Drumbeat: June 20, 2010

The Norwegian gas bubble will soon burst

Norway’s largest newspaper “Aftenposten” covered on June 17th the entire front page with a headline stating “Rapid end to the gas”. The text began, “Snipp, snapp, snut. The Norwegian gas adventure will end much earlier than the authorities have stated. In ten years production will decline dramatically according to new calculations from Uppsala University.” (In Norway and Sweden one usually finishes children’s tales with the phrase “Snipp, snapp, snut, nu är sagan slut” - “Snipp, snapp, snut, now the story is ended).

Smart Moves on Drilling in New York

It may be hard to believe, but New York’s dysfunctional state government has done one big thing right over the past three years.

While neighboring Pennsylvania and other states have rushed pell-mell into the Northeast’s version of an energy boom — making some people richer and some environments poorer — and while concern has steadily risen about the evolving industrial practices used to extract gas from shale, New York and Gov. David A. Paterson have held back. Instead of jumping in, the state has written fairly tough regulations that are still being tweaked and has added extra protections for the most sensitive areas, particularly the upstate watershed that provides drinking water to nine million people in New York City and its suburbs and exurbs to the north.

Iranian Official Says Crude Sales To Europe Increasing

LONDON -(Dow Jones)- Iranian crude oil sales to Europe have been increased in 2010, a top official at the National Iranian Oil Co., or NIOC, was quoted as saying Saturday.

In an interview with Iranian oil ministry agency Shana, Ali Asghar Arshi, the NIOC's director of international affairs, said crude oil sales to western countries have increased this year, without giving more details.

BP Ignored the Omens of Disaster

“We have to get the priorities right,” the chief executive of BP said. “And Job 1 is to get to these things that have happened, get them fixed and get them sorted out. We don’t just sort them out on the surface, we get them fixed deeply.”

The executive was speaking to Matthew L. Wald of The New York Times, vowing to recommit his company to a culture of safety. The oil giant was adding $1 billion to the $6 billion it had already set aside to improve safety, the executive told Mr. Wald. It was setting up a safety advisory panel to make recommendations on how the company could improve. It was bringing in a new man to head its American operations — the source of most of the company’s problems — who would make safety his top priority. And on, and on.

That interview didn’t take place this week — a week in which BP was excoriated in Congress for the extraordinary safety lapses that led to the Deepwater Horizon rig disaster, while also being strong-armed by President Obama into putting $20 billion in escrow to compensate victims.

No, the interview took place nearly four years ago, after BP’s previous disaster on American soil, when oil was discovered leaking from a 16-mile stretch of corroded BP pipeline in Prudhoe Bay in Alaska. And that was just a year after a BP refinery explosion in Texas City, Tex., killed 15 workers and injured hundreds more.

Design Considerations for a Shock-Hardened Deepwater Drilling Rig and Plausibility Argument for the Loss of the Deepwater Horizon Drilling Rig

President Obama has stated this is a war and indeed it is. These very large surface combatants (we call them Deepwater Drilling Rigs) are operating in an explosive environment where they can be both subjected to underwater blast loadings as well as airborne explosions – think of them being in a “war zone”. During the shock loading to the drill deck the drill pipe that is “racked” can fall over on everything below. There are no systems currently in place to hold any drill pipe in event of shock loading to the deck. We can no longer afford or permit the mentality of “abandon the rig” for deepwater operations if something catastrophic happen. If the drilling rig cannot maintain station-keeping (as in the case of the Deepwater Horizon) during a large explosion event the rig can capsize. If it moves very far laterally to get out of the burning pool of water it can pull a BOP entirely off the wellhead.

As BP Staggers, Pension Funds Skid

A retirement fund for Louisiana’s municipal police officers, for instance, had fully 20 percent of its money invested in BP shares before the disaster. The Florida pension fund has lost $85 million on the 21 million BP shares it held when the offshore rig went down. And the retirement system of Alabama has lost nearly $100 million on paper from its own BP investment.

Some pension funds are seeking to recoup their losses by filing suit, not against BP itself, but against the company’s corporate officers. Called derivative lawsuits, these filings seek damages from BP leaders like Tony Hayward, the chief executive, for harming the company by undermining safety in pursuit of profits.

Oil Workers Muse on Renewable Energy

“I come pretty straight from school, National Guard,” said Charles Buckhanan, a derrickhand. “I’ve been here ever since. This is all we know.”

But while Mr. Buckhanan and his fellow crew members were insistent in their belief that the six-month pause in deepwater drilling — put in place by President Obama to allow time to investigate the unprecedented disaster — was unnecessarily onerous, they also offered measured and nuanced views on the larger social need to seek alternatives to fossil fuels, including the crude that they toil and sweat to extract from the depths every working day.

Are Consumers Sold on Clean Energy?

Advocates of "clean energy," including President Obama, have seized on the disaster in the Gulf of Mexico to make the case for developing alternatives to sludgy, messy carbon fuels. But are Americans willing to pay extra in order to achieve this goal? A couple of polls yield an ambiguous verdict.

Ford, Edison and the Cheap EV That Almost Was

That Henry Ford and Thomas Edison were good friends late in their lives is well-known. They camped together, presented each other with lavish gifts, even owned homes adjacent to each other.

Many Ford enthusiasts also know Ford, when he first drove his Quadricycle on the streets of Detroit in 1896, worked for Edison at Detroit Edison Illuminating Company. And historians know Edison, when introduced to Ford some months later and shown Ford’s plans for a gasoline automobile, encouraged the budding industrialist to pursue those plans.

What is far less known is Edison and Ford worked together on an affordable electric vehicle.

This is the story of what happened and why the car never came to be.

Innovative Mayor Sam Adams Builds a Cleaner Portland

We're also working to make every section of Portland a complete 20-minute neighborhood to strengthen our local economy. Two-thirds of all trips in Portland and in most American cities are not about getting to and from work. So if I can offer quality, affordable goods and services, eliminate food deserts, have neighborhoods with schools and parks and amenities--if I can create these 20-minute complete neighborhoods all over Portland--it strengthens our local economy. We drive 20% less than cities of comparable size, and because we don't manufacture cars, produce oil, or have car insurance companies, every dollar that we don't spend elsewhere, will stay in Portland's economy. There's about $850 million that stays in Portlanders's pockets because we drive less. With a 20-minute neighborhood, also reduce congestion and meet our climate action plan goals.

How low can you go: Milwaukeeans plan to "power down"

As millions of gallons of oil continue to spill into the Gulf of Mexico, a group of Milwaukeeans prepare to live, by choice, without electricity and other conveniences in conjunction with a local, underground event called "Power Down Week."

US envoy cautions Pakistan over Iran gas deal

ISLAMABAD (AP) -- The U.S. warned Pakistan that a recently signed gas pipeline deal with Iran could run afoul of new sanctions being finalized in Congress, the U.S. special envoy to Pakistan and Afghanistan said Sunday.

Richard Holbrooke delivered the message during a visit to Pakistan, his first since Iran inked a contract earlier this month to export 21.5 million cubic meters (760 million cubic feet) of gas per day to Pakistan beginning in 2014.

"We cautioned the Pakistanis to try to see what the (Congressional) legislation is before deciding how to proceed because it would be a disaster if ... we had a situation develop where an agreement was reached which then triggered something under the law," said Holbrooke.

INTERVIEW - Russia's Sechin says Gazprom must raise game

Russia (Reuters) - Russian gas behemoth Gazprom (GAZP.MM) must raise its game by penetrating the swiftly growing markets of Asia after a fall in exports to European Union customers, Russia's energy tsar told Reuters.

