Drumbeat: October 6, 2009

Pickens Says China Purchases Are Leading to $90 Oil

(Bloomberg) -- Billionaire hedge-fund manager T. Boone Pickens said Chinese purchases will help push up crude-oil prices to as much as $90 a barrel next year as output declines and the global economy rebounds.

Next year’s average oil price will be $80 a barrel, 39 percent more than the average so far this year, Pickens said today in an interview on CNBC.

China has spent $200 billion on forward purchases, “tying up” the world’s oil supply, Pickens said. The U.S. “can’t compete” with China-owned oil companies because it lacks state- owned oil companies to pursue its economic interests, he said.

Gold hits record high as dollar falls on oil pricing fears

Gold hit a record high of $1,043.78 per ounce in intraday trade yesterday, as the dollar fell on reports that Arab states were considering pricing oil sales in currencies other than the dollar.

Peak Gasoline Is Here

The jury's still out on peak oil, but the concept of peak gasoline has some very credible proponents.

Last Thursday, ExxonMobil CEO Rex Tillerson argued that U.S. gasoline consumption peaked in 2007. In his words, "motor vehicle gasoline demand is down, is headed down, and is going to continue to head down."

Burning Coal Deep Down has Huge Potential, Untested

LONDON - Burning coal underground could be one of the next breakthroughs to increase the world's energy supply, similar to establishment of Canadian oil sands, executives and academics told a conference in London on Monday.

The world could exploit huge additional coal reserves that are too deep or remote to mine, using a technology that burns the fuel hundreds of meters underground.

GM hits a big speed bump

The collapse of the Saturn sale and glitches in the Opel and Hummer deals are signs that GM faces a difficult turnaround after a quick bankruptcy.

Europe to throw $73 billion behind energy research

BRUSSELS (Reuters) - Europe will this week launch a campaign to triple funding for energy research to 8 billion euros ($11.7 billion) a year in a technology race with Japan and the United States, a draft document shows.

Eestor watch out! IBM is building a next gen battery too

he recent advent of electric and hybrid cars to mainstream consumers is driving an intense interest in battery technology. Eestor has secretively been working on an ultracapacitor battery it claims will eclipse current lithium-ion and lead-acid batteries. Though the company has built volumes of buzz by keeping the curtain low, IBM is stealing some thunder with its commitment to create a battery that will enable 500 miles of travel on single charge.

DOE Introduces Big Oil to New Energy Source: Waste Heat Geothermal

Every barrel of oil extracted in the US also produces ten barrels of hot fluids in addition to the oil. Why not use that potential energy in the waste heat?

Rather than discard that “geothermal” resource created by the process of oil extraction, the DOE is going to show the traditional energy industry how to tap into those waste fluids to power equipment at the site.

Act now on climate change, oil exec tells industry, government

OTTAWA — A major player in Canada's oil and gas sector is warning that both the economy and the environment are in danger in the absence of a "robust" federal plan to crack down on heat-trapping emissions in the atmosphere.

In an interview with Canwest News Service, a Shell Canada executive says the company has been engaging stakeholders from both environmental and government circles to push for a climate-change plan that has legitimate targets and incentives for new technologies to reduce greenhouse-gas emissions.

Iran says profited from non-dollar oil sales increase

TEHRAN (Reuters) - Iran has made a huge profit from its policy of increasing its sales of oil for currencies other than the U.S. dollar, Central Bank Governor Mahmoud Bahmani was quoted as saying on Tuesday.

The comment came after Britain's The Independent newspaper quoted unidentified sources as saying Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in the trading of oil.

Gulf region to stay with dollar for oil: UAE central bank source

ABU DHABI (Reuters) - Gulf Arab oil exporters will stay with the dollar as the currency for trading crude, a source in the United Arab Emirates central bank said on Tuesday.

"They are going to stay with the dollar," the source told Reuters, asking not to be named. "For so long oil pricing is in dollars and it would be difficult for producing countries to change."

Comments by Jean Laherrère on “Squeezing More Oil From The Ground”, Scientific American

Leonardo Maugeri, who is an economist, being Vice-President of the Italian oil company, ENI, has evidently been influenced by Professor M. Adelman, who also took the Kern River oilfield in California as the best example of reserve growth, suggesting that it is representative of what can be expected more generally throughout the world. The basic statistics he quotes for Kern River Field are shown in the table.

Alderman commented that the field itself had not changed; but knowledge of it had. Maugeri follows the same argument but fails to mention that the number of producing wells had increased from 500 in 1942 to 9318 in 2007 and that as many as 16 000 wells had been drilled in total. In other words, drilling increased by a factor of twenty yet the reserves increased no more than eight-fold.

Chevron leads venture in Kazakhstan

TengizChevroil LLP, the Kazakh oil venture led by Chevron Corp., may spend $10 billion to boost output at the country's largest producing field over the next seven years, TengizChevroil deputy head Anuarbek Dzhakiyev said.

TengizChevroil plans to ask the Kazakh government to approve a spending plan designed to increase output at the giant Tengiz deposit by about 12 million metric tons a year by the end of 2016, Dzhakiyev said in an interview in Almaty today.

Sarkozy clinches $6 billion of Kazakh energy deals

ASTANA (Reuters) - French President Nicolas Sarkozy clinched oil, gas and nuclear deals worth more than $6 billion with Kazakhstan during a visit on Tuesday, establishing France as a key investor in the resource-rich state.

The West sees Kazakhstan, the largest oil producer in the former Soviet Union after Russia, as an increasingly important energy supplier as it ramps up production by tapping new oil and gas fields on its Caspian sea shelf.

Winter heating fuel bills seen 8 percent lower: government

WASHINGTON (Reuters) - The average U.S. household will pay 8 percent less in heating fuel costs this winter -- a savings of about $84 -- with natural gas and propane users enjoying the biggest drop in cost, the Energy Department's forecasting arm said on Tuesday.

This winter's heating bills will be lower thanks to cheaper fuel prices, plenty of fuel supplies and expected slightly milder weather compared with last winter, according to the U.S. Energy Information Administration.

Energy and society

Ian Lowe speaks about the future of global energy supplies. As he puts it, our society's heavy reliance on oil and other fossil fuels makes us vulnerable for both economic and environmental reasons. Without substantial and immediate moves to find new energy sources, the dwindling oil supplies will have a massive impact on how we live - and in the meantime they are doing great environmental damage.

Linking the past with the present: resources, land use, and the collapse of civilizations

Without energy, societies collapse. In contemporary, industrialized societies, virtually all energy sources are derived from oil. Even “renewable” energy sources such as hydropower, wind turbines, and solar panels require an enormous amount of oil for construction, maintenance, and repair. Extraction and delivery of coal, natural gas, and uranium similarly are oil-intensive endeavors. Thus, the decline of inexpensive oil spells economic disaster for industrialized countries. Demand destruction caused by high energy prices is affecting the entire industrialized world.

Disaster extraction

Hurricane Katrina is estimated to have destroyed over 275,000 homes. To replace these would require nearly 4 billion board feet of new lumber. Add the number homes lost due to severe flooding, tornadoes, and other storms and you can see that the extractive industries make out quite well in these circumstances. But it is not only trees that are harvested to replenish these lost homes and businesses. We also need to factor in the mining of gypsum for wallboard, copper for wiring and plumbing, iron ore for the iron and steel found in everything from furnaces to cabinet hinges. And don't forget the petroleum derivatives found in everything from the wall and floor coverings, wire sheathing, lighting fixtures, and the 70 gallons of heating oil left in the tank in the basement. Obviously the list goes on and on and this is only meant to illustrate how much needs to be replaced or repaired and where it's going to be coming from. Indeed we need to cut more trees, mine more minerals, and pump more oil all to replace the house lost in the fire, flood, or storm.

How Will Future Sea-Level Rise Linked to Climate Change Affect Coastal Areas?

The anticipated sea-level rise associated with climate change, including increased storminess, over the next 100 years and the impact on the nation's low-lying coastal infrastructure is the focus of a new, interdisciplinary study led by geologists at The Florida State University.

"Our hypothesis is that the historic storm record, which extends back only about 150 years, isn't a reliable indicator of true storm frequency, but the long-term geologic record is," said Joseph F. Donoghue, an associate professor of geology at Florida State University and the study's lead investigator. "This project is crucial because the rates of change in environmental parameters predicted for the near future are much greater than those of the past several millennia. For example, some of the worst-case sea-level rise scenarios predicted for the near future have not been experienced by the coastal system for more than 8,000 years."

Americans Are Still Buying Gas-Guzzlers, But Here Are 7 Signs That the Market for Green Transport Is Exploding

More and more Americans are finding other ways to get around in greener fashion, from Smart Cars to Vespas.

Sharon Astyk: Whither Peak Oil?

What’s funny is that the people who got it right - the ones who described what would actually most likely occur, seem to have been not the technical specialists, but the non-technical analysts who presented the material to the general public. Richard Heinberg warned everyone in pretty much every book he wrote that what we could expect would not be consistent price signals, but “extreme volatility” - prices rising and collapsing, with complex results playing out in the financial arena. Jim Kunstler may have gotten a bunch of things wrong (still no Pirates in Seattle) in The Long Emergency, but his refusal to single peak oil out as a sole root cause was absolutely on target - it was just one of several urgent factors that are driving us forward. In his analysis of how collapse proceeds, Dmitry Orlov observed that only rarely do we correctly articulate the causes of collapse - instead, it takes on a life of its own.

I’ve noticed that there is a tendency for people who come at this through the numbers and data to listen to those who offer big-picture analysis, to praise them for their analysis, but honestly, not to really, seriously believe what they say. That is, I think there’s a tendency to assume that there will be time at least for their pet projects, that the most important part of our crisis won’t be the messy, fuzzy parts that are hard to analyze - the finances, the politics, the human reactions - but the tidy bits that can be neatly graphed. And thus, there’s shock when it turns out that the system is messy.

Iran Oct gasoline import down 20 pct vs Sep -trade

DUBAI, Oct 5 (Reuters) - Iran's October gasoline imports are expected to drop 20 percent versus the previous month, even as the Islamic Republic seeks to raise more cash for fuel imports for the rest of the year, traders said on Tuesday.

Tehran will import around 102,120 barrels per day (bpd) of gasoline this month or about 12 cargoes, down from about 15 cargoes seen in September, traders said. They did not immediately link the lower exports to a shortage of funds.

"The lower volumes purchased are not a clear indication that Tehran is scaling back on international purchases," a trader said.

"What they could be doing right now is stepping back to assess the current situation with regards to all the noise going on about sanctions."

Iran needs $6.5 bln more for fuel imports-report

TEHRAN (Reuters) - Iran needs an additional $6.5 billion to help pay for imports of gasoline and diesel fuel during the 2009-10 budget year, a senior Oil Ministry official said in remarks published on Tuesday.

Deputy Oil Minister in charge of planning, Ebrahim Radafzun, said the ministry was preparing a draft supplementary budget bill to be sent to the government during the current week, business daily Donya Eqtesad reported.

Alaska's Oil Tax: Is It Driving Away or Attracting Investment?

Alaska officials say the state's 3-year-old net profits production tax, and a package of exploration and capital investment incentives that go with it, are bringing new companies to the state and stimulating exploration.

These have resulted in discoveries and new fields being developed, they say.

Oil and Gas Drilling Off Florida Coast? Lawmaker's Plan Spurs Debate

With the fight over drilling anchored in federal waters, environmentalists had little inkling anybody would have the audacity to invite rigs into state waters within sight of sunbathers. Reaction to Cannon's call to drill that close to shore has included a sense of betrayal and a measure of disbelief.

Natgas Production Increases while Oil Output Falls

Some of the world's largest producers of petroleum are noticing serious dips in their national output.

In fact, Norway - Europe's second largest exporter of oil is only producing 1.91 million barrels per day...compared to 3.3 million bbl/d in 2000 and 2.2 million bbl/d in 2008.

In 2010, the decline in production is expected to continue down to 1.62 million bbl/d.

This is due to the fact that a majority of Norway's best petroleum reserves having already been tapped. In fact, the country reached peak production in 2003.

Libya Govt Grants Cabinet More Power Over Oil Sector

Libyan government encroachment into its oil sector prompted the resignation of the country's top oil official in late August, after the government gave greater powers over the industry to a group headed by the Libyan cabinet, a person familiar with the matter told Zawya Dow Jones this week.

Natural gas: Cleaner fuel deserves attention

Who knew?

The potential of natural gas to provide many decades of relatively clean power for homes and industry, to power vehicles and help clean up the atmosphere at the same time has been a well-kept secret.

Which is greener: Portland or New York? (guess again)

One of them is famously green. Lots of urban wilderness. An expanding light rail system. Bikes everywhere. Enviro-friendly buildings, some with grassy roofs. Drive 90 minutes one way, you're at the mountains. Ninety minutes the other way, you're standing in the ocean.

The other is notoriously filthy. Don't even ask why the sidewalks are so sticky. Or why the air smells like that. Tens of millions of residents, half of whom seem to be swearing at the other half, loudly, in the middle of the night. Enough neon to obliterate the stars, even on a clear night. The sky has a distinct texture during the day: It's kind of yellow, and entirely man-made.

These two cities are, respectively, Portland and New York.

One is far more environmentally sustainable than the other. And it's almost certainly not the one you're thinking of.

Making Meters Smarter, Home by Home

California's PG&E is installing two-way meters in 5 million homes, but consumers aren't yet convinced it will save them money.

A Code Too Far: Building codes have finally gone too far

People are ingenious in finding ways to get around uncooperative systems. One of the code council members told a story about office workers putting a bag of ice on a sophisticated, supercilious thermostat in order to call for more heat, and I am sure it's true. I've never heard of an energy conservation study on how real people interact with building technology. I work with excellent consulting engineers, but their training focuses on theory, gadgets and codes. As an architect, my training is to think about how people interact with buildings and their systems. The best engineered system is useless if it doesn't take into account the human factor.

Don't blame the milk farmers for world hunger

The reason behind the 2007 food crisis was not a shortage of food on the planet, but the biofuel stimulants rich countries introduced. The high food prices of that year put an abrupt end to the steady decline in malnourished people in the world and boosted their number to over one billion. And while biofuel was long thought to be an environmentally-friendly alternative to fossil fuel that would help combat climate change, many now consider it to be at the root of the current food crisis because, in reality, it created a new, profitable market for crops.

