DrumBeat: December 9, 2008
Posted by Leanan on December 9, 2008 - 9:44am
Oil and OPEC: Can the Cartel Possibly Cut Production Enough?
Just how daunting is OPEC’s challenge to rein in falling oil prices? Beyond its control, if economist and oil-market analyst Philip Verleger is right.Mr. Verleger, a former Carter administration official, academic, and energy-industry consultant, says OPEC can forget about tiny production cuts of 1 or 2 million barrels when it meets later this month in Algeria. The cartel needs to wipe out at least 7 million barrels per day of oil production to bring oil markets close to balance, he says, according to Platt’s The Barrel.
And that’s not likely to happen, which spells even more happy times for oil bears, Mr. Verleger says: “Since cuts of such magnitude are out of the question, one should expect prices to come under further downward pressure.”
Iran’s crude output may fall 25%; exports will cease: report
SINGAPORE: Iran, the second-largest crude producer in the Organisation of Petroleum Exporting Countries, may reduce output by as much as 25% and cease exports because of ageing fields and a lack of foreign investment.
Platts Survey: November OPEC Oil Output Fell to 31.38 Mil. Barrels Per Day
LONDON /PRNewswire/ -- Platts -- The 13 members of the Organization of the Petroleum Exporting Countries (OPEC) pumped an average 31.38 million barrels per day (b/d) of crude oil in November, according to a Platts survey of OPEC and oil industry officials just released. This is a decline of 880,000 from the October level of 32.26 million b/d.Excluding Indonesia, which will leave OPEC at the end of this year, and Iraq, production from the 11members bound by output agreements fell by 950,000 b/d to 28.16 million b/d from 29.11 million b/d, the survey showed.
Pemex to Add Nitrogen at Chicontepec to Boost Output
(Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, will inject nitrogen into the Chicontepec field to increase output at the onshore deposit as it seeks to offset a faster-than-expected decline at its largest field.The nitrogen injection will help the field produce 500,000 to 600,000 barrels a day of crude by 2021, the company, known as Pemex, said today in a statement e-mailed to the Mexico City stock exchange.
Report outlines issues with Iraqi energy security, systems
LOS ANGELES, Dec. 9 -- While Iraq's oil industry will continue to face problems with security in 2009, the country's crumbling production and pipeline systems are more likely to disrupt crude exports, according to a report by London-based Exclusive Analysis (EA)."Notwithstanding an overall improvement in security, the situation in the country is still extremely fragile, and progress over the next 12 months is at significant risk of being reversed by a variety of factors," the report said.
Canadian oil firms wait on job cuts
CALGARY, Alberta (Reuters) - Global economic turmoil and skidding oil prices have yet to cause Canadian oil companies to resort to large-scale job cuts but harder measures will be coming if the industry's prospects don't improve.They are struggling with low oil and natural gas prices and stubbornly high costs for big projects, but Canada's big oil producers and oil sands developers have so far shied away from cutting staff.
The Real Estate Crunch Comes to Russia
Now that the global economic crisis has hit Russia with full force, real estate prices are finally tumbling. And if recent trends are any guide, the mother of all crashes may be in the offing. "The property market in Russia is on the brink of collapse," says Valery Koltashev, head of economic research at the Institute for Globalization & Social Movements, a Moscow think tank. "Property prices are very severely inflated, and demand is obviously slumping."
Pelosi: "car czar" could be named this week, Volcker eyed
WASHINGTON (Reuters) - A presidentially appointed "car czar" to oversee the restructuring of struggling U.S. automakers could be named as soon as this week if Congress approves an industry bailout, House of Representatives Speaker Nancy Pelosi said in an interview aired on Tuesday.Pelosi told NBC's "Today Show" that she favored former Federal Reserve Chairman Paul Volcker, recently appointed by President-elect Barack Obama as his top adviser on steering the economy out of recession, to oversee restructuring of the industry.
Lester R. Brown: A Wartime Mobilization
There are many things we do not know about the future. But one thing we do know is that business as usual will not continue for much longer. Massive change is inevitable. Will the change come because we move quickly to restructure the economy or because we fail to act and civilization begins to unravel?Saving civilization will take a massive mobilization, and at wartime speed. The closest analogy is the belated U.S. mobilization during World War II. But unlike that chapter in history, in which one country totally restructured its economy, the Plan B mobilization requires decisive action on a global scale.
Climate Change Threat: Developing Countries Lack Means to Acquire More Efficient Technologies
BOULDER—Contrary to earlier projections, few developing countries will be able to afford more efficient technologies to reduce greenhouse gas emissions in the next few decades, new research concludes. The study, by researchers at the National Center for Atmospheric Research (NCAR) and the University of Colorado, warns that continuing economic and technological disparities will make it more difficult than anticipated to reduce greenhouse gas emissions, and it underscores the challenges that poorer nations face in trying to adapt to global warming.
Global warming aided by drought, deforestation link
Irvine, Calif. — In the rainforests of equatorial Asia, a link between drought and deforestation is fueling global warming, finds an international study that includes a UC Irvine scientist.The study, analyzing six years of climate and fire observations from satellites, shows that in dry years, the practice of using fire to clear forests and remove organic soil increases substantially, releasing huge amounts of climate-warming carbon dioxide into the atmosphere.
Failing water scheme leaves Beijing high and dry
When the scheme was launched, Beijing's mayor promised the water in plenty of time for the Olympics that took place earlier this year. Then the project was postponed to 2010. But last week, Chinese officials set a new completion date of 2014.Now the whole project is in serious doubt. The eastern route, using the ancient Grand Canal, is held up because factories are polluting the canal. The western route, tapping the Yangtze headwaters in Tibet, has not been started. Officials also blame pollution for the latest delay to the middle route - a canal stretching more than 1200 kilometres from the Danjiangkou reservoir on the River Han. They say more treatment plants must be built to bring the water supply to a high enough quality.
OPEC needs big supply cut to stem oil's slide
LONDON (Reuters) - OPEC needs to make a large cut in supplies at a meeting next week, its third reduction since September, to prevent further falls in oil prices as world demand slumps due to slowing economies.The 12-member OPEC should cut output by at least 1 million barrels per day (bpd) at the December 17 meeting, OPEC delegates and analysts said. Some even suggest the minimum reduction should be 2 million bpd.
"The whole world economy is in turmoil," Shokri Ghanem, Libya's top oil official, told Reuters. "We think this needs substantial action."
OPEC to Cut as Much as 2.5 Million Barrels, Boone Pickens Says
(Bloomberg) -- The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of world oil, will cut output by 2 million to 2.5 million barrels a day, billionaire hedge-fund manager Boone Pickens said today.
Marseille Oil Port Workers’ Strike Cuts Output From Refineries
(Bloomberg) -- A strike by workers at the Fos and Lavera oil terminals in the French port of Marseille is forcing refineries to lower output because of difficulties getting crude and exporting refined products.“The situation is deteriorating,” Jean-Louis Schilansky, president of the Union Francaise des Industries Petrolieres, or UFIP, said today in a telephone interview. Reduced refinery operations and vessel delays are costing the oil industry about $1 million a day, he said.
Petrobras May Pump Pre-Salt at Cost Below $40/Barrel
(Bloomberg) -- Petroleo Brasileiro SA, Brazil’s state-controlled oil company, may be able to produce oil from its pre-salt fields in a pilot program for less than $40 a barrel, the company’s investor relations manager said.
BP May Boost Spending in China by `Several Times,' CEO Says
(Bloomberg) -- BP Plc, Europe's second-biggest oil company, may increase its investments in China by ``several times'' to benefit from rising domestic energy demand even as the global economy slows.``I want to see BP expanding its current investments in China by several times over the medium term,'' Chief Executive Officer Tony Hayward said in a speech posted on the Web site of the company's China unit yesterday. BP has invested more than $4.6 billion in the world's fourth-largest economy, he said.
Richard Heinberg - Transport: Time to Think Outside the Metal Box
Congress is reluctantly preparing to help GM, Ford, and Chrysler with a bailout package of loans, but only on condition that the industry restructure itself and start making more sensible vehicles.But the reality is that there won't be enough investment capital available to help the automakers retool comprehensively. Nor will there be enough customers to make new fleets of SUV super-hybrids profitable to build. People without jobs or credit don't buy new cars.
It's about time someone started thinking about the implications. Up until now the US road vehicle fleet has had a 15- to 17-year turnover period. That's about to become 25 years to forever.
OPEC has a math problem.When demand for oil is rising, members of the Organization of Petroleum Exporting Countries take extra portions from the expanding output quota pie. But when it falls, as now, they are supposed to share the pain of lower production even as oil prices are declining, a double blow to cash flows.
As the organization's biggest member, much of the burden of managing all this rests on Saudi Arabia.
Yet it also must consider its customers and long-term demand.
2 New Reports Indicate China’s Water and Soil May Be Too Far Gone to Support a Growing Economy
Two new reports – one from the Chinese government, the other based on criteria developed by the United Nations – should be enough to scare every government, economist and investor in the world about the future of the Chinese economy, currently the one global bright spot.The underlying question raised by these reports is this: How can a nation’s economy grow when its soil is rapidly eroding and its water is rapidly becoming so polluted that it isn’t just unsafe to drink. It’s even unsafe for fishing, farming and factory use.
In short, how can a nation’s economy grow when its ecosystems appear on the verge of collapse?
As the intersection of water, energy, environment and population demand tightens global food markets, studies are showing that what we eat can have much more environmental impact than driving or powering our homes. But how do we know what food purchase choices to make? Is an organic banana produced in northern NSW and trucked down Australia’s east coast a better option nutritionally and environmentally than one produced by conventional means in the Philippines and shipped to an Australian market? The answer is not as clear-cut as you might think.
U.N. sees surge in North Korean hunger
UNITED NATIONS (UPI) -- A United Nations report issued Monday projects about 40 percent of North Korea's population will be in dire need of food in the next few months.If the prediction comes to pass, it will mean about 9 million North Koreans will go hungry because of a shortage of cereals. The assessment by the U.N. Food and Agriculture Organization and the World Food Program says agricultural production will fall short despite favorable growing conditions because of shortages of fertilizer and fuel.
Oil price drop casts cloud over Pemex reform
While Mexican legislators were discussing legislation to increase oil exploration and production last July, Mexico’s crude oil mix hit a record $132.71 a barrel. The government’s coffers were filling at breakneck speed and, with a few exceptions, there were smiles all round.This month, with the reforms in place and following a presidential pat on the back to Congress for a job supposedly well done, prices have plummeted; the Mexico mix at the end of last week was down to $30.52 a barrel.
KYRGYZSTAN: Poor hit hardest by rising food prices, energy crisis
OSH/BISHKEK (IRIN) - "No electricity, no life", says Asan Kojomkulov, 58, an unemployed resident of Kyzyl-Bairak village near the southern Kyrgyz town of Osh. "There are regular blackouts every day; it is very difficult to manage without power."
Impose license fee on King County cyclists
With governments at all levels hurting for revenues but faced with huge infrastructure bills, Times columnist James F. Vesely argues it's time to impose a license fee for bicycles. Cyclists have benefitted richly from projects that have blazed trails throughout the Puget Sound but have not had to pony up themselves.
Gleanings from Fatih Birol’s presentation of the WEO 2008 to the Council on Foreign Relations
Birol’s talk was fairly dry, understated and nuanced. His slides were essentially the PR set you can download from the IEA website. He stated right up front that the Business-as-Usual reference scenario projection for energy consumption to 2030 was unsustainable. But the compelling reason he gave was because BAU would cause a 6-degree global temperature rise, not because oil supply shortfall challenges might make those levels of consumption unfeasible.
Too late? Why scientists say we should expect the worst
Anderson, an expert at the Tyndall Centre for Climate Change Research at Manchester University, was about to send the gloomiest dispatch yet from the frontline of the war against climate change.Despite the political rhetoric, the scientific warnings, the media headlines and the corporate promises, he would say, carbon emissions were soaring way out of control - far above even the bleak scenarios considered by last year's report from the Intergovernmental Panel on Climate Change (IPCC) and the Stern review. The battle against dangerous climate change had been lost, and the world needed to prepare for things to get very, very bad.
New Novel Predicts the Collapse of Civilization
TAMPA, Fla. -- December 9, 2008 -- The Noah Countdown by B.T. Post is a psychological thriller about a global energy crisis that threatens the human race with extinction.
If the plans being laid for the economy and the environment work out the way President-elect Barack Obama's advisers hope they do, the future of energy can be summed up in one word: electricity.That one word covers a lot of policy twists, however: What will the economic downturn mean for initiatives to cut down on greenhouse-gas emissions? What will the recent drop in gasoline prices mean for efforts to boost alternatives to fossil fuels? Can the electrical grid handle increased demand? How do you smooth out the highs and lows of power generation? Where will all that power come from?
The broad American public voted for "change" but they thought that meant a "changing of the guard." Out with the feckless Bush; in with the charismatic Obama... and may this American life now continue just as it ever was. The change actually coming will be much more than they bargained for, namely our transition from a wealthy society to a hardship society. The sharp break is a product of our years-long failure to reckon with the energy realities of our time. We're still confused about that, but it's hard, otherwise, to ignore the massive disappearance of capital, asset values, livelihoods, domiciles, comforts, and necessities.
All I want for Christmas is an energy policy
The world's energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable - environmentally, economically, and socially. But that can - and must - be altered; there's still time to change the road we're on.
The Classic Post-Bubble Bounce
Actually, James Kunstler has it right for the long term. Many of these big schools have grown so big due to cheap money and cheap energy. Now they have to pay for the upkeep in an era of long-term rising costs for energy. Just heating the physical plant at Michigan State of the U of Minnesota at Duluth will eventually become a prohibitive expense. How about salaries for profs who teach just about any course in a field with the word "-Studies" as part of the name? Can you define the concept of "uselessness" in the era that's coming? At some point, it's just welfare for PhDs with no other visible means of support. And what will the US economy do with all of the "marketing" majors when the whole concept of globalization begins to crumble. Market what, pray tell? And to whom?
It would seem fairly logical that an organization responsible for tracking the global oil industry would as a matter of course, indeed of its very nature, take a close look at actual oil supplies every year, but this in fact has not been the case. For almost its entire existence, the IEA has quite unbelievably looked at demand and assumed supply would be there to meet it.So after their first real inventory of global oil supplies, extrapolated from 800 largest oil fields, the IEA's conclusion? Mr Tanaka put it quite succinctly, "The era of cheap oil is over." And despite some of the report's optimistically shaded opinions, a closer look at the World Energy Outlook 2008 leaves a rather more ominous conclusion. Not only is the era of cheap oil over, but the era of oil as a yoke on future economic growth has begun.
Study lists benefits to tapping off-limit US resources
WASHINGTON, DC -- Development of US oil and gas resources that Congress has kept off-limits for decades could generate more than $1.7 trillion of government revenue, create thousands of new jobs, and enhance the nation's energy security by significantly boosting domestic energy production, a new study suggested.The study by ICF International, which the American Petroleum Institute commissioned, concluded that developing offshore areas covered by congressional moratoriums until recently, along with resources in the Arctic National Wildlife Refuge and a small portion of currently unavailable land in the Rocky Mountains, could increase US crude oil production by as much as 2 million bbl a day by 2030, offsetting nearly a fifth of the nation's crude imports.
Natural gas production could increase by 5.34 bcfd, or the equivalent of 61% of the expected gas imports in 2030, the study added. It also estimated that development of all US oil and gas resources on federal lands could exceed $4 trillion over the life of the resources.
Charts Predict: Oil Will Be Trading Wasteland for 5 Years
The price of oil could stay in a tight range below $50 a barrel for the next five years, after retesting recent lows, Paul Day, deputy head of research from MIG Investments, told CNBC."We expect oil to probably trade in a range between $36 to $47, possibly for five years," Day said.
Shtokman gas field partners push for tax breaks
MOSCOW (RIA Novosti) - The operator of the Gazprom-led Shtokman gas condensate project in the Russian section of the Barents Sea asked on Tuesday for tax exemptions as a precondition for investing in the development of shelf deposits.
ANALYSIS - China sugars the pill of oil market revolution
By allowing the limited liberalisation of domestic gasoline and diesel prices and shifting to a much bigger consumer tax, Beijing sent a clear signal that consumers -- not its refiners -- would be required to bear more of the future cost of fuel, making the world's No. 2 oil consumer more sensitive to prices.For oil markets counting on China's growing demand to help offset contracting consumption in the industrialised world, the reforms may give one more reason to think twice before bidding U.S. crude back toward its record $147 high. U.S. crude fell last week to nearly $40, its lowest in almost four years.
Nigerian economy could collapse in a few months
The Nigerian economy is predicted to collapse in six months if oil prices continue to fall at the current rate and if the country’s currency, the Naira continue to devalue against the dollar, reports claim.
Petrobras delays strategic plan; receives investment offers
LOS ANGELES -- Brazil's Petroleo Brasilerio SA (Petrobras) continues to review its 2009-13 strategic plan, with no deliberation taking place yet at the board level, according to an official report.Even as the company firms up its plan, however, government officials claim to have no concern over funding, especially as substantial offers of finance are coming in from other nations such as China and the UAE.
The way forward: Fighting global poverty
I have mentioned before but because it is a very important fact for human survival I will say it again. We depend totally on oil and where a minor shortfall according to the Peak Oil, Life after oil crash Website, between demand and supply of as little as 10 to 15 percent, is enough to wholly shatter an oil dependant economy and reduce its citizenry to poverty.Therefore we are all now living on borrowed time and where we have to understand this fully, its implications for our children's sake and where we have to find alternatives quickly.
Africa is a continent of darkness and is desperately in need of power.Only one in three of Africa's 700 million people have electricity - and in the countryside only one in ten has light at the flick of a switch.
For many people, solar energy is the most obvious route for a continent blessed with abundant sunshine. However, some countries are already heading in the nuclear direction.
