Drumbeat: July 21, 2010

The Peak Oil Crisis: Thinking About China

Earlier this week, the International Energy Agency announced that China was now the world's largest consumer of energy (oil, coal, natural gas, nuclear power and renewables), surpassing the U.S. for the first time.

With 1.3 billion people, China is unlikely to reach current U.S. energy consumption per capita for some time, if ever, but to double energy consumption in the last ten years is still an impressive achievement. But keep in mind that the average American is still consuming five times as much energy each year as the average Chinese. China had not been expected to overtake the US for another five years, but the global recession reduced U.S. consumption and China's strong economic rebound in the last sent Beijing's consumption soaring.

Matthew Simmons: “We've now killed the Gulf of Mexico”

Matthew Simmons, founder and chairman emeritus of Simmons & Company International and former energy advisor to President George W. Bush, spoke with Bloomberg Television this afternoon. He said that while the GOM oil leak has been stopped from coming out of the riser, there is another more important leak five to ten miles away caused by the explosion of the blow-out preventer.

Mr. Simmons said, “What we don’t know anything about is the open hole which is caused by the drill bit when it tossed the blow-out preventer way out of the hole…and 120,000 minimum of toxic poison has now covered the floor of the Gulf of Mexico. So what they’re talking about is the biggest environmental cover-up ever. And they knew that that well, that riser, would finally deplete. And then they could say it’s over. And unfortunately, we now have killed the Gulf of Mexico.”

Branson may not know best

Tycoon's suggestions that change from fossil fuels to biofuels can be done swiftly are inaccurate, which is in fact likely to be disruptive and expensive

Louisiana governor: Let's start drilling

NEW YORK (CNNMoney.com) -- Louisiana Governor Bobby Jindal railed against the federal ban on deepwater drilling in the Gulf of Mexico at a rally on Wednesday, saying the "arbitrary moratorium" could cost the region hundreds of thousands of jobs.

Oil Companies Plan Rapid Response System to Gulf Spills

Four large oil companies are committing $1 billion to set up a rapid response system to deal with oil spills in the Gulf of Mexico’s deep waters. The effort is aimed partly at deflecting efforts by some state and federal officials to stop or severely restrict drilling in the gulf in the wake of the BP spill.

Food Standards Agency: what a carve up

A food world post peak oil will be very different. This new government must recognise that. The difficulty is breaking the news to consumers. And that's dangerous political territory.

Oil Futures Fall After Report Shows Unexpected Increase in Crude Supplies

Crude oil fell after the government reported an unexpected increase in U.S. supplies and Federal Reserve Chairman Ben S. Bernanke said the economic outlook remains “unusually uncertain.”

Inventories climbed 360,000 barrels to 353.5 million in the week ended July 16, an Energy Department report showed. Stockpiles of gasoline and distillate fuel, a category that includes heating oil and diesel, also increased. The price dropped 39 cents after Bernanke began speaking to the Senate Banking Committee.

ANALYSIS - Trust technology, market as oil reserves dwindle

(Reuters) - Reserves of conventional crude oil, the world's most popular fuel, are dwindling.

No one knows how much is left in the ground or how long it will last, and it is getting harder and more expensive to find.

But most geologists and economists believe higher prices, new technology, different sources of hydrocarbons and other forms of energy will help fill the gap, whenever it comes.

Turkish governor blames Kurdish rebels for gas pipeline blast

Istanbul, Turkey (CNN) -- Turkish officials are blaming a pre-dawn blast that ruptured the natural gas pipeline between Iran and Turkey on rebels from the Kurdistan Workers' Party (PKK).

The alleged act of sabotage follows two deadly clashes between Kurdish rebels and Turkish security forces on Tuesday, which left at least seven Turkish soldiers dead.

Doubts about U.S. tactics shadow war in Afghanistan

"We consider America a failed state because America could not fulfill its promises," Safiullah said after a recent meeting of village leaders here. "Instead of bringing peace and development, they brought destruction and fighting."

The Afghanistan war is at a critical juncture. The surge of 30,000 troops ordered by President Obama will be complete soon. A new commander has arrived. A full offensive against the birthplace of the Taliban —Kandahar— has been delayed.

Taliban attacks are rising as are U.S. operations against insurgent strongholds. Coalition deaths are at a high. And Afghans such as Safiullah say they are losing faith in America's ability to deliver on its promises.

Interview with Art Berman - Part 1

You have to acknowledge that shale gas is a relatively new and significant contribution to North American supply. But I don’t believe it’s anywhere near the magnitude that is commonly discussed and cited in the press. There are a couple of key points here. First the reserves have been substantially overstated. In fact I think the resource number has been overstated.

N.S. natural gas production at all-time low

New figures from the Canada-Nova Scotia Offshore Petroleum Board show the volume of natural gas produced so far this year from offshore fields near Sable Island are the lowest since production began in 1999.

Aramco-Sumitomo JV Q2 profit halves vs Q1

Analysts say PetroRabigh relies on petrochemical products profitability to offset low margins from its refined oil products, most of which are destined for the Saudi market and sold at a giveaway price.

Saudi Aramco offers second rare spot parcel from Jubail in under a month

The state-owned refiner is likely to push out at least one spot parcel from the port every month after its term buyers had either reduced the volumes, or dropped their contracts citing high premiums.

Hedging, currency hit EnCana

EnCana Corp. says foreign exchange and hedging activity dragged it to a $505-million (U.S.) loss in the second quarter.

Storms threaten to shut down BP's Gulf well work

NEW ORLEANS — Storms are threatening to delay BP's undersea efforts to permanently plug the leaky well in the Gulf of Mexico.

The federal government's oil spill chief says Wednesday that if a storm moves into the Gulf, ships would have to leave and BP couldn't observe the capped well.

Salazar: US Could Have Done More on Offshore Safety

U.S. Interior Secretary Ken Salazar on Tuesday came close to accepting some responsibility for the BP oil spill, telling a U.S. House panel that government could have done more to ensure safety.

"Prior administrations and this administration have not done as much as we could have done relative to making sure that there was safer production in the outercontinental shelf," Salazar told a House Energy and Commerce subcommittee. Officials "were lulled into a sense of safety," he said.

Finger-Pointing on Oil Shifts to Bush Era

House Democrats sought Tuesday to use a hearing on the Interior Department’s role in the Gulf Coast oil spill to blame the Bush administration for regulatory failures that may have contributed to the April 20 explosion of the Deepwater Horizon oil rig.

Democrats on the House Energy and Commerce Committee traced the roots of the disaster back to Vice President Dick Cheney’s energy task force.

BP: Running the odds during the planning stages

This pair of items will illustrate BP’s extraordinary confidence during its planning for the Macondo well. The first item consists of selected quotes from BP’s Initial Exploration Plan (Feb. 2009). The second item is a review of the recent presentation by two veteran drilling specialists from Shell. The primary purpose of their presentation was to contrast the differences between the way Shell designs its deepwater wells and the way BP designed the Macondo well. An underlying theme of both items is the fact that the various aspects of the BP plan were conducted under the oversight of senior industry administration and federal regulators.

Ohio pension funds seek lead in BP class-action lawsuit

Pension funds in Ohio and New York want to lead the charge in a class-action lawsuit to recover what investors say are billions of dollars lost during a five-year period as fuel giant BP Plc allegedly made false claims on the safety of its drilling operations.

Book Review: The Energy Gap by Doug Hoffman and Allen Simmons

The Energy Gap is a tour de force review of our energy resources, their potentials, pitfalls, environmental consequences, economics, and politics. The sub-title is “How to solve the world energy crisis, preserve the environment & save civilization.” Well not quite, but it is a start.

De Vido denies 'energy crisis,' warns about gas sales below fixed rates

Argentina's Planning Minister Julio De Vido said that all detected persons involved in cases of gas cylinder containers being sold at prices above the fixed rates "will be fined," adding that any "places" caught doing so would be "shut down" once the infraction is detected.

According to the minister, "there are many cases where these containers are being bought because it is cheaper, since they are subsidized."

Poland could face natural gas shortage

Polskie Górnictwo Naftowe i Gazownictwo (PGNiG), Poland's largest state-controlled oil and natural gas company, has already used more than 70 percent of the natural gas it contracted from Russian supplier Gazprom for 2010.

A Question of Policy: Cutting Off Indonesia’s Coming Energy Crisis

The lack of adequate and reliable supplies of electric power is one of the most serious problems facing Indonesia today.

In 2009, energy output was about 170 billion kilowatt hours (kwh), well short of the 260-290 billion kwh we would have required to avoid rationing. Further, each percentage point in GDP growth demands a 2.5 percent increase in electric power output.

If Indonesia is to reach a 6 percent annual growth rate, we will require a power increase of at least 15 percent each year.

Nuclear renaissance around the corner

THE world is on the verge of a nuclear renaissance that will be driven by accelerated energy demands in China and India coupled with efforts to cut carbon emissions and combat pollution.

This was the view of Argonaut managing director and chief executive Eddie Rigg, who provided compelling figures at the Australian Uranium Conference today to back up his forecasts.

North Stream and the island of Gotland

There are two main explanations for why we in Sweden are unique, for why we can brew our morning coffee and warm the children’s porridge in the microwave oven without contributing to the greenhouse effect.

One explanation is luck. The rivers that run from the mountains to the Gulf of Bothnia give us nearly half of all our electricity. The remaining four undisturbed rivers must remain undeveloped. We must become better in our nation at preserving biological diversity and those rivers are unique.

The other explanation is that PM Tage Erlander and PM Olof Palme made a strategic decision to develop Sweden’s nuclear power industry. This gives us nearly the other half of the electricity we need. Erlander had not heard of the greenhouse effect.

Greek Rail System’s Debt Adds to Economic Woes

Some have argued that Hellenic Railways should shut down the majority of its routes, especially in the mountainous Peloponnese region where trains manned by drivers being paid as much as $130,000 a year frequently run empty.

The government, perhaps optimistically, is advocating the sale of a 49 percent stake to the French, who said this year that they would take a look. But it remains unclear how the French rail network, already burdened with its own high levels of debt, would be able to assume Hellenic’s liabilities and losses.

