DrumBeat: September 2, 2008

OPEC Will Cut Output, Defend $100 Oil Price, Pickens Tells CNBC

(Bloomberg) -- Oil prices are unlikely to drop below $100 a barrel because OPEC will cut production to support the price, billionaire hedge-fund manager Boone Pickens told CNBC today.

``OPEC likes it up here,'' Pickens said in a televised interview from the New York Mercantile Exchange. ``I think they'll support it and cut production.''

The 13 members of the Organization of Petroleum Exporting Countries meet Sept. 9 in Vienna to review production targets.

Lula wets his hands in Brazil's new oil wealth

VITORIA, Brazil (Reuters) - Brazil's President Luiz Inacio Lula da Silva dipped his hands in the first oil from vast new reserves on Tuesday, symbolizing the start of what could be a new era for Latin America's largest economy.

Wearing orange overalls and a hard hat, the former union leader gave his blessing to the oil on an offshore platform as his government seeks a greater share of the wealth it hopes will propel Brazil to developed-nation status and help its poor.

The Philippines: DOE sounds alarm on LPG-powered tricycles

The Department of Energy (DOE) on Tuesday raised its concern on the safety of liquefied petroleum gas (LPG)-converted tricycles amid reports of exploding tanks and the health risks involved in using cooking gas to power vehicles.

Brazil Pumps First Pre-Salt Oil Amid Windfall Debate

(Bloomberg) -- Brazilian President Luiz Inacio Lula da Silva boarded an oil platform today to celebrate the first output from offshore deposits he's counting on to speed development and end poverty.

The oil is the first trickle from the so-called pre-salt region containing as much as 50 billion barrels of oil worth $6 trillion at current prices. Located in area is Tupi, the largest discovery in the Americas since 1976. Petroleo Brasileiro SA, the state-controlled oil company, is tapping the well about 560 kilometers (350 miles) northeast of Rio de Janeiro.

Although full-scale production is still years away, Lula's allies in congress are already writing bills to spend the windfall on programs ranging from education to nuclear submarines. Other lawmakers want to revamp Brazil's oil industry to exert more state control and limit foreign involvement. As the fight for cash intensifies, analysts and opposition lawmakers say it may scare off investment.

Dick Cheney to take fight against Russia's oil dominance to Azerbaijan

Dick Cheney, the US vice-president will arrive in the Caucasus on a mission to prevent Russia from gaining a stranglehold over Central Asia's vast reserves of energy.

Russia: Europe can suck our gas

RUSSIAN newspapers have hailed a victory for Moscow after the European Union froze talks on closer ties until Russian troops withdraw from Georgia but stopped short of imposing economic sanctions.

"Europe Can Keep Sucking Our Oil and Gas," read a headline in the tabloid Tvoi Den, adding that the EU had not "given in to the hysterics" of British Prime Minister Gordon Brown and Polish President Lech Kaczynski.

Resurgent Russia flexes muscles in Africa again

RABAT (Reuters) - Russia is reviving an interest in Africa that collapsed with the Cold War and its growing appetite for deals in African oil and gas is an added cause of unease in energy-hungry Western Europe.

Russian firms say the goal is to diversify energy interests and secure raw materials for a fast-growing economy, but the companies are also seen as tools of an increasingly assertive Kremlin foreign policy.

Power blackout in Venezuelan capital, oil province

CARACAS (Reuters) - A power blackout hit major parts of Venezuela on Monday, including the capital and an oil-producing province, darkening buildings, knocking out traffic lights and disrupting plane and train journeys.

It was the second massive outage in just over four months on the OPEC nation's electricity grid, which is creaking from outdated infrastructure and low investment.

There were no reports of problems in the country's mainstay oil industry, which is a leading supplier to the United States, the state oil company said.

It's a wrap

A month ago I announced I was giving up plastic for the whole of August.

Little did I know that what seemed like a simple, if somewhat extreme, idea would lead me into such intricate areas as whether apples sold loose are more wasteful than those in bags, the environmental pros and cons of a wooden toothbrush and whether bicarbonate of soda is an effective deodorant (it is - at least on the one day I tried it).

'Big Dry' turns farms into deserts

There are puddles of water but they are brown-tinged and unwelcoming. The cows will not drink it. So high is the salt content that it stings and burns their mouths.

Winter heat crisis looms, little relief seen

NEW YORK (CNNMoney.com) -- Home heating bills are expected to rise dramatically this winter and there is growing concern that the government program aimed at helping poor families cope with energy costs may not be able to meet the needs of cash-strapped households.

The Low Income Home Energy Assistance Program (LIHEAP) is a federally funded program that gives money to states to help low-income households, the elderly and the disabled cope with the financial strain of high heating bills.

This year, however, the program could be squeezed by a projected 20% average increase in heating bills nationwide and an influx of people applying for assistance due to sour economic conditions, high gas prices and a weak labor market.

"This could be the worst winter ever for low-income folks," said Jerry McKim, who oversees Iowa's LIHEAP program for the state's Bureau of Energy Assistance.

Putin vows 'an answer' to NATO ships

MOSCOW - Prime Minister Vladimir Putin said Tuesday that Russia will respond calmly to an increase in NATO ships in the Black Sea in the aftermath of the short war with Georgia, but promised that "there will be an answer."

Russia has repeatedly complained that NATO has too many ships in the Black Sea. Foreign Ministry official Andrei Nesterenko said Tuesday that currently there are two U.S., one Polish, one Spanish and one German ship there.

Russian officials say the United States could have delivered weapons to Georgia under the guise of humanitarian aid.

Nigeria: U.S. journalist arrested in oil region

LAGOS, Nigeria: Authorities have detained a U.S. filmmaker in Nigeria's troubled oil producing region for filming the military without authorisation, an official said Tuesday.

A Niger Delta military spokesmanm, Lt. Col. Sagir Musa, said the military handed the American to state security operatives for questioning after arresting him for filming troops at the waterfront in the southern oil center of Port Harcourt.

Reports: Russia, Uzbekistan to build gas pipeline

Russia and Uzbekistan plan to build a new natural gas pipeline across Uzbekistan, strengthening Russia's bid to establish control over Central Asian gas exports to the West.

China to charge $6 a barrel to develop Iraq field

BAGHDAD (AFP) - Iraq on Tuesday cleared a plan to develop an oil field by China Petroleum National Corp. at a service fee of six dollars a barrel, giving Beijing a foothold into the world's third largest oil reserves.

Economic crunch to take bite out of kids’ lunch

With food prices rising and packages shrinking, parents are wondering how they'll stretch their food budgets. Children are going to get an unwitting lesson in economics, analysts say, as parents change their food-buying habits to keep costs down.

Mexico to spend $25 bln on fuel subsidies in '08

MEXICO CITY (Reuters) - Mexico's government will spend about $25 billion (260 billion pesos) this year on gasoline subsidies to blunt the effect of inflation on consumers, President Felipe Calderon said on Monday.

The figure was higher than the $19 billion (200 billion pesos) that the government previously said it would spend on fuel subsidies, which have gotten more expensive this year on higher oil prices.

The subsidy means Mexicans are paying about $1 less for a gallon of gasoline than U.S. motorists, and has helped moderate inflation that is running at its highest pace in more than three years.

ASPO Newsletter - September 2008 (PDF)

1077. Spain reacts to Peak Oil
1078. 33rd International Geological Conference
1079. A Fall in Oil Price
1080. A Sense of Direction
1081. The Golden Zone
1082. The Good News
1083. ASPO-USA Conference
1084. Russia Re-evaluated
1085. Estimating Discovery and Reserve Growth

Mexico oil port reopens after rough weather

MEXICO CITY (Reuters) - The Mexican port of Cayo Arcas on the Gulf of Mexico coast, one of the country's three main oil exporting ports, reopened on Monday after being closed the previous day due to rough weather.

All other Mexican ports including Dos Bocas and Coatzacoalcos, the other two key crude ports in the Mexican Gulf, where Hurricane Gustav blew strong winds and rain into Louisiana, were also open, the communications and transport ministry said on its website

Gustav Reminds U.S. of Oil Vulnerabilities

Hurricane Gustav's rampage through the Gulf of Mexico was a stark reminder that U.S. oil supplies are vulnerable to major storms, analysts said.

A Growing Global Power Crisis Looks to be Greater Economic and Political Danger Than Oil

How many stories have you seen about high oil and gasoline prices? Now how many have you seen about global electricity shortages?

Lost in all the attention oil is receiving, reports from around the world indicate that 100 or more countries may be suffering, many acutely, from shortages of electricity. Given who is in trouble, both the economic and the political danger of this growing global power crisis are starting to look greater than oil’s.

India: Penalty fails to curb power overdrawal

New Delhi - Amid a surge in short-term power costs triggered by acute shortages, State Electricity Boards (SEBs) are increasingly opting to overdraw from the grid and shell out the Rs 10 per unit maximum penalty, instead of sourcing power from more expensive liquid fuel stations.

Tanzania: Cooking gas shortage hits Dar

Dar es salaam residents are experiencing acute shortage of liquified petroleum gas (LPG) used as fuel for domestic cooking, heating, catering and other purposes. A survey by 'Daily News' reveals that the city had been facing the shortage for more than a week, where sales personnel at various retail outlets blame the port for the scarcity.

14.5 million people need food assistance in Horn of Africa

Nairobi, Kenya - Poor rains in much of the Horn of Africa in the normally wet March-to-May period compounded by high food and fuel prices, mean that 14.5 million people in five countries need food assistance, the World Food Programme (WFP), has warned.

As many people watch their crops and livestock die, the situation is made worse by conflict, animal disease, inflation and poverty.

Brazil: Deforestation rises sharply as farmers push into Amazon

Concerns over the destruction of the Brazilian rainforest resurfaced at the weekend after it emerged that deforestation jumped by 64% over the last 12 months, according to official government data.

Brazil's National Institute for Space Research this week said that around 3,145 square miles - an area half the size of Wales - were razed between August 2007 and August 2008.

With commodity prices hitting recent highs and loggers and soy farmers pushing ever further into the Amazon jungle, satellite images captured by a real-time monitoring system, known in Brazil as Deter, showed that deforestation was once again on the rise after three years on the wane.

Alternative Energy for Russia

“Monowai Energy” is the newly established joint company of Russia and New Zealand, which is aimed at adapting renewable energy sources (wind, sun and water) to humanity’s needs.

Company’s founders believe that renewable energy can stop global warming and energy crisis. Experts of “Monowai Energy” estimate economic potential of wind power engineering in Russia to be about 260 billion kWh per year, which is 30% of energy, produced by all existing Russian power stations.

Louisiana Refiners to Take Days to Resume Full Supply

(Bloomberg) -- Louisiana refineries that shut down before Hurricane Gustav may take up to 10 days to resume operations because of a lack of power, stunting fuel production at a time when regional gasoline inventories are at a 10-month low.

Marathon Oil Corp., Valero Energy Corp. and other refiners that shut plants as Gustav swept through the Gulf of Mexico won't know the extent of any damage until today at best. Exxon Mobil Corp. shut its Baton Rouge plant, the second-largest U.S. refinery, after winds snapped power lines.

Gulf Oil Industry Seems Unscathed

Natural gas prices fell nearly 6 percent, to $7.48 per million British thermal units. AAA reported that the average national price for unleaded gasoline of $3.69 held steady on Monday despite the storm threat, holiday weekend driving and the giant evacuation in the Gulf Coast.

“It’s very striking to see that the market made up its mind about the extent of damage before anyone else,” said Daniel Yergin, an energy historian and chairman of Cambridge Energy Research Associates, a consulting firm. Despite the outbreak of hostilities in Georgia and an active hurricane season, he added, “the focus is on the weak economy, weak demand and the impact of the stronger dollar.”

Saudi Arabia seen upping heavy crude, cutting light grades

SAUDI ARABIA. Lifters of Saudi crude expect the world's top oil exporter to raise prices of its heavy crude on the back of strong fuel oil prices, and to trim the price of its lighter grades as Asian refiners cut runs.

But lifters polled agreed on the direction, not the size of the moves. Refiners said this was a tough month to predict, as product prices have started diverging with the fuel oil crack rising strongly while the gas oil crack has plunged.

Saudi Aramco cuts LPG prices for September as crude oil falls

SINGAPORE (Bloomberg) -- Saudi Aramco, the largest supplier of liquefied petroleum gas to Asia, cut prices of cargoes loading in September from August after global crude oil benchmarks fell.

Sri Lanka: Gas prices to decline in November

Gas prices are expected to be slashed in the world market in both August and September and this relief will be provided to consumers in November when the gas price formula is formulated, Trade, Marketing Development, Co-operatives and Consumer Affairs Minister Bandula Gunawardhana said.

Iraqi cabinet approves $3 bln oil deal with China

BAGHDAD (Reuters) - Iraq's cabinet has approved a $3 billion oil service contract with China, the government of Prime Minister Nuri al-Maliki said on Tuesday, in a move that could signal the shape of anticipated future oil deals.

Clare Short: A foreign policy that makes little sense at all

The conflict between Russia and Georgia may seem far from Birmingham’s concerns., but as the price of petrol and gas is straining most people’s budgets, we should stop and think of what it means to pick a fight with Russia.

Technological Fundamentalism In Media And Culture

While media watchdogs and bloggers probe contemporary news media for signs of bias -- from every angle, on virtually every issue -- perhaps the most important of journalists’ biases is ignored: their routine acceptance of society’s technological fundamentalism. This devotion to the industrial world’s core delusion shows up not just in stories about science and technology but in the assumptions about science and technology that underlie virtually all reporting in the corporate commercial news media in the United States.

Hurricanes, floods show risks of climate change: UN

OSLO (Reuters) - Atlantic hurricanes and floods in India are reminders of the risks of ever more extreme weather linked to a changing climate, the head of the United Nations Environment Programme (UNEP) said on Monday.

Achim Steiner said that more damaging weather extremes were in line with forecasts by the U.N. Climate Panel. He urged governments to stick to a timetable meant to end in December 2009 with a new U.N. pact to fight global warming.

"These natural disasters do reflect a pattern of change that is in line with projections" by experts on the Intergovernmental Panel on Climate Change (IPCC), he told Reuters in a telephone interview from Geneva.

On first scan, little oil damage seen from Gustav

HOUSTON (Reuters) - Several major U.S. refiners said early checks on Monday showed their facilities were unharmed by Hurricane Gustav, but at least two others were said to be considering dipping into the U.S. Strategic Petroleum Reserve to keep operations going after the storm shut down key waterways.

Gustav weakened to Category 2 before roaring ashore near Port Fourchon, Louisiana, on Monday, potentially sparing the kind of damage that the region's platforms, rigs and refineries suffered at the hands of more powerful Katrina three years ago.

Offshore operators said remote sensors indicated that major platforms remained where they were moored before the storm, although Shell, the region's largest producer, said it may take three to five days to restore production.

Oil falls as global demand concerns resurface

Oil prices tumbled nearly $7 on Tuesday from last week's close ahead of the U.S. Labor Day weekend as investors shifted their focus to slowing global demand after fears subsided about Hurricane Gustav's impact on Gulf Coast oil rigs and refineries.

Iran wants excess supply on OPEC agenda

TEHRAN (AFP) - Iran on Tuesday called for the Organisation of Petroleum Exporting Countries to discuss quota-busting by some members at its meeting in Vienna on September 9.

"The oil supply should be proportionate to demand, and control of excess supply is an issue which should be addressed at the upcoming OPEC meeting," Oil Minister Gholam Hossein Nozari told the official IRNA news agency.

Shell says some progress fixing Nigeria oil pipeline

LONDON (Reuters) - Repairs to a damaged oil pipeline in Nigeria have made some progress but production is still lower than normal, Royal Dutch Shell said on Tuesday.

Shell's Nembe Creek trunkline, located at Kula in Rivers State in the Niger Delta, was sabotaged in late July.

Russian Oil Output Fell in August, Continuing Decline

(Bloomberg) -- Russia's oil production declined in August as companies struggled with costs and maturing fields, bringing the world's second-largest crude exporter closer to its first annual drop in output since 1998.

...``We probably won't get more oil produced this year than last year,'' Artyom Konchin, an oil and gas analyst at UniCredit SpA, said by phone in Moscow. ``By the end of the year, however, we should see a gain in the daily output rate because of new projects.''

Putin reminds EU of Russia's Pacific oil pipeline

MOSCOW (Reuters) - Prime Minister Vladimir Putin said on Sunday that Russia's first oil pipeline to Asia must be completed without delay, underlining Russia's energy clout just hours before European Union leaders meet to discuss Georgia.

Gas prices fuel interest in alternatives

This could be a critical moment, not only to observe whether the trend toward shorter and fewer car trips continues, but also to watch whether Americans demand better transit options from their government and whether investors continue to show interest in alternative fuels.

Oil drop to help U.S. transport only in short-term

CHICAGO (Reuters) - A recent dip in oil prices should boost U.S. transport companies' earnings for the current quarter, but oil is still too pricey to offer the sector any long-term relief from the many economic headaches it faces.

