DrumBeat: May 25, 2009

Is $100 oil coming soon?

It's been a relief while it has lasted. Lower oil prices, that is. But the days of cheaper oil are numbered.

The brief respite from last summer's record-high crude prices, which aggravated the global economic slump, will soon give way to another oil-price spike that may be more painful than the last one.

"The stage is currently being set for oil prices to skyrocket," says U.S. energy analyst David Fessler in the online investment newsletter Investment U. Fessler cites the decline of such super fields as the North Sea, Alaska's North Slope, Mexico's Cantrell Field and Saudi Arabia's Ghawar Field – largest in the world – along with the extraordinary cost of producing crude from the few remaining newer crude sources such as Alberta's Athabasca tarsands and reserves six or seven kilometres below sea level off the coast of Brazil.

That's a view shared by most of the world industry's veteran experts.

Are Wall Street speculators driving up gasoline prices? (Again?)

Big Wall Street banks such as Goldman Sachs & Co., Morgan Stanley and others are able to sidestep the regulations that limit investments in commodities such as oil, and they’re investing on behalf of pension funds, endowments, hedge funds and other big institutional investors, in part as a hedge against rising inflation.

These investors now far outnumber big fuel consumers such as airlines and trucking companies, which try to protect themselves against price swings. The big investors are betting that the economy eventually will rebound, that the Obama administration’s spending policies and Federal Reserve actions will trigger inflation and that oil prices will rise.

China's car-driven oil demand to soar - think-tank

BEIJING - China's oil demand will increase by up to one third by 2015 as car ownership grows fast from its current low base, an executive at a think-tank run by Asia's top oil refiner, Sinopec Group, said on Saturday.

International Energy Agency may revise downward its forecast of 21% fall in global energy sector investment

The International Energy Agency (IEA) may revise downward its forecast of a 21% fall in global energy sector investment, its chief economist Fatih Birol, said on Monday. Oil producers may have cancelled or delayed $170 billion worth of investment in recent months.

G8 urges oil industry to invest despite crisis

ROME (Reuters) - The financial crisis must not delay investments in the oil sector that are essential to an economic recovery, G8 energy ministers and top oil officials from four OPEC countries said on Monday after a two-day meeting.

The new millennium

This global collapse is seen as the result of the sub-prime financial fiasco. It is often overlooked that the incredibly high prices of energy, driven by the peaking in global production of oil, forced up, among others, food prices, and caused eventually the destruction of demand for energy, i.e. a departure from economic growth as we knew it. Current fluctuations in oil and gas prices are random, and are related to the uncertainty in the reconstruction of the global economies.

Thomas Homer-Dixon, for the All Party Parliamentary Group of the UK Parliament on Peak Oil (APPGOPO), addressed the evolving complexity of our contemporary world which he characterised as: Multiple stresses, macro perturbations of natural systems, impending energy transition from fossil fuels, increasing connectivity and complexity of our systems.

Alternative Energies and Other Fairy Tales

The quest for alternative, non-fossil fuel, energy sources is driven by two misconceptions: (1) The mistaken belief in "peak oil" (that we are nearing the complete depletion and exhaustion of economically extractable oil reserves) and (2) That market mechanisms cannot be trusted to provide adequate and timely responses to energy needs (in other words that markets are prone to failure).

Can OPEC save the world economy? ...Cheap oil? ...Not for long!

We can note that only about 10 years ago, 'New Economists' could still proclaim oil and gold as Sunset Commodities. Resource depletion, let alone climate change never featured in the stock of Adam Smith slogans from about 1760 -- reworked as wildly intelligent one-liners by leading edge 'New Economic intellectuals' for a decade or two.

When will Russia re-engage Asia-Pacific?

Russia is a big country with a big "if". If Russia's development plan works, about 70 percent of Russia's 142 million people will attain a middle class living standard by 2020 (see The Plan 2020 at www.kremlin.ru). Russia's GDP per capita will increase from the current US$12,000 to $30,000. If this happens, Russia will likely elevate itself to become the fifth largest economy after the US, China, India, Japan, and hence, regain its old status as Eurasia's preponderant power.

But Russia only strategically matters for us if her regional priority becomes the Asia-Pacific region. Despite the fact that 60 percent of Russian territory extends across northern Asia, Russia's regional priorities remain heavily anchored in Europe.

Eni wants oil producer/consumer watchdog

ROME (Reuters) - A global oil agency representing all producers and consumers is vitally needed to combat price volatility and ensure that investments keep flowing into the oil sector, chief executive of Italy's oil major Eni said on Monday.

Oil prices bouncing from $50 per barrel to $150 and back within a couple of years hinder investments in the global oil sector needed to ensure adequate supplies once the economy picks up and energy demand resumes growing, Eni's Paolo Scaroni said.

Is Iraq on collision course with OPEC?

OPEC has done a solid job of countering the global recession and resurrecting crude oil prices in recent months, but the successful implementation of Iraq's oil development plan could complicate the cartel's efforts for relatively high and stable prices in the coming years.

Kunstler: Wishes, Hopes, Fantasies

Something like a week remains before General Motors is reduced to lunch meat on industrial-capital's All-You-Can-Eat buffet spread. The wish is that its deconstructed pieces will re-organize into a "lean, mean machine" for producing "cars that Americans want to buy," and that, by extension, the American Dream of a Happy Motoring economy may be extended a while longer.

Directory:Peak Oil

Index of resources relating to Hubbert’s Peak model which says that once the maximum amount of oil extraction is reached, the back side of the curve wills spell much higher prices as extraction becomes more and more difficult.

Some say that peak has already been reached. Others say it won’t hit for another 25+ years.

Either way, continuing our trend of increasing oil dependence is not a sustainable path.

The Global Food Crisis: The End of Plenty

It is the simplest, most natural of acts, akin to breathing and walking upright. We sit down at the dinner table, pick up a fork, and take a juicy bite, obliv­ious to the double helping of global ramifications on our plate. Our beef comes from Iowa, fed by Nebraska corn. Our grapes come from Chile, our bananas from Honduras, our olive oil from Sicily, our apple juice—not from Washington State but all the way from China. Modern society has relieved us of the burden of growing, harvesting, even preparing our daily bread, in exchange for the burden of simply paying for it. Only when prices rise do we take notice. And the consequences of our inattention are profound.

