Drumbeat: March 6, 2010

Expensive oil to shorten supply chains: Top economist

Rubin said the price of energy will ultimately decide which modes of shipping will be used by supply chains in the future, but he disagrees with the PwC survey’s focus on only gas and diesel as possible fuel sources in the future. This is unlikely, Rubin believes, especially if price for a barrel of oil hits triple digits within the next two years as he predicts.

“Unlike in the 1970s and 1980s, there no longer are undiscovered fields of cheap, conventional oil,” Rubin says. “That oil has long been burned. So yes, we can get more (oil). But that new supply is going to come at an ever-increasing price tag on it.”

Land Rig Review: Accelerating Rig Count Underscores a Strong Recovery

Since the last Rigzone Land Rig Review was published, the recovery has gained steam with E&P companies continuing to increase their land rig contract portfolios. The optimistic outlook we highlighted late-last year may have actually been on the conservative side given the pace of the recovery so far. In fact, over the last four months, the U.S. land rig count has increased more rapidly on an absolute basis than in any other four-month period over the past decade.

Somali pirates demand $20m for hijacked tanker

Somali pirates have demanded a $20m ransom for a Saudi product tanker hijacked in the Gulf of Aden on Monday.

Arab News reported that a spokesman for the owner of the vessel, International Bunkering had confirmed that a ransom had been offered, although he was unaware of the progress of negotiations.

4 Tips to Beat the NEXT Crisis

After over 18 months of recession, world oil consumption is roaring back to its pre-crash peak. The International Energy Agency says oil demand will probably hit 86.5 million barrels a day this year. That is equal to a thousand barrels a second. The growth in demand isn't in the U.S. — we're using oil at 2005 levels. Instead, it's the growth in China, India and other emerging markets that is driving global demand now.

Poorly maintained ships in Marshall Islands lead to fuel shortage

The second largest urban centre in the Marshall Islands, Ebeye, has been short of gasoline and kerosine for several weeks because poorly maintained ships are out of action.

Venezuelan businesses consider 1-day shutdown to curb energy consumption amid crisis

CARACAS, Venezuela - Venezuelan industries and retailers may close their doors one day a week in an effort to curb electricity consumption and help the government cope with an energy crisis.

Consumer group doubts power supply crisis in Mindanao

MANILA, Philippines - EmPower Consumers Alliance has raised doubts on government‘s pronouncements of a power supply crisis in Mindanao, saying it could be a play to force the use of nuclear energy and raise power rates.

Several towns in state of calamity due to drought

MANILA, Philippines - Local officials of several towns in Luzon and the Visayas plan to declare a state of calamity in their areas after agricultural crops and livestock were wiped out by the current dry spell brought by the El Niño phenomenon.

Ghana: Water Shortage Hits Takoradi

Mark Teiko Codjoe, Production Manager of GWC, attributed the acute water shortage in the Twin-City to the fact that the Pra River at Daboase and the Anankwa River at Inchaban, which served as the sources of raw water supply in the metropolis, were drying up.

He said as a result, the GWC treatment plants at Daboase and Inchaban could no longer supply the stipulated quantity of water to consumers in the metropolis.

Homeowners will 'foot the bill' for energy efficiency

People with an energy efficient home will save less than those with very inefficient ones, according to one expert.

Gareth Kloet, head of utilities at Confused.com suggested that the savings made by homeowners will depend on the body responsible for the installations, who ultimately want to "protect their revenue".

He said: "We appear to be facing an energy crisis with an infrastructure that in Ofgem's own words, is simply not fit for purpose and a government that has put us firmly on the hook for reducing our emissions."

Exclusive: Famed NYT reporter tells Michael Moore capitalism driving humanity’s downfall

"All sorts of people who have spent their lives studying climate change, from Bill McKibben on down, have warned us that we don't have a lot of time left," Hedges said. "So it's not just that capitalism has destroyed our economic system and hijacked our political system, but it literally is extinguishing the system that sustains life. If that's not thwarted soon...then we will begin to see massive dislocations, environmental refugees, further depleting of natural resources. Overpopulation is also an issue. The UN estimates that by 2050 the size of the planet will double."

Obama, politics and nuclear waste

President Barack Obama has pulled the plug on the entire Yucca Mountain enterprise, million-year safety study and all, by writing it out of his financial year 2011 budget, which begins in October.

Yucca Mountain’s death by budgetary axe defies logic. It coincides with Obama’s stated support for expanding nuclear power. More reactors mean more waste, now piling up above-ground at sites scattered around the country.

Setting Wind Power Records in Texas

Texas, the nation’s wind-power leader, set a new record for wind generation this morning, when — at 6:37 a.m. — about 19 percent of the electricity on the state’s main grid was supplied by turbines.

For Lighting, an Exception to ‘Buy American’

The Department of Energy has waived a “buy American” requirement for government projects receiving money from last year’s stimulus bill so that recipients can purchase energy-efficient lighting products for public buildings and roadways.

Our Toxic Waterways: Flushing Away Our Future?

Evidently, the world's waterways are a giant toilet into which we can dump anything and everything, and then simply flush it all "away." As if river currents and rolling waves will pull our pollution into some giant cosmic garbage disposal.

CERAWEEK - Stable oil prices shouldn't breed complacency

HOUSTON (Reuters) - Oil company executives should not get too complacent about how oil prices settled in the $70-$80 a barrel range over the last several months as the economic recovery has yet to catch up, the head of consultancy IHS Cambridge Energy Research Associates warned ahead of the CERAWeek conference next week.

While crude appears to have found a sweet spot, the global recession has eroded demand for gasoline and diesel, and Washington wants to regulate the carbon-intensive energy industry's emissions.

And after two straight yearly declines in global oil demand took prices from their 2008 heights near $150 a barrel to about $32 in December 2008 before recovering to about $80 currently, sure signs of economic recovery that industry officials and government policy-makers crave aren't quite there.

"One lesson we've learned about the oil price - never to be too confident about stability," said Daniel Yergin, chairman of IHS Cambridge Energy Research Associates and author of the Pulitzer Prize-winning history of the oil industry, "The Prize."

The heat continues to rise on the cost of producing shale gas

I try not to get into arguments over other people's religious convictions. Even if you win your point, you make an enemy. That's been a conventional understanding since the Thirty Years War. Sometimes, though, you have to clear your throat and carefully offer a heretical thought, if lives or large amounts of property are at risk.

For example, I think it might not be a bad idea to examine the faith-based assumption that the US has a virtually unlimited supply of natural gas from shale formations that can be extracted at a low price for the indefinite future. Perhaps the few people who think shale gas will be produced at a higher cost, and more slowly, than generally believed should be heard out, rather than be executed or sentenced to work in the salt mines. If you disagree, I will quickly withdraw that comment.

Ukraine's president heads to Moscow to discuss gas

Ukraine's new president Viktor Yanukovych has arrived in Moscow to meet with his Russian counterpart Dmitry Medvedev in hopes of getting Russia to cut gas prices for his country.

Yanukovych, who was sworn in last week, is anxious to review the 2009 gas deal with Moscow that bound Ukraine to pay European gas prices, which are much higher than Ukraine previously paid.

Abu Dhabi awards $300 mln Shah gas work-paper

DUBAI (Reuters) - Abu Dhabi and ConocoPhillips have awarded a 1.1 billion dirham ($300 million) construction contract for their Shah gas project to Al Jaber Group, Emirati newspaper al-Ittihad reported on Saturday.

Power Prices May Rise in Second Half, China Power’s Lu Says

(Bloomberg) -- China, the world’s second biggest energy user, may increase wholesale electricity prices for coal-fired power plants in the second half, China Power Investment Corp. President Lu Qizhou said.

CNOOC, Total pitch oil plans to Ugandan government

KAMPALA (Reuters) - Global petroleum firms Total and China National Offshore Oil Corporation, CNOOC, have presented their investment plans in Uganda's emerging petroleum industry to the government, an official said.

Why There Will Be No Recovery

When oil crossed $120 a barrel for the first time in May 2008, oil cornucopians knew they were in trouble...

Prices had quadrupled in just five years, yet had failed to bring new production online. Regular crude had flatlined around 74 million barrels per day (mbpd). The case for peak oil was looking stronger with every new uptick in crude futures.

The following month, prominent peak oil critic and cornucopian Daniel Yergin of IHS-CERA changed his stance: The peak oil threat would be neutralized by peak demand. Gasoline consumption had peaked in the U.S. and Europe, he argued, due to the combined effects of increasing efficiency, biofuels, and the recession.

Peak Oil task force

Having tried to interest people in the earthshatteringly important subject of peak oil for more than five years, I'm delighted - but also horrified - to see the likes of Richard Branson discussing the urgent need for society, businesses and individuals to take it seriously.

But when I posted about this recently I was dismayed to find that comments suggest some people don't believe Branson is sincere. I'm at a loss to explain why somebody who runs an airline, train companies and bus fleets would pretend that there's a problem about oil if there wasn't.

Exxon Must Pay $1.2 Million for Workers’ Radiation Exposure

(Bloomberg) -- Exxon Mobil Corp., the largest U.S. energy company, must pay $1.2 million to 16 Louisiana workers who claimed they were exposed to dangerous levels of radiation when they were cleaning used oil drilling pipes, a jury said.

Chesapeake swapped 25 mln shares for land in 2009

HOUSTON (Reuters) - Chesapeake Energy Corp, a natural gas producer known for a voracious appetite for land, issued 25 million shares to shore up its 2009 acquisition budget, an unusual move that was also dilutive for investors.

Low natural gas prices in 2009 hurt Chesapeake's ability to generate cash, so the Oklahoma City company issued $429 million worth of its shares to trade for the right to drill, according to the company's regulatory filings.