The Coming Energy Revolution

Food producer Cargill is taking a carving knife to its electricity bills. At a plant in Springdale, Ark., where the company handles about 50,000 turkeys a day, electricity bills run more than $2 million a year. But Cargill thinks it can cleave $680,000 from the total by using its own generators on high-demand days.

The secret behind this money-saving plan lies in what's known as the smart grid—a wholesale revamp of the system that distributes energy to homes and businesses around the country. Government bodies and utility providers are in the early stages of this multibillion-dollar upgrade to transform the existing grid into a two-way network where power and information flow in both directions between the utility and the customer, not just from the provider to the user.

Kuwait delays plan to boost oil capacity to 2030

(AP:KUWAIT CITY) Kuwait's oil minister says his country is delaying plans to boost output capacity to 4 million barrels per day by a decade because of weakness in the market.

Kuwait Says OPEC to Hold Quotas, Sees Oil at $60-$80

(Bloomberg) -- OPEC is likely to maintain oil production levels when it meets next in Angola in December and prices may stay near today’s level, Kuwait’s oil minister said.

“I don’t expect any output change in December,” Sheikh Ahmad al-Sabah told reporters in Kuwait today. “This year, impossible. This year, no way,” Sheikh Ahmed said when asked if he foresees OPEC raising output this year.

Oil jumps above $71 on dollar shake-up

LONDON (Reuters) -- Oil prices rose more than $1 to above $71 a barrel on Tuesday, helped by declining dollar following a report that Gulf Arab states were in talks to replace the U.S. dollar with a basket of currencies in oil trading.

The report was swiftly denied by senior officials from leading oil producers Saudi Arabia, Russia, Kuwait and the United Arab Emirates.

Saudi Bank Governor Denies Talks to Replace Dollar

(Bloomberg) -- Saudi Arabia hasn’t held talks with China and other countries on dropping the dollar as the currency for pricing oil, Saudi Central Bank Governor Muhammad al-Jasser said, denying a report in the U.K.’s Independent newspaper.

The Independent report is “absolutely incorrect” and there has been “absolutely nothing” of that nature discussed between Saudi Arabia, the world’s biggest oil exporter, and other countries, al-Jasser told reporters in Istanbul, where he’s attending an International Monetary Fund summit. The dollar pared losses after his remarks.

Long-term power of oil is open to doubt

Analysts who talked about “peak oil” were once derided as fantasists or simpletons. But more people are starting to use this language, even if they do not always mean it in the sense of dwindling reserves in the ground.

Deutsche Bank is publishing research today that focuses more on the idea of peaking demand rather than supply.

If the 20th century was the age of oil, then the 21st will be the age of electricity, says Deutsche, thanks to the arrival of the electric car. Oil demand will peak in 2016 but in the meantime prices will surge to $175 per barrel, again not due to lack of reserves but government-induced distortions in the market.

Oil Back on the $100 Track

We are initiating our coverage of the crude oil market, with Brent price forecasts of $85/bbl for 2010, $100/bbl for 2011 and $110/bbl for 2012. Our long-term forecast (2015+) is $90/bbl, based on the expected marginal cost of Canadian oil sands (now the world’s second largest oil reserves).

We believe the oil market will move back into deficit in 2010 as global GDP growth recovers to about 3% Year-on-year, resulting in a 2.4% Year-on-year increase in oil demand to 86.5mbpd. This is modestly higher than the latest IEA forecast of 85.7mbpd, and almost entirely due to our more positive view of growth in Asian demand. Additionally, we expect further deficits in 2011-12.

BG-Led Kazakh Oilfield Expansion Is ‘Under Question’

(Bloomberg) -- The BG Group Plc and Eni SpA-led planned expansion of the Karachaganak oilfield is “under question,” Lyazzat Kiinov, Kazakhstan’s deputy energy minister, said in Almaty today. Talks are still continuing and the next phase of the development may not take off, Kiinov said. The partners are examining plans to boost production from the field, BG’s largest project in Kazakhstan.

The Other Side of the Bakken

Much of this story revolves around peak oil.

I'll let my readers make up their own minds concerning when a global peak in oil production will take place. Some believe it won't occur for another 5 to 10 years. . . some even push the date back 30 years. . . still, many of you think it's already passed.

Whatever your opinion on the subject, there exists one cold, hard truth that none of us can deny: Oil production in the U.S. peaked nearly four decades ago.

The Challenging Incongruity of Cheap Oil

Expecting or wanting oil prices to be "low or moderate" is at best incongruous, and at worst naive in the current economic, financial and political context.

Kunstler: World War Three Anybody?

This is a dangerous situation. I'm not so sure that Israel could launch an effective attack on Iran's nuclear infrastructure, but it might try anyway, especially if a US-backed sanctions effort fails to coalesce quickly. I'm not sure Israel would seek permission from the US to do this, though the US would certainly be tasked with defending the shipping lanes in the Persian Gulf. Iran might succeed in sinking more than a couple of US ships-of-the-line with sunburn missles and other toys, and this would lead to the bigger danger of oil supplies being choked off to the rest of the world. The US air response would be impressive, but possibly not effective against hardened targets. The leaders of Iran might exult even if the Iranian people were swept into a maelstrom. I imagine that what followed would be a very extravagant military frenzy amounting to World War Three, with European air forces and navies dragged in, with Hezbollah and Syria striking back at Israel, India and Pakistan possibly incinerating each other, and mayhem galore among the bystanders in Iraq, Egypt, Saudi Arabia, and Afghanistan. There could easily be internal mischief in the UK, France, and Germany from angry immigrant populations, and "sleepers" could work some overdue hoodoo in the USA. I don't know what Turkey would do, but it could be the biggest beneficiary of a bad regional meltdown, providing the only effective governance what remains in the region. China and Japan would probably just gape at the spectacle in wonder and nausea from the sidelines as they saw their energy supplies for years-to-come go up in flames.

The G-20 nations would be crippled as global oil supplies were choked off indefinitely. And if anyone -- Iran, or its friends inside the Kingdom -- managed to pull off a stunt such as blowing up the Ras Tanura oil terminal -- then a darkness will spread across places that were used to being lighted and they will stay dark a long time.

Oil’s Trend-Line Key to $75, Barclays Says: Technical Analysis

(Bloomberg) -- Crude oil futures may surpass this year’s $75 a barrel high if prices for the most active contract close above their 100-day moving average and a six-month trend- line, according to technical analysis by Barclays Capital.

November crude oil on the New York Mercantile Exchange has settled above its 100-day rolling mean each day for the past week. While this signals potential for gains, for prices to rally the contract must also close over a line connecting the lowest points between February and July, Barclays said.

Iran Poised to Reduce Oil Prices in November After Saudi Cuts

Bloomberg) -- National Iranian Oil Co. is set to reduce the official selling price of its main Iranian Light crude oil to be supplied next month to Asia after Saudi Arabia cut prices yesterday.

Total, GDF Suez to Buy Stakes in Kazakhstan Gas Field

(Bloomberg) -- Total SA, Europe’s third-largest oil company, and GDF Suez SA agreed to buy stakes in the Caspian Sea Khvalynskoye natural gas field from Kazakhstan’s state-run oil and gas company and help fund development.

Total agreed to purchase a 17 percent stake and GDF Suez will acquire 8 percent from KazMunaiGaz National Co., Total Chief Executive Officer Christophe de Margerie told reporters in Astana today. Russia’s OAO Lukoil owns 50 percent of the field.

ONGC May Buy Stake in Iran’s South Pars Gas Field

(Bloomberg) -- India’s Oil & Natural Gas Corp. is in talks with Iran’s state-owned Petropars Ltd. to buy a stake in South Pars, the country’s largest natural gas field, as it seeks to offset declining production at its aging domestic wells.

ONGC is looking to acquire “some” stake in Phase 12 of South Pars “since we already have an initial agreement with Petropars,” R.S. Butola, managing director of ONGC Videsh Ltd., the overseas investment unit of India’s largest energy explorer, said in a telephone interview in New Delhi today.

Aramco team plots energy savings at Berri gas plant

An energy-assessment team for Saudi Aramco has systematically analyzed the interaction between process and utility systems at the company's Berri gas plant and identified realistic and achievable energy-saving opportunities for the plant.

This effort resulted in a number of energy-saving initiatives, which the team prioritized for implementation with a "road-map" strategy.

Cool NE summer softened demand for electricity

BOSTON—Electricity use dropped nearly 6 percent in New England in the summer of 2009, a result of cool temperatures and an economic recession that drove down demand, the power grid operator ISO said Monday.

Danish secrets of renewable energy

Danes pay the highest energy prices in the world. Most of the reason is high government taxes, I'm told. Most of the tax money goes to subsidize the renewable energy industry, with a little left over for programs to educate the public on energy conservation. The government here signed on to the Kyoto Protocol years ago and committed to reducing greenhouse gases. The treaty is being renegotiated here in December.

Unemployment is shockingly low, at about 3.5 percent. And that's with a recent rise.

A unionized, skilled worker here makes about $35 an hour, working a 37-hour week. With that shorter week, however, comes flexibility. Your boss might ask you to work a few extra hours here and there, and not be too generous when it comes to overtime pay. People pay income taxes of 45 or more percent, but health care comes with it. The sales tax is 25 percent. There's no minimum wage.

It's unclear why the attitudes here are different when it comes to renewable energy versus fossil fuels like coal. People, or at least government and business leaders, seem to have accepted that the world needs to take steps (however expensive and painful) to reduce greenhouse gas emissions, which scientists say contribute to global warming and climate change.

Free land offer mostly fails in small Alaska town

The March 2007 giveaway prompted thousands of calls from around the world. By the day of the land grab, 44 waited in line. Many camped out in weather as cold as minus-25 for a shot at the 1.3-acre lots, which went to the first 26 people to claim them and put down nonrefundable $500 deposits.

Under the rules, winning applicants were supposed to build a house measuring at least 1,000 square feet within two years.

Many of the winners, however, never came back or communicated with the town, even to respond to formal letters asking what their intentions were, City Clerk Darla Coghill said. She still hears daily from others interested in getting some free land, but she tells them Anderson is out of that business these days.

She thinks most outsiders couldn't cut living in a place where the nearest gasoline and groceries are a 20-mile drive away.

"It's like a TV show," she said. "It all looks like fun and games until you get here."

Thai villagers in bid to halt disappearing coast

BANG KHUN THIEN, Thailand (Reuters) – Some villagers use bamboo fencing. Others plant mangroves. And some do both to fight back against erosion transforming centuries-old communities on the Gulf of Thailand.

Only a half hour drive south of Bangkok, coastal regions already show alarming signs of erosion: electricity poles, once on land, are submerged in parts of Bang Khun Thien, a district on the outskirts of Bangkok.

Economists Join to Say: We Can Afford a World Climate Policy

America’s largest network of independent climate economists has issued a major new report showing that the more aggressive world leaders are in curbing world carbon emissions, the greater the economic benefits will be.

The new report is co-authored by researchers from universities and think-tanks across the country, and it is designed to inform major initiatives including the Waxman-Markey climate legislation before

Aviation to Be ‘Role Model’ on Emissions Cooperation, IATA Says

(Bloomberg) -- Aviation can be a “role model” for other industries on emissions cuts, the International Air Transport Association said as it battles to secure worldwide pollution regulations instead of a patchwork of national rules.

“We need a global sectoral approach to reducing aviation emissions,” IATA’s Director General Giovanni Bisignani said in a statement today. “Aviation will be a role model for industry cooperation with the UN in driving important change.”

Once-mighty caribou herds dwindle, global warming blamed

ON THE PORCUPINE RIVER TUNDRA, Yukon Territory (AP) — Here on the endlessly rolling and tussocky terrain of northwest Canada, where man has hunted caribou since the Stone Age, the vast antlered herds are fast growing thin. And it’s not just here.

Across the tundra 1,500 kilometers (1,000 miles) to the east, Canada’s Beverly herd, numbering more than 200,000 a decade ago, can barely be found today.

Halfway around the world in Siberia, the biggest aggregation of these migratory animals, of the dun-colored herds whose sweep across the Arctic’s white canvas is one of nature’s matchless wonders, has shrunk by hundreds of thousands in a few short years.

Apple joins Chamber of Commerce exodus over climate change scepticism

Apple has become the latest in a growing list of companies to quit the US Chamber of Commerce over its policies on climate change. In a letter to the chamber president, Thomas Donohue, Apple's Catherine Novelli said she was frustrated by the hard-line stance the organisation had taken against the Environmental Protection Agency and draft climate legislation now before the Senate.

Novelli did not sugarcoat the exit. "We strongly object to the chamber's recent comments opposing the EPA's effort to limit greenhouse gases," she wrote in the letter, released yesterday, adding: "Apple supports regulating greenhouse gas emissions, and it is frustrating to find the chamber at odds with us in this effort." The company's departure is effective immediately.

Recession Eases Effort to Preserve Climate, IEA Says

(Bloomberg) -- The economic crisis has made it easier to halt the growth in greenhouse gases released by power plants, factories and cars, the International Energy Agency said in a report that revised its forecasts from November.

Yearly emissions from energy use may peak at 30.9 billion tons “just before” 2020, the Paris-based agency said today in a report presented to United Nations climate negotiators in Bangkok. That’s 4.9 percent less than the IEA’s previous estimate of a 32.5 billion-ton peak in 2020. Both scenarios assume nations will adopt climate-protection measures.

Howdy Drummers,

Having read these Drumbeats for a long while now, and having noticed users that I've never seen before and others that pop up with some regularity, I got to wondering various geeky things. Like: How many different users have left a comment in the last year? Which user has left the most comments? Does the 20/80 rule apply here? Which user leaves the longest comments? On average, what fraction of the user base leaves a comment each day?

