DrumBeat: June 16, 2009

Conoco Chief Says Replacing Oil May Take a Century

(Bloomberg) -- ConocoPhillips, the third-largest U.S. oil company, said it may take a century for the nation to replace fossil fuels with alternative energy sources.

The country will need to develop its own oil and natural- gas deposits and continue importing petroleum while developing alternative supplies in the decades ahead, ConocoPhillips Chief Executive Officer Jim Mulva said today at the National Summit economic conference in Detroit. At the same time, he said, the nation will need to address climate change.

The U.S. needs policy that encourages investments in all types of energy and avoids hurting the economy by making the nation less competitive than countries with cheaper energy, Mulva said. Proposed climate legislation in Congress threatens to drive U.S. refiners out of business by imposing higher carbon costs on domestic fuel than on imports, he said.

Statoil says may pull ex-pats' families from Iran

OSLO (Reuters) - Norwegian oil and gas group StatoilHydro said on Tuesday it is considering pulling the families of its foreign workers out of Iran due to security concerns after Friday's presidential elections. StatoilHydro, which is part of the South Pars gas project, has 120 workers in Iran. About half are foreigners.

"We are very likely to ask the families of ex-pats to leave Iran ... The object is safety and nothing else," StatoilHydro spokesman Kai Nielsen told Reuters.

BA asks staff to work for nothing

British Airways is asking thousands of staff to work for nothing, for up to one month, to help the airline survive.

The appeal, sent by e-mail to more than 30,000 workers in the UK, asks them to volunteer for between one week and one month's unpaid leave, or unpaid work.

Price of jet fuel jumps 22 percent

For the second straight summer, airlines are staring down the barrel of rising fuel prices. Travelers can expect fewer flights, higher fares, elimination of markets and a drop in less-revenue- producing regional jet service.

"It will get very rough out there," said aviation analyst Mike Boyd, whose Boyd Group is based in Evergreen.

World's megacities ripe for 'megadisaster': UN

GENEVA (AFP) – Some of the world's biggest cities are at growing risk of "megadisasters", the UN's humanitarian chief said Tuesday, warning that climate change was behind a rising number of natural catastrophes.

"We are going to see more disasters and more intense disasters as a result of climate change," said UN Under Secretary General for Humanitarian Affairs John Holmes.

Why oil is on the rise again: Prices have doubled since February, but that's probably not the end of it. Asia's recovery is igniting demand.

NEW YORK (Fortune) -- Ask a group of oil analysts about the recent surge in crude costs and here's the consensus answer you'll get: Prices have run up too far, too fast and they aren't supported by the fundamentals.

Ask them about where prices will be two years from now, however, and the majority will offer this prediction: A lot higher.

"We're concerned about oil prices rising so rapidly in the near-term," says Hussein Allidina, head of commodities research at Morgan Stanley. "But the bet in the long-term is one way, and that's just up."

Kunstler: Too Stupid To Survive

The proposed solution to this is the most expensive public works program in the history of the world, at a time when both the state of California and the US federal government are effectively bankrupt. By the way, I wouldn't argue that California shouldn't have high-speed rail. It might have been nice if, say, in the late 20th century, some far-seeing governor had noticed what was going on in France, Germany, and Spain but, alas.... It would have been nice, too, if the doltish George W. Bush, when addressing extreme airport congestion in 2003, had considered serious upgrades in normal train service between the many US cities 500 miles or so apart. The idea never entered his walnut brain.

The sad truth is it's too late now. But the additional sad truth, at this point, is that Californians (and US public in general) would benefit tremendously from normal rail service on a par with the standards of 1927, when speeds of 100 miles-per-hour were common and the trains ran absolutely on time (and frequently, too) without computers (imagine that !). The tracks are still there, waiting to be fixed. In our current condition of psychotic techno-grandiosity, this is all too hopelessly quaint, not cutting edge enough, pathetically un-"hot." The fact that it is not even considered by the editors of The New York Times, not to mention the governor of California, the President of the United States, and all the agency heads and departmental chiefs and think tank gurus and university engineering professors, is something that will have historians of the future rolling their eyes. But for the moment all it shows is that we are collectively too stupid to survive as an advanced society.

China demand for oil, other resources soars as Beijing stockpiles reserves for future growth

ZHOUSHAN, China (AP) — One reason behind the rebound in world oil prices lies here on China's eastern seaboard, where tidy rows of immense, squat oil tanks tucked away on an island south of Shanghai, have been filled to guard China's energy security.

Patrolled by military personnel, these tanks in Zhoushan are one of four locations where China keeps its national strategic reserves.

Since crude oil and other commodity prices plunged last year — oil tumbled from $147 last July to nearly $33 in December — China has been rushing to build up stockpiles at bargain prices, economists say. That motive, more than a revival in actual industrial demand, has driven its recent import boom of oil, copper and other metals.

Iran oil flows '100% secure'

Iran's oil output and exports were unaffected by the wave of protests that have swept the country since Friday's presidential poll, the country's Opec governor said today.

"The oil industry is 100% secure," Mohammad Ali Khatibi told Reuters. "There is no affect on production, exports or refining."

Iraq says it won't delay 1st oil bidding

The Iraqi government says it remains committed to holding its first postwar oil bidding round at the end of this month despite parliamentary calls for a delay.

Mexico set to recover its international leadership in the Petroleum Industry: President Calderón

President Felipe Calderón declared that the national petroleum industry has the potential to continue being the trigger for development that will enable Mexico to become the modern, developed, competitive country we want.

“Our aim is very clear: We will recover the position of leadership Mexico is entitled to in the world as a petroleum power. That way we will be able to trigger our country's growth and development in the coming decades," he stressed.

New environmental challenges to test European refiners’ flexibility, resources

European refiners have enjoyed a short period of extremely good profitability caused by a tightening of refining capacity in the Atlantic Basin. The current recession, however, with the consequent loss of demand, has taken pressure off capacity and margins have reduced but not collapsed.

European refiners face new challenges driven by environmental concerns of a different order of magnitude from earlier ones. These challenges will test the flexibility and resourcefulness of participants. They will make more important than ever before the necessity to work with regulators to ensure realistic solutions that meet reasonable environmental objectives with due consideration to consumer and industry needs.

BP Says Valhall North Sea Oil Field Resumed Output

(Bloomberg) -- BP Plc, Europe’s second-largest oil company, said its North Sea Valhall oilfield resumed production yesterday after repeated oil and natural-gas leaks prompted a shutdown of the facility.

“Valhall had a cautious production start yesterday and was producing at 13,000 barrels a day,” Jan Erik Geirmo, a BP spokesman, said after a company presentation in Oslo. “It will take a few days before it can reach normal production.”

Airline defers salaries

MUMBAI: Air India, the country's national carrier, will defer salary payments for its 31 000 employees for two weeks because of a cash shortage born of tepid demand and overcapacity, the company says.

A Preassembled Nuclear Reactor

A new modular design could make building nuclear reactors faster and cheaper.

Fertilizer industry finds its alternative energy: corncobs

WASHINGTON — American agriculture has become increasingly dependent on foreign sources of natural gas, a key ingredient in the nitrogen fertilizer that farmers use to get high yields of crops such as corn and wheat.

Now, a California start-up company is preparing to open a plant that will make fertilizer in the U.S. and reduce fossil fuel emissions from agriculture.

Nothing exotic needed, said the company, SynGest of San Francisco. The raw ingredient for the same ammonia-based fertilizer farmers have used for decades is something many already have and don't really need: corncobs.

Biofuels may lead to a 'drink or drive' issue

Rice University scientists warned that the United States must be careful that the new emphasis on developing biofuels as an alternative to imported oil takes into account potential damage to the nation's water resources.

"The ongoing, rapid growth in biofuels production could have far-reaching environmental and economic repercussions, and it will likely highlight the interdependence and growing tension between energy and water security," said a report titled "The Water Footprint of Biofuels: A Drink or Drive Issue?"

Water risks ripple through the beverage industry

NEW YORK(Reuters) - At New York's Del Posto, diners can share a $130 entree of wild branzino fish with roasted fennel and peperonata concentrato and a $3,600 bottle of Dom Perignon. They cannot share a bottle of Perrier or San Pellegrino water.

The Italian restaurant backed by celebrities Mario Batali and Joseph Bastianich is one of several shunning bottled water, along with the city of San Francisco and New York state.

Can We Survive the “Anthropocene” Period?

Unless there is a global catastrophe – a meteorite impact, a world war, or a pandemic – mankind will remain a major environmental force for many millennia. As a result, scientists and engineers face a daunting task during the Anthropocene era: to guide us towards environmentally sustainable management. This will require appropriate human behavior at all levels, and may well involve internationally accepted, large-scale geo-engineering projects to “optimize” climate. At this stage, however, we are still largely treading on terra incognita.

Only faith can solve the energy crisis

Rational self-interest isn't enough to save the world. We will need faith as well.

Gazprom may delay key field due to low gas demand

MOSCOW (Reuters) - Gazprom (GAZP.MM), the world's biggest gas producer, may delay the launch of a major field because it expects gas demand in Russia and Europe to be depressed through 2012, an executive said on Tuesday.

Deputy Chief Executive Alexander Ananenkov told a news conference Gazprom may postpone the giant Bovanenkovo field by one year to the third quarter of 2012.

"We see that there will be no demand for that gas. So why invest money in what is not in demand?" said Ananenkov.

Gazprom Loses European Market Share After January Supply Halt

(Bloomberg) -- Europe increased imports of natural gas from Norway and liquefied natural gas from Trinidad and Tobago in the first quarter after gas supplies from Russia were halted in January.

European imports from the former Soviet Union fell 35 percent to 26.9 billion cubic meters from a year earlier, the International Energy Agency said in a report posted on its Web site late yesterday.

EnCana cuts natural gas output

The continent's largest natural gas producer is turning off the taps on a hefty chunk of its daily natural gas production, saying low prices make it too expensive for EnCana Corp. ECA-T to bring some of its gas to the surface.

With gas prices hovering around $4 (U.S.) for 1,000 cubic feet, EnCana has dropped its production by "a couple hundred million cubic feet per day in Canada, and a couple hundred million cubic feet in the U.S.," chief executive officer Randy Eresman said yesterday, adding that the company is also cutting spending by 10 per cent.

Q&A: "The Global Crisis Is Really About a 140-dollar Barrel of Oil"

VANCOUVER (IPS) - Sitting in the restaurant of Vancouver’s posh Fairmount Waterfront Hotel, the former chief economist for one of Canada’s largest banks doesn’t seem like the typical apocalyptic peak oil theorist.

But in his new book, "Why Your World is About to Get a Whole Lot Smaller", Jeff Rubin argues that globalisation, fuelled by cheap oil, is finished. In the book, Rubin contends the current global recession is a result of expensive oil, rather than subprime mortgages in the U.S.

BP retreats to a paler shade of green

Remember the 'Beyond Petroelum' slogan? BP is now quietly returning to its carbon roots

Crude Responsible for High Gasoline Prices, API Says

(Bloomberg) -- The rising cost of crude oil is vaulting gasoline prices higher as world supply and demand for oil have reached an equilibrium, said the American Petroleum Institute, which represents the oil and natural-gas industry.

“The cost of gasoline has gone up because the cost of crude oil has gone up,” said John Felmy, chief economist with the Washington-based API, in a conference call today with reporters.

