Drumbeat: September 10, 2010


Kleen Energy's fatal deal

FORTUNE -- When the natural gas ignited, it caused a blast so powerful that people 30 miles away thought there had been an earthquake. Inside the almost finished power plant in Middletown, Conn., around 11:15 a.m. on Feb. 7, the explosion blew the siding off the structure, crumpled construction trailers, and sparked a conflagration that sent a dense plume of black smoke hundreds of feet in the air. Six men died. Another 50 were injured, some of them gravely.

They had all been laboring at the Kleen Energy plant that Super Bowl Sunday, pushing to wrap up construction ahead of schedule so that the lead contractor could collect a $14 million bonus for early completion. The cause of the disaster was identified almost instantly: a "gas blow" gone awry. In theory, it's a simple procedure -- highly pressurized nitrogen, steam, air, or natural gas is propelled through pipes to clean out debris. Natural gas is the most dangerous choice; safety depends on dispersing the gas effectively and avoiding even the slightest spark. At the Kleen plant large quantities of gas were vented into a partially enclosed area that had a door that opened into a space where pipefitters were using blowtorches and open-flame industrial heaters warmed the men on a frigid winter day.

US crude rises more, up over $2, on Enbridge outage

(Reuters) - U.S. crude oil futures extended early gains to more than $2 on Friday, sparked by the shutdown on Thursday of a major Enbridge Inc pipeline to the Midwest and rising gasoline cash prices in the Chicago region and the U.S. Gulf Coast.


Europe Products-US supply worries boost gasoline crack

LONDON, Sept 10 (Reuters) - Gasoline crack spreads in Europe above $8 a barrel on Friday to a two-month high in anticipation of lower U.S. refinery output after a major pipeline leak.


Enbridge sees 'significant impact' from 6A shutdown

HOUSTON (Reuters) - Enbridge Inc expects "significant impact" on oil producers and refiners from the shutdown of its Line 6A Thursday due to a leak in Illinois, a spokesman said Friday.


FACTBOX - History of Enbridge's pipeline spills in the U.S.

(Reuters) - Enbridge Inc shut down the largest of its three major oil pipelines due to a leak in Illinois on Thursday, reducing supply on the main transit route for Canadian crude into the United States.

Canada is the largest oil exporter to the United States and Enbridge's pipelines carry the lion's share of that crude.


Huge California gas fire 75 percent contained

San Bruno, California (CNN) -- Firefighters have contained 75 percent of a massive gas-fueled blaze in California that killed four people and destroyed or damaged 45 homes.

The intensely hot fire sent fireballs shooting 80 feet into the air in the normally quiet Glenview neighborhood in the city of San Bruno, near the San Francisco airport.

"It looks like a moonscape in some areas," said San Bruno Fire Chief Dennis Haag, who was visibly shaken at a Friday news conference.


US Govt: Flash Fire Aboard GOM Oil Platform

A flash fire occurred aboard a Mariner Energy Inc. (ME) oil and gas platform in the U.S. Gulf of Mexico on Thursday, U.S. regulators said.

The Bureau of Ocean Energy Management, Regulation and Enforcement said the fire was immediately extinguished and no pollution was reported. The platform sits atop permanently plugged wells, and is located in shallow waters about 109 miles south of Lafayette, La in South Marsh Block 136.


BP directed to assess quicker way for final kill

The US National Incident Commander, retired Coast Guard Admiral Thad Allen, directed BP this morning to assess whether it can use a sleeve to lock down the casing hangar beneath the wellhead instead of cementing from the top as a quicker way to complete the final kill of the Macondo well which for almost 90 days ejected some five million barrels of crude into the deep-water Gulf of Mexico.


Transocean Rises as FBR Says Gulf Well Liability May Be Less Than Expected

Transocean Ltd., the owner of the rig that exploded in the Gulf of Mexico in April, rose 7.9 percent after a report from FBR Capital Markets said the company’s liability for the accident may be less than expected.


BP evicted from ethical index, delays Q3 results

LONDON (Reuters) - BP Plc is to be evicted from the FTSE4Good ethical investment index due to its Gulf of Mexico oil spill, index compiler FTSE said on Friday, as BP said it would delay its third-quarter results due to the challenges of accounting for spill costs.

FTSE said BP would be excluded from FTSE4Good, which many managers of ethical funds use to screen companies before including them in their portfolios, from Sept. 18.


Iran to lift petrol output as sanctions hit

Iran has activated an emergency plan to increase petrol production in tacit confirmation that tighter international sanctions over its nuclear programme have affected supplies.


Mexico to push up fuel prices; budget fight looms

MEXICO CITY (Reuters) - Mexico will continue raising domestic fuel prices to eliminate costly subsidies, Finance Minister Ernesto Cordero said on Thursday as he pushed an austerity plan that opposition lawmakers promise to fight.

Mexico has been lifting fuel prices since mid-2009 to cut losses on fuel sales by state oil monopoly Pemex as the country recovers from a deep economic downturn.

Mexican drivers enjoy subsidies that in July had them paying roughly 10 percent less to fuel their cars than U.S. consumers do. Heating and cooking fuel also get price support.


Repsol ready for African pre-salt hunt

Spanish explorer Repsol wants to export its Brazilian pre-salt oil reserves model to Gabon, Congo, the Republic of Congo and Angola.


Steady Growth of Wind Industry Moves EU Closer to Green Goals

Europe is in the midst of a wind energy boom, with the continent now installing more wind power capacity than any other form of energy. In an interview with Yale Environment 360, the European Wind Energy Association's Christian Kjaer describes his vision of how wind can lead the way in making Europe’s electricity generation 100 percent renewable by 2050.


USDA cuts world wheat, US corn forecasts

WASHINGTON (Reuters) - The U.S. Agriculture Department pared its world wheat production forecast less sharply than expected on Friday, but made a deeper cut in its outlook for the U.S. corn crop that will knock the ratio of inventories to usage to the lowest in 15 years.

While a fourth monthly reduction in its wheat supply forecast was widely expected in the USDA's monthly supply and demand report, the paring to 643 million tonnes was not as deep as expected as a more upbeat view on Canada helped offset crop losses in Russia and Europe.


WTA to consider eliminating rider transfers

WTA is set to reduce bus service starting Sunday, Sept. 19, but revenues continue to lag. In the first half of this year, WTA collected $7.8 million in sales taxes, which was 5.4 percent less than it collected during the same period in 2009 and 8.5 percent below what it budgeted for this year.

By eliminating transfers, WTA staff estimates, the agency could see a revenue increase of about $100,000 a year. It would also reduce the roughly $10,000-a-year expense of printing the transfers.


New Pioneers

Americans are facing a troubling reality. The economic recovery they were promised has not materialized. There’s growing talk about a “new normal”—a new way of life to take us through a long period of failed recoveries.

There are, indeed, good reasons to believe we won’t go back to the old ways. But this new normal doesn’t have to be a time of chaos and decline.