I found that a user named Roberto had done some basic statistical analyses way back in September of 2006, but hadn't noticed anything since then. And so, as I was endeavoring to refresh my perl skills anyway, I wrote a script to analyze the Drumbeats and answer these questions. A few of the interesting (well -- to me, anyway) results:

  • Around 1350 users have left at least one comment in the last year of Drumbeats (this compares with a little over 3000 users who have left at least one comment since inception [which was May 14, 2006]).
  • The most prolific commenter in the last year (measured by number of comments) is our illustrious editor, Leanan, who has written 5.2% of all comments. The rest of the top 5 are: totoneila, Darwinian, jokuhl and westexas. Together they wrote over 13% of all comments.
  • When measured by total length of comments, the top spot switches to totoneila, with 5.1% of all commenting. The rest of the top 5 are: memmel, Leanan, Darwinian, and (the no-longer-posting) airdale.
  • In the last year, the user with the longest average comment (among users with at least 50 comments) is memmel, who averaged over 2100 characters per comment. ThatsItImout was second with a bit over 2000.
  • The 20/80 rule holds when looking at about month of Drumbeats. Over longer periods, the ratio is even larger (as a core group of users consistently comments while others come and go). Over the last year, only 2.7% (37 of them) of all users active during that period are responsible for half of all comments (by length); 11.7% (159) are responsible for 80% of the comments (by length).
  • More than a quarter of all users who left at least one comment in the last year left only one.
  • Each Drumbeat contains comments by an average of 60-70 different users. The record (since inception) is June 11, 2008, with 161 users. The Drumbeat with the most comments was July 23, 2007, with 586.
  • The most commonly-used nouns in the last year of Drumbeat comments are, in order: 'oil', 'year/s', 'people', 'time/s', 'price/s', 'energy', 'world', 'money', 'production', and 'peak'. The word 'bifurcation" has appeared 15 times. The word 'eggwhite' has only appeared once.

More results are available here, as well as some charts like this:

Will try and keep the data updated (so long as the Drumbeats are around...) and perhaps add some new data (looking at the number of subthreads per comment could be interesting). If you have other statistical questions regarding the Drumbeats that I might be able to answer, feel free to reply here or drop me a line.

Notes and caveats: 1) This data currently only applies to Drumbeats. Some users may rarely comment on the Drumbeats but leave many comments on the main articles. 2) Drumbeats from the last week are still open for comment; the data may change. 3) Comment length does not include blockquotes or dividers like 15 hyphens in a row. 4) Deleted comments are not included. 5) It's not a competition, and I'm not making any value judgements, just presenting what the data reveals.

So, of all my posts, what percentage did not mention net oil exports?

Incidentally, regarding statistical trivia and the 80/20 rule, I've forgotten the exact number, but I read that the majority of German U-Boat commanders in the Second World War never sank a single Allied ship, which of course means that the top 20% sank a hugely disproportionate share, probably on the order of 80%.

Of your 5822 Drumbeat posts (not including the one above), the phrase 'net oil export' (with or without an 's' on the back; case-insensitive) was included in 788 of them. So, 86.5% did not mention that phrase.

Just over half of your Drumbeat posts haven't included the word 'oil' at all.

Well. . . clearly I have been remiss in not mentioning net exports enough.


Note that you didn't ask how many had the contraction "ELM". Surely you'd pick up another 10 or 20% mentions.

Does that figure include ships that were hit but did not sink (like the one my father was on)?

If memory serves, the stat was for ships that were sunk. Of course a lot of U-Boats were sunk on their first or second patrol, without having a chance to even get a torpedo off.

What we are talking about here, for those who don't know, is the Pareto Principle. Because so many things follow something close to a normal random distribution, you see this 80:20 relationship (approximately) show up in all sorts of things. Pareto's principle is not a hard, fast, foolproof law, but it sure is a useful "rule of thumb". Definitely a tool to keep in one's toolbox.

The Pareto law is pretty darn close to modeling the size distribution of oil reservoirs if you choose the right power.

I would just correct that Pareto does not classify as a normal random distribution. It is actually a "fat tail" distribution or a fractal distribution that Taleb and Mandelbrot like to talk about.

The Zipf-Mandelbrot distribution is the form of Pareto that seems to match oil best IMO. If people are interested, I have the equivalent "80/20" rule worked out for oil reservoirs.

Thanks WNC, Was wondering what I was missing.
Very helpful explanation

Dear Mr. Westexas and Mr Sam Foucher... Just so you know... I read your posts with anticipation of new content and new insight and consider the concepts that you have shown vis-a-vis the ELM to be most relavant to the future of the USA. I spent considerable time in the employ of the US Govt and have considerable experience in the intelligence community. (CIA/DIA/NSA) I adjure you Sir: Beat the drum with this issue! If I could at this juncture proffer a single briefing at the National Security Level it would be the topic of ELM. Please continue the most excellent analysis.

regards TG80 sends

I remain astounded that the net export situation is not the #1 story in the world. Once production starts falling in an oil exporting country, unless consumption in an exporting country falls at the same rate as, or at a rate faster than the production decline, net exports will show an accelerating rate of decline, and so far we haven't found any examples of exporting countries cutting their consumption enough to keep their net export decline rate above their production decline rate.

Bush: Ramp up that oil production!!

KSA: No.

Just 'cause they ain't shoutin' it from the top of the capitol building don' mean they ain't talkin' 'bout it.

Witness China's moves wrt oil.


"The word 'eggwhite' has only appeared once."

You've just doubled it!! but then again you can't make omelettes without breaking eggs and getting eggwhite and eggyolk.

Ah, the effect of the observer on the observed, eh?

Yesterday Lynford wisely cautioned that no one can predict the future, but I'm going to go out on a limb here and predict peak eggwhite on October 6th, 2009.

eggwhite, eggwhite, eggwhite, eggwhite, eggwhite, eggwhite October 7th, 2009

Lynford is indeed wise.

You called it yesterday and today it's higher so peak eggwhite just can't be true, it's at least 50 years away:-)

Number of posts is low on the weekends. Apparently, many posters, like me, post from "work." Too busy to post on the weekends when we have real work to do. Unemployment may be high but it apparently isn't high enough, yet.

Three percent of posters responsible for half the posts & 12% for 80%. Maybe the frequent posters need to give TOD's DB a rest. Let others have more of a say. Get some real work done around home & avoid PO burnout. Seems like from last weekend's Campfire, some of the TOD PTB are experiencing burnout fringing on consideration of closing down The Oil Drum. Shame if that happens. Take a break if it's getting tedious or obsessive.

Too bad there's no metric for post content quality. Seems like often quantity & quality are negatively correlated.

I have commented from work only perhaps a handful of times, and I snuck those in when I had a top-level post up. Too bad I am always late to the game, but I try to make it up on the weekends.

(a very unimportant comment on my part ... in the greater scheme of things)

I think one of the reasons that a few comments contribute a large percentage of the comments is that these people are the most knowledgeable. Discussions on the drumbeats tend to be just that -- discussions -- where people without direct knowledge of the topic don't have as much to contribute.

As a regular reader I find myself only having something to contribute once in a while, and so most of the time i just read. I guess that this is a reflection of the quality of the contributes on this website.

If someone does have a random question to ask, at times it doesn't seem that there is an appropriate venue to ask them -- perhaps we could encourage people in the 80% (like myself i suspect) to be free to ask general energy related questions in the drumbeats?

would it be possible to catagorizise the "most thought provoking comment/person?" (ie, the node which has the most (direct and indirect) children?)

Not necessarily the most knowledgeable, I don't think, but those with the most to say, for better or worse. Oftentimes what they have to say is repetitious.

I apolozhize fer ze uze uv b-brrrrp-bifuuuuuuurk-a shunz in pu-uuuuh-lic.



Oh-oh! According to the article in the UK’s The Independent, there is a move to disconnect the dollar from oil.


Yes, an international move to dump the dollar!

No petrodollars in 9 years? If so, the price of oil will go through the roof!

If true, our economy will probably never recover... although others might benefit.

see the 3rd article above;

'The Independent report is “absolutely incorrect” and there has been “absolutely nothing” of that nature discussed between Saudi Arabia, the world’s biggest oil exporter, and other countries, al-Jasser told reporters'

oil & gold up significantly. someone thinks the story is true. 9 yrs.[see independent story]; yeah right.

What sort of meaningful analysis is this in the Yahoo banner?
"Stock futures are pointing toward a higher opening Tuesday on Wall Street as investors try to build further momentum amid fresh signs the global economy is recovering."

Gold is up 1.8%, implying the dollar is down by that amount, and future are up about .8%.

Seems to me that the market is really DOWN, and really it's the global economy saying, "America, bite me."

I've plenty of respect for Robert Fisk, the author of the story, it's credible. The report said they wanted a managed transition, hence the 10 years. However I cannot see this happening. If the official perspective from such important and diverse countries is that the dollar is going to tank,why would anyone continue to invest in dollar assets or buy US bonds from now on? Well, China and Saudi might, so as to try and maintain the value of their holdings. But plenty of others might decide to stop playing. Is this the beginning of positive feedback process that will kick off FEAR-Dollar collapse/market melt-down/ gold price rise-Rush for the exit-Fear....?
Is the US on the edge of major inflation?
Or, am I just too sensitive?

Another point in the inflation/deflation debate is that the USA could enter a deflationary collapse coincident with the collapse of the US dollar. Therefore, a standard safety approach in the face of deflation (cash holdings) would not help out. The thing is, every credit bubble like this has ended in a deflationary collapse yet every currency in the situation the US dollar is in has collapsed so it is an unusual situation.

my 2¢

2009 corresponds to 1930 and we are at the top of the sucker's rally, about to enter the next leg down in the global depression.

The dollar appears to be inversely correlated to the market. The 50+% rally in the markets since March have seen a steady decline in the dollar over the same time. An apparent recover coupled with a weakening dollar has given support to oil in dollar terms.

Falling markets and a strengthening dollar should cause oil prices to fall substantially. In the recent poll I voted for a worsening economy and oil below $40 because I expect:
1) the economy to deteriorate over the next 6 months and beyond
2) the dollar to strengthen as a perceived safe haven
3) oil to fall due to the combination

If we really are in the Second Great Depression, and I believe we are, then demand will contract much faster than supply and energy prices will fall in nominal terms while remaining high in real terms.

With all due respect, I think it is a mistake to attempt to map present events to the Great Depression Timeline. The assumption that they are similar phenomena and will play out in identical ways is not valid.

What we are in the midst of is a paradigm shift. The world is changing in profound ways, and so the past will not be like the future. We therefore cannot look to the past for guidance in predicting the future.

I think it safest to heed the warning printed in bold on every prospectus: "Past performance is no guarantee of future results."

Interesting snapshot from MSM and the keepers of BAU on what happened a little over a year ago When Lehman Brothers filed for Chapter 11.


Another point in the inflation/deflation debate is that the USA could enter a deflationary collapse coincident with the collapse of the US dollar.

This is a key point... a point lost on certain bloggers, who are understandably mesmerized by the magnitude of the coming deflationary collapse.

Others have been confidently preaching that "cash will be king" in the short- to medium-term. They may be wrong.

This is a key point... a point lost on certain bloggers, who are understandably mesmerized by the magnitude of the coming deflationary collapse.

The coming deflationary collapse? I was thinking of the coming inflationary collapse. If the dollar collapses this is inflation, not deflation. There is no argument that this would inflate the price of imports and since a large segment of our economy is imports, they would have to buck the trend for there to be deflation. If all imports double in prices this would be a strong headwind that any deflation would have to buck.

Watch this video then tell me there is going to be a deflationary collapse. There will be a collapse all right but it will be an inflationary collapse.
Bailout Big Lies & Your Savings

As the video points out, if you are a taxpaying head of household, then your share of the bailout, and the rest of the debt, then your share of that debt is 1.2 million dollars. Do you think the average household can pay off that debt? You will, but you will never pay 1.2 million dollars, in today's dollars anyway.

There is not a mere chance of an inflationary collapse, it is a lead pipe cinch.

Ron P.

There seems to be a good chance of a deflationary plunge that will wipe out a lot of debt via default and then inflation to balance trade deficits and pay down debt.

As I understand it, the velocity of money is slowing, and that pushes for contraction. Real-estate and business equity is dropping, and that's deflationary too. Unemployment is high, which traditionally keeps a cap on wages (once the minimum wage hike percolates through).

The magnitude of the above are pretty huge. It'll be hard to get a lot of inflation going in the midst of that, but certainly it's happening in the market now. Still, I think a major plunge is likely, with a transition to inflation in a year or two.

Doesn't matter too much to me -- my goal is to simply stay employed. Beyond that, I'm just along for the ride.

Whether or not cash will be king depends on what order the dollar and the economy collapse. If the economy collapses first then cash is king. If the dollar collapses first then hard assets and foreign currency will rule.

I don't see the US going down like Iceland did. It would require the US to decouple from the global economy in a very short time frame and I think that is unlikely.

In the long term, yes, it's inevitable that US economic dominance will diminish. But, I think the global economy will contract much faster than the US loses relevance. Shifts in power are gradual processes and great depressions are fast in comparison.

Written by BrianT:
Another point in the inflation/deflation debate is that the USA could enter a deflationary collapse coincident with the collapse of the US dollar.

If I understand you correctly, you are saying that real estate and investments will decline in value while the cost of imports increase. Since crude oil is a significant import to the U.S., the cost of transportation will increase significantly. This is the same as saying that investments will deflate and the CPI-U will inflate dominated by the prices of food and energy. The price of all the junk we do not need will decrease. Unemployment will increase. Eventually inflation of the money supply will dominate as the Fed attempts to print its way out of the mess. It is why the general advice to prepare for peak oil is to get out of debt, buy gold and silver coins, stock up on necessities, like food, start a garden, power down and localize. Forex, TIPS and Series-I savings bonds have a chance under this scenario. Have some cash available in case there is a general bank holiday. Get a job in a necessary industry.

If the reported events in The Independent come to pass, then this hodgepodge of deflation and stagflation will gradually emerge over the next 9 years.

Yes I believe your fears are well founded. This may well be the beginning of the next stage of collapse of the world economy, as GEAB puts it.

It`s a bit like the fairy tale "Sleeping Beauty". The Bad Fairy (in our case her role is played by the 2nd Law of Thermodynamics) told the Priness (played by the US economy and other oil-based economies) that she would die when she reached her 16th birthday and pricked her finger on a spindle (when Hubbert`s peak, another kind of sharp point?, was reached). The Good Fairy (the Fed, Central Banks, Paulson, etc.) knew they couldn`t argue with the powerful 2nd Law but they wanted to delay her doomy scenario and said "no! Wait! We can give you more time, Princess!". But it wasn`t all that much more, basically a year was all that we got. The End.

Oh well!

