Drumbeat: April 17, 2009

The good oil is that stocks are already running thin

AUSTRALIA'S abundant endowment of natural resources has provided a cushion against the need for energy security policies. No longer.

Declining domestic oil production, refinery disruptions, extended supply lines, geopolitical turmoil and the carbon constrained future are all sending warning signals: Australia's easy energy ride is over, and moves to encourage renewable transport energy sources are long overdue.

It is a message the Howard government ignored. Rudd so far has shown little interest.

Given Australia's increasing reliance on oil imports, and our relative isolation, such political apathy is a mystery.

US natural gas rig count slides to 6-year low

NEW YORK (Reuters) - The number of rigs drilling for natural gas in the United States fell 30 to 760 last week, the lowest level in more than six years, according to a report issued on Friday by oil services firm Baker Hughes Inc in Houston.

U.S. natural gas drilling rigs have been in a steady decline since peaking above 1,600 in September and now stand about 701 below the same week last year, the lowest level since March 14, 2003, when there were 754 gas rigs operating.

Number of active oil rigs falls by 30

HOUSTON — The number of rigs actively exploring for oil and natural gas in the United States fell by 30 this week to 975, down nearly half from a year ago.

Of the rigs running nationwide, 760 were exploring for natural gas and 205 for oil, Houston-based Baker Hughes Inc. reported Friday. A total of 10 were listed as miscellaneous.

A year ago, the rig count stood at 1,827. The U.S. count is down 52 percent since the end of August as weak energy demand has hampered oil-field activity.

Venezuela says OPEC should restore oil price bands

CUMANA, Venezuela (Reuters) - OPEC should create an oil price band of $70 to $90 per barrel if oil prices stabilize, Venezuela's oil minister said on Friday, adding he expected prices to reach $60 per barrel by the end of the year.

The Organization of the Petroleum Exporting Countries in 2005 abandoned a price band system, which seeks to keep oil prices within a set range, that was adopted in 2000.

Iraq parliament promises to push Shell out of gas deal

Expectations that foreign companies will cash in on Iraqi oil riches were called into question tonight after a key parliamentary body in Baghdad pledged to "push Shell out" and halt a forthcoming licensing round.

The warning from Jabir Khalifa Jabir, secretary of the Iraqi parliament's oil and gas committee, was seen by financial analysts as a serious threat to western investment opportunities in a country that holds the second-largest oil reserves in the world.

Kazakhstan expects more deals with Chinese firms

BOAO, China (Reuters) - Kazakhstan is working with China to ink more deals in both energy and non-energy sectors following this week's $10 billion oil-for-loan deal, a senior Kazakh official said on Friday.

On Globalization, Economics, And The History of Food Crises

Early economists were struck by the fact that the 17th century Dutch economy flourished, despite the fact that it was heavily dependent on imports for everything. Although the Dutch had developed the most intensive farming techniques in Europe, economists paid virtually no attention to that part of their economy. Instead, they marveled at Dutch trade and finance and the sophisticated futures markets.

Agriculture appeared to be the alternative to capitalism, because every culture seemed to be relatively self-sufficient, rather than dependent on traded commodities. Its products are not valuable enough to export abroad. As I described in my book, The Invention of Capitalism, early economists were very concerned to find ways to squeeze people off the land in what Marx called primitive accumulation.

Court blocks Bush-era Alaska offshore drilling

WASHINGTON - A Bush-era program to expand oil and gas drilling off the Alaska coast was blocked Friday by a federal appeals court because of environmental concerns.

The Bush administration's Interior Department failed to consider the offshore environmental impact and marine life before approving an oil and gas leasing program in the Beaufort, Bering, and Chukchi seas, the three-judge panel in the District of Columbia ruled.

Oil Shock and Inflation Ahead

Slogans are comforting and easy to learn. Since late 2008 the hard-worked slogan is that cheaper oil, today, is one of the few rays of sunshine for the recession-wracked global economy. Today's variant of the mother slogan "High oil prices hurt economic growth" has little or no proof to offer, for example cheaper oil helping recovery of 4WD car sales, airline passenger numbers, house building activity, world steel output, or production of plastics, pesticides and fertilizer. The fallback slogan for cheap oil aficionados is that even if it doesn’t restore growth, cheaper oil will hold down inflation.

Oil prices themselves are far above the 'nice price' of the late 1990s and first few years of the 21stC, that is below 30 USD/bbl, and at present are tending to be "surprisingly firm" at around 50 USD/bbl. This is attributed to surprisingly firm discipline among OPEC suppliers facing their own problems of economic recession and falling investment, not only in the oil and gas sector. When as likely by June-July prices bounce back above the 'psychological ceiling' of 60 dollars, despite the recession, the mother slogan that high oil prices destroy economic growth can be dusted off and recycled, as an explanation why the recession just keeps on keeping on.

Kurds discover 3bln to 4bln barrels

Iraq's largely autonomous Kurdish north has discovered 3 billion to 4 billion barrels of oil, and hopes for far more, a minister said.

Reliance Gives Up Jamnagar Refinery Export Status

(Bloomberg) -- Reliance Industries Ltd., India’s most valuable company, surrendered the export-oriented unit status of its refinery to sell fuels locally.

The change, effective yesterday, will enable the refiner to cater to both the local and overseas markets efficiently, Reliance said in an e-mailed statement today.

Huge manhunt over $40 million Army fuel theft

ALEXANDRIA, Virginia - A former U.S. Army contractor convicted of stealing $40 million worth of fuel from a military base in Iraq is helping authorities in a global search for other suspects in the case, according to court records.

One suspect has already been arrested in the Philippines and now awaits indictment from a federal grand jury in Virginia.

Just what is it with evangelical Christians and global warming?

A poll this week showed that only 34% of America's white evangelical Protestants accepted there is solid evidence that global warming is real and that it is attributable to humans.

EPA to Propose Regulating Greenhouse Gas Emissions

The Environmental Protection Agency today plans to propose regulating greenhouse gas emissions on the grounds that these pollutants pose a danger to the public's health and welfare, according to several sources who asked not to be identified.

The move, coming almost exactly two years after the Supreme Court ordered the agency to examine whether emissions linked to climate change should be curbed under the Clean Air Act, would mark a major shift in the federal government's approach to global warming.

Oil production puts Russia on collision course

OPEC is squaring up for a spat with Moscow as it becomes increasingly frustrated with Russia's reluctance to curb oil output as agreed with the international cartel.

Cash-rich China courts the Caspian

The global downturn is spreading to Central Asia. It may lead to a marked shift of fortune in the Great Game for control of Caspian energy reserves. On the surface, the intensity of the rivalries may appear to have subsided, as the principal protagonists - Russia and the West - brood over the precarious state of their own finances and prioritize fixing their domestic economies.

But the slowing down of the Great Game bears a deceptive appearance. China gains out of any changing equations. Of all the major economies of the world, it is in China that the government's 4 trillion yuan (US$585 billion) stimulus package may have begun showing results, which puts the economy in a "better-than-expected" shape, as Premier Wen Jiabao said on Thursday.

Russia, Azerbaijan seek broader gas ties

Talks between Russia and Azerbaijan on Friday paved the way for a gas supply agreement that may undermine Western Europe's efforts to reduce their energy dependence on Russia.

"We have a very high chance of entering a full-blown agreement" on gas supplies, Russian President Dmitry Medvedev told reporters after a meeting with his Azeri counterpart, Ilham Aliyev.

Iraq addressing oil infrastructure shortfalls

BASRA (Reuters) - Iraq needs foreign companies to invest in drilling more oil wells as it does not have the capacity on its own to more than double national output of 2.3-2.4 million barrels per day of crude, the oil minister said.

Oil Minister Hussain al-Shahristani said Iraq has 70 new oil wells ready to start pumping crude in the next two months but lacks the infrastructure and resources to add much more than another 100 in its southern fields without foreign investment.

Tesla's Elon Musk: the democratisation of electric cars is speeding up

Just as no credible scientist questions whether the world is getting warmer, no credible automotive engineer questions whether electric vehicles (EVs) are more energy efficient than internal combustion engine vehicles or hybrids. The automotive industry, which for years experimented with hydrogen fuel cells, biofuels and other alternatives, has reached a clear consensus: the future is electric.

Fighting Real Parrots With a Fake Owl

Many of Con Edison’s challenges are well known — blackouts and steam pipe explosions included — but a lesser-known problem has proved no less nagging: How to protect its equipment from the thousands of monk parakeets that nest in the utility poles of Queens and Brooklyn.

These birds — also called monk parrots or Quaker parrots — are attracted to the heat given off by the transformers and other equipment high up on the utility poles. Their nests often wreck the electrical equipment by engulfing the electrical devices and blocking ventilation.

New study warns damage to forests from climate change could cost the planet its major keeper of greenhouse gases

"We normally think of forests as putting the brakes on global warming, but in fact over the next few decades, damage induced by climate change could cause forests to release huge quantities of carbon and create a situation in which they do more to accelerate warming than to slow it down," said Risto Seppälä, a professor at the Finnish Forest Research Institute (Metla) and Immediate Past President of IUFRO, who chaired the expert panel that produced the report.

Back to the dark ages

The three-day week began at midnight on New Year's Eve in 1973, a Monday. The Heath administration decreed that until further notice all businesses except shops and those deemed essential to the life of the country would receive electricity only on Mondays, Tuesdays and Wednesdays, or on Thursdays, Fridays and Saturdays. Non-essential shops would get power only in the morning or the afternoon. When the electricity was off, affected businesses would have to make do with candles, gas lamps, private generators or moving their workers next to windows to make the most of the brief winter daylight. Employees would have to wear extra clothes to keep warm.

Four days before the restrictions started, the archbishops of Canterbury and York suggested every British congregation should pray that, "God may guide us in facing the present crisis with wisdom, justice and self-sacrifice." Two days before, the Daily Mail said "industry minister Tom Boardman has said that a two-day week could not be ruled out." The national emergency that followed would last for just over two months. Yet its roots went back much further than the winter of 1973-4. One of them was Heath's economic policy.

BP Well Positioned For The Future, 2009 Challenging

BP Group Chief Executive, Tony Hayward, said Thursday that the company is well positioned to face the current economic environment and to turn it into an opportunity that, going forward, will set it apart from its competition.

He added, "BP has been, and remains, an organization operating at the frontiers of the energy industry. Our technology and capability allow us to take on challenges that others cannot -- or choose not -- to confront, securing access to new resources now as in the past -- from Iran 100 years ago to the Canadian arctic Thursday.

Southwest Airlines freezes hiring after losing $91 million

Once relentlessly profitable Southwest Airlines reported its third-consecutive quarterly loss Thursday amid what CEO Gary Kelly called the "toughest revenue environment in our history."

The discount airline reported losing $91 million, or 12 cents a share, in the first three months. It ordered a hiring freeze and offered employee buyouts.

EPA to review system gauging air emissions

In a move that could signal a fundamental shift in how industrial pollution is regulated, the U.S. Environmental Protection Agency has pledged to reconsider how it estimates the amount of toxic chemicals that refineries and petrochemical plants release.

General Motors considers fates of GMC, Pontiac

DETROIT — General Motors, in its attempt to push its restructuring plan deeper than first proposed this year, is examining whether it makes sense to keep the GMC and Pontiac brands going, says a source briefed on the discussions.

No cash? Barter for services with "dibits"

With Dibspace, they hope to offer a place to unite the roofer sitting around with time on his hands and a client with a hole in his roof but no cash to repair it.

"It's not that there's not enough supply and demand," said Dominic Canterbury, an independent marketing consultant who started Dibspace with Aaron Brethorst and Dave Richardson. "The currency has dried up."

Government Fuel Goals Beg For Higher Ethanol Blends, Study Concludes

A new report on biofuels is urging that better infrastructure and more aggressive policies necessary if the nation is to meet its mandates for ethanol and other alternative fuels.

The report, by the National Commission on Energy Policy, argues that the nation needs to increase the amount of ethanol blended into gasoline, as well as make it easier for biofuels plants and pipelines to get government permits and make it easier to transport ethanol.

Economist/activist says world on cusp of third industrial revolution

Mankind is facing “the end of human civilization as we have come to we know it” because of global warming, according to activist Jeremy Rifkin, citing NASA climatologist James Hansen. But we are also on the cusp of a “third industrial revolution” that might be able to stave off collapse.

Energy Secretary Chu, on Power Sources Old and New

Romano: Do people get it? How would you rate our nation's understanding of the energy crisis?

