DrumBeat: December 19, 2008

'No way' did oil demand plunge

Simmons & Company Chairman Matthew Simmons says the low price of crude is not reflective of a drastic demand decrease.

Oil settles below $34

NEW YORK (CNNMoney.com) -- Oil prices fell sharply Friday, on the last day of the January contract, as the global economic slowdown continues to clamp down on demand.

The price of crude for January delivery fluctuated mid-afternoon, before shedding $2.35 to settle at $33.87, nearly a five-year low.

The last time oil traded this low was Feb. 10, 2004, when it settled at the same price.

The February contract, which begins its front-month run on Monday, rose 69 cents to $42.36 a barrel in a trading day with very little price movement.

Energy firms socking away cheap oil

NEW YORK (MarketWatch) -- While cheap oil bites into the fortunes of crude production and refining, the oil storage business remains robust as energy players sock away plentiful crude to wait out the current multi-year trough until prices come back.

Storage of oil also offers an instant return of $10 a barrel or more tied to the so-called "contango" structure of the futures market - a condition where the expected price of oil in coming months trades higher than current prices.

Gulf Arab Oil Exporters Seen Posting Deficits in ’09

DUBAI — Saudi Arabia and other Gulf oil producers will almost certainly run unaccustomed budget deficits next year as they take a double hit from the collapse in oil prices and deep crude output cuts, economists said on Thursday.

Still, huge surpluses amassed during a six-year boom when oil prices rallied as much as seven-fold compared with 2002 levels will allow the biggest oil-exporting region to keep on spending to sustain local economies during a global recession.

Shell May Revisit Oil-Sand Projects as Procurement Costs Drop

(Bloomberg) -- Royal Dutch Shell Plc said construction and engineering costs may fall in Canada, allowing Europe’s largest oil producer to revisit plans to expand oil- sand projects.

“We expect that procurement costs will come down quite a lot,” Chief Executive Officer Jeroen van der Veer said today in an interview at an energy conference in London. “If the overheating goes out of the market, the break-even price that you can build an oil-sands project will come down again.”

Companies lock horns over oil hedging

SHENZHEN Nanshan Power Co, a Chinese power producer based in the southern city, and Goldman Sachs Group Inc are in talks to resolve a dispute over oil-hedging contracts that caused losses for the utility.

The parties may take legal action if the talks fail, Nanshan Power said in a statement to the Shenzhen Stock Exchange late Thursday. The Chinese producer is refusing to pay for losses on contracts signed in March based on oil prices ranging from US$62 to US$66.50 a barrel.

Alberta Oil Jobs Evaporating

EDMONTON — Thousands of workers from as far away as the Philippines are watching their jobs in Alberta evaporate as the richest oil boom in the province's history deflates.

Sinking oil prices have forced skittish investors to hedge their bets on half a dozen multibillion-dollar oilsands projects, leaving one of the key engines of Canada's economy teetering on an uncertain future.

Ben Stacey, a pipefitter from Newfoundland, was making as much as $70 an hour in the oilsands when he was blindsided by sudden layoffs.

“You can make $70,000 up there in three months,” Stacey, 54, told The Canadian Press from his home back in Grand Bank. “If the price of oil keeps on dropping, you're going to see a lot of Newfoundlanders on unemployment here and a lot of people selling their trucks.”

The scramble to mine tar-like bitumen and refine it into synthetic crude stopped abruptly after oil prices, which had soared to US$147 in the summer, tumbled below US$40.

Peak Uranium: What’s Going to Fuel All Those Nuclear Plants?

Now that “peak oil” is seemingly in retreat, is the next big worry peak uranium?

The expected nuclear-power renaissance, from the U.K. to India, means dozens more nuclear reactors will likely be built in coming years. Current-generation reactors all need uranium for fuel—but where’s all that uranium going to come from? The Wall Street Journal reports today that some nuclear operators are getting nervous:

Japan’s Kansai Electric Power — which accounts for nearly a third of the country’s total uranium demand — says it plans to buy uranium mines to ensure its long-term supply of the fuel. Its chief manager says he worries that in coming years he won’t be able to buy what he needs “no matter how much you are willing to pay.”

Global aid in crisis as cash supply dries up

International aid programmes are in crisis, with governments around the world failing to honour funding promises, individual donors sceptical about aid policies and wealthy philanthropists losing money in the economic turmoil.

Jeffrey Sachs, special adviser to the United Nations, told The Times: “We have a terrible situation because the overall aid system is on its knees and that was true even before this global economic crisis.”

Urban areas struggle to get grocers, fresh food: Inner city ‘food deserts’ are instead loaded with fast food and fatty snacks

"Deserts are naturally occurring things," said Joanne Kim, chief operating officer of the Community Coalition of South Los Angeles. "We call this food apartheid because people have chosen to locate elsewhere even though there is substantial purchasing power here."

There are only six supermarkets in South Los Angeles, serving a population of about 688,000. By comparison, 19 supermarkets serve West Los Angeles' population of about 395,000.

Retailers blame theft in urban supermarkets, high employment turnover and lack of space for choosing to locate their stores elsewhere.

Nigeria: Panic As Fuel Queues Resurface in Lagos

Panic buying and long queues in petrol stations are back in Lagos, caused by scarcity which could sour Christmas and New Year celebrations for millions of residents.

The shortage noticed on Thursday is the result of the strike begun on Wednesday by Petroleum Tankers Drivers (PTD).

U.S. gasoline seen at $1 a gallon in 2009: Alaron

CHICAGO (Reuters) - The price of gasoline, which soared to above $4 per gallon in July and hit motorists and industry hard, could retail at an average $1 per gallon next year, brokerage Alaron Trading Corp forecast on Thursday.

Alaron energy analyst Phil Flynn told a conference in Chicago he expected crude oil prices to range between $25 and $50 per barrel in 2009, with the short-term target being $35.

"We're not going to see commodities turn around overnight. We're entering a new era in commodities with more stable prices and we will not see the big spikes in prices we've seen in the past," Flynn said.

Could the Electric Grid Support Far More Wind and Solar?

SAN FRANCISCO — The electric grid may be able to handle more wind and solar power — way more — than previously thought, according to a new preliminary study.

The commonly accepted wisdom in the energy industry is that the grid could only draw something like 20 percent of its power from wind and solar resources before encountering major reliability problems. But the new power flow simulation, presented for the first time this week at the American Geophysical Union meeting, shows that, at least in California, the power grid might be able to handle three times that much renewable energy without encountering major trouble pushing electrons around the state.

New ban set on regulating global warming gases: Ruling would tie up President-elect Obama who said he wants regulation

WASHINGTON - The Bush administration is trying to make sure in its final days that federal air pollution regulations will not be used to control the gases blamed for global warming.

In a memorandum sent Thursday, outgoing Environmental Protection Agency Administrator Stephen Johnson sets an agency-wide policy prohibiting controls on carbon dioxide emissions from being included in air pollution permits for coal-fired power plants and other facilities.

Groups sue to stop Utah oil and gas drilling

WASHINGTON - Conservation groups filed a lawsuit Wednesday to block the Bush administration's last-minute sale of oil-and-gas drilling leases in Utah near national parks and ancient rock art panels.

Three Gorges Dam tested as water rises

BEIJING (Reuters) - Rising water levels in China's giant Three Gorges Dam have triggered dozens of landslides in recent months, damaging houses, land and infrastructure worth millions of dollars, state media said on Thursday.

Saudi Arabian varsity banks on solar power

JEDDAH: Saudi Arabia is determined to go the clean energy way. An indication to this was evident when Conergy Asia-Pacific, a regional subsidiary of Hamburg-based Conergy AG, has been given a contract for a 2-megawatt solar power plant for Saudi Arabia’s King Abdullah University of Science and Technology (KAUST).

The project will occupy 11,577 square meters of roof space and produce 3,332 megawatt hours of clean energy annually, while also saving up to 1,666 tonnes of yearly carbon emissions. This is equal ant to carbon offsets for approximately 11,758 million kilometers of air travel.

World Bank: Russia may need help if oil falls more

MOSCOW -- Russia would come under crippling financial pressure and may need to raise money externally if oil languishes at an average of $30 a barrel over the next two years, the World Bank predicted Friday.

The bleak scenario would mark a rapid unraveling of Russia's oil-fueled economic gains over the past eight years, during which time the government has paid down most of its foreign debt and built up a vast stockpile of international reserves.

Oil Futures Slump in New York as Stockpiles Build at Cushing

(Bloomberg) -- Oil futures slumped in New York as concern mounted that rising stockpiles at Cushing, Oklahoma, will leave little room to store supplies for delivery next year.

“World crude oil prices are currently driven by barrels of crude in Cushing and not by the OPEC announcement of a 4 million barrels a day cut,” said Olivier Jakob, managing director of Petromatrix GmbH in Switzerland.

Crude oil stockpiles at Cushing, where oil that’s traded on in New York is delivered, climbed 21 percent to 27.5 million barrels last week, the highest since May 2007, the government said in a report on Dec. 17. OPEC’s biggest production cut in more than a decade this week has failed to stop the slump in prices as the deepening global recession saps demand.

Crude oil for delivery in January fell as much as 7.7% to $33.44 a barrel on the New York Mercantile Exchange. The contract expires today.

Oil price has found floor: OPEC president

LONDON (Reuters) - Oil prices have found a floor around current levels, OPEC President Chakib Khelil told Reuters on Friday.

He was asked if he expected the oil price to fall further: "Not really," he said. "I don't believe there is any reason for it to fall any further, I don't see it going lower."

Oil producers, users call for oil price stability

LONDON (Reuters) – The world's biggest oil producers and consumers called on Friday for cooperation to increase stability in oil prices, improve information on energy markets and help guarantee future energy supplies.

Opening a meeting of energy ministers from OPEC and the big consuming nations as well as energy companies, British Prime Minister Gordon Brown called for action to reduce huge swings in oil prices that he said had damaged the world economy.

"We will need a new partnership between oil-producing and oil-consuming countries," Brown said. "As with the global financial crisis, this global crisis in our energy markets cannot be solved by one nation or one continent alone."

Recession Shock Hits the Oil Market; Are Future Shocks and Oil Market Volatility Inevitable?: New CERA Analysis

LONDON--(BUSINESS WIRE)--The past 12 months have seen volatility in oil prices on an unprecedented scale. A new special report, Recession Shock: The Impact of the Economic and Financial Crisis on the Oil Market, released today by Cambridge Energy Research Associates (CERA) as part of the London Energy Meeting, explores these issues, including: What is driving this extraordinary volatility; the effects on future demand and supply, and the effects on investment and energy security; how the financial crisis and economic downturn is exacerbating the volatility of oil prices, and the possible risks and unanticipated consequences.

OPEC calls on UK to cut fuel duty or risk a long-term spike in oil

Oil cartel OPEC has called on Western governments, including Britain, to cut duty on petrol prices or risk fuelling a much higher oil price in the future.

Falling petrol prices – a sign of things to come?

For most of my life the doomsayers have been predicting that oil will soon run out and those voices have become louder over the last 12 months.

Some commentators have suggested that we may already be at the peak of oil production, which could suggest that the price increases we saw during the earlier part of the year becoming a normal part of life over the next few years.

The true picture of oil supply and demand is likely to be very complex, making future predictions extremely difficult.

My thoughts on Oil, Refiners, Chemicals etc

I see many posts today on oil and surprise that oil broke $36. What many are not realizing is that oil prices are not only dependent on gasoline demand but also chemical demand... that's where there is big weakness and there are several investment thesis that flow from this.

First realize that chemical companies are on their backs right now. Consumers aren't buying anything, and manufacturers are making anything... so chemical companies have NO DEMAND for the byproducts of crude oil. So the price of oil is only being supported by heating oil (diesel), gasoline, and jet fuel... all of which are in lower demand than they were a year ago.

Eni Says Lower Oil Won’t Affect Kashagan, Barents Sea

(Bloomberg) -- Eni SpA, Italy’s biggest oil company, said the slump in oil prices won’t affect its projects at Kashagan in Kazakhstan and the Barents Sea.

Chief Executive Officer Paolo Scaroni said $30 oil isn’t “dramatically” low, though prices in a range of $60 to $70 would be better.

Brazil to boost troops in Amazon, weapons industry

BRASILIA, Brazil – Brazil will beef up troops in its vast Amazon rain forest, build nuclear and conventional submarines to protect offshore oil fields and modernize its weapons industry under a national defense plan outlined in a report Thursday.

Could plunging oil prices make Tehran more friendly?

Iran will stop exporting fuel oil in the New Year, officials announced yesterday. It needs it for its own people. That is a measure of how the plunge in oil prices from $140 a barrel to $40 is hurting the world’s fourth-largest oil exporter. Is this the shock that might nudge Iran’s leaders to think again about their nuclear ambitions? To be blunt, probably not. Nothing so far has made them budge from the goal of enriching uranium in a way which would put a nuclear weapon within reach.

All the same, the sharp fall in the oil price, coming at a crucial stage in Iran’s nuclear work, does strengthen diplomatic efforts to dissuade the Tehran Government. It may even topple that Government.

Petrobras Oil Hunter Estrella Fights to Keep Finds for Brazil

(Bloomberg) -- Guilherme Estrella found an undersea lake of oil that may transform Brazil’s economy forever. Now, the exploration chief for Petroleo Brasileiro SA is at the center of a debate over who will profit from it.

At stake is how much of Brazil’s newfound riches will be controlled by the state and how much will end up in the pockets of Exxon Mobil Corp., Royal Dutch Shell Plc and other oil companies hungry for new sources of crude. Estrella wants to make Western oil companies little more than hired help for government-controlled Petrobras, as his company is known.

China's electricity consumption increases 6.67% year-on-year

Data recently released by the China Electricity Council (CEC) showed that from January to November, China (excluding Hong Kong, Macao and Taiwan) consumed 3.153089 trillion kilowatt hours of electricity, an increase of 6.67% year-on-year; of which, the nationwide industrial power consumption was 2.344005 trillion kilowatt hours, an increase of 5.27% year-on-year.

China to Raise Fuel-Oil Consumption Tax Starting 2009

(Bloomberg) -- China, the world’s second-biggest oil user, will increase the fuel-oil consumption tax paid by refiners and importers by eightfold to conserve energy use.

The tax will be raised to 0.8 yuan (12 cents) a liter from 0.1 yuan starting next year, according to a statement on the government’s Web site today.

Private oil firms reserve crude for future

Over 200 million tons of idle oil reserve capacity in some of China's private oil enterprises will be utilized in the future, said an official from the Petroleum Circulation Committee under China General Chamber of Commerce.

Zhao Youshan, committee director, told Dow Jones Newswires that the committee has applied to join the State strategic oil reserve base program in a bid to further expand the country's oil reserves under the current low oil price.

If approved, oil reserves in Chinese private oil enterprises will be used, Zhao said.

Zhao said the present time is a good opportunity for China to boost its strategic petroleum reserves.

Russian lawmakers ratify Caspian gas pipeline deal

MOSCOW (RIA Novosti) - Russia's lower house of parliament ratified an agreement on Friday with Kazakhstan and Turkmenistan on building a natural gas pipeline along the Caspian coast.

Russia, Georgia argue over damaged gas pipeline

MOSCOW (Reuters) - Russia and Georgia blamed each other on Friday for delaying repairs to a pipeline that pumps gas to the Georgian rebel region of South Ossetia, focus of a war between the two countries in August.

Winter temperatures drop to below freezing in Tskhinvali, the region's war-wrecked main city, and Russian Foreign Minister Sergei Lavrov accused ex-Soviet Georgia of dodging its responsibility to restore the town's gas supplies.

"According to our estimates, Georgia could repair the problem very quickly," he told the Russian upper house of parliament.

Norway to use oil wealth to fight financial crisis

OSLO, Norway (AP) -- Norway will spend more of its vast oil wealth next year to fight the economic crisis, part of a package of new stimulus measures to be revealed on Jan. 26, Prime Minister Jens Stoltenberg said Friday.

Norway is a major oil exporter and has put aside more than 2 trillion kroner ($290 billion) in a fund for foreign investment. Normally, the government limits spending of oil wealth to 4 percent of the fund's total value - the expected annual return on investment - to not deplete the fund.

But Stoltenberg said it can spend more in troubled economic times and pledged new economic stimulus measures.

Exhaust Pollution and All That Jazz

A major problem that we are all facing, and it promises to get worse, is the shortage of fossil fuels that is leading to what is called ‘peak oil.’ Peak oil basically is where the maximum production of oil from known sources is less than the demand/consumption.

Various governments are facing up, at last, to the fact that energy, as we currently know and use it, is getting scarcer, so the ‘Greens’ who have been screaming for years that nuclear energy must never be used, and coal is ‘too polluting,’ are all being hushed up because nuclear is actually better than people dying of cold and industry falling apart because it has no power to manufacture products, and so on. And the new systems of using good quality coal, a product of which we still have many millions of tones underground in Europe, promise that with new power stations designed to ‘capture the carbon output,’ we can actually get to the stage where OPEC will be begging us to buy their black liquid gold because they will not have enough storage facilities for it. But what about vehicle exhaust pollution?

John Holdren to be Obama's Science Advisor

In his salad days, Holdren was a paid-up member of The Limits to Growth club. For example, in his 1971 Sierra Club book, Energy: A Crisis in Power, Holdren declared that "it is fair to conclude that under almost any assumptions, the supplies of crude petroleum and natural gas are severely limited. The bulk of energy likely to flow from these sources may have been tapped within the lifetime of many of the present population." More recently, Holdren has declared that the world is not running out of energy and that even "peak oil" is debatable.

Japan launches first solar cargo ship

TOKYO (AFP) – The world's first cargo ship partly propelled by solar power took to the seas on Friday in Japan, aiming to cut fuel costs and carbon emissions when automakers export their products.

Climate change: 'We need to unleash the power of the masses'

Achieving mass mobilisation hinges upon reaching out to people who are currently not engaged or passionate about climate change issues. This means working with civil society groups that have a wide and broad reach such as faith groups and trusted established bodies such as the Scouts and Women's Institute.

It also means creating structures that both support meaningful dialogue across, not simply within interest groups and give individuals a voice through mechanisms such as e-petitions. The conversation and the vote must be brought together, to ensure voice is the product of these all important conversations not the usual isolated opinion.

ANALYSIS - Now China is growing slower, can it grow cleaner?

SHANGHAI/BEIJING (Reuters) - China's dramatic economic slowdown is paying an environmental dividend, slashing emissions levels from the world's biggest greenhouse gas emitter as its highest-carbon industries begin to contract.

The question Beijing will soon face is how it will manage to sustain those curbs once growth is restored. Some say it's moving in the right direction; others are far less certain, as the government, facing a threat to the economic miracle on which its credibility was built, rushes to pump growth up again.

