DrumBeat: June 1, 2009

Jeff Rubin - The recession: First, there was expensive oil

Knowing the nature of a disease is usually a precondition for finding a cure. Similarly, identifying the cause of a recession goes a long way in defining what type of recovery is likely to follow.

Conventional wisdom ascribes the current downturn, which in many ways is already the postwar's deepest one, as a financial-market crisis with origins in the bursting of a U.S. real estate bubble. But how did the demise of the American subprime mortgage market create earlier and much deeper recessions overseas than in the U.S. economy itself?

Maybe there was something else going on, like triple-digit oil prices for example.

Global Storage Constraints Limit Oil Stockpiling

(Bloomberg) -- Global storage constraints in the short term are limiting the ability of most countries to stockpile more oil, China’s energy chief said.

“Crude stockpile facilities at most countries have been fully filled in the first half, and it will be difficult for countries to greatly increase crude reserves in the second half as they did in the first,” Zhang Guobao, director of the National Energy Administration, said at a media briefing in Beijing today.

Driving Season in U.S. May Beat Forecasts, IEA Says

(Bloomberg) -- Fuel demand during the U.S. summer driving season may prove stronger than projected as consumers recover from the shock of the global financial crisis, an International Energy Agency official said.

“It wouldn’t surprise me if it was a better driving season than some people have forecast,” IEA Deputy Executive Director Richard Jones told reporters at the Australian Petroleum Production and Exploration Association conference today.

Oil Rises to Seven-Month High on China Manufacturing Expansion

(Bloomberg) -- Crude oil rose to the highest since November as China’s manufacturing expanded for a third month, signaling that fuel demand in the world’s second-biggest energy consumer will increase.

Oil climbed as much as 1.8 percent after the U.S. dollar fell to its lowest against the euro since December, heightening the need for commodities to hedge against inflation. China increased prices of gasoline and diesel by as much as 8 percent, a move that may prompt refiners to boost crude purchases.

OPEC unlikely to lower oil output

There is "no way" OPEC will cut production when the group meets again in September, Kuwait's oil minister said, after the supplier of about 40% of the world's oil left output quotas unchanged last week.

"We're not in favor to see the prices in the hundreds because this will fuel recession again," Sheik Ahmed al Abdullah al Sabah told reporters Sunday in Kuwait City. "We have to give the world economy more time" to recover from its worst recession since World War II.

The big American gas-guzzler: Down but not out

HOUSTON (Reuters) – Even though U.S. pump prices are nearly half the $4 per gallon ($1.06 per liter) levels of a year ago, the legions of American fans of gas-guzzling SUVs and trucks don't have much to celebrate.

President Barack Obama's White House has unveiled new fuel-efficiency rules that will push auto companies into making more small cars and General Motors and Chrysler -- both heavily associated with large vehicles -- have sunk into bankruptcy.

But don't expect many dents in the Sport Utility Vehicle fan club.

Total Says New Oil Finds Can Beat North Sea Decline

Bloomberg) -- Total SA, Europe’s third-largest oil company, calculates that investment in North Sea fields will make it the biggest oil and gas operator in the U.K. within three years, challenging top-ranked BP Plc on its home turf.

“Our strategy is more aggressive than other companies,” Roland Festor, managing director of Total E&P U.K. Ltd., said in a May 28 interview. “We don’t have a strategy to grow by acquisitions but by exploration in our hubs.”

US energy braced for hurricane pressure

Rising reinsurance rates and falling capacity have left some insurers and US energy producers with more to fear than in past years as the Gulf of Mexico hurricane season begins on Monday.

A severe storm season would put “big pressure” on the Gulf energy industry, according to brokers at Marsh, as producers have been left with little or no insurance cover.

A cutback in the state reinsurance fund has left insurers of buildings in Florida less able to afford reinsurance, according to research out on Monday.

GM files for bankruptcy

It's an end of an era for GM as the troubled automaker is forced into bankruptcy. GM is set to close nearly a dozen plants and cut more than 20,000 jobs.

Is Halliburton forgiven and forgotten?

The Houstonian Hotel is an elegant, secluded resort set on an 18-acre wooded oasis in the heart of downtown Houston. Two weeks ago, David Lesar, chief executive officer (CEO) of the once notorious energy services corporation Halliburton, spoke to some 100 shareholders and members of senior management gathered there at the company's annual meeting.

All was remarkably staid as they celebrated Halliburton's US$4 billion in operating profits in 2008, a striking 22% return at a time when many companies are announcing record losses. Analysts remain bullish on Halliburton's stock, reflecting a more general view that any company in the oil business is likely to have a profitable future in store.

Asia Crude-IOC seeks more August crude

SINGAPORE (Reuters) - India's largest state-owned refiner, Indian Oil Corp (IOC), has issued a second tender to buy August sweet crude, after having bought four million barrels last week, traders said on Monday.

China: Power consumption continues to drop, oil sales set new high

Statistics released by the State Electricity Regulatory Commission (SERC) reveals that starting from October 2008 China's power consumption has experienced negative growth for six consecutive months.

Kurt Cobb: Hypocritical modelers

Oil companies like to use models to estimate their reserves and the potential of unexplored fields. Exxon Mobil Corp., the world's largest oil company and a longtime supporter of the global warming denial lobby, tells us the following on page 8 of its 2007 annual report: "Using proprietary technologies and tools, including advanced reservoir prediction models and geological data visualization, we have significantly improved our ability to identify, model, and understand oil and gas reservoirs."

Exxon and its fossil fuel partners in the denial lobby seem to like models well enough when they use them for their own purposes; but through their hired mouthpieces they decry the use of models for climate change forecasting. (The Heritage Foundation to whose pages the previous link leads received consistent funding from Exxon throughout this decade.)

Saudi's Say Crude Oil $75 is Fair: Parasite Economics Explained

There is a rumor that demand for oil is a function of GDP, therefore when the world economy recovers, demand will go up, so divide that by supply and you get to price.There is only one small little thing wrong with that theory; historically it doesn't work very well.

Rather the other way around, sort of like a 300% increase in price might cause a 5% decrease in demand with a four or five year lag and a 60% decrease in price might give a 10% increase in demand with a four or five year lag.

Where Is Silver Heading Next?

The fundamentals that will propel wave 3 will be similar to wave 1 as the economy recovers, silver demand picks up industrially but again inflationary pressures begin to bear as commodity demand from China and elsewhere tightens. The inflationary effects of the worldwide credit crunch bailout will also finally filter through but we also expect Peak Oil to finally and decisively appear and oil to breach $200 and beyond. Wave 3 will occupy most of the next decade.

What’s wrong with a 30-hour work week?

With millions of jobs lost during the first part of 2009, who is calling for a shorter work week to spread the work around? Not the Republicans. Not even the Democrats. But why is there nary a peep from unions?

Red Cliffs and collapse

We are at the eve of a depletion crisis. Present day polities are so complex – and therefore costly – they cannot exist without a constant inflow of energy only fossil fuels can provide. With the advent of peak-oil, they will less and less able to pay for the cost of their existence and will disintegrate. The way they will do it, however, will matter quite a lot and if they cling to their unity too long and fail to decentralize, they will only exhaust resources their successor will need to firmly establish themselves. So instead of the warring but reasonably stable Three Kingdoms, we will end up with squabbling fiefdoms.

This is, I think, a vital task peak oil activists unfortunately tend to overlook : how to make sure that when current polities fail, they won't be replaced by a reincarnation of the petty kingdoms of England. That certainly does not mean encouraging every wild secessionist scheme – some are reasonable project, as in Scotland, Wales or Catalonya but most others are just recipes for disasters – but encouraging decentralization, growth of regional identities and empowerment of local authorities, so that, when the time will come, we won't need a Battle of the Red Cliffs to avoid fighting the one of Badon Hill.

Triple crisis for the motor car

THE modern world is so much built on the motor car. For many middle-income families, it is the most important asset they own after the house. And, many who don’t own a car have the fervent dream of doing so.

Just as car ownership is the most obvious status symbol for the individual, the making or assembly of automobiles is for many developing countries the centerpiece of their industrialisation process.

