Gwydion, thanks for the reply. Just to expound on what you wrote. Jack pumps cannot be used offshore or on slant or horizontally drilled wells. But, in most cases, down hole electric pumps can be used. I have no idea how they would work when a well is producing only a few barrels per day however.

Another point, depleted fields are not all the same. Most fields in Texas have sandstone reservoirs. Sand is mostly quartz. Oil will not soak into quartz so a sandstone field will gradually give up most of its oil if you are patient, wait long enough and pump slowly enough. However I am not sure such a tactic would work where the oil has been forced out by massive water flooding. I would need to get an oilfield expert's opinion on that.

Carbonate fields, like Ghawar, are a different story however. Carbonate rock soaks up oil like a sponge and you can extract about 30 to 35 percent of it and no more. What oil is left can never be extracted. Well, not with known technology anyway.

Ive been to 1500 feet in a copper mine. It was very warm!

I recall that the quoted reserves from the Alberta tar sands includes some tar that isnt economic to recover (to much overburden). Anyone have any data on how the tar is distrubuted?

Which raises the question: if you are going to bother to dig that deep into the earth, isn't there more energy to be harvested as geothermal? Why even bother with the residual oil left in the rocks?

Heat flow definitely increases with depth, but the average depth/temp calculation is misleading. I have been about 6000 feet below surface at the Con Mine in Yellowknife, and while it was warm and humid, simple down-flow ventilation was sufficient. OTOH, 800 feet deep at Miekle on the Carlin Trend was very warm despite a huge refrigeration system. The difference between the two is crustal thickness. The Canadian shield around Yellowknife is old and very thick...and cool. The lithosphere at Carlin is very thin...the asthenosphere is but a few kilometers down.

Well not exactly - they have mined, with human labor, down below 8,000 ft - see Homestake and while it was a little uncomfortable to move around (you have to climb ladders into some of the stopes) it was not too bad. The did, however, use very large air conditioning systems to cool the air down at that depth. The world's deepest mines are in South Africa and go down more than two miles.

The relative cooling of the rock in S. Africa doesn't contribute a lot to the rock burst problem down there, it is largely stress related, particularly with the stress concentrations around the mine openings.

Even in the distant non-oil future (assuming catastrophic social failure), the formulae ERoEI is still applicable. The diggers have to be fed.

Since the Bailout Kings at AIG, etc, have enjoyed vigorous massages and wheelbarrowed great quantities of cash: perhaps their muscles are now ideally suited to this asphalt removal task.

Slideshow of partying on the taxpayer dime:

http://www.businesssheet.com/2008/11/bailout-junkets-of-2008-a-scrapbook
----------------------
Top 10 Bailout-Sponsored Junkets

Eat, drink, and be merry -- someone will bail you out.

After the humiliation of haggling over bailouts, there comes the post-bailout party. Staff of supposedly ailing companies are living it up on more than a prayer.

See where and how they celebrated government money and keeping their jobs.
-------------------------

Sorry, had to replace that image with a link. It was humongous.

What an unmitigated environmental disaster the tar sands are becoming.

I said; oil wells are drilled because they are deep. (Meaning because the oil is so deep there is no other way of getting it out.) Xeroid replied:

I think this is incorrect, oil wells are drilled because they are currently the cheapest and most profitable way to get at the oil.

Please get real! Like there is another way of getting oil out that is a mile beneath the surface of the earth.

When the world's oilfields have been depleted of 'net energy' what remains can be extracted in some way if, as I suspect, it will be profitable to do so -

Okay, we are all ears here. When Ghawar, or the North Sea, or Cantarell has been depleted, how do you propose that we extract what is left. It is not enough just to say "I think it can be done". Hell, that can be said about extracting methane from Jupiter, by anyone who has no clue about what the hell he is talking about. If you believe it can be done then please inform us exactly how that oil can be extracted after all well extraction technology has run its course and nothing is coming out except water.

By all means tell us what other methods can be used to extract the remaining oil. You are going to strip mine Ghawar or Cantarell? Yeah right!

Exactly. EROEI invested does not matter for non-energy uses, all that matters is to make a profit.

I can't tell the future as Darwinian wants (to assume anybody can is bizarre), but that does not make me wrong, at the moment mining does not need to be considered since we have large flows of oil suitable for energy or non-energy uses.