Chu: I think virtually all Americans are uneasy about our growing dependency on imported oil. . . . [But] it's hard for people to actually think deeply about what will be happening 30, 50 years from today [on global warming]. Most societies have not had to grapple with the fact that something 50 years down the road can have some grave consequences.

Mexico’s Pemex forecasts daily oil output decline next year

RIO DE JANEIRO, (Reuters) - Oil output at Mexico’s state-owned firm Pemex is expected to fall to about 2.6 million barrels per day in 2010 from an expected 2.7 million bpd in 2009 due to technical disruptions at its main oil field, Chief Operating Officer Raul Livas said in an interview on Thursday.

The expected fall is due to lower production at the giant Cantarell field, he said, adding that output should remain at a relatively stable level going forward.

Petrobras Seeks New Rigs, Marches on with Expansion Plan

Petroleo Brasileiro SA (PBR), or Petrobras, will start seeking bids for new rigs in the next couple of months as it marches on with its ambitious five-year investment plan.

The Brazilian state energy giant in January announced it planned to invest $174.4 billion in 2009-13, including $28.6 billion this year -- an increase from $23 billion in 2008, which is unusual as global oil majors including U.S. firms Chevron Corp. and ConocoPhillips are cutting back on investment.

Mideast fuel oil prices set to rise next week

DUBAI: Middle East fuel oil prices were poised for a boost next week after holding steady over the past seven days, as East of Suez supplies were expected to tighten due to refinery maintenance and a seasonal increase in demand.

Benchmark fuel oil differentials for 180-centistoke (cst) were pegged at $5 a tonne this week, and maintained that level despite unexpected spot sales from Kuwait and Saudi Arabia. The spread from May to June fuel oil in Asia was pegged at minus 12.5 cents a tonne, closer to backwardation than it has been in months.

Bangladesh: No respite from power cuts

Life in the capital and elsewhere in the country has become miserable with the mercury rising and its effects worsened by frequent power cuts.

The HSC examinees are facing severe difficulties in taking their preparations due to rampant power outage while the erratic electricity supply is hampering production in factories as well as office works.

Can oil from tar sands be cleaned up?

IN THE Canadian province of Alberta the ground is skinned and gutted. Rising oil prices and dwindling reserves have pushed oil companies to exploit what was once considered unexploitable: tar sands, the dirtiest oil on Earth and the most expensive to extract.

This strip-mined landscape is bad enough, but another method of extracting the oil is on the rise, and it is even more damaging to the environment. Yet new technologies offer hope that tar sands could one day be transformed into one of the cleanest fossil fuels.

Peta Asks Minister Smith To Go Vegetarian

A recent UN report determined that raising animals for food generates almost 40 per cent more greenhouse-gas emissions than all the cars, trucks, ships and planes in the world combined. The report went on to say that the meat industry is "one of the … most significant contributors to the most serious environmental problems, at every scale from local to global" and recommends that the meat industry "be a major policy focus when dealing with problems of land degradation, climate change and air pollution, water shortage and water pollution, and loss of biodiversity".

Future-proof homes for a warmer world

Global warming will change how we live. Models forecast that tropical storms are likely to become stronger and more frequent, drought will bring more forest fires, and shrinking ice caps will raise sea levels worldwide.

Some architects are now preparing for these challenges by attempting to design "future-proof" homes.

Melting Glaciers Threaten Asia Security as Water Supplies Fall

(Bloomberg) -- China and India water supplies will decline as global warming shrinks Himalayan Mountain glaciers, increasing the likelihood of regional disputes, according to a report by the Asia Society.

Asia, with half the world’s population, has less fresh water than any continent except Antarctica, said Suzanne DiMaggio, director of social issues for the Asia Society, a New York-based nonprofit group that promotes Asian-U.S. relations. Water scarcity could trigger conflicts between villages in China and rivals India and Pakistan, and fuel water-borne disease and “large-scale” migration, according to the today’s report.

Global warming from fossil fuel emissions is increasing the frequency of extreme weather, intensifying dry and wet seasons that can overwhelm crops, the report said. Lower crop yields from water shortages in China or India, the world’s most populous nations and the top producers of wheat and rice, could affect world food prices.

“If we don’t start addressing water access issues soon, we’re likely to see growing incidents of destabilization and perhaps even outright conflict between countries and within countries,” DiMaggio, an author of the report, said in an interview yesterday.

Oil Heads for Biggest Weekly Drop in Two Months on Slack Demand

(Bloomberg) -- Oil headed for the biggest weekly decline since February after a stronger dollar reduced its appeal as a hedge against inflation and reports showed falling fuel demand and rising stockpiles.

U.S. fuel consumption in the first quarter fell to the lowest for that period in 11 years, the American Petroleum Institute said yesterday in its monthly report. The U.S. dollar gained for a fourth day against the euro, limiting demand for crude as a currency hedge.

“We still have a picture of very low demand and a picture of stock builds,” said Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix Gmbh. “That is why crude oil is not able to move any higher.”

Angola’s Crude Exports Scheduled to Rise 7.3 Percent in June

(Bloomberg) -- Angola will increase daily crude shipments, including the Palanca grade, by 7.3 percent in June as OPEC’s production cuts stall.

Brazilian oil chief: unlikely to join OPEC soon

Brazil is unlikely to join the Organization of Petroleum Exporting Countries anytime soon, despite overtures from the cartel, the head of the nation's state-run oil company said Thursday.

Petrobras CEO Jose Sergio Gabrielli told The Associated Press that his company isn't yet a big enough oil exporter to warrant joining the organization.

BP 'still committed' to Sunrise: chairman

CALGARY -- BP PLC is considering a range of options to move forward the Sunrise oil sands project with partner Husky Energy Inc., including integrating carbon capture and storage to mitigate the environmental impact, chairman Peter Sutherland told the annual meeting of shareholders in London on Thursday.

The British oil major, Europe's second-biggest oil company, said in February it was slowing down the project, which would produce oil from the oil sands using steam-assisted gravity drainage technology, because it expects costs to come down as a result of the retreat in oil sands spending due to the oil price downturn.

May day launch for Tupi oil

Brazilian state-run Petrobras is on target to pump the first oil from the Tupi on 1 May, company boss Jose Sergio Gabrielli said.

German watchdog probes firms in wholesale power market

FRANKFURT (Reuters) - Germany's cartel office said on Friday it has launched an investigation into the behaviour of utility companies including E.ON, RWE, EnBW and Vattenfall Europe in the German wholesale power market.

A spokesman said the antitrust watchdog will seeks replies to data requests for power trading in 2007 and 2008 from 60 companies in the wholesale power market in May this year, but the overall probe was expected to take at least several months.

Pipe problems halt Cepu flows

ExxonMobil has temporarily halted output from the Cepu Block, one of Indoensia's biggest oil finds in a decade, because of pipeline problems, an official from the country's energy watchdog said today.

PetroChina May Pay $1.4 Billion for Kazakh Oil Stake

(Bloomberg) -- PetroChina Co., Asia’s biggest crude producer, plans to pay as much as $1.4 billion for a stake in an oil company in Kazakhstan to take advantage of lower commodity prices and expand overseas, Chairman Jiang Jiemin said.

India Defers Oil Field Auction Over Gas Tax Break

(Bloomberg) -- India postponed its largest auction of oil and gas fields on concern that the absence of a tax break for natural gas production will keep domestic and overseas bidders away.

“The confusion over the tax holiday for gas continues and that needs to be resolved,” Oil Minister Murli Deora said by telephone today.

Summertime gas prices could fuel road trips

Take advantage of it while it lasts.

All indicators suggest gasoline prices have entered a period of stability, with market experts like Tom Mirabito Jr. suggesting that trend could continue at least over the summer.

“You’re not going to see much movement in prices until the economy rebounds,” said Mirabito, a recently retired convenience store industry executive who now lives in the Village of Springdale with his wife Sharon. “Then, you’re going to see some big upticks.”

Canadian March Inflation Slows Unexpectedly on Gas

(Bloomberg) -- Canadian annual inflation unexpectedly slowed in March on falling gasoline and car prices, which may add to expectations the Bank of Canada will adopt extraordinary policies to boost growth.

The year-over-year inflation rate fell to 1.2 percent from 1.4 percent in February, Statistics Canada said today in Ottawa. The consumer price index rose 0.2 percent from February, compared with 0.7 percent the previous month, the agency said.

CSX expects volume drop, more furloughs in 2Q

NEW YORK (AP) -- Railroad operator CSX Corp. said Wednesday it predicts double-digit declines in shipping volume to continue through the second quarter, and expects to furlough more employees as a result.

The Jacksonville, Fla.-based company said Wednesday in a conference call with analysts that sales will continue to be hurt as demand to ship goods by rail plummets. Railroads face stiff competition from trucking companies that have slashed rates to remain competitive, as well as overall economic weakness.

Californians say "baby, baby, no more drilling"

SAN FRANCISCO (Reuters) – U.S. Interior Secretary Ken Salazar confronted a host of sea creatures and polar bears on Thursday as costumed Californians told the new administration 'no' to offshore oil drilling.

Salazar did not hint at the contents of President Barack Obama's energy policy, but said it would address climate change and include oil and gas.

"We're not going to turn off the oil and gas requirements we have for this country overnight or even in a decade. We're going to see oil and gas production," he told a packed hearing on offshore drilling.

Car industry shakeup opens door to China upstarts

SHANGHAI — As ailing global automakers agonize over their survival strategies, China's upstarts are racing them to launch homegrown hybrid and electric vehicles in the only major market that is still growing.

Shanghai's biannual auto show, which opens Monday, will showcase these "new energy" vehicles, as the Chinese call them, alongside a cornucopia of conventional gas guzzlers, compacts, luxury and mid-range vehicles.

Matt Simmons: Energy Planning (video)

Matt Simmons explains why planning in the oil & gas industry has been, and continues to be, particularly difficult.

When oil goes bust (Review of David Strahan's The Last Oil Shock)

The story of The Last Oil Shock has been told countless times. World oil production is expected to peak soon and then plateau—known as the peak oil theory—no alternative forms of energy can replace fossil fuels sufficiently and it’s not far when we will have to kiss our car keys goodbye and our financial, trade and agricultural systems will struggle to cope, recessions, depressions, and global turmoil will ensue. The theory was put forward by Hubbert in the 1950s, and many geologists and scientists have elaborated on it. But David Strahan takes the reader through this oft-repeated story with elan, revealing something new to even old eyes.

Malaysian socialists: `Unite to turn workers’ frustration into a political struggle for socialism’

One of the most widely known truths today is that capitalism is in deep crisis of its own making . The endless search for greater and greater profits with complete disregard for people and the planet has inevitably resulted in crises which capitalism itself cannot solve.

The clock cannot be turned back on global warming, which has resulted in major changes to temperature and natural phenomena, and which poses a serious threat to future life on Earth.

Capitalism has also created a crisis of resources. The resources of the world are being exhausted and depleted by unplanned production and wasteful exploitation. Peak oil production has been reached and we face the prospect of a world that is short of energy resources.

Population growth poses threat to stability

When most people imagine the end of human existence, they think of a nuclear holocaust or perhaps a catastrophic meteor strike terminating the bulk of the population in one fell swoop. Few seem to contemplate a scenario of lingering but languishing cities buckling under the weight of famine and resource lack.

My contribution to Alstrynomics

What we are told is capitalism is not capitalism at all, what we live under is CURRENCYISM. Capitalism would have a respect for capital. In capitalism, a tree standing would be worth money. In currencyism it is not worth anything till it is cut down. In capitalism, those who produce would be nurtured, and saving would be sacrament. In currencyism those that produce are cheated, and saving is a waste of leverage.

World's largest nuke plant to restart in Japan

KASHIWAZAKI, Japan (AFP) – A strong earthquake shut down the world's largest nuclear power plant here almost two years ago.

The clock is now ticking for it to restart -- but fears about a nearby seafloor faultline and a string of fires inside the dormant facility have deepened distrust in local communities.

Pope to Pursue Heavenly Power in Europe’s Biggest Solar Plant

(Bloomberg) -- On pasture land a day’s walk north of Rome, the inventor of radio Guglielmo Marconi set up a broadcasting service in 1931 for the Vatican.

The world’s smallest state now intends to build the biggest solar plant in Europe for 500 million euros ($660 million) on those same 740 acres near the medieval village of Santa Maria di Galeria, project engineer Mauro Villarini said in an interview.

Canadian panel touts carbon pricing

OTTAWA (AFP) – An environmental panel urged the Canadian government on Thursday to quickly implement a national carbon pricing policy if it is to meet its targets for cuts in greenhouse gas emissions.