For a City in Gridlock, a Lifeline and a Scourge

CARACAS, Venezuela — Motorists despise them. Pedestrians fear them. Highway bandits lie in wait for them. Leftist leaders call them unsung heroes.

And this anarchic city, its love affair with the car notwithstanding, would collapse if not for them: the thousands of daring motorbike couriers who make life here treacherous and viable at the same time.

Eco-vandals take on the gas-guzzlers

Police are searching for a gang of radical environmental activists after a series of attacks on 4x4 vehicles.

The gang, who claim to have targeted up to 80 vehicles across South Manchester, let down tyres and leave notes accusing the owners of adding to global warming and increasing the chances of road deaths.

Company looks to bring air-powered cars to US

NEW YORK — Most car companies are racing to bring electric vehicles to the market. But one startup is skipping the high-tech electronics, making cars whose energy source is pulled literally out of thin air.

Zero Pollution Motors is trying to bring a car to U.S. roads by early 2011 that's powered by a combination of compressed air and a small conventional engine.

Russia Faces Uncertain Times Selling Natural Gas to Europe

The latest round of pipeline politics between Moscow and the European Union masks a new reality: Changes under way in Europe are likely to damp the Continent's appetite for Russian gas, weakening Russia's much-vaunted status as an energy superpower.

Russian and EU leaders met Friday in the eastern Russian city of Khabarovsk to heal a relationship badly damaged by the January gas cutoff of Russian gas that left thousands of people in Eastern Europe shivering in their homes.

The EU sought assurances that would never happen again. Russia refused to provide any. Instead, President Dmitry Medvedev said Moscow doubted that transit state Ukraine had enough money to pay for the gas Russia supplies, hinting at more disruptions to come.

But behind the bravado, Russia is worried. Europe's economic slowdown has led to a collapse in demand for natural gas, while January's crisis has triggered a new push by EU states to find alternatives to Russian imports.

No Kremlin Guarantee of Gas to EU

Russia cannot guarantee that there will be no halts in gas supplies to Europe, President Dmitry Medvedev warned at a news conference closing an EU-Russia summit in Khabarovsk on Friday.

Further raising the specter of a new gas shut-off, Prime Minister Vladimir Putin separately indicated that the country would not extend any loans to Ukraine. Ukraine's failure to pay for Russian gas resulted in the halt of deliveries to more than 20 European countries in January.

Saudi warns of new oil spike without investment

ROME - Oil prices could spike to beyond the near $150 record high of 2008 within two to three years unless the industry invests in new projects to expand capacity, Saudi Arabian Oil Minister Ali al-Naimi said on Monday.

The influential minister of the world’s top oil exporter said the industry faced “faltering demand and significantly lower prices” but that the market reflected the global economic downturn rather than being an indicator of things to come.

“We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions,” he said in prepared remarks to the G8 energy summit in Rome.

“However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two-to-three years another price spike similar to or worse than what we witnessed in 2008.”

Alberta forges ties with OPEC

For the first time, Alberta and the Organization of Petroleum Exporting Countries have established an official relationship. It's a new strategy with big implications, including potential investment by OPEC members in Canada's oil sands.

OPEC Is Seeking $70 Oil, Venezuela Minister Says

(Bloomberg) -- Venezuelan Finance Minister Ali Rodriguez said that OPEC is seeking an oil price of $70 a barrel in order to maintain new investments in the industry.

Rodriguez, speaking to reporters in Quito, Ecuador, said that sustained low prices could eventually cause prices to rise as production slows and investments decline.

“What’s happening now, all over the world, is a strong fall in investment in oil, in exploration, in refining,” Rodriguez said. “In the long term that will lead prices to shoot higher again.”

Algeria worried Opec compliance slipping

Algeria's oil minister said Opec was unlikely to cut output at its meeting next week amid a weak global economy, warning compliance with previous supply cuts had slipped in April and needed to be tightened first.

Oil price misleading, output cut essential, says Tehran

DUBAI: Higher oil prices were lulling some members of OPEC into a false sense of security while oil market fundamentals show the need to cut output, Iran's OPEC governor said yesterday.

If ministers decided to keep output steady at OPEC's meeting in Vienna on Thursday, their decision would be political rather than based on supply and demand balance, Mohammad Ali Khatibi told Reuters in a telephone interview.

Libya Says 50% Chance OPEC Will Cut Output at Vienna Meeting

(Bloomberg) -- There is a “50 percent chance” OPEC will cut production quotas this week as the group seeks to reduce excess supply, a move that could help crude prices rise to more than $70 a barrel, Libya’s top oil official said.

Iran says still no balance in oil market - report

TEHRAN (Reuters) - Iran's OPEC governor said the oil market was still not in balance and the producer organisation's work was "incomplete", the Oil Ministry website SHANA reported on Sunday.

The comments by Mohammad Ali Khatibi made clear again that Iran, the world's fifth-largest crude exporter, believed that the Organization of the Petroleum Exporting Countries needed to reduce output further to help boost the market.

Indonesia: Govt. unable to boost oil output next year

The government has set an oil lifting target of 960,000 barrels of oil per day (bpd) for next year, unchanged from this year's target.

"We are still unable to set a higher target," Director General for Oil and Gas Evita H. Legowo told lawmakers from Commission VII overseeing energy and mineral resources Monday.

Oil Above $50 Saves Gulf States During Crisis

(Bloomberg) -- While their biggest customers may continue to wallow in recession into 2010, the oil-producing nations of the Persian Gulf are again luring foreign investment and looking for places to park their own wealth.

Crude prices that have stabilized above $50 a barrel mean the Middle East’s oil-rich economies are likely to pull out of the global financial crisis sooner than the rest of the world. Saudi Arabia, the largest Arab economy and the world’s biggest oil exporter, is attracting renewed interest from investors including leveraged-buyout firm KKR & Co. Qatar and Abu Dhabi have returned to international capital markets.

PetroChina Purchase May Signal Global Expansion Plan

(Bloomberg) -- PetroChina Co.’s proposed takeover of refiner Singapore Petroleum Co. may mark the start of a spending spree to secure overseas assets after shareholders approved a $15 billion bond issue to fund expansion, analysts say.

