Drumbeat: April 11, 2010

US military warns oil output may dip causing massive shortages by 2015

The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact.

The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel.

"By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day," says the report, which has a foreword by a senior commander, General James N Mattis.

It adds: "While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India."

One of the World's Biggest Oil Producers Is Going Bust

Most Americans don't realize it, but Mexico is a major player in global oil production. According to the Energy Information Agency, it was the seventh largest oil-producing country in 2008. Mexico is the U.S.'s second-largest source of imported oil, behind Canada.

You read that correctly: We import more oil from Mexico than we do Saudi Arabia, Iraq, Kuwait, or any other Middle Eastern country. You don't read about it much in the papers, but Mexico is a critical supplier to American drivers.

Now, Mexican oil officials like Georgina Kessel have a problem... one the entire world has: There are no easy barrels left.

Bad weather drives Iraq oil exports lower

Iraq, holder of the world's third- largest oil reserves, exported less crude in March than in the previous month because of faults tied to poor weather, an Oil Ministry official said.

RRI Energy, Mirant Combine to Form New GenOn Energy

(Bloomberg) -- Mirant Corp. and RRI Energy Inc. will combine their companies in a $1.6 billion stock transaction to form the second-largest independent U.S. power producer, the companies said today.

Aviation fuel shortage in Uganda now spreads to petrol

The shortages experienced with AVGAS in recent weeks in Uganda have now spread to ordinary petrol, diesel, and even kerosene used in many households, all commodities needed to keep the country running. Inquiries about the national fuel reserves in Jinja, or a release of these reserves into the market to cushion off the effects of absent deliveries for the time being, have been met with stony silence by those asked, while one fuel company executive dismissed the question by saying: "Why don’t you go to Jinja and check what government has in stock there?" before hanging up the phone, without answering even the question why his own market leader company once again let the country down by failing to bring in enough supplies. Government has meanwhile also confirmed that the national fuel reserves were dry as the facility "was being refurbished," leaving the entire nation reeling from the fallout of yet another fuel crisis.

Daisetta fears unstable future after sinkhole

They fear the sinkhole only a block from their fire station and high school could make their property worthless and jeopardize their future water supply. As a result, the Daisetta City Council and 230 residents have authorized a law firm — Watts, Guerra, Craft in San Antonio — to investigate and sue whoever was responsible.

In the first published report providing any explanation for the phenomenon, a Texas Commission on Environmental Quality adviser theorized injection disposal wells may be primarily responsible for destabilizing the area and creating a kind of quicksand 1,000 feet below that led to the collapse. These wells are used to dispose of saltwater and other nonhazardous oil field waste by pumping them into geological formations deep below the surface.

New Mexico sinkhole gets US senator's attention

U.S. Sen. Tom Udall said scientists are certain it's only a matter of time before a giant cavern in southern New Mexico will collapse and possibly take with it part of a highway, a trailer park and a major irrigation canal.

"It could be very devastating to the community. This could impact transportation, business, tourism and farming, among other things," Udall, D-N.M., told The Associated Press in a telephone interview Wednesday after being briefed on the situation by state and local officials in Carlsbad.

Energy crisis forces Bangladesh to consider open pit mining

Dhaka: Energy-starved Bangladesh plans to adopt controversial open pit mining at a major northwestern coal mine to maximise extraction despite controversies over the method, environmental damage and the displacement of thousands, officials and reports said.

India keen to buy Australian mines

In 1799 a barque named The Hunter was loaded with coal in Newcastle and dispatched to the British colonial province of Bengal. Legend has it that that shipment to the subcontinent was Australia's first ever export.

Now, more than 200 years later, Australian coal sales to India are booming and the state-owned mining giant, Coal India Limited, is hunting for Australian coal investments to help avert a worsening energy crunch in one of the world's fastest-growing economies.

Scourge of the rainforests

The renewable-energy industry faces new controversy after a Northamptonshire firm became the latest to win planning permission to burn tropical palm oil to make electricity.

Chelveston Renewable Energy has been told it can build a bio-oil power station on a disused RAF bomber base near Wellingborough.

Such projects have infuriated environmentalists who say the burgeoning market for such oils is accelerating the destruction of tropical rainforests as they are cleared for biofuel plantations.

New fuel could solve fusion

Imagine if you could generate electricity using nuclear power that emitted no radioactivity: it would be the answer to the world's dream of finding a clean, sustainable energy source.

That is the great hope raised by researchers who believe they have found a radical new path to the ultimate goal of solving the world's energy crisis through nuclear fusion power, as detailed in a paper published in the journal Energy and Environmental Science.

Kurt Cobb: Will the post-oil future be bicycle-free?

U. S. Secretary of Transportation Ray LaHood may soon be nominated for heresy-of-the-year award for an impromptu speech at the 2010 National Bike Summit last month. In that speech he said federal transportation policy will no longer favor automobiles over bicyclists and walkers.

As anyone who regularly rides a bicycle knows, this change is big precisely because automobiles and bicycles share much of the same infrastructure. But this very fact may bode ill for the bicycle in a post-oil future.

Brown Said to Plan National Interest Test for British Takeovers

(Bloomberg) -- British Prime Minister Gordon Brown’s campaign program, to be published in two days, proposes a law giving the government the power to block foreign takeovers of infrastructure and utility companies, people familiar with the plans said.

The proposal will be announced as part of Labour’s manifesto for the May 6 general election, according to the people, who declined to be identified because the announcement hasn’t been made yet. It follows labor-union complaints about Kraft Foods Inc.’s takeover of candy-maker Cadbury Plc.

Oil production . . . Britain’s crude awakening

It came as a surprise that last month Britain’s Energy Minister summoned a meeting of business leaders to discuss the Government’s response to a decline in global oil production should it actually be imminent.

Just last summer, the UK Government formally rejected the notion that the demand for oil would soon overtake available supplies leading to much higher prices and global economic disruptions.

No Substitute for Oil on the Horizon

TER: Are you suggesting there is no tangible visible substitute on the horizon at this time?

ML: It's interesting to look at the hypothesis of using natural gas. It is becoming very visible, and a lot of respected people in industry are pointing that out. However, when you look at the ramifications of building out infrastructure in places like Pennsylvania, where there are no pipelines or gas plants, it takes a while to build those up. Then more importantly, the infrastructure needed to supply transportation throughout the United States is significant and it will take a long time for that to be put in place. So that day may come, but I don't think that date is visible at this point.

Hugo Chávez cries sabotage, while his critics just cry 'Bananas'

It sounded like a Frederick Forsyth plot transplanted to South America: Colombian spies in league with the US infiltrated Venezuela to sabotage the electricity supply, sow chaos and topple President Hugo Chávez. Venezuelan authorities arrested eight Colombians last week and accused them of subversive acts against the country's energy infrastructure. They allegedly had photographs of electricity substations, transmission systems and highways.

Shareholders may fail to drag BP out of tar sands but have won moral victory

BP will almost certainly see off a resolution at its annual meeting next week from 140 shareholders asking it to produce a report by next year about its tar sands activities.

City investors have rallied around BP's management, but the level of protest is too significant to ignore. A number of large overseas investors backed the resolution, as did about 5,000 individuals who participated in an internet drive to enfranchise pension fund members organised by lobby group FairPensions and supported by the Observer.

Occidental to boost Oman crude production in 2012

MUSCAT (Reuters) - Occidental Petroleum Corp will boost its crude production in Oman by 50 percent to 150,000 barrels per day (bpd) in 2012, senior company executive Bill Albrecht said on Sunday.

The fourth-largest U.S. oil and gas company currently produces from the Mukhaizna field in Oman.

Valero Finally Sells Refinery

Post-closure, Valero will continue to supply its customers by entering into a terminaling agreement with the new owner. This deal will make incremental cash flow for the company, management said.

Aramco-Sumitomo seek firms interest for JV expansion

Long-term growth in petrochemical demand in China has encouraged Aramco and Sumitomo to consider moving forward with the estimated 25 billion Saudi riyals ($6.67 billion) expansion.

Vietnam and Saudi Arabia to strenghten oil and gas ties

Saudi Arabia and Vietnam have signed agreements to increase cooperation in the oil and gas sectors.

The Saudi Press Agency reports this includes possible Saudi investment in Vietnamese refineries.

China Said to Halt Imports of Argentine Soybean Oil

(Bloomberg) -- China stopped approving permits to import soybean oil from Argentina, four executives familiar with the halt said, as a trade rift widens between the biggest buyer and largest supplier of the commodity.

Ontario Issues $8 Billion in Renewable Energy Contracts

An Ontario government agency yesterday announced $8 billion in new renewable energy deals under the province’s bulked up feed-in tariff program, with 184 wind, solar, hydro and landfill gas projects winning long-term contracts to provide a total of about 2,500 megawatts of green power.

While the announcement is good news for the environment, provincial ratepayers will end up spending about $300 more per year on their electricity bills, according to The Globe and Mail.

Target, Whole Foods expand recycling to cork, electronics

Target says it's launched recycling stations this week at all 1,740 U.S. stores, and Whole Foods Market announced drop boxes for recycling wine corks at its 292 stores.

Developing a ‘Water Battery’ for Trees

According to the World Health Organization, 1.2 billion people – or almost 1 out of 5 people in the world – are without access to safe drinking water. And even in areas with access, 70 percent of water withdrawn from fresh groundwater sources is used for agriculture.

But using groundwater to grow crops and trees doesn’t make sense to Pieter Hoff, a Dutch inventor. Not only are traditional irrigation techniques inefficient because most of the water is lost to evaporation, Mr. Hoff says, but water can be easily captured from the atmosphere to grow just about anything.

To prove his point, Mr. Hoff retired from the lily and tulip export business in 2003, established his company, AquaPro, and devoted himself to the development of the Groasis Waterboxx, which he says will grow food crops and trees even in the driest places on earth.

Tribes of Amazon Find an Ally Out of ‘Avatar’

VOLTA GRANDE DO XINGU, Brazil — They came from the far reaches of the Amazon, traveling in small boats and canoes for up to three days to discuss their fate. James Cameron, the Hollywood titan, stood before them with orange warrior streaks painted on his face, comparing the threats on their lands to a snake eating its prey.

