Drumbeat: July 7, 2010

U.S. Cuts Price Forecast for Oil on Concern Global Economic Growth to Slow

The U.S. Energy Department reduced its crude oil price forecast for 2010 on concern that global economic growth may slow and on ample U.S. stockpiles.

West Texas Intermediate oil, the U.S. benchmark, will average $78.75 a barrel this year, down from last month’s forecast of $82.18, according to its monthly Short-Term Energy Outlook, released today. That’s 28 percent higher than the 2009 average of $61.66 a barrel.

Prices will climb 4.8 percent to average $82.50 a barrel in 2011, the report showed. The estimate for next year was down 3.5 percent from May’s report.

EU Energy Chief Urges Ban on New Offshore Drilling Until BP Probe Finished

The European Union’s energy chief urged a ban on new offshore oil drilling until the causes of BP Plc’s spill in the Gulf of Mexico are known, citing the need for “utmost caution.”

The call by European Energy Commissioner Guenther Oettinger is directed at EU national governments, which are responsible for granting oil-exploration permits. The administration of President Barack Obama is fighting to reinstate a temporary ban on deep-water oil drilling that a judge threw out on June 22.

China invests millions into Canada's oil sands

BEIJING - Energy-hungry China, once stung in its efforts to secure access to resources in North America, is making a more subtle push into Canada's oil sands, and the new approach is paying off, experts say.

Chevron to get 1/3 stake in Rosneft JV - sources

MOSCOW (Reuters) - Chevron will take a roughly 30 percent stake in its Black Sea oil venture with Russia's largest oil producer, Rosneft, industry sources said.

"The ownership structure will be around one-third Chevron, two-thirds Rosneft," a source familiar with the details of project told Reuters.

Court OKs reorganization plan for Utah’s Flying J

Just two years ago, Flying J was the 16th-biggest privately held company in the U.S., according to Forbes magazine. What the overhauled Flying J will look like in the future is still hazy. Maggelet said the company won’t discuss that until sometime today.

Flying J, along with its Big West refining and Longhorn Pipeline subsidiaries, filed a voluntary petition for reorganization in December 2008.

The companies said a rapid plunge in oil prices and a sudden freeze in credit markets led to a shortage of cash it needed to run its business.

Chavez will take little more than joy from US oil woes

During his election campaign, the US President Barack Obama pledged to end “in 10 years” the country’s dependence on oil from politically unreliable sources.

In the western hemisphere the finger was pointed squarely at Venezuela, the president of which, Hugo Chavez, has often threatened to cut exports to the US in response to real or imagined threats from what he calls the “yanqui empire”.

Mr Obama’s ambitious goal looks even more of a stretch after the environmental disaster in the Gulf of Mexico, the source of expected growth in domestic production. The resulting six-month moratorium on fresh deepwater drilling may lead to a drop of 70,000 barrels per day (bpd) in production next year, the Energy Information Agency says.

Total Reorganizes Oil Sands Portfolio with $1.42B Acquisition

Total E&P Canada, a Total subsidiary, has signed an agreement with UTS Energy Corporation (UTS) to acquire UTS Corporation with its main asset, a 20% interest in the Fort Hills mining project in the Athabasca region of the Canadian province of Alberta.

Middle East Crude-Qatar price cut stirs buyers

SINGAPORE (Reuters) - The Middle East crude market was firmed on Wednesday as a cut in Qatar's official selling prices (OSPs) for June spurred buying interest.

Traders waited for the release of OSPs from more Gulf producers and crude allocations from top oil exporter Saudi allocations to calculate their requirements for September trading.

Cygnus Confirms Largest Ever Discovered UK Sector of North Sea

Endeavour announced that a sixth appraisal well has been successfully drilled and tested in the Cygnus gas field further confirming the field as one of the largest ever discovered in the UK sector of the Southern North Sea. In addition, the Department of Energy and Climate Change has awarded Cygnus field participants interest in P1731 covering blocks 44/11b and 44/12b. This new license contains additional fault blocks forming a northerly extension of the Cygnus structure that are yet to be appraised by drilling.

Iran power deal seen unlikely to address Pakistan’s immediate needs

LAHORE: A plan to import 1,000MW electricity from Iran is unlikely to address Pakistan’s immediate energy crisis as the whole process will take at least five years to materialise under the normal security conditions, government officials said on Monday.

Iran-Pakistan gas pipeline

While laying the groundwork for strategic relationship with Pakistan, the US is persuading Pakistan to scuttle the Iran-Pakistan gas pipeline project due to its serious reservations about Iran’s nuclear ambitions.

The US administration is sympathetic about the energy problem of Pakistan but opposes the pipeline because it involves Iran, a country US President Obama labels as a ‘rogue state’.

Pakistan Pays Price for Trucking in Afghan War Cargo

(Bloomberg) -- Hundreds of trucks and buses leave the main highway in northwest Pakistan each evening at sunset to wait out the overnight closure of a strategic tunnel. Taliban attacks there are raising the cost of supplying U.S. troops in Afghanistan and hurting the local economy.

Egypt: Fights break out amid gas and diesel shortages

Problems related to gasoline and diesel fuel shortages in the provinces intensified on Tuesday, as disputes and fights erupted between drivers and gas station owners.

In the Governorate of Assiut, gas stations ran out of supplies of 80- and 90-octane gasoline in addition to diesel fuel. Verbal confrontations developed between drivers and station owners after the owners announced they were out of fuel. Some of the drivers then took to the streets on foot hunting for fuel supplies.

Eskom warns more than 50 towns to pay or get power cut

Eskom has warned 11 Free State municipalities, representing more than 50 towns, that it would disconnect their power supply if they did not pay their electricity bills by July 20.

On Wednesday, Democratic Alliance deputy shadow minister for energy David Ross said the Free State government should intervene in the matter to prevent an energy crisis in the province.

Spill veteran says both relief wells may be needed

HOUSTON (AP) — A former Pemex engineer in charge of deepwater drilling operations during a 1979 oil spill in the Gulf of Mexico says BP may need both relief wells it's drilling to contain the gusher in the Gulf.

New Report Says Energy Efficiency Measures Have Greatest Impact

A new study out today by the Energy Efficiency Council of Australia finds that, "energy efficiency will deliver 65 per cent of worldwide carbon cuts in the energy sector by 2020, and 54 per cent by 2030. This means that in 2020 energy efficiency could have almost twice the impact of renewable energy, nuclear power and clean coal combined."

Chevy Volt coming ... Good luck getting one

NEW YORK (CNNMoney.com) -- General Motors is set to begin sales of the Chevrolet Volt electric car by the end of this year. But if you have your heart set on buying one, you'd better cool your heels.

GM plans to build only 10,000 Volts in 2011.

Tesla interest wanes, stock below IPO price

NEW YORK (CNNMoney.com) -- Shares of Tesla Motors sank below their initial public offering price Tuesday and continued to remain depressed Wednesday.

Electric refueling: Doing the math

Oilbama and what passes for a green movement talk breezily of “clean energy,” as if the only thing blocking a rapid and thorough transition to an alt-energy economy is oil-industry corruption and political indecision.

In the misleading verbiage of such false prophets, you never get any details. Why not? Because the facts are entirely contrary to the promises.

Should Cities Install Moving Sidewalks?

If it sounds like the stuff of science fiction … well, it has been. In his short story "The Roads Must Roll," Robert Heinlein imagined the United States — facing a war-strained petroleum shortage that meant the "end of the automobile era was in sight" — shifting to a series of massive commuter moving walkways. Of the first "mechanized road," built between Cincinnati and Cleveland, Heinlein writes: "It was, as one would expect, comparatively primitive in design, being based on the ore belt conveyors of ten years earlier. The fastest strip moved only thirty miles per hour, and was quite narrow, for no one had thought of the possibility of locating retail trade on the strips themselves."

25 million acres of corn with nowhere to go, by 2030?

Buried inside the USDA’s Biofuels Strategic Production Report is a startling prediction from both EPA and USDA: if the Renewable Fuel Standard targets are to be met by 2022, there will be a wholesale change in US crop usage.

However, doomsayers who have been predicting an inevitable conflict between food and fuel appear to have been completely off the mark.

Rather than a shortage of food, the increased pace of biotechnology innovation associated with bioenergy is set to usher in a period of food abundance so intense that US food policy may have to move back towards crop subsidies, because there will be far more food available than the world will know what to do with.

South Africa: Pebble Bed Technology is 'A Costly Source of Energy'

Johannesburg — THE pebble bed modular reactor (PBMR) technology is unlikely to solve SA's energy shortage in a cost-effective way, according to an Institute of Security Studies paper on the project.

The Case Against the ‘Malaise’ Speech

Recently a narrative has sprung up, on the “crunchy” right as well as on the left, that argues that Carter was prescient rather than over-pessimistic, and that America would be better off today if we’d heeded his indictment of consumerism and self-indulgence, rather than spurning him for the go-go optimism of Ronald Reagan.