The world’s second-biggest company by market value offered S$1.47 billion ($1 billion) for Singapore-based Keppel Corp.’s 45.5 percent stake in the refiner, PetroChina said in statements to the Shanghai and Hong Kong stock exchanges yesterday.

PetroChina Matches Exxon as Most Valuable Company

(Bloomberg) -- PetroChina Co. briefly overtook Exxon Mobil Corp. as the world’s most valuable company after China’s stimulus plan caused a surge in the nation’s stocks this year.

State-controlled PetroChina’s Shanghai-traded shares rose as much as 3 percent to 13.25 yuan today for a market value exceeding $336 billion, surpassing Exxon’s $335.9 billion as of May 22. The gain came as China’s largest oil producer agreed to pay as much as $2.2 billion to buy Singapore Petroleum Co.

Mend claims major pipe attack

Nigeria's main militant group today claimed it had attacked major oil pipelines in the Niger Delta in order to prevent five flow stations feeding a Chevron facility in Delta state from operating.

The Movement for the Emanicpation of the Niger Delta (Mend) said in a statement emailed to Reuters that the attacks had affected flow stations at Alero Creek, Otunana, Abiteye, Makaraba and Dibi.

Oil & Natural Falls in Mumbai After Report Profit May Be Capped

(Bloomberg) -- Oil & Natural Gas Corp., India’s biggest energy explorer, fell in Mumbai trading after the Economic Times reported it may face limits on earnings as the government plans to impose a cap on oil producers’ profits.

Iran completes gas pipeline deal with Pakistan; line could be extended to include India

TEHRAN, Iran (AP) — Iran's official news agency says the country has completed a major gas pipeline deal with Pakistan that could be extended in the future to take Iranian gas to India.

The IRNA news agency says Iranian President Mahmoud Ahmadinejad and his Pakistani counterpart, Asif Ali Zardari, watched the signing of the agreement Sunday.

'Mexico output to recover by 2011'

Mexico's faltering crude oil output should begin to recover next year or in 2011, Energy Minister Georgina Kessel has claimed.

Can Oil Go Even Higher?

This Friday, the price of oil held above $61 a barrel, helped by a weakening dollar. With the price off around 60% from its all time high, which was set last July at $147, could oil and gas be one such opportunity? I doubt about it. A deteriorating world economy, conservation and competition from other fuels would cut deeply into oil demand.

Real estate bust turns South Dade suburbs into modern ghost towns

To some housing experts, the numbers indicate a shift.

"We are seeing the limits of sprawl," said real estate analyst Michael Cannon.

Like much of the rest of the country after World War II, growth in South Florida followed a model of housing subdivisions, malls, and office parks -- built separately and connected only by cars fueled by cheap gas. As each new and ever more distant development sprouted, city centers emptied.

But by the 1990s, exhaustion from long commutes and clogged roads, complaints about a lack of a sense of place, and worries about strained resources prompted calls for "smart growth" and mixed-use developments with work, school, and homes in close proximity.

Indy 500 continues to waste fuel: Another car race with no awareness of recession or peak oil

The Indy 500 happens at this time ever year regardless of the price or scarcity of gasoline. It's pushing $3 per gallon, and it was near $5 per gallon last year. Still, these folks continue to blow off valuable energy as if there is an endless supply. They no longer use gasoline but have replaced it with ethanol, the plant-based fuel that is now causing us to grow corn and sugar for fuel rather than feeding the 25,000 who will die of starvation today. Experts say that the energy required to fill one SUV tank could feed a single person for an entire year.

Coal gasification is gathering steam

IT IS a technology first developed in the 19th century and encouraged under Joseph Stalin's Soviet Union. Now a few Australian companies are attempting to prove that underground coal gasification (UCG) is more than just a promising idea but a technological and financial reality.

Hydro Risks Make China's Three Gorges Look To Wind

BEIJING - The state-owned company behind China's Three Gorges Dam is looking to expand its wind power portfolio as the risks associated with hydroelectric projects grow, a senior executive said on Saturday.

"Previously we focused mainly on hydropower but recently we have been restructuring and are moving towards wind and nuclear," said Bi Yaxiong, the vice-general manager of the China Three Gorges Project Corporation (CTGPC).

Wind turbines and migratory birds: A serious problem?

The Illinois Department of Natural Resources conducted a study in 2007, which found far fewer instances of bird deaths from wind turbines than some feared. The mortality study, conducted at a wind energy installation, found an average of one bird per turbine was killed a year.

However, bat deaths associated with turbines were three times that of the rate of birds, especially during their migratory season, IDNR's study recorded.

India: Mandatory use of solar heating system

NEW DELHI: The government intends to make mandatory the use of solar heating systems in all functional buildings under the first phase of the proposed National Solar Mission.

To be implemented between 2009 and 2012, the Mission proposes to make it compulsory for all hospitals, guest houses, hotels and nursing homes to install solar water heaters. This will be applicable to residential complexes too if a minimum plot area of 500 square metres is available.

Japan may entrust uranium enrichment to Russia without IAEA checks

MOSCOW — Japan is mulling entrusting uranium enrichment to a Russian nuclear plant which may not be inspected by the International Atomic Energy Agency, sources familiar with Japan-Russia relations said Sunday.

Climate change summit hijacked by biggest polluters, critics claim

A vital meeting in Copenhagen this weekend that will help shape the agenda for the most important climate change talks since the Kyoto protocol has been hijacked by some of the biggest polluters in the world, critics claimed today.

Among those attending the World ­Business Summit on Climate Change is Shell, which has just been named by environmentalists on the basis of new research as "the most carbon-intensive oil company in the world".

MIT Model Predicts Accelerating Warming Trends

If an unusually detailed computer simulation at the Massachusetts Institute of Technology has it right, global warming in this century is on track to be about twice as bad as predicted six years ago.

The MIT model is said to be the only one that incorporates among its variables possible changes in economic growth and other human activities and draws on peer-reviewed science on the climatic effects of atmospheric, oceanic and biological systems.

Warming will make Scotland the bread basket of Europe

Climate change is poised to transform Scottish farming, boosting yields of oilseed rape, wheat, barley and oats by 30% within 40 years, according to a new report.

