Drumbeat: October 24, 2009

China steps up, slowly but surely

Among members of the U.S. Congress and negotiators preparing for a December climate summit in Copenhagen, China is often considered an obstacle because it has not committed to imposing a ceiling on its emissions of the gases that most scientists blame for climate change. China produces the most carbon emissions in the world, and the output is likely to continue growing for two decades. When President Hu Jintao pledged at the United Nations last month to lower the country's carbon intensity "by a notable margin," that was regarded as a step forward.

Yet, in visible and less visible ways, China has begun to address its emissions problem. The steps are driven in part by the parochial concern that climate change could worsen the flooding that plagues the country's low-lying coastal regions, including Shanghai, and cause water shortages in western areas as glaciers in the Himalayas melt away.

But China has also begun to see energy efficiency and renewable energy as ingredients for the type of modern economy it wants to build, in part because it would make the nation's energy sources more secure.

Crude rally stalls but gas nears summer high

Energy demand is extremely weak and the country's storage tanks are brimming with crude, said Peter Beutel, an analyst at Cameron Hanover.

There are also whispers that the Organization of the Petroleum Exporting Countries, which supplies more than 35 percent of the world's crude, will decide to open up the spigots when it meets in December.

"At some point, the bubble has to burst," Beutel said.

Traders Sell September Put Options as Oil Ends Week Above $80

(Bloomberg) -- New York oil traders sold $45 put options, bets that crude would fall below that price, as futures settled above $80 a barrel for the third time this week.

September 2010 $45 put options were the most active options on the New York Mercantile Exchange, based on electronic trading today. They were followed by December $90 and $100 calls, bets that the price will rise above those levels. The call options also declined.

Crude May Decline on Ample Stockpiles, Survey Shows

(Bloomberg) -- Crude oil futures may fall next week on speculation that U.S. inventories are sufficient to meet weakening demand.

Eighteen of 36 analysts, or 50 percent, said oil will drop through Oct. 30. Twelve respondents, or 33 percent, forecast that the market will rise and six said prices will be little changed. Last week, analysts were split over whether prices would rise or fall.

Oil may hit $100/barrel on weak dollar: Deutsche

NEW YORK (Reuters) - Oil prices may surge to $100 a barrel sometime in the next two quarters as the U.S. dollar weakens against the euro, Deutsche Bank energy economist Adam Sieminski said Friday.

"We think the dollar could weaken further to $1.60 against the euro and it implies pushing oil prices to that threatening triple-digit level," Sieminski told Reuters.

ESAI sees potential oil bull trap

ESAI estimates the global contraction in oil demand will average around 1.75 million b/d in 2009 and then oil demand will grow by at least 1.3 million b/d in 2010. OPEC production has begun creeping up, although quota discipline remains impressive in the face of almost $80 crude oil prices.

The combination of creeping OPEC output and still weak demand will result in a counter seasonal surplus in the fourth quarter and very high distillate stocks, indicating a fundamentally soft market this winter. But, this fundamental picture is overwhelmed by other signals coming from the investment community.

Daniel Yergin on oil: Expect $60 to $100 a barrel

If anyone should know about the outlook for oil, it would be Daniel Yergin. He's the Pulitzer Prize-winning author of The Prize, a marvelously documented history of the oil industry that frames the origins of OPEC.

Yergin was interviewed on a Bloomberg radio program this week. Here are excerpts:

--Oil demand: "We think the industrial world actually peaked out in terms of its oil demand in 2005."

Nouriel Roubini, One on One: More Doom and Gloom

Index Universe: You’ve said that you’re worried we’re already sowing the seeds of the next crisis. Where do you see that most directly?

Dr. Nouriel Roubini: Well in commodities, I look at oil prices. They fell from $145 last summer, came down to $30 earlier this year and now they’re back close to $80. But if I look at the fundamentals of demand and supply, demand is down to 2005 levels, supply and inventories are at all-time highs. In my view, the movement in oil prices is not fully justified by the fundamentals.

Our First Peak Oil Recession: Why Oil Prices May Never Rise Above $150

One of the most bedeviling problems for oil producers (and oil investors) is knowing when it's too cheap to keep producing, and when it's too expensive to sell.

Last year gave us new boundaries: $147 a barrel was too expensive, and $33 was too cheap. But those aren't terribly useful numbers in the real world.

We now know that $147 was extra-inflated by too much money sloshing into the sector, and $33 was extra-deflated by the fear and confusion that dominated all markets in December of last year. It's likely that tighter regulation of the oil futures market will tamp down the former, and the latter will not be seen again. . . so long as the world banking system continues to beg, borrow, and steal its way to stability and "full faith and credit."