Transport firms will get a short-term lift as the fuel surcharges they implemented to cope with higher oil prices finally begin to bite, while at the same time actual fuel prices fall.

But a wobbly U.S. economy and the pounding U.S. consumers have taken from tighter credit and rising inflation mean transport companies -- trucking companies above all -- are likely to see little more than a short-term earnings bounce.

Bartiromo Talks with Sarah Palin

Some people might say: "Look, even though opening up ANWR has been a symbolic issue for Republicans, the oil there may only have a marginal effect on reducing overseas dependence. Why is ANWR so important and how do we know that there's actually enough oil there to really make a difference?

Because just that swath of land in that refuge alone is estimated to hold about 11 billion barrels of oil and 9 trillion cubic feet of natural gas. And those are just the areas that have been explored. That's about a year and a half worth of U.S. oil consumption and many months of natural gas. It's about a trillion dollars worth of energy. And that's—again—just that sliver of ANWR. So when we hear, "Well, maybe there isn't enough," or "Well, it's too late to drill now anyway, we should have done this five, 10 years ago," hey, I can't argue that. I say yeah, we should have done that years ago. But better to start that drilling today than wait and continue relying on foreign sources of energy. We are a nation at war and in many [ways] the reasons for war are fights over energy sources, which is nonsensical when you consider that domestically we have the supplies ready to go.

Alternative energy source found in Southwest Utah

A company is claiming it has found the nation's biggest geo-thermal find in 25 years in southwest Utah.

This weekend they're already finishing up a power plant to provide electricity for Mickey Mouse's home town.

"We call them 'heat farms' because we're just extracting heat out of the earth," says Michael Hayter of Raser Technologies.

Glaciers need closer watch in poor countries: UNEP

GENEVA (Reuters) - Scientists are not paying enough attention to glacial melting in the Andes, the Himalayas and peaks in other developing countries, a United Nations-backed report found on Monday.

Experts from the U.N. Environment Programme (UNEP) and the World Glacier Monitoring Service (WGMS) said while there has been excellent monitoring of glacial trends in Europe and North America, ice fields in Central Asia and the tropics have been largely overlooked.

Adaptation: The Ultimate Challenge

Mankind has met adaptation challenges before. What makes climate change different?

Adapting to climate change is not something new; we have been doing it as society for thousands of years. People and species have always adapted to changing climates. What is different is the speed and the scale of the changes we are facing.

In the last 300 or 400 years, we have built our society and economies on an assumed stable environment. If you look at houses built near a river, you see that they are all built in what people considered to be a fairly safe place, a few meters above the water, the highest tide, etc. But that is now changing, and so the baseline for our society changes.

Climate 'hockey stick' is revived

A new study by climate scientists behind the controversial 1998 "hockey stick" graph suggests their earlier analysis was broadly correct.

Michael Mann's team analysed data for the last 2,000 years, and concluded that Northern Hemisphere temperatures now are "anomalously warm".

Different analytical methods give the same result, they report in Proceedings of the National Academy of Sciences.

Oil today is down to $107 or about $40 (27%) down from the $147 top reached on July 11th, thus in under 2 months oil prices have basically crashed on a compensation of demand destruction, and higher OPEC production.

I guess the supporters of the speculation thesis are ecstatic by this oil meltdown, which somehow support their believe that our prices were manipulated higher, rather then driven by fundamentals factors.

While, I still believe oil will race higher in the coming months and years, sharp declines as we are seeing today are very detrimental to the security of future supply, as investments in unconventional oil sources will be probably delayed or put on hold until prices stabilize, while the switch to certain alternatives may weaken as people belief in peak oil get shaken.

Furthermore and most importantly OPEC is not likely to inject tens (if not hundreds) of billions of dollars in expanding its production capacity if prices can decline by close to 30% in 2 months based on a slight demand moderation, and slight supply increase.

Meanwhile, the party goes on, as the dollar continue its rally, despite the appalling fundamentals of the US economy.


The $147 was an important benchmark for traders, but it was pretty much irrelevant to producers and consumers (probably almost no one paid $147 and almost no producers received $147). The monthly average WTI high price was $134 in June, basically flat in July (down 50¢). It looks like August will average about $117, down about 13% from the June/July peak.

Meanwhile, on the export front:

From the Bloomberg article on Russia linked uptop:

Production in Russia's oil heartland of western Siberia is flagging as older fields mature, and companies are investing in harder-to-reach regions in search of growth. . .

It ``is becoming increasingly more expensive and burdensome for the oil companies to maintain output growth,'' Citigroup analysts Alexander Korneev and Ildar Khaziev said in a note to investors, cutting their price estimates for companies including the country's two biggest producers, OAO Rosneft and OAO Lukoil.

I agree west, the average is more relevant, but even if we take the average as our measure, current prices are close to 25% lower, this is a massive decline in revenues for the producers in a very short period of time, I believe such volatility is detrimental to the steady development of unconventional oil.

However, it would be very interesting to see how prices will move during this winter, considering the steady decline in net exports; as you have mentioned in a prior post, there seems to be a race between the decline in net exports, and demand moderation.


Also, we saw an August decline last year, down 2.4% from July, followed by more than a 10% increase in September. This was in the context of an average monthly increase of 6% per month from 5/07 to 6/08.

In any case, the monthly average price is a far better indicator of what is going on regarding fundamental supply/demand issues, and the August, 2008 average price was down around 13% from June/July. I wouldn't predict the September average price, based on early September trading, but I think that the average September/October prices will tell us a lot about the horse race between the long term overall decline in net oil exports and an overall forced reduction in the demand for oil imports (plus the effect on demand from the slowing economy).

One must ask, "Who does this price deflation hurt the most?". Those selling the oil, of course. Who is the West currently at odds with? That would be Russia, mostly. Could be coincidence?

I find that very doubtful - a year ago, oil was trading at around $70 per barrel, and no one was suggesting that this was in any way painful to major producers.

The pain is being experienced on the consumption side of the equation, and the idea that $100 per barrel oil is a "relief" just demonstrates how many frogs are being slowly boiled with smiles on their faces. Whilst prices above $120 per barrel were a nice windfall whilst they lasted, I doubt that any oil execs in Russia/OPEC will start fretting until oil hits $60 per barrel.

In 2003 the OPEC target price band was $22-28. In 2004 it was $30-35. In 2005 Chavez suggested that $50 was more than acceptable as a guaranteed price. Only $110 per barrel and "oh, noes, we're gonna go bankrupt!" Nah.

A few months ago someone on TOD did a superficial analysis of Saudi Arabia's budget and concluded that, given the size of their social welfare program, they would need about $90/bbl to balance their budget. Yes, the KSA could run a deficit (I think it is less likely they would scale back their welfare program because of concerns about social unrest), but I think it is more likely that they would try to defend $100/bbl.

The problem with easy money is that you get used to spending it, and sometimes it's hard to cut back to previous levels.

However, Saudi's budget requires dollars, not dollars-per-barrel.

I agree that OPEC as well as other oil producers have gotten used to higher prices, and this is exactly why their price target kept moving higher year after year, until they finally abandoned a price target and let the market run to the upside.

I don’t believe that any OPEC member or oil producer expected oil to trade in the $130/$140 range without a major supply shock (such as the Arab embargo or Iranian revolution), the fact that oil climbed to such levels on its own has probably given the producers a lot of confidence that oil may sustain much higher levels on regular market fundamentals then they thought was possible.

It is also worth noting that oil prices have risen by a hundred folds since the $1960s, and they never dipped to such levels after crossing the double digits in first oil shock in the $70s; and I do suspect that they will never trade for any sustainable period under triple digits in the future.


Come on londanium, we have decided today would be one of national morning in the oil patch. How are we to survive on this mere pittance? I’m sure some of the traders are panicked but at the well head you couldn’t knock the smiles of our faces with a baseball bat. I doubt $100 oil will take much shine off either the unconventional or conventional oils. Even when oil hit $147 most companies were still using $60 - $80 oil in their economics along with some other fudge factors. Based upon the 12 month running average I would expect oil to be bouncing around $110/bbl. As WT pointed out, Aug was the first drop in monthly avg in 7 or 8 months. And it’s easily to write that off to the high July avg. I can’t see any factors down the road that will permanently shift the trend downward but who knows: demand destruction may be sneaking up some out there along with a little bump on the production capacity side. On the other hand, if OPEC is finally on the verge of becoming a functional cartel, even DD might not bring a long term downward price trend with it.

"the switch to certain alternatives may weaken as people belief in peak oil get shaken."

Nawar, I'm not sure if I understand you correctly, but PO is not a belief. If you believe it you must understand the simple basic concept. The price will not shake that understanding.

Paul, indeed PO is not a belief, it is a basic concept, and I do understand it as such, however such severe declines, may push certain believers to consider that PO is not as big of a deal as it may seem, some may start believing that solar and wind are doing their trick, while forgetting that our issue is liquid energy, and not energy per say.

As you know a lot of people and investors have a blind faith in the ability of markets to predict the future (didn’t the CIA wanted to start a terror futures contract after Sept. 11?), if prices continue heading lower, they will rather believe the markets rather then believe the simple fact beyond PO.


while forgetting that our issue is liquid energy,

And I'll say that this view is wrong. The issue is the economic model built on CHEAP oil. (Cheap VS the other forms)

I would like to refine that to an economic model built on endless growth.

And I'll say that this view is wrong. The issue is the economic model built on CHEAP oil. (Cheap VS the other forms)

Oil just isn't a cheap form of energy. For your dollar you could get ~8 times as many BTUs from coal, 1.5-2 times as many BTUs from natural gas, ~100 times as many BTUs from yellowcake(with ~10 000 as many BTUs potentially extractable); I haven't done the calculations for wind and solar, but they're definetly far cheaper still.

The reason people keep buying so much oil at such a high cost is that it's easy to store, easy to transport, low capital cost of the equipment required to use it, burns relatively cleanly, high energy density.

The cheapest forms of energy are exactly the most costly and cumbersome ones to use; otherwise demand would drive their price up.

You can see for instance how this plays out for a vehicle. Natural gas is hard to store and it costs a lot of energy to compress it for use in a vehicle; but it's still fairly straight forward to power a vehicle with it. Coal would fail the emissions standards of every single country that has one and you'd kill an awful lot of people; you have to build the infrastructure to turn it into something like oil(e.g. see SASOL and the fisher-tropsch process) and you're likely to be required to deal with all that CO2 instead of just venting it to the atmosphere. Nuclear is only practical for powering electric trains, street cars and other grid tied vehicles and renewables can't even do that(not without back-up generation or enormous grid storage capacity).

That is a good summary of the current state of play.
What it omits is that very shortly it will be practical to power most vehicles with electricity and batteries.
It will not be so convenient as oil, but for all personal transport uses works just fine.

Delivery vehicles can also run on electric, but long-distance trucks are impractical, and trains would be needed.
Agricultural equipment etc also will need oil or biofuel for the foreseeable future.

PO is absolutely a belief. Whether something is true or not has nothing to do with how many people believe in it. As the price drops, fewer people will believe in PO, and will put less pressure on TPTB to do anything about it, and will want to continue the party.

The price just balances supply with demand at a particular time, the price says absolutely nothing anout the actual volume of oil being supplied/demanded.

Peak oil is about volumes supplied on a daily basis and has very little to do with reserves.

Peak oil isn't a belief it's a fact, for oil wells, for oil fields, for the USA, for the UK, for lots of countries ... and maybe for the whole world in total ... you need to check the data, moving averaged over a few years, to be sure ... monthly data is too inaccurate to be useful.

If you do check the data I think you will find C+C 'net exports' have actually peaked around 3 years ago - it is the 'net exports' that are important to importers.

Today I expect the demand for oil from refinerys has gone down in the area around NOLA at least, so today I would expect the price of crude to fall if there weren't other effects!

Each country will have it's own peak oil experiences - for some it won't matter much for a few years, for others it will be a rapid catastrophe.

I don't know how someone can make that statement here, but... PO is not a belief, it's a fact.

Any finite resource has to have a peak in production. If there's no peak, it means the resource is in fact infinite, obviously not the case with oil.

PO is not a belief, it's a fact.

I believe it is useful to consider two realities. The first, and familiar one is the actual physical state of the universe (or some portion thereof), the second one is the collective mental landscape of the people (or the people empowered to make decisions). The second reality need not conform to the first. Politics is the realm of the second reality. Physics and geology exist in the first realm. Economics is somewhere in between. At least for a while a collectively held falsehood can control the market.

Needless to say, the farther apart the two realities, the greater the risk of a catastrophic event.

There is but one reality. The first that you mention above.

The collective mental landscape of the people is not a second reality, it is a delusion, and it is not helpful to associate the word "reality" with it in any way. It is a house of mirrors, wishful thinking, evasion.

Words matter.

Whether or not we should refer to the mental landscape as a reality, or some other term, it is a useful mental concept. A large part of human endeavor is involved with the intended manipulation of this second state. Without a favorable perception by enough people, beneficial actions are precluded.

It is a very useful concept! It's just that attaching the word "reality" to it is a bit obfuscatory. At least let's distinguish between actual reality and virtual reality.

E.g., if you jump off a cliff, you die in a big splat at the bottom, no matter what you or anyone else believes. That's actual reality.

The maddening thing is that if you show any real interest in studying actual reality, you will soon be told that you're trying to "escape reality".

That's why I think words matter.


Sgage, you could have stopped with your first sentence. You reintroduce another duality by talking about "the collective mental landscape". We only have our one "delusion", and it is exactly the one physical reality, permeating all things.


We only have our one "delusion", and it is exactly the one physical reality, permeating all things.


I find it useful to distinguish the personal reality, the agreement reality (the reality shared by others) and the final or ultimate reality, which is what you would call "physical reality."

To see ultimate or physical reality clearly, one has to distinguish the personal reality and the agreement reality and then throw them away. What's left is physical reality.

For instance, I can look at the corridor between two walls and think "that's really wide" -- that's the personal reality getting its say.

Then I can say, "the corridor is 3 meters wide." That's the agreement reality (since units of measure are just an agreement).

Take away both realities and what's left is physical reality.

You just wouldn't have any way to talk about it :-).

Meanwhile, the party goes on, as the dollar continue its rally, despite the appalling fundamentals of the US economy.

This isn't so hard to understand. First there has been a coordinated effort by the Fed and other central banks to increase the dollar. Secondly, with 10 trillion dollars in debt, the world is all in on the dollar. It's in few people's interest to have it collapse at this point. Finally, the United States despite all its debt remains far and away the biggest economy and as the global economy slows, the dollar is becoming a safe haven, say what you want about that, but money is very conservative, and as there is nothing near taking the US' place at this point.

Depending on how slow the global economy gets, oil can go down a long way. That said, it will also quickly become a choke on global economic growth above a certain factor in a "recovery" too. Not a situation an economic system run on quarterly results will be able to address.

Secondly, with 10 trillion dollars in debt, the world is all in on the dollar. It's in few people's interest to have it collapse at this point.

Oh yes, no producer of oil or any other goods the US market consumes would take any pleasure in seeing their main customer go bankrupt.

And don't discount the fact that the value of the dollar gets pushed up every time the oil price rises due to increased demand by countries paying for their own oil imports in US currency.

Oil goes up, then there is a time lag of a few weeks, and then the dollar follows suit.
Could this lag be due to international oil customers gradually replenishing their US currency reserve accounts?
I'd be glad if someone could shed some light on this.

Seems to me that we are at least in a phase where, if this were a "speculative bubble", the corpses should be accumulating due to it's "pop". When the tech bubble popped, companies died. As the housing bubble pops, banks are dying and homeowners are defaulting. If the oil bubble just popped, where are the "losers"? No body, no crime.

I think OPEC has a better handle on the supply demand fundamentals than you realize. OPEC wants high prices, but recognizes that high prices create demand destruction and so strives to maintain enough production to keep prices from rising too fast. The worry is that the recent price run-up appeared to be out of OPEC's control and one might surmise that they are reaching production limits.

When supply is constrained changes in demand will drive large price swings. This is especially true when demand is inelastic and exceeding supply. The recent oil price history seems to be a model of what one would expect given my amateur understanding of economics (and reading of others here on TOD).


I think OPEC has a better handle on the supply demand fundamentals than you realize. OPEC wants high prices, but...

More than classical supply/demand I think OPEC was concerned with at what (oil) price would the world economy on which they depend start to tank. The experiment in high prices, showed that at least in the very short term (a few weeks) the economy was robust enough to withstand pretty high priced oil (say $140). Now they are seeing that on a somewhat longer time scale (six months to a year), that the world economy may not be quite as resilient as they had hoped. So they are still struggling to determine what price maximizes their profits. This of course doesn't mean that they can maintain control indefinitely, i.e. they may not be able to maintain enough production to keep the price within a range that the world economy can happily live with for much longer.

It also didn't help at all that the islamic nations' governments kept blaming it on "speculators".

Everybody with their eyes open trivially sees their deceit, but what is Joe Average supposed to think ? Here we have Tom, from New York saying it's the fundamentals and on the other hand we have the oil minister of Saudi Arabia saying it's "speculators".

It would help a lot if they'd drop their "it's a conspiracy !" yelling everytime something happens.

islamic? Maybe. I thought it was the US Congress.