Just like oil for energy use, if it is profitable, the low hanging fruit (and there's lots of it) will be used first, not the fields that are tens of thousands of feet down under deep water, but those on or near the surface on land.

Try to keep graphics under 500 pixels wide.

Also, an image like this with large areas of solid color is usually better posted as GIF or PNG. It looks better, and is smaller in file size. JPGs are best for photos.

Thanks folks! I think that answers the problem, as it shows what the graphic is all about so those who find it intereesting as I do can download the pdf.
I fiddled around for a few minutes looking at the html guidance, but could not seem to adapt it for pdf's

"Co2 emissions might prevent future ice ages."

Keep in mind that the oceans contain a 1,000 times as much thermal energy as the entire atmosphere. That means the oceans rule the weather. For example, even though the UK is located in a far northern latitude, because the water flowing in the ocean conveyer is arriving from South America, that relatively warm water provides for warmer winters than would be expected for that latitude.

If CO2 emissions cause higher tempetures worldwide, causing a big melt of ice from the arctic, including Greenland, then freshwater will reduce the conveyer which is dependent on a high salt content to maintain the density of the water, which pushes the conveyer down and keeps the flow of water moving as it makes the turn from the Artic towards the equator. Slow or stop the conveyer and the oceans become stagnant, reducing water tempetures in the northern latitudes, which initiates a new ice age.

Once an ice age starts, it won't matter how much CO2 is in the atmosphere, ice sheets will form at both poles and glaciers will start advancing.

Earth's history has shown previous periods of ocean stagnation in the mid-latitudes, which causes algae blooms, which rob the oceans of their oxygen killing the marine life. The algae blooms then die from lack of oxygen and drop to the ocean bottom, where they become a sedimentary layer that later is cooked under the pressure of more layers on top, which turns that biomass into oil, coal and natural gas, which we are tapping into today.

Funny how that works isn't it. Too much carbon in the atmosphere has led to stagnation of the oceans, which led to the formation of oil deposits. Hmm, you don't mean we are in the process of causation of that same scenario, right?! Oops!

Family homelessness rising in the United States

Families are flooding homeless shelters across the United States in numbers not seen for years, camping out in motels or staying with friends and relatives, homeless advocates say.

"There are lots of families hemorrhaging into homelessness and we need to figure out how to put a tourniquet on the hemorrhaging," Philip Mangano, the homelessness czar appointed by President George W. Bush in 2002, told Reuters.

If the flippers are renting, then it's probably at a loss. That I can see some people tolerating, but I've been speaking with people who own properties that have been residential rentals for a while, and lately they subtly hint that they have vacancies.

The 500 turkeys my son's school typically gets free to include in the thanksgiving baskets they deliver to families that otherwise would go without are not coming this year; for the first time in decades, the supplier said "no".

Snowball.

cfm in Gray, ME

Is this the first time that they've managed to successfully loot a treasury with no money in it?

Brilliant!

Let's take a different look at this data:

4 week avg y-o-y and YTD

Products Supplied          2008    2007   Diff  Percent

Finished Motor Gasoline   9,055   9,235   -180   -13.3
Kerosene-Type Jet Fuel    1,322   1,629   -307   -22.6
Distillate Fuel Oil       3,992   4,183   -191   -14.1
Residual Fuel Oil           452     657   -205   -16.0
Propane/Propylene         1,244   1,176    +68    +5.0
Other Oils                3,067   3,610   -543   -40.0

Total Products Supplied  19,132  20,489  -1,357

The "other oil" category apparently includes kerosene for heating, ave gas, natural gas liquids except propane, etc. I suspect that there were fewer people flying the past month. And, there are more cokers operating out there this year, data for which appears to be included in the stock numbers but not in the supply numbers. The bottom line can be confusing at best.

E. Swanson

I saw your comment above and of course am in total agreement.

I have recently dedicated considerable time to trying to sort out my own values, beliefs, attitudes and opinions. I read a great many books, but forums like TOD are invaluable in this process. Nothing compares to free and open debate when it comes to truth-seeking.

Actually, TOD is not totally devoid of discussion of moral virtue. Those discussions happen quite frequently here. And it's fairly balanced discussion--there seem to be no lack of people to take both sides of an argument. And for the most part it stays pretty civil. And of course there's always an abundance of information here for the left-brainers like myself--a level of empiricism you don't find on most blogs. I suppose those are the things that keep me coming back.

