Drumbeat: May 15, 2010

Peru: Gas Exports Will Cause Local Shortages, Governors Protest

LIMA (IPS) - The Peruvian government refuses to change the contract it signed with Consorcio Camisea to export natural gas to Mexico, as demanded by the governors of the southern provinces of Arequipa, Cuzco, Moquegua, Puno and Tacna, who are worried about shortages of local supplies.

The governors want Peruvian President Alan García to modify the contract signed in 2006 during the administration of former president Alejandro Toledo (2001-2006) to export four trillion cubic feet of gas.

The gas export contracts were signed at a time when domestic demand for gas was minimal. Since then, demand in Peru has risen sharply.

Texas Court Ruling Deals Blow to Lawsuits over Withdrawn Lease Offers

Large neighborhood coalitions negotiated lucrative lease agreements with gas producers and leasing companies, but before many of the residents could sign, the offers were abruptly withdrawn in October 2008 after gas prices plunged.

Barbarian invasions

Many authors have predicted the energy descent will result in mass migrations, leading to large scale population replacement. John Michael Greer has thus stated he considered an Arab conquest of Europe as a distinct possibility, and his e-novel Star' Reach describes the Old World as the place “where the Arabs live now”. There is certainly an American bias here. America certainly experienced a large scale population replacement in the last three centuries, with natives being progressively swamped out by immigrants from the other side of the sea. This hasn't happened in Europe for five millenniums.

Tapping The Public View Of Big Oil

Pollsters have been looking at public views of oil companies for more than 60 years. The earliest questions I've found are from polls taken in 1944 and 1946, when people were asked whether the government should own the oil companies. In both questions around 70% said it should not. In a poll taken by the Opinion Research Corp. several months after the Santa Barbara, Calif., oil spill in January 1969, nearly two-thirds had a favorable view of the "oil and gasoline industry"; by 1971 opinion was more negative than positive.

Crisis in the Gulf: Where were the watchdogs?

NEW YORK (CNNMoney.com) -- After a week grilling oil executives over what caused the Gulf of Mexico oil spill, lawmakers are setting their sights on government regulators next week.

They'll be asking the watchdogs about just what kind of role they had in approving the ill-fated drilling operation, and why they weren't better prepared to deal with the disaster.

Fuel stolen from PEMEX pipeline near Reynosa

Mexican authorities are investigating how a fuel siphon was attached to a PEMEX pipeline that runs from Reynosa to Monterrey.

The Notimex news agency reported that the clandestine fuel siphon was found at Pump Station 19 of the pipeline.

Authorities told Notimex that the device was both hidden and secured.

Kjell Aleklett: How long will the coal last?

Despite a shortage of electricity it has been taken for granted in South Africa as an infinite resource – and cheap electricity is a reason that many foreign energy-craving industries have established themselves here.

BP chief backs oil drilling in wake of US disaster

BP's chief executive has said the Gulf of Mexico oil disaster should not mean the end of deep-water exploration.

But Tony Hayward told the BBC's Today programme that significant changes to the oil industry should arise from what he called a "transforming event".

BP Aims to Stop Gulf Oil Leak Within 10 Days

LONDON—BP PLC's chief executive said he hopes the oil leak in the Gulf of Mexico can be stopped in a week to 10 days, but the worst case scenario is "more than that, and it's impossible to say how much more."

Effort to Raise Oil-Spill Liability Fails in Senate

(Bloomberg) -- Backers of legislation to raise the economic-damage liability cap for oil companies to $10 billion plan to seek passage through the committee process after the legislation failed to win expedited approval yesterday.

Senator Robert Menendez of New Jersey, a sponsor of the bill, said he plans to push for the Senate’s Environment and Public Works committee to take up the measure, which could lead to a full Senate debate on it.

BP Attitude on Spill Size Called "Scandalous"

(CBS) As efforts continue to stop the mammoth oil leak from the sunken British Petroleum rig in the Gulf of Mexico and contain the potential damage from the resulting spill, question s are being raised about how big the leak really is.

BP Aims to Curb Spillage From Leak by Running Pipe to Surface

(Bloomberg) -- BP Plc, the largest oil and natural- gas producer in the Gulf of Mexico, may today see results from its latest effort to reduce spillage from a well off Louisiana that’s been leaking for four weeks, disrupting the largest U.S. fishery outside Alaska.

Remote-operated vehicles yesterday began guiding a 6 5/8- inch (17-centimeter) tube wrapped with a large rubber flange into the severed 21-inch-wide well pipe that’s gushing oil from the seafloor. The idea is that undersea pressure will force the oil into the pipe and up to the surface, where a drill ship will separate and store the oil for processing at a refinery.

Sell Transocean Put Options, Buy BP’s, Barclays Says

(Bloomberg) -- Investors should sell bearish Transocean Ltd. options and buy BP Plc’s to take advantage of a price anomaly after the gulf oil spill, Barclays Plc said.

Gasoline Futures Decline as Dollar Strengthens Against Euro

(Bloomberg) -- Gasoline futures fell as the dollar strengthened against the euro, weakening the appeal of commodities as an investment.

Prices dropped as the dollar gained as much as 1.4 percent versus the European currency. The 16-nation currency was poised for its fourth straight weekly drop against its U.S. counterpart as Deutsche Bank AG Chief Executive Officer Josef Ackermann said Greece will require “incredible efforts” to repay its debts and may not be able to do so in full.

Qatar sees oil prices pressed by Europe debt crisis

(Reuters) - Qatar expects further pressure on oil prices from the uncertainty engendered by the European debt crisis, its oil minister said on Saturday.

"The oil price is not reflective of demand and supply, but psychological (factors) and uncertainty, especially in Europe (and due to the Greece) bailout," Abdullah bin Hamad al-Attiyah told reporters in the Bahraini capital Manama.

Unapologetic oil

In the wake of BP's oil rig disaster in the Gulf of Mexico, Canada's oil sands suddenly seem a much cheaper and cleaner energy solution. The following excerpt from Alastair Sweeny's new book Black Bonanza is a timely defence of the Athabasca Oil Sands.

Gunmen kidnap four Lebanese workers in Nigeria

LAGOS - Gunmen kidnapped four Lebanese construction workers in oil rich southern Nigeria, a security source said on Saturday.

The four — workers of Stemco construction firm — were seized in Akwa Ibom, one of Nigeria’s nine oil-rich states.

Goldman Sachs to Buy Nexen’s Gas-Trading Business

(Bloomberg) -- Goldman Sachs Group Inc. will buy Nexen Inc.’s North American natural-gas trading business for an undisclosed price, reducing volatility in Nexen’s earnings.

Iraq to boost oil output above 3 million bpd in 2011

DUBAI - Iraq, which last year awarded 10 contracts to oil majors, expects to add 600,000 barrels per day of new oil to boost output to 3.2 million bpd by end 2011, a top official was quoted as saying.

‘We expect to increase production by around 600,000 bpd over the course of this year and next,’ Iraqi deputy oil minister for upstream Abdulkarim Al Laibi told the Middle East Economic Survey (MEES) in its edition to appear on Monday.

The country’s current oil output capacity stands at around 2.6 million bpd.

PDVSA to ‘Rescue’ Sunken Gas Platform, Extract Gasoil

(Bloomberg) -- Petroleos de Venezuela SA and Aban Offshore Ltd. will try to “rescue” the Aban Pearl gas platform and 400,000 liters (105,540 gallons) of gasoil in the rig that sank off the country’s coast yesterday.

Fealty to Folly: Oil Is Dead! Long Live Oil!

Memo to oil apologists: When VHS supplanted BetaMax nobody shed a tear. When word processing software replaced typewriters, nobody shrieked about a socialist revolution in the steno pool. And when the jet engine replaced the propeller, there were no protests on the Mall in Washington about a vast supersonic conspiracy.

Face it. Technology changes. And the petroleum-based economy is dead. It’s built on antiquated technology that’s killing us and our planet. Now quit your whinging, get over it, and move on.

Transition Mill Valley plans first event

Transition Mill Valley will host its first community event, "Resilience from the Ground Up!" May 26 in Mill Valley.

The new grassroots group will discuss issues associated with peak oil, climate change and the economic crisis as a means of promoting community resilience. The event will feature soup, socializing, speakers and a film screening.

Flawed energy bill beats current policies

Congress should tune out the naysayers and skeptics who suggest the timing is all wrong for an energy bill that includes controls on global warming emissions. Continued dithering will do more harm than almost any change in policy could.

Plant study dims silver lining to global warming

Some biologists thought rising levels of carbon dioxide might stimulate plant growth, but a UC Davis study finds the greenhouse gas inhibits nitrate absorption. The finding carries significant implications for agriculture worldwide.

Peak oil man shifts focus to peak price, demand

In this article Colin Campbell reflects a position now being taken by many peak oil advocates, including myself. In 2008 we all thought that prices would continue to rise as demand outpaced supply. We totally overlooked the dramatic effect that high oil prices would have on the world’s economies. We wuz all wrong! We totally overlooked the very simple fact that the price of anything cannot rise above the people’s ability to pay.

What has changed is his opinion of the price impact and implications for fuel consumption after the spike of July 2008 to nearly $150 a barrel was followed by world economic recession, a deep drop in fuel use and a crash in oil futures to just above $30 in December 2008.

"I have changed my point of view about future prices," said Campbell, who used to think the peak in conventional oil production, which he believes happened in 2005, would lead to a relentless price surge.

Instead, the record rally led to a peak in demand in the developed world.

But that still will not stop the price of oil from rising to the point that it will dramatically affect the economy. At best the price of oil will rise until it causes another deep recession and at worse the economy will completely collapse. The latter will happen at in any case but the question is how far down the depletion curve must we get before it causes complete economic collapse. As Campbell says:

But he does not think reduced demand is enough to offset the gravity of peaking supply. He still sees a possibility of social anger as millions are forced to change their lifestyles in a too-sudden structural shift from economic growth driven by cheap conventional fuel.