Weather or not, we're getting warmer

Even so-called daily records, as in the first example above, can tell a compelling tale when gathered over a long enough period. For nearly a decade, a friend of mine has been patiently tallying record highs and lows reported by NOAA from many hundreds of stations across the United States. Thus far he has counted about 230,000 record highs and about 110,000 record lows. In some years, such as 2008, the ratio is closer than in others. But every year since 2000 has seen more record highs than lows.

Climate change has soured my once-wholesome love of statistics like these. I find it harder to take pleasure in a virtually snow-free autumn like the one we just saw in much of Colorado. Almost every fall since 2000 has seen less-than-average snowfall in the Denver area. When you contemplate humanity's influence on the atmosphere, the highs and lows - but especially the highs - become much more ominous.

On the local TV station (Austin TX) this morning there was a report on people cutting back on funeral expenses - like selling cemetary plots because burial is too expensive. Choosing cremation vs. burial. Going for the $400 press-board coffin vs. the 10K walnut wood.

Looks like this recession/depression will follow us to the grave.

Looks like the options for future archeologists may be quite limited. No more King Tut's Tombs.

This may sound crass to some, but "the American way of death" should be negotiated. We don't have the resources (or even the land, in some areas) for the traditional methods. And certainly dead bodies don't need elaborate boxes to be buried.

The fashion for trendy greens in the UK is woodland or grassland burial. Cheap, biodegradable coffins with no metal, sometimes just cardboard. The grave is either unmarked (except by GPS reference) or has a tree planted above.

My (sadly young) friend was buried this way.

My wife (who was buried this summer, and passed at age 30 of cancer) was buried in a simple stainless steel urn in a small country cemetary. The most expensive parts of her burial were her funeral, and her tombstone, and combined they cost about $5K. (I went with a highly polished black tombstone, because the lettering is easy to see on black and if it were polished it would withstand the elements a bit better.)

On the flip side, I kept some of her ashes and recently buried a bit under a tree dedicated to her where she worked. I haven't decided what to do with the remainder of her ashes... We'll see.

My sympathies, Geckolizard.

Thank you.

So sorry to hear about this. Best wishes to you Geckolizard.

Truly, our thoughts go with you. You have given us a moment to reflect on the blessings we have and the temporal nature of life. The many memories of her must be a boundless treasure to you.

I'm re-married with a 1 year-old now, but lost my wife in her early thirties. (I'm not very lucky except in love - at least in the long run.) I also split her ashes for various reasons... some were spread in her favorite nature spot.

My sympathies.


Hello VtPeaknik,

Just as FF-compnies are now curtailing new projects, I would be expecting eventually for the same to occur for I-NPK companies-- thus, at some point, I would also expect Peak I-NPK to occur. Obviously, O-NPK will then start ramping faster: we will again recycle human bones, by the untold billions, in a repeat of the earlier days of scavenging the battlefields and graveyards, then dead-heading this O-NPK home.

Since there are No Substitutes for the Elements NPK for leveraging photosynthesis above a Liebig Minimum: we can always cost-justify using depleting FF-energy for running wood chippers and grinding mills to reduce these 'immigrants' to powder for the final application to the desired topsoil square foot. Let's hope that the desperation for NPK doesn't impell some to inject still-living immigrants into the wood-chippers' powerful impellers.

My recent posting that pointed towards possible plateauing of I-NPK vs the rosy trendline projections for 2015 & 2030 is thus worthy of closer scrutiny, especially as the US becomes increasingly reliant upon I-NPK imports. Recall that I-NPK is nothing more than 'transformed energy' suitable for topsoil, but bereft of the benefits of O-NPK for better microbial life and water-retention.

In my 'wild & crazy' imagination: I sometimes picture NYC nearly totally abandoned by humans, but re-inhabited by untold billions of birds and bats roosting in the ruins. These species would be creating naturally-superphosphated guano in far greater quantities than the remaining I-NPK facilities. Their 'footprint' would also be magnitudes less than the 'ecological footprint' of the remaining I-NPK mines and factories.

Picture Wall Street transformed from a pointless center of finance to a real asset as a biophysical center for harvesting O-NPK guano. Will a future Wall Street tycoon be a bat & bird biologist? Please consider that as you hug your bag of NPK today.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

I have a Troybilt "Super Tomahawk" wood chipper. I'd like to perform the experiment of running some roadkill thru it, to see how well it handles flesh & bone, but I'm afraid it would make quite a mess. I hate to try it with my own machine. Maybe I could rent one & try it. Wonder what the rental people would think when I returned it all gummed up with grease & blood..

What are all those birds & bats occupying abandoned skyscrapers supposed to eat, Bob? They can't all be carrion eating cathartids.

Watch the ending of "Fargo"

I learned during a composting workshop that chipper shredders are the recommended method for dealing with all the chickens to kill in case of a bird flu outbreak. You'd probably want to through in some wood during the process to balance C-N ratios for composting.

Hopefully we will have the wisdom to let our fishstock regrow so the seabirds can use this as the guano-generating source like the seabirds did for so long in Nauru and other offshore islands. With pesticide and herbicides outlawed [or Unobtainium]: there should be gazillions of bugs for bats. Let's hope these species don't go extinct, or is that too far-fetched?

I sure hope that all bats don't go extinct. I think that the larger, non-echolocating fruit bats will bite it but I'm hoping that at least some tropical clades of microchiropterans make it thru the anthropogenic mass extinction pulse. I often say that the Cenozoic is depauperate and biotically "boring" compared to the Mesozoic, but there are some wonderful exceptions to this trend and the bats are one of them, along with colubrid snakes, hummingbirds, and the great teleost radiation. On the other hand, most avialean clades & all pterosaurs went extinct at the end-Cretaceous and this extinction pulse will be at least that big. I hope that bats make it thru but wouldn't want to bet on it.

i think bats will make it. arn't the majority of mammal species either bat's or rats?

The cockroaches will survive in spite of all types of pesticides to try to eliminate them.

Well this is news, Fox news not supporting the US government? :-)

FOX Business Network has filed a lawsuit against the United States Treasury Department over failure to provide information on the bailout funds or respond to FBN’s expedited requests filed under the Freedom of Information Act [FOIA].

The initial request, filed on November 25, sought actual data on the use of the bailout funds for American International Group and the Bank of New York Mellon, and an additional request, filed on December 1, sought similar data on the bailout funds for Citigroup, Inc. FBN is asking for the Treasury Department to identify, among other issues, the troubled assets purchased, any collateral extended, and any restrictions placed on these financial institutions for their participation in this program.

How times are changing...

True VK. I can't beleive Fox beat the ACLU to the punch. Maybe they hit the holiday eggnog a little too early this year.

Well only bailouts don't seem to change, it's a global trend. Like the macarena or disco, except this time we are all dancing to the tunes of bankers.

From Marketwatch

The White House is prepared to extend $13.4 billion in loans to troubled Detroit auto makers, with an additional $4 billion likely available in February, The Wall Street Journal reported on Friday. The deal could help General Motors and closely held Chrysler LLC avoid bankruptcy and is contingent on the companies showing they are financially viable by March, the newspaper reported.

"I think under normal circumstances, no question the bankruptcy court is the best way to sort through credit and debt and restructuring," President Bush reportedly said. "These aren't normal circumstances, that's the problem."

I do believe that Bloomberg has sued for the same reason (where is the money going) and justification (FOIA).

It's probably safe to assume that Fox News has a dog in that fight. I would be willing to bet that it is more money than truth that they are after. Good, though.

It shows that however bad the crunch lawyers will be ok.

Short term yes, longer term I doubt it.

I expect Fox News to sue the government much more often after January 20th...

Hi everyone

So I am trying to understand how oil prices can fall as much as they have as quickly as they have. It's making me question the whole "Peal Oil" thing.

I guess my initial thought/realization/question is that oil really is priced at the margin. As someone a few weeks ago gave the "last roll of toilet paper amongs some rich campers" who bid up the price, I understand that last barrel of oil drives up the price. So if demand has dropped a little and that last barrel isn't need price starts dropping. But doesn't that mean that relatively little change in consumer behavior has a major impact? Doesn't that mean that little to moderate actions have radical impacts on mitigating peak oil? Would that point to more of a pumpy plateau?

Wouldn't this dramatic decline in the price of oil be a really bad PR event for Peak Oil? No one is ever going to believe oil production is declining, any future price rises will be blamed on something else. And as people here have been saying, won't there be a real reluctance for companies to start/continue major projects?

I was also thinking about the possibility of a lot of hedge funds out there that are selling short and driving the price down even more?

I was also thinking would this be a good time to be buying oil future call options that are way out of the money, say a strike price of 150 for 3-4 years out?

Just some thoughts as I watch oil prices drop.

The pricing mechanism of the markets is woefully short-sighted, because the players are short-sighted. The price is falling because short-term demand is falling. In the long-term, because of our massive worldwide oil-dependent infrastructure, the price will come back up.

That which cannot be pumped forever, won't.


Id guess you are right on a few points. Some poor guys are sitting on oil contracts, and have to sell now.
Oil companies (US) dont really need these contract, thus price gets very low (selling sand to people in Sahara or something, comes to mind). Look at brent crude and the asian price for other indicators than WTI.

And "peak oil" is taking a beating, yes; but notice, peak oil is about the maximum extraction (per day/month/year) of oil.
I believe the current low price, might make less new oil production come online -> stronger cause to think that
the last few years of oil extraction might be hard to beat say 2013...
The price has less to do with peak oil than one might think, (at least in the middle of wild price swings). The trend over 2-3 years periods is probably up up and away. But who knows? Nobody...

I never saw price as a component of Hubbert's cruve... Has anyone else?

Oil can be 5 cents a barrel and still be post-peak.

Price is a funcion of the economy and future expectations, and as anyone has seen with the Dow in the last few years, price frequently does not reflect reality.

Human behavior is a component of Hubbert's Curve
... and thus price is part of that equation.

When it no longer appears "profitable" to pump more, people will pump less.

No, you are describing Peak Lite. Peak Oil is a purely geophysical problem. It has to do with what the maximum extraction rate **can** be. Yes, above ground issues are involved in actual flows, but they are not reflections of the geological reality nor of technical ability.

As has been noted many times by many different people, Peak Oil is almost certainly now because after pumping out another 200 - 250 billion barrels out of the ground by 2020, it will be nigh on impossible to get flow rates back up above where they were for 2008.

Again, above ground factors play a role in shaping the peak profile, but they have nothing to do with the fact that there is a rise, peak and fall. They do not define what Peak Oil is.


Said by ccpo:
Peak Oil is a purely geophysical problem.

No, it is not. The concept that we extract the easy oil first and are stuck with the expensive, difficult, low ERoEI oil during the second half of the curve, is very much based on an economic model. Only a fool with money would have developed offshore oil rigs while competing with light sweet Oklahoma crude due to the massive difference in cost. Imagine the shape of the Hubbert curve if our economic model constructed by an insane king forced us to develop the most difficult, costly, low ERoEI wells first. It would be very asymmetric with the drop from the peak being nearly vertical.

The concept that we extract the easy oil first and are stuck with the expensive, difficult, low ERoEI oil during the second half of the curve, is very much based on an economic model.

No, it's common sense. Economists can claim they invented common sense, but that jsut shows how ridiculous their endeavors are. Economics is B.S. Always has been, likely always will be.

Still, what you describe is also not Peak Oil. Peal Oil is simply this: rate of extraction will rise, peak, and fall, usually roughly approximating a bell curve. The bell curve is far too pervasive to be considered a purely economic phenomenon. Also, your point about EROEI *IS* an economic designation. Truly, had people chosen to, they could have waited to discover all oil then developed the hardest to do first.

So, like I said, there are things that affect the shape and the prices and even flow rate, but most of them have not much to do with the simple notion of what Peak Oil is.


Peak oil = peak credit

Peak credit has a far bigger immediate impact on prices than the oil shortage.

I expect the credit unravel (and attendant problems) will continue, with ups and down, and be a much bigger newspaper story than the lack of oil.

Not sure about the math. I've seen that "banks" have written off just over a trillion dollars, while at the same time the Fed has expanded its balance sheet by 2 trillion dollars. Another 15+ billion dollar loan today to Chevy.

I would argue that credit is increasing VERY rapidly. The prudent bear has a weekly column that adds up the debt and money supply numbers. The year over year changes, with the exception of ABS, is way up. Total household debt this year is up. The fed debt is way up.

Bank Credit surged $75.7bn to $9.980 TN (week of 12/3). Bank Credit has expanded $767bn y-t-d, or 8.8% annualized. Bank Credit has expanded $588bn over the past 13 weeks

Total Commercial Paper outstanding surged $48.6bn this week to an 11-week high $1.700 TN

Federal Reserve Credit jumped $123.7bn to a record $2.241 TN, with a historic 13-wk increase of $1.353 Trillion. Fed Credit has expanded $1.368 TN y-t-d (163% annualized)

I'm just not seeing the peak credit.

Price is also a function of the velocity of money. Money supply is not expanding as quickly as velocity is slowing.

But could this change quickly and cause hyperinflation? Debates abound.

But expanding nonetheless.

M2 (narrow) "money" supply jumped $37bn to a record $7.986 TN (week of 12/1). Narrow "money" has expanded $523bn y-t-d, or 7.6% annualized.

Peak oil will cause a lot of the additional credit not to get paid back. The timing may not be precisely the same, but without reasonable oil supplies you don't get growth, and without growth, payback of principal plus interest doesn't work in the aggregate (some borrowers will do OK, but on average, there will be a lot of defaults).

So peak oil will cause peak credit, even if we are trying our best to expand credit. In not to long, all of this will fall flat, one way or the other.

Exactly and the number one place we need credit esp long term credit is for housing and the automobiles. The deflation of long term debts serves to give us a bit of a buffer for the rest of the economy as people can happily default on long term debt for quite a while.

Because of the 30 year boom in housing prices we have plenty of longer term debt to default on.

For the 50% of the people that own their homes all that happens is they see ever shrinking equity and the chances of retirement fade as they hold out for the highest price they can get.
Few will be smart enough to sell now and pocket the money then retire in a few years.

The government will backstop the continues level of mortgage defaults as long as it can for the people that actually own their homes they are simply losing now untapped equity with the end of MEW's.

I'm saying that we will spend quite a bit of time several years at least effectively stuck pretty much where we are right now with the exception that ever higher commodity prices will consitently decrease the amount people can pay for homes and a consistent unemployment rate of 8-10% will result in stagnant wages.

This goes on until the US Government defaults or down payment requirements for homes approach 100% either one finally stops the spiral. My bet is on the government defaulting before downpayment requirements ever rise enough to stop the downward price spiral.

In effect by not choosing to make home loans very tough to get and stabalizing housing prices they are going to kill the entire economy.

If we went the other route and say raised downpayment requirments to 50% we would see a swift and quick fall in home prices. People would be able to buy homes many for cash then as commodity prices rose they would simply lose some equity just like people that owned their homes outright. Cash flow i.e paying the small mortgage would actually be less than renting
so they are better able to withstand high oil prices.

But all this really means is basically transitioning rapidly to a very low or zero level of fractional reserve lending with ever larger cash payments rapidly removing leverage from the system.

So in my opinion thats the only route that allows our current system to escape without collapse aggressive increases in down payment requirements or the reverse rapidly reducing the amount your able to borrow using asset backed loans puts a bottom in. Real asset price declines replace defaulting debt as the way the economy shrinks vs peak oil but this decline is nominally less than renting so its not a full loss. Increasing interest rates across the board might also be important but in my opinion all thats required is a large increase in the amount of capitol required for a loan. This would allow us to wind down fractional reserve lending in a orderly manner.

I just thought of another way to look at the situation. The US is broke but homeowners have trillions in equity tied up in their homes certainly the ones with paid off homes do.

How do you turn that equity into cash if the homeowner won't HELOC and is unwilling to sell.
Well if no one else has money then home prices fall and cost of housing falls this is effectively the same as all the "broke" people extracting the remaining large pool of housing equity to stay alive. We can and will do this before we allow our economy to collapse.

And its done in the simplest manner by devaluing houses also of course raising taxes at the same time works to the same end. At the end of the day very little equity will be left in most homes. That does not change their value as shelter nor the fact that if you own outright your not paying rent but as a store of value homes are probably going to get slaughtered and there is nothing a homeowner can do about it.

To be more precise Peak Energy Profit will cause Peak Credit. As the EROEI continues to go down, even if we produce more energy from coal or oil, the economy will not be able to have real (non-bubble) economic growth as the available energy will still be lower.

Previously, EROEI was declining, but production was increasing more so that energy profit could still go up and growth could go on. Now (production plateau) production growth occurs at the expense of EROEI. It is impractical to maintain growth under such conditions. Peak oil means not only peak production, but also that EROEI is dropping as well as all the easy stuff has been taken.

I think putting it in terms of Peak Energy Profit makes it easier for someone with traditional economical thinking to understand.

Previously, EROEI was declining, but production was increasing more so that energy profit could still go up and growth could go on. Now (production plateau) production growth occurs at the expense of EROEI. It is impractical to maintain growth under such conditions. Peak oil means not only peak production, but also that EROEI is dropping as well as all the easy stuff has been taken.

The concept that EROEI will inevitably decline seems to be accepted without question by several TOD posters.

However, consider how efficient modern wind turbines have become:

Within its 20-year design lifetime a wind turbine will supply at least 80 times the energy spent in its manufacture, installation, operation, maintenance and scrapping.

The energy balance of modern wind turbines

Read the entire report for a very detailed EROEI analysis.

Doomer fantasies could yet come to pass.

But, IMHO, it will be social dysfunction that creates an energy crisis rather than the inverse.

The aggregate energy of the few windmills we are putting up is just a fraction of the energy that will be removed from the system as oil declines.

In relative terms, your point is like saying "I expect personally to spend 20% more next year and that will make up for the cutback in spending of the whole U.S."

That's a clearly absurd notion, as is your assertion that a few 80 EROEI windmills are going to make a material difference.

The reason is because of the incredible energy density of oil, the massive quantity of it we are using and the small amount of wind energy currently in place or expected to grow before the bottom drops out of the economy (50% and greater unemployment).

80 EROEI wind turbines simply make no difference in the big scheme of things.

So far, wind electrical generation is tracking the historic growth curve of nuclear power. IMHO, wind can grow to a substantial fraction (say 7% to 10% of all US generation) within a decade with a massive effort (no more on again, off again incentives).

Will this "save us" from Peak Oil ?

No, but it could be a worthwhile silver BB.

After all, no one action will save us. All the silver BBs together will just make things better than they would otherwise be.

Best Hopes for many silver BBs,


Agreed. A worthwhile silver bullet. Unfortunately, all the silver bullets combined do not make up for the energy we are about to lose.

True, and not good news for BAU. But a quite worthwhile life can be created with much less energy use.

Something that we will likely be forced to deal with. I (and you also) have made efforts to point towards what that "better choice" might be, and how we can get there.

Best Hopes for Energy Efficiency and Better Societies,


The EROEI analysis for wind assumes energy equivalence for different inputs, i.e. there is no consideration of energy quality but only total amount of energy used. The FF subsidy of the process is presumably believed to be replacable with other energy sources such as electricity provided the MJ figure is the same.