A Look at the Peak Oil Belief – Is the End Really Near

Deeply held beliefs go beyond evidence and logic. Thus they tend to be unfalsifiable, invulnerable to demonstrable facts or reason.

Take belief in Peak Oil Doom. There are several blurred and shifting definitions of "Peak Oil", but none of them stand up to sustained examination. With any belief -- such as belief in a deity -- as long as one is not pressed for a rigorous definition of exactly what it is one believes in, there is little point to the argument. So what, exactly is this "Peak Oil" that so many people either do or do not "believe in?"


E.P.A. to Study Chemicals Used to Tap Natural Gas

The Environmental Protection Agency sent letters to nine drilling companies on Thursday requesting detailed information about the chemicals contained in fluids used to crack open underground rock formations in the hunt for oil and natural gas.

The move is part of the federal agency’s preparations for a long-term scientific study of the effects of the practice, known as hydraulic fracturing or “fracking,” on drinking water and public health.

“Natural gas is an important part of our nation’s energy future, and it’s critical that the extraction of this valuable natural resource does not come at the expense of safe water and healthy communities,” the E.P.A. administrator, Lisa P. Jackson, said in a statement.


Oil Rises After U.S. Jobless Claims Decline, China Crude Imports Increase

Oil climbed to near a three-week high as economic indicators from the U.S. and Asia restored confidence that the recovery will stimulate fuel demand.

Oil was set for a 1.4 percent weekly increase as U.S. jobless claims fell, Japan boosted its estimate of economic growth, and China raised imports of crude. Prices gained after a leak prompted Enbridge Energy Partners LP to shut a pipeline that can carry more than a third of the crude oil shipped to the U.S. Midwest.


OPEC's August Output Quota Compliance 53%, Unchanged From July, IEA Says

OPEC’s compliance with record supply cuts was unchanged in August as increased output from Angola and Iran offset lower production from Nigeria and the United Arab Emirates, the International Energy Agency said.


Shipping forecast is clearing

Rising demand for oil worldwide is encouraging shipping companies to expand their oil tanker fleets, just a year after the outlook for the shipping industry appeared bleak.

By the end of this year, daily demand for oil is forecast to fully recover from the effects of the global downturn. Demand for this year will be 86.3 million barrels daily, almost matching the 86.5 million consumed in 2007, when the global economy reached its peak, according to the International Energy Agency.


IEA Maintains Estimates for Worldwide Oil Demand Amid Economic Concerns

The International Energy Agency left its estimate for oil demand for 2010 and 2011 little changed as fuel stockpiles surge and concern persists that a revival in world economic growth may falter.

Global crude demand will average 87.9 million barrels a day next year, the IEA said today in its monthly Oil Market Report, unchanged from last month. It revised the 2010 estimate 50,000 barrels a day higher to 86.6 million. Soaring stockpiles and slowing Asian consumption are capping oil prices and there’s a “significant downside risk” that demand will falter should the global recovery stall, the Paris-based group said.


IEA sees Q4 refinery runs down on US, Europe

LONDON (Reuters) - Global refinery crude runs will fall in the fourth quarter as the end of U.S. driving season and lower demand in Europe will outweigh rising runs in Asia, the International Energy Agency said on Friday.

Runs could fall by 780,000 barrels per day to 73.9 million bpd, it said but added that it would still be 1.4 million bpd above year ago levels.


Producer price inflation slows to six-month low

(Reuters) - British annual factory gate inflation slowed more than expected to a six-month low in August, helped by a surprise fall in input prices on the month driven by oil, official data showed on Friday.


U.S. Improperly Banned Oil Drilling off Alaska Coast, State Claims in Suit

U.S. Interior Secretary Kenneth Salazar was sued by the state of Alaska over claims he improperly banned drilling off the state’s coast after BP Plc’s Gulf of Mexico oil spill.


Total considers sale of British petrol stations

LONDON (AFP) – French energy giant Total said Friday that it could sell its 480 petrol stations in Britain as part of a strategic review by its British arm.

"Total UK can confirm it is undertaking a strategic review of its UK downstream operations," a statement said.


Sinopec Group to Bid for 42 Gabon Oil Exploration Areas, Reuters Reports

China Petrochemical Corp., the nation’s second biggest energy company, will join the bidding for 42 offshore exploration blocks off Gabon, Reuters reported.


CNOOC, Sinopec Weigh $7 Billion Offer for Assets of Brazil's OGX

China’s oil companies are seeking assets overseas to secure supplies for the world’s fastest-growing major economy. Sinopec Group, as China Petrochemical is known, bought Addax Petroleum Corp. for C$8.3 billion ($8 billion) last year to add oil reserves, part of the record $32 billion of acquisitions by Chinese companies in natural resources.


Chevron to explore for oil in Liberia

MONROVIA (AFP) – US energy giant Chevron will explore for oil in three deepwater oil wells off Liberia in West Africa, a region which has yielded massive oil finds in recent years.

In a statement on its website published on Wednesday, Chevron said the Liberian government had approved an agreement giving the company a 70 percent interest in the three deepwater blocks.


Enbridge Shuts 34-Inch Oil Pipeline in Illinois After Leak is Discovered

Enbridge Energy Partners LP shut down and isolated its Line 6A, which can carry more than one- third of crude oil imports to the U.S. Midwest, after a leak was discovered.

Crews are investigating the situation, said Glenn Herchak, a company spokesman. He declined to provide information on what the line was carrying and if it was at full rates. The pipeline, part of Enbridge’s Lakehead system, can carry 670,000 barrels a day of oil from Canada to refineries in the U.S. Midwest, according to a company website.


Birth of oil bloc that shook the world

Fifty years ago, a telegram arrived at the desk of Juan Pablo Perez Alfonso, then the Venezuelan minister of mines and hydrocarbons.

The simple message invited him to a meeting of Middle East oil exporters in Baghdad to discuss the conditions of the world oil market.


Q+A: OPEC at 50 and the next 50 years

CAN OPEC CONTINUE TO INFLUENCE WORLD MARKETS?

OPEC sits on around three quarters of the world's proven reserves, according to sometimes disputed figures from its Annual Statistical Bulletin.

Its members largely deny international oil companies access, leaving the majors obliged to invest in very expensive oil, such as that beneath deepwater, in tar sands and in the Arctic.

"The fact that the world is using up its most expensive crude before it uses up its cheapest oil shows that OPEC is effective," said Lawrence Eagles of JP Morgan.


TIMELINE: 50 years of OPEC

The following is a timeline showing landmarks in its history.


Oil group to retain its global influence

Fifty years after its founding, OPEC is as influential and important to the oil market as it ever has been, even as it confronts the gradual decline of the petroleum age, says a former oil minister who has been closely involved with the group for decades.

“The organisation is alive and it’s kicking, so what started out as an adventure, a dicey organisation to some, has become an eminently respectable group that has a role to play for a long time to come,” said Alirio Parra, the Venezuelan minister of mines and hydrocarbons and the president of OPEC in the early 1990s.