A study by the Scottish Agricultural College (SAC) and the Rothamsted Research centre in Hertfordshire predicts that rising temperatures and levels of the greenhouse gas carbon dioxide in the atmosphere will create ideal growing conditions and turn Scotland into the bread basket of Europe.

If underground coal gasification (UCG) was viable it would be up and running by now. The problem with partial combustion in air is that along with some unburnt gases you get N2, CO2, inert gases and other undesirables. That hugely reduces the heating value of the collected gas compared to free release methane. The process is quite different to say steam extraction of oil sands.

Some have suggested UCG will disprove claims by Aleklett, Rutledge and Energy Watch Group that coal will peak within a generation. In theory UCG can get at coal seams that are stranded, deep, thin, waterlogged, faulted, geologically unstable and so on. I think it will make no difference, either as a source of local gas or for conversion to liquids. I predict it will go nowhere in the next few years then we can forget about it.

I strongly disagree. Your only real argument is that undesireable gasses are produced in conjunction with the fuel gases desired, and that is an extremely weak basis for your proposed conclusion. 1) The gas mixture produced in UCG is the same mix as produced in an IGCC gassifier, and no-one has claimed that IGCC is "dead" because of the fuel gas mixture it produces. 2) if the nitrogen in the oxidizer gas flow is a problem, the easy solution is simply to use pure oxygen as the oxidizer, leaving only an output flow of H2 and CO, a high-quality fuel gas.

The ONLY reason UCG is not presently in use is that it's a relatively new technology offering no definite advantage over current standard mining practices, a situation which will prevail until almost all presently mineable reserves are exhausted. As soon as that happens, UCG will immediately take over and begin accessing that much larger "uncounted" resource of unmineable coal.

There is another problem, "volume". Where to put 1000 times the volume in form of gases than in form of solids.

There is another problem, "volume". Where to put 1000 times the volume in form of gases than in form of solids.

I suspect these are left in formation. Carbon is pretty good at holding onto such things, thats why charcoal filters are so effective. And if this only happens deep underground -and I think the claim is that is the only case that makes sense for this, the pressure of the overburden is immense. That means that a lot of the resource must be left in place as well. But, these were assumed to be unminable, so partial recovery may not be much of an issue. I think the economics will be the real (probably show stopper) issue.
I also think separating the oxygen from the nitrogen would greatly add to the costs.

I also think separating the oxygen from the nitrogen would greatly add to the costs.

I was searching for the 60% nitrogen use claim, but got this instead:

The crunch came in 1999 when production began to decline and massive injections of nitrogen gas were employed to stabilise reservoir pressure. At 1.2 billion cubic feet of compressed nitrogen per day, nearly half of global nitrogen production was used on the Cantarell field.

'Mexico output to recover by 2011'

How? I don't think they can.


Mexico sees crude output recovering by 2011 [Reuters]

Analysts remain skeptical.

'Mexico output to recover by 2011'

Mexico's faltering crude oil output should begin to recover next year or in 2011, Energy Minister Georgina Kessel has claimed.

I call the Energy Minister a liar.


Cantarell, which was pumping more than 2 million bpd in 2004, yielded only 713,000 bpd in April, down more than 35% from a year ago, according to energy ministry data.

Crude export volumes tumbled to 1.177 million barrels per day as yields at Mexico's aging Cantarell field continued to plummet, state oil monopoly Pemex said today.

Oil production declined 4.2% year-on-year to 2.642 million bpd in April, the fourth month in a row that it has been below a targeted level of 2.7 million bpd, according to a Reuters report.

Ku Maloob Zaap, which recently overtook Cantarell as Mexico's biggest producer, yielded a record 814,000 bpd in April, near the maximum 820,000 bpd Pemex thinks it can produce.

Output at Ku Maloob Zaap is expected to begin to decline to 810,000 next year, however.

Pemex has vowed to end this year with oil output at 2.7 million bpd.

Executives say meaningful increases in production from the Chicontepec onshore project starting in July should reverse the trend of declining output in the first half of the year.

PEMEX Delays Chicontepec Oil Project In Mexico - Energy Business ...
Petroleos Mexicanos (PEMEX) said that Chicontepec oil project seen a delay this week when the ... PEMEX Delays Chicontepec Oil Project In Mexico. Published:13-May-2009 ... The problem is each well only produces around 100 barrels a day, ...


May 22, 2009

Chicontepec, an oil field that lies in the states of Puebla and Veracruz near the Gulf of Mexico, is currently producing about 35,000 barrels a day, according to Pemex.

“I have the impression that Pemex is still seeing Chicontepec with the perspective from last year, but the prices are not the same,” Ruiz said. “This view is subject to a meeting that we may have in the following days with the production head.”


James Kingsdalec Wednesday, July 23, 2008

According to an earlier report, Mexico’s total oil production is expected to rise by 4.3% in 2009 and then go into decline in 2010. Considering that Mexican exports are declining even as production is stable to growing slightly, a steady decline in their production starting 2010 could mean that Mexico could well be unable to supply the U.S. with any oil by 2014.

Here is the report from Bloomberg:
Pemex Oil Production Falls 11% in June on Aging Field (Update2)


February 16 - 22, 2006

An energy consultant in Mexico City published parts of the study and later the Wall Street Journal got to examine the document. It seems there is only 825 feet between the gas cap over the oil and the water that is pushing into Cantarell from the bottom. This distance is closing at between 250 and 360 feet per year.

The more pessimistic of the study's scenarios have Cantarell's production dropping from 2 million b/d to 875 thousand barrels a day by the end of next year and 520 thousand barrels a day by the end of 2008.


The difference between 713,000 bpd in April, 2009 and 520 thousand barrels a day by the end of 2008 is the mitigation effort by PEMEX.

That's all they've got. Mexico must crush domestic demand.

And the government must capture more of the drug market.

Hope springs eternal. Here's a bit more detailed piece than that one: Mexico sees crude output recovering by 2011 | Reuters

Pemex has vowed to end 2009 with oil output at 2.7 million bpd. Executives say meaningful increases in production from the Chicontepec onshore project starting in July should reverse the trend of declining output in the first half of the year.

