Drumbeat: March 10, 2010

World crude oil production may peak a decade earlier than some predict

In a finding that may speed efforts to conserve oil and intensify the search for alternative fuel sources, scientists in Kuwait predict that world conventional crude oil production will peak in 2014 — almost a decade earlier than some other predictions. Their study is in ACS' Energy & Fuels, a bi-monthly journal.

Ibrahim Nashawi and colleagues point out that rapid growth in global oil consumption has sparked a growing interest in predicting "peak oil" — the point where oil production reaches a maximum and then declines. Scientists have developed several models to forecast this point, and some put the date at 2020 or later. One of the most famous forecast models, called the Hubbert model, accurately predicted that oil production would peak in the United States in 1970. The model has since gained in popularity and has been used to forecast oil production worldwide. However, recent studies show that the model is insufficient to account for more complex oil production cycles of some countries. Those cycles can be heavily influenced by technology changes, politics, and other factors, the scientists say.

The new study describe development of a new version of the Hubbert model that accounts for these individual production trends to provide a more realistic and accurate oil production forecast.

Shale Gas Can Transform U.S. Power Generation, IHS CERA Says

(Bloomberg) -- Technology to develop natural gas from hard-to-access rock formations can expand U.S. supplies, shift the price outlook for gas and realign choices for fueling power generation, according to a study by IHS Cambridge Energy Research Associates.

Gas locked in shale formations is expected to account for 50 percent of U.S. supply by 2035, up from 20 percent today, according to the report released today at the CERAWeek Conference in Houston. Shale gas is produced by a technique known as hydraulic fracturing in which millions of gallons of chemically treated water are forced into wells to break up rock and allow gas to flow

Skepticism Over OPEC's Demand Forecast

One analyst is skeptical about reports of consumption increases in China. While the OPEC report states that oil demand in China is expected to grow 4.7% year-over-year in 2010, Mark Gilman, an oil analyst with The Benchmark Company, thinks that is an overstatement.

While many reports have pointed to China as the center of spiking oil consumption, Gilman contends that the increased demand is actually a factor of inventory building rather than increased consumption. Moreover, he points out that OPEC has an interest in increasing supply in the market.

How a 22-year-old student uncovered peak oil fraud

Lionel Badal was working on his undergraduate dissertation when he suddenly found himself privy to information that he knew must be made public.

The Three most IMMINENT Economic Disasters. How to survive...

Disaster #2: Peak Oil Is Rushing Toward Us Like a Runaway Train. The only reason oil prices aren’t higher right now is because of weakness in the U.S. and European economies.

Meanwhile, however, the two most populous countries in the world — China and India — are adding to their fuel demand at a rip-roaring pace.

The Myth of Energy Breakthroughs

Renewed belief in the concept of Energy Breakthrough seems resurgent these days, as a versatile scientist now helms the Department of Energy, and famous people such as Bill Gates invoke the need (and thus our quest) for energy miracles. The notion of a technological breakthrough was also, unsurprisingly, at play this weekend when I attended the MIT Energy Conference. And of course, in February, the world was treated to the roll out of Bloom Energy’s Bloom Box.

The problem with energy breakthroughs is that they actually require a Built Environment breakthrough. Energy transition, or the notion of disruptive energy technologies, are affairs that occur at the interface between an energy-source, energy-tools, and the built environment. I suppose coal was a kind of breakthrough for early 18th century (and wood-based) England but the barrier to coal adoption was that alot of England’s built environment was running on wood. You see, new energy sources or new energy technologies don’t distribute easily, or quickly, through the built environment.

How to Reduce Foreign Oil Imports

It makes no sense for Americans to have to ditch their $30-40K SUVs in order to purchase an electric car. What we should be doing is converting these vehicles to run on natural gas. These conversion kits would cost much less than buying a new electric car and the cost of the kits would be drastically reduced were the volume to go up with prudent government policy changes.

Norway Oil Output Falls, May Signal Lower Statoil Production

(Bloomberg) -- Norway’s crude production fell for a second consecutive month in February from a year earlier, possibly signaling lower-than-estimated output at Statoil ASA in the first three months of the year.

Norway’s oil production dropped 7.4 percent to 2.007 million barrels a day in February from a year earlier, after a 5.7 percent annual decline in January, according to preliminary figures published today by the Norwegian Petroleum Directorate. Stavanger-based Statoil operates about 80 percent of the Scandinavian nation’s petroleum production.

Argentina May Limit Fuel Exports to Ensure Supply

(Bloomberg) -- Argentina may limit fuel exports and force refineries to step up production to ensure domestic supplies after Petroleo Brasileiro SA and Royal Dutch Shell Plc cut output.

Petrobras and Shell pared refinery output in Argentina to push up gasoline prices, Planning Minister Julio de Vido said today in a statement.

“There’s been a decision by these companies to refine less oil to cause this shortage situation,” de Vido said in the statement. The government may “regulate fuel exports so that local markets may be properly supplied” and “intervene so that these refineries utilize their maximum capacity.”

Where Policy Starts for Right Now

Here in the United States, consumers expect to have a reliable and affordable supply of energy that helps them heat their homes and fuel their transportation needs. Consumers today also are grappling with a serious economic environment. Job losses and uncertainty make it difficult to plan for the future. Having a stable source of energy can help. In fact, expanding energy exploration and production can have a positive impact on the U.S. economy and the lives of all Americans.

Google Maps now features bike lanes

MOUNTAIN VIEW, Calif. - Google Inc. is adding a bike lane with its latest online mapping option.

The new bicycling directions available on Google Maps starting Wednesday supplement the guidance already provided to motorists and pedestrians. The biking directions initially will be available only for the United States.

Oil King Warns Of 'Green Bubble'

It's Ghawar that is of utmost interest to the industry. The biggest oilfield ever found, it has been producing for five decades, often putting out more than 5 million bpd, a level that Aramco has been able to maintain by injecting millions of barrels a day of water into the field to push up the oil. Cynics in the Peak Oil crowd say that an ulterior motive of Aramco adding so much unneeded capacity is to prepare for the pending collapse of Ghawar.

Al-Khalid says that couldn't be further from the truth. Ghawar is currently producing above 5 million bpd, and he says it will be able to do 4 million bpd for more than a decade. "Ghawar still has recoverable reserves equivalent to 55 billion barrels. As we improve our technology we will add to Ghawar's reserves." This is not a homogeneous field, he says. "There are reservoirs in the north that are in gentle decline. While some areas of the field like Haradh are nearly virgin."

Official: Saudis have plenty of oil capacity as demand returns

Arabia’s 4 million barrels a day of spare capacity can easily be absorbed into the market when global energy demand recovers after the recession, the head of the kingdom’s state-owned oil company said today.

“Oil supply will decline if there is no investment, so that 4 million could be absorbed by demand alone,” said Khalid al-Falih, chief executive officer of the Saudi Arabian Oil Co., in a speech today at a Cambridge Energy Research Associates conference in Houston.

CERAWEEK - Oil companies take more risks with price rebound

HOUSTON (Reuters) - A rebound in oil prices has encouraged oil and gas companies to take more risks in their quest for reserves, drilling deeper in more remote waters or finding new sources of energy, top executives said on Tuesday.

After the trauma of oil's 2008 collapse and tentative recovery last year, oil executives at the CERAWeek annual conference brimmed with confidence in the future of oil, particularly in the wake of high-profile successes in the ultradeep waters in the U.S. Gulf of Mexico and offshore Brazil.

CERAWEEK 2010: On ‘Oil Day,' most see a future in fossil fuels

On one side was the oil and gas industry, which said fossil fuels will be the dominant energy source for decades and that improving technology and abundant natural gas supplies hold the potential to extend that life further.

Vastly outnumbered on the other was Energy Secretary Steven Chu, who said the U.S. must accelerate efforts to wean itself from oil in what will amount to a “new industrial revolution,” or risk losing the clean technology race to other countries and doing further damage to the environment.

Top oil user, producer agree on oil dominance

HOUSTON (Reuters) - The world's top oil producer and consumer agreed on one thing when they took the podium at a high-profile energy conference on Tuesday: The world is unlikely to kick its oil habit anytime soon.

Jeff Rubin: Looking for oil demand in all the wrong places

It certainly wasn’t U.S. fuel demand that took oil prices over $100 (U.S.) in the first place, and it won’t be U.S. fuel demand that will push them back into that range any time soon. U.S. oil consumption is almost 3 million barrels per day short of its pre-recession peak -- a level never to be regained, just as U.S. motor vehicle sales will never again see the levels that prevailed before the recession. Ditto for oil consumption in Canada, Western Europe, Japan, or, for that matter, anywhere in the OECD economies.

Back in the 1990s, that kind of demand contraction in the OECD would have foretold a big decline in oil prices, since those countries accounted for almost three quarters of global oil demand. Today, they account for barely half, and tomorrow they will account for even less.

Is East Africa the Next Frontier for Oil?

According to local lore, Portuguese travelers as far back as the late 19th century suspected oil might lie beneath parts of East Africa after noticing a thick, greasy sediment wash up on the shores of Mozambique. More interested in finding cheap labor, though, the explorers had little use for oil.

A century on, it turns out the Portuguese were right. Seismic tests over the past 50 years have shown countries up the coast of East Africa have natural gas in abundance. Early data compiled by industry consultants also suggest the presence of massive offshore oil deposits. Those finds have spurred oil explorers to start dropping more wells in East Africa, a region they say is an oil and gas bonanza just waiting to be tapped, one of the last great frontiers in the hunt for hydrocarbons.

Gazprom Neft Posts $638 Million Quarterly Net, Reversing Loss

(Bloomberg) -- OAO Gazprom Neft, the oil arm of Russia’s state gas producer, posted profit in the fourth quarter as crude prices and output rose.

Net income increased to $638 million after a net loss of $543 million in the year earlier period, the St. Petersburg- based oil producer said today in an e-mailed statement. Adjusted for a loss on asset sales, net came to $861 million. The result missed the $955 million median estimate of six analysts surveyed by Bloomberg.

Europe Needs to Push Gas Infrastructure Spending, Scaroni Says

(Bloomberg) -- Europe should promote spending on infrastructure to deliver natural gas to consumers from new sources of the fuel from Africa, Turkmenistan and Kazakhstan, Eni SpA Chief Executive Officer Paolo Scaroni said.

FACTBOX - Facts about Venezuela's energy crisis

(Reuters) - Venezuela's worsening electricity crisis, caused in part by a drought linked to the El Nino climate phenomenon, puts its $300 billion economy at risk of contraction and may cut the OPEC country's oil product exports.

Report: Egypt imports 47% of its diesel fuel

A recent report issued by the state-run Egyptian General Petroleum Authority (EGPA) revealed that Egypt imported 5.6 million tons of diesel fuel in the 2008/2009 fiscal year at a total cost of LE9.5 billon, accounting for 47 percent of total domestic consumption. The figures suggest that the country is suffering from a serious shortage of petroleum resources.

Diesel shortage claims first fatality

Shortages of diesel fuel and gasoline continued for the third consecutive day in Cairo and the governorates. The crisis claimed its first fatality on Tuesday in Sharqiya, where a local resident was reportedly killed in a fight with his relatives over who would be first to fill up their tractors.

Argentina to import gasoline for first time in 30 years

Argentine oil company YPF has said that it plans to import 50 million litres of gasoline as demand outstrips supply in the South American nation.

Argentina, an oil-producing country where fuel is subject to government price controls, has not imported gasoline in 30 years.

Indonesia: Natural gas supply to see 23.3 percent deficit this year

Natural gas supply and demand in 2010 will see a deficit of 23.3 percent based on demand specified in contracts and commitments combined in relation to available supply. The shortage equals to 2,554 million standard cubic feet per day (mmscfd), an official says.

Monbiot vs. Leggett duking it out over solar panels and feed-in tariffs

Those who hate environmentalism have spent years looking for the definitive example of a great green rip-off. Finally it arrives, and nobody notices. The government is about to shift £8.6bn from the poor to the middle classes. It expects a loss on this scheme of £8.2bn, or 95%. Yet the media is silent. The opposition urges only that the scam should be expanded.

North Korea Trying to Reverse Urbanization

The North Korean authorities are reportedly offering an incentive to city dwellers, cadres of the party apparatus and the People’s Security Agency in an attempt to encourage them to move to rural areas.

...In the lectures, the authorities explained that a severe shortage of manpower in agricultural areas needed to be made up, and asked cadres to step forward and help.

Korea faces a long road in resources race

Korea’s state-run energy companies, such as the KNOC, are now struggling to secure independent supplies, but the country lacks China’s financial resources. Government officials who toured oil-rich nations in Africa said they now realize how aggressive China has become.

“I was puzzled after hearing from Angolan government officials that there was no point in talking unless we were going to invest billions of dollars,” Lee Jae-hoon, a former vice minister of knowledge economy, said at a seminar, discussing a trip to explore and acquire rights to African oil fields. “China was easily offering billions of dollars, while we only suggested hundreds of millions maximum. We were simply no competition for China.”

China's Feb copper, oil imports surprisingly strong

BEIJING - Copper and oil were in surprisingly strong demand in China in February, with imports rising despite a week-long Lunar New Year holiday and a crippling winter freeze that iced up many of the country's northern ports.

Trade in other commodities, such as iron ore, steel, and soybeans, slowed or remained close to sluggish January levels.

World Bank Gives South Africa Lumps of Coal

In case you didn't catch it, the World Bank's top official for Africa just thumbed her nose at the dozens of renewable energy companies lining up to build clean energy in Africa's dirtiest economy.

