DrumBeat: October 8, 2008

Oil prices: Buckle up for a wild ride

Outlook for crude depends largely on the health of the global economy. Analyst predictions range from a fall to $50 or a surge to $150 a barrel.

NEW YORK (CNNMoney.com) -- Expect nothing but volatility for oil prices over the next year or two - with the fate of the global economy largely dictating whether crude will fall to $50 or shoot up to $150 a barrel.

The global economy is teetering on the edge, and no one really knows if it will muscle through this credit crunch or succumb to a pronounced recession.

With crude prices so closely linked to the health of the economy - unemployed people tend to drive a lot less - oil analysts don't really know where oil prices are headed either.

Oil prices skid to 2008 low on falling demand

NEW YORK - Oil prices fell Wednesday, touching their lowest level this year, — as the government reported a huge spike in crude inventories while giving more evidence of dwindling demand.

Light, sweet crude for November delivery was down $1.23 at $88.83 in afternoon trading on the New York Mercantile Exchange, paring earlier losses after the stock market rose into positive territory after being down most of the day.

Oil prices earlier fell to $86.05, the lowest level since Dec. 6, 2007.

Crude has now fallen about 40 percent since surging to an all-time record $147.27 a barrel on July 11.

But Wednesday's losses were limited by growing speculation that the Organization of the Petroleum Exporting Countries could cut output to keep prices from falling too hard. OPEC officials, worried about declining oil revenue, in recent days have urged members of the cartel not to pump too much crude in a bid to keep prices above $100.

Preparing for a Financial Crisis, Electric Utilities Unlikely to Spend Despite Critical Needs, Says Analyst Scotto

The needs are everywhere – more power plants, more transmission lines, major upgrades to the existing grid. But even as the threat of blackouts grows daily, in the wake of Wall Street’s meltdown the capital-intensive electric utility is unlikely to carry out desperately-needed improvement projects.

So says Daniel Scotto, veteran Wall Street electric utility financial analyst, one of the few on the Street who understands how Wall Street’s woes are likely to impact the Byzantine, multi-trillion-dollar electric utility industry.

In Wake of Street Crisis, ‘I Wouldn’t Own Any of These Heavy Nuclear Utilities’ - Analyst Scotto (Part 2 of 2)

With Congress on the verge of committing a king’s ransom of taxpayer money to cope with the meltdown on Wall Street, it will have little appetite for guaranteeing billions of dollars in loans for new nuclear power plants, which could end America’s “nuclear revival” before it’s even begun.

That’s according to veteran Wall Street utility financial analyst Dan Scotto, who told EnergyTechStocks.com that federal loan guarantees for new nuclear power plants (without which Wall Street is unlikely to advance utilities the money to build) are now “way, way off Congress’s radar screen.”

Venezuela's Chavez to survive crisis despite oil fall

CARACAS (Reuters) - Venezuelan President Hugo Chavez will likely emerge unscathed from the current global financial contagion even if tumbling crude prices force the oil-dependent OPEC nation to scale back spending in the coming months.

The crisis, which the socialist Chavez gleefully calls the end of capitalism, has helped push crude oil to an 8-month low after it hit a record near $150 per barrel and sparked dire predictions by Chavez adversaries of an economic meltdown.

But analysts say billions of dollars in cash reserves and widely available financing by political allies will let Chavez ride out a sustained oil price fall of even several years.

Qatar's Model May Break Gas Price Link With Oil, Analyst Says

(Bloomberg) -- Qatar, the world's biggest producer of liquefied natural gas, may force the decoupling of gas prices from crude oil, an industry analyst said.

``The gas market will become detached from oil when enough surplus LNG capacity appears and when enough LNG carriers become available on a spot basis to transport the surplus LNG,'' Leo Drollas, deputy executive director at the Centre for Global Energy Studies, said at the Sparks and Flames conference in Amsterdam.

Tide turning on Nigeria oil delta thefts-Governor

LONDON (Reuters) - Nigeria is winning its fight against militants and criminals in its oil-producing Niger Delta but social and economic conditions must also be improved to solve the problem, a regional governor said on Wednesday.

Rivers State governor Rotimi Amaechi has taken a tough approach to dealing with the violence since he took office last year and is keen to attract more foreign investment.

"Things have got much better -- kidnappings are down," Amaechi told Reuters in an interview.

First council since Second World War set up to look at food security

The production, supply and consumption of food in Britain is to be investigated by a dedicated Government council.

The Council of Food Policy Advisors will sit alongside the National Economic Council set up last week to address the financial crisis.

Hilary Benn, the environment secretary, has set up the council to advise the government on the affordability, security of supply and the environmental impact of food production.

He said the growing world population, climate change and rising fuel costs were all leading to an unprecedented threat to Britain's food security.

New Zealand: Register planned for car pooling

Car pooling to save on fuel costs may be coming to Oamaru under a plan by the Natural Heritage Society and Waitaki Resource Recovery Trust.

The venture will be launched at the Health Active Living Oamaru (Halo) expo on October 19 encouraging people to share trips, not only to save fuel but to cope with the long-term impacts of climate change and peak oil.

Newly discovered fungus strips pollutants from oil

A humble fungus could help oil companies clean up their fuel to meet tightening emissions standards. The fungus, recently discovered in Iran, grows naturally in crude oil and removes the sulphur and nitrogen compounds that lead to acid rain and air pollution.

End use of fossil fuels in 20 years, UK warned

Britain must abandon using almost all fossil fuels to produce power in 20 years' time, the government's climate change watchdog will warn today.

The independent Climate Change Committee will publish its advice to the government that the UK should set a 2050 target of cutting all greenhouse gas emissions by at least 80% - including the emissions from aviation and transport, which were previously excluded.

Because it is unlikely that emissions from aviation and shipping will be cut so dramatically, other sectors, particularly power generation, would have to reduce emissions by much more, with big increases in energy efficiency, wind and tide power, and probably new nuclear generators, Lord Turner of Ecchinswell, the committee chairman, told the Guardian.

George Monbiot: This green subsidy for car makers is just a disguised corporate bail-out

While all eyes were fixed on the banking bail-out, a bucketload of public money was quietly sloshed into the pockets of another undeserving cause. Last week, George Bush agreed to lend $25bn to US car manufacturers. It's a soft loan, which will cost the government $7.5bn. Few people noticed; fewer fought it. The House of Representatives approved the measure by 370 votes to 58. The great corporate bail-out is spreading like the plague.

Rural communities best equipped to cope with climate change: UN report

Rural communities which protect nature and exploit forests, wetlands and wildlife sustainably will be the best equipped to cope with the droughts and floods that will increasingly hit Africa, Asia and Latin America with climate change, says a new UN-backed report.

Nature-based enterprise, says the report from the World Resources Institute in Washington DC, offers the world's 2 billion rural poor key survival tools to weather the extreme changes that are expected. It argues that communities must be given secure rights to access, manage and profit from, the natural resources they depend on daily and calls on governments and development agencies to scale up such approaches.

Warming Andes stymies Peruvian potato farmers

"Climate change is bringing new and more frequent diseases during the harvest," said Cesar Portocarrero, a civil engineer who has been studying the effects of global warming on the Peruvian Andes for decades. "As plagues and temperatures increase, farmers are forced to go higher and higher up the mountains to avoid them. Eventually they'll have nowhere to go."

One of the big losers is the 1.8 million potato farmers like Huanuco, who depend on predictable climate. Most are ill prepared to handle new pests and diseases that have materialized as temperature and rainfall patterns have shifted, agronomists say.

How to buy a scooter for your commute

The economy is tanking. Bleak financial headlines are bombarding us every day. And on top of everything else, gasoline prices continue to be painfully high.

If you’re on the prowl for ways to save as much money as possible right now, you may be among the growing numbers of consumers who are showing an interest in scooters. Of course, depending on the weather where you live, a scooter might not be a viable year-round answer for you — but get this: A cute and trendy scooter can cost as little as $4 to fill up. Just $4!

Saving gas, beyond the car

Taking a hard look at the relationship between peak oil (when the maximum rate of oil extraction is reached) and water shortages paints a grim picture.

Oil supplies from non-OPEC sources have already peaked, according to Dr. Peter Wells, an oil industry consultant who works for Toyota. Drilling may produce new sources, but they are likely to be much smaller and many times more expensive to extract than existing wells. Producing energy from untapped sources (such as shale and tar sands), as well as producing alternative energy requires massive amounts of water that the U.S. currently doesn’t have.

Back-to-back presentations on these subjects at the recent Toyota Sustainable Mobility Seminar were enough to dampen the car enthusiasm of a room full of automotive journalists. In the final analysis, nothing is ever likely to be as cheap or convenient as the light, sweet crude oil of years past.

This raises two key questions: As a society, where do we go from here? And if you’re in the business of making cars, how do you plan your future?

The answer to both questions involves learning to use less gas – and soon.

54 Production Platforms Destroyed in GOM

MMS estimates that from September 13, 2008 through September 14, 2008, approximately 1,450 oil and gas production platforms in the Gulf of Mexico were exposed to hurricane conditions, winds greater than 74 miles per hour. As of August 2008, there were more than 3,800 production platforms in the Gulf of Mexico; these structures range in size from single well caissons in water depths of ten feet to a large complex facility in water depth greater than 7,000 feet.

Transocean downgraded on market woes

Analysts at investment bank Dahlman & Rose today moved shares in drilling company Transocean from ‘buy’ to ‘hold’ in light of current activity within the commodities and financial markets, despite steady dayrates on drilling rigs, a move that could be experienced by other major players in the industry.

“We believe the latest drops in oil prices will have an impact on management’s decision-making during the next few months—especially as it relates to the special dividend,” said the bank in a statement.

New Continental Shelf Rights Add to NZ Offshore Exploration Estate

New Zealand's rights over the Continental Shelf sea floor around its coast have been officially extended by 1.7 million square kilometers or 42% greater than covered by the 200 nautical mile-wide EEZ area.

The Government recently announced that a special United Nations Commission has officially confirmed New Zealand's claim to the 1.7 million sq km Extended Continental Shelf (ECS) area that includes rights to resources such as petroleum and minerals beneath and on the seafloor.

Somali troops free British oil worker; 1 killed

BOSSASO, Somalia (Map, News) - A Somali government official says troops have freed a British oil worker abducted in northern Somalia.

Energy and Minerals Ministry official Farah Abdi Hussein says one of the abductors has been killed and another wounded during a battle to free the man. The oil worker, an employee of Canada-based Africa Oil Corp., was unharmed.

Egyptian Companies Seek Oil Projects in Iraq

Egypt has formed a delegation of oil companies to probe petroleum projects in Iraq, Egyptian Minister of Petroleum Sameh Fahmi said on Tuesday.

The Egyptian delegation will have talks with Iraqi officials on rehabilitating the oil infrastructure in Iraq, the Egyptian MENA news agency quoted Fahmi as saying.

No crisis for energy start-ups in Calgary

CALGARY • As money drains out of some of Canada's biggest energy companies, private oil and gas startups led by star management teams are are still capturing hundreds of millions of dollars in cash here in Calgary.

Shell Aims to Grow in Ukraine, Starts Drilling in 2009

Royal Dutch Shell PLC's subsidiary Shell Ukraine E&P is planning to drill its first well in the country in 2009, and is looking for further opportunities in the country, the company's general manager, Patrick Van Daele, told Dow Jones Newswires Wednesday.

Pakistan: Draft of new petroleum policy finalised

KARACHI: Petroleum ministry has finalised the draft of new petroleum policy which will be presented for approval in the next meeting of the Economic Coordination Committee (ECC) of the cabinet, Acting Petroleum Secretary G A Sabri told The News.

Petroleum Policy 2008 will help expedite the exploration of oil and gas reserves after last year’s policy failed to generate any activity at a time when the country faced severe energy crisis.

U.S. Welcomes Chinese Firms to Invest in Energy Sector

The United States would welcome Chinese investments in its oil and gas sector, an official with the U.S. department of energy said on Wednesday.

"If they want to invest in our oil and gas sector, I can't imagine we would have any objections," Alan Hegburg, deputy assistant secretary in the department, told Reuters on the sidelines of an oil conference in Cape Town.

Time Is Up Congress - And America

Oil will collapse in price to $20/bbl. Unfortunately nobody will have any money to buy gasoline, or a car, so it won't matter. As in The Depression millions of automobiles will be scrapped after being abandoned by their owners for lack of insurance and registration fee money. Cheap scooters will become the dominant form of transportation for those with jobs, as they will be all most people can afford.

As credit collapses distribution of food and other essentials will break down. Unable to access credit, trucking companies will be unable to get goods to market. The current distribution system for food requires travel of over 500 miles from production to consumption; this is untenable in a market where stable credit is unavailable. Food distribution will be severely impacted and in some areas may break down below critical levels.

Unemployment will reach 25% within two years. Median income will fall by 30% nationally. Foreclosures will reach 20 million homes. The government will step in with HOLC-style remediation but it won't matter - the unemployed won't be able to pay irrespective of the price.

House prices will fall to well under $100,000 nationally on a median basis but with lending all but non-existent you'll need 50% down. A few people will make out like bandits near the bottom, being able to buy up homes for $10,000 each in blocks of 10 at a time - for cash. 60% of America will be renters; nearly half of all homeowners will ultimately lose their homes to foreclosure.

Civil unrest will break out in major cities when incomes fall but the cost of food and essential services fail to come down materially, leaving millions of Americans hungry, broke and homeless. Unlike in the 1930s America will not quietly stand in soup lines - instead they will riot, loot and burn. The National Guard will be called up but will find it impossible to exert meaningful control without shutting down all commerce in the affected areas. The decision will be made to cordon off the cities and deny entry to anyone who does not live in that specific neighborhood, essentially shutting down commercial activity. GDP will fall by 30%.

The S&P 500 will fall to 150 and flatline, a 90% loss. CNBC and Bloomberg will cease broadcasting. Volume will fall to 10% of former levels.

Energy firms likely to trim their spending

The financial crisis that has choked credit markets also may stem the flow of capital spending by oil and natural gas companies as the situation shakes out, analysts said.

"All the oil companies, large and small, will cut back their capital spending," Fadel Gheit, an oil analyst with Oppenheimer & Co. in New York, predicted. "The ones that keep their capital spending intact will be the exception, not the rule."

Even if companies have the money for new exploration and production projects, "they will say, 'We will wait for the market to cool off,' " he said.

The industry also is watching crude prices, now at around $90 a barrel after approaching $150 in midsummer.

Some OPEC members float idea of oil supply cut

LAGOS/ANTALYA, Turkey (Reuters) - OPEC may need to intervene to balance the oil market if prices fall further, Nigeria said on Wednesday, making it the latest country in the exporters' group to float the prospect of supply curbs.

Nigeria joins Libya, Iran and Iraq, fellow members of the Organization of the Petroleum Exporting Countries, in expressing concern this week about the impact of the financial crisis on the oil market.

Business is booming for the prophets of doom

WHAT will happen if, as a consequence of this financial disaster, there is a withdrawal of mass support for the existing economic order? There may be no viable socialist alternative with any credibility, but the loyalty of the population to an increasingly crisis-prone economic system will be severely tested.

There are no obvious solutions to such unprecedented challenges and simultaneous crises. But if nothing else emerges from the maelstrom, the role of the state in rescuing American capitalism from its internal contradictions will be the final antidote to free-market hagiography.

Russian Bombers Escorted By Japanese Fighter Jets

(Bloomberg) -- Russian strategic bombers flying over the Sea of Japan were escorted by Japanese fighter jets on two occasions today before returning to base, Russian Air Force spokesman Vladimir Drik said.

The two Tu-22M3 strategic bombers left an air base in Russia's Far East as part of a training exercise, Stability 2008, Drik said by telephone in Moscow today. As they flew over the Sea of Japan they were accompanied for about 30 minutes by two Japanese F-15 fighter jets, he said.

Later, Japanese F-15 jets from a different air base flew alongside the two bombers for about four minutes before the bombers returned to Russian territory, Drik said. A Japanese Air Self-Defense Force spokesman, Masanori Tsuji, said he hadn't heard the report about fighters scrambling and couldn't comment.

Russia is currently holding its largest air force exercises since the 1991 collapse of the Soviet Union, while a naval convoy on its way to Venezuela is staging a show of strength in the Mediterranean.

OPEC would cut output at below $80: source

DUBAI (Reuters) - OPEC was unlikely to cut output at its December meeting unless the price for crude produced by its members fell below $80 a barrel, an OPEC source said on Wednesday.

The price for OPEC's basket of crude stood just above that threshold on Tuesday, at $80.04 a barrel.

"The price is still reasonable," the source told Reuters. "If it stays where it is then OPEC will stick to the output levels decided at the last meeting. I think if it falls below $80, OPEC will do more."

BP's Forties Crude Oil Output May Fall in January

(Bloomberg) -- BP Plc said production of North Sea Forties oil, part of the benchmark used to price two-thirds of the world's crude, will probably rise 4 percent in December before falling in January.

BP, the operator of the Forties Pipeline System, forecasts December production at 700,000 barrels a day, compared with 673,000 barrels a day in November, according to an update on its Web site. January output is scheduled to decline 2.7 percent to 681,000 barrels a day, it said. October production is forecast at 649,000 barrels a day.

Nigeria targets 4 mln barrels per day by 2010

CAPE TOWN (Reuters) - Nigeria is optimistic that the falling world oil price will stabilise and it expects to lift its production to 4 million barrels per day by 2010, the African nation's oil minister said on Wednesday.

"We in Nigeria remain optimistic that the oil price will stabilise," Nigerian Oil Minister Odein Ajumogobia said at the Africa Upstream 2008 oil conference in Cape Town. "Our ambition is to reach 4 million barrels per day by 2010."

