Drumbeat: September 4, 2009

China and the Buzz of a Pending Bank Default

Let’s put the pieces together here. Just this past weekend China announced that State Owned Enterprises (SOEs) will be allowed to default on commodity derivative contracts. Think of that. China has given the green light and authorized the defaulting on commodity derivative contracts.

...Some of the State Owned Enterprises that stated their potential intentions to default were Air China. China Eastern and Cosco. Mainly in part because they took major derivatives losses over the past year but also, concerns are arising that the derivatives that they were sold by these foreign institutions are garbage, underwater and may never see the light of day. So why continue to pay for them? So the concern in the financial world is that holders of these losing products may just walk away, not unlike a home owner with a $600,000 mortgage on a home valued at $475,000 deciding to just hand in their keys. However, read on...this has nothing to do with mortgage backed products. This time, the concern may be over Oil.

Contango And Inventory: Clues To Oil’s Trend

Because most of our oil supply resides below ground (or under the ocean), oil prices historically reflect shortage. More often than not, the oil price curve is inverted, or "backwardated." Backwardation occurs when futures are priced lower than the spot price. Since 1985, in fact, the average quarterly discount from the nearby NYMEX West Texas Intermediate (WTI) crude oil contract is 16 cents a barrel.

Why is this? Think of the ownership of oil reserves as granting a sort of call option to a producer. When futures are priced higher than spot prices—a condition called "contango"—a producer has the option of leaving oil in place, rather than bearing the costs of extraction and above-ground storage. If the majority of producers withhold oil, though, shortage is created, which in turn causes the spot or nearby delivery price to rise.

Thought of this way, you could say that weak backwardation is a necessary condition to stimulate current production.

Peak oil or is it that oil has peaked

Peak oil or is it that oil has peaked. What a week in energy as history was made in more ways than one. Oh sure, you can focus on prices and economic fears in a week where risk aversion became the flavor of the day, yet if you do that, you might miss some of the more interesting stories that surround the complex . This was a week we saw the good side of high energy prices and how the quest for energy and profits inspired minds to take steps to solve some of the greatest challenges facing the energy industry today.

ConocoPhillips May Buy PDVSA’s Half of Sweeny Unit

(Bloomberg) -- ConocoPhillips, which left Venezuela after assets were seized in 2007, exercised an option to buy Petroleos de Venezuela SA’s stake in a U.S. coking unit after accusing the state oil company of defaulting on a supply accord.

ConocoPhillips, based in Houston, plans to take full control of the unit at its Sweeny, Texas, refinery at a price set under the companies’ partnership agreement, Rich Johnson, a ConocoPhillips spokesman, said in an e-mailed response to questions today. He declined to state the price.

Ecuadorean judge recuses himself from Chevron case

QUITO (Reuters) - An Ecuadorean judge presiding over a $27 billion lawsuit against Chevron Corp recused himself from the case on Friday after state prosecutors opened an investigation into accusations of bribery and misconduct.

Solar panels to boost property prices

The survey of 2,700 UK adults, the full results of which are to be released later today, found that half of respondents are interested in finding out whether their home is suitable for renewable energy systems, such as solar panels or micro wind turbines.

Meanwhile, over a third said they would be willing to pay more for a house where some of the energy was supplied by renewable sources, suggesting that those investing in microgeneration systems will be able to recoup some of the cost through increased house prices.

ANALYSIS - After record August, can Russia pump more oil in 2009?

LONDON/MOSCOW (Reuters) - Official opinion conflicts with analysts' views over whether production from Russia's new oil fields can replace the fall from older deposits after record August output.

Analysts say the recent uptick might not be enough to offset stagnating western Siberia deposits, and it could be decades before sufficient infrastructure is in place to exploit new reserves in eastern Siberia.

"The real question is going to be how steep the decline comes...and what steps the Russian government is willing to take to improve investment in those fields," said senior energy analyst Julian Lee at the Centre for Global Energy Studies.

Mexico energy ministry unhappy with Pemex results

MEXICO CITY, Sept 4 (Reuters) - Mexico's energy minister said on Friday she is concerned about state-run oil company Pemex's poor financial results and the company's board is reviewing possible actions to halt the decline.

The minister's comments about Pemex, led by Chief Executive Officer Jesus Reyes Heroles, come as President Felipe Calderon is promising a shake-up in his administration.

"Unfortunately, the financial situation has not improved as it should be improving and we are analyzing what are the things we can do to reverse the situation," Energy Minster Georgina Kessel said in an interview with broadcaster Televisa.

U.S. natgas rig count climbs for a seventh week

NEW YORK (Reuters) - The number of rigs drilling for natural gas in the United States rose two this week to 701, the seventh straight weekly gain after sinking in mid-July to the lowest level in more than seven years, according to a report on Friday by Baker Hughes in Houston.

U.S. natural gas drilling rigs are still down sharply since peaking above 1,600 September last year, and now stand at 885 rigs below the same week last year.

Shell to cut jobs in core exploration unit-website

LONDON (Reuters) - Royal Dutch Shell Plc (RDSa.L) is planning job cuts of around 15 percent in its core exploration and production unit, a Shell protest website reported on Friday, citing sources inside the oil major.

An announcement on a restructuring of the unit, which generates most of Shell's profit, is due on Monday, website Royaldutchshellplc.com said. Shell declined comment.

Oil data suggests no need for OPEC output change

LONDON/DUBAI -- Oil demand and supply data reviewed by a panel of OPEC economists before the group's Sept. 9 gathering indicate no need for it to change output policy, two OPEC delegates said on Friday.

Advisers to Obama Divided on Size of Afghan Force

WASHINGTON — The military’s anticipated request for more troops to combat the insurgency in Afghanistan has divided senior advisers to President Obama as they try to determine the proper size and mission of the American effort there, officials said Thursday.

New Solutions for Oil’s ‘Produced Water’

“Produced water,” as it is known in the oil industry, is briny fluid trapped in the rock of oil reservoirs. It is by far the largest toxic byproduct produced by the oil industry, and in addition to salt, it is often loaded with chemicals, residual oil and heavy metals.

As oil fields age, water production increases. By one estimate, the volume of water produced by oil fields worldwide exceeds petroleum by a factor of three. According to Department of Energy figures, at the most “mature” oil fields in the United States, the amount of water extracted may exceed oil by more than 50 times.

BP Finds 'Giant' Oil Source Deep Under Gulf of Mexico

Bob MacKnight, a senior consultant with the Washington consulting firm PFC Energy, cautioned that while the big new discoveries were welcome news, they might not boost overall U.S. oil output because other Gulf of Mexico fields are expected to decline. "We really need this," he said. "After 2012, given current developments, we will see production start to decline. Without continued discoveries . . . that decline could be steep."

Mexico's Calderon: BP's Deepwater Find A Wake-Up Call

Mexico needs more reforms to rapidly tackle the deep waters of the Gulf of Mexico and shore up plummeting domestic oil production, President Felipe Calderon said Thursday.

Calderon said BP PLC's giant deepwater oil discovery in the Tiber field, announced Wednesday, should serve as a wake-up call for Mexico. State-run Petroleos Mexicanos is legally blocked from teaming up with foreign oil companies that have more experience in the area.

"I hope this sign from the Gulf of Mexico tells us something," said Calderon in a radio interview. "It's very likely we have similar [oil] wealth, but we don't have, whether or not you want to admit it, the technology or the organizational and operational capacity to do it by ourselves."

BP’s Tiber Find: Fodder for Oil Optimists or Pessimists?

What’s really interesting about BP’s “giant” Tiber discovery in the Gulf of Mexico is how it provides ammunition for both people optimistic about the future of the oil business and those that are a lot gloomier.

Petrobras: Still a Sure Thing?

Proving my point at how little is stable over any long term period of time - we have had some rumblings out of Brazil of late which could take the long term shine off of Petrobras. Some of the language is downright "Putin-like". This despite the fact Brazil is moving into the top 10 world's producers of black gold.

Nigeria produces 2.3 mb/d of crude oil

GROUP Managing Director of the Nigerian National Petroleum Corporation (NNPC) Mohammed Sanusi Barkindo said on Tuesday that the country now produces 2.3 million barrels of crude oil per day against the Organization of Petroleum Exporting Country’s (OPEC) figure of about 1.6 barrel per day.

...He attributed the increase in crude oil production by the country to the Nigerian federal government’s amnesty program for militants in the Niger Delta.

Pemex to Boost Power Supplies to Largest Oil Field

Petroleos Mexicanos will spend about $120 million to increase electricity supplies to its biggest oil field, Pemex said Thursday.

Mideast fuel oil up on demand and tight supply

DUBAI: Middle East fuel oil premiums rose about 5 percent as traders continued to grapple with strong regional summer and marine fuels demand, amid tight supplies. Premiums were pegged at about $10 a tonne, up $1 from the previous week.

“The market here is tight because of a number of reasons, you have Iran limiting their spot sales and then you have usual summer demand,” a trader said. “That has given the market a momentum for the upside, I’m not sure if we’ve hit the peak possibly could go higher.”

Blackout fears after power station strikes loom over 'British jobs for British workers' row

Britain risks fuel shortages and power cuts following a decision by workers at some of the country's biggest oil refineries and power stations to strike.

The action is the latest offensive by British workers who are angry that employers have opted to bus in cheap foreign labour rather than use locals.

Nationwide blackout hits DomRep, 10 detained

Authorities in the Dominican Republic have detained 10 people for questioning following a countrywide blackout.

Power company superintendent Francisco Mendez said Thursday that the suspects are workers who were found in front of a power plant that failed.

...Protesters who demand improved service have clashed with police in recent months.

Libya’s Top Oil Official Ghanem Offers to Resign, MEES Reports

(Bloomberg) -- Shokri Ghanem tendered his resignation as chairman of Libya’s National Oil Corp., the Middle East Economic Survey reported, citing a person in Tripoli it didn’t identify.

Holiday weekend to see spike in motorists

Americans will get behind the wheel this Labor Day weekend for what AAA forecasts will be the biggest travel holiday of the year — another sign of economic recovery.

Even though the holiday is late this year and many students are back in school, more miles will be driven than over the traditionally busier July 4th holiday, the auto club forecasts.

…for Jeff Rubin

The central premise of the book is that triple digit oil prices will reverse globalization and bring about the reemergence of local economies.

When suddenly distance costs money, it will no longer make any economic sense to produce something in one end of the world and sell it at the other end. Whether you are moving those goods by air, ship, train or truck you are burning lots and lots of oil. And very soon the savings on labour costs from importing goods around the world will be dwarfed by the transport costs of moving those goods around. Hence many industries that have long disappeared in our economy may soon be returning home.

Mondragón Worker-Cooperatives Decide How to Ride Out a Downturn

Here’s how it played out when one of the Mondragón cooperatives fell on hard times. The worker/owners and the managers met to review their options. After three days of meetings, the worker/owners agreed that 20 percent of the workforce would leave their jobs for a year, during which they would continue to receive 80 percent of their pay and, if they wished, free training for other work. This group would be chosen by lottery, and if the company was still in trouble a year later, the first group would return to work and a second would take a year off.

The result? The solution worked and the company thrives to this day.

Lester R. Brown: How on Earth Can We Feed 8 Billion People?

How China ended its dependence on food aid, almost overnight, and become the world's third largest food aid donor.

Solving SA'S Food Crunch

High food prices are being investigated. Land reform as a means to decrease rural poverty and increase food security through farming is not working. Are South Africans under threat? What is government's response?

How to Grow Democracy

"Food democracy" has become the rallying cry of an emerging grassroots movement. It certainly sounds good--but what exactly does it mean? "Eating local," as more and more people strive to do, is part of it. At the most basic level, though, food democracy requires a transformation of the food industry, so that workers and consumers can exercise control over what they produce and eat. As the Small Planet Institute defines it, "Food democracy means the right of all to an essential of life--safe, nutritious food. It also suggests fair access to land to grow food and a fair return for those who labor to produce it. Food democracy concerns itself with the future as well: It implies economic rules that encourage communities to safeguard the soil, water, and wildlife on which all our lives and futures depend." The vision is compelling, but how can it be made concrete? What are the obstacles to democratizing the food system, and how can they be overcome? For this forum, we asked five leading figures of this country's food movement to reflect on how food democracy can be achieved, here and now. Their responses follow.

My Introduction to ‘Local Food: how to make it happen in your community’

September 17th sees the release of the first in a series of ‘how to’ books published under the imprint of ‘Transition Books’ (due soon, guides to money, working with local government and cities). Entitled ‘Local Food: how to make it happen in your community’ it is the work mainly of Tamzin Pinkerton (who was recently interviewed here at Transition Culture) with bits from me, and it is really quite brilliant. Rather than being an intellectual exercise, it is really about the nitty gritty of setting up local food projects, drawing largely (but by no means exclusively) from the successes and failures of Transition initiatives around the world. It is packed with examples, tips, links, ideas and inspiration for rebuilding food resilience where you live.

Johnson announces awards for 'low carbon zones'

Ten London boroughs have won funding to develop "low carbon zones" with schemes ranging from "energy doctors" to solar panels for schools and electric car charging points, London Mayor Boris Johnson said.

Each borough will be awarded at least £200,000 to pioneer energy efficiency and carbon reduction measures in the capital.

Supertankers May Halt Oil Trading as Rates Drop, Frontline Says

(Bloomberg) -- Supertanker owners may start refusing cargoes within the next three months unless rates return to a profitable level, said Frontline Ltd., the biggest operator of the ships which carry almost half the world’s oil.

Ship owners’ income after fuel costs from shipping Middle East crude is a negative $703 a day, according to the London- based Baltic Exchange. Rates have been below operating costs since July. Should the losses persist, some owners may choose to idle their ships, according to Jens Martin Jensen, Singapore- based chief executive officer of Frontline’s management unit.

“If you see another quarter, then I think owners have to do something,” Jensen said by phone today. “We are subsidizing oil companies.”

Saudi prince urges U.S. to recognize oil dependency

MILAN (Reuters) – The United States has no alternative to oil to meet its massive energy needs and should recognize its energy interdependence with the Middle East, Saudi Arabia's Prince Turki al-Faisal wrote in an article on Friday.