Obiageli Ezekwesili, the Bank's Vice President for Africa, defended a controversial $3.75-billion loan to build a massive coal plant in South Africa with this head-in-the-sand statement: "There is no viable alternative to safeguard South Africa's energy security at this particular time."

Alternative energy 'needs to be proven'

Australia will struggle to reduce its contribution to global greenhouse emissions unless a viable alternative energy source can be developed within the next decade, Resources and Energy Minister Martin Ferguson says.

The federal government is investing in biofuels and carbon capture and storage (CCS) research, but beyond that, it insists it does not want to pick winners in the alternative energy sector.

German fishing boat flies giant kite to save fuel

Germany's largest fishing vessel will leave the Netherlands this week, towed by a giant kite harnessing trade winds for South America that will help cut its fuel consumption by up to a third.

The 15,000 tonne 'Maartje Theadora' is the first fishing vessel to use the system, in which a 160 square metre blue and white kite similar to a paraglider pulls the ship on a 300 metre rope, assisting its main engine.

Impact of 'Cash for Clunkers' was underestimated, researchers say

Search online for “Cash for Clunkers,” and here’s one thing you’ll find: stories about its negligible overall impact on the economy.

Wrong, says Maritz Automotive Research Group. The Toledo, Ohio, independent automotive research company recently surveyed participants in last summer’s federal program designed to stimulate new-car sales and get gas-guzzlers off the road. On Tuesday, the company shared its results.

One key finding: 90 percent of those participating in Cash for Clunkers said they would not otherwise have bought a new car.

Increased Solar Radiation Requires Additional CO2 Reduction of 50 Million Tonnes, Analysis Finds

ScienceDaily — The recently observed reduction in air pollution implies that more solar radiation reaches the Earth's surface. This could lead to a far more rapid increase in the Earth's temperature in the coming decades than has previously been expected based on calculations of CO2 emissions alone.

The Peak Oil Crisis: The Looming Fiscal Storm

All this says that despite the incessant media repetition that the economic situation is getting better, there is growing evidence that the economy is in fact growing worse. Federal Reserve support of the Treasury security market and purchases of mortgage backed securities is supposed to end in the next few months. Many fear that this action will send interest rates much higher before the year is out.

Where all this leaves oil prices is not yet clear. Gasoline has been rising in recent weeks and now averages $2.75 nationwide. If normal patterns pertain this year, we could see $3 gasoline by summer, but these are not normal times. Two years ago high gas prices are believed to have done much damage to the economy. Asian and Middle Eastern demand for oil appears to be on track to remain strong. But even China's leaders are becoming concerned about too much pointless growth. Geopolitical dangers ranging from the Venezuelan drought to Iran and political stagnation in Iraq remain.

Oil drifts near $81 amid mixed US inventory data

Crude inventories jumped last week by 6.5 million barrels, the American Petroleum Institute said late Wednesday. Analysts, eyeing a cold weather spell in much of the U.S. this month, had expected a drop of 1.6 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

However, inventories of gasoline and distillates fell more than analysts expected, the API said.

Gas prices’ run likely won’t top $3

As the economy recovers, energy prices are rising and that is placing extra strain on families' budgets.

Each spring brings a familiar ritual in gasoline markets — rising prices — and this year won't be an exception. But motorists aren't likely to pay much more than $3 a gallon, on average, during the peak summer driving season.

OPEC Raises Forecast for Oil Demand on Lower NGL Estimate

(Bloomberg) -- The Organization of Petroleum Exporting Countries said it will need to pump more crude than previously forecast this year after cutting its outlook for production of natural gas liquids.

OPEC, which produces about 40 percent of the world’s oil, predicts members will need to produce 28.94 million barrels a day to satisfy demand in 2010. That’s about 190,000 barrels a day more than last month’s projection. Still, OPEC expects demand for its crude this year to be lower than last year after it increased its estimate for 2009 by 200,000 barrels a day.

Saudi Aramco to Invest $90B in O&G Projects to 2015

The development and deployment of viable alternatives to fossil fuels "does remain an open question," Saudi Aramco Chief Executive Khalid Al-Falih said Tuesday.

Speaking at an IHS CERA conference in Houston, Al-Falih said that oil still underpins the global economy and is likely to remain at the core of the world's energy needs in the future. The conference, known as CERAWeek, reunites some of the world's top oil and gas executives.

OPEC President Vows to Reduce Oil-Price Speculation, Volatility

(Bloomberg) -- OPEC President Germanico Pinto said he will seek to reduce price speculation and volatility during his term as leader of the oil cartel, adding to calls from the U.S. to Europe for measures to minimize market swings.

“The fact that there’s volatility produces difficulties in the markets and in defining a long-term strategy for public investment in the oil industry,” Pinto, who is also Ecuador’s minister of natural non-renewable resources, said yesterday in a statement.

Natural gas focus of oil conference, pointing to source of future

For years, the so-called Oil Day of the annual IHS CERA energy conference, which draws thousands of industry executives to Houston, has been the highlight of this weeklong event. It comes first - before Gas Day and Power Day. The biggest names are keynote speakers that day (This year, for example, Steven Chu, US Secretary of Energy, was among the keynote speakers). And attendence is at its highest.

But the irony of how natural gas is beginning to overtake oil in importance to the industry was underscored by the lunchtime keynote speaker Jim Mulva, chief executive of ConocoPhillips, the third biggest US oil and gas company. Even though Conoco is an oil company first and foremost, and Mr Mulva was speaking on Oil Day to a room filled with oil executives, his speech was called Natural Gas - The Gift.

Musings: Gas Shales May Change More Than U.S. Energy Markets

The U.S. natural gas industry has been focused on the effect the commerciality of gas shale formations is having on the domestic industry. One result is that after years of declining gas production, the U.S. has experienced a rise in domestic supplies. Secondly, the Potential Gas Committee has suggested, based on its study, the country has huge gas resources that can be developed with today’s drilling and completion technologies. They did not, however, suggest that all the potential natural gas resources identified are commercial at current gas prices, and especially at the sub-$5 per thousand cubic feet (Mcf) prices being experienced now. One of the key new basins that will supply this growth in natural gas production is the Marcellus Shale that extends from West Virginia through Pennsylvania and Ohio and into New York. Reportedly this is the largest basin in areal extent (95,000 square miles vs. 5,000 square miles for the Barnett Shale) and possibly in the amount of gas potential with an estimated 500 trillion cubic feet (Tcf) of reserves.

Royal Dutch Shell stops gasoline sales to Iran - trade

DUBAI (Reuters) - Oil major Royal Dutch Shell has stopped gasoline sales to Iran, oil traders said on Wednesday, the latest addition to a growing list of firms that have halted supplies under threat of future U.S. sanctions.

The Anglo-Dutch oil firm will join the likes of BP, Reliance Industries (RELI.BO), and independent Swiss trader Glencore, among suppliers that have either stopped fuel sales to Iran or have made a decision not to enter into new trading agreements with the world's fifth largest oil exporter.

"Shell has stopped selling gasoline to Iran, we have not seen them there for a while now," a gasoline trader said.

Russia lowers oil export tariff

The Russian government said it had lowered its oil export tariff from the current 270.7 U.S. dollars per ton to 253.6 dollars, starting March 1.

Tullow Says Total, Cnooc to Help Ramp Up Ugandan Oil Production

(Bloomberg) -- Tullow Oil Plc said the addition of China National Offshore Oil Corp. and Total SA as its partners in Uganda will allow the U.K. explorer to ramp up production from the African nation.

Ugandan oil output may exceed 200,000 barrels a day beyond 2014 after starting next year, Chief Operating Officer Paul McDade said today. Tullow expects Cnooc and Total to each take a one-third stake in its three blocks in the Lake Albert region, subject to government approval.

Land Rig Review: Land Rig Utilization Trends

Although the recent land rig hiring spree has gone a long way towards improving utilization, total land rig utilization still has room for improvement. With the 2005-2009 construction cycle helping to increase available land rig supply by over 1,000 net units, a rig surplus remains despite the ongoing recovery. It is also worth noting that today's hottest onshore plays require higher spec rigs, thus some of the more marginal capacity has been left out of the recovery in demand and overall supply should be discounted to some extent due to legacy equipment.

OPEC's Oil Output on the Rise - Platts Survey

The Organization of Petroleum Exporting Countries' crude oil production rose to 29.31 million barrels per day (b/d) in February, an increase of 60,000 (b/d) from an estimated January level of 29.25 million b/d, according to a just-released Platts survey of OPEC and oil industry officials and analysts.

Excluding Iraq, which does not participate in the oil producing group's production agreements, output from the 11 members bound by quotas (OPEC-11) -- under a 24.845 million b/d collective target -- dipped by 10,000 b/d to 26.75 million b/d in February.

Increases totaling 170,000 b/d from Angola, Iran, Iraq, Qatar, the United Arab Emirates (UAE) and Venezuela were partly offset by decreases totaling 110,000 b/d from Libya and Nigeria, the latter's production dropping by 100,000 b/d to 1.98 million b/d in February.

PREVIEW - Arms, energy to dominate Russia's Putin India trip

MOSCOW (Reuters) - Russian Premier Vladimir Putin will offer a traditional cocktail of arms and oil deals when he travels to India on Thursday to persuade a Cold War ally to buy new weapons amid rising competition with the United States.

The Russian economy shrank by 7.9 percent last year after a decade of oil-fuelled boom and Putin sees the defence sector as key to reviving growth. But Moscow often needs to offer incentives to sell its usually outdated military equipment.

India Is Seeking Coal Deals in Australia, ANZ Says

(Bloomberg) -- Indian companies are stepping up interest to secure coal resources in Indonesia and Australia to meet the power needs of the world’s second-most populous country, Australia & New Zealand Banking Group Ltd. said.

Natural gas crystals: Energy under the sea

NEW YORK (CNNMoney.com) -- It looks like ice -- but this ice could one day be used to heat your home.

It's actually not ice at all, but crystallized natural gas, and if scientists can figure out how to harvest it cheaply enough, it could become a vast new source of energy available in just about every country in the world.

Offshore wind farm a no-go in Jefferson County

The head of the New York Power Authority addressed the Jefferson County Legislature Tuesday night to clear up misconceptions and encourage the board to entertain the idea of an offshore wind farm, but legislators were not swayed on their opposition.

A Rough Rollout for Smart Meters in Texas

So-called “smart” electric meters, heralded as vital for an energy-conscious era, are having a rough rollout in Texas.

The devices, which enable utilities to vary their rates according to the time of day, allow consumers to save money — in theory. But according to The Dallas Morning News, hundreds of Texas customers have called to complain that the meters, which are being installed by a Dallas-based electric company called Oncor, are inaccurately raising their electric bills.

Japan, New Mexico collaborate on smart grid tech

SANTA FE, N.M. – Two national laboratories, the state of New Mexico and a Japanese agency are developing smart grid technology to give homeowners and businesses more access to renewable energy sources by controlling the supply and demand of electric power.

US Department of Energy to grant $40m for development of next generation nuclear plant

The award has been made to Pittsburgh-based Westinghouse Electric and San Diego-based General Atomics.

The US Department of Energy (DoE) has revealed selections for the award of approximately $40m in total to two teams led by Westinghouse Electric and General Atomics for conceptual design and planning work for the next generation nuclear plant (NGNP).

Debating the Nuclear Waste Problem

With Nevada’s Yucca Mountain facility apparently out of the picture as a nuclear waste repository, government nuclear experts say interim measures might be needed for a very long time.

Drought Has Venezuela Looking at Alternatives to Hydropower

A severe drought in Venezuela appears to be pushing the country’s president, Hugo Chávez, to ramp up efforts to diversify the country’s energy portfolio.

Up to now, hydropower has been the major energy source in Venezuela — providing residents and industry with up to two-thirds of the total electricity produced. But a record lack of rainfall has resulted in low water flows and several power interruptions — as well as angry recriminations of the government from some Venezuelans ahead of upcoming legislative elections scheduled for September.

New Zealand: Govt's $21 Billion Bet On Cheap Petrol

This week, Shell CEO Peter Voser joined a growing chorus of voices announcing the end to cheap oil. When asked about whether the theory of "peak oil" was dead the theory that oil production will no longer be able to keep up with demand Mr Voser said "I think what is dead is cheap oil."

"This Government is placing all their bets on electric car technology to keep us moving in the future. But the new cars are expensive, their uptake will be slow, and they don't solve the problem of congestion or where the power will come from," said Dr Norman.

Rail summit rallies support

Mark Robynowitz, was one of two attendees to frame the projects through the lens of peak oil projections, said he believed the federal money would probably only be enough to fix up existing wear and tear, and less highway- and automobile-related expenditures to fund the project should be considered.

“One of the ways that we could afford to improve the trains is to transfer funds from widening (Interstate 5), which the state has to spend billions on, towards fixing the rail ... The Amtrak Cascade is capable of going a 120 miles per hour, but it can barely go half that on most of the routes because the rail network is decrepit.”

Future of public transit in Orillia is now

There are many reasons why limiting automobile useage is considered important -- in large cities gridlock is a multimillion-dollar problem; air pollution is far worse than many people believe (5,800 premature deaths due to smog in southern Ontario, according to the Ontario Medical Association in 2005); climate change; inactive lifestyles leading to fantastically spiking diabetes and obesity rates; parking problems; and recurrent "peak oil" concerns regarding how much petroleum is actually left in the earth to fuel our cars.

All of these problems were considered in a 2007 report titledHealthy Communities, Sustainable Communities: The 21st Century Planning Challenge.