Eq. Guinea sees oil output up to 400,000 bpd in 2009

CAPE TOWN (Reuters) - Equatorial Guinea's oil production is likely to rise about 5 percent to an average of 400,000 barrels per day next year, an official in the African nation's energy department said on Wednesday.

"It will probably be about 400,000 barrels (per day)," Diosdado Engono Bengono, director general of hydrocarbons in the nation's ministry of mines, industry and energy, told Reuters at an oil conference in Cape Town.

Valero says restarting Houston refinery units after Ike

NEW YORK (Reuters) - Valero Energy Corp said Wednesday it will be restarting some units at its 130,000 barrel-per-day oil refinery in Houston, Texas after repairs from Hurricane Ike.

Russia to delay construction of proposed gas pipeline to China - Xinhua

BEIJING (XFN-ASIA) - Russia will delay the construction of proposed gas pipeline to China due to competition from other gas sources in the Chinese market, the official Xinhua News Agency reported, citing Russian media.

The Altai gas pipeline project, designed to ship 30 bln cubic meters of natural gas per year from western Siberia to China, was excluded from Russia's recently released blueprint for gas industry development through 2030, the agency said.

US oil production at lowest level since 1946-gov't

WASHINGTON (Reuters) - U.S. crude oil production this year is expected to fall below 5 million barrels per day for the first time since shortly after World War Two, the government's top energy forecasting agency said on Tuesday.

The lower output is due to hurricanes Gustav and Ike, which at one point shut in almost all the 1.3 million barrels a day in oil production in the Gulf of Mexico, according to the U.S. Energy Information Administration.

About 45 percent of Gulf oil output is still offline weeks after the hurricanes struck.

Oil Rebounds From 10-Month Low After Central Banks Cut Rates

(Bloomberg) -- Crude oil rebounded from a 10-month low after central banks in the U.S., Europe and China reduced interest rates to thaw credit markets.

The Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank each cut their benchmark rates by half a percentage point. Crude had earlier dropped with industrial metals on concerns that bail-out plans already being implemented will fail to avert worldwide recession that cuts energy demand.

``The coordinated rate cuts may slow the decline and perhaps even stabilize prices as some market participants view the move as positive for economic and oil demand growth,'' said Mike Wittner, London-based head of oil market research at Societe Generale SA.

Nigeria says OPEC may need to act to stop oil slide

LAGOS (Reuters) - Nigeria said on Wednesday that OPEC may need to intervene to balance the oil market if the price of crude continues to slide, making it the latest OPEC member to voice concern about the impact of the global financial crisis.

"There may be a need to intervene to balance the market if the price slide seemingly predicted on (lower) demand and over-supply continues," Nigerian Oil Minister Odein Ajumogobia told Reuters.

Oil prices could fall more - Eni CEO

ROME (Reuters) - Oil prices could fall further with signs pointing to dropping demand, Italian oil company Eni SpA's chief executive officer, Paolo Scaroni, said on Wednesday.

He said the company's international growth would be unaffected by the current market turmoil.

OPEC may need to cut if oil under $90: Iraq

ANTALYA, Turkey (Reuters) - OPEC may need to consider cutting oil output if the price of crude remains below $90, Iraqi Oil Minister Hussain al-Shahristani told Reuters on Wednesday.

"It has been a source of concern since the price has fallen since June and July," he said on the sidelines of an energy conference in the Turkish coastal city Antalya.

OPEC members move to support oil prices

CALGARY - With oil prices sliding nearly 40% from their July high, and predictions of a return to US$50-a-barrel oil becoming louder, some members of the OPEC cartel seem to be getting nervous their petrodollar hauls are lightening up.

Balts hope Georgia conflict boosts energy case

TALLINN (Reuters) - Ulo Kikas, harbor captain at the port of Muuga, stands at the top of the multi-storey harbor building near Estonia's capital and points down to a network of vacant railway tracks for oil product wagons.

"That used to be full of trains," he said. In the distance is an empty quay. "That is the coal terminal. There used to be piles of coal there, you could see them from here. Now there is nothing."

The reason, Estonian officials say, is that Russia diverted shipments of oil products and coal from Tallinn port after a diplomatic row last year in a display of its willingness to use energy as a political weapon.

How Much Oil is Actually Left On This Planet? Should We Care?

According to Dr. Peter McCabe, a world-renowned scientist currently working at CSIRO in Australia, any realistic analysis of future energy sources can only conclude that, barring some complete and miraculous harmony between all the world’s economic superpowers, fossil fuels will dominate our energy mix for at least the next few decades — and we should just accept it.

... So, if Dr. McCabe is right, will the world have enough fossil fuels to keep up with demand? If we can’t completely switch to renewable energy sources for at least another 30 years (and assuming climate change doesn’t kill us off first) will the problem of peak oil rear it’s ugly head and kill us off anyways?

According to McCabe, in a nutshell the peak oil concept is fundamentally flawed because is doesn’t account for external factors.

GAO opens probe into gas, oil drilling in Utah

SALT LAKE CITY - Congressional investigators are looking at a federal government agency's quick approvals for oil and gas drilling in Utah, a development applauded by environmental groups but condemned by industry executives as political posturing.

Two Government Accountability Office investigators are in Utah as part of a probe into the federal Bureau of Land Management's practice of approving some drilling projects without a full environmental study of the consequences.

Nigerian militants threaten anarchy over graft case

LAGOS (Reuters) - Militants in Nigeria's oil-producing south threatened on Wednesday to create a "state of anarchy" unless local government officials accused of corruption are properly dealt with. The Economic and Financial Crimes Commission (EFCC) has said it is investigating allegations that large sums of money were withdrawn in a suspicious manner from the funds of Rivers state, one of the three main oil-producing states in the Niger Delta.

Turkey says will push ahead with Iran gas deal

ANKARA (Reuters) - Turkey's Energy Minister said on Wednesday the country would push ahead with a planned deal to produce and export gas from neighbouring Iran, saying cancellation of the deal was "out of the question."

Turkey and Iran failed to conclude expected energy accords during a visit by Iranian President Mahmoud Ahmadinejad to Turkey in August. The United States, which is seeking to isolate Tehran over it nuclear programme, opposes the plan.

India's ONGC eyeing Kazakh oil asset - source

ALMATY (Reuters) - Leading Indian explorer Oil and Natural Gas Corp has shown interest in buying a stake in MMG, a Kazakhstan-based oil production company, a Kazakh government source told Reuters on Wednesday.

Gazprom Neft, a unit of Gazprom, had earlier said it wanted to offer Kazakhstan a stake in one of its fields in Western Siberia in exchange for a 49 percent stake in MMG, also known as MangistauMunaiGas, but its offer has been rejected.

Saudi cbank says no need for emergency liquidity

DUBAI (Reuters) - Saudi Arabia's central bank said on Wednesday there was no need to provide emergency funds to banks in the world's largest oil exporter as the financial sector faced no shortage in liquidity.

Muhammed al-Jasser, central bank vice governor, said in comments carried by the state SPA news agency that the central bank was ready to provide sufficient liquidity if needed but no bank had approached it for additional funds.

Gazprom May Say Quarterly Profit Reached $9.1 Billion

(Bloomberg) -- OAO Gazprom may say profit rose 5.2 percent in the first quarter as Russia's largest energy producer benefited from higher natural-gas prices at home and abroad.

Net income probably advanced to 221 billion rubles ($9.1 billion) from 210 billion rubles in the same period last year, according to the median estimate of eight analysts surveyed by Bloomberg News. The range was between 171 billion and 286 billion rubles. Sales probably rose 34 percent to 822 billion rubles.

Airlines' earnings forecast to rise in '09, as oil prices drop

The same U.S. airlines that looked to be goners three months ago when oil reached $147 a barrel now may be headed toward healthy 2009 profits.

Several industry analysts are forecasting 2009 gains instead of big losses for Alaska, Delta, Continental and US Airways. Perennial moneymaker Southwest could be more profitable.

US Airways President Scott Kirby said at a recent conference that investors don't appreciate the magnitude of the changes airlines made to cope with $147-a-barrel oil.

Russia, Indonesia, Ukraine Shut Exchanges as Stock Rout Worsens

(Bloomberg) -- Russia, Indonesia, Ukraine and Romania shut their stock exchanges after shares plummeted in the worst week for emerging-markets in at least two decades.

Russia's Micex Index dropped 14 percent, having already slumped 20 percent this week, before trading stopped at 11:05 a.m. in Moscow. The exchange won't reopen until Oct. 10 unless the Federal Financial Markets Service says otherwise, Micex spokesman Alexei Gerasyuk said by phone. The Jakarta Composite index fell 21 percent in its biggest weekly slump in at least 25 years, according to data compiled by Bloomberg.

Russian Stocks Tumble, Extending Record Decline, Led by Gazprom

Gazprom, the world's biggest natural-gas company, fell 19.35 rubles, or 14 percent, to 121.80 rubles in the first 10 minutes of trading. OAO Lukoil, Russia's largest independent oil producer, slid 181.89 rubles, or 16 percent, to 930.57 rubles at 10:40 a.m. in Moscow.

Jim Cramer: Wall Street, Fall 2009

In terms of investing between now and next fall, I’d buy the stocks of only companies you can’t not use — Kellogg’s, General Mills, Kraft, P&G. You can’t trust anything to do with financial paper — there’s still too much uncertainty (if a bailout bill does pass, at what price will the toxic bonds be marked?). And commodities have been bid up too high—demand soared as investors sought shelter from stocks — to buy for some time. Oil’s going to $50 on weaker demand; when it gets there, we can revisit the oil stocks.

To drill or not to drill is not the question: Renewable resources abound. Let's use them.

Washington - To drill or not to drill is the wrong question.

Real solutions to the energy and climate crisis are available today if we focus on what we have in abundance instead of arguing over what's exhaustible and dwindling – namely fossil fuels.

Alcoa stops capital projects on income slump

ALCOA says it will stop all "non-critical" capital projects and suspend its share-buyback program after a slump in metal prices.

The company posted a third-quarter net income drop of 52 per cent, hurt by a charge for layoffs at a Texas aluminium smelter.

Sell-off continues in solar sector

NEW YORK - The rising cost of debt and potentially less generous subsidies in Europe exacerbated what had been part of a broader Wall Street sell-off for the solar sector Tuesday.

Goldman Sachs Global Investment Research said it was moving to a more cautious outlook on the sector.

"The risk of oversupply in the solar market will soon become a reality as considerably less generous demand subsidies take hold just as a wave of supply and tight financing hit the market," Goldman Sachs wrote in a note. "We believe that liberal subsidies of the past in markets like Germany and Spain are unlikely to be replicated in the future given fears of their ultimate cost in a bad world economy."

U.S. announces 'Biofuels Action Plan'

WASHINGTON (UPI) -- U.S. government officials have released the National Biofuels Action Plan, an interagency plan to accelerate development of a sustainable biofuels industry.

U.S. Department of Agriculture Secretary Ed Schafer and Department of Energy Secretary Samuel Bodman said the plan is in response to President George Bush's goal of cutting U.S. gasoline consumption by 20 percent in the next 10 years.

Indonesia Biofuel Policy to Reduce Palm Oil Exports

(Bloomberg) -- Exports of palm oil from Indonesia, the largest producer, may decline by as much as 1.5 million metric tons a year after the nation made the use of renewable energy mandatory, a government official said.

``In relation to the mandatory policy for bio-energy issued last month, we see that the use of agricultural products for alternative energy will increase,'' Bayu Krisnamurthi, a deputy to Coordinating Minister for Economic Affairs Boediono, said today in Jakarta. ``This will cut our exports'' of palm oil.

Autumn reds disappearing as global warming blurs boundaries between the seasons

The vibrant palette of autumn is draining away from Europe's woodlands, as global warming continues to blur the boundaries between seasons, scientists have warned.

Researchers at the Italian Meteorological Society have observed less gold, copper and red foliage in the country's woodlands, and linked this to rising temperatures and extended springs and summers.

Scientists urge Canadians to 'vote strategically' for the environment

OTTAWA - Canada's top global warming scientists weighed into the election campaign on Tuesday, blasting the Conservative government's record on climate change and urging Canadians to "vote strategically" for the environment to protect future generations and modern civilization.

EU MPs' climate package vote brings little joy for industry

BRUSSELS (AFP) - A European parliamentary committee on Tuesday broadly approved ambitious proposals to tackle climate change, refusing to bow to industry pressure to water down the measures.

The global financial crisis and the closure of German auto factories did not prevent the parliament's environment committee from voting 44 to 20, in favour of a tough stance in talks with the 27 EU member states on how to achieve the agreed goal of cutting CO2 emissions by 20 percent by 2020.

Climate change seen aiding spread of deadly diseases

BARCELONA, Spain (Reuters) - A "deadly dozen" diseases ranging from avian flu to yellow fever are likely to spread more because of climate change, the Wildlife Conservation Society said on Tuesday.

The society, based in the Bronx Zoo in the United States and which works in 60 nations, urged better monitoring of wildlife health to help give an early warning of how pathogens might spread with global warming.

Rainforest dwellers demand more say in climate change efforts

BARCELONA (AFP) - Indigenous leaders in five Amazonian nations, the Democratic Republic of Congo and Indonesia on Wednesday demanded a larger say on how best to manage tropical forests to fight climate change.

More than a billion poor people who depend on forest ecosystems risk economic and cultural devastation if efforts favored by rich nations to reduce greenhouse gases fail to respect their rights and needs, they said at the World Conservation Congress in Barcelona.

House Democrats unveil draft climate change bill

WASHINGTON - With the presidential election less than a month away and the economy reeling, House Democratic leaders on Tuesday unveiled a proposal to reduce the gases blamed for global warming from power plants, transportation and factories by 80 percent come 2050.

The draft legislation, which will be refined in coming months for introduction next year, would begin slowly, capping emissions of heat-trapping gases released by transportation and power plants first, then moving to other sectors of the economy. The money earned from auctioning off some of the permits would be redirected to energy efficiency and clean technologies. In later years, all permits would be sold with the proceeds going back to the taxpayer, unless Congress reauthorizes the bill.

It is hard to focus on work on a day like this.

Our government headlines nearly 50Billion Sterling 'investment' in our banks, plus a blank cheque to cover short term liquidity, and a half percent cut in interest rates.

Net result is that the markets are still down, 3% on the day was I type. Gold and Yen up a lot, and oil little changed.

My pension is toast. As Sterling collapses my savings are toast. As the banks refuse to extend our overdraft, my job is probably toast before long.

At least the hens are laying.

I know the feeling. We're on the verge of one of those "step changes" Greer talks about, and I think it's trickling through even to people who usually don't follow current events.

I overheard a group of people this morning, who usually talk about things like who's getting married, who's having a baby, and what they bought at the mall last night. Today, someone mentioned the mall, and the rest said, "Shopping? Shopping? Who's going shopping at a time like this?"

It does make it hard to concentrate on the ordinary details of life...

As a weather nut, I am familiar with this feeling, as I find myself in the same frame of mind as when a major hurricane is hurtling toward the coast -- I see the impending damage days in advance, and know many are unprepared and even unsuspecting, and that life for many will never be the same. Even though I need to work, and I do to a degree, I check back for updates more often than they can appear, armchair-quarterback every prediction, and try to out-do the "experts" as to what the steering currents really are. The difference, though, is that this time "the storm" affects the entire country, including me.

Even my wife doesn't make disparaging remarks about my "economic doom" statements anymore.

" I see the impending damage days in advance, and know many are unprepared..."

This is the essence of most of my anxiety and frustration.

IMO the inability or unwillingness to extrapolate out to the obvious results of our systems and actions is what will bring us down.

Either that or it's all just one big conspiracy (winkanol)

since when shopping at the mall is considered "ordinary"? is it the same ordinary as driving an suv 40 miles to work?

buying food is ordinary, "shopping" is not

I was referring to Ralph's comment about finding it hard to concentrate on work.

Huh? For as long as malls have been reasonably common, was shopping at them ever seen as anything but ordinary, that is, commonplace and banal? Now, driving 40 miles to work does happen, but more often it's just a meme cherry-picked by reporters seeking out maudlin stories. After all, average commute times seem to be less than half an hour, which in typical real-world traffic might get you 5-15 miles.

We're on the verge of one of those "step changes" Greer talks about

Step changes? As in stepping off the windowsill of a skyscraper?

When the economy collapses, many millions of Americans are screwed. What happens when their only source of income vanishes? Or when the grocery stores close up shop overnight, due to the total breakdown of our credit system? How will people eat? Is FEMA going to feed a nation of 300 million people? State governments are bankrupt. Municipalities either are, or will soon be in, the same boat.

Greer takes historical examples of collapse and generalizes them to our situation: Because Easter Island and Rome experienced catabolic collapse, so will we. I'm still scratching my head about out why he thinks this is valid.

The vast majority of Romans were not dependent on just-in-time delivery of food, fuel, and other necessities. Their civilization wasn't propped up on stilts by a rapidly vanishing energy source. The Romans hadn't destroyed or paved over all their good farmland. The Roman populace hadn't lost the knowledge, skills, and abilities with which to procure the necessities of life.

In the US, it almost seems as though we deliberately built up a society rigged for a rapid, catastrophic implosion. Sure, maybe in a decade or two the survivors (200 million people? Or fewer?) will have figured out how to grow food locally, manufacture basic necessities like clothing and medicine, and so on. And I suppose one might call this a "step change", in a dieoff-sort-of-way. But by that time, won't extreme energy scarcity (and possibly climate change) deliver the coup de grâce?

It's all so depressing. What a waste.

Is FEMA going to feed a nation of 300 million people?

They don't have to. Not everyone will lose their jobs at once.