Peres: Iran leaders cannot feed their kids uranium for breakfast
President Shimon Peres said Tuesday that the global economic crisis and falling oil prices would retard Iran's nuclear program, adding that Iranian leaders could not feed their children "uranium for breakfast."
As the World Economy Sinks, So Does Global Shipping
The Baltic Dry Index, which measures world shipping charges for raw materials, has plummeted from a high of 11,793 in May to 672, its lowest level since soon after the index was established, in 1985. Daily-rental rates for the largest Capesize category of carrier have plunged from $234,000 just two months ago to $2,320, a fall of a staggering 99%. Jeremy Penn, president of the London-based Baltic Exchange, cautions that bulk rates are prone to fluctuation and have been hit particularly hard this time by the skittishness in financial markets, as the necessary letters of credit for commodity purchases have grown more difficult to come by. Still, Penn says, the recent drop in bulk-cargo fees is unprecedented, citing declining worldwide demand, particularly as the economic slowdown reaches China. "The violence of the drop (in rates)," he says, "is more extreme than anything we've ever seen before."
Barack Obama has pledged to overturn George Bush's policies by pushing for deep cuts in greenhouse gas emissions.But he inherits an energy system dependent on a heavily polluting fuel - coal.
China to spend 150 bln yuan on railways in coal region
BEIJING (Reuters) - China plans to spend more than 150 billion yuan ($21.8 billion) over the next six years to add some 2,000 km of railway track in the coal-rich region of northern Shanxi province, the Xinhua news agency reported on Sunday.The construction projects are expected to help boost domestic demand and counter the impact of the global financial crisis, said Zhang Baoshun, Communist Party Secretary of the Shanxi provincial committee.
India quakes over China's water plan
BANGALORE - Even as India and China are yet to resolve their decades-old territorial dispute, another conflict is looming. China's diversion of the waters of a river originating in Tibet to its water-scarce areas could leave India's northeast parched. This is expected to trigger new tensions in the already difficult relations between the two Asian giants.
Task force to study city's energy supply
Email Story
The city is forming a community task force to study how peak oil will affect Hamilton.Council approved $35,000 to set up the Community Energy Collaborative to explore the city's energy supply vulnerabilities. The task force will look at economic, social and environmental sustainability and urban planning.
Obama to meet with Gore to discuss climate change
Washington - President-elect Barack Obama will meet with former vice president Al Gore in Chicago on Wednesday to discuss global warming, Obama's transition office said in a statement. The two men, along with vice president-elect Joe Biden will "discuss energy and climate change and how policies in this area can stimulate the economy and create jobs," spokesman Nick Shapiro said.
Deal secured on ambitious EU renewables law
EU governments and the European Parliament have agreed a far-reaching new directive to boost EU renewable energy use to 20% by 2020, following a compromise struck with Italy over a controversial 'review clause'.
Car sharing schemes can make a real impact in terms of reducing your and your neighbour's emissions. Cycling is also a great option. Think how the town would be with only half the traffic or even less and what side effects could be such a benefit. We could turn car parks back into gardens or orchards, for example. With peak oil making driving ever more unaffordable in the future, a low energy and low emissions town could be an even better place to live.
Insurers seek funding for countries at risk of global warming
Poznan, Poland - A UN agreement to fight global warming should include financing to help insure countries most at risk from natural disasters attributable to climate change, insurance firms said Monday. Insurers made their appeal during this year's main UN climate conference, where some 190 countries hope to agree on the blueprint for a year of talks meant to produce a global deal by December 2009.
Science paves way for climate lawsuits
People affected by worsening storms, heatwaves and floods could soon be able to sue the oil and power companies they blame for global warming, a leading climate expert has said.Myles Allen, a physicist at Oxford University, said a breakthrough that allows scientists to judge the role man-made climate change played in extreme weather events could see a rush to the courts over the next decade.
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Two thoughts this morning. First is that it might be useful to shift our rhetoric from "the era of cheap oil is over" echoed above, to "affordable oil." We seem to be in a (probably brief, but real) period of cheap oil - but it isn't much more affordable, given the consequences.
My other thought was to plead with the TOD editors to find someone to do a clear piece on the Baltic Dry Index and implications for shipping. I don't think I'm the only person who would be really grateful to have something they could point their readers at that really lays out the issues clearly.
Meanwhile, it is worth reminding people that the food crisis goes on unabated around the world. http://www.voanews.com/english/2008-12-08-voa8.cfm
Sharon
Regarding shipping, like a lot of other people I would be very interested in some numbers on the actual shipping tonnage.
Regarding "affordable oil," by coincidence I just wrapped up work on this graph: Oil Consumption of nations by kb/d, contrasted with per capita GDP:
This summer's price spike wrought a torrent of news items highlighting shortages of fuel in the poorest parts of the world, far from the media's beaten paths, aside from what Tom Whipple documented in his column; in a world of declining supply it will be nations like Burundi and Rwanda who will be forced to do without petroleum after the OECD outbids them, with disastrous effects on their well-being of course. I might attempt to tally the sum total of their demand when I have a moment, if someone else hasn't examined this already.
Hi the Dude, that's pretty much near my home region. I'll give the breakdown below
Population - Oil Consumption
Rwanda: 10,186,063 - 5,500 bbl/day
Burundi: 8,691,005 - 3,000 bbl/day
Uganda: 31,367,972 - 12,000 bbl/day
Kenya: 37,953,840 - 68,000 bbl/day
Tanzania: 40,213,160 - 25,000 bbl/day
Ethiopia: 82,544,840 - 31,000 bbl/day
Total: 211 Million people consuming 144,500 bbl/day
:-) Positively wasteful isn't it? If the US used the same amount of energy per capita than oil use there would be around 206,000 barrels. I invite people to visit these countries, great beaches, lots of wildlife, cheap and plentiful beer, sunshine all year round and friendly and warm people for the most part.
The Drum Beat quotes a guy from MIG Investments saying oil is cheap for the next five years. Of course, six months ago you could find people predicting $200 oil.
But, crude oil looks very, very soft for a long time. Mexico is selling its crude for under $30 a barrel. Demand is going down, not up. I would say a 10 percent to 15 percent reduction in crude demand is underway, and recovery from the bottom will come in annual increases of one percent. We might see demand recover for 10-15 years.
Let's say oil is cheap for five years. Some of you guys are going to be predicting doom for a long, long time, while oil stays cheap. Something to ponder.
Another demand expert comes out of the woodwork. Where have you experts on world demand been for the last five years ?
I get a real kick out of everyones sudden ability to readily account for world demand.
Of course your obviously right if you look at this post.
http://www.theoildrum.com/node/4853#comment-441988
These nations obviously can drop there demand a lot leading to a flood of cheap oil on the market.
And of course this flood of cheap oil from the African nations is not going to cause usage to increase.
Impressive. But I don't want to go anywhere near where you pulled these numbers out.
It looks ugly out there -- check out the railroad tonnage figures posted in Drum Beat today by another poster. Or the deep plunge in cargo through Los Angeles ports. And this recession just ot out the crib.
At least a 10 percent plunge in oil consumption is in the works. I hope it is limited to that. I fear a 15 percent reduction.
And I hope for rapid recovery.
But, global crude oil demand recovery following the 1980 price spike was very slow -- it took a full ten years to recover. This time looks even slower, given the depth of the recession and accumulating marklet reactions to higher prices (until recently). But a guy who bought a small car isn't going to buy a big one right away. If I moved closer to work, now I do not move farther away just because dollar gasoline is back.
$10 oil here we come (Mexico already selling for below $30).
There will be a big big big glut of oil to the moon in 2009. Get ready for $1 gas.
Whats the amount of oil saved when rail tonnage drops by 10% ?
Show me the source for your numbers.
Lets take and example a train has 100 cars tonnage drops by 10% the train now has 90 cars.
Does oil usage drop by 10% ?
Lets say tonnage drops by 50% the train now has 50 cars.
Does oil usage drop by 50% ?
I thinks its fairly obvious that making assumptions based on dropping sales and even tonnage and how they relate to oil usage is difficult.
Lets take another example UPS has shipments drop by 50% every day twice a day it sends out its delivery trucks only now they are half full how much oil has been saved.
What you and a lot of people are missing is the false efficiency gains when the velocity of money increases.
When the transaction rate is high then most transport moves fully loaded when it drops partial loading is common.
For many industries the ability to cut deliveries is limited i.e the trucks have to run full load or not.
Or the other example I use you go to the grocery store and by cheap foodstuffs for half the price you normally spend
the revenue for the grocery store drops by 50% but whats the change in oil usage ?
Given that the velocity of money has increased dramatically in the last few decades we can expect minimal fuel savings as the velocity falls back to historical norms.
Now I do have a rule of thumb I've worked out since I've actually taken the time to ask these questions.
For each 10% decrease in economic level i.e GDP you get about a 1-2% reduction in oil usage.
One special exception exists which is the housing construction industry which is very oil intensive its decline is closer to 1:1 and the overall decline depends on how much of the economy this represents. Note this is in general only the final construction not the secondary manufacturing efforts which are much less oil intensive. For the US this could result in as high as a 2-4% contraction with additional contraction included and weighted your looking at a
baseline contraction of about 3-5% in oil usage. Potentially as low as 2% since in general people don't stay unemployed they take other jobs potentially at lower pay. With this a 10% drop in economic activity could result in as little as a 0.5% change in demand over the longer term i.e 6 months as people take less desirable jobs.
If you look at historical VMT during recessions and at areas that have had long term depressed economies you will find that oil usage tends to go flat in line with the population and independent of the economic level. I.e a poor town in the Mississippi delta with a average income of 15k has almost the same oil usage level as say a Colorado town of the same size with a average income of 30k.
Its very easy to slow the velocity of money down to a crawl its difficult to reduce the intrinsic transportation needs of a given population without building extensive public transport.
Demand with the exception of ceasing building unneeded houses is very inelastic. Cuts in other industries do not result in anything close to the same fuel savings level as you get from housing. The intrinsic reason is of course the need for scheduled deliveries. Given that the world has moved to a JIT just in time inventory model the ability to reduce transport costs are dramatically lower now then they where in the past.
Obviously one way around this is to increase inventory levels where possible however this is difficult to do in a declining economy. Another solution and one I think we will see is a dramatic cut in the number of stores in a given area this is far more likely. However outside of pulling back from over expansion further reductions in the number of retail outlets will probably only come as prices increase. And worse its not clear that this will reduce overall fuel usage since as the number of store fronts decline customers will have to drive further to purchase items. In fact I'd suggest that as stores close the overall fuel usage actually increases not decreases.
But again your the demand expert so I defer to your incredible knowledge of the subject.
I must be a bit dumb because I find calculating demand changes to be a difficult subject. It really depends on what the velocity of money was which is directly related to the "loading" factor or precent utilization of the transport network was before the decline. If utilization was high then oil usage will not decline that much with declining sales. We have plenty of evidence that our transportation system was maxed out over the last several years.
This means we will need to see effectively depression level pullbacks in the economy to get much past the initial housing related decline.
As far as trains go they would run 45 trains of 100 cars rather than 50 trains of 90 cars.
Routing ?
I made the implicit assumption that the trains where traveling to different destinations.
But this highlights how difficult it is to reduce the energy usage of a transportation network if its faced with a partial load problem.
Routing goods is a hard problem. Maximizing fuel usage simply adds to the complexity and its a trade off with other variables esp delivery times. The airline industry probably has the greatest leeway but they often fly with a partially full plane to fulfill their schedules. The fact that a lot of our oil usage is in the transportation sector now is one reason I doubt it will decline all that much.
Unless forced by high prices but the thesis is oil is cheap because the transportation system will work to optimize a cheap resource making it cheap at the expense of other variables that may be more costly like losing a customer.
Can we optimize our transportation system for energy usage. Sure if the price of oil is high enough people will allow more erratic scheduling in exchange for a cheaper rate. But thats not the assertion being made. The assertion is that the transportation system is able to optimize energy usage effectively linearly as demand for goods decline. Thus leading to cheap oil.
I'd argue that if significant optimization where possible then they would have been implemented as the price of oil rose the first time. I.e we would not have seen the rise in prices. In my 100 car train example you would have gone to
110 cars and the energy usage would not have changed thus oil should not have gone up.
Instead if you subtract the housing construction industry you find that energy usage in the US was effectively flat the entire time to slightly declining. Energy costs were rolled through prices to the consumer. I'm not saying there is not room to save some energy obviously we managed to move probably 20% more goods in 2007 vs 2003 without a significant increase but on the same token a 20% drop in goods moves is probably not going to result in a significant decrease.
Simple population arguments make it difficult to propose oil usage dropping much lower than the 2003-2004 level without a driving force such as high oil prices. And even as prices go high as I've said its difficult to optimize transportation networks for energy usage without blowing out the time variable. At some point obviously your truck/car based transportation network looses its largest advantage over rail which is flexible routing and flexible/faster delivery times. As this becomes a issue I think rail will become very interesting.
A perfect example is the carpool the carpool members have far less scheduling flexibility vs a reasonable rail service. Rail is more convenient then carpooling. But these are all high oil price issues not cheap oil.
http://money.cnn.com/2008/12/09/news/economy/gas_demand_up/?postversion=...
Don't let facts bother these new experts !
I will not that I predicted demand would begin to match that of past months at this time because oil usage by the housing construction industry drops dramatically in winter and other less elastic demand replaces it.
Unfortunately although my prediction is spot on the decline and oil prices leave the real driver in doubt.
Notice that demand did not return with the dropping prices but did return when the weather in most parts of the country normally resulted in a decline in building however the fact that it did not even follow prices is brushed
off in the article. The price dropped to fast ??? Yeah right.
However I can say given my model that we will see summer demand significantly below 2007 levels for the foreseeable future with overall demand flattening over time with the exception of increases in winter because of the heating season.
This is assuming that housing construction remains dead for the foreseeable future. Now we will have to wait but I also predict the US demand will remain fairly flat irregardless of price until oil crosses 200 a barrel at that point real demand destruction will begin to kick in.
Time will tell.
All those framers have turned in their dewalts for bass boats.
They aren't going to be sitting at home when the bass are bitin.
FF
certainly public works projects consume a lot of energy, maybe more than housing. portland cement consumes a lot , asphalt too. just a question of when and how much.
Good one FF. From the article:
Indeed. The situation in 2008 is in many ways different from the 1979-80 oil shock and associated recession. It is probably a mistake to base a near-future forecast focused on the outcomes of the long-ago event, as some here on TOD appear to be doing.
-best,
Wolf
The "waning demand" and "collapsing demand" is a smoke screen. It is gone. Everyone I know is commenting on large traffic volumes.
The EIA will catch up in about 3 weeks time.
Backup the Price-Supply curve we go. For a while.
Welcome to Peak Oil.
FF
A major difference between the current situation and the decrease in demand from the early 80s was a massive switchover from petroleum to NG for electrical generation. For the US:
From 1977 to 1985 1.23 mb/d of demand was cut out in this fashion, a performance that won't be repeated. Low hanging fruit, you know.
Yes. Thanks for sharing the details--very interesting.
-best,
Wolf
Perhaps the mechanism of periodic deep recessions/depressions
allows the BAU - infinite growth on a finite planet - paradigm
to continue for awhile longer ... In less than a three month
period we've managed to re-set the price of crude from
+$140 to <$45 per barrel .. Ctrl-Alt-Del .. Re Boot !!
We should ( but probably won't ) use this price re-set to
make those infrastructure investments in nukes/renewables/
plug-in-hybrids/rail etc etc
Does society just hit the 'snooze' button or do we
roll up our sleeves and get busy ??
Triff ..
Well that's the million dollar (700Billion Dollar?) question...
When 'times are easy' / we have cheaper energy all these renewable sources don't stack up from a business case angle. When oil is expensive commodities (really a proxy for energy IMO) go through the roof and everything gets more expensive including renewables. I think this is called the "Law Of Receeding Horizons..."
[note to TOD Editor: is it possible to have a PermaLink / page setup that defines all these nice Laws so we are all talking off the same page?]
Now Gas is cheap isn't it about time America considered a higher Gas tax than 10%? -You can invest the money within the US, repair your bridges / roads and create thousands of new jobs...
Nick.
I think that very few people who talk about the price of oil take into consideration the effect of the currency in which it is traded. Oil is trading at $40 a barrel right now, but one must consider what happens when the US dollar resumes its downward trend. Even with the same or less demand that could result in prices +$80. If this continual creation of money through bailouts for everyone and increased government debt spending leads to hyperinflation, maybe we will have $1,000,000 barrels of oil. No matter what the notational price is or will be, there is no doubt that it is and will continue to get more expensive. $40 might appear cheap, but not if your one of those unfortunate enough to have lost your job over the last 6 months. A focus on the notational value of dollars is kind of pointless, as paper money has no inherent value. I wonder how much a barrel of oil costs in Zimbabwean dollars?
That's excellent news.
We'll avoid expensive oil by entering the Greater Depression...
Where do I sign up for this utopia of low oil demand (did I mention it's going to be cheap ?).
I feel so stupid for being worried these past few years.
I was afraid very expensive oil was going to cause a global economic meltdown.
Hey - wait a second...
Re price of crude:
How can price swing from $120 to $40/bbl without prior arrangement and agreement with KSA?
At $80/bbl, KSA nets perhaps $60-70. At $50, they net say $30-40. So why not cut exports 1-3 Mbbl to maintain $80 price with proportional profits, promote sustainability and stability?
Why allow slide to $40 and waste such valuable resources, while causing stress and potential calamity in, say, Russia, Iran, Venezuela, and off-shore start-ups, even Kazakhstan and Shtokman ? Oh, wait...
Are there geopolitcal drivers? Who benefits from such whipsaws?
