DrumBeat: November 13, 2008

Kingdom stands vindicated after IEA report on Ghawar

Pushing his peak oil theory, Simmons has been arguing that Ghawar’s northern regions are almost depleted and that the two other giant fields, Abqaiq and Berri, also seem to have peaked in the 1970s. He keeps insisting Saudi Arabia wouldn’t be able to sustain production much above the current levels for long — a bleak scenario indeed for the global energy balance.

...The IEA report on Ghawar, when seen in the above perspective, appears reassuring in many, many ways. It is music to ears in real, real sense.

Renewable energy may end up scarred, but stronger

DENVER (AP) -- Billionaire oilman T. Boone Pickens put his massive wind farm plans on hold in Texas. A Maryland solar plant project has been scrapped. And the nation's second-largest ethanol company is under bankruptcy protection.

The alternative energy sector has run smack into a credit crisis, probably a recession as well, and almost all industry experts think the fourth quarter is going to be worse.

Yet many believe it could emerge from the economic turmoil scarred but stronger. The International Energy Agency in Paris this week predicting green energy will be the second largest source of global electricity generation before 2015.

China's Monthly Power Output Falls For 1st Time In 4 Years

BEIJING -(Dow Jones)- China's monthly power generation fell for the first time in four years, data released Thursday by the National Bureau of Statistics showed, suggesting a significant drop in industrial demand due to the global financial crisis.

Power generation in October fell 4% from a year earlier to 264.5 billion kilowatt-hours, the data showed.

Russia spends $4bn to protect rouble

Russia spent over $4 bn (£2.7bn) trying to defend the rouble yesterday as falling oil prices spread chaos and consternation through Moscow's money markets.

Iran May Have to Abandon Nuclear Program, Israeli President Shimon Peres Says

NEW YORK — Tumbling oil prices will force a weakened Iran to consider abandoning its nuclear ambitions, Israeli President Shimon Peres says.

"The minute a barrel of oil goes down to its real cost, the Iranians will have to make a choice either to provide bread and butter for their children or to provide enriched uranium for the prestige of their leaders," Peres told FOX News in a wide-ranging interview Wednesday.

Mexico says value of crude oil hedge is $9.553 bln

MEXICO CITY (Reuters) - Mexico spent $1.5 billion to hedge its oil exports for 2009, and the current value on its position is $9.553 billion, the Finance Ministry said on Thursday.

Economy has boat owners abandoning ship

SAN FRANCISCO - From Southern California to Maine, the foundering economy, high fuel prices and poor fishing have driven boat owners to abandon perhaps thousands of vessels on the waterfront, where they are beginning to break up and sink, leaking oil and other pollutants.

The Peak Oil Crisis: The First Rule of Holes

America has dug itself into the deepest hole it has been in since 1860 when the dispute over slavery reached its zenith.

That hole took five years of war and 150 years of social discord before we could start climbing out. The current hole, reliance on fossil fuels for nearly everything, will also take many decades of hardships to work itself out.

For now however, digging our hole deeper continues everywhere. Oversized gas-guzzling automobiles continue to be built and sold by the millions. New generations of kerosene-guzzling airliners are being readied for the market. Houses and all sorts of buildings requiring excessive amounts of energy to be habitable continue to be built. Roads are being widened and lengthened. Our great national hole deepens every day.

Getting out of this hole will not be painless.

‘Peak oil’ adherents grow in number and influence

What do former Vice President Al Gore, Wall Street Journal columnist Neil King and Long Island City Business Development Corp. director Dan Miner have in common?

It turns out all three men have, to varying degrees, allied themselves with a “peak oil” theory once dismissed as a crackpot concept lurking in the darkened corners of the Internet.

U.S. military worries about climate change

As a new administration committed to addressing climate change takes office, intelligence and defense officials are laying plans to address the national security implications of a warmer planet.

In recent months, U.S. military planners have discussed the impact on personnel, equipment and installations of extreme weather events, rising ocean temperatures, shifts in rainfall patterns and stresses on natural resources.

Among the concerns: 63 U.S. coastal military facilities and several nuclear reactors are in danger of flooding from storm surges, said Tom Fingar, the deputy director of national intelligence for analysis.

OPEC Plans to Meet This Month to Discuss Output Cut

(Bloomberg) -- OPEC, the supplier of 40 percent of the world's oil, plans to meet in Cairo at the end of the month to discuss a further cut in production after crude slumped to a 21-month low.

Cairo is hosting a meeting of the Organization of Arab Petroleum Exporting Countries on Nov. 29. Non-Arab members of OPEC, like Venezuela, Iran and Angola, will be invited to take part in talks about the oil market afterwards, OPEC President Chakib Khelil told Algerian radio today.

OPEC 2008 Revenue Forecast Is Cut 9.6% by U.S. Government

(Bloomberg) -- The U.S. government lowered its forecast for OPEC nations' revenues from oil exports this year to $979 billion, a cut of 9.6 percent from last month.

The Organization of Petroleum Exporting Countries would make 46 percent more than it did in 2007, based on the revised estimate, according to a report released today by the U.S. Energy Information Administration, the statistical arm of the Energy Department.

Shell Hires Supertanker With Option to Store Oil, Broker Says

(Bloomberg) -- Royal Dutch Shell Plc, Europe's largest oil company, hired a supertanker with an option to use it to store North Sea crude, according to Paris-based shipbroker Barry Rogliano Salles.

Shell contains Nigeria oil spill caused by sabotage

YENAGOA, Nigeria (Reuters) - Saboteurs used a hack-saw to cut through a Royal Dutch Shell oil pipeline in southern Nigeria but the Anglo-Dutch giant said on Thursday it had managed to contain the resulting spill.

Shell said the damage to the Adibawa delivery pipeline in the Okordia-Zarama community in Bayelsa state was reported on Tuesday and a team of investigators was sent to the location to determine the cause of the spill.

UK power demand falls as credit crunch bites

LONDON (Reuters) - Lower British industrial output because of the economic slowdown will probably cut electricity use this winter, helping generators meet demand comfortably, UK network operator National Grid said on Thursday.

The green pound: Greenery may create jobs—but not the ones its boosters think

In many ways, Britain seems an attractive destination for green investors. The country is one of the windiest and most wave-battered in Europe. Liberalised markets mean few barriers to entry. After 15 years of dithering, says Mark Woodall, the boss of Climate Change Capital, an investment bank that advises Vattenfall, the government’s green targets suggest that it is at last taking renewable energy—particularly offshore wind power—seriously. And with an electricity-generation crunch looming as old nuclear power stations and dirty coal plants close, there is a great appetite for new power stations of all kinds.

Despite these advantages, a clunky subsidy regime and planning delays have conspired to slow investment and keep Britain near the bottom of the European renewables league (see chart). Both are being reformed, with extra cash for expensive technologies and powers to overrule local planning objections. Even so, Mr Brown’s comparison with North Sea oil highlights risks as well as rewards. In the 1960s it was hoped that the development of oil and gas would revive British manufacturing with orders for drilling rigs, production platforms and survey vessels. In the event, much of the equipment was brought in from America or Norway.

Credit crisis shakes up solar land rush

With most of the prime solar hot spots taken in California, the action is moving to sun-drenched states like Nevada where there’s plenty of wide-open desert land. The BLM has yet to issue any leases and is currently evaluating the applications on a first come, served basis. A key consideration: whether the applicant can deploy a viable solar technology.

But with the credit crunch threatening to derail many of those projects, companies are jockeying to score the best sites - those near transmission lines and water - when the weak are weeded out by a failure to obtain financing or a proven solar technology. Some sites have two or three companies queued up in case the first company in line falters.

Russia tells oil firms to resume full exports

MOSCOW (Reuters) - Russia has ordered oil firms to resume full exports in November after they cut loss-making deliveries because of high duties and falling oil prices, industry and trading sources said on Thursday.

...On Thursday, industry sources said Transneft warned oil firms against cutting exports after its head Nikolai Tokarev met Prime Minister Vladimir Putin on Wednesday.

"Everyone will be pushed back. The reason that is being given is that the budget needs money and we must meet obligations with customers. No one wants to hear that prices will only fall further," one industry source familiar with the situation said on condition of anonymity because he is not allowed to talk to the press.

He added that the order applied to all companies including private producers. "You can not really force private firms into it, but there might be (other) sanctions," he said.

Powering the world

The world will use more renewable sources to produce electricity.

Scientific Community Called Upon To Resolve Debate On ‘Net Energy’ Once And For All

ScienceDaily — “Net energy is a (mostly) irrelevant, misleading and dangerous metric,” says Professor Bruce Dale, editor-in-chief of Biofuels, Bioresources and Biorefining (Biofpr) in the latest issue of the journal published November 7.

Net energy is a metric by which some scientists attempt to assess the sustainability and ability of alternative fuels to displace fossil fuel but recent debate in Biofpr shows that scientists are undecided on its merits as a tool.

Instead, in a series of corresponding articles clearly stating the case for and against net energy, Professor Dale calls for a more holistic approach which takes into consideration issues such as greenhouse gas emissions, petroleum displacement and economic growth, particularly in the developing world. He is calling on the scientific community to come together to help establish, once and for all, parameters by which to calculate fuel efficiency by using not just one, but several metrics that can be used in conjunction to give a fuller picture.

OPEC May Wait Two Months Before Deciding Further Cuts, IEA Says

(Bloomberg) -- OPEC, which supplies more than 40 percent of the world's oil, may need to wait two months before the impact of last month's production to cut is felt, the International Energy Agency said.

``With the meeting coming in late October, after many producers had already informed customers of November contract volumes, it may be a couple of months before the impact and durability of actual production cuts becomes apparent,'' the IEA said in its monthly report released today. Compliance to cuts is likely to be ``strong,'' it said.

Democrats speed push for auto industry bailout

WASHINGTON - Congressional Democrats are pushing legislation to send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., hope for quick passage of the auto bailout during a postelection session that begins Monday.

Legislation being drafted by Rep. Barney Frank, chairman of the House Financial Services Committee, would dip into the $700 billion approved by Congress last month to rescue the nation's financial industry.

Trade deficit shrinks as oil imports slow

NEW YORK (CNNMoney.com) -- The U.S. trade deficit eased in September as lower gasoline prices drove down imports of crude oil.

Gates brands Russian threats as 'provocative'

TALLINN, Estonia - The United States views Russian threats to place tactical missiles near the border of NATO member Poland as provocative and misguided, Defense Secretary Robert Gates said on Thursday.

Is The Mall Dead?

With lighter wallets and heavier burdens, Americans are rethinking their conspicuous consumption. That's bad news for retailers.

Greer: Facing peak oil in Motown

Then we arrived in Auburn Hills. It was the sort of suburb built for cars rather than people, where strip malls crouch back from six-lane boulevards as though hoping that their vast parking lots will shield them from the traffic, city hall looks like one more corporate office building, and reader boards on the same restaurants you’d find a thousand miles away struggle to project a pallid imitation of bonhomie into empty space. The sidewalks – where there were sidewalks – had been there long enough that grass poked up here and there through cracks in the edges, but I never saw anyone using them but me. Drivers on their way into parking lots gave me goggle-eyed looks, as though they’d thought pedestrians were as mythical as hippogriffs. It was a strange place for a peak oil conference; given the equally surreal luxury-hotel setting of this year’s ASPO-USA conference, I started to wonder if some hidden cosmic law requires the biggest possible contrast between the subjects of these conferences and their physical setting.

South Africa to re-examine nuclear plant plan - official

JOHANNESBURG (Reuters) - South Africa's plan to build a nuclear plant to tackle its energy shortages has to be revisited in light of the economic climate and the project may be postponed, an energy ministry official said on Thursday.

Energy giant's earnings plunge

LONDON (AP) — Scottish & Southern Energy PLC, Britain's second-largest energy supplier, said yesterday that profit for the first half of its financial year plunged 78 percent as higher wholesale gas and electricity costs crunched profit margins and some of its power stations stopped production because of upgrade delays.

China is taking up slack in gas exports

While traditional LNG importers such as Japan, Korea and Taiwan, which had limited domestic gas supplies, would underpin Woodside's new projects, marketing president Reinhardt Matisons said demand from China and India was also strong.

"These markets can absorb any surplus LNG that comes into the market and thus keep the market really tight for the foreseeable future," Mr Matisons told Woodside's investor day in Sydney. "China, of course, can build LNG import facilities a lot quicker than we can build export facilities. Only as recently as last week, our Chinese customers were yet again asking us for all the LNG we could deliver into the future."

Study: Calif dirty air kills more than car crashes

FRESNO, Calif. – Lowering air pollution in Southern California and the San Joaquin Valley would save more lives annually than ending all motor vehicle fatalities in the two regions, according to a new study.

...To illustrate its point, the study noted that the California Highway Patrol recorded 2,521 vehicular deaths in the San Joaquin Valley and South Coast Air Basin in 2006, compared to 3,812 deaths attributed to respiratory illness caused by particulate pollution.

Life after (peak) oil

How close are we to Peak Oil? Too close for comfort, according to the best predictions, with some of the world's biggest oil fields already showing signs of depletion. We're entering the post-carbon world, one that has varyingly been depicted in science fiction either as an ecological Utopia or, more commonly, a dystopian Road Warrior apocalypse.

Saudi Aramco to cut crude oil supplies to Japan, first time in two years

(MENAFN - Kuwait News Agency (KUNA)) Saudi Arabian Oil Co. (Aramco) has notified Japanese oil distributors that it will reduce crude oil supplies to Japan by about five percent in December, Japan's leading business daily reported Wednesday.

Brazil welcoming Big Oil to its party: Oil and gas discoveries could alter international markets

Brazil's Petrobras has within the past year announced a stunning string of oil and gas discoveries that could alter international markets and prove a boon for both the national oil company and international operators that are involved in the action.

And in a rare, heartening bit of news for the world's largest oil companies -- which are struggling to replace production as many nations shut them out of their fields -- Big Oil is welcome to join the party.

Idea to lower Kansas speed limits runs out of gas

Higher speeds may reduce fuel efficiency, but officials said the idea just wasn't feasible.

"I would hate to drive a whole lot slower myself," acknowledged Ken Frahm, co-chairman of the Kansas Energy Council, the task force that's compiling a list of recommendations for the Kansas Legislature.