The economies will sleep for a hundred years while all the cement crumbles and people start growing their own food and walking everywhere again.

The Handsome Prince (a decent economy where people won`t be starving, perhaps) will wake our economies up again with a kiss much later. A happy ending after all!

If you recall most of the Repubs and other assorted conservatives hate Robert Fisk with a passion. It got so bad during the war that they made up a term called "Fisking" which they used to try to deconstruct his reportage. Most of his stuff turned out true, BTW.

I never did finish his "The Great War for Civilization" but was astounded by his recall of events. He either kept prodigious notes or he used some artistic license. That fact probably set the neocons on their pursuit to discredit Fisk.

"The Great War For Civilization" is one of those must read tomes. His ending interview comment about what his Hong Kong friend told him to anticipate was choice. The man is a gem and worthy of a Nobel Prize.

"the price of oil will go through the roof!" only in dollars:-)

From the Independent's heading "Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading"
Well, that secret didn't stay secret for long :-)

Also "The Americans, who are aware the meetings have taken place – although they have not discovered the details" they obviously don't read The Independent. ROTFLOL, so the bankrupt Independent is able to find out about these secret meetings whilst the US can't - not very likely is it?

The oil states hold huge amounts of dollar reserves so they won't want to intentionally hurt the dollar. So, who's short the dollar right now?? or perhaps someone is just having a joke with the reporter.

Hey, if the Treasury Bills are losing value, what's left for those countries to lose? "intentionally hurt the dollar"?.. maybe not "intentionally", but we seem to be doing a good job of it thorugh (?)negligence(?) and/or (?)misuderstood/unregulated(?) fiscal policy.

Besides, if our dollar loses value that means more oil for everyone else.

I believe we really need to consider this possibility... and prepare for it. Just my opinion.
Or we could try to sit down with the T-Bill owners and try to renegotiate the payments.


I don't know where this crap comes from. It never ends, it's more tinfoil hat nonsense.

America is the biggest customer for the world's oil producers. Business rule number one; keep your customer happy. Keep your customer coming back. No customer, no business.

This iron law was demonstrated last summer, when high oil and commodity prices destroyed demand. The Independent has forgotten, I'm sure the Saudi oil minister hasn't.

The Federal Reserve and other central banks would 'love' to devalue the dollar; what next? Any currency with the 'reach' of the dollar would manifest the exact same credit- flow/liquidity problems as does the current dollar and would in all likelihood be simply a proxy for the dollar. If the Fed started to blatantly 'monetize' oil purchases through 'straw agents' (like it did last summer) the price would rise, demand would be choked and the price would then plummet. This is a very powerful feedback loop.

The 'replacement currency' argument is simply inflation in sheep's clothes. How will there be inflation with 10 million US consumers unemployed and on the (meager) dole? How will there be inflation when most of the credit created by the Fed and other central banks is simply recycled back to Fed accounts? In a debt based fiat money system, how can there be inflation when the world's credit systems and banks are broken?

Oil prices are much too high now for there to be any 'economic growth'. (Oil prices are too low to finance replacement oil production, but that is another story.) The high oil price translates to a strong petrodollar. How would an even stonger currency - implying a higher relative value - result in better economic conditions ? How would that be beneficial to oil producers, who cannot make use of their current income streams?

Oil prices are a governor on central banks' ability to float large amounts of new debt, time will tell if this is a 'good idea' or not. Right now, the 'replacement currency' proponents are economic retards like Hugo Chavez and a bunch of gold traders talking their book; to the liquidiationists out there like Meredith Whitney. be careful of what you wish for!

You might get it.

That 'economic retard' Hugo C. is so retarded that he considers it a smart move to make oil deals with China. Silly man; as if they have anything to trade in return.

The US is to the point it barely makes any of its own socks. From a functional point of view, the concentration of economic retards is higher further north. The point is , you have to trade something of higher value than gunfire.

That 'economic retard' Hugo C. is so retarded that he considers it a smart move to make oil deals with China. Silly man; as if they have anything to trade in return.

Huh? Is this sarcasm? In my experience it is becoming more and more difficult to find manufactured goods, especially at the lower end of the market, that are NOT made in China. Even many reputable brands (US, European and Japanese) use Chinese contract manufacturing. So even when you buy reputable brands you might end up getting something that was actually made in China.

Alan from the islands

"From a functional point of view, the concentration of economic retards is higher further north."

Yes, apparantly concentrated in Virginia and next to it.

"be careful of what you wish for!" I'm not wishing for anything, I'm just pointing out what I see.

"No customer, no business." But the customer needs to pay with something of value. Right now we pay other countries in money that we borrowed from them (through sales of treasury paper). It's like going to a shop owner and saying "let me borrow some money from you so that I can buy your stuff," and then never paying the money back. After a while you won't be welcomed back.

i tried to avoid name calling, but sometimes it just happens, like karma.

Venezuela is bartering w/ China in exchange for oilfield technology that is not forthcoming from the US and other weatern countries on account of Chavez's nationalization policies.

If the China deal works for Chavez, there will be more oil flowing out of Venezuela. This means that country's oil fields will deplete faster. It's an opportunity cost arrangement for Chavez. There is nothing in the agreement that would benefit anyone in Venezuela outside the government; this policy is retarded. Since the government of Venezuela is Chavez, you come to your own conclusion.

As for economic retards in America, I can think of dozens off the top of my head. Dennis Kneale is the poster boy although Jim 'Goldman- Sachs' Cramer comes close.

As for gaining something of value, this is also in the 'be careful of what you wish for', category. Value is subjective, return isn't. It is hard to see any more than 10% of oil imports having any return at all other than transient recreational/pleasure 'value' for consumers. It will also move the misleading GDP marker. In order to move a line on a piece of paper, an irreplaceable resource is essentially wasted. There certainly is little energy return on oil imports; oil used to manufacture and distribute other, renewable forms of power generation.

Strip mining coal with diesel powered machinery and running gas drilling comes to mind, but these - as in the Venezuela example - accelerate depletion, make the long term problems worst.

Worst, not worse.

I've said this elsewhere, with oil and other fossil fuel energy sources, the distance between worthless (in the ground) and worthless (in the atmosphere) is very short. That the return on that worthless- generating process is unsatisfactory to those producers is easily solved by them. They can show the same discipline they accuse the consumers of lacking and leave their resources in the ground.

For those who have a bit more wisdom about how to use it.

Now ... as for the inflation arguments posted above; to restate ... inflation is now asset inflation rather than currency- wide; inflation that effects all prices and wages as well. Crude here is an asset. In our allocation regime, made necessary by the manifold increase in crude prices over the past ten years, a customer must choose between buying oil products and ... keeping his business open, or buying crude products and having American workers! @ $70 a barrel, there probably cannot be any inflation. The oil price sucks up all the available cash (that escapes the liquidity trap, that is.) This is a very strong feedback loop that is almost impossible for any economy to inflate out of. The US was attempting just this during 2000 - 2007 real estate and finance bubbles before the roof caved in. The price of oil is the governor on the 'growth engine'. It's international, it is embedded in goods and services as much as is credit and its effects are easily ignored.

"There is nothing in the agreement that would benefit anyone in Venezuela outside the government;"
or to put it another way, the agreement benefits the government, so not retarded at all from their point of view.

Steve,Your arguments are hard to argue with and history -FOR NOW- is on your side.

But fiat money and oil wells are not alike in at least one key respect-electronic and paper money can be created out of thin air.

If the economy keeps going down hill,which I believe it will, at some point the congress and the administration will by one means or another get the inflation it wants.

Revolutions are not necessarily things of the past-when unemployment gets high enough and enough poeple start voting for third parties and independents;

and mobs are busting windows at bank branches;

and folks are still hoarding cash because prices are going down rather than up;

rather than get voted out of office the politicians will find the intestinal fortitude to do something radical-

such as write and pass some banking laws in a hurry and take direct charge of the monetary system, or at least the management thereof.

It's not hard to run a real printing press and it's even easier to run an electronic one.

There is absolutely nothing that can prevent the federal government from inflating the money to any extent desired-EXCEPT FEAR OF THE CONSEQUENCES.

In the short term people living from check to check are mich better off employed than unemployed.
In an inflationary environment the people still raking it in -every body from a teacher at the top of the local pay scale(I have a cousin who saves fifty percent of her take home pay plus ALL the pension checks she gets from early retirement from an out of state system))to the criminal lawyers
will go back to spending.

Back in Washington:

What can stop them?


Why will they do it?

Fear of the mob!

What will the consequences be?

That in my opinion is almost impossible to predict but I will go so far as to predict that inflation will POSTPONE a final reckoning for a significant period of time-possibly for as much as as two to five years, depending on the way the cards fall in the energy, diplomatic, and military arenas.

How long will it be before inflation tales hold?

Impossible to say but when the oil supply starts getting really tight and prices go thru the roof;when unemployment rises a few more points;when some idiot manages to start a real war in the middle east?

Before you and I are dead most likely, within a couple or three years is my personal wag.

Oil prices are much too high now for there to be any 'economic growth'. (Oil prices are too low to finance replacement oil production, but that is another story.)

Hmmmm ... I think that is how world peak oil works, they are the two sides of the same story.

Supply side, not enough demand at the price that would have to be charged to make a profit from new investment.

Demand side, inability to afford the price of increasing BAU flows.

An individual well goes to a 'Hubbert's Peak', the shape of which is dependent on geology.

A field or country does not usually have a smooth 'Hubbert's peak', the shape is dependent on the number and age of wells, costs and affordability etc, all determined by above ground decisions!

Inflation will come about because people have to eat.

Here in Japan food prices are down 5% from last year. But TVs and computers have had there prices knocked off 30% or more. Clothes are practically being given away.

But not food.

Food is the 2nd Law kicker here. There will be a market for that oil production if the US can`t absorb it. People will happily, happily eat it elsewhere around the world, in the form of plastic packaging, processing energy and shipping costs for their precious food. Even people in tent cities buy food.

As production falls, oil producers would rather keep a stable...uh, stable....of customers than cater to one petro drama queen, the USA.

So they will let the USA careen off to the side of the road while they work to maintain stability for their other good customers. They hope to see a long slow decline of their industry so they can adjust. The US may collapse but return to the oil markets once it has reorganized under Chapter 11. And it will still need oil, just less.

I am having trouble with Mish's analysis of the petro dollar theory.

He asserts that anyone can trade any amount of currency, instantly , for any other currency; that other countries dollar reserves have nothing to do with commodity purchases (oil), and are held for purely macro economic reasons and political reasons.

If this is the case, what is stopping China from going to the Forex window , say on a Saturday at 10pm, exchanging ALL of their trillions of $US for a basket of currencies? If this were the case, how could any country have "problems" with their dollar reserves? (other than un-mature treasuries)

You aren't the only one-there are advantages to any country that possesses the global reserve currency, and plans are underway to replace the US dollar as the global reserve currency. OTOH Mish is pretty smart so this is interesting.

Mish is exactly right.

Nothing is more fungible than currency. The idea that one must hold dollars in order to buy oil in dollars is really weird. Nothing could be further from the truth. A lot of other commodity and currency traders, other than Mish, have made this same point over and over again. But the public never seems to understand, they seem to hang on to that old idea that a country needs to hold dollars in reserve in order to buy anything priced in dollars.

The only thing at risk here is US prestige. If the dollar lost its status as the global currency benchmark then the US dollar would lose a lot of prestige but it would mean nothing else other than perhaps a temporary drop in the dollar.

Ron P.

The Forex, Foreign exchange, FX market is the largest market in the world, with trades of the world's many currencies amounting to about USD 4 trillion equivalent every day.

Most Forex trading (90%+) is speculative, only a small percentage of market activity represents governments' and companies' currency conversion needs.

Unlike trading on the stock market, the Forex market is not conducted by a central exchange, but on the “interbank” market, which is thought of as an OTC (over the counter) market. Trading takes place directly between the two counterparts. London is the largest centre. Trading takes place 24 x 5.

shmuu102 above
Mish says "anyone can trade any amount of currency, instantly, for any other currency" yes within reason and subject to supply and demand. If you suddenly want to swap say a huge amount of dollars for euros it will move the price and you have to find someone who wants the dollars.

Just because oil is priced in USD doesn't mean you have to settle in USD, you could settle in anything provided both sides agree. It would be easy to calculate say EUR equivalent of the USD price and settle in EUR, alternatively if you have EUR it is easy to convert to USD for settlement.

This would require a "buyer" for every "seller". How is that instantaneous? This would require a virtual line of customers, waiting at the "window" to buy dollars. I cant believe that is the case right now.

Otherwise, they (forex) would have to have ridiculous reserves, no?

"This would require a virtual line of customers"

That's the beauty of computers it's easy to create a virtual line and since 95% of trading is speculative with many banks there's no shortage of liquidity in the major currencies. There are different ways of bringing two counterparties together including using electronic exchanges (e.g. Reuters) or through an intermediary (broker). Trading takes place in pairs of currencies and the banks are "publishing" offers all the time with a spread. For example, you might buy 5 million GBP/USD (the ISO codes for British Pound and US Dollar) at a rate of 1.59333 so will cost you 7,966,650 Dollars. The deal can be done electronically or even over the phone so from that perspective it's instantaneous, usually deals are for "spot" which means "on the spot" but the settlement takes place two days later.

The "back office" of the banks will exchange confirmations (usually electronic) within a short time of the deal being struck and the details are checked to ensure both parties are in agreement, e.g. not both trying to buy USD and sell GBP:-)

There is no single "window" through which all trades must pass. Today many trades are netted through Continuous Linked Settlement (CLS) so the banks pay or receive a net amount of each currency in order to reduce settlement risk.

Added - I think something like 70% of trades involve the USD, 20% EUR

Tony -- And to empahsize the power on the computer in these trades I recently learned of a company involved in automated equity and commodity trades. On average they do 350 to 500 million trades A DAY. Boggles my little mind.

This would require a virtual line of customers, waiting at the "window" to buy dollars. I cant believe that is the case right now.

Then you believe wrong. There are always a queue of bidders and askers. There is no one FOREX, it is a group of member banks located around the world and it operates 24-365. The FOREX never closes. And they do not have reserves per se. The reserves are the pockets of the bidders (and askers) and there are literally millions of them. The big bidders are usually banks and brokerage houses, which always have a bid-ask price. That is how they make their money, the difference between the bid and ask price which is usually about three basis points. That is three cents per one hundred dollars.