In a report, the National Round Table on the Environment and the Economy said the cost of carbon would have to top 100 Canadian dollars (83 US) per ton by 2020, and rise to a maximum of 200 dollars.

Climate change could worsen African "megadroughts"

WASHINGTON (Reuters) – The recent decades-long drought that killed 100,000 people in Africa's Sahel may be a small foretaste of monstrous "megadroughts" that could grip the region as global climate change worsens, scientists reported on Thursday.

Droughts, some lasting for centuries, are part of the normal pattern in sub-Saharan Africa. But the added stress of a warming world will make these dry periods more severe and more difficult for the people who live there, the scientists said.

"Clearly, much of West Africa is already on the edge of sustainability, and the situation could become much more dire in the future with increased global warming," said University of Arizona climatologist Jonathan Overpeck, a co-author of the study published in the journal Science.

Since economics and energy are interconnected and we talk a lot about economic issues here, I'll post this:

Stiglitz Says White House Ties to Wall Street Doom Bank Rescue

The Obama administration’s bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.

“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”


“America has had a revolving door. People go from Wall Street to Treasury and back to Wall Street,” he said. “Even if there is no quid pro quo, that is not the issue. The issue is the mindset.”

I know that the above quote is going to offend some of the resident Obamaniacs, but it is the truth and needs to be said. Stiglitz is an equal opportunity critic, and is truly authoritative.

Stiglitz, 66, won the Nobel in 2001 for showing that markets are inefficient when all parties in a transaction don’t have equal access to critical information, which is most of the time. His work is cited in more economic papers than that of any of his peers, according to a February ranking by Research Papers in Economics, an international database.


Stiglitz was head of the White House’s Council of Economic Advisers under President Bill Clinton before serving from 1997 to 2000 as chief economist at the World Bank. He resigned from that post in 2000 after repeatedly clashing with the White House over economic policies it supported at the International Monetary Fund. He is now a professor at Columbia University.

Denninger was all over that this morning.

But I feel Denninger gets it wrong on another subject ...

"Bend Over: Here It Comes (Carbon Taxes)"


The only thing that I personally find offensive is the implications that "the other guy" would have done anything different.

The current situation has proven to me that all of Washington is hopelessly corrupted with regards to dealing with this particular problem. The Democrats and the Republicans are tapping the same people over and over and pursuing the same policies with abandon.

This isn't a partisan issue anymore, it is a fundamental issue, and it is going to take "The People" too long to recognize it as such.

I doubt most people here think the other guy would do anything different.

It was an interesting moment in the campaign, though - the candidates' reactions to the first bailout. McCain initially said he wouldn't support it, and reports from the closed-door meeting said Obama ended up screaming at him for it.

Yet in the end, McCain voted yes. What happened? Either the "tanks in the streets" warnings were so sobering McCain changed his mind, or his GOP bosses reminded him which side his bread was buttered on.

I'd be interested in seeing some evidence for "Obama ended up screaming at him for it." It's not how I recall the coverage and I think by now we all have to concede that Obama is not a screamer. So I did a little googling and came up with this report in Huffpo and this report in McClatchy. Both suggest that if any screaming was done, it was done by Congressional Democrats (Dodd, Frank and Reid) who believed that McCain was grandstanding. Huffpo's description of Obama's conduct at the ensuing press conference is consistent with a "No-Drama Obama" personna:

Obama himself did not directly take McCain to task at his post-meeting press avail, but suggested that his methods were not helping the process.

"What I found and I think was confirmed today when you inject presidential politics into delicate negotiations it is not necesary as helpsful as it could be," he said, according to Politico's Carrie Budoff Brown. "When you are not worried about who is getting credit and who is getting blamed you tend to move forward more constructively."

I'm a critic of team Obama's approach to the financial crisis but I think we do a disservice to the factual record to assume that the other guy in this instance was thinking anything substantive about the financial crisis at all. In my opinion, the move was a pure stunt on McCain's part to benefit his campaign. It turned out to reveal more of his talent and temperament than his advisors had anticipated and his electoral prospects declined in a rather unrelenting way thereafter.

That is indeed why I found it interesting. McCain screaming at someone would not be newsworthy. He's known to be a shouter. Obama is not.

It was reported on CNBC the day of the meeting, and in the press the day after. I'll try to find the links if you're interested.

I have read that there are over 100,000 paid lobbyists in Washington and if true shows that it is worth paying 100k people to bend the laws in whatever way suits.

On finance I see that General Growth Properties (GGP) filed for Chapter 11, there are several other commercial real estate companies with similar over-leveraged positions that cannot afford the interest repayments. IMHO the GGP filing will reduce the "value" of commercial real estate (held as collateral??) and may lead to further pressures on commercial real estate companies.

r4ndom -

The only possible good thing that I can see coming out of this recent financial bailout debacle is that it has (finally) revealed who really owns the US government. The treasury secretary threatening Congress with tanks in the street speaks volume on who calls the shots. Whether this uncomfortable realization will eventually be transformed into real change is another question entirely. I suspect that most likely answer is that it won't.

Already, the political establishment is trying to exploit the situation. It is almost laughable seeing the various Republicans desperately trying to position themselves on the right side of the issue in hope of regaining Congress in 2010 and the White House in 2012.

The situation will get more and more muddied, and the political establishment will resort to all sorts of stunts to distract the people from the unprecedented rip-off that has taken place. They desperately want to get this out of the news. A new armed conflict in the Middle East or another 9/11-scale terrorist incident would do wonders in that regard.

What we really need is a true opposition party in this country, not the two-sides-of-the-same-coin we have now. I suggest as a logo a crossed pitchfork and broom.

I'd suggest a bucket (of tar) and bag (of feathers).

Pitchfork and broom has too much religious baggage, and not the good type, despite being very appropriate for other reasons.

Not gonna happen.

PG explained why, here. The way the US political system is organized means we're always going to end up with two very similar parties.

More succinctly here...

No, it would have been much the same under "the other guy". Both parties are totally corrupt. That - and not just the identity of whoever happens to be in the White House at the moment - is our real problem.

Do remember that Stiglitz is indeed an "equal opportunity critic". His analysis of the true cost of the Iraq war was a devastating condemnation of the Bush administration, and he had his run ins with the Clinton administration as well. Such non-partisan truth-tellers are quite rare in our country, and thus should be given as much attention as possible.

Well said r4ndom. I would go so far as to say hopelessly corrupted period. We do REALLY need change in Washington.

John McCain and Sara Palin would have been far, far worse.

McCain clearly did everything he could to change his previously strongly held positions to kow-tow to the rabid right ring of the Republican party. If he stayed true to the John McCain of the year 2000 campaign against shrub, he would have received much more serious consideration from moderates Republicans, Independents, and conservative Democrats.

President Obama is clearly very intelligent, well-spoken, is not afraid to admit mistakes and take responsibility, and is working on many problems at once and making progress undoing many of Shrub's bad policies and directives.

One of the many things he is tackling concurrently with the economy and numerous other issues is grabbing the bull by the horns and moving out on nuclear arms control with the Russians. It is hard for me to over-estimate how important this is. It is truly refreshing to have a leader who can explain complex issues in multiple paragraphs and appear extemporaneous, and who has the patience to listen to others and has the wisdom to show appropriate humility and leadership in foreign affairs.

Before some of you hate-Obama doomers accuse me of fan-boy-ism, rest assured that I do NOT think he is perfect, a messiah, is able to solve all the World's problems, or hasn't made mistakes.

If we wanted radical change then we as a nation would have voted for Mike Gravel, Ron Paul, or Ralph Nader. In order to have any hope of voting for someone besides a mainstream Republican or Democrat, then we need to replace plurality voting with either Range Voting or Concordance Votings...but that would take some effort by the lowest common denominators to first understand the mathematics behind voting systems, then to persistently advocate for change.

Until people take smart pills and grow some, then the corporations will be happy to offer us a choice between Coke and Pepsi and convince us that our choice will be decisive, then they will laugh all the way to the bank (again...and again...and again).

Palin did a wonderful job governing Alaska until she was tapped by McCain. I watched with horror as the bashing took over. Shame, shame, shame.
Palin was a phenominal governor for two years. She rose above Alaskan politics and terrified partisan politicans on both sides, and earned the respect of Alaskans. On the national scene, she did the same thing, both Republicans and Democrats were terrified of her as a "loose cannon". A "loose cannon" is what Washington needs.
Alas, she has now been captured by handlers and effectively lebotimized. She no longer effectively governs. Sigh.
r4ndom is right. Washington is hopelessly corrupted. Anyone who beleives otherwise is part of the problem.

Cold Camel

Wow...that's your opinion and you are welcome to it.

Cruella Deville is a great champion of wildlife...at the end of a gun, then mounted on a wall.


She is such a farce, I scarcely know where to begin. I watched (and listened) in horror as I contemplated the remote possibility that this idiot might be VP. I don't have all night to elaborate, so you can stay content with your Palin fantasies.

One could always join the Alaskan Independence Party and strike out on one's own...you'all let us know how that works out for you.

She is such a farce, I scarcely know where to begin. I watched (and listened) in horror as I contemplated the remote possibility that this idiot might be VP.

That had been my reaction, I even was making noises about leaving the country for good. But I have been surprised the last two days, I've seen quotes from her that are actually intelligent and correct. Is it possible that the Palin we saw last fall was some sort of charade. An act put on the impress the right wing? That idea sounds nuts, but what is the explaination. Has she simply hired some smart advosirs, and parroting what they tell her? Or has she shown a remarkable ability to grow neurons, that clearly weren't in evidence last fall?

Yes, Palin cut the budget to build hydroelectric dams to generate Alaskan electricity (dams that will last long after the last bit of oil or gas comes from Prudhoe Bay) while increasing the annual payment to all Alaskans (when you can't cut taxes any more, just give people money).

Everything for the next election, nothing for the long term.

Alaska should have been 90+% hydroelectric 25 years ago, the first and best use of their state oil royalties.


USA could sell Alaska to the Norwegians to get cash and cold weather adapted long term planing? ;-)

I know Norwegians and they would be at a TOTAL loss on how to deal with Palin and her supporters !


It occurred to me that the difference between the bankers and the Somalian pirates is that the pirates in Somali don't try to pretend that they are something else.

I think your are painting the banking community with a broad brush. Pirates (and other such degenerate types) don't provide anything remotely useful to society. The local small time bankers provide a service to the community which has been very important over decades. The Wall Street Banks, formally known as investment banks, pushed the limit too far, creating the imploding bubble that we are caught within. Those guys need to be strung up by their thumbs, left to twist in the sun in their undies till dark brown. Hanging is too good for them. Maybe we could treat them like pirates of old and bury them in the sand on the beach at low tide...

E. Swanson

why don't the "private" shipping companies provide their own security ? ............ oh yes, it is the liability, the liability and the fact that the us military is rwaa to provide security for that pipeline of cheap oil. why would private companies pay for something that can be had for free ?

i can think of one reason and that was covered in "pretty woman". who would want sex with a hag when they can "date" the likes of julia roberts ?

rwaa = ready willing and able.

heretofor, the rrw has been unwilling to recognize any international law, except as it pleases the rrw.

rrw = ridgid right wing

maybe it is time to examine the empire of debt. nearly everyone talks about reducing dependence on foreign oil. it appears that is only lip service, too many vested interests in bau.

Outside of serious wartime (WWII-level) merchant marine ships of any flag are generally not allowed to carry serious armaments. It goes beyond corporate liability issues and most civilized ports will not allow armed ships to port at all unless the ship belongs to a recognized national navy.

If the piracy issues prove to be a problem that the navies involved cannot contain adequately (which I do not expect to be the case this time), then the rules will get loosened up.

The congress could grant the merchantmen a "Letter of Marque and Reprisal" against the pirates, which would probably give them all the legal cover they need. See US Constitution, Aricle 8, Section 1. This is supposedly an archaic provision from early days, but high seas piracy was supposedly archaic as well.

Or, just hire BlackWater (aka, Z corp) or some other group of ex-military to cruse around the neighborhood and smash the buggers. Small arms fire could take out the small boats rather quickly and there would be no threat to the crew on the larger cargo vessels. That is, if the U.N. can't get it together to run daily convoys thru the area...

E. Swanson

And they, the pirates, are not interested in good press. Be prepared for "good" news over the next months. The spin doctors put it all in place, add some springflowers and the world turns out to be a rosy, lovely place, again, full of positive balance sheets, lowering unemployment increase and gently talking world leaders.