It would help a lot if you'd drop the "islamic" everything something happens.

Last year I was creating price projections for WTI. It said:

2008: USD 120
2009: USD 180

I'll revise these numbers, but it is somewhat besides the point I'd like to make.

On January 12th I made predictions for this year. Basically the following:

  • USD 130 by midsummer
  • A minimal price crash late summer, I mentioned 100-105 as a short minimum
  • steady increase in Q4, starting in mid-September
  • A price maximum aroud USD 150 late this year (say mid-Dec)
  • Events have been following my predictions so far. As for proof of all this: I do have proof but it is in Hungarian. However, should anyone doubt it I can give you the address.

    All in all I think oil is trading at a minimum these weeks, and in two weeks' time it is going to start strengthening. By two weeks I mean: not later than that, maybe sooner.


    I'm about the same as you although a bit higher understand that in my opinion 2008 is the year we have fallen off the plateau and started into decline so its a bit of a split year.

    I had us up to about 130-135 this summer and we should have stopped seeing price increases their and stayed basically level with a drop about now down to say 120 then headed toward 150 towards December.

    This is what should have happened however it seems that the oil markets have been played with this year in my opinion in preparation for a war with Iran.

    On that note as near as I can tell what actually happened is that Ghawar production is in decline which is not unexpected but in addition to this a significant amount of light sweet crude was withheld from the market something like 30-70 million barrels or so. This also includes probably a resting of wells that may have seen water breakthrough. Problems in Nigeria production mae the light/sweet situation worse. Balancing this KSA has always claimed to have excess heavy sour production and I believe them I don't believe its 2mbd but 500k-1mbd is highly probably to some extent selling this masked the problem. But this lead to Iran seemingly having some problems finding buyers for its own heavy sour oil recall the reports of tankers sitting loaded.

    However this gave us and early glimpse of what life will be like once Ghawar is really in serious decline and it will not be pleasant since it looks like the heavy sour/NG issue is huge and was triggered by the above.

    Eventually of course after price rose well above everyones expectations including mine KSA belatedly hit the market with a surge of light sweet this was coupled with what looks like a extensive set of financial maneuvering. Publicly this showed as a campaign agianst speculators you have to imagine that in private the people with large long position received a lot of pressure. Needless to say the combination of real increases in short term oil production esp light sweet coupled with financial moves burst the bit of bubble we had.

    As far as demand destruction goes well its certainly a factor but demand does not change dramatically over a few months demand destruction has been going on for years and is absolutely required to match flat supply with a growing population. Needless to say this supposed demand destruction argument happened during the months we supposedly had the highest world oil production ever. Of course this is just one of the blindingly obvious paradoxes ignored by people who wish to believe the current price is real. I could write forever on this and the bottom line is that concerted financial pressure along with the help of real increase oil exports will cause a price drop.

    Finally following the last surge we have seen a sharp drop in oil exports out of the ME this indicates that a second mini surge if you will is possible over the next month or two and this can be coupled with political talk of opening the SPR. I believe the goal is to try and get the market price down to 70-80 dollars a barrel in anticipation of a strike on Iran.

    On the Iran side the situation is fairly strait forward. Once Iran has stockpiled sufficient quantities of highly enriched uranium they no longer have to have the large enrichment facilities. They can build a bomb now or later if the political climate changes or never and blend it down for nuclear fuel. And they can build the bombs almost anywhere potentially in a number of small facilities that would be impossible to track.

    Later they could readily build more enrichment facilities that need not be large to ensure a growing stockpile of enriched uranium. Once they have enough to build a few bombs they basically have a lot of options and would be practically impossible to stop. Their bomb program would effectively be successful.
    Once nuclear reactors are in operation plutonium would then be viable which is much easier to separate.

    This is important since even if Mcain wins he would have a tough time getting and attack together on Iran before they reach the point that they are basically immune from attack and could use the attack itself as justification for suddenly deciding to develop a bomb.

    So this is basically it its pretty much now or never for and attack on Iran which would reasonably ensure they don't or can't develop a bomb. If this window is passed then their may well be and attack but it probably will simply ensure that Iran will develop nuclear weapons. Right now my opinion is that they are telling the truth in the sense that they have no short term plans to build a bomb but they will maintain needed enriched uranium and later plutonium supplies along with the expertise to rapidly assemble a bomb.

    Finally even with the mini-surge that is highly probable I just cannot come up with a way for price to remain low through Nov esp with the recent Hurricanes SPR release cannot keep us from having a crunch by at least that point in time. But assuming they can successfully keep the price down over the next few weeks and this mini-surge does show up then I believe its possible to see oil prices pushed down into the 70-80 dollar range.

    The reason for all this is pretty simple and attack on Iran would lead to a price doubling if they get it down to 70-80 then this means 140-160 not a lot higher than at the beginning of the year. The assumption is that disruption of supplies from other countries in the gulf would be temporary but Iranian oil production would be shut-in for the foreseeable future. By aggressively pushing the price down now although temporary then the response from and Iranian attack would have to work from and artificially low price point. And certainly the pressure would stay on to try and suppress the price as much as possible. From this standpoint and attack later with oil say at 150-200 a barrel would be far far more damaging. I think and attack was planned for last year but to many Generals objected and we have seen a serious house cleaning on this side.
    Also the US is officially winding down operations in Iraq and it does seem to have settled down quite a bit this itself may be temporary but for the moment at least the US seems positioned to be able to reduce its presence in Iraq.

    Finally even if for some reason and attack does not actually happen you have the secondary goal of taking Americans minds off of the Middle East and keeping the campaign from falling into a lot of promises to force OPEC to ship more oil. Overall the financial moves have not only been in oil but a broad spectrum full court press to temporarily shore up the financial system for a few months.

    But a Mcain win in the election is in my opinion secondary to either attacking Iran before the election or losing whats probably the last chance that can reasonably ensure they cannot develop nuclear weapons.

    Sorry for the long post :)

    Not really but we are in a unique geopolitical year this year its really the first post peak decline year if you look at tanker traffic, price and oil quality. The high probability of and attack on Iran during the very first year we probably had significant declines at least in exports does not bode well for the future geopolitical climate. Coupled with this of course is the situation in Russia. Russian moves in Georgia indicate that they have every intention of trying to ensure they have their way if a resource war does develop.

    Whats even more interesting is that Pakistan is on the brink of collapse yet the papers are not even really covering the meltdown of the only nuclear armed Islamic state.

    And last but not least the current year has been marked by underlying geologic decline but on top has been some significant manipulation of the oil markets as near as I can tell the outcome is twofold. If and attack on Iran actually takes place then our short term situation will be entirely driven by above ground factors.
    For the next several years geologic peak will be secondary and probably effectively masked by the attack it could well be years before the situation stabalizes to the point that real production levels could be determined. More likely is that further entanglements with Russia, Venezula, Collapse of Mexico etc etc will result in people thinking that if only all this ended the oil will flow.

    If and attack does not happen then prices should increase on their own accord I expect a spike to 160+ by December simply because the current situation is unstable. But as the supply and supply quality change and probably more important NG production changes the price will go up until the spreads stabilize then plateau for a bit then up some more. As near as I can tell the first round of serious demand destruction is actually at the 200 dollar a barrel level. The current round is simply the collapse of the housing industry and the start of a mild recession. 200 a barrel will eliminate the most outrageous use in the US with large SUV's etc really off the road except for the wealthiest people. From here on out the oil prices should creep higher approaching 300 a barrel and the next stage of demand destruction contraction where very fuel efficient cars are widely adopted. In the interm the continued collapse of the housing and consumer debt defaults in general will ensure people retain cash flow for food, gas, rent. Eventually as we pass 300 a barrel and into 500 a barrel collapse of a significant portion of the middle class will be the next stage of demand destruction. Starting back at 200 a barrel we will see collapse of poor nations such as Eygpt but they don't use a lot of oil so demand collapse if you will probably won't free up significant supplies.

    On a time scale you have
    2008 at 140 -160
    2009 160-200
    2010 200-300
    2011 300->500+ ( first serious collapse year )

    Depending on how low they can get oil prices before and attack on Iran we would see post attack 160-200 etc
    basically about a 30-40 dollar long term premium from the attack. But at least for the short term if they pull it off they practically get it for free.

    Although I don't have Eastenders data I suspect the reason I'm higher is I've got a very strong suspicion that Ghawar started into decline and I think that prices will be driven by the light sweet supply and that NG production problems will prevent the heavy sour oils from being all that useful.

    Whats really interesting is that Iranian crudes are generally of low quality

    Given I expect US NG production to collapse worldwide we probably will simply not have enough NG to process the heavy oils such as Iran produces. In short peak light sweet plus rapidly declining NG production puts us into the paradoxical situation of incredibly high prices for light sweet but a surplus of heavy sour oils that are not that useful. Basically we will have all the heavy oil we can refine without sending NG prices skyrocketing. As T Boon Pickens has realized we are better off just burning the NG directly its no longer economical to refine the heavy sour crudes.

    The reason this is important is because from the big picture Iranian oil is of limited utility without opening up Iranian Natural Gas supplies and in fact heavy oil in general is of little use without a significant new source of NG. Iran has the largest natural gas resources and they are located close to a lot of the worlds heavy sour production so the choice is politically bleak. We would have to help the Iranians develop their NG resources and back off on attacking them on the political side.


    So on the energy front we have no use for the Iranian oil without Iranian NG and to get both will require a significant investment from the western nations or china. So its pretty much gotten to and all or non situation. The US would have to eat a LOT of crow on this one.

    Needless to say given all the above which is pretty reasonable outside of my suspicions about Ghawar the big picture seems to indicate that a concerted effort to push down oil prices before and attack on Iran before the last and best window of opportunity passes is sensible. You don' have to agree with everything I'm saying just the key points about NG and heavy sour and at least strained light sweet supplies coupled with the nuclear situation. The rest is details.

    if iranian crude is uneconomical to refine, what chance is there for bitumen ?

    Given I expect US NG production to collapse worldwide we probably will simply not have enough NG to process the heavy oils such as Iran produces.

    Not true.

    Refining bitumen requires about 5kg of natural gas per barrel. Natural gas is about 0.05lb/cf, meaning 5kg is about 220cf of natural gas. Refining 1Mb/d of bitumen, then, would require about 80Bcf of natural gas over the course of a year. This represents 0.08% of worldwide natural gas production of 104,000Bcf.

    Even 10Mb/d of bitumen would require less than 1% of world natural gas production to refine, and other heavy oils would require even less. A lack of natural gas for refining heavy oil is not a credible bottleneck.

    (This, incidentally, is exactly why it's so important to run the numbers before making claims: intuition is very often wrong about quantitative situations.)

    You don' have to agree with everything I'm saying just the key points about NG and heavy sour

    Unfortunately, you're simply wrong on those points. Anyone can check my calculations above and see that for themselves. Upgrading heavy oil requires only a tiny fraction of world natural gas supply.

    At a price of $8/Mcf, natural gas adds only about $1.60 to the price of a barrel of bitumen-derived syncrude, or less than 2% of the total input price. Natural gas supplies will have to fall very, very far before heavy oil upgraders are priced out of the market.

    Hi Pitt,

    bitumen requires about 5kg of natural gas per barrel. Natural gas is about 0.05lb/cf, meaning 5kg is about 220cf of natural gas.


    At a price of $8/Mcf, natural gas adds only about $1.60 to the price of a barrel of bitumen-derived syncrude

    Not even close.

    According to Petro-Canada,

    Operating costs are approximately $6 per barrel at a gas price of $4 per thousand cubic feet.


    I could duplicate these numbers from a myriad of sources.


    Ron I seriously doubt this is all the NG input before you get final refined gasoline and oil.

    I'd love for a real ChemE to get involved in this but you can look outside the oil industry at plants that render animal waste for there NG input to get a handle on how much is used in the overall process. On a boe basis for rendered animal waste its about 1:1.

    Reading the article this seems to just be the NG needed for the steam/electrical inputs. I've tried to back calculate the NG usage from various public sources but they simply don't break it out in a easy manner.

    Steam is of course one of the big ones and the heavier the oil the more steam thats used. The pipes have to be heated to flow the heavy tars and in complex refining you have a lot of pipes. Next NG is used as the source for hydrogen in sulfur removal and upgrading and finally its used in the coker. As far as oils lighter than bitumen that are on average about 40% bitumen and generally the bitumen is processed after the lighter fractions are boiled off so they are not a lot different from the tar sands for rough calculations I just assume the barrel is 50% tar.

    I've posted my attempts and results several times on this issue and not gotten others to take a look but I've come up with about 1/3 of a boe of NG per barrel of heavy oil 40% bitumen as the entire NG input before you get your final products of Gasoline and Diesel. This includes primarily coking and steam usage. With the coker as the main energy culprit vs refining lighter grades. The plants can and do burn the lighter fractions internally i.e butane and higher but these are marketable products and burning them in the refinery operations simply shifts the demand for NG to the petrochemical/plastic industry.

    Some links.



    The second link has additional NG inputs as 26% of the overall input and internal gas as 53% obviously the heavier oils have less volatiles so the need for more external NG increases.

    Slide 9 is important since its C02 output this means you burned stuff to generate the C02
    a light refinery produces 12 ktonnes/kbd of C02 vs a heavy refinery at 48ktonnes/kbd about 4 times as much C02. Guessing that the internal volatile gas sources are 50% lower for the heavy crudes not only is it 4 times as much but your getting half as much from internal light fraction sources.

    On slide 8 they claim that the energy usage in refining based on C02 emissions is less that 10% of that emitted when the gasoline is burned since C02 is a almost perfect proxy for Btu's and assuming that this slide is using the less energy intensive results of light refining we can assume heavy refining is 4 times higher or 40% of the total vs 10% for light refining.

    I've come up with heavy crude refining consuming about 1:3 i.e one boe of NG per 3 barrels of oil.
    Going of of the C02 emissions it seems to imply 1:2.5 Btu or 0.16:2.5 BOE or 1:15 BOE of NG to Gasoline
    Take the gasoline fraction as 40% of a barrel and you get about 1:7 BOE NG to Oil barrel.

    Finally a barrel of oil is a volume concept not density heavy oil can be 40% more dense than the lighter oils
    once you try to work with weights not volumes it becomes clear that the uncertainty can readily be attributed to where and how they converted. Given the higher real density of the heavy crudes vs light you get different results and refinery gains using volume is completely wrong but its all we have.

    This is a really rough way to figure it out but and order of magnitude agreement is not that bad given these are completely different approaches. A 50% error term is not horrible :)

    The ballpark figure of 4 to 10 times as much NG usage for complex refining vs simple seems reasonable.

    You can also work backwards from the discounts for the heavy sour crudes plus price of NG to figure out the profitability of refining a heavy sour vs light sweet crude. Going that way you also get numbers similar to this approach.

    On a BTU basis in my opinion from everything I've read your probably not getting any real gain in net energy for when you process the residual oil via thermal coking. But what is clear is complex refining uses significantly more NG or produces significantly less gaseous products vs simple refining either way the net demand for NG is a lot higher.

    Hi memmel,

    I seriously doubt this is all the NG input before you get final refined gasoline and oil.

    I agree completely. That amount of NG is just required to to get the bitumen out of the ground and is not even close to the amount required to refine said bitumen into light sweet crude. Since Pitt's numbers were so far just the minimum amount of NG made it clear he was not seeing the picture correctly so I only posted those. I should have gone further so thanks for the detail.


    I seriously doubt this is all the NG input before you get final refined gasoline and oil.

    Of course; I was simply pointing out that the amount of natural gas needed to upgrade heavy oil (even bitumen) is very small.

    The amount of natural gas required to upgrade bitumen to API 31 is 220cf, and that puts it right on the borderline between light and medium crude (link) and not far below "generic light sweet". Accordingly, it should take neither more nor less natural gas to refine than any other medium-light crude oil, meaning that 220cf/bbl is the net additional natural gas requirement to obtain refined products from bitumen vs. a naturally-light oil.

    In other words, finding natural gas for upgrading heavy oil simply isn't going to be a problem. Either there's a reasonable amount of natural gas available - and, remember, the amount needed to upgrade heavy oil is under 0.1% of world supply - or there's barely any natural gas, which means upgrading heavy oil is likely to be the least of our concerns.

    we can assume heavy refining is 4 times higher or 40% of the total vs 10% for light refining.

    As a reminder, this doesn't apply to syncrude, as that's an API 31 oil, and so not heavy.

    You also can't assume this because you're basing it on other faulty assumptions; in particular, you're assuming that the 4x higher CO2 emissions of Refinery B represent 4x higher energy consumption, which of course is false. Refinery A is fuelled by natural gas and refinery B by fuel oil, and those two have a very different level of CO2 production per btu. (Slide 12 also points this out.)

    Not to mention that you're assuming "refinery A" and "refinery B" on slide 9 are giving you real numbers, rather than made-up numbers for explanatory purposes. No evidence that's true.

    I've come up with heavy crude refining consuming about 1:3 i.e one boe of NG per 3 barrels of oil.