Daily volume in the currency markets is around $1.5 trillion. By comparison, the NYSE daily volume averages $25 billion a day.
What is Forex (Currency) Trading?

That's right, the FOREX has 60 times the daily volume as the NYSE. It is by far the largest exchange in the world. And understand the FOREX is not a futures market, it is a spot market. If you buy or sell on the FOREX your position never expires.

Banks always buy at the bid (low) price and sell at the asked (high) price and pocket the difference. They are nothing but the middle man in the deal. And as I said above, that difference is usually about three basis points. That is they usually pocket about three cents on every hundred dollars traded. And at the enormous volumes of the FOREX, that is a lot of money.

Ron P.

If more and more countries stop trading commodities (oil) in dollars, then would not less and less dollars move thru the Forex exchange?, more and more dollar bids go unfulfilled, and the bid prices would go lower?

How is this not the same effect as flushing out $US to use other currencies?

Isn't that how the Icelandic Currency collapsed literally overnight? Certainly , there was more damage done than just their pride.

If more and more countries stop trading commodities (oil) in dollars, then would not less and less dollars move thru the Forex exchange?, more and more dollar bids go unfulfilled, and the bid prices would go lower?

No, it does not mean that at all. The value of any currency is based on its buying power verses other currencies. The FOREX, like the oil futures market, can be responsible for short term swings but not the long term trend. That is the FOREX cannot determine the purchasing power of a currency. It does not determine how much oil or potatoes a dollar will buy.

Also only a small fraction of trades on the FOREX is payment for goods shipped between countries. The vast majority of trades are made by speculators trying to make a buck by betting on which way a currency will move verses another currency. That is, most of the volume on the FOREX is created by speculators betting on which way a currency will move.

You people are forgetting one very basic point. No currency is a commodity within itself; it is only a medium of exchange. And the value of any currency is based on how much of any commodity or service it can purchase.

Ron P.

No currency is a commodity within itself; it is only a medium of exchange. And the value of any currency is based on how much of any commodity or service it can purchase.

Today the dollar lost some value in terms of the commodity gold as it reached a new all time high:


Here is a nice chart showing the classic cup and handle formation with a breakout today:


It may or may not run from here, who knows, but the timing coming in October which is a notorious bear month for stocks is appropriate.

It is hard to imagine gold going up much without dragging oil and other commodities along. The proplem I have is that at these price levels a big percentage increase has to be several hundred dollars. I question whether there are that many unattached dollars around that want to take on the risks of the gold market.

The BBC chart looks bullish, but I've been sucked into bullish looking charts in years past so many times I've learned to question the obvious. The best looking chart base can fail.

When something is obvious in the markets it's time for caution. There are always bears lurking in the bushes waiting to pounce.

I think the point you are missing is that people outside the US may not want to exchange anything for dollars, at the moment they have to because you pay for imports like oil with dollars since that is how oil is priced, sombody somewhere has to hold exponentially more of them. Exponential growth always fails at some stage.

This is a unique situation which the US has abused, moving away from it would help solve a lot of other country's problems.

I think the point you are missing is that people outside the US may not want to exchange anything for dollars, at the moment they have to because you pay for imports like oil with dollars since that is how oil is priced, sombody somewhere has to hold exponentially more of them.

No they do not! And that is the point you are missing. Read Mish today:
Ridiculous Hype Over Secret Oil Meetings

4) Neither Venezuela or Iran hold any dollar reserves. To the extent that either is taking trades in dollars, there is clearly nothing forcing them to hold dollars. By extension there is nothing forcing any OPEC country to hold dollars if it doesn't want to.
5) It takes less than a second for Forex trades to take place. 24 hours a day, 7 days a week, one can sell any currency they want and buy any other currency.

How many times must this be repeated. If it takes less than a second to swap any currency for dollars then no one need to accept dollars and no one need pay in dollars. Just switch your currency at the moment...errr...at the second of the transaction to any currency your heart desires. This whole argument is just dumb, dumb, dumb.

There are millions of speculators out there who are willing to buy or sell dollars for the euro or whatever. No country need hoard dollars. Banks will always have dollars and speculators will always have dollars. There will never be a shortage or glut of dollars.

Again, dollars are not a commodity. That is, the price of the dollar does not depend on the supply and demand for dollars as if they were potatoes, oil or cows. The value of the dollar, or any other currency for that matter, depends on what it can purchase in the form of goods and services, and nothing more.

Ron P.

There will never be a shortage or glut of dollars.

Again, dollars are not a commodity. That is, the price of the dollar does not depend on the supply and demand for dollars as if they were potatoes, oil or cows. The value of the dollar, or any other currency for that matter, depends on what it can purchase in the form of goods and services, and nothing more.

I disagree. IMHO there is a glut of dollars happening right now based on the behavior of the markets. Is it a coincidence that while the US financials were in the toilet just about all of the markets were down (oil, commodities, stocks etc.) and since the TARP funds have flooded the system, all the markets have recovered somewhat? IMHO the toxic assets represent a potential for dollars to disappear into the ether as the (speculative/inflated?) value of these assets is written off. While this is happening there aren't likely to be all that many dollars chasing commodities as investors try to figure out what their true positions are. Along comes TARP and it's back to BAU of sorts.

What a given currency can purchase in the form of goods and services is partly dependent on how much of that currency exists relative to the goods and services available. I have not seen or heard an explanation as to why that would be less true for the US dollar than the Zimbabwean dollar or the Jamaican dollar. If the US continues to create dollars out of thin air, then I really do not want to hold dollars as a store of value, nor would I expect others to want to hold them either.

Alan from the Islands

There can never be a glut of dollars on the FOREX. Of course the very defination of inflation is too many dollars chasing too few goods so there can be a glut of dollars on the open economy. But the FOREX is not the open economy, it is the FOREX. There is a difference and it seems a kit if people cannot understand that difference. But until they do they will never understand the currency exchange.

Ron P.

It makes sense to me that it doesn't really matter what particular currency is used for the spot market in petroleum. If the buyer has euros and the seller wants yuan, the FOREX can facilitate the transaction very efficiently.

But what about the futures market? Suppose I am a European business with lots of contracts that specify payments one or or another in euros. I would like some insurance against petroleum prices jumping. I know I will need some oil next year, so I can lock in a decent price by buying some futures. But if I buy a future denominated in yuan, I take the risk that the yuan may itself jump. So I can buy some futures in yuan that are denominated in euros. What I wonder is, how efficient is dealing in currency futures?

Sorry - I expect I have bolloxed all the terms here - I am no kind of player in financial markets!

There is no oil futures market denominated in the Yuan. If you are a European and wish to buy oil futures you would likely buy on the IPE in London. There oil futures are traded in dollars because that is how the world market prices oil.

There is no futures market that trades Yuan futures. The Yuan, for most of its history has been pegged to the dollar. The peg snapped in 2005 however but the Yuan is still tightly controlled by the Chinese government. There is not likely to ever be a futures market for a currency who's value is tightly controlled by the government.

The FOREX market is a spot market, not a futures market. But you can buy or sell the Yuan on the Forex. Your contract just never expires. It stays open until you decide to close it and at that point take your profit or loss.

Ron P.

Sorry, I didn't mean for the details of my example to distract from the concepts.

The root question is, does it matter in what currency petroleum prices are denominated?

The efficiency of the FOREX means that the denomination doesn't matter for the spot market.

My question is: does it matter in the futures market?

If my business is conducted in currency X, but petroleum futures are conducted in currency Y, can I use any kind of currency futures or other means to insure against unfavorable fluctuations in the X:Y exchange rater between now and when my futures mature?

If I can't effectively hedge myself against such currency fluctuations, then it could really make a significant difference in the market if petroleum futures that are today traded in terms of currency Y were to be traded tomorrow in terms of some other currency X or Z.

"If my business is conducted in currency X, but petroleum futures are conducted in currency Y, can I use any kind of currency futures or other means to insure against unfavorable fluctuations in the X:Y exchange rater between now and when my futures mature?"

You bet! this is a fundamental requirement in business (e.g. i am receiving or paying foreign curency in the future so i do not want to be exposed to exchange risk) so of course the dealers will give you this possibility. Here are some different types of FX:

spot = done on the spot = now
future = fixed amount of currency at a given rate and date in the future
option = the option but not mandatory at a future date and rate
swap = pair of currencies exchanged for a period then swaped back at the end of the period with interest added to one side.

Are you ready to trade:-)

Besides, the dollar is backed by lead, and uranium [enriched or depleted] with a sprinkling of white phosphorus.

Yes, but Russia, China, France and Japan have combined military muscle.

France isn't going to muscle anybody. Russia will be content to needle the US and hope that we reign in China. Japan has problems as bad or worse than we do, as does England - they're not going to get involved against us. Russia and China and maybe France will leak technology which will make things more dangerous for any action taken, though.

That would leave China as the main opponent. I would fully expect them to spend their dollars buying strategic reserves prior to engaging in a military venture, but it will certainly be interesting to see where they venture militarily first. Eventually you'd fully expect they will.

Weaponry won't stop the decline of the dollar, but it might make everybody wish it hadn't.


Yes, but in terms of military spending, the USA would be up against #2,#3,#5,#6 and all the countries aligned with China (all the countries for which China is the #1 customer). The USA is #1 militarily but hasn't gone up against a powerful adversary in 60 years, even though Vietnam won the decision.

Yes, but considering #1 outspends the rest of the world, and outspends #2,#3, #5, and #6 by a three to one ratio, the battle would still be wildly uneven based on spending. Of course, that group would hold some significant advantages over the U.S.

It's an interesting discussion, but purely an academic exercise. France and Japan certainly aren't going to war with the U.S., and the chances of either Russia or China seem extremely remote. But I guess if you are assuming a whole new world nothing can be ruled out.

I am having trouble with Mish's analysis of the petro dollar theory.

I basically agree with Mish on this issue.
Consider the following:
The assertion we have seen made by the people who think the oil denomination is somehow critical to the value of the currency is basically that the cause and effect will be that a critical mass of oil producing countries will stop denominating their oil trades in US$ and this will cause the collapse of the dollar.

What we are actually seeing is that the dollar is in the process of collapsing and as it collapses various countries who produce oil are talking about getting away from the dollar. The collapse is the cause and leaving the dollar is the effect rather than vice a versa.

While this makes more sense to me than the discussion above, I still have a problem with the idea that changing the dollar denomination of commodities sold is not way bad news for the dollar.

If the dollar is completely "fungible" , what's the big rush ? why has a lot of the world gotten in line and chimed in that we need to move away from the dollar hegemony.

What's the rush? Its just an accounting "widget"?

What I read alot of is Country X announces it is now (or going to ) sell commodity Y in Euros instead of dollars, or the ever popular "basket" of currencies and commodities.

What's the rush? why the big push NOW?

the the argument that its not worth " a huge programming effort" to reprogram their computers.? Really?, come on

Mish also goes on about all the denials, but his first post today left out the most telling quote from the Chinese banker in Fisk's article.

"You will know how worried by the thunder of denials this news will generate." "

My take is , that ever since we got off the gold standard in the 1970's , we have had a machine (press) that steals money from the rest of the world, even more so recently . The rest of the world is sick of it, and sees an opportunity to get out from under our oppression.

Though in the thunder of denials, I note how weak a denial the Saudi one was...

I think the point is that if they want to "get out from under", they've got to stop holding dollars. As long as they go on holding dollars, the currency that oil is priced in is more or less irrelevant, because currency is so fungible and oil is such a negligible portion of the trading. And if they stop holding dollars, the currency oil is priced in is still more or less irrelevant - if oil is still priced in dollars, just go get some the second before you need them. If the dollar tanks, the oil price in dollars will be that much higher, and you'll get that many more dollars for your currency if your currency hasn't also tanked.

One's only realistic choices for holding large amounts of money right now are probably the dollar and the Euro. (The yen? The yuan? Please, give me a break. The ruble? You must have lost your mind.) And unless you're a blind ideologue like Chavez, what to hold may not be quite as open-and-shut as you'd like to believe. After all, in the real world, there's not much possibility of bringing the "stealing" to zero, it's more a matter of minimizing it, a question of where to park your money that's least worst.

That's is one reason why the dollar hasn't gone off the cliff yet despite the supernaturally massive 'printing' (so to speak) that's already occurred. The alternatives at the moment range from not-obviously-better to simply ludicrous.

Sure, but the main reason the dollar hasn't gone off the cliff yet is that China doesn't want it to go off the cliff yet. China could literally drive it over the cliff tonight but that wouldn't be good for anybody including China. The USA borrowed an incredible sum from China and it appears that many feel that there were no strings attached, that all these goods consumed were a gift from heaven or something. The USA went on a wild bender, put it on the tab and now the previous geopolitical and economic freedom isn't there anymore because of this.

No petrodollars in 9 years?

I don't think it will take that long. The other parties still think its BAU forever, which will allow them the luxury of a graceful exit from their US dollar holdings (aka decoupling). In reality the end of the US economy means the end of these so-called rivals too. Rivals who have now evolved as either peers or satellites of the same US system they are hoping to escape from. There is no return from the event horizon.

The price of oil in worthless Dollars will go trough the roof. For people paying hard currency it will only get very dear. unless US can think of another reason for a war to change the subject and make them Arabs see sense.

Google’s PowerMeter Bypasses the Smart Meter, Signs Up First Gadget Partner

When Google started talking about its energy management web tool PowerMeter earlier this year, a big hurdle quickly became apparent: The search engine giant’s market for the device would be limited to consumers whose utilities are deploying smart meters (meters that have two-digital communication). That’s a small piece of a very small pie, given only a little over 6 percent of U.S. electricity meters are smart. But now Google says it’s able to bypass the smart meter and today the company tells us that it has signed up its first device partner, Energy Inc, which makes The Energy Detective (TED).


The advantages of bypassing the smart meter aren’t just the quick deployment times of these energy management devices. The set-up could also offer the customer more detailed and quicker energy data than data coming off of smart meters. Devices like TED are connected to the user’s home broadband connection and, working with PowerMeter, can be quickly displayed to the customer in almost real-time. TED 5000 will show energy data via PowerMeter every 10 minutes.


I completed my initial analysis of Pass and Seymour/Legrand (also the maker of Wattstopper I believe) vacancy and occupancy sensors.