Energy security, eh?

South Korea may be doing a China. Korea National Oil Company’s C$1.8 billion ($1.7 billion) purchase of Canadian Harvest Energy Trust secures future oil supplies, like recent Chinese deals in Canada and elsewhere.

With oil shortages possible in the medium term, that makes sense. But Korea can’t play rough, so KNOC must stick to countries it trusts. That makes Korea’s quest for energy security a tougher one than China’s.

In a free market, there would be no need to secure oil supplies in this way — rather, they could be acquired freely on the spot market or through long-term contracts. That’s how Korea currently obtains most of its 2.14 million barrels a day in imports.

INGAA study takes midstream look at long-term gas supply

WASHINGTON, DC -- Projected growth in North American natural gas supplies and markets will require billions of dollars of additional investments in pipelines, storage, and other midstream infrastructure through 2030, a recent INGAA Foundation Inc. study concluded.

The study, which the Interstate Natural Gas Association of America’s research division released on Oct. 20, projected that investments of $133-210 billion — or $6-10 billion/year — would be needed in the next 20 years under various market scenarios.

The outlays would be needed primarily to join increased gas production from unconventional shale basins and tight sands to the existing pipeline network, it said. Anticipated electric power generation and industrial demand growth as well as the potential to connect massive Arctic gas resources and LNG imports to the grid also will be key drivers, it indicated.

Puerto Rico Has Fuel Supplies for 24 Days After Fire

(Bloomberg) -- Puerto Rico has enough fuel to supply the island for almost a month after explosions and fire at a refinery and tank farm near San Juan in Bayamon.

The power authority has fuel to supply the island for about 24 days after 14 of the 40 tanks at Caribbean Petroleum Corp.’s farm were on fire today, Governor Luis Fortuno said in comments in a PR Newswire statement. The Federal Bureau of Investigation, U.S. Environmental Protection Agency, U.S. Coast Guard and others are coordinating efforts, Fortuno said.

“We will coordinate with wholesalers to ensure adequate fuel is supplied to all citizens,” he said. “There is no problem in terms of supply.”

Bolivia Gas Industry Losing Clients, Former President Says

(Bloomberg) -- Bolivia, which holds South America’s second-largest natural-gas reserves, has seen reduced gas output and investments since the government took greater control of its energy assets, former President Jorge Quiroga said.

Since President Evo Morales’s government raised taxes and forced companies to renegotiate energy contracts three years ago, it has stifled investments, said Quiroga, who held office from 2001 to 2002 and leads the Andean country’s largest opposition party.

Azerbaijan and Turkey clash over energy

MONTREAL - In all the debate and speculation over the various pipelines planned for the Caspian-South Caucasus corridor and adjacent regions (Nabucco, South Stream, White Stream, and Trans-Caspian Gas Pipelines in addition to various oil pipeline projects), the troubled state of energy relations between Azerbaijan and Turkey has been lost from view, mainly due to their stellar cooperation in the past over the Baku-Tbilisi-Ceyhan oil pipeline and South Caucasus Pipeline for gas in particular.

However, Azerbaijan's frustration with Turkey's inability or unwillingness to address present and future bilateral contract terms has now broken out into the open at the highest level. Azerbaijan's President Ilham Aliev was this week widely quoted in the press as saying publicly, "What state [meaning Azerbaijan] would agree to sell its natural resources for 30% of world market prices, especially under current conditions? This is illogical."

Listen Up! Northwest program 66: Post-carbon transportation

This week, Listen Up! Northwest speaks with energy experts Richard Gilbert and Anthony Perl, authors of the book "Transport Revolutions: Moving People and Freight without Oil." The authors share their research and views on 'peak oil' and transportation.

The secret lives of our profs: Assistant Professor of Government Jason Brozek

So, I think the issue is international fresh water. It's an underappreciated problem. Everybody realizes that we've passed peak oil, and that we're just about past the point where we can save the atmosphere from burning us all alive. But, there's this incredible problem of international water and we're overusing it. We're running out so quickly and there's no political interest internationally in solving this problem. The research project, my research that I'm working on right now is about international bodies of water. So rivers, lakes, aquifers that cross international borders and how those conflicts are managed. I think it's an incredibly important problem that's not getting enough attention internationally or academically.

Does Toronto have to be a mean city?

Consider for a moment the great challenges and potential opportunities Toronto is bound to face in coming decades. Here are six of them -- more could be added to the list. How Torontonians negotiate them will have much to do with shaping the city's success or failure in the time of our descendants.