    Roughly speaking, 1 boe = 6Mcf = 6Mbtu. 1Mbtu is currently about $8, meaning that you're claiming refining a barrel of heavy crude costs $16 in natural gas, above and beyond all the other costs of a refinery (in particular, capital costs). Crack spreads simply aren't that high.

    US refineries consumed 670Bcf in 2007, for all uses, while processing 5.5Bbbl of oil. That's an average of 120cf/bbl, so any estimate you come up with that's on average higher than that is known to be wrong.

    Moreover, most of that natural gas is used as fuel to heat the various processes - your own links make it clear that it's used for fuel. Accordingly, the amount that's used in refining to supply hydrogen is necessarily quite a bit less than 120cf/bbl. 120cf/bbl for 30Bbbl is 3.5% of world natural gas production, meaning that at most a couple percent of world natural gas production is used to supply hydrogen to oil refineries.

    You can also work backwards from the discounts for the heavy sour crudes plus price of NG to figure out the profitability of refining a heavy sour vs light sweet crude.

    You're falsely assuming that that price difference is due to the price of natural gas, rather than due to paying for (among other things) capital costs on cokers and other machinery needed to refine heavy crude. You really need to read RR's essay on assays and refining, and some of the links he gives. The need for hydrogen depends strongly on the refining method, and some (such as coking) require relatively little, even for heavy oils (see his response to the first comment). See also here, which points out that not only does coking not require hydrogen, catalytic reforming actually produces hydrogen.

    Plus, if you actually try looking at price differences in terms of natural gas prices, you find it doesn't work.

    I randomly picked a very heavy and a very light oil from here - API 40 Canadian Par and API 22 Canadian Lloyd - and compared the average annual price difference with the price of natural gas in that year. If your theory is correct - that most of that price difference is due to natural gas requirements - then that difference should be some constant number of Mcf of gas (since the quantity required for refining won't change).

    It wasn't - it varied from a low of 1.6x to a high of 3.2x, meaning that your estimation method doesn't work. Looking at monthly figures, it's even less valid - it varies from 1x to over 4x.

    Of course, months where the price difference was 1Mcf means that at most 1Mcf more gas is required to refine that heavy oil; since that price difference also needs to take into account the capital cost of the coker and other machinery, it's clear evidence that much, much less than 1Mcf of additional gas is used in the refining process. As 1Mcf is roughly 0.17boe, then, it's clear that your other methods of estimating are also wild over-estimates.

    Look, your ideas are interesting, but they'd be a lot more useful if you checked them for accuracy before running with them.

    Operating costs are approximately $6 per barrel at a gas price of $4 per thousand cubic feet.

    You're talking about process heat for SAGD production of bitumen; I'm talking about hydrogen inputs for upgrading bitumen. Those are completely different steps in the process!

    Step 1: use SAGD to produce bitumen. Uses $6 of gas.
    Step 2: upgrade bitumen to syncrude. Uses $1.60 of gas.
    Step 3: refine syncrude much like you'd refine WTI.

    When we're talking about the amount of natural gas required for refining heavy oil, it's totally irrelevant how much SAGD uses for heat. Two totally different things.

    I could duplicate these numbers from a myriad of sources.

    I'd rather you found numbers relevant to refining; that is what the discussion's about, after all.

    A real plant processes a sour medium weight crude and low sulfure resids.


    Its processing capabilities consist primarily of medium sour crudes and low-sulfur resids



    Uses 17 MMSCFD of NG and used 135,000 bpd of oil.
    17000000/135000 = 125 cf per barrel.

    So one medium weight refinery used more NG then your 120 estimate.

    This refinery does not have a coker unit from what I could tell although the flow graph was unreadable for me.

    Nor did I include the Sweet Gas usage in the numbers.

    Thats at 28.6 MMSCFD.

    Next another refinery with a coker unit.


    75,000 bpd

    Coker unit energy usage.

    449 mbtu/hr -> 10776 mbtu/day

    1516 Btu/scf -> 7MMSCFD

    Or 93 scf/barrel for the cocking unit alone if it was fired with natural gas.

    If it uses internal refinery gas then the effect is felt by former customers that don't get the refinery gas.

    Yeah ditto for gas. How many of the shale gas projects in North are even profitable at these prices? Where will the financing come from in the future if capital believes the extra gas will drive prices down?

    I wonder if anyone has heard anything similar....

    This Labor Day weekend I got to talk with 5 people who deal in real estate. 4 of the 5 were of the opinion that (currently active) developers are now behaving just like gamblers who are desperate to win back what they lost. Nothing new is selling (I was told), but new construction is still being started .... And they’re still getting construction loans.

    I'm no financial whiz, but, is this responsible fiscal management?
    If true, isn't this going to drive an already depressed market even further into the toilet bowl?

    The UK Government's latest 'Cunning Plan' involves Developers and the government contributing to provide interest-free or reduced interest loans to fist-time buyers for 5 years.

    It is just wonderful that developers are so flush with cash that they can finance this!

    A cynic might feel that the number of developers still around to kick in their share might be rather limited before the 5 years are up.

    Yes, the first time buyer loans were also mentioned during these conversations. Some of these (tax-payer funded) loans are actually forgiven if the buyer lives in the house for a certain number of years.

    On which side of the Atlantic were these ideas first thought up at? Don't the customs people check for this kind of smuggling?

    I couldn't really be bothered to follow the Government's arrant nonsense too closely, but I gather that in so far as they have budgeted at all for it, most of the money is supposed to come from 'bringing forward expenditure' - IOW, very little real money.
    In all, including these transfers, it is supposed to involve a massive £1bn pounds, which should have a major impact on the 24 million households in this country, currently valued at around £165,000 each - call it a £4 trillion pound residential property market.
    It just occurred to me that it might be worth explaining for the benefit of those in the US the way the system works in the UK.
    The family who is repossessed does not end up sleeping in a car, although a single person might.
    It is basically the obligation of the local authority to provide housing, and if they have nothing suitable for the whole family they might have to put the children into care.
    Most typically though they would end up in bed and breakfast accomodation whilst something more permanent is sorted out.
    All this means that if they are unable to meet their mortgage payments then the local authority may end up paying hundreds of pounds a week, far more than the mortgage cost.
    It is also worth noting that there is no such thing as a non-recourse mortgage - the only way out is to either have so little assets that the building society can't be bothered to chase them , or to go bankrupt, which costs money.

    So to sum up, most will end up with some sort of roof over their heads but without assets, often down to the furniture.

    In agreement Ignorant, at least from the western metroburbs of Chicago, a builder in the neighborhood has this medieval mcmansion in progress http://www.kingwanted.com/

    That building is truly hideous! It looks like something out of a Kunstlerian nightmare...



    I can confirm this in my little piece of the world – it's simply amazing to me and a good demonstration of just how pervasive this idea of get rich quick thru real estate (Kunstler’s “lotter nation”) still is…

    In the town where I work there’s yet another new multi-story office building going up nearby. Overheard a co-worker today saying that it’s going to house – get this – some kind of realty offices.

    And this is in one of the counties that is getting absolutely walloped by the housing implosion.

    I’m left shaking my head on a daily basis…

    Here in Australia I am also left shaking my head.I'll have to steady down a bit.I might do myself an injury.

    On Queensland's Gold Coast,that paragon of responsible development,there is a house under construction in a canal estate which is budgeted to cost 24 million dollars.It is huge and is probably all of one metre above high water spring tide.

    While the real estate market here has declined it is not (yet) in the free fall stage.Most of the wealthy will aways indulge themselves in a grossly irresponsible fashion.The owner of this monstrosity on the canal will,in a few years,be able to drop a line out his 1st floor window and catch a feed of fish in the back yard.All this crap is good for a cynical laugh,at least.

    We're still approaching the energy cliff every single day that the planet uses up it's 74mn barrels of crude. The price declines will probably serve to calm people down and push off till a later moment the investments required in alternatives. I can imagine a child in the year 2300 asking his parents, "they used up the most precious finite resource in a 100 years? without even considering us?" What the market fails to see is that 100's of years from now, the oil that we use today at 24-30c a cup will be worth it's weight in gold in an age of energy scarcity.

    Markets can not price in peak oil. Most of the trading that goes on is for the front month contract. So the price is only an indication of supply and demand in the comming month. Do better not look at the markets to price in peak oil, they wont.

    I think our best hope is for producers to price in peak oil and begin to husband their resources. That in turn will affect the front month contract.

    All the airlines opened up double digits, percentage wise, this morning. Continental opened up more than 15 percent. This is astonishing, everyone seems to now believe that the oil crisis is over and it's time to buy airline stocks. Gustav did not do as much damage as expected so now it's time to buy the airlines. I guess it's time to buy a new SUV as well.

    The ignorance of the investment community as to the true state of the economy is unbelievable.

    Ron Patterson


    There are nimble traders out there that laugh at your "ignorant investor" comment all the way to the bank.

    I would agree. Peak Oil is a long term thesis. Those nimble traders will not recognize what we've been saying for a long time -that a drop in oil prices will delay the sense of urgency needed policy change, delay scaling of decent EROI alternatives, delay build out of long 'duration' renewables for electricity, delay consumer changes. However, these laughing, profitable traders will one day need to understand the difference between financial capital and the 4 real capitals: natural, built, social and human. It's an open question whether they make that trade in time...

    not just nimble traders, but the self-claimed "worst trader" yet the proven shrewdest investor -- Jim Rogers -- as well. on his June 6 interview on Bloomberg:

    ROGERS: I own commodities, I have been buying agriculture, I bought airlines today. I bought a lot of airlines around the world today, both stocks and bonds. Swiss franc, Japanese yen, renminbi, these are the few things I have been buying recently.

    LIU: You bought airlines? A lot of people are very bearish on the airlines, talking about the fuel cost. Why are you buying airlines?

    ROGERS: Well, Betty, you just got through the same why, everybody is very bearish. No, I don't buy things just because people are bearish, but I fly a lot, and the planes are full. You cannot buy a new - if you order a new plane today, you couldn't get it for several years.

    This Boeing and Airbus have problems. You read every day that the airlines are cutting back their capacity. Fares are going up. I mean, Betty, everybody knows about the fuel cost. Is there any airline left that doesn't know we have fuel problems? They are adjusting for all it.

    LIU: Well, that's true. But there's also talk about bankruptcies in the airline industry. And you think some could go bankrupt?

    ROGERS: How much more bullish in the news do you want? Twenty-four airlines have gone bankrupt this year. That's great news. You know, five out of the seven largest American airlines went bankrupt during this decade. So, fine. Bankruptcies are signs of bottoms, not signs of tops.


    So, fine. Bankruptcies are signs of bottoms, not signs of tops.

    Well, several banks and investment brokers went bankrupt several months ago. And the financial stocks have tanked since then. Ditto for the airlines. If Jim Rogers bought into airlines in June he is almost back to even now after being down almost 50% in mid July. However if he bought in March he is still down about 35%. Will Rogers make money? Possibly but not yet. The airlines are at the mercy of the oil market. If oil continues to fall...for several months...then Rogers will make a killing.

    However it is only a matter of time before the price of oil shoots back up again. Then investors will not be able to get out of airlines fast enough. Many will lose their shirts.

    Ron Patterson

    However it is only a matter of time before the price of oil shoots back up again.

    in the very same interview:

    LIU: Well, but you know, and I know you always hate having me ask you about - about limits or caps and all of that. But, given the supply/demand situation that you're talking about, how high can oil go?

    ROGERS: Betty, I know you - how you're paid to ask questions like that, but I don't know the answer. I'm not smart enough. I know that unless somebody discovers a lot of oil, the price of oil can go to $150, $200. You pick the number.

    Eventually, if it goes high enough, if oil goes to $300, there will be drilling for oil on the White House lawn. Hillary Clinton won't be speculating in cattle futures anymore, she will be speculating in oil futures. She will be out there drilling for oil.

    If it goes to $300, there will be drilling at Buckingham Palace. I don't know how high it's going to go, Betty, but unless somebody discovers a lot of oil very quickly and very accessible areas, the facts are the world is running out of oil - out of known oil - known oil reserves.

    There are nimble traders out there that laugh at your "ignorant investor" comment all the way to the bank.

    Sorry Francois but you are dead wrong on this one. (And you also Nate.) First let me point out that there is a tremendous difference between a "nimble trader" and an "investor". Investors invest for long term profit, traders try to buy low and sell high within a very short period of time. I would guess that very few traders bought the airline stocks at the opening this morning because they were up from 10 to 20 percent. They could not buy, this morning, at Friday's closing price. They would have buy at a huge premium this morning. That is simply not something a nimble trader would usually do unless they had a very good reason to expect the trend would continue up. They have not. In fact they are all down slightly from the opening.

    Investors, on the other hand, would expect the airline stocks to keep rising in the next few months and buy anyway. They would have to believe that when they paid a 15 percent premium over Friday's close.

    No Francois, no airline trader is laughing all the way to the bank, not yet anyway. And investors sure as hell are not laughing yet. Will they be laughing a year from now? Only time will tell but I would bet big bucks they will be crying a year from now if they hold their positions that long.

    Ron Patterson

    Ron, you misunderstood my comment. There are traders who are in and out 50 times a day based on minibreakouts. There are traders who sense when 'news' is supposedly bullish but market is down (like friday) and go short, or on friday when airlines were up ahead of hurricane would go long - they are probably out by now.

    My point is that many people have different horizons. Peak oil is real and it is now (depending on the definition - my definition is end of cheap oil, based on permanent supply/demand imbalance). At some not too distant price point, OPEC, and some independent producers will announce cut or shut in production (in areas that they can). Long term trend is higher highs and higher lows. Super long term trend is turning abstract wealth into real wealth.

    Our point of contention is that short term traders are not 'idiots' -they understand risk reward very well. The main reason I am an editor here and getting my phd in ecological economics is because that whole life was shallow and unrewarding, other than the 'puzzle solving' aspect -Peak Oil, and its broader issues are the greatest puzzle of our era, or even our species. The answer to it is > than the empty set. How much greater, and in what direction is what we are trying to suss out here...

    Nate, it is true that there are traders, or speculators, who are in and out many times a day. But there are no investors who play that game. My post specifically spoke of investors, not traders. So I think both you and Francois misunderstood my comment. Traders are gamblers. They are normally called speculators when they trade commodities but the principle is the same. They are definitely not investors! Almost half of traders (speculators) will make money and slightly more than half will lose money. It is a zero sum game minus commissions.

    I stick to my original comment. The ignorance of the average investor is astonishing. If they realized what is happening to the US economy, they would dump their equity investments today. And I am not just talking about peak oil but the entire big picture.

    For an overview try Chris Martenson's Crash Course.

    Ron Patterson

    a) that Chris Martenson site is great! He packaged alot of TOD themes into more slick compact presentations -did a pretty good job on net energy.
    b)I don't have time to find stats now, but I think the number of 'investors' compared to 'gamblers' has shrunk in recent years. But if you solely meant 'investors' as in 5 year hold types, then I agree with you.

    But if you solely meant 'investors' as in 5 year hold types, then I agree with you.

    Well no, I meant those who buy with the intention of holding for several years. Most investors will sell if their investment drops by a certain percentage, regardless of how long they intended to hold their investment. There is no rule that says investors cannot panic and cut their losses, just like speculators.

    However there are investors who will hold their investments regardless of how much they lose. Some will hold their investments even as the companies they hold file for bankruptcy. They say they cannot sell until they get back to the break even point. These people are usually called fools.

    Or they're called "People stuck in 401K plans they can't get out of without taking a huge loss in taxes and penalties". :) Even putting it all in money markets won't help when the fiat currencies of the world implode. *Sigh*

    thanks Ron for that Martenson site link, i'm going to share that with as many of my friends and family as i can.
    presenting the information in little chapters is brilliant. (since that seems to be about the attention span of people when listening to this type of information).


    Ron, is generally right. While it is true that certain airlines might gain a relative advantage at a certain price, the whole industry could also restructure. The flights that he has been on are probably losing money. They are just being operated with by a large entity w/ access to capital that can afford to sell at a loss for a while. I would rather stay in cash and wait for the sure thing (The short!) than gamble on AMR going from 11 to 14.


    This (or in a couple of weeks) would probably be a nice moment to short these stocks.

    Try borrowing shares.

    You will need to buy puts if you want to play that game, but pick your spot because the puts are expensive now. They were selling for peanuts the first time around (say 18 mos ago), but a lot of people are onto it now. The same amount of leverage is 5-6 times as much as it was the last time around,I would say. Better off waiting until 14 or 15 and taking the chance you will miss out than end up sitting on something that expires worthless.


    It gets funnier than that...

    According to the financial media, slowing economies caused oil price drops, which in turn caused the stock market to surge.

    Are they seriously telling us that slowing economies caused the stock market to surge?

    If any of the media writers at CNN, Yahoofinance, bloomberg, etc really knew what and why markets moved they wouldn't be media writers.

    Talking heads give explanations because their readers LIKE explanations, and often don't question them, (except like the egregious example you just listed!!)

    Right on Nate; narrative fallacies at work.

    "narrative fallacies" a history of misunderstanding,from the moment we first attempted to understand.