Initial results are promising. The 600 series devices handle LED and CFL lamps, but the 500 series absolutely will not. With CFLs the bulbs buzz and shortly smell hot using the 500 series (which are rated for incandescent only).

The 600 series works fine with both CFL and LED, and with bathroom fans (probably the 500 would work with a bathroom fan too, but I didn't try it).

Operation is intuitive for both types of devices: a single large pushbutton will toggle the light state. Occupancy sensors will automatically turn on lights and turn them off, while the vacancy sensors will only turn them off.

My primary goal was to automatically turn off forgotten bathroom and closet lights, but I may do my kids bedrooms and a couple of other rooms as well, especially those with vanity bulbs and candelabras which cannot readily be replaced with CFLs or LEDs.

I jury-rigged a line cord so I could measure phantom power consumption, and unfortunately learned that each sensor uses approximately 1W of power all the time. This means that for a multi-incandescent fixture drawing 200 watts, if the sensor saves just a few minutes per day of usage it will be a net energy (and bulb) cost savings. However, for a low 10W or 25W LED application the switch would have to save an hour per day of usage on average to break even.

So, for 4-bulb vanities at 240W and bathroom fans, the savings will be sufficient. For a single 13W LED closet bulb, that isn't forgotten often there is no benefit.

Of course, most of us could deploy a houseful of these sensor switches for the consumption of a single incandescent bulb, so the cost isn't extreme, though efficiency is the goal.

So far the vacancy sensors seem to fit most applications, but an occupancy sensor in the laundry room has proved popular since it'll turn on the light for you when you walk in with your hands full.

On the LED bulb front, I recently rebuilt a kitchen CFL fixture with a bad ballast from 2x8W (320 initial lumens each) tuble fluorescent to use Cree XR-E warm white LEDs. The result is 13W (vs 16) and 700 warm white lumens (versus 640 cool white lumens). Anticipated life is 30K hours for the LEDs versus 7.5K for the CFLs. And it only cost 2x as much to upgrade the fixture as it would to replace it with CFLs!

Swapping from incandescent to CFL or LED is a no-brainer -- the savings justify the swap. Going from CFL to LED requires other motivation, as the savings alone won't justify the expense.

Hi Paleo;
Don't forget the closet-door light switches, too. A nice zero-energy solution to that one.. as long as you remember to close the closet door, that is.

"Every Automation is an Amputation" Marshall Macluhan

It's funny. I was just at a training to be a parent volunteer for a Lego-mindstorms Robot team at my daughter's school yesterday, and the instructor was reminding us of how very few people with engineering experience and degrees were going into gradeschool education, and so those kids who will have a propensity and enthusiasm for these sorts of engineering directions end up with almost no potential mentors..

Of course, I was immediately thinking about the paradox of a society that has manically built machines to do everything for us, leaving us with a scarcity of people inclined to do the 'DIY' level of building out the continuation of that system. I guess it's almost a negative feedback loop, except that the Indians and Taiwanese are more than happy to sell us all the automata that we think we desire.

(My Robot, Bad Dog, is NOT being built to become a servant.. just a pet and occasional Bench-assistant, glorified voltmeter.)


pps, these are the LED's that I just bought.. mainly as Video Sungun lighting, but also for camping and various utility situations.. they weigh nothing, don't get hot, take up no space..
"G4B-WHP10-D White LED Lamp" (down in the middle of this page, I got the warmwhites)

Thanks, Paleocon, for sharing your hands-on experience with these lighting and control technologies. After several years of experimenting with various CFL and integrated ballast ceramic metal halide PAR38s, I've reluctantly switched back to halogen-IR, at least for the time being (nothing matches the sparkle, brilliance and purity of halogen). Our table lamps contain CFLs and they supply 90 per cent of our daily needs, so, used sparingly, the hit hasn't been too bad.


Thanks, HIH. I have yet to play with Par 38 LED bulbs, as all of my applications have been 6" cans served well by the Cree LR6. However, I'm about ready to tackle the vanities, and I know there are no LED solutions that are adequate. Certainly 5000 degree LEDs make the diamonds in a display case dance, but for color-accurate vanity lighting there are no standard-bulb solutions.

Is there E37 Halogen that would work well for vanities? That would cut my consumption by half or so, I'd imagine.

On another tack, the long life of LEDs (30-50K hours) makes me think that the notion of building standard bulbs is simply wrong for many applications. For example, a chandelier with a good number of small-base candelabras can't cost-effectively be replaced with either CFL or LED today. That many small CFLs give a soft glow, but not the mottled interplay that the incandescents provide, and for narrow-base the choices are few. LEDs are a non-starter -- no good way to dissipate heat, no room for the power supply, and too much complexity replicated time and again for every bulb.

Instead, I envision a power supply in the fixture base, and low-voltage DC daisy-chained throughout the fixture, with back-to-back LEDs thermally affixed to the fixture tubes and crowns. In such a design, the fixture itself is the heat sink, and the bulbs are small and brilliant. Modular maintenance would be harder, but failures should be so rare it hardly matters.

Now watch me convince my wife to help pick out a new chandelier that I'm going to immediately butcher.....this will be fun.

Hi Paleocon,

I've heard good things about the LR6 but haven't as yet come across any installations where they have been deployed. My biggest issue with CFLs is the soft, diffuse nature of the light. I like the "punch", "kick" and jewel-like sparkle of halogen; in exposed fixtures, CFLs tend to make everything appear flat, dull and life-less (less of a problem in the case of table lamps and fully enclosed fixtures, obviously).

In terms of halogen vanity lighting, Philips offers G25 lamps in both clear and soft white (see: http://www.lighting.philips.com/us_en/browseliterature/download/p-8582.pdf). Supposedly, the 60-watt clear version provides 990 lumens; a typical incandescent G25 might be in the range of 650 lumens, so perhaps 50 per cent more light and one-third longer service life.

I'm tempted to replace the CFLs in our living room table lamps with ceramic metal halide. I have a number of 39 and 70-watt Halo L5200 track heads that utilize a T4.5 CDM and I've half toyed with the idea of sacrificing a couple for this purpose (7,000+ lumens and 90+ CRI in the case of Philip's MasterColour Prestige Elite). However, these lamps lack an outer protective capsule and are thus not suitable for open fixtures and the fear of burning down the house has given me pause. Sometimes, it's best to not get too creative.


CFLs tend to make everything appear flat, dull and life-less

Try the Ott-Lite CFLs (I bought mine at Lowe's). Not just good CRI but a little punch.

I have three 15 Watts over bathroom pedestal sink in "tulip" type fixtures (exposed bulb over sink, glass cover elsewhere). Bathroom is mauve fixtures and peach tile (black trim) so I wanted to bring colors out.

Best Hopes for Good Light,


Hi Alan,

Thanks for the recommendation; I hope to try them out at some point. In fairness to CFLs, I dislike soft-white incandescents for the same reason -- the "shadow ban" coating on most incandescents and higher wattage halogens produces pretty much the same result. I'm not happy unless I can see the shadow of the filament coil and support wires on the ceiling. :-)

Best hopes for good light and fewer fuss buckets like myself.


I'll take a look at the Philips, and at Alan's suggestion. I think your Nx7000 lumen lamps would make your living room feel like a sun room?

I think the non-sparkle nature of the LED Christmas lights is what caused my family to universally hate them, and the same issue is why I can't stand CFLs for "character" and "ambiance". Of course LEDs by base nature are bright, and a sparkly lens would be easy to add, so I'm hopeful that I can address my finicky nature with these over time.

Speaking of lighting, I have a row of halogen track lights in the bedroom (not recessed). They use 180W, and I can't find any affordable low power bulbs for it. I ended up using them sparingly, and I use the desk lamps, 15W CFL, and vanity lights, 6x 12W CFL globes, over the sink instead.

I tried CFLs in the bathroom, but the humidity seems to kill them quickly. I may switch back to incandescents since the bathroom lights are used so little.

I tried CFLs in the bathroom, but the humidity seems to kill them quickly

I put a CFL in my bathroom in 2004 and it lasted just over two years before failing. I replaced it with another and that one is still working. I put two into the vanity fixtures there in 2005 and they are still working. The only concession I made for these was to turn the metal cone shades up so that the light is now indirect reflected off the walls and ceiling and no heat can accumulate around the units.
For reference, I put the same brand and size of bulb as the first bathroom unit into our lower hall in a totally enclosed difusion globe. It is on a two way circuit and is used a lot. That original unit is still functioning after five and a half years.

Hi dwcal,

Frequent switching and high humidity can extract its toll on CFLs, so an incandescent or halogen lamp may not be a bad choice if their usage is relatively modest, e.g., thirty minutes per day. You might also consider replacing your vanity strip with a T8 linear fluorescent fixture if personal taste and décor permit -- the benefits include longer lamp life (i.e., 24-36,000 hrs versus 6-10,000 for CFLs), lower lamp replacement costs (i.e., 1 x $2.00 versus 6 x $5.00 or $6.00) and higher efficiency (i.e., 90 to 100 lumens per watt versus 50 to 60). Humidity should also be less of an issue. Philip's TL930 and TL950 lamps have a CRI of 96 and 98 respectively, so their light quality is phenomenal. That said, a standard 800 series T8 with a CRI of 85 or 86 will do the job just fine.

I don't know if your halogen track lights are PAR20, PAR30 or PAR38, GU10 or MR16 but if a halogen-IR version is available, you could conceivably drop the wattage by a third or more without any appreciable loss of light (e.g., http://www.gelighting.com/na/business_lighting/products/hir_plus_halogen...).

Also, a couple minor corrections to my previous post: the Halo fixtures referenced above are L5300 not L5200, and it's MasterColour Elite, not Prestige Elite which some of us might remember from our IBM Selectric days.


Thanks, I'll look at the HIR bulbs.

Humidity isn't an issue with the vanity strip. It's for the bedroom sink, not the bathroom. I'm ok with the CFL globes for now. Even four globes is plenty of light, and the electric utility subsidized them to only $2/ea. Amazing to think it uses 360W with incandescents.

The CFL that died most quickly in the bathroom was in an enclosed exhaust fan fixture. That one's going back to incandescent.

The EIA's Short Term Energy Outlook is just out. Not much of interest except I was surprised that they are saying the UK's oil production is dropping off a cliff. The bold is past the rest are predictions in million barrels per day.

                      2009				2010			
                      Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Europe                5.27	4.88	4.64	4.83	4.8	4.57	4.31	4.47
Norway                2.53	2.21	2.24	2.37	2.37	2.25	2.15	2.21
United Kingdom        1.55	1.5	1.25	1.31	1.3	1.22	1.07	1.18
Other North Sea       0.32	0.3	0.29	0.29	0.29	0.29	0.27	0.27

Ron P.


Are you personally predicting that EIA is overly optimistic and that European production will decline even faster?

No, I think the EIA is pretty close in this instance. North Sea production is very transparent and they are just reading what producers there say about themselves. Where the EIA is off, I believe, is Russia. They are saying that Russia has plateaued and production will be pretty much flat through 2010.

                         2008   2009 2010                                     
FSU and Eastern Europe   12.52 12.75 13.02
Azerbaijan                0.88  1.04  1.18
Kazakhstan                1.43  1.51  1.66
Russia                    9.79  9.78  9.78
Turkmenistan.             0.19  0.20  0.20
Other FSU/Eastern Europe. 0.43  0.41  0.40

Russia's old giants have a decline rate of 19 percent. However Russia is drilling from 5,000 to 6,000 new wells per year, mostly in old reservoirs, just to keep production flat. They are sucking the oil out faster and faster just trying to keep production flat. I am predicting that next year Russian oil production will start to fall and fall a little faster in 2011 and even faster in 2012.

Ron P.

I vaguely remember hearing that the summer months were when a lot of North Sea infrastructure is serviced. Could this have an impact? How do other summers compare - is there a comparable dip?

Certainly though it looks bad predicting that we will be importing almost 1MB/day in 2011 and apart from anything else this has got to hurt tax income of a Billion or so. Not what the chancellor will want.

Yes, every summer there is a dip in North Sea production. Norway usually has two or three months of low production due to maintenance. At least one of these months is usually in the spring and the rest in the summer. For the UK it is usually all in the summer or the second quarter. But when this is averaged out we see an obvious decline.

The UK showed a slight pause in its decline in 2007 due to the Buzzard field coming on line but now has obviously resumed its steep decline.

Ron P.

Certainly though it looks bad

Having studied UK Government official proved and probable and assuming a rapid shutdown due to difficulty (no 'nodding donkeys') and cost then worst case I think the UK might go something like this:


Is it not more realistic to expect consumption to drop as imports grow, anticipating a high cost for the imports and its impact on the economy? Or a shift to alternate sources? Either way, it's hard to imagine imports growing as quickly as production fades for an entire decade.

Is it not more realistic to expect consumption to drop as imports grow

Yes I agree, that is why I said this is worst case. We may find more oil to extract and consumption may decline.

I am fairly confident about the decline in production but I have no idea what the UK consumption is going to do. As you can see we are a typical OECD nation, our BAU consumption isn't the world +1.6% a year growth, it's the countries like China and India that have all the growth.

The UK has had flat consumption, come hell or high water, for 25 years or so - I don't expect consumption to grow. If we did fall off the final world peak in 2008 the world net exports will make it very easy for the UK CO2 emissions to decline by the mandatory 20% by 2020 that our Government has signed up to. Have you tried running your life using 20% less fossil fuels?

"These new techniques mean producers can promise a nearly 100-year supply......."

more checks are being put in the mail, but the post office is having trouble delivering "the checks in the mail".

Something I've always wanted to know about a country's stated oil consumption per day. I am guessing this does not include all the barrels needed as feed stock to the petrochemical industry to create all the plastics, fertilizer, paint, etc which are imported as finished goods to that country. I wonder how much this would add to a country's (the US) oil demand. If the US imports X many plastic toys for Toys R Us from China then surely some of China's oil/petrochems will actually be 'consumed' by the US. Anyone got any thoughts on this?

Intersting question HA. I've always assumed (for no particualr reason I can reference) that daily consumption included all users including petrochem, utilities, etc. I think I'm correct but others might confirm. But your basic point is valid: the world consumes a large volume of oil as produced goods (including ag products). The accountant might say the oil is exported to China but the net consumption is being done by the rest of us end product consumers. Doesn't really change anything though IMO. Just a different way of saying consumption cannot go on as BAU.