Saudi's Naimi, from office boy to top oil min

(Reuters) - Saudi Arabian Oil Minister Ali al-Naimi helped to calm a record price rally, halt a record crash and restore OPEC's damaged credibility.

Repeated rumours the 75-year-old minister plans to retire from the top of the world's most powerful oil ministry have so far proved unfounded.

One of the leading oil exporter's highest ranking non-royals, the technocrat commands respect for his market savvy and deft handling of OPEC politics, notably between Riyadh and Tehran, the group's second biggest producer.


Russia Gazprom discovers new gas field in Sakhalin

MOSCOW (Reuters) - Russia's energy giant, Gazprom, said on Friday it has discovered a new gas field in Kirinsky block of the Sakhalin-3 project.

It said the company plans more exploration works in 2010 and 2013 and to evaluate the resources.


Bomb discovered at Russian hydro plant

An explosive device was discovered in the main hydraulic unit of the Irganaisk hydropower project in the republic of Dagestan, Russia, following a small fire at the project, according to reports from RIA Novosti.


FACTBOX-China's LNG import terminals and plans

BEIJING (Reuters) - CNOOC, China's leading liquefied natural gas (LNG) importer, hopes to start building its Hainan LNG receiving terminal in March 2011 and supply gas from early 2014, a company executive was quoted as saying by a local newspaper, four years behind an earlier schedule.

Here is a list of China's LNG terminals and plans. It will be updated as more information becomes available.


German Military Braces for Scarcity After ‘Peak Oil’

The study states that there is “some probability that peak oil will occur around the year 2010 and that the impact on security is expected to be felt 15 to 30 years later.”

The concept of “peak oil” is a controversial one, as it signifies the point at which global oil production reaches its maximum level and then enters a permanent decline. As oil is a finite resource, most energy experts consider the eventual peak and decline of world oil production to be an inevitable reality.

But the timing of this zenith — whether in the near term, or some distant future — is a subject of fierce debate.


Is a perfect storms building?

While the latest Interim Economic Assessment of the Organisation for Economic Cooperation and Development (OECD) found that the world’s economic recovery may be slowing faster than previously anticipated, a leaked report from Germany and reports from the UK paint a picture of a world running scared that it is about to be hit by perfect storm which could dramatically change the world as we know it.


New Zealand: Environmental quiz time for local hopefuls

Mr Calkin said that with growing concerns surrounding resource depletion, peak oil, climate change and sustainability, it was important to know where the candidates stood on the issues.

"Fragile energy security associated with rising energy costs will also threaten our agricultural sector and transportation, which in turn will affect the very fabric and structure of our communities that local governments will be called upon to grapple with, in the future," he said.


Peak Oil, Meh? Ctd

Will it be the end of civilization? No. But surely dealing with the coming oil crisis is a major policy concern for all people across the political spectrum.


Here's Who To Invest In If The GOP Wins Big In November

Big oil companies will be huge winners. American oil imports from the Middle East will accelerate, where the industry earns 80% of its profits. That will bring peak oil sooner, easily taking crude over $100/barrel quickly, and eventually to $150 or $200. Restrictions on both onshore and offshore drilling will get rolled back to their Bush era laissez faire levels, cutting costs and boosting profitability. You want to own Chevron (CVX), ExxonMobile (XOM), Conoco Phillips (COP), and of course, BP (BP). The drilling and service companies, like Transocean (RIG) and Diamond Offshore (DO), should do spectacularly well.


U.S. Oil Imports: Three Million Barrels or Bust

Canada is about to break another import record.

So far, our Canadian imports of oil have only reached as high as 2.73 million barrels of oil, according to EIA data.

That was two months ago.

Over the next six months, I wouldn't be surprised to see Canadian crude imports break that mark. At that level, that would make up approximately one-quarter of our oil imports.

You can bet the flood of Canadian oil is coming...


For Pelosi and Markey, an Oil Sands Mission

Representatives Nancy Pelosi of California and Edward J. Markey of Massachusetts are in Canada this week to learn and listen about oil sands development there. The two Democrats are getting an earful from Canadian officials as well as from Canadian environmental groups on the pluses and minuses of importing oil from Alberta.

Later this year the State Department will decide whether to authorize a new pipeline, Keystone XL, that would run from the Alberta to Texas. If built, it would vastly expand the potential for oil imports from Canada.


U.S. Speaker calls for cut in oil imports

Nancy Pelosi would like to see the United States buy less of what Canada is selling.

At a luncheon at the U.S. ambassador’s Ottawa residence on Thursday, the powerful Speaker of the House of Representatives said she is committed to reducing her country’s dependence on fossil fuels – and that includes Canadian crude oil and natural gas.


Canada’s oil exports threatened by U.S. boycott

OTTAWA—U.S. concerns about Alberta’s oilsands highlight the federal Conservative government’s “laughable” approach to global warming and environmental protection, Liberal critics say.

“The Harper Conservatives have failed completely,” MP Frank Valeriote said Thursday. “After almost four and a half years and three environment ministers, the Conservatives have nothing to show” on those fronts, he added.


Experts speak on the need to embrace renewable energy

Renewable energy and how to improve world’s energy supplies were the focus of the recent World Energy Forum held at the European Union in Brussels last Tuesday.

Delegates from various countries presented papers on the way forward. Addressing the delegates, the Chairman/Chief Executive Officer of PSC Industries Limited, Dr. Patrick Owelle called on Nigeria’s leaders to follow the lead of President Abdulwaye Wade of Senegal in implementing widespread solar electricity initiatives especially in the Niger-Delta as well as commercial/industrial centres and rural settings, saying“it is time to quit plans and master plans and start implementing.”


U.K. Shouldn't Raise Renewable Energy Target, Government Adviser Says

The U.K. shouldn’t raise its target for generating 15 percent of its energy for heating, power and transportation from renewable sources by 2020 because it would be too costly, the government’s climate change adviser said.


Vestas Says Broken Blade on Prototype Was Due to Human Manufacturing Error

Vestas Wind Systems A/S said that the breakage of a blade on its prototype V112 wind turbine was due to a one-time human error in manufacturing and that when mass production begins, a similar error won’t be possible.


Japan to sell its nuclear expertise to Kuwait

Japan will help Kuwait develop the expertise it needs for a civilian nuclear power programme as part of a broader effort to sell civilian nuclear technology across the region, its government said yesterday.


The Rise of the Biological Fuel

What do E. coli, grass, pond scum, and wood fungus all have in common? They could all have a hand in saving the planet. No, that is not an obscure science joke — it is the culmination of research from all over the world on the best ways to replace our stores of slowly dwindling fossil fuels with sustainable, renewable biofuels. According to the US Department of Energy, nearly 85 percent of all energy used in the United States comes from fossil fuels — coal, oil, and natural gas — and there's a big possibility that that number will increase during the next two decades. The US government, the European Union, and corporations such as ExxonMobil and Chevron are teaming up with scientists to come up with a viable solution — or set of solutions — to the problem.


