Drumbeat: February 17, 2010
Posted by Leanan on February 17, 2010 - 10:23am
The Peak Oil Crisis: The Crunch
The first two issues encompass the balance of new oil supplies and declining production from existing oil fields. Here the report suggests a fairly specific time frame when significant additions of new production to the world's oil supply is likely to end. The report says time is around the end of the current year. From 2011 on, the relentless drop in production of just over 4 million b/d from the fields that are currently producing about 85 million barrels a day will be just barely balanced with production from new projects through 2014. After that world production will go into decline.In other words, the world's ability to keep increasing its oil production will come to an end this year after 150 years of more or less steady growth. While new production from projects such as those in the deep waters off Brazil and the Gulf of Mexico will continue, these projects are five to ten years away from significantly adding to global production and likely will be overbalanced by the 4 million b/d annual drop in production from existing fields. New production will, of course, slow the pace of global oil depletion, but will not be enough to allow for global economic growth.
U.S. Crude Oil Supplies Fell Last Week, API Report Shows
(Bloomberg) -- Crude oil inventories fell by 63,000 barrels last week to 337.6 million, the American Petroleum Institute said today.Supplies of distillate fuel, a category that includes heating oil and diesel, increased by 1.28 million barrels to 159.5 million. Gasoline inventories gained 1.43 million to 230.3 million.
Yanukovych’s Russian Overtures May Signal Ukraine’s Allegiance
(Bloomberg) -- Ukraine’s President-elect Viktor Yanukovych may be stepping up efforts to move the former Soviet state closer to Russia and end a standoff that’s obstructed gas flows and heightened regional tensions for half a decade.
The hidden danger of an oil spike
JEDDAH: Professor Christopher Allsopp, invited speaker at the Jeddah Economic Forum, is director of the Oxford Institute for Energy Studies, founded in 1982 as an autonomous centre for advanced research into the social science areas of energy issues.“Our institute is not terribly impressed by the peak oil story. But there is a question now beginning to emerge from analysts in this country and elsewhere, as to whether oil demand has reached a plateau — or is likely to,” he said in an exclusive interview with Arab News.
“It certainly has in the OECD countries and it might go further but it’s being held up by the growth of India and China.”
The world — as we know it — is doomed
I’ll give you the condensed version of Ruppert’s argument: Just about everything we consume is oil based — plastics, paints, the tires on our cars, etc. Virtually nothing totally can replace oil as the grease of our economic engine — not cars powered by electricity, not solar or wind power and not coal.Because the economies we’ve built (and which we falsely believe are indestructible) revolve around oil, they’re ultimately doomed, and we may already be in the end of days, at least as far as any sustained growth is concerned.
India offers to protect China oil shipments
New Delhi on Wednesday offered Beijing the protection of the Indian navy to help it to secure shipping lanes in the Indian Ocean that are crucial for the energy needs of its fast-growing economy.Pallam Raju, India’s minister of state for defence, said India was “happy” to assist China to keep open vital sea lanes between the Middle East and Asia in order to guard against piracy or conflict.
Western Mass. Electric chooses site for 1st solar farm
Western Massachusetts Electric Co. announced Wednesday it will develop the first utility-owned solar farm in Massachusetts at the William Stanley Business Park in Pittsfield.
Gas drillers find a welcome mat in New York state
BINGHAMTON, New York (Reuters) - New York landowners whose properties sit on the gas-rich Marcellus Shale are pushing back against calls for greater environmental regulation, saying it has halted the U.S. gas drilling boom at the New York border.Their concerns have opened a new front in the gas drilling wars, in which environmentalists and neighbors opposed to seeing gas wells in their back yards have put a drag on the exponential growth of onshore U.S. natural gas production.
Q+A-Environmental fears over U.S. shale gas drilling
(Reuters) - The boom in shale natural gas drilling has raised hopes the United States will be able to rely on the cleaner-burning fuel to meet future energy needs.But concerns about its impact on water quality could slow the industry's ability to tap this bountiful resource.
Anadarko, Mitsui agree to Marcellus Shale venture
HARRISBURG, Pa. (AP) -- The flow of money into the exploration of the Marcellus Shale natural gas formation is continuing.Japanese investment house Mitsui & Co. announced it is taking a $1.4 billion stake, or 32.5 percent, in Anadarko Petroleum Corp.'s Marcellus Shale assets.
Gazprom May Ship Shtokman LNG to Europe, Less to U.S.
(Bloomberg) -- OAO Gazprom, the world’s largest gas producer, and its partners in the Arctic Shtokman project plan to direct some liquefied natural gas to Europe until demand for fuel imports recovers in North America.“The LNG business will develop in Europe,” Yuri Komarov, chief executive officer of Shtokman Development AG, said in an interview in the northern Russian port of Arkhangelsk yesterday. “Some LNG volumes can go to the European market, first of all, the U.K., Italy and France.”
Oilpatch faces little demand growth in developed nations
The oil industry is benefiting from higher prices and global consumption as the economy recovers, but faces little or no demand growth in developed markets and a weak outlook for the refining business.
The AP and the Wall Street Journal today reported that Exxon Mobil Corp. said it added 2 billion barrels of oil equivalent to its proved reserves in 2009, the highest gain in the decade and a 33 percent rise above last year's addition. The AP said, "the world's largest publicly traded oil company reaped the benefits of its aggressive exploration and production strategy, which led the industry in capital spending amid a recession that forced many peers to cut back. The company said it replaced 133 percent of its 2009 production." Hey Peak oil guys! This is not supposed to happen? Is it?
Petrobras imports gasoline on demand surge - report
SAO PAULO (Reuters) - Brazil's state-controlled oil company Petrobras said on Wednesday it is importing gasoline from neighboring Venezuela because of a surge in demand for the fuel.A spokesman for Rio de Janeiro-based Petrobras said the company bought the gasoline to take advantage of a "good deal," without elaborating. O Estado de S. Paulo reported on Wednesday that Petrobras is importing gasoline for the first time in four decades, after consumers switched away from ethanol because of a spike in prices.
HIROSHIMA — In April 1953, defying the British, the Japanese petroleum tanker Nissho Maru left the port of Abadan in southern Iran, its hulls filled with crude oil. The owner of the tanker, Idemitsu, was one of only a handful of companies that dared buy Iranian oil in those days — two years earlier the Iranians had nationalized their oil industry, and the Anglo-Iranian Oil Company was fighting back.The head of Idemitsu, a legendary industrialist named Sazo Idemitsu, did well — he paid the cash-strapped Iranians 30 percent less than market prices. But in standing by the Iranians he also gave Japan, just emerging from a devastating war and seven years of American occupation, a sense of pride. Though Idemitsu was rebuked by his own government, his action was highly popular in both countries.
Bill Gates and the 'nuclear Renaissance'
(CNN) -- Say you were to give Bill Gates a really great present -- like the ability to cure crippling diseases or to pick all U.S. presidents for the next 50 years.Gates would like those gifts, sure.
But you wouldn't have granted his one, true wish.
The Microsoft-founder-turned-philanthropist said at a recent speech in California that, more than new vaccines for AIDS or malaria or presidential selection power, what he really wants is clean energy at half its current cost.
St. Louis company strikes deal with Poland for isotope that is crucial to medical tests
As U.S. physicians face an impending crisis caused by lack of a crucial isotope used in many diagnostic procedures, a U.S. company said Wednesday that it had reached an agreement with the Polish nuclear energy agency to obtain the isotope from a reactor in that country.
Creating an electric car posed a lot of challenges, such as where to put 480 pounds of batteries. Nissan's stylists came up with a design that is both futuristic and functional.
Permafrost line recedes 130 km in 50 years
The southern limit of permanently frozen ground, or permafrost, is now 130 kilometers further north than it was 50 years ago in the James Bay region, according to two researchers from the Department of Biology at Université Laval. In a recent issue of the scientific journal Permafrost and Periglacial Processes, Serge Payette and Simon Thibault suggest that, if the trend continues, permafrost in the region will completely disappear in the near future.
Back in the mid-zeroes, I remember reading a lot of stories about a buildup of trash in the Pacific Ocean so massive that it had formed a floating island of waste the size of Texas. Its colorful nickname was the Great Eastern Garbage Patch, and what was even more mind-boggling than the purported scale was that pretty much the only places you could dig up any substantial info about it were in minor oceanographic and environmental publications. You also couldn't find a photo of it to save your life. It was like Garbage Brigadoon.Anyhoo, the idea that one of the biggest environmental disasters of our age had been going on outside nearly everyone's awareness piqued our curiosity, so we decided to head out there (the middle of the ocean) and see it for ourselves.
New oilfield in Mexico could help rescue industry
A new oilfield was identified in the south of the Gulf of Mexico that could help rescue the North American country's lagging industry, according to the newspaper Reforma on Tuesday. The field is located off the coast of the Mexican state of Campeche, and contains an estimated 66 million tonnes (900 million barrels) of the fossil fuel. The discovery is one of the most important in the past decade, the state oil company Petroleos Mexicanos (Pemex) said.Exploitation of the field could begin in about two years, when up to 150,000 barrels a day could be pumped out. The new field could compensate for one-third of recent losses in Mexican production.
Mexico's oil industry has been in crisis for years. The infrastructure operated by Pemex - which supplies 40 per cent of government revenues - is getting old and wearing out.
Mexico's Pemex will stand short for years
A new oil field in the south of the Gulf of Mexico could hold 900 million barrels of reserves. Located off the coast of Campeche, the discovery is important. Development could begin in in 2 years and 150,000 bbl/day could be produced. It could compensate for a third of recent production losses. Mexico's oil industry is getting old and wearing out. Part of Pemex oil earnings goes to the national budget depriving the company of funds for needed growth. Production will be down 11.6% this year.
Colombia to offer gas help to Venezuela
BOGOTA, Feb. 17 (UPI) -- Colombia will advance an energy offer to Venezuela despite apprehension from Caracas, the Colombian energy minister said.Colombian gas exports to Venezuela collapsed in January, complicating an energy emergency declared by Venezuelan President Hugo Chavez.
Mexico to alter oil deal rules, avoid court fight
MEXICO CITY (Reuters) - The Mexican government and state oil company Pemex have agreed to alter the rules governing how Pemex awards contracts to avoid a second constitutional challenge to its flagship oil reform laws.
Mideast's Second Exporter in Gas Crisis; Prices Rise Also
Yemen approved on Tuesday an increase in the prices of domestic gas by YR 100 per cylinder; almost two weeks after the prices of diesel and petrol rose by YR 100 per 20 liters.One cylinder is now sold for YR 750.
In a related move, Parliament approved to summon the government on Wednesday to give explanations for increasing prices as well as the shortage of gas.
(PRINCETON, N.J.) - Do concerns about inadequate options for long-term nuclear reactor waste disposal now mean that it is time to make a new commitment to the development of fast reactors? What of the related concerns about the cost, reliability, safety and proliferation issues associated with fast reactors?
Petrobras Imports Gasoline on Ethanol Shortage, Estado Reports
(Bloomberg) -- Petroleo Brasileiro SA has started importing gasoline after almost four decades because of a shortage of ethanol, O Estado de S. Paulo reported, citing a note from the company.
Dmitry Orlov: Industry's Parting Gifts
We are going to need some widgets made. They do not have to be as sophisticated or as complicated as the widgets we have today. For instance, once it is no longer possible to launch satellites, we will no longer have satellite navigation systems such as the Pentagon-run GPS or the joint Russian/Indian GLONASS. To compensate, we will have to go back to using radio beacons, so that boats can find harbor entrances in the fog. Another example: once laser printer and ink-jet technology no longer exists, we will need to bring back the humble old teletype. Add to that all of the other humble adaptations that will be needed once the electric grid and municipal services first become unaffordable, then cease to exist. Countless items will have to be manufactured, one way or another, using local means, because imports are also going to first become unaffordable, then cease to exist. These items will have to be far more robust, longer-lasting and maintainable than the consumer products of today. A population reduced to a permanent state of camping out shares certain characteristics with astronauts and deep-sea divers and others who live and work on the edge: their reliance on their equipment is absolute. In such situations, an unreliable or unmaintainable product is worse than no product at all, because it gives a false sense of security. Making such high-quality items is by no means technically impossible; things can be made so well that they will last a lifetime and even become heirlooms. This, then, should be the new main thrust of industrial activity: to manufacture and distribute products with the understanding that this process will run out of resources and stop. These products must be designed to outlive the process by which they are made, by as long as possible.
Deep Ecology Institute suspends operations
It is with both sadness and joy that I announce that the Sierra Nevada Deep Ecology Institute is suspending operations. The sadness is because it is the end of a decade of exciting work and joy because of what an exciting decade it has been.
Margaret Atwood and the end of humanity
In "The Year of the Flood," set in the not-too-distant future, things have gotten pretty well along the path. Corporations and governments are intertwined, and the well-off live in protected corporate communities. Much of the population, however, lives in slums and scrounges for food -- some eating the creations of fast-food joints such as SecretBurgers, where the secret was "that no one knew what sort of animal protein was actually in them," Atwood writes ("Soylent Green," anybody?).
Saudi arrests wanted militant in major oil centre
RIYADH - Saudi Arabia has arrested a Saudi militant suspected of links to Al Qaeda in a major oil centre, an Interior Ministry spokesman said on Wednesday.Ahmad Al Hadhli was arrested on Friday in the southern Saudi town of Yanbu, said Mansour Al Turki, the Interior Ministry spokesman for security affairs.
Hadhli, 36, had been on a wanted list of 85 people issued by the Saudi authorities last year. Seventy-four are still on the run and most are believed to be outside the kingdom, the world’s top oil exporter.
A security source said Hadhli had been monitoring oil and industrial facilities at Yanbu, site of a large oil refinery, an oil terminal and petrochemical plants.
Desire Petroleum says Falklands drill to continue as planned
LONDON (Reuters) - British oil explorer Desire Petroleum (DES.L) said its drilling program in the Falkland Islands will go ahead as planned despite a move by the Argentine government to restrict access in the area.
Russia Delays Arms Delivery to Iran
The Interfax News Agency quotes the deputy director of Russia's Federal Service for Military and Technical Cooperation, Alexander Fomin, as saying delivery of the S-300 air defense system to Iran has been delayed by technical problems.Fomin, whose service controls Russian arms exports, made the comment during a defense exposition in New Delhi. He did not indicate the nature of the technical problems or how long repairs would take.
Buffett continues to sell off energy stakes
NEW YORK (CNNMoney.com) -- Warren Buffett continued to pare his investments in energy companies during the fourth quarter, while boosting his stake in a waste management provider, a regulatory filing showed Tuesday.
Chevron-led Kazakh oil venture stops BTC shipments
ASTANA (Reuters) - Chevron-led (CVX.N) Kazakh oil venture Tengizchevroil has stopped pumping oil through the Baku-Tbilisi-Ceyhan (BTC) pipeline, Kazakhstan's Energy Minister Sauat Mynbayev said on Wednesday.
Oil deal 'damaging for Uganda environment'
Uganda's environment is being put at risk by a secret deal between the government and a UK oil firm, a lobby group has told the BBC.The pressure group Platform said Tullow Oil had framed a deal with no provision for the environmental or social impact of oil extraction in Uganda.
Norway outlines ways to reach deep 2020 CO2 cuts
OSLO (Reuters) - Norway laid out ways to reach one of the world's toughest climate goals on Wednesday with measures to clean up sectors from oil to transport that it said would trim just 0.25 percent from the economy by 2020.
National Review: The Nuclear Future We Really Need
On a frigid February day in Washington, Barack Obama became the first president in many years to back the nuclear industry with more than vague promises. In committing $8.3 billion worth of federal loan guarantees to the construction of two new nuclear units at Southern Company's facility in Georgia, the president has sent a clear message to the country — and to environmentalists — that nuclear will be part of the country's future energy mix. For that message, he deserves our approbation.However, the vehicle in which the message rides — loan guarantees — is itself an illustration of the reason why we have not had a new nuclear plant in the United States for 30 years. The permitting process for getting a new nuclear plant built in this country is longer and more arduous than in most of the rest of the world. Litigation by environmental activists is a certainty. Construction also takes a long time (the new plants are predicted to be operational in 2016 and 2017, which is quite fast). Add these together and it can easily be 20 years from beginning the permitting process to turning the switch on, which makes it impossible to put together the requisite financing package without government loan guarantees.
Jeff Rubin: When do smart prices get dumb?
As they say in stock brokerage, find a strong enough wind, and even pigs can fly. Pay 19 cents per kilowatt hour for power, and you can let the wind turn on the lights. But at that price, how long will you leave them on?The larger the contribution wind power makes to tomorrow’s grid, the less power you will be able to afford to draw from it—the same way triple-digit oil prices, which will pull tomorrow’s oil supply out of Alberta’s tar sands, will translate into pump prices that’ll force millions of drivers right off the road.
It’s not how many megawatts of additional power new sources like wind add to the grid that counts. Rather, it’s the amount of power demand that a 19-cent–per-kilowatt-hour price will kill that’ll have a far greater effect.
Utilities' transition to smart grid has promise, but potholes, too
The deployment of smart grids, applying digital technology to the nation's electricity network, is intended to help utilities better manage the flow of electricity, avoid failures and, for the first time, give consumers details on how they consume energy so that they can cut use and perhaps costs.The existing grid "wastes too much energy; it costs us too much money; and it's too susceptible to outages and blackouts," Obama said last fall in announcing $3.4 billion in smart grid stimulus funds.
But the smart grid rollouts will take years and are likely to evolve in fits and starts, as thousands of utilities nationwide add technologies and regulators weigh the proposed benefits against costs that may be borne by ratepayers.
Crude Oil Surges the Most in Four Months as the Dollar Drops
(Bloomberg) -- Crude oil surged the most in more than four months as the dollar fell against the euro, bolstering the appeal of commodities as an alternative investment.Oil rose 3.9 percent as the euro rebounded from the lowest level against the dollar in nine months yesterday. Commodities and stocks also gained after manufacturing in the New York region grew at the fastest pace in four months as companies boosted payrolls in anticipation of growing orders.
Energy Company Mergers Are Expected to Rise
Energy companies are on the prowl again.After a two-year slowdown in mergers and acquisitions in the industry, companies are once again looking for ways to use their checkbooks to expand their reserves, buy new technology or snap up promising oil and gas fields.