Peabody Declares Force Majeure at Australia Coal Mine

(Bloomberg) -- Peabody Energy Corp., the biggest U.S. coal company, says production has halted and force majeure declared at its Wilkie Creek mine in Australia after heavy rain disrupted the rail network.

PVEV : A Match Made in the Heavens

What if you could do all your daily driving chores without ever stopping at a gas station to fill up?

What if you could provide your own fuel for such a vehicle at your own home?

What if this never contributed to pollution including noise pollution and was truly green and clean?

U.S. needs fresh look at nuclear waste issue: Chu

SANTA BARBARA, California (Reuters) - U.S. Energy Secretary Steven Chu said on Friday that the United States needs to come up with a better system for storing or disposing of radioactive nuclear waste than a planned repository near Las Vegas.

"The president has made it very clear that we are going to go beyond Yucca mountain. You should go beyond Yucca mountain," Chu said. "But instead of wringing my hands, let's go forward and do something better."

Wind Turbine Syndrome, Part Myth, Part Mystery

Now, as though no one could ever be happy with a technology that was clean, renewable, and cheap in comparison to solar energy (many utilities offer wind power at premium prices of two to three cents a kilowatt-hour), comes a report that wind turbines produce what is being called, “Wind Turbine Syndrome”, a collection of symptoms that include heart disease, insomnia, migraines, panic attacks and vertigo. Wind turbines are also said to trigger epileptic seizures.

And this is just among the humans living near wind turbines. The cows are said to stop giving milk or wander away in a fugue. In the UK, a goat farmer says wind turbines near his goat farm caused 400 of the animals to “lose sleep and die.”

Demolishing Density in Detroit: Can Farming Save the Motor City?

So it's come to this: Unable to provide basic services for all of his constituents, Detroit mayor Dave Bing is drafting plans starve his city down to a manageable size. Using proprietary data and a survey released by Data Driven Detroit, Bing and his staff will pick "winners and losers" amongst the city's neighborhoods and seek to resettle residents from the losers, those deemed most unlivable. With Detroit's tax base withering from the implosion of two-thirds of the Big Three, the housing crisis, and an ongoing exodus, Bing believes he has no other choice.

...Can Detroit really shrink its way back to greatness (or at least stop the bleeding)? Part of the problem is that it's been hollowing out for decades. A city of 1.85 million residents in 1950, Detroit had just 951,270 as of the last national census a decade ago, and the next--which is key to obtaining millions of dollars in federal funding--is expected to turn up only 800,000 this year. Some believe it might eventually slide to 700,000 before all is said and done. A quarter of the city is nothing more than vacant lots--40 square miles of "urban prairie." Bing plans to shrink the occupied portions further by tearing down another 10,000 buildings. That should earn praise from economists like Harvard's Ed Glaeser, who's suggested similar policies for other Rust Belt cities. And what will Bing do with all of that empty space? Turn over as many as 10,000 acres to John Hantz to farm.

School drawing new farmers

In the room were two couples in their 50s with high-tech backgrounds, three younger women, a retired man and a fellow originally from Indonesia. Their stories had several themes in common. They didn’t want to be in a university degree program where they’d sit in a classroom for four years, or as one person put it “never get their hands muddy nor even know what a package of seeds was for.”

Issues such as climate change, peak oil, seeking meaningful life changes or alternatives to create strong urban agriculture related food systems were some of the reasons why they were there. Plus the fact that this new school provides a balance of classroom theory and an apprenticeship approach which will include working in the fields and orchard of the Sharing Farm and other farms.

Disposal of spilled coal ash a long, winding trip

While the Tennessee Valley Authority's cleanup has removed much of the ash from the river, the arsenic- and mercury-laced muck or its watery discharge has been moving by rail and truck through three states to at least six different sites. Some of it may end up as far away as Louisiana.

At every stop along the route, new environmental concerns pop up. The coal-ash muck is laden with heavy metals linked to cancer, and the U.S. Environmental Protection Agency is considering declaring coal ash hazardous.

Xcel promises to cut Colorado pollution by 2017

DENVER (AP) — Xcel Energy is promising to cut air pollution over the next seven years.

A deal announced Friday by Gov. Bill Ritter, the company and lawmakers will require Xcel to reduce pollutants by retiring or modifying Front Range coal-fired power plants by 2017.

White House replaces Bush-era cups

The last holdover from the Bush administration has officially been used up and tossed out: The White House has received its new, “green” hot beverage cups.

Capture and reuse phosphorus, think-tank urges

On Thursday, the International Institute for Sustainable Development - a Winnipeg-based environmental think tank - released a report examining how phosphorus spilling into Manitoba's waterways doesn't just promote the growth of ecologically devastating algae.

The failure to capture and reuse phosphorus could contribute to a global food crisis as supplies of the vital fertilizer run low, say the authors of a report that highlights ways phosphorus can be recovered from human and animal waste.

3 Questions: Hunt Alcott on behavioral economics and the energy crisis

Behavioral economics is used to examine how consumers make decisions about everything from their life savings to which brands of jam they select in a supermarket. Hunt Allcott, a behavioral economist with a two-year appointment as the Energy and Society Fellow in MIT’s Department of Economics and the MIT Energy Initiative, wants to apply his field’s insights to the realm of energy use.

Climate change debate grows heated

Less than a month after CNN proclaimed "Last Decade Was Warmest Ever," a headline in Britain's Daily Mail shouted that a top climate scientist had taken a "U-turn" and now "Admits: There Has Been No Global Warming Since 1995."

Pity the poor reader, whipsawed in recent weeks by what appear to be conflicting signals on one of the most complex and momentous subjects of our time.

Regional Rainfall in a Warming World

Slowly but surely, a picture of climate change at the regional scale -- where it really matters -- is beginning to take shape.

Apart from the obvious warming at the high polar latitudes, which already is affecting Arctic sea ice, the rate of Greenland ice cap melting, and Antarctic ice shelves, new details are beginning to emerge about the impact of global warming in the Tropics -- the boiler-room of Earth's climate and weather.

Climate change human link evidence 'stronger'

In 2007 the IPCC's report concluded that there was "unequivocal" evidence that the Earth was warming and it was likely that it was due to burning of fossil fuels.

Since then the evidence that human activities are responsible for a rise in temperatures has increased, according to this new assessment by Dr Peter Stott and colleagues at the UK Met Office.

John Rockefeller leads charge against EPA on greenhouse gases

To the applause of coal workers and dismay of environmentalists, lawmakers in the Senate and House led by Sen. John Rockefeller (D) introduced legislation Thursday that would delay by two years any regulation of greenhouse gases by the EPA.

Sen. John Rockefeller warned last week that he might present a delaying measure. He is part of a growing chorus of lawmakers unhappy with the EPA for its plans to start curbing emissions as soon as next year.

Cap-and-trade key to US energy reform - Exelon CEO

BOSTON (Reuters) - U.S. energy reform has stalled now that the Democrats have lost their filibuster-proof majority in the Senate and Republicans drift to a more negative position, a top industry executive said on Saturday.

"What I see is a series of disjointed, piecemeal approaches that will not yield the optimal solution," Exelon Corp Chairman John Rowe said in remarks prepared for a conference at the Massachusetts Institute of Technology.

Arctic melt to cost up to $24 trillion by 2050: report

(Reuters) - Arctic ice melting could cost global agriculture, real estate and insurance anywhere from $2.4 trillion to $24 trillion by 2050 in damage from rising sea levels, floods and heat waves, according to a report released on Friday.

"Everybody around the world is going to bear these costs," said Eban Goodstein, a resource economist at Bard College in New York state who co-authored the report, called "Arctic Treasure, Global Assets Melting Away."

Gold, copper gain on dollar fall, oil on OPEC report

Crude oil prices gained today on a report that the Organization of Petroleum Exporting Countries (OPEC) will cut shipments by 2.3% in the month ending 20th March. OPEC which supplies around 40% of the world’s crude oil will ship 22.87million barrels a day in the four-week period, as against 23.42 million a month earlier. Prices also rose on optimism that fuel demand will increase amid improved prospects for an economic recovery in the US, the world’s biggest energy consumer.

That is a decline in OPEC shipments of .55 mb/d. Is this just meaningless noise or the first chink in OPEC’s armor?

Ron P.

Hmmm ... I'm not so sure I can believe anything OPEC says anymore - after reading Memmel's comments yesterday I did some checking for myself, I agree with his analysis, to me it looks like KSA may be overstating internal consumption (to cover production declines?).

Even if it is true, 0.55 mb/d across 10 nations is noise IMO.

Even if it is true, 0.55 mb/d across 10 nations is noise IMO.

Noise, when instead they should use their spare capacity to increase exports to stop oilprices from rising ? If in reality they don't have spare capacity or much less than they claim, then 0.55 mbd isn't noise.

Have OPEC nations stuck to their published quotas in recent times - IMO they say one thing publicly and hidden reality is another - who knows whether they will actually ship more or less than now?

I mentioned this previously at the tail end of Thursday's Drumbeat.

To repeat for new readers, the Oil Movements report referred to is used by OPEC itself to gauge compliance with its own quotas. So I believe this report has some validity, since its is somehow based upon actual loadings for export.