Gazprom usually supplies a quarter of the European Union's gas needs but exports tumbled last year as some customers turned to cheaper alternatives such as liquefied natural gas on the growing spot market.

Oman Oil Co eyes Oman oil, gas block as BG exits

MUSCAT/DUBAI (Reuters) - State-run Oman Oil Company (OOC) is in talks with Oman's Ministry of Oil and Gas to take on an exploration block ceded by Britain's BG Group, a senior Omani oil official said on Sunday.

Like most of its Gulf neighbours, Oman is short of the gas it needs to meet rapidly rising demand for industry and power. Across the region, governments have embarked on exploiting unconventional gas reserves, such as Oman's tight gas.

The gas is in complex formations that is more expensive to produce than more conventional reserves.

BP appoints American to handle Gulf of Mexico oil leak

BP'S chief executive Tony Hayward has handed over the daily management of the Gulf of Mexico oil spill.

The fuel giant's chairman Carl-Henric Svanberg said Mr Hayward, a Briton, was handing over the running of the containment efforts to another top BP official, Bob Dudley, an American.

BP chief rapped for yacht trip as oil cleanup goes on

A yacht outing has landed BP chief Tony Hayward in more hot water, unleashing fresh criticism of his handling of the Gulf of Mexico oil spill and overshadowing modest progress in containing the disaster.

The White House and environmental groups were quick to lash out at Hayward's latest mishap after he was sighted at the JP Morgan Asset Management Round The Island Race, which sees hundreds of yachts race around the Isle of Wight off England's south coast.

BP May Seek to Raise $50 Billion for Oil Spill, Times Reports

(Bloomberg) -- BP Plc is seeking to raise $50 billion to cover the cost of the oil spill in the Gulf of Mexico, the Sunday Times said, without saying where it got the information.

The first $10 billion may come from a bond sale this week and the company is talking to banks to get a $20 billion loan, the newspaper said. The remaining $20 billion would come from asset sales over two years, the paper said.

Anadarko’s Long-Term Debt Rating Cut to Ba1, or Junk, by Moody’s

(Bloomberg) -- Anadarko Petroleum Corp.’s long-term debt rating was cut to Ba1, or below investment grade, from Baa3 by Moody’s Investors Service.

BP Should Pay Dividends in Oil

BP has plenty of two things: cash and oil (ok – if you count emotive assets, you can throw animosity in the mix). Cash is going to become much more dear, so I propose that BP pay dividends in oil instead.

Louisiana oystermen worry that BP payout won't be enough

PORT SULPHUR, LA. -- It sounds like a bottomless gusher of money: a $20 billion fund to help make Gulf Coast residents and businesses whole. But here in the bayou, where rich oyster beds have provided livelihoods to many and brought wealth to a few, people worry just how far BP's handouts will go.

With No Gulf Solution in Sight, Louisiana Turns to Prayer

State senators in Louisiana have designated Sunday as a day of prayer aimed at seeking an end to the Gulf of Mexico oil spill disaster.

Scientists: Gulf oil spill threatens breeding ground for bluefin tuna

WASHINGTON -- Near the end of a 12-day cruise in the Gulf of Mexico to study the habitat of just-hatched Atlantic bluefin tuna, scientist Jim Franks came upon fields of oil sheen as far as he could see.

Mixed with the oil were large amounts of sargassum, the golden brown algae that drifts at the whim of winds and tides and shelters the quarter-inch-long bluefin tuna larvae.

How the young will fare and what will happen to the population of bluefin tuna will affect a wide range of people, including the tuna fishermen of Gloucester, Mass., for whom a single fish can fetch $20,000 or more, and sushi chefs everywhere.

Perspective on the Spill (Before It Began)

AMERICA’S addiction to oil is making itself felt on the blackened wings of pelicans in the Gulf of Mexico. As BP takes heat for the environmental and economic damage caused by the Deepwater Horizon spill, a timely new book by Tom Bower titled “Oil: Money, Politics, and Power in the 21st Century” (Grand Central, $26.99), reminds us that our insatiable thirst for oil makes us as much a part of the larger problem as the major oil companies.

“We are all simultaneously both the victims and the beneficiaries of conflicting realities in the search, production and trading of oil,” Mr. Bower writes, adding that “oil is a uniquely human story.”

The Natural Resource Curse: A Survey

INTERNATIONAL. It is striking how often countries with oil or other natural resource wealth have failed to grow more rapidly than those without. This is the phenomenon known as the Natural Resource Curse.

The principle is not confined to individual anecdotes or case studies, but has been borne out in some econometric tests of the determinants of economic performance across a comprehensive sample of countries.

NH issues first-year review of climate plan

CONCORD, N.H.—A Nashua elementary school that uses environmentally friendly practices, an active town energy committee in Temple and a new biomass plant at the Winnisquam school district are among the success stories cited in a report Friday on the state's year-old climate action plan.

Those are examples of ways the state is looking to reduce greenhouse gas emissions to 80 percent below 1990 levels by 2050. The review shows a declining trend in emissions in the last few years.

Rising waters pose threat to Va. coast

POQUOSON -- Hurricane Isabel flooded Sandy Firman's house in 2003, and now routine storms drive water into the roads and marshes close by.

Several homes in this low-lying city, including Firman's, have been elevated about 10 feet to keep them above the ever-closer waters.

"We used to not have it like that," said Firman, who has lived in Poquoson all of his 46 years. "But something has changed around here."

One big thing that has changed is the sea level, which is rising -- an increase blamed on global warming.

Journalists should not forget climate change, say experts

A British study shows journalists are overlooking the issue of global warming in favor of more sensational stories, an issue that will be discussed at this year's Deutsche Welle Global Media Forum.

Until this matter is resolved, some 3,300 MW of additional hydro-electric generation will be left hanging in the balance.

Newfoundland may take dispute to U.S. regulators
Open access to Quebec power transmission system sought

Newfoundland and Labrador's provincial energy company is prepared to take its dispute with Quebec over power transmission to U.S. regulators, the head of Nalcor Energy told Reuters on Friday.

"We're developing our strategy for an appeal process in Washington with the Federal Energy Regulatory Commission and also the Department of Energy," said Nalcor president and chief executive Ed Martin.


Nalcor is also considering an alternative, subsea route for the Lower Churchill project that would bypass Quebec. That plan would ship the power from Labrador via the island of Newfoundland, through the Maritime provinces and into the United States. However, the end market would be smaller: it would gain Nova Scotia, but lose out on much larger Ontario.

If sales and environmental approvals fall into place, the construction of the Maritimes route -- which would involve undersea lines at the Strait of Belle Isle and the Cabot Strait -- could start in about a year, Martin said.

See: http://www.calgaryherald.com/technology/Newfoundland+take+dispute+regula...


The Québécois in many ways are clueless about the depth of animosity generated by their hard-nosed negotiations with Newfoundland and Labrador.

Yes, I understand the logic. Play hard ball. The Newfoundlanders will grovel because they need the lucrative Ontario market. But such an approach is doomed to backfire. Ontario is already rich in hydro and nuclear. Other markets are waiting in the wings.

Newfie Hydro would be welcomed in N.S., P.E.I., & N.B., a population of 2 million looking to shed its reliance on fossil fuel generation (and in N.B.'s case, a nuclear albatrose). Besides N.B. is still smarting politically from the Hydro-Québec/N.B. Power deal collapse.

Besides, the New England market is close by. Boston and the burbs would be a profitable energy consumer. I'm sure they would be very interested in doing something with 3,300 MW spare capacity. Talk about a swing producer.

