you can spend on housing steadily declines. So you can only afford to pay less each year than the year before for housing. Attempts at monetary inflation fail since this just drives up already increasing commodity prices.

You cannot take out a low down payment 30 year loan at what is really a high interest rate of say 5-8% on a asset thats falling in nominal dollar prices. Your underwater immediately.

It literally does not make sense unless house prices are actually lower then renting.

This situation destroys the American lifestyle. People can't depend on home equity gains any more. This is outside even our current bubble and holds even as prices fall back and then below previous standards.

The majority of the financial losses in the future will be in housing and commercial real estate and they will continue and dwarf the absolute losses from expensive commodities. Along side this we will see huge losses in whats called the service economy as people focus on paying their daily bills and either lose access to revolving credit i.e credit cards are become more prudent using this credit sparingly for emergencies.

People will move back to worrying about day to day living and saving not for a house but simply to cushion short term financial difficulties. As job losses mount incomes will continue to spiral downward.

I'm pretty sure that the housing industry as a whole accounted for a lot of our excess oil consumption changes in VMT closely follow the rise and fall of the housing industry. But now that this industry is for all intents in purposes dead the remaining oil usage is weighted towards the non-discretionary side of the economy with say 10% or so related to eating out or shopping mall supply and consumerism.

The point is that a large amount of the effects or force of spiraling oil prices will really be felt in two places falling property values and lower wages. This does not directly lead to significant declines in oil consumption itself. I'm not saying that consumption won't continue to decline simply that until we have effectively defaulted on all of our debt we don't need to seriously cut living expenses.

Americans can default on debt for a looooong time.

Also understand the situation with housing. First and foremost we have an excess in housing units with about 2.1 people per housing unit. We can easily increase our living density to lower housing costs.
Taking on boarders or a roommate cuts housing costs in half plus if your renting you can move to a cheaper place. Children and older parents can reform extended families etc etc.

As housing prices fall rental rates will drop since we have basically a permanent excess of housing units.
More suburban housing will be chopped up into rentals etc.

So this is what I mean by a end of the American lifestyle. To some extent its Kunstlers end of suburbia bit really its a end to leverage by taking on long term debts.

Only when this cycle of debt defaults ends do we finally reach the point that people will seriously have to cut day to day expenses. This ending is still a long way off and oil prices can and will continue to increase steadily as consumption is fairly enlastic.

For example lets say you have a stupid 500k mortage with a 3500 dollar a month payment. You default on the mortage and go rent say a two bedroom apt for 1500 a month. This frees up 2000 a month for living expenses.
Lets say your credit cards are charged to the hilt and your payments are 400 a month and later you lose your 40k a year job and have to take a 20k a year job. At this point you default on your credit card debt freeing 400 a month. At this point lets say you also move your family 1 wife 2 kids back in with Mom and Dad till you get back on your feet. After this things continue to get bad and you say lose the 20k job and get one making 15k at this point you go and buy a small commuter car for 2000 dollars and let your truck go back to the bank saving lets say 200 a month since your Dad payed for the car.

Finally later on you start car pooling with a friend from work to save some money.
Eventually your parents die leaving the house but its not a huge windfall since you where living there rent free already in fact since your now paying the bills your carpool friend moves in paying no rent but helping with the utilities and food bill. And he helps you start a garden to feed the family.

Certainly along the way your energy usage probably dropped at each step but only at the bitter end when you bought the cheap ecnobox and started car pooling did it really drop. Otherwise all the way down you could default on debt and keep your daily energy usage basically constant.

Along the way hundreds of thousands of dollars in debt where destroyed and since a lot of other people where doing the same thing the resale values of the homes and cars was also plummeting.

This is what I call our 100:1 leverage of oil for the suburban lifestyle. Only once this leverage is removed as you can see in my example does actual energy expenditure begin to decline.

Lets say it takes three years starting today for this person to reach "rock" bottom and become a reasonably prudent energy user. The whole time oil prices can and will continue to increase until after we collectively have defaulted on all our debt.

A side example.

Consider the case of a prudent baby boomer retiring that owns their own house that they payed 20k for in 1970. The price of housing does not really matter if they decide to downsize to something smaller and half the price. Even if houses are down to 10-20k again and they sell theres for 20k and get a new one thats smaller with lower energy bills for 10k they come out ok. What they are doing is reducing annual heating and cooling costs. Sure the lost a lot in equity if you will but its really only relative housing prices that matter to them since we are assuming that they did not plan to use home equity for retirement.

The boomers that either have loans or no other source for retirement will be the ones forced to live with their children or some other family that needs to rent rooms.

Its not the end of the world if anything its simply a reversion back to something like the living standards of the 1960's or earlier. Where people did not have a lot of disposable income. You get up go to work buy your food and go to sleep and are thankful to have a job and roof over your head and get to be a pretty good gardener. Maybe your family starts to play musical instruments or gets together with others for potlucks etc. The smart kids go to college if they are lucky if not then you get really smart people back into the skilled trades reinvigorating them with insightful thinking. I think the internet will increasingly be used by our children and there children as a self education tool as education again becomes important.

Bankers will think the above is the end of the world but its really not. Sure we probably will see some social problems as this unwinds but through it all I just can't see any real problems all thats happening is people are going again be forced to life in close proximity and respect others. The end of the American lifestyle is really just the end of our ability to isolate ourselves from our friends and families.

Now the picture is not near as rosy for other parts of the world that don't have this safety net of defaulting on debt but thats a entirely different issue and not related to the demise of Non-negotiable American Lifestyle.

The end of the American lifestyle is really just the end of our ability to isolate ourselves from our friends and families.

I agree this will occur. But there is still the upheaval caused by the ending of one energy-based political-economic paradigm and its replacement by a different energy-based political-economic paradigm, and that it's this upheaval that is the genuine crisis.

Like I said this natural descent by reducing housing cost and debt loads is only viable in the West.
Its not a option for the rest of the world or for the poorest members of the west who are already on the lower rungs. Surrounding this fairly slow decline of Middle class to what we consider lower class living standards is a sea of people falling into desperate poverty. Relatively middle class people able to live as I outlined above will be doing so in more of a traditional third world environment with shanty towns of true poor. Sort of a hybrid second/third world.

But this is itself not the end of the world at least in the wealthy nations. What matters to a large extent are the poorer countries such as Egypt etc. Thats where the real problems will be. The western nations outside of the growth of a true poor class and probably a move to more militaristic governments to control the poor will still be relatively well off. And on the economic side we should see the real economy rebound some as the new poor in the west can compete with Chindia for jobs coupled with the impact of transportation costs.

I've said a few times that ELP like nuclear power is apolitical in the sense it can happen in a good way or a bad way but we will economize localize and produce we have no choice the only choice we have is to try and maintain a reasonable quality of life for some by being aggressive about it.

The third world will be forced to fend for itself and solve its own problems. I think that with work they can at least keep everyone fed if nothing else but they will have to figure it out on their own. Soon we won't be able to take care of ourselves much less anyone else.

I think how you laid out the "personal descent curve" is very good.

However, it seems to me quite gradual and I suspect many people even here in the U.S. are going to be thankful they have food. Decent shelter (as opposed to living in a shantytown or slum) will be a bonus and a job will make someone wealthy, comparatively. Crime will go up significantly, too, though you accounted for that with your comment on social problems.