Don,

Thank you for your response. You and I have some of the liveliest debates.

As a rejoinder, I believe that, if you want to defend Milton Friedman, it is incumbent upon you to cite the appropriate texts and details of his life and career that justify that defense. And having done that, it is then up to you to make your case, not to demand that I do it for you.

The other day you accused me of making "ad hominem" attacks on Friedman. That presents me with the opportunity to respond. Please excuse the length, but I felt it was important (and necessary if I was to mount an effective defense against the bowdlerized history of his life told by his defenders, Paul Krugman and the New York Times) to set out some of the relevant highlights of Friedman’s career. Some might also find this history germane to what is going on in America today. Perhaps it will help put current events into a larger historical and philosophical framework. As we try to figure out where to go from here, it’s important to understand how we got where we are.

Webster’s New Collegiate Dictionary defines ad hominem as “marked by an attack on an opponent’s character rather than by an answer to his contentions.” I suppose my opprobrium for Friedman is based on both his character and his contentions. So the criticism leveled is perhaps half true. Anyway, here’s my answer:

The drive for wealth is not qualitatively different from that for glory…

Robert L. Heilbroner, Behind the Veil of Economics

Why did they do it?

This is the question that always arises when considering Milton Friedman and the school he fathered—the Chicago School. He and his disciples set out to remake the world, perhaps with good intentions. But the movement he and his followers engendered increasingly came to resemble other ideologically-driven stirrings, such as Communism and Nazism, and in practice had similar results, though not nearly as extreme.

The “new classical” economics that Friedman preached, despite all its pretensions to “science,” was not really a science at all. It was instead an ideology, and an ideology in what Robert Heilbroner calls the full “pejorative sense” of the word—“as denoting a set of ideas foisted on the populace by a ruling order in order to manipulate it.” Cornel West was not so kind. He called it the “economics of greed”--the “culture of indifference to the poor.”

It seems the first priority of Classical economics was to purge the study of economics of all moral considerations. Drawing from precedents established by Albert Hirschman and Jeremy Bentham, the evangelists of the wonders of the free market concluded that:

[T]he constitution of a “science” of economics as the most important form of social self-scrutiny of capitalist societies could not be attempted until moral issues, which defied the calculus of the market, were effectively excluded from the field of its investigation.

Robert L. Heilbroner, Behind the Veil of Economics

The real-world implications of this were to manifest themselves as Friedman’s career unfolded.

Friedman’s first chance to put his economic prescriptions into practice came in Chile. As Barrons reported at the time, American economists may have been writing “treatises” on the “way the world should work, but it is another country that is putting it into effect.” Carlos Fuentes gives this account of Pinochet’s rise to power:

In Chile, the socialist government of Salvador Allende was overthrown in 1973 by a military coup headed by General Augusto Pinochet. In a savage action, Allende partisans were rounded up, gathered in a stadium, and murdered en masse. Others were sent to concentration camps, and still others were exiled and sometimes murdered abroad. Pinochet did all of this in the name of democracy and anticommunism.

Carlos Fuentes, The Buried Mirror

None of this, however, seemed to faze Friedman. In fact it all seemed to fit very neatly into his ideology. He personally appeared on the scene in Chile in March of 1975. Greg Grandin gives this recounting of his trip:

While he was in Chile Friedman gave a speech titled “The Fragility of Freedom” where he described the “role in the destruction of a free society that was played by the emergence of the welfare state.” Chile’s present difficulties, he argued, “were due almost entirely to the forty-year trend toward collectivism, socialism and the welfare state . . . a course that would lead to coercion rather than freedom.” The Pinochet regime, he argued, represented a turning point in a protracted campaign, a tearing off of democracy’s false husks to reach true freedom’s inner core. “The problem is not of recent origin,” Friedman wrote in a follow-up letter to Pinochet, but “arises from trends toward socialism that started forty years ago, and reached their logical and terrible climax in the Allende regime.” He praised the general for putting Chile back on the “right track” with the “many measures you have already taken to reverse this trend.”