No word about the relation of energy and growth. No word about the enormous debt accumulated all around the world. Who the f*** is Denninger?

Pirates (and other such degenerate types) don't provide anything remotely useful to society.

I think the Somalis would disagree.

The pirates started out as fisherman who lost their means of subsistence when the failed government of Somalia could not protect Somali waters from illegal fishing by Asians and Europeans, and the dumping of hazardous waste. They started their own patrols...and accidentally discovered how easy it was take over ships and get ransoms for them. It's now a pretty significant source of income in some areas. In a country where half the population is dependent on UN food aid, a few million goes a long way.

And of course, England and other countries to used to license and support pirates, in exchange for a share of the profits.

Leanan - what you said!!

I would trust the Somali freedom fighters much more than the Paulson- Geithner G-Sax crowd. The Somalis have way more integrity.

I'd agree with the Somalis if I had to choose sides.

I can't find the article now, but I remember that a few months ago I read an article about the Somali Pirates on Al Jazeera. What impressed me was that they interviewed a Somali woman who said something along the lines of:

"I've been to a few pirate parties, they throw the best parties. The last one I went to they roasted a goat".

When you think about the extravagance the US corporate crowd will go to to throw a good party and compare it to a party where the highlight is one roast goat it doesn't seem scale-able. One group risks their lives, holds a small crew hostage, delays a delivery and gets a relatively small lump sum. They look their hostages in the eyes and rarely hurt them. At worst they might drive up consumer prices. The other group sits in impenetrable board rooms and doom watersheds or vast swaths of small businesses or wind power projects with a swoop of a pen.

Its not right to rob by force of arms, but its probably worse to rob by force of sneaky legal loop holes backed by Blackwater or local law enforcement.

How many pirate ransoms can a bailout buy anyways?

By the way I believe Privateers had licenses, pirates took their own initiative. Supposedly the pirates in the Caribbean had a much more democratic distribution of wealth aboard their ships that the typical merchant of navy ship. Their crews often included freed slaves and working class sailors they encountered on their raids.

Black_Dog said

Pirates (and other such degenerate types) don't provide anything remotely useful to society.

I think that the do not provide any value to OUR society. They provide an enormous value to their own. They feed their wives and children. They spend their plunder within their community, etc. If you were living in utter squalor in the slums of Mogodisu, watching your family starve, living on hand out scraps provided by UN social workers, where your life has absolutely no value, and you have no hope of ever becoming a part of what we call Normal Society, piracy may look like a pretty good option.


I must have hit a nerve.

Don't forget, folks, we live in a "civilized society". By that, I mean the Western nations where the Rule of Law prevails (in theory). Those laws have been built up over generations and many of them deal with property, both in civil law and criminal law. Outright theft is clearly one of the activities which those laws are intended to prevent. Sure, much of the activities of law breaking criminals might appear to be good for the criminals. There's the old saying that even killers have families to feed. But, if we are to continue to enjoy the benefits of "civilization", then those laws must be enforced and criminals must be punished. Otherwise, all bets are off and anything goes. That sounds like Somalia, doesn't it? Maybe the Somalis would prefer Sharia Law, where thieves often have their hands cut off. That would be a bit rough on a pirate who needs both hands to climb a rope.

I feel the same about the fraudsters from Wall Street...

E. Swanson

So, if your family is starving, is it legal to steal bread for them? Probably not. Is it moral? And if it is moral to steal for the benefit of others, does that supercede the illegality?

Not a new theme... covered in everything from Les Miserables to Breaking Bad. Sometimes the moral reasons for actions outweigh the legal ones... It might be worth the risk to be punished legally in order to provide for your family.

Yeah, big questions. Morality seems to go out the window in times of stress. Questions like "The Tragedy of The Commons" fits in there too, where what's good for the individual is bad for the whole of society. As Robert Reich wrote about in "Zero Sum Economics", when resources are limited, the only way for one to have more is for another to have less. It's been said that economics is about the distribution of shortage (if I have my quote correct).

Your mention of "morality" just points out that neither a moral code or legal code is absolute and both can/will change to fit what ever current situation exists. Is it moral for you to steal my food so that you can survive and I can not? Is it moral for you to eat your own seed corn, feeding it to your family, so that all starve next year? Is it moral to continue to produce children so that your children (or their children) can not survive on the land that presently provides enough for you? Is it moral for one to use fossil resources excessively, thus "borrowing" from future generations who might have greater need?

Many old questions there. The Somalis can can fix the problems in their own small corner of the world or they go to hell and there would not be a problem. Once they set sail, the problems they create for others will provoke a response and they will likely suffer. So it goes...

E. Swanson

Yeah, big questions. Morality seems to go out the window in times of stress.

I contend "morality" is an entirely relevant concept. Usually moral laws/principles have been created to allow a certain level/type of civilization to exist. Most societies ascribe moral as being something that god has imposed, and can become quite dogmatic about what is and isn't moral. If you look at nature, you don't have morality, just a lot of life forms doing what they do to compete. I can think of a lot of moral value systems that could be self-consistent, but that we would consider barbaric. Take for example The values of Imperial Japan (sort of mythical Bushido on steroids), every citizen is supposed to be willing to sacrifice his/her life for the emperor worship thing. I'm sure one can construct all kinds of moral systems, and each of the stable ones would create a different sort of society, with different experiences of life. But there is no universal metric by which we can judge one better than another.

Clearly if one is born poor, and embedded in a wider moral system that provides no sanctioned mechanism for the improvement of your situation, the odds of a rejection of that system go up dramatically.

Morality really goes out the window when you are already being pillaged by the haves. I've seen estimates that $300 million of fish is lost annually to foreign fishing trawlers illegally fishing in Somali waters. There are serious allegations of toxic waste dumping off of Somali shores.

Now, I ask, who threw morality out the window first, the West or the Somalis?

I've seen estimates that $300 million of fish is lost annually to foreign fishing trawlers illegally fishing in Somali waters. There are serious allegations of toxic waste dumping off of Somali shores.

'Toxic waste' behind Somali piracy

Nick Nuttall, a UNEP spokesman, told Al Jazeera that when the barrels were smashed open by the force of the waves, the containers exposed a "frightening activity" that has been going on for more than decade.

"Somalia has been used as a dumping ground for hazardous waste starting in the early 1990s, and continuing through the civil war there," he said.

"European companies found it to be very cheap to get rid of the waste, costing as little as $2.50 a tonne, where waste disposal costs in Europe are something like $1000 a tonne.

"And the waste is many different kinds. There is uranium radioactive waste. There is lead, and heavy metals like cadmium and mercury. There is also industrial waste, and there are hospital wastes, chemical wastes – you name it."

Hmm... Toxic dump + fishery... If foreigners want to eat toxic fish, it's their own problem... They should eat their own garbage. It just sucks for the Somalians because that's their food supply too.

But seriously, Somalia is getting screwed over because they have no central government to have a navy to partol their territorial waters. I know that if Canada came down here by the States to fish our food and dump their cr@p, there would be consequences... because we can patrol our coastline. Somalia can't... At least, not without pirates...

+10 Eric

IIRC, toxic waste disposal costs ~$1000/ton. If I am in the business of producing nasty byproducts and someone offers disposal at $100/ton, then accepting the offer means I am either very stupid, or totally without morals. OTOH, if I am paying full price, I would ensure that the contract would be with reputable and responsible contractors.

sic transit gloria mundi

The toxic waste part is a complete joke and has no verification what-so-ever by any entity in the world aside from the crowings in Somalia. It also boggles the mind when these allegations are made along side with the - probably truthful - illegal fishing claims that are happening off of the coast.


Why would you dump any kind of waste so close to a countries coast? Why not ship it straight out to the middle of the Atlantic and dump it there? Instead, we are lead to believe that Italian mafia types are taking this material on ships, through the Suez canal and the checkpoints there in, traveling south and dumping the material in the most heavily trafficked region in the world: and no one has ever seen them do this.

Doesn't that seem a bit silly?

and no one has ever seen them do this.

UN: Nuclear Waste Being Released on Somalia's Shores After Tsunami
(Posted: 23 February 2005)

A United Nations' report released this week says nuclear and hazardous wastes dumped on Somalia's shores had been scattered by the recent Asian tsunami and are now infecting Somalis in coastal areas.

A spokesman for the United Nations Environment Program (UNEP), Nick Nuttall, told VOA that for the past 15 years or so, European companies and others have used Somalia as a dumping ground for a wide array of nuclear and hazardous wastes.

"There's uranium radioactive waste, there's leads, there's heavy metals like cadmium and mercury, there's industrial wastes, and there's hospital wastes, chemical wastes, you name it,” he said. “It's not rocket science to know why they're doing it because of the instability there."

Ever read 'When Corporations Rule The World'? I'd suggest it. Especially in light of the economic meltdown and bailout we're experiencing.

Well color me purple!!!!

Think it through Ampersand...they would stick to the traditional shipping lanes to hide in plain sight...why wast bunker fuel to steam into the middle of the Indian Ocean and attract attention from American patrols from Diego Garcia? Why not have false manifests for non-existent cargo to Africa? Why not dump your toxic cargo them pick up a legitimate load of goods from Africa and bring it back to Europe (or pick up contraband goods, which would be far more profitable). If the Cosa Nostra or similar organizations have a hand in this, then the mechanisms for bribing all the right folks are well established. Your post is what seems a bit silly. Use the Google before you make absolute, baseless assertions.

Pirates (and other such degenerate types) don't provide anything remotely useful to society. The local small time bankers provide a service to the community which has been very important over decades

Speaking of broad brushes, local small time pirates have brought about 100 million dollars to their coastal communities, a sum which is no doubt important to their local economies.

Think of it as involuntary aid to the people of Somalia....

Involuntary aid? Hell, no. They've had enough of that.
The pirates worked for that money, risking life and limb.

Dambisa Moyo also shows how, with improved access to capital and markets and with the right policies, even the poorest nations could be allowed to prosper

Review: Dambisa-Moyo/Dead-Aid:-Destroying-the-Biggest-Global-Myth-of-Our-Time
Although I'm not sure that 'piracy' is one of the policies that Moyo was suggesting. ;-)

Somehow I suspect a stable investment environment would be more rewarding. Too late now, they can rot for the next half century.

"A war is a 'force majeure'," he said. "To hold military exercises in a country where a war has just ended is impossible."

Rogozin also said the war games could be exploited by Saakashvili in his stand-off with the opposition, which has held a series of major protests in recent days.

"To hold exercises on Georgian territory could be used by Saakashvili against the opposition, or by the opposition against Saakashvili," Rogozin said. "In either case, the holding of military exercises is inappropriate."


"1) So long as America pursues an offensive grand strategy, Fourth Generation war will ensure her defeat. The reason is Martin van Creveld’s concept of the power of weakness and its intimate relationship with legitimacy. In a Fourth Generation world, legitimacy is the coin of the realm. At root, Fourth Generation war is a contest for legitimacy between the state and a wide variety of non-state primary loyalties. American power lacks legitimacy because, on the physical level, it is so overwhelming. That is the power of weakness: anyone who stands up to the American military becomes a hero. In turn, any state the American military supports loses its legitimacy. The more places America intervenes militarily, the more states lose their legitimacy, to the advantage of Fourth Generation, non-state entities. In effect, we have a reverse Midas touch. Only a defensive grand strategy, where we mind our own business and leave other states to mind theirs, can break us out of this downward spiral.

It occurred to me that the difference between the bankers and the Somalian pirates is that the pirates in Somali don't try to pretend that they are something else.

The Crimson Permanent Assurance part 1
The Crimson Permanent Assurance part 2

It's fun to charter an accountant
And sail the wide accountancy,
To find, explore the funds offshore
And skirt the shoals of bankruptcy!

It can be manly in insurance.
We'll up your premium semi-annually.
It's all tax deductible.
We're fairly incorruptible,
We're sailing on the wide accountancy!

Two thumbs way up...

Lady Presenter: Well, that's the end of the film. Now, here's the meaning of life... Well, it's nothing very special. Uh, try and be nice to people, avoid eating fat, read a good book every now and then, get some walking in, and try and live together in peace and harmony with people of all creeds and nations. (Monty Python's The Meaning of Life)

It occurred to me that the difference between the bankers and the Somalian pirates is that the pirates in Somali don't try to pretend that they are something else.

I personally wouldn't mind seeing Bernanke and Paulson (or Geithner) in puffy shirts. Give them a few cutlasses as well...