Worldwide supply and demand are “probably at equilibrium,” in part from effective OPEC cuts, he said.

Russian executives to try to revive Iraqi oil deal

BAGHDAD - Officials say executives from Russia's biggest independent oil producer Lukoil will visit Baghdad this week to try to revive a Saddam Hussein-era deal.

Construction of Sino-Myanmar oil-and-gas pipelines to begin

BEIJING - The construction of pipelines that will transport oil and gas to China via Myanmar will begin in full swing in September, an insider from PetroChina said Tuesday.

The project will open the fourth route for China's oil and nature gas imports, after ocean shipping, the Sino-Kazakhstan crude oil and natural gas pipelines, and the Sino-Russian oil pipeline, according to the insider, who declined to be named.

Petrobras cash plans on track

Petrobras boss Jose Sergio Gabrielli has insisted that the company is on course to financing its ambitious $174.4 billion capital expenditure plan after raising more than $30 billlion at the height of the global credit crunch.

Petrobras financial managers were taken aback last week when credit rating agency Standard & Poors downgraded the company due to signs of financial overstretching in the five-year investment plan.

“We were very surprised that Standard and Poors downgraded us because it comes as the price of oil is rising and not falling, at a moment when we have practically raised all the finance we need over the full five years, at current prices,” Gabrielli said.

Saudi cuts reverse repo rate to 0.25 pct

RIYADH, Saudi Arabia -- Saudi Arabia's central bank has cut its reverse repurchase rate by 25 basis points as the oil-rich kingdom looks to boost bank landing amid tight credit markets worldwide.

Tesla Motors CEO: Gas Should Be $10/Gallon

(CNET) "I'm anti-tax, but I'm pro-carbon tax," Tesla Motors founder Elon Musk said onstage at the Wired Business Conference here Monday--a remark that prompted interviewer and Wired editor-in-chief Chris Anderson to quip that he was a "true Silicon Valley libertarian."

Gasoline "should probably be $10" per gallon, said onetime PayPal co-founder Musk, who is also attempting to make sending satellites into space cheaper with a start-up called SpaceX. "I'm not paying for the true cost of gasoline at the pump...since nobody's explicitly paying for the CO2 capacity of the oceans and atmospheres, it's getting consumed. We will pay for it down the road, but we are sort of ignoring it for now."

Officials vow support for renewable energy in West

PARK CITY, Utah – Cabinet leaders in the Obama administration promised Monday to help Western states develop a robust system for delivering renewable energy.

Interior Secretary Ken Salazar said the West has vast untapped potential for harnessing wind, the sun and geothermal energy to create electricity. But "it doesn't do any good to generate energy if you can't get it to market," Salazar said during the annual meeting of the Western Governors' Association.

German firms eye huge African solar project: report

BERLIN (AFP) – German firms plan to club together next month to turn into reality a dream to generate electricity for Europe in the deserts of north Africa using solar power, a newspaper report said Tuesday.

The 20 or so firms will form on July 13 a consortium that aims to attract an enormous 400 billion euros (560 billion dollars) in investment in the project, known as Desertec, the Suedeutsche Zeitung daily reported.

Bangla 'green revolution' starts with solar power

NAYEB ALI BAZAR, Bangladesh (AFP) – Like all rural Bangladeshis, Saidul Islam knows the hardships of summer, when his tin-roofed house turns into a furnace with not enough electricity to power even a fan.

For the 100 million Bangladeshis -- most of them farmers -- who live in the countryside, the notion of electricity supply is little more than an empty promise bandied about by politicians at election time.

Only villages close to highways or large farms with irrigation pumps have access to the national grid, and even then for an average of just one hour in four.

Fed up with promises of a connection that never came, Islam took matters into his own hands, and four years ago scraped together 335 dollars to buy a solar panel for the roof of his modest mudbrick-and-tin home.

Irish company buys Ill. wind farms

CHICAGO – An Irish company hoping to benefit from the Obama administration's emphasis on renewable energy purchased three Illinois wind farms near Chicago.

AEP signs first solar energy agreement

COLUMBUS, Ohio—American Electric Power Co. said Monday that its AEP Ohio unit has signed a long-term power purchase agreement for a 10 megawatt solar energy plant to be built in Ohio.

Oil, Utility, Train Executives Want Comprehensive US Energy Policy

DETROIT (AFP)--From oil executives to utility and train operators, the message to Washington was clear: come up with a plan to deal with climate change and lay out a comprehensive energy policy.

Otherwise, the U.S. will lose its competitive edge and have its national security threatened, they warned Monday at a summit aimed at developing a new strategy for dealing with the nation's economic woes.

Coastal castles 'to be moved inland'

Castles on the coast could be moved brick by brick and rebuilt inland as part of plans to save Britain's coastal heritage from climate change.

Asia set to become biggest climate change driver

MANILA, Philippines – Asia's share of global greenhouse gas emissions could rise to more than 40 percent by 2030, making it the world's main driver of climate change, experts warned Tuesday.

The most populous continent with the fastest-growing economies in China and India already accounts for a third of world emissions of gases blamed for warming weather, including carbon dioxide, Asian Development Bank President Haruhiko Kuroda told a conference in Manila.

Its share of discharges from energy use has tripled over the past 30 years, he said.

Asia also stands out as the most vulnerable region to climate change.

Government Study Warns of Climate Change Effects

WASHINGTON — The impact of a changing climate is already being felt across the United States, like shifting migration patterns of butterflies in the West and heavier downpours in the Midwest and East, according to a government study to be released on Tuesday.

Even if the nation takes significant steps to slow emissions of heat-trapping gases, the impact of global warming is expected to become more severe in coming years, the report says, affecting farms and forests, coastlines and floodplains, water and energy supplies, transportation and human health.

Retailers Head for Exits in Detroit
Shopping Becomes a Challenge as Auto-Industry Collapse Adds to City's Woes

There was a time early in the decade when downtown Detroit was sprouting new cafes and shops, and residents began to nurture hopes of a rebound. But lately, they are finding it increasingly tough to buy groceries or get a cup of fresh-roast coffee as the 11th largest U.S. city struggles with the recession and the auto-industry crisis. No national grocery chain operates a store here. A lack of outlets that sell fresh produce and meat has led the United Food and Commercial Workers union and a community group to think about building a grocery store of its own.

The future for the rest of us, maybe...

A few retailers are thriving. Family Dollar Stores Inc. has opened 25 outlets since 2003. A handful of independent coffee shops and a newly opened Tim Horton's franchise cater to workers downtown.

Discount grocer Aldi Inc. opened stores in the city in 2001 and 2005. A spokeswoman said the chain is "very bullish" on Detroit. Farmer's markets draw crowds looking for fresh produce.

I was so disappointed. Tim Horton's opened up shop in the building right across from the Rencen the very week after I stopped flying up there for work. It now occupies the space that the Starbuck's coffee used to be. Downtown Detroit is actually not bad during the day, and especially if you travel in packs with your other coworkers. :) I also never had any problem walking through downtown at night, but I stayed only to very specific areas.

The entire article goes out of its way to avoid mentioning the absurd levels of crime in that city as a reason not to want to locate a retail establishment there-all it mentions is poverty. A lot of money can be made off poor citizens (liquor stores as an example) but the security costs make large scale retail pointless in Motown.

liqour stores seem to be among the most stable businesses.


It does mention that the economic difficulties mean lower tax revenues, and less police protection.

It downplays it-Detroit had a major violent crime problem when the city had a strong economy (40 years ago) and it has steadily gotten worse. The oil depletion implications for the USA are that unlike many other countries, the USA cannot easily densify urban development in many cities-Detroit, Baltimore, St. Louis, Cleveland and many others. The violent criminal element drags down residential and commercial investment, making large scale urban redensification impossible in many of these large cities. American suburbanites get a lot of warranted criticism, but American suburbanities face real urban problems not faced by Europeans or Canadians. If the USA is going to transition successfully to a post peak world, it will have to realistically and honestly face the challenge of taking back many of its urban centres from the violent criminal element. Currently, this is impossible as it is not politically acceptable to even acknowledge the reality (as in this article that makes a glancing reference to slower police response times).

I agree with your analysis--
Any ideas on how to accomplish this, other than setting up even more of an oppressive police state?
Urban areas in the US are often scary, and I have spent quite a bit of time in Bogota Columbia.

On the "bright" side, suburban crime is increasing as the housing crisis worsens. So maybe people will move to cities simply because suburban crime is just as bad or worse. :-/

legalize drugs:

The USA lost the war on drugs decades ago.

Anyone have an ERoEI for the war on drugs?

No they didn't. They just weren't on the side you thought they were.

But, agreed wrt legalization.


You are so right it hurts.

Unfortunately we seldom do what is right but rather what is politically expedient and we have too many cops,lawyers,judges,and politicians depending on the war on drugs for things to change in this respect until thirty or forty million older voterswho know in thier hearts about the devil weed are replaced by younger ones.

It is patently ridiculous to lock up somebody for smoking pot when he copuld be paying a couple of thousend bucks a year in taxes on his smoke-and still getting it cheaper than black market.

Legalizing drug take would do away with 99 percent of drug related crime,and allow society to focus on treatment rather than punishment.

True conservatives and liberterians adhere to this pov,as well as younger folks who detest the republican establishment.

It's time for a little political bridge building.

Don't hold your breath for legalization (unless they are waterboarding you) http://abcnews.go.com/International/wireStory?id=7800340

trekker -- If it's that oppressive where you live now you might consider moving to Houston. Currently here the individual is primarily responsible for their protection. This isn’t a shot our cops. They do their best. But the best they can do is work on solving crimes already committed and writing speeding tickets. Don’t drive over the speed limit or commit a crime and you can live here 30 years without even meeting a cop let alone be oppressed by one. For a major city Houston may not be as bad as many when it comes to crime. But the rules here have been very clear for a long time: you are responsible for preventing a crime against you and yours…not the police. Unfortunately that requires a bit of self-induced paranoia to make yourself watch your back though.

Don’t drive over the speed limit or commit a crime and you can live here 30 years without even meeting a cop let alone be oppressed by one.

That's news to Robbie Tolan.

Thanks Leanan. I hadn't heard abut that shooting. But it does emphasize my point...a little. He was shot because the cop had thought he stole the car. Poor policing for sure. But it was a shooting while investigating a possible crime...not trying to prevent one. And knowing the Bellaire cops being black was the guy's first mistake. I wasn't kidding about an almost complete lack of crime prevention by the establishment here. I'm not sure we're much different then other big towns. But I can tell you the attitude of many here when listening to a victem's story: why did you allow yourself to be in the situation in the first place? It's not exactly the old west here but most folks expect you to be armed and able to defend yourself. And that does make you cautious when approaching someone in a dark parking lot. They might not be one of the bad guys but they might think you are.

p.s. Been in Houston oveer 30 years and never met an HPD cop. Probably never been within 100' of one. But I was once handcuffed in the back seat of a county deputy sheriff's car once...way to long a story for TOD but he did let me go when the confusion was cleared.

It's a very sad case. Made national news, because Robbie Tolan's dad was a fairly well-known baseball player. Otherwise, I doubt anyone would have cared. The kid's baseball career may be over, because of the shooting.

They suspected him of stealing the car, apparently because he was young and dark-skinned. The car was his parent's. It wasn't a particularly expensive car, either. But apparently, they thought it was too nice for a guy like him to drive, and so they ran the plate number. They mistyped the number, though - that's why it came back as stolen.