How about an EROEI analysis that looks at energy inputs provided entirely by wind generated electricity? i.e. what is the truly self-replicating EROEI for turbines? You can use that electricity to make liquid fuel (e.g. hydrogen) if you like but the renwable electricity has to be the source for all processes (digging, construction, transport, maintainance, disposal etc) involved. No FF's allowed.

Is it even possible to do this analysis when our entire infrastructure is permeated with FF energy? If it can be done do you still get EROEI of 80?

Assuming EROEI will be the same without FF's is IMO at best a guess and at worst a dangerous delusion.


Other problems with wind are:

Windmills are not 'instead of' existing electricity infrastructure but 'as well as' - because the wind doesn't blow continuously.

The energy invested in making a windmill and it's infrastructure is made before you get any energy back - any windmills installed in the next few years will be built using fossil fuels, and if the windmill numbers are ramped up too quickly then for several years there is NO NET ENERGY GAIN just a massive extra use of the fossil fuels. The same is also true of adequate amounts of any new energy infrastructure, including nuclear, we will likely have massive new FF demand at the same time as a massive fall in FF supply, I doubt that is a workable plan.

We cannot burn what is not available.

The FF to RAPIDLY expand WTs (energy payback is on order of 4 months after generation starts#) will be diverted from other consumption. So a very steep growth curve is required to keep WTs in toto energy neutral or energy negative.

Build more Exurban McMansions or more WTs ? Both consume FF ...

# 4 months after generation starts could be almost a year since the steel was smelted for the tower.

The Empire State building (erected in the Great Depression) was built with steel girders still warm to the touch from the steel mills. Many WT towers are fabricated today in Korea, etc. One can only guess as to the time delay between iron mining, smelting, etc. and commercial generation in an exponential "Wind Rush".

However, consider how efficient modern wind turbines have become:

While I think economics is largely a joke (looking backwards not a bad tool, looking forward? Nearly useless), it has a number of useful tools. One of them that helps illuminate sometimes complex-seeming issues is the Law of Diminishing Returns. Were we at the end of the development of wind power and efficiency could be proven to rise inexorably, I might agree with you, but we aren't and it hasn't. And won't.

But, IMHO, it will be social dysfunction that creates an energy crisis rather than the inverse.

1. Chicken and egg.

2. We are already in the energy crisis (witness the rise in prices from '03 to '08, and the analyses that shows those prices were a cause of the end of the housing bubble, etc.)


Peak Credit = Peak oil.

When Banks write off 1 trillion dollars because of fractional reserve banking their lending capacity declines from anywhere between 10 trillion to 20 trillion (Assuming a reserve ratio of 10% and 5%)

In the current market environment, if you're a smart bank and you want to survive than you don't want to lend.

If you're a smart borrower you don't want to borrow. You should be paying down your debt.

All money is loaned into existence, the FED can create all the money it wants but if it doesn't get loaned out, than we can't have hyperinflation unless it decides to monetize the debt, which it won't as the bond investors will slaughter the market, causing interest rates to rise and thus crashing the system.

A deflation scenario allows the game to last a little longer.

By deflation I mean the NET contraction of money and credit. So even if money supply is positive, we can still have deflation due to deteriorating credit.

The FED is all in, it's playing its last cards. As Ilargi put it, "they are gambling with our lives."

I see your 5 Trillion and raise you a Quadrillion

The Fed by definition can never be all in. They can monetize any asset they choose and at the moment are doing just that. They can change the nominal price level at will. In the end there need not be any bond investors at all 'to slaughter the market' because the Fed can buy their bonds with newly created dollars whose supply is unlimited.
Whether monetizing vast quantities of assets is a good idea or not is certainly open to discussion but the idea that there is some systemic reason why it can not occur in principal is incorrect.

Agreed. Consumption is not going to fall meaningfully at these prices. Likely it will creep back up. I have taken 2 significant vehicle trips in the 2 weeks that I would not have taken last year. People will use gas if it is cheap.


People use less fuel when they become unemployed and businesses use less fuel when consumers do not buy their products, such as automobiles and new houses. Crude oil is used to make more than gasoline.

Sure, but the relationship is not even close to linear. People don't just sit at home when they get laid off. Economic disruption also causes a lot of scurrying around that is not necessarily very efficient. ie if someone has a job they may get in a groove w/ using public transportation ie knowing just when such and such bus is going to come etc. whereas if someone has job interview, they are more likely to drive. Or they might have to make 500 different trips to Kinkos and Men's Wearhouse. Or a person who takes a certain trip for a commission or % profit may have to take more such trips to get by than they did before. Dislocation may cause consumption as with the Joads. At a certain point price is going to add as much to consumption as economic problems take away. Back in the early nineties when gas was 58c , it was practically cheaper to drive than to sit at home!


I've done these sorts of thought experiments and the results are murky at best.

Its basically a wash. I now think its something quite similar to velocity of money. Once people become accustomed to a certain level of mobility it actually does not change that much.

Two thoughts on oil prices -

1. Lower oil price does not negate Peak Oil. Peak Oil is a max production number of barrels per day. Lower price may actually cause production to drop faster because new projects and infrastructure will be cancelled without funding from oil profits. After the recession is over and demand rises again, prices will rise fast.

2. Lower oil prices may be a strategy to cripple Iran, Russia and other non-friendly powers. Their governments depend on oil profits to survive. Iran is cutting all exports while the price is low and saving it up for later.

P.S. - Until new alterntives come online, oil prices will be in a continual see-saw of ups and downs. A very risky investment.

Thanks, that is something I forgot to mention. I guess oil prices can go back up as fast as they have come down.

Lower prices hardly negate Peak Oil, indeed, and other posters have made more detailed comments in past threads along the lines of how falling oil prices are going to lock in Peak Oil by destroying projects in the works.


2. Lower oil prices may be a strategy to cripple Iran, Russia and other non-friendly powers. Their governments oon oil profits to survive. Iran is cutting all exports while the price is low and saving it up for later.

Ronald Regan supposedly bankrupted the Soviet Union and caused it to collapse. Are you saying that something like this is being tried again?

And it sort of looks like the "friendly" powers are about to bankrupt themselves in the process. Where do you think this will come down?

I don't know, I think I'd still rather have an economy based on grain exports, mining, manufacturing, and oil wells than paper pushing.

No one is ever going to believe oil production is declining, any future price rises will be blamed on something else.

Of course, this will largely be true no matter what. Part of the problem is that price information is instantaneous and accurate. Production data tend to be noisy (especially in the short term), delayed and subject to revision.

Also, the finite world concept violates most people's concept of how the world works--which is that we can have an infinite rate of increase in our consumption of a finite fossil fuel resource base.

So, despite the fact that we are going to almost certainly see three years of net oil exports below the 2005 rate, three years of flat crude oil production and two years of flat total liquids production, with a bump upward in 2008--which Simmons attributes to dying oil fields, as their gas caps are being blown down--the increase in oil prices was "speculation" while the decline in oil prices is due to Peak Oilers being wrong. IMO, oil prices went up as importers bid for declining net oil exports--until demand fell in the second half of 2008, when the bottom dropped out of the economy.

Our best case is the top five net oil exporters, who (net) exported about 24 mbpd in 2005, will be down to about 18 mbpd by 2012.

Hey WT,

Many TODers seam to be loosing faith in how the diminishing oil exports will effect us all in the future. Very short time references being used, I am afraid. I think that the "Glut" of oil on the export market will run it's course in a year. Then prices will return, and crash demand again. Each of these cycles will be shorter in duration and with ever lower peaks.

I visualize a bouncing ball (as oil exports). The first bounce is long and high, almost back to the starting point. But, each successive bounce will bounce shorter and take less time to cycle.

I would imagine that after three or four bounces of oil production (and oil exports), the reality might sink in. Especially when the time between bounces is shorter than the public's memory loss.

Somewhere around bounce two or three is where the resource wars will really kick in. Of course, some other rationale will be found for them.


Sadly, likely Act 1 of many.

See also Kuwait
See also Iran-Iraq

Let's remember that we're still in peak plateau land. The sled ride downslope hasn't really even started yet.

That is likely true for production. However the decline in EROEI which has been gaining momentum of late, has started to reduce the net energy available to the economy. Even if production were to stay level (roughly speaking) or even increase marginally, I suspect the net effect of decreasing EROEI will still mean less actual energy available to do work.

As the global economy has gone into contraction, demand for energy has declined. So the effect will remain masked until there is sufficient recovery of demand OR, more likely, the reduction in supply due to restriction of oil extraction. Projects that might have kept supply up are being postponed due to the price of oil being low. What could happen is overshoot in the lowering of production, relative to future potential demand, could drive the price upward (significantly) again (and there remains a huge question mark over the Saudis' ability to adjust their production upward to modulate prices). Projects in non-conventional liquids then would look attractive but these have really low EROEI, hence would further reduce the net energy available.

This set of feedbacks, with the markets' inherent lags and our fundamental misunderstanding of the nature of money, will all act to create increasing amplitudes until the system blows up.

All the while, net energy is heading south because we failed to invest a significant proportion of current net energy into alternative source and infrastructure development. Such sources will never compensate for the flow of energy we are used to from conventional fossil fuels, but they would at least mitigate the downward spiral of energy production until we find a steady-state economy that can sustain itself.

Energy flow, energy production, monetary values, economic activity... All of these are interrelated systemically. We need to grasp them as components of a complex system (and don't leave out human nature in the mix!)

Question Everything


"I visualize a bouncing ball (as oil exports). The first bounce is long and high, almost back to the starting point. But, each successive bounce will bounce shorter and take less time to cycle."

an analysis of oil price(monthly wti), and nothing else, vs time seems to show an increasing amplitude and decreasing cycle length( increasing frequency). this oscillation started about 8-'06 as far as i can tell, more than a year of oil priced lower than the longer term(6 yr) trend.

the current price (amplitude) exceeds the infamous $ 147 of july '08($134 monthly avg wti price).

I am a visual kind of guy. could you give a chart on that?

a fit of price(wti monthly) vs time for 2002 through 2008.10 gives:

p= 12.90 + 1.05t

t is in months with r=0.91

and here are the residuals(actual minus estimate)

2006.08 2.59
2006.09 -7.69
2006.10 -13.65
2006.11 -14.51
2006.12 -12.67
2007.01 -21.17
2007.02 -17.44
2007.03 -17.33
2007.04 -14.84
2007.05 -16.41
2007.06 -13.42
2007.07 -7.84
2007.08 -10.64
2007.09 -4.14
2007.10 0.71
2007.11 8.63
2007.12 4.50
2008.01 4.74
2008.02 6.11
2008.03 15.12
2008.04 21.21
2008.05 32.98
2008.06 40.42
2008.07 38.86
2008.08 21.11
2008.09 7.51
2008.10 -21.04
2008.11 -41.39
2008.12 -60 est.

and maybe someone more nimble in graphing can put this in a nice chart.

The U.S. dollar began increasing in value in July 2008 which contributed to the decline in the price of crude oil. I think the banks began increasing their loan loss reserves in preparation to deal with the subprime crisis making the dollar scarce.

So if demand has dropped a little and that last barrel isn't need price starts dropping. But doesn't that mean that relatively little change in consumer behavior has a major impact?

Yes, little changes have major impact on prices.

Doesn't that mean that little to moderate actions have radical impacts on mitigating peak oil?

Not really. It's true that on the demand side there are few things that could alleviate the situation in the short to medium term, but the problem will aggravate in the future as the decline continues. It's like getting a small pay cut every year - the first few years you may forego going to movies or an a vacation; but sometime in the future you may not be able to afford the essentials - housing, food etc.

Its early so I may come off sounding like a jerk...

This nonsense has got to stop. Declining oil production is not the tooth-fairy or Santa Claus. It is not something you "believe" in. It is a cold, hard fact. The numbers dont lie, people do. They will lie to themselves to make themselves feel better. "Oh look, oil production seems to have reached a plateau. But hey oil prices are dropping so everything must be ok!".

No, everything is not ok. Millions of people have lost and are going to lose their jobs. The Saudis and the Russians are going to lose their ability to subsidize all that they do. There will be many cascading events resulting from declining oil production.


That's exactly what I think whenever I hear all this nonsense cheerleading about low oil prices on CNBC et al.

The bright shiny object (cheap oil) is trying to be used to distract the masses from the black hole sucking them in (the Greater Depression)...

Unfortunately for TPTB it becomes a whole lot less distracting once your audience has lost their job, health insurance, they're upside down on a mortgage etc etc.

Their probably not all that excited that cheap gas will allow them to run around in their giant SUV a bit cheaper - there are much bigger financial issues in their lives that can no longer just be ignored.

And the businesses and freight lines won't be impacted all that much by a decrease in fuel prices - the damage has been done... who are they shipping "stuff" to - who's buying things other than essentials ? Who cares if it can be shipped a bit cheaper - again the damage has been done.

The "consumer" was long ago tapped out - the credit crisis is just where they had this fact plainly revealed to them.

The ultimate issue for most of us j6p's is not the raw price but the affordability.

If you don't have a job, $1.50 gas is no more affordable then the $4.00 gas you paid for when you had a job.

We need an affordability index. Price alone does not tell the whole story.

I had the misfortune of channel surfing over to Jim Cramer and his ludicrous show 'Mad Money' while I was sick as a dog in my hotel room the other day. He was ringing his bells and cuing up his sound effect machines to praise the wonders of crashing oil prices to the high heavens while extolling the masses to think positively and thus the economy will bounce back soon stronger than ever!

I could only suffer about five minutes of his inane drivel before I had to visit the bathroom again.

Sheer lunacy.

shawnott -- there are different ways to look at the situation. Of course the day's headlines get most of the attention. It's that 24 hour news cycle beating us every time we turn around. First, current oil prices are not cheap. Nor are the expensive. They are $X per barrel. I have oil projects that will work just fine at $40 bbl. Many of the very expensive/risky projects won't. Companies don't change their plans based upon daily changes. They use a pricing model that projects value over a 7 to 10 year time frame. Certainly those projections are lower today then they were 6 months ago. But 6 months ago companies were typically using $60 - $80 for the initial price of oil when a project came on line. In fact many actually lowered the price projection for years 2 and 3 about $10 per bbl and then allowed a small inflation factor for the following years. Current prices are lower then expectation but not as much as many would guess.

Also consider income instead of a daily price. They aren't sitting around in OPEC crying too hard at the moment despite what the headlines might say. From 1 Jan thru 30 June of this year OPEC income exceeded more than their entire 2007 income and way more then their 2006 income and way, way more then their 2005 income. Essentially, OPEC could have been giving their oil away for free since July and they still would have made more than last year. Sure, plans have been changed. Just like you'll change your spending plan because this year's Christmas bonus is only $50k and not the $100k you thought it was going to be.

There are other aspects that will surprise most: potential significant increases in NG prices over the next couple of years. The economic downturn has put the skids on much of the unconventional NG plays in the US. I consult for one of the biggest players and they just cut their 2009 budget from $1.4 billion to under $700 million. We’ll be cutting loose about 40% of our drilling rigs over the next 2 months. We’ll be spending from cash flow only. We have a good credit line but don’t want to combine that expense with pricing uncertainty. If you’re not familiar, the big increase in unconventional NG drilling over the last few years has significantly increased supplies. But there’s a big downside to these plays: they decline very rapidly. Wells can drop 60% to 80% in the first couple of years or so. It has only been the ever increasing drilling rate that has kept production up. But with the decreased drilling activity we’ll see a rapid drop in NG deliverability. Probably won’t be too noticeable this winter but during the next couple of heating season it will be IMO even if demand stays down or even decreases. That’s not a good prospect for the future: a worsening economy meeting increased NG (and all its associated products like electricity) prices.

The average US spot price is going to finish up 2008 just barely shy of $100, and right now the average futures price for 2009 is right around $50. I still think that it is likely that the current monthly price decline may not even show up in the annual data, if the 2009 average price is higher than 2008--as we see a combination of voluntary + involuntary net export reductions.

So what did you think Peak Oil was going to look like?

I know I guessed wrong on everything but the timing(Drumbeat Oct 22 2007 I predicted Jan-Mar 2009). It's looking like we will find out what the world going looks like with 5mbpd less oil being exported within the next 6 months.

Will growth ever return to Oil Production?

Yes, I think the world is going to follow the Russia example (see chart Oilwatch monthly, page 18). Falling off this level (74mbpd C&C), down as much as 40%(i hope not) in the next few years and then it will start growing again but never reaching above 70 mbpd.

It's going to be a E ticket ride, have fun.



First, let me just say that I think it is a good thing to question your assumptions. However, I really think these are some things you need to consider:

1. The oil that is left in the ground is increasingly expensive to get out.

2. As the economy recovers (eventually), demand will have to come back.

3. As developing economies grow, their growing middle classes and industries will demand more oil.

4. Keep in mind that oil is a "boom and bust" cyclical industry. What is happening now is typical for this sector.

5. Seventy percent of all oil is used for transportation. Therefore, even if you use the maximum capacity of alternative energy sources available, it will not alleviate the central problem unless we can change the transportation paradigm.

I still think that Peak Oil (namely that oil, as it becomes more expensive to extract and refine, will go up in price), is correct. The analysis of EROEI is still relevant.

You may want to take a look at this post from Calculated Risk and the comments:

Calculated Risk: Oil Prices: Cliff Diving

In the short term, prices probably will stay low due to the destruction of demand with high unemployment and the bursting of the credit bubble (which makes finding funding for oil exploration next to impossible). Don't let the short term issues take your eyes off of the Big Picture and long-term problems with energy.

I really think this has more to do with a lack of credit than a destruction of demand. Businesses seems to be purchasing on credit.

Same in Agriculture, farmers need credit, but the seller wants cash, because the seller doesn't trust the credit. so cash is king right now. no cash, no sale.

Until credit is restored somewhat in a half way fashion, cash will be king.

Last I checked, world population is still growing. This can't stay low forever. a rebound will happen like a rubberband or that bouncing ball concept mentioned earlier, until there is a happy medium in price. then it just goes up from there.

But doesn't that mean that relatively little change in consumer behavior has a major impact? Doesn't that mean that little to moderate actions have radical impacts on mitigating peak oil?

Relatively little change in consumer behavior has a major impact short-term on price, because you get about a 15% change in price for a 1% change in demand relative to supply.

But the crash in our economy isn't really a relatively little change in consumer behavior--our manufacturing, for example, is grinding to a halt. Our diesel consumption has dropped to negative 4.5% yoy, and that drop has been over just a few months. If I remember correctly, it was up 2ish% yoy as of last summer.

The only thing holding the price up even as high as it is right now is 1.) the decline rate, 2.) OPEC cuts, to the extent people believe they will actually be carried out, and 3.) producer resistance. If you watch the markets all day, you can see pretty clearly that there is only trivial commercial demand in the markets right now.