Having said that, it does appear that the effects of westexas' exportland 2.0 may unwelcomely appear as soon as this summer. That is because net oil imports into the US are running at less than a replacement level. Granted if the economy goes into a decline soon, we may be spared those effects for a while. However there are recent indications that the economy may improve at least a little in the first half of 2010, and total oil use is closely correlated with economic activity. Meanwhile while actual onshore inventories, as measured weekly by the EIA appear to be stable, there was a hidden liquidation of oil stored offshore over the winter months. And yes, I have found some evidence of this:

Teekay Corporation Reports Fourth Quarter and Annual Results
Highlights HAMILTON, BERMUDA 03/04/10

Tanker Market

During the latter part of the fourth quarter, of the previous quarter as a result of increased global oil demand, rising supply from both OPEC and non-OPEC sources, seasonal factors such as weather-related vessel delays and an increase in the use of conventional tankers for floating storage volumes, which tightened active fleet supply. Spot tanker rates remained strong during the first few weeks of 2010 largely due to severe winter weather conditions in the Northern Hemisphere which led to increased oil demand and caused weather-related delays. Subsequently, spot tanker rates have softened in late January and February due to easing seasonal factors and an increase in available fleet capacity as a result of a reduction in global floating storage volumes.


It doesn't look then like meaningless noise, and indications in the spot tanker market do not indicate any sudden increase in demand over the last week.

That is because net oil imports into the US are running at less than a replacement level.

What does that mean? Net imports are down about 35%. Domestic consumption is at 1997 levels. We could have a vigorous year economically and, horrors, be at Y2K demand.

Tanker rates have been dismal for a couple of years now, at levels not seen in over three decades, so this is relief for them.

Seems like odd timing for OPEC to be reducing supply. The dow and the economy are finally gaining a foothold, and less supply will mean higher prices that will endanger the recovery. Are they that greedy, or are there claims of spare capacity a mirage?

Re: Cap-and-trade key to US energy reform - Exelon CEO

A comment from Exelon Corp Chairman John Rowe:

A cap-and-trade system or a carbon tax are the only policy frameworks that could achieve each of the four desired outcomes from energy reform -- cleaner energy, greater security, job creation, and the lowest cost...

As I've pointed out before, cap-and-trade as described in the proposed law will appear like a tax at the consumer level as the restrictions filter thru the economy to the final consumer. The ever tighter restrictions on emissions will most likely result in increased costs to the consumer, which will produce inflation in a positive feedback. How will that positive feedback provide the lowest cost if the entire impact of the restrictions are reflected in prices?

I can't understand the logic used to claim lowest cost. A direct rationing system with a white market would not directly increase the cost of energy at the consumer level, such as the cost of fuel, although it might result in increased costs for manufactured goods. Anyone out there in TOD land care to comment?

E. Swanson

A direct rationing system with a white market

If a power plant is emitting more than this rationing allows - what do you do ? Close it ?

Important thing with cap&trade or carbon tax is that it will make less carbon intensive methods less expensive. Ofcourse, the current bill has too many loopholes and exemptions and offsets to be effective ... I prefer cap & dividend.

I love the idea of rationing, because I drive a tiny car, ride my bike a lot and live on a streetcar line (and I want everyone else to, whether they want to or not.) Let's assume a system where your car, heating fuel, air travel, and electricity was rationed. Let's look at what rationing might accomplish: you could set production and import quotas for various fuels by time of year. You could use the allotments to determine climate change and anti-pollution goals (and meet treaties if you had signed them.) It would encourage efficiency by making a high mileage car more valuable in very concrete terms. It would encourage the use of alternate fuels and just plain conserving because your ration ticket could be sold if you didn't use it(this could replace tax-breaks for things like home solar and wind turbines.) It would encourage the building of (and probable legislation requiring) passive solar homes. It would provide a reward for doing the right thing, and a direct cost for doing the stupid thing. It would alter property values and land use laws. And it could be reduced every year (and I would state this in the laws mandating it.) This would let people know that they would have less in the future, and should plan accordingly: don't sink your money into a big car, because in ten years, you might not be able to run it. Fuel reductions would accelerate, and the costs of not changing would become unbearable for all but the super-rich over time. It would provide a rationale for duplexing large homes, tearing down inefficient ones, or even making your current home smaller (de-additionizing?)

It would provide a framework to plan one's future in a rational fashion(pun not intended, but I don't have time to rewrite.(oops...didn't see rationale 2 lines back either.))

A rationing system would probably reduce the costs for average citizens, and might even raise the boat for those who are either homeless or under-housed- they weren't going to use those 90 gallons of jet fuel they're entitled to anyway. I see this as the key political difficulty with such a system- it will be seen as communist, which, at heart, it is: it apportions the costs and benefits to every citizen as equally as can be managed (assuming not too much corruption) and re-distributes wealth in a concrete way.

But best of all, the jerks who claim they require a huge truck to safely drive their asthmatic child to his weight-loss camp wouldn't have to see the irony- they'd see the cost, which I know they can understand.

Canuckistani - I appreciate your "smaller footprint" sense. The idea behind sustainability is appealing however I take the opposite tack. I think that we should keep our foot on the accelerator until we "hit the wall". Any efforts at imposing "rationing" will be vulnerable to political trickery.


I suspect that your notion about the vulnerability to gaming a rationing system is correct, if the previous attempts at a rationing system were repeated. That's why I think that individuals are an important ingredient in the system, not just cap-and-trade for a few large emitters.

The system I proposed would have the allowances expire after a short period, thus there would be little reason to sell them outside the white market. If the allowances expire, they could not be hoarded or used in a futures scheme. The allowances would only be used to purchase real physical sources of carbon (or energy) or turned back to the white market for dollars.

In fact, anyone could purchase extra quantities and store it, but would pay the white market price premium for any purchase beyond their allotment. This would still allow a consumer to purchase and store heating oil or propane in the off season for use when winter arrives if there were an economic advantage to do so.

I think that there might be little added incentive for a large corporation or investor to purchase physical quantities in hopes of future price gains, as they might find it difficult to sell in quantity at a later date if they weren't already in the energy business. If oil sere stored offshore in tankers, this oil or product would still be be subject to the limits of import quotas.

Of course, where there is a way to game a system, someone will find it. That's where some sort of regulations would be required. Ultimately, if oil imports were subject to quotas, which were strictly enforced and coal production similarly limited, the effect would be real reduction in emissions. The allocations would just spread what was available a bit more fairly, compared to market price mechanism. And, if the consumers found out that some game was being played, it's likely that they would become quite irate at the perps...

E. Swanson

I keep remembering that by the end of World War II, at least third of the gasoline was already black market, off the books, and it only took about three years for it to become that corrupt. And that was with the air filled with propaganda that there's a war on that must be won.

Nowadays one ought to expect any complicated system - and the very nature of Congress is such that anything operating directly at the retail level will inevitably turn out to be very complicated indeed - to become an ineffectual cesspit of corruption in months rather than years. First, there's no war on, so a powerful social lever is missing; hardly anyone will think it treasonous to cheat. Second, we're talking rationing for CO2/AGW reasons, but the public isn't genuinely convinced of the need (oh, they may say yes when talk costs nothing, but rationing will cost by cancelling trips or raising the cost); many will eagerly corrupt the system not just for sheer practical reasons (how am I supposed to survive if I can't get to work and earn a living) as during the war, but just out of sheer spite.

Probably the simplest possible cap-and-dividend system or something like it might hold such effects to a semi-tolerable level by at least not pushing it down to where it directly pits neighbor against neighbor. OTOH I certainly won't hold my breath waiting for shamelessly corrupt Congresscritters, who fill everything with loopholes and free gifts for their buddies, to enact an honest system...

"First, there's no war on"

Really? I thought I read something about Iraq and Afghanistan in the paper.

That's actually kind of a sad commentary about how easy it is to forget that we are involved in two wars. I think its easy precisely because we are not being asked to sacrifice anything.

First, there's no war on My friends in the services in Iraq and Afghanistan might beg to differ.

There is a war on, and like World War Two, this war's causes point right back towards America's addiction to oil. For the last 40 years, America has decided as a matter of policy that stateside civilians should not be asked to make any sacrifices towards a war effort. That is in sharp contrast with the world wars. The first world war featured such institutions as the Driverless Sunday. Every Sunday people were expected to forgo driving entirely. The second world war caused many, many changes in daily life for the average American. Americans grew accustomed to drinking crappy coffee during that war, and it took 40 years before the country decided that coffee should taste good once again.

That was cast aside by the time of the Korean War. And it should come as no coincidence that America's wartime performance declined considerably in the wars that followed. Korea. Vietnam. The first Iraq war, which stopped short of defeating Saddam Hussein. The 2nd, which drew us into that cursed patch of quicksand. Afghanistan, where we can't shake the damned Taliban.

This is not a coincidence. Without sacrifices made stateside, it should come as no surprise that America's wars end with less than a resounding victory.

The record of U.S. in wars since WW2 is decidedly mixed...not especially good, but not especially bad either.
Korea: draw (managed to save South Korea for the glories of capitalism)
Vietnam: loss
1st Iraq: win (as we defined it, which was to protect Kuwait and S.A.-thanks to Colin and W.'s daddy, we had no intention of going after Saddam)
2nd Iraq: undecided (even I am willing to admit that if Iraq continues to show relative stability and the oil flows, then it's a victory...albeit one with a hefty price tag and shady justifications)
Afghanistan: we all know it'll be a loss so I'll count it as one

Which gives a record of 1-1-2. With 2nd Iraq in any of the columns depending on how things turn out.

I should make sure this much is clear: I'm not saying this to cast aspersions at the US or at the US military. I'm saying this to point out that perhaps the country should mobilize the stateside population into the war effort like it did in WW2.

Sigh. Mobilize them to do what? Turn in pots and pans again? For what conceivable purpose?

I realize some folks like to encourage guilt feelings, but even with World War II, where some small bits of the civilian "effort" did serve some purpose what with the war effort being somewhere north of 50 times what it is now relative to population, it's long since become abundantly clear that the better portion of said civilian "effort" was nothing more and nothing less than invented, wasteful, corrupt and corrupting makework b---s---.