· The decline of the suburbs. The decades following the Second World War were the golden age of the motorcar, the suburb, and the flight from urban density. We have now entered the era of Peak Oil, the struggle to contain climate change and the decline of the motorcar. Cities of the future will be more densely populated, more like those of the 19th century than those of the second half of the 20th century, in that respect. Managing the shift to greater density -- the shift is not a matter of choice, it will come -- while paying heed to social justice, urban planning and the minimizing of dislocation, will figure largely in determining the success or failure of Toronto.

Real action on climate change is needed now in B.C. and at Copenhagen

We can’t go back easily to a hunter-gatherer population of just millions living in a pristine world. Even if we wanted to. Even if that was the only solution to climate change and biodiversity loss and peak oil and all of the other “bottleneck” problems caused by exponentially increasing populations armed with potent technologies.

We must instead head for a future where humanity isn’t a cancer threatening all life on Earth. If such a future is possible.

Australia faces famine, expert warns

A food production expert says Australia may face a massive famine if governments fail to address an impending global food shortage.

A conference of food productivity experts in Sydney this week heard the greatest threat to the world is not climate change, but food production on land and in the water.

Clunkers leads to backlog at recycling yards

Under the federal trade-in program, the cars are required to be crushed or shredded within six months of the date the vehicle is transferred from the dealership. Recyclers say the deadline — even a few months away — will be difficult to meet as they try to remove spare parts such as transmissions, front and rear axles, starters and alternators.

"True recycling is using something to its fullest potential and then recycling it over again by making it into steel and sending it out to become another engine or transmission or car," said Jeff Cantor, an auto recycler in Candia, N.H. "We're breaking that circle here by crushing good quality parts. We can't process them quick enough in six months."

For many, saving green a big part of picture

When the doors open at the Bright Green Future conference this morning in La Jolla, participants will get a glimpse of how economic and ecological goals are merging, changing the face of environmentalism.

There won't be lots of speeches about protecting polar ice caps or redwood trees. The free symposium is mainly about how green choices such as harve sting rainwater can lower household bills and create better places to live. Several sessions, including one called “Show Me the Money,” are about green jobs.

Obama: Energy Bill Opponents Using Cynical Ploy

CAMBRIDGE, Mass. (AP) ― President Barack Obama said Friday that opponents of his energy bill are disputing the evidence of global warming in a cynical ploy to undermine efforts to curb pollution and steer the nation to greener energy sources.

Obama said some opponents "make cynical claims that contradict the overwhelming scientific evidence when it comes to climate change -- claims whose only purpose is to defeat or delay the change that we know is necessary."

Senate Climate Measure Would Give Away Most Pollution Permits

(Bloomberg) -- Lawmakers would give away for free the bulk of all pollution permits under a plan to curb global warming introduced yesterday by Senator Barbara Boxer.

The 923-page measure is similar to legislation the House passed in June. The Senate bill gives away free carbon dioxide emission permits to some industries, including 35.5 percent for utilities, 15 percent for manufacturers and 2.25 percent for oil refineries.

EPA estimates Senate climate bill costs modest

WASHINGTON (AP) — An analysis by the Environmental Protection Agency says a proposed Senate bill to combat global warming would add a little over $100 a year to household energy costs.

The analysis released late Friday by California Sen. Barbara Boxer's office generally mirrors the cost projected by the EPA when it examined similar legislation passed last summer by the House.

Bill would offer incentives to anyone who buys energy storage systems

U.S. Rep. Mike Thompson, D-Yolo County, introduced legislation that provides a 30 percent tax credit for the purchase of thermal energy storage systems for homes and businesses. Energy storage technology allows consumers to purchase electricity during off-peak hours and save it to use during peak hours.

Renewables targets will hinder decarbonisation, warn business leaders

Delegates at CBI conference argue renewable energy targets are unlikely to be met, forcing the UK to increase reliance on gas.

Wind industry targets training for 60,000 green collar workers

The British Wind Energy Association (BWEA) yesterday inked a deal with representatives from the government's skills programme, designed to provide training for up to 60,000 new wind energy technicians and engineers.

Solar recovery to start, but 2010 outlook dim

FRANKFURT (Reuters) - European solar equipment makers are slowly emerging from the crisis that has hit the sector, quarterly results will show, but the outlook beyond 2009 will be uncertain due to tight credit and oversupply.

Europe's solar companies are expected to show signs of recovery when third-quarter earnings kick off next week, with analysts expecting capacity adjustments and the shift of production abroad to benefit companies.

SunPower Drops Most in 10 Months on Lower Guidance

(Bloomberg) -- SunPower Corp., the second-biggest U.S. supplier of solar modules, fell the most in 10 months after reducing the top end of sales and profit guidance for the year.