UN climate chief urges flexibility in talks

BEIJING - The United Nations' climate chief on Friday urged countries to be flexible in order to make progress at weeklong climate talks in China next month, the last formal negotiations on climate change ahead of a major year-end meeting in Cancun, Mexico.


UN Risks ‘Huge Mistake’ in Carbon-Trading Probe

(Bloomberg) -- A United Nations investigation into alleged improper claims for hydrofluorocarbon-pollution credits threatens to choke off investment in projects to curb emissions, according to Bill Clinton’s former adviser on global warming.


Bjørn Lomborg: Sure, worry about climate change – but not too much

The point isn’t that we can or should ignore global warming. The point is that we should be wary of fear-mongering. More often than not, what sounds like horrific changes in climate and geography actually turns out to be quite manageable. In research funded by the European Union, climate scientists Robert J. Nicholls, Richard S.J. Tol and Athanasios T. Vafeidis recently studied what would happen in the unlikely event that the entire West Antarctic Ice Sheet collapsed. The result, they found, would be a sea-level rise of 20 feet over the next hundred years – exactly Mr. Gore’s nightmare. But how calamitous would this really be?

Not very. According to these scientists, a 20-foot rise in sea levels would inundate about 16,000 square miles of coastline and affect more than 400 million people. That’s a lot of people, to be sure, but it’s hardly all of mankind. In fact, it amounts to less than 6 per cent of the world’s population –which is to say that 94 per cent of the population would be unaffected.


Ryanair boss O'Leary says global warming theories are 'nonsense'

He suggested scientists had invented and perpetuated the theory in order to gain research grants. "Scientists argue there is global warming because they wouldn't get half of the funding they get now if it turns out to be completely bogus," he said.


U.S. Steps Up Its Effort Against a European System of Fees on Airline Emissions

The United States has stepped up pressure to prevent Europe from charging foreign airlines for greenhouse gas emissions when they take off and land there.

Yet even as authorities in the United States seek to build support against the European system, some major carriers in the United States have started taking steps to comply with the rules, which take effect in 2012. Participating now will enable airlines to avoid paying most of the cost of permits for their carbon emissions for years to come.

The law, which European Union governments approved two years ago, represents the boldest attempt by Europe to push other parts of the world to adopt its standards for controlling greenhouse gases. It has prompted bitter criticism from the airline industry in Europe and abroad, especially from carriers in the United States.


EPA officials: Kan. must revise air permit process

TOPEKA, Kan. – Federal officials told Kansas legislators Thursday that the state will be expected to cut greenhouse gas emissions as it considers air-quality permits for power plants, large factories, and oil refineries — and if it refuses, the Environmental Protection Agency could step in.


Climate change law's suspension slammed by UC Berkeley study

Suspending California's landmark climate change law would result in the loss of millions of dollars in state revenue and hurt the state's growing clean-tech industry, a new report says.

The Center for Law, Energy & the Environment at the University of California, Berkeley Law School also said the rollback initiative, Proposition 23, would benefit oil and power companies while increasing regulatory burdens to real estate developers and auto makers.


Fight over bid to suspend California's global warming law gets ugly

George Shultz warns of the dangers of dependence on foreign oil, and backers of Proposition 23 respond with attacks on him and his co-chairman in the opposition campaign.


How Much Global Warming Is Guaranteed Even If We Stopped Building Coal-Fired Power Plants Today?

Humanity has yet to reach the point of no return when it comes to catastrophic climate change, according to new calculations. If we content ourselves with the existing fossil-fuel infrastructure we can hold greenhouse gas concentrations below 450 parts per million in the atmosphere and limit warming to below 2 degrees Celsius above preindustrial levels—both common benchmarks for international efforts to avoid the worst impacts of ongoing climate change—according to a new analysis in the September 10 issue of Science. The bad news is we are adding more fossil-fuel infrastructure—oil-burning cars, coal-fired power plants, industrial factories consuming natural gas—every day.


Drought brings crop losses

It is so dry that frogs and honeybees forage for moisture in the few mud patches left at John Headley's cranberry bog in Eagleswood.

When Headley strides across the normally flooded ditches, dry vines crackle underfoot like old straw. Some cranberry plants are burned from the relentless heat, their berries scalded and stunted.


The American Dust Bowl Returns

Research published recently in the journal Science concluded that the Southwestern U.S. has already transitioned into permanent dust-bowl conditions. The storage capacity of the Colorado River system has been reduced by half between 1999 and 2007. The river supplies water to more than 30 million people, including residents of Los Angeles, Phoenix, Las Vegas and Denver. The most troubling fact: More people are moving to the Southwest than to any other part of the country. More people and no water to sustain them? That spells water wars by 2020.

With the discussion and news of hydraulic fracturing and oil spills and related groundwater contamination, I wrote up a blog piece decribing how to model solute transport, aka breakthrough curves, using very simple concepts. Apparently the scientists studying this don't know how to reduce the problem to some something a spreadsheet jockey can use.

http://mobjectivist.blogspot.com/2010/09/hydrogeology-for-dummies.html

The following figure is an example of a breakthrough curve. The experimental conditions is to inject a tracer at a position upstream and then to measure concentration somewhere downstream over the course of time. The interesting part of the results are in the very long tail of the concentration profile, which is easy to understand from the model.

If anyone has any comments on this, pipe in, because I can't find anything like this in the current literature.

Google Buckley Leverett. Helfrech (sp??) shock theory. Lynn Orr Stanford University.

They use to teach PE280A and PE280B at Stanford which was nothing but your topic... extrapolated to multi-component three phase flow... been researched for over 50 years.

FF

I googled "Buckley-Leverett" and "breakthrough curve" and I only got 108 hits, and the 5th hit was this TOD comment.
This implies that people normally don't think in terms of Buckley-Leverett in analyzing breakthrough curves.
And to top that off, I suspect that you would have to do a numerical solution anyways.

I googled again and now this TOD comment comes out as the highest Google page ranked link. Google is a pretty reliable indicator of acquired knowledge so it likely indicates that no one is actually using Buckley-Leverett for breakthrough curves.

Again look at the agreement for a breakthrough curve over several orders of magnitude. This is a very simple model and something like this would definitely be useful for estimating how long that a contaminant will linger in a watershed, based on fitting the data near the top of the curve.

Lest anyone should think human innovation is slowing, flying cars are about to hit the market.

(whether this solves an actual problem we have, however, is debatable).

"The flying car is coming sooner rather than later. Terrafugia, the Massachusetts company that appears to have a healthy lead on just about every other, plans to start "low-volume production," perhaps as soon as by the end of the year, the Associated Press reports..."

"...Transition is expected to initially be priced at between $200,000 and $250,000. The company said it already has accepted refundable $10,000 deposits for vehicles that were expected to be built during the first two or three years of production."

http://content.usatoday.com/communities/driveon/post/2010/09/flying-car-...

Large increase in complexity, little added value.