For a number of reasons, including that the populace is not really conditioned for survival in the way it was prior to the Great Depression, I'm open to a "snap contraction" occurring in which everyone is surprised at how quickly things fell apart, with people literally walking around not knowing how to respond.

Food is already a problem for some Americans. There are articles every day, about how food pantries are struggling. More people are asking for help (including lots of people who never needed help before, or who had been supporting themselves for years, but are now being forced to return to the food pantries). They're having to turn people away. The higher food and fuel costs mean their clients need more help, the pantries can't buy as much food as they used to, and their donors can't give as much as they used to. They're really worried about the back to school season. That's traditionally a difficult time of year for families, because of school expenses. (Which makes me wonder if some families will simply give up on school, because they can't afford it.)

The new clients they are seeing are often "working poor" - people who make only $15 or $20 too much to qualify for food stamps.

I don't think parents will give up on school but I think we will see a return of the poor kids dressed in second hand clothes and handmedowns. Growing up poor I did notice that even in the poorest areas of LA/Orange county the kids wore very nice "hipster" clothes. Often the only source of pride for these kids was the nice cloths there parents where able to buy. Also of course all of them seemed to have cell phones even if they where cheap prepay ones. Inside the homes I suspect cable tv is prevalent.

This will eventually go away and we will be back to what I saw in the 1970's.
From personal experiences the big problems these kids had was that often the parents could not afford to wash the cloths at the coin drop laundry and worse they where unable to bathe when the water was shut off.

I was not one to tease but these kids did get teased a lot for being smelly. All of us where pretty poor so getting something nice was a big thing but not having something nice was really not a big deal.

I can't imagine how things will play out given how kids are so hooked on Hollywood glamor crap.
Its going to be interesting and now that I'm older and have a daughter I realize that having to wear old smelly clothes and sometimes missing a bath is probably devastating to girls. Personally I did not care if I had a bath or not as a bit of a wild kid but I have vivid memories of some of the poorest kids being teased for smelling.

Anyway its "little" stuff like clean clothes and a bath that I recall having the biggest impact in poor children for whats its worth.

My mom sewed all my clothes and cut my hair when I was a kid. Which made me a total geek; I looked noticeably different from other kids. It was probably worse for my younger sister; she had to wear my hand-me-downs. We were also looked down on for our cheap, homemade lunches (no bags of chips, cookies, etc.).

But it's transportation that I think will be the biggest issue. The spike in fuel prices is killing schools, forcing them to cut bus routes, even go to 4-day weeks. A couple of years ago there were some articles about a school system in California that simply stopped sending buses to the farthest neighborhoods. They happened to be inhabited mostly illegal immigrants whose parents didn't have cars, so once the buses stopped running, the kids couldn't get to school.

I got this from CalculatedRisk.


Here is housing prices on about the same scale.


My point is housing slow downs correspond closely with drop in demand and recessions. The size of the current housing bubble is pretty obvious but notice a lot of that was price inflation the only resulted in steady growth in demand from 1992 to 2006. Demand turned downward in 2006 EXACTLY at the peak of the housing bubble even though we had experienced high oil prices for several years. The housing industry is a huge industry that used a lot of oil its effectively collapsed.

And finally note that the depths of decline in the past reached at best 2.5% I've said a few times that the housing industry has shrank close to its nominal bottom it will shrink a bit more of course but we can based on historical data expect at most a 0.5% or so additional decrease.

I expect at this point that demand will become highly inelastic again with price just like it was before the housing industry collapsed. All that has happened as far as demand goes is we have lost the housing industry just like in past strong recessions and the resulting oil used. Its not all that unreasonable to expect the housing industry to use 2-4% of our nations oil supply.

We don't really have another industry to collapse to reduce demand and for some time personal reduction in consumption will be erratic at best until gasoline is simply to expensive.

2009 marks the year that the American Way of Life makes a last ditch effort to resist moving to a more reasonable lifestyle so we can expect strong increases in price next year and into 2010 before people are finally forced to seriously modify their life styles either because of bankruptcy and job loss for most or prudent behavior of a few.

I don't think we will see this seriously occur before oil hits the 300-500 dollar range per barrel. So we can expect demand to remain highly inelastic over the next couple of years. It will literally take that long before people have either reduced debts and spending or defaulted and are finally squeezed enough just staying alive to start making serious changes. Between now and until we hit this 300-500 dollar range I don't see any real constraints on how high the price of oil can rise nor how fast. We could increase 50-70 dollars over a matter of months. I'm not saying this will happen I'm just saying nothing prevents if from happening. I don't think a spike like this will occur until its obvious that we have reached historical demand contraction levels and demand remains strong despite the price of oil.

And finally note that the depths of decline in the past reached at best 2.5% I've said a few times that the housing industry has shrank close to its nominal bottom it will shrink a bit more of course but we can based on historical data expect at most a 0.5% or so additional decrease.

I'm thinking not even close to a bottom.


Whitney's idea of "real" is pretty drastic. Whereas most banks are estimating 20% to 25% peak-to-trough declines in housing prices, the Case-Shiller housing futures traded on the Chicago Mercantile Exchange portend a much steeper 33% decline, she points out.

In fact, Whitney thinks the actual declines will be worse - closer to 40% - because of the loss of the securitization market and the paucity of mortgage credit available. And that means more defaults: "The consumer's ability to refinance his way out of trouble has diminished greatly."


In the US, Alt-A, Option-ARM and prime mortgages are starting to default in frighteningly large numbers.

...No matter what is offered to Fannie and Freddie, they are both so deep in the doghouse that they must cut their purchases of mortgage loans. They cannot take on more risk.

...That means no-one is left to purchase loans, in no shape or form. Banks and lenders can’t keep them on their books, because they in turn also cannot take on more risk. ...

...The only correct way to summarize the state of the real estate industry, in the US, and the UK and soon in many more countries, is "collapse". 90%+ of builders and lenders will go the way of the dodo.

...There remain trillions of dollars in unaddressed gambling debt problems in vaults around the world. Some of them are housing related, but many more are not.

...an estimated $1.2 trillion and $6 trillion have vanished from Britain's and America's respective total wealth. In one year.

...And the losses don't just continue unabated, they get worse. This cannot go on much longer; something's got to give.


Mortgage payments for Alt-A and option-ARM loans won’t hit the height of their scheduled -sharply upward- resets until 2010-11. Hence, unless home prices start rising soon and fast, these resets will drive up foreclosure and repossession numbers to levels even much higher than they are today.

You can’t have it both ways: either prices go up OR sales go up. There will be no miracle that suddenly replenishes either people’s incomes or banks’ ability to lend, or both.

The only possible conclusion that does not include a fairy tale or divine intervention, is that home prices will keep falling for years to come. If they stay high or even rise, there will be no buyers. And without buyers, prices will fall.


Total disaster

It is impossible to know for sure how many of the people who are now walking away from their homes could have gone on paying their mortgages.

But Professor Nouriel Roubini of New York University, one of the first economists to warn of the dangers of the American house price boom, believes the number of people positively choosing to walk away is growing rapidly.

"This is becoming a tsunami of voluntary defaults," Professor Roubini says.