U.S. President Barack Obama has been pushing to boost green energy which cuts emissions of heat-trapping gases and reduces the use of fossil fuels. In his election campaign, Obama raised some potentially disturbing issues for the Saudis, such as ending dependence on Middle Eastern oil.

In the article translated into Italian and published by Italian newspaper Il Sole 24 Ore, Turki said energy independence was an unrealistic, groundless and harmful concept which was likely to re-emerge once economic recovery pushed oil prices up.

"There is no technology on the horizon which can replace oil to satisfy colossal needs of U.S. industry, transport and armed forces. Any future scenario will be characterized by mix of renewable and non-renewable energies whether you like it or not," Turki said.

(I would guess this article is the same or similar to the one he wrote for Foreign Policy.)

IEA to Cut 2030 Emissions Forecast on Recession

Bloomberg) -- The International Energy Agency plans to cut its forecast for carbon-dioxide emissions in 2030 after the recession slowed energy consumption and reduced pollution, Executive Director Nobuo Tanaka said today.

The projection “will have to be revised downward given stalled industrial activity amid the economic crisis,” said Nobuo Tanaka, 59, without giving details of how much the agency will trim the forecast. Tanaka will announce the findings at a United Nations climate summit in Bangkok on Oct. 6, he said in an interview in Tokyo today.

Crude Oil May Decline as Refiners Shut Units, Survey Shows

(Bloomberg) -- Crude oil futures may fall on speculation that demand from U.S. refineries will decline this month as units are shut for seasonal maintenance.

Seventeen of 34 analysts surveyed by Bloomberg News, or 50 percent, said futures will drop through Sept. 11. Eight respondents, or 24 percent, forecast that the market will rise and nine said prices will be little changed. Last week, 59 percent of analysts said oil would fall.

European Refiners to Idle More Capacity Than Usual in November

(Bloomberg) -- ConocoPhillips, the second-largest U.S. refiner, is among companies that plan to shut European plants for repairs in the next several months, helping to ease a record-large glut of fuels.

At least 659,000 barrels of oil a day, or 4.2 percent of Europe’s refining capacity, will be idled in October, according to data compiled by Bloomberg. Idled capacity in November will rise to a higher-than-usual 893,000 barrels a day because of maintenance, the data show.

Crude Oil Is on ‘Slippery Slope’ Toward $60: Technical Analysis

(Bloomberg) -- Crude oil is on a “slippery slope” after failing to break through resistance and is set to test support at $60.43 a barrel, according to technical analysis by Auerbach Grayson, a brokerage in New York.

The failure of October oil futures to breach $75.27, the June 11 high, has made crude vulnerable to “significant decline,” according to Richard Ross, a technical analyst at Auerbach Grayson. Futures dropped more than $7 since touching $75 a barrel on Aug. 25.

BP warned UK of risk in delayed Libya prisoner deal

LONDON (Reuters) – British oil major BP Plc told the UK government two years ago that slow progress in concluding a Prisoner Transfer Agreement with Libya threatened a multi-billion dollar exploration deal it was negotiating.

BP, Europe's second-largest oil company, said on Friday its advice did not refer specifically to the man convicted of the 1988 Lockerbie airliner bombing, whose release from a Scottish jail last month prompted criticism of Britain.

China police break up angry crowds near party HQ

The demonstrations are likely to further unnerve the Chinese leadership - already grappling with tens of thousands of increasingly large and violent protests every year - as it prepares for a nationwide celebration of 60 years of communist rule on Oct. 1.

The unrest shows how unsettled Urumqi remains despite continued high security since 197 people were killed in July in the worst communal violence to hit Xinjiang province in more than a decade. That rioting began when a protest by Muslim Uighurs spiraled out of control, and Uighurs attacked Han. Days later, Han vigilantes tore through Uighur neighborhoods to retaliate.

...Any trouble in Xinjiang is magnified by ethnic tensions. The Uighurs see Xinjiang as their homeland and resent the millions of Han Chinese who have poured into the region in recent decades, saying they have unfairly benefited from the strategically vital Central Asian region with significant oil and gas deposits.

Forest Oil shale gas discovery of 2007 back in the news

Thus in spite of the attractiveness of this addition to the many shale gas discoveries in the U.S. and Canada, price remains the problem and at under $3/million btu will retard development. Still, the world is awakening to the realization that shale gas is everywhere and it will be inexpensive for quite some long period of time, perhaps a decade. The focus today is lowering the extraction cost. If it can be reduced to less than $1/million btu, it will be a commercial fuel. What is needed now is an expanded effort to switch from coal with a high coefficient of pollution to natural gas with an extremely low coefficient. Once the market for natural gas is broadened enough to guarantee steady development, the worry about declining avails of crude oil will disappear. "Peak Oil" will be moot.

Shale gas scepticism, and shale gas enthusiasm

Simmons also talks about the EIA figures and says that with Barnett Shale, peak initial production “happens virtually when you come onstream”.

Meanwhile Stephen Holditch, head of the petroleum engineering department at Texas A&M University, told a conference that he believes there could be nine times as much technically recoverable gas in the US as is conventionally recoverable. This would equate to 32,560TCF in the US, he said, and that this 9x rule might apply to the rest of the world’s gas reserves, too.

The Big Question: Does BP's discovery of a giant new field prove we're not running out of oil?

On Wednesday, BP, the UK energy group, announced the discovery of a "giant oilfield" in the Gulf of Mexico that could open up a huge new frontier in oil exploration. It comes less than a week after Iran announced an even larger discovery of crude oil, and is the latest in a spate of finds over the past few years. Taken together, the discoveries have emboldened sceptics of the notion that oil will soon run out, and reignited the debate on an issue with huge implications for the environment, and geopolitics more broadly.

World's deepest well taps giant oil find in the U.S. Gulf of Mexico

HOUSTON (UPI) -- BP's announcement of a new giant oil field in the depths of the U.S. waters of the Gulf of Mexico and a series of other recent major finds offshore are setting the stage for geopolitical shifts in Central and South America but also raising key questions about the future map of world oil supplies, analysts said.

North Sea find validates Nexen strategy

Nexen Inc.'s discovery of a major oil pool in a tricky spot below the North Sea has helped validate the company's heavy exploration spending in an area that many believe has few petroleum gems left to discover.

John Licata: Nat Gas to Heat Up, Crude to Climb Back Toward Triple Digits

TER: Do you think we're going to be facing the downside of the peak oil before long?

JL: I think we'll again see triple-digit oil within the next two years. I've read all the theories on peak oil and they're fascinating; I think they're very credible when you consider a country like Mexico has said that in 2010 their production is going to drop off from, I believe, 2.6 to 2.5 million barrels a day. Their Cantarell Field in the Gulf of Mexico is drying up and that's one of the largest fields in the world. That should raise some eyebrows; maybe we don't have so much oil in the future.

Mexico May Emulate Petrobras as It Studies Changes to Oil Laws

(Bloomberg) -- Mexican Energy Minister Georgina Kessel said the government may seek to emulate Brazilian state-controlled oil company Petroleo Brasileiro SA as the country considers “all” potential changes to its oil industry.

Mexico must decide what steps taken by the Rio de Janeiro-based company it can adopt, Kessel, who’s also chairwoman of state-owned Petroleos Mexicanos, said yesterday in a telephone interview from Monterrey, Mexico. She’ll meet Mexican lawmakers “soon” to discuss potential changes to the law, she said.

Former CIA Official Urges Curbs on Oil Firms Supplying Iran

(Bloomberg) -- A former CIA director says companies that sell Iran refined petroleum products must be punished as the country gets closer to making a nuclear bomb.

“Any kind of dealing with companies such as Shell and Vitol, that are chiefly involved in sending gasoline and other refined petroleum products to Iran, should be cut off,” former Central Intelligence Agency Director James Woolsey said in a phone interview from Harwood, Maryland Sept. 2. He said sanctions at the moment are “watered down.” Iran hasn’t enough refining capacity and imports 40 percent of its gasoline needs.

Alaska gov. urges feds to allow offshore drilling

ANCHORAGE, Alaska – The federal government should allow offshore oil and gas drilling along Alaska's northernmost coastline, Alaska Gov. Sean Parnell said Thursday in a letter to Interior Secretary Ken Salazar.

Parnell called a responsible Outer Continental Shelf leasing program that respects Alaska Native concerns "vitally important to Alaska and the nation."

Prius top-selling car in Japan for 4th month

TOKYO – Toyota's hugely popular Prius ranked as Japan's best-selling car in August, keeping the top spot for the fourth consecutive month with the help of government subsidies and tax breaks, an auto industry group said Friday.

Audi Chief Calls Chevy Volt “A Car For Idiots”

Bring on the war of words. In a frank conversation with MSN writer Lawrence Ulrich, Audi of America President Johan de Nysschen has said that the Chevy Volt will fail and that anybody who buys the car is an idiot. Not only that, de Nysschen has lumped proponents of any type of electric car into a category of “intellectual elite who want to show what enlightened souls they are.”

Nuclear Energy Becomes Part of China-U.S. Talks, Official Says

(Bloomberg) -- Talks between the U.S. and China, the biggest producers of greenhouse gases, are evolving to include sharing expertise in nuclear-energy technology.

Atomic reactors, which discharge far fewer heat-trapping gases that conventional power plants, will become a “very important” part of the negotiations on energy and climate change, said David Sandalow, the U.S. Department of Energy’s assistant secretary for policy and international affairs.

American Power and the Fall of Modernity (Part III)

Global networks will continue, but only for those who manage to “make it” by the first decades of this early-21st century. Unable to aid the 60% left behind, humanity’s prosperous minority — whether they admit it or not — is increasingly looking to its own defense and preserving the integrity of a smaller system that is still viable. Globalization is now all about a minority living defensively within a seething non-state majority.

It's time to get serious about food security in Surrey

The problem here is twofold. First, British Columbians cannot grow nearly enough food within our own borders to feed ourselves. Second, the conversion of agricultural land goes hand-in-hand with the expansion of suburban sprawl.

Our vulnerability to food insecurity becomes a problem if we run into peak oil and food becomes extremely expensive to transport over long distances, or if an international crisis sparks the closure of borders, making it difficult to import food.

Federal agency approves plan for Gulf fish farming

NEW ORLEANS – President Barack Obama's administration on Thursday allowed fish farming in federal waters of the Gulf of Mexico, a move criticized by environmentalists fearful of pollution and threats to wild stocks.

Senator: Funding needed to cut high wildfire risk

LOS ANGELES – Sen. Barbara Boxer on Thursday urged the U.S. Forest Service to dedicate more money to reduce wildfire danger in high-risk areas before another blaze threatens homes and lives.

The massive wildfire burning north of Los Angeles is being fueled by dry, overgrown brush, and similar conditions exist across the Southwest.

Environmental groups sue to protect ribbon seals

ANCHORAGE, Alaska – Ribbon seals should be listed as threatened or endangered because global warming is quickly melting sea ice, which the seals depend on for several months each year, two environmental groups said in a lawsuit filed against the federal government in San Francisco Thursday.

A No-Carbon Payoff

Truthfully, when I said yes to this Woody Allen-meets-Walden affair, I didn't fully think through what it would mean to live with a toddler and a dog in a one-bedroom, ninth-floor Manhattan apartment using no elevators, no electricity, no disposable diapers, no food grown more than 250 miles from home, no TV, no takeout, no beauty products, and no washing machine. Oh yes, and no buying anything; for the next year I would shop my own closet.

Little did I know that a year after the project's completion the global financial system would implode, or that the era of high-impact living -- using one's house as an ATM, jetting off on a lark -- would come to a spectacular and cataclysmic end. And here's the strange and unpredictable twist: Going No Impact for a year turned out to be sublime preparation for the post-subprime life.

Fall colors fade in U.S. west as aspen trees die

SALMON, Idaho (Reuters) – The American West is losing its autumn colors as global warming begins to bite and there is far more at stake than iconic scenery.

Aspen, the white-barked trees with golden leaves that gave their name to the famed Colorado ski resort, have been dying off across the Rocky Mountain states. The die-off is puzzling but some foresters point to climate change.

Can Dirt Really Save Us From Global Warming?

This month the Senate is set to take up the climate and energy bill that Congress began work on last spring. One provision will likely set up a system to pay farmers for something called "no-till farming."

The concept: When crops are planted without tilling, the soil holds more carbon, which means less goes up into the atmosphere.

But scientists aren't sure no-till really sequesters carbon any better than conventional farming.

Group Advocates Geoengineering Solutions to Warming

The Copenhagen Consensus Center, a controversial Denmark-based think tank focused on the environment and international development, proposed Thursday that world leaders should focus on a geoengineered solution to climate change in the near term rather than mandating cuts in greenhouse gas emissions.

Farmers warned to get ready

RALEIGH -- Even if global temperatures rise slowly, climate change could slash the yields of some of the world's most important crops almost in half, according to a new study co-authored by an N.C. State University scientist.

The study, recently published online in Proceedings of the National Academy of Sciences, looked at three frequently used scenarios for global warming. It found that the average U.S. yields for corn, soybeans and cotton could plummet 30 percent to 46 percent by the end of the century under the slowest warming scenario, and 63 percent to 82 percent under the quickest.

"There are some caveats, but this is a real cause for concern," said Michael Roberts, an assistant professor of agricultural and resource economics at NCSU.

Long-term Cooling Trend In Arctic Abruptly Reverses, Signaling Potential For Sea Rise

ScienceDaily (Sep. 4, 2009) — Warming from greenhouse gases has trumped the Arctic's millennia-long natural cooling cycle, suggests new research. Although the Arctic has been receiving less energy from the summer sun for the past 8,000 years, Arctic summer temperatures began climbing in 1900 and accelerated after 1950.

...The new research shows the Arctic was cooling from A.D. 1 until 1900, as expected. However, the Arctic began warming around 1900, according to both the natural archives and the instrumental records.

"The amount of energy we're getting from the sun in the 20th century continued to go down, but the temperature went up higher than anything we've seen in the last 2,000 years," said team member Nicholas P. McKay of The University of Arizona in Tucson.