Russia moves to strip BP venture of giant gas field
MOSCOW (Reuters) - Russia stepped up pressure on BP's Russian oil venture TNK-BP with environmental watchdog RosPrirodNadzor recommending on Wednesday to strip the firm of its giant East Siberian Kovykta gas field.
Total Refinery Workers on Strike Over Plant Closure
(Bloomberg) -- Total SA refinery workers began a 48-hour strike to protest the planned permanent closure of crude processing at an idled plant near Dunkirk in northern France.The disruption is affecting all six of Total’s French refineries with a “massive following” and will lead to lower output and shipments, Christian Votte, a representative at the CGT union, said today by phone from the Gonfreville plant. Meetings will be held to determine whether to extend the action, the union said in a statement.
Iran leader accuses U.S. of "war-mongering"
TEHRAN (Reuters) – Iran's supreme leader accused the United States on Wednesday of war-mongering and of turning the Gulf into an "arms depot", hitting back at U.S. accusations that the Islamic state was moving toward a military dictatorship.The comments by Ayatollah Ali Khamenei were the latest sign of growing tensions between Tehran and Washington, which are embroiled in a long-running and escalating row over Iranian nuclear work the West suspects is aimed at making bombs.
Govt plays down Argentina's Falklands shipping move
LONDON (AFP) – The government played down Tuesday Argentina's latest move in a row over oil drilling in the Falklands, after Buenos Aires ordered ships headed to the disputed islands through its waters to seek its permission."Regulations governing Argentine territorial waters are a matter for the Argentine authorities," said the foreign ministry in a statement.
"This does not affect Falkland Islands territorial waters which are controlled by the island authorities."
Kuwait Oil Signs Technical Service Accord With Shell
(Bloomberg) -- State-run Kuwait Oil Co. signed a service agreement with Royal Dutch Shell Plc to help develop natural-gas fields in the north of the Persian Gulf country.“Shell will deploy technical experts to Kuwait to support KOC in its management of the ongoing development of the Jurassic gas fields,” Shell said in an e-mailed statement today. “This project is both complicated and challenging, due to unconventional geological formations, difficult reservoir conditions and complex gas compositions.”
Stephen Leeb: Positioning in Gold, Oil for the Months Ahead
This is a curious time to be talking about peak demand for oil. Renewable energies account for a very small fraction of overall energy supply. No one expects oil demand in China and other developing countries to peak anytime soon. Even China’s most ambitious renewable plans will lead to rising oil demand for another generation.Could the Saudis have really meant peak “production”? Could they really be preparing for a time in which their own production will start to decline? In the same press release, the Saudis also mentioned in passing that they will begin to inject carbon dioxide into their largest source of oil – the giant Ghawar field. Ghawar is not only the main source of Saudi oil but the biggest oil field in the world. Injecting carbon dioxide is something you do to keep production from collapsing after you have tried everything else.
Some will argue that new reserves of oil and minerals will be found, but these reserves are likely to prove much more expensive to access and therefore the costs will be high. Moreover, there is no guarantee that we will be able to develop the technologies to access them.Is this certain depletion of natural resources not a stronger basis than the uncertain climate change argument for trying to change the structure of our economies and altering the way we live? Whichever way you look at it, eventually we are going to run out of these raw materials upon which our current lifestyles are based. Oil, gas, coal, copper and platinum do not just replenish themselves and once they are gone, they are gone. Let us not talk about mining the moon and the planets – we can’t even afford another manned mission to the moon.
Yet Another Energy and National Security Myth
VetVoice.com (a project of VoteVets.org) recently launched a $2 million television campaign supporting the Clean Energy and American Power Act. In all, there are eight television ads that essentially claim that oil money finances terrorism and that we need to wean ourselves off of foreign oil to be more safe and secure. (The red herring in one of the ads is Iran, which does support terrorist groups, but the groups it supports – Hezbollah and Hamas – are threats to Israel, not the United States.) The ads feature veterans of the conflicts in Iraq and Afghanistan and target members of Congress who oppose comprehensive energy legislation and who have taken political contributions from oil companies. Once again, energy and national security have been mistakenly conflated.
Shortage of Rare Earth Elements Could Thwart Innovation
Silicon may represent one of Earth's more common elements, but it transformed Silicon Valley into a high-tech corridor and helped usher the world into the Information Age.Now rare earth elements with exotic names such as europium and tantalum hold the key to hybrid cars, wind turbines and crystal-clear TV displays - that is, if a looming supply shortage doesn't stop innovation in its tracks.
The city is choking thanks to our idea of transport nirvana
At our behest, successive state governments have been pursuing a magnificent dream, to make Sydney a place fit for cars to be driven on all occasions. Now the Herald-commissioned independent inquiry headed by Ron Christie has exposed that dream for what it is: the wrong tram (forgive me).It's not just a dream incapable of being realised, it's one that's made our present transport problems worse rather than better and offers no answer to the looming worsening of those problems.
Theolia Investors Said to Warn They May Oppose Plan
(Bloomberg) -- A group of investors in Theolia SA, the French wind-power producer trying to avert bankruptcy, may refuse to back a refinancing plan and seek to replace its board, according to a person with direct knowledge of the matter.
Oregon is first U.S. site for a wave-power farm
The search for clean, renewable energy is turning toward the ocean, but not without some waves of skepticism.Construction has begun off Oregon on what would be the nation's first commercial wave-energy farm, said Sean O'Neill, president of the Ocean Renewable Energy Coalition, a Maryland-based trade association that promotes marine energy. It is planned to supply energy to about 400 homes.
Nuclear Industry Gets Lift, No ‘Renaissance’ From U.S. Loan Aid
(Bloomberg) -- Don’t call it a renaissance yet, says John Rowe, who oversees the biggest fleet of nuclear reactors in the U.S.President Barack Obama’s announcement yesterday that the government will guarantee loans for the country’s first new nuclear plants in 30 years is a necessary move that won’t in itself spur a revival of the dormant industry, said Rowe, chief executive officer of Chicago-based Exelon Corp.
“We may see more and faster development of new plants now,” said Rowe, whose company operates 17 reactors. “We probably won’t see a full-blown nuclear renaissance in the next five to 10 years.”
Jordan, France to Sign Uranium Mining Accord Feb. 21
(Bloomberg) -- Jordan and France will sign an agreement on Feb. 21 on uranium exploration and mining in the Arab country to help it become more energy efficient, the head of Jordan’s Atomic Energy Commission said.The accord, to be completed during a visit by French Prime Minister Francois Fillon to the kingdom, will help “introduce nuclear energy as a major part of the energy mix in Jordan for the next three decades,” Khalid Touqan said today by telephone.
New Renewable Fuel Standard A Mixed Blessing For Agriculture
The Environmental Protection Agency’s (EPA) recent final ruling on the national Renewable Fuel Standard (RFS) was met with mixed responses by farm state politicians and organizational leaders.“This is a good news/bad news announcement for American agriculture producers,” Rep. Adrian Smith (R-Neb.) stated in a recent press release. “While I’m glad to see ethanol and biodiesel will qualify as advanced biofuels under the RFS, I have concerns with the international indirect land use portion of this final rule,” he added.
Pangestu Says Palm Oil May Stabilize Around $700-$750
(Bloomberg) -- Palm oil prices may stabilize between $700 and $750 a metric ton this year as China and India buy more of the commodity, Indonesian Trade Minister Mari Pangestu said.“What we’re seeing is a very strong demand from China and India,” Pangestu said in an interview with Bloomberg Television from Jakarta today. “India is now a larger consumer compared with China because of the reduction in production of oilseeds. Prices of palm oil look like stabilizing around $700 and $750 a ton.”
3 big firms quit warming-bills lobbying group
Two of the nation's largest energy companies on Tuesday quit the lobbying alliance that has been the major force shaping anti-global warming legislation in Congress and claimed that the leading climate change bills don't do enough for oil and natural gas.
UN Emission Board Split on Renewable-Energy Projects
(Bloomberg) -- Regulators who oversee the world’s second-biggest emissions market are split on how to approve renewable-energy projects that receive subsidies from developing nations such as China, the board’s chairman said.
Climate skeptics exploiting scandal: US envoy
Todd Stern, the US special envoy on climate issues, downplayed recent revelations about a landmark 2007 study by the UN's Intergovernmental Panel on Climate Change (IPCC) that warned of dire consequences from global warming."What you do see sometimes is that people who have an agenda that is directed toward undermining action on climate change grab whatever tidbit they can find," Stern told reporters.
"What should not happen is that any individual mistakes, typos, whatever they might be, be taken to undermine the very fundamental record that exists from scientists all over the world and from observed data from all over the world that this is a quite serious and growing problem," he said.
Slow Trip Across Sea Aids Profit and Environment
In a global culture dominated by speed, from overnight package delivery to bullet trains to fast-cash withdrawals, the company has seized on a sales pitch that may startle some hard-driving corporate customers: Slow is better.By halving its top cruising speed over the last two years, Maersk cut fuel consumption on major routes by as much as 30 percent, greatly reducing costs. But the company also achieved an equal cut in the ships’ emissions of greenhouse gases.
“The previous focus has been on ‘What will it cost?’ and ‘Get it to me as fast as possible,’ ” said Soren Stig Nielsen, Maersk’s director of environmental sustainability, who noted that the practice began in 2008, when oil prices jumped to $145 a barrel.
“But now there is a third dimension,” he said. “What’s the CO2 footprint?”
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I see a video has been posted of the UK Government's initial (public) response to the UK Industry Peak Oil action group led by Richard Branson. This has been mentioned previously but here's the complete video of Chris Barton's response on behalf of the government.
At the time I posted this nobody had rated it yet but I see it now has the lowest possible rating at only one star. I'm curious as to the reasons for rating it as one of the worst things they'd ever seen. Was it a comment on the government in general or for some other reason, or was it just to make it less likely that people will ever watch it at all (the practical effect of a 1 star rating)?
IME, one-star ratings usually mean the rater had political disagreements with the content of the video.
I'm not sure how you come to this conclusion Leanan about political disagreements. I would rate the video as 1 star as he talks about deliverables and then immediately discusses forming another working party of experts!
I get no sense of urgency about what needs to be done. If Robert Hirsch is correct on his time frames for mitigation, and the world is already at peak (production up to the price economic recession certainly looked flat), the economic downturn is simply masking the coming storm.
Watched and commented, it has a rating of 4 now.
168 views, someone is reading here.
Cheers,
Charles.
A member of the Government talking about the risks of peak oil ... finally! - hopefully this is a short enough speech to be shown on TV news channels.
In summary he says the Gov doesn't have a firm view on what the future holds for oil supply and then in the same breath says they recognise the risks, - ie: he's not going to be the one to say the UK has an energy security problem looming even though he knows it probably is! Because the Gov has no idea what to do, the solution to our predicament is a panel of experts - you know, the people who know almost nothing about almost everything ... sigh!
It isn't clear to me how I can make my expensive petrol driven car more efficient or make it run on electricity (and even if I could where the required adequate amount of alternate non-fossil energy is going to come from.)
The message is changing from drip, drip, drip ... to a bit more of a gush it seems.
Re: Stephen Leeb (uptop)
Start to decline?
One can argue about why annual Saudi crude production and especially net oil exports, from 2006-2008, were below their 2005 rate, in response to rising oil prices--versus rising production and net exports from 2003-2005, relative to their 2002 rate, as oil prices rose--but one can't assert that post-2005 annual Saudi crude production and net exports have not declined, relative to their 2005 rate.
As the article states, watch what they do, not what they say. They are making plans to inject C02 in Ghawar in an effort to stem a steep decline. They are also exploring in the Red Sea in areas two kilometers deep and looking under a salt bed 7,000 feet deep. Aramco boosts drilling in seismically tough Red Sea
But occasionally they forget and let a few tightly held secrets out of the bag. In 2005 Aramco Senior Vice President Abdullah Saif reported that their existing fields sustain a 5 percent to 12 percent annual decline rate. Saudi Arabia
And that was in 2005. It is now 5 years later. As the article states they must find 500,000 to 1,000,000 barrels per day of new capacity just to stay even. No doubt that Khurais compensated for one or two years of declines and Manifa will add almost another year. But that is all. Saudi has no more rabbits in the hat. So they are trying C02 injection and looking for some very expensive oil in under a deep Red Sea salt bed.
I think Saudi Arabia is starting to panic.
Ron P.
All this talk about peak demand from Saudi officials seems to confirm this statement. The question is how Saudi Arabia is going survive the next few decades with ever lower oil production. They have no food, no water, and a high birth rate -- a recipe for disaster.
Saudi Arabia Says Peak Demand for Oil Is an ‘Alarm’ (Update2)
How are they going to survive the next few decades, about as badly as the rest of the planet.
They can't support themselves without Oil, so they will sell less, and keep more as the days go on. Money can buy you water, but oil can process it faster on your own turf without paying someone to ship in the water.
On the permaculture side of things. If they started planting more native plants that can handle the harsh conditions, they could in the next few decades have some nice places to go and eat from. There are many food barely plants that handle the harsh conditions, they won't have to do much, just select for the long run.
Charles.
If they are in fact losing production, the likely result will be higher prices, and although the world economy will falter / collapse, I would think that they could still do, uh, OK.
The logical next step is to reduce domestic consumption (or slow the growth) in KSA. Reduce the ELM effect. Politically possible ?
Stop burning oil for summer peak demand (reduce demand with better insulation and more efficient equipment, buy NG from Qatar and add solar PV)
Reduce domestic gasoline demand (higher gas prices, taxes on gas guzzling cars, more mass transit (new high speed rail between Mecca, Riyadh and Medina is one project))
Shift freight from truck to rail (some steps in that direction with increased rail, new truck taxes needed as well).
Alan
So Alan...you're suggesting they follow the U.S lead? LOL
Did you party till the horses swept the street or have you grown beyond such antics?
Sauce for goose works as a sauce for the gander as well :-)
Can absolute monarchies make better decisions than democracies ?
I was tempted to go out after my steak at Crescent City Steak House (aged porterhouse for two (shared) served in sizzling butter), but it was cold, I was tired and full, money ...
The excuses of age :-((
Alan
They seem to be reasonably serious about building one or more nuclear plants, as well.
I find the discussion of CO2 injection very interesting.
The 1,300' of structural closure puts you very high on the asymptotic portion of the drainage capillary pressure curve resulting in a very low connate water saturation (11%). When the reservoir filled with oil almost all the interstitial water was expunged. This is great.
The downside is that the efficiency of a piston-like waterflood is huge. This efficiency is largely related to the slope of the fractional flow curve. The slope in the case of Ghawar is very shallow, and the recovery at breakthrough is very large. In addition to the low connate water saturation, the oil is less viscous than water. These 2 factors should make the tertiary oil recovery target very small (from a pore volume sense). Around 20% of the reservoir pore volume.
One will have to produce and cycle a helluva lot of water to displace the discrete residual oil out of this field with carbon dioxide.
FF
FF, I am not sure what you are saying but boy it sure sounds impressive. ;-)
Ron P.
Ron -- FF's knowledge of EOR is way beyond mine. But allow me to paraphase (I think): plop plop...fizz fizz...oh what a relief it is. More fizz (a lot more) and more oil.
I read it as secondary worked very well, so there is not as much to be gained from tertiary.
Twilight -
I think that your interpretation is exactly right - the fact that the water flood (piston) was very "efficient" is bad news for future "scrubbing" of the reservoir via tertiary methods.
I find it interesting that FF says that the oil is less viscous than water - this seems counterintuitive (perhaps someone could explain ?)
As they say - this is not going to end well...
the gas desolved in the intermediate gravity ghawar crude makes for a low viscosity at reservoir conditions.
If I am interpreing you right, panic measures is a reasonable description for CO2 flood recovery at Gharwar.
It might not be panic Ralph but the CO2 effort may be profitable but the rate gain may be far less then impressive. Thus they can go forward with the project and portray its potential as much greater with some certainty of making money in the long term and gaining some immediate good PR that doesn't truly represent the full reality.
My comment on the interesting timing of the Saudi announcement:
http://www.theoildrum.com/node/6221#comment-590122
Texas peaked in 1972, and Chevron started looking at CO2 for the SACROC unit in the early Seventies. Based on the logistic models, Saudi Arabia in 2005 was at roughly the same stage of depletion at which Texas peaked in 1972.
Right, and Texas is still producing .9 mbpd, 40 years post Peak, in part because of reserve growth(EOR).
The story will probably be similar. Texas has a 60 Gb URR and Saudi Arabia has a 200 Gb URR(Graphoilogy). Texas peaked at 3.5 mbpd and KSA at something like 10.5 mbpd. KSA is likely 3 times as big as Texas.
It's not small potatos like the North Sea(30 Gb) or Alaska(12Gb).
KSA is REALLY BIG.
So isn't this watching for small signals of the imminent decline of KSA a bit silly.
Ok, in 2045 KSA will produce something like 2.6 mbpd and consume all of it domestically. This is good news for the rest of the world how?
Ok I'll bite.
A lot of Texas oil was produced early on in its history and in the history of oil extraction. Many fields where extracted using the native pressure without any sort of attempt to inject water or other secondary extraction efforts. And of course best practice was not always used leaving even more behind. Next as far as real Texas peak production and real URR I'm not convinced the official production numbers are that reliable. A tremendous amount of "hot oil" was produced in the state over decades. This adds up over time. A good chance that the real URR could easily be 70GB or higher. I bring it up because I'd argue that people overproducing their fields and selling on the black market probably left even more behind. There is plenty of dirt in the public press concerning various issues with controlling production in Texas.
And on top of this is was a very boom bust and chaotic development cycle for most of its history. Plenty of people went bust sitting on oil prospects developed to some level that could later be bought at pennies on the dollar and profitably developed. And last but not least the mom&pop oil development is unique to the US our stripper wells would simply not be viable elsewhere in the world. This makes up a good bit of Texas production and indeed overall US production.
I could go on and on but hopefully you get the point that some comparisons don't make a lot of sense.
Time from peak to when EOR is considered is probably fairly standard. How much oil follow on EOR recovers is dependent on so many factors that its clearly and apples and oranges problem.
Now if you know of a large carbonate reservoir with edge water injection started early in the life of the field with a good chance of high recovery outside of problem areas then I'm all ears.