“The snake kills by squeezing very slowly,” Mr. Cameron said to more than 70 indigenous people, some holding spears and bows and arrows, under a tree here along the Xingu River. “This is how the civilized world slowly, slowly pushes into the forest and takes away the world that used to be,” he added.

Scientists turn to Inuit traditions to collect data on Arctic weather

OTTAWA — Using traditional Inuit weather knowledge passed down through generations, environmental scientists have uncovered new data on Arctic climate change.

Rupert Murdoch, CEO of Fox News believes global warming will be catastrophic

Rupert Murdoch has been claiming that his corporation is sensitive to climate change and that global warming will be catastrophic if allowed to continue. It sounds like he is incredibly disconnected from his own News organization. All the Fox News commentators scoff at global warming, calling it the biggest hoax ever perpetrated on the American people.

Abu Dhabi faces climate change flood threat - expert

A leading US academic will tonight warn that Abu Dhabi must invest in research and infrastructure if it is to combat the risk of flooding due to climate change.

David Holland, director of the Center for Atmosphere Ocean Science at New York University, told Arabian Business that the rise in sea levels is “accelerating” and that the UAE capital is “among the dozen or so major cities in the world that are precisely at sea level”.

UN urges for progress as climate talks enter final day

BONN (AFP) – Another failure in the quest for a treaty on climate change would cripple trust in the United Nations' ability to tackle global warming, the UN's climate pointman warned as new talks ground into their final day Sunday.

So the Ontario government is dishing out $8 billion in private sector energy contracts while at the same time suspending a $4 billion investment in Toronto's mass transit infrastructure. We'll all be sitting in gridlock with our electric vehicles by 2030. Do these clowns even bother trying to see the whole picture?

The alternative electricity production will go to replace coal plant shutdowns (a good thing) instead of adding new capacity to deal with future transport demand.

Hi dissident,

Not that it justifies the cut in TTC funding, but the $4 billion you speak of is a direct, mostly front-loaded cost to taxpayers whereas the other is paid by electricity consumers over the span of twenty years. The money ultimately comes from the same pocket, but one is visible, politically contentious and may impact the Province's ability to borrow funds for other purposes -- the other is buried deep in a monthly statement.


I find the most discouraging part of the whole renewable energy counter argument is the take on the price point. A large majority of the existing electrical rate is due to an investment made over twenty years ago, and forty to fifty years ago also. The only way I can seem to get through to people is to ask them if its o.k. if they get paid at 1978 wages, because they are paying for electrical energy at 1978 rates - so to speak.

Of course in Ontario fuel is a significant part of current electrical rates, and I don't have the numbers in front of me, but I would hazard a guess at 10% given the electrical generation portfolio in the province. Just for the record, I was responsible for transmission and substations for private utility in Northern Ontario which was all hydro electric.

When Ontario announced the FIT I had a look at the rate sheet and went through the generation source's price paid. For the types of generation I was knowledgeable having been on project development teams, I went "yup, yup, yup, yup, etc, right on the money, that's what rate is required to make these types of projects viable". Can't speak for small solar power, but people have to stop looking at that rate as some kind of typical rate for all generation sources. In reality, small solar is a novelty and won't have any appreciable impact on electrical rates in Ontario.

The rates for small hydro, biomass, and wind are more indicative at around the $0.14 mark and that is the new marginal rate of production (we actually price in MWh, or $140/MWh - its just easier).

As for the mass transit, this may not be a good time to commit to $4 billion as the Ontario government is running deficits and is probably still a "taker" in the federal transfer payments column. Probably for reasons to make separatist Quebecois feel even more special, receiving federal transfer payments is considered positive. But we won't go there...

Ontario has certainly been a graveyard for electricity generating schemes.

They had some of the lowest prices in North America as a result of the early hydro developments at Niagara Falls. However, after WWII they ran out of good hydroelectric sites to develop.

Then they bet the farm on nuclear power, building a dozen and a half CANDU reactors starting in the 1960's. Unfortunately the CANDU's turned out to have a much shorter lifespan than they expected, and most of them have had to be shut down, although some have been refurbished. The taxpayers ended up paying for the losses.

To make up for the failing nukes, they built a number of big, cheap, and dirty coal-burning power plants, notably the Nanticoke power station, the biggest greenhouse gas emitter in North America and a major contributor to sulphur and particulate emissions in Southern Ontario.

Then, they decided the strategy was going to be nuclear power again. However, the bids came in too high for comfort, so it was back to coal again until they came up with a better idea.

Now, they're going for wind and solar power. The cost of this is going to be astronomical, and the ratepayers are going to be hit in the pocket.

The real problem is that Niagara Falls gave them the cheapest power in the world, and they just can't get their minds around the fact that anything else they can do is going to be much more expensive.

Or, they could import hydro-electricity from the neighboring provinces of Manitoba and Quebec. They don't like that idea because the other provinces would make a lot of money from Ontario in the process.

The real problem is that Niagara Falls gave them the cheapest power in the world, and they just can't get their minds around the fact that anything else they can do is going to be much more expensive. ... how does that differ from any other place in the world?

When you have Niagara Falls, you should be able to set up a matching size of wind capacity and have no supply fluctuations.

Here's a book that might be of interest: From the April issue of California Farmer "...Humans possess two minds = an "analytical brain" that plans for the future and an "emotional brain" that falls in love with familiarity. The dichotomy helps explain why change is so hard, says Stanford professor (Chip) Heath in a new book, Switch: How To Change Things When Change Is Hard...


Let me put this into the context that change is hard due to the notion of sunk costs.

For example, our current economic policies are predicated on specific economic theories. Much is invested in these theories, in bureaucratic costs, in egotistical costs, etc. To make any kind of change requires people to justify losing their investment and then rationalizing recouping their costs by adopting a different theory. Sacrificing the ego by abandoning a pet theory has to be incredibly belittling to an academic. That is why science is such an exacting master -- it keeps on telling you that all that matters is the concept of truth, while everything else is secondary.

I would imagine that religion is exactly the opposite of this notion. The familiar is all that matters and change is immaterial. But then someone will say that science is a religion and the subject switches to tautology.

Concept of truth seems to be where the next grant money will come from and everything else is secondary(?). /saroff

I don't think it's just "sunk costs". I recall some "experimental economics" research that basically concluded that "potentially losing a reward" is weighted more significantly than "potentially gaining a reward" (ie, experimenter says "I'll either give you 100 dollars, or we can flip a fair coin and I'll give you 300 dollars if it's heads, nothing otherwise", people tend to choose not to risk "losing" the 100 dollars.) Change involves "losing" the future rewards that they (think that they) know how to get in the current system in the future in exchange for a new situation, even without sunk costs.

Right on! Thanks for reminding me of that. There is a concept called hyperbolic discounting which gets invoked almost subconsciously when making decisions about future worth.

If we have an uncertainty in risk our Bayesian impulse is to weight this in a specific way and economists can take this into account through a hyperbolic discounting formula.

What I find interesting about it is that the math looks very similar to the hyperbolic reserve growth curves that we use in oil depletion analysis. I can derive hyperbolic reserve growth through the same probabilistic uncertainty arguments that the hyperbolic discounters use. It also looks like the odds function that gambling operations use. http://mobjectivist.blogspot.com/2010/03/fitting.html

This essentially explains the heads/tails decision making because the person is uncertain about whether they will actually receive the reward in the future. The odds may be to their benefit but the payoff may not be immediate. Obviously the professional gambler will expect that he can play the game several times and eventually beat the odds. But playing just the ONE time, the person takes the easy route.

I have been pushing this math approach for a while but due to sunk costs, none of the other oil analysts will likely be interested in it. Full circle, QED, full stop. (that's supposed to be irony)

"...Humans possess two minds = an "analytical brain" that plans for the future and an "emotional brain" that falls in love with familiarity.."

And I might add, all decisions are made by the emotional brain.

Along the same lines, as a follow-up to an earlier conversation regarding Ontario's 80-cent feed-in tarrif for residential and commercial solar:

Not yet the best thing under the sun

WATCH out, there's another green rush: New South Wales residents are flat out installing rooftop solar panels due to the state's new, generous feed-in tariff (FIT).

More than 60 countries - and now most Australian states and territories - have feed-in tariffs that offer a subsidy to electricity users who install renewable capacity in their home or business. It's known as embedded or distributed generation.

Net tariffs (in Victoria, Queensland and South Australia) pay for only surplus power fed back into the grid. Gross tariffs (NSW and ACT) pay for all power fed back to the grid. Either way, the retailer pays the subsidy, passing the cost on to its other customers.

See: http://www.brisbanetimes.com.au/business/not-yet-the-best-thing-under-th...


Here we go again - Feed in tariffs, ohh yeah !. Here is George Monbiot's take on them in newspaper The Guardian.

Solar PV has failed in Germany and it will fail in the UK

The paper estimates that the subsidy for every solar PV job in Germany is €175,000: in other words the subsidy is far higher than the money the workers are likely to earn

For how long can such politics last? I bet for not much longer. This is still Space-tech in my head and will stay that way until further notice. I should like to see a serious EROEI analysis on PV's. And a question that press ahead is : When will PV manufacturers eventually start to produce this "energy_source" in the desert with the means of their own home-made energy? b/c today they are situated near all sorts of conventional powerplants 'parasiting their energy'. PV's has been underway for 50 years now, so time to grow up...

Also - I will recommend everyone to read the first comment under this article in The Guardian.
It's about "Two Danish experts in the field of wind energy will be in Washington for the next three days to speak on the subject of wind generated electricity" ..."Danish Wind Power Overblown"

..."Danish Wind Power Overblown"

According to Wikipedia:

Wind power provided 19.7 percent of electricity production and 24.1% of capacity in Denmark in 2007[1], a significantly higher proportion than in any other country.

In my opinion, it's difficult to overestimate how useful this electricity will be in a post peak world. The same can be said for all the solar panels being installed in Germany. I believe that now is the time to build up renewable energy generating capacity, not deep into the post peak decline. Go Denmark/Germany Go! Don't listen to guys like Paal.

