Drum(stick)Beat: November 27, 2008

OPEC to Consider Another Round of Cuts: Meeting Saturday, Cartel Will Again Try to Stem Oil-Price Fall

Having failed twice in two months to calm plunging oil markets, OPEC ministers are set to weigh another round of steep production cuts as the world's economic travails continue to drive crude prices to levels not seen in years.

The Organization of Petroleum Exporting Countries has scrambled since September to stem the fall in oil prices, which is now putting pressure on OPEC budgets from Ecuador to Kuwait. Ineffective in blunting the price spike earlier this year, the cartel is proving similarly hapless in putting a floor under collapsing prices.

TNK-BP Could Freeze New Projects in 2009

TNK-BP may have to freeze new refining and marketing projects next year as Russia faces its biggest financial crisis in a decade.

"Next year won't be easy, just as for any other company," Alexander Kaplan, an interim vice president for refining and marketing, said Thursday. The board will decide on the 2009 business plan on Dec. 11, he said.

Russian oil companies are already struggling with falling output at mature fields, a drop in crude prices and rising costs for starting projects in harder-to-reach regions.

Petrobras took loan due to 'temporary' problems - minister

BRASILIA/RIO DE JANEIRO (Reuters) - Brazil's state-run oil giant Petrobras took a loan from a state-owned bank due to "temporary" financial problems, the country's energy minister said on Thursday.

Petrobras from Caixa Economica Federal in October, raising questions about the company's financial health.

Venezuela, Chevron Venture Operating Below Capacity Since Oct.

(Bloomberg) -- Petroleos de Venezuela SA and Chevron Corp.’s heavy-oil producing joint venture has been operating below capacity since an October power outage, an executive for Venezuela’s state-owned energy company said.

The Petropiar venture’s upgrader, a specialized plant that converts tar-like heavy oil into a lighter grade for export, lost a sulfur unit in the blackout, cutting output to 135,000 barrels a day, said Petroleos de Venezuela Vice President Eulogio Del Pino. The project is designed to handle 180,000 barrels of crude.

Iraq central gov't, Kurdistan agree oil exports

BAGHDAD (Reuters) - Iraq's oil ministry and the country's largely autonomous northern Kurdish region have agreed to export oil from Kurdistan to Turkey, an Oil Ministry spokesman said on Thursday.

The initial agreement represents a breakthrough in a dispute between the two Iraqi authorities. Disagreement between the Baghdad central government and the Kurdistan Regional Government has held up development of oilfields for export.

"There has been an initial agreement to export Iraqi oil from the Tawke oil field," Iraqi Oil Ministry spokesman Asim Jihad said.

French Refinery Talks Begin as Union Calls for Strike Action

(Bloomberg) -- Salary negotiations got under way today between French refinery workers and management at companies including Total SA, Europe’s third-largest oil producer, amid calls for strike action by one trade union.

Talks began at the Paris-based Union Francaise des Industries Petrolieres, the main body representing the French oil industry, industry and union representatives said.

Russia Eyes Trade Accord, Investment In Ecuador - Foreign Min

QUITO -(Dow Jones)- Russian Foreign Minister Sergei Lavrov said Thursday that his country would pursue negotiations with Ecuador on a trade agreement and is interested in investing in its oil, gas and energy sectors, including nuclear energy.

Hyperion looks for railroad service for refinery

SIOUX FALLS, S.D. (AP) - A company that wants to build a $10 billion crude oil refinery north of Elk Point is trying to find a way to bring railroad service to the site.

Hyperion Refining has contacted the D & I Railroad of Sioux Falls.

Hyperion says it needs a rail line to bring in equipment and materials for the construction phase -- and that the rail line would continue to be used when the refinery is operating in order to export its products and receive materials.

Kurt Cobb: The Energy Optimist's Lexicon

The world's energy optimists often employ a particular lexicon to make their case for abundance far into the future. Whether the lexicon is used cynically or out of ignorance, the result is the same: false impressions.

It is understandable that when people want to argue their case effectively, they use the terms most favorable to their argument. We should expect that in any spirited debate. But when it comes to the debate over the world's energy future, those arguing for continued abundance are sometimes ignorant of the full implications of the terms they use and sometimes just intellectually dishonest.

To help readers sort through the thicket of loaded terms often used by the energy optimists, I've constructed a short list of the most pernicious words and phrases that are often used to fool audiences rather than inform them.

Report of the Select Committee on the Impact of Peak Oil in South Australia (PDF)

During the time this committee was in operation, the price of petrol in Adelaide increased to more than $1.70 per litre, and is now trending downwards with predictions of it reaching $1.00 per litre by the end of the year.

While there is general relief in the community at this lowered price, it is a false dawn. The reality is that peak oil impacts will be felt just as hard. In the light of evidence taken by the Committee it might even result in those impacts occurring earlier and harder. We learnt that higher prices result in oil companies being willing to undertake new, more costly and more difficult exploration and extraction of oil while a lowering of the price removes any incentive for that to happen.

Gulf's woes bode ill for the oil and gas we need

Alistair Darling's Pre-Budget Report on Monday contained at least one item that raised not a flicker of attention at Westminster but which will have been keenly noticed far away in the Gulf: he has decided that Islamic bonds will not form part of the Government's borrowing programme in the near future.

The scrapping of Britain's first sukuk (a loan instrument that complies with Islamic strictures on the immorality of interest) will be seen as a slap in the face, a cold shoulder at a time when Islamic financial institutions are being buffeted by a catastrophe of real estate, the seeds of which were planted in America and Europe.

Petrobras takes out US$890mn loan, faces financial questions

Brazil's federal energy company Petrobras (NYSE: PBR) has taken out a 2bn-real (US$890mn) short-term loan with federal savings bank Caixa Econômica Federal (CEF), a Petrobras spokesperson told BNamericas, confirming a statement from the senate news agency.

"The operation took place in Brazil because of the tough credit scenario in foreign markets," she said.

Shell warns on gas supplies to Nigeria LNG

LAGOS (Reuters) - Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) declared force majeure on gas supplies to Nigeria Liquefied Natural Gas Ltd (NLNG) on Thursday after shutting down its Soku gas plant to repair pipelines damaged by thieves.

Shell's Nigerian unit SPDC said a sharp rise in illegal connections on pipelines to the Soku plant in recent months had raised safety risks to an unacceptable level and that it had been forced to carry out urgent repairs.

Democrats brace for ‘midnight rules’ from Bush

White House hastens to put new regs in place – and out of Obama’s reach, watchdogs say.

Oiligarchy: A game with a message

Trash the environment for profit to win! An utterly partial guide to the oil industry, as you 'walk a mile' in a mogul's shoes.

Carolyn Baker: Restoring Food Security and a Dying Way of Life

The U.S. financial system is in collapse, and energy costs are likely to come back again next spring and summer with a vengeance that we can't imagine. This will make the price of food, already off the scale, skyrocket even further. We must all get to know our local farmers, or better yet, become them. In the moment, we have the "luxury" of low energy prices, and it is during this time that we should be making food security our top priority.

Michael T. Klare: The Fall of Triumphalism

In a remarkable evocation of the strategic environment of 2025, the National Intelligence Council (NIC), a government intelligence service, portrays a world in which the United States wields considerably less power than it does today but faces far greater challenges. The assessment, contained in Global Trends 2025: A Transformed World (dni.gov/nic/NIC_home.html), was released November 20 and is intended to be read by President-elect Obama's transition team as well as the general public. "Although the United States is likely to remain the single most powerful actor," the council notes, "the United States' relative strength--even in the military realm--will decline and US leverage will become more constrained."

The report is devoted largely to an examination of the major trends--political, economic, military and environmental--that will shape the world of 2025. Many of these will be familiar to Nation readers: the rise of China and India as major actors in world affairs; Russia's growing significance as a power broker in Europe; the increasing role of corporations, crime networks and other nonstate actors; and the growing impact of climate change. But two key developments, by the council's own admission, stand out above all others: the decline of America's global primacy and the growing international competition for energy.

Opec keeps a close eye on US

Delegates of the Opec oil cartel yesterday began to arrive for their emergency policy meeting in Cairo, just as American families criss-crossed the US to reunite for their Thanksgiving dinners. The two gatherings may appear worlds apart, but in fact they are closely linked. The US accounts for almost a quarter of the world’s oil demand, lapping up nearly one in every five barrels of the oil Opec produces.