Port Authority eyes massive service cuts

PITTSBURGH - Port Authority today will unveil a plan to cut transit service by 35 percent, eliminate 48 routes and raise the one-way fare for some riders to $4 to fill a projected $50 million budget deficit.

The service cuts, deepest in the authority's 54-year history, would take effect Jan. 9 and leave more than 50 communities that currently have transit service with none.

Effective Jan. 2, base fares would rise by 25 cents -- to $2.25 in Zone 1 and to $3 in Zone 2. But Light Rail Transit riders and users of 13 suburban express bus routes would be charged a new "premium" fare of $4. The authority said its cost of providing service on those routes exceeds $4 per passenger.

Cyclists see no justice in probation for 2 in hit-run

He fell sideways and slid some 30 feet toward a curb. And as he watched the car slowly drive off, a shocking thought came to him. This was no accident; the driver had hit him on purpose.

As it turned out, he had. The two young men in the car had been playing a real-life version of a video game: Hit a cyclist, get points. A prosecutor would later describe the young men laughing as they switched places so they could each hit a bicyclist. A few blocks later, the second driver struck a 34-year-old Brookfield man.

New York Mandates Cleaner Heating Oil

It’s official: New York State is drastically reducing sulfur in home heating oil.

After some uncertainty, Governor David A. Paterson on Tuesday signed into law a bill that limits the sulfur content of No. 2 heating oil to no more than 15 parts per million starting in July 2012, down from the current range of 2,000 to 15,000 parts per million.

Climate change: Debate is going to get hotter within EU

Brussels - This summer may be hot, but the climate in Europe and the political debate on what to do about it are likely to get even hotter, the European Union's top climate official said in an exclusive interview with the German Press Agency dpa.

FACTBOX - Oil reserves: declining - but how fast?

(Reuters) - A declaration by Venezuela last week that it hopes soon to overtake Saudi Arabia as the country with the biggest oil reserves has stoked debate on how much oil and gas the world really has left.

OPEC said last week its proven crude oil reserves rose 4 percent in 2009 to 1.06 trillion barrels, led by an increase in Venezuela. BP estimated last month total global oil reserves were over 1.33 trillion barrels -- equivalent to more than 40 years of consumption at current rates.

But many industry analysts have cast doubt on these figures, saying estimates may be inflated for a variety of reasons.

Following is a selection of some of the key issues involved:

Against backdrop of gulf spill, other nations move forward with deep-water drilling

In 40 years of offshore energy exploration, Norway has suffered just four spills -- none of the magnitude of the one in the Gulf of Mexico and none reaching the country's pristine tundra shores. Its government has made efforts to avoid the kinds of conflicts that have bedeviled the U.S. regulatory process by splitting off safety and environmental oversight duties from the Ministry of Petroleum and Energy. Perhaps most significantly, the country has a separate Climate and Pollution Agency that weighs in on every decision about whether to open up new areas to offshore drilling and has inspectors who examine rigs once they're operating.

But even as the ongoing underwater drama in the Gulf of Mexico reveals the oil industry's shortcomings when it comes to preventing or stopping the flow of an underwater geyser, Norway is pushing ahead with offshore drilling plans, including the kind of deep-water drilling that the Obama administration has suspended in the United States.

"Easy oil is running out," said Hege Marie Norheim, head of Statoil's Strategic Agenda of Arctic and Subarctic Business Development Activities. "We've been exploring for oil and gas where it lies."

You can't fight the drilling ban

FORTUNE -- The legal back-and-forth surrounding the deepwater drilling ban in the Gulf is distracting from a key truth: Nobody drills until the Obama administration says they can.

BHP Says Gulf Drilling Halt, Declining Fields Limited Gains in Oil Output

BHP Billiton Ltd., Australia’s largest oil and gas producer, said a moratorium on deep-water drilling in the U.S. Gulf of Mexico in response to the BP Plc spill and aging fields limited gains in fourth-quarter output.

Drilling at the Atlantis and Shenzi fields in the Gulf stopped during the quarter ended June 30, the Melbourne-based company said in a statement today to the Australian stock exchange. BHP said it continues to monitor the impact of the suspension, imposed after the worst oil spill in U.S. history.

Oil hovers below $78 after small crude supply drop

SINGAPORE – Oil prices hovered below $78 a barrel Wednesday in Asia after a report showed U.S. crude supplies fell less than expected last week, suggesting demand for fuel remains tepid.

Two killed in 'terror attack' on Russian power plant

MOSCOW (AFP) – Militants burst into a hydroelectric plant in Russia's volatile Caucasus region Wednesday in a brazen dawn attack, killing two people and setting the facility ablaze with a string of blasts, officials said.

The unknown attackers set off the explosions at the station in the unrest-infested North Caucasus's Kabardino-Balkaria region by laying mines in the turbine room. The plant has been shut down as a result.

Russia’s oil, gas extraction tax may rise - official

Russia may increase taxes on natural gas and oil extraction, a Finance Ministry official said on Wednesday.

Tax on gas extraction, currently at 147 rubles ($4.80) per thousand cubic meters, may increase 61 percent starting from 2011, six percent from 2012 and 5.4 percent starting from 2013, Ilya Trunin, head of the ministry’s tax and customs regulatory department, said.

"We think, and the relevant ministries agree with us, that starting from next year the rate for the extraction of natural gas could be increased by 61 percent," Trunin told journalists.

Kazakhstan Oil Reserves Too Rich for Tax to Deter Chevron

Kazakhstan’s oil reserves may be too valuable for an export-tax increase to deter companies from drilling for crude in the former Soviet republic.

Calgary Gasoline Stations Run Dry After `Stampede' Draws Thousands to City

Royal Dutch Shell Plc is shipping more fuel into Alberta after surging demand from motorists, including visitors attending the annual Calgary Stampede, drained pumps dry in the Canadian city.

Oil Spill Shuts Dalian Beaches, 300 Tons of Fuel Recovered in Cleanup

The northern Chinese port city of Dalian has closed beaches as workers continue to clean the offshore oil spill that has shut the country’s biggest crude terminal, China Daily said.

Official: 'Severe threat' as China oil spill grows

BEIJING -China's largest reported oil spill more than doubled in size to 165 sq. miles (430 sq. kilometers) by Wednesday, forcing nearby beaches to close and prompting one official to warn of a "severe threat" to sea life and water quality.

Gas driller faces eviction from Utah reservation

SALT LAKE CITY (Map, News) - The Ute Indian tribe is threatening to kick Questar Corp. affiliates and a spin-off company off an eastern Utah reservation where they operate wells and natural-gas processing plants.

Japan Power Prices Rise to 2-Year High as Tokyo Swelters in 35-Degree Heat

Japanese power prices for delivery during peak hours rose to their highest in almost two years as a heat wave continued, boosting demand from Tokyo Electric Power Co. to cool offices and homes.

Jeff Rubin: What does King Abdullah know?

So much for the International Energy Agency’s forecast for huge production increases in the kingdom. Like so many of the agency’s previous optimistic projections, this one isn’t any likelier to pan out. But what does King Abdullah know that the IEA doesn’t?

BP gains confidence in cap as spill plan takes shape

NEW ORLEANS, Louisiana (AFP) – BP said it was gaining confidence in the cap over the ruptured Gulf of Mexico oil well, as plans took shape Wednesday to seal the blown-out well for good.

The British energy giant and US government officials were evaluating the cap each day, and on Tuesday extended for another 24 hours the period of evaluation of the so-called capping stack structure that appeared to stop the oil flow last week after nearly three months.

Relief tunnel should reach BP Gulf well by weekend

NEW ORLEANS — Three months into the disaster in the Gulf of Mexico, the federal government's spill chief says a relief tunnel should finally reach BP's broken well by the weekend, meaning the gusher could be snuffed for good within two weeks.

Apache seals $7bn BP asset swoop

US independent Apache has finalised a $7 billion deal to buy all of BP's assets in the Permian basin in Texas and New Mexico and in Egypt's Western Desert, as well as "substantially all" of BP's natural gas assets in western Alberta and British Columbia.

With Sale of Assets, BP Bets on More Deep Wells

Despite the April 20 Deepwater Horizon disaster, BP has no plans to leave the Gulf of Mexico or stop drilling for oil in other deep ocean waters.

Just the opposite: with its runaway well apparently under control, the troubled oil giant is now staking its future more than ever on deepwater wells. Although such wells are far riskier than land-based or shallow-water ones, oil fields that are located under a mile or more of water can be extremely lucrative, and BP continues to see them as worth the risks.

Transocean Is BP Spill Focus as Five Workers Named `Parties of Interest'

Transocean Ltd. employees onboard the Deepwater Horizon drilling rig when it exploded in the Gulf of Mexico have become the focus of a U.S. government probe into the cause of the fatal disaster.

Stephen Bertone, chief engineer on the rig, and Mike Williams, chief engineer technician, were designated as parties of interest yesterday by a joint U.S. Coast Guard-Interior Department investigative panel. That boosted to five the number of Transocean workers who could face criminal charges stemming from the accident that killed 11 people.

Witnesses avoid BP oil rig blast hearing

NEW ORLEANS, Louisiana (AFP) – A hearing into an April explosion aboard a BP-leased oil rig in the Gulf of Mexico has been cancelled, after four witnesses refused to offer their testimony voluntarily.

BP Kept Drilling After Report of Leak, Worker Says

KENNER, La. — Government investigators looking into the causes of the Deepwater Horizon oil rig explosion are colliding with a frequent obstacle: witnesses canceling their scheduled testimonies.

Robert Dudley May Replace Hayward as BP Chief Within Weeks, Times Reports

BP Plc’s Robert Dudley is the front-runner to replace Chief Executive Officer Tony Hayward, who is set to step down in the next 10 weeks, the London-based Times reported, citing unnamed people close to the company.

An announcement about a successor to Hayward, under fire for BP’s handling of the Gulf of Mexico oil disaster, may be made in late August or early September, the newspaper said.