SunPower sank $4.95, or 15 percent, to $28.35 in Nasdaq Stock Market composite trading. The shares, which fell the most since Dec. 1, have declined 23 percent this year.

'Stealth' wind turbine deployed

Defence firm Qinetiq and turbine manufacturing firm Vestas are developing "stealth turbines", with radar-absorbing materials and coatings.

The five-year effort may help many wind farm projects that are on hold because of so-called "radar clutter" concerns.

Hydropower industry braces for glacier-free future

RHONE GLACIER, Switzerland (Reuters) - Standing on the glacier at the source of the Rhone river, glaciologist Andreas Bauder poses next to a 3-meter high pole sticking out of the ice, and gestures above his head.

"This is about the melt of one month," he says, as fellow scientists drill into the ice. "I'm about two meters tall."

From the Himalayas to the Andes, faster-melting glaciers spell short-term opportunities -- and long-term risks -- for hydroelectric power and the engineering and construction industries it drives.

The most widely used form of renewable energy globally, hydro meets more than half Switzerland's energy needs. As summers dry and glaciers that help drive turbines with meltwater recede, that share may eventually fall.

Australians kick off world climate change protest

SYDNEY (AFP) – Climate activists gathered on the steps of Sydney's iconic Opera House Saturday and along the city's beaches to kick off an international day of protest about global warming.

Along the famous sands of Bondi Beach and across the span of the Harbour Bridge protesters gathered with placards bearing the logo 350 to call for a cut in carbon emissions to 350 parts per million (ppm), organisers said.

Happy climate change action day, everyone. This is not just going on in Australia, as discussed in the last article above. Actions are happening all around the world. To find the event closest to you, check out www.350.org.

Yes, Australia was just the first, because they're on the other side of the International Date Line. Kinda like they always get to celebrate New Year's first.

Here's a photo from Kashmir:

...on the other side of the International Date Line...
Kinda depends on which way you go around. We could consider ourselves all to be on the same side of the Date Line if we wished to... ;)


I am aware that many US residents have little knowledge of geography, but I thought that you, at least, would know that New Zealand is to the East of Australia and as such is first to celebrate such things as New Year. Australia was NOT the first.

I used to live in Guam "Where Americas Day Begins"
But NZ was ahead of us, as we were the same a OZ.
When I flew back to Hawaii, I would arrive before I left.

I was at the Embarcadero Plaza in San Francisco today for the Greenpeace 350.org kick-off. I have to say this: Those Greenpeace folks are first class.


What a comedian $Y3r8in is. It must be gauling going through life knowing how full of s*1T you are. What difference does it make if economics or EROEI or flying Aubergines or geology caused Peak oil? Peak is peak is peak. If oil was $20 we would pump the earth flat right now. If he thinks that the industrialised world has given up on oil then he really is more insane than I previously presumed he was.

Rant off/


I see that Daniel Yergin is predicting the oil price, again. Given his dismal record in calling prices, this bullishness, and the fact that both the equities rally and weakness in the dollar are approaching some kind of technical resolution, perhaps it's time to go short crude?

At least his handlers have wised up and he is predicting oil prices to be in a wide band $20 each side of current price.

Saying $60 to $100 isn't a prediction, it's the way a consultant says "I don't have a freakin' clue."

westtexas[jeffery brown] on financialsense newshour re exportland


about midway starts.

The destruction of the Tablas de Daimiel wetland: Tablas de Daimiel wetland: then and now.

It's like Mordor arrived at The Shire.

The old world will burn in the fires of industry. Forests will fall. A new order will rise. We will drive the machinery of war with the sword and the spear and the iron fist of the Orc. We have only to remove those who oppose us.

"'Double food output to stop world starving,' say scientists"


"They cite the original green revolution of the 1960s when new crop varieties, greater use of agro-chemicals, and a change in farming practices led to a dramatic increase in food production: it leapt from 1.84 billion tonnes in 1961 to 4.38 billion tonnes in 2007. But scientists accept that this increase came at great environmental cost, and the Royal Society report warns that a second green revolution has to be based on a sustainable increase in global food production without a significant expansion in the area of land turned over to farming.

"There is insufficient water to support an increase in the cultivated areas, and the environmental consequences of increasing cultivated areas are undesirable. Additional production will have to take place without further damage to [the environment]," the Royal Society report says. The area of land available to sustain each human being is "dangerously declining" because of soil degradation, the report says."

Relatively small investments in micro-irrigation schemes - single-farm and village-sized monsoon detention ponds, polyethylene pipes rather than irrigation canals or flood irrigation, and so on -- throughout South and South-East Asia and Africa could easily "double food output".

