Drumbeat: July 9, 2010

Allen: Oil Gusher Could be 100% Capped by Monday

(CBS/AP) The federal official leading the Gulf oil spill cleanup says a new containment cap and an additional ship collecting oil could effectively contain the spill as early as Monday.

National Incident Commander Thad Allen said Friday that the work to replace a leaky containment cap on the well head with a tighter one will begin Saturday.

U.S. natgas rig count climbs 4 to 964 - Baker Hughes

NEW YORK (Reuters) - The number of rigs drilling for natural gas in the United States rose by four this week to 964, according to a report on Friday by oil services firm Baker Hughes in Houston.

The gas-directed rig count is only nine rigs below the 14-month high of 973 hit on April 16.

FACTBOX - Sanctions and fuel supplies to Iran

Reuters - U.S. President Barack Obama signed a law last week imposing tough new sanctions on Iran's banking and energy sectors, hoping to curb Teheran's nuclear enrichment activities.

The West fears the nuclear enrichment could lead Iran to make a bomb, something Tehran denies it wants.

New era of shale oil in Queensland will require capital, commercial nous and political will

Just a decade ago Australia was a net exporter of crude oil, producing more than we needed for domestic consumption.

Today we produce just over 50 per cent of our requirements, and that is forecast (according to energy industry advisory firm EnergyQuest) to decline to about 20 per cent by 2030.

Oil pact a dive into deep trouble

It was like a blind date with Hannibal Lecter, when he was still a nice guy. We have just awarded a contract to Brazil's oil giant Petrobras to explore possible deepwater drilling in over 12,000sq km of our waters off the East Cape.

These are some of the angriest seas in the world. The seabed can be almost almost twice as deep as BP's Gulf of Mexico disaster.

Our drilling will have a new safety regulating body that hasn't even been fully born yet. What are we doing?

Strong gains beat diversity when the opportunity knocks

What a difference a global financial crisis makes.

Before the summer of 2008, the sovereign wealth funds (SWF) of the world, and of the Gulf in particular, were seen as dangerous interlopers on the western business scene. Their petrodollars were welcome, but sniffy corporations in the US and Europe expressed concern that the presence of SWFs on their share registers carried all sorts of dangers, mainly to do with lack of transparency and the possibility of political and executive interference.

Diamond Offshore moving Gulf rig to Egypt

“With new contracting severely restricted in the Gulf as a result of the uncertainties surrounding the offshore drilling moratorium, we are actively seeking international opportunities to keep our rigs fully employed,” company President and CEO, Larry Dickerson said in a statement. “We greatly regret the loss of U.S. jobs that will result from this rig relocation.”

Coast Guard: Most Texas tar balls not from spill

TEXAS CITY, Texas (AP) -- Coastal officials in Texas now say that new laboratory tests show most of the tar balls that have washed up on Texas shores in the past few days are not from the massive Gulf of Mexico oil spill.

Coast Guard spokesman Petty Officer Richard Brahm says new lab tests found that almost none of the tar balls originate from the BP-operated Deepwater Horizon rig that blew up on April 20.

Poster mocks topless Judd for coal criticism

LOUISVILLE, Ky. -- A topless photo of Ashley Judd emblazoned on a poster that mocks the actress' outspoken opposition to mountaintop removal mining was on display at a coal industry-sponsored golf tournament in Kentucky.

"Ashley Judd makes a living removing her top, why can't coal miners?" the 5-by-3-foot poster reads in bold, black letters. It was hanging at a golf tournament Wednesday at StoneCrest Golf Course in Prestonsburg, Ky.

Spill Commission Hires Science Adviser

The seven-member commission assembled by President Obama to investigate the BP spill has hired Richard A. Sears, a longtime Royal Dutch Shell scientist, engineer and offshore drilling expert, to be its chief technical adviser. Mr. Sears is currently on loan to the Massachusetts Institute of Technology as a visiting scientist at the university’s Laboratory for Energy and the Environment.

Toyota working with Tesla toward vehicle prototype

NAGOYA, Japan — Toyota Motor Corp is working to develop a prototype electric vehicle with Tesla Motors as it continues work on a battery-powered small car the Japanese automaker plans to launch in 2012, senior executives said Friday.

"We're at the stage of working towards a prototype and once that's completed and we've reached that milestone, I'd like to announce more about what we're working on together," Toyota President Akio Toyoda told reporters.

Can Tesla defy gravity? CEO Musk hopes so

What goes up must come down, as Internet entrepreneur Elon Musk has been finding out lately.

The South African-born entrepreneur has always had a knack for making money — but he’s good at spending it too. The question is whether Musk’s significant fortune will survive his broad ambitions, which cover everything from software to space, as well as clean and green electric vehicles.

Might We Do as the Romans Do?

Three years ago, the Italian energy giant Eni began what is now a summer tradition: from June 1 to Sept. 1, the company sets the thermostat in its corporate office buildings 1 degree Celsius (1.8 degrees Fahrenheit) higher than it had in summers before 2007. It also allows employees to “take off their ties” – that is, wear lighter, more casual clothes to work. Don’t misunderstand: Eni uses air-conditioning, and the offices are more than comfortable. It simply allows the temperature to creep up a tiny bit; most workers wouldn’t even notice.

The point, of course, is to use less air conditioning during Italy’s scorching summers so the company can save energy and reduce attendant fossil fuel emissions. Last year, Eni calculates, that simple intervention saved 386,000 kilowatt hours of electricity, a 9.5 percent cut in energy consumption over the summer.

To put that into perspective, comparable energy savings would be achieved if 800 employees traveled to work using public transportation over the summer instead of commuting by private automobile. (Although the latter would be unlikely in car-crazed Italy!)

Smart tech can help with heat wave blackouts

Smart power strips have a series of dedicated outlets, depending on what you're plugging in. Electronics that shouldn't be shut off go in certain outlets, while ones that can be turned off go in others. Several models in the $40 to $80 range are on the market now, as the Wall Street Journal's Katherine Boehret pointed out recently: the Bits Limited Smart Strip Power Strip, HP's Monster Digital PowerCenter and iGo's Power Smart Tower.

Then there's the next step — systems that can make dumb appliances into smart ones. Earlier this year at the Greener Gadgets Conference, several startups showed off their concepts for smart outlets and plugs while Home Automation Inc. president and CEO Jay McLellan described using low-power processors to monitor and control energy usage in the home.

Renegade on a hot tin roof

Tang Lee is a bit of a renegade amongst Canadian architects. The professor and building science expert has shown—in homes, airplane hangars and even churches—that solar heating doesn’t require specialized, costly technology. In fact, it can be as simple as a metal roof, a hot water tank, some fans and tubes and a concrete floor.

Coast's future in residents' hands

AUSTRALIAN Conservation Foundation president Professor Ian Lowe has urged Sunshine Coast residents to take responsibility for the region’s future sustainability instead of hoping outside forces will do the job.

Despite giving the Coast a green pass mark, Prof Lowe said the region needed to start thinking about its future beyond the age of “cheap oil” due to increased evidence suggesting we are near or even beyond peak-oil production.

Prof Lowe, who has held senior advisory roles with all three levels of government and is the author of numerous climate change and sustainable living books, said the Sunshine Coast needed to seriously consider what population it could support sustainably.

Iran Cuts Crude Oil Stored in Supertankers by 40%, Signaling More Supplies

Iran, the second-largest oil producer in the Middle East, released six supertankers from its fleet of vessels storing crude oil, a 40 percent reduction that may mean more oil heading to Europe, shipping tracking data show.

The National Iranian Tanker Co. has nine supertankers stationed off the United Arab Emirates and its own coast, according to data from the ships collected by AISLive Ltd. and compiled by Bloomberg. That’s down from 15 of the vessels on April 27. The six tankers that have been released can hold about 12 million barrels of oil.

NOIA Urges Admin. to Reconsider Issuance of New Moratorium

The National Ocean Industries Association (NOIA) reported it is pleased with the Fifth Circuit's decision, which once again confirms the lack of legal merits of the Department of the Interior's moratorium on deepwater drilling, imposed on May 27, 2010. However, the Department's announcement that a revised moratorium is waiting in the wings and that the appeal of the lifting of the moratorium continues only adds confusion and uncertainty for the offshore industry at the worst possible time and portends additional economic devastation to an area already on its knees.

Angolan Oil-Region Rebels Declare End to Civil War, Seek Government Talks

Angola’s government said it’s willing to hold talks with rebels in the oil-producing region of Cabinda after separatist leaders said their armed struggle was over.

Another anxious plea to recognize limits

According to the renowned Netherlands-based research institute, TNO Defense, Security and Safety, the threat of material scarcity is real and imminent.

Hockfield Sees Obama, Immelt Converge on MIT Energy

(Bloomberg) -- Being an expert on the nervous system of leeches and fold-up, battery-powered cars is helping Susan Hockfield enlist Barack Obama and Jeffrey Immelt in her improbable passion: a factory for alternative energy.

The 59-year-old biologist, who became president of the Massachusetts Institute of Technology in 2005 and a year later spearheaded the MIT Energy Initiative, presides over a $300 million research program that’s developing new solar cells, wind turbines and fuel-producing viruses.

Transition in the Big City - part I

The Transition movement coaches us to "begin in your own backyard." But what if your backyard happens to be one of the biggest megacities in the world?

350.org Urges Obama to Put Solar Back on the White House

Should Sasha and Malia be studying by the light of a solar powered bulb?

Today, environmental author Bill McKibben and his international campaign 350.org are joining the solar company Sungevity in a new effort to encourage President Obama to reinstall an updated set of solar panels on the White House roof.

Lloyd's CEO Sees Insurance Coverage for Rigs Rising 30% After BP Oil Spill

Lloyd’s of London Chief Executive Officer Richard Ward said insurance coverage for offshore oil rigs in the Gulf of Mexico will rise between 15 percent and 30 percent after BP Plc’s Deepwater Horizon spill.

“Prices will have to go up in the Gulf of Mexico,” Ward, 53, said in a Bloomberg Television interview today. “We’ve seen very low prices for covering these offshore installations over many, many years. People recognize that the risks they were pricing a while ago were underpriced and they need to restore pricing levels.”

The BP disaster is likely to be the second-biggest energy insurance loss based on current estimates, said the Insurance Information Institute. The most expensive property loss for energy insurers was a July 1988 explosion aboard the Piper Alpha oil platform in the North Sea, which killed 167 people and cost insurers $3.6 billion in 2009 dollars.

Norway bomb plotter seeked drilling training

One of the three people arrested yesterday, in connection with a plot to bomb targets in Norway, had signed up for training in oil and gas drilling twice in recent years.

Santos dampens talk of Shell LNG tie-up

SANTOS has moved to cool speculation that it is close to striking a multibillion-dollar deal with Royal Dutch Shell to consolidate their Queensland coal seam gas projects.

The Adelaide-based coal seam gas hopeful told the market that its $8 billion Gladstone liquefied natural gas project remained in ''detailed ongoing discussions with a number of parties in relation to LNG sales, equity in the project and collaboration between projects''.

The BP Stat That Will Shock You

Just one month before its April 20 Gulf of Mexico oil spill, BP claimed it could skim 491,721 barrels of oil a day in the event of a major oil spill.

So now that it's not merely a thought exercise, how much has it skimmed each day? 900 barrels.

That's less than .2% of its estimate.

Obama promotes energy projects, economy in Nevada

LAS VEGAS – President Barack Obama is wrapping up a two-day swing through Missouri and Nevada with a speech on clean energy that could deliver a boost to Senate Majority Leader Harry Reid, who's in a tough fight for re-election.

In Friday's address, Obama planned to call on Congress to expand a tax credit program for advanced energy manufacturing jobs. Eligible would be solar projects that Reid has been promoting heavily in Nevada as a way to capitalize on his state's scorching climate and cut down on pollution from coal.

Lloyd's says won't cover Iran petroleum shipments

LONDON (Reuters) - Lloyd's of London will not insure or reinsure petroleum shipments going into Iran, the insurance market said on Friday. U.S. President Barack Obama signed into law last week far-reaching new sanctions that aim to squeeze the Islamic Republic's fuel imports and increase its international isolation.

"The U.S. is an important market for Lloyd's and, in recognition of this, the market will not insure or reinsure refined petroleum going into Iran," Lloyd's General Counsel Sean McGovern told Reuters in a statement.

"Lloyd's will always comply with applicable sanctions," McGovern added.

Iran cuts oil prices as sanctions bite

As international sanctions mount, Iran is finding it increasingly hard to find buyers for its oil, forcing the hardline nation to offer discounts in order to shift as much as it can to a declining number of customers.

Though Iranian officials are increasingly voicing their concerns in public, many seem optimistic about finding ways around the trade blockade.

Axis of Oil

North Korea has found a new tap for its petrol thirst and at the same time a surprisingly significant trading partner--India.

Oil rises to $76 amid optimism on global economy

U.S. crude supplies dropped last week, suggesting oil demand could be improving. Crude inventories plunged 5.0 million barrels, the Energy Department's Energy Information Administration said Thursday, more than a drop of 3.5 million barrels forecast in an analyst survey by Platts, the energy information arm of McGraw-Hill Cos.

However, inventories of gasoline and distillates rose, the EIA said.

"Given the strength of the fundamentals, we would state that something in the region of $80 or above is more befitting" the oil price, Barclays Capital said in a report.

Oil Contango That Gave BP $500 Million Boost Is Vanishing

The profit from stockpiling North Sea crude, a strategy that helped boost BP Plc’s earnings by $500 million in last year’s first quarter, is evaporating amid rising refiner demand and oil-field maintenance.

Brent Crude Shipments in August Rise 2% from July, Loading Program Shows

Daily shipments of North Sea Brent crude, part of the price benchmark for almost two-thirds of the world’s oil, will increase by 2 percent in August.

Tankers are set to load 157,968 barrels a day of Brent crude next month compared with 154,839 barrels scheduled for July, according to a trader with knowledge of the loading schedule, who declined to be identified as the information hasn’t been made public.

ENOC pulls out of Fujairah port

Emirates National Oil Company (ENOC), owned by the Government of Dubai, has stopped storing and marketing bunker fuel at the port of Fujairah.

It has ceased its operations at the world’s second-biggest bunkering port less than two years after restarting the business, as traders pointed to rising competition from other ports in the region and business rivals.

We won’t run out of oil any time soon

THERE is only one rule when it comes to the availability of oil: experts are always convinced it will run out – but it never seems to. Brent crude is now at close to $75 a barrel, which is high but hardly excessively so by historical standards. There will be upwards price pressure in the aftermath of the BP disaster and the clampdown on new drilling, though if prices do rise enough the incentive to find more of the black stuff will increase commensurately, especially in countries with a more liberal exploration policy, and this ought to keep a lid on prices.

Obama loses drilling moratorium appeal

NEW ORLEANS, Louisiana (AFP) – The Obama administration lost its bid to keep a six-month freeze on offshore drilling, and BP was to outline Friday its next steps to cap the well gushing oil into the Gulf of Mexico.

