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Drumbeat: May 24, 2010
Posted by Gail the Actuary on May 23, 2010 - 10:16pm
The U.S. Department of Energy Secretary Steven Chu will travel to Houston tonight as part of his ongoing work on strategies to stop the oil spill. Secretary Chu has been working with the Department's National Laboratories and other top scientists to help BP determine how to stop the leak, and exploring ideas about the most effective scientific and engineering approaches to the problem.
Secretary Chu was originally planning to travel to China this week, but postponed the trip at the request of President Obama to continue his work on response efforts to the BP oil spill. The Secretary was scheduled to visit Beijing and Shanghai to discuss further progress on bilateral clean energy cooperation.
BP Pledges $500M to Study Oil Spill's Impact on Marine Life
BP on Monday pledged to spend $500 million for independent research on the Gulf oil spill's impact on marine life.
The energy giant said in a press release Monday that the money will go toward a research program to study the effects of the April 20 oil rig explosion on marine and shoreline environments of the Gulf coastal states.
Spill May Force Long-term Rise in Insurance Cost
The price to insure offshore rigs will almost certainly rise as the accident's cost to the insurance industry becomes clearer. Premiums may remain permanently higher if the investigation of the disaster reveals previously unknown dangers, or if the inevitable legal wrangling breaks new ground in assigning blame more broadly than insurers expected.
BP Continues to Develop Top Kill Ops
Work goes on to optimize the oil and gas collected from the damaged riser through the riser insertion tube tool (RITT). The collection rate continues to vary, primarily due to the flow parameters and physical characteristics within the riser.
In the period from May 17th to May 23rd, the daily oil rate collected by the RITT has ranged from 1,360 barrels of oil per day (b/d) to 3,000 b/d, and the daily gas rate has ranged from 4 million cubic feet per day (MMCFD) to 17 MMCFD.
Analysis - BP's Success Continues Despite Tragedy
BP produced 4 MMboe/d in 2009, an increase of 4% on 2008, and its 17th consecutive year of increasing reserves. BP intends to start up a total of 42 new major projects between 2010 and 2015, which are expected to contribute about 1 MMbbl in total production by 2015, more than offsetting the decline from currently producing fields.
The supermajor also announced its Q1 2010 replacement cost profit was $5,598 million, compared with $2,387 million a year ago, which is an increase of 135%. Full year replacement cost profit for 2009 was $14 billion, down 45% on the record full year profit of 2008, mainly reflecting the weaker market environment of lower average oil and gas prices and depressed refining margins.
BP hits 52-week low as energy sector slides
BP PLC led oil and gas stocks lower Monday, falling to a 52-week low as it faces mounting costs and criticism for its response to a vast oil spill gushing for more than a month from its ruptured well deep in the Gulf of Mexico.
Shares of Transocean Ltd. (RIG 55.83, -3.41, -5.76%) , the company that owned the Deepwater Horizon rig chartered by BP to drill the well, were down 2.2% at $57.95, also a 52-week low for the stock.
Sharp-Elbowed Leader Brings Oil-Patch Swagger to Wind Group
Now in her second year at AWEA, Bode leads the organization at what many see as a pivotal time for the wind industry. Congress is considering policies that could bolster renewables. Investments in wind businesses already have boomed, amplifying AWEA's size and importance. The trade group this week in Dallas hosts its annual conference and more than 20,000 people are expected. That is nearly triple the attendance AWEA had at its conference two years ago.
But wind also faces major hurdles. Despite a promising year in 2009, wind installations in the first three months of this year fell to their lowest first quarter level since 2007.
Western US grid could support 35% renewable energy, says NREL
The electricity grid in the western United States could support up to 35% of wind and solar power by 2017, without extensive additional infrastructure, according to the National Renewable Energy Laboratory (NREL).
The US Department of Energy’s research agency issued a study that said the target was “technically feasible” – but would require key changes in how the electricity network is operated in the mountain and southwest states.
Up to 30% wind energy and 5% solar energy penetration could be achieved on the grid with a better coordination of utilities’ distribution activities across a much wider geographic area, the research suggested.
It also recommends operating a schedule of generation or sales more frequent that the current hourly system.
Total to Develop Gas Field in Barents Sea
Total plans to develop the huge Shtokman natural gas field in the Barents Sea remain on track, with a final investment decision expected in 2011, Arnaud Breuillac, the company's senior vice-president for Continental Europe and Central Asia, said in an interview.
"Shtokman is not being further delayed," Breuillac said, dismissing rumors that the project was facing further postponement due to the gas price weakness after lengthy earlier delays.
Massey Worker Calls Mine 'Ticking Time Bomb'
In emotional testimony Monday before a half dozen members of Congress and Labor Secretary Hilda Solis, Mr. Stewart and five family members of miners who were killed at the mine testified about poor safety conditions at Massey's mine prior to the accident that they either experienced or heard about from their relatives.
Euro Crisis Scares Off Gulf Leaders, Delays Plans for Common Currency
Plans for a common currency in the Gulf are being put on hold while leaders study the development of the euro crisis.
As the Euro, the common currency for most members of the European Union, is being traded at record low levels against the dollar, leaders of the Gulf Cooperation Council, which includes Kuwait, Qatar, Bahrain, Oman, Saudi Arabia and the United Arab Emirates, are having seconds thoughts about the proposal for a common currency.
Kuwait Foreign Minister Sheikh Mohammad Al-Sabah was quoted in local media as saying that it would be irresponsible of the Gulf Cooperation Council to push ahead without studying the implications of the problems in Europe.
BP Delays New Attempt to Stop Oil Leak
Doug Suttles, chief operating officer for exploration and production, said in an interview on NBC on Monday morning that the top kill would be attempted Wednesday morning. BP had previously said it hoped to execute the procedure on Tuesday.
Treasury banks on an endless growth from China
THE most worrying aspect of Treasury's push for a resource rent tax is that it is based on a conviction that the boom will last for decades.
The rise of China and India is seen as a kind of manifest destiny that will lift Australia's terms of trade permanently higher.
Why Dunedin needs community boards for Hills, Cargill and South Dunedin
Those aware of the problems of our present unsustainable way of life know we are not only facing peak oil - we are facing peak everything. When we really, really, really needed a good stockpile of collective resources to help anticipate these problems and development alternative and parallel systems, instead we have recently had utterly folly-ridden councils which have put us up to our eyeballs in debt.
Leaking gas may give clue to size of gulf oil spill
A UC scientist proposes dragging methane sensors through the water, which could yield a more accurate measure of the slick. But, he says, the work needs to begin quickly before the plumes disperse.
Pacific climate change could drive droughts
Climate scientists are concerned a rise in temperature in the Pacific region due to climate change, could increase droughts in Australia.
Australia must do more to curb emissions: report
A new report commissioned by The Climate Institute says Australia's carbon pollution will continue to soar without price signals to make companies take responsibility for their emissions.
A new plant that turns plastic, food scraps and even human waste into fuel is humming away on the Kapiti Coast.
Underwater lab the first to plot impact of climate change on reefs
On an idyllic coral atoll just a two-hour boat ride from Queensland's Gladstone Harbour, out past the endless line of tankers queued to load coal for export, a half-dozen scientists work frantically against the tide.
Their objective? To explore the consequences of rising atmospheric carbon - which evidence overwhelmingly attributes to the burning of coal and other fossil fuels - on the delicate chemistry of the reef and the creatures living there.
Investigator Warned MMS in 2009 About Deepwater Gas Blowouts in Gulf of Mexico
A sixty-page memorandum addressed to Renee Orr, the chief of the leasing division of the Minerals Management Service (MMS), was sent in September 2009 by an environmental investigator, warning of potential disaster in offshore drilling operations and the particular dangers posed by gas hydrates.
La. won't wait for federal OK to erect sand berms
Louisiana Gov. Bobby Jindal says the state is not waiting for federal approval to begin building sand barriers to protect the coastline from the Gulf of Mexico oil spill.
Jindal's defiant comments Sunday came as oil pushed at least 12 miles into the heart of Louisiana's marshes. Two major pelican rookeries are now awash in crude.
Oil soaks coastal marshes, birds as spill grows
"As we talk, a total of more than 65 miles of our shoreline now has been oiled," said Louisiana Gov. Bobby Jindal, who announced new efforts to keep the spill from spreading.