Today, the motor car, and what it represents, is caught in the midst of at least three crises – the environmental, economic and energy crises. Its future will not be the same.

Investing in creativity is way to achieve economic success

Global warming and peak oil may necessitate a complete rethink of our approach to investment in transport infrastructure. Rising unemployment means risking a repeat of the 1980s disapora and the brain drain that went with it.

Resources available now to begin the transition toward life we’re seeking

The Transition Town Movement – a grass-roots initiative spreading around the globe – is asking, “How are we going to drastically reduce carbon emissions (in response to climate change); significantly rebuild resilience (in response to peak oil); and greatly strengthen our local economy (in response to economic instability)?”

The movement, originated by Rob Hopkins, a UK ecological designer and permaculturist, provides a roadmap away from this triple threat and toward a sustainable future.

Seeds of Change

These are, to put it gently, unsettling times. A triple whammy confronts us: climate change, peak oil, and a global economy in a possible death spiral. With things spinning so badly out of control, it’s easy to feel daunted.

A century ago, the poet William Butler Yeats described chaos’s onset this way: “The center cannot hold.” While his words still resonate, they don’t quite capture the current crisis, whose cause lies precisely in this: The global economy has no center. It’s a system in which capital sloshes from money center to tax haven, and corporations, in the words of writer David Ehrenfeld, are “everywhere and nowhere.” The result: From the Hudson Valley to Hong Kong, people are plugged into an economic matrix that has no face and is indifferent to yours. Talk about your primal helplessness! Here we are, attached to the same global teat, the milk is slowing to a trickle, and Mama’s on crank and doesn’t care.

Is it end-game time? Yes, if we’re referring to the era of plentiful, cheap oil. But don’t assume a high-tech Dark Ages is upon us. Out of the rubble of the old, a new, postglobal economic arrangement is emerging.

Beyond Westminster's bankrupted practices, a new idealism is emerging

Progressive politics will take root from the rubble of a Labour defeat. The Transition movement is giving us a glimpse now.

Superfluous Luxuries: How science was put in the service of greed

Throughout our history our development has been geared into progressive invention, at no point have so many scientists co-operated in the name of preservation. Will peak oil result in a peak of technology, or at least those technologies which are such an ubiquitous aspect of our society?

I grew up with this notion that our race was infallible, that we would explore the stars, and even when I learned that, if we weren’t wiped out by a meteor the sun would burn out, the assumption was that we would inevitably prevail. I also naively believed that our evolution and the state of society was at a level and we would not experience even half the change our parents and grandparents witnessed. The last hundred years have seen the most drastic change to the lives of the ordinary in human history, but the next hundred will outdo that effort effortlessly, but we all know where you’re headed after a peak. The metaphorical conception of oil as the earth’s blood is only too accurate; we are bleeding it dry and the life-force we have invested far too much in will soon give up on us. Nature will have her revenge, she is already displaying her destructive potential, flexing her muscles, and we need look no further than our temperate little island to see the effects (in terms of unprecedented weather patterns and consistent meteorological anomalies).

'Clean-tech' start-ups are pushing the green button

Venture capitalists, big companies including Cisco Systems Inc. and General Electric Co. and private equity firms have been pumping money into a variety of green IT initiatives, said Ron Pernick, co-founder and principal of Clean Edge Inc., an environmental research and consulting firm. A major push includes an effort to make the nation's power grid "smarter" by using sensors and networking technology so companies can track their electricity use.

These initiatives look at the demand side -- figuring out how people are using energy -- rather than the supply side, such as solar power, to replace the type of energy being generated.

Corn farmers eye E15 waiver

For decades, much of the fuel sold in the U.S. has been blended with 10 percent ethanol. However, in recent years, the amount of ethanol produced in the U.S. has been on the rise. In 2008, the ethanol industry produced 9 billion gallons of the alternative fuel. And this year, ethanol production is expected to rise yet again, to more than 12 billion gallons.

But for the ethanol industry, the steadily rising production portends trouble. Should the federal government continue to limit the blend of ethanol in regular unleaded gasoline to 10 percent — a blend known as E10 — the ethanol industry will run into what is known in the industry as the "blend wall," or the maximum amount of ethanol that can be reliably absorbed by U.S. gasoline production.

Monbiot - Stern breaks the east-west deadlock on who's responsible for CO2

China says it's unfair that the west 'outsources' emissions. Now that Lord Stern has said responsibility should be split between producers and consumers, other countries may follow suit.

Japan to choose on climate: lose face or lose money

TOKYO (Reuters) - Japan's prime minister faces the country's toughest climate change challenge in more than a decade when he sets a greenhouse gas emissions goal for 2020 this month: he must either take a lead on the cuts or cave into pressure from business.

If his target is deemed too small, Taro Aso will earn global ire for not pulling his weight in the fight against climate change and disappoint some voters ahead of a looming election.

As the U.S. goes (green), so too goes Canada

“There is the strongest prospect ever” that the United States will embrace cap-and-trade, believes Elliot Diringer, vice-president for international strategies at the Pew Center on Global Climate Change.

That likelihood represents a profound surrender of sovereignty by Canada on environmental policy.

CO2 levels may cause underwater catastrophe

The world's scientific academies - including the UK's Royal Society - issued a warning that ocean acidification must be on the agenda when countries attempt to forge a new global deal on cutting emissions in Copenhagen in December.

And a separate paper warned that increasing acidity in the seas could damage fish, corals and shellfish - leaving fishing communities facing economic disaster.

Public asked to help monitor life on earth

OSLO (Reuters) - Scientists asked people around the world on Monday to help compile an Internet-based observatory of life on earth as a guide to everything from the impact of climate change on wildlife to pests that can damage crops.

"I would hope that ... we might even have millions of people providing data" in the long term, James Edwards, head of the Encyclopedia of Life (EOL) based at the Smithsonian Institution in Washington, told Reuters of the 10-year project.

The seldom-seen devastation of climate change

A NASA climatologist explains why global warming is more than starving polar bears, and skeptics are simplistic.

Apathy threatens humanity, ex-Clinton aide says

Thomas Homer-Dixon says we still don’t get it.

And unless we change our energy-consuming, air-polluting ways, we’re in for a rude awakening in just 26 years.

“It’s not going to look good,” said the author of “The Ingenuity Gap,” and editor of the recent best-seller, “Carbon Shift” and former White House advisor to the Clinton administration.

By 2035, Homer-Dixon warns there will be a cataclysmic shift in weather patterns that will leave us reeling.

12 Months Later

At the end of this month, it will have been one year since oil prices hit their (so far) all time monthly high record of about $134 (WTI, spot). At the start of trading this morning, the price of oil is at about half of the June, 2008 record level.

So, what has changed in 12 months, other than the obvious decline in demand due to the slump in the world economy?

I think that the key metric over this time period is (surprise!) the volume of net oil exports from the top five net oil exporters--especially as a percentage of remaining cumulative net oil exports. Based on Sam's best case projection, from 6/08 to 6/09 the top five will probably have shipped around 7% of their remaining cumulative net oil exports.

If, for the sake of argument, oil prices average $67 for 2009, the annual rate of increase in oil prices since 1998 would have been about +14%/year. The one down year over this time period, prior to 2009, was 2001, which followed the very rapid increase in oil prices in 2000. Note that the annual rate of increase from 2001 to 2008 was over +50%/year, as average annual oil prices almost quadrupled over this seven year time period.

So what happens from 2009 to 2016, when Sam's modeling shows that the top five will have shipped more than half of their post-2005 cumulative net oil exports?

This link to talks from Drs James Hamilton and Daniel Yergin on "oil and the economy" (given at the Joint Economic Committee a few days ago) may have been posted elsewhere...


Certainly worth a look. Run time 1hr 14m.

Regards, Matt B

I got a kick out of Yergin advocating increased reliance on Canadian oil sands. It just shows how desperate Yergin must really feel the situation is. He also mentioned an interesting measure of total US energy consumption per day: 46 million barrels of oil equivalent.

I guess I should be encouraged that there's at least *some* official (public) discussion in the US on what may lie ahead re oil supply. But is it just talk?

Was there a "Sub Prime Committee" established *before* TSHTF?