For Opec ministers ahead of Saturday’s meeting, the number of trips by US drivers will be key in measuring the health of oil demand as they consider a production cut to shore up oil prices that have tumbled from July’s record of almost $150 a barrel to yesterday’s $52.85.

Merrill Lynch Cuts 2009 Oil Forecast to $50 a Barrel

(Bloomberg) -- Merrill Lynch & Co. cut its 2009 oil price forecast to $50 a barrel from $90 as the global economic slump cuts fuel demand and said OPEC production cuts will likely fail to revive the market.

Merrill lowered its 2010 crude forecast to $70 a barrel from $100 and said prices may fall as low as $43 in the first quarter of next year. Iran and Venezuela have called for the Organization of Petroleum Exporting Countries to cut production again after an Oct. 24 decision to reduce supplies by 1.5 million barrels a day failed to stop the slide in prices.

UAE oil rig firm sees drilling as usual despite crisis

"We all got caught in the panic as investors rushed for the doors," Chief Executive Peter Whitbread told reporters on a visit to Lamprell's yards this week.

"But nobody is cutting back on drilling in this region. There is no significant cutback in the areas we are focused on."

Australia: Fewer independent fuel rivals allow rorts

A SHORTAGE of independent petrol stations has all but killed off the effectiveness of Queensland's fuel subsidy to drive local fuel prices down, according to watchdog Fueltrac.

Gold Coasters were yesterday paying 5c more for a litre of unleaded petrol than South Australians despite our state's 8c a litre fuel subsidy.

Edible playgrounds and political vegetables

From school playgrounds to digging up the lawns of the White House and Downing St, there are many wasted spaces where we could be inspiring people to grow their own food.

Villaraigosa unveils solar plan for Los Angeles

The mayor's proposal aims to have solar power meet one-tenth of L.A.'s energy needs by 2020. But skeptics wonder if the plan will be cost-efficient and friendly to private enterprise.

Falling oil prices test OPEC's unity

NEW YORK: For the first time in a decade, oil producers are facing a real test of their unity.

As the Organization of Petroleum Exporting Countries prepares to meet in Cairo on Saturday, exporters are being pummeled by a triple whammy of lower prices, falling demand and declining revenue. The group, whose members account for more than 40 percent of global oil exports, is desperately seeking ways to stop the drop in prices, which have fallen from their summer peaks at a record pace.

But OPEC is increasingly torn between its moderate members, led by Saudi Arabia, which can afford a period of lower oil prices, and countries with high government spending, like Iran and Venezuela, which have become much more dependent on high prices.

These two groups have often clashed in the past, and as prices plummet the tensions are once again bubbling to the surface.

Oil producers to carry on spending, but warily

DUBAI (Reuters) - A deep drop in oil prices has sapped the confidence of producer nations as even top exporter Saudi Arabia faces the prospect of a financial deficit next year.

But they are still expected to carry on spending for as long as possible and the core Gulf producers can draw on healthy cash reserves accumulated during the price boom.

Nigeria: Production Cuts - Country Threatens to Ignore Opec

Abuja - The Federal Government yesterday threatened that Nigeria may stop further cuts in crude oil production as directed by the Organisation of Petroleum Exporting Countries (OPEC) if other member countries within the cartel fail to obey the directives.

Russian oil producers seek further cut in oil export tax from Dec

Moscow (Platts) - Russia's oil producers are trying to convince the government to cut export duty for crude oil further from $192.10/mt ($26.31/barrel), expected to be introduced from December 1, the Vedomosti daily reported Thursday, citing unnamed sources in two ministries.

Deputy Prime Minister Igor Sechin is dragging out the signing of the draft resolution on the new export duty of $192.10/mt as he tries to help oil companies by reducing it further, the report quoted one of the sources as saying.

Peak oil is over but present lows hurt: Jum'ah

NEW DELHI: The world's largest oil producer Saudi Aramco on Wednesday said the time for astronomical crude prices was over but the present low levels too would not be good in the long run for finding and developing new reserves to ensure security of future energy supplies.

"The peak oil theory has been proven right. The era of peak oil is gone... for many NOCs (national oil companies) oil represents big revenues for development. Producers want enough money to build additional facilites after paying taxes, royalty and shareholders,'' Saudi Aramco president and CEO Abdallah S Jum'ah told a conclave of industry captains and experts organised by energy think-tank Great Organisations of the World.

Goldman Says Sell Oil Refiner Calls, Outperformance Won’t Last

(Bloomberg) -- Goldman Sachs Group Inc. told clients to sell Exxon Mobil Corp., BP Plc, Total SA and Chevron Corp. call options on speculation shares of the world’s biggest oil refiners will be unable to sustain their outpeformance of equity markets as demand for crude remains weak.

Euro-Caspian energy plans inch forward

Azerbaijan's state oil company SOCAR and Kazakhstan's state monopoly KazMunaiGaz this month signed an agreement setting out the main principles for a transport system to convey Kazakh oil across the Caspian Sea for entry into the Baku-Tbilisi-Ceyhan (BTC) pipeline and subsequent re-export to world markets.

This represents a step forward in the realization of the Kazakhstan-Caspian Transportation System (KCTS) that, while long discussed, has become Kazakhstan's response to Russia's unwillingness and/or inability to implement the long-promised doubling of the capacity of the Caspian Pipeline Consortium (CPC) line.

Medvedev, Chavez Sign Oil Agreements Before War Games

(Bloomberg) -- Russian President Dmitry Medvedev and Venezuelan President Hugo Chavez agreed to form joint ventures to pump crude oil and to increase military and nuclear cooperation yesterday in the first visit by a Russian president to the South American country.

Medvedev and Chavez today will tour the Russian atomic- powered navy cruiser Peter the Great, which is visiting Venezuela along with three other Russian vessels. The ships will conduct exercises in the Caribbean Sea with the Venezuelan navy in the coming days.

America’s Coming Financial Vortex: 6 predictions for 2009-2012

5. We will see oil hit $200 as Peak oil becomes obvious to all during 2009-2012. Don’t be fooled by the recent drop in oil from $147 in the summer of 2008 to $50 during November 2008. the recent data from the world energy market indicates that oil depletion (“supply destruction”) is far more severe than the recent headlines blaring the misleading condition of “demand destruction”. The most severe energy crisis in history is in my mind an unavoidable certainty during the next few years. America needs to go full-bore toward energy independence since we will have no choice. This energy crisis will be very difficult to get through and will cause tremendous social and economic difficulty.

6. International conflicts over natural resources will hit the headlines during 2009-12. As governments across the globe seek to address the wants needs of their growing populations, there will be aggressive competition for the world’s limited resources. Natural resources will be seen as strategic as well as economic. National and economic security for America will be a vital concern.

Nafeez Ahmed: Food Crisis & Peak Oil (Audio)

Are we running out of oil and food? Why are prices fluctuating? Are we leaving behind a catastrophic legacy for our children? Learn about how global food and energy crises will affect you over the coming years, and how the global system must change to meet our food and energy needs.

Hope For Hawaii's Energy Future

Every great debate faces the initial challenge of getting the facts straight, and few subjects have more factual confusion and denial than our energy future. Matt Simmons, international expert who wrote the best-seller Twilight in the Desert, opened with a compelling recitation of the evidence for "peak oil", referring to the point at which international petroleum production hits its maximum and, not being a renewable resource, begins its decline.

Plans for the world's biggest wind farm

It is not the usual green suspect. But it hopes to build a 5-gigawatt, deep-water wind farm - the largest in the world, equal to the output from five nuclear plants.

"It" is the Ocean Energy Institute, a tiny research organization founded by Matthew Simmons. An energy investment banker who specializes in oil and gas, Simmons was an energy adviser to President George W. Bush. His main partner, George Hart, is a physicist who consults for the Pentagon on the Strategic Defense Initiative, where he uses supercomputers for the mathematical modeling of complex systems. He also co-invented a laser used for eye surgery and semiconductor manufacturing.

China Seeks 60,000 Alternative-Energy Vehicles on Roads by 2012

(Bloomberg) -- China, the world’s second-biggest oil user, plans to have 60,000 alternative-energy vehicles on the roads in 10 cities by 2012 to cut pollution and fuel imports.

Solar panel sales to contract in 2009, says forecast

PARIS — The economic crisis will impact significantly solar panel sales, starting with weakened average selling prices and order delays or cancellations, according to market research group The Information Network (New Tripoli, PA.)