'Kilowatt Ours' explores energy conservation on PBS

If you’re looking for simple, practical, affordable solutions to America’s energy crisis, then tune in to “Kilowatt Ours: A Plan to Re-Energize America,” 8 p.m. Saturday (check local listings) on PBS.

This award-winning film from environmentalist and filmmaker Jeff Barrie shows how to save electricity, save money and make a difference for the planet.

Pakistan approves big dam project

Pakistan has developed a massive power shortfall in recent years, and experts believe development of hydro-electric power is a key part of the solution.

Attach environmental strings to Big Three bailout

The real challenge is to think of U.S. automaker woes as an opportunity instead of as a disaster. The auto industry occupies a critical position, not just in the U.S. economy, but also in the struggle to cope with climate change and the energy crisis. The government has immense leverage right now to force the Big Three to make progress on multiple fronts and should not be afraid to use it.

GM and the electric car: a murder-suicide?

Perhaps it is enough to expect that capitalists would reach for the low-hanging fruit, and it is natural to expect that a President from Texas with numerous ties to the oil industry would believe that most Americans want big trucks and will be able to afford them thanks to his administration's policies. The economic developments of this year have taught us to reject both of these propositions. The bubble in oil prices this year may have burst with the slowdown of the economy, but it is a startling preview of a future in which our nation, addicted to oil for our daily driving habits, is starved by foreign suppliers whose willingness to sell to us has been overridden by a swelling global demand for fuel.

Popular energy: Solar thermal

Like a thousand other optimists, I plunged into the new renewable energy business, designed a drain-back solar water heater, and sold hundreds before the federal tax credits were cancelled, and the solar collectors were taken off of the White House roof.

Those of us who had been developing wind turbines, solar water heaters, wood stoves, ground-source heat pumps and cogeneration systems were wiped out.

We have waited 28 years for Washington to try again, which may soon happen.

Why Michigan offshore wind farms are inevitable

The answer: it's all about global energy economics and windmill physics. It's simply a matter of time before offshore windmills appear in Michigan: our appetite for energy is too big, and our off shore wind resource is just too huge to ignore.

Researchers push butanol as biofuel answer

Butanol has traditionally been used as paint thinner, cleaner and adhesive, but as a fuel additive it contains more energy than ethanol and could be blended into existing cars at higher percentages.

And unlike ethanol, butanol does not eat away at pipes so it doesn't need to be shipped by truck. That could help the nation meet its aggressive renewable fuels standard of 36 billion gallons of biofuels to be blended into gasoline by 2022, said Andy Aden, a research engineer at the National Renewable Energy Laboratory.

Date set for Jatropha Jumbo biofuel-2.0 test flight

Boeing and Air New Zealand have announced that they will carry out the first flight test of "second generation" sustainable biofuel in an airliner on 3 December. The planned test will be carried out using an Air New Zealand Boeing 747 flying from Auckland. During the flight, one of the jumbo's four Rolls-Royce engines will run partly on biofuel.

Peddling Green Cement and Concrete Abroad

With the construction business in the United States slowing down considerably, startups that are developing environmentally friendly building materials might have to look outside of the country for market opportunities.

Producers in turmoil as Russian oil hits $10 a barrel

Leading Russian oil producers, including TNK-BP, BP's Russian affiliate, are grappling with a collapse in profits from the export of Siberian oil.

Heavy export tariffs have almost wiped out the profit margin from selling crude oil outside Russia, forcing Siberian producers to sell at prices as low as $10 a barrel on Russia's domestic market. Fears are mounting that the profits squeeze may speed the decline in Russian oil output, already down 6 per cent this year.

The profits crunch, caused by the collapse in the worldwide price of crude, is provoking concern within Russia's oil community that capital expenditure budgets will have to be cut if profits from oil sales do not recover. “The tax burden is very tough,” Valeri Nesterov, an oil analyst at Troika Dialog, the Moscow brokerage, said. “The problem is that the future of the oil sector might be jeopardised if the Government doesn't reduce the tax burden.”

Russia Stocks Slide, Kuwait Shuts as Oil Roils Emerging Markets

(Bloomberg) -- Russian stocks plunged and Kuwait suspended trading as the slump in oil to below $55 a barrel roiled emerging markets and increased concern that the ruble will be devalued.

OPEC May Meet in Cairo to Discuss Oil Production Cut

(Bloomberg) -- OPEC, the supplier of 40 percent of the world's oil, may hold a full meeting in Cairo at the end of the month to discuss a production cut as crude fell to the lowest in 21 months.

Oil falls below $56 on grim world economic outlook

Oil prices continued to slide, to near $55 a barrel Thursday before rebounding slightly, as bad economic news from the world's largest economies heightened fears that a severe global downturn will slash demand for crude.

Government lowers forecast for heating costs this winter

Gasoline is expected to remain a relative bargain through 2009, with prices averaging $2.37 a gallon, and home heating costs will likely be flat this winter under sharply lower U.S. forecasts released Wednesday.

The brutal economy will push down total U.S. petroleum demand this year by 1.1 million barrels a day, or 5.4%, the first time since 1980 that total consumption is expected to fall by more than 1 million barrels a day.

"It's because of significant revisions downward in U.S. and world economic growth," says Tancred Lidderdale, senior economist for the Energy Information Administration, the Energy Department's research arm. "This is not something we've really been through before."

U.S. 2008 oil demand to drop most since 1980: EIA

WASHINGTON (Reuters) - The weak U.S. economy will slash America's oil demand this year by 1.1 million barrels per day, or 5.4 percent, the first time annual oil consumption will fall by more than 1 million bpd since 1980, the federal Energy information Administration said on Wednesday.

For 2009, total U.S. oil demand was projected to drop by an additional 250,000 bpd, or 1.3 percent, the Energy Department's analytical arm said in its new monthly forecast.

International Energy Agency raises alarm on oil, climate[

In this year's World Energy Outlook, the International Energy Agency (IEA) breaks with its tradition of allaying concerns about the availability of oil. Instead, it calls for an urgent transition to a more sustainable global energy system to avert a potential climate catastrophe.

Shell says still happy to invest in oil at $50/bbl

ISTANBUL (Reuters) - Royal Dutch Shell Chief Executive Jeroen van der Veer said on Thursday investing in oil projects could still be attractive with the price of $50 a barrel if taxes and royalties on oil production are not too high.

Executives and officials of oil producing countries have previously said oil prices of about $80 a barrel were needed to justify investment in new projects.

Iran minister says no gas cuts this winter - radio

TEHRAN (Reuters) - Iran will not cut domestic gas supplies this winter, Oil Minister Gholamhossein Nozari was quoted as saying on Thursday, after there was a public outcry last winter following supply disruptions.

In comments carried by state radio, he said finalising a deal to import gas from Turkmenistan would ensure adequate fuel.

U.S. considering offshore Virginia drilling

WASHINGTON (Reuters) – The U.S. Minerals Management Service said on Wednesday it has started the process to consider selling leases to drill for oil and natural gas off the coast of Virginia.

The MMS plans to issue a notice Thursday requesting public comments and evaluating the possible environmental impacts of drilling offshore Virginia.

Israeli Bombs Are Source of Uranium at Shelled Site, Syria Says

(Bloomberg) -- Israeli missiles are the source of traces of uranium that diplomats at the International Atomic Energy Agency say were found at a suspected nuclear site in Syria, according to Syrian Foreign Minister Walid al-Moallem.

EU seeks to expand energy grids

The European Commission has unveiled plans to diversify the EU's energy imports and reduce dependence on Russia, the main gas supplier.

Fire at Japan nuke power plant injures worker: operator

TOKYO (AFP) – A fire broke out at a nuclear power plant in northern Japan on Thursday, injuring one worker but causing no radiation leak, the operator said.

Firefighters put out the fire about an hour after white smoke was spotted coming out of the reactor, which was already shut for a regular check-up, Tohoku Electric Power said.

How Floating 'Energy Islands' Could Power the Future

The ocean harbors abundant energy in the form of wind, waves and sun. All of these could be sampled on something called an Energy Island: a floating rig that drills for renewables instead of petroleum.

JA Solar Cuts Forecast, Sees Solar 'Panic'

NEW YORK - Chinese solar cell maker JA Solar Holdings Co Ltd said on Wednesday the global economic slump had triggered a "panic" in the solar market, prompting it to slash its sales forecasts and sending its shares down more than 30 percent.

Debate: The Ripple Effects of Biofuels

What might appear to be a minor footnote to last year’s energy legislation from Congress is proving to be a significant point of contention between the expanding biofuels industry and environmental advocates.

Meltdown 101: The economy and alternative energy

This summer, alternative energy was looking like it was poised for a phenomenal 2009.

With oil trading around $147 a barrel, why wouldn't consumers and business turn to something other than the status quo? Even billionaire oilman and investor T. Boone Pickens was jumping on the bandwagon, launching a plan to boost the use of wind and natural gas to ease American dependence on foreign oil.

What a difference a quarter of a year makes.

Offshore wind power could alter ocean currents

Generating wind power at sea may disturb ocean currents and marine ecosystems, according to a new study.

Dirty coal to remain world's top power source: IEA

LONDON (Reuters) - Coal, the dirtiest source of fuel, will remain the world's main source of power until 2030 and nuclear will lose market share, the International Energy Agency said on Wednesday.

GM crops found to affect reproduction in mice: Austrian study

VIENNA (AFP) – Genetically-modified maize can affect reproduction in mice, an Austrian study has found, although its authors have dismissed warnings by environmental groups that it could also harm humans.

'Dig for Victory' garden for Barnstaple town centre

He said: "Hopefully, by summer 2009, the shelter will be in and the traditional World War Two vegetable garden will be in. We are going to make sure the seeds are varieties that would have been used back then.

"We can also use the garden to talk about sustainability and peak oil and food production. It's not just about the war."

Infrastructure planning ignores peak oil: ASPO

Without immediate action peak oil will cost Australia up to $80 billion within a decade, a research body has warned.

IEA Report Predicts Oil Supply Crunch

The needed recession has arrived - that much is clear. Demand estimates are now being slashed with abandon, helping to pull the rug out from under the price of oil which has since tumbled more than 60 percent.

You'd think that oil market prognosticators would be happy with that development (at least the ones who are hoping there's going to be enough of the stuff to go around for a while), but apparently they are not.

A closer look at Obama’s energy plan

While many candidates’ platform promises are cast aside when political opposition looms, the Obama energy plan seems integral to his promise to get the economy restarted, some experts say.

“Obama’s energy plan is much more than a campaign laundry list,” says Bracken Hendricks, a senior fellow at the Center for American Progress, a think tank chaired by John Podesta, who heads the Obama administration’s transition effort. “It really is a centerpiece of Obama’s economic development strategy for the nation, for energy security, and rebuilding our cities and infrastructure,” Mr. Hendricks says.

Prank NY Times: `All the news we hope to print'

NEW YORK – Commuters nationwide found out during Wednesday's morning rush hour that the wars in Iraq and Afghanistan had ended and global warming, health care spending and the economy's problems were on their way to being solved.

Where Have You Gone, Gray Davis?

Priorities: California is headed toward fiscal disaster, thanks to the worst performance by any state, ever. So what does Gov. Arnold Schwarzenegger do? Convene a big meeting on global warming, of course.

Earth may face freeze worse than Ice Age: study

OSLO (Reuters) - The planet could face a freeze worse than an Ice Age starting in as little as 10,000 years, giving future societies a headache the opposite of coping with global warming, scientists said on Wednesday.

The researchers, based in Britain and Canada, said that now-vilified greenhouse gases might help in future to avert a chill that could smother much of Canada and the United States, Europe and Russia in permanent ice.

Nyrstar says carbon trading could shut smelters

CANBERRA, Australia – The world's largest zinc producer, Nyrstar, said Thursday its Australian smelters could become unviable under a proposed national greenhouse gas emissions trading scheme.

From 2010 polluters will trade permits to emit carbon-based gases that are blamed for global warming, under the government's plan to reduce the country's greenhouse emissions.

Giant Asian smog cloud masks global warming impact - U.N.

BEIJING (Reuters) - A three-kilometre thick cloud of brown soot and other pollutants hanging over Asia is darkening cities, killing thousands and damaging crops but may be holding off the worst effects of global warming, the UN said on Thursday.

The vast plume of contamination from factories, fires, cars and deforestation contains some particles that reflect sunlight away from the earth, cutting its ability to heat the earth.

Mining of depleted oil fields! Is it economically possible? There seems to be some confusion on this point and to my knowledge it has never been discussed on TOD. The point needs to be cleared up and the experts needs to weigh in. I am not an expert by any stretch of the imagination but I will post my opinion anyway.

Xeroid, in a post early this morning, stated that after an oil field has been depleted by normal wells, “it can be mined some other way (just like things like gold, silver, iron, aluminium etc etc).” And earlier he had stated: ”There is enough known oil to last hundreds of years for chemicals/plastics - URR reserves of oil economical for energy uses are much smaller than total reserves."

So there you have it. Nothing to worry about, we have enough oil to last for hundreds of years because we can simply mine after we can no longer pump it. Is this possible?

Well no, it is not. Oil wells are drilled because they are deep. The oil sands are barely profitable because the oil soaked sands are on, or very nearly on, the surface. They are strip mined with giant shovels and giant trucks.

Strip mining a deep reservoir would be impossible. Removing that overburden would be impossible and certainly not profitable even if it were possible. And to attempt to mine them like a deep coal mine would not be economically possible. Overlooking the fact that the vast majority of oil reservoirs are much deeper than most coal mines, coal is almost pure carbon while oil reservoirs are mostly rock. It takes giant earth moving machines to make the oil sands profitable. In a deep mine the oil soaked rock would have to be chipped out by miners and hauled out one tiny car load at a time. The energy expanded to extract would be far greater than the energy contained in the extracted material.

One more point. The oil left after a field depletes is no different from the oil pumped out. It was not recovered, not because it is so heavy or gooey to flow out but because it is soaked deep into the reservoir rock and will not drain out. Contrary to what Xeroid seems to think, the oil used to produce energy is the same oil used to produce plastics and chemicals. The stuff removed from the oil sands is heavy bitumen because all the lights have either evaporated or have been consumed by bacteria near the surface.

Ron Patterson

Nice post, I think you're spot on.