With oil pushing at least 12 miles into Louisiana's marshes and two major pelican rookeries now coated in crude, Jindal said the state has begun work on chain of berms, reinforced with containment booms, that would skirt the state's coastline.
Jindal, who visited one of the affected nesting grounds Sunday, said the berms would close the door on oil still pouring from a mile-deep gusher about 50 miles out in the Gulf. The berms would be made with sandbags and sand hauled in; the U.S. Army Corps of Engineers also is considering a broader plan that would use dredging to build sand berms across more of the barrier islands.
Despite previous spills, oil cleanup research falls short
"We failed at preventing the spill. Now, we're failing in the response simply because we'd never gotten ready," says Richard Charter, oil spill expert for conservation group Defenders of Wildlife. "Nobody has invested in these technologies."
Federal funding for oil spill research was cut in half between 1993 and 2008, falling to just $7.7 million in fiscal year 2008, data from the Congressional Research Service show. Federal legislation introduced last year to bolster oil spill research has yet to pass. And oil companies have invested "little to no" money on spill response technologies, concentrating instead on oil exploration and spill prevention, says Robert Peterson, a consultant to the oil and gas industry at Charles River Associates.
White House: Oil Spill Isn't Our Katrina
White House press secretary Robert Gibbs told Bob Schieffer Sunday that the United States government is doing "everything humanly and technologically possible" to stop the oil leak in the Gulf - despite criticism that it has left too much responsibility to oil company BP and needs to do more.
"The Coast Guard was on the scene moments after the rig exploded in April, Gibbs said on CBS' "Face the Nation." "It certainly has been weeks, and the government is doing everything humanly and technologically possible to plug the hole 5,000 feet below the ocean, and to do everything we can to contain its spread and to deal with its environmental and its economic impacts.
U.S. Was Not Ready For Major Oil Spill
Some scientists researching the spill don't have the right instruments to measure the spill or to study its impact. Maps that federal officials are using to identify priority areas to protect from spreading oil are outdated. And the Coast Guard says the country lacks enough plastic piping, or "boom," to keep the incoming oil away from the coast.
BP Chief Warns New Effort to Cap Leak Isn't Guaranteed
Mr. Hayward said that an effort by BP to cap the well using heavy drilling fluids, a process known as "top kill" that's due to be implemented early next week, "would be another first for this technology at these water depths and so, we cannot take its success for granted."
Venezuela's Chavez Sends Crew To Cuba As Gulf Oil Spill Nears
Oil-rich Venezuela's President Hugo Chavez derided the U.S. Sunday over last month's drilling rig accident in the U.S. Gulf of Mexico, and said he sent oil experts to help its ally Cuba as the spill moves toward the island's northern coast.
Oil industry braced for report into offshore spill
The Obama administration will reveal the findings of its preliminary investigation into the Deepwater Horizon oil spill by the end of this week, delivering a report that is likely to highlight the risks being run in the oil industry.
Government slams BP for missed deadlines on spill
Interior Secretary Ken Salazar said Washington is frustrated and angry that BP Plc missed "deadline after deadline" in its efforts to seal the well more than a month after an oil rig explosion triggered the disaster.
Despite Obama’s Moratorium, Drilling Projects Move Ahead
WASHINGTON — In the days since President Obama announced a moratorium on permits for drilling new offshore oil wells and a halt to a controversial type of environmental waiver that was given to the Deepwater Horizon rig, at least seven new drilling permits and five waivers have been granted, according to records.
Louisiana Officials Threaten Action if Spill Response Proves Inadequate
Louisiana state and local officials continued to hammer BP and the federal agencies responding to the Gulf of Mexico oil spill on Sunday, repeatedly threatening to “take matters into our own hands” if the response fell short.
Chamber Attempts to Put Number on Energy Security
The study, by the U.S. Chamber of Commerce's energy-policy group, is slated to roll out this week with the aim of producing a data-driven definition for the politically hot term "energy security," which has bedeviled energy-policy debate.
The chamber's Institute for 21st Century Energy's "Index of U.S. Energy Security" uses 37 types of data from government and industry sources and certain nongovernmental organizations to create a single chart that maps the rise and fall of energy risks to the economy.
Stephen Eule, who led development of the index, said the collapse in oil prices from record levels in 2008 dropped the current level of energy risk to 85.6 on a scale that sets 1980—a time of high energy anxiety—as 100. But, Mr. Eule added, "as the economy recovers we are showing that energy security gets worse and worse."
Oil Trades Near $70 on Europe Debt Concern, Stronger Dollar
Crude oil traded near $70 a barrel in New York after falling on concern European sovereign-debt defaults will slow economic growth and cut fuel consumption.
Hedge Funds Sell Crude Fastest in Eight Months: Energy Markets
Hedge funds sold oil at the fastest pace in almost eight months, cutting their bullish bets by 32 percent as crude prices plunged on concern Europe’s debt crisis will hurt energy demand.
Sanctions hit Iranian oil production
Sanctions and underinvestment have cut Iran's oil production capacity by at least 300,000 barrels per day, depriving the country of billions of dollars of revenues.
The slow development of new oilfields and the poor condition of many existing wells have caused the fall, according to Iranian and western experts.
S**t hits the fan(belt): manure, sewage as biofuel materials
A recent issue of the American Chemical Society's Energy & Fuels looks at the potential for harvesting biofuels from municipal waste streams. As it turns out, raw municipal sewage has a substantial amount of lipids in it that lends itself to the production of biodiesel. Right now, biodiesel is largely produced from vegetable or seed oils, and the cost of agricultural products accounts for roughly 80 percent of the production costs. In contrast, municipal waste is something we currently pay to get rid of.
Lipids are actually extractable at two different stages of the process. The raw input (primary sludge) is about 15 percent lipid and cholesterol by dry weight, and this can be harvested directly. The treatment process allows bacteria to break down many of the organic compounds present in the primary sludge, converting some of them into the lipids that comprise the bacterial cell membranes. About seven percent of this secondary sludge can be harvested as lipids. The review notes that it might be possible to find or develop bacterial strains that like sewage and produce more lipids, which could up the final output further.
Apocalypse: Six Trends Converging on Collapse
There are dark clouds gathering on the horizon. They are the clouds of six hugely troubling global trends, climate change being just one of the six. Individually, each of these trends is a potential civilization buster. Collectively, they are converging to form the perfect storm--a storm of such magnitude that it will dwarf anything that mankind has ever seen. If we are unsuccessful in our attempts to calm this storm, without a doubt it will destroy life as we know it on Planet Earth!
1. Climate Change
2. Peak Oil
3. Collapse of the World's Oceans
4. Deforestation
5. The Global Food Crisis
6. Over Population
Energy sector Govt’s top priority: Gilani
Prime Minister Syed Yusuf Raza Gilani Sunday said on Sunday that the Pakistan People’s Party (PPP) government attaches top priority to the energy sector and every measure would be taken to end the load-shedding. “The PPP government has the capability and the will to resolve the crises and it would take the country out of current energy crisis as it had pulled the country out of other crises”,he said while addressing the inaugural ceremony of 62 MW Gulf Rental Power Plant at Eminabad, Gujranwala.
Gilani said Pakistan was not the only country to face power shortage, India was facing a shortfall of 50,000 MW while Bangladesh and Nepal also confronted a problem of load-shedding.
Ohio farmers fear a disastrous drop in business as some nutritionists give corn sweetener a bad rap
Davis, who runs his family's farm in Delaware, said the pressure on high-fructose corn syrup could take away a successful, profitable market from farmers, leaving them to sell their corn for other uses, such as ethanol production, feeding livestock or food production.
"When times are as tough as they are now, it makes it harder for farmers to survive, especially when you take away profitable markets," he said. "These companies are not basing their decision on scientific facts but on what certain activist groups are telling them about the issue.
Fiscal crises threaten Europe’s generous benefits
Now the welfare state - cherished by many Europeans as an alternative to what they see as dog-eat-dog American capitalism - is coming under its most serious threat in decades: Europe's sovereign debt crisis.
