DrumBeat: October 28, 2008

Navy frigates defend world oil prices in the Gulf: In a small corner of the Gulf, British-led forces have been protecting the oil installations key to controlling world oil prices.

At a time of international economic fragility any attack on the sea terminals would lead to a potentially crippling rise in oil prices.

With two per cent of the world’s oil going through the terminals and security for area was branded “extremely important to the global economy" byd Commander Rory Bryan, captain of the frigate HMS Lancaster.

“They are clearly a tempting target for violent extremists and need to be protected," he said. "We are here to make sure their integrity remains safe.”

More than 2.4 million barrels a day flow out of the platforms in the Arabian Gulf and into the super tankers queuing up nose-to-tail surrounded by a flotilla of six warships on 24 hour readiness to intercept attackers.

The 10 square miles of water around the Al Basra and Khawr Al Amaya oil platforms, essentially huge petrol stations at sea, are the most protected waters in the world.

BP Starts Second Thunder Horse Well in Gulf of Mexico

(Bloomberg) -- BP Plc, Europe's second-largest oil company, started the second well at its Thunder Horse field in the Gulf of Mexico.

BP is now extracting more than 100,000 barrels day of oil and gas from the deposit after it began pumping and exporting the fuel in June from the first well at the Thunder Horse platform, the world's largest semi-submersible drilling and production facility. The company plans to have four wells open at the site by the end of 2008. The project had been delayed for about three years.

Peak Oil And The Systemic Collapse Of Modern Civilization

“Modern civilization” is unique, then, in the sense that it is global rather than local. It is also unique in the sense that its means of production is not the labor of humans or draft animals, but a malodorous substance known as petroleum --- oil. This substance was rarely used until the late nineteenth century, when it was realized that a steam engine could be modified to run on petroleum. These new engines were soon everywhere. Petroleum is a great mixture of hydrocarbons, and some of the variants could be used or modified to produce other substances such as plastic. In almost no time, we had created a world that was literally “driven” by oil. The planet Earth seemed infinitely large now, and we not only stopped worrying about overpopulation, but we felt that there would be no limits to industrialization, capitalism, “free enterprise,” and all the rest of the ideology that was remarkably lacking in “ideo-.” We just never got around to thinking that all of this was dependent on that dirty substance known as oil.

Mexico Congress Begins Session as Opposition Protests

(Bloomberg) -- Mexican opposition lawmakers took over the podium at the lower house of congress, prompting leaders to begin the session at a makeshift stand away from the protest.

Russia's oil boom: Miracle or mirage?

MOSCOW: After years of growth, Russia's once mighty oil machine is feeling the strains of declining production and energy prices as the industry copes with the worst economic crisis in Russia in a decade.

Oil companies that coasted on high commodity prices, Soviet-era infrastructure and easy Western bank credit have quickly fallen on hard times. Foreign investors have pulled out and company share prices have wilted. Is this the end of the Putin boom?

"We're watching Russia very carefully," David Fyfe, a senior oil market analyst at the International Energy Agency in Paris, said by telephone.

Just this month, the state-controlled oil company Rosneft was compelled to meet a margin call on bank debt. Already, one Siberian oil company is unlikely to be able to roll over debt, and creditors could seize its assets, industry analysts say. Output is declining this year, for the first time in a decade.

The pivotal question in the Russian oil industry is whether the government intends to support the companies, milk them for short-term funds to shore up other areas of the economy, or intentionally allow them to wither as an unstated curb on output to help support world prices. This being Russia, evidence of all three approaches seems to be surfacing at once.

China oil co breaks ground on Chad, Niger refineries

NIAMEY (Reuters) - State-owned China National Petroleum Corp (CNPC) broke ground for new oil refineries in Chad and neighbouring Niger this week, as the company boosts its ties with resource-rich countries in Africa.

The refineries will be the first in each of the landlocked African countries, which remain desperately poor but have seen their state incomes surge during the resource boom of recent years.

Oil-Rich Kirkuk Could Hold Key To Iraq's Problems

The northern Iraqi city of Kirkuk has become a symbol for one of the country's most intractable problems — the debate over who should control Iraq's oil riches and the conflict among its major ethnic groups.

The dispute over control of Kirkuk prevented Iraq's parliament from passing a law authorizing provincial elections. Although the law finally passed late last month, the issue of Kirkuk was not resolved, only postponed.

Iraq loses $20-30 billion over global financial crisis

BAGHDAD (RIA Novosti) - Iraq has already lost $20 - $30 billion over the current global financial crisis, a government daily quoted the deputy chairman of the Iraq's oil and gas committee as saying on Tuesday.

According to the Al-Sabah newspaper, Abdul-Hadi al-Hassani said the losses had been caused by plummeting oil demand and prices.

Kazakhstan set to sign new Kashagan deal

Kazakhstan will sign a new partnership deal with an international consortium developing the giant Kashagan oil field by the end of the month, the nation's energy minister said Tuesday.

Russian oil firm Rosneft posts 130% net profit rise in Jan.-Sept.

MOSCOW (RIA Novosti) - Russian state-controlled crude producer Rosneft said on Tuesday its net profit under Russian Accounting Standards increased 130%, year-on-year, in January-September to 206.36 billion rubles ($7.6 billion).

At the same time, Rosneft's net profit declined 33%, quarter-on-quarter, in July-September to 45.11 billion rubles ($1.7 billion), the company said in a statement.

Mexico's Lopez Obrador Demands Changes to Pemex Energy Proposal

(Bloomberg) -- Former Mexican presidential candidate Andres Manuel Lopez Obrador raised new objections to President Felipe Calderon's initiative to loosen the state oil monopoly, urging lawmakers to modify the measures before voting on them.

Valero says plans significant '09 turnarounds

HOUSTON (Reuters) - Top U.S. refiner Valero Energy Corp (VLO.N: Quote, Profile, Research, Stock Buzz) on Tuesday said it planned significant turnarounds in 2009, with projects planned at two of its Texas refineries.

The company also said it had scaled back capital spending in 2008 and 2009 by deferring projects until 2010 and 2011.

Economic woes mean smaller paychecks

Paul Buzash also is facing the possibility that the business he has spent much of his life building will come crumbling down because of the tough credit market.

Buzash works as an environmental consultant in Glenville, N.Y., often helping companies interested in alternative energy go through the compliance process. While there has been plenty of buzz lately about alternative energy, he says most of those projects take years to complete, meaning companies can invest for as long as six years before they start generating cash.

With the credit markets tight, Buzash says many of his clients are having trouble getting the cash they need to pay him during the build-out process, in turn forcing him to leave bills unpaid. Some projects have been put on hold.

Wind study forum too big a hit

Close to 200 people crowded into a meeting room at Christ Church on Markham Rd. to learn about the wind study, which would be needed before a decision is made to proceed with the wind farm.

But another 200 were left on the sidewalk, unable to get into the small meeting hall.

That was enough for local resident Jeanne Gagné, who rose to demand the meeting be rescheduled for a larger hall. Toronto Hydro officials quickly agreed. A time and place will be announced later.

Russian oil firms await large Chinese loans

MOSCOW (Reuters) - Russian oil firms will receive "considerable" loans from China in return for increased oil supplies, with the exact amount to be determined by individual projects, Russia's senior energy official said on Tuesday.

Deputy Prime Minister Igor Sechin, who oversees the oil sector, said Russia planned to increase deliveries to China and that the falling oil price would not be critical for Russia this year.

...The Kremlin is seeking to diversify its oil export routes away from the West and is targeting China as the main market for its East Siberian oil.

OPEC May Call Early Meeting If Oil Declines Further

(Bloomberg) -- The Organization of Petroleum Exporting Countries may call a meeting earlier than the scheduled December date if oil prices continue to fall, according to Secretary-General Abdalla el-Badri.

``If circumstances dictate we have another meeting, of course we will meet,'' el-Badri said today at the Oil & Money conference in London. He said he expects a market response to last week's production cut after about a week.

Canada: Diesel outages continue

United Farmers of Alberta (UFA) manager of corporate communications Natalie Dawes said the company has brought in tank cars of fuel from the U.S. by rail car in order to try to fill the gap.

She said a myriad of factors have contributed to the shortage, like maintenance shutdowns of Edmonton area refineries, hurricanes which damaged refineries on the U.S. Gulf Coast and a higher demand for the product.

...Based on company records, demand is higher now than it ever was, Seetal said. She blames the shortage, in part, on unprecedented growth in the oil and gas sector.

However, she said "If anyone could have seen this unexpected increase in demand they should be in Vegas.”

Brown Seeks Fuel Price Cuts in U.K. After BP Plc Profit Surges

(Bloomberg) -- Prime Minister Gordon Brown stepped up calls for U.K. energy companies to pass on a drop in oil prices to consumers after BP Plc's surge in third-quarter profit triggered a backlash from unions and Labour lawmakers.

``In the past as the market price has gone up it's been passed on and we want to see that fully reflected in the price of petrol and fuel on the way down,'' Brown told reporters at his office in London today.

Taxes, supplies causing higher gas price, AAA says

Mix higher gas taxes in North Carolina with lingering disruptions in the gas-distribution system and the result is higher prices than in neighboring states, analysts say.

Iraq Parliament Committee Rejects New Draft of Oil Law

The Iraqi parliament's oil and gas committee has rejected a new draft of the country's controversial hydrocarbons law, a leading lawmaker said Monday.

The long-awaited law could pave the way for international oil companies to develop the nation's vast oil reserves, estimated at 115 billion barrels, the world's third largest.

600 to face winter without heat

A Wisconsin law meant to protect residents from having their utilities cut off during the coldest months of the year won’t help the increasing number of Madison residents already without light and heat after failing to pay their utility bills.

Madison Gas and Electric has about 600 customers whose service is currently disconnected, about a 15-20 percent increase from last year, according to Steve Kraus, spokesperson for the company.

Metro Fares May Increase 50 Cents

MADISON, Wis. -- It may soon cost 50 cents more to ride Madison Metro.

On Monday night, the Board of Estimates voted to recommend the increase to the full Common Council, but not before listening to dozens of riders who voiced their concern over the potential rate hike.

"I believe this is the wrong time to increase fares. We're looking at the economic crisis, the energy crisis, but here at home were looking at non-attainment status for air quality, which is an EPA level that says your air quality is unhealthy to be living in," said Metro rider Amanda White.

Smart electricity metering system to be introduced soon: Salman Faruqui

ISLAMABAD (APP): The government would soon introduce smart electricity metering in the country to eliminate complaints of inflated and manipulated billing, Deputy Chairman Planning Commission of Pakistan, Salman Faruqui said here. He was speaking at a one-day workshop on Development of Integrated Energy Modeling System for Pakistan organized by the Planning Commission in co-operation with the Asian Development Bank.

Big Oil May Be Close to Taking Control of the Biofuels Industry

The evidence is still anecdotal, but it’s starting to look like major oil and gas companies will soon seize control of the biofuel industry from the independent firms that launched the ethanol and biodiesel businesses only a few years ago.

Ethanol stance taints Barack Obama's green credentials

Barack Obama has enjoyed near-universal backing from American environmentalists, with the Sierra Club, the country's largest grass-roots environmental group, and Friends of the Earth US both endorsing the Democratic nominee for president.

But there is one policy area in which Obama and the environmental lobby have increasingly grown apart: ethanol. As senator for the corn-growing state of Illinois, Obama has been a firm advocate of corn-based ethanol, 34 billion litres of which is now added to US petrol every year to reduce imports of foreign oil.

People power can beat climate change

If it becomes law, the UK's climate change legislation will be the toughest of its kind in the world, says Lord Puttnam. However, in this week's Green Room, he says the government is still failing to make the most of an untapped resource - local communities.

President Mori Addresses 63rd UNGA

New York (United Nations Department of Public Information): Emanuel Mori, President of the Federated States of Micronesia, said that the world financial situation, along with the fuel and food crises, had a negative impact on efforts to achieve the Millennium Development Goals and the broader pursuit of sustainable development.

Island nations remained under threat from climate change, he added. Those most affected were those who could least afford a response, most often the small island developing States. Families in Micronesia had been adversely impacted by the inability to secure fuel, he said, calling for the acceleration of development and sharing of technologies for renewable and affordable alternative energy sources. The assistance of the international community and financial institutions should follow.

The energy crisis led to an increase in the cost of foodstuffs, he said, noting that imported rice, a staple of the Micronesian diet, had become unaffordable. The nexus between food security and climate change was being felt in his country, which had farmlands barely a few meters above sea level. Taro, and other crops, had already been inundated by salt water from the surrounding rising waters. The seas must be managed sustainably to preserve the bounty they provide. Collateral catches and discards in commercial fisheries were also troubling as they impacted both critical resources and areas of cultural importance to Micronesia.

The Clean Air Act: Jump-starting climate action

The urgency of the current situation cannot be overemphasized: The latest scientific research tells us that global warming is accelerating at a rate beyond previous expectations, and that the window for a timely response is closing quickly. Despite some political efforts to muddy the waters, there is scientific agreement that greenhouse gas emissions must now be stabilized within seven years or the world will face unpredictable climate-related catastrophes — far beyond the serious impacts already in evidence globally.

Climate action in the United States — at a federal standstill for the last eight years — is expected to finally move forward with the inauguration of a new president in January. What preparations can be made now to assure action within the first 100 days? Congress is expected to try to move cap-and-trade legislation again while also addressing related issues: energy, transportation, economic policy, and conservation. But the key question remains: Is there a leadership strategy that the next president can initiate to strengthen the likelihood of success, particularly during this time of economic crisis?

Power struggles

The general amazement at the power failures that plunged New York and much of the US's north-eastern seaboard into darkness five years ago was perhaps best summed up by Bill Richardson, former energy secretary. He quipped that the US was "a superpower with a third world grid".

Yet the US is far from the only developed country with a shaky power structure. In fact, Europeans have also suffered blackouts as a result of their ageing electricity infrastructure. In 2006, a power failure in Cologne spread through France, Italy, Spain and Austria, with Belgium, the Netherlands and Croatia also feeling the repercussions.

...The International Energy Agency (IEA) estimates that the world must invest $22,000bn (€16,700bn, £13,000bn) in energy, half of that in the power sector. More than $8,000bn will have to be spent by developed nations, with the power sector again eating up half of that budget. Much of the money is needed to renovate and replace existing systems, which were built in the 1960s and 1970s.

Britain's Brown calls for bigger IMF bailout fund

LONDON (AP) -- British Prime Minister Gordon Brown called on China and oil-rich Gulf states to bolster an enhanced IMF bailout fund for countries rocked by the global economic downturn, saying Tuesday those with the greatest surpluses should do more.

OPEC cannot bail world out

LONDON - OPEC cannot be expected to bail out the world over the current global financial crisis, the secretary general of the oil producers' cartel said on Tuesday.

The United States must take the lead in resolving the crisis, which stemmed from a US-based credit crunch last year, said Organisation of the Petroleum Exporting Countries (Opec) Secretary General Abdalla Salem El-Badri.

'What is surprising me is everybody looking at Opec to bail out this crisis. In Opec, we are most of us very poor countries, we cannot bail out this crisis,' he told an industry conference in London.

OPEC ready to act again to boost oil

LONDON – OPEC ministers will take further steps to prop up the oil market and could call another meeting before the group's next scheduled talks in December, officials said on Tuesday.

UK: Speculators and government blamed for high fuel prices

The government and speculators should take part of the blame for the excessively high fuel prices that pushed red diesel to 70p/litre earlier this year, according to one of the most important men in the oil industry.

Abdalla Salem el-Badri, secretary general of OPEC, which controls 40% of world oil output, told a briefing in London yesterday that very high prices did not ultimately benefit oil-producing countries because they affected demand. “$147 a barrel was too high,” he said.

Russia, China sign oil cooperation memorandum

MOSCOW (Itar-Tass) - Russia and China have signed a memorandum of understanding on cooperation in the oil sphere, under which the parties will set up a working group to be led by the Russian energy minister and the head of China’s state energy department.

Is Venezuela's oil boom set to bust?

The dizzying collapse in oil prices has started a heated debate in Venezuela about the possible effect on its oil-dependent economy - and the political future of left-wing President Hugo Chavez.

Venezuela is particularly vulnerable to oil prices. It is the Western hemisphere's largest oil exporter. More than 90% of its export revenue and more than half of the government's annual expenditure comes from oil.

President Chavez's right-wing opponents are hoping a sustained drop in the oil price could curb his heavy spending on social programmes and undercut his support.

The Bloom Is Off of T. Boone

In the latest sign of how the financial crisis and steep drop in commodity prices since July have blindsided some of the most prominent investors, energy crusader T. Boone Pickens said he and his BP Capital investment firm have lost some $2 billion since oil and natural-gas prices started tumbling in July.

The information, released on “60 Minutes,” is sharply higher than the most recent estimates of Mr. Pickens’ losses. His funds were previously thought to be down over $1 billion in 2008, with his personal losses pegged at more than $300 million.

Saudi luxury car sales seen rising despite global crisis

Recession fears may be gripping much of the global economy, but in the world's largest oil exporter Saudi Arabia car manufacturers are betting on more big spending.

Traders at a luxury car exhibition in the Red Sea city of Jeddah said sales are holding up and are expected to increase in a country of 25 million, whose economy has boomed in recent years as the oil price soared to record levels.

China's CNOOC announces oil, gas output rise 15.2% for Q3

BEIJING (Xinhua) -- China National Offshore Oil Company Limited (CNOOC Ltd.) announced Tuesday that its net oil and gas output in the third quarter of 2008 rose by 15.2 percent over the same period last year.

The state-owned offshore oil producer said that its unaudited total revenue was 30.9 billion yuan (4.5 billon U.S. dollars) for the third quarter, representing a year-on-year increase of 69.1 percent.

UN atomic energy chief warns of nuclear theft

UNITED NATIONS, New York: Mohamed ElBaradei, chief of the International Atomic Energy Agency, asserts that the number of reports of nuclear or radioactive material stolen around the world last year was "disturbingly high."

ElBaradei, in his annual report to the General Assembly, said Monday that nearly 250 thefts were reported in the year ending in June.

World Is `Drowning in Oil' (Again) After Drought

The spike in crude oil earlier this year had the support of the popular theory of ``peak oil.'' In a 2005 book, ``Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy,'' investment banker Matthew Simmons argued that oil production by Saudi Arabia, the world's largest producer, is ``at or near peak sustainable volume'' and likely to decline in the foreseeable future.

Just a few years before the peak-oil theory was hot, the world was ``Drowning in Oil,'' according to the Economist magazine's March 6, 1999, cover story.

Oil was trading at $13.50 a barrel at the time. ``We may be heading for $5,'' the Economist predicted. ``Consumers everywhere will rejoice at the prospect of cheap, plentiful oil for the foreseeable future.''

Oil prices took off and never looked back.

Like the world of fashion, trends in markets come and go. Oil is a limited, albeit vast, resource. At some point in the future, we probably will run out of petroleum, at least as we know it.

Man's ingenuity is equally vast. When the time comes, given all the tax incentives that will be thrown in the direction of alternative energy, I have full confidence the world will not return to travel by horse and buggy.

Gas prices drop 26 cents in a week; some areas below $2 a gallon

The collapse in prices has been faster and deeper than forecast.

"It is stunning," says Tom Kloza, petroleum-price analyst at the Oil Price Information Service, a consultant. "I remember saying $2.75 by Halloween. Now, I think $2.50 by Election Day."