US demands BP detail next steps to cap oil slick

WASHINGTON (AFP) – The US government Thursday gave BP 24 hours to outline its next steps to contain the Gulf of Mexico oil spill, saying efforts to cap a fractured well were entering a "critical stage."

The US pointman in the crisis, Thad Allen, wrote to BP managing director Bob Dudley saying that after talks to be held in Houston on Friday the British energy giant must hand over "detailed plans and timelines."

Oil containment effort facing 2 key moments

WASHINGTON — The battle to contain BP's massive Deepwater Horizon oil spill in the Gulf of Mexico is approaching two critical junctures in coming days that could affect how the months-long catastrophe ends.

Transferring oil from broken well an option for BP

THEODORE, Ala. – The first of two relief wells being drilled to stop the Gulf oil gusher could be done by the end of the month, BP officials say, but if that doesn't succeed, one backup being considered is transferring the crude to non-producing underwater wells that are miles away.

BP would run the flow through pipelines across the floor of the Gulf of Mexico, said retired Coast Guard Adm. Thad Allen, the Obama administration's point man on the crisis.

BP's payments help, but don't match the loss

BP is wading into compensating Gulf Coast fishermen and businesses affected by the spill.

BP gets stricter with claims

NEW YORK (CNNMoney.com) -- BP is becoming increasingly stringent with its demands for documentation from victims filing claims for lost wages and income in the Gulf region.

Florida legislature to consider oil drilling ban

TALLAHASSEE, Florida (Reuters) – Florida Governor Charlie Crist on Thursday called for a special session of the state legislature to consider a constitutional amendment to strengthen the ban on oil drilling off Florida's coast.

Drilling in state waters is already prohibited by statute but putting the ban in the state's constitution would make it much more difficult to overturn, Crist said.

Mississippi coast faces environmental crisis

WAVELAND, Mississippi (Reuters) – Coastal Mississippi is facing its biggest environmental crisis since Hurricane Katrina as oil from a leaking BP well in the Gulf of Mexico fouls its beaches and creeps onto inshore wetlands.

People watched in horror on Thursday as high tides washed oil onto beaches in the southeast of the state and in some cases the chunks of hardened oil floating offshore were as big as a school bus, said Long Beach Mayor Billy Skellie.

The previous day, oily water breached a sea wall and cascaded onto a coast road, leaving sticky patches.

It also flowed into a stretch of marsh, coating around one mile of marsh grass where it has the potential to do long-term harm to a delicate ecosystem. In one spot, fishermen pulled crab traps from the marsh bed only to discover that all the crabs were dead.

Attorney general suggests companies beyond BP are being investigated

Aspen, Colorado (CNN) -- Attorney General Eric Holder suggested on Thursday that the Justice Department might be focusing beyond BP in its Gulf Coast oil spill investigation.

Paul: Obama jabs at BP could harm spill cleanup

LOUISVILLE, Ky. – Republican Senate candidate Rand Paul said Thursday that harsh criticism of BP by President Barack Obama's administration could contribute to the oil giant's demise and harm its ability to pay for cleanup of the massive Gulf of Mexico oil spill.

Anti-Car Crusade, Fueled by Gulf Spill, Takes a Station Hostage

The Arco gas station at Fell and Divisadero Streets in San Francisco has become a flashpoint for two issues that inflame local passions.

First, as a subsidiary of BP, Arco draws ire for its ties to the endless oil spill in the Gulf of Mexico. Second, because the station sells some of the least expensive gasoline in the city, it creates hectic customer traffic that threatens the sanctity and safety of a popular bicycle lane.

So on a recent Friday when demonstrators blocked the Fell Street entrances to the station for a fourth consecutive week in protest of both BP and the cycling hazard, many drivers slowed and tooted their horns in support.

But instead of showing appreciation, some protesters responded with vitriol. “Where’s your bike?” they shouted back.

Saudi King Abdullah Delays Visit to France, No Reason Given, Le Monde Says

Saudi Arabia’s King Abdullah has postponed a planned trip to France that was to have started on July 12, Le Monde reported, citing an unidentified person.

E.P.A. Fines Monsanto $2.5 Million

ST. LOUIS (AP) — The Monsanto Company agreed to pay the Environmental Protection Agency a $2.5 million penalty for selling mislabeled bags of genetically engineered seed.

A City’s Motto: I ♥ Tap Water

New York City is so proud of its tap water that the Bloomberg administration has come up with a product line to trumpet its quality and promote it as an affordable and sustainable alternative to bottled water.

9 Stores Fined for Propping Doors Open

Nine stores in Manhattan and the Bronx have been hit with $200 fines for leaving their doors open on hot days in the hope that the escaping cool air will lure sweaty customers. They are the first fined as part of a new law passed in 2008.

Maine hopes to sell carbon credits to finance energy projects

AUGUSTA, Maine — Energy experts long have touted home weatherization as the best way to save money while reducing Maine’s reliance on fossil fuels.

Now, state officials have developed a plan to potentially make money from Maine’s aggressive weatherization efforts, using the growing international “carbon market” to help fund additional energy efficiency projects.

The unsatisfactory nature of inquiries

But, leaving science to one side, there are in any case three (rather than the more usual one) elephants in the room. The first is the accepted need to pay off accumulated budget deficits, and investing in subsidised and unreliable green technologies is a step in the wrong direction. The second is the evident fantasy that China, India and other major developing nations are going to do anything to curb their own growth in emissions. And the third is one which is probably the most important: available reserves of fossil fuels and the rate at which we are able to extract them. If, as many commentators believe, Peak Oil becomes a reality in just a few years, we will have far more pressing issues to address than trying to reduce carbon dioxide emissions.

Study: Think you're hot now? Just wait a few years

WASHINGTON – Folks sweating out the heat wave battering parts of the country may just have to get used to it.

As global warming continues such heat waves will be increasingly common in the future, a Stanford University study concludes.

Norway Production figures May 2010

The average daily production in May 2010 was about 2 197 000 barrels of oil, NGL and condensate. This is 51 000 barrels less than in April 2010.

That is total liquis. May C+C was down 46,000 barrels per day from April. But the June (preliminary) numbers take a real hit. Total liquids are down another 351,000 bp/d from May and C+C production is down about 335 bp/d from May to 1,586,000 bp/d. But these numbers are due mostly to planned and unplanned maintenance.

Production from the fields in the Ekofisk area were closed periodically in June due to planned maintenance, the Vale field was closed due to technical problems. Gullfaks C was closed whole month due to well problems.

Eyeballing the chart they published with this report Norway expects oil production to recover to about May levels in July. That is, of course, unless they have more unexpected problems.

Ron P.

Norway monthly production chart, Crude + Condensate, January 2001 thru June 2009.

Eyeballing the graph. Production should drop to zéro with two yers if the trend continue!

I think you are confusing months for weeks on the horizontal axis.

9 years and 6 months is 114 Mo's He meant Jan 2001 to June 2010.

Right, I meant 2010, not 2009. I still put 2009 on my checks sometimes. :-(

Ron P.

Hi Ron,

thanks for this. Do you (or anyone else) have a similar chart of Norway's nat gas production over similar time frame. Seeing as as Britons are heavily reliant on Norway to keep us cosy in the winter I would like to see a comparison.


Ron, I believe your last data-point (big drop) is from the oil_only table, no?

No, the last data point is Crude + Condensate, just like all the other data points. Norway gives crude only every month, then they give NGLs and then Condensate.

The liquid production in May was: 1 853 000 barrels of oil, 276 000 barrels of NGL and 68 000 barrels of condensate.

So for May I just add Crude and Condensate. For the preliminary figures for June, or the closest month in every report, they give crude but combine the NGLs and condensate.

Preliminary production figures from June 2010 show an average daily production of about 1.521 million barrels of oil, 0. 325 million barrels of NGL and condensate

I then must figure out how much of that "NGL and condensate" is condensate only. So to get Crude + Condensate for the last month I estimate the same percentage of condensate that was in the NGL + Condensate from the month before. Usually I am within one thousand barrels per month of the correct figure. For June I took their 1,521 K barrels of crude and added 65 k barrels of condensate and came up with 1586 barrels of crude + condensate. That is what the last data point on my chart represents.

Note. The EIA, in their "International Petroleum Monthly" always reports crude + condensate and have their numbers always show the exact same figures as Norway in this report. That is, they add the crude plus condensate and report "Crude + Condensate".

International Petroleum Monthly

World Crude Oil Production (Including Lease Condensate), Part A - ...

All their data for individual nations include condensate. That is the data I use for all my other spreadsheets so I must include condensate. Actually it makes sense because condensate is like gasoline. It is a light hydrocarbon and refined like regular crude.

Ron P.

Thanks for clarification and 'elaboration' ;- ) . I was slightly remote when looking at your vs Npd's charts imagining you also reported NGL's, which you did not. So there is my mistake.

We Need To End Our Addiction To Oil! LOL_Candyland

At this point in history it is almost impossible to find a place "beyond" petroleum. It's not just the scale of the task but its nature. Energy-dense liquids are valuable, and oil is uniquely valuable in its combination of density, ease of storage and transport, and, believe it or not, safety. Every alternative is worse on all metrics, including cost, even at twice today's oil price.

(Bold and italics theirs.) This is exactly the point many on this have been trying to get across since its inception. Others have insisted that ethanol, or palm oil, or solar, wind and electric vehicles, or some combination thereof, can step up to the plate and perform almost as well. Poppycock!

We are not running out of oil, not right away anyway, but we have already run out of growth in the oil supply. We ran out of that growth in 2005. But there is some elasticity in the economy. Economic growth can take place in the absence of energy growth. But like a rubber band, that elasticity can be stretched only so far… then all economic growth must stop. At that point the long recession begins. And after a few years the never-ending depression will begin.

When the growth in the oil supply stops it is only a matter of time before it starts to shrink. At that point all economies of the world will start to shrink as well. Every citizen of the world, whether they be rich or poor, will have to survive on less and less. This condition will be aggravated by the fact that the population, at that point, will still be growing… but not for long.

Then people will curse Malthus with every breath.

Ron P.

While we disagree on some things Ron, on this we are in perfect agreement. No point in cursing Malthus, he was describing reality not creating it. Of course cursing when it does no good will be one of the mental coping mechanisms that will help for a few weeks after the crash starts in earnest. After that other equally useless coping mechanisms will come into play such as scapegoating.

Well as I have said many times everyone now alive will die, the only thing this affects is the timing and nature of our deaths and whether or not our genes move forward to future generations.

We are not running out of oil, not right away anyway, but we have already run out of growth in the oil supply. We ran out of that growth in 2005.

Using the word 'growth' really helps define what happened. The world had been used to 2% growth on average per year and suddenly that went away.

I'm amazed at how steady the plateau has held.

I think price is going to be the big issue, in terms of how much oil will ultimately be recovered. I don't see prices going up indefinitely, because people's paychecks aren't going up.

EREOI One issue with respect to how much oil a company will be willing to pump at a given price per barrel (say $100 barrel) is energy return on energy invested (EROEI). At a 100 to 1 EROEI, a very low price per barrel will produce a profit--perhaps $2 or $3 or $4 a barrel. As the EROEI goes down, the needed price goes up. The oil sands in Canada seem to have an EROEI of something like 4:1 when everything is counted. There, they need a price of something like $75 barrel for adequate profitability.

We can talk about prices of oil of $200 or $500 barrel, but we are probably talking about oil with an EROEI of 2:1 or 1:1, or even less. In my opinion, these high prices just won't stick, because there is inadequate energy return.

Tax levels A second issue (besides EROEI) in determining how much an oil company is willing to pump at a given price is taxes. Taxes can be low, if society can afford to subsidize energy--probably through lots of net energy available from all forms of energy in general. But as countries get poorer, they start to raise tax rates. I expect this to happen quite a bit in the near future, since most countries need to raise taxes, and there aren't many good places to look to tax.

I expect Hubbert Linearization will not work well in estimating future oil production, because it doesn't consider these issues, especially tax rates. Higher tax rates will tend to make production drop off quickly--much more quickly than past production history would indicate. More oil will be left in the ground, because it is no longer profitable to pump.

You make a good case for why the price of oil won’t ‘stick’ at higher price levels. However the price for oil does not rise or fall smoothly and steadily, and I expect more volatility in the future.

Note that the price of oil rose for six months in 2008 after the US was in a growing recession – even while paychecks were not going up. Therefore the price of oil could rise, or fall, well beyond that would be determined by long term value after EROEI and/or the economic situation.

I would expect that once it becomes clearer that there will be less and less oil around, oil may acquire some type of hoarding or investment value – pushing the price ever higher (even adjusted for inflation).

Without economic growth, itself contingent upon ever expanding supply of cheap energy, the price of oil becomes irrelevant and more a function of deflation/inflation in an untethered, fiat currency world, rather than underlying supply/demand dynamics.

The signal that this is going on is gold, against which everything has deflated. It has gone back to its historical role as the only safe store of value.

This is why I've become less and less interested in the price of oil as the zombie economy continues. Buy gold and you don't have to worry either way.

Of course, who knows what's going to happen when the global production decline ensues.

I think that part of what has kept the world economy from falling apart is the continued rise in coal production (whether we like it or not!), helping to offset the lack of increase in oil production.

The countries whose economies continued to grow were the ones with big increases in coal use, by and large (China, India, other east asian countries). So coal use becomes another variable besides oil use, at least with respect to the future of the world economy. It was only in 2009 that total world energy production / consumption began to fall.

I really don't think the author of your article was thinking of coal as an alternative to oil--but that seems to be what part of the world is thinking. This is a major reason why the climate talks are going nowhere, IMO.

Euan will have a post next week with respect to Chinese coal.

The countries whose economies continued to grow were the ones with big increases in coal use, by and large (China, India, other east asian countries).

I was discussing this with someone on here a while back - the idea that China and India have coal based economies vs. western countries that are oil based economies. I would think it's due to levels of complexity and as they increase, so does use of oil vs. coal. If so, then Chindia (as Deffeyes refers to them) will be moving towards greater oil usage as their economies mature and increase in complexity.

So if an oil based economy is marked by high levels of complexity, then we would have to infer that less available oil or higher priced oil, pushes economies to lower levels of complexity and greater coal usage.

Unfortuntely, coal produces much more CO2 emissions than oil or NG. At this stage of the climate change, ocean acidification, a World moving towards ever greater usage of coal is the kind of dark ironic humor we don't want to experience.

Others have insisted that ethanol, or palm oil, or solar, wind and electric vehicles, or some combination thereof, can step up to the plate and perform almost as well. Poppycock!