"Perforar, muy chica, perforar"? Chicontepec means a proverbial pincushion, which has been part of the gentle decline rates we've enjoyed in the US; perhaps they'll get stripper well fever down there. When I have the time I might chart out how many feet/exploratory wells were drilled in the 70s/80s, to speculate if the US experience might be applied to any other countries, despite the contrast in mineral rights ownership/lack of independent small scale ventures outside the US/etc. Petrobras used to be purely a NOC, after all.

Ben Stein explored our financial predicament in a sci-fi format a few days ago. (NYT article)

Decline and Fall: A View From 2089

Favorite snippet:

There was also a steep increase in liquidity after the notorious terror attacks of Sept. 11, 2001. This, combined with federal regulations that virtually eliminated regulation of lending and banking in general, led to the great Credit Collapse stagflation in the period after 2006.

At this time, the nation’s finance sector had to become a virtual ward of the state, with public shaming of the leaders of the banking sector in front of Congressional committees — a sort of Great Cultural Revolution in America.

There was a spectacular constriction of credit, despite the flooding of the economy with dollars.

So are "constriction of credit" and "Credit Collapse stagflation" the new code words for DEFLATION ?

Deflation would be fair, but OTOH Deflation means people lose jobs and when they lose jobs they become angry and when they are angry they want to kill someone.

Our beloved leaders know this and are trying to put off inevitable - global clash and end of the world as we know it.

There is simply no way that we can escape from the mess we got into. The only way is all to accept lower standard of life, but as we know, it is going to be tough.

BTW: The most you can do for the world is to be unemployed and spend as little as possible. Try to set an example for others, maybe someday they will understand this (but dont count on it). Homo sapiens is not a clever ape, its a pretty stupid ape.

Article required a login.

I think Mr. Stein (and I loved him in "Ferris Bueller's Day Off") is an "optimist", aka "denialist" around here. He doesn't like to use the word "Depression", which is what we are going to experience in the near future.

And I think Mr. Greer's view from 2089 is probably more accurate. But few of us will live long enough to say 'told you so'.

Working link: Everybody’s Business - Decline and Fall of the U.S. - A View From 2089 - NYTimes.com

Jeb as POTUS 2012. Texas and Alaska secede. Ya, you betcha. 54-40 or leave!

Reading Brian Stableford's The Third Millennium off and on for a cornucopian change of pace. Published 1985. Future histories are always engaging for me, even though the details are always off the mark. Stableford doesn't leave energy issues out of the mix, although he saw us burning FFs like no one's business throughout the 21st, until fusion kicks in. Maybe OPEC had a copy?

Thanks for the working link. Looks like Mr. Stein has evolved into more of a doomer than I thought.

(The Obama victory was greatly aided by the unopposed secession of Texas and Alaska from the nation.)

Yee-haw!! ... wait a minute. We'll be right next to Mexico. Uh-oh.

Solar water heaters save more than 60% off annual water heating bills in the Negev of Isreal:


Why would you need hot water in the desert?
I live in the tropics, and I very seldom use hot water. Cold showers are much nicer here (well, the 'cold' water isn't very cold anyway).
Maybe Israel gets a bit cooler at night or during the winter.
That said, a lot of people here take very hot showers, and then crank up the air-conditioning so they don't get too hot. But then, because the room get cold, they put a sweater on, or sleep under heavy blankets.

But good on the Israeli for having a better use for their roofs.

if indy race is a problem, then we don't have a problem at all. it is such small event that is pretty much neglible.

author probably just want to illustrate a point and further on is very correct on this: "The majority of people who have the great seats are corporate executives whose tickets are bought by the company, many of which are being supported by U.S. government funds."

This Wednesday is scheduled European "SuperBowl", Champions League final between Manchester United and Barcelona. While Barcelona has Unicef on their shirts, MUTD has AIG!

Yes, that same AIG, that recieved billions of dollars from US government is sponsoring a major european franchise, which just recently has already won English Premiership.


if indy race is a problem, then we don't have a problem at all. it is such small event that is pretty much neglible.

I would argue it is not the direct effects that are important, but rather the promotion of the big engined go-fast lifestyle/mindset that is the problem. And the argument, that even now at (or past) PO, the vast bulk of society just doesn't get it, is unfortunately correct.

Manchester United are worried about the future of their sponsorships due to the credit crunch. I think the AIG deal expires in 2011.

Hello TODers,

Recall from Duncan's latest Olduvai update that our USA Standard of Living [SL] has declined 7.4% boe/c starting in 1973 to 2007. Does it increasingly appear that Pres. Carter has generally called it right in his Sweater Speech? His Global Peak date was early, but his general theme & thrust was basically correct?

Primary Sources: The President's Proposed Energy Policy

Jimmy Carter delivered this televised speech on April 18, 1977.

..It is a problem we will not solve in the next few years, and it is likely to get progressively worse through the rest of this century..

Are historians and the general public slowly coming around to what Carter tried to do energy-wise as President?

..Notwithstanding perceptions while Carter was in office, his reputation has much improved. Carter's presidential approval rating, which sat at 31% just prior to the 1980 election, was polled in early 2009 at 64%. Carter's continued post-Presidency activities have also been favorably received...
If things keep trending down fast like they have for the past two years: Carter and FDR may be seen as Presidential equals by future historians.

EDIT: I wonder if things will get so bad that future historians cannot understand at all why Pres. Lincoln would ever think to write the Emancipation Proclamation. They would think having human slaves is just as natural as we have gotten used to energy-slaves. Yikes!

We can continue using scarce oil and natural to generate electricity, and continue wasting two-thirds of their fuel value in the process.

Natural what?

If we do not act, then by 1985 we will be using 33 percent more energy than we do today.

We haven't quite hit that level even now, not that we haven't tried.

The world now uses about 60 million barrels of oil a day and demand increases each year about 5 percent. This means that just to stay even we need the production of a new Texas every year, an Alaskan North Slope every nine months, or a new Saudi Arabia every three years. Obviously, this cannot continue.

That sure rings a bell. Fodder for you naysayers, there's a full trough of bad calls waitin'! Of course a Texas or a North Slope aren't what they used to be.