Iceland's ash cloud volcano 'dormant'... but scientists warn it's too early to say it's all over
Iceland's Meteorological Office said 'the eruption activity is minimal'. Civil Protection Agency official Iris Marelsdottir said: 'Now we can only wait and see. It's too early to say this is over, but at the moment it is quiet.'
Scientists say the level of seismic activity is decreasing and is near that recorded before the eruption began last month with the lava flow stopping completely.
Green entrepreneurs show business is blooming
After finding out that ground coffee dregs (and the caffeine contained therein) are a natural repellent for slugs and snails, Davis made a first, basic product, collecting dregs in bulk from local coffee shops. Researching the subject further, he saw a chance to use recycled, ground ceramics such as tiles and sanitaryware as a natural repellent. The ceramics are crushed into tiny shards that are too sharp for slugs and snails to tolerate, while the porous surface of the ceramic draws in the slug's mucus, causing the shards to stick to it.
His father's property business had foundered as a result of the recession and the entire family – including his horticulturist mother (also, fortuitously, an accountant) – had been looking for new ways of earning a living. "I just hadn't expected it would be through my little business," he recalls.
White House to propose more nuclear, renewable loan guarantees
The Obama administration plans to expand the US Department of Energy'sloan guarantee program, making an additional $9 billion available for nuclear projects and another $1 billion for renewable energy projects, under a pending war funding bill that Congress may take up before Memorial Day.
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Leanan is on vacation for a couple of weeks, so Drumbeat will be a group effort for a while. Debbie Cook and Prof. Goose (Kyle Saunders) are helping. I just now received some news items from aeldric, who writes for The Oil Drum: Australia/NZ. I'll add those with the next update. There may be others as well helping, as time goes on.
Many thanks to all!
Edit: Sorry the word count is wrong. The short HTML count indicates an HTML error--but I don't see one off-hand. - Got it fixed!
Gail, I found the HTML error. The URL for "Government slams BP ... " has a trailing double-quote-mark as part of the URL link. Remove it and you should be good to go.
So now they're going to make oil out of sh*t. But with reduced inputs from artificial fertilizer, we are going to start needing those nutrients to cycle back into the soil. We can't just burn everything all the time. We need food more than we need energy.
We have to start living in circles rather than lines, especially since the line we're on is headed right over a cliff.
I see ever increasing competition for what used to be considered wastes, competition mostly between use for energy production and for soil (as well as simple reuse...).
I fear energy will mostly win, since it is, by definition, controlled by those who have power and value what it can do for them to keep power.
But humans have lived most of their existence without electric power or liquid fuel. And we can live quite well with only limited amounts of these.
We haven't ever lived very long without food.
So now they're going to make oil out of sh*t.
Why not.....what could possibly go wrong?
2 proposals have been pitched for "lets make a fuel from energy"
The make ammonia from wind turbines (that one is current) and an older one that when I last dug about I could only find mentions to the 1970's conversion of seawater into fuel. Seafire,seafuel,sea-something.
I see ever increasing competition for what used to be considered wastes, competition mostly between use for energy production and for soil
And closing the soil loop is bad how?
Thanks for the reference to "seafuel"--hadn't seen that one before.
I guess I wasn't clear on the other point--we definitely HAVE to "close the soil loop": turn 'night soil' back into actual soil. We can't draw down tilth for ever without putting back something of what we actually took out.
Unfortunately, right now, we have so many pollutants in the sewage stream, we can't just dump it on fields without long term damage.
Ultimately, people have to be more careful about what they put into their bodies, not because of what it does to their bodies, but because of what it does to the earth that the body and its products ultimately turn into.
This is 180 degrees opposed to the dominant paradigm at this point, so will not be even remotely considered for a long, long time--too little, too late, as usual.
dohboi - Suggestion: Make an appointment for a tour of a state of the art sewage treatment facility. They conduct them on request. The advances in this field are seldom heralded as the business has a poor reputation (undeserved). What's sad is the fact that they could easily take the water back to tap with one additional step, however the stigma of toilet to tap has squeamish civilians spooked. This is ironic because San Diego is seeing cuts in water allotments up to 30% and more to come from the Colorado etc.
What do they do with the waste? Daily they have three tractor trailers load up tons of this "Human manure" for a long trip to AZ farms for fertilizer. If you want to see food grow use this stuff...but you're probably already loading up on this bounty without your knowledge. As my grandmother used to say: "A Chinaman would keep your s*&t alone!"
Joe
I am aware that sewage is used in some areas, but the last I heard, there were still many concerns about the heavy metals and trace drugs...in the muck. And I have heard about the separate water extraction issue. It would be great if we had a separate system so that could be used on trees and such to get around people's squeemishness.
"We can't just burn everything all the time."
Why don't you take your anti-American agenda elsewhere, you apple pie hating, puppy kicking communist.
This is the land of the free, where our corn goes into our cars, our sh*t goes into the ocean, and where tough choices are things we make our grandchildren make. Always remember "why put off until tomorrow, what can be put off until the day after tomorrow".
Awesome, just truly awesome!
Kick the can down the road.
Not just ethanol. I ran across this the other day. Kitty litter made from whole-kernel corn.
http://www.onlynaturalpet.com/products/Worlds-Best-Cat-Litter/118001.aspx
This just makes me shake my head. We have such an abundance that we let cats crap in our food.
We had a problem with the dog eating kitty-litter plus its contents. It turns out she thought the litter was food. Went back to traditional litter, and the problem went away.
Hey, why not! We crap in our purified drinking water!
The problem becomes whether the rich powers that be, want to have energy and food, or just want to see if they can reduce world populations enough to have their cake and eat it too.
Your statement about not living long without food, I am reminded that there is a lot of hungry people in the world and also a growing number of obese americans, and even food addicts( ABC news show I watched yesterday talked about this lady who was not obese, sometimes eating over 10,000 calories in a day binge eating( I watch the weeks news in bulk on the weekends so I can't remember which show it was)).
Not everyone in america is fat, there are hungry people here too, but we have so many more chances to get fed than most places.
So what will it be, land for energy or land for food? Currently we have about just barely fed the whole world with the arable land we have, I can't get an exact figure on the numbers, but it is close.
We need the foods we get from the world's water ways, be they fresh or salty, without them the world is likely to go hungry faster.
Isn't it great to be king.
Charles,
BioWebScape designs for a better fed and housed future.
Hi Charles;
It's worth considering too that even a great many overweight people are, in fact, malnourished. Sufficient calories doesn't equal a complete diet. Preaching to the choir, I know..
Oy..
Best,
Bob
A limited number can live with a limited amount of power and fuel. Our numbers ultimately must be governed by what the planet can produce in food, and that is impacted to a large extent, today, by the use of fossil fuel derived fertilizers and fuels. When the amount of energy decreases, so will the food supply; and our numbers must come down. The number of peole who can live on the food supplied will do okay... provided we are able to maintain some knowledge base and manage ourselves better than we have in the past. Otherwise, there will be endless wars for food and resources, determined by numbers of people competing for same.
We had our chances to convert energy supply sources to sustainable means... we declined to do so. BAU demanded growth, so we grew. Nature will, one day, demand our numbers shrink. And, shrink we will! Maybe slowly, over a long decline. Maybe fast in a sudden collapse. Time will tell.
Craig
New evidence of the link between rapid climate change and species extinction (as if anyone but denialists doubted it):
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/05/23/BAU21DILTA.DTL
"Fossils of small mammals excavated around a Shasta County cave tell a remarkable story of animal diversity and its loss when the Earth warmed abruptly after the last major Ice Age ended some 12,700 years ago.
The fossils reveal how the changing climate sharply altered the pattern of their distribution as some populations rose to dominate the landscape, while others - once dominant - diminished to virtual obscurity."
So, assured by the oil industry that it was perfectly safe, Obama OK'ed deep offshore drilling.
That went really well, so now, assured by the nuclear industry that it is perfectly safe, Obama is OK'ing expansion of support for nuclear projects.
Does anyone else see a pattern here?
To be 'fair' to BO - its the pattern associated with the Government/Business partnership.
But perhaps we should be asking the aliens for their power source eh?
http://www.theweatherspace.com/news/05-22-2010-UFO-Spiral-in-the-sky-see...
Or we could live to learn to live within a solar budget.