BP denies CEO to resign in coming months

BP denied a report its embattled chief executive would leave soon, as it lined up $7 billion in asset sales to help pay for the worst oil spill in U.S. history, lifting its shares on Wednesday.

CEO Tony Hayward, who has been heavily criticized for his handling of the disaster, had the full support of the board and would stay in office, a BP spokesman said, dismissing a report in the Times that he would step down within the next 10 weeks.

Messy cleanup of BP oil spill damages the Gulf

Hordes of helicopters, bulldozers, Army trucks, ATVs, barges, dredges, airboats, workboats, cleanup crews, media, scientists and volunteers have descended on the beaches, blue waters and golden marshes of the Gulf Coast.

That's a lot of propellers, anchors, tires, and feet for a fragile ecosystem to take, and a tough truth is emerging: In many places, the oil cleanup itself is causing environmental damage.

Oil disaster taught us several lessons

I always try to see the silver lining in every cloud. The Gulf of Mexico oil spill, however, presents a challenge to find anything good.

What did we learn from this experience, as everyday people?

Honda to introduce plug-in cars in 2012

NEW YORK (CNNMoney.com) -- Honda announced it will begin selling two new plug-in electric vehicles in the United States in 2012.

The automaker will begin selling a small plug-in electric "commuter car" and a mid-sized or larger plug-in hybrid vehicle, Honda Motor America said.

Emerging Technologies Battle to Fill Peak Electrical Demand

The report, titled “Who Wins the Peak? The Battle of Solar, Storage and Smart Grid to Fill Peak Demand,” assesses the potential roles of demand response, solar and energy storage in satisfying peak demand. It also details the widely different costs and production profiles of each technology, and their comparative capacity factors, which is the ratio of actual power output over a given period versus total possible output during that period.

“As the cost of energy storage declines, it will help make wind, solar and other intermittent renewables more viable sources of cheap dispatchable power during peak periods,” said Ted Sullivan, a Senior Analyst with Lux Research and the report’s lead author. “Combined with demand response, these technologies could address the top third of the peak demand curve and reduce the need to keep gas-fired turbines on standby.”

Ocean Energy founder has big plans for Midcoast Maine

ROCKLAND, Maine (NEWS CENTER) -- Matt Simmons says midcoast Maine can become the Silicon Valley of ocean energy - and he wants to make it happen.

Clean energy is not a cheap alternative

It is a pitiful moment in world affairs when poorer countries such as Montenegro and Sierra Leone donate more money to a renewable energy project than the United States.

The meagre contributions – a paltry $137 for both nations – still amount to $137 more than developed countries such as the US, Japan, Switzerland and Australia have donated thus far to the International Renewable Energy Agency (Irena).

The perils of policy pragmatism

Neither major party has a viable policy for preparing Australia for peak oil, or even for much more expensive fossil fuels. A price on carbon would go some way to addressing the situation, but massive government investment in renewable energy and transport infrastructure will also be required. But, in the wake of the Coalition's successful campaign against the CPRS and Labor's insulation programs, it may be a long time before a Liberal or Labor government will be prepared to promise another ambitious infrastructure program for renewable energy.

Is the Next Global Food Crisis Now in the Making?

In a new book, "Empires of Food," journalist Andrew Rimas and Leeds University agricultural researcher Evan Fraser examine civilizations from Mesopotamia to Rome to Great Britain. They argue that every empire was made possible by agriculture, and that when those agricultural systems failed, the empires they supported failed with them.

Fraser and Rimas worry that the food system in place today is built around nitrogen-based fertilizers that require petroleum to create, as well as good weather that's graced the world since the dust bowl. If fuel prices go up again, or if the weather gets worse, they say, we could see our food empire unravel as well.

Off the Grid and Rural Sustainable Prosperity

Going off-the-grid in rural areas needs to be, if it has any worldchanging aspirations, a part of improving that situation. That means, it needs to be based in thoughts about how it can help address systemic problems, especially in the United States where rural areas seem to suffer from a few major structural problems that make them less resilient than they deserve to be, and far less sustainable than some of us would like to think. Here are five examples of some of those major challenges in need of systemic solutions:

California delays fee tied to climate change law

The state, facing a ballot initiative to roll back its landmark climate change law, has pushed back a $63 million fee to pay for the legislation until after the November elections.

Americans for Prosperity protests N.J.'s greenhouse gas 'cap and trade' law

MORRIS TWP. — One sign at a rally opposing the state's cap and trade program described the sentiment of the participants there: "A 'green economy' means less green in your pocket."

Carbon-control bill faces steep hill in Senate

WASHINGTON – Senate efforts to pass an energy bill with carbon controls appeared in doubt Tuesday as leaders said they still lack the needed votes.

Kyoto CO2 trade may end if no climate deal - UN study

LONDON (Reuters) - The Kyoto Protocol's clean development mechanism (CDM) may end from 2013 unless the world can agree and put into force a new round of carbon emissions targets before then, a U.N. paper has said.

In a Climate Quest, the Roof as White Knight

Steven Chu puts his department's money where his mouth is, instructing Energy Department offices to install "cool" white roofs.

Report: More than One Out of Three U.S. Counties Face Water Shortages Due to Climate Change: Greatest Risks Seen in 14 States: AZ, AR, CA, CO, FL, ID, KS, MS, MT, NE, NV, NM, OK and TX

WASHINGTON - More than 1,100 U.S. counties -- a full one-third of all counties in the lower 48 states -- now face higher risks of water shortages by mid-century as the result of global warming, and more than 400 of these counties will be at extremely high risk for water shortages, based on estimates from a new report by Tetra Tech for the Natural Resources Defense Council (NRDC).

Link up top: FACTBOX-Oil reserves: declining - but how fast?

Looks like more and more people are starting to recognize that those vast OPEC proven reserves are not proven at all. That is what this whole Reuters report is all about. The table at the bottom of the report is very revealing.

         Official Estimates         Alternative Estimates!
                       billions of barrels
Country   Now¦  End-1999   End-1989     Total     Past   Future
S.Arabia  265        263        260       260      118      142
Russia     74         59          -       230      146       84
USA        28         30         34       200^     178^      22^
UAE        98         98         98        85       29       56
Kuwait    102         97         97        80       36       44
Venezuela 172         77         59        75       50       25
World   1,333      1,086      1,006     1,900    1,072      828

Notie they give a far more realistic estimate of the reserves of some OPEC nations than the nations themselves claim. Venezuela is really brought down to earth. Kuwait has less than half what they claim. I still think they have Saudi way too high. They have about the same amount of reserves left as does Russia, perhaps less. Notice also that the amount of "Future" reserves is a lot less than "past". As far as remaining reserves go, we are post peak. Of course some reserves remain to be discovered but not enough to reach what we have already produced.

Anyway this whole article is a breath of fresh air.

Ron P.

Isn't it nice that we can trust OPEC officials with their forever expanding oil reserves?

A breath of fresh air indeed. From the same article:

The reserves of some countries, including Kuwait, the United Arab Emirates and Nigeria, have not changed for several years according to OPEC, a trend that for some observers makes the figures questionable.

Hmm ... do ya think?

The ability of these countries to bluff on reserves is eroding, and we may see a reversal of the dynamic that has driven this game. We may have producers with just a little bit left and eroding production prospects spooking the markets higher by embracing 'transparency' and stating that reserves are low. We would then expect producers with sizeable reserves (Saudi Arabia, Venezuela, maybe Iraq) to announce reserves increases that match or exceed announced reserves declines. Could get interesting.

Jay Hanson of "Dieoff" fame is back...

I haven't seen anyone mention that Jay has been back posting on http://www.tech.groups.yahoo.com/group/energyresources for some time.

What is interesting is that Jay had a major paradigm change in his views last August. If you are interested you can follow the posts (or review previous posts) at the above mentioned forum.

Jay also has a new site http://jayhanson.us with lots of new material.


The Yahoo link doesn't work for me. Try this one


Todd, thanks for the alert. I searched several pages of posts on the list but could not find anything that defines his new position. Could you give us the post # of the post where Jay announces this paradigm change?


Ron P.

Here's the message that explains his thinking:


I haven't studied much of what Hanson written in the past but this reads like much of the rhetoric of any ordinary pundit. What exactly constitutes his original thinking? i.e. "after 20 years of study and debate"

The difference is that Jay used to be an uber-doomer. He thought collapse and nuclear war was inevitable, no matter what anyone did. For reasons that were hard-wired into us.

He no longer thinks that. Now, he thinks it's possible we'll muddle through, and that there are also some positive traits hard-wired into us, like the desire to help others.

Good to see him wrestle his focus free from the myth of apocalypse. Maybe he has been reading Greer?

He describes what led to his change of mind in the link sgage posted. It sounds like it was the realization that major change has occurred in the past, in fairly short time frames.

From all I read he believes it is "technically" possible although highly unlikely that we could mitigate collapse.

Hardly a optimistic position.

@ Leanan

I think that Hanson reaches the right conclusion for the wrong reason.

He appears to be saying that the elite are becoming co-operative/collaborative for altruistic reasons, and my view is that they did not become the elite through being more virtuous than the rest of us.

I think that the elite will be co-operative/collaborative for the same reason that a parasite has an interest in keeping the host alive. That is, that self interest dictates that a percentage of something is superior to 100% of nothing.

In my view - and every day that goes by reinforces this view - it is the pervasive spread of direct instantaneous connections of the Internet which are inevitably leading to a decentralised, connected partnership-based 'Economy 3.0' of 'network presence'. ( Economy 1.0 was decentralised but disconnected, requiring physical market presence and our current - dysfunctional and unsustainable - Economy 2.0 is centralised but connected with market presence via intermediaries).

Hanson has become what many cancer patients become when the end is in site.

Somewhat in denial, hoping for the best outcome. Thinking to themselves, maybe that Chemo's not so bad after all?

He is going thru Kubler-Ross. Plain as day.

The end still comes.