    This oil price action--also the stock market and general economic conditions--reminds me of a ball bouncing down the stairs. It's kind of a physics-type of energy release sort of thing. Waves which gradually get smaller.

    As we use up energy we are really involved in a fundamental way with earth's available energy. It's a physical process above all else (i.e. economic processes, biological processes are involved secondarily I think because they (we) respond to the basic physics out there.)

    It takes a long time for this enormous physical energy to be expended and it happens in waves. Perhaps the waves get slower too with time. I am not a physicist so I can't really talk about this knowledgeably. Yet I've seen a ball bouncing down the stairs or a skipped stone making smaller and lower arcs in the ocean.

    The bouncing takes time because it's a geological event. It's huge, but we're tiny. Things will seem like they're getting better but it's a lower shorter bounce, followed by another stair step down, then another (shorter) bounce up.....

    I would think therefore that the stock market would be a long way from "dead" at this point.

    I'm not a pro at this but I think that is correct. Markets often go up on bad news. The reasoning is that a slowing economy lowers labor costs and labor is the largest cost for business. Boom times mean tight labor markets which mean high labor costs. This may not be a correct analysis, the truth may be otherwise but traders believe this and this drives markets. I've heard this rational many times.

    Well, here's a new low point in mass transit vandalism. My daughter, who takes the TRE commuter rail line between Fort Worth & Dallas, just called. Someone apparently poured gasoline on a section of the tracks and set fire to the railroad ties. The trains are forced to reduce their speed to 10 mph over the damaged section until it is repaired.

    That's because commuters are communists.

    Sounds like a bunch of bored kids.

    Sounds more like General Motors or maybe a highway contractor if you ask me.

    Perhaps we should follow the German example and make railroad ties out of concrete. They mass produce them and they are all of equal quality and uniform size. They are long lasting because they won't rot (or burn).

    They then pre-assemble them to the rails and deliver them to the construction site where they are hoisted in place with alignment carefully checked.

    Not only that, the sections are welded in place and the joint ground down to make for a super smooth ride.

    I know this stuff because I watched it on Bahn TV.

    Amtrak's Northeast Corridor route (DC-NYC) has been re-fitted with concrete ties for quite some time now.

    Yea, and now they're replacing them all because they've started cracking in 5 years instead of the 40 they were supposed to. Damn mafia concrete.......

    Wooden ties have a rapidly shrinking market share (usually used for specialty applications like road crossings).

    Concrete ties are cheaper than composite (mainly recycled plastic) with composite better for more humid areas. Union Pacific is changing out concrete ties in East Texas and Louisisana with composite ties for example.

    50 years nominal life for concrete ties, "longer" for composite ties.

    Best Hoeps for Long Lived Infrastruture,


    Not only that, the sections are welded in place and the joint ground down to make for a super smooth ride.

    This is interesting since you'd think the sections need to be able to expand/contract freely when ambient temperature changes.

    An almost solved problem. In extreme heat, occasional "slow orders" are required on some lines due to expansion.

    Not my field, but curves can absorb some expansion/contraction as well as the occasional joint.

    Welded track is almost universal on new, upgraded and replacement tracks today as are concrete or composite ties. Cracked granite is considered the best ballast.


    Makes sense, thanks for this.

    I chalk it up to lower oil prices. At $8.00 a gallon, gasoline will be too expensive for petty vadalism...they will use whale oil instead. :)

    Bartiromo Talks with Sarah Palin

    Does anybody know what Palin is talking about?

    First she says:

    I think some in Congress have misconceptions about what ANWR [Arctic National Wildlife Refuge] is all about and what Alaska is all about. When you talk about ANWR and the area that needs to be unlocked so that we can explore more and develop these billions of barrels of oil, it's a swath of land that's about 2,000 acres in size—and that's out of a 20 million-acre plain that has been set aside. So 2,000 acres, that's like a postage stamp on a football field.

    And then later she says:

    Because just that swath of land in that refuge alone is estimated to hold about 11 billion barrels of oil and 9 trillion cubic feet of natural gas. And those are just the areas that have been explored. That's about a year and a half worth of U.S. oil consumption and many months of natural gas. It's about a trillion dollars worth of energy. And that's—again—just that sliver of ANWR.

    Is she saying that 11 billion barrels of oil and 9 trillion cubic feet of natural gas lay under only 2000 acres?

    Then she says:

    ...we have to protect Americans and protect Alaskans, who own the resources underground, from big-oil-industry interests that may have in the past taken advantage of a state like Alaska and been allowed to warehouse reserves.

    Again, what is she talking about? Is there a scintilla of evidence that oil companies are warehousing reserves?

    Or is this woman just a 24 carat demagogue?

    These mathematics are perfectly sensible, when you consider that after the rapture countless billions are to be accommodated in the relatively confined space of the New Jerusalem.

    See here

    Seems to me she's playing the game of, the footprint is tiny, only 2,000 acres (the real impact of which the link helps clarify), then trying to claim that the 11 billion barrels would be coming from under only those 2,000 acres, so there must be so much more! Utterly ignorant or disingenuous, take your pick. I'd guess mostly the latter, which a touch of the former. Either way, what bunk!

    Thanks clifman.

    That link helps tremendously.

    What she is saying is that 1.5 million acres, with 30-something oil fields scattered over that 2344 square mile area, can be developed with only 2,000 acres of actual area being covered by drilling pads, tank batteries, roads, pipelines, pumping stations, natural gas plants, tank farms, etc.

    This claim that a 2344 square mile area, with oil and gas wells scattered asunder, can be developed while impacting only 3-1/8 acres is nonsensical.

    But her implication that 9 billion barrels of oil and 11 trillion cubic feet of natural gas lie under only 2000 acres, as you say, takes ignorance and dishonesty to an entirely new level.

    i've wondered about that 2000 acre oil field myself. are they planning to do drill 50 mile laterals ?

    the 2000 acres is a scam SCAM SCAM. just like the electric power industry claiming that they can sequester c02 from coal fired plants. they have no plan to do so.

    i say dont let the sleezy ba$tards get their foot in the door.

    ms palen also claims that the 11 billion barrels is what is already explored. one well of unknown results proving up 11 billion barrels ?
    i know she was never qualified to be chairman of the o & g commission, but did she learn nothing ?

    how about a thought experiment. assume that the oil in anwar is contained in a single field and can be developed with a 2000 acre site. assume the reservoir is as thick and porous as ghawar (700' ?). how long will the laterals need be ?


    I assume she's talking about the surface footprint of the operations. Even then you have to make some assumptions. An active drill site might cover 4 or 5 acres. Finish drilling and leave the well head and surface production equipment you'll take up 1/3 of an area or so. Maybe 2 acs if there is a lot of tankage. Drill 20 wells from one surface location you might end up with as little as 5 or 10 acres total. Now, if you lay a pipeline below ground level do you count anything for surface use?

    Technically you might be able to put 4000+ wells (post-drilling) on 2000 acres. But that 2000 acs can be spread across 300,000 acs. I've stood next to producing wells making 2000 bopd and 20 million cubic ft of NG that took up less than 1/8 of an acre. But it is somewhat misleading for her to throw numbers like that around. There can be an environmental impact that goes beyond the amount of drilling acreage involve. Your next door neighbor’s house may only cover ¼ ac but him blasting his sterio all night long is going to have an impact on your “environment”. The support facilities, for instance, needed to drill and produce those 2000 acs, might cover 10,000 acs. But that is a tiny amount compared to the size of ANWR. So she does have a point. But if the operations do not have to severe an impact on the environment does it matter whether it’s 2000 acs or 200,000 acs? I personally don’t see it as a big problem. But, then again, I can look at a drilling rig, a well head or even a refinery and often enjoy the view. But that's just me. And then when I look a a golf course I think "what a waste of good land". But then I don't play golf. Nothing can be done without some environmental degradation. Anyone here living in a subdivision that didn’t see its impact completely destroy the habitat it now covers? So we’re back to the basic definition of good growth vs. bad growth: do you benefit from it (good growth) or is it a tragic loss of habitat (because it doesn’t benefit you directly). Each one of has to look into our heart and question whether we can pass judgment without being hypocritical in the process.

    As far as "warehousing reserves" I suspect she's referring to the battle Alaska has been having with some operators for many years. Companies have, in some cases, resisted putting some reserves in to production because of the high pipeline costs and pricing uncertainty. The leases from the state probably had some sort of allowable delay allowed (most lease have a finite term that expires unless you start producing) based upon initial uneconomic conditions. Just a guess but the story was in the trade headlines 4 or 5 months ago.

    What I find questionable is this grand conspiracy theory of hers implicating the oil companies in some sort of malfeasance. While the supposition that oil companies could be involved in some sort of devilry is not unbelievable, what is unbelievable is that they would engage in this maliciousness in order to make less money.

    Let me draw an analogy. Let's say you are a real estate developer and you have 5,000 acres on the outskirts of a city. You have another 5,000 acres located five miles farther out.

    Now imagine the following scenarios and how they might impact your decision as to whether to develop one, both or none of the properties:

    1) The city is growing rapidly and both your properties are in the fairway of that growth.

    2) The city is growing slowly.

    3) The city is suffering a major economic contraction and is losing population.

    4) Your land was contaminated with industrial chemicals and the clean-up costs will be high.

    The operating assumption here is that the developer wants to make the most money he can. And as soon as he can. If the city is growing rapidly and grows up to the limits of his first parcel of land, and it becomes profitable to develop it, then will he not develop it? And will he not develop it despite the obstacle of the high clean-up costs, assuming the land price is high enough to pay for the clean-up and allow a decent profit? Likewise maybe he will postpone the development of his second tract to see if the city continues to grow or not.

    Inherent in Palin's "logic" is this nonsensical assumption that oil companies don't want to make the most money they can and as quickly as they can. Instead, she argues there is this conspiracy amongst them to sit on these prolific oil and gas leases. For what possible reason would they do that? You're in the oil business, ROCKMAN, and you know how present value of money calculations are made, and you know the pressure is always on to make as much money as you can as soon as you can. And you also know what she says is blathering nonsense.

    And then in the same interview she has the audacity to state: "Because capitalism still works. The free marketplace and competition still work."

    The cognitive dissonance is mind boggling!

    I had a conversation last summer with a member of the Alaska O&G commission. He was on the board both under Murgowski and Palin. The O&G companies were trying to get a sweetheart deal from Alaska to develop a known natural gas deposit as a stranded deposit. That is it would not be profitable without subsidies. Murgowski and the O&G companies had come to an agreement that would have provided for a twenty year tax holiday and freedom from environmentas oversight and lawsuits. Murgowski demanded that the O&G commission sign of on that agreement. Palin who was head of the O&G commission along with the other members resigned in protest. Palin then run for govenor and won in landslide. She is certainly more on the side of Alaska than the oil companies. Folks, a little more fact checking before grabbing the tar brush would be advised.


    I think you're a little confused. In fact I think you are exremely confused, because your story has little in common with what happened during Palin's tenure on the Alaska Oil and Gas Conservation Commission.

    Murkowski served as Alaska's governor. According to the National Journal, in 2003 he appointed Palin as chairwoman to the Alaska Oil and Gas Conservaton Commission. There she served alongside state Republican Party Chairman Randy Ruedrich. Months later, Palin emerged as the driving force behind an ethics probe of his activities. Hamstrung by confidentiality rules, Palin was unable to talk about the case; she grew frustrated and resigned from the commission just 11 months after accepting the post. Her efforts were later vindicated when Ruedrich admitted ethics violations and paid a record $12,000 civil fine.


    According to Citizens for Ethical Government:

    Randy Ruedrich admitted getting caught violating three seperate ethics laws and was fined $12,000 by the Attorney General’s office.

    ► Misuse of official position by engaging in partisan political activity in his Alaska Oil and Gas Conservation Commission office.

    ► Improper disclosure of confidential information to a third party without authority. Ruedrich forwarded a confidential attorney-client privileged e-mail and attachment to attorney Kyle Parker, who represented Evergreen Resources on matters pertaining to methane gas development in the Matanuska-Susitna Borough.

    ► Incompatible outside voluntary service for the Republican Party of Alaska by acting contrary to the manner he said he would in his Ethics Act disclosure statement.


    I stand by my statements.

    A litle further statement. I agree with what you said concerning the memo, and the ethical breach it caused. I still stand behind the information concerning underlying cause of the of this incident.

    I sense that you are recalling your story from memory, and I'm wondering if you're not confusing what Palin did as O&G commisioner with what she has done as governor.

    I say this because your description of a "sweetheart deal" to move "stranded deposits" with subsidies and tax holidays sounds a lot like the deal Murkowski had cut with BP and ConocoPhillips to build a natural gas pipeline from Alaska across Canada to the Lower 48.

    According to the Natonal Journal article I linked above, this was a key campaign issue for Palin when she ran for governor. Her original proposal was to build a natural gas pipeline to Valdez where the gas could be converted to LNG and transported in tankers. (This, by the way, sounds eminently sensible to me since LNG in the international market is selling for about $20 per MMBtu, almost three times the $7.50 it is currently fetching in the North American market. Of course, with the current energy shortages, the American nationalists would probably brand such a move as treasonous.) Since then she has evidently modified her preference and now backs a pipeline linking Alaska to the Lower 48. The pipeline will be constructed by TransCanada, however, and not BP and ConocoPhillips, and evidently with fewer of the tax holidays and other incentives. DrumBeat had a story posted on it Aug. 30 that describes the deal and the controversy:


    I certainly don't know enough about this deal to talk intelligently about it, and with this type of deal, the devil is most definitely in the details. On the surface of it, however, it does appear that Palin's deal is a better deal for the people of Alaska than Murkowski's, netting them more tax revenues, the losers being ConocoPhillips and BP.

    I might add that whoever gets the concession to build the pipeline will have a de facto monopoly on buying and transporting natural gas produced in Alaska to market. The pipeline should therefore be treated like a public utility, accessible to all current and future natural gas producers on the same prices and terms, those prices and terms governed by a state or federal agency. If Palin's deal does not do this, then she is awarding TransCanada a liscense to steal.

    The one thing I can check on is her math. She claims that 2000acres out of 20million is like a postage stamp in a football field. Well the ratio is one part in ten thousand, the square root of that is a hundred, so we are talking about a patch 1 yard, by about a foot. That is clearly much larger than your average postage stamp. So clearly we see her using grossly exaggerated language, and counting on innumeracy to carry the argument. All for no need, as most readers would consider that patch to be small anyway.

    maybe she has female measurement dyslexia.

    And will he not develop it despite the obstacle of the high clean-up costs, assuming the land price is high enough to pay for the clean-up and allow a decent profit?

    He'll trade the toxic land - without mentioning the "problem" - to the city so it can build a sports stadium and he'll get a more "appropriate" section elsewhere. Palin is on dangerous territory talking about corporate abuses. If that meme takes off it will be hard to stop.

    cfm in Gray, ME

    Well put DS. I didn't follow the details of her argument with the companies regarding development of those leases but I took her negative statements more as negotiation efforts then honest rebuke. Despite all the praise many have thrown upon her she is still a politician and thus has the bully pulpit always at hand. But at last report it does sound like she has finally got some serious movement started on the NS NG pipeline.

    She has associations with the "Alaska Independence Party" - a small political fringe group that wants Alaska to secede from the union.


      And what does the AIP believe?
    • A belief that "the vote for statehood was invalid because the people were not presented with the range of options available to them" and that "the federal government has since breached the contract for statehood on numerous occasions in over a dozen serious and substantial instances."
    • A belief that there should be a vote on Alaskan secession.
    • Remaining "steadfastly opposed to environmental regulations and actively promotes the private ownership and widespread development of Alaskan land."
    • A platform which includes:

      [A]mending the Constitution of the State of Alaska so as to re-establish the rights of all Alaskan residents to entry upon all public lands within the state, and to acquire private property interest there in, under fair and reasonable conditions. Such property interest shall include surface and sub-surface patent.

      [F]oster a constitutional amendment abolishing and prohibiting all property taxes.

      [S]eek[ing] the complete repatriation of the public lands, held by the federal government, to the state and people of Alaska[.]

    I suppose they ultimately want the oil and mineral wealth for themselves. I don't know what they call such talk up in Alaska, but down here in the lower 48 they would call a person that talks like this a kook.

    But in light of all of this, her discussions about ANWR aren't quite as baffling.

    If the AIP is close to on a par with Vermont's Second Republic or the movement in Hawaii, then I'd suggest you think again before calling her a "kook". So might the citizens of Ukraine, Russia and the other parts of the FSU.

    The "repatriation" of all public lands held by the federal government to the state and people of Alaska - that would probably open the doors to gross exploitation by well-connected locals. If the permafrost is melting anyway and swallowing all their lakes, homes and landscape, then why not pump everything they can. Party on. That's the downside of "local, local, local".

    cfm in Gray, ME

    Secession sure sounds incompatible with being vice chief executive of the nation, doesn't it? I'm sure you understood that point. Her association then vs. now further indicates that high ideals can go to hell in the face of having power, no?



    We are a nation at war and in many [ways] the reasons for war are fights over energy sources, which is nonsensical when you consider that domestically we have the supplies ready to go.