Regards, Matt B

It just amazes me how most people haven't learned anything from this past year. Almost nobody in the MSM seems to connect the downturn in auto sales (due to high oil prices) to the problems that the big three car makers are having now... and very few seem concened about the potential consequences of the current upturn in gasoline prices.

It's one thing to accept things that are highly unavoidable; it's another thing altogether to forget one's own mistakes.

It was raining - still - in South East Florida over the weekend so I figured to try and watch CNN's "How the Wheels Came Off: The Rise and Fall of the American Auto Industry".

I couldn't take it. I learned Christine Romans was a Corvette gal and not much else...in no small part because I tunred it off and went outside to get wet and dodge lighting strikes.

There was something on Huffington Post about how far CNN has fallen in terms of prime time reproting...and that in the context of all MSM outlets being less than - uhh - useful with in depth reporting.


Yeah, when they tried to tighten the budget the first guy they axed was their science reporter (I think it was Miles O'Brien).

That in itself says something.

I HAVE bought my 'Talking Billy Bass' placque, and have started debugging the solenoid wires to turn it into the Bona Fide 'CNN News Fish'

'Why settle for talking heads, when you can have Talking FishHeads?!'

Don't Worry. Be Happy!

Now I've got visions of a text-to-speech rss feed wireless enabled dancing bass.

My belief is that we are about to enter into a new Inflationary era driven primarily by resource scarcity. However I do not believe the 50% increase per year between 2001 and 2008 will be sustained as this was from a very low base price and we are now already in the $60s. 50% for 5 years would put oil @ almost $500 a barrel by 2014 and I don't think the US economy can handle more than a couple of hundred without demand destruction setting in...

Of course if sufficient money is printed the likely high figure will increase. It's quite possible that if the Dollar falls off a cliff we could see oil in the high hundreds in the coming decades even without any scarcity scares.


Demand destruction is a given. I expect to see a recurring pattern of a smaller number of consumers paying a higher unit price for a smaller volume of exported oil. I've previously described the "Oil Consumer Continuum," from a poor Third World consumer at the bottom to Bill Gates at the top. I expect to see continued progressive demand destruction.

Having said all of that, as I have said before, while I am never surprised by oil price volatility, I was surprised by the size of the decline below $100.

I think the drive down to 30$/bbl shows how much momentum there is in worldwide oil production. Basically they filled up every storage container on the planet before they could finally slow down production in response to serious demand destruction.

With all of those brimming inventories it is easy to forget that not too long ago the world was depending upon the last linchpin of the oil cartel to prevent a true demand destroying shortage of oil. So far we have yet to see a situation where real demand for oil is unmatched by supply. The run up in oil to the 130s was mostly speculation (as is the current run up over 60).

On the plus side we have seen how just taking the edge off demand can do a lot to sustain our current usage. Meaning that if we can simply stop the Rule of 72 we can go a long way toward avoiding an energy crisis altogether.

The run up to the $130's was a 10 year event, as average annual oil prices increased from $14 in 1998 to $100 in 2008, with the fastest annual rate of increase being in 2000, not 2008.

Regarding supply/demand factors, I suspect that a long term accelerating net export decline rate will outpace virtually any long term decline in demand, forcing oil prices higher:

A simple explanation for oil prices (12/08)

My frequent co-author, Samuel Foucher, and I started warning, in January, 2006, about an imminent decline in world net oil exports. EIA data show that we are almost certainly going to see three years of world net oil exports below the 2005 rate, primarily because of collective declines by the top five net oil exporters—Saudi Arabia; Russia; Norway, Iran and the UAE—which account for about half of world net oil exports. Kenneth Deffeyes predicted that world crude oil production would peak in a range from 2004 to 2008, most likely in 2005. EIA show world crude oil production of about 74 mbpd (million barrels per day) in 2005, slightly less in 2006 and 2007, and 74 mbpd in 2008 (through September). Total liquids production is up slightly in 2008, which Matt Simmons attributes to increased natural gas liquids production, as the gas caps in many large oil fields are produced, in the last stages of depletion for these fields.

So, despite the fact that relative to 2005, we are going to almost certainly see three years of lower net oil exports, flat crude oil production and a slight increase in total liquids production, the conventional wisdom is that the increase in annual US oil prices from $57 in 2005 to about $100 in 2008 was due to “speculation,” while the recent sharp decline in monthly and daily oil prices was due to Peak Oilers being wrong about a near term peak in world oil production.

Part of the problem is that price information is instantaneous and accurate. Production data tend to be noisy (especially in the short term), delayed and subject to revision, so price, at least a falling price, is frequently used as a proxy for production (as noted above, rising prices are generally attributed to speculation, and not to fundamental supply/demand factors).

You are assuming that the increase in oil inventories was involuntary, when it was largely intentional. This was due to the very low tanker storage rates that existed early in the new year and the futures prices - which were high enough in later months to lock in a guaranteed profit.

Granted these kinds of purchases can influence prices, and there is some speculative element at all times - up and down. However when the price ran up to its highs a year ago, we saw very heavy demand - especially from China stocking up before the Olympic Games (when business activity was intentionally reduced).

The fall in prices late last year was in the midst of a financial panic, the type of which the US has not seen since 1873.

Since it takes about three months for the cutbacks by mideast OPEC producers to show up in US inventory reports, the effect of cuts they took in March and April have yet to be seen.

What do declining availability of petroleum exports and increasing climate change have in common? They both constrain options which will lead to sustained civilization. Some authors talk of climate change and resource depletion as if they were totally independent events. The most important issue in my mind is not which is the more pressing problem, but how does each impact the other? When we have less oil, will we use more coal? How will changes in agriculture resulting from climate change impact energy usage? Will we pump water for agriculture from greater distances? As a layperson, I have more questions than answers. I'm not sure if my questions are the right questions, but we need very good questions if we are to navigate survival in a world where our viable options are fewer due to both climate change and resource depletion (water, gas, oil, coal, uranium, minerals).

In my view, peak oil constrains the options we have for climate change rather than the other way around. Almost all the climate change mitigation plans I've seen assume a growing economy and this assumption makes them, more or less, worthless.

So there definitely is an order that we should look at things: understand what the boundaries are given peak oil (since it will impact the economy so much and thus how we can marshal scarce resources to address climate change) then choose mitigation and adaptation strategies for both issues.

You're going to have to be more specific. I find this contention absurd. You're just not thinking this through.

Almost all the climate change mitigation plans I've seen assume a growing economy and this assumption makes them, more or less, worthless.

And how is this different than any peak oil plans? They all involve BAU Green. The only places you see steady-state given any credence is on blogs/fringe sources. Olduvai, maybe? Sure, people **here** talk about non-growth scenarios, but even here I doubt it's a majority opinion. Worse, movements such as Transition Towns specifically target both issues.

You are attempting a false comparison.

understand what the boundaries are given peak oil (since it will impact the economy so much and thus how we can marshal scarce resources to address climate change) then choose mitigation and adaptation strategies for both issues.

Any choice that is good for climate change is good for peak oil, but the opposite is not true. Thus, from the very start, you are wasting time determining what is economically feasible for things that cannot be part of the solution. For example, there are plenty of things one can do with coal that would be great for dealing with PO, but virtually anything you do with coal is bad for Climate Change.

You talk about choosing resources based on economic limits. Yet, climate change affects the economy. And, the greatest limits we face come from Climate Change, not PO. What sense does it make to base your choices on the least limiting of two choices?

In fact, if you are to, as they do in Transition, determine where you will/want to be and work backwards, then Climate Change is where you start as the effects are extremely long-term and will eventually obliterate PO concerns.

In fact, it's far, far simpler if you start with the limits presented by Climate Change because they are are so great, PO is essentially irrelevant. You don't have much in the way of choices. You can't burn all the FFs, you can't wait 20 or 30 years to get significant change up and running, so nuclear is out as a primary response. Many scientists have expressed that we have as little as five years to begin significant reductions. What PO mitigations achieve that? None? Pretty much, yup.

In fact, Climate Change defines the boundaries while PO only shapes how we respond.

Powerdown (conservation) is THE #1 response given the urgency. Shouldn't that also be true for PO? Yes. At least, the Hirsch Report would certainly argue the urgency is there and strong conservation needs to start now.