Can we do it? In our sleep. But we won't.

Edit: "Relatively" compared to what, you ask. Relative to the money tossed down the bank bail-out "black hole".

Iran's parliament warns against drop in oil exports

An Iranian parliamentary center has warned that Iran's oil exports may face a plunge due to depreciation of oil wells and a jump in domestic consumption.


A report by a parliamentary research center, published on Saturday by Iran's Aftab-e Yazd daily, said Iran's crude oil exports will "drop to zero" in eight years in the absence of an annual $4.5 billion in investment in the oil sector.

Interesting new documentary featuring William Black,Celente,Max Keiser,etc.-almost a companion piece to Michael Moore's latest flick on Capitalism http://www.youtube.com/watch?v=wDQ6nIsgKW0

I tuned out after hearing : " "They" are creating a Global Warming Police" (about 2 minutes in).
This is conspiracy theory at its best - par for the course for Alex Jones.

Your feelings are both understandable and expected. Over at IMDB (the movie site) the Moore movie is rated-overall the film is rated highly, yet a very high % of the raters gave the film a 1 out of 10 rating. One would be surprised if these raters had actually viewed Moore's film at all-IMO they agree with your basic value system. To each his own.

I wasn't referring to the Moore movie - one which I haven't seen yet, but would probably rate highly, based on previous films of his that I have seen. I was referring to the YouTube link posted.

I know that-a great many people dislike what Moore represents, therefore any film of his,in their opinion, is not credible. They don't want to view it (even if they go to the trouble of downrating it). IMO they are afraid to be confronted with information that possibly would cause them to question their views. You have your own fears-not a problem.

Brian, you're being unfair. Anyone who calls climate science a conspiracy is proving they are unable of clear, objective thought. Why would one continue watching when you know anything that follows is being filtered through a mind that has proven with its own utterances it is not capable of rational dialogue on major issues?

Also, there is the problem encountered when one finds facts mixed with crazy. It is impossible to sort out what is valuable and what isn't because the facts are twisted and contorted by the delusions they are filtered through.

It's a poor use of one's time. There are other sources of information that are not filled with irrational claptrap.

I say this as someone who is perfectly capable of believing governments and the powerful use their powers very, very badly quite often. I mean to say, I have no problem with the idea there are conspiracies. There are. The US government has been involved in any number of subterfuges that served nothing more than to line the pockets of the powerful. It's a given.

But not everything is a conspiracy. Tonkin Gulf? Conspiracy. The fall of Mossadegh of Iran in 1953? Conspiracy. Iran/Contra? Conspiracy. Iraq after 9/11? Conspiracy. But you have to have some major mental, emotional or intellectual issues to see a conspiracy in climate science. The proof is not just in the studies, it's right out your flippin' window! More absurdly, where denial conspiracy has been factually confirmed, those that were fooled by it *still* don't get it. Even after the conspiracy has been confirmed. By the same token, there is zero evidence of any conspiracy in support of climate change science. None. Zilch. Nada. And this despite 97% of climate scientists agreeing we are headed for Very Bad Things. Are 97% of climate scientists (how many thousands at how many universities, labs and think tanks in how many nations would that be? Yet, not one of them has slipped up and spilled the beans?)


Ccpo: But you are also not describing the whole picture. IMO climate change is not a "conspiracy" but it does appear that the government measures which will be undertaken could meet that description. Most objective observers agree that measures will not be effective and are seriously hamstrung by going light on China and India. What everyone agrees on is that the huge carbon credit trading market will be a bonanza for some-all the profits from this scheme are transferred from someone else (the payer to the payee). Will it hit the USA hard? IMO yes, maybe it is designed that way, maybe it isn't. Philosophically, I don't respect appeals to intellectual authority (at all). I don't regard Alex Jones, Michael Moore or Barack Obama as intellectual authority figures. If I feel they have missed the boat on one piece of the puzzle that does not cause me to disregard all other pieces of evidence presented. You have to attempt to figure it out yourself, knowing that you are never going to see much of the whole spectrum because of the large volume of intentional and unintentional misinformation. To the credit of Alex Jones, he challenges you to educate yourself-not to follow him like some sort of messiah figure.

I was describing the whole picture. The two questions are separate ones:

1. Is anthropogenically-driven climate change happening?

2. What do we do about it?

If your answer to #1 is "No," then #2 just becomes a conspiratorial rant. Pointless, that is.

And, yes, we have to filter through for our selves. I addressed that: Alex Jones doesn't help because whatever facts he might offer are filtered through crazy. The facts can be had elsewhere, so why waste your time with Jones?

