Drumbeat: May 16, 2010

Quest for oil leaves trail of damage across the globe

Like many of her neighbors, Celina Harpe is angry about the oil pollution at her doorstep. No longer can she eat the silvery fish that dart along the shore near her home. Even the wind that hurries over the water reeks of oil waste.

"I get so mad," she said. "I feel very sad."

Harpe, 70, isn't a casualty of the oil spill in the Gulf of Mexico. She lives in a remote corner of Alberta, Canada, where another oil field that's vital to the United States is damaging one of the world's most important ecosystems: Canada's northern forest.

Across the globe, people such as Harpe in oil-producing regions are watching the catastrophe in the Gulf with a mixture of horror, hope and resignation. To some, the black tide is a global event that finally may awaken the world to the real cost of oil.

BP Making Second Attempt to Funnel Oil to Gulf Recovery Ship

(Bloomberg) -- BP Plc, the largest oil and natural- gas producer in the Gulf of Mexico, hopes to see results today from a second effort to funnel oil to a surface recovery ship as it tries to reduce spillage from a well off Louisiana.

Yesterday, BP failed to maneuver a tube into a leaking pipe that’s gushing oil from the seafloor. The frame that holds the tube shifted, Doug Suttles, BP’s chief operating officer for exploration and production, said.

Substantial safety concerns raised about the Atlantis, another BP oil rig

The company most closely linked to the Gulf of Mexico oil spill also owns a rig that operated with incomplete and inaccurate engineering documents, according to records and interviews, a deficiency that one company official warned could "lead to catastrophic operator errors."

An independent firm hired by BP wrote in an April letter that it had substantiated allegations by a former contractor that the petroleum company was violating its own policies on the Atlantis, which is stationed more than 150 miles from New Orleans in 7,070 feet of water. Billie Pirner Garde, a deputy ombudsman, wrote to contractor Kenneth Abbott and stated that multiple workers on the Atlantis had raised similar safety concerns.

Giant Plumes of Oil Found Forming Under Gulf of Mexico

Scientists are finding enormous oil plumes in the deep waters of the Gulf of Mexico, including one as large as 10 miles long, 3 miles wide and 300 feet thick in spots. The discovery is fresh evidence that the leak from the broken undersea well could be substantially worse than estimates that the government and BP have given.

“There’s a shocking amount of oil in the deep water, relative to what you see in the surface water,” said Samantha Joye, a researcher at the University of Georgia who is involved in one of the first scientific missions to gather details about what is happening in the gulf. “There’s a tremendous amount of oil in multiple layers, three or four or five layers deep in the water column.”

A Looming Shortage of Oil Boom?

As a vast oil slick threatens waterfront from western Louisiana to the Florida Panhandle, BP and the Coast Guard are engaged in a frantic effort to secure millions of additional feet of oil-containment boom, supplies of which are spread thin across the coast of the Gulf of Mexico.

Adequate boom is on hand to protect the most immediately endangered areas, but more is needed, said Adm. Thad Allen of the Coast Guard, who was appointed by President Obama to lead the spill response.

NOAA's projection of oil spill path impacts openings, closures of fishing waters

Barham had been trying to find ways of reopening the long-closed but never-contaminated east bank. He achieved that Friday -- but there is a possible fly in this healing ointment.

The dispersants BP has been using to break up the spill can be as toxic as crude oil. And for several days beginning a week ago, the company injected the chemicals on the sea floor -- the idea being, it said, to begin the break-up sooner.

Oil Spill Washing Ashore Angers Gulf Residents

In Port Fourchon, La., southwest of New Orleans, clean-up crews had to scrape beaches and hauled away 300 trash bags filled with tarballs that had washed ashore.

"It kind of gave you a pit in your stomach - oh lord here we go," said LaFource Parish resident Chett Chiasson.

As more oil spills onto the coast, many people here grow more frustrated, more angry. They're afraid waves of oil coming ashore could soon kill their livelihoods.

"BP did this," said one fisherman. "They destroyed us."

Odd Smells in New Orleans, Thoughts of the Gulf

NEW ORLEANS — At almost 300 years old, somewhat moldy from the remnants of Hurricane Katrina and surrounded by muddy water and swamps, this city is not exactly known for being lemony fresh.

The signature scent around Bourbon Street, after all, is the smell of spilled liquor.

But from the French Quarter to New Orleans East, people here have been complaining about a tinge to the air that is unsettling even by local standards.

Many suspect that it has something to do with the oil disaster in the Gulf of Mexico, which has already leaked millions of gallons of crude about 50 miles off the Louisiana coast. The authorities involved in the cleanup of the fallen Deepwater Horizon oil rig have been burning oil on the surface of the gulf and using chemical dispersants around the leak.

After Spill, an Economy on Pause (slideshow)

The oil spill in the Gulf of Mexico is disrupting the area's economy and the lives of its people.

U.S. Seeks BP Clarification of Plan to Pay for Gulf Oil Spill

(Bloomberg) -- The U.S. government is seeking assurances from BP Plc that the company will pay for all damage relating to the oil spill off the coast of Louisiana.

“The public has a right to a clear understanding of BP’s commitment to redress all of the damage that has occurred or that will occur in the future as a result of the oil spill,” a letter to BP Chief Executive Anthony Hayward from U.S. Interior Secretary Ken Salazar and Homeland Security Secretary Janet Napolitano said. The letter was dated May 15 and released by the White House yesterday.

The Call in the Middle of the Night

As I reported in Friday’s paper, serious questions are being raised about the government’s estimate of the oil spill in the Gulf of Mexico. The estimate of 5,000 barrels per day has not changed since April 28, and many scientists and environmental groups argue that it cannot be right, given the seemingly rapid flow from the undersea well, as seen in this video of the gushing fluid released on Wednesday.

It turns out that in the early days after the explosion of the Deepwater Horizon, the government entertained a far higher number than 5,000 barrels a day. Video shot in Seattle at the spill response unit of the National Oceanic and Atmospheric Administration includes notes made on a white board as government workers discussed how to respond to the disaster. The estimated flow rate: 64,000 to 110,000 barrels per day.

White House message machinery spinning faster than ever

WASHINGTON -- In the days after an oil rig exploded last month in the Gulf of Mexico, the White House faced not only a looming environmental catastrophe but also a potential public relations disaster.