I was very glad that Campbell did not miss the chance to point out the absurdity of those OPEC reserve claims. This point needs to be repeated over and over until the world comes to realize the absurdity of the oil reserves OPEC claims.

Campbell's analysis of data questioned reporting of reserves by the Organization of the Petroleum Exporting Countries, whose members' upward revisions, he said, were not credible.

"It's absolutely implausible new discoveries would absolutely match that produced," he said.

Ron P.

That article is dated April 6, and was discussed here quite a bit back then.

In the Campbell timeframe, April 6 was eons ago. He must have created quite a few new predictions since then :)

Campbell saw it coming:

“I think we are facing an oil price shock, 100 or 200 dollars a barrel, an economic recession that cuts demand, and I will not be at all surprised if a fall in demand would make the price collapse again. So we might be back to 20 or 30 dollars a barrel next year perhaps. And so you have a price shock, a recession, a recovery, hits again the falling capacity limit, another price shock. And so I think that in the next few years, we have a sequence of vicious circles and gradually the reality of the situation will filtered through. We are on for a very volatile few years with enormous economic consequences” 10 July 2006


I still think that the progression in annual price declines, since 1997, is interesting. Three year over year declines in annual prices: down to $14 in 1998, down to $26 in 2001, down to $62 in 2009. The 2001 price was about twice the 1998 price, and the 2009 price was about twice the 2001 price.

There is a close connection with the change of the price of oil and the economy, except those changes come with a lag, and also, it is not always in direct proportion. Keep in mind that the price of oil kept rising for six months after a recession started at the end of 2007, and later when the price dropped steeply, the economy continued to fall deeper in to recession for some months.

However I do think that Peak Oil does mean the price of oil will be trending ever higher over the long run, because at least to me, it would be irrational for oil demand to drop when the price of oil is moving lower at the same time availability was diminshing. The price of oil dropped most steeply in the 2008/2009 financial panic, and is dropping again in the recent Euro panic. Unless you believe that the financial system will totally break down, the price of oil should rebound after every panic as demand exceeds supply at below long term market clearing prices (such as the sitiuation today with the Euro panic, as many have become very confused as to the value of money and have accepted the dollar meme due to lack of any thought as to what value a fiat dollar really has).

Our experience since the time of Hurricane Katrina has been that price is not the only barrier to demand, since our national distribution is so finely balanced some minor decisions to allocate available supplies has lead to some local, and even regional, shortages of product.

What I find interesting is that the price of oil has moved over and incredible range over the last few years and that people are picking various price points to predict this that or the other.

Realistically the market which generally is made of people that don't believe in peak oil has explored a number of pricing scenarios and the economy has explored a number of ways to deal with expensive resources including oil and ever growing debt.

It will settle wherever it ends up however I think the important point is that the past price swings are probably not predictive of future events. Certainly the first time oil went high peak could be denied but certainly any attempt at rapid growth will bring on high oil prices if we are even close to peak much less at or past peak. Eventually this situation will have to result in recognition that oil supplies are limited.

Now as far as futures goes sure a sort of roller coast like we have been on is possible however I'd argue its the least likely outcome esp give that the reality of peak will become increasingly obvious.
Maybe we are dumb enough to try it a few more times sure but sooner or later as oil prices rise and our economy stutters to a halt yet again people will figure it out.

I won't go through all the scenarios as there are and infinite number. However given that we are post peak I'd argue that the general trend is not in the highs but in the lows as it is with any other market whats important is not the max price but a steady series of relatively higher and higher lows on any time scale related to intrinsic oil demand this would be measured in months not weeks as it simply takes time to ship oil around the world and plenty of storage exists and plenty of people are using oil every day without being tightly coupled to each other. For physical oil its a sum of many individual actors. Indeed perhaps the only thing that really unites them is price or more importantly their perception of the near term future price.

That unique binding point can also result in a surprisingly sharp change in consensus opinion.
Thus even though its many individual actors perhaps its best described as a huge flock of crows in a corn field.

At first when the flock lands food as plentiful and interaction amongst players is weak but in time the food supply dwindles in the case of corn fairly randomly in the case of oil via a complex web of money nationality etc complex enough to be close enough to random for our purposes.

In any case as it goes down these crows have no choice but to fight with each other for the remaining supplies. At first as individuals but in time certain regions become more depleted than others leading to groups of crows acting together to move to regions that still have more.

Now assuming for the sake of argument that every day there are more and more crows and every day there is less and less corn. Certainly at first the since we assume its not evenly divided some won't see the depletion hitting them directly however they can certainly feel the pressure coming from the outside even if they are deep in the biggest concentration of corn.

Eventually of course the real situation will become obvious and the fighting and pressure if you will will become tremendous. And if its the only corn field and their is no other things will get interesting.

So no I don't expect "low" prices for oil the underlying intrinsic demand level is simply to high and the number of people wanting more oil grows every day. Shifting it around based on how money is distributed to the highest bidder simply cannot hide the real situation for long.

Sure you can scare the flock with a shotgun blast which is in essence what the economic collapse is it shook the system and the crows that either did not leave the corn field or managed to land in a particularly good spot after the blast where briefly well fed until the rest of the flock returned but so what.

Thats basically all that really happened during the rapid economic collapse the system was shaken and in a sense looked good for just a brief time as a portion of the crows where in a sense scared off the field.
They did not go away permanently however and they will be back fighting for their pieces.

They literally have nothing else to do. Sure they may have perhaps found themselves thrown from a good situation in the center of the best patch to the middle of the worst patch but they have no choice but to keep fighting.

And here I'm talking in a sense about myself I've been laid off for some time and if anything my oil usage has gone up since I had a stable job. Indeed depending on how things go it could go up substantially. Few of us crows that where scared of their little patch of corn have permanently cut our oil usage simply because we cannot cut it. Everyone that lost their job will eventually be forced back into the battle for corn/oil as they have no choice all thats really happened is a grand mixing that accomplished nothing in the end.

Its still more crows and less corn with every passing day.

So its not a stable situation and certainly as time goes on it will get harder and harder to shock the crows and cause a brief abundance to form.

Thus ever higher and higher lows are probably the best bet with the lows never revisiting the previous lowest low again. And if they do staying for ever shorter time periods.

For fundamentals in my opinion this is the key signature regardless of what happens relentlessly the price moves higher.

Can the system still be shocked certainly it can it always can be but whats important is how it responds to the shock. For example on the financial side things have deteriorated literally within days after the big EU shock and awe program. Promises of billions indeed hundreds of billions in aid did nothing.

On the oil price side sure its still going down and may well fall substantially lower I happen to see 60 as probable. However whats important is how fast do the crows if you will return and whats our next low ?

Sooner or later the market will sense that oil is under priced at some price point and from that point on the price is determined by how much there really is and what the demand is. I suspect it leads to a bit of a stampede once its clear the price of oil has bottomed out if real supply and demand are imbalanced esp at the lower price points.

The price point that marks the low will be interesting and important far more important however is what the next low will be and how we get there.

At the moment I have to imagine oil is being dumped simply for financial reasons as the big players reposition or probably more likely forced to reposition against intense uncertainty. Not a good time to invest in a commodity which you generally believe only holds value if we have growth.

If thats simply not true then eventually the fundamentals will assert themselves and not only will the crows realize they are fighting for far less corn then they thought but some will realize they have a relative abundance and fight to keep it others will fight harder to take it. Attempts to scare the flock will fail or become increasingly less effective.

Thus how we come out of the up and coming low and where the next one is are important they leave a signature of the truth if you will about the real situation. Going into it not so much as the reaction occurs really after the low is obviously in place. Until then the shock if you will is in play.

My own opinion is if the original price before now was perhaps still to low then the new low will represent and even higher discount thus the rebound should be fairly hard perhaps only after its clear that prices have started falling from there who really knows its something you simply watch and analyze after the next low seems obviously in place. Whats important is if there is any real stress at all in the market it should show up then.

Nice analysis of the current situation.

As I mentioned about three times in the last week, even though the trend in the long run, and even the medium run (six to 12 months), in the price of oil is up, the price of oil could fall below $75 – and it has.

I will make a specific prediction for the short run too. The near term price for oil will bottom within 24 hours of when the Euro/dollar exchange rate makes a bottom. Our experience in the last year is that currency exchange rates are subject to wild price swings, and this affects the price of all commodities. The dollar fell almost 20% against the Euro in just about a month last fall, and at some point, something like that will happen again – but I don’t know when.

In addition to price swings in exchange rates, and the financial panics (where the crows temporarily leave the field) there is addition another short term swing factor. That is the targeting of US oil inventories by OPEC. This seems to have worked because excess world inventories seem to end up mostly in the US. OPEC still is targeting the flawed weekly oil inventory report, which due to its many revisions, probably leaves both buyers and sellers miscalculating where they want to buy or sell. Plus we have to consider it may take 6 to 8 weeks for Mideast OPEC oil to get the US.

When you add all these variables together you have oil prices moving all over the place, sometimes even in the opposite direction of where underlying demand is going.

But I strongly agree that the underlying trend of oil marker price bottoms is up, and although this is a bit beyond the normal scope of the TOD, the US dollar will one day lose its place as the unit by which oil is measured. When that happens, the price of oil in dollars will become less important, and the actual supply to be imported will become more important.

But I strongly agree that the underlying trend of oil marker price bottoms is up, and although this is a bit beyond the normal scope of the TOD, the US dollar will one day lose its place as the unit by which oil is measured. When that happens, the price of oil in dollars will become less important, and the actual supply to be imported will become more important.

To be clear I was hypothetically stating if when the trend of the bottoms was steadily upwards.
I think its still to early to know for sure what the trend will be. We would need at least 3 more lows to be sure. In a sense the price crash effectively restarted the equation. And we would need to see pricing pressure on oil despite flux in currencies.

Not that those events won't cause wiggles however it would be wiggles in steadily rising prices for oil in all fiat currencies and say flat to falling prices in gold. That would be the signature we reached intrinsic shortage levels. As far as the dollar goes I tend to think that because of all the debt in the system etc stress from rising commodity prices if they do actually rise steadily despite flux in the financial world will result in a economic crash well before dollars die a natural death if you will.