Peak Oil, Time, And Population

There is a close relationship between peak oil and population. Since the 1950s there have been many estimates of the rise and fall of global oil production, but it was perhaps inevitable that the shift has been from optimistic to realistic. After all, it is better for one’s reputation to make errors on the side of caution than to look like foolish by announcing a catastrophe that does not occur. With increasing studies, however, and with increasing proximity to the critical events, realism at last takes over.

We begin with two basic facts. The first is that the world’s present annual consumption of oil is nearly 30 billion barrels. The second is that the world’s present population is nearly 7 billion. From there we can add some reasonable estimates of both oil decline and population decline.

Green religion movement hopes spill wins converts

NEW ORLEANS (AP) -- Where would Jesus drill?

Religious leaders who consider environmental protection a godly mission are making the Gulf of Mexico oil spill a rallying cry, hoping it inspires people of faith to support cleaner energy while changing their personal lives to consume less and contemplate more.

Chris Martenson - RESILIENCE: Personal Preparation

My “standard of living” is a fraction of what it formerly was, but my quality of life has never been higher. We live in a house less than half the size of our former house, my beloved boat is gone, and we have a garden and chickens in the backyard.

Peering in from the outside someone might conclude that our family had fallen off the back of the American dream truck with a thud. But from the inside they would observe a tight, comfortable, confident, and grounded family. We owe much of our current state of unity to the fact that we embarked on a journey of becoming more self-sufficient and discovered the importance of resilience and community along the way.

Anyone can do the same. But first, we must lay some groundwork and address the question, “Why prepare?”

Beach reading about the great meltdown and the way forward

The Long Energency, by James Howard Kunstler. In The Geography of Nowhere, Kunstler offered the most trenchant analysis of the downside of American suburbia and car culture. This 2006 book, published at the height of the boom, looks at how the misallocation of resources into sprawl (and its financing), global competition for more scarce energy resources and climate change will make a future for which few Americans are prepared even now. Essential reading for optimists who worry and other realists.

The aspiration gap

A hardcore Plan C advocate can be aggressively unimpressed with conventional measures to conserve energy or use alternatives. The numbers themselves, can be disheartening: if we achieved optimistic projections for the amount of energy that solar and wind could provide by 2020, we are only up to, what, 2% of world BOE usage?

For someone who has invested considerable time, energy, and optimism into solar energy, into electric cars, or into getting 100 mpg from their Prius, Plan C may seem to treat their small measures or first steps, perhaps gained with considerable struggle, with contemptuous disregard: “yes, your electric scooter is cute, but where are we going to come up with the other 219 Million Barrels of Oil Equivalent per day once we are all riding those?”

As the world’s ice melts, the Navy’s role grows

Roughead said that the melting Arctic creates all kinds of issues as more water is freed up for fishing, shipping and mineral exploration. The United States, Canada, Russia, Norway and Denmark (via Greenland) have made new claims for territory, prompting Chinese naval Rear Admiral Yin Zhuo to say four months ago, according to the China News Service, “The Arctic belongs to all the people around the world as no nation has sovereignty over it . . . China must play an indispensable role in Arctic exploration as we have one-fifth of the world’s population.’’

For Roughead, that means that the United States needs to become an indispensable player in the global marine legal arena. The first step, he said, is for Congress to finally approve the UN Law of the Sea Convention. The convention has 160 signatories, but not the United States. It creates a global structure for using the oceans. The Obama administration and the preceding Bush administration, as well as other military leaders, support the treaty. But hard-line conservatives and some business interests have blocked passage in the Senate, saying the United States would cede too much to the UN in territorial sovereignty and resource rights.

Simmons unlikely to win $10,000 oil bet with Tierney

Matthew Simmons is very unlikely to win his $10,000 bet with NYT columnist John Tierney that the average price of oil in 2010 would be more than $200 a barrel. Of course that was true before 2010 even started, but it's quadruply true now that 2010 is half-over and oil is $73. Simmons needs oil to go well over $300 for the rest of the year.

India oil minister seeks help to offset diesel hike

(Reuters) - India's junior oil minister Jitin Prasada said on Wednesday he had urged the farm ministry to raise the price at which government buys grains from local farmers to offset the hike in diesel prices.

Romania dishes out licences

Romania granted 20 oilexploration licenses in July, including five in the Black Sea, to companies including Russia's Lukoil, Hungarian Mol and US supermajor Chevron the national agency for mineral resources said.

China Gas Profit Jumps More Than Sevenfold on Sales and Derivative Gains

China Gas Holdings Ltd., the supplier of the fuel to homes and business on the mainland, said profit increased more than sevenfold on higher sales and gains in derivatives contracts.

ConocoPhillips asset sale could hit $15bn

ConocoPhillips, the third-largest US oil company by market value, has said it could get more than $10 billion from asset sale over the next two years and use the proceeds to reduce debt.

The company could sell closer to $15 billion worth of assets since the sale to date have generated higher premiums than he expected, Deutsche Bank analyst Paul Sankey said to Reuters.

Petrobras Debt Risk Rises More Than Pemex on Deepwater Drill Cost Increase

The cost of protecting against a default by Petroleo Brasileiro SA, the largest oil producer in waters below 1,000 feet, is surging relative to Petroleos Mexicanos on concern that deep-water drilling costs will jump.

Credit default swaps that protect against non-payment by Petrobras, as the Rio de Janeiro-based company is known, over five years cost 187 basis points, or 36 more than its Mexican counterpart, which has no production deeper than 1,000 feet (305 meters), according to prices compiled by CMA DataVision. The gap reached a 17-month high of 47 basis points, or 0.47 percentage point, on June 30, up from 19 on April 20, when BP Plc’s rig explosion in the Gulf of Mexico sent oil spewing into the ocean.

Crews connecting oil vessel to ruptured well as leaders pray for Gulf

(CNN) -- Interfaith leaders prayed for restoration and renewal for the Gulf of Mexico as they prepared for a tour of the oil-soaked marshes, wetlands and rookeries of the Louisiana coast Wednesday.

Abandoned oil wells make Gulf of Mexico 'environmental minefield'

The Gulf of Mexico is packed with abandoned oil wells from a host of companies including BP, according to an investigation by Associated Press, which describes the area as "an environmental minefield that has been ignored for decades".

ExxonMobil Broke Air Pollution Laws, Group Says

(AP) The largest U.S. oil refinery violated federal air pollution laws thousands of times during the last five years, releasing 10 million pounds of illegal pollution, including cancer-causing toxins, without facing proper fines or being forced to fix equipment, environmental groups claim.

China and Canada: It's All Business

The King, reports the Gazette, told the story of a meeting of his cabinet during which he asked his advisors to pray with him, “May Allah prolong its life,” without saying what “it” was. When asked to clear up the mystery the King said he said, “It is the oil wealth. Just leave the underground wealth for our sons and their sons.” Saudi leaders have well-earned reputations for using only the most optimistic language to describe the state of the kingdom’s oil. To concede, even in the most unstructured environments, for the most benign purposes, that Peak Oil is something to be reckoned with is to cede significant ground.

King Abdullah’s remarks, even after efforts to walk them back by other Saudi officials, are simply the latest reminder that cheap oil is a thing of the past. We’re going to extreme depths, at exorbitant cost, to find and produce crude reserves, which is necessary right now because there is no alternative or alternatives that alone or in combination can replace fossil fuels, still the cheapest way to power cars, cool homes and otherwise light up our lives.

Huhne to overturn ban on councils selling green electricity

A ban on councils selling green electricity into the national grid is to be overturned, Climate Change Secretary Chris Huhne announced today as the carbon footprint of every local council in England was published.

In a speech to today’s Local Government Association annual conference, Mr Huhne will say that he wants local councils to be allowed to sell electricity they produce from renewables to the national electricity grid.

European Union Tightens Timber Rules to Help Save Forests, Fight Emissions

The European Union decided to make suppliers of timber to Europe guard against illegal logging, bolstering a push to fight climate change through worldwide forest protection.

The European Parliament voted to force companies to use a system of due diligence to ascertain that the timber they sell in the 27-nation EU was harvested legally. A fifth of EU timber imports may come from illegal sources, according to the European Commission, the bloc’s regulatory arm, which proposed the legislation in October 2008.

British activist fighting expulsion from Peru

LIMA, Peru – A British religious activist is fighting an expulsion order from Peru's government for allegedly inciting unrest among indigenous peoples protesting environmental damage from oil drilling in the Amazon rainforest.

The Ecological Crisis is an Economic Crisis; the Economic Crisis is an Ecological Crisis

The post-WWII boom was based on cheap oil. But oil is nonrenewable, polluting, and causes global warming. It was "cheap" because the capitalists did not pay to prepare for the day when it would be harder to access oil. We have reached that day, which is one aspect of the worldwide crisis of the return to the epoch of capitalist decay.