Great speech, but first stop on my time machine would be to talk Jimmy out of the choice of wardrobe. The medium is the message.

A report from southern California

Crisis spurs spike in 'suburban survivalists'
Recession prompts fear of economic collapse, spurs breed of 'suburban survivalists'


Hi Jim,

I was going through some of my archival audio tapes from the late '70s/early '80s, and an August 21st, 1980 broadcast featured a story on a survival store in Ravenna Ohio that was doing an especially brisk business. The store owner explained that "Americans had lost confidence in their government" (presumably he was referring to the federal government) and that "folks just want to stock up on food in case there's a disruption in supplies". He then added "We've been cleaned out of our four and six month servings of Beef Stroganoff...".

The more things change....

Taking us further OT, in another broadcast on this same day, there's a story about a news paper vending machine in front of the Macon County Court House that had been seized by order of a judge. Apparently the local sheriff angered by an editorial in the Macon Telegraph and News had argued that "old people might stumble over it", and that "it might lead to flea markets and watermelon sales...".


Having spent over 30 years living in southern California suberbia (I now live in the woods in Michigan) it is understandable how some people might be getting nervous given the state of California's economy. People generally do not know where there services come from and when there is a possibility of not enough water, food, etc. I can see why they might get concerned.

Am hoping to get back to Cape Breton Island this fall.

Hi Jim,

I hope you can make it back too. There are no web cams of St. Ann's Bay, so the best I can offer you is this:


And, of course:



Owens Corning seeks to use stimulus weatherization sales to replace lost new construction sales of fiberglass insulation


Add to this the 30% tax credit for insulating primary residences

Best Hopes for more energy efficient homes,


The Government has NO real interest in people insulating their houses! Only in buying votes!
I was planning to spend $50,000 of my money to superinsulate my house this year. One of the problems with this is that if I did so my real estate taxes would go way up - by an unknown amount. The amount you spend has nothing to do with how much your taxes go up, but only how much more your property is worth in the eyes of county real estate assessor. Spend 50k and you property value for taxes could increase 50k, 100k, 250k or more. I could have easily wound up paying more in tax increases than savings in my fuel bill.
I contacted my State legislators, national legislators and the President & Vice President. My State legislators got back to me saying there was nothing they could do to exempt all insulation retrofits from property tax increases, but both mentioned government handouts (vote purchases)which I was not asking for and did not want or need.
The government was not interested in how many tons of CO2 could be prevented from going into the air each year after retrofit for each house that was superinsulated (about 12 tons per year in my case) or that my one insulation retrofit energy savings would be equivalent to replacing over 900,000 one hundred watt incandescent bulbs with CFLs.
The only thing that I could see that the Government was interested in was handing out taxpayer dollars to other taxpayers to try to buy their votes.
Best Hopes for a Government in the US that gives a damn about something other than their own perpetuation in power?

Uhm, I would tell the tax assessor about the improvement. And I would get two real estate agent opinions, in writing, about how much super-insulation would add to the value of your property (my WAG, $10 to $15,000).

Generally, the market does not value efficiency at cost.


Add to this the 30% tax credit for insulating primary residences

This is as good a time as any to ask Alan about this. I am currently waiting for a delivery of a thousand square feet of attic-foil. This is supposed to prevent the radiative transfer of heat from your attic ceiling to the insulation. The one rather unscientific reading I took (with the IR thermometer), showed a 10F difference between the ceiling, and the insulation. Stefan Boltzman law would imply thats 38watts per meter squared, or several kilowatts (thermal) for an entire roof! Any one have any experience with this stuff?

Excellent for radiation heat transfer and (depending on installation) it can also serve to limit convection heat transfer.

I have installed foil covered kraft paper (lots of labor, minimal material cost) in several homes.

Not a MAJOR savings, but generally worth while.

Best Hopes,


I have installed foil covered kraft paper (lots of labor, minimal material cost) in several homes

I would think my climate would maximize whatever good it does, it is cloudless here at least 99% of the cooling season! Most nights I can open up windows and cache the cold (sometimes to as low as 60F) and avoid the A/C until late afternoon. I'm hoping to be able to delay the need for AC by a couple of hours.

Have you already increased the insulation or are you trying to do the job for minimal cost? The more insulation you have in your attic, the less effective the reflective foil is, IMHO. If you are trying to reduce the heating in summer due to the solar energy hitting a dark roof, why not paint the roof a lighter color, perhaps white? My guess is that the paint would cool your roof much more than 10 degrees. Of course, in Winter, with a white roof, you would also lose the warming effect of the sunlight.

E. Swanson

Have you already increased the insulation or are you trying to do the job for minimal cost? The more insulation you have in your attic, the less effective the reflective foil is, IMHO. If you are trying to reduce the heating in summer due to the solar energy hitting a dark roof, why not paint the roof a lighter color, perhaps white? My guess is that the paint would cool your roof much more than 10 degrees. Of course, in Winter, with a white roof, you would also lose the warming effect of the sunlight.

E. Swanson

Homeowners assoc won't allow painting. That is a shame as that would be the most cost effective means. In any case it is surprising how hot even "dirty" white surfaces can get. Last weekend -when we hit 100F, I measured 150's on my deck, which is painted an off-white color, that to an uneducated eye would appear white. Of course I found some black plastic that hit 200!. But in any case achieving 10F drop on the inside surface of the roof -not the outer surface wouldn't be all that easy. At least
with the foil it is pretty easy to determine the heat flux avoided, simply point the IR thermometer up and down, and use Stefan Boltzman law to compute the fluxes. It looks like it is pretty substantial. The other major approach is to add an attic exhaust fan to increase air circulation. At least the foil solution will also increase winter heat retention. Our heating climate is not very severe roughly 50F winter temps, so thats only a minor consideration however.

I think that one must be careful using that infrared "thermometer", since it's calculations assume some fixed emissivity. Simply pointing the device up or down sounds easy, but pointing the instrument at a surface of fiberglass insulation then upwards at wood decking wouldn't likely give the same reading as placing a thermistor type thermometer in contact with either surface.