They forced him down in his driveway. His mom came out of the house, and freaked. They started shoving her around, and he started to get up. To protect her, I guess. That's when they shot him.

And what will happen to that cop?

What could be done that would be 'justice'?

*shakes head*
*finds a bottle of booze and drinks away the sad*

How in the heck can you live in Houston and not have heard of this case???!!! I am living here again and it was big news for a while -- all the TV stations, in the Chronicle, etc.


BTW, did you hear of Hurricane Ike?

I actually live in Baytown displaced. Not that we're that far from Houston but I pay little attention to local news outside of the politics of Baytown or the state. I probably haven't bought the Chronicle in 10 years and have no reason to watch local stations. It's a big world out there with many aspects that will affect me and mine. Outside of politics and road work local events don't impact me. Growing up in S La. 40+ years ago where being black automaticly makes you suspect has probably desensatized me to a degree about such abuses. Also, I'm as far away from being a sports fan as one can get so that angle wouldn't have garnered a second look.


You are dead on regarding crime and self defense.We do suffer the occasional bank robbery around here,but even guys dumb enough to rob a bank know that bank clerks aren't allowed to bring a gun to work.

Such burglars as we have are extremely careful to make sure thier victims are not home,and home invasions are so rare that most folks don't know what the words mean.

Convenience store robberies are rare ,even though most of the chain stores have a no waepon policy.Ya just can't be sure a redneck store clerk cares more about his job than his life,ya see,and rednecks are notorious for hauling out thier piece when threatened. THEREFORE store robberies are rare.You don't go to jail in Va or the Carolinas for defending yourself.
Physical violence is limited mostly to the wife abuse category.

We do lose an occasional citizen to a jealous husband with a pistol or a careless drunk,but as I see it,jealous husbands and drunks can and do kill with golf clubs and automobiles.

We lose thousands of lives every year to accidents and untreated disease.The people so hot to collect our weapons don't seem to be very excited about this preventable loss of life,thus leaving me wondering about thier true motives.

Now if somebody like Bernie Madoff stole my life savings,or my parents life savings,his life wouldn't be worth a wooden nickel-if he lived around here.I find it HARD to understand why SOMEBODY of the many who have been robbed by such white collar criminals doesn't just shoot one of them ONCE in a while.

I'm sure a few such incidences would have a salutary effect on the incidence of big time white collar crime.

Call me an unreconstructed redneck if you like,but I AM rational.Mostly.

I'm really sorry about the kid the cops shot.

THe ones involved should be busted to clerks with no possibility of ever carrying a firearm on business again,at least.

Thier superiors should busted to privates and never be promoted again.

This policy works keeping the armed forces leadership on thier toes.

Remember that I'm just a crabby old farmer and not to be taken too seriously-unless the subject is ag.

The idea that Detroit has a problem with violence and crime is hardly news. It's not necessary to make this article go down that path, which is hardly 'the unmentioned elephant in the room'.. it's practically planted in Detroit's definition, worse than most cities.

Sometimes you have to stop just staring at the rushing Hippo and focus on climbing the tree.


Exactly my point-the USA can address oil depletion as long as political correctness is maintained at all costs, which means oil depletion will not be addressed in the USA.

Of course, one of our many problems is that we can't afford our current level of government spending, all the way from local to state to federal. The next bubble to pop will be government spending, as revenues continue to contract--leading to more and more municipal bankruptcies, reductions in services and employee layoffs.

My state, North Carolina, is facing a $4 Billion reduction in spending this year. I recall hearing that one of the proposed solutions is to close several prisons (perhaps 8). The implications of this should be obvious...

E. Swanson

The implications of this should be obvious...

Maybe. Will violent offenders be released before people who are locked-up for drug related offenses? There are over 500,000 people in prison on drug offenses today. It is not entirely obvious that releasing them will affect me.

When you have close to 1% in prison -- you would ask -- what the heck wrong!!! 5x Britain, 12x Japan -- that is what we have.

If other countries managed fine with a much much less population (rate) in prison (and it's more effective too) why can't we?
Different interests (politicians, police, for-profit prisons, etc...) used "fear tactic" to keep the prison population high only to benefit them -- it does nothing to benefit us.

Britain should have a lot more. Sentences are short and even now prisons are overcrowded. This was due to political infighting between the Home Office(who run prisons) and the Treasury(who control the money). Supply of prison space fell well behind demand.

Take away the law library. Take away the cable tvs. Take away the exercise equipment. Shut down all country club prisons which exist for the rich folks and politicos caught.

Make it a real prison and the inmates grow their own food. Put them to work on civic projects.

There is lots that can be done. When crime is punished maybe the offenders will stop breaking the law.

I remember a prison in Raleigh where the inmates were always just apparently walking out or jumping a fence. It was a sick joke back then.


Shut down all country club prisons which exist for the rich folks and politicos caught.

Stuart? I like you. You're not like the other people here
in the trailer park. Oh no, don't get me wrong, they're fine people, good

And that is why we have a seperate place for your lockup Stuart.

The next bubble to pop will be government spending

This is so true, I had not thought of it as a bubble but it is, and as we all know bubbles burst.

A sharp drastic drop in U.S. government spending would, even in the best of times, case serious repercussions, imagine what would - will happen, if the government stops its spending in the middle of this economic crash.

Of course once the so called stimulus money is all spent, if there is not another package after that the results will be quite dramatic as well.

If the current package does not work and the government has to start to cut spending to pacify the holders of US debt then the economy will be going down the drain with nothing to grab on to on the way to oblivion.

It is surprising that few understand that government spending has to be financed by somebody and if nobody has any money to finance it, then by definition government employees and their lucrative pensions, etc. cannot be financed. There seems to be a feeling among the public that this money comes out of the ether or out of Barack's pocket.

Maybe we'll all end up working for the government. "We pretend to work, they pretend to pay us."

I think that the crunch will hit first on the local and state level. California is an ongoing example of where more states will be.

Actually, California with its absurd approach to taxation and baggage like Prop 13, is unlike most states, which is why I am very happy not to live there anymore, and many of its citizens behave like ostriches: My sister and brother-in-law weren't the only ones who didn't even know there was to be a special election regarding California's budget crisis.

I can't agree on that one-IMO California would be in even more trouble than it is without Prop 13. Any jurisdiction that tries to fund out of control spending by gouging property owners eventually runs into a wall as the property values are impeded by the outrageous property taxes (Florida,NJ,etc.)

Brian,Leanan,every body,

Please EVERYBODY ELSE-stop here and think a minute what happens when and if the government runs out of money.

A local government may actually have to bite the bullet and reduce spending,as is frequently happening these days ,up to the state level.

On the other hand there is absolutely NOBODY OR NOTHING capable of preventing the FEDERAL government of the US( or any other national government,for that matter) from continueing to spend by printing the money when it can no longer be borrowed-if congress and the president choose to do so.

Now if you have a few decades of reading the news out of DC under your belt,you should realize that it almost impossible to overestimate the lengths that our govt will go to to avoid making a TRULY politically unpopular decision-such as clamping down on spending at a time when ts is already in tf and every nickel and dime pressure group from the hot dog vendors association and the cashmere wool growers cooperative on up to half the big banks and two thirds of Detroit are begging for a welfare check-NOT TO MENTION a good many states and localities.

So we are treading on some very thin ice.If the bailouts work,and the printing can be stopped,maybe we come out ok.

If for some reason things go wrong-and there are SO many ways for things to go wrong-then Uncle Sam's most likely course of action-judging fron history- is to keep the pedal down and try to bull his way thru by printing even more money-exactly the way you try to keep moving on a snowy road,when you know that if you stop you are NOT going to get going again,and that if you DON'T keep going,you are FINISHED-YOU FREEZE IN THE BlIZZARD.I really want to use some profane language to emphasize this scenario,but this IS a public forum.

Now there can be and almost certainly does exist a tipping point at which there is a loss of confidence in the dollar and every body with cash tries to bail before the amount of funny money chasing the world's supply of resources ranging from crude oil to farm land to next years corn crop renders thier cash worth maybe a couple of percent less every month.

If we hit that tipping point-and nobody can say exactly where it lies-

Every body will be trying to buy hard goods.Nobody will renew a t-bill unless the interest rate is maybe fifteen percent or even worse..Why do you think the Chinese are buying iron ore,scrap metal,and oil as fast as they can unload the stuff?-meaning both the dollars AND the metal and oil.Does anybody really expect oil and iron to get cheaper over the next few years-? Barring the possibility of a crash so hard there IS no recovery?

Now one beautiful thing about inflating a currency,from the govt pov,is that the people who are first in line to get the handouts are well organized and able to show thier gratitude at the polls and at the fund raisers.Most of them,when they are hard working auto workers for instance, will never realize that IF the currency becomes worthless that THIER handout contributed to the problem.

The second beautiful thing about inflating a currency is that the effects feel very good in the short term,like getting drunk.The biggest difference is that if YOU drink tonight,tomorrow YOU suffer the hangover.When a currency is inflated,the hangover is spread out over every body who is holding it or using it-all the way down to your kids with a few bucks in a savings account BUT the high is enjoyed by the recievers of the hand out in proportion to the size of thier helping and thier proximity to the source-the govt.The fact that the average voter is financially and economically illiterate means that he can not make the connection between his persistent headache and govt spending,meaning in turn that he may even vote for the folks who are destroying the value of any dollars he has due to him,such as the cash value of an insurance policy,or the monthly payment from the sale of his house if he finances the buyer-or a pension check that does not increase as fast as inflation.

The third beautiful but closely related thing about inflating the money is that the hangover is delayed,sort of like an incipient liver problem,but probably not as long.But long enough that if you really screw it up,you may already be out of office and can blame it on the opposition.

A fourth beautiful thing(always from the soverign govt pov of course) is that if you pull it off successfully-meaning that you do it but manage to keep from losing control altogether-you wipe out your older obligations to the extent that you inflate.

A fifth kinda cute feature is that everybody finds themselves in a defacto higher tax bracket unless there is previous legislation in place to index taxes.This of course allows the govt to make at least a little progress towards a balanced budget w/o raising taxes. because after all we don't WANT this scenario to really play out,do we?

As far as things that can go wrong are concerned,any regular here can probably think of a dozen.A cocaine submarine loaded with artillery shells and rammed into a super tanker.A repeat of the WWI flu epidemic.A revolution in some powder keg locality in the oil and sand world.An assination of some key leader in a hot spot.An unexpectedly fast decline rate in the super giants.Demand destruction will at some point become irrevelant to shortages as we simply have to have a certain amount of oil to maintain the industrial,farm,and security infrastructures.Any half dozen really tough and determined men who have read a Spetsnaz guerilla warfare manual or two could take out a middle sized city in this country with very little in the way of finance or technical training,and they wouldn't need anything you can't buy at Home Depot and Walmart.( So far as I can see the only we reason we haven't been brought to our knees by infiltrated terrorists is that nobody is really trying to,with the exception of maybe a few nuts who can't keep secrets very well..)

Now just TRY to remove yourself from any assumptions you may have made about the stability of our financial system,and look at them objectively from a good distance away.Put them on a beam balance and on the other end put your frustrations with the shortsighted ham handed actions( mostly inaction really) of our leaders visavis peak oil,aids,poverty,crime and drugs or whatever disturbs you the most-climate change,redneck republicans, or Hillary's resurrected take over of the health care system.Now think hard about how much confidence you have in the direction that balance will move.