Aides feared a story line would take hold that President Barack Obama had responded too slowly to the spreading oil slick, damaging him politically much as the slow federal response to Hurricane Katrina in 2005 discredited former President George W. Bush.

Debate over cross-border pipeline poised to heat up at U.S. town halls

Public hearings in Montana are being held this week to discuss a plan to build a pipeline through eastern Montana to move crude extracted from Alberta’s oil sands to refineries in the United States.

Oman oil output up 8.7 pct in Q1 2010

MUSCAT - Oman’s average oil production rose 8.7 percent to 855,400 barrels per day (bpd) in the first quarter of this year compared to the same period in 2009, the Ministry of National Economy Bulletin said on Sunday.

Tax Uncertainty Hurts Australia Gas Projects, Lobby Group Says

(Bloomberg) -- Proposed natural gas ventures in Australia’s Queensland state estimated to cost as much as A$80 billion ($72 billion) need certainty over taxes to start on schedule, the industry’s lobby group says.

Australia’s proposed 40 percent tax on resource profits is “destabilizing” the country’s liquefied natural gas industry at a time when energy producers are advancing toward making final investment decisions, the Australian Petroleum Production and Exploration Association said in an e-mailed statement today.

Why the United States Crude Oil ETF Is Getting Crushed

The United States Crude Oil ETF is getting crushed right now, but if you want to know where it’s heading, it’s important to understand what it holds and what’s going on in the futures market.

USO has become investors’ proxy for oil. When you hear people talk about oil on CNBC, they’ll often mention USO. The fund has $1.8 billion in assets and trades 11 million shares per day.

Chart of the Day: Drill, Baby, Drill

This chart comes from Glen Sweetnam of the Department of Energy (he's the director of the EIA's International, Economic and Greenhouse Gas division). The black line represents the year 2011. After that, oil production diverges sharply from projected demand, and no one knows how we're going to make up the difference.

Sweetnam, by the way, is not talking about peak oil here. DOE subscribes to an "undulating plateau" theory, where oil production peaks and then stays more or less flat for a decade or so. Rather, Sweetnam attributes the production decline to a lack of investment. However, since new projects take years to come on line after they're funded, this is a fairly thin distinction in the medium run. If investment is lacking today, then Sweetnam's chart is probably accurate for at least the next few years.

Energy and Capital's Weekend Edition

Socialism just hit the oil industry.

And I'm not referring to Venezuelan President Chavez wresting oil fields away from foreign companies...

No. This time, it's hitting much closer to home.

Obama recently took his plan to Congress. In order to pay for the clean-up efforts in the Gulf of Mexico, he's proposing a penny tax on oil companies.

Although a penny tax seems trivial, it's a foot in the door for Obama.

Peak Oil: The Changes

The following is a transcript of the conversation I had with Paul Michael Wihbey on the May 4 episode of Turning Hard Times into Good Times. The previous week, Simmons presented his continuing thesis that the lights on western civilization are about to go out. Contrasting that notion is Paul Michael Wihbey, who provides a much more optimistic view of prospects for keeping the lights on, not from foreign imported oil, but from abundant sources right here in North America.

Colliding tragedies and the missing pie slice

Few are admitting that the amount of oil from offshore drilling, which could offer up to 15 years of American supply, is swallowed in the shadow of financial uncertainty in producing such oil. The capital risk of exploring and tapping those fields cause great pause to energy companies. Oil companies should be even more hesitant now that deep-sea operations have proven to be like space adventures requiring ceaseless dedication and accountability. That sterling standard is not a great match for companies which have been earning billions per quarter after getting what they want from regulators by having their lobbyists literally sleep with them.

While oil companies have great access to government regulators paid with public funds, they do seem to enjoy great privacy concealing the many strategic vulnerabilities of our oil-based life.

It's The End of the World (As We Know It)

A storm is quickly approaching, and the world is not ready for it.

The permanent end of the era of cheap oil is coming as soon as next year, according to a raft of official reports that have made their way into energy media over the last few months. Governments are now beginning to acknowledge the looming crisis. Yet, perhaps because they waited too long to prevent it, leaders are not yet alerting the public.

The entire world economy is built on cheap oil, A permanent oil production shortage will thus lead to The End of The World (As We Know It). What will come on the other side of this -- will it be good or bad?

Making the transition

Because of the process of economic globalization, our communities — which have been ravaged by what we call “affluence” — are now at the end of very long and fragile supply chain upon which we depend for even our most essential needs. Our community is vulnerable, exposed and at risk.

Here’s why: We now are facing three major converging global crises — Peak Oil, global warming and economic instability — that together represent a “perfect global storm,” bringing with it massive waves of change. James Howard Kunstler has called this “The Long Emergency.”

Oil spill a boost to alternative energies

The Gulf oil-spill catastrophe calls for immediate teamwork, as various entities work to end this spill, clean up damages, preserve the environment and prevent re-occurrences.

Longer term, this devastating accident is a reminder that we’re far too dependent on oil and we’re only drilling a mile below the surface because other sources are tapped out. We’ve known this for decades, but we’re still without a viable national energy plan to wean us off oil and onto energy independence.

The world’s energy challenge is beyond enormous. We are very close to “peak oil” — where the world’s daily demand begins exceeding the world’s maximum daily supply. China and India use only 5 percent per capita of what we do, and their combined populations are eight times ours. Their energy appetites and others worldwide are growing at alarming rates. Meanwhile, with only 5 percent of the world’s population, we’re consuming 25 percent of the world’s oil, largely setting global prices, indirectly bankrolling even nations like Iran.

Brideshead reheated

Heating Castle Howard in North Yorkshire has never been easy. When the stately home was built in 1699, it took 30 open fires to do the job. Even after the arrival of central heating, it was still a tough task.

“We were using 85,000 litres of oil a year at a cost of almost £40,000,” said Simon Howard — a descendant of the Earl of Carlisle, for whom the house was built — who lives on the picturesque estate with his wife and two children.

Two years ago, faced with escalating fuel prices, Howard decided enough was enough. Now the 142,000 sq ft house, used in the filming of Brideshead Revisited, is being heated by its lake.

The Climate Bills, Side by Side

One of the more concrete differences lies in the floor and ceiling that each bill sets for the price that companies will have to pay for permits to emit greenhouse gases under a proposed cap and trade system. The House bill, approved last June, says the permit cost would be $10 to $28 per ton, while the proposed Senate bill, unveiled on Wednesday, calls for a range of $12 to $25 per ton.