I'm just a supporter of "plan now - consider - act" whereas you seem to prefer "act now - consider - plan", the fallout will be better with my flowchart. IMHO.
As I indicated PV's, WT's and more renewable should become self-producing (as far as possible)- but I'm not seeing steps in this direction, do You ? To fill you in Frugal- renewable energies is just noise in the bigger picture and I can assure you it will only be slightly more noisy in a decade or so. The Fossile-Monster is running the Renewable-Funfair today, tomorrow and anytime. Prepare yourself Frugal :-)

When did you ask for an EROEI analysis on PVs lately Frugal?

When did you ask for an EROEI analysis on PVs lately Frugal?

The useful life of PV panels and wind turbines is at least 20 years. The EROEI is less important now than it will be in the future because fossil fuels are readily available right now but won't be in the future. We have a choice of burning fossil fuels for our present enjoyment or using fossil fuels to build something of lasting value, such as renewable energy systems or electrified rail. EROEI will become increasingly more important as fossil fuel production declines, but if you wait until then, you will not have enough energy to built anything with long term benefits.

That's why we should build renewable energy capacity now, not later. I not sure if renewables will ever become self-producing.

Prepare yourself Frugal :-)

Yes by installing PV right now instead of waiting until they become unavailable.

Current PV (or wind) isn't suitable for all situations - in cloudy high lattitude places like the UK because of its low efficiency it is totally inadequate at any price.

Well the BAU grid tied,'bells and whistles' systems being pushed are definitely uneconomic in the UK. If I was building my house from scratch I could live with a few hundred daytime watts to run a 12v fridge, some minimal lighting and a music system. Sod the grid connection - I could do it for £1000 - £2000, with 80 -90% of the cost being panels. Of course, Mandel-slime wouldn't let me have a subsidy unless I use a REGISTERED installer. In fact I would probably have to bribe the local council to stop them demolishing it. That's the British way...

The perception that one needs a big fridge is probably an American export and wasn't nearly as common in UK and Europe as recently as a couple of decades ago. For people who live in compact cities with close access to grocery stores, it is not necessary to have the big fridge. A counter top size is quite adequate for a family and can be dealt with by more frequent shopping.

Well, then, good luck with continuing fossil fuels as the north sea goes down the tubes. Eventually, in the absence of alternatives, UK will just have to depopulate. It happened to Ireland; it can happen to the UK.

I think there needs to be a realization that objections of this nature are just an admission that life as UK has known it in the past is not going to continue.

Well, it's good you like your beer warm.. not so good that you like your homes warm, too.

It might be the British Isles, and not PV that turns out to be inadequate, sorry to say. There's no guarantee that Renewables are going to satisfy you wherever you happen to live.

Judging from all the Brits I've met in Florida, I would have guessed England has already depopulated.


Solar is peaking power that will generally match air conditioning load. Not baseload power for that 3-shift industrial firms rely on for producing goods.

Wind feeds it's energy into the grid. Wind power equipment is made from goods produced using grid supplied electricity.

So in a sense, wind power is producing more wind power already.

Oh yes absolutely, some one should tell the Pakistanis. They already have some 10 months of guaranteed seasonal sun every year,l but still....

How to survive the energy crisis in Pakistan

THE loadshedding-driven sleepless nights and disrupted daily routines of last summer are still haunting the people as the weather turns hot. The situation has not improved since last year; indeed all the signs are that it is getting worse.Credit goes to brave Pakistanis for surviving through the winter despite 10-hour power and gas loadshedding. But in the upcoming summer when the mercury is going to consistently hover round 40°C, occasionally rising to 50°C in some places, a power crisis of a similar order is going to prove unbearable. Last summer the national media reported tragic deaths due to heatstroke and dehydration. The energy crisis in winter forced thousands of industries to shut down operations, affecting industrial production and the livelihoods of thousands of families.

Pakistan is just a symptom of this world.

At the end of the day, it may be determined that PV and wind are not sustainable. However, in the mean time, we continue to deplete fossil fuels. At what point do we decide to give renewables a go? Or, are we to wait for some magical energy source to save the day? The worst case down the road is that we will decide that PV and wind were bad investments. Regardless, they will continue to produce electricity. We know that fossil fuels are neither sustainable nor acceptable for the environment. The jury, in my opinion, is still out on PV and wind and I would prefer to take my chances that efficiencies of both will continue to improve with a good chance that PV efficiency improvements will be dramatic in the thin film area.

We can also move forward by investing in zero and less than zero net energy homes which will provide significant benefits to the homeowner and the planet down the road. Protecting oneself against increasing utility costs seems like a good strategy for the individual.

Keep in mind, also, that most people putting solar on their homes first seek to minimize their electricity needs. That act alone is a worthwhile endeavor and is another reason why the solar mentality is a good one.

Combine the above with massive downsizing of living spaces and minimization of transportation needs and we can address the fossil fuel problem which is economical for the individual regardless of the chosen fuel source.

When the fossil fuel funfair is over, we will definitely be screwed if we have no alternatives in place. We may be screwed anyway with renewables in place but at least that is an uncertainty. Doom is guaranteed by going down our current path of business as usual.

And, while we are at it, feel free to throw in some nuclear for baseload needs.

Let us by all means perform the EROEI analysis on everything. But let us also recognize that solar and wind are a moving target. Increased efficiency will continue to improve their EROEI.

Given the credit crunch and the need for being able to reduce household waste because of frozen or reduced incomes, I find it unlikely we can really grab much more efficiency from living as we are now, without essentially drastically altering lifestyles. Which could be seen as not requiring that investment in PV at all if we're talking about only needing bare essentials to power.

I'd say the economic downturn has made all the low hanging fruit of efficiency savings all but exhausted for now.

"I find it unlikely we can really grab much more efficiency from living as we are now"

There are countless ways to improve household energy use, and business/industrial demand as well. A great many simple changes in habits and blind-waste won't affect capital outlay at all, and others, like Paul (Here in Halifax) doing very off-the-shelf refitting of lighting equipment and heating equipment can make pronounced reductions as well.

With a lighter demand for electricity, it then makes MORE sense to own some PV, which would be cheaper as it's a smaller array then, but still leaves you protected from the likely fluctuations in Utility prices coming down the pike.

(Edit: Paul, 'Off-the-shelf' didn't sound very complimentary... just meant that the tools are all available, they aren't exotic or experimental)

Actually, Bob, your description is bang on... virtually all of our lighting retrofits utilize standard, off the shelf hardware -- typically, a simple re-lamp/re-ballast if the existing fixture is in good repair and well suited to the intended task, or outright replacement with new industrials, strips, high bays and troffers as required. And, you're right, we'll never run short of work because the opportunities to cut demand are simply staggering. Nova Scotia Power's 2010 Integrated Resource Plan is calling for a 1.5 per cent net reduction in load via DSM for each of the next twenty-five years.

I'm working six and seven days a week until 02h00 and 3h00 in the morning and I can't keep up with the requests. I'm not complaining, 'cause every kWh saved is another half-kilo of coal that won't be burned, and that makes everyday a good day.

Update: Just got off the phone with my counterparts at NSP. They've asked us to put our balls to the wall (their exact words) and doubled our monthly targets. In fact, we've been told to pursue every opportunity that meets their minimum yield requirements; that "the sky is the limit" (another direct quote). Great news for our firm, but it comes at a time when we're busy ramping up our work in New Brunswick, so it's going to get crazy from here on.


Sounds like job creation to me.

Hi Substrate,

I'm not sure; perhaps with a recovering economy NSP has determined that they need to ramp things up if they are to meet their IRP commitments to the provincial Utility Review Board. If it means we can avoid building another coal-fired power plant in this province, which is the likely alternative, I'm all for it. And since DSM initiatives such as this are the least costly option to meet new load, it's good news for ratepayers.


It's about "Two Danish experts in the field of wind energy will be in Washington for the next three days to speak on the subject of wind generated electricity" ..."Danish Wind Power Overblown"

These experts, maybe:

Anti-Wind Study Linked to Climate Sceptics

You should restrain yourself from jumping to conclusions- it may have you look light weighted. The main takeaway point in the article (commentary) is that the US will not benefit form the advantages that Denmark has- with her grand share of WT's.
So come again-- why do you blend in climate skeptics ?

Thanks for the advice. Here's mine: Read a little further in the comments section, for example this one:

"The total cumulative cost to all electricity consumers (not just households) of this scheme and for all technologies is £6.7 billion by 2030. You claimed incorrectly in your first piece that the Gvt was "about" to take £8.6 billion from the "poor" and give it to the "middle class". Since you don't do so in the article, will you now apologise at last for trying to mislead your readers, presumably for effect."

What the heck are you talking about? I was pointing to only THE FIRST-comment..... and not the entire 165 comments thereunder.. or any other blog comments on this planet either.
Here is what I wrote:

Also - I will recommend everyone to read the first comment under this article in The Guardian.

Do you expect from me to understand where you are headed with this?

"The Danish study, prepared by Danish think-tank CEPOS has been misrepresented and distorted. CEPOS was awarded a $100,000 grant from the Atlas Economic Research Foundation, which has given CEPOS “several awards.” The Charles G. Koch Foundation and the Claude R. Lambe Foundation both support the Atlas Economic Research Foundation. The Danish paper on wind farms was promoted by The Institute for Energy Research and the Heritage Foundation. "

(my emphasis)

We're judged by the company we keep, or the one which pays for our research.


"As I indicated PV's, WT's and more renewable should become self-producing (as far as possible)- but I'm not seeing steps in this direction, do You ?"

Why would they? That challenge is spurious. We know PV generates electricity, and that it takes large amounts of power to refine the PolySi and other components of its manufacture, but why would it matter that this is done with other solar panels, and not perhaps in the shadow of Niagara Falls?

We have seen EROEI evaluations for PV here showing energy payback in 1 to 3 years depending on type, and a lifespan of over 25-30 years.. and that's not even with recycled panels. If you reject these numbers, then it's YOUR turn to provide a counterpoint.