Greer takes historical examples of collapse and generalizes them to our situation: Because Easter Island and Rome experienced catabolic collapse, so will we. I'm still scratching my head about out why he thinks this is valid.

I think it is.

The government can feed the population. It may do so as inefficiently as it handled Katrina, but they can do it. They can make sure the farmers get first dibsies on petroleum products, and they can distribute the food, or move people to where the food is.

I suspect that people will move on their own, closer to the supply lines, and where there may be jobs. It will be painful and tremendously disruptive.

And face it...most Americans won't starve for a very long time, even if the grocery stores close overnight. ;-)

Exactly - when morbid obesity and its inevitable Pandora's box of chronic disease (caused by meat/dairy/oils & overnutrition), when these things are gone from the general population, then one can talk seriously talk about starvation in America. A single pound of FAT contains enough energy to fuel several days of mild activity - nearly ALL Americans have more energy stores in the form of chicken FAT than the average 3rd world farmer has in their entire body!!!

"Caused by meat/dairy/oils & overnutrition"

This does not reflect current scientific studies at all

in fact, quite the opposite - but I am getting as used to you misrepresenting the facts on food as I do the McCain/Palin campaign the facts on just about anything

which studies would those be? I look around, and I see a sea of fat, diabetes, hypertension, coronary artery disease and low back pain.

What else might be wrong? Not that people eat too much!

The question is why they eat too much. And the answer, it appears, is refined carbohydrates. Refined carbs screw up your body chemistry and your appetite control system.

Amazingly, despite the conventional wisdom, there's little scientific evidence that fat is bad for you.

The obesity explosion in the US started after the government starting recommending a low-fat diet.

The conventional wisdom on this really is changing. A friend of mine in Ohio had a heart attack recently, and the doctors told him that his number 1 priority should be to cut down on refined carbs. Not fat, refined carbs.

I blame high fructose corn syrup. Cheaper than sugar, and in damn near everything, starting early 70's. Your body tastes the sweet but doesn't process it the same way as plain old sugar.

I know they have their own commercial now, which to me just proves it's horrid.

I 100% agree on the refined carbohydrates point (personally lost ~90 lbs by switching to a low-carb diet). However, it's important to distinguish between "good" fats (non-hydrogenated, unsaturated, Omega-3/6-rich) vs. "bad" fats (hydrogenated = worst, saturated = better, but not great).

Unfortunately the FDA and Big Agribusiness have colluded over the past 30 years in a massive propaganda campaign to convince Americans that ALL fats are "bad" for you, while all carbohydrates are "good". Most Amreicans are simply too lazy and ignorant to do the research and decide for themselves.

However, it's important to distinguish between "good" fats (non-hydrogenated, unsaturated, Omega-3/6-rich) vs. "bad" fats (hydrogenated = worst, saturated = better, but not great).

No, it's not. The "good fats vs. bad fats" thing is as bogus as the low-fat diet.

'fraid not.

Consumption of fats and oils is not as simple as delivering energy to the body. Omega 3 and 6 in particular are "essential" in that they cannot be manufactured by the body. These things are building blocks for cytokines which have important regulatory effects on the immune system. Get them out of whack in your diet, and your own biochemistry will suffer.

The incidence and progression of MS for instance is pretty strongly related (although not "proven") to saturated fat consumption. Also very good epidemiological evidence that omega-3 is protective of that, and of heart disease.

I suspect that consuming a variety of fats is probably the healthiest thing to do. And perhaps certain fats are better for people suffering from MS. That does not mean we should all eat that way, though. Indeed, that is a key point from Gary Taubes' Good Calories, Bad Calories. Some of the conventional wisdom (such about cholesterol) is based on what happens with people who have a genetic defect that results in abnormally high levels of cholesterol. What's good for them may not be good for normal people - may in fact be bad for normal people.

Taubes also argues that the omega-3/heart disease has little scientific support. It was proposed as an explanation for why Inuit, who live on meat and blubber, don't suffer heart disease.

But if it's actually refined carbs, and not fat, that cause heart disease, no explanation is necessary.

If you have not read Good Calories, Bad Calories, read it. It's really eye-opening. An awful lot of what we thought we knew about nutrition is actually based flimsy, even contradictory, evidence.

perhaps certain fats are better for people suffering from MS. That does not mean we should all eat that way, though

There is evidence that reducing saturated fat intake and taking in sufficient quantities of omega 3 reduces the prevalence of MS in the population, as well as reducing progression rates for those who have it.

So yes, it probably does mean that we all should eat that way (at least if we want to reduce our chance of developing MS).

Ref: George Jelinek, "Taking Control of Multiple Sclerosis", (2005, I think)

There is evidence that reducing saturated fat intake and taking in sufficient quantities of omega 3 reduces the prevalence of MS in the population, as well as reducing progression rates for those who have it.

Another point from Taubes' work: correlation is not causation. That is probably the biggest problem with research on human nutrition. You cannot do the kind of experiments on people that you can do on, say, rats. You cannot keep all other conditions the same, and change only one variable.

MS is an autoimmune disease, and like many autoimmune diseases, is more common in wealthy, developed nations. Which might be assumed to have a different diet than in poorer nations. That makes epidemiological studies on diet suspect, or at least very complicated.

That is the problem Taubes found with the fat-heart disease link. Fat and meat consumption go up as a population gets wealthier...but so does refined carbohydrate consumption. It's difficult to tease them apart. And the obvious test cases, such as Alaskan natives that eat a lot of fat and few carbohydrates, were ignored as a fluke.

You're right that correlation is not causation, and as you say there is really no way to carry out the experiments that are required to prove causation. The same problems would apply to "proving" anything relating to simple carbohydrates.

What we have with MS is some pretty strong epidemiological evidence, plus a plausible biochemical basis. It really amounts to what standard of proof you want, but it's good enough for me:

- MS is much more prevalent in inland Norway than on the coast, the primary difference between the two being that the inland diet is heavy in saturated fats from a dairy based diet (lots of milk, cheese and butter) whereas the coastal diet is heavy in fish (lots of omega-3). Lots of other less direct evidence but this is the one that sticks in my mind as far as saturated fat / omega-3 issue goes.
- Swank's longitudinal diet study indicated that long term progression for MS patients was greatly reduced (order of magnitude improvement) in those who could stick to a diet of less than 20g of saturated fat per day. This is a much larger effect than any of the medications that have ever been tested.
- omega-3 is the building block for a group of cytokines that suppress inflammation, which presumably includes inappropriate immune interaction with the nervous system in the case of MS (omega-6 is the building block for the pro-inflammatory cytokines. Both synthetic routes use a common catalyst in the body and what can happen is that if you eat too much omega-6 (from, say, canola) that can block the conversion of omega-3 by saturating the synthetic pathway).

Yes simple carbs are a problem with diabetes / syndrome X. But the simple carb story is not the only important nutritional story that needs to be told.

The point I'm trying to make is that "fats ain't fats". They are biochemically active and have different nutritional functions in your body. They are not just inert energy carriers (although they serve that purpose also).

If anyone is looking for a good baseline book on nutrition, I recommend Walter Willett's Eat, Drink, and Be Healthy.

It's really important to distinguish between refined carbohydrates like table sugar or white flour, versus whole foods like especially whole grains. "Glycemic index" is one measure, but it gets tricky. E.g with whole grain flour, it depends on the coarseness of the grind.

I knew there was a reason I was storing all those calories just above my belt!

The most credible advice I ever heard about food was to never eat anything unless people had been eating it for at least 1,000 years. Thank god that includes beer.

The government can feed the population. It may do so as inefficiently as it handled Katrina, but they can do it. They can make sure the farmers get first dibsies on petroleum products, and they can distribute the food, or move people to where the food is.

In theory, the government can do a lot things. In reality, they often just make matters worse. They launch & support wars instead of building the nation's infrastructure. They subsidize ethanol instead of developing viable alternative energy sources. They pass bailouts instead of genuinely dealing with our financial problems.

But I am fairly confident that the government will do a great job of relocating the jobless masses into major cities...

I suspect that people will move on their own, closer to the supply lines, and where there may be jobs....

In terms of longer-term viability, isn't this exactly opposite of what we want? Instead of people concentrating in cities and along supply lines, they need to spread out across any & all arable land, forming localized communities. Right?

Jobs, medical services, food and electricity are going to disappear from the periphery first - the remote countryside, far-flung suburbs, etc. But setting up a relatively self-sufficient community requires significant amounts of time, tools, knowledge and capital. Most Americans will have none of these things.

Therefore, I think many families will be forced to turn to the government for shelter, heat, food, and medicine. We'll have hundreds of thousands internal refugees living in government camps (FEMA, Red Cross, etc.) This number will only grow with each passing year. Will these people ever be relocated out to viable communities? If not, what will happen to them when the camps run out of supplies?

In theory, the government can do a lot things. In reality, they often just make matters worse. They launch & support wars instead of building the nation's infrastructure.

They have to feed people in order to launch wars. Don't forget...the purpose of the school lunch program was to improve the quality of Army draftees.

In terms of longer-term viability, isn't this exactly opposite of what we want? Instead of people concentrating in cities and along supply lines, they need to spread out across any & all arable land, forming localized communities. Right?

What do you mean "we," Kemosabe? Nobody here agrees on what "we" want. Alan, for example, thinks cities and supply lines (rail) are the future.

In any case, what "we" want doesn't matter. I'm talking about what likely will happen, not necessarily what I want to happen.

Therefore, I think many families will be forced to turn to the government for shelter, heat, food, and medicine. We'll have hundreds of thousands internal refugees living in government camps (FEMA, Red Cross, etc.) This number will only grow with each passing year. Will these people ever be relocated out to viable communities? If not, what will happen to them when the camps run out of supplies?

If I had to guess...they'd be moved out of camps in a sort of "welfare to work" program. The work is likely to involve joining the Army...or becoming farm laborers, perhaps on government farms. Which would at least give them a path to the localized communities you want.

Me, I don't think it will come to that for quite some time.

It does make it hard to concentrate on the ordinary details of life...

It's painful, but necessary. I am by nature the anxious type, Chicken Little if you will, pestering friends, relatives, acquaintances to not buy houses, etc. (Of course, it weakens my case that I've been a little premature, 30-40 years maybe, but every dog has his day.) Still, it's seems to me that the one good thing is that maybe people will spend more time talking about the world and what's going on in it, and arguing and thinking and even reading about it.

If one can control one's personal anxiety, it is in fact one of the most interesting periods of history one could possibly live in, a turning point for mankind. We all need to think about survival, and we have to realize that ultimately survival is a collective issue, and by collective I mean humanity as well as family, immediate neighbors and countrymen.

Not that this is any substitute for hunkering down and figuring out one's own personal and familial options.

At least your government is doing something that might actually ameliorate the problem, not what my government did which is to spend $700 billion to keep on life support the same group of thieves and incompetents who got us into this mess:

Unlike the Paulson plan, this sounds as if it makes sense. However, given the strong financial linkages among the world’s economies, I wonder how much Britain can do on its own. Let’s see what the plan actually looks like; if it’s good, it can be a model for US emulation, and for the eurozone too if they can get their act together.

Paul Krugman, "Britain leads the way?"


I've noticed something interesting in myself lately. While I can normally be a cynical person, I'm becomning increasingly so. I've started thinking, that if things should recover, my investing outlook is going to be much different. My modest IRA has been invested in commodity type vehicles, with some good interest bearing shares like MGB, DNP. I thought I was somewhat conservative, yet I am still getting hammered. This whole process of markets tanking has made me realize nothing is safe, so I'm wondering how that is going to effect me later on.I've realized you have to be careful of governments changing the rules of the game on you, that typical investment advice seems wrong, etc etc. Will I want to hold physical gold? Cash under the matter? Buy land? I guess my reaction is nothing new. It would be interesting to read up on the psychology of this and how peoples thinking has changed in other economic events like this.

There was an article posted yesterday, that basically said that the difference between recession and depression is that in a depression, there is no safe haven.

In a depression, the "winners" are those who lose the least.

I have thought for some time that the best preparation you can do is to embrace the changes that are coming, regardless of what we might want, and to keep one's eyes open and remain agile in one's thinking. Adjusting to dealing with a deflationary environment requires different assumptions from those learned in a lifetime of inflation, and there is no time to waste in denial and shock. I have no expectation of getting out of this unhurt, nor any expectation of being able to retire. I am focused on various things that could hit me really hard in this financial turmoil, but not worried about the smaller hits.

I have thought for some time that the best preparation you can do is to embrace the changes that are coming, regardless of what we might want, and to keep one's eyes open and remain agile in one's thinking.

Something along those lines was partially behind my decision to start commuting to work on foot. Did I absolutely HAVE to stop driving and start walking to work? No, not YET. By going ahead and doing it now, though, I've gotten a head start on adapting to the future in one small way, and removed from my life something that is causing considerable stress and anxiety in the lives of many others.

This same approach applies to things like growing your own food, and a bunch of other stuff we've been talking about.

Hmm. So I should embrace destitution? That seems harsh. I can embrace my laptop until I have to sell it for a can of beans. I can also embrace death, I suppose, by not being so attached to my life?

I still have a job. The stores are still open. But I'm not on a farm that I own outright. What other idea is there, really? An intentional community with land and water--same sort of thing--buy into it and then find a job?

This is a social crisis and individuals who think they 'got out alive' are going to have to face the angry hordes of the dispossessed who were not so fortunate. Never forget: we're all in this together.

No retirement: Just keep working till death. That's what many of us now face. You got your money out and stuck it in a mattress? Wow--brilliant. Good luck with that plan. Now do you have razor wire around your property? A turret? Barrels of rice, pasta, and beans... Get busy!

The razor wire is on the list of things to buy this month. It buys time to reload while slowing the hordes.

Ha Ha. Okay, you're place is LAST on the list. For the sake of argument, I'll be representing the 'angry hordes' of dispossessed, most of them are too busy to read the Oil Drum.

There is a reason that weapons manufacturers are seeing record backlogs in ordering.

Don't know where you got all of that - not in my post - and I'm not real sure what your point was. Are you just angry and raging against the injustice of a fading dream?

No retirement: Just keep working till death. That's what many of us now face.

So apparently the situation that exists for the majority of the world's population now and for the history of man is not good enough? I guess if you are not satisfied with that, then you should do something else - good luck with that plan.

I'm certainly vulnerable, and no believer in the rugged individual survivor mentality - I'm not the Marlboro Man. However, my wife and I have made considerably better choices than many of those around us, and we are therefore less vulnerable than we might have been. And we do have skills that make us marginally more self-reliant than average, and we are trying to cultivate a greater ability to survive with less. The biggest benefit of that is to increase our usefulness to the community around us, and to decrease our burden upon it.

The point I was making is that change is coming, and you have very little control or influence of that. You can waste your time and efforts and resources in denying it, or you can see the changing world as it is, and make appropriate adjustments as best you can. Does that provide you with guarantees of success? Hardly, but planning for a future that won't happen just about guarantees failure.

So should you embrace destitution? That depends. Will you be able to prevent it? If not, wouldn't it be better to try to figure out how to survive with less than to deny it? Why plan for an unlikely future? The dream of infinite growth and life of wealth and leisure is dying - it was always a fantasy, so let it go.

Sorry--venting a bit, joking as well. As I say below--
Here's my positive suggestion:

You know, even with only a little bit of land people can get animals to help them. Chickens, rabbits, maybe a goat. The animals eat waste grass and other things, bugs, leftovers, acorns, etc. Then their manure is fertilizer. We have only a small plot of land in a largish town (I want to move to a country area but our jobs are here for now at least). But it's enough to feed two rabbits. They help fertilize the broccoli, tomatoes, etc. Even if we eventually have to move, the knowledge that I've picked up has been valuable. It's incremental, it's slow, it's piecemeal, but it is better than nothing.

"A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly." -- Robert Heinlein

Specialization is for insects. Humans are, by nature, adaptable. Come what may, many of us will survive. Lifestyle quality, though, is another matter....

I've done most of those things above except the last ... but even at that, it is hard for an old man to read this without a tear.

"'Tis not too late to seek a newer world.
Push off, and sitting well in order smite
The sounding furrows; for my purpose holds
To sail beyond the sunset, and the paths
Of all the western stars, until I die.
It may be that the gulfs will wash us down:
It may be we shall touch the Happy Isles,
And see the great Achilles, whom we knew.
Tho' much is taken, much abides; and tho'
We are not now that strength which in old days
Moved earth and heaven: that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield."

Tennyson's Ulysses

A recession is when you lose your job, a depression is when I lose mine... :o)


When you say safe haven are you refering to investments? If so would you consider cash to be a fairly safe haven in such times?

Yes, I'm referring to investments. No, cash is not safe. The possibility of inflation aside...where do you put it, when you can't trust the banks?

I suppose you could put it in the Bank of Serta, but that carries its own risks.

Bury it in the back yard?

Ha Ha. Make sure the neighbors don't see you. And watch out for curious dogs.


That way, in three thousand years time, archeologists can dig it up and a grad student can accurately date it to the Early 2nd Dark Age. :-(

Here is my question: who is actually IN the markets, and buying daily, to keep the markets UP on a day like today? If the market manages to close up a little today, I fully expect more bad reports after the close to drive it back down tomorrow.

But then, I didn't expect a housing up-tick either. Bloomberg is the only place is see much behind-the-scenes analysis, and they say it was mostly "vulture investors" buying up heavily distressed properties. It may be more a sign of seller capitulation rather than buyer strength. And since these are only offers, not closings, many may go away now if credit isn't available.

I'm buying - just in tiny amounts. But what the heck. If the market comes back over the next ten or twenty weeks or years, I can make some money. If it doesn't, I'll just be in the soup line with everybody else whether I buy a bit or not!