Ps Lots of financial types have long thought that we were already past the point of no return(the tipping point) even before the current crisis arrived.

If I were getting paid to do this I could take the time to polish it up a little.

Remember I'm just a crabby old farmer.But you just might want to think about this seriously anyway.

Good thoughts Mac. I bet you remember well the inflation back in the late 70's. Hard to believe President Ford's "WIN" (Whip Inflation Now) buttons didn't do the job, eh?

Though I do worry about the grief such inflation will deleiver to so many I can actually look forward to it. At 58 yo I've acquired most of the big tickets items. Heading towards retirement I can make very good use of 12% CD's. Fortunately for me when we had those high inflation rates when I was raking in 10% - 20% yearly salary increases in the oil patch. Unless folks have lived with 16% prime rates I don't think they can truly appreciate the personal toll. Yeah...great way to reduce the value of our debt repayments but it comes with a great deal of local pain also.

Good article about money from a crabby old farmer, impressive and a better understanding than some bankers I met this morning!

The 12% CDs are good if you can buy them at the top of the inflation cycle since not only a good return but an increasing asset value. Of course if you can't time it right while inflation is increasing you have an asset that is decreasing in value:-(

The whole point of allowing inflation is that the politicians can bribe the voteriat with their own money whilst putting off and diminishing the repayments. What is that US saying, don't tax me, don't tax you, tax the man behind the tree??

Good points Tony. At 58 yo most of my savings are in fixed income so timing isn't so much a choice. Sitting back watching the gov't take actions which will likely start running those returns up does bring a smile to my face. But only as long as I don't think what it will do to my 9 yo daughter's future. And I don't think "bribe" is too harsh a term either.

Whenever I hear about crime in Detroit, I can't help but remember the Kentucky Fried Movie:

Take Him to Detroit"

You may have forgotten that the Kentucky Fried Movie also solved the oil crisis in the opening few minutes as well - Honest it did :)

The resolution, approved at the ASC's annual meeting now under way
here, states:
"Be it resolved, that the Executive Board of the American Society of Criminology opposes the use of Uniform Crime Reports data to rank American cities as 'dangerous' or 'safe' without proper consideration of the limitations of these data. Such rankings are invalid, damaging, and irresponsible. They fail to account for the many conditions affecting crime rates, the mismeasurement of crime, large community differences in crime within cities, and the factors affecting individuals' crime risk. City crime rankings make no one safer, but they can harm the cities they tarnish and divert attention from the individual and community characteristics that elevate crime in all cities. The American Society of Criminology urges media outlets to subject city crime rankings to scientifically sound evaluation and will make crime experts available to assist in this vital public responsibility."
The Society's resolution is the second passed in recent months deploring crime rankings by community. Last June, the U.S. Conference of Mayors passed a similar measure, which also committed the Conference to working with the FBI and the U.S. Department of Justice "to educate reporters, elected officials, and citizens on what the (UCR) data means and doesn't mean."
In addition, the FBI has posted the following disclaimer on its Web site with the UCR data:
Caution Against Ranking -- Each year when Crime in the United States is published, some entities use reported figures to compile rankings of cities and counties. These rough rankings provide no insight into the numerous variables that mold crime in a particular town, city, county, state, or region. Consequently, they lead to simplistic and/or incomplete analyses that often create misleading perceptions adversely affecting communities and their residents. Valid assessments are possible only with careful study and analysis of the range of unique conditions affecting each local law enforcement jurisdiction. The data user is, therefore, cautioned against comparing statistical data of individual reporting units from cities, metropolitan areas, states, or colleges or universities solely on the basis of their population coverage or student enrollment.


Great article. I can't resist a few gratuitous comments.

Borders Inc. was founded 40 miles away

I am sorry, Ann Arbor does not count.

Starbucks ... has only four left

Detroiters will do just fine without Starbucks, thank you.

Used-book outlet John K. King ... is considering moving to the suburbs.

Say it isn't so!

less-frequent snow plowing

The policy in Detroit has always been: when the snow melts, it goes away.

A very sober read on Iraq;

"As Iraq runs dry, a plague of snakes is unleashed"


"An unprecedented fall in the water levels of the Tigris and Euphrates rivers has left the rural population at the mercy of heat, drought – and displaced wildlife."

"The collapse in the water levels of the rivers has been swift, the amount of water in the Euphrates falling by three-quarters in less than a decade. In 2000, the flow speed of the water in the river was 950 cubic metres per second, but by this year it had dropped to 230 cubic metres per second."

"Large parts of Iraq that were once productive farmland have already turned into arid desert. The Iraqi Ministry of Agriculture says that between 40 and 50 per cent of what was agricultural land in the 1970s is now being hit by desertification."

Basically, Turkey and Syria have stolen the water from Iraq. 5 big dams on the Euphrates in Turkey, 2 in Syria. Let's have water wars!

Over on another thread it was stated that wars are not over resources but ideology.

Darn Water Gods getting the worshipers of water mad as wet hens.

What percentage of the flow for these rivers come from mountain snowmelt?

I don't have the source, but i read the majority of the eurphrates waters is from the hills of turkey and syria.

The Tigris water is mostly from mountians in Iraqi territory.

If it's from the mountains (?glaciers?) can GW be the culprit?

If it's from the mountains (?glaciers?) can GW be the culprit?

In that part of the world you gotta be pretty high up to have glaciers. There are some small ones on top of Mt Ararat, but thats at nearly 15,000 feet. I've felt the claim that melting glaciers will cause drought is overblown, averaged over time the presence of ice doesn't increase runoff, it just redistributes it in time towards late summer. Note glaciers also help move some runoff from wet to dry years, as during the later ice accumulated during wetter years melts. But glaciers store water, not create it. Likewise with the earlier loss of seasonal snowcover, this doesn't destroy water, it just moves up the time it runs off.

"averaged over time the presence of ice doesn't increase runoff, it just redistributes it in time towards late summer"

That's the whole point. There is no shortage of water during the wet season, it's the dry season that's the problem.

The Jeff Rubin link up top is quite interesting: Q&A: "The Global Crisis Is Really About a 140-dollar Barrel of Oil"

JR: What happened to the world economy when oil hit 140 dollars? Is this deepest recession in the post-war period really about the U.S. subprime mortgage market? Or is it about 140-dollar a barrel oil? I’d argue it is about a 140-dollar barrel of oil.

There is one fact that Jeff Rubin never brings up. In fact I have found no one who has brought up this fact, even here on TOD, other than myself. And that fact is that the recession is not just about the price of oil but primarily about the supply of oil. Rubin, and a lot of others, does talk about the decline in oil supply. But they discuss it only as it relates to the price of oil, and how the price affects the economy. I have seen no one even mention the fact that growth in the economy requires growth in the oil supply.

A recession is described as two consecutive quarters with negative GDP growth. Constant growth in the GDP requires a constant growth in the energy supply. Oh, it can grow for a couple of years but eventually growth in the economy without growth in the oil supply stretches the energy rubber band too tight and it snaps. The oil supply stopped growing in 2005 and in 2008 the energy supply was stretched too tight, it snapped and threw the economy into a tailspin.

The economy cannot begin growing again until the oil supply starts growing again. And I don't think that is going to happen. Oh there will be the wags out there who say we can simply transition to another form of energy for our transportation fleet, and to make all the products from that are currently being produced from oil. I doubt that however even if it is true, it would take ten to fifteen years, at least, for that to happen. By that time it will be way too late.

I disagree with Rubin when he says oil will reach $225 a barrel by 2012. For oil to reach that price then the supply will have to shrink considerably by then. The combination of low oil supply and high oil prices will keep us in a deep recession, and perhaps a depression. The unemployment rate, under such conditions, would likely be well above %20 percent and the underemployment rate would likely be above 50%. We would see conditions such as we saw during the Great Depression, perhaps worse.

$225 oil by 2012? In my opinion that just ain't gonna happen.

Ron P.

Hi Ron,

I personally have not seen a single article in the US regarding a business being closed due to lack of fuel. Not one. Surely if businesses were cutting back because of an inability to obtain fuel there would be some mention don't you think?

Any argument that states price rise or supply drop is a causal condition, in this case of a recession, then it necessarily states that the condition would be removed in the event of a reversal of the cause. In our case, the recession has continued and in many areas, such as unemployment, have intensified despite $1.61 gasoline on January 1st.

My personal opinion is that both you and Mr. Rubin are over-simplifying the role of energy in this recession. The monumental increases in debt over the last 10 years has very little to due with energy but is greatly exacerbating the recession we find ourselves in. In addition, I would argue that the unnatural increase in debt more than likely caused the surge in energy use leading to its price rise due to the temporary increase in all kinds of output from houses and cars to chinese made ceramic toilet brush holders.

Lastly, I can assure you that at $225 per barrel, there will be plenty of available supply, economically speaking.

Of course, I've been wrong before. Have a nice day.

I personally have not seen a single article in the US regarding a business being closed due to lack of fuel. Not one. Surely if businesses were cutting back because of an inability to obtain fuel there would be some mention don't you think?

Jteehan, I don't think you understand. The price of oil and the supply of oil are joined at the hip. Rising price tries to pull more oil into the market. And until 2005 this worked. This time around however prices rose and rose again, but no more oil came onto the market.

Had more oil came onto the market, prices would have never reached the lofty levels they reached last summer. Had more oil came onto the market General Motors would not have filed for bankruptcy. Every car dealership that closed did so because the oil supply stopped rising in 2005. There are hundreds, perhaps thousands of other businesses that closed because of the very same reason.

Total petroleum products supplied in 2005 was 20,802,000 barrels per day. That is, or was, the total petroleum products consumed by the US, people and governments, in 2005. In April of 2009 that figure was 18,225,000 barrels per day. That's a drop of over two and one half million barrels per day in consumption. That, dear hearts, is the reason we are in a deep recession. The price of oil, varying from $147 to $38 and back up to $72 a barrel, is the result of the drop in oil supply.

The above figures can be found here, PDF file: Petroleum Overview

Ron P.

A rough outline of our update to the top five paper:

The antecedence escapes me.

I can assure you that at $225 per barrel, there will be plenty of available supply

Maybe, maybe not, it depends on whether it is profitable for the producers - tell us what the future costs of production and political situation will be. What is for sure is that the world oil supply peaking phenomenon is caused by consumers not being able to afford the price required to consume more.

We live in a complex interconnected world with many unknown feedback loops and for BAU growth to continue we require consumption of many economic inputs to increase, not just oil.

The big question is ... which economic input is the Liebig's minimum? - I suspect this changes all the time, in the medium term maybe it's not oil or debt. If however oil does turn out to be the limiting factor (for now) it doesn't matter how much you increase inputs like debt, the economy won't go any faster!

I think the history of the earth tells us that some stage the Liebig's minimum will almost certainly be a limiting input to our unsustainable intensive food system.

Xeroid -- Just my opinion based upon 34 years looking for oil/NG. This isn’t an absolute view without exceptions. But I’ve seen oil/NG prices hit high peaks several times in my career. The late 70’s boom led to 4600 drilling rigs running here at that time…about twice as many as were running when oil hit $147 last summer. I can tall you for a fact that half those rigs running in 1980 were drilling crap that had almost no chance of working. It was an oil promoter’s paradise. I personally know folks who made millions and never drilled one commercial discovery. High oil/prices allow us to drill a lot more wells. But we don’t find a proportionate increase in reserves when we do. Yes…there were lots of discoveries back then. But many times more failures. Today it’s not as easy to sell crappy prospects as it was back then. With tech advances it’s a great deal easier to find hydrocarbons now. That also means it’s a lot easier to see the crap for what it is. I know that might be hard to accept but it’s true. I deal with the data daily. It’s much easier to find oil/NG now then it’s ever been. But unfortunately there’s not as much left to find as there was before.