"I can't speak for other renewables but know a great deal about EROI for solar. Let's just consider crystalline silicon (c-Si) panel which currently comprise ~75% of global PV production. Past estamates of EROI for C-Si (or "multi-Si) PV: " >> http://www.theoildrum.com/node/6364#comment-609693

We have seen EROEI evaluations for PV here showing energy payback in 1 to 3 years depending on type, and a lifespan of over 25-30 years

... but I have not- only them claims of yours I read time and again
A fullblown and realistic PV- analysis have I never seen. So , would you kindly direct me to the MOST up to date one?

Here's the source document from the other day, in case you didn't follow his link.

physicsperspective added (at the Permalink above..)
"Source --- http://www.clca.columbia.edu/papers/Photovoltaic_Energy_Payback_Times.pdf "
"If you don't check the reference please note this methodology accounts for the energy inputs of the product, deployment, operation and maintenance, decommissioning, and even the energy associated with building the tools used to build the PV system components."

.. and here is a more recent paper co-authored by Marco Raugei, one of the originators of the PV life-cycle chart I linked you to.

October, 2009

3 Methodological Guidelines

All PV LCA studies should be elaborated according to the ISO standards 14040 and 14044.
Deviations from the nomenclature, procedure and methodology compared to this standard for
life cycle assessment should be clearly stated. ...

...3.3.1 Key parameters to be reported
Clear communication is essential for transparency. The following aspects need to be reported:
- explicit goal of the study or investigation, including aspects such as static or
prospective LCA (goal A), B) or C), current performance or large scale (future)
development, etc.
- Name the commissioner of the study
- Intended purpose and audience
- Module efficiency
- Irradiation (kWh/(m2.yr)) and performance data, including performance ratio (PR);
describe if irradiation input is specified on horizontal or latitude tilt plane; describe in
detail region and condition, e.g. X % for supersolar power plant installed in Spain,
measured by continuous monitoring and reported in www.supersolar.org.
- Location of the PV plant (to be stated in the goal and scope description and during the
interpretation of the LCA).
- Assumptions for production of major input materials, e.g. solar grade silicon
- Assumptions for system type, method of module mounting (for roof-top systems) and
BOS components;
- Conversion factor from m2 to kWp, For instance, 15 % module efficiency is equivalent
to 150 Wp/m2.

(Many more particulars to their report parameters/methodology at this link..)

If you insist on claiming that this study is not serious or sufficiently up-to-date, then it becomes YOUR responsibility to bring something with you to back that up.

Thanks indeed Jokhul.
I will spend some time to read this more closely- thus of course I accept your conclusive demand (for now).
But I'm skeptical already "One year pay back-time" gets my head having flashbacks to "perpetual mobile" and that kind of stuff... You know.
Also the Sales_Trick "Pay for 1 take 2 ... ehh 20" comes to mind. This is the very reason I like to see those PV- companies well out in the desert doing their thing ... with their own energy thing. b/c this would actually give initial proof for "your analysis" - at least as far as we could hope for at this stage. Skeptical !-indeed-! such claims make me.

I'll be back !

I was pointing to only THE FIRST-comment

And I was pointing to some of the following comments, which also deal with the questions you've raised (or George Monbiot, respectively), PV and FITs.
Monbiot got some questions to answer, but he prefered not to come back in four weeks time, cause he was "meant to take his three-year-old to the beach."

Do you expect from me to understand where you are headed with this?

No, not really. I'm headed to unbiased information (instead of reading what fits with my preconceptions.)

Hi Paal,

It might be helpful to put this into context. I don't have any up-to-date estimates, but between 1947 and 1997, Canadian taxpayers reportedly paid over $20 billion in subsidies to AECL, the Crown corporation responsible for the development of Canada's CANDU nuclear reactors. Ontario Hydro's nuclear expansion programme during the 70's and 80's saddled the utility with nearly $40 billion dollars of debt and, ultimately, the Province was forced to assume some $30 billion of it to prevent its collapse. I don't know how many billions more have been spent on refurbishments thus far, nor the decommissioning costs when that day arrives, but I suspect the final tally will be substantial. And as stated in a previous Drumbeat, Ontario was paying as much as $2.00 per kWh to import electricity when the Province was battling a heat wave and fourteen of its twenty nuclear reactors were off-line due to refurbishment and various equipment outages. Frankly, whatever they spend on this FIT will be a drop in the bucket compared to what has been spent on nuclear to date.


Frankly, whatever they spend on this FIT will be a drop in the bucket compared to what has been spent on nuclear to date.

Oh, I think the taxpayers of Ontario ain't seen nothin' yet. This is shaping up as one of the classic boondoggles of Canadian history.

One important point that seems to have been overlooked: you can't count on solar and wind for base load - there are those hot, dark, windless days when nothing works. You have to back it all up with more conventional power sources.

So, who's going to build all those new peaking units? I don't see that in the plans. The ideal backup is gas turbines, but knowing Ontario it will be big, cheap, dirty coal plants burning high-sulphur coal mined in the US using mountaintop removal.

Or, just going without. I've been travelling in third world countries and know what it's like when the national power supply is out for 12 hours per day. You get used to breathing exhaust fumes from thousands of portable generators.


No denying it, Ontario is in for a rough ride, which is why we're seeing the Province investing heavily in energy efficiency, smart meters and renewables. With respect to natural gas generation, as of January 1st of this year, there was just under 6,300 MW of natural gas plant in place, with more to come, e.g., there's a 900 MW facility that TransCanada Pipelines wants to build next to the Ford plant in Oakville.

If it's fair to ask this of you, what's your guess as to how much it would cost to build a 1,250 MW transmission line from Conawapa to the major load centres in south-western Ontario? .... 2,000 km built over some fairly tough terrain.... $2 billion? $3 billion?



If the new transmission line is to fit into their existing system, they would have to go with at least 500 kV, but I would have to do some back of napkin calc's first. It's late here even on the west coast so I'll make it short. They would only go double circuit at 1,250 MW and 2,000 km (that's a long, long circuit), and their first poke would be AC at 750 kV. I only had pricing for 500 kv recently at $1.6 million per kilometer, so twin circuit 750 kV might be around $2 million per kilometer, or $3.8 million for the two circuits (some common costs). The total would then be $7,600 million.

Now, the next approach would be HVDC and I would take a shot at about 3/5's of that cost or $4,560 million. They would have to go with the HVDC for other technical reasons also.

But at 2,000 km watch out for those sun spots...

Thanks, BC EE, I was hoping you might be able to provide us with some numbers. I recall discussing this with my colleagues at the Ontario Ministry of Energy when a north-west link was first proposed, and I believe the number at that time was pegged at somewhere between two and three billion. I keep forgetting that was twenty-five years ago!


Well, HiH, it's nice to get some realistic numbers on this. Call it $5 billion for a HVDC line from Northern Manitoba to Southern Ontario.

Now, the real question is: can the Ontario Ministry of Energy do it cheaper with wind power? Keep in mind that with wind power you have to have some backup for days when the wind doesn't blow, whereas with hydro you can go from zero to 1000 MW in about 60 seconds.

(I'm just remembering standing along the Columbia River when BC Hydro opened the Revelstoke Dam up full blast due to a power shortage in California. Have you ever seen a major river go from a trickle to full flow in 60 seconds?)

And California is a long way from British Columbia, but it's all about money. California was paying insane prices for electricity at that time. Ontario just doesn't want to pay that kind of money.


I suspect Manitoba is competing with imports from neighbouring Québec more so than native wind. Hydro One's new 1,250 MW interconnect with H-Q will reportedly cost $124 million, which makes this north-west link some forty times more costly (source: http://www.hydroone.com/Projects/QuebecIntercon/Pages/Default.aspx), plus the technical challenges of shipping power 2,000 km as BC EE suggests can't be underestimated. To learn more about this interconnect, see: http://www.hydroquebec.com/interconnexion/bulletin/outaouais_3_en.pdf.


Or, just going without. I've been travelling in third world countries and know what it's like when the national power supply is out for 12 hours per day. You get used to breathing exhaust fumes from thousands of portable generators.

Peak oil will solve the portable generator exhaust problem. Of course, heavily polluting coal burners will be around for a long time.

Paul- in skimming your reply here I'm getting the feeling that you look at the Solar-FITs as pocket-change or something thereabouts. Not so!

If you read the linked article you would have seen that the Germans have used in the vicinity or more than your mentioned Candu-expenditures for solar FITs over 10 years - and as you imply, thats a lot of money.
But for this amount they have achieved to convert ONLY 0.6% of their ELECTRICITY into solar.
A simple Google effort gave me Canadas el. generation , and there at least we have a 17-20% share of real and good old fashioned base-load from Nukes.
I don't know why I wrote this- because it has no value what so ever. These are different animals IMO, but YOU started it with that Candu- thing :-)

BTW, Have a look at this NEW Google feature ; Electricity consumption per capita

Hey, check out those gluttonous Europeans using more electricity than Americans!

? 0.5 < 1

Norway's primary energy source is hydro. That's why they use a lot of electricity per capita.


Hi Paal,

I don't know how the two jurisdictions compare, but as noted below, for grade level installations greater than 10 kW, the FIT rate is 44.3-cents per kWh, and during periods of peak demand when these plants are presumably operating at maximum output, the cost of imported power can easily exceed $450.00/MWh.


Just a note that I installed 800 watts of pv and 1kw nameplate of wind for my off grid house in Ontario twenty two years ago. Supplied all my needs then and ever since. Original cost in 1987 dollars about $13,000 batteries included. One change of batteries since, about $1500. Toast in the morning, bread machine twice a week, washing machine, frig, computer, doodads & gizmo's. Longest stretch of heavily overcast weather 31 days in Nov-Dec one year. My sweetie & yes she thinks it's fine let the laundry wait and eventually forgave the toast. Everything else was fine.

What's this silliness about no wind and too cloudy?

When I built the place Ontario Hydro wanted $10,000 just to put in the poles and hook me up, for the privilege of paying $1,000+ a year to pay for CANDU. No thanks. I think we would do well with hydro, wind, pv and some serious HereinHalifax retrofit. At times less is more. Perhaps we should stop competing on who has the biggest electricity bill and downsize our consumption as well as our cars.

Paul in Ontario

Paul,re the Brisbane Times article.I installed a 5.4 kw PV system with battery backup last year in a sub tropical climate.This is grid connected with a minimum feed in tariff of $0.44/kw hr at the moment.