An excellent question I've wondered about also. I believe its all about lack of solidarity in the OPEC consortium, eg. if KSA cuts back 1 mmbpd in order to sustain prices, others like Iran, Kuwait, Venezuela will just secretly fill the demand anyway. Oil supply's not QUITE short enough YET for that to be a decision of KSA only.
Thats a tough one first how is Iran, Kuwait and Venezuela going to fill this cut they are producing at maximum production already.
I'd say that any cuts made unilaterally by KSA cannot be filled by other producers there is effectively no spare capacity outside of KSA. I'd even give you 500kbd if you wish.
Thus I think the only issue is if KSA itself can cut enough to influence prices and this of course depends on the real change in World demand. Unlike a lot of the new experts on demand I'd suggest that overall world usage once you include growing economies and regions that may have been priced out over 100 a barrel has probably drummroll increased.
Or at best remained flat. Once you include export land the chance of the demand for exports to have actually declined is slim. But with that lets assume fine we don't know for sure what reliable indicators we do have indicate that oil demand is flat to slowly growing. Certainly the rate of growth in demand has slowed substantially but thats not the same as a actual demand decline.
But lets throw in some error in general I like to assume that world oil supply is fuzzy by about 2mbd +/- lets say demand dropped by 2%. Thats about 2mbd so a 2mbd cut by KSA alone should easily be sufficient to allow them to completely control world oil prices. If this is wrong then we could be talking about 4mbd cut in exports. This would require cooperation inside of OPEC.
I'd suggest that if KSA manages to significantly influence world oil prices with a 2mbd cut then they would then have the leverage to force OPEC to cut and additional 2mbd. They would effectively have a gun to the rest of OPEC heads.
I.e if the cut 2mbd and oil prices go to say 80 and they want to force the rest of OPEC to play by the rules then then only need to threaten to undo the cuts. Given that production costs put a floor on the profits the rest of OPEC might for once decide to act like a cartel.
I happen to think for way to many reasons to lists that no real cuts are required i.e once the expectation of a imminent economic collapse passes it will become clear that the oil supply is currently mispriced and should be higher without cuts. How much higher is anyones guess. So I think a initial cut by KSA will be a roaring success.
I actually suspect that this is what we are seeing right now. KSA is now threatening/punishing the other OPEC producers for previous failures in solidarity with an unmistakable message, eg. bankrupcy, if they dont in future follow the line. It looks to me like the only logical explanation. KSA is now proving to other producers including no-OPEC (and incidentally a lot of bankrupt speculators/hedge funds), that they're now totally in charge, and that prices will go where KSA wants them to go. So question is, where does KSA want oil prices? I'd guess somewhere between $80 and $100, with a lot more stability. Likely early next year.
Not to sound obtuse, but if one looks at it another way, in terms of how much energy a dollar will buy, then the imaginary entity called a U.S. Dollar means something different than it did this summer. Moreover, I think it likely that during the coming five years it will morph further in ways unknown. Now that it's becoming conventional wisdom that everyone needs to be in U.S. cash and treasuries, will everyone be whipsawed by "something" happening to them? I dunno, but a lot of paper wealth will have to be lost to bring the token world into rough alignment with the actual physical wealth that exists. I will continue to own some crude call options at $100 to hedge against such weirdness. Because dollars are imaginary, oil isn't, and if wealth has to contract the system will find a way to make it happen. I kinda expect the dollar to lose its strength once the deleveraging slows, however long that takes. Of course, things COULD stabilize, so I'll also hold treasuries. Ymmv.
Well the key is that vast amounts of wealth need to be lost vs commodities as the world move to one more focused on staying alive. Food/Clothing/Shelter. This world obviously has little spare capacity to produce goods outside of those needed for survival so the rate of wealth creation is very low. This is true for any renewable society in the total sense not just renewable energy. This does not mean wealth is not created and does not accumulate. Building are built etc. But the rate is slow and its accumulation of real wealth over a period of years and even centuries. Over time barring war extreme wealth does accumulate even in sustainable societies but with humans at least this wealth often becomes concentrated.
But the point is the amount of money needed by a society that predominately focused on daily needs with locally produced goods and probably small manufacturing for many goods is small. This means exactly what your saying we simply don't need most of the money in existence today at anywhere near its current valuation vs goods. Most of this money is actually debt and will be defaulted on eventually. The rest will need to be lost or devalued significantly. Certainly losing money will be a big factor i.e cash investments but you still in my opinion have way to much money. This will have to be devalued vs goods and services.
During the Depression the money was destroyed via bank failures the accounts where simply wiped out and fractional reserve lending ensured not enough gold existed to back up the accounts. We are not going to let that happen which means that the money supply will be devalued via inflation. Sure it will be expanded but even if its not as people pull back to a more basic way of life you have to much money chasing to few goods this is all thats needed to cause price inflation. Generally its done by expanding the money supply but a contracting basket of goods that people are interested in purchasing does the same thing. Both together decline needed goods (i.e commodities) and expanding money supply makes for inflation for this basket of goods a sure bet.
To prevent price deflation in unwanted goods such as excess housing one would need to expand the money supply even more as the price of preferred needed goods rose.
As long as the government is willing to monetize the debt by accepting effectively default debt at face value in exchange for money and outright cash injections at some point you will get inflation a deflationary end is effectively impossible if your willing to devalue your currency vs needed goods and services.
Given that other economies will attempt to devalue in the race to the bottom you will see commodities again start acting like wealth hedging against inflation.
I don't think oil has fully bottomed yet but its getting very close and the dollar is close to topping price increases now while the dollar is strong will only amplify the effect as the dollar finally weakens.
To some extent I actually hope that oil does not strengthen in price significantly before the dollar begins to weaken because the dollar could slide pretty fast and this would make the shock even worse.
If oil rose to 60-70 while the dollar remained strong that would not be good.
As far as fiat currencies go and deflation etc well the only real way out of this mess is to repudiate long term debt thats not 100% hard money lending i.e only cash loans for debt say over a year. Fractional reserve lending for shorter time limit debts are of no consequence.
I agree with most of your analysis, but wouldn't have thought of it all, especially the train routing issue, though of course it's obvious now you mention it.
Do you think repudiating (or legislating against the enforcement of) all derivatives debts where the derivative isn't hedging a direct position (essentially speculation) would be a positive step to reduce the severity of this disaster?
As I see it, much of the mounting bank losses stem from the derivatives meltdown, and governments are rushing to help the financial elite turn their dodgy derivatives debts into real money before the system dies, through a continuous program of bailouts.
Well if you want to hedge agianst a company you can short equities. Thats the market that allows parties not involved in a transaction to speculate on the health of a company. If you want insurance then we have regulated companies willing to insure all manner of potential outcomes. Note that insurance is a variant of fractional reserve lending keeping a fraction of their reserves vs liabilities. Thus they should be critically examined they are just as big a problem as fractional reserve banking and inflationary. To some extent a role exists for insurance its worthy of debate but not at the current levels and not in its current form. CDO's etc are simply a variant of insurance unregulated and worse sold to pure speculators they are effectively a massive short position on the economy sold by the same people that where creating the balloon. Now the various CDO positions are so large they literally cannot allow the balloon to pop.
We are left with zombie companies structured to prevent triggering various default conditions that have nothing to do with operations.
I think that for the economy we really need the equivilant of the supreme court. Its one of the few institutions that has been reasonably functional. So we know how to create a legal body that controls our society and generally acts in the common good. The Fed is not such a body although its in a certain sense a step in the right direction.
I may get heavily flamed for that but at the end of the day capitolism is not stable its flawed. You cannot prevent concentration of wealth with traditional capitolism you need a structured system to recycle the money from the top and into the bottom the prevent concentration of wealth from stifling the economy.
Mercentalism is viable. Look at France which practices mercentalism they are much better off then many countries.
http://en.wikipedia.org/wiki/Mercantilism
You only need one rule Governments can only collect taxes via tariffs on imports.
Then everything works. You probably need a oversight body to punish governments that try to collect internal taxes like a supreme court but if you work through everything you will find that this system is balanced.
Man, memmel. Mercantilism is the WORST possible solution to present problems. See, from your reference,
It's extreme balkanization, every country for itself, damn the rest of the world. Obvious that wars MUST be the outcome, as seen historically in Europe.
The real solution must involve every human on earth being considered and treated equally, somehow. Many businesses today are much more far-reaching than any country's borders, AND WILL CONTINUE TO BE SO UNLESS EXPLICITLY LIMITED. As much as intellectual property must be protected in some way, in order to reward beneficial achievements, then international businesses must be allowed. Would people in Denmark be willing to do without imported computer CPU's to satisfy mercantilism's "NO IMPORTING" rule? Could they develop wind generators without them?
A genuine solution must go way beyond what was tried and abandoned as failed in the past. (Mercantilism, gold standard currencies, etc.) These times call for creativity, not the proven flaws of conservatism.
Interesting... maybe the Georgist land value tax would be another kind of legitimate tax, or does this inevitably lead to over-exploitation of natural resources? Inheritance tax is another tax that I often consider fairer than most.
errr...please answer my question re:
How can price swing from $120 to $40/bbl without prior arrangement and agreement with KSA?
...
Are there geopolitcal drivers? Who benefits from such whipsaws?
Who but KSA could cut and control price...if they chose? ANd why would they choose NOT to?
As for other producers "filling-in thus neutering any cut", why would they...
Are they in a rush to deplete?
Hmm I do think KSA acted to stop the rise in prices I doubt seriously they expected prices to hit 40.
In general if anyone can control the price its them. They do have surge production potential of at least 1mbd for 60 days plus some additional heavy oil production of at least 1mbd. They could have more of both. And finally they may still have some unused longer term capacity. At best 500kbd in my estimate.
So as far as injecting a surge of oil for a short period of time I think most people would agree its possible for them to do that.
On the flip side they probably can unilaterally cut production now enough to set the price of oil within a wide range of values. Historically they have cut 4mbd in the past.
The only issue on the cut side would be is if its enough to offset demand dropping and result in higher prices.
And on the high price side I'd say that a lot of other variables besides their surge where responsible for the drop in prices. So later its not clear a surge would have the same effect and politically its certainly not clear that the would ever surge significantly again given the current situation.
Now unlike in the past there is no large increment of supply coming online or at least not enough to offset declines significantly so in my opinion they are certainly in a position to control the floor price for oil.
And finally understand that even if they announce a cut its takes almost six weeks for the cut to work its way through the supply chain maybe longer. The current round of cuts for example where already happening at least two weeks if not a month before they announced their cuts. So the current round of supposed cuts where already in place well before prices decline significantly from there levels in October. So this is the level they probably planned to be at under the assumption of putting a floor on prices given the conditions back in Sept and Oct.
Additional cuts would then probably not seriously showing up until later in Jan at the earliest. Again it depends on when the cuts started vs when the announce them. My opinion is they have steadily been cutting production so we should see a smooth slid in exports from KSA down at least 2mbd regardless of the timing of the announcements.
Generally they seem to announce cuts in supply well after they are already in the pipeline and well know to be on there way. So if people are worried about there cuts then it get priced in before we hear about it. So if they have cut to the point that prices will increase we will actually see the price increase several weeks before they announce the cut publicly.
One thing we can see is what's happening to US rail freight. Down about 10% in November YOY.
U.S. Rail Carload Traffic Down Sharply in November
Here's the figures for the last two weeks of November. Thanksgiving holiday fell in a different week this year so you need to sum both weeks compared to the same two weeks last year to make sense of it.
Taking the estimated Billion Ton-Miles as an example for both weeks
The local farmers co-op elevator has received notice that the rail line to its facility will be abandoned.
A few years ago corn was shipped out on the line regularly in 25 car units which carried about 100,000 bushels. Also chassis were brought in to Winnebago Industries motor home plant on the this line.
Now with motor home demand in free fall, those chassis that are needed arrive by truck. The corn goes to the local ethanol plants also by truck.
The notice said the line was being closed for lack of use, but the real reason is more complicated than that. Rates had been jacked up so high that the local elevator could not afford to ship corn out by rail and still stay in business. Exporting corn became economically impossible here in North Iowa due to high transportation costs.
Now while truck transport is less efficient, it is only 10 miles to one ethanol plant at Hanlontown, about 20 miles to a second one at Lakota and 30 miles to a third one at Mason City. Ethanol from these plants does often go out by rail as does the dried distiller's grains, but volumes are much less and the products are of higher value.
I guess that comes under "Motor Vehicles and Equipment"
No source for this but I heard that Pilgrims Pride(Chickens) has gone out of business here.
They took over from Tyson some years back. Lots of chicken confinement barns here.
I must say that I will not be too upset to see them shutdown.
Used to be lots of folks raised chickens and made some money off selling the pullets and fryers but with the big huge multiple sheds via the big food conglomerates...only one person makes all the money.
One guy makes a million....thousands of others make nothing. Why can't everyone who wants get some of the action then?
And we wonder why our food is such trash. Big breast chickens are genetic engineering and they are really really tough. I always try to buy the smallest since I may accidently get one that wasn't raised on 'Grow or Bust' by the big bozzs.
Chicken meat isn't what it used to be...and the eggs are not much (read none) better. Cloudy and full of spunk. Cold storage for real long periods I suspect.
A real range fed chicken has a yolk that is a deep orange and tastes nothing like what you buy in the supermarket.
Airdale-could be wrong,been wrong before....but I do know taste!
Hi Airdale.
Here where I live I've lost poultry to the raccoon, the sharp-shinned hawk, the long-tailed weasel and this year, to a ballsy male bobcat who isn't much afraid of dogs or people. That bay lynx ate my grey goose this summer! So my son & I were forced to build a poultry house that's "weasel tight & bobcat strong." If a black bear or mountain lion comes along, tho, all bets are off...
My rogue's gallery includes red fox, fishercat, weasel, and red-tailed hawk - actually saw the hawk from across the paddock come zooming down. Ran after a fox that had a hen in his mouth and he dropped it and skulked off. The hen was fine - robust creatures, in their own way. Guess he was going to finish it off in the woods.
Lost 5 hens to weasels last winter. I found that "weasel tight" is pretty damn tight.
Plenty of coyotes around (and bears for that matter), but they don't come around until night, when everyone (sheep and chickens) is safely locked away.
i had a mink [ per my 80 yr. old neighbor] get in & kill my dominant hen [didn't have a rooster at the time so i figure she took protector role]. got in a 2" crack. coyotes are coming around a lot more too. i heard they got a dozen or so of a neighbor's cats.
Yes, are'nt Coyotes wonderful.....saves ammo.
From WIKI::
Interspecific hybridization
A Coyote-German Shepherd hybridCoyotes will sometimes mate with domestic dogs, usually in areas like Texas and Oklahoma where the coyotes are plentiful and the breeding season is extended because of the warm weather. The resulting hybrids called coydogs maintain the coyote's predatory nature, along with the dog's lack of timidity toward humans, making them a more serious threat to livestock than pure blooded animals. This cross breeding has the added effect of confusing the breeding cycle. Coyotes usually breed only once a year, while coydogs will breed year-round, producing many more pups than a wild coyote. Differences in the ears and tail are generally what can be used to distinguish coydogs from domestic/feral dogs or pure coyotes.[21]
Yes, Pilgrim's Pride filed for bankruptcy protection a couple of weeks ago. A big impact here in Arkansas.
Airdale,you are not wrong.Factory farmed chickens and eggs have been known to be a lousy product for years.The sheds are an eyesore and the methods of raising the birds are cruel.
Sounds like a description of intensive pig farms and beef feedlots as well.
Airdale,the best solution,on a personal basis,is to take up a vegetarian diet.If enough people do that then there might be some improvement overall as well.
A vegetarian diet is good, but I'd also recommend eating the best organic local animal products one can afford, to accustom yourself to their traditional scarcity, which should soon return everywhere.
If this seems wasteful to you, then continue to buy factory meats, but pretend that they cost 5x as much and put the difference into a savings account that you can draw upon when times get tougher.
If you pay 5x for a chicken, you're more likely to stretch it into many meals and use every part of the bird. You may lose weight because you will eat less meat per meal, and the meat should be tastier, because you are unlikely to throw away the skin, marrow, etc.
Dealing with meat scarcity is wise to learn today, when times are good, and your mistakes won't cost you as much.
Airdale-
Man, you are right about food. Everytime I eat something homegrown, I wonder, "Why do I ever eat anything else?"
If I lived in Texas, I would try to trap or shoot at the huge wild boar population.
Couple decades ago in a former lifetime, we adopted some ducklings around Easter time. They grew up to be ducks, they looked more or less like mallards, in our suburban back yard. My daughter took care of them, and the hen started to lay. It was astonishing how many!
The duck eggs from our free range mallards were just as you describe ... deep orange yolk, and the shells were noticeably harder to crack than store-bought eggs.
If I ever move to the country, I'm gonna have some poultry around, fer shure.
You don't even have to be in the country. Raising chickens has become an extremely popular hobby, in the suburbs and even in the city.
A lot of my friends keep chickens...in their suburban backyards. They're pets, not really kept for eggs (and never slaughtered). I can basically get all free eggs I want, at least in spring and summer, because they can't eat all the eggs produced. (Each breed produces a different color, size, and shape, and if you get eggs from someone with a varied flock, it's almost like Easter, though the colors are more muted.)
These people are not doing it because of concerns about food or sustainability. It's just a hobby.
How do they take care of the chicken during winter? Do they bring them inside the house? Or do they have heated coops?
Plenty of people here in Madison, Wisconsin keep them for the eggs - not pets. I went on a "coop tour" organized by "Mad City Chickens" last summer. One woman was telling us they built their coop with scrap materials, including insulation, and kept it warm enough in winter with just a heated water dish and light bulb (forget how many watts). I think it's easier to keep warmer because the coop is small and they have just a few birds. I plan to take their Poultry 101 class next year and get some birds of my own.
lilith
They have sheds. I don't think they're heated.