Auto parts supplier base teetering in downturn

DETROIT — While the big U.S. automakers lobby the government for some form of bailout, industry watchers are bracing for a major failure of the auto supply base if one or more of the Detroit 3 seek bankruptcy court protection.

Already fragile suppliers would be forced also to seek protection or simply liquidate, as some have done this year. The Center for Automotive Research says a bankruptcy filing by one or more domestic automakers could result in the loss of 2 million jobs.

"It would take the industry down," says David Cole, chairman of the Center for Automotive Research, who advocates that the government step in to assist the automakers. "An ounce of prevention is worth a pound of cure. … (A bailout) is a teeny amount compared with the overall consequences if this thing gets away from us."

OPEC members say low oil prices imperil investment

OPEC oil producers warned Tuesday that low oil prices have created a crisis situation that threatens key investment in production, pushing them to seek moderate price increases by cutting output.

IEA concerned about oil project delays - Tanaka

LONDON (Reuters) - The International Energy Agency (IEA) is concerned about potential delays to upstream oil projects as a result of the recent sharp fall in crude prices, its head said on Tuesday.

...Oil industry officials and analysts have said the low price may clog investments in upstream projects needed to maintain world supplies.

"Discussion that price of oil should be high enough and there will not be incentives to sustain upstream investment ... if the price of oil is too low? Yes, we are concerned about it," IEA's head Nobuo Tanaka told Reuters at a sidelines of a conference in London.

"We have seen this financial crisis. The supply side, as well as the demand side, has been hit badly by the financial crisis."

BP third-quarter profits surge on record high oil prices

LONDON (AFP) – British energy giant BP said on Tuesday that third-quarter net profit soared 83 percent to 8.049 billion dollars (6.434 billion euros) on record high oil prices which have since slumped.

Net profit, excluding gains from the value of its crude oil inventories, rose by 148 percent to 10.03 billion dollars in the three months to September, compared with the same period of 2007, BP said in an earnings release.

Jet fuel's down, but surcharges have stuck

Despite lower jet-fuel prices, fuel surcharges on international tickets are much higher than a year ago, according to an analysis of airline fare data for USA TODAY. Surcharges on many tickets have doubled, and many tickets on shorter flights — which often burn less fuel — have higher surcharges than longer-distance flights.

Most round-trip international tickets still have surcharges ranging from $200 to more than $500, even after airlines lowered the surcharges by $20 to $70 on many U.S.-Europe tickets last week. U.S. domestic fares still carry fuel surcharges, too, but international fares have the highest ones.

Congress Skimps on Roads, Providing Little Help for Caterpillar

(Bloomberg) -- The morning rush in Philadelphia ran 30 minutes longer than usual earlier this month when a joint in the Interstate 95 roadway came loose, shutting part of the artery and causing traffic to back up at least two miles.

The U.S. House's transportation panel will hear from 19 witnesses tomorrow on boosting infrastructure spending after Speaker Nancy Pelosi asked committee chairs to suggest contents for a potential post-election economic stimulus package. While the California Democrat hasn't announced a spending target, a plan last month included $12.8 billion for roads. That wouldn't be enough to plug a $19 billion hole projected in the federal Highway Trust Fund next year.

UK: North-east could suffer as oil price slumps to $60 a barrel

THERE were warnings last night that the gloss could be about to come off the north-east economy as the price of oil teetered below the $60-a-barrel mark.

Economists warned of job cuts to come and a fall in house prices as the region loses the cushion of booming oil prices that has enabled it to avoid the savage downturn hitting the rest of the UK.

Iran 'opens naval base' near Gulf

Iran has opened new naval facilities east of the Strait of Hormuz, the narrow entrance to the Gulf which is key to oil supplies, state media say.

Naval chief Admiral Habibollah Sayyari was quoted as saying the base in the town of Jask would enable Iran to block the entry of an "enemy" into the Gulf.

China condemns Sudan oil killings

China has condemned the killing of five of its citizens in Sudan, calling it as a terrorist act, but said it would continue to invest in the country.

Beyond the triple crisis: a green new deal

This sequence makes clear that what is at stake is more than a financial breakdown that can be repaired by policy adjustments at the margin. Rather, the excessively indebted global economy is but one aspect of anunprecedented triple crunch, each element of which has contributed to the current crisis:

* an enormous Ponzi scheme of debt

* peak oil

* climate change.

Intel Capital to invest $20 mln in solar venture (AP)

BEIJING - Shrugging off gloom over the economic outlook, Intel Capital on Tuesday announced its first "clean-tech" initiative in China, a $20 million equity investment in Trony Solar Holdings Co., one of China's biggest makers of solar energy and wind power equipment.

"The world economy is in a very difficult position, but innovation is the way to help the companies out of financial crisis. Intel Capital is still committed to investing in innovative companies," Cadol Cheung, managing director of Intel Capital for the Asia Pacific, told reporters. Intel Capital's parent is computer chip maker Intel Corp.

"We have no plans to slow down our investment pace," Cheung said.

EPA may relax power-plant pollution rules

WASHINGTON — The Environmental Protection Agency is working at the Bush administration's direction on a new rule that would weaken regulations for power plants, allowing them to increase emissions without adding pollution controls.

Study: Smog chops 2 months off Mexicans' lives

MEXICO CITY – Mexicans would live an average of two months longer if they breathed cleaner air, Harvard researchers conclude in a study published Monday. The study found that some 7,600 people's lives were cut short each year by diseases related to air pollution between 2001-2005, representing about 1.6 percent of annual deaths in Mexico.

China's hidden coal cost equal to 7.0 pct of GDP: green groups

A report entitled: "The True Cost of Coal", jointly commissioned by Greenpeace, the Energy Foundation and conservation group WWF, said taking into account the real expense was vital to the nation's future energy security.

The unaccounted costs equate to an estimated 1.7 trillion yuan (249 billion dollars), and would be even higher if the impacts of climate change were included, according to the report.

Climate is the real crisis: Britain's Prince Charles

TOKYO (AFP) – Britain's Prince Charles urged the world Tuesday to fight climate change, saying that while the global credit crunch may be temporary, the effects of the "climate crunch" were irreversible.

Oregon governor outlines climate change agenda

PORTLAND, Ore. – Oregon's governor unwrapped an ambitious 2009 legislative climate change package with proposals for net-zero greenhouse gas emissions for homes and buildings by 2030, with benchmarks to be sure the goal is reached.

Gov. Ted Kulongoski also wants to replace the $1,500 tax credit on hybrid vehicles with a $5,000 credit on all-electric cars and to fund energy efficiency for 800 low-income homes a year.

Top economist talks up risks of climate inaction

HONG KONG (AFP) – Nicholas Stern, one of the world's leading environmental economists, said Monday that the global economy will face a more severe downturn than the current crisis if it fails to halt climate change.

Stern, the author of a key climate change report and a former World Bank chief economist, said moves towards a low carbon economy should not be stifled by the fallout from the current economic downturn.

Report: Climate change affects Yellowstone

From Walden Pond in Massachusetts to Yellowstone National Park in Wyoming, climate change has begun to dramatically affect the flora and fauna of these American treasures, according to two studies in Monday's Proceedings of the National Academy of Sciences.

The studies show that the warming of the Earth's atmosphere over the past few decades has caused a loss of many of the flowers that Henry David Thoreau recorded in his book Walden and also has contributed to a decline in several species of native animals once common in Yellowstone.

I'm interested in canvassing people's opinions about the near-to-midterm future of the Dow and other stock indices. How low do people think it will go before bottoming out? At what rate? And for what reasons?

Is 6000 by the end of 2009 a decent guess? How about 3000 by the end of 2011? (Those are my own WAGs, but they are WAGs, as I do not understand the intricacies of finance as some posters do.)

Nobody knows, but remember that between now and the end of 2011 the value of the US dollar (which is what that index is stated in) could change dramatically.

I agree. We are in uncharted waters now, and even the conservative talking heads at CNBC, the WSJ, etc., admit it. That means even the "experts" are in over their heads.

I don't think I'd give the "experts" any more weight than the average Joe, at this point.

TPTB desperately need (disguised) inflation, because that is where the confidence for the continued Ponzi scheme comes from. Few Americans are even aware that their equity losses over the last few weeks are not losses at all in many other currencies, and they don't care-they view the USD as a constant.

The leaders and experts have given it there best shots, and now all they've got left are prayers, and perhaps the shreds of their faith that somehow the Invisable Hand well mysteriously appear and conjure a solution out of thin air. They have effectively lost control, if they ever really had it, of a system they not only don't understand, but more importantly, can no longer control. As Bush said recently, this sucker could go down! He was right.

Average Joe here--

I have noticed that from time to time, companies are replaced by other companies in the makeup of the DOW "average".

Now how can an "average" have any meaning if the elements change? Who could possibly predict anything in a scheme like this?

Keep digging! Who decides which companies are in the DOW and which get booted? And who owns the Wall Street Journal? >;-)

" "We are adding Kraft because the Dow Jones Industrial Average had no representation in food products. Kraft is one of the world's leading food companies," Mr. Thomson said.
John A. Prestbo, editor of Dow Jones Indexes, said, "There are no pre-determined criteria for a stock to be added or deleted, though we intend that all components be established U.S. companies that are leaders in their industries." For the sake of continuity, composition changes are intentionally rare, Mr. Prestbo said, "although this time change was forced by the effective nationalization of AIG and its very low stock price." AIG has been in the Industrial Average since April 1, 2004.
The changes won't cause any disruption in the level of the index. The divisor used to calculate The Dow from its components' prices on their respective home exchanges will be changed prior to the opening on September 22. This procedure prevents any distortion in The Dow's reflection of the U.S. stock market.
For more information, see the web site of Dow Jones Indexes at http://www.djindexes.com."

Agreed, i can't see how there can be a consistency in the DOW average, if they keep changing out companies. which means it's not reliable for a trend. yet, the DOW is constantly used as a trend. the average can have no meaning, if the elements change.

This is one of the devices used to convince the punters that the stock market performs over a period.
Not if you are not an insider it doesn't.
The money is made by parting small investors from it.
The market is can be represented as rising over a period of time if the losers are continually weeded out, and then the remainder are presented by averaging their performance.

This is a fairground scam.

One other notable one was in the idea of managed funds. The grifters then extract money from the marks on the thesis that their expertise allows them to outperform the market, and collect transaction funds for moving their money around.
There is no evidence at all that they outperform a bundle of shares on average, and after taking out the transaction costs you are far better off just putting your money into a fund which buys the market proportionately and leaving it there.
Even this strategy is likely now to fail, as the rules on directors remuneration have been redrawn so that they can extract huge bonuses win or loose, whilst gutting their companies.
The large pension funds etc are complicit in this, as they are on a merry go round where they vote for perks for the Directors, and will be rewarded in turn with plum jobs and cuts.

This is not a rational market, but a giant ponzi scheme.

Fairly accurate summary. You forgot to mention hedge funds, which have borrowed huge sums with little capital through their crony connections at financial institutions.

The whole system is a scam, so examples can be drawn from any point, from the politicians who wave it through and cover for the execs, to the oil industry regulators who have been 'partying on dude' at the expense of the oil industry, but, we are assured by the investigators, without detrimental effect on the public purse - although in that case, why one should have to pay their salaries is perhaps open to question, is not performing their function has no effect.

My favourite though - sorry I did not bother to keep the reference - was the British fund manager, I believe in hedge funds, who was one of the few to get it right on commodity prices, and on the grounds of his genius paid himself some 40% of the profits.
If you set up 10 management accounts, and had no knowledge at all of what would happen, whether prices would go up, down or sideways, you would then be in the fortunate position of just earning your wages on 9 out of ten of them where your guesses were wrong, plus of course guaranteed bonuses 'to attract the calibre of staff needed', the losses would be someone else's.
On the remaining fund where your guess would right, you would make out like the scamming bandit you are, and all without knowing anything at all.
In fact, the managers perform on average no better than chance.

It is exactly the same as if you went into a betting office, and an 'advisor' placed bets on your behalf on all the horses in a race, merely charging you a fee for placing the loosing bets, but took 40% of your winnings on the one horse which won.

The key is you need contacts who can lend you OPM. Really, the hedge fund business is a sales/networking area more than anything else. It is 95% access to capital, maybe 5% investment skill.

Most people are assuming either a "V" or a "U" - a recovery on the way, either sooner or later. Not me: I am assuming an "L" - a leveling out with no real recovery - folowed by further "Ls" in a stairstep path downward over the next few decades.

I believe this is likely because the US has multiple huge problems which are not being addressed, and are unlikely to be addressed effectively. Absent effective action (in contrast to running around like headless chickens, throwing money we don't have around mindlessly), I see little reason to believe that the US economy can sustain any real economic growth. Absent any real growth, there is no good reason for the stock market (which is a leading economic indicator) to move up. Given what we know about oil (and all other non-renewable resource) depletion, there IS good reason to believe that the long-term trend will be downward. Given that these things never seem to follow smooth pathways, my stairstep pattern seems as good a model as any.

The market may go down some more before leveling off, or it might level off soon. I do think that average p/e ratios are finally getting close to where they should be, so that further trending downward at this point would be a function of lowered expectations for earnings. That could well happen; I am not totally convinced that the overall market has become appropriately pessimistic enough about future earnings outlooks, even at this late date. I don't think that this dynamic is likely to drive further declines on a percentage basis quite as drastic as what we have seen over the past year.

Bottom line: DJI may decline possibly another 20% or so at most, but in any case will level off within the next year and trade within a relatively steady range for the following two or three years at least.

So why invest in stocks at all? I can only see two reasons that make any sense at all: dividends and diversification.

Way back in the mists of history, dividend yield was an important consideration. The advantage of dividends over interest is that they are not so locked in. In an inflationary environment, if the company is positioned in a manner that allows it to raise prices and maintain real profits, then its dividends can be a good inflation-proofed source of income. In a recessionary/deflationary environment, if the company is very sound and positioned in a manner that allows it to maintain its prices and income, then its dividens can be a good, secure, deflation-proofed source of income. Because stockholders come at the end of the line when it comes to liquidating assets in a bankruptcy, stocks are more risky than interest-bearing securities; that is why dividend yields SHOULD be higher than prevailing interest rates - unless both the company and its investors are looking for capital gains instead. Over the past 3/4 century, capital gains have become the main game, and dividends mostly an afterthought. I believe that those days are over, that we are going to see a huge paradigm shift away from the emphais on capital gains (which are going to be rare in a long-term declining market) and back toward decent dividend yields.

As for diversification, I still believe it is a good strategy. I could be wrong about all of the above, of course. Maybe the market will rocket into the stratosphere. Then one would feel pretty foolish having had nothing at all invested in the stock market. As I suggested above, there are many inflationary or deflationary scenarios where carefully-selected stocks in very sound, well-positioned companies paying good dividens can be an important part of one's portfolio.

IMHO, anyway. YMMV.

It seems to me that a lot of your argument about dividends vs. interest depends on government tax policy -- which is another completely unpredictable term in the financial equation.

Way back in the mists of history, dividend yield was an important consideration.

Why should that be any different now -- it certainly makes sense, considering the original reason for the development of corporations and stock companies. But politics change, and there is a whole class of people (investment bankers, stock brokers, regulators, tax attorneys....) trying to carve out a living between the investors and their companies.

Maybe the market will rocket into the stratosphere.

Well maybe-- but it seems like only another wildly successful Ponzi scheme could do that, given the current prices, earnings, debt levels and values of various currencies. People will be off Ponzi schemes for a while -- it will take nearly a generation (long enough for the memory of having been burnt to evaporate) before the sleeze merchants can pull it off again.

Maybe the market will rocket into the stratosphere.

I have a feeling that the solution to the current credit crisis is to inflate our way out of it- lower taxes, lower interest rates, etc.- and eventually, yes, the market will go into the stratosphere. Once that happens, though, the dollar will probably inflate that way too, so the end result is that the market rises less than the inflation of the dollar.

Most people are assuming either a "V" or a "U" - a recovery on the way, either sooner or later. Not me: I am assuming an "L" - a leveling out with no real recovery - folowed by further "Ls" in a stairstep path downward over the next few decades.

Yeah, I agree with this, with a slight modification: the bottom of each L could have a little upward bump in it, but nowhere enough to bring it back up to the top of the L.

But I'm not so much talking about the stock market as the real economy. As far as investing is concerned, I think energy is undervalued now. Other things that are in the pits are still overvalued, auto and all related, airlines. It's a matter of figuring out what will still have value in a greatly shrunken and relocalized economy. (Energy because it is still needed on the way down, and the supply cannot but shrink.)

But beyond that, we are in deep doo if we aren't able to think beyond our investments (those that still have). Our only real security is collective, that is a social structure and ethic with a supportive gov't that let's no one starve or not have a roof over their head and lets everyone have a role to play in restructuring. We won't survive as a bunch individualists with society collapsing all around us.

Yeah, I agree with this, with a slight modification: the bottom of each L could have a little upward bump in it, but nowhere enough to bring it back up to the top of the L.

I get this vision of a slinky going down a stairs... Each step being a new temporary equilibrium, until that equilibrium breaks and we get to a new step...

Reminds me....some people are like slinkies........

Not really good for much, but you can't help but smile as you push them down the stairs!


"The Slinky Economy" - any bets on how long before this makes it as a buzzword?

Kind of a stretch but it does show how things can be pulled down quickly in spite of a long period of stability.

Wouldn't that be "The Sinky Slinky Economy"?

Not the comment: "The War took the country out of the Depression, not Roosevelt"

I wonder if certain leaders today will think along similar lines today to try to jump start their economies...

Given what we know about oil (and all other non-renewable resource) depletion, there IS good reason to believe that the long-term trend will be downward.

People appear to be driving as much as before the crisis. Even if consumption is cut a few percentage points, there are still 19 million barrels of oil disappearing forever ... every day.

Driving more might be 'good for stocks' and 'good for the economy' ... but, for how long?

A return to the SUV couldn't come soon enough for Detroit:


The government will do its chicken act and prop up the tottering auto giants for few more desperate quarters at astronomical cost.

Another problem:


I keep hearing from serious types on C-Span about the $1 - 2 - 3 Trillion dollar deficits beginning now and ending ... when.

Where is the money gonna come from?


Who pays it back?

"You do."

How can you pay it all back?

"I don't know, it's your problem."

Markets look great ...

No one knows what the markets are going to do in the near-to-midterm future, or even if there will be markets. So don't worry about them. I did some investing in the '90s & made some money, then got out when I started losing money around the time of the neocon coup at the turn of the millenium. Instead of playing the markets I focused on paying off my property. The markets are rigged against you & even if you do make some money, it's ill-gotten gains. Participation in evil condones evil. Focus on growing food instead. Invest in hand tools that will aid you in growing food, not in market scams.

All you people focused on your charts & graphs and what the markets may or may not do are delusional. You are so thoroly socialized to a anthropocentric paradigm that you actually think economics is a rigorous science. Even those on TOD who claim creds in "Human Ecology" or "Energy Ecology" know very little actual ecology or even basic biology. You fiddle around with your projections & predictions & models within a wholly BAU paradigm. That paradigm is collapsing by the very minute. The human population exceeds the carrying capacity (K) of the biosphere by well over an order of magnitude. The only way so many people have managed to be fed is thru exploitation of fossil fuels. Fossil fuels are rapidly being depleted at the same time that their utilization is rapidly reducing K. Whatever the markets do in the near-to-midterm, the only markets there are going to be in the long term will trade labor for food, shotgun shells for shovel blades, 3 dead rats for 1 dead 'possum, etc. That's our future, ready for it or not. Focus on what financial markets may or may not do indicates that you sure aren't ready for it.