Write a sequel to Ridge author’s book

“GETI’s main objective in promoting the writing contest is to create awareness that peak oil and climate change are issues that will force change upon us,” said CEED director, Gerry Pinel.

“To prepare for those changes, GETI’s mandate is to build resiliency into our area through grassroots-driven, community-based initiatives. We have a positive vision of our community’s future and this writing contest is a great start in that direction.”

Athamas Hedge Fund Will Sell More Wood, Fewer Carbon Credits

(Bloomberg) -- A forestry and carbon hedge fund proposed by Athamas SA will focus on wood rather than carbon credits after United Nations climate talks in December failed to set international targets after 2012.

First Climate Seeks $136 Million for Carbon Credits After 2012

(Bloomberg) -- First Climate AG said it signed letters of intent with major European utilities to invest in projects that may generate emission credits good after 2012.

Sun Activity Reaches Century Low, May Slow Warming ‘Slightly’

(Bloomberg) -- Solar activity is at its lowest level in almost 100 years and should that continue may slow the pace of global warming “slightly,” Potsdam Institute for Climate Research scientists said today in a study.

Climate Myths and Questions, Part II

In Part One of our series, we looked at polar bears, hockey sticks, Medieval Warm Periods and Little Ice Ages, among other topics. Today our list includes water vapor, volcanoes, and CO2.

California global warming law may lead to job losses, report says

Debate over the economic effects of California's first-in-the-nation global warming law flared this week, with a report saying short-term job losses can be expected.

China unsure on warming cause, to stick with CO2 cuts

BEIJING (Reuters) - China's top climate negotiator said on Wednesday that the cause of global warming was still not clear but the problems it was creating were so serious that the world must anyway act to cut greenhouse gas emissions.

China urges greater US commitments on climate change, technical and financial support

BEIJING - China told the United States on Wednesday to make stronger commitments on climate change and provide environmental expertise and financing to developing nations.

At the same time, China said its own efforts to reduce energy intensity have been hampered by its economic recovery in the latter part of last year, which brought growth in heavy energy-consuming industries.

At White House: 14 senators discuss climate-energy legislation

The fate of President Obama's plan to shift America toward renewable energy and away from fossil fuels may depend on the outcome of a crucial White House meeting Tuesday with 14 key senators, many from coal- and oil-producing states, who have long opposed curbs on carbon emissions.

Mr. Obama – often criticized for being too hands off on complex and controversial climate-energy legislation after it became stalled in the Senate last year – now appears to be making a full-court press to win the 60 votes he needs for Senate passage of revamped climate-energy legislation, several observers agree.

Comparing Chinese car sales year on year is not as simple as it would seem plus China to give big "new energy" vehicle subsidy:


Don't forget most Chinese car sales are for cash or Bertel Schmitt will give you a tongue lashing.

Another Day, More Stories of "Excess Capacity" in Saudi Arabia and Elsewhere

A slight variation of "Show Me'" from "My Fair Lady"

Words! Words! Words!
I'm so sick of words!
I get words all day through;
First from him, now from you! Is that all you blighters can do?
Don't talk of Excess Capacity, if you have it,
Show me!

Saudi Arabia pledged, in early 2004, to support the $22-$28 OPEC price band, and they followed through on their pledge, as they significantly increased net exports in 2004 & 2005.

Why did they "abandon" their efforts, starting in 2006? Why don't they increase their net exports sufficiently to bring oil prices back to the upper end of the OPEC price band?

Or, let's account for a declining currency. How about if they just increase net exports enough to bring prices back to what Daniel Yergin promised that we would see long term--$38 per barrel (AKA "One Yergin")?

"But if the industry is to keep the world hooked on oil......"

there you have it all you petrojunkies, fill-er-up and happy motoring.

Figured you guys would be all over this - didn't you notice that Al-Khalid admits in the top post ('Green Bubble' piece) that Ain Dar and/or Shedgum are in "gentle decline"? Oh boy. Find me a field that big - OK, half that big - that has really "gently declined" and a supergiant with 50-70 Md that produced >3 mb/d and I'll hit the snooze button.

Actually maybe these feats have been pulled off, what do I know? Need a refresher.

China and cars in the news today.

I thought it might be interesting to have a look and see if gasoline demand is up after all this car buying in China. What I found is puzzling and I'd love it if anyone could offer insight in interpreting the following graphs from the JODI Databrowser:

(Note: vertical scales differ.)

Now, with all these automobile sales I would have expected Chinese gasoline consumption to be going up over the last couple of years. But consumption is no higher in December of 2009 than it was in September of 2007.

Diesel consumption, on the other hand, has a very interesting history. The spring and summer of 2009 saw huge growth to a new, higher level. Are the Chinese buying diesel cars?

Any insight into the interpretation of the diesel chart in particular would be greatly appreciated.

-- Jon

That's an interesting question, and one a lot of people have been asking for months now.

China's economic numbers have never been reliable, but there's even more doubt than usual now. The reported number of cars sold did not come with the expected increase in gasoline consumption. For awhile, gasoline consumption was actually lower despite a huge jump in car sales.

The Chinese book a car as "sold" as soon as it leaves the factory. Some people suspect that the cars are sitting in warehouses, or have been destroyed - IOW, that it's a "dig a ditch, then fill it in" situation. Others think a lot of the buyers are using their cars as lawn ornaments - impress the neighbors with the car parked out front, but ride a bike or take the bus to actually go anywhere.

Back in the 70s my family owned a 3.8l Jaguar. A big (by UK standards) engined car. 20mpg. Dad bought it cheap. We used it on average twice a week.

Annual milage probably 2 - 3000 miles.

Others think a lot of the buyers are using their cars as lawn ornaments - impress the neighbors with the car parked out front, but ride a bike or take the bus to actually go anywhere.

I don't think this plays an important role.
Maybe indeed a lot new cars are diesel.

It sounds strange by our standards, but things are different over there. The government had limits/disincentives on car purchases. Suddenly, the government was not only allowing people to buy cars, they were encouraging it by offering subsidies. For a lot of people, this seemed like a once in a lifetime chance to own a car.

But the economy's bad, and gas prices are high. Just because they own the car, doesn't mean they'll drive it a lot. They expect the economy to improve, and/or gas prices to drop. Then they'll drive more.

I don't think the diesel numbers are because of vehicle use. I expect it was used for electricity generation. They had serious power shortages last winter.

For a lot of people, this seemed like a once in a lifetime chance to own a car.

But the economy's bad, and gas prices are high. Just because they own the car, doesn't mean they'll drive it a lot.

Right, but that's something different than buying a car just 'to impress their neighbors.'

The traders who said that were being a bit flip, I'm sure.

Its not uncommon in Japan.

My mother in law was upset my wife and I had an old beater. She was so embarrassed she was almost ready to buy us a new car

Good thing no one here in the States ever buys a car just to impress people. ;-)

But its so much worse in Japan.

Nobody drives an old car. Everybody gets a new car every 4-5 years even if their previous vehicle sat in the driveway 99% of the time barely used.

When I moved back to the states I tried to get rid of my car. Since it was 8 years old I couldn't sell it. I had to pay a fee to get someone to take it off my hands. It was in great condition with very little mileage on it. What a waste.

The laws are really setup to encourage this. If your car is more than 5 years old you have to pay a hefty inspection fee every year. New cars a waived of course.

And of course (at least in Tokyo) everyone just takes the train for just about every trip. Their new cars just sitting in the driveways depreciating.

And of course (at least in Tokyo) everyone just takes the train for just about every trip.


5 worst international traffic jams (order depends on which side you look)

#1 Sao Paulo, Brazil
#2 Jakarta, Indonesia
#3 Los Angeles, U.S.
#4 Tokyo, Japan
#5 New York City, U.S.

If there could be a number six it would probably be Bangkok in Thailand

So, when you are in the train in Tokyo, it may seem that everyone takes the train, because the trains are loaded at full capacity.

Nobody is able to avoid traffic jam in big city but Tokyo is horrible when it comes to transportation. Subways and trains are running everywhere in Tokyo, but still there is a big problem.

Cause the road system in Tokyo is awful and maxes out easily.

And yes, the trains in Tokyo are loaded at above 100% capacity for far too many hours of the day.

99% of Tokyoites commute via the trains and subways and leave their cars at home.

Cause the road system in Tokyo is awful and maxes out easily.

Rethin, that webside showed a picture of Tokyo with a highway with 8 (!) traffic lanes packed with cars.

Seriously man, if you've spent any length of time at all in Tokyo you wouldn't be arguing this.

Its pretty obvious that traffic is the completely wrong metric to use here.

Rethin, I don't argue about that most people go by train/metro, just wrote that Tokyo is in the top ten traffic jam cities. The train/metro system has to be very dense for 99% of the people be able to travel with them. It is a good example for other countries. If others follow that example rapidly, Peakoil problems would be less.

Also good is:

Minicars, like the redesigned 2009 Honda Fit, are about the only cars selling in Japan as sales hit a 34-year low.

Still, Japan imported 3.67 mbod in 2009.

Still, Japan imported 3.67 mbod in 2009.

Japan uses oil for electricity generation. I don't recall what percent off the top of my head but its not insignificant.

Also what I wrote about train commuting pretty much only applies to Tokyo and a handful of other large cities. Most of the rest of the country use their cars.

In addition to the rail system being very dense, Tokyo is a great example of transit oriented development. Communities are built around train stations. In America you drive to you qualify. In the greater Tokyo area you walk away from the station until you can afford to live.

The train can't replace the car. Two entirely different transport concepts[1]. Indeed the train couldn't even handle the capacity of traffic which roads do.

[1] Trains transport groups. Cars transport individuals. Very important distinction for the capabilities of the systems.

This source points to another Japanese Auto future-
Japan auto sales plunge as young lose interest

From the text : -- which automakers here have dubbed "kuruma banare," or "demotorization" -- is a U-turn from earlier generations of Japanese who viewed car ownership as a status symbol.

What do unambitious youth in Japan do? In Britain apparently they drink away their dismal futurer (the US too, but not yet on that scale).

That's where the freeters with any ambition seem to be ending up. Its really rather amazing considering the stigma placed on rural living and farm work.

For generations young people were fleeing the country side for Tokyo. Now with the economy hollowed out there is no place for them.

They are called Freeters. They live in their parents house and spend what little money they make at their part times jobs on comic books and video games.

Its a scary thing to see. A whole generation of young people (mostly men) with no hopes or ambitions. A young man used to guaranteed a career for life with a corporation but that security is gone now. Its mostly the result of the bubble popping in the 90's.

I don`t know when you left Japan but I can tell you that I see a lot of older cars around here these days(I live one hour outside Tokyo) ...yes, and almost all new cars are the tiny kei models (econobox). Also I work as a teacher and no students I know have cars anymore although 7-8 years ago some did. Cars are really on the way out here. Older people in their 50s (the auto boom generation) have their older nice big cars and everyone just thinks "ugh!" No one is impressed anymore or thinks wow. The older drivers sort of look like fashion victims, people who were gullible and went all out to spend and make a statement but young people want to be totally different and just don`t buy a car at all.

My husband and I have no car. My mother-in-law used to plead with us to get a car. But then the economy crashed 1 and a half years ago and now everyone who can cut expenses so they can still buy food is looking correct. So she stopped talking about that completely---amazing and seemingly overnight. She (75) remembers what a carfree economy looks like and she knows (a lot of the older people here do) that it is coming back although slowly.

A lot has changed here recently. And I`m glad. I don`t care if all the horrible cement buildings do end up abandoned (that is happening) because it means they will stop building them. If that is what it takes then fine!!!!

I left over a year ago just as the economy (and job market) imploded.

I think you are right and that the car culture is on its way out at least in the greater Tokyo area. Around there you don't really need a car. Its mostly just a status symbol. And the young are not buying into it (despite the heavy advertising aimed at them by the car companies).

My travels through the country side (and talking to a friend who grew up in the country side and moved to Tokyo) that a car is absolutely necessary to get around. Not unlike a lot of America. I've always wondered it that's where the used cars in Japan end up. Where people actually need them.

I'm curious as to where you are. 1 hour outside of Tokyo could either be country side or a bedroom community depending on which train line you live. I was always amazed at the Chuo line. It's bedroom communities right up to Takao. One stop later and its rural as could be. Just because the express train ends at Takao.

I`m in an industrial area not a bedroom town but there are some farms too. It is pretty ugly around here because of the huge roads, abandoned bowling alleys, closed pachinko parlors, shut-down fast food places (all Wendys closed, now about 400 McDonalds are closing (out of 3,000 in whole country)) closed clothing shops....abandoned used car lots.........ugh!!! Talk about an implosion!!!

Like I said, I don`t care. If this wasn`t happening then I would be more concerned. It is like a cleansing process.

I read about Wendy's. But McDonalds! That's bad.

Who would buy a car just to have it sit on a lawn?
That's allot of money for a status symbol to just sit there and do nothing.

I'm sure thier cars had better mpg to begin with, but..., maybe they're just getting more bang for the buck....

Or maybe the numbers are bogus. Like the old joke goes, China is the only country that knows what their GDP will be three years in advance.

The US numbers *are* complete lies. The GDP deflator has been about half of its actual value for the last 20 years at least.

"Who would buy a car just to have it sit on a lawn?

The same sort of people who buy enormous houses that they can barely keep up, and that, well, just sit on lawns?