We simply don't need a PO/Climate Change dichotomy.

The danger in creating a hierarchic dichotomy is that PO mitigations actually might allow BAU Lite or PO Lite responses. However, the limits imposed by Climate Change require such massive reductions in emissions - enough to move the clock backwards wrt emissions - that the emissions from maintaining manufacturing at BAU Lite levels will still drive us over the edge.

Let me end with a question: Does it change the equations much to consider the two issues equally from the get-go?

No. It doesn't. I can't figure out any way that focusing on peak oil helps the situation. It clarifies nothing. It eliminates nothing that CC limitations wouldn't. It doesn't necessarily push for changes as deep as CC requires. Really, I can't figure out any reason to take the approach you are.

The only variable I can see here that changes with a focus on PO is you. There is no benefit to the planet or its people.

I hope you will stop spreading this truly irresponsible message.


See the new post by Bardi, The Fifth Problem: Peak Capital for more on why I think peak economy will circumscribe our options.

I haven't yet read it, and don't need to (but will). The problem is with your logic, not your facts.

1. You didn't say PE, you said PO. However...

2. PE <> PO... and...

3. PE <> PO <> ACC (circular)


I repeat: you said, look at PO and see what the ultimate parameters are, but PO does not define the ultimate parameters, ACC does.


Hello WT & Sam,

Thxs for beating on the ELM drum--please keep it up as I think it directly ties into Duncan's latest Olduvai Re-Equalization scenario and Thermo/Gene MPP.

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

Could anybody discuss the internal contradictions in ELM such as:

1. Economize: cheap rental apartment would be best, get rid of that huge structure in the exurbs
2. Localize: walkable neighborhood close to rail station would be best. Unfortunately, such real estate is expensive. Contradicts 1.
3. Produce: truly independent production (such as necessary in the collapse hypothesis) would need land, at least 10 acres (2.5 hectares ... is that even enough?). Contradicts 1. and 2.

This may be the reason that almost everybody is still where they were two years ago.

You mean ELP, I think.

Why ten acres?


The old saw was a human can provide for whatever the need on 5 acres.

so 2 ppl.

You are right, I meant ELP.

Ten acres - I am thinking about a northern location and include firewood.

What in the world would you do with ten acres? See here:


I didn't ask, "Why ten acres?" I asked, "Why ten acres?"

Intonation and stress obviously are lost in textlation.


Willem, using your numbers ELP also does not make sense: with your agricultural methods, you don't need to Localize someplace else. You just produce all you need in your suburban backyard. If you cut out the beef from your numbers, you get 0.11 acres (400 m2), nearly no backyard would be too small, and US suburbia is the best place to be in the collapse scenario. (While nearly no US suburbs are walkable, most are "bikeable": anything you need within 6 miles/10 km) If these methods work out, great.

I have not read enough of your comments to know if your handle is " 'ferreal",but BIOLOGISTS AS SUCH are not farmers. SOME OF THEM tend to rhapsodize occasionally about THEORITICAL possibilities without making it clear that they have little or no PRACTICAL EXPERIENCE with agriculture of the sort possessed by agronomists,for instance-who incidentally are very well trained in the aspects of biology most immediately relevant to agriculture,and do quite a bit of cutting edge research.Get your degree in agronomy,and you are only a couple of easy semesters part time from a degree in botany,although you could probably not schedule the courses in only two semesters.

There is nothing in the world so prone to Mr Murphy's loving attention as agriculture,except war.

It is impossible to generalize about the upper limits of production of very small scale farming without specifying who,what,when,where,why,etc.

I assure you sir that unless your 0.11 acre is under glass and you are a very accomplished operator with plentiful and reliable supplies of fuel,you will starve in North Dakota well before winter even makes its official appearance.I am willing to place a substantial bet that there is not a reader of the Drum in the Dakotas who lives and works on a farm who will disagree with me.

In the delta in Louisiana,you just barely maybe might concieveably skinny by-if you are a six under par Chinese peasent kind of organic farmer,with a life time of experience and the willingness to devote your entire life to eating just enough.Obesity is not common in subsistence societies.

You will starve anyway in Louisiana the first time a decent hurricane hits your 0.11 acre.If things are bad enough that you are subsistence farming,they will also probably be bad enough that any organized rescue is doubtful.

Modern ag tech is nearly useless w/o the associated modern inputs which will be unavailable if tshtf.

You will find FH King's Farmers of Forty Centuries to be a very worthwhile read.It is still,after a century, the gold standard reference in any discussion of sustainable low tech agriculture.


The crux of my argument--building on work by a lot of other people, e.g. Jim Kunstler--was that we were headed for deflationary trends in the auto, housing & finance sectors, with inflationary trends in food & energy prices and that we were headed for a labor surplus as the discretionary side of the economy imploded. Large suburban homes would therefore become more expensive to heat and cool, and to commute to and from, as the value of suburban real estate fell--even as many people's incomes fell.

One would have to compare the cost of renting a small apartment close to where you work or along a mass transit line, versus the total cost of a suburban home, but one point that you are missing is the cost savings from minimizing, or eliminating, your use of a car.

For most people, the E&L parts of the ELP Plan are the easiest to achieve, but here is the "P" part of the article, slightly edited to correct JHK's quote:

ELP: Produce

Jim Kunstler has suggested that we should not celebrate being largely a nation of consumers. I agree with Jim. We need to once again become a nation of producers. I recommend that you try to become, or work for, a provider of essential goods and services.

Key recommended sectors are obviously energy--conventional, non conventional and alternative energy production and energy conservation--as well as food production, especially local organic farming close to towns and cities.

Other sectors to consider are repair and maintenance, low cost energy efficient housing, low cost transportation, basic health care, etc.

The biggest risk to family finances is trying to maintain the SUV, suburban mortgage way of life in a period of contracting energy supplies. Beyond that, one of the next biggest risks in my opinion, is excessive and unwise spending--especially debt financed spending--on college education costs.

While we will desperately need engineers and many other technically qualified graduates, we are seeing wave upon wave of college graduates entering the work force with degrees that very poorly prepare them for work in a post-Peak Oil environment. We may ultimately see college graduates competing with illegal immigrants for agricultural jobs.

Perhaps the best education investment that many young people could make is a two year associate degree in some kind of repair/maintenance area, perhaps with summer jobs in the agricultural sector.

I would especially recommend that you consider buying, perhaps with a joint venture group, a small farm, either currently organic, or that can be converted to an organic farm. In the short term, if nothing else you could lease it out to an organic farmer. Longer term, you might consider building or moving a prefab, small energy efficient house to the farm. If nothing else, this plan may provide a place of work for your unemployed college graduate.

I think that “Tiny Houses” will become more popular, as larger homes are no longer viable. Where there are jobs nearby, many McMansions could be subdivided, but absent local job centers, I expect large swaths of American suburbia to be essentially abandoned. As Jim Kunstler warned, American suburbs represent the “Worst misallocation of resources in the history of the world.”

Very small (250 square feet or so), highly energy efficient, perhaps prefabricated housing makes a lot of sense, and this may become a growth sector.

I should confess that I in no way have a green thumb, but others certainly do, and there are some very encouraging case histories of Americans doing quite well with their own “Victory Gardens” so to speak, such as this case history: “Berkeley: Urban farmers produce nearly all their food with a sustainable garden in their backyard.”

The linked article about urban farmers describe how a couple of guys in Berkeley, on an urban lot, could be virtually food self-sufficient, if they wanted to do without some food items.

In any case, the key reason that "almost everybody is still where they were two years ago" is that they chose to remain where they were two years ago.

Following is a clip from one of my recent letters to a group of young men. Most but not all are located in the Pacific Northwest:
Most of our oil based enterprises will cease to exist in the near future. If you hope to put food on the table, you need to reassess your career plans. Sever weeks ago a particularly astute young reader of my letters asked, “What business opportunities do you see going forward?” Following is my current list of potential viable business opportunities. The ideas are not ranked by importance.