I would add that the resulting flying car is a bastard compromise in that the craft is likely to be both poor as an aircraft and bad as a land vehicle. For starters, how many MPG will it provide on the ground? What about it's cross wind stability while on the freeway? A three wheel design is notorious for it's tendency to tip over and with the wings folded, the lateral wind forces would be both large and high above the ground. With the center of gravity located in the middle of the craft, slightly ahead of the "F" in the registration number, cornering forces on the single rear tire would be much higher than those on the two in front. Then too, would the passengers survive a frontal crash on the highway? These toys might be great gifts for the suddenly rich as they might then quickly qualify for Darwin Awards...

E. Swanson

I was thinking along similar lines....I'm not going to hold my breath that it gets the thumbs up from the FAA and other regulatory bodies. Remember how much trouble the Segway had getting permission to operate within cities? (I realize it won't seek to have permission to take off and land within cities; that's not what I'm referring to. It needs to pass the safety standards of both a flying machine and a driving machine regardless of where it takes off and lands.)

Now, putting my geek hat on, I've always wanted a flying car :-).

I suspect that the machine isn't a "flying car", but would be better described as an aircraft which can be driven short distances on the road at low speeds in fair weather. If it were driven during bad weather, it would likely need to be washed before going airborne, as the accumulated road dirt would compromise the aerodynamic qualities of the wings.

Here's a high mpg motorcycle project I built which I found very difficult to control in cross winds. I found it necessary to add the vertical tail for basic stability, which made the vehicle more sensitive to cross winds.
High MPG motorcycle  project High MPG motorcycle  project, #3
Not to mention the problem of insurance as even a minor 5 mph collision on either end would be very expensive to repair.

E. Swanson

I've read about Terrafugia at Slashdot. Their market is pilots who want to drive their plane after landing, not average yokels such as us. I'd reserve "flying car" for the latter, as depicted in 1930s Futurama exhibits and movies like the Fifth Element or Minority Report. Whereas Terrafugia are building "drivable planes."

/. has had some pieces on jetpacks too. They're still working on the bit about operating the thing without killing yourself in the process...some things man wasn't meant to do.

The news piece says this:-

"Owners could fly into a town, then drive to a meeting or other destination, then drive back to the airport and take off."

They make it sound seamless and rather attractive to the "busy executive".

Uh - no checking of bags, no screening, especially no body scans, no waiting in queue for takeoff, no traffic ? In this day and age of 3-ounce toiletries ?

I'm visualizing a whole new dimension for the TSA.

Again - this is for certified pilots who already tool about in Cessnas and Pipers. I don't think the TSA is making them take off their shoes or dump shampoo bottles into the trash.

So some individual hires a pilot to do the "air" leg of the trip, and then takes over him/her-self to do the "ground" leg. Or is some special license going to be required to drive it ?

Right now, aircaft go airport to airport. We're talking about these vehicles going city to city, via the airport. Don't tell me nobody will raise security issues about that.

The problem of any light plane commute is if the weather turns bad while you are out, you will be there a while. Think ice in the clouds for several days which is very possible in several parts of the country. More than one light plane has been left tied down while the pilot flew commerical air back home. DAMHIKT

General Aviation (private planes) currently is virtually not security controlled --- one reason for the up tick in the 'almost' scheduled flights being purchased by those that can afford the high fare. Some is by time share purchase of an aircraft ---- similar to resort time shares where the management does everything for a fee. Special terminals without the insane crap of removing shoes.

I own a pilot's license and would like nothing better than to have a flying car (if I could afford one). It has been a dream of inventors going back to the 1930s, resurrected every decade. Many hyped prototypes that never reached production ---- even back when the FAA had far less clout. Ain't going to happen. As black dog (eric?) implied: a jack of all trades is a master of none.

Why do we not have Amphicars other than a few antiques? Much easier with far fewer regs yet 40 years out they are still a 'future' technology ;-)

Oh but the (U.S) Marines need them. Probably in the coming scramble for energy resources.

http://news.cnet.com/8301-13639_3-20002587-42.html

ouroborosian

You can see a lot of IEA links up top. That is because the IEA's Monthly Oil Market Report is out this morning. Of course the folks writing those articles are likely subscribers and get the full report. But us non-subscribers can only get the highlights. Non-subscribers can get the full report in two weeks. But from the highlights:

Global oil supply fell 250 kb/d to 86.8 mb/d in August, as non-OPEC output dipped to 52.4 mb/d on seasonal maintenance in Canada, the UK and Russia. Non-OPEC projections for 2010 and 2011 are raised minimally, to 52.6 mb/d and 52.9 mb/d, respectively, although Atlantic storms could yet curb autumn Gulf of Mexico supplies.

Last month the IEA prdicted that Global supplies would reach 87.2 mb/d in August. From the above report we can see that it did not quite reach that level.

It is also interesting to note that the IEA is predicting that non-OPEC supply will increase by 300,000 bp/d next year. That differs from the EIA who is predicting a 160,000 bp/d drop in non-OPEC supply next year. A few months ago the IEA was also predicting that non-OPEC production would fall next year.

Ron P.

Stuart Staniford has a blog entry using this data as well:

http://earlywarn.blogspot.com/2010/09/trend-break-in-oil-supply.html

Peter.

Happy Birthday OPEC!

Everyone else is doing a historical review of OPEC so I'll join right in:

OPEC currently has 12 members. Here's the production/consumption/export history for these 12 nations combined. The global economic crisis obviously reduced production and exports from the recent peak but consumption kept rising throughout.

And let's not forget that two previous members have dropped out of the club after their production and exports peaked. The BP Statistical Review has no statistics for Gabon consumption but Indonesia has become a net importer of oil.

How long will it be before the entire cartel goes through Peak Oil Exports? Or has it already?

(charts from the Energy Export databrowser)

Happy Exploring!

Jon

Happy Golden Jubilee to all you prorationers of the Devil's excrement from me as well.

Can only see two of your graphs, Jon, even after maximizing my window in Firefox. If only I had one of those 496" monitors...

Here are some stacked graphs of net exports, ranked by size of same in 2008, data from BP. First those with positive net exports >100 kb/d:

Net Exports of Crude Oil 1

Nothing surprising there, there's a dogleg where BP begins to include Russia in the data but otherwise it basically is the production shape we know and love. Most of the OPEC birthday boys are in there somewhere.

But how about the reciprocal - OPEC's customers - nations importing >100 kb/d?

Net Exports of Crude Oil 2

Don't see that shape often. Extending the X axis out the trend is towards needing an additional 20 mb/d by 2030.

Link up top: Is a perfect storms building?

We could see many countries abandon free market principles. Deals would be struck between oil-exporting and oil-importing countries that would fix prices and remove large quantities of oil from the global markets. “The proportion of oil traded on the global, freely accessible oil market will diminish as more oil is traded through bi-national contracts,” the report states.

Obviously the author of this piece does not see a smooth, gradual decline. China already appears to be preparing for the decline by investing heavily in foreign oil. And it's not just China:

Some observers argue that this process might in fact already have started, pointing to the fact that countries like Russia, Turkey and Brazil have broken international ranks on the issue of Iran because of such bilateral agreements and cooperation.

