sounds like the ccc with a little looting of the treasury on the side. the wpa with halliburton as manager.

dommer,

I see one rather large flaw with Stage 1. The gov't can pay to retool plants and hire all those folks to build new drilling equipment but he question would remain: who will buy all this equipment? I work in the oil patch and see daily there is no pressing need for more equipment. An occasional local shortage due to increased activity over he last couple of years. But the key problem now is the lack of skilled workers for the drilling contractors and service companies. The latest oil price drop and credit tightness has caused a major contraction in drilling activity. The industry solution is standard and been utilized for decades: cut back and lay off staff. The gov't the philosophy of "If we build it they will use it" is seriously flawed.

If they think throwing money at our problems they should throw it at alternatives IMO. I doubt they'll be effective at it but at least it has some positive possibilities.

I have a Kuwaiti friend who told me a story about his first job. He was brought to an office where they dragged in a new desk and chair to add to the dozens of others. A report of some sort would come in to the room and each person had to read then sign it. Soon it became obvious that none of the others read it so he asked about that and they said that the same reports are circulated over and over. In the months he was there they kept dragging in desks adding people until the room was packed then they expanded to another office.

He said that very soon this situation became so disheartening that he begged his family to send off to American university. He said he knows that if he goes back he will likely be promoted to the guy who brings in the report.

Obviously, there are many real positions in Kuwait but in much of the wealthy OPEC countries there is make work which is more detrimental to the human spirit than not working.

IMO over half the jobs in the developed world, perhaps 2/3s of jobs are makework. The FIRE industries, finance, insurance, realestate for example.

We need to get more creative in coming up with legitimate ways of occupying our time to deal with the massive unemployment that is starting to happen.

Give people back their dignity.

I could not agree more, Antidoomer, but the Obama plan is idiocy. The building needs to be in things that will:

1. give people work, and the more the merrier
2. reduce consumption of fossil fuels
3. increase renewable energy generation

To that end, pay/help pay for improvements in efficiency/micro power generation improvements in every household. A large number of people would have to be trained to do design, building and installation of these projects. The would not do all the work, but help private citizens/communities to do this. This would provide a huge number of jobs, would make transition to an renewable electric system faster and more affordable as well as saving fossil fuels, and build community connections.

Rather than build roads (some money repairing what we have is OK, I suppose, particularly in cities) we should be building electrified mass transit - both short and long-haul. Obviously this would employ large numbers of people, but also would reduce consumption of oil in the long term by a large amount.

A massive back-to-the-earth movement to promote sustainable agriculture would do wonders. Natural farming methods act as carbon sinks. Small farms/"victory gardens" would ensure the food supply for the entire population - as well as shutting down Monsanto and their ilk. Further, large amounts of land could be cultivated using natural methods and the food exported, helping with the US trade deficit.

Build out: The Grid vs. The Household - Towards a Community-based Solution to CC and PO

And all this would cost less, in the long run, than any form of BAU while at the same time creating communities, giving us a chance to avoid globally catastrophic climate change and moving in the direction of sustainable, steady state economics.

Cheers

Kenneth Boulding's comments still ring true today. Storage is still a major problem, but one which is also tied into the fact that most of society still understands little about energy and our predicament. We've learned quite a bit about capturing and using renewable energy from the technical point of view and we've learned ways to use energy more efficiently as well. But, the public perception is still based on the fossil fuel model of consumption, especially the suburban model of living, which has a tremendous impact on out economy. What can be done is not what is being done and what can be done won't be the same sort of development path which has dominated the U.S. for the past decades.

Bolding's comment that we can't discover that which isn't there is not understood among the general public, which has been conditioned to think that science and technology will continue to bring forth newer and better gadgets to meet our needs. Our political class (mostly lawyers) exhibit similar lack of understanding, apparently thinking that all which is needed to solve a problem is a new law or regulation. The trouble is, the laws of nature can not be changed by man. Most economists also appear to have little understanding of this reality, as they assume that "growth" will occur as the result of their efforts. But, growth of material consumption on our finite planet must eventually reach limits and after that, begin to decline, even more on a per capita basis with population increasing.