D dog – I agree with you and am inclined to just dismiss the financial shenanigans however it is MONEY that determines who lives and who dies at this juncture and for the foreseeable future.

One must first be wealthy enough to make it to the point where we all wear gloves with the fingers cut off and fight over the dead rat carcass.

While I agree that no one knows what the markets are going to do and that those who follow charts and models which project the past into the future are delusional, there are nonetheless common seasonal patterns in markets just as in weather. It gets cold in the winter and markets tend to bottom in October.

By Thanksgiving Day the scary demons of October have usually been banished by time and the short attention span of market participants who are always ready to chase the next new trend. In commodities, the grains seem to be tired of going down although they may try some more of course. Soon most of them will be safely in the bin which is the usual signal for the beginning of the uptrend into spring.

Obama will be elecgted along with Democratic majorities in Congress. The scary prospect of a unfocused, senile President McCain and a scatter brain President Palin if he became incapacitated will vanish like an Halloween ghost. While Democrats can not perform miracles, they will have a different tone than the brain dead President we have now.

By Christmas the mood probably will be upbeat and the stock market will end the year on an uptick, although still lower than before the Neo-Con coup.

I agree, z:
The markets hate uncertainty and react to symbolic moves, so I think an Obama landslide will provide the necessary encouragement to traders that it's time to jump back in. Not into real estate or other illiquid, ill-advised capital purchases (adieu, GM), but all that cash on the sidelines is just waiting for a chance.

The strong dollar should give the Fed the leeway it needs to cut the rate another 50bp without crashing the currency, and some of that free money will end up in the equity markets. People love a bargain, and we can all see that plenty of issues are undervalued now as a result of forced selling.

We're not out of the woods, and I am totally pessimistic in the 1-2 year term, but I think we'll still see some wild (read profitable) swings from deflation to hyperinflation and back again, especially for food and fuel.

In the meantime, I've started selling off my short positions, and am holding my breath right now before plunging back into POT and the like.

but I think we'll still see some wild (read profitable) swings from deflation to hyperinflation and back again, especially for food and fuel

With Obama's election there will be at least an initial collective sigh of relief heard round the world. IMHO many PTB's favor the perceived stability implied. I would not be surprized to find out that boomers are already voting with their wallets in this runup today. Hope and stability good for business not to mention individuals.

Yeah I'm with the diggers and growers too. Might as well. The alternative future w/o food and energy ain't good.

Dang Z...that must be some good stuff you're smokin'. Can I have some?

Z actually has some good points. The markets are being driven by emotions, not fundamentals, and Z's prediction is only through the end of the year.

There are a lot of investors out there sitting on money and waiting - waiting for a little stability, a new president, for the W to leave office, or just a little hope.

I do not know what will happen, but I do know that emotions are high, and one of the most powerful of the emotions is fear - and that is currently driving the markets.

I wouldn't count McCain/Palin out just yet. Don't be surprised if the polls show Obama with a big lead but shockingly McCain pulls off the "big upset" next Tuesday. The media will say people said they would vote for a black man but when they got to the voting booth they didn't. No one will bother to investigate how the polls could be so wrong. Greg Palast says the election is already stolen.

Not that I think it really matters who takes occupancy of the White House on Jan. 21. This civilization is headed for the crapper no matter what.

'Greg Palast says the election is already stolen.'


That is my nightmare scenario. That would not go down well on the street. And not just among black folk.

I'm fairly sure there are a certain number of white folk who say they'll vote Obama, hell even THINK they'll vote Obama, but when they get in that booth just won't be able to pull the lever. My WAG is 6-7%. So if Obama isn't ahead by 8-9 the vote could go either way. But if he is, and still loses things may get ugly.

I don't see the angst. The election was open when it started but now it's 1932 all over again. The incumbant party canidate doesn't stand a chance. The only mystery is why Obama isn't 20 points ahead. Mind you i don't think anybody in their right mind would want to be President at this time.

what about people who say they would vote for a dinosaur but really won't, won't that balance it out ?

the polesters go to great lengths to decide which theoretical voter will theoretically vote for which candidate.

but no, the election ain't over yet and neither is october.

and if you don't think it matters who is elected, imo you havent been paying attention for the last 8 yrs. hint, the national debt is about double what it was the last time a dem was in the white house.

An odd chart showing growth in income as a function of tax bracket under both democratic and republican presidents. This is from a book by Larry Bartels that I haven't read so I can't speak as to it's veracity.

Apparently nobody knows how the democratic presidents do this, but it still works if you take any one president out. Income growth under democratic presidents has been higher for all incomes (although only statistically significant at lower incomes) and favors the lowest ones. Income growth under republican presidents has been lower and favors the richest ones.

If this is right, there is a difference between democratic and republican presidents.

That probably has been true in the past. The question is whether what has happened in the past has any relevance to what is going to happen in the future?

Why is that surprising? For the Democrats, that's the "rising tide" approach. For the Republicans, survival of the fittest. It is, however, only a partial picture. That the Democrats have been better for the lower classes does not mean they are anywhere near best or even "good enough". Nor does it address changes in Commonwealth services - fish in the river, clean air, education or healthy food.

cfm in Gray, ME

All you people focused on your charts & graphs and what the markets may or may not do are delusional... You fiddle around with your projections & predictions & models within a wholly BAU paradigm. That paradigm is collapsing by the very minute.

So true. This point really hit home for me after reading Dmitry Orlov's book:

So what has become of these Soviet mavericks, some of whom foretold the coming collapse with reasonable accuracy? To be brief, they faded from view. Both tragically and ironically, those who become experts in explaining the faults of the system and in predicting the course of its demise are very much part of the system. When the system disappears, so does their area of expertise and their audience. People stop intellectualizing about their predicament and start trying to escape it - through drink or drugs or creativity or cunning - but they have no time for pondering the larger context.

pp. 128

Reinventing Collapse

- I'm no expert, but I stayed in a Holiday Inn. Who cares if the jobs for experts disappear?

- I didn't make the rules, but profiting from them allows me to stay home and tend the garden.

- The game goes on with or without my participation, and my part in it is insignificant.

- Some of my "ill-gotten gains" are reinvested in the community and in public-service organizations whose mission it is to stick their thumb in the eye of the government leaders.

- What I'm not doing is propagating a consumer culture by livin' large. These winnings of mine make it more likely that I'll be one of those people handing out soup, and less likely that I'll end up as one of those carrying a torch or pitchfork.

I guess one gets tired of rat after a while.

Market bottoms when we have a 2008 valued 12 dollar barrel of oil.

The markets from here on out will be characterized by wild volatility. This state is a result of increasing nonlinear pressures on multiple critical points in the system (eg, involving energy and food), which then produce unexpected feedback in other points in the system.

And as time goes on, the proximate reasons for each price swing will be harder and harder to pinpoint and understand.

In other words, it's going to be chaotic and specifically unpredictable.

Horray! for the interconnected global system!

Boo! for trying to dissect the parts and name things and measure them and then thinking we understand the whole thing at the end of it!

There have been a lot of helpful responses to my market-prognostication question; thanks. Perhaps I should explain why I raised the question: Like the skyrocketing oil prices earlier this year, it has been my experience that precipitiously declining equities markets lead to a "teachable moment." Many who would not be open to the Peak Oil perspective have a way of becoming open to it at least a little bit when suddenly they find themselves in a state of fear about their long-term expectations for material security and comfort. In that regard, a continued rapid market decline could be beneficial for spreading the Peak Oil meme.

Maybe, except that oil price is plunging right now.

And as far as I can tell the people running scared seem more intent on propping up the old economy than working toward change.

I'm from Canada and I can see this happening before my very eyes right now. The latest example is that, now, it looks like our (British Columbia) carbon tax will be scrapped to prop-up the economy. We will also have "more government spending to boost the economy". Not evolving in the right direction if you ask me.

The latest federal election is another example where people apparantly "run back to mama" (i.e. the conservatives), and away from things such as the liberal's "green shift plan". After been clobbered on the elections, now the liberals are also backing out and vowing solemnly to help work on the economy as "priority number one". I don't recall the exact words, or even what politician it was, but the liberal politician I heard right after the federal election on the radio news said something like "this is not even up for discussion" because it is just "plain obvious" we have to try help Canada's suffering auto industry.

I'm sorry, but I can only conclude that the current crisis is doing anything but get people to think in the right way. Quite the opposite in fact.

Someone asked about Iceland...

Iceland's interest rate up to 18%

Iceland's central bank has raised its key interest rate to 18% from 12% as it battles against financial collapse.

The rise comes less than two weeks after Iceland cut rates from 15.5%.

The central bank governor said the increase was part of its agreement with the International Monetary Fund, from which it borrowed $2bn (£1.3bn).

Leanan or others,

There was concernd a couple weeks ago about Iceland having issues with food security and shelves of imported food running empty. Any updates on food supply in Iceland? Any Icelanders reading?

Bjork? You out there?

Funny you should mention that... her insider's view of Iceland's predicament is featured in this morning's

A recent article in Harpers (paywall) highlighted how environmentally aloof they actually are. That they "don't want to preach."

So that for the last 30 years, the greatest natural resources "have been on clearance sale." "...the wilderness, or at least a major chunk of it, was sacrificed to produce cheap power for Alcoa's smelter, and the other rivers were offered up soon thereafter. It was a tragedy of privatization and acquiescence"

Bjork held an "ecoconcert" with nearly 10% of the country's population, yet according to the article, no one said anything about the environment till the very end with Bjork's anthem "nature, nature, nature" nothing on dams, environment, democracy, politics, how to make a difference.

It was written no doubt just prior to the present financial problems. Flipside, it relates a story of a group of people blowing up a dam in 1970. They were heroes, and the Supreme Court overturned their fine.

Bjork and Thom duet

Bjork and Thom Yorke have collaborated on a new song designed to raise awareness about climate issues in Iceland.

The Radiohead singer sings backing vocals on "Nattura", which was released digitally today.

The track is intended to promote the campaign for environmentally-friendly, sustainable green options in Bjork's home country.

"It is now more important than ever before to emphasize a respect for nature", she explained.

"I believe that profits, technological advances and working together with nature can all go hand in hand. None need to be sacrificed at the expense of the others."

Yay! We can have it all! Exploit the environment for profit and better gadgets (or, more efficient ways of exploiting our dwindling resources) and have "nature" at the same time! Whee!

Oh, come on Seadragon you are such a sarcastic pessimist!
Watch this and I'm sure you will agree that we can all continue our unending quest for global economic growth. Of course we will still have "nature" and who gives a rodent's anal orifice if it ends up looking like this...

Iceland Counts on its Neighbors for Aid, Haarde Says

Ranked the fifth-richest nation in the world per capita in a recent United Nations report, Iceland has been forced to ration its use of foreign currencies to prioritize imports of food, fuel and medicine since the collapse of its currency.


I´m from Iceland. I live in Reykjavik.

It´s not looking good at the moment but I´m not worried we will be seeing food shortages any time soon. Iceland produces about 1/2 of its food and could easily produce 100%. We even produce our own vegetables and fruits in the winter because we have plenty of greenhouses and abundant energy (hydro, geothermal) Then there is enough fish in the Icelandic waters to feed millions of people and we are only 300 thousand here in Iceland.

But the situation is very bad at the moment and will be for the next 5 years I would guess. Unemployment has been very low or about 1-2% but could in the next few years go up to 10-15%. Before the financial meltdown the Icelandic state was nearly free from debt. That will obviously change now. But Iceland will not go bankrupt I think. The Icelandic state will not pay the debt of private banks. The government has said so. The creditors of the banks will lose their money though.

Life is normal at the moment. People go to work and shop. The bars and clubs are packed on weekends as usual. But sales of cars and luxury items have plummeted. We are still a developed country and will be. We have plenty of energy we have not yet used.

Iceland will be fine but poorer than in the last 10 years.

Hello TODers,

Germany says Pakistan needs IMF loan within week

..Without help, it faces the prospect of a run on its currency and defaulting on its international debt, developments that would wreck already shaken confidence in the country.

For ordinary Pakistanis, that could add unemployment and falling real incomes to problems that already include chronic power outages and 25 percent inflation and spark popular unrest.

The government insists it has already taken action to slash unsustainable subsidies on food and fuel — measuring that hurt in a country where about three-quarters of the population live on no more than $2 a day.

There is speculation that an IMF loan might come with demands to slash the government's on budget, including defense spending.
IMO, with Pakistan having nuke warheads plus all it other problems: this has to be the Numero Uno global concern for diplomats & defense thinktanks. All sorts of very bad things could happen if this country goes haywire.

I know a country, also with nukes, many, many nukes, one that has already used them, and is threatening to use them again, and is still developing them, and whose economy is also imploding, and the implosion is taking the rest of the world down it. That's the country I'm worried about -- my country.

The US going down it's own Yankee built global-corperate-world-economic-flusher and its military bullying everything in sight you woof about Pakistan? It looks like the US has four times as many types, let alone numbers, of nukes than Pakistan has bombs.

Sheesh Totoneila, it is bad enough that your rulers do what they do to instigate strife and instability in the world, but do you as an, I assume, ordinary citizen have to fall in line so blindly?

Isn't Bin Laden hanging out in Pakistan? I mean, think of this... This guy is a hero to folks near the Afghan/Pakistani border... Could you imagine the fallout if we get another videotaped speech with him, but instead he tells us he's nuclear capable?

Oh dear Geckolizard, maybe you look under the right rock you will find the real Bin Laden there.

Sorry Davebygolly, I should check to see if anyone has covered the bases before posting. (I was having a leisurely lunch and fume)

Goldstein is Jewish. Osama is Muslim.

But hey, he's on the screen... Time for the daily two-minutes hate!

"I can hear you, the rest of the world can hear you and the people who knocked these buildings down will hear all of us soon." - Pres. George W. Bush, September, 2001.

Actually Adam Gadahn is Jewish and is the head of media for Osama Bin Laden. Adam Gadahn's real name is Adam Pearlman and is the son of a prominient California doctor.



You can't make this crazy up huh.

Maybe they can finally knock off Bin Laden at his kid's briss.

Gecko, the point was not a racial or religious one, the point was that, like Goldstein in 1984, the government needs to have an arch villain whether he is real or invented and to me, in the book, Goldstein was entirely a government fiction. I'm afraid the rock bit was more or less aimed at at you with the image I had of yourself as a gecko lizard. Actually my first writing of that went "If you would crawl out from under your rock....ect". I changed that as I felt you might be offended with what could be considered a personal attack.

I'mnot offended... but now I appreciate the pun. Thanks!

Sorry Davebygolly,...

Don't be.

BTW, check out the David Frost interview of Benazir Bhutto where she lays out the list of her possible assassins: one of them, she says, is the guy who killed bin Laden. Note how Frost picks right up on it -- NOT.

Easy to google.

Top economist talks up risks of climate inaction

(I had been working on the following comment for some time. It refers to Stern, so this is as good of a hook as any on which to hang it. So here goes.)

Can all economists really be this stupid?

Martin Freidman, the patron saint of modern-day economists, now springs forth as little more than the hetaera of Wall Street. Alan Greenspan, Robert Rubin, Phil Gramm and Ben Bernanke have fared little better, their names reviled across the land. Greenspan and Gramm had the special distinction of having their mugs blasted upon the nation’s television screens like common criminals. “10 Most Wanted” the headline blares:

Oddly enough, none of them really did it for the loot. It’s the selling of indulgences that landed them here. Theirs was the sin of the 16th-century priests who looked the other way to raise money for a divine project--the rebuilding of St Peter's Basilica in Rome. "As soon as the coin in the coffer rings, the soul from purgatory springs," is how Luther described it. But could all practitioners of this miserable discipline be this ideologically blinded? This prone to destructiveness?

These were the questions that passed through my mind as I was reading Martin Wolf’s column in the Financial Times. It’s about a consensus that is now forming in the business community that global warming not only exists, but something should also be done about it. “Yet,” Wolf tells us, “there is one group among whom dissent reigns: economists.”


In his article, Wolf includes a graph from a recent review by Sir Nicholas Stern. Stern is a “professional economist of high standing,” Martin Weitzman tells us. The graph shows how global GDP per head will grow exponentially over the next 200 years under two different scenarios. If the effects of climate change can be mitigated, average incomes per head will rise close to 13-fold. If not, they will rise only nine-fold. All this is according to Stern’s “modelling.”

Stern is actually one of the good guys. He’s trying to convince fellow members of his congregation to take some action on climate change. But, as Wolf matter-of-factly intones, he fails to persuade. After all, he puffs: “Economists are trained to address the costs and benefits of alternative policies rigorously. Scientists are not.”

(My eyes roll back in my head and I’m thinking: And these are the guys who have such a prominent place at our nation’s policy table?)

Many of us who take peak oil and climate change seriously, who think they pose real and significant threats to our and our grandchildren’s welfare, believed we could worship at the same church as the economists. When the price of oil soared, we believed Adam Smith’s “invisible hand” had finally begun to work, validating and valuing our concerns, pushing our agenda to the forefront and spurring conservation and investments into low-carbon energy alternatives. We were soon proven wrong.

The Trinity of orthodox economics is as follows:

1) Free markets are inviolate and infallible. They are always efficient and rational and are the best way to allocate scarce goods and resources. Or, as Paul Krugman explains, the adherents of classical economics hold that the answer to almost all problems is “to let the forces of supply and demand do their job.”

2) Monetary policy is a talisman against all economic evil. In other words, tinkering with the monetary base is all that’s needed to ward off any and all economic unpleasantness.

3) Laissez-faire is absolute. Steve Waldman puts it so eloquently: “The Leviathan [is] a wildcard too large and dangerous to risk.” The first two tenets of the Trinity--free markets and monetarism—provide perfect solutions to any and all problems, so more direct government intervention, such as regulation, fiscal stimulus or bailouts, is an absolute taboo. The result is anti-government ideology in the extreme.

And then there’s that crazy thing economists have about models. As Nassim Taleb laments: “We replaced so much experience and common sense with ‘models’ that work worse than astrology…” http://money.cnn.com/2008/03/31/news/economy/gelman_taleb.fortune/index....

Which brings us back to our original question: Can all economists really be this stupid? Or to put it another way, is there a denomination of economists where those of us, alarmed about peak oil and climate change and their consequences, might worship and feel at home?

I believe the answer to the latter question is a qualified “yes.” The dilemma is that the ranks of non-ideologically obsessed economists in the United States are so rarified that it might be difficult to find that place. Christopher Hayes talks about a mutiny that French students staged against their professors in 2000 and against the “autistic” economics they were being taught, and, as Luther did when he defiantly nailed his 95 Theses to the door of the Schlosskirche, they likewise issued their manifesto:

Too often the lectures leave no place for reflection. Out of all the approaches to economic questions that exist, generally only one is presented to us. This approach is supposed to explain everything by means of a purely axiomatic process, as if this were THE economic truth. We do not accept this dogmatism.