1. Maintenance of existing essential equipment – mechanical, electrical, electronic
a. Transportation
b. Manufacturing
c. Farm
d. Household
2. Maintenance of existing housing stock and modification to accommodate multiplefamily occupants.
3. Medical services, midwifery, and emergency medical service with out medical clinic or hospital backup.
4. Local manufacture of essential equipment. For example wood cook stoves and wood heaters.
5. Fabrication/rebuild of repair parts for existing essential equipment
6. Commercial distribution of essential equipment and supplies- Wholesale/retail (We will go back to the mom/pop kinds of business. The Wal-Mart/ Home Depot business model will not survive. Even those such as Weyerhaeuser will have difficulty surviving because their structure has become too rigid. (The ‘gypo’ logger and small local saw mill will replace them. )
7. Elder care. Short term for those who have money but no family or no responsible family. Long term people will by necessity take care of their own or let them depend on the charity of the community which will be in short supply. You fifty year olds and younger need to make sure that your children and grandchildren love you and are trained to assume responsibility for your care in your old age. You can forget about Social Security, Medicare, savings and private pensions. Most are insolvent even now. My generation has already ‘eaten your lunch, breakfast and dinner’.
8. Farmer market type food production and commercial distribution
9. Local food processing – canning, freezing, etc.
10. Training/retraining for all of the above. A Boeing machinist would be lost initially in the new environment. Many will not be able to make the transition even with retraining. The new environment will require much less specialization, more flexibility, and far more personal initiative because the current support systems will not be affordable.
11. Managing the acquisition and distribution of minimal food, clothing, and shelter for large masses of unemployed people. This will be a welfare program on an unimaginable scale.
12. Private security forces.

I do not consider the above to be negative, pessimistic, or defeatist. Rather it is a realistic and desperate call for you to get serious about planning and preparing for coping with the unfolding chaos.

... the annual rate of increase in oil prices since 1998 would have been about +14%/year. The one down year over this time period, prior to 2009, was 2001, which followed the very rapid increase in oil prices in 2000. Note that the annual rate of increase from 2001 to 2008 was over +50%/year, as average annual oil prices almost quadrupled over this seven year time period.

Now you can see why GM and Chrysler are bankrupt. And the host of other bankrupts and the propelling force for outsourcing and other cost cutting strategies of business over the past eight years. Cutting labor costs and retirement benefits in order to compensate for increased fuel costs.

Rubin et al should forget the spike, it was a decoration intended to attract economists like a flashlight will attract mosquitoes. It was and is the continuing steady increase in prices that is doing the economic damage.

This is the front- month NyMEx crude; you can see it is trending upward since the February low ...

This is June, 2010. These charts speak for themselves.

Those 'Green Shoots' were simply a reaction to $35 oil at the end of last year. There is a lag ... $50 oil is probably the killer of profits for most businesses. Now it is at $70. It might go up to $140 again and test the upper limit set a year ago.

I don't know anymore. I see plenty of strip malls with empty stores, yet within very close driving distances of those vacant retail spaces I see plenty of new strip malls under construction... and land being cleared for even more commercial retail construction.

Does anyone really expect the economy to turn around that fast?.. or am I only being a pessimist?.. or is something funny going on?

During the past year or so there where a number of commentators along the lines of '2nd Great Depression'. What a load of twaddle, clearly these people knew nothing of history or they wouldn't have raised the spectre.

Much of the pain of that era was caused by policy mistakes that have not been made this time -in effect we have 'zoomed' from 1929 to 1933 IMO with the Inflationary policies of that year.

The panic did grip the commodities markets that IMO had undergone a final bubble in the 1st half of 2008 to unsustainable levels and subsequantley they fell by 'Great Depression era' amounts -so the panic in this area WAS similar...

However we are now seeing that panic subside and commodities are rallying as clearly we are not going through a new 'Great depression (not even close). The anal-yst who said oil would "fall to $25" probably had a short position -or perhaps just something else that's short.

So we have a highly Inflationary monetary policy with the Govt printing $$$s and buying debt because Jo Consumer has turned into Jo Saver which will be bullish for stocks, non-discretionals, oil, Gold and commodities in general. Meanwhile on main-street business models that only worked in the fairytale land of massive borrowing from the future are being tested and found wanting. "Build-Your-Own-Bear" seems destined to fulfil its nameplate.


During the past year or so there where a number of commentators along the lines of '2nd Great Depression'. What a load of twaddle....

However we are now seeing that panic subside and commodities are rallying as clearly we are not going through a new 'Great depression (not even close).

Noutram, we are seeing the tip of an economic iceberg that will make the Great Depression look like a Sunday picnic.

You seem to think that because the causes of the Great Depression are almost totally absent this time around, that this means it cannot get nearly as bad. To use your term, "not even close". During the Great Depression we had far more fossil energy than we could possibly use. We were able to, with the aid of an abundant supply of very cheap oil, recover from those very bad economic times.

This time things are totally different. Our economy depends on growth. Without growth our economy will collapse. We cannot have constant growth without constant growth in the energy supply. Those days are over. What we are witnessing right now are merely the first stages of the final global economic collapse.

Our energy supply stopped growing in 2005. From that point it was only a matter of time before the economy stopped growing also. And with an ever shrinking energy supply we will have an ever shrinking economy. A shrinking economy means more and more unemployed. It means that the stock market will ultimately collapse because people invest for growth, not shrinkage. Investment totally disappears and even more people are out of work. The economy totally collapses. End of story.

Ron P.

While I agree that we are post Peak Oil, I can not agree that our energy supply stopped growing in 2005. There are too many wind farms, ethanol and biodiesel plants around here for me to agree to that.

The supply of conventional oil stopped growing and has peaked. Peak Oil is about conventional oil only. It is the depletion of conventional oil wells, oil fields and world conventional only that is correctly predicted by the Peak Oil thesis. Other oil production such as tar sands and other liquid fuel production such as ethanol and bio diesel are outside the Peak Oil realm since they are different and do not follow conventional oil well depletion.

This goes to my oft repeated complaint about using energy interchangeably with forms of energy. We do not do it with grain or metal, why do it with another abstraction like energy? We can have Peak Oil without Peak Energy, at least in some parts of the country and in some parts of the world too. I do not think Peak Oil will be a big deal for Saudi Arabia for example. And Texas passed Peak Oil decades ago and did quite well afterwards.

Granted it was because the world had not peaked yet, but there will be areas even whole states and countries post Peak Oil that will do quite well while other parts of the world descend into depression and chaos just as as predicted. The difference will be in the steps that have been taken to deal with Peak Oil.

If other sources of energy have been developed like wind, solar, ethanol and bio diesel, then produces of such will not experience an energy shortfall even if oil is in decline. If this is true, then growth and investment will continue according to the Darwinian thesis in these areas even as decline and withdrawal continue in energy short areas due to failure to deal with Peak Oil.

I think the effects of Peak Oil will vary widely. While it may be true that over all Peak Oil means an energy decline and on average there will be an energy decline, there can still be room for growth in areas which are producing alternatives and are less dependant on oil. Averages are tricky things. If we averaged the land above sea level and the land below sea level, few would argue that the world would not be all under water. It is the differences that make life and growth possible. That is why thinking in abstractions and gross generalities is dangerous and wrong.

Hello X,

Your Quote: "While I agree that we are post Peak Oil, I can not agree that our energy supply stopped growing in 2005."

I think a more accurate measure is energy/capita. Feel free to gather your own data, then disprove Dr. Duncan's recent analysis. I suggest you research your sources very quickly as millions of people are added every day...

Richard Duncan-Olduvai Theory: Toward Re-Equalizing the World Standard of Living
Thxs, Leanan--you're the best!

Hello Noutram,

I gotta second Darwinian's post. I just think you need to expand your boundary analysis as it takes time for disaster to spread everywhere.

Recall the UN FAO projections I posted sometime ago. They are becoming increasingly pessimistic for feeding the one billion [and growing] at food risk for many reasons. We didn't adopt Malthus' advice on the cheap upslope, and I strongly doubt, within the next two years, that we will suddenly see all nations go whole hog into universal birth planning [but I would love to be proved wrong!].