As much as these ideas have been kicked around for more than 30 years, one wonders just what it would take to get these thoughts into the heads of our government and the common man. Well, one way might be for one of the car companies to go bankrupt, which would have a major impact on NASCAR and the culture of mindless consumption which it feeds. NASCAR teams are very expensive and without support from industry, they can't function. We can only hope for better times.

E. Swanson

The 1977 National Academy of Sciences study, “Energy in Transition 1985-2010.”

It's actually really interesting to look at their projections for today and compare.

For example, their estimate of energy sources available to the US in 2000 under the "enhanced supply" assumptions are (in quads):

• Oil: 19
• Gas: 15
• Coal: 37
• Nuke: 30
• Renew: 13
• Total: 114

The actual consumption by source for 2000 was:

• Oil: 38
• Gas: 24
• Coal: 23
• Nuke: 8
• Renew: 6
• Total: 99

Roughly speaking, the prediction was that oil&gas availability would plummet, and it didn't. Without that, other sources stayed relatively low. (It's interesting to note that energy consumption was 10-15% lower than predicted, despite a population ~10% higher than estimated.)

the transition required the development of liquid fuels or storage batteries that could store much energy, like diesel or gasoline. Since 1977, no major advances have been made in these respects.

"Battery systems have undergone significant improvements over the past 25 years."

It would appear that the Journal of the Electrochemical Society disagrees with you.

One likely reason is the substantial level of development in rechargeable batteries, including not only new chemistries (NiMH and Lithium), but continued refinements to new and existing chemistries. Improvements in battery technology have made electric and hybrid-electric cars viable replacements for the internal combustion engine for huge numbers of people, not to mention enabling other technologies such as electric bicycles (of which more will be sold in China this year than cars in the US).

There are options available today that were not available in 1977, and were not forseen. One example of that is how the report includes an entry for solar but not for wind, despite the fact that wind energy is currently much larger, cheaper, and commercially viable, and last year generated about 200TWh.

That doesn't mean their findings should be ignored, of course, but it does mean that they're far from conclusive.

For nearly 100 years, for instance, there have been very high payoffs for the discovery of a cheap, light, and capacious battery for storing electricity on a large scale; we have completely failed to solve this problem.

I would argue otherwise.

For bulk storage, pumped hydro is about 70% efficient, and can store enormous amounts. For portable storage, lithium-ion is light and dense enough to make electric and hybrid-electric vehicles with essentially the same characteristics as oil-powered ones.

Sure, it would be nice to have 90% efficient bulk storage instead of 70%, and batteries that are 1lb/mile instead of 5lbs/mile, but those are differences of convenience, not of necessity.

Fundamentally speaking, current tech can replace oil. The only issue is building out that tech fast enough.

Surreal is an understatement-and the dutiful MSM still pretends that this will be a "loan". Only 296 times the request made by the formerly Big 3. Only 7400 times a headline grabbing guv support program for wind power (that would have to be debated for months).

I have to say, the more I see of the economists, financiers and treasury 'addressing' of the finance community breakdown - the more I think they really don't have a clue what's happening.

I get the feeling they are all working on a 'lever' view of life. Pull this lever here and this number over here goes up. Every approach to the gumming up of the works seems predicated on this. Often with an air of hope rather than certainty. Because they were taught that interest rates were connected to growth they merrily yanked away on the lever in the belief that things would change. However a moment's thought would have told them that the system has changed because of the way the system of self-delusion had broken. There's no connection any more.

Now we will have the 'financial stimulus' lever being yanked in the hope that will avoid the 'deflation' output - itself in the belief that that would be a highly negative output to be avoided.

Nobody seems to have a grasp of the big picture or how the system has changed and what that means. Fake money is being thrown around without any firm grasp of consequences.

What is the impact of this for peak oil?

Well its two-fold at least:

1) The collision between the global economy and declining oil availability will occur against a backdrop of an economy that's not working, and is probably still depressed. If you expect big investments; forget it.