Well Shawn, I noted yesterday how the Depression impacted my view of life. I saw what it did to people and my aim throughout life has been to withdraw from the system so far as possible. When we bought our current 57 acres in 1979, I looked at the trees and actually said to myself, "At least we'll always have firewood." And, in the intervening years, I have made every effort to be as self-reliant as possible.

The problem most people will face is that it is too late to take my kind of actions. FWIW, a good rule of thumb is that it will take 5-7 years to establish a functioning "homestead."

My best suggestion is for like-minded people to get together and then find a mentor who can moderate discussions and keep everyone focused upon the most important topics and possible actions.

I might add that a few others and myself (we were all serious doomers) used to meet for a monthly "long lunch" at the town park to discuss the future. It died when one guy moved but will likely restart in the near future.


Thanks for the reply. Sorry, I didn't get to read your comment the other day. I just did though. Interestingly, you mentioned about have a frame of reference and things not being 'that bad'. The other day I just watched a 1980's Swedish movie, "My life as a dog". The recurring theme in there was putting things in perspective, the boy of the movie kept thinking about other peoples misfortunes which in comparison made his life not so bad.

My reply to Todds post that started this thread.

Yes most here are not ready,most will not be ready and even starting right now they won't make it.

I awoke in the middle of the night last night with an amazing thought in my head. I knew my JD riding mower was sitting outside the barn and I really had to finish trimming up around the place BUT>>>>>>>>>>

it really struck me right hard!!

WHY? Why indeed. This is fall. I will start planting food plants in my yard. Start making piles of wood chip. Starting throwing leaves and clippings and dead downfall branches right where all that damned grass is and never mow grass again. I have several large rolls of hay that won't be used so I will roll them out all around the place and plant many more blueberry bushes,elderberry, and blackberry ..all with cuttings and seeds from the ones that now grow near the garden.

Turn my whole area into what would look like a plant nursery that you walk down the rows of...stuff growing everywhere. Plant fruit trees,garlic everywhere,some flowers, mostly things that yield food.

So why mow grass. Make it a total garden everywhere.

It was an epiphany one could say. I had falled asleep reading an old FoxFire book from back in the 60-70 time frame and it must have stirred my subconsious enough to wake me up and tell me to quit the stupid mowing of grass and instead make it a huge 'jungle'. With little paths here and there and deadends,etc.....

More like when I was young on the farm...huge amounts of useful vegetation grew wild all over the country side. No johnson grass, no noxious weeds then. Honeysuckle on all the roadsides and wild flowers. Wild dewberries and blackberries,nut trees everywhere.

I am going to go primitive...

Today took the grinder/sander to my recently acquired Peter Wright anvil. Next week I drive to a place in the Ozarks that deals in blacksmith coal and haul back a ton or so. Built or find a nice forge and restart my blacksmithing skillset of the past.

I need to learn how to sharpen plow shares and forge garden tools.

Leanan says she like 'fresh food'. Bah to supermarket tomatoes. My canned ones beat them easily. My home cured country bacon and ham make the supermarket scat rather tasteless. I have plenty of fresh corn to shell and grind for cornbread and tortillas. Even wheat that I gathered last harvest stored in gallon jugs to grind for flour.

Airdale-When you bring forth what is within you?
What your bring forth will save you.
When you have nothing to bring forth ,
that will kill you.

I hate supermarket tomatoes, too. I don't think I've ever bought one.

"will likely restart in the near future."

Cool. I'm retired in 3 weeks. I'll either drop you an e-mail or see you in town. Might even get one of my sons to come. He called me last week and said he was thinking about buying food.
Did you meet during the rainy season, too?

BTW, our roads may hold up a year or 2 longer than the rest of the country; they have just re-paved a good bit of 101 all the way down to Willits, and a few spots around Ukiah.


Hi Mike,

Well, I was actually thinking of you when I posted. I'm thinking about having Jim put a little "article" in the paper to draw a larger group. My concern is that Frank, Kent and I were all doomers so we didn't waste time trying to convince each other about the facts. New people might divert discussion. What do you think?

FWIW, we usually met for 1 1/2 - 2 hours.


Hey , Todd...

I think I had better start buying the paper.
Sure, an article wouldn't hurt. If too many people show up, the old group can re-activate, and lunch can go on with a small group.
Also, I think I may not be a Pollyanna any more (<:


My personal opinion is that the best place to put your money is in freeze dried food and other necessities that will keep for a long time. Next time you go to the grocery store, or the clothing store, etc, take that receipt of what you bought, note what was NECESSARY, and then go buy a boatload of it. TP, shoes, underwear, jeans, shirts, rice, beans, pasta, coffee, cocoa, salt, sugar, propane, etc, etc. Your purchase will not lose value, you can always consume it or trade it. Get out of the mentality that you need "money" with exception to paying your rent/mortgage, everything else can fall by the wayside.

The problem with that is it doesn't last forever. Paper goods moulder, shoes crack, food gets hard and stale. I've even had canned goods go bad on me. (And what horrible mess when that happens.)

Come on Leanan, a lot of us have been at this storage game a long time. Do you think we would keep doing it if it wasn't worthwhile? If things are stored right and rotated if necessary, there is almost a 0% chance of them degrading.

I might mention that my "dress shoes", two pair, are 38 years old and still going strong. I mostly wear work boots and I always have a couple of new pairs on hand - about a two year supply.


I'm just sharing my own experience. Been a waste of money for me so far.

I do similar to what Todd does, which is eat what you store, and store what you eat. You cycle the stuff. Higher initial investment, but after you have the initial stock built up, it doesn't cost any more. What I've seen others do is buy a month's worth of food every 2 weeks until they have the amount they need, then they just go shopping monthly, using the oldest of the food... No money lost.

Yes, I've heard that recommendation. The problem is that I tend not to like the kind of food you can store. I prefer fresh food. So the canned goods sit on the shelf until they corrode through, producing a substance that looks like pitch and is as hard to clean up. (I've invented abiotic oil!)

That woman who wrote that book on preparedness goes so far as to use powdered milk instead of fresh, partly so the family would be used to it, partly in order to rotate her stock. But yech. I hate powdered milk. According to my mom, I wouldn't drink it even when we lived overseas and it was the only thing available.

P.S. Someone posted at PO.com today, complaining that a mouse chewed through every bag of food in his stash.

Yup, they do that. And not just to annoy you. It's a survival thing. They only eat a little bit from any one food source, then move on. This minimizes the chances that they'll be poisoned. If they get sick, they won't go back. Which of course makes it harder to poison the little buggers.

Presumably that was a good lesson and one learned in time while the victim could still get more bags of food. Imagine if that happened in the winter to the last of the bags of food and if there were now nests of many mice eating everything.

People who think they can get mostly self-sufficient overnight are nuts; there will be all sorts of mistakes made and many setbacks.

cfm in Gray, ME

I suspect if things were that bad, you'd eat the food anyway. And maybe a few of the mice, too. ;-)

Me, I don't have to worry about mice.

Solution: 5 gallon plastic bucket.
Cats work too.
A nice chicken snake around works also.
How can they get inside a cabinet?
There are ways to handle this. You just have to think it thru.

Like hanging seed corn in a cotton sack and tying it so it hangs from a rafter. I have stored shelled corn ready to grind in my barn in a 5 gal bucket with just a piece of plank covering it. Hardware screen wire is
handy. They can't go thru that!....

I think you have a new age problem that needs an old age solution.

A nice tight root cellar is the best solution. Go out in the yard to a sloping area that faces south. Start digging and place large 55 gal plastic drums therein. Won't freeze and no mice or insect problem.

Store you dug potatoes there and whatever else you have grown. In fact make it big enough for a cot and water supplies and you have a hideout hole for when things go really bad....(soon enough).

Ok..I am sure you have answers to all these ideas. Fine. Works for me.
Maybe for others. You have to get creative BUT..like Todd says....too late..far too late for most..even if you had the land.

So far I see no visible rush to the outback here. Don't expect any either until the meltdown is well under way.


So far I see no visible rush to the outback here. Don't expect any either until the meltdown is well under way.

I don't, either. Probably not for generations.

As Farley Mowat discovered, mice are also good to eat. A little bit lean, but full of nourishing protein :)

Mom and Dad used to share "horror stories" with us kids about sifting flour bugs out before baking, trimming mold from cheese, cutting the bad parts out of fruit and potatoes, and scavenging the undamaged goods after mice started nibbling. They HATED mice. It was a "survival thing" for them too.

Only modern Americans expect unblemished fruit. According to my folks, farmers sold the best, canned the worst, and kept as much "fresh" as possible in the cellar. Bugs, bad spots, downfall damage -- all it took was a little more trimming. A fruit or potato that was still "good" would keep another day or two, so you always ate the ones that were just "turning". "Eat what you can, and what you can't, you can" was my Mom's mantra during the early 70's when times got tight at home and they gardened and grew fruit trees.

Heck, even I learned early on to pick a fruit off the tree and happily nibble around the bug spots and watch out for worms. I learned to like slightly green fruit, too, as the birds and coons would take anything close to being ripe, so you were always competing with them for choice fruits. My wife and kids can't even conceive of such notions.

As Alan would say,
"Best hopes for low expectations"

My kids know all about "nibbling around the bug spots" and such like. From a young age, they've been taught to not be "fussy" about their food/clothing/toys/etc. I think they're much better off for it, even if we weren't in these tumultuous times.

On Saturday we put on a community cider-making party. Must've processed at least 5 bushels of apples. Mostly it was about building community and having fun and sharing. It was successful at all those things. You can be sure there was a certain amount of "essence of coddling moth larvae" in the finished product, too. Mighty tasty!

We've had 11-kilo bags of rice with weevils in them. I've found that I could drop the rice into hot water, where the bugs died like lobsters. Then they can be skimmed off the top with a sieve. If I missed some, I figure the creatures are MADE of rice, anyway. (I try not to let my husband know about the bugs: he's squeamish.)

But when I went to use some pasta we'd had in the cupboard for ages, I found that the same (sort of) bugs had hollowed out a lot of the spaghetti and linguine, leaving a lot of dust. Evidently we should put the boxes in sealed plastic bags.

I got a package of a half-dozen tomatoes for 79 cents at the green grocers last week -- when I opened the package and turned them over, each had a black spot. I cut out the spots and found that the tomato was otherwise okay. Stored in the fridge in those magic green vegetable bags (they seem really to work), the tomatoes have been useful for several days since. (Agree that super market tomatoes suck, but vegetable stands sometimes have ones with flavor.)

I thought that dented cans were liable to corrode where the dent compromises the coating inside. I'll still buy them if we plan to use them soon.

We've got a diner nearby that still gets pickles in the 1 gallon Glass jugs, so I'm gathering them when I can. I've seen mice chew through a lot, but the glass works, doesn't crack or get odorous, either.


grew up poor - in northern Quebec - not a lot of food choices - very little fresh food in winter and not a lot of affordable in summer. This has affected my shopping/cooking even to this day.

Always have cut out the bad spots, and probably know 7-8 ways to use up mushy - not quit bad yet - fruits and veggies so that they taste good and don't go to waste. I vermicompost the rest. My kids often laugh at how "cheap" I am with food.

I must have a bazillion containers - some purchased - some recycled. I find the best way to keep flour, grains, pasta is in a container that neither mice nor bugs can enter. It won't help against what is already in the product (ugh) but it will decrease losses from opportunistic eaters.

I only buy canned/dried stuff that I am willing to eat, and use it in rotation. And I usually always buy extra - especially if a sale is on.

My two cents :-)


Always have cut out the bad spots, and probably know 7-8 ways to use up mushy - not quit bad yet - fruits and veggies so that they taste good and don't go to waste.

Any tips?

I read somewhere that those fancy sauces in French cooking were to cover up the taste of spoiled meat and other ingredients, but I'm not that fond of French cuisine.

Jams, Jellies and Juices are one way to go..

"Any tips?"


Almost any vegetable can be chopped or pureed and used as nutritional filler in soups, stews, chili, sauces. Also chopped, spiced and thrown in with stir-fry hides a lot. I am very fond of savory and breakfast muffins - made with leftovers of course - and veggies are nice in there -as well as pot pies or savory tarts.

And fruit can be mixed with yogurt in a smoothie, cottage cheese, muffins again (sense a theme here? lol) or as mentioned above - jams, jellies and sauces. If you loosen up your definition of jams or preserves you can just mash the fruit - add a few spices/sugar to the mix and voila! My mom and I are fond of fruit salsa - I haven't quite been able to convince the kids on that one yet. I also throw it in while I cook warm cereal - makes a nice breakfast.


Note that "cheeseparer" has long meant "cheapskate" in the UK. (Had something like the I35W bridge collapse occurred over there, the tabloids might well have screamed blue murder about the "cheeseparing" government officials who allowed it to happen.) It's not only [most] Americans who haven't had to take chances with rotten food in recent decades, despite the apparent attractions of the "blame America first" meme.

I tried storing two 5kg bags of rice in a closet. The moths bored holes through the plastic and bred like crazy. Moths everywhere. Flying around day and especially night. We use a net to catch them but they are tough, now going after wool items in drawers. I had to throw away the ruined rice!

Try freezing stuff like this when you buy it.This will kill the bugs and if you store it in impermeable containers it will stay uncontaminated.May have to fish out a few dead bugs when using the stuff,but,what the hell.

Plastic bags may be convenient, but they are a very vulnerable way to store food. Worse, many creatures have long since learned to LOOK for human food in plastic bags. They go for them FIRST!

Insects will eat through them too.

Jars and cans are much better.

Plastic buckets...mylar inner liners for extra protection...


I know what you mean. Cost-effective storable food tends to be a bit on the bland side (dried beans, rice, etc.) Given (a) my own less-than-stellar abilities as a cook, (b) limited time for cooking, and (c) fondness for Chinese takeout, eating the stash looked like it would be a tough proposition.

The compromise that I've come up with is "buy cheap, store, rotate, and donate". I keep a close eye on expiration dates, and all those bags of rice and beans (and a lot more besides) goes to the local food pantry after spending a couple of years in my basement, to be replaced by fresh stock from the grocery store.

With that said, my hat goes off to the folks who walk the walk, and are already in the practice of feeding themselves from the deep reserves. They'll have a leg up on me if the day comes when we need to start relying on the basement food stash. But given that I view it as a truly emergency reserve, and I can spare a few hundred bucks a year to keep the rotation going, it's been a good compromise for me. And no food is going to waste - the food pantry gets regular donations of food which is still in good condition.

I've been doing that, too. In fact, on my to-do list this month is to gather up non-perishable food for the annual holiday food drives.

Hello TODers,

Regarding the shelf life of various products: recall the age of the various O-NPK products I have mentioned earlier: bat & bird guanos, mummified Egytian cats sold by the pitchfork ton in the UK, human bones from earlier graveyards & catacombs, Atacama nitrates, etc. Hundreds to thousands of years old--yet high in potency for fueling the topsoil.

I-NPK, stored in a manner to preclude water and/or moisture infiltration, should retain it's potency for as long a timeframe as the owner and his subsequent grandchildren could care about before it is finally applied to the final square foot. Have you hugged your bag of NPK today?

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

mummified Egytian cats sold by the pitchfork ton in the UK

Well, we HAVE been talking about CATabolic collapse. . .

Hello WNC Observer,

Thxs for responding. The best thing about trading or using I/O-NPK is that you get FRESH veggies, milk, eggs, bacon, bread, etc. Canned goods will be Unobtainium WTSHTF, and glass jars, suitable for food storage purposes, will be treated like fine heirloom jewelry.

A single postPeak quart jar of [pure luxury] honey or jam might trade for a large amount of precious metal coinage [doubtful, see TODer Todd's rationale], or a box of .22 ammo [so the farmer can shoot varmints raiding his fields and coops]. The farmer may require a heaping wheelbarrow of 5 fifty lb. sacks of high potency I-NPK to part with a quart of his beehive's honey.

I love eating fresh food, but I've grown accustomed to the bland food mostly through the use of spices. Vaccum sealed pouches of spices helps them keep their flavor, plus the addition of fresh ingredients here and there. Sure, beans and rice are bland, but when you make dirty rice or red beans & rice Louisiana style, it's good stuff!

Well, storing up on canned food is just a temporary solution--very short term. Unless you've got a basement full of the stuff and you own your house outright. Even then, you have to be able to grow food yourself, otherwise, you really are just kidding yourself and not really solving anything or setting an example.

I've been making a lot of jokes today, but seriously, the idea of small farming on less than an acre is my suggestion for all of us. This web site explains how it can be done even by those who don't own land: http://www.spinfarming.com/

>>Cost-effective storable food tends to be a bit on the bland side (dried beans, rice, etc.) <<

Part of your store should be a good supply of dried herbs and spices.

As for canned and dried food, I have just restocked for winter. We will rotate this out, and any left over will go to my kids when the return to Uni in a years time and then We restock.

Not so much for the 'end of the world' , more for the ever increasing likelyhood of blackouts, strikes, food distribution snags etc.

ps: Never buy dented cans.

why? I haven't died of dents yet. Am I missing something?

The internal coating on the can gets microfractures.

The (generally) acidic contents work on the can and air gets in.

A dented can has been dropped or impacted. So the seams may not be so good.

More on dented cans.


On a basis of risk assessment:

Occurance - Rare.

Effect - Severe to Fatal.

You don't have to worry about botulism if you heat the food before you eat it. Boil it for 20 minutes.

Botulism usually happens with home-canned foods that aren't heated before eating, like three-bean salad or canned fruit.

Of course, now we would just throw out anything that was suspect. In the future, we may not be so picky.

The problem is canned fish. Which of course is often eaten cold.