The problem with peak oil is that as the decline rate gets higher and higher, reduced supply soon catches up to reduced demand. Then you have to find another way to reduce demand further. Essentially you wipe out low-utility (low usefulness) uses of oil and sustain high-utility uses of oil. The higher the utility of your remaining oil usage, the higher the price can go.

Or, you can do what we're doing in the U.S., and just shut down the lives of the bottom income tiers. Then low-utility uses of oil can go on cheaply among the upper economic classes. When supply gets tight again, just cut off the lives of the latest group on the bottom.

Peak oil is always a function of price and utility/politics in combination with geology, not just geology.

Smart, high-utility uses of energy will tend to lead to a steadily increasing price of oil and a better outcome for all people. Stupid low-utility uses of energy will tend to lead to low oil prices and a steady increase in impoverishment and misery. The one thing you're not likely to get in either case is an increase in oil supply, which is why it's called peak oil.

You mention buying out of the money calls. The thing you have to realize is that you're betting not only on the reality of peak oil, but more importantly on what the key players in the poker game will do in response to peak oil.

The system we all live in, at least in the "West" (define however) is a race to the bottom, with the bottom then marginalized and rendered invisible.

How, in the politics of the "free market" (as defined by "the West") do we get to "smart, high-utility uses of energy"?

Smart, high-utility uses of energy will tend to lead to a steadily increasing price of oil and a better outcome for all people. Stupid low-utility uses of energy will tend to lead to low oil prices and a steady increase in impoverishment and misery.

That would seem to require planning, and some central direction. Both anathema to the Chicago School. (And Obama, as the administration seems to be shaping up.)

Right on the button, Moe.

From time to time, someone follows a post with "post of the day" accolade.

This one is post of the month, in my sometimes less than humble opinion.

"You mention buying out of the money calls. The thing you have to realize is that you're betting not only on the reality of peak oil, but more importantly on what the key players in the poker game will do in response to peak oil."

i dont know that i agree with that statement, one can make a profit buying out of the money calls and selling not-quite-so-out-of-the- money calls.
i dont put that much focus on peak oil, except to say that peak oil is manifesting itself with price fluctuations. and imo, you dont have to be right on the timing of po or what the major players will do, just buy low and sell high. granted, there is risk in that. there is also risk in doing nothing.

Regarding low prices, as this economic mess intensifies, or after a new peak price and crash in the future, I wonder if we'll be able to sustain the distribution/retail system we have at present. So though oil by the barrel may fall again, retail price at the pump, when you can find them, is still high. Maybe we won't retreat to a Asian situation where you buy fuel off the shelf in cans, but fueling stations will be very large, and centrally located. In rural locations, I envision perhaps one jobber for the county, and he may charge the moon for small fillups, and have regular customers preorder for the month.

As far a peak oil goes as noted by a number of posters if we are reasonably correct about depletion rates and assuming that if prices rise again they won't spur as much development we can be pretty certain that peak oil production is now behind us. Other posters noted this. More worrisome is actually Natural Gas which is the real problem. Its suffered the price drop and most new NG sources have high depletion rates. Other posters have noted this.

Understand that we where running flat out to stay on a plateau any pull back in extraction efforts for both oil and NG should create a wedge that we won't be able to overcome.

Next whats important is the change in demand and this one is really hard to calculate esp going forward into the future. In my model collapsing industries play a large role in the decline in demand. Thus the collapse of the general construction industry played the predominate role in actual demand changes since 2005. Residential Real Estate is effectively dead further changes in the number of homes constructed will have little effect on oil usage going forward. The associated pyramid of support industries is still collapsing. However countering this we are seeing buying pick up in areas that have dropped into the affordable price ranges. Plenty of demand seems to exist for houses that are priced withing traditional 3X income price ranges. This will place support under some of the associated housing industries. Commercial Real Estate is just now starting to really crash and it really has no support as it goes down expect a further increment in reduced demand.

The next industry thats going down is of course the auto industry again as it collapses it will remove a increment of demand.

Now these are generally big ticket industries in the sense the products are expensive and financed with long term debt and they fall the financial industry takes a huge hit and the nominal GDP drops like a stone. Defaults on these expensive items as you have seen are bring the financial industry to its knees. The fact we where in a large bubble simply amplifies the effect.

However a counter current exists that will amplify over the next few years. As consumers pull back from purchasing big ticket items their cash flow situation improves dramatically.
Where I live in California the difference between purchasing a home and renting it is 2000 dollars a month. Thats a lot of money lots of places have varying degrees of fairly extreme differentials between owning and renting. And in a lot of places rents are falling as the combination of people attempting to hold real estate and get some cash flow and unemployment flood the rental market. Thus even as housing prices fall the ability to profitably purchase a house and rent it falls. Also of course a lot of the newer homes are McMansions which make poor rental properties.

In any case although at first we see a pullback in Consumer spending what we should see as the stretched out consumer repudiates its current long term debt and refuses to take on new debt beyond his means is a increasingly good balance sheet. Their ability to purchase small consumer goods improves and day to day living becomes manageable for most.
Maxed out credit cards are a big problem but generally if someone defaults on their housing debt they will default on their credit cards and move to cash. This dash to cash makes it difficult to track the status of the economy but overall even as we continue to get dire info about the economy the consumer is rebuilding his ability to purchase items that don't require debt.

So wither demand ?
Well it seems that as the collapse of housing construction, commercial real estate and the auto industry fade then we are left with a economy that spends a lot less money but its not clear that demand has changed that much. The consumer still goes to the mall but buys one item at half price vs filling the car with junk. The wealthier consumer buys junk in the mall and not a house etc. The poorest go to discount stores and into the cash economy of used goods and becomes difficult to track.

And of course as I said earlier as housing becomes affordable all evidence is that purchasing picks up. The biggest problem with housing is simply affordability.

So using this model of collapsing industries what we see is a large slowdown up front as the big long term debt based industries collapse some permanent demand destruction then a increasingly robust "day to day" economy form certainly spending a lot less money but with demand changes for oil difficult to determine and basically flat as you take into account all the factors.

So in my opinion given today price the trend of falling production is pretty much set in stone. While the purchasing power of the consumer for small ticket items is improving thus their ability to handle expensive gasoline prices is actually improving not declining as they reduce the amount of long term debt they carry.

That seem to be the big picture trend and price will be determined as the supply and demand curves shape up. Right now they could literally be anywhere on the curve the uncertainty is enormous and worse given the financial problems a total collapse is a real possibility at the moment these expectations coupled with a obvious short term glut in oil that is still being worked through will control prices under the short term. Although hard to calculate one would think that given the chance of effectively the end of the world as we know is now on the table it would have a big damper on all markets. Fear uncertainty and doubt are at the moment the biggest driver in all the worlds markets not just oil. A lot of people are claiming speculation but its deeper than that many transactions that are reasonable in a stable economy are not happening right now. Low risk transactions that are profitable for all parties and make sense by any standard business metric that are not bubbly are failing to occur. I lived through the dot.com crash and I say the same thing happen companies with excellent cash flow paying customers and good products where denied credit along with the most ridiculous ones. The baby was thrown out with the bath water.

This will clear over time.

And back to supply and demand everything I can find thats credible points to demand and supply being basically in balance in general on the demand side the economy seems to have retreated to 2003-2004 levels relentless population growth serves to buffer the underlying demand for commodities used in day to day living making further drops difficult globally.

From this current article.

This gives a demand change of 75 mbd of oil to about 72 mbd. Thus about a 3mbd glut if you will from maximum production. From current levels of about 73 mbd the remaining glut seems to be about 1mbd.

Looking back at historical prices.


You can read off the price for 2003-2004 to be 32-42 dollars a barrel. Thus my guess that demand is down to 2003-2004 levels matches very well with current prices and current supply. And in 2004 we where seeing steep increases in production on the way up.

But now we are on the down slope so the difference between < 50 dollar oil and some unknown price point is a glut of 1mbd. This is well within the ability of OPEC and Russia to remove from the market if so they should be able to set the oil price at any level. The downslope will not match the upslope. In time given that investment in oil has slowed one would expect this gap to narrow and the need to curtail production to get a price to lessen.

The big variable is how low can demand fall from where its at today ? Using my above arguments I'm saying that its probably already in the flattening stage and further demand is more robust going forward since as daily expenses arise more consumers will simply defer purchasing big ticket items such as homes and cars and others will continue to default.
And again relentless increases in population will serve to bolster demand for food and oil.
Various government actions to prop up economies should prevent collapse in most areas.

Looking back to past postings I predicted we would see a sharp drop in oil production starting in 2008 on the order of 2-4 mbd without regard to price or any other criteria.
This prediction is impossible to figure right now given the recent economic collapse.
I also predicted our economies would founder this year. I'm not the only one who saw that coming and one could argue I got lucky. However we have the nasty problem that if I was right about a steep drop in oil production then we are in for a very nasty surprise in 2009 we quickly go from a nominal glut of about 1mbd that can be controlled via OPEC cuts to real supply shortfalls.

Now whats really interesting to me at least is this fits perfectly with my overall model of complex systems in collapse they will work to make their true state impossible to determine.
This means the world will never really know when we transition from a price level determined by OPEC production levels and one determined by real declines. The transition is perfectly hidden. This ability of complex systems to somehow manage to hide their true state is astounding yet seems to be a real and common result.

Just and addendum one example that shows that consumer spending may already be bottoming out.


With MEW now basically zero its decline will no longer result in drops in consumer spending levels. A lot of similar economic indicators are starting to bottom out.

And I forgot to address unemployment well I'm suggesting that the economic level has fallen to 2003-2004 levels thats 4-5 years of growth reversed but its also 4-5 years of a steady increase in population at 1% a year. Not to mention we are now entering baby boomer retirement . So a increase in unemployment of up to 4% say to 10% would not necessarily lower consumer spending. Thus at least over the short term increasing unemployment rates are absorbed in simply reducing the consumption levels back to 2004. In fact current unemployment numbers actually support a return to something close to 2003-2004 consumption levels. And again simply population growth continues to serve to ensure that those seeking employment will grow.
My guess is that for now at least we will see unemployment stabilize at around 8-10% and remain there for the near term. Real economic dislocation ala Depression like conditions seem at least from my reading to start occuring as unemployment climbs to 12-25% at these levels wages collapse and Deflation is impossible to stop. My opinion is goverment programs will be sufficient in the short term to keep effective unemployment hovering in the 8-10% range.

These are reassuring comments, and it may be that people are finding it hard to extract further wealth from their homes even though they don't quite understand the folly of doing so in 2009. Friends I spoke to yesterday got turned down on false pretenses (an obviously unfair home assessment) for a cash-out refinance (they were planning to purchase an investment property in a neighboring town with appealing house prices).

However I don't think we've seen the end of deflation, so where unemployment will go is unknown, and whether people begin to drive less to save on gas (fewer trips to the mall, not just buying less per trip; or even carpooling (??!!) (or because they no longer have a car) is also unknown. I have worked many years with the poorest Americans, homeless folks and folks on welfare, and these are often people without cars, by and large. Many unemployed, foreclosed and bankrupt will join the ranks of the homeless. Violence, alcoholism and mental illness lurks there and government programs to fish people out of homelessness are taking a serious hit, meeting emergently in D.C. and being told there is no answer.

Also, credit card debt and the ability to even HAVE a credit card becomes an issue. If cash use (vs. credit card use) decreases our expenses by 20% , depending on how many Americans like me make almost all of their consumer purchases on credit, that could hit the economy hard. Also, vacations - the average airplane trip for my family of 5 becomes something we have to put off several months if we have to save for it ahead of time. This should directly affect oil use (though we will DRIVE somewhere nice if we can't fly to a warm beach).

So though I understand the point that not all economic slowdown causes reduced demand for oil, I think there will continue to be more demand reduction, some of which is also permanent destruction. I guess my objection to Memmel's post is to the idea that there is any light visible at the end of the tunnel just yet.

You will start seeing good news stories pop up in the coming months. Companies that have cut back will post ok earnings. The stock market will stumble along with a few bear market rallies etc. Its no light at the end of the tunnel I'm suggesting. One part I left out is that housing prices will continue to fall and fall and fall esp if I'm right and oil prices start increasing. Housing is beyond dead and headed for price declines as far as I can see decades at least. As people who bought homes now go underwater they will get foreclosed on.

As far as credit card usage goes payday loans will move up the economic ladder and become acceptable. I saw a post where a reputable bank was effectively offering pay day loans.
And I've seen layaway adds. All I'm really saying is that as we transition from a growth economy to one thats really in decline you have a plateau that last for several years say 3-5 years where we can continue to reduce long term leverage in auto and home loans and keep gasping for air. Think about someone who is drowning. This year the economy fell into the water over the next few years it will struggle to breath and then finally go under.

I'd not call it a light at the end of the tunnel more the last thrashings before certain death. The repudiation of long term debt and primarily falling home and rental costs will allow us to struggle along for a bit longer. I expect housing costs to drop by about 75% over the next several years as our ability to purchase homes decline.

I'd guess and this is a WAG that we will see housing prices approach a steady 10% decline within 2-3 years effectively going to zero probably exponential decline. Now at some point our economy will really crash before this happens but you can see how declining housing prices in the future serve to keep
the economy from crashing. Auto sales as I did in another post I expect to actually flatten close the where they are now. The mix will go to ever cheaper and probably more fuel efficient cars but cars are over the long term consumable so as long as prices fall we should see purchases level off. Now later of course ever higher oil prices will result in manufacturing costs actually increasing then we will see further declines. Long term car purchases head towards zero or at least new car purchases.

There is the possibility the light at the end of the tunnel is a runaway train speeding toward us and there is no way out of the tunnel.

Or it might just be an illuminated sign: "Abandon all hope, ye who enter here!"

Hopefully it's at least electric, with Alan at the helm. :)

LOL this may sound weird but the only reason I'm not a complete doomer is we did build out the railroads with muscle and horse power. I've seen what can be done in China, Vietnam and Thailand with just people. I've watched women demolish a 10 story building with hand tools and the kids living in the building at they tore it down.

People are correct in a sense when we have to we will do what we must but on the same hand I think we lose something we lose a sort of safety net. In the US today if your smart keep your nose clean and work hard you can live a nice life. In the future you won't have this opportunity regardless of how smart or dedicated you are. A lot of very smart people are going to die in abject poverty with no chance just like they do every day in the rest of the world.

So although we may make it the one redeeming quality of America despite all its problems that someone with smarts of some sort can succeed at the goal they set for themselves will be lost.
At the end of the day its the only thing America offered that really made it different and its the one thing we are certain to lose.

I'm thinking somewhat along your lines: a leveling off into an "L", giving us a few years to adjust before we take the next stairstep down. Of course, the airheads over at CNBC will be chirping about a recovery being "just around the corner" all year long.

Think "L", not "U", and definitely not "V".

What we may have witnessed is the (short- to- medium-term) end of demand as the driving force in oil pricing. Prices soared because demand was bumping up against what could physically be produced.

As we enter this little correction (or decade-long crushing depression, if you prefer) demand has slacked off a bit and the rate of decline in demand is (briefly, I believe) exceeding the rate of decline of production.

My personal opinion is that a lot of the "low-hanging fruit" of discretionary oil consumption has occurred already. Some of that may actually reverse in the face of low fuel prices - not that people are going to line up to buy new gas-guzzlers, but they may drive more discretionary miles with that cheap gas in the vehicles they already have. They are probably already foregoing that plane trip to Grandma's house for the holidays. Business air travel has already been axed, all for reasons that extend beyond ticket prices.

New declines in demand will be mostly driven by continued contraction in the real economy. Any turn-around (however short-lived) in the economy will necessarily involve an increase in demand, which will butt up against constrained supply.

The peak of all liquids production may now be behind us, but until decline catches up to reduced demand we will see above-ground factors (such as OPEC production cuts, and how well they are enforced) play an even greater role in determining prices. I, for one, think this is a matter of less than a year, but what do I know?

We will see I'm arguing that the contraction is from industrial collapse specifically the construction and to some extent the auto industry. Economic activity that does not require long term debt will remain robust. Thus I think you will find as 2009 progress that various economic indicators outside of these really 3 industries residential, commercial and auto the rest of the industries will not be that bad and spotty good news will pop up.

Whats funny is our Recession began about Dec 2007 and most of the economic indicators for these industries are probably getting close to their bottoms are have bottomed. I'm not saying we won't get continued bad news esp for commercial real estate but I am saying for example I'd be surprised to see auto purchases fall more then say another 20%. I'd have to look at historical purchases. If someone has the number for cars bought in say 2002 at the bottom of the last recession I'd suggest that car purchases probably won't drop below this.

Now testing this WAG.




Year Sales (thousands)
1998 15,534
1999 16,879
2000 17,344
2001 17,118
2002 16,810
2003 16,643
2004 16,866
2005 16,948
2006 16,504
2007 17,129
2008 14,131 (Near 1993-1994 sales levels)

Guessed wrong on the year but then we should see a small rebound in sales for autos into next year. I was trying to pick a year that MEW was not a big contributor to auto sales.

Looking closer at MEW and assuming that without it we fall back to the same levels as before.

And of course including population increases then we would expect that future auto sales will fall in the same range as from 1991-1997 and rising for population reason into 2000 levels.

Thus I would assert that auto sales are actually very close to the bottom and will undulate near their current levels as long as the economy remains functional. But the current level looks like its actually effectively at the bottom.

Not surprisingly by the time the public realizes we are in a Recession we are probably at the bottom this is because unemployment is a lagging indicator.

by the time the public realizes we are in a Recession we are probably at the bottom this is because unemployment is a lagging indicator

Actually, the reason this is typically true is because recessions in recent decades have been relatively short, and the government drags its heels as long as possible (a year this time) before admitting to a recession. I don't see any signs that this will be a short recession.

I agree in general but we are already hitting the point that belt tightening and pullback by companies will result in better earnings. Simply canceling unneeded growth results in a short term increase in profits. Plus of course a lot of companies have pulled way back on travel even travel thats required to run your business. This will result in a better temporary bottom line. I'm not saying the world is not coming to the end my parent don't call me Master of Doom for no reason its just it will take time for the world to transition from insanity to comprehension to fear. Not long in the big scheme I'd be surprised to see us functional in 5 years but almost 100 years of infinite growth and I'd argue 1000 years does not end in six months.


People, especially the media have a tendency to focus on the wrong aspects of the issue. Even today the media is still focussing on the PRICE of oil and gas, not on the productions figures. Everyone has their own theories and arguments to explain why we are seeing oil prices dropping drastically.