For overburden, in the coal business I think it's profitable to strip mine a seam if the ratio of coal bed thickness to overburden thickness is more than 1 to 20, i.e., if the coal seam is 20 feet down, it needs to be at least 1 foot thick. My guess is that most oil reservoirs are too deep, as I think they tend to be thousands to tens of thousands of feet deep, e.g., the "oil window" where P & T are high enough to created oil from kerogen is 7,500-15,000 ft burial depth. The exception of course is tar sands, which are oil reservoirs with no cap rock, so the oil "floated" (seeped) to the surface.

One other point, pump jacks will be able to pump oil from a depleted reservoir for a long time. The issue is not just if we can get the oil out, it's at what flow rate.

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.


Oil (mixed with water) fills the pores in porous rock -- sandstone or carbonate. The pores were originally filled with water, but then oil formed deeper migrated upwards until it was trapped by an overlying layer. It displaced most (90%) of the water. When you suck the oil out (and it gets replaced by more water), some oil wants to stay behind. The amount depends on the chemical interactions of the pore surfaces with oil vs. water, and it is a broad range. True, some sandstone reservoirs have very high recovery (East Texas). But some don't. If all the sandstone reservoirs in the world had the recovery of East Texas, we wouldn't be having this conversation (yet). And some carbonates have rather high recovery, such as Abqaiq in Saudi Arabia with over 70% from the Arab-D. But Saudi Aramco is making the same mistake in assuming they can get that much out of all of their carbonates, mistaking good fortune for skill.

To get more oil out or either, you can change the chemistry. Adding surfactants (detergent) to the injected water is one way. Pumping in CO2 is another. These are both expensive and not applicable everywhere.


I would think that a lot of this depends on the physical structure of the porosity; so a lot would depend on the local geological structure.

Also, the viscosity as it relates to the Reynolds number and size of micro pathways in the rock would also affect how fast it would (re)collect in recoverable pools (after a rest period).

Re: Mining Oil

No worries. At the "oil window" (7,500-15,000 ft depth)* it's only hot enough to bake human skin within minutes... Not to mention the problems due to the high geological pressures there...

Depth of the Deepest Mine

...Many problems arise when digging so deep into the Earth. The most obvious is the heat. For example, at 5 km the temperature reaches 70 degrees Celsius and therefore massive cooling equipment is needed to allow workers to survive at such depths. Another problem is the weight of the rock. For example, at 3.5 km the pressure of rocks above you is 9,500 tones per meter squared, or about 920 times normal atmospheric pressure. When rock is removed through mining this pressure triples in the surrounding rock. This effect coupled with the cooling of the rock causes a phenomenon known as rock bursts, which accounts for many of the 250 deaths in South African mines every year.

...But, in the future human labor will be cheap and people expendible.

*borrowed from Gwydion

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?

if you are going to bother to dig that deep into the earth, isn't there more energy to be harvested as geothermal?

Good call.

I think another of the many problems with granite geothermal at 4000 metres depth will be plastic creep as well as rock burst. At 250C granite will slightly viscous. Though I doubt any single geothermal well will stay hot for long enough to be much of a problem.

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.

Yes, I agree, but those rocks are impermeable, in general. Oil is where it is because the reservoir rocks are both porous and permeable. I have trouble conceiving of mining old oilfields by any conventional underground means, owing to water flooding.

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.

It would probably be much more economical to send gangs of laborers out on to the highways and parking lots with pick axes, shovels, and wheelbarrows to "mine" the asphalt. I can imagine this actually happening at some point in the future.

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:

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.

Re: Bailout Kings at AIG

Remember the phrase 'Tarred and Feathered'?

Both tar, which was used in and around 1774, and feathers from edible fowl sources (such as chickens) were plentiful. In a typical tar-and-feathers attack, the subject of a crowd's anger would be stripped to the waist. Hot tar was either poured or painted onto the person while he or she was immobilized. Then the victim either had feathers thrown on him or was rolled around on a pile of feathers so that they stuck to the tar. Often the victim was then paraded around town on a cart or a rail. The aim was to hurt and humiliate a person enough to leave town and not cause any more mischief.

How about O-NPK'd?

That'd work.

Toto, I'll let you pour the bag.

Great, so now birds are potential terrorist weapons. All those feathers.

It takes giant earth moving machines to make the oil sands profitable. In a deep mine the oil soaked rock would have to be chipped out by miners and hauled out one tiny car load at a time. The energy expanded to extract would be far greater than the energy contained in the extracted material.


IIRC, only about 18% of the oilsands can be mined from the surface. The remaining 82% is accessible by techniques such as SAGD (Steam Assisted Gravity Drainage).

Here is what the surface facilities of a SAGD operation look like:


And a photo gallery of the whole Long Lake site can be found here.

The Long Lake project converts part of the bitumen into a synthetic gas which is used in place of NG for heat.

We don't use miners with pickaxes in the oilsands at the current time :)

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

What an unmitigated environmental disaster the tar sands are becoming.

Hmmmm ... beware being quoted out of context ... actually, what I said was:

'Net Exports' Peak Oil is primarily an energy problem, specifically for transport in importing countries, there has to be more energy in the oil than is used to obtain it for transport uses but there is no need to worry about EROIE for chemicals and plastics.

There is enough known oil to last hundreds of years for chemicals/plastics - URR reserves of oil economical for energy uses are much smaller than total reserves.

When an oil well's production for energy is energetically uneconomic the rest of the oil (the majority?) left behind can still be extracted some other way if somebody is willing to pay the price - Canadian Tar Sand mining is an example where the deposit is close to the surface.

Darwinian says:

Oil wells are drilled because they are deep

I think this is incorrect, oil wells are drilled because they are currently the cheapest and most profitable way to get at the oil. It looks like in certain places it is even profitable to actually mine hydrocarbons for energy use - but this won't last!

There are many very useful non-energy uses for oil (and other fossil hydrocarbons) and this is the way most of the world's population gets to use oil currently.

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 - though not in a way that Darwinian can envisage it seems.

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!

Hell, Ron, you're old enough to remember that all you had to do was drop a nuke down the hole. And, for those of you who aren't old enough, nukes, i.e, bombs, were the answer to any resource problem.


We discussed the nuclear option for oil mining a couple of years ago.

I have seen underground oil sand mined - using what is known as borehole mining - in Bakersfield back in the last energy crisis. I was on my way to JPL where we discussed an alternative version where long laterals were to be drilled and mining carried out from them, again using water jets as the mining tool.

The oil in Alberta is readily separated from the sand in the pumping operation that carries it from the floor of the pit up to the refinery. It is possible to do the same sort of thing with the underground mining operation, stripping the oil and then pumping the sand back underground. I have seen the same tool used in mining small uranium pods in Wyoming - mine the sand, remove the uranium, pump the sand back into the underground cavity - regrade the surface and move on. (In fact I taught this in class a couple of weeks ago).

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.

The Times also has quite a good write-up on the proposed European Supergrid, referenced in the BBC report above:

The reason for my post though is that it contains quite a nice graphic, but I don't know how to make a pdf graphic show here - any assistance would be great:

Nice graph. Here we go:

(How large may such a graph be on TOD? I could link a larger version, too)

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.

All are 500x410 pixels. I have sharpened the latter two. However, you can delete my message and put your link instead of it.

It depends on the type of GIF or PNG you use. The graphic contains about 16 colors, certainly less than 32, so there's no need to save it as a GIF with 256 colors.

As a comparison, the GIF I posted, which is 845 x 690, is only 87 kb. It would be about twice the file size and not look as sharp as a JPG.

And I'd prefer them no more than 400 pixels.

That graphic is too large to display here and still be readable for the average person. It's probably fine as a PDF.

For those who hate PDFs, here it in in GIF form:


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

PDFs are different. You really can't display them like you can normal images. And you shouldn't, since a lot of people hate PDFs, and they can be bloody huge.

Re: Earth may face freeze worse than Ice Age: study

The researchers, based in Britain and Canada, said that now-vilified greenhouse gases might help in future to avert a chill that could smother much of Canada and the United States, Europe and Russia in permanent ice.

It is important to note that this prediction is for a return to Ice Age conditions some 10,000 years into the future. By that time, all the CO2 we humans might put into the atmosphere by burning ALL the oil, coal and natural gas over the next 1,000 years would have been absorbed by the oceans. The fossil fuels would also not be available to keep folks warm, let alone driving their year 10,000 SUV's around the snow as it piles up to form glaciers. The CO2 levels might actually begin to decline as CO2 is trapped in the glaciers or retained in the soil by colder temperatures.

E. Swanson

And since the oceans would thus become highly acidic, all the fish would die, and then all of us on land, long before it began to feel chilly.

Actually there is a very long tail on the CO2 residence time. It is not a simple exponential decay. IIRC Hansen believes we have put enough CO2 into the system to skip the next ice age cycle, (i.e the one that w/o GHG would be starting shortly, and lasting for a few tens of thousands of years). The cycle after that would not be stopped by the current CO2 spike, but that is more like a hundred thousand years out.

Not all the CO2 would disappear. I read in Real climate that of the Co2 released in to the atmosphere 25% will still be around in 30,000 years. Some 7% will still be around in 100,000 years. So there is a belief amongst climatologists that Co2 emissions might prevent future ice ages.

"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!

Regarding Prank NY Times: `All the news we hope to print', there's another interesting "prank" that's happened. Remember earlier this week when Palin called McCain's aides jerks? Well, apparently the McCain "aides" who said that anonymously are a blogger and his friend who have been posing as insane Republican pundits saying crazy things. I feel obligated to post this one since I posted the one about the jerks:

A Senior Fellow at the Institute of Nonexistence

It was among the juicier post-election recriminations: Fox News Channel quoted an unnamed McCain campaign figure as saying that Sarah Palin did not know that Africa was a continent.

Who would say such a thing? On Monday the answer popped up on a blog and popped out of the mouth of David Shuster, an MSNBC anchor. “Turns out it was Martin Eisenstadt, a McCain policy adviser, who has come forward today to identify himself as the source of the leaks,” Mr. Shuster said.

Trouble is, Martin Eisenstadt doesn’t exist. His blog does, but it’s a put-on. The think tank where he is a senior fellow — the Harding Institute for Freedom and Democracy — is just a Web site. The TV clips of him on YouTube are fakes.

Wow... Lee Atwater and Karl Rove would be proud, except these guys don't seem to be playing for the Republicans. I do wonder if there was a lack of trust between the McCain people and the Palin people since this seemed to set off Palin relatively easily, but maybe it's just her inexperience with the politics of mud-flinging and smear.

Read carefully. The anonymous comment (AFAWK) IS true. This "Martin Eisenstadt" is not. He was created to take fake credit for a true comment (The source is real and still anonymous).

Has anyone noticed any change in business concerning rental properties?

With foreclosures I would have thought that rental business would have incresed, but after speaking with folk who own rental properties I get the impression that not all is well there either.

Anyone else hear anything similar?

I don't think anyone's really doing well in this environment. There's more to the housing market than foreclosures. What about all the people who have to move or bought houses to flip, who are now renting the properties because they don't want to sell low?

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.

Signs of the times:

Yesterday I had to drive to a city. I saw a youngish man with two dogs on a leash standing under a small tree on the edge of a shopping mall with a sign in his hands and a pullover on and covering his head.

He looked pitiful and about at his end. I suspect his dogs were mostly what might have been keeping him going.

His sign said something to the order of "Help me plase. I will do work of anykind. I have no money.I need help."

I hated it later when I realized I could have given him at least a small amount but for some reason just drove on. It was raining hard and had been all day and the temperatures were quite cold.

I later wondered just how this guy survived and especially with two dogs on a leash. Perhaps he had thought to kill them and make his life easier while on the bum.

This equals the scene I saw two winters ago as I saw a small little house dog that had been dumped during the snow storm. It was standing by a bridge abutment looking hopefully as each vehicle passed.

I caught a final glimpse of it as a semi roared by throwing a huge sheet of ice and water over it. It tucked its tail between its small almost hairless legs and scuttled past the end of the abutment and headed for the nearby trashgrowth of a fringe of woodlands nearby.

I knew the coyotes would eat it that night. It hadn't a chance to survive.

Some yuppie family must have decided to drive to the outback and dump it after its likeness to the Taco Bell dog grew tiring and it might have snapped at one of the children when they kept mistreating it.

They had the nerve to dump their problems on someone else or just let it slowly perish in the wind and snow on a lonely state highway on the outskirts of my hometown.

I find humanity to be almost worthless at times like this. I could have taken it in but this would have been an unending task. Perhaps better it die fast than slowly starving and trying to eat road kill.

So the homeless are once more with us. Many are on the road with little hope. Dogs and pets are being trashed. Peoples hopes are dying and I suspect the number of suicides are rapidly increasing but for some reason not reported as newsworthy enough.

Obama? Lots of luck fella. You get to preside over the end and not some shining city on a hill. Its all bad kaka from here on out I am afraid.

Airdale-I sleep with my two dogs. They would protect me with their very lives. What more can a man ask. I can then understand the hobo kid standing in the rain with his sign and two companions. Sometimes thats all we have. Sometimes thats all that really counts.

Any person who would dump their own pet would just as easily dump one of their own human family members. My opinion after years of observation.

They would if it was legal.


It probably costs more to maintain a teenager than to maintain a dog.


Well, well. That's my highschool hometown. Haven't been there much in 40 years. Been to the hospital there to visit Dad, in his last days. Drove through a couple of times on the way to Omaha.

I don't keep on this issue, even though I live in Lincoln. But I do read an article if I stumble across it - like this one.

The only pattern I've seen on reportage is that the pieces seem to be short blurbs - shallow to say the least.

Might that be intentional ? I know 40 years ago Papillion was solidly middle class. Times must be tough.

Then we have moronic imbecils like this...

Higher speeds may reduce fuel efficiency, but officials said the idea just wasn't feasible.
"I would hate to drive a whole lot slower myself," acknowledged Ken Frahm, co-chairman of the Kansas Energy Council, the task force that's compiling a list of recommendations for the Kansas Legislature.

One commenter agrees...

That's good because it was a STUPID idea. Anyone who knows ANYTHING about modern vehicles knows that going slower does not mean you will save more gas. Heck, you burn pretty much the same amount of gas whether you are idling or driving 30MPH.

Posted by: dontdie_multip

WTF? Could someone please stop this bus? I'd like to get off!