My wife and I raised our kids on Sanalac, a powdered whole milk that had its own cartons -- fill the yellow container to the line with water, add the powder, shake, and let sit for a bit. Tasted okay. You could even make yogurt with it. Unfortunately, Sanalac is no longer available. Too many people agreed with Leanan.

My current husband (married in Montreal) and I don't drink milk at all, but I like to use it in cooking. So I keep ordinary powdered no-fat milk in the fridge (one quart envelope's worth in a jar) and add it to recipes with the appropriate amount of water.

The Sanalac company still makes available a powdered buttermilk, also useful in baking.

I hang a bug-trapping sticky tape from the ceiling of the pantry, and it is covered with the little weevils and moths that infest the place. Doesn't prevent the flour from infestation but delays it, I hope.

One of the interesting things I've discovered is that even when kept in a deep chest freezer, chicken and fish and anything else with unsaturated fat will still go rancid. Without getting moldy or discolored, it loses its natural flavor and develops the nasty flavor of oxidized fat. How hard would it be to build a gas separator and purge the freezer with nitrogen?

shoes crack

That is why I have a gallon of leather balm.


Hey Alan I use mink oil on my leather what kind of balm do you recco? Just got back to my basement office after picking tomatoes, spinach and gathering pecans. Dang squirrels, crows and jays are out scoring me on the pecans. Sorry to hear you have had bad experiences with storage Leean. Being a semi old fart I have practiced the buy at least 2 when I buy most necessities mainly because I figure the prices will increase and I don't like to shop. I am in the midst of a new storage closet for dry goods i.e. clothing, shoes etc.
I bought the book "Crisis Preparedness" from Matt Chimp Man Savinar and it lays out storage specs for a lot of food items. Lots of pasta's, beans, and grains are good for over 10 years (at least) if stored properly. I have paper goods from as much as 20 years ago that are still fine. I didn't deliberately buy them they were leftover party goods (plates, cups,napkins) given to me by a paper company for a departmental party, stored in totes they are fine.
I'm still leaning towards the inflation scenario with the Central Banks throwing dollars at the problems in increasing volumes. We will still see deflation in some assets but food, energy, other necessities will IMO see upwards pressure. Under that scenario I can't think of a better way to invest your precious cash than in useable inventory. GLTA

I use "Leather Balm" by Leather Coatings Inc. of Dallas.

About a quart and a half down after 5 to 6 years.

On the sides of the front of the shoes are the most likely to crack. I also use it when I get my shoes wet.

Best Hopes for Good, long lasting shoes,


Over $150 to my cobbler this year :-) About = to my diesel bill.

I use Neatsfoot oil several times before applying Mink oil, can be purchased at Tandy Leather outlets.
I have leather rifle slings in new condition that are over 60 years old. Bandoliers that are over 40 and 50 yrs old. Work boots stored and not used will last indefinately with this method. Oddly enough, handling the leather items doesnt wear them out, its storage that break them down. Using neatsfoot oil makes storage long term, possible. Work boots by the nature of their use,wear out. Neatsfoot makes long term storage possible.

I think that a whole systems approach is better. Instead of just going out and buy a bunch of canned corn, beans, tomatoes, etc., either grow your own or buy in bulk in season from a local producer, then equip yourself with the canning equipment and supplies to can your own. Get into a pattern of doing this on an annual basis, putting up enough each summer to see you through the next year (or maybe even a couple of years), use it up, and then replenish next season. We need to be thinking in terms of a lifestyle, not an episode.

I'd also suggest people get a copy of Making the Best of Basics. I've loaned my copy out and I forget the author (Ken Stevens??). Lots of lists and useful information. I'd also recommend finding a copy of Farm Journals (new and revised edition) Freezing and Canning Cookbook, ISBN 0-385-13444-4. Ours is from 1973 - shows how long we've been doing this stuff.

We hot water bath and pressure can, dehydrate, vacuum pack* and freeze. We have about 40 cubic feet of freezer space (and the PV system to run them if the grid is out). I also store a LOT of food in used plastic olive barrels. They come in a variety of sizes, I have 50 and 62 gallon ones. Their advantage is that they are food grade plastic and have screw-on lids with a gasket. Nothing can get in. Their disadvantage is the the lids are only a little over a foot in diameter (14" and 16" respectively). They are about $25 in my boondocks town in northern CA.


*Remember, canning jars can also be vacuum pack

My wife and I used to have sheep on our farm.

Never underestimate the power of the sheep to change direction instantaneously. One second there running for their lives, the next, eating.

And right on queue, pending home sales up 7%. Baaaaaaa

It's very hard to laugh lately, but that was damn funny, Ha.

I imagine it is better to feel like one understands what is happening, but now I'm not sure.

Come on, cheer up. Don't you get slightly sick of hearing that "this time it's different"? The New Economy. The New Securitization. The End of the World as We Know it. It's the same old crap. The business cycle ebbs and flows and almost always for the same reason.

Of all of world's history, do you really believe you're watching the end of it? If it comes, it comes. But everyone at my company keeps showing up for work. Gas is getting cheaper. The store shelves are filled to the brim. My bills show up in the mailbox on time and the payments go out on time. 6% unemployment? Big deal. A couple of greedy quasi-banks failed? So what. There are 8500 more banks where those came from.

Really. I'd go on, but I have to take my daughter to school like I do every Wednesday.

Hang in there and enjoy the moment.

Of all of world's history, do you really believe you're watching the end of it?

Nope. But I believe I'm watching the most interesting part of it in the last 60-90 years. Maybe more.

I'm fortunate to live in interesting times.

Jtee: Yeah you're right-screw them all-you're doing fine.

My post started with "Cheer Up" and ended with "Enjoy the moment".

Even McPalinbush would have a hard time twisting that into "screw them all".

But I am doing fine, thanks for caring.

I've had a running conversation with a friend of mine for about a year now about the imminent problems that were facing the world: the debt crisis, peak oil, climate change, food crisis, etc. I was never able to get through to her at all. The last time we talked about it, she said, "People always predict doom and gloom. That's what people do."

That may be true, but what vastly more people do is to pooh-pooh the doomsayers. And they're right, most of the time -- until they aren't. And then they are completely unprepared for what happens when TSHTF.

My guess is that this inability to imagine the future as anything but a continuation of the past is probably involved in every failed civilization. If you can't imagine that the future will be different, then you can't prepare for discontinuities, and even relatively benign changes can become catastrophic.

People have known this financial crisis was coming at least two years ago. Even I, who normally pay no attention to economic issues, have known it was coming for more than a year. The world has sleepwalked to the precipice, and now you're advising them to keep sleepwalking. Not the best advice, IMO.

shargash, those people who smirked at me these past couple years while I cashed out and moved to Cascadia have been emailing me this week, looking for - direction. And I had the opportunity to say the four sweetest words in my language: ITYS. So there's always fun to be had among the ruins, even if all that remains is schadenfreude.

But heck, I've made a ton this past week, because I was dumping commodities all Spring and buying Proshares Shorts. One problem with this scheme, though, is that their valuation depends on orderly functioning markets. From the "Time Is Up" link at the top of the page:

There is chatter circulating, apparently, that "global equity markets will be closed after the emergency G7 meeting this weekend." That ought to induce confidence - just ask the Russians or Indonesians, both of whom have tried this and it has resulted in an instantaneous crash when they reopened (the Indonesian market was just closed AGAIN this evening, after literally imploding - down by more than 10% - within an hour of starting to trade.)


Better to make your move a year too soon than a day too late.

Unemployment when the whole labor force is included is at 11%, according to the BLS U6 metric, while shadowstats has it pegged at 15%. http://www.shadowstats.com/alternate_data The number you cite is the obfuscatory U3. Also note the CPI being 13%.

And according to offical stats, the USA isn't even in a recession at all (I think their latest number is a strong 2% real growth rate).

I'm assuming that the downward revisions into negative territory for the past year will be announced sometime soon after November 4th.

Huh, Here I thought it was the worlds largest banks and many several of them at that. I must have misunderstood that it was a world wide economic crisis. Maybe I took it all out of context and added things that werent really occuring, like oil wars, resource wars, territorial wars.

I suppose it seems jockular to tell a person with a flat tire..."Hey! its only flat on one side" and chuckle to yourself at that individuals misfortune....
instead of offering to help fix the flat or share a lift.

Nephilim<----making that tisk tisk sound and wagging his finger at you.

What this country needs right now is a good Border Collie!

I prefere Old English Sheepdog (OES). A Border Collie wants to run-run-run and I can't keep up while my OES will try to herd me along my morning walk.

I just wish we had an OES running for president.

I'd like to turn loose a large flock of elephant size chickens in Washington DC (Big Grin).

At 38 I have no illusion of retirement. I have a modest pension plan paid by my employer, of which 40% are in saving, not investing.

A few times a year I get this calls from insurers that there is this gap between my present income and expected pension benefits. Hilarious!

2035 is a long time away.

At 38 you have a lot of life ahead -- and no one can forsee the future. (Forsee has several meanings, I have recently discovered, #1, no one can forsee the future and #2, "no one could have 'forseen' the collapse of the economy").

Anyway, I'm off to see my grandkids, and they are completely untroubled by all this turmoil, totally optimistic about the future. It is a welcome break. They may be "toast" along with my bank account and what little is in my IRA. But I am beginning to slither out of my gloom -- the world has seen a lot, and yet it is very young.

I like the geological perspective on time.

The new model for aging will not be cessation of work, but changing of work. When we are no longer able to earn a living doing what we used to do, we'll have to change to doing something else. Hopefully by that time one will have no debts, will have housing and other important assets in hand, and will have some financial reserves saved up to cushion the decline to a lower income. That's about the best that I think that most of us can really hope for.


You called it. I last retired from programming right after Y2K because I told my employer I would stay till then. I have a one man business making high end furniture in what I call a "Simple Oriental" style. Though I have all the power equipment needed, I am training myself into hand tools. No debt and lots of food, etc. Of course we are not completely ready for any Black Swan but we are fairly well prepared to get along for quite a while.

BTW: I have been a doomer for about 35 years now so none of this is any surprise.

Off topic

For woodworking, have you considered the Fien Multimaster ? A different way of cutting and grinding (high frequency oscillation) ?

Best Hopes for fine tools,


Further off topic: the Dremel Multimax looks similar and is just coming out. I'm pretty sure I don't want to buy the Fein due to cost, but the clone looks cool.

Alan: I have a multimaster and I used it almost daily for tough sanding positions in corners. I have used the cutter piece a couple times in weird angled curved trim that must be hand fit.

Hand tool wise a chisel plane works well in the corners and carving chisels can get into most of the weird places.

I won't use it much after the grid goes down. :-)


"It is hard to focus on work on a day like this."
Yeah, it's almost like being in love.

BUT SERIOUSLY, at least your government (I'm assuming that you're writing from the UK) can step in and basically nationalize the process. At least it provides SOME stability.

All I can say to you (or anyone else) is I wish you Good Luck.

I'd much prefer the welcome distraction of not getting any work done because I'm in love, as opposed to fretting about how much work I have to get done on my homestead before TSHTF.

A friend of mine said that I was 4 years early with my 'end of the world' predictions of Peak Oil (in ~2012?) and that it was all happening too soon...

I said what this? haha, a mere 'amuse bouche' mon amis...


Oh for goodness sake it's only money.

Imagine you have in your left hand the whole world and everything in it. All the houses, cars, businesses, land etc etc.

What is it worth?

You have in your right hand all of the money in the world... 1 penny...

What is the world worth?

What price could it possibly have? Now double the money. 2 pennies, what is it worth? A quadrillion pennies, what is the world worth?

The world hasn't changed... The real stuff hasn't changed.

If the banks start taking out pennies and shooting them, the share of the world which those which are left represent grows. Each penny becomes worth more of the world.

What this really means is that your salaries and cash are able to buy more stuff... The crashing of the stock markets is great news. If you don't absolutely have to sell you haven't lost anything. It's a huge bargain basement sale... It's buying time.

You know... buy low, sell high... Am I the only one who sees this?

Am I the only one who sees this?

My guess is yes. Or close to it, at least around here.

Many of us suspect that the stock market will never recover. Will in fact only get worse.

And that lack of money is actually the least of the problem. The fear is that economic collapse will lead to societal collapse, and peak oil will mean recovery will be a long time coming, if it ever arrives.

The fear is that economic collapse will lead to societal collapse

Humans one by one are flimsy monkeys. What makes us so powerful is teamwork, our ability to learn from each other and coordinate our activities.

What money does and all the other financial instruments, is allow us to coordinate our actions, e.g. to balance supply and demand of whatever commodity.

The big problem I see with the present turmoil is that our systems of coordination have broken down. Not utterly, of course, but seriously enough for my taste. E.g. many commodity prices are way down, but the commodities themselves are scarce.

The point is, reality crucially includes our carefully choreographed patterns of behavior. If the orchestra conductor collapses, all the fine violins aren't going to save the music from dissolving into noise.

Buy and Hold

Figure 2 depicts the performance of a portfolio beginning at the end of 1928 with $100 divided between the three asset classes. It is called a buy and hold strategy because the growth of the three alternate portfolios is calculated based on the assumption that once the money is invested, the investments were simply held until the end of 1938. All dividends and interest have been reinvested net of the standard commission rates of the time. The three alternatives shown are expressed in terms of the percentage of capital allocated to T-bills/Long-term bonds/Stocks respectively. So 10/40/50 indicates and allocation of 10% Short-term bonds, 40% Long-term bonds, and 50% invested in the stock market. It is not surprising to find that the more we allocated to Long-term bonds in this strategy the better the portfolio would have sailed through the Depression. The best performing portfolio shown, 10/80/10, grew to $171 by the end of the ten year period. That constitutes an annual growth rate of 5.51% per year

Bargain basement prices are great for those of us who are debt free with an income and savings. Deflation isn't so great for those with fixed debts that do not adjust while wages and employment decline.

Likewise, inflation should benefit those with fixed debt as wages rise. The catch is that the price of goods rise before wages, making it hard to pay those debt obligations in the mean time.

At least the hens are laying.

Better get ready for an avian flu epidemic, then!

Sterling fell against the euro late last year and early this year from 147.5 €/£ to 126 €/£ and has been stable since (www.euroinvestor.co.uk/currency). Do you think it will resume falling? Surely you don't think sterling will collapse against the dollar (we're not that screwed - we have a railway network!).

"...we have a railway network!"

Which halts instantly whenever the wrong kind (i.e. any kind whatsoever) of leaves or snow fall on the line?

It is hard to focus on work on a day like this.

I've noticed a shift in attitude at TOD in the last week or two. Many of us have been logically pessimistic for a long time. But now it's hitting us emotionally and the posts reflect that. Personally, I find the turn of events both exciting and depressing at the same time. One side of the brain knows what is going on; the other is angry and very scared - very very scared because it is informed by the side that knows what is going on.

Lots of people have been getting back to me, "Chris what you said would happen is and it's happening faster than anyone [myself included] thought. What's going on?" And I don't know any more. I can work myself out of depression by staying physically active. People need to stay attentive to their attitude because poor attitude is that last thing any of us need now. These are not times to lose focus - today, tomorrow and all next week and into the dark days of winter. What works for me: use logical brain to put myself on a program; tonight I'll take satisfaction in the trees I've taken down, the extra space for the chickens, the firewood, potential terra-preta and the extra amount of afternoon sun that my gardens will receive.

Last night at Town Council, I spoke out - as I have for the past year - against taking on more bonding and debt. About not expanding town facilities; many assets are going to look like liabilities all too soon as we cannot keep them going. We got our town's annual audit report. The audit firm does maybe 1/3 of the towns in Maine; Buffet is cancelling all the insurance policies, towns aren't getting bonds floated for new projects, those that do are paying way more than anticipated. The auditor thought long term prospects for municipalities were looking very dark.

I think it's WestTexas down thread writing about walking to work. If one starts making the shift into the new paradigm, it's easier for feeling brain to stay congruent. That's important to mental health.

YMMV - your mileage may vary.

cfm in Gray, ME

Speaking of getting emotional...

Lehman CEO Punched in the Face

“From two very senior sources – one incredibly senior source – that he went to the gym after … Lehman was announced as going under. He was on a treadmill with a heart monitor on. Someone was in the corner, pumping iron and he walked over and he knocked him out cold. And frankly after having watched this, I’d have done the same too.”

Ward determined Fuld deserved the beating based on his testimony before the committee.

“I thought he was shameless,” Ward said. “I thought it was appalling. He blamed everyone. He blamed, as you say, ‘naked short sellers’ over and over in case we didn’t get the point, when in fact hedge funds like Harbinger had money locked up in Lehman and was shorting it to try and make the most of the money that they already had. He blamed everybody but himself.”

I'm still surprised that none of these guys have had actual attempts on their life yet. Just wait until people get really angry, and the rich have to start defending their homes from the angry hordes.

A simple beating will not be what will befall a great many, when they are published with a name and address linked to a work record. Many, many people, will not sit idle, and let a few take from them, that which they have worked their whole life for. If a man took from you by fraud and dishonesty, say all your savings, or your house, and you saw him on the street, would you say "Thank You Mr. President" and walk on by?

A man, who has already lost everything, and has nothing left to lose, is a very dangerous man. This is, the beginning, the revolution, to change the face of this country. For good or for bad will be unknown.

What is hilarious about this is that with a few bounces the other way and better guv connections possibly Fuld could have been running the country and Paulson would be getting smacked around in the gym. OTOH I guess most people would accept a shot in the head if they could be allowed to steal 400 million.

Fuld should consider himself lucky he wasn't strung up. If I had any money to invest I would put it all into tar, feathers and rails.


There was a fine colonial item called the "wooden horse".