"The losses for the financial system from people walking away could be of the order of one trillion dollars when the entire capital of the US banking system is only $1.3 trillion.

"You could have most of the US banking system wiped out, so this is a total disaster."


We are already seeing "significant declines from the super giants," and the related problem of small fields inability to maintain flow rates. Yet, your prediction, "Our life style will end," hasn't occured.

Clearly your idea of what "significant worldwide decline" means and my idea are vastly different. I would say we have experienced "halting" or "mild" decline.

When we reach what I would call significant then we are in big trouble, in my view.

(click to make larger)

Is Prudoe Bay considered a supergiant or just a giant? How about the East Texas field? The vast oil complex in Southern California? Cantarell? Burgan? The North Sea complex? The massive onshore province around Baku?

I know there's a definition of super giant out there. Ah, wikipedia: "The world's 932 giant oil and gas fields are considered those with 500 million barrels of ultimately recoverable oil or gas equivalent." Ah, other definitions have supergiants as 5 Billion or more recoverable barrels. As Colin Campbell is fond of saying, an oil field starts its decline as soon as it's tapped. So, by his definition, all supergiants are in decline.

Anyway, you should know by now that I know it's all about the flow rates, and as exhibited below, also about the energy quality of particular oil types. IEA is saying their decline rate is 5%, so approximately 1,368,750 barrels of new oil must be brought online daily to make up for that rate of decline (assuming 75 Mbpd of crude & C+C). I'd say that's a significant rate of decline (over 160 Billion$ at today's price).

"A consistent pattern in our response to new [situations] is we simultaneously overestimate the short-term impact and underestimate the long-term impact.” - Roy Amara [paraphrased]

In the end, does it really matter how it happens.

IF liquid fuels mean significant long period of severe reduction in economic activity (esp. global) and ability to increase debt and money flow in controlled manner, then it's a bad situation from either case (finance economy based on debt/money or real world activity based on energy).

Let's hope it doesn't come to that :)

Hmm.... Lets try with crude oil production #s, not all liquids:

100% Light Sweet 74Mbbls = 67.2727....
100% Heavy Sour 74Mbbls = 49.3333....
50/50 37Mbbls L/S = 33.363... 37Mbbls H/S = 24.666... = 58.03Mbbls


Thanks for the link and discussion below about the significance of the above numbers.


I suggest to take a look at the ENI world oil & gas review production quality figures -->


Very detailed time series on the production division between 10 different categories of crude (from ultra light to heavy & sour) from 1996 to 2007.

I've actually seen this before. With 5mbd of unassigned production I don't know what to make of it.

You can see the trend is increases in production of heavy sour oils with light sweet at least flat but like I said its unclear to me how the unassigned production fits. My opinion is that with that much unassigned the only thing your sure of is that the heavy/medium sour oil production is whats increased over the last several years. Even with this assuming demand has remained high and effectively increased then by default the small increases in light sweet over the past few years are effectively a peak. Production of light sweet is lower today then it was in 2000 although its slightly higher then 2002-2006. I'm just not convinced this table is actually that accurate given the amount unassigned 4377/73957 == 6% as a reasonable error term then you would have 12432 +/- 745 the lower bound is lower then any reported number for light sweet. So at best this table says light sweet production into 2007 has been about flat.

But the relative percentage of light sweet vs heavy/medium sour has seen a big change.

1996 12649/(12649 + 977 + 4854) = 68%

2007 12432/(12432+2029+5855) = 61%

I think this is significant I'd have to dig out my error propagation stuff but if I recall the error in the difference of the two percentages is less than 6%. Given that what looks like a 2mbd or so loss of light sweet earlier this year sent prices up about 30% and thats a 2% change then the decline of light sweet is making a significant contribution to prices. In fact this probably explains why experts kept predicting 70 dollar oil etc when we where seeing 100. However you look at it we don't have any more light sweet then we had in 1996 and we probably have less while the economy has grown for 11 years For all intents and purposes we have a effective decline in light sweet if not a real decline. Peak light is in my opinion real.

Now if Ghawar is really in decline and it did start back in about Nov of 2007 then we will see real declines in light sweet production from 2008 onwards. This alone should easily ensure we see 200 dollar oil
as absolute and noticeable declines in light sweet production may have set in.

Next of course if I'm right about NG prices causing problems with refining heavy sour oils then we are going to be in a real pickle with moderate declines in light sweet production. The combination seems to really magnify the pricing pressure on light sweet. If we see the strong increases in NG prices I expect as we continue to ramp up heavy sour production and if light sweet is in decline you have a nasty feedback loop forming. Heavy sour refining pushes up the price of NG which makes light sweet more economic but we are effectively running out of light sweet so attempts to buy light sweet pushes up the price of the oil indexes which are used to discount sales of heavy sour pushing up heavy sour etc.

The various spreads of NG, heavy sour, light sweet are in a nasty feedback loop that causes prices of all to rise until it break apart or the spreads stabilize. The problem is that these interdependencies prevent and real downward drop in prices the only thing that can really break it is a big slug of light sweet oil on the market.

I think we actually got that recently. Effectively the Saudi's for all intents and purposes speculated in the oil markets using about 30 million barrels of light sweet to turn the market for a brief period of time. I'm pretty certain we will never see it again.

I wish we could get reliable breakouts of light sweet etc on a monthly basis.

Next it looks like the real belt tightening in light sweet hit about Nov of 2007 as far as I can tell so it will be this years numbers that will be the most telling.

Rembrandt, thank you very much for this data source. I had missed it earlier.

I did a couple of quick graphs.

To me it doesn't look like the share of better quality crude has change dramatically in the past years. The trend has been slow and steady for the past 11 years:

In relative terms:
- bit less light API and a bit less sweet (low sulfur)
+ more Medium API and Heavy API
+ more medium sour, a bit more sour (highest sulfur)

In absolute terms (not graphed):
+ all categories regardless of API or sulfur content have grown steadily in their production quantity

Then again, the changes are not so big and I didn't do std var comparison.

Based on those numbers alone AND assuming category 'Unassigned' isn't masking some significant changes between categories, I would not see a reason for immediate concern in terms of crude oil quality changes.

What say you?

Summary of Weekly Petroleum Data for the Week Ending August 8, 2008

U.S. crude oil refinery inputs averaged 14.8 million barrels per day during the week ending August 8, down 216 thousand barrels per day from the previous week's average. Refineries operated at 85.9 percent of their operable capacity last week. Gasoline production fell last week, averaging about 8.9 million barrels per day. Distillate fuel production decreased last week, averaging 4.3 million barrels per day.

U.S. crude oil imports averaged nearly 9.7 million barrels per day last week, down 538 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 9.9 million barrels per day, 100 thousand barrels per day below the same four-week period last year. Total motor gasoline imports including both finished gasoline and gasoline blending components) last week averaged 785 thousand barrels per day. Distillate fuel imports averaged 136 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.4 million barrels from the previous week. At 296.5 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories decreased by 6.4 million barrels last week, and are in near the lower boundary of the average range. Both finished gasoline inventories and gasoline blending components inventories decreased last week. Distillate fuel inventories decreased by 1.7 million barrels, and are in the upper half of the average range for this time of year. Propane/propylene inventories increased by 2.0 million barrels last week but remain below the lower limit of the average range. Total commercial petroleum inventories decreased by 5.4 million barrels last week, and are in the lower half of the average range for this time of year.