Folks, I think the peak oil panic has already begun. But of course you ain't seen nothing yet.

At any rate this is a very good article. It should be read by all.

Ron P.

China has been obviously moving this way for years. Is the U.S. asleep? Don't know.

What should the U.S. be doing, assuming that it will not be able to acquire sufficient supplies on the open market? Is it prudent to simply rely on the multinational oil companies to make the necessary arrangements? If they cannot guarantee access to oil supplies, what then? Short of war, what can/should the U.S. do?

It seems to be that the U.S. and other nations are at a disadvantage trying to secure access when it has to compete against China. If the so called free market is about to disappear, then perhaps it follows that private oil companies need to disappear. It may be that the only way to compete is to nationalize the oil companies. But perhaps it is all too late as China seems to have their fingers everywhere.

This situation has very significant implications for the future viability of capitalism. This kind of puts a whole new light on the perennial debate on the efficacy of the private sector versus government.

We should form a national resources "company" so the US can compete against other state players for minerals of all sorts. But mostly we should spend any amount of money needed to free ourselves from imported oil -- this means efficiency gains and alt sources. Even if we can import oil, we really can't afford it now, and that'll only get worse going forward.

Somehow I'm not surprised that the Paleocon Movement is ending up in the state capitalist camp.

But the problem is not that the US can't afford oil, and it matters little if the oil is domestically produced or imported, as either means of supply carries the same costs, including the risk that the money spent is not recirculated efficiently. The problem is that the US is consuming oil in non-productive ways, such as moving empty passengers seats from here to there in the hundreds of millions each and everyday. And thereby adding to gridlock which interferes with commercial transport efficiency to boot.

There is a behavioural problem here, rooted in historical circumstances.

Carbon taxes, and especially higher gasoline taxes, are an efficient way to change this behaviour. Efficient, but insufficient. Other policies, including raising the cost of parking and providing efficient mass transit are also needed. It's also clear, to anyone able to understand the information contained in the persistently high price of oil and in fossil fuel production data, that investment in electrified rail transport is a silver bullet.

So I would not establish a state run company in an attempt to secure resources. I would beef up Amtrak and put plenty of federal money into municipal and/or state transportation budgets.

Thanks for another day of ad hominem attacks. I think you are determined to take an opposing point to everything I state, even when my perspective aligns with yours. Economically, though, it is obvious we are diametrically opposed.

Of course it matters hugely where the flow of oil dollars go, and who benefits from the flows. I don't know how you can presume otherwise. Eventually the balance of flows must equal in value (determined by the strength of currencies), and we'll end up trading what we have (such as grain) for what we need. Only political actions, by such as China, skew this temporarily as they hold down their currency. We can't print money and expect others to cash it for goods forever. The only other result is the recipients come back and own our country, trading products for our assets (which is what will likely happen when we can't borrow anymore).

I agree with the non-productive aspects, which is why I included the word "Efficiency".

Carbon taxes COULD be one tool, but horribly inefficiently if done on the global scale. Much more efficiently at the state scale, yet the value still depends on where the money goes. I'd give it back to the individuals directly, and that will never happen from a nat'l level tax. At the global level, you can bet half will end up the bank's pockets, and little will go back to the little guy who is paying.

Domestically, we love to hate oil companies, yet they are our only allies in this game of resource musical chairs. Unless we can return Standard Oil to US-run oil dominance, and prevent it from having a global perspective, a US resource board would make sense. Otherwise, when push comes to shove, only our military might will hold sway, as dollars will not.

And certainly the electrical rail items make sense -- I've been a fan of Alan's plans for a long time.

It was actually a poor attempt at humour. Sorry for the misunderstanding. I don't have time to go through your arguments at this time, as roof repair is demanded. Gotta take advantage of the pause in the all too regular rain of late.

I agree with everyone of your suggestions and would go further. I think we should transition to a bicycle,tricycle,pedestrian,street car,light rail,bus based transportation system for starters. I would like to see car free cities everywhere modeled on J.H. Crawford's ideas.

However, none of these things are going to happen in sufficient time to avoid the coming oil collapse which will be exacerbated by nation to nation contractual arrangements for oil. This will double or triple down the problem for countries like the U.S. who choose to acquire oil resources using the market route.

The last two years have made it abundantly clear that even with so called progressive majorities, nothing will be done that threatens to upset the business as usual apple cart.

Prepare for the worst. We have a government of, by, and for the clueless.

. . . a government of the misinformed and divided, by and for the rich clueless.

Carbon taxes, and especially higher gasoline taxes, are an efficient way to change this behaviour. Efficient, but insufficient. Other policies, including raising the cost of parking and providing efficient mass transit are also needed.

I am not disagreeing, but am pointing out that there are an sizable number of details that would have to be worked out.

  • Carbon taxes that raise energy costs, gasoline and electricity in particular, will be devastating for the poor simply because they already spend so much more of their household income on energy (Census Bureau figures put the share at roughly 16% for a poor household, 6% for a median household, and 3% for a rich one). Offsetting tax decreases have their own difficulties: they reduce the effectiveness of the carbon tax, and some groups (the elderly) may not pay enough in taxes to do a full offset. Capital investments that would improve efficiency -- new windows, better furnace, even insulation -- are more difficult for the poor.
  • More than 20% of the US population still lives in rural areas, where behavioral changes can be much more difficult. Denser housing doesn't work in general. Mass transit doesn't work at all. Smaller vehicles often don't cut it -- if you have to take a 500-pound pump to town for repair, you need a vehicle large enough to handle it. Grain has to be hauled to the elevator to wait for the train. The farm families I know already do trip planning to minimize errand mileage simple because getting to town carries a serious cost in time.

I live in a place that has a carbon tax (British Columbia), but unfortunately, to make it politically acceptable, they had to make it so small that it doesn't actually change behavior. It is in place and rising, and will eventually amount to something in the order 25c/gal gasoline - about one tenth of what it needs to be to actually make a difference. The tax is paid back out as income tax cuts, but again at a level so low you don;t notice a difference. And, it is hidden in the cost of everything, not split out like our GST is.

It needs to be significant, and obvious - if every time you bought a gallon of gas, you knew you were paying $2 of carbon tax, you would take some measures to avoid it. Anything you buy will have a carbon tax on the price tag, so you can do carbon tax comparison shopping, whether you are paying for a hotel room, airline flight or buying 2x4's. But the system has to be transparent, so that everyone knows what is going on.
I am in favour of returning the money to the people by a combination of raising the income tax free threshold and an Alaska-style dividend, paid to everyone regardless of whether they earn income. But the key thing is for the carbon pricing to be out there on every product and service, so people can comparison shop. For companies in the supply chain, they can do the same to take steps to reduce their carbon tax bill. Railroads, for example, will see noticeable difference in carbon $/ton compared to trucks, and an electrified rail, even less. You can bet that the Wal Mart and Home Depot's might pay some attention to that sort of thing.