2) The evidence is that governments and finance are incapable of actually seeing the big picture, even when their lives depend on it. Its probably wrong to believe that they will recognise a peak, or that they will take rational approaches to deal with it. Instead they will take that 'lever' view of life as their guide.

Therefore we can 'wargame' how it plays out, since all the players are understood. We already have a good view of the physical quantities, we know what the markets are, and we know the mental state of the governments. Options have been closed down sufficiently that we can now predict the forward path of the global system.

If you want a picture, it's the charge of the WWI cavalry brigades in an age of tanks and machine guns.

ha.
700 billion here, 700 billion there, and pretty soon we're talking about real money :)

from where are they going to get that enormous sum?

Leanan -

As the US government itself is many trillions of dollars in debt, it is in no position to lend anything to anybody.

It is, however, in a position to print $4.7 trillion of new money, and that is what it will do, even if the resultant inflation beggars those increasingly rare Americans how have somehow managed to save money.

It is painfully obvious that people who run the Fed and the Treasury are totally of, by, and for the banking industry. The pros and cons of the possible $25 billion GM bailout notwithstanding, I think it is quite revealing how these people poured many times that amount into the financial sector with blinking an eyelash yet endlessly agonize over the GM bailout.

I think Kevin Phillips was quite right in saying that the financialization of the economy is one of the early signs of an empire slipping into decline.

Something tells me this is not sustainable...

It isn't supposed to be sustainable, Leanan. This is an endgame move; meant to close out the field and snatch everything possible. Each time there is no resistance, they grab an order of magnitude more.

It's a deliberate bankrupting of the country - the globe actually - to insure that the wealthy keep as much as possible and to foreclose all avenues for real change [the faux hope/change stuff they'll let continue]. To make it as difficult as possible to reclaim any of that wealth for the average Dick and Jane.

I don't think I'm halfway as cynical as I should be; after all, what is going on we don't see? My POV is only an observation on what is happening repeatedly. Repeatedly. Repeatedly. How many times before a failure to recognize the established pattern is pathological behavior on our part? There's no problem here for the people walking off with everything. Except making sure we don't get antsy. A little hope/change dust power seems to help with that.

cfm in Gray, ME

And where did they get the money they're prepared to lend?

I think the question is quite simple - Do we. as a society, produce enough of value to support the cost of our collective lifestyle? You could pose that in terms of energy, or the supposed stand-in called money, but I believe the answer is a resounding "NO", not by a long shot. And if the answer is no, then none of this can work.

So take our tax dollars, give it to banks to loan to other banks to loan to our local governments - and ultimately ourselves - paying interest all the way. All the while highly placed people at the top of the system pull out unimaginable sums for their - well, for nothing.

I cannot shake the feeling today that someday soon there will be hell to pay. The situation cannot be "fixed", but the actions being taken will certainly make it worse. People do not understand what is happening and why, because they never got a proper education and are not equipped for critical thinking (they don't even realize they're supposed to be thinking for themselves), but they're scared and angry and looking for someone to blame. All that is needed is for someone to supply the target and the justification. That's just too easy - too much available power, too great an opportunity. Someone will be along any time now.

The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers...

We could have rebuilt every slum and ghetto in America.

We could have built good schools and well stocked libraries in every neighborhood.

We could have provided universal health care.

But NOOOOO....

This is utterly disgraceful.

With the widely reported stalling of international shipping due to vanishing demand and lack of credit, is the transnational oil shipping business somehow immune? If shipments of all kind are dropping off, is oil the exception? Assuming it is-assuming that deliveries will continue at any cost- what does that say about the so-called "energy independence" of the 21st Century economy?

Short of an intervention, which appears to be very unlikely, these guys are on course to do to the USA what they have already done to the shareholders of Citi, Lehman, AIG and many other firms.

Ugh, looks like another huge fascist bailout in order to socialize more private sector losses.* I can't tell if this $300 billion is included in the original $700 billion or is on top of that, does anybody know?