They need to be kept indoors at night, summer or winter, because otherwise predators will kill them. Dogs, coyotes, raccoons, or whatever. In the daytime, hawks take the occasional chicken, but predation is not nearly the problem it is at night. The chickens are let out during the day, and put in the shed at night. (They're fed in the shed, so it's usually no problem getting them inside.)
Again you see the complexity of the transportation network crop up. Travel by rail stopped so its shipped by truck whats the net energy change ?
Same thing for say a car dealership say it used to get its cars by rail but the volume dropped and they switched to truck delivery etc. It really tough to figure out the net energy gain or loss in transportation as the economy contracts.
You have no easy way to prove that drops in one area are not balanced by gains in another. I use the example of a store closing forcing former customers to say drive 5-10 extra miles to buy goods this is probably a net loss. At least in my reading the result seems to be there is a fairly high level base energy usage based on transportation type and population density.
As long as the transportation types do not change much energy usage seem to stay within a +/-5% range on average.
Thats not saying the economic decline cannot reduce oil usage such that we have a surplus its certainly possible and thats a supply demand issue but on the demand side for transportation at least its difficult to get a net gain in energy efficiency even with a declining economy. You have as many examples of cases where economic hardship either did not change energy usage or even increased it as you do of cases where it declined.
Took me a few minutes to isolate this - it's the Union Pacific feeder line to Forest City ... any word how far south it's being abandoned? Is there any chance you'll get service from Iowa Central & Eastern via the crossing at Garner?
My father was the conductor on that line a zillion years ago. I hope it doesn't end up like the Iowa Northwestern ...
Hmm, are these two not particularly worrying.
The first article "Cheap-Oil Age is Over" includes many criticisms of the IEA report many voiced here. Perhaps the author is a lurker here?
Will the IEA ever admit that their brainless assumption that supply would always meet demand helped keep the world in the dark about the looming threat of PO till it was too late to do much to really adequately prepare for it? Grrrrrr.
Hey Dohboi,
Indeed, the author references Phil Hart: http://anz.theoildrum.com/node/4775
Cheers,
cj
Thanks, cj, I didn't notice that ref.
You expect administrative skills AND a conscience?
Oil will not stay below $50 for long, and could easily shoot up in 2009, 2010, or by 2011 at the latest.
There are no indications that demand destruction has cut into global oil production. According the EIA, demand is at 1.2% annual growth, down from 1.8% last year, but this is growth in demand nevertheless. Global crude oil production remains plateaued for 4 years.
Independent studies conclude that global crude oil production will now decline from 74 million barrels per day to 60 million barrels per day by 2015. During the same time, demand will increase 8%. Oil supplies will be even tighter for the U.S. As oil producing nations consume more and more oil domestically they will export less and less (Land Export Model). Because demand is high in China, India, the Middle East, and for other oil producing nations, once global oil production begins to decline, demand will always be higher than supply. And since the U.S. represents one fourth of global oil demand, whatever oil we conserve will be consumed elsewhere. Thus, conservation in the U.S. will not slow oil depletion rates significantly.
Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment. The independent scientists of the Energy Watch Group conclude in a current report titled: “Peak Oil Could Trigger Meltdown of Society:”
"By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame."
http://www.energywatchgroup.org/fileadmin/global/pdf/EWG_Press_Oilreport...
With increasing costs for gasoline and diesel, along with declining taxes and declining gasoline tax revenues, states and local governments will eventually have to cut staff and curtail highway maintenance. Eventually, gasoline stations will close, and state and local highway workers won’t be able to get to work. We are facing the collapse of the highways that depend on diesel and gasoline powered trucks for bridge maintenance, culvert cleaning to avoid road washouts, snow plowing, and roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, large transformers, steel for pylons, and high tension cables from great distances. With the highways out, there will be no food coming from far away, and without the power grid virtually nothing modern works, including home heating, pumping of gasoline and diesel, airports, communications, and automated building systems.
Cliff Wirth
we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment
NOT true for trains and mining equipment.
And sailing ships were economic for "slow cargo" up till the 1930s. The US Navy operates several aircraft carriers and submarines off of nuclear power.
Alan
Imagine sail & kite powered ships that are autonomous, loaded with GPS and radar, no people on board to kidnap for hijackings, with intrusion detection. With removal of standard ship controls, hijackers could neither directly pilot the vessel, nor hold a captain at gunpoint to do so either. Shipping costs could be incredibly cheap with no fuel to use, with solar power and wind turbines providing power for navigational control.
We did it with cars... No reason we can't do it with boats.
Durandal -
I don't really see much point.
Large ships today are already so minimally labor-intensive that even these huge super tankers and container ships have surprisingly small crews (typcially, 15 to 25 people).
As far as preventing piracy, all you really need to do is to install a handful of pedestal-mounted 20 mm machines guns with a perhaps a half-dozen security people who know how to use them, and you can make short work of any pirates approaching in a small speedboat. If the pirates want to escalate this 'arms race', you can always upgrade to larger guns and/or add some small rocket launchers. I'm surprised this hasn't already been done, but I suspect there are insurance liability issues that the ship owners rather not deal with.
The inherent trouble with sail power is not only that it is relatively slow, but also that unfavorable winds can make for a voyage much longer than anticipated. One thing that modern commerce loathes is unpredictability of delivery. But for the less critical items it might be viable.
Some are switching back to sail already:
http://www.guardian.co.uk/environment/2008/feb/24/food.carbonemissions
It's a little weird that some of those who think that shortage of oil will cause civilisation to grind to a halt can't seem to get their heads around using sail either.
As regards piracy, it will be stopped the same way it always has been.
At the moment they are playing nice, but when times get harder and they get more annoyed they will simply wipe out the ports which are used, if necessary with everyone in them.
It is a lot easier than dealing with pirates at sea.
See the history of the Caribbean, or the Barbary coast.
attack by omission.
our modern civilization will grind to a halt if one can't use the modern transport. since sail can't produce the 'j.i.t.' model.
Personally I think that if oil gets very short and low-grade stuff can't be used, then a combination of things will take over.
A large reduction in goods transported will take care of a lot of it - it can't be bad all ways, if we need the transport then the economy is working well, and so new ships would be financible, and if not then most of the ships won't be needed anyway.
Some can be converted to pulverised coal dust, and solar, wind and nuclear will play their part.
I read that a ship can move a ton of freight up to 500 miles on one gallon of fuel.
The sea level has risen 120 meters since the last ice age (360 ft.) and the global warming activists claimed that there were no natural causes to global warming. They claimed it was all CO2 emissions. Now I have read in TOD that you might get sued for driving and emitting CO2 as it is to blame for droughts and storms. That is droughts & flooding. As if these things did not exist before the industrial revolution.
Ignorance is bliss. There is nothing to stop the green people from purchasing windpower certificates like Al Gore did. In private they would rather pay for cheaper electricity.
Was there a point in there somewhere you were trying to make?
105mm Recoilless rife is a good option, or Ratel surface to surface missiles. These were used in the 70's and 80's by friends who traveled by boat in South East Asia frequently.
I fished in Micronesia in the 70s and 80's, and pirates were even a concern then.
Seems to me a lot more efficient to mount the guns and gunners on a separate small escort vessel. Maybe keep survailance assets only on the tanker. Avoids that nasty bit about gunfire in the midst of a zone labelled explosion-proof requirement for the purposes of electrical wiring. Also the escort vessels could turn around and pick up another client as soon as they get through the zone, and perhaps also have a chance to chase down some of the bad boys, (sounds like a bit of fun actually.)
Better pay your security escorts well, least they come to regard piracy as being more lucrative than guarding the vessels they're hired to protect.
Whether they're on separate vessels or on your ship to start with will make no difference on that score.
That's why you make sure your security escorts are aware that you are aware all the details about their family, and you likely hire from industrialized nations only.
Empty and ballast a freighter so it looks full, put a couple of tarp covered chain guns on the back, and let it run up and down the coast of Somalia for a while with a platoon of bored marines posing as sailors. When the little boats approach they don't return to tell the tale. Do that a few times and incidents of piracy will decrease dramatically.
Question about this: I have read in several places a claim that flamable vapors given off by petroleum in an oil tanker make lighting a match or firing a gun on deck a really dangerous thing to do. Is there any truth to this? Or is it just scare hype from wanabe security experts?
oil tanks need to be vented, but i doubt the vapors are allowed to accumulate on the deck. that would be dangerous without matches or rifles. an "empty" tank is more dangerous than a full one.
Navy oil tankers during WWII carried AVgas, diesel,and NSFO, and mounted a 3 inch gun, two 40 MM and 2 20 MM on the flying bridge and the fantail.
They also carry a lot of CO2 to vent tanks
Bushmaster II is a much more likely choice.
http://www.youtube.com/watch?v=CNL1BPQx0wM
The little 20mm, say an Oerlikon, has a maximum range of 2000m while the 30mm round from the larger gun is effective at that range and has a maximum of 3000m. This would be a wonderful deterrent for a small pirate boat armed only with the RPG-7 (920M range).
More important than the weapon is the early detection - if you don't know they're coming the chain gun becomes a problem for rescuers if the ship is taken.
There are a lot of interesting ideas conflated here. For the immediate future, piracy is a big issue. Removing standard ships control so that a boarding party cannot control the ship seems to me to be a very good idea. A ship without a bridge! Interesting. But what if the antennas that support the control data link are damaged? How will emergency responders respond? Maybe a little more design work is needed.
Hi Alan,
For ships, that was yesterday, today is another day in much bigger economy, and in fact many ships use sails today in order to cut oil consumption.
Most mining equipment is surface using diesel, and the electric stuff is electric generated by diesel mostly, and some using coal, natural gas, nuclear, and hydro to get the electric power.
Trains can convert to electric if you can come up with the billions for infrastructure make overs for the 180,000 miles of lines and get it to work through cities and rail yards, for which no one even has a plan so far. The credit crunch is here. And the train network of 180,000 is little coverage compared to the 5 million plus miles of highway.
Soon the federal government will be using all its meager resources to subsidize heating oil, unemployment, and oil production which is pinched due to the credit mess.
Cheers,
Cliff
Nuclear powered ships just require higher oil prices and appropriate regulation to become economic. Same for 5 masted schooners.
Mining engineers make choices (based on economics) on whether to use conveyor belts or large/giant trucks in specific cases. Shovels can be electrified or diesel powered (how much expenses to run out large cables vs. barrels of diesel). Change the economics, change the choice of power.
If a given deposit cannot be easily mined except with very expensive diesel, then mine another deposit.
you can come up with the billions for infrastructure make overs for the 180,000 miles of lines and get it to work through cities and rail yards, for which no one even has a plan so far
Trillions seem to be readily available ATM, not mere billions. Give me 20% of the interest on the bailout and I can do a lot.
Electrifying cities & railyards is not that big a deal (although battery operated switch locos do have a place). On January 1, 2006, President Chirac set the goal to "electrify every meter of French railroads" and "burn not one drop on oil". But they are miracle working French bureaucrats, we are merely Americans.
We do not need a railroad down every suburban cul-de-sac (bike paths will do :-) and 180,000 miles does give excellent coverage. The mainline RR lines (~35,000 miles) are roughly equal to Interstate highway miles (48,000 miles ?). The national highway system (interstates plus US highways) = 160,000 miles, roughly equal to RR miles (180,000).
Most major destinations are now reached by major roads, relocating them to rail lines or adding rail spurs of a few miles can reach most of the rest (Las Vegas, Phoenix, Honolulu excepted).
Best Hopes for Understanding,
Alan
Just had to re-post that, I laughed out loud. Marvelous use of irony (as a motivator I presume).
Can't help thinking of that so cool master of the dark arts, "le Frog" in the movie Flushed Away. Yes, I have a seven year old granddaughter.
Hi Alan,
The capital costs for nuclear powered ships are phenomenally high, ever wonder why we don't have more of them. The credit crunch will get far worse, as we are at Peak Oil now.
Electric power does not just happen, it must be generated, either by diesel on-site or mostly by coal and natural gas fired power plants, where over 50% of the coal and natural gas energy is lost in heat lost. This is marginally better than diesel.
The railroad coverage of 180,000 miles, with much of it located in the same areas is very sparse compared to the 5 million plus miles of highway.
"President Chirac set the goal to 'electrify every meter of French railroads' and 'burn not one drop on oil.'" Creating an electric economy use much oil in manufacturing all of the infrastructure and transporting it. And when the highways fail, so too will the power grid and all of the electric economy will fail, as discussed below.
Independent studies conclude that global crude oil production will now decline from 74 million barrels per day to 60 million barrels per day by 2015. During the same time, demand will increase 8%.
Oil supplies will be even tighter for the U.S. As oil producing nations consume more and more oil domestically they will export less and less. Because demand is high in China, India, the Middle East, and other oil producing nations, once global oil production begins to decline, demand will always be higher than supply.
And because the U.S. represents one fourth of global oil demand, whatever oil we conserve will be consumed elsewhere. Thus, conservation in the U.S. will not slow oil depletion rates significantly.
Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment. The independent scientists of the Energy Watch Group conclude in a current report titled: “Peak Oil Could Trigger Meltdown of Society:”
"By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame."
http://www.energywatchgroup.org/fileadmin/global/pdf/EWG_Press_Oilreport...
With increasing costs for gasoline and diesel, along with declining taxes and declining gasoline tax revenues, states and local governments will eventually have to cut staff and curtail highway maintenance. Eventually, gasoline stations will close, and state and local highway workers won’t be able to get to work.
We are facing the collapse of the highways that depend on diesel and gasoline powered trucks for bridge maintenance, culvert cleaning to avoid road washouts, snow plowing, and roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, large transformers, steel for pylons, and high tension cables from great distances.
With the highways out, there will be no food coming from far away, and without the power grid virtually nothing modern works, including home heating, pumping of gasoline and diesel, airports, communications, and automated building systems.
I'm not sure about where you live, but around here, if a rail line is not going through a town, it often has electrical lines running alongside it. Why? To run the switching and signaling hardware. Upgrade the voltage on those puppies, and you can support higher load, so the infrastructure is there for providing the electricity, so then you only need the transfer mechanism. In-town the electricity is nearby, once again, you only need the charging mechanism.
Just because the majority of electricity generation comes from fossil fuels and nuclear power doesn't mean it has to be that way.
Hi Durandal,
1. Are you going to run a third rail on the ground or overhead lines?
2. Please show us the plans for the infrastructure and where the capital will come from for this:
Cheers,
Cliff Wirth
When someone questions where the capital for infrastructure will come from in tough economic times I ask the question: where did the capital come from for all the goods produced during WWII? Doing what needs to be done is a matter of politics more than a matter of economics.
Capital is energy, at the outset of WWII, Texas supplied the capital. The problem is that we are running low on oil here at home and abroad too. Doing what needs to be done takes oil.
I would suggest third rail, but a third rail doesn't have to be a true "rail" in the same sense as the first two. The third rail can be a cable similar to the ones that are overhead. So, what of safety/security? Similar to what was developed for electric car charging in the OEM automotive industry, a low voltage and low amperage current is provided to the third rail until contact is made with the train and "communication" occurs, switching on the high voltage for that section of track until the train has passed, and it switches back to low-voltage mode.
Where will the capital come from? Take your pick of projects that the federal government spends money on and kill it. Personally, I'd close the majority of our foreign bases and keep troops stationed at local bases instead, reduce our standing army, and have an increase in reservists to compensate. I would cut the budgets to so many other programs that exist, stop the "war on drugs," dissolve the DEA, Remove the ATF from the ATFE, and even scale back programs that I like such as NASA.
Hell, just withrdrawing troops from Iraq and Afghanistan would free up capital for such a project.
The capital costs for nuclear powered ships are phenomenally high
Nuclear ships will be, by their nature, very large and very fast. High speeds (say cruise at 30 knots) will allow one nuke ship to make almost twice as many trips/year as today's oil burners do.
Size also matters, and even a one reactor nuke ship will be quite large (oil/coal back-up required if only one reactor). The new 2014 Panama Canal will allow ships about 2.5x as large as today.
Land bridges (three electrified rail routes EU-China in the future, new Chile-Argentina cross-Andes rail could shorten ocean routes to Asia, etc.) will reduce the need for ocean shipping on some routes.
For container traffic#, I could see where reduced international trade could be largely supported by a dozen 2014 Panamax one reactor nuclear container ships and twenty Suezmax two reactor nuclear container ships. Build a handful of them with ice-breaking capability for seasonal use of the NW Passage.
To say that the world cannot build 32 ships is ridiculous. Worst case, the US Navy could build and operate them for the US Gov't.
Add several thousand 5 masted schooners in the 2,500 to 5,000 ton range.
Don't stretch facts to fit your preferred scenario.
Alan
# Container ships carry the highest % by value of all shipping, but there is also a need for break bulk (items too large for containers, combined break bulk & containers ships are feasible), dry bulk (ore and grain ships for example) and oil & LNG tankers. The shipping fleet in toto will respond to whatever economic scenario develops.
Grain and ore might be largely by sail for example, or large nuke ships could carry the vast majority of this cargo type.
I agree with your sentiments, Alan, but I don't see why nuclear powered ships would have to be absolutely huge.
There is plenty of experience in nuclear power at sea from the submarine fleet, and in addition people like Toshiba and Hyperion are designing small reactors.
Obviously they would be substantial vessels to allow for shielding, but I can't see why they would have to be gigantic, although that might be the most economic course.
Electric power does not just happen, it must be generated, either by diesel on-site or mostly by coal and natural gas fired power plants, where over 50% of the coal and natural gas energy is lost in heat lost. This is marginally better than diesel
What does thermodynamic efficiency have to with availability ? Two disparate concepts with little in common. Coal will be with us till replaced with non-GHG sources (nuclear or renewable).