US Gasoline Supplied LDV+Car Sales 1973-2009

Loose correlation there. By all rights we should be using a lot less gasoline, you notice. Efficiency mandates haven't kicked in (they will next year, in theory anyway), perhaps. What happened 30 years ago simply isn't obtaining; if we'd followed the same pattern from our local peak in gasoline consumption we'd be using 1885 kb/d less for Dec. The total fleet size was smaller, for one thing; people had more discretionary income, balancing out higher interest rates, I'd guess. Maybe they canceled each other out. Then there's credit...I'm not an econ guy. There could have been a rush to MT too, but the data isn't there for us to tell - Staniford attempted to dig this up, but all he could find were data points for lone years like 1980.

People are just holding on to their cars longer between trade-ins. I'm seeing this same pattern in vehicle property tax receipts - older vehicles equal lower valuation equal lower tax revenues.

Several weeks ago I saw a video showing how China makes it's growth numbers. They build a whole big new city right next to another one, and wish for people to move out of their old homes into the new ones, and people have actually bought a lot of the new ones, but they figure on using them as an investment, and don't want to leave the old Neighborhoods where everything is in place for a new unfilled city.

So your thinking of buy the car and set it in the yard as a status symbol is pretty much a sure bet, or at the least a warehouse full.

Growth does not have to mean consumed.

They do have a lot of big cities, and some of them are filling up with new homes and new people, but not all of them are that way. They are busy bees building a lot of hive room, without ever filling it with honey. Sooner or later the growth will not be as great, or more people will call them on what they are doing. Their gift is that they are not an open society and that allows them to hide the facts from the rest of us.

BioWebScaping a path for the future.

Maybe their cars are getting smaller with better gas milage...???

China has much higher fuel efficiency standards for new cars than the U.S. and they drive fewer miles.

Diesel is key. I found this;

"And Asian oil demand today is only partly about transport. About half is industrial consumption, for power, fertilisers and petrochemicals, with additional use in home cooking and heating. This pattern holds even in a wealthy country such as South Korea.

High industrial use of oil is largely due to the last decade of rapid economic growth. Electricity supply failed to keep up, coal was in short supply in cold Chinese winters, and consumers and factories ran diesel generators to avoid blackouts."


Here is an excerpt from a March, 2006 article in China Dailiy:

China should widely use diesel engines to release the bottleneck in energy supply and demand brought about by accelerating fuel consumption, said the All-China Environment Federation in a proposal presented last Wednesday to the current National People's Congress being held in Beijing.

The country is facing a growing problem of resource and energy shortage and environmental pollution. Rapid development of the automobile industry has presented new challenges to fuel supply. Experience at home and abroad shows that wide application of diesel and development of diesel cars will help China effectively implement a national energy safety strategy and push forward construction of a resource-saving and environmentally friendly society.

Sounds like some in China's government have been lobbying for diesel cars in China to reduce oil consumption. But I can't yet find any statistics on the percentage of newly purchased vehicles that are diesel.

When American analysts look for increased passenger vehicle use in Chinese gasoline consumption numbers they may be looking in the wrong place.

-- Jon

Interesting article here, from Jan. 2010:

China boosts 2009 diesel exports; buys coal

China boosted diesel exports by more than sevenfold last year because of slow domestic demand and increased oil-refining capacity while purchasing more coal after shutting small, unsafe mines across the country.

Everything in that article is pretty well reflected in the JODI Databrowser graphic.

The sevenfold increase in diesel exports is not very meaningful because we're talking about large differences in small numbers. According to the JODI data, China was a diesel importer for most of 2008. And one of the more interesting stories is in the stock changes. It's too bad JODI doesn't report total stocks for China but the Chinese went from regularly building diesel stocks to significant drawdowns during the latter half of 2009.

It appears that Chinese refinery output is increasing at a pace to keep up with demand but that should be reflected in their increasing crude oil imports.

But if what's going on China is cars that use diesel instead of gasoline, you wouldn't expect to see "slow domestic demand" for diesel.

51.56% of China's 2006 power generation was from oil. Assuming 35% efficiency this equates to 227.8 kb/d. JD used the same source for 2004 and showed 316.9 kb/d, so they'd gone on a diet. I've yet to correlate this with Stat Review numbers - they show regional consumption by light/middle distillates, fuel oil, others, plus a few key nations - US, China, Japan. Or JODI/EIA. Fuel oil = power gen and bunker fuel, plus a few odds and ends like really crappy domestic heating. For 2008 China's fuel oil use as % of total was down to 8.95%, so they've curbed a lot of these bottom end applications, good for them. Unfortunately fuel oil is the big piece of low hanging fruit in curbing overall demand.

The last car one is probably ever able to afford is treated differntly than 1 car in a long series. I saw a lot of bikes being ridden around with the bubble wrap still on the frames to keep them nice ,for instance. But I think there is a larger picture as well. Crude imports are as high as they have ever been up 58% over last year and refinery capacity has soared.

The strategy seems to be to tamp down domestic consumption of gasoline while encouraging refinery exports. In short I think a lot of the increase in Chinese crude imports are being refined and resold to their neighbors.

Sinopec will pay refineries 130 yuan for every ton of fuel exports starting this month, the newspaper reported.

It's no secret that by using price controls and a 5% maximum profit margin for refineries the Chinese are able to somewhat direct consumption and control the amount of products supplied.

Also of interest is that 70% of the new cars sold in China are less than 1.6 liters in engine capacity. As to whether Chinese consumers would buy a car and then not use it as much I definately think that will come into play esp as the government slows an overheated economy and encourages exports of refined products.

Last year, record 70% of cars sold in China had disp. of 1.6l or less. A change in majority of car buyers to household from busin
esses has also affected gasoline demand. According to cera analyst,
household cars drive only a fifth as much as corporate or gov't
cars and a tenth of the distance covered by taxis.(eg 4/20/40kmpg)
One gasoline forecast is for ~1.72mmbpd this year vs 1.60.
A growing % of veh will only be using 100-130gpy vs US lv avg of
550-600. China also tripled the cash-for-clunkers incentive this
year but this would get used up fairly quickly.
Chinese drivers are currently paying around 13% more for gasoline
than in summer '08 while Americans are paying 33% less.

Summary of Weekly Petroleum Data for the Week Ending March 5, 2010

U.S. crude oil refinery inputs averaged 13.9 million barrels per day during the week ending March 5, 149 thousand barrels per day below the previous week's average. Refineries operated at 80.7 percent of their operable capacity last week. Gasoline production decreased last week, averaging 8.8 million barrels per day. Distillate fuel production decreased last week, averaging 3.7 million barrels per day.

U.S. crude oil imports averaged 8.5 million barrels per day last week, down 744 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.8 million barrels per day, 367 thousand barrels per day below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 806 thousand barrels per day. Distillate fuel imports averaged 130 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.4 million barrels from the previous week. At 343.0 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.9 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 2.2 million barrels, and are above the upper boundary of the average range for this time of year. Propane/propylene inventories decreased by 1.5 million barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories decreased by 5.3 million barrels last week, and are above the upper limit of the average range for this time of year.

Oil stocks up. Consumption up. Dollar up (against yen and sterling). Markets up. Oil price up a dollar and a half.

Maybe there is something in memmel's ramblings after all.

Total commercial petroleum inventories decreased by 5.3 million barrels last week, ...

Doesn't seems like oil stocks are up to me

I've been thinking all along that we are headed for another big oil price spike. As things have dragged on, I found myself waivering. Darwinian and others have made some good points. But now I'm certain I was right the first time. And I think I even know why.

People who say that we don't need to look at production numbers anymore are WRONG! They say we can't learn anything from production numbers because we are not pumping full bore due to lack of demand. Not true at all. They've got it backwards, really. The cost of production is putting pressure on all parts of the system. We are pumping as much oil as we can afford to pump. We are getting poorer every day. If we can no longer afford the increased costs necessary to raise the production levels, then we are toast. Some theoretical maximum rate of extraction is just that. Theoretical. In the real world we ARE pumping full bore. So when production numbers get into the range we happen to be in right NOW (about where the 2008 spike started), we will begin to experience serious production shortfalls due to actual depletion. Inventories will VERY SOON drop significantly below demand and the price of oil will rise DRAMATICALLY.

I think the final super-spike in the price of oil actually started about 4 weeks ago.

If this is true, we will know very soon. I love a testable hypothesis!

I would conservatively estimate the price of oil to be somewhere in excess of $120 a barrel within about 20 weeks from today. Even a bad stockmarket crash in the meantime shouldn't slow it down too much (maybe just a little). And I wouldn't be surprised if it goes up faster and potentially higher than $120 before this super-spike collapses from massive demand destruction. This may or may not be the terminal spike.

If I can figure out how to post some graphics, I'll show my simple reasoning for this seemingly wild forecast.

I think it is too soon for a super spike. Although I suspect the numbers are inflated, OPEC probably has some spare capacity. Since OPEC changes its quota at meetings, there will be a delay before they act to reign in a rising price. Also last month Saudi Arabia announced its desired price range changed from $70/barrel - $80/barrel to $70/barrel - $100/barrel. Price spikes will be contained until all oil producers are producing at maximum capacity. Since OECD countries raised their production at the end of last year, OPEC has not needed to increase production.

Saudi Arabia announced its desired price range changed from $70/barrel - $80/barrel to $70/barrel - $100/barrel.

This month Saudi Arabia announced that it was moving its target price range to $100-$120 a barrel to meet demand if needed the vow to shift the price range as high as required to satisfy demand.


I would love to get your thoughtful critique of my basic reasoning in my post above.


Well first of all I agree that in principle that there is some spare capacity in OPEC however I suspect most of it is short term in nature resulting from stressing the system in various ways. Pumping and storing oil during the natural rise and fall in demand and releasing it later. Aka the oil equivalent of pumped storage. Even shipping below capacity and storing to surge later this is a trick that I think was played in 2008. Time shifting of when oil is pumped and when its delivered if the amounts are large enough can effect the oil markets if supply and demand are close to balanced. Seasonal demand variation is large enough and storage levels large enough that games can and probably where played. Next there is simply pushing the field and system in general at unsustainable damaging rates.
Last but not least there are still some supplies of heavy oils that perhaps are not being produced at their full capacity that might provide a sustainable increase but the ability to efficiently refine these is and issue.

So there is almost always just a little bit more and globally I'd argue squeezing 1-2mbd out is reasonable. I'm talking ever single little podunk well going full blast.

Now with that said does it matter ?

If the world consumption is pulling down storage at the rate of 1.5 mbd and production increases to 1mbd dropping the storage pulldown to 0.5mbd.

This is very important because to get strong price increases the gap if you will absolutely has to be sizable 200kbd+ more likely 500kbd or more.
Anything less than that can be overcome by pushing the system just a bit more. Pump and dump schemes etc.

However and this is really important a gap on the order of 500kbd ensures that no scheme to hide it can last long your talking months not years before your in trouble again. Exactly when is of course dependent on a number of factors but its why in the past I predicted that right now the truth will start to show.

So going back to 2008-2009 if what transpired was a desperate scheme of pumping and dumping oil starting in 2008 along with and attempt to contain demand by deliberately cooling the economy ( got a bit out of hand ) then your in deep again shortly there after.

If we further assume that the intrinsic decline rate is accelerating variants of export land etc etc. Then your back in hot water again if prices start rising strongly.

The key point is that this gap between production and demand met by oil storage schemes fails if the gap is of any size at all. For prices to rise it has to be relatively large otherwise give the amount of oil we pump everyday 70mbd+ it can be readily met by efficiency increases in the oil industry itself.

If you understand this then you have no problem ignoring what the "offical" announcements are because they are irrelevant the system is telling you exactly whats going on if you know how to "read the tea leaves".

Its a problem of scale and a reasonable estimate of the minimum gap required to get a certain price action. Pump and dump schemes on top can buy some time but all they do is shift the certain problem point out by six months to a year. Eventually the gap widens to the point these no longer work indeed because of the way things worked and prices collapsed they actually worked to make matters worse not better esp as prices rise again because everyone is expecting a collapse. And of course the cooling of the economy ensures that current demand is less elastic then before as its no-growth demand.

Obviously the claims of increasing GDP and growth are also utter BS our global economy is not growing it does not have the oil just at the moment its not shrinking rapidly. There is no real growth and no real change in oil demand simply real supplies steadily declining and the respite from prices caused by pump and dump and financial games coming to and end.

Now going back to the past the collapse of construction globally over 2005-2009 depending on each region did help to quell demand to some extent as construction is oil intensive and the construction industry can change fairly rapidly. Housing construction in the us changed dramatically over the period of a year. So you certainly have one demand variable that was large and could be tweeked. Of course given my viewpoint obviously one has to wonder about the fact that this tweakable parameter was allowed to grow so large in the first place ...

This is of course important if you read my blog because the extreme of the housing bubble happened well after peak oil. They are far more tightly coupled then most people realize.

But at that point you know have to understand where we really are peak oil is well in the past and we are now facing the final crunch period where games no longer work and further drops in demand via destruction are economically destructive. Basically demand cannot contract from here on out without part of the economy actually failing.

Basically in the end you have to buy my whole argument of a peak well in the past to fast forward to today.

Now whats really really funny is that people claim that rising prices will result in falling demand. Well hell we spend basically a decade seeing steadily rising prices any conservation that could be done has been done all the way up to 140. There are no simple easy conservation methods left.
Indeed what I claim i.e we now can only cut demand by destroying parts of the economy happened. The first example was the housing bubble popping indeed because it was a bubble and not normal it bought us a bit of time.
Its was obviously in my opinion allowed and fostered to eventually act as a break if needed. Obviously conservation caused by rising oil prices had zero effect otherwise we would have have seen prices moderate in the past they did not. Therefore the claims that conservation can offset rising prices are simply bogus and trivial to prove wrong. Our one big red button collapsing the construction industry has been pushed we don't have another one. Its S meet Fan time.