A Housing Project in Victoria That Embraces Nature

VICTORIA, British Columbia — Rare are the homeowners who welcome a sewage treatment plant in their backyards. But at Dockside Green, a 15-acre mixed-use development being built just north of this city’s downtown harbor, neighborhood utilities are less a cause for alarm than part of the amenity package.

“These are our best-selling units,” said Joe Van Belleghem, a local developer who won a city-sponsored competition in 2004 to develop Dockside Green. On a recent Friday afternoon, Mr. Van Belleghem was on site, pointing to ground-floor condominiums with decks jutting over a network of ponds and waterways containing native plants, otters and ducks.

China pumps billions into Canada's oil sands

BEIJING (AFP) – Energy-hungry China, once stung in its efforts to secure access to resources in North America, is making a more subtle push into Canada's oil sands, and the new approach is paying off, experts say.

Chinese firms seeking a toehold in the largest known crude deposit outside the Middle East have opted for joint ventures and partial stakes to avoid the kind of political uproar sparked when CNOOC tried to take over US oil group Unocal in 2005.

"They are tiptoeing around the edge, not challenging anybody, not getting in any American Senators' faces -- just very quietly taking a position," said David Hewitt, regional head of oil and gas research at CLSA in Hong Kong.

Crude Oil Falls for a Seventh Day on Signs of Slowing Economy, Fuel Demand

Crude oil traded near a one-month low in New York as equity markets declined, fanning concern that the economic recovery may falter and impede fuel demand.

Jeff Rubin: The G8: The biggest brake on growth

Of late, the major Western European economies have hardly grown at all, and even those economies that have seen a modest recovery, like the U.S.’s, now show widespread signs of weakness, just as many of President Obama’s stimulus measures are about to run out of gas.

Energy- and resource-rich member states like Russia and Canada are the exceptions, benefitting from the ongoing industrial revolutions in China and India, and the lift they give to commodity prices. (If the OECD still accounted for three quarters of world oil consumption, as it did in the mid-1990s, would oil still be trading at over $70 per barrel?)

Sinopec Cuts Crude Processing at Yangzi Refinery on Losses, Weaker Demand

China Petroleum & Chemical Corp., the nation’s largest oil refiner, cut crude processing volume at its Yangzi oil refinery in the eastern Jiangsu province on refining losses and weaker demand, a plant official said.

China Plans New Resource Tax on Coal, Oil, Gas in Western Areas

China plans to impose a new tax on coal, oil and gas extraction in western provinces, raising funds to develop its most restive region in a move that will reduce profits for PetroChina Co. and rival resource producers.

Heat Wave Means Natural Gas Rises Most Since '05 in Survey: Energy Markets

The hottest U.S. summer in three years and the start of hurricane season means analysts are forecasting the biggest gains in natural-gas futures since 2005 for the six months ending in September.

Gas may climb 27 percent from the first quarter to $4.90 per million British thermal units, according to the median of 13 analyst forecasts in a Bloomberg survey, extending a 19 percent gain in the three months through June 30. The estimates ranged from $4 to $5.50. August-delivery gas was little changed at $4.682 per million Btu yesterday on the New York Mercantile Exchange.

Commodities May Extend Drop This Quarter on `Open Gap': Technical Analysis

Commodities may extend the worst slump since 2008 this quarter after an advance in June proved short-lived, Barclays Capital said, citing trading patterns.

Big Oil Firms Accused of Human-Rights Abuses in Burma

To the list of Big Oil companies with p.r. problems add two more: Chevron and French energy giant Total. In a report published on Monday, the NGO EarthRights International accuses the firms of being implicated in human-rights violations in Burma, claiming that soldiers guarding Chevron and Total's natural-gas pipeline in the country have murdered locals and forced others to do backbreaking, unpaid labor in order to keep the gas exports flowing smoothly. The report also holds that the revenues from the operation have been propping up the country's oppressive military government for more than a decade, thus fostering harmful political outcomes that affect the entire country.

Fracas erupts over ‘fracking’ practices

Despite the best intentions of energy icon T. Boone Pickens and regardless of the controversy over deepwater exploration in the Gulf of Mexico, onshore natural gas operations in the United States face a serious and distracting problem.

Hydraulic fracturing — the now common industry process of injecting water and chemicals into reservoirs to fracture rock and free up gas and oil — is in the cross hairs of shareholders and environmental groups, and is drawing scrutiny from Congress, which is considering increased regulation.

BP gets U.S. demand for notice of asset sales

LONDON — BP PLC confirmed Wednesday that it received a demand from U.S. authorities for advance notice of any asset sales or significant cash transfers.

The Financial Times reported that U.S. Assistant Attorney General Tony West, who heads the Civil Division of the U.S. Department of Justice, wrote to Rupert Bondy, BP's general counsel, on June 23. Normally the U.S. Justice Department does not require advance notice of such deals.

BP's Hayward in MidEast talks as relief well advances

ABU DHABI/HOUSTON (Reuters) – BP's boss met officials from an Abu Dhabi state fund on Wednesday as hopes for fresh investment and progress toward closing a leaking U.S. oil well lifted the company's battered shares.

Louisiana and Scientists Spar Over How to Stop Oil

As the gulf oil spill enters its third month, Louisiana officials have grown increasingly enamored of large-scale engineering projects, like sand berms and rock walls, to keep the oil off their coast. But these projects, which demand the swift restructuring of eastern Louisiana’s dynamic and fragile coast, have brought the desires of state and local officials into sharp conflict not only with a complicated federal bureaucracy charged with protecting wetlands and estuaries, but also with an experienced and highly vocal community of local coastal scientists.

U.S. Deep-Water Drill Ban a `Rational' Response to Emergency, Salazar Says

The U.S. government said a ban on deep-water oil drilling is a rational response under emergency circumstances and should be reinstated immediately.

Interior Secretary Kenneth Salazar said in documents filed with the U.S. Court of Appeals in New Orleans that his department acted responsibly by implementing the ban in response to “an unprecedented and ongoing disaster.”

Kuwait rules out increasing its stake in BP

KUWAIT CITY (AFP) – Kuwait has ruled out an increase in its stake in British oil giant BP, which is struggling to cap an oil spill disaster in the Gulf of Mexico, a sovereign wealth fund official told AFP on Wednesday.

"We are not currently considering increasing our stake in this company," the official said when asked about the possibility of new Kuwaiti investments in BP.

Mexican Storm System More Likely to Become Cyclone, Hurricane Center Says

Thunderstorms moving west-northwest off Mexico’s Yucatan Peninsula in the Bay of Campeche have a 40 percent chance of forming into a tropical cyclone in the next day or so, the U.S. National Hurricane Center said.

The system moving at 10 to 15 miles per hour may become a tropical cyclone before it heads inland over Mexico or southern Texas, the hurricane center said on its Web site at 8 a.m. Miami time. The potential of formation rose from 30 percent yesterday.

As power demand soars from hot weather, grid holds up so far

NEW YORK — Electricity demand in the East surged Tuesday near levels not seen since the summer of 2006. The power grid has so far been up to the task.

With temperatures soaring above 100 degrees in cities from New York to Washington, utilities and grid operators saw power output close in on the records set in August 2006. No widespread outages have been reported, although electricity demand typically jumps between 5 and 6 o'clock.

A Blow to Home Retrofits

The federal agency that oversees two government-chartered mortgage finance companies imposed new restrictions Tuesday on homeowners’ ability to take advantage of a program that allows them to repay the cost of installing solar panels and other energy improvements through an annual surcharge on their property taxes.

The new guidelines could also make it more difficult for homeowners to obtain mortgages even if they don’t participate in the programs, called Property Assessed Clean Energy, or PACE, but happen to live in an area where they are offered.

Sudden Surplus Calls for Quick Thinking

Engineers say that if the power grid becomes more reliant on renewable energy, a lot of new transmission lines will have to be built at some point or there will be unhappy consequences. Mostly this problem has been predicted rather than experienced. But the future may have arrived last month, when the Bonneville Power Administration, a federal agency that oversees power transmission in the Pacific Northwest, had more energy than it could comfortably use.

Soybeans, Corn Climb as Higher Crude Oil Prices Increase Biofuels Demand

Soybeans and corn rose in Chicago as gains by crude-oil futures boosted the appeal of crops processed to make biofuels.

The Parking Lot as ‘Solar Grove’

In 2005, Mr. Noble founded Envision Solar, now the country’s leading developer of solar carports. The company’s signature product is “solar groves,” 1,000-square-foot canopies that shade parking lots while generating clean power from an array of photovoltaic panels.