At least from my reading a lot of the worlds oil fields extensively well after Texas and have benefited significantly from technical advances developed to initially address what was basically a mess made in Texas.
In general everyone else used the best methods as the became available and did not get themselves into the same situation as happened in Texas. Good for them but this intrinsic increase in efficiency overseas coupled with the different economic climate suggests that the exact production history of the US is probably the worst model for the rest of the world. Other choices like Russia are just as bad for different reasons.
The screwed up their fields but did it in a different fashion same result :)
For offshore fields the North Sea probably represents the best global model and certainly the GOM to some extent but not as well as the North Sea.
For land production I'm not really sure there is a good even basin level model for best practice i.e say starting in the 1960's -> Now with a peak well in the past and no obvious problems. Most of the large onshore development is either the US, Russia or the ME which is the experimental variable.
Alaska and perhaps Canada might serve as examples that don't have flagrant and obvious abuses ?
If we exclude oil sands production and look at conventional then they had a nice long production history with minimal decline followed by conventional production finally falling off fairly rapidly.
I'm unable to find a graph minus historical oil sand production so I don't know exactly.
Here is what looks like oil sands only.
http://canada.theoildrum.com/story/2006/10/20/142436/03 a quick look suggest conventional declined steadily being being fairly smoothly replaced by oil sands after 1995 or so.
But I'd argue if your going to use a model for the ME thats more detailed then Canada is probably our best best. Its production history is a lot saner than the US and it seems to be the best reasonably large regional production area to use as a sort of generic best case model. Like the US however production is probably much higher in the decline phase then it will be in the rest of the worl as it also has a significant small operator model.
Now if we throw in politics and a lot of the oil coming from a few big fields then the right model is practically a no brainer the perfect match for OPEC with known oil production is Mexico.
Of course I suspect a lot of people won't like that picture but the number of ways Mexican production can be used as a model for ME production makes it the best fit IMHO. Even though Canterell is nominally offshore its such a good field that I'd argue its status as a offshore field is not enough to throw it out.
If you want you can consider Canada minus the oil sands plus Mexico as a sort of good hybrid model however obviously the final steep drop from using advanced technology still rules.
In any case using a sort of mixed Mexican/Canada model as a best proxy for ME production has them seeing rapid and steady production declines some time after their peak depending on technology. Given they did not peak in the 1990's but later with a more Mexican style production model and even Canada had a fairly steel decline once it set in its pretty safe to assum the ME should be in steep decline now.
Given this Mexican/Canadian model you can use a sort of huersitic using the past to pretty well prove they are already in steep decline. If they are basically on the Mexican/Canadian time scale with a similiar production curve i.e it obeys scaling laws i.e same curve simply multiply by a scaling factor then they are now in steep decline. If they actually had substantial reserves left then the should have been able to boost production and we would not have see the large rise in prices. Esp given the latest advanced technology.
Basically if they actually scaled along the time axis as they claim then they would still be increasing production for the next 20-30 years and are perhaps at 50%-75% of their final production peak. A 10% or better increase would be readily doable with high prices and technical advances suggesting even higher.
It did not happend therefor they don't scale along the time axis indeed historically almost all production basins have gone into decline or following some curve in less than 70 years. All producing regions can be fit on a 70 or year less sort of fixed time scale with all of them showing peak production and decline in less than 70 years. With the region well depleted at the end of 70 years.
In fact regardless of the actual production levels what I call the mainline production period where the region is fully developed and within 25% of peak production and has declined by 25% post peak is invariably 50 years or less. Not a single region produced for more than 50 years ahs not seen peak and decline regardless of the actual production volumes.
Thus there is compelling evidence that the time axis does not scale with the production volume and our extraction methods seem to result in a very consistent 50 year cycle for large producing regions 1 mbd 10 or 50 mbd does not matter we repeatedly have developed extracted and obviously sent a region into decline in 50 years or less.
Sure there is a fairly large spread on some of the regional start dates esp for smaller regions but they also tend to have smaller fields and exhaust well before the 50 year range thats marked by basins with giant and super giant fields. This spreads overall world production out a bit but no way is the ME in my opinion not only in decline right now but probably a fairly steep one. The time axis simply does not scale anywhere in the world they are not special with magic fairy dust coating their fields.
Here's a link to an Alberta Energy Resources Conservation Board web page that gives the data for Alberta (which regulates the vast majority of Canadian oil). ST98: Alberta's Energy Reserves and Supply/Demand Outlook . Click on "View current edition" to get the latest report (2009). Warning: This document is 220 pages long and has more information than you ever wanted to know about Alberta's energy reserves of all types. Warning 2: This document is not for the metrically challenged since most oil data is given in cubic metres.
The key information is around page 3-17: A nice graph of Alberta's crude oil production decline versus Texas and Louisiana. The Alberta curve is very, very atypical: a steep rise followed by a very gentle, oscillating decline, not at all like Texas or Louisiana. The atypical curve results from government policy - this is why they call it the "Alberta Energy Resources Conservation Board" and not the "Alberta Energy Resources Use It Up As Fast As You Can Board".
However, crude oil is only a small part of the overall picture. The vast majority of the reserves are covered under Section 2 - Bitumen. There's a nice graph on page 4 giving a summary. There was only 1.5 billion barrels of "conventional oil" left in Alberta in 2009, vs. 170 billion barrels of "bitumen".
And as a result:
So, as Canadian conventional onshore and east coast offshore oil production declines, the increase in non-conventional production is much more than offsetting it - giving Memmel's Canadian Oil Production graph.
As Micro pointed out, what really counts is net exports. After rebounding in 2008, Saudi net oil exports were still only at 8.4 mbpd, down almost 8% from their 2005 rate of 9.1 mbpd.
But let's look at some small signals, using the Indonesia, UK, Egypt (IUKE) case history. Their combined production peak was 1996, and their annual net export decline rate was only 3%/year from 1996 to 1999. However, their post-1996 Cumulative Net Oil Exports (CNOE) depletion rate was 25%/year from 1996 to 1999.
Sam best case estimate for the (2005) top five net oil exporters, inclusive of Saudi Arabia, is that their 2005-2015 annual net export decline rate will be 1.7%/year, but their post-2005 CNOE depletion rate will be about 9%/year.
Texas production declined at about 3.5%/year since 1972 (although the 1972-1975 decline rate was only 2%/year). Saudi consumption increased at about 6% from 2005 to 2008.
For the sake of argument, let's assume that Saudi Arabia has a 3.5%/year decline rate from 2005 to 2025. Their total liquids production would fall from 11.1 mbpd in 2005 to 5.5 mbpd in 2025. At a 6%/year rate of increase in consumption, their consumption in 2025 would be 6.6 mbpd, so they would be net importing 1.1 mbpd in 2025, based on the observed Texas production decline rate and based on the recent Saudi increase in consumption.
In any case, the question is not whether annual Saudi production and net exports have declined since 2005; the question is whether they will ever again exceed their 2005 annual production rate and more importantly, whether they will ever again exceed their 2005 annual net export rate.
Here at TOD the sport of watching KSA reach peak is really
overdone. It's based on the notion that supergiants are drying up but Ghawar is a super-duper giant.
They've already shown an ability and even a desire to cut production for price purposes. It's impossible to know whether they are losing their ability to produce.
Megaprojects is a more interesting gage IMO.
Exportland may not be so decisive if more people live at a lower living standard. For example, Iran has rationed gasoline in 2007 and now will reduce the ration exposing consumers to higher prices.
http://www.reuters.com/article/idUSDAH84841320091008
You might want to compile a list of oil exporting countries, showing a production decline, that have cut their consumption sufficiently to keep their net export decline rate above their production decline rate.
In any case,
Saudi Cumulative Net Oil Exports Versus US Oil Prices
2002-2005 & 2005-2008 (EIA, Total Liquids)
One of the primary contributors to the 2002-2005 increase in production, followed by the 2006-2008 decline was Saudi Arabia, but let’s look at Saudi net oil exports, which are defined in terms of total liquids, inclusive of natural gas liquids and refined products.
Here are the average Saudi net oil export numbers per day by year, versus average annual US spot crude oil prices:
2002: 7.1 mbpd & $26
2003: 8.3 mbpd & $31
2004: 8.6 mbpd & $42
2005: 9.1 mbpd & $57
2006: 8.4 mbpd & $66
2007: 8.0 mbpd & $72
2008: 8.4 mbpd & $100
Relative to the 2002 net export rate of 7.1 mbpd, in the following three period, 2003-2005 inclusive, the cumulative three year increase in net exports was 1,716 mb, versus a three year increase in oil prices of $31. So, for every dollar increase in oil prices, three year Saudi cumulative net oil exports increased at 55 mb per dollar, again relative to the 2002 rate.
But then we have the 2006-2008 data.
Relative to the 2005 net export rate of 9.1 mbpd, in the following three year period, 2006-2008 inclusive, the cumulative three year decline in net oil exports was 841 mb, versus a three increase in oil prices of $43. So, for every dollar increase in oil prices, three year Saudi cumulative net oil exports fell at 20 mb per dollar, again relative to the 2005 rate.
Note that in early 2004, the Saudis reiterated their support for the stated OPEC policy of maintaining an oil price band of $22 to $28, and they made good on their promises to support lower prices as they significantly increased net oil exports in the 2003-2005 time frame, but then in early 2006, they started complaining about problems finding buyers for all of their oil, “Even their light/sweet oil,” even as oil prices continued to increase. Apparently no one thought to ask them in early 2006, as oil prices traded over $60 per barrel, why they didn’t offer to sell another two mbpd of oil for $28 per barrel.
Like many other people here, I almost understood that.
I think that what you are trying to say is, "It's game over, man, it's game over!"
Well, not really, but I think the meaning is that once they go from secondary recover to tertiary recover, most of the oil is already gone. What is left will be produced in a slow, steady process of recovering the last dribs and drabs of oil.
It being the world's largest oil field, the dribs and drabs of oil would be huge in scale, but it will be nothing like what it used to be. The associated water volumes, however, will be of biblical proportions.
At least that's my inference.
Yeah ... and the CO2- inputs will be of Quran'ian proportions, so there you have it. Joke aside : Where will the needed CO2 amounts come from ? Are these readily available as in those Texan CO2 plays (as you mentioned the other day) ?
Hmm but there are plenty of articles that indicate that the super-K fractures are a real problem and bypassed oil is a significant problem. I've seen stuff that suggests they are drilling behind the water front in some cases.
http://www.onepetro.org/mslib/servlet/onepetropreview?id=00048956&soc=SPE
Quoted the entire abstract as its all very relevant.
My opinion is that these C02 injections are targeting these low permeability zones that they are having a hard time extracting. Now these zones represent 35% of the original OIP. This suggest the rest of the reservoir was produced against 65% of the oil in place. Lets assume for now that it was a 50% sweep efficiency of that oil i.e the recovery rate was 50%. Thats only 32% recovery of the total OIP. If they did better say 70% which is fantastic its still just 45% of the OIP.
If they are planning C02 injects this soon to get maybe 30% at a low production rate of the 35% that was bypassed then they are seeking and additional 10-20% at best recovery.
This fields not starting to decline its well on its way to being toast.
Depending on decline rate perhaps its doing 2-3 mpd ?
Some of this has been offset by other projects but one has to guess they have other fields also in decline so no way is it fully offset. Guessing on all the variables one would put their peak production rate at around 7-8.5 mbpd very close to what they are actually claiming they are doing right now. If they are holding any in reserve it can't be a lot more than 500kbd and this cushion is being steadily eroded.
Now assuming 2012 as when they start C02 2 injection I'd have to imagine they will also be stopping water injection if not then that C02 takes precedence knowing that most fields are not treated this way till well avert peak means Ghawar has to have been in decline for several years. I'd guess decline started perhaps back in 2002-2004 say it was probably obvious by 2003. Of course export land never sleeps so offsetting production probably did little to offset export declines.
A steadily declining Ghawar over the last several years with and accelerating decline rate is a perfect underlying geologic event supporting high prices as oil from this field was important for exports well beyond its actual production levels. If you look at net exports and knowing the major sources for exported oil then Ghawar is a bigger percentage of exports over its actual production levels.
http://intellibriefs.blogspot.com/2007/10/saudi-arabia-ghawar-oil-field-...
Saudi Arabia accounted for 19% of world exports in 2006. Just to do a fast guess assume Ghawar accounts for 50% of Saudi oil for export and its declined by 50% then 19%*50%*50% = 4.75%
Heck that alone is enough to send oil prices to some crazy number over 100 a barrel.
Ohh wait .....
@ ff
40 mmcfd co2 is a razzzzzzzzz in the wind if we are so bold as to look at ghawar as a whole. i agree with your conclusion that the potential for co2 eor in ghawar is limited.
i havent seen anything that details the supply of co2. where oh where would they get enough co2 for a meaningful scale project ? for all i know there may be a giant underground source for co2 nearby.
Oh my God ! I actually understand (almost) what he is saying on the 3rd reading.
My translation.
When the reservoir rock was formed, it was only 11% water. All the water since then (until man injected water) has been forced out of the rock pores by the VERY thick oil layer that was trapped there.
Since there is little water naturally mixed with the oil, and Northern Ghawar is very porous (and the oil is less viscous than water, new info to me), the existing water flood is very efficient in getting most of the oil out. Perhaps 20% of the original oil in place will remain after water flood, stuck in small pores and around grains of rock. And that 20% will be hard to get out. Repeated washing with water and CO2 will slowly get whats left out.
Parts of Ghawar are toast, depleted and the rest will follow shortly.
Alan
Couldn't have said it better myself.
I put enough unique terms in their that googling would result in some interesting reading to a technical person.
Thanks for your comment.
FF
Proof positive that I have spend too much time reading TOD! I thought I knew what "connate" was but looked it up to confirm. Otherwise, I knew.
Alan
that statement requires more than one hugh leap of faith.
how does a 40 mmcfd pilot project equate to plans to inject co2 in ghawar in an effort to stem a steep decline ?
assuming that the saudi are making an effort to stem a steep decline, where is the co2 supply coming from ?
No Nuclear Renaissance
I am reminded of of a Department of Energy study I read that reviewed the bottlenecks in reviving the US nuclear power plant building industry. Some specialty suppliers were an issue but experienced labor and management were bigger problems. Eight new nukes in a decade was their calculated upper limit. Many more in the decade after that.
I have lost my link to that study. Anyone have it ?
Thanks,
Alan
No worries, we have millions of liberal arts majors, law school graduates, etc., who can pull wagons.
Insert trial lawyers into the following picture:
http://www.desertusa.com/mag05/jul/images/20_mule_team.jpg
"20 Trial Lawyer Team Borax."
Westexas,
I doubt if I coul get enough useful work out of a lawyer to pay for his lawyer chow.
In respect to our economic troubles, there is a piece in the NYT business section today about the fed managers getting very antsy about inflation.
Since these are the very same and identical bankers who have been pressing the "print " button , they just might know whereof they speak.
I have been trying to get it acroos to the deflationists here since I've been on this forum that zeros "add up" exponentially when you put them at the end of a number, and it's not even necessary to run a real threedee press to print money.
All they gotta do is hit that zero again.
The FUNDAMENTALS always apply.
How do the "zeros" get into the hands of consumers?
Answer: They don't.
If price increases occur they will because of import prices rising due to exchange rates not because of more money chasing fewer goods.
This illustrates the poorly defined terms of "inflation" and "deflation".
You can pile the "zeros" as high as you want but if they just sit there then they have zero impact.
edit:
The best use for lawyers(liars) is fertilizer.
I was reading where all that money lent to the banks through TARP was being reinvested with the FED. The FED pays the banks interest. The FED monetizes their loss which means that we the taxpayer get dinged. I suggest you all write you Congress person. I've had enough of this fraud.
Break out the Pitchforks!
I am with you but the problem is the congress is either impotent or involved....either way we will get no results.
It is a blatant fraud isn't it?
But alas as long as there is an ample supply of panem et circenses things will continue.
Something this out of whack can't go on much longer though.
Edit:
Aldous Huxley: What I may call the messages of Brave New World, but it is possible to make people contented with their servitude. I think this can be done. I think it has been done in the past. I think it could be done even more effectively now because you can provide them with bread and circuses and you can provide them with endless amounts of distractions and propaganda.
Edit^2:
http://www.youtube.com/watch?v=FzRdQEfSUCc&feature=player_embedded#
Relax, they have plenty of clunkers to compensate us with.
Excellent book. Re-read it last year.
...Does this mean I can get some Soma with my Solyent Green, when the time comes?
The Huxley quote reminds me of what I see on the web and people tell me they see on TV. We are filling the minds, with cell phone apps, a Cable or Sat dish on every roof top (There are three houses who have dishs on them out of the four houses I can see from my back fence). We have people who sit in front of the TV all day long, and when asked what they did that day, we get a mind numbed stare.
How many people know what person, that you don't really know as an invite to your house friend, did today? Why worry about such inane things?
My dad is 74 today, and sick, I am not worried about him, but He stopped paying for cable ages ago when he realized he did not use it. He can't stand how people are acting so mindless, with their gadgets.
Gadgets are just another mindnumbing distraction.
Charles.
+1
Mac, it's hard not to see strong deflationary currents at work in the present economy. The real-estate bust has been hugely deflationary. Every one has lost out -- the banks, the homeowners, the building supply industry. There was an article in one of the latest print editions of the Christian Science Monitor which said that cash-strapped communities were foreclosing on properties to recoup back taxes, but that some had realized that this only led to further downward pressure on housing prices. Thus, delinquent tax-payers were being allowed to stay in their homes (various arrangements were being made, depending upon the commnuity), in large part to keep another house from hitting the market.
I won't say we won't yet experience hyper-inflation but be assured -- middle class wages won't be going along for the ride.
agree.
The two conduits are wages and loans.............forgettabouttit.
But, hey, don't you know that residential real estate rose 2.5% this month? This is the spin being used to stem renewed panic in single family home owners, and maybe fool a few folks into buying. What they did was to combine the new consruction of apartments and homes into a single "residential" number. B/c so many people are being forced from their homes, some apt. builders are beginning construction. This tips the numbers and seems to show "recovery."
Sort of like having Bill Gates in a room of 1000 average Janes and Joes whose income has dropped in the past year, and saying that they made an average of 6 Million dollars a year. Knock out Bill Gates/the apartment builders and you would get a picture of reality.