Well, actually there are some places where E100 (180 proof alcohol = 90% ethanol + 10% water) will out perform gasoline.
In any equipment that sits for long periods of time (lawn mowers, tractors used only in summer time, outboard motors, collector cars, some general aviation aircraft and others the problem of fuel deterioration due to time between use might make E100 more attractive as a fuel than gasoline ( especially today's gasoline with anhydrous alcohol mixed with it)
The deteriorating gasoline makes it difficult/impossible to start the engine and doesn't run well even if you can get it started. Also the deteriorating fuel precipitates out tars and varnishes that plug filters, carburetors/injection systems.
The deteriorated gasoline after a year or so needs to be removed from the tank and properly disposed of as hazardous waste (or illegally dumped somewhere)
E100 would eliminate those problems in these specific nitch uses.
We need to find some way in particular to encourage small engine manufacturers to develop and manufacture lines of small engines that will run well on E100 (only) for these seasonal uses.

E100 would eliminate those problems in these specific nitch uses.

Jon, no one questions whether ethanol has niche uses or not. I have a niche use for ethanol just about every afternoon... in my toddy. The question is: Can ethanol completely replace gasoline as our primary transportation fuel as the supply declines to a fraction of current levels in the next couple of decades? Some say it can, I say poppycock!

Ron P.

Ron, our society uses a whole lot of energy that we simply don't need to, and as costs of different options we have currently deployed change we shift pretty quickly.

You are absolutely correct that BAU cannot survive serious fossil fuel depletion, but guess what? It didn't survive serious fossil fuel surplus either.

BAU is in a constant state of change, what is "normal" today would have been outlandish 50 years ago. There are always transitions going on, there are always winners and losers, there is no equilibrium state.

Some of the changes on the downside of the energy curve stand to be pretty nasty, but look at the past hundred, thousand, or ten thousand years and tell me with a straight face that there is anything unusual about that.

We'll get by. Maybe not as well as a lot of folks would like to, but unless somebody's worked out the technical problems with the pink unicorn engine we never were going to do that well anyway.

My kids (mid-30's) don't seem to be worried, or even interested in these petroleum issues.

I think they have concluded that the world I know is different from the one my father and and even more startling, my grandfather knew -- and they don't expect or even want to live like I do. I don't think they are deluded or ignorant or burying their heads in sand, I think they truly expect a different economic assortment-- and will be content with it.

History would suggest that it is our generation's slavish adherence to a high-energy, hydrocarbon based model that is out of sync with reality, and even if we immediately cut energy use in half, we would sooner or later face the same problem. It took less than 200 years to burn through all the fish in the Columbia River, and less than 100 years to burn through most of the oil in the world. And the only thing we have to show for it is a vast world population of miserable people (and a few fabulously wealthy ones), skyscrapers everywhere that can't be heated, cooled, watered, sewered or even gotten into without huge energy flows that won't continue, and piles of rusting cars.

The Oil Drum is interesting when it discusses petroleum -- but probably not relevant to the future.

Its relevance lies in all the articles and postings about re-establishing the communities that the high-energy model tore apart.

My kids (mid-30's) don't seem to be worried, or even interested in these petroleum issues.

So their non-concern means everthing will be ok? Actually, all it means is it fits with most people's viewpoint, but that in itself doesn't make it correct. That's what's known as 'Group-Think'. If the majority think it's correct, it must be, is the rationale. Well, Hubbert predicted a peak in US oil production to occur in 1970, and at the time, 1956, the majority were unconcerned and ridiculed him. Yet it happened just like he said it would.

My children in their mid 30s have concluded the situation is hopeless. Unfortunately, one has chosen to have three children so far and is condemning those children to a miserable existence.

Dom, your post just doesn't make any sense. Tell you there is anything unusual about the last hundred thousand years? Well the Neanderthals went extinct. Was that unusual? We'll get by? Who will get by? We are talking about then entire world, 7 billion people. Will they all get by?

The truth is I haven't a clue as to what you are talking about. You need to articulate the context of your post a little better Dom.

Ron P.

Since you had just expanded "niche uses" to "Can ethanol completely replace gasoline as our primary transportation fuel as the supply declines to a fraction of current levels in the next couple of decades? Some say it can, I say poppycock!", I felt it was the order of the day to expand further.

There is no one fix. You know that.
That there is no one fix is irrelevant. You seem impervious to that bit of wisdom.

Ethanol will not save the day, neither will solar, wind, hydro, fission, nor fusion. The world will change. Nothing can stop that.

Just like it always has.

Business As Usual, that bogeyman that you are so insistent cannot be saved and whose downfall will doom us all, is an illusion. The usual business is change, and trying to preserve an idealized form is what is going to do the most damage.

Of course ethanol can completely replace gasoline for our transportation fuel .
It is just that our transportation using only ethanol will be a lot less travel than currently with gasoline.
So, if gasoline disappeared tomorrow, transportation could continue at a new (and much lower) BAU with ethanol? (Another Big Grin).
So I am agreeing with your and disagreeing with you at the same time. Mosquitoes have been ravaging my body all day and the itching (and blood loss) may be affecting my thinking??
Think I'll go take a shower and jump in bed to try to get away from the Monster Minnesota Mosquitoes for a little while. (I am out of shotgun shells - sigh)
PS, now you know why the 3M Company uses 3 M's in their name.
Off to the shower.

Spot on Ron

True that, Ron.

We're not running out of oil production quite yet, but we're unfortunately starting to run out of net energy. And when oil production starts to decline, net energy will take a nosedive.

At some point, physical economic issues take over. The money and finances won't matter. When we expend 1 boe of energy and get .99 boe in return, game over.

And in the meantime, the portion of net energy that gives us lifestyle, diversion, food, water, heating, clothing, transportation, the Internet, all gets eaten away by the portion that goes to maintaining energy production from ancient sunlight.

And in my own hubris, I think we can still keep this going for at least 2 to 8 years before a net energy collapse. Which I kind of like, because I like central A/C and heat, the Internet is amazing, and dry-aged ribeye is great. I'd like to be wrong on the back-end, and have the collapse happen after my own collapse (death). But I could just as easily be wrong on the front-end and net energy falls off much faster than I think.

In the past few weeks, I have seen changes in the places I go both on the net and IRL. People are beginning to scramble to find ways to augment their inflows or reduce their outflows. Matt Savinar added consultation services. Marc Maron's WTF Podcast started charging for premium content, and has started reminding people to donate on every podcast. More small lawn signs are going up on street corners for all kinds of services, from foreclosure to remodeling. People in various levels of government are actually seriously considering legalizing marijuana, which should have been done for a million reasons 30 years ago.

And the accuracy of weather forecasts also seems to be crashing. Meaning that the models that used to do a fair job of predicting weather are failing because the weather patterns are changing at a fundamental level.

Urban garden report, Chicago :

After a very wet spring, and now very hot and humid temperatures, with torrential downpours followed by dry spells, here's how my garden is faring to date.

Great : apricots, raspberries, blackcurrants, strawberries, beans (including soybeans)

Good, but not great : peas, cabbage, apples, peaches, gooseberries, lettuce

Poor : leeks, onions, corn, cauliflower, spinach

Looking to be great : broccoli, tomatoes, melons, pumpkin, squash
Looking to be good, but not great : cucumbers

Fantastic week for the first of the bush beans.

Garden report: drowned
S. Saskatchewan has experienced heavy flooding in early summer. Many farmers, including most of the Qu'Appelle Valley veggie farmers (suppliers to Regina), have lost the year. My plot at the community gardens where I raise much of our year's veggies, is still under water with duckies. Very sobering as without long distance shipping we (the district and province) would be facing a hard year. I have hauled rotten straw to raise part of my garden, and tomorrow will add a layer of composted manure and plant out turnip, carrots, beets, kohlrabi, spinach seeds (anything fast growing) and spare seedlings that I have been moving to bigger pots (hopefully not too pot bound). Have dug up alot of lawn around house for veggies, but area is too shady for non-leafy vegetable production. Sigh - no potatoes for winter, suspect no local ones made it through flooding period. Fear some small, young truck farmers will be wiped out.

Sounds miserable.

I have most things in raised beds so there's a benefit when it comes to drainage. I am noticing an appearance of powdery mildew on the squash plants, but nothing substantial at this point.

I have tried reseeding a few things, like corn, but I am challenged in where the sunlight falls - my main vegetable bed is next to the garage, and I only get full sun there April - September, so anything late-planted has to mature pretty fast !

Anecdotally, I'd say, overall, it's been a poor year for cool-season vegetables, looking to be better for the warm-season items, as long as I can keep them rot- and bug-free. I keep the pumpkins and squashes off the ground on trellises.

Anything that likes hot and moist conditions appears to be thriving. I have banana plants in pots -they are loving it, as long as they get good watering during the dry spells.

I'm also considering moving to more of the perennial vegetables, since, with deeper root systems, they seem less vulnerable to the vagaries of the weather.

Hi spring_tides -

Curious as to how you trellis the squash and pumpkins - are they "trainable" or do you have to (semi)permanently affix them to the trellis. I've wanted to try this but never really understood the mechanics behind doing it.

Weather report from the Hudson Valley of NY - really hot and what I'd imagine would be gulf coast style humidity for the past few days - absolutely awful... Similar to other poster's reports we started out warm really early this year - then had an alternating stretch of seasonable and cool/rainy weather... the last month has been dry dry dry though - any rain has been in brief downpours that exit quickly as surface runoff - nothing percolates into the soil... without some good soaking rains I think we could be in some trouble since our "dog days" are still a month off.

Pumpkins are trainable. They'll climb anything once they get started ;) Some squash varieties I have to attach with garden wire.

Since they are pretty heavy, I either plant them close to the fence, where I nailed up garden netting (the wire kind) for them to climb, or, for the smaller varieties, I use the 3-sided tomato trellises that you can fold into a triangle-shape for stability. Available at most garden supply stores.

Since I only have a small space, generally I choose smaller or mini varieties. I trellis squash, pumpkins, cucumber, melons and watermelons.

Must try this with the cucs on the chinampa;^) Hope I can find these 3 sided tomato trellises or find time to build them.

I have a wire fence around my garden, and plant my cukes where they can run up the fence. Not only do you save garden real estate, but the cukes that form up the fence are nice and straight and clean.

Report from the high desert north of Reno NV. We do the same with cukes. This year a late killing frost set us back about a month in the garden and caused complete loss of our apple crop. We never have to worry about humidity deseases like fungi but irrigation is critical for everything. I believe the early hybred tomatoes will make but the heirloom beef steak tomatoes may not. Such is life in the high desert and we are certainly glad the stores are open. If we had to depend on the garden this year, we would be in possible Hurtsville with an early fall killing frost.

In the weather forcast; very dry @ 10-20%RH, 95F-101F this week, and widly scattered (dry) thunderstorms which may get to be exciting for the fire fighters.

Thanks for the info spring_tides, I'll give some of these methods a shot...


Garden Report:
North-Central NC--- Parched
Entire crop of field peas withered. Buck wheat brown, oats holding their own...
Vegtables ok cuz irrigate.
All we get are gully washers, then scorching temps in high 90"s
Spend some days driving truck loads of topsoil to top of mtn from the bottom lands where the unbelievably harsh but brief (i.e., useless)downpours wash my fields away. (Despite berms, cross-ditching, rock blocks, etc) Used to do this every few years. Now it is monthly task.

If everywhere is reporting parched or soggy, what's this going to do to our food supply?

Hate to see what food quality and prices await us come autumn and winter.

Garden report: SW North Carolina Mtns.

Very Dry. No beneficial rain for weeks. Some spotty downpours, very localized. Springs, creeks and ponds doing OK thusfar. Garden soil parched but drip irrigation working well, though taxed to the max. Tomatos, cukes, squash, peppers, green cabbage and bush beans doing ok and corn varieties growing OK despite late start.

Lots of bugs. Weather stations showing 18.85" YTD, about half of last year's total to date. No second crop of hay expected this year. Lots of blackberries, few big ones and not as sweet.

Sourwoods blooming profusely and ZERO honeybees. None. Very spooky. In previous years the buzz could be heard for hundreds of feet. Very quiet around the Sourwoods this year. Best hopes for self-pollenating fruits and veggies.

I have honey bees "in house" - but I do notice their foraging preference is nectar flowers such as dandelion and clover, when available, although I did see them on the early apricots and the peaches. Most of my vegetable pollination seems to be accomplished by bumblebees of various descriptions.

Other species are filling the nitch somewhat here. My beekeeper friend across the ridge lost 80% of her hives over the winter. She's been keeping bees for over 40 years and really knows her stuff. I think she's about to give up.

Sheesh...that's very sad...

I had a great year for honey last year, and the bees overwintered fine. In fact, one hive threw two swarms this spring. Good for them, bad for me ;)

I'm probably going to harvest honey this weekend - ordered 1lb containers, which will hopefully arrive today.

I really only harvest for personal use, but I have some private customers too.

Hi again spring_tides,

Sorry. Forgot that you yourself are a beekeeper. Please excuse my preaching to the choir. I really envy you your bees. I absolutely loved keeping bees, as much for the sake of watching them as for the wonderful honey they made. But these are more difficult times for my wife and me on our hillside homestead. We built our house and barn ourselves years ago, but we are 30+ years older now; and gardening, keeping our forest away from our garden, maintaining our buildings, etc. occupies (pleasantly enough) much of our time. Besides, as you know, honey bees are in trouble as a species nowadays, for reasons even the experts are not clear about. And, ultimately, wooded Vermont hillsides don't provide the best of livings for honey bees. They need to be down on the flats closer to the farms. But those too (the smaller dairy farms) are being driven out of business, just as smaller operations would seem to be best in our long-range future.

Again, sorry for jumping into the breach you could just as well have filled yourself.

Glad your honey bees are doing well.

All the best,


No worries at all ;)

I'm only in my 5th year of beekeeping - I hardly consider myself an expert ;)
I started, really, because I was hearing so much about CCD. Now, there's no going back.

The one year I lost both hives to varroa, and it was so awfully quiet around here - couldn't wait for the packages to come in. I was about the first in the door that spring, when the packages arrived.

It's hard to explain that to people.

Hi spring_tides,

As I've mentioned a couple of times in past DrumBeats, honey bees tend to forage true to type. That is, each field worker bee tends to forage on one flower, instead of flitting about from one species of flower to another as bumblebees, hornets, wasps, and other bees do. As you can imagine, this makes honey bees particularly valuable as crop pollinators. The pollen they carry from flower to flower (whether the pollen is the crop they are foraging for or an incidental passenger while they forage for nectar) tends to be overwhelmingly of the type of flower they are visiting. This is obviously an advantage for the flower and the crop owner.

Honey bees that are working dandelions, clover, alfalfa, bird's-foot trefoil, apricots, apples, black locust, basswood, whatever tend to rest at home in the hive instead of switching to a different flower, if "their" flower (for example) quits producing nectar in the afternoons. Healthy honey bees behave this way, in part because even the foraging worker bees have specialized tasks. No doubt, over the centuries, humans who noticed that honey bees tended to forage true to type artificially selected for this useful trait, thus increasing the specialization of honey bee stocks.