And here is what they were expecting:

Weekly data from the U.S. Energy Information Administration (EIA) was expected to show crude stocks had fallen by 200,000 barrels after Tropical Storm Edouard disrupted imports, according to a Reuters poll of analysts.

Gasoline inventories were also expected to shrink by 2.1 million barrels and New York RBOB gasoline futures led the modest gains on the oil market.

Distillates stocks, which include heating oil and diesel, were forecast to rise by 1.9 million barrels.

So people thought that a $30 drop in crude
would bring in more supplies?


The only surprise is that people are surprised.

Nothing changed in the last month, except for
massive, blatant sell pressure/manipulation,
frantic de-leveraging of positions.

The BTC used to move 1% of the world's oil.

not anymore. Unless with Russia's permission.


Even more interesting - miles driven in the U.S. keep falling, at least per CNN http://www.cnn.com/2008/TRAVEL/08/13/american.drivers.ap/index.html

Admittedly, there is some lag there, but falling gasoline supplies AND falling miles driven? Either something is not matching up (quite possible, to be honest - the numbers aren't exactly precise, and aren't exactly in matching time frames), or maybe flows are changing - for example, perhaps Mexico require more gasoline imports than in the past?

The snap the whip game has probably started in the last few months - where old assumptions will hang on longer than the new reality that replaces them, only being discarded as an even newer reality appears, obscuring the picture again.

My question ... and this is b/c it's a mystery to me: is there an agency, corporation, or special interest group that collects data on the # of miles driven by Americans and then feeds it into the MSM press corps?


Sure. I suspect that are statistical wonks out there for whom such data collection would be inspirational. However, how do they gather such stuff? How reliable are they as a source?

Curiosities abound!

The EIA does. Near as I can tell, they do it via survey. Ask a "representative" group of people how much they drove, or ask them for their odometer readings at the beginning and end of the time period in question. Then adjust it in typical pollster manner to apply to the entire country.

The way they generate the inventory report is similar.

Thanks Leanan. You're a great source for info.

Have you ever thought about putting together a Peak Oil Trivia Pursuit game? Just a thought.

Still leaves me wondering, if such data is by way of survey, who do they survey? Is it a reliable reflection of reality? Or mood?

Such factors, I would say, could affect the integrity of the data.

Curiosities are still killing this cat. Thanks again, Leanan, for the satisfaction to bring back at least one of its nine lives. Cheers!

Have you ever thought about putting together a Peak Oil Trivia Pursuit game? Just a thought.

Never been a fan of that game. I'm waiting for the peak oil version of Civilization/Sim City. ;-)

I have no clue how reliable the survey information is. I don't have much faith in polls about anything, really.

I recall hearing that the inventory report is calibrated four times a year. The survey is adjusted somehow so it matches an actual count. When these weekly reports are issued, traders tend to react to them more, because they are seen as being more accurate.

... or maybe "Grand Theft Oil."

Frontlines - Fuel of War?

Too bad it's a 1st person shooter game - the trailer really hits all the right points, and with the latest fun in Caspian region, fairly prescient.

I'd have a real interest in Fuel of War if it were a strategy game of taking over the last fields in the Caspian instead of just blowing people away

In the final days we will all be first-person shooters, right?

No, that will be an interim condition. In the final days we'll all be first-person throwers and bashers.

Never been a fan of that game. I'm waiting for the peak oil version of Civilization/Sim City. ;-)

The genre of games known as "real-time strategy" has modeled the abject brutality of resource depletion for about a decade. Command & Conquer, Warcraft, and Total Annihilation all started with peaceful coexistence as resources are explored, tended to have "a moment" during which all the players realize roughly the ultimate scope of resources, and ended very violently when resource flows ended.

Trivial Pursuit game. Sorry for that bit of "Trivia."

Here's the link to the FHA Traffic Volume Reports:


Purely anecdotal argument, but here in my corner of the world I feel as though there are far fewer cars out on the road outside peak commuting hours.

Anyone else out there see this in their locality?

Purely anecdotal, but yes. ;) I've noticed it marginally here in the Detroit, MI area, and I've noticed it moreso in the Fayetteville, AR and Little Rock, AR areas. I've also noticed an increase in motorcycles as well, although that may be skewed thanks to the warm weather. :)

In Vegas and LA (and on the road between the two) I'm seeing a sharp increase in the percentage of SUVs on the road and in parking lots. The populace is clearly switching back from their small cars (The price of gasoline has dropped from $4.29ish to $3.85ish in Vegas).

I really haven't noticed a decrease in rv's and campers this summer in the inland northwest. In any event, the #'s of motorhomes seems to be increasing this last couple weeks.

Maybe it's go now or never, maybe it's worthless anecdotal observations, but I always thought it silly to forgo vacations based on fuel price rise. The increase in fuel for a camper on a pickup is a small part of the cost, esp on 200 mile roundtrip to the mountains. Seen alot of Canadians, and they tell me gas is 6 for them, so fleeing south saves some money. The big decrease has been on the lakes, MUCH less boat traffic and water skiing.

Gas is 4.19 in town, 4.15 at the Rez 2 miles out. Makes me laugh to see the vehicles run out for 10 gallons and their "saving".

According to this article, RVs aren't selling well. But the problem isn't gas. It's financing.

Yup. I was going to plot traffic times, then realized the powers that be have re-done the roads so my data would be suspect.

The drop in US gasoline inventories equates to only several HOURS worth of use, and thus does not accurately reflect overall demand. Rather, it reflects the vagaries of day-to-day fluctuations such as fog in Houston, a fire in a refinery, etc etc.

Not true. This is the third week in a row of significant drops in gasoline inventories. This is not a small fluctuation.

Moe - I was always of the opinion that as prices rise, people start putting in more $5, $10, etc amounts and run with a 1/4 tank. But, when they have a $.50 drop, it is fill it up and they run with a tank that averages 1/2+. Am I wrong?

Expat - IMHO it's THE ECONOMY.

People can not pay for gas @ $2.00 yet alone $4.00.

People can not pay their mortgage reguardless of the terms.

People can't buy cheap STUFF even at a loss to retail.

Global economy is tanking big time but it can't/won't find it's way into the MSM.

souper - I guess that is why everyone has stopped smoking, stopped going to Starbucks, stopped using I-pods, stopped buying I-phones, stopped going to movies, stopped their infinite minute/texting cell-phones, stopped getting their 16 year old kids cars, starting making their kids get summer jobs, stopped driving them around the state to soccer tournaments, etc., etc., etc. Right, it is the economy!

What will it take to raise the oil market? This is a very bullish report. About 6M barrels below expectations. So far we have seen less than $2 rise on this.

That and Russian irregulars on the rampage in Georgia...

That and Russian irregulars on the rampage in Georgia...

Please. you're reading MI6 AgitProp.

"They shot their brother Russian peacekeepers, then they finished them off with bayonets, so we are not going to see them there any more," said Dmitri Rogozin, the Russian ambassador to Nato in Brussels.