I'm not an aeronautical engineer, so take it for what it's worth. Looks like an ionic drive system and the sound is definitely a sonic boom. The radial light phenomenon looks like the same as an ion SCRAM drive or some such thing I caught in a Popular Science quite a while ago. Although, the vehicle appears to be moving faster than the speed of sound as it approaches, but that may be an illusion due to the relative light contrasts.
We - as in the general populace - don't know what it is, so that still makes it a UFO, but it has the appearance of human construction. Alien UFO's don't make sonic booms because they travel through physical space differently (not an authority, just made that up based on way too much UFO documentary viewing).
Cool video. Looks to be a hoax though. One giveaway is the so-called sequence "from the air", which is supposed to have been shot from an aircraft. That the background of the "from the Air" video does not move during the entire period suggests that there wasn't really a video made with a vantage point "from the air"...
E. Swanson
Given that TOD was accused by someone else as 'being into technofixes' and becoming a technofix haven - what better technofix than Aliens!
(Living within a solar budget looks to be the answer however.)
I see a pattern of compromise. But I would not worry too much about new nukes. They are quite expensive to build, even with federal loan garantees and federal caps on liability. However, the price for photovoltaic (PV) power is continuing to drop at a pace in keeping with its 40-year exponential history of cost-reductions. In essence; this translates to a 50% decrease-in-costs every-3-years for sun-derived PV electricity .
Given the emergence of ever-more potent quantum engineering ("old" example: the transistor) for electronic goods, it is very likly that PV will be cheaper than any new nuke that begins construction even as early as tomorrow.
The nuke wars are over. Fission is old-tech, while fusion-power via conversion of solar photons to electricity is taking off.
The Chinese are betting billions that this trend towards renewables will continue; so the Chinese have now moved into the global "driver's seat"; steering energy infrastructure towards their national interests. (Their national government is not a great friend of personal liberty, but it is also not beholding to American Energy Interests for re-election funds)
While the actual panels are still dropping in price, the installation expense is flat. This is drastically slowing the overall rate in the price drop of PV, making the 50% decrease in cost every three years no longer remotely possible. The installation expense is now a very large percentage of the overall PV system.
Of course this is most serious for home and small business applications. Large scale PV power generating is better because of scale.
I think an earlier post on TOD this month graphed out the manufacturing cost and installation expense history but I have not found it yet.
So Leanan is on vacation. That explains why an article published on May 20 was reposted up top today: Apocalypse: Six Trends Converging on Collapse. Only then it was called: "The Perfect Storm: Six Trends Converging on Collapse". I will add the same comment that I made then, they forgot one; the global financial collapse.
1. Climate Change
2. Peak Oil
3. Collapse of the World's Oceans
4. Deforestation
5. The Global Food Crisis
6. Over Population
7. Global Financial Collapse.
Now we have seven trends converging on collapse. But actually there are several others. There are:
8. Desertification
9. Falling Water Tables
10. Rivers Going Dry
11. Mass Extinctions
12. Top Soil Blowing and Washing Away
13. Lakes and Inland Seas Drying Up or Being Polluted
14. Atmospheric Pollution From Industry, Power Plants and Dust
And I am sure there are a lot more.
Ron P.
I noticed that repetition, too. Thanks for the cheery additions.
But at least it is one post that mentions GW/CC as a top threat--a topic generally conspicuously absent when L is away.
It looks as if Arctic Sea ice is melting at a rate that is precipitous even by recent extreme standards--http://arctic.atmos.uiuc.edu/cryosphere/IMAGES/sea.ice.anomaly.timeseries.jpg
Anyone want to join the grim game of guessing how little ice will be left up there by the September minimum?
Personally, I don't think that September ice extent is the most important, because there is very little albedo effect then (due to the angle of the sun). I think there will be real problems when the June extent gets low, as this is when the bulk of solar heating of open water would take effect.
Of course, ice extent is not really the most important metric to be looking at. Ice volume (or mass) is much more critical, as I think the ice will thin and thin, and then you will see extent fall off a cliff when the ice becomes so thin it will all melt.
The minimum sea-ice extent is the result of the entire summer's energy flows thru the Arctic climate system. The melting of the sea-ice integrates the daily fluctuations of insolation, clouds and albedo changes and the influence of greenhouse gases on the atmospheric energy loss to space above. The positive feedbacks internal to the climate system in the Arctic should result in sea-ice being the most sensitive visible indicator of climate change, IMHO.
We may be witnessing the beginning of another extra warm year, such as occurred in 1988 and 1998. That the sea-ice maximum was near the long term average this past Winter but is now below the extent for 2007 suggests that these processes are trending toward another record low in the seasonal minimum.
E. Swanson
Good points. Let me just add that the first time there is an ice free Arctic Sea, it is not going to be in June.
In Minnesota, the just had their first ever "Excessive Heat Warning"--and this is happening in MAY.
To paraphrase the old song --"Yes, it's gonna be a hellishly hot, lonely summer...."
http://www.youtube.com/watch?v=xIkUiD8N81k
If its gonna be ahot summer -perhaps I'll get some yield this year on my Luffa's tho.
And here I am freezing in inland northern california. We aren't supposed to break out of the 60's all week (should be upper eighties), nor did we last week. I looked at the weather map and noted that both Eau Claire Wisconsin, and Fairbanks Alaska were warmer than we -and we were having our warmest day of the week -and of the coming week according to the forcast. Rain in late May isn't quite unknown -but almost so (snow in the mountains). I'll bet the west to east contrast will drive some wild weather later on.
enjoy it while we got it
I have a feeling we're in for some "warm" weather soon enough
--the local weather channel explained that it is due to a large kink in the jet stream; it's dipping down into Mexico and then bringing the warmed air mass east to middle America while we in California get the dragged down Arctic effect
The meltyear can be heavily affected by a single months anomalies. I don't think that simple projection of the trend has much forcasting skill for the end of season.
I do agree, that using minimum ice extent as a proxy for warming isn't bad.
Yup. If you look at the daily extent graph, you see quickly that the sea ice was very slow to form, overall, then had a spurt of late growth that was confined primarily to the area between Russia and western Alaska, making it pretty much irrelevant to eventual sea ice minimum this summer.
The lateness of the sea ice growth also would suggest that thickness would be minimal, as the ice would have less time to thicken.
Add to that the survey done last year around this time exposing much of the ice the satellites thought to be fairly solid pack ice to be a lot more like swiss cheese, and you've got yourself hints of trouble.
http://www.time.com/time/health/article/0,8599,1956932,00.html
Let us then add in the new info on sea temps and flows of subtropical waters up the coasts of Greenland, and we're getting into "Ruh-roh!" territory.
Ocean heat content: http://www.realclimate.org/index.php/archives/2010/05/ocean-heat-content...
Greenland Fjords/Glaciers: http://www.livescience.com/environment/warm-water-melts-greenland-glacie...
To add insult to injury, we've got the hottest year on record shaping up, with the warmest April and May in the books, as well as the warmest Jan - March in the books globally. That puts us squarely into "Oh-my-freakin-goodness" land.
Take note that the Northwest and Northeast Passages are already, on eyeball measure, about 15 and 25% open already. And it's May.
Here's a sequence of May 23rd images for you. (Sadly, they didn't have 2009.)
May 23, 2006: http://arctic.atmos.uiuc.edu/cryosphere/IMAGES/ARCHIVE/20060523.jpg
May 23, 2007: http://arctic.atmos.uiuc.edu/cryosphere/IMAGES/ARCHIVE/20070523.jpg
May 23, 2008: http://arctic.atmos.uiuc.edu/cryosphere/IMAGES/ARCHIVE/20080523.jpg
May 23, 2010 (This is the daily, so will be changed tomorrow): http://arctic.atmos.uiuc.edu/cryosphere/NEWIMAGES/arctic.seaice.color.00...
As goes the Arctic, so goes the planet.
The Perfect Storm Done Made Landfall.
Cheers
One thing I've been wondering about for some time is that the Artic ocean is effectively a basin.
The North Alantic Gyre normally has saline water cooling and sinking well before its in the arctic.
Plenty of maps if you google but I did not find a good one to post.
In any case I've been thinking/theorizing that this warm salty water will eventually start sinking into the Arctic basin instead of in the historical pattern. If it does start going over the sill this will force a strong outflow current in the arctic as the stagnant bottom water in the Arctic basin is displaced. This should cause a rapid clearing of arctic ice.