As a result my power bill is zero and I get some return on my considerable investment. The backup adds to the initial expense but it gives me a guarantee of electricity in the event of grid failure.

There is some discussion about renewable power schemes in Australia with all opinions represented,ranging from all for it to it being a waste of money.

It is impossible to predict what is coming down the track.It is possible that feed in tariffs could be abolished for various reasons - who knows? However,when I consider the disruption that having no electricity or paying exorbitant rates would cause for me I think that it has been worth the cost.

Hi thirra,

Congratulations on the installation of your home power system. It must feel great to be totally self-sufficient.

You raise a good point: these feed-in tariffs are not cast in stone; they can be discontinued, the incentives scaled back, or the terms and conditions altered if the Province decides that the programme is "fully subscribed". Also, it should be made clear that the 80.2-cent per kWh rate applies only to installations of 10 kW or less. For roof top installations greater than 500 kW, the rate is 53.9-cents and for ground mounted installations greater than 10 kW, it's 44.3-cents.


I have 2kw of PV here in cloudy Tasmania. I get net metering at 18.5c per kwh. My power bill is about $112 in credit mainly due to woodfired cooking and restricted water heating. A feed-in tariff would be a bonus for me but I think it's wrong in principle, in effect a tax on the poor.

Australian electricity markets will get even more distorted when China and India ship out vast amounts of Australian coal while Australian generators have to pay $20 a tonne CO2 tax or somesuch.


I am surprised and disappointed my home State and capital (NSW and ACT) are doing this. The fact that so many governments around the world are doing it, but few or no private utilities are (unless mandated) suggest that governments see something else in this, like good PR, which undoubtedly it is. I do agree with Boof (great Aussie nickname!) that it is a tax on those who can't afford panels, for the benefit of those who can.
BUt, governments are always finding ways to waste money and do counter-productive taxes, and nothing we say here will stop them.

If we look at the progress of various renewable energy technologies that have developed with the benefit of subsidies, we find that NONE of them have yet progressed to the point where they are profitable at market rates - i.e. where they can be taxed, instead of subsidised. If they had, these feed in tariffs would not be required. The problem is, that any business that is dependent on a government subsidy, is inherently unsustainable, unless it can get to a point where it is not dependent. That is because, sooner or later, the subsidy will be removed, and the business will have to sink or swim on it's own.

I suspect something we can all agree on here is that history of government intervention the electricity generation industry, over the decades, has likely done more harm than good ( I do actually believe it has done some good, especially with the hydro projects). And they would appear to be continuing that batting average today.

I have often wondered if a better alternative to the feed in tariff, would be the offer of no interest loans, perhaps with a one or two year holiday before repayments start, and possibly different payback periods for different technologies. That way, the developer is forced to take a good look at their business plan, as their "subsidy" has a definite expiry date. If the gov decides to discontinue the policy, existing agreements are honoured, so no one has the rug pulled from under them. Would require some interesting rules regarding default situations though.

Ultimately, the more governments try to steer both producers and consumers away from market reality, the bigger the hole they dig for themselves. Ontario Hydro's debt is testament to this.


Paul N.

Hi Paul,

I wish I had more time to explore this as it's an interesting question. My assumption is that most home based systems will produce about the same amount of electricity as these households consume. If that's the case and any excess kWhs are simply banked for future use by the customer, with some sort of clean-up at the end of the year, say, would you still consider this to be a poor policy?



That is essentially how BC Hydro's net metering operates, buy back rate is currently 8.16c/kWh


I actually think this is a good policy, as it allows the customer to use whatever generation source fits best - I am helping a neighbour set up a 3kW micro hydro on a creek that runs through their property. though we may not actually "grid connect" it as the control equipment is quite expensive - we may just use it for their elec heat and HW.

BUt what I don't think is good is paying the 80c to buy a product that they sell to the same customer for 5-10c

In California, Sonoma County has a good plan that you would find interesting. The county has set up $200m fund for energy conservation, self generation AND (my favourite) water conservation projects (water/sewer accounts for 20% of electricity usage in California). They will fund whatever part of your project is not covered by rebates/tax credits, by lending the money (at 7%), for a term of 5 or 10 years (or 20 for a >$100k project). The payments are added to your property tax assessment (so does not show up as debt on the balance sheet of a company!). And, if you sell the place, the loan stays with the property (though you can pay it off, but certainly don't have to.) I would have liked to have seen this interest free, but it's better than nothing. It does make the property owners look for 5-10yr paybacks, and solar actually meets this, because they have very high tiered elec rates, and your marginal cost in sumer can be 30c, so panels are a good payback - and it is hot and sunny there, in summer.


I like this layout as thew property owners, with the help of people like yourself, analyse their situation and choose the best investments. Then they see that it is far better to make the a/c, and the building it cools, more efficient , than to just put up subsidised solar panels to offset the A/C consumption. Ultimately, I think that is a better approach than upping the price for bad investments so that they become good.

Hi Paul,

Thanks for mentioning the Sonoma County programme; it sounds like a smart option. I'm not familiar with the terms and conditions that apply to this NSW initiative (they're probably available online but I don't have time to hunt them down right now), but are the sell and buy-back rates not the same, so that the utility pays only for the kWhs that are generated in excess of what was consumed by that household at the end of a twelve month period?


Texas border towns fear violent spillover from Mexico

El Paso: Texas law enforcement officials are bracing for a bloody weekend along the border, advising farmers to arm themselves as signs across northern Mexico point to a new escalation of violence after coordinated drug cartel attacks against the military this week. ...

... He said he has four of his 15 deputies on duty in Fort Hancock, up from the lone deputy who normally patrols the community.

Earlier in the week, the Sheriff's Department held a community meeting in which authorities advised residents, "If you're out on the fields, arm yourself," Doyal said.

Border Patrol spokesman Doug Mosier issued a statement Thursday evening urging calm "amid unsubstantiated reports of violence, threats and intimidation."

Mosier said the agency has increased the number of agents on duty and is "determined to prevent violence from spilling over into the U.S."


Ashtabula County Ohio: Judge tells residents to "Arm themselves"

In the ongoing financial crisis in Ashtabula County, the Sheriff's Department has been cut from 112 to 49 deputies. With deputies assigned to transport prisoners, serve warrants and other duties, only one patrol car is assigned to patrol the entire county of 720 square miles.

"I did the best with what they (the county commissioners) gave me. If it wasn't enough, don't blame me, don't blame this department," said Sheriff Billy Johnson. ...

... Ashtabula County Common Pleas Judge Alfred Mackey was asked what residents should do to protect themselves and their families with the severe cutback in law enforcement.

"Arm themselves," the judge said. "Be very careful, be vigilant, get in touch with your neighbors, because we're going to have to look after each other." ....


The El Paso story is from over a week ago.
The Ohio story more recent.

But the same story for rural residents: guns and neighbors

But the same story for rural residents: guns and neighbors

One of the less-remarked-upon aspects of the New Deal was a conscious decision, in both Washington and in most states, that rural America would not be consigned to a second-class status. Out of that decision came: various sorts of farm supports, rural electrification subsidies, telephone tariffs that included urban subsidies for rural service, etc. In many (most?) states today, funding structures for roads and K-12 education provide urban subsidies of rural areas.

A long slow decline in energy resources is likely to be very hard on rural areas, as these subsidies become politically unpopular.

Right now those roads are as much a liability as they are an asset. I know which rural budget item I'd cut first.

I can offer a first hand view of the border problems. When my new company started up last summer the first potential project was in far S Texas along the border. A combination of production acquisition and new drilling. In charge of field ops I had to explain to my owner how it works down there now. Based on current SOP of other operators along the border that I deal with: no one-man well site visits…a minimum two-man teams. Everyone armed with assault weapons. Nighttime ops: All trucks equipped with high intensity floodlights. Don’t let anyone approach. One warning shot and then it’s up to ones discretion.

And this is the procedure when out just checking on a freaking producing well. The problem isn’t the Mexicans trying to sneak across the border to try to feed their families. These folks are forced to carry drugs by the coyotes. In the old days if they were caught the coyotes would just run off and leave their human cargo to fend for themselves. Now they might be hauling a couple of million $’s worth of drugs. The word in the Valley: coyote looses the drugs: he should just keep heading north because he’s a dead man.

And now kidnapping is becoming another cash flow item. I first worked in the Valley 30 years ago. A different world back then to say the least. About the only interaction with the illegals you crossed paths with was to leave a couple of jugs of water on the road but both sides kept their distance. Always kept a few jugs in the back of the truck. S Texas is a harsh environment even in the winter and some folks didn’t make it across a 100 miles with little or no water sources. Now if you see someone you go back the lease road and wait for them to clear out.

This isn’t a significant national problem so we won’t see much coverage. It’s a local problem and the locals will deal with it. And as usual the folks who will suffer most as a result are the ones who can afford to loose the least: the illegals. My owner decided he didn’t want to buy into this little piece of hell. Profit is nice but, as he pointed out, he didn’t want to think about a shooting report coming one day with the morning production report. I was not unhappy with his decision. In my youthful and ignorant days being a gun slinging production hand would have been just fine. But aging has cured me of such notions.

What you describe is the "Mad-Max" scenario that others say can't happen. Scary.

jj – I suppose it is on a small-scale version. But it could get much worse especially on the Mexican side. Just this morning there was a story about the Monarch butterflies loosing habitat in Mexico much the result of illegal logging. As their oil production continues to deplete gov’t support for the general public will disappear. Eventually working for the drug cartels may be the next best option to starving.

Yikes. The notion of having to guard a 160 or 80 acre farm in the Upper Midwest without a sheriff patrolling is pretty damned scary. The extensive road system makes it easy for criminals to "get in, get on with it, get it over with and get out", and the size of farms out there means there's little your neighbors can do for you. The next farm over you can't see because of your wood lot, and they can't see you all that well, and on the other side is the other guy's wood let, et cetera. (Though I'm told Ashtabula was part of Connecticut's Western Reserve, so the farm sizes are more New England like.)

It's all well and good to arm yourself, but if I were living there, I would advocate forcing the roads to close at night, with caltrops, or by parking farm equipment in the middle of the road.