Alan
Alan, I share your hopes for sail, but I don't think the statement that "Nuclear powered ships just require higher oil prices and appropriate regulation to become economic. Same for 5 masted schooners" is actually quite true anymore. They don't just require higher oil prices - they require available credit and funding from either public or private sources. Higher oil prices and regulation, even will alone are not sufficient in an economy that is devolving, and experiencing rapid decline in credit and deflation.
To use a simple example, higher oil prices in a moving economy do stimulate such ideas. Higher oil prices in an economy in crisis, where increasing numbers of people can't afford oil, mostly price people out of the oil market. Higher prices spur innovation when credit flows - but they stagnate it when there is no credit or spare money for investment.
I think we will see a resurgence of sail for shipping - but I think it will be a long and bumpy problem, and there is no "just" anymore. Many of the existing connections we've relied on are now broken.
Sharon
Ships last a long time, especially if you can't afford to replace them so repair is a better option.
If trade is really going to fall off of a cliff, then we have enough ships to last a very long time.
In that case, for many purposes you would prefer smaller ships, which are easier to retrofit with sails, or perhaps to burn coal.
It might not be very efficient, but that is less important in the circumstances being hypothesised.
Labour gets traded for capital outlay.
Retro fitting existing vessels with nuclear propulsion would be a more practical solution.
Please preserve us from a return to coal powered ships.
Sail is practical in smaller ships for specialist uses,like maintaining communications between islands in the South Pacific or fishing craft.That is,if we can ever get away from the current ocean mining with trawlers.
Norway is a MAJOR shipping nation (Norwegian Seaman's Church is 4 blocks from me :-)
Norway does NOT need credit. Over $400 billion invested worldwide.
They could use some of their oil & gas export earnings to buy a fleet of nuclear powered ships (American, Russian, perhaps British reactors ?)
Best Hopes for Norwegian Shipping,
Alan
Only one nuclear cargo ship is operational at the moment, and it is being converted into drilling rig.
List of civilian nuclear ships
It's happening sooner than people think.
http://finance.yahoo.com/news/DOE-slashes-energy-demand-apf-13788329.html
Cliff,
The EIA doesn't call for demand growth in '08 or '09 anymore. See today's short term energy outlook, which I'm about to post a blog about at www.setenergy.org
They are calling for demand to go negative this year and next for the first time since '82 & '83. Interesting times we live in...
-Dennis
Hi Dennis,
Thanks for the update, you are right, here is the EIA link:
http://www.eia.doe.gov/emeu/steo/pub/contents.html
A few other choice quotes
Given the track record of the EIA with there predictions its a sure bet that what they have said will not happen.
For example if we really do have a significant excess in oil supply and its produced and exported then we should actually see the price of oil drop to around 30 the 50 estimate is not correct for the low price given their estimate of excess capacity of 4mbd. So either 50 is bogus or 4mbd is bogus. 50 is probably correct for about 2mbd of excess capacity that buffers the oil supply.
Next it seems that depletion is will take a breather in 2009.
Next I really don't get how any economic growth results in decline in consumption. I.e they are still forecasting positive growth but a decline ? How is this possible how can a region grow economically and still have falling consumption esp in a low price environment. I could understand some economic growth plus decline associated with a high oil price environment if obvious conservation efforts where underway. I'm not saying its impossible to maintain a growing economy with falling oil use if substitution and efficiency gains are still possible. However a positive growth with low prices and declining consumption simply does not make sense.
I feel like I'm seeing one of those commercials for noggin a children's programming channel
Children can you tell which part of the curve is not like the others ?
How about this one kids do you notice it always goes up past the line ?
Adults call its BS but your not old enough to know what that means.
Here is the text since 2008 is not clearly marked.
http://www.eia.doe.gov/oiaf/aeo/gas.html
Addendum.
However in
http://www.eia.doe.gov/emeu/steo/pub/contents.html
This section could be reasonably viewed as and opinion based of discussions on theoildrum.
Interesting some of them are scarily similar to arguments I'm making and also very close to other
posts I've read on theoildrum. Some of Gails ideas seem prominent. No mention of exportland however in this report although I think I've seen it mentioned before in EIA reports.
Half a million bbl/day (the EIA's predicted decline in "demand" - at what price?) is a long ways from Verleger's 7 million. It's also much less than the claimed 2 million recent drop in USA demand, so either the EIA is predicting that US demand will re-appear (thanks to lower prices?) or they are predicting significant demand growth elsewhere (China?) despite the "global recession".
David Brooks: "This Old House"
This is an unusually good piece by David Brooks, for once JH Kunstler should be mostly in agreement with him. The whole article is worth reading, I just posted as much as I dared, with Leanan's forbearance.
David Brooks is very good at sounding reasonable, but basically he is defending suburban settlement plans with slight changes toward giving them mini-downtowns. This development is already well underway, but trying to service all these dispersed nodes with a "complex web of roads and rail systems" is not going to work--you can't service all these places and make them all equally accessible to the others. You do need centers, spokes and wheels for a fixed system like rail to work. Otherwise you have a vast over-build.
(I also note that he doesn't mention building public schools and libraries--too socialistic for him I guess, even though most studies have shown that charter schools on average do worse than public schools. The guy is a right wing ideologue and always will be--former editorial writer for the WSJ, for Pete's sake! He's just quite a bit smoother at making an essentially ugly ideology sound sweet and reasonable.)
I rather doubt that Kunstler is interested in saving suburbia in any form.
I doubt that all of it can be saved; I also doubt that all of it will be abandoned.
As far as transit configuration goes, the typical metro area has an urban core surrounded by successive rings of suburbs, in a bulls-eye target fashion. This suggests to me that a series of ring routes around the periphery could be established, with connections to the few spokes radiating out from the central hub. The ring routes need not be as high-speed/high-volume as the main spoke routes; probably something like a streetcar/tram or the old interurbans would do. Maybe you have more frequent service in the more dense inner rings, and less frequent, minimal service in the less dense outer rings. You stop building rings at the point where the density is too low to support even minimal infrequent service. The mistake is in thinking that the system has to be all the same stuff, one size fits all. A better approach is to size each component of the system to the actual need.
An advantage of such a system of peripheral ring routes superimposed on a hub and spoke centralized system: not everyone has to make a trip all the way downtown if they need to travel from one place along the periphery to another place along the periphery. Since a lot of our existing employers are located along the periphery and not downtown, as well as a lot of our housing, this will continue to be important for a long time to come.
Suburbs located along these peripheral feeder lines could probably have a good shot of developing their downtowns and surviving in some fashion, most likely evolving into something more similar to stand-alone small towns; suburbs located beyond both the main spokes and the peripheral rings probably would wither and die.
This suggests to me that a series of ring routes around the periphery could be established, with connections to the few spokes radiating out from the central hub...
I dunno about this structure of ring roads. It makes getting anywhere by bike or foot or scooter difficult. You typically cannot cross a ring road any easier than you can cross an interstate. Which means you can't. They are like moats. The congestion at entrance/exit ramps is high, so is the rapid accretion of shopping centers, which further reduces biking or walking.
A grid system with major and minor roads works pretty well, is potentially easier to navigate, and allows for options besides car and trucks.
The ring road is a time-honored structure that works. Most European cities have at least one ring road, often running along former medieval city walls. While they are noisy and polluted and unpleasant for pedestrians, European ring roads typically have the effect of draining traffic out of the surrounding area, making nearby areas more walkable and bikeable. They are also equipped with sidewalks, for those who really must travel them on foot, and sometimes bike lanes and trams as well. Whether this structure could be abruptly transplanted to the U.S. is debatable. It makes sense in old cities with dense, well-developed city centers, often complementing car-free pedestrian zones by balancing the needs of peds and drivers. Perhaps it's something we can aspire to. Starting the transition to a ring-road structure probably makes more sense for U.S. cities than wasting resources to keep unstructured sprawl on life support.
Please note that my comments were meant to imply a ring ROUTE for some sort of electrified, preferably rail based (if possible), transport mode. Most US cities already have ring roads around them (strangling them actually). I am not suggesting that we need any more of those.
Well, there is the Capital Beltway. . . . no sidewalks there, though running a metro line along it would be a grand idea.
Anyone ever ride a collectivo in Mexico, or a peso cab? That is our future, old school busses converted to commuter busses privately operated at whatever frequency thwe routes will allow.
Perhaps flatbed trucks as well in warmer areas.
There is another style of Colectivo in Colombia. These are just sedans (back in the day they were locally assembled Dodge Darts with three-speed floor-mounted shifters). They would run predictable routes, often the same as bus routes, and had the advantage of being faster, cleaner, and never crowding beyond the actual seat capacity. Their best application was for intercity travel, especially because you could pay the driver to drop you at a specific destination rather than just the terminal. It used to be, hands down, the best way to travel around the country. It was a bit more expensive than riding a bus, but the difference was worth it. Typically travel times were 1/2 to 1/3 the bus times because they just drove straight through most of the time.
While I agree that we shouldn't simply perpetuate the currently sprawl centric metro area, an implication of Brooks' piece is that we shouldn't just throw money at whatever "shovel ready" project the states and localities have on the drawing boards. Priorities should be set based on criteria that include transit and multi modality. Those communities that have a plan and a vision for a set of transportation alternatives that encourage people to use modes of transportation other than the automobile should be given funding priority. Those who lack vision and just simply want to lay more concrete to facilitate sprawl, suburbia, and more dependence upon the auto should not receive priority.
Yes, we have a severe economic problem. But we also have a future regardless. Let us not piss away the stimulus packages to make that future just more of the same but worse.
The first principle should be do no harm. In Obama's haste to get this money out there, I fear that he will do a lot of harm and lose an opportunity to create a less auto centric future. I just envision pork barrel on steroids. I would rather see money dumped out of helicopters than just a bunch of new roads leading through and to suburbia and to exurbia.
My village in Israel once ran its library out of the living rooms of several of the elderly.
And the kindergarten was an actual house with a yard, with the teacher living in an in-law flat on the side.
This is the future.
Apuleius,
I think community security will be important in a future of limited resources. Do you have any links or information on how the people living in rural kibbutzes maintained security during their difficult times?
Regards,
Gunga
Our village was not a Kibbutz. It was a Kfar (regular village, privately owned land, only attempt at socialism being an obligatory membership in the cooperative that delivered seed and fertilizer from Tel Aviv. There was an irregular militia until 1948. It got absorbed into the IDF on independence, and all the other militias were dismantled after Israel's 8 hour civil war (the Altalena incident).
Advantage Rent-A-Car files for bankruptcy
Illinois Threat to Bank of America Is Dangerous, Critics Say
Interesting situation. The company, which makes energy-efficient windows, shut down because their Bank of America credit line was cut off. Now the governor of Illinois is supporting the workers by threatening to stop dealing with Bank of America.
This morning on CNBC, they were talking about Obama possibly nationalizing the auto industry once he gets into office. And they didn't seem to think it was a bad idea.
More news right out of THE ONION. A "dangerous " trend of politicians meddling with commerce-that should be left to non-elected officials (e.g. Paulson,Bernanke,Rubin,Summers)-they have the wisdom to know who the taxpayers' money should be given to (8.6 trillion so far).
The sooner we accept that capitalism has largely stopped working (if it ever really did), the better position we'll be in to figure out what's next. It is stunning that people who would have howled about socialism, communism and worse at such prospects just a few months ago, now can discuss nationalization of major industries without batting an eye.
capitalism as a text book definition stopped working once we left the tribal society. much easier now as to back then to break the 'trust and honesty' one needs in capitalism between buyer and seller to do it's magic. As i tell my friends, if a system demands trust and honesty to work. it's the dishonest person who wins.
Hogwash. All societies require some basic level of trust to work, what Durkheim called "pre-contractual solidarity" - the essential foundation for contractual arrangements.
I thought that was replaced by a new concept - marketing?
Ban marketing and capitalism might have a chance [and I speak as a life-long socialist type]
The only system that will continually create new wealth and solve problems is a free-market system that involves as little government as possible. No country in the world is even close to this. The first thing needed would be real money, such as gold and silver, so that the government can't steal through the inflation tax.
Some of you will disagree with this, and say that it is the free-market that has failed. The US doesn't have a free-market, the system it does have can be best described as a facist. There is ever increasing union between business and the state, and bailouts of private companies with public money is perfect evidence of this.
At some point, someone has to raise the question...
What is "wealth"?
Exactly. What we need is a system that continually returns "wealth" back to the living planet, so that we may continue living.
Who is John Galt?
You don't want to know. See "Rand, Ayn"
haha... so you guys think government is the solution? I hope that when Marshall law is implemented you don't change your minds.
Who is this "Marshall" guy anyway, and what is his law???
Somehow, plans to fix all problems with a system that is not and has never been implemented anywhere do not inspire confidence. Do "free market" true-believers ever wonder why their utopian system has never been implemented?
Meanwhile, back in the real and very imperfect world, markets are always far from "free" but are very useful for some purposes.
I think rental car companies could re-invent themselves from being placed at airports and such, to being located in urban areas where people who normally don't own a car as they take the train/bus/etc could rent a car for a day for a trip, or for some utilitarian purpose that normally doesn't justify owning a car 24/7. The other thing would to have an older fleet of vehicles, allowing people to rent cheaply, and possibly on an hourly basis.
You are talking about what we call car clubs.
I've been using car clubs for at least 5 years.
I've never owned a car and really only felt the pressure to use a car when our children started going to parties, sporting events etc.
I'm taking our middle son to a school function this evening at 6.30pm and picking him up at 9pm. I'll use a car club car (6-7pm and 8.30-9.30pm) as the venue is not easy to get to by our otherwise excellent bus system. At the end of the month I get a bill which will include the charges for the two hours I used the car this evening.
In between times I'll attend a Transition Edinburgh energy group meeting to discuss applications for Climate Challenge funding.
As far as I'm aware, the only car-sharing schemes, such as ZipCar, here in the US are in larger cities. Once our kids leave home, we would definitely be better off in a car club than owning our own car, but there's nothing like that available right now in our small city. In fact, I know a family whose auto insurer actually cancelled their policy when they simply inquired about insuring a car to be co-owned with other families. That was several years ago. Perhaps things are getting better.
Start your own car club.
See which of your neighbors wants to join.
Get an old beater. Or vespa.
Sign up neighbors on the insurance plan.
Voila.
It's been done in Southern Calif. no less.
Vespa is good. Honda Ruckus is way cooler. Mine gets 100+ mpg.
Here's one for a smaller city:
Ithaca Carshare: Carshare Implementation in a Small Upstate City
Or to extend your thought along lines even more radical: Maybe the auto companies need to reinvent themselves so that instead of just SELLING cars, they also RENT them.
I have never bought into this idea of needing to buy a car costing tens of thousands of dollars just so that I can have reliable transportation for the handful of times per year that I need to travel outside of my county. Instead, I've always bought used cars and drove them until they were ready for the junk yard -- for all of my local transport, that is. For the out-of-town trips, I've always rented. Rending is a pain, though, because it does mean a trip to the local airport 20 miles away. It would be much more convenient if a car dealer located closer to home was in the car rental business.
As the economy declines, fewer and fewer people are going to be able to afford to buy new cars, and they will be able to afford to replace them less frequently. On the other hand, people will still need reliable transportation, especially given our dismal state of rail transport in this country. I suspect that more people will see the advantages of doing as I do, and renting an almost-new car when they need it, while driving a more economical vehicle on a daily basis.
The only way I see US automakers surviving in such a market is if they change their business model to adjust to this new pattern. They need for their dealer network to become "full service" automotive centers, where people can buy, lease long-term, or rent short-term a limited variety of both new and used vehicles.
Oil use can fall greatly whilst still retaining reasonable mobility.
Costs to the user can also fall.
It is much easier to do when people live at high density, but variants albeit less convenient should work for suburbs if supplemented by bikes, electric bikes and so on.
Here is the Paris scheme for electric car share:
http://www.businessweek.com/ap/financialnews/D926VO9G0.htm
A similar system is already up and running in La Rochelle.
And here is a modern variant on the taxi/bus:
http://www.taxibus.org.uk/
This gives on demand travel at less cost, particularly capital cost, than for buses.
It would also eliminate a lot of the fuel inefficiency problems of buses, as although they are fine when full, hauling a big bus around nearly empty for the rest of the day is not too efficient.
If individuals owning a car stops being the normal pattern, then replacing present inefficient fleets is much easier.
Just to put some numbers on it, if the average life of a vehicle is 12 years, but in future present cutbacks in vehicle production become permanent and indeed worsen somewhat to 50% of the maximum 2007 production, then old, inefficient vehicles would be effectively replaced in 2.4 years if 90% of the fleet was not longer wanted! :-)
Of course, those precise figures will never happen, as you would not set up the new production to go out of use after two and a hlf years, but perhaps they begin to look at how the vehicle fleet can be retired and more efficient vehicles and usage, together with lower production, be implemented.
How much longer before we see a re-run of Great Depression I era scenes, where neighbors mob foreclosures and tax auctions in behalf of those about to be dispossessed?
Tenants victimized by foreclosures
Many renters have no clue that their homes are in any danger at all - until a sheriff comes to evict them.
Ah, the fun of renting...
That happened to us in 1987. We had to move, with about one week's notice.
In any case, one advantage of renting a unit in a multi-tenant building, or in a complex dedicated to rental units, is that you, as a renter, are usually viewed as an asset, versus a liability, in the case of a single family home foreclosure.
But that's really part of the deal when you rent. Even if you have a lease, you know you may have to move unexpectedly. Indeed, that's a big benefit of renting. You can move unexpectedly.
My sister had to move unexpectedly during finals week. Her landlord was diagnosed with cancer, and broke her lease because he wanted to move into the house, which was close to family and medical care.
Could she have fought it? Sure, but she didn't want to. Not under the circumstances. So she moved in under a week.
Personally, I am trying to pare my possessions, not least so I will find it easy to move if necessary. Having to make an unexpected move is a minor inconvenience compared to the risk of owning, at least from my point of view. YMMV.