On a Monty Python theme

It's fun to charter an accountant,
And sail the wide accountan-cy.
To find, explore the funds offshore,
And skirt the shoals of bankruptcy.
It can be manly in insurance.
We'll up your premium semi-anually.
It's all tax-deductible,
We're fairly incorruptible.
We're sailing on the wide accountancy.

EDIT: Someone beat me too it,

” Livas told Reuters at the World Economic Forum on Latin America in Rio de Janeiro.

“The decline of Cantarell has some natural reasons and some technical reasons. There was a longer-than-expected disruption due to technical reasons which is being addressed this year,” he added.

Mexico’s finance ministry said earlier this month it expected oil exports to slide by 18 percent in 2010, to 1.125 million bpd from 1.370 million bpd forecast for 2009. Although the ministry did not provide a forecast for overall oil output in 2010, it did say it expected an unspecified decline in oil production next year.(from the Pemex story above the fold)

If past Pemex projections of the last four year are taken as a guide, a factor of two should be applied to the forecast, and we should prepare for less than 1 million bpd in imports from Mexico in 2009.
In addition, as we export around 400,000 b/d of refined products to Mexico. At a value of approximately double the crude we import, Mexico will reach zero net exports, on a value basis in around 10 months IMO.

"Some students said they were alarmed at Rifkin’s talk but also inspired to make a difference."

From the Top Article above. Soon, malls will be a memory:

Second Largest US Commercial Retail Real Estate Company Files for Bankruptcy This is the tip of the iceberg, still the early stages of failures in the real economy which has been distorted beyond all reason by the outsized financial sector, a failed regulatory regime under the influence of Wall Street, and reckless financial engineering by the Fed. AP Mall operator General Growth Properties files for Chapter 11 bankruptcy Alex Veiga, AP Real Estate Writer Thursday April 16, 2009, 3:14 pm EDT


"Will the G-8 ever meet again? That said, China showed its reserve about the actual decisions in many ways. It offered a derisory amount to the new IMF package. After all, it got no guarantees that there would be a real reform of IMF governance, which might accord an appropriate role to China.

What we can say in summary is that the principal actors strutted on the world scene. Did they ever intend to do something that was more than that? Probably not. The world economic downturn continues to wend its way, as though the G-20 meeting never occurred.

by Immanuel Wallerstein


Just a little more gas on the fire...

Link courtesy of The Baseline Scenario

A.I.G. Chief Owns Significant Stake in Goldman

Edward M. Liddy, the dollar-a-year chief executive leading the American International Group since its bailout last fall, still owns a significant stake in Goldman Sachs, one of the insurer’s trading partners that was made whole by the government bailout of A.I.G.

The Baseline Scenario is worth a read too

The Department Of Justice Is On Line Two

Have we completely lost of sense of what is and is not a conflict of interest? Have we really built a system in which greed fully overshadows responsibility? Is it not time for a complete rethink of what constitutes acceptable executive behavior?

The funny thing is that the second paragraph you highlighted sounds like it was pulled verbatim from a Barack Obama campaign speech 12 months ago.

I don't think this one has been discussed here:

The Geithner Bubble

In some people's eyes, a miraculous emergence from the crisis is brewing: Through the combined play of the Geithner plan, (which allows investment funds and banks to buy other banks' toxic assets, borrowing most of what they need to do so from the Federal budget) and accounting changes (which allow banks to carry those assets at an inflated value), we see a derivatives market take hold in which some will sell these assets at a very high price to others in order to buy more of those assets at a still higher price: so that an asset value bubble will form, entirely financed by the taxpayer. The value of banks' capital funds, up until now totally corrupted by the presence of these toxic assets, will be raised naturally by this operation, without the government having to spend any money apart from that which will have allowed the banks to buy these products and make their price rise. Then growth will be able to take off again, creating new financial fortunes in the midst of innumerable industrial bankruptcies.

This bubble is already underway: It can be measured by the difference between the stock market ( in full growth mode), in particular, stocks of at-risk sectors (especially the financial sector) and the (totally anemic) credit market, by the difference between the (negative) change in estimated profits and the (positive) change in stock prices, by the increase in company multiples, by the foreseeable nature of central bank actions, allowing the return of mechanisms for currency transfer, the so-called carry trade, on the dollar and the yen.

Which leads me to conclude that one can be a trader (i.e., speculator, i.e. gambler), or one can be an investor, which means that one invests one's money in one of the few remaining things of genuine value - like double glazing or insulation or fruit trees.

"Stock investor" has now become an oxymoron.

See also: Traders, Not Investors, Fueling This Stock Rally

However in my opinion the key to the shell game is you only play with people playing the game.
Thus despite the sudden soundness of our banks they won't lend and real companies will continue to default.
This coupled with claims of tighter lending standards and lack of credit worthy borrowers will lead to credit continuing to tighten outside of the shell game.

They have no choice but to keep cycling waste between each other and the government slowly off loading the worst bits to the US Government. But its not real money its simply a game and as long as its being played real lending will be curtailed.

In a lot of ways this is what I mean when I've said we are entering a period of rich mans inflation and poor mans deflation the wealthy can only keep the facade of wealth by trading worthless assets amongst each other at inflated prices to keep the illusion going. Of course at some point in this game of musical chairs one of the players probably Goldman Sachs is going to refuse to play when its to their advantage sending one of the players into bankruptcy and forcing another "financial crisis" and another large cash injection similar to AIG with the money going back to Goldman to get them to play along again.

Periodically like musical chairs play as stopped and one of the parties is taken out and dismembered with the feds making the counter party whole ( Goldman just seems to be the lucky counter party each time ).

And play resumes.

Meanwhile of course the real economy simply continues to sink and if peak oil is real and esp if its as steep as I think the game of musical chairs will also play in the oil and commodities market bringing in even more cash with Goldman Sachs again winning big at this game.

At least for the next year or two this seems to be our future I don't really see anything changing at least until enough players have been eliminated to go to the next level which I'm guessing is and expanded asset sweep with Goldman Sachs buying up the assets of defunct companies that actually produce stuff for pennies on the dollar. This is of course already underway with GM. Overtime we should see new Goldman owned companies formed from the corpses of our current large companies which have a lot less people lower wages and real credit access so they can destroy their competitors who are cut off from credit.

Obviously the total number of people benefiting from the new world order shrinks in time. Peak oil is really just governing the rate at which this game advances but the game is already in motion.

In fact if peak oil was not real and we where approaching and era of long term cheap oil one would think that GS would probably not try to play this game. Why play ? Simply maker yourself whole and allow the system to be restructured via a sharp but normal recession. GS is still on top and can continue to play the old growth game.

The only reason to play this game of musical chairs and shells is to extract maximum profit from a declining system. Otherwise you would I think simply jump early into growth chances.
For example I'm sure if GS thought that growth was around the corner they would pressure for control of a cleaned up and more nimble GM. The only reason to allow it to be broken up is simply that you expect to only need a fraction of GM's capacity for a much much smaller future market. This you just as well build from the ground up with the physical assets no need to keep GM. Only peak oil really provides a viable model for this prediction even the financial mess does not naturally lead to demand dropping all that much further. Certainly withing the capacity of a reasonably reformed GM.

Same for that matter the bankruptcy of General Growth. No big player stepped in to save the business model that malls have no value. This is because the big boys simply don't think that they are needed and thus expect a significant contraction of the middle class starting now.

In my opinion there has to be a very fundamental underlying reason that makes the wealthiest emboldened to take the path they are on. They have to be certain that the era of growth is over and not returning otherwise even right now they are leaving tons of money on the table.

It has to in my opinion be peak oil and for that matter a sharp peak. The lack of action is just to smooth.
None of the big players care about the raging deals that are possible right now this means that they must know that they are not deals yet.

For Goldman, it's help to have a lot of their people running the government. The odd that they know everyone's cards is pretty high.

I went to see a finance guy today. While walking there, I am thinking exactly what you wrote. Funny heh? In the end, all this financial models that people try to predict market -- blah blah blah -- are not really "market models". Everyone is a gambler in this speculation market -- so the point is not trying to understand the market but try to bet and win against the other players. Market efficiency and capital efficiency donot matter, what matter is running everyone else to bankruptcy or the brink of bankruptcy. It's "dog eat dog" world for banks -- they care less of a mouse got killed in the process.

Yep. Consider what you said and that I'm simply saying that Goldman is peak oil aware and don't forget they effectively own the government the financial markets and the commodities markets.

All you have to do is ask your self given what Goldman is assume that they are very peak oil aware and even better aware of a sharp production drop starting in 2008. What would Goldman do ?

With that conjecture I can easily see the events of about 2002 to now fitting a ever growing understanding of peak oil buy what effectively are the real rulers of the world. You can of course go further back and look at other factors but for a sort of recent oil/financial play thats far enough. Given your description and my assumptions the past few years look entirely reasonable.

But it also means for course that GS must be setting up to send oil to the moon if this is the game they are playing. I think they actually got caught a bit during the least run up they did not play a perfect game.
Even being peak oil aware I think they where caught by surprise by how fast it declined which put them in a really bad situation (failure to deliver becoming real either by them our their counter parties).

So I think they really like/caused the reset to do a replay this time with better positioning :)

This is a good link.


Think about if a big player was on the verge of a cascade of physical failure to delivers.


This is whats public but the question is who is the counter party to SemGroup.

Whats not being said is that under all this financial brinkmanship its a physical oil
market and my opinion is simple someone either GS or one of its counter parties was
setting on a bomb of a massive chain reaction of failure to deliver physical oil that would
make the financial collapse look like a walk in the park.

The real smoking gun was in my opinion this and no one has uncovered it yet.
Given this scenario it has to be Goldman Sachs at the heart of the mess and probably they are the ones that where going to have the problem delivering.

Thus my assertion that our current storage levels are probably a work of fiction not complete fiction and thus the exact value is uncertain but not the truth. I don't and can't know exactly what the real situation is but right now
I really suspect that we will see some surprises as the year goes on.

Re: Government Fuel Goals Beg For Higher Ethanol Blends, Study Concludes

Increasing the ethanol content in gasoline would seem to be a great idea, except that machines which use carburetors won't work very well. There aren't many cars out there still using carbs, but there are lots of motorcycles, boat motors, lawnmowers and chain saws that do. I've had trouble with my chain saw last season and wonder whether it's due to the fuel. Besides, the corn ethanol producers seem to be failing left and right. Worse yet, we know that it's going to be very difficult to produce all that mandated ethanol, most of which must be produced from biomass by processes which are not well developed as yet...

E. Swanson

The WSJ is now talking about the problems of the UK oil industry.

North Sea Protection: U.K. Oil Industry Seeks Aid

The U.K. oil industry is pressing for big tax breaks in next week's government budget, warning that dozens of small oil companies operating in the North Sea will go bust without help, which in turn could accelerate a decline in U.K. oil and gas production.

The warnings come as smaller players in the industry reel from low crude prices, high costs and shrinking credit. Many are cutting investment and drilling fewer wells. . .

Malcolm Webb, head of Oil & Gas U.K., a trade association, said exploration on the U.K. Continental Shelf "could effectively collapse" unless the government introduces "targeted incentives" for the industry.

Those who don't have a WSJ subscription can go through Google or read it here.

This chart from Horizon Oil (and CERA data) seems correct in that the North Sea will need at least $60 oil.


It is an interesting contrast to the IEA chart of reserves vs price. Clearly the IEA has underestimated.


Hasn't it been said time and time again that KSA can lift their oil out of the ground $2 a barrel? It seems a tad misleading that the figure is shown at a full $20 a barrel.


If this is an error or intentional, shouldn't every figure on that list drop by about $20 a barrel as well?

Hasn't it been said time and time again that KSA can lift their oil out of the ground $2 a barrel? It seems a tad misleading that the figure is shown at a full $20 a barrel.

The charts show average cost including amortized capital. The $2/bbl figure is probably an incremental cost, i.e., not including embedded capital. So even at today's prices, a low cost producer like KSA generates a lot of cash flow even if their leverage puts them in difficulty (not likely, in their case).

It is not an error at all. The $2 figure is for Saudi's old producing fields. That was, and still is, the price for the very first low hanging fruit, mammoth fields that were developed years ago and are still producing. Newer and much smaller Saudi oil cost a lot more but it is still cheaper than most oil around the world because of the size of the fields. That is, the wells they are drilling right now will likely produce for far longer than deep water fields. The figures in the chart seem quite reasonable to me.

Ron P.

There is a lot more than lifting costs needed to keep up oil production. And costs change quickly. Remember only 10 years ago the north sea oil sold for less than $30. Now they claim they can't develop for less than $60.00

If this chart is correct, then we should only see new projects coming from the ME, Russia, China and Lybia and no where else in the world at the moment. Is this true?