A lot of people don't realize that many fuel injectors (as well as carbuerators) run richer at higher RPMs. (Done so that the engine runs "cooler".)

PLUS.... Then there's the usual aerodynamic drag that increase with the square of the speed. Drag at 60mph is 1.44 times greater than at 50mph.

Do they have drop-off shelters for dunces?

Then there's the usual aerodynamic drag that increase with the square of the speed. Drag at 60mph is 1.44 times greater than at 50mph.

Which understates that energy required to overcome the drag is proportional to cube of velocity.

cfm in Gray, ME

But it also depends on the frontal surface area of the object in question. Let's say you have a long, thin object that is going through the air (like a train) vs. breaking it up into smaller pieces and having those go through the air (like cars). Shape matters... Trans generate much less wind resistance per unit of volume because of shape...

(In other words, trains are more fuel efficient than cars partly because of shape).

You're only addressing frontal area drag. Don't forget eddy current drag, laminar frictional drag, and turbulent frictional drag. For a longer body frictional drag is significant.

For a longer body frictional drag is significant.

Yes, even ask my wife... :)

On a serious note, yes, you are correct. But, think of it this way... Is it easier to pound a brick or a nail through a block of wood? If I needed to have something embedded in that block of wood and I had the choice of the brick or nail, I'd take the nail.

Sorry to say, but your comment is incorrect.

The force of aerodynamic drag increases with the square of the speed, as noted in your link. That means that the power necessary to overcome that drag increases with the cube, again, as noted in the link. Power is the time rate of use of energy, or fuel flow rate in a car. As the car speeds up, it travels further per unit time, thus the fuel consumed per mile only increases with the square of the speed.

E. Swanson

Which understates that energy required to overcome the drag is proportional to cube of velocity.

The energy loses to wind drag per unit time goe up as the cube (assuming the airflow doesn't change characteristics), but the energy to go a given distance, which is proportional to the drag goes as the square. Assuming the goal is to drive a fixed distance you should use V**2. If you intend to drive for a fixed length of time then V**3 is correct. I'm not sure what the idling in neutral consumption is. I suspect most ICE cars don't get good mileage below 30 or 40mph. But the sort of speed limit changes we are talking about would be more like 75 changes to 65, and the fuel saving benefits at those speeds are unequivocal.

You're right about aerodynamic drag. However you're wrong about fuel richening. Maybe your user ID is appropriate.

Most modern gasoline engine cars run right around stoichiometric at light to moderate loads because current catalytic converter technology requires it. Fuel mixtures are richened at wide open throttle to reduce the tendency to knock under heavy load.

I oppose reducing speed limits because (1) no one obeys the ones currently in place because they already seem too low, and (2) peoples' time is a non-renewable resource too. I would much rather reduce the need to travel by car.

That's what I said, they run richer at higher RPMs. At light to moderate loads (lower RPMs) they run leaner.

High RPM does not always mean high load. And I don't know about your experience, but few vehicles I've ever driven are anywhere near wide open throttle at 70. We're talking on the order of 30 HP in an era where 200 HP cars are common. You'd have to be in the upper half of the power rating to trigger enrichment.

I can't blame Kansans for not wanting to lower their speed limit. Have you ever had to drive across Kansas? I did, driving a V8 Mustang with California plates in the 55 MPH era. It seemed to take forever. I had to stay close to the speed limit because I seemed to draw a lot of attention from the Kansas State Police.

I'm generally skeptical of any attempts to modify someone else's driving behavior. Feel free to slow down if you wish, but please stay in the right lane when you do.

I think that enforcing a painted yellow line on a road is modifying someone else's driving behavior. The issue is whether it should be done for any reason but public safety.

Well, I volunteer at the cat shelter and it is a busy time for us. People who are forced to move can't find pet permitted housing. When somebody drops off an animal, you never know what their story is.

There aren't any outdoor cats in Tucson. The coyotes get them. People think their pet will be smart enough to outwit the coyotes. But they won't.

I'd like to say something wise here. Something that would comfort you, both about the existence of the beings (man and dog) whose stories you related and about your own feelings that you should or could have done something. But I'm afraid I am not that wise a person.

I can relay a little bit of the sense of responsibility I've picked up from years of studying and practicing Buddhism. Compassion is important, both because of how it benefits the suffering, but also because it is a source of humility for the compassionate one. But where you direct your compassion is also important. The total sum of suffering in the world is far greater than what any one person can either understand or impact. You could have emptied your wallet for that man, but what of the next one you met? You could have taken that puppy home, but how many could you realistically house?

This is not to say you should be callous and ignore their plight. It does say that, for the good of your own being and for the whole of existence, you must understand the role of suffering in our lives. Live your life in a compassionate way and work to reduce suffering, but recognize that you can not save everyone, nor should you even try. You do more good by living lightly on the planet (thereby making more "space" for others) than by restoring one homeless man to a life of over consumption.

Shaman I respect your attitude on this. However I should have simply pulled over and gave him a $10 bill. Told him to get something for his dogs as well.


Shaman, you cannot be more correct.
Perhaps this is a watershed moment for this person as well. Is he being forced into a personal transformation where he rises above, vowing to never go back to the ways which led him to that low point.
Like foreign policy, giving handouts to people is a stick with two ends. Yes you help them but you also imply that they are not adequate and are (fill in the blank) to make it better themselves.
Give a man a fish and feed him for a day, teach a man to fish and you feed him for his life.
The dogs don't have a choice. I suggest you give him dog food- for his dogs.

My daughter just placed an abandoned German Shepherd into a no-kill rescue organization we support. She was already fostering another. Daughter is in Naples, FL - rescue near Tamps, FL.

Dog had been left as part of what seemed to be a foreclosure abandonment.

We have two GSD rescues ourselves - foster failures :-) - they are the best.


Jobless claims unexpectedly hit 7-year high

WASHINGTON - The number of newly laid-off individuals seeking unemployment benefits has jumped to a seven-year high, the government said Thursday.

The Labor Department reported that jobless claims last week increased by 32,000 to a seasonally adjusted 516,000. That is the highest total since just after the Sept. 11 terrorist attacks and second-highest since 1992.

Unexpected by whom? Deranged optimists?

Welcome to the Christmas without a Santa.

At this point, how can anything be unexpected?

Except perhaps:

NOBODY expects the Spanish Inquisition!
Our chief weapon is surprise...surprise and fear...fear and surprise....
Our two weapons are fear and surprise... and ruthless efficiency....
Our three weapons are fear, surprise, and ruthless efficiency...
and an almost fanatical devotion to the Pope....
Our four... no...
Amongst our weapons... Amongst our weaponry...
are such elements as fear, surprise...
I'll come in again.

(Exit and exeunt)

We had a homelessness czar? Who knew? What's he been doing the last 6 years? Where was he after Katrina? Some czar.

For a fast fix, the Feds should jam the new homeless into the houses it will be foreclosing. About five families per McMansion, to keep warm. And they'll be held responsible for the upkeep. Maybe they'll come out of it with some concept of how a community works.

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.

I'm sure they do. The homes that can't be sold and are being rented depress the rental market.

The exact way things play out varies widely in different countries.
Here in the UK the biggest fall in property prices has been in urban flats, which were the main buy to rent market, not in the suburbs.
I am not sure what is happening to rents, but the system here where many get their rent paid by the Government heavily influences the market.

Most of our suburbs can't really be compared with American ones anyway, as they are much more compact.
The biggest problem areas are kind of purpose built slums, social housing estates at some distance by UK standards from the city centres, making getting to work expensive, and having very high rates of unemployment and crime.

What surrounds these remote estates? It sounds like the residents could arm up, take over surrounding lands and start growing food. Maybe the government should best look the other way. Or bombard the residents from the air with barleycorns.

They are only relatively remote, perhaps 5 miles or so from the City Centre, but public transport is expensive here and if you are on a low wage then getting into work in the City Centre is expensive.
They are also populated at UK densities, not Americans, so an estate such as, say, Hartcliffe in Bristol might have 50,000 people in it.
That would need a large area of prime agricultural land to support, and in some instances, for example in Bristol, there are just hills suitable for sheep and cows beside them.

Most of the population is also many generations removed from the peasantry, and would not know one end of a plant from the other.

Large quantities of food could be grown if every square foot was used - the still more compact cities in the war did so - but it would not amount to self sufficiency or anything remotely like it.

In the really large towns like Birmingham or London one remote suburb is surrounded by others.

Google Earth is informative in this respect.

I have multiple multi-family properties (in the Northeast) that I rent. My properties are not the greatest and also not the worst. I prefer to rent to women with kids. They usually are partially receiving some form of government assistance and do not move from place to place as much as others, which reduces the turnovers that I have to do. Government assistance is great, that check comes on time every month. With all that said, all my properties are currently full, some are current (paid up to date) while some are ~1 month in arrears. I find it works out better to work with tenants to get them current than to evict them. Eviction costs are huge! For the segment of the population that would rent places such as mine, there are vacancies to be had.
I think that the multi-family property owners that bought in the last ~4 years are having a tough time making any money as rents have come down a little, while they bought the properties when the rental income would barely offset the mortgage and thought they would make money on increasing housing values and increasing rental income.

Yeah, Government assistance means that a 'fair rent' is what you can convince the local authority it is, and they base that on the average cost of rental for similar types of property, which average rental is supported by the rates that the authority will pay, in a kind of circular support structure.
This is one of the things which make it very tough here to get off benefits, as effectively there is an artificially high rent, and at the bottom end of the jobs market you end up loosing money through working.

The basic deal here for the rental system has been one which is financed by capital appreciation for years.

Personally I feel that if Government funds are being used to pay rent, the properties should instead be converted to a purchase agreement, and ownership should gradually transfer to the Local Authority.

That is not to criticise individuals, of course, as it is a tough world and we do what we must to survive.

Most of the 'they can only afford to rent, not to buy' syndrome is anyway an artificial product of the financial system, as if they pay rent plus a profit for the landlord they can by definition afford to buy.
They are rules out from doing so by the lack of appropriate financial instruments which would enable the purchase of tiny one room deals to start.
This is a massive subsidy to the middle class, as their mortgages are tax-deductable whilst poorer people in less secure jobs, the ones in which the wages have typically been held down by importing immigrant labour, pay tax on their rent if they are unwise enough to attempt to work.

you have a really good grasp as to the determination of what 'fair rent' is.
I would add that that my tenants all have jobs, they get assistance for a portion of their rent.
'Fair rent' value has actually come down in the last couple of years.
A common misnomer is that landlords make good money on the rent. Actually, unless you've owned the property for >15 years or so, you only make a small amount that is usually used up for turning the property over for the next tenant, fixing damages caused by the tenants, pest control because the tenants can't figure out that leaving food all over is a bad idea, blah, blah, blah. yeah, I know, you've broken out the smallest violin in the world and its playing just for me. ;)
I personally bought my rental properties as a means of retirement income ( i should own them by the time I retire, and hopefully it will provide better than a fixed income stream, we shall see).
I wouldn't have a problem if the local gov wanted to slowly buy my properties as long as the price reflected fair market value and I knew going in what kind of profit I could expect, i.e. I put a lot of time and work into my properties, if I knew upfront what I would be compensated for my time and the investment of my money(risk), then I would be able to gauge whether I would want to get involved or not.
I wouldn't have a problem with that at all, in fact, kinda sounds like a guaranteed return. Although, when explained like that, I assume you would have problems with it.

Actually, probably contrary to that which you would likely assume from what I have written, you are talking to a Conservative-from birth kind of guy, and I have no problems at all with what you suggest there.

My conservatism though is of the very old fashioned sort, which is chiefly interested in community, not the gangster scam the bankers are perpetrating.

The ongoing problem with capitalism is that those who determine the laws can load the dice such that more and more wealth gets into fewer and fewer hands - the best known example is probably the enclosure movement, which abrogated the traditional rights of the peasantry to seize land, on the grounds that their title to the commons was not formalised.

To me, at least in the European context which has not got the religious right as in America, it seems that we really have two choices, the slow and peaceful transfer of some of the wealth back down by appropriate tax policies and employment laws, or the eventual violent overthrow of the order, in a Revolution.

It looks as though the excesses which have occurred together with peak oil make that the likeliest outcome, with all the horrors and injustices that implies.

If that is the case, the just and unjust will suffer alike.

I think you're right.

George Bush Sr said it was important to facilitate the flow of money into "higher, tighter and righter hands".
He and his son can note Mission Accomplished next to that goal.

Yeah, I hope they enjoy the remainders of their lives in the Crawford Ranch Bunker.

What's striking about the enclosure movement is that the very definition of property was reimagined by those who had the money to buy a parliamentarian. Now it's happening with "intellectual property", with Disney continually increasing the length of what is now called the Sonny Bono Intellectual Property Act (!) so that Mickey and Donald never, ever become public domain, with Monsanto calling a grain's DNA its property, and, well, just about everything Microsoft does.

How many times has the definition of property been rewritten, then sanctified as eternal and unchanging? Truly, it is the new God.

This reminds me; a documentary on our PBS about Shakespeare discussed at length Elizabeth I's secret police and arbitrary use of royal monopolies. Most Americans have no idea about this stuff. We think the English past was a paradise where private property was sacrosanct and government enforced only the God-given rights of hard-working yeoman farmers, as it should. Since you are doubtless more knowledgeable about British history than me, do you know if this sort of overbearing state control was always the case?

(What, you mean Robin Hood didn't fix everything?)

the Sonny Bono Intellectual Property Act (!) so that Mickey and Donald never, ever become public domain, with Monsanto calling a grain's DNA its property, and, well, just about everything Microsoft does.

The story is stranger than this. Congressman Bono was an active Scientologist in good standing. Scientology's sacred scriptures at that time were close to entering the public domain. They now enjoy permanent copyright protection. You can find them at WikiLeaks.

Most of the 'they can only afford to rent, not to buy' syndrome is anyway an artificial product of the financial system, as if they pay rent plus a profit for the landlord they can by definition afford to buy.

The slogan is a missing something: I can't afford to buy anywhere that I'd want to own, or even live in long term whereas I'm less demanding about where I'll rent. (I wouldn't want to own where I'm renting at the moment, because it's a building in a bit of a grim state in a not socially brilliant area. However since it lets me save some money that I hope to buy somewhere with I can just about live with it at the moment.)

No argument about it being an implicit subsidy to the home owning class though.