As Darwinian notes below, overshoot is overshoot, especially as bad as ours is right now. I also don't see his change as major. He still sees his "hope" as a very low probability "long shot" (his own words), something that I think all of us have said is remotely possible, just not probable. Instead of being 100% doomer, he's just 99.99% doomer.

He is going thru Kubler-Ross. ... The end still comes.

As one who not long ago lost a loved one to cancer I can vouch for that.

In the beginning it seems as if the doctor/ technologists have one magic chemo after the next to pull out of their magician's rabbit hat.

OK. Chemo #1 has stopped working but we can still try Chemo #2. And Chemo #3.

Then one day, all too soon, they look up at you after a long deep stare down into their rabbit hat and say:

"Sorry, my techno-magical hat is empty ... there is no next miracle technology to try. There's only hospice now." The end still comes.

But the problem is that even though the "parasites" may have finally realized that they need the host, the collective blood loss may have already been too great - they may have taken a liter or two too much...

I'm guessing that ecologically and climatologically we've pushed past tipping points we may not even have realized existed... all while the "elite" were infected with the hubris that they could apply the brakes and stop the train just short of the cliff. But they hadn't accounted for the erosion of the cliff that removed the last few hundred feet of track.

I simply don't think we operate within any kind of "margin of safety" that would allow us to stop in time if there is indeed slightly less track available than we think.

At every turn we are encountering resource and ecological limits - my thought is that we have yet to hit on the right combination of factors to really put the screws to us - but we are furiously pulling the handle of that slot machine and I see no attempt by the "elites" to pull us away from the machine - I'd say they just keep handing us quarters...

"I'm guessing that ecologically and climatologically we've pushed past tipping points we may not even have realized existed... all while the "elite" were infected with the hubris that they could apply the brakes and stop the train just short of the cliff. But they hadn't accounted for the erosion of the cliff that removed the last few hundred feet of track."

Ha! This reminds me of how I explained overconsumption, overshoot and failure to heed warning signs to my Daughter.

I reminded her of when her car brakes began grinding, metal on metal. It started slowly, and the car still stopped fine, so she ignored it for a while. By the time the brakes were screeching and fading I had to explain to her how a $60 repair bill a month before (me doing the work) was now a $300+ overhaul (not sure I want to fool with it at this point) because she had ruined her rotors. She had the $60 but not the $300, so she ended up walking or hitching a ride to work.

Perhaps the rich have ignored too many warnings for too long. They were too busy making all of that money.

Wow. I'm stunned to read this. I tried to have a civil conversation with Jay about a year ago about the possibility that the human race had been 'auto domesticating' for thousands of years and that the influence of women on society had been the major contributor to that fact. Jay’s response was pretty negative to that idea. He didn't even want to discuss it. I’m amazed he is even contemplating that any altruistic behavior may have found its way into human genetics.


When Jay Hanson began his "long march", he used to post on the usenet group, sci.environment, starting around 1997. I occasionally posted replies to his stuff. Fast forward to today, in his "awakening" last year, he apparently thought:

A flash went off and all of a sudden I realized:

#1. That most rich people care about the rest of us. A sense of fairness is genetic. They have been conned into avoiding available political solutions by lying economists.

It REALLY IS POSSIBLE to "mitigate"* the downside of the net energy curve, but it requires that we return to explicit politics -- to use "democracy" instead of "capitalism" to determine our social goals.

The trouble with this is that democracy (with a small "d") isn't an economic system but a political system. "Capitalism" is an approach to organizing human activities for economic purposes and is directed at increasing wealth for the people within, often by taking resources from people who aren't "insiders". "Socialism", with it's variations, is another organizing principle. Both have numerous variations when coupled with political systems.

What he may be saying is that there is hope if our political system stays democratic while our capitalistic economic system is replaced with something else. Just what that new economic organization would be, he doesn't mention in this piece. Perhaps he has come around to thinking in terms of some form of "democratic socialism", which has been adopted by various European nations. Or, maybe something more on the lines of a "Technocratic" society, such as that to which Hubbert belonged before WW II.

As for rich people, one doesn't get rich by being a nice guy (or girl). They weren't called "robber barons" for nothing...

E. Swanson

It REALLY IS POSSIBLE to "mitigate"* the downside of the net energy curve, but it requires that we return to explicit politics -- to use "democracy" instead of "capitalism" to determine our social goals.

Just about anything can be "mitigated" except OVERSHOOT. Even if there were no downside to the net energy curve, even if fossil fuels kept increasing forever, overshoot would still get worse and worse every year, just as it has for the last fifty years. Sooner or later, as the earth is degraded and able to support fewer and fewer people, we would have collapse.

If the earth already has twice as many people as it can support... long term... there is no way to mitigate that.

I have studied this problem for almost half a century and have read every book on the subject. The very best two were "Overshoot" by William Catton and "The Spirit in the Gene" by Reg Morrison. Morrison did not write about energy at all but what we Homo sapiens are doing to the earth. His estimate of collapse is sometime before mid century, around 2035. And again, this estimate assumes energy business as usual

But there will be no energy business as usual, mitigated or not. The collapse will be 15 to 20 years before Morrison's estimate. Sometime between 2015 and 2020.

Ron P.

Looking at Hanson's long description of America 2.0, I think Hanson grasps the basics of the problem, as did Garrett Hardin in his Tragedy of the Commons presentation (may be behind a paywall). Of course, he is focusing only on the US and the problems are global. For example, the US represents less than 5% of the Earth's population, yet still consumes about 24% of the of the oil. We've been able to do that of late by borrowing from our foreign trading partners, such as China. When Peak Oil becomes an obvious problem in the rear view mirror, I think China will still want more of the declining production.

Hanson's Technocratic approach may not have enough time to begin to work if the rate of decline is as fast as even he projects. That's because the average person has no clue yet for the reason for his/her unemployment and won't easily accept the sort of changes Hanson proposes. I think Hanson doesn't realize how tightly coupled our economic and political systems have become. The latest example is the Supreme Court's decision giving corporations the same "rights" to political speech as humans, thus moving the US further away from Hanson's goal of removing corporations from politics...

E. Swanson

Overshoot is a local phenomenon once globalization fails in the worst case scenarios.

The main characteristic of any collapse that might happen in the next 100 years is that it would be uneven. Should it occur some places will be hell on earth, others will be relatively peaceful and calm.

Earth might be finite, but it is still mighty big and hard to get around if you don't have massive amounts of surplus energy.

Thus I believe that in the worst case scenarios the very severity of the downturn will mitigate against absolute global disaster.

One contender for the post-capitalist, post-socialist economic system is "state capitalism". Ian Bremmer describes this in the context of several countries with varying state controls, including Saudi Arabia and China. Note however, that it resembles the system used by all major combatants in WW II to organize their industries for war production, and it resembles the methods of organizing military industrial complexes thereafter.

The West should fear the growth of state capitalism - Ian Bremmer

State capitalism, as Bremmer defines it, is "a set of governing principles" used by governments around the world to manage the performance of markets and companies for long-term political survival. Think the oil-rich Gulf states, or Venezuela, or China itself. "State capitalism is corporations captured by states," he says, explaining a phenomenon he argues has yet to be fully embraced by the political or financial spheres. Bremmer argues that increasingly influential countries are using financial markets to create wealth based on the perceptions of national interest.

@ Merrill

I think that the State is as obsolete an intermediary as 'For Profit' Corporations.

The corporate form of organization is essential to accomplishing the functions of a modern economy. Profit is a measure of financial success, and it is the major means by which it is determined which corporations will be allocated more resources.

@ Merrill

The Joint Stock Limited Liability Company ('Corporation') is an obsolescent 19th century development of a 17th century concept. There is no need for shareholders if more up to date legal and financial structures are used instead.

A shared surplus is possible within a partnership framework, and partnership enterprises (eg US LLCs and UK LLPs) are emerging in use because 'they work' for all stakeholders. ie there is no profit and no loss within a partnership.

A market mechanism with a meaningful value standard for exchange transactions is IMHO optimal. But there is no need for either unproductive rentier (intermediary) shareholders or (credit intermediary) banks if resources and credit can be sourced from stakeholders, which they can.

So there is in fact no need for an organisation - merely a framework agreement within which stakeholders self organise.

Startups, even very large startups like Level 3 Communications, use the LLC organization. However, they normally incorporate when they get to the point where they want to sell stock to raise added funding, go into the bond market, award stock options to reward key employees, etc. Note that the employees of a startup are not usually partners in the LLC. LLCs actually can be considered either corporations or partnerships for IRS purposes.

So in your world, only the very rich would wind up being stakeholders in large LLCs.

In the current world, only the very rich intermediate the shift of ownership from venture capital/entrepreneurs to putative public ownership. What's the diff?

The object is wealth itself, not the products that source it.

Capitalism by definition assumes growth. Bremmer apparently believes in the economic mantra of "free markets", which has long ago been shown to be a false hope. Even Bremmer mentions the necessity of "regulation". As resources become ever more constrained, it will eventually become impossible for the rate of consumption of material goods to increase. Peak Oil is a perfect example, but there are other limits to growth as well. Because of resource limits, the growth of one corporation can only occur by removing those resources from other consumers, be they other corporations or individuals. The economy becomes in effect a Zero Sum system. As the power and influence of "national corporations" increases, one can expect that the ability to compete of more traditional corporations will decline.

What we experienced during WW II was that the entire economies of the combatants were subsumed by the national governments in an effort to out produce the enemy. The US and Russia won that competition, but now there are other nations which appear to have the competitive advantage, such as China and the OPEC nations. The old battle field contests between nations involving force and death may be replaced by economic fights over resources with little destruction and relatively few direct deaths...

E. Swanson

Bremmer's book is interesting, since he describes the emergence of state capitalism in various countries and to various degrees and outlines its strengths in several chapters. Then, at the end of the book is a chapter on a prescription for various things that must be done for free markets to prevail. But that chapter is not so persuasive with regard to the merits of the proposal or chances for their success.

It is a little like a theologian writing several chapters on sin and then a half-hearted one on repentance to even things out.