Most new projects, especially deep sea projects, were begun years ago. There was a surge of new projects that started up in 2007 and 2008 when the price of oil was very high. Some of these projects are being shut down but some that were very far along when the price of oil collapsed, are being continued.

But make no mistake, most very expensive deep sea projects are now being cancelled. And even onshore, drilling rigs are going into mothballs every week. Decline puts rig count near 1,000

Baker Hughes reported the number of active oil and natural gas rigs in the U.S. fell by 38 during this past week. Gas rigs declined by 18 and oil rigs by 20, bringing the total to 1,005.

Actually that was two weeks ago. And as the link up top indicates:Number of active oil rigs falls by 30 , rigs fell to 975, down by 30 this past week. A year ago, the rig count stood at 1,827. That should give you some indication that the price of oil is directly affecting new projects.

Ron P.

The WSJ has a big article on Ecodriving:

Efficient Drivers Cut Emissions, but Stir Up Hot Air

Eco-Motorists Slow Down, Coast, for Big Mileage Gains, but Their Strategies Might Drive Others on the Road Crazy

Trials in Europe, Japan and the U.S. are finding that drivers commonly improve their fuel economy upwards of 20% after deploying a handful of eco-driving techniques. Among them: Driving more slowly on highways, shifting gears earlier in cities and shutting off the engine rather than idling at long stops.

. . . One of their tips: Drive as if there is a hot cup of coffee in the cup holder at risk of splashing.

Hey, if you're going to file for bankruptcy, might was well take on some mortgage debt...

GMAC mortgage unit: We're hiring again

GMAC LLC, the General Motors Corp financing affiliate that received a government bailout, said its mortgage unit is hiring 1,000 people to handle a surge in refinancings and jumbo loans.

Earlier this year, GMAC said there was substantial doubt about the ability of the mortgage unit, Residential Capital LLC, to survive, after roughly $10 billion of losses over nine quarters as the number of bad loans and foreclosures soared.

But GMAC said that since it got a $6 billion federal bailout in December and became a bank holding company, it has benefited from a pickup in deposits and low mortgage rates.

Oh, and I had to reread this: GM is getting bailed out both as an automaker AND as a bank...

Anyone wanna work for GM doing mortgages...? (In other words, do you think that job is remotely safe????)

Some homeowners see giving up as best option

Teresa Bondora and her family abandoned their two-story brick home in Atlanta rather than fall behind on their mortgage and $30,000 worth of home renovation debt.

...“I was willing to walk away and live with someone else while we get out of debt,” Bondora says. “I’m not worried about anything anymore.”

Bondora isn’t the only homeowner making an about-face in her approach to the stigma of foreclosure; if anything, homeowners like her see that efforts to prevent foreclosure may make them more financially vulnerable than succumbing to it and starting anew.

Hmmm, Ilargi at TAE had some comment a couple of days ago about re-financing mortgages. He mentioned that the first mortgage was a non-recourse and if you re-fi it would become a recourse loan. I am fairly ignorant but I take that to mean if it is non-recourse, you can hand over the keys and your record is clean, but if you have a recourse loan, that even if you try to hand the keys back, the man can still come after you to collect. Does anyone here know more about this? Is the new government push to get folks back into refinancing their homes dangerous in that it could lead down a path of indentured servitude?


It depends on what state you live in, but yes, refinancing usually means you can't walk away. Your record won't be clean if you walk away from a non-recourse mortgage. It will trash your credit rating. But they can't come after you, take your bank accounts, garnish your wages, etc. If you re-finance, it's a different story.

Denninger wrote about this when he first saw the fine print on the "bailouts." The "lucky" people who get bailed out may wish they weren't so lucky.

General Motors Corp... said its mortgage unit is hiring 1,000 people to handle a surge in refinancings and jumbo loans.

Well, that's swell. They can just pick them up from their rank-and-file...

More plant closings, job cuts due at GM
CEO says it will need to shut more U.S. plants and trim more jobs by 2012 than it thought just two months ago.

General Motors will announce more job cuts and plant closing plans in the coming weeks, CEO Fritz Henderson said Friday.

The embattled automaker, which has until June 1 to reach agreements with creditors and unions in order to avoid a government-forced bankruptcy, originally told regulators in February that it planned to eliminate 14 of its current 47 U.S. plants by 2012, and reduce U.S. staff by about 20,000 jobs.

Henderson, speaking to reporters Friday, did not give any details about exactly how many more job cuts and plant closings would be necessary, but said there should be an announcement before June 1.

"There is no question that as we look to revise our plan to cut deeper and go faster ...there will be further reductions in manpower," he said.

I can just hear the board meeting at GM now: "Psst... Mr. Henderson... Go into the mortgage industry... I hear it's safe there..."

Anyone wanna work for GM doing mortgages...?

If I was out of work, and they offered me the job, yes. Better an insecure job, than no job.
Besides the mortgage writing they expect to do (is expected to) generate positive cash flow, so in any rational bankruptcy procedure it would be continued.

Well, I myself am not so sure from this tidbit in the article...

Earlier this year, GMAC said there was substantial doubt about the ability of the mortgage unit, Residential Capital LLC, to survive, after roughly $10 billion of losses over nine quarters as the number of bad loans and foreclosures soared.

...coupled with the fact that foreclosures are rocketing to the moon I'd think their current profitability is an anomaly that is supported by the $6 Billion they got in gov't bailout for GMAC. But I do agree that if I were unemployed, better an insecure job, than no job.

Chesapeake to cut Barnett Shale production amid chronically low prices

Natural gas prices have sunk as low as $3.50 per million British thermal units, and have remained below $5 for several months. Thomas Gardner, research director at Simmons & Company International, a Houston-based energy investment bank, recently told a Fort Worth energy conference that natural gas prices “must remain above $8 to grow rig count, and above $7 to prevent the rig count from aggressively declining.”

So I am guessing the rig count will continue to decline based on these remarks. After the rig count fell to 591 (4/5/2002) in the last recession, production bottomed out at 18.5 tcf/year (2004,2006). Last week the count was at 790, so we should see a similar decrease in annual production by 2011. Given that we were seeing a rising trend in prices (1998-2008) before the decline, I am guessing the natural gas prices could shock and awe between now and 2012. As for LNG, last year we saw the highest prices in history and lowered imports for LNG.

EIA Annual Wellhead prices

Smith Stats has data out for this week. http://www.smith.com/stats/new/ (Only Internet Explorer seems to work on that site) The number of rigs "rigging down" is greater than the number "rigging up" so that also hints at another fall next week.

Looks like 23 three gas rigs lower this week. But added one horizontal. So some of the shale gas is still earning money at these low prices. It is those horizontal shale rigs that we want to watch most closely.


Baker Hughes data is out:

The gas rig count is down 30 to 760 including a drop of 11 horizontals.

Chesapeake has stated we need to be down to 750 to balance the market by the start of 2010. It looks like that will happen next week.


See the investor presentation on the middle right, last few slides.

Naomi Klein on HopeBama

Link courtesy of a comment at The Baseline Scenario

Hopebroken and Hopesick: A Lexicon of Disappointment

All is not well in Obamafanland. It's not clear exactly what accounts for the change of mood. Maybe it was the rancid smell emanating from Treasury's latest bank bailout. Or the news that the president's chief economic adviser, Larry Summers, earned millions from the very Wall Street banks and hedge funds he is protecting from reregulation now. Or perhaps it began earlier, with Obama's silence during Israel's Gaza attack.

Whatever the last straw, a growing number of Obama enthusiasts are starting to entertain the possibility that their man is not, in fact, going to save the world if we all just hope really hard.

She is a great writer-she has absolutely no fear of the truth. It will be a sad day if Naomi ever decides to sell out.

Wow, don't confuse a small minority of rabid Obamamaniacs with the vast center who accurately perceived Obama to be the better leader than McCain. Stop smearing the man on this stupid false premise that unless he is a messiah then he is crap. Your false binary argument takes us nowhere. I suppose you would rather have McCain win, kick the bucket, then have that mess Palin steer the ship of state into an iceberg. Not that McCain would be any better...remember his stupid, sick attempt at humor when he sang his little 'Bomb, Bomb, Bomb, Bomb Bomb Iran" ditty?

Let me refresh your memories: http://www.youtube.com/watch?v=o-zoPgv_nYg

Yea, real funny...as an Air Force Officer, I was appalled. More 'Bring 'em on, Dead or Alive' Shrub cowboy crap.

Obama enthusiasts are starting to entertain the possibility that their man is not, in fact, going to save the world

I was simply hoping that he wouldn't have that "My Pet Goat look" on his face when Congressman Roscoe Bartlett sits down with him to chat about the not-so-urgent problem of Peaking Oil

Re: EPA to Propose Regulating Greenhouse Gas Emissions

Looks like we are headed for a big collision:

Roger Martella, who served as EPA's general counsel under Bush and is now a partner at the firm Sidley Austin in Washington, issued a statement saying, "The proposed endangerment finding marks the official beginning of an era of controlling carbon in the United States."

"This means that EPA's mission of environmental protection will burst outside those bounds and place it on the stage as one of the most influential regulators of both energy use and the greater economy in the upcoming year," Martella added. "The proposal, once finalized, will give EPA far more responsibility than addressing climate change. It effectively will assign EPA broad authority over the use and control of energy, in turn authorizing it to regulate virtually every sector of the economy."

I think that there's quite a bit of truth in that comment. We are likely to find out whether those country boys that have made statements about States Rights, etc, are really serious about ignoring TPTB in Washington. Maybe the EPA will get the NAVY to impose a blockade on those Rebels, just like last time, cutting off their oil imports...

E. Swanson

Maybe the EPA will get the NAVY to impose a blockade on those Rebels, just like last time, cutting off their oil imports...

They'll just say screw it and secede from the union...

Texas Governor Rick Perry Threatens Secession From The Union

Speaking at an anti-tax protest yesterday, Texas governor brought up the fact that Texas had the right to secede from the union if thing in Washington got bad enough....

Here's one thing we do know. An independent nation of Texas would be energy independent. Gregor Macdonald has done the analysis:

"Given that Texas, starting with Cortez in 1519, has functioned under six flags already I thought it might behoove to take a quick look at how Texas might fare under a seventh. Specifically, with respect to the supply of Oil and Gas. Would an independent Texas be able to produce enough oil and gas to serve its own population, with some left over for export ? Indeed it would. In fact, Texas produces more oil than any other state and accounts for 19.7% of total US output. Texas also produces more than 30% of US natural gas supply. Texas does consume a goodly portion of its own oil output, about 75% of what it produces. But, it only consumes half of its own natural gas production. For secessionists, these numbers look good."

Texas: It's like a whole other country.

Here's one thing we do know. An independent nation of Texas would be energy independent.

Yes, but is Texas water and food independent? I know there is a lot of beef cattle in Texas but isn't the Rio Grande almost dried up?

Yes, but is Texas water and food independent?

Yes, it is actually a food exporter... (PDF warning)... and as for water, moving massive quantities of water is pretty difficult... Not like it comes by tanker... so, by definition, Texas is water independant.

isn't the Rio Grande almost dried up?


...From El Paso eastward the river flows through desert. Only in the sub-tropical lower Rio Grande Valley is there extensive irrigated agriculture. The river ends in a small sandy delta at the Gulf of Mexico. Due to the persistent period of dry weather, the river has only occasionally emptied into the Gulf Of Mexico since 2002.

Rick Perry is just trying to pull a "Palin." He's facing a probable primary challenge from Kay Bailey Hutchinson, and he wants to solidify his support in the right wing of the Republican Party, which at this point is I suppose about 95% of the party.

How interesting it would be if someone other than a current life long politician ran for Texas governor on the platform of secession. Wouldn't win but the platform could include joining OPEC, massive wind/solar build out, flat taxes, term limits.

I think that as a stand alone country, Texas would probably be a net oil importer. We could join OOFPEC--Organization Of Formerly Petroleum Exporting Countries.

Talked to a Republican elected official I know here in Texas. He thinks that Perry needs a psychiatric evaluation.

Hello Geckolizard,

Thxs for the link. Even if TX doesn't immediately go for legal Secession, I think we can eventually expect regional ELM to assert itself, thus forcing TX towards a protective form of 'energy secession'.

As discussed before: for example, let's say gasoline becomes increasingly unaffordable and shortages consistently occur; maybe around $10/gal. I would expect someone in TX, in imitation of Nigeria's MEND, to start consistently disabling/blow up the fuel & natgas pipelines heading west towards my Asphaltistan of AZ.