All of this, of course, courtesy of the Golden Sacks people, Timmy Geithner, and Benny Bernanke, plus of course assorted Democratic and Republican spin meisters who are vested in protecting the BAU, big corporations and big government.
They will keep lieing until will after the crash that is impending...
Oh, and these guys are not laywers. They are PhD economists. So, back off on the "let's kill all the laywers" stuff.
Full disclosure: I am an attorney.
Craig
Well I agree economist are probably the best targets but there simply are not a lot of them around and lawyers are in many people opinion not only a good substitute but a superior substitute to using economist for fertilizer.
I'm sure the economist will be happy to explain this to the people I'm not sure how easy it will be for the lawyer to convince the maddening crowed that are really a inferior substitute and therefore need not be butchered until the supply of economists are completely eliminated.
Perhaps they will mention their golfing buddy Fred who is CEO of the local bank and has a degree in law and economics from Harvard and also political position. In fact speaking of politician the next block over is slam full of them many are also lawyers.
I'd invest in a pair of tattered overalls and learn to chew tabbacky.
Yes, I can think of more than one occupation that is fungible with Bat Guano.
If you get your economics from politicians/talk show hosts/Chicago school - then the "fundamentals" are not what they are said to be.
http://delong.typepad.com/sdj/
http://krugman.blogs.nytimes.com/2009/11/13/fiscal-perspective/
Tarzan, Porge ,Evnow
I suggest respectfully that you actually read the article.
It seems to me that for such an open minded systems thinking group of people as inhabit this corner of cyberland that a lot of us are remarkably blind as to how electrons -funny money electrons- can be put into the hands of comsumers, considering how free our imaginations run in other respects.
I may call upon the court jester to help me count the ways, but he is a contrary old rascal.
Shall I try to rouse him?
He works only for a bit of applause you know.
OFM,
I claim no special expertise or knowledge, but.....
There are numerous charts on the net showing the GDP return per dollar borrowed (kinda like ERoEI, except worse). That number has been trending down, and has been below unity for a while. It threatens to go negative, in that each newly borrowed dollar threatens to destroy more than a dollar's worth of existing GDP.
Would that also apply to "printing money"? I don't think it would be the same, but other secondary effects could certainly occur.
My personal expectation is that as long as we keep borrowing, the dollar will stay strong and GDP will shrink as debt collapses faster than we borrow. Once we get to the point that we can't borrow, there will be another shock down with a quick sweep of defaults around the globe, and the dollar will soar in value. Then it'll be our turn, and we'll print dollars and/or default, and then hit bottom and start again from their.
I think this will take at least 2 years, maybe a lot longer, until we hit the heavy inflation or default phase. What we're seeing now is just the rumblings of distant thunder.
But I could be completely wrong.
So could I be wrong.
I have NOT said that deflation has run it's course but rather that sooner or later inflation is in the cards.
It's either default or collapse on the ONE HAND, niether of which will be allowed to happen if any means short of and possibly up to nuking anybody beteen us and the oil CAN BE DEVISED TO PREVENT THIS on the OTHER HAND.
On the other inflation hand, it is rather likely, in my humble opinion a dead cartainty, that given the possibility that inflation can buy some time, it will be deliberately brought into play.It is possible that it might even serve well enough that gau and bau collapse are either averted or delayed at least for several years.
Of course there is a possible middle ground wherein we actually live under an austerity regime and try to pay our debts but again imo that is a political nonstarter and it appears to be impossible at any rate.Some combination of partial default, partial collapse and inflation is much the most likely mid term outlook.
I do not expect a happy ending to the longer term inflation scenario I envision, but otoh as I said above, it will probably buy a year or two or maybe even keep things afloat for a long time.
Every month that an outright disaster can be avoided will be one more motth for boomers to die peacefully, warm and fed, and for the younger folks to get used to the new reality.
They will have one heck of a lot of lifestyle changes to adapt to.
As of this week I know one person who is sleeping over at work on an office lobby sofa one or two nights a week between twelve hour factory shifts to cut his commuting expenses.I expect to see more of this sort of emergency adaption soon.
I don't think anyone disagrees with that. Even Stoneleigh says that's the eventual fate of every fiat currency.
She just thinks inflation won't be a problem for a long, long time...and that by the time it is a problem, we'll have a lot of far more serious things to worry about.
As for me...I completely agree that inflation is coming...one day. However, I think it may be decades. Possibly further in the future than you or I have to worry about. Japan is what, 20 years and counting? They printed money like crazy, built roads to nowhere, etc., and all it got them was the yen carry trade.
We're a decade into the try-to-inflate-but-decline-instead phase, though. I hope we have another decade of stability. That would leave me positively giddy!
I worry that if it was "just us" this would be the case, but instead we have a worldwide house of cards, and when the next step down occurs it'll be faster and brutal, rather than slow and painful.
Another Japanese similarity is population aging, though we still have growth and I think they do not. Will our working young choose to be taxed to pay the debts and the entitlements of the old? I doubt it. They may not be able to vote it down soon, but they will eventually, and in the meantime monetary dynamics will do its part as well.
Regardless of what happens monetarily, the young will be doing the productive work to support the old or retired and the infirm. There is no real store of wealth when product consumption is the norm -- the oldsters have not laid-up a store of exceeding durable goods to provide for their care, but just "money" and "investments". The young will have to be paid for what they produce, from an increasingly scarce resource base, and the value of money will adjust to where the retired are poorer, their investments collapse, their debtors renege, and many will be forced back into work.
The only way out of this is if US "money" holds enough value to buy goods from elsewhere, as it has for 20 years. That can't really happen if oil is in short supply and very expensive, yet we continue to import it.
So, IMHO, the social contract boomers have written for us all cannot and will not be honored, regardless of whether we have monetary deflation or inflation. Younger boomers will likely have to work until they can't, as will the rest of us.
This all would set the longer-term edge -- maybe 10 or 20 years I would think.
I'm not so sure about that. So far, the dollar is holding its position as the prettiest horse at the glue factory. What's going to take its place? The euro? The yen? The renminbi?
I think being the world's breadbasket will also protect us somewhat. We have something to trade - something that people will still need, even when they no longer need gold or plastic gewgaws.
I agree with the high-dollar-value argument for a while, in the deflation and run-to-safety phase, but I don't see how that can last longer-term unless we have:
- debt forgiven (or defaulted)
- balanced trade
- balanced budget
- balanced energy trade and more efficient use
Yes, I agree we can trade food for oil, but without a revised energy profile I think we'll see "ELM for food" as production drops.
To hold the current position long-term (top of the heap on the way down as well as the way up) will require no reversion to the mean and continued weak Chinese yuan. Seems like a pretty tall set of assumptions given that we're not at all working to balance trade, budgets, energy usage, or debt.
Once we hit bottom (20 years? 50? who knows?) then a parity trade model could certainly work, but by then we'll have reduced our meat diets, service economy, debt levels, spending, retired/non-working, and of course energy use. The collapse will be in the rear-view mirror at that point.
If we can get to there and still keep the dollar strong all the way through, I'll be astonished at the brilliance of our economic overlords, who seem to random and ineffective in today's world.
I think we're going to have a revised energy profile, one way or another.
Even without things going nonlinear, we will be consuming a lot less. Of everything, including energy. Not out of concern for the planet or fear of climate change, but because we can't afford it.
And not just us. Most of the OPEC countries cannot feed their people. Not by a long shot. They won't be consuming oil in cars or power plants if they have no food to eat. The US and Canada are the only major food exporting nations left.
Australia still pumps out a fair bit of food for overseas consumption, but I concede that, with our long-term drought conditions, water crises generally, and lunatic drives to increase population aggressively over the next 40 years ... being a "major" exporter is not a long-term reality, I expect.
Here's what happens to 80% of that unneeded plastic. Also why sea turtles that have been around for 250 million years are all highly endangered and will probably soon be extinct. Guess what, they eat jellyfish. Yeah, I know humans can't possibly be having an effect on global climate either.
TOXIC: Garbage Island
If anyone would like to help out by adopting a sea turtle I know of some people who could use that help. I will be volunteering for beach duty this year.
http://gumbolimbo.org/ee/adoption
The Pacific Gyre current holds a big island of garbage in it, I watched another report on it, a while ago in something that I found on Hulu, that was talking about how the oceans mix, and the ways that studies have been using trash in the oceans to track the currents.
A big load of plastic toys fell off a transport ship and they have been showing up all over the world, there was a link and phone number you could call if you found ones of these toys washed up on your beach. It was a cool little news article.
Having had 6 years in making Nautical Charts, while working at a company involved with GeoSpatial Cartography. I understand how the world's water systems change things.
Cheers,
Charles, thanks for the video.
Mass death of Albatross chicks from ingesting plastic debris: the photography of Chris Jordan
My sailboat is at anchor in Thailand after an astonishing voyage thru the garbage thickened seas of Indonesia and Malaysia. People there treat the ocean as a garbage dump. Tide goes out : garbage gone.
Does your charting outfit have any commercially available products ?
These are the good old days
Back in the days before I got to the company, Which I no longer work for, The Gov't agency that they worked for was named the Defense Mapping Agency, It is a little know Agency that is at the head of all mapping operations in the US gov't. Every Map ever made by the US Gov't started with data they collected, via NOAA,USGS, Spy Sats, and old hard copy maps.
The DMA has changed names several times, but they are the defacto top of the heap. If the CIA wants a map, they called DMA, If Rand McNally wanted a Map, they called someone down stream from DMA, but the clearing house for Most World mapping is what was formerly known as DMA. Last time I checked they had the word GeoSpatial in their name. Because of the fact that the globe is not a prefectly round ball like a basketball, they also mapp the heights and depth of all the places on earth.
It was always neat to get a chart with a lake on it, that had soundings for the lake. Normally you only have soundings for Ocean/waterway features.
The company I worked for did a lot of Top Secret work, of that I can't tell you about, (( there are days that I wish I could, but I don't like prison much )), but they also did a lot of the commerical side. Mostly NOAA charts. They were at one time the top of the mapping heap, out of only 7 companies that did this sort of thing in the whole world. Most mapping is done by governments elsewhere in the world. We lost our edge and there was a new Gov't contracting cycle and we lost top dog status.
It did not help any that the rules changed, we had to produce a product that was at or nearly 0% errors. If I had a chart with 12,000 datapoints each with a list of varibles, I could only make a mistake on 4 of them.
It was frustrating to say the least, when you make one mistake, and it could be as little as a typo, in a text field, they would call you on it, if it was in the end product.
I have seen charts for most of the world, I have actually held in my hands detailed maps of every coastline in the world.
As part of my job I took hard copy paper charts and maps, and scanned them into digital files, and set projects up in the 3D geospatial digital world.
Mercator projection is only one of about 20 different ways you can make a un-round globe into a flat piece of paper.
Neat job, wish I still had it, but there was a new CEO and he was not one of the old guys that started the firm, and the bottom line hit me hard, I cost them to much on their health insurance.
Check them out at http://www.isc-maps.com/
Thats a new site design. neat photos, its new to me too.
cheers,
Charles.
On the page for Services, the photo shows a guy in front of 3 monitors, he can put on a headset and look at several 3D photos, or Sat images and collect the data with x-y-z dimensions, one of their non-secret jobs was working for Departments of Revenue at the state level looking for people who have added buildings to property without filing for a building premit so the state could add value to property taxes. When You fill a building premit, they add that to the records on your title deed in the files at their offices. There was also a move toward converting all those paper plat plans to digital format.
Lots of data in stored on paper, can't be easily gone through.
Charles.
After seeing that video, I come away with the outlook that, we humans have put all that in there, in under 200 years.
I used to walk up and down beaches, all over the world, looking for glass. Now the next time I am on a beach, I'll pick up the trash and find some way to get rid of it better.
Oil in the form of all these plastics will be found by creatures that see the Earth in the future, they will wonder at how crazy we were to have done this.
Biowebscapes don't need to use plastics.
Charles.
We could start pushing Permacultures edible landscapes with a goal toward Forest Gardening, for all people who are 10 years away from retirement age. That way when they retire, they will have a safe living Biowebscape there for them to retire on. No need to have take care of them with the system we have in place now, except to help them with getting to the voting booth at election time.
Selling Biowebscapes as a retirement package will get them into the people's minds fast. Just one more way to educate people that there is a solution out there for them.
Biowebscape Is a term that as far as I know, I made up yesterday in a post. And just now doing a google I got a total blank look from the engine.
Cheers,
Charles.
I live near Tokyo. In my opinion there are a lot of misconceptions about deflation in Japan.
First of all, the price of a liter of gasoline is up about 30 yen per liter in ten years, It is now about 125 yen/liter. Two years ago when oil was $147/bbl it was 179/liter. But 10 years ago it was around 90 yen/liter.
Food prices don`t go down here, they stay the same or go up a little.
Clothing prices go up, then there is a lot of discounting wne they can`t sell them.
Everybody feels like they can`t manage on what they are making...salaries get cut, bonuses get cut.
There are a lot of empty shops and office buildings.
It is the opposite of a boom..it is a loooooong loooong bust.
I know the govt is trying to stave off the disaster as long as it can. But it eventually will fail.
Deflation you can call it but when your salary goes down and food prices stay the same it feels like inflation.
What ?
Absolutely no way what your saying is true you see everyone in the US now has the beautiful little models that prove beyond a shadow of a doubt that food and gasoline prices must decline during deflation.
Wait ...
Are you telling me that Japan even though its been in a long deflationary phase has high food and gasoline prices exactly like I've been trying to explain to the boneheads here ???
Thanks for this report I've been trying hard to explain to people that a debt deflationary bust like Japan is seeing does not result in deflationary forces on food, gasoline and other commodities. I did not include clothes but they also must be replaced its interesting they show a volatile price which fits well. You eventually have to buy them but you can hold out for a long time and wait till the price is reasonable. Thus the cyclic prices are a prefect fit for a semi-consumable in deflation.
We have had long running regional depression in the US for a long time. Detroit is the poster child but basically everywhere between the coasts with and exception of Chicago (really coastal aka Great Lakes) we have had something not all that different from Japanese style deflation.
Every single place shows the same thing a steady fall in prices for stuff that has to be bought with significant debt and steady to rising prices for consumables in line with population and overall global demand.
Seriously thanks for sharing. I suspect that most people will stick with their beliefs that debt deflation is certain to result in falling commodity prices until it becomes painfully obvious this is false.
More facts help and perhaps a few people might just give up on their belief systems and take a look at commodity prices in a deflationary economy.
Now if I can get some good graphs of Japanese gasoline prices and food prices to go along with all the good ones shown deflation in other areas of the economy I can just post the dang things and quit writing about it with a pretty graph.
Of course all you have to do is check the price of Gasoline in Detriot vs House prices and perhaps if your capable of thought you just might suspect that the assumption of debt deflation leading to falling commodity prices might have a whole in it. Gasoline should be about 5 cents a gallon now if it was tied to falling housing prices and unemployment. Its not and not only that the consumption level matches well with the rest of the US.
THANKS !!!!! For your post helps me fight this stupid Peak Demand and Low Oil Price Deflation model crap thats been polluting the Oil Drum for a while now.
Well what do you know ask and you shall receive :)
http://www.thoughtofferings.com/2009/09/price-deflation-today-versus-gre...
Here it is all laid out.
Now one thing you have to do is consider that you hand actual monetary deflation in the US during its depression not just debt deflation. Japan of course is the perfect model since its a fiat currency and does not suffer true monetary deflation aka actual falling monetary base.
I'd argue if you had a chart that corrected for the rapid strengthening of the purchasing power of the dollar during the depression as people simply did not have money then prices would not have that deep dip.
Also given the lack of money barter for food became a large part of the economy. This simple and extensive barter economy is not reflected in the the government numbers. Significant quantities of food where used instead of money for many transactions.
This is not to say food prices did not see a true decline even if one adjusts for both barter and the monetary strengthening you still saw a real decline in prices. One last thing however comes into play and thats mechanization on the farm and of course the obvious increase in the amount of cheap labor during the depression.
http://eh.net/encyclopedia/article/white.tractors.history.us
Obviously there where major efficiency gains made on the farm right through the great depression in fact it really did not miss a beat add in cheap labor supply and correct for monetary deflation and you should get something close to falling prices that actually flatten out even earlier than the raw data suggests.
These industrial revolution periods in this case for farming are one time historical events certainly they probably played a big role in how the depression developed but on the same hand one has to correct for them.
Indeed the falling prices on the farm seem to have had a lot more to do with the revolution going on in equipment than they did with the actual depression itself. The fairly steady rise in the use of tractors flattening only when prices really collapsed suggest that this revolution in farming almost simply overlapped the depression again I'm not saying they are not entangled but that food prices had two powerful factors at play.
If farmers where actually losing money then you would not have seen this rising use of tractors instead the truth is the massive increase in efficiency was offsetting the falling prices during this period and of course making it difficult for people to even find work on the farm as even cheap labor was less needed.
Sorry to go on so long about the depression but you have to always consider how you use the data as it was a complex time period reminiscent of the industrial revolution not the pure financial situation most people assume. Lost of complex stuff happening that no one seems to appreciate I find it fascinating as most of the events that actually allowed us to pull out of the depression including the ability to wage world war without nukes no longer apply today. Nothing that worked then works now. There is not revolution on the farm and no limited warfare in general and no steady increase in oil supples etc etc etc. I've yet to come up with a trick that works to pull us out this time. Our war against people that dress funny and don't have nukes but have oil or live next to someone with oil is about the best you can do but this is trying to rev a military industrial complex that had already been revved up fighting a cold war where you spent a lot of money playing war games. Beating a dead horse comes to mind.
Better stop now but I think its vital for people to start to seriously study commodity prices during deflation esp debt deflation as we have fiat currencies so actual money supply is not and issue aka liquidity.
Given peak oil and stressed food supplies from global population and a touch of global warming we are in my opinion in a inescapable death spiral of rising commodity prices and fairly rapid debt deflation. Attempt to maintain liquidity will simply ensure commodity prices are forced higher. If its removed the fiat currencies themselves fail if its left on the fiat currencies fail.
Checkmate.
Just because people disagree with you doesn't make them boneheads.
Please refrain from name-calling.
Had to look up the definition now associated with various unsavory groups interesting.