The solar panel market is set to contract in 2009 because of the slowdown in economic growth and the credit crunch, stated Dr. Castellano, president of The Information Network. "Newly installed solar capacity will reach only 7.1 GWatts in 2009, equivalent to a global growth rate of 26 percent, down from our forecast of 49-percent growth earlier this year."

The new politics of climate change

Only governments can save us from catastrophic climate change. Only they have the power to tax, regulate and incentivise businesses and individuals to act. But only a dramatic surge in the demand for political change will persuade them to use their power to full effect.

Creating that demand is now the central task, for all of us committed to success in this struggle.

Czech president: EU's most outspoken global warming doubter

Prague - Czech President Vaclav Klaus, one of the most prominent climate change doubters, is about to get a new platform: the European Union presidency. Klaus has called man-made global warming a myth and questioned sanity of Al Gore, the former US vice president who received the 2007 Nobel Peace Prize for turning a spotlight on climate change.

Most recently, Klaus expressed hopes the EU would give up its ambitious plan to spearhead the global struggle against climate change in the face of the global financial crisis.

ANALYSIS - Rich shelving CO2 cut ambitions as economies slow

OSLO, Nov 27 (Reuters) - Many industrialised nations are shelving ambitions for the deepest cuts in greenhouse gas emissions by 2020 as economic slowdown overshadows the fight against climate change.

About 190 countries meet for U.N. climate talks in Poznan, Poland, next week with scant mention of a deal in Vienna last year by almost all rich nations to consider cuts in emissions of 25-40 percent below 1990 levels by 2020.

Americans: Happy Thanksgiving! May you enjoy friends and family, food and football today. (Real football, not that strange game played with a round ball. ;-)

Everyone else: Happy 3rd Anniversary of Peak Oil.

Half Time's over!

Stay tuned, I think the second half is going to be a barnburner...

The photo of the Hubbert Curve made out of marshmallows was done by a Richard Katz, I see; waddya know, I know a musician by that name, also in the Bay area.

Merry Gobble gobble!

This is a bit strange, so Saudi Aramco now admits peak oil is real? According to the Times of India article. If it is indeed correct, thats a huge step in the right direction atleast.

is there a right direction anymore?
we're going the way of the dodo. news like this only make us go slower, but the direction is clearly set.

does anyone here have a guess about how fast the related and non-related jobs will dissapear if gm goes bankrupt? i mean from the moment from when it hits the news to the moment where most of the related and not-so-related people get fired (repair shops, auto part makers, waiters, and so on?)

ps: where did the comment about the nuclear "energy revolution" go?

It will be interesting to see if there if there is a "Correcting Statement," but if the quote is accurate and if the statement stands, I will be astounded.

Don't be astounded.

Oil prices have crashed. It would be foolish for OPEC to promote endless reserves. Now is the time to talk about scarcity.

Good point. At their current level, oil prices have increased at only 13%/year over the past 10 years.

"The peak oil theory has been proven right."

Really. Wasn't someone recently dismissing it as garbage?

Jum'ah also says that politicians were the only people convinced the price spike wasn't due to speculators; guess he doesn't read the Washington Post...

Yeah, seems surreal. What is this Great Organizations of the World? Seems like its a name straight out of some movie.

Matt Simmons' 5 gigawatt wind farm proposal is astonishing. Unlike the Pickens plan which has a nebulous quality about it, the Simmons' plan is concise and easily debated. I can't wait to see how the numbers from a 5 gigawatt wind farm compare to nuclear. Let the fun begin!

I have a hard time seeing that offshore wind will be a long-term solution. According to the article,

Dagher pointed out that floating structures could be decommissioned relatively easily at the end of their service life, in a projected 20 to 30 years.

I am guessing that these floating structures will be fairly expensive to build. Maintenance in the salt spray will be greater than on shore. The structures will only last 20 to 30 years, and I doubt that we will be able to replace them at that point. At best, we have a temporary solution with a lot of up-front costs.

So what would be a solution?

One of the ironic weakness's of wind power is the inability to produce electricity when winds exceed 55 mph.


If that mph limit could be increased via new technology over time, might that improve the odds that the investment required to extend the life of the wind farm is justifiable? A location off the coast of Maine might be one of the few locations that has enough high winds to make that a possibility. Add to that, incremental improvements over time in the overall efficiency of wind towers in winds less than 55 mph and you might have a viable economic reason to extend their life.

BTW, is there already a theoretical limit to wind power generating efficiency?

Yes, although it's not technically an efficiency. Because the work is mechanical, the conversion efficiency of that mechanical motion into electricity can be extremely high.

However, there is a maximum amount of power you can remove from the air and still have air flow given by Betz' Law, and is given by about 59%.

Gail -

In general, stationary floating structures, such as would be used to support a large offshore wind turbine, are neither terribly difficult to build nor all that expensive for their size. It's mainly relatively simple steel fabrication. As far as the problems of maintenance in a salty environment, the human race already has a wealth of experience with that sort of thing ..... they're called ships.

As far as a 20 to 30-year operating life, that is consistent with most types of systems involving heavy machinery, e.g., coal-fired power plants, chemical plants, heavy manufacturing. In reality, these things don't wear out all at once, but some components go before others, so routine maintenance and replacement becomes largely an ongoing thing.

Such an enormous wind farm would most likely be built in phases, anyway, so the replacement schedule would be staggered in a manner that would more or less follow the order in which individual wind turbines went into service. If the wind farm has an energy payback period of say one or two years, and if it lasts 20 to 30 years, in terms of net energy production, that is not such a bad deal. The other nice thing about wind farms is that they are modularized, i.e., you can add a few here and a few there, as you like. You don't have to build it all at once, as is the case of a conventional power plant.

The most serious (and obvious) inherent problem with wind power is the need for energy storage or back-up fossil-fuel power generation to deal with those periods when the wind is insufficient to satisfy electrical demand. Once wind power becomes a certain critical fraction of a grid's total power, it can make it extremely difficult to maintain a stable and reliable supply of electricity. I think this problem is not given enough consideration in some of these grandiose proposed wind projects. It simply won't do to have to shut down a large chunk of the grid during the middle of August because there isn't enough wind for weeks at a time.

Perhaps we should plan to repurpose unneeded global shipping fleets to ammonia-producing wind facilities?

Pumped storage is useful for time of day (and even weekend > weekday) shifting, and GREAT for grid stability (hydro for a number of technical reasons is the best source of power for grid stability) but not seasonal shifting. Seasonal NG, biomass or coal power will be needed to keep the a/cs in Suburbia# humming.

Best Hopes for Pumped Storage,


# Suburbia is the logical choice for rotating scheduled blackouts. Less critical infrastructure (hospitals, etc.) and twice the per capita consumption.

Alan -

Sure, pumped storage is a very effective practical means of load stabilization. The only hitch is that not too many locales have a topography conducive to building pumped storage.

As the pumped storage reservoir has to i) be quite large even for a modest size power generating facility, and ii) be at a significantly higher elevation than the turbine it will be running, pumped storage systems are generally located in mountainous areas (e.g., Switzerland has a nice big one operating at a head of several thousand feet, Pennsylvania has at least one).

Any place that has a flat terrain, such as all of the Plains states, the Great Lakes area, and most of the South, is not a good candidate for pumped storage. It is simply not practical to build an artificial mountain with a large lake on top of it.

Conceivably, you could go in the opposite direction by having a lake at ground level and putting the water turbine down some deep mine shaft, but then you have the problem of where to store the water on the downstream side, as the receiving reservoir has to be the same size as the upper one.

Try this little exercise: assuming a 200-ft elevation difference and 100% efficiency, calculate the volume of a reservoir capable of providing 8-hours worth of energy storage from a wind farm generating 200MW of power.

Response later (with Tryptophan overdose).

Happy Thanksgiving !


If my maths are right, I have this:
200 MW for 8 hours is 5.76E+12 joules
200 feet is 60.96 meter (h)
potential energy is mgh, g being 9.81 on earth
So the mass is 9631823545 kg.
1 cubic meter of water being 1000 kg, we need 158002 m2 or 0,15 square km.

I suppose this is not a problem in many countries :-)

PS: Please correct me if I got something wrong.

mehdirah -

Your calculation appears correct ....... for the way you did it. However, you appear to have assumed that that pumped storage reservoir itself is 200 ft deep. Hence, the relatively small area of the reservoir.