This is simply a good old fashioned back run in a sense with the financial system going haywire to the point that people simply cannot exchange fiat currencies for anything of value.

Sure after such a crash we could well see the demise of the dollar almost certainly hyperinflation across all currencies aka massive devaluation vs anything of value etc. Who knows. I just don't think our current system can hang together long enough to have a real currency crash it falls apart on approach.

So yes I basically agree with your disagreements I guess I was not clear in stating that parts of it where future events that have yet to happen. Most importantly I don't think the last couple of years serve as a predictive pattern of the future. In a large part because they are in the historical past. The events themselves have a huge influence on future behavior that in general not really being recognized.

The 60% gain in oil prices of the last year despite a deep recession pretty much ensures dip buying will keep the next low well above the last one. We shall see and more important I think we are right in the middle of the grand experiment needed to determine whats really happening.

As far as OPEC targeting the US I don't think thats directly true KSA has steadily reduced its exports to the US. That does not mean someone may not be aggressively stuffing the channel if you will in the US to depress prices I suspect that this someone is closely related to the new unknown buyers for a large percentage of gov debt. If games are being played then they eventually unwind and generally with worse consequences.

As far as OPEC is concerned I think they are generally in decline and basically pumping full throttle against declining production and rising internal consumption. OPEC's unity is a farce they can have all kinds of fantastic press reports because they really don't have any spare capacity.

More specifically KSA is not targeting exports to the US, but subtly influencing OPEC to make relatively minor output adjustments over time. Those moves are small and are dwarfed, for example, by the expected change (drop) in exports due to the upcoming summer air conditioning season in the Arabian penn.

As far as currencies go, I don't expect the end of the Euro soon, nor the dollar based world trade system, and it would only make sense if such a thing happened, there would be some other type of currency realignment at the same time. For example, the use of the IMF SDR unit to include China, gold, etc. There is also a possibility of total chaos, but based upon recent history, world leaders want to maintain the present monetary system going as long as possible - maybe because it is so hard to reach agreement on what systme comes next.

If we are truly in the age of the decline of oil, it will take months, not years, for the price of oil to rebound very sharply up again.

He didn't 'see it' because peak oil didn't cause the credit crisis and few people attribute the recession to oil briefly touching $147/bbl in 2008.

He didn't 'see it' because peak oil didn't cause the credit crisis and few people attribute the recession to oil briefly touching $147/bbl in 2008.

It may have only briefly touched 147, but that's just the end of the price rise. Fact is, crude oil production stopped increasing in 05 and gradually increased in price until it finally hit its high of 147, then immediately dropped like a stone into the 30's along with the rest of the economy. So there was 05, 06, 07 and 08 up until the 147. That's about 4 full years of flat oil production coupled with increasing oil prices.

So, if you don't think that could have caused a recession, then what scenario would you attribute a recession occurring as a result of - maybe 6-8 years of flat production with price increases to 250 dollars?

One should not fall into the impression that everything that happens is just another nail for a peak oil hammer. The 2008 partial collapse was in the focus of a near perfect storm caused by many factors while the build up of oil price was just one. It is arguble that the banksters with their bundling of non-performing mortgages were a direct cause also. Or maybe it was the people who wanted to make money in housing lied about income (liars loans). Or maybe it was the rating companies with their AAA rating on non performing securities did it. Probably ALL did it.

Just like the catastrophy in the gulf is the result of many causes. A few think our demand for cheap oil is the root cause and all else must follow sooner or later and it just happened to be last April.

Update from North Valleys above Reno: Looks like the garden will be getting underway big time next week here in the high desert. The solar drier worked well last year and this year we will have many more boxes of dried fruit and veggies.

Cheers, LD the Woodworker

He didn't 'see it' because peak oil didn't cause the credit crisis

How about "cheap oil caused the credit crisis"?

Without the cheap and easy oil from imports the US would have been mired in depression the last couple decades.

No Bubbles besides the ones in the Tub when you would have been taking your weekly bath ;)

Without the cheap and easy oil from imports the US would have been mired in depression the last couple decades.

Bingo, snarlin! Some people are still trying to catch up to the apparently difficult concept of cheap oil translating into prosperity and relatively expensive oil putting the brakes on the economy. In such conceptually dynamic cases the hundredth monkey may take a while.

>> How about "cheap oil caused the credit crisis"?

How about GREED caused the credit crisis?

and few people attribute the recession to oil briefly touching $147/bbl in 2008

James Hamilton is one of the few who does.

One would certainly expect a flattening of oil production to cause disruptions to the credit markets. I had been talking about that long before the recent credit contraction happened. See for example:

Our World is Finite: Is this a Problem? April 2007

Peak Oil and the Financial Markets: A Forecast for 2008 January 2008

The Expected Economic Impact of an Energy Downturn March 2008

One might also note that while James Hamilton has talked about the connection of oil prices and recession, many others also talk about this. For example, Energy Secretary Chu quoted James Hamilton in his 2009 EIA Energy Conference talk (see this presentation).

Also, Deutche Bank, in its presentation at the 2010 EIA Conference, very much ties economic growth to the growth in oil production. Based on this, it calculates that the next recession is due in November 2012 (Slide 7).

Yes this prescient remark makes WHT's comment above appear gratuitous, which is not to say that I don't greatly appreciate his unique and intelligent commentary in general.

The price of oil will, imo, bounce around in a moving range that will, with the occasional exception, be consistent with the worldwide economy's capacity to absorb it profitably. It doesn't work any other way.

I agree with Westexas that the capacity to pay the highest price will mostly lie outside North America and Europe. Greater Chindia, for example, still has plenty of room to improve productivity with the infusion of additional oil. More consumption can lower their product costs. In the mature economies, additional consumption decreases competitivity. It may be that the recent differential in price between WTI and other contract indicators is an early manifestation of this trend.

I think that Campbell, among many, overemphasizes the significance of the oil price runup with respect to the financial crisis. The financial system was fragile for a number of reasons. Like any crash, this one has to be seen in the context of multiple contributing factors. Here is one essay which introduces several thoughtful, non-mainstream views: http://monthlyreview.org/100401palley.php

I think what we are seeing is that the world economy can absorb high oil prices, but that the adjustment to these prices is more difficult in the mature economies, a situation made worse by a financial crisis with multiple contributing factors, including, very significantly, higher oil extraction costs and higher oil prices in the market.

The financial crisis crimps the capacity to undertake the economic restructuration in the mature economies that would turn declining consumption into increased productivity. As an example the political elites are constrained in the extent to which they can effect the accumulation of capital for a restructuring of transportation systems; i.e. electrified rail systems. In addition to all the usual hijinks of the political outs trying to again become the political ins, there are many other ways in which reform confronts inertia.

Competing visions can affect the speed at which infrastructural renewal is undertaken. Individual, motorized transport vs a mix of self-propelled and collective transport comes to mind.

Countries with the best mix of appropriate market and interventionist policies will do the best among the mature economies. The same can be said of the immature economies, except there waste is concentrated in production and not consumption and so they have an advantage. What is appropriate is not predictable, but overtime will be carried by the force of internal logic consistent with objective environmental conditions. Entrepeneurship, including public entrepeneurship, is vital.

A big problem in the mature economies is mistatement of the problem. I hope everyone takes the time to think about James Galbraith's remarks in an interview post by Majorian yesterday, but which I can't find today on TOD. Galbraith outlines the incoherence of those panicked, or in the process of trying to create a panic about deficits.


Real problems for the mature economies derive from the space taken up by the sick-sploitation and the financial casino industries. They also derive from income and wealth inequalities, problems also hampering immature economies. And this does not exhaust the list of real problems, not the least among the remaining are huge problems arising from resource degradation.

I note the great probability that additional healthcare spending in Greater Chindia will increase productivity there.

There's every reason to expect lower consumption in the mature economies and a difficult period of adjustment. But this doesn't mean worldwide collapse. Expect more tourists from Greater Chindia.

Also expect China to have defeated and reversed the desertification and water wastage problems over the next decades. It's all part of learning.

My comment may appear gratuitous, but it is in the context of the way people do predictions in the oil depletion community.

I assume that Campbell relies on heuristics for his predictions. In particular, Campbell is renowned for making predictions that he routinely updates when his old predictions start to differ. There is perhaps nothing wrong with this as it is supporting his gut feeling, which may turn out right. Yet there is a historical problem with this general use of heuristics.

The problem is that heuristics have no defendable basis, since they are by definition always aligned with the empirical data. So when the data changes, everyone clinging to the original heuristic starts making stuff up to rationalize their commitment to the new "standard" heuristic. This is all so predictable and it does not happen with some real model (perhaps based on physics or some verifiable behavior), since the model can become invalid if it doesn't work in the face of new data. You actually have to support a model with scientific evidence, otherwise it becomes falsifiable. A heuristic is not falsifiable, it is only morphable to suit your needs.

So, with these heuristics, people twist themselves into pretzels to justify their sunk costs and they always get away with it because it isn't science, just curve fitting. There is not even any Bayesian updating to the predictions (which would put in on a firmer scientific foothold) because we have no idea of what the underlying parameters relate to.

If you look at it, King Hubbert also got away with this. He had his famous two predictions for peak oil based on URR's of 2000 and 3000 billion barrels. Take your pick. No basis for either. I guess that is why we can't fault Hubbert for his two estimates, as he realized that it was just an educated hunch. Yet, its also why all these estimates have chased their own tail over the years -- the old heuristics simply get updated with the new heuristic with no scientific verification ever put into place. That is the trap that Campbell fell into.

In essence, that's all we are seeing here are the real-time updating of a heuristic based on the empirical evidence. And since classical economics is not science, we will get bombarded with these new predictions that will constantly get updated. If people had no idea what was going on before, we will have to square that confusion now.