Christopher Hayes, “Hip Heterodoxy”, The Nation


But lamentably the uprising never reached the United States. As Hayes goes on to explain:

The rebellion spread across Europe and gave rise to a fairly vibrant Post-Autistic Economics movement in places like England and Germany. But in the United States, the Post-Autistic movement never caught fire, and dissident economists remain clustered in a handful of locations: the University of Utah; UMass, Amherst; the University of Missouri, Kansas City; The New School; Notre Dame; and in a few professional associations and journals. "We're between 5 and 10 percent in the academy," Frederic Lee, who edits the Heterodox Economics Newsletter, tells me. "That might be generous. It's not very much, but it would be like saying Jews only constitute 5 percent of Europe. Yeah, sure, after you slaughter 'em. The issue isn't that you're small--the issue is that you're there at all."

But I do, nevertheless, believe we have a small but dedicated group of heterodox economists toiling away, mostly in obscurity, in the United States. Many of these, who almost to a man (or a woman) tend to be young, have blogs. In subsequent comments I want to make a habit of quoting these reformers more frequently and point out some of the reasons they give as to precisely how and why neoclassical fairy tales don’t come true. I also want to explore some of the alternatives they offer to counter the proposals, or lack of proposals, of the defenders of the one-true-faith. Although quite bright, these non-conformists have chosen a difficult road. They deserve all the moral support we can give them in their uphill struggle to loosen the death grip that the Chicago School has had on the American academy, economy and society for entirely too long.

You keep talking about Martin Freidman. Do you mean Milton Friedman?

Sorry about that. I stand corrected.

It's that the names Martin Feldstein and Milton Freidman run together in my mind sometimes.

I did mean Milton Freidman.

Although Martin Friedman would make a much better economist :-)

Marty Friedman (born Martin Adam Friedman, December 8, 1962) is an American guitarist. He was the lead/rhythm guitarist for the thrash metal band Megadeth for close to ten years. He now resides in Japan. He hosted his own television programs, Rock Fujiyama and Jukebox English on Japanese television.

Classical/neoliberal economics works beautifully when it comes to the exchange of pure private goods in a market of many buyers and sellers, undistorted by monopolies or other market failures, and with no externalities involved. There might actually be a few things in the real world that this describes.

The trouble is, private goods are not everything. You also have public goods, toll goods, and common-pool goods. Each are different in character in ways that assure a serious market failure if a purely market-based approach is attempted on them.

The "solution" of the Chicago School boys lately has been to try to deny that these other types of goods exist, and to privatize everything. If you are looking for the origin of the phenomenon of "privatization of profits, socialization of costs", here is where it is.

Their solution doesn't work, just as the Marxist prescription of nationalizing and socializing everything doesn't work either.

Undistorted by market failures and no externalities? Reminds me of the old joke about the farmer who takes his cow to the local university for advice on increasing milk production. The agriculture department suggests new strains of grain. The veterinary department suggests some medicines.

And the physics department suggests, "consider a spherical, frictionless cow with negligible mass ... "

Ha Ha Ha

But that is why "classical" economics is classical. It's frozen in time, and mostly a mirage anyway. That doesn't stop people from trying to use it as a bludgeon. (c.f. WTO and World Bank. Consider the plight of Argentina -- a prime example of the "success" of classical economics.)

Their solution doesn't work, just as the Marxist prescription of nationalizing and socializing everything doesn't work either.

This is true. Most Marxists recognize this now. What's left is pragmatism: let the market and capitalism do what it is able to do, but what it cannot or refuses to do, let it not block and prevent action needed to protect the common good. But this pragmatism can never prevail if the ship is being steered by billionaires and those otherwise engaged in self-dealing.

The other mistake made by Marxists (including this one) was in thinking that ever increasing technology, industry and growth would eventually be appropriated and brought under control to the benefit of humanity.

That's not the way it's playing out. Instead the finiteness of the globe and its resources v. the explosive growth in population and resource consumption is leading to a global cataclysm and the need for radical retrenchment. What affect this will have on social structure, one cannot say. But I will hazard that because we are retrenching to a vastly impoverished nature v. 50, 100, 1000 years ago, a far more involved and educated version of the human animal is going to be needed to make a go of it in those circumstances. I doubt that simple wage labor will do the trick.

Marx' analysis of capitalism was right on. Capital remains a stupendous work. He did not foresee the limits to growth (and much else of course).

BTW, Marx, answering a question by his daughter: what's your favorite maxim? said, doubt all.

There are other points of view about economics besides the either/or neoclassical Capitalist vs. Keynesian vs. Marxist, for example, Ecological Economics. Herman Daley and others started the movement which became International Society for Ecological Economics back in 1989 and has grown to include members from many countries around the World. In the commentary you point to about "Hip Heterodoxy", Christopher Hayes has nothing what ever to say about the fact that all our economic activities occur within the limited boundaries of the Earth and that most all economists ignore that fact. Even the Technocrats realized (before the environmental movement) that energy was the key factor in industrial production and the energy theory of value was the proper definition of money. But the economic priesthood has pushed us into a corner based on debit money, with the resulting cycles of boom followed by bust, one of which we are seeing just now. Greed is good. So it goes...

E. Swanson

I attended a Climate Change conference about 5 years ago and was almost driven to hysterics and tears by the economists. I wrote about it here: http://globalpublicmedia.com/the_climate_wrecking_ball

UC Berkeley professors dominated the opening sessions. They stood up at the front in nice suits and ties and pronounced the results of their new econometric models of the California state-wide economy for the next 100 years. Housing would fill up the prime ag soils in the central valley. The electric grid, freeway system, levees, water and sewage treatment systems, etc. would all have to enlarge massively, not only to cope with the 2-3 fold increase in population (60-90 million by 2100), but the great stress we'd all be under from the heat waves, flood events, storm surges, etc.

I kept asking questions like, "Where does the food come from if the farm land is all paved over?"

Answer: "We import it."

I went on: "Where does all the extra electricity come from to keep those air conditioners running?"
(Note that under their models electricity for air conditioning ALONE will be greater than TOTAL electricity use today).

Answer: "This will be a challenge."

I don't think I have ever been more disappointed in the "intellectual elite class." There no more clothes among any emperors.

"1) Free markets are inviolate and infallible. They are always efficient and rational and are the best way to allocate scarce goods and resources. Or, as Paul Krugman explains, the adherents of classical economics hold that the answer to almost all problems is “to let the forces of supply and demand do their job.”

Not even Freidman believed that markets were "infallible." But what makes you think politicians, central planers, bureaucrats, or whatever is better?

From the Coyote Blog:

Government and Regulation

One argument about regulation that seems to be gaining traction through the recent financial crisis is "See, private action and enterprise is not infallible. They can make mistakes that have costs for everyone. Therefore they need to be regulated."

I don't have time for the full refutation of this, but a few thoughts:

* No one ever said that private actors in the economy are infallible or even universally honest. However, no one has ever been able to make the case that government employees are any more infallible or honest.
* There are a couple of reasons government regulators are going to be demonstrably worse than the marketplace in making decisions. The first is information -- a few actors in Washington can never have the same access to information as thousands of actors across the country or around the world. The second is incentives -- while regulatory hawks cite private greed as a bad incentive in the marketplace, bureaucratic incentives can be at least as problematic.
* Governments are subject to all sorts of rent-seeking initiatives, not to mention regulatory capture, that undermine regulatory effectiveness. Just look at the bailout bill. Wooden arrows?

For some reason, the argument "private actors screwed up" seems sufficient justification for regulation. The burden of proof should instead be "the government could have done better."

Here is a nice example of how regulation really works, from an interview with Warren Buffett:

QUICK: If you imagine where things will go with Fannie and Freddie, and you think about the regulators, where were the regulators for what was happening, and can something like this be prevented from happening again?

Mr. BUFFETT: Well, it's really an incredible case study in regulation
because something called OFHEO was set up in 1992 by Congress, and the sole job of OFHEO was to watch over Fannie and Freddie, someone to watch over them. And they were there to evaluate the soundness and the accounting and all of that. Two companies were all they had to regulate. OFHEO has over 200 employees now. They have a budget now that's $65 million a year, and all they have to do is look at two companies. I mean, you know, I look at more than two companies.

QUICK: Mm-hmm.

Mr. BUFFETT: And they sat there, made reports to the Congress, you can get them on the Internet, every year. And, in fact, they reported to Sarbanes and Oxley every year. And they went--wrote 100 page reports, and they said, 'We've looked at these people and their standards are fine and their directors are fine and everything was fine.' And then all of a sudden you had two of the greatest accounting misstatements in history. You had all kinds of management malfeasance, and it all came out. And, of course, the classic thing was that after it all came out, OFHEO wrote a 350--340 page report examining what went wrong, and they blamed the management, they blamed the directors, they blamed the audit committee. They didn't have a word in there about themselves, and they're the ones that 200 people were going to work every day with just two companies to think about. It just shows the problems of regulation.

The problem, of course, is that Fannie and Freddie were doing exactly what Congress wanted them to do -- systematically lowering mortgage underwriting standards. They won't put it that way now, but that is what spreading home ownership to lower income families really amounted to.

Posted on October 7, 2008 at 10:43 AM

I'll let one of those young dissident economists answer you. In a rejoinder to Marty Weitzman's critique of the Stern Review, Brad DeLong had this to say:

I think we are pretty certain why the configuration of asset prices does not match our economists' intuitions about what asset prices should be in a world of well-functioning markets given our estimates of preferences and technologies. It doesn't match because our financial markets are not well-functioning. They do a lousy job of mobilizing the risk-bearing capacity of society. And they appear to be profoundly myopic in the sense that average opinion has a hard time peering into the future...

On the other hand, this from Weitzman seems to me to be completely right:

To its great credit the Review supports very strongly the politically-unpalatable idea, which no politician planning to remain in office anywhere wants to hear, that the world needs desperately to start confronting the expensive reality that burning carbon has a significant externality cost that ought to be taken into account by being charged full freight for doing it. (This should have been, but of course was not, the most central "inconvenient truth" of all in Al Gore's tale about inconvenient climate-change truths.) As the Review puts it,"establishing a carbon price, through tax, trading, or regulation, is an essential foundation for climate-change policy." One can only wish that U.S. political leaders might have the wisdom to understand and the courage to act upon the breathtakingly-simple vision that a carbon price reflecting social costs (whether imposed directly through taxes or indirectly via tradable permits) could do much more to unleash the decentralized power of greedy, self seeking, capitalistic American inventive genius on the problem of developing economically-efficient carbon-avoiding alternative technologies than all of the command-and- control schemes and patchwork subsidies making the rounds in Washington these days...


Not even Freidman believed that markets were "infallible."

And to that I'll let another young dissident (well not that dissident) respond:

What's odd about Friedman's absolutism on the virtues of markets and the vices of government is that in his work as an economist's economist he was actually a model of restraint. As I pointed out earlier, he made great contributions to economic theory by emphasizing the role of individual rationality—but unlike some of his colleagues, he knew where to stop. Why didn't he exhibit the same restraint in his role as a public intellectual?

The answer, I suspect, is that he got caught up in an essentially political role. Milton Friedman the great economist could and did acknowledge ambiguity. But Milton Friedman the great champion of free markets was expected to preach the true faith, not give voice to doubts. And he ended up playing the role his followers expected. As a result, over time the refreshing iconoclasm of his early career hardened into a rigid defense of what had become the new orthodoxy.


I can easily understand why my govenment wants everybody to own a home.

By far, the easiest way of threatening people is to take something away from them. If they have nothing to take, how do you control them? Beat them? Imprison them?

Jailing people is expensive! A threat letter is much cheaper and quite effective if the threatee has something to lose.

Janis Joplin: "Freedom is just another word for nothing left to lose."

I think they went about this the wrong way though.

There are way too many financial incentives for one to own homes one does NOT live in. This encourages people to consider other people's residences as an income source. Hence landlords and lots of renters.

A few adjustments to tax law would encourage people NOT to own property unless they personally lived in it, so those properties would be owned by their residents.

A good way would be to increase property tax while simultaneously increasing homestead exemption from property tax. Property tax would NOT be a writeoff.

If homes were expensive to own as an investment, but much cheaper as a residence, we would see increases in individual homeownership.

"House flipping" has got to be one of the most unproductive (for the nation as a whole) activities imaginable, but our tax law foments it.

I see almost all of our problems not being fundamental in nature at all, but only because LAW foments these problems.

Watch what you say to someone with nothing.
It's almost like having it all.

~ Todd Snider, "Looking for a Job"

One of my favorite musicians--
You will never hear him on Clear Channel

No, in fact it's amazing we hear him at all. I like one of his current rants:

“I may share my opinions with you, (but) I don’t share them because I think they’re smart or because I think you need to know them. I share them because they rhyme.”

He said that just befoe he played CCRWRSWAM* here recently.

(*Conservative Christian Right Wing Republican Straight White American Males, in case anyone was curious)

I believe the Irish saying is: "Never fight an ugly man...he has nothing to lose"

If nothing is everything then I will have it all - "Gone" - Eddie Vedder

Actually what happened at Fannie Mae and Freddie Mac was that regulation was pulled and it was a organised theft. I won't get political and show where it was 100% Republicans who orchestrated this fiasco or try and belabour how it was Dems who were 100% agaisnt it.

Nope, Iam not gonna do that !....Iam gonna let FAUX news do that for me, you bethca !


AP IMPACT: Mortgage firm arranged stealth campaign
Monday, October 20, 2008

By PETE YOST, Associated Press Writer

WASHINGTON — Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.

In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI's chief executive is Doug Goodyear, whom John McCain's campaign later hired to manage the GOP convention in September.

Freddie Mac's payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel's bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.

McCain's campaign manager, Rick Davis, or his lobbying firm has taken more than $2 million from Fannie Mae and Freddie Mac dating to 2000. In December, Freddie Mac contributed $250,000 to last month's GOP convention.

Where do billionaires want low income families to live? In cardboard boxes under bridges? Perpetually paying 50% of their income in rent to make billionaires richer? Fannie and Freddie are poor substitutes for what a large percentage of low income families need, energy efficient small homes at prices they can afford. Instead of creative financing schemes the government should have built homes for low income families and sold them on land contracts which the low income people could afford. The Market though doesn't want the competition for renters and buyers. The Market doesn't like competition for government support. The Market wants things like tax credits and depreciation allowances and all manner of deductions and tax abatements so they don't have to pay taxes at the same percentage as working families. The Market is about keeping the poor working harder and harder for less and less so the rich can get richer and richer. The Market doesn't give a damn about what people need. The Market only cares about minimizing costs and maximizing profits.

Zoning laws which allowed them to build houses they could afford instead of McMansions would have solved the problem, but would not have provided the same income for the banks.

Whenever the economics issue comes up, I like to point these people to their Bible of economic dire consequences IF we (the US) adopted the Kyoto Treaty. There is this little position paper written by the EIA that predicts terribly expensive gasoline (up to $1.60 per gallon in 1996 dollars if memory serves) by 2012. there was another little think tank paper on the number of manufacturing jobs tht would be lost (somebody forgot to change the water in that think tank) that is much smaller than the amont the US has actually lost in that same period.

Of course, there was always Julian Simon.

Hi, everyone. Jeffrey (westexas) posted some net export decline rates a few days ago. I used them in a presentation yesterday and thought others might be interested in seeing them.
Decline Rates

Thanks for putting all of these together.

All five of these countries are, or were, major net oil exporters--exporting one mbpd or more. The initial decline is measured from the approximate final production peak. For the UK and Indonesia, the final decline rate is the last year of net oil exports. For the other three, it's the 2007 data.

Key point: five countries with vastly different demographic factors, such as per capita income, and vastly different energy policies, e.g., the UK taxes energy consumption, while Indonesia subsidizes energy consumption, but all five show a consistent pattern, an accelerating net export decline rate.

Note that there is a big difference between percentage declines, and decline rates per year. For example, consider production increases. A 100% increase in production in one year doubles the production, but a 100%/year rate of increase in production increases production by a factor of 2.7 in one year. It works the same way with production declines. A 230%/year decline rate causes production to fall by about 90% in one year.

I bumped into an old friend of mine at a party at an art gallery the other day. She's now become a university lecturer in economics, not quite the future she'd planned. Being talented and very ambitious, she'd imagined she'd scale the heights of the financial world. At least that's what she assumed in university.

That didn't work out bascially because she had the disarming habit of not taking the guy's world seriously enough, and if men dislike one thing in a woman it's if they don't take them or what they do, seriously enough. Not only that she had serious doubts about the established dogma about the nature and character of capitalism and how it worked, or didn't, in practice. But she, as far as I could see, thought that her brilliance would see her through. I always told her she should keep quite until she was the CEO of a large bank and then she could afford to become a maverick.

Anyway it didn't work out, so she moved from the private sector to a government department. Once again she assumed she'd be protected and could perhaps influence her departments attitude to the massive mountain of debt that was being accumulated and which she was very concerned about.

No luck here either. Maybe she just wasn't a team player. She told me it was like part of strange, male, cult; were alternative voices were frowned opon and drowned out.

So she got a job teaching instead, but she once again failed to move on up as she hoped she would, even here it seemed to be a boys world, a team world; and she clearly didn't quite fit in, probably because of her gender, but certainly because of her views.

It's not as if she was a Marxist or an extreme left-winger. I always thought she was a conservative politically. On the other hand, she always found it difficult to just accept dogma and she had an advanced and very critical attitude to received wisdom.

Over the last few years she's been accurate to an extraordinary degree in her abilitiy to see clearly where we were going economically. Yet, nobody was ready to listen, the guys were all on a 'high'. We'd entered a new world, a post boom 'n' bust world. The end of history. We had arrived.

Basically she felt the entire system was full of contradictions and hidden fault lines, that instability was built into capitalism. I suppose she could be described as a neo-merchantilist which might suit a post-peak world rather well.

What irritates me and angers me, is that she, in my opinion, had the ability to go really far, yet she was 'filtered out' by the system, and now she's been effectively marginalized, far away from real influence and power. I suppose there are lessons here, yet I'm not sure exactly what they are.

Reminds me of that article about Brooksley Born.

In 1997, the Commodity Futures Trading Commission, a federal agency that regulates options and futures trading, began exploring derivatives regulation. The commission, then led by a lawyer named Brooksley E. Born, invited comments about how best to oversee certain derivatives.

Ms. Born was concerned that unfettered, opaque trading could “threaten our regulated markets or, indeed, our economy without any federal agency knowing about it,” she said in Congressional testimony. She called for greater disclosure of trades and reserves to cushion against losses.

Ms. Born’s views incited fierce opposition from Mr. Greenspan and Robert E. Rubin, the Treasury secretary then. Treasury lawyers concluded that merely discussing new rules threatened the derivatives market. Mr. Greenspan warned that too many rules would damage Wall Street, prompting traders to take their business overseas.

“Greenspan told Brooksley that she essentially didn’t know what she was doing and she’d cause a financial crisis,” said Michael Greenberger, who was a senior director at the commission. “Brooksley was this woman who was not playing tennis with these guys and not having lunch with these guys. There was a little bit of the feeling that this woman was not of Wall Street.”

[Sometimes] a new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.

--Max Planck


I would like to suggest that maybe there was something more sinister behind Greenspan's, and especially Rubin's, opposition to the suggestion that the "unfettered, opaque" derivative market be regulated than merely myopic free market fundamentalism, and groupthink among the high and mighty. Let's not forget that Rubin, like Paulson, has a long history with the Goldman Sachs gravy train, and doubtless benefited personally from this "opacity" he so stridently insisted on to the tune of tens of millions, if not more.