A rental system is fine. Unfortunately in some places such as South America it has become the case that no normal people can 'afford' to own their homes, but somehow manage to pay rent, and that without a social security system, to the landlords which includes not only what they would otherwise pay to own but a profit.

This kind of thing only exists where the system is in fact heavily weighted in favour of TPTB.

Perhaps countries such as Germany are different, although that has a large rental sector, but this sector is very heavily regulated, for example in insulation standards.

That is true, especially for larger rentals. The housing market here is still decent, yet I see adds for new construction going for rental, or with lease-option. Spec homes that have never been lived in can be rented for barely over a mortgage payment. It looks attractive, really, to rent.

We have several small rentals, and those are always easy to keep filled at a profit. Larger houses are much harder.

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".


cfm in Gray, ME

What are they doing to do? Can they buy turkeys instead?

I've heard a lot of complaints about how expensive turkeys are this year. Usually there's no need to even buy a turkey, unless you want something special (organic, free range, etc.). The local grocery stores would give you a turkey free if you spent $150 the month before Thanksgiving (pretty easy to do if you have a family). I haven't seen that deal offered this year.

"I've heard a lot of complaints about how expensive turkeys are this year."

Try growing the bird with grain the way it was for much of the year. I imagine that many cut their flocks considerably, or got out. Maybe next year for cheaper birds.

They are asking all the students and parents to come up with turkeys as well as the rest of the meal. I find it a bit frustrating in that I can't get a fresh local bird - the logistics wouldn't work - and I have to buy a frozen hunk of industrial toxic waste I personally consider unfit for consumption and bad for the planet. One of the few times I go into a chain supermarket is to buy exactly the sort of product I'd not eat? Sort of like giving a deer suspected of "mad cow" to the homeless shelter or food pantry. A perfect example of how "what is food" is shaped by the distribution process. I'll have to get off that moral high horse otherwise some family won't be able to celebrate the memory of that first harvest dinner with the Natives.

Gives me a pain in all the diodes down my left side.

cfm in Gray, ME

I find it a bit frustrating in that I can't get a fresh local bird - the logistics wouldn't work - and I have to buy a frozen hunk of industrial toxic waste I personally consider unfit for consumption and bad for the planet.

Are they in season where you are at? Go get one yourself if you don't like what they have in the store. Wild Turkey is 400% better than anything you can get in the store. Or I'm sure there is a farmer o flea market that would be willing to sell you a live one. Either way its fresh and YUMMY!

Sort of like giving a deer suspected of "mad cow" to the homeless shelter or food pantry.

Contrary to your apparently ignorant beliefs, CWD doesn't hurt anyone but the deer.....like it or not, alot of people would go hungry without these donations......I made one last year since I got a spare.

Wild critters are 100% organic, they just don't have the label.

Why do you have a turkey?
Can't you eat something else for thanksgiving?

I've never understood the need to buy the 'official' food for traditional holidays. The only upside to it, is that there's a lot of very cheap food just after the event.

Hmmm, I was at the grocery store last night, turkey's ranged from .49 to 1.00 a pound, and I live in the DC area (often more expensive than most areas).

Only a couple of years ago around here, it was free if you were a regular customer at the store, or 13 cents a pound if you weren't.

Of course, AFTER thanksgiving is the time to sock it away, they'll be dirt cheap, along with 25-cent pumpkin pies etc. Though this year I plan to hit the stores the day or two after to see how cheap I can get canned pumpkin and other useful storables below what it cost to create them. Those of you wishing to do a little stocking up, that can be a good time... just sayin'...

The IEA's new Oil Market Report is out this morning. They are saying OPEC production was flat in October but world oil supply was up 1.8 million barrels per day to 86.9 mb/d. However that means last months production has been revised downward by half a million barrels per day to 85.1 mb/d. Last months Oil Market Report had world oil supply at 85.6 mb/d.

The IEA has July oil supply at 87.8 mb/d, the peak so far. October production, before any OPEC cuts, is still 900,000 barrels per day below that point. However in October the US was still down about half a million barrels per day from Gustov and Ike.

Ron Patterson

Thanks to the wonders of technology we will be able to document and chart our demise with breathtaking accuracy. Isn’t it wonderous?

Hell Jacques Cousteau in a rubber suit warned us about this over 40 years ago.

“Ten-Year Probe Reveals Oceans in Peril”


“UXBRIDGE, Canada - A thousand points of light are being shone into the dark ocean depths as scientists from 82 countries work to complete the decade-long global research effort called the Census of Marine Life.”

“And during the eight years the census has run so far, scientists have documented that more than 90 percent of the oceans' top predators -- large sharks, tunas, swordfish, cod and others -- are now gone and those remaining are in serious trouble. "We're also seeing evidence of climate change with the shifting distribution of species," he said.”

I love the fact that among all the gaff about new ocean exploration technology, and new findings that are "exciting", they drop the above quote in then say nothing more about it...


More MSM masquerading as THE ONION: Give us the taxpayer's money-we won't use it to pay ridiculous bonuses to our incompetent cronies, we have our own money to do that (but priority one is paying these bonuses even while sucking at the welfare tit)-any more questions? Just give us the cash and go away http://biz.yahoo.com/ap/081113/meltdown_banks.html

Isn't the looting of the treasury usually one of the last phases of collapse?

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

Oh no. Treasury looting is a time honored practice that goes back thousands of years. The ancient Romans developed treasury looting into a fine art--financed by debasing the currency. Typically, increased government spending is financed largely by inflation, which is a hidden tax that sort of hides the looting from public view, because the public has its own explanations for inflation, such as greedy oil companies causing the price of gasoline to rise or overpaid schoolteachers causing property taxes to increase.

When it comes to looting treasuries there is truly nothing new under the sun. How do you think building of the pyramids was financed?

Hello Don,

I would like your opinion on who you think is in the worst financial position as we go globally postPeak: Haiti [no money, no food] or Zimbabwe [everyone's a billionaire, but no food].

Can this financial difference have a big effect [or no discernable effect] upon their respective efforts to become sustainable in the decades ahead as they go thru their Overshoot Dieoff bottleneck process, or is it all entirely dependent upon 'real resources' such as topsoil, water, ecosystem and specie diversity, mineral resources, education, etc? Thxs for any reply.

Oh boy, who is in worse shape, Haiti or Zimbabwe . . . That is kind of like asking which is colder, liquid helium or liquid hydrogen. Both countries are enormously overpopulated basket cases. There is essentially no hope for the people in either society. Zimbabwe used to be a fairly prosperous colony, but since then they have had some of the worst government in the history of the world. Haiti has had uninterupted bad government for four hundred years--without fifteen minutes of good government. Haiti has some of the most badly damaged environment (deforestation and erosion) in the world. By way of contrast, the neighboring Dominican Republic is not in bad shape and has star baseball players as a major export. Which country will suffer worst as a result of declining net exports of oil? That is hard to say: Instead of 95% of populations living in utmost misery, perhaps 99% will. In our morning prayers we should each give thanks that we do not live in Haiti and do not live in Zimbabwe. Runaway hyperinflation has probably not hurt Zimbabwe as much as we might assume, because the great mass of people were utterly destitute and miserable both before and after the inflation. I try to discourage people from going to either country, but missionaries don't always listen.

Where is the big dieoff likely to begin? Haiti and Zimbabwe.

Study the history of Haiti and you'll see that the US and France had more than a little to do with sending it down the death spiral it is on. Sometimes the governments and rulers there just didn't 'cooperate' and were dealt with.

France has a lot to answer for, in regard to Haiti. On the other hand, the black Haitians killed all the French in Haiti early in the nineteenth century, so the recent influence of France has been minimal. The U.S. interventions in Haiti were some of the least bad times of governance in Haiti--not good, but least bad. Low as Haiti's standard of living is, declining global oil exports will make it lower. In other words, death rates will go up, and people will not even be able to afford mud pies. Unable to afford oil, and unable to afford fertilizer, economic and environmental conditions will continue to worsen in Haiti. For all intents and purposes, it is now a collapsed society--but there are degrees of collapse.

As I understand it, the pyramid builders lived in a simpler time. At first Egypt was run as a tribe gone viral; thus all Egyptians were members of the same family and the pharoah was its acting father and owned all land and production. Thus he could demand that surplus grain be stored in government facilities, which gave him the means to pay the pyramid builders, who were not slaves, during the off-season. The idea of the pharoah rewarding his buddies with land and thus creating landlords hadn't yet occurred.

So does this mean that socialists are actually the most extreme conservatives?

You are right about the pharoahs and the pyramids; they were erected essentially as public works projects to help out with unemployment during the slow times in the agricultural season. The priesthood collected the taxes and stored the food and controlled irrigation. Pharoah was a living god, and he not only owned all land but also all people. Still, it does not require democracy or modern banking to loot a treasury: Pharoahs repeatedly did this, especially to finance expensive wars. Today Egypt lives on food handouts from the U.S.; Egypt was more sustainable in the time of the pharoahs, and they did not really require foreign trade, though there was some in luxury goods.

I always think of the Pyramids when JHK says that the suburbs are "the greatest misallocation of wealth in the history of mankind".

I'm going to make a mad guess and say that the pyramids required relatively few calories of energy to build and maintain, compared with the suburbs.

Especially if you amortize the costs over a few thousand years. After all they remain standing.


Interesting stat from the weekly report-in the midst of the biggest YOY slowdown in the USA economy in probably 70 years, oil imports to the USA are UP 2.6% YOY http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_pe...

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

Products Supplied
Finished Motor Gasoline   9,055   9,235  -1.9% -3.0%
Kerosene-Type Jet Fuel    1,322   1,629   -18.8%   -5.7%
Distillate Fuel Oil       3,992   4,183    -4.6%   -6.1%
Residual Fuel Oil           452     657   -31.2%  -18.6%
Propane/Propylene         1,244   1,176    +5.8%   -6.4%
Other Oils                3,067   3,610   -15.0%   -8.9%

Total Products Supplied  19,132  20,489  -6.6% -5.6%


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

Joe Costello,

Thank you very much for your response the other day.

I would agree completely with your assessment that “America is in a very juvenile state of politics at this point, which is extremely dangerous.”

Due to some strange atavistic phenomenon we seem to be back battling the Leviathan again. Ours is a world not unlike that described by Charles Dickens in A Tale of Two Cities:

Military officers destitute of military knowledge; naval officers with no idea of a ship; civil officers without a notion of affairs; brazen ecclesiastics, of the worst world worldly, with sensual eyes, loose tongues, and looser lives; all totally unfit for their several callings, all lying horribly in pretending to belong to them, but all nearly or remotely of the order of Monseigneur, and therefore foisted on all public employments from which anything was to be got…

Far and wide, lay a ruined country, yielding nothing but desolation. Every green leaf, every blade of grass and blade of grain, was as shrivelled and poor as the miserable people. Everything was bowed down, dejected, oppressed, and broken. Habitations, fences, domesticated animals, men, women, children, and the soil that bore them—worn out.

Monseigneur (often a most worthy individual gentlemen) was a national blessing, gave a chivalrous tone to things, was a polite example of luxurious and shing life, and a great deal more to equal purpose; nevertheless, Monseigneur as a class had, somehow or other, brought things to this…

Charles Dickens, A Tale of Two Cities

To the thinkers of the French Enlightenment, the enemy thus became entrenched inherited privilege, embodied in the church and in most European royalty, each operating in collusion with each other. Two formidable dualities—wealth and power; error and ignorance--had come together in a powerful matrimony. Error was to be found in the doctrines of the Church. Ignorance was an uneducated public, intentionally so.

Today we have a similar situation—wealth and power united with error and ignorance. Error is to be found in the doctrines of the new secular religion that has swept the land, the “new classicism” fathered by Milton Friedman. Ignorance takes form in a nation where educating its young has ceased to be a priority; where leaders appeal to ethnic and other cultural hatreds to gain power; and where facile simpleminded solutions like “drill baby drill” or “go out and shop” gain credence as solutions to profound, difficult problems that lack easy solutions.

The French Revolution responded with an equally toxic combination: power and poverty united with error and ignorance. (I haven’t read Arendt’s On Revolution, but I wonder if she comes to the same conclusion.) The result was the deparage. Error was to be found in the dominant philosophy--an insatiable thirst for revenge; while ignorance was elevated to a virtue. Again from the pen of Dickens:

Looking at the Jury and the turbulent audience, he might have thought that the usual order of things was reversed, and that the felons were trying the honest men. The lowest, cruelest, and worst populace of a city, never without its quantity of low, cruel, and bad, were the directing spirits of the scene noisily commenting, applauding, disapproving, anticipating, and precipitating the result, without a check.


It was in the American Revolution where the ideals of the Enlightenment were to first gain a toehold. It was here that the Old World status quo was to meet its match in another powerful matrimony—that of knowledge with moral virtue.

And therein lays one of my principle critiques of your essay in Asia Times. I certainly applaud and agree with your idea about a "distributed network order," and your observation that “we have already created a rudimentary societal system that operates accordingly—the internet—a network of distributed order with no ultimate central hub.” To me the internet is the greatest thing that’s happened for democracy since the invention of the printing press. And I stand in awe as to what it must have been like to have been a senior advisor on Howard Dean’s presidential campaign, to have played a part in pioneering the use of a technology that later came to play such a pivotal role in successful campaigns in Spain (Aznar vs. Zapatero), Connecticut (Lieberman vs. Lamont) and the U.S. (McCain vs. Obama). And the internet is indeed a wonderful tool to spread information. But I would argue that information, in and of itself, is not enough. That to prevail over the Leviathan will require both knowledge and moral virtue.

Daniel Yanelovich, in the preface to his book Coming to Public Judgment: Making Democracy Work in a Complex World, states that:

Paradoxically, in this Age of Information, the importance of information in shaping responsible public opinion is vastly exaggerated.

His point, expanded greatly upon in his book, is that the public does not view things through the same prism that technical experts do; and that knowledge, even though absolutely necessary, is no substitute for good judgment. One of the philosophers he relies upon is Jurgen Habermas:

Habermas shows us that although the objectivist approach may be superior to other modes of knowing for purposes of exercising technical control over nature, it utterly fails to address other human purposes such as the great philosophical questions of how to live, what values to pursue, what meaning to give to life, how to achieve a just and free society, and how to be a fully realized and free human being.