This could be a real win-win situation for everybody except the short-sighted technocrats in Quebec. All that's required is the political will. I don't think that's too far behind. If you tick off enough people, all obstacles will be out of the way.



Hi Tom,

I don't disagree. I just wonder how expensive this power will be -- as a WAG, construction costs are likely to be in the range of $7 to $10 billion and we could be looking at an additional $3 to $5 billion for the associated transmission infrastructure. If that's the case, the delivered cost will likely exceed $0.15 per kWh. Natural gas will have to get darn expensive if this project is to get off the ground.



I would suggest that Newfoundland tap into federal infrastructure money, but being a "have" province with a stormy track record with the present government in Ottawa (Premier Williams and Prime Minister Harper hate each other despite both being Conservatives) that is out of the question. Besides, the cap-in-hand would be about two years too late.

Yet after the unsettled relations between St. John's and Quebec City over the past four decades, I can frankly see Newfoundland subsidizing the infrastructure from oil and gas revenues to get from under the burden of going through Quebec to sell its electricity. Spite is a powerful motivator. I can see Williams taking the necessary steps to achieve a Newfie version of energy (transmission) independence.

He isn't someone I would want to mess with in a pub brawl.



If it was that simple...

First, looking at the market for electricity in northeastern North America these days, is anyone ready to commit to buy LC power at 14-16¢/kWh when the market price for gas-fired power is sold 5-6¢ on the New England spot market? Heck, even the Dalhousie heavy fuel oil power plant in northern New Brunswick would be competitive at that price.

Second, the Lower Churchill project is still a lot of vaporware. As Newfoundlander pundit Ed Hollett says, you can't sell power you don't have. And the project no longer has a construction schedule as Danny Williams admitted last month.

Hydro-Québec is a convenient scapegoat for Williams, and blowing smoke is a sure fire way to win political points in the ROC (Rest of Canada). But it won't get him any contract for his very expensive power.


If you like, I can put you in touch with the engineer that has done the feasibility for the various scenarios.

As for the Quebecois, don't let the door hit you in the a$$ on the way out. My God, we should be rid of these leaches.

Thanks, BC_EE; I appreciate the offer, but I don't want to impose especially if any of this data is confidential/proprietary. I'll just assume it's a number one through nine with a whole bunch of zeros tacked on the end. ;-)

Best hopes for Newfoundland and Labrador and for amicable relations amongst all provinces.


Best hopes for Newfoundland and Labrador and for amicable relations amongst all provinces.

Amen brother. But this being Canada, politics tends to be inordinately focused on territory (regionalism) and less on ideology. The same game as usual, only different players in different years.

I'm really not trying to invoke regional tensions here, but merely pointing out that there is an appetite for some kind of arrangement to channel Labrador hydro-electricity into the Maritimes. This is, in part, a reflection of a change in the relative position of the players. Newfoundland is not as passive as four decades ago and I will venture to say Quebec is not as militant as before.

This is not to suggest Quebec is a push-over. Simply, that la belle province is less of a factor in the equation.

The dynamics are ripe for further hydro development in Labrador with an eye on alternative markets.

If it's doable, the political will is there to make it so.


I'm guessing it all comes down to the almighty dollar, Tom. If Hydro-Québec can satisfy its domestic and export needs by developing its own hydro-electric resources at a competitive cost, it will most likely go that route. If it can't, then I could imagine a greater willingness to come to some mutually agreeable terms with its provincial neighbour. I think we're many years away from that happening, and in all fairness to H-Q, I don't think they're doing what any other utility would do if they were in the same position.

I sincerely hope that Newfoundland and Labrador, Nova Scotia, New Brunswick and New England will all ultimately benefit from this tremendous resource; it would certainly go a long way to eliminating our province's dependence upon fossil fuels and to reducing our GHG emissions. Let's hope there's a willingness on the part of our provincial leaders and NSP's ratepayers to make it so, because it won't come cheaply.


in all fairness to H-Q, I don't think they're doing what any other utility would do if they were in the same position.

Couldn't agree more. Business is business.

I sincerely hope that Newfoundland and Labrador, Nova Scotia, New Brunswick and New England will all ultimately benefit from this tremendous resource; it would certainly go a long way to eliminating our province's dependence upon fossil fuels and to reducing our GHG emissions.

That's basically my sentiment in a nutshell. Wreck Cove aside, nature has not endowed the Maritimes with the waterworks to go hydro. Options are limited. I, for one, would celebrate any future day when all our electricity came from renewable supplies.

Let's hope there's a willingness on the part of our provincial leaders and NSP's ratepayers to make it so, because it won't come cheaply.

Yes, let's hope so.

Continual dependence on fossil fuel electrical generation (whether coal, oil or natural gas) is perhaps cheaper in the short-run (dollar value), but has its own set of inherent costs.

I genuinely think that if the political will is there, the public can be brought on side, especially if presented on environmental grounds.



Relief well within 200 feet? http://alertnet.org/thenews/newsdesk/N18134060.htm

HOUSTON, June 18 (Reuters) - The first of two relief wells being drilled to plug the massive Gulf of Mexico leak is within 200 feet (60 metres) of the blown-out well, a BP executive said on Friday.

Kent Wells, senior vice president of exploration and production, said the next step will be to slowly hone in on the ruptured well and eventually plug it. (Reporting by Kristen Hays; Editing by Doina Chiacu)

This may have been noted on drumbeat a day or two ago, to little notice. There seems to have been not much notice taken in the wider world either. One post I found had a little more information, though it's from a forum so I'm not sure about the source. This one seems to say that the relief well is within 200 feet horizontal distance, but still has a long way to go vertically. Which makes the usually diagrams of the relief well coming in at something like a 45 degree angle suspect, but that's another story. http://www.godlikeproductions.com/forum1/message1104920/pg1

Good links, but please don't post the entire text of articles (for both bandwidth and copyright reasons). The link is enough.

Which makes the usually diagrams of the relief well coming in at something like a 45 degree angle suspect, but that's another story.

Not necessarily suspect, but just a result of trying to illustrate something a mile deep. I read an account a couple days ago of a Mississippi legislator flying over the Macondo site and noticing how close together the Enterprise Discoverer and the relief well rigs are -- 100 yards.

That probably isn't correct, but let's assume each relief well is 1000 ft. away from directly overhead the blowout well. The diagram indicates that the deviation from normal occurs about halfway down (to about 18000 ft.). The intercept angle is then the arctan of (1000/9000), or 6.3 degrees. Makes me wonder how they plan to breach the well casings at that steep an angle.

Makes me wonder how they plan to breach the well casings at that steep an angle.

i dont think they plan to breach the wild well's casing..... this was discussed a few days ago.


i believe the plan is to drill the relief well right alongside the wild well. the uncontrolled flow is most likely outside the 7" casing, either up past the 9 7/8 " casing shoe, or down past the 7" casing shoe and into the bottom of the 7" casing.

Krugman fears another Great Depression: That ’30s Feeling

How bad will it be? Will it really be 1937 all over again? I don’t know. What I do know is that economic policy around the world has taken a major wrong turn, and that the odds of a prolonged slump are rising by the day.

Why? Because the government's not spending enough.

I'm more convinced than ever that economics is a pseudoscience. We simply can't conduct the kind of experiments that would be required to prove the various theories scientifically. There are supply-siders today who still insist that trickle-down economics would have worked, we just didn't cut taxes enough. Similarly, the argument from Krugman and his ilk is going to be "The government didn't spend enough" (which is the usual argument about Japan's 20-year losing battle with deflation).

Then there's this article from Time: Inside the Dire Financial State of the States

It's ugly, and getting uglier. But this is the money quote:

Many taxpayers might say that it's about time spending dropped. But then they start hearing the specifics.