As for Greenspan, I'm not immediately aware of such a plausible basis for a sinister ulterior motive, but I find it hard to believe that one couldn't find one if one looked hard enough.

Heard a great quip at a seminar yesterday, "If you're not at the table, you're on the menu".

How about this: If you are not a part of the solution, you are a part of the precipitate.

"Chemists have solutions" - copyright American Chemical Society

"I suppose there are lessons here, yet I'm not sure exactly what they are."

I forget who said it the other day but it has stuck in my head since;

"Your either a rancher or your ranched" if you opt out of both you are dismissed.

Iv'e been dismissed so now I get to go out and play. Yea!


It was the head of the CIA at the end of the recent movie (Cohen Brothers, with Brad Pitt, etc.) - I forget the name.

Yes, there is a lesson: People who tell the people at the top of large organizations what they don't want to hear never make it to the top of those large organizations. A few top dogs, if they are exceptionally wise, might keep a few dissidents around just to provide an early warning system and an antidote to groupthink. I emphasize, these are very much the rare exceptions and not the rule. None of those token dissidents should ever labor under any delusion that they are on the ladder toward the top; they are strictly hired help. Furthermore, they are usually the very first to get the axe when the new top dog ascends to his lofty throne.

This isn't the way it should be, and it explains a lot of what is wrong with our governments, businesses, universities, and other institutions. Unfortunately, this is the way it is. Too bad no one was able to explain this to her up front.

"Prophet" has never been a very rewarding profession, at least as far as any worldly rewards are concerned. If that is your chosen career path, you had best adjust your expectations to look for purely psychic or spiritual rewards, because those are about all that you are going to get.

I agree: prophets have an alarming tendency to get strung up. Like souperman I have a tendency to opt out of a lot of these things, I have no interest for these types of games.

In my view, humans are still little better than hairless apes. We have a strong tendency to form tribes, and unfortunately it is easy to be ostracized if you don't fit in. If you want to change the course of the tribe usually you have to do it in such a way that you are working with the tribe rather than against it. Where did we get this idea that people are perfectly rational?

Maybe it's because for a long time large numbers of people believed we are created in god's image and therefore must be more perfect than other animals (and some people still do). Speaking of which, I believe that the evolutionary advantage of religion is that enables people to work together in larger tribes than what is usually practical using the more usual techniques, like the tribalism your friend seemingly encountered.

If my big tribe can corner the good lands from your tiny tribe, and your kids stave while mine get fiefdoms, doesn't than mean Darwin or God is on my side? Seems like you lose either way?

Not trying to be confrontational, just pointing out that both tendencies you mention, religion and tribalism, would appear to have self-reinforcing aspects.

Or maybe there's little difference between them...

Religion not the only path to altruism

Humans are evolved to be acutely sensitive to our reputations as do-gooders in our social groups because this promotes strong cooperative bonds that help the species. This psychological mechanism was originally unrelated to religion, the authors write in the Oct. 3 issue of the journal Science.

The review also shoots down the idea that religion is necessary to make people choose to engage in altruistic behavior — or do something that benefits others at your own personal expense. Religion has no monopoly on good behavior today, Norenzayan said.

In fact, the courts, police, cameras, credit records and other justice-related authorities can serve the same purpose nowadays, encouraging proscial behavior among large groups of strangers.

In fact, the courts, police, cameras, credit records and other justice-related authorities can serve the same purpose nowadays, encouraging proscial behavior among large groups of strangers.

Social behavior like the bees, perhaps. In the very root definition of "social". I'm not so sure that "society" increasingly maintained by state force is stable; it's certainly not something I'd consider desirable. Besides, even martial law or gang control would qualify as "society" in that sense. Cameras and surveillance don't get me to altruism or virtuous behavior; they take me to a world where whatever one can get away with is OK. The meltdown of the financial system is an example of such a "social" system backed by the state. Authoritarianism, fascism and totalitarianism are not what we'd typically consider "altruistic" and not what a typical person would understand as positive social behavior.

More prisons makes society more "prosocial". Ayuh.

cfm in Gray, ME

That's kind of the point of the article. Religion is no different; the motivation, for most people, is that they believe someone's watching. Whether it's god in heaven or a security camera.

I had a Calvinist friend once, and I asked her, if predestination is real - if your fate, heaven or hell, is already decided - what is the motivation to be good? The elect can be bad and still go to heaven, while those not chosen might as well party, since no matter what they do, they're going hell.

She replied that what mattered what was other people thought. That is, even if you secretly thought you were probably going to hell, you wouldn't want your neighbors to know. So everyone had incentive to at least pretend they were one of the elect, and that meant being virtuous.

Be prepared, and be careful not to do
Your good deeds when there's no one watching you

Any post which uses Tom Lehrer lyrics in a well-reasoned argument automatically gets an "up" arrow!

But it's irresponsible to use 'Religion' as a single definition like this.

Like 'Jazz', the word has evolved and mutated into just countless directions, many completely opposite from each other. The monks protesting in Burma (and magically disappearing) are a different part of 'Religion' and how it can bind and inspire a society, or try to.. than that of this Baptist woman you mentioned.

The most helpful reactions to extremism are not just invoking the opposite extreme.

Humans are evolved to be acutely sensitive to our reputations as do-gooders in our social groups because this promotes strong cooperative bonds that help the species.

The author of this statement doesn't understand natural selection. No evolutionary biologist would make such an explicitly group selectionist statement. George Williams demolished such thinking in his 1966 classic "Adaptation and Natural Selection." For insight on reciprocal altruism, read Robert Triver's "Natural Selection and Social Theory."

"Reciprocal Altruism" is an oxymoron.

From Dictionary.com
Instinctive cooperative behavior that is detrimental or without reproductive benefit to the individual but that contributes to the survival of the group to which the individual belongs. The willingness of a subordinate member of a wolf pack to forgo mating and help care for the dominant pair's pups is an example of altruistic behavior. While the individual may not reproduce, or may reproduce less often, its behavior helps ensure that a close relative does successfully reproduce, thus passing on a large share of the altruistic individual's genetic material.

What stands out here is the word "Instinctive".
If altruism is instinctive then it's beyond our control and we do it to pass on genetic material or assist the survival of the group.
If it is not instinctive then we do it for some other reason, whether it be deception, selfishness or because of a religious belief or patriotism. In most cases altruism is mistaken for simple cooperation.
Similar to the "Prisoners dilemma"

So what is altruism as we like to perceive it?
Does it have a different meaning because we are human? Do we like to think we are above the apes because we hold our altruism NOT to be instinctive.

If our perceived "altruism" is a survival mechanism then which is stronger, self preservation or altruism? Self preservation is instinctive too.


Humans are evolved to be acutely sensitive to our reputations as do-gooders in our social groups because this promotes strong cooperative bonds that help the species.

And what will we do about sociopathy? Because this is not incompatible with the previous statement, that we are sensitive to our reputations. There are plenty of effective sociopaths, effective because no-one sees their detrimental behavior, while they put beneficial behavior on display publicly to enhance their reputation.

In fact Hypothetically, the courts, police, cameras, credit records and other justice-related authorities can serve the same purpose nowadays, encouraging prosocial behavior among large groups of strangers.

Altruism is based in mutual support, cooperation, love, respect, all that happy shit. Whereas courts, police, and anonymous surveillance are based in coercion, suspicion, and fear.

Discouraging anti-social behavior isn't the same as encouraging pro-social behavior.

Ahh yes, but what's to prevent your big tribe from falling apart due to fighting over the spoils? You need a cohesiveness to keep a big tribe together, something that's easier to do with smaller groups. Small groups that are separated from each other by distances large enough so that each member doesn't see most of the other members every so often would be especially difficult to keep together because separated peoples would start to diverge culturally. The idea is that religion aids this cohesiveness by having some sort of larger set of rules that we follow beyond the normal tribal ones that we share with other primates.

But don't put too much weight on it, I'm no biologist, nor a paleontologist.

And then your displaced tribe can buddy-up with a couple of others to come kick my now-fractured sub-tribe's rear off "your" land. Unless we have to band together to fight off the Huns.

Anecdotally, the tribe vs sub-tribe arrangements seems to be ever-changing and hierarchical. Perhaps the maintainable size of the tribe is a function of real or perceived external stresses? People certainly tend to overlook small differences to band together when under duress, yet they invent points to argue about and create rather arbitrary splits when they have nothing better to do.

Heck, my kids fight at home like they hate each other some days, but they stick together if one is getting picked on at school. I have some pretty funny stories about my older girl and a wannabe bully picking on a younger brother....all at their school which is itself a concocted tribe (remember the "pep rally" fervor versus another school?), all inside the same city which vies against another peer city on the other side of the state, but which are of course both in the same Red state, which bonds with other heartland states versus the coasts in same aspects, but all are part of the US, which competes but bonds with the West versus the East and the Evil Empires. etc. etc.

If only we had a interplanetary enemy we might be able to resolve this peak-oil collapse problem!

Unless we have to band together to fight off the Huns.

Hey! You got something against Huns?! I'll have you know some of my closest friends are direct descendants of Atilla. You sure you want to mess with us? ;-)

Bagehot's gift of double-mindedness appears strikingly in his short work Physics and Politics... It undertakes to apply Darwin to politics, but Bagehot is no Social Darwinist. He begins indeed by showing "Natural Selection" in the early stages of the march to civilization--the better organized, more cooperative groups conquer the less unified. But then more and more other qualities, initiatives, and ideas--liberty, free discussion, written law, habits of calm reflection, of tolerance and generosity--conduce to survival, because they make for an ever higher degree of cohesion. These virtues are the strengths of the national state, whose power a less developed people cannot successfully withstand.

Jacques Barzun, From Dawn to Decadence

Ah, the good old days, when the "march to civilization" was still advancing, and "the national state" was still the dominant power. How times have changed!

Chomsky said that systems self-select individuals who reinforce the preexisting values and mores. By the time you've reached the top, you've passed so many gates and hurdles that the rough-edged and the dissenters are all peeled off. It's no conspiracy, but neither is it coincidence.

That's basically a restatement of Peter's Principal

The Peter Principle is the principle that "In a Hierarchy Every Employee Tends to Rise to His Level of Incompetence." While formulated by Dr. Laurence J. Peter and Raymond Hull in their 1968 book The Peter Principle, a humorous treatise which also introduced the "salutary science of Hierarchiology", "inadvertently founded" by Peter, the principle has real validity.

This has all been known for so long-- and yet there is no way out because people's lives are so short relative to the time that it takes to become competent in any field you care to choose.

Probably the best we can hope for is Writerman's quote from above "Basically she felt the entire system was full of contradictions and hidden fault lines, that instability was built into capitalism." Periodic re-sorting keeps things moving. Otherwise, we would probably evolve into something like an ant hill.

The larger the organization, the worse these types of phenomena tend to be. A good case could probably be made that all large bureaucracies are inherently and terminally disfunctional. There really are some good reasons for tying to keep human organizations as small scale and local as possible, and some of those reasons are of the biosociological types discussed in this thread.

Some people call it an "in-bred attitude."

Amen brother, AMEN.

What irritates me and angers me, is that she, in my opinion, had the ability to go really far, yet she was 'filtered out' by the system, and now she's been effectively marginalized, far away from real influence and power. I suppose there are lessons here, yet I'm not sure exactly what they are.

The lesson is that people get in power by telling others things they want to hear, not things they don't want to hear.

She was telling them things they didn't want to hear... That much of the economy, as it is currently structured, is disfunctional; that there was impending economic disaster; and that change was needed to avoid or mitigate future issues.

They wanted to hear that everything is running smoothly and things will continue to run smoothly (Who wants someone to tell them they're a captain of a sinking ship?). And, to reinforce this, many of the folks in power surround themselves with folks who believe the status quo is "Situation Normal", and then hand the reins of power over to them. I beleive we've seen this in many places... The handling of the terrorist problems prior to 9/11; the handling of the current economic mess; and the Iraq war are a few. This herd mentality has gotten us over many a cliff...

And I truly feel bad if she was marginalized because of her gender. I beleive that women have as much to offer to the world as men do, and anyone who beleives differently is just a bigot.

She may not have been marginalized just because of her gender...but IME, if you're not an old, white, male, you have a lot less leeway for dissent.

This is probably true, but the "fresh dissenting voice" is never very welcome if it challenges the status quo, especially from a new grad. Every company is a team sport, and you have to expect to play along, fill your role, and learn the ropes before your opinions count for much with the old guard -- self-affirmed brilliance is not a very marketable commodity! If you don't like the team sport, start your own company and build it your way -- not everybody fits the traditional company role.

For most, it's not too hard to find a place where you can work hard and contribute value without selling your soul, until you have enough years of "hard knocks" to have some street cred and can afford to stick your neck out. Asking the right questions during interviews and being willing to research firms before applying helps a lot too. There are plenty of firms that I've never wanted to work for, even though I'm successfully approaching the "credible old white male" point of my career. But then, I have swallowed my pride and shut my mouth to keep my family fed a couple of times too. Being right doesn't necessarily pay the bills.

Really this reality is what bugs me about Kashkari -- you only get where he is in the time he did by carefully toeing the party line and climbing the ladder behind low-risk coat-tails. The chance that he will display brilliance and independence now is pretty much nil, I fear.

My corner of the finance world (hedge fund) seems to be a bit different. Here, nobody cares what you look like, what reproductive organs you have or what your views on the economy are. They care if you can make money. If you make a lot of money, and you are a communist lesbian eskimo, they will love you. If you are a graying white male with "III" at the end of your name, and you can't make money, they have no use for you.

There are still office politics to be sure, but it all comes down to performance in the end.

Yeah, if they lose money they are given the boot, with a golden 'chute.

One of the pitfalls of viewing the world through the prism of race or gender is that it opens the door to using it in unprincipled ways.

Did you notice in the CNN story on the HENRYs (High Earner, Not Yet Rich) who felt they were being "penalized for their success" that one of the five couples was black and one was a lesbian? You think there might have been a little editorial (and statistical) bias there?

Money Income of Households

Household type            Less than $15,000     $100,000 or more

Headed by Single Woman         29.6%                   5.5%
Headed by Single Man           18.5                   10.1
Black or Hipanic               33.4                    8.5
White                          12.8                   18.3


The right has certainly leaned how to play those cards too.

Did you notice in the CNN story on the HENRYs (High Earner, Not Yet Rich) who felt they were being "penalized for their success" that one of the five couples... was a lesbian?

By virtue of being a lesbain couple, I'm (pretty) confident that there are no kids in the picture. Yeah, a lot of us would be a lot richer and have a lot more lucrative career paths if we did not have kids...

...but, on the sustainability side, this couple is doing everyone a great service by not having kids. Population is one of the key issues that will drive things in the future.

And, on the flip side, I'd be willing to say that the cure to all of our population problems is if someone could find a way to make everyone gay. Would anyone here disagree? If every guy and gal on the planet were gay, we'd solve pretty much all of our long term problems (except social security, but hey...)

(And for the record, I am not gay, but did my bit for population control by getting fixed.)

No, the lesbian couple has two kids.

Could be adopted, though.

IME, a lot of gay couples have kids. Sometimes from previous straight marriages, sometimes adopted, sometimes via surrogate/turkey baster.

Check the U.S. Census figures for percentages of households with single parents raising children.


Ancient civilizations banned adultery and fornication in order to facilitate child development and training.


Widows and windowers are counted in this group too.

Also separated married people... Including cases where the father (or mother) is incarcerated.

So... There is indoubtedly more than just single moms there. And, if you haven't heard my story yet, I am a single father due to my wife's death, so those 'adultery' and 'fornication' mores don't apply to my situation.

Ancient civilizations banned adultery and fornication in order to facilitate child development and training.

But they didn't. At least, not all of them did.

The Christian view - no sex outside marriage, no marriage except to a fellow Christian - seems designed to out-breed competing cultures.

All cohesive social groups have strict rules about who you can marry and who you must not marry; this fact is just as true of Native American tribes as it is of Christianity. And anyway, Christianity adopted its rules on sex and marriage from Judaism; the ancient Christian and Jewish cultures were in strong contrast to the dominant Hellenism that ruled much of the Mediterranean world after the conquests of Alexander the Great. The anti-gay position of Christianity is also adopted right out of Old Testament Judaism. It is interesting that Jesus himself never pontificated on sex and marriage, except perhaps when he preached foregiveness for the woman taken in adultery. Islam also adopted most of its ideas right out of the Old and New Testaments; the exception being that Mahomet advocated polygyny (and for good reason--shortage of men).

In the Egyptian Book of the Dead one was supposed to be able to confess to not having committed adultery before going on to glory. That goes back more than four thousand years ago. The Old Babylonian code of Hammarubi c. 1800 B.C. banned adultery. Christianity, Judaism, and Islam were supposed to be against adultery. In one case Mohammed was supposed to have taken his adopted son's wife to be his own wife; to some it is adultery, to others all that was needed was a divorce decree and a wedding.

The census figures above were probably percentages of children in single parent households as some single parents had several children. Most single parent households are not headed by widows or widowers given the divorce rate was nearly 50% recently and remarriages ended in divorce also.

Marriage in the bible had a lot to do with economics. For example, if your brother died, you were REQUIRED to marry his widow. The thinking went that she would have no way to provide for herself and her children, and it became your responsibility.

Nowadays, this would be considered highly inappropriate (marrying your dead brothers wife) but then it was seen as necessity so that your neices and nephews didn't starve.

And ladies... if your *sister* dies, sometimes *you'd* be required to marry her husband...


Come now, Bronze Age Fiction is a genera that should be read with laughter and amusement, not for guidance.

Yes, until recently, marriage was a legal contract. Peasants might not bother marrying. No property, no reason for a contract. Hence "common law marriage." Originally, the church took little interest in marriage.

In the U.S. marriage still is a legal contract. If you don't believe me, try getting a divorce without going through the courts.

I usually don't ask for sources for statements but this one tends to cry out for such.

How long ago was 'recent'? Peasants did not own property?
Which church? The Catholic believes very very heavily in the family and marriage as I am sure you can recall when the King of England wished an annulment and the end result?

And then lets remember the marriage that Jesus attended back in ye oldense dayse.



  • http://www.americancatholic.org/newsletters/cu/ac0596.asp
  • Historically speaking, it was not until the 12th century that marriage took its place among the other ritual actions which we now name the seven sacraments. Throughout the Middle Ages there was no singular wedding rite for Christians. The Catholic wedding ceremony that you might witness today dates in large part from about the 16th century.

  • http://www.mnsu.edu/emuseum/history/middleages/pdailylife.html
  • The [peasant]couple were married in a simple ceremony unlike the elaborate marriage ceremonies today. The actual ceremony differed from place to place. In the early part of the Middle Ages, the Church was not very involved in the marriage ceremony and it was usually conducted at home with several witnesses present.

    Even witnesses were not required. It was the Council of Trent in 1545 that made witnesses and a priest mandatory.

    Speaking of economics, charging interest used to be considered sinful.

    "REQUIRED to marry his widow"

    We, most here, are not Jews and therefore this covenant(Mosiac) does not apply.


    The ignorance here about the bible is astounding. I suppose thats why so many come up with the Christain Fundamentalism Flogging mantra.

    Airdale-forgive me while I speak the TRUTH

    I was making a historical, not liturgical point.