Solar plane sets out on historic flight

PAYERNE, Switzerland (AFP) – An experimental solar-powered aircraft took off from a Swiss airbase here shortly after daybreak on Wednesday in a historic bid to fly around the clock and prove the value of solar energy.

In Congo forest, bushmeat trade threatens Pygmies

Bushmeat — animals like monkeys and especially antelope — has been a staple of the African diet for millennia. But it has never been consumed as much as now: at least 1.1 million tons each year in the Congo basin alone, according to the World Wildlife Fund. Other estimates put the figure at five times that.

The result: the forests still standing are growing emptier by the day.

Some have suffered 90 percent drops in wildlife, stripped so bare, hunters have been reduced to eating their own hunting dogs, says John Hart, an American conservationist who first lived among the Mbuti in the 1970s.

PG&E opposes CA prop. to halt global warming law

California's largest utility says it will oppose Proposition 23, the initiative that seeks to suspend the state's landmark global warming law.

Pacific Gas & Electric Company Chairman and CEO Peter Darbee said in a statement Tuesday that climate change could cost California's economy tens of billions of dollars a year, with losses to agriculture, tourism and other sectors.

CRU climate scientists 'did not withold data'

Climate scientists at a top UK research unit have emerged from an inquiry with their reputations for honesty intact but with a lack of openness criticised.

The Independent Climate Change Email Review was set up by the University of East Anglia (UEA) after more than 1,000 e-mails were hacked from its servers.

Climate "sceptics" claimed the e-mails showed that UEA scientists manipulated and suppressed key climate data.

But these accusations are largely dismissed by the report.

Behind a paywall, but viewable through Google:

Geologist Sought Oil-Industry Data

The American geologist jailed in China for spying...worked for CERA.

According to the verdict, Mr. Xue sought oil-industry information for his former employer, now known as IHS Inc., an Englewood, Colo., research company that he left shortly before being detained by Chinese agents in late 2007. IHS is perhaps best known for its subsidiary Cambridge Energy Research Associates, founded by analyst Daniel Yergin.

A guy jailed for trying to steal proprietary data that his own company would label as proprietary and sell for millions. If that is the story, how rich the irony. Is that the right word for it? Or is it schadenfreude?

If they criminalized poor production forecasts, CERA would really be in trouble.

How many of the 27,000 abandoned wells in the gulf could be leaking?

How many other deep wells like deepwater horizon are potential blow outs?

Does 30% of US oil come from the gulf?

30% of the oil PRODUCED in the US comes from the Gulf. The Gulf's percentage of oil CONSUMED in the US is much smaller. If 2/3 of our oil is imported (not sure of exact figures), then the Gulf of Mexico supplies 30% of 1/3 of the oil consumed, or 10% of the USA's oil demand.

Remember that around the world, much of the new oil discovered is deep water. Leanan had this post up yesterday:

Analysis: Deepwater Discoveries, Production Still Critical to Reserve Base

The volume of new oil reserves coming from deepwater has been on an upward trend since the 1990s, and has become particularly important in recent years. From 2006 to 2009, annual world deepwater discoveries in over 600 feet of water accounted for 42 percent to 54 percent of all discoveries onshore and offshore. In 2008 alone, deepwater discoveries added 13.7 billion BOE to global reserves.

Global deepwater production capacity in 2,000 feet (610 m) of water or greater has more than tripled since 2000, according to research compiled by IHS CERA, rising from 1.5 million b/d in 2000 to more than 5 million b/d in 2009.

Projections before the April 20 blowout in the Gulf of Mexico showed deepwater production capacity had the potential to rise to 10 million b/d by 2015, a rate of expansion well above the expected average rate of global supply growth.

Cool -- My response from another thread: The potential for an abandoned oil/NG well to leak is always there. Just as true onshore. But the statement "Texas alone has plugged more than 21,000 abandoned wells to control pollution..." can be a little misleading . The state had to plug these wells (all operators contribute to the plugging fund via the state permits) because small operators walked from them. But they were plugged to prevent potential pollution problems...not existing ones for the most part. Actually ground water contamination by salt water coming up improperly abandoned wells is THE big concern...much more so than oil pollution on the surface.

OCS wells have to be P&A according to MMS specs. Have some of the wells not been plugged properly? Certainly...either unintentionally or thru sloppy/non-compliant efforts. I've never seen a report of an abandoned OCS well leaking oil/NG. But I also doubt anyone has every surveyed them with that purpose in mind. If there were a big oil leak we would know about it, of course. Small leaks comparable to natural seeps may well exist IMHO. How alarmed anyone should be is rather subjective IMHO.

All wells, onshore and offshore including Deep Water are potential blowouts. Anyone on a drilling rig thinks otherwise they should serious consider a change in professions. In my experience the vast majority of well control issues occurred at a time when no one expected it to happen. It's difficult for a kick to catch you by surprise when you're looking for it.

Soybeans and corn rose in Chicago as gains by crude-oil futures boosted the appeal of crops processed to make biofuels.

What the article didn't mention was "The USDA report showed U.S. corn stocks as of June 1 were 4.31 billion bushels – well below analysts’ estimates of 4.613 billion bushels. In addition, the government reduced it’s 2010 estimate for U.S. planted acreage to 87.872 million acres. Average analysts estimates were for 89.302 million acres." http://www.futuresmag.com/News/2010/7/Pages/Sharp-Reduction-in-Corn-Stoc...

Explanations are created on the fly in the financial world. The question is 1) is more ethanol than the required amount being used in gasoline 2) is more corn ethanol than other types of ethanol being used and 3) is more gasoline being used.

Higher gasoline prices mean less gasoline purchased. I doubt that any more than the required percent of ethanol is being used in the US but perhaps more is used elsewhere. It would be interesting to see if any data supports the more ethanol due to high gas theory.

Another explanation is that the USDA reports last year were wrong, as had been suggested by some who watched farmers unable to harvest corn in wet fields. Also we know that the presence of vomitoxin has caused some corn to be turned away from ethanol factories. Much more information is needed to document what is actually going on.

Meanwhile in the highly connected world, late soy and corn planting and harvesting last year is affecting winter wheat in Missouri.

Great story about Victoria's Dockside Green project. Was there in March and will be visiting again in a couple of weeks. It is on the Galloping Goose bike trail. Victoria is such a great bicycle friendly city where in many places the cars are required to stop for the bikes along the rail trail. What a concept!

Here is another LEED Platinum certified residential development project which was recently constructed in downtown Victoria. http://www.parksidevictoria.com/

The City's new draft downtown development plan gives pedestrians and bicycles top priority (see figure 24). http://www.victoria.ca/cityhall/pdfs/downtown-core-area-plan-draft.pdf And, single occupant autos, the lowest priority.

China’s Corn Imports May Grow 10-Fold, Marubeni Says

July 7 (Bloomberg) -- China, the world’s second-largest corn consumer, may give up efforts to be self-sufficient in the commodity and boost imports 10-fold by 2015 to feed livestock, said a researcher at Japan’s biggest grain trader.

The U.S. is expected to account for 42 percent of global soybean exports in 2010-2011, and 57 percent of global corn trade, according to the USDA.

The 3 big global commodities ....

Water ... Oil ... Corn

Why not wine, corn and oil....a bit more traditional.

wine, cloth, corn, oilive oil

Ummm... that would be huge? Ethanol would be toast... No way we could increase that to 15% and export a crapload more to China. There just isn't enough land. Plus you have poor wx conditions that change yearly and all the other problems.

These two stories taken together:

As power demand soars from hot weather, grid holds up so far
Sudden Surplus Calls for Quick Thinking

point up the problems that will need to be faced if we shift to more renewables for electricity. The good renewable resources are where they are, and the population/demand centers are where they are, and there's not a great deal of overlap in the two. There's a lot of work that needs to be done on the grid. Two thoughts come to mind:

  • Gail's concerns about the availability of capital once the debt bubble finishes collapsing raise the question of whether we'll be able to finance the grid expansion, and
  • Alan correctly points out that efficiency and conservation can drastically reduce the magnitude of the expansion that might be needed.

Best wishes to the people in the NE suffering through the heat wave.

It's worth remembering during these heatwaves, and during the worst Winter Freezes.. that the ground temperature just 6 feet below my house is a fairly constant 45-50 degrees.

Best hopes for feeling nice and safe at six feet under!

Bob, looks like the good folks of Coober Pedy in the Aussie outback have already figured out that living underground provides cheap air condition.

The biggest factor against mass migration underground in temperate climes is that mold and mildew, never healthy for people, are ever present in places that combine moisture & moderate temperatures. Otherwise, six feet under would be the way to go.

I have dozens of relatives residing six feet under in a very attractive grass and stone sustainable community on a scenic nearby hilltop without a worry in the world.;)

Late last summer, two conventional cargo vessels made the voyage from South Korea to The Netherlands via the North East Passage along the Siberian coast. This is a much shorter route from Northeast Asia to Europe than going via the Indian Ocean and the Suez Canal.