My own opinion is that we've already hit peak oil. Remember that Peak Oil isn't about prices. It's about rate of extraction. Peak oil merely states that once we hit our peak extraction rate, we'll never hit that rate again and it will decline relentlessly. This is based on geological and technological contrstraints. The price we see in the market place is a factor of many more things. Supply and demand being the main forces. Over the past year, as geological contraints limited the daily extraction of oil, there was more demand for oil that could be supplied. As a result prices spiked. Since oil=energy and economies run on energy, prices across the board shot up. The financial crisis we are in happens because we've mixed an economy based on perpetual growth with an environment that has real physical limits. As we approached the physical limits for available energy, the global economy hit a brick wall. There were some other things going on with our economy that make this situation worse. Those traits, such as the housing bubble and Madoff were there for years. Peak Oil exposed them. So now we're in a worse situation because other large problems have come to the forefront as well. Our financial system is effectively bankrupt. I believe that is why they Treasury is refusing to release detailed accountings of the bailout monies. If the FOIA suit wins and they actually release the truth, that will most likely disclose to the world that we're insolvent.

As you look over the oil production data in the coming years, I'd be very surprised if you ever see the daily extraction rate surpass the record high that was achieved in the past few years. What happened is that businesses realised that they couldn't remain profitable with energy prices so high. Many of these businesses have folded or have made drastic changes/cuts in their operations. These operational cuts have translated into lower demand for energy. As the demands for energy drops below the available supply of energy, energy prices fall. The changes that were made in operations are not something that can be undone overnight. Everyone is weary of falling into the same trap again and thus are not ramping up production to take advantage of the cheaper energy prices. OPEC can announce all the cuts they want. The real productions number out there will determine what the market price is. Also, the more they ramp the price up by cutting production, the more demand for oil they'll destroy.

If we do see a "recovery" in our economy, the oil prices will rise again. But because we've already hit peak oil, we'll already know exactly where the limits are. In the long run, our economy is doomed because it can only remain healthy if it perpetually grows. Even if we magically solved the energy problem, some other contraint would take it's place....Peak metals, peak food, etc.

So to summarize, peak oil is a function of geologic and technologic constraints. It's about the maximum extraction RATE.

Prices are a function of supply and demand. The RATE of extraction can affect supply, but when there has been so much demand destruction, you'll see prices drop, regarless of peak oil.


Peak oil merely states that once we hit our peak extraction rate, we'll never hit that rate again and it will decline relentlessly.

I think that is called the 'Drunken attic lodger effect' where the drunken lodger runs his head into the slope of the peaked ceiling, again and again until crawling on hands and knees reaches solid wall of of energy in equals energy out.

Prices are a function of supply and demand. The RATE of extraction can affect supply, but when there has been so much demand destruction, you'll see prices drop, regarless of peak oil.

Movement of the drunken lodger is a function of the headroom and his delirium. The rate of his recovery can effect the headroom, but when there hs been so much head destruction you will see him drop regardless of the peaked roof.

How they dropped so fast is because they went up so far due to speculators, it drained final dollar from American pockets so we car pooled, bought higher mileage cars, drove less, took mass transit that we dropped use so much oil
price dove. Don't think it's that low as it's not at $40/bbl and likely to hit $30/bbl soon.

A basic thing in economics is not to kill your
customers economy which the skyrocketing oil price was a large part of.

Hedge funds, speculators are what ran the oil price up in the first place. Then getting out at the peak and those who were not quick enough now selling to recover something has driven the price down.

Other factors too like the banking, mortgage mess happened the same speculator way sadly all at the same time.

Regarding Obama's pick for science advisor. Holdren seems a poor choice given the problems we are facing, if for no other reason than the opinion that peak oil is debatable.

If he is up for debate I am sure there are many educated TOD posters, scientists, geologists etc that he can debate with.

The question is, would he be open minded to change and have a fair dialogue? Are we facing skeptic or a denier? At least we have a chance with a skeptic, they are open to new facts, ideas and are willing to change when presented with new facts (flip flopping?). With a denier there is no chance.

Obama has stated on multiple occasions that this is not the time to get complacent about oil or energy just because we are currently experiencing a glut. The fact is that we will continue to be highly dependent upon foreign, including Middle East sources of oil, regardless of whether or not we have reached or will shortly reached peak oil production.

Even if Holdren is now skeptical about the short term arrival of peak oil, this changes little if we agress with Obama that we still need to cut down on consumption and pursue alternatives.

Regardless, of course, a large majority of the American people will become complacent, and Obama will have to move forward on conservation, efficiency, and alternatives despite the lack of push up from the peeps. Obama stated recently that we cannot repeat the mistakes of past Presidents, that this time we really need to do something to reduce our dependence. Given all his other priorities, I am skeptical that this time we will really, really take oil and energy seriously. Politicians respond to pressure; so if he actually follows through on his promises without the pressure to do so, it will take a heroic effort on his part.

Let's divide total petroleum production by the total number of employed people -- oil per capita employed.

Is there still a "glut"? I don't have any idea where to get those figures, but it seems to me that if a significant part of the world's population is economically invisible, that the price and availability of oil is meaningless to those people, and as that marginalized proportion of the world population increases, that the concept of "Peak Oil" also becomes meaningless. Oil is only important to consumers of oil.

Ya but his "solution" is to upgrade our oil based transportation infrastructure, in addition to finding/developing alternate sources of energy. How is this a solution? He doesn't even know what the problem is. Maybe he thinks we can all just switch to electric cars. Maybe he can give billions to the auto companies on the one side and then billions more in subsidies and incentives to get people to buy them, all the while spending billions and billions more on roads and bridges. And in the meantime we can drill and mine domestically, because it makes complete sense that energy independence is achieved by exploiting our own resources as fast as possible keeping all the cars running.

I don't see why you think Holdren is a poor choice. I doubt that he is a skeptic on Peak Oil.

Here's a quote:

"The world is not running out of energy, as there are tremendous resources remaining of fossil fuels, uranium, and renewable energy in a wide variety of forms," said Holdren. "But, we are running out of cheap, easy, and accessible conventional oil and gas... and running out of the capacity of the environment to absorb energy's impacts without unacceptable consequences."

Holdren said that world leaders and industry must immediately begin to explore new, cleaner energy sources because "the world is running out of time to lessen the impacts of climate change."

"The energy system has a tremendous amount of inertia in it," Holdren said. "If you want a different energy system by 2050... you'd better start to change it now because the turnover time of energy facilities is typically 30 to 50 years."

Here's a couple of links (which might be behind a paywall?):




E. Swanson

This is a very good development.

"Oregon State University marine biologist Jane Lubchenco as head of the National Oceanic and Atmospheric Administration"


Lubchenco testified to congress this summer on Ocean Acidification.

Because he's using a false argument. "The world is not running out of energy" because there's so much other energy available.

I'm only just starting to regularly remind myself of this part of the problem ... energy is only half of the issue. The other half of the issue is the infrastructure dependent on it.

Infrastructures are very slow to change their dependencies. The network of hundreds of billions of individual living cells of the human body has an infrastructure which is dependent on food. We can't eat wood, coal, uranium, or gasoline, despite their huge energy content because our bodies, our infrastructures, can't use it.

The energy infrastructure of a car depends on gasoline. It won't run on wood or natural gas unless you change the infrastructure, which takes time, extra resources, and extra energy. Which you can do, if the rest of the industrial infrastructure outside your garage is available to supply the energy and resources. But the industrial infrastructure is dependent on physical infrastructure like roads, food production and distribution, and the overall economy.

And they're all dependent on oil, at the same time, worldwide.

The issue of a decline in oil production is not that your garage is running low on gasoline, it's not that the industry is running low on petroleum products, it's not that the roads are running low on asphalt, it's not the crops are running low on fertilizer, pesticides, and the ability process, package, and ship food. The issue is that it's all of these things, and more, happening at the same time.

The decline in oil production means we are running low everywhere, simultaneously, on the things our infrastructure needs to maintain itself and move forward.

All the proposed new technology, the renewable energy projects, the grand solutions, they are all dependent on the rest of the system, the rest of the infrastructure, functioning normally. But the rest of the system is also running low on the same petroleum necessities.

This situation is akin to famine. When many hundreds or thousands of people are dying en masse due to a lack of food, every time someone dies, that is a possible biological source of meat for the survivors. However, our infrastructure does not generally support cannibalism. There is energy there, yes, but there is great difficulty in using it. Most people would rather starve to death than chow down on another human being.

It's also similar to bleeding to death in an abattoir. While only 5% of the body's volume, the blood supply is necessary for the entire body. If one was bleeding to death in a slaughterhouse, the body would not readily accept the blood available in the surrounding environment.

Because the dependent infrastructure won't support it.

This means a systemic collapse, like a collapse of the body's systems from starvation or blood loss.

I don't expect Holdren to lay bare the truth, but he is misleading people on the seriousness of the situation.

And this is politics, so I am not surprised, but he's still a poor choice.

While I can't speak for Dr. Holdren, I suspect that he understands the problems, which should be clear from this comment:

"The energy system has a tremendous amount of inertia in it," Holdren said. "If you want a different energy system by 2050... you'd better start to change it now because the turnover time of energy facilities is typically 30 to 50 years."

Most of the energy consuming activities involve technologies, such as cars and aircraft, which have useful lives less than that of the energy facilities which supply them. Structures are an exception and once built they must be provided with enough energy to meet the demand, although many buildings can be retrofitted to consume less energy as time passes. We build the parts of our technological infrastructure based on what energy sources are at hand or least expensive in the foreseeable future. The half life of cars is about 8 years, thus most will have been replaced within 25 years. I agree that trying to perpetuate present patterns of energy use thru alternative energy sources may be impossible, but that does not imply that there are no other solutions. I suspect that changing the form of the overall demand, aka, "conservation" is an integral part of most plans for a future based on renewable energy. I think that would include plans to make the necessary cuts in CO2 emissions.

You appear to assume that it is impossible to make the change without a major problem, perhaps a rapid decline in population thru a die off. I agree that you are likely to be correct, based on my understanding of the problem. I have no way of knowing whether Holdren is offering a rosy scenario of the future based on renewables. I make that point because the basic concept has never been tried on anything like the scale required, although efforts in Europe to deploy wind energy systems are encouraging. I do think that Holdren has spend a considerable amount of time thinking and studying the situation and probably understands the twin problems of energy and climate change at least as well as you.

For example, see his presentation slides

As time passes, decisions will be made about what to do next. Some choices will be better than others, but we can not know whether they will work as predicted until they are tried.

E. Swanson

Mostly agreed. Holdren's 72 page presentation is pretty good, but could also have been produced by any competent reader of The Oil Drum with an appropriate amount of time and research.

He's still calling for economic growth, technology, and efficiency. The only things we know how to implement, I understand, but they're not going to work for the current set of problems.

As the President of AAAS, Holdren is speaking to a much wider audience than just those of us who have frequented TOD for a period long enough to gain some understanding of our predicament. Maybe he is trying to raise the general awareness of the serious consequences of climate change, given that what we do over the short term to fix the Peak Oil problem can either benefit or worsen the long term climate problem. I think this past year as taught us all quite a bit about the reality of our economic and financial system, an awakening which is just beginning for many. Sustainable real growth is not possible in the long term on a finite planet, but we can do things in ways which make it appear as though it is...

E. Swanson

I would describe the presentation as very heavy on climate change and very light on peak oil. He says, "The problem is not running out of energy", He then says, "Total world energy use is ~15 TWy/year," and then lists the following as being available, in TWy or in the case of renewable energy, TWy/year.

COAL 5,000
OIL SHALE 30,000

RENEWABLE ENERGY (available energy per year)
sunlight on land 30,000
energy in the wind 2,000

Yes, Gail, and the problem isn't just energy, it's also the dependent infrastructure. And the need for growth, and being in overshoot, and an imminent decline in available oil due to production declines and net-export declines.

Yes, there's more than enough energy in sunlight alone, but virtually none of our human industrial infrastructure uses it, and a critical input to our system, oil, has peaked.

It's the dependent infrastructure that keeps tripping us up.

Back in October 2007 when Holdren gave that presentation, the idea of Peak Oil was still a rather fringe concept. After last summer's spike in oil prices and the latest revisions in EIA and IEA data, the idea that Peak Oil is near has gained much greater traction. But, we still do not know with certainty that oil production has passed Peak, especially as demand has dropped off a bit due to the financial mess...

I agree with your observation that our U.S. infrastructure is geared to use fossil fuels. As oil production declines, the infrastructure which is built to use oil will wither as well, no matter what happens with renewables or nuclear. That the U.S. and the rest of the industrial world didn't begin the transition after the warning shocks of the 1970's may turn out to be mankind's ultimate tragedy. Our situation might also provide the opportunity to implement a transition, but only if we can find the commitment and motivation to make the change. I think the social and political problems are much greater than the technological ones, which aren't small potatoes either.

E. Swanson

The Dinosaurs get $13.4 billion.

From CNN
"Allowing the U.S. auto industry to collapse is not a responsible course of action," President Bush said Friday morning.

Since when has this Moron even understood what a "responsible course of action" is?

Hey Moron!!! Where is my Bailout?

I am just a citizen...After all, I guess.

Power Down.

$13.4 billion more of tax payer money is now gone. This is a temporary fix that will only last a few months, then it will be Obama's problem to worry about. As long as we keep rewarding bad decisions, CEOs will keep abusing the system.

Clearly the Big 3 car companies had no long term strategy, and were caught off guard by high oil prices. If they had looked ahead and built energy efficient cars, they would still be in business now. However, Americans in general do not think long term, so suffering is inevitable. People will not buy fuel efficient cars as long as gas is still cheap at $1.50 per gallon.

"However, Americans in general do not think long term, so suffering is inevitable."

This seems like a good place o insert a snip from the editorial in the current Cook's Illustrated magazine(which BTW, I highly recommend for real cooks). It's entitled The Vermont Creed.

1. Think Locally
2. When You Don't Know What To Do, Do The Work In Front Of You
3. Worse Things Than Death
4. Every Day Is A New Day
5. The Early Bird Gets The Worm
6. Look, Aim, Then Shoot
7. Be Useful
8. Know Your (local) History
9. Mind Your Own Business
10. Waste Not, Want Not
11. Life Is Fair, Really!
12. Don't Look In The Mirror
13. Check The Weather
14. Make Hay While The Sun Shines

Now, some of these don't make too much sense without the full commentary. But, still they point to a possibly better way to approach life. Our favorite family saying was Many Hands Make Light Work (With apologies to our German readers for my for my spelling, we said, Felien hande machen bald dein ende.)


The NYT reports:

The loan deal also requires the companies to quickly reduce their debt by two-thirds, mostly through debt-for-equity swaps, and to reach an agreement with the United Auto Workers union to cut wages and benefits so they are competitive with those of employees of foreign-based automakers working in the United States.

As I understand it, the U.S. will get "nonvoting warrants", which might be some form of senior debit, that is, the U.S. will be paid before anyone else. If GM and Chrysler turns their debit into equity and then can't meet the deadline on 31 March, there will be a bankruptcy. Then, the U.S., being first in line, will acquire the remaining assets of GM and Chrysler. The equity of the stock holders will likely be wiped our, as often happens, such as with WorldCom. As a result, the U.S. will run GM and Chrysler. The holders of bonds, etc will already have been bought out, which will make those rich finance types very happy...

EDIT: The bloggers over at the WSJ are all over this bailout. It's pointed out that the U.S. will likely get unsecured debit, which is NOT SENIOR. Current unsecured bonds are trading at 20 cents on the dollar, so, the $13.4 Billion could instantly be reduced to only $2.7 billion, if GM and Chrysler can't make it all work. And, the requirements are non-binding!! Go figure...

E. Swanson

Mussolini couldn't have done it better!

And he made the trains run on time. I hope Amtrak is next in line!

"$13.4 billion more of tax payer money is now gone."

not really, what the taxpayers get is $ 13.4 billion of the money recently looted by the "financial industry" is diverted to feed the dinosaurs.

GM has it all wrong in the vehicles they build. As I said before, if you want to build a car of the future, here's what it looks like...

The New Geo Metro...

ROFL!! Hee Haw!

And you don't want to know how the airbag system works...

I can only imagine!!

looks like more of a poo-bag system

How many miles per bale of hay?

Figure about 15 pounds of hay a day and about 30 miles or .5lbs./mile. There are economies of scale to be had here, if the equine were pulling less dead load.

with a bumper sticker that reads "gas grass or ass, nobody rides for free"

a minor quibble, the ass end of the car(meaning the rear end)is not a metro, possibly a prism ? i dont think the metro was ever a sedan.

$13.4 billion more of tax payer money is now gone.

It's all funny money debt anyway. What is important is how the responsibility for repaying the debt gets allocated in the future. If history is any guide, the lower 90% of the US population will be beggared, the rest will ride high, or relatively high anyway.

It will not be all funny money when our government wrecks the dollar, and all of our savings are worthless. Printing new money is a short term fix, that is a disaster in the long run.
Just look at Mexico, Argentina, Zimbabwe, etc.....

Let me just add that people need to spend some time at ferfal's blog about Argentina's situation at http://ferfal.blogspot.com since it may be our reality soon.

If you look in his archives you are likely to say BS but he has been more right on about the future except Dimtry O.


Clearly the Big 3 car companies had no long term strategy, and were caught off guard by high oil prices.

No one told them about peak oil. It's the wishful thinking about future oil supplies in many government reports which caused this situation. I don't understand why that was not discussed in Congress hearings.

Some web sites are now reporting $17.4 billion! CNN says $13.4 billion.
Where did the extra $5 billion come from?

Hmmm... Math error?

13.4 now, the rest later...

"The money will come from the $700 billion fund set aside to bailout Wall Street firms and banks in October.

With these loans, Treasury will have committed virtually all of the $350 billion of that fund that it can hand out without additional authorization from Congress. Once Congress releases the other $350 billion, the two automakers will be able to borrow an additional $4 billion"


GM and Chrysler Will Get $13.4 Billion in U.S. Loans

Another $4 billion will be available to GM in February provided Congress releases the second half of the $700 billion

There were some earlier versions of this story but this seems to be how the reporting is settling down.

As distasteful as it was, the short-term bailout seems right to me. This plan doesn't settle anything, it just kicks the can down the road three months to let the Obama administration deal with it.

If Bush at this late date had made a decision with grave long-term implications - either bailout or bankruptcy, the Obama administration would have no commitment to the plan yet be stuck with the fallout. Obama will have to deal with the problem in the long term, so he should probably be the one to make the decision about what to do.

Obama should have begged for bankruptcy. That's the only solution that would let him be the good guy. Now they'll go bankrupt on his watch. Another $15B wasted.

How much would you like? Enough to buy a new car? a new house? to save your job? How would you become less likely to need a bail out in the future? I don't want you coming back in 3 months asking for more. Show us a reasonable plan.

Do you need a bail out because you are sinking or is it to get you out of jail while awaiting trial? If the latter what are the charges?

I doubt the car companies answered any of these Qs, why should he?

Low oil prices mean less future supply: Saudi

LONDON (Reuters) - The steep fall in oil prices is causing "havoc" with investment plans in oil producing countries and jeopardizes future oil supplies, Saudi Arabian Oil Minister Ali al-Naimi said on Friday.

Naimi told a meeting of producer and consumer countries in London that oil prices, which have fallen by more than $100 a barrel from a high of almost $150 in July, were already too low to support some necessary investment in energy projects.