And that kind of explains the direction I have taken. Either do it scientifically, or keep your trap shut :)
(and here come all the regulars complaining about my holier-than-thou attitude)


I'll be the first to admit that I can't understand many of your technical posts. Yet I still enjoy reading them as I do get bits and pieces that help me to see the big picture.

In the case of your last post, after looking up the definitions of heuristics and empirical, I actually did understand it:)

WHT - I'm sure you would have been an interesting addition to the passenger list on the Titanic. You could have given regular presentations modeling the elements of sinking, water flow, heeling angle, decibel level of death screams, etc.

Fascinating stuff I'm Sure.

And 99% of the passengers will be texting or tweeting at that point.

We have a vast sea that laid down X number of Millions of years ago, that sediment layer and others like it formed the FF layers we see today. But in those same years the earth moved through plate tectonics so that some layers got folded into and over and under other layers, and then got buried under more sediments. Within the time frame that we started using FFs say the last 5,000 or so years, not much more has happened to those original layers and pockets of FFs.

Now if we could go back in time and look around and calculate the total sediment bases we'd be able to give a maxium amount of FFs available today, but with all the earth movements and otherwise convoluted happenings since those eras, we can't give anything but a wild guess as to the FFs left to be gorged out of the earth's crust.

Our problem as thinkers is trying to figure out something so complex that even our best models will be greatly shy of the information needed to give a good result.

We think from what we have seen in our current state of exploration that X is the number of FFs in a given region, but we really have no clue, unless we have done a lot of poking and prodding in all the places on earth.

What we have done is base our future on guesses that we can partially model what is left in the earth's crust concerning FFs. We think we know something and we are running with it, but only a few of us, have been wrapping our head around the complexity of the issue. Everyone else in the world could not care less how much is left in the ground because they think that it is an unlimited supply. After all the globe is vast and we are such small creatures.

There is just too many theories out there for the common man to handle and they get one or two set in their head and forget about the rest.

Whatever the number of ounces of FFs we have left, we will not be able to get them back once we burn them up. We have a lot of people in the world, more being added to the total every day, on average 152 every minute are added to the total, but these are averages, we really have no clue how many are being born. As yet we don't have a total global counting system set in place.

1,000,000 cameras in London England, so saith the ABC nightly news, that is a lot of data going on every second of every day. We are being overrun with vast amounts of data, but all we can do is program modeling software to handle the edges of it.

Note... I try not to use ten dollar words when typing or talking, because I am always explaining them to people. Most of you fellow readers/posters use bigger words than the general populace. I am also a horrible speller these days, my dyslexia has been increasing lately to point that if I don't watch it, I can't type simple words without flipping letters.

Anyway back to my post.

Complexity in figuring out the FFs numbers will always be with us, and most of this back and forth between WHT and others just won't get solved, we'll pick sides and stand our ground till hell freezes over. I just thought I'd voice a call for peace in the camp that has the best discussion forum online in the energy and future living feilds.

But feel free to ignore anything I say, after all, I am just a simple person, standing on one leg crowing at the sunrise.

BioWebScape designs for a better fed and housed future.

Those are all absolutely valid points.

You can have a system that is perfectly ordered, one that is perfectly disordered, and something in between. The something-in-between state is the hardest to analyze. Everything I read about fossil fuel is that it is a highly disordered system of processes.

In terms of modeling, the more the complexity and randomness the better, as this leads to a greater mixing of possible states, and maximizes the amount of entropy in the system. Then when you get to a state of maximum entropy, you can start using ideas from probability. This may seem awfully counter-intuitive but it works for many systems.

That is the angle I am covering.

I think it is also notable that life thrives in the middle of the zone, not too ordered, nor too disordered. And once started, life also actively changes its environment towards the middle zone simply by natural selection.

An individual species can be highly ordered, but in these terms you should never look at the individual species and instead consider the entire aggregate. Then you can use entropy to discover things like the relative abundance distribution.

An individual species goes to the middle zone but the aggregate goes disordered. Natural selection is a euphemism for disorder and filling up the allowable state-space.

People get all excited that the oil price will not hit $500 or something since it will be unaffordable. The problem is that instead of a high price we will have shortages. People queueing at the gas pump and eventually not even that due to outright unavailability. This will be just as bad as if the price went through the roof.

The market pretends oil is like cod fish. When we run out of enough supply we will just use something else. This makes the current price a joke. I doubt we have actually probed the limits of affordability for gasoline. Like I said before, during the 2008 peak I was paying $1.35 per liter Canadian (taxes included are much higher than in the US but still much lower than Europe). If gasoline was $5 per liter I would still buy it and so would most drivers (not everyone has a 400 km commute every day). This would correspond to about $500 US per barrel. People would whinge about the great price gouge conspiracy but they would have to lump it.

So the market is not doing me or others any favours by underpricing gasoline to the point that there will be supply issues by 2013 due to underinvestment in field development. This is regardless of the underlying peak. A proper price signal would do wonders for weaning the economy off oil. But instead we have some sort of bizarre price fixing by the pathological ignorance of the "market".

A Lament for the Class of 2010
New college graduates face a labor force that neither wants or needs them; a plum job interning at a street fair

A few weeks ago I ran into one of my son's oldest friends. He had attended an Ivy League school, studying drama and music, and was now back living at home. He is a smart, talented, enterprising young man and I have always liked him, in part because he engages with adults in a way many young men do not. (For example, he actually makes eye contact.) I asked him if he had found a job yet and he replied, a bit sheepishly, "Not exactly." He then explained that he was working as an intern at a street fair on the Lower East Side of New York City. An Ivy League education runs around $200,000, not counting meals and transportation. The internship paid about $250 a week. But presumably, it could lead to bigger things, like a full-time job at a street fair in New York. Even so, it did sound like my son's friend was ever so slightly underemployed.

Over the next few weeks, hundreds of thousands of Millennials will graduate from institutions of higher learning. They will celebrate for several days, perhaps several weeks. Then they will enter a labor force that neither wants nor needs them. They will enter an economy where roughly 17% of people aged 20 through 24 do not have a job, and where two million college graduates are unemployed. They will enter a world where they will compete tooth and nail for jobs as waitresses, pizza delivery men, file clerks, bouncers, trainee busboys, assistant baristas, interns at bodegas. . .

With the obvious exception of youngsters born during the Great Depression, no generation in American history faces more daunting obstacles.

And of course, there is the "shadow inventory" of large numbers of recent college graduates hiding out in graduate school and law school (e.g., the son of the author of this article), in many cases continuing to increase their student loan burdens, while hoping that the job market improves.

Yes, we must feel sorry for those kids from "Gen Y" who are about to face reality. Especially as hamburger flipping and pizza delivery depend on cheap oil, as do many of the so-called "service" jobs. Worse, "Gen Y" will be followed by "Gen Z". Might "Gen Z" be the last generation of kids with any access to wealth powered by fossil fuels?

E. Swanson

Is that "Generation Z" as in "Zombie"? Notice that we've reached the end of the generational alphabet along with the Mayan calendar, cheap oil and just about everything else. Coincidence? I think not...

The sidebar on your link is quite interesting. The cause of the housing bubble, and subsequent bursting of that bubble, was caused by the fact that for the last 15 years, give or take, the cost of housing has been rising at over twice the rate of inflation. Obviously that could not continue indefinitely and the bubble burst.

The sidebar on the WSJ page shows the cost of annual tuition at Harvard was $2,600 in 1970. And it also shows that today it is $33,696. That means that the tuition has been rising at least twice the rate of inflation for the last 40 years. (I haven't done the math but I think that is a pretty good guess.) At any rate such a rise in rates cannot possibly continue. How long will young people continue to pay such a price when it becomes obvious that their job prospects, upon graduation, are getting slimmer every year?

The cost at state supported University of Michigan Law School, for a Michigan resident, has gone up by a far greater percentage. From an annual cost of $680 in 1970 to $43,010 today. That has to be several times the rate of inflation.

The sidebar also shows that the unemployment rate for people age 20 to 24 was 7.5 percent in 1970 while today it is 17.2 percent. The cost of education is going up while job prospects are going down.

But the real kicker revealed by the sidebar is this jewel. In 1970 the federal deficit, as a percentage of GDP, was 0.3 percent. Today it is 9.9 percent, 33 times as much. How long can that continue? Or better yet how long can that continue to grow. After all, only a balanced budget can stop it from growing and we are nowhere close to a balanced budget.

Ron P.

That means that the tuition has been rising at least twice the rate of inflation for the last 40 years. (I haven't done the math but I think that is a pretty good guess.)

According to the Bureau of Labor Statistics inflation calculator, CPI inflation over that period was 4.4% annually. From $2,600 in 1970 to $33,696 in 2010 is 6.6% annual inflation, 1.5 times the CPI inflation rate. And the Michigan law school increase works out to 10.9% annually, 2.5 times the CPI rate. I always have to go work out the numbers -- estimating what are effectively compound interest effects is hard.

State schools in particular make it difficult to compare between then and now. It is not that the expenses of operating the law school have increased at that rate so much as that state subsidies have declined, with tuition and fees rising accordingly. If you compare a typical 1970 state budget and a 2010 budget, two things jump out at you: enormous increases in the share of the state budget that goes to K-12 education and Medicaid.

There are no easy choices.


What people don't want to see, much less admit, is that collapse is beginning. Although education might not be the best canary, it is one that cannot be denied; if graduates can't find jobs, mommy, daddy and the kid are going to have confront the reality that "something" has changed.

One of the reasons I was a chemistry major fifty years ago was that it took my love of science and allowed me find a good job. I would have real doubts about this now.


As a PS - I know people who are still subsidizing their kids even though the "kids" are pushing 30.

I also was a chemistry major 40 years ago, in the UK.

The difference between now and then? ... then <1% of the population went to university now ~50% do. IMO around 49 of today's 50% graduates are not required by our current society, just like they weren't then ... we just don't have enough high paying jobs.

IMO keeping people in education until they are in their early 20s just keeps the number of unemployed down, but is just piling up frustrations for the future.