Re: Prius and Volt articles, up top:

Peak dysprosium:


Democracy is dead, lobbyists rule:

The Wall Street Journal should know.


Switch the word lobbyist for corporation.

That's a good point. "Lobbyist" has become an easy target word, but it's really only blaming the messenger, isn't it?

IMO this is a reframing of the whole situation-corporations are under no obligation to work for the public, neither are lobbyists. Politicians are employed to work on behalf of the public (theoretically) and blaming lobbyists or corporations for funnelling money to them is ridiculous. The situation is that politicians cannot resist bending to the will of lobbyists/corporations because of the money and power they wield.

Getting money out of politics and reducing the power of corporations in all things are both necessary for a functioning democracy and nearly impossible to achieve.

Hey, Mr. Congressman, is that your suitcase full of cash under the table? Must be, it’s not mine! More champagne?

Unfortunately, democracy seems to be afflicted by a Paradox. Defining democracy as elections, terms of office, campaigns, separation of powers, etc. sets up a system where special interests (usually corporate) are able to "game" the system to their own advantage.

Any government that posesses the authority to toss the lobbyists and corporate/special-interest people off the table and out of the room, is, by contemporary definition, "undemocratic."

So, what to do?

Stop viewing corporations as entities with the rights not only of citizens but of super citizens. Make all corporate charters temporary. Band corporations beyond a certain size...

There are lots of ideas out there, but they are mostly identified with the marginalized left. And with most politicians already firmly in the pockets of various corporations, who is going to even propose such legislation, much less get it through?

Also, one part of getting money out of politics is taking back the airwaves that properly belong to everyone. A set number of viewing hours must be reserved for the public interest, including free ads for politicians that have reached a certain fairly low (5%) threshold in the polls.

Again, almost surely never gonna happen, but who knows?

Band corporations beyond a certain size...

A Freudian slip perhaps? We used to 'band' our young billy goats which is effectively a less painful castration. Band corporations. Good idea.

I have seen this "technique" and every time i think about it I wince!
But I can't think of a more appropriate way to treat the greedy suits that have ruined this nation.

According to a segment I caught the tail end of on the Thom Hartmann show there is an upcoming Supreme Court case that is set to appeal the validity of "corporate personhood"...

Hartmann makes a strong case that corporate personhood was never legitimately settled in any case but was "slipped into" the records of the case frequently cited as evidence for the legality of corporate personhood - the reference to personhood was inserted in the margins by the court reporter who was decidedly pro-business (railroads at the time)...


Edit: I don't think this has a chance at being overturned - Hartmann started rattling the cage about this issue sometime around 2001 - one might argue that Bush et al saw that this was as one of the defining cases to be decided in the future and stacked the deck with Roberts and Alito, both pro-large corporations...

"corporations are under no obligation to work for the public"

Well that's the myopic worldview of a 'Marketocracy'. Frankly, we've celebrated the fantasy of wealth and power to the point where we are defending the parasites that are killing the society. To put all the responsibility on the Representatives and None on the Business community is willful blindness. Both need to be held to a standard of behavior.

We're all under an obligation to work for the public, since that is us. The problem is creating this frankenstein notion that our Corporate Creations are 'Entities' with rights and access.. and yet exempting them from the responsibilities of real citizens.

Listen to yourself "Under NO Obligation.." what do you expect the behavior of that kind of setup to become? Enron and Exxon are good examples.

You or I could be a lobbyist, too.

Just go to City Hall or whichever capitol you want to lobby at and talk to politicians about issues you care about.

The problem is cash-rich corporations hiring former politicians to lobby for laws that will protect their interests. They can create more noise than you or I could, from sources that have pre-established credibility. No money needs to pass directly into the hands of politicians in office under this system, yet it is fully as corrupt as if there were.

Just to be clear on who and what the problem is. The old phrase "moneyed interests" sums it up best.

No money NEEDS to pass, but it sure does (in big piles). If you are a politician who can look out for the powerful, your financial future and present is absolutely golden.

I won't dispute the fact of what you say, I'm just saying that the system is established enough that they don't need to pass the money while the politico's are in office for it to work.

i used to think texas a & m was a good petroleum engineering school. on the other hand, texas a & m is just turning out the compliant reserve hyping engineers that companies want. buyer beware.

i have no opinion on texas a & m as a petroleum geology school except that imo, berg made a bonehead conclusion based on bonehead assumptions re the trapping mechanism at recluse field, wyoming.

pow! take that rockman.

elwood -- did I ever mention that I did my master's thesis under Dr. Berg? But you make a valid point about their throwing out such numbers for shale gas reserves. Not defending them since I didn't read the piece but we're back to the distinction between "technically recoverable" and "commercially recoverable". Just like we know there are many times as much gold in sea water as has ever been mined. But it's not economically feasble to extract it. How many times have we've seen the university types offer great potential solutions to any number of problems while not looking at the economics involved. The free market scoundrals are always ready to exploit such claims.

I'll have to find the Recluse study and review...too many years and scotches to have an opinion at the moment.

Even Dr. Berg may have made a mistake, but he was one the smartest men I ever knew. I used to run into him and Dr. Gangi at the Grapevine restaurant on game days, when we were in town for a game.

Btw, could you shoot me an e-mail? I know someone who wants to talk to you. Westexas at aol.

Scotch in the morning; all right ROCKMAN!! I prefer Dalwhinnie when I have my choice of single malts. Here's hoping we don't have to worry about Peak Scotch anytime soon.

Peak water = Peak whiskey


Peat water = Peat whiskey

Actually Pet I was referring to the intake over the last 40 years. In truth my memeory was never anything to brag about.

hi rockman,
i don't know if you mentioned the ms thesis. the paper i am refering to is "trapping mechanisms for oil in lower cretaceous muddy sandstone at recluse field, wyoming." this was published in the wyoming geological association guidebook twenty eighth annual field conference -1976.

I assume you are talking about capillary pressure traps? I usually cite Dr. Berg's work on capillary pressure a couple of times per year, to explain how we can find oil by drilling downdip from wells that test saltwater, if we have enough of an improvement in porosity and permeability. He cites one example, in the Bell Canyon Field, of a sandstone with 20% porosity & 5 md permeability acting as a barrier to an oil reservoir with 24% porosity & 25 md permeability. The really eye opening example was a Lower Wilcox field, where a sandstone with 24% porosity & 153 md served as a barrier to an oil reservoir with 32% porosity & 900 md.

berg postulated a hydrodynamic trap, completely dismissed the effect of any faulting (strike slip type), and cites an oil well adjacent to an (updip or apparently so)water productive well with essentially equivalent permeability. geologists were scratching their heads to explain this phenom in 1968.

WT & elwood -- I'll pass on a first hand account of how Dr. Berg viewed research. His grad student was analyzing a bunch of old pressure tests with regards to cap. traps. The data quality was terrible: incomplete, difficult to read, often inaccurate. In frustration, I heard the grad student tell Dr. Berg that "this was all chicken sh*t". Dr. Berg, in his typically calm voice responded: "Yes, I know it'a all chicken sh*t but a good geologist can turn chicken sh*t into chincken salad if he works hard enough. Go back to wrok."

Someone I know asked my opinion about participating in a Barnett Shale production acquisition in 2007. I suggested he stay out of it, but he had a report showing that the current production would go up by a factor of five by 2012, so he went ahead with the deal. I just checked in with him. Production is down to about two-thirds of what it was when they bought the properties.

In any case, an excerpt from Arthur Berman's recent article:


Operators often state that shale plays have about a 30 to 40-year production life, but I found that the average commercial life for horizontal wells is about 7.5 years, although the mode is four years. There are many wells that should have 8-12 years of production but few that will extend beyond 15 years. About 75 percent of predicted EUR in horizontal Barnett wells has been produced by Year 5. In the control group, the first wells were drilled in 2003, and already 15% have reached their economic limit five to six years into their production life cycle. . .

Another surprise is that horizontal wells do not have significantly higher EUR (0.81 Bcf) compared to vertical wells (0.62 Bcf).  Horizontal completions only result in a 31% improvement in reserves for about 2.5 times the cost.  Put another way, the nominal unit cost (leasing, drilling and completion costs only) of gas from a horizontal well is approximately $4.30/Mcf compared to $2.05/Mcf from a vertical well.

Though your critique of Texas A&M may be valid (I will give you the benefit of the doubt not knowing much about that august institution myself) I think this has become generally true of higher education. At the facilty I work at (a large, well respected state university and academic medical center in Virginia) I see much the same thing occuring. Whether it's the Business school, Law school or even the Medical or Nursing schools, there is very little questioning of the conventional wisdom of how are society is put together, and all appear eager to buy into the status quo. Any questioning at all of how our corporate/government organs operate (infinite growth and technocornucopianism forever) would get you labeled a bitter prole, a madman or a communist.

Pete Deer

can i plead guilty on two of three? but we all know how we were expected to present ourselves when looking for our 1st job after graduation. some drank the kool-aid and some didn't. i probably missed the boat when i didnt stay in school and go into research. a boss once threatened to fire me if i didn't "play ball" and guess what, i got whacked. i have no regrets, what a long strange trip it has been.

The unemployment report came out:

Unemployment rate jumps to 26-year high

Denninger has some interesting analysis.

"The unemployment rate is based on a survey of households while the payroll estimate comes from a survey of employers"

A survey? There is nothing like cooked-up data to prove the economy is showing green shoots. What a load of baloney. Perhaps the most important economic datum is drawn from a survey. I'm sure all the boys and girls in the MSM will be bigging it up..

what ever happened to truth, eh?

That's how most government data is gathered. Even the oil inventory reports we follow here so closely. Basically, they call up people and ask how much oil they have.

There really aren't many alternatives to the survey. However, this is why Denninger says tax revenues are the most reliable measure. If people are working, they're having taxes withheld. If they're buying things, they're paying sales taxes.

The tax data and similar data for sales of houses are indications that the economy is still seriously sick. Given that some 70% of the economy is consumer spending, if the sales tax data is at all accurate, it signifies that the economy is still in a serious downturn. If the consumer isn't spending, it means there's less work for the producers, that is, the working man (and woman) that actually do the consuming.

As an aside, I called a surveyor last week to verify a property line for a fence. The crew arrived this Wednsesday, which I found startling. I asked one of the crew about how much work they had and he said they were laid off about every other week. Just another data point to show how bad the local construction economy has become. Similar stories abound about the drop in the number of local building permits issued in our county.

Oh, wait, the latest news spin is that there's less INCREASE in the number of jobs lost. We're saved!

The Feds use a phone survey to estimate employment. What happens as people give up their landlines and switch to cell phones, which are neither listed nor associated with a dedicated address? Should one believe that those employment numbers represent the actual job situation??

E. Swanson

How about the guys that give up a land line and keep the cell because they are unemployed?

Yes, that's the problem. Since their phones are mobile, they can't be counted as a "household", thus their situation would not fit into the statistical picture, I think. Anyway, does the Fed maintain a list of active cell phone numbers? What about pre-pay cell phones, such as the Trac Phone I recently purchased? It's mostly turned off to keep the battery charged for road trips...

E. Swanson

What I don't get is with all of these revenue short-falls by both the federal and state governments... Where the heck do they get the GDP growth number -- something like +3%?

I just don't get it -- somewhere thing doesn't match up.

That's pretty much what Denninger said. He thinks the books are being cooked. On all sides. The GDP number is flawed, and states have a tendency to be overly optimistic on their projections. Rather than give up their pet programs and risk angering constituents, they just assume a higher growth number.

Also as an aside, I have a 20 year old section of chain link fence around about an acre of land which had had several trees come down on it in various places over the years. I decided that I needed it for goat pasture. I called the fence installer who had put chain link around my house last year to see if they would do repairs. Last year I had to wait a month to get them to install my fence. This time when I called the owner answered the phone himself and said that right now they would take any work they could get. They had my fence repaired in 3 days......

I don't respect ANY survey based on phones. Many years ago I was told that the survey for the us presidential election that FDR won had him losing- the reason being that Republicans were far more likely to have had a telephone than Democrats so were more likely to have been phone polled. Today it's probably a similar situation with the young, the mobile, the renting class etc to own mobile phones whilst the older, the stay at home,the homeowning class to have a landline. So still plenty of inbuilt bias in phone surveys.

Since neither of my parents can still drive and insist on shopping at WalMart (ugh!), I've been having to haul them there once a week there now for a while now. I've been doing my own anecdotal "survey" of shopper's cart contents. My survey results: people are no longer piling their carts up with junk, they seem to just be pretty much buying necessities - foodstuffs, HBA items, occasionally a pair of socks or underwear or something like that. Given the few things that WalMart is actually selling, they could probably get by with a store half the size - and this is a store that actually still does have some customers who actually still are buying some things.

One cannot draw any statistically valid inferences from a single data point. Nevertheless, I'm inclined to conclude that the good times are not rolling right now.

Be sure to bring your camera to WalMart:

Leanan -

At least from my narrow first-hand experience in the environmental field, I've come to the conclusion that a great deal of government-generated data is pure garbage. This is particularly true of aggregated data based on voluntary surveys, mandated but unaudited self-reporting requirements, and plain old wild extrapolation from smaller data sets.

With some of the data based on environmental reporting requirements, such toxic chemical inventories, or hazardous waste generation rates, the survey responder typically fills these forms out at the last minute before they are due and usually takes an educated (and often not so educated) guess as to what numbers might seem reasonable. Many thousands of these reports are then processed and analyzed in a dozen different ways, and all sorts of dubious conclusions arrived at. For instance if the total amount of toxic air emissions for 2006 was X million tons, and that for 2007 0.98X, then the government concludes that we have made improvements in toxic air emissions, even though that small difference lies deep within a very wide margin of error.

This is why I sometimes get an uneasy feeling when various contributors to TOD generate all sorts of pretty graphs (often with a highly compressed Y-axis to make small differences seem larger) and then claim to see all sorts of trends based on small differences in what are probably fuzzy numbers in the first place.

I have asked this question several times in several different ways but can't seem to get a straight answer: what is the margin of error in these weekly or monthly oil inventory and production numbers? One percent? Five percent?, 10 percent? Then we have the more sinister question: who benefits if they are understated, and who benefits if they are overstated?