Conditions appear favorable for a repeat this summer. Ice is clearing well in the Kara Sea and Laptev Sea, but the prospects for clear sailing in the East Siberian Sea are somewhat less. But a repeat may depend more on clearing up the Russian permissions than on the ice.

The clearing of ice in the Arctic Ocean is opening the door to further geopolitical developments.

From the above As the world’s ice melts, the Navy’s role grows.

Roughead argued that a more orderly ocean would actually allow the United States to “expand its sovereign rights to the increasingly accessible outer continental shelf areas of the resource-rich environment of the Arctic.’’

When the Navy’s head of operations talks about the continental shelf as well as how much fish is being caught by whom and can see melting ice having a direct impact on geopolitical relations, that is all the more reason we need to understand that our vast waters have their environmental and political limits. We need to understand those limits before water becomes a source of war.

Apparently, the Chinese are staking a claim to access to Arctic waters even though they have no Arctic coastline. We human beings, opportunistic parasites as always, are looking to exploit the newly ice free treasure trove to its nth and finite limits.

I would be happy if TPTB would declare the "Arctic Ocean" a no-go zone. Yes, that's wishful thinking on my part and not bloody likely to happen. I'm also aware of past precedents, rich potentials, and vested national interests. Yet it's too bad that no one on the international stage is raising it as a possible worthwhile goal.

It would appear from the bathmetric map referenced above and Territorial claims in the Arctic that there is relatively little continental shelf north of Alaska.

Russia has by far the most Arctic Ocean continental shelf north of Russia and Siberia, with Canada, Norway and Denmark having substantial claims.

Canada claims waters among the islands north of the Canadian mainland.

"... voyage from South Korea to The Netherlands via the North East Passage..."

Yea!!! Cheap stuff to remain reasonably cheap in the Netherlands for a little while longer. We will do whatever it takes to extract the last bits of natural resources and turn them into garbage at a "sustainable" rate. Hooray for mankind!!!!

The EIA issued a revised report on oil supply/demand for this year. Surprisingly to me, it did not increase the expected demand from the US much, plus downgraded the rest of the world - although worldwide demand is already running well ahead of their projections.

More specifically, even though the EIA increased its estimates of US demand by 80,000 bpd over the year from just last month's report, US demand is already trending above their demand expectations for 2010, so the only possible way that the EIA will be correct is that if the US falls into a recession in the second half of 2010.

Not that that's impossible - I can think of at least one hurricane related scenario that would constrain supplies, and by retricting supplies, cut off demand. Barring that type of scenario I can only conclude one and/or two things about the EIA:

1) The EIA expects a second half recession and/or
2) The EIA is intentionally trying to downplay the level of demand to nudge the price of oil lower

TOD posters at the end of 2010 can quote this post if my presumptions turn out wrong.

Most likely later in the year, I see the EIA just amending its report to match reality, instead of projecting ahead of time what will happen.

Charles, let me give you my projections. I expect demand will equal supply. It always has so why would this year be any different.

The EIA has traditionally projected supply to always rise to meet demand, or what they thought demand would be. However supply having failed to rise to meet demand, or rather what they thought demand would be, they seem to have changed their way of thinking.

The EIA now seems to be projecting demand to be what they think the supply will be. That being said, you can read their report here: Short-Term Energy Outlook

I found this forecast a little strange.

Non-OPEC Supply. EIA has revised its forecast of non-OPEC supply upwards from the last Outlook, with non-OPEC supply now expected to increase by 0.6 million bbl/d in 2010 and decline by less than 0.1 million bbl/d in 2011. The forecast for oil production in Mexico is more optimistic than last month. Data for the first half of the year have been higher than expected, as recent decline rates at the Cantarell field have fallen and the country has boosted output from other offshore areas. Nonetheless, oil production in Mexico is still expected to fall by 0.1 million bbl/d in 2010 and roughly 0.2 million bbl/d in 2011. Over the forecast period, Brazil, the United States, and Azerbaijan should provide the largest sources of non-OPEC supply growth.

Clicking on "3b" or Non-OPEC supply, they expect Brazil to go from 2.73 mb/d in 2010 to 2.90 mb/d in 2011. And they expect Azerbaijan to go from 1.08 mb/d in 2010 to 1.21 mb/d in 2011. However they expect the US to go from 9.35 mb/d in 2010 to 9.33 mb/d in 2011. They are expecting US production to drop in 2011 so how can the US provide one of the largest sources of non-OPEC supply growth?

Also, they expect total non-OPEC supply to go from 50.86 mb/d in 2010 to 50.68 in 2011. That is supply shrinkage so why did they say non-OPEC supply growth?

Also I don't agree with them on Azerbaijan. According to Wikipedia Megaprojects Azerbaijan had no new projects last year or this year and has nothing coming down the pike until 2013. And their production seems to already have stalled because of this.

Oh, these figures are all liquids, not C+C. The US has the larges "other liquids" ratio to C+C in the world. C+C production is expected to be around 5.4 mb/d over this period.

Ron P.

The EIA has traditionally projected supply to always rise to meet demand, or what they thought demand would be. However supply having failed to rise to meet demand, or rather what they thought demand would be, they seem to have changed their way of thinking.

Exactly. Previously it appeared the EIA was subtly saying that supply would always magically meet the expected demand. But as we have noted over the last five years, the EIA is slowly adjusting its forecasts and projections to the view that new oil supplies are much harder to come by.

I also agree that upon looking at some of the individual country supply forecasts much more closely, their forecasts don’t entirely make sense. Mexico is in the middle of a great decline, as well as Venezuela and Iran. If not for a few new places like Angola and Sudan, and some salvaged older fields in Iraq, we would, well, be sliding down that Hubbert’s curve already.

My main point is that the EIA is reluctant to predict more than a minimal amount of demand gain, perhaps because they finally realized demand is limited by supply – and not the other way around. Still in the short run, slightly higher than normal inventories of crude can temporarily facilitate demand increasing faster than supply. I expect that if the economy can even just maintain the level where it is now, US demand will exceed EIA forecasts – and subsequently oil inventories will be drawn down.

They should just ban the use of the word "demand", as it means different things to different people and has become so abused to be meaningless. I demand a Porsche 911 for my next birthday but am not sure that I will be accommodated. If supply does not increase, how will they know that the demand has increased? I know there are theoretical supply and demand curves, but then reality is a different story. If demand exceeded supply,how would we know it?

What you link to is a video, explaining why we need to get rid of the debt based financial system. I would agree.

The one problem I see is the huge amount of debt outstanding, even if we get rid of the debt based financial system. A lot of it will never be able to be paid back, unless there is a huge amount of economic growth. For example, think of all of the young people with college loans, but with not much more than minimum wage jobs. If the economy were doing better, these young people would have a better chance at good jobs, and paying back debt.

Before too long, I expect to see the "Student Loan Protest March on Washington."

I think the recent student loan law will defuse that kind of protest.

What students are likely to be protesting is not enough loan money, and increasing college costs.

But does the new law really do anything regarding existing loans?

As I understand it...yes, it does. It limits your monthly payments to a percentage of your income. However, it only applies to federal loans. Private loans aren't covered.

Depending on US politics, IMO this debt anchor will likely play out in one of the two future scenarios:

1) the US will go cold turkey like Greece and Ireland Britain? are doing (at least for now) and reduce spending, pay down some of the debt and painfully deflate the economy;

2) Debt will be inflated away as we slowly grow our economy (until we are out of cheap oil) as Paul Krugman suggests. http://www.nytimes.com/2010/04/09/opinion/09krugman.html?_r=1&hp

My guess is door number 2.

My guess is that we're entering the world's largest credit contraction and the money the central banks are trying to get into the system will sit in bank reserves in a vain attempt to keep them solvent as their assets melt away under them.

We have a lot of credit to destroy first before inflation is a problem. Easily a decade's worth, perhaps two. But a cascading stock market plunge could hurry things along.


I would have said that a while back too. But from the economic indicators I am seeing today we seem to be continuing to get GDP growth (not that this is a very good indicator for well being) even though it is likely to slow for the remainder of the year. Bank non performing assets are decreasing and general business conditions seem to be continuing to stabilize as they have for the past six months or so. Credit availability is also improving for businesses that are not so leveraged and are likely to have the capacity to repay debt. It will be interesting to see what happens as the 47 states try and get themselves out of their budget situations which I am sure will not be pretty. Surely government is headed for some significant contraction given its unsustainable promises. Perhaps that will undo any stability we might be experiencing and plunge us into the widespread contraction you are forecasting.

I think we are in the lull before the storm...don't forget that we have a major oil shock coming "soon." (By 2013 according to the U.S. Joint Forces, Lloyd's of London (PDF) and the Oil Megaprojects database.)