Think of the irony involved-nuclear weapons, which the pessimists were absolutely convinced would destroy the Earth, might be the very controlling factor actually preventing "battle field contests between nations" so that "economic fights" become the new norm.

It's scary as hell and as dangerous as anything I can imagine, but in a nuclear armed world, major powers will not attack each other directly if there is any other workable solution to the problem of survival.

At least, they haven't so far. :)

one doesn't get rich by being a nice guy (or girl)

Amen to that.

In business ....
nice guys finish last

Was it Gordon Gecko who said that?
Right after he said "Greed is good
and absolute greed is absolutely great"?

Jay wrote:

#1. That most rich people care about the rest of us. A sense of fairness is genetic. They have been conned into avoiding available political solutions by lying economists.

That is a huge change for Jay. I do think a sense of fairness is genetic but it extends to what one perceives as one's tribe and very few rich people perceive the rest of the world as part of their tribe. As for economists, they are a mixed bag. They are influenced by those economists that preceded them and were deemed acceptable by the powers that be. Thus they produce solutions that are acceptable far more often than those that aren't - is that lying or subtle self deception? If they work for those with money for the short term those solutions are accepted by one and all as valid and true. I suppose when they say they will work for all via "trickle down" they could be said to be lying, but no doubt they come to believe that it is true.

Maybe Hanson suddenly came to the realization that he is one of the rich.

And perhaps he realized that the underlings have their own tribe and are more numerous than the rich.....I told him once to get started on his moat that he was going to need.

It is also possible for a capable thinker who is rich to realize that his wealth would not exist without a large population of "not rich" people.

Marooned on a desert isle with a pirate's treasure?An axe would be wirth more than a sack of gold.

Own a large tract of apartment buildings?Worthless without poor people to rent them.

Own a factory overseas shipping cheap goods into this country?At some point you must realize that this country will crash and you will have no customers because the country has no industrial base or way to employ the poor and they must be supported by tax monies-and if there are only rich people available and capable of making the costs good?

Such thinking can force the rich person to somewhat expand his definition of tribe, or as I like to put it "us and them".

Jay wrote:

#1. That most rich people care about the rest of us. A sense of fairness is genetic. They have been conned into avoiding available political solutions by lying economists.

He doesn't know many rich people, I bet. As one of them told me, while we were strolling on the walkway, looking at the factory hands in the shopfloor,
"We are in this life to steal from these sons of a bi...".
He was a member of Opus Dei and his diplomat father had been fired from the Spanish diplomatic corps, for stealing.

To a rich man an economist is the same as the janitor that cleans the offices; the economist does and says as he is told or he gets fired, it is as simple as that.
You don't believe me? Watch
Tory! Tory! Tory! Outsiders – 1/6
and the others
Tory! Tory! Tory! The Exercise of Power – 1/6

It is the extraordinary story of the cabal of the British Institute of Economic Affairs
A cabal of some rich, a poor journalist (later Lord Harris ) who made good by licking the shoes of his patrons and who says in one of the videos, that the unemployed ought not to have any help. And Seldon, a poor Jew who wrote economic pamphlets because he was paid to do that.
Well, they didn't have any help in Victorian times, -the poor and the unemployed I mean- and if Harris eats today the whole world has eaten, that's they way to make it to the Lords.

The only thing that had kept the rich from crushing us was the existence of the Soviet Union and the fear that it put into their thieving souls. Communism is finished, they don't fear anything anymore.

Whenever I see a "grand plan" for changing the world, I always immediately look for the transition strategy. I haven't scoured his new site, but I don't immediately see anything having to do with transition. This concerns me, because without that it's just more "pie in the sky" - if we only would - fantasy stuff.

The "vision" page (America 2.0) concludes with a statement I'm in complete agreement with - " No progress is possible until we can GET THE CORPORATE-SPECIAL INTERESTS—ALL OF THEM—OUT OF OUR POLITICS AND OUT OF THE MASS MEDIA!"

Unfortunately this is where the vision page should start, for without a reasonable means of implementing this specific change, any other aspect of the "plan" is just mental... self abuse.

Is there a section having to do with transition or implementation strategy? Or is he dealing with it in other places (yahoo groups are blocked at my workplace).

I'm truly hoping there is, because Jay's ability to speak to these issues is greatly needed, and we don't need him wandering down the "if only" road.

America 2.0, by Jay Hanson, was posted and discussed here at TOD last October:


I too would like a brief explanation of this paradigm change; I don't have time to go through all the stuff that was linked to above.

Thanks for the link. My first thought was that I would have liked to have participated. But as the "discussion" moved on it got bogged down in some absurd defense of modern capitalism by someone who decided to try to dominate the discussion (one of the reasons I tend to drift away for months at a time).

Still, from what I did review, there were a number of people concerned with the lack of any implementation strategy.

The trouble with any plan that begins with "policy" - or with "laws we should pass" (or repeal) - or with what the government needs to do - ignores a fundamental reality - you don't have control of the government and are a long long way from having that control. (And in our society "control" of the government is far more complicated than merely having possession of the artifacts of gov't).

For all you tar sands advocates who insist that it's not a problem,and say things like, "it will all soon be a big green park where our children will play". B.......S

"What Those Who Killed the Tar Sands Report Don't Want You to Know
Why did a parliamentary committee suddenly destroy drafts of a final report on tar sands pollution? Here's what they knew."


"James Barker, an earth science professor at the University of Waterloo, testified that the tailing ponds do leak and seep. In particular "seepage of process affected water is occurring from the (Suncor's) Tar Island dike into the sediments of the Athabasca River" at a rate of 67 litres per second.

Moreover the risk of more toxic seepage from the expanding tailing ponds into groundwater would escalate as mining projects increase bitumen production. "Newer oil sands tailings operations are forced really by geography to be located closer to or on top of sandy aquifers... the risk of local groundwater contamination is fairly high."

"Newer oil sands tailings operations are forced really by geography to be located closer to or on top of sandy aquifers... the risk of local groundwater contamination is fairly high."

But, Hey! That's okay. Cause, ya see, there are some very rich people who depend on those sand tars increasing their wealth by at least 18 to 20 per-cent a year! And that's good. It's greedy. And, as everyone knows, greed is good.

Should be fine with you, too, so long as you don't live close to those rivers and aquifiers that are contaminated. If so, we call that "collateral damage." Naming it makes it just fine. Yup. Very 21st Century, (the American Century, ya know) Chicago School/Austrian School, and even better, it is the Word of God, according to Saint Ronnie the Wrong.

Drill baby, drill.
Dig, baby dig.
Extraction in the pursuit of wealth is no sin... it is necessary, in fact.

Have a nice decade. Or year. Or, whatever is left.


The only oil sands zealots in Ft. Mac are Tim Horton's franchise owners. That's where the money is really being made.

I started a project for pumping the seepage back into the tailings pond. Seemed kind of crazy to just pump it back in, but what else are they going to do? With the newer extraction techniques the tailings pond won't be needed any more.

Like your Copper? You should see Highland Valley's tailing pond. 14 km long and it even has view points along the way on the highway.

Keep in mind that the "sandy aquifers" being referred to are already full of naturally occurring oil - that is, after all, what the "oilsands" are.
Yes, there will be seepage out of tailings ponds, that is what tailings ponds are designed to do, let the water seep away slowly while retaining everything else.

Groundwater seepage in to the Athabasca River has contained oil from the oilsands, since forever.

The only thing new here is that the tailings ponds create a local concentration of what is already all over the place there - oil.

That is a false claim. The bitumen is converted into synthetic crude through hydrogenation and that creates a full spectrum of hydrocarbons not present originally in the soil. The tailings bonds are by no means "concentrated bitumen". They are man made toxic waste byproducts of the synthetic crude oil manufacturing (not extraction).

Also, where do you get the notion that seepage from tailings ponds is filtered water safe enough to drink? The man made toxins are leaking into the ground water at shallow depths.

Excellent point Paul Nash but there are zealots here and you may as well be replying to a brick wall.

Right now the Gulf spill makes this a very sensitive issue and I understand this. But let's see where we are in 5 or 10 years. When kids can't get to school and people can't get to work, I doubt the health of a river in Alberta will be first in our priorities.

Of course, let's see where we are in 50 years when the planet's cooked and everybody's migrating north, and we very well might regret that we laid waste to that land.

Of course he's talking to a brick wall. The anti-oil-sands zealots are steadfastly ignoring the fact that the oil sands are the world's biggest oil spill.

In the Canadian oil sands, the ground is completely contaminated with oil, mixed with water. The river banks are black with oil, and the black goo continually leaks into the rivers. Oil has been seeping out of the ground and into the rivers for millions of years, and will continue to do so for millions more.

Unless of course we clean it up by digging it up, refining it into gasoline, and dispose of it by burning it in our cars.

There was a legal action over the fact that 1,600 ducks landed in an oil sands tailing pond, lost flotation, and sank. A huge environment catastrophe, punishable by Canadian law. OTOH, California's Altamont Pass Wind Farm kills between 7,300 and 9,600 birds per year because it's on a bird migration path and the wind turbines whack a lot of birds out of the air as they go past. One would think this would be a violation of US migratory bird protection laws, but apparently it's OK as long as it's done in an environmentally sensitive manner.

Can you or anyone else provide data that demonstrates that the Athabasca river was just as contaminated before the oil-sands mining operations began, as it is now?

Keep in mind that the "sandy aquifers" being referred to are already full of naturally occurring oil - that is, after all, what the "oilsands" are.
Yes, there will be seepage out of tailings ponds, that is what tailings ponds are designed to do, let the water seep away slowly while retaining everything else.

Come on, Paul! That's like saying there are natural oil seeps in the Gulf of Mexico so the fact that BP had a blowout and caused a little more oil to flow into the natural environment is just not something we should worry about... That's disingenuous at best!

Saudi has 'every intention' of meeting oil demand: prince

Saudi Arabia fully plans to meet the growing demand for oil driven by China and India, a senior prince and former national intelligence chief said on Tuesday. "As the demand for oil continues to rise, especially from China and India, the kingdom has every intention of meeting that demand," Prince Turki al-Faisal said in a speech to the Oxford Energy Seminar in Britain.
Were Saudi Arabia to go down the path of claiming unproven reserves, there would still be no competition," he added, saying the desert kingdom might have over 700 billion barrels underground.