Follow the money, spot on!
I would have thought that in the summer holidays the number of people temporarily employed would have risen to service those on holiday, such as campsites, hotels etc?

IMHO Denninger rants sometimes but does an excellent job especially collecting statistics and giving an honest interpretation.

I would have thought that in the summer holidays the number of people temporarily employed would have risen to service those on holiday, such as campsites, hotels etc?

Any "worthy" source of economic data always creates "seasonally adjusted" figures. So they are using historical data to attempt to remove seasonal variation.

denninger is great in his niche - analysis of large-scale financial fraud and insider shenanigans.

he's very narrow-minded, however. if you mention peak oil or 9/11 he will ban you from his forums.

peak oil can't be real, apparently, because this would require too many people to conspire to keep it a secret.

same for 9/11, as explained in a denninger post this week.

When I read Denninger's total lack of logic or critical thinking regarding events that occured some 8 years minus 7 days ago it completely undermined his credibility with me regarding his economic analyses, which I have tended to trust his "better" judgment on. He's not the only site that has done such banning. Unless my memory is wrong, the discussion here, in yesterday's drumbeat on the same topic has been entirely deleted.

That's because this is not a 9/11 conspiracy site, and there are plenty of other places you can go to debate about it.

Thanks. I didn't participate in the conversation, but would have expected a courteous "heads-up" reminder when it got going. Lots of other "off-topics" get discussed here ad infinitum.

There was one. It was ignored.

You would be right. This is not the place to discuss conspiracy theories.

Leanan -

After a 9/11 or other conspiracy theory finally proves to be a 'conspiracy fact', may we then discuss it?

Yes. But I suspect this site will be dismantled due to the discovery of a working perpetual motion machine first. :)

Leanan -

Time will tell.

With all due respect Leanan, peak oil is a conspiracy theory.

Denninger censors peak oil - because just as you said, "This is not the place to discuss conspiracy theories."

When Yergin or Lynch go on TV, peak oil is censored, because "This is not the place to discuss conspiracy theories."

I remember reading an account by a Scientologist, who said that when his group worked the streets to find new members, there was nobody they hated more than the Hare Krishnas - who were obviously pushing a fake, greedy, mind-bending cult on naive victims using manipulative practices.

You're right to keep this forum on target, and so are Denninger and the MSM to keep their messages on target.

Except it isn't.

Peak Oil is a simple fact, like Peak Daylight around noon every day.

That there exists an entire respected segment of our society whose job it is to deny physical reality (Daylight Savings Time anyone?) speaks poorly for us.

I don't think peak oil is a conspiracy theory. Denninger misunderstands the problem if he thinks it is.

I think he's blinded by his ideology. It's not just peak oil. He's said that anyone who suggests that capitalism isn't the only way to do things will be banned from his site.

The fact that some people see peak oil as wacky is a big reason why we try to discourage wackaloon discussion here. We want peak oil to be taken seriously. We don't want visitors wandering in and finding people arguing about 9/11 "truth," creationism, whether the moon landing was a hoax, etc. There's plenty of other places where those things can be discussed.

You're right of course, and so are your counterparts in other fora, who discourage discussion about peak oil. They also want to be taken seriously by their readership.

I agree that Denninger is blinded by his ideology, but so are you and I. We all just have different ideologies with different blind spots.

You and the rest of the TOD crew have been far more lenient on people who veer from orthodoxy than Denninger has, and that's to your credit.

On a macro level, a "conspiracy theory" is any information not regarded as accurate by the local or prevailing MSM. Using that definition, TOD is loaded with these. If it wasn't, what would be the point? We can get the PG-13 version of 9/11 or any other subject from PEOPLE or US magazine, along with MJ's funeral details.

I never read his forums, nor hardly any others I have not seen any other site where the quality of the forum comments is as high as TOD.

more from D on "hard-data""

actual miles driven by truckers, tonnage loaded and transported by rails and roads, containers shipped across oceans (TEUs) and sales taxes collected by states to know when the economy is bottoming.

...Containers do not move without someone paying for them, sales taxes are not paid except on actual sales, and truckers don't drive without someone paying them to haul a load.

These numbers are not subject to manipulation by the government and media - they are hard economic statistics that will tell you exactly what is going on inside the economy on a "right now" basis, and must form the foundation of any investment thesis when it comes to your macro-economic view on where we are and where we're headed.

There is no aggregate data of actual miles of transport trucks, nor of ton-miles etc, which is not based on surveys and sophisticated modeling leading to the estimates that you appear to feel are arrived at with the addition function of a calculator and someone reading the odometers and bills of ladling of the millions of trucks on the road.

There is no aggregate data of actual miles of transport trucks, nor of ton-miles etc, which is not based on surveys and sophisticated modeling..

Why should this be so? Most commercial trucks nowadays have electronic identification &/or GPS systems installed. Why couldn't data obtained from this technology be aggregated? Seems like the DOT would be interested in obtaining actual mileage or ton/miles data in this way.

It is theoretically possible. But then it would be obvious that we could easily calculate how many miles and hours truckers are really driving in a day and the trucking industry and many in government would rather no one really know.

All commercial truck operators and drivers working more than a half day from home are required by well enforced laws to maintain meticulious log books detailing times ,mileages, destinations and primary routes driven down to the hour and minute.Failure to keep such a log will result in heavy fines and revocation of the cdl which puts the driver out of work and there are all sorts of cops that enforce only commercial truck regulations that don't even exist as far as the average motorist is conmcerned.

Each and every truck must have individual fuel tax permits for each state in which the truck operates,and the driver or his employer must buy fuel or pay road use tax in that state and he better not get caught there by the local truck cops without all the paperwork in place back at the home office.

So somebody definitely has the data, but as to how long it takes to get it collated,or to what extent, or who has early access to it ,I have no idea.

Nearly all the road taxed diesel is used in commercial trucks and that should be a sufficient metric for most forecasting purposes.

The Birth Death Model adjustment probably messes up the U stats as much if not more than anything else. For Aug it ADDED 118,000 jobs!

Mish takes - another - whack at that here:

Jobs Contract 20th Straight Month; Unemployment Rate Hits 9.7%

Birth/Death Model Revisions

After the typical in January in which the Birth/Death Model revisions bore some semblance of reality, the Birth/Death numbers remain in deep outer space.

At this point in the cycle birth death numbers should have been massively contracting for months. The BLS is going to keep adding jobs through the entire recession in a complete display of incompetence.

The Birth/Death numbers have been a joke for at least two years now.

When they say/compare "highest in (so-many) years," do they adjust the numbers to take into account the changes made under President Reagan?

Under the Reagan change, military are now counted as employed, whereas before they were excluded from being considered into the unemployment number calculations.

I heard this on CNBC this morning, in between their recovery celebrations:

Troubles For 'Prime' Borrowers Intensify

The long recession and rising joblessness are taking an increasing toll on the nation's most credit-worthy borrowers, who are now falling behind on their mortgage and credit-card payments at a faster pace than people with poor financial histories.

Hello Leanan,

Thxs for the link. Just like Duncan's Re-equalizing in BOE/capita, those formerly well-off, acclimated to high consumption, are now falling down the pyramid to join those at the bottom with reducing economic power$/capita.

Any guesses on when we might see massive numbers of those, who own advanced degrees, doing manual labor? Lawyers digging up broken sewage lines for repairs, English professors in the slaughterhouses, former bankers scrounging through landfills for recyclables, etc?

Will their advanced learning help them remain calm and acceptive of the Powerdown and Overshoot forces? Or is it more postPeak likely they will take up guns and machetes?

Will it be Machiavelli's Prince or Socrates & Thoreau?

EDIT: Will a former lawyer want to talk about Supreme Court Decisions while swinging a sledgehammer into reinforced concrete?

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

I don't think that's going to happen any time soon. My guess is that you'll die of natural causes, not at the hands of an angry machete-wielding banker.

I'm not predicting the return of BAU, but I think change will come far slower than we expect. Most people still have jobs. Most people are still paying their mortgages and their other bills. People will have to downscale their expectations, but we were living so high off the hog that there's a lot of room to downsize before bankers have to scrounge through dumpsters to make a living.

..those, who own advanced degrees, doing manual labor?

Like me, you mean? I "own" three degrees beyond the B.S. and I just spent the morning picking chilis, and will spend the Labor Day Weekend cutting firewood.

That's not what he was talking about. Even in the best of times, there are people with advanced degrees who do manual labor. By choice or necessity.

As they say, "Chili today, hot tamale."

Hello Leanan,

Yep, that is the BIG Question: is it going to be a fast-crash sharkfin or the slow Catabolic grind per ArchDruid's writings? My feeble sense is that TOD is probably split 50/50 on these potential outcomes.

Hopefully, TOD, ASPO, and other writers are continually seeking more refinement on depletion flowrates, ELM, food supply availability/capita, ongoing financial collapse, extinction rates, Climate Change, and other key topics that might show which one [fast vs slow] will clearly assert itself.

Too bad we cannot poll all the global topdogs to see what they prefer as that could be key to what lies ahead.

..which one [fast vs slow] will clearly assert itself.

Arguing over whether collapse (socioeconomic, population, etc.) will be "fast" or "slow" is silly unless you quantify the terms. What do you mean by [fast vs slow]? Days? Months? Years? Decades? Centuries? Millenia? What time scale is meaningful to a human lifetime? What scale is meaningful in terms of ecosystems? What is meaningful from the perspective of natural selection? Of geology? On the one hand, I've been expecting human population collapse to occur "soon" since the 1970s. From this perspective it's been "slow" in coming. On the other hand, I feel pretty secure in predicting collapse to or near to extinction on the scale of decades to a couple centuries at most. That is so "fast" as to be virtually instantaneous from a geological or evolutionary perspective, and is even "rapid" from the perspective of ecological time. If you're going to argue over whether collapse will be fast or slow, please state your time frame. Otherwise, the argument is meaningless.

On the one hand, I've been expecting human population collapse to occur "soon" since the 1970s. From this perspective it's been "slow" in coming.


We've had this discussion here before. I think the only scale that matters (in terms of the debate here) is the human scale. Because really, if the US collapses 200 years from now, none of us will be around to care. Or say "I told you so." ;-)

Among those who believe we're headed for a collapse (that is, discounting the cornucopians who think the party will go on forever), the parameters are "months" vs. "centuries." 710 boldly predicted a collapse by January 2010, IIRC. OTOH, Greer points out that it took Rome four centuries to collapse. That is a slow, "catabolic collapse."

I think the only scale that matters (in terms of the debate here) is the human scale.

Okay, but I've spent too much time examining the fossil record & rates at which selection operates or species replacements occur in biological communities or ecosystems replace one another or how orbital mechanics effects climate... for my perspective to be limited to that of a human lifetime. I may differ in this way from most TOD posters but there are geologists in this forum who may also think in terms of longer time frames than most people do.

Indeed. Looking at things from the perspective of a single human lifetime is a large part of the problem.

Hello DD,

My reference fast-crash scenario timeline is Jay Hanson's 2007 publishing of the Thermo/Gene Collision [8-page PDF Warning]:

..If you were born after 1960, you will probably die of violence, starvation or contagious disease. Although it’s news to you, your generation is challenged with a technically-insoluble problem – a
political problem – which will ultimately kill five out of six worldwide – or perhaps all...

[1] Fifteen years, plus or minus ten years, is when I estimate anarchy will reign in the United States. Please note that I do not advocate anarchy. Indeed, anarchy is the worst possible future. However, our government was not designed to solve social problems and will be utterly helpless in the face of unfolding biophysical law-driven events...
2007 + 15 = 2022 +/- 10 years gives a [2012 to 2032 prediction validation window]. Seems like a reasonable fast-crash to me, especially if one includes Duncan's Re-equalizing:

Olduvai Theory: Toward Re-Equalizing the World Standard of Living - Richard Duncan

US [BOE/capita Peak] was 62.09 in '73, then in 2007 = 57.48
My WAG for 2009 = 52? 50?

2012-1973 = 39 years from 'partying like hell' to anarchy
2032-1973 = 59 years from 'partying like hell' to anarchy

I think approx. 40-60 years from easy-motoring to gunfire & machete' moshpits would seem like a fast-crash to most US people. Even if total anarchy doesn't happen until the last year [2032]: a child born today [2009] would only be 23. Plenty of time for even these future young adults to see & recognize the sharkfin decline-trend & ELM to US BOE/C of 3.53 by 2030.

From ['73 to now] is 36 years wasted at attempting a non-BAU paradigm shift. 2032-2009 = 23 years ahead, AT THE MOST, to avert the fast-crash to anarchy per Hanson. Do you think we will get it done?

Even if we do prevent anarchy by 2032--we then STILL HAVE TO TRY to avoid the Catabolic Grind. That is what my Optimal Overshoot Decline [OOD] postings are aimed at: finding that SWEET-SPOT between Jay & Greer.

IMO, it will take a hell of a lot of Earthmarines and much more to roll back the yeast-clock from the 59th minute to prevent [anarchy **AND** catabolic collapse]. I am not optimistic.

Dr David Suzuki Quote: "We are on a suicidal path..We are in the 59th minute...We have simply got to start putting our bodies on the line.."

Toto, you don't have an email posted; could you click on my user name and drop me a brief note?

The global topdogs have built a global police state. That implies catabolic collapse with lots of unpleasantness along the way, with no real drop in standards of living for the elite. See North Korea.

This assumes that the enforcers/domestic soldiers will not come to their senses and see that they are on the wrong side.
The military is comprised of mostly lower class kids and they are going to have to brainwashed to an extreme degree to turn against their homies.
In America at least there is too much information floating around to expect people in the enforcement positions to not start questioning what they are assigned to do.
It is not going to be like N. Korea.

Are you quite sure about that? From what I understand, the military does not allow dissent and definitely does not allow systematic disobeying of orders. Do you think that nobody in the military/police systems in any of the dictatorships around the world and through history has realized that they are doing something immoral by continuing to serve those with power?