Anything you see now trending toward inflation will be short lived.

Also, don't count on the central banks being able to bail the world out the next time a September 2008 comes...they might not even try as hard next time since their citizens are clamoring to stop adding to the debt load.

We may not even make it to 2013 before the markets crash.

Yes, the Lloyds and Joe 2010 reports certainly paint a grim picture as does the ELM. Not to mention the Saudi's repeated declaration they are going to leave new oil in the ground for future generations and will eventually be unable to continue being the swing producers. More demand destruction seems to be the only thing that will slow this train down. Valcav Smil has cautioned us that China's supernormal growth cannot continue unabated...perhaps that will make a difference. http://www.vaclavsmil.com/wp-content/uploads/docs/smil-article-20091229-... I think we are going to see some type of a saw tooth economy as we work down the back side of the oil depletion curve and agree that the medium term economic outlook is not good.

I agree with you except for the possibility that states will be partially bailed out. If this happens, it will probably happen after the next election this fall, although there is no political will to fully bail out states that made their own problems worse.

The US economy recently has, somewhat ironically, benefited from the panic out of the Euro. Ironic because financial panics usually lead to recessions or worse, and not recoveries. The dollar has increased in value, oil has fallen in price even as worldwide demand increases, and interest rates remain very low - despite trillion $ plus federal deficits.

The dollar is key - and it also seems to be benefiting from some type of bet on deflation. I don't think prolonged general price deflation is even possible under our monetary regime, but right now, most investors don't agree.

Time to buy more zero coupon treasury bonds.

I stopped at the "centripetal vs. centrifugal force" into.

What a bunch of hooey.

Good, I thought it was just me that felt like that when I watched the 1st minute..

The video is almost the definition of "false analogy." Hurricanes, like economies, run on ENERGY, not debt-based money.

Clever video, but unrealistic.

Interesting article on how a recent college graduate is coping with the economy, and how it was different for his parents and grandparents:

American Dream Is Elusive for New Generation

Curiously, he turned down a $40,000 job in insurance because he was afraid it would stunt his career, but is willing to work as a bartender or laborer.

Sibling rivalry--I think that he didn't want to accept a job for $40K in an industry in which his older brother was making $75K. I suspect that he rationalizes the bartender/laborer jobs as something to do while waiting for his $75K job. In any case, I think that he was crazy to turn down the job offer, and it appears that his parents agreed.

Things may be different in the US to the UK (why on earth does someone young without dependents need life insurance? Or is that a typo for "health insurance"), but I can see a sort of reasoning: after your first "serious" job that becomes your primary "skill rating" rather than your university career, whereas you can convincingly claim menial work was the best you could get in hard times. Obviously that becomes less "valid" the more you're being supported by others money. (This is assuming the BAU viewpoint that 50-odd years of corporate work lies in front of him.)

Thinking about jobs there are more issues than just immediate salary. Here in the UK the retirement age looks like it'll be ratcheted up to 70 pretty quickly, probably within my working life. In the planning where I'm assuming no energy crunch in the future, this says to me that I can't afford to settle for a middling, interchangeable job since, when I would have gotten made redundant at say 55 (due to outsourcing or covert replacement with someone younger and cheaper) I've still got 15 years to fund until retirement; it's pretty vital to end up in a job where I can be sufficiently indispensible to be employable until 65 at least. (My father was made redundant at 62, not getting any job interviews and is trying to survive the 3 years until his various pensions become available. 3-5 years is just about survivable but 15 years isn't.) I'm prepared to have 6 months unemployment being selective now to try to avoid this fate. (Of course, I also do some planning assuming a future energy crunch.)

I'm not sure why he has life insurance. It's not common in the U.S. for young, healthy people without dependents to have life insurance.

In the old days, families would often buy life insurance for their children. It was seen as an investment for them, and also would be used to cover funeral expenses if they died young (as was all too common back then). Now, though, it's rare for kids to have life insurance. Some people still buy it as an investment, but it's not recommended unless the child has health problems that would make it hard for him to get life insurance as an adult.

In South Africa people start signing up for life insurance very early - but they aren't term life policies. Generally, they are combination life/retirement policies, where you pay in either a lump sum, or a monthly amount over a period of time, and then you have various options for withdrawal e.g. annuity with death benefits.

Edit : I believe, in the US, it's called a Variable Annuity


Apparently there were actually some energy analysts that were "surprised" by the large 7.3 million barrel fall in oil inventories reported by the API:

July 7, 2010, 4:57 p.m. EDT ·

API shows surprise decline in oil, gas stockpiles

SAN FRANCISCO (MarketWatch) -- The American Petroleum Institute reported Wednesday a surprise decrease in crude-oil inventories, and decreases for distillates and gasoline stockpiles. The trade group reported a decline of 7.3 million barrels in oil


Platts Oil tweets:

US crude stocks dn larger-than-expected 7.26 mil b to 351.761 mil: API. But data did not support a pull on inventories of this magnitude.

I previously mentioned two days ago that "we should expect an unusual drop in oil inventories of at least 5 million barrels more than what would have otherwise occurred". With a normal drop of 2 million barrels at this time of year, that would be about a 7+ million barrel drop altogether.


Still the EIA is sometimes quirky in its handling of data in unusual situations, so it may or may not report the actual inventory drop tommorrow.

As far as I know, the Louisiana Offshore Oil Port was operating normally since last Friday, although there are some concerns about its operations this summer:

July 4, 2010
Section: MONEY

Atlanta Fed keeping tabs on spill
It's trying to gauge economic impact

Rebecca Mowbray Business writer

As the Federal Reserve Bank of Atlanta tries to anticipate what the economic impact of the Gulf oil disaster will be, it's been searching for models that will help economists understand the rhythm of the event.

In monitoring the oil production and transportation industries, the Atlanta Fed is watching for a major potential concern for the U.S. economy: the Louisiana Offshore Oil Port, or LOOP, which allows tankers to offload 13 percent of the nation's imported oil and send it by pipeline to refineries that account for half of U.S. capacity. So far, Christz said, there's been no impact.


Did anyone else hear Matt Simmons on CNBC financial today? He said the BP relief well will fail to provide a cement plug because he belives the casings for the original well are blown. He said the only hope was to nuke it from deep under.

Is there any ring of truth to what Simmons is saying?

Don't know the answer but here's the link:

Discussing whether the oil well should be nuked, with CNBC's Bertha Coombs, Christopher Brownfield, fomer nuclear submarine officer and Matthew Simmons, The Ocean Energy Institute.


Is there any ring of truth to what Simmons is saying?

Not usually.

sb -- two points: no one has guarenteed the RW will work. Nor have I heard anyone say they didn't think the csg wasn't at least partially damaged. So he's just a tad more certain then most.

The nuke part I won't consider ever responding to again.

The nuke part I won't consider ever responding to again.

If Simmons' hypothesis happens to turn out to be true, will you keep your word?

In spite of all the muscular technical-speak that goes on here, sometimes things turn out to be very simple.

I don't know if Simmons is correct, but the summary dismissals of his case--and ad hominem attacks on his psychological state--are beginning to sound suspiciously as though they're coming from a place of desperation.

mike -- Absolutely. Folks much more qualified then I have relegated the "nuke the well" idea to the looney bin. And I'm guess I haven't been reading the same posts you have: I've seen very detailed and logical explanations debunking much of what Matt has said. Unlike the "ad hominem attack" you just offered for those who have disagreed with Matt. Any technical support for Matt's views you would care to offer would be very much appreciated.


Personally I agree that the "Just say Nuke it" idea is a looney one.

It invites us to engage in a massive and uncontrolled science experiment whose outcome is wholly unknown.
There is no guarantee that an atomic bomb of imprecisely controlled energy and explosive direction will not make matters much worse by blowing open a Pandora's Box hole bigger than anything we imagined before --and more lethal because now we will have radioactive hydrocarbons gushing out from an uncappable underwater spigot.

Nonetheless, Matt Simmons is no light weight in the Peak Oil movement. So when I heard him giving credence to the nuke-it option, it took me a back more than one step.

My inquiry was more directed to Simmon's claim that the main well casing is non-existent. I guess we'll find out soon, now that the relief well is almost there.

Nonetheless, Matt Simmons is no light weight in the Peak Oil movement.

Reciting peak oil dogma does not create technical training, expertise or experience. Simmons wrote an entire book explaining how poorly he understands something as basic as water handling procedures in an oilfield, has he written another one where he actually explains something correctly to suddenly gain technical credibility that I missed?

The main well casing, while quite possibly damaged, is right where it was before this mess started.

I don't know if Simmons is correct, but the summary dismissals of his case--and ad hominem attacks on his psychological state--are beginning to sound suspiciously as though they're coming from a place of desperation.

You might not know if Simmons is incorrect, but reservoir engineers who examined his earlier claims are certainly in a position to discount his value as a "technical" source.