Perhaps these internet communities like TOD, like you say, do form a “rudimentary societal system” where people can come together and try to hash out some of these truths. But I all too frequently see a knee-jerk reaction even here to fall back on what Yankelovich calls the “information-driven model,” which, ironically, is the very same arrogant, hubristic model employed by that most despised of constructs--TBTB. Yankelovich elaborates:

For university professors, laboratory scientists, the foreign policy community, the high civil service, and the upper reaches of the press, public opinion appears fickle, impulsive, disorganized, ill-informed, and unreliable. These elites may be sincerely devoted to the principles of democracy, but their outlook is, simply stated, elitist. They think they know better than the public because they are well educated and articulate. They have superior knowledge, and because they do, they assume in the great classic tradition they are, therefore, endowed with superior moral virtue…

The information-driven model leads to a concept of public education as a one-way process: the expert speaks; the citizen listens. Questions may arise about the best technique for grabbing the public’s attention and conveying the relevant information. But conceptually, the model is simple and unidirectional; the expert’s role is to impart information to the public skillfully and effectively; the citizen’s role is to absorb the information and form an opinion based on it.

We do indeed find ourselves living in dangerous times. Yankelovich predicted that, if the “experts grow too bold, the electorate will express itself in populist fury." And, if “the public dominates and pushes the experts out of the picture altogether, we will have demagoguery or disaster or both.” Yankelovich warned we could experience “another episode of native know-nothingness.” However, Yankelovich wrote his book in 1991 and I’m not sure he foresaw the full scope of new realities that would be forced upon the American people in such rapid succession. I fear the outcome could be worse than he envisioned--maybe something closer to the French Revolution--if we don’t find a better balance between the experts and the rank and file.

Another fine post.
I am not always in a position to tackle your posts, as they deserve true attention and considerable energy, but whenever I do I am amply rewarded.
I fear the same outcome as yourself, and indeed commented to that effect in another post in this thread prior to reading this.

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.

I do have to wonder if you have ever read a single page that Milton Friedman wrote. What do you think of his two main proposals, monetarism and the negative income tax? Are these proposals "error"? Note that if monetarism had been in effect the housing boom (and subsequent bust) never would have happened. Also, Friedman and his associates, such as Ana Schwartz, were opposed to bailouts. Is this error?

In my opinion it is a big error to criticize somebody unless you have first carefully studied their work. Rather than quoting what other people wrote about Friedman, why not go back to original sources? That is what genuine scholars do.


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.


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.”

In my opinion you are still guilty of the ad hominem fallacy of attacking Milton Friedman on the basis not of what he wrote (which you appear quite ignorant of) but rather than by quoting--selectively--his critics. Have you even read what Heilbroner himself wrote specifically about Milton Friedman? To judge by your highly selective quotations, you have not.

You talk about Chile. Would you please explain why Chile is in much better economic shape than its neighbors, especially Argentina?

You go on at great length with remarks drawn from secondary sources--and drawn in a highly biased and incomplete and selective way.

I challenge you to read "A Monetary History of the United States" in which Friedman and Schwartz present the evidence which underlies the theory of monetarism--a theory that you show no evidence of understanding at all. Among his other virtues, Friedman was one of the best economic writers of twentieth century. You might also find it useful to Google 100% Reserve banking and see what Friedman had to say in advocating that, way back in the nineteen forties.

You have no evidence on which to attack Friedman except the carefully selected and edited quotes from his critics.

By the way, do you think Paul Krugman is a supporter of Friedman's ideas? Nothing could be further from the truth: Krugman is an out-and-out Keynesian and not a Friedmanite at all.

You might also look at some of the remarks Paul Samuelson, another great Keynesian economist had to say about Friedman, especially his famous remark, "We are all monetarists now," to which Friedman made the gracious reply, "We are all Keynesians now." For many years Samuelson debated Friedman on a regular basis in the columns of "Newsweek." These columns are easily understandable to noneconomists, and they are concise and well written. (Paul Samuelson was also one of the best economic writers of the twentieth century, as was our mutual favorite, Robert Heilbroner.)

To the ad hominem charge, like I've already indicated, I plead guilty, or at least to some degree. I must confess that I have absolutely no admiration for Milton Friedman, either based on his contentions or his personality.

And again, if you want to enlighten me as to what Milton Friedman wrote and what he did in his lifetime, and to build a case in his defense, feel free to do so. I'm all ears. And I will respond accordingly. But don't expect me to build your case for you. That's hardly fair to think I should do your work for you.

As to your framing everything in this Keynes vs. Friedman context, that creates a distortion. Keynes was a "leftist" in the same way Franklin Delano Roosevelt was--he moved only as far to the left as was necessary to save capitalism. The only way one can cast Keynes, Krugman or the New York Times as "progressive" or "leftist" is in the context of American politics, which is so skewed to the right that, in this environment, they appear "leftist." But from a more global perspective, they are very much in the center, or even right of center.

In some ways I consider the New York Times to be little more than the Trojan horse in the leftist camp. This became poignantly clear in the runup to the Iraq war, when the paper allowed itself to be so shamefully used and manipulated by the administration. Bill Moyers did a great job of laying out the papers complicity with the Bush administration in this PBS special:

TIM RUSSERT: No. No. I mean, I don't have the-- This is, you know-- on MEET THE PRESS, people come on and there are no ground rules. We can ask any question we want. I did not know about the aluminum tubes story until I read it in the NEW YORK TIMES.

BILL MOYERS: Critics point to September eight, 2002 and to your show in particular, as the classic case of how the press and the government became inseparable. Someone in the Administration plants a dramatic story in the NEW YORK TIMES And then the Vice President comes on your show and points to the NEW YORK TIMES. It's a circular, self-confirming leak.

TIM RUSSERT: I don't know how Judith Miller and Michael Gordon reported that story, who their sources were. It was a front-page story of the NEW YORK TIMES. When Secretary Rice and Vice President Cheney and others came up that Sunday morning on all the Sunday shows, they did exactly that.


And when it came to the $700 billion bailout, I don't remember seeing anyone at the New York Times speaking out against that either. The paper and all its writers, including Krugman, seemed to be pretty well on board.

O.K., you refuse to read primary sources. O.K., you choose to paint Krugman as not left-wing enough for you.

Fine. How about Heilbroner and Thurow, both socialists, writing in their jointly authored text, "The Economic Problem" about monetarism and Milton Friedman. Or how about Heilbroner's "The Worldly Philosophers," and what he has to say about Friedman in that enormously popular book.

It is not my job to remedy your ignorance. That is your job.

Why are you allergic to primary sources? I have yet to see you quote a single sentence actually written by Milton Friedman.

You keep attacking Milton Friedman's character, yet you have not shown one iota of knowledge of his life, beyond the fact that he visited Chile. Can you explain why so many U.S. Nobel Prize winners in economics have been educated at the University of Chicago? Are the Swedes a bunch of closet neocons? I don't think so.

Milton Friedman was a short man who played very good tennis against men a foot taller than he was. He was also an outstanding economist. Of course he made mistakes: Back in the early fifties he declared that the velocity of money was a constant; that is flat out wrong, and he recognized it as wrong and corrected his error.

Milton Friedman's advice on monetary policy--if it were followed--would prevent great financial booms and busts, such as we have just seen in the housing market. His advice against bailouts would have allowed all the big investment banks to fail rather than being bailed out, and he would oppose bailing out G.M. and Ford. He did advocate a negative income tax, which makes a lot of sense, especially in view of the current mess of our income distribution programs. He advocated the stregthening of public schools by giving them competion for students by issuing tuition voucers. He advocated universal health care through financing by the negative income tax and also by government being the insurer in case of catastrophic illness. He advocated laws against pollution and other negative externalities. He was opposed to the growth of government bureaucracies, and in my opinion, he was right about that.

So if Friedman is in error, precisely where (in his own words) was he wrong?

It is not my job to remedy your ignorance. That is your job.

Ah, but it is your job, that is if you want to build an evidentiary case and have any chance whatsoever to prevail in your defense of Friedman.

I have yet to see you quote a single sentence actually written by Milton Friedman.

Strange, but I don't recall you ever having done so either, and you claim to be his defender.

I don't have to defend Friedman. He can and did defend himself in his own words. You do not want to read his words, just as an ostrich prefers to stick his head in the sand. It's not my job to change the ostrich's habits.

What I try to do on the Oil Drum is to use economics to help us understand and deal with the consequences of Peak Oil. I'm not especially interested in old controversies (e.g. monetarist vs. Keynesian) that are now pretty much settled within the discipline of economics. Economics as it is taught at the University of Chicago is pretty much the same as economics taught at U.C., Berkeley. (I've attended both universities and did all my graduate work at U.C., Berkeley.)

My success on TOD is limited. I can't even get people to distinguish "demand" from "quantitity demanded," which is as elementary as Econ 101 gets. People throw around terms such as "elasticity" often not knowing that there are different kinds of elasticity, e.g. price elasticy of demand and income elasticity of demand. I've seen people on this site misuse the term "deflation," and fail to distinguish between the ideosyncratic Austrian definition of "inflation" and the term as generally used, both in dictionaries and by economists.

I don't mind people attacking ideas--so long as they present some evidence that they know what these ideas are. It is pointless to attack individuals: That is the ad hominem fallacy. I am opposed to fallacies, and every attack on Milton Friedmen I've seen on TOD has been an ad hominem attack.

IMO there are two classes of posters on this blog (in ref. to your comments): Some lack the ability to follow/understand, and some have an agenda.

There's much about economics that I don't pretend to understand. It's too bad that the politicians don't understand economics either. The Shrub just gave a big speech about "economics" today, in anticipation of the G20 meeting this weekend. He noted:

It will focus on five key objectives: understanding the causes of the global crisis, reviewing the effectiveness of our responses thus far, developing principles for reforming our financial and regulatory systems, launching a specific action plan to implement those principles, and reaffirming our conviction that free market principles offer the surest path to lasting prosperity.

First, we're working toward a common understanding of the causes behind the global crisis...

It's been more than a year since the mortgage problem hit the news. Is Shrub really telling us he still doesn't understand the problem? He goes thru the entire speech and doesn't say anything about the reasons for the high oil prices. You can read the speech here:


And you think you are having a hard time getting thru? I've been trying to tell folks about the energy crisis since 1973...

E. Swanson

But how relevant is the whole field of modern "economics" at this point. All the economic schools, the Chicogans and Austrians, and the individual economists, Friedman, von Mises and all the others have been operating on an assumption so fundamental it was rarely even vocalized; and that was that more or less continuous economic "growth" would be a permanent reality.

Now this "permanent reality" seems like it is nearing its end. Once the "growth" assumption becomes untenable, the entire world of "economics" will have to be completely re-evaluated and re-structured if it is to retain any relevance.

Antoinetta III

Economics is highly relevant to the questions that arise from falling oil production. Economics is about scarcity, about constraints. Economists can come up with theories of decline just as well as they can theories of growth. Clearly, economic growth depends on growing supplies of energy. Because energy supplies are about to decline we face a bleak economic future. Nobody understands choice under binding constraints as well as do economists.

In my opinion, many of our troubles come from being ruled by lawyers. I have yet to meet a lawyer who understood economics; legal thinking is antithetical to economic thinking. Even bright lawyers like John F. Kennedy could never remember the difference between monetary and fiscal policy.

Engineers, on the other hand, have an almost intuitive knack for economics. In engineering school economics is a required subject, and I've yet to meet an engineer who did not understand fundamental economics concepts such as the production possibilities curve or opportunity cost or constrained maximization or cost minimization or marginal cost as opposed to average cost. Petroleum geologists also "get" economics.

I've found that the people who generally don't get economics tend to be innumerate. Chemists get economics easily, while most English majors struggle with the subject and hate graphs.

Oil companies employ economists, because they need the skills that only economists have. Money is only a medium of exchange, a store of value--a way to measure other important things. If economics did not already exist, we would have to invent it anew to deal with the problems that will come from declining oil production. In designing public policies, it is crucial to have numbers for such thing as long and short term price elasticities of demand and price elasticities of supply, and income elasticity of demand for oil products as well.

Some economists have erred by not taking energy constraints seriously enough, but you can go back to the economic textbooks of the nineteen seventies and find chapters on energy in these books. Also, economists have said many useful things about ways to protect the environment. Finally, economists have been pleading for a stiff tax on gasoline to internalize external costs since the early nineteen sixties. The problem is not that economists do not have any answers. The problem is that politicians listen to economists only when the economist tells them what they want to hear.

Economics is highly relevant to the questions that arise from falling oil production.

Economics is a bad joke. It's voodoo. Once one hears "Demand cannot exceed supply" one knows they are in the land of faerie dust.


The 19th-century creators of neoclassical economics—the theory that now serves as the basis for coordinating activities in the global market system—are credited with transforming their field into a scientific discipline. But what is not widely known is that these now legendary economists—William Stanley Jevons, Léon Walras, Maria Edgeworth and Vilfredo Pareto—developed their theories by adapting equations from 19th-century physics that eventually became obsolete. Unfortunately, it is clear that neoclassical economics has also become outdated. The theory is based on unscientific assumptions that are hindering the implementation of viable economic solutions for global warming and other menacing environmental problems.

The physical theory that the creators of neoclassical economics used as a template was conceived in response to the inability of Newtonian physics to account for the phenomena of heat, light and electricity. In 1847 German physicist Hermann von Helmholtz formulated the conservation of energy principle and postulated the existence of a field of conserved energy that fills all space and unifies these phenomena. Later in the century James Maxwell, Ludwig Boltzmann and other physicists devised better explanations for electromagnetism and thermodynamics, but in the meantime, the economists had borrowed and altered Helmholtz’s equations.

The strategy the economists used was as simple as it was absurd—they substituted economic variables for physical ones. Utility (a measure of economic well-being) took the place of energy; the sum of utility and expenditure replaced potential and kinetic energy. A number of well-known mathematicians and physicists told the economists that there was absolutely no basis for making these substitutions. But the economists ignored such criticisms and proceeded to claim that they had transformed their field of study into a rigorously mathematical scientific discipline.

You two going on like this is a bit like discussing whether pixie dust or faerie dust is more real.



Pixie dust or faerie dust??

I prefer Ponzi Oil myself, since it has an infinite EROEI...