"Today's price levels are wreaking havoc on the industry and are threatening current and planned investments," he said.

Naimi, representative of the Organization of the Petroleum Exporting Countries' biggest oil producer, repeated previous assertions that $75 a barrel was a "fair and reasonable" price for crude oil. Benchmark U.S. crude oil futures for January fell below $36 on Friday.

"It is the price that marginal producers need to maintain investments sufficient to provide adequate supplies for future oil consumption needs. When oil is priced lower, such as it is now, there will be less investment and less future supply."

So what are we supposed to do? Voluntarily pay more now so that investments can be made in oil projects for oil that we can also pay more for later? In any event, most of this money will flow out of the country. Billions of dollars are being saved right now that would otherwise be spent in support of foreign countries and large corporations. In the long run, the amount of oil available for export to use will decrease regardless of how high the prices are. Perhaps part of the billions could be spent on making us less dependent upon oil. Or has all that money been sucked up by the financial institutions?

On a personal level, invest in a car with better gas mileage now and avoid the rush later. Most people will wait until the prices go up again, then start thinking about personal investments to save or create energy.

Or has all that money been sucked up by the financial institutions?

Bingo! Give that (man or woman) a cookie!

More specifically, since we have a nifty Christmas present to the dinosaur automobile industry today, it is being sucked up trying to keep up BAU as the reality on the ground changes rapidly.

"invest in a car with better gas mileage now"

Or invest in an EV with NO gas mileage!


The company is planning to build the $2.2 billion facility, which includes a mine, in the southern part of the county (Kemper Co. MS).

It would create power by separating carbon dioxide emissions from coal. The gas would be stored in depleted underground oil wells and sold to companies that would use it to produce oil.

I assume they mean 'separating' carbon dioxide from coal by burning it, then seperating the Co2 from the other emissions? Poor writing, but sounds like a nice idea.

Probably they have teamed up with Rumpelstiltskin to develop a process to convert CO2 to oil.

Upon reflection, the residents of my former home state may just be getting suckered (again). Or the writer has no idea what he writes about, but probably both. Mississippi can be a pretty corrupt place, with a former tobacco lobbyist gov., people desperate for any new industry (google Mississippi Beef Plant), and a history of past corruption-

Link goes to PDF called 'No pretense to honesty' by Ole Miss.

Probably they have teamed up with Rumpelstiltskin to develop a process to convert CO2 to oil.

More likely with a PR firm like Burson-Marsteller to slightly "reframe" CTL technologies. That they can "create power by separating carbon dioxide emissions from coal" is a stroke of marketing genius of the highest order. Don't you want one of those in your backyard?

cfm in Gray, ME

Out here in Oregon we have someone claiming that the Columbia River is the Saudi Arabia of Hydrogen Energy. http://oregonwatercoalition.org/2008/09/23/northwest-is-saudi-arabia-of-...

It seems like if all those high-powered investors, with all the resources at their command, could get suckered by Madoff, etc., that it wouldn't be too hard to bamboozle the legislatures of Oregon or Mississippi. More public money to Rumpelstiltskin. There is a free lunch (for some.)

They must calculate the volume of the hydrogen in the water but it looks like they mean energy.

Right. That's my point. Sucker born every minute.


TO mathematicians, 32 is an interesting number: it’s 2 raised to the fifth power, 2 times 2 times 2 times 2 times 2. To economists, 32 is even more special, because it measures the difference in lifestyles between the first world and the developing world. The average rates at which people consume resources like oil and metals, and produce wastes like plastics and greenhouse gases, are about 32 times higher in North America, Western Europe, Japan and Australia than they are in the developing world. That factor of 32 has big consequences.

That was Jared Diamond writing in the NY times earlier this year. I brought this up to calculate effective populations as a result of the consumption factor.

Effective Population = Actual Population x Consumption factor

US - 9.6 Billion
UK - 1.92 Billion
France - 2.08 Billion
Germany - 2.7 Billion
Australia - 0.67 Billion
NZ - 0.13 Billion

Total = 17.1 Billion from those 6 countries alone. There's plenty of room to power down and still lead a more than comfy life.

The population especially of the developing world is growing, and some people remain fixated on this. They note that populations of countries like Kenya are growing rapidly, and they say that’s a big problem. Yes, it is a problem for Kenya’s more than 30 million people, but it’s not a burden on the whole world, because Kenyans consume so little. (Their relative per capita rate is 1.)

A real problem for the world is that EACH of us 300 million Americans consumes as much as 32 Kenyans. With 10 times the population, the United States consumes 320 times more resources than Kenya does.

EDIT: Population overshoot isn't the problem, consumption overshoot is. Man can just be as happy with less. We dealt with scarcity for most of humanities existence except for the last 80 years. There is so much waste and needless consumption. I strongly believe that America could power down to 2.5 million barrels per day and still retain a good quality of life. Intelligent thinking can get us there.

EDIT: Population overshoot isn't the problem, consumption overshoot is. Man can just be as happy with less. We dealt with scarcity for most of humanities existence except for the last 80 years. There is so much waste and needless consumption. I strongly believe that America could power down to 2.5 million barrels per day and still retain a good quality of life. Intelligent thinking can get us there.

VK it is not an either/or situation. You have both overpopulation AND overconsumption. Kenya, as well as the rest of Sub-Sahara Africa is desperately overpopulated. They are consuming so much bush meat in order to stay alive that they are diving may species into extnction. All Africa's great apes will soon be extinct because they are being killed for food.

Also you simply are missing the big picture. True, we do consume way too much and true we could be happy with much less. However all that stuff we consume employes millions of people to produce it. If we did not consume so much stuff we would have ove 50% unemployment because people that produce that stuff would be out of a job. And that is the case all over the world.

And it is the case especially in developing countries. In China, as mechanized farming drives people into the cities, they are employed producing stuff for Americans and Europeans to consume. If we stopped consuming they would be in for a real rough time. Ditto for India, Bangladesh and most of the rest of Asia.

The world is deep into overshoot and no amount of "return to the earth method of simple living" will prevent massive starvation in the next quarter to half century or so.

That is true. It's a really twisted system. Short term gains over long term losses.

Wishful thinking on my part that the world can power down and change it's ways and it could actually but it would require a great deal of co-ordination, sacrifice, innovation and co-operation. So a small probability.

Reality probably is that we hit a brick wall. With life as we know it becoming completely and utterly different with everyone competing for what's left. That has a higher probability of happening indeed.

I'm still hoping that a peaceful outcome prevails but...maybe its too late? Here's too hoping its not.


Plus your numbers for the UK are based on a pop of 61 million.

The indigenous UK birth rate dropped below replacement SINCE 1966 onward:


yet we now have 10 - 15 million more population - about a 20 -25% increase, than we would have had with a 'closed border' from 1966 to 2008.

So the extra 10 - 15 million, from other warmer countries, are not cooking on dung fires at 54 deg North latitude [UK]. They are probably using more than 32 times the 3rd world average energy, keeping warm in the UK, and they are breeding at beyond replacement rate...

While I agree that the "west" consumes more than their fair share, I belive it's a red herring to say the "developing" world is not over populated thanks to their lack of consumption. It has been well proven increasing wealth (consumption) lowers birthrate.

This does not justify the magnitude of consumption in the west, but it stands to figure that reduced consumption (lower wealth) will lead to higher birthrates.

They are consuming so much bush meat in order to stay alive that they are diving may species into extinction.

That's plainly true however there is a much larger problem we are confronted with Darwinian. Consider the following from the IUCN:

Current Estimates of Known and Threatened Living Species by Taxonomic Group:

Taxonomic Group - Known species - Threatened

Mammals - 5,416 - 1,093
Birds - 9,934 - 1,206
Reptiles - 8,240 - 341
Amphibians - 5,918 - 1,811
Fishes - 29.300 - 1,173
Insects - 950,000 - 623
Molluscs - 70,000 - 975
Crustaceans - 40,000 - 459
other animals - 130,000 - 44
Mosses - 15,000 - 80
Ferns and allies - 13,025 - 139
Gymnosperms - 980 - 306
Dicotyledons - 199,350 - 7,086
Monocotyledons - 59,300 - 2
Mushrooms - 16,000 - 1

A quick perusal of the above numbers should alert even the causal observer to the realization that we (homo-sapiens) are focused on the charismatic species to the detriment of "lesser" species".

Presently we should be focusing on organisms that are keystone species in various habitats worldwide. The less cute organisms are the ones that do most of the heavy lifting of cleaning the air and the water.

Currently we are in the midst of the sixth great extinction (the Late Quaternary)and it is on record to be the most devastating extinction thus far. According to E.O. Wilson we are losing from 1 to 3 species per hour (most of them undiscovered)which is two hundred thousand times normal extinction rates (1 species per decade) and 30,000 time the rate of extinction from the Cretaceous (65 million years ago).

Ecologists are now in "Triage" mode which is: "forget individual species...save as many habitats as possible".

By the way Darwinian...Happy Holidays!


It'll be somewhere between the K-T and the P-T events would be my guess.

But speaking in the interest of cute organisms everywhere, nobody really knows how many nematode species are out there. It's hard to get worked up about them when 1) many are parasites; 2) many are microscopic or nearly so; or 3) they aren't really "cute" ...

Two things:

1. There's no such thing as a "keystone" species. ALL species are integral to ecosystem function. Even if there was some merit to the idea of keystone species, ecosystems are so complex that ecologists could never identify a priori which species are "key."

2. There's no way that the anthropogenic extinction pulse is going to rival the end-Permian event. If it does, the biosphere has far more to worry about than some ape meeting it's "peak oil" problem.

The world is deep into overshoot and no amount of "return to the earth method of simple living" will prevent massive starvation in the next quarter to half century or so.

This is false in so far as it seems to imply natural farming methods do not compare with petroleum agriculture. (I'm looking for the report I read justin the last day or two that says non-petrochemical food production can = current methods) I could agree with the following:

The world is deep into overshoot and nothing will prevent massive starvation in the next quarter to half century or so because people simply will not pull together to make it happen.


The world is deep into overshoot and no amount of "return to the earth method of simple living" will prevent massive starvation in the next quarter to half century or so.

This is false in so far as it seems to imply natural farming methods do not compare with petroleum agriculture. (I'm looking for the report I read justin the last day or two that says non-petrochemical food production can = current methods) I could agree with the following:

The world is deep into overshoot and nothing will prevent massive starvation in the next quarter to half century or so because people simply will not pull together to make it happen.


The world is deep into overshoot and no amount of "return to the earth method of simple living" will prevent massive starvation in the next quarter to half century or so.

This is false in so far as it seems to imply natural farming methods do not compare with petroleum agriculture. (I'm looking for the report I read justin the last day or two that says non-petrochemical food production can = current methods) I could agree with the following:

The world is deep into overshoot and nothing will prevent massive starvation in the next quarter to half century or so because people simply will not pull together to make it happen.


After the holidays and the receipts are added up we may see many large and small retailers decide they cannot afford the rent, utilities and other fixed costs. If this happens, the owners of malls and other commercial buildings may not have renters. Most of these structures are highly leveraged (like nothing down) just like the sub prime mortgages. We may see another round of bank failures, bailouts and general badness due to these new types of foreclosures. The time frame is not till February after the happiness of inauguration is over. I think the Sarah and the old guy lucked out.


A lot of small and large banks are smart they diversified by investing in multiple commercial real estate ventures generally targeting the high growth bubble areas and new subdivisions.
To further ensure they would lose a lot of money in different ways hotels where also a hot investment choice.

And to ensure that they where not over extended in commercial real estate most of the rest of their loan portfolio was to builders building the subdivisions where the customers for the new strip malls would live.

So don't worry your bankers aver very smart and understand how to diversify to make sure the risk was distributed amongst several bubble markets.

There's no place like home...

Commercial real estate is next to tank, no doubt - buy SRS.

A bit of poetic justice that, when the world economy can get so hung up on an expensive birthday party for a non-materialist.

Someone should tell O'reilly that in that 'War on Christmas', that Christmas might be planning a counterattack.

Who would Jesus foreclose on?

Birthday Boy

I'm rather surprised at the seemingly complete absence of discussion here, or anywhere else for that matter, of the US trade deficit and balance of payments. Discussions of the government deficit and cumulative debt, while often confusing the two, are abundant but the progression of the trade deficit is off the radar.

Maybe it's the ongoing illusion of the insular security of the GNOE, as if a Greatest Nation could be on Mars or cyberspace or - maybe it's the Greatest Nation in the Imagination, but somehow this figure, usually relegated to insignificance by trade being a rather small component of the economy as a whole, just doesn't register as it does in any other country I can think of.

A decade ago the figure was about 130 billion a year. This mopped up the trade surpluses of places such as Canada and Japan and the rationale was that the money would come back to the engine of consumption via investments in solid American assets. Of course, these were finite in scope like oil, and perhaps now we are past Peak Assets. Past a certain point it may not be worth the effort to morph from parasite to host; how much of a dubious and perhaps unresellable foreign economy, i.e. us, would be wise to own?

The last figure I saw on the trade gap was in the 700 billion range which the temporary glut of oil production has mitigated for a while. There were those who questioned the long term sustainability of 150 billion range imbalances and the consequences of incurring multiples of that were thought horrific. I think horrific just happened. The rest of the world doesn't change the rules of accounting for our sake. If it were a business, USA Inc. is running a 750 billion dollar annual loss mitigated by accumulating debt and selling assets. No MBA would consider that a valid business plan.

If we posit a price of say $60 a barrel because that is what will be required to maintain a modest modicum of investment to attempt to moderate production declines, the annual outflow to maintain current import levels would be about $300 billion a year. Add in Walmart, China, Japan and you have a hell of a nut to crack. Sure, a lot of the money should in theory come back home somehow, but the mechanisms to do so seem a bit broken at the moment. Consider $150 a barrel times $5+ billion a year, plus plus plus. If oil had stayed at $150 the trade deficit would have gone to over a trillion.

Economists are said to be kept awake at night working on how what works in practice can be made to work in theory. They were hard pressed at 150 billion but my guess is that five times that just isn't going to work for any great period of time. Ding, ding - time's up. A trade deficit in goods can be solved by tariffs and import replacement schemes - over time - but the only way to get the oil money is to print it. Or come up with a way to replace the oil with...coal and electric cars and trains!!!

Happy days are here again,
The sky is getting dim again,
I can see the oceans rise again,
Happy days, are here, agaaaain.

Don't worry folks, it's a short term solution until we can get fusion up and running and transfer to the hydrogen economy.

The trade deficit is the bubble of bubbles. The trade deficit grows because the US does not manufacture and export as much as it imports by a wide margin. The money is 'recycled' back to the US through investment. This 'recycled' investment is basically an expectation of future productivity of the US economy, yet the relative productivity of the US economy keeps dropping. The only way I can see reversing the trade deficit tide is for US consumption to drop significantly below US productivity. This will be major painful and it might take decades to reverse the tide, especially since US productivity is dropping along with US consumption, or even faster than US consumption.

Fusion and hydrogen? You just showed that you aren't any smarter than the folks you are complaining about. Maybe you are just too young to know that fusion has been only 10 years away for the last 40 years. The same with hydrogen. Even if we had a working fusion reactor today consider how long it would take to replace the thousands of power plants in the world. For 50 years we have known how to build thorium floride reactors which produce only short lived actinide wastes and have failed to do it.

There has been discussions about the trade deficit in the past. As for why we run up such big deficits it is because that is what Wall St wanted. Wall St has repeatedly shifted centers of manufacturing from first the northern Rust Belt, closed shop, good wage states to southern, right to work for less, low wage states. From there they moved manufacturing to Latin America. When they formed unions they moved to Asia. They really like China because its dictators make no bones about killing dissidents like free union organizers. All in the name of free trade. We have these trade deficits because we no longer export enough manufactured goods to offset our oil imports. All the while Wall St has profited in the trillions.

You just showed you were dumb enough to take me seriously. Sorry, but you missed the joke. And what folks was I complaining about? Complaining? As if discussing reality is complaining? You need a stiff seasonal drink.

But thanks for filling in all the reasons why my final sentence was not expected to be taken seriously. I don't think it took Wall St to export manufacturing jobs but just a political will to remove barriers to unfair offshore labor competition. Industries had no option but to follow the 'China price'. I don't see any evil cabal here but just opportunism - short sighted - both political and economic.

You just showed you were dumb enough to take me seriously. Sorry, but you missed the joke. And what folks was I complaining about? Complaining? As if discussing reality is complaining? You need a stiff seasonal drink.

But thanks for filling in all the reasons why my final sentence was not expected to be taken seriously. I don't think it took Wall St to export manufacturing jobs but just a political will to remove barriers to unfair offshore labor competition. Industries had no option but to follow the 'China price'. I don't see any evil cabal here but just opportunism - short sighted - both political and economic.

You just showed you were dumb enough to double post.

So what's the meaning of life? :-) Any suggestions?

There isn't any.

There isn't any.

That doesn't mean it isn't really nice.

Focus on love and satisfying work. Learn how to appreciate time.

I googled the answer to life the universe and everything and got 42. Anybody else?

AKA 101010 in base 2 - sort of an "on again, off again" type of answer. . .

That is from The Hitchhiker's Guide To The Universe by Adams

Galaxy. The Hitchhikers Guide to the Universe is out for proofreading.


Well than why do we do anything that we do?

What of the universal truths of love, truth, freedom, caring and honesty. What about spirituality and all that jazz.

I'd like to share this with the TOD board, from Eckhart Tolle's, A New Earth.

Here are some of the most common unconscious thoughts that feed
the feeling of discontent or background resentment. I have stripped away the
content from those thoughts so that the bare structure remains. They become
more clearly visible that way. Whenever there is unhappiness in the
background of your life (or even in the foreground), you can see which of
these thoughts applies and fill in your own content according to your
personal situation:

“There is something that needs to happen in my life before I can be at
peace (happy, fulfilled, etc.). And I resent that it hasn't happened yet. Maybe
my resentment will finally make it happen.”

“Something happened in the past that should not have happened, and
I resent that. If that hadn't happened, I would be at peace now.”

“Something is happening now that should not be happening, and it is
preventing me from being at peace now.”

Often the unconscious beliefs are directed toward a person and so
“happening” becomes “doing”:

“You should do this or that so that I can be at peace. And I resent that
you haven't done it yet. Maybe my resentment will make you do it.”

“Something you (or I) did, said, or failed to do in the past is
preventing me from being at peace now.”

“What you are doing or failing to do now is preventing me from being
at peace.”

to eat everything in the Petri dish

The culture poisons itself on its own metabolic wastes before all the nutrients are consumed.

True, but that won't stop us from trying.

Not me I'm gonna swim faster than all those other little yeasties and find the alcohol-free zone in the vat :)

When we remember we are all mad, the mysteries of life disappear and life stands explained.

- Mark Twain, Notebook

There isn't any.

Damn, I didn't reload my browser for awhile and Darwinsdog had the same answer.

Isn't it obvious?