Were Saudi Arabia to go down the path of claiming unproven reserves, there would still be no competition," he added, saying the desert kingdom might have over 700 billion barrels underground.

This is hilarious. The prince is in effect saying; "We can make up a bigger number than Venezuela, or anyone else can make up." Unproven is unproven so any number will do. Of course when you are an expert at making up numbers for "proven reserves" making up a number for "unproven reserves" is a cakewalk.

Ron P.

ghawar could easily have 250 gb condensate in place. 225 gb of which is potentially recoverable.

I noted your estimation the other day. You made several generous assumptions, such as the Khuff areal extent being roughly equal to that of the Arab-D and the condensate fraction there being roughly equal to that found in Khuff formations elsewhere. Beyond that, SA is still burning oil to keep themselves cool this summer (instead of gas or condensate), and associated gas still makes up a big chunk of their total gas. So if they have all the gas (and hence condensate) you estimate, they must value it for posterity more than crude.

yes, i have expressed doubt that aramco would or could conduct a cycling project. however, it is clear that aramco is looking at cycling as a possibility and if they are, they wouldn't be all that eager to sell their gas.

i am giving aramco credit for being a lot more clever than the typical public owned multi-national.

yes, i made the assumption that the khuff was arealy equal to the arab d. it could be less and it could be more.

the condensate yield is based on one well in particular with a yield of, from memory, 160 bc/mmcf, roughly 4 times that of s pars/n dome, but in line with the average of the range of 100 to 275 bc/mmcf for ghawar stated in another of the articles.

yes, i made the assumption that the khuff was arealy equal to the arab d. it could be less and it could be more.

Most likely less. The only place outside the Arab-D "boundary" that gas wells can be found is at the very south of Ghawar. In the north, 'Ain Dar has only a couple wells. Here is a comparison for the Uthmaniyah area:

from: Reservoir characterization of Permian Khuff-C carbonate in the supergiant Ghawar Field of Saudi Arabia mashed with my Google Earth data

No, we don't know their reserves. But we can do a better job of putting boundaries on them.

thanks for the reference. what is the basis of the gwc in the khuff "c" in that area ? i note that the reference is from a geophysical journal.

a quick review of spe literature on the khuff at ghawar reveals that the khuff reservoir is very complex with productive "a" through "d" carbonate zones. the "b" and "c" zones account for most completions.

there is also gas condensate production from a devonian aged sandstone underlying parts of ghawar. this is refered to as the "jauf" field and the sandstone is also refered to as the "jauf" zone.

there is still much we dont know about this potential sleeping supergiant.

The Khuff C zones were the first discovered and developed, beginning in the mid 1980s. It is often described as "complex".

The Jauf gas is mostly on the eastern flank of Hawiyah. There is also gas in the Unayzah formation in Ghawar.

There is information to be had (and not enough time on my part), but much can be learned by what they are doing elsewhere. They don't produce all the gas they need, they are developing offshore gas at the Karan field, they are still looking in the Empty Quarter, etc. Lots of hydrocarbons, perhaps, but currently not a working strategy.

ghawar could easily have 250 gb condensate in place.

Condensate is a clear liquid, similar to gasoline, that condenses out of natural gas, hence the name condensate. Ghawar is not a gas reservoir but an oil reservoir. But of course there is a lot of associated gas that comes up with the oil.

Oil reserves left in Ghawar are somewhere in the neighborhood of 30 billion barrels. Yet you claim that there could be 250 billion barrels of condensate that will condense out of the associated gas that comes up with the remaining 30 billion barrels of oil.

I find that astonishing... and unbelievable.

Ron P.


I don't agree with the numbers that ee comes up with, but deep below the Arab-D (oil) there is a lot of unassociated gas (Khuff, Jauf, etc.) and they have drilled a lot of wells for this along with gas plants.


Joules, they are still burning $75 a barrel oil in their power plants instead of all that very cheap Khuff gas. And the real story here would be the gas, not the condensate. In order to produce 260 billion barrels of condensate the gas supply would have to be larger than all the rest of the Middle East combined.

Just like everything else that comes out of Saudi Arabia I think there is a lot more hype than facts here.

Ron P.

Joules, they are still burning $75 a barrel oil in their power plants instead of all that very cheap Khuff gas

maybe they want to save the gas for recycling, with the benefit being improved recovery of the not so cheap khuff condensate ?

once again, here is the link to the south pars/north dome field:


gas recovery is expected to be 70 % of original gas in place. condensate recovery for the depletion case is only 32% of original condensate in place.

there is no reason why the recycling case can't approach the 70 % recovery also. two different processes depletion-vs-recycling.

this is not majic or slight of hand or rocket science, this is standard petro neepery. ha !

here is a case history for recycling that goes back to 1965:

Gas Cycling in the Lookout Butte Rundle Pool


the potential "disadvantage" to recycling is delay in gas sales. delayed gas sales could also be an advantage, depending gas prices in the future.

some of the gas would be burned for compression for the recycle case.

In order to produce 260 billion barrels of condensate the gas supply would have to be larger than all the rest of the Middle East combined.

all gas condensate reservoirs are not created equal. condensate yield for s pars/n dome is, according to wiki, 36 bc/mmcf. khuff at ghawar, according to spe articles, has a much higher yield. 100 bc/mmcf to 275 bc/ mmcf have been quoted.

here is a quick course in gas reservoir engineering:

pv= znRT

that's it. well,at least 90 % of it.

I don't agree with the numbers that ee comes up with

fair enough. we don't know a lot about khuff at ghawar, but we do know a little about south pars/north dome.

you could try this in your spare time: take south pars/north dome as a base case and do a monte carlo simulation with the result being a range for reservoir pore volume for ghawar. given that, gas and condensate volume is easy to estimate with what we do know.

the only numbers i have is that ghawar khuff could easily contain 250 gb condensate.

Why is Saudi Arabia looking to build nuclear power plants? A country so rich in fossil fuel deposits should be able to produce copious amts of electricity for eons... no? Maybe they are just full of $%(t...

link to nuclear ambitions:

maybe they recognize that their fossil fuels are finite ?

Maybe they recognize (one ) that thier ff resources are finite and (two ) that they can go nuclear now and sell the oil and gas thereby saved later at an enormous profit?

Of course this depends on believing as I do that nukes are cheap(relatively) if built without too much political intereference and cheap financing is available-no problem there for the house of Saud, a few nukes would be chicken feed to them.

And of course (two) they must also believe that the price of thier oil will be going up fast enough that leaving it in the ground will be more profitable than investing the revenue earned by selling it now.

They might even be thinking that securing a few nukes would be easier than securing gas or oil electricity generating plants in the event of uprisings-both have power lines going out but nukes don't need much in the way of pipelines coming in, and enough fuel can be stored in a very small place to run for years.

Who is prepared to predict the price of oil fifty or sixty years from now, in real money terms, other than to say it will likely be very expensive?

At that time a nuke started now will be not much over halfway thru its useful working life;and building the nuke now exchanges fiat money for hard physical assetts.

I don't believe in demand destruction except as a short term phenomenon.A crash may drive oil and gas down of course, but a recovery will drive it right back up, and depletion will force the long term average price up.

The Saudis can easily afford to take a very long term view.

The King may be devious, probably he is, when he talks about his grandchildren, but he can be at the same time dead serious in respect to the principles involved.

He is not worried about a stock market report detailing his performance as ceo for the last few
quarters causing a sotckholder uprising costing him his job.

Walking a mile in the other man's shoes is not that hard unless you refuse to consider things from his pov-unless you are so com mitted to a certain pov that you cannot admit the possibility that others may be right, implying that you are wrong.

Why is Iran looking to build nuclear power plants? They flare natural gas.

But you have to give them points for precision. They have balanced production with "new reserves" to near perfection for several years now (always making sure that the net change is positive). Quite an arithmetic tour de force, if nothing else.

back in the olden days(that was the early 80's) i tried to impress upon those i was supervising to maintain some consistancy in the reserve forecasts. it seems someone new did the studies every time and the reserves tended to bounce all over the place, casting doubt on their credibility.

i dont know what aramco's reserves are and niether do any of you. "they are lying" is just not an adequate explaination, imo.

I'm just viewing it from a stochastic standpoint. How much they produce in a year is reasonably well known. How much they add to reserves is discoveries plus reassessed existing. That these are always nearly equal but always favoring an increase is more than suspicious; it's comedy.

please keep in mind that aramco doesn't want to either panic the market by announcing a huge increase in reserves, or drive their customers to alternatives. maybe it is a little shading of the numbers every year instead of the truth. lying, that is such a terrible ugly word.

My 2¢ = Proved, Schmooved. US reserves have held in a narrow band around 21-22 bbo since 1994, for instance. Before that the reserves just tracked the production itself, generally. The difference between our BS and theirs is that, at least according to EIA, ours fluctuates slightly and goes out 2 decimal points, unlike say Russia's, which have been precisely 60 bbo for the last 6 years. I agree with Joules that the only appropriate response is humor.

How about an actuarial analysis? You've produced this much cumulative, at this flat out level on occasion; based on our population sample you have this much longer to live before peaking. No doubt this a totally unnuanced version of analysis already done by Laherrère or WHT or someone. Now, if only we had an actuary posting on this site...

From 2007: The Oil Drum | Empirical Relationships Between Reserves and Production Rates

my analysis is based on pseudo-first principals. that and some gratuitous petro neepery.

Russia's reserves are a state secret. The 60 billion barrel figure is pure nonsense. Allegedly Russia has no more reserves than Kuwait but produces 10 million barrels per day. People should get off the crack.

Saudi Arabia will meet demand. Supply always meets demand. They will not however meet demand in the price band they once were determined to defend. And they will produce less and less oil over time.