You're bang on with the need to do something and get from under the despair.

The moment I had my fill of reading the news on Monday morning.... and knowing that the financial world was really, really crashing big time... I said to the missus, it's a nice day let's go for a drive. Went to a nearby bog and picked cranberries for the afternoon. Pick over a gallon of the red berries.

Gave us something to do. Good exercise, fresh air, and we harvested food that will not have to come from a supermarket.

Lean times perhaps this winter, but at least now we'll have lots of cranberry sauce.

Also, this autumn, harvested a plentiful garden of cucumbers and made bread and butter pickles, lots of beets, and having been storing up lots of preserves on our shelves. Our potatoes didn't do too well... too wet here... but looking like a bumper crop of turnips.

The last thing anyone needs to do is mope. When times get bigger than life, live large!

Links above indicate it is all up to OPEC to stop the slide in oil prices. It is. Prices are down because we are deep into a recession and headed into perhaps a depression.

World crude oil production hit a new record high in July of 75,099,000 barrels per day. It was, and is, all OPEC. Non OPEC production, in July, was still below its production for last July. Every month this year non-OPEC production was well below the same corresponding month last year. Non-OPEC production for the first seven months is averaging 422,000 barrels per day below the same seven months last year. And due to hurricanes Gustav and Ike, the rest of the year will be a lot worse. Non-OPEC oil production has been on a relatively flat plateau for five years. This year it falls off that plateau.

The ball is entirely in OPEC's court now. That's scary. As if we didn't have enough already to scare the hell out of us.

Ron Patterson

Prices are down because we are deep into a recession and headed into perhaps a depression.

something i read here on tod a couple of months ago stuck with me. that the drop in oil production will turn into a never ending depression / recession. that when the dust settles, we will not have enough energy to pull ourselves out of it

i wonder if this is it. if the current financial events take 5-10 years to calm down, we'll be deep into declining production, not to mention exports. fields like tupi are losing their appeal with prices so low

The oil sands producers are scaling back new developments and there was also a report that NG drillers had trouble obtaining working capital and are therefore reducing activity.

We have seen a 30% drop in oilprice but I cannot see how we can obtain a 30% drop in demand. People still need to heat and cook and transport is still required.

This "crisis" appears to be a bit overblown with folks in panic mode due to problems in the financial sector with this washing over into other sectors. Does anyone have data on oil demand declines in prior recessions?

Table 4.4  World Oil Supply
(Thousands Barrels per Day)

        OPEC-11   World    Non-OPEC
1976     30840    61121     30173
1077     31442    63665     32029
1978     30119    64225     33975
1979     31299    66973     35527   
1980     27419    63987     36418
1981     23393    60602     37079
1982     19702    58098     38274
1983     18352    57934     39405
1984     18389    59568     40971
1985     17151    59172     41790
1986     19234    61407     41891
1987     19499    62086     42228
1988     21373    64380     42555

Energy Information Administration, International Petroleum Monthly,
February 2008


It is a relief to see that that time series data includes data for the year 1077.

I was worried we might return to that level but can now see it is not so bad after all. Now, where did I put my sheep?


The key point about the early Eighties decline in production is that it was primarily due to Saudi Arabia cutting back, in an attempt to keep the price up--and Matt Simmons argues that they had to "rest" their key fields for a while, because they had been produced too hard in order to offset the decline in production from Iran, after the revolution.

In any case, the big price drop was in 1986, when Saudi Arabia significantly increased their production. Annual oil prices through 2007:

I would argue that there is a crucial difference between now and the 80s.

OPEC did cut its production some 45% between 1979 and 1985. This fact seems to be lost on a lot, if not a majority, of people.

During that same period non-OPEC production increased by 18%. I don't see any possibilities of that happening this time. In fact, as prices decline below the marginal cost to find and produce a barrel (about $100), I believe non-OPEC production will decline. Those who think non-OPEC production will increase at the same time prices are decling are living in lala land.

If OPEC members, along with Russia, want to make the most money, which I can only assume that they do, I don't think it takes a brain surgeon to figure out you make a lot more money selling 55 million BOPD (or even 40 million BOPD) at $100/barrel than you do selling 60 million BOPD at $50/barrel.

This is not difficult to understand, and yet there's all these free market fundamentalists running around blathering nonsense about $20 and $30/barrel oil.

Another delusion they labor under is the claim that the U.S. with its superior military can force countries to produce oil. Again, blathering nonsense. Russia has nukes too.

I don't see any possibilities of that happening this time.

No argument from me. The conventional wisdom assumption is that things will settle down at some point, and economic growth will resume. The problem I foresee is of course oil exports.

I am agreed with the two of you. My post was due to all those folks talking of price drops to $20 or $30. I do not see that happening.

I do see curtailment of E&P, slowing of CAPEX spend, and a delay in unconventional substitutes (wind, solar). The result is that when the western economies do start to pick up they will be even more dependent on OPEC sources.

By some measures China has a larger economy than the USA already-it was an infant in the 80s.

I guess one could argue that the way in which WW2 ended the Great Depression is by energy demand creation. Before civilization could rot for enough years for skilled people to die off, Hitler gave all mankind this wonderful one-time jolt to all march together into the coal mines and refineries or die. Even if your country lost, he'd make you a slave laborer to get you working again.

National Security, the all-purpose motivator. At least as long as there is actually any energy available to extract.

From what I have been able to ascertain, it looks like world oil production in the Great Depression only fell in one year, in 1930, and as someone (Downsouth?) noted, there were three million more cars on the road in the US in 1937 than in 1929. Difference between the Thirties and now is that hundreds of millions of people want to drive a car for the first time now, versus millions of people in the Thirties.

American individuals and families were becoming more nomadic. This was partly due to the omnipresence of the automobile; there were three million more cars on the road in 1937 than in 1929, for though fewer cars were sold, more old ones were still in use.

Frederick Lewis Allen, Since Yesterday

The New President and the Global Landscape (Open Access)

An interesting read.


What, specifically, do you find interesting?

How does this compare, in your mind, with The Grand Chessboard?

Seems to me, that unless the USA redirects all that money that has been directed to housing and consumer trinkets to "defense", that none of these schemes will come to anything.

If that happens, the country will become a very different place. Quite likely, not the Land of the Free and the Home of the Brave.

Both reads are intersting in that Neither candidate can forsee the geo-political challenges to be presented in the next 4 years. Our vote and their solutions could well be better determined by a coin toss.
Todays chess board is over populated.

BTW your link is dead.


The problem facing the U.S. is that to project power it needs moral authority, military might, and/or resources (primarily financial). In all three categories the U.S. is now bankrupt. I feel sorry for President Obama and anger at what neoconservatives have wrought.

Summary of Weekly Petroleum Data for the Week Ending October 3, 2008

U.S. crude oil refinery inputs averaged 14.0 million barrels per day during the week ending October 3, up 1.6 million barrels per day from the previous week's average. Refineries operated at 80.9 percent of their operable capacity last week. Gasoline production rose last week, averaging 8.9 million barrels per day. Distillate fuel production increased last week, averaging 4.0 million barrels per day.

U.S. crude oil imports averaged 10.3 million barrels per day last week, up nearly 1.4 million barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.7 million barrels per day, 1.5 million barrels per day below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1.4 million barrels per day. Distillate fuel imports averaged 165 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 8.1 million barrels from the previous week. At 302.6 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories increased by 7.2 million barrels last week, and are below the lower boundary of the average range. Both finished gasoline inventories and gasoline blending components inventories increased last week. Distillate fuel inventories fell by 0.5 million barrels, and are near the lower limit of the average range for this time of year. Propane/propylene inventories increased by 2.8 million barrels last week but remain slightly below the lower limit of the average range. Total commercial petroleum inventories increased by 19.6 million barrels last week, and are just above the lower boundary of the average range for this time of year.

Nobody seems much interested in the inventory report this week, but here is what was expected:

The petroleum supply report was expected to show that oil stocks fell 1 million barrels, according to the average of analysts' estimates in a survey by energy information provider Platts.

The Platts survey also showed that analysts projected gasoline inventories rose 2 million barrels and distillates went up 1 million barrels last week.

We are closing in on a major milestone.

The Weekly Petroleum Status Report released a few minutes ago indicates that they estimate consumption for the last 4 weeks to be down 8.6% from last year. That's a record for this energy crisis.

But perhaps more significantly, if we compare this latest estimate with same time 2006, the US is now consuming 9.7% less than that peak.

So, consumption drops 10% in 2 years with most of the drop occurring in the last year.

The peak oil community got many things right, but they missed that. The consensus was more like what I once labeled "The Cold Dead Hands Theory of US Oil Consumption" which basically held that Americans would sell their grandmothers to be rendered into dog food before cutting back. Not so. (thankfully).

IMO the peak oil community underestimated USA oil consumption declines because they didn't foresee a Depression coming on this quickly (neither did I).

Actually, many in the peak oil community did foresee this. The "Grand Depression" or "Greater Depression" scenario, where gas would be cheap, but no one could afford it anyway.

where gas would be cheap, but no one could afford it anyway.

For the most part, people can afford it. They are choosing to cut back.

Many people who are no longer paying big mortgages would actually have more cash flow. But they are scared and not spending it on gas.

[rising unemployment can't account for a 10% decline]

[though I agree that the hurricane related shortages are part of it]


The depression is just in the first stages, if it cannot be held to a really bad recession. And, since nobody will be able to drill up the remaining oil/gas, there will still be the potential for it to be recovered later. Some formations will "regenerate" probably due to better oil/gas/water separation in the interim. Seeing, at the stripper level, third and fourth generation development is not at all unusual, and I would imagine the same in the elephant field domain as well. I have a third generation lease myself which I still plan to further develop parts of that have been long ignored.

When things get bad (and they are not for me yet) I think we will see the really bad things happen. Of course, I had planned and toiled so I would not see the really bad stuff, but probably will. $8.00 beans will be a luxury.

I agree, the Depression is probably just starting.

Read the accounts of the Great Depression. The stock market went sour in 1929 but it took until 1933 until we hit bottom in the rest of the economy. A creeping tide of inability to buy things overtook almost everyone by the end.

Based on that example it will be 2012 before we unravel all the bad debt, drive unemployment up to levels where only "essential" jobs remain, and otherwise domino the bad effects from the financial sector into everyone's life. It's too early to predict stability in 2010 Just because your job and life look safe through 2008.

All of us who have any debt (myself included) are at risk because we don't actually own things. They can all be taken away from us if our buying power shrinks enough and the owner of the debt wants the asset instead of accepting less money in the future. The question is which will have more value in the future a hard asset (land, house, car metal, etc) or money?

NC - I do think that things will happen much faster, and that the Information Age (or was that the Disinformation Age ?) and the speed with which news travels, events are reported, etc. are all so much faster that it will bring about collapse in weeks and not years. For instance, settlement on produced oil is still on the 20-25th of the month following sale, and that reflected the amount of time it took before computers made it possible to make instantaneous payment. I know, thanks to computers on board the transports which pick up the oil, the exact settlement quantity, and the only unknown is the settlement price, which at this point is generally a monthly average of some price determined by the purchaser, probably in collusion with other purchasere, but nothing I can do about that.

woodychuck - I disagree. We don't lay people off in 30 days even if payments are in default. Shedding jobs takes quarters to years. In the meantime the financial health of a company will get very bad. The shedding of jobs is in my opinion what drives the negative feedback mechanism of downturns. As more and more people lose jobs their lack of buying imperils evermore businesses which have to shed jobs which imperils a different set of businesses and so forth. Some companies are leading indicators of the economy and some are lagging indicators of the economy. They don't all suffer from recessionary influences simultaneously.

My take is that in a depression all sectors are severely affected before any sector can recover. This makes it impossible for investors to preserve their capital by moving it around the economic sectors. Capital evaporates, eventually, no matter where you put it. The only safe haven is not to invest, which obviously is what people are doing now in the financial sector, but that makes things worse for anyone using debt and is opposite of what the government and central bank want investors to do.

So long term net savers may ultimately benefit from a depression, in the end, but anyone leveraged is in trouble since we all are forced to become sellers of assets to clear our debts when our income dries up. Until assets reset to their lowest level savers won't part with their capital because they will not get it all back. It is no longer about return on capital it is about preservation of the capital. If you knew that everything in the economy was going to decrease in value for the next 24 months would you buy it today with cash savings you have in the bank or would you buy it 2 years from now (even assuming 0% interest on the money) and try to save more money in the interim?

Obviously some things like food and clothing have to be bought frequently but everything that is an investment might not get bought until the price bottoms out. We aren't quite there yet but we are dangerously close to this point I think.

The goal of the administration and regulators should be to provide clarity and predictability to the markets, not just liquidity. There is no rule that says that bad debts can be profitably carried -- those just need to be washed out as quickly and efficiently (and continuously!) as possible.

The past modus operandi favored obfuscation, and that is tolerated during continuing profits. Now we're back to show-me, and nobody is showing yet. In fact, the bail-out and loose money do nothing to help this, IMHO. The quicker we get to transparency and par value, the better off we'll be, but it will be excruciating.

What I find weird is those who are selling out of the stock market are apparently buying T-bills. They really believe the US government is a safer bet than big business. They are loaning money to an entity which so many pundits consider bankrupt.

Actually, it's the opposite.

The information age means that alarm signals about financial bubbles are sounded much earlier, and heeded by anyone willing to listen.
This downturn has taken 18 months now to reach this stage, with smart money heading for the exits the whole time. 1929 was much faster.

Sure, but a significant number of people no longer paying mortgages are people who "walked away" from their homes (some may have even run). The ensuing fiscal poop-pile is yet to be shoveled, and people are rationally skeptical of buying homes that are 30 miles from most job centers and require driving to accomplish the most regular and menial of chores. If, in the meantime, each small drop in prices results in previously unmet demand sopping up supply, prices will never fall back to the glory days of sub-$1 gallon gas that fueled rampant suburban sprawl. Exurbia will continue to lose value, the floor price for such homes set by their utility as farm-homestead sites for extended families of immigrants and others willing to raise their own chickens. That price will still be far below their present day short-sale value.

Datamunger, but isn't the consumption still growing in oil exporting countries and India, China, et al? Sure the rate of increase in consumption may slow down, but consumption is still increasing.

Perhaps, but the reason I focus on the US is that they are the biggest consumer. If they can transition to an economy that is much less oil-intensive without economic catastrophe, then peak oil is essentially solvable.

I'm optimistic.

Let me quantify what I mean by catastrophe...

20% unemployment (by the usual measure) is one.

10% is not. Though it would be quite painful.

It is race between declining exports and declining consumption.
Even if you make the economy less oil intensive, eventually declining exports catch up with you.
The only solution is to consume so little oil that you can get by with tar sands and bio fuels alone. I don't see that happening without a drastic change in our way of life.

I don't see that happening without a drastic change in our way of life.

That's it exactly. There was never any question that Americans would eventually have to cut back. You can't burn oil that doesn't exist. The question was always, "Can we do it without a lot of pain and unpleasantness?"

The question was always, "Can we do it without a lot of pain and unpleasantness?"

Completely as an aside, Leanan, there is a resident lurker who keeps voting you and Alan and others on TOD down. Becoming a tad tiresome.

Figure it must be Bush, McCain or Obama lurking in the background all P-O'ed b/c we're not being nice to their campaign.

Seriously, though, if you have a quibble with someone, address them upfront. IMHO, this hitting the downward arrow, all in the safety and comfort of home, is cowardly.

We can have thoughtful discussion without "a lot of pain and unpleasantness!"

Just ignore them. Complaining about it amounts to feeding a troll.

Can you see who rates the posts?

People can't afford it. They've been living beyond their means through borrowing, but they were showing no signs of comprehending that there were limits to borrowing until this year. They still don't comprehend that this will go on until they all pay off their debts.

You got me-I did not foresee a Depression starting in 2008-score another one for the Doomers.

I didn't see it happening until 2010... It sucks when you're right about the world going to crap, it sucks even more when you're wrong and it happens earlier.

It has been a hell of a year-I have never seen uncertainty like this-at this point literally nothing would be a surprise. No wonder the credit is seized up.

I disagree. A lot of people thought the resolution of "Peak Oil" would be depression and demand destruction.

It seems like "The Peak" is still holding pretty well, and demand destruction will flatten things out into the "undulating plateau" that was also forcast.

Yup. Heck, peak oilers are the ones put the term "demand destruction" on the map. It wasn't commonly used before Simmons, Ruppert, etc. started using it.

And I think Tom Whipple is right. This is peak oil, because between demand destruction and the financial crisis, there won't be much interest in increasing production. When they finally do get around to producing Tupi or Jack 2, we'll be that much further down the backside of Cantarell, the North Sea, etc.

The funny thing is that the current crisis might actually be a GOOD thing, long term. Massive paradigm shifts and reprioritization cannot happen with a laissez-faire all-is-rosy outlook -- shock and pain are necessary.

I am not at all confident that the lesson has sunk in yet, though. We're in a new round of the psychological phases of loss, and we're only just now getting into anger and denial. Acceptance is where positive change can meaningfully occur, and the silver linings of consumption loss and credit spending declines we've seen so far are mostly incidental, though perhaps helped along by the few who are making it through the phases earlier than most.

Those who have been laid off already believe this is a depression. The rest are still thinking it may just be a cyclical recession. Bailouts and rate cuts are an expected part of the response, just as putting up storm shutters and sandbagging levees were for Katrina. Some believe it will help, some hope it will help, and some do it to feed like they're doing something. In the end if the storm surge is big enough it will wash away all the mitigating attempts along with the original assets, and you get to dig deep and start over.

I'd say the financial levees are failing right about now.

I am not at all confident that the lesson has sunk in yet, though.