That disparity may seem slight to the layman. But the potential range in costs, $18 in the House bill and $13 in the Senate bill, is of great interest to investors, who might prefer a narrow band so they can better understand and predict the permits’ potential effects on the market, said Paul Bledsoe, a spokesman and strategist for the energy policy commission.

A cooling trend

They were friends as global warming skeptics, but then their minds and lives diverged. That these MIT experts now see the facts, and each other, so differently shows how hard climate consensus will be.

I'm figuring this article must already be on TOD, but anyway here it is:


Gulf oil spill: real disaster might be lurking beneath the surface.
New research suggests that huge plumes of oil might be spread at all levels of the water column, showing how much scientists don't yet know about the complex Gulf oil spill.

Tonight on 60 minutes: Survivor Recalls Deepwater Horizon Blast

CBS) One of the last to escape the Deepwater Horizon oil rig tells "60 Minutes" correspondent Scott Pelley how he got away from the flaming platform and all the things that went wrong leading up to the blowout that killed 11 and caused the still-gushing oil leak.

Michael Williams, chief electronics technician on the oil platform, speaks in his first interview in a report to be broadcast this Sunday, May 16, at 7 p.m. ET/PT.

I think this is going to be interesting.

Ron P.

I posted an excerpt from a WSJ article which was largely based on Mr. Williams' sworn statement, regarding an argument between the BP Company man and the Transocean supervisor. It was not clear to me who was in favor of displacing the mud. Hopefully, it will be cleared up tonight.


I've just been replaying the Congressional Hearings

The sworn testimony by Transocean said that as far as they were concerned there was no indication of any problem (the well certainly wasn't "kicking") as far as their personnel were concerned until seconds before the disaster. Halliburton testified that it was necessary for the riser to be displaced to seawater in order for them to set the final plug according to the agreed well plan. Unless Transocean lied under oath then presumably Transocean were in favour of replacing the mud as it was the only way to move forward under the well plan agreed with the MMS under what they testified was a normal situation as far as they were concerned.

So as far as I understand it there was never an option to not displace the mud (unless something was wrong) without going back to the MMS for authority to change an agreed plan. If I've misunderstood the testimony someone please correct me.

Question: If the riser had still been full of mud would the outcome have been any different anyway when it appears that somehow the full well pressure was exerted virtually instantly on the riser fluids and would have easily blown it out even if the entire riser was full of it? Choke & Kill wasn't connected at the time of the blowout either if I understand correctly and we know that the BOP subsequently failed to seal and detach the rig.

Also does anyone know if more details on the negative pressure test are available and what time it was carried out at? As of the hearings that data was not available in digital format.

And if Transocean said there were no well control issues what caused the pause in removing the mud? Was that the weekly BOP test as some info has suggested was carried out shortly before the blow-out or would that have been much earlier? Are the Halliburton provided logs consistent with the possibility of the BOP being opened with a blow-out having already taken place but temporarily contained by the BOP?

Edit: Just realised this is the Drumbeat and was thinking I was in one of the key posts. I'll leave it here for now.

I was also watching a replay of the Congressional Hearings ... the part where ...

the part where Senator Sessions is trying to get the big 3 to admit that displacing the mud with seawater so quickly was not "normal". He asked each of them if this procedure is done more than 50% of time or is it done substantially less than 50% of the time ...

... and they all flat out refused to answer

but then Sen. Session's time ran out and Sen. Landrue (LA) came on deck with her "Will you, BP, pay?" question and they answered, Yes, all "legitimate" costs.

IIRC, he returns to the question later but the reply is still basically "we don't know the percentage but it has been done many times before". Whether "many" means 5, 10, 100, 1000 times or whatever would be nice to know. But none of them was of the opinion it was inherently unsafe.

I think the subject came up again in the House Hearing the next day (was watching it while doing something else so missed bits) but I haven't had time to watch that again fully to see if any more light was cast.

Edit: Quickly scanned the House testimony again. This time there was a lot of attention to the negative pressure test - ("During this test, 1,400 PSI was observed on the drill pipe while zero PSI was observed on the kill and the choke lines.") All agreed that it would not make sense to displace with seawater if the negative pressure test failed. Information was not available to the Hearing on the process or tests that led to the decision that the well was safe subsequent to the earlier acknowledged anomalous test. Without that info it could not be determined whether there was a satisfactory resolution to the earlier tests. The negative pressure tests all occurred after 5pm (and thus could not have been an issue at the 11am meeting) and prior to 8pm. Transocean's Vessel Management System logs after 3pm were not yet stored off-site and went down with the rig.

"we don't know the [exact] percentage [to ten decimal places] but it has been done many times before".

Is hedge hog language not a wonderful thing or what?

The Venezuelan oil rig the Aban Pearl has sunk off the coast of Venezuela early Thursday. All hands apparently off safely. Sounds like their BOP worked - no mention of oil spill. Found the story on the BBC news site. I don't think I've seen it mentioned here. (?)


It was a natural gas rig. Natural Gas Platform Sinks Off Venezuela

Venezuela's Energy and Oil Minister Rafael Ramirez said the Dragon-6 natural gas field being drilled by the Aban Pearl had been stabilized and that there was no environmental threats.

He made it clear that "The safety valves activated along with an additional security mechanism, which allows us to affirm that we have stabilized the well and there is no risk of any kind of gas leak."

Ron P.

Oops - rereading the article - no need for BOP (red face). It is reported the disconnect went with no problems. The rig apparently sank due to bad weather and a problem with the pontoons.


It was posted in the DrumBeat went it happened, along with several articles analyzing what happened and what it means for Venezuela.

What I found most interesting about the story is that Hugo Chavez announced what happened via Twitter.

Yesterday, he said they were going to try to retrieve the rig, and the 100,000 gallons of gasoil on it.

Hugo Chavez announced what happened via Twitter.

maybe he wanted to channel sara palin.

Link up top: Peak Oil: The Changes

You must read this article to believe just how far this guy is removed from reality.

Well, yes. I mean there are a lot of peak oil theorists out there who point to the United States peaking its production of oil in the 1970s. Well in fact the United States has rebounded from that, in part, thanks to the issue of offshore drilling. Gulf of Mexico now produces 25% of all U.S. oil production. A decade ago it did not produce anything and that’s a reflection of technology...

But the issue here is that is we have an abundant source of petroleum within the territory of the United States that we can access with current and future technologies.