Trouble with specialization, as many humans have discovered over the centuries, is that it can restrict flexibility and adaptability, especially if the environment changes suddenly or rapidly. That's part of what's been happening to honey bees of late, and it's part of what's about to happen big time to our own species.

Best hopes for soft landings all around.

The above generalizations about honey bees are based on my own experiences as a beekeeper. (10 hives = most I ever kept at any one time; don't now have any hives--am retired with my wife in the wooded hills of Vermont, not the best bee pasture.) The generalizations can be checked in virtually any basic text on honey bees and beekeeping. I happen to be partial to the many books written by Roger Morse, a long-time beekeeper and entomologist at Cornell University.

Update: a wonderful thunderstorm just dropped .33" in about an hour. Temp dropped 23 degrees (all window fans on!). Not a lot but we'll take it. The catch trenches between the corn and beans filled enough to help, and the "dust is off the vines". Scared the cat a little (but she has my lap for times like this).

Fabulous! We also got a good rain yesterday. Much cooler today. All the plants, of course, on their usual post-rain growing spurt.


Hurray! ccpo, looks like the wet stuff is heading east, too.

Today was sunny and hot. As I write, at 10:30 p.m. ADT, the outside temperature is still 29 C, 84 F. The house has yet to cool down. Alas, one more night of sweating amid the covers.

Here's to a spot of rain and cooler temperatures tomorrow.



Hey Tom,

We've fallen to 21°C, down from 30°C, and there's a strong breeze blowing off the water -- man, it feels great ! Better yet, Environment Canada's forecast is calling for showers over the next four days (Maritimers getting excited about the possibility of rain... what in blue dickens is the world coming to !)


Looks like either feast or famine ... drought or flood. Environment Canada is issuing heavy rain fall warnings throughout the Annapolis Valley.


Rainfall warnings have been issued for the western regions of Nova Scotia where 50 millimetres of rain is forecast by Sunday evening...

This moist air mass accompanying the rain is also expected to bring thundershowers across the region. Higher amounts of rain can be expected locally in these thundershowers. Please note that these rainfall warnings may be extended to other areas of Nova Scotia depending on the position of the trough when it arrives this evening.

Please refer to the latest public forecasts for further details.

What's worse, it's 5 a.m. and it's bloody hot and steamy: 24 C/ 75 F with 89% humidity and a humidex reading of 33 C / 91 F. Both the temperature and humidity are expected to rise and remain high throughout the day.

Oh joy, oh bliss. No A/C or dehumidifier in this household. I would hang out at the hospital except that it's aging cooling system is no longer working. That should free up a few beds and make for robust business at the local funeral homes.

I can take some consolation in the fact my vegetable garden will appreciate the wetness and that tomorrow the forecasters are calling for a return to seasonable temperatures - that is until Tuesday and then right back up again.

Here's to a return to clean t-shirts and non-smelly armpits. Ahhhh.... the things we take for granted.



Miserable stuff, Tom. It's quite quite a bit cooler here on the coast. There has been the odd passing shower, but heavy rains are expected to move through later today. The winds have really picked up, and you get the sense that we could be in for some potentially violent weather. Stay safe.


Stay safe, too.


The same front has been crawling across PA all evening, but it still hasn't hit my County. We're looking forward to a little rain -- I don't think we've had more than a drop or two since early June.

Square foot garden report (Two 4 x 4 squares)

Peas went brown and I took 'em out. About four servings from four 1x1 squares.
Lettuce grew really good, a few harvests and they're out.
One measly head of broccoli from each of four plants. No worms this year, tho.
Onions, peppers, tomatoes still hanging in there, but pretty small. Maybe I shoulda watered them more.

Over on the other side, I got ... 4 quarts of raspberries from the bushes the previous owner planted. Best crop in years. Apple tree isn't doing so good though.

Peas went brown and I took 'em out.

This year was my first attempt to grow food. Peas grew great but after a single crop of pods, they all just shriveled up. I thought they were supposed to keep producing all season. My tomatoe plant has become huge however. Put in an Orange tree, but i don't expect any fruit for a couple of years.

Peas hate hot weather/soil. That's why you should plant them as early as possible - so you can get more than one round out of 'em. I didn't even bother this year - too much hassle for too little food. Though I usually do plant them, since it is something to do in the garden in April in NH!

Garden Report: Southern Willamette Valley Oregon.
After the longest cold, wet spring I can remember (had our last fire in the wood heater in mid-June) we are getting some hot, dry weather more typical for this time of year but thankfully not quite the level of heat the east coast is getting (mid 80s to mid 90s)

raspberries have some kind of blight but are beginning to bear some.
blueberries appear to be doing well.
strawberries are kind of stunted and slow to get going.
snowpeas doing well but the &$%# voles killed off the sugar-snaps
corn doing well
potatoes doing great, planted them where last years compost heap was
great salad stuff and khol crops doing very well.
wine grapes doing reasonably well, no fungus apparent.

This is a mandatory irrigation climate, so we are critically dependent on a good water source.

Best wishes to fellow gardeners and to wannabe gardeners as well.


Wild, sweet plums in the dehydrator.
I cannot possibly harvest them all, so I guess the birds and deer will get the bounty.
A big buck was across the way a short time ago.
Still have artichokes, chard, beets, kale, onions.
I'm more of a forager .

Here in NW Georgia, we had a good June for Chantarelles--good enough that we've put quite a lot of them into the freezer.

Our weather has been a lot like that in NC -- wet spring, much hotter than usual early summer. Bugs and diseases that are more typical of late summer are already here, but the tomatoes, okra, peppers, melons, and corn are all doing well. The beans are doing less well, but if the plants make it through to cooler weather, their production should pick back up. I planted an heirloom pole bean this year, and the flowers don't make beans when temps are in the 90s, apparently. The variety is Alabama black. Live and learn!


I cannot stress enough, and the other permaculturists lurking out there will hopefully back me up on this, that there are ways to manage water, regardless of climate to deal with excess, drought, what have you.

In designing resilient systems, start with water. All else depends on that, obviously, but we tend to design for our own thoughts on aesthetics and organization, rather than what the space would suggest we do.

Brad Lancaster's books are invaluable, even though they are for drylands.

Yes, there are deluges that nothing can withstand, but most deluges - and droughts - can be dealt with.


Whoa dude,
speak on.... Listening intently

Garden report: Cumberland, MD

Hot and humid has been the keynote of the spring and summer here: not too pleasant for H. sapiens, but great for the plants. This is my first year of gardening here, which limited yields of some crops -- for example, I didn't get the snow peas in soon enough, so got only a very small crop before the heat did them in -- but others have done stunningly well.

Very good: spring radishes, Romano bush beans, pole beans, corn, winter squash, onions

Good: spring lettuce, field peas, tomatoes (so far)

Poor: snow peas, carrots.

The first round of perennial crops, asparagus and rhubarb, are still getting settled in -- won't know how they're doing until next spring, really, but so far they look happy.

JMG, my spouse and I moved from Western NC to Oregon in '03. The most significant difference we noticed in gardening is that there are much fewer bugs here, at least the garden pest kind. We have worm free corn for the first time I can remember. There are trade-offs, such as the tomatoes which don't like the cool nights here and take forever to ripen (trying plastic row covers this year). Our biggest problem this year, besides the long, cool, wet spring, are the voles. We can protect the berries with bird netting, but the consarned little furry critters wreak havoc. Haven't found a trap bait they will go for yet.

Best hopes for growing stuff.

PS enjoy your blog. Makes me think.

I have vole issues as well. We've had mixed success in dealing with them. I think the most reproducable catch we've had so far is with peanut butter on a cracker in a "mouse cube". We have an inquisitive 2 year old so I'm reluctant to put out any type of trap that could cause her trouble. I'd put this in the "it worked once for me" catagory, but you might give it a shot.

Biggest Defaulters on Mortgages Are the Rich

“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”

...The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona who has studied strategic defaults.

“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.

I notice more than once they mention "house as financial investment" i.e. there is less emotional investment in the home to begin with. Easier to walk away.

Many "investment" and second (third) homes in our area. Many walking away. It makes it nearly impossible for those who must sell to do so. It's sad because lots of folks here are reaching post-retirement and can't cash in the only home they have. Their biggest asset has been rendered nearly worthless due to others' greed and ambition. A customer of mine called it "a great buying opportunity". It's a tragedy for those who are running out of time.

I suppose we all are.

Its not greed and ambition Ghung, its common sense. Do you expect people to maintain a residence that will only cost them with no positive return? Since when did the real estate market get altruistic? What do you recommend we do with a house carrying $250K note while others down the street are selling for $30K?

Is it any different when the prices were escalating driving those on fixed income out because they couldn't afford the market rate taxes? There is no upside for the fixed income with house as major investment in this. I've seen my in-laws in Miami suffer the same fate, although their home is not their only investment but it still hurts.

"Its not greed and ambition Ghung, its common sense."

Ha! I could introduce you to some folks that may change your mind.

Question; Is it not greed when folks that already have much more than they could ever need but want ever more create conditions that diminish values for all? The real estate market here wasn't normal investing. It was an all out gold rush. View lots that were sold as land in the 80's for $1000/acre were pushed beyond $400,000/acre before the crash in '08, by speculators and bubble blowers. Lots.

Common sense? Around here we call it "carpetbagging". These same folks pick up the scraps and head back to FL where their assets are protected, leaving a County with a year round population of less than 10,000 with about $40 million in real estate defaults, a dramatically reduced tax base, very high unemployment, infrastructure that is unfinished/unfunded (which they insisted upon), and permanent residents trying to hold on to property that is unsellable, except perhaps at the 1980 price.

You call it common sense. We call these people "common" (zero class).

Yeah, it's a mean ol' world. Hunker down!

The second home boom went wild around here in NW NC as well. In Watauga County, one S/D (Laurelmor) sold many of the lots in one weekend for some big bucks. They had lots of plans for amenities, such as a golf course and an nice clubhouse, etc. But, then the developer went out of business and sold to another crew, who changed the golf course and cut the prices of the remaining lots. The folks who bought in at the peak lost a bunch of value and some lots have appeared as foreclosures. Another development I'm aware of in Madison County had a similar fate, the first batch of lots going for ever increasing prices until the S/D went bankrupt. Since of 2008, there's been nothing but foreclosures amongst the highest priced lots. Many of those later lots look to be impossible to build on...

E. Swanson

Writing from Los Altos today, my daughter says the home in the NYT photo is very likely in Los Altos Hills; even the local paper cited is really the Los Altos Hills Town Crier.

My daughter lives in a neighborhood with many modest-looking homes, but some are still pricey.


"The real estate market has morphed into a beast that is largely sinking the overall economy into the ground. If we combine the commercial real estate market ($3.5 trillion in debt) with residential outstanding mortgages ($10.3 trillion) we arrive at a figure that nears the annual GDP of our country. What makes the figure even more troubling is the amount of leverage found in the real estate market."

...The rich and successful often come naturally to this sort of attitude,

I'm beginning to think that that statement has it backwards. Those with this sort of predatory attitude become the rich and successful. I had no problem dreaming up get-rich schemes when I was younger. Its just that my upbringing was such that exploitation wasn't considered to be ethical. I suspect that a pretty good fraction of the top one percenters got there due to owning an ethical deficit.

Some news from Iran

Iran allocates $29.4 billion for South Pars development plan

TEHRAN - The Iranian president’s special representatives for oil affairs has announced that the government has allocated $29.48 billion of the National Iranian Oil Company’s revenues for the South Pars gas field development plan.

The South Pars field is a gas condensate field located in the Persian Gulf. It is the world’s largest gas field and is shared by Iran and Qatar. According to the International Energy Agency, the field holds an estimated 50.97 trillion cubic meters (1800 trillion cubic feet) of in-situ gas and some 50 billion barrels of condensates.

Bushehr plant in last stage of testing

BUSHEHR - The equipment of the Bushehr nuclear power plant is in the last stage of testing and the plant will come on stream by the end of September, Atomic Energy Organization of Iran Director Ali Akbar Salehi announced on Wednesday.

“Today we completed one of the most important and last tests of the nuclear plant, the Warm Water Test, before its start-up,” Salehi told managers and staff of the Bushehr nuclear power plant.

Iran plans to launch new satellite: minister

TEHRAN - Iran plans to launch a new satellite called Rasad 1 (Observation 1) in the last week of August, Telecommunication Minister Reza Taghipour said on Wednesday.

“Rasad 1 satellite is expected to be launched into space on the back of a domestic carrier during the period marking the government week (last week of August),” Taghipour told the Mehr News Agency.

The launch of the Rasad 1 would mark Iranian “newest achievement” in space technology, the minister said.

Iran will seek damages if Russia fails to deliver S-300 system: MP

TEHRAN -- MP Hojjatoleslam Hossein Ebrahimi said that if Russia fails to deliver the S-300 missile system, Iran will pursue the issue through official channels and seek damages based on the provisions of the contract signed by the two countries

...The S-300 system, which can track targets and fire at aircraft 120 kilometers (75 miles) away, features high jamming immunity and is able to simultaneously engage up to 100 targets

south pars/north dome gas condensate field:


50 gb of condensate in place, 90 % (not a misprint) of which may be recoverable as liquids (condensate and ngl) if they play their cards right(gas cycling). dont count on it.

quatar is pissing away their gas by letting the uber-capitalists turn it into under valued lng. quatar may see the light(from the wiki article):

The prospects for further growth in Qatari gas production beyond 2012 are clouded by the uncertainty created by a moratorium on new export projects, which was imposed in 2005 while the effect of existing projects on North Field reservoirs was studied.[38]

north dome (north field) was studied as early as the '80's as a possible gas cycling project with all the dry gas returned to the reservoir.

the doomer denizens won't want to hear it, but ghawar' khuff reservoir has the same potential(gas cycling). cheer up doomers, it is doubtful aramco can get'rdone. i give them (aramco)credit for maybe connecting the dots.

someone more articulate and nimble with posting graphs than i should post a key post on the subject, imo.

From the article that says we won't run out of oil
Brent crude is now at close to $75 a barrel, which is high but hardly excessively so by historical standards.

Not correct, per:http://inflationdata.com/inflation/images/charts/Oil/Inflation_Adj_Oil_Prices_Chart.htm


Only between 1979 and 1984 was that true. Between 1946 and 1973 the inflation adjusted price was about $20. Between 1985 and 2004 the inflation adjusted price was between $20 and $40.

In nominal terms, the average price of oil through the first half of 2010 was $78, which exceeds all prior annual oil prices, except for 2008, when we averaged $100--and all post-2005 annual oil prices, including 2010 to date, have exceeded the $57 that we averaged in 2005. Despite the strong price signal, annual global crude oil production has not yet exceeded the 2005 annual rate (EIA)--in marked contrast to the sharp increase in crude oil production from 2002 to 2005, in response to rising oil prices. So far, in the post-2005 period, rising unconventional crude oil production has simply served to partially offset the (so far) slow decline in conventional crude oil production.