    How comforting. Just the person we need to lead us into the next four years of the 21st century. And, by some, she is considered an expert on energy. Kind of like the ad I saw last night saying we had enough domestic supplies to last us for the next 60 years. Hey, well let's just cancel all those import orders and take that black stuff off the shelf. After all, the supplies are ready to go, whatever the hell that means.

    I fear the reality based community is going to take another major hit during this election. I hope my fears are unfounded.

    These comments made me wonder if Palin is in the Abiotic Oil camp, since a lot of Creationists subscribe to the abiotic view. Here is a blog post (from someone familiar with TOD and the EB, if you scroll down) who had the same question:


    Whew, this still has my head spinning.
    After reading up on Sarah Conner....err Palin's religious views I just had to ask:
    Does she subscribe to the abiotic oil theory?

    These comments made me wonder if Palin is in the Abiotic Oil camp, since a lot of Creationists subscribe to the abiotic view.

    The main creationist organizations all teach a biological origin for oil, not the abiotic view. A few links as examples:


    This source (answers) is a pathetic joke. It starts out OK:

    Most scientists agree that hydrocarbons (oil and natural gas) are of organic origin. ... [T]he weight of evidence favors an organic origin, most petroleum coming from plants and perhaps also animals, which were buried and fossilized in sedimentary source rocks. The petroleum was then chemically altered into crude oil and gas.

    And this has occurred since 9:00 am, October 23, 4004 BCE, correct?

    Crude oils themselves do not take long to be generated from appropriate organic matter. . . . Thus, for example, it has been demonstrated in the laboratory that moderate heating of the brown coals of the Gippsland Basin of Victoria, Australia, to simulate their rapid deeper burial, will generate crude oil and natural gas similar to that found in reservoir rocks offshore in only 2–5 days.

    How disingenuous! How long did it take to make those brown coals of Gippsland? I also highly doubt that the oil kitchen (or oil window) functions as a laboratory.

    FInally, there's this chestnut:

    All the available evidence points to a recent catastrophic origin for the world’s vast oil deposits, from plant and other organic debris, consistent with the biblical account of earth history. Vast forests grew on land and water surfaces1 in the pre-Flood world, and the oceans teemed with diatoms and other tiny photosynthetic organisms. Then during the global Flood cataclysm, the forests were uprooted and swept away. Huge masses of plant debris were rapidly buried in what thus became coal beds, and organic matter generally was dispersed throughout the many catastrophically deposited sedimentary rock layers. The coal beds and fossiliferous sediment layers became deeply buried as the Flood progressed. As a result, the temperatures in them increased sufficiently to rapidly generate crude oils and natural gas from the organic matter in them. These subsequently migrated until they were trapped in reservoir rocks and structures, thus accumulating to form today’s oil and gas deposits.

    So check it out: coal beds formed almost instantaneously apres le Deluge!

    Trillions of barrels of oil--formed from coal!--in a mere 6,000 years!

    Anyone care to do the math in barrels-formed-per-day?

    Ah, silly me, and here I was, all this time, thinking it happened back when the Earth, Mars, and Venus kept bouncing off each other on that pool table otherwise known as the Solar System, accounting, among other things, for the fact that the month names manifestly count only to ten rather than a full twelve! (Believe it or not, that one made such a big public fuss in its day, and again in the 1970s, that eventually even Carl Sagan weighed in on it.)

    damn ! i thought i knew a little about geology and here it is all 'splained in the bible.

    I bet that pregnant 17 year old unwittingly doesn't realise the fate of America lies in her hands.

    How did it come to this?


    How did it come to this?

    Simple... John McCain's stellar judgment. I just can't wait for him to be in the White House.

    Stellar, as in light years from reality?

    Just in case anyone has any doubt American politics has an illogic all of its own, the Republican National Convention gets the final word.

    "God only made one John McCain, and he is his own man," declared Sen. Joseph Lieberman, the 2000 Democratic vice presidential nominee, awarded a prime-time turn at the Republicans' convention podium.
    The convention hall resounded with boos when Lieberman said the Democratic presidential candidate voted to cut off funding "for our troops on the ground" in Iraq last year.
    And again when former Sen. Fred Thompson scoffed at the 47-year-old Illinois senator, who is seeking to become the first black president.
    "Democrats present a history-making nominee for president. History making in that he is the most liberal, most inexperienced nominee ever to run for president," Thompson said as delegates roared their agreement.
    Thompson and Lieberman both cast Palin as a political maverick in the McCain mold.


    When you have the GOP spotlighting Al Gore's VP nominee extolling the virtues of Palin, well what can I say... it don't get any weirder than this!

    Traitors are not uncommon in dire times. ;-)

    But there is always a chance someone's view of the world has changed over the years. However, that's still assuming one DID have a view to begin with...

    A very clear reminder that McCain/Palin domestic policy promises a shotgun wedding for every family.

    Get rid of any reality you don't like - ban books, fire anyone who disagrees with you.

    Stein says that as mayor, Palin continued to inject religious beliefs into her policy at times. "She asked the library how she could go about banning books," he says, because some voters thought they had inappropriate language in them. "The librarian was aghast." That woman, Mary Ellen Baker, couldn't be reached for comment, but news reports from the time show that Palin had threatened to fire Baker for not giving "full support" to the mayor.


    Adaptation: The Ultimate Challenge

    I liked this article caption, so decided to read more, however feel it doesn't capture the true essence of what will probably occur. Climate change is not going to be an incrementally increasing phenomenon that will require stronger efforts to adapt, but rather one that increases exponentially, and as it does humankind will be chasing an ever smaller range of latitudes with weather suitable for agriculture, i.e. sustainable life.

    The amphibians, polar bears and other species that are dwindling, are warning signs that life for people will at some climate change juncture become a losing battle for many, and at least a very difficult effort for most.

    What's fascinating about climate change, is it's occurring at the same time we are facing peak oil. So, as we burn through fossil fuels at an unprecedented pace, knowing it's a finite resource base which will soon not be able to keep up with demand (although that may have already occurred, aka greatly increasing price), we face the ever increasing pace of ice melt which leads to ever greater emissions of CO2 and methane (the albido effect), yet simultaneously compete on a worldwide scale, at what some believe will be a close to war type tempo, for the last of the big untapped storehouses of oil & gas in the arctic!

    We are much like termites eating away at a log at sea. We simply cannot stop ourselves, or can we? Can we alter our future with sustainable forms of energy production that does not destroy the very fabric of our existence? I suppose that's the 'T' in the road we now face.

    We simply cannot stop ourselves, or can we? Can we alter our future with sustainable forms of energy production that does not destroy the very fabric of our existence?

    My guess is no. While peak oil may mean there's not as much oil to burn as some fear, there's a lot of other things to burn...and with oil gone, we will burn them. Coal reserves are probably larger than estimated, if you consider the dirty coal few want to burn now. Some countries are already having problems with forests being cut down, as poor people switch from fossil fuels to wood. Trees that have shaded family courtyards for generations are being cut down and sold, or stolen. Some have taken to burning plastic. They're burning peat again in Scotland. CNN's special on the mortgage crisis featured a woman who was burning paper and furniture for heat. (She figured she would lose it all anyway when she lost her home and declared bankruptcy.)

    While peak oil may mean there's not as much oil to burn as some fear, there's a lot of other things to burn...and with oil gone, we will burn them.

    We humans are remarkably adaptable and eventually, energetic circumstances will force us to 'adapt'. Unfortunately, people will do what they have to in order to survive, even if it means undermining the longer-term habitability of the planet.

    Currently, much of our consumption here in the US seems to be motivated by the genetic drive for status. But as the world falls over the net energy cliff in coming years, more and more of us will struggle to procure energy, food, warmth, and other basic necessities. Eventually, the struggle for survival will become the predominant motivator. Desperate people have no qualms about chopping down all our forests, burning dirty fuels, or engaging in many other such 'adaptive' behaviors.

    I agree, probably not. It is not that we are not adaptable in small groups. It is not even that most of us are not adaptable. It is that it only takes a minority to push destructive activities. One small group with bulldozers can clear cut a forest that a larger group would like to preserve. Small numbers mining for gold can pollute streams and rivers for miles downstream. We still suffer heavy metal pollution in the San Francisco Bay from mines that are over a hundred years old.

    My local cobbler is going out of biz (I am trying to buy out his equip. and supplies) citing the high cost of materials. He points at a sheet of quality sole material that cost $70 last year and now is over $200.

    I said just charge more (IMO he is way too cheap) but he said even now people walk out saying they can “get a new pair at _______ for that price”.

    Everyone I know who is involved with actually producing something talks about astronomical increases in materials costs and their customers who are out of touch with producing something tangible not understand and are not willing to pay the increases.

    I believe we are at the peak of disassociation.

    We have a majority of the population who are so removed from the natural world that they have no concept of the raw materials it takes to actually make the world go round and I might add, no concept of raw waste we generate in doing so.

    Also I have been talking with many young people from highschool to university age about learning the noble art of cobbler/ shoe repair/ leatherwork. You would think I was suggesting they get a job pumping out septic tanks. They laugh and say “yeah right, whatever”. They are all going to get a degree so they can get a real job so they don’t have to LABOR.

    Oh well. I WILL find someone who understands or at least hold the stuff and wait until it is obvious to all.


    I've heard that some craftspeople have taken to working deals out with local sources of raw materials. I can't speak for cobblers, but I've repeatedly heard that weavers and shepherds have worked out mutually beneficial contracts for certain wool produced by specialty breeds of sheep.
    And since there are no middlemen this one-on-one arrangement is more profitable for the guys who actually do the work.

    My brother occasionally has DIY miners coming into his jewelry shop to sell gold. They work for about six months, then come down out of the mountains to sell & resupply.

    I just helped a a artist at the Sausalito Art Festival, and many artist are having trouble acquiring supplies and materials. High end mills are closing (Italy), and past quality of materials are not available to artists.
    Peak Art?

    Is there hope we will get rid of the cadmium pigments?

    Yup. Nobody wants to labor.

    And we've kind of lost touch with how much labor it takes to support us in the style we are (or would like to) become accustomed to. Of course some of it is energy slaves. But a lot of it is still actual, human labor. Often out of sight, because it's overseas, or just so familiar we don't really notice. It's okay, because in theory, those people laboring on the bottom will one day work their way to the top. Or at least the middle. All we need is infinite growth.

    Even a lot of peak oilers can't bring themselves to think about this. They think they'll be scientists or engineers, working on green energy, while others do the dirty work required to feed, clothe, and house them. Some go so far as to say there will be fleets of robots, so no humans have to do manual labor. (Not holding my breath for that.)

    "Yup. Nobody wants to labor." ... even vicariously.

    When I first started out as an engineer I used to enjoy working in a laboratory with the physical work involved... until one of the management people came over to me and explained that that type of stuff is "meant for technicians" ... and if I continued to do it then maybe he should consider reclassifying me as a technician.

    Talk about disassociation.

    When I worked in a research lab, we got to tinker with our equipment quite a bit. I kind of missed working in the machine shop though - that was something we did in graduate school, but once I finished my degree we used technicians.

    Ultimately the scarcity of jobs as "policy makers" will force people to get real jobs. It will be a slow and painful process - right now it seems like we are weeding out things that are high on the list of oil/energy consuming professions (long haul truckers and injection molded plastic).

    In my experience the best design engineers are the ones who have done some hands-on work with the equipment they're designing. They also listen carefully to what their technicians are saying.

    Your post made me feel warm all inside, Ignorant.

    I got to work in Aerospace for a while. Loved it. We built all sorts of nifty stuff.

    But then, exactly what you said happened. When our small company landed a big government project, we had enough money to executize and managementize our business, and engineers like me had to leave the lab and sit in cubicles all day.

    I had the same discussion with my manager about doing "technician work". I tried to explain I was extremely concerned about things as little as how a wire was routed, the grounding patterns, or the exact layout of a PCB. There are many things that were very important to me, but I could not communicate with him at that level. Not only that, it would take me far longer to prepare exact assembly instructions than it would take me to "just do it". After I got it working, I could sit with the tech and share with him how things had to be for this to work as intended - then supervise him from there. But, to get it working in the first place, there was a helluva lot of things I could not model and I *had* to have empirical experience in order to make a clean design.

    Geez - I wondered why they didn't go ahead and complete the installation with a toilet, as I felt I was locked in a toilet stall all day. Management took away my computer, holding it in my Boss's office, unused - no less, just sitting on his shelf - apparently just to drive home the idea to me that I was now subordinate to the Tie Guy.

    Remember that little song about cheap stucco housing? Ill give new lyrics:

    Little engineers, wearing suit and tie
    all sitting in their little cubicles
    and they spend their day doing coffee-break
    and they all go home at five.

    I completely lost drive to work. The Six Million Dollar ( salary and stock options ) Man felt managers were worth more than me, not only that, He gave them the power to confiscate my stuff and dictate how I was going to be allowed to do things.

    He made my keeping my job dependent on how much they liked me. Well, I certainly did not like them - they were a royal pain in the ass - and the feeling was mutual.

    I had to realize people like me were a dime a dozen. One ad in the paper and hundreds of resumes pour in. I had to realize the value of things. Someone who can build damn near anything from discrete parts is not worth very much.

    People who have the management skill of phoning armed security guards to raid an engineer's office and take his computer are paid more.

    Why spend money on engineering talent to build it right, when one could spend money on legal talent to write disclaimers? Its been shown time and time again that business customers will sign almost anything - regardless of the disclaimers. From a purely business point of view, a badly designed product gives the customer incentive for a repeat purchase, whereas a well engineered product will perform until its purpose has been fulfilled.

    Hi hardhat,

    This sounds sad (and familiar).

    re: "Someone who can build damn near anything from discrete parts is not worth very much."

    Maybe not yet.

    Yup. Nobody wants to labor.

    And we've kind of lost touch with how much labor it takes to support us in the style we are (or would like to) become accustomed to. Of course some of it is energy slaves. But a lot of it is still actual, human labor. ...Even a lot of peak oilers can't bring themselves to think about this.

    And from what I've been reading over the years, they can't imagine the labor it takes to grow food "organically." [I handle the word with the tongs of quotation marks because while I work on an organic farm, I'm not on board with the alleged superiority of "organic" produce over conventionally-grown produce.]

    Some peak oilers think "organics" will step in to replace conventional agriculture. It will not. The scale is absolutely forbidding.

    It WILL help you as an individual, though. I've grown food without chemical inputs for years--BECAUSE I AM CHEAP. As NPK fertilizers, pesticides and herbicides get more expensive, labor becomes more valuable.

    The organic farm where I work (4 acres under cultivation) requires stupendous amounts of labor for planting, weeding, bug-picking, and harvesting. Some of it is volunteer time.

    All laborers are appalled at the labor involved.

    Luckily, I'm the guy that runs the tractor!

    Organic does not equal sustainable. There are too many examples of people producing as much food with sustainable practices as with "modern" farming - organic or not - to put up with this, "Can't be done!" mantra. Also, the fact you are using a tractor tells me you aren't even working on an organic farm. At least, not as I would define it.


    "Also, the fact you are using a tractor tells me you aren't even working on an organic farm. At least, not as I would define it."

    I agree, wholeheartedly. Though the farm is "certified" organic because there are no chemical inputs.

    Where I disagree is with "sustainable." Buzzword. NOTHING humans do is sustainable as long as there is an expanding population base. Nothing. Especially farming, of any sort.

    It's not a buzzword, and I agree about population,but that wasn't the issue being addressed when I wrote my post.


    I've noticed a recurring theme among many well off parents, many of whom are Peak Oil Aware. When I suggest that their high school/college age children look into some kind of skill related to actually producing something of value, e.g. food & energy, they generally respond that there will still be a demand for--drumroll please--"Policy Makers." In other words, it's a swell idea for someone else's kid to work at a real job, but there will always be cushy white collar policy making jobs available for graduates from the right law schools.

    Meanwhile, an item on FWO's (Formerly Well Off's):

    People Who Were Well Off Are Feeling Nervous

    The Princeton Packet reports from New Jersey. “Mercer County’s more affluent communities, including Princeton and West Windsor, have experienced an increase in foreclosure notices during the past year, according to an analysis by The Packet. Both towns have seen a tripling of initial notifications of foreclosure proceedings, year over year. In Lawrence Township, such notices have nearly doubled.”

    “While the actual numbers are still small compared to those recorded in Trenton, Hamilton and elsewhere, the trend suggests that Mercer County’s wealthier enclaves are not immune from the long term effects of the housing crisis and slowing economy.” “‘I’m not surprised,’ said U.S. Rep. Rush Holt, whose 12th Congressional District includes Princeton and West Windsor. ‘People just a few years ago who were well off are feeling nervous,’ in some of his district’s wealthy towns, Mr. Holt said.”

    Several engineers I've met have sayings to the affect that

    "If you stay an engineer, you'll never be rich, but you'll rarely be unemployed."

    I think I live modestly if I can depend on consistancy (i know, in a PO world, there probably won't be any such thing, blah blah blah).