Greg Grandin, Empire’s Workshop: Latin America, The United States, and The Rise of the New Imperialism

And so the template that was to be used by U.S. conservatives for the next three decades had its genesis not in the U.S., but in Latin America. As Grandin observed, this was to be “Friedman’s greatest contribution to the rehabilitation of conservatism in the 70s.” It was in Chile where “the New Right first executed its agenda of defining democracy in terms of economic freedom and restoring the power of the executive branch.” And from this point forward, conservatives, whether their goal was to replace defined benefit pensions with 401(k)s, do away with public education, privatize social security or fend off public health care, crouched their arguments in this framework of “capitalism and freedom”.

But so much for morality and politics. Moving beyond that, and turning to the question of efficacy, how did Friedman’s prescriptions for the economy, when put into practice, work out? Grandin goes on to explain:

Chile became, according to Business Week, a “laboratory experiment” for taming inflation through monetary control, carrying out, said Barrons, the “most important modifications implemented in the developing world in recent times.”

A month after Friedman’s visit, the Chilean junta announced that inflation would be stopped “at any cost.” The regime cut government spending twenty-seven percent, practically shuttered the national mint, and set fire to bundles of escudos. The state divested from the banking system and deregulated finance, including interest rates. It slashed import tariffs, freed prices on over 2000 products, and removed restrictions against foreign investments. Pinochet pulled Chile out of a number of alliances with neighboring countries intended to promote regional industrialization, turning his country into a gateway for the introduction of cheap goods into Latin America. Tens of thousands of public workers lost their jobs as the government auctioned off, in what amounted to a spectacular transfer of wealth to the private sector, over four hundred state industries. Multinationals were not only granted the right to repatriate one hundred percent of their profits, but were given guaranteed exchange rates to help them do so. In order to build investor confidence, the escudo was fixed to the dollar. Within four years, nearly thirty percent of all property expropriated not just under Allende but under a previous Alliance for Progress land reform was returned to previous owners. New laws treated labor like any other “free” commodity, sweeping away four decades of progressive union legislation. Health care was privatized, as was the public pension fund.

GNP plummeted thirteen percent, industrial production fell 28 percent, and purchasing power collapsed to forty percent of its 1970 level. One national business after another went bankrupt. Unemployment soared.

Yet by 1978 the economy rebounded, expanding thirty-two percent between 1978 and 1981. Though salary levels remained close to twenty percent below what they were a decade previously, per capita income began to climb again. Perhaps even a better indicator of progress, torture and extrajudicial executions began to taper off. With hindsight, however, it is now clear that the Chicago economists, despite the credit they received for three years of economic growth, had set Chile on the road to near collapse. The rebound of the economy was a function of the liberalization of the financial system and massive foreign investment. That investment, it turns out, led to a speculative binge, monopolization of the banking system, and heavy borrowing. The deluge of foreign capital did allow the fixed exchange rate to be maintained for a short period. But sharp increases in private debt rising from $2 billion in 1978 to over $14 billion in 1982 -- put unsustainable pressure on Chile’s currency. Pegged as it was to the appreciating US dollar, the value of the escudo was kept artificially high, leading to a flood of cheap imports. While consumers took advantage of liberalized credit to purchase TVs, cars, and other high-ticket items, savings shrank, debt increased, exports fell, and the trade deficit ballooned.

In 1982 things fell apart. Copper prices plummeted, accelerating Chile’s balance of trade deficit. GDP plunged fifteen percent, while industrial production rapidly contracted. Bankruptcies tripled and unemployment hit 30 percent. Despite his pledge to hold firm, Pinochet devalued the escudo, devastating poor Chileans who had either availed themselves to liberalized credit to borrow in dollars or who held their savings in escudos. The Central Bank lost forty-five percent of its reserves, while the private banking system collapsed. The crisis forced the state, dusting off laws still on the books from the Allende period, to take over nearly seventy percent of the banking system and reimpose controls on finance, industry, prices and wages. Turning to the IMF for a bailout, Pinochet extended a public guarantee to repay foreign creditors and banks.