And then there is the net export question.

This is a great way of framing the situation. Oil prices in the $70/bbl range are historically high. The 2008 price surge--it should probably be termed a super-spike--appears to have an effect of making $70/bbl oil look cheap. In my opinion, oil in the $70/bbl-range is probably not conducive to a serious economic recovery in the United States, nor does it help a global economy that developed in an era with ~$20/bbl oil. Looking at media reports from the 2005 era indicates that oil in the $50/bbl-range had begun to cause problems for a number companies, including airlines. (I have posted on this before, with references--no time to find link.)

Incidentally, I find it interesting that in March and April, monthly average oil prices (WTI spot price per the EIA) reached $81.20 and $84.29/bbl respectively. This was the first time that monthly average prices crossed $80/bbl since the 2008 economic meltdown. Note that after these two months of quite high prices historically, the market chaos of May and June followed.


I used to think that forced energy conservation would move up the food chain pyramid, from lower income to higher income consumers, with Bill Gates, et al, being at the top of the pyramid.

But the rapid increase in oil consumption in developing countries, as oil prices rose at 20%/year from 1998 to 2008, contradicts this model.

Probably a more accurate way of modeling forced energy conservation is more a function of how people use energy, e.g., energy used for essential goods & services versus non-essential, versus consumers' level of non-discretionary spending, versus how dependent their incomes are on continued discretionary spending.

For example, let's assume we have a real estate agent who drives his large Lexus SUV around town, selling suburban McMansions, who is currently spending 100% of his income on monthly expenses, especially his own McMansion. So, he is using energy for largely non-essential consumption related purposes, with all of his income going to meet current expenses, while being heavily dependent on continued sales of houses. While the real estate agent appears to be far wealthier than a farmer in Kenya, it's quite possible that a farmer in Kenya, who wants to increase his consumption of petroleum products in order to better irrigate his fields, may be able to outbid the real estate agent for access to petroleum.

Recent oil consumption in Kenya (EIA) as annual oil prices rose at 20%/year from 1998 to 2008:

While the volume of US consumption is "slightly" higher than Kenya's, it's interesting that US oil consumption in 2008 was back to the same level as 1999.

Think of it as profit return on consumption. Some oil consumption is not very profitable. Or it can be replaced such as the real estate agent making more use of the telephone and the internet to sell properties. The expensive SUV is mostly a tax write off anyway.

But the Kenyan farmer will have no or a much reduced crop if he does not buy oil for his equipement. The same is true for American farmers.

I do not worry about reduced oil supplies affecting farm production much. If farmers want an income they will bid what ever it takes to get oil to power their machinery. Oil is a small cost compared to other farm expenses even if the price doubles or triples.

Those businesses/countries that can substitute other means than oil to survive will do the oil conserving.

This goes for consumers also. Some consumers can shop on the internet rather than at the mall for example. Others have to shop at the mall since they are not internet savvy.

In my view this explains how Americans will reduce oil demand even as some poorer nations increase oil demand as prices rise.

Some uses for oil are more profitable than others. It is those who have the most profitable use for oil who will out bid those whose use is less profitable or simply a luxury that can be foregone with little loss.

The farmer will starve/go out of business without oil. The real estate agent is merely inconvenienced.

Finally a comment that I can nearly 100% agree with.

"The farmer will starve/go out of business without oil."

The Corn belt farmer can dedicate 10% of his crop land to The production of soy diesel, when it becomes more economical than F/F diesel.

That's much better than what used to be 25% crop land dedication for horse feed.

That's much better than what used to be 25% crop land dedication for horse feed.

but how much of the soy diesel is recycled ?

"but how much of the soy diesel is recycled ?"

The same amount as from FF. Except it is carbon neutral, and the 10% includes process energy requirments.

Available economic information does not support the idea that the present day economy enters a recession at about $70 oil. Granted that may have been the case around 2005, when $70 was much higher than the $30 oil that prevailed only a few years earlier. If anything, $70 oil is now cheap – well at least as compared to the almost $90 level seen a few months ago.

Total US distillate (mostly diesel) demand is growing at an incredible pace of 15.8% over last year – as compared using the same 4 weeks period of last year. That my friend is not recessionary.

My guess, although not supported by any specific facts, is that the $100 level is now the tipping point to push the economy into recession.

Your numbers and your interpretation of them are correct. We're not in a recession now, and we appear to be headed for slower positive real GDP growth rather than a double-dip recession.

Most likely, your $100 per barrel number is right for tipping us back into recession. I think on the downward side that $60 per barrel (which I expect during the next few months) is enough of a fiscal stimulus to send the rate of growth in real GDP to higher numbers than the 1% to 2% that seem to be current.

If Nate is right, and oil drops to $20 per barrel, that would be a big boost to the economy and would get unemployment rates down to 8% and perhaps a bit less than that.

We're not in a recession now

Yes, we are. The accounting is just ridiculous. The desecration of the environment alone dwarfs any tiny, fanciful "gains." Four decades with no growth in real income?

"we appear to be headed for slower positive real GDP growth rather than a double-dip recession."

Not a snowball's chance in Hades. Real estate alone will see to that.


No, the accounting is not ridiculous--if you understand it.

By definition, real GDP excludes both positive and negative externalities. There are a host of reasons why GDP is defined as it is defined in official statistics. If you don't like the official numbers, then go to Shadowstats, and what you will find is that shadowstats.com shows the same trends as do the official government numbers. The adjustment for inflation, the GDP deflator, is a questionable number. Many economists believe the deflator understates the true rate of inflation. On the other hand, some notable economists claim that the official GDP deflator OVERstates the true rate of inflation. My own tentative conclusion is that at least the first digit in the deflator is correct, but I question the second and third digits.

Neither you nor I know what is going to happen to real-estate prices, because neither you nor I know what the Fed is going to do to prop up real-estate prices. If the Fed buys enough U.S. Treasury securities, then they can boost the money supply enough to reignite inflation. Much of what the Fed will do depends on what happens to the U.S. budget deficit: If the deficit increases greatly (which I expect to happen over the next three years) then the Fed will quantitatively ease (i.e. "print" money), and enough quantitative ease will cause inflation rates to rise.

Neither you nor I know what is going to happen to real-estate prices, because neither you nor I know what the Fed is going to do to prop up real-estate prices.

The fed cannot prop up real estate prices although they can drive down interest rates.
1. Where are the credit worthy borrowers?
2. If credit worthy borrowers are trapped in homes they can't sell, how can they upgrade to bigger homes?
3. Why would anyone buy large homes with large property taxes and large heating and cooling bills if they cannot count on appreciation?
4. What about the millions of homes already on the market or about to come on the market? Are they not going to depress prices?

The fed can create money out of thin air. It cannot force the lenders to lend or borrowers to borrow. It also cannot make you credit worthy if you don't have adequate assets or income.


What the Fed can do more of and has already done is to take over bad mortgages (e.g. in Fannie Mae and Freddy Mac) and keep them at a fictionalized par value. This refusing to write down mortgages tends to support new mortgage lending and thus to support real estate prices. Just as the Fed has bailed out residential real estate, I now expect them also to bail out commercial real estate by putting those loans onto its balance sheet at par value.

In my considered opinion, The Fed has dodged the bullet on financial collapse resulting from declines in real estate prices. True, the Fed does not have the ability to force people to borrow or to force bankers to lend out excess reserves, but the evidence to date suggests that the Fed acted decisively and correctly and successfully to prevent the dreaded debt deflation. Thus I do not see financial collapse in the immediate future of three to five years.

What I do expect is a renewal of inflation. Note, however, that the effect of monetary policy on prices is long delayed, typically from eighteen to thirty-six months. Thus there is no reason to expect inflation rates to rise this year, but for 2011 and 2012 I think we are likely to experience increasing rates of inflation.

I do not expect hyperinflation--unless the economy plunges and unemployment rises to 25% or more. Note that after 1933 there was a considerable reflation of prices, despite the lingering on of high rates of unemployment during the Great Depression. The Fed wants mild inflation, not hyperinflation, and in this case I think it is most likely that the Fed will--sooner or later--get what it wants.

What the Fed can do more of and has already done is to take over bad mortgages (e.g. in Fannie Mae and Freddy Mac) and keep them at a fictionalized par value.

Fannie Mae and Freddy Mac don't issue jumbo mortgages. So this Fed action does nothing to prop up the middle and high end of the housing market. Also, note that the $8000 tax credit played a major role in propping up the housing market. Now that the tax credit has expired, the buyers have disappeared. Once again, the Fed cannot create credit worthy borrowers or influence the borrower psychology which has now changed.

I do not expect hyperinflation

I fully expect hyperinflation when all confidence in paper currencies is lost. This will happen because the Fed will continue to do what you applaud them for. They will continue to create money out of thin air to buy worthless securities from banks, FNMA and Freddie Mac at par value. They will also use that money to buy treasury bonds when there aren't enough legitimate buyers. That will prevent a deflationary collapse in the short term but cause all confidence in the US $ to be lost. There is no free lunch.

Got gold?


You are right Suyog but you guys sound like little kids arguing who is going to win the World Series.

Just as baseball is a game, so is the financial world a game. It is completely divorced from the physical economy, and has been since 1971.

With declining oil, the physical economy is deflating, big time. Monetary deflation or inflation, you will be poor regardless. Unless you have a good job, hang on to it, and buy gold.

I would recommend instead buying land, hoes, shovels, etc. If you have excess money buy hoes and shovels for your neighbors to give away in exchange for good will when the time comes. Good will is cannot be stolen, only lost. Gold, in times of disruption, will likely be stolen. In times of disruption a good meal is worth far more. We are "Nine Meals from Anarchy"
Oil dependence, climate change and the transition to resilience
A reflection on the vulnerability of our oil-dependent society and recommendations about how we might rebuild resilience.

You may think you can trade gold for food, but more likely you trade gold one time and later you get robbed.

I agree that agricultural land is a better investment. But you can't buy agricultural land in chunks of $1200, especially if you live in an urban area and don't want to quit your job. Also, most people don't have the skills, temperament and know how to grow food on a big scale.

I don't think we will ever have a shortage of basic things like shovels. They are too easy and cheap to make and transport.

Suyog, shovels are easy to make NOW with oil. Of course they were made before oil by blacksmiths. How many blacksmiths do you know? As for transporting, well after the age of oil that it not going to be easy or cheap.

The question is not if we will ever have to go back to making tools without oil, but when. Societal disintegration could make it happen sooner, quite sooner than when we would have to for lack of oil.

Are you talking "virtual" gold or real gold? If you are buying gold stocks then you can be robbed by financiers. If you are buying real gold then you can be robbed by real people.

OK, one lives in the city and can't get land. Instead invest in skills. Midwifery, nursing come to mind. Of course blacksmithing and heck even knife sharpening. In fact these are valuable assets that go with your body and thus you are worth more alive than dead. You can grow a few herbs and learn to make medicinals. You can learn to identify edible plants in the city.

But if you don't expect a big crash, just a gentle decline, investing in gold may be just fine. On the other hand we were assured that investing in real estate was a never lose proposition, and now lots are losing lots.

I don't expect Mad Max. I expect a bad economy for years and decades to come. I expect the end of wide spread prosperity. In 10-20 years the US will resemble Brazil or a less crowded and somewhat more affluent version of today's India.

India, a nation of 1.2 billion people, consumes only 3 million barrels of oil per day. 70% of that oil is imported. There are no shortages of shovels or any manufactured goods in India. Why would you expect a shortage of shovels in the US, a nation of only 300 million people producing 9 million barrels of liquid fuel per day? Will oil imports fall to zero overnight?

How many decades will it take for the US liquid fuel production to decline to 3 millions barrels per day? Doesn't that give us enough time to transition to electric mining equipment, electric transportation, etc?

People need to focus on preserving their wealth, not preparing for end of civilization. There is no way to prepare for end of civilization. How many things can you stock up? What happens when the stock runs out? Wouldn't your stash make you a target? I can hide my gold in a bank locker. Where will you hide your shovels?

I think it was Collin Campbell that projected that depletion post peak would be 3 % a year. If we peaked in 2005 then in 2035 we would have depleted 90% of the remaining oil. Right now that is not apparent as we are on a plateau, but that only makes the decline more steep once it becomes unstoppable. Of course demand will fall as prices rise so the decline may be slower. Or if 1 trillion barrels is 1/2 of the extractable supply, then at BAU of 85 million barrels per day, 31 billion per year, we have 32 years to zero oil. It takes oil to transition to an all electric society. Since we are pretty much using all that the world is producing only rationing would allow us to make the switch. Refer to the Campfire for discussions about what politicians will or won't do.

If the electric grid fails how will you get your gold out of the bank locker. I have a drilled well with a hand pump in it. I can "buy" favor with neighbors (I don't have guns but they do) by sharing water (which can't easily be stolen and no doubt my neighbors will defend my well pump). You will note I said have extra shovels to give or loan to neighbors who don't have any. And of course with that goes sharing of seed and knowledge on gardening. Thus likely my neighbors will have some good will towards me. Who will defend you when you withdraw some of your gold from your bank locker?

I expect at least a Soviet Union type collapse relatively soon - for what worked and what didn't in the Former SU do read "Reinventing Collapse" by Dmitry Orlov

I am very much in favor of having a good relationship with neighbors, sharing things, skills, etc even during the best of times. However that doesn't preclude one from buying gold. What if a person has $20,000 to invest? That is not enough to buy agricultural land and it makes no sense to buy shovels worth $20,000. However, one can buy gold with it. You can still share stuff with neighbors and have a good relationship with them.

If the electric grid fails how will you get your gold out of the bank locker.

That is the difference between our outlook. I do not expect the electric grid to fail.

The US produces 5.5 million barrels of conventional crude oil per year and production is declining at around 2% per annum. At this rate the US will still produce 2.75 million barrels of conventional oil per day in 36 years. It can also import upto 3 million barrels of oil from tar sands of Canada. Add another million bpd of bio fuels and perhaps another million bpd of CTL. Thus the US will have around 8 million bpd of liquid fuels 3 to 4 decades from now. That is more than enough to maintain civilization. It is also plenty of time to transition to electric transportation.

I expect at least a Soviet Union type collapse relatively soon - for what worked and what didn't in the Former SU do read "Reinventing Collapse" by Dmitry Orlov

I never really understood why anyone takes Orlov seriously. The Soviet economy was not integrated with the rest of the world, the Ruble was never the reserve currency, Soviet corporations never dominated the world, it never had a culture that fostered innovation, hard work and entrepreneurship. The Soviet collective farms always had pathetic productivity. The US doesn't have much in common with the FSU.

Maybe you're right. But the scenario you outline is more likely 50 to 100 years from now, not now. With oil sands and coal to liquid, we aren't going to be facing the big problems yet.