I'm not aware of a English word that works well for what I'm trying to describe.
Not surprising since we seems quite good at ignoring this problem.
And example story that uses the definition I meant was the Challenger disaster. A lot of smart people eventually made a big mistake. It was blamed on incompetence but I don't agree with this conclusion as it hides the underlying problem that very smart people can screw up. Its a concept that our culture seems to reject to the point that we don't have words describing the phenomena that are in general use.
After the fact when things actually blow up the chain of decisions is picked over and the problem blamed on incompetence. And gasp yes I'm suggesting that Feynman got it wrong one reason I used this example to illustrate the problem. He biffed it.
However thats not what really happens what really happens is that people believe that they don't have to defend their decisions against questioning. The question is dismissed as irrelevant, stupid etc without proper defense.
Defending your position with a valid rebuttal is a critical part of the scientific process and good decision making in general. In many cases the result is a synthesis i.e both sides have exposed some truth but the truth is different from the original positions. This does not mean that some arguments are not soundly rejected and then no longer defended against. But the art of the correct rejection if you will is critical.
When people are unwilling to correctly reject questions about a thesis then they are falling into this above trap which I don't have a good term for.
In Arkansas we used the term I used to suggest to someone that they needed to step back and review what they where saying i.e their logic may had gone astray. I only know the slang word in the way it was used in my own childhood I don't know a polite word for the concept. Also when you say this its meant as a goad i.e to ruffle your feathers a bit emotionally thus forcing you to actually collect yourself and offer a rational rebbutal. Another art thats been lost in our politically correct world is to use terminology to goad people to force them through this phase of initial emotional response followed by a cold calculated rebuttal.
Get angry get pissed off dislike me but then take the time to rebut the argument with reason. If you don't then well good chance you have fallen into this logical trap of not defending your position.
What I find a bit interesting is how common this concept is in what is considered a backwards state. I have to think that this has a lot to do with poverty when your poor but not ignorant you have to be careful about making mistakes and you simply cannot afford them. You have plenty of time to review your thinking but not enough money to fix a mistake. In general from what I've read on the oildrum many people are either unable or unwilling to consider the fact that we may well be in the proverbial measure twice and cut once situation with no chance to rectify mistaken assumption which went undefended against criticism.
The real problem I've seen is that both sides of all debates raging now from peak oil to global warming to economics suffer from this lack of defense of their position.
Obviously I feel like this is the real root of human created disasters and we are collectively regardless of our position on issues falling into it.
Sorry for the term I used but obviously when I see this going on I find it very alarming as I consider this logical failure to be the critical key in allowing disasters to develop.
I consider that trolling. Don't do it. IME, it doesn't force people to offer a rational rebuttal. More usually, it ticks them off and they respond emotionally.
And it's not just calling people boneheads. "Stupid" and "polluting the Oil Drum" are also out of line.
Try groupthink. It is a phenomenon which has been implicated in both space shuttle crashes as well as numerous military and other disasters.
Only too happy to help out of course!
But you see the deflation/inflation mechanism IS he way the bust continues to propel itelf along through the economy, basically preventing anyone from uh---engaging in population growth, shall we say....you know, marriage, kids, all that stuff....it`s pretty much gone by the wayside here for many people! They stay single and they get used to it. Actually some people seem to be happier like that....
Food costs too much relative to your salary. So you cut down on the other things. The prices are cut, the salaries go down across the board. The food prices stay the same or go up a tiny bit...arrghhh....the same thing happens. You have to live in a one-room apartment.
So now more and more college grads are looking to work for food companies I read. That does make sense. First the food companies will have more employees, then they will need more farmers...
I think everyone here understands that. Nobody is saying deflation is a good thing. In fact, it's the opposite. Deflation is even worse than inflation.
But it does affect your strategy. If you have some spare cash...should you rush out and spend it, before it loses value, or should you save it, because things will be cheaper tomorrow?
You should choose a good location with lots of rain. You should choose an industry that has the power to last a while---like the food industry or education or healthcare or religion. As for money (if I had any!) , I would put it into some PM and some land and keep some cash. Why put all eggs in one basket?
Pi,
Having a senior moment here-what is PM?
Gold Silver............Precious Metals.
Because the average American has only one egg. Your advice makes great sense if you're Matt Simmons or Richard Rainwater, but the average American cannot buy land and have money left over to put elsewhere.
Even the most basic investment - buy or rent your home - depends on whether you see inflation or deflation in our future. If you're expecting inflation, get a mortgage (if you can). Your debt will be inflated away. If you're expecting deflation, do not go into debt. Rent, and wait for prices to drop.
On the inflation/deflation debate.
One major factor is industrial capacity and it is enormous globally.
The only thing I see talked about here is how much "money" is being printed.
I don't doubt that a lot of other people have thought about the cost to income ratio before but it never seems to be pinned down as a core concept.
I think it's implicitly understood. What drives deflation in the first place? Why is it worse than inflation?
Because it tends to create a "death spiral." People buy less, because they can't afford to buy like they used to. That means businesses shut, and people lose their jobs. The newly unemployed are forced to cut back on spending. Rinse and repeat.
The driving force of deflation is "cost to income ratio" - the fact that incomes are dropping faster than prices.
PI,
I think you accidentally came up with a better metric than "inflation"/"deflation".
That is "costs relative to income".
That is the true way to measure buying power etc.
It is, like most things, all relative.
Ratios
Edit:
We need to fix(make it constant) the ratio...........like your name pi=C/D and holds true for any and all circles!
Nature is the guide but we continue to ignore her.
Stoneleigh came up with that years ago. She's warned that the future might hold $10/barrel oil...that few can afford.
are u implying that incomes go down; or just the total $ available due to jobs lost.
i see the latter but not the former anytime soon; unless a sharp crisis/reset.
the income to cost[or reverse] i feel as i am retired now but my wife's income is not stretching where it used to. before i could save some for preps; now i can feel the small increases adding up.
btw our sewer district[for this area- semi-rural, no sewers or drain/water catchments anywhere closeby or 'downstream' for our runoff water]added a monthly charge to water bill saying it is for possible projects. we just got city water 2yrs ago.
a ding here a ding there. it adds up.
some of this has to do with the velocity of money too; even if there we might not spend it.
for me though i purchase thinking i may not get to buy[afford] this fencing/bolts anymore. these type things[metal] have just about doubled in the last 10 yrs.
Both.
And I repeat: please use proper spelling and punctuation if you are going to comment here.
Leanan
Regarding my English-text, etc.
Typing, and at times written English, is very tedious for me.
I appreciate and respect the job you do!
Have you ever told memmel this?
If we ever impose a hard limit on comment length, it will because of Memmel. ;-)
It is difficult to imagine memmel on Twitter.
Edit: In all seriousness however, I do skip over what memmel writes. I find it too hard to read. memmel may have good insights, but I will miss them because the writing does not flow, and as you say, it does not flow for a long time.
I've thought this way for a while, too. I hear people say that the dollar has 'lost' 97% of its value since 1920. I don't doubt that inflation has occurred over the past century, but I also remember my mother saying she made 15 dollars a week as a secretary in NY during the 30's and that was 'good money.'
I thought it would be useful to have a value indicator based on average hourly salary. So a Model T might cost a year’s salary (at $15.00 a week). A bottle of milk costs 15 minutes. A house costs 2 years. Something along those lines. It's probably impossible since taxes, wages, hours worked, contributions to health insurance, retirement, etc, are all different now than then, but it might put the whole inflation question in a clearer light.
Jon.
I've found the price of 1st class postage stamps works reasonably well. I'm just old enough to remember putting a 3 cent stamp on an envelope when I was a young child in the mid '50s, and now it requires a 44 cent stamp. That means that a dollar has lost about 93% of its purchasing power since I was a four or five year old. That sounds about right.
Mac, I looked for your NYT article (online) but didn't see it. Could you please post a link? Thanks.
I'm a computer klutz( the pc was invented long after invented after I left school ) but go thier site(registration is required I think, click on business on the left), scroll down to the article that begins party gridlock , and clink on the link under neath that reads "Fedreral Reserve officials openly voice deficit concerns"
Is this it?
Thanks, that looks like it.
What did I miss? The only other way that people will get electrons is government handouts.
First all existing debt will need to be at least serviced before excess digits can pump up prices.
As I mentioned before the supply side will be the source of any price increases because of exchange rates. I guess plain old monopoly tactics such as the health care system could do whatever they want with prices also.
I just don't see it happening.
They can give consumers money. They already are. But it's not enough. They can't give people enough to make up for the jobs and houses and access to credit they have lost. It's a tabletop fan against a Category 5 hurricane.
My guess is that you will see it happening in a big way well inside of a decade.
As far as the electrons getting into the hands of the consumer, the court jester will have something to say about that before this article is closed to comments.
It won'r be all inflation at first or at the last.
There will be some combination of austerity, default, collapse, and inflation.
Got to run and work a while now.
But if anybody wantts to lay some long term bets on this , I'm game.
mac
i'll appreciate u'r efforts here.
i'm meeting w/ our adult kids about PO, $ etc. next mo.
i will empty the next to last ira chunk in april & if my wife will agrees we will empty the last chunk soon & put it into something tangible.small chunks to many but big enough to count to us.
i bought wire, screws, etc. today with a chunk because i can use these things to help produce food...perhaps enjoyably. & i can't in my conscience leave the $ in funds already in the hole in 10's of billions though we eat penalties, & taxes; nor do i accept the level of risk that something.. a reset as nate puts it could freeze these funds essentially or cut their value significantly.
heli-ben said he would do it; maybe too much wine that nite. stoneleigh says he won't put 1's& 0's in most of our accounts to inflate as would be too much power to us commoners. some say the politicos will do it in last minute desperation.
they sure do have a lot of tricks; seems to have kept the market up when TAE & many said likely to go down.
don sailorman still around... he said inflation too & knew a thing or two. i've made my bets; & they are essentially in the same direction u are fleshing out.
so far though deflationist 1 inflationist 1/4.
i look forward!
creg,
Thanks for thinking about my comments.
What works for me might not work for you.
I am stocking up on a lot more stuff than I will ever need PERSONALLY because I fully expect to be able to trade the excess by barter or even for cash as prices go up.
This strategy has worked thru thick and thin good times or bad all my life as stufgf like nails and screws just keep on going up in terms of money prices.Such items have to be bought new of course.
Most of what I pack rat is bought second hand at flea markets and yard sales,and I just grab anything that is useful , will not rot, and is excellent quality and in very good condition..
Right now I have four coal scoop type shovels of the top quality that cost over sixty bucks new today.I paid not more than ten dollars each .I have a dozen ordinary round and square blade shovels in vgc that I bought for fifteen or twenty cents on the dollar.
I would not reccomend that a typical person have more than two of each type as most people are not equipped to store such things safely at no expense.
creg,
Thanks for thinking about my comments.
What works for me might not work for you.
I am stocking up on a lot more stuff than I will ever need PERSONALLY because I fully expect to be able to trade the excess by barter or even for cash as prices go up.
This strategy has worked thru thick and thin good times or bad all my life as stufgf like nails and screws just keep on going up in terms of money prices.Such items have to be bought new of course.
Most of what I pack rat is bought second hand at flea markets and yard sales,and I just grab anything that is useful , will not rot, and is excellent quality and in very good condition..
Right now I have four coal scoop type shovels of the top quality that cost over sixty bucks new today.I paid not more than ten dollars each .I have a dozen ordinary round and square blade shovels in vgc that I bought for fifteen or twenty cents on the dollar.
I would not reccomend that a typical person have more than two of each type as most people are not equipped to store such things safely at no expense.
Best investment?
How about emergy.
About storing stuff-nobody imo should buy and store more stuff than he and his family can rasonably expect to use PERSONALLY unless he thinks he can barter it later.
Isn't that a main consideration?
Creg...could you please use correct spelling and punctuation? Call us old-fashioned, but we would prefer correct English to text-message-speak.
As for Don...he kind of admitted that he was wrong about the economy.
Just because we are currently in deflation doesn't mean the trend will continue. I think the deflation will last until the big banks get de-leveraged by selling all their junk to the fed or earning free interest. Check out this chart:
http://4.bp.blogspot.com/_cvdgPlEKW9k/S3ZNQhStkBI/AAAAAAAABDY/hnAn1A8AmJ...
Argentina had a short bout of deflation before they inflated like crazy.
Which one in particular ?
Anyway, the basic problem with Chicago school is that they have never even studied depression economics - so you continuously hear their chatter about deficits etc. You should checkout the articles by DeLong on this.
The current problem is too high an unemployment and continuous deflation. We should deal with this before worrying about inflation that may or may not appear this decade. Considering that money is mostly concentrated in the hands of the rich, I don't see inflation as a likely problem anytime soon.
European and US government creation of new money in the face of the "Great Recession" has totaled just over $4 trillion dollars. Total losses in the US and Europe together so far easily exceed $30 trillion dollars the last time I actively looked which was well over a year ago. In an economic system where the currency is based on debt and the total debt is contracting at a rate of 1 order of magnitude larger than the rate at which money is printed, you will not have inflation.
Further, if you actually read the speech by the Federal Reserve board member who made it - Hoenig - you will find that he mentions inflation in a future context, one which almost all deflationists whom I know today acknowledge as a possibility. But right now, today, what is occurring is massive deflation and contraction. Central banks are almost always too slow to react and by the time Bernanke actually starts dropping century notes from helicopters on the south Bronx, it will be too late.
Finally, the US Federal Reserve is quite constrained and in a box of their own creation. The power of the US dollar is in its reserve currency status. Excessive printing will simply destroy that status outright, stripping both the US government and the Federal Reserve of the source of their own power. This is the "curse" of being the reserve currency. You can only inflate faster than your competitors if you give up the status of reserve currency, which neither the Fed nor the US government wishes to do. Thus, China and other nations can always debase their currencies faster than we can. So what is the only tool remaining in order to maintain US financial power? Deflationary collapse, which makes the US dollar even more powerful while ruining all other economies faster than our own. Yes, this has the unfortunate side effect of massive pain on your own citizenry but perhaps those in power believe they can control and channel the resultant anger from such pain to further their own goals? This leaves the final question as to how do you restore a positive trade balance to the US when so many other countries are active manufacturers and producers as well? I suggest that the answer you seek may be staring at you from the pages of history.
Tariffs?
David,
I have no arguments with you concerning the fed and the dollars status being the reserve currency-for now.
But my position is that we will soon be in a sort of race to the bottom as one govt after another is unable to meet it's obligations.Uncle Sam's debt is worthless now-if anybody tries to convert it to material goods on the grand scale.
I believe the Chinese are unloading as much as they can, betting that the interest they collect is going to be worth less than the price increases they expect are on the way in oil, iron, copper,farmland, etc.
When the people with money, public, corporate, or personal, to loan decide that Old Uncle's house ir rotted down and about to fall,they will refuse to buy an more of our debt, and try to unload what they are hiolding.
I cannot see any possible way this can fail to happen, excepting a miraculous turn around in our economy-that just is going to happen.
When tshtf, Uncle will print as a last resort-and those who own loans will be able to collect on them, for a while at least , at some percentage of thier value - that will be better than nothing, and far better than an immediate and catastrophic failure of the monetary system..
But as far as the long term result is concerned, I can't say-the ed might actually be able to pull off a controlled inflation over a period of years, but my guess is that it will get out of hand and that an inflation induced collapse will result.
But it most likely will postpone the end game for a while.It occurs to me that maybe we are all on the same page to a much greater extent than we realize, or that I have realized-I am comfortable with the idea that inflation of the kind I envision will not emerge until the rules change.For now the rules you mention about a reserve currency are still in effect.
But tptb in Washington are going to become desperate at some point.When?
Maybe when little old lady democrats start hitting the streets with broom handles and molotov cocktails because thier ss and teachers pension checks either didn't arrive or they bounced.
Maybe when all the people in Detroit decide to march on Washington and stay warm on the way by burning as they go.
Remember that the LAST RULE that will still stand is that US CURRENCY is LEGAL TENDER. landlords and local tax collecters and grocery stores will HAVE to accept it.
So somebody tell me-why won't handouts get inflationary electrons into the hands of comsumers?
Let me count some ways that it is being accomplished TODAY. of course this game is a little like getting a wrinle out of a carpet, or whackamole-the result can show up in another place in another form, such as a lack of purchasing power among those still working-actual price changes may not show until later.
Medicare, medicaid, food stamps , govt pensions, payments not to farm, free school lunches,make work programs of all kinds,social security, military hardware(wagesand dividends paid to those who manufacture it)in short everything the govt pays for above and beyond it's current income by means of deficit spending.
If it were NOT for this spending, prices of ordinary goods such as food clotheing appliances, etc would have been declining steadily as the result of growing productivity.( A few industries such as computers increase productivity so fast that prices fall anyway.
Interesting parallel to some of the economics of the guild system in Europe. If you were a peasant, children aged four through about ten or twelve were assets: they could do more useful work than the cost to feed them. Beyond that age they became liabilities, especially boys: they ate as much as a grown-up, but were too small to do the brute labor that a full-grown man could. At that point, it was very attractive to sell some of them to someone as apprentices.
In most of the crafts, an apprentice could learn enough to be useful fairly quickly. For example, throwing a pot on a wheel is a skilled task, digging clay out of the riverbank not so much. But even digging the clay was more valuable than "peasantry". For the cost of room and board and some training, the master got several years of increasingly valuable service. IIRC, "journeyman" was synonymous with "too many of the customers are asking that I have you do the work".
I'm sitting here thinking about middle-aged lawyers apprenticed out to a bad-tempered blacksmith...
I resemble that remark.
I will point out that lawyers are a renewable resource that shows no signs what-so-ever of depleting.
Alan
Never thought of em that way.
Maybe a little kink in that armor here in Houston. Quit a few lawyer layoffs recently including my daughter-in-law. Told her it was the best thing that could have happened to her. Going to go to work for the State Dept overseas soon. Fits well with her pointy liberal head. Very nice kid otherwise.
Does that imply limitless lawyerosic ethanol?