So you see production will not peak in a manner that these theorists have propagated. In fact, it will increase, and if it doesn’t it’s for political reasons and environmental reasons that we may decide to lower our production rate and import more oil from offshore.

He seems to think it is all about the US peaking. The US peaked in 1970 and currently produces just over half of what we did at the peak.

We here in the US import about two thirds of our petroleum and petroleum products. Peak oil is about the peaking of world oil production, not US production, which is a fact of history. Paul Michael, the guy being interviewed here, does not mention the world peak at all, he simply states that we have overcome the peaking of US production.

But of course we have overcome the peaking of US production, but not because of the 1.5 million barrels per day of GOM production, we have overcame the peak in US production by importing about 12 million barrels per day of crude oil and other petroleum products.

Ron P.

Ron, If deep water drilling in the GOM were suspended indefinitely (say for three of four years), what would that do to U.S. production?

Joe B.

Well since current GOM production is 1.5 mb/d a four suspension would likely cut that in half. That would probably put U.S. production at at just over 4.5 mb/d. Of course that would depend on what the rest of the country does in the next four years. I would expect that to decline slightly.

Ron P.

Isn't this the basis of entire conservative argument ?

With some of these really ridiculous talking heads (like this guy) we need to start keeping a log of their comments so we can play them back to them in a few years. I have no problem with differing opinions but for someone to say that the US has recovered from its peak oil problem is beyond belief.

Re: Brideshead reheated

A family of four consuming 85,000 litres of fuel oil per year kinda boggles the mind. Good thing we all don't live in castles !

In any event, £160,000 for a ground source heat pump works out to be $1,163.00 per kW or almost $4,100.00 per ton of capacity. Two Sanyo ECO-i WCHDX32053 air source units would provide 200 kW of nominal heating capacity (~170 kW @ -10°C), at a similar operating efficiency (average COP = 3.79), for perhaps one-third to one-half the cost.

Best hopes for intelligent and cost-effective energy solutions.


Plan B: Skip College

Professor Vedder likes to ask why 15 percent of mail carriers have bachelor’s degrees, according to a 1999 federal study.

“Some of them could have bought a house for what they spent on their education,” he said.

Professor Lerman, the American University economist, said some high school graduates would be better served by being taught how to behave and communicate in the workplace.

The thing about a college education is that is not an automatic get-rich-quick scheme. It will not compensate for lack of ambition or lack of competence. However, it does open a lot of doors that would otherwise not be available to people. Sure, a lot of mail carriers have bachelor's degrees, but most CEO's and VP's of major companies have advanced degrees in business-related subjects.

Some companies I worked for would not promote someone to plant foreman if they did not have a degree. It was one way of weeding out the unambitious and incompetent. They had other ways of weeding out people with degrees who were unambitious and incompetent, but the requirement for a degree reduced the number of candidates they had to weed out to a manageable level.

Just to set people further on edge, I'll also mention that China is now producing 5 million college graduates a year, and India 3 million. People without a degree are going to find themselves somewhat lower on the global food chain than those people. This is particularly true in the US, where the grade school system is frankly not very competitive in the modern world. And it is a very competitive world.

most CEO's and VP's of major companies have advanced degrees in business-related subjects.

Got a link with some actual numbers?

There are some jobs that you really need a college degree. Can't be an MD without the degrees. But CEO? Bill Gates doesn't have a college degree.

And face it...the vast majority of people are not going to be CEOs or VPs, and probably don't even want to be.

According to this source 97% of CEO's of Fortune 500 companies have degrees. 38% of them have MBA's and 29% have advanced degrees other than an MBA.

Bill Gates has an honorary law degree from Harvard. He's actually quite unusual in that he dropped out of Harvard to found Microsoft, and became one of the 3% of CEO's who did not have degrees. However, Harvard felt he deserved a degree, regardless.

He did have the advantage in getting his first deal with IBM in that his father was a prominent Seattle lawyer and his mother was on the Board of Regents of the University of Washington. His mommy had the connections that got IBM's attention, and his daddy taught him what to put in the fine print. It was the fine print that made him his first billions.

Maybe most people are not going to be CEO's, but as I said, I have worked for companies where you needed a degree to be a plant foreman.

Maybe most people are not going to be CEO's, but as I said, I have worked for companies where you needed a degree to be a plant foreman.

I think that's going to change. If I were expecting BAU, then yes, you need a college degree. You need multiple college degrees, and graduate degrees, too, to keep up with those millions of Chinese and Indians who are willing to work for a tenth of your salary.

But I think BAU is changing. Globalization is breaking down. We will no longer be competing with everyone in the world. And the attitude toward college will change as well, because it is so unaffordable. IMO. a college degree is a way of making sure the people you hire are from a certain socioeconomic class (with a few exceptions, of course). And as that class shrinks, so will job requirements. Heck, it might even help you get a foot in the door, since they don't have to pay you as much.

"college ... is so unaffordable."

On a slight tangent here, this is a market opportunity. Combine the technology for multi-player online video games with web-cams (for eye-tracking), and adaptive educational software can be created which monitors your comprehension in real time, while allowing you to work with others when required. Automated learning and assessment; get a degree from Electronic Arts University.

Sounds silly maybe, but it has to be done, since new industries and jobs are appearing more and more quickly, and old ones are disappearing. Learning isn't just 'get a degree and you're set for life' any more. In future most people will have to retrain several times in the course of their working lives. Costs have to come down, and the only way to do that is by automation. It's already starting to happen, with simulators for the military and fire fighters appearing, as well as the old pilot-training simulators. It just needs to be rolled out to the mass market.

This could be the biggest change in education since the invention of the printed book.

And yes, old-style colleges will go back to being clubs for members of 'a certain socioeconomic class'.

Automation is the art of replacing a system that requires human energy with a system that can perform all or most of what the human does using a machine. note that, the machine too, like the human, needs to expend energy and therefore, the machine too, needs a 'source' of energy to move it across itself to do 'work'.

Also... data has it that more than 75% of the world's energy comes from a finite endowment of fossil fuels today. The "act of getting it together", the transportation sector, it's energy needs are met by liquid fuels. The topic of how fast other alternatives must come online in an environment of growing economy, etc., has been beaten around enough that we're ready to make cakes out of the topic.

so, sorry to burst your bubble. Automation isn't going to help. Servers and Cloud computing too won't help. i wonder how the internet will fall apart. Will it be like that librarian in H.G.Wells' Time Machine?