I agree. And I'm not sure it will ever sink in.

I've long suspected that peak oil would unfold this way. The main symptom being a "recession" that doesn't go away. And no one really understanding why.

Interestingly, Roubini still thinks we can avoid a meltdown and system collapse, and persist in "just" a multi-year depression. He figures we'll see DOW 7000 next year.

Unfortunately, the rate of the recent slide indicates that Roubini was not sufficiently pessimistic. He's officially in the optimist camp now. ;)

Calling market tops and bottoms is notoriously difficult. It will be harder still to call a "bottom" if instead the new paradigm must assume continued shrinkage, just at lesser rates.

Jim Cramer thinks that McCain means a depression, Obama just a recession. I think he's dead wrong. It's a depression either way.

But even Jim Cramer, who is more aware of resource limits than most finance types, seems to think that the right policies mean we'll soon be back to happy motoring. The wrong policies mean a longer time until the party resumes.

I'm looking forward to seeing another another Jim Cramer Meltdown.

I thought that most of the TODers were talking countdown to $200 a barrel ?

So which is it ? $20 a barrel or $200 a barrel ?

How about a public polling of TOD contributors.
will not say
Will call different number ?

Ace had said no monthly average oil price below $102 ever again.

So which is it ? $20 a barrel or $200 a barrel ?

Ask Ben.

can't OPEC get the price back up by cutting production, which is what it sounds like they are wanting to do?

They can, and I think they'll try.

But they are dependent on oil revenues. That's why they always cheat on their quotas. If the price of oil keeps falling, they'll need to sell more oil, not less, to keep their income the same.

Takes discipline.

It's hard to cut back in the face of falling prices & demand because OPEC revenues are falling. When you cut back, you lose even more money because you are bringing less product to market. There is enormous incentive for OPEC members to individually cheat. i.e. Let the other guy cut back and prop up prices while I secretly sell oil out the back door.

When US demand collapsed in the early 80s, OPEC's discipline failed. It's not a stable cartel.

When US demand collapsed in the early 80s, OPEC's discipline failed. It's not a stable cartel.

Saudi Arabia cut their production from 9.9 mbpd (C+C) in 1980 to 3.4 mbpd in 1985 in a successful effort to keep oil prices at a relatively high level (about eight times higher than 1972), although Matt Simmons has argued that they may have also had to reduce their production because they pushed their fields too hard.

In any case, as noted up the thread, the big price drop did not occur until 1986, when the Saudis started ramping up their production again.

WT, adjusted for inflation, the picture is not as you portray it.

This is from BP's Statistical Review (inflation adjusted, which is what matters):

1980	93.08
1981	82.25
1982	71.08
1983	61.73
1984	56.14
1985	53.21
1986	27.22
1987	33.64
1988	26.24

You wrote:

In any case, as noted up the thread, the big price drop did not occur until 1986, when the Saudis started ramping up their production again.

This is incorrect. The price of oil was almost cut in half before that.

Inflation adjusted prices from:

My point being that OPEC was profoundly unsuccessful at propping up prices in the early 80s in the face of declining US demand.

It looks to me like OPEC showed a tremendous amount of discipline back in the 1980s.

Between 1979 and 1985 OPEC did gradually cut production from 31.3 to 17.2 million BOPD. Persian Gulf producers cut production from 21.6 to 10.3 million BOPD.

The problem OPEC faced back then was non-OPEC production increased fom 35.5 to 42.6 million BOPD at the same time demand fell from 67.0 to 59.6 million BOPD.

In 1985 Saudi Arabia apparently finally threw in the towell and decided it just couldn't overcome both declining demand and increasing non-OPEC production.

Things are different this time:

1) Non-OPEC production has not increased

2) Much of the increase in non-OPEC production in the 1980s came from Russia. Russia has now switched teams. I fully expect some sort of an OPEC-Russia or Russia-Iran-Crimean-Venezuelan axis this time.

It looks to me like OPEC showed a tremendous amount of discipline back in the 1980s.

Between 1979 and 1985 OPEC did gradually cut production from 31.3 to 17.2 million BOPD. Persian Gulf producers cut production from 21.6 to 10.3 million BOPD.

During the 80s two of OPEC's senior members were at war with one another. Yeah, sounds disciplined to me!!!

A million people lost their lives. Oh, what self control in not producing oil while your oil infrastructure is being bombed to shit by your OPEC neighbor!

Good grief.

If you have some spare time:

Okey dokey, let's use inflation adjusted oil prices. The problem of course is that you are basing everything on the 1979/1980 price which was extraordinarily high because of geopolitical events-- the Iranian Revolution. The 1985 price was still well above the Pre-Iranian Revolution constant dollar oil price that we saw in the Seventies, so why was Saudi Arabia's reduction in oil production not successful?


But in any case, in the Seventies and Eighties, people did not buy and sell oil in constant inflation adjusted dollars. Then, as now, they used nominal dollars. You might as well have priced oil in gold. It's interesting, but it's not relevant to actual commerce. Here are the actual posted US oil prices from 1978 forward:

Nice graph now with economics all the rage I'd like to note something.


If you discount the effects of the recessions after 1995 or simply smooth them the curve is pretty interesting.

I actually put peak oil at 1995 which because we were producing under capacity became peak capacity.

In my opinion we our peak production capacity is well in the review mirror and it would have also been the real peak in production if we where producing at capacity.

The price of oil given the caveat about the recessions can be seen to be moving upwards from 1995 onwards as spare capacity was reduced.

Anyway thanks for the graph.

Westexas wrote:

But in any case, in the Seventies and Eighties, people did not buy and sell oil in constant inflation adjusted dollars. Then, as now, they used nominal dollars. You might as well have priced oil in gold. It's interesting, but it's not relevant to actual commerce.

Some advice: you may want to keep quiet about such quaint opinions because in analytical circles everybody adjusts for inflation. That's why BP includes inflation adjusted values.

BTW, when it came to salary negotiations and budgets in the 70's and 80's, people adjusted for inflation too. BIG TIME!

Maybe we should send you off to Iceland so you can reassure them that inflation is not relevant to actual commerce!!! :-)

You won't mind will you, if I quote you in a talk I'm giving next month. Some people believe that the public has gotten pretty good at adjusting for monetary distortions and others think they are still rather easily tricked. I'm weighing the evidence.

Depends on what your trying to show.

Real increases are price changes over a short period of time much lower then the average inflation rate unless your in hyperinflation.

Adjusting for inflation is the same as converting one currency to another. The price of oil in Euros is very interesting to people that have euros less so to Americans who you dollars.

We could easily do the price of oil in Zimbabwe currency vs some other and the hyperinflation is obvious.

Adjusting for the value of a currency in year A vs year B using some sort of inflation constant is exactly the same as comparing it to some other currency. Given the higher oil prices tend to cause price inflation across a wide range of goods used in these inflation adjustments themselves correcting oil prices for inflation is intrinsically incorrect.

I'd guess that the Norwegian Krone is a good currency to measure oil in another choice is the maybe the Swiss Franc. Problem is you need a real currency thats not suffered any inflation.

Gold has problems since its still treated is money and its availability is manipulated.

Platinum is good but its industrial so it suffers.

A basket of gold the Norwegian kroner and the Swiss franc is probably the best true measure of the price of oil we have today.

Barring that I agree with WT to look at the impact of prices using the actual price that year is a much better measure. Another reasonable fixup is to divide the oil price by the median salary which changes slowly and is not as influenced by short term inflation but it has its problems.

So a final approach if you which to adjust is to probably use gold, kroner, and swiss franc and dived by the median salary of Norway and Switzerland.

Given we don't have a real zero inflation rate currency the problem is oil is effectively money its actually a better form of money then gold and all our fiat currencies are themselves back by oil to a certain extent. As the price of oil increases it is itself strongly inflationary to fiat currencies so disentangling the effects is non-trivial thus simple inflation adjustments are not the correct way to calculate long term oil price trends.

Using the price at the current time in that dollar value esp for what WT is trying to show is a pretty good approach. The simple adjustment using the median wage at the time is probably better.

Even better is minimum wage probably.


Since these are the people most sensitive to high oil prices.

The other thing that is different is that Russia and the Persian Gulf countries are sitting on huge stocks of foreign exchange reserves:

As of June 30, 2007 Russia had $414 billion... Compare this to the U.S. at $67 billion. Additionally, the foreign exchange reserves of the major oil-exporting countries have risen by about $430 billion since the end of 1998, reaching $519 billion by July 2006. Thus their share in global foreign exchange has risen from 5 percent at end-1998 to almost 12 percent by mid-2006.


Putin has discipline.

Russian oil exports down -10%, Azeri oil exports down -53% (good for other people to do your "discipline" for you). Together 1+ million b/day.


Exactly! Russia exports 6 million bpd. If they cut that to 2 million bpd, what happens to the price of oil?

Perhaps, and this is different from the 1980's, now some oil-exporting countries are aware of the finiteness of their "reserves", and thus may be more willing to slow down "production", in order to have more later?

I guess that all depends on the meaning of "Dollar".

One reason for taking note of rapidly falling demand in the US, is that it lends support to Obama's target of eliminating dependence on the Middle East within 10 years.

Obviously, he's not going to cite it as it's a reflection of the economic pain felt across the country at present.

But, with a little help from OPEC et. al (keeping prices high)..... it's doable.

Remember, some of this consumption decline in the last four weeks was because people in Atlanta and Nashville and Knoxville were stuck at home, with virtually every gas station around closed. People worked at home if they could, and stopped making trips that were half-way optional. Now that gas supply is better, these huge savings are going to go away.

Now that gas supply is better, these huge savings are going to go away.

I remain unconvinced. For the last 6 months or so, the EIA's early estimates have proven to be way too high. Off by as much as 1/2 million barrels per day compared to the final revised number. Unless they have suddenly improved their estimation approach, this latest number could be revised down close to 18 million barrels per day.

In addition, the credit crunch has finally reached Main Street in spades. There is a strong possibility of severe economic damage in the months ahead and that will drive down petroleum use.

Ike had as much to do with that decline as the economy. If you go back to the last pre-Ike TWIP, you get a decline of 3.8%. Empty gas stations are a real good way to depress demand, but it tells you nothing about what demand is really doing, now that gasoline prices are closing in on $3.00/gal. Now, don't get me wrong: demand is down, and it is going to go down more. But 8.6% isn't real (at least not yet).

Lets see what happens with demand over the coming months my prediction is and continues to be that demand declines will rapidly approach zero in fact we should see a robust increase in demand as the hurricane induced shortages lesson.

I stand by what I've said all along most of the demand drop was caused by the death of the housing construction industry as it bottoms out further reductions are going to have less of and effect.

We don't have any other large source of demand destruction for oil use outside of serious unemployment. 15% plus. Certainly we could go to depression employment levels but barring that demand should become highly resilient to oil prices and only decline when the economy finally crumbles for real. And I think we are still two years away from this despite the theatrics surrounding the banks.

This is a great link I was sent.


As one of those nobody guys, I did take a look at the gasoline data at the PADD level. So, I wonder just why there are still reports of gasoline shortages, when there was an increase in gasoline in storage last week.

Total Motor Gasoline                      184.6    178.7    179.6    186.8
 East Coast (PADD I)                       46.4     44.8     43.9     45.3
  New England (PADD IA)                     3.2      3.4      3.2      3.3
  Central Atlantic (PADD IB)               26.0     25.0     23.8     23.4
  Lower Atlantic (PADD IC)                 17.2     16.4     16.9     18.6
 Midwest (PADD II)                         48.6     47.1     47.5     47.8
 Gulf Coast (PADD III)                     57.9     54.7     55.7     60.4
 Rocky Mountain (PADD IV)                   6.1      6.2      6.3      6.6
 West Coast (PADD V)                       25.7     25.9     26.2     26.6

Notice the jump in Gulf Coast and Lower Atlantic, which brackets the areas of Georgia, North Carolina and Tennessee where the reports of shortage were coming from. It's all very curious to me. Couldn't possibly be any political involvement, now could it?

E. Swanson

I think things are finally starting to bounce back in the Southeast. We are probably starting to get back to "normal" storage levels.

Its been well over a week since I saw any lines at a station here in Atlanta. Almost all stations have fuel now, including Premium. Prices are falling back now too. from $4/gal to $3.80 falling at about 5 cents a day on average.

Here's the part of the weekly report that Leanan always leaves out--to me the most relevant part:

"Total products supplied over the last four-week period has averaged nearly 18.7
million barrels per day, down by 8.6 percent compared to the similar period
last year. Over the last four weeks, motor gasoline demand has averaged nearly
8.8 million barrels per day, down by 5.3 percent from the same period last
year. Distillate fuel demand has averaged 3.8 million barrels per day over the
last four weeks, down by 8.3 percent from the same period last year. Jet fuel
demand is 5.5 percent lower over the last four weeks compared to the same
four-week period last year."

That domestic petroleum demand was down 8.6% is big news.

I wonder how much of that is because of the hurricanes, though. Some people simply could not get gasoline. There was probably a spike in demand early in Sept. as people fueled up to evacuate, but that's probably dropping out of the report now, and we're left with those people in Tennessee and Ohio and Georgia and North Carolina who could not get gas.

Yes, when looking at today's TWIP numbers, one has to keep in mind that hurricane-related disruptions have amplified the downward trend.



And of course...said disruptions were not unrelated to peak oil. Gasoline inventories were extremely low, at least partly because of the high price of crude.

And the elephant in the room:

Total Prod Supplied for Domestic Use: down 8.6% yoy

USA just discovered a brand new oil producing area the size of Iraq. Simply reducing economic activity and taking some basic conservation steps eliminated almost 2 mln.bpd of consumption. Now one can only imagine what a coordinated conservation&mitigation program would do. IMO we can be easily oil free in 20-30 years. This may be our chance to revive the economy too; just like WWII took the US economy out of the Great Depression, PO may be the one saving it from its ongoing reincarnation.

Oil falls after inventory report

NEW YORK (CNNMoney.com) -- Oil prices fell below the $90-a-barrel level Wednesday after the government reported a sharp increase in the nation's supplies of crude and gasoline, in another sign that demand for energy remains weak.

Light, sweet crude for November delivery was down $3.11 to $86.95 a barrel on the New York Mercantile Exchange. Oil had traded down about 75 cents just before the government figures were released. Prices have been under pressure amid anxiety over a global slowdown in demand.

Wednesday's report "feeds into the sense that the consumer is flat on their back," said John Kilduff, energy analyst at MF Global in New York. And with the global economic outlook darkening, "demand for energy is not going be perking up any time soon."

Price Elasticity of Supply ?
4 week avg y-o-y and YTD y-o-y %

Finished Motor Gasoline      8,767     9,253  -5.3% -2.8%
Kerosene-Type Jet Fuel       1,456     1,541   -5.5%   -4.7%
Distillate Fuel Oil          3,819     4,165   -8.3%   -4.7%
Residual Fuel Oil              441       671  -34.3%  -16.7%
Propane/Propylene              764     1,162  -34.3%   -7.9%
Other Oils                   3,412     3,629   -6.0%   -7.6%

Total Products Supplied     18,660    20,419  -8.6% -4.9%


The high % savings are in residual fuel oil and propane. Residual fuel oil is being replaced by natural gas where feasible. Propane is more puzzling.

A sign of fuel poverty, credit issues at dealers, ...?


Look at this board. 4 months back everyone was in the hyperinflation camp and now all in the deflation camp.
You cannot have shortages and inventory builds at the same time. Something here does not make sense.
Second, although the USD price of oil is down the price of oil in other currecnies appears a lot more robust.
The price of oil is australian dollars is less than 5% of its high.
this is deleveraging not deflation. The fed is pusing massive money behind the clot. If it unclogs and I believe it will you will see DOW 14000 and oil $200 within 2 years.

You cannot have shortages and inventory builds at the same time.

Actually you can. The shortages are sport shortages....not nation-wide.

The gasoline distribution system is a complex beast. For regulatory and practical reasons, gasoline cannot easily flow from surplus areas to shortage areas.

If you look at the data it suggests that the economy went off a cliff in the last 1.5 months. About the time the hurricane hit. make sense?
Although hurricanes damage the balance sheet of the country they actually increase gdp due to spending.
If you assume oil consumption and GDP are well corelated then the GDP fell 5% in 2 months or greater than annualized 20% drop. Sorry not buying it.

Of course, the overall inventory numbers are out of the ordinary due to SPR draws. Also, Gulf Coast refined product inventories are skewed by both refineries being down and demand being down. When "everything" is in turmoil, none of the numbers will make much sense unless you try to adjust for all of the variables and the oil market is too complex since we do not even know what all of the variables are.

Hindsight is still the greatest tool we have.

I agree with the deleveraging comment. There are several factors at play now: peak oil, economic decline in the US, massive deleveraging in the financial industry, and Ike.

People who are making specific commments about the economy based on post-Ike TWIP reports are running WAAAAYYY ahead of the data.

For propane, I think people aren't buying. For myself and I'm sure others, electricity is cheaper. Also, pre-buy programs are way off for my dealer, could be folks are just waiting for better price, or have given up on it entirely. I filled our 500 gal tank (actually 400 storage with 80% limits) last spring when prices seemed poised to shoot, haven't really touched it since.

Also, as oil, but not necessarily retail propane, has come down this fall, I think many are waiting for lower prices to fill. I also think most homes are a good deal cooler this fall than last.

We pre-bought on Sept 10th this years propane at $3.08/gal in Reno. We will have to see if that was a good deal or not.

If you think you can predict any part of the future with any degree of precision then you must have failed BS-101 :-) That's Black Swan 101. The other meaning of BS-101 has to do with the congress, the administration, MSM, Karl Denniger, etc. and also has nothing to do with predicting the future.