There was an piece in "The Journal of Irreproducible Results", unfortunately I don't have a link and I no longer have the hard copy, circa mid 90's? It had to do with the AH coefficient which was proven to be a constant in all populations studied. The only detectable anomaly, was that it tended to be significantly higher amongst lawyers, regardless of which population they were a part of ;-)
Hi Alan
This is probably not what your looking for, but The Union of Concerned Scientist has a Nuclear Industry Factsheet from Aug 2009 covering construction cost (and cost over-runs), rate-payer bailouts, comparison of efficiency cost (negawatt) vs. nuclear energy (full-cycle costing),etc. Lotta charts and graphs.
Hell. Even Yergin, et.al. can find fault with it.
edit Found it DOE NP2010 Nuclear Power Plant Construction Infrastructure Assessment
A quote from the 2005 report.
Completing Watts Bar 2 (80% complete in 1988) is one (and one that will not compete for resources with any new starts such as Vogtle, since it will go commercial in 2013. It is at a different stage and requires different skills & materials).
Vogtle 3 & 4 (just financed by US Gov't) are two more. Commercial 2016 for #3 and 2017 for #4 (per plan, reality may differ).
My SWAG is the USA can complete three more new nukes by 2017 and one or two a year for 2018, 2019 and 2020 with a speed up possible after that.
Best Hopes for more new nukes (even if they are slow in coming),
Alan
Can Natural Gas displace Coal ?
This is a review of existing power plants, NG & coal paired, with adequate transmission. An extra 5% to 20% of US NG consumption is required (depending on how much displaced).
The hypothetical displaced coal generation and emissions are equivalent to 5 percent to 9 percent of total U.S. coal generation. For associated CO2 emissions, the percentages dropped to 3 percent to 5 percent of the U.S. total from coal generation.
Better insulation, weatherstripping, windows & door (less NG in winter to heat, less NG & coal fired electricity to cool in the summer) and tankless NG water heaters should "make the difference" for most of the 20% in increased NG use. Add some industrial efficiency for the rest.
http://www.powergenworldwide.com/index/display/articledisplay/1855344227...
Best Hopes for Less Carbon,
Alan
In the Feb. 2010 issue of Scientific American, Campbell and Laherrère's Letter to the Editor about "Squeezing More Oil from the Ground" is published, with Maugeri's response.
There was already a post on Oil Drum: Europe about this at the time of the article in SciAm (Oct '09). I highly recommend reading it, as it explains in great depth why Maugeri is wrong on multiple levels.
Their letter, IMHO, was very good. Maugeri's response is pathetic. Here's my fisking of his response:
You see, I'm the renegade here, not Campbell and Laherrère. They're just spouting the conventional wisdom.
I just use an infinite growth model in my economics models, but I'm careful never to call it that.
Except for economists like me, who can calculate when others' calculations are wrong. My calculations are right and I know that production won't peak. Ever.
Trust me, I know nonscientific approaches when I see them, since most of what I write is nonscientific. Besides, they didn't predict the (scare-quotes)"peak"(scare-quotes) period with 100% accuracy, so everything they say is wrong. And, they smell funny, too.
Since we don't know everything, then I can claim whatever I want to claim. And, my claims are as accurate as anyone else's, because no one knows what's going on under the ground. Except for me.
You see, I'm rich, so I can pay more.
Did you read about that Single-arity thingy? Robots are gonna get really smart and fix all these problems. Just wait and see.
Don't **** with us or we'll really show you expensive oil can get.
That link was posted last week.
And please watch your language.
My apologies for the duplication and the language.
Maugeri has one point that I find hard to argue with. Campbell and Laherrere don't apply much by the way of first principles explanations to their arguments. It's mainly heuristics. That's just the way it is.
According to the figures here: http://michaelbluejay.com/electricity/cost.html
We already pay roughly 15 cents a kWh here in New York. I live an apartment with 3 other people who make little or no effort to reduce their electricity use: they leave lights on, fans blow all day, etc. Our electricity bill is on average about $90 dollars a month. So some quick math says we are using about 600 kWh a month. If we were forced to pay 25% more per month, we could easily cut our use with no quality of life difference at all, in fact, I doubt we would even bother.
I mean, I would, because I try and keep my carbon footprint as low as possible, but for purely economic incentive, is $7.50 per person more a month really going to break our banks?
This is an extremely limited and simple example, but in my opinion unless we see doubling or tripling of current prices here in NY (which are already almost the highest in the country) nobody is going to be sitting in the dark, let alone turning their computers off when they leave for work. A 25% increase because of the cost of Wind or other renewables is easily offset by conservation that does little if anything to lower quality of life.
One thing I find amazing personally (I work in IT) is how the power consumption of PCs has shrunk. It's fun to take a part a "pentium d" machine from 2005 that has a 4" thick heatsync and a 6" case fan just to keep it around 45c during peak load. Now look at a modern dual core machine that has a 45w max consumption and stays very cool with a little old heat sync and a 4" fan while being almost twice as powerful as that machine from 2005.
If power is really expensive in the future it can be offset by the gains in computing power per watt. I really have a hard time seeing power being so expensive in the future that it limits our modern access to computing power.
You're right, I have a 1U server that probably only pulls 140 watts during peak load. This is a quad core machine with 8GB of Ram too. Back in the early 90s when I first got into computers the power draw and performance was terrible to what can be accomplished today.
So maybe during the crash we'll at least be able to read Kunstler's blog and play World of Warcraft.
Well, at least on sunny or windy days :)
It was a few months ago, a story was talking about how a server farm was upgrading the Chips to double the capacity and more than halving their energy needs. And the story went on to say, the next upgrade would be the same thing, 2x to 3x the chip speeds, and 1/2 the energy needs.
This is a good thing.
My computer is on almost 24 hours a day, then again I am up almost 24 hours a day too. But I turn it off if I know I won't be up again for 6 hours. I am not worried so much about the computer power drain. If I was living alone, my power usage would be way down. But I am not one to use the light when I enter a room, I can see well enough unless I am lookign for something that I'll need a light to see with.
Charles.
Some of the contemporary machines have gotten remarkably good at reducing the power draw when they idle. Powering off entire subsystems, drastically reducing the CPU clock rate, etc. Assuming an LCD monitor that goes into low-power monitor mode when its input signal disappears, some systems drop down to less than 10 watts if you walk away from them for a few minutes.
The new ARM designs look like it may be possible to have an entirely serviceable computer that draws well less than 10W max (excluding the display), and idle at something well below a watt. Dell is already selling laptops that contain two systems: one is the full-blown Intel/Windows system that behaves as you would expect; the other is an ARM/Linux system that is instant-on (less than a couple seconds, IIRC) and lets you do e-mail, browsing, calendar, etc, without booting Windows. Dell surveys indicate that some users (probably only a handful) spend as much as 70% of their time in the instant-on mode.
I always turn my flat screen off when I get up for more than a few minutes.
Up thread I was talking about my job in the GIS field, Geospatial number crunching was a big load for own cpu's. When you plug the data in and let the machines crunch for 12 hours to give you a finished product, that you still have to check over, it was boring waiting.
Everytime a faster machine came out, we wanted one on our desk. The biggest issue was storage space, I was always running out of room on my harddrives. Its okay when you have a huge room filled with paper charts and maps, but going to digital data can really give you a headache if you don't have room to twist and turn it. NOT my worry anymore.
Charles.
I donate my spare CPU cycles to BOINC projects.
Long story here comparing today's newest processors. The linked page talks about power, most informative chart is the one at the bottom. For grins, the testers included a Pentium 4 in the mix. For the measured benchmark at the bottom of the page, the best of the new processors completes the task using about an eighth the energy used by the P4.
When you dig into the performance differences, it is interesting to see that the designers appear to be running into limits on decreasing the voltage and increasing the clock rate. Most of the gains now are due to multiple cores on a chip, better support for thread switching in the individual cores, and applications being written to take advantage of that parallelism. For straight single-threaded number crunching, the best of the new processors is only a little more than twice as fast as the P4.
http://seekingalpha.com/article/188984-positioning-in-gold-oil-for-the-m...
I really liked this article, because this is from an investment firm that has figured out the parsing of words, between peak demand and peak production. They get it and read between the lines to further state that by injecting CO2 the Saudi's are in fact admitting they have tried everything else on Ghawar so will try CO2. And, now that field is at peak, can the rest of the worlds oil production peaking be far behind.
At first, I admit to being infuriated by the use of the term peak demand, due to it only being the 'effect' part of the 'cause and effect' of peak oil, or if you prefer peak production. However, it doesn't seem so bad now, because its usage provides an incite to those that cannot refer to peak oil directly, yet need to have a way to reference it in their dialogue, like the Saudi's.
The Saudi's have not said in what way they are injecting the CO2, and since the discussion on this before, I have been wondering if they are using this to bolster the gas cap on Ghawar? The relatively small volume of CO2 wouldn't help the oil production, but if the gas cap is starting to fade, possibly due to pressure loss and very precise horizontals sucking the gas down with oil produced, this could simply mean some pretty good management. The CO2 could be separated out later even though it would be expensive, and it could help them better manage the potential for oil moving up into the oil cap, where the loss due to formation saturation would mean a greater loss of oil which could not be recovered, vs the gas which can.
We are thinking about conventional use of CO2 - they may not be.
Despite all of the rhetoric from many quarters, I am still impressed with their management of those huge reserves.
Good news is not "News"
USA Drought ends
http://www.usatoday.com/weather/drought/2010-02-16-drought-us-reversal_N...
Best Hopes for Good rainfall,
Alan
Alan: Thanks for the link. Look at the North-West side of Nevada (Washoe County). We were just talking this morning that it looks likely there will be enough water in the reservoirs for drinking water here in Reno and along the Truckee river.
Agriculture in Washoe county is hurting since we only received .86 inches of moisture this last winter. This drought has been going on for quite a while here and water allocations for agriculture are way down like three acre-inches instead of two acre-feet. This is not enough to grow any field crops and barely enough for a small orchard or garden.
Our personal condition in our well is not seeing the drought because of the local geology and our use is very small compared to growing hay or other high water crops.
You should not be growing alfalfa in the Great Basin.
I'm a former Reno resident, and Derby Dam still ranks as one of the all time ecological disasters, destroying one of the great fisheries of the planet at Pyramid Lake,
My friend caught a couple nice trout from the shore at Pyramid Monday. Like me, not as good as it once was ... :-)
I'll be out there soon.
One of my favorite places.
But the original population is gone, and one of the great fishers on earth is no more---
I've fished pyramid so many times my fingers are going numb recalling the bitter cold and howling wind.
And yes. one of my favorite places as well, took my wife camping there on our first anniversary, boy she was pissed (till we got there)
I do have to take issue with your assertion that the derby dam killed the great fishery. Pyramid was commercially fished from the late 1880's into the (er) early 40's. Whitey striped it bare, then came the dam. A nice one two combo
http://www.nevadaweb.com/cnt/r-t/pyramid/
It would be great if it weren't for the fact that many areas are getting too much rain. Here in AL I can't remember a winter as wet or with as many cold days.
Other parts of the country have had trouble harvesting
http://www.delmarvanow.com/article/20100116/NEWS01/1160338/Soggy-soil-ho...
Lots of areas had late harvests and worse yet the corn had a higher moisture content requiring much more fuel to dry it. Even then some is developing mold, especially one that produces vomitoxin which is particularly hard on hogs. Excellent article about this on Energy Bulletin - at http://www.energybulletin.net/51554
So while it is good to get rain, it is not good to get too much rain at the wrong time of year.
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The other day I was watching a UK program on youtube about a lady getting back to her farm and making it more nature friendly and learning about peak oul from Dr. Campbell, and Richard Heinberg. During the credits I saw a thankyou to ..
The Oil Drum.
That was a warm fuzzy feeling.
Charles.
Was it this one, focusing on how English Farms can move towards Permaculture?
http://europe.theoildrum.com/node/5120
"BBC Films- A Farm for the Future"
http://www.bbc.co.uk/programmes/b00hs8zp
I've watched it a few times now, and plan to order or download a full-resolution copy. (A New-Years' Resolution copy?)
It won't play for me in the US, but I'm sure there are copies out there.. like here seems to work! http://www.viddler.com/explore/PermaScience/videos/4/
My mom really loved what it pointed towards, and had started pushing our shared acreage up in the White Mts in that direction, before being abruptly taken away from us.. so I've got to do my research and continue 'Carol's Orchard' .. Luckily, my wife is also very eager to see this through.
Best,
Bob
superb! one of the few po films my wife would watch.
Exactly. She found the right tone of voice, did sound the alarms, but didn't make it into a chastising sermon, just got to work looking at the ideas.
For me, it serves as a model for how the messages can be made to get through. Both my wife and mom have responded well to this, while still looking askance when I'm building my solar projects..
It's critical to figure out the way in..
Nice video. Very heartening to see thoughtful people successfully applying rationality and creativity to adapt to the predicament before us. Thanks much for the posting the link to it. And thanks to Charles for continuing to beat the drum about permaculture.
I'm fairly hopeful that permaculture can avoid some of the stigma and resistance that 'Hippies and Communes and even Organics' found for themselves, even in the areas where they were right. (Maybe especially)
With some care, the sensibility in the permaculture approach can remain about the ideas in it, and not have to become clannish and identified with a political ideology.. keeping it available for a broader reach of people to join into.
We are a mess, but I have to think we're learning a little bit along the way here.
Hence my term BioWebScape, I give a def. on my blogspot page.
We can do this, if we don't act selfish, or greedy. Look at it this way, I am a christian, but some people who aren't think like I do, that we can solve this problem if we have faith and work hard at it. And the hard work in mostly in getting others educated, once you have the seeds sown in your land space, you should be letting nature do the work.
Fukuoka was right when he stated that you should let nature do the work, because it is better at it than you are. You shouldn't have to do much once the seeds and small plants are in the ground.
If you have drought conditions, pick plants that will deal with drought. If you have rainforest, the same, pick plants to add to the mix that will deal well there and still feed you.
Once the area is getting back to balance, you step back and let the system work its magic. If you want a plum in the yard, find a spot and tose in a few seedball's worth. Or if you have to, dig a hole and plant a small one your friend Jokuhl gave you.
Charles.
Yeah that is the one. It kinda shocked me that her father was doing all this work and she did not notice till later what all was going on in the hedge rows.
Maybe I just grew up different, both my parents grew up on small landholdings, My dad worked on a farm for a while. So somewhere along the way I just remember looking at the natural world around me and planting seeds for the fun of it.
I took some Indian Corn that we had in the Thanksgiving displat at school, when we lived in Iceland, and threw it out the window of our apartment building, come springtime it was growing, last time I saw it, it was 3 feet tall, up close to the building, I'll never forget feeling happy, that I grew something.
I'll send you mail Bob and we can talk about your land and what all you can do with it. I wish I were younger, so I could plant some slow growing trees that would be great to harvest off of around here.
We are plannig to Increase our water catchment storage amounts. I want to put in a pond and stream and pond system. A pond that over flows down a stream course then to a Pond in the back corner with additional water storage. Last year we had almost 30 inches of rainfall over average. This year I am almost betting on a drought, the way things have been lately with the swings in weather.
Thanks, taomom, I just hope we can get more people to think about fixing the problem we have. I get down and get all doomy and gloomy, must have been the winter doledrums.
Cheers,
Charles.
The Feb. IPM was released today showing world crude oil production through Nov. 2009. The Nov production was reported at 73.222 m/b/d which is the best month of the year and consistent with the seasonal factor. The 2009 11 month average is 72,169 m/b/d which is below 2004's 72,476 m/b/d and all years in between.
Paul Craig Roberts
http://www.counterpunch.org/roberts02162010.html
Re: the new "big" Mexican oil field. The reserve potential is pegged at 900 million bo with an estimated initial flow rate of 150,000 bopd. IMHO at least one of these numbers is likely wrong. This reserve volume/rate would indicate an 16 year field life. And that's assuming no decline in rate...generally not a valid assumption. Just a WAG but a more realistic figure might be 30 years plus. As we aren't given any supporting details, either the reserves are no where near 900 million bo or this is a heavy and thus difficult to produce crude.
We'll just have to wait a couple of years and see what develops.
Rock,
You drive me nuts sometimes. Use the reply button to reply to a specific comment. To comment on a posted article, if no one has commented yet, use the post a comment button at the bottom.
(The Rock's problems with the Internet come from too much developmental work, and a lack of exposure to, and a deep seated envy of, creative exploration types.)
Agreed.
Usually, people make the mistake of posting at the bottom instead of replying to the comment they are responding to. Rock is the opposite. He replies to posts that are completely unrelated.
WT/Leanan -- I would resent that comment...if it weren't true. Sorry. I'll try to pay more attention next time. But at least I can take take some comfort in that I drive WT nuts sometimes even if it is unintentional. Just wish my intentional efforts were as successful.
China: Hugh Hendry warns investors' infatution is misguided
I think I saw that on Automatic Earth, because I remember some of that text, the middle paragraph that you quote.
What I have seen on a news item online, is that China has ghost cities, fully built, ready to be moved into, but no one willing to move from their old city to the new one right next door. They own the houses, but don't live in them, keeping them for an Investment to be sold later when the prices go up.
Reminds you of the rush to riches in our housing market.
I wonder how long they can keep up building ghost towns?
Charles.
Obama 'gave in' on nukes in the name of bipartisanship, no matter how objectively stupid nukes are. I saw a video showing the Republicans exploding with joy over subsidies(shall we talk about conservative hypocrisy?)
On top of this the US need for electricity is definiting shrinking--so why are conservatives high-fiving each other on this Greenpower plant?
Weird.
I am about as anti-nuke as anyone on this board but in a way I'm glad Georgia is getting the plant. Southern Company is 100% coal and its 5GW Herman Scherer plant eats trainloads of coal per day. (OTOH, building a big nuke in drought prone Georgia could be a mistake.) At least they reduce their emission a little.
More interesting is the news that John Roe of Excelon, the biggest US nuke utility seems rather subdued on Obama's nuke renaissance.
FYI, there are two nukes in Georgia, Plant Hatch (1,759 MW) and Plant Vogtle (2,236 MW).
E. Swanson
I stand corrected.
Actually Southern Company has 3 nukes and gets 70% of its energy from coal, 15% from nukes, 13% from natural gas and 2% from hydro.
OTOH, Exelon gets 92% of its energy from nukes, 5% from coal.
http://www.exeloncorp.com/energy/generation/generation.aspx
The Southeast gets most of its energy from coal and lacking renewables nuclear is probably the best way for them to get green, short of massive rooftop PV.