This would result in greater supplies and cheaper FFs in TX, but much higher prices in AZ; let's say $5/gal in TX, $20/gal in AZ. I would expect this 'energy secession strategy' to gradually spread to other areas--Cali could also blow up their export pipelines to AZ & NV so that Cali-residents could have cheaper fuels. We 'Zonies, of course, would retaliate by possibly blowing up the water works that provide Cali with Colorado River Water.

It doesn't take much imagination to see this spreading across the USA as Regional ELM & Zero Sums strategies become dominant forces. It won't be much postPeak fun.

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

I get visions of WWI style trenches along state borders...

...but seriously, Hugo Chavez is way ahead of you there...

Cheap Gas? Try $1 a Tank

Last month, I paid a brief visit to Venezuela. Aside from the glorious, 80-degree weather, the most astonishing thing about the country is the rock-bottom price of gas.

It cost $1 — including tip — to fill up the Subaru Forester that my hosts were driving. Just to repeat: that’s $1 for a tank!

Venezuela has long been among countries with the cheapest gas on the planet. It is an oil producer, and like other countries with similar oil resources, it heavily subsidizes the price of gasoline to its own people...

“Many Venezuelans consider oil to be a birthright,” said Miguel Tinker-Salas, a professor of Chicano and Latin American Studies at Pomona College, who fills up his Toyota Corolla for less than $1 when he visits Caracas.

He doesn't need to blow up pipelines or anything like that. He just needs to buy his own oil and give it to his own people...

"I get visions of WWI style trenches along state borders..."

IMO, it is much better to have the demarcation lines atop the high ground of watershed geo-boundaries; Snipers are much more effective controlling geography when they already possess the mountains and hills.

Nature's animals ignore fictitious lines politically drawn on paper maps; they pursue resource flowrates. IMO, we would all be better postPeak served if our political and societal forms moved towards boundaries organized on watersheds, plus inclusion of recognition that river delta outflow into ocean bays is an essential flowrate, too.

Recall the classic opening segment of the film, 2001: Proto-humans screaming and fighting around the waterhole [bottom of the local watershed; location of highest value]. A 'resource aware' postPeak tribe or larger political org would be better served to deny the opposition any and all access to the watershed's resources [minerals, biota, water, energy, etc] by making the 'fighting line' at the high mountain boundaries.

Recall from my previous posts on innate territoriality that this is how most top predator animals efficiently control/optimize their habitats; the urination and defecation marking while regularly patrolling the somatic endurance boundaries of their domains, thus mostly contending with an invader at their boundary intersect [not waiting until the worst possible point where the invader might have succeeded in eating your resources and drank you out of water].

My first law of geography: straight lines on a map are always drawn by people who don't live there.

Iraq is having significant production issues, as well as serious wet crude problem

In regards to the wet crude, I have read about this in several articles, and here is the latest reference to this issue:

“It has issued a blitz of tenders recently for degassing and dehydration plants, valves, control systems, pumping software, pumps, storage tanks, and equipment for treating wet crude -- oil mixed with high levels of ground water.”

“Shahristani said Iraq was keen to build new crude processing plants to cope with wet crude. "We are trying to avoid this problem by starting to drill in fields which we studied previously and we are positive they will not pump wet crude," he said. “

Full article:

Also the above article mentions that Iraq can not drill more then an additional 100 wells in the next 2 years, unless international companies move in, which they are not directly to do in any significant numbers without an oil law, a law not likely to be enacted any time soon:

Kurdish minister 'not very optimistic' oil law soon passed

Full Article:

The combination of corruption, production issues, political instability and creeping wet oil (which Iraq is far from able to deal with it, as Saudi Arabia could) means that those betting on Iraq to save the oil supply issue will continue to be disappointed.


Wow wet crude indicates the fields are watered out. This means that they are old toast done for in decline etc. Some of this may well be field damage of course but I find it interesting given the numbers reported for Iraqi reserves.

wet crude ? ground water ? i think i know what they are talking about, but something is lost in the translation.

Their best hope is a deal with Saudi Aramco. Expertise, financing, common language, roughly two hour flight away and "more trust" (still low) than ExxonMobil, BP, et al.

AFAIK, the Iraqis have never feared Saudi expansionism.


Denninger has gone off the rails in a convoluted rant about ACC and carbon taxes.


I agree any regulation will likely be a dog's breakfast and will be gamed wherever possible. It might even be the next scam bubble that will make the mortgage ponzi scheme look like petty cash, but he is now opining and using his forum in an area where he has no business and even less knowledge.

Looks like he has been drinking the "Clean Coal" Kool Aid. Remember "They call it pollution, we call it life."?

I'd post a rebuttal, but I'd probably just get banned.

I think the game is to reduce consumption. How to do that w/out telling people to stop using FF? Put a tax on it. Saying "gas tax" is hard to sell -- so Obama administration is going the "environment route".

This is good news -- in the long run, we either move toward more renewable (hopefully with sustainability built in mind) and slowly "force" people toward that route.

The problem is : if the next gas crisis hit before the next election, then Obama will be in big sheesh and all of his programs.

The problem is : if the next gas crisis hit before the next election, then Obama will be in big sheesh and all of his programs.

I think Obama is screwed either way. If the economy does not recover, he is likely toast. If the economy does recover, increased FF demand will knock it back down, so he will be faced with a worse economy and a resource crisis. Even if the economy does not recover, ongoing depletion and reduced E & D may smack us upside the head soon (within the first term) anyway.

I think there is a vicious cycle here. Serious ACC mitigation efforts will only be possible in a strong economy. A strong economy will re-expose peak oil, and peak oil will always trump climate change.

This cycle will continue ad infinitum until the majority realize that the American way of life is very much negotiable.

What Denninger didn't mention is that the issue isn't just taxation of FF use-Goldman and JP Morgan are eyeing billions in potential revenue from the cap and trade futures market scam. There is absolutely no value added-this is billions of dollars diverted from productive economic activity. I'm not convinced Obama would even be mentioning this subject if the dollar potential wasn't there for Goldman and JP Morgan.

Well a large carbon emmisions tax will certainly compound our current economic woes. The Chinese must be laughing their heads off. Lets see we increase taxes on energy use and thereby drive our economy into complete submission. China gets lower oil/coal prices and increased supply. Then they begin exiting Treasuries spending instead on domestic stimulus. We get a further declining economy, higher taxes and interest rates to the moon. All in the name of saving the planet. Of course, the 2 billion people in China and India proceed to burn up all the “carbon” fuels resulting in absolutely no reduction in global CO2 emissions.

Let’s hope he really is the messiah.

There are other ways to allocate the required reduction in CO2 emissions. Taxes work by increasing the price, which results in "rationing by price". There's also direct allocation, like gas rationing, only for all emissions from fossil carbon consumption. I think it's premature to conclude that the EPA would decide to add a carbon tax, even though that would likely be the approach of choice, given the difficulty of instituting a rationing program.

However, once Peak Oil happens, I think that adding a tax to oil would result in seriously punishing prices for oil, as one should expect to see the world shortage cause a massive spike even without a tax. I would also expect that inflation would soon negate the effectiveness of the carbon tax, thus the tax in current dollars would need to be continually increased. Not a good scenario, is it?

E. Swanson

Nope. But maybe if we go with cap and trade we can insure that the captains of our financial industry can get a couple more years to maximize their incomes before TSHTF.


The problem with regulating "greenhouse gases" is that you produce them. You exhale CO2. So does your dog, your cat, and your fish.

The cow in the field that makes milk emits greenhouse gases - they fart. Really. And methane is several times as potent as a greenhouse gas as is CO2. What's the "cow tax" going to be? And what's the tax on that bowl of chili I want to eat - you know what comes next, right?

CO2 is in fact essential for life on earth. The paradox is that without CO2 there would be no free O2 - that is, oxygen - for you to breathe. Green things - from algae to your lawn to trees in the back yard - in fact respire, taking in CO2 and emitting O2. The second paradox is that the higher the atmospheric CO2 content the faster those plants grow.

So if you're going to tax me for emitting CO2 from my tailpipe, then you must also credit me for having nearly 3/4 of an acre of lawn. See, that grass sequesters approximately 3 tons of CO2 per acre per year, according to the same scientists.

Of course you're not going to see the EPA promulgate regulations forcing the government to cut me a check for my personal carbon sequestration, but they'll sure as hell tax me for my carbon fuel use.

Wow. What an idiot.

Denninger has mastered the art of persuasion, sprinkling his writing with undeniable facts, only to arrive at bull**** conclusions.

Very dangerous too.

So does your dog, your cat, and your fish.

All pigs equally produce hot air.
Some pigs are more equal than others.
Denninger is a highly productive individual.
Each statement appears to be individually true. Therefore, by force of pure logic, the collection of statements must be true.

Denninger's followers are logical people. Therefore they must agree. Don't you?

The Evangelical tendency to disavow ACC gets me wondering about a key structural shift that Martin Luther (I believe) started bringing about with his hammer..

Protestants got rid of Confession. (and the consequential Absolution)

There is no shortage of Guilt in Protestantism, but where do you put it all? The theme of 'personal responsibility' is just supposed to be borne by the sinner, or forgiven in a broad sense with your statement of faith, but on a recurring basis, to have amputated the means by which shame and blame are socially and directly forgiven means that 'being responsible for the potential destruction of life on earth..' is not something there's much room to hear or think about.

It doesn't help that these green causes are also coming from the Secular Left, from the Granola's and all those reminders of the 'Hippy' side of the culture, and from a scientific community that frequently tells evangelicals how wrong they are about creation and reproduction..

But I don't think the Guilt/Forgiveness part is insubstantial, either..

(I have been thinking about this 'unforgivable' theme when it comes to the US's bipolar attitudes around crime, as well. Either to SUPER-Punish or to refuse to punish at all. There are some of these corporate crimes that it almost seems anathema to suggest taking to court, when this might be seen as a punishment of businesspeople who were simply being 'successful'.. or, say, holding a president accountable for saying 'The US does not torture prisoners'.. it's made to seem simply unreasonable to 'force' those people to account for themselves. Hey, did Rove testify yet?)

A belief system is, by definition, not subject to a rigorourous examination of any facts and therefore outside the purview of science.

I have no problem with that, as long as those beliefs do not negatively affect my well being, or the well being of the commons. It is at this interface between the two systems that, IMO, science has a responsibility to push back. Unfortunately, Evangelists strongly feel that their agenda can and should be pushed everywhere.

It is therefore no surprise that the underlying resentment about government environmental regulation is one of control, with conspiracy overtones. The irony is that the Evangelists themselves are vying for more control.

When various groups fight against control, they ignore the draconian measures that loom in the future, as resource depletion and ACC really manifest themselves.

Nature bats last. - Joel Staunton

"A belief system is, by definition, not subject to a rigorourous examination of any facts and therefore outside the purview of science."

I guess this is a good place to bring up a question or two that I have been thinking about for a while.

Why does "belief" have to automatically equate to "religon"?

Do we not "believe" many of not most things? Do you not "believe" that your favorite team will win the game on Saturday? And though you may not "know" they will win, do you not use data points to come to that belief?

You may say that "every time they play team X, they win" and "every time they play on a snowy day they win, (and it is going to snow on Saturday)". Since they are playing team X and it is supposed to snow, you "believe" they will win. Don't we do this with things like oil production, the economy or the presidency? Do you not come to that belief based on some (maybe rigorous?) examination of facts?

I do not quite see how people can act as if they never believe anything, that they only act upon "facts", "knowledge" or "science".

I guess I am suggesting (asking?) that people are not either "scientist" or "believers", it is a continuum and everyone is some where in between.

Do you not "believe" that your favorite team will win the game on Saturday?

No. Not if they're terrible, and up against a better team. I'll cheer for them, sure. But I'd be foolish to believe they'll win.

So what would it be called when you have a collection of data, that points you in a direction? If you had data that points to 10% probability in something happening, what would you call it? What about 40%? 80%? Wouldn't 100% be KNOWLEDGE? Would anything less be BELIEF? Why can't a person have facts/data/limited proof that leads to belief?

What if your team was the current super bowl champs? And they were in first place still. The other team was in last place, had not won a game in the last three seasons? And their best player was out on an injury? Are you saying a person can't have data, that while incomplete, leads to a reasoned belief in something?

Is not all of life a belief system of one sort or another? One may think they "know" something (anything) only to find out, it was just a belief and quite wrong.