In reality, the reservoir would more likely be in the form of a relatively shallow lake, say something with a depth of about 20 ft. In our example, the mean water level of that lake would be 200 ft above the downstream turbine. Thus, the area of that lake would be more like 1.5 square km rather than 0.15 square km.

As natural lakes go, that is not a huge lake, but for something that would have to be built, it would be a large and expensive construction project. And if one had to build an artificial hill 200 ft high to put that lake on top it, it would (by simple inspection) be absolutely prohibitive.

Which was my main point all along, i.e, that the feasibility of pumped storage is highly site-specific.

No need for pumped storage in Maine, Canada has massive hydro capacity close to NE of US and grid connections already in place. Furthermore Canadian demand is lowest in summer, just when Maine wind farms are likely to need back-up from the North.

The west coast of the US has a near continuous mountain range essentially right on the beach except in Southern California.

I saw mention of another gravity storage solution along the lines of Joule's solution, only water turbines weren't involved. It suggested using deep shafts and massive weights, which would create power by turning a generator when descending the shaft, and surplus power would be used to winch them back to the surface in "recharge" mode.

I think that was me, and the scale of the mass and distance turned out to be impractical for my back yard and budget.

Putting wind farms out in the ocean looks great, especially from a real estate and nimby POV, but sea water is a universal solvent for pretty much everything except plastic. See Pacific Garbage Gyre. If Simmons can make them out of plastic and they don't get loose too often I'll forgive him for not believing in AGW. It'll happen with or without him. My experience with the service life of bearings, steel and anything electrical out at sea leads me to think that he's hoping for a miracle that the marine industry has yet to pull off. Plus it's going to need one hell of an extension cord.

Maybe what I need is a depleted uranium counterweight, major density, so the hole doesn't need to be so deep.

I'm starting to think along the lines of a pyramidal tower, say a hundred feet high, with a turbine on top pulling a DU weight up a central shaft. Good design for flatlands, and the platform on top would be good for major pronouncements and maybe a ritual sacrifice to the wind gods as necessary. Could be a public works project for enemy combatants and the like. Good place to store crops as well.

Best Hopes for Pumped Storage,

They didn't say too much about matching the demand, but implied it would mostly be for wintertime space heating needs. No mention of whether that is resistance heating, or more efficient mechanisms such as air-source heat pumps, or ground source heat pumps. The amount of power needed would dramtaically be reduced with the heat pump technologies, as would better insulation. Presumably these are mainly (pun inteneded) existing structures which already have FF and/or wood based heating systems installed. These could be relegated to backup heat sources (for when it is both cold, and windless), rather than for baseload heating. That way the legacy heating could substitute for storage of wind energy. I am firmly of the belief that significant demand management will play a significant part in our energy future. I think the cost of storing power will be much greater than the cost of adapting to variable supply.

The real issue, is at what cost these resources can be developed. DavaMart assumes pretty high cost for the UKs planned off-shore wind. To be economically viable these would have to be considerably cheaper.

Hi EoS,

Few of us, even those who should know better, appreciate the vastly improved performance of today's air source heat pumps, in particular, those with variable speed inverter drives. Normally speaking, air source heat pumps are sized according to cooling loads because if you oversized a conventional heat pump, you don't get good dehumidification; not surprisingly, the heating performance of an undersized unit come winter suffers appreciably. Inverter drive systems address this issue quite nicely because they continually adjust their output to match demand under a wide range of conditions, thereby ensuring optimal comfort and efficiency.

There's also the misconception that air source heat pumps don't operate efficiently (or at all) at temperatures much below 0C/32F. Simply not true. For example, Mitsubishi's Zuba-Central heat pumps operate down to -30C (-22F) and maintain 100% of their rated heating capacity at -15C/5F and 90% at -20C/-4F. Back up electric resistance heaters? You're joking, right? Even relatively inexpensive ductless units that retail for as little as $2,000.00 CDN offer HSPF ratings as high as 10.0 and 11.0, which translates to a seasonal COP of 3.0 or more (i.e., 1 kWh of electricity equals 3+ kWh of heat).


Hey HereinHalifax,

Just attended a session on Mitsubishi product lines including MrSlim® Split-ductless Technology.

They have old tech in a new application, i.e. Pulse Width Modulation (PWM), Pulse Amplitude Modulation (PAM).

One aspect of the sales pitch is for spot heating. They are 410A refrigerant systems.

Lots of innovation in the several lines from HVAC Advanced Products Division.

Hi Robert,

Mitsubishi continues to raise the bar year after year -- their City Multi line kicks ass!

Locally, folks who spent several thousand dollars on pellet stoves are now all madly running around town trying to find pellets, only to come home empty handed. My brother was at a local Home Hardware on the weekend and he tells me there were thirty or more cars lined up in the side yard wanting to buy pellets, and as he was leaving he overheard an employee tell another that they were now down to their last fifty bags.

For more on the pellet shortage, see: http://www.cbc.ca/canada/nova-scotia/story/2008/11/26/pellets-panic.html

Also, check out today's CBC Maritime Noon segment at: http://www.cbc.ca/maritimenoon/stories.html

The irony in all this is that ductless heat pump have a lower initial cost and, in addition, a lower operating cost; there are no fuel handling, storage or supply issues; no ongoing cleaning and maintenance requirements; no dust or indoor air quality concerns; they're dead simple to operate (a click of a remote control); far more reliable; provide air conditioning and dehumidification benefits during summer months.... it just doesn't add up.


their City Multi line kicks ass!

Wow ! you know about that ! I thought it kicked ass too, but figured it was just cause I'm a newbie at this HVAC/R stuff ;)

Wood pellet shortage and then a wood stove ban on the horizon, that's not good.

I agree, very kewl stuff, but it predicates electricity being available. How does your heat pump run without power? Nice to see the reduction in use, but it still is based on something outside to give you power you pay for. Lose your job, and can't pay your electric bill.. heat pump doesn't help much. Heck most pellet stoves now don't run without grid power. We just went 36 hours without power. Had lights and heat just fine. So when the big crash happens you expect to still have grid power? And the ability to pay for it?


Don in Maine

Hi Don,

As you point out, pellet stoves require electricity too, so neither is much good without grid power. Short term: my oil-fired boiler is wired for emergency power and that becomes my primary heat source in the event of an extended power cut; I figure running the generator one or two hours per day will supply enough heat and DHW to keep the pipes from freezing and ensure some degree of comfort. If the boiler or generator should fail or if I exhaust my fuel supplies, I have four propane fireplaces and a propane cook top as a fall back. During the winter months, I try to maintain at least 700 litres of heating oil, 350 litres of propane and 20 litres of [stabilized] gasoline on hand at all times, with perhaps another 50 to 75 litres between the two Chryslers. Long term: my ass is toast.


I share Gail's concern on long term viability of off-shore wind. I'm no expert but for maintainence and replacement you'll need specialized vessels. I'm not sure if a sailing boat can be fitted to do the job.

Also, the poles are typically made of steel, which is really energy intensive to produce. Or to recicle for that matter.

And of course, the blades are constructed from carbon fiber, meaning good old oil.

In general I still asume that all the so called "alternatives" to FF need an underlying FF infrastructure to produce, install, maintain, epand and decommision. Please correct me if I'm wrong.

I think the local grid idea is the best substitution to our current energy problems: some solar electricity, some solar water heating and some wind generation on every premise.

Oil? Wind turbines don't need oil!

There is sometimes more than a tonne of oil in big turbines gearbox, which gives a nice burning when lit.

Must be an electric helicopter. It probably uses the wind turbine on its roof to charge its batteries :)

This is a typical response to renewable energy solutions that are being applied and have every prospect of replacing FF in the future.

Apart form the fact that most turbines are not serviced by helicopters, this appears to be a 5MW turbine, that would generate about 15Gwh of electricity per year, enough to replace 2million gallons of oil based fuel. Now how many hours of helicopter flight time is going to be used on this turbine per year, and what does that translate into fuel consumption? 200 gallons/year? 2,000 gallons? A EROI of 1,000-10,000 ( for the helicopter servicing) Of course, most energy used for producing wind turbines is in the steel, again using very little oil but requiring about six months electricity production (from a wind turbine) for electric arc steel furnaces.

When all oil used for heat, land and sea transport is replaced by electricity, their will still be enough oil for lubrication and the occasional helicopter flights. My guess is that that turbine can also be accessed by a ladder up the central tower, as that's standard in most turbines

Here here!