I'm in agreement with you here, the wind resources are not very good. Solar is possible, but I suspect not very stellar, as the region id pretty humid, which I think means a lot of clouds. I suspect the Southern Appalacians/Smokies probably have undeveloped hydro, but generally the renewables are not so proming, that subsidizing a few Nuke plants is worthwhile.
From the linked story about Atwood's book,
I hope that the religious group God's Gardeners is pushing things like permaculture and forest gardening.
As a Christian, I never did see where others could think about wasting the gifts of our natural world. I know that others in the forums dislike the people in the current So-called Religious Right. If they are promoting wasteful behaviors, I'd dislike them too. I dislike people who stand on their high horse and judge everyone else, that is not what I was taught to do.
I push getting back to the natural systems, be you a christian or a buddist or what-have-you. This is not about YOU. This is about US. We can't keep going in the direction that the world is traveling right now.
On that Deep Ecology think tank, action place. Why did they close their doors, the job is not done yet, The article does not say, at least in my first reading why they had to close up shop.
I am trying to form local connections, within the Permaculture groups Which I don't see in my travels many of them around here, yet. And the Local people helping the Homeless, to see if we can form a co-op.
I am calling it Homeless seed planters, Taken form an idea on another forum about handing out seedballs, or tree seeds to people to go plant where ever they travel.
The Homeless are out there all over the place, if they are given Seedballs to spread about in the wild city scapes they hang out in, they can come back later and find food in those wild places.
I can't offer them much more than a handful of seedballs, and a hot meal and a few supplies for the job of planting, but every little bit helps.
Charles.
It is pretty scary when "up to 150K/day" is considered some massive new miraculous find. It is no doubt a nice find. But the new finds keep getting smaller and smaller.
lawyer -- And thus the problem with the news as delivered by the MSM. As an oil operator 150,000 bopd is huge. As an oil consumer it is not. But the MSM often doesn't put such numbers into a global consumption context. Easy to understand how the general public gets confused on the issue. No...we are not "running out of oil". Yes...our ability to supply global comsumption is declining. Most TODers understand the distinction. Joe6Pack seldom does. And the MSM is a poor educator.
Any day that a new Dmitri Orlov article comes out is a day that is sure to include a smile!
Dmitri points out a few things at the beginning of his article that I think are very important:
1) Reliability and durability. We cannot know for how long any given thing will continue to be made or spare parts remain available. Even if something is still being made elsewhere in the world, it is conceivable that the US economy, and the US dollar along with it, might decline to the point where the purcahse of imported goods becomes all but impossible, yet domestic manufactures don't get started back up due to lack of capital or skilled labor. Thus, if some tool or device or other product is going to be important to you, it is wise to invest in gear of really good quality, gear that you can be reasonably certain is going to last. Investing in a supply of repair parts and the maintenance manual would probably be a good idea, too. The "affluenza" bug that has infected so many people is all about accumulating LOTS of stuff. That is definitely the wrong way to go. Having a few possessions that are built to last and that you can count upon to do what you really need them to do: that is what you want.
2) The advantages of old-tech/low-tech: Dmitri gives several examples of how, when the high-tech systems die, we will have to go back to older, lower-tech, presently "obsolete" technologies. A great many more examples could have been given - see Low-tech Magazine for a lot more examples. The thought that occurs about this is that, at least when it comes to "personal technology" for household use, a lot of that old, "obsolete", low-tech gear is still available - just check out ebay. While there are lots of high-tech gizmos and gadgets being created all the time that may indeed represent "improvement" in some sense or another over older technologies, the question nevertheless remains: are these really necessary? We lived without them up to now, why can't we continue to live without them?
The thing is, quite a lot of the older stuff actually was built to be far more durable than what is being built now; that is why it is still possible to find older gear that works. In a considerable number of cases, gear that is already decades old will likely be continuing to be usable decades after the latest and greatest gizmos are resting in landfills.
Agreed.
I don't even own much "tech"; no cell phone, no iPod, iPhone, iPad, no computer (use this one at work), no flat screen TV.
I like reliable mechanical things that run on springs, levers, gears and that are held together with screws, nuts and pins. Things like hand tools and good rifles will keep on working especially if you have four nearly identical of each and the tools and know how to be able to swap parts and repair them all.
Walk into my house and except for my telephone (land line) you wouldn't have many clues that the year wasn't 1910:)
They can have my electric toothbrush when they pry it out of my cold, dead hands.
While looking around at the Local Sam's, (We were there buying food items, and some paper goods), My dad pointed out a gizmo to slice food, I can't remember what they call them, but you can use the blade and running board to slice cabbage and anything else rather fast, and in different widths.
With the low tech sharp knife I can slice the same thing, about as evenly as they can, for a lot less than the plastic gizmo, that when dead will be in the ocean or landfill.
My dad has power tools, but also the hand tools from which they grew. When I work with wood I prefer the hand tools.
Charles.
Assuming we are talking about something non-electric here, the smaller ones are known as a "mandoline", the large wooden ones that can hold an entire head of cabbage (for shredding into slaw or kraut) are just known as cabbage slicers. Yes, you can do the same thing with just a knife, though these make the work go a little faster. You really have to be careful that you don't slice your fingers, though! Both have been around for centuries - very low tech. The large wooden cabbage slicers are very durable, you will often see them in ebay or in antique shops, and the only thing that might render them unusable is a rusty blade (which could be replaceable). The small plastic ones - yes, you are right, those won't last very long. They used to be made entirely of metal, those are a lot more durable if kept free of rust, and can occasionally still be found.
Thanks, I knew someone whould know.
If I have a lot of slicing to do, say for putting up extra produce, I might just ask my dad to help. Both of us with knives will be faster than one person on a Mandoline risking their fingers.
If I am slicing meat, I'll use a meat slicer for big jobs, we have a good one in the house, I think it is about 30 years old or so, the company that made it is still in business.
But I prefer to have a knife in my hand when I need to slice things.
Charles.
I own a mandoline. If you have a food processor you probably don't need a mandoline...but it's fairly low-tech, and often quicker and easier than dragging out the food processor.
My knife skills aren't so hot. A mandoline allows me to slice things paper thin, very quickly. My fingers are less at risk than with a knife, because mandolines come with finger guards - basically, a handle with spikes in it, that holds the food and keeps your fingers out of harm's way. People who cut themselves on mandolines usually do so because they forget how sharp the blades are, and touch them while trying to clean it. A mistake that's often made by knife users as well.
A meat slicer can also be used with veggies. I used to work in a deli, and we used a meat slicer to slice onions and lettuce as well as beef, turkey, salami, etc.
We hand sharpen our own knives, using a steel to keep the edge in good condition until the sharpening time, if you use them a lot, about once a year.
I have heard of people using the big meat slicers for vegies. I was the #2 person in a small grocery store, International Food Mart, here in Little Rock in 1999, The store is gone now, but food from all over the world and a deli line up to salivate over. 20 Buckets of Olives to choose from and about 25 kings of baklava and sweets. I am getting hungry thinking about the place.
Easy way to clean a knife is not to get near the business end when cleaning it, and clean it as soon after use as possible and put it back in its safe place. No throwing in a drawer (unless it has its own pocket), and away from other items that can nick the edge. Magnet runners are good if you are careful how you pull them off and put them back on.
We never had any use for a food processor, But I have used them at the store. A good blender works okay for most things, Top of the line ones anyway.
This of way off topic I feel, thanks
Charles.
Yesterday, Mitsui agrees to buy 100,000 net acres of Anadarko Petroleum’s Pennsylvania Marcellus Shale acreage for $1.4 billion in drilling carries through 2013 (or about $14,000/acre). Meanwhile, in its operational report yesterday, Chesapeake notes that it has 1.57 million net acres under lease in the Marcellus Shale, with a net acquisition cost of $330 per acre (after taking into account payments from Statoil for its purchase of a partial interest in Chesapeake's Marcellus stake last year.)
Assuming Chesapeake’s Marcellus acreage is roughly equivalent to Anadarko’s (maybe a stretch) and ignoring the fact that the $1.4 billion Mitsui is paying is not an up-front cash payment, this suggests Chesapeake’s Marcellus acreage alone is worth something like $22 billion. Yet the market cap of Chesapeake at yesterday’s market close was less than $17 billion, and its Marcellus Shale holdings account for only 11% of Chesapeake’s acreage and less than 2% of its proved reserves.
Something is wrong with this picture (even acknowledging that Chesapeake has a heavy debt load and may not be able to HBP all of its acreage.) Anyone have any thoughts?
Disclosure: I own CHK stock and am a believer that shale gas is economically viable.
CHK also still has all their Barnett Shale acreage, acreage accumulated for the Balmorhea (sp?) shale in Reeves and Pecos Counties, Texas (an almost out of sight potential) and their interest in the Haynesville area. If you own CHK, you better believe in shale gas being economical !!
CHK and Devon seem to have the best understanding of what it takes to get the most out of shale gas wells. Of course, CHK has a lot of conventional reserves as well.
I am not sure of it myself, but I was told that McClendon had forward sales contracts which would leave all of their existing wells profitable, and that was 1 1/2 years ago. But I am just an oil guy who hangs around supply stores cause they have free coffee - all you have to do is watch out for the Basal Sediment (BS).
Cat -- Not sure if I understand the situation with Chesapeake either. But I can toss in a few bits and pieces. The net cost of the Marcellus acreage to CH might have been $22 billion but that doesn’t mean it’s worth that on the market right now. Ignore that if there is no buyer for those acres the value is zero. That may be true but that’s not the reality. But the intrinsic value is how much money can CH make drilling those leases. Part of the problem may be timing. A mineral lease is not perpetual…it expires X years after it’s taken. And in some case just holding on to a lease is expensive: for some lease a “rental payment” is due every year in addition to the original lease bonus. I have no ideas how this factor breaks down on their Marcellus holdings. According to their web site CH owns sufficient shale gas leases (all plays) which would require 16,300 wells to develop. At $4 million/well (my WAG) that means CH ands its partners have to spend $65 billion to develop all those leases. If all those wells aren’t drilled before the leases expire then those undrilled leases could be considered worthless. But that wouldn’t be completely true. Ch could sell or sublease those mineral rights to another operator.
Beyond the value of the undrilled SG leases they have a lot of other undeveloped leases. Then add their cash flow. Then add the value of near term new drills. I suspect if one were to put a reasonable value on all those assets it might greatly exceed their market cap. But that may be the answer. The market cap is based on what the stock is selling for. And that’s based upon what the market perception may be. And folks don’t tend to base their purchase price on what a company is worth. The value is split between a return on future dividend payments plus any premium that would be realized if the stock can be sold at a gain down the road. Thus if the dividend expectations are modest and future price projections are not optimistic the current stock price could be far below its “book value“.
When the NG company market crashed at the end of ‘08 most stocks were selling far below what I would call their true value. And in time prices came back. If one had bought Devon at its low you could have doubled your money in less than a year. Ch stock did rebound but I don’t think to that degree. And how would I personally view future values: I suspect NG prices will stay soft and might even drop again in the near future. Thus my current stock price expectation would remain low. But, as they say, that’s why we have horse races: to see who is right.
Disclosure: I own Devon stock and am waiting for it to run up another $10/share to get back to my purchase price. I am a believer that shale gas is becoming more economically viable but NG prices still have a way to go to jump start the SG plays again. The Marcellus appears to be more viable at current lower prices then the other SG plays.
My guess for the market value of Chesapeake is mostly related to their hedges. They did an awesome job at hedging their production going into 2010. However, they remain largely unhedged for 2011. Risk to Chesapeake is a continued low NG price which would hurt their ability to hedge at higher rates. On the flip side, if prices do rise Chesapeake could benefit beyond its peers and hedge 2011 at much higher prices. There is a reason they call Natural Gas the "widow maker".
Good Luck!
That plane that crashed into a house was carrying three Tesla employees.
An example of exponential growth from today's Financial Times:
http://www.ft.com/cms/s/0/9feccaea-1bee-11df-a5e1-00144feab49a.html
Dmitri Orlov is channeling a.c. clarke. a.c. sed electronics will be handed down through the generations. he didnt count on techno lust,
i.e. gotta have the newest phone every 6 months. ( i surf the web using win 98 and a pent 3 running at 750mhz)
REE? why arent we recycling old electronics? the concentrations of
REE in old electronics are higher than ore.
we could mine the moon and planets if we didnt have such a huge and expensive military. how many trillions of dollars have been spent on the military budget since ronald ray-gun? maybe we wouldnt need so much oil either.
that money could have put solar panels on every roof top, 10 KW systems, and wind farms in every community. that money could have given, that is given, every driver an electric car.
so what to do? BUG OUT!!!!!
http//www.bugoutgroup.com
if you havent bugged out already it's too late.
dont forget your stone knives and bearskins. you know how to make stone knives and bearskins, dont you?
well, then expect to be one of the folks who die off. i did mention die off didnt i? 99.999% of current humans gone. that includes me and you and everyone who posted on TOD today. oh, silly you! you think you are special. life isnt some colorful chart or a hollywood movie. it's chaotic and messy and doesnt respond to smugness.
have you reduced your lifestyle today? did you reduce some one else's lifestyle then?
"it's all good"
I increased my lifestyle. I bought some books, bought some seeds, planned a water feature for my yard, baked some bread, shared some bread, helped a friend and spread some hope today.
I know that die off will likely happen. But there is a way around it, if you are willing to work on it.
Give up knowing what you think you know about farming, all that plow, plant, spray, till, do less each year, or have to GM your seeds because they can't handle the mess you are farming them in or with.
If you want to know more email me.
If you want to learn something look to edible landscapes.
It does not have to be everyone dies.
And I know you keep saying it, but I don't think the world will only have 68,000 people left after a die off. using 6,800,000,000 * .00001
We could easily feed them all on 5,000,000 square miles using permaculture methods and high food crop plant selection. Get away from mono-culture farming is the only way to go.
Cheers,
Charles
Reminds me of this, to which I think someone here led me...
The "Farm for the Future" documentary (complete, on google video)
http://video.google.com/videoplay?docid=2750012006939737230&hl=en#
The EIA IPM world oil production data to Nov 2009 has just been released.
http://www.eia.doe.gov/ipm/supply.html
OPEC's crude and condensate production stayed roughly constant from Aug 2009 to Nov 2009 at about 31 mbd. The increase of world crude and condensate production from Aug 2009 to Nov 2009 was due to non OPEC's production increasing from 41.2 mbd in Aug 2009 to 42.3 mbd in Nov 2009. I think that non OPEC's recent production increase is over and will now decline.
ace, the article up top by Tom Whipple is projecting a decline in production to begin in 2014. In contrast, the graph on your post projects a 2.3 mbd per annum decline which it shows to have begun in Dec. 2009.
Do you think Whipple's date of 2014 is too optimistic? And, do you agree with that graph that the decline stage began in Dec. 09?
BTW, has anybody caught Ilargi's latest over at TAE? It seems as though he's finally jumped the shark. He's claiming, in a very poorly written and arrogant piece, that peak oil had nothing to do with the financial crisis.
Well, I guess that's one less website worth visiting. And more time at TOD!
Interesting: But not unexpected I think way way to many people are getting caught up in the financial fiat money games and can't see the forest or the trees.
This was a personal email I sent out I'll just post it but I think it explains why most people don't understand whats really going on.
http://www.greenfaucet.com/economy/fed-chooses-to-exit-through-eye-of-ne...
I liked this article even though I think he is completely wrong.
The problem is of course the feds "assets" are not worth much. I.e
they will never sell for close to what they paid.
The interest they are paying is going to offset losses in assets they
have not put on their balance sheet.
Its pure monetization.
However this can set in a stalemate for a long time. If the Feds are
saying 5-7 years figure 10-20 years before the unwind. Starting in 10
years
at the earliest. Thus what they are not saying is that the plan to set
on this stalemate situation for 10 or more years perhaps steadily
lowering
the interest they are paying on excess reserves. Thus they have every
intention of steadily printing as long as they can get away with it.
But at the end of it all 10-15 years hence if things go as planed then
we will at best be about even with where we are now. And this is
assuming 2-3% real
inflation at a minimum. In short if they managed to put us back on
the historical inflation rates then we would be back where we are now
within 15 years.
And one has to guess that underlying real economic growth will work to
absorb the trillions of printed dollars turning them into real wealth
against rising interest rates
during this period.
Tough to pull off but if they succeed in kicking the can down the road
time and moderate inflation will work to ensure that their losses are
steadily written off.
But now forget about all of this what people don't understand is I
don't think any of this even matters. We are facing a bigger problem
and thats loss of confidence
in the fiat currency itself not the above games they are a side show.
The bet will be increasingly that the US won't be around in 5-10 years
much less playing the above game. The problem is not this shell game
but all the dollars we have printed and treasuries and other dollar
denominated debt sold for decades before this bubble even started its
debt and dollars printed in the 1990's forward that will come back to
haunt us. No one is really considering a world where people are
ditching dollar denominated assets as dollar values fall. Indeed a
world where everyone is ditching financial assets of all forms in
exchange for physical assets and gold.
Commodities obviously are one of the safe haven assets but thats just
part of the big picture. I have to think however on of the biggest
asset classes that won't garner significant cash investment is real
estate with the exception of perhaps farmland. Also this is big money
it does not want to get entangled in local illiquid assets.
In short hard money will be looking for conversion into another liquid
asset in order to store wealth. What are the choices ? Rolling
commodities futures and various metals.
Equities to some extent but I can't see the stock market looking that
good sorry.
There simply is not enough liquid form of wealth in the world to
absorb the amount of money trying to find a safe haven.
This is inflation from simple repudiation of the fiat currencies
themselves as they are rejected for anything of value that has a
liquid market and can be purchased by other cash buyers.
Makes me wonder about land but my gut says people will hesitate to buy
land and I'm talking about the uber super wealthy who already own crap
load of land and factories etc etc they don't need more what they need
to do is sell real estate holdings and any pure financial instruments.
I just don't see there being enough asset classes in existence to
cover the flight from fiat currencies themselves. Obviously a lot of
the super rich are going to end up a LOT poorer and many of the
current wealthy will be wiped out. Its a world that realizes its
really dirt poor in fact poorer than dirt is their simply is not even
enough alternatives to fiat wealth to even so this wealth by
definition has to be destroyed which in my opinion means that any
inflation from this migration from fiat currencies eventually result
in loss of wealth.