You've got some really. really crap rental legislation in the US.
We stuff up most things, but even in the UK I can't imagine tenants having that degree of insecurity of tenure.
About the only circumstance which might approach it is if you were renting a room in an owner occupied house, and even then there is no way they could get you out for the time you had paid ahead.
Most tenants would take months or even years to shift providing they kept up their rent.
The US is the "land of the free". . . free to be treated like crap, that is.
In Des Moines an advocate for the homeless built a shanty town near the river. The city recently evicted the tenants after a fire and will soon tear down the small cabins. The city is now debating where to house these poor souls. I fear they will be crowded into dormitories where both their physical (influenza and pneumonia exposure) and mental health (lack of privacy and need to submit to unreasonable rules increasing a sense of helplessness) will be stressed in ways that living in the cabins prevented.
Leanan -- I see a simple solution for the governor: let the state loan the company the money it needs. They can use some of the state employee retirement funds it has in other investments. Thus not only doesn the state save the jobs but the interest payments go to state employees and not those greedy bankers. Win -win -win as far as I can see.
As posted downthread, Blagojevich was arrested on unrelated corruption charges soon after refusing to deal with Bank of America.
Google News on Blagojevich Arrest
Unrelated??? Yeah, right.
The day after the governor attacked the Bank of America, he was arrested by the Department of Justice. Tells us who's really in charge around here.
No kidding. Bank of America, and any of those other gigantic banks are ones that I refuse to do business with if I can manage it. I'll stick with credit unions and local banks as long as I can.
How convenient that they had collected this material and had it waiting to be used.
How coincidental they just happened to hit him with it the day after he cut business ties with B of A over a Union matter.
How unusual that they rousted him and his next in line out of bed and arrested them so publicly rather than letting him turn himself in, which would have been the norm.
How interesting that it should be plastered all over every news outlet almost immediately and the accusations being treated as fact in most all of the stories.
How quick the conservative blogs knew about this and tried to smear Obama with it.
This has little to do with Blagojevich and what he is allegedly accused of.
This has everything to do with his move against B of A, and a prepared political assault against the left, through use of the FBI, a common practice of the Bush Administration.
Illinois Governor Rod Blagojevich was arrested today on corruption charges. Think there is a connection?
http://news.yahoo.com/s/nm/20081209/pl_nm/us_blagojevich_crime_3
Let's see..
A populist politician illegally pulls political muscle to try to force a bank to extend credit to a risky business, and it turns out he's corrupt?
My worldview is shattered!
The grand jury investigation has been ongoing for months. They produced an 80 page report. NO, it is not related to this week's B of A issue.
Yeah, right it's not.
A grand jury is not something you can just keep in the bullpen for when you need them.
The "US Auto Industry" is comprised of a whole lot more than "The Three Dinosaurs".
Think VW, Mercedes, Nissan, Honda, Toyota, etc...... All build cars, trucks and parts here in the USA.
Is the new "Car Czar" to have say over those profitable sections of the US Auto Industry, or only The Three Dinosaurs?
Not to worry about the Govenor of Illinois any longer....currently under arrest by the Feds for trying to sell Obama's Senate seat...
Power Down...
This outlines the parlous state of the UK economy in the most effective presentation I have read:
Is Bankrupt Britain Trending Towards Hyper-Inflation?
http://seekingalpha.com/article/108421-is-bankrupt-britain-trending-towa...
The supporting analysis is what makes this article important in my view though.
One caveat, this may be a 'always look on the bright side of life' analysis, as from the text it is not apparent that the author is peak oil aware, and he does not mention the huge hole appearing in the balance of payments due to falling oil and gas production.
I would therefore be more pessimistic than his central forecast:
I would feel that the altternative given in the first section I quoted of bankruptcy is the likelier outcome.
EDIT: It is apparent from this that Walayat is peak oil aware:
http://www.marketoracle.co.uk/Article7664.html
However, he does not seem to have factored the increased cost of oil and gas imports into his forecasts for the UK economy in the article I first quoted.
DaveMart,
You certainly have a knack for finding the best links! Thanks.
I enjoyed the reference to super-hack cornucopian Anatole Kaletsky. This guy gets it so wrong so often that one can safely assume that the opposite of his predictions will be right on target. We're done for.
Let's go down memory lane:
-- from Anatole Kaletsky, US optimism makes me optimistic, 21 March 2008.
http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/art...
I don't understand this. Why should they be able to sue the producers? Why not instead sue the consumers of the energy?
The consumer isn't demanding clean energy - they want cheap energy and don't worry about the environmental cost. When that environmental cost is ready to be paid they want the producers to foot the entire bill, while they reaped the rewards of consuming the cheap energy. We have had warnings about global warming for years. We have known the affects of pouring mercury into our atmosphere. Nobody argues the distruction of acid rain. Consumers have had the ability to demand cleaner energy or reduce energy usage, but chose cheaper energy instead.
When the state of California wanted to sue the auto industry a couple of years ago why didn't they at the same time say they were boycotting the auto industry until they produced vehicles that met their standards. Instead they continuted to purchase more cruisers, highway department trucks, and other vehicles. It is like wondering why you have drug dealers in your neighborhood when you are their biggest customer.
Instead of trying to divert responsibility for the problems we face we must take responsibility ourselves. Before pointing fingers at car companies and utilities we need to start biking and turn off the lights.
Because the producer markets the substance, and seeks to make profit on it?
But the consumer also benefits. Cheap energy and cheap cars compared to the price of these if the true environmental impact was factored in. If a group sues an energy producer and wins the producers should be able to split the cost with the consumers. The environmental impact comes in the form of a lawsuit and should be split between the producer and consumer.
Well, it turns out that this energy was "cheap" only because a significant part of the bill comes much later and to a different subjects than the original consumers.
I think the correct way to approach this is to sue the government - it is the government which did not make the legislation to make consumers pay the real price of the product. In other words - it did not force producers to factor in the externalities of burning FFs.
...and the producer will raise prices to the end consumer in order to pay for the damages just been awarded.
Since "The Group" is composed of the consumers the circle is complete, lawyers are the net winners since wealth has been extracted and concentrated by them, welcome to America...
Nick.
Same reason that Willie Sutton robbed banks...that's where the money is.
I see not the consumers filing lawsuits but insurance companies and governments doing the deed. The victims of adverse weather events are compensated for their losses by insurance companies or governments. The insurance companies already have the lawyers on their payrolls where as those already devastated by a natural disaster have to wait for law firms to advertise their ability to sue for these particular damages. Independent law firms usually wait for those with deep pockets to set the legal precedents which make subsequent lawsuits an easy win. For instance it took dozens of individual and class action suits against tobacco companies which failed before success was achieved when state attorneys general joined the effort.
I would say that is living in an era of cheap oil :-)
I
$4.00 / gal. for drinking water (liter bottles) at the local service station.
Denninger's Market Ticker
And
Fox News
Interesting timing...
George Bush's drive to remake the United States in the image of Mexico now seems complete. Bush and his camarilla have learned well from their compatriots south of the border.
A few years back the finance minister of Mexico City was at the Las Vegas craps tables, making bets of $10,000 each. This was a man who had a salary of perhaps $100,000 per year. Someone made a videotape of the action and released it to the media in Mexico. It got widespread coverage.
The result of all this was the finance manager kept his job. But the fellow who made the tape and distributed it was sent to prison.
A Democrat, Blagojevich currently serves as governor of Illinois and previously represented parts of Chicago in the U.S. Congress. He is the second Serbian American to be elected governor of any state of the United States, after George Voinovich of Ohio.
Blagojevich was the first Democrat to be elected governor of Illinois in 30 years (since Daniel Walker in 1972). Blagojevich has struggled annually to pass legislation and budgets, often opposed by some members of his own party (which controls the Illinois General Assembly) who perennially disagree with him over budget and other issues.[2] and he has been the target of multiple federal investigations.[3][4]
Wow! The FBI seems to have months worth of "evidence". Was this a last second hail mary by the Gov to bolster his image before getting locked up or a furious and brilliant ploy to silence a threat and send a message to others by TPTB?
The fact that the report came out on Fox news and mentions absolutely nothing about the BoA showdown is a bit curious.
Revenge?
Another Siegelman hit job?
Bush moles in the DoJ unveiling their smear-Obama campaign for the next 4 years?
Let's see what the acting governor will do about Bank of America.
Thanks for the reference to Siegelman, super390.
I recalled that this wasn't the first time that Bush had used the Justice Department as a political hit team, but had forgotten the details of the other high profile case.
For others like me that need a refresher course, here's a link:
http://en.wikipedia.org/wiki/Don_Siegelman
Man, if even part of the Wiki article on the Siegelman smell-up in Alabama is true, the US needs to declare null on governments and start over. That's just simply unimaginable. Politicians getting a bit out of rut and getting slapped is fairly common worldwide, but if there's any fact in the inuendo of Bush's campaign co-ordinator or whatever Rove was, setting a state governor up for jail for political reasons.... That's bannana republic stuff. Awful.
Where's the investigative journalists on all this? That's their job.
OTOH, there is the election of Cao (with zero national support) in New Orleans to the US House of Representatives.
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/08/AR200812...
Best Hopes for Democracy,
Alan
They're in jail.
60 minutes had an interview with Siegelman (from his cell) 4 or 5 months ago. What really caused some tin foil hat conversations down here in Alabama was that when the 60 minutes piece ran, a CBS affiliate in northern Alabama conveniently went off the air. But we all know coincidence is most parsimonious, right?
Pat Quinn, the present Lieutenant Governor of Illinois and successor to Blowjobovich, is a noted reformer and has a reputation for being squeaky clean.
The prosecutor is Patrick Fitzgerald. I think we can safely say that he is immune to pressure from the Bush administration.
Patrick Fitzgerald is a prosecutor, and a damned good one.
But you don't see something wrong with this picture? You don't find it curious that the immense talents of this man have been assigned to this case, when you can look around you and see much more egregious cases where his talents might be more appropriately employed? Yves Smith had this to say about our illustrious bankers and financiers:
The target of a political hit team doesn't have to be innocent, and I'm not arguing Blagojevich's innocence. What I am questioning is the priorities of the Justice Department and the administration.
Let me put it this way. It's like using the FBI's resources to go after and prosecute those who talk dirty to children on the internet, while ignoring those who sodomize them.
As a minority, I am especially atuned to this type of profiling and selective prosecution.
And returning to the Mexican example, whenever some big drug capo is busted here in Mexico, you can rest assured that the criminal justice system is only eliminating the competition for some competing drug capo who paid them a load of money to do so.
Not that I disagree with Yves. She's right, and nationalization should be part of any bailout.
But that's a legislative matter, not a prosecutorial one. Fitzgerald's talents are being well utilized right now.
Apuleius,
I couldn't disagree with you more.
I believe investigation and prosecution of these bankers and financiers is exactly what is needed.
Instead, the Bush administration has its best talent off on bunny trails, while it willfully ignores the biggest heist in the history of the world, going on right under its nose.
I'd argue that they're not ignoring it, but are complicit in it.
Yves was talking about the terms for nationalization that would make for good policy.
That is certainly not a prosecutorial issue.
As for prosecuting the bankers who are asking for bailouts, if you have evidence of actions in mens rea on their part, feel free to present it to the world. Running a business to the ground by failing to anticipate market conditions is not a crime in the United States.
Since you are the expert on this one, explain clearly why what ENRON did was illegal and what CITIGROUP did was legal.
The burden is on the prosecution here.
Citigroup invested in mortgage instruments and got overleveraged. We all know that.
If you think they did anything illegal, feel free to present it. Mismanagement is not a criminal offense.
What Enron did was illegal because they were using "inventive" accounting to hide their losses. What Citigroup and all the other major banks should be illegal too; they are able to mark-to-imagination any number of worthless assets that they like and can avoid bankruptcy through deceit, and then through theft of taxpayer money. However, what they do is not illegal because they have the backing of the government. Just like the Federal Reserve is an illegal company, that prints counterfeit money in direct violation of the constitution.
The law really means nothing, and the sooner people realise this, get angry, and overthrow the government the better... oh crap... CIA's already in my living room...
Last time I discussed it with a lawyer, and I admit it was a long time ago, poor business judgment, even execrable business judgment, was not in and of itself a crime. And as I've said before, the heist was immensely popular, because scads of entitlement-minded middle-class house-flippers, and even just passive "owners" who actually "owned" nothing, made handsome bundles without engaging in even the slightest bit of socially-useful effort.
So I'm not sure which banksters to scapegoat, or on what charges. All of the parties including most of the public were eager and willing, for as long as it seemed impossible that the Ponzi scheme could ever end. After all, everyone knew well that if the middle class had to live solely on what it produces, without the luxury of abundant Ponzi "earnings", much of it would be in deep, deep trouble.
Be all that as it may, none of it excuses either Blagojevich or the pervasive corruption in Chicago and Illinois generally.
Old Czech proverb: the big thieves hang the little ones. Throw some meat to the masses as a distraction to commit the real crimes.
Here's an historical example of another administration with misplaced priorities:
The Manichean construct seldom exists in the real world. As Elliot goes on to point out, there was a certain plausibility to the assumption that expulsion of the Mariscos was the only remaining solution. But Spain faced problems far direr than those posed by the Moriscos--such as its defeat by the Dutch and the bankrupcy of its treasury--from which the government wished to distract attention.
I desperately would like to see financial fraud prosecuted agressively. Unfortunately, I'm not sure the degree to which that is in Fitzgerald's area of responsibility. The CBOE is in Chicago, of course, but that's not the epicenter of financial fraud.
Where we probably disagree is in this -- I believe that crimes by officers of the state, particularly those involved in execution and enforcement of the law, are inherently more serious than crimes by civilians. It is one of the reasons I wanted to see Scooter Libby prosecuted, as sell as Rove, Cheyney, and Bush.
If the allegations are true, Blagojevich should be prosecuted and impeached and put away from a long time. He was trying to sell a Senate seat, for god's sake.
The forebearance on the part of the Justice Dept & the SEC towards financial fraud doesn't bear on Blagojevich at all. Just because one part of the government is corrupt, doesn't mean that another part (the Illinois prosecutor's office) shouldn't do its job.
shargash,
You and I want the same thing, and that is that there be aggressive investigation and prosecution of both Blagojevich and those involved in financial fraud.
It's the horrible double standard that is operative that gives me pause. The government throws ample resources at investigating and prosecuting Blagojevich, while simultaneously allowing bankers and financiers to operate with impunity.
You say that the "forebearance on the part of the Justice Dept & the SEC towards financial fraud doesn't bear on Blagojevich at all." I disagree.
Martin Luther King wrote that:
And conversely, he wrote that:
Even though King was talking about a white majority who controlled the government, and in the immediate case we are talking about a powerful financial elite who control the government, the dynamic is the same. A blatant double standard is at play when it comes to the enforcement of the law, and how anyone can call this "justice" is beyond me.
No man is incorruptible - including Patrick Fitzgerald.
"...a small portion of currently unavailable land in the Rocky Mountains, could increase US crude oil production..."
the api want to drill yellowstone national park.
Hello TODer's, maybe it's been posted before, but there is an excellent talk on thorium powered nuclear energy on googletalks.
The link for the video is, http://www.youtube.com/watch?v=AHs2Ugxo7-8
The link for the 68 page powerpoint slide used in the video is, highly infomative and detailed. http://www.energyfromthorium.com/ppt/LFTRGoogleTalk_Bonometti.ppt
A lot of young people today simply do not understand the value of oil/gas. They just think it is dirty and therefore something they can easily decide not to have in their lives.
I spend a good amount of time attempting to explain how all encompassing it is and how intensely concentrated the energy is.
I would like to relate it to something close to them by showing how long 1 cup of gas could power their laptop.
Anyone have this info handy?
Thanks in advance.
Oil/gas IS dirty and is something dedicated & committed young people can easily decide not to have in their lives and then act on that decision by not participating in the petroculture in any way, shape or form. Actually doing so under the current cultural paradigm won't be easy; it requires commitment and effort but can be done, especially in communities of like minded individuals. The Amish don't live entirely petro free lives but they at least offer an example of what a reduced impact culture could look like - sans the religious fanaticism. Subsistence agriculturalists worldwide offer better examples of how an oil/gas free lifestyle can be effected. Such a lifestyle is going to be forced on the young anyhow; visionary youths are well advised to make this transition voluntarily and rationally, thereby setting examples for their more (petro-) acculturated peers. This effort is more likely to pay off in terms of Darwinian fitness than is infatuation with the ideas of the many techno fetishists who post here on TOD and the many other primarily technocopian blogsites that currently infest the web.
But he is not talking about people who want to live like the Amish, he is talking about the wealthy young environmentalists that want to keep living their lives of leisure, but do it in an environmentally friendly way. These people think that you can have roughly the same standard of living without Oil, Coal or Nuclear. Some people think that driving your Prius to Whole Foods is not using very many FF's but they don't realize all the points along the chain where FF's were used to make it all happen.
With the infrastructure already committed to Fossil Fuels, it is getting to be a real long shot to create a high consumptive leisure society for this many people with renewables.
How you define "standard of living" depends on what you value. If one values biodiversity and ecosystem integrity then an oil/gas free lifestyle improves standard of living enormously. No one said or implied that an oil/gas free culture constitutes a "leisure society." Such a life involves a lot of hard work, rather. But the payoff in personal satisfaction over doing the right thing makes it well worth while - to those who value such things, once again.
It's all a moot point, however. For every young person willing to adopt an oil/gas free lifestyle there are hundreds of thousands perfectly content to liberate the carbon.
I was just highlighting what I hear environmentalists saying. I hear a lot of people saying we should shut down every coal plant immediately and never build a new nuke plant, but they don't think that they should have to change their lifestyle at all.