An interesting result of how the US was developed. When the federal government started giving native land to settlers one requirement was that you lived on the land. This resulted in homes being scattered all over the countryside. And as the minimum size of a farm grew in order to be profitable, the homes grew farther apart. This, in turn, created a demand for good roads and better vehicles.

Contrast this to what I saw in Germany in the 1960's. The farming village had all of the houses packed together. The land with the crops on it was adjacent to the village. A farmer could live in the village and only own his farm vehicles to get out into the fields. If he wanted to go the the nearby city he could ride the bus or a train. But all of his necessities were available in the village.

The German villages were probably arranged like they are both for security and convenience. Will the American farmer start to see the wisdom in that? Or will it be another case where "the American way of life is non-negotiable"? Thereby preventing us from learning anything from the people who are out-competing us in so many ways.


In New England the original villages were settled very similarly to Europe. Tight and defensible in case of French or Indian attack. In the Midwest, the Indians did not have good supply lines to the European powers, and so could not pose a credible threat. In the meantime, the US needed a good selling point to encourage settlement, so they started selling land by the one mile square. That's 640 acres, divisible by 16 into 40 acre lots. Buy one of those, and your family could split it among the children for several generations before having to revert to the European law of primogeniture, where the eldest son gets the whole estate. That would have settled the Midwest into a tight population distribution by now, except during the mechanization of farming, the rule became "get big or get out," and instead of splitting further, Midwestern farms actually started growing into what is now looking more and more like a corporate plantation economy.

Chinese housing bubble yes. Car bubble no.

We went for dinner, all three of us agreeing that in China, the boom in cars has nothing to do with the boom in real estate, that the two are much more disconnected than they ever were in the U.S., that the Chinese real estate market will go boom unless the government will intervene (very likely, as it is often state owned enterprises that are driving the prices up and are building the empty towers,) and that the car boom in China will last until the motorization has reached Western standards. In a country where cars aren’t financed, tight or easy money has little impact on car buying.

Which is about 600m cars away. So even if the Chinese would – horrors of horrors – buy 50m cars a year, instead of the 15-17m this year, China would have 12 years until the beginnings of a market saturation.

I asked both whether I should buy oil futures. They both shrugged, and we had the best Beijing duck in town.


Chinese housing bubble yes. Car bubble no.

Unfortunately for China, they timed their road infrastructure expansion and love of cars too late in the game. They won't have to listen carefully to hear the buzzer going off not long from now.

And being overpopulated, ecologically devastated, and run by bureaucrats with little knowledge in the field of biology, China is not remotely survivable.
Within the current BAU economy, it is simply the last great industrial power, and a dinosaur waiting for the comet to strike.

Most Chinese mortgages are the local equivalent of Alt-A, so, yes, upon being hit with a reset or two consumers are likely to cut back on new car purchases.

Found this as well, may be of interest: China's national sport: tax evasion? | Marketplace From American Public Media

Wang Haiyan: In my contract, I make about $400 a month. But I use receipts to get another $700, sometimes a $1,000.

There are variations to this game, perhaps only limited by one's imagination. But the key in China is employers are in on it. They're liable if workers cheat the tax man.

CPA Hank Bourg works for a Shanghai consultancy, Dezan Shira.

Hank Bourg: So your typical Chinese business keeps multiple sets of books. So you have the official one that they show to the government, they have the ones that they're willing to show any partners and then they have the third one, that's the real one because they have to manage their business.

He says what makes all this possible is the tax enforcers are...

Bourg: A little bit behind in their sophistication, but rapidly closing the ranks. And what that means is that there probably is a lot of people here that are exploiting that lack of sophistication.

"No Substitute for Oil on the Horizon "

So the DOE says liquid fuels will begin to decline in 2012, and we know we have no substitutes capable of replacing them.

The Stagflation 1970s was only possible because the US could continue to import past peak production. But the world cannot import and cannot find substitutes in time to cushion the blow.

"Stagflation" is not even a reasonable goal post 2012.

So we have no working models for our world economy for 2012 and beyond.

What the hell are we doing...?

The early years of the post peak oil era, at least here in the US, will be marked by continued mal-investment. That is most investment made this year in factories, roads, etc., will have little or limited value in a few years further down the back side of Hubbert’s curve.

I expect that there will be great misunderstanding of our predicament at all levels of business and government, and although there may be some in power who are “Peak Oil Aware”, it is unlikely that government will soon lead the way to an orderly transition to less oil use.

Therefore the economy may come to be characterized as being in a ‘stagflationary’ period, but that too will be a misinterpretation. Resource shortages will force the price of food and energy relentlessly higher relative to other goods, services, and home prices. Governments will react as they have for the last 100 years: that is they will promote deficit spending in an attempt to make up for lost purchasing power. This will eventually result in central banks and the IMF issuing increasing huge sums of [fiat] money to finance those deficits when savings aren’t available. For example, in case you missed it, about six months ago the IMF just printed up about US$300 billion worth of money and distributed it to all the countries of the world.

Under these conditions, sustained general consumer price deflation is virtually impossible. Look for continually rising prices and the failure of total wage income to keep up. For those that maintain jobs, income levels won’t fall too far behind inflation, but in general, unemployment will pick up with each downturn in oil usage. Probably the next significant uptick in unemployment won’t come until 2011, as there is just enough extra oil in storage from 2009 to support a modest increase in oil usage, and therefore economic activity, in 2010.

Charles that all sounds reasonable, but if liquid fuels start declining with no replacement then some parts of the world will have to go without (or some industries). US consumption did not decline in the 70's after our peak production, so the slow motion stagflation like we experienced in the 1970's seems very unlikely and all-out collapse of some parts of our global village/global economy will have to occur. We cannot all grow, or even keep steady-state, with declining liquid fuels as early as 2012.

If "governments act the way they have the past 100 yrs" as you suggest (and I agree with - it appears they have no other models they will seriously consider) we will probably see the pace of warfare increase, as the Big Industrial Countries will not want to decrease their consumption. I guess many smaller and weaker nations will simply be forced out of the markets.

I wonder how many if any countries will bow to the IMF and the "austerity measures" they would demand (see Greece). Especially if the largest economies, the largest consumers like the USA, who are also effectively as insolvent as anyone, are not taking the same measures and instead continue to be predatory colonialist and retain "most favored importer" status from weak oil-rich countries like SA.

Maybe this is all worry for nothing. Maybe the DOE is right - that the "unidentified sources" will magically appear and be fully operational starting in 2013 when "sufficient investment" arrives just in time to locate them and develop them over night.

I think it is time for individuals and communities to begin emergency plan B preparations. Our leaders are just going to keep rehearsing their, "Nobody saw this comming" line as they continue to pretend and extend.

"...we will probably see the pace of warfare increase, as the Big Industrial Countries will not want to decrease their consumption."

Change that to "we ARE seeing the pace of warfare increase. You do know we are full on in Africa now right?

"US Expands War Front Throughout the Globe"

"America's First War in Africa. US AFRICOM Launches Large-Scale Offensive In Somalia"

As I keep harping on about, This is the ONLY issue of concern going forward because it will be different this time. It will be for all the marbles. We don't overcome this little issue and all your planning, future scenarios, New tech, localization, whatever, is all just wasted breath.

Now don't just go dismissing this as pure doomer talk. I for one intend to keep screaming about this inconvenient truth, which everyone trots out as if it's inevitable, in the hopes of avoiding it. I have no time for those who dismiss this issue off hand.

I don't dismiss your points as doomer talk. I agree with what you say except the localization part. That will be the key. The problem is finding the right locale with the right people. That and a lot of luck post-peak.

It appears likely that the US, Canada, Japan, Korea, Europe, will pay for what they need, India and China will also mange to get what they need for now through trade, while many third world countries will have to get by with less - at least in 2010 and especially 2011.

After that, many countries will experience food shortages brought on by lower energy availability and rising populations. It's unclear just how far the IMF measures would go for a country that can't feed itself.

At some point war between countries, and civil wars, will erupt for those with the least resources, or that can no longer play within the rules set by the IMF. It's even possible that eventually the role of the IMF, or at least the dollar based world trade system, will be phased out if the use of available resources and food seems unfair to most of the world.

I don't think we can expect any sort of smooth geopolitical sailing - just the opposite.

I'm not so sure " the US, Canada, Japan, Korea, Europe, will pay for what they need" or that China and India "will manage". "TAKE what they need under the guise of aiding some poor oil rich nation maybe.

And honestly, even if the powers divy up the remaining oil "peacefully and at fair market prices" - for how long can that continue if production continues declining and no magic "undiscovered reserves" appear? All of the above countries are Financially Insolvent and none possess the resources to pay off their debts - will we trade food commodities directly for oil.

Why assume any developing nations will simply role over and die? How secure are our shipping lanes?

There is not any room for any of our assumptions and certainly no room for any error starting in 2012.

More likely sooner - the market is stupid crazy now, but will likely wake up and start to "price in collapse" sometime before 2012.

Aardvark, I'll take exception with one thing you said here. Of those countries named, Canada is not insolvent, and is energy independent, for all major forms of energy. It is also water and food independent too. It is not, of course, "manufacturing independent", especially in regard to electronics, but then few, if any, countries are.

Canada is running a deficit, has a significant national debt, and has massive unfunded liabilities.

Canada is running a deficit, has a significant national debt, and has massive unfunded liabilities.

And, notwithstanding the above, it is one of the countries in the best financial shape in the world, especially compared to the US and the UK.

You're mileage may vary from our kilometrage. Why do you still use miles, they're so 20th century-ish?

Broke is still broke. You're just less broke than other developed nations.

You're mileage may vary from our kilometrage. Why do you still use miles, they're so 20th century-ish?

Dimensional Analysis works fine.

It's so hard to tell these days who is solvent and who is not because of the joke accounting standards and off-balance sheet games.