No - it was masterful PR.

People wanted to feel connected to the effort - the gardens and scrap collections helped the people feel connected to the effort - even on a small scale.

"Sigh. Mobilize them to do what?"

How about paying for it?

Sacrifice ?

Perhaps a tax increase to "pay as you go". Ideally, under the "user pays" theory of taxation, a $0.80/gallon tax to fund Iraq II.


Suppose you're a war planner in 1942 trying to allocate scarce resources for everything from aircraft to ships to bicycle tires to MRE's. You don't know how long the war will be, or whether scarce offshore resources (like rubber) can be increased or replaced, or might be emabargoed, interdicted, or subject to crop failure. And the fate of the world lies in the balance. Are you going to be conservative in your allowance, or let the whole thing be at risk so people can go to the cottage?

I think the rationing allocations were made with an eye to the vagaries of nature and war, using the tools of the time, instead of with an Excel spreadsheet and 20/20 hindsight.

How about minimize their driving, so as to reduce the amount of money being siphoned off to fund Al Qaeda?

How about to minimize driving long term, to reduce the extent to which America is leveraged over oil prices?

How about to minimize their driving, so the army's oil purchases are as cheap as possible?

How about to minimize their driving, so that in case the strategic petroleum reserve is tapped for strategic purposes, it will last more than a few months?

(1) Utterly futile; someone else will consume the oil. Al Qaeda will get its money no matter what, until and unless someone has the guts to destroy it.

(2) Might be useful; but it's a financial issue having little to do with the wars, i.e. its usefulness is the same with or without the wars. Some might prefer to obtain some of the same benefits by switching car energy sources where feasible.

(3) Simply silly and stupidly wasteful; far, far more sensible to let the army pay a few pennies more per gallon rather than waste countless tens of billions of hours of the entire population's time standing around waiting for late and no-show buses.

(4) Might be useful in a physical shortage; but doesn't actually need to be done until there's reason to expect a call on the reserve, so won't happen.

I would consider Iraq II as the worst blunder in US history. Illegal in the limited sense that relevant UN authorizations did not cover it (per Kofi Annan, Sec Gen at the time) and illegal in the broader sense of 'just war' theory (see Phillipe Sands).
Immoral in the sense that it did in no way comport with 'just war' theory. It was founded on a basic lie. We insisted that Saddam had WMD and that was the foundation of our case against him. He insisted that he did not. He was correct and we were wrong. We executed him.
As a consequence, we have lost the moral high ground, like it or not.
We have the power for now, still.
We can no longer claim to represent justice in the eyes of the world, and i think that is huge.

2nd Iraq - Winner is Iran (a multi-dimensional triumph for them).

Since we do not like them, they do not like us, a loss.

Afghanistan is still undecided. Pashtuns are 40% of population and always ran things. All Taliban are Pashtun. If we can get the other 60% involved in power, allied with the urban Pashtun (the other half of the civil war), I can see a bloody victory.


As compared to either World War, I repeat, there's no war on. (Yes, technically, since 1945 there's almost always been a war on somewhere.) Despite all the whining, the efforts in Afghanistan and Iraq are utterly trivial by comparison, even in absolute terms. The number of soldiers under arms is now around a paltry 5% of what it was in World War II; relative to the much larger current population make that under 2%. And most of those relative few current troops aren't even in Afghanistan and Iraq. That those who die in Afghanistan and Iraq are every bit as dead as World War II dead doesn't alter the minute size and scope of the current effort by one jot. (But the sheer magnitude of the fuss over them does strongly suggest that if a new Hitler ever arose, we'd just passively let him walk all over us.)

As to the crappy coffee business, it's a nice nostalgic emotional trope but I'm not grasping how drinking crappy coffee (although some people actually like coffee adulterated with chicory as I'm told it often was in World War II) is supposed to be of the slightest help to your friends in Iraq and Afghanistan. The effort is just too trivial in size and scope for such things to make a difference. Nor is there any shortage of, say, World War II scrap metals like aluminum; the current effort is too trivial to create one (and anyway aluminum is now often collected by civilian recycling programs.)

That our wars no longer end in victory owes far more to postmodern political correctness eliminating the willingness to do the terrible things that were necessary to win World War II, than to anything else. (The atom bomb theoretically could have been used in Korea; the North Vietnam dikes theoretically could have been bombed. It's now deliberately forgotten for political-correctness reasons, but at the time, US soldiers back from Vietnam often ranted bitterly about "idiot politicians forcing them to fight with one hand behind their back".) Pacifists delight in such outcomes; they have said so quite plainly in these threads before. Others who are less cocksure of themselves may instead harbor strong mixed feelings. But that is a religious issue and there's nothing beneficial to be gained by probing it again.

Ah! Paul S Wow- truth! Naked unabashed truth. The reason I oppose the conflicts we are presently involved in, ( I expect to get totally trashed for this) is that we are not fighting warfare as it had been fought for thousands of years. The true purpose of war is to kill people and break things until your enemies will to resist is destroyed. There are no rules in war. Let me say that again, there are no rules in war. Anything less than that is something other than war. I believe if you are not willing to go that far, if you do not have the will or desire or feel the necessity to do just that, then DON'T DO IT AT ALL. It is a waste of time, money, and most importantly lives.
I have been in a conflict which we called a war, I have killed people who were trying to kill me. Many of them face to face. I know what war is. War is hell. Unfortunately, for the desires of the PC crowd, for the third time, there really are no rules in war. What we are doing today and have done since World War 2 is not War. It is some bastardized form of conflict, and it is generally not successful. I believe the largess of our fossil energy consumption allows us to waste our resources this way. I can assure you there would be no Geneva convention rules followed if your enemy was trying to eliminate your food supply and kill your family. You are correct Paul, we are not in a war, our brave men and women are being wasted.

So sad but so true treeman. Perhaps all we can do is lighten the mood and call it "politics...armed and dangerous".

Every effort should be made to avoid war. And if it can't be avoided then win...at any cost. If you can't follow that simple rule then you should surrender and accept your faith.

For the last 40 years, America has decided as a matter of policy that stateside civilians should not be asked to make any sacrifices towards a war effort.

You are right! No one *ASKED* those millions of stateside civilians who have lost their jobs and access to basic health care if they *WANTED* to make any sacrifices.

The stateside civilians who are still sitting on their chairs when the music suddenly stops after each and every round of musical chairs just continue to stick their heads in the sand and go on pretending that their particular easy chair will not be yanked away from beneath their own soft behinds!

After all they have theirs and are of the opinion that those who don't are just plain lazy!

I have to wonder how long before their schadenfreude hits the hard wall of reality.

You are right! No one *ASKED* those millions of stateside civilians who have lost their jobs and access to basic health care if they *WANTED* to make any sacrifices.

And that is completely irrelevant to what I was talking about.

I keep remembering that by the end of World War II, at least third of the gasoline was already black market, off the books, and it only took about three years for it to become that corrupt. And that was with the air filled with propaganda that there's a war on that must be won.

WWII gas rationing was intended to reduce total mileage by half. There was plenty of gas- there wasn't enough rubber. So the situation is not analogous. The problem of counterfeit ration coupons was reduced by improved coupon technology later in the war.

This does raise a question for me, however. All through this thread there's worry about corruption and cheating the system. I've been looking at the Corruption Perception Index of Transparency International (http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi...). Being Canadian, I have a different perception of government and the polity in general (despite the current one.) With a reason, apparently: Canada is #8 on the Index (with #1 being least corrupt), and the US is #19.

I wonder if the problem for the US going forward, and on almost all the contentious issues, like AGW and health care, could be this deep seated (and apparently justified) distrust for one another?

And just what do you do about it?

"The situation is not analogous."

That's a big part of the problem with imposing rationing in the current situation. It's not analogous in the propaganda sense I was referring to, and as you just pointed out it's not analogous in other ways as well.

Different problem + same old solution = insanity.

"And just what do you do about it?"

I simply don't know. It's a predicament, not a solvable problem, so in that sense there's nothing to be done about it. The founders of the USA tried to cope with it by setting up a limited government.

The European "solution" seems to be opposite to theirs: naive blind trust in governments that intrude into and try to run every last micro-detail of every last microsecond of life. I happen to think that such naive blind trust enabled absolute power and contributed mightily to the lethally awful behavior of European governments in the 20th century - and that there's nothing I need so badly from government that it's worth a 21st century repeat of that awfulness to get it. Clearly, though, just from current news reports, I realize I'm in the minority, and there are plenty of entitlement-minded folks running about loose who feel that the world owes them all manner of free rides no matter the risk entailed in getting them.

[As to the index, a number of European countries where there is a good deal of blind trust in, and minimal constitutional restraint on, power rank below the USA as well as above it. So I suspect that the difference between ranks 8 and 19 may not be terribly significant.]

That's a big part of the problem with imposing rationing in the current situation. It's not analogous in the propaganda sense I was referring to, and as you just pointed out it's not analogous in other ways as well.

Different problem + same old solution = insanity.

except that I was pointing out that there were real reasons for rationing and that it wasn't propoganda.

As for your response to the idea that Americans see their society as corrupt from the government on down and don't trust each other, and my pondering of what can be done about it:

I simply don't know. It's a predicament, not a solvable problem, so in that sense there's nothing to be done about it.

This does seem a little defeatist.

The founders of the USA tried to cope with it by setting up a limited government.

Then you guys need to have a constitutional conference, because "It's a predicament, not a solvable problem, so in that sense there's nothing to be done about it." suggests that yours no longer works.