Deflation gets a lot of press coverage, but look at this article-these have to be all time prices-$9675 US a square foot. 10 years ago this would have been inconceiveable http://blog.buzzbuzzhome.com/2009/09/hong-kongs-luxury-condos-shimmer-mo...

Also, Hawaii RE, California, Manhattan, Miami has got to look pretty cheap to anyone shopping at these rates. IMO prime USA RE has a bright future-the other 95% is in big trouble.

re: Sharon Astyk's essay 'Whither Peak Oil?'

Sharon has raised a number of interesting points in her essay but I would like to highlight one particular weakness in her approach that makes one want to raise one's eyes heavenward and pray that, some day, our universities will make an introduction to basic mathematics compulsory for all aspirant students -- even those who prefer literature and Casaubon's unwritten book to the hard sciences.

Sharon writes (penultimate paragraph):

Focusing on energy to the exclusion of other issues - focusing on numbers instead of the moral and political, narrative and social elements has never been enough.

In fact, the problem is that there has been far too little focus on numbers and the issue of scaling up (especially among the Greens). David MacKay, author of 'Sustainable Energy - without the Hot Air' has a section of his book entitled Numbers, not Adjectives which explains why quantitative data is of the essence -- particularly when it comes to explaining the facts of the world to the credulity-driven members of the Alternative Energy Bullshit Community.

Instead of paraphrasing David's arguments I'll simply refer you to an excellent review thereof published at Resurgence.com:


It should be an absolute requirement that every bachelors granted should require the completion of the same basic freshman courses in chemistry and biology as as taught to majors in the field.I will pass on physics because enough physics is taught in chemistry for the student to see the big picture.

I might be willing to allow the professors to modify the content slightly to avoid any serious calculus.

A person without this basic knowledge is simply unprepared to really understand what's going on in the world today.

That book is also online at: http://www.withouthotair.com/

..quantitative data is of the essence -- particularly when it comes to explaining the facts of the world..

People are by & large innumerate. You can't explain anything to them using numbers.

Hello DD,

Your Quote: "People are by & large innumerate. You can't explain anything to them using numbers."

That is why I always clue any newbie to read Jay's Thermo/Gene Collision PDF--it is only 8 pages long with very few numbers. If they then wish to try to debunk it without looking like a total idiot: they must then become more numerate and informed on lots of other topics. Thus, the next Peak Outreach step for them is the basic WWWeb primers and/or books.

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

I think you are actually helping reinforce her point here.

She isn't saying the numbers are unimportant, and she takes pains to thank those here and at EB who have worked hard to assemble them. If I'm not mistaken, she's not saying the 'public discourse' on PO is too numbers-heavy, but the discussions HERE tend to slough off any considerations that are not easy to quantify and graph, but are aspects that do affect and will speak to us just the same. (And will speak to others, more importantly)

This goes to the heart of the question Nate was asking the other day. 'Are we able to take this conversation to the next steps?' How do we translate the (vitally important) numbers and science into a message that will produce a national/global sense of what is being talked about here? This is clearly one of the battles that AGW is struggling with as well.

Who even looks up when the boy cries "Canis Lupus!!"

We need to translate and frame this as a story that connects. When it doesn't connect, the speaker sometimes want to blame the audience for not getting his language.. an understandable frustration, but still missing the solution.


'Sometimes I think people who complain that they can't communicate should just shut up!' Tom Lehrer

I think another big part of finding the message and the language that is going to work is that you have to care about your audience.. 'care about' in the sense that you aren't looking down on them (as the Diploma'd crowd sometimes has a cultural habit to do..) , that you can keep in mind that they are just other people trying to live on the planet, trying to get by, trying to understand.

Whenever we get into those discussion that get all knowledgeable about 'The masses', with the derision that says how dumb everyone is.. we're just smugly isolating ourselves and ignoring the fact that there is a lot of intelligence out there, but it is often too compartmentalized, and so they in their harried lives may never have looked at the assumptions about energy and lifestyle that could awaken them to this problem. But if they also happen to like Motorsports, or identify as a Christian, or a Hippie, or a Trader, what are the chances that we would alienate them so quickly with those rants that they'd join the 'Peak Oil is for Ivory Tower snobs' club, and likely stay there?


I think another big part of finding the message and the language that is going to work is that you have to care about your audience.. 'care about' in the sense that you aren't looking down on them (as the Diploma'd crowd sometimes has a cultural habit to do..)

Few people have ever shown that they cared about their audience as much as Richard Feynman.

Check out The Messenger Series Lectures, brought to you by Microsoft:


Had him recommended many times.. have to take a look.

Well if that isn't the strangest thing.

I'm looking at the 'Law of Gravitation', Feynman Talk #1, and it is slated as 'Nov 9th, 1964'. The day after I was born.. his talk given at Cornell, two states over from the blessed event..

Thanks again.

If china is locking up long-term exploration deals in countries like Angola, i.e. they get a % of production for a set upfront investment; isn't china buying in Yuan effectively.

My feeling is the markets are looking to much at the dollar and oil exchanges, and not enough at china's other actions.


I think you have a good point-China has some good stuff to export and will have more later-everything from trucks to structural steel to cement to the usual electronics and junk consumer goods.

I can't see any reason why the countries they are buying into would refuse to exchange oil and food for these products.

And China might figure out a way to get around her resource problems-some of the worst ones ,anyway.

Germany managed to keep a wartime economy afloat on synthetic gasoline.

The chinese might figure out a way to build enough wind farms to pump irrigation water distances not currently considered even remotely feasible.We tend to forget just how cheap labor is in China-and cheap labor makes for cheap concrete, cheap bulldozers, cheap pumps , cheap everything.

This sure would be a good way to smooth out the highs and lows and make good use of whatever wind is available-which looks to be a huge amount soon.Water could be stored in local irrigation reserviors during periods of high wind and wind power diverted to business and industry to save fuel at other times.

Morgan Downey has some good comments on this today....


blondie - I fully agree with you that many aren't seeing the full implications of China's efforts over the last 15+ years to secure long term energy resources. Not just funding exploratory wells but funding development programs. Have never seen the details of their trades but typically these deals lead to an actual titled ownership of the future production. This is no small consideration. Such title carries great weight in the courts. Interfering with such transactions would not be easy for any country including us. And beyond ownership they are tying up big volumes via contracts. Last year the Chinese cut a deal with Venezuela in which VZ has guaranteed a volume of future heavy crude in return for China building 4 specialty tankers to haul the oil and three refineries in China designed to crack it. This is the crude our Gulf Coast refiners had been taking for granted would be theirs when the time came.

I'm in the process of documenting as many of these trades as possible but it will take a while. But in addition to tying up future crude supplies they are also going now after refineries. Just last week I learned that China was close to closing the purchase of Valero's Aruba refinery. Saw one story in a trade journal and nothing in the MSM about this effort. Not sure but I think this is the second largest refinery in the western hemisphere. And most of its products are marketed in the US. Probably not so coincidental China also announced at the same time another deal with VZ to purchase another $16 billion of their crude. There may be a day not too far down the road where we'll start buying a meaningful percentage of our gasoline et al products from the Chinese...if they are willing to sell it, that is. And the Chinese won't need to ship those products all the way to the homeland to take advantage of the situation. Just do a product swap with an Asian refiner and they both saving transport costs.

There might be some knee-jerk saber rattling over these developments but in the end it won't matter IMO. Possessing crude oil is a lot easier then taking it away from someone. I see an eventual world where the U.S and China agree to split FF resources at the expense of those who cannot bring economic/military/political power to bear. Unlike the old cold war days and MAD is see a future where the MADOR protocol dominates. MADOR: Mutually Assured Division Of Resources. I doubt any country would fire a shot at a Chinese or American flag vessel transporting oil from one of that country's former oil suppliers. But it's just as difficult imagining one of those vessels being boarded and forced to an alternate port. China knows the day will come when it won't be as much a question of being able to afford the price of oil but the ability to buy whatever is available. In this sense the Chinese have a great advantage over the U.S. Our companies have to consider the profitability of such ventures to tie up future oil production. The Chinese don't worry about the profit motive IMO...just the access to FF and the continued ability to feed the economic machine.

Rockman, in the next post is a video link of Pickens in which he says the Chinese are doing what they need to do to secure the oil they're going to need in the future, but the U.S. is doing nothing, supporting your post.

Now, if the dollar gets replaced by a basket of currencies as the basis currency for trading oil, as the value of the dollar continues to descend (due to huge borrowing and a weak economy) the price of oil will shoot way up.

Thanks Perk. Saw that link but didn't read. Will now. As far as prices shooting up that's exactly our biz plan. Not that I would wish such on our ailing economy but if it's going to happen anyway we might as well profit since we have the capital today (just like the Chinese) to tie up FF resources in the ground.

Why haven't Exxon and Shell (etc.) been buying up all the assets worldwide for 30 years? Seems like with billions in profits that would be a superb long-term plan. Or maybe that's the problem -- shareholders want short-term cash profits rather than long-term equity profits?

Exactly Paleo. Imagined if Exxon had paid $5 billion for a field last summer that would now be worth half that price. Not very happy shareholders for sure. Stocks are sold on a daily basis...can't get much more short-sighted then that. But more importantly, Exxon is not responsible for our country's future energy security. No oil company is. And the shareholders (the bulk of whom are U.S. union members/folks with retirement accounts) would not tolerate it if they tried. But, hey, don't find fault with these companies for not doing so. The U.S. gov't, with the full support of the American people, also refuses to take on such responsibilities. The Chinese companies buying up those reserves are not free market operations. They are owned/controlled by the Chinese gov't. Any one company's biz plan is the same as the Chinese gov't: gain control of as much of the commodty markets as possible with their trade imbalance dollars. And remember...no one takes Chinese money at last report. But the U.S. writes a check for $500 million every day to pay the interest on our debt. And a big chunk of that goes to China. And guess what China is swapping those U.S. $'s for? More then a little irritating, eh, that we're funding Chinese efforts to take future FF resources off the market which we might badly need one day not too far down the road.

Oddly enough, this is what brought me to TOD originally -- my belief that Exxon was our best friend in the oil world, at the time that all the discussion was how to increasing skewer Big Oil.

Lack of a "national" oil company was no big deal when the oil companies were all western and the fields were all owned or developed by western companies, but now they aren't, and we have a vacuum.

Compared with national oil companies, where do Exxon and the other majors fall in the worldwide reserves ownership? 10% maybe?

Edit: Answered my own question, from Wikipedia.

According to consulting firm PFC Energy, only 7% of the world's estimated oil and gas reserves are in countries that allow companies like ExxonMobil free rein. Fully 65% are in the hands of state-owned companies such as Saudi Aramco, with the rest in countries such as Russia and Venezuela, where access by Western companies is difficult. The PFC study implies political factors are limiting capacity increases in Mexico, Venezuela, Iran, Iraq, Kuwait, and Russia. Saudi Arabia is also limiting capacity expansion, but because of a self-imposed cap, unlike the other countries.[89] As a result of not having access to countries amenable to oil exploration, ExxonMobil is not making nearly the investment in finding new oil that it did in 1981.

MADOR: Mutually Assured Division Of Resources. I doubt any country would fire a shot at a Chinese or American flag vessel transporting oil from one of that country's former oil suppliers.

Rockman, you've raised an interesting scenario-- that of a China/US alliance. Looking back at China's long history, I can't think of any period in which China projected its military power in more than a short-term burst of massed, screaming soldiers. Kick butt for a few weeks then get out. Think India/China war, Vietnam/China war, US/China war(Korea) etc. but certainly not a global projection or even very far from their own borders.

It will be a massively clever global chess move if China can co-opt the US into being a proxy power for the global projection of military power, which is what the US seems to love doing, and is equipped for both militarily and culturally. Likely it would be an unspoken/unwritten alliance but real nevertheless. China currently has many of the cards in the form of US$ and I believe lots of reserves from other nations too.

Interesting times.


China has not attempted to project power much beyond its immediate borders/neighbor states since Kublai Khan's and his his successor's (or was he the successor - I forget now) attempt to take over Japan. Like the Spanish Armada which tried to destroy the English fleet the Japanese navy did not destroy them but the weather did most of the damage. For a few centuries China did have a large fleet that traded throughout southern Asia and along the east coast of Africa. I don't think they did the colonial thing though.

Since WW2, the most important reason the US has projected power across the oceans was to provide access to markets (globalization). Before US it was England's navy which provided the same role and allowed Globalization Round previous (not really Round 1, think Marco Polo and the Silk Road) to scale to a greater degree than ever before.

Thomas Barnett has an interesting way of describing our military's role - we export security to the world, in fact the deal is we provide a safe environment for trade to take place and in return the world accepts our paper. No safe environment to ship or trade, how are the oil exporters and the the goods mfg's going to get their produce to market?

I don't think we are being co-opted (at least yet) this is what Bush talked about when he spoke about exporting democracy.(I dread using that example as he brings out such as visceral response in people). Its not the political system he was referring to, more the economic system, but who in America is going to complain about exporting democracy?

ET -- Having adopted my daughter in China back in 2000 I got a small taste of Chinese focus. They have game plans and from my experience they stick to their plans with a fanatic resolve I've seen little of in our country (except, of course, when it comes to sports). Not judging this as good or bad but just noting it's existance. Add that to their freedom to not be controlled by typical free market/profit motive requirements and U.S. oil companies have little chance to successfully compete. Not that the U.S. historically has completely clean hands but the Chinese have no restrictions when dealing with corrupt governments/institutions.

Granted it's a simple view but I thinks it's fairly obvious: China needs to sell products to advance their economy. In addition to needing the energy to produce those products they need buyers. Initially I felt this would move them to support U.S efforts fo the most part to secure FF so as to perpetuate their markets here in preference to other developed countries. But I recently read that Chinese purchases by the EU now exceed those by the U.S. Can't really predict how the Chinese might balance this situation. Perhaps they've secured enough to supply all three appetites. Maybe not. But I still think the U.S. will eventually use it's various powers to usurp energy where ever it can. China might not openly support such effoerts but I doubt they'll try to block them as long as those efforts don't interfer with theirs. After all, we're not hindering their efforts at all today. In fact, I can't envision a future where we don't continue to fund their FF acquisition efforts via the trade imbalance. Again, a simple view, but we seem to have developed as rather advanced symbiotic relationship with China. It's difficult to imagine this relationship not becoming stronger in the future. And that it will come at the expense of many other industrialized economies.