E. Swanson

Obviously demand can exceed supply. What is impossible is for quantity demanded to exceed quantity supplied. The failure to make this distinction shows either that you never had freshman economics, or you didn't understand the most fundamental elements of the class, or that you forgot the enormous difference between "demand" (which is a whole curve on a graph) and "quantity demanded" which is a unique point--the point where the demand and supply curves intersect.

You do yourself no credit by abusing a discipline of which you are so extremely ignorant.

Blah, blah, blah...

What is impossible is for quantity demanded to exceed quantity supplied.

Like I said, faerie dust. Only an economist would ignore reality. Demand outstrips supply all the time in the real world. Your world? I don't know. But in my world, "sold out" means your statement above is not just silly, it's delusional.

I do believe that was the point of the article.

You do yourself no credit by pretending there are no legitimate criticisms of economics. We call that delusion over in the psych wing.


I challenge you to read "A Monetary History of the United States" in which Friedman and Schwartz present the evidence which underlies the theory of monetarism ...

In particular, DownSouth would benefit from reading Chapter 7 thereof ('The Great Contraction 1929 - 1933'), which in fact has been published separately as a paperback:


Of course, if you have the accused's death sentence in your pocket before you listen to the evidence ...

If Friedman believed in the negative income tax, why didn't he have his blind acolytes push it on the many countries they ruled? There are things you say because you mean it, and things you say to deceive your enemies while you prepare to ambush them.

We spend a lot of time debunking economic theory at this site because we see them as a cover for cornucopian ideology. As in, Friedman came up with the desire to crush the poor into silence first, and then developed the arguments to justify it. Who needs a negative income tax once they're already being tortured and executed into silence?

As for Chile, it is an old trick to create a Potemkin village to con the surrounding peoples into believing your good intentions. You pour foreign aid and investment into this special place to send a deceiving meassage. You quietly disappear any of the villagers who threaten to leak the truth. Your agents gain control of the neighbors and then the real agenda comes out.

In Iraq, we used 200,000 soldiers and no Potemkin village was thought necessary. Real agendas come out of the barrel of a gun, not an economics text.

You avoid the issues.

For example, if Friedmanite ideas were so bad for Chile, why is Chile now one of the most prosperous countries in Latin America? Did Chile adopt all of Friedman's ideas? Of course not.

Argentina is a case of an economy that has come to grief in large part because they did not follow Friedman's prescription of monetarism. There is no way you can have significant inflation in a monetarist regime, because monetarism includes the slow and gradual increase in money supply in accordance with the long-term rate of real economic growth.

Before you can debunk a theory, it helps to know something about it. With the exception of Professor Goose, Stuart Staniford, Gail the Actuary, and Nate Hagens, I find that knowledge of economics on TOD is skimpy, though there are a few commenters who have studied and do understand economics. Most of the characterizations of economists and economics that I see on TOD are merely inaccurate cariacatures that bear little resemblence to economics as it is presented in reputable books and academic journals. Indeed, I wonder how many of the critics of economics on TOD can even name some of the major economic journals, much less make references to them and from them.

The quality of the debunking of economics on this website seems to be about on the level of saying that Einstein's General Theory of Relativity is all wrong, because it disagrees with Quantum theories. Believe it or not, physicists who know physics use both theories and spend little time trying to debunk either one.

Economics is not a science in the sense that physics or geology is a science. No social science can approach the physical sciences in power. Nevertheless, economics can help us both to describe the real world and to understand it. Economics can also help us in times of economic decline, such as will come about from declining net exports of oil. It is not economists who are responsible for our problems, but politicians, lawyers, bankers, educators (especially educational administrators and educational psychologists), media moguls, generals, corporate executives and others in positions of leadership. At most, economists advise. They never make policy. To the best of my knowledge, there is not one single economist in the House of Representatives nor in the U.S. Senate.

For example, if Friedmanite ideas were so bad for Chile, why is Chile now one of the most prosperous countries in Latin America? Did Chile adopt all of Friedman's ideas? Of course not.

Don, that strikes me as bizarre. You do know there was a US supported coup in Chile, right?

Chile was/is a very rich in resources country. Absent 9/11/1973, it could easily be richer than it is now. The Chicago program wasn't exactly "adopted" by popular acclaim but imposed at the behest of Anaconda, ITT, First National Bank and the plantation class.

We know that the Chicago boys tied their wagon to a military coup against a popularly elected socialist government. They were eager to support a counterrevolution by the wealthy elite plantation class and the military. I'd suggest the standard isn't whether the country is "richer" now - that's "ends justify the means" and questionable ends and missing yardstick to boot - but the standard is who decides what policies a country chooses and how. It's not Economics 14.01/02 to implement Chicago School policies by military coup. RealPolitik 101 perhaps.

My knowledge of economics is marginal at best. [Actually, I think much of it is simply wrong, coming as it did from high priest Samuelson at MIT and a few others at Sloan.] So call me an econodunce. But the story of the Chicago Boys in Chile is not economics in the textbook sense but free market at the point of a gun.

You write that Argentina came to grief because she didn't follow enough of the Friedmanite creed? What about Videla, Bush, Kissinger and the failure of so many to fly from helicopters? And in Iraq, is the problem that Bremer didn't go far enough?

One doesn't need textbook economics to understand Pinochet like Videla like Bremer. It's a racket as Smedley Butler put it. And this racket is coming home.

Economics can also help us in times of economic decline.

I don't think so. "Political economics" yes, but economics divorced from politics no. Nearly every toplink on the drumbeat testifies the two are inseparable. Even this example, Chile 1973 is intelligible under the topic of "political economics" where it is nonsense as simple "economics".

cfm in Gray, ME

Until early in the twentieth century there was no separate discipline of economics. Instead there was "Political Economy," and in my opinion it was a huge mistake to split the one discipline into two. Political economy was an invention (largely British) of the nineteenth century. Before the nineteenth century there was Moral Philosophy, which included economics. Adam Smith was a professor of moral philosophy and logic, and he wrote as much about morality (e.g. "Theory of Moral Sentiment") as he did about economics. I doubt if it ever occurred to Adam Smith to split economics off from moral philosophy, because he regarded it as one ball of wax--as did Aristotle too, by the way.

There is a widely respected journal titled "The Journal of Political Economy," (JPE), and there have been a lot of important articles published in it over the decades. What discipline other than political economy can deal with the problems from declining oil production that cause a shrinking economic pie? Among the people who do not at all get Peak Oil are political scientists and sociologists--which is a darn shame, because potentially both of these disciplines could contribute to mitigating our bleak future. Ecological economics (more properly called "environmental economics") has much to contribute: This subdiscipline identified economic growth as the fundamental problem way back in the sixties and seventies. Not all economists worship at the god of growth. Now here is a tough question for you and others on TOD: How best can we deal with the massive growth in unemployment that inevitably will be caused by the declining real GDP that results from declining oil production?

Hint: Consider a negative income tax as an alternative to our mess of income redistribution programs.

And guess who was the great advocate of the negative income tax?

Negative Income Tax? Who pays for it? The people with money. Who runs the Government(s)? The people with money. Chances of a Negative Income Tax passing into law?

Answer = Money available to pay/Number of people receiving payments

Where money available to pay ==> the cost of a bullet...

E. Swanson

I think one simple explanation for the cult of inequality, under names like feudalism and laissez faire and fascism, is ignored.


What if the superior "incentive" and "motivation" that capitalism always congratulates itself for comes from its willingness to tap the most monstrous of human impulses, the pleasure of living well while watching others suffer? It's not an impulse that drives everybody, but if you add that to other motivations, you incentivize more actors. What if that gave American capitalism that extra margin of ambition and energy that fueled it past a revolution-wary Europe? What if it helped divide the working class via racism so that its labor unions were too weak to stop outsourcing and deregulation?

The test of this would be to watch how the Friedmanites would freak out if a way existed for all the poor to produce their own food and energy, and tell the capitalists to take their lousy jobs and shove them.

...if a way existed for all the poor to produce their own food and energy, and tell the capitalists to take their lousy jobs and shove them.

Aye, but there's the rub. Such a magic wand does not exist and may well never come into existence. That's the very reason why, whether you like it or not, some of the best-developed areas of economics involve the study of scarcity and its consequences.

And I suspect this whole thread has been far more about fatuous likes and dislikes than anything else. "Take This Job and Shove It" may be a fun song from some points of view, but IMO one would be wise to be very careful what one wishes for. The autarkic world of your fantasies may well be much harsher than the one you seem to despise now. For example, in that world, it may well no longer be possible for a person to party and slouch through childhood and youth while acquiring utterly negligible skills and education (social, artistic, academic, vocational, practical, whatever), and while failing consistently to learn or exercise intelligence or good judgment - and then casually waltz down the street to an auto plant and, in return for providing all that nothing, magically be granted $100K/yr in wages and fringes beginning the very next morning. It may not even be possible to be granted $10K/yr in that way.

Life in an autarkic world is likely to be far harsher, and to require a larger set of skills than many, even most, people have been accustomed to acquiring for a very very long time. The sort of slouching and goofing off that may cause one to fall almost irreparably into the worst "Take This Job and Shove It" jobs may well become far more socially intolerable than now, hard as that may be to imagine after so many decades of partly-oil-fired prosperity and entitlement.

Your post creates an appearance that you might harbor great bitterness about your own job. If so, you might want to look into finding another - or at the very least, given the way the economy is tanking, into acquiring some skills you can hustle on the side in some manner that you find more congenial. Or you might reflect on whether your expectations about jobs are unrealistically idealistic and dreamy.

I doubt that all the wishful thinking in the universe will ever allow you or most others to escape jobs and trade. For example, there is nothing in history or economics to support the notion that everybody's ever going to be digging up their very own iron ore and smelting it and forging it all by themselves into even the simplest of agricultural tools. In other words, even in the most autarkic of Mad Max doom-worlds, job-like relationships of one sort or another seem likely to go on existing widely. I suppose they will also continue to engender fatuous, futile fury. Sigh.

Yankelovich is my hero. I'd just like to put a plug in for another book in which he (and Amitai Etzioni) contributed: Changing Maps; Govering in a World of Rapid Change. I was so blown away by it, that I bicycled from Edmonton to Ottawa in an absurd attempt to give a copy to Chretien (one of his cabinet members also contributed to the book). Another prominent Canadian contributor was Charles Taylor, who gave the Massey Lectures a few years ago.

It covered deliberative democracy, communitarianism and scenario planning (first used by Shell, by the way). Very simple, straightforward writing for the generalist audience about matters that go to the root of sustainability.

Published by Carlton University Press in Ottawa.


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.


Add "rosell" (the roundtable organizer) to the search term and you'll find it. Looks like there's a used copy going for 94 cents. It's a bit more easily available up here in Canada, since it's from a Canadian university. I ordered a 2nd copy from Chapters just recently and it arrived in a couple of weeks.

Strangely, it's $63 new from amazon.com, but only $35 new from amazon.ca

I was just flipping through it again and see that one of the other roundtable members was Kees van der Heijden, who was the scenario planner at Royal/Dutch Shell in the 1960's. He's now professor of strategic management at Strathclyde University in Glasgow. (I just googled his name and got 136,000 hits)

Regarding the internet and information..as per Down Souths comment:

I find this simple statement to ring with truth.

"As information doubles,knowledge halves and wisdom quarters."

Don't know who said it and won't take the time to google it but it defines what we have become. A nation of info pushers. A service economy.
Little of real value.


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.


Aw shucks.

As a member of the Class of '57....meaning high school....I have reached a stage in life where I care not too much for others opinions of me.

I do appreciate your comments however. Most I get are not too positive.

Life is now too short for me to do otherwise than just say it like I think it is. Remember though..mostly just observations.I source very little.


Actually, in 1991 I thought our current crisis was just about to happen and would finish off the Republic. I didn't know about the importance of energy supplies back then. Kevin Phillips had an upheaval scheduled for the '90s too. Then there's one of my favorite movies, "Slacker", in which we are shown the video suicide note of a grad student who had tried to do his thesis on the coming of a new Bronze Age in the '90s.

It should have happened then. We weren't as far into overshoot.

But let's never forget Chou En Lai's response to the question, "Was the French Revolution a good thing or a bad thing?"

"It is too soon to tell."

the internet—a network of distributed order with no ultimate central hub

I posted at Global Guerrillas today about what I fear to be uncritical optimism about the internet. One branch in Ohio, and there goes the internet - central hub or not. And no, even if the internet somehow does continue, there are other things that must be done to make it useful in an energy descent. souper390 referred to enclosure of commons - Mickey Mouse. For internet to be useful, the commons have to be rebuilt, not further fenced off. Intellectual property and copyright are bastard versions of the original; the original deal was for a short period of protection in exchange for rapid reversion to the public domain. We - human, polar bear or ent - can't tolerate even the current level to which the commons is fenced where there is less and less to go around. Monsanto's days are numbered; corporations - where the aim is to dump expenses and liabilities on the commons and privatize the profits - are at the end of their life.

Resource depletion is pitting life against corporations. We don't need Nestles/Monsanto/Boeing/Halliburton/AIG; we need to get rid of Nestles/Monsanto/Boeing/Halliburton/AIG. [I'd have included a good corporation if I could think of one.] The model is obsolete and too destructive for the times.

cfm in Gray, ME


Yankelovich was an interesting mind indeed. He had book in the early 80s that looked at all the trends from the 70s, which was the real narcissistic peak of the Boomers. He looked at all the self-help, self-religion, self, self self... and had an interesting conclusion. If all this inward self examination could be turned outward with an understanding of the power of the individual and society, we might have a democratic renaissance or even evolution. Hasn't happened yet.

Since we're talking about the self, no better place to talk about Mr. Friedman, who was a second rate intellect and a first rate propagandist. Mr. Friedman's critiques of the New Deal excesses, failures, and problems were certainly nothing new, many old Republicans and more than a few Democrats were concerned with the centralizing of power in DC and what it meant for liberty in this republic.

Yet, none were quite so good and in the end profited so well from ignoring the other great centralization that occurred and that was with corporate power. To simply ignore the power 20th century industrial corporations had in society is ludicrous. But to try and justify it by claiming it adhered to the tenets of free markets devised in a theory by Adam Smith 150 years ago based on people pounding out nails or cutting sheep skins in their backyard is simply propaganda.