I am one of those people who are still subsidizing their kids even though the "kids" are pushing 30.

I think Darwinian is right about the bubble in higher ed (search "bubble in higher education"). I remember Mish discussing the effects of student loans and grants as mechanisms for blowing the multi-decade bubble.

But I also think you are right Todd, collapse has started to pick up speed. Higher Ed is one of the last bubbles but it will get nailed and the Ivory Towers will turn into Dark Towers.

Health care is another bubble. I hope my future doctor and dentist don't mind getting paid in walnuts (and I hope their student loans accept the same in payment).

Great I have a bunch of Black Walnuts that my dad can't eat and so we can't put in anything for the family to eat. I don't mind them, but they sure are hard to crack and get out.

I have thought about making a lot of tiny knick knacks out of them. Or sprouting them and seeing if they taste okay that way. The squirrels love them, but they also forget them and They are in several of my flower/herb beds.

Maybe they will take herb jellies?

Collapse is here and now, we are just now seeing the signs of the downhill slope in the road ahead, but we here have been looking for it, for a while, and some of us have been forewarned for decades.

On a positive note, I just increased my rainwater storage by 40 gallons today and next week it will go up another 200 gallons. For a total of nearly 450 gallons. My goal is to never need city water for the garden, unless it gets really bone dry for a long time(lets pray that don't happen).

BioWebScape designs for a better fed and housed future.

Urban water storage - great idea (even sand point wells are illegal in town). I wonder how many people will be following your lead to avoid high utility bills, or avoid delivery problems if their local utility becomes dysfunctional.

Maybe give the Walnuts to the doctor or dentist next visit and tell him to "get used to it" ;)

I grew up on the tales of cisterns and storing rainwater and hand pumping from wells and creeks. One cabin/house my mom grew up in, the well was down a hill, and they had to carry the water uphill two and three times a day. Hearing my mom talk about carrying two buckets on a yoke like pole over her shoulders full of water 2 times in the morning and 4 or more times on wash day, knowing that at 4-10 and 90 lbs, makes you think about water availablity issues.

Knowing that we might be without water anytime in the future. Knowing that if I want to have a sustainable design I have to supply water to every garden or home plan. There are methods of gathering and storing water that are basically low tech, done all over the world in times past.

Given time I'll set up a swamp system to recycle the waste water too.

BioWebScape designs for a better fed and housed future.

PS I have not asked about whether or not they are going to allow me to store a lot of water in my yard, I am just going to do it.

I hope my future doctor and dentist don't mind getting paid in walnuts (and I hope their student loans accept the same in payment).

My maternal grandfather was a physician and during the great depression frequently took goods as payments for his services. My mother said that they always had a good supply of Portuguese wine and ate a lot of chicken. My grandfather was a kind man and never refused anyone service.

Son in law lost his HVAC job. Daughter has part time merchandising job. So here are parents helping to support kids 46 years old and 12 and 8 yo grandchildren. They don't want to lose their house that after 15 years of payments is just about at the water line and with the next drop will go under. Real unemployment here is ~20% and will get worse with state deficits. Unemployment will just cover food and living expenses or house payments but not both. I expect to have them here in the next year or so unless he finds a job that is 2X unemployment.

I have a friend in the same position. Her grown children have finally lost the house after my friend spent $25,000 out of her savings over the last two years helping them make payments. The irony is the adult children spent that much three years ago on renovations.

After their sudden change in occupation their income stream became chaotic. The cycles of unemployment, partial employment, full-time temporary employment, etc - kept their hopes alive they could weather the recession and get back to their careers. They finally ran out of rope, and out of hope, and just gave up the house.

Ron, you are close in your rough guess on inflation. According to the US Bureau of Labor Statistics CPI Inflation Calculator $1 in 1970 is $5.61 in 2010. So if Harvard tuition had gone up with the overall rate of inflation the cost would now be $14586. So costs have gone up by an additional factor of 2.31 or 130% more.

We need online education that is not labor intensive. Live educational services cost too much.

FP, you are correct and we will move there soon. We no longer need 100 anatomy professors across the country all giving a lecture on the anatomy of the hand. The hand hasn't changed much. Record those who want to be recorded, let students choose and within three years, everyone will watch one of 5 lectures. Choose 20 different body parts and you delete one FTE of class time per year.

I see three value components of knowledge, the creation or unveiling of new knowledge, the transfer of knowledge and the utilization of knowledge. The value proposition of knowledge transfer is dropping due to rapidly increasing supply of transfer methods.

Apropos of that:


WT. A drama and music major? He should have taken your advice on getting to the non-discretionary side of the ledger.

I think people who come out of school looking for a job will struggle. I think people who come out and try to add value will fare much better. We still have a $14T economy. Anyone who can deliver value to me by providing more for the same price or the same for a lower price is going to get paid.

Anyone who can deliver value to me by providing more for the same price or the same for a lower price is going to get paid.

Yes, but that only works as long as there are enough people left who still have the means to purchase something of value.

As more and more people become disenfranchised the game of musical chairs won't be able to go on forever, now will it?

As we move towards a world with less fossil fuels, we will need more human labor to get things done. Economies tend to have a group that manufactures something or provides some service that others need. Then, those people who sell the things they produce spend those dollars which provides jobs for others. I admit that too much of the US economy is retail with national debt (public and private) replacing the dollars we used to earn when we had a positive trade balance. But I think reduced fossil fuels may mean we need more human labor to produce the things we need.

I could see more people working in farming. We talk about riding bikes to get places but America is aging. Perhaps we will have bike taxi service where the bike rider pulls a covered cart for the elderly to go shopping.

People won't earn as much as now, but that is going to happen anyway. I still think that energy scarcity may mean more human labor needed.

Back to the good old days of feudalism and slavery! People don't appreciate the freedom that cheap energy has given us.

You touched on my greatest fear as we transition. People with land and no cash will sell to the rich in order to meet their tax bill. The rich will then accumulate land and serfdom is a potential result. I know a lot of people feel they can grab a few guns and some ammo and defend their homestead. With soldiers for hire already working in Iraq, it wouldn't be a long stretch to get to soldiers for hire in the US. If that happens, 20-50 people trying to defend 200 acres wouldn't have much of a chance.

This is a great series of videos and explains clearly what has happened.


Neat set of videos. Though most of us know the subject matter laid out in them. The one reason the dark ages will show up is that resources are limited and the guys and gals at the top of the heap will have to figure out how to grow their own food or take it by force.

Going back to a kingdom and serf kind of system till something else shows up.

I'd love to be able to not use money for anything in my life. But right now taxes on the land and other things has to be paid in the common coin of the realm.

My design work is heading toward not using grid based imputs, even going so far as to being able to supply most of everything on the land, mostly at a local level, but with some trade amoung other local areas. Clothing is the one aspect I have to work into the system, amoung a few others.

But given the amount of time I have to get this done I am not sure I'll have all of it set up and designed out. I have a few limited networks of other like minded people, but not as many as I would hope.

I still have a pond to build and a few other things for my yard. It is a dim day today, with clouds and rainy weather hinted at for the next several days. So it is not the dark ages yet, but I have a supply of lamb oil I can use in a pinch.

BioWebScape designs for a better fed and housed future.

Triscuit crackers joins Home Farming Movement
Linked by Michael Levenston
4 million cracker packages with seeds inside and a pledge to build 50 community-based home farms

Visit Triscuit’s Home Farming web site http://www.kraftbrands.com/homefarming/Pages/default.aspx to see how-to videos and an interactive map where you can add your own home farm.

Yesterday we had a bit of discussion on EVs.

Here is an interesting article in ABG about a poll. The speed at which Chinese adopt EVs obviously has an impact on oil demand.


Chinese consumers lead the world in electric vehicle interest

88 percent of respondents claimed that saving fuel was a leading factor for considering plug-ins
82 percent said the environmental impact was influential in their decision
69 percent listed safety as a top priority
79 percent believe that EVs will outnumber gasoline vehicle in under 20 years

The article speculates about the reasons...

Here in the U.S., we're used to gas vehicles and many people are resistant to change. We've piloted gasoline vehicles seemingly forever and our trust in the technology is carved in stone for many. It's inconceivable that we would just immediately drop a technology that has served us well for decades and move to something unproven. But, over in China, where most people have, at most, a few years' experience with gasoline vehicles, switching over to electric is not about breaking away from something they are familiar with, it's about making an economical choice that will benefit a smog-filled nation. If only it were that simple here.

Ofcource, the other reason could be their experience with electric bikes.


They sold 20 million e-bikes in China last year.

evnow, your point is well taken, and there is another factor in cultures that have always had automobiles in their living memory:

Aesthetics. By that I do not just mean the look of the vehicle, but the sound and perceived performance. We live in a culture where people will buy a V-8 rather than a 4 cylinder car simply because the V-8 "sounds better".

When it comes to the aesthetics, the "theatre" aspect of the automobile, we must remember the boomers who have grown up with fond memories of the "muscle car" and want to retain aspects of that period in their automobiles. An electic car simply lacks the "theatre" aspect and does not provide the "driving experience" that a powerful fast gasoline car can provide. This may seem idoitic in relation to our current financial, resource constrained and carbon release concern period, but the old sense of aesthetics, where more horsepower is always better, and more engine cylinders are always preferred (nice smooth and always available power available in an instant!) but aesthetic habits die harder than addictions.

This "aesthetic" aspect is true in Europe as well, but the terms are different. Due to the postwar austerity in much of Europe and the always high taxes on gasoline, the aesthetic is more focused on smaller vehicles, smaller and lesser engine diplacement and cylinders, and a more "rally" look, quick and small instead of large and fast. In Europe the focus is not so much on total horsepower (or kilowatts) but on output per liter of engine displacement (Kw per liter) The transition to electic cars fits the aesthetic much better.

China and India are more influenced by the European aesthetic than the U.S., due to the U.S. being nobably insular and exporting little, and the influence of FIA World Rally racing. For the most part, the bigger, faster super high horsepower (total output vs. output per liter) has not caught in the Asian market.