Nice summary, it all makes sense to me.

Since we are past PO and well on our way to seeing the strong effects of Exportland 2.0, it would seem that any supply/demand imbalances would be quickly recognized by price increases. As I mentioned recently all indications are that that much discussed floating offshore oil storage has mostly disappeared. But since US oil and gasoline inventories are above nomral many are not worrying much until we get near some minimum operating level.

The amount of oil being transported at any one time around the world is truly incredible, and as you imply, just small changes in the delivery of that oil can have the temporary appearance of rising output or rising exports. However the bluff will be call in a matter of months as we stumble down the back downslope of Hubbert's curve.


Thank you very much for the thoughtful comments.

The pump and dump stuff you talk about is true. In fact, it's part of the underlying mechanism that creates the shape of the oil price curve. Every time the price rises very fast, this cost shifting begins happening very naturally as a result (profit maximization motive). This leads to a drop in inventories which eventually causes a subsequent rise in price. That's what makes the characteristic stairstep pattern upward. The fact that it has slowed it's ascent means that tension is building up. The system is squeeling between two equally bad alternatives. Oil spike or market crash (or both). That can be the only outcome. The thing about nonlinear systems is this squeeling is a clear sign that the system is about to state jump. It turns out that these signals for timing are more clear than they are for direction or magnitude. It's like we can sense something is about to happen, we just can't tell what that something will be. How long can a system squeel this way before it snaps? Not very long.

As far as the supply/demand gap needed for a big spike, I think the big surprise will be the depletion factor. Plus, like I said, I believe we are already pumping full bore, practically speaking. When the most recent rise in production finally gives way to a decline (soon), it will be a major one.

You say: "Indeed what I claim i.e we now can only cut demand by destroying parts of the economy happened. The first example was the housing bubble popping indeed because it was a bubble and not normal it bought us a bit of time.
Its was obviously in my opinion allowed and fostered to eventually act as a break if needed."

I think I may have a better explanation for this. This story goes way back in history. It all began in 1978 or 1979 when world population growth overtook world energy growth. Enegry/capita peaked and began to decline world wide. Once this happened, economic growth was no longer possible and the economy was going to begin to contract terminally (meaning collapse long before now if nothing was done to stop it). The whole Reaganomics thing was all about lowering taxes and interest rates to cancell out the rising energy cost, thus maintaining room for the economy to keep growing (this policy was imitated worldwide as well). Also, outsourcing began at this time as another way to reduce the non-energy cost of manufacturing (and screw the working man as well). And it's been nothing but a fake economy ever since. I wouldn't blame anyone, though. You see, there was not really any other choice. All that anyone in power could do was kick the can down the road, with an ever more increasingly ficticious economy as a result. Basically, now the jig is up. All that fake money was like sugar to a starving man; only a temporay lift, leading to a big let down later on. The most recent housing bubble bought us time, yes, but it was not floated so that it could eventually act as a break. It was the only thing keeping the economy running at all! The popping of the housing bubble (proximately caused by the oil price run up that culminated in 2005) signalled the point at which the bubbles and tricks were no longer going to work any more. Ever. That was the point where the rising cost of energy had finally overtaken the whole system. The next thing is collapse.

LS If your images are already on the web you should pretty easily be able to use This Website to post them. If not you'll have to upload them to Photobucket or some such first.

Also if you haven't followed Ace's work here http://www.theoildrum.com/node/6206#comment-589057 is one of his charts which may be of interest. By looking through his comments there are quite a few more. By no means exhaustive of the material available here on the good ol' TOD. Cheers.


Thanks for the link. I am a huge fan of Ace. I used to have one of his charts stuck to my refrigerator way back in 2007. I showed it to everyone I knew. When it came true, most people couldn't begin to grasp the significance.

His forecast is not much different than what I'm saying ($120+ by September is basically what I'm saying, just likely sooner). I think the price is more sensitive than he does. And the economy as well. I think we are pumping full bore. I think a price signal is already blinking and traders aren't going to wait for real shortfalls to bid the price up (it's how they make a living, and remember what happened last time).

I don't think this spike will reach the heights of the last one (although it may). I do, however, think this spike will happen a lot faster. I also think it will destroy demand very quickly and severely. I think the price will drop again to begin the cycle anew, provided the economy is up for it (I have my doubts).

I did share that belief at the beginning of the year. Today, after what has gone on in Iraq, my opinion has changed. Here is what I see.

1. The players in Iraq are being set up for a massive pump out off oil as fast as can be done. It will likely result in that 12 MBPD figure in about a year. This will peak and begin very rapid depletion in 2014:

scientists in Kuwait predict that world conventional crude oil production will peak in 2014

2. The depletion rate for remaining oil beginning in 2014 will be a shock; prices will begin to rise, until in 2015 the final crash will begin TEOTWAWKI.
3. It will be a gradual decline, punctuated by local violence and brief rapid deflations (if that is a good word).
4. In 50 years, there will be a new normal, and a totally different world. Not better, and not worse. Just unlike what we have today, and IMHO unpredictable from today's viewpoint.



Thanks for the post

You say: "3. It will be a gradual decline, punctuated by local violence and brief rapid deflations"

I think a better way to think of it is that eventually each local area will have it's own complete collapse, but not all local areas will collapse at the same time. This achieves the same "gradual" outcome (average worldwide population loss), but it has a very different feel to the individual living or dying in it. Location will be important to survival, but so will timing. Individual survival will come down to mostly luck.

I think you're wrong on all counts.

1) Factional infighting and externally-driven destabilization will limit growth in Iraq. It'll be expensive and deadly, but some growth will probably happen. Lucky to see even half the 12, and that will take years. Maybe, if Burgan and Ghawar hold on another few years, it will drive a brief mideast peak....possibly even a new overall peak, but I doubt it. The oil just won't be cheap enough to enable the consumption.

2) Initial decline will be gradual (even 5% per year is gradual, even though it won't feel like it), but the effects will be centralized on a few poor and a few trade-imbalanced western countries. Prices will rise on average but cycle on about a two-year period, with recession/depression in between.

3) Decline will remain gradual with occasional pops back up until the first war...could be Iran this year. Could be elsewhere in 2 or 5 or 10. Wars will happen, and they will be deadly beyond all recent history. Infrastructure makes for easy targets, and that will make for steep declines.

4) The new normal will be worse for most, and getting there will be worse still. How can you beat nearly free energy? Things can't get better, ever, until population is under control. 50 years would put a dent in that IF we started now, but we're not even close to starting.

1. The players in Iraq are being set up for a massive pump out off oil as fast as can be done. It will likely result in that 12 MBPD figure in about a year. This will peak and begin very rapid depletion in 2014

Say what? You are predicting that Iraq will be producing 12 million barrels per day next year?

1. The players in Iraq are being set up for a massive pump out off oil as fast as can be done. It will likely result in that 12 MBPD figure in about a year.

Craig, I take this for a joke. They are planning 12 mbd in 6 or more years. Imagine the infrastructure that has to be build. I think 6 mbd is more realistic for several reasons.

Although I think you're jumping the gun a little on how fast prices will rise Loren, I got a big kick out of your posts. Especially the super-spike bit. They are bold, predictive and thus make for interesting reading. Welcome to TOD!

Perk Earl,

Thank you so much for the warm welcome. This is really fun!

I have always been a student of human nature. The Oildrum, and the growing peak oil community in general, are social webs. Because of the way social groups interact, they tend to become echo chambers, and thus make little real progress in terms of understanding the reality that surrounds them. Groupthink naturally skews toward optimism. I'm intentionally trying to be a little provocative to shake some of this up, but with the very serious goal of teasing out new insights into what's ahead.

As far as predictions go, I kinda stuck my neck out a little on this one, huh? Damn, I sure hope I'm right. No, wait... I hope I'm wrong. No, wait...

Loren - interesting comments.

PFC Energy did a recent study and stated that the Saudi need $50 oil to balance their current ac-count. Surprisingly Iraq needs $94 oil to balance its trade account, so I would not expect the much discussed expansion of Iraqi oil to commence in earnest without prices nearing $100. Even then, I will be very surprised if they ever make it to 6 million bpd in 5 years, but even if they do, it will only be a minor upblip on the downslope of total world output.

However I prefer to think at what price of oil the Saudis need to balance their governmental budget. Last summer (which I posted) they specifically said that price would be $75 - and I said not to expect the price of oil to drop much below $75 after that. In fact it never did drop much below $75, and in recent months the $75 level has been the low.

Since Saudi exports have been gradually dropping, outside of February – which I consider a one moth anomaly – the price the Saudis want is probably about $80. I look at that as the new mini-mum. On the upside, even though I believe the Saudis may have about 1 million bpd of real spare capacity, I don’t see that being used at all while oil is less than $100.


Thanks for the post.

I think you are taking the correct approach. The minimum price is what's important.

I didn’t mention this before, but last week’s oil inventory report (the one released on March 3) showed a 4.1 million barrel build-up in oil inventories. However a majority of that was due to an increase in the West Coast area – whose oil and product distribution network is mostly isolated from the rest of the country. The increase there was due to an unusual increase in imports, and it may possibly be related to an extra tanker offloading – due a minor increase in February OPEC exports. All indications are in March OPEC exports are significantly dropping.

This week’s report (issued today) shows a further 1.4 million barrel build-up in oil inventories, which was more than offset by draw downs in distillate and gasoline supplies. The trend of in-creasing oil inventories and decreasing product inventories is seasonally normal, but the decline in product inventories was faster than normal.

Oil imports now are trending below last year’s levels, and with product imports dropping too, total net imports are down about 700,000 bpd on average in the recent four weeks.

Falling oil (and product) imports, otherwise known here as Exportland 2.0, are going to clash with increasing domestic oil demand. Total presumed demand, based upon refinery output, is up 3.8% year over year in the most recent four week average. As I have stated frequently here, this perhaps is the strongest evidence that the US economy is in some type of first half recovery. Well at least a recovery where oil use will increase. Keeping in mind that US oil consumption dropped more than 2 million bpd from its peak while a vicious cost cutting and inventory reduc-tion cycle was undertaken, a more normalized economy with no inventory liquidation could re-sult in increased demand.

How the problem of increased oil demand and decreased oil imports will be resolved is going to make for an interesting summer.

I'm leaning toward thinking Jeff Rubin is right. He doesn't think the weekly inventory report matters any more.

Exactly why oil traders and speculators think the data has anything to do with the state of world oil demand is beyond me. I suppose, like Pavlov’s dog, they’re only doing what they’re trained to do. But their training comes from a world that no longer exists.

The economy got a boost, but it was mostly government spending. I think any recovery will be short-lived, if it happens at all. I don't think the drop in imports reflects Exportland, so much as it reflects demand destruction.

Regarding ELM 2.0, my point is, at least based on recent data, that developed countries like the US are going to be forced to make do with what is left after developing countries take what they want. So, the US is going to have to make do, IMO, with a declining share of a falling volume of global net oil exports.

Regarding traders focusing on weekly US inventory reports, I've compared it to the old joke about the drunk looking for his keys under a streetlight late at night. He lost his keys down the street, but the light was better under the streetlight.

Regarding ELM 2.0, my point is, at least based on recent data, that developed countries like the US are going to be forced to make do with what is left after developing countries take what they want.

This, I disagree with.

The oil will go to those most able and willing to pay for it. In some cases, those will be developed nations. In some cases, it won't be.

I don't think the current situation is anything but recession-driven demand destruction.

I haven't done a comprehensive review of developed versus developing countries, but based on the countries I have looked at, the trend is pretty clear, especially from 2005 to 2008--generally increasing consumption in developing countries versus generally declining consumption in developed countries.

And looking at "Chindia" specifically, as annual oil prices went up at 20%/year from 1998 to 2008, China's oil consumption almost doubled, while India's consumption was up by about two-thirds. US consumption in 2008 was back to the same level as 1999.

BTW, Rubin's comments from today's linked article sound a little familiar:

As China moves from consuming 8 million barrels a day to 10 million barrels, and OPEC ramps up its own daily consumption from 10.5 million to 12 million barrels, somehow, somewhere else in the world, there must be a corresponding decline in oil consumption. That somewhere else just happens to be the U.S. market and the oil markets of the other OECD economies.

I don't think you can just look at country by country numbers. As that article I posted yesterday pointed out, developed countries have outsourced their emissions. Some more than 50%. That means they've outsourced their energy consumption as well.

Okay ... I suppose the advantage of developing countries vis. OECD is inexpensive labor and inexpensive energy consumption infrastructure although China's consumption infrastructure is being expanded rapidly. The infrastructure needs energy in addition to the energy required by the cars running on it.

Here, the OECD is noncompetitive with dirt- road developing countries.

Macro demand is also effected by capital flows, current account surpluses and currency reserves. Developing countries are speculators darlings and now have 'hot- money' capital to squander. Tomorrow? Demand destruction is really hitting developing countries' exports since the end users both in the OECD and the other parts of the developing world are going broke - because of the high oil prices.

Cheap labor is a tremendous structural advantage when wage rates, infrastructure costs, finance/capital costs and 'government expenses' (bribes, etc.) are added together. The impetus to outsourcing US jobs was the unsupportable cost of high US wages plus high fuel costs, even with low taxes.

Cheap labor is not a panacea, however. It buys some time but the decreasing efficiency of automation makes even cheap labor ... not cheap enough.

It's the real cost of energy - not the number but the percentage of economic activity directed toward the consumption of fuel that matters. If you are unemployed and gas costs a quarter a gallon ... it's still too expensive. If you have a thousand bucks worth of gold in your pocket and there is no gas in any gas stations in your state, you may as well be flat broke from a gas standpoint.