What continually astounds me about these things is the large price tags, hundreds of billions of dollars. To put that in perspective, it took us five or so years to spend ~$570 billion on the Iraq war. The entire yearly budget for the NSF is around $6 billion, and the EPA is around $7.2 billion, $1.3 billion of which is the Superfund. How can anybody argue that environmentalism hurts the economy when unnecessary wars and bailouts for poorly regulated banks cost just as much or more? To get up to these kinds of numbers for a yearly budget, you have to go all the way up to social security which is $624 billion per year. However, that pays for itself and is not paid for out of the general fund from income taxes and is not in debt. Bah!

* I don't use that term lightly, as we discussed when they bailed out AIG, the policy of U.S. lately seems to resemble most a national socialist economy.

And wait, there's more...

Bush: More rescues like Citigroup possible
The president says he told President-elect Obama about government rescue plan for bank.

President Bush said Monday that the first step toward economic recovery is to stabilize the financial system - and that the government may step in to help financial institutions again the way it did with Citigroup.

"This is a tough situation for America. But we will recover. The first step is to secure our financial system," Bush said after meeting with Treasury Secretary Henry Paulson. "If need be, we're going to make these kind of decisions to safeguard our financial system in the future."

Bush's statement came within 12 hours of an announcement that the federal government would step in to help Citigroup (C, Fortune 500), whose shares fell 50% last week on a loss of confidence.

Brother, can you spare a dime?

And Pandit (rhymes with "Bandit") gets to keep his job. . .

As several people have pointed out, price responses are non-linear. I think that in the short term, the decline in demand has outpaced the long term decline in world net oil exports (which surprised me), but I anticipate that this situation will change, probably as soon as next year--due to a combination of involuntary net export declines + voluntary net export declines.

In any event, one could also argue, assuming an average price of $100 for 2008, that the average annual price has increased at about 20%/year in the past 10 years (from $14 in 2008). Even if we use a current price of $50, oil prices have increased at about 13%/year in the past 10 years. In same time frame, the GM stock price has fallen at about -34%/year, from $90 to about $3.

It doesn't take a 60% drop in demand to get a 60% drop in price.

The relationship between price and demand is not linear. In other words, it is not as simple as that you can calculate price as

Price = Demand * ConstantFactor

If there is a formula to predict price, which I seriously doubdt, that formula must be very very complex indeed with all kind of chaotic non-linear effects.

One thing I think about the current low price is that, even though price is down, people / businesses are not necesarily buying more oil. Thus the demand/suply imbalance persists and price keeps heading lower. It will continue to go lower until either supply side cuts down enough to catch up with falling demand, or demand picks up again, or both.

We've always understood that the issues of peak oil, climate change, economic collapse, and political collapse were intersecting at roughly the same time. In my opinion they are all based in the root cause of over-extending due to excessive exploitation of fossil fuel, but regardless the confluence of all these problems was bound to become very complex. It looks like the economic collapse is dominating now, and that's not really a surprise. Short term changes, especially in signals as polluted as the market price, really don't mean much.

I expect it will mask the effects of peak oil for quite some time - probably years. But it's hard to tell, as it will likely reduce any investment in alternatives of all kinds - sources, infrastructure, means of consumption, etc.

Nothing as powerful as an idea whose time has come, or more accurately, as an idea whose time has once again come, too bad we abandoned functioning electric rail transportation in so many areas. Dallas, at one time, had close to 200 miles of electric streetcar lines plus an electric Interurban system. Only a small part of this system had been preserved, the McKinney Avenue system, and it is slowly being expanded, although DART is working as fast as they can on expanding the new light rail system.

IMO, Alan is asking, and answering, a fundamentally important question, to-wit, How did we provide for transportation in the past, with little or no oil input?

i did a linear regression on price vs t for the period 2002 through oct. '08. and the data fits fairly well with the eqn. p=12.9 + 1.05t. t is in months with an r^2 of o.84.
and this fit includes the wild fluctuations for the period 08'06 to 10'09.

something happened in august '06 that sent the price down for the balance of '06 and until about 11 '07 and then the price spike up to the infamous $147/ bbl. in july '08 and now down to the $ 50 range.

the residuals for this period look like a wild sin wave and if the trend continues look for a price of about $ 107 in may '09 and on up from there.

wheeeeeee ! this oil forecasting is easy.