A general article.
http://www.eoearth.org/article/Arctic_Ocean
Some of what I'm seeing right now suggest that this process might be happening with more water entering the Arctic basin than normal perhaps a lot more.
I think it is really a reprint of the article. I was debating on whether to mention it or not.
There are a bunch of problems. The earliest articles I wrote (not for The Oil Drum--for actuaries) talked about living in a finite world, and reaching its limits.
The story doesn't change, except for getting worse.
It really doesn't change once the whole picture comes into view, does it?
I've begun work on a video on collapse: the major theories that indicate why it will happen, what the fallout might be, etc. I'm leading with the likelihood of an economic discontinuity and then fitting everything into that because the economic climate will make a big difference to our response. It will include Ferguson, Greer, Diamond, Tainter and Duncan (at least). I'm reading Storms of My Grandchildren now and will likely include something from Hansen, too.
I'll post for feedback when it's ready (three to five weeks from now is my estimate).
BTW, for those interested, Ferguson's Ascent of Money: Boom and Bust is available at the PBS website in full:
http://www.pbs.org/wnet/ascentofmoney/category/video/
There is a two-hour and four-hour version. The original six-hour BBC version seems to be at the link below but I haven't tried getting it. It doesn't seem to be available from the BBC web site.
http://www.mytvblog.org/?p=2062
Second Edit: forgot to mention the Limits to Growth team and Orlov's five stages of collapse, which will also be included.
I'll primarily be using the numbers from:
Fiscal Crises and Imperial Collapses: Historical Perspective on Current Predicaments
http://www.piie.com/events/event_detail.cfm?EventID=152
http://www.youtube.com/watch?v=_aQ7nimVmXM&a=AIPP6vFK0P4&playnext_from=ML
lol. Thanks for the laugh...and it's a lovely song. After a wonderful 15 minute diversion looking for various versions:
Here is Chrissie Hynde singing it (from the comments of the one above):
http://www.youtube.com/watch?v=K7Qfqle_2Bs&feature=quicklist&playnext=3&...
Merilee Rush's version:
http://www.youtube.com/watch?v=y16Ac9O9Alc
Melissa O'Neil:
http://www.youtube.com/watch?v=Sphhk1CjyWw
Juice Newton:
http://www.youtube.com/watch?v=HTzGMEfbnAw
I think I still like the Juice Newton version best.
That's good, but Rush is the classic version I grew up with.
Dohboi, check out this find (full orchestra for Love is Blue):
http://www.youtube.com/watch?v=p9FYD1dlw4E&a=wB92xdV94fI&playnext_from=ML
Oh boy, the number of times I heard that as a kid while at Woodward's! It still triggers psychotic episodes. Reminds me of bad 60's clothing and stuffy old lady's perfumes.
Stein closes his article:
Pray tell, Mathew, what technology, and how to apply who's knowledge?
Your assertion that this oil spill may be the "wake up call" that motivates people to change is purely wishfull thinking.
This "Perfect Storm" is destined to run its course. We have no more chance of stemming its furry than we we did during the "Perfect Storm" of '93.
Best hopes for finding "safe" harbor.
Yes, Stein compares us to the German people who did nothing while the Holocaust was happening right under their noses. Not an apt comparsion if you ask me. "We", meaning this generation, are no more to blame than the generation that came before us, or the one that came before that. We are just following our nature.
Pointing the crooked finger of blame will get much worse as the collapse unfolds. Everyone will blame everyone else. Really who is to blame as the plague species expands its numbers well beyond what the planet can support? Only our evolutionary success is to blame.
Ron P.
I think there's blame to go around. Our government, in our name, hold people without charges in concentration camps, torture them and others, fire missiles into wedding parties and apartment houses (both in the war zone and neighboring friendly countries), ignore financial fraud and put the fraudsters in charge of a supposed clean-up, ease regulation of industry and give blank looks when industry screws the public . . .
What can the people do? We marched in the streets, we voted the scoundrels out of office. We should do more . . . commenting on the Drum Beat just eases the frustration a bit.
The rich own the government and the corporate media. Making a change looks like a slave revolt (which seldom succeeded).
Mudduck, all governments in all recorded history have misbehaved. Emperor Nero was a real scoundrel. I really don't think any of them contributed any more than any other the collapse of the world as we know it. Pointing the crooked finger of blame at any of them and saying: "It's all your fault" is more than a little silly, and... it is fundamentally incorrect. None of the world past or present leaders, Ramses, Nero, Attila the Hun, Napoleon, George III, Hitler, Stalin, Mao, Roosevelt, Clinton, Bush or Obama are to blame.
As for as preventing the collapse of the world as we know it by marching in the streets and voting the scoundrels out, I really don't think that will have much effect but by all means give it a try. ;-)
Ron P.
The point was, We marched in the streets and voted the scoundrels out already and, as you say, it didn't have much effect.
I know that governments aren't pure. It's just that I grew up during the Second World War when torture, village destruction, and reprisals were Nazi practices. The Nuremberg Trials and all that. As a retired copy editor, I expect a certain continuity within the text. American history has gone wrong.
I don't know Ron, I'm not sure what you mean by "your fault." It is no "one's" fault that we are going through peak oil.
But we can certainly hold our leaders responsible for the direction they took the country(world) at this point in history.
War for oil "security," no serious preparation at home, government-promoted and subsidized consumerism, financial casino regulations replace sound regulations (Glass-Steagall), housing fraud overlooked for years and even after Freddie and Fannie blow up, legalized mark-to-fantasy accounting, creating and bailing out TBTF banks, Finacial Weapons of Mass Destructions and their current detonations...
We had ass-hats for presidents, treasury and most of the key positions in congress for the two decades Hirsch said we should have been preparing.
I started using Perfect Storm in 2006 for all this, A Perfect Storm Cometh being the name of my blog. Is it possible to copyright a phrase for a specific situation?
;)
There was a book and movie by that name around 2000. Maybe its a good idea to check on that copyright ;)
I was being facetious, obviously, and, I said for a specific event. Well aware of the movie... which is why I use the name I do on my blog.
Cheers
My view is that major problems will begin when we wake up to the realization that some of the issues you mention have no fix. I think our mastery of technology will probably push that day out as far as possible and make the situation worse when it does occur because our civilization will be engineered to deal with BAU growth -with increasing efficiencies- rather than decline.
I have no date in mind for "Armagedon" (="the revealing") but I suspect we will be there sometime in the 2020s on a global perspective (I also think that some human defined Entropy will enable pockets of civilisation to continue -perhaps with a new set of values- amidst the chaos that surrounds it)
Nick Outram.
apocalypse = the revealing
A Financial Times columnist is saying:
Bad debt also threatens Europe’s strongest
According to zFacts.com today the US Federal debt exceeded $13 trillion for the first time and is approaching the 100% ratio of Federal debt to GDP,currently 87.6% as of May 15,2010 according to zFacts.com. If all the toxic debt and bad mortgage debt assumed by Freddie, Fannie, FHA and the FED were added, the Federal debt would be larger.
What do you expect them to write? Maybe now the cuts of Cameron will distract them from slagging off the Continental Europeans.
Sums up my position nicely. In case anyone cares.
"The Progressive makes History the center of his ideology," Macdonald wrote in "The Root Is Man." "The Radical puts Man there. The Progressive's attitude is optimistic both about human nature (which he thinks is good, hence all that is needed is to change institutions so as to give this goodness a chance to work) and about the possibility of understanding history through scientific method. The Radical is, if not exactly pessimistic, at least more sensitive to the dual nature; he is skeptical about the ability of science to explain things beyond a certain point; he is aware of the tragic element in man's fate not only today but in any collective terms (the interests of Society or the Working Class); the Radical stresses the individual conscience and sensibility. The Progressive starts off from what is actually happening; the Radical starts off from what he wants to happen. The former must have the feeling that History is ‘on his side.' The latter goes along the road pointed out by his own individual conscience; if History is going his way, too, he is pleased; but he is quite stubborn about following ‘what ought to be' rather than ‘what is.' "
Chris Hedges' Columns
The Greeks Get It
http://www.truthdig.com/report/item/the_greeks_get_it_20100524/
Modern scientists are more aware of limits to knowledge than the general public appreciates. There was a period of Newtonian science and progress that has faded now--brought down by quantum mechanics, chaos and complexity theories, and ecology. The good scientist is humble, uncertain, and professes the precautionary principle.