IMO. a college degree is a way of making sure the people you hire are from a certain socioeconomic class (with a few exceptions, of course).

The general principle at play with this is ancient. So, in more straitened circumstances, might not degrees that are now a dime a dozen become scarcer - and thus more usable as markers - however perverse that may seem? I'm thinking here about draconian, rigid medieval trade-guild laws, sumptuary laws (e.g. no wearing of fur trim unless you were of a certain rank), and the like, which were meant to keep people firmly in their "proper" places, and to make each person's "proper" place visibly and instantly known to others. Surely, should baccalaureates become too rare to sort out rank amongst foremen who have no genuine need for a degree, "certificates" will be (have already been) invented, or the meaning of a baccalaureate will be diluted, to fill the need.

It seems as though people always find ways to sort out position and rank in the relevant sense - so much so that one could think it must have survival value. However politically incorrect it might be to think the thought, maybe it often didn't work out very well to have key decisions made by some idiot chosen at random (or chosen "democratically" on shallow personality traits of the sort that are nowadays telegenic and thus win elections.) Maybe even hereditary rank, which intuitively seems like a poor measure since traits are only partially heritable, proved to have more survival value than no assessment at all. Maybe social "evolution" discovered that the guy who, in modern terms, can't even figure out getting the noon bus underway when the big hand and little hand are both on the twelve, shouldn't be making any but the very simplest decisions.

It's almost as though the phenomenon were innate. I recall entering junior high school the year the powers-that-were ingeniously decided to randomize the class numbers to "hide" the tracking, i.e. "7-1" was no longer the "brightest" class. But funny that: at least down to around what would have been "7-8" or even "7-10", there was little disagreement on the sequence - no one was fooled. (Beyond that, all the way to "7-22", hardly anyone cared.)

Yes, I think it will work out that way. But college degrees won't necessarily be the marker. For one thing, they are not rare enough. There are still lots of people around from the days of cheap fossil fuels, and will be for some time. A young person will need something else to stand out.

And I think the economics will prove...uneconomical. Most people won't be able to afford the years of nonproductivity that education requires. Heck, society probably can't afford it.

We will no longer be competing with everyone in the world.

Unfortunately you will be competing against everyone else in the world, and unfortunately, U.S. secondary schools are no longer competitive in the global context.

Students can graduate from grade 12 without actually learning anything, which is why some companies I worked for insisted on at least some post-secondary credentials for any job at all. People with only high school graduation were considered only qualified to flip burgers and sweep floors until they demonstrate otherwise.

...keep up with those millions of Chinese and Indians who are willing to work for a tenth of your salary.

Those millions of Chinese and Indians with college degrees are not willing to work for a tenth of a U.S. salary. An MBA graduate from one of the top 5 Indian business schools can expect to find a job in less than 4 hours, so they have been successful in biding up the price considerably, and U.S. universities are still recognized as being among the best in the world (albeit among the most expensive). However, a U.S. high school dropout will find himself competing against people willing to work for a tenth of his salary.

Students can graduate from grade 12 without actually learning anything, which is why some companies I worked for insisted on at least some post-secondary credentials for any job at all.

People can graduate from college without actually learning anything, either.

People with only high school graduation were considered only qualified to flip burgers and sweep floors until they demonstrate otherwise.

I know some college graduates I wouldn't trust to flip burgers. IMO, everyone needs to 1) be trained and 2) prove themselves qualified apart from the piece of paper.

However, a U.S. high school dropout will find himself competing against people willing to work for a tenth of his salary.

I don't think that's true. I think globalization is already collapsing, and this will only accelerate. I know, you don't think it can happen. They didn't think it could happen on the eve of WWI, either.

People can graduate from college without actually learning anything, either.

That's true, but only for certain colleges, which is why a degree from those colleges is worth nothing. There's a lot of effort devoted to rating colleges by both prospective students and employers.

I know some college graduates I wouldn't trust to flip burgers.

That's true, and that's why they are delivering mail for the post office.

I think globalization is already collapsing, and this will only accelerate.

I was thinking about this point last night. It occurred to me that globalization is really only collapsing for the U.S. It is going extremely well for the Chinese and Indians.

What got me thinking was the recent deals in the Canadian oil sands. The Chinese are very quietly buying up control of as much of the oil sands as they can, without making it obvious what they are doing. However, there have been three mult-billion dollar deals in the last few months, and likely more are to follow. They don't really buy a controlling interest, they just buy enough to get a major say in what happens.

One commentator made the point that the Chinese are not only bringing money to the table, they are bringing expertise in cost reduction as well, and in the long term this will be extremely useful for the projects they are investing in - probably more important than the actual money. High costs are the biggest problem in the oil sands.

It's a dangerous illusion to believe the Chinese and Indians are competing on low wages alone. They are also being very innovative in reengineering business processes to reduce costs and bring useful products to market at much lower prices than anyone else can do. This is why there is such a huge demand for engineers and MBAs in China and India. It takes a lot of talent to design and produce a cheap product.

That's true, but only for certain colleges, which is why a degree from those colleges is worth nothing.

Disagree. Some of the most "valuable" colleges have produced some of the least valuable employees, IME. Probably the worst engineer I ever had to work with had a degree from MIT. The combination of lack of social skills and sense of privilege was brutal. He didn't last long.

It is going extremely well for the Chinese and Indians.

I don't think it is. It was. But I think peak oil is going to change that.

Indeed, early signs of the breakdown in globalization came from India and China. They blocked exports of food/energy during the recent price spike. They won't be the only ones.

People can graduate from college without actually learning anything, either.

Got one better for ya.

Electrical Engineering - got his degree and was in a masters program.

After spending 8 months on a project (I washed my hands of it with a flury of sound and hand motions indicating I was washing my hands 'till they abandoned their proposed method and followed my advice - which when they did I had 80% completion in 2 weeks and the final version in 5 weeks total) the grad student was busted down to floor moping of hydraulic oil.

So the hydraulic control system was on display for walk-thu's and he was asking 'what is this and what does it do' questions. In the center was the +5 +12 volt DC switch supply module. He pointed at it and asked 'what is that' and 'what does it do'

Your entire sophmore year of Electrical Engineering is all 'bout thevinin and norton power supplies and what they do.

Last I saw him with his EE degree - bus boy at local restraunt.