The highly evolved flying dinosaurs used their telepathic powers to capture our primitive knuckle dragger brains so that we could be fooled into digging up all the oil and coal, dumping it into the air. They did this by convincing us that by driving around in circles in fast machines, we too would live like the flying dinosaurs. The resulting emissions would warm the Earth so much that the other remaining land dinosaurs could attack and eat all the lethargic warm blooded mammals which replaced the previous populations of ruling dinosaurs millions of years ago when the Ice Ages made the Earth too cold. I expect that the most cold blooded killers will win out, as usual...

E. Swanson

And who will help you bear your cross?

Where I live, there are quite a few large hardwood trees. I've often wondered how the crows can fly thru those trees at full tilt in a gale without colliding with the tiny limbs which seem to grow everywhere. Birds must be the greatest athletes on earth. The amount of brain power required to accomplish this acrobatic miracle must be immense...

E. Swanson

I agree. I look at what we've accomplished with computers, the internet, integrated circuits, computer programming... And then I'm amazed at the computational power of even the simplest animals, who operate on much less evergy than even the smallest laptop. They don't require silicon or high temperature ovens or microscopic etching to create something that processes data... All that's required is a brain powered by carbon based food sources, and to make that brain it only requires one tiny cell with a full set of DNA...

I am not impressed with the power of bird brains. I have large windows for passive solar and the open feeling they give to a small house. Birds of all kinds are continually flying into them. They make a loud thump. Sometimes they kill themselves. Mostly they just lie on the ground until they get their wind back and fly off.

In the summer male robins will fight with their window reflection all day long for weeks on end. They really mess up the windows. Baltimore orioles and cardinals will do the same thing. Black birds are the smartest birds and never do it.

Robins will nest in an annoying place and if the nest is destroyed, they will rebuild in the same place 3 or 4 times. They do not avoid humans. Black birds would never do such a stupid thing.

Black birds work together especially when their young are fledglings. They will all try to distract danger and feed the young one. They also flock in large numbers for protection during migration.

But most birds are idiots. Sparrows and robins will build nests in tractors, trucks and other farm machinery. Swallows love to nest in buildings and poop all over every thing as do sparrows and robins. I have never seen a black bird doing such stupid stuff.

Swallows love to nest in buildings and poop all over every thing as do sparrows and robins. I have never seen a black bird doing such stupid stuff.

I agree, blackbirds rock... But as for the rest... We have Dove hunting here in Wisconsin. We tend to shoot pheasant, turkey, grouse, which might be for the better. The Passenger Pigeon went extinct partly because they were too easy of a target, and partly because they wouldn't breed properly in small groups.

Toto, we have some O-NPK for you...

Terrific photo--Damn, that is a lot of bird poop [10 lbs?]--never seen anything like that before. If I was an organic gardener nearby: I would leave a note offering to scrape & hose off the car for the compost material if the car was driven to the gardener's property. I would imagine the bird poop acids have already wrecked the car's paintjob.

I think a better use of that parking spot would be to put a flatbed trailer there and collect the O-NPK. Manna from heaven...

This reminds me of a story I heard as a kid about a farm machinery company. Their motto apparently was something like:

We won't stand behind our manure spreaders, but we do guarantee them.

Which reminds me of a joke from the same era...

"Say Clem, what do you think of my new manure spreader?"
"Why that's a pretty neet rig Jeb, but how do you get the cows to go on it?"

I'm glad you're doing some passive solar, but I don't think birds are dumb for not knowing how to deal with reflections in a large pane of glass. We all have our blindspots.. I hope you might consider it to be smart to put up some ribbons or raptor shapes or whatever might keep them from getting caught short by our industrial advances.

(Then, maybe we could hang some Raptor shapes in front of your ethanol argument and save you from continuing to run into that!)

Just funnin'..


When humans, with their frozen air curtains in their oddly boxy nests, have lived for a million years and have become a natural part of the environment, some randomly mutated future birds will have evolved to accomodate these 'windows' as easily and freely as-wait! Humans probably won't be around for a million years.

Never mind.


...the crows can fly thru those trees at full tilt in a gale without colliding with the tiny limbs which seem to grow everywhere. Birds must be the greatest athletes on earth.

Bats can do the same thing in total darkness... The real champs of vertebrate powered flight, tho, were the pterosaurs. Stretch receptors in smooth muscles attached to protein stiffening fibers in the pterosaur flight membrane fed back to the flocculus region of the cerebellum, which in turn controlled contraction/relaxation of these muscles. Real time fine-tuned adjustment of tension in the membrane compensating for small changes in pressure on all areas of the membrane must have made pterosaurs the master vertebrate aeronauts of all time. Too bad such superb animals are extinct.

What is the meaning of life?
To contemplate the question, "what is the meaning of life?"

At least, so it seems for Homo sapiens (the other species of life on this planet will have to supply their own responses).

An easy answer VK: the meaning of life is what you define for yourself. Just look at the diversity of answers you've gotten so far.

the meaning of life is what you define for yourself.

Sure, you can invent arbitrary & idiosyncratic 'meaning' for yourself. Just remember that such 'meaning' doesn't exist outside your own head & may not 'mean' a thing to anyone else. The universe doesn't owe us meaning & accordingly hasn't supplied us with any.

I'm not talking about one's fantasy about life dog. I'm talking about how you actually live your life. That's how one defines themself. You're right: it might be an arbitrary and idiosyncratcic meaning, but that's one's choice. Have you not defined yourself? And if you are not living the life you defined then who did define you as a person?

My answer wasn't original. It an old response to that same old question. And I've yet to hear anyone present an effective argument that it isn't the case.

I'm not talking about one's fantasy about life dog. I'm talking about how you actually live your life. That's how one defines themself. You're right: it might be an arbitrary and idiosyncratcic meaning, but that's one's choice. Have you not defined yourself? And if you are not living the life you defined then who did define you as a person?

My answer wasn't original. It an old response to that same old question. And I've yet to hear anyone present an effective argument that it isn't the case.

It is worth it to remember that your denial is only within your head, too. Of course, someone else's hope and optimism, as well as your cranky nihilism are also contagious, so once they are shared they are also in all our heads, as well.

Whether they are 'real' or not isn't the point of meaning. Meaning is simply how you understand the world, from within your head.

It will be idiosyncratic by definition.. but that doesn't invalidate it.

There are two world views in my head. One is a purely genetic view, that we seek to maximize inclusive fitness and it's all about the genes and all that jazz about reciprocal altruism and memes and what not. There are a number of books on this including the Red Queen, The Mating Mind, The Selfish Gene, The Spirit in the gene, Sperm Wars etc etc.

Than there's another world view I subscribe too, that of a spiritual one, Authors such as Deepak Chopra who try and combine spirituality and physics, Michael Talbot's the holographic universe, Eckhart Tolle's A New Earth and stuff like My Stroke of Insight by Jill Bolte Taylor (watch an excellent video here - http://www.youtube.com/watch?v=UyyjU8fzEYU) who believes that there exists a higher state within us - nirvana, and that it lies in the right brain.

There are many incredible feats that those who have attained mastery over their brain can complete. They are absolutely present and aware. For example the happiest man in the world http://www.independent.co.uk/news/uk/this-britain/the-happiest-man-in-th...


As a young man, Matthieu Ricard, 60, was regarded as one of the most promising biologists of his generation. He completed a starred PhD at the Institut Pasteur under the supervision of Nobel prize-winner François Jacob, but abandoned his scientific career in 1972, when he moved to Darjeeling. There, he devoted himself to studying under Kangyur Rinpoche, a Tibetan master in the Nyingma tradition: the most ancient school of Buddhism. He has been a monk, and celibate, since he was 30. Ricard still lives at the Schechen Monastery in Nepal.

To scientists, he is the world's happiest man. His level of mind control is astonishing and the upbeat impulses in his brain are off the scale.

Now Matthieu Ricard, 60, a French academic-turned-Buddhist monk, is to share his secrets to make the world a happier place. The trick, he reckons, is to put some effort into it. In essence, happiness is a "skill" to be learned.

So while some argue that it's all in the genes, there is the opposite side of the coin that says hey, wait a minute, there are all sorts of anomalies, that consciousness has something very special too it. Only time will tell, maybe CERN will give us some answers after blowing up a few atoms.

A relatively small % of people actually desire happiness. This French guy has made it a priority so he is getting it.

Now Matthieu Ricard, 60, a French academic-turned-Buddhist monk, is to share his secrets to make the world a happier place. The trick, he reckons, is to put some effort into it. In essence, happiness is a "skill" to be learned.

Buy his books, that will really make him happy!


Oh please!

Good article on him in 'YES' magazine last month.

Compassion is Good for the Brain

When Dr. Richard Davidson of the University of Wisconsin used magnetic resonance imaging to look at Matthieu Ricard’s brain he saw a prefrontal cortex—the part of the brain associated with happiness and other positive emotions—lit up in a way never before seen by researchers. Ricard, a PhD geneticist and Buddhist monk who’s been meditating for decades, had off-the-charts gamma wave activity, which corresponds with focused thought.

And appropriately, my music is playing 'Let it be' as I send this one in.

I don't know what it means, but it makes me happy. What's in your head actually matters.. for your health, for your thinking, for your relationships and for your actions out in the physical world.


Thinking about it.. it's only a conceit to conclude that your thoughts are not also part of the physical world.

One must share one's knowledge. I mean that's what books are for - sharing and storing knowledge. He's a monk who lived in Tibet for 3 decades, he doesn't have much use for money.

Kurt Vonnegut asked a slightly different question:

"Why are we here?"

He said that "My son the doctor" replied with what Vonnegut accepts as the answer.

"We are here to help each other through whatever this is."

A slightly different way to approach the meaning of life comes from novelist Walker Percy, who -- paraphrased -- put it like this:

The only question facing each of this is: "what am I going to do between now and whenever I die?"

These seem to me to be important clues about the nature of our existence.

I usually feel that we have reached Peak Wisdom over and over again, but every now and then, some bubbles up from the phenomenological landscape.

"Why are we here?"

We're here because our parents fucked and nothing has killed us yet.

This always made sense to me:

"Where ever you go...there you are." - George Carlin

So for me...life is more existential..cannot be talked about...we are of the moment if we chose to be.


...we are of the moment if we chose to be.

I've always heard the admonishment to "live in the moment" or "be here now." What I'd like to know is how it may be possible to NOT BE "in the moment"? If you know please clue me in, as I'd like to leave "the moment" to go back & visit my dead grandparents or go forward to see how all this "peak oil" business finally turns out. Thanks.

...of course...one can chose not to be here and now. If you ever figure out time travel let us know. The only way I know is through books and letters.

We're all travelling through time --advancing one minute per minute. Travelling significantly faster than that (relative to everyone else) is possible but requires moving at a velocity close to the speed of light. And for that, you will need a really expensive spaceship, probably one powered by fission or fusion.

Vt = Velocity in Time
Vs = Velocity in Space
c = Speed of light

Vt^2 + Vs^2= c^2

So if we could move at 1/2c, we would be doing around 52 seconds/minute...

Hi Darwinsdog,

The book to read is David Benatar's "Better Never to Have Been: The Harm of Coming into Existence":


Contains plenty of good arguments for suing your parents for gross negligence.

The idea that it would've been "better never to have been" reminds me of the Albigensian or Cathar doctrines that only pure spirit is "good" and that matter & material existence is "evil." Of course, the Catholic Church regarded these ideas as being "heretical." You could get burnt at the stake or even have a crusade launched against you for espousing such ideas. Benatar had better watch out, the pope might send him to some Nazi death camp for reviving these neo-Manichean doctrines. Personally, I've never talked to someone who never existed, so I don't know if such hypothetical people regard nonexistence as being better than existence. I guess it all depends on how you define "better."

I recommend the version of What Am I Here for by Lambert Henrricks and Ross.

Especially the scat singing of Annie Ross and the line "Maybe I'm doing it now"

Why are we here?

To move small quantities of water from place to place.

The universe is a ying yang of opposing forces. Energy, through entropy, attempting to dissipate, and mass, through gravity, attempting to coalesce. Life is the Universe's attempt to use complexity to achieve a sustainable balance between these forces.

OK, that may not be right, but it does discuss energy and sustainability, and thus is at least on topic for TOD.

Old geezer reply so disregard. I've had some time to think about this question. I have the stars at night and the wind in the trees, that's my standard answer. If you really want answers you must look at the stars at night. With your own eyes, and your own thoughts. We can see them differently, and be looking at the same sky But this is TOD so I need to go further. The meaning is the moment. Each one stacked on the next. They are very hard to catch as we think in a linear fashion, always looking forward to the next moment, not studying the existing moment.

We all have our moments and they define us. Births and deaths, we get those but there are times when we are not in what I call the "now", and we do not see. we think, we conjecture, we discuss, we plan, and yet we are not present as you might say. TOD does seem to miss "now". All about external forces and not what you muster within.

The meaning of life means something different to everyone, for me it is the birth of my children, the pine bough on the rafters of the house I built, the first fire in a chimney I built. I've built new for generations.

Moments, the dog, meeting the school bus, and running and protecting the kids in the woods.

40 below windchill and the mountain top.

Snuggling the one you love. That just perfect time.

Just sitting here petting the cat.

A touch of Jim beam after a long night.

Peace to you all.

Don in Maine

It's those special moments we personally enjoy.

Life is a roll of the dice. Everything is random. Even if you believe in a purpose to life, and a 'purposeful agent' aka god, his existence is random, too. Ever wonder where god came from? His existence, or lack thereof, is random too. The first act of creation was to roll the dice.

But the question sure is fun.


Life's journey is not to arrive at the grave safely
in a well preserved body,
but rather to skid in sideways, totally worn out,
shouting "...holy shit ...what a ride!"

- George Carlin

WASHINGTON - The Bush administration is trying to make sure in its final days that federal air pollution regulations will not be used to control the gases blamed for global warming.
In a memorandum sent Thursday, outgoing Environmental Protection Agency Administrator Stephen Johnson sets an agency-wide policy prohibiting controls on carbon dioxide emissions from being included in air pollution permits for coal-fired power plants and other facilities.

Incredible. Which part of the US constitution mandates that what one set of elected executive can do, another cannot undo?

This act may be used as an convenient pretext for the Obama administration not to do anything about it. Being from a coal mining state I strongly doubt Obama is eager to impose pollution controls on coal; moreover he has been an open supporter of the "clean coal" boondoggle during his campaign. After this memorandum, he well always be able to pin it on Bush and his legacy afterwards.

The same section that allows Paulson and friends to do what they have done with "our" money. John

What this is about is the lengthy rule making procedures which Congress has imposed on the executive branch. To change the rules developed by one administration means restarting the rule making process which could take several years or new legislation from Congress which could take even longer considering the Senate filibuster rule. It is one of the ways we are more a republic than a democracy.

Still banking on ethanol, unfortunately:

Mr. Obama said that Mr. Vilsack "led with vision" and "understands the solution to our energy crisis will be found not in oil fields abroad but in our farm fields here at home."


Could be referring to biodiesel and wind turbines or the gasification of biomass.

OR, he could be referring to that home-grown, sustainable stuff that powers about 8% of our automobiles, and reduces our trade deficit.

From an internal memo

In its weekly accounting, Baker Hughes Inc. reported Friday that the number of drilling rigs working in the U.S. had
fallen to 1,790, down 12% from the September peak and down 2% from the same time last year. It was just the second time the weekly report reflected a year-over-year decline in the past five years.
Most industry analysts now expect hundreds more rigs to fall idle by the middle of next year. Some industry experts suggest a drop of as many as 1,000 rigs, which would represent a 50% decline from the peak set in September. That would leave fewer rigs running than at any time since 2003.

"This whole thing is happening more at videogame speed than real life," said Bob Simpson, chairman of oil and gas producer XTO Energy Inc.

Chesapeake Energy Corp., the largest U.S. gas producer, has reduced its drilling budget four times since September, and has said it will do so again if necessary.
"These things take time to play out, and we have been reacting for the last four months to worsening credit conditions," Chesapeake chief executive Aubrey McClendon said.

The drop-off in activity is also bad news for oilfield service providers, especially drilling companies such as Patterson-UTI Energy Inc. and Nabors Industries Ltd.

If prices remain at current levels or fall further, though, the effects will be felt across the U.S. industry. Oil prices of "$40 to $60, that pretty much doesn't work in the U.S.," said Bill Herbert, an analyst with energy-focused investment bank Simmons & Co.

"We are asking Santa for fewer drilling rigs, less supply and a bit more demand," investment bank Tudor Pickering Holt & Co. wrote in a research note Friday.

Industry executives, however, warn that restoring production takes longer than cutting it. That means the drop-off in drilling activity could lead to supply shortages -- and rapidly rising prices -- when the economy recovers.
"This sets up, I kind of think, the mother of all price recoveries," Chesapeake's Mr. McClendon said.

The mother of all price recoveries...

Simmons said all the same things on the recent round table w/ Hirsch on GPM.

Ominously, he said we have **weeks** to fix this problem.

All hell breaks loose sometime between now and, say the end of February, April at the latest. I'm thinking within 30 days of the inauguration... if we're even that lucky.


Be careful statements like that are not politically correct these days everyone knows that the massive demand destruction will lead to decades of low prices. Heck I got my shoes shined at the airport the other day and the guy said we will never see high oil prices again.

Then he told me he got this great deal on a used SUV he could even afford it on his salary with gas being so cheap and all.

I should have been more clear. I don't have a feel for where oil prices will be in the late winter/early spring, but Simmons' comments just add to the other analysis I'm reading that all see trouble in this time frame.

I may end up stick here in Korea... visa bullshoot takes for flippin' ever, and is a restriction of my Constitutional rights... Grr....


I can't edit my older posts?? somethings gone wrong. but i can edit this one?? scratching head.

You cannot edit a post once it has been replied to.

By Ellen Brown

...While that may all be true, it still doesn’t seem to explain a sudden surge of interest in a potentially risky investment that generates zero profit. Or could it be that the profit is coming in other ways than interest? For banks, U.S. Treasuries are highly sought after regardless of interest rate, because the securities are considered “risk-free” for purposes of meeting the “risk-weighted” capital requirement of the Bank for International Settlements. Under the Troubled Asset Relief Program (TARP), banks can bolster their balance sheets by swapping T-bills for riskier “toxic” collateral, including those pesky derivatives that are messing up their books. Banks are allowed to buy Treasuries with their “excess reserves” (the amount by which the bank’s deposits have not been leveraged by a factor of ten or so into new loans).3 By putting these lendable funds into T-bills, the TARP recipients can remove them from the reach of riskier borrowers. The fact that the Fed is now paying interest on the reserves that banks hold at the central bank could also factor into the equation...

So far this month the highest rate for a 4 week T-bill was .09% and the lowest was -.01%.

Daily Treasury Bill Rates

Lots of economic stories in the McPaper today...

Owners find themselves trapped underwater

Increasingly, job seekers find that their homes are albatrosses imperiling their ability to relocate for higher incomes or more secure job opportunities. In fact, the greatest drop in home prices, in many cases, is in areas with the sharpest rise in unemployment.