As for the rural folks, there are improvements that can be made there. Growing up on my family farm in Australia we had a Nissan 4cyl, 2.2L diesel pickup, with a 6x8'flat bed tray, with removeable sides etc. Rated for carrying one ton/tow 3500lbs. We had it hooked up for towing hay rakes and pasture harrows instead of using the tractor. Far more useful, and far more fuel efficient than ANY pickup truck you can buy in the US. No trouble carrying tractor engines, 40 bales of hay, full yard of gravel etc. If you want a diesel truck here (which most rural folks and anyone who does a lot of driving should), then you have to go a F350 sized pickup. Even Ford and GM make and sell lots of smaller diesel vehicles elsewhere, but choose not to make/bring them here - I think that attitude has cost rural folks dearly over the decades.
I would have no problem with actually paying some kind of carbon rebate on a per ton basis for produce - that still gives them the incentive to minimise fuel use, though I agree most farms do a good job of that already.

As an interesting side point, I saw an experimental farm in Australia that had the best fuel saving innovation I have yet seen in farming - controlled traffic farming. They had their equipment set up so that everything was the same width (about 30') and on the ploughs and seeders, removed the discs/tynes from the tractor wheeltracks. So had these "tramways" running along the fields, where the tractor always drove. It turned out that in ploughing a field, the tractor used a significant amount of energy compacting the earth under the tyres, to get the grip to pull the plough. The tynes of that plough in the wheel tracks, then needed double the amount of energy to break up the soil the tractor had just compacted! They lost 10% of their field area to the tracks, and saw typically a 30% decrease in fuel consumption during tillage, and 10% for other operations from driving the hard tracks. Access was possible in all weather conditions, mid crop spraying, if needed, did not do any damage etc etc.

Now, this was a dryland farm, and so the rainthat fell on the tracks would then run off the the sides, so the remaining 90% actually saw a 10% increase in effective rainfall. This was a big deal because moisture was the limiting factor in crop yields. For giving up 10% of the land, they only saw no decrease in yield overall, which was actually a 10% increase in per acre yield for the cultivated part, while using 90% of the seed, fertiliser and 70% of the fuel. They were able to downsize their tractor by 20% too, and instead of needing dual rear tyres, could run singles, so another saving. They eliminated hard pan formation in the soil (from random tractor movements) , rainfall infiltration and retention was improved, as was plant root depth, atmospheric nitrogen uptake etc etc. When they grazed cattle or sheep in the stubble or in a fallow year, they walked along the wheeltracks instead of random lines all over the place (sheep are notorious for this).

But all in all, for an innovation driven by the desire to save fuel, it had a host of beneficial side effects. I bring up this lengthy anecdote as a carbon tax might inspire some fresh innovative thinking from farmers, who have a good history of that.

Unlike the tour operators to the Caribbean whose customers can choose not to go, we all have to eat, so I think the rural communties could do fine, if the carbon tax, and rebates, are structured properly.

The only thing I would add is that in many rural areas, agriculture is marginally present if at all. It is possible, perhaps likely in some cases, that carbon consumption will not be affected. So what? Perfection is heavenly.

Quite so, rural does not always equal farming (e.g. half of California)
Many such areas are simply nice places to live away from the city, it's the commute between the two that is the killer. I live and work in such a place, don;t need to commute to the city, but living here, 4mi out of the town, you are totally car dependent. But it would be an ideal place for electric vehicles as you can't drive more than 30mi in either direction without coming to a ferry, and most trips and daily driving are quite short.

Lots of rural towns would actually be ideal places for the NEV vehicles, if they were allowed on the roads. Even the F-150 is fuel efficient if it is not driven every day. Much better for the local economy of many rural areas too, as a good % of money leaves every day in fuel.

Those are the sorts of changes I'd like to see enabled by a carbon tax - it only works when alternatives are sought, and implemented

We should form a national resources "company" so the US can compete against other state players...

I don't necessarily disagree, I only point out that there are a number of significant incidental problems that would have to be addressed. The "government is bad, private markets are good" meme is really well-embedded in the US national psyche these days. Many large US corporations would be unhappy about it, which makes Congress nervous. So far as I can tell, the "ugly American" problem continues to exist in many places in the world. Competing may require considerable changes in the tactics that are allowed; for example, such a company would presumably still be constrained by US laws against paying the bribes that are a normal part of doing business in some places.

We should celebrate our emerging "freedom" from our dependence on foreign sources of oil--as we are gradually forced to make do with a declining share of a falling volume of global net oil exports.

I don't think that a military option--presumably using force to ship oil to our shores that someone else (China for example) is willing to pay a higher price for--is a viable option. It's just too easy to sink or damage supertankers.

Here is a chart by Kurt Cobb showing the US economy resting on the 5% of the economy represented by the food & energy sectors:

http://bp1.blogger.com/_-uualVqzFPk/RqzoKrjp48I/AAAAAAAAAE4/fV4VTpfl5gA/...

From “Upside Down Economics” by
Kurt Cobb
http://www.energybulletin.net/node/32718

We should celebrate our emerging "freedom" from our dependence on foreign sources of oil--as we are gradually forced to make do with a declining share of a falling volume of global net oil exports.

Yes, and the Chinese are more than happy to assist you in achieving that goal by buying all the oil themselves. With the number of cars they're buying, they're going to need it.

I don't think that a military option--presumably using force to ship oil to our shores that someone else (China for example) is willing to pay a higher price for--is a viable option. It's just too easy to sink or damage supertankers.

Or just not send them out to sea at all. And if the US sends its own tankers, with naval support to keep them from being sunk, the disaffected locals just throw a burning rag into the storage tanks at the port.

However, Canada is the largest supplier of oil to the US and sends most of its oil by pipeline. Canada's exports to the US will likely exceed 3 million bpd in the next six months (see U.S. Oil Imports: Three Million Barrels or Bust above). Sending it to China would require building new pipelines to the West Coast of BC, and building new port facilities there. Guess what - approvals are already in the works for those pipelines and ports, and the Chinese have recently bought an interest in a lot of the production.

And meanwhile, Nancy Pelosi is in Canada saying the US needs to "get off" oilsands oil, and opposing the new Keystone XL pipeline to the Teaxs. Those BC pipelines just got a step closer.
I really don;t know how she thinks can make a meaningful contribution to US energy security, if Canada starts shipping 1mbd to China, the US just has to get that much more from somewhere else, and they won't be as friendly, and it will have to come by ship.

ts - I'm not sure the free market isn't performing exactly like it's suppose to. China is buying into oil fields and long term oil contracts out in the free market. Any other company/country could have been out there competing with them. I'm not sure you can't say the NOC aren't/won't function in the free market just as it designed. The Venezuelan NOC (or any other NOC) has oil in the ground that belongs to that country. They cut a deal to sell it to China or anyone else on terms they like. If they decide they want to hold back some of those reserves because doing so benefits their long term goal then that's the free market also. No one expects Ford to make more cars then they think they can market to their financial benefit. Why should we expect Saudi to do otherwise? It's a free market: you don't have to produce or sell your product for the benefit of others...you do it for your benefit. That's a free market. Just because you have the money I don't have to sell you my house. That's freedom.