Everyone thinks it's someone else's benefits or services that should be cut, not their own.

economics is a pseudoscience. We simply can't conduct the kind of experiments that would be required to prove the various theories scientifically.

It does seem to be the case, that we can only try out the presciptions that come from the various theories halfway. Politics intervenes and experiments only are able to provide half-a-wouldbe-cure. Then the results are ambiguous, the patient still had a long period of illhealth, so proponents can say, it was only half as bad as is wouldabeen, while opponents can say "it didn't work". So when the next supercycle comes (in this case, great financial crash), we repeat the same experiment, complete with only half-application of the theory.

Economists have been doing economic experiments (in the computer labs) for at least the past fifty years. I did research for my mentor, one of my favorite professors (Austin Hoggat) who was a pioneer in the field of using computers for interactive economic experiments during the 1960s. Experimentation in economics has come a long way since 1960.

One of the most interesting areas of economics now is behavioral economics.

It's amazing what you can do using old technologies. My prof wanted me to do a search for all the articles and papers on decision making under uncertainty back in 1966. So I got on my old Raleigh 3-speed and biked around to about 28 different libraries on campus. The main library had no catalog that was up to date--had to get a lot of help from the librarians there (one of whom was my girlfriend who was over six feet tall and had a model's face and figure. She's still beautiful at age 70.). Now guess where I found the best books and articles on decision making under uncertainty. Psychology? No, they had virtually nothing. Poly Sci, ditto. Very little in the economics library. Good and abundant sources in the Business Administration Library. But the most and best sources were in the engineering department library stuck away in a little old temporary building built during World War II!

Of course, that is what engineers do: They make decisions under conditions of uncertainty--and with grave consequences if they are wrong. The drilling crew on the Macondo blowout made decisions under uncertainty; I blame the managers (Bus. Ad. majors?) more than I do the drilling engineers on the rig.

The problem of theories in social science is that people make use of that info when making future decisions. So any results are always tentative ones and subject to change, as people change behavior based on theories or data or even polling. It's like trying to measure a moving target when you have no way of knowing anything except the approximate current "snapshot". That goes for just about all social sciences. Theories are made based upon the past or an inkling of the present - but past behavior is not necessarily predictive - at least in the social sciences. Gravity is another matter.

as people change behavior based on theories or data or even polling.

Few people change behavior; even fewer change it based on data. Most people use events or data to rationalize their decisions - decisions which are mostly made on unconscious levels.

Note that the 1937 recession was far milder than the downturn of 1929-33. If the worst thing we have to fear is a rerun of 1937, then I feel reassured. After Peak Oil I expect the downturn of 2015-2020 to be much worse than that of 1937.

Currently the economic evidence (using either Government numbers or Shadostats numbers (doesn't matter which) shows that we are in a slow but definite recovery phase. I do not expect this recovery to bring unemployment down below about 9%, however, because an increasing amount of unemployment is structural rather than cyclical. Think of all the students who graduated this June with degrees in Art History, English, Psychology, Sociology, etc. Few of them will get jobs related to their major fields in history. The surplus of lawyers is notorious. There is a big surplus of people with MBA degrees. And the graduate schools keep churning out mass quantities of PH.Ds that mostly will not find research or teaching or consulting positions. Don't forget the increasing numbers of high-school dropouts; their prospects are bleaker than ever.

In the 1930's, we could borrow against the future productivity of the post-WW I baby boom and most important, the energy wealth of the country.

Charles MacKay, author of the Madness of Crowds, pointed out that there is always intervention in crashes. The actors change from crash to crash (a syndicate of wealthy merchants, the Bank of England, the city fathers of Paris), but there is always an intervention. Hence, all breast beating about how the government should allow the crash to proceed without intervention is just drama. The goal is a piloted crash and hopefully a belly skid on the runway instead of just taking both hands off the controls and nose diving into terrain. No government, elected or monarchy, can survive a nose dive and everybody (voters, subjects, elites, elected pols) knows it and prefers the managed crash.

The mid-19th century currency collapse in Paris is particularly instructive. Things got really dire. The city fathers issued bonds against the future revenues of the city of Paris. The crash was stabilized and things limped along from there. Of course, they had both energy in the rising industrial age and human capital in the exodus of people from the countryside, so there too, they were borrowing against future productivity.

We have human capital as well, more than ever, better educated, and many faced with disappearing career paths (and hence a motivation to rethink their direction.) We have declining energy but still lots of it. And however much magical thinking is out there, there is a steady trickle of "buckle up and cope" actions coming from our leadership.

Best hopes for muddling through,

Well put, and thanks for mentioning 'my' book.

At the bottom of the depression in the early 1930s, the US had very low oil prices and growing energy supplies. In the early 2010s, we will have very high energy prices and falling energy supplies. There was a lot of intervention in the 1930s to re-adjust the economy - including a major dollar devaluation, which I view as a blatant attenpt to 'create' inflation to get the prices of homes and stocks out of foreclosure (or margin calls).

However the adjustment going forward will be more difficult than the adjustment to life in latter 1930s. I am in full agreement that the managed crash will be the best way to transition to the post peak world. Not that it's very likely, but more black swans - such as a possible closure of GOM oil ports - could have more people rethinking the economic model based upon cheap oil.

Krugman vs. Greenspan on "That ’30s Feeling";
Calculated Risk Sides with Krugman, I Side with Greenspan

Greenspan is seldom right and so is Krugman. In this case it is not even close...

In fact, because of peak oil and because of consumer debt coupled with global wage arbitrage, it's not possible to spend our way to prosperity this time, even with another baby boom...

Krugman is on the wrong side of this debate while Greenspan is mostly right. However, no one will pay any heed to the now discredited Greenspan who ironically was worshiped for all the things he got wrong and ignored the few times he ever said anything that made any sense.


However, no one will pay any heed to the now discredited Greenspan who ironically was worshiped for all the things he got wrong and ignored the few times he ever said anything that made any sense.

Allen Greenspan

should change his name to Cassandra

Truth is stranger than fiction.

I think he should change his name to Jackass-the-Incompetent.

Greenspan played a major role in sending us down this economic path. Now he warns this is blind ally ???

As Samuelson said "You can take the boy out of the cult, but not the cult out of the boy". Greenspan was an Ayn Rand cultist. 'nuff said.

Paul Samuelson never said that. Do you have a source? Or is it some other obscure Samuelson?

Around here, we get a fair bit of appeal-to-authority via quotes that never happened, but this one seems to have happened last December:

And this brings us to Alan Greenspan, whom I've known for over 50 years and who I regarded as one of the best young business economists. Townsend-Greenspan was his company. But the trouble is that he had been an Ayn Rander. You can take the boy out of the cult but you can't take the cult out of the boy. He actually had instruction, probably pinned on the wall: 'Nothing from this office should go forth which discredits the capitalist system. Greed is good.'

Thank you. I stand corrected.

Mish asks a lot of questions except the main one. That is, "How are people to survive without a job in the modern, urban, high tech world?".

All his prescriptions tend to reduce jobs. With out new jobs, how are the young going to be able to live, given that the population is growing? Are those who are unemployed simply going to munch on grass and live in boxes under freeway overpasses? He complains about the use of stimulus funds and suggests that there will be a larger problem with the stimulus runs out, while failing to mention the deficit spending by the Repugs under RayGun, Bush I and Bush II, who pumped up the economy to absurd heights, adding trillions to the national debit. In a normal recession, the counter cyclical spending would tend to off set the ups and downs of the recession. To do that, the spending must decline when the economy gets going and taxes must go up to produce a surplus and reduce the debit to prepare for the next recession. We have become addicted to deficit spending over the past 30 years, just like a housewife with a credit card.