Good comment but it points to one of the main issues facing the transition: its a liquids fuel crisis. Liquid fuels are so energy dense that certain applications are likely to die out or be seriously curtailed as prices will mean current business models simply do not work. A classic example of this will be airlines. Airplanes and helicopters will still be flying in 20 or 30 years but they will be much rarer, I believe this is an inevitable conclusion of lower EROEI.


Resources are MUCH better used for one 1 MW (or 2 or 5 MW) wind turbine than thousands of small residential WTs for a number of technical reasons (not enough time ATM to list).

All steps to make WTs can be done using renewable energy, but there is not enough of it/it costs too much (Iceland has a steel smelter using renewable electricity, used to make specialty silicon steel for electrical applications).

Aluminum (>50% from hydroelectricity) can used for many applications.

Best Hopes,


Hmmm... what about the 1kw windmill I can make using things from the scrap yard?


for maintainence and replacement you'll need specialized vessels.

An offshore field of turbines could be like a flip ship. A glorified spar bouy with blades. Towed to position and set up. Put them out, bring them in, service and return. The mooring system would include the power docking. It's not clear to me if one would go straight to electricity - and what type - or maybe to some other intermediary fluid that would drive a turbine cluster. Not my job, man. I do vegetables.

cfm in Gray, ME

The most economical current designs for offshore wind involve turbines on anchored barges. This allows for placement further offshore than with a rigid pole to the seabed, and takes advantage of our expertise with oil derricks to locate the wind power where there is much higher wind speed. Power in wind goes as the cube of the velocity, so increasing wind speed makes the power output vastly better.

More importantly, by using barges, you can take a normal ship and simply tow the entire wind turbine in to shore for onshore maintenance. This is much, much cheaper than hiring a crew and doing offshore maintenance.

Lake Michigan is one of the best (if not THE best) wind resources in the USA. Upper Lake Huron and parts of other Great Lakes (Superior, etc.) are good too.

Great Lakes shipping typically lasts 60 and even 80 years in fresh water.

Most FF power plants have a 30 year depreciation and design life.

Best Hopes for More Wind,


The lakes vary a lot in terms of average depth however. Superior can be quite deep in some places (over 1000 ft). My recollection is that Huron and Erie tend to be more shallow.

I guess I wonder whether it makes more sense to put the wind turbines on the shore to avoid the added expense of offshore wind...

Alan-- Happy Thanksgiving. I see you never take your eyes off the screen!

Can you make a brief comment about the energy and financial reality of hydrogen vs. ammonia vs. pumped storage vs. batteries in storing peak electrical generation from wind or hydro?

There is a new organization in Oregon that is pimping the idea that peak hydro power can be used to make hydrogen for a New Hydrogen Economy on the Columbia. It smells like grant-bait to me, but I'm no engineer.

There is never any surplus hydropower in the USA NW to produce hydrogen from (decades ago there was a couple of weeks of surplus after heavy rains, they turned down the nuke (Trojan ?) to save fuel).

All existing and future small hydro projects in the lower 48 can find good use in the grid (the highest and best use of electrical energy *IF* we improve efficiency). It would be good to expand transmission capacity to find a home for future/potential BC hydro (mainly in CA, AZ, NV, but also in AB).

Yes, a scam IMO.

Wind, OTOH, has the potential to be built faster than we can build transmission. And it cannot be scheduled like most hydro can. Winter peak, summer minimum generally (good also in spring & fall), so an economic use for surplus/stranded wind electricity (too much wind generated electricity for local consumption and transmission) would be a good thing, perhaps a very good thing.

Ammonia used in Iowa today (example) now comes from Trinidad, etc. where it is produced from otherwise stranded NG. Local seasonal production of ammonia from surplus wind in Iowa is worthy of additional R&D IMHO. (No CO2 generated in ammonia production from stranded wind, unlike NG sourced ammonia).

HV DC and pumped storage can shift wind power for time of day and even weekend > weekday, but not seasonally (spring > summer). For, say, a 50% wind grid (HV DC over North America, 50% of GWh from wind), some economic use in the spring, fall and perhaps winter for surplus wind would be needed for, perhaps, 3%-5% of total wind generation.

Best Hopes for Turkey with friends,


Could there be a synergy by combining wave power and offshore wind? In business, synergy is usually highly overestimated, but being able to share the same transmission line to the coast, helping to balance out the lack of wind power during periods of low wind, and lowering the installation expense and ongoing maintenance expense of both systems would seem to be worth looking into.

You also have the ability to manufacture both systems at the same plant near the coast; increasing the return on investment in the facility. If Maine got their act together soon enough, they could ship their wind and wave power systems to the Great Lakes via the St. Lawrence river and over to England as well.


Edit: You might also have the ability to balance out the lack of wind power when winds exceed 55 mph.

Here is an idea for all those unused tankers we are soon to be up to our ears in.

Pump seawater out of the full tanker ship with a row of windmills mounted on deck (cabled to also provide E to grid when done), when wind dies generate E with water rushing back in as you sink the ship.

Pumped storage.

I have also heard this proposed very seriously for the many, many decommisioned oil rigs in the gulf of mexico. They're already licensed and such, so the legal issues are straightforward, and there are lots of them.

Thanks, Alan. I will pass on your comments to the editor of our local paper, who bought the idea without any apparent reservation.

Grace be, we have both friends and turkey and will give thanks to the source of it all (with no attempt to name the unnameable) at dinner today.

I hope everyone on TOD is similarly blessed.

Here is a promo PDF about deep water wind from Matt Simmons' Ocean Energy Institute website. http://www.oceanenergy.org/


The US already shares power with HVDC links to Canada's hydro. Furthermore N America has the great lakes and lake Winnipeg, that have vast potential for season storage. Lake shore residents may not like a seasonal 2 meter drop in lake levels but its a lot better than a permanent 2 meter increase in sea levels. Nowhere else in the world has better natural hydro storage capacity within transmission distance to very large wind and solar resources.
We need base-load power is just a rational for keeping coal or expanding nuclear.

I am aware of the way Lake Winnipeg is used as a reservoir by Manitoba Hydro (they want to add 5 GW) and how the seasonal spring water in the Great Lakes could be delayed and used for summer peaking power (install about 20 GW at Niagara Falls instead of 5 GW today).

All told, good, but not nearly enough.

Minimum nukes % for a 90% non-GHG grid, about 30%.


The difference in height between Lake Erie and Lake Ontario and the size of these lakes would seem to have much more than 2OGW capacity, if pumped storage was used, especially if it was possible to control the lake levels back to Lake Superior. So Lake Superior could be pumped up 1 meter above mean level in winter and pumped down( or drained down to Lake Erie 1 meter below mean level in summer, that's a lot of extra water, especially if some is re-used by being pumped back past Niagara falls during off peak in summer.
What makes these lakes so good is the large surface areas, multiple lakes and the narrow control points between lakes. The big drop at Niagara falls and a lower Lake Ontario is ideal for shorter term pumped storage.

Quebec and Ontario also have additional lakes but smaller and more remote from major population centers.

Conveniently located near those soon-to-be shut down car factories too. Perhaps someone should suggest to GM that they include making wind turbines in their "proposal" for getting 25 billion dollars for free.

Currently costs for of-shore wind in Britain are well over £2 million/installed MW - costs shift so rapidly that it is difficult to be more precise, and how much of the cost of transmission and back-up varies with different estimates.
In the North Sea 35% is the usual figure used for capacity estimates - perhaps you get more in the Gulf of Maine.

That works out then to well over £6 million/MW of actual energy generated - way higher than anything except solar PV

Here are Centrica's figures, which show £80 billion for 40BW of wind installed - but 7GW of this is for the far cheaper on-shore wind.

It should be borne in mind that materials costs are currently falling rapidly, so updated figures may be much more favourable.

I thought Ilargis post today over at his blog "The Automatic Earth" was good.
I won't try to summarize it because I am sure I can't do it justice.

Correction: StoneLeigh wrote the leading post. My apologies

The post I wrote on pyramid schemes was actually yesterday's intro. It's not on the front page anymore, but you can find it here. As our posts are long, we only have the current day on the front page. For older posts, we have an archive list on the right sidebar.

Thanks for the archives tip, Stoneleigh.

Ric's post today is one that really spoke to me !!