All swans were white till they found a black one. Housing prices will always go up until they don't.

I think therefor I am ... but I may be wrong. etc. etc.

Yeah. I think the term 'belief system' has been inaccurately equated with Religion alone, and yet the religious people who approach it well (IMO) handle it like a Philosophy, not a Loyalty test, and the quality of humility is often a central requirement for keeping your head in the right space to think well. Belief for its own sake is just an early stage of superstition.

The Squeaky wheels have gotten to define Religion, Patriotism, Politics.. EVERYTHING in our recent dialogs. As another 'structural' observation, and speaking also as a Media Professional, it has occurred to me that TV and Radio don't 'like' dead air or a still frame..and so the presence of a person who stops to think is unsuitable for Good Programming.

Heaven forbid we are exposed to a person concentrating, calculating, considering, praying, meditating or just Waiting for a few seconds.. CUT! Who brought THAT guy!?


Heaven forbid we are exposed to a person concentrating, calculating, considering, praying, meditating or just Waiting for a few seconds.. CUT! Who brought THAT guy!?


Death by a thousand sound bites.

Everybody was surprised... He came
right on time, carrying a rose in his hand.
They had listened to him for many years,
and he has never carried anything.
Everybody wondered: What is this rose,
and why is he carrying it? But they sat
silently - perhaps he will explain.
And he did explain, but not with
He sat silently looking at the rose. The rose
was immensely beautiful. So were those
two eyes, so was that silent moment -
pregnant, expectant, that he is going to say
something very special.
He was - but he was not using words.
There are things which can be shown but
cannot be said.
The silence became heavy; people were not
accustomed. This behavior of Gautam
Buddha was so unexpected, so new.
Everybody sat like a marble statue and
Buddha was looking at the rose with such
blissfulness, showering so much love and
so much blessing and so much grace on the
rose that nobody dared to interrupt him
and ask, What is going on?



Everybody should believe in something -- I believe I'll have another drink.

There's more than one meaning to the word belief, as that old chestnut illustrates. Believe can mean a supposition - "I believe it will rain tomorrow." It can also mean religious faith.

"Belief system" carries a connotation of faith, rather than supposition. Faith, IMO, is belief without proof. That's kind of the point of faith.

That's very different from the belief that a team will win. The Detroit Lions went winless last year, but they were only the second NFL team to do that in the last 40 years. In baseball, the bad teams still win 40% of the time. Sports is unpredictable, as expressed in phrases like "Any given Sunday" and "That's why they play the game." So no, I don't think you can say belief that a team will win is a "belief system." Even the most ardent fan understands that his team may lose.

Why does "belief" have to automatically equate to "religon"?

I don't think it has to, but it is the elephant in the room. Many religious believers promote their own particular (and curious) beliefs. Much of it is presented as "fact" and then becomes subject to scrutiny, or even hostility.

Belief of anything is largely irrational behaviour, something human beings are very good at. Common vernacular and semantic sloppiness muddies the water. Often when we say "we believe" it is just an understood marker for "I hope" or "I want it to be". The word originates from middle English, meaning like, love, willing or glad.

If the belief is based on rational thought, which is an oxymoron, perhaps "I expect" would be more appropriate.

I do not quite see how people can act as if they never believe anything, that they only act upon "facts", "knowledge" or "science".

Again, it's a question of semantics. If I say I believe that I will get to work on time, I really mean "Based on my experience from many trips, I have enough time to get to work and arrive on time.", On the other hand, if I am 20 miles from work with one minute left and I truly believe that somehow I can teleport myself and arrive on time, then I should be on medication.

So it's a question of separating actual beliefs from what are expectations, estimates or knowledge.

Similarly, the word "theory" is often abused. Common usage frequently derides the word, hand waving it away as conjecture or a guess, when in reality, a scientific theory is the highest level of verification outside of a mathematical proof.

I guess I am suggesting (asking?) that people are not either "scientist" or "believers", it is a continuum and everyone is some where in between.

I agree, but gets more complicated than that. It is often the case that a scientist can also be a believer on the very same subject. There are many religious believers that are also very good scientists. Somehow they compartmentalize irrational beliefs which are contradicted by their own work.

Personally, I couldn't handle that level of hypocrisy but to each his own. Indoctrination at an early age is difficult to shake, be it religion, astrology or racism.


The OP's questions make me wonder if they aren't a thinly disguised fig leaf for the false logic or assertion that atheism is in itself a religious belief. I know that is not what was said, but it smells as if this is a back-door approach to the same end.

[I do not quite see how people can act as if they never believe anything, that they only act upon "facts", "knowledge" or "science".]

Well, just because the poster can't 'see it' doesn't mean that it doesn't exist. Lots of folks don't 'believe' in religion at all, yet somehow happen to love their fellow human beings and all creatures great and small and live their lives in sways which promote a civil society.

We don't need religion to be kind, nice, altruistic, honest, hard-working, loyal, reliable, and good neighbors and stewards of the land any more than a fish needs a bicycle.

For reason's sake, people can be atheist and not have horns and pointy tails...get over it...stop looking for validation from the masses and live your life, without trying to impose your beliefs on society through legislation. Live and let live...we could care less if you pray 5 times a day and give half your money to your flock, just keep your beliefs the heck out of government.

Re "The Evangelical tendency to disavow ACC..."

A lot of evangelicals are coming around: Evangelical Environment Network: Climate Change.

There was another item about the contribution of livestock farming to greenhouse emissions. surely emissions by livestock are part of a natural cycle, and the net effect is zero. How are they allowed to peddle such stuff?

I think the issue is that the livestock consume plants which had sequestered Co2 and then emit the much more potent greenhouse gas methane. The carbon is balanced, but the heat trapping is not.

A herd of bison on the prairie are part of the natural cycle. Thousands of cattle crammed into a feedlot are not.

A herd of bison on the prairie are part of the natural cycle. Thousands of cattle crammed into a feedlot are not.

And, I suspect the number per acre of cows is much greater than the bison density in nature.

Oil leaking into the ocean/land and becoming atmospheric CO2, is also a natural process, as are coal seams being eroded, and underground coal fires. It is the unnatural size of the fluxes that are the issue, not the nature of the individual sources.

Livestock can't emit anymore than they consume. Crammed in to a feedlot they just need more plant matter to support them, sequestering more carbon. Also the methane they emit degrades to co2 in a decade or so, and the cycle begins again.

Crammed in to a feedlot they just need more plant matter to support them, sequestering more carbon.

How does cows eating more plant matter sequester more carbon?

Also the methane they emit degrades to co2 in a decade or so, and the cycle begins again.

Wrong. Some of that methane/carbon stays in the atmosphere, which is why CO2 has been rising for 150 years.

Please don't futz with the truth.

The more food they eat the more carbon is fixed as plants to produce that food. Also the methane degrades to co2 it means the equivalent amount is fixed by plants to provide further fodder. In other words it is a closed cycle. The same amount of carbon is fixed as emitted. Atmospheric Co2 has been rising due to the burning of fossil fuels sequestered by the Earth millions of years ago. why the green lobby are bringing up cattle emissions is a puzzle.

Because modern feedlot cattle are outside the natural loop. #s much higher than nature (without FF) can support and they eat LOTS of FF derived food.


The "plants" cattle eat in feedlots took a LOT of FF to grow (natural gas > fertilizer > corn being the largest) and some FF to transport (cattle to feedlot, corn to feedlot, beef to consumer).


PS: All of that fertilizer to grow corn also kills a large zone of the Gulf of Mexico every year, turning it into an anaerobic mess, some GHG comes from that.

Hello TODers,

IMO, IF Cali went to Peak Outreach to convert to full-on O-NPK recycling combined with minimal water usage strategies, much of the following bad trends could be mitigated for quite some time:

California's drought raises rural-urban tensions over water

Addressing thousands of farmworkers and farm owners at San Luis Reservoir, Gov. Arnold Schwarzenegger said the world's attention was focused on the California Latino Water Coalition over its four-day march that culminated at the state park just outside San Benito County. The group was marching to raise awareness of the drought conditions and water-related needs in California in light of a zero allocation this year from the federal government's supply. Critics have contended the cutback will lead to thousands of job losses.

With a common refrain of "We need water," Schwarzenegger spoke to the importance of the issue for California...
We need to totally realize that water flows uphill to money only when much energy is applied to this task. Obviously, this is in direct opposition to the force of gravity. Let's hope the leadership of the parched Southwestern US and Northern Mexico will have the wisdom to start massive reforms [I remain doubtful of a happy outcome].

if dibits are coordinated and traded on the internet then the various
governments will have documentation and demand their share in cash.
expect law enforcement to pretend to be a roofer or a customer just like
many child molesters are caught in online stings. unless.... the gov-ments take tax payments as volunteer community service. can you say
slave labor? what will be the last to collapse? the tax collecting power
structure. WE ARE DOOMED! DOOMED I SAY! lots of talk of open revolt,
pitch forks, tar and feathers. invest in interment camps. maybe community colleges will have evening classes in administration and
guard techniques. if vegetarians eat vegetables, what do humanitarians eat? do black swans taste as good as white ones? as long as the criminal elite think money is worth stealing, everyone else will "buy into" the current paradigm. until... there is a crumb too small for a who mouse.
good day to you, BROTHERRRRs!

Never having eaten White Swan, I cannot answer that question, but I can assure you that Black Swan does taste good.
Needs to be hung for a few days, and then cooked slowly. Casserole is best as otherwise it tends to be a bit dry.
Bon Appetit.

As a teenager a friend of mine tried to catch a swan (with intention of eating it). He was a large boy, the sort that got in scuffles with police officers, swam in rivers deemed too dangerous and otherwise presented a rough-tough image.

The swan beat him up pretty badly. He had bruises all over his legs and arms from the wings, and limped for several days due to a peck on the leg. The swan walked away.

Doesn't make me confident for the future if we must all suddenly live off the land.

Geese too. Those necks seem so tempting and easy, but they are quick and those wings have enough power to carry 30+ pounds of bird through the air.

On the other hand, even (especially?) "tough guys" seem to forget that we aren't just predators, we are tool users.

If you get beat up by a goose you obviously didnt want to win or eat. Its not that hard to grab their necks and pull. The downside is that they make an annoying bagpipe deflating noise for far too long and anyone that sees you do it looks at you as if you're a sociopath.

Same with swans. It just looks like it should be easier than it really is.

Of course, swans are bigger than geese, so more of a challenge.

NPR: Industrial ag in India on the verge of collapse

..Government officials are talking openly about agricultural “collapse” in the breadbasket of the world’s second most populous nation.

Fertilizer inventories build as prices fall
Weekly Fertilizer Review for April 17, 2009

Ethiopia: Zenawi Admits Exporting Grains While Millions Starve and Die

..What is more disturbing is the fact that the government manages to export these grains effortlessly while food aids coming to feed its citizens from elsewhere are frequently reported to have been stuck in Djibouti port. In March 2009, the World Food Program (WFP) reported that food supplies heading to the land-locked Ethiopia were stuck in Djibouti port. We do not hear any inconveniences the regime faces while it exports grains snatched from the hands of starving mothers and their helpless children.
Have you hugged your bag of NPK today?

Hello TODers,

IMO, Ukraine is under tremendous stress, caught between Russia & Western Europe, and having big financial and energy & resource problems. I don't think this news will help cool off either the Russians or Eastern Ukrainians [who politically lean toward Russia]:

Ads praising Nazi division put up in [Western] Ukraine
This is certainly no way to smooth out the situation. Yikes!

Hello TODers,

Recall my earlier postings on numerous golf course closings, with some possibly targeted for conversion to wildlife preserves or community gardens:

ASU golf program may be cut

When Tom Barrios decided to pursue a golf-management degree, his choice of a college was easy.

..The Professional Golf Management program [PGM] is among 48 programs targeted for elimination as part of a budget-cutting plan announced by ASU President Michael Crow in February. Enrolled students would be able to complete the program, which would be closed to new enrollment.
I would encourage these Master Golfers to instead enroll in agro-based courses to become Master Gardeners. AZ State Univ. also has the Global Institute of Sustainability [GIOS]. A degree from this might be postPeak helpful,too.

Another Cali golfing complex built before the '30s Depression might bite the dust from water shortages and declining play:

Council mulls over future of golf course

..but with fewer rounds now being played against a backdrop of declining revenue at the complex, the course was closed in November.

..water restrictions imposed by the East Bay Municipal Utility District helped prompt the closure.

..The Chuck Corica Golf Complex opened in 1927 and boasts two 18-hole courses.