But before the crisis of 1982, there were the golden years between 1978 and 1981. Just as the international left flocked to Chile during the Allende period, under Pinochet the country became a mecca for the free-market right. Economists, political scientists, and journalists came to witness the “miracle” first hand, holding up Chile as a model to be implemented throughout the world. Representatives from European and American banks poured into Santiago, paying tribute to Pinochet by restoring credit that was denied the heretic Allende. The World Bank and the Inter-American Development Bank extolled Chile as a paragon of responsibility, advancing it 46 loans between 1976 and 1986 for over $3.1 billion.

ibid

And it was these “golden years” that Friedman and his acolytes seized upon, making them the poster child for their economic paradigm. Despite its dismal failure in Chile, the “Chicago influence” remained a powerful force in Latin America. Its prescripts were subsequently implemented in various Latin American countries, including Argentina, Brazil and Mexico, always with the same outcome. Carlos Fuentes elaborates on its fate in Mexico:

The privatization schemes of the Salinas government dismantled a large part of Mexico’s economy and concentrated wealth and power in what the president considered to be big, competitive conglomerates for our entry the world scene. The losers were small- and medium-sized businesses, lacking credit, and Mexican society as a whole, lacking the public investments that had once had repercussions across the whole economic board, stimulating further investment, employment, production, and a healthier balance of payments…

Mexico needed—and did not get—policies encouraging investment in activities that would further employment, wages, growth, and savings. Instead, the Salinas reforms provoked a flood of speculative, unregulated capital that did not go into productive areas. Like flight capital in any other emerging market, it stayed in Mexico as long as it was profitable to stay and fled as soon as dark clouds started accumulating in the sky…

Never had Mexico received as much foreign investment as it did during the Salinas years: almost $59 billion between January 1989 and September 1994, but of that economic sum, almost 85 percent was speculative flight capital.

[When the foreign capital began to flee and the crisis began the] neoliberal model espoused by the Salinas administration responded by fighting inflation, balancing the budget, inspiring confidence in Mexico, attracting investment, concentrating wealth in a few competitive firms and individuals, and hoping that the trickle-down would take effect. But the hope was undermined by evidence that the economy was not growing, that fighting inflation had become a fetish, that excessive foreign spending was not compensated for by increasing local production, that real growth was hindered by one of the lowest savings rates in the world, and, finally, that flight capital had become unmanageable.

Yet the deeper reason for the crisis has simply to do with democracy in Mexico. The secrecy surrounding our economic realities is related to something well known in Anglo-Saxon law for which there is not even a proper term in Spanish: accountability, checks and balances. These are part of a democratic system of government with a real separation of powers, in which the legislative and judicial branches balance and offset the executive. In Mexico, from the Aztec emperor Moctezuma right down to Carlos Salinas, the executive has been all-powerful, untrammeled, subjected neither to accountability nor to checks and balances.

Carlos Fuentes, A New Time for Mexico

The road to the imperial presidency in the United States, however, was to be a slow and arduous one. The kind of free-market absolutism advocated by the Chicago School was only possible through overt repression, to which modern liberal democratic societies are not very amenable. This point was bemoaned by Margaret Thatcher, who,

at the nadir of Chile’s 1982 financial collapse, agreed that Chile represented a “remarkable success” but believed that Britain’s “democratic institutions and the need for a high degree of consent” make “some of the measures” taken by Pinochet “quite unacceptable.”

Greg Grandin, Empire’s Workshop: Latin America, The United States, and The Rise of the New Imperialism

So patience was necessary. But Friedman and his disciples did not demur. It took more than three decades of constant agitation and propaganda, in league with neoconservatives and corporate and media elites, but America’s tradition of financial accountability, transparency and checks and balances was gradually, and almost imperceptibly, dismantled. And in the election of 2000 the Chicago boys, along with their corporate sponsors, finally got their imperial president. America became a Mecca for the free-market Right and was given the full, unbridled, and unadulterated Friedman treatment. And the product, not surprisingly, has not been so different from what was experienced previously in Chile and Mexico. The difference is that the U.S. possesses the world’s reserve currency, which may keep it from suffering the same sort of economic pain that those countries did. (Or maybe not. Are Treasuries and the dollar the final bubbles?)

Which all brings us back to the original question: Why did, and still do, Friedman and his followers do it? They can’t be accused of doing it for the money. Most of their academic pursuits are not all that lucrative, especially when compared to the remuneration received by the corporate titans they enable.