Rockman, you've raised an interesting scenario-- that of a China/US alliance.

Union of Allied Planets ;)

Pickens on Oil Prices .. video

plus second video ....having oil priced in something other than the dollar.


Just watched this myself. Old Boone certainly didn't mince words when the host mentioned the "huge finds" this year.

You produced 30 billion barrels of oil and found 10 in 08 so, a little bit short, just 20 and I...I don't think you're gonna... uh you're not gonna replace 30 billion barrels in 09. That isn't gonna happens so, you can't do it Joe. It isn't there.

Strong words from the old coot! Response .... Change the subject!

Alan from the islands

George Soros thinks oil headed up, at least as of June 10th:


Markets Higher, Investors Shun Dollar
Here's the NY Times take on the story posted earlier from Reuters and other sources, on oil being priced in "anything but dollars". This development, if real, could portend substantial escalation of the price of oil in dollars even if, in other currencies, its price stays relatively flat.

Adding to the turmoil, a report on Tuesday in The Independent, a British newspaper, suggested that China, France, Japan and Russia were in secret talks with Persian Gulf countries to abandon the dollar for international trade in oil and replace it with a basket of currencies plus gold.

The article named no sources and was quickly denied by Muhammad al-Jasser, the governor of the Saudi central bank, and Dmitry Pankin, Russia’s deputy finance minister. French officials declined to comment. In China, the government is closed for a weeklong holiday, but well-connected bankers were skeptical.

“While informal discussions might have taken place, I doubt they represent a serious intent to undermine the existing global monetary order or the role of the U.S. dollar,” said Fred Hu, who is the chairman of greater China for Goldman Sachs and advises the Chinese government.

But the report caught the attention of financial markets because several economists have been predicting in recent months that at some point, the world’s oil exporters would start moving toward other currencies to limit exposure to the dollar.

“It won’t be easy to make such a shift, it’s a pretty unrealistic idea in the near term,” said Qu Hongbin, an HSBC economist in Hong Kong. But in the years to come, he added, China would be delighted if it could print its own currency to pay for oil, instead of having to earn dollars through exports.

Dick Lawrence

The most interesting line was the one about Goldman advising the Chinese government. Isn't this the same Goldman supported to the tune of billions by the USA taxpayer and basically running the USA? Or is it shorting the USA?

Well, I did read somewhere that the whole US economy is underwater. So if Goldman knows that (they must know that if it`s true, it`s their business to know things like that) then yes, they are "shorting the USA".

By the way, I already did that myself, 14 years ago. I emigrated and it felt like "shorting" the USA. Even back then I realized the auto dependence in the USA was going to be a millstone around the neck there and I left for a more walkable, bikable place--Japan. I`m not saying things won`t get better there in the good ol` USA eventually, there are so many pluses there so I`m sure they`ll manage something.

I have no doubt they have been talking about it "in secret". After all, the Chinese, at least (as well as some of the others), have been talking about it in public.

I also have no doubt that they are going to continue to deny that they are considering any change -- all the way up to the moment that they announce the change.

WNC Observer -

I may be (and probably am) slightly paranoid, but I do think that the big players may have already given up on the US and are now slowly and secretly making plans to bail out and find a safer haven for both their money and their collective arses.

I am reminded of an old Gahan Wilson or Gary Larson cartoon (I forgot which one). Anyway, the scene is the cabin of a jumbo jet, facing forward. As the puzzled and slightly concerned passengers look on, the captain, copilot, and head stewardess, are slowly walking toward toward the rear of the plane, staring at the ceiling and trying their best to look extra nonchalant. At first I didn't get it, but then after looking at the cartoon more closely, I see that all three are wearing parachutes. I think this is the sort of thing that might be going on in the financial world.

It also reminds me of the situation in one of my previous jobs during the early 1980s. We were in the midst of a bad recession, work was slow, and there were many rumors of layoffs. Well, the management had a big meeting and reassured everyone that while things were tight, no layoffs were being planned and that they were confident that thing would soon turn around. Well, less than two months later the ax fell big time. You see, there's no point in stampeding the herd until they can all be rounded up and slaughtered.

Exactly right. You see variations on the same theme over and over. It is pretty much SOP for anyone in a position of power.

Not to worry. They're building floating houses in the Lower Ninth Ward.


Fleet buyers warm to alternative auto tech

Now, hybrids are being scaled up for bigger jobs. Staples recently received hybrid and all-electric delivery trucks from Smith Electric Vehicles that it will test in different locations. The initial cost is higher--partially offset by government stimulus spending--but Payette estimates that operating the electric and hybrid delivery trucks will cost about half as much as their diesel equivalents.

From a technology point of view, hybrids and battery-electric vehicles are well suited for deliveries, since the stop-and-go nature of the driving allows the trucks to recharge the batteries during braking. Also, the length of trips is well understood, whereas consumers will typically do a mix of driving, including long trips.

Interesting article on the changing attitude of fleet managers to alternatives to purely gasoline and diesel powered vehicles.

And in a somewhat related story from accross the pond

Guilty as charged: UK police get iMiEV for urban policing

The West Midlands Police will be the first force to use the i MiEV and there might be some envious competing departments who wish they could get the all-electric city cars right away; Mitsubishi says that the EV was "an instant show stopper" at the National Police Show in September.

The Yanks in the audience will probably have a good laugh if you go to the article and have a look at the picture but, in an crowded urban environment it's going to be hard to outrun it, with a top speed of 80mph and acceleration typical of electric cars. I can just imagine the looks on the miscreants faces when they're foiled by a jellybean!

Alan from the islands

But isn't that a mite elitist, thus counter productive? ;-)

Hello TODers,

Food Stamp Crisis in Houston

..A recent visit to a local Houston HHS office revealed a run down office with missing outlet covers and standing room only as every aisle was packed with people. People waited for almost an hour at an empty desk, not daring to even sit down in case they lost their place in line. Applicants couldn't take a number, as the dispenser was empty. They were waiting for the employee needed to approve their application submission to return and simply take their paperwork, getting it into the system. Another hour or two of waiting produced a paper with an appointment to come back and show eligibility, with the perk of actually being able to talk to a caseworker...
It would seem that handing out copies of the Thermo/Gene Collision, plus other Peak Outreach articles, could help these people pass the time in line. The State could also hand out seeds, fertilizer, and garden tools, to incentivize them to grow their own food. IMO, we all will have to do this at some point anyhow, they might as well be encouraged by the State to get started early.

Has anyone calculated what percentage of the US pop. can be reliant upon free food handouts without them doing any garden/farm labor? 50%? 75%?

I am looking at your soliton analogies. So far nothing has stuck with me apart from the fact that solitons look like they are composed of something akin to wavelets, and that wavelets are related to Sam's loglets. So the pieces are there but I can't completely connect the dots yet.

I have my own idea and that is the notion of "shocklets". These are not narrow high frequency wave packets like solitons or wavelets however. They are low frequency and rather broad.


Which is greener: Portland or New York? (guess again)

Nya, nya! I live in Jersey City, at the other end of the Holland Tunnel. Many times (over many years) I've had occasion to accompany friends in Manhattan. How do we get from point A to point B? Walk. How far is it? Close, maybe only 20 blocks. What!!? But many if not most New Yorkers would say, ok, let's go. And in terms of land usage, forget it -- several orders of magnitude better than the exurbs. Trees? Central Park. Water? A beautiful walkway around much of the island.

But affordable? Forget it, even for a cubicle, which is why we live in JC. And of course, the point about Wall Street devastating the rest of the country (and world) is point on.

Will Manhattan survive the collapse of the rest of the country (and the empire)? I don't see how. Still, in the shorter term, it has its merits.

Nursing homes struggling across the state, many already in bankruptcy

Wisconsin is now ranked the worst in the country for reimbursing the cost of medical care to nursing homes and other elderly care givers.

Administrators say that's why 17 percent of nursing homes in Wisconsin are currently going into bankruptcy -- and why many more may follow...
Does anyone know if Wisconsin golf courses and luxury resorts are closing at this 17% pace? My guess is that they are closing at a much slower rate due to ongoing wealth concentration upwards.

Let's hope former golfers, who now cannot afford this sport, don't get angry at now having to provide their personal time to intensive nursing care for their aging parents.

Server farms consume vast amounts of electricity (see: http://www.greens.org/s-r/45/45-03.html) and their demands continue to grow with each passing year. Perhaps this will help:

Servers With Cellphone Chips? Yep, Here They Come

If a server runs on a smartphone chip is it still a server?

The era of such a deeply philosophical data center question is upon us. A pair of stealthy start-ups have placed smartphone chips at the center of their plans to create a new breed of low-power servers. They’re hoping that this radical take on data center hardware will attract the likes of Google, Facebook and Microsoft, which all battle energy costs on a huge scale.

SeaMicro, based in Santa Clara, Calif., has put together a server based on Intel’s Atom chip, which currently slots into things like netbooks and other mobile computing devices. Intel expects Atom to drive its cell phone strategy in the coming years as well.

Exact details on the SeaMicro product have been tough to come by, since the company remains inside the cone of silence, but people familiar with SeaMicro’s hardware say it will pack about 80 Atom chips in a very small chassis. The company also has some proprietary hardware and software twists, these people said.

See: http://bits.blogs.nytimes.com/2009/10/06/servers-with-cell-phones-chips-...


Server farms are a significant problem or a significant opportunity, depending on your viewpoint. Yes, they use a LOT of power, like over 1% of the US power budget, and that is growing. Moore's Law is well known for performance, but it turns out that Internet bandwidth and server needs are growing even faster, and the resulting power is determined by the change in power consumption for a change in performance. In the past Dennard's Law (sp?) has ruled, and that basically says that power consumption goes down as circuits get smaller, so the power density stays about the same for a chip, but that law isn't holding as well as Moore's Law has.

The opportunity is manifold:
- Every server farm gets replaced or rebuild every few years, as the technology moves quickly. Any new technology can be implemented quite quickly, and that includes power saving technology.
- In many cases the increase in data usage offsets other usage. We could hope for nothing better than telecons and videocons instead of jet travel.
- Hosted services using shared servers are much more efficiently allocated to processors than a single-user home solution. It's easy to balance servers, and shut down the ones you don't need.
- In another technology generation or two (say, 2-4 years) rate-adaptive and lower-power home datacom equipment should arrive as well, reducing some of the power footprint.

Somebody clever will eventually come with 'time shifting' power for the servers -- their loads are predictable, and cooling matches peak utilization, so an ability to store "coolth" or electrical power locally could fit in nicely with a smart grid. Plus, most servers have backup power, which could also make the load dispatchable in some cases.

The key is to get lower-power, higher-efficiency, longer-life equipment in place in the server farms before the economy slows too far. At least this sector already had one crash in 2001, so it's a little better positioned this time.

Edit: one source (Lawrence Berkely National Lab) says data servers use 2% (61TWh) today, growing to 122TWh by 2013 on the current path. There has been no real slow-down with the economic malaise -- IP TV is still coming in leaps and bounds. 12% per year power growth is the historical number and projection.

This is already being worked on and is still one part of the economy that is growing or remaining pretty stable. Having been involved in this for a number of years now, time sharing is now called virtualization in the industry, its been used on mainframes for decades and in the x86 (Windows, linux) for about a decade.

AMD and Intel have been talking about performance per watt for several years now. PGE started a program a couple years ago to offer incentives for companies to adopt virtualization.

Now this is evolving into a utility type service (cloud, formerly utility or grid computing). The network becomes the computer and the emergence of skynet cannot be far off!

The growth in the number of servers is more a behavioral than a technological problem. We just can't seem to throw anything out, cause "I may need that someday".

The real issue is that this 61TWh feeds another 40TWh of access network equipment, which in turn drives 150TWh of customer-premise equipment.

Really the server side is the "easy, low-hanging fruit", due to the centralization, clear cost-benefit structure, and rapid replacement cycle. Telecom equipment designed for 30-year life (well, originally, but 10-year is still reasonable) and customer equipment which varies by user preference is a much thornier problem.

Still, there is a lot of room for improvement, and there is finally some interest in doing something about energy consumption in this space.

All excellent points, Paleocon. The three to five year replacement cycle is a definite plus in this respect; so too the growing popularity of laptops and net books which are far less power hungry than their desktop counterparts.

Then there are developments like this that truly boggle the mind:

Researchers at the University of Idaho have created a single computer chip more powerful than 17,000 quad core processors that runs on 0.03 percent of the power those chips would require, the university says.

The chip will be used on NASA’s developing Geostationary Synthetic Thinned Aperture Radiometer (GeoSTAR) project, which will observe hurricanes and other severe storms in the U.S.

It is the latest in a long series of microprocessors created for NASA by the Center for Advanced Microelectronics and Biomolecular Research in Post Falls.

The chip is responsible for correlating 588 antennas in real-time. It will run on 120 watts of power – barely more than a typical light bulb.

Source: http://www.idahostatesman.com/business/story/919748.html


Unfortunately that processor is probably an application-specific design that does this particular task better than 17,000 general purpose processors, but is likely unsuited to any other use.

There are eternal trade-offs between ultimate performance, design cost, component costs, and programmability/flexibility, and of course power consumption. Intel CPUs have low cost due to massive production runs, high flexibility, and a broadly-amortized design investment. This chip would be be on the other end of the scale -- very high design investment for a very small production run, but for an application where power, weight, and performance are critical.

Fortunately there are millions of telecom users, so networking optimization costs can be amortized across a great many devices.

Well, let's hope there's some opportunity for cross-pollination along the way! Data storage is another area where energy performance has improved tremendously. Not long ago, a 300 megabyte hard drive was the size of a small filing cabinet and could double as a space heater. Today, a 2 terabyte hard drive consumes less energy than a 7-watt night light (see: http://www.wdc.com/en/products/products.asp?driveid=610).


Hmmm...I think they can probably install ever-less-efficient bloatware - which seems infinitely scalable - much faster than they can ever install power-saving gimmicks - which seem not so scalable. As a WAG, I doubt that more than one clock cycle in five hundred does useful work nowadays, be it in a home computer or in a server farm.