    Where were you yesterday? I was hoping you would weigh in on the HENRY's whining about making "only" $350K a year and struggling to get by.

    The Old Testament about marrying your dead brother's wife only applied if they hadn't yet produced children. It was all about continuing the family lineage and nothing to do with providing for widows and orphans. Provision for widows and orphans was considered a community responsibility.

    OTOH...China, the most ancient existing civilization, had concubines. There are concubines in the Bible. In many societies, women were expected to avoid sex outside marriage, but not men. But in some societies, it is believed that it takes more than one man to father a child, and a pregnant woman would be expected to have sex with more than one man throughout her pregnancy. In ancient Japan, in some areas, men would have young male lovers, along with a wife.

    This I can agree with.

    Jesus himself never pontificated on sex and marriage, except perhaps when he preached foregiveness for the woman taken in adultery.

    This statement is totally incorrect as I am sure any one who seriously has read the bible can point out verses where he reaffirms marriage and speaks of it. As to SEX? I doubt that word existed back then. Marriage and fornication are mentioned quite a bit but many chose to act as those that wasn't there,simply so they can do as they wish.

    I would give you the chapter and verse but I will leave that up to you to find.

    This is exactly how stuff gets perpetuated over the net. Someone makes a statement that is incorrect but everyone else 'buys' off on it.

    There is also his statements to the woman who has several husbands and the one she is living with is not her husband. He also reaffirms the commandments. This speaks as well of 'coveting'.


    Jesus went to at least one wedding, in Cana; they ran out of wine and he helped out.

    AFAIK, he did not discuss marriage at the wedding, however. But the wine was good (or, so I've read).

    But the wine was good (or, so I've read)

    Jesus himself was no slouch either... or so they say.

    Rowan Atkinson Amazing Jesus


    Jesus was in favor of marriage. He may have been married by age 18, which was considered by ancient Israelite tradition to be the ideal age for marriage for a man. It never says in the Bible whether or not Jesus was married or had children, but most Jewish men were married and fathers by the age of 25. Indeed, marriage was considered to be a social obligation (and is still considered as such by Orthodox Jews). Show me chapter and verse where Jesus preaches in favor of marriage or against fornication or against homosexuality. He was undoubtedly in favor of wine at weddings. We have no idea what his ideas were concerning fornication or homosexuality.

    Yeah, for all we know Jesus could be gay...

    Matthew 19:1-12

    Ironically, the masterwork of Christianity’s most powerful medieval philosopher was inspired by a false report. Alaric’s sack of Rome, it was said, had been the act of a barbaric pagan seeking vengence for his idols. (This was inaccurate, actually, Alaric and a majority of his Visigoths were Arian Christians.) Even so, the followers of Jesus were widely blamed for bringing about Rome’s fall; men charged that the ancient gods, offended by the empire’s formal adoption of the new faith, had withdrawn their protection from the Eternal City. One Catholic prelate, the bishop of Hippo—Aurelius Augustinius, later Saint Augustine—felt challenged. He devoted thirteen years to writing his response. De civitate Dei (The City of God), the first great work to shape and define the medieval mind. Augustine (354-430) began by declaring that Rome was being punished, not for her new faith, but for her old, continuing sins: lascivious acts by the populace and corruption among politicians. The pagan deities, he wrote, had lewdly urged Romans to yield to sexual passion—“the god Virgineus to loose the virgin’s girdle, Subigus to put her beneath a man’s loins, Prema to hold her down…Priapus upon whose huge and beastly member the new bride was commanded by religious order to stir and receive!”

    Here Augustine, by his own account, spoke from personal experience. In his Confessions he had described how, before his conversion, he had devoted his youth to exploring the outer limits of carnal depravity. But he wrote, the original sin, and he now delcared that there was such a thing, had been committed by Adam when he yielded to Eve’s temptations. As children of Adam, he held, all mankind shared Adam’s guilt. Lust polluted every child in the very act of conception—sexual intercourse was a “mass of perdition [exitium].” However, although most people were therby damned in the womb, some could be saved by the blessed intervention of the Virgin Mary, who possessed that power because she had conceived Christ sinlessly: “Through a woman we were sent to destruction; through a woman salvation was restored to us.” He thus drew a sharp line. The chief distinction between the old faiths and the new were in the sexual arena. Pagans had accepted prostitution as a relief from monogamy. Worshipers of Jesus vehemently rejected it, demanding instead purity, chastity, and absolute fidelity in husbands and wives. Women found this ringing affirmation enormously appealing. Aurelius Augustinus—whose influence in Christianity would be greater than that of any man except the apostle Paul—was the first to teach medieval men that sex was evil, and that salvation was possible only through the intercession of the Madonna.

    William Manchester, A World Let Only By Fire

    Aurelius Augustinus—whose influence in Christianity would be greater than that of any man except the apostle Paul—was the first to teach medieval men that sex was evil, and that salvation was possible only through the intercession of the Madonna.

    Like a... Virgin?

    Those who say poverty is solely a minority issue have a hard time explaining Asian success.

    I have heard elsewhere (these tables support the assertion) that to stay out of the poverty class, you just need to (a) stay in school through 12th grade graduation, (b) be married or have no kids, or (c) have a full time job. Statistically that is sufficient to not be "poverty" level. If you do all 3 and are over 25, you're pretty much guaranteed to be at least 2x poverty level, even if you have kids.

    If you drop out of high-school, have a kid, stay single, and work part-time at an age less than 25 (not an unusual combination, since the factors correlate) you are quite likely to be very poor.

    Society can certainly tilt the playing field, but a lot depends on how the individual chooses to play ball.

    If you're unlucky enough to be born into a rathole so that you have to go to the corner to score and smoke your crack, you're very likely to become permanently stained as a felon, ex-con, junkie dirtbag whatever. Try looking for employment under those conditions.

    The same soul born into wealth can expect to buy his powder cocaine in the security of his Ivy-League frat house, free from the prying eyes of police, and perhaps even go on to be President someday.

    Hard work and all the other virtues are neither necessary nor sufficient conditions for escaping poverty.


    My guess is that your friend is up against much more than a prejudice against women in economics: She is up against a big oversupply in economists. How many economists do we need? Not very many. How many economists do we have? Lots, and the graduate schools keep churning them out. Notable women have done well in economics since the time of Joan Robinson, in the thirties. Two of my daughters have degrees in economics, and they both have good jobs at a fairly young age.

    We don't even need more economists to get more good ideas. There are plenty of good ideas presented by economists (e.g., Implement a stiff tax on gasoline.) that nobody pays attention to in the U.S. Economists have come up with better ideas on the redistribution of income, namely, a negative income tax, than we now have in place. There is an extensive literature on steady-state economics.

    It's all about being liked in a sense,the more well liked you are, the more influence you have.

    Robert Cialdini studied how “influence professionals” exploit our reflexes. His findings, along with those of other psychologists, explain the ways in which optimism can trump logic.

    Cialdini pointed out that we are more apt to comply with those we like—that is, people who are similar to us and people whom we find attractive. We are therefore more likely to shun someone who pours cold water on our pet ideas. Thus, people who want social influence will reinforce—or, at least, not dispute—optimistic assessments.

    To smooth their dealings with others, people resort to white lies—large and small—with startling frequency: A study by social psychologist Robert Feldman found that 60 percent of his subjects told lies, at an average frequency of two to three lies per ten-minute period. No surprise that our co-workers and colleagues reinforce and amplify our rose-colored views more often than they dispute our assessments.

    "That millions of people share the same form of mental pathology does not make those people sane." Eric Fromm

    Or, for a slightly different twist on the same idea:

    It's no measure of health to be well adjusted to a profoundly sick society.
    — Jiddu Krisnamurti

    Or, as Emily Dickinson wrote:

    MUCH madness is divinest sense
    To a discerning eye;
    Much sense the starkest madness.
    ’T is the majority
    In this, as all, prevails.
    Assent, and you are sane;
    Demur,—you ’re straightway dangerous,
    And handled with a chain.

    That seems to be the goal of modern psychiatry--
    Smile and be happy while you rape the planet!
    If you are having trouble with a brutal economic and social system, it is time to look at Father Issues.
    Just have some Prozac and be happy! Don't think to much. Smile, it is morning in "Merika".

    All religious cults are packets of viral memes, and yes social cohesiveness of groups is the evolutionary benefit that allows the viral infiltration. Religions helps boost overpopulation, critical thinking does the opposite.

    ... Or as the Lord of the Flies said:

    You too should eat sh*t, after all; us ten billion flies can't be wrong.

    On the other hand, Nouriel Roubini suddenly has rock star status:


    But after making a series of uncannily accurate predictions about the global meltdown, Roubini has become the prophet of his age, jetting around the world dispensing his advice and latest prognostications to politicians and businessmen desperate to know what happens next – and for any answer to the crisis.

    yes, it usually doesnt pay to be right, especially when you are right about something "they" dont want to hear. conform, go along to get along, dont rock the boat.

    corporations are paying big bucks for mediocrity. same applies to university athletics.

    Her name would't be Cassandra by any chance, would it?

    All animals seek pleasure and avoid pain.

    Information can be either a source of comfort or discomfort.

    Therefore, anybody who causes pain by providing information will be discredited by those potentially most affected by it.

    TOD seems to be an exception to that received wisdom.

    Not at all. the rating system is very strongly normative, and when fully implemented should very effectively suppress all dissent, by making it 'disappear'.
    If they had had that in time, the Renaissance would never have happened.
    The 'party line' may be rather different from the world outside, but political power here is both striven for and enforced.
    It's quite amusing actually, when people genuinely imagine that they are non-political, but they just happen to have ended up running things and determining the peak oil agenda on more than one site.

    Hardly. We certainly have an editorial view here; if we didn't, I suspect most people here would not bother to visit. But we aren't the only site on the net. Anyone is free to start their own blog, for the same price they pay to post at TOD.

    The Greeks came up with a myth ("Cassandra") as a kind of warning to people and societies to not filter out voices that might give apt advice before a disaster. But anything that threatens the status quo is of course filtered out, and the myth pays heed to this fact.

    It has been observed that in the face of a threat the society will redouble efforts to continue going down the same path it has always followed. No matter how hopeless, no matter how useless, no matter how ineffective.....the previously trodden path is the only one under consideration. In fact, perhaps as things become more hopeless, people feel the need to find security in the status quo.

    In fact, perhaps as things become more hopeless, people feel the need to find security in the status quo.

    I don't think that's it. Tainter argues that "scanning behavior" appears as a society starts running out of resources. People can sense that what they've been doing isn't working, and they start looking around for something else.

    In some cases, they find something that allows the society to continue, but if they don't, eventually scanning behavior will cease...because they no longer have the resources for it. The society becomes focused on doing what they're already doing more efficiently. This is often a trap, since once the resources truly run out, building stone heads very efficiently isn't much of a help.

    In short, I don't think this is a psychological urge toward familiarity, but in fact a practical short-term response. As Nate often points out, we aren't good at looking at the long term. And the more invested we are in one system, the harder it is to change it. Building our current oil infrastructure was relatively easy - cars, highways, gas stations, tankers, terminals, etc. If we wanted to suddenly built an alternate infrastructure, it would be quite difficult, because we have become dependent on the oil infrastructure. We can't just shut it down for a few years while we work on the switchover. And now it may be too late; we may not have the resources or capital to do it.

    In 1942 the US auto industry was shut down and the resources converted to war. Perhaps the question is whether a similar scale diversion of resources (while they last) could build a critical mass of renewable energy and recyclable materials infrastructure with long legacy and low maintenance requirements?

    We can't just shut it down for a few years while we work on the switchover. And now it may be too late; we may not have the resources or capital to do it.

    At least from a materials resource point of view, the resources required for massive builds of renewable or nuclear energy are quite trivial compared to the auto industry - the fall in production to date would amply cover it for many resources, although not of course for concrete - but the fall in construction covers that many times over.
    Prices for raw materials are also going into freefall, and labour costs are likely to follow.
    At least we are in a race, and on the technical level at least some solutions seem possible.

    If only the Big 3 bailout was to fund them to build wind turbines and train cars....

    Key consumer measure at all-time low

    The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index plummeted to 38 in October from an upwardly revised reading of 61.4 in September.

    Last month's decline brings the index to its lowest level since its inception in 1967.

    Economists were expecting the index to have declined to 52, according to a survey by Briefing.com.

    Home prices see another record plunge

    NEW YORK (CNNMoney.com) -- Home prices fell in August for the 25th consecutive month and prices in 10 major markets plunged a record 17.7% year over year, according to a key index of real estate values released Tuesday.

    LONDON – OPEC ministers will take further steps to prop up the oil market and could call another meeting before the group's next scheduled talks in December, officials said on Tuesday.

    It seems to me that we should try to take some steps in response to the last cut in production. We need economic stimulus right now. There are a number of carpool organizations around as well. If we offered to pay for a third of the gas used in carpooling for the next five months in carpools registered with these organizations, we'd get more money out into the economy and we'd see a big uptick in carpooling. This obviously would not be the whole stimulus, but it could have big leverage since the price of gasoline should fall as a result.

    Setting up a taskforce to seek market stablization at $20/barrel should be something that would be very helpful. When OPEC seeks to increase the price of oil, they are really grafting more volatility onto the market. We need less volatile markets so that investment signals are clear: don't invest in new supplies of expensive-to-produce oil!


    I think this is a ridiculous idea.

    We are not the only oil consumers in the world; it's beyond our power to force oil prices down to $20/barrel and keep them there.

    What is needed to support $20/barrel oil is about 5 million barrels a day of spare capacity. That can be found through a 25% cut in US consumption. Actually, with the current economic sitaution, even less cutting is needed because other consumers are also cutting. The US alone can force the price of oil down to $20/barrel. If we replace our transportation fleet to essentially no longer use oil over a decade, we can keep the price of oil down near $20/barrel for the decade. All that is needed is to ensure oil producers have spare capacity throughout that period. Cutting consumption faster than depletion does this.

    So, you are correct. We can't keep the price of oil down to $20/barrel for more than a decade on our own. But, if we are no longer using oil after a decade, the subsequent price does not matter except that we can sell our domestic production at a profit.

    What is the alternative? Face depletion in any case but at volatile but high prices for oil because we are trying to do the impossible: grow oil production on the basis of stuff like tar sands.

    We have a choice to get off of oil at a high cost or a low cost. Meeting OPEC production cuts with larger consumption cuts is likely the best policy if depletion is the true underlying dynamic. OPEC will blink. They also need a revenue stream to prepare for the end of oil just as we need reduced oil prices to help us along. $20/barrel is where they are still profitable so long as they are not investing in new supply.


    What is the alternative? Face depletion in any case but at volatile but high prices for oil because we are trying to do the impossible: grow oil production on the basis of stuff like tar sands.

    I think that's likely. I'm expecting extreme volatility.

    We could also raises taxes on oil, establishing a floor. The money wouldn't go to big oil or OPEC, but the higher price could help wean people off oil, and provide the stability you seek.

    We could also raises taxes on oil, establishing a floor. The money wouldn't go to big oil or OPEC, but the higher price could help wean people off oil, and provide the stability you seek.

    Yes, absolutely. I would say funnel the money into retrenching, restructuring, relocalizing. And preventing undue hardship on the downslope. To have $20 oil (were it possible) sends the entirely wrong message. We'd go off a cliff at some point.

    If we use a tax to cut consumption, the effect on the world price of oil is the same. And, we are likely to see a black market developing as well. In the US stand-by gasoline rationing plan, there is a white market in rations which should pretty effectively shut down any black market. Avoiding corruption is probably pretty important if we want the program to work effectively for a decade or so.


    I think that it could be possible that we could use a tax to accomplish this aim, more so now than a couple of months ago. The amount of tax would be very large and might replace FICA in the amount of revenue, which I consider dangerous to the stability of social security. But, a tax might work. US policy, in the face of supply problems though, is to use gasoline rationing. This seems to me to be a better approach since it keeps most of the money flow private. Our rationing plan includes a white market in rations.


    ...we are trying to do the impossible: grow oil production on the basis of stuff like tar sands.

    This project will create significant value for Albertans by generating approximately 60,000 barrels per day of Premium Sweet Crude (PSC(TM)). The Companies' product will be the highest quality synthetic oil to come from Canada's oil sands.
    "Long Lake is unique because it represents a step change in upgrading and is the first project to incorporate gasification. This is expected to lead to lower operating costs and position Long Lake to be a leader in carbon capture."

    Long Lake Oilsands Startup

    Some quick facts:

    • U.S. imports 70% of its crude oil
    • 200,000,000+ petroleum powered vehicles in North America
    • 300,000,000+ people in NA depend upon transportation for survival
    • rail and agriculture are run using diesel and gasoline

    Changing the NA transportation to *alternate* fuels is going to take decades to achieve.

    Replacing most of the transportation takes the average lifespan of a vehicle. We replace our transporation fleet on that timescale in any case already. So the question is: do we want to do that while oil costs $20/barrel or while it costs $200/barrel? That is the 7 trillion dollar question!


    Replacing most of the transportation takes the average lifespan of a vehicle.

    Using what for fuel?

    It looks as though we will be using electricity in plug in hybrid verhicles though some advocate for natural gas. Conversion to natural gas is appealing since cars that are on the road now can also be converted. But, I suspect that the efficiencies involved with electic vehicles, especially those powered by renewables, will be persuasive and we'll see only limited use of natural gas as a transportation fuel.


    Are you advocating the Picken's Plan?

    There was a PBS special the other night ("The Heat Is On" IIRC). One of the more memorable scenes was a the Chevy Volt showing up for a photo shoot and being totally unable to climb a tiny little hill. It finished with several GM engineers having to push the car.

    Electric vehicles are simply not ready at this time.

    Since the 1970's, there have been gas-powered taxis in Ottawa (CNG,Propane). The gas cylinders take up the entire trunk area and the cars have limited range. Also, most indoor parking lots have signs that say "No propane/ng vehicles allowed" because of the explosion risk.

    There are problems with converting everything to CNG including the question of adequate supplies.

    *In principle*, I agree that it is possible to build a transportation fleet based on renewables. Matthew Simmons believes that ammonia may be the liquid fuel of the future and perhaps he is right.

    My disagreement with your posts is in the length of time that this will take. I expect the process to take several decades; 30-50 years at a minimum.

    Changing the world's energy and transporation infrastructure is a *huge* undertaking. It simply can't be done in a decade or two.

    >It finished with several GM engineers having to push the car.

    Fortunately they have plenty of surplus GM engineers so you get two with the purchase of every car.

    Sounds like the GM engineers are trying to apply GM policy- show prototypes in a very early stage of development.
    If you expect electric vehicles to slot seamlessly into all the versatile uses of ICE cars, then indeed they don't work at the moment.
    But if you contrast it to an ICE car without petrol available, and have an expectation of a modest performance envelope, then they sure beat walking.
    I China there are 60 million electric bikes, mostly using lead acid batteries, so at some level it is possible to have personal mobility with electric.
    Some very advanced vehicles such as the Mitsubishi should be able to do most of the job of an ICE, although with limited range, but I actually expect most people who have personal transport to have all sorts of trikes and covered trikes, Golf cart like things etc.
    This is all part of the fall in the standard of living we can expect, but it is a lot better than being without transport.