China has a lot of dollars, it can buy fuels or it can buy fields. Making use of these fields when they are tagged with the 'colonialist' label will be an interesting form of entertainment for those who have an affinity for schadenfreude.

My take on Saudia's official statements regarding 'volatility' and controlling prices is an understanding of changing conditions. In 2004, the rise in price from $25 to $25 did not threaten the entire world's economy - although businesses started to fail because of the rise in input costs that did take place. There was more capital available, low real interest rates and the 'wealth effect' of high home equity in tens of millions of homes.

Today, the rise in oil price much above current levels would signal an oil shock and a speculative 'buy in' as took place in 2008. +$80 is really a danger area; there is less credit available, tens of millions unemployed world wide, housing values that have plummeted and excruciatingly high real interest rates. Basically, there was a lot more price slack in 2004 than there is now.

How does our infrastructure return a profit when businesses that use it are dependent on oil that costs less than $35 dollars a barrel?

I don't think the current situation is anything but recession-driven demand destruction.

I'd be inclined to agree BUT it looks like our demand is down 23% from peak (looking at EIA graphs). And yet... at the pump price is rising.

EIA data shows December 2009 demand ("U.S. Product Supplied of Crude Oil and Petroleum Products") is down about 10% on December 2005 (peak December month). Or were you just referring to imports?

See http://tonto.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTUPUS2...

This was discussed last week on Drumbeat.
Although imports 20% down, consumption was only 10% down. This was explained with that what is counted as import is more than only oil.

A preview of coming attractions in a state near you. An update on the mess in Illinois:


That is probably how it's going to play out, for as long as possible. We won't raise taxes. We won't cut services. We'll borrow, and keep waiting for things to turn around.

As a resident of Illinois, I would expect them to do nothing more. This is BAU in Illinois, kick the can down the road until you go over the cliff. The shortfall is only approaching 50% for 2011. Hell, we should be able to ride this baby to 80-90% at least. Our politicians are just reflecting most of the citizens desire not to deal with reality. "Take it from the other guy. I deserve my tax break, services, etc... and I want to continue receiving more than I put in, so take it from the other guy." The other guy in this case is the bond market, and some day the bond market will say we don't want your paper. Just a microcosm of what's happening in most other states and the country. We're just getting there in the front of the pack.

There are many bad things that can be said about Colorado's Taxpayer Bill of Rights (and I've certainly said my fair share of them), but the fact that TABOR makes it almost impossible for the state to borrow money for current operating expenses has kept the Legislature here from making that particular fiscal mistake.

The one current exception is the Unemployment Insurance program, which is on pace to have borrowed $270M from the federal government by the end of March in order to continue paying benefits. It was originally thought that there would be a court case challenging the legislation that made the UI borrowing possible. However, the peculiarities of the state/federal tax setup for UI are such that killing the state program would result in roughly tripling doubling the UI taxes businesses must pay. As a result, the businesses who would normally fund such a lawsuit have declined to participate.

A typical ploy.
In Michigan Granholm tried the same, oh and don't forget the early release of dangerous felons.
Edit for memory lapse.
What is coming in October is a 3% raise for unionized MI state workers...difficult to see how this gets funded.
My homes assesed value dropped 10 grand last year BUT a repo'ed home a few doors down sold sold for less than half of what I paid for my home...in 1990.

Re: A Rough Rollout for Smart Meters in Texas

The article also mentions customer complaints of higher bills in California as well as Texas. The same complaints are occurring in Boulder, CO, where smart meters are being installed. Is it possible that the cases that are showing up are due to problems with the old meters under-measuring use? Is there any published work on the long-term behavior and failure modes of the old meter technology?

The cost estimate for the smart grid update being done in Boulder is now $100M, or just a bit over $1,000 per resident.

I was wondering this, too. It's hard to believe they would be so incompetent as to install new inaccurate meters, though I suppose it's possible. It would be very interesting to see the verified accuracy of the old meters. Perhaps the utility companies were giving away power for free? Either way, (inaccurate old meters or inaccurate new meters) it's a big public relations problem.

I don't find it hard to believe at all....incompetent people run big programs all the time. Just look at your Fed Gov....

All electricity should be tiered to the personal consumption.
First X amount for private dwelling use is free...small amount to provide minimal consumption.
Next X amount for private use is X dollars...Ok, so you want the house/apt warmer, you pay for it.
Next X amount for private use is X dollars...Still want to heat and cool the McMansion? You pay thru the ass!

Business use pays from the get go.

Stop with all the technology mumbo jumbo of "smart meters". Technology for technology's sake, needs to end. Look at all the idiots and their Toyota problems. I drive a vehicle that gets 35 mpg, and its all mechanical controls. So what, I take the bike most of the time.

Grow up people. The problems are human. Solve them with a little Humanity.

mc - As I understand the theory behind smart meters is that you're rewarded with a lower rate for shifting your consumption to off peak times. But then the opposite would also be true: consumption during peak times would be billed at a higher rate. Thus if folks keep their peak consumtion rate up their bills should be higher. Installing new meters can't reduce the gross charges the utilities collect. In fact, I assume the cost of the new meters are built back into the rate base. If I'm correct there should be a lot of folks getting bigger bills then had been use to. Isn't that the whole point behind smart meters: use energy during peak load periods and you get charged a premium price. Granted they may have pitched the lower non-peak rates to the public. But for evey $ someone pays less someone else has to pay a $ more as I understand it.

The complaint is that the meters are showing much larger energy consumption that before. Not in dollars, but in kilowatts.

So far, the only errors that ONCOR is admitting to are manual input errors, when the meters are changed out, but to their credit they are all in favor of independent third party testing.

Here is new article on side by side meter comparisons:


A different animal then. Thanks Leanan. Even when they get the bugs worked out I wonder how many folks will be happy paying higher rates for prime time. In Texas with our demand for AC during peak periods during the summer at lot of folks would be shocked at the end of the month.

So that's when you put up the solar panels and get credited for your production at those high peak rates.

Right now, in California (PG&E area), tier V peak rate is $0.618 kwh.

61 cents for a kilowatt-hour...

TTBOMK, Xcel has filed for a time-of-day tariff for Boulder, but it has not yet been approved by the PUC. At least one of the sticking points appears to be how such a tariff should be integrated with the state's net-metering rules. If I understand the problem, utilities do not want to pay small intermittent net-metering generators the high price that is based on purchases from peaking load generators that provide guaranteed delivery.

It looks like the high-priced periods will be about 10 cents per kWh higher than the low-priced periods. Wonder if you could pump enough water up the hill at night to show a profit by using it to run a grid-tied generator during high-priced periods?

I couldn't be more pleased to see people being shocked into cutting their power usage. Too many lazy retards use power with no concern to the enviornment or the level of infrastructure needed for their demands.
At my fathers place I regularly see his boarders using the clothes dryer for 90 minutes at a time (and heating the house up) just 10' from the clothes line. On one occasion whilst the dryer was going I had time to wash and then line dry my clothes as the 105 degree low humidity windy day dried my clothes in 20 minutes. My father also runs his air con with the doors open (lots of power used for no effect) and passed up on free (govt provided) home insulation because he didn't to be reminded about the borers in the rafters. I'm hopeful stupidity isn't inherited.

Well, reading up on the California scenario, it looks like the meters, old or new, were not at fault. The roll out of the new "smart" meters in Bakersfield coincided with a hefty rate increase most people were unaware of (it'd been approved years before) and an unusually hot July (17 days over 100 degrees as opposed to 6 the previous year.) In addition, the roll out wasn't well publicized, and most people weren't aware of when peak use (and peak cost) times were each day. So customers continued their usual pattern of air conditioning, their bills went through the roof, and then they howled and accused the meters of being inaccurate rather than taking proactive measures like installing ceiling fans or moving their electricity consumption to non-peak times. Overall, it looks like incompetence was indeed at the heart of the problem, though I'd say the incompetence involved the manner and timing of the implementation rather than the technology itself.

Hard to predict the weather, of course, but it seems the takeaway lesson here is to rollout smart meters at a time when energy consumption is likely to be low and/or dropping. Spring and fall, rather than winter or summer.

We have a whole-house electric meter - not something the utility can read, but something I put in myself so I can monitor usage. A common question comes up related to calibration - there was a discussion recently:


The consensus is that the old spinning disc meters aren't all that accurate, perhaps get worse with age, and undercount usage during periods of low usage.

Now in our case the utility is still reading the old spinning disc meter, so our bills remain the same. I haven't actually tried to compare the numbers we get from the power company and the numbers I get from TED - I suppose I should..

Anyone else seen the BP banner advert on certain sites (bloomberg for one) saying "for the last 17 years we have had 100% reserve replacement". Seriously, who are they kidding!

Interested to get WestTexas and ROCKMAN's take on this bogus claim...

I don't think it's bogus. There are a lot of ways to replace reserves. Drilling on Wall St., for example. And the higher prices allowed a lot of companies to replace reserves without any drilling.

Leanan - I agree, but that is why I call it bogus. At the very least it is extremely misleading. The average punter will read it as if BP have gone out and found as much new oil as they have extracted each year for the last 17 years...

I would guess that the ad isn't aimed at the average punter. It's aimed at investors. Who don't care if the reserves come from increased prices, better technology, more drilling, or buying up smaller rivals.

And they are usually talking about barrels of oil equivalent (BOE). It's roughly analogous to Exploration Geologists Equivalent. It takes six Developmental Geologists to equal one Exploration Geologist.

I like that. It's as good as "economists were created to make petroleum geologists look good!"

HA -- No way to tell if that statement is true other than to read their annual report. But even then you have to understand some of the factors that go into "replacement reserves". First, the amount of reserves they prove up in any given year is something they calculate. We've seen folks like Shell Oil do massive revisions in those numbers in recent years. Second, reserve volumes are based upon an assumed sales price. A company's reserve volume can go up/down overnight with a change in pricing platform. But generally this isn't a huge shift. Also good to remember that a company can produce 100 million bbls of oil in a year and find another 100 million bo with new drilling in the same year. Thus they've replaced 100% of their production. But that new 100 million bo reserve might take 3 years to produce. So the following 12 months production doesn't have to match that 100 million bo previously produced.

Bottom line since no one has access to the details of their exploration success all you can do is accept their numbers. Or not. But there are regulators who monitor such claims. And you can believe them. Or not. Also good to remember that the profit on that 100 million bo of new reserves might be much less than the profit from that production. It might also include a big chunk of purchased production. ExxonMobil replaced a good bit of their production when they did that stock swap for XOT. Added a big chunk of reserves and didn't drill a single well to do so. Another important factor: that 100 million bbls of replacement reserves might be "exploration geologist" reserves. In reality it might only be 10 million bbl of development geologist reserves. Kinda like "dog years" if you get my drift.

Oh Oh...

Shell: Production Outage At Norway Ormen Lange Gas Field Wed

LONDON (Dow Jones)--Royal Dutch Shell PLC (RDSA) said production at its Ormen Lange gas field offshore Norway was interrupted Wednesday after a technical problem.

"Yes, there's an issue, Ormen Lange experienced shutdown March 10 after an outage on the power grid," a Shell spokesman told Dow Jones Newswires. The spokesman said the company has now started the process to resume normal production but that this could take some time to achieve.

Prompt U.K. natural-gas prices gained ground quickly Wednesday on the news, rising to around 36.75 pence per therm for within-day contracts from deals near 31 pence per therm earlier in the week. Traders pegged prices at 34.70 pence per therm for day-ahead contracts.

Ormen Lange's maximum production capacity is 70 million cubic meters of gas a day. The field is in the More Basin in the southern Norwegian Sea. Gas flows through stage one of the Langeled pipeline--the world's longest subsea gas pipe--to Sleipner, and from there to continental Europe or the U.K.

The Langeled pipeline, which pumps gas from Norway to the U.K, is running at a rate of 62 million cubic meters, according to the National Grid Web Site.

Latest info shows pipeline flow down to 55 mcm/day from 70mcm before the problem. I also note a big fall off in flows at the Bacton terminal (BBL Netherlands pipeline) where another 30mcm /day seems to have vanished. LRS/MRS and LNG inputs all compensating but we are really running very low on storage now in my opinion no matter how "relaxed" National Grid claims to be.

Is UK past the coldest part of the season? Even if stores plummet, is it warm enough to muddle through until next year?

It is remaining stubbornly unseasonably cold. Some warmth from the sun now but natural gas usage is still way above normal.

The Bacton BBL website confirms that all flow of gas on the pipeline into the UK from the Netherlands ceased approximately 1 hour ago.


So we seem to have two problems - one with Norway and one with the Netherlands.

Desperate times, we're burning oil to make electricty again today! ... and sending it to France via the interconnector ... replacing nuclear with oil ... wassup?

Langeled pipeline now down to about 30 mcm/day. For the first time in a long time SRS storage is now being drained at an appreciable rate as well as MRS and SRS and Linepack is dropping rapidly. I think we need to get some problems solved quite quickly.

Edit: Update 8pm UK time

Langeled pipeline at 40mcm/day (down from 70)
Half flow rate resumed on Bacton BBL 15 mcm/day (down from 30)

SRS storage continues to be drained along with MRS and LRS - Linepack which was falling has now risen again thanks to the additional gas injected from SRS

It is remaining stubbornly unseasonably cold

I concur. Just got back from walking the whippet and it is decidedly nippy out there. Even the hound thinks so. And what was the first thing I did upon our return home? I reached for the thermostat and cranked up the gas boiler, thus draining the UK's reserves and the North Sea just that little bit more. Roll on the summer is all I can say...