Mr. Friedman's legacy as an original theorist is nonexistent. His idea on the control of credit and money supply was instituted by the Fed in the early 80s and abandoned as unworkable quickly there after. But better, we are witnessing as we write the refutation of Friedman's great claim to fame. His monetarist's misunderstanding of history, that the Depression was caused by the Fed. Its great to be able to put something out that you can argue about academically without being able to prove or disprove.

Unfortunately for Mr. Bernanke, he gets left holding the empty bag. The real lessons of the 30s, was to not let bubbles form, and the financial regulations of the New Deal did exactly that. Which is why we had no bubbles for fifty years, until we started dismantling those financial regulations in the name of being "Free to Choose"

So now we are finding that you can't simply throw a bunch of money to reinflate the bubble, and in the next couple months the Fed will be at 0% and out of bullets. While you can kill inflation with high interest rates, and that was no original insight by Mr. Friedman, you cant stop deflation with low ones, which is why Mr. Keynes said you have to just put people working so they can reinflate the economy. Mr. Keynes, a really first class mind, also has limited value for our predicament, which I write about here:

Cars, Oil, Entombing the Future, and Reform

Keynesian political economy died in the 70s and Monterarism dies before our eyes. What's Next?

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.

the importance of the falling real costs of fossil fuels during the twentieth century.

Completely agree, it is the fundamental force of the 20th century, pretty much the foundation of what's deemed "modern." However, I think, the role technology plays in defining our society is still very little understood. I'm a great fan of McLuhan, though you read one sentence and go this guy is just nuts, but two paragraphs later there's another and you say, that's just damn brilliant.

Tied to that try talking to Americans about the automobile, try and get them to think they can live without a car, phew. The car is simply reality, as much as the sky. Anyway, that's changing, one thing is Americans can be radically pragmatic when reality strikes, so we'll see, but we certainly need some good new thinking.

More absurdity-now the all-important city of Detroit wants 10 billion from the taxpayer http://www.freep.com/article/20081112/NEWS01/81112065/1199/PRINT

The implication that Detroit can be saved by floating them a loan and forcing them to build more fuel-efficient cars is a distraction. Detroit's problem is not fuel-inefficiency; it is its need to sell autos that carry a large markup -- a markup that the American middle class will never again be able to afford.

GM's bankruptcy is inevitable but I also see this being a huge blow to America's pride (and a real political hot-potato). Never mind that GM is a mere shadow of its former self (as are the others). It will be a big blow.

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

Hey, don't forget about Ford- Quality is job one. Too bad quality came before profitability.

They aren't the only ones:

City Halls call out for help from Obama

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.

Not that anyone much cares about this any more...

Summary of Weekly Petroleum Data for the Week Ending November 7, 2008

U.S. crude oil refinery inputs averaged nearly 14.5 million barrels per day during the week ending November 7, down 154 thousand barrels per day from the previous week's average. Refineries operated at 84.6 percent of their operable capacity last week. Gasoline production fell last week, averaging 9.0 million barrels per day. Distillate fuel production decreased last week, averaging about 4.4 million barrels per day.

U.S. crude oil imports averaged 9.5 million barrels per day last week, down 469 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged nearly 10.1 million barrels per day, 266 thousand barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 589 thousand barrels per day. Distillate fuel imports averaged 114 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) remained unchanged from the previous week. At 311.9 million barrels, U.S. crude oil inventories are in the middle of the average range for this time of year. Total motor gasoline inventories increased by 2.0 million barrels last week, and are near the lower boundary of the average range. Both finished gasoline inventories and gasoline blending components inventories increased last week. Distillate fuel inventories rose by 0.6 million barrels, and are in the lower half of the average range for this time of year. Propane/propylene inventories fell last week and remain below the lower limit of the average range. Total commercial petroleum inventories increased by 1.2 million barrels last week, and are in the lower half of the average range for this time of year.

I only come here for the oil and energy information, so thanks. I'll be glad when the ecomonic issues get settled one way or another so that the O in TOD becomes the primary noun. Way too much drumming these days and not enough about oil, in my opinion.

It's been a warm week or two in the Midwest and East Coast which has really crimped any Heating Oil demand, but the Weather Channel shows 10 below average over the weekend and into next week east of the Rockies, so I would expect that 600K distilate build to start going negative for the next 12 or so reports.

Thanks for keeping the site going.

On another note, in the last month, the only position I'm taking a bath on is oil. All the other stocks are at about the same number and the options keep getting richer. So far, the stock market still seems to want to bounce off minus 40% pretty hard, witness today. I get a little nervous from time to time, but I still think cashing out now is the wrong move. Especially with gas at 2.25. This may sound strange, but it is no longer economical to drive my Prius. I'm putting the mileage on my guzzlers to try and use them up while it's cheap again. Goofy world, huh?

Thank You Leanan

I have to skim the social/political comments to find the ones about oil

DOW dips below 8000 today...oil holding steady at 56. Good times!

New lows. and now massive highs for the day!

I assume a lot of shorts started covering at new lows, and a quick rally turned into a major short squeeze. With nothing but bad news, I bet a lot shorts were heavily vested, and are hurting badly now.

I figured the market would be unpredictable this week as hedge funds have to unwind any positions needed to cash out withdrawals by Nov 15th.

The real question is if we'll retest 8000 and continue down. I think yes - quite soon. No guarantees though -- Ilargi figures we could still see a rally for awhile.

No matter to me directly -- I'm on the sidelines. The slower things crash and the longer I have my job, the better, though!

I'm a 9000 seller and a 7000 buyer

Clearly a bear market rally late today - 700+ points in 2.5 hours after having fallen 200 points in 15 minutes.

900 point swing today.

CNBC is so happy they're wetting themselves. They're using the "C" word (capitulation).

I think we may get a "Santa Claus rally," but I think we have a lot more to fall yet.

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.

What's going to happen in 2023 to turn it around?

My crystal ball clouds up around 2020. We do not know what the responses to declining global net oil exports will be. I can imagine constructive responses that would have us well on the path to independence from fossil fuels by 2020 or 2025. Unfortunately, I think there will be relatively few constructive responses to Peak Oil, and instead that there will be frantic efforts to maintain Business as Usual. Efforts to maintain BAU will frustrate constructive efforts to deal with Peak Oil.

Fast-crash is possible--can't be rulled out. But I think the most likely future scenario is Leanan's and Greer's slow squeeze. The slow squeeze will be devastating for investments in stocks and bonds.

One reason I hesitate to venture even guesses out beyond 2020 is that nobody knows what technological advances in the production of energy will occur over the next dozen years. My suspicion is that there will be no notable advances in energy technology for years to come; thus I think it is likely that we'll face 2020 with about the same energy choices that we now have. There are many wild cards out there, including politics. Here is a forecast for you: Sarah Palin is elected in 2012 by a landslide majority due to severe declines in real GDP during the 2009-2012 period.

Now is that scary enough for you?

When I am feeling hopeful I would see a varied future for the world, with the countries with surpluses and money to invest or already strong nuclear or hydro components to their energy mix being essentially past peak oil in 2025, or more accurately seeing pretty clearly how they will be so.
China and perhaps Japan in the far East should be able to put hundreds of billions to work on energy, with China alone able to build 20 nuclear power stations a year by 2020 just on present plans.
After a fall-back in transport with electric bikes being the order of the day rather than cars, it will perhaps be possible to have substantial EV ownership, although I would see it on a hire as needed basis perhaps rather than everyone owning a car.

France and Germany might also be able to be a long way along in getting past peak.

All of this assumes that they are not dragged down by there less successful neighbours, and everyone is not simply blown away.
Over the medium term though I have not really identified any technological show-stoppers, although of course GW might prove to be so, perhaps over the slightly longer term.

When I am not feeling very hopeful I see a world very gradually slowing down, until the last bit of scrub brush is burnt to boil the last blade of grass. In my optimistic mood I see a 97% plus die-off and after that an exhausted garden planet gradually healing itself.

There is one light in the forest though, and that is that male potency is on the decrease due to chemical pollutants.

Overgrazing is the problem on this commons we call the Earth ... so maybe effing science has come up with a workable solution after all?

Eat your veggies guys:)

Hello TODers,

We Are Shutting down over Farmers' Lack of Money

..The CEO of Agropolychim declared that the Bulgarian state must aid the farmers in getting credit, and must tackle the issues of the terminated EU funds, and of the Bulgarian bureaucracy.

Rombaut also said he expected that by February-March of 2009 the whole of Bulgaria's economy would have been hit by the global financial crisis.
It will be difficult to have Bulgarian job specialization if they have no food surpluses from an in-country farming collapse.

Another link for more corroboration:

Bulgarian fertiliser firms halt production

The shutdowns are bad news for Bulgaria's emerging economy as the two companies are among the top exporters from the Balkan country, which depends heavily on foreign cash to fund its huge current account deficit.

Neochim, which like Agropolichim exports most of its fertiliser and chemical output to the Balkans, South America, the Middle East and Europe, will not resume work after being shut for maintenance for the past month, a spokeswoman said. She did not say how long the plant would remain closed.
Have you hugged your bag of NPK today?

Totoneila, from the Guardian article you cited:

The shutdowns are bad news for Bulgaria's emerging economy ...

For 'emerging', read 'submerging'.

Bulgaria's economy is de facto third-world class, heading downward: the country survives on remittances, sale of cheapo real estate to British and Irish investors, 'subprime' tourism, and exports of raw and semi-manufactured products with near-zero added value.

I reckon it will be the first EU Member State to go bankrupt.

Forgetting the Mayan twaddle, this is almost made for peak oil. They even got the date about right.


I was hoping they would make a cool movie about 2012, but this is apparently a "kid-friendly" movie from the director of Independence Day (still the worst movie made in my book).

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

Looks like the UK is the next Iceland-building your economy around the financial sector isn't working out too well for anyone. Open question for anyone who knows: why have no Cayman banks run into trouble?

Nymex $30 February Crude Oil Put Options Most Heavily Traded


If Crude would really to drop towards 30$/barrel, then one could assume, that the worst, ever worst economic downturn is still to come. Also: All these export nations recycling their dollars to the US treasury would be past. Bond markets across the world would collapse. The dept empire of the G7 would crash down in dimensions never seen before.

Hi folks

Just for a bit of light relief (but with a serious intent) look at


Well, it made me laugh anyway. I hope the humour translates itself across the pond!


This is wild-spending of 402 billion with tax receipts of 165 billion (41%)-gotta be a record low % http://biz.yahoo.com/ap/081113/budget_deficit.html

Zinc smelter woes. Who'd a thought they would have objected to carbon tax? Give these people more subsidies instead. I drove past one of the smelters only yesterday and I must go to their next open day. If their electrolytic process is not water based then like aluminium 'pots' they will need continuous reliable power to prevent the metal freezing. That means baseload which in the southern hemisphere mainly comes from coal and hydro.

If as the green utopians tell us we don't need baseload power then I wonder how electrolytic refiners could cope. Huge battery banks or interruptible processes perhaps.

I just had an idea about renewable energy...is this a decent way of going about it or not?

If the government is trying to find ways to encourage companies to build renewable energy, via Production Tax Credits, good financing etc, it seems that there is a better way.

Why not just build the plants yourself, then auction off the completed plants to the highest bidder? In fact, instead of giving the Detroit automakers a big bailout, why not build big wind farms offshore in Michigan, and then give them to the automakers?

You want the same government that builds hundred million dollar planes and 10 billion dollar submarines to build windmills. I predict the world's first billion dollar 5MW windmill. Probably built in a politically connected district that has no wind.

Today George Soros predicted a deep recession, if not a depression:


How much worse might it get?

A few years ago Soros was one of the first to predict the housing bubble would burst leading to a recession. His timing for the recession was off, but it came none the less.

How much worse might it get?

I believe this may qualify as worse?


The US dollar can no longer claim to be the sole world currency, French President Nicolas Sarkozy said on Thursday before a weekend summit on the global financial crisis that has its roots in the United States.

"I leave for Washington tomorrow to explain that the dollar, which at the end of World War II was the only world currency, can no longer claim to be the sole world currency," Sarkozy said

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

According to NASA scientists the sea level has risen about 120 meters in the past 20,000 years (since the peak of the ice age) and Al Gore discovered the sea level was rising a few years ago.


According to Chinese scientists the sea level off the coast of China has risen 0.09 meter in thirty years. That is little more than three inches in a thirty years, it is not a tsunami.


Most of the northern hemisphere ice cap melted off in prehistoric times due to natural causes other than CO2 emissions. What was the source of the warming? Some global warming critics claimed there is no way the warming was natural or of solar origen. One would not believe them.

Any ideas on how fast it happened in prehistoric times?

Denialist BS !

Yes, the climate has changed before, but THIS TIME we humans are playing a massive scale, uncontrolled chemistry experiment with the atmosphere !

The time scale of climate change can possibly, quite probably will, speed up since humanity keeps putting larger and larger amounts of CO2 and other Greenhouse Gases into the atmosphere every year. Add time delays in a complex system and the only question left is just how badly has humanity shitted in it's own nest.

Your position is inherently immmoral and evil,


Fox Business: Gerald Celente Predicts Revolution 11/10/08


Leanan, here's an interesting, if somewhat baffling to me lead:

It claims a contact was signed for $100MW @$100M, of wavepower generation for an undisclosed African Muslim country.

Now to explain my bafflement. IFAIK, wave power is still in the early development 1MW class demonstrator development phase. Then wave power at tropical latitudes is not very good, and Muslim countries in Africa shouldn't have very good wave potential. Well, in any case take a look at it.

Paul Krugman is keen that economic stimulus is sufficient to restart BAU ASAP: http://www.nytimes.com/2008/11/14/opinion/14krugman.html. I left a comment suggesting that an early return to BAU might not be ideal, but I don't know if the moderator will accept it. Here's what I wrote:

If we are too successful in restarting the economy then we'll quickly run up against the fact that oil flow can't meet world demand. The oil price will shoot up again and the economy will crash again. It is crucial that America and the world spend the period of the recession and a lot of the money that is printed to make the world less dependent on oil. Transport electrification is a big part. Just buying oil and storing it does several things: keeps the price up so energy projects are viable and oil dependent activities don't make a comeback. It can then be sold when the oil price shoots up to keep the price down. The government might make a profit on its printed money. Perhaps the President-Elect has a secret message: Yes! World Energy Crisis Action Now (WECAN).