"This is not something that just happened — it has been
unfolding ever since Putin took power, and with growing intensity in
the past five years. Part of it has to do with the increase of Russian
power, but a great deal of it has to do with the fact that the Middle
Eastern wars have left the United States off-balance and short on
resources. As we have written, this conflict created a window of
opportunity. The Russian goal is to use that window to assert a new
reality throughout the region while the Americans are tied down
elsewhere and dependent on the Russians. The war was far from a
surprise; it has been building for months. But the geopolitical
foundations of the war have been building since 1992. Russia has been
an empire for centuries. The last 15 years or so were not the new
reality, but simply an aberration that would be rectified. And now it
is being rectified."


Russia has been very forthrite and judicious
with it's statements.

It has said repeatedly what it would do after
Kosovo, after NATO lied about Eastward Expansion.

Winter now approaches. I wonder where Georgia
and the Ukraine, Poland and the rest of NATO
think their gas will come from.


The American press is dutifully fulfilling its role as the new Pravda. Anyone who gets his news solely from the MSM has a grossly distorted view of what's going on in the Caucasus.

I can't seem to shake the feeling that this is a diversion. engineered by Bush & Cheyney, maybe not to distract the Russian so much as the American people. I hope I'm just being paranoid, but I've learned that if you expect the worst out of Bush & Cheyney, you will rarely be disappointed.

"I can't seem to shake the feeling that this is a diversion. engineered by Bush & Cheyney,"

That would explain the cyber attack on Georgia comming out of the US prior to Georgia attacking.

Perhaps they believed they were being attacked?

Yes, it could be a case of attempting to create plausible deniability for certain elements within the Beltway.

Note that the story on the origin of the cyber attacks is a bit muddy. Here is a Chicago Tribune posting of a NY Times article by John Markoff.

The attacks were controlled from a server based at a telecommunications firm in Moscow, he said. In contrast, the attacks last month came from a control computer that was based in the United States. That system was later disabled.

However, the NY Times version of the article (same author) states that attacks on Saakashvili's web site came from a U.S. based server.

Researchers at Shadowserver, a volunteer group that tracks malicious network activity, reported that the Web site of the Georgian president, Mikheil Saakashvili, had been rendered inoperable for 24 hours by multiple D.D.O.S. attacks. They said the command and control server that directed the attack was based in the United States and had come online several weeks before it began the assault.

Where the server was really doesn't matter. The people actually controlling the computer can be anywhere in the world.

Understood, but most folks (not necessarily TODers) are unlikely to understand that.

Very true, but without further evidence it should NOT be assumed that the same people took control of two different servers to stage these attacks.


Georgian villages burned and looted as Russian tanks advance

I based my comment on this eye witness report by a UK national journalist. I do not pretend to know the truth of all the propaganda. It does look like Russian military activity in contravention of the ceasefire. There is clearly a lot of ill will on both sides, things and people are getting blown up. Pipelines might get in the way...

"It does look like Russian military activity in contravention of the ceasefire."

What ceasefire?

""No dialogue is possible with the current Georgian leadership," said the Abkhaz leader, Sergei Bagapsh. "They are state criminals who must be tried for the crimes committed in South Ossetia, the genocide of the Ossetian people.

"We have received proposals for some sort of contact from the Georgian side. But we see yet again that they fail to grasp the meaning of what happened in the early 1990s [when Abkhazia and South Ossetia broke away] and they do not understand or do not want to understand what is going on now." Bagapsh claimed women and children from villages inside Georgia were actually heading into Abkhazia to seek refuge."

Just keep thinking about Kosovo and the double standards
of the US/EU here.

Georgia talks peace while still waiting on US "Humanitarian aid".

CNN-Help on the Way- with the DoD's Barbara Starr enlightening us.

Who will get this aid? Not Ossetia.

It looks like the humanitarian aid is going to be delivered by US troops -- another deliberate provocation from the Shrub.

really really dumb - sending US forces anywhere near the region is just idiotic at this point

as was airlifting Georgian troops out of Iraq and back home to fight the Russians - I keep being amazed at the idiocy of this administration

I shouldn't be, however

I'm wondering what sort of agreement exists between the US and Russia, at this point? Has Bush agreed to limited flights? Has the US guaranteed that no arms are being shipped? What happens when the Russians attempt to monitor or block delivery?

"What happens when the Russians attempt to monitor or block delivery?"

Tbilisi airlift? South Ossetian Missile Crisis?

had an uncle who during the Cuban missile crisis had to actually load nuke warheads on ICBM's - as he left the base, he saw something roar into the sky and was convinced the end was near - turned out to be a satelite heading up for a look - but must have really been a scary moment

I'd rather not have repeats of those days - from what we hear more recently of the history of that time we were a LOT closer to the balloon going up than most people knew

There were reports in detail by Saturday that Cossacks were jumping on trucks and heading south into the fight. Cossacks were interviewed about it. They see the Ossetians as their kin and were likely to go even without Army help - which they got. The problem is that Cossacks are natural-born raiders, operating without central control. Russia had a winning battle plan that required the ability to stop on a dime to obtain a favorable cease-fire. That means total control over all forces. How did Putin intend to get his irregulars to do that?

To those who gave me the neg 2.

You can now tell me why you think that the US hadn't planned this
for months.

That Immediate Response 08 had concluded only weeks before.

That the US/Georgia Grad missile attack in the middle of the night
on Tskhinvali was something other than a war crime.

while your potus was doing a reprise of his Booker Elementary/
"what, me do something?" role in Beijing.

I look forward to it.


Irony of ironies... The US "advisers" participating in "Immediate Response 2008" were from the Georgia (US) National Guard. They are back home now, but it must be weird for them to see all of this being played out.

"What will it take to raise the oil market? This is a very bullish report."

Yes, the oil market seems to be incredibly non-responsive right now, like it is in a state of shock. Where's Moe_Gamble? Moe?!? What's your take on the past month in oil prices?


Wolf in YVR BC

When the price crossed roughly $138, we had a surge of speculators buying. Speculators are always weak hands--when they're driving prices, it's always a pain in the neck, because it can't last long and can reverse hard without warning.

The producers started selling like crazy over $145 or so, and I'm pretty sure the reason was that China sharply decreased buying in July, basically because of the ongoing price controls, and because the gov't there elected to close down factories and restrict driving during August rather than deal with energy issues in a long-term way. No way the price can keep going up when these guys are selling. Then, again because China wasn't buying and specs had pushed prices up too high for conditions, we added some inventory at a time when refineries etc. want to keep inventory at a bare minimum.

When the price started falling, all those specs who bought in at $138 panicked and had to get out when no one was buying. Plus, now the commercial buyers expected a build in inventory from the spec long pile-on, and so they were going to sit tight for as big of a price drop as possible before buying again.

Then, in the price tumble, you start triggering panic among specs who are short the dollar. They start bailing out, causing a panic rise in the dollar. This causes even more panic in those who are long oil.

Then we started hitting the numbers where system speculators were getting signals to short oil. Once you hit that point, forget about it. You have a big speculator pile on into shorts, driving the price even further down. And China's still not buying, even at the lower prices, because they still don't know what the gov't policy is going to be.

As I type, the price is over $117 again, and it looks like the spec shorts are starting to panic.

So, to summarize, I see the entire move above $138, and the entire move below around $122, as nothing but speculator pile-on. But ultimately the spec pile-on was caused by China's price controls and the failure of China to set a realistic long-term energy policy.