[As to the index, a number of European countries where there is a good deal of blind trust in, and minimal constitutional restraint on, power rank below the USA as well as above it. So I suspect that the difference between ranks 8 and 19 may not be terribly significant.]

First, I didn't mention the Europeans; ranking a little above the European bottomfeeders may make you feel all warm and fuzzy, but it's not germane to the argument. My central point is that I see and feel a difference. I do not look at the things my taxes pay for as unneeded frills. I do not believe that any level of government here is corrupt (misguided and vindictive, yes. Corrupt, no.) I generally feel that I get a reasonable shake financially and politically(though the slide towards Americanism we've had for the past 20 years is starting to change my opinion.) The Index is about how you perceive your society. You see your society (the USA) as corrupt and utterly unchangeable(One point where, ironically, we agree.) I see Canada as an open society with little government corruption. If our perceptions are that different, that suggests there may be something to the ranking.

Finally, let me be clear: I would like you to change. I would like my neighbor to the south to be true to the ideals they claim to espouse, and not a decadent parody where business is a blood sport, and everything is business. My wife summed up the difference when I showed her my last post:"Canadians would see rationing as everyone getting a fair share. Americans would see it as an opportunity to make obscene profits at the expense of their fellow citizens." Of course, the wife may be a little harsh...

I think that we should keep our foot on the accelerator until we "hit the wall".

I think my way would offer a better chance of a decline rather than a hard crash.

Any efforts at imposing "rationing" will be vulnerable to political trickery.

No more than expecting corporations to do the right thing with cap and trade laws.... we all know that big corporations like Goldman Sachs and Enron always put the public good first.

Canuckistani, you might enjoy the book The Carbon Diaries 2015

It is about energy (carbon) rationing in the UK. Here's a quote from the review:

It is difficult to imagine a world where we can’t just plug stuff in or drive wherever we want or boil the kettle for a cup of tea, but The Carbon Diaries brings this situation into such sharp focus that it’s very frightening. And yet the chatty style, the humour and the ‘normality’ that the diarised format brings to the piece, although lifting the immediate angst, for me made it all the more real. This isn’t some dry report by a scientist full of technical jargon and mind-numbing complications, this is real people and real lives.

The main character is a teenage girl, so the book often gets categorized as Young Adult fiction. But it is really a great read for an adult - especially one who wonders what things might look a feel like a few years down the road...

Thanks Greg- I just put in a reserve at the library.


First of all most of the inflationary effect should be in the first year of operation of administrative carbon pricing. If the scheme is revenue neutral (ie handed back) the taxes paid on fuels will be available to spend on less fuel intensive items e.g. low carbon electricity not high carbon. The beauty of a CO2 cap rather than a tax is that the spot price could actually decline if consumers make the switch to lower carbon. An overall CO2 cap covers the myriad of possible indirect substitutions e.g. jet fuel from coal means less coal fired electricity.

The European cap and trade scheme has been undermined by over-issuing free permits and by allowing too many questionable offsets. You'd think other countries would learn from that. As to speculation in auctioned permits I think only physical producers not finance firms should be allowed to participate.

The European cap and trade scheme has been undermined by over-issuing free permits and by allowing too many questionable offsets. You'd think other countries would learn from that.

The same political pressures that yielded such compromises exist elsewhere. It is much easier to design a consistent system, than it is to get one through the democratic political process. We've seen the same with with economics this recession, elite economists may know what to do, but the same political forces that existed in the thirties, are forcing us to repeat some of the same mistakes. Homo Politicus is very adept at gumming things up, and is nearly immune to learning from past mistakes.

I think you are missing the main point. To actually do something about CO2 emissions implies cutting global emissions to a small fraction of today's emissions. Cap-and-Trade would not/could not accomplish that in a single step. Many years of fractional cuts would be required, else the world's economic system would cease to function were the full cut to be imposed in a single step. The periodic cuts would each have an inflationary impact, as each cut would result in increased costs to the consumer in response to the continuing "shortage". Baring some breakthrough in physics to another source of energy, one might expect this process to play out over 40 years.

From the perspective of the man-on-the-street "final" consumer, the effect of cap-and-trade as proposed in the US would be increases in the cost of energy. Cap-and-trade would be what's called "rationing by price", that being the mechanism by which the consumer would be "encouraged" to reduce his/her emissions. That would easily be seen as a "tax", as the denialist camp would continue to spread that perception amongst the public. Unless, of course, the public could actually receive those allocations, which would make cap-and-trade a rationing system, perhaps as I have described.

E. Swanson

One of the beneficiaries of Cap and Trade is the agricultural community who have lobbied vigorously to get certain ag practices ( like no till) included as sequestration methods. The large amount of political clout in ag states will resist rationing intensely.When you determine what will happen vs. what should happen, you cannot ignore politics.

Greece's Plans Draw EU Praise, Spur Protests

German Chancellor Angela Merkel signaled that Germany and its European Union partners would intervene to rescue Greece if its problems threatened to spiral out of control, but emphasized that she is "optimistic" that Athens won't need help. . .

Ms. Merkel's comments about Greece are the latest sign that her government is pursuing a wait-and-see strategy with the crisis. That course enjoys wide support in Germany, a nation of savers who strongly oppose using taxpayer money to rescue a country that has lived beyond its means for years.

ELP Plan

Author Thom Hartmann, in his book, “The Last Hours of Ancient Sunlight,” described a high tech company that he consulted for that went through several rounds of start up financing, and then collapsed, without ever delivering a real product. At the peak of their activity, they had several employees and lavish office space--until they ran out of capital. His point was that this company was analogous to a large portion of the US economy, which has the appearance of considerable activity and uses vast amounts of energy, but how much of this economic activity delivers essential goods and services?

I have read, and it seems reasonable, that the majority of Americans live off the discretionary income of other Americans. We are therefore facing a wrenching transformation of the US economy--from an economy focused on meeting “wants” to an economy focused on meeting needs--and the jobs of a vast number of Americans are thereby directly threatened in a post-Peak Oil environment.

Dividing an expanding economic pie is difficult enough, but dividing a contracting economic pie is, and will increasingly become (perhaps literally in many cases), a bloodbath.

The division between the savers and the spenders, between producers of essential goods & services and consumers of essential goods & services, will become increasingly apparent. Kurt Cobb probably had the best image, he showed an inverse pyramid with 95% of the US economy resting on the 5% represented by the food & energy producers.

I have described developed countries with out of control debt financed government spending as the Grand Prix of Debt Race; some countries are just closer to the edge of the fiscal cliff than others. The "Thelma & Lousie" moment is the point at which local, regional and national governments can't borrow enough money to fully finance their deficits. For national governments, it would especially be the point at which they can't borrow enough money in their own currencies to fully finance their deficits.

Circa 2005/2006, I started describing the probable impending decline of (North) Ghawar and the certain decline of Cantrarell (the two largest producing fields in the world at the time) as "Two warning beacons heralding the onset of Peak Oil." From 2002 to 2005, combined net oil exports from Saudi Arabia and Mexico went from 8.7 mbpd to 10.8 mbpd (close to one-fourth of total world net oil exports, EIA)--as annual oil prices rose from $26 to $57. But from 2005 to 2008, their combined net oil exports fell from 10.8 mbpd to 9.5 mbpd, a decline of 8%, as annual oil prices went from $57 to $100. This was, IMO, a huge confirmation of the "Warning Beacons" thesis, but our government/finance system can't handle to concept of a finite earth, so these warning beacons continue to be largely ignored.

To put projected US deficits in perspective, let's assume that we had to repay the debt with barrels of oil. The CBO is projecting 10 year cumulative deficits of $9.8 trillion (let's call it $10 trillion). Of course, this assumes economic growth. In any case, let's assume $100 oil, so if we had to pay back $10 trillion of debt with oil, if my math is correct, we would have to come up with about 100 billon barrels of oil--the equivalent of about eight Prudhoe Bay Fields.

And to put 100 Gb of oil in perspective, if we extrapolate Chindia's recent rate of increase in net oil imports out to 2018, they would be net importing 15 mbpd, when Sam's best case projection puts the combined (2005) top five net oil exports at about 15 mbpd. So, based on these two projections, the total volume of post-2010 cumulative net oil exports from Saudi Arabia, Russia, Norway, Iran and the UAE--after subtracting out Chindia's net imports--would be about 22 Gb.

Estimated 2010 net exports from the (2005) top five--less Chindia's estimated net imports--are about 5.5 Gb.

22 Gb divided by 5.5 Gb/year is four years.

It is not valid to treat all currencies and debt as the same. Clearly the dollar and a few other currencies have special status. Japanese debt as a percent of GDP is nearly twice that of the U.S. and interest rates are near zero there also. Yet Japan goes on and the world does not come to an end. The currency the debt is denominated in matters.

Some sovereign debt never has to be repaid and some has to be repaid. The Japanese debt can grow forever since the Japanese are great savers even at near zero rates. And Americans are in a similar situation except that the Chinese and the Japanese do the saving for us. They are forced to or else they have to allow their currencies to rise which will adversely affect their export based economies.

The only thing that matters for the U.S. and Japan is that the debt can be rolled over perpetually. We often hear that this game will come to an end some day, but it is hard to see how.

Greece, Latvia, Ireland and some other countries are indeed in a fix. There debt is denominated in Euros and the European central bank is independent of European government pressure. The Euro countries that are in debt trouble are more like the states in that they have to balance their budgets or find outside lenders to keep the game going. They can not create more Euros just as American states can not conjure up more electronic dollars out of nothing.

So the debt/payment game clearly has at least two sets of rules depending on who you are.

This is often the case in many situations in life and should come as no surprise.