"It's a pretty alarming trend," says Alan Steel, general manager of AOL Real Estate.

In California, about 18% of homeowners owe more on their first mortgages than their homes are worth. In Florida, it's nearly one in four. Half of homeowners in Louisiana are underwater on their first mortgages.

More low-income families need food aid

The economic downturn has left many low-income Americans struggling with hunger for the first time, a survey out Thursday by Feeding America shows.

The hunger relief group, formerly known as America's Second Harvest, found that 36% of low-income households say they ate less or skipped meals because they didn't have enough money for food, and 40% say they chose between food or paying for utilities in the past year.

"We've never seen anything like this," says Vicki Escarra, the group's president. "We're seeing more people come (to food banks) who've never come before."

More struggling companies delisted from Nasdaq, NYSE

Some companies aren't just seeing their credit dry up. Now they're losing their ticker symbols.

In the latest strain on companies already struggling to borrow, a swelling number are being delisted from stock exchanges. This is taking the capital drought to a new level, because delisted companies may have even more trouble raising money.

Maybe someone could answer for me.

I don't understand why companies facing de-listing are unwilling to do reverse stock splits to bring the price back into listing requirements. Sure it will fall some more but so what better to be listed with a tradeable value then on the pink sheets.

I suspect that whatever the reason that companies don't take this route will lessen and we will see a lot of reverse stock splits in the future.

Maybe someone can fill me in on why it seems to be the last choice a company would make.

In particular I've followed Sun Microsystems for some time who did a lot of stock splits during the .com years I've always felt if they did a 10:1 or 20:1 reverse split to better reflect the real company price and lower the volatility of the stock on a % basis they would be better off.


You will find the NYSE listing requirements here.




I did not see price as a listing requirement for the NYSE. For NASDAQ it is $1 ($5 for initial listin). Reverse splits are best if the firm hopes to get ownership from large institutions. Many institutions have rules prohibiting purchase of shares valued below $5 or $10. If you have no realistic chance of attracting shareholders from this class, de-listing may not be a bad thing.

Listing fees and expenses associated with listing can be substantial for smaller companies. 30-90k for NASDAQ annual fees, but there are other expenses. Reverse splits can be expensive if you are cash strapped. Indeed, you never know how many you will need to make.

Paul in Nevada

Thanks that makes some sense. Still when stock prices get close to a dollar for any company its a real psychological problem and your right how many do you have to do ?

Hello Leanan,

Thxs for the info, especially on the org: 'America's Second Harvest'. IMO, Obama needs to be moving full-speed on creating 'America's First Harvest for these people: relocalized permaculture, full-on O-NPK recycling, and narrow-gauge minitrains and SpiderWeb networks to support this direction. This could put millions back to work 'ribcage' building combined with the millions rebuilding the 'spine & limbs' of Alan's standard gauge RR & TOD ideas.

For Optimal Overshoot Decline and Minimal Undershoot: millions of wheelbarrows & bicycles are far better than lots of machete' moshpits. I hope Obama sees the need to move 60-75% of the postPeak workforce in this direction, but my Jay Hanson Thermo/Gene Collision background makes me very doubtful.

I would love to see my Phoenix hand-dig sixty miles of underground narrow gauge track just as Chicago did back in the late 1800s, early 1900s. When A/C gets too expensive for most people and companies: people will flock to travel/work in cool areas underground. Recall my earlier post where, as a young man, I worked in an uninsulated, uncooled building--after the end of a hot summer shift: my clothes would be totally soaked with sweat and exuded salt. It would kill me in short order if I had to do that kind of physically-exerting work again with no prospect of cool bedtime sleep for recuperation.

This was a pretty good job back in that recession. Prior to that I had an even more tiring job: I had a shoveling job in the blazing sun removing wet-mud & silt that was piling up underneath a rock & materials company's conveyor belts [with some underground]. For those that have never tried to shovel sucking silt: imagine a fifty pound weight added to the shovel end to simulate the 'breakout force'.
Next, I had to heave this shovel load unto the top conveyor belt; about chest high.

It was such hard, hot, and dangerous work that I was required to periodically make my self visible to the dispatcher in the yard tower. I had no car back then either: I pedaled many miles daily too [north central Phx to Litchfield]; even more on the days I had to also pedal to night classes at Az State University in Tempe.

Crash Concepts
Connecting the Crash Course to your Daily News
By Chris Martenson

I haven't looked at the entire site yet but the Crash Course looks very interesting

If you are brand new to this site, I'd like to direct your attention to The Crash Course, which represents my very best attempt to explain exactly how we got into this economic crisis. It's completely free and is my offering to everybody and anybody who wishes to view it. (more below)

Simply, in order to know where we are headed, we have to know where we are. And in order to know where we are, we have to know where we came from.

While The Crash Course is divided into small video sections of 3-18 minutes each, the whole thing runs just over 3 hours. If you are unsure of making that time commitment, start on Chapter 15: Bubbles, where I explain how the housing crisis came to be and how long it will take to resolve.

After that, if you chose to view more, I strongly suggest you watch from beginning to end as I have taken great care to build the concepts on top of each other.

More than 110,000 visits have been made to The Crash Course in the past 30 days, so you will be in growing company.

So far the videos load up extremely fast even for dial up users like me.


My take is that it is not a question that you should ask, but rather, one that is being asked of you. You answer through the actions you take and the choices you make. It is for you to provide the meaning, instead of expecting some one else to give it to you.

A question. A lot of oil producers hedged their production--let's say that a producer, in July, 2008, locked in a price of about $120, until July, 2009. This means that someone, let's call him Alpha, took the opposite side of the position.

As oil prices fell, wouldn't we see a lot of speculators like Alpha trying to sell their losing position to someone else, and as prices moved lower, wouldn't this be a feedback loop--all compounded by the credit contraction?

So, my question is, would the fact that a lot of producers (and for that matter, non-producers I suppose) locked in oil prices at what is historically a very high nominal price cause a moderate price decline to turn into a very sharp decline (with the credit contraction acting as an accelerant)?

I think this is THE BIG QUESTION regarding oil prices. Answers please fom you all TOD experts.

I thought that it was a pretty good question. I emailed it to some of my oil trader friends. The monthly peak of $134 that we saw in 2008 was more than six times the average price that we saw from 1986 to 1999.

My understanding is that the oil trade is basically a zero sum game, or worse than that because of commissions. For every winner there is a loser.

Why don't you write a post on this? I'm afraid this one might get lost in the 250 comments already made. Really, this is the most important line of investigation to understand what is going on right now.

Nate might want to. We traded a couple of emails. He thinks that what I described is a factor, but not the main factor (falling demand being the primary factor).

Ideally, you would have a consumer (such as SouthWest Airlines) on the opposite side of every producer for futures trades. But speculators provide the "grease" to make the markets work better.

It is an open question if producers or consumers have a larger presence on the oil futures markets.


From a link in the DB today? not sure:

"Spare Capacity

Spare production capacity in the oil industry may more than double through 2012, because of falling oil demand and new supply from investments already being made, said Cambridge Energy Research Associates.

Excess capacity may rise to 8 million barrels a day from 3 million a day this year, according to Cambridge, Massachusetts- based CERA’s estimates published in a report for delegates at the London Energy Meeting, which included representatives from 27 oil consuming and producing nations. "


I know CERA has little if any credence here, but we are below a yergin, so giving them the benefit of a doubt...

Their spare capacity, coupled with demand, seems to project low prices for quite some time, years rather than say next summer's driving season. New supply from investments already made says don't worry about mothballed projects, 8 mbd excess is huge.

I'd like to see comments-Ace?-where they coming from?

As we have previously discussed, Yergin was predicting, in November, 2004, that rising oil production would outpace increasing demand, causing oil prices to fall back to $38.

What we have seen is declining net oil exports, flat crude oil production and a slight bump upward in total liquids (resulting from dying gas cap oil fields according to Simmons)--which forced prices up, in order to balance supply & demand, until demand fell as the economy contracted, especially in the fourth quarter of 2008.

look up, according to simmons, no way demand has fallen enough to justify the current price. and furthermore, do we really know what demand is ? today the market has a theory that supply balances demand at ca $32. and of course there is a lot of oil in inventory that will need be burned off.
i keep seeing stories that blames(or credits) the price change de jour on demand or even less tangible "anticipated" demand.

caution: wild oscillations ahead !

woohoo ride em'cowboy.

I'm puzzled about Matt Simmons certainty about demand not having fallen enough to explain fall in price. Is it possible that both elasticity of demand and elasticity of supply are very stiff (opposite of elastic) for oil. If that is the case then tiny changes in either demand or supply can lead to major swings in price. I can see how elasticity of supply is very small.

Suppliers seem to have to be hit by a ton of bricks before they can try to restrict supply. And when operating at maximum pump rate, there is little they can do to increase supply quickly.

Likewise, consumers have very strong habits of consumption for things like gasoline, and this propagates backwards through the supply chain to there being very consistent purchase rates for crude, IMHO.

Do we really have precise ways to measure tiny shifts in supply or demand? I doubt it. But I'm not a expert.

It might be noted that production, per Rembrandt's chart number 4, fell by 10 Million bpd between 1977, and 1982. IIRC, that was 16.6%.

'77 to '82 was in part a case of substitution in the us of a at least. cheap natural gas was substituted for expensive crude and heating oil.

Do we really have precise ways to measure tiny shifts in supply or demand? I doubt it. But I'm not a expert.

No we don't the error term is horrendous for the world I set it at +/- 2mbd the range is like losing Iran the third largest oil exporter in the noise.

Think about it lest assume for this discussion we use 70 mbpd globally and the average time between when oil is pumped and when you burn it in your gas tank is one month that means we have at least 2100 mb of oil inflight if you will in the system. Double this for redundancy and we have 4200 mb of oil a super tanker carries about 2mb so its about 2000 of the worlds larges ships moving at any one time. Pipelines move a good bit of the oil but hopefully you get the picture. The US the larges market burns about 25mbd or so. So daily consumption of the US is about 1.2% of the oil thats already been pumped and is headed for delivery somewhere. This is oil thats been pumped out of wells sold and a good bit of it refined.
The weekly US report on storage the best we have which is voluntary is a snapshot of 7% of the world current oil thats in flight.

On top of this KSA shocked the supply chain with between 60-90 mb of oil this year in my opinion primarly from emptying storage this is like have the US which uses 25% of the world oil take 3 day off without using a single drop.

That a huge shock even given the volume of oil thats moving through the world bigger then any of the economic changes a resonable estimate of the economic contraction doubles that number to between 120 mb to 180 mb or the US took a entire week off without using a single drop of oil. And people that don't look at the numbers are wondering why the price can drop.
I'd suggest that if the US quit using oil for one week the price would fall through the floor. Thats literally what happened this year but is a very short term situation.

Sorry to reply but there is more. Because of the hurricanes we basically added France and then some to a short term drop in demand and I've not even really included the financial moves because of deleveraging. Bottom line is the world for a brief moment has bit hit by a slug of light sweet crude that it has not seen in 4-5 years. The key is its brief.

Thanks, memmel

We live in troubled times. One of the great voices of reason has lost his reason, but not his voice.

Yesterday, Paul Krugman wrote in NYT that the whole of Wall Street is a Ponzi game. It seems true to me, in which case it is kind of pointless to apply rational economic arguments to details like the ups and downs of the price of oil.

el bardi was recently quoted as saying that inventory was close to 57 days oecd demand. that is a hell of a lot of inventory. something on the order of 2.5 gb. but then the normal inventory is on the order of 52 days so 5 days in excess of oecd demand or about 250 million barrels. and if "real" demand is just 1 million bpd below supply, it will take 8-9 months to bring the inventory down to more normal levels.

Well I think he is a little high. My own attempts show that it looks like KSA injected about 60 million barrels to maybe 90 million barrels of light sweet crude on the market in late 2008. I think most of this came from storage but they can also readily push their fields.

Next because of the Hurricane I'm guessing and additional 60 million barrels or so where freed up on the world market and the US was unable to import the comment about France above I agree with.

Now of course we have the "demand" variable and thats a touch one but at leas 30 million barrels have been freed up by the known demand drop we just don't know for sure how much.

So I come up a bit lower say 160 - 180 million barrels of excess oil on the market.
I figured about 6 months to run it down and about 3 months max before the market would respond to shortages. The fact that we where probably starting to again draw down world crude supplies should now be obvious and attempts to secure oil further out should be met with higher prices.

The market is in contango but it looks like everyone has decided to all supplies to draw down and not try and get the best price for as long as they can and keep inventories high.

My opinion on this is that as long as prices are falling you get this situation that refiners don't build refining inventory so in an sense that market can work at cross purposes. The gasoline prices track closely to the current oil price but the oil itself was actually purchased earlier at a higher price with falling oil prices you get low inventories of finished products high nominal oil inventories and it seems to take time to clear.

And last but not least some decent precentage of the current supplies is being held by people planning on selling in a few months or refining in a few months. So days of supply are probably a bit off since lets say maybe 1-2 days are actually oil being held for later delivery or use given the contango in the market. It could be more. This of course further distorts the local picture. And of course real demand is probably hard to figure.

I of course expect the market to start responding to future shortages sooner rather than later but the key variable is unfortunately when US stocks begin to get drawn down as long as they are rising I don't think the market will do anything. I expected them to be heading down by now and thats not yet happened but this is a matter of weeks or months at most.

So we must join the market it looks like at simply wait and see. About the only forward looking events that seem to be happening are some people storing oil for later delivery other than that I don't think the market is going to do anything until OECD stockpiles are obviously heading downwards.

What would be the 'evil twin' or counterpart to a Bubble? A sinkhole?

Darwinian I think, had a visual to describe how the price-swing was something like a game of 'snap the whip'.. with price being the last kid in line.. so even if it's not the only factor, the fundamentals (the first kids in line) are still leading the behavior.

Maybe they are ignoring the 9.1% annual decline rate of production from existing crude oil wells as reported by the IEA.

My server has been sporadic at best all week. I barely posted the above before it screwed up till now, which means it'll go shortly again.

I wonder if CERA simply believes that there has always been 2-3 mbd spare. To this they add the total OPEC cut plus projected cuts from July 08 to present of 4.4mbd, and bingo, it's close enough to eight. Which again denies any depletion of existing fields going forward, static demand, and instantaneous restart of any mothballed production. I know, too simplistic, but is it?

Hi totonelia-

Thought you (and others) might find this book useful. Availible free and legally as a 14.7mb .pdf download via Google Books.

Fertilizer Resources of the United States - US Dept of Agriculture (1912)


Hello IanSF,

Thxs for the link, I hope to get it read someday [just scrolled through quickly]. The USGS has some later info on our native western resources:

..Concentrated initially in Southeast Idaho, this study is enhancing our ability to evaluate additional phosphate mineralization and to anticipate, assess, and mitigate environmental hazards, such as selenium toxicity, that are spatially associated with the existence and societal use (mining and reclamation) of the phosphate...

The organic-rich black shales that host phosphate also contain significant concentrations of potentially toxic trace elements, including arsenic, cadmium, copper, molybdenum, lead, antimony, selenium, vanadium, zinc, and others.

In 1996, several horses pastured near a phosphate waste dump in SE Idaho were euthanized due to severe selenium toxicosis. Additional selenium problems are documented. These problems have occurred despite detailed, multi-agency investigations undertaken in the 1970's for an Environmental Impact Statement on proposed mining, which suggested that toxic element releases would be unlikely because the "carbonaceous" system is "buffered."
These toxic concentrations are obviously an ancient artifact of the previous geology, and process filtering these undesired elements to supposedly 'safe, usable' levels certainly adds additional costs to the beneficiation process. Even with this process removal, global topsoil loadings of cadmium, arsenic, selenium, mercury, etc, have continued to rise, most likely from burning coal and other industrial processes. This is worrisome for us since we are the apex consumer of the lifeforms concentrating these heavy metals.

SuperG is going to be working on the site Christmas Eve and Christmas Day. It may be down for several hours.

For that reason, I'm going to ask those of you wanted to post "eyesore" Christmas photos to do it this weekend (Dec. 20 and 21) instead of Christmas Eve.

Ok drummers the peak doomer wants to know has anyone revised the time projections of depleation rates, short term consumption increases are off the table???

I see the time has increased but my question is by how much? does anyone want to get wet with this new development. Freezingtoes.

Volatile price action in the last minutes on the expiring Jan. Crude contract today. A sudden plunge to 32, a quick bounce to 37, and a settle at 34 within a few minutes. It was interesting to see on globex the $1+ bid/ask spreads (due to low volume) and 100 contract lot sizes offered towards the end of the session.

Am I imagining things, or does anyone else notice that Simmons seems to be deteriorating in appearance this last year or two? I've also noticed that once or twice he has seemed a little "tired and emotional" during interviews. Are you thinking what I'm thinking ... ?

Mind reading is not my strong suit...LOLOL
Are you implying that he is completing his crackup...or dying? Perhaps he and Steve Jobs will soon be touring the Great Hereafter?

Ya'll...Need to relax....Pssst...One word....Algae

He's been traveling a lot, too. That can wear a person down quickly.

... I think it's called ageing.

Let me spell it out then, for the less intuitive: my impression from some of his interviews (and I've listened to most of them over the years) is that he is often under the influence of alcohol, especially in the last few months. I don't think I am mistaken. Nothing wrong with that, plenty of people drink to excess, but it gives me pause when taking his prognostications at face value. But don't get me wrong, I like the guy. I'm a big fan.

Well gee, I guess anyone in the financial and energy industries has had a few good reasons to be worn down a bit lately. I hope Matt can find a little time to recharge....

Hello TODers,

Fertilizer prices could be bottoming
Weekly Fertilizer Review for Dec. 19, 2008

While nearby prices for fertilizers continue to show weakness due to plunging demand and oversupply, forward bids are starting to creep higher for January and February delivery on international markets, the first hint that the complex may be trying to bottom...

..Manufacturers announced more cutbacks in production this week, as they move quickly to slash output. Now, the question is whether they will be able to supply all the product farmers need in a relatively short amount of time this spring. The industry is already buzzing about the potential for a logjam, compounded by squeezed farmer margins that may force producers to make last-minute planting decisions...
see included charts & further analysis inside

Will a I-NPK pricing turnaround precede a crude oil and/or natgas pricing turnaround? If not, I then expect any later rising trend in FF-pricing to quickly set off a farm purchasing frenzy to lock in whatever diesel and I-NPK they can afford before prices rise any further; i.e, farmers trying to get ahead of the FF/I-NPK latency effect. IMO, this ragged, jagged pricing volatility in JIT I-NPK will drive the entire global supply chain crazy unless they develop some kind of market-smoothing supply-demand mechanism.

A farmer can be Liebscher's Optimal successful with Just-In-Time farmgate delivery. It is a disaster when a Just-Isn't-There supply chain logjam makes the farmer miss the critical seasonal planting and fertilization time-slots.