If oil does go to $200+/bbl a lot of wells may be drilled. But the effort won’t produce proportional increase in reserves from my very experienced view. Thus the economy will suffer as a result and, unfortunately, not be rewarded with a godsend of new big reserves IMO.

Dang ROCKMAN looks like I need to post a email I just sent out.

I think I finally figured out the right way to do Economics and EROEI

The EROEI cliff is fascination it implies that as prices increase supply decreases. This is completely opposite to traditional supply demand concepts.

Consider the case of whaling assume their are 10 whales in the sea and whale oil is worth 100 times its weight in gold.

1000 whale ships are sent to capture the 10 whales. Ten or less of these ships are going to catch a whale.
Lets assume five are caught 4 by one very lucky ship and one by another the rest go empty handed.

Obviously one ship made a huge amount of money one made a large sum and most made none.

Now what ?

Lets assume that the 995 ships that did not capture a whale are now bankrupt and can't search. What does the one lucky ship do ? Lets say now with the collapse of the whaling fleet it could buy all the excess s ships for the price of a single whale same for the other one that caught one whale.

Obviously there is no intrinsic reason for the winners to buy and send out the whole fleet and go bankrupt in turn.

Basically there is nothing you can do if there are no whales there are no whales your forced to right size your efforts to match the real physical situation. Increasing effort has no effect. And price does not matter.

This of course should be obvious sending out whalers does not create whales for them to hunt yet thats the premise of traditional economics :)

i think elephants would be a more accurate oil and gas analogy. the press is full of start up oil and gas exploration companies able to convince the gullible public that they can do it, they can find elephants(with a little help from a few $million of opm).

With the shale gas plays, there are a ton of locations, many "orphaned" by the prices which royalty owners are asking and thus not leased by the majors, which will allow for plenty of drilling a high percentage of producers, just not wells which will be profitable at the time they are drilled. Even in the Barnett, wells in the far northeast section made decent amounts of oil.

Incidentally, in 1980, with a high-end marginal tax rate of 70%, drilling was costing the high income investor only 30 cents on the dollar, with the Federal Government picking up the other 70 cents in the form of tax reduction - and states with income taxes made it even more luctrative. Thus, raw wildcats, with very little chance of long-lived production could deliver a decent shot at breaking even, between expensing of IDC's and depletion on successful efforts. Reagan killed the advantages from a rate standpoint and tax reform has greatly reduced the depletion related tax incentives.

So memmel, I gather you know how to play the game: issue an IPO for you new whaling ship company (perhaps called "Whales-R-Us"), collect all that front end money from the investors and then buy back the ships at 5 cents on the dollar when the company goes belly up.

There is actually a rather well known independent oil company today that started exactly that way. They did an IPO based on a truly absurd reserve report based upon application of a "new" technology to this old field. They raised over $250 million in the IPO to buy the field. Based upon then current production rates that was equivalent to an almost 20 year payout. Within 12 months the "new tech" proved to be a complete failure and the company wrote down over $200 million in asset value and the stock tanked. But in the same week they got a $50 million line of credit based on the new reserve value. Remember...they didn't borrow any money...just used the shareholders' money. They were in great shape as a corporation: no debt, $50 million line of credit, a small but nice cash flow property. Of course, they original shareholders were burned to death. But management was able to buy them out for pennies on the dollar using the credit line. They are now in the top 10 list of US independent oil operators. I wonder if they erected a memorial to those original shareholders.

Is this a great country or what!!! Amazing the success you can achieve when you set morality aside.

I probably should have left that line out since it didn't really support my point. However, it is my belief that the price at any given time roughly correlates to what a seller is willing to take and still make a profit. So at $225, there will be adequate supply at that price and so on.

Whether or not I'll be able to generate demand at that that price belongs in another thread, but my guess is no.

For the rest of your post, I agree mostly with the exception that a short-coming of Liebig's Law is that it assumes a maximum output is desired. A barrel has no opinion on whether it should be full or not. I guess that's why the law was design to forecast rhubarb and not recessions. Liebig's Peak?

Nice post.

I have seen no one even mention the fact that growth in the economy requires growth in the oil supply.

On the subject this is from the latest public IEA Monthly Oil Market Report (PDF) concerning China GDP figures.

[I tried cutting just the text from the PDF but for some reason it wouldn't work properly - allthewordsendedupjoinedtogether) so it's an image grab]

You could have cut and paste like this:

Another Chinese Riddle: How Reliable Are GDP Figures?
In mid‐April, the Chinese government reported that real GDP increased by 6.1% year‐on‐year in 1Q09. This
figure was immediately taken up by the market as a tangible proof that the country is about to emerge from
its downturn, and prompted numerous forecasters to upgrade their 2009 outlook of the Chinese economy.
The current consensus view is that the government’s fiscal boost, its plans to develop a social security net
for rural households and the Central Bank’s much looser monetary policy are not only having earlier‐thananticipated
effects but also virtually guarantee that the Chinese economy may expand by as much as 8% this
year and be back at double‐digit growth figures in 2010.
Oddly enough, 1Q09 reported GDP growth does not tally with oil demand data (nor with electricity demand,
which was also inordinately weak). Oil demand contracted by 3.5% year‐on‐year, as noted earlier.
Admittedly, pinpointing China’s oil demand with accuracy is an exercise fraught with difficulties, given the
lack of data and the underlying assumptions analysts must make regarding stocks and refinery output from
independent producers. Still, one would have expected stronger, positive oil demand growth
commensurate with the reported economic resilience, unless income elasticities had drastically changed.
Another possibility is simply that real GDP data are not accurate, and therefore should not be taken at face
value. This is the view advocated by Lombard Street Research (LSR), a respected London‐based economic
consultancy. It argues that 6.1% real GDP growth in 1Q09 is inconsistent with a decline in trade volumes of
about 20% over the same period, as it would have required domestic demand to expand by some 9% in real
terms. Using official 1Q09 nominal annual growth rates for GDP and consumption, and consumer and fixed
investment price indices as deflators for consumer spending and investment, respectively, LSR reckons that
domestic demand expanded at most by 2% year‐on‐year in real terms. If so, China’s terms of trade should
have deteriorated sharply in order to achieve the decline in the GDP deflator implied by official data – yet
the country recorded a significant improvement in its terms of trade. LSR concludes that 1Q09 real GDP
growth was actually probably slightly negative or nil at best – a very large difference vis‐à‐vis official
statistics – and adds that 4Q08 real growth was also likely negative or flat, if examining nominal data. If so,
the last two quarters would effectively signal, from a Chinese perspective, a recession of a rare magnitude.
This analysis, which ultimately suggests that the country’s falling exports have significantly weakened
domestic demand and hence GDP growth, is of course one set of opinions among many. However, its
conclusions regarding China’s real 1Q09 GDP growth seem more consistent with oil demand estimates, and
would imply that overall 2009 GDP growth could indeed match our current assumptions, despite the boost
that fiscal and monetary policies will arguably provide in the quarters ahead.

You could have cut and paste like this:

As I said in the post I tried but ended up with many of the words all strung together in the copy/paste buffer. I've never seen that problem before. Probably a rare Foxit reader bug but I don't have Acrobat Reader installed on this PC as Foxit is generally a better PDF reader.

MacIntoshes with Safari are good at copying text. If you remove the carriage returns at the ends of lines, the text gathered in this way looks "normal". It even somewhat works on lower quality photocopies of printed materials.

If you grab a copy of BBedit, the removal of carriage returns is a snap. Tell the program to show the invisible characters, copy the carriage return at the end of each line and then replace each carriage return with a space.


However not all PDF files are created the same. As an example I use a Canvas X print to Canvas driver save as a Canvas cvx file then open the cvx file in Canvas 11 then save my files as PDF.

This is an example of the copy and paste from my file

Another Chinese Riddle: How Reliable Are GDP Figures?

In mid April, the Chinese government reported that real GDP increased by 6.1% year on year in 1Q09. This figure was immediately taken up by the market as a tangible proof that the country is about to emerge from its downturn, and prompted numerous forecasters to upgrade their 2009 outlook of the Chinese economy. The current consensus view is that the government’s fiscal boost, its plans to develop a social security net for rural households and the Central Bank’s much looser monetary policy are not only having earlier than anticipated effects but also virtually guarantee that the Chinese economy may expand by as much as 8% this year and be back at double digit growth figures in 2010.

Hi Ron,

I like the analogy of a bouncing ball better than the rubber band. Gravity keeps pulling the economy down, and with shrinking energy (post peak oil), each economic recovery (bounce) is smaller. We are on the first bounce now. When the third bounce comes, and people start to see the whole picture, then you will need your bug-out-bag.

A ball thats bouncing down some steps perhaps.

I like the ball vision too. Especially if it has a relatively short period compared to the wave lenght. That would mimic the volatility we've seen which I think might be repeated for some time and, perhaps, with even great extremes.

There have been several mentions of the restriction of net energy as a basic cause of economic downturn (or alternatively the increase in loose credit). E.g. Gail's "The Connection Between Financial Markets and Energy - Open Thread", http://www.theoildrum.com/node/4534/408108 Or read an extended version at my blog: What is going on in the financial markets?

It isn't just oil availability per se. It is the combined effects of peak production and decreasing EROEI giving rise to declining net energy (actually exergy) that is at the root of the whole financial/economic trouble. And the argument applies to all forms of energy sources, not just oil. Oil is dominant because of its king pin role as a portable/liquid fuels source.

Question Everything

Thanks George, I stand corrected, someone has mentioned it before.

I read your blog, linked above, "What is going on in the financial markets?". It was really interesting. You seem to understand the interconnections of the economic system as few others do, including myself and a lot of economists.

I got from your blog, among other things, that if you reduce the energy flow, you must also reduce the amount of actual work being done. And only actual work creates actual wealth. Hence when the flow of energy declines the flow of work declines and wealth declines.

Of course a nation's wealth, in this case, is measured as GDP. So, if energy is in decline, can the wealth required to purchase energy increase?

Ron P.

Hi Ron.

Of course a nation's wealth, in this case, is measured as GDP. So, if energy is in decline, can the wealth required to purchase energy increase?

I may be a little confused by what you are asking here. If net energy to do work is in decline then the only way to invest any energy into producing future exergy is by reducing our uses of current exergy for non-extractive (of fossil fuel) work. Or, through a combination of conservation and limiting discretionary wealth production (e.g. building autos and 110 brands of shampoo!) we can redirect some of our remaining available energy into producing renewable energy conversion capital such as solar and wind farms. I don't think, at this point in time, there is any formula that will allow us to grow our exergy supply no matter how much of this conversion capital we build out. A fair amount of the produced exergy will need to be reinvested in maintenance and replacement equipment, leaving us with lower net exergy for other economic activities. Until our population size and per capita exergy consumption are in balance with what we can effectively produce, our whole economic engine will be in decline -- we will be poorer over each increment of time.