The ever increasing debt game can go on until the players do not want it anymore and change the rules. Since those benefiting from the rules as they are (China, Japan and other exportors) benefit as much or perhaps more than the United States likely little will actually change.

The system is at the crux of how the Empire is financed. Should it fail and the United States have to pay out of its real GDP for all the escapades of Wars for Oil Security and living the high life off imports paid for with funny money, the whole shebang collapses.

Until then we pretend to pay with electronic funny money and exportors accept the system because they can quickly change that funny money into oil which they need to keep it all going.

Wrong about Japan being great savers. They used to be, and a lot of JGBs were held internally but now demographics are playing an increasing role. There is now massive pressure to realise huge amounts of savings to finance retirement. No longer can Japan expect their own citizenry to finance their huge deficit spending. Japan is in dire straights.

Hi all,

I've been working on an article that is geared towards the layperson. My goal is to show the links between Debt based monetary systems and problems such as peak oil/energy delpletion.

A rough draft of my article is below in the blockquote below. I'd appreciate any feedback on my facts and assumptions about the energy specifics. I didn't want to get too technical, but I need to be factually correct.

An Economic discussion of Energy
-Why our energy “problems” are really symptoms of debt based money

This article is written for those of you who have recognized the increasing importance of energy in our daily lives. Many of you might be aware of peak oil. When gas prices spiked two years ago, energy was constantly on the minds of everyone. The reason that energy is a “problem” is because our economy must grow in order to remain “healthy.” Because the bulk of our energy use comes from fossil fuels, growth in perpetuity is impossible. The availability of fossil fuels is governed by natural, geological, and scientific principles. So ask yourself this, “Would our energy need be such a huge problem if we weren’t striving for perpetual growth?”

What Fuels the Growth Imperative
Our monetary supply fuels the growth imperative. It really is that simple! The only money (save for coins) that gets added to the money supply is that money which someone goes into debt for. When you repay a loan, you have to pay back interest on top of principle. The interest that must be paid was NEVER created! There is always a shortage of money in the system. You will always have bankruptcy. The only way to maintain the illusion of a functioning system is to continually add more debt. Then, in the short-term, there are enough dollars in the money supply for people to access and make their payments but this “solvency” is fleeting. THIS is why the economy is only "healthy" if it's growing. (This is also provides insight into why decisions are made for short-term gains versus long-term benefits.)

Energy and the Economy
Energy is a need of human existence. In the most basic sense, food provides the energy that our bodies need to continue living. In some climates, other forms of energy are needed to provide heat so we don’t freeze to death.

Energy is also a need of our economy. You can’t have ANY economy without using energy. Even if you use human labor exclusively to run an economy, you need to feed those humans so your energy inputs would be in the form of food. In simpler terms, the economy uses energy to produce goods and services. If you “need” your economy to grow, then you need the goods and services produced to grow as well. There are two ways to increase the results of energy use. You can either use more energy inputs, or you can be more efficient with the energy you use, or both.

As evidence, we have steadily increased our energy consumption in pursuit of economic growth. However, energy is governed by laws of science and nature. There’s only a certain amount of energy available for use at any given time. Once we reach the point where we cannot increase our energy inputs, we’re just left with increasing our efficiency. Let’s just assume that we can be 100% efficient with our energy use. Where does that leave us then? We won’t be able to increase the fruits of our energy use through either method! At BEST, we’ll only be able to maintain a steady output, not grow our output. This assumes that our energy supply maintains itself at our current levels. What if we’re 100% efficient and our energy supply drops? There’s no choice left but to use less energy and that necessarily means that our economy will shrink. Where does that put us in a system which REQUIRES perpetual growth to remain “healthy?” I guess it puts us in a perpetual state of “unhealthiness.” Is that how you want to live? Is that how you want your children to live, your loved ones, your friends?

Different Ways Humans Access Available Energy
The only steady and sustainable supply of energy we have access to is the sun. “Wait a minute,” you might say, “what about wind, geothermal, oil, natural gas, coal, hydroelectric, nuclear, bio-diesel, ethanol, and hydrogen?”

Fossil Fuels
Oil, natural gas, and coal are all fossil fuels. They are the remains of living organisms from our planet’s past that were stored and converted into certain forms which we exploit as energy. If those organisms were plants, they relied on sun energy. If they were animals, they relied on eating those plants, or on eating animals that ate those plants. Ultimately, every bit of fossil fuel on this planet is an energy savings that built up over millions of years. Once humans use it up, it’s effectively gone forever. So relying on fossil fuels is not sustainable. It’s just like draining your savings account at the bank to pay your bills. Eventually your balance will be zero and won’t be able to make any payments.

What about wind? What does that have to do with the sun? Simply put, the energy from the sun, heats up areas of the planet. As those areas heat up, so does the atmosphere in those areas. Half of our planet is always dark, and half is always light. Some parts of our planet get more direct rays of sunlight than others. This uneven heating results in hot pockets and colder pockets of air. The hotter areas have increased pressure. High pressures of air will always flow toward areas of lower pressure, that is, warm air will move into colder areas. Thus you have wind. So the wind is caused by the sun.

The rivers flow because of gravity you might argue. Well that’s true but in order for a constant flow of water from a higher elevation to a lower elevation, you’ve got to constantly replenish the supply of water at higher elevations. You can’t do that without energy. That energy comes in the form of sunlight, which evaporates water and carries the moisture in the warm air to those colder pockets of air where it condenses and falls as rain and snow. Some of the rainy and snowy areas are in higher elevations. So you can’t have hydroelectric without sunlight.

The Bio-Fuels
Bio-diesel and ethanol are made from plants or animals that rely on plants. You can’t use the plant matter to get the bio-diesel or ethanol until the plants exist. In order for them to exist, they must grow and they need sunlight to grow.

Geothermal energy doesn’t rely on daily inputs of sunlight, true. But it’s just not available in the sheer volume of energy available for exploitation that we need to continually grow our economy. It’s a fixed source of energy and relatively small compared to the needs of our current economic system. It’s also location specific and the usable energy is not easily transferred from place to place like oil, coal, and natural gas are.

So let us look at hydrogen, which really isn’t a source of energy at all. It’s an energy carrier, and an explosive one at that. Hydrogen gas in its usable form is two molecules of hydrogen bonded together. The reason it’s not an energy source is because we don’t find reserves of H2 gas anywhere on the planet in the volumes that we need to economically grow or even sustain our present economy. The vast majority of Earth’s hydrogen atoms are in the form of water. H20. We can make hydrogen gas by splitting apart the water molecule into H2 and O2 gasses, but that takes an enormous amount of energy to do. So where will the energy to split all the water molecules apart come from? The energy comes from either fossil fuels or the sun. And fossil fuels are from the sun so the energy would have to come from the sun. Here’s the problem though, the earth has a limit to how much energy it receives from the sun on a daily basis. Even if we were 100% efficient in our solar energy usage, we cannot grow the sunlight energy we receive.

The other thing to remember is that when H2 gas is utilized you end up with water. The laws of thermodynamics state that you can’t create or destroy energy. You can only convert it from one form to another. So our car engines would convert the energy in H2 gas into kinetic energy…motion. The by product of that energy usage is water. Well since you have to start with water, you need to use at least as much energy to create the H2 gas as you’ll get by burning the H2 gas. Even if we were 100% efficient with our conversion of water to H2 and then our burning of H2 to create motion, we still only have the amount of energy equal to what we began with which is the amount that the sun gave us. Since we know that we’ll never be 100% efficient, then Hydrogen is an energy loser over the long run.

Well then I guess the only option is nuclear energy. That doesn’t utilize the sun. But it does need radioactive elements in sufficient quantity to keep the nuclear reaction going. Furthermore, you have a lot of radioactive waste that needs to go somewhere. Any volunteer for storing that waste in your neighborhood, county, state, country? Even if waste wasn’t a problem, there just aren’t enough radioactive elements to fuel the reactions in all the power plants that we’d need just to replace our declining fossil fuel supplies, much less to keep our economy growing at an exponential rate.

Final Thought to Ponder
If we can’t control the amount of energy available for us to use, then why do we accept an economy that is only “healthy” if it’s growing? You’ve learned that the growth imperative is fueled by debt based money. So I’ll restate that question. Why do we allow the continued existence of a monetary system that gives us no other option but perpetual growth?

"It's the DEBT!"
We're Doing Something About it!Come Join the Swarm!


Sorry Toucan,

But Joe Five and a Half Pack (newly reduced due to recession) doesn't do reading and thinking.

It's more funner to watch Glenn Beck's bobbing eyeballs bounce around the Romper room.

Besides, tonight is Big Bird and OSCAR night!!!

TS, good, your summary is all fine and easily readable.

Why do we allow the continued existence of a monetary system that gives us no other option but perpetual growth?

... b/c that other system is 'illegal and proven no good' by countless presidents- there is no way around infinite growth.

So what does this mean for US ability to attract further foreign investment? The OilDrum has shown the link between GDP and oil? US expenditures on oil are in the scale of 4% of its GDP (14.2 trillion GDP, 20.8 M bbl/day, $82 / bbl). Wikipedia suggests that foreign holdings of US Treasury Securities are $3.9 trillion (http://en.wikipedia.org/wiki/United_States_public_debt#Foreign_ownership). US Government revenues are in the scale of $4.5 trillion /year (http://www.usgovernmentrevenue.com/ ). If oil consumption and GDP are closely correlated, then as US oil consumption goes down, its GDP will shrink. As a first order estimate, that reduction would be something like $40 less GDP per $1 less oil consumed. With focus on higher value uses and efficiencies, perhaps the marginal reduction in GDP might be half that (i.e., $20 less GDP per $1 less oil consumed) – however the price of oil has demonstrated it can double current levels. So how much oil could the US import in 2018 when Chindia consume 60% of oil exports (15 M bbl/day). Let’s say (half of the implied) remaining production or 7.5 M bbl/day. Current levels are 13.15 M bbl/day. This would mean a reduction of 5.6 M bbl/day in consumption, and implies a reduction in the scale of $4.4 trillion of GDP. What will bankers think about the prospects of getting loans repaid, let alone lending more to a country with 30% less GDP, and continue likely hood for GDP reductions?