    As I say, my guess is that that the plug in hybrid will be the new mode of transportation, but there is quite a lot of advocacy right now for natural gas. As to how long it takes, several automakers are planning 2009 or 2010 market introductions of the plug ins. GM is advertizing very heavily. There is a $7500 incentive to buy one of these if it is one of the first 2.5 million. So, I see the kind of momentum that can cut our oil consumption by at least 80% in a decade if we put our minds to it.

    And, there is no real reason not to have natural gas plug in hybrids if it comes to that. The tanks will be smaller.

    The first steps are the easy conservation steps: car pooling, using transit more often, getting a second (or third) small car to use for a larger number of trips. Cutting 25% should not be a problem just doing these things. And, cutting 25% gets us to $20/barrel oil. Once we are there, and we know we controlled the market to do that, we'll be pretty motivated to finish the job I think.

    What I am advocating is that, faced with depletion of oil, we make the smallest needed undertaking to shift off of oil. That means shutting down deep water exploration and tar sands and CTL and oil shale and any of the other expensive and wasteful efforts that distract from getting off of oil. We need to do our transition on the easy oil and about the only way to ensure that there is only easy oil in the mix is to force the price down and soon.

    We may make some sacrifices along the way, but those are small compared the the $7 trillion plus cost of going after expensive-to-produce oil just to transition five or ten years later than we would if we started right now.

    Either we transition with low cost oil or high cost oil, but the difference in timing is not enough to make much of a difference in the technology we use for the transition. Basically we need to rely on technology that is in demonstration now. Anything still on the drawing board is already too late. Thus, our transition costs on the infrastructure side are fixed and won't be reduced by delay. Only the cost of the oil we burn during the transition is variable. We should go for the low cost option: transition now and quickly enough to keep the price of oil low.


    The flaw in their thinking is in trying to make an EV that is long range, like ICE cars are now. The problem is that the longer the range, the higher the weight of the batteries. It doesn't take long until you get to the point where most of the additions to battery capacity are going just to transport the added weight of the batteries. It is very much the same type of problem that rocket scientists face - the larger the rocket, the higher the percentage of additional fuel is needed just to boost the added weight of the additional fuel.

    The irony is that they are doing the same thing that automotive engineers did the first time around, when the earliest automobiles were designed to look just like horse-drawn carriages.

    I think that there will be quite a few EVs around in the future, but that they will be NEVs. Small, lightweight electric vehicles that can travel a radius of a couple dozen miles at up to 30-35 mph max are available right now, we know these work. These are quite adequate for short commutes to nearby workplaces or mass transit nodes, or for errands around town - which should be all that most people should need automobiles for most of the time, if we had an adequate investment in urban and inter-urban mass transport.

    Walking + Bicycles + NEVs + Mass (mostly rail) Transport: that is the future, if we're lucky and halfway smart.

    One idea that has not been tried AFAIK, is to make a vehicle with the sort of range you describe, 30-35 miles, which incidentally could be done far cheaper than the Volt as you would not need to be lugging a fully equipped ICE around with you and would economise by being electric only, and to have either a plug-in additional battery kit or batteries on a trailer available, which you would hire from a garage when needed.
    It's probably simpler just to hire the whole ICE car though! - or even keep your old ICE car in the garage, and use it once a year.

    Replacing most of the transportation takes the average lifespan of a vehicle.

    Actually thats the minumum timescale -unless we destroy past capital investment by taking them out of service earlier. Of course we need to change the designs, and the production lines, etc. The result is that the transition time is going to be considerably longer than a typical vehicle lifetime. Then different classes of vehicles have different lifetimes, private automobiles perhaps 15years. Or are the old ones recycled to developing nations? Industrial diesel, trucks, and construction equipment tends to have considerably longer service lifetimes. Of course we gotta get serious about the transition first. With our libertarian besotten philosophy of government, that pretty much means oil has to get painfully expensive before a serious effort is made.

    Or are the old ones recycled to developing nations?

    Once America can't afford to drive a gasoline SUV anymore, we export them to poor countries that can?

    There's something fishy in that idea...

    It's already happening a little. Last summer there were articles highlighting folks that would buy up SUV's and 4x4's at a bargain price and export them to Venezuela (where gasoline, at least at the time, was dirt cheap due to govt mandate).

    Even after paying duties and whatnot, there was still a tidy profit. May not work so well now that gas is "cheap" again and the fuel shortages of the fall are old news. Folks are hugging their suburbans again. Oh, sorry, are they now "crossovers?"

    With our libertarian besotten philosophy of government, that pretty much means oil has to get painfully expensive before a serious effort is made.

    We have a stand-by gasoline rationing plan which does contain market elements, but I view that as a strength. And, oil is painfully expensive. What I am worried about though is that oil is stupidly expensive because we are encouraging a situation where oil has a high floor price because much of the replacement production is very expensive-to-produce oil. This is a foolish thing to do.

    On the details of how quickly we can retool factories, I think that the WWII experience suggests that this is not a big issue. If, for example, we were to impose a $10,000 surcharge on non-hybrid vehicles along with the existing $7500 incentive to buy plug in hybrid vehicles, we might see very rapid retooling indeed. I'm not sure we need the surcharge it we are rationing gasoline, but we are going to be doing the transition sometime. If we delay, it will be much more expensive.


    We are not the only oil consumers in the world...

    We are the largest. There is no way the other consumers can increase consumption quickly enough to beat our cuts if we are bold enough. The have to increase road capacity as well as the number of cars and that takes time.


    I think you're dead wrong on that. There's a lot of pent-up demand. People who used to be able to afford petroleum, but now cannot.

    I attended the Light Reading "Green Telecom" seminar yesterday -- quick news blurb about it:

    "We're all trying to conserve cash," said Kathy Loshbaugh, VP of network engineering at Sprint Nextel Corp. (NYSE: S - message board). "And I think now is a perfect time to look at energy costs."

    It was a small affair (I have attended telecom events with 50,000 attendees, instead of more like 50), but much valuable energy-related information and some promising technical progress was highlighted as well.

    A key "Peak Telecom" take-away: telecom/datacom is growing exponentially, with 50% per year bandwidth growth. Today the industry uses 1-2% of global energy (depending on where you draw the boundaries), but if you extrapolate bandwidth/computing power trends and user uptake trends, the picture is grim. For 1/3 of the current world's population to each have about 1 gigabit per second Internet access, the necessary network structure would consume power equal to the world's entire current power use. Such a theoretical cross-over would be many years in the future, but all who frequent TOD realize that exponential growth is a nemesis best addrerssed early.

    Telecom is a double-edged sword. Power use for telecom/datacom will double by 2020 (from 61TW estimated today) on the current path, but when teleconferencing, telepresence, and on-line shopping and such displace travel the external savings can also be considerable. A referenced study indicated 2x power spent on telecom would save 5x in deferred consumption.

    Though the impact of telecom may not be as personal as automobile usage, it is nonetheless pervasive and significant. A new server farm can use 20MW of power, and require computing-resource replacement in less than 3 years due to obsolescence. Cellular phone systems and the networks and handsets that support them turn over just as quickly. I made the comment that I thought much of the hectic innovation and replacement pace and the resulting "velocity of technology" was enabled by cheap energy and cheap credit, and would naturally slow as these resources became constrained. I got an "interesting observation" response from one panelist but no agreement, and the moderator moved on.

    The seminar provided cursory coverage of many perspectives -- equipment (telecom networks, routers, data centers), providers (AT&T, Charter), power (nuclear, fuel cell, wind, solar), and end-users (mostly the audience!). There was a pragmatic undercurrent pushing for real-world ROIs and net savings.

    I should get the slide sets in a week or so, and I'll plan to provide a more thorough summary. I'd like to contribute something useful to TOD in return for all I've learned here.

    Power use for telecom/datacom will double by 2020 (from 61TW estimated today) on the current path

    Perhaps you mean 61GW, for the world doesn't have 61TW available.

    Looking back at my scribbled notes, data centers were 61Twh, telecom was another 21Twh. I'll provide clear numbers and more details once I get the slides -- I was trying to listen and scribble and the pace was fast, so unit errors are likely in my notes. You can't beat TOD for prompt peer review!

    I am SURE about the "1-2% of total electrical consumption" comment....though even that is a "soft" number as well. Is analog TV a datacom element? No? But IP TV carried on the network is? How about a set-top box that handles both? Get's pretty fuzzy...

    TVs in peoples homes use about as much power as all the nation's data centers. The little converter widgets mandated for the digital cut-over next spring will add another 100MW of consumption just by themselves. Somewhere there will be new coal plant popping up just to ease the digital transition.

    The average broadband home uses 2.6kwh/day of electricity just for the "broadband" aspects. It all adds up.......

    The confusion is arising from the terminology of Kwh and Kw, and Twh and Tw.

    KW, for instance, would normally be an installed capacity, and over a year would produce 8,760Kwh, so there is a factor of around 10,000 floating around.

    I always loose decimal places, so here are the world consumption figures for you to calculate from:

    As you can see, that is a consumption of around 17 trillion Kwh
    Here is a converter:

    That comes out to around 17,000 Twh, as far as I can see, which seems to be around 4 times more than your figure of about 82Twh for 1-2% of consumption from data centres.

    There are further levels of complication though, as in the energy industry it is often unclear whether one is talking about the raw input, which in the case of coal would give you around 3 times your output figure, or the final product of energy used after it is converted into electricity.

    So good luck sorting it out! :-) - Hope this helps.

    Worse, some refer to US numbers, others to the world overall. And of course all sources vary a bit anyway, depending on what they count -- do the cell numbers include your phone charger, etc. I'll be more precise and accurate when I have references available.

    One universal theme on the "user" side of the debate was a desire for more commonality and standardization of chargers and data cables for phones. Many (if not most) phones have a vendor-unique connector, and some are specific to a single model. The end-user cost, overall duplication of functionality, and inherent waste is significant, even if you ignore the new-phone-every-year aspect of the market.

    I think telecom will survive the energy collapse, but it is likely to return to a longer-cycle ROI model. Remember when the rotary telephone would last you 30 trouble-free years? Now you're lucky if a cell phone survives until your 2-year contract rollover.

    My wife and I have two rather new Samsung cell phones. Different wall wart connectors.

    "data centers were 61Twh"

    - per day? Per year? Remember, wh is unit of energy, not power.

    "The average broadband home uses 2.6kwh/day of electricity just for the "broadband" aspects"

    - that's a bit more than 100 watts (average power). A typical desktop PC that is fully "on" uses that much. Wouldn't a minimal broadband interface hardware setup (with the PC on "standby") use much less?

    BTW my total household (2 adults) electricity usage is about 5 or 6 KWH/day (or roughly 200 watts average power). (But we don't have broadband...) My PC uses less than 1 watt on standby.

    Your house is not an "average" broadband home.

    That number would include at least a gateway/routere, a PC, a set-top box, a video game, and some sort of recording device, all at some number of "on" house. Most had usage values of something like 4 hours per day, which seems low.

    Many houses have 3 or 4 TVs, two game systems, two PCs, a laptop or two, two printers, a gateway, a couple of DVD or DVR boxes, and stereo gadgets. Many such houses probably use 200W even when all the TVs are off and the PCs are idle.

    Better managing idle-state consumption will be key for the next round of home efficiency gains. Most people simply aren't reliable about turning stuff off.

    Next year home femto-gateways will start to catch on, so you can use your cell-phone over your home network (especially good for fringe-reception areas). Many fiber-fed homes now have a house-powered active network interface device (NID) on the side of the house. 10 watts here, 30 watts there -- pretty soon you're talking about real energy.


    South Florida FPL
    3000 sq ft house built 1985 - 2 story(crap windows and really crappy insulation)Value $455,000
    4 adults
    4 computers on all the time - wireless network - DSL
    a/c to 75 at all times
    pool filter runs 4 hours a day - solar heater
    all electric appliances - energy star rated
    September Kwh last year 2357
    September Kwh this year 1551
    September bill this year $ 189.34

    The reason for the large drop? Beat the kids till they turn off the lights and TV, when they are not in the room. Yes, conservation can be done and it takes very little effort. Just need to kick the ass off of our elected officials.

    The little converter widgets mandated for the digital cut-over next spring will add another 100MW of consumption just by themselves.

    I put the cable box (22watt on 20 watt off) onto a switchable extension cord. That way at least the vampire doesn't draw power while people sleep. But the stupid TV schedule loses all memory, and requires hours to get caught up.

    Just about all my electronics are on those $5 power strips. When i leave a room, I turn off the strip. That way, they don't consume fossil fuels to blink 12:00 when I'm asleep or at work.

    I wonder how much total fossil fuel we've consumed, just to blink 12:00 when we aren't there to see it.

    With 1.21 Gigawatts, I'll go back in time and fix this whole mess...


    I personally am not too concerned about the power consumption of telecom and computer data centers. Anyone who is sitting in one place talking on the phone is someone who isnt out driving somewhere, riding a snowmobile, jetski, or ORV. Everyone staying home browsing the internet, watching TV, or playing video games is someone who is using relatively less energy than if they were out buying stuff, jetting around the world, or eating at a high end restaurant.
    I say give the data centers all the power they want. Anything to keep the people at home and not consuming fossil fuels.

    Well then you don't understand data centers.

    When you sit leisurely at your computer and click on the TOD URL, you expect a mountain load of data to instantly pop up on your computer screen at the moment of request.

    That means that somewhere out there, thousands of hard drives are whirring away in anticipation of your next mouse click. Will you click on TOD or on Cornicopia.com today? They don't know. So they all have to be ready for your beck and call. That's a lot of hard drives and a lot of power consumption --not to mention the air conditioners that keep the center cool. It ain't so innocent after all (--to quote Chairlady B. Spears).

    Re: shortage of diesel in Alberta: "She said a myriad of factors have contributed to the shortage, like maintenance shutdowns of Edmonton area refineries, hurricanes which damaged refineries on the U.S. Gulf Coast and a higher demand for the product. "

    It seems to illustrate one aspect of Peak Oil, that anticipating supply and demand will become more and more difficult. The variables no longer slowly change or are predictable but violently change each day depending on how many more speculators have to sell at any price due to margin calls. The Seven Sisters wanted an integrated North American market back in the 1980s and got it with NAFTA, but now they are finding that a hurricane in Texas can sideswipe a truck driver in Fort McMurray, and in turn disrupt their refinery at Fort Saskatchewan.

    I'm in private-equity junior petes that operate on cash flow only, so the current credit crisis and market volatility is not immediately relevant. A lot of junior petes in Alberta are publicly listed and rely on a line of credit for day-to-day operations, as a result of which they are suffering. It illustrates one point that has been demonstrated clearly during the Panic of 2008; stay out of debt, whether financial (credit) or legal obligation (publicly traded stocks).

    The only bright spot I can see is that maybe drilling rig costs will come down as more owners hunt for work.

    During this credit crisis of the ages, guess who has the cash to buy up resources? I just stumbled across this and it may have been posted on an earlier drumbeat. Sinopec has agreed to purchase a Canadian junior for $2 bn with assets in Syria. Not a large resource in Syria but India and China are still doing deals.


    Sinopec, the Chinese refiner, has won the battle to acquire Calgary-based Tanganyika Oil in a deal that values the Canadian company at C$1.9bn (US$1.8bn).

    Tanganyika Oil, which has exploration and production assets in Syria and Egypt, has a primary listing in Toronto and listed depositary receipts in Stockholm.

    The Chinese refiner agreed to pay C$31.50 per share, and expects to acquire 100 per cent of the company after securing support from its major shareholders.

    Sinopec's offer represents a significant premium to Tanganyika's recent share price. On September 19 the stock closed at C$17.50 per share, and was as low as C$9.89 per share in January.

    People familiar with the deal said Sinopec's offer was substantially higher than that of India's Oil and Natural Gas Corporation, the main rival bidder.

    ONGC last month beat Sinopec, China's second-largest mainland oil and gas company, for control of Russia's Imperial Energy with a US$2.5bn bid.

    Credit problems might hinder 20% of the planned construction of deepwater drilling rigs (Bloomberg):


    Credit and trust are pillars of capitalism. Without either capitalism is finished. I suspect that the recent laxity of regulation and securitization have basterdized lending to such a degree that some serious damage to the economy cannot be avoided. This shall pass however, and when more normal credit markets prevail, these large infrastructure projects will be financed again (albeit at a much higher interest rate!)


    I'm not the one who down-rated your comment (p.s. you are not your comment) but it sort of deserved it for mixing up concepts.

    "Capitalism" implies that many small private owners each control a respective small piece of the total means of production. The theory is that each will take good care of his piece of the pie because his livelihood depends on it and thus efficient utilization of the total means of production will occur due to the self-interests (and specialized knowledge) of the individual private owners.

    "Credit and trust" on the other hand are monetary concepts. Money and capitalism are not one and the same thing. You can and do have money in communist states. Money has many functions including that of being a unit measure of value and a temporary storage of value. When you give someone a loan, you are extending credit and trust to them. Loans can be made in communist countries. Loans are not the exclusive bane of capitalist societies.

    IOW, money =/= capitalism.
    The Bank of China makes loans.

    So true rain. Today's price of oil isn't much of a factor. It takes 5 or 6 years to build the big rigs. Payout can take another 5 to 8 years. Thus the rig builders today would be looking at oil prices from 2013 on to determine the economic value. Credti/cash flow will be the determining factor in which rigs get built, delay or cancelled. And many rigs are built as JV's with operators so any credit difficulties with the E&P companies will show up in the build out schedule too.

    Dow up about 900 points, closed back over 9,000

    What was that Nephilim was saying yesterday...

    They must be anticipating the complete crash of the bond markets by the end of the week ;)

    "Tomorrow is anybody's guess right now... but sometimes bear market rallys are the most impressive gains you'll ever witness", said a trader on Bloomberg a moment ago.

    Did we bounce off Ilargi's "top masquerading as a bottom"? I think I&S still expect a possible bear rally which could last into early 2009 but not much longer

    Nephilim's comment with further explanation downthread from yesterday is here btw.

    So! thats why my ears were burning, lol.
    I don't need to rehash yesterdays information, its already history as everyne knows.

    Follow thru will follow this market upturn as per chiseled tablets interpretations. I stand by my assertions that continued market growth as the world once knew it...is over. Ive read the entirety of todays TOD as I always have. Everyone has already spoken well of all the problems, the answers to all the question were all yours. (Except the part where no one ever knows)

    Actually when you hear the term (No one knows) or (You never know) You should laugh a hearty guffah.
    Most times you do know, most times everyone collectively knows. I always laughed when the Gypsy women would answer the door, the neon "READINGS" sign blinking vacancy, sucker, vacancy...she would open the door and say "I knew you were coming...come in"

    The market will recover over a period of quarters and everyone will breath a collective sigh of relief. But PO is like a grim reaper, riding hell bent for leather. This isn't a parlor game, its midnight, too the dawn of peak oil, it ain't no time to be cute.

    Watch for the follow thru, guard against complacency.
    Build a community, be sociable, make it multifaceted, entertain ideas, be creative, love one another...now you werent even thinking about money or filthy lucre.
    It took the space of a few sentences and you became distracted.

    I reiterate to pay attention. Its the only thing you pay for, that doesnt cost anything. PO oils as real as and confusing as my ramblings <----confusing to read isnt it?
    Parlor games are childs play. Peak oil wont be so.

    The cabal that runs this rodeo isnt going to be working for you, their rodeo clowns wont be there for your protection. The horns of the bull (delemma) you ride are made for goring. The danger of PO isn't from the collapse of society, its from the rulers of society when it collapses.