As far as his recent psychological state....well...thats more a question for the shrinks, don't you think? Certainly his recent claims, the statements deployed by his old company disassociating themsevles, and his ideas running afoul of ...well ....reality .... speaks volumes on the topic.

When I read "Twilight in the Desert" I thought Matt Simmons was the absolute guru of oil depletion. Lately significant tarnish is appearing on his halo.

I have spent a lot of time around old people with bodies tougher than thier brains;something after all has to go first.

I think that while he is not yet entirely out of it, Simmons is in the early ambigious stages of losing it intellectually after watching a video of him getting interviewed.

Wow, the 'nuke the well' concept won't die...this schtuff never gets old I guess:

For all youse nuke-meisters, get a big rush from this:

(YouTube video of your phantasy at this link...scroll down to see the video player and watch):


Have a blast!


Over the past four weeks, gasoline consumption in the world's top oil consumer fell by an average 1.7 percent on a year-over-year basis [according to Mastercard].

Yet according to the EIA, the 4 latest week average gasoline demand is up 1% in the latest 4 week period. Now the Mastercard figures include one more week in the latest report (new EIA week tomorrow) but if we drop off that additional week then Mastercard say consumption was down 2.2% in the first 3 weeks of June.

Mastercard's estimates include their figures for cash etc sales and not just card sales.

Why the roughly 3% discrepancy between Mastercard and the EIA? IIRC last time things got this far out of synch the EIA weekly estimates were massively revised down later.

Don't know why there is a difference, but a guess may be that the EIA is measuring the output of refineries and MasterCard actual retail sales. So there is a slight lag between the figures.

However the EIA weekly refinery production report is a very accurate report of what the refineries are really doing. Historically output totals are revised very little - only about 1 or 2/10 of 1%. So if anything doesn't add up, it is probably reflects inventory accumulation (or disaccumulation).

Charles, I'm using US Weekly Product Supplied http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WGFUPUS2&f=W

A year or so ago the EIA revised the weekly product supplied figures down by several percent in the final monthly report. I recall Gail wrote a key post at the time but can't find it off hand.

EIA's figures could be off by a large margin, as up to 15% of the gasoline consumed in the US is imported. Lately it is around 900,000 bpd and has been as high as 1,300,000 bpd in 2008.

Live from the first night flight of a human piloted solar powered aircraft:

Who knows if these guys fly at night with a solar powered aircraft, others may even be able to use solar instead of fossil fuels to heat their water or maybe with fossil fuels flowing less plentiful, the end of the world is indeed near...

China Property Market Beginning Collapse That May Hit Banks, Rogoff Says

China’s property market is beginning a “collapse” that will hit the nation’s banking system, said Kenneth Rogoff, the Harvard University professor and former chief economist of the International Monetary Fund.

You can't accuse Toronto Hydro of gold-plating their distribution system.

Ontario’s ageing grid puts province at risk of more blackouts
Hydro One's tired system is just another factor that can lead to more outages, just as the temperature rises and demand skyrockets

Ontarians can expect more days like Monday when a Hydro One breaker burst into flames, leaving 240,000 sweltering residents in the province’s largest city without power during a heat wave. Much of the Crown-owned utility’s equipment is nearing the end of its design life. As the provincial government reins in spending for political purposes, it is neglecting the aging infrastructure that keeps the air conditioners humming, critics say.

The cause of the fire at a transformer station that shut down much of Toronto for four hours is still under investigation. Hydro One spokeswoman Daniele Gauvin said it is not known why the circuit breaker caught fire. But it happened on a day when demand for electricity peaked at a high of 25,000 megawatts, but below the record of 27,005 set in August, 2006.

The outage was a stark reminder that an aging electricity grid is leaving many regions vulnerable to blackouts. One day after Toronto was plunged into darkness, scattered outages were reported around Montreal, leaving 651 Hydro-Québec customers without power.

See: http://www.theglobeandmail.com/news/national/ontarios-aging-grid-puts-pr...


Heat wave stresses central Canada and power grid: critics call for conservation

TORONTO - As heat-wave ravaged Ontario residents cranked up their air conditioners amid assurances there is plenty of electricity for all, environmental groups warned that the focus should be on energy conservation.

Millions of people in Quebec and Ontario are coping with the scorching heat wave that's pushed temperatures into the mid-30s and humidex readings into the 40s.

See: http://www.winnipegfreepress.com/canada/breakingnews/central-canada-heat...


Interesting, I wouldn't have expected this from Ontario, even during a heat wave.

Forgive me for my ignorance but why exactly wouldn't this equipment be kept up to date? It's certainly not for lack of materials or expertise.

Or are we really becoming third world?

Forgive me for my ignorance but why exactly wouldn't this equipment be kept up to date? It's certainly not for lack of materials or expertise.

I'm putting my money on dollars and the public's unrelenting demand to keep electricity rates [artificially] low.


I'm putting my money on dollars and the public's unrelenting demand to keep electricity rates [artificially] low.

And that coupled with the volume, scale, and complexity of the grid itself.

One has to wonder how we pull it off, Tom. It's hard to imagine how.


Yes, a remarkable piece (or should that be pieces?) of engineering, Paul. It is amazing it runs as smoothly as it does. Cheers!

Well Gol-l-l-eee Sarge, I git to chime in with something on this site where I'm might be the expert! (Its always fun to put on the Gomer Pyle now and again...)

The Toronto Hydro system is one of the oldest in N. America. I guess this is a casualty of being one of the first connected to Niagara Falls. I would take that quote one monumental step further and say the equipment is well beyond its design life. Chances are this was a Westinghouse "QC" or GE "KSO" oil filled circuit breaker which are built like tanks but the insulation material (some of which is cellulostic based) breaks down, and ka-blooey, you get a fire when it has to operate and extinguish the electrical arc as designed.

How old is this equipment? My very corny engineering joke is "They didn't know what to do with the tank designers after WWII so they go them designing this stuff". You could say they are a victim of their own success. There are maintenance and test procedures for this equipment, (and I'll give Toronto Hydro the benefit of the doubt at this point), but when its this old the point spread is greatly enlarged on successful operation.

The system was stressed in a heat wave, probably a transformer over-temperature which sends the trip signal to the circuit breaker to protect it. Keep in mind these circuit breakers can be about the size of your garage. It could be a smaller 27.6 kV breaker which is about the size of your refrigerator. The breaker opened under full load - which is not a lot of duty for these things - and the arc extinguishing components failed. Mineral oil has a pretty good flash point, but not that good.

I'll take a WAG and figure the circuit breaker was a 115 kV, 1500 MVA capacity. Interrupting 1500 MVA over 3 cycles (50 msec) is comparable to stopping 30,000 MVA (or MW for the trigonometrically challenged). I've tried, probably unsuccessfully I might add, to calculate the energy interruption in mechanical terms, but some comparison to stopping a short freight train within 100' would not be out of the realm of possibility. Ironically, as EE's we spend a lot of time going over the civil engineering aspects of this equipment because it can literally launch itself under these operating conditions. Net result: we like concrete, lots! of concrete.

Its been pointed out many times before boys and gals, there is lots of this stuff out there holding things together and there are not too many grey shades of failure. Either it's hunky-dory, or a very bad day in a heat wave or killing winter temperatures. Why the tone of voice? I have to deal with this predicament often. I can either defend or condemn equipment of this vintage for reliable operation, but if you are in the protection and control business you get to see the price of your shortcomings, (we don't use the word "failure"), or those of your colleague's in very stark light.

The upside? It looks like the system isolated itself and didn't cascade. Sound familiar...

Interesting BC, thanks.

Recent search hit is a NYT article 7/2/10


In this article it does mention that the really big grid transformer manufacturing is all gone from the USA, I knew that, but it says if a big US city blew a transformer it could take a month to get a new one built overseas and delivered. That is different from papers I had read (and of course I can't find any of them now) which analyzed grid reliability versus transformer age and number of spares available. I had seen estimates up to 16 months delivery time after an order was placed. So what are the facts, would a big city be dark for a month, two, a year, what?

Scooper, sorry for the late reply - its another day...

You are correct with the 16 month delivery for a large transformer. Its not much shorter for a mid-sized unit. And yes, all the large unit manufacturing is gone from N. America. If I get a quote for a unit in the 50 MVA range it is sourced overseas. ABB (Westinghouse) is still producing units in the 35 MVA size and smaller in Pennsylvania. But utility sized units are in the 100's of MVA.

I think I can speak for the general case if there was a redundant unit in the substation. This would be the typical double-feeder utility configuration. Each transformer base rating is 66% of the total substation load. Fan cooling (under more preferable temperatures) allows the transformer to operate at 100% of the substation's loading. Better hope the second unit doesn't blow.