But, this time, maybe it's different. Mish goes on to mention Peak Oil, after which things will in fact be different. But, then he writes:

If we address the structural problems, jobs will eventually take care of themselves.

Sorry, but without the energy to run all those machines, the jobs won't be there for the people that run the machines or the people that make all the otherwise useless stuff we have all grown to expect as part of the "American Lifestyle". Our situation is now more of a "Zero Sum Economy", where the pie is shrinking and everybody will need to adjust to lower oil use. Not only that, but each year will provide less oil than the past year, so I think that we will not find that "jobs will take care of themselves".

E. Swanson

The only way we know how to create jobs is through economic growth. That is why most economists think economic growth is prerequisite to solving our other problems.

We could probably re-create some industrial jobs by putting high tariffs on imported goods, but this would come at the cost of much higher prices to consumers. It would also destroy our lucrative export industries, including things we're really good at making, such a weapons, aircraft, chemicals and some kinds of heavy machinery.

Unlike the great majority of economists, I favor high tariffs. As John Maynard Keynes said, "Most goods should be homespun." Except for oil, a few rare earths, and a couple or three minerals, the U.S. does not NEED to import anything. We could live without French wine and cheese, German and Japanese and Korean cars, steel from India and other places, coffee, tea, and cocoa. Anyway, sailing ships could carry all the imports we really need--even oil. (True, we would need a lot of the biggest kind of sailing ships that were built around 1870 or 1880 with steel hulls and steel masts and twisted wire for rigging. On the other hand, we could grow hemp for rope in the U.S., except that it is now illegal to do so.)

Hi Don I just ran across these did not know the existed.


Color photo's from near the end of the Great Depression and WWII.

B&W are cool but they are hard for us to place the "artistic" aspect of black and white photos makes it hard for me at least to place myself in the situation.

Anyway for me at least I can feel the end of the old ways and start of the new come through with these photos.

IMO, in most cases various governments (at least those unable or unwilling to borrow enough to cover their deficit spending) won't come close to cutting their overhead costs (payroll, pension, health care, overall G&A, debt service, etc.) enough to allow them to cut government services at the same rate that their revenue falls, which means that the cuts in government aid and services (i.e., the net money and services "exported" out of government) will tend fall at a faster rate than the decline in government revenue--which is of course analogous to the situation in oil exporting countries showing declining production, to-wit, the net export decline rate tends to exceed the production decline rate.


On what data do you base your conclusion? You may very well be correct, but I cannot follow your reasoning from data through to your conclusion. I expect both tax rates to rise and tax revenue to decline in the future, based on past declines of empires.

Getting back to Japan: their consumption of oil peaked in 1997, a year before their economy went resolutely south along with most of East Asia. 1997 consumption was an 8.3% gain over 1990, too; assuming the US is about to embark on a similar period of contraction as did Japan in 1997, we would be down to 18 mb/d or so in 2015. Wow, belt tightening!

The Japanese have mostly dispensed with middle distillates - trucking, heating - and fuel oil - electrical generation. The latter card we played 30 years ago, and is almost tapped out. Heating oil use continues to decline, at a somewhat slower pace. Perhaps the solution is one of those command economies. Fuel oil is a much smaller part of Chinese consumption by now than it is in Japan - 8.95% vs 14.69% for 2008. The Chinese have visibly purged it from their energy mix - probably through fuel switching to NG.

You alluded to NG substitution for petroleum consumption. The EIA shows that total Japanese primary energy consumption, from all sources, increased by about 5% from 1997 to 2006:


Of course the critical metric for the US is net oil imports, which fell at 4.5% from 2005 to 2008. For the sake of argument, at this rate of decline US net oil imports would be down to about 8 mbpd in 2015, versus 12.5 mbpd in 2005.

As Japan's experience shows, substitutions can allow countries to show overall increases in energy consumption, even as oil consumption falls, as long as the substitutes are available at a price that consumers can afford.

I thought I'd check and see how US crude imports are doing; we are on a very definite uptick, with little of the usual volatility, and also definitely happening post-DWH. Weekly U.S. Crude Oil Imports (Thousand Barrels per Day). Curious - the numbers for the 4 wk average have a huge gap 2004-2008.

We will almost certainly broach 10 mb/d, as only happened 3 times last year. Averaged YTD is 9.1, already ahead of 2009. 07/08: 10,031 and 9,783 kb/d, respectively. At the very least we will erode a bit of that putative spare capacity.

While it is true there is an uptick, thanks to more detailed data now available on a weekly basis, basically the uptick in imports is from Canada. More precisely industry sources are reporting excess supplies of 'tar sands' oil, which is building up across the midwest and Cushing, OK.

About 100% of the US oil inventory increase in the last two months is due to the build up in the midwest.

Reports of refinery shutdowns in Canada is circumstantial evidence that refineries are not adjusting fast enough to lower quality tar sands oil while light sweet crude from Nigeria and the Mideast diminishes.

I suspect that Canadian imports will level off soon because, well, there just won't be any space to store them.

Interesting, hadn't noticed they'd introduced a weekly summary for imports, along with other goodies. Have to wonder if that's just indicative of a temporary trend though, Mexico imports have averaged +45.5 kb/d Dec-Mar monthly, KSA +75.25 kb/d; yet they show -413
and -742 kb/d respectively for this first week of data. Perhaps they're still working out bugs in the system, which would be understandable.

I think there is a lot of new pipeline capacity coming on-line to move bitumen from Canada to the US, and they may have exceeded the available demand for the stuff, at least temporarily.

In the long term, the political fallout from this blowout in the Gulf is going to cause US domestic production to decline sharply, and at that point I think companies will be moving Canadian bitumen all the way to the Gulf Coast to keep refineries there supplied because GOM production is going to tank.

Shell is closing an old refinery in Montreal. It is uneconomic to ship bitumen from Alberta to Montreal, and the refineries there can't handle the stuff anyway. Western Canadian supplies of conventional oil are approaching zero and Arab oil is increasingly heavy, so the choice was between upgrading the refinery to handle heavy oil, or closing it, and they chose to close it.

I think that we agree that there will be attempts, largely futile, to increase revenue by raising taxes.

In any case, let's assume that a government entity generally has $100 million of tax revenue, and let's assume that they spend $20 million per year on their own G&A + debt service, roughly analogous to consumption in an oil exporting country. So, $80 million is normally "exported" out of government in the form of aid and services. Let's assume that revenue drops to $60 million, and that because of various constraints (pension obligations, debt service, etc.), they only cut what government spends on itself to $18 million. The math would be as follows:

Revenue Decline: 40% ($100 million to $60 million)
Government "Consumption" Decline: 10% ($20 million to $18 million)
Decline in Government Aid & Services: 48% ($80 million to $42 million)

In terms of "consumption as a percentage of revenue," in this case this government would have gone from 20% to 30%.

To return to a Net Oil Export example, Saudi Arabia's oil consumption as a percentage of production went from 18% in 2005 to 22% in 2008.

Of course, the problem is far worse since so many government pension programs are vastly underfunded, so--at least until many governments default on their obligations or file bankruptcy in the case of municipal governments--many government entities are going to be reallocating more and more money to their pension plans.

Well put, but what is happening now is that states realize that they should be putting more money into pension plans, but do dnot have the political will necessary to cut expenses in other areas. So the result is that retirement plans are becoming even more underfunded.

For example, in my home state of New Jersey, sucessive Democratic and Republican governors have decided the best way to handle this problem is to kick the can down the road and do nothing about it. Or in other words, no contributions have been made to the large state retirement fund in the last few years.