I was a military officer for 8 years and I know who these kids are.
They are not stupid they are just poor.
This is the most open society in history and the free flow of information increases daily.
To answer your question. no i am not certain but the government has lost a lot of credibility and if in the future they need to resort to a draft then my position gets even stronger.
At this point they are already offering citizenship to illegals to enlist. How far off could a draft be???

Porge ,

I agree. The typical American kid in uniform is simply not capable of really turning against his own people,for now at least.

This is not to say that maybe somewhere down the road it couldn't happen if things get bad enough that the free flow of information ceases.

I suppose that by then it will be too late to worry about much of anything except simple survival any.

I would hate to think that some bunch of brainwashed kids with assualt rifles might show up collecting food or draftees someday.

I doubt if you could have convinced an average German or Russian in 1930 that such a thing would happen in his country within his lifetime.

I don't mean to imply that our country is headed in that direction,but I simply can't see any way out of a hot war except by luck and once the fighting starts.....

We're still the big dog, but we aren't as young and hard muscled as we used to be.

My guess is that you'll die of natural causes,...

Not likely unless you are quite old.

People will have to downscale their expectations, but we were living so high off the hog that there's a lot of room to downsize before bankers have to scrounge through dumpsters to make a living.

I dearly hope you are right but I think your expectations are nothing more than your desires and this is nothing more than another form of denial.

Most people believe to be true what they desire to be true.

Ron P.

Not likely unless you are quite old.

Bob has made it clear that he is not a young man.

I dearly hope you are right but I think your expectations are nothing more than your desires and this is nothing more than another form of denial.

If that's true, then my desires have changed. I've changed my mind about the likelihood of a fast crash over the years. It just seems like everything's moving a lot slower than predicted. Many of us thought $100 oil would be TEOTWAWKI. It wasn't. Then we started thinking price doesn't matter, oil's going to hit $200, $300, $500. Oops, nope. Price matters after all. In short, I think such predictions are often right, but the timing is usually wrong.

Most people believe to be true what they desire to be true.

Maybe you're the one believing what he wants to be true?

I actually hope I'm wrong, because as I've said many times before, I think catabolic collapse is the most doomerish scenario.

My guess is that you'll die of natural causes,...

Not likely unless you are quite old.

In both cases natural causes. Oil is a natural resource.

Maybe you're the one believing what he wants to be true?

Most people. How many don't take everything (electricity, running water, food from all over the world, car) for granted ? How many even only one second think that this could change in their life-time or ever ?
A fast collapse is possible and depends on how fast oil-exports will decline. If that is in the order of 10%/year one have to fear. It is also possible that happens what memmel wrote: fast oilproduction decline to 50-75% and then a slow decline for decades. Even then a ugly collapse is possible, because of declining EROEI and ELM.

Sure, a fast collapse is possible. I just don't think it's a certainty, or even all that probable.

Which doesn't mean there won't be times and places where things get very catastrophic indeed.

It just seems like everything's moving a lot slower than predicted.

Really? I think things are happening quite fast. I had expected everything to crash by 2017 but it looks like, right now, that things will crash by 2012 or 2013, much faster than I had anticipated. It is not only peak oil but the world's financial systems are going down in flames.

500 More Banks to Fail by End of 2010

It is happening fast Leanan. But how fast is fast? You are thinking maybe one year? No, if the world's support system crashes in one decade that is very fast!

Peak oil will only prevent any recovery. By 2013 the world's oil supply will be declining by about 1.5 percent per year or greater. That will insure that they will be no recovery.

Ron P.

I think what we disagree on is what constitutes a crash. I agree that the economy could crash. Iceland's did.

But that doesn't mean societal collapse.

Ahh but it does. The United States is not Iceland. The US has a population of approximately 1,000 times that of Iceland. China is also on the verge of collapse. Many African countries have already collapsed.

If the US financial system crashes then the world's monitory system collapses. The US would no longer be able to honor its debts, domestic and foreign. No social security, no Medicare. People like me, who live on social security, could no longer pay their mortgage or other debts.

The dollar would be worthless, we would no longer be able to import oil unless we paid in gold.

I don't think you have thought this thing out Leanan. Comparing the US to Iceland proves that to be the case.

Ron P.

If the US financial system crashes then the world's monitory system collapses.

If that's true, then the world has a lot of incentive to keep us going, irrational as it may be in the long term.

The US would no longer be able to honor its debts, domestic and foreign. No social security, no Medicare. People like me, who live on social security, could no longer pay their mortgage or other debts.

It would suck, for sure. I have no doubt that a lot of people will suffer financially.

The dollar would be worthless, we would no longer be able to import oil unless we paid in gold.

We have something better than gold to pay with. We have a food surplus.

And if the economy implodes as you suggest, demand will be way down. We won't need to import that much oil.

You still seem to take collapse way too lightly, like it will just be hard times for most folks but otherwise everything will be okay. Think the Great Depression. Then think ten times worse. Not 25% unemployment but 50 to 75 percent unemployment. No pensions, no social security. Medical care would be almost non existent.

During the Great Depression there was a reverse migration, back to the farm. Not a lot but some. But now we have virtually no farm economy whatsoever. There are only large farms where one farmer farms hundreds of acres. Eggs come from the egg barns. That where chickens are farmed as well. Milk and butter comes from dairy farms.

But with a collapse no one could go back to the farm. They wouldn't know what to do if they did. No one will have any money to buy even the basic necessities, even food. And all this happens if the US Government and its economy collapses. This will very likely happen within the next 10 years.

Ron P.

I'm not taking it lightly. I think it will be the first step in a very long descent.

Think the Great Depression. Then think ten times worse.

That is in fact what I'm thinking. But not necessarily within 10 years.

But with a collapse no one could go back to the farm.

Agreed. But on the flip side...food is very cheap for us compared to the 1930s. Unlike many other countries, we can feed ourselves.

Health care is probably where we'll feel the pain most. We are no longer used to letting people die just because they can't afford to pay for treatment.

Agreed. But on the flip side...food is very cheap for us compared to the 1930s. Unlike many other countries, we can feed ourselves.

Errr, no we can't. If no one had money to buy food then they could not feed themselves. And few people working means little income tax is collected. With industry bleeding money there would be virtually no corporate taxes collected. With income down 75% we could borrow money from no one. The government would collapse.

Also remember, during the Great Depression, the government did not collapse. That's why it will be so much worse this time around.

Ron P.

I don't think the government will collapse in my lifetime. It will become an increasing burden, but we'll keep it going as long as we fear other countries.

If I had to guess, I'd say the future is likely to be something like this.

Fearing other countries will not keep the government going. Armies take money, lots and lots of money. We are deeper in debt than you imagine because we are deeper in debt than anyone can imagine. When we can no longer borrow money to pay the interest on the debt and to keep the armies going, to keep social security going, to keep Medicare going, to keep the entire government payroll going, the government will collapse. And it will happen in your lifetime.

It has never happened before in your lifetime, except in Somalia. That is why you find it hard to believe. Other governments, like Haiti and Zimbabwe are in near collapse but still have some government. Which would be better, total collapse like Somalia or near collapse like Haiti and Zimbabwe? Tough choice.

Ron P.

I don't think lack of money will collapse the government.

And I think collapse would probably be better than what we're going to get. I think we'll get more government before we get less.

We will probably get more Govt like this where the insiders, even when tipped a scam is going on, will choose to look the other way:

SEC Official Whose Unit Got Madoff Tip Had Family Money by Scam

Family members of a U.S. Securities and Exchange Commission enforcement official, whose unit got an anonymous tip in 2005 suggesting Bernard Madoff may be running a Ponzi scheme, entrusted $2 million to the scam, the agency’s internal watchdog said...

..Senior SEC officials include former chairmen were cleared of “inappropriate roles.”
I thought a jury was supposed to decide if anything criminally 'inappropriate' had occurred?

That makes sense in a Tainter ish sort of way. Add another level of complexity to keep the system working.

Its what the Romans did. They expanded their bureaucracy dramatically to keep their empire functional.

Still I wonder if its just setting us up for a faster crash. The more you prop the system up the harder its going to fall when it does finally fall. Isn't that what is Denninger is always saying?

"as long as we fear other countries"

ROTFLOL, I think based on history most other countries should fear the US. Try looking at it this way, the US is protected on two sides by large oceans that make it practically impossible for a hostile force to land a sufficiently large force. Is Canada going to invede the US? I have however seen comments that the US should invede Canada for its resources. To the south Mexico which can't even keep the drug runners controlled.

The US spends more or less as much on the military (laughably called defense) as the rest of the world combined. The US has bases in dozens of countries. History has show the US is prepared to use the military to support regime change for commercial reasons.

Now tell me why exactly are you afraid?

Use our food surplus to trade for oil to keep that cycle going then hand out food stamps to anyone (a Lot) that needs them(or everyone).
If you want to prevent chaos keep their bellies full and also free cable TV.
Think Rome...........Bread and Circuses..................
The more things change the more they stay the same.


I think you nailed the big difference between the 30s and today and that is today we are way, way over optimized and over specialized on all levels of society.
The systems that last are robust with redundancy.
We effed up............we let greedy business men make decissions based soley on profit motives.
It seems like they only read the parts of Adam Smith that they wanted to and left the Moral Sentiment works on the book shelf.

This is the perfect set up for the future that you predict.
I think the same thing for the same reasons and have lost many friends predicting 50% plus unemployment.
We live in a junk culture with most people working at junk jobs if many swindle activities can be called "jobs" at all.

A good thing happened during the early part of the Great Depression-prices fell, at least until the end of the gold standard in 1933. Not just asset deflation but productivity deflation. We had a lot of productivity deflation, especially from 1890-1910 because of electrification, and later because of internal combustion and agricultural mechanization, household refrigeration, etc.

Peak oil is the opposite of productivity deflation. Our system does not understand it and is not equipped to handle it.

Food surplus. The ultimate barter item.
Food for oil.

I think that trade will descend into large scale barter. That is food for oil type of arrangements. The Arabs already see this and are reacting.

Hasn`t anyone noticed re-localization of their local economies?

I`ve noticed two new farm stands recently. OK they`re seasonal, they`re makeshift, but they were not there before.

By the time the supermarkets shut down there could be a lot of basic local supply of bare necssities.

In the US (in FL) a woman noticed my mom in a supermarket near the eggs and said "pssst! Wanna buy some fresh eggs from me cheaper? I deliver!"
I think it`s a mistake to think the situation is static, that we`re going to all wait for Wal Mart to shut down and the army to march in and occupy while people fight and steal. I think a lot of people are quickly taking huge advantages of selling things locally.

One more anecdote: I traveled through a touristy mountain resort area and the upscale "pottery galleries" were all obviously going under with huge sales, out of business signs, etc. But it won`t take those shopkeepers long to start stocking food and sell to the locals. Simple food, not fancy imported stuff. There is a huge advantage in being able to start a small tiny business WITHOUT having to make a huge parking lot. You just hang a little sign in the window of your house "cheap stuff" "(and by the way today we have some eggs and extra cabbages)" and customers will start coming because they don`t wan to spend money on gas. In the US there are lots of tag sales and yard sales now. Those are the first step in the development of villages perhaps. The people who are good at that, who realize they can sell food too (on the side, perhaps semi-illegally but cash-strapped states can`t keep track of everything) will be the people who put WalMart out of business. All without a disastrous collapse.

I think it`s a mistake to think the situation is static, that we`re going to all wait for Wal Mart to shut down and the army to march in and occupy while people fight and steal.

I agree.

However...it's not necessarily all positive. Take those 500 banks predicted to fail before the end of next year. I have no doubt there really are that many banks that are insolvent. But will they fail before the end of next year? Or will there be shenanigans that keep zombie banks among us?

Um...your grammer sucks Leanan. WILL is future tense, their is already shenanigans and zombie banks among us with the FDIC trickle feeding out the deaths of 3-5 zombies a week (another FDIC Friday= another 5 banks, 89 so far this year).
The day the govt or wall st or the Fed can't keep it's tainted cr@p in the air then thats the day public confidence will collapse and 500 plus banks could shut in a single day (and without the possibility of the FDIC covering losses). If you woke up and found your bank, your money and your future gone then the unpaid army and police might be the ones fighting and stealing.

I agree with Pi, who the heck wants to wait around for Wal-Mart and the army? ;-)

There are small signs of optimism, from the great article we recently got in the local Sunday magazine, to an article that openly discusses how to have a business in your garage. My neighbor just offered to buy some of the veggies in my front garden (former parking strip). If this is happening here in the Pacific NW, why not elsewhere? Yes, I'm aware, per Nate's articles, how very long social change can take. Still--membership in the Transition Town movement is growing rapidly.

Saving the planet, one block, one small project at a time

But Reid's voyage is an example of a new wave of efforts that spring not from City Hall or the Statehouse but from neighborhoods and small towns. From Bellingham to Olympia, from Burien to Ballard, neighbors are organizing low-budget programs designed to grow food in their backyards, get people out of their automobiles, switch to low-energy light bulbs — anything that encourages energy conservation and discourages oil consumption.

From crammed to pristine clean, garages are extensions of ourselves


Alice Rios Martinez hits on this weird proposition when she describes running a hair salon, Alice's, out of the garage at her home in Southwest Seattle.

"Cerca (close) but separate," she says of her salon. "The customers have a personal door. They don't come into the house."

It's a funny thing, she says, commuting to work by stepping a few feet from the main house into the garage. She laughs at the notion, but it's quite practical.

Cisco says opening the business in his garage made great financial sense, especially for an untested venture such as theirs.

"It's a moonlight venture," Cisco says. They work on the bikes mostly at night and on weekends.

The brothers believe they've tapped into the spirit of the times as people seek relief from the stresses — including traffic and erratic gas prices — of owning a vehicle.

"We're selling bikes about as fast as we can build them," he says.

I consider advertising to be interesting because I assume that advertisers are generally smart people and have a fairly good idea of what people want in order to sell products to people (this of course excludes ads that are merely attractive people posing with the product, which speak for themselves). A grocery chain in Nova Scotia is advertising, quite heavily, products grown close to the locations where they are consumed. I thought that this was interesting, as it shows that at least some advertisers think that people are concerned where their food comes from. This is not a boutique grocery store either, it is one of our two big chain grocery stores.