Summer heat is the worst case scenario. I've seen utilities and refinery plants put very carefully placed water sprinklers on the transformer's cooling rads to bring them into operating range.

Glad there is some interest in this critical component of the electrical grid because I've been maintaining for quite some time this is the Achilles Heal. Not the cyber-security or ineffectual guard patrols of nuclear plants, but the big ugly things with mutant antennae sticking that makes everything work. Very easy to take out of operation for three months or more, and if enough are taken out..., well, it doesn't take too much imagination.

Great description BC-EE. When you think about it, interrupting 1500 MVA is like a full load trip of 1-1/2 nuclear power plants....a huge amount of energy to begin with, and then magnifying it by the extremely large currents produced in short circuiting this much energy. Wonder how well they are keeping up with their second law, maintenance CAPEX costs?

Thanks, BC EE. When I moved to Toronto in the early 80s, I was shocked (horrified) by what I saw. I'm guessing portions of the overhead distribution system (2.4/4.16 kV) would have dated back to the '20s -- very old and woefully inefficient. Presumably, much of this has been upgraded to 27.6 by now.


With temperatures soaring to record levels in eastern North America, the hydro grid will be maxed out, definitely not good news b/c of our reliance on aging infrastructure. Under such conditions, people should anticipate rolling blackouts (reminiscent of Enron days in California) and try to conserve as much as possible.

It's one thing to see tempers flare b/c power is out for 240,000 people in Toronto, quite another if it gives out for the entire 4 million who live in the city, the 10 million residents of southern Ontario, or the 40 million who live on the eastern seaboard.

Paul, they are calling for thunder storms overnight in New Brunswick but nothing here. Valley temperatures expected to be in the 30s C (high 80s and 90s on the Fahrenheit scale) well into the weekend. No rain expected until Sunday and then only light showers if any. Parched earth is not something we are use to but it seems to be the norm this summer. Luckily, where you are in Halifax it is expected to be a few degrees cooler on account of ocean breezes.

Here's to keeping the lights on by turning them off,


Hi Tom,

It was a tad toasty even here along the coast at 29°C and with the humidex climbing into the high 30s. Tomorrow looks to be more of the same and then the showers move in with temperatures returning to more seasonal-like values.

If Cuban taxi drivers can keep their Desotos and Belvederes on the road, I figure there's some hope for the North American grid. But, yes, it's a worry and perhaps more so in Ontario than anywhere else.


Seasonal temperatures, like a chubby Cuban cigar, would be very nice right now.

Stay cool my friend and drink plenty of fluids. January is a mere six months away.



Z -- Sympathies to my Yankee cousins. Welcome to Texas in August. At least we have plenty of AC. I can still easily recall laying in my childhood bed in my pre-AC days and feeling the sweat run down my face all night long. I know cold be very bad but at least you can bundle up. But you can only get so naked.

Thanks Rockman,

Without AC, I'm finding the best way to stay cool is not to open windows, keep the curtains closed in direct sunlight, and to spend as much time in the basement as humanly possible.

Interestingly, the local MSN Lifestyles feature this morning talks about how to chill out without powering up the AC.

I've heard it said that northerners and southerners have their indoor seasons in reverse. Northerners spend most of their time indoors during the winter (to stay warm) and enjoy the great outdoors during the summer while southerners spend most of their time indoors in the summer (to stay cool) and find winter a time for refreshment.

I've come to appreciate why southerners form the bulk of U.S. fighting forces. After the torture of August, the heat of battle would be child's play. You're a hardy bunch.



P.S. I'm a Bluenoser not a Yankee, although it's sometimes hard to tell the two apart: closely tied by geography, climate, history, and family. We're the ones who remained loyal to Old King Georgie while our blood cousins opted for the other George, the one known as Dubya, Washington that is ;-)

Thanks, Tom, and you too! There's a nice breeze blowing off the harbour, so it hasn't been that bad for us thus far. I have to run downstairs and empty the dehumidifer (again). This time of year we average 13 kWh a day when it doesn't run and twice that when it operates full tilt, as it is now. I curse the damn thing but the alternative is mould and mildew and that nasty hockey-bag-left-in-car-trunk-on-hot-July-day smell.


that nasty hockey-bag-left-in-car-trunk-on-hot-July-day smell.

Sounds delightful. Brings back vivid memories.

Already a sultry 27 C (83 F) in Windsor and climbing. Spending most of my day in the basement. Helps.


We're neighbors. Perhaps a beer sometime!

There's also a movement afoot to get Stoneleigh here in September. Don't know if that would interest you.


Yes, interested. In a beer and in Stoneleigh, though not necessarily in that order or at the same time.

ccpo, keep me posted. Thanks!

Btw, where is here?



Well, there's Windsor, Ontario and then there's Windsor, Nova Scotia. Guess which one Tom calls home? (Here's a hint: http://www.town.windsor.ns.ca/)


Uh-oh! Guess that's what ya get for being (relatively) new to an area! And not checking people's profiles.


When I lived in Toronto I would regularly visit friends in Detroit and attended numerous performances of the Detroit Opera. Lots of great memories of my time spent there.


Opera... my years subscribing to the Mark Taper Forum (in L.A.) and doing community theater seem like a chimera of someone else's memory. It's so foreign to me to think of such things as important... at least, the opera. Community-based entertainment might see a huge revival if the future goes as expected.


One can rightfully argue there are more important issues demanding our attention and I'm sure you and I could rattle off a long list of greater needs. Nonetheless, I still hope the performing arts can continue to be a vibrant part of our communities. New Orleans without its jazz, Detroit without its Motown or Memphis without its blues -- unimaginable. I may hold the minority view on this, but I don't consider opera to be the sole province of the well-healed or its aspirants; I simply appreciate it for what it is and marvel at the way it moves me, e.g., the final act of the Dialogues des carmélites shook me to the core.


ccpo, I guess the beer and Stoneleigh will have to wait. Nice thought while it lasted.

Too many Windsors in Canada, damn!!

Perhaps down the road our paths will cross ... if you're ever on the east coast, we have some great beers!

I'm a Keith's man myself. And I never pop my collar (every pun intended!)

It's been warm in Detroit these past few days, too. Don't sweat it, January is coming.





Actually, the population of Toronto proper is 300,000. The GTA is a couple of mil. But the central point is valid, this is what happens when you segregate the vertical market of generation, transmission and distribution. Didn't see that one comin', did ya Reaganomics Boyz??

No one wants to pay for transmission and distribution because there is no money in it. Clearly a system design worthy of Homer Simpson. I may sound bitter and that is very un-Canadian of me, but this is what happens when the accountants take over. Lord hulp ya bahy when the accountants figure themselves the leader of the organization.

I stand corrected. The core city of Toronto is about 300,000 (excluding the amalgamated burbs), the city itself is about 2.5 million, and the metropolitan population is a little over 5 million.


The province of Ontario itself has a population of 13 million with the bulk living in the cities along the western edge of Lake Ontario.


Thanks BC_EE for your insights into the workings and equipment of Hydro Ontario. Being one of the first utilities in the game does have its drawbacks.

IMHO, your assessment of the negative influence of bean counters is pretty well on the mark. Chartered accountants have the reputation of being boring b/c a myopic focus on the bottom line leads to a rather flattened view of the universe. The chief achievements of human engineering and artistry have been in spite of fiscal regimentation. We rob ourselves of the riches and pleasures of life if our only concern is money. Apparently, parsimony can lead to black outs as well.

The visual sight from space of the afterglow of the grid is impressive. Despite fiscal starvation and public apathy it works surprisingly well. Sometimes it takes a heat wave to get people to notice.



it's been hot and sunny here on the east coast a few miles from nyc. my 3kw solar pv grid puts out
16kwh per day. but my 3 air conditioners are using 24 kwh per day....if they start rolling black outs as uhmerika turns into a 3rd world nation, the grid tied system wont do me no good unless the blackouts happen at night.

me and the GF drove around to 4 different fourth of july fireworks shows in a bid to drive gaz-o-leen prices ever higher. when JHK stops jet setting around the world i'll think about curtailing my extravagant lifestyle (sic). pundits first sez i.

so that evil bastid BP CEO hayward is Abu Dhabi. i say we take him out by remote control with a predator drone strike. let's hope there are "innocent" civilians nearby, some other BP thugs and enablers. it happens all the time in pakistan and afghanistan. if needs be i'll push the button as a "rogue agent" to provide cover. we should "curtail" his extravagant lifestyle.

of course hayward and BP will get the medal of freedom and billions in taxpayer hand outs.

if every time a corporation screws up big time some CEO dies i bet corporations wouldnt screw up so much.

now let us see what trolls, shills, pundits and apologists have to say.

the man enslaved to wealth can never be honest.

Mixed messages and delusion at Pensacola: "It's safe to go in the water! (just wash that oil off before you go into your hotel please)"