    I've always wondered what happened to all those Soviet policy makers after the collapse of the Soviet Union - were they snapped up by the Russian Mafia to make policy?

    Hi Jeff,

    re: "many well off parents, many of whom are Peak Oil Aware..."

    It makes one wonder how aware they really are.

    That said, I've had many similar conversations. With both generations.

    I guess the "right education" (practical, participatory, etc.) has to start at a much younger age.

    On the energy side of it, what are your "top pick" (of) occupations?

    It makes one wonder how aware they really are.

    Lots of people I talk to I am able to get to Level 1 of Peak Oil awareness. The test for when someone truly gets it (my Level 2) is when their actions start changing.

    That's because humans always act according to how the world occurs to them. If they feel threatened, they lash out or curl up in a ball. If they feel confident, they speak up and contribute. If they think the world will end at the horizon, they sail for only a few miles then turn back. Actions are always exactly correlated with the internal reality.

    If their actions don't change, their "personal reality" has not changed, and they don't get it.

    It's difficult to move someone to Level 2 because there is so much in the way, much of it people will hold on to unto their death. I have several people close to me who say they understand peak oil, but until their actions change, it is clear to me that it is only another intellectually interesting idea, like how neat it is that certain reptiles can grow back their legs, for instance.

    Regarding occupations, obviously most things related to food & energy production. Beyond that, a two year associate degree makes a lot sense, in some kind of useful skill, with special emphasis on repair & maintenance. Avoid like the plague almost anything on the discretionary side. Also, occupations related to mass transit make a lot of sense.

    peak of disassociation

    Peak Disassociation is a great term as it provides a lot of insight into the fundamental nature of the problem.

    If you have a significant proportion of society engaged in PD then it becomes self-reinforcing and there is no means for correction.

    When reality does finally force its way into the picture then the reaction will likely be to seek out leadership that continues the promises of PD. I do not see how the society would break out of this state until such time as reality forcefully intrudes and destroys all illusions. That outcome would not be pleasant.

    When reality does finally force its way into the picture then the reaction will likely be to seek out leadership that continues the promises of PD.

    That's exactly what happened to Jimmy Carter. His response to the "Energy Crisis" was to put on a sweater, put solar panels on the White House roof and tell Americans that they needed to face a new reality.

    The "Joe Six-Packs" (who became "Reagan Democrats") had been hearing since the 1960s that they would have to compete for jobs with women and minorities, and weren't too happy about it. The military-industrial complex was told we needed more resources for peaceful purposes here at home; they didn't like that, either.

    So along comes Cowboy Ronnie, and feeds America a story about how it is all those rotten liberals, with their environmental laws, affirmative action, anti-war movement and welfare state, that are keeping America down. Sacrifice? Make do with less? Simply un-American is what Ronnie told us.

    And enough believed him that we got 12 years of Reagan/Bush, 8 years of a "new" kind of Democrat, and 8 more years of Bush II.

    And even now, that you'd think so many more could see the folly of their rose-colored glasses, we have John McCain staying competitive by saying stuff like "I believe we should WIN in Iraq" and trying to tell people we can drill our way back to $2 a gallon gas. And Democrats are parsing and nuancing because they fear, rightly so, that Americans will believe almost ANYTHING if it means they don't have to sacrifice, do more with less, or share more of what they have so that all are better off.

    I fear it is going to get very ugly.

    Ditto, with the ugliness compounded by the Christian right pulling all stops to get their gal elected.

    The Christian right is very adept at electioneering and strategic voting. As much as many of us are dismissive of their hocus pocus convictions and pseudo-science, they've got the money and dogged determination to twist the American voting landscape to their liking.

    Sarah Palin is clearly not TOD's first pick as VP, indeed she may very well prove to have more skeletons tucked away in her closet than any Juneau cemetery, but she has one thing going for her that McCain, Obama, and Biden don't - the backing of several million prayer warriors who want one of their own in the White House.

    What's more, the Republican boss-in-waiting is an old man; what better chance for God to call him home early and thus thrust a northern light to illuminate the great American darkness.

    There is nothing rational or orderly or sensible about American culture these days. The road to the US polls in November is very likely to take some very bizarre twists and turns.

    Peak Disassociation is a great term as it provides a lot of insight into the fundamental nature of the problem.

    I find it hard to imagine the downside of the peak. Does Humpty-Dumpty somehow mostly reassemble like Mr. Potato - perhaps with a leg in the eye or some such - or does he become compost? Anecdotally, it's a wonderful term, very expressive of so many discussiong I have where people are talking about stuff that not only doesn't matter, but makes no sense. Like what passes for informed commentary on MSM about energy policy. Or finance. Economic growth. The environment. It's so divorced from any reality that none of the results of the discussions make sense. It's not even good science fiction.

    cfm in Gray, ME

    Concerning today's drop in oil prices at Nymex, can someone explain how prices are set?

    For instance, if everyone went long before the hurricane, shouldn't we now see panic sales and therefore a big drop?

    Futures are no options, so if everyone was betting on rising prices, they now have to pay, no?

    Does that make sense, or am I writing BS?

    Thanks for any helpful comments!

    Hello TODers,

    Beyond Carbon: Scientists Worry About Nitrogen’s Effects

    ...Nitrogen trifluoride, which is not one of the six gases covered by the Kyoto Protocol, the celebrated international global warming accord, is about 17,000 times more potent than carbon dioxide. Its estimated worldwide release into the atmosphere this year is equivalent to the total global-warming emissions from Austria.

    A KUWAITI delegation last week met with the Myanmar cabinet and industry officials in Nay Pyi Taw to discuss investment in the agricultural sector, a senior Myanmar Federation of the Chambers of Commerce and Industry (UMFCCI) executive told The Myanmar Times.

    ...“They will provide the fertiliser and financial support, hiring Myanmar’s land and human resources, and then in turn they will purchase the crops at world market prices. Paddy plantation and palm oil are the agricultural sectors they are most interested in,” he said.
    IMO, reads somewhat similar to my earlier biosolar investor posting series. Have you hugged your bag of NPK today?

    Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

    The Saudi's are courting Brazilian agriculture. All that oil money has to go somewhere.

    I expect the KSA to do an essential 'food-and-mutual-defence-for-fuel' deal with muslims not infidels.

    The ideal country would be sunni muslim, already have lots of workers in KSA, be physically close to KSA, be very short of energy already and have nuclear weapons to defend KSA oil.

    Now, let me see ..... um ... Pakistan?

    Oh! ... and I expect socialist countries to mutually support each other as well ... e.g. Russia/China.

    ... and OPEC countries to support each other post their individual peaks.

    ... and the big infidel/capitalist exporters are? ... hmmmmm!

    Bob, you'll be happy to learn that I turned a great big stinking pile of plant refuse today on the farm.

    That algae pictured in the story would be wicked good in my compost heap I bet. 6%. Everything else is lost. That's more than sad.

    cfm in Gray, ME

    Is there really that much demand destruction since July that caused crude oil to drop ~$42 barrel? I've been following PO for several years and I thought that there was very little spare capacity and that any disruption, even slight, would cause demand to exceed supply. Has that changed? Or has there been some new supply come online?

    No, prices in July were simply too high. There was an awful lot of demand destruction but it was already in place in July. Prices, in the long run, reflect the fundamentals, supply and demand. In the short run they reflect market sentiment pure and simple.

    Think of a boat pulling a skier. The skier swings far to one side then to the other of the path of the boat. The path of the boat reflects the fundamentals and the path of the skier, swing far in one direction then to the other, reflects market sentiment, sometimes too high then too low but always, in the long run, tracking the fundamentals.

    Ron Patterson

    On Jun 8 when oil was $136, I wrote Peak Oil and Reflexivity and Peak Oil, about the fact that peoples beliefs in where pricing would go impacts the fundamentals themselves. My last sentence of the post was:

    "One of my concerns is when the pendulum swings back the other direction, and we head towards one of those 'higher lows', that the urgency of both supply and demand response will be lost. Both oil prices and energy stocks will overshoot on the downside and we will lose sight of the long term situation. These are high stakes."

    I continue to feel this way, 3 months later.
    The producers will now throw their weight around a bit. At $7.25 NG the marginal MCF is gonna be shut in- if anyone has expertise in quantifying that please do. Same goes with oil.

    Boone Pickens, in an interview with Bloomberg last week, said they would start "laying the rigs over" if natural gas fell to $6.00/MMbtu, and maybe $7.00/MMbtu.

    I think maybe the later figure comes closer to the truth. One of Pickens preferred naratives is that of "abundant natural gas" and I think that probably biases his judgment towards the $6.00 figure.

    If we take a look at Chesapeake's Q2-2008 financials we see it cost them $4.74 to produce an MCF of gas: $2.27 direct operating costs plus $2.47 DDA. A general rule of thumb for oil field economics is a third, a third and a third; that is 1/3 direct operating cost, 1/3 DD&A and 1/3 profit. Using that standard, the price of natural gas that would be needed to continue development and meet that standard would be a little over $7/MCF.

    The Chesapeake costs are pretty much in line with a study that appeared in a presentation accompanying the release of William's Q1-2008 financials. It conducted a study of the 20 largest natural gas producers in the U.S. and found 2007 direct operating costs of $1.59/MCF and 3 year (2005, 2006 & 2007) average finding and developing costs of $2.89/MCF, for a total of $4.48.


    Both this and the Chesapeake figures, however, use trailing finding and developing costs. What are the forward-looking costs? Would today's finding and developing cost be higher than their average over the last three years? Would they be the same? Or would they be lower due to higher efficiencies of the highly touted new drilling and completion techniques?

    There are a lot of factors involved in shutting in gas, which is generally not done - it does not lways come back the same as before it was shut-in. There are a lot of other things which can be done, of course. Much of the gas produced today is low pressure and requires compression, and a lot is "unconventional" gas. Depending on the circumstances, turning off or substantially slowing down the compression, and saving on fuel for the compressor is pretty simple. Shutting down nitrogen stripping units is a lot easier than snything else, and would be easier to just run periodically rather than slowing anything down. Coal bed methane is a little different in that once the coal is de-watered, you do not want to stop producing it, but the bigger producers in that area will probably let the pressure on their lines build slightly, holding the production for a better price. In each case, most of the operating costs will continue, and any related debt service will as well. None of these things will impact the later recovery, and nobody is going to allow their leases to be in jeopardy because of a downward blip in prices.

    Thing is, however, this gas would be on the margins, and is part of the reason prices have slipped so much. If these actions were taken, and volumes trimmed, that would cause the price to blip backup pretty quickly. If you have an old deep, super-pressurized well which would go to 3000-3500 PSI on shut in, you wouldn't do anything, except maybe complain.

    The biggest factor will be in the area of shale well drilling and development. Rather than cut the acreage requirements from, say 160 acres, it would be easier to just drill on the 160 acre spacing and go back later and infill the drilling. If prices stay down, and that infill drilling doesn't get done within a few years, that acreage will mosst likely not get developed.

    Stripper oil producers, on the other hand, will probably have to work a little harder to keep their income up, and if they are doing the work themselves, will start up some of the stuff that was in any way a problem. Like anyone else, they would have gotten used to the nice prices over the last few months, and Mama won't let them buy that new truck until Mama gets her new fridge, so they will get back to work. I.e., this would be a good time to own a supply store with a pump shop out back.

    There are a lot of factors involved in shutting in gas, which is generally not done - it does not lways come back the same as before it was shut-in. There are a lot of other things which can be done, of course.

    I guess when I said shutting in - I meant stopping drilling. The vast majority of cost is drilling the well - operating costs after that (except for depreciation and labor) are minimal. So at $7 gas, we are going to see less drilling, which is a big deal given how steep the treadmill has become. I predict we are within months of seeing the all time low in natural gas from here forward. I wouldn't necessarily say the same for oil.

    That's a great metaphor, Darwinian.

    That said, it looks like there's a lot of effort going on in an attempt to influence that skier over to one side of the boat.

    memmel has offered evidence that Saudia Arabia is trying to temporarily manipulate supplies upwards for a few months to lure that skier over.

    And if pure mouth action can push him over, McCain and certainly Palin are doing everything in their power to make sure he stays on the "right" side of the boat.

    memmel thinks Saudia Arabia won't be able to hold out until November, that, before then, it will become obvious that Saudi production is falling. Evidently Boone Pickens agrees, since he's saying oil will be back up above $148 before the end of the year.

    Maybe this upcoming OPEC meeting will be when Saudia Arabia announces it has "decided" to trim its production.

    And if it does, maybe we'll never know if Saudia Arabia's "decision" to cut production was similar to that of the debtor who "decided" to sell his property 15 minutes before the sheriff's auction.

    Hi Ron,

    Could you possibly say a bit more about "market sentiment pure and simple."

    Meaning, the collective feeling (on the part of...?) about what a price *should* be?

    Feeling? Thought? Based on...?

    By market sentiment I mean the emotion of the traders. It has nothing to do with what the price should be but all about in which direction most traders think the price is headed. If enough traders think the price is about to go higher, they will buy, or they will sell if they think the price is about to move lower. This causes wild swings in the market that has nothing to do with the fundamentals.

    The fundamentals act much slower. Supply and demand, in the case of commodities, in the long run, always determine what the true price should be. For equities the fundamentals are much more complicated. These include book value, P/E ratio, growth potential, past performance and so on. People who trade based on these things are called fundamentalists.

    However many traders, perhaps most, ignore these things and look at the charts. They look for things called double tops, head and shoulders, resistance points, support points and so on. They are called technicians. These signals sometimes become self fulfilling prophecies. That is if enough people believe a double top is a signal that the price is about to fall then enough people will sell and the price will drop. This is called market sentiment and has nothing to do with the fundamentals or the true value of the equities of commodities being traded.

    Ron Patterson

    They look for things called double tops, head and shoulders, resistance points, support points and so on.


    since this seems much like reading tea leaves to me, I've always wondered: do the technicians make money above random chance? (serious question) Has anyone done any studies demonstrating that money can reliably be made this way?

    I know of no study that indicates technicians make money or make more money than fundamentalists. Some of the most famous technicians, William Gann for instance, died broke. On the other hand the fundamentalists generally make money. Jim Rogers and perhaps the greatest investor of all, Warren Buffet, are fundamentalists. They make money, they make a lot of money. I cannot think of a single technician that has made a lot of money. However of all the books on how to make money in the stock market, at least six out of every ten are on technical analysis.

    Ron Patterson

    Thanks, Ron. I suspected as much. Technical analysis seems to concentrate on the ripples in the stream rather than where the stream is going. And since ripples are (as far as we can tell) almost impossible to predict, my assumption was that same held true for minor variations in stock prices.


    Ron makes a great analogy with the skier. To help even out the picture try focusing on "running averages". If that's a new term for you just search it. It's a rather simple statistic. It tends to reduce the impact of the short cycle swings. If you look at crude prices that way you'll see that the late summer price spike was well above where one might project using a 12 month running average. Oil back down to $100/bbl is a little low on that curve. Back to the skier analogy: he starts at point A and ends up at point B. How he zipped around to get to point B isn’t as important as where that point B is….like up against a big rock wall.

    I don't play with oil future contracts which are the numbers you usually hear daily. When you figure out the how and why's of those swings let me know. But PO is a long cycle phenomenon. It’s the long term cycle that will impact my life. PO would probably be better measured on a 24 to 36 month running average. But I think even that curve will have some big, relatively unexpected swings. The big swing, IMO, will be when OPEC can finally function as a true cartel and holds/raises prices even in the face of significant demand destruction. At that point, political/military actions will likely produce other significant off trend swings.

    Hi Rock,

    re: "The big swing, IMO, will be when OPEC can finally function as a true cartel and holds/raises prices even in the face of significant demand destruction."

    Could you please explain more about this? What are the conditions under which OPEC can function as a "true cartel"?

    How long to you expect these conditions to last before...(something like no market?)

    Also, do you see the holding of prices as a good thing?

    Human-powered gym relies on sweat, willpower

    PORTLAND, Ore. -- A new gym in the Northwest is turning to pedal power.

    The Green Microgym in Portland is one of the first human-powered gyms in the region.

    It aims to make sure time spent on the exercise machine not only fuels your body but the environment as well.


    Boesel says the some of the gym's cardio machines generate energy that is used to power the building's appliances, such as the stereo.

    "I think that in 15, 20 years, it's hard not imagine that all gyms will have equipment that generates electricity and puts it into the grid," he said.

    Of course one can imagine it. But one can also imagine a good game of Quidditch.

    I think I can more easily imagine people riding bicycles to get around instead of going to the gym. Running the stereo from a stairmaster seems like a gimmick to me.

    I can imagine it occurring here as easily as I can imagine the public transportation system morphing into Portland's...which is to say, not at all.

    Tropical storm Josephine has just been added to the list (along with Hanna and Ike) of storms heading West. Certainly looks busy out there in the Atlantic.

    Can/do hurricanes ever amalgamate together? If Hanna doesn't get a move on she may cause a pile-up :)

    As pointed out before, it is possible. It is however rather unlikely that hurricanes merge. Or, to be more precisely: It is unlikely for tropical storms.