Leanan, sorry but you are mistaken if you think the mild financial problems of Iceland constitute an economic crash. Far from it. A real collapse would have far worse consequences like their cod fishing fleet being unable to buy fuel or indeed having their fleet and fishing quotas siezed to pay creditors. When a country gets to a severe economic situation then a societal collapse could quickly follow (within the timespan of 3 missed meals).

When a country gets to a severe economic situation then a societal collapse could quickly follow (within the timespan of 3 missed meals).

People always say that, but where's the proof?

Human beings are really, really bad at predicting the future. Even for things we or others have experienced, we have a tendency to think "This time it will be different." Daniel Gilbert argues that the best way to predict the future is to look at other people's experiences.

Of course global peak oil is unique situation...but there are other societies that have collapsed, and people have frequently run up against Malthusian limits. And it doesn't lead to instant societal collapse. People often quietly starve. Or there may be sporadic riots that are successfully suppressed.

As for collapse...it has happened many times in the past. And it doesn't happen instantly. It takes decades, or centuries. Even the Easter Islanders took about two generations to collapse.

History suggests that more complex societies take longer to collapse, but some argued that we're different. We're so fragile we'll collapse quickly.

I think recent events suggest that this assumption is false. It doesn't mean everything will be fine. But oil spiking to $150 and the financial crisis did not lead to a fast crash. That suggests there's more resiliency (or inertia) in the system than many of us thought. That is, we're not special. Our collapse is likely to be like others in human history.

History suggests that more complex societies take longer to collapse, but some argued that we're different. We're so fragile we'll collapse quickly.

I think recent events suggest that this assumption is false. It doesn't mean everything will be fine. But oil spiking to $150 and the financial crisis did not lead to a fast crash.

Leanan, two things will be completely different from the past. One: because of oil the population was able to explode the last century. Two: the $150 oil and the financial crisis happened during oil production on plateau. Declining oilproduction is much worse. This year there was no fast crash, indeed, but a lot of people lost their jobs and exports of goods went down a lot. That happened only with oil production on plateau.

If there's a fundamental difference from past collapses its not obvious. Romans, Mayans, Anasazi, Cahokians etcetera didn't have oil, but they had energy inputs that were declining. They had population growth then overshoot. It seems possible to me, maybe even likely, that they had multiple shocks in their economies from which they partially recovered as they were on the downward spiral to collapse. We're going to be able to pump significant oil and mine coal for some time to come, the slow catabolic collapse idea makes sense to me with multiple fractures in the facade we have for a financial system happening along the way accompanied with a standard of living that's slowly going down.

What Barrett said. Yes, the population has exploded beyond all previous levels.

But that was the case with previous societies, too. That is, they massively overshot their resources. Tainter points out that collapse is usually followed by a drop in population of around 90%.

But it doesn't happen overnight.

@ totoneila
You can never be over-qualified for a job, however, you can be unqualified.


Hello Cinch,

How true. When I was young: I could and did shovel heavy, wet, sucking sand & mud for 8 hours a day, from under a conveyor belt, then heave it onto the top belt about 4-5 feet high. Piece of cake for an 18-year old, and back then: I used to be able to water-ski until the others thought I was hogging all the boat's gas. Not anymore, as I am now 54: that earlier job would kill me in record time today==>I am unqualified.

totoneilla - Dear god! Get thee to a gym! My father's 81 and he can bike for 20 miles.


There's a 65 y/o that runs in 5K races in my area that regularly runs sub 20 minute races. He placed 6th overall in a race sponsored by the local University with lots of young athletic types as competition. His times are better than the winning times at some of the less popular races, I'm been looking for him to win one. He always dominates his age group, some races he beats out people all the way down to the 30-40 bracket. I was in one of the races, he was on the return loop at the two mile marker as I was just passing the one mile marker. A 5 ft tall 14 y/o girl with hair down to her waist was running neck and neck with him. Demoralizing, that.

Re: Long-term Cooling Trend In Arctic Abruptly Reverses, Signaling Potential For Sea Rise

There is a similar story in today's NYT: Global Warming Could Forestall Ice Age.

Unfortunately, the notion that AGW might stop the next Ice Age, while it may be true, tells us nothing, since the next Ice Age isn't expected for thousands of years. By then, it's likely that all the fossil fuels would have been burned and the CO2 removed from the atmosphere. Likewise, the methane would likely have been reduced to pre-industrial levels as the methane would have been oxidized to CO2, which would also have been removed.

Sad to say, Revkin's Blog has attracted the usual denialist comments from the likes of Steve McIntyre. One may read the comments HERE.

E. Swanson

States Shut Down to Save Cash

There's an interesting graph showing how much in the red states are.

A big part of the solution here in NC was to increase the sales tax from 7 to 8 percent. That's a 14% increase, and is getting us up pretty high, especially for a southern state. Nevertheless, it was probably the right decision.

And some government apologist probably put the spin that the tax was only going up by a penny. Its only the right decision if its a temparary budget plugging measure. If/when the economy rebounds what is the chance that the tax will go back to 7%? (IIRC income tax was introduced in England to fight the Napoleonic wars and Payroll tax here in Aust to free up manpower for WW2- Napoleon and Hitler must be bunking with elvis as those taxes were never done away with).

Speaking of the boys and girls in the MSM, this should tell you all you need to know about their journalistic standards:

Two Bangladeshi newspapers have apologised after publishing an article taken from a satirical US website which claimed the Moon landings were faked.
The Daily Manab Zamin said US astronaut Neil Armstrong had shocked a news conference by saying he now knew it had been an "elaborate hoax".
Neither they nor the New Nation, which later picked up the story, realised the Onion was not a genuine news site.


And in other news, it was reported in TheOilDrum today that "Holiday weekend to see spike in motorists' ...heads!" After newspaper editors fall on their sword.

For British style humour they should look at the daily mash


...and another oil soaked shoe drops...and asks that the "Pretenders..." post from yesterday be appraised in new light

EDITORIAL NY Times Published 9-3-09
Another Astroturf Campaign

It was probably only a matter of time, but the oil lobby has taken a page from the anti-health-care-reform manual in an effort to drum up opposition to climate change legislation in Congress. Behind the overall effort — billed, naturally, as a grass-roots citizen movement — lie the string-pullers at the American Petroleum Institute, the industry’s main trade organization and a wily, well-funded veteran of the legislative wars.

"Greenpeace, the advocacy group, uncovered a letter last month from the A.P.I. president, Jack Gerard, to industry C.E.O.’s revealing that the campaign’s central objective is to “put a human face on the impacts of unsound energy policy,” specifically the Waxman-Markey bill recently passed by the House.


if it looks like a duck, walks like a duck and sounds like a duck... "unsound energy policy" now there is something API knows a thing or two about!

IMHO, the API and similar advocacy groups fear is unfounded. All of us, including environmentalists will continue to depend and use oil for a long time to come. Climate change legislations such as Cap and Trade will be hit hard by economic truth and be sideline. From the article above, Prince Turki al-Faisal shares similar unfound fear i.e. threat of us using alternative to displace oil. I think if Prince Turki al-Faisal had read Robert Rapier post yesterday on TOD, he would sleep better.


Multiple points here:

On Alsaka: they must be getting worried. Minimum sustainable flow will occur somewhere between 20014 and 2017 at current deceline rates and offshore production is becoming an increasing share of the total oil production. ANWR does not look like it could get done in time and NPR-A can help a little.

Here is the chart of the most recent production:

Alaska Onshore &Offshore

On global production and costs:

I have updated the graphics from the EIA's MER data (August 2009, for production through May 2009). They slightly revised the production data all the way back to 1999 (there was a hint of this in the IPM earlier in August). I have rescaled the axes since I last published these:

With cost data:

08-2009 MER Data&Oil Cost

Without cost data:

08-2009 MER Data

The July 2008 and May 2005 peaks have been "closing" as the data is periodically revised. The smoothed production curves (a 13-month centered ARMA) for the two years are nearly identical. But the July 2008 peak looks more and more like a last desperate gasp rather than just meeting demand. Given all the recent chatter about discoveries and "ignoring peak oil", those of us that have a sense of scale about these matters know that "too little, too late" might flatten the production curve (and may even slightly increase production, e.g., US overall production), but it's hardly a drop in the bucket.

Can you provide a legend? Thanks.

Click on the image it will bring up the original with the legend.

Looks like 2005 was still the peak year, even tho July, 2008, was the peak month. When was the peak day? Hour? Second?

On the one hand people worry about petroleum depletion while on the other they worry about global warming. If PO is the issue people should just accept a hotter world. If AGW is the issue they should rejoice over PO. Wanting more oil while wanting a cooler climate goes beyond hypocrisy all the way to schizophrenia.

The problem with the PO vs AGW issue is twofold (at least). Unless the decline from the oil-peak is catastrophic (e.g., it looks more like the startup of the North Slope fields in reverse), the amount of cummuative addition to the atmosphere plus the momentum effects of the global ocean circulation can be substantial.

The other-side of this is that, in desperation to maintain liquid fuels, we turn to other approaches that can make things much worse(e.g., coal-to-liquids or massive biomass conversion. I'm thinking more along the lines of the "direct conversion" technologies that have not been scaled up yet from the bench level gasifier/catalytic reforming to something approaching large pilot scale operations. The basics are there but the implementation is not).

The idea that we could reach "Peak Everything" is also pretty challenging as an issue, moreso than "sustainable growth," a true oxymoron.

Trooper -- Unfortunately I share a similar view to yours. It may seem simplistic but it's as elegant as it is horrifying in my opinion. The world was unwilling to switch from FF when it's economies were healthy. Now, with a population continuing to not only grow but demand a better standard of living, the demand for cheaper energy will continue to expand. Coal will replace other FF as a result. I don't worry much about global warming even though I have a 9 yo who will inherit this mess. Not that I don't see the potential for catastrophic problems arising from global warming but the world will be to occupied dealing with every more frequent and escalating commodity wars. In many ways very similar to the circumstances that led to the two previous global wars. Except, of course, a number of the players have access to nuclear weapons. Some might classify me as a gloomer. But very few anticipated the last two global conflicts which produced 100's of millions of casualties. And that was when most of the killing was done with simple lead bullets.

Renewable Energy, Meet the New NIMBYs

Environmentally friendly energy projects are running into the same cries of "not in my backyard" that stymied a previous generation of alternative-power efforts.

Even as Americans tell pollsters they are eager for alternatives to fossil fuel, some are fighting proposals for solar and wind projects and for the thousands of miles of transmission lines that would be needed to carry the cleaner energy to market. The protests echo grass-roots opposition that has blocked nuclear plants and energy-producing trash incinerators for decades.

The new backlash is fueled by worries that renewable-energy projects would occupy vast amounts of land to produce significant amounts of power. Either renewable projects would have to be centralized and sprawling, covering many square miles apiece, or they would need to be distributed in pieces across millions of rooftops and lawns.

So I wonder how many of these people are going ahead and disconnecting their electric service, seeing as they have crossed off ALL of the available supply options? They might as well start learning now to live without it.

NIMBY is incorrect.

It's now BANANA

Build Absolutely Nothing Anywhere Near Anything

Either renewable projects would have to be centralized and sprawling, covering many square miles apiece, or they would need to be distributed in pieces across millions of rooftops and lawns.

WNC the notion that you're "either with me or against me" when it comes to solar arrays is not accurate. What are the pro's and con's of centralized and sprawling solar plants vs. solar across millions of rooftops and lawns. .

Distributed Photovoltaic Solar Rooftop Projects:


* These projects can get up and running fast. Around 8 months, Kuga says, noting that the solar industry is also trying to bring down this time dramatically.
* Distributed projects are not dependent on building long transmission lines to remote locations (such as the desert).
* Distributed projects are also not dependent on the high water needs that solar thermal plants require for cooling.


* Distributed systems have high costs of deployment. Because each system is a separate project, each rooftop installment requires a lot of labor, transaction and implementation costs.
* They scale more slowly because it takes time to get all the rooftops up and running.

Solar Thermal Plants:


* Solar thermal plants benefit from the economies of scale that can deliver lower solar power prices.
* Solar thermal plant efficiencies are commonly higher than rooftop systems.
* Solar thermal systems have pretty good energy storage technologies, so they are compatible with the intermittencies of solar. Solar thermal plants can store energy for when the sun goes down better than rooftop systems.


* Solar thermal plants in the middle of the desert are transmission line dependent. Transmission lines are costly and difficult to get built.
* Solar thermal plants need a lot of water, which is costly and delays permitting.
* Solar thermal plants need a lot of land and require extensive permitting processes to get approved.

One last thing that's missing from the comparison: Widely distributed rooftop solar literally takes the power out of the hands of corporate utilities. Massive centralized power systems are about preserving "Empire". (spoiler alert) The well dressed executives on the Planet Eating Death Star are the bad guys.

Power to the People

Joe (aka shameless socialist)

An article in EV World from a couple of weeks ago titled The Power of CHP tackled the idea of using CHP (Combined Heat and Power) to increase efficiencies. About distributed power the author had this to say:

This decentralized free enterprise approach could revolutionize our power structure in short order. Denmark changed their utility laws in 1990 and within 10 years 45% of ownership of power generation had shifted to consumer owned and municipality-owned CHP plants (25%) and windmills (20%). Ironically, ten years is about the time it takes to build one giant nuclear plant or “clean coal” plant. Distributed power eliminates the need for massive expansion of our power grid to connect old-style monster power plants. Distributed power also reduces power transmission losses since power is consumed near where it is generated.

Earlier on in the piece he makes the case against the Audi Chief Calls Chevy Volt “A Car For Idiots” story, saying that:

If we take that same acre of corn and burn it to make electricity to charge an electric car, we will be able to drive the car 22 times as far! About 117,096 miles per year!

On closer examination he makes a serious error in his calculations. He works out how much energy is in a ton of corn biomass, how many tons of corn biomas are produced per acre and based on an efficiency figure for CHP plants, goes on to state that some 85% of the energy contained in the biomaass from one acre of corn would be available as electrical energy to power an EV. What the author either does not know or does not understand is that, most of the energy from a CHP plant tends to be heat energy and the 85% figure he used is for both heat and electrical energy.