Moe--Thanks very much for a very informative post!



The price has to cross key numbers to hit the stops and sell signals of speculators who are short. And the first time you hit a lot of key numbers a lot of speculator longs who didn't sell on the way down will sell now, in relief that they're able to get out. So the climb back up is often messy. China is still screwing around and avoiding decisions on whether to raise prices or retain tax cuts, so real buying still can't get underway from there.

So would you say we are still waiting for the "buy signal" you are looking for?

I'd say the market has been in the process of making a buy signal this morning. I have to see the close though.

Okay, MacDuff, I've watched the close. There's a glimmer of a buy signal, but I'd classify it as weak. I did not get my preferred buy signal. I think we're probably in the process of putting in a bottom and making a stronger buy signal. There are actually some stronger buy signals in various energy stocks than in oil itself or in natural gas itself.

The problem is that commercials have already been steadily closing out short positions and adding long positions at lower prices. That leaves us waiting for either China or speculators to drive up the price. Many speculators won't be closing out short positions until we hit significantly higher numbers. They are still expecting the price to crash to $80.

And believe me, there are still boatloads of spec longs just waiting for the price to get anywhere close to $120ish, and $122ish, and $125ish, etc. so they can unload and forget about oil. It's hard to get a nice upward run out of people who've been scared as badly as this.

So, assuming China keeps stalling around (probably a good assumption until at least after the Olympics, and maybe well into fall) and there's no hurricane or bombing to give a good scare to spec shorts, this could take some time.

Maybe we'll get a stronger buy signal later this week.

Thanks Moe!

Always appreciate your comments on the market.

About 1.25 million b/day of world oil exports were knocked off-line in Georgia for XXX days. 3% of world oil exports.

Some, but not all of this may be redirected to Russian oil export ports & pipelines (if Putin wants it to).

I see signs that Putin is trying restrict supply to raise world oil prices (others talk about it, the Russians do it!).

Over a million b/day may stay off the market for many months.

Has the market figured this out yet ?


Checks NYMEX up its starting to figure it out.

And if I'm right and KSA/OPEC emptied its storage for this surge to drive down oil prices for the election I'd say someone is going to be caught with its pants down on this one. Or maybe robe up :)

All we need is a decent hurricane in the Gulf and life is going to get verrry interesting.

Lets see how the Saudi's dance on this one. Whats really interesting is the Russians probably know in a fair amount of detail the real status of Saudi production and storage. So I'd have to guess that given the recent surge in oil shipments that they know that no more will be coming. If the Saudi's could nullify the effect of the pipleline shutdown then the action is not nearly as effective as if the Russians think the Saudi's have nothing left. This is not required for the action in Georgia but if its true it really fits into what I think I've figured out which is KSA saved up for a one time surge for political reasons and future exports will drop off as they refill storage to safer levels. You can see how more potent the Georgian action is if I'm right so I wonder ...

Your comments suggest a slightly different perspective on the crisis.

Suppose that the Russian's goal was to keep the pipeline off line for a while. While this would likely drive up the price of oil, it would also put pressure on KSA to further increase their exports. If the Saudis can deliver extra production, then it would appear that they do have a cushion available. Then, those of us on TOD who think KSA has peaked (including Matt Simmons), would be proven wrong. If the Saudis fail that "test", the Russians would be in a much better place over the longer term as they would be much less inclined to debate price with their customers in Europe and Asia.

Could this little "Police Action" in Georgia actually be a "put up or shut up" test for KSA?

E. Swanson

So this little Russian move has provided us with a little validation experiment?

And now, the US is sending in our military for "humanitarian aid". Interesting that Georgia should warrant so much attention from two huge superpowers at this point in time.

There's only 2-3 weeks left in the "summer driving season" in the US, so I didn't think the report was as bullish as it would have been had it been released early in the season.

Price Elasticity of Demand
4 Week Averages 08 vs. 07 plus % YTD 08 vs. 07

Finished Motor Gasoline   9,435   9,617    -1.9%     -1.6%
Kerosene-Type Jet Fuel    1,534   1,676   -8.5%   -3.9%
Distillate Fuel Oil       4,209   4,037   +4.3%   -1.9%
Residual Fuel Oil           612     686  -10.8%  -16.6%
Propane/Propylene         1,016     981   +3.6%   -4.6%
Other Oils                3,368   3,768  -10.6%   -7.5%

Total Products Supplied  20,174  20,764   -2.8%      -3.6%


MUCH easier to format ! THANKS !

Can anyone verify this statement made by Philip Gotthelf, Equidex president/commodities analyst, on CNBC this Morning?

We have discovered more new oil in the last five years than we have in the last twenty five years and that is not getting into the mainstream media.

I know the statement is an impossibility because the last twenty five years includes the last five years. He probably meant the previous 25 years. But that is the first time I have ever heard such a statement. How correct is he? The 4 minute video can be found here: Commodities Slippery Slide.

Ron Patterson

Just as outrageous was his assertion that oil price is linearly proportionate to demand, or in other words that world demand would have to have increased four-fold from 85 million BOPD to 340 million BOPD since 2004 in order to justify the four-fold increase in the price of oil.

I think a more important question than whether some joker like this is lying is why he is lying.

What is his motivation for willfully spreading doubt, uncertainty and disinformation? What motivates his sophistry?

What motivates his sophistry?

He's long airlines.

Maybe he's talking about Tupi, and the "30 billion BOE or more" the media reported.

Or maybe he's expecting a huge jump in reserves when the SEC rules change goes through and all that oil shale can be put on the books.

I listened to the clip Ron. His statement regarding recent discovery rates didn't have enough clarification to understand what he meant IMO. Who are the "we" he refers to: the US? The world? As far as the time frame I’m guessing he meant the last 5 years vs. the prior 20 years. He could have a point there if you define it as the following: 1985 thru 1995 US oil discovery volume vs. 1995 thru 2005. I don’t have the numbers at the moment but we did add a lot of oil reserves in the Deep Water Gulf of Mexico since 1995. But that volume was a “lot” only when compared to how little oil was discovered in the earlier period. Oil has not been the primary exploration target in the US for decades. The last really big discovery was the North Slope but that predates the earlier time period. Likewise, much of the OCS GOM shelf oil discoveries were made between 1970 and 1980. His remark may actually be close to statistically correct. But his tone implied that we’ve been able to discover more oil then ever before in the last 10 years. And we all know that isn’t true. Statistics are easy to misuse. I’m going to guess that Brazil has, perhaps, discovered more oil in the last 10 years then they have in the entire history of Bz exploration. But that doesn’t accurately reflect the nature of global oil exploration potential today. Bz didn’t start a serious push into exploration until the late 70’s oil crisis. Another example would be Equatorial Guinea. They had no oil production prior to 1997. Now they are a major oil exporter. That certainly doesn’t mean there are a thousand more EG’s or Bz’s out there to exploit. But, as always, if you pick your control population carefully, you can make as many misleading extrapolations as you like.