You may be right, but floridian is also right - Canada may not technically be insolvent but they have major financial problems. MISH has covered some of those problems recently:

California vs Ontario - who is in worse shape

"Canadian says "Short Canada"

Housing Bubble Comparisons

We will only see pockets of inflation in an overall deflationary environment. If your food, electricity, and gas bills go up but your house value goes from $200,000 to $100,000, that is still deflationary. With the housing crash and the great crash of 2008 in which practically everything lost value, we now have experiential evidence that it happens. We don't have to guess about that any longer. It's guaranteed in a post peak world that most assets and investments lose value. Nobody will want to invest in anything, because growth is no longer possible. Money printed quickly gets lost in the vortex of credit destruction, and it becomes apparent that debt really isn't money at all, and very few individuals, businesses, or governments actually have real capital.

Yes, and when very few individuals, businesses and governments actually have "real capital" then what happens.

Our local utility requires paying customers in order to function. During the foreshocks of the past three years our utility got a little skeered...

I hope our community can afford to pay our utility so it can afford to buy energy for many years after 2012.

Why not define it as pockets of deflation in an inflationary environment? The fact is, the two are mutually exclusive. Economists measure an overall "inflation rate" for the economy. Stocks, bonds and assets like houses are generally considered investments, not "goods and services", which is what we are speaking of when we are talking about inflation. What that means is, that when "food, electricity and gas" go up in price, the economy is experiencing inflation. To make matters more confusing however (in the US at least) what the Fed defines "core inflation" currently excludes food and energy (go figure), and this is the tool they use to set monetary policy.

When the value of your house crashes or your stock portfolio tanks, your investments and personal wealth or net-worth might have suffered, but this is still not an sign of deflation. True deflation means that when you go down to the mega-retailer, you can buy more "stuff" with the same amount of money. If you think there is going to be significant deflation, you should save your money like crazy so that you can buy more needed "stuff" when the crisis occurs. I think for a post-peak world, that is WAY off.

If you look at the historical record, the US has not experienced any significant deflation since 1933, which is when we dropped the gold standard for the dollar. As my technical skills for chart posting lack somewhat, here are wikipedia links to the last ~350 years, and last 100 years of inflation/deflation in the US. (note the lack of almost ANY deflation since 1933, and none between 1955 until 2009 when the final result was a insignificant 0.4% deflation rate)



My personal expectation for a debt-ridden nation in a post-peak world (does this describe your country?) is the unfortunate specter of hyperinflation. You'll be might be able to pay off your entire mortgage with one paycheck, and yet you might not be able to use the next one to purchase a loaf of bread. Zimbabwe is an instructive modern example of this phenomenon but there are many others historically. Hyperinflation almost always comes after a moment of crisis, and peak oil certainly fits the bill. Having a lot of foreign owned debt greatly worsens the situation.


Well put.

Historically, hyperinflation has not shown up overnight and was usually preceded by lower but accelerating rates of inflation.

I hope we will have some similar kind of warning again if hyperinflation shows up in the US, otherwise I won't be able to pay my credit cards off in time to avoid incredibly high rates of interest.

If you are in the US, Congress changed the law so that the credit card companies can't jack up your interest rate for your existing debt now unless you are 60 or more days late on a payment, or you have a "variable rate" card tied to an index.

Regardless of that, if there is any way you can avoid carrying a balance on your cards, it would be in your long term financial interest to do so. In fact, paying off your total CC balance every month is one of the smartest financial moves you can make, it will raise your overall credit rating, and in the long run, actually allows you to purchase more stuff, as you won't have to waste any money paying interest. Treating your credit card like it was a debit card can free you from the revolving debt trap forever.

A few days back Electrification Coalition issued a study on the economic impact of electic cars.


They say (page 16) that the best case scenario is that EVs can help reduce oil imports by 3 mbd by 2030 (they go by EIA figures, they aren't peakers).

The effect of the transportation fuel savings is a reduction in oil imports of about 3 .2 mbd by 2030 . The cumulative reduction over the period of the simulation is approximately 11 .9 billion barrels .

An interesting report and worth reading, however I cannot take their conclusions seriously because of their initial working assumptions - their 'base case'. Their 3.2 mb/d 'saving' is nearly useless and in comparison to their 107mb/d base case it is even worse.

On a side-note, if you consider oil to have peaked recently, would it not be fair to say the 'billions of passenger miles' totals must also have peaked? Efficiencies might buy you some time I guess, but no rises.

Yes, lets turn this from a liquid fuel for transportation problem, into a burn more coal for transportation problem.

Problem Solved.

While you've blithely ignored the number of times it's been shown that even with coal-fired electricity, an EV produces less C02 than and ICE car.. and clearly there are other preferable and popular ways to charge these vehicles that can make them emit NO carbon.

But Blather on..

So you seriously believe we will shut down coal-fired electricity, as we must, while at the same time increase demand exponentially?

Time for your meds?

Yes, I do believe we will be continuing to shut down coal generation. After the Mountaintop Removals, the TVA spill, the Coalmine disasters here and in China lately, the Tanker on the Barrier Reef. Coal has money for a loud PR apparatus, but it's not gaining as many friends as it's losing. It's going to lose.

I totally understand why many of you feel that will never happen, and that yes, it will be a conversion fraught with battles and more denial.. but as you say, it has to happen.

EV's at least allow for a wide range of other sources. Numerous people with EV's have already put in the additional effort and investment to charge up with PV (and I'm sure those who can and live in the right places are doing it with wind and microhydro, too.) Some people are knuckleheads, some are downright mean as snakes.. but a lot of people are smart out there, and know that this looks like a good set of tools.

One of many 'Solar RAV4 EV Testimonials', from the following site.. http://www.evnut.com/rav.htm

White 2002. We bought out a lease at 41k miles in 2005. Power comes from our roof-mounted 4.8kW PV solar PV system. Have seen Range over 120 miles. Our "second car" is a battery-assisted bicycle and a regular bike, and our "third car" is a membership in City CarShare.

Smart people, doing a range of things to live responsibly. Probably not perfect.. but who is, they're pushing in some very good directions.

Coffee is my Med.. and yes, it's always time for that..

$42,510 plus tax for an EV Rav 4? A normal hybrid vehicle is a much better buy, these are simply not economical and glorified status symbols for environmentalists.


Let me know when I can afford an EV without getting into horrible debt. Then we'll talk about this bright shiny future of BAU from clean coal and renewables.

They built 1500 of these, guys! The EV industry has never gotten a long enough production run to get the economies of scale that you have with the 9th decade of ICE manufacture.

There are numerous EV conversions being built for around 10-12 thousand (usu DIY).. but until and unless those Nimh packs that have done so well for the RAV4's are allowed to be mfr'd again by the current patent-holder, Chevron (IIRC), then they will be unable to get into the volumes to reach a better price point.

Personally, if someone has the cash and chooses a RAV4 and PV rooftop to impress, I am happy to be impressed. They have taken an actual bite out of the Petrol Transportation Monopoly. Other Upper Middle and Rich folks still show off with Hummers.

There's no way we'll all be able to afford pocket calculators! Those things cost two months salary. I guess I'll have to keep my slide rule.

I hope you know that your comment only applies to semi conductors. Moore's Law won't work on other systems based on mass, such as batteries. And, one reason newer cars cost so much is the extra complexity which the use of micro processors made possible. All that extra wiring and those distributed sensors add cost and are expensive and difficult to repair. Not to mention the extra expense of building more complex ICE's, with 4 valves per cylinder, multi-point fuel injection, variable valve timing, etc, all coupled to the tires with more complex automatic transmissions with more gears or continuous variable designs. Back in my slide rule days, I drove a Chev with a 2 speed Powerglide...

E. Swanson

"no substitute for oil on the horizon" interview with Mark Leggett included this:

Mark Leggett: I think $80 is about the right price, given the current economic conditions. We still don't really have a strong visible demand recovery and we are still sitting on above-average petroleum product inventories. Eighty dollars or just above $80 may be the top end of the range. The average cost to produce a barrel of crude oil globally is above $75. That tells us that the range that makes sense to us on a sustainable basis is $75 to $80.

"The average cost to produce a barrel of crude oil globally is above $75."

Is this true?

I do not know if that is true, even on a marginal basis, but the average price that the Saudis need to balance their total governmental budget is at least $75, and perhaps more surprisingly, Russia needs at least $95 oil to balance their budget. Granted there is probably waste and corruption that is driving costs higher, but those losses must be overcome somehow.

thanks for the info.

Those numbers [right or wrong] are the key parameters that most viewers miss. Especially KSA, since their pop growth demands that number should increase at a steep slope. If it doesn't rise at that slope because of other suppliers, then their investments will drop at that slope.

The concept of a swing producer or group [OPEC] becomes totally bogus when the national revenue drain in each state becomes significant - why should any country want to see their revenue swing wildly just to stabilize a price for others? At some point they can maximise their overall revenue [Hotelling model?], but politics and greed will probably prioritise today over tomorrow. Eventually, the revenue drain demands that all taps are turned to full - and then..
Which stage is KSA today?

dovey -- We have to be careful with the terminolgy we use. The cost to "produce" is greatly different then to the cost to explore or develop. It might cost $60 million to drill an exploratory well in the Brazil Deep Water. But that well won't produce 1 bbl of oil just sitting there. It will produce when development is done. That price tag might run $1 billion. That might represent a cost of $30 to $100 per bbl ultimately produced. All depends on URR. But once the field is developed and the wells producing the cost to deliver (called lifting cost) a bbl might be just less then $10. I've seen many cases where oil is produced at a costs that generates a very positive cash flow but will never recover the total cost to develop the project. Thus even saying a field is producing profitably can be misunderstood.

thanks for the response - very informative.


US military warns oil output may dip causing massive shortages by 2015
• Shortfall could reach 10m barrels a day, report says
• Cost of crude oil is predicted to top $100 a barrel

Chalk this story up to one more of the "frank" admissions that we "may" be close to a real Peak from a pretty reliable source.

It has been an interesting year of these little back-story releases creeping into the media.

In a recent interview with French newspaper, Le Monde, Glen Sweetnam, main oil adviser to the Obama administration, admitted that "a chance exists that we may experience a decline" of world liquid fuels production between 2011 and 2015 if the investment was not forthcoming.

Long time TOD readers here, like me, find it somewhat surprising that peak oil - at least soon - is all but admitted, although by another name, such as 'peak demand', 'lack of investment', 'geopolitical problems', etc.. However most of these admissions are coming from foreign and less followed sources, from the US perspective.