I think most people are unaware of the subtle effects of the Porridge Principal of Metered Decline. I have posted much on this before [supported by many weblinks], but IMO, it should be intuitively obvious as I see it globally occurring. At least it is to me, but I am not very bright. YMMV. Here is another link for your consideration:

[UN FAO]: Israeli buffer zone eats up 30 percent of Gaza's arable land
Looking to increase security, Israel dropped leaflets last week warning residents to stay at least 1,000 feet from the border or risk being shot.

Please extend this into NPK boundary thinking, too, as I posited earlier that NPK may be the Last Bubble, but timing uncertain [and I could be wrong]. But I think there is no question that job specialization, therefore civilization, is built upon food surpluses. There are No Substitutes to these Elements for leveraging photosynthesis above a Liebig Minimum.

We can find substitutes to birds and bats going extinct, but do we really want to have to soak everything with pesticides and herbicides, made from depleting FFs and P & K? Liebscher's Optima and Asimovian 5.8 P-intensity is better than glycophosphate.

I have no illusions that my postings have much effect, but I hope so as I try my best for Peak Outreach and building a Foundation of social movement towards Optimal Overshoot Decline. IMO, much could be done if more people read Frank Herbert's 'Dune' and the prolific writings of Isaac Asimov, then grokked Jay Hanson & Archdruid Greer.

Again, with golf courses going belly up globally as fast as the dead, polluted fish rise to the surface, and millions of bellies bloat on starving children: POT, Minemakers, and other I-NPKs are moving ahead by cutting back to realize long-term value [Webb/Pomerene], in an effort to keep the pull-system viable long-term .

But Bill Doyle [plus many others] has clearly expressed his concern that he wished this wasn't the economic case [but his hands are tied until we abandon BAU, IMO], thus his 1,000 yard stare. It must be a real, lousy feeling to layoff mine-workers at the same time he reads of 50,000 daily-dead under five. :(

Recall the quote by IFA spokesperson Cathy Mathers: "We are probably at the theoretical limits of chem-efficiency." Please Google Dana Cordell, too. Recall my Ft. Knox scenario, but I would prefer full-on O-NPK recycling and SpiderWebRiding. Time will tell..

Have you hugged your bag of NPK today? The mothers cry as their babies die..

"but I am not very bright."

Now there's a load of twaddle. :=)

I completely agree Ron P. (Darwinian), and really don't understand positions to the contrary. Either someone understands that we are past peak, and the way down is recessionary at best and depressionary sooner or later, or they don't understand the implications of post peak.

If cheap oil was the energy used to build civilization, then lack of cheap abundant energy will be its demise.

There is no plan B. There is no energy filled fluid ready to take oil's place in the quantities needed to sustain a growing economy. I heard a statistic on a film about peak oil, that by 2050 the World will need 220 mbd. Right now we are using some 84 mbd and that number is predicted to decline to 65 mbd by 2013, so how does the world economy grow? It doesn't, game over.

Sure, the world as a whole operates on the magna-view---But I think that there can be locals that do grow, at the expense of other locals. Same goes for countries. There are going to be some lucky countries, and vice versa.
Philip Arnason

load of twaddle?

Let me get this straight... you dont think there is going to be another Great Depression? Hey, all I gotta say is "Sold to You!!"

9 months ago I began predicting a major collapse in oil prices. At the time I felt that by march they would try to reinflate this mess and oil prices would shoot back up and stab the consumer in the back once again. It does seem to be happening as I predicted, but I am beginning to have more difficulty believing that they can actually continue to do this for many more iterations. I think it is far more likely that the equities markets will sell off another 50% from here than it is that they will gain even 15%. I believe it is all a matter of perception. Once people stop believing that printing money is anything but a ponzi scheme, the game is over. Over the past few months I have seen so much evidence of corruption that it makes me dizzy. These criminals are striking at the core pillars of capitalism, and when they start falling we will have another Great Depression. It is inevitable because people cannot invest with confidence in today's market. It's all rigged and everyone knows it and very soon the hordes will begin a mass exodus. They'll all think "I'm just gonna wait for Bernanke to intervene again, then I'll get back in." But he wont, not in the way most people think.

Only the criminal insiders and a few lucky guessers know when the next rally for equities will start, but this one is done. With the 10Y yield (and 30Y fixed rates) up so high, the longer it continues the more damage it does.

Long TZA.

Hope you weren't long TZA in March. The 80% decline since then would be painful.

one reason you might be seeing projects started even in an over-built real estate market...government permitting process...when real estate started to crash permit applications started to dry up, and since many of the permitting agencies are funded at least in part by fees, they have had to lay off employees, furlough others, etc. The result is that a formerly somewhat obstructionist bureaucracy staffed by environmental scientists with an antipathy to development projects is now manned by insecure employees who are more than ready to roll out the red carpet and 'fast-track' any serious 'player' who shows up with a 'shovel-ready' project. (former girlfiend was county wetlands scientist)

In Florida several counties and cities have proposed lowering impact fees (charged to make new growth 'pay for itself) by some arbitary number, usually 50% or other schemes such as letting them pay them off after getting their c.o. I've talked to several in County gov'ts that are quite bitter about their job security, or lack thereof, and said they are being pushed to only do work that's attached to a fee...no calling and asking them questions, come in and pay $500 for a pre-application meeting...

Shades of Easter Island, no? They kept building giant stone heads until the very end...

I believe Nate Hagens has had many illuminating posts on just this very subject.

It never entered my mind, but yes, maybe we are seeing people doing former useful (but now useless) tasks because they unquestioningly believe they must.

Oddly, this does explain a lot.... My gut agrees.

Just out of curiosity, does anyone know if the people on Easter Island today have a program of planting trees and building lots of bird nesting sites [future guano], or are they usually out removing nesting sites from the stoneheads, then polishing them up hoping to increase the tourism?

Notice the small amounts of bird poop on these sculptures. You would think they would be heavily coated by now unless someone is regularly cleaning them off.

IMO, the birds are trying to alert the natives by their pooping action:

"Listen up sh*theads, we are overtly trying to give you an O-NPK clue as to what you should do."

EDIT: I would also expect to see lots of bird nesting on top of these stoneheads as their best egg protection against the imported rats.

I saw a picture of easter island a few years ago. There was one modest plantation of trees. I don't have the link.

Thxs for your reply, and Welcome to TOD, too!.

Hello TODers,

I hope all will think of Jenkin's Humanure Handbook, the MacFarlane PDF, naturally superphosphated guano from birds, and full-on O-NPK Recycling as they click on this hilarious video [although just the photo says it all for those on dial-up]:

Was Eminem really angry at Sacha Baron Cohen's rear in his face?
I would have loved to have been there to lead the crowd in chanting, "Have you hugged your bag of NPK today?", then we could move to the reception area to practice the half-glass "Peakoil Shoutout". :)

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

i have not met anyone who believes in peak oil. everyone wants more!
no one is changing their life styles. when i talk of dollar oranges and
canned tomato soup for 85 cents everyone accepts that as normal. and the price of gaz-o-leen? "what can you do?" it is the paradigm. oh sure, i have a 3KW PV solar system on my roof. even with no heat i get $125
monthly bills (hot water and refrigeration only). 15% annual increases take away any savings. solar power is not cost effective unless one has $90,000 up front for 10 KW. only the filthy rich can go green. western society will continue until catastrophic collapse. there is no other way. there is no alternative. stick a fork in umerika's buttocks. we is done. IT'S THE OIL CONUNDRUM! but....it's all good.

If there's one thing regarding PO that can be predicted with 100% accuracy it is that the level of whinging and complaining will increase dramatically in the coming decades;

Whinging Quotient = k * OilPrice * Expectations / Income

Even at 'cliff year - 1' anyone coming from most of human history would consider what we have to be amazing. I suggest anyone who fancies a moan about the ills of the world check out what life was like back in the Middle Ages. Sobering.


With the figurative rolling of the eyes in the blogs, given conditions in the world today, about people "whining and complaining", it seems there is a market for an Empathy Pill after all.

Not really, nobody who would be in need of it would take it.

I believe your formula is incorrect.

I offer:

Whining Quotient = ((k*OilPrice*Expectation)^MSM Consumption)/Income

as a better specification.