However, money is likely to flow to the cocky technologist employing the tools of science to help us gobble up the planet faster.
That's a really good topic to examine.
I do accept that science has had a maturing in the way you describe, but I also still see many samplings of that 'gush of hope'.. It has a LOT of momentum. I'd even take a stab at calling it a kind of 'faith' that our supposedly growing mastery over the elements will allow us to find some more rational form of paradise.. while the game still looks to me like the Red Queen's Race, pushing our little legs ever faster across finer specialties, and not actually getting anywhere new.
I do have a technologist in me, I like tools and materials sciences, but I also feel that we need to stop racing to get 'there'. We're here, and we need to accept that and take care of 'here', not trash it on our way to a fictitious 'someplace better'.
You also have to look at things from a game theory point of view. If you were a funding body, and industrial partner or a potential student, who are you going to want to work with/study under: someone who talks excitedly about the various prospects or someone who talks in measured tones about there are good prospects, but things are complicated and often don't go to plan? Almost everyone will choose the exciting guy. In this, science is like most other endeavours (for example, note how often the term "a safe pair of hands" is used pejoratively of players/managers in sport.)
Point taken.
It's hard to make 'restraint' into a thrilling pitch. It's gotta come from the other side. But even then, I think it's a symptom, the actual condition being our insistence on motivation and action, being part of a team, and making accomplishments, strides.
Tao te Ching - Chap eleven
Thirty spokes share a wheel hub,
it is the (empty) space (not spokes, nor hub) makes wheel useful.
Shape clay into a vessel,
It is the empty space within, makes it useful.
Cut doors and windows for a room,
It is the holes, make a room a room.
Therefore, what is there defines its form,
what is not there defines its use.
re.: Banks --> Calling "PERFORMING" Loans Only.... because the non-performers can't pay immediately.
Got Cash?
(emphasis added)
Otherwise known as "Extend and pretend."
Question: sell off his project to whom. Around here, nothing is selling, so properties just sit idle, unmaintained. It seems it would be better to find a way to keep the developer actively working the project. Also, is it smart (or even legal) to call in a loan that the developer is current on? It's not his fault the bank has solvency problems.
Maybe I'm missing something.
I'm sure it's not hard to find some loan covenants that have been broken, especially regarding the loan to value ratio. I think that the premise is the lenders/FDIC are trying to extract all the cash from solvent developers that they can. Another famous, and accurate saying is that a banker is a person who will lend you an umbrella when the sun is out and take it away when it starts raining. And generally when banks decide that they can't lose money in a certain sector, it's a sign of an impending crash in that sector.
"Question: sell off his project to whom. Around here, nothing is selling, "
There are people with cash who will wait for the distressed liquidations ("smart" money - wish I was in this group ;).
As for nothing selling, that depends ... my brother-in-law just sold his house for the asking price after one week on the market (suburb of Madison, WI).
The only problem is he is now going to buy another house with a huge mortgage... this inspite of the fact that he is very much PO-aware and believes we are in the process of collapse. But his wife is not convinced, and since she wears the pants (and the jock strap - with accessories), she makes the decisions.
We are seeing perfect examples of more complexity piled onto complexity. This leads to "The Solution is the Problem." We need "The problem is the Solution."
This is nothing more than an extension of the bailouts and the failure to clear the debt back then with mark to reality pricing of assets and liquidation. So now we're killing the healthy tissue to feed the dead and dying.
F'ing brilliant.
How about they just do what they should have done in the first place and liquidate the badly performing assets?
Cheers
Better regulation of banks may make their reported financial condition worse. From today's WSJ:
Financial Overhaul Puts Bank Ratings at Risk
Isn't that kind of the point of it, though? To expose the true credit risks that the banks have taken? If that means that their bonds need higher yields to sell, isn't that OK? The point is to get a clear picture of their risk profiles. If you want to borrow at low rates, don't take big risks.
You got it consumer. That is the point. Our entire economy rests on fraud right now and that is not at all hyperbole. The debt has to be cleared, and the bone-heads who caused it should eat it.
But no. Pig-Man Obama gets into office and his version of "CHANGE" is how much of the debt can be CHANGED from the bank's balance sheets to the publics balance sheet.
Denninger has outlined how the FDIC has not been doing its job of closing banks when they balance sheet demands it (by law). That is the main reason I think FDIC Chairworm Sheila Bair should not be included in Times "# women Leaders" cover last week.
Obama, Bush and Clinton should stand trial for treason, along with their treasury secretaries, most of the Federal Reserve board members, and of course about two or three dozen congress people from the last two decades (Gramm, Frank, Dodd....)
http://zfacts.com/p/461.html
Speaking of which, if you go to that link you'll see the US just passed the 13 trillion mark. Oh my! Greece, here we come.
A sign of the times, perhaps: a friend of mine here in Vermont mentioned the following to me in an email today.
"I asked the Vermont Director of Emergency Management why they weren't making any plans to deal with Peak Oil and she said, 'If we told people about Peak Oil there would be mass panic.' So, there's your governmental response - wait until there's a crisis, then deal with it (or not, as the case may be, e.g. Katrina)."
The ostrich syndrome alive and well in high places here in Vermont.
I'm been wondering about government officials' knowledge of peak oil for a long time. Are they really that ignorant or do they actually understand the consequences of peak oil but don't dare tell the public? I think that five years ago it was predominantly the former but more and more it's becoming the latter.
My take is that peak oil will come out of closet in the near future, not because government officials want to deal with the problem (they don't know how) but because the problem will be impossible to ignore. Get ready for increasing public awareness and acceptance of peak oil, it's just a matter of time.
Well, as Leanan is out today, I will present her case here as best I can:
Peak oil may never be acknowleged. We will simply have price spikes, leading to a deteriorating economy, and any lack of supply blamed on lack of investment due to the bad economy which was caused by the price spikes. We will just gradually get poorer, without Peak Oil ever publicly cited as the cause.
I guess the way I look at it is that even if a bunch of world leaders got up and started to talk about peak oil, that most people would just go deep into denial and haul out the usual strawmen to "prove" that peak oil is wrong.
It's not that they together don't dare tell the public. It's that each of these civil servants is reluctant to step forward and be the first to do so. With the exception of a certain elected official who is an OilDrum regular.
Apuleius, I think you're correct the overwhelming majority of the time. I've had more than enough conversations in which it became clear after someone got the whole picture that they lacked the courage to speak out.
I think what gave it away was something like "Peak oil really needs a big name like Al Gore to speak out on it." The obvious question I didn't ask was, "Why aren't you going to speak out about it?"
Not to forget that we've had PO floor speeches by Roscoe Bartlett for years.. the message has been presented, but has found few ears in congress where it's gained any traction.
I don't know that I'd call it courage as much as inspiration, someone who can find an angle to play it with where it has a chance to grab and not blow the rep's chance to carry it and not just get dismissed as a crank. You might have the rifle and the bullet, but if you don't have the target in sight, why pull the trigger and blow that one shot?
I don't know if it's hurt Bartlett or not, but I think that's the reason others have demurred so far.
Bob
That probably plays a role but don't you think it's really a facet of the same concern? The concern that we not look like a 'crank' is I think the operative part.
BTW, in case I'm coming off as judgmental I'd like to correct that. I deal with my own fear all the time and fear wins as often as it doesn't, whether it's while atop a hill on my mountain bike about to descend ("will I go head over heels?") or in front of a large audience about to embark on explaining a difficult topic like peak oil ("will they think I'm crazy?").
Of course much of any success I've had in my life was because at some point I acted even with the fear present. When someone pointed out to me years ago that courage wasn't the absence of fear but was instead acting even with fear, that put things in a lot of perspective for me. I saw that if I waited for the fear to go away I would pretty much not do anything worthwhile.
In any case, fear is a powerful damper on action and I don't begrudge people their grappling with it and the fear winning. It still does with me more often than I would wish.