If one were to assume that a CHP plant produces twice as much heat energy as electrical energy, the electricity out put would be somewhere in the region of 25-30% of the energy contained in the fuel. Using his numbers, a typical EV would still be able to travel 7 times the distance as a ICE powered vehicle for the same amount of fuel so, I don't think his exaggerated numbers were necessary to make the argument. A multiple of seven still looks good enough to make nonsense of the Audi chief's statement.

Edit: correct spellling

Alan from the islands

islandboy - "decentralized free enterprise approach"

That's it! It seems to me that there are so many simple practical solutions to our energy and CO2 emissions problems. I am convinced that large corporate enterprise, in it's present manifestation, is the problem whether it's energy, climate change or health care reform.

Most people don't realize that if you are sitting at a BlackJack table in Vegas and you have lost hand after hand you have the right to call for a new deck of cards to be put in play. It's high time we asked for a fresh deck of cards and while we're at it let's ask for a new dealer. The present deck is stacked against us.

IMHO, what makes very good sense is putting in rooftop solar thermal for H2O and space heating where it is feasible (not all homes are well situated for this), combined with intermediate-scale CSP-powered (in part) district heating plants. The latter could be set up and run as a community co-op utility. For those neighborhoods that don't want even this, I guess they could tear apart the foreclosed houses and burn the lumber for heat - for a while.

Large scale CSP might eventually make sense for some industries that need to shift from continuous to batch process. These are going to have to be industries that need a lot of concentrated heat, but not a lot of workers, because they are indeed going to need to be located in out-of-the-way places.

I'm not conviced that PVs are going to end up being that good a deal, either on a small scale or large scale basis. I fear that we are likely to run into materials bottlenecks once we really try to scale up, and that in turn will drive the price back up to prohibitive levels. The niche for PVs seems to be for places where connection to the grid is impossible or too expensive, and where only a very limited amount of power is needed. While there will be a few houses where the homeowner can afford to cover the roof with PV pannels, that is not going to be feasible for most people. More commonly, we might eventually see a fair number of houses with one or two PV panels. That won't be enough to power everything they have now; it might be just enough to keep a few batteries recharged if the grid goes out for several days, which in turn might be enough to keep the refrigerator and freezer running, the HVAC control systems (but not a heat pump or a/c), and maybe a couple of CFLs or small appliances. Given the likelihood that the grid will become less reliable in the future as utility maintenance budgets prove inadequate, this much makes sense.

WNC - Here is an obvious question. Everywhere I see massive 1-2 story office parks, warehouses and shopping centers. If they're looking for a solution to the coal fired electrical energy power plants its' right there. We don't have to clear any new fields, take up environmentally sensitive areas and build more obscene power lines. Let's mandate solar on all commercial roofs and have a bond issue to pay for it.

Why aren't we doing that? I'm allergic to fine print so I guess I must have missed something.

Why aren't we doing that? I'm allergic to fine print so I guess I must have missed something.

We are doing that here in South Florida at least in terms of tax rebates and incentives and net metering with the option of selling back unused power to the grid.

However it is an enormous constant uphill battle against the interests of FPL and other centralized agglomerations of power. If you really think about it decentralized power generation is a truly subversive concept that is anathema to what we currently have.

We are only beginning to chip away at TPTB and my impression is that they don't like it.

I happen to sell commercial rooftop PV systems.


You always have something useful to say and I look forward to your comments.

Since your are personally involved in PV sales I would appreciate your answer ,which I realize must be only a WAG ,as to how long it will be before I can buy panels and the necessary inverters and safety equipment-not including installation -at a non subsidized price that will make it possible to actually save cash money by owning a pv system.Subsidies in the form of tax credits don't mean xxxx to me because I don't earn much money and therefore can't take advantage.

Lets assume that retail electricity doubles in price every seven or eight years.One guess for deep in the sunbelt folks and one for people like me in Virginia,please. THANKS!!!


I appreciate your compliment.

Since your are personally involved in PV sales I would appreciate your answer ,which I realize must be only a WAG ,as to how long it will be before I can buy panels and the necessary inverters and safety equipment-not including installation -at a non subsidized price that will make it possible to actually save cash money by owning a pv system.Subsidies in the form of tax credits don't mean xxxx to me because I don't earn much money and therefore can't take advantage.

First, this is *NOT* a sales pitch. However, on the commercial side, the company I work with is heavily involved with doing financial payback analysis of the systems we install and it is necessarily based in part on educated guesses as to the increase in electricity rates over the coming years. We admit up front that we have no crystal ball.

Second, I'm in Florida and while I assume circumstances are similar in Virginia, wading into such an analysis without having some very concrete information as to what it is that you wish to achieve would be pure guess work at best and probably downright dishonest at worst.

Having said that there are reputable dealers and contractors out there who do a reasonable job of looking out for the interests of their customers. As in any business you will find the good, the bad and the ugly.

You might start by taking a look at what incentives are available in your Area.

If you'd like to contact me you can reach me at fredunderscoremagyaratyahoodotcom

I happen to sell commercial rooftop PV systems.

FMagyar - Thank-you...That makes you a Hero

“ A hero ventures forth from the world of common day into a region of supernatural wonder: fabulous forces are there encountered and a decisive victory is won: the hero comes back from this mysterious adventure with the power to bestow boons on his fellow man."
Joseph Campbell The Hero With A Thousand Faces


FMagyar - Thank-you...That makes you a Hero

It's a Bird, It's a Plane, It's FMagyar in his green cape ;-)

One last thing that's missing from the comparison: Widely distributed rooftop solar literally takes the power out of the hands of corporate utilities.

I don't see it that way at all. Unless the customers go off grid, with all the extra costs of energy storage they are still dependent on the grid for time distribution of the energy. Currently rooftop solar is getting a sort of subsidy by being able to store and recover energy from the grid on demand. At low penetration levels this is not a problem, as peak generation has high enough correlation with peak demand, that the time distribution service provides net benefits to both society and the utility. Once a certain threshold of penetration is reached, it will start to become a nontrivial net cost to the utility.

I don't see it that way at all. Unless the customers go off grid, with all the extra costs of energy storage they are still dependent on the grid for time distribution of the energy.

EST - Shouldn't we simply nationalize the grid and then we won't have these sticky issues about who is "dependent" on who? If the utilities are simply interested in maintaining their "customer" base then maybe we need to look at the possibility that corporate interests are a threat to our National Security.


Joe (aka shameless socialist)

Are you American? I can't imagine that you live in the same USA as any body who presents on Fox TV (Bill O'Reilly, Glen Beck), Rush Limbaugh, Denninger etc. With the kind of stuff you're spoutin' surely they'd shoot you on sight! ;o)

Alan from the islands

"With the kind of stuff you're spoutin' surely they'd shoot you on sight!"

If you had six months to live what would you do?

If you had grandchildren what would you do?

If you had a conscience what would you do?

If you had 2 of the 3 hanging over you what would you do?


EST - Shouldn't we simply nationalize the grid and then we won't have these sticky issues about who is "dependent" on who?

Joe, the real problem is that the solar grid conneected customers become free-riders, using the grid as a free energy storage system. Somewhere someone has to pay for the cost of the grid.

Joe, the real problem is that the solar grid conneected customers become free-riders, using the grid as a free energy storage system.

The grid also gets power fed back into it at certain times and it mitigates the costs of having to build very expensive new centralized power plants. The incentives given by the power companies aren't exactly because they've suddenly become concerned about the financial welfare of their captive customers. It's because it saves them money as well.

Nationalizing the grid will not reduce our reliance on it.

Nationalizing the grid similarly will not reduce problems that arise from much larger fractions of electricity coming from less reliable distributed sources.

Leave aside inefficiency problems that come with socialism, some problems do not have solutions and some changes can't be made without more technology than we have.

Why does concentrating solar need water? I thought some of the newer designs use an oil as the heat transmitter to molten salts for storage. I also thought what water does get used is used in a closed system.

Kooling. Just as nuclear and coal work better with a source of water cooling.

Edit: P.S. Look up "Carnot efficiency"

But isn't it possible to build closed systems that do not involve water evap? For example, run pipes underground and let the cool soil cool down the liquid.

Zipcar - The best new idea in business
Zipcar has already persuaded young urbanites to share wheels. Now the movement is going mainstream - and players like Hertz and Ford want in.

. . . drivers who give up their cars and switch to Zipcar say they save an average of $600 per month. Car sharers report reducing their vehicle miles traveled by 44%, according to Susan Shaheen of the University of California at Berkeley, and surveys in Europe show CO2 emissions are being cut by up to 50% per user. . .

One thing everyone can agree on? The radical environmental benefits of sharing cars. The high cost of car ownership -- AAA pegs the average at $8,000 a year -- motivates people to drive even when they don't really need to. (Hey, if you're paying for the car, might as well use it.) Paying by the hour, meanwhile, creates a strong incentive to cut back. The Canadian car-sharing service Communauto calculates a 13,000-ton reduction in CO2 emission by its 11,000 members in Quebec and says that number could skyrocket to 168,000 tons per year with widespread adoption in the province.

At some future tipping point: watch Goldman Sachs and other PTB buy this company, then shut it down to help keep FFs more affordable and profitable for themselves. IMO, this will be no different than back in the earlier days when GM & other PTB forced urban transit to be ripped out.

It seems obvious to me that at some point the PTB will embrace Kunstlerization, but with their own twist: walkable cities for most of us, but empty boulevards for speeding limousines [recall post-collapse Russia per Orlov]. Of course, the roads will be in bad shape, but that should be no problem for limos like this:


I suspect I'm not the only one who has figured out that peak oil may force home prices to zero.


Of course there certainly are other factors involved but still ...

I'm willing to pay $500 for your home sight unseen...right now*.

* This offer has time limits and seller may have to provide vendor with proof of clear title. Other restrictions may apply. If your home is in foreclosure please consult an attorney.

Yeah eventually it will come to this I think we are all Detroit and TPTB know it.

As far as my economic theory falls now its a matter of sitting around and waiting to see if the peak oil hammer falls. If I'm right and we continue to see rising oil prices nothing they can do about it people will be forced to pull back from buying McMansions and as prices fall people with little equity will get hammered.

Whats interesting is I think they will first extend then expand the housing subsidies. What this means is everyone who set out the bubble will be enticed to buy. However I also think prices will continue to fall going into the winter regardless this slowly brings them closer in line with historic values during good times. But of course times are far from good. The net result is to pull in some more "responsible" fence sitters. After next year all thats going to be left I think are people like me that won't buy except at Detroit prices and people in financial ruin. Very few "normal" folks will be left.

Thus I really think they are aggressively pulling all remaining demand forward.
You couple this with what I thinks going to happen with oil and by next summer it will really be nasty. The subsidies will increasingly fail to work simply because there are literally no buyers left at inflated prices.

Same of course with autos. So I'm really interested to see how fast these two programs generate waning interest esp if oil prices increase.

Also of course I suspect most of the homes sold in 2008 and 2009 will end up in foreclosure esp with job losses. So a significant percentages of the sales up through 2010 are going to end right back in the foreclosure queue. I think after 2010 it will be general with only houses bought 20 years ago and no HELOC immune.

In housing during busts people talk about the silent spring I think spring 2010 will be our silent spring when no one shows up to buy.

Mike, I can see that moving out a year (perhaps two), per Leanan's comments. But not much further.

It all depends on the price of oil.

Hate to say that on the oildrum but the financial games crash fast at 200 bbl oil.

I can't yet call the game but once we pass 90-100 a barrel with high unemployment its over.

I think there are two things happening in housing;

1) the financial meltdown,

2) resource reallocation.

The intrinsic value of a property, once speculative excesses are stripped away, is the extent that it pays for itself. A factory by facilitating production, a farm by exploiting natural resources and a house by proximity to paid work.

A house with no resources and no production facilities and left in an area without paid work is essentially worthless. No one can live there unless they can commute. Take away jobs due to the financial meltdown and the fact that in our evolving new world service industries will be mainly an expensive luxury and unneeded (they currently represent 90% of the US economy*). Take away the ability to commute, due to energy depletion, infrastructure degradation and lack of investment in alternatives. And you're left with vast tracts of housing which is economically worthless, even if people are forced to carry on living in them (a la Detroit).

So first we have falling values due to deflation and the financial meltdown, secondly we have a more severe loss of value due to a permanent reallocation of resources away from a service based economy. Property values will automatically adjust to their intrinsic value eventually once government and finance recede from the scene.

* "The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy"

Very long, but very interesting article by Krugman:

How Did Economists Get It So Wrong?

It seems the crisis last fall shook economics to its roots.

But almost all of us on the left saw this clearly coming.
My educational background is in science and history, but it was a no brainer. Anyone paying attention could not miss that one.
It is disconcerting that people in positions of power were so ignorant and blind to obvious conditions, and had ideology override observable reality.

Going right back to the Upton Sinclair line.. (paraphrased)

'It's sometimes impossible for a man to see something that his salary depends on him not seeing..'

I saw it coming mid 2007 so I'm always p!ssed of when lying politicians, economists and banksters claim that no one saw it coming.

Likewise p!ssed off.
I saw it. If I could, then what about the corporate and government adviser crowd? We could not stand the strain any longer and pulled the lot out late 2006, which admittedly was too early, and then spent 2007 waiting for the bubble to burst. Did not make as much as if I had hung in, but at least we have the means still to do our low-energy house and 2 acres. Better than wasting it.

Alan Greenspan claims to have been shocked.

Most people on the Left and most people on the Right did not see the financial crisis of 2008 coming. The people who saw it coming were rare outliers. Among the ranks of academic economists Nouriel Roubini was one of the rare exceptions. Most of the managers of big investment funds didn't see it coming and the vast majority of them lost money. A small number of them (notably John Paulson who made billions betting on it) saw it coming and made big money.

It seems the crisis last fall shook economics to its roots.

Perhaps because the roots were in very poor soil to begin with?