Moreover, the world you describe may not be a world worth living in. If that be the case, there's always alcohol, ropes, and revolvers.

Oilman, my prophets for the timing of the future are Richard Duncan (Olduvai Theory) and Dmitry Orlov (Reinventing Collapse). Per Duncan by 2030 Industrial Civilization is over. Time will tell eh? A lot depends on what ERoEI is necessary for Industrial Civilization, and flow rates.

Whether or not a world is worth living in is personal. Obviously people are now living lifestyles that we in the first world find a lifestyle not worth living. Yet they continue to live and reproduce (our major biological imperative. Except for the most desperately poor (about 1/2 the world's population) happiness surveys don't correlate to lifestyle. The US is NOT the happiest population on the planet. When we are forced into a lifestyle we find unacceptable, some will give up trying to keep living, some will choose their own exit if they can, and some will keep struggling. Not every midwestern farm boy who found himself in the ditches of Europe for years during WWI, or who found himself in a Japanese prison camp in WWII gave up trying to live. Yet I doubt that any thought it was a world worth living in. However they had a hope for the end and return to a world that was worth living in. When the collapse of Industrial Civilization is done it will be hard to think that we can go back. However some will find something worth living for in just keeping on.

Some of course will take the options you mention - per Orlov in the FSU the ones most devastated were the middle age men most closely invested in the Soviet Union before collapse. The one's who kept things going were often the grandmothers, who already had kitchen gardens and were responsible for keeping families from starving. A lesson to be learned there I think.

Myself, I am past my prime and glad not to be young. This is a good time to feel comfortable that I may have less natural years left than Industrial Civilization does.

I think Duncan is a quack. Wasn't he predicting permanent, world wide, blackouts by 2007? If in 2017 we still have our civilization intact, will you admit he was wrong? We have plenty of energy to run an industrial civilization. Not enough for everyone to drive a gasoline car, but enough to run an industrial civilization.

ccpo - Give it up wrt don Popeye the sailorman.

He is clueless.

He has been around here on TOD for ever so therefore has the oldtimer respect but he has never been even close to relevant other than touting the standard economist position in the greenspan (read twilight) sense of the word.

Listen to him and you are guaranteed to get slapped upside the head by the invisible hand.

Stoneleigh's perspective is infinitely closer to reality and has called it very close to how things have and will come down, (a position that donny dismisses off hand by the way)

I paid attention to stonleigh 3 years ago and saved my family and myself from great financial loss where as donny was saying the opposite at the time.

I do not dismiss Stoneleigh (as you can easily see by reviewing my comments over the past four years and more) nor do I dismiss Ilargi. However, one thing I have noticed: Both are mortals. To err is human. To say that we have been in a recession over the past three quarters is just plain wrong.

You cannot refute me with ad hominem fallacies.

In fact, I remember you writing that she was wrong about deflation not very long ago. As far as your outlook, I made the point about accounting for the natural world and you dismissed that, too.

They are right: You don't get it. How could you? Economics being voodoo, and you thinking it's science, you have very little chance of ever getting it.

I'm not an economist and don't pay enough attention (read: don't take the time to memorize) to all the details to discuss them fluently, so don't usually get involved in such discussions, but all that pseudo-debt has to be unwound. Hello deflation.

We've been in a recession since 1970, if you account it properly and define it properly. That is, all the gains have been at the top while the rest of us have gotten poorer.

I know you don't get it. Nobody much got it, even now, about how fast climate was going to change, either. I'm used to it.


In case you want to look at specific facts, look at the data on the Consumer Price Index for now and twelve months ago. Result? Inflation. Thus I was right: There has been no price deflation so far. True there has been disinflation, but that is NOT the same as deflation.

You may note also that I am very careful to define my terms, and I use them the way most economists use them (with the exception of the Austrians). Inflation means a rise in the price level. Deflation means a fall in the price level. When is the last year-on-year deflation that we have had? None this decade, none the decade before.

If you are not an economist and if you know little about economics, perhaps you could avoid making comments about matters that you know nothing about. You can save yourself a lot of embarrassment that way.

Is there a regular calculation out there of CPI vs Median income? That might get at ccpo's perception of the situation.

Of course, the Austrian School is more of a religion than anything else. They only question other people's theories, never their own. I tried poking at their forums to learn a thing or two and found them most disagreeable and argumentative, as if I was proposing a theory of anti-gravity on a physics forum.

Never mind that I was pointing at the equivalent of floating objects in front of their noses at the time...

I concur - Don S. is a straight down the middle of the road old time economist who's views on the events of the last few years have been on the wrong side of events compared to the Stoneleigh's of this world. On the basis he didn't get much right in the last 3 years I would not be putting much money on him getting much right in the next 3. Besides his views are ten a penny amongst the routine bank economists/talking heads - not much by way of new insights to see here people, move along.

Please cite one single example where I got a prediction wrong over the past four years. I make lots of predictions, and I'm batting well over .750, which is one heckuva record.

I follow every one of Don’s post’s for two main reasons, it is nice to be able to have a trained economist on this site (I forget the name of the other economist who used to post here)who looks through the lens of energy issues, and he is fairly accurate in his analysis. Back when Lehman and Bear Stearns collapsed everyone except Don was calling for a complete economic collapse, I believed it myself. As bad as it was it did not happen. I enjoy reading the Automatic Earth, and read it every time a new page is posted. But for all of the immanent predictions of doom they have been largely wrong. Yes it is bad, I can attest to this as I am no on unemployment and have been in an industry that has been severely hit (so bad I’m considering practicing law), but this is no Great Depression. Could it turn that way? Could, and I suspect might if consumer demand fails. But Don’s outlook is just as legitimate and well thought out as those who predicted this mess. No one is 100% right in this field, especially calling the timing of the drastic events. Be careful believing what you wish to be true.

Actually three main reasons, I like Don’s references gained from a traditional liberal education.

Edit: Now I remember the other economist who used to post to this site; Lou Grinzo

Wow, 8% unemployment (the U3 rate) doesn't seem to be a very big improvement given the postulated very big drop in oil prices (down to ~ $20/bbl).

What do you think would be a successful strategy to achieve U3 significantly lower than 8%...say 5%?

To get the unemployment rate down, two things would be necessary:
1. A resumption of vigorous growth in real GDP, perhaps to the 4% to 5% rate typical of some recoveries from recessions.
2. Effective measures to deal with structural unemployment. This means subsidies for retraining and subsidies for relocation.

No administration for the past forty years and more has done much to deal with the worsening problem of structural unemployment. Some unenlightened economists claim that structural unemployment is not genuine but rather is a result of too slow a rate of real GDP growth. In my opinion, these economists are seriously misguided, and we should pay no attention to them.

The biggest impact of declining global oil production after Peak Oil will be rising unemployment. Part of this unemployment will be due to a long-term trend toward a smaller real GDP, but even worse is structural unemployment. We have millions of job vacancies that are difficult or impossible to fill, because those seeking work have the wrong skills (or no useful skills, e.g. lawyers) or are in the wrong place. For example, unemployment rates in Minnesota are much higher in the rural northern part of the state than they are in the greater metropolitan area around St. Paul and Minneapolis. People simply do not want to relocate out of their homes on the Iron Range or other depressed areas. Many are seriously upside down on their mortgages. Others have no skills that would get them better than a minimum wage job. It is hard to support a family in a metro area with two full-time minimum wage jobs, though some families (particularly those of immigrants) do manage to get by on low wages even where the cost of living is relatively high.

growth in real GDP

But you don't understand what real GDP is. How about a little test to see how far gone you are? Can you link to something you wrote between Jan and Oct '07 on the state of the economy and likelihood of an economic fall?


I did not mention the word recession anywhere. Take a look. I mentioned "serious economic recovery."

Though one might contend that distillate growth of 15.8% YoY is an indicator of serious economic recovery, I do not think this alone tells the entire story. Sure, it shows some things have picked up, but the jobs--a very important facet at least to the man-on-the-street--are apparently not coming back with any such force, just one of many indicators that things are not all well. The economic situation that existed before the 2008 oil-price super-spike was hammered by the associated ensuing economic meltdown. And those pre-2008 economic conditions have not returned. Nor does it appear that they will return with $70 oil. Note what Don Sailorman indicates about unemployment in his post: that truly cheap oil (e.g. $20/bbl in today's terms) would provide a good stimulus to get unemployment back down to better levels, for example. Not $70/bbl.

And, incidentally since you brought it up, I believe the tipping point is below $100/bbl. To me, the data point to a number roughly around $80/bbl. There is probably a relationship between sustained price levels and the rapidity at which an economic slowdown occurs: The higher the price, the more quickly the economy is hammered. This probably confuses the issue of just where a tipping point is. Or, in fact, it points to the possibility that the tipping point is a moving target, based on how long particular price levels endure. For example, sustained (monthly) oil prices at $75/bbl may take 2 years to throw the economy into recession; at $100/bbl it might be six months; at $125/bbl, three. (Note that this is just an example--not a claim that these are the real numbers if such a relationship exists at all.)

However, I also note that the difference between $80 and $100 is not really that huge (e.g. the difference is not even a factor of two, let alone an order-of-magnitude), so perhaps there is some agreement here, at least roughly. Shall we split the difference and go with $90/bbl? ;o)


I think that a sustained price of about $50 per barrel would provide substantial economic stimulus; its effect would be similar to a large cut in sales taxes. Thus we would very likely get unemployment below 8% with a moderate stimulus--enough to push economic growth up over 3% per year in real terms. Note the time lags involved: Employment lags behind increases in economic growth by at least two quarters and more likely three.

If by chance the excess capacity of OPEC comes onto the market, then I think oil prices would tend to fall to the $20 to $30 range. If sustained, such low prices probably would be enough stimulus to the economy to get unemployment well below 8%. Note that over time, any shut-in capacity to produce oil on the part of OPEC tends to vanish, as oil production usually creeps up to reach capacity limits. In other words, there is a long-term tendency for OPEC to open the valves all the way and produce as much as they can without damaging their wells.

I doubt that OPEC has six mb/day excess capacity, but I've been wrong before.

To me, the evidence shows that we are in a trend of falling oil prices, and this trend may persist for a few more years before we reach a final Peak in global oil production around 2014.

Thanks for the additional insight. I am pretty much with Darwinian on the OPEC spare capacity, and believe it to be significantly lower than 6 mb/d. I suspect that our civilization could hit "the wall" again as early as 2011-12; though, of course, can not rule out it taking a few years longer.


Just as they're expanding the gas distribution system into our area...

Natural gas versus oil: These days, money is going to oil

It was news everyone knew would be coming one day, but on Thursday, owners of the Sable offshore natural gas project revealed they would not be spending any more money to extend the project’s life.


In recent years, production at Sable has been in decline, although the life of the project had been extended a couple of times by tapping into smaller fields nearby. So it was still somewhat surprising that the owners — ExxonMobil, Royal Dutch Shell, Pengrowth Energy Trust and Mosbacher Operating Ltd. — reached their decision, especially after all the money spent on Sable infrastructure.

See: http://thechronicleherald.ca/Business/1191069.html


that is not different than practices ubercapitalists have used in the past. wine'em'dine'em'f*ck'em and forget'em. move on to greener pastures. paint your wagon.

Five reasons why China will rule tech
"Recent development points to growing concern in Washington about China's tech moves, but here's why it may be unstoppable"

Computerworld - WASHINGTON -- China's focus on science and technology is relentless, and is occurring at all levels of its society. Its labor pool is getting increasingly sophisticated, its leadership is focused on innovation, and the country is adopting policies designed to pressure U.S. firms to transfer their technology.

  • China's leadership understands engineering
  • China's leadership wants to out-innovate the U.S.
  • China's science and technical talent pool is vast
  • The U.S. is failing at science and math education
  • China is getting U.S. technology, all of it

Creativity and freedom of thought are absent--
Almost all advancements in science are still coming out of Europe and the US, with Japan contributing also.
The US will soon be in trouble, as our anti science culture will soon fall to the wayside.
Dumber, fatter, and shorter is not the direction one wishes on a population.


Creativity and freedom of thought are absent

You realize that is exactly what they said about Japan in the '60s? Their rigid culture doesn't allow creativity, so they'll never be able to do anything except make cheap knockoffs of American products.

I'm a materialist.
When I start to see the volume of papers in Nature coming out of China, or technology that helps my world, I'll take note.
The Japanese are producing very good work, but it took quite a while, and internal democracy was much more advanced very quickly.

Disclaimer: I have a Chinese side of the family, and have primary contact with what is happening.
The last time my brother was in China, the sky was green during his stay.

China is merely the last great industrial power, with ecological devastation and population overshoot.
The last of the mating dinosaurs.

I don't think China is going to be the new world power, simply because they don't have enough natural resources going into the coming age of scarcity.

But to claim they're not capable of innovation because of their culture or genetics or political system...I don't buy that.

China in the 1930's was still a feudal society, with a family structure based on Confucius Thought (the Cultural Revolution would not of been possible without the Confucius Family dynamic).
Conditions have a ways to go.
Of course innovation can happen in China, but the situation is not condition free.

Again, I'm reminded of Japan. In the '60s, many "experts" thought Japanese were genetically and/or culturally incapable of competing with the US.

Less than ten years later, they were kicking Detroit's butt.

Historically Science and Engineering have been the instruments of tyranny. Napoleon for example promoted all the Sciences and when the Emperor fell the French Parliament attacked the behaviour of the scientists and engineers during Napoleon, and praised the return of Art and Literature to France.
The greatest advances in Science and Engineering in Britain happened when it was a real Empire of Evil, in the nineteenth century.
The USSR vastly outshone the USA in Science during its short existence and I myself have held in my hands Chemistry books published in Germany in 1944 of unbelievable quality, when bombs were raining all over them.

Indeed freedom of thought and speech and communication and trade is a great thing for the society as a whole -or so I want to believe- but in a Research Department or a factory, where specialization and top-down command is the rule, the bosses hate the very idea of independent thought.

Umm, bosses in research departments don't hate independent thought: I've worked in both academic and commercial research and know this from experience. What they don't like is unpredictable thought, because you can't mark off progress towards it on a gantt chart or calendar. But they quite like it when you independently come up with a nice safe predictable course, because it saves them having to think of these things.

The comment about the British Empire is also very misleading. We were certainly at best condescending and at worst exploitative of other nations during the period of empire (ie, I'm not denying the British empire was quite beastly to others), and it certainly provided economic income to provide a relatively affluent internal market for buying the products of the industrial revolution, but almost all of the science and engineering happened at home where there was a quite liberal attitude of the british to british citizens. A lot of the big advances (trains/railways, industrial looms, coal mining technology, steam ships, motor cars, etc) happened as a result of private enterprise with the government happy to rake in the taxes without getting involved, at most getting involved via prizes like the longitude prize.

I'm starting to think it's not even wars per se that are the periods of greatest technological progress, but those periods where there's some problem with a clear need for some kind of technological solution, of which wars are just the obvious example.