Why does this mater and what can we do? The trick is in the advertizing and promotion...we should continue to promote smaller more efficient vehicles (including electrics and hybrids)as the "modern" choice, the chic choice, we must build on the "green chic" ideas of the young idealists of the world. It may seem like "greenwashing", but in this applications, we are desperate to save every ounce of wasted consumption and every ounce of unneeded carbon release in the world we can.

Recall that the U.S., Europe and Japan are already declining as a percent of world crude oil consumed and greenhouse gas emitted. The future is in how the developing world develops.


I hope this comment is okay. I've uploaded a torrent for Blind Spot, IMO one of the best peak oil/collapse documentaries around.

download here

Thanks a million for the link Never. I am watching it now. It is one of the best.

Ron P.

This is awesome. Normally I do not leave Bit Torrent running (or post comments), but I've made an exception for this video. In fact I'm thinking I might burn a couple of CD-ROM's (DVD if 700MB is too big for a CD). The rip is perfect until 3 minutes before the end, at 1 hour 22 minutes, then there are a few seconds of distortion.

Everybody and their dog needs to see this video - along with all the others in this genre. For years now I have been one of those people on the outside of contemporary culture, looking at everybody else as if they are barking mad and saddened to accept that it is impossible to make them see that the world is not flat - and it is not because of any limitation on my part to articulate a point or make an illustration or analogy that is easy for people to understand.

I no longer have sympathy for those that are either incapable of seeing or choose not to.

In fact I'm thinking I might burn a couple of CD-ROM's (DVD if 700MB is too big for a CD).

It should fit on a 1GB flash drive, I just put it on one and plan to keep it in my pocket and offer it to everyone I meet from now on.

Sorry about the distortion! Especially as it is TOD's own Jason Bradford that is distorted!

If I would have known, I would have ripped a new version. Luckily it's just a few seconds.

Question ?? .. doing a presentation ...

what is the daily global consumption of fossil fuels

Oil (liquid)- 83-85 mbd ?

Nat. Gas (gas) ?? cu ft ?

Coal (solid) ?? tons ?

This should give you the stats ...


So ....for a ball park figure ...

We humans use/burn approx ...

85 million barrels of oil each day

300 billion cubic feet of Natural Gas each day

10 million tons of Coal each day

Close ??

Is shale included in the oil ?

The EIA now has a section of its website where it gives international data as well, for example, here. Most of the numbers are annual, so you have to divide by 365 to get daily numbers.

Lots of great free graphics available using google (images) search:


The shady side of the green building industry

Mike Preston was everything his environmentally friendly customers wanted in a contractor.

The Oakville entrepreneur promised homeowners across Ontario he could solve their energy woes with state-of-the-art geothermal systems. They’d be cool in the summer and warm in the winter, saving money and the environment along the way. He said he was an accredited specialist who could help them get government rebates.

What happened next — the complaints of shoddy and unfinished work, the utility bills that doubled, the missing money — is part of a growing problem in the loosely regulated green building industry, a Star investigation has found.

“It shouldn’t be this hard to do something that’s so right,” says Lesya Cooper of Richmond Hill, who paid Preston more than $70,000 before he vanished — leaving a couple of holes in the wall where two gas furnaces used to be.

See: http://www.thestar.com/news/investigations/article/809835--the-shady-sid...


Reminds me of the program I saw about the medicare fraud that is going on, or the easy pain drugs for sale in florida, all bits of gaming the system. There are people all over the place that are finding any way they can to get ahead on someone else's back.

Interest on money loaned is a hidden scam to get more of your labor, if you listen to some people. Several groups of people in the eastern worlds do not allow interest on a loan, seeing it as evil.

BioWebScape designs for a better fed and housed future.

That's true; there's always someone out there with an eye on your money. What surprises me more is someone advancing $70,000.00 for the installation of a ground source heat pump.


Interest on money loaned is a hidden scam to get more of your labor, if you listen to some people. Several groups of people in the eastern worlds do not allow interest on a loan, seeing it as evil.

First off... Doh! A "hidden scam"? The interest is spelled out right in the terms of just about any loan you will ever take out! There is nothing hidden or underhanded about it. Interest is simply the cost of satisfying your wants/needs/desires today, with money that you do not yet have. If there were no interest, there would be very little reason for people to give loans. Loans can grant accesss to increased future income potential (school loans), or the ability to live on a plot of land in the future for merely the yearly tax payment (home ownership).

As to "groups of people in the eastern world who do not allow interest, seeing it as evil", this is predominately a Muslim belief. There is a industry built around the whole concept of what is known as "Islamic banking". From an outsiders view, the whole thing is a system based around a bunch of technicalities which avoid the direct payment of interest, but accomplish the same principle using work arounds.

A simple example: A house is on the market for $100,000. You want the house, but can't afford it, so you need a loan from the bank. Solution: The Islamic bank purchases the house for $100,000, and then immediately sells it to you for $200,000. The monthly payments include no interest however, they are principal only. There are no late payments fees in such an arrangement. Better hope you have some good collateral as well in order to obtain the loan.

In short, there are a lot of different technical work arounds, but in the end, the borrower is still paying an additional premium of some sort... the premium just happens to get buried in the overall transaction instead. IMO, interest actually has some advantages, as if one is able to pay down additional principal on top of the normal payment, one can actually avoid paying a large amount of interest. In the earlier example, paying additional principal on top of the normal payment is pretty much pointless, as the costs were factored in at the granting of the loan.

Failed Banks list now includes my neighborhood bank, Midwest.

Midwest Bank and Trust Company Elmwood Park IL 18117 May 14, 2010 May 14, 2010
Southwest Community Bank Springfield MO 34255 May 14, 2010 May 14, 2010
New Liberty Bank Plymouth MI 35586 May 14, 2010 May 14, 2010
Satilla Community Bank Saint Marys GA 35114 May 14, 2010 May 14, 2010


With FDIC insurance, though, for an individual, i.e. me, the process is pretty painless. Business as usual (so to speak) today for the new bank, FirstMerit of Akron, Ohio.

Addendum : Last few weeks Midwest was offering "Peak Interest" on savings accounts. Takes on a whole new meaning....

There is no need to shout or cry about what is happening in the banking sector, it is, to use the words of Virginia Woolf, "like speaking with our noses pressed against a closed door", but the FDIC practices are essentially having the terrible effect of centralizing an alreader over centralized industry: the weakest are sold to the equally weak (or sometimes even weaker) banks, so then that combination can later be considered "failed" and sold to yet another partner of questionable weakness...until finally we are concentrated down to the smallest possbile number of gigantic weak "too big too fail" banks, which then become essentially insured from any concern about moral jeopardy by the federal government.

There is no way this can go on for long without creating an essentially nationalized banking system. Many so called "neighborhood banks" are actually owned by giant U.S., European, Singaporean or Hong Kong based megabanks. The customer cannot without research tell what really is a "local" or "neighborhood" bank without considerable research.

This is why the move to independent credit unions is a MUST, and it must occur fast and soon. For banks, the rewarding of higher and higher centralization and risk creates just that, more centralization and more risk place in fewer gigantic baskets, in banks that have no loyalty to any neighborhood, any region, and finally any nation, world roving predators who will sell anyone out to oblivion if that is what is required. This is a dire situation, but one that most banking customers either do not want to confront or are simply oblivious to. The clock is against us on this.


From up top: the end of the oil-based economies…yeah!

Boy…just in time. I needed a good laugh this morning. We’re up to our ankles in mud this morning trying to complete a well. Opinions vary, of course. But I can’t envision the oil-based economies not being replaced by coal-based economies. Certainly not an improvement IMHO but as certain as the sun rising tomorrow.

Coal? Nah. Methinks you missed the poor guy's point: a wave of the wand will replace old-fashioned CD oil with new-wave MP3 oil. What could possibly be quicker, simpler, or cheaper? Oh, and never forget: tomorrow's MP3 oil will obey Moore's law - a mere thimbleful will do the same work as a whole gallon of yesterday's CD oil...

I have never understood the supposed advantage of coal EXCEPT when the use is very close to where the coal is mined (KY, WV, PA, or out west in the case of strip mone coal in some states) and if you completely ignore the horrific damage in its extraction and of course the carbon issue...

Coal is a pain in the ass to handle, requiring massive infrastructure in trains, rail, handling facilities, conveyers, or barges, tugs and port facilities built to handle a very heavy, nasty and cumbersome product. It is a massive undertaking compared to an oil or gas pipeline. In a world that many already see as capital short, where will the money for all this coal handling infrastructure come from? The investment in "green" energy somehow does not seem so undoable when compared to the cost of handling coal, and with green energy you get out of the carbon problem and the destruction of mineral extraction. I don't see coal as the natural next step.


Coal is lazy. You can dump it on the ground, spill a little, shovel it into a hopper, bay, or a basement. Doesn't require engineers and fancy mechanics to control.

We use more coal today than ever before, much more than the heyday of the coal-based economy, but oil has top billing - by percent its 37% vs 25%. 63% of energy use is not oil. We are really a oil/coal/gas economy, if anything, which provides 85% of energy use.

Fun graph on the cost/efficiency of various forms of transport in terms of calories per gram per kilometer:


I was surprised to see that jet fighters beat out helicopters, but that helicopters beat out mice. As to the overall winner, I am always surprised when people argue that humans shouldn't switch from cars to bicycles because then they will eat more and require more net energy than driving around in a car. Perhaps Snopes should put this among its urban myths since it is so easily refuted?

(I'm wondering if someone more conversant with formatting on this site than I could embed the graph into a comment so that everyone can see it? Pretty please?)

Here ...


This gets into the whole field of "transport efficiency", which is a very interesting area. One factor not present in the copenhagen chart is speed. Generally speaking, the slower you go, the less energy per mile you use, and of course, at zero speed you use zero energy. but if we want to go at a certain speed, what is the most efficient means to do so?