Heilbroner I suppose would argue that it is the drive to accumulate glory, which he says is no different from the drive to accumulate money. The “capacity to amass wealth on an unprecedented scale”, “rational maximizing” and a “wholly self-oriented conception of motivation” are, after all, the touchstones of the capitalistic creed. Even though Heilbroner concedes that acquisitive behavior has been legitimized as the social norm, he nevertheless alludes to the possibility that extreme cases entail a destructive psychopathology, rooted in a childhood socialization process gone awry:

The unappeasable character of the expansive drive for capital suggests…that its roots lie not so much in these conscious motivations--what Adam Smith called “desire of bettering our condition”--as in the gratification of unconscious drives, specifically the universal infantile need for affect and experience of frustrated aggression.

Robert L. Heilbroner, Behind the Veil of Economics

And then we have the musings of Eric Hoffer, who spent a lifetime studying the nature of true believers. Here’s some of what he had to say about the idealistic fervor that grips the Milton Friedmans of the word and their followers:

Absolute faith corrupts as absolutely as absolute power....

A doctrine insulates the devout not only against the realities around them but also against their own selves. The fanatical believer is not conscious of his envy, malice, pettiness and dishonesty. There is a wall of words between his consciousness and his real self...

The monstrous evils of the twentieth century have shown us that the greediest money grubbers are gentle doves compared with money-hating wolves like Lenin, Stalin, and Hitler, who in less than three decades killed or maimed nearly a hundred million men, women, and children and brought untold suffering to a large portion of mankind.

And finally we have what Milton Friedman himself said about why he did it. “In every generation,” he is quoted in his flattering New York Times obituary, “there’s got to be somebody who goes the whole way, and that’s why I believe as I do.”

quixotic,

I did a search for that title on amazon.com and couldn't find it. If you can find somebody who has it in stock and post a link I would appreciate it.

In my search I did find this title which I ordered:

Moral Dimension : Toward a New Economics by Amitai Etzioni

The title looks interesting.

airdale,

You're an amazingly complex person.

You come out with what I consider to be some real blunders sometimes, but then you are also capable of coming up with some real gems like "as information doubles,knowledge halves and wisdom quarters" or your "signs of the times" comment above, which is suffused with heart-felt sentiment and thoughtfulness.

One thing's for certain though, I've noticed there sure ain't no bashfulness on your part to tell 'em how the cow ate the cabbage. Sometimes you got to take some heat for doing that, but you seem pretty good at that too.

What's next is the post-Keynesian synthesis of economics that can help us deal with declining oil production and declining net oil exports.

Economics is about scarcity and choice. Scarcity is a given in economics, cornucopianism merely a weird variant that strays from the tradition of nineteenth century classical economics. Economists in the nineteenth century were particularly concerned about running out of coal and what that would mean for industrial societies. They keenly appreciated the primacy of energy and the importance of natural resources in general. One can do much worse than to read the great nineteenth century economists, from Ricardo to Mill to Edgeworth to Alfred Marshall and John Neville Keynes, the father of John Maynard Keynes and the one who made the crucial distinction between positive and normative economics.

When economists get away from scarcity, they tend to blunder. Much of the theory of economic growth published during the second half of the twentieth century ignored the importance of cheap fossil fuels. For example, I despise Solow, because his famous growth models focus on the importance of technological advances for growth and completely neglects the importance of the falling real costs of fossil fuels during the twentieth century.

So, if GM goes belly up, will we also find that "The Heart Beat of America" will also cease? Call it "collateral damage", perhaps.

E. Swanson

Time to get back to revenue sharing which we had in the 1970s? There has been way too much competition between states and cities in giving out tax breaks to corporations in the mistaken belief that taxes on workers will make up the difference. Once the tax break expires the corporations move to the next town or out of the country where labor can be had for pennies per hour.

I'm a 9000 seller and a 7000 buyer

I think we may get a "Santa Claus rally

I hope he will be bringing me S&P 500 ultra-shorts along with those Christmas socks.

I think stock indices will fall for the next fifteen years. Why? Because net oil exports are going to fall for the next fifteen years. Decling net oil exports will lead to decling real GDP and hence to declining profits. Declining profits will lead to lower earning for stocks and also lower price earnings ratios. Thus I think the Dow Jones Industrial Average is headed for 1,000 or lower. Of course there will be rallies from time to time, and a few speculators will make money. Very few.

How bad can a movie be where they blow up the white house and kill all the congresscritters?

How much worse can it get. To paraphrase Clare Wolfe, we may get past the "Awkward Stage", one way or the other.