From the Financial Times:The shale gas fairytale continues

Yes, shale gas is there, but it is expensive to produce, and there is much, much less of it available at today’s low prices than policy people, investors, and energy consumers are counting on. It is not a cheap and simple way to replace coal (in America), or Russian gas supplies (in Europe). I am, however, humbled in the presence of the marketing genius of the promoters who have convinced so many people to buy the story.

Because it is a story. The basic truth about shale is that it is much harder to extract the gas from those rocks than it is from the sandstones that are the source of most “conventional” gas.

i would love to read the fairytale, steve, but ft wants a registration, i think i'll wait for the movie.

FT.com gives you a few free articles without registering.

You can delete your FT.com cookies, and get around the limit.

It may be a fairy tale, but US nat gas production is up about 10% over the last 5 years and the current spot price is about $4.50 which translates into about $30 crude on a straight BTU basis.
So at least here in the USA cheap energy is the order of the day. Seems sort of unlikely that this geologic structure is peculiar to the lower 48 but hey maybe we are just lucky.
I don't know why the folks here seems to conflate peak oil and peak energy (well I guess I do cause to admit that the two are not inextricably connected would end the back to the stone-age meme which runs thru the site).
Like I said two years ago when first happening across this site, the only thing peak about oil was the price.

So at least here in the USA cheap energy is the order of the day.
I don't know why the folks here seems to conflate peak oil and peak energy.

You seem to have the same problem. The price of natural gas doesn't have much bearing on peak oil, so don't try to use it to "disprove" PO.

PT in PA

Actually the price of natural gas and all other forms of energy have everything to do with peak oil. Peak oil for it to be meaningful has to place a constraint on energy consumption. Otherwise it is like peak whales (we used to get oil from them too). Right now the market price is telling you that peak oil does not matter. Of course in some sense there is a finite amount of oil but that is not the issue. The issue is whether or not it is meaningful. The markets at the moment are saying no.

The price of oil is an indicator of peak oil. Natural gas is not generally a substitute for liquid fuels as you contend. Granted over the long-term some substitution will occur since cheap oil has peaked, the consumption of the natural gas will increase and subsequently ng price will increase, however, that doesn't happen over the course of a year. [will = if the markets don't collapse]

My point is that "oil" and "energy" are not synonymous, and specifically that oil and natural gas are not truly interchangeable. I find it very difficult to imagine that the world's gasoline and diesel vehicle fleets will be replaced with NG-powered vehicles nearly fast enough to compensate for oil's decline.

the difference between shortage and surplus for ng is razor thin. april '09-'10 yoy working gas in storage amounts to an increase of about 0.3 bcfd or about 0.5% of dry gas production.

working storage is just that. tells you nothing of bigger supply / demand picture, as can be seen from 10% increase in production in 5 years time while price was going DOWN. This points to abundance not scarcity.

yes oil and nat gas are not perfectly interchangeable but at the margin they are. There are perfectly fine nat gas vehicles and should the price of oil increase a lot relative to nat gas these vehicles will become much more sought after. For now the switch will start in fleet vehicles like garbage trucks and the like.

all these fossil fuels will yield to electric over the next 25 or so years. China is building nuke plants at a furious pace. Their AP1000 program looks for installed plants at under $1500 per kw. Operating costs are around 2cents per kw/hour. First one due on line in less than 3 years.

working storage is just that. tells you nothing of bigger supply / demand picture, as can be seen from 10% increase in production in 5 years time while price was going DOWN.

If you can understand the chart below (most people probably cannot), prices have not gone down the last five years. They went down in 2009 and it takes awhile for production to drop. Production will be dropping over the next couple of years and it will take a couple of years of frenzied drilling activity to pick back up after that.

Encana, the largest North American producer, posted results today. The price of ng is not high enough to sustain these companies over the long haul.

EnCana said in a statement that it will increase capital investment by $500 million to boost output, even as it cut its estimate for average gas prices this year by 13 percent. Including the currency and hedging items, the company had a net loss of $505 million, or 68 cents a share, compared with profit of $92 million a year earlier.

Yes the price of natgas peaked in the summer of 2008. some of todays excess capacity is a function of the wells drilled in response to that price. however current prices are nearly 2$ below summer 2009 and yet rig counts have gone from about 650 to 975 in that period. so obviously at 4.50 the marginal producer is still happy to drill. so the answer is that cheap energy in the form of ch4 is currently available in size and shows no market sign of changing. if prices were too low for profitable drilling rig counts would be declining not rising.

No, prices this summer are a dollar or so higher than last summer.

The rig counts are up because ->

And now they have all these leases and they want to keep them, so they're drilling to protect those leases. But even in the current environment, I don't think that $3, $4 gas is enough to support that activity over the long haul. Some of the production is protected by hedges and things like that, too. But with the price environment that we've had so far this year, I don't believe that there's been a lot of additional hedging activity this year. So based on where we stand today and where I expect us to be over the rest of this year and most of 2011, there's not a way to add more hedges and provide similar benefits to what companies have generated this year. I think that we need natural gas prices in the $5 to $7, if not $6 to $8, range to really support overall activity. The first activity to get cut out is certainly going to be the conventional production side.

Interview link

if prices were too low for profitable drilling rig counts would be declining not rising.

you are operating on the assumption that public traded companies know if their drilling is profitable or not.

what i see in every shale play, profitable or not, is massive amounts of capital being deployed. stock offerings seemingly are a perpetual and periodic part of the financing for many of the public traded companies(bexp comes to mind). and there is also the opm factor and the expiring acerage factor.

Exactly what I found too when reading the investment reports, good to see it confirmed by you.

This points to abundance not scarcity.

and as i pointed out, this "abundance" currently amounts to about 0.3 bcfd or 0.5% of dry gas production. gas is produced or imported and either consumed or stored , it has no where else to go. so the change in storage (supply minus demand) over a year is a guage of surplus or shortage.

the case for producers taking gas off the market is weak, imo.

The top story in the CNN business section:

The Fed's toughest foe: Deflation

One of the biggest worries among economists is that fighting deflation is much tougher than turning back inflation.

With its key interest rate already near 0% for the last 18 months, the Fed can't cut rates to spur the economy.

Until a couple of months ago, most experts assumed the Fed's next step would be to raise rates in order to reduce the risk of inflation. The central bank's next moves are now less clear.

"There's a tried and true policy response to inflation -- raise interest rates and eventually you'll win," said Mark Zandi, chief economist for Moody's Analytics. "We haven't had a lot of bouts with deflation, but in those battles, central banks have never won in a clear-cut way."

So much for the theory that deflationists would be proved absolutely wrong by now.

The deflationists have not been proved absolutely wrong--and they never can be, for they keep forecasting deflation (a fall in the price level) for the future--not the present.

So far we have had disinflation, with house prices retreating somewhat from the insane boom levels reached before the crash. Stock markets are in real (correcting for inflation) terms lower than they were ten years ago.

In regard to credit, federal government borrowing is increasing over the past few years while business and consumer borrowing have contracted since the peak of the boom.

I don't have a crystal ball, but so far the rumors of debt deflation and total financial collapse are much exaggerated. For banks and other financial organizations (insurance companies, pension funds, mutual funds, brokers) it is pretty much business as usual--but of course at lower levels than the boom years.

Real GDP has expanded for three consecutive quarters; my guess is that there will be a fourth quarter of growth--but at only a low rate, maybe 1% or at most 2%. The economic recovery has been too feeble to generate many jobs, and as long as real GDP growth remains below about 3.5% per year, unemployment rates won't go down much, if at all.

A double dip recession remains a strong possibility, but I think it is more likely that economic growth will remain positive over the next year or so--but at low levels, 1% to 2% rather than the higher numbers put out by various official organizations.

Don, my take on it has been that the power elites have made a deliberate decision to short-circuit Shumpeter's "creative destruction". They have decided to bail out their well-connected friends rather than allowing them to take the fall. Thus, rather than big banks failing and opening up opportunities for smaller banks to grow, the big banks have been deemed "to big to fail" and kept in operation - and assuring that small banks remain small. Similarly, keeping GM and Chrysler alive was deemed too important to allow Ford the opportunity of grabbing market share and finally having the chance to becoming a super-competitive global car company. And so on. What we are seeing is systematic government hostility to small business - "Main Stret" - and bias in favor of large and well-connected firms - "Wall Street". This shouldn't be a surprise, as the people in the top tiers get there and stay there by scratching each other's backs.

The thing is, it is those small businesses that are the engines of job creation. Those in power in Washington have been far more concerned about saving the jobs of their cronys than they have been about creating jobs for the average unemployed joe 6-pack. What this suggests to me is that the U.S. is setting itself up for years and years and years of economic stagnation, quite apart from any consideration of impacts on the energy front.

IMHO, we would have been better off to just bite the bullet, take the hit, let whatever defaults and fails do so, and then pick up the pieces and rebuild. If a nation is going to have deflation, it is far better to concentrate the pain in as short a time period as possible and then get past it. Dragging things on for decades is not recommended.

I suppose that giving everyone in the US a 5% pay increase would solve the deflation problem ..... naw too simplistic!

then again the banks didn't spend their QE so I guess the public will paydown debt instead.


Just set up a random number generator, pick 1,000,000 social security numbers, and give each a debit card with a balance of $1,000,000 which will expire in 1 year. Repeat as necessary. All the inflation money can buy.

Except, that we aren't currently experiencing deflation.

Table of Inflation Rates by Month and Year (1999-2010)

Note that the inflation rate as measured by the CPI was 3.8% for 2008, total "deflation" for 2009 was a paltry 0.4% (mostly a correction from the run up in 2008), and that inflation has been running at about 2% for the first half of 2010.

I've noticed a trend on this board to equate falling home prices with deflation, when in fact they are two entirely seperate things. This should be obvious just by looking at the numbers... house prices fell way more than 0.4% in 2009 for example.

Houses/real estate are considered assets, not goods or services, and therefore are not included in either the CPI or the "core inflation rate" (which removes potentially volatile food and energy prices). Rising housing prices are considered "asset price inflation"... so the current period of falling housing prices could be refered to as "asset price deflation". Regardless, housing prices could fall to zero, if you wish, and we could still show high rates of inflation at the same time.