Still I find many financial and business commentators almost making fun of the 'peak oil theory', at least here in the US. There will have to be more of an acceptance of the problem before more serious measures are taken to adjust to the post peak world (again I am talking about the US here).

Thats like the difference between CNN and CNN International. Latter is almost watchable compared to the former.

Was just thinking...why did the US military come out with this information? What authority do they have to know about the global production of oil that no one else does? Bit odd, ain't it?

Not as I view it Dragon. The military is always concerned about supply lines. And they have their own intellegence system that I suspect is very capable in a limited but very focused manner. For instance, they have the capability of tracking every surface vessel in the world. Add their eletronic survelance capabilities and code breakers designed to defeat the Russians and their ability to hack the KSA et al should be obvious.

It may just be wishingful thinking that some arm of the gov't is really paying attention to the reality of the PO situation.

..and it might be worth adding 'Only Nixon could go to China' in there.

We've often chewed over how much 'the powers' are already Peak-aware.. but are constrained from saying so out loud.

The military might be one of the few vehicles that can carry the story without outrage or ridicule ..

Defense Intelligence Agency.

The Pentagon has their own in house intelligence service. It's a little bit like the CIA in terms of general intelligence gathering. And it's a pretty competent outfit.

It really shouldn't come as any surprise that the Pentagon knows about Peak Oil, takes it seriously and is very concerned about it.
What IS something of a surprise (and alarming) is that no other branch of government seems to take the DIA analysis very seriously.

Because they are told to look the other way.

In my old company I told them about it, so there are people who know people in the CIA and DIA. As I am not hashing out secerts( if I were you'd see the black magic markers out in full), but the Gov't knows full well, it just can't say.

BioWebScape designs for a better fed future.

If you look at the military PDF report, you will discover that the energy section is buried in the middle of a 76 page PDF. The problems with energy are not highlighted in either the introduction or conclusion. It is only if you slog through the report that you will find energy covered on pages 24 to 29, with a summary on page 29.

While one sharp-eyed reader who was aware of peak oil may have found the section, I am not convinced that a military person who was intent on ignoring the problem before reading the section would have his mind changed. I think the writer of a report will have to make more of a "big deal" over peak oil, for it to have any impact. As it is, the section provides a list of alternate fuels that might be ramped up, and the issue is "lost" in a report with so many other issues, a person doesn't know what is important and what is not.

The graphic on page 28 is the key graphic from the military perspective. For those who would rather not go look - it is titled "World Oil Chokepoints" and enumerates key ocean straits/canals and the amount of oil that flows through them.

Later, in the discussion of China, we get this gem:

Chinese discussions exhibit a deep respect for U.S. military power. There is a sense that in certain areas, such as submarine warfare, space, and cyber warfare, China can compete on a near equal footing with America. Indeed, competing in these areas in particular seems to be a primary goal in their force development. One does not devote the significant national treasure required to build nuclear submarines for coastal defense. The emphasis on nuclear submarines and an increasingly global Navy in particular, underlines worries that the U.S. Navy possesses the ability to shut down China’s energy imports of oil, 80% of which goes through the straits of Malacca. As one Chinese naval strategist expressed it: “the straits of Malacca are akin to breathing – to life itself.”

Moving on to Russia ...

At present, Russian leaders appear to have chosen to maximize petroleum revenues without making the investments in oil fields that would increase oil and gas production over the long term. With its riches in oil and gas, Russia is in a position to modernize and repair its ancient and dilapidated infrastructure and to improve the welfare of its long suffering people. Nevertheless, the current leadership has displayed little interest in such a course. Instead, it has placed its emphasis on Russia’s great power status. For all its current riches, the brilliance of Moscow’s resurgence, and the trappings of military power, Russia cannot hide the conditions of the remainder of the country. The life expectancy of Russia’s male population, 59 years, is 148th in the world and places the country somewhere between East Timor and Haiti

And in the Pacific ...

... The uninhabited islands south of Okinawa are in dispute between Japan and China, both drawn to the area by the possibility of oil. Much of the Yellow Sea remains in dispute between the Koreas, Japan, and China, again because of its potential for oil. The straits of Malacca represent the most important transit point for world commerce, the closure of which for even a relatively short period of time would have a devastating impact on the global economy.


It borders a troubled Pakistan, a growing China, is in a neighborhood at high risk of nuclear proliferation, is a common target for radical ideological groups using terrorist tactics, and sits astride key sea lanes linking East Asia to the oil fields of the Middle East. Perhaps reflecting the growing importance of India, and the fading of old animosities borne of the cold war, the U.S.-India relationship has been developing very quickly over the past decade. The Joint Force will likely have a role to play as the U.S. encourages the growth of India as a regional and even global power.

Oil is also mentioned in relationship to Brazil and Venezuela (but not Mexico).

The Peak Oil discussion in Section 2 is there to demonstrate that oil is likely to become even more valued over time. It sets the stage for its discussion as a critical geo-political factor in Section 3, especially in regards to China.

I didn't get that far--thanks for mentioning this.

From the last paragragh of the "US Military Warns" item:

The Joint Operating Environment report paints a bleak picture of what can happen on occasions when there is serious economic upheaval. "One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest," it points out.

The Great Depression did NOT cause the rise of the Nazis; they arose as a direct result of the Versailles Treaty's reparation demands and Germany's domestic political turmoil caused by loss of the war, and Hitler's grand design--Mein Kampf--was published in 1925 & '26, well before the Depression's onset . Italy was already engaged in Africa well before 1929, in Libya and Somalia. Franco did NOT seek prosperity through "ruthless conquest" of other countries. Nor did Stalin. Japan wasn't affected by the Great Depression much at all because it had ALREADY embarked on its "ruthless conquest" in Korea--with US help--followed by China in 1931, well before the greatest depth of the Great Depression. Whoever penned that quoted item clearly failed US and World History, or is penning propaganda. Of course, there's no mention of the Colonialist mother countries who had already and were still seeking "economic prosperity for their nations by ruthless conquest," including the USA.

Then there's the issue of disappearing "spare capacity," as if all the infrastructure global spare capacity consists of will just disappear (or is this assessment made in light of an attack on Iranian facilities and the war that would spark?). There appears to be further gobbledegook from my very brief look at the PDF document that ought to provoke further commentary.

My recollection is that the Nazis got a lot of traction in Bavaria in the early 20s. But then Hitler went to jail, and the economy improved, and the party lost support, reaching a low point in about 1928. Everyone thought they were finished. But they started gaining ground after that, in part due to the dissatisfaction of the voters brought on by the Depression.

Additionally, already in Europe we're seeing a rise in far right parties due to economic immigration concerns and social upheaval.

Double post.

I agree that this quote is nonsense but I don't think it renders the report useless. I hope this wakes up the establishment that things are much worse than the collection of professional delusionists at CERA, EIA and IEA would have everyone believe. It is hard to believe that in 2010 we have the same sort of "please the king" court behaviour of the centuries ago.

I read a lot of history, and I see things somewhat differently.
It is true that the Versailles Treaty had a lot to do with the early difficulties that enabled the nazis to get thier toehold;but they almost certainly would not have come to power had it not been for the depression.

Germany lost her export markets in the depression, and with that loss came the loss of income to buy necessary imports.Her economy crashed hard and the crash put Hitler over the top.

Japan engaged in aggressive war for the same basic reasons as Germany-resources that could not be easily bought could, in the Japanese view, be easily siezed.

The depression had a good bit to do with the situation in italy too.

And the soviets bargained with the nazis to split up a good sized chunk of Eastern Europe.Of course Hitler double crossed them in short order.

Hard times are accepted by many historians as a primary cause of many wars, if not THE cause in patricular cases..

The Great Depression didn't "create" the Nazi movement, but it contributed to the ability of the Nazi movement to gain followers. Problems started right after WWI with demobilization. IFAIK, the U.S. is one of the first countries to effectively confront the difficulties of demobilization with the creation of the G.I. Bill. But prior, in Europe and especially in Germany after WWI there were large numbers of unemployed young men with lots of energy, lots of frustration, and no where to go. They possessed military skills honed on the battlefield and not compatible with anything in the civilian economy. They assembled in various "Freikorps" and raised general hell. The NSDAP itself, was at its core, a "Freikorps" type of group.

The Depression generated a rejuvenation of these frustrated groups. It isn't anything unique to Germany. Right here in the U.S. since the onset of "The Great Recession", something on the order of 300 new militia/para-military groups have popped up around the country. Economic hardship and frustration open doors for extremist groups and boost their appeal for all those down and out people looking for scapegoats and answers for their problems.

Just to split hairs here, but the US is not the first country to confront the difficulties of demobilisation. That would be Julius Ceasar, who came up with the idea of giving out parcels of land to the soldiers after the war. It not only gave them something to do (farm) but dispersed them so they couldn't be a threat to the government, but government knew where they were if they needed to be recalled. Every major government since has followed (or tried to follow) the same principles. Germany post WW1 is an example of what happens when you don't.

Problem today is, the geographical separation/dispersion doesn't matter. This forum (the internet) allows them to get around that problem, and we can see that governments are really struggling with it. If those 300 new groups get together, even just online, you can see the snowball starting.

As M. King Hubbert pointed out many years ago in 'Man-Hours And Distribution' trying to keep a monetized energy supply/system and equate that with the primitive social structure we have (contract society), while trying to maintain our Middle Eastern origin of the current political Price System operating system in a high energy conversion society... not only is not going to work, it is going to destroy our resource base for 'debt tokens'.., http://mkinghubbert-technocracy.blogspot.com/

Contrary to being several years away from this, we are 24 hours away at any given point, because of our dependence on monetized energy conversion ... purchasing power/consuming power through antique economic ideas and general lack of knowledge of the current dynamic.
The political Price System as we know it destroys itself. Then for better or worse, real change happens in emergence.

I expect our modern industrial society to collapse from two different directions... California and Indonesia. California because of its total dependency on energy conversion and purchasing power when 'jobs' disappear, and Indonesia because of over population, lack of resources, lack of installed technology etc.
Two dominoes of a system that no longer is viable.