Since you are mostly concerned with cooling, you might use the reflective insulation to make an inner plenum under the roof, then duct the hot air out thru a ridge vent. Place the foil under the roof all the way to the top, joining the foil from both both sides under the ridge, leaving the lowest area near the roof and rafter junction open. That way, the hot air could thermosyphon out the ridge vent.

As for your NIMBY association, you might ask them to pay for the fraction of the cost of electricity to cool your house which the darker roof presents, vs the white roof. Better yet, convince them all to paint their roofs white too. As I recall, white roofs are common in south Florida...

E. Swanson

That is precisely the type of installation I was talking about that reduced convection heating.



A far better idea that keeps money in the local economy rather than siphoning it into the pockets of a few.

You'd need to have a property tax provision that disallows any additional property taxes for people below a given income level, either as renter (can't be passed on to renters by owners) or owner.


Rainy day.Good time to breeze.Cat in lap.Elderly Coondog in his easychair.

Being somewhat of a recluse on the personal level and a misfit on the corporate/ business /organization level,I have wandered around from one job to another,sticking at each long enough to learn the basics,then losing interest.Spent most of my free time(which has been most of my time!)reading and fishing,which is a very efficient way to combine useful pastimes.Realize now that I should have made the effort to conform and won myself a cubby hole in an ivory tower someplace;once in I would have been tolerated as no more or less than just another harmless eccentric,and found congenial company plentiful.

Have instead spent my life mostly in company of Joe Sixpack,with a few lucky exceptions.I have been at various times myself seriously interested in a good many of Joes enthusiasms ranging from fast cars to deer hunting to shooting pool to getting high and getting laid,but in the end I usually found myself with nobody around to talk to at a serious level.Joe's dreams, aspirations,and ordeals are just as real and important as my own,but his conversation in the long run is confining.I did find plenty of extremely intelligent people anxious to talk to me at second hand,thru thier books.

So I read them as I came across them,indiscriminately.Science fiction,classic novels, military sciences,technology ,environment,religion,biology,you name it.Never less than a couple a week.Daily papers when available.A few months worth of news and sciece magazines during all day library visits.

Back on the farm now for duration of old folks lives,maybe permanently.

So now that I finally have high speed access,I have found a community of people I can really relate to here on the Oil Drum.There are numerous other good thought provoking sites but this one is the most informative,interesting and relevant single forum around IMO.THANKS,EVERY BODY!

Now that I have tried to explain where I'm coming from,I would like to outline VERY BRIEFLY what seems to me to be the likeliest path we will be following over the next couple of decades.Hopefully some others with real expertise will pickup where I leave off.

I accept as a given that a crash,the REAL crash, is coming and will not be too long in arriving.The things going on now are just the organ music, the movie has not started yet.There arguments in favor range from over population to depletion or critical scarcities of everything from oil to water to climate change,and hard as I have tried,I cannot find any convincing arguments that timely solutions to any of these problems are at hand.

On the other hand,it seems to me that little thought is being given to the various public policies that will inevitably be enacted on an emergency basis as things begin to truly get out of hand.I can't see congress and the white house doing much in the short term as long as bau stumbles along,but once few city water systems fail as a result of the grid going down,I can't see any body standing in the way of firing up a few dozen new coal plants,if it is still possible to get them built.There will be no environmental review unless I am entirely mistaken in my read of history and politics.

If the utilities need trucks to maintain the grid,they will be commandeered just as ships have been commandeered in the past to move troops and cargo during war time.

Electrically operated advertising signs will probably be outlawed.Greenhouses producing flowers and farms raising christmas trees will not get fertilizer or fuel allotments.Feedlot operations where cattle are finished for slaughter will be forced out over a couple of years time as we farmers are "encouraged" to switch to larger plantings of crops directly consumable-we won't be able to afford corn fed beef any more,but otoh,we can't eat anything like the amount of corn flakes and corn bread that could be made from the current corn crop.

Mail will be delivered every other day, then twice a week.

Personal autos such as Chevy Suburbans will not be allowed on the highway,unless occupied by six or more persons.

Your fuel oil allotment for home heating will allow you to set the thermostat at sixty, and then it will shrink to nothing,and you can either move south or freeze.
Luxury taxes will be levied on everything from potato chips to tennis balls,and any products not necessary to survival made by less than well connected manufacturers will gradually be taxed out of existence.

Birth control may be free and abortions mandatory.

There will be hard limits set to treatment of chronic diseaes in the elderly-pain meds,maybe herion since it is dirt cheap,may be available but a stay in intensive care will be out.

Pot will be sold at liquor and wine stores.

Plenty of jobs paying room and board for housekeepers and security gaurds will be available under the table in the private sector.

I do not want to defend any of these examples as inevitable ,but merely to get every body thinking about this middle ground between the lights out-walking-out-of-NY-and-scavenging scenario and the recognizable-as-bau-scaled-down scenario.

IMO the majority of your predictions make far too much sense. My guess is that responses to the crisis will be politically determined and many will be maladaptive.

My guess is that responses to the crisis will be politically determined and many will be maladaptive.

Diamond says this is exactly what happens to societies that do collapse. The desire to maintain BAU, regardless of eon or era, is strong. Stasis is comfortable. Change is hard. This is not a surprise, but it is surprisingly difficult to get people to realize change **must** come, for it is the way of all things in the end.

Better to choose your path than to be buried beneath it as more aware Others choose change over stasis.


I think you have outlined a very plausible scenario. We can add things like bicycles built for three, suicide pills for the elderly (give your life for your country), fewer pets, more blankets (up north), an increase in bartering, more potluck dinners (gives variety as in eating out), rainwater harvesting, composts, fewer baths, much less variety in the stores, fewer to none "convenience" stores, kids walking to school, and homemade music.

I've just posted a long blog post on the new Data.gov site and how it misses the mark in its stated mission: "better public access to high value, machine readable datasets".

I'd appreciate any comments from folks here who are interested in data access, data usability and data management issues. I have my own opinions on these issues but value the thoughts of the Oil Drum community.

Best Regards!

-- Jon

I didn't see a posted link in the DB yesterday or today to this NYTimes article on the downturn in so-called "golf resorts" that seems to causing some consternation among the developers of those evidently high-end ventures.

Too bad. Maybe they read TOD, and will eventually choose to take the alternate route that is often mentioned here, that of turning their unsold lots and the accompanying 18 hole courses into garden plots.