Actually it is an effectve political trick, for I would hazard a guess that 90% of the residents of NJ are not even aware that this is what's happening - including many who are planning a comfortable retirement from the fund.

Needless to say at some point contributions would have to be resumed or retirees would suddenly get nothing. But until we get to that point, the problem just keeps getting differed.

Similarly, the argument from Krugman and his ilk is going to be "The government didn't spend enough" (which is the usual argument about Japan's 20-year losing battle with deflation).

Wow, I didn't know Leenan was an economics guru. Can you tell me the "real truth" ?

No, but Greer can:

There is no brighter future ahead.

Krugman is a moron. His answer to every problem is that the government needs to spend more money. He's never seen a government stimulus that he didn't like. His advice to people upside-down in a home loan and with massive credit card debt would be to apply for another card and keep borrowing more money... its not like it has to be paid back or anything.

You can't spend your way out of the problem when the problem is your spending.

Krugman is not a moron; he is extremely intelligent. I don't agree with everything he writes because am not a pure Keynesian economist, but the guy is sharp as a tack.

Keynesian economics has been known to work and there is evidence. Normally, it would work. These are not "normal", times. Previously, as in the Great Depression, much of the worlds resources had only begun to be thrown away. By now, we have thrown away a vast amount of resources to throw away and we are running out of resources to throw away. Efforts to increase growth in the throwing away of resources or growth in demand (population growth) will simply speed up this disaster. Instead we need an economy based on conservation, sustainability and zero growth.

THe problems with spending money, which is what should be done in a low point in the business cycle, is we have not been following keynesian economics in past years, which would have us have balanced budgets during good times and higher taxes then, not during the downturn, so we would have a clean debt free slate to work with when we hit a downturn. Now we are already loaded up with debt, thanks to the no-new-taxes mentality of the right.

The other thing is of course peak oil and resource depletion, the fact is our current economy cannot be sustained much longer, not to mention further growth. The ability to pay back massive debts is a tenous proposition when basically consumption and jobs will be falling in our consumption rather than conservation oriented economy.

Greenspan is wrong to, as well as supply siders, the fact is there is little easy solution, or none, if we assume that there must be new growth and that we must maintain our current usage pattern of resources and consumption based economy, which both the keynesian and supply side do presently.

The goal of economics is to make sure people have basic necessities such as food, water, and shelter, and it is within humane effort to obtain these (no gulags please).

In the US we have a corporate gulag and an unelected corporate capitalism (ONLY kept in check and child labor, 15 hour day and worker beatings kept at bay with unions and govt. reg.) that is similar in many ways to the USSR command economy, focused on vastly expanding the wealth of the elite and causing environmental damage and resource depletion that is destroying our future.

We have to cut our energy consumption with public transit, have a long term view, meaning implement renewables now even though it is not the greedy thing to do, it will cost more but it will cost less in the long run, and overall be more flexible. By being flexible there are ways we can reduce consumption and create sustainable, zero growth (population and demand) societies while we work to eliminate poverty, by conserving energy used for wasteful things and prioritising on basic human needs, food, water, shelter.

I thought the usual argument about Japan was that the government propped up their very sick banks, rather than letting them fail, and tried to prop up real estate prices. Rather than endure a very sharp correction of over-inflated prices and a re-organization of the finance industry, Japan chose to "extend and pretend".

That's completely different to what's happening today.

Oh, wait...

OT - Are We Living In A THX1138 World?


HX 1138 is a 1971 science fiction film directed by George Lucas, from a screenplay by Lucas and Walter Murch. It depicts a dystopian future in which a high level of control is exerted upon the populace through omnipresent, faceless, android police officers and mandatory, regulated use of special drugs to suppress emotion, including sexual desire.

One of the things I remember from the movie was "Tex" "buying" stuff and then throwing it away in the provided container. What brought this all to mind is that I was in COSTCO this past week. As we were going to the exit, my wife thought she'd go to the restroom as we have a long drive. It gave me an opportunity to watch the stream of people and their carts full of stuff run by me. What I was struck by is that none of them seemed happy.

They were like the character in the movie...just going through the motions of life. And, as I look around me, this detachment from reality seems to prevail in just about everything people do. Interesting.


I just watched this, and it's pretty incredible...

Jon Steward, of the popular show The Daily Show, a comedic version of the news, ran this segment, earlier this week.

This is truly an incredible piece of reporting, and demonstrates this countries lack of mobility towards things such a alternative energy.


I'd highly reccomend anyone here to watch this in its entirety..



Just finished watching it. The Daily Show sums it up nicely. Excellent commentary.

Yes - one of the best pieces of journalism I've seen. It is a shame MSM doesn't even come close.

Stewart's team may have taken some creative license. When they showed the clip of Gerald Ford, he never did say the words "energy independent", so his words could have been taken out of context. But without that sleight-of-hand, it would not have been as impressive.

Sorry, this time Stewart's point stands up perfectly well. The full quote is:

A massive program must be initiated to increase energy supply, to cut demand, and provide new standby emergency programs to achieve the independence we want by 1985.

Stewart's staff actually weakened it by cutting it a little too short. It remains that we never saw a "massive program", or any program at all really, we just heard yet more political bluster, blah, blah, blah.

Yet again it's the archetypal behavior of politicians. All hat, no cattle. Empty posturing, utterly devoid of substance.

I saw that to, he wasn't actually doing a speech, however, we still have raw footage of 7/8...I think that is at least showing the tendencies of both our gov't, and our own inability to bring about change, that at this point, has become absolutely necessary..


I'll have to add that movie to my list.

I was just at COSTCO yesterday, and the experience always leave me feeling drained. Never one to indulge in "shoppertainment", how anyone could derive pleasure from wheeling a cart through a veritable demolition derby of preoccupied cell phone-jabbering kid-wrangling self-absorbed bargain hunters is completely beyond me. With their din and general stimulus overload, within minutes of waling in the door I'm looking forward to getting home.

Are such establishments a symptom of the general decline of the American Empire? -- an increasingly stressed populace forced to pay for the privilege of buying dietary staples in huge quantities in order to get them at a price approximately equivalent to a normal "sale" price.

I've shopped at CostCo on occasion. My parents do almost all their shopping there. They go at least once a week (not least because the gas is so cheap there).

I don't know anyone who considers that type of shopping entertainment. It's a chore, like scrubbing your toilet or taking out the garbage.

Chores. That is such a strange, un-human, word to me. All of the things you mentioned; scrubbing the toilet, shopping, are modern "conveniences" to which we have now become subservient.

There is no chore to be done after we defecate like the animals that we are, nature acts on the feces, it is glad, it is not a chore. It was only until technology created farming that we became too crowded and or "waste" had to be "managed".

Humanity, before all technology, did not "have to" shop to eat. It was not something to be gotten out of the way so you can REALLY enjoy living, it was living.

Then technology creates all these methods to help us cope with this subservience and invents self help books and religions and technological toys to make us more dependent on the thing that is enslaving us.

All these things we think we have to do are being dictated to us by the CEO of Technology, Inc. so it can grow bigger and bigger.

Well, I quit.

Bravo: OTOH if you really did quit, then you would never see my "Bravo" response because the most technical part of our life is this damned internet and you just quit. I 'quit' once when I was about 40 and after a week or two I was really hungry because it was winter and in Eastern Washington there was nothing to eat and I had not really prepared to quit, I just did it. Well, this time I prepared to quit but I keep remembering back and I still need this or that so I can't quite quit yet. Perhaps in another 10 or 20 years I will really quit. I really do hope you quit but then again how could you ever tell us how it goes? BTW, I am 77.