I ask a simple question, what are there bachelor's degrees worth? 50 years ago with a competitive system of entry and 10% of the population going too University then the average IQ would have been around 120 for the entrants. In these more egalitarian times of trying to raise the numbers of people going to university is to lower the standards, along with those more pernicious affirmative action, under the illusion that the more people we have in university the more egalitarian the system is. What you do is lower the standards and the pass marks to make the facts fit the fantasize. If you have an average IQ then being a mail carrier would most likely be the measure of your ability even if you had a Phd in social studies where opinions matter, and not facts or ability, and you are marked accordingly.

Building Is Booming in a City of Empty Houses

The chance to make money on the next housing boom “is like it’s never been,” Mr. Lee, a real estate promoter, assured a crowd of agents, investors and bankers. “We’re going to come back like you’ve never seen us before.”

Home prices in Las Vegas are down by 60 percent from 2006 in one of the steepest descents in modern times. There are 9,517 spanking new houses sitting empty. An additional 5,600 homes were repossessed by lenders in the first three months of this year and could soon be for sale.

Yet builders here are putting up 1,100 homes, and they are frantically buying lots for even more.

Speculators are supposedly bidding up the price of foreclosed houses, making it cheaper to buy new.

Something is not adding up here, but I'm tired of math.

I still have no clue what's going on with the economy. Overall, I get the impression that things are improving. My friends who were out of work for months or even years are getting jobs. They're buying cars and houses again. Malls and restaurants seem busy. OTOH...state budgets seem like they're in more trouble than ever. I got an e-mail this morning from a company I did business with years ago, basically begging for donations because of "financial stress." Denninger has put out another "stock up on cash and guns" call. And the financial markets are just weird, with that strange and still unexplained "flash crash." Seems like Greece, Spain, Portugal, etc., are far from contained, though Main St. USA couldn't care less.

Well, the whole idea is to get those with any discretionary cash or credit left to get busy spending.
Greyzone has some interesting observations on how that is being accomplished:

Denninger waxes hyperbolic as usual, but if you want a wide and deep picture which includes energy, and environmental awareness with your economic analysis, then the clear elegant prose from Stoneleigh at: http://theautomaticearth.blogspot.com/ is still the best source, IMHO.

I think Denninger and Stoneleigh are both right on the fundamentals, but so far, they have been wrong on the timing. And that's the big question, really. Fiat currencies don't last forever, and in the long run, I think Jeff Rubin is correct: we will see the collapse of globalization. But will it happen in a timeframe I have to worry about? I dunno.

"I dunno."

Neither do I.

But, if the delusion that supported the recent economic optimism, and the resulting sucker's market rally extension is about to finally collapse, then as Stoneleigh suggested, the extra time gained for preparation, if utilized for that purpose, will end up being far more productive than trying to keep a horse running to a market top.

I dunno, but to me her stated economic expectations, or predictions if you will, seem over-all remarkably prescient.

But whatta I know?

That's the thing isn't it? The math (Chris Martenson, Albert Bartlett et al) pretty much prove that we're in for a world of hurt.

This puts me in a schizophrenic mindset. I see BAU chugging along and yet I'm quite sure that it can't continue. Heck, I'm not even sure why it works as well as it does, even now!

I no longer think that we will see the direct effects of PO, at least for quite a while. The underlying rot of the economic system (mostly unrelated to PO) will cause the system to collapse, rather than falter. This will lead to inter-country and intra-country conflict. The Richard Duncan scenario may be either masked or eclipsed by the economy and geo-politics.

So, I think the potential timeframe is very soon, perhaps two years or less. The actual timeframe will be determined by some exogenous event. Greece? Spain? Pakistan? Iran? Israel? It could be as simple as the bond market realizing that they are not going to get their money back.

I'm no spring chicken and I think it will significantly affect me, but to borrow a phrase from Dimitry Orlov, all predictions are +/- half a decade.

It's simply too complex and much information and many intentions are being deliberately obscured.

Rumors from manufacturing are that electronic parts from China are backordered eight weeks to six months. This with a smaller U.S. manufacturing base than we had going into the recession and general sense of "manufacturing jobs aren't coming back".

Possibly, China now has a smaller manufacturing base than it did going into the recession.

Rumors from manufacturing are that electronic parts from China are backordered eight weeks to six months.

Yes, and newly announced parts seem more often unavailable. The recession must be easing in that respect. Such things have been par for the course for decades, from long before China was involved. It's a bit like drilling new oil wells - it takes time to ramp up, you don't just turn a faucet. In other words, yes, at least temporarily, until they get 'mothballed' equipment replaced or back into shape, they may well have a smaller base.

from where I am it seems the same or worse. just relocated temporarily from Spain to Ft. Lauderdale and i've never seen so many able-bodied adults working by waving signs for businesses alongside the boulevards. then alongside them are many homeless people in medians with their own signs. and then veterans selling some kind of veterans newspaper in the medians and walking in between cars stopped at lights. it is insane. lots of 'for sale' signs on homes, lots of empty strip malls and closed restaurants. as you go west, the main retail landscape is mainly comprised of thrift shops, pawn shops, dollar stores, fast food and payday advance places. this was out in a place called Lauderdale Lakes. i felt like i was in another world.

living here without a car - one of the most hostile places i've even seen to pedestrians and cyclists. really hostile...

anyhoo, i hope somehow the trillion dollar status quo holds up long enough for my grand psycho plan of cashing in all frequent flier miles to go on a round-the-world trip (i'll be reporting back on interesting resource depletion stuff I see, I promise!) then return and sell my house in Silicon Valley. values are holding up there for the moment so my fingers are crossed that the trillion dollar façade holds up until jan. '11 when the renters' lease runs out and we can cash out and go 'all cash'.

will be doomstead hunting at that point, but probably not in USofA. "Palin For President 2012!!!"

I think it is simply the American culture of "New". Even if it costs more money, Americans like the idea of the "New Car Smell", the "New House Smell", whatever.

I work in an area with several giant office parks in which the overall vacancy rate is 25%. Over a million and a half square feet of "Class A" office space are vacant within a five mile radius. There are literally transparent office buildings around here. The buildings were built but the interiors left unfinished waiting for the first tenant to choose wall configurations.

In the face of all this, a developer is putting the finishing touches on a 300,000 square foot, 11-story building that was built on speculation. As far as anyone knows, not a single square foot has been leased yet.