Good thought, but I think that the Expectation term is not independent from the MSM Consumption term. :-)

Sorry that 3kw isn't enough for you.. probably was pricey, too.. But I'm running a 3unit apt building and use electric for cooking and laundry (for all tenants), and never see our electric bill higher than $100. (Not electric water, which is probably most of the difference, and no AC)

Solar PV doesn't solve all problems, there must be some other ways to cut down that you still need to rout out. It certainly doesn't call for a $90k investment, though.

We aren't done for.. we're just in for it. There's a difference.

Anyone got any good links for Stirling Engines used in conjunction with solar power?

I designed one. They seem to work cause...

Infinia: http://www.infiniacorp.com/technology/how_stirling_works.php

Microgen might have one: http://www.microgen-engine.com/Product.html



Anyone know why you don't seem to see practical examples?

I seem to remember manufacturing tolerance issues, but I doubt that can be a show stopper where we are today.

The closest 'hope' to a cheap low cost unit was a group that claimed they would be able to ship a 1 hp nitrogen charged 4000 hours before rebuild made from press metal Stirling Cycle engine.

They blame 9/11 as to why they never shipped.

Most of the issue is tied to the heat exchanger. The more you try to maximize the heat transfer the more un-mass-makeable the engine becomes as I understand the issue. For solar, the thermal changes that a heliostat target undergoes is an issue.

The cheapest commerical production product I am aware of is Whispergen of Australia. Every other vendor is either 'we are shipping to partners/you have to be in the research area' or expensive to the point where it would be cheaper to feed humans fatty meats, harvest the lipo-suction, and burn that fat.

So could you take a Whispergen unit, do away with the gas burner element and instead marry it to concentrated solar and achieve the 800W their unit seems capable of?

If so, why haven't they done it?

if so, why haven't they done it?

once again:

For solar, the thermal changes that a heliostat target undergoes is an issue.

Catapiller's issues with its solar head are documented enough that I found 'em on the internet 9+ years.

It occurred to me once that a typical American V8 has 90deg bank angle on common crank throws, ideal for a piston type stirling engine. I always wondered what one could do with a V8 block, crank, and pistons and a wood stove. If you could get a horsepower or so you would have useful mechanical energy. Maybe enough to drive a blower fan to circulate the heat.

As in shipping uints you can buy? No.

Solo in Germany was selling some dishes for 10,000. Buy that was only 50 units, local to the town, and partly funded by the local government.

There are a few Stirling makers who are testing in the desert. No, you can't buy em.

Energy Innovations was supposed to have shipped long ago the Sunflower. Again - a non product.

Your best links for solar to electrial power is Dwuane Johnson's http://www.redrok.com/

Wow! You should try a cheap solar water heater and a dc cooler. I'm getting 20 watt hours/day from a west facing apartment with an overhang from a 15 watt panel. I am going insane with envy imagining someone complaining about their 3Kw system.

any specs on the dc cooler ?

I am shocked and appalled.
TOD has posted an article on SILVER of all things.
Don't we all know that gold is a barbarous relic and silver is gold's running dog?

The value of these metals is based on superstition - they give no dividend or interest, and central banks with huge stockpiles have been selling, so that prices will never go up.
These metals are extremely volatile in price.
If you bought gold in 1980 at $850 you would have lost money inflation adjusted over the past 30 years
Why dig them out of the ground in Africa and put them back in the ground in America.
In addition, there is no link, anywhere in the world, between any currency and gold or silver. Both have been de-monetized many years ago.

...now that I take my tongue out of my cheek, lets play a little game. Think back to 1971.(ah that was a good year!) Suppose a stranger came up to you and said - here is $1000, but you need to invest it and not touch it till June 2008. you have three choices: stocks, bonds or land
Before you make your decision, I will tell you what will happen in the future. The US will experience an amazing boom - everything will go up - your three choices are really good better or best.
But in 2008 there will be a big crash, so be sure to sell in June.

Oh by the way, you could also invest in gold, but I would not recommend it. Nixon has just shut the gold window, so gold is fully de-monetized. No country uses it, in fact the central bankers are all actively against it, and are selling their huge stockpiles to keep prices down.
We all know what happened to silver when it was de-monetized in the 19th century. It has languished for 100 years.

Well good luck!

Flash forward: In 1971 gold was trading at $35 dollars and the S&P was trading at about 90.
If you had held the S&P to the peak in 2008 of 1530, your $1000 would have become $17,000 or a return of 7.5% per year over 37 years.
This is better that any other country in history over that extended period of time.

However, Gold went from $35 to $1015, so you would have had $29,000 or a return of 9.2% over 37 years. Significantly better than stocks or any other asset class

And remember, we are going to the peak of stocks, to put them in the best possible light.

Thanks Alan Greenspan! This is what money printing does.

Yes , I know - reinvested dividends and all that crap make a difference. have you ever tried to actually do that consistently?
And what about Mutual fund management fees, rebalancing fees, brokerage fees etc.

If you buy gold you can sit under a tree like a fat stupid peasant and take a nap.

and we are just getting started...

the oil/gold co-relation is 90% over the past five years, according to Bloomberg

Let's change one point in the setup. In 1971 a stranger comes up to you and says "You have to invest 1000 dollars of YOUR OWN money...".

Having done that, lets consider a similar scenario: "In 1971 a stranger comes up to you and says 'You have to spend 100 dollars of your own money on a wardrobe of clothes, and you can't buy new clothes until June 2008. I will tell you this blah blah fashion in 2008 blah blah fashion in the fall of 1971 blah blah ... Why aren't you listening?"

Me: "Well I'm not particularly interested in your scenarios when you come up with scenarios with arbitrary unexplained rules. It may make your point for you if I'm not allowed to buy new clothes, but stipulating that I can't buy new clothes seems a rule with no natural justification."

You may or may not have a point about precious metals, but you lost my interest in the argument with your rigged thought experiment.

Point taken, but the index used for the market does integrate over actions taken by investors actively trading.
"Welcome to Lake Embregon, where the fashions are strong, equities are fashionable, and all investments are above average..?" :-)

Don't we all know that gold is a barbarous relic and silver is gold's running dog?

And what - the Federal Reserve Note is better?
How about anybodies fiat currency?

The old saw was 10% in metals. Hand tools at rummage, solar PV are fine examples of metals.

Since you are "cherry picking" gold, let me cherry pick a stock (not the entire market). I may not even pick the best one, but Berkshire Hathaway will do.

On CNBC's "Fast Money" today someone said that there is a rumor that drug dealers around the world won't take dollars anymore. But they will take gold.

What a surprise!!

Oil and Gas Investor Announces Schedule of 24 Presenting Companies for Energy Capital Investment Symposium on June 3 - View Live Videocasts at EnergyCapitalWeek.com


many ung's.

East Troy company's engines provide power and heat

Marathon is a 10-year-old company whose engine previously was manufactured by Briggs & Stratton Co. The company, with about 20 employees, is partnered with a large European firm that sells combined heat and power units in Europe. In many countries, electric rates are higher than they are in the United States - prompting interest in the units that produce heat and electricity from a small, indoor engine not much louder than a refrigerator. "Europe is doing well for us, even in the rather bleak economic times there," said Mike Cocking, Marathon's general manager.

I am surprised that CHP systems are not more common in my neck of the woods. Hotels especially seem like good markets, with swimming pools and laundry demanding hot water and the rest of the hotel needing steady electricity). The article doesn't mention another potential selling point: uninterrupted power during local & regional blackouts. Anyone care to prognosticate on the future of CHP systems?

Check this out. Honda has a working system and it's been around for a few years.


Lets all look at the unit GM makes. OOOPS....there is no GM. And a damn good thing it is.

Anywhere with a high thermal load is a good target, hospitals, hotels, swimming pools and some industrial and agriculture processes.

I would like to see a plug in hybrid able to act as a CHP unit, two birds and one stone.

I would like to see a plug in hybrid able to act as a CHP unit, two birds and one stone.

How about a fleet of CNG inline hybrid school busses that "rest" during the school day by plugging into the school's utilities and serving as an on-site generator and water heater?

Sounds good to me. Dual fuelling diesel and natural gas in existing diesel engines is fairly simple, and can displace around 80% of the diesel with natural gas allowing full use on diesel if CNG is unavailable.