Thanks for the link

What that all seems to boil down to is the reality that human populations differ from much more stable social insect populations (ants and bees) by their ability to generate financial bubbles!

If we had only a "gold" or similar standard, there could be no growth beyond the supply of gold. So if we value a static universe, we will choose that. Aristocracies prefer a gold standard. Populists prefer fiat money.

People are born gamblers -- they know that the lottery and Las Vegas are fools' games, but they willingly participate because of the possibility of a payoff-- someone else could be the greater fool.

Historically, those who successfully generate and promote bubbles are hugely rewarded, so I guess that has to say something about how we are organized as homo economicus

The same message as Stoneleigh's in pictographic form, courtesy of Ruben Bolling;


I laugh to keep from crying.

2.7 GW in 8,900 biogas plants worldwide in 2009



Burning methane before release into the atmosphere also reduces GHG.

Good News for Thanksgiving :-)

Best Hopes,


doesnt the methane simply oxidize in the atmoshpere ?

Yes, with a half life on 7 years X months.

Methane in the Earth's atmosphere is an important greenhouse gas with a global warming potential of 25 over a 100-year period. This means that a methane emission will have 25 times the impact on temperature of a carbon dioxide emission of the same mass over the following 100 years. Methane has a large effect for a brief period (a net lifetime of 8.4 years in the atmosphere), whereas carbon dioxide has a small effect for a long period (over 100 years). Because of this difference in effect and time period, the global warming potential of methane over a 20 year time period is 72. The Earth's methane concentration has increased by about 150% since 1750, and it accounts for 20% of the total radiative forcing from all of the long-lived and globally mixed greenhouse gases.[13] Usually, excess methane from landfills and other natural producers of methane are burned so CO2 is released into the atmosphere instead of methane because methane is such a more effective greenhouse gas.


Best Hopes for Less Methane,


thanks for the explaination.

We are devouring our young!


U.S. Details $800 Billion Loan Plans
The Federal Reserve and the Treasury announced $800 billion in new lending programs on Tuesday, sending a message that they would print as much money as needed to revive the nation’s crippled banking system. The gargantuan efforts — one to finance loans for consumers, and a bigger one to push down home mortgage rates — were the latest but probably not the last of the federal government’s initiatives to absorb the shocks that began with losses on subprime mortgages and have spread to every corner of the economy.

1st time ever: 10-year yield is below 3%

NEW YORK (CNNMoney.com) -- Demand for U.S. Treasury bonds surged Wednesday, lowering the yield on the benchmark note to an all-time low, as investors responded to grim economic data and falling mortgage rates.

The closely watched 10-year note rose 1-3/32 to 106-18/32, and its yield fell to 2.99% from late Tuesday's 3.10%. The yield on this note has never gone below 3% in its 46-year history.

Deflation anyone? I can almost hear Denninger rant and rave about this one.

I believe "We the People" have lost our country. An overwhelming majority of Americans that emailed, faxed and phoned their elected representatives were against the initial $700 billion bailout. It was passed anyway, which demonstrates that "We the People" have no representation in Washington DC.
They say they are giving international investment banks money to help us out.
The lie is so huge and obvious it seems our politicians don't even think they have to pretend to be acting in the best interests of the population.
A teen crisis center was recently closed in my town because it lacked $75,000 for expenses.

grassley of iowa recently said that he was against the bailout of detroit because his emails were overwhelmingly against it. i dont think he reported anything about his emails re the banking bailout.

I wouldn't put too much weight on Grassley's statement. He's taking a bargaining position in order to trade his vote for something he would like such as an increase in ethanol mandate percentages or getting Detroit to build more cars/trucks that are flex fuel.

The Detroit 2.8 would like help with no strings attached. No way.

Grassley is aiming for strings that will help Iowa corn farmers. It's called politics. Those who want something must help others get want they want if anything is to be done.

i wasnt implying that detroit should be bailed-out, only the hypocrisy of that folksy senator from iowa. that is also called politics.


Putting aside, for the moment, whether the bailout was necessary, where is the reform we were promised. I expect that will fall by the wayside in the coming months. We could start by breaking up banks like Citigroup and preventing banks of that size in the future. If they are too big to fail, they should be too big to exist.

I am not even sure that Citigroup actually needs to be bailed out as the bailout happened so quickly with virtually no public debate or discussion. Clearly, too much power has been vested in the Treasury and the Federal Reserve. And yet, we are having extensive debate about the relatively paltry bailout for GM.

And shouldn't the conditions include no bonuses for the forseeable future, all salaries cut to well under a million, giveback of salaries and bonuses for the last year?

Consideration should also be given to nationalizing all the major financial institutions. Put them under the umbrella of a true National Bank and pay them civil service salaries. What would be wrong with doing banking the old fashioned way? Garner deposits and make loans to thoroughly vetted and financially sound individuals and companies. The reason is that the old fashioned approach will not result in the incredible leveraging and securitization that result in billions of dollars of profits.

"I propose that we pay for sending the current crop of bankers on a one way trip to the sun. It would be cheaper to put bankers and their families in launch vehicles directed towards the sun, than bail them out of their fictional mathematical games. The 'Zenit' rocket system can put one kg of stuff in orbit for less than three thousand dollars- You could put a family of bankers in orbit for less than a million. Building the launchers for putting bankers in orbit would create more real jobs than the trillions wasted in the futile efforts to make banks lend to consumers."
---from cr

Why waste all that valuable O-NPK. Just grind up the bankers and plough them into the fields.

They are toxic. Don't meet organic standards. And no, I'm not kidding.

The environment's already screwed.
Let's just do it anyway.

I agree. But first have them dance the jig from a lamppost.

I thought the US has a system where people voted for candidates at polling booths ever 2 years, not by emails. "we the emailers, faxers and phoners " don't seem to count as much as voters.

Is reinflating the housing market an unabashed good thing? Housing was unaffordable in many parts of the country, so the bubble burst. Now that it is getting affordable again, they want to reinflate it. And when will we get the next bubble? Just let well enough alone. At some point, people will get back in the market and buy that unsold inventory.

There is an obsession with home ownership in this country. Home ownership is overrated in this country and only works when the prices of housing are inflating. So let the housing prices go down so that the next generation of home owners, if they so choose to be home owners, can benefit from the successive appreciation.

I don't think they can re-inflate. The problem though is all of the people who are underwater. The "best" hope they have is for some inflation to boost wages and prices a bit to "fix" that aspect of the problem. It would really tick off anyone holding lots of notes denominated in dollars though..

Ericy - If they cannot reinflate housing, then there will be no new houses built. Even with the collapse, it generally costs more to build a new house of like quality and location, than it does to buy a used house. Unless we have persistant deflation or a decrease in population as in Japan and parts of Europe, houses will inflate.

But Americans have ridiculous amounts of space in their homes by historical standards. If more people shared the same house, we could have an increase in population with no increase in houses built.

Indeed, that is what happened in the Great Depression. That's when a lot of the family mansions were broken up into apartments.

They want to re-inflate everything, because inflation is viewed as a creator of wealth. Create money which consumers spend and there is a short-term increase in economic activity. The bubble in housing has popped and it will be very difficult if not impossible to re-inflate. The next bubble is already here, and its in US T-bills and US FED (private company) notes. Deflation is not a serious risk, once all this newly created money flows through the system, hyperinflation will be the worry.

It's so disheartening to hear this constant desire to fix the drug addict with more powerful and expensive drugs. Maybe its time to realise that the credit drug is very damaging despite the initial euphoria.

I think its time to let government do what it does best; nothing

They have administered the money creation drug so often, they think it will work every time. But consider the condition of the patient now. We have some $500 trillion of complex packaged debt wedged into every nook and cranny of the global economy. The entire GDP of the planet is only around $50 trillion. Now all this unstable liquidity is collapsing in on itself and they are throwing a total of around $4 trillion at it trying to stop the collapse of a $500 trillion house of cards!

The stock market may not be buying the rescue story just yet. Everybody is saying surely the bottom is in, but in a bear market, all rallies are guilty untill proven innocent of being a bear trap. This latest rally should be viewed as guilty for now:

It's a pretty reliable technical rule that moves with volume ramping up indicate the primary direction and moves with volume ramping down indicate countertrend direction. The chart shows that this last big rally is with sharply fading volume not to mention A/D strength.

They may fix deflation with severe inflation, resulting in a respite from the bear decline in the markets; but that would mean a return to the dollar's decline and oil and other commodities becoming inflation problems with a mountain of global debt still to unwind. Eventually, I think the patient dies of overdose.