The irony of all this is that people are excited about the future of the area because of the purchase of a 400 acre piece of empty land and a planned huge office/hotel development there. The company that purchased that property: Conoco-Philips.

Go figure.

Sometimes, for entertainment, and when it's raining and I can't work outside, I watch HGTV - they occasionally have programming dealing with renoovating or fixing up older homes, and I've learned quite a few tips watching that.

Inexpensive home maintenance suggestions are very much on my mind, at the moment, since my house is 105 years old.

The shows which blow me away, however, are the ones where people go around looking to buy property, sometimes holiday properties hundreds of miles, and a 'plane ride, away.

The waxing orgasmic over the double-high ceilings, the stainless appliances, the granite countertops...it's like watching the Cartoon Network...

Actually, the only show I watched which seemed real was set in Croatia, IIRC, and they took the buyer to a property with no running water - just a garden hose coming into the bathtub from outside. The look on his face was priceless...

Croatia has a good chance. Nice realistic people. A bit hilly. Good food, beer and wine. Joe Bageant would approve..


I have seen this too on HGTV, it is like a throwback to "Only Yesterday", a return to a time before the economic crisis, nothing has changed if you return to the fantasy world of HGTV.

The worst is "Antiques Roadshow" where some obscure piece of jewelry, furniture, or a blanket is given as worth what would have been idiotic prices even before the economic crisis, and would be worth far less now, but the owner is assured that "at auction, this would bring..." and then some totally fantastic amount of money is given!

On old houses...I recently shopped a beautiful historic old brick home of modest size in Elizabethtown KY, (and as an aside, I think the Ohio River Valley and central KY, southern IL, southern OH, southern IN are among the most sane and sustainable places on the face of the earth), but the banks are TOTALLY not interested in loaning on old houses, they are involved with the builders on these new cheezy cartoons of decent homes, hugely expensive but real crap building, thrown up almost overnight and packed together like eggs in a carton...for that slop they will loan you the money...(!!!)

Needless to say, I didn't get this beautiful old art piece of a home, and rather than discount the price, the owners are now trying to rent it out at about $1000 per month...complete insanity, if we had a sane banking system it could be bought for $500 per month in payments!

We are nearing the limit of what the economy can endure, as the sellers and banks refuse to be reasonable and more and more people are being considered "sub prime" the market is all sellers, no buyers. I don't think a market can be made in such situations if I understand the whole idea of markets, but apparently the "brains" are going to try...total insanity.



I'm sorry you didn't get your old house. Sounds beautiful. While they do have their issues, I'm pretty certain that a house which has already been standing for a hundred years ought to make it another 25.

I love seeing the solid old wood beams in the basement, and in the roof structure. And they built smaller. Much more manageable. Although, of course, today, people want bigger and "better". They also had good ways of managing air-flow. I don't use air conditioning, since I figured out how to open the windows in such a way as to create air-flow in the house at night, cooling the house.

The basement area has a sufficiently high ceiling to be livable, and is cooler in summer. The warm air rises to the upper levels. In summer, it can be vented out through the upper windows.

Buyers would probably scoff at my "small" bathroom. No double vanity or separate shower. However, I didn't buy it to "flip" - I bought it because it had a reasonable "footprint", in a decent, if not so affluent, neighborhood, near pubic transit, and enough garden to grow stuff.

I lived in a new-construction condo building before this - the brick-on-concrete-block facade was starting to crumble after just 5 years. Shoddy workmanship !

Couldn't agree more...the one I was looking at was under 1600 feet including basement and felt twice as big as some of the newer development homes and they were over 2500! The one I wanted was a two story and as you pointed out, in the summer you can open the upstairs windows and downstairs doors and it is like a thermal chimney pulling the heat upward...it also sets in mature shade, which is priceless!


RC - I agree that the lower Ohio River valley is the most undiscovered place in the continental US. A reasonable climate, generally good moisture for growing (the soil needs some work in some places), lots of fish and game, timber and coal (high sulfur, but when the crap goes down, we'll be burning it in our stoves.)

On top of that, the real estate prices are still somewhat sane. You can get a good house on a few tillable acres for about $60,000 in southern Illinois. If you don't mind living in a dying little town, there are livable houses for $15,000. The issue at this point is that there are very few jobs, but when there are not "jobs" anywhere in the country, this would be a good place to hide.

And the Ohio river! Lots of freshwater and with a little sailing skiff a person would still be able to travel some distance with no fuel consumption (just not fast!)



Well basically what we have going on is massive malinvestment because we really don't have anything like a true free market, properly regulated, in this country - especially when it comes to real estate. Virtally all home purchases are now backstopped by the Federal Reserve (which in effect means the taxpayers - you and me). Combine this with low rates and it means we continue to have homes being built that shouldn't be built, and people with mortages that shouldn't have mortgages. It's a complete misallocation of resources and it's brining this country to ruin.

IMHO Las Vegas is finished. The basic, fundamental reason why is that in the world in which we are headed, nobody is even going to have money to make the trip out there, much less gamble away their hard earned cash once they get there. Moreover, if anything we might see gambling open up in many more states/jurisdictions that are starved for funds.

Combine this with sprawl and water issues and there is no reason anybody should be buying a home in Las Vegas. Of course, people are what they are, they are not rational, and they can't be blamed for that.

As more oil spills onto the coast, many people here grow more frustrated, more angry. They're afraid waves of oil coming ashore could soon kill their livelihoods.

"BP did this," said one fisherman. "They destroyed us."

As much as BP is directly responsible for the spill/accident, its really too simple to put all the blame on them. The fact is, BP isn't drilling in the Gulf because they enjoy it. If there was no demand for oil, there would be no need to attempt feats like deep water drilling. Its convenient to point the finger of blame at BP, but last I checked, fishing boats tend to run on gas. The truth is, everyone who consumes oil, including myself, is to blame for the spill.

"We did this" said one fisherman, as he got out of his F150 and walked over to his trawler. "We're killing ourselves."

For anyone interested in CO2 levels, here is a great website.


As of April of 2010 the CO2 level is 392.39 and last april's was 389.46, which is a one year increase of 2.93 ppm!

Keep in mind that in the early years of CO2 record keeping in the late 50's it was less than 1 ppm added per year. In the 70's it went up to approx. 1.5, 80's closer to 2, 90's 2+ and now we are increasing by 2.5-3 ppm increase per year. The reason why is two fold. More annual emissions and a bioshphere less capable of absorbing CO2 due to deforestation and acidifying oceans.