The coldest part has passed and days are starting to warm up (10 degrees C?) but the nights are still cold (down to freezing in my area near London). A visit to my mother-in-law's is a stark illustration of the way 'heating' used to be in the UK. She is in her 80s and has lived in the same flat for over 50 years. It still has no central heating. Just an electric, portable bar heater (2-3 kw) in the living room, and the 'warmth' of the kitchen appliances in that space. Double glazing was only installed about 2 years ago after the council instructed the landlord to do so. The family has to be vigorously reminded to pack an extra layer or two if a visit is on the cards. Still, she survives fine throughout the winters like this. Maybe the 'cold' contributes to her health?
I live a cosseted life by comparison, with the thermostat hovering between 14 and 18C.


It's still cool in the UK, long range gas storage continues to be used at a pace, in 2 out of the last 3 years long range storage was drained up until the beginning of April, it's starting to get 'interesting'.

Especially with problems on both the Langeled and Bacton BBL pipelines at the same time as we seem to have right now.

I don't wish to put ideas in our cave-dwelling buddies who hate us, or their Midlands-based sales teams, but can you imagine what would happen if one of these bearded entrepreneurial explosives experts blow up these pipelines and terminals? We would all go without a hot bath, hot meal and most likely Eastenders too as there wouldn't be enough electricity. And how long would it take to rectify the situation? Months? Years? I reckon if the Cobra team which meets in Number 10 have role-played this sort of terrorist event.

Well the BBC have certainly though of it. One of the terminals blew up in a recent episode of Spooks - only it turned out to be an accident and not a terrorist attack as was first thought.

Spring is about to bust out around here in the mountains of Western NC. There's still snow on the ground, but it's melting fast, since we had 60F (16C) yesterday and, just now, it's 57F (14C) as the clouds roll in before a large area of rain. Of course, out in the Midwest and Western US, there is another snow storm underway...

E. Swanson

In Quebec, weather is ridiculously good. This winter is close to a record for the minimum amount of snow, ligthing hours (we had something like 2 weeks in row without a cloud) and temperature.

It is unseasonably warm in Narsarsuaq, Greenland as well, but I'd hardly call it good weather for somewhere so close to glaciers to be above freezing for so much of the winter.

We have to redefine good weather as normal weather even if it perhaps is not the most enjoyable weather.

Cascadia in the NW US has also been unseasonably warm and sunny, once we got past a couple weeks of record cold in December. Up until the past few days, we've had two straight months of Spring. We planted our early greens at the end of January - mostly chinese edible weeds of a dozen untranslatable varieties - and had to scramble to cover them two nights ago when frost threatened for the first time. But it's warmer and only partly cloudy again today - I could get used to this kind of Winter!

BTW, that "record cold" spell of 12/09 only reached about 20°F or -7°C in Portland, OR.

It's still snowing here in Ural region, Russia. Snow on the ground, snow in the air, snow on the roofs, snow on parked cars under my window. Everyone wonders what'll happen when the spring comes. Heavy floods are anticipated in April.

Have you ever seen the Bacton terminal?

Despite being one of the largest gas terminals in the UK, it's actually very small.


As of lunchtime (Thursday) flows on the Langeled pipeline are still well down at 40mcm/day. According to the National Grid site flows on the BBL pipeline have returned to normal but according to the real time data on the BBL site only about half the normal flow rate is entering the pipeline. So I am a bit confused here - does this mean that pressure is falling in the pipeline as I can't see how you can take out more gas from one end than is going in at the other for any length of time.

Gas In

Gas Out

The good news: Americans cut more than $93 billion in credit card debt last year. The bad news: it was because the debt was written off as uncollectible.

Lot's of write offs or settling debt for pennies on the dollar. My brother "short-sold" a house recently but was left on the hook for a 61k heloc. The creditor ultimately settled the debt for 5k.

This is good news. When debt is written off, it leaves the credit circulating (to be consumed by other debt elsewhere). Effectively it's inflationary.

Re: Indonesia: Natural gas supply to see 23.3 percent deficit this year

You have to read the article to understand that the deficit results when you take total natural gas production and subtract out first domestic demand and then "demand specified in contracts and commitments". These contracts, not surprisingly, are with China.

I raised this exact same issue back in September, 2009 in a discussion about Turkmenistan Natural Gas where I commented:

The article on Turkmen gas for China has this gem:

The Chinese National Petroleum Corporation has signed contracts to buy gas for the next thirty years. The volume envisaged is 40 billion cubic metres annually.

Are they high? How can they expect stable delivery of this volume of gas for thirty years? Is the Turkmenistan economy supposed to sit idle for three decades?!

And now we see exactly this playing out in Indonesia. Folks in Central Asia should pay attention.

And I don't think there's any question about where natural gas production and consumption are heading in Indonesia -- it's a story we've already seen before in oil. Here are the two charts from the Energy Export Databrowser. Just look at the shape of the production and consumption curves and the point at which consumption becomes greater than exports. These are patterns we have seen before and pretty much always with the same result. It doesn't take unusual pattern recognition skills to see that Indonesia is headed toward being a natural gas importer in ten years time.

I'll repeat my comment about whoever is signing these 30 year contracts -- Are they high?!

Best Hopes for looking at the historical data and drawing the obvious conculsions!

-- Jon

Scary stuff. What happens when every country is a net importer of oil and gas? ;)

Bombs will fly, people die and it will force Mr. Yergin to admit (probably) that sh... errrm... Peak Oil happens. :P So, just ordinary stuff like that will happen. :o))

I have an idea for TOD - a collaborative FAQ. Pick a topic - CTL, say - and everyone can chime in with links, studies, real life examples, historical data. Then shape the results into a Wiki or the like, or even just hosted text files. This would require minimal effort on behalf of the staff, be a lot of fun, and have tremendous utility when it's done. Occasionally pieces here have inspired impressive feats of data collecting by readers; I'm thinking of some of the articles from 3 years ago or so on KSA, people were tearing through every Aramco presentation to be had looking for info.

Anybody else interested in this?

Why not just use Wikipedia?

Hate the interface for editing them. The data is usually incomplete, and you can't ref blogs, which often are the only sources for collated data on things like PHEVs. Plus I don't want to do all the work, not knowing everything there is in the world already. ;)

Would it be possible to start a wiki here?

It's been discussed before, but I don't think it will work. For precisely the reasons you mention, plus some.

Someone has to do the work. No one wants to. If they did want to, they would be doing it already - at Wikipedia, or at their own site.

A wiki also requires a critical mass to work. If you don't have a lot of interested people, it will be overrun by spammers. That happened at the PeakOil.com wiki. Every page was filled up with spam, most offering pr0n. They even edited the templates so the edit tabs were missing. I don't think we're anywhere near the critical mass needed to keep the vandals and spammers out.

Yeah, I remember the chaos from the bots over there. Can't that be countered by requiring registration with captchas and email confirmation?

And actually I'd be content with just dedicated articles here. The comments section would serve as the resource itself, those with an interest could use the info in what manner they see fit. It would be messy, but that's OK.

Another example for one of these articles could be for energy data resources; many know about EIA/IEA, some about JODI; what, for instance, are the release schedules for these agencies? Has anyone collated long term data that may no longer be available from them? Then there are resources which are more obscure, the Pemex data at Sistema de Información Energética is a good example. Neither Art Berman nor Staniford knew about it.

I'm in favor of collaborative efforts like this, being a bit of a data nut. Another notion would be to share bookmarks - leaving out, of course, stuff like "pics of Nana" or "YouTube - Light Saber Kid." Doing this is also a snap, thanks to file sharing services. There are also services where you can store your bookmarks online for use on multiple computers.

Can't that be countered by requiring registration with captchas and email confirmation?

It didn't have a noticeable effect at PeakOil.com.

And actually I'd be content with just dedicated articles here. The comments section would serve as the resource itself, those with an interest could use the info in what manner they see fit. It would be messy, but that's OK.

Well, we have that already. However, the advantage a wiki has is that it's constantly updated. Our articles are not.

The advantage is also the disadvantage, of course. If something is constantly updated, you also have to constantly monitor it for spam and vandalism.

On ‘Oil Day,' most see a future in fossil fuels

These first three comments to this article are all I need to convince me that there is no hope whatsoever for a peaceful orderly power down and transition to a new paradigm.


oldschorz (6)
oldschorz wrote:
Steven Chu is stunningly ignorant of thermodynamics for a PhD is physics. Either that or his political philosophy has so overwhelmed him that he has lost touch with reality.
Fossil fuels are the current and future source of the energy that drives the world's economy. Oil is villified because we have to import so much, but we have centuries of supplies locked up in oil shale in the rockies. Instead of wasting money on wind and solar (see the recent waking to that fact in Spain), we should be spending precious research dollars on shale oil recovery.
Coal is also available to power stationary soueces for many centuries, but has been villified by the global warming fantasy.
Fossil fuels are nature's gift of stored solar energy that we need to utilize.

3/10/2010 8:34:00 AM
Recommend: (19) (1) [Report abuse]

CaptSternn (0)
CaptSternn wrote:
oldschorz, could not have said it any better myself.
3/10/2010 9:25:56 AM
Recommend: (4) (1) [Report abuse]

Willy_Weylon_and_the_boys (0)
Willy_Weylon_and_the_boys wrote:
We have a couple hundred years supply of Coal in America, why don't we further develop the technology (we're already on the right track) that will clean up this abundant source of energy?? We need to try to exploit the resources that are most abundant and prevents us from being held hostage by Middle Eastern sheikhs.
3/10/2010 11:27:36 AM
Recommend: (3) (0)

I think I'll just go out and buy me the biggest most inefficient gas guzzling SUV I can find and plaster it with Drill Baby Drill and Vote for Sarah Palin bumperstickers. Then I'll rip out the exhaust system a put in a boom box sound system and go drag racing up and down the sidewalks in front of city hall!
You don't like it?! Get the F off the sidewalk before I run you over! /rant

Are you a Yank? 2008 took the scales off my eyes; the response from pols to the fuel spike was to whip up voter frenzy with promises of DBD, CTL, shale, open up ANWR, drill in National Parks if need be. Pure facade, with no ref to the actual balance of energy in the US. Corresponding kneejerk from the other side of the aisle was to have speculators hanging from every lamppost, followed by implementation of Gore's 10 Year Plan, which is no more feasible than the similar medium term goals set by 20th century autocratic communist regimes.

Then you had Obama being laughed at for suggesting that tire pressure has anything to do with fuel economy. People want tanks full and lights on, nothing more, and will believe anything they're told about resources. They will respond in all likelihood in the worst way possible to bona fide extended periods of shortage, which is a far bigger worry to me than other topics people discuss in relation to peak oil.

They will respond in all likelihood in the worst way possible to bona fide extended periods of shortage, which is a far bigger worry to me than other topics people discuss in relation to peak oil.

I think we are on the same page...

peak oil will never become an acceptable mainstream topic of conversation, because it doesn't have a happy ending and so nobody will choose to believe in it when there are alternative stories, even if the alternatives are not true.

when i showed my "drill baby drill" mother the USGS web page that shows offlimits offshore oil supply meets ONLY TWO YEARS of consumption, her response was that unless i could think of a happier story, she'd stick with her "drill baby drill."

i can't find one example of peak anything in history ever becoming widely acknowledged. even the near-extinction of whales by hunting is disputed by "conservatives" here in america today and by the japanese.

The sheeple follow the media. It is the media's fault for being nothing more than a collection of propaganda agents. Where is the triumph over totalitarianism? At least in the USSR people didn't take the media seriously. In the USA the majority swallow the shite dished out daily by these corporate whores.

I wonder what Willy-Weylon-and the boys thinks would be the next phase in technology to clean up coal. It sounds to me like he thinks mountaintop removal mining has been a huge step in this area ("we're already on the right track..."). The right track also unfortunately seems to be the one with the bridge out not too far up ahead... we probably should have opted for the left track when we had the chance...

"Coal is also available to power stationary sources (IN CHINA) for many centuries..."

Shale oil recovery - where does all that water come from to process this plentiful source of oil and still quench the insatiable thirst west of the Rockies ?

Details, details...

Details, dust devils, details, dust devils ...

We are talking about Texans here (I'm assuming that nobody else is reading and commenting on the Houston Chronicle). Critical thinking is not one of their strong points. I should know, I'm one of them.

Fossil fuels are nature's gift of stored solar energy that we need to utilize.

Critical thinking is not one of their strong points. I'm finding it really hard to disagree :-(

Critical thinking is not one of their strong points.

Yeah. We keep hearin' that it's "A whole other country".


I'd say oldshorz is just another balfasz!

John Q.s in America will drive home from their $8 per hour job in their gas guzzling jacked up pickup or suv, so they can sit on their fat butts in front of their flat screen HDTV, and watch sports while they drink beer and believe whatever fantasy they think will keep it all running.

Rant away, guy! I'm with you all the way!


Rant away, guy! I'm with you all the way!

It's good to know there are a still few sane people left out there!

Gazprom’s Hands Ever Deeper In State’s Coffers

In March 2010 the Russian Government will be considering a plan for integrated development of hydrocarbon deposits in the Yamal Peninsula drafted by the regional administration and JSC Gazprom. The gas monopoly insists on tax concessions without which the development would take many years. Experts see no need in this suggesting that the investment programme be reviewed. The lack of transparency of Gazprom left no other option than to doubt the efficiency of the country's main company for the RusBusinessNews observer too.