I struggle with this issue myself. My username comes not just from my relationship to oil, but to how I have been defined by society (we Americans are no longer "Citizens", we are now "Consumers") and what my real role in the world is. It is not something I am particularly proud of, and I would like to change it. I don't want my headstone to read: Here lies XXXX, He consumed enough resources to give 100 people long happy lives.
On the other hand, I like my stuff and my leisure. I drive to work, and I like the door to door service, personal space and satellite radio listening that it affords me. There is also a lot of social pressure to consume. I am getting people the X-mas gifts they ask for, even if I think they are environmentally unsound, because who am I to preach. I know that I should eat all local vegetarian food, but sometimes I just want a cheeseburger, and sometimes I have it.
I don't have kids yet, but I imagine that if/when I do, the social pressure to consume will be 1000 times as great. Very few people I know are able to have low consumptive lifestyles with kids.
I agree that "we should shut down every coal plant immediately and never build a new nuke plant" but expecting this course of action to have no impact on lifestyle is completely unrealistic, of course. Anyone who thinks that in this regard we "can have our cake and eat it too" needs to get a clue.
Thanks for sharing biographical details Consumer. I grew up in an upwardly socially mobile middle class household in the Midwest, the only child of a well paid electronics engineer and a sometimes stay-at-home / sometimes department store clerk mom. My parents were the children of people who had grown up farming with horses. My parents wanted nothing to do with the rural agrarian lifestyle. They must have considered me to be something of an atavism, since the only thing that interested me as a kid was being far afield, observing, catching & interacting with critters. As a kid, my heros were Darwin, Muir, Thoreau, Tarzan...
As a young adult, of course I was a back-to-the-land hippie. My wife and I lived in the country, raising goats and growing pot, cooking & heating exclusively with wood. My parents didn't know what to think about our lifestyle but my grandparents understood perfectly. I learned much from them. I eventually received an education as a vertebrate zoologist, the emphasis of my undergrad education being on the cellular & subcellular level, and that of my grad work being on the level of ecology & evolution. I consider myself to be an "environmentalist" but not in any hokey sense as you describe for those who feel that a fossil fuel free lifestyle need have no impact on "standard of living" as measured with a consumeristic meterstick.
I have three grown kids and one grandkid. By the time my kids came along my wife and I had moved West. Consequent with what I have described as my "atavistic" proclivities, after several years of itinerate woodsworking we ended up on the Navajo Reservation, and endeavored to live as much as possible after the fashion of the unacculturated Dine', given the constraints imposed by my job and other circumstances. I wanted to live as far removed from the lifestyle of the "plastic people" I considered my parents to be, as possible. All my life I simply fell naturally into a lifestyle of Thoreauvian "voluntary poverty," due to a pervasive disgust with the wanton consumerism that led to environmental degradation. My children weren't nearly as indulged as I had been as a child; in fact, they grew up without television or sucrose, exposed to the blatant racism any bilagaanaa' faces on the rez. I thought it would make 'em tough & resourceful, and well it did.
Recently I read a blog on my daughter's MySpace page, in which she expressed resentment over having grown up "poor." I never considered myself and family as being impoverished; I considered our lifestyle as being rich beyond common measure in late 20th century American culture. With my education I could have secured more income than I did, but income was never of great importance to me. Natural history was. My family and I did without amenities not because we were forced to do so, but because my wife and I considered such amenities to be distractions from what really mattered in life. It surprised me that my daughter seemed to fail to understand all this. Oh well... my granddaughter seems to be a throwback too - a feral child who thinks snakes are cool just like I did. Perhaps there's some hope for alternate generations.
Best wishes, Consumer.
I made a similar comment once in front of my Mom, about us being "poor" when I was a kid, compared to what I had at the time (yuppie guy, just married, new car, etc.). The look on her face shamed me and I never said it again, but it took 20 more years before I realized my childhood was richer than my kids' have now, and they my parent put back more real equity than I have at the same age.
Now I'm making up for lost time, trying to bridge my kids into the life I had then, and taming their desires for material goods. Wisdom has been slow in coming for me, but I'm getting there.
I grew up in the 80's, which seem to be when the big switch from "real" to "virtual" life took place. I had feet in both worlds. My parents are very much "real", but I was fascinated by all things digital.
I thought I was poor when I was a kid, because those around me had much more. It wasn't until later that I realized that we were pretty well off. I then went through a super-consumptive phase during college and just after, and now I am trying to re-think what is important and what isn't.
It's very hard to stop wanting more stuff. Even now, I daydream about having lots of cool things. I guess that the key is to focus that lust on things that don't harm the environment. Somebody posted about Aquaponics on here the other day, and I was thinking how cool that would be to have.
I know many people with children(biological or adopted) who live low consumption lifestyles. My children and many of their friends use bike, transit, and walking for transportation. Energy-efficient remodels and PV are common in my neighborhood. For me, spending less means more free time with my family. Sometimes my children complained about thrift-store/yard-sale clothing, but mostly they were oblivious. Eating vegetarian/low on the food chain seems pretty normal.
My opinion is that parental consumption is mostly related to parents wanting to "keep up with the Jones" and not the children's desires.
I do know the people who "needed" a massive SUV as soon as they had a child, who worked crazy hours and hired nannies,etc., and their children reflect these values.
"But he is not talking about people who want to live like the Amish,..."
Exactly. They believe that with plenty of money and technology they can simply avoid oil and live a very high quality lifestyle. It almost sounds to me like they believe they can eventually climb through their computer screens and live the virtual life depicted there.
I get nowhere talking about farming and making things by hand.
I should add that this is just one faction of the young people I am in contact with on a regular basis.
There is also a bunch of really cool soil savy, farmer/warriors putting up dozens of huge greenhouses and fencing, living in amoungst the plants, who have an idea something is coming and say “bring it on”.
More power to 'em. The "warrior" aspect of such a lifestyle needs emphasis, since subsistence ag is hard work and many will consider it easier to simply pillage the products of others' efforts, rather then go to that effort themselves. Farms will need to be defended.
When you have the food and others don't, you can easily have hungry people defend your farm. (Help out and help defend this, and you get x% of the harvest. You now own a % of the farm.)
As per my rough calculations, 300ml of Gasoline contains 10,301,887 joules of energy.
I'm assuming the average laptop uses between 60-250 watts,so thats 216,000 joules to 900,000 joules.
So it can be anywhere between 48 hours to 11.5 hours.
I might have made a mess with the calculations somewhere, my assumptions are
1 gallon of gasoline contains 1.3 x 10^8 joules (converted this to mililiters)
1 Kwh = 3.6 x 10^6 joules
The number I found was 45 watts which gave me 50 hours.
That sounds reasonable for a "full" laptop. Netbooks/UMPCs are trying for dramatically lower but that's still in the 20-25W (when in active use) region at the moment. Note that this is for when you've got it as DC power, as mentioned in a post below losses are incurred in converting from other forms of stored energy.
100W+ numbers are for full computers, particularly those with lots of components (graphics cards, etc). Not that these aren't worth talking about with people, just that they're pn a different level to laptops/netbooks.
Of course, you can't just pour gasoline into a laptop to power it. You have to convert it to electricty. In general, IIRC, most FF power plants and transmission lines throw off about 2/3 of the gross energy they consume as waste heat, leaving about 1/3 available to do the actual work. Thus, you probably need to divide by 3 to get something close to the real number.
Combined cycle natural gas approaches 60% efficiency. Install as part of a local combined heat & power plant (rare in USA) and #s grow towards 80%.
Hydroelectric is >90% typically.
Best Hopes for improved efficiency,
Alan
Real crude number assuming gas has 45kJ/gm , a cup is 200 gms and we use a 25% efficient heat engine to run the laptop that uses 25 watts like this one, and we get maybe 25 hrs.
Call it a day.
Now, you guys who advocate fuel cells, go ahead and make your stab at it.
http://www.sunpower.com/index.php?pg=25
I was assuming of course that the laptop was not dragging a wire around connected to Alan's super good but huge heat engine. The above talks about a little bitty heat engine that goes wherever you want with the laptop, and does indeed burn diesel or jet fuel, making you worry a little about heat sniffing weapons if you happen to be into that way of life.
About "The Noah Countdown," the novel about an energy crisis:
and about the author BT Post:
Ironic.
A case of the messenger not understanding the message?
Actually, having lived in the north for all my life, I can't help but question whether or not this should be a 12-month-out-of-the-year arrangement. Heating everything is costly, and frankly not much productive work can be accomplished Dec-April with respect to food. Why not close up the farm (i.e. properly prepare buildings for near-freezing interior conditions) after Christmas and take a train to a small condo apartment in Florida? I know a person in the area who lives a very frugal life, mostly on the road. In the Winter he builds trails in Florida and in the summer he builds them here in Wisconsin. He seems to be a very content person.
A number of waiters and chefs (line, etc. not head) in New Orleans head north for the summer during our 'dead season". During the winter, we get more construction workers showing up here, looking for a few months work.
Best Hopes for Seasonal Migration ?
Alan
Regarding licensing bicycles: You're about as likely to see cyclist lining up to pay to license their bikes as you are to see local police departments lining up to pull over cyclists to ticket them for pedaling without a license.
Subtracting out the cost of enforcement probably leaves little left to build bike facilities from the proposed Bike License revenue.
Anyway, I would think that the negative external costs that the bikes create, would more than equal a $25.00 licensing fee. There are so many societal benefits to taking those cars off the road, they should be given a "free" ride, so to speak.
...they should be given a "free" ride, so to speak.
Not a snowball's chance, politically. As with pedestrians, too many drivers despise them as yet more obstacles to a quick, efficient trip.
Actually, here in Wisconsin, this is quite common. Here in Madison, there is a $10 fee for four years. This is a university city, so students often get bikes when they come. When they graduate and get "real" jobs they sell the bikes - or abandon them in the racks, or even pound them to bits with great gusto as in "now I'm an adult, I never ever want to see this thing or anything else like it again in my whole life."
With thousands upon thousands of bikes turning over every year, the city simply forces bike shops to do the paperwork when bikes are sold (new or used.) So the city in fact collects a good part of what it's theoretically owed, primarily at the expense of bike shop owners who really don't need yet more time-consuming paperwork (see link), and with no need to pull bicyclists over.
I created another -really- simple model of supply /demand.
In the up-phase Supply is assumed limited by growth in exploration/drilling and shows a constant % increase to some maximum at which point it plataues and after a period declines again at a constant rate.
Meanwhile demand increases at a constant % until it hits the Supply limits. At this point I assume that a price-spike induced recession cuts demand by some constant %.
Lets have a look at the result:
-points to note:
1. While energy supply is increasing oil-price induced shocks are relatively rare...
2. When supply stop increasing and begins decreasing these shocks become much more frequant: demand hardly has chance to recover before it is 'beaten down again' by yet another price shock / demand destruction.
I tried to make a model of prices but lacked a way of linking the supply/demand 'gap' to a realistic price. This year we have seen dramatic falls in prices from what looks mostly like a hedge-fund induced price spike (80%?)
Since the supply/demand gap is narrowing I expect price volatility is likely to increase in this commodity going forward making it likely that we will see more dramatic price swings.
I do not think TOD should nail its flag to the price signal -as has been proved the market is very driven by speculators who appear as likely to drive the price down to ridiculous lows as up to highs: both have their problems and distort the real message which is one of impending FF decline.
Higher highs and higher lows within the framework of ever-declining NET oil exports once the Giant Fields begin their inevitable decline...
...and as an aside is there any more evidence that -at a time when the average Chinese person is saving upwards of 20% of their income- why some people NEED a short-sharp whatever-induced shock than this:
http://www.break.com/index/amazing-christmas-light-display1.html
Regards, Nick.
I don't think this has been proved in the least. Iron ore was driven up in price by about the same amount as oil and other commodities, and yet there is no futures market for iron and no way to speculate on iron other than to store millions of metric tonnes of the stuff. After the economy fell off a cliff this summer, so did iron ore prices.
If something other than speculators could drive iron ore from $20/T to $200/T and back down again, then why couldn't that something be driving oil as well?
I can explain the rise & fall of both oil and iron ore by invoking a boom in China & the developing world caused by outflows of American debt-based cash. The boom "flared off" in the preparations for the Beijing Olympics and recovery from the earthquake in China and crashed as the credit crunch sent the global economy off a cliff. My explanation explains the timing of the boom & bust, the movement of Chinese populations, and the price fluctuations of all commodities, including iron ore.
Your explanation founders on trying to explain why hedge funds pouring money into the Nymex would cause China to pay Rio Tinto $200/tonne for Australian iron ore.
Shargash is right, and the people here are lucky to have him, because I don't have the energy to say this stuff over and over anymore.
Speaking of which, Westexas and Darwinian ought to be nominated for sainthood for their persistance.
It's called a 'momentum play' and is a classic explanation of bubbles -the expectation of ever higher prices feeds the speculative inflows. Of course there might be a variety of reasons offered up why the price level is as it is at any given moment: Beijing Olympics, earthquake recovery, 'Peak Oil Approaching'...
noutram, some of the traders in the market trade based on momentum. In fact, I basically trade on momentum. But momentum trading does not cause price rises.
For example, when the price broke $145, that was a strong signal for a momentum trader. So momentum traders bought, drove the price up $3, and then got murdered by commercial traders lying in wait. Sometimes momentum plays win, and sometimes they lose.
Momentum trading is a perfectly legitimate trading strategy, but it doesn't control markets. Speculators use it to help evaluate risk and reward. Sound evaluation of the risk of buying or selling when commercial traders choose not to is how speculators get paid. Their purpose in the markets is to take risk that commercial traders don't want, kind of like insurance companies.
Yes, of course. The expectation of higher prices is why investors buy anything. The problem in your analysis, however, is the assumption that the speculative inflows drive prices. Oil experienced speculative inflows, iron ore did not. If your analysis were correct, then the price of oil should have moved far more than the price of iron ore. That it did not is pretty much proof that "speculative inflows" were not the major driver of the price of oil.
They aren't distinct enough to paint with that broad a brush.
For instance... what if speculators drove up the price of oil causing actual demand for steel to be driven up (say for new rigs) which drove up actual demand for iron which shifted prices upward. That's still driven by speculation.
Or what if speculation drove up prices for an alternate metal like AL. As the expected gap between aluminum and steel grows, steel becomes comparatively cheaper... driving some demand awy from one and into the other... causing iron prices to rise despite a lack of a futures market.
Other commodities are involved in mining iron (obviously oil). Higher production costs could impact prices.
Lastly... you're right that it's harder to speculate in iron... but it's certainly not impossible. Oil has contango issues because storage has to be constructed well in advance. Iron presents fewer problems. Those who expect steel prices to be higher in five years could certainly buy it now and park it.
Oh ok... one more. There may not be a futures market, but that doesn't mean that producers never contract for future delivery.
Thanks for the bit about iron ore. I think that is a great argument to the "speculators" cause to oil price increases.
The price of oil could stay low for a while yet. Deflationary forces are really taking hold. If half the hedge funds fail and there is no access to credit anymore. Oil prices will simply stay put, put that doesn't mean it's going to get cheaper relatively as a lot of people are going to lose their jobs.
No, VK, a lack of access to credit, or the removal of half or all of the hedge funds, doesn't cause prices to stay down. It will just mean fewer participants in the market, and more price volatility.
What's going to probably happen is we'll see prices stabilize for a while. That will lower the price signal at which the black boxes close out their shorts. Which means, when the price starts to move, you get a sharper rise.
Which will immediately trigger a big round of kvetching about speculators again.
Nick,
Your graph shows falling price as supply decreases; I think this is unlikely to happen.
When graphing supply and demand, I think it is best to stick with the conventional graph that has price on the vertical axis and quantity on the horizontal axis. To compare situations at different times you can either draw several supply lines (leaving demand constant for convenience) or draw many graphs.
Demand will fall as GDP goes down, but supply can fall more and fall faster both due to voluntary cuts in oil output and to involuntary cuts in production due to both decline of oilfields and increased oil consumption in oil-exporting countries.
Using simple supply and demand graphs works well to illustrate concepts, but we cannot use them for prediction because we don't know what will happen to demand, nor do we have any reliable way to predict voluntary cuts in supply. Another limitation of the simple supply and demand graph is that it shows only first order effects; it is hard to show what happens when a higher price of oil causes a recession that results in a lower demand for oil without having the graph get messy and obscure. To show these important macroeconomic chains of causation one needs graphs of macroeconomic quantities, such as the link between real GDP and inflation-adjusted prices for oil.
Don, it shows nothing of the sort -I suggest you have another look at my introductory text.
In the following graph I have included a very simple price indicator based on results from the Supply/Demand Gap parameter:
-Note: none of these value results should be taken as actuals -both future or historic, its the overall look and feel of the thing I was aiming for to get a better understanding of what the different 'zones' did in relation to one another with a simple model.
-and clearly an innacurate one at that because Price -as we have seen- can fall far more quickly and dramaticly than demand...
Regards, Nick.
Nick, read this study: http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1062&context=u...
Also, I really take issue with the idea that price itself destroys demand enough to cause price falls like the one we've seen. What caused the degree of demand destruction we've seen was Fed policy--a political reaction to the market, not the market itself.
The markets are increasingly moving away from bets on supply and demand to bets on what big players like China and the Fed are going to do. We've hit that point where it's poker rather than free markets. Which is probably not good.
Can you enlighten me -which FED policy trumped $4+ gas? (perhaps you mean the Fund rate that was raised after being 'kept too low for too long' by Greenspan?)
-Just scanned the link: If I'm reading correctly I really find it quite indicative of the inneficiency of the American model that $2.50 gas is given as the peak price the model seems to be able to tolerate before a breakdown...
If we had $2.50 gas here in the UK I would probably be rushing out to buy a Hummer as well -this is a joke btw.
Nick.
Nick,
Thanks for the clarification.