Alan,

I wish you would post more of your writings in a place where the public can see them. TOD Comments is a great place to get some thoughts out, but the ideas need more exposure.

TOD articles are one place. Energy Bulletin would be glad to post your work too.

I hope the paper you are presenting will be online.

Note that posts to the Web do not have to be long and detailed. We've found that a series of articles of a few hundred words apiece can be more effective than one long article.

I have that other TOD commenters like Bob Shaw (totoneila) will consider expanding their horizons too.

Bart Anderson
Energy Bulletin

Why is gasoline cheaper than oil? Because there are, now, alternatives? Competition, if you will?

Now, THIS, from Lake Co, In: "Lake County officials have approved a contract with a company that plans to build an $80 million plant that would turn trash into ethanol," according to WSJV Television in South Bend, Ind. "

Theantidoomer -

Getting the CO2 to the algae in the most cost-effective manner is largely a traditional mass-transfer problem. However, it only represents one component of the total cost of production.

So I am more than just a little bit skeptical of Solix's claim that better CO2 transfer will reduce the costs by over 90%.

The real quantum leap in improving the overall economics of fuel from algae will come when someone demonstrates a way to successfully grow high-lipid algae at a reasonably high rate in open ponds rather than in enclosed transparent bio-reactors or covered ponds. As there is about an order-of-magnitude difference in capital cost between the two methods, a successful open-pond method would represent a real break-through.

Whether that happens or not is open to question, as the highly specialized strains of high-lipid algae are prone to getting mugged by other naturally occurring microorganisms if not grown under carefully controlled isolated conditions.

Makes you wonder how the total cost of gasoline burned compared to the retail value of the food. Long,long ago I watched a field being gleened. Unless the farmers had a very inefficient harvest I suspect it was a net $ loss for the participants. Nice sentiment on the part of the farmers though.

Some more [delusional?] thoughts:

I can think of no better way for Obama to signal to the 'Murkan & global masses that BIG CHANGES are required for postPeak mitigation than to have Tiger Woods plow up the White House lawn into a veggie plot, then moving the tractor to Augusta National {site of the Masters].

IMO, this would instantly make both Tiger & Obama into full-blown international heroes. Obama would probably have the highest approval ratings of any new Prez, and the sales of Tiger Tools would be so rapid that Tiger's net worth would double practically overnight.

I can picture Obama & Tiger saying to the media:

WE HAVE A DREAM!

We are going postPeak in everything--we must all adapt. In earlier times, our tribes were forced into slavery--this WILL NOT happen again, to anybody. Everybody better get mentally adjusted to the idea of mutual cooperation, in all things, to save our little Blue Marble.

The White House veggies signal global changes, read Peakbooks and websites like TOD,EB,LATOC,Dieoff.org,etc. Tiger will now move on to plow Augusta National so that the rich homeowners that own this land can get started on learning to be Master Gardeners themselves. They WILL NOT force future generations of blacks, or any minority, into slave-tending these fields. Any workers hired will get the majority of the profits that their sweat & blood generates -- so let it be written. Any worker can demand to see the accounting ledgers to insure that equity & justice prevails fairly for all.

The friendly handshake of the future will be two well-caloused hands meeting in the joy of shared physical labor. The friendly future talk will occur on trains, and among the crowds on bicycles and SpiderBikes, NOT PERSONAL CARS.

The wheelbarrow crowds will sing as they easily transport the I/O-NPK one direction, and then again as they wheel harvested foodstuffs the other direction. If you doubt me: balance a bucket with five gallons of water on your head, then try to sing as you stagger along. We WILL NOT revert to the iconic pictures of moving things on our heads, or heavy loads on our backs-- we are smarter than that--we understand how simple tools like a bicycle with baskets, or a wheelbarrow can make life much easier.

We Will be moving to close the Circle of Life--Have you hugged your bag of NPK today? I-NPK, manufactured, or extracted, then primarily moved with FFs will get increasingly unaffordable--We Will be requiring everyone to have a compost pit as We Will be closing the landfills as former Pres. Clinton recommended.