Sure, Andre;
I have an acquaintance in the Maine Senate who is quick to confirm the high degree of terror that operates for the elected class. But also, has that ever been the case. I think the choices made and those avoided are thoroughly marinated in fear.. but I still think it plays out as 'Do I have a play here, or not?' or, 'Do I have a viable target in my sights..' to replay the previous metaphor.
More political leaders will only pick it up at 11:58.. and only if there's an established audience to cheer for it (IE, those already leading on the topic)
True story: I met a Minnesota state congressman at a party a year or two ago and asked him if he was acquainted with the concept of peak oil. He said "Oh, yes, we actually passed a resolution stating that it is a fact."
I had no idea they were tuned in. But it just points out that if it isn't covered in the media, it didn't happen.
I hope for her personal sake she was smart enough to to say that on her personal phone rather than in an email sent over a govt computer.
The closing price of WTI crude was rather strange today. The near term contract and the spot price for WTI always closes at exact same price except for the first three trading days of a new contract. But even those three days usually close pretty close, and nearly always in the same direction. Not today.
The June contract closed Thursday, so today was the second trading day for the July contract, as the near term contract. That contract closed up 17 cents at $70.21 per barrel. NYMEX Light Crude Oil However the spot price for WTI was down $2.08 at $65.96 a barrel. At least that was the last trade. Bloomberg has not yet posted the closing spot. Bloomberg Energy Prices
By Wednesday's close, they must close together so the price must close more than $4 before then.
Ron P.
Just wait and watch no friggin telling whats going on right now there are all kinds of imbalances for example Brent continues to trade at a premium to WTI. So you have a sort of crazy situation the WTI spot is suggesting that the futures go down while Brent trading at a premium should be forcing WTI up. And of course we have the even stronger coupling to the stock market and to some extent dollar strength.
In short a completely f'dd up situation at the moment.
In general however WTI seems to be on the verge of a price collapse if so god knows where the low is.
Just reading the market and ignoring my own thoughts n fundamentals I'd then say we are right in the middle of interesting times.
One thing I'm proud of is I've been saying for some time that we would have a shakeout or decision time for the oil markets about now. If the US is bluffing then the bluff is getting called right now. If its not well then we find that out.
So I feel like the oil markets are starting to function as real markets and doing price discovery. It could be a very wild ride so extreme volatility could well happen. Or a price crash or ...
I hesitate to even make any sort of guess about what happens next however I of course always have a pet theory :)
If I'm right and we don't have oil and the US is bluffing here is my guess on what might happen.
I think that the stock market is basically topped out and will trade sideways to downwards from here on out. On currencies at some point CB interventions will begin in earnest and at the minimum increase volatility so currencies could get pretty wild themselves.
I think all of this plus continued reports of a building surplus from the EIA will work to pull the rug out for oil and we will see a price crash.
However if I'm right and its actually basically BS and we really don't have the oil etc etc then I think we will see prices move up sharply after crashing. The basic problem is sure financial issues can work to crash the price of oil but then what a few weeks or perhaps 1-2 months later if we are actually intrinsically short oil then we are period.
Given the situation I don't have one theory here is the next one:
The next theory is that oil prices actually hold around 70 even as the stock market declines. Here we assume that the market slowly rolls off its peak value sort of one step forward two steps back like movement not a real crash. Currencies begin to stabilize and the dollar slowly weaken. And oil starts inching up in price perhaps taking a month or more to return to 75-80.
Theory three:
Someone goes crazy i.e we are positioned fairly well for a so called black swan event to occur. If we have any other major events happen over the next several months they will have a serious impact. This could be natural and or man made.
War Korea, Pakistan, Thailand, Iran etc.
Natural: All the usual.
Financial: Elephant skeletons in plenty of closets.
Theory Four:
Everything suddenly gets rosy stock go up dollar down and oil goes up on confidence in growth etc.
So unlikely I only add it for completeness.
Despite all of this I think periods like now are really important as they force the system backs towards sanity and away from insanity sure the truly sane situation could well be a deep depression but tracking reality what ever it is moves us away from catastrophic collapse if the overall system is too whacked. Such situations my prove gut wrenching but vs all out collapse they are a walk in the park.
I don't understand what the US may be bluffing about?
Oh! Bluffing about having the oil. Having what oil? What oil are they claiming to have that they do not have? As far as I know the US is not claiming to have very much oil at all. They have the SPR, which is for emergencies only. No need to bluff about that.
As far as claiming reserves the US, according to the EIA, has from 22 to 30 billion barrels, or about 2 percent of the world total. If they are bluffing about that they need a new bluffer because that is not a very big bluff.
Ron P.
Hmm I should have said storage instead of reserves sorry.
The intrinsic problem is the EIA as far as I can tell never does a real audit of the current supply situation and their methodology uses a smoothing function making the assumption that this week will be similar to last week. Every now and then they attempt to correct the data. Obviously the method has systematic error or they would not have to make fairly large corrections from time to time. Not really a huge problem unless it gets political then its hard to know if the reports are getting steadily divergent from reality.
I like to use this example you can claim to have a full tank of gas for a long time but eventually you hit empty.
Regardless of what happens if the truth is different from whats been reported then eventually the real oil supply will prove to be tight regardless of what numbers are published.
Or not ...
Regardless current oil prices are not consistent with either a well supplied market and economic weakness or a tight oil market and inelastic demand.
At best they could until recently have been linked to expectations of a robust recovery but now that argument is basically gone.
The real situation economically is probably a very weak recovery or at basically a sort of steady state not getting much worse and not much better and perhaps turning fairly quickly into another down swing. Given the claimed levels of storage and usage etc we should see oil price fall off sharply over the coming weeks if they are true. Any other outcome from holding steady around 70 to higher is simply not consistent with the facts if they are true.
Thats the bluff that I'm saying is being called if it is a bluff. Expect a lot of volatility of course but I'm simply saying right now I think that the Oil markets are going to determine the price of oil based on their own internals and intrinsic demand over the coming months as financial issues unfold. The price of oil should sync with whatever the real fundamentals are. What ever this turns out to be I'm pretty confident that it will be fairly close to the "real" market price. So we are in a sort of shakeout period where we find out who really wants oil and how much are they willing to pay today speculative interest should drop to a minimum. And I don't mean speculative in a bad sense but in the general sense that buyers and sellers will focus on the short term since the overall economic situation is so murky.
In general this is extremely bearish for oil sellers are willing to lock in any price via the futures and buyers are unwilling to pay preferring spot. And it seems spot is low. Oil prices should collapse down to some unknown level at which buyers feel oil is cheap regardless of instability. If we actually have enough oil then the oil market is probably dead for months at least if not the rest of the year or longer or we don't and "cheap" may well be higher prices.
In the end it all depends on how much physical oil is around and how much will be dumped if prices slide like they should.
In the process and as I said it could be a very wild ride over the next weeks if not months buyers and sellers of oil will in my opinion establish a price for oil based on whatever the intrinsic fundamental relationship is.
Its a buyers market and these are in my opinion the best ones for establishing basic fundamental price supports.
Look at it this way if you repriced all homes in the US to 1 dollar and allowed everyone to bid then did it again and again you would eventually establish what I call the true market price. Only periodic buyers market situations work to establish a market price esp bearish situations.
The reason I like it is it causes every buyer to focus on his own needs and desires etc. Buyers become the market makers and they are looking internally at their needs not so much at overall market moves. For consumable items like oil buyers have to buy periodically regardless of price they have no choice however given a bearish market they should in general try and buy at the last minute if possible. This causes a bit of a short term glut and how it clears and at what price tells you a lot about the intrinsic situation as its more the case of the sum of a lot of individual actors instead of a herd type situation. Conditions such as now are thus when I think the market behaves closer to the sum of a number of discreet individual actors with less overall market sentiment driving the market and this is where I think real price discovery happens.
Needless to say I think the EIA data is rubbish but I have no real idea what the real situation is thus I'm excited to see a situation where I think the market will work it out for itself.
Looks like Ron called you on your own bluff. Somewhere else in this comment thread talked about game theory. One aspect of GT is trying o figure out who is bluffing who.
???
I know your trying to slam me but I don't quite get it. Not sure whats Ron calling me on I think the EIA data is rubbish but the problem is if its wrong we don't have any reliable info on the real state of affairs. Is it just off a bit because of some systematic errors that are reasonably corrected ? Has it become a political number ?