The USSR vastly outshone the USA in Science during its short existence

Aren’t you forgetting Lysenkoism, which set back biology and genetics in the USSR for many years?


China Ascendant

No matter how you slice it, China is on a scientific roll.

This past year, China became the world leader in terms of the number of chemistry patents published on an annual basis, according to Chemical Abstracts Service (CAS), a division of the American Chemical Society. And growth in publication of scholarly papers by the country's researchers far outpaces that of other nations, reports Thomson Reuters, a news and information company based in New York City.

"If China's research growth remains this rapid and substantial, European and North American institutions will want to be part of it," says Jonathan Adams, director of research evaluation at Thomson Reuters. "China no longer depends on links to traditional G-8 partners [Canada, France, Germany, Italy, Japan, Russia, the U.K., and the U.S.] to help its knowledge development. When Europe and the U.S. visit China they can only do so as equal partners."

Per Tainter, complex societies eventually stop having increased returns on investment. One area in which he documents this in his book Collapse of Complex Societies, is in inventions. Inventions have ceased to be dramatic and relatively cheap. They have become less frequent, less dramatic and relatively expensive. Probably the computer is the last great invention of this global complex society. In the field of new drugs, nothing of late compares to the discovery of penicillin and the dramatic effect on health care for low amounts of investment. Now most new drugs are slight advances on older drugs, cost tons of money and have relatively little impact on societal health. In another area, how different is the modern internal combustion engine from the first one. How much does it cost to tinker a bit with it to get it to do something different or more efficiently. How many people still get around using the internal combustion engine.

Good point. As a grad student at the University of British Columbia, I have worked with many Chinese students among people from other countries around the world. Granted that university students are not necessarily a representative cross-section of a nation's population, creativity appears to be an individual trait, not well correlated with country-of-origin.


Agree: My father always told me, necessity is the Father of invention, however I might add that a proper government is the Mother that must nurture it.

I once heard that necessity was the mother of strange bedfellows. ;-)

Ron P.

The US still leads even Japan in terms of technology leadership. China isn't a slam dunk... yes more and more Chinese have advanced degrees but billions more have no education at all. In a time of peak oil, the whole place might just implode.

I haven't seen any evidence of lack of creativity or freedom of scientific/technological thought in China. If there's a criticism it's that in advancing their university system they've moved straight to the "maximum volume of minimum publishable units" (with a certain fraction of outright fraud) career scheme currently extant in the US and northern Europe without passing through the period of the early-to-mid twentieth century where an academic could say "**** off, I'm working on a big, difficult problem and I'll publish when I've finished."

You are perhaps right but creativity is overrated, because ideas, once created, spread quickly and lose their initial shine.

The Brits created the modern world and look where it got them: they lost the American colonies, their empire collapsed, they were outcompeted by practically everybody in industrial design and engineering, and they are now bankrupt and basically finished. Not to mention they invented football (soccer), but their team is worthless and has been since 1966.

This is to say nothing of the very earliest humans who "created" language and writing.

Regarding the story up top; "Lloyd's says won't cover Iran petroleum shipments"

Now the Clerics are speaking out. I just don't see how this can stop from escalating out of control.

Whether they want war or not I believe that the US should never have passed these latest sanctions targeting energy and finance as there no way to put pandora back in the box.


"Stressing that the Iranian nation would not put up with oppression, Ayatollah Khatami warned that the enforcement of any part of the new sanctions would draw a strong retaliatory response from the Islamic Republic."

Now the Clerics are speaking out. I just don't see how this can stop from escalating out of control.

eeyore, yes I think the $64,000 question is not what the U.S. or Israel will do, it is what Iran will do?

Unintended consequences and blowback are still factors whenever international players move pieces on the chess board. And these sanctions are not about mustering the pawns, more like maneuvering the knights or casting with the rook.

Last summer's disputed re-election of Mahmoud Ahmadinejad has put strains on the internal power structure and has raised questions about the sustainability of the 1979 Islamic revolution. The clerics won't let go and sanctions carry the real prospect of clearing the temple. From the mujtahid's perspective, better public relations to go down fighting Zionists and usher in the age of the 12th Imam than to cave into submission and invoke the wrath of their own people.

Another element sometimes overlooked by the West is the nostalgia undercurrent. The Persians are a fiercely proud people and much to be proud of. The ghosts of Cyrus the Great, Darius, and Xerxes are apparitions on the political landscape today, not distant figures of twenty five hundred years ago. The Iranians didn't give in to the brutal tactics of Saddam Hussein, a secular thug next door, they won't be shy to push against a bully from across the seas, especially one already mired in the sands of Iraq and the dust bowl of Afghanistan. What's more their history has conditioned them to see themselves at the table of the great powers. They won't hesitate to put diplomatic pressure on the Russians and the Chinese to help them out or to use a bit of bribery to get their own way. It is no accident that the late Shah styled himself the King of Kings - all Persian regimes, religious or secular, are conditioned by the same historic memories and culturally-induced imperial ambition.

Meanwhile, the United States is compelled by the Carter doctrine to preserve American interests in the Persian Gulf. Iran by securing the wherewithal to develop a nuclear warhead is a threat, real and imagined, against Israel, the Sunni neighbours, and supply lines in the Caucus region. Obama is right to see this as a troublesome development and as an infraction against American security.

What worries me is that the player in the east is reading the chess board one way while the player in the west is reading it entirely differently. Check mate, unhappily, isn't the only possible outcome.

If Israel or the United States bombs Iran, they will go into a defensive posture to ensure that no successful land invasion can be mounted.

But that is it. They don't have to do anything else.

The Iranians will have won. The US and Israel will be together in the dock as the two oulaw nations.

Merrill, the U.S. and Israel don't have to bomb Iran to achieve their aim.

The problem with the sanctions, from an Iranian cleric point of view, is that they are very likely to work.

Last September's protests and crackdown in the streets of Tehran demonstrated the contradictory tensions at work inside Iran. The last thing on earth the Shiite imams want is domestic deprivation.

The next move in this drama is not America's or Israel's to make. The key question is what steps the Iranian government will take - on the domestic, diplomatic, and military fronts - to prevent a regime change. The Ayatollahs are adept practitioners of propaganda and reading public opinion; they used both effectively thirty-one years ago against the Shah. They are keenly aware of how tenuous a hold on power can be (after all they undermined the stability of the Pahlavi dynasty) and they are not going to go down without a fight.

IMHO, this is what makes the current situation fraught with danger.

Exactly ZtP - This first article is primarily about taxs and subsidized fuel and food but makes the connection to the US sanctions on energy and finance;

"There is a growing sense that economic showdowns may be the next test for Iran's embattled leadership."

"A sustained fight with the influential merchant class would pull Iran's rulers onto a path littered with warning signs from the past.
The bazaar has been the tipping point in popular unrest for more than a century, including the 1979 Islamic Revolution, when merchants pulled their support from the Western-backed monarchy, paving the way for its ouster and the installment of rule by Islamic clerics."

BUT... That clever Obammer bugger DID leave himself an escape clause;


"Or will Obama use the bill's opt-out provisions, which the president noted in his signing statement, and render the statute something of a dead letter?"

and from the same article;

"Iran is not the only one that can play chicken over this issue. China's oil companies will soon be the dominant foreign player in Iran's energy sector. H.R. 2194's sanctions will place these Chinese companies, and many other Chinese companies dealing with Iran, in Obama's gun sights. Will he be willing to pull the trigger and risk a possible trade war with China, thus imperiling his goal of doubling U.S. exports over the next five years?"

...and then there is the story about refined product coming into Iran from Kurdistan that Leanan linked to up top. Can't have that.

The last line of the Foreign Policy article says it all:

Sanctioning Iran is not free; it will require taking risks and possibly incurring economic and even military losses. Iran, and perhaps China, might soon test Obama's appetite for further escalation.

If the sanctions are not free, the costs for us in the West await to be seen. In this game of international poker, the Iranians may be willing to up the ante rather than fold on its nuclear program. It's easy to gamble high when down to your last chips.

Computerized stock trading leaves investors vulnerable

Following the May 6 "flash crash," investors are beginning to understand there's a serious and often hidden downside to letting the machines run the markets.

Perhaps most troubling is how computers are giving sophisticated investors with the best digital access to the markets a leg up over regular investors in ways modernization was supposed to do away with. Meanwhile, technological advances are making it nearly impossible for regulators, who play a critical role in maintaining a fair market, to monitor the system that by its very nature has no paper trail and buries transactions in mountains of data.

An example:

Rapid-fire computer systems allow sophisticated traders, including the giant Wall Street firms, to post bid (buy) and offer (sell) prices they have no intention of actually following through on, he says. For instance, a firm might post a bid for a stock showing they want to buy at a certain price. But by the time investors interested in selling at that price get their order to the market, the false buyer yanks the electronic bid literally faster than a blink of the eye, Hunsader says. This interplay happens in milliseconds, making it difficult to detect.

The computerized trickery is enabled by physics. Since trades move over computer networks at roughly the speed of light, the firms that are physically located nearest the market centers in New York and pay market-access fees get a leg up.

The Bank of Serta is sounding better and better all the time.

Even without large-scale "flash-crash" problems, it appears that computer trading is changing market behvaiour.

Using high-frequency time series of stock prices and share volumes sizes from January 2002-May 2009, this paper investigates whether the effects of the onset of high-frequency trading, most prominent since 2005, are apparent in the dynamics of the dollar traded volume. Indeed it is found in almost all of 14 heavily traded stocks, that there has been an increase in the Hurst exponent of dollar traded volume from Gaussian noise in the earlier years to more self-similar dynamics in later years. This shift is linked both temporally to the Reg NMS reforms allowing high-frequency trading to flourish as well as to the declining average size of trades with smaller trades showing markedly higher degrees of self-similarity.


Krugman wonders What Went Wrong? (Answer: the stimulus was much too small.)

Those concerns were what had me fairly frantic in early 2009: I was terribly afraid that the failure of an inadequate stimulus to bring unemployment down would end up being seen as a refutation of the whole idea of stimulus — which is exactly what happened.

He's starting to remind me of the supply-siders who insist that trickle-down would have worked, they just didn't cut taxes enough. Would any stimulus, and any result, actually convince Krugman that maybe the whole idea of stimulus is wrong?

Denninger, not surprisingly, thinks Krugman is insane.

The "stimulus" was never going to work: it couldn't, mathematically.

And Stuart Staniford tries to calculate how long and how fast the deleveraging will be. His conclusion:

Deleveraging will take at least a decade, and it could easily take 15-20 years. In the meantime, the economy is likely to be pretty choppy at best.

Here's a clue Krugman as to what went wrong... how about that little issue of trying to base an entire economy largely on selling homes to each other at ever inflating prices. That's a good place to start for your incredible investigative journalism. Then follow that up with simultaneously dropping an entire economic class of people down the ladder by one (or more) rungs through the magic of globalization. No amount of stimulus is going to fix these kinds of structural problems...


You are quite right: The main economic and political problems that the U.S. faces are long-term and structural in nature. The cyclical unemployment is curable by a big enough fiscal and monetary policy, but cyclical unemployment is the least of our problems. As I go about my business, I see more and more "Help wanted" signs in the windows of various businesses. These vacancies are hard to fill, because the unemployed are often in the wrong place or have the wrong skill set to take the available jobs. For example, I know an unemployed architect who is having trouble finding any kind of job related to her degree. To some extent, she is a victim of cyclical unemployment, but the longer term and more serious problem is that we have way way too many architects in the U.S.--along with too many lawyers, too many Ph.D.s in the humantities and social sciences, too many people with an MBA in finance.

In the town where I used to live in Northern Minnesota, the number of lawyers increased from three to more than twenty over a period of thirty years. More than one of these lawyers was living on food stamps and rent subsidies. There is nothing more worthless than a law degree these days, because we have more than twice as many lawyers as we need. The universities keep putting students through the sausage machines to create more college graduates and more people with graduate degrees. But the long-term demand for many types of degreed people is stable to declining--and it will decline more as oil imports to the U.S. decline after Peak Oil.

Indeed, one of tha failings of modern economics is the lack of willingness to admit that if you want to "end the business cycle" for the overall economy it isn't sufficient to damp the downturns, you also have to limit the upturns.

I think we all know how people addicted to high-potency stimulants end up.

But the long-term demand for many types of degreed people is stable to declining--and it will decline more as oil imports to the U.S. decline after Peak Oil.

I agree, but also suggest that we are in the midst of a decline in the complexity of our economy due to the increasing cost of energy, vis a vis oil, due to world flattening production beginning in 05. Thus, it is a byproduct of lower complexity that many degreed professions are no longer needed in the numbers they were prior to 05.

In a sense we could say, the greater the flow of densely packed, cheap energy filled liquid, oil, the greater the complexity an economy can attain. And conversely, the more expensive that liquid becomes, the less complexity afforded.

And if we view bridges and roadways as forms of complexity, then the lack of adequete upgrading and repaving is a reflection of lowering complexity due to higher priced oil.

Sure, the world has made the necessary adjustments to higher priced oil, but at what cost to its complexity? Essentially the answer is: A new economy whereby those employed or wealthy enough not to need to be employed, have made the adjustment or were not affected by the reduction in complexity. Yet at the same time that adaptation included a new reality of needing less people in the workforce. A disenfranchised segment of the population that is growing, for which there are fewer opportunities now to rise above the fray.

People living with relatives and or maybe collecting food stamps as their way of contributing to the household. But if we are moving in the direction of less complexity as oil price rises, then won't the disenfranchised continue to grow in numbers, and won't the Govt. be on the hook to increase money outlays for social programs to keep those people fed?

Got me so far? Ok, so what happens as we move further down the line, maybe even into the realm of a descent from peak when oil prices rise even more? Less complexity, leading to fewer jobs, leading to obsolescence of infrastructure, leading to more disenfranchised, leading to greater outlays of social programs, leading to greater govt. debt loads, leading to eventual default on govt. debt.

Essentially so many disenfranchised due to a reduction in complexity, that the system we call the economy implodes. The stock market tanks into a realm of no valuation, ships stop transporting goods, stores close, banks go belly up, the currency falters as a form of barter, and we have collapse.

But then how does everyone get fed?

The key to creating jobs is not stimulating consumer spending or reducing taxes.

The key to creating jobs is to make the economy more complicated.

Over the last 70 years, there have been huge productivity gains in many aspects of business. For example, the cost of a voice channel mile of communications capacity has declined exponentially over much of the period. The cost of gasoline retailing has declined with the introduction of self-service, credit-card operated gas pumps. Bank employees once processed paper checks which were mailed back to the customer, but now paper checks are imaged and destroyed at the first opportunity when the customer chooses to write a check instead of using a card.

Everywhere, each individual business process has been made cheaper by scaling up volume, improving process design and controls, automating whatever could be automated, engaging the customer to participate in self-service delivery, and outsourcing the rest to low-wage countries.