LOL, I hadn't noticed the Drum(stick) in the Drumbeat today. Hilarious! :D

Ambrose Pritchard Evans at the telegraph states that California has a higher bankruptcy risk than Slovakia. What interesting times we live in. I've never been to America but have friends and family in LA and I've always thought that California is the golden land. It's a bit surreal to read what's happening at present.

California is the golden land

It is. A century and a half ago it was Gold Mountain to starving Chinese peasants. California has been violated and despoiled, but is still fabulously rich. Bankruptcy won't be the end, but the future will be very different, and a far different cast of characters will be in charge. Many of them will be Chinese.

Holiday retail season may end before it begins

Piles of jewelry, clothing and electric drills are bypassing store shelves and heading straight to liquidators by the caseload as stores try to save as much cash as they can.

Major department stores and mall-based chains have cut prices up to 70 percent to move out mounds of excess inventory stuck in the pipeline since the financial crisis hit in September and people snapped their wallets shut.

Looks like we may not have to worry about empty store shelves, shipping problems or no.

It wasn't supposed to be this bad. Stores, which typically place orders about four to seven months in advance, had cautiously planned their holiday inventories about 15 percent below last year's levels.

...Richard D. Hastings, a consumer strategist with Global Hunter Securities, says the latest culprit — fear of deflation — is also causing stores to dump inventory. Clothing and other merchandise is worth less now than it was even three months ago.

"Prices are slipping too fast, and so by the time you sell the product, stores are not covering their operating expenses," he said.

Who was downrating this one? Trying to shoot the messenger?

To me we had a retail bubble as well as a housing bubble and a credit bubble. The aftershocks from the housing and credit bubbles popping are causing the retail bubble to pop as well. Not sure what's next - maybe expensive vacations..

It was probably TheAntiDoomer, downrating anything remotely negative.

If he keeps it up, he'll be the ex-AntiDoomer.

I just gave this post excoriating the AntiDoomer a 1 Positive.

It was probably TheAntiDoomer, downrating anything remotely negative.

If he keeps it up, he'll be the ex-AntiDoomer.

Reader Guidelines

"4) Treat members of the community with civility and respect. If you see disrespectful behavior, report it to the staff rather than further inflaming the situation.
5) Ad hominem attacks are not acceptable. If you disagree with someone, refute their statements rather than insulting them."

Are vague attributions of malice and threats of banning for "incorrect rating" really the best way to promote civil discussion? One of the best ways to refine your arguments is to talk openly and respectfully with people who disagree with you.

It's not a threat. It's a warning.

We will be cracking down on abuse of the ratings system in the future.

It's not clear to me what the rating system does. It's not like slashdot where one can read at a certain level. And the number is at the *bottom* of the post. It should be at the top - if at all.

Basically, it's still in beta. Right now, there are no consequences. No karma. That will likely change in the future, but not for awhile. Obviously, we need to deal with ratings trolls first.

For now, we'd like to see more people use the ratings system to vote up good comments. It really does work pretty well for those who don't want to read all the comments. You can scan down the page and pick out the ones with high ratings.

Downrating should be for truly obnoxious comments, outright spam, etc., not just because you disagree with the comment or dislike the poster.

You really expect it to be used like this? The end effect is the encouragement of group think, and given the typical leanings of this site, most viewpoints that are optimistic will be downrated, and many snarky one liners will be uprated. Thats how it works now, and I certainly dont expect people to change.

I haven't used the rating buttons yet.

My considered opinion is that it measures mostly a 'reality TV' level of poster celebrity more than the relative merits of individual posts. Some posters seem to have loyal followers who rate up their most minor , banal, or repetitive comments. Not that they are not important contributors, but clearly fame is a dangerous drug...

Yes, we're aware of that. But then, that's kind of the point of karma, isn't it?

Also, I think a lot of the uprating is in response to the trollish downrating. People try to erase unfair down votes with an up vote. Not realizing until they refresh the page that five other people had the same idea.

There's no perfect solution. A lot of other sites have had to deal with the same problem, so it's not like the pitfalls are unknown.

Deflation that involves stores selling at a loss is obviously a rather short term matter.

Except for those stores that go out of business because of selling a a loss a litte too often.

Then it becomes a rather long term matter.

....Caution......Demand Destruction at Work.....

We flew yesterday for Thanksgiving - I have done this for years, and I am used to the long lines, full parking lots, and all of that.

But yesterday when we arrived at Dulles airport just after noon, the far out parking lots weren't even in use. We get up to the ticket counter and there were 4 people in line ahead of us. There were 6 people ahead of us in line for security. There was nobody in line at the pizza stand.

This got me to wonder what the trends are WRT aviation fuel. Fortunately I didn't have to look hard:

Monthly Jet Fuel Cost and Consumption Report

And an Excel spreadsheet

The story is that airlines cut back capacity quite a bit starting in Sept, and you can see that in the consumption figures. It doesn't really show yet in the annualized graph - as the months go by it will show more clearly, and my guess is that it will look like the dip after 9/11.

And in related news:

United Airlines post nearly $1B collateral

MINNEAPOLIS (AP) -- Falling oil prices have forced United Airlines to put up hundreds of millions of dollars in new collateral on fuel hedges that have turned against it, and on Tuesday it said it had reworked a credit card agreement to reduce penalties if its cash balance falls.

Based on Tuesday's oil price below $51 per barrel, United would have to put up some $990 million in collateral, according to a formula for its fuel hedges that it disclosed on Tuesday. By comparison, as of Sept. 30, it had $378 million in cash deposits held by people on the other side of its bet that fuel prices would keep rising.

This is a great graph and it puts into pictures a thought that has been brewing in my mind for a fair few months and it's simply this:

People who are prepared for what's coming will reap the benefits of the demand destruction that will wipe others out.

It sounds harsh but its reality. If YOU take the actions NOW to reduce your energy usage, don't buy the McMansion, have a high MPG car, orient your lifestyle and perhaps even your job towards a post-PO world -and remember even in the GREAT DEPRESSION 75% of people where employed- then the coming decades could in fact be quite enjoyable.

So my message to all those doom and gloomers out there who are getting depressed about it all is simply this: get with the transition mindset and you will be just fine -in fact far better than those that havn't got a clue... (98%+ of the population?)


Anyone up for some Clapper Capitalism?

Just wanted to say thanks to all here for being interested and involved in discussing the BIG issues.

BTW Great discussion in the comments yesterday from Writerman & Don Sailorman and others in case anyone missed it.

All in all I just have to say that TOD is worth more than TWICE what I pay for it.

Serving an incredable turkey pumpkin soup today to family and friends.


Shell delays another oil sand project.

here's a link related to a story 1st reported by bob shaw a few days ago: re: gigacell reservoir simulation.


My slow internet is going to take a while to download the 81 page pdf on Peak Oil in South Australia where I was raised. Here's my short take on SA's problems; they have dire energy and water issues yet they have the world's largest uranium deposit at Olympic Dam. Apart from oil issues;

  • The Murray River on which they depend for water appears to be drying so that sea water is steadily heading upstream and may need to be blocked by a weir.
  • The main power plant is open cycle natural gas supplied by pipeline from two basins which are fast declining. In fact one basin is advertising 'underground space for rent'. The two coal fired stations use a low quality coal of which there are ample reserves at depth.
  • Nameplate windpower is significant at 12% but it was becalmed during the 13 day run of over 100F temperatures in Adelaide this last March.
  • They have high hopes on hot fractured rock geothermal and ammonia storage solar thermal. Neither have shown results yet.
  • There will have to be at least two big desalination plants for Adelaide and the Olympic Dam expansion. No word on what energy sources they will use.

The good news is that except for a handful of people the locals seem completely nonplussed by their looming predicament. Nukes have been ruled out. Good luck to 'em.


Are you familiar with http://www.strandedwind.org/ ?

Thx for the link I'll read it thoroughly. My thought on stranded wind was to use it to plasma gasify local biomass, then run farm tractors etc. Low net energy but handy.

I'm also going to try to photoshop some images to show how some prime coastal wind sites could pump water uphill to nearby hydro dams here in western Tasmania, now on its 150th straight rainy day. I might comment on that site.