So... where is the evidence for deflation? So far, it has yet to materialize in any meaningful way. Have you personally noticed big decreases in prices, other than for housing? Meanwhile the national debt keeps rising, and oil demand keeps growing (Chindia anyone?)while oil supply does not. The stage is set for inflation to come roaring back, forcing a rise in interest rates, even while the economy is still in the dumper. Mmmmmn... smells like stagflation for dinner to me.

Have you personally noticed big decreases in prices, other than for housing?

Yes. Food prices have dropped like a rock around here.

But that wasn't my point. My point is that a lot of people, including mainstream "experts," are still worried about deflation - when many predicted the argument would be settled and over by now.

And I think it's quite possible the debate will continue for years to come.

For me, this is a magical thinking article and, since it's written by a "former doomer", is given credibility. Hanging your hat on unknown technologies is, well, hanging yourself. From what I can read all these new technologies to scavenge remaining oil produce little in the face of demand. And these vast new fields of billions of barrels show up, regularly, on broker web sites trying to lure in new investors. When I read of wells in Bakken producing millions of barrels a day, I'll say, yep, that new techology works. Meantime, I'm not holding my breath.

I'm an old man and have been hearing/reading of magical futures all my life. But if I were young and scared, I would hang, desparately, onto any shred of good news. But if I were young, and a realist, I'd be hedging my bets.

The technologies will likely be able to increase present production a bit, and add a few BBL to each field; it does not look to be sufficient to fend off the impact of peak oil.

Many of those who post contra make a shift in definition of peak oil, and presume that it means a sudden drop. It will begin gradually, and increase... then the speed it drops will level off, until the bell curve hits zero. Of course, in a few million years there may be some new fields generated from present organics. Meanwhile, unless you plan to wait 100 Million years for fuel, you need to find some alternatives.

Another neglected part is that when oil begins to drop, coal and gas useage will have to increase, thus speeding peak coal and peak gas. I have heard convincing arguments as to either peaking first. None saying that they will not. Those saying gas peaks first point to the sudden drops in production in gas wells, and in particular in frac'd plays. Also... as coal use increases, black (anthracite) coal, the most energy intense type, becomes scarce and the brown coals begin to come into play. They are much less energy efficient, and so will be burned faster (with problematic impact on the environment), and hence coal may peak before gas.

The real dangers come from farming problems (see Is the Next Global Food Crisis Now in the Making?). How the coming food crisis (it could come from water, soil, petro or gas shortages) plays out will almost certainly determine whether we see a step-wise, Greer type decline, or we go off a cliff, propelled by riots, insurrections, wars and attendant mayham. That in turn will be impacted by the way that triage of resources is done, and by whom. If done by the 'free market,' as seems most plausible, it could be ugly. OTOH, I do not see sufficient determination, and I certainly don't see any adequate level of leadership on this subject. Since the alternative to widespread rioting would be worldwide agreement on how to address peak oil, peak soil, peak water, peak gas, and excess population, and since there is no obvious move to do so, my viewpoint remains on the doomer side.

Someone, please, talk me out of this. Show me how we can bring down population, diminish consumer products as a profit center for businesses, and reestablish local farms as the main source for community produce. Show me where China, India, Europe, and America are even talking about, much less planning for any of the outcomes most probable for a finite planet.

I will be waiting, but not holding my breath.


Show me how we can bring down population, diminish consumer products as a profit center for businesses, and reestablish local farms as the main source for community produce.


What is it good for?

(Now you know ... it's for bringing down population, diminishing consumer products, etc.)

Weekly Preliminary Crude Oil Imports Now Available

EIA is now publishing preliminary weekly estimate of U.S. crude oil imports by country of origin for the top 15 sources, based on data from the weekly survey.


I've uploaded a new version of my free Peak Oil software to my website.


* The formula for the upper gasoline prices estimation with changing non-oil expenditures (i.e. the upper "blue line") has been modified. The percentage of the oil price that accounts for the highest estimated gasoline prices has been raised from 30 % to 45 %. This results in a lower estimation for the prices.
* Added new Hubbert Curves for Australia, Azerbaijan and Cameroon

You can download it here: http://sokath.sourceforge.net/

Summary of Weekly Petroleum Data for the Week Ending July 16, 2010

U.S. crude oil refinery inputs averaged 15.5 million barrels per day during the week ending July 16, 48 thousand barrels per day above the previous week’s average. Refineries operated at 91.5 percent of their operable capacity last week. Gasoline production decreased last week, averaging 9.3 million barrels per day. Distillate fuel production increased last week, averaging 4.5 million barrels per day.

U.S. crude oil imports averaged 10.0 million barrels per day last week, up by 696 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 9.5 million barrels per day, 203 thousand barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1.2 million barrels per day. Distillate fuel imports averaged 174 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.4 million barrels from the previous week. At 353.5 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 1.1 million barrels last week, and are above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 3.9 million barrels, and are above the upper boundary of the average range for this time of year. Propane/propylene inventories increased by 0.9 million barrels last week and are in the middle of the average range. Total commercial petroleum inventories increased by 5.1 million barrels last week.

Very surprising. Everyone was expecting inventories to drop, but the opposite happened.

I was surprised as well to see a major build in petroleum stocks (particularly distillates). The main reason for the strong build appears to be a major increase in crude imports to the west coast (increasing around 856k b/d).

Is there anybody left here who doesn't think Matt Simmons has gone mad? I'm kind of sad because I liked Twilight in the Desert and now it seems it will be forever discounted as a book a crazy dude wrote.

Matt Simmons who wrote "Twilight in the Desert" is not the same man who has been appearing on TV lately and spouting nonsense about the Macondo well and surrounding areas in the Gulf of Mexico. Recently one comment was made about Matt (by Noizette) to the effect that Simmons did not show the signs of Alzheimer's Disease or other forms of senile dementia. Some claim that he is venal (shorting BP stock and bad mouthing the situation in the Gulf) rather than senile.

To me the explanation requires a careful application of Occam's Razor: The simplest explanation is that he has become senile but is able to mask outward signs of dementia. When a once highly intelligent man becomes somebody who spouts nonsense at length, there are only a few plausible explanations. I doubt that pure venality accounts for what Simmons has been saying over the past several weeks. I've known of two other cases where once brilliant men of about eighty years of age showed fairly sudden mental decline--a decline not apparent to most people because outward signs of senility (e.g. groping for words) was not present.

I am not a psychologist or a psychiatrist, but based on these two similar cases my conclusion is that some physical cause--perhaps a series of "silent" strokes--has caused Simmons to change from a rational approach to the facts to voicing absurdities in public. I hope if my own mind ever goes that those around me will restrain me from voicing nonsense in public, but such has not been the case for Matt Simmons.

Has anyone actually confronted Matt on the technical problems with his beliefs about the GOM incident?

I agree he sounds weird these days. But so far all I can find is one voice making the claims, and another set of voices calling him crazy from afar. No face-to-face discussion from anyone informed enough to make him elaborate on anything or defend his outlandish scenarios.

I don't think Matt Simmons is 80 years old. According to this he got his MBA in 1967 which would make him about my age, 67.


While I notice myself being more forgetful I don't think he suffers from dementia. I find it strange that BP and/or the government are given more credibility than Matt Simmons after all the lies and misjugements coming out of both of them over the last few months.

I think Matt has a tendency to over react and is given to hyperbole which does not help his arguments.

I will site two examples:

The first was his bet that oil would have reached $200/barrel by about now which has turned out to be wrong. He got carried away and obviously misjudged the market and the true Peak Oil situation. That is easy to do when closely following Peak Oil unfold. I myself thought that gas would be $5 per gallon by now.

The second is his oft repeated claim that oil at 15 cents a cup is cheaper that anything else of value. I have called him out on this in past comments because corn which clearly has some value is much cheaper than oil. But he doesn't care and has repeated the same line for years.

I think he loves the attention that his flamboyant remarks draw.

As Ronald Reagan knew all publicity is good publicity. Sarah Palin is proving it again and making millions with the goofy stuff she spouts.

Matt Simmons will laugh all the way to the bank as his next book sales break records. We know oil is seeping out of the floor of the gulf and that it is a big mess.

I can imagine him selling the movie rights to "The Day the Gulf Exploded" for millions.

Matt Simmons is crazy like a fox.

I think he loves the attention that his flamboyant remarks draw.

Reminds me of a quote I once heard attributed to Kim Philby, the British intelligence officer who acted as a mole for the Soviet Union: "Fame or infamy, so what? I will be remembered!"

Nobody gets noticed or courted for doing or saying the ordinary.

His hyperbole isn't usually there just for its own sake though.

"Twilight in the Desert" was a great big stack of wild assertions when it was first published. It's easy to forget what an absurd concept it was in 2003 to say that KSA peaked 20+ years earlier.

I agree he's probably wrong about the GOM right now, but to what degree I'm not so sure. Like most wild theorists, he's more effective at pointing out problems with the existing ideas than he is at supplying more valid replacement ideas. His replacement ideas about what's going on in the GOM might be all wrong, but the holes he punches in the existing story may have more worth than is commonly appreciated just yet. He seems to have been ahead of the curve on the true amount of oil being spilled so far for example. I don't put much stock in the "lakes of oil" stuff, but the ongoing daily spill rate was probably much closer to his early guesswork than the official story for the first few months.

Hard to know. Truthfully, I have paid only moderate attention to what Matt Simmons has said about the GOM situation in the last few months. There's just too much to soak in at once about the whole GOM spill subject. Even if Matt was totally making sense, I think the GOM situation must be pretty far beyond his area of expertise. He is still overwhelmingly a paper-reader and not a driller or geologist or engineer.

Sarah Palin is proving it again and making millions with the goofy stuff she spouts.

Am I hearing ya right?

Are you "refeudiating" Sarah's holy mission to take our country "back" ... to feudal times?

Watch it there fella. The eyes of Wassilla are upon ya.