Oh, and the best answer to the carbon issue has been offered by J. Hansen. It's flawed, but better than carbon credits.


I already answered "Yes" to #1. Look, you appear to agree that nothing substantial will be done to affect climate change. If this is the case, then what is the reason for all these schemes? If you wanted to effect real results, would you effectively ignore China? You aren't filtering these facts objectively either-Al Gore meeting with Kenny Lay at the White House discussing trading schemes-is your premise the main motivation is the salvation of the ecosystem? Where is your evidence for such claims? I think I am going to go with a new slogan because this "Conspiracy Theory" label used to describe every fact that is uncomfortable is tired-lets go with the opposite approach (which is far more popular) the Naivety Theory. This describes the majority of the info thrown around-the ridiculous unspoken assumptions are overwhelming IMO.

Obama declares swine flu a national emergency

WASHINGTON, Oct 24 (Reuters) - U.S. President Barack Obama has declared 2009 H1N1 swine flu a national emergency, the White House said on Saturday.

The declaration will make it easier for U.S. medical facilities to handle a surge in flu patients by allowing the waiver of some requirements of Medicare, Medicaid and other federal health insurance programs as needed, the White House said in a statement.

The U.S. Centers for Disease Control and Prevention said on Friday that H1N1 swine flu has become widespread in 46 of the 50 U.S. states, a level comparable to the peak of ordinary flu seasons but far earlier and with more waves of infection expected.

Obama signed the statement on Friday night.

The White House statement said the declaration was intended to prepare the country in case of "a rapid increase in illness that may overburden health care resources." It was similar to disaster declarations issued before hurricanes hit coastal areas.

"It's important to note that this is a proactive measure -- not a response to a new development," an administration official said.


I'm definitely not a lawyer, but here is what Wikipedia has to say:

"It was due in part to concern that a declaration of "emergency" for one purpose should not invoke every possible executive emergency power that Congress in 1976 passed the National Emergencies Act. Among other provisions, this act requires the President to declare formally a national emergency and to specify the statutory authorities to be used under such a declaration."


The rise and fall of oil production (telegraph.co.uk)

...Under more realistic assumptions, the peak could occur much earlier – or may already have passed.

Roubini predicts a second oil crash due to commodities speculators(worse than the first).



If that's the case then Globalisation may be approaching its long expected "Waterloo moment", as Skrebowski at ASPO 2009 said that anything worse than the lows seen for oil in the aftermath of the Global Financial Crisis could result in the shut-in of most unconventional/high cost plays and may even cause OPEC and oil companies to collapse/go broke. How much oil would be lost from production as a cause? 10 million, 15 million bs p/d?

The delays in exploration and development due to low prices has already put at risk, and any repeat of lower prices will cause further delays. I doubt OPEC can be broken - they tend to see solidarity as stabilizing and will hold. The longer term problem will be intellectual property about potential exploration sites being shelved and not revisited until after the exploration staff who developed the info has retired or otherwise left the employ of the big boys. Most of the shelved info will be related to projects which require longer periods between discovery and production, like Jack # 2, if you remember what that is / was. Not that it will not be produced, but that type of project.

Always interesting to see how far off some of the existing projects are, or have been pushed back. Jack # 2 date of first production was originally estimated to be 2010 the first time I saw it there, and is now shown as 2015.

Uncertainty will de-incentivise the exploration for projects which are going to be high in production cost, which is just about anything new. NOC's will probably pursue enough to keep ahead of their export declines, or so I would anticipate. What a shame the Midland Communist Association was unsucessful in taking over the US - we could have used the technology they had to bring huge amounts of production online. (For those unfamiliar with Midland politics, the average American right wing nut would be considered a liberal out there.)

So I am in the pub in Southampton this afternoon (before we take on the MK Dons) and I am watching Wolves Versus Villa on Sky. Nothing unusual about that you may say. And you would be right. Typical Saturday afternoon on the south coast of England - football, beer and more beer.

So Wolves are looking strong going into half time, and as they are just above Portsmouth in the prem me and my mates are cheering them on to win and put some clean air between them and our arch rivals Pompey....

... So along comes the half time whistle, my mates go to the bar, and I am left on my lonesome staring at the nice plasma flat screen and Sky's broadcast...

... And probably by now, most of you - including Leanan - are thinking "What the heck? Eh? Where is this Villa you talk of, and who are these Wolves? And most likely you are also asking "what has all this to do with anything and why should the Oil Drum community give a monkey's..

.. Here's why: as my buddies were getting the beers I stayed watching the TV adverts and one in particular caught my attention. A company called 'Exxon Mobile' entertained me to a very slick two minute advert featuring a chap who had grey hair and glasses, and a lot of nice graphics.