Being 54 yrs old now, I try to quit a little bit each day. I have been doing this for the last twenty years......Some call me eccentric, some call me a little crazy, but I will be one of the survivors in the collapse that's coming. There is always a choice in how we live.

Simplicity is the art of life....

Only too late, will 95% of the population of this truly wasteful country realize,,,they had it and pissed it away.

Today I got bombed by a mocking bird because I was to close to their nest, why I was there was to pick the blackberries. One whole bunch went unpicked (likely half a gallon). I got about a quart and a half off of two other bunches before the heat became opressive.

I am reminded that we could have an outhouse, instead of an indoor bathroom. We could have to carry five gallon buckets in from a well, or use a hand pump to pump water into a sink in the house. All the things we take for granted in the USA are a given in a lot of other places and were a given in my parent's childhoods.

But I'll be honest I miss Costco, I liked their selection better than Sam's.

So I got to ask people that can Go to a Local CostCo, Do they have these.


In your stores, or are they only online? My brother never got back to me about the Costco in Huntsville Ala. It's out of his way generally and he let his membership slide.

Just asking. It would be neat to add a few different things to the store room, when money was available.

The blackberries are so full and ripe that we don't have enough hands to pick them. Just the one area we went to today would have filled a five gallon bucket easy, maybe two when they are all ripe.

BioWebScape designs for a better fed and housed world,
Hugs from berry stained Arkansas.

Here on Kauai, Costco is a meeting place. The island is still small enough that the majority of people you see, you at least recognize, and many you know. It is a fairly pleasant social experience. You can't get out of the store quickly because it is rude not to "talk story".
A few years ago we happened to have 2 simultaneous meetings one evening. The kick off meeting for the 2050 sustainability initiative for the State of Hawaii, with all the heavy hitter pols, and the grand opening of Costco. You still could not buy anything, it opened the next day. But you could see what was available. 150 people attended the sustainability meeting, which was the largest turnout for any of the State meetings. 3000 people attended the Costco event. 5% of the island population, including the bulk of the 150 from the sustainability event down the street earlier.
It was very telling.

Costco is nearly necessary to exist in Hawaii on a low budget these days; of course it'll be going away. We go there about 6 times a year for dogfood and bulk staples.

I actually find it to be surreal to see; my headspace is usually so far into the future that while there I feel a bit like a time-traveller transported back into a preposterous potlatch of consumerism. Stories will be told around campfires of such places in the not too distant future... and they will be hard to believe.

Shopping carts of the gods....

I can see that happening.

But I can also see a bit of living the old ways when my Mom and her family all went out berry picking, when food gathering was a social affair.

I sometimes wonder why they need to make so many of some items, I know it is the CONSUME or die mentality of this Nation, but it still makes me wonder how it all got started and when it will all end.

I am sure people didn't even notice me and my dad out picking berrys this afternoon, I know I once looked and the car that was stopped was cellphone centric and not even looking about. people seem so lost in their own little worlds these days, it is hard even at times to get other people's attention when you are out and about it the world.

Not something that will be the norm for much longer I hope.

BioWebScape designs for a better fed and housed world.
Hugs from hot Arkansas

By way of contrast, shopping the garage sales can be entertaining and very rewarding. Amazing what you can pick up for 5% or 10% of the original price--much of it perfectly good.

One of our favorite family stories is about "shoppertainment". My wife and I went to a Big Lots store for some specific thing, and while there became entranced by all the bargains. We just kept finding more and more to put in our cart until it was almost full!

Near the end of this adventure in wildly unfocused consumerism we got our hands on some gizmo that was a fantastic deal - but we couldn't figure out what we would ever use it for. It broke the trance and allowed us to see that the shopping cart was FULL of things we would probably get little use from.

With lots of grins and giggles we deserted our shopping cart in the middle of an aisle and slipped out of the store. By the time we reached out car we were laughing out loud. We have never since had so much fun in a store :-) (*apologies the clerk that had to re-stock it all)

Great idea, Greg!

We should all do this--then the big box stores would have to hire more people to put everything back on the shelves. This is the modern version of Keynes's 1930s suggestion that the government hire one group of people to bury money in jars, and another group to dig it up again.

Everybody, do your part for the economy--desert your shopping cart today! ;-)

On this issue, Keynes was right. Why do you think the pyramids were built? They were mainly make work projects to employ unemployed Egyptian peasants year after year after year. May as well bury jars in the ground and dig them up. The point is that when you have a lot of unemployment you have to figure out how to get money in the hands of the unemployed so that they can stimulate consumer spending, which in turn stimulates business investment and thereby the whole economy.

Source: John Maynard Keynes, "The General Theory of Employment, Interest, and Money."

No argument from me, Don. Make-work is better than no work. Work to create useful infrastructure would be the best, but that's not going to happen. Somehow the idea of the government directly employing the long-term unemployed is in such bad taste that it's never, ever mentioned.

You might not be a Keynesian, but I am. Especially when he says the important things in his writing are the fundamental ideas, not the particular way he has formulated his equations.

I'm a "cafeteria Keynesian" as was the late great Paul Samuelson. I pick and choose what I think is correct from Keynes's many writings.

Along the same line, have you noticed that all the ads for casinos show people smiling and "having fun".
But if you go into a casino, I challenge you to find even one person smiling! All they do is sit there with a sour look pushing buttons. They don't even get the exercise of pulling the handle or putting in the coins any more.
I went to the nearby casino with some friends who wanted to eat at the casino restaurant and after we ate we walked through the casino. I was going to put some of my pocket change into the slots, only to find upon asking one of the employees that none of the slots take coins any more. So the coins in my pocket went into my savings jar.

I find casinos to be the second most depressing places to visit, after nursing homes.

Agree, Consumer, except that I would reverse the order. Residents in nursing homes find many people around who care, but can't help. At Casinos, there are many people around willing to help, but they don't care.

Cheers! (errr.... cheerless?)


Hi Tom,

We've upgraded a number of Royal Canadian Legions recently and I was shocked to find that all of them have VLT machines and that all are heavily used. I was expecting darts and drinks, but this discovery left me thoroughly depressed.



I was on the board of one such Legion when they introduced the V.L.T. machines. Declining revenues made the decision for the move easy to justify in many members' minds- boils down to the money.

Within a year, the V.L.T.s were generating more income than all other revenue streams combined. Over Cdn. $2000 / week and this in a community of fewer than a thousand people.

Sad commentary when an organization mandated to support aging veterans relies on the proceeds of gambling addictions to survive.

Cheerless again,

Tom :-(

"David Kotok: BP Oil Spill Will Cause 1 Million Permanent Lost Jobs"


I saw the article by The Big Picture and got curious about the claim that The Trans Alaska Pipeline will stop at MOL of 700,000 barrels per day current production reate if they stop finding new oil to pump. In Wikipedia they say 200,000 bpd MOL for the Trans Alaska Pipeline to be hit around 2020 without new finds, otherwise 2032. Kotok should check his stats before publishing such things.

Plethora of Bad Ideas

The US desperately needs less government. Yet nearly every day, someone sends me some harebrained scheme to fix the economy. Today I received two such proposals.

One person wanted to put a $5 per gallon tax on gasoline. Another person wanted to create jobs by building monorails.

A $5 tax on gasoline would likely crucify what little manufacturing we have left and would bankrupt millions who barely get by as it is.

A series of monorails would without a doubt add $trillions to the national debt.

Everyone of these harebrained proposals assumes government can tax-and-spend money better than individuals, or alternatively that printing money and cheapening the dollar is a good idea.