Not quite sure where a "bluff" is being called on me as you put it. All I've said is I think right now may well be a fantastic chance to prove what I thinks going on wrong. As far as bluffing I think I've been pretty clear in my views.
The last eight years of public data are a complete and utter fabrication its a huge lie with real oil production about 10mbpd lower than whats claimed. I can't see any bluffing there.
Assuming the US uses 25% of the worlds oil this means US consumption would have had to have fallen by 2.5 million barrels over a period of eight years from the VMT data it seems most of this has been in the last five lets say the last 4 years thus its only changing at the rate of 650kbd annually and even here the last year its changed little so our fastest rate seems to be about 800kbd per year and now its slowed substantially my guess is less than 200kbd if at all.
If the above is true then the public data set produced by the EIA is simply wrong. I'd argue that the rate of change I'm claiming makes a lot more sense than the US suddenly dropping 2mbd in a year most of the decline was while prices where high. Higher prices = lower consumption.
My guess is the EIA has the real numbers and choose to simply claim they happened over a much shorter time span. I find it interesting that as far as I can tell they seem to be using real data to create their fabricated data. Yes US consumption has almost certainly dropped by 2mbd just it took a while. The storage levels claimed by the EIA seem as far as I can tell to be simply the real data shifted up axis a bit.
Whats important is that we see bottoms aligned with the five year trend. If we really had a massive excess of oil then one would think that it would follow a different pattern from normal esp vs prices. We should have seen oil storage fall as prices started to rise and then prices fall instead we seem to be able to do magic and see storage levels rise steadily as prices rise. Even though we have a massive surplus. The data looks like its simply had its baseline shifted.
Of particular interest is PADD 5 or the west coast which is isolated from the rest of the US.
It follows basically what I've claimed is probably basically the truth for the entire US.
Same for PADD1 the east coast.
The two regions that import a lot and also are not tied to games with NYMEX and have a lot of the US population show trends in line with what I think happened and VMT.
http://www.fhwa.dot.gov/ohim/tvtw/10martvt/figure1.cfm
There is no particular reason for the rest of the US not to follow the trend set by the two major population centers.
I'm not going to post all of them.
http://tonto.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMP41...
Have fun.
Our massive surplus of storage is concentrated the Gulf and at Cushing. The east and west coast data and even the rocky montains are consistent with a slow decline to some inelastic level and consistent with VMT.
If one subtracts Cushing data from PADD2 its also consistent with the argument of slow change to no change over time.
Padd4 the rocky mountains have increased but we have a known expansion of a large oil field in the region.
Now with all that things get really interesting as the anomalies have been reduced to Cushing and the Gulf.
Well a lot of the oil at Cushing is held by powerful speculators in the oil market and in the Gulf a lot of the oil production now comes from Federal waters and its what ever number the Feds want to say it is.
Thus the two areas that account for almost all of our so called glut happen to be the two regions where centralized control exists. I don't believe either set of numbers. At Cushing however almost 15 mbd of additional storage was added so perhaps the number is right who knows but it seems to be simply physical oil thats not moving and being traded back and forth to influence the futures market. Very little seems to come and go based on any real need.
Regardless of what ever is really there it seems to be simply a buffer of physical oil to allow for trading games that use physical delivery as part of their schemes.
http://www.reuters.com/article/idUSN0522592520090805
This leaves the GOM.
And in particular Fed area production.
So dig around a bit and you find 15 million barrels of oil added for traders and all the rest can
be isolated to increased production in federal waters in the GOM. However given that BP is in the hot seat note
they are a big player at Cushing also.
So our rosy numbers about storage can be fairly easily traced back to claims by the US government about production in federal waters in the GOM. The same people who have political reasons to claim ample amounts of oil are available are in the end the source for the oil that backs these claims.
So it really boils down to if the US Federal Government is lying about Federal GOM production if so then we ain't where we think we are.
Interesting.
From Mish.
http://globaleconomicanalysis.blogspot.com/2010/05/insanity-down-under-i...
I'm willing to claim that this post represents the absolute peak in insanity :)
It can't get any worse than this at least for housing.
I suspect that such a loan also follows you around even if you sell and rent and they are
not discussing the fine print.
I don't know what the rules are Down Under, but in the US, ING direct normally requires at least a 25% down payment, and they only fix the rate for five to seven years. They typically keep the loans on their own books.
If memory serves, ING direct made 100,000 home mortgages in the US from 2000 to 2007, and a grand total of 15 of them went into foreclosure in this time period. But as I said, I don't know what their Down Under rules are.
I'm with you and Mish...what ING is recommending goes straight to the top of my list of insane advice.
memmel:
You're right it's insane, but I wonder why it isn't criminal. Or is it?
Canada and Australia right now are where the U.S. was circa 2006. So this isn't going to end well for them.
Still, they are commodities rich countries which should buffer the blow and allow some degree of real and not phony wealth. This is especially true relative to their populations, as opposed to the U.S. which is still in many respects commodity rich, but not on a per capita basis as it has a very large population used to high standards of living (cheap energy and the ability to do whatever the heck it is you want to do) and thereby it stands to reason that the problem was always going to be end up worse here, as we have alot farther to fall.
All of this is part of the reason I am planning on moving to Western Canada at some point - maybe 1 to 2 years. I am thinking either Alberta or BC as both have considerable advantages in a post peak world. For now I think I have time and it's prudent to wait for the excess to get flushed out.
ok. i posted this on one of the other posts on this site and have got no interest. please take a look at this. how much was BP paying for the oil? very interesting, at least to me. remember James Watt of the reagan administration? gonna go water some tender plants now. here is the site.
http://emptywheel.firedoglake.com/2010/05/24/how-much-does-bp-pay-us-for...
Yes Rube, very interesting and pathetic indeed. But of that offshore royalty $$$ coming in, Louisiana gets the shaft, unable to collect even its 35% pittance . . . until 2017 or therabouts. Yet we hear that some states get 50%, some who do not allow drilling off their shores at all.
Here is something about the legal fix going on. I add it because it also went without interest at another TOD posting today:
http://www.thedailybeast.com/blogs-and-stories/2010-05-21/bp-legal-case-...
I hope that the technical challenges of this approach are being worked out, should the "conventional" approaches continue to fail.
Nuke it
I'd trade a small increase in background radiation (or perhaps none at all) to the ongoing poisoning of the gulf. The fellow from UT seems to think it's feasible.
http://online.wsj.com/article/SB10001424052748704852004575258332608266808.html?mod=rss_Today's_Most_Popular
'Don't Rule Out a Double Dip Recession'
Oh no, not a double dip recession, or what is referred to as a W shaped recovery pattern! (Or, maybe it's just an endless undulating post peak oil recession.) The number of people disenfranchised out of a 2nd big downturn would be huge! If 1 in 7 home mortgage holders are behind on their payments or delinquent, and the bottom falls out again, how many will walk away from their properties? Wouldn't the number potentially be in the 10's of millions?
Speaking of a possible double dip recession, look at the pre-market #'s in the link below - wow! Suppose it might change for the better by the opening bell, but for now the Dow is predicted to drop by 213 points! Are we headed for a new bottom?
http://money.cnn.com/data/premarket/
Yep, it will be interesting to see what kind of psychological effect the break below 10,000 will have.
What's the best place to get close to real time stock numbers?
I'm a bit confused. Are there people who think we ever came out of the depression? The privatization of Wall St. debt/felonious behavior and a bunch of non-regenerative gov't spending do make a recovery. It's a head fake bounce and nothing more. I mean, what the hell does anyone think was underlying the green shoots? No humus, only sand. And quicksand at that.
The other shoe is finally dropping.
Cheers
Hope you placed all your cash in market puts. You will be rich.
Hey, anyone have any comments about Rob Kirby's editorial? He thinks oil from the SPR is being released.
http://www.financialsense.com/fsu/editorials/kirby/2010/0524.html
"From all of this evidence – and yes it is EVIDENCE – it is now highly likely that after failing to gain legal authority to utilize sweet crude in the SPR – DESPERATE authorities – who, no doubt will wrap themselves in the flag and claim they acted in the name of National Security – DID CONDUCT oil swaps. The timing of all these events lines up perfectly with the Waterfall decline in oil prices"