The antidote to improved productivity has been to make business more complicated. While gas station attendants were losing their jobs, a dentist invented the acrylic nail, salons were opened, and nail technicians were hired. Improvements in auto manufacturing efficiency were partially offset by new efficiency, safety and convenience features that make the current car far more complex than a 1950 vehicle. Financial products proliferated in number and complexity providing employment for lots of mortgage brokers and now foreclosure processors.

As a result, there has been a great expansion in the types of jobs people do, the training they need, and the information that they need to understand. This is easily seen by the majors offered by universities or by the number of specialized occupations in the medical community. Infomation technology systems businesses have proliferated greatly in their role of arms merchant to both sides of the productivity versus complexity war.

So the key questions are:

  • Can we still continue to create enough new jobs through increased complexity to be able to distribute the fruits of productivity increases fairly to the population?
  • Is the energy sector a good place to look for new jobs through replacing high revenue per employee oil with an array of low revenue per employee alternative energy and energy conservation businesses?

the answer so far has been to make the economy bigger so there are more jobs for people to do - down side is that a lot of these jobs can be outsourced now - and the inevitable happend the econonmy cannot expand for ever on a finite planet.

the natural conclusion in the sci-fi I read many moons ago was that as "progress" squeezed out jobs then in the end one man (woman) would do everything - so what do the rest do ?

ofcourse this will never happen as the Brazilisation of the UK and US continue we will end up like the middle ages again , many poor , a feew so called middle class and the (super) rich

perhaps we'll up like Harry Harrison's "Home World" ....


What do you mean "make the economy bigger"?

If you mean increase the number of tons of steel or cement, board feet of lumber, bushels of corn, etc, in proportion to the number of people, then this does not provide enough jobs for the rising population. Fewer farmers produce more bushels of corn now than in the '50s.

To make the economy bigger in the sense of expanding employment opportunities, you have to expand the variety of products and services. The bushels of corn are converted to a wider and wider array of food products that involve more complex processing and innovative packaging on the grocery store shelves.

Can we still continue to create enough new jobs through increased complexity to be able to distribute the fruits of productivity increases fairly to the population?

See my prior post, which should answer your question.

Denninger's rant is rather familiar. I think his presentation of the problem of the impact of debit financing with great leverage is likely true. We in the US are addicted to deficit spending, which has been a fact for most of the past 35 years. Then he gets on the Government's case, presenting a typical neocon mantra:

But far worse is the refusal to recognize that absolutely nothing the government does produces anything. That is, government can redistribute a unit of currency (or credit) from Joe to Jane, but government in doing so does not and will not cause more units of currency in terms of output to be produced on a sustainable basis.

He seems to forget that government does "produce things" by spending tax monies. An obvious example is roads, which the US pays for thru gas taxes and local governments tend to pay for by way of income and property taxes. Also, the Feds pay for all the expensive military hardware which is then used to "influence" other nations, in support of our "national interests", like it or not. Most of the US economy is said to be in the form of services and the Government provides lots of those, such as police and fire protection, medical care for old folks and scientific research. The Government also provides for K-12 education, which is not a product, but without which the rest of the US economy would cease to exist on the world stage.

One could easily add many "items" to the list. But, as we all know, one man's excessive tax pays for another man's job. The question of whether government's re-direction of national consumption provides larger benefits to individuals than the costs is the subject of continual debate. However, it should be clear by now that no government (meaning no taxes), is not a reasonable solution, given the fact that other nations are going to continue to function in support of their own national interests. That recent excesses of the financial community have resulted in unsustainable borrowing does not imply that the US Government can simply walk away from the millions of people who are presently out of work and for whom there are no jobs. Desperate people do desperate things...

E. Swanson

To be fair to Denninger, his claim is that nothing the government does actually "creates from nothing" rather than converting taxpayers money into things, but that then that begs the question of how much of private industry does this: there's intellectual creation of "utility" ab initio, there's an arguable "creation" by mining/growing things, but most of the rest appears to be as much conversion as the criticised government (me giving a burger-flipper money for a burger is just redistributive). To be honest, as with much Denninger writes I don't see that particular argument as useful unless you're really arguing from your base political views (which I suspect he does most of the time). A better question is essentially under which conditions does the government result in overall more beneficial resource allocation than local private enterprise? I can see that for very local things government is very inflexible and ill-suited, but likewise has private enterprise ever constructed as large and forward looking as the Hoover dam on its own (without even governmental partnership/underwriting)?

Give me a break, you jump all over Krugman, yet he was one of the few economists who got the story right on the 2008 crash.

So who should we be listening to?

Hint: JOBS > DEFICITS. Coming from someone feeling the pain firsthand, let me assure you that artificially imposed austerity helps nobody. With no stimulus we'd be another 5 million jobs in the hole.

What a wizard he was! Even I pulled everything out of the market in Oct. of 07.

I don't think he did get the story right. That's my beef with him.

And I'm disappointed that he won't consider the possibility that he could be wrong. He saw the "science" of economics collapse in the wake of 2008 crash, and wrote a long and interesting article about it...but he seems to see it as proof his side is right, simply because the other side was wrong. What about the possibility that both sides are wrong? Isn't it possible that his life's work is as mistaken as his rival economists' turned out to be?


If you want to make that argument, fine. What I object to is the claim that this will fix the economy. I don't think it will. I think Denninger is correct on this one. If the problem is too much debt, the fix is not more debt. It only makes the eventual crash even worse.

If you want to say screw the deficits for humanitarian reasons, fine. I could get on board with that. But don't pee on me and tell me it's raining.

The news of my death is greatly well, umm yeah okay you get the point.

I have been busy with family and garden and the homeless folks that I have been taking under my wing and caring for the best I can, without being a bother to others.

I have had a stress filled week.

Most of you don't know that I smoke. Not often, but when I do I don't do it like (likely) anyone you have ever met. I discovered through research that nicotine triggers two respectors in the brain that amoung other things, shoot a shot of epinephrine into your brain, not much just enough to get you that head high, but as an asthmatic I have to have a history of bad asthma to get that prodcut anymore because of the drug trade and that thing called meth. Well being the information junkie that I am I have learned a lot of lessions in life.

As a kid I could relax myself to the point that I could hold my breath for 2 minutes and 45 seconds, repeatedly, whenever I got the mind and body in tune I could do things that most people thought were impossible.

But today I can type clearly without dyslexia, why?

Hitting a high I think but then I could explain it that way, but I might be wrong, I don't understand the brain chemistry as some of you more science minded folks might.

I have been trying to fight some nasty blight getting my tomatoes. We got about a 5 gallon buckets worth off of about 33 Square feet of bed space stuffed with tomato plants. Don't ask the numbers, my dad did the planting. But the high temps in mid June could have been the problem. Then blossom end rot took out some.

We have given them to the family next door(5 people), My two aunts, an old friend from Church and two nearly homeless friends. and ourselves. We still have green ones on the vines, and loads we have to use in the fridge, and we made 2 pints of a salsa, and several other meals out of them. Not bad really.

The cantaloupes are small but they are sweet and I have picked 3, and have 4 getting ripe on the vine, plus several that are fruiting out as I type.

The watermelons are odd. Dad saved the seeds out of a seedless and then planted them in a pot, they grew, 4 plants, the melons are striped, but the size of a baseball. Cute, but not like the 75 pounders that the Hope Watermelon Fest used to have. There is one other kind that looks just green light in color and sandpaper speckled in texture. The first one that was formed, started to curl at the end and was green when I picked it.

Watermelon rind is fried in a dish in other countries of asia, so I have tried the white rind in a garlic and onion and salt and olive oil stir fry, and it is a nice slightly sweet veggie dish to add if you get the big red ones and have a lot of rind left over, who knew? All these years I have missing out on a cool dish.

So that little guy got skinned and stir fried a bit differently, I have my own hand made season salt, I'll dig out the recipe if anyone mails me for it. I make it up in batchs of half a gallon volume, it is great as a chicken grilling salt.

My dad being an Executive Chef Before I was born, having cooked for so many people in several different countries, he has skills just oozing from his fingers at times. I love the fact that he and I get along so well, though when I smoke he hates thinking I'll die like his brother did. So there is the stress added to it.

The peppers are doing great, His jalepena(sp), Sweet banana, and green bell. Still producing and they have been added to meals and the salsa. And given away to the other folks on the list.

I started potatoes late, and they are in an old MMCohn shipping tote, and two rubbermaid 18 gallons, I put them in the bottom on a bed of mixed soils, then covered the roots and green shoots( I sprouted them first before planting)( in a peatmoss compost and soil mixture in a pot). The MMCohn tote is full and the vines are still alive. The 2 rubbermaid totes are still growing up to the top, about 60% up so far, I have them in a partial shade place to protect them from the heat of mid day sun, they look fine so far.

The Wheat and jicama experiments need work, but I at least got an even return on my seed, so I'll save it and plant it next year in one bed, and plant a fresh crop of seed in another, just to see the differences.

The herbs are still flavorful and the basil is in good seed head.

I am listening to Tom Fm a local station just google Tom Fm, the mixture of music is rather good, I have heard a lot of good songs today. I had not been listening to music for a while, or listening with out doing something else.
Or while I am playing pool.

So if you thought that another old timer had bittent he dust and gone the way of the dead oil making creatures and other stony things, well yes and no.

500 things going on. This my frind Kevin Pride 4 years ago, he told me that he just had a feeling and there was the signs. And he got an award from the city, it is in his office somewhere he said. He works for the City of Little Rock as the forman, manager of the city's riverfront park, going from Broadway to just this side of the Clinton Library. About a mile and a half of park, with lots of stuff to do extra, he is the only full time employee, been on the job 17 years.

He is the moustashed guy, If you want to know about anykind of rescue in hard places he is he man in this area, he trains the people who are coming up, I have worked with him in thinking up projects, we hope to have a place to unload his supplies to sort them out so that if the need arises we can help as many people in an emergancy as possible.

I fasted for 24 hours, the first time in my life about a week ago. Wow( no water no food) neat experience, not that hard really. I do wonder how 40 days would be like, not on my list of things to do though, I'll leave that to radicals.

Well That is the news from lake BioWebScape, we had the first rain in a week today, a real soaker, long and slow after a heavy rain, all my collection buckets and barrels are full. 460 gallons plus.

See you on the flip side.( how many remember that one)

Hugs from arkansas,
BioWebScape Design Studio.


Sorry there, got side tracked, This is the link.


So if you thought that another old timer had bittent he dust and gone the way of the dead oil making creatures and other stony things, well yes and no.

500 things going on.

Sounds like life. Might be time to learn to be easier on yourself.

Remember, it's not your job, Charles, to save the world - don't put yourself in the grave trying. You won't be any damn good to anybody doing that.

Btw, advice from an ex-smoker who quit after thirty years - "smoke 'em if you've got 'em." . Nagging - whether from yourself or others - doesn't help with ending the addiction. The day will come when you'll be ready and able to quit. Trust me, it will happen.

Meanwhile, keep the volume of smoking down to a minimum so as to ease up on the asthma. Trust me, again, you can cut way back even amid stressful times. Try, as best as you can, to adjust the pace of your cigarette breaks.

Don't beat yourself up if it takes longer than you anticipate. Challenges are to be expected. As you know, nicotine holds quite a grip on the chemistry of the brain.

Good luck and godspeed with the other 500 things going on. Your garden sounds like it's growing great!!

One part sunshine, two part rain, three part prayer.

Here's to living the best way you can,


It's been said that the best way to quit smoking is to go cold turkey and get over it. The other method, which is slow reduction, leaves one in a near constant state of withdrawal, which is to say, continually suffering and craving another smoke. Thus, the slow withdrawal method tends to fail and repeated failure makes the next attempt to quit more difficult.

Of course, smokers tend to congregate in social environment with other smokers, where one would find it difficult to fit in after quitting. And, if one is married to a smoker, that adds even greater disincentive. One of my neighbors quit smoking, but her mate still did/does. They later split up, perhaps as a result of her differences with him over smoking in the house, though there were other obvious issues as well...

E. Swanson

Black Dog, when eventually I did around to quitting I did it the only way I could -- cold turkey. The six months that followed were the worst emotional and physical roller coaster experiences of my life and I never, never want to go through that again.

For a period of time prior to my final smoke(about two years), I went from being a pack-and-half-a-day man down to a two-pack a week junkie. I deliberately set out to change my smoking routine altogether. No longer smoked inside the house. No longer smoked in the car. No longer smoked at public gatherings. No longer smoked around work. Most of the in-between cigarettes - other than the ones early morning, just before bed, after meals, when relaxing, or just after I accomplished a task - were weeded out from my daily consumption.

My wife, fortunately, didn't smoke so that helped.

Smoking less didn't make it any easier for me to take the final plunge and break free. But if there are other health conditions at play - like asthma - I would suggest that fewer cigarettes may ease with the congestion.



Today's story on oil tankers daily going by the thousands into Iran from Kurdistan confuses me when the top article in today's DrumBeat is that Iran is releasing 6 supertankers to lower the amount they have in storage. I can see that the Kurds like the income they get, but why would the second-biggest oil producer, one whose storage is being reduced, be willing to import oil from Kurdistan?


Iran exports oil but imports gasoline.

And the Kurds have excess refining capacity.

Thanks, Don and Testudo. I missed the significance of "fuel tankers." And you've explained the situation in the two countries.

'350.org Urges Obama to Put Solar Back on the White House'

If he did, how long would it be once a Republican President was in office before they were removed?

A political update from the Great White North.

One day after a poll gave the Conservatives an eleven point lead over the opposition Liberals, the government gave a boost to the rumour mill that a Canadian election may be pending. Surprise, surprise.

Prime Minister Harper announced today his appointment to the last vacant Senate seat and his willingness to pull the plug on parliament if the Senate puts amendments to his budget legislation.


The news that unemployment has dipped below 8% and that the economy is likely to grow well over 3% in 2010 has added to the election speculation. It doesn't hurt that both the loonie and the Toronto stock exchange are flying high.


Stephen Harper is biting at the bit to hit the hustings - to go while the going is good is good politics.

Only thing, Harper's luck doesn't always hold. Last time he called a snap election (September-October 2008), the world economy came within a hair's breath of total collapse. A trick like that midway through another election campaign would likely ensure an opposition win, no matter what the polls currently say.

7 PM EST 2 east coast banks closed

Ideal Federal Savings Bank Baltimore MD 32456
Bay National Bank Baltimore MD 35462

2 more 7:45

Home National Bank Blackwell OK 11636
USA Bank Port Chester NY 58072


Maybe I'm in a weekend happy mood ... but I must say that I have enjoyed this thread.

It's more like the old pre-GOM threads.

Little insane drivel ... just interesting posts!

Thanks for restoring my faith in TOD everyone!

BAU here is like nowhere else in the world ;-D

Yep, sure is nice to see again.