The landmark paper on this is "What Price Speed?" by Gabrielli and Von Karman in 1950 (I can;t find the paper on the Net), and they compared the specific power (power to weight) compared to speed for various mechanical modes of transport. Not surprisingly, large ships and trains came out well.

A good discussion of this, and the charts from 1950 and a 2004 update, are here;


The animals are no on these charts, though they could be plotted. AS the copenhagen chart implies, the greater the size, the more "efficient" the transport. In the animal kingdom the efficiency title belongs to whales, they move the most weight for the least energy per mile - size matters.

That is why for any freight transport, bigger is more efficient.

But if we are interested in transporting people, then we want to transport the least amount of additional weight possible - that would be the bicycle, as long as we don;t mind going 10-20 mph. Faster than that, the trains always win - as long as where you want to go is along a train line...

If we are interested

I understand that for every calorie of food that we modern humans consume there were ten calories of fossil fuel energy needed to create it. So it took effectively 1.5 calories of fossil fuel energy to power that bicycle, more than the 0.8 needed for the car. I imagine things would change if we just ate local oatmeal.

Of course the automobile is a bit heavier than the bike.

Of course how many fossil fuel derived calories one consumes depends on one's diet, but according to this website (which has an in depth analysis of food calories derived from fossil fuels and is highly critical of red meat) bicycling is more efficient than the automobile, even if one ate nothing but beef.


"In fact, meat production is so wasteful that walking actually uses more fossil energy than driving, if you get your calories for walking from red meat. (Of course, no one eats nothing but red meat. The point is just to show the massive amounts of energy required to produce red meat.)

"The same is not true of bicycling vs. driving, because bicycling is more than twice as efficient as walking (calories consumed per distance traveled) -- bicycling uses less fossil energy than driving even if the cyclist were eating nothing but beef. But to focus on this misses the point. It's no bombshell that cycling uses less fossil energy than driving, no matter what you're eating. What's important is that meat-eaters use twice as much fossil energy as pure vegetarians -- whether they're bicycling or not."

He also debunks that assertion that Hummer-driving vegans burn less fossil fuels than meat-eating Prius drivers. (Far worse to drive a Hummer than eat meat.) But he does make a good case to reduce beef from one's diet.

Very good points. A group of us avg. 60 yr olds will do 200 mi. bike in one day this summer. A Hummer will certainly eat a whole lot more to do that even with 6 vegans inside to help PGPM! oops MPG.

Yesterday my lovely bride and I did ride support for a marathon here locally.
Although we rode our least efficient bikes with smallish 20" wheels and upright stance the effort required to montitor the runners was miniscule. (Very small lunch after, too)

The slight superfit young man who won the race was being paced by two *ahem* not so fit support riders who were even able to cycle back and forth to check on the progress of the #2 runner who was far back toward the end.

Most common comment from the exhausted participants was, "Hey, can I borrow that bike for awhile."

Most Americans couldn't do 20 miles on a bike in one day. If we're going to switch to bikes with a graying population, we'll some of those surreys like families rent at the boardwalk.


Plant study dims silver lining to global warming

Sure does. That's most temperate agriculture crops; those with photosynthesis type C3.
QUOTE from transcript of a podcast - pdf file http://www.sciencemag.org/cgi/data/328/5980/923-b/DC1/1

The levels [carbon dioxide] that are predicted in the next 20 to 50 years can cause a 10 to 20% decline in the amount of protein in the leaves and the rest of the plant body because of this phenomenon. In fact, the wheat grain that has been exposed to the conditions that we expect in the next few decades declines about 20% ... pests become more of a problem, because they can’t eat enough of the material to meet their nutritional needs, so they eat more. So, pest problems become more widespread, as well.

There is also a little mentioned factor regarding pollination.

Some A$$hat in a debate alongside Bjorn Lomborg was crowing about how man can survive from -50 C. to + 50 C so what's the big deal?

Well, it's a very big deal when it comes to pollination. I was surprised to learn that 100% pollination occurs in a narrow temperature band. A shift in temperature of just 4 deg. C can drop crop yield by 20% in some rice species, so crop planting will need to migrate to the poles just like insects (and people). Unfortunately, any fertile crop land, like river deltas will have to stay put until we figure out how to drive plate tectonics.

It just gets better and better doesn't it?

If only some kind of disaster could be the event which would be the wake up call that would finally wake people up. Like say, an oil volcano in the Gom that was spewing thousands of barrels of oil a day, seemingly uncontrollably. Oh. We just had that.

When people in the U.S. start starving, then there will be a sudden epiphany. By then, of course, it will be too late.

Lent is a great tradition. Let us start celebrating it year round.

And besides, hot weather really sucks.

It just gets better and better doesn't it?

I know the feeling.
What caught me was that this was a direct response to global C02 levels that are going to rise whatever happens; no local variation, no ifs no buts, no argument, inescapable.
This happens whether there will be indirect critical local or regional variation in temperature, soil moisture, [edit] and other limitations to growing food, which there surely will be, even if we can not be so sure of these later details.
(Note also in the podcast the crop genetic engineering project that didn't work because the photo-respiration was not understood. And, separately, other studies in this week's Science; too late already for lizard species across the globe as the temperature changes, ... oh ... and malarial drug resistance.)

Hormone mimicking compounds such as bis-phenol-A seem to have most of the reptile world in it's crosshairs, due to near-constant skin absorption. No telling what effect that biodiversity loss will have. We have screwed up in so many ways that it is too depressing to list them all.

Oh, and no one should expect Monsanto to save us (as if!). We are moving past monoculture into monogenetic (new word ;) ) farming. All we need is a new bacterium or insect to develop a taste for a market-dominating GMO and we will be living in interesting times. Even now, farmers are noticing more and more Roundup resistant weeds.

Surprise, surprise....



Bloomberg, dateline 5/16/2010: Euro Falls to Lowest Since Lehman as Breakup Concern Increases

“The euro is doomed,” said Andrew Wilkinson, senior market analyst at Interactive Brokers Group LLC in Greenwich, Connecticut. “It’s like a clown without its makeup. The strains among the partners are becoming clear and it’s becoming harder to see global growth not being threatened by this.”

“The euro “can easily head through parity” with the U.S. dollar under a “hard landing” recovery scenario from the European deficit crisis, according to Royal Bank of Scotland Group Plc.”

Whether you regard it as the "wolfpack" (I caused consternation by repeating that term as used by several financial commentators and a European finance minister the last time I used it) or whether you regard it as the investor/speculator simply acting in their own best interest (and I would do the same if I were them) the outcome is the same:

The European Union is in a desperate struggle to survive. Bets are being placed against the Euro's survival as a viable currency, and businesses, foundations, banks, citizens and national governments are burning the night oil to create vaible contigency plans. If these plans look as good as salvaging the European Union would look, then the die is cast, the Euro Union dream will die, at least for now and very likely for the remainder of the average persons lifetime.

Then the recriminations will begin: What went wrong? Who is to blame? Did the big banks and the flood of American money, now freed from the limits of the Glass Steagall Act blast into Europe and essentially assassinate the Euro and by extension the European Union? Like it or not, you can be sure this charge will be raised, and it is a serious one. Bonds are more powerful than bombs, and it is hard to believe the Europeans (many of whom are already rabidly anti-American) would not expect to redress this "attack"...and as the old saying goes, paybacks are hell.

Or will the Europeans lay the blame upon themselves and see the structure of the European Union as essentially flawed? The European Union always seemed to be like a train running in essentially the wrong direction: It was centralizing just when technology allowed decentralization, they were standardizing just when the world seemed to want customization, they were becoming a big single unit when the trend seemed to call for many semi-autonomous units. Just when speed was needed, the European organizations seemed to be bogged down in byzintine bureaucracy. Was it a cultural/political/economic model that was simply born long past the time it was needed? European union by peaceful means has long been a dream...perhaps it took so long to accomplish it was by then simply an archaic hope of old men?

If the European Union is disolved, the center of economic/political and even cultural gravity swings rapidly to the east, to India and China (the two largest nations by population under a national government) and surprisingly to many, the United States (followed by Indonesia and Brazil. For the trivia buff, the smallest in the world is Pitcairn Island, famous as the landing place of Captain Bligh of Mutiny on the Bounty, with 50 permanent residents)

If we consider the statistic (flawed though it is) the nations in the top five rank of population under one authority that are also the leading nations by GDP per person of the group of five, we get the United States, 6th in the world per person GDP, and next, again surprising to many, Brazil, ranked 75th by person GDP. China is far back at 99th, but trying to grow fast, Indonesia is 120th and India is 128th, but trying to grow fast. I assume many people here are interested in energy, so it should be noted that when ranked by oil production only the United States and China ranked (as of 2008) in the top five world oil producers of the "big five" in population, U.S. ranked a surprising 3rd and China 5th as single nations, but both nations are at this time in production decline.

If the European Union disolves, how the Europeans accept and react to this catastrophic cultural event will determine much about the future of the world. Europe has been a huge influence on development around the world, putting in foriegn aid, cultural influence, technical assistance, scientific and cultural research and development, assisting in development of world education and acting as intermediary in places where the U.S. is either feared or detested.

While the U.S. provided the guns to the world the Europeans essentially provided the butter. As Europe fractionalizes and turns inward to its own problems it will leave a gaping hole in the cultural, political, economic and technical development of the world. A European Union collapse could very well by greater in importance than the collapse of the Soviet Union in the cultural direction of the world.

Should the United States be cheered by this? Even if we wanted to help save the European Union could we? As strong as we still are, we are greatly weakened by our recent banking crisis, as trillions of dollars in supposed wealth essentially disappeared. The U.S. is already taking a turn to the insular, to a turning inward, just at the moment when we are in need of taking a global view.

Or should we simply allow the financial community to take its course? Again, whether you like to think of it this way or not, it is in the nature of the financiers to pick the bones of dead or dying for sustanence ("liquidation of assets"), and move to other opportunities (some would say new prey). Given our current financial weakness and political inclination, it is very doubtful that we have the will or the financial power to try to constrain the world bondholders, financial arbitrage and derivatives traders and hedge funds. China must be VERY alert and is certainly attempting strategy to avoid the next stage, as the financial community is surely already setting it sights on the next target of best opportunity. Is there any way China can avoid the coming onslaught, even if they know it is coming? The rumors and talk of "Chinese weakness" are already beginning to spread...