Jeff Rubin is the former Chief Economist for CIBC World Markets on CBC on his new book "Why your World is about to get a whole lot smaller."


There's a whole thread about the book over here:

Sorry this thread appeared with comments turned off, and then disappeared altogether for awhile. Server problems, not an editorial choice on my part.

The Global Food Crisis: The End of Plenty (linked up-top) is a 13 page article from the National Geographic. It is very good.

Between 2005 and the summer of 2008, the price of wheat and corn tripled, and the price of rice climbed fivefold, spurring food riots in nearly two dozen countries and pushing 75 million more people into poverty. But unlike previous shocks driven by short-term food shortages, this price spike came in a year when the world's farmers reaped a record grain crop. This time, the high prices were a symptom of a larger problem tugging at the strands of our worldwide food web, one that's not going away anytime soon. Simply put: For most of the past decade, the world has been consuming more food than it has been producing. After years of drawing down stockpiles, in 2007 the world saw global carryover stocks fall to 61 days of global consumption, the second lowest on record.

"Agricultural productivity growth is only one to two percent a year," warned Joachim von Braun, director general of the International Food Policy Research Institute in Washington, D.C., at the height of the crisis. "This is too low to meet population growth and increased demand."

There are lots of details about how the green revolution is not working any more -- water table depleted, too much pesticides, farmers with cancer. Scientist are looking for a new green revolution, but haven't found one.

Naimi, from Leanan's link above, is warning of a new oil price spike within two to three years due to low investment.

Birol is also warning of price spikes due to insufficient capacity additions caused by low investment, leading to a supply crunch by around 2012.

Tanaka is also warning of an oil supply crunch in the middle term.

The chart below has been updated for Aramco's delayed start of Manifa from 2012 to 2013 leaving 2012 as the obvious year for a big oil supply crunch. If demand stays constant from now until 2012 then fuel rationing will probably occur by 2012.

click to enlarge

The data from the chart is derived from http://en.wikipedia.org/wiki/Oil_megaprojects and shows only gross capacity additions. A discount of about 15% should be applied to estimate future production additions.

Once Khurais, Shaybah and Nuayyim start this year, Aramco will have no new oil projects starting until Manifa in 2013.

For more information about declining oil production, which could causes prices to spike by the end of 2010, please read the following.

World Oil Production Forecast - Update May 2009

Hahaa! I knew it!! The Mayans where right all along...

$200+ in 2012 it is then...

Should be a nice little chnuk of demand destruction ensuing. I'll just make sure I've got myself a nice little pot of cash ready to buy up all the resulting firesale sell-offs.


Nicks Peak Oil Timeline:


Al-Naimi, Birol, Tanaka. It's starting to look a bit rehearsed, isn't it?

This will be how it goes, officially. When it makes the TV news, the problem will be called "short-term supply problems" due to "above-ground factors" - lack of investment, political interference, speculators, storms, whatever. And the "short-term problems" will extend ... and extend again ... and again. "Unexpected" "short term problems" that "will soon be corrected" - all the way down.


In our local Barnes&Noble bookstore there was a book blurb that referred to “this generations apocalyptic world view.”

What do you know, TOD style worldview and thinking which once seemed so out on the edge of things is now mainstream! :-)

This summer, I am letting my friends know that we should be very aware and maybe pull in the horns a bit. The stock market very often adjusts down in the summer, and with a little perfectly timed bad news, it could be a drop of some magnitude. The problem is that after last years bottoms being so low, no one knows where the bottom is.

Of course oil prices will almost certainly come back up due to the increased demand that always comes with summer driving holidays, so the hysteria should really take off.

The "echo" market downturn will set off some major alarm bells, thus adding fear and panic to a market that is already nervous to begin with. We could see some harsh drops in markets across the board.

Now for those who read TOD late at night, and my personal cadre of friends I take care of, don't say you weren't warned.

And for those who will see the seasonal echo adjustment as propaganda to use as proof of the collapse of the Western world, no one can stop them from doing that.

For the financial advisors (who are well aware of historic patterns) who will use the coming adjustment to take advantage of more clients, no one can stop you from doing that either. Please recall that the financial services industry is already discredited in a way that it has not been since the 1930's, and further abuses will only serve to undermine your profession to a degree that may take decades to repair. There are those (no small minority mind you) who in their heart feel that the U.S. financial community should be tried for treason as things now are, and feel that no amount of regulation is too much when trying to reign in mad dogs who are essentially a destructive force to our nation and the world, and always will be.

Good luck to everyone in the coming week and for the rest of the year, keep your powder dry and enjoy life, but remember that right now, ready cash is not a bad friend to have around. :-)


The "echo" market downturn will set off some major alarm bells, thus adding fear and panic to a market that is already nervous to begin with. We could see some harsh drops in markets across the board.

I'm about 95% certain we hit the rally peak May 8. That fits well with what Stoneleigh has been expecting. Certainly, the rally has been longer than I ever expected given there actually is zero good news out there. There is some not-quite-as-bad news, but that's nothing more than the usual cyclical rises in certain things this time of year and normal variability, imo.

It took two months to get up there, it would also fit with Stoneleigh's guess it might be down again or be headed to new lows by sometime this summer.

I hate it when others guess better than I do.


(I still think there's a good chance of a sudden market tumble once people understand the green shoots were nothing more than O-NPK.)


Unintended consequences:

California's adoption of the Indirect Land Use Change idea and the EPA decision to follow Simple Simon will defeat the climate change bill before congress. Or Congress will change the law. Whatever.



Corn farmers (and the politicians they elect) want to outlaw good science and accounting that shows that corn based ethanol is a nearly worthless scam.

The hurdle is VERY low, that growing, distilling and distributing corn ethanol generates *JUST* 20% less GHG than burning straight gasoline; but corn ethanol cannot pass that LOW hurdle.

With many better policy alternatives, a process that reduces GHG by only 20%, or 25%, is simply not worth doing with massive public subsidies.

Best Hopes for LESS corn ethanol, not more,


PS: Ethanol, preferably from sugar cane, does have a place to replace MTBE. Now, if new cars need ethanol, or MTBE, to reduce emissions is an open question.