As for GDP, I personally find it a worthless measure of anything. At best its movement correlates with work but since it includes so many repair and defense transactions it hardly measures income in the traditional sense of the word. I much prefer to strictly look at net exergy as an indicator of wealth (potential anyway).


George, thanks for the reply.

Sorry for the confusion about my question. That was my fault for not being more specific. Let me rephrase it. If net energy, primarily oil, is in decline, and wealth is also in decline, can the wealth required to purchase oil, in inflation adjusted dollars, continue to increase? To put it in plain words, if the economy is crashing big time, and total wealth is also crashing, can oil prices increase into the stratosphere? Again, in dollars adjusted for inflation. It is obvious that oil prices may reach one million dollars per barrel in a Zimbabwian type inflation scheme.

As for GDP, I personally find it a worthless measure of anything.

Well, so do I. But to my knowledge there is no other measure we can substitute. So we are, in my opinion anyway, forced to use the only measure we have. Do you know of another one? Is there any measure of actual wealth production, or decline, that we can use?

Ron P.


Some time back I wrote a blog called "Can you say contractflation?" as a play on stagflation. Bottom line, less energy -> fewer goods -> excess dollars chasing them. Everything will cost more in dollars. This will include what we would pay for whatever energy we can find. It's a vicious downward spiral. But that is what I think we'll see.

As for GDP, Daly and Costanza have some ideas about adjusting GDP to reflect true income. See: Genuine Progress Indicator. Me, I prefer physics!!! Energy, exergy, emergy, and work with accounts for stocks and flows measured in appropriate physical units.


Thanks George,

I see the economy crashing faster than the scarcity of oil causing prices to rise. So far, the oil supply, even with the OPEC cuts, has contracted only about 3%. In the early 80s the oil supply fell a full 15% and prices rose only to about $100 a barrel in inflation adjusted dollars. At any rate in a great depression type economy, hardly anyone will be able to afford anything, including gasoline to drive to jobs they don't have.

Yes, GPI seems to be by far the better economic indicator. But to my knowledge no one is measuring it or publishing it anywhere. So we are left with GDP. A very bad indicator but all we have. Pity.

Ron P.

Bottom line, less energy -> fewer goods -> excess dollars chasing them. Everything will cost more in dollars.

Sounds to me like short term deflation followed by inflation - the great race. As of today, people are tightening belt buckles while available goods are at peak (inline with energy available). This should theoretically bring prices down. As price falls, excess goods are purchased out of existence. All this time, energy is on the decline as are available goods. Eventually available goods will reach equilibrium (intersection point) with the (continuing) fall in available energy in which case all attempts to "tighten one's buckle" further will fail. Available energy continues downward and continues to pull available goods with it. As this avalanche sweeps through more and more checking/savings accounts, prices continue to rise because there is no excess energy to turn the trend around.

From Bangla 'green revolution' starts with solar power

"Every solar accessory except the panels is now produced in Bangladesh which means we are going to be self-sufficient very soon to keep driving the growth."

and "The best thing about having solar energy is coming home at 10pm from work and seeing my three sons reading their books,"

Solar too expensive? For these guys, it would seem it's priceless.

The Tailor who was able to get double the work because he could keep his Sewing Machine running. You can call Solar 'Intermittent', but the overall power availability in the developing world is far less reliable than the chance that the sun will shine.. and the benefits go FAR beyond any 'pragmatic' comparison of KWH rates.

The flip side is...now he has to work twice as long.

He can work twice as long if he wants to, but there is no reason that he "has to".

My experience in less-developed countries is that PV usually replaces kerosene,flashlights or candles, which are also expensive, dirty, and fire hazards, plus the quality of the light is too low for most fine tasks. It is interesting to see the simplicity and durability of locally produced PV/light systems designed for "peasant operation". The first "peasant operation" PV/CFL systems I saw where produced in China and used many places where no one could read the ideogram instructions, but it did not matter because the systems were so simple, red plug in red jack for red wire,etc.

He has to...to make his "investment" in the solar panel pay off.

Does he?

Only if he took on debt to purchase it. Then he must serve his creditor.

If he paid cash then he may do as he pleases, as he is only obligated to serve himself.

No, I wasn't talking about credit.

He's not obligated to serve only himself, even if he paid cash. He has a family. That's money that could have been spent on their other needs. Eight months income is not trivial.

You take a mighty narrow view there.

How is serving your family not fulfilling an obligation to yourself?

Working extra to pay creditors is time spent serving someone else.

How is serving your family not fulfilling an obligation to yourself?

Seems pretty obvious to me. An individual's interests may be at odds with those of their family and community.

I'm reminded of the Amish, and how some communities allow tractors...but only if they are hooked up to horses. Sounds silly to us, but I can understand their reasoning. They don't want one farmer to gain the ability to work a lot more than his neighbors. They fear it will make him greedy, and lead to a tractor "arms race" among neighbors.

Clearly the system being described involves battery backup. This will need to be replaced in a few years, I would expect. Without the batteries, he would have to quit sewing at sunset as before, and his sons wouldn't be able to read into the evening.

In the "peasant operation" systems that I have seen the lighting energy consumption is minimized by including a 10 or 12 watt compact fluorescent as part of the integrated system. So the battery is much smaller and cheaper than a car battery. Plus non-user adjustable charge controllers (probably a single ASIC) are in-line. So I would guess that the batteries last longer than a few years, probably more than a decade, because deep-cycling is prevented. After a decade or so the battery can be replaced for fraction of the system cost.

Whatever the opinions on TOD, these simple systems are meeting needs in less developed countries and selling well, often without any subsidy. If we look at the return on investment in financial rather than energy terms, what is it worth to a parent that children can read and educate themselves after dark?

This is a point I have made often. Every single analysis we've seen on these pages involved replacing FFs on a 1 - 1 basis. Not one single in depth analysis has been done using 50 - 75% of what we currently use. Yet, we also constantly are hearing about demand destruction, reducing carbon emissions, etc.

It's schizophrenic.

Except for me, of course. I need to update my Build-out vs. the Grid post.


Not one single in depth analysis has been done using 50 - 75% of what we currently use.

Nothing stopping you from doing it.

In the mix beyond transportation, powering war machines, making plastic do-hickies for happy meals you have:

Dental offices with the replacable plastic one use cleaning tools. So they are not plastic and are the standard metal. You regain that oil and the transportation energy of moving about the 1 time use items, but now lose energy to autoclaving and there is some value that should be applied to the 'this cleaning tools was not properly re-sterlized and now someone is sick' events.

One man's 'needed' oil use is anothers 'meh' case.

Nothing stopping you from doing it.

Nothing but the lack of accounting skills, access to data, knowledge of thermodynamics, etc.


I'm full of ideas and can often suss out what will and won't work even when I barely know which end is up (some would argue it's the opposite), so I'm very qualified to be a CEO, but not below that level!


Seriously, though, we have no choice but to power down, so this is an analysis that is as overdue as anything else on the docket at the moment. There are too many people making good use of micro systems and DIY systems for this to continue to be ignored.

One man's 'needed' oil use is anothers 'meh' case.

Yes, but that's no different than noting you've got no shoes but gotta walk to town. Moot. Besides, I was thinking in terms of what is dispensable without real discomfort to the populace. In the US, at least, that's a huge amount.


Not one single in depth analysis has been done using 50 - 75% of what we currently use.

I have pointed out that shifting freight from truck to electrified rail trades 20 BTUs of Oil (could be 17, could be 22, 20 is round #) for 1 BTU of electricity. And that shifting 83% to 85% of current inter-city truck freight to electrified rail is a realistic goal in a decade or two.

I have also pointed out that when TOD build-out is included, Urban Rail gets comparable ratios.

Bicycling is a clear winner EXCEPT it increases lifespans. A dead Hummer driver uses less energy than a living bicyclist.


Sure, but that's not a systemic analysis of nationwide and/or global enregy systems, en toto, eh?


Batteries, like shoes, will last pretty much in direct proportion to how hard they are used. I have some Nicads from the 70's still. Lead-Acid is not hard to MFR and recycle, while care must be taken, it's nowhere near the care needed for embroidering a fancy shirt.

Besides, the kind of battery power required to run a couple reading lights or even a simple sewing machine is very modest. But it sounded to me as if the Tailor was happy to be able to get 5 hours of work in. Maybe working into the night is something we can afford to sacrifice. Considering the almost impossible ease of most of a Solar PV setup, it seems that watering, monitoring and eventually swapping out the Battery is a chore that I don't hear PV Homeowners get too excited about. It's about as frequent an event as Painting the Garage or buying a new car.. (and since we won't have garages or cars anymore, that would just be spare time anyway)

I'm really curious about why you bring up these all-too-familiar cautions against Windpower and Solar, when they have such enthusiastic PROVEN testimonials as in articles like this one .. but you didn't seem to apply anything like the same kind of prudent caveats around the Space-Satellite post, which is almost entirely theoretical and just wildly expensive. (But at least there are no batteries!)


I quite agree that a battery and a modest PV system is very usable. My solar powered golf cart 36VDC @ 220Amps and 3-130 12V panels will do us a long long time if I keep the batteries well serviced.

Further, with the inverter I find the ability to get 110VAC to where I need a power tool or 220VAC to operate a 400 watt well pump will be priceless.

After the above comments, I believe I will wire up three 12V plugs for LED reading lamps. It will be much more efficient than 36VDC -> 110VAC -> reading lamp. Good show ... thanks all.

Well, this is one of those places where having a fairly solid 25-30+ year product gives him a pretty good chance TO pay it off. It's not like putting down all your credit to get a loaded truck for construction work or something, where such a tool can give you maybe 10 years of service INCLUDING a lot of inputs, maintenance, parts, fuel, servicing before needing replacement or considerable overhaul.

This is exactly where the simplicity and durability of this technology can assist people at a very small scale, or a medium one, and provide consistent service with minimal fuss. That power can remain available to him for any number of other trades and family needs as well. Small shop tools, Refrigeration, Battery Charging, Hosting a local computer for a village, a radio link, Water pumping, Bookkeeping, etc..

If not for this investment, wouldn't he have been just pouring that same money out the door for one-time utility power or generator fuel, etc?

Nonetheless, that choice to make such a hefty purchase is no joke, as your response probably was saying. Good argument for microloans, or also perhaps for a 'Lego-solar' product, where you can just buy blocks as often as you can afford them, and just snap them together to increase your capacity.

If that sounds glibly simplistic, I have to re-emphasize that this is precisely one of the strengths of PV. They are almost entirely modular, and such a setup would be quite workable. Making durable contacts might be the biggest challenge, but something as simple as RCA connectors would probably suffice.


I was with you until the RCA connectors - they don't even work on stereos!

You just have to practise..

if you want to get all precious, you can go to molex or something.. I kind of like the '8-track chic' level of engineering.

THe flip side of HAVING to work twice as long is CAN work twice as long.Once he has paid for his system,he is earning marginal dollars(or whatever the local currency) that he can use to raise his standard of living or to use to buy a better sewing mchine,further increasing his productivity.

Iran's Web outage shows the Net's still fragile

When you live in a place where every Starbucks offers wireless access and every salesman seems to have a Web-anywhere laptop gadget for wireless broadband, it's hard to imagine that Internet access could disappear overnight. But the election unrest in Iran is a stark reminder that Web access is indeed fragile -- and it's not hard for a determined government to curtail or cut off connection to the outside world.