With Mexico (#6 in exports) showing no prospects for increases, Venzuela (#7) becoming less functional, and Canada (#10) only growing slowly; it is easy to see the calculus that led Cheney et al to think that deposing an oil-rich despot was strategically important. If the US can capture most of IRAQ’s increase in production (current estimated at something like 6 M bbl/day) perhaps the US can stave off calls on its foreign debt.

Is modeling impacts of reduced consumption on GDP something that TheOilDrum collectively can contribute to?

A sector analyisis might show that if 80% of an economy was based on debt and the useless overconsumption of FF the final impact on reduction to GDP from each increase in oil price will be much much worse. How much GDP is ultilitarian and how much is not in fact production of any kind? Since repayment of debt-to-spur-GDP are based on old assumptions about the avaliable resource base how can we truly count any resulting GDP as real. (borrowing on fantasy future productive capacity to exploit declining finite ancient sunlight in order to maintain present growth BAU)

The continued issuance of debt assumes some ablity to pay back at some future date based ultimately on some combination of future GDP growth, higher taxaion on existing (or declining) production ,or the ability to roll that debt into some other form of asset.

It impossible to even remotely count GDP during the active massive issuance of debt that is occuring in the OECDs. We might rather need to look at energy use per unit of GDP as a gauge for this and then only at countries who are not running yearly 1.6 trillion dollar Federal deficits, multi billion dollar individual state deficits and 800 billion dollar yearly current account deficits.

Many here would argue this system is irreparably broken based on PO/ELM and futile attemps to maintain BAU. In short any snapshot or model has to account for how much 'function' is being artificially maintained through debt stimulus of one kind or another but has little real productive value in a declining or collapsing energy efficiency picture.

For instance how do you count 'productivity' generated by incentives derived from borrowed dollars to maintain airports, freeways, and automobiles when it is known that furthering such energy uses will likely mean a huge net reduction in GDP due to higher lonterm costs, declining efficincy, and decreasing ability to repay debt.

Handling these conceps IMVHO are problematic b/c advancing ELM and the acellerating debt race have altererd basic conceps like GDP which are filled with subjective growth assumptions which are no longer valid.

Agreed ...

1) Understanding the abilities of individual countries to service existing debt may help identify where and when we'll see the next triggers for another "financial crisis" (engendered by PO).

2) Talking to political leaders in terms of jobs lost, GDP and debt service may better reasonate who we need to make investment decisions to soften the impact of PO.

1) Understanding the abilities of individual countries to service existing debt may help identify where and when we'll see the next triggers for another "financial crisis" (engendered by PO).

Looking at the level of 'understanding' between Germany and Greece together with the reaction of the citizens in each country gives us a hint.
Seeing how the bond vigilanties go after an economy with a cripplingly steep yield curve is an indicator too.

Marc Faber thinks it will take 5 years or so to put the US firmly in this pickle jar. ELM 2.0 could bump that up a bit.

Basically I feel the new paradigm will mercilessly punish ineffciency. The outbidding process which used to be about 'our oil beneath your sands' is just as easily about 'our coal under those rocky mountains', 'our jobs under your corporate banner' or 'your guns for our hire'. Yep, squandering energy, the quickest road to the poor house.

The above article "Why There Will Be No Recovery" by Chris Nelder is a great synthesis of much of what we discuss here at TOD. Is he a TOD member? If so, what is his screen name?

Yes, he's a member of TOD. He posts as ChrisN.

Ya...thought he had to be to have written such an thorough article. Congrats, Chris.

Sure, its an outstanding article.
But on the other hand, Nelder is heavily promoting all the shale plays for years.
In my view he has never understood the impact of EROIE in these "unconventional" sources.
He did not understand, that a cheap oil society cannot simply transform itself into a "very high carbon price" society without a collapse.
I have said it several times on this blog: Large scale unconventional/alternative energy use: not in your lifetime. Simply because we cannot affort it. Period.

@quadour88 You have confused my work with the P.S. upsells and ads that my publisher attaches to it. I have never, ever promoted shale plays. I have always been a skeptic, and have written repeatedly about my skepticism (articles which, to their credit, my publisher did run). For example, Of Ghosts, Unicorns and Energy Policy and Reflections from the 2009 Peak Oil Conference.

I have also written many times on net energy (see some of the links in this latest piece) and the challenges of energy transition.

I repost my work (without the extra stuff my publisher inserts) to my blog: GetREALList. I encourage you to look around there for what I've actually said.

I have been a TOD member nearly since its inception. TOD was a crucial part of my early education in this area.


Here' a blast from the past. Iko Iko

;-) We'll get a new start - live the lives we should.

Ha! I just heard My Brother Esau (1/28/87) in the car today...I love that satellite radio.

Rat in a drain ditch
Caught on a limb
You know better but
I know him

There is only one way to go out; "singing"!
John Lennon

Could you explain the $50-75/week additional gas cost? A 20mpg suv

doing 12kmi/yr would use avg 11.5 gal/wk,ie price hike of $4.3-6.5

per gal.

Second,the 15%/85% product breakdown. Looking at the '07-'09 mo

product max/min for the 3 main product groups, you have gasoline

off 1.143mm/d,dfo off 1.161mm/d and ker jetfuel 0.377mm/d, total

2.681, of which gasoline 43%, dfo 43% and kjf 14%.

Third, sensitivity of larger ldc countries to gaoline price vs

US. Chinese, with pc income of $4k, are now paying up to $3.19

a gal - more than in July '08. Indians are paying $3.65, and as much

as $4.

A Chinese driver doing only 4kmi/yr in a 35mpg car is paying nearly

10% of income vs <4% for an American in a 20mpg suv @ 12kmi/yr.


I'm thinking of the most vulnerable buyer. For example, someone who commutes 25 miles each way 5 days a week in a vehicle that gets 14 mpg. When gas goes from $3 to $4, that's another $71 a week, and here in California, a lot of people experienced it in 2008.

For the 15%/85% breakdown, I referenced Jim Hansen's calculation, but I did a similar independent analysis previously.

Re: the marginal buyer argument, again, think of the value of a gallon of gas in a scooter (not a car) in developing countries. Far more people will use it that way than driving in a car U.S.-style. Car ownership is a relatively new phenomenon in China and India, and if gasoline is too pricey for them to drive their cars, they can always fall back on the scooter to bring goods to market etc. There are already reports of just-purchased Chinese cars sitting in garages & driveways because gas is too expensive for daily uses.

The commuter you described would pay $18/wk more, not $71; at 50mpd
7 days a week it would cost $25 more. $71 more a week would describe
a 14mpg vehicle (!) driven 52000 miles a year - ie a very busy taxi
driver with extremely poor judgment. Is this relevant?

The Hansen reference appears to have been removed.

A 70mpg scooter driven 5000mpy in China would cost the owner 5.7%
of average p/c income of $4k. That's still more than the US driver
spending 3.9% of $40k to drive the 20mpg suv 12kmi/yr.

Sorry, $71 a month, not week - will fix that. Hansen link works for me.
In any case I'm not sure what your point is.

Could you remind us of your point about Alternatives?

Of course, once we do have such Large Scale Renewable suppliers, they're not really 'unconventional' anymore.. but of course you mean by today's standards.

Personally, if you're talking about, what, floating Windfarms or Desert Solar piped up to Europe, Tidal and Wave (??) .. they could come about because they HAVE TO. The Money, the Credit, the Releveraged Debt.. if that's the power source we know we can get running (only a big 'if' for some of them..) , I really have to expect that the Bugaboo of Financing will be dealt with on the same symbolic level where money exists in the first place.


I have a specific question for the econ and market experts out there. I ran across a reference to a financial modeling rule that essentially states
"If a model exists that predicts trends in a financial market accurately, and everyone has equal access to the model, then the model's utility will drop to zero"

I recall it was named after someone who suggested it, I want to say Morgan or Miller, but I can't remember exactly who. This one is tough to track down by Google for some reason.

It sounds like a common sense game theory law, likely categorized as a zero-sum game.

Its because of arbitrage and efficient markets. In theory, the market prices in all available public information immediately.

The only reason your model would work, is because it gives you information that other people don't have. If the model says that the price of Google will go to $600 tomorrow, and people know it is right, everyone will bid Google up to $600 now, because that is what the price will be.

This means that your model is no longer predictive, because it's effect on the market has been immediately priced into the stock, and now you don't have the information before everyone else, so you can't make money.

The same is true for the market as a whole. If everyone wakes up tomorrow and thinks "the market is going to go up 137.28 points today", then the market will go up 137.28 points, because that will be the percieved value.

I understand the concept alright, I just want to know the name that they have given this modeling effect. The reason it is given a name in the first place is then you don't have to spend 3 paragraphs explaining it everytime you need to refer to the effect.

What do use as a short-hand name? Perhaps the "arbitage and efficient market model cancellation effect"?

I think it's just part of the "Efficient-Market Hypothesis".


This is getting very warm. It does seem like the concept is buried in there somwhere.

I believe that the tag you are looking for is simply "the strong form of the efficient market hypothesis," which says that predictive models can't exist. It was the first form of the hypothesis put forward.