The catch phrase of the advert: 'Exxon Mobile, Leading the way in Algae' (maybe not quiet exact)

So, the reason dear international Oil Drummers that I have just typed this whole message out on my iPhone is to let you all know

I've seen that ad. Too bad they're planning to use algae to generate fuel - we may be needing it as food after we've taken all the fish....

[continued from above]... Ok so I got cut off by the iPhone..

The point I am making, if not soberly, is that this company called 'Exxon Mobile' (who I have never heard off, it is not a house-hold name here in England !) is actively branding itself as an Algae company! WTF!

Seriously, if you get to see this advert you will have a laugh! I have no idea who this Exxon Mobile bunch are but I sure want to meet their public relations company!

...Exxon Mobile! Yeahhh.... Algae to save the world! ALGAE! Come on. Why not just admit that the easy cheap oil is gone! And stop with this crap PR stunt which gets me choking on my pint..

(for those who care, Southampton won 3-1. So much for Wimbledon Wanderers!)

I think they are throwing out the algae stuff, to discredit peakoil. Folks PO is a myth, nothing to worry about. Your friendly international oil company will keep the oil coming, just the source will change, but the change will be seamless for the customer. No need to think about that electric car you've been dreaming of......

speaking of electric cars, i built one over the summer. costs about $7000 in parts (plus lots of time). It wasn't that hard. Makes you wondering why car companies are dragging their feet-- oh, right!

see here:

"...who I have never heard of, it is not a house-hold name here in England!"

Oh, HAc, surely you've left off a <sarcanol> tag here? They are mentioned in the UK press from time to time. They were able to afford an advert in an expensive prime sports time-slot; they didn't need to resort to the sort of cheap wee-hours slot unheard-of companies must use, at least in the USA.

Possibly the difficulty might be that in the UK, more than a few things seem still to be known to households by rather fusty names - hence the journey in the wayback machine which takes us to the rather odd mention of "Esso petrol stations" in the second article linked above... ;)

Flagging as inappropriate : cheeky scummer expressing opinion on club literally out of his league !

Another take on Chinese auto sales.


Overall my own view of China is in line with his outside of the expectation of collapse.

However a large government purchase of cars makes a lot of sense to explain he 2009 numbers.
I believe I read Obama ordered the US government to do something similar.


In China they tend to supersize orders like this. If so once you remove government purchases the
car sales to individuals was probably up still but not as much.

Also one thing about China I can't quite find is they have a huge number of taxi's think New York with every third car a taxi. I'm not sure what the fleet turnover rate is now. When I was there ten years ago a lot of the cars where junkers. However assuming expansion of the fleet and replacement with newer models China should be developing a fairly health appetite for new cars every few years for its taxi fleet.


Regardless if you take into account how long the fleet has expanded both taxi and personal cars then China should now have a significant number of replacement cars hitting the streets each year.
Of course the older cars are probably headed towards the poorer provinces but still.

This also suggest 450k accidents a year. I've got no idea how many result in a car being totaled but I feel this is a high accident rate and assume again a number of replacements are needed because of this.

Assuming the wealthy take on the habit of buying a new car every year American style and assuming the older chinese models are now being aggressively junked in favor of much better made and fairly cheap replacement cars then the replacement market in china is quite large. Often with increased fuel efficiency by default.
The older models where not that fuel efficient.

Thus after years of booming and fast growth one has to think that replacement sales now make up a significant volume of new cars sales instead of pure growth. I'd suggest at least 5 million or now replacement sales.

If the government is desperate enough not only did it probably make new orders for government use but also scrapped the old cars. Sort of a mix of cash for clunkers and government mandated purchases.



The last link has a unsubstantiated claim of 30% of the cars in Shanghai belong to the government.
Later it gives a number of around 9% for Beijing. If the government rolls its car fleet and scraps
the older ones then thats a pretty good amount of cars. More than enough to account for a lot of the increase in purchases in 2009.

Looking quickly at scrap aluminum which makes up a good bit of later model cars is rising.


And looking here it seems they have had and aggressive plan in place to scrap older cars for some time.


This article also has government ownership at 8%.

In any case as you work your way through the fantastic news about Chinese autosales it seems like the combination of a growing base of replacement cars along with a government splurge esp if they scrapped their older cars can narrow down the "fantastic" numbers to something that fits well with our weakened economy.
Real new car sales i.e not replacement or government was probably not that strong. Also in 2008 there was a fairly significant decline in sales so you have a bit of pent up demand to deal with too. Once it was clear the world was not going to end people that put off buying a car in 2008 purchased in 2009.