    Lots of TODers wont ever rent (tear) their clothes, knash their teeth, heap ashes (Toto maybe for the potash) on their heads or wear sack cloth. I know many among you will actually prosper and do very well in the future.

    Semper Nephilim


    Your intuitive side has been on fire lately. Really enjoy your prognostications.

    My late master Solomon shared something akin to the same ... it's called wisdom.

    Are you still anticipating a scary downturn on or before Halloween Friday? Perhaps a memorable crash this week, one for the history books?

    Pray tell us. Where is the dark horses leading us?

    Ubique Zadok.

    You compare me too Solomon and rightly so, both of us have had a weakness for the feminine gender.....and horses. Other than that, we arent all that wise.

    I will answer your question directly, as I dont anticipate anyone reading this, but you.

    No Friday All Souls Eve surprise. I write this at 12:11 PM on Oct 29-th and am confident to a fault that the follow thru with yesterdays gains, will be manifest today, even though the markets are (UNCH) at this moment. "Unchanged" (UNCH).

    Another day of Depression era stock movements. Beware of the company you keep. (Today rang in at 10.9%)

    Macro Man compiled this a couple of weeks ago...

    Great post. Scary as hell.

    1000 apologies, Datamunger! I mistook you for someone else and my less than polite remarks were uncalled for. Again, my apology.

    From the Ask Amy advice column:

    Dear Amy: I have two children in high school. They are good kids, good students and have nice friends. They have driver's licenses, but neither one of them has a car because my husband and I don't feel it's necessary for teenagers to have their own cars. My kids take the school bus to and from school every day. There are at least 25 kids in our immediate neighborhood who also attend the same high school. Most of them have their own cars or their parents drive them.

    I've had parents ask me how we can be so mean to make our kids take the bus?

    What is wrong with all these parents who believe Susie or Johnny is too good to take the bus, and then look down at parents like us? Why don't more kids take the bus?

    A few months ago, I talked to an older gentleman who was in high school in Dallas in the Second World War. He said he took his date to the prom on a streetcar.

    One of the things I learned at the recent Electrification of Transportation symposium was that Dallas at one time had almost 200 miles of streetcar lines, with 400 streetcars, not counting the electric Interurban system. All that is left is the small McKinney Avenue Trolley system, which they are trying to expand.

    In any case, here is a link to the excellent interview with Alan Drake and Jay Kline (VP of DART, Dallas Area Rapid Transit) on the local NPR station yesterday:


    Click on the MP3 download for Electrification of Transportation

    Here in Prague all the kids go to the prom on the streetcar. How else would they be able to drink and get home? But then I guess our alcohol laws are a little different ;-)

    How else would they be able to drink and get home?

    Generally, via limousine, here in the US. Kids rent these huge limos - the bigger, the better.

    On the bright side, they often share them, so it's carpooling of a sort.

    Looks like BlackLight Power Inc is trying to make a comeback with their physics defying 'energy source':

    BlackLight Power Inc. Announces Independent Replication of New Energy Source

    I wonder why journalists fall for this. Rowan University, eh what gives?

    And media contact handled by one of the biggest PR agencies. Riiiiight :)

    Here is a better article I read the other day:


    Meanwhile scientists at Rowan University in New Jersey have scrutinized and confirmed the 50k Watt claim. To generate the according amount of heat (1 million Joule) 1.5kg of a catalytic substance were used. "These results are unexpected given conventional chemistry and may represent a validation the BLP scientists have indeed uncovered a novel technology for producing energy from the hydrogen atom," a recently published interim [extern] report concludes. Controlled experiments have been conducted by students led by engineering professor Peter Jansson in Rowan laboratories under initial guidance by BlackLight scientists. According to Jansson they have shown that "repeatable heat experiments based on [BLP] technology can be replicated by independent scientists." It is still unclear if the study was commissioned by BlackLight Power.

    Is Rowan a legit university?

    I'd guess you didn't read SamuM's link.

    Legit, why do you ask ?

    Dr. Peter Jansson's Homepage

    The link to his funded research projects returns page not found. His homepage contains links to a video and a PDF file about the BlackLight Power Validation Test.

    The work describes an initial test cell (containing 15 – 30 grams of BLP materials) as well an introduction of what BlackLight Power calls its "50kW Unit‟ which contains approximately 1.5 kg of BLP materials.

    How much energy was used to prepare the BLP materials, R-Ni-155 and R-Ni-mix? I do not know enough chemistry to understand the PDF file, but I get the impression that Jansson and his students do not understand the reaction they are studying.

    Blue Twilight,

    LOL ! We wouldn't be here if Jansson or anyone else understood the reaction. The pdf includes discussion on how they are going about eliminating potential sources.

    I'm not a chemist, either.

    There is plenty of material online that discuss this unknown area. It depends on how dogmatic your beliefs are if you get anything out of the material.

    My own 'bright shiny object' is

    Edit: 'unknown area' is meant as a reference to unification of all 4 forces.

    airdale posted on it a few days ago.


    "physics defying"

    Errr, isn't that what makes
    good science ?

    I have been to Walden Pond. In the summer the place was overrun with people from Boston taking time off in the country during the weekend. There were people swimming from beaches around the pond and constant hiking over all the trails. People may have picked the flowers, yet I also suspect that the deer might have been eating the landscape both wild and cultivated in the town of Lincoln and points westward. In the previous generation people blamed acid rain for loss of habitat, then there were the gypsy moth caterpillars that ate almost anything except coniferous trees, this generation blames global warming, am not sure who will blame what next.

    Police say Andover man's nest egg stolen for booze and cocaine birthday party

    ANDOVER — When the stock market took a nosedive, Joseph Stack of Andover withdrew money from a bank and kept it in his wallet.

    But the 75-year-old made the mistake of letting people know he kept a lot of cash on him, police said, and he was beaten and robbed of $4,000 by two homeless men he served at a Lawrence soup kitchen where he volunteered.

    An interesting article on oil pricing:

    How Oil Is Actually Priced: Be Worried

    "Cook therefore believes the prices of all traded oil contracts, including WTI itself could suddenly decline in a way similar to the decline in mortgage backed securities that are highly leveraged to the relatively small amount of bad mortgage debt written over the past few years.

    Cook states that the U.S. WTI contracts are linked by strong arbitrage trades to the European Brent/BFOE futures contracts which in turn are priced directly off the spot cash market for shipload quantities of oil in Europe. Thus, he says, virtually all futures prices depend on the European spot market. Unfortunately, this spot market is very thin and thus subject to manipulation which could either be intentional or accidental based simply on speculative greed. Cook claims that $260B of contracts including “structured products” rest on a base of only $4B of actual cash trades. In other words, he suggest that at some point oil could become like tulips were in the 17th century."

    (hat tip to the snarky commenters over at Calculated Risk)

    The article is over a month old (dated Sep. 19).

    Not sure if he's right about the reason for the meltdown, but it certainly did happen. Oil fell to half the peak price - lower, even.

    Google looking to invest in energy sector: report
    Tue Oct 28, 2008 10:57am EDT

    Internet search and advertising leader Google Inc is increasingly looking at the energy sector as a potential business opportunity, the New York Times reported.

    Engineers at Google are hoping to soon unveil tools that could help consumers make better decisions about their energy use, the paper said.

    To support these efforts, Google has hired engineers who are conducting research in renewable energy, former government energy officials, scientists and even a former NASA astronaut, whose experience with electronic gadgets is being put to use to develop energy tools for consumers, the Times said.

    It added that the company's philanthropic unit, Google.org is considering large investments in projects that generate electricity from renewable sources.

    Maybe Google understands peak oil!

    Something reminded me of an ecology experiment with water snails. They are detritivores -- they eat shreds of rotting plant matter, which they grind up with their mouth parts, swallow, and excrete.

    The experimenters fed one group of snails with fresh detritus. They fed a second group with the poop of the first group. They fed the next group with the poop of the second group, and so on, until a group that couldn't live on poop any more.

    The mystery was: How could each group of snails extract food value from already-eaten detritus?

    It turned out that the detritus was just a substrate, and what the snails actually ate was the bacteria growing on the detritus. When they pooped it out, the bacteria grew on the detritus again and served as food for the next group of snails. At some point the shreds of detritus became so small and diffuse from the constant chewing that the last group of snails couldn't harvest enough to stay alive.

    I think that humans, as a species, most resemble detritivores. Our substrates are coal and oil and iron and arable land, and our bacteria are crops and cattle. And good fresh detritus (i.e. rich ore bodies and oil fields) is getting hard to find, and re-used detritus (arable land) is getting skimpier.

    I'm not sure if this analogy gets us anywhere, but I'm pretty sure that by the time we start mining city dumps for materials, we aren't the snails at the head of the queue any more. The big question is, are we the tail end Charlies that don't survive?

    Whoa! The long-awaited IEA report has been leaked and it is horrendous! Take cover....

    From the Financial Times

    World will struggle to meet oil demand

    Output from the world’s oilfields is declining faster than previously thought, the first authoritative public study of the biggest fields shows.

    Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

    The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term de­mand. The effort will become even more acute as prices fall and investment decisions are delayed.

    The IEA, the oil watchdog, forecasts that China, India and other developing countries’ demand will require investments of $360bn each year until 2030.

    The agency says even with investment, the annual rate of output decline is 6.4 per cent.

    The decline will not necessarily be felt in the next few years because demand is slowing down, but with the expected slowdown in investment the eventual effect will be magnified, oil executives say.

    You beat me to it. I just prepared an almost identical post and did a quick check to see if someone else had made one...

    This would have been a big story a few weeks ago. I wonder if it will get much exposure now?

    Officially the IEA's World Energy Outlook will be released on 12 November.

    They obviously still think that the fairies are replenishing oil fields every night:

    It expects oil consumption in 2030 to reach 106.4m barrels a day, down from last year’s forecast of 116.3m b/d.

    They've also managed to sneak it out at a time when it is least likely to attract attention, with the financial crisis and the election.
    If that was my watchdog I would have it put to sleep, but that would be a bit redundant as it seems to have been asleep for years and show no signs of waking up.

    But still, Dave, a move in the right direction. The IEA is showing signs of movement... even a corpse can stir b/c of rigor mortis.

    Amazing! Wonder what's prompting them to come to their senses now? What entrails have caught their attention?

    147/barrel oil & the need to CYA before the economic/civilizational collapse. their head, fatih birol might be the driver for better reasons.

    as u say- i think- cheers!

    Some other sources that have taken up the story from the Financial Times.

    International Herald Tribune
    Watchdog warns on declining oilfield output

    Global Oil Production Is Falling Faster Than Expected, FT Says

    The Telegraph
    World oil output declining faster than thought

    Not much new info, though. Just quoting the FT piece.

    Holy Moly--9.1 %, that is damn ugly if true. Seems like the IEA has now admitted that superstraw tech [horizontal drilling, multiple reservoir contact, etc] applied to these aging giant fields, plus the same tech applied to any new found, but smaller fields, has turned the Hubbert Curve into the Hubbert Cliff.

    Using the Rule of 72:

    72/9.1 = 7.9 years

    72/6.4 = 11.25 years

    If these numbers in fact is what IEA will present November the 12th then the issue of oil supply destruction is what will overshaddow everything else. The fact that the awailability of oil is doomed to decline perpertually in the future from now on is what will be discussed and on going financial debacle will in this regard look like a mere breeze. Certainly Supply destruction will be more important than the notion of greenhouse emissions (this as we by now instead will have less and less awailability of oil and thus greenhouse emissions from here on will be recuced every year) and even more important the notion of so called demand destruction will be out of the window as a totally irrelevant topic to focus on.

    ALL economic growth depends on oil and as such oil is THE ultimate currency. Oil in the ground wherever it may be found is where it's at.

    Again remember that some 1% of all the worlds oil fiels in average where discovered and put in to production some 40 years ago and that these so called giants today provide for approximately some 60% of all the worlds oil production.

    In all of these giant oil fields the usage of THE most modern technology has been extensive in order to keep up production at maximum capacity. Thus when they do enter in to decline the decine rates then in most cases will be very agreesive and steep. As an example Chantarell in Mexico that once was the worlds second largest oil field now has annual decline rates of in excess of 30%. Imagine what will hapen if all giants reaches these kind of numbers.

    Add then to this the fact that Peak Discovery of oil was 1964 and that we since then every year have dioscovered less and less new oil at the shallange to keep up supply with demand simply will be a very daunting task.

    Canadian tar sands provides for huge potential reserves but the challenge here will be flow rates. Thus only way from here for oil price as the marginal cost of production for oil increases is up.

    The added wrinkle is that oil prices cannot be expected to reflect this growing supply problem. As long as prices remain low, the MSM and most governments will talk of oversupply-the needed investment changes will not take place and there will be no cushion against hitting the supply and price wall suddenly. Oversimplifying, Hank Paulson's crew (traders) are entrusted with warning the global economy-their voice is really the only one that matters until TSHTF.

    That's HUGE!!

    Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent

    Does anyone know the definition of natural decline rate? Does it mean no new extraction or injection wells in a mature oil field?


    Just for fun how about a thread for predicting the closing price of WTI on Wednesday 31 December?

    I myself would choose something above $100 based on the details out of the upcoming IEA report (that will be compounded by increasing news of delays to new projects) + a significant supply disruption out of the blue.

    I expect many would go for a figure in the opposite direction.


    The price of oil on 31 Dec is a critical number for the oil patch. All public oil companies have their reserves audited by outside consultants as per SEC regs. These numbers represent the in ground reserve values as well as a schedule of production projected years forward. But the reserve values and cash flow estimates must include a pricing factor. Again, by SEC regs, the price of oil on 31 Dec of each year is the value used. As most operators run their drilling program from their credit lines this price becomes all the more critical since it impacts directly upon credit. If oil is relatively low on 31 Dec it will have a big negative impact on budgets. Combined with the current credit tightness we could see many big projects delayed or cancelled if we see a low price on that date.

    From the Wall Street Journal:

    Oil-Price Rebound Could Be Severe

    LONDON -- Oil prices and demand for crude are both falling, but industry executives warn that the world could experience another dramatic ramping up of prices as soon as the global economy rebounds, squeezing existing supplies.

    The sharp fall in oil prices since July has spread relief among consumers and fuel-reliant industries, helping to damp a serious economic downturn in much of the world. But that same slump in prices is also beginning to squeeze balance sheets within many of the companies now scrambling to bring on additional sources of oil in coming years.

    Mike Johnston's photography blog has this interesting post. The comments section has a reference to TOD also: http://theonlinephotographer.typepad.com/the_online_photographer/2008/10...

    Amazing how many comments he got, from the totally uninformed (hydrogen will save us) to those who have simply given up on humanity:

    "But here we are again. A whole new generation [since the 1970's] of empty-pocketed energy drunks [have emerged] asking the same damn questions, getting the same damn answers. Economists often spouting half-truths about energy supplies and consumption mainly to get notoriety. Politicians misquoting stews of economists hoping to produce the right blend of guilt, fear and hope to get votes. Nothing much has changed in 30+ years."

    If these numbers in fact is what IEA will present November the 12th then the issue of oil supply destruction is what will overshaddow everything else. The fact that the awailability of oil is doomed to decline perpertually in the future from now on is what will be discussed and on going financial debacle will in this regard look like a mere breeze. Certainly Supply destruction will be more important than the notion of greenhouse emissions (this as we by now instead will have less and less awailability of oil and thus greenhouse emissions from here on will be recuced every year) and even more important the notion of so called demand destruction will be out of the window as a totally irrelevant topic to focus on.

    ALL economic growth depends on oil and as such oil is THE ultimate currency. Oil in the ground wherever it may be found is where it's at.

    Again remember that some 1% of all the worlds oil fiels in average where discovered and put in to production some 40 years ago and that these so called giants today provide for approximately some 60% of all the worlds oil production.

    In all of these giant oil fields the usage of THE most modern technology has been extensive in order to keep up production at maximum capacity. Thus when they do enter in to decline the decine rates then in most cases will be very agreesive and steep. As an example Chantarell in Mexico that once was the worlds second largest oil field now has annual decline rates of in excess of 30%. Imagine what will hapen if all giants reaches these kind of numbers.

    Add then to this the fact that Peak Discovery of oil was 1964 and that we since then every year have dioscovered less and less new oil at the shallange to keep up supply with demand simply will be a very daunting task.

    Canadian tar sands provides for huge potential reserves but the challenge here will be flow rates. Thus only way from here for oil price as the marginal cost of production for oil increases is up.

    If these numbers in fact is what IEA will present November the 12th then the issue of oil supply destruction is what will overshaddow everything else.

    I don't think so. If the leaked report is correct, they are expecting new production to more than make up for the decline in existing fields.

    It expects oil consumption in 2030 to reach 106.4m barrels a day, down from last year's forecast of 116.3m b/d.

    In short, this is a very minor modification of their original forecast, and given the demand destruction caused by the current economic crisis, nobody will pay much attention to this.

    The IEA website has a rebuttal of the FT today

    IEA Statement on Unauthorised Press Coverage of World Energy Outlook 2008

    The Financial Times carried a cover page article this morning and a second article on page 4 allegedly reporting on the findings of the forthcoming WEO 2008. This article was drafted without any consultation with the IEA. It appears to be based on an early version of a draft from several months ago that was subsequently revised and updated. The numbers in the article can be misleading and should not be quoted or considered to be official IEA results. We are dismayed that such a comprehensive and important IEA report was made public without our input and verification.

    The IEA will present the final and accurate results of the World Energy Outlook 2008 officially as planned at a press conference in London on 12 November. At that time, we will be happy to discuss the results and their implications for the global energy and climate in full detail.

    Interesting. I wonder if the "real" numbers are better or worse.

    Dunno. But they are after November 4th, and I take that to be the point of their release date! :-)

    I would like to hear VP Candidate Sarah Palin's response to this early draft release, afterall, McCain claims she is an energy expert.

    What are the chances of the MSM hairdos quizzing either Obama/Biden or McCain/Palin on this IEA info before the election? Will the Shrub comment if asked by the White House press corp?

    Will the Press ask OPEC, Chavez, Putin, Brown, Sarkozy, et al, for their reaction to this draft?

    This could be a political gold mine or land mine depending on what the global politicos say [or not say] before the US election and Nov 12th.

    It's hard to know what sort of game is being played. Is the leak deliberate, as many leaks are?

    Anyhow, the net effect is that very pessimistic numbers are out there. And that's important. And it's a game changer.

    Simply issuing a final report with better numbers won't change it.

    Russia fertiliser firm Acron cuts output

    MOSCOW, Oct 29 (Reuters) - Russian fertiliser producer Acron will cut output by up to 50 percent next month at its plants in Russia and China as cash-strapped agricultural producers scale back orders and prices for its products fall.

    .."The global liquidity crisis has impacted the financial position of agricultural producers; many of them are experiencing difficulties with obtaining debt financing," Popov said in the statement.
    As I predicted earlier: the I-NPK producers seem clearly able to measure a buildup of inventory, then quickly move to curtail JIT flowrates to keep prices profitable.

    This next link is on just one fertilizer company's prepayment amounts:

    Terra Industries Inc. Q3 2008 Earnings Call Transcript

    [from page 3 of 10 total]: Our cash balances which included $195 million in customer prepayments totaled $681 million.
    I have no idea if the other I-NPK mfgs are getting prepaid amounts like this, but if they are it can really help to financially smooth their overall operations.