Don,
Did you ever get a chance to check out Michael Hudson? Here is the link to reviews of his SUPERIMPERIALISM book on Amazon:
http://www.amazon.com/review/product/0745319890/ref=dp_top_cm_cr_acr_txt...
Your thoughts on this would be much appreciated.
Phil,
I did read the reviews but don't feel right about commenting on a book that I have not read.
Markets in the capitalist system have been deliberately set up by 'fat cats' to permit trade and speculation and this is a major weakness since it masks the very signals required to make sensible trade decisions.
Unfortunately our economic system has been permitted to grow very complex in the last 50 years or so and has also been deliberately set up with inbuilt ongoing exponential inflation - to try and protect their wealth long-term savers are required to take a risk using the markets and make the 'fat cats' a handsome living from producing nothing - making it probably an almost impossible task to preserve wealth let alone grow it, watch and learn from the GM pensioners over the next few months.
IMO we will return to simpler times - no company or system must be so big or complex that it can't be allowed to fail - small and simple is beautiful. In a declining energy situation we will no longer be able to afford the 'fat cat' leeches.
Actually, it's a good thing that inflation forces people to reinvest their money in the living world, instead of hoarding their savings in their mattresses.
Otherwise people with money have no incentive to take any risk. Good new ideas would never find the capital to get developed. The young could never get anywhere without inheriting money from someone who already has it.
Inflation and markets are actually progressive forces. It's usually our political responses to the markets that are regressive, and cause the pain you're talking about.
Moe-
I agree, but only if you suspend thermodynamics, and disregard the limitations of the biological system you are sensually imbedded in.
One cannot expand indefinitely in a finite system.
Theoretically, no growth and investment of money could work, but only if the investor accepted no growth in return. Of course, if you look around, this doesn't conform with observable reality, as the rape of the planet continues.
How about a Great Leap Backward?
Oh, thats right, one cannot go backward.
Nothing can grow exponentially forever - including inflation, so, even if it is a progressive force it is only temporary - and what is the failure mode? ... see Zimbabwe for a current example.
In recent years Wall Street, and financial people in general, never ever considered a failure mode, or a lack of economic growth cause by insufficient energy.
Hoarding cash does work, there have been thousands of years of civilisation to prove it. Fiat money does not work for long, there are thousands of examples of fiat failure - fiat money wealth is especially short lived in a deliberately inflationary, fractional reserve banking, capitalist situation.
AAAAArrrrrghhhhhhhh
I don't know where all this demand destruction is happening but it's certainly not here in Scotland! The roads are more traffic jammed than I can remember!!
Never mind; I'm back on the bicycle to work (13mile round trip). Fed up waiting in queues of traffic. Perhaps people are cutting back on other items but it is surely not petrol/diesel!
Marco.
There's certainly not enough DD going on to justify a 70% drop in raw commodity price which points to one thing: a good chunk of the recent run up was primarily driven by speculation...
In an economy where the only thing growing is the money supply that money will chase any asset moving with momentum (both up and down) creating wild swings. Now credit is much harder to get hedge funds are unable to use their massive leverage to bet and we are seeing reverse momentum take hold as they de-leverage.
OPEC must now be getting fairly desperate to put a floor under these declines so they will probaby cut quite dramatically next week IMO. I think we could see a fairly rapid bounce. Certainly the futures market are penciling it in.
Nick.
But you don't need that great a fall in demand to cause a huge fall in price if you've subsequently got a slight oversupply and thus eliminated prior bidding wars - in whatever commodity.
Undertow is 100% right. You need only a 4.5% change in supply relative to demand to cause a 70% change in the price of oil.
It's really not that mystical, and it's not due to speculators, except maybe the last few bucks of the drop.
That's a bit worrying -4.5% is hardly anything in the grand scheme of things...
Where's that figure from?
Any suggestions on how oil prices might be made more stable or is vast instability just the way it has to be?
Nick.
The same here in Switzerland. Even at 5 am there is heavy traffic including trucks on the motorways.
Today on the petrol station was no pump free.
Everywhere you look... traffic like mad. The coffeeshops and restaurants are full.
I have been trying to order the plumber for the last 2 weeks. Answer: We are coming as early as possible.
Where is this GLOBAL economic crisis? Could it be......
that this so called crisis has been done by purpose? By someone?
This crisis has also done some very good things: Commodities have crashed! And so did Venezuela, Iran and Russia. The so called evils of the US.
I don't want to offend anybody in the US, because, believe me, we here in Europa are not one ota better.
So far it seems to me there is much talk about how bad things are -yet in a historical context- things are still very good. I always like to remind myself that even during The Great Depression 75% of people had a job...
Nick.
P.S. Mmmm, the quote that came up as I posted:
"“Of all races in an advanced stage of civilization, the American is the least accessible to long views… Always and everywhere in a hurry to get rich, he does not give a thought to remote consequences; he sees only present advantages… He does not remember, he does not feel, he lives in a materialist dream.”
—Moiseide Ostrogorski (1902, 302-303)"
Maybe it's a sign of the times, the change in mood as Elliot Wave theory describes but at Australia's version of Burger King, we have a new meal called the "Angry Whopper".
Btw anyone seen the new James Bond movie? There is a direct reference to the world running out of oil. The plot revolves around water though.
there is always a silver lining for someone
We were driving along when we saw all this furniture thrown out of a house. I picked up some items that we needed and it didn't cost anything. My advice is don't buy furniture at the moment just wait until you see what you need
Behind every silver lining is a dark cloud.
Every silver lining has a touch of grey.
We WILL get by :-)
Oh, man. We're done for. Wait'll Hollywooden releases it's blockbuster "Uber-Petrol" designed to entice Joe the Plumber to spend 20 billion on tickets. (Or is that Hollywould?) No further cred in this topic. Any way to stop them?
Yeah, one of the key symbolic moments in the film was a beautiful dead girl covered in oil (a recreation of the scene in Goldfinger where the dead girl in the bed was covered in gold).
A must-see for peak oilers, although don't expect to be able to follow the plot. And the chase scenes were like watching a mirror explode.
I saw the movie...I think a critic got it right when they said, "it's just not much fun."
My recommendation: save it for Netflix or similar.
One of the intriguing thing about the current period where Obama is yet to gain power and Bush is losing power, is all the power battles going on within the US. And I expect that will go on. There are so many who would actually like to see Obama fail so that their agenda may go further.
Take for instance the recent directive by Obama that America doesn't do torture and that he would shut down Guantanamo Bay. What happens? Well more politics and people trying to stop that.
This according to Time Magazine, http://www.time.com/time/politics/article/0,8599,1865087,00.html
Seems like some in the military are bent on ensuring that the suspects are not allowed a trial in US courts but in military style tribunals that will probably be opaque and hidden from public view.
As Jon Stewart said in yesterday's daily show with his interview with Matthew Alexander, the former Interrogator, how can we as a country do this in a humane way and not lose our soul? This was in reference to the torture carried out by some military interrogators eg Abu Gharaib, the secret prison locations all over the world.
This guy needs to be constantly reminded of his 'predictions':
http://www.cnbc.com/id/28108576
"We expect oil to probably trade in a range between $36 to $47, possibly for five years," Day said"
PAUL DAY: deputy head of research from MIG Investments...
-I'd love to know the extent of his research to come to this conclusion...?
5 years!! Has he not heard of: OPEC cuts, Chindian demand, Supergiant field decline??
Nick.
I've just realised. Yergin has parity!!! Who'd a thunk it!
I'm cashing in my Yen for some Yergins.
Marco.
Anecdotal evidence of economic conditions hitting home...
Took my 86 pickup truck into the mechanic, as it was making an insane amount of noise, like the exhaust pipe had snapped or something.
Just heard back from my mechanic, turns out someone stole my catalytic converter. Crawled right up underneath the truck and cut it out with a sawzall. He says he's seeing it happen more and more lately.
I got an 18 volt cordless sawzall recently. The last one I used was corded. I was real surprised of the torque and cutting ability of the cordless unit.
P=(V x V) / I
-small increase in voltage = large increase in power...
18v is a lot better than 12v, 24V is going to be really good!
Nick.
Just a nit, but it's P=V*V/R, or P=VI, with V=IR. But your point is valid -- higher voltage makes for more power across a given load, or with a given current.
Lol! Where was Libya when prices were over $140/bbl and the "whole world economy" was in danger?
In fact, Libya was talking about cutting production at $140.
Hello TODers,
Recipe for Famine: Parts 1,2 of 7-->Have you hugged your bag of NPK today?
The articles are much better than my teaser excerpts below:
Part 1 article weblink:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aU7BLQWMss2k&refer=home
--------------------
Dead Children Linked to Aid Policy in Africa Favoring Americans
The bag of green peas, stamped “USAID From the American People,” took more than six months to reach Haylar Ayako.
For seven of his grandchildren, that was a lifetime.
They died as the peas journeyed from North Dakota to southern Ethiopia.
---------------------
Part 2 weblink:
http://www.bloomberg.com/apps/news?pid=20601103&sid=al5VYcsSREdU&refer=us
-----------------
How Famine Lurked Behind Vienna Toast Where Joe Cocker Crooned
..“Last year it was the frying pan,” Jacques Diouf, director general of the United Nations Food and Agriculture Organization, said during a conference in Rome on Oct. 15. “Next year it could be the fire.”
..Manmade causes helped spur the food shortages that the World Bank says left 967 million of the world’s 6.7 billion people undernourished this year. The recipe for famine included government policies, speculation in commodities markets and a failure to invest in agriculture.
Now the cost of potash may help bring the world a fresh bumper crop of hunger.
------------------
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Bob,
the tracking you are doing with our food supply is very valuable.
Please don't take this the wrong way, but I've created a blog for you at WordPress in the hope that it clears the way for you to keep your posts all in one place. I think a food blog has the potential of becoming quite popular as food increasingly becomes a topic we must deal with. As Leanan has pointed out, this does not mean you can't still post here. It does mean, however, that the search engines will find your posts and she can link to the relevant ones in the Drumbeat.
I hope you take me up on my offer. If you do, I am happy to give you a tour of the software behind the scenes.
You can find it here:
http://foodpulse.wordpress.com
Best,
Andre'
That sounds like a great idea!
AA - thanks for that. I tried to become the first "follower" of the blog, but I keep getting an error message.
Bob - Your stuff is good, don't let it fall into obscurity in inactive drumbeats.
Hi, Consumer. I will most definitely work out the technical glitches on Bob's behalf if he likes the idea.
Bob, you can also change the theme quite easily if you don't like the one I chose. You can even change the name, the URL -- the whole shebang.
It's also possible to tag stories that are similar, making it easier for someone to see all posts that related to "wheat" or "fertilizer," for example.
It would be wonderful to capture your writing and get your content a wider audience. I hope you mull over the possibilities.
-André
UK faces energy blackouts without investment in nuclear and clean coal
http://www.telegraph.co.uk/earth/energy/3691608/UK-faces-energy-blackout...
I think blackout will happen far earlier than they do - the gas they hope to import will not be available.
Is it just me or is the UK in danger here of a 70s rerun in the coming decade?
We face:
1. Massive payments deficits
2. Declining oil/gas
3. End-of-life Nuclear plants
On top of this we have a collapsing FIRE revenues (Finance, Real Estate, Insurance) -core drivers of Govt income that has helped fund massive state sector expansion.
And a sickly pound which will compound all the above as imports get more expensive.
Is this a case of "will the last person to leave the UK please turn the lights off?" (I'm just wondering which bright light we would flee to though as America is looking like a sickly child itself this time around...)
Nick.
Hey All-
I wrote a blog today on my website about how to prepare for, and cope with what is headed our way.
It's nothing revolutionary or new to anyone here, but I'd appreciate it if you had the time to check it out and tell me what you thought. I kept it pretty basic as it is on our corporate site and intended for those not as immersed in this stuff as the rest of you.
Thanks in advance.
ps-I have a news aggregator for TOD on there. Hopefully it will get some traffic and send some people this way.
I had a look and signed up - enjoyable site.
The only slight thing was that it was really fussy about pass-word settings, and a lot of visitors might not bother registering - but perhaps this is because it is part of the corporate site.
Progress for off-road EV's will be interesting to watch - many think that roads may deteriorate greatly, so it might be critical.
Is placing the motors in the wheels an advantage in this respect, so that the suspension can be really floating, or does the extra weight in the wheel counteract this?
Thanks Dave. I genuinely appreciate your input. The site is new and I haven't messed around much with the password settings. I'll see if I can simplify them.
I agree on off-road EV's. That is what drew us to the Zero X, which can actually be driven on any public roads. A flip of a switch on the controller limits the bike's top speed to 30 and instantly classifies it as a moped. Here in Colorado, funds for road maintenance is lacking and I see the bike as the ultimate urban assault vehicle in the future. The frame is rock solid aerospace aluminum and the bike should need very little up-keep over the long run.
As for motors in the wheels or hub motors, unsprung weight is never a good idea. The key is to make the motors light enough to rival the wheel weight of a conventional ICE. If we can get AC hub motors with rapid regen through a ultra-cap, li-ion combo we'll be in business. I assume you've seen this intriguing Mini? Hub motor, series hybrid, 900 miles between charging.
We're working on a lightweight AC motor to achieve the necessary weight, and will do some full car conversions, but are mostly sticking with two wheel EV's (bikes, scooters & motorcycles) until batteries are more affordable or we all become millionaires.
The Zero X looks a very cool machine.
The Mini is great, and puts a lot of idea together in one frame.
Dunno if you have come across the idea of regenerative shock absorbers?
http://www.greencarcongress.com/2008/11/electric-truck.html#more
I think that a wonderful idea!
I am not sure how practical it is though, as it will presumably add complication and expense.
Tremendous for your work though, if if can be made to function!
As for EV cars, I like the idea of an inflatable car! Although I don't trust the projected use of a fuel cell in the XP:
http://nextbigfuture.com/2008/06/inflata
http://www.myxpcar.com/ble-electric-cars-could-be-cheap.html
Weight reduction and simplicity seem to be the way forward for EV's - the biggest obstacles are safety regs.
I agree that offroad vehicles will become a bit more practical. The motorbike that I picked up last year is a Yamaha XT225, small displacement with good gas mileage (around 80mpg at 45mph) and being a dual-sport, it is both street legal AND good for offroad use. I would like the Zero, but they are going to have to have a street-legal version with turn signals, etc before I can purchase one. I emailed them and told them as much, and they agreed that it was a market they want to get into.
Let me say though, that when traveling on rough roads or offroad, wearing offroad riding armor is a very good idea, and has reduced my injuries. There's nothing like muddy dirt roads in the rain to cause a rear tire to slip/slide all over the place.
That is what drew us to the Zero X, which can actually be driven on any public roads.
That is an interesting vehicle and one that I would bet on being successful.
You might wish to reconsider the black background on the site. For anyone over about 45 years old, as the cone-rod relational efficiency in the eyes change, they lose about 50% of their original ability to see in the dark... or to discriminate against dark backgrounds.
I know it's hard to believe this when you are young but it is true. Google for confirming information.
I just registered with a new name. It said my password should be stronger, but I clicked save anyway and it accepted it.
Cheers.
I liked the content, but for my old eyes (53) the light grey font on the black background was very difficult to read. The Green Font on the side items was much easier.
In the browser I use (Opera) you can switch from "author mode" to "user mode" instantly by hitting shift-G (or the appropriate toolbar icon). In user mode you get YOUR choice of text and background colors, fonts, link styles, etc. Works wonders on those web pages with silly dark-on-dark fonts, etc. There's also a tool for "make the page fit within the horizontal width of the window" which is also very helpful. Also one-click turning images (for the specific page) on and off, etc. Perhaps Firefox has similar features, I don't know.
With Firefox, I use View -> Page Style -> No style.
I find anything except black text on a white background pretty hard to read, at least for anything of any length.
p-sunflower,
In Firefox you can press Control + to increase size (zoom in) and minus (-) to shrink back down. Also if your mouse has a scroll wheel, Control Scroll will do the same.
That often helps for them old eyes.
I switched it to a lighter font. Is it easier for you to read now?
90 Day T-Bill Rates go Negative:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOGXsWKEI6F4&refer=w...
All the money is getting sucked in by the US Govt! Ironic that they are taking taxpayer money and giving it to the banks and the banks are parking all that money into Treasuries and are willing to lose money just to keep it safe.
Says a lot about deflation, increasing risk and the state of the world economy.
Philip Verleger:
1. In 2006, Philip Verleger after George Bush's SOTUS in January, is quoted in the WSJ saying that "all the global demand growth for the next two years for oil will be satisfied by ethanol and biofuels, leaving the call on global oil supply flat." I wrote to Verleger to see if he was quoted correctly. He wrote back "Yes Sir, I was." Here is what was bizarre about the claim. At the time of Verleger's call, the world was not even remotely close to producing biofuels/ethanol volumes that could take up even one half of one percent of global oil demand growth, let along 1.5%.
2. Later in 2006, only 90 days after calling for very high oil in late Summer, Verleger then calls for a collapse to 15.00 in the Autumn. Laszlo Birinyi notes, in his research commentary, that Verleger has a tendency to make extreme calls. (My word: kook/crank calls).
3. In December of 2007, Verleger delivers a paper to Congress on high oil prices. He asserts that all factors from demand, supply, speculation, hoarding, and so forth cannot be the cause. "Therefore, by deduction, it's clear the reason for high oil prices is Secty Bodman's decision to fill the SPR."
4. In December of 2008, Verleger, using the All Liquids category, says global demand is now down already by 5.2 Mb/day, and that OPEC needs to cut up to 7 Mb/day to balance out the market.
My comment on Verleger, after watching his analysis and commentary for years: no comment.
Gregor
California May Have to Halt Public Works Spending Amid Deficit
And this is without the Hookers and Blow account----
Nearly a billion people worldwide are starving, UN agency warns
The US morphs into http://www.zmag.org/znet/viewArticle/19897
Argentina