Is China's economy roaring as claimed ? Probably not although certainly no longer declining.

Going forward with so many cars on the road replacement sales will continue to account for more and more purchases and if China is even slightly aggressive about scrapping used cars overall growth in total numbers of cars will be slow.

And a nice peak into the real China.


All good points but one of the problems with analyzing economic growth as measured by GDP is that the measurement itself is flawed. Look at the USA-the huge sickness industry and the huge military industry add to nominal GDP but is there a discernible wealth multiplier? The Insurance industry, Wall Street and various forms of government all add to GDP but the same question can be asked. My point is that the China GDP numbers (in terms of growth) are probably overstated yet the total GDP for China appears to be well understated in relation to the USA when you look at the economic footprint of the nation. Quite possibly no one can accurately compare the GDP of an industrial nation to a non industrial nation.

Well the first thing you need to with China as treat as two countries.

A second/third world interior region and a first world coastal region plus Beijing.

Its demographics are actually quite similar to America in that sense but only one coast.
In the US you have the wealthy coasts plus Chicago and flyover country wages vary between the coast and the interior by 50% or more.

Having grown up in Holly Springs Mississippi as a young child I can assure you we also have a second world economy in some parts of our country.

Regardless for China you have about 300 million people involved in the first world economy these have a wage distribution similar to California with poor Chinese replacing Mexican labor and a much larger group in this class. Closer to 30% or more of the population in the wealthy coastal towns are cheap labor.

Next the factories are styled closer to the US in the 19th century with most workers living in dorms owned by the company and eating in the company kitchen. Lose your job and you lose everything.

If you think about the US during its industrialization or probably better a large scale version of England then you have it about right. Immense wealth at the top a growing skilled work force in the middle and a large poverty stricken class at the bottom.

Regardless its sensible to consider 300 million as a decent picture of wealthy in China. Now when I was there 10 years ago the average wage for this group was about 15k in US dollars I'd imagine its closer to 30k now so not all that much lower than the US. Now the Government is huge and pretty much correlates with our government spending defense spending and all state spending combined. Chinese government purchases and actions are easily 10% or more of the economy maybe 20-30% internally. This government spending seems to be steadily expanding and I'd have to guess give 3-5% annual GDP growth boost year in and year out.

Exports are of course tied to the growth rate in importing nations thats easy enough to figure simply take the rate of growth between the US and China or Europe and China trade and thats your basic number. Sure they expand trade in Africa and elsewhere but the volumes are minuscule compared to the US and Europe.
This is anywhere from 3-5%.

Now real internal consumption is growing on average itself in the 3-5% range in general. I.e china grows its demand for chinese and imported goods at about the same rate as its exports are expanding not government expenditures not shocking since its dollars earned via exports fueling the internal economy.

You want to know the health of the Chinese economy follow the commodity imports.



Now cars are cool and sexy and all but if China's internal economy is really growing then people will be buying new underwear and t-shirts.

No fooking way is this happening the auto numbers are simply artifically jacked buy large government purchases.

I left off the reason why I'm interested..

Chinese oil imports have been growing steadily this is a number I believe since China likes to use it to show how they grow. I could perhaps be overstated but it seems in this particular case that claims of exports of oil to China match well with imports. I've found no reason to believe that this number is wrong.

If this is correct and the Chinese economy is basically as screwed as everyone elses which you would expect with and export oriented eoconomy then only one variable can be changing rapidly.

Internal oil production is declining rapidly in China.

You can imagine this is not something they want to tell the world but look my results from the Demand side and the fact they are buying any source of oil that is for sale and the conclusion is obvious.

Not only is their production declining it may be declining faster than I expected.

Export Land on after burners as even a weakened Chinese economy experiences 3-5% growth from Government demand alone.

Forced growth ?


If you look at the graph obviously TSHTF in housing.

However another interesting part is how the deviation form the average number of new homes is quite stable.
In my opinion this indicates that the housing market was under effectively steady stimulus. Periodically it would retrench during recessions then growth would resume.

You can now see the obvious break to the pattern during the 2002 recession. Here the system obviously went on a completely different and eventually fatal course.

The moral of the story is be careful about using data from the last several decades to predict the future economic activity in the US it really is different this time and not in a good way.

The recession cycles ended in 2000 and that was the end of a forced economy that was at least somewhat sane from there on out we went insane. Not only did we manage to avoid what was probably going to be a very long recession touching depression we blew way to high against a major downturn.

You have to consider the difference between what should have happened and what did happen and what should have happened was distinctly negative and we went way positive.

I'd argue it now impossible to recover from this fiasco.