While SA has more challenges than Tasmania, its not all bad.
The Murray water supplements local dam storage, and I don't think they recycle except for using treated sewerage for horticulture.
Desalination plants are planned to use wind power.
Wind power will continue to expand saving NG, and is linked to the Snowy Hydro pumped storage backup.
Longer term NG could be sourced from QLD and NSW coal seam gas by reversing gas pipelines that are presently taking gas from SA to Brisbane and Sydney.
SA is sitting on one of the largest geothermal resources in the world. Better to sell uranium to China, so that they can stop building coal fired power plants.

The real big advantage is the great Mediterranean climate, great for wine growing and drinking, similar to California, but 39 Million fewer people.

I'm going to have to disagree with you on a couple of points Neil. I've never heard that the 120 ML/day Whyalla desal plant will use windpower. Moreover I suggest windpower is NBG when all air conditioners are turned to the max in a heatwave. A lot of the non-premium wine grapes used to be irrigated. That will mostly stop with the river woes. The Murray's contribution to the State's water needs was 60% a couple of years ago so that is hardly topping up natural dams. Treated waste water is used for hydroponic vegies north of Adelaide but there is not enough to pump over the hills for grape growing.

Sure SA has a lot of hot rocks it's the same block of granite with all the uranium in it. However Geodynamics was going to light up the town of Innamincka population 12 using Kalina technology by end 2008. We're still waiting.

Maybe there is some merit in connecting Qld coal seam gas to the Cooper Basin pipeline. I also think when China asks for more coal the deal should be they get uranium instead in return for verifiable emissions cuts. China is already staking claims to both deep lignite (Arckaringa) and uranium (Crocker's Well) in South Australia.

I would agree with you about selling coal to China.

The good wines are grown from rain fed vines in Adelaide hills, Barossa valley, Claire valley and along south coast, with on site dam drip irrigation. Why buy non-premium when premium clean skins are $6 a bottle.

A quick Google search shows that the first desal plant in SA(at Port Stanvac)is going to be powered by renewable energy. Presently in SA this means wind, but in future could also draw on solar and geothermal. There are plans for a solar powered desal plant near Whyalla,(proposed by Acquasol) but I think this is still in planning stage.
Both Sydney and Perth a building or have completed desal plants using wind energy for operating.

Murray water is too saline to use without dilution by water collected in Adelaide hills. The ratio varies from year to year, with the objective to keep Murray water to minimum. Plans are for rain water tanks, conservation, recycling, storm water collection and desalination to reduce or eliminate Murray water.

Wind power has never been looked upon anywhere for supplying peak power, but to reduce FF consumption. Peak power in SA is supplied by NG gas turbines and grid connections via NSW and VIC that interconnect to Snowy hydro and TAS hydro.
Because many air conditioners in SA are evaporation cooling they don't use as much energy as compressor A/C, but you are correct that peak loads are usually in summer afternoons when wind power is lower. Thus the interest in using CSP and PV which could contribute to peak demand and reduce FF. It goes without saying that SA has no shortage of sunlight in summer months.

Happy Thanksgiveg! but for those of you who aren't fortunate enough to be vegetarian and insist on eating a bird today:

Satiating your poultry jones with chicken, by contrast, would consume only around 281,600 barrels of oil. Net savings: 633,600 barrels of crude...yes, really—then we'd reduce Thanksgving's CO2 output by about 109,641 metric tons.


Interesting chart on new floating production system deployments to 2010 from

Floating production outlook less bullish, Nov 24, 2008

The chart shows a peak in 2008. Many of these floaters are used for deepwater areas such as Gulf of Mexico, Brazil and West Africa. If deployments are forecast down, does this mean that peak deepwater oil has been reached? Possibly.

The chart below shows Colin Campbell's downward revised forecast.

Due partly to the recent credit crisis, less credit is available for expensive floaters which could turn deepwater oil production into a 7 mbd peak plateau, shown by the red line.

The peak production plateau could also be partly caused by declining offshore discoveries.

The number of announced deepwater discoveries made in water depths greater than 1,500 feet (457 m) stands at 42 so far this year, down from the 47 deepwater discoveries made in 2007 and less than half the record 88 deepwater discoveries made in 2003.

Last year, deepwater (>400 m) oil production was forecast to be over 8 mbd by 2011, according to estimates from Bank of America and Wood MacKenzie.

Given the credit crisis, it now appears more likely that a deepwater (>500 m) peak oil production plateau of 7 mbd could occur.

click to enlarge

This temporary period of low prices is also making it difficult to economically justify new deepwater production increases, which provides another reason for deepwater oil production becoming a peak plateau.

Callon Petroleum has just recently suspended development of Entrada, a small deepwater oil and gas fiedl, locate in the Gulf of Mexico.

New deepwater oil projects now require prices to be at least $70 a barrel, as shown in the chart below. Oil prices have only been about $50 recently.

click to enlarge
source http://www.total.com/static/en/medias/topic3166/Total_2008_mid_year_revi...

Thanks for the update!

We assume that peak oil will mean high prices. I think it may be more the other way around--low prices will guarantee peak oil. The price of oil may bounce back up again, but it will be difficult to get the production to bounce back up. Once companies stop building new platforms, or other needed infrastructure, a bounce back in price will act only very slowly to increase production. In fact, it may not actually happen, because of the offsetting impact of decline. There is a very long timeframe before the full needed series of steps can take place for new oil production.

low prices will guarantee peak oil.

Hmmm ... Low Profits will guarantee peak oil - not quite the same - so could be any oil price IMO, the price just balances supply and demand at a particular moment.

Low profits will limit supply - high profits will limit demand (both scenarios limit the essential economic growth.)

We'd like to think that our ability to produce doesn't have much wiggle room, but we're only thinking about our planned ability to produce more oil, which we expect to decline at a given rate in the near-term. We're not thinking about the unplanned black swans which can abruptly and negatively impact the ability to bring oil to market. Civil chaos, climate change, financial difficulty, and war all damage infrastructure in some way.

While some may lament the crash of the oil price due to "demand destruction", there is also mobility in how much oil we demand. Barring production black swans, as the price of oil products falls, demand picks back up, and the price rises again.

I would argue that nearly all of the recent demand destruction falls into the realm of luxury or convenience. We have not yet seen on a wide scale what happens when petroleum scarcity eats into day to day necessities.

The price is also dependent on the proportion of the money supply which can be spent on petroleum, and that proportion is dependent on the demand and production of non-petroleum goods.

I think this supports a conclusion of volatile price movements, and increasingly volatile as time goes on.

It'll be like a roller-coaster, except with no-one manning the controls, and the screaming won't be as much fun.

Chesapeake Energy may sell $1.8B stock to get cash

Chesapeake Energy Corp., the nation's largest producer of natural gas, seeks to raise up to $1.8 billion through common stock sales in an effort to fund its drilling and exploration activities and mitigate the impact of lower natural gas prices on cash flow.

Well, I'm in what I call a catbird seat. I am constantly looking at and for the things I have missed. I'm sure the future will hit me with things I missed coming. That's the future we all have to live in. I can adapt to what I can generate here , food and power. The stonewall I'm hitting is health care.
I'm looking to stockpile broad spectrum antibiotics and pain killers. Some we can save and some we just need to make comfortable. I have yet to find a doctor who will let me do that. It amazes me how locked up this is. I actually can get the pain killers off the street easier than I can get the antibiotics.
That just does not seem right. Been to 4 doctors and tried to explain it, peak, and been laughed out. And I can't get antibiotics without a script. Any doctors out here?

Don in Maine

I have yet to find a doctor who will let me do that. It amazes me how locked up this is. I actually can get the pain killers off the street easier than I can get the antibiotics.

You're planning for a ludicrous fantasy future and doctors aren't going to indulge your fantasy by putting the public at risk. Free dispersal of antibiotics is a much larger public health risk than any mind effecting drugs. If every time you think you're coming down with an infection you start treating it with broad-spectrum antibiotics you contribute to breeding antibiotic resistant bacteria that can contribute to the deaths of thousands. If you overdose on heroin, no one cares if you die. If you come down with an aggressive case of MRSA due to antibiotic-induced dysbacteriosis, you be come a public health threat.

talk to a chemically savvy animal feed/med supplies person. i still haven't done the research but have penicillin from treating a chicken, & i understand a no. of antibiotics are available for fish, & they are in cattle/chicken feed, etc.

i recently got ivermectin for cattle;chemical in heartgard & am diluting for dogs+ it treats other dog ailments for example.

doctors can get in deep doo re prescriptions.