Nice little summary of different biofuel options in Popular Mechanics:


I've been seeing articles this week on the federal deficit in July alone being over $100 billion. Now I know that certain months seem to be worse than others each year, so I need to know the figures for the last year. However, these articles say that the deficit is approaching $400 billion for the "year". Does that mean the fiscal year (the last 10 months) or the calendar year (the last 7 months)? Has anyone seen anything that would nail that down, or even better know a month-by-month table for the federal deficit?

Because I know these figures don't even include the off-budget war, I'm wondering if we're looking at a $1 trillion deficit year, and higher interest rates to sell the debt.

Peak oil is scary enough. I can't handle thinking about the federal deficit/debt, not to mention all of the obligations that don't even appear as part of the debt (social security and medicare). It makes me want to hide in the basement with a bottle of Jack Daniels.

If the US Gov were a corporation, would you buy their stock after reading the financials?

**Edit** They said on NPR this morning that the Gov had no problems selling securities at the last auction. I thought that was strange, as recently they were having a lot of trouble getting people to take the auction securities. Did I hear this story right?

Yeah... I think the FED is correct that they have no issue in selling securities at last auction. The only problem is what they get for selling are those toxic mortgage-back-securites, ARS, CDOs that their pals JPM, Merrill Lynch, Citicorp no longer want. By the end of this financial debaucle, the US taxpayers will have to bear all the freaking mess these idiots created.

I thought it was the Federal Reserve (which is neither federal nor has any reserves) that was swapping guv bonds for "toxic waste". But it had to buy those bonds from the treasury, no? (The "fed" and the feds are still separate entities, sort of.)

They said on NPR this morning that the Gov had no problems selling securities at the last auction. I thought that was strange, as recently they were having a lot of trouble getting people to take the auction securities. Did I hear this story right?

I believe they were all very short term: 4 week and 155 day bills. These should sell pretty easily. Its the longer term notes that are going to be a problem. With ongoing Inflation and a credit problems, few people are willing to invest in long term bonds at such low yields. However US treasuries have an advantage over mortgage\commerical\consumer debt: "Flight to safety." Investors are pulling money out of other security that have high\unknown risks and buying US treasuries until the mess is straightened out. Others are concerned that the Fed will raise rates causing the dollar value of bonds to fall which would cause investors to lose money if they sold their bonds before they came due.

I still believe that the next Fed move will be lower. I can't see the Fed raising rates and move the US economy closer to an economic depression. FWIW: The Fed moves in response to the employment figures. When unemployment declines they usually raise rates, when unemployment rises the usually cut rates. Right now unemployment is rising pretty quickly. Commodity prices have also been falling which gives the Fed some room to cut rates.

The currently-projected $450 deficit does not take into account supplemental war spending, any future stimulus packages, or any decline in tax revenues caused by the slowing economy (and the billions in write-downs by financial institutions). IMO, if we were talking calendar year, we'd have a shot at hitting $1 trillion. But since the fiscal year ends in September, I suspect we'll only be in the $650 range.

It seems that at some point, lenders are going to get concerned about being paid back, and will stop lending the Gov money at 4.50%.

Apparently neither presidential candidate has much interest in reducing the deficit, much less starting to reduce the amount of debt.

As Tom Vu would say-Bawgin pwoperties in Motown-the house is free but the yearly property tax is currently at $3900 which is ridiculous for a property which topped out at $65000 http://www.detnews.com/apps/pbcs.dll/article?AID=/20080813/METRO/8081303...

On that subject here is a little video about whats going on in Detroit w/ Laura Flanders. Eye opener about how re-wilded some of these cities are becoming.
Also I would recommend "Ruins" by Camillo Jose Vergara
about how much American cities have collapsed and rotted from their hayday. Also Camillo sometimes has insight that seems similar to what we see here.


So hows the VENMEX situation these days? Is shrinking demand in the US easing the pressure and shifting the spotlight from these closest decliners?

Bloomberg says:


"U.S. fuel demand averaged 20.2 million barrels a day during the past four weeks, down 2.8 percent from a year earlier, the department said. Gasoline consumption averaged 9.4 million barrels a day over the period, down 1.9 percent from a year ago."

Take a look at the AAA website:


Gasoline a year ago: USD 2.767
Gasoline today: USD 3.787
US Gov inflation: 4%

Demand destruction: 1.9%


nominal based elasticity: -0.05
inflation adjusted elasticity: -0.06

Pretty inelastic, if you ask me.

Oh, I forgot:

nominal change in prices: 36.8%
'real change' in prices: 31.4%

(We are talking about gasoline, of course. With diesel added to the mix it's looking even more grim)

These guy at FT has it backward:

Insight: Oil prices have peaked

World oil consumption is now growing at a significantly lower pace than had been imagined a year ago. Last October, the International Energy Agency was forecasting global demand growth for 2008 of 2.1m barrels a day, with 750kb/d from the OECD and 1.33mb/d from emerging markets.

Of course demand is going down. Why? Easy. It has to. Yoi simply cannot buy something that is not there. So if supply goes down (imports + domestic production in the case of the net importers) demand HAS TO follow suit.

Demand = desire and ABILITY to buy. if there is no (i.e.: less) oil, you may have the desire but you lcak the ability. Hence you don't have demand in the economic sense of the word.

So as long as import + domestic production is down in the OECD, look for demand to go down, too.

Prices are just a mechanism to make it all happen. Supply going down 2% and an elasticity of -0.05 -------> prices will go up 40%

It's not rocket science, doh. supply goes down ----> demand NEEDS to go down, too.

It may be simplistic, but I always think of demand in terms of dollars. Demand = Supply * Price.

So demand of 20 mmbopd * $120 = $2.4 billion
vs. demand fo 19 mmbopd * 145 = $2.755 billion

Therefore demand went up.

It shows something else, not demand in the way we can use it for calculating elasticity, but it's still simple and nice. You can use this number to calculate the percentile of the average income average consumer spends on gasoline.

So I guess I'll rate you up. :-)

I know it's not demand, but it shows the total amount that people are willing to pay for something.

It's been a long time since I had Econ 101.

Demand by importing countries cannot be higher that Export Supply by exporting countries.

Demand can't grow because supplies are flat.

So YOY the price is going up.

The average price for the last 12-months is now $100. (Thru July 2008).

WTI monthly averages:
August 2007 $70
September 2007 $80
October 2007 $85

The corresponding monthly prices this year have to fall below these values to make the 12-month moving average fall. This isn't gonna happen. The 12 MMA has been level or rising every single month since Q1 2004 when it was $30.

Table of WTI 12MMA price (rounded to nearest $5):

Jan 3040606575

To get the 12MMA back under $100 is going to require the monthly average price to fall back under $100 and sustain that for at least 6 months.

Yesterday I was struggling with dodgy KSA data, today it's Russia. Please can somebody point me in the right direction?

eg: The EIA says that Russian C+C for 2007 is ~9.44 mbpd with ~7mbpd of net exports, but elsewhere it says:


With production of 9.8 million bbl/d of liquids (not including oil products), and consumption of roughly 2.8 million bbl/d, Russia exported (in net) around 7 million bbl/d. According to official Russian statistics, roughly 4.4 million bbl/d of this total is crude oil. Over 70 percent of Russian crude oil production is exported, while the remaining 30 percent is refined locally.

If >70% of crude is 4.4 mbpd, then total crude should be <6.28mbpd not the claimed 9.44 mbpd C+C. Is it reasonable for the difference to be condensate?