The Economist Has No Clothes

John Maynard Keynes expressed particular contempt for financial markets, which he viewed as being dominated by short-term speculation with little regard for fundamentals. And he called for active government intervention — printing more money and, if necessary, spending heavily on public works.

Leanan - This statement appears to express our current dilemma quite succinctly. This country and a large percentage of it's citizenry are in a lot of trouble right now. I don't know a soul who has been spared loss from this financial meltdown.

I don't have to tell you things are bad. Everybody knows things are bad. It's a depression. Everybody's out of work or scared of losing their job. The dollar buys a nickel's work, banks are going bust, shopkeepers keep a gun under the counter. Punks are running wild in the street and there's nobody anywhere who seems to know what to do, and there's no end to it. We know the air is unfit to breathe and our food is unfit to eat, and we sit watching our TV's while some local newscaster tells us that today we had fifteen homicides and sixty-three violent crimes, as if that's the way it's supposed to be. We know things are bad - worse than bad. They're crazy. It's like everything everywhere is going crazy, so we don't go out anymore. We sit in the house, and slowly the world we are living in is getting smaller, and all we say is, 'Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials and I won't say anything. Just leave us alone.' Well, I'm not gonna leave you alone. I want you to get mad! I don't want you to protest. I don't want you to riot - I don't want you to write to your congressman because I wouldn't know what to tell you to write. I don't know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first you've got to get mad.
Howard Beale Network

Maybe we should start with putting all of the economists in WWII style re-education camps. Teach them a trade maybe.


I'm not convinced Keynes and Krugman know what they're talking about, either. They may not be as moonbat-crazy as the guys who claim unemployment means people just don't want to work, but I don't think they have the answer, either.

In particular...I'm not convinced government spending can get us out of the trap. It didn't work for Japan.

It's easy: just keep borrowing from the future and the future is forever! Especially, the Fed funds rate being essentially zero, the cost of servicing the debt is zero. Treasury keeps writing IOUs and selling them to the Fed Reserve. That's how they're doing it. When an IOU comes due, it's just rolled over into the future. No Problem! The key is to always pay the currently due debt with debt from further in the future. There is no limit!

What's there to stop it?

"What's there to stop it?"

Kiting checks is against the law.

Not for our government it would seem!

Yep, long article. You would think that Krugman would at least mention Ecological Economics [Nate's Gund Institute and other's work] as worth further research.

Net [energy, services, and resources] provided by Nature seems fundamental to me.

TOTO,you have one big fat enormous problem and there is only one way to fix it.

You must just go ahead and die.:-(

Cause you're about fifty years ahead of your time,whereas the rest of us here are mostly only five or ten years ahead.;-)

If there is one thing I am sure of after having spent my life reading at random ,it's that damn near every body is as ignorant as a new born babe in respect to the big picture,especially bankers and economists.

I don't mean they don't have the data, and insider data at that.I mean they are too arrogant/stupid to stop and consider the possibility that they might be wrong.

I spend so much time here on this site because it's the best place I've found to spend time in contact with the very small part of the general population that is actually aware of what's going on w/o getting too religious about it.

Hello OFMac,

Like Memmel said upthread: the future just keeps getting pulled ever more faster into the Present. Sounds like my Rogue Wave Theory.

Thus, what we currently 'think' may be 50 years away, may in actual 'Reality' be only 5 or ten years away.

especially bankers and economists ... they are too arrogant/stupid to stop and consider the possibility that they might be wrong.

You know how we TODders talk about the Earth being finite and thus having room to store only so much in the way of commercially exploitable oil fields?

Well maybe that's true of the human brain? Maybe it too is finite and can store only so much in the way of knowledge and modeling constructs of reality?

Maybe bankers and economists aren't all that stoopid and arrogant? Maybe their constructs of economic reality are so complex and large that there is no room in their individual (smart but finite) brains to include what we TODders take as a given, namely, that "The Economy" is an engine that feeds off of depleteable non-renewable natural resources?

I just finished reading page 8 of Krugman's massive NYT tome and not once did he mention depleteable non-renewable natural resources. It seems that in his head, it is all about the fight between foul and fresh water economic theorists and the circulation of the "money" thing round and round in our irrationally exuberant markets. All those theories saturate his head. There is no room for anything more. (Left click on images for more info)

In their defense, they are being paid (often very well) to write and say what they do-here we are stating our beliefs. Money makes people do things they otherwise wouldn't do.

"Money makes people do things they otherwise wouldn't do."

Brian - The first thing they do is lord it over everyone that has less.

Readers will be unsurprised to learn that evidence for adult neuron growth was first presented in the 1960s, and again in the 1980s, but was dismissed out of hand for no reason other than that it contradicted existing (untestable) theories.

I remember over 30 years ago being told that once you get to about 12 years old the neurons in place is all you get. Since college I've always drank and I worried about destroying so many brain cells that I would become an idiot. Well it happened...I'm an idiot. Now I learn that it's not my fault. I always was an idiot. :-)


I am still laughing my ass off at that!

According to just-released data, U.S. capitalism’s reserve army of the unemployed increased by 466,000 people, to a total of 14.9 million, and the unemployment rate rose by 0.3 percentage point to 9.7 percent.

step back - That's a neat web-site. After reading the above my heart swelled with pride...being unemployed has made me a part of U.S capitalism's reserve army.

Paul Krugman kids that you are on a self-chosen "vacation". After all, in a free will market, workers freely "choose" what they want to do. If you are unemployed it is clear that you chose to take an extended "vacation" --according to classical economic theorists.


Yup and we also have the freedom to chose whether to starve or not.

Yeah, I read Krugman's piece this morning and his lack of interest in the energy side of the economic problem is glaring. Most surely, the "Stagflation" of the middle 1970's was the result of the large jump in the price of oil after the Arab/OPEC Oil Embargo in 1974. Again, after the 1979 Iranian Revolution, another oil price spike hit the economy hard and the efforts to deal with it produced the massive increase in interest rates which resulted in the Recession in 1981.

As much as I enjoy Krugman's writing, he is still fighting the last war, looking back at the Great Depression for reasoning to apply to the present situation. His description of "Externalities" in economic theory might have been reasonable back then with lower world population and with the much smaller global economy having little impact on the natural world. Since then, many of us have realized that there are no "Externalities", but that the economy is an "Internality" in the sense that all economic activity functions within the boundary of the Earth's available resources. The fact that these resources are both finite and are being rapidly depleted is nowhere mentioned. And, underlying all human economic activity is the basic reality that all civilization is solar powered in the sense that people are powered by solar energy captured by agriculture or by other parts of the natural world, such as ocean fisheries. As our economic system continues to value "raw" agricultural land as "dirt cheap", our situation can not be expected to improve.

Krugman did not mention the many efforts to quantify this new reality in economic terms, such as Ecological Economics. And, there's no mention of Peak Oil or the abrupt spike in the price of oil last year, which surely precipitated the implosion of the financial markets thru the housing bubble created by irresponsible lending to unqualified borrowers at low interest rates. Sorry to say, both versions of economic theory as described by Krugman are likely to turnout to be wrong. We will all suffer if Peak Oil is already here and those old economic theories won't fix things, sad to say.

E. Swanson

In Krugman's defense, he's written a post-speak note explaining that he had to leave a lot out because this was a "magazine" piece.

Discover has an interesting take on Krugman's magazine article.


Art Levine, AlterNet - The AFL-CIO released the results of a disturbing new Peter Hart survey, "Young Workers: A Lost Decade" that found that about a third of workers under 35 live at home with their parents, and they're far less likely to have health care or job security than they were ten years ago. . . A quarter of young workers say they don't earn enough to even pay their monthly bills, a 14% rise from the last survey. . . Thirty-five percent are significantly less likely to have health care than older workers, only 31 percent make enough money to pay their bills while putting anything aside in savings, and almost half are more worried than hopeful about their economic future.

I suspect this is how a lot of people are going to deal with the Greater Depression: move in with family.

Only a generation or two ago, it would be normal to live at home until you were married, and maybe even after marriage. There are a lot of houses around here set up as three-family. Three generations would live in it, one on each floor.

That would be nice if your house was designed for that.

But the modern house is setup for single family occupancy.

There is something about the daughter in law-mother in law relationship that makes two families in a single family dwelling unworkable.

It's amazing the things that go from unworkable to practical if there is need.

Agreed. In fact, if you talk people here who live in the houses I mentioned, the daughter in laws hate it, and can't wait until they can afford their own place.

But they stay, sometimes for decades, because of financial considerations.

It's not just corporations that are donating money to politicians:


It never was. It could, in fact, be likely that unions are required by their charters to contribute in what they believe to be their member's best interest.

How do you think that chart would have looked in 1925?

Perfect. Let it do the telling then.

Hello TODers,

Disclaimer: I know next-to-nothing about fiat currencies, foreign trade & forex, and PM-investing. But IMO, this link is interesting when combined with Leanan's DB toplink, "China and the Buzz of a Pending Bank Default":

China Urges Citizens to Buy Gold and Silver

..As I have written previously, there appear to be two, related goals in this strategy. Most-obviously, the Chinese government is now spending its U.S. dollar-holdings faster than it is accumulating them...

..The second goal which the Chinese government appears to be moving toward is having its own currency, the renminbi, replace the U.S. dollar as the global reserve currency. There have simply been too many actions on this front to list them all..

..These initiatives are entirely separate from the buying-spree the Chinese government has been engaging in, dumping U.S. dollars for a vast assortment of “hard assets” - primarily commodities and commodity-producers.

..A plunge by the U.S. dollar to its real value (somewhere not far above zero) would unleash crippling inflation in the U.S. (if not actual hyperinflation), while a rise in borrowing costs would strangle its crippled economy. Given that suppressing the price of gold has been a principal strategy by Western bankers to keep the dollar artificially propped up, China's zeal for gold (and silver) is also strongly against U.S. interests.

Whether the official urging by the Chinese government for its citizens to buy precious metals is merely prudent, “fatherly” advice to its citizens, or part of a somewhat more sinister campaign the result will be the same: soaring precious metals prices indefinitely into the future.

Hong Kong pulls all its gold out of London

This story may have huge implications.
Hong Kong has demanded all its gold reserves back from London for storage locally in their new state of the art vault.

The Hong Kong Monetary Authority has also stated that it will transfer its gold reserves stored in other vaults around the world to the depository later this year.

This has massive implications if Asian banks start demanding their physical gold. The “paper” game may soon be up.
It's almost like a game of MPP for currency. China appears to be moving to the point of claiming their currency will be partially backed by gold, rare earth minerals, and countless tons of stockpiled commodities [plus their low-cost mfg prowess].

The USA still appears to be moving towards claiming that our greenback is backed by the full faith in: debt up to our eyeballs.

Whose currency is going to be the most postPeak credible?

Bob, "the future is already here, just not widely distributed", as someone once said. The elite are fully cognisant of what's going down and are placing themselves accordingly for the future. They fully intend to keep their place in the human hierarchy, although their strategy is still evolving. What is obvious though is that there is little trust in paper claims to real assets, the trend is to own and control directly. Normally in any scam, the asset of value is swapped for a claim to an asset of greater value, the fraudster makes off with the physical asset leaving the victim with a worthless claim to something non-existant. Basically this is what's going down, real assets are being swapped for paper and the naive public is going to be left with the increasingly worthless paper.

Farmland Investment - Next Bubble or Undervalued Asset?

Investment banks and hedge funds are mopping up vast tracts of agricultural land around the world, hoping to ride the so-called "commodities supercycle" that has lifted prices of everyday agricultural commodities such as wheat, rice, soybeans and corn to record highs.

U.S. investment bank Morgan Stanley has bought several thousand hectares of land in Ukraine, Europe's grain basin...

...Banks are not the only ones going back to the land [you can add countries, corporations (Daewoo) and wealthy individuals too].

Fund manager BlackRock has a hedge fund that invests in agricultural land. International estate agents Knight Frank is setting up one to buy agricultural land in the UK.

Industry experts say hedge funds have bought thousands of hectares of corn and sugarcane plantations in the United States and Brazil, illustrating how even purely financial players are moving beyond paper markets into real assets...

..."Over the next five years, you will have 2 billion more people eating bread, eating noodles, drinking coffee ... There is no way in this world that the supply side can catch up with the demand side," says Badung Tariono, an Amsterdam-based fund manager for ABN AMRO...

..."Supply is inelastic. It's not easy to increase the acreage to produce crops. Effectively your supply curve is fixed and your demand curve is moving to the right," he added.

Financial players also realise that agricultural land is a limited resource, and who controls it now could well reap windfall gains later.

Analysts say having a stake in the agricultural process is an extension of a trend among financial players to embrace physical assets to gain greater insights into paper trading.

Banks, hedge funds and private equity funds have over the past several years built sizeable interests in physical infrastructure in the energy sector, with assets ranging from ships to pipelines to power stations.

"There is this craving for real assets. Banks have become more and more physical in their investments," says Francisco Blanch, head of global commodity research at Merrill Lynch.

Well, from Leanan's and Darwinsdog's comments above

Leanan: I think the only scale that matters (in terms of the debate here) is the human scale.

Darwinsdog: Okay, but I've spent too much time examining the fossil record & rates at which selection operates or species replacements occur in biological communities or ecosystems replace one another or how orbital mechanics effects climate... for my perspective to be limited to that of a human lifetime. I may differ in this way from most TOD posters but there are geologists in this forum who may also think in terms of longer time frames than most people do.

I frequently get people saying ideas about the natural time scales of events are "too big" or "too small" to think about. There's a trick one can use for that, but I can't get most people to try it out. All time scales of change actually fit a common universal scale, in relation to themselves. The physics supports it completely, that every kind of conserved change comes and goes with it's own developmental process... i.e. occurs as some "bump on the curve" brought about through the same sequence of changing directions of accumulative change. That makes all events however big or small all the exact same size, "one bump" conceptually, and gives you a framework for fitting in the many kinds of events of other scales that compose them. ¸¸¸.•´ ¯ `•.¸¸¸

This sounds very much like the self-similar feature of fractals.
The coast of england looks the same from either 50 miles or 50 millimeters.
Crystals form the same way.
Natures design once again.
I am surprised that this relationship is not recognized in everything.