This means that intrinsically in the end this entire set of notational
wealth itself losses all value. Thus finally we see that the final
holders of wealth will be those that can actually raise the military
force and real assets to pay for it. Good old fashioned ancient
dictators will in the end be the only ones with any wealth at all.
So its also far from being a game of money in the end its also very
much a game of power with money playing a minor role.
I'd argue that the current group of wealthy are of value in the sense
that their claims on assets can be seized either directly or
indirectly by becoming members of the ruling dictator and subject to
murder and seizure at a later date. Regardless they lose no matter
what in the long run. Their value lies in the fact that their current
claims are initially recognized as valid and thus are easy enough to
seize in the real sense. They are thus setting themselves up as soft
targets.
So I think the end game is obvious but whats not obvious is working
backwards and recognizing that this means a intrinsic rejection of
fiat denominated wealth period.
Starting with all forms of financial instruments and ending with only
assets you can hold by force.
For a while at least I see assets such as food and oil having very
high valuations as they have intrinsic value. Much later via seizure
not purchase a more traditional agrarian society with land being the
intrinsic form of wealth emerges.
One has to hope of course that some regions will bypass this emergent
dictatorship and take a different route with small land owners and
towns and villages surviving.
The ability of these dictators to create regional power structures
where they have control will be in my opinion limited as of course
their own hold on power will be weak with many falling in rapid
succession to follow on dictators. The worlds a bit place and its
going to get a lot bigger and many regions simply don't have the
population density and infrastructure combo to support large regional
dictators. I'm think something closer to city states in a few regions
than anything we are sued to on the 20th century.
Very much like the African countries with the dictator residing in the
city controlling some of the surrounding countryside with the rest
controlled by "bandits". However these bandits are actually freemen
and reasonable people in many cases even today.
The key is again how do you get there and the key point is during the
transition notational wealth and titles simply loose all value. Gold
will actually do well I think in the long run assuming you have taken
care of food/clothing/shelter.
I think this is why I'm having a hard time communicating with people
because this concept of rejection of fiat wealth and title is
something most people simply don't believe.
If we could bring back a few Roman elite from Gaul and even Rome at
the right time period I think they will be happy to explain to you how
this works from first hand experience. Your title and nominal wealth
don't mean a lot when your heads split from its body.
This rush if you will to reject fiat wealth and title actually and
obviously leads to the creation of wealth by force i.e they are one
and the same event as the "barbarians" reject using the current system
recognizing they can now simply seize what they want. In Roman times
it was primarily border tribes but with its fair share of internal
dictators in modern times its by far more internal moves. Its matters
not what matters is we pass this tipping point where more and more
people recognize the need to seize wealth in order to hold it and give
up on the current system.
This is exactly whats happening right now and I think you can see it
means that the Central Banks of the world and fiat banker class are
now a side show and irrelevant as what they offer simply has no value
in our future. People will be fighting to simply try and salvage as
much of their existing wealth as they can much less create new.
No matter how its done the current wealthy are going to be steadily
dumping more and more intangible assets over time thus there is way
way to much money in the world by several orders of magnitude the
recent bubble does not hold a candle to the "real" bubble thats
popping. Your basically talking about all the wealth thats accumulated
in the last 500 years. This last little bubble is a pimple on the big
one that popping.
So do commodities go through the roof in this scenario ? My opinion
is that its a sure bet as they represent a safe haven for this 500
year monster bubble that dwarfs our little credit bubble. Its a
completely different sort of collapse and far far more fundamental and
crushes fiat money games making them rapidly irrelevant.
But a lot of wealthy people have a lot of cars, condos, etc. they use drycleaners, they like nice clothes and fancy restaurants. They spend a lot of money. So I think they will not keep their wealth.
The people who are not so rich but are intellectuals will be able to live with a lot less because they don`t care about riches that much. No fancy lifestyle= easier transition.
Maybe you`re right about the dictatorships. That will be interesting to see. I think they will be very tough people to be under the thumb of. Not looking forward to it!
-I'm thinking you have to be selective on which ones. Diamonds for example are probably not a good bet. I'm still unsure on Gold at the end but it should do very well in the run-up. Silver looks to be a good two way bet -part fiat hedge part GreenTech hedge (huge amounts needed for solar rollout).
Other plays I like the sounds of are
Molybdenum: -massive Chinese city buildout, big users in energy industry, repair of rusting pipes/nuclear, desulphurization catalyst for sour crude.
Neodynium/REEs: "Green" industries + wind.
Cobalt / Lithium: batteries
Regards, Nick.
Hard to say to be honest I think various real assets will each have their little bubble.
To look at it this way the housing bubble was the first of many asset bubbles. Via credit induced artificial price support it converted relatively cheap materials into high valued dwellings. Plenty of other assets with a much better fundamental basis will be subject to speculative bubbles. But in this case my definition is different from the traditional one as underlying the bubble is and attempt to flee pure fiat assets i.e financial assets of all sorts or the FIRE economy.
The eventual end game of land and some sort of technology at some level being the last bastion of wealth is easy enough to see. How we get there and what level of technology and most importantly how well property rights are maintained along the way is open to question.
Historically the smaller town and villages which did not happen to have the bad luck of lying directly in the path of invading armies tended to overall weather the storm in general. Its a big generalization yes but it covers thousands of years of history. You want to be big enough to survive collectively but off the beaten path and not of strategic value. Everyone has to eat at the end of the day regardless of their political/social system.
Certainly you have cases where this observation failed the Ukrainian starvation by Stalin. But also you can see that this was and extreme situation well off even the normal devastation of war.
On the flip side if you go too remote you stand a good chance of simply not having enough community support for a decent life and your quality of life will decline. Sure you may live but it might get pretty bad.
As and example you can probably move to backwoods Alaska and tune out of our society all together however in the long run your really turning your back on technology itself. Doable but yet in my opinion not desirable.
Outside of the population problem which is not evenly distributed and the problem with collapsing fiat currencies and resulting political changes we actually do have a lot of knowledge. I'm not so sure that current green technologies are the answer.
My own research into the matter suggests that the best answer is a return to what I call the charcoal and steam economy. The only thing that prevents this sort of basic economy is the level of population but if one assumes that at least in certain regions population will be low then this wood powered economy makes a lot of sense. A wind/biofuel economy can readily set on top of this. I'm not saying no PV but its not really needed in large quantities and I don't think its core. Assuming that technology keeps advancing you could well see this above economy steadily grow into a PV powered one. The point is that its a stable and viable and renewable economy with the exception that it can only support much lower population densities than today.
I'm pretty sure that thats where we will end up sort of restarting the industrial revolution again in a sense but not taking the oil route and relying on charcoal to form the basis of the economy.
I bring this up because its suggests to me that most of our green energy projects we have today will fail. The time for PV and wind is actually a lot farther out in the future and will be bootstrapped off this charcoal technology and ts not clear if they will actually supplant charcoal but fill in chinks if you will.
Also of course if you consider the flight from fiat then financial collapse will also have a huge impact on anything high tech. Charcoal of course is insensitive to the financial situation and robust.
So obviously I'm looking for a big woodlot thats off the beaten path but not too far off.
Some farmland too but not too much etc. All things in moderation so your not a target.
Associated with this of course is a good machine shop and the metal and wood working skills to maintain a reasonable charcoal lifestyle. Longer term I'd like to be able to manage steel quality in a isolated workshop.
I think that as long as you have the ability to essay the steel and assume that scrap is readily available then your ok. It would still be really nice to be able to make any of our modern steels or suitable alternatives from scratch. Ball bearing for that matter also. But these are the sorts of issues best dealt with via a larger support community nearby. Micro steel/metal works primarily based on recycling but capable of full refining.
Next use of air power aka Amish Electricity makes a lot of sense in this sort of technical environment as making electricity and motors is not easy esp the magnets. Again recycling can support continued use of electricity for a long time but it makes sense that wherever possible simpler ground up manufactures compressed air motors of various sorts will replace many of the electric motors.
Thus I see technology in the future becoming right sized if you will with the fundamentals falling down to whatever can be supplied by a reasonably equipped machine shop and foundry. Capable of reproducing itself.
Its and obviously stable foundation. On top of this higher levels of technology will be used where they fit.
Over time this cottage industry will evolve down a completely different path from the economy of scale approach we took with these micro factories steadily getting more sophisticated. One break with the past for example is they probably will use a lot of CNC machining however with air powered motors produced in house not electrical. Next there is a very good chance that huge advances will be made in fluidic controls. Perhaps say resulting in a fluidic processor the size of an table or dinner plate and slower than our electrical ones but also perfectly capable of controlling industrial processes. On the other side optics of all sorts hold great promise.
http://www.mrs.org/s_mrs/sec_subscribe.asp?CID=8683&DID=194776&action=de...
All kinds of novel photonic/fluidic/acoustic devices are possible and we have not even begun to explore the realm of non electronic computation. The beauty of all these devices is that they are generally a machining problem and don't require dopant's although mask etching can be used. Obviously at first they won't be able to compete with existing semi-conductor logic but what do you care if your CNC controller is the size of a fridge in your machine shop ? You built yourself in your spare time.
This whole branch of right sizing technology was destroyed when the cottage industries collapsed early on in the industrial revolution however I believe that in the future we are going to return to this path and over time its going to be the one that moves forward in the future.
So sort of back to investment I don't think there is really anything that makes it through over the longer term even oil will eventually be and asset bubble that will pop I think it goes higher and lasts longer than most people think simply because the existing oil based infrastructure will remain viable for a long time.
Just like I see electric motors which are abundant now continue to be used but on the same hand steadily replaced where possible when the fail with cottage industry viable alternatives.
The food/oil bubble is a big one and will play out over decades its going to be around for a long long time even if the current markets collapse new ones will spring up to trade these valuable commodities.
For oil at least I only see it really declining once our road systems have collapsed. Rail will rise to replace it but when and how is a open question. Good chance a return to steamers may well happen who knows.
The right sizing concept cannot predict the technical level. I suspect that the ability of external combustion to burn any fuel and its simplicity will lead to adoption of steam powered trains. Oils of all sorts still work just need to be innovative on your burner design. Obviously I thin flexible fueling will be the major requirement.
Outside of oil and food, generally assuming war and falling population recycling of the detritus of the 20th century ensures that any durable recyclable resource probably wont be in short supply. We will be mining our garbage for a looong time.
Thus its not a wealthy society however its stable and technically adept and capable of adopting to the new conditions and continuing our technical innovation. In the end all thats really rejects is the concept of economy of scale and the resulting social and financial complexity required to support it. Surprisingly that one thing seems to be the only thing we give up however its also the defining concept of our current society.
A technically adept society that rejects economy of scale is fundamentally different from ours.
Initially its rejected because the energy is simply not there to support it however longer term even if the energy actually became available I'd say the society would have evolved micro production to the point that it did not need large scale industries. Probably eventually creating universal constructors that our own society has started to research. If we lasted longer I think we would have also eventually have arrived at a society based around distributed universal micro fabricators turning out goods on demand. So I think the big picture end game is the same just its approached differently and in my opinion more directly via restarting of cottage industries. I'd not be surprised in the least to actually see this new way of doing things not rapidly evolve into one with full universal constructor capacity faster than we would have.
We shall see.
I am wondering how many inputs would be required for a 'self-sustaining' PV factory...
I.e. Not only would it need the inputs of silica but also energy (which it could eventually produce itself) and a host of machinery or a 'work-shop' that could build/maintain any and all factory elements.
This unit would form the basis of a self-sustaining, self replicating entity that could expand organically.
But part of me thinks that there will always be some key ingrediant that is fundamentally and inextricably linked back to dependancy on the external FF based economy, probably a minor but key raw-commodity byproduct of mass mining for example...
Nick.
I'm an agnostic on that issue. Jeff Rubin thinks peak oil caused the financial crisis, and he's a smart man whom I respect a lot. However, a lot of equally smart and peak oil aware people don't agree.
And a lot of people who don't believe in peak oil predicted the crisis. People were warning that housing was a bubble for years and that CDSs would blow up in our faces. Rubin argues that a US housing bubble shouldn't have affected the whole world, but given our global economy and US dominance thereof, I don't find that convincing.
I agree with you Leanan about Rubin's smarts. That's why I'm amazed that he would take the position that our housing bust didn't impact the global stage. I'm sure you have the numbers handy but even my fading memory recalls 100's of billions lost by foreign banks, funds, etc from US mortgage based paper. I haven't seen his statements directly but I'm sure your reporting them correctly.
I read Rubin.Carefully.
Nowhere have I seen him say that the housing bust PLAYED NO PART in the overall crash.
He makes a good case that the bust was well and truly started BEFORE housing crashed.As I read him , the oil spike (which was after all prolonged for what three , four years?) was THE most serious contributing factor in the housing crash-but by no means the only one.
Most of us have a tendency to view correlations a bit too literally, and we fail to see that when there is a correlation, it may be only a contributing factor, not the primary one.
People opposed to corn ethanol see it as driving food prices thru the roof.
People in favor see the exact opposite.
As a matter if fact, ethanol does put strong upward pressure on food prices, but the upward pressure can be cancelled out , at least temporarily , by more powerful influences putting downward pressure on food prices.The price increases may be felt unequally in different areas and for different foods.Lots of conflicting input pressures .
Nuance is always lost unless you go to the primary source.
Many times I have been of the mistaken opinion that some particular authority in some given field is an idiot-simply because I got my info second hand thru people opposed to thier interpretatins of the facts.This distortion is not necessarily intentional -it's simply the result of the way we communicate-we are like Art Linkletter's kids.At each step what we want to accentuate, grows, and what we wish to ignore,shrinks.
Anybody else here old enough toremember the pass the message game he used to play with the kids in a row of chairs?
Here
Sachs, I wouldn't write TAE off. I had a hard time "getting" Ilargi's point, as well. As Mike B. pointed out in the comments, the price of oil rippled throughout the economy and was not felt just at the gas pump. Still, TAE are a smart bunch and I can't write off his thesis that easily (and that may be my own obtuseness).
Ilargi's contention is that the whole derivatives business is a giant Ponzi, and that it was going to crash and burn regardless of the price of crude. That may be, but my question is, "What happened to precipitate the financialization of our economies -- particularly of Western economies?" Was the peaking of oil production in the US in the early seventies, a (not necessarily overt) signal to investors that the low-hanging fruit were gone and that wealth accumulation was about to get a whole lot harder? In the absence of hard resources with which to grow the economy, does the "paper-pushing" phase become the inevitable?
Much to think about in my opinion. Oil is part of the mix but to what degree?
I was thinking that myself.
In particular...real wages have declined since the '70s. Around the time of peak oil USA, coincidentally or not. It was disguised, first by sending women into the workforce (more earners per family), then by increasing use of credit - credit cards, HELOCs. But that wasn't going to last forever.
Yes, and you can add to that the influx of cheap goods from Asia (though this was a double-edged sword as far as the US was concerned, as it forced a lot of good-paying jobs to disappear). The bottom line is that -- as you said -- wages were stagnating and under such circumstances, everything that was done to shore up consumer spending in the short run -- lending money to those who were increasingly unable to make good on their debt, outsourcing production, etc.-- only served to bring the day of reckoning closer.
I think peak oil had a lot to do with the present financial crisis - but maybe not in the direct way people are looking for. As you point out, the peak of US oil production in the early seventies coincided with the peak of percapita income. We maintained our access to plentiful energy by using the tools of empire, economic tricks, and we went massively into debt - that energy was simply not as cheap to us as domestic supplies were. Empres and massive military spending are a huge burden on society.
It may be that this present crisis was a classic bubble, but in the long run those bubbles are the result of peaking energy production. The financial and political turmoil we face are just the social symptoms of the real problems - the discovery and exploitation of fossil fuels, leading to massive and rapid population increases and depletion of other resources and destruction of ecosystems, and then to climate change. As we reach the peak of FF production, the whole thing comes apart. This is just a symptom of that process.
I don't even think the question of what "started" the present financial crisis is a meaningful one - it had no beginning. Blame it on agriculture, the discovery of fire, blame it on FF, whatever. These kinds of questions are only relevant when you still think the situation can be fixed - as then it still seems important to find a reason that can be corrected. Once you get past that and understand that there is no solution, and that these things are inevitable consequences of being way into population overshoot, combined with the usual cycle of empire, then it really becomes a pointless argument.
IMO, Peak Oil/Peak Exports was both a trigger and an accelerant--like a hiker dropping a lit match in a dry forest, just as the wind is picking up, and then air tankers drop napalm, instead of fire retardant. The firestorm was inevitable, it's just a question of what would start it, and how bad it would be.
It's natural for us wildland types to look at conditions thisaway. We have an Energy Release Component and Burning Index. The first is a BTU per sq. ft. number based (at the flame front) on a fuel type which varies based on curing and usually builds up through the season. Sustained ERC's in the 90th percentile account for many of the 'memorable' fires and we study them.. BI is related but also includes the worst slope and wind conditions related to a given area. It is somewhat related to a max expected flame lenght.
I doubt it will be easy to counter your idea that if crude had remained @ $30 the subprime mess would not have continued to build-up until a sufficient release was possible. Lot's of times we just think 'let your hiker throw all the matches he likes' b/c it's high relative humidity or high fuel moisture. OTOH there's the story of a guy who burnt his TP at the bottom of a steep south slope in Chelan in August....anyway often nature lights em up high but people do better.
Conditions brought on b/c of the expectation of plentiful cheap energy and limitless growth like...The global debt picture, CDS market, the currency swap agreements, lender largess and ,job & revenue recovery, seem like pretty high stakes risk too. Maybe conditions aren't there yet but I expect in the next few years a story like this one http://www.timesonline.co.uk/tol/news/world/asia/article7017951.ece
to signal a significant event for all of us. A lot of times it starts off just like another sunny day.
I agree with this.
PeakOil/high energy prices and the financial havoc are way too inter-mangled to separate, I feel they are two ugly heads on the same Troll, seldom looking eye_to_eye, at least in MSM. So depending on what campus you are in (energy vs economics) - you'll end up pointing at your favorite 'head'. It's a chicken n' egg sitcom.
I still think Maria caused the crash with her "The Hunt for Black Gold" special on CNBC.
:)