Just as it is dangerous to be very near a large ship sinking to avoid being sucked into the whirl pool created by the vacuum, so we must concern ourselves with the danger of being sucked downward in the European collapse should it occur, and the risk grows greater by the moment.

The United States must tread lightly here, and think deeply and with great reflection as we act in our confrontation of this new reality, this global re-alignment. We are again at a pivotal moment.

Roger Conner

Without going into details, it seems that the Euro is on the margin of what Tainter refers to as diminishing returns of complexity. The Euro simplifies some inter-state trading, but I'm not sure that currency conversions is such a big problem for companies that the Euro presents much benefit, the Euro is as much a political symbol. Complexity is introduced by having to coordinate disparate economic regimes in the Euro zone, so on balance the Euro is really on the edge of the cost/benefit ratio.

Abandoning the Euro could well fit into the pattern Tainter observes of complexity being shed in favour of a simpler system. We have already seen that happen twice in Europe recently with the former USSR and Yugoslavia. The plus point is that the Euro-zone is not as far down the road of integration as those entities were, so breakup should be less traumatic. The danger would be to try maintain the Euro despite indications to the contrary, which unfortunately as the Euro is largely a politic construct that is likely to happen.

Thank you for the informative commentary RC.

Although I continue to believe the U.S. is in a very bad situation vis-a-vis peak oil, especially as we begin the downslope, it is still interesting and tragic to a certain extent witnessing the chaos which is ending the European project.

Few (if any) could or would have predicted the breakup of the Eurozone as a consequence of peak oil - but now here it is, in full view!

I am reminded of Chalmers Johnson whom I otherwise consider to be an excellent spokesperson for the unsustainability of American empire. He, however, seemed to believe that the Euro was a sound currency. My oh my.


We should just hope that the breakup can happen peacefully. I suspect that it can as really this economic project is all of 11 years old compared to centuries if not millenia of unique development for the individual European nations. So in the end it will be just another TSHTF head fake before the ultimate consequence of peak oil - the breakup of the U.S.

Then the recriminations will begin: What went wrong? Who is to blame? Did the big banks and the flood of American money, now freed from the limits of the Glass Steagall Act blast into Europe and essentially assassinate the Euro and by extension the European Union? Like it or not, you can be sure this charge will be raised, and it is a serious one. Bonds are more powerful than bombs, and it is hard to believe the Europeans (many of whom are already rabidly anti-American) would not expect to redress this "attack"...and as the old saying goes, paybacks are hell.

Greece May Take Legal Steps Against U.S. Banks for Crisis, Papandreou Says

I strongly object to your rabid anti European language, a product of the dismal journalism of the Anglosphere, with their talk of Britain being "a warrior nation" and constant warmongering talk.

There's absolutely no problem with the European Union project and even with the euro, it is all lies and hysterics from the newspapers.

This two graphs are from TAE, I do not know how to post images, so here are the links, that I know how to do.
Euro/U$D, 5 day chart values
If you take a longer, 5 year view
Euro/U$D, 5 day chart values

As you can see from the graph there aren't any problems at all, we are where we were some years ago, same relative place. It may even be true what Ilargi says, that the Germans drop the value of the Euro on purpose, to favor their exports.
I understand that the euro was worth 84 US cents some years ago.
Gasoline costs 1.21 pounds a liter in the UK, about 1.31 euros in Germany. No one thinks it is the end of the world, we pay, no problem. Or we walk, ride the bus, the Underground. No problem.

The president of Spain cut the salaries of public workers, pensions, 5%. First time in history this happens. It is not even clear if there's going to be a one-day strike by the public workers. Not all of them will go on strike and it doesn't extend to private business.

Europe is in peace, a continent trying to work. The envy of less happy lands.

The current value of the Euro is not the problem, it is a symptom. Citizens who have lived frugally (Germans) are subsidizing with below market rate loans, citizens who haven't. The price is austerity and prolonged recession as Greece and others are forced to reduce spending. When the PIIGS get weary of the prolonged economic slump, they will rise with anger. Everyone will need a scapegoat to blame their pain on. Already, the Germans call the Greeks cheats (they did cheat) and the Greeks complain that Germans never paid restitution from WWII. 1500-1950 Europe was a series of self inflicted wounds. I don't see anything's changed in the human condition so I would expect Europe to revert to its usual pattern of inter-state relations.

It's easy to be nice on the way up, no so easy on the way down and the West is on the downward slope of reversion to the mean.

I also don't see the demise of the Euro coming so soon as the media would have most believe, and I also don't agree that even if the Euro was ending, its value would gave to drop from here. It's already dropped 20% in a short time. I follow the money base of the Fed and ECB very closely, and although the ECB has issued at most 10% more Euros relative to the dollar in the last two months, when the US money base doubled from late 2008 to late 2009, the dollar did not lose half of its exchange value.

So I am saying I am somewhat surprised that the dollar hasn't seen record exchange value lows vs. the Euro yet, but that day may yet come. But that day may never come because it so hard to put a value on the Euro or dollar, because frankly almost all investors in dollars don't have clue what they are buying.

I dread the day when the US will stop getting a free pass to flood the world with money, since when that happens the quality of life in the US will drop rapidly.

BTW - It is not just Germany bailing out Greece, but the US too. Also the IMF ends up creating many more dollars in its loan programs too, further flooding the world with dollars.

"But that day may never come because it so hard to put a value on the Euro or dollar, because frankly almost all investors in dollars don't have clue what they are buying."

I think you are wrong about the dollar. The public knows what is geting:

A nation with the greatest transport system in the world, whether it be rail, road or aircraft and airports.

A nation with one of the most educated populations in the world, flexible, self motivated and literate.

A nation of CREATIVE TALENT, able to deliver music, art, theatre, motion pictures and books and novels that are craved all over the world.

A nation with millions of acres of land in military bases, state and national parks, federal property and buildings.

A nation which still has millions of acres of undeveloped real estate along great natural rivers and lakes and still crowned with trees, plants and animals of a variety known only in a few places in the world.

A nation with the best housing stock in the world (so many houses we can't sell them all!) and apartments, office space, stadiums, convention and conference centers, etc.

A nation with (to this point) a stable system of government where the power is split between the courts, the legislative and executive making power grab and overthrow very difficult. A government with a working system of power transfer from one administration to the next.

And, like it or not, a biggie: A government that controls a law enforcement system able to protect property, able to maintain civil order, and able to bring order to the streets.

And, a REAL BIGGIE: A government that controls a military system able to bring pain to our enemies and protection to our friends. If you have "stuff" you still have to be able to protect it.

What I have described above is NOT paper, it is real, it is concrete, steel, land, resources, and the embedded work of billions of hours of thought and labor.

When it comes to money, and to the order and power to protect the stability of the money (what is lacking is wisdom and the will to stand up to the wolfpack financial community but that can be fixed), yeah, I WILL TAKE ALL DOLLARS ANYONE WANTS TO GIVE ME....:-)



I am so sorry that found my remarks to be anti-European. I intended just the contrary:

Europe is a major contributor to the cultural, technical and scientific and humanitarian development of the whole globe.

The current price of the Euro, as some have said here, is NOT the essential problem: The European community simply has no way to keep the nations in the currency from running up debts that the whole community must stand behind. This is a problem in the United States regarding our banking community. This allows the international arbitrage and derivatives traders to come into the market at the firist sign of difficulty and "talk down" the currency, (what you call the press "hysteria" is not by accident...this is a pattern that has been repeated all over the world, as the very financiers who have literally driven the currencies and the borrowing of massive capital to avoid being left behind in the boom times, suddenly switch to the other side of the currency and debt and begin betting against it. This creates a collapse out of all proportion to the real economic problem.

However, in Europe the real economic problems are still very severe: Europe has an over older demographic than the U.S., and are facing huge subsidized care for the elderly. Europe now has a class of immigrants from Asia and the Middle East who expect to live as well as the European natives, with subsidized health care, subsidized or rent assisted housing etc., Europe has NO real supply of home produced energy in relation to its size and post war growth, so massive amounts of money must be exported to buy energy.

The demographic of Europe, the energy situation in Europe, the problem of integrating the former east block nations into Europe are all indicators that the Euro should have never been above parity with the dollar, and should probably be well below it. But that is NOT the scale Europe has become accustomed too. The Euro faces all the problems the U.S. dollar does, only 5 times larger as percentage, and STILL has no way to enforce the Maastricht Treaty! In America, federal agents will COME TO YOUR BANK and empty it and shut it down if they see you are not in compliance. Can any 'EURO POLICE' do that? Whole nations in Europe are acting as out of control banks with the European community expected to act as the insurer of last resort.

How long will it be (or has it already occured?) before the European population and national governments decide the whole Euro experiment is simply not worth the risk? It is like tying the strongest swimmer to the weakest or most corrupt stones.

This is creating a real crisis of confidence in the Euro as a useful and valued currency. The financial press are serving to fan the flames of this fear, because the sources they are using are talking down the Euro, and if they are talking it down, you can bet they are placing big bets to make the talk true...it is a self feeding circle downward, at least for the foreseeable future...right now, no one, not even the Europeans, want to get caught out with too many Euros on hand...if they want to travel or move about Europe, they can achieve that with travelers checks.

Europe, as I said in my prior post, are fighting back. This is a struggle to salvage the European Union idea and the Euro currency, because if the currency goes, the justification for the Euro is in serious question. I hope the European community is able to defend itself, IF the terms and methods used to defend it are not so radical in nature as to destroy the benefits for European Union membership. Only time will tell, but it will require extraordinary effort, concentrated thought, and will power on the part of Europe and its citizens to pull this off. Do the Europeans think the Euro is worth that much to them?