Elsewhere :


I see quotes for exports of ~3.9 mbpd for C+C. Does anybody have C+C net exports figures from an official Russian website?

Is this really a smart move right now?

Bush Says Pentagon to Deliver Georgian Relief Aid

President George W. Bush said the U.S. military will lead a humanitarian aid effort to Georgia and that he expects Russia to withdraw all troops sent into the country since fighting started.

``We expect Russia to ensure that all lines of communication and transport, including sea ports, airports, roads and airspace remain open for the delivery of humanitarian assistance and for civilian transit,'' Bush told reporters in Washington today. U.S. air and naval forces will help to deliver aid, he said.

By using the military to deliver humanitarian relief and dispatching Secretary of State Condoleezza Rice to Tbilisi, Bush is signaling the U.S. is firmly committed to Georgia and to exerting its own influence in the region, said Cliff Kupchan of New York-based Eurasia Group, a political risk consulting firm.

The moves are ``a symbolic shot across the bow that `enough's enough,''' Kupchan said. ``It's as much pushback with hardware as the U.S. can, or should, muster at this point.''

Russian Foreign Ministry spokesman Andrei Nesterenko said sending U.S. navy ships to the region wouldn't be ``the best way'' to deliver humanitarian aid.'' Russia is ready for ``consultations'' with the U.S. on the Georgian aid effort, he said in comments broadcast on CNN.

Seems to be some confusion...

Georgia leader expects U.S. military help

TBILISI, Georgia - President Mikhail Saakashvili told his people Wednesday that the U.S. military will take control of the ex-Soviet state's seaports and airports as part of a humanitarian aid mission amid Georgia's battle with Russia, but the Pentagon quickly shot down the claim.

"the Pentagon quickly shot down the claim"

Awfully relieved to hear that! - I can't think of a worse idea than US military getting that close to Russian operations

All I can say is "Holy Cr*p!!" if BushCo is going to try to play tough cowboy in this situation. Is this going to be a game of Dare...Double Dare?

Gail...you may need to queue up another Georgia Open Thread in the near future.


Ugh...US sending military?


Ugh..another Georgia thread? I've found the Georgian thread discussions quite interesting.

"Ugh" as in mentally exhausted.

There's a war going on and instead of working something out I see politicians making emotional displays that probably don't help toward resolving things.

I know that's reality, but that doesn't make it any less distasteful to me.

The threads are always good.


Look at what our pal Jerome "Abiotic Oil" Corsi is up to:

Book on Obama Hopes to Repeat Anti-Kerry Feat

In the summer of 2004 the conservative gadfly Jerome R. Corsi shot to the top of the best-seller lists as co-author of “Unfit for Command,” the book attacking Senator John Kerry’s record on a Vietnam War Swift boat that began the larger damaging campaign against Mr. Kerry’s war credentials as he sought the presidency.

Almost exactly four years after that campaign began, Mr. Corsi has released a new attack book painting Senator Barack Obama, the Democrats’ presumed presidential nominee, as a stealth radical liberal who has tried to cover up “extensive connections to Islam” — Mr. Obama is Christian — and questioning whether his admitted experimentation with drugs in high school and college ever ceased.

It's already #1 on the NY Times Best-Seller list.

Alas... Joseph Goebbels is not unique only to his generation. Sigh...

I did not realize that Goebbels made the Germans purchase his propaganda.

Actually, that's a very astute observation Mr Bunt. It really reveals the depravity of those doing the buying, and how totally lost their souls are.

Great - the old guy that wants to attack Russia now to defend poor-ole Georgia is our next President?

I can't wait for McCain's flubs when he speaks on this region "South Odessa" is a given - will he confuse the ethnic groups involved as badly and often as he does Iran/Iraq Shia/Sunni?

There's a reason, well a smoking gun other than politics, McCain is defending Georgia.

"WASHINGTON — John McCain's chief foreign policy adviser and his business partner lobbied the senator or his staff on 49 occasions in a 3 1/2-year span while being paid hundreds of thousands of dollars by the government of the former Soviet republic of Georgia."


Wonderful election coming up. Such choices. When people complain of corporate lobby control of government, I hope they don't forget foreign groups.

Hey, what are the energy policies of the third party candidates?

From Weather Underground:
Major shift in steering currents coming
As I discussed in last week's blog on steering currents, the hurricane steering pattern for all of July and the first two weeks of August over the North Atlantic has predominantly acted to recurve hurricanes out to sea. The jet stream has been "stuck" in a standing wave pattern, where it dips southward over the East Coast of the U.S., creating a trough of low pressure capable of recurving tropical storms once they get north of the Caribbean Sea (20° latitude). This pattern is in contrast to the steering pattern that set up in 2004 and 2005, when a ridge of high pressure set got stuck over the Eastern U.S. A ridge in this location does not allow hurricanes to recurve, and the U.S. took a terrific battering those years.

This year's steering pattern is about to make a major shift towards the steering pattern observed in 2004 and 2005. According to recent 500 millibar (mb) upper-air forecasts from the GFS model. and ECMWF model, the trough of low pressure over the U.S. East Coast will be replaced by a ridge of high pressure 7-10 days from now. As a result, the surface Bermuda High will extend far to the west over the Eastern U.S. This pattern will mean that fewer hurricanes will be recurving beginning a week from now, and the threat to the U.S. Gulf Coast will increase. Conversely, the threat to Bermuda and the Northeast U.S. will diminish.

There is no way of telling how long this new steering pattern might stay in place. It could last only a few days, or remain in place for several months.

That History channel article is an eye opener-5 million barrels a day is about what the USA used in total circa the early 50s (guesstimate).

I just watched the program. Hoo boy. Very educational. After showing all the other non-transportation uses of oil they ask the viewer, "so...what happens when all the oil is gone!". Yikes

RE: Top Link:

"Farmers mend their watering ways"

This, though I'm not meaning to mock advances in irrigation technology, should be taken with several grains of salt.

Greater efficiency has been a constant theme in irrigation, but the dominant trend noted at WUE (water use efficiency) forums for decades is that the savings are paper ones. Efficiency measures which "save" water mean that additional water is available to that farmer or region, and it is applied. Total water use keeps rising. I think its a misnomer to state things such as the water savings will "meet the needs of 250,000 people" when in fact, that "saved" water does little of the sort.

As the above article notes, changes in WUE are very expensive, and I see the hype goes to the ones which make expensive systems more so. The profiled farmer can only afford to use the "savings" plan on only one of his 17 irrigation systems. I would imagine that the "saved" water ends up in one of the 16 other systems. How else to pay for the new--by having increased yields overall on the farm.

Worldwide, most irrigation is via flood or ditch systems, very inefficient in getting water to the desired plant. The switch from even ditch to pipe is usually too expensive.

US: No plan for naval blockade of Iran

A senior official with the US Defense Department has dismissed reports that Washington is planning a naval blockade of Iran.

"As a matter of policy we do not discuss current or future ship's movements. However, I can tell you that reports of an alleged naval blockade of Iran are false," Lt. Col. Patrick Ryder, a spokesman for the assistant secretary of defense for public affairs told The Jerusalem Post on Wednesday.

"We routinely rotate deployed naval forces in the USCENTCOM area of responsibility," he added.