They put it up, then took it down to make revisions. It will probably be re-posted tomorrow.

I don't get it. If shipping has collapsed all over the world, then some part of the chain of bringing goods to market obviously has completely frozen up due to lack of credit. How could that happen without it causing big disruptions in other areas of society? Shouldn't the store shelves be empty? Shouldn't the railroads be quiet? Shouldn't the tractor-trailers all (instead of mostly) be off the roads? It's five weeks until Christmas, and all the gifts are imported.

Should efforts to substitute for oil with other high EROEI sources such as thin-film solar and high burn nuclear energy be unsuccessful I would consider a descent into endemic warfare including nuclear to be inevitable rather than probable, at least on the evidence of history for responses when resource limitations are hit.

That is my primary area of disagreement with those who advocate vastly reduced energy use, and feel that we can transition relatively peacefully to some kind of sustainable balance using renewables only.

Fortunately at least technologically speaking it would seem we have the capacity to power our society by these means. Whether we will manage to do so quickly enough is what is undecided, and perhaps unknowable.

The energy supply situation seems to me to be the critical one, and given abundant and relatively cheap energy then we may be able to work a passage past other constraints such as water shortage in relatively good shape - I emphasise relatively.

Should these resources not be developed then in my view massive conflict is unavoidable.

The issue is will those with problems see nuclear bombs as solutions to those problems.

Perhaps strictly limited use (demonstration explosions at sea), but rational actors will see little gain beyond that point.

LOTS of "gaming" analysis was done in the 1950s and 1960s (how does one deter Stalin ?). Today, expansionism is not the dominant goal, but conserving existing gains is. And this trend is likely to intensify with shortages of resources.

I do want a focus on productive, "problem solving" responses to post-Peak Oil.

One little considered risk is the demographic implosion of Russia.

Hope that helps,

Alan

You need to talk to Jay Hanson.
He's REALLY sure there will be a nuclear war based on his analysis of human behavior.

http://warsocialism.com/

"Mining" Old Bossy:

To date, BioEnergy said three dairy farms have agreed to supply biogas to the network. The combined herd of 6,500 dairy cows is expected to produce 615,000 cubic feet of natural gas per day, enough to power 3,000 homes.

When the nine-farm network is completed, BioEnergy said it may include as many as 26,700 cows to produce enough natural gas to power 12,000 homes.

It's an "Organized" Gas.

Let's see, it takes Two Cows/House, and we have 100 Million Cows and Calves . . . . . . . hmmm

marielle,

Since I didn’t see the report I’ll just have to guess what he’s talking about. And I have no idea what he’s talking about. First, NG prices are not low. They are down a good bit from the price spike last spring but that's a red herring. They are close to the high price of last January and winter is just beginning now. As far as shutting in a NG well it can go back into production at anytime. There are low pressure NG fields which require a lot of expensive compression to produce. Some of these fields could be abandoned if the become uneconomic. This would be especially true is some areas like OK. Due to a limited market some areas, like OK and parts of the Rockies have seen very low local prices at the well head.

A much bigger impact on NG drilling has been the difficulty/expense of financing such projects. I consult for on of the largest unconventional NG operators in the country. We just cut our 2009 budget in those plays from $1.2 billion to less than $700 million. Not because of pricing but because the cost of borrowing shot up. We’ll be just spending our income on new drilling projects. But we have thousands of locations that will be drilled eventually. This is just a delay. The unconventional gas wells deplete quickly. No public company can delay continued development too long or their asset value will drop dangerously fast.

Very little current production is being abandoned for any reason. But many projects are being delayed. My best guess is about 24 months until drilling picks up significantly. It will be a function of economic recovery and, to a lesser extent, winter temperatures IMO.

But don't worry. Easy-credit ripoffs coming our way:

U.S. plans program to aid credit issuers

WASHINGTON - The U.S. government is working on a new loan facility to help companies that issue credit cards, make student loans and finance car purchases.

The Treasury Department and the Federal Reserve will unveil the program Tuesday, according to people familiar with the plan. They spoke on condition of anonymity because a formal announcement has yet to be made.