Both assumptions are absurd, yet people keep sending me free-lunch proposals or schemes...


The above cut and pasted begins about half-way down the article in the link.

"The US desperately needs less government" is a pretty standard mantra of that belief system known as "Libertarian Fundamentalism", a term being increasingly used to try and describe the anti-government, anti-social rhetoric popular among the far right in the US.

Apparently, blogger Mish Shedlock is not exactly your typical investment dingbat(Larry Kudlow, Cramer) as he attacked uber-goldbug Peter Schiff, who advises Ron Paul, for the bad results of his fund.

Schiff accused Shedlock,
"nothing more than an overt advertisement (and a highly deceptive one at that) to use my popularity to advance his career,"


So I am inclined to overlook his lapses of libertarian idiocy such as when he said the Great Depression was an 'accident'.

Anyone who wants less government should visit places with less government - like Somalia. And if they come back, we can talk about how great it is.

Actually, in a sense they have a wretched surplus of government - in the form of warlords and their gangs...

Corporations are our warlords and gangs. I think what is meant by Somolia is there is no government to look out for peoples interests and that the people control, just unelected thugs ready to exploit and abuse people, how Conservatives would have it in the US.

"Addicted to Oil". A funny cartoon in the Economist
Obama and Uncle Sam

Solid organic electric battery based upon treated potatoes

Researchers at the Hebrew University discovered that the enhanced salt bridge capability of treated potato tubers can generate electricity through means readily available in the developing world. This cheap, easy to use green power source could substantially improve the quality of life of 1.6 billion people, comprising 32% of the developing non-OECD populations, currently lacking access to electrical infrastructure. Such a source can provide important needs, such as lighting, telecommunication, and information transfer.

HT Slashdot, which led off with these comments:

Or they could just eat them...

With NEW Shockingly Great Taste!


Wasn't the first battery a potato or human skull or the like, anyway? Developed in the 19th C, I'm not counting those weird piles discovered in Sumerian tombs or whatever it was.

There is additional information which confirms that US oil demand is making a surprising recovery, lead by a remarkable 12% growth in distillate demand over last year.

Although it's likely that part of the increase in distillate demand can be traced to an uptick in maritime demand from shipping (including from shipping outside of the US), it has been reported that trucking is up 10% over last year. Mostly the trucking demand has been attributed to the a pickup in imports which have to be transported by trucks.

Granted increasing imports does not seem like a sustainable economic model in the post peak world, but for 2010, I expect the EIA and IEA to shortly revise upward their estimates for worldwide oil use in 2010.

June 21 (Bloomberg) -- U.S. diesel demand is rising at the fastest pace in five years as the economy expands and truckers haul more goods, boosting profits for refiners.


Here's a DB post of mine about increased shipping at LA ports and attendant increase in distillate, including a graph of CA diesel demand vs. traffic at the Port of Long Beach, and some links to a Calculated Risk article on this and data. Also: CEC Forecasts and Analysis for the 2009 Integrated Energy Policy Report. May be of interest. The graph is striking, quite the correlation, as would be expected. Here's some breaking news: Retail Container Traffic Increases

A sign that consumers are buying more than they were a year ago, import cargo volume at the nation’s major retail container ports is posting double-digit increases versus last year.
After cargo volume increased 16 percent in April, cargo volume is expected to increase 15 percent this month compared with June 2009, and double-digit increases should continue into the fall, according to the monthly Global Port Tracker report released Friday by the National Retail Federation and Hackett Associates.

In retrospect, it appears businesses in 2009 cut their inventories too steeply relative to demand (maybe to get 'ahead' of the economic downtrun they expected). This reduced trucking miles more than the decline in retail business activity.

Now that they want to bring retail inventories back to some normal ratio, more than the usual amount of goods have to be ordered, with the resulting abnormal increase in shipping and trucking.

Granted this could extend into the fall as indicated, after which deisel demand should go back to tracking the overall economy.

In retrospect, it appears businesses in 2009 cut their inventories too steeply relative to demand (maybe to get 'ahead' of the economic downtrun they expected). This reduced trucking miles more than the decline in retail business activity.

The banking crisis simply froze a lot of credit lines for business's and various other business credit operation. A good bit of the slow down had nothing to do with the business itself but sudden disruption of credit lines. By the time these businesses had either regained their credit lines or found alternative financing many had run their stock down.

One story.



Certainly it affected many businesses which where profitable. The point is a fast financial crash can depress business well below its natural levels even if its in decline. People still have to live. I think a good bit of the bounce back was a fairly simply natural rebound from excessive tightening caused by the financial nature of the crash.

Look at it this way in the 1930's if the banks had been insured and not simply lost peoples savings the economy would have probably also experienced a much stronger rebound before heading downwards.

Indeed the financial games keeping failed banks alive or in a zombie state unable to make loans continues to probably drag the economy a bit.

The layoffs and streamlining and plain old fear of losing your job so you work harder has increased profitability along with lower wages.

So we have in effect simply cycled back up to what I call "real" crash levels i.e about where the economy would have been if we had not had a fast financial crash. Of course now that the rebound is over we should start peaking economically and rolling over the other side.

This means business with real problems that somehow managed to survive still have real problems. Housing is still messed up nothing really changed.

Now the economy can contract again from its current level but its much closer to being a leaner meaner fighting machine if you will than it was before the crash. We gained a lot of resiliency and where we could not direct props have been put into place. This does not mean its going to expand from this level it still way to sick to do so however it does mean that it will have to be pushed down from here.

Assuming no external forces i.e oil remains cheap the stock market does not crash etc etc then I'd argue it would idle along about where it is now not really growing and not really shrinking. The next crash with a far less bubbly economy will require tremendous pressure.

I think oil will provide that pressure point. Technically the stock market should also be considered but its so rigged now it will have a hard time crashing.

This is why I think our intrinsic resource issues will be pushed to the forefront they can no longer work as secondary forces with the changed being primarily financial since the financial system itself has been given a blank check.

By removing financial panic as a factor we have I think unleashed and even deeper and more serious form of collapse.


Some tanker data stuff...


The REAL interesting part...

Oil purchases from Angola reached 4.29 million metric tons in April, about 70 percent more than two years earlier, customs data show. Saudi Arabia supplied 3.09 million tons. The average journey from Angola to China takes more than 33 days, compared with 21 days from Saudi Arabia, according to the distances.com website. Venezuela to China takes almost 40 days.

Everything I've read seems to indicate that China is not depending on rising imports from Saudi Arabia but getting them from other sources.

So basically Saudi Arabia has cut exports to the US and does not seem to be increasing them elsewhere.


Either they are cutting as claimed or production is in serious decline and export land is heating up.

So either KSA is tellng the truth or word oil exports are falling off rapidly. If you combine export land with a rapid production decline in some exporting countries you get a real nasty. Don't know what else to call it :)

Saudi oil spokesmen do not always lie. To claim the opposite is to engage in crude stereotyping and prejudice of the worst kind.

Saudi oil spokesmen do not always lie.

Indeed, they just exaggerate.

A sign that consumers are buying more than they were a year ago, import cargo volume at the nation’s major retail container ports is posting double-digit increases versus last year.

Taking into account the dollars recent rise relative to other currencies, this uptick in cargo import volume might have more to do with trade/inventory dynamics than in consumer buying. Retailers may be taking advantage of the (relatively)strong dollar to 'tank up' the inventories before the dollar levels off or drops again.

That too. I've been mentioning that the Euro financial panic has acted to reduce the US price of oil, and in reverese of what would usually be expected after this recent mini-panic, US oil and import demand in general has increased.