Why am I a 'Doomer'? If I am wrong, then I have lots of food to recycle and lots of toys to play with (solar this and that, good tasting tomatoes, lots of NPK, etc). If I am right, I will have lots of company ... like my dumb-assed kids and grandkids.

At 75 years old, WGAS. Oh well, we will just have to wait and see what happens. Popcorn anyone?

Just checked my ticket-paid $1.95 last spring. But it doesn't do that much good, as it must be replaced with current prices. It's for backup now, really cold periods.

Topped off my propane tank yesterday for $2.20/gal. The gas station over by the interstate was at $2.99/gal today.

It's certainly causing fuel poverty. It used to be cheaper than heating oil, and you could cook with it as well. No more. And it's been that way since the end of 2006.


For whatever it's worth, it seems that James Howard Kunstler made the right predictions a few years ago.

JK Quote: "The age of the 3000-mile-caesar salad will soon be over."

Wasn't that based off the assumption of the end of cheap oil?

Yes; compounded by the durability of truck axels.

Its 10:04 and I have been on hold for over one hour trying to sell some stocks from my account at Fidelity. I called the head office because the local brokerage office (Marin county, CA) would, could, did not answer the phone between 7:45 and 9.


I am sure you are going to do this, but you definitely must get your money out of there IMO. It is hard enough without worrying that your broker will steal your money (literally). Good luck.

Go to Fidelity.com and sign up for online access. Get the other humans out of the loop! :)

I did that a year ago and have been sitting ~75% in a "cash fund" since (IRA). ...and losing ~25% of the other portion thinking a renewables and trains strategy was a good idea. Oh well.

Just be careful with getting grand ideas about where to make money in this volatility. (I think the IRA gives me more options/control than the 401k).

I have an account with Janus, and in the past have sold shares online. (They deposit the money in your bank account electronically, or mail you a check.) You used to be able to change your automatic investments, too.

But I don't have that option any more. Now when I try, I get a page saying I need to call a customer service representative if I want to make any changes.

Just out of curiosity, you obviously have a computer, why aren't you using ATP? You can't trade for $8 and expect an unlimited number of reps to be available during a panic. I had to wait almost a whole second to get my confirmation, but the time seemed to fly by.

Let me say this as clearly as possible. This site is not equipped to provide financial advice. Most of what I've read here on oil is fabulously well thought out and presented, but the financial advice is mindboggling backwards. The world is not ending, and if I'm wrong, it won't matter whether you have stocks or cash anyway. Therefore, you might as well pretend that this has happened every ten years for the last 240 years just in this country alone.

Tell me what you're trying to sell, maybe I'll buy it.

The world is not ending, and if I'm wrong, it won't matter whether you have stocks or cash anyway.

Yeah, but what if you're wrong about that?

If this is Black Tuesday or a few days afterwards...do you really think it won't matter if you sell today?

I wish I had a nickel for every time I heard that stupid line. Just like the stone age didn't end because we ran out of stones.

Or that the middle ages didn't end because we ran out of middle. :)

First of all, I have a tremendous amount of respect for what you do for this site. And I don't want to in anyway claim that I'm right and you're wrong. I simply have a difference of opinion on this subject only.

That said, for all I know, s/he was selling QID for a %100 gain in the last few months for starters.

Second, you can go long and hedge against the Great Depression in several ways. Buy puts to limit your downside, sell calls (which with the VIX where it is is extremely profitable way of sitting it out). You can go long oil and short the market and sell straddles against both and live off a generous income.

Here are my two main points. 1. Using the worst case scenario rather than the average scenario, which is a 30% decline in a bear market, creates a statistically invalid choice. 2. If all the banks collapse and the dollar is worthless, then selling stock to obtain those dollars is moot.

Lastly, let me just note that this poster is panic selling. Obviously didn't have a exit strategy that included alternatives. For example, the automated trading phone system for Fidelity is always empty because it's a pain in the ass to use. However, if you have a cheat sheet in your Fidelity folder, you can do what you need to do when the power goes out or the reps are in panic mode.

The Great Depression took years to unfold, assuming you mean the 1930's Great Depression and not the 1837 Great Depression which lasted for decades. However, had you continued to save though the entire period and we're still alive today, you'd have done far better in stocks than in cash or even oil for that matter. Even without the options.

Like I said, you may be right. Sometimes the sheep do get eaten!

What worries me about your hedging scenarios is that the government keeps changing the rules. What if, like Nate, you get caught with your shorts down?

I also strongly suspect that the rules for IRAs and other retirement accounts will change by the time I'm retirement age. And not to my benefit.

The Great Depression marked the beginning of the oil age, more or less. Without that cheap and abundant energy, would the recovery be as fast? (If you consider 20 years fast.) Would it have happened at all? What if we're at peak oil...and peak world economic productivity? Would that change your analysis at all?

I guess it's hard for me to put into short snippets exactly what I think and how I'm approaching my investments. I do believe in Peak Oil and its ramifications, most of which are quite negative. For most of the last year I've been short because I guessed correctly that oil prices would finally expose all of the short-comings in the housing and banking systems. I've had a nice year so far. Once the market got down 30%, I went neutral (cash) and waited for the bailout to either pass or not. As we're past 30% I've gone longer, but mostly in indexes like QQQQ and oil USO because I didn't have to worry about a single company killing me and the options are close to 8% a month at the money. The short squeeze which you referenced only applied to the 699+- financial stocks, which I have and continue to avoid, so that really didn't affect me.

To your questions. Oil and money are going to become more and more scarce, but not all at once. And there is the rub. Would you agree with me that probably 95% of the world is not Peak Oil aware? If so, then I think the sheep will continue to pile in and out of stocks quite possibly for years to come. With my option strategy, and mandatory cash holdings so that I personally stay liquid for the next few years, I think I can make money even if the market goes down 2% a month for the rest of my life. My system fails if the market goes up or down too fast. It's on that edge right now. I'm just trying to get to expiration next Friday where I can reevaluate, but I will sell at a loss if my stop losses trigger.

I lost my butt in the dot.com bust. All the more ironic for me since I'm in the Silicon Valley and correctly called that bubble as well. Unfortunately, I was in energy companies back then and I didn't understand there business. Enron, Dynegy, Calpine. I know what I invest in now and I know when to take a loss and admit I was wrong.

In summary, I think things are going to get pretty bad for a while. But I'm not willing to give up just yet, and besides, I don't have enough money to retire, probably ever, if I leave all my money in cash. My daughter is permanently and totally disabled so my retirement has to include enough resources to cover until her death as well. There is always someplace to make money, one just needs discipline.

Or, if I was really smart, I'd drive an old Corolla into the ground and live on the cheap.

I don't really know what's going to happen, but for now I have a plan, it seems to be working, and I'm giong to stick to it.

Thank you for the kind reply. As always, I respect your opinions and I consider them carefully.

Interesting. I'm kind of expecting a Great Depression type crash, with the result being people afraid of stocks for a generation. Plus, people will need cash, both because of the bad economy and because of the boomers hitting retirement age. I think they'll be skittish of stocks.

FWIW, I made out like a bandit in the dot-com boom. I, too, knew it was a bubble...and I bailed out just past the top. I was a dollar cost averaging buy and hold investor, from my teen years, really, and had never sold stock before in my life. But I sold almost everything a couple of weeks past the peak. Never had a moment's regret.

I'm thinking about bailing out again. Just in case Denninger's right...

I noticed that all of the top 5 worst days were between October 5th and October 29th.

Best Hopes for Halloween,


Shocking stat du jour: China retail sales are only about 35% below the USA level right now (and would be higher if the Yuan was revalued to where the USA politicians wanted it)-quite the rice bowl http://afp.google.com/article/ALeqM5i0x0q895Dg_GgXhBp-THK49Hhgrw

China's domestic consumption has replaced investment to become the biggest driver of economic growth for the first time in seven years.
"The rise of domestic consumption is the result of many years of efforts to support spending while curbing investment, with a goal to reduce dependence on external factors," said Ba shusong, a researcher with the State Council Development Research Center.
Since the Asian financial crisis in 1997, China has earmarked a strategy to reduce reliance on investment and exports and turn to consumption through tax cuts, minimum wage rises and improved education, welfare and health care.

The Chinese middle class is now probably equal numerically to that of NA with the big difference being that they have savings in the bank.

And, after a few exchange rate adjustments, China will be the world's largest single consumer market.

Time to "go with the flow" and start reading Chinese for Dummies

In the last couple of weeks we've been talking quite a bit about Atlanta's gasoline shortage and the EPA's decision to waive the requirement of low sulfur gasoline. AlanfromBigEasy asked the question "is the shortage was affecting air quality?" I didn't know the answer then, but today I managed to run into the guy who makes the tropospheric ozone predictions for Atlanta. He said that they would never be able to tell right now, because so much of the ozone concentration in Atlanta depends on day-to-day meteorological conditions. He said they can remove about 70% of the effects of the current weather in their model, but that 30% remaining is still swamping any signal from the decreased air quality. So the short answer is: no, there is no discernible improvement from fewer miles driven nor a decrease from the higher sulfur gasoline. That doesn't mean there is no effect, but in order to make it discernible, you'd have to do an average over a long time, several years.

Speaking of sulfur, I found out that Atlanta's low sulfur gasoline is about 15 ppb or so sulfur, whereas the max in high sulfur gasoline used in areas without ozone problems is about 50 ppb. However, most of the urban areas on the east coast have ozone problems, so are using the 15 ppb stuff.

And the gravy train keeps rolling on.

The Fed is loaning AIG another 37.8 billion dollars.

And here we thought it was all bought and paid for with the 85 billion we gave them last week. It wasn't enough money, apparently, so we're giving them more.

What, did the spa raise their prices?

These grifters need those expensive spa massages-as long as the taxpayer is paying, why not? The problem is there is no happy ending for the taxpayer.

I know I should be sorry, but I just couldn't resist posting this :-)


Sarah Palin is related to Princess Diana...

Dorme Bien.

... and here I thought that she was related to a space alien :)

Riots in Hong Kong after heavy stock losses

There have been riots on the streets of Hong Kong following heavy losses at the city's Hang Seng index.

The Hang Seng closed over 8% lower with losses in banks, communications companies and exploration companies.

That rioting is not a good sign. They could scare the bankers and traders so bad that they will do something stupid like loot the cash and valuables in vaults, transfer funds to safe havens with special 'emergency software code', then type [Delete all files *.*] throughout their operations to cover their tracks. The Govt will never be able to recover.

I am sure the self-beneficial idea of panicking first, early, and often has crossed their minds. My feeble two cents.

Biofuel plants hit economic road block

Wonder how Minn. Bio-diesel mandate is doing?


After reading the entire thread and every post by every TODer, I noticed (like everyone) that recent events have everyone on edge. I believe the combination of "Severity" and "Rapidity" of the situation, along with the Chinese water torture like redundancies of bad news turning even worse, being broadcast from every quarter, are taking their toll.

Doomers seem to be appearing like prophets and gaining some credibilty. I personally don't see the down side of being prepared. Lets be honest, smart people and smart people who form communities with other smart people, have the most advantage. I don't think many TODers will succumb in the near future to the obvious storm thats gathering on the horizon. Even a little leaven will leaven the whole loaf. TODers are smarter than yeast.

I personally don't see the down side of being prepared

It takes time, money and effort. A couple of years ago, I realized that I could prepare for #1 (I had a superb plan#, better than any I have heard here to date, decent medical care would likely continue, an excess of food that could be traded, etc.) but following that plan would negate my broader efforts, so I chose not to spend more than minimal efforts on personal preparation and enjoy the years in New Orleans.

Best Hopes,


# One part was to become the high school science (perhaps math) teacher and be a "nice caring" teacher. In a few years, the young adults would remember "nice old Mr. Drake". Meanwhile my expertise could help in local preparations and mitigation efforts after TSHTF.

Hello TODers,

It now appears that the Zim Govt acknowledges that their currency is totally worthless as a medium of trade. For those lucky Zimbabwean few that have foreign currency:

Sticker Shock In Zimbabwe As Officially Sanctioned Hard Currency Shops Open

..Bankers say they are not receiving enough notes from the Reserve Bank, while others blame the central bank's suspension of electronic transfers last week for the intensification of the cash crunch, as consumers and businesses deprived of the electronic payments system now need significantly more cash to carry out essential larger transactions.
My guess is they had to suspend the in-country electronic payments system while the special emergency software is transferring whatever wealth remains to other havens. Delete *.* is next. Time will tell..

I bet the Zimbabwean 'bottom currency' to facilitate barter trade is now offered so frequently by so many that even this act doesn't have much value to a transaction.

This may be too late in the day to post this to get some responses. But I have an opportunity to put some questions in front of a government official with a Peak Oil related portfolio tomorrow.

What should I ask?

If anyone posts a question and I get an answer I will post the answer.

When I think about the government acting to solve some problem, I like to start by thinking about how the government might currently be acting to cause or aggravate the problem. The place to start would seem to be to stop doing those things that make the problem worse.

As fossil fuels get more scarce, we have two basic strategies with which to respond: 1) find alternative fuels, 2) figure out how to get by with less fuel. I figure #2 is the more robust approach. Most of humanity has gotten by well enough with much less fuel than most participants on this forum use, so we know that strategy #2 can work.

So the question becomes: what does the government now do that pushes up fuel consumption, and how can the government stop doing those things?

The military is one interesting arena to address. How can we protect our nation's interests, but burn a lot less fuel in the process?

Co-generation fascinates me. What government regulations block groups from establishing effective co-generation facilities... especially looking around the world, what have other nations demonstrated to be effective but our government somehow impedes here? How can the government get out of the way of known good solutions?

Agriculture is also huge. How do government policies force farmers to use fuel-intensive methods? How can those policies be changed to allow less fuel-intensive methods?

Thanks for the opportunity to offer suggestions!

If this government official is Peak Oil aware, there is no need to ask a Peak Oil question so ... nothing much there.

Since the government isn't doing anything to mitigate Peak Oil other than talk “drill now, drill here” ... nothing much there. Note: If we double our oil production, we will still be importing 50% of our oil and since our production is declining, imports will grow.

If the government does not intend to do something other than hope the whole thing goes away … nothing there.

I wonder if the government official understands EROEI and if so, why not stop ethanol production here and buy it cheaper from South America?

Since no one in government can suggest rationing of critical resources and keep their job … nothing much there.

Since I don’t have much confidence in government officials about the only thing I would ask is; how to cook KFC crispy. And further, I wouldn’t put any stock whatsoever in the answer.

Has any thought been given to promoting non-oil transportation ?

Bicycling, electrified rail (urban & inter-city), walkable communities ?

As the oil based transportation is stressed, people and essential freight can switch over, IF IT EXISTS !

Best Hopes,


Great questions as always Alan. I'll definitely pass those ones on. I am not personally meeting with this official, but a colleague is and asked me if there's anything i'd like the answer to and these are good q's.


Remember that ban on short selling 950 companies that Nate reported on not too long ago...well, the ban gets lifted at midnight tonight.

Market nervously eyes return of short sellers

At midnight on Wednesday, U.S. regulators will restore investors' rights to make bearish bets on financial stocks but few expect it to put an end to wild swings in the market.

For nearly three weeks, investors who bet on falling stock prices have been prohibited from short selling more than 950 companies under an experiment by securities regulators to restore equilibrium to a fragile financial system.

Short sellers arrange to borrow shares they consider overvalued and sell them. If the price drops, they repurchase shares, return them and pocket the difference.

It's questionable whether the U.S. Securities and Exchange Commission's temporary ban worked. S3 Matching Technologies, a market data firm, said it found no statistically significant differences between stocks covered under the ban and those that were not.

If that's not enough excitement, there's also the next hat trick...

Treasury considering taking stakes in banks: report

I saw some other individuals posting quotes from the book "Since Yesterday" by Frederick Lewis Allen. A book describing the the decade after the stock market crash and the Great Depression. The quotes posted made the book sound interesting so I picked up a copy at a book depository. I haven't gotten too far in the book yet, but I noticed this sentence referring to the time period shortly after the crash in October 1929. I just thought it sounded eerily similar to what McCain said just a few weeks ago.

"Hoover and his associates began at every opportunity to declare that conditions were "fundamentally sound," to predict a revival of business in the spring, to insist that there was nothing to be disturbed about."

I think it was TOD member Jerry McManus who first recommended Since Yesterday. It can be read online for free here.

It really is uncanny, how we seem to be repeating history. A lot of people think Hoover did nothing. Not true. He did something. Pretty much what we're doing today.

Thank you so much for that link.

I really wanted to read that book, and yet to buy it in Japan it would have cost me $120!

I asked my family to buy and air mail me Tainter's book cause that was cheaper than the $85 that I could buy it for here in Japan.

The world isn't that flat...

Hello TODers,

Illinois sheriff: No foreclosure evictions on my watch
It will be fascinating to see what happens as this builds steam.

Combine that with McCain's Mortgage Welfare plan and I'm gonna feel like a real dumbass for paying my mortgage on time all these years.

Hello TODers,

Stakes high for South African land reform

For those seeking to redistribute South Africa's rich farmland among landless, poor blacks, there is an uncomfortably close reminder of the dangers of getting this sensitive task wrong: Zimbabwe.

More than a decade after the end of apartheid, poor blacks in South Africa are still waiting for farms promised to them by the ruling African National Congress (ANC), which sees land redistribution as a cornerstone of black majority rule.
My bet is they will screw this up like Mugabe mishandled Zimbabwe.

Hello TODers,

OCT. 9: Global Economic Outlook Grows Darker, IMF Says

"The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s," the IMF said Wednesday in its World Economic Outlook.