Hmmmm ... Government and the rule of law only works while the vast majority of the population accepts it - political revolutions and civil wars do happen!

All the more reason for the huddled masses to learn flag semaphore [optical telegraph] for postPeak text-messaging. One Iranian waving flags from the top of a Tehran office building could quickly and accurately inform 100,000 protestors in the streets below. Recall my prior links on this subject: the Chappe brothers sent optical text-messages cross-country about 200mph. Sure, birds can 'Tweet', but when one bird optically signals danger by rapidly going airborne--the rest of the flock usually follows.

Obviously, the weak link is when a skilled sniper picks off the flag-signaler from up to 1.65 miles away, but that in itself, sends another 'optical message' to the crowd below.

I've been thinking about getting one of those over the air satellite receivers that picks up unencrypted satellite from other countries. It would be good to be able to get news from overseas in case everything domestic is cut off or "edited."

""It would be good to be able to get news from overseas in case everything domestic is cut off or "edited.""

Why, would everything domestic be cut off or edited?? Are you expecting some visitors from outer space??

I would believe he means that the president to declare some sort of emergency and take over the internet (see Rockefella-Snowe Senate Bill) to stop any opposition discourse ... kinda like Iran just did with their election and subsequent communication outrage. If a mass of people with torches and ropes descends on Washington or New York none of TPTB would want the rest of the country to know. Mainstream media would be playing Lawrence Welk music only for weeks on end. If that doesn’t make you shut off the TV, nothing will.

I think Iran is demonstrating how robust the internet is rather than how fragile.

The MSM has been shut down and the Iranian government has attempted to shut down the internet yet the news continues to reach the rest of the world. Apparently young Iranians are very fond of their social media and refuse to give it up no matter what. I have disregarded Twitter and Facebook and the rest as incomprehensible trivia but now they are, surprisingly, serving an important social function. Hackers around the world are helping set up alternative routings to get past the government censors. See Huffington Post live blogging. It seems like the attempts at internet censorship have made the young Iranians even more angry and more determined to get their messages out to the rest of the world. I can't recall another national crisis on the other side of the globe that I have felt so closely in touch with.

I'm thinking the internet has become more indispensable than cars.

From the linked interview with Elon Musk:

Gasoline "should probably be $10" per gallon, said onetime PayPal co-founder Musk, who is also attempting to make sending satellites into space cheaper with a start-up called SpaceX. "I'm not paying for the true cost of gasoline at the pump...since nobody's explicitly paying for the CO2 capacity of the oceans and atmospheres, it's getting consumed.

A little perspective on this seems to be in order. An ICE car emits 19 lbs CO2/gallon consumed. If gasoline is $2.50/gallon now, he implies a carbon tax of around $790/ton ($7.50/gallon / 19 lbs/gallon * 2000 lbs/ton) to get us to $10/gallon.

Gas prices may need to be much higher, but CO2 is only one reason rather than the sole reason.

Agreed, and gas prices in Europe seem to be $6 to $8 dollars a gallon without any carbon tax.

Meanwhile in the US, roads in towns and cities are largely funded by property tax, sales tax, and income taxes. Gas taxes pay for most Federal roads and some State highways (although my state Colorado takes a big chunk of state income tax revenue for state roads too).

If the road users directly paid those costs in the US, rather than having homeowners, income-generators, and retail customers subsidize roads whether they drive or not, gas prices would be much closer to $10 gallon ( you can find plenty of varied estimates of the "real cost" on the web, depending on boundary assumptions).

An ICE car emits 19 lbs CO2/gallon consumed.

This number doesn't look right. A gallon of gasoline doesn't weigh anywhere near 19 lbs.

An ICE car inhales past the air filter a huge volume of mass to burn a gallon of gasoline.

Hmm -- yeap this is the case. One gallon is about 6 lbs. The weight is mostly dominated by Carbon (amu=12). The ratio of mass of CO2/C is about 3.6 -- so the order of 20 lbs of CO2 is reasonable.

You're right--it looks wrong because (I think) it's more like 20 pounds.

The reason it's more than the weight of a gallon of gasoline is that every C atom from the gasoline winds up combining with two O atoms from the incoming air (i.e. not part of the weight of the original gallon of fuel) to make the CO2.

Either that, or it's gremlins.

Sounds to me like more comparing things that are different. How exactly does one weigh CO2? Isn't it part of the atmosphere? It weighs nothing when placed on a scale. What we are talking about are two different things: the weight of a gallon of gasoline in pounds and the atomic weight of CO2.

And it wasn't all gasoline's fault. It's mostly evil oxygen's fault that is likes gasoline so much. Carbon isn't all bad. Plants love it. And they wouldn't be able to store solar energy without it.

The whole argument is pointless anyway since gasoline is one of the cleaner burning fuels. So clean in fact that it is the standard by which biofuels are judged according to the EPA and California regulators.

It is so clean that it is beyond questioning and ethanol for example must have a lower total carbon footprint than gasoline. As for the total carbon footprint of gasoline, who cares?

Yes, one should speak of "mass" to be precise. But here in the US, we spurn concepts such as this along with metric units.

But CO2 does have weight, as even individual molecules are affected by gravity. And that weight is greater than that for other atmospheric molecules (O2, N2). Its just that turbulence is sufficient to toss a CO2 molecule up rather high, essentially mixing the atmosphere.

Try filling a balloon with CO2 vs. one with air.

yes a lb mole of co2 weighs 44lbs and a mole of ideal (or not so ideal gas at atmoshperic pressure) occupies 379 scf. so the density of co2 is 44/379 = 0.116 lbs/scf. and if the atmosphere was pure co2, the sealevel atmoshperic pressure would be about, oh lessee..........(44/29)*15....... about 23psi.

Isn't it part of the atmosphere?

387 parts per million and counting, baby!

The whole argument is pointless anyway since gasoline is one of the cleaner burning fuels.

But clean burning gasoline produces CO2 just like dirty burning gasoline.

As for the total carbon footprint of gasoline, who cares?

You raise a good question here: who cares?
I guess I am hoping religious groups start to care.
Because our response to the issue is essentially spiritual
rather than political or scientific or economic.


Your wife might wiegh 120 on a scale besise the swimming pool but if you put the scale in the water and she submerges herself and sits on it,she will only about ten or fifteen pounds.Co2 is so light that a small container of gaseous C02 it barely registers more than the container wieght on a scale but it does have wieght.

Now as to the carbon footprint of gasoline,quite a few people happen to believe that the world is gradually getting warmer,and that the primary reason is the rising concentration of co2 in the air.

It is a demonstrated fact that co2 in the air is an insulator.It is a demonstrated fact that the co2 concentration is rising.Now as far as I am concerned personally,I do believe the case has been made,but there ARE some legit scientists out there who disagree.Not a hell of a lot though.

Now if the folks who believe in global warming turn out to be right,your great grand children may be growing winter vegetables on your corn land,if there is enough water available.

It doesn't look right, probably because we forget about the oxygen. Gasoline is carbon and hydrogen (mostly). When you burn it, the carbon and hydrogen join with oxygen to form CO2 and H2O (mostly). So, the extra weight comes from the oxygen.

EPA Website

I was surprised too.

best article i have read in a long time

De-Dollarization: Dismantling America’s Financial-Military Empire
The Yekaterinburg Turning Point

by Prof. Michael Hudson

It is a good article, but Hudson fails to mention that this was an inside job-an analogy would be the USA as ENRON, with the most powerful Americans as Lay, Skilling and Fastow. These foreign governments are in the role of outside investors ready to dump the stock as the internal fraud becomes more apparent.

Americans are the ENRON employees and retirees-Obama is the entertainment hired for the summer picnic.

More too stupid to survive stuff:

Chrysler restarts with the Viper

The factory that makes the Dodge Viper sports car is the first to reopen after bankruptcy.
The Viper has a 600 horsepower V-10 engine and a price tag that starts at about $90,000.

I wish the current administration would use those to drive of a cliff rather then take the entire world economy...

It's the only vehicle that they can sell for a profit

Triff ..

From JHKs weekly posting: "The tracks are still there, waiting to be fixed." A dry understatement if I ever read one. Among the major subsets of all that railfan/trainspotter porn out there on the web is one to do with bad track. The link below is just a single example of the issue. Going by the comments this kind of thing is not particularly unusual and shows why we cannot just let passenger equipment loose on existing freight lines. Even if such lines had the room and the control systems in place they need tons of work.


The way the track lifts and drops in this movie actually has a nice kind of relaxing effect, like watching waves on the ocean.

Here in the northeast, the trend is "rail to trail." The tracks are torn up, and replaced with trails for walkers, bikers, and equestrians.

...and in part that reflects the unmentionable issue that oftentimes, however useful the old rails might have been in 1880, they are now utterly irrelevant to people's living patterns. Like it or not, the landscape has been reshaped by highways and massive population growth and shifts. Even if the future turns out something like the past, it need not mimic the past so precisely that the old rails happen once again to become useful where they are - no matter how much some environmental, social, and urbanist writers choose to wallow in nostalgia. If people want trains again, some new rails may be needed.

A valid point if we were actually going to do rail again, but we aren't. As amazing as it seems, we will simply do nothing - no choice of rail vs. other ideas, rather we will simply sit and do nothing until we are too broke to do any major infrastructure projects (we are probably there now). I'm sure that someday a rail system may be built up again, and in places it will need new rails in new beds, but it will be a long time in coming.

This is pretty much my opinion of all of the mitigation strategies discussed here - we will do none of it. A few enlightened, impassioned individuals will run around screaming "Wake-up!", suggesting great ideas that would truly help - and be totally ignored. There will be no riots, no revolution - people will starve to death in the driver's seat of their out-of-fuel SUVs, wondering why their stomach hurts and who will win on Idol.

This doesn't even sound like Sarcanol..

Sorry if you feel this way. I believe we will do TOO LITTLE of it until the very last minute, as usual, and then make a big heroic plunge. As with the 'Greatest Generation', the disaster of Hitler could have been averted in a dozen ways, but it would have put a 'chilling effect' on our business priorities, and the 'Adventurous Way' that we did it was far more suited to Hollywood's future business opportunities.

Amundsen: Adventure is just bad planning.

Anyway, we've got some new rail connections going in in Maine, and I think it will be followed by more. As Mr. Andrews said of his Titanic's doom, 'Tis a mathmatical certainty'. You can ignore physics for a while.. but eventually it finds you again.

I thought there was some rule about not using Adolf Hitler's name to justify every lamebrained idea.

Yes, but that's only for Lame-brained ideas.

It was only partially Sarcanol - waiting until the last moment (or after) does not always work, especially given the simultaneous crises we face and how much wealth we've just transferred to the already very rich. It is already the last minute, and no sign of anything.

I know, I know..

I'm just sayin' it's been our pattern before, and we've kind of 'just gotten away with it'.. who knows how it'll go? We seem to be a suspense-driven people..

especially given the simultaneous crises we face and how much wealth we've just transferred to the already very rich.

Yeah, we have just transferred wealth to the very rich in the same way that someone who is held up at gun point voluntarily donates his wallet to the person holding the gun. It is indeed the rare pissed off victim who fights back and of those that do even fewer manage to retrieve their wallets and remain unscathed.