...The expert reckons that we must not forget the significant wear of main assets of the Unified Gas Supply System (UGSS) which today exceeds 56%. A quarter of main pipelines in Russia have been in use for a term exceeding their nominal lifecycle (33 years). One of the key consequences of this is the reduction of technically available UGSS capacity. The main reduction is recorded precisely at the output of the Nadym-Pur-Taz region from where it is impossible to pump more than 550 billion cubic metres annually. The expert is convinced that is the gas transportation infrastructure is not renovated it will lead to the delays in the Yamal project. Investments needed for the modernization of the gas transportation infrastructure are comparable in size to the cost of the construction of the new Bovanenkovo-Ukhta route.

Piping gas from above the Arctic Circle is never easy.
Images of the Yamal gas industry

Is that a Shai-Hulud from Arrakis?!

No, that is a terrorist's dream- or Europe's nightmare if you like.

No, terrorist damage would be repaired quickly. The real nightmare is when the valves are simply turned off.

" This is not a homogeneous field, he says. "There are reservoirs in the north that are in gentle decline. While some areas of the field like Haradh are nearly virgin."

1. How can there be a virgin oil field in a homogenous field? Either they are distinctly different fields or they are homogenous. Which is it?

2. That quote of gentle decline is the first time I've ever heard of a Saudi official, that is still on the payroll, admit a decline of any part of their vaunted Ghawar. The cat's out of the bag now!

Sorry, I've got the flu and my brain isn't working right. I misread the quote - disregard # 1.

"While some areas of the field like Haradh are nearly virgin."

I wonder if that has something to do with the differences in reservoir quality between the north end and the south end.

Re: World crude oil production may peak a decade earlier than some predict (uptop)

It's certainly a good thing that world crude oil production has increased every year since 2005 (at least this seems to be what most people think), or some might think that we peaked in 2005.

If you look at it per world capita it was probably even longer ago

That is a really good notion. If you correct for EROEI and capita, the peak was probably somewhat earlier, but the slide will absolutely be steeper.

If you look at it from the affordability point of view peak was 1998.

Haven't some of us said, that the peak will be much clearer "in the rearview mirror?"

In a little presentation I make to various groups on energy issues, I take away the dates and some of the specific numbers (using oil production for the US) right up through 1970 and ask people to "predict the future" track of production over the next 15-20 years without referring to what the curve really is.

Almost without exception, people's response is that ever increasing rate at around 7% per year. Even if I put in a little arrow at 1956 (or an earlier one at 1948), indicating Hubbert's paper or earlier concerns that the rates are not sustainable, almost nobody predicts the fall of of the lower 48 onshore production. I can add in Alaska, the GOM, our inceased reliance on NGLs to show the peak. Then I superimpose our consumption and show that as the imports.

"We were warned." Now it is "we" who are doing the warning of the global peak.

"Welcome to the summit," I say, asking "did you bring your prayer flags?" referring to the mountain climbing tradition in the Himalaya.

That would make for an interesting post - maybe some kind of flash chart where you can slowly add in another year's P. "I can identify that producing nation in only 15 segments of Q!"

In the early 90s things perhaps looked precarious, with ME wars and FSU going down the tubes and recessions and world production rather flattish. Campbell would have seemed prescient for a bit, until production began to swamp the market again. With demand down in some parts of the world things seem semi up in the air right now as well.

I had exactly the same thought, and re-read the article again to make sure the words said what I thought they said!

When a person cannot deceive himself the chances are against his being able to deceive other people.

- Mark Twain

re : World crude oil production may peak a decade earlier than some predict

It's good to see more stuff out there about this, but this reminds me of an article I saw which also has additional comments on the short term nature of the platforms politicians stand on and that nobody likes to listen to Cassandras. As Dick Cheney put it, the American way of life is non-negotiable, and to varying degrees America has exported its way of life to other countries. :


Honda has released a video that mentions oil problems, it's about half way into the video:


It's just that.. it seems to me that "the race" is what has caused this problem. Now China races to increase car production. So what is this : teamwork, competition, or just the desire for the good life ?

This site and document may be interesting as well :


That last paper I found more interesting, and mentions Hubbert's peak oil theory and the fact that Saudi Arabia's standard of living has fallen over the past few years, and a rewording of one of Einstein's sayings.

I present these as material for anybody in the politics of peak oil. How can one sway opinion without appearing as a Cassandra and ending up not having an effect on what is surely clearly becoming a negative outcome. More than that, how can one motivate while offering some real alternatives and helping other people.

From The Three most IMMINENT Economic Disasters. How to survive..., up top:

The outstanding public debt is $12.3 TRILLION. The U.S. has a little over 307 million people. So that means every single man, woman and child in this country is responsible for $40,000 in government debt —over and above any money they have borrowed personally.

Ridiculous. I have attacked this idea before and here it is again.

A basic principle of accounting is matching assets and liabilities. For example if a person owns a car worth $10,000 but owes $4,000, the asset is worth $6,000. Now let us consider the United States's assets and liabilities. Who owns them?

Obviously the people. But it turns out that these assets are not distributed evenly. Some people such as Warren Buffett have huge assets and others like a new born infant have nothing. When American debt is divided by population to come up with debt per capita of $40,000, it is assigning the same amount of debt to the infant as to Warren Buffett. That is silly nonsense.

78 year old billionaire Warren Buffett, the richest man in the world, gets off being responsible for $40,000 which to him is nothing while the new born who has no assets is also saddled with $40,000 of debt.

Assets and liabilities must be matched. It is a principle of accounting learned by every accounting 101 student if they are paying any attention at all. Those who have more are responsible for more and those who have nothing are responsible for nothing.

To say otherwise makes no sense and shows the speaker does not know what he is talking about.

This is why if the debt is to be paid down or if deficits are to be reduced, taxes on the wealthy must be raised. They can not be raised on those who have nothing or even very little. It is the reduction of taxes on the wealthy that is one of the main reasons that the United States is in the debt fix it is in.

Tax cuts are defacto expenditures as a reduction in income has the same effect as an increase in expenditure in accounting.

Even redistribution does not ensure that the total can be paid (assuming most is owed overseas, so there is no netting-out of debt), nor does it deal with the large burden of expanding entitlements and deficits.

If we had any intention of the debts being cleared fairly, the bank defaults and credit implosion would have gone ahead last year. The effort is specifically to spread the debt and centralize the gains.

In an ideal world x, you're right. In the real world Paleocon is right.

Each of us is, more or less, $40,000 poorer. This is happening, right now! While the investment banksters are making out like bandits.

X, the newborn does owe $40,000 because s/he will be called on to pay for previous generations waste. If anything by the time the newborns come of age they will owe far more with the 18-21 years of interest and further .gov waste.

All true, and I have long been saying that the lack of a national balance sheet to accompany the national income accounts is a fundamental source of all manner of misunderstanding, foolishness, and mischief.

Nevertheless, two things wrt debts DO matter:

1) National debt as a percentage of GDP. When a nation's debt gets exceptionally high relative to other nations, that is a sign of big trouble.

2) The percentage of national debt that is owed to foreigners. It is one thing to say that "we owe it to ourselves", and quite another to owe it to someone else.

Observer at al -- Lots of ways to frame debt for sure. But for a simple minded geologist it seems the most critical metric is how much of our economic output (or Federal budget if you prefer) is spent on the interest payment. If the ratio of debt to whatever is 100% so what if it's only costing us 1% of our GDP (or Fed budget). In that case does it really matter if we ever pay it off. OTOH, if intersts payments are eating up 30% of our Federal budget then I would say it's a serious problem. Simplistic example I know but it's like the guy continuing to run his credit card balance up because he still has a little more income at the end of the month to pay the extra interest.

You are right, and I could have added that as a number three to my list above. The US actually isn't in the very worst shape wrt debt compared to other nations, but we are getting there pretty fast.


Can someone please explain how to post a chart or graphic?


In Firefox on Windows you can right click on an image and select "copy image location." Install the Text Formatting Toolbar extension. Paste link of image into post, hit image formatting button on new toolbar. Voila, posted image.

Hosting your own images at sites like Photobucket is a different matter, but not that much more complicated. They provide the code for posting in forums like these as well.

See here.

And please use "preview" to test it. Don't post test comments. If it doesn't look right in preview, it won't look right when you post, either.


If you have Mozilla FireFox as your browser, there is a feature called 'View Selection Source'.

To use it, highlight something someone else posted, click with the right button on your mouse, and select 'View Selection Source'.

A separate window will then pop up showing you the HTML code that made what you see happen. (Unfortunately, on some websites including here at TOD, the server automatically alters the original code. So you don't always see exactly what the poster did. But you get a general idea.)

There are also many free tutorials available on the net teaching you how to use HTML. You want to learn how to use the img src="xxx" code.

And as Leanan warns, please use the Preview button first before ever hitting the Save button in TOD's post-a-comment feature.

Oil price up to 82.09


Just yesterday, someone posted the EIA were projecting the price of oil would rise to 82. by the end of 2010, and I commented on how optimistic that was. One day ago!

Anyone wanting to donate or support a green organization needs to read this article to find out which ones are in the pay of big polluters

he Wrong Kind of Green
By Johann Hari

This article appeared in the March 22, 2010 edition of The Nation.

or listen to the author on Democracy Now http://www.democracynow.org/2010/3/9/the_real_climategate_conservation_g...

We're not.


Think globally, act [not so] locally:

Saint Mary’s University Students Helped Build Three Habitat Homes

On Friday, Feb. 19, a coach from Trius Tours Inc. pulled into the Tower Parking lot and was greeted by 49 enthusiastic students set to embark on their three day journey to Bay Saint Louis, Mississippi, an area ravaged by Hurricane Katrina, five years ago.


After a long journey, the students were ready to start building. “As the bus approached the build site at 8:30 AM on Day 1, the enthusiasm was overwhelming. Students practically ran off of the bus!” Laura stated.

See: http://smujournal.ca/view.php?aid=40394

And on a related note:

Sustainability Week 2010

The Saint Mary's University Environmental Society (SMUES), Facilities Management, SMUSA, International Activities and Sustainability at SMU, along with many other groups and individuals at SMU will be hosting the 2nd annual Sustainability Week, March 15-19th. There are a variety of events planned on campus to get students, faculty and staff thinking green!

See: http://smujournal.ca/view.php?aid=40392

Paul ('82)

My hometown in the news...not in a good way...this was actually a long battle started long ago, but with $$ a problem for cities and states, they decided to finally act on it.


Kansas City, Mo., closing nearly half its schools
District is seeking to erase a projected $50 million budget shortfall

The Kansas City school board voted Wednesday night to close nearly half the district's schools in a desperate bid to stay afloat.

The board's 5-4 decision came after parents and community leaders made final pleas for the district not to shut down 29 out of 61 schools as it seeks to erase a projected $50 million budget shortfall.

Collapse. Can you dig it?

Shutting down schools while rewarding bankster crimes and sending young people to fight for fossil fuel scraps in the Middle East. Brilliant.


Spot on. People never seem to make the connections. Its all so obvious.

Meanwhile Warren Buffett net worth jump $10 bln last year to $47 bln.

from the same news outfit MSNBC. $50 mln budget shortfall? well that is only 2 days worth of Warren's work. Chump change!

To Warren Buffets credit, he has been very vocal about the fact that the rich are undertaxed in this country, and in the state of California.



Unemployment tops 20% in eight California counties

From school closures in Kansas City to Unemployment in CA, I think if people are going to get the straight scoop on what's going on, its not coming from the National News, which paints as rosey a picture as possible based on broad numbers.

The state was one of five, along with Florida, Georgia, North Carolina and South Carolina, that reached their highest unemployment rates since the government began keeping track in 1976, according to the Bureau of Labor Statistics. California's was 12.5% in January, up from 12.3% in December.

Yeah, that story definitely caught my eye.
My family is already living the California-Dreamin' life style.

The headline photo in the story apparently shows unemployed nurses begging for a chance to work with murderers and rapists inside the CA Prison system because that's where the last jobs are.

When the media tells you there is a "shortage" of nurses ... or engineers, or skilled bank executives ... well, you know they're lying cause their typewriter keys are moving.

Most counties were still struggling under the burden of joblessness, especially the eight counties where rates were higher than 20%. Merced County, for instance, had an unemployment rate of 21.7% in January, and Imperial County's rate was 27.3%.

I'm surprised no one commented on the "peak oil fraud" article. It's not another article bashing peak oil. Instead, it's a short summary on an IEA whistle-blower and evidence of a cover-up.

"We have to know what is really going on behind the walls of the so-called global oil watchdog," he says. "If the Agency deliberately covers up the seriousness of the [peak oil] situation and provides misleading information, then the consequences could be world-shaking."

We're all subject to information overload.

It would help if first you provided a link to the story you're talking about.

Next it would help if you pulled an interesting quote out of the story to tease up some interest:

July 2009…

By July, [the student] Lionel had managed to arrange a meeting between himself, the IEA official and the MEP Corrine Lepage, a former French environment minister and well-known figure in French politics. 

Clearly pleased to meet such a respected figure, the IEA official became much more open about the downplaying of peak oil concerns at the agency.

‘He told her reports had been modified and that there were pressures on the IEA from the US not to make too pessimistic predictions,' Lionel remembers. 'He said just as peak oil theorists claimed, there was a big problem with oil.’

But then, finally, the question is so what?

Many here at TOD already understand that the minions of the elite have been instructed to keep their mouths shut.

Why spoil a good tea party?

Well, it's not exactly news. The original allegations surfaced last September, and the story appeared in the MSM in November.

Good point 710. The title probably deflected TOD interest.