In practice CHP efficiency is about the same as using a modern CCGT and heat pumps

Gas fired CHP - 10 units of fuel -> 3 units electric 5 units of heat
CCGT & Heat pump - 10 units of fuel -> 5 units electric -> 2 of these units of electricity converted to 5 units of heat.

If you could get industrial scale heat use at a large CCGT plant, you would get the best of both worlds.

Perhaps a modern twist on the traditional roman baths, something along the lines of Icelands Blue Lagoon Geothermal powerstation and spa

CHP systems have been around for decades. They used to be called "Total Energy" systems and they typically used large diesel powered generators as a foundation. In such large scale systems, the life of the diesel engine could be rather long, as they are when used in maritime installations. In smaller scale systems, the time between overhauls can be rather short if they are to be run continuously, 8760 hours a year. Think of an automobile engine, where traveling 100,000 miles at 50 mph would represent only 2,000 hours of operation. I recall that the overhaul period for the engines in small general aviation aircraft are about 1,000 hours of operation, but reliability is of key concern in that situation. In any event, the larger the engine is, the slower it can spin and thus it's lifetime will be longer...

E. Swanson

Economic indicators down + energy prices up = stock markets up

What is going on?

Things are BAD -- but they are not BAD BAD or BAD BAD BAD... Some kind of reason like that.

I'm not an expert on the DJIA, and hope never to play one on TV. BUT, they dropped GM and Citi as Dow components.


Would replacing two laggards have an impact on the Index?

Stoneleigh has posted about a half dozen times or so over at TAE today.

She has been busy the last month or so...she was missed.

For some reason she can help make sense of it on crazy days like this - of course the sense of it is not at all that heartening in the mid-to-long term.

Perhaps she will pop in here later today, but for the time being: https://www.blogger.com/comment.g?blogID=4921988708619968880&postID=8205...


When oil was passing $80 and the stock market was passing 14K (late summer 2007), I had the same feeling as I have today with the market going towards 9K and oil heading to $70.

My guess is that Stoneleigh is right, it's herd mentality. After the GM announcement, I expected the stock to drop off a cliff, but it actually rose over 10% until the bell when someone dumped 30M shares, and even then it dropped back to the previous close.

I assumed that there was some sort of expected residual value that I didn't know about, but Denninger is just a puzzled as I am.


As Denninger says We are in Looneyville

Unless we are both missing something, we are witnessing some seriously dysfunctional and delusional behaviour.

The company is friggin' bankrupt fer chrissakes! Help!

As he said on 30 May
"...Disclosure: Short the American people, who appear to be as dumb as a box of rocks for putting up with this crap..."

As I am typing this in the top right hand side I see "...“Where ideas are concerned, America can be counted on to do one of two things: take a good idea and run it completely into the ground, or take a bad idea and run it completely into the ground.” —George Carlin.."

Of course it is not only the American people:-( The problem is that the finance industry has become far too large and interwound. Since the finance industry is a "virtual" industry it only takes a few clicks of a mouse to leverage up, no assembly line has to be expanded or actual product built. finance adds nothing it should merely be an enabler or real business.
Disclosure: have been involved in finance for 30 years trying to part as much money from banks as possible:-)

And realistically, what can the American People do in the timeframe this stuff is happening in? Riots? Insurrection? General Strike? Mass withdrawal from "the system"? How well have general strikes worked in Europe, where everybody seems to be suffering from the same economic malaise we are?

We did what we could, tried to put the best people we could find in place to deal with this crisis among others. We continue to put pressure on the people we elected to these positions to try to get good results. If we got suckered again it wasn't for lack of our best efforts to get to the truth of things and get it right.

Really, all "The People" can do without breaking out the guns has been and is being done. We push our people in office, pray that they get the message, and wait until either the next election comes around when we can try again or the transgressions become worse than the alternative of direct action.

Meanwhile we do what we can to prepare, within the limits of our means since the credit has dried up.

One would assume so Steve. I wonder how that's going to effect folks who have funds tied to the DJIA index.wonder how they;ll handle that.

Speaking of the DJIA a question for the knowledgeable: As i understand it the reason they originally selected X number of companies to use was to ease the process of running all thos hand operated calculators back in the day. Now computers they can get the average of the entire industrial component with one mouse click. I know they pick the biggest companies because they have agreater impact. But again....why not include all the companies? I'm sure every brokerage house has that number at their finger tip every day. Just as they have the average price of every stock in the entire exchange. Those numbers might parallel the indexes and then again, might not. Why not share that info?

Rockman - No problem. All you have to do is follow the right index. For example, to give YOU what YOU want, just follow the Willshire 5,000 (right, an index of 5,000 stocks). Remember, when they started the Dow, the Dow (value) was well over 90% of all stocks (and, even numerically, a large percentage). Now, you can do the same by following the Willshire 5,000. And, there are hundreds of other stock indexes, should you choose to use one of them. Fortunatly, or unfortunatly, while peak oil is here, peak stock indexes is nowhere in sight.

Thanks J. I still wonder why the MSM doesn't highlight a broarder spectrum. Probably just an old habit. I'll keep track of Willshire and see if it offers a better big picture.

Hi Rockman,
I don't know about the Willshire but some indexes (e.g. FTSE-100 UK largest 100 companies) are weighted according to their market capitalisation, i.e. the largest company has more influence than the smallest so expanding the index to include all companies would not have much effect.

Nowadays there are lots of indexes but the MSM tends to only list the well known ones. You can see some at http://www.ftse.com/Indices/index.jsp

peak stock indexes is nowhere in sight.

Unless, of course, you have a rear view mirror.

stock markets up

GM and Citi dumped for better stocks.

This article lists the richest welfare babies in SF http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/01/BAN017TOP0.DTL

Or doesn't. First, it's barely an article. Second, there is no discussion of wealth, so they cannot be the "richest". Third, a pension is not the same as welfare in the common use of the two terms. Finally, seeing as they are pensioners, I am not sure they qualify as "babies".

Law enforcement, firefighters, and first responders of all kinds have society in a bit of a spot, I'll admit that. What are you going to do about it? Argue for lower salaries and poorer benefits for police officers? Do you want "second-rate" law enforcement staff? Who ultimately guarantees property rights? What if police choose to "make up" their income in other ways? Russia, I think, gives some good examples for you to draw upon.

I think that William Hume is the wealthiest welfare baby in the Bay Area, but that's just an opinion.


The argument is ending-these welfare babies are the lucky recipients of a Ponzi scheme worthy of Bernie Madoff. These absurd pension benefits didn't exist a couple decades ago and this is the tail end, so the whole scam only lasted a relatively short time. These guys only have "society in a bit of a spot" because CA managed to keep borrowing and taxing until the camel's back broke.

It's a known fact that all the really rich people are teachers and firefighters, the average business man can't make a buck. Perhaps you thought this was Fox News. If you want to talk about ponzi schemes, start with capitalism.

"Capitalism goes, or we go"
--Joel Kovel

The young teachers and firefighters in CA are every bit as qualified as these older welfare babies-they aren't going to receive a fraction of the renumeration for the same work and qualifications-don't evade the point.

But that's a generational thing, more than a welfare thing. People in private industry will also not receive the pay and benefits that their elders got. It's the end of the ponzi scheme, not welfare per se.

True enough. Personally, I don't think any employee deserves a 90% pension for life, but I agree I stretched it with the welfare babies comment.

The young people in public service are working in part for the promise of the pension that their elders are already getting.

If you want to do away with the guaranteed pension, you will have to pay the young more to make up for it.

'We will eat your children'

They did not break in this time, but they made a lot of noise, circling the house like whooping hyenas and shouting before they left: “We will eat the children.”

Is this where we are heading? Sure right now, we think Zimbabwe is not normal -- but is it possible that we are wrong and not able to recognize changing times ahead?

Dinh Ton,

Your comment about thinking the current situation in Zimbabwe is possibly a new "normal" is right on.

Actually the farmers being harrassed probably would have been ejected or murdered some time ago except for the fact that tptb in Zimbabwe don't want any martyrs at the moment.

If only something like this could be made to happen...