The "rail to trail" trend in the US will only brings us back to the Tlameme backpacking scheme that much sooner, with severe cascading blowbacks. Europe seems to be moving towards keeping the abandoned tracks, but encouraging draisines:

Draisine fun - railbike action [0:11 seconds]

Photo of Easter Bunnies pedaling away in Europe
SpiderWebRiding anyone? Or are 'Murkans too fat & lazy to move early into this proactive direction? They will certainly get fit very fast moving firewood very long distances on their heads:

she looks like she wants to kick the photographer's ass, but she already knows that he is not about to help her move the heavy firewood load for the remainder of the trip..

In the last couple of years, this has become increasingly peppered with 'Rails AND Trails' proposals.. at least in Maine.

Hello Jokuhl,

Good for Maine! My Asphaltistan stupidly built 200+ golf courses so we could waste Lots of water, then burn Lots of fuel negotiating the miles of paved cul-de-sacs the long way around them.

We do have some disused trackage in Portland, and I keep toying with outriggers that I could clomp onto my bike and try a test-ride.

Did you like my 'Solar LEGOS' idea up there? I could snap some of them onto my LEGO Wheelbarrow and be a Stylin' EarthMarine!



Not long ago I watched over weeks as crews replaced some track. About 3 miles of it.

It took a huge number of workers, a huge number of various large pieces of equipment and a very very long time.

Of course the trains had to keep running and be coordinated yet the time span was unreal.

They had machines that analyzed the rail/tracks,ones that scraped the road bed, one that carried rail, and so on and on and on.

This was extremely work intensive and I would assume used a large amount of energy.

In fact they are always working on the rails here. Always. And in various places around about. Replacing crossings it a lot of it.

When you sit by a crossing and note the rails heaving and shifting about you can get a bit nervous as the consist goes by with 3 or 4 engines in tandem.

I find it fun to watch but its like watching syrup run off a plate. So you gander a bit and go on. This can last for days,and weeks.


Judging by the lack of response to Felipe Calderon's blitherings in Veracruz, I can infer that nobody here takes him the least seriously. I wonder what Obrador would be doing now if he had officially won instead of just, in all probability, having received the most votes.

As I see it, events are now driving the system and all the putative 'leaders' can do is follow along and muddle through. Whatever our ails are, the time to have addressed them is long past and we will live through the consequences of inaction.

Mexico could have produced Cantarell at a fraction of the pace they did but now it's over. The bizarre aspect is that they are still exporting despite the steepness of the decline. The good news is that they have solar and no need for heating. Donkey time again.

Parking tickets - in their own driveways

TOLEDO — Residents of Toledo are complaining that they received $25 tickets for parking their vehicles in their own driveways.

Mayor Carty Finkbeiner says he stands by the citations handed out last week by the Division of Streets, Bridges and Harbor. He says the tickets were issued under a city law against parking on unpaved surfaces, including gravel driveways.

During a news conference Monday, Finkbeiner ignored a reporter's question of whether the crackdown and fines were related to the city's budget crisis.

Been there, done that. Years ago in my Asphaltistan, I was cited for parking a camper on dirt next to the driveway--mixed and poured lots of concrete to widen the driveway to get the gov off my case. Such is life...

With the economy is tattered and city budget in a crunch -- they will do everything to get the money to keep the machine running.

Here where I live -- a lot more traffic cameras were set up. People are getting tickets for not stopping "long enough" when making a right turn. The traffic judge was saying -- "where else do you think we can get the money?" -- something to the effect of that. There is rumor that at the end of the month (I guess just before payday) -- the camera system is tuned up to give more tickets out.

Not sure what the functions of government anymore -- wonder if they are there to just exist or to help us.

I will take the arrows for this I'm sure...but in ABQ, the red-light camera systems have tamed the unruly idiots who spent 7-10 seconds running red lights, especially in left-hand turn lanes. Used to be the entire traffic stack felt it had the 'right' to go and not wait any more, even if the light had been red for a while.

I love it, since I have been a calm, tame driver for some time now.

The only thing I don't like about the red light camera system is that the city government reduced the length of time the green arrows are lit...that is downright underhanded...but I adapt and stop and avoid the tickets. So far no one has rear-ended me, but my luck probably won't hold...

Mish noted a few weeks ago that Dallas county, Texas gets HALF its revenue from tickets and fees:


10% of Texans have an outstanding arrest warrant out.

Police are the new tax assessors.

Remember the 2000 Bumper Sticker? "No New Texans"

...and every time I see another one like this, my eyes roll at all the folks here who want to give government even more power, which, like this, will be used to harass citizens arbitrarily...didn't Lord Acton say, "power tends to corrupt, and absolute power corrupts absolutely"?...guess nobody was listening...

I think people understand this. They just think the alternative is worse.

The one alternative I keep getting drawn to is voting Libertarian. I love the party platform, but most candidates seem rather un-electable. The last Libertarian presidential nominee was a joke.

The hole is too deep already, we need to stop digging. Perhaps less government is better government?

Unfortunately, I would rate the US government seriously shrinking at less of a chance than laser-propelled, space-based, microwave-transmitted, solar-power. Ain't gonna happen unless TSHTF...

"Perhaps less government is better government?"

The issues of quality and quantity are separate ones. The solution to poor leadership isn't just making a poor SMALL system. As it is, the corporate influence is too much for the existing government to say no to.

The quality of our governing structures needs to have a clear say in what industry is allowed to do. Antitrust needs its teeth back, 'Personhood' needs to go. The system is allowing the rich and poor to get farther and farther away on the wealth scale. It, like energy will not hold in this situation.. do we make conscious choices for how to disassemble and rebuild it.. or just let it fall down and go boom?

I love the party platform, but most candidates seem rather un-electable.

Back in the 'day A party got advanced by what it could deliver to the voters. Machine politics.

For the Libertarian view to work there needs to be a working court system. To show the Libs can deliver - having a system of court monitors would seem to be a natural.

Yet - ask about the topic..

I just googled the Libertarian party platform and it is so ridiculously unrealistic that I am not surprised the candidates are unelectable.

"People should not be forced to sacrifice their lives and property for the benefit of others. They should be left free by government to deal with one another as free traders; and the resultant economic system, the only one compatible with the protection of individual rights, is the free market."

No society on earth operates this way, and I doubt that one ever will. If funding law enforcement, emergency services, public health, roads, bridges, sewers, schools, etc., by taxes is considered a "sacrifice of property for the benefit of others" and banned, civilization would crumble. The "Libertarian" regime would quickly collapse because it would have no means of funding its' operations, and would be quickly replaced by a mafia or militia that had no ridiculous theories about operating government with no source of income, but simply takes what it needs at the point of a gun. With no taxes, the "Libertarian" government would have no resources with which to defend itself.

Oh well, as ridiculous as it is, the Libertarian Party serves an important purpose, by siphoning off votes from the Republicans, so I hope it never dies.

This is the usual right-wing circular refrain. We don't believe in government, so we don't fund government, or make a serious effort to run government properly. Now look the government is mess, so the only solution is less government, and then the circle begins again.

But this ignores the fact that there are plenty of places on the planet that fund their government better than Texas does, and operate their governments better than Texas does. So the lesson I take is don't run your government like the anti-government idiots in Texas, not that government cannot function, because there are plenty of existence proofs that competent and non-corrupt government is possible.

My experience is that governments in the Northeastern US and Europe work fine, and do not need to depend on parking tickets because they have a reasonable progressive tax structure. And yes they have both more power, more competence, and less corruption than the "smaller government" in Texas.

The other issue with "power tends to corrupt, and absolute power corrupts absolutely" is that government is the only practical check on corporate power. So without a strong government, corporate oligarchies and monopolies have absolute power and soon are absolutely corrupt, as plenty of history shows (the anti-trust acts were not created for theoretical reasons but for the practical reason that monopolies such as the railroads and the utilities were oppressing and exploiting the public {kind of like the insurance companies today}).

Oil prices and the economic recession of 2007-08
My paper concludes that the economic downturn of 2007-08 should be added to the list of recessions to which oil prices appear to have made a material contribution."

Sad that the author (James D. Hamilton) says nothing about the current rise and what will happen the next time around. There are plenty of financial bubbles still waiting to be deflated, just come another shock.

I've written this before, but I'll repeat it because it's important : I think the oil price oscillation yo-yo with increasing amplitude has been activated.

Work-Sharing May Help Companies Avoid Layoffs

BERLIN, Conn. — As companies struggle to make it from recession to recovery, many are turning to a novel but unheralded program that cuts their costs while sparing their workers’ jobs.

Under the program, known as work-sharing, employers reduce their workers’ weekly hours and pay, often by 20 or 40 percent, and then states make up some of the lost wages, usually half, from their unemployment funds.

Student Debt, Fool’s Gold?

In our discussion about the rising burden of student loans, we received numerous comments from readers who took on a lot of debt to pay for their education. Some found they simply couldn’t afford to repay the loans with the jobs they found after college. Others said their debts determined their life choices. Still others wondered if the college experience was worth the financial burden they’ll carry for decades afterward. Here are excerpts from their comments.

It's all just a waiting game at this point for the axe to fall on the economy. Those degrees are as valuable as an Economics degree from Stalingrad University, in other words - worthless. The politicians and banksters have IOU'd the future of America and large parts of the world.

Most of these graduates 20-30 years down the line will either have to be farming or be toast. Bleakness can not even begin to describe the future at this point :(

I think you're right about that "farming or toast" idea....yet the transition to that point still means some other employment along the way before the thirty years is up. And when you're competing for a job it's still easier to get one if you have a degree and that will be true for some time to come.

In short, if you're competing in the job market now good luck trying to get a job without a degree.

But gradually more and more people will manage to make a living without a degree.

THOMAS: Bulldozing American cities

The Obama administration reportedly is considering whether to broaden an experimental "shrink to survive" program in Flint, Mich., - one of the nation's poorest cities. The proposal is to raze districts within some cities and towns while bulldozing others in their entirety. Land would be returned to its pre-construction state. Local politicians in Flint think the city must contract by as much as 40 percent. They want to focus on the population that remains and cut services to save money.


A sign of the times.

Off topic but anyway.

Last year I noticed no bees in my garden. Today on one tree - sorry I don't know the species - too many to count. Are the bees recovering in the UK?

Below a new publication by the Uppsala Hydrocarbon Depletion Study Group:

"How reasonable are oil production scenarios from public agencies?"


It seems to be the opinion here with statistics to back it up that the peak production year has passed. When faced with beautiful assumptions and formulae the thought keeps coming back "GIGO" and Dilbert is a documentary.

One assumption is that KSA can ship millions of barrels of oil each year and still not deplete their reserves or that somewhere near the formation of OPEC many OPEC country's reserves jumped several percent with no new discoveries. Quotas are based on reserves. Hello!

Some places are like ...

Ruler; "If you tell me we have less oil than I say, we will kill you."

Analyst; "No sweat Ace, you may even have more than that!"

Kinda like body count from Vietnam (sorry, that was before many of you were born). There are other instances nearby like "The sub-prime mortgages will not be a problem." While knowing full well he should have added "until next year".

Another thing I have learned since college ... the further out from tomorrow you forecast, the more likely it is to be just simple ego enhancing BS.

The bottom line to all this yak, yak, yak is a simple question. How big is your garden?

This report is an excellent analysis by Aleklett et al. One of the main conclusions is that "An imminent peak cannot be ruled out."

I responded here it actually has my prediction but the authors don't believe it :)

But you need to follow my long train of thought to explain why its true and how they made a slight mistake.


Hugely different answer but its a theoretically small mistake.