Over time, as it became clear that there were models that had predictive power over significant periods of time, a succession of weaker and weaker forms have been proposed. One form asserted that the models weren't profitable when trading costs were included; E-Trade and companies like it blew that up. Another form asserted that the models weren't profitable when taxes were included, since rates for short-term gains were higher than for long-term; a trillion dollars being traded in tax-sheltered accounts blew that up. TTBOMK, the current form of the EMF is that the magnitude of one-day movements of market indexes is not predictable.

However, it's always good to remember what Lord Keynes said: "The market can remain irrational longer than you can remain solvent."

So it seems that we have two constraints that act as a rail at each extreme.

1) If we had a good model then everyone would use it and no one would make money. (strong-form?)
2) We can't have a good model because the magnitude of movements is unpredictable. (weak-form?)

Somehow a predictive economic model like this seems analogous to an 'over unity' or perpetual motion machine. You can get a few spins on the wheel, but it will always run down from the energy draws overcoming the energy inputs.

Or, in a world idealized with perfect access to information, perfect processing of information, and infinite speed of both, any such models would be instantly self-neutralizing as described. Their results would already be embodied in any price you could name. In the real world neither information nor its processing are free, nor are they fully instantaneous, so it may take a while for a model to be neutralized, and the neutralization may be imperfect. (Analogous effects are seen with adaptive filters in communication systems, which is the sort of thing that allows physicists to become quants.)

On another hand, even when the neutralization is imperfect, a real world model may not remain profitable indefinitely. In the real world, all such models introduce noise (volatility) into the system. This noise can introduce costs of its own. Think, for example, Edwards Deming's funnel experiment. (Note that no Black Swans are required, they are yet another angle - the world is so complicated that these costs can manifest themselves even when no birds are dropping off airmail.)

[On yet another hand, if you're too big to be allowed to fail, then the continued profitability of the models isn't even an issue...]

Re: Setting Wind Power Records in Texas, up top.

While Texas is setting records in wind power production in absolute terms, it is a little misleading. This is another case of comparing things that are different.

Adding and comparing things is tricky business. There are several ways to do it. The article chose absolute total as the measure. I choose other measures that are just as valid to show that Iowa is the leader in wind power.

By population Texas has about 24 million people. Iowa has about 3 million. Texas has 9,410 megawatts of installed wind capacity. Iowa has 3,600 megawatts. For Texas to have as much wind turbine capacity as Iowa per capita it would need to have 8 times 3600 megawatts installed or 28,800 megawatts. It has about a third of Iowa's on a per capita basis.

By land area Texas has about 268,000 square miles. Iowa has about 56,000 square miles. For Texas to have as much installed wind capacity as Iowa per square mile it would need 4.8 times what Iowa has or 4.8 x 3600=17,280 megawatts. Texas has only about half the installed wind turbine capacity of Iowa by land area.

So by picking absolute total installed capacity as the measure of leadership and comparing states without regard to population or land area a false picture emerges as to who is really the leader in wind energy.


Hi x,

On that basis, you might want to watch your back:

Prince Edward Island
Population: 138,519 (2006 Census)
Land area: 556,000 hectares (2,185 sq. miles)
Current installed wind capacity: 164 MW
Planned additions: 130 MW (Source: http://www.cbc.ca/canada/prince-edward-island/story/2010/02/15/pei-renew...)


This is exactly my point for X with my 'Saturday night psychology class'-reply here under.

This small Norwegian island named Smola, population 2,248 has the largest onshore wind farm in Europe with a maximum production capacity of 150 MW

What value has this info anyway? Did I just win a trophy?

X says : Cannot, Cannot , cannot !... Obama says "Yes we can !"

X let's do this together - Well what, you'll probably ask?
I'll help you here and now to Rid You Of Your Inferiority Complex on Comparisons and at the same time Boost Your Self-esteem on the same, for rest of your life... .
Let's just for once force ourself to Compare Apples to Oranges.
Now, list what you observe - Equalities and differences, thereafter summarize and conclude.... What category wins?

Saturday night psychology class. Lesson learned? You just compared them!
Feeling better already, yeah? Good. At least I do. Cheers :-)

Those are probably useful comparisons for SOMETHING, X, per capita and land volume but really, what they are comparing is Wind as a percentage of overall power generated. It's really a fair basis.

Sorry if that makes your horse look bad. But that's often the case with you, it seems.

x -- So if I follow your numbers correctly Iowa is currently getting almost all it's electricity from wind turbines? That's amazing and much credit is due those folks for nearly getting rid of all FF from their grid.

On a windy late night/early morning, I would not be surprised if Iowa supplied 100+% (i.e. exported) wind generated electricity. That is what PEI does.

And I think x's points are valid, especially with land area. If Texas broke itself into 5 states (allowed under treaty between the Republic of Texas and the United States of America), then West Texas would be a bigger player by any measure than Iowa (per capita or per mile2), but East Texas, South Texas, Central Texas and Dallas-Ft. Worth would be also rans.

Best Hopes for More Competition (Texas is building transmission lines for 10 to 12 GW more wind),


The argument over who is ahead can get to be pretty silly. It really depends upon whats sa;ient for a given agent. If I had a product to sell to wind farms (say a lidar system that detects wind gusts 10seconds before they hit the turbines, and allows them to adjust there blade settings -or whatever), and I had to jump through state imposed bureacratic hoops before doing business in the state, I'd be interested in the biggest market per amount of paperwork -so all things being equal I'd probably select Texas. If I was more concerned about travel distance between work sites, I'd go for Iowa because the density of wind turbines is greater.

EOS -- You miss the most important factor that puts Texas way ahead of the rest of the states: excessive amounts of hot air. With the possibile exception of DC we have more blow hards here per capita.

I resemble that remark.


Thanks for the laugh and thanks for the ELM insights.

Yea, but it makes for easy burial.
They just give Texans enemas, and bury then in shoe boxes.

Ha! I'm going to use that one on the next Texan I meet (provided he isn't packing!)

I applaud all the renewable electricity we can get. Back in November, there was at least one one-hour period where Spain produced more than half of its electricity from wind turbines.

This is a good time of year for wind turbines in Texas: moderate overall demand (although in 2006, a record Spring heat wave caused rolling blackouts because too much capacity was offline for maintenance), and predictable downslope winds off the Rockies. My questions are always, what was the minimum percentage for the weeks before and after the peak? And, at the same time as that minimum, was there anywhere with wind turbines producing more than 100% of local demand (ie, a surplus that could have been moved across the grid to Texas)?

Alan has convinced me that wind is predictable enough that we can make use of all we can generate by spinning down other sources during appropriate hours; I am still struggling with how much base load capacity -- coal and nukes -- we can get rid of.

Andreessen's Advice To Old Media: "Burn The Boats"

Warning no paragraphs:



I can't believe Tiny Tom (a.k.a. Clean Coal) Friedman has come out with his latest non-thermodynamic science will save us dream scape:

“If this works,” said Khosla, “coal-fired power would become more than 100 percent clean. Not only would it not emit any CO2, but by producing clean water and cement as a byproduct it would also be taking all of the CO2 that goes into making those products out of the atmosphere.”

...America still has the best innovation culture in the world. ... All I know is this: If we put a simple price on carbon, these new technologies would have a chance to blossom and thousands more would come out of innovators’ garages.

Tommy, Tommy, don't you know that turd blossom is the trade mark of some other neoconical cone head? How can you, the green is the new red white and boohoo guy spew such incredible nonsense about clean coal and sootless cement?

Most sad of all, Tommy, Joe Five and a half Pack (reduced due to recession) and Bailout Barry O are going to believe you because they plumb just don't know no better.

Making concrete is a rather energy intensive process and thus produces lots of CO2, especially if the energy comes from coal. If the capture process described works as claimed, the result would surely be less emissions for making concrete, while cutting emissions from coal burning electric power plants. As a result, the net reduction in emissions could be greater than the emissions from a comparable coal fired electric generation plant on the basis of CO2 emissions per unit electricity produced. Of course, there a big "if" hidden within that claim.

Due to inflation and unemployment, Joe Sixpack has been downsized to Joe Quart, as in a quart of Colt .45. Watch out, Old Joe is packing...

E. Swanson

The word is "cement"

and this Wiki link might shed more light on --or cement it it in as to-- why it consumes so much energy:

Cement kiln

You got me with that one...

E. Swanson

Wasn't trying to get anyone.

Just trying to spread the knowledge around.
Cement does not come free or cheap but rather at the cost of huge energy inputs.

So the next time somebody says
Gee, all we got to do is build dams, or
Gee, lets build lots of nuke plants with concrete domes, or ...

Now some TOD readers out there will have a better insight on what comes with the territory

It's true that the amount of concrete required for projects such as those is quite large. But the amount of cement in volume terms is much less, as the cement just holds the aggregate (basically, rocks and sand) together. Locally, the concrete is crusher run granite mixed with cement, which is very tough material. The granite used to be part of a mountain near town...

E. Swanson

The article "Expensive oil to shorten supply chains: Top economist" must have gotten added late b/c I didn't see it yesterday.

I've always liked looking at what the Goods Supply Chain industry (including the Baltic Dry Index) has to say about things. Their data is probably on the up and up (not manipulated by governments) and is forward thinking when it comes to planning for fuel price volatility.


This simple statement below tells you what the industry is thinking and is huge in its impact. Can Walmart survive in this type of environment and still reap the profits it once did?

“A complete shift to local production is going to be unlikely, but there is going to be a move to have more locally grown and locally produced products available for consumers,” says Wendy Potomski, vice-president of PwC’s Sustainable Business Solutions and Climate Change Services practice.