    We have seen two tropical storms of slightly different size crossing each other in the Indian Ocean some years ago. The smaller one looked quite plucked afterwards. However, they did not perform a dance as described elsewhere, nor did they merge.

    What might be more relevant is the effect seen on the ocean surface. There has been some speculation about the enhanced occurrence of big waves under such circumstances, if I am not mistaken.

    I believe we've seen the merger of spots on Jupiter. These resemble hurricanes, but are much larger and longer lived.

    Going back to the idea of choosing a labor trade. Pick one that is critical to the customer. Residential plumbing is one. When a pipe freezes and breaks, the customer MUST fix it. $200 per hour is not unheard of ... this is of course some small percentage of what an attorney makes. Heating and Air Conditioning is another good trade because the customer MUST have heat in the winter.

    Do NOT build furniture (DAMHIKT). A couple furniture workers in the US make a living from high-end customers. I am not talking about kitchen and whole house cabinetmakers. Furniture is bought, though quality is poor, for a few years and most admirably holds up for that time. Fortunately, our other income(s) allows me to build high-end furniture. It is not unusual to spend a couple weeks on a nice table and even at $35/hr for my shop time plus material; how many will spend $3000 for an heirloom quality table when one can buy a similar sized table at brand X for $500.

    I appreciate the cobbler’s problem. If I had to raise a family on the furniture market income, it would be a starvation enterprise.

    It's important to put "fixing the pipe" in context. Among other licenses, I have a landscape contractor's license in CA so I get all the state contractor's enforcement newsletters. The California Contractors State Licensing Board (CLSB) sets up "sting" operations to catch those guys.

    A person might get away with it for a while but not forever. And, given the fact that the ligit businesses will be hurting for work, the unlicensed guy is doomed.


    I see Thomas Friedman has a new book out. There is a video on the attached Amazon link. Sorry if this has been discussed already!


    Editorial Reviews
    Product Description

    Thomas L. Friedman’s phenomenal number-one bestseller The World Is Flat has helped millions of readers to see the world in a new way. In his brilliant, essential new book, Friedman takes a fresh and provocative look at two of the biggest challenges we face today: America’s surprising loss of focus and national purpose since 9/11; and the global environmental crisis, which is affecting everything from food to fuel to forests. In this groundbreaking account of where we stand now, he shows us how the solutions to these two big problems are linked--how we can restore the world and revive America at the same time.

    Friedman explains how global warming, rapidly growing populations, and the astonishing expansion of the world’s middle class through globalization have produced a planet that is “hot, flat, and crowded.” Already the earth is being affected in ways that threaten to make it dangerously unstable. In just a few years, it will be too late to fix things--unless the United States steps up now and takes the lead in a worldwide effort to replace our wasteful, inefficient energy practices with a strategy for clean energy, energy efficiency, and conservation that Friedman calls Code Green.

    This is a great challenge, Friedman explains, but also a great opportunity, and one that America cannot afford to miss. Not only is American leadership the key to the healing of the earth; it is also our best strategy for the renewal of America.

    In vivid, entertaining chapters, Friedman makes it clear that the green revolution we need is like no revolution the world has seen. It will be the biggest innovation project in American history; it will be hard, not easy; and it will change everything from what you put into your car to what you see on your electric bill. But the payoff for America will be more than just cleaner air. It will inspire Americans to something we haven’t seen in a long time--nation-building in America--by summoning the intelligence, creativity, boldness, and concern for the common good that are our nation’s greatest natural resources.

    Hot, Flat, and Crowded is classic Thomas L. Friedman: fearless, incisive, forward-looking, and rich in surprising common sense about the challenge--and the promise--of the future.

    The last comment (so far) on the discussion thread sounds like it could have come from the hallowed halls of TOD:

    Nean says:

    I'm afraid Mr. Friedman hasn't looked far enough into the future. Picture this: Friedman in a barn, outside a small town, milking a cow. When all the oil runs out (which is sooner than we can imagine) that's exactly what his children and grandchildren will be doing in Friedman's "flat" world.

    I would suggest that Mr. Friedman read "The Long Emergency: Surviving the Converging Catastrophes of the Twenty-First Century" by James Howard Kunstler.

    Kunstler's book will educate him about the reality of survival in a not-to-distant future without oil. In the real world, people won't have to worry about pollution, outsourcing, or competing for global jobs, because those things won't exist anymore.
    Perhaps Friedman should consider writing a book about how to run a local dairy farm, how to heat a house without central heating, how to make horse shoes, and how to use draft animals for local farming. He should ruminate about commuting 50 miles to work with no car; battery-powered or otherwise.

    Can Friedman explain to us whether or not a solar panel can produce enough energy to create another solar panel? Can a wind turbine generate enough energy to create another wind turbine? All of the green-energy innovations require an underlying cheap-oil economy.

    Sorry, Friedman. The jig is up.

    If only Friedman's book were entitled:

    "Hot, Crowded and On the DownSlope --Our New Reality"

    then he would be closer to getting it. But alas Friedman is devote believer in E.T. Technologies.

    Looks like the Markets have had a nervous breakdown today. Poor old Dow didn't seem to know whether it was coming or going :)

    Will anyone in the Minneapolis police department be held responsible for the gross misconduct of the officers in arresting credentialed members of the press for simply being there? Apparently not even Republican journalists were safe.

    Amy Goodman & Two Democracy Now! Producers Arrested at RNC Protest



    I was just on the outskirts of that, and I saw what had happened. So I ran in. I was holding a microphone. So I held it, you know, above my head with my left hand high to pose no threat. I held—I had a Democracy Now! press pass, as well as an RNC press pass, which gave me access to inside the convention, which is a hard one to get. You know, you have to get vetted through your Social Security number to get that one, so it’s a higher-degree press pass, as well. Anyway, I was holding my Democracy Now! one and screaming, “She’s press! She’s my co-worker! Let her go!”

    And then, when I was doing that, three—two or three police officers tackled me. They threw me very violently against a wall. Then they threw me to the ground. I was kicked in the chest several times. A police officer ground his knee into my back. And I was handcuffed with plastic handcuffs. And I was also, the entire time, telling them, “I’m media. I’m press. I’m credentialed. I’m an accredited journalist.” But there was no—that didn’t seem to matter at all.

    I looked over, saw Nicole on the floor on her stomach with her hands cuffed behind her back. I yelled over to her, and I saw her face was completely bloodied. This entire time, I kept telling them to let us go.

    There was a photographer right next to me who was also taken down pretty violently. He was screaming he was press, as well. He had credentials. He kept saying he was a photographer for the New York Post. And quite funnily, he said, “For Christ’s sake, it’s a Republican paper!” But that didn’t seem to matter.

    Interview with Minnesotan Congressman Gena Bergland

    As the RNC Opens in St. Paul, Twin Cities Police Arrest Nearly 300; Journalists Targeted

    Gena Berglund of Minnesota Chapter of the National Lawyers Guild discusses the police tactics, including the targeting of journalists and use of excessive force on the street.


    >GENA BERGLUND: Well, I don’t even know if it’s a—I mean, it is a constitutional issue. There is case law that would support you being treated differently. We teach our legal observers that they don’t have special rights, but that reporters and journalists do have special rights on the streets.

    I think it’s more of a democracy issue. I mean, in order to preserve democracy, we have to be able to report on what really happens, and if that’s hidden from view—and cameras are the way we talk about things in our culture, film and stills—we can’t tell what’s really happening around us in the streets. So, here we have a situation where if the cameras are all quieted, the police can get away with doing what they want. They can lie in their police reports, and no one can hold them accountable. And we believe that happens regularly.

    Were the police wearing brown shirts?

    It is a Post 9/11 world you know. Clearly the threat from Islamo-facism justifies the use of such tactics. We can't let the terrorists win, they might take away our freedoms.

    No, they were wearing riot gear with bullet-proof vests. Some were friendly, some not so much.

    I think the reference to brown shirts was more figurative than literal.

    The Sturmabteilung , abbreviated SA, (German for "Assault detachment" or "Assault section", usually translated as "stormtroop(er)s"), functioned as a paramilitary organization of the NSDAP — the German Nazi party. It played a key role in Adolf Hitler's rise to power in the 1930s.

    SA men were often called "brownshirts", for the colour of their uniforms, and to distinguish them from the Schutzstaffel (SS), who wore black and brown uniforms (compare the Italian blackshirts). Brown-coloured shirts were chosen as the SA uniform because a large batch of them was cheaply available after World War I, having originally been ordered for German troops serving in Africa.

    The 'Big Dry' and the thirsty cows has been a revelation as to who 'gets it'. GW deniers say it's not climate change but because the upstream water has been overallocated. While partly true the soil is so dry heavy floods in the catchment never made it to the cows. Green cornucupians say take the water off upstream irrigators. Apart from taking away livelihoods there's not enough water in the system.

    If the lakes are flooded with seawater or blocked off and allowed to dry I think it will just be one of many engineering geo-repair projects in store. Obviously levees to beat storm surges and sea level rise will be ongoing. Then maybe atmospheric adjustments. I think everything will go a little crazy, not just politics.

    Boof,the Murray-Darling water is hugely over-allocated,from the top,in Queeensland,through NSW,Victoria and SA.Not only are many of the tributary rivers dammed there is a lot of extraction of flood waters by flood lifter pumps into off stream storage.
    Consequently the rivers are not allowed to flood and the associated flood plains and wetlands do a slow perish.The Murray is a classic example of this and the Western QLD rivers,which spread far and wide in NSW and only make it to the Darling in big floods,are going the same way.

    The whole rotten destructive situation is the result of the triumph of greed and cornucopian hope over sanity.
    The only solution is to drastically reduce the out take from the system.No doubt this will destroy livelihoods.But they are going to be destroyed anyway by the degeneration of the environment.Better that the scale-down be done in an orderly fashion.That way there will be fewer people hurt badly and there may be some hope of saving the system.
    Austalia is not a continent for grandiose irrigation schemes.

    Oops. Accidentally posted this to the wrong thread. Too many tabs open, as usual...

    Our pal Learsy. Proof that libruls can be as clueless as wingnuts...

    Gustav and Oil Price Hysteria

    Watching media reportage of the advent of Gustav has become a classic example of how the media and the oil patch has herded us into sheeplike panic accepting of most any set of events to rationalize ever egregiously higher oil prices.

    At 5:30 PM, without an announcement, State Police and National Guard units were told to abandon checkpoints preventing re-entry into New Orleans and other areas.

    Gov. Jindal apparently vetoed the efforts by Nagin and the Parish Presidents to control re-entry.

    This should speed the labor force to restart operations at refineries and other oil infrastructure as well as the city itself.


    As convenient, Hopefully Alan can give TOD an overview of rail lines and rail served loading facilities damaged, and general idea of time required to reballast & reconnect for service.

    Recommended to all interested in disaster (or attack)recovery preplanning: RAIL TRANPORT and THE WINNING OF WARS, James A. VanFleet, 1956. Get from Association of American Railroads librarian (202-634-2100), Washington, D.C. Dated but helpful for visualizing concept of the "Second Dimension Surface Transport Logistics Platform" attributes of railways.

    As for Boone's plan, it is needful of some "Parallel Bar Therapy". The myriad approaches to perpetuate automobile economics will actually have a better chance, if railway rehab, upgrades, expansion & extensions are included. "Pickens Plan" Army (Sloane Marketing) will do themselves and the country too, the biggest favor with a railway division included. Mentioned in correspondence to Sloane, initializing the railway cadre' with recommissioned Railroad Operating & Maintenance Batallions in each of the respective State's National Guard Units. This will grow human resource base for the private sector railway rehab.

    Christopher C. Swan's "ELECTRIC WATER" is a useful handbook for TOD correspondents to study & comment on.

    Flowing water will damage some spurs (some of which serve refineries). But with "slow orders" these sections should still be operable with minimal work.

    The rest should be OK.

    I was on a conference call with the Pickens Plan and they showed zero interest in any improvements or anything except their agenda.


    Hello TODers,

    Countries that subsidize I-NPK are sure getting into a mess as this system breaks down [please see photo in embedded link below]:

    ...On Tuesday, several farmers from Palnadu region broke open the ‘Gromor’ fertilizer shop in Sattenapalli and looted diammonium phosphate (DAP) before the police could intervene and bring the situation under control.

    ...On the whole, a panic situation prevails among farmers as there was a shortage of 6,000 tonnes in August against the demand of 15,000 tonnes putting immense pressure on the district administration to supply DAP and other Complex fertilizers.
    If the people were Peak Aware, the cops would be busting the heads of the politicians instead of the farmers trying to get I-NPK before the seasonal planting timeslot passes them by. If the farmers fail to grow sufficient food: then these cops and their families will be mighty hungry in the future.

    For those readers looking at the photo: any guesses on how long before similar postPeak photos will be taken at your local Lowes or Home Depot gardening center? Imagine Daniel Yergin and his fellow cornucopian Yerginites leading the charge to loot for 'The Prize'...

    Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

    >>For those readers looking at the photo: any guesses on how long before similar postPeak photos will be taken at your local Lowes or Home Depot gardening center? Imagine Daniel Yergin and his fellow cornucopian Yerginites leading the charge to loot for 'The Prize'...<<

    Or at the pumps.

    Today, I was getting fuel for the farm where I work. The Valero station was packed with SUVs, trucks, and cars. A big tanker was pumping fresh fuel into the underground tank. All was well, with Gustav moving inland, leaving NOLA intact, and the election circus in full swing mode.

    There was muzak playing loudly throughout the plaza. I looked at all the complacent faces as they pumped their gas.

    I realized I was one of them.

    I nearly had a panic attack.

    ``OPEC likes it up here,'' Pickens said in a televised interview from the New York Mercantile Exchange. ``I think they'll support it and cut production.''

    Pickens should be ostracized from public discourse on anything but CNBC and FoxNews just because of his infamous backing of the "Swift Boat Veterans for Truth".

    Ironically, for so many years Saudi Arabia would work hard to keep the price of oil at something below $35. They probably feared US attack, but also felt high prices would lead to people seeking alternatives to oil that would cause demand to plummet. They now know that at least one of those is not a viable concern.

    Colorado State Forecasters Predict Four Hurricanes in September

    (Bloomberg) -- Colorado State University forecasters today predicted ``well above-average'' tropical activity in the Atlantic for September, with four of five named storms becoming hurricanes.

    ``We expect the month of September to be quite active,'' Phil Klotzbach, the forecast's lead author, wrote in the report. The activity is predicted to be at about 190 percent of the September average, with two of the five storms predicted to become major hurricanes of Category 3, 4, or 5. A Category 3 hurricane has sustained winds of at least 111 mph (179 kph).

    The situation looks serious in Haiti with hurricane Hanna. Haiti's third largest city, Gonaives, is underwater seemingly and the situation is becoming desperate.

    With Ike and Josephine also heading towards the Caribbean hot on Hanna's heals, it looks like a major humanitarian catastrophe is building. Cuba suffered badly under Gustav also.

    On the ASPO September Newsletter.

    As an interested and non technical reader I seek the professional knowledge of those on TOD and others including ASPO. This month's ASPO newsletter is disappointing. There are two reasons this months tome gives me pause.

    First, in section 1080 The discussion of changes included the following regarding post PO urban changes:

    "...For example on-street parking could be progressively forbidden so people would find it increasingly difficult to use their cars in towns..."

    Was this a translation error? What's the point? Move the cars to make room for the rickshaws and bicycles? I can't tell. It rambles on.

    Second, there is a long, rambling and disjointed discussion of European history. History is important in context but I struggled to find one.

    Bottom line. I look to ASPO and other Peak Oil proponents for accurate and professional information. I accept information presented with the authority of facts. No one can predict the future but knowing the possibilities provides us with a baseline of knowledge from which we can make decisions.

    This month's ASPO newsletter read as if it was written by amateurs and not edited by the pros. ASPO, you've got to do better if want to be taken seriously.

    Limited and expensive parking works as well as limited and/or expensive fuel in promoting mass transit, walkable neighborhoods (people do not want to give up their precious parking spot), and bicycling (assuming plentiful bike parking).

    A VERY good strategy. I think a $3,000/space/year# excise tax on commercial parking spots and a $500/space/year for residential parking beyond one (2 gar garage costs $500, 3 car garage $1,000/ye) would help reduce the % of space devoted to the automobile (approaching 50% in many modern areas).

    More space for the auto means less space for humans and EVERYTHING is further away !


    An ideal reaction to this tax by, say, a shopping center surrounded by a sea of parking would be to build a mid-rise residential tower with a grocery store on the bottom floor. Devote more parking to tennis courts and some minimal green space. And lobby like crazy for a light rail line and bus stops at their mall (today they often do not want them, they bring the "wrong people").

    The USA has 10x the retail space/capita that we had circa 1950 and 5x to 8x most EU nations. So shedding most of our retail space is a good thing for the energy efficiency of our economy.

    Sounds logical. What's required is leadership that's not in denial to:

    1. Admit there is a problem
    2. Make a plan
    3. Sell the plan
    4. Work the plan
    5. Measure progress
    6. Go to step 2

    p.s. Glad you're OK. Your adventure with Gustav was quite the drama.