That website also shows that March of 2010 was the warmest March ever recorded in 131 years of record keeping. It was 1.39 f degrees warmer than the average March for the years spanning 1901-2000.

Another one for the "just when you thought it couldn't get any worse" file, here comes tropospheric ozone:

So what are the effects of ozone? There are two absolutely stunning EPA documents linked to at the end of this post - the italicized statements in quotes that follow are excerpts taken from them. The conclusions are catastrophic as stated, without even considering that the published studies summarized in these reports are using even older data in some cases gathered a decade or more ago - and so as with everything in climate science, from ice loss to severe storms to methane release, the situation is actually much worse than described...or predicted.

"In compiling more than 55 studies, Wittig et al. (2007) reported that current O3 concentrations in the northern hemisphere are decreasing photosynthesis (-11%) and stomatal conductance (-13%) across tree species. They also found that younger trees were less affected than older trees."

The statement [in bold] was written in 2007 as a compilation of even earlier studies - and is an example of observations that are no longer true, which can be readily demonstrated in any cursory inventory. The foliage of trees of every age is equally damaged now, as are the leaves of annual plants - and have been rapidly deteriorating since 2008. Whether this is due to the inexorably rising levels of background tropospheric ozone, or the government-mandated addition of ethanol creating emissions of acetaldehyde, or a tipping point through some synergism of other factors, I cannot say.


I have been looking into tree sensitivity to pollution ever since I realized that the trees are not only growing more slowly, they are actually dying at a rapidly accelerating rate. This is being reported from all over the world, not just around my farm in New Jersey. Every species of every age is in decline, as is the understory of the woods. It is well documented that ozone interferes with the ability of vegetation to photosynthesize by damaging the stomata of foliage and needles.

Because the recent decline is proceeding at a truly astonishing pace, it is possible that some wide-spread change in the composition of the atmosphere is responsible, perhaps from biofuel emissions, or a disruption of the nitrogen cycle, or heavy metal contamination such as mercury, reacting to increased UV radiation. A recent line of inquiry involves the influence of chlorine. It is critically important to determine what is killing trees, because they are the foundation of the ecosystem and without them it will collapse.

Last year, in the summer of 2009, even annual plants showed the unmistakeable symptoms of exposure to toxic greenhouse gases, which is a stippling of the leaves and loss of pigment, wilting, and in extreme cases shriveling into brown webs. Crop losses were disguised by the USDA and blamed on weather, but if we do not recognize this problem, famine will be the result.



I have been looking into tree sensitivity to pollution ever since I realized that the trees are not only growing more slowly, they are actually dying at a rapidly accelerating rate.

Flying over the Sierra Nevada Mountains two years back I noticed huge swaths of trees that looked dead or dying - that kind of pale reddish look they get. I wondered what was causing it, but didn't realize the problems of dying trees was a global problem.

I think the Mayans were right when they predicted a consciousness change to occur during this time period. And it would seem like it will be a simple change in perspective, but huge in its magnitude. That we will go from a man 1st, planet 2nd attitude, to a planet 1st, man 2nd declaration.

However, it probably won't be an easy transition. Too much has been banked on eonomic growth by whatever means necessary, and too little on any kind of concerted plan to see the folly of this ongoing progression as it continues to degrade the planet in overshoot. Negative feedback from responding natural forces will have to smack down our specie in the harshest manner imagineable - a high proportion die off - to then move our consciousness on a large enough scale into a new paradigm of planet first.

The Mayans predicted the change in consciousness could be simple if it was accepted easily, or be very rough if we did not. At this point it seems a foregone conclusion the transition will have to be very harsh. Batten down the hatches.

I always liked the posts of Humbaba. Where are you, my friend? I hope all is all right with you.
I specially liked his line
have you reduced your lifestyle today?

Aaahh! Zapatero, the President of Spain this week reduced our lifestyle, by shaving off 5% from the salaries of the public workers and state pensions, and doing away with frills like the "baby check", euros 2400 that new mothers got when they gave birth.
He's in a meeting now with his thinking heads to see how much he can put up income tax and other harsh economic measures.

And all because Obamán phoned him. After a quick change of underpants ZP hit on this sure fire solution, Humbaba's, to the economic ills of Spain. Perhaps for all of Europe: ash and sackcloth.

Bravo on the birth thingy.

Two features in the Toronto Star this weekend about the pitfalls of "green" construction and renovation. It seems that the new school interest in heat pumps, solar, and energy efficiency has created openings for old-school style contractor rip offs.



Spain’s Jobless Find It Hard to Go Back to Farm

PUERTO SERRANO, Spain — During Spain’s construction boom, Antonio Rivera Romero happily traded long hours and backbreaking labor in the fields for the better-regulated building trades, earning four times as much as a bricklayer. He took out a mortgage and enlarged his house on a quiet side street in this small city in southern Spain.

Now, with the construction jobs gone, Mr. Rivera is behind on his bank payments and eager to return to the farmwork he left behind. But Spaniards have been largely shut out of those jobs. Those bent over rows of strawberries under plastic greenhouse sheeting or climbing ladders in the midday sun are now almost all foreigners: Romanians, Poles, Moroccans, many of them in Spain legally. “The farmers here don’t want us,” Mr. Rivera said with a defeated shrug.

Yes! And we don't even have the option of going to the USA to pick up vegetables: seas worse than the desert separate us.
For a (mostly) photographic essay on Central American workers picking up vegetables in Florida, see here.
Nación Apache
Braceros centroamericanos en la Florida

Don't miss the photo of one of them, who instead of picking vegs decides to pick the pocket of a mate!
If you can read some Spanish you will see, perhaps with amazement, that the marielitos Cubans are not happy with the centroamericanos in Florida.

It's quite similar in Finland: picking strawberries was considered the summer job from hell, as it involved squatting in the sun all day and getting stung by wasps and nibbled on by horseflies for very little money. Well, as far as I can tell, a lot of strawberry farmers don't even try to hire any Finns any more, as Russians, Estonians and Poles are more than happy to do the work, and they don't even want any days off!

What is more, at many farms even the supervisors are Russians who speak little or no Finnish, so employing Finns (few of whom speak Russian) has become impracticable. When things get a lot worse, it is clear many Finns will resent the fact that so many foreigners have work, even though it's the sort of work Finns didn't want to do before. Probably the same in most western countries.