Why would we expect a multinational company to make arrangements that don't primarily benefit itself? Is Total suppose to make less on its oil sales by shipping to the US at a price lower that what China will pay? The US govt is free to go out into the market place and compete all they want for oil. They do it now, on a limited basis, through purchases for the SPR. ExxonMobil owns a big chunk of oil production in Equatorial Guinea. And they ship all of it to the EU...none to the US. Should the American people expect XOM to ship that oil to the US for a lower price than what the EU would pay? That's the free market working.

I don't see "a whole new light on the perennial debate on the efficacy of the private sector versus government". The Chinese govt is being very effective in securing future oil production. The US govt isn't. The free market is about to disappear? I don't think so. IMHO I think the free market may be on the verge of grinding BAU in the US into some rather indigestible flour. The US has dominated the free market for decades. In the 1950's the Texas Rail Road Commission affected the price of oil world wide by limiting how much Texas oil wells could produce during any given month. It was much more effective at this practice than OPEC ever was. We've always loved the free market when it worked to our advantage. Not as much fun when you're on the losing side of the bid though.

Thanks for that, Rockman.
Sometimes I really get the creeps reading all the posts by wannabe dictators.

jabber - I'm all for coming up with a better system if it helps us ease into PO. I'd even go with a benevalent dictator LOL. But the problems with most new systems are 1) no details how how it would be really better and 2) no expectation that it would be employed. We can come up with a lot of reasonable ideas on how to improve the future. Getting everyone to use 30% less gasoline is a great one IMHO. Can't argue that it wouldn't solve a lot of the future problems. But if that idea doesn't include a viable method of implamenting such a change then it's really worthless IMHO. There are a number of aspects of the free market that don't work very well. But if you can't generate a change then it doesn't do much good to run down that list IMHO.

Sorry you got that impression, which is wrong. Not using the private sector to acquire oil should be a last result. Unfortunately, however, we may be in last resort mode.

Countries and companies are "free" to lock up long term contracts with countries thus taking that oil out of the "free" market for some, possibly indefinite period of time. After that, countries and companies are free to compete for whatever is left in the "free" market. It is this declining residual part of the market that we should be concerned about. Yes, it appears that China is better at competing for oil in what we call the free market. But is the market free anymore once the oil is locked up? I couldn't care less whether or not the U.S. used to control this market or whether that was fair. I am also not concerned about the semantics of what a free market is and whether or not it is free now. I am concerned with what might be left over after everyone has divided up the pie in long term contracts.

The question is, what should the U.S. do assuming the scenario I have outlined continues to play out? What do the oil companies do, for that matter? You have accurately pointed out that the oil companies will act in their own interest. Well, that just reinforces the idea that we are in even worse shape that I originally described.

If all this is the result of what you call the free market (always a tricky term), then I am not sure that the free market is in our interest.

And by the way, part of the definition of a free, open market is that no one party dominates. Then the market becomes a monopoly, an oligopoly, or a monopsony. Just because a market is "free" doesn't mean it is competitive, open, or fair.

But getting back to square one, the U.S. better figure out a way to play this "market" to its advantage or learn how to do without, pronto. And as we know, we will do nothing to reduce our reliance on oil.

I stick by my original statement that this changes the perspective about private enterprise vs government. Our problem is that governments are taking over the market space. Do we sit idly by because we think this should all be worked out by the oil companies, who as you say have only their own self interest to be concerned about?

And this has nothing to do with whether I want to be a dictator or whether I feel all warm and fuzzy about the government taking over the oil sector. In a less than ideal world, however, consideration may have to be given to put the U.S. in a better bargaining position. That, unfortunately, may require more government control.

How do we compete with the Chinese? If the answer is simply, "no way", then I guess we better implement plan B, pronto. Bring on the bicycles.

ts - I thnk I understood you. If you thought I was implying the free market is "good" I wasn't. I don't judge the FM as good or bad. That depends on one's position. China obviously feels the free market is great...they have the capital to fuel their great economic growth. I get the impression that you're disappointed the free market isn't fair: China taking oil out of the free market is bad for the US. Well heck yeah it's bad for the US. Just as bad as the decades the US used the free market to allow 5% of the world's population to burn up 20+% of the world's oil production. And how did we do it? By using the very basic free market rule: the high bidder wins.

As far as our govt putting us in a better bargaining position IMHO it will require much more govt control. But certainly not controlling the domestic oil industry. And I don't hold that position because I work in the oil patch. If I flipped burgers for a living I would expect the govt to be a total failure in such an effort. But the control I expect to ultimately see us use to maintain BAU for our economy will be with military/political influence. And that isn't the free market. But it is a part of destiny the US govt can influence IMHO.

A free market will solve any problem, but the solution is not guaranteed to be better than the original problem was.

No. the united states is taking a different approach. while china goes around the world securing trade deals. the united states goes around planting military bases around china and in energy rich area's or area's it will need to be transported through.

Link up top: Is a perfect storms building?

Can't find the link. Can you paste it in a reply? Thanks.

For some reason Leanan's link doesn't work. I did not know that since I found the article with News.Google and never tried her link. This one will work.

Is a perfect storms building?

Edit: The link up top works now.

Ron P.

Thanks for the link Ron.

According to Rubin, the world loses four million barrels of crude oil production every day “but we don’t hear much about it”. The report goes on to state that “we could easily see the return of $100 oil in just months”.

4 mbd a day lost, meaning I presume that we use 4 mbd more than new oil found. So if for example we use 74 mbd of crude, then we are finding 70 mbd to replace it. Is that the gist of what he's saying?

But, I thought we were actually using 4 mbd for every 1 mbd of new oil found. Do you know which one is correct?

No, that is not what it means at all. That was some sloppy reporting by the author of that piece. What Jeff Rubin really said was:

Every year we lose four million barrels a day [of production due to depletion]. Over the next five years, we are going to have to find 20 million barrels a day of new production, just so that we can [continue to] consume what we consume today.

Canada’s top economist Jeff Rubin predicts $225 for a barrel of oil by 2012

Ron P.

Thanks for the clarification.

Tainter ...audio interview on Collapse 9-4-10

http://www.financialsensenewshour.com/broadcast/fsn2010-0908-1.asx

This was posted to yesterday's DrumBeat, and discussed quite a bit two days ago.

Oh you horrible oil people, you !
How Big Oil will stop my children from driving electric cars

A lot of money is at stake: if we all switched to electric, oil companies would stand to lose everything.
the Department for Transport can no longer afford to help me buy one. The government has allocated £43m to subsidise ultra-low-carbon cars, but at £5,000 a car that's only enough to help the first few thousand of us who switch over.

A lot of money is at stake. In the UK alone, filling up cars with petrol is worth over £1bn in annual, after-tax profits to the oil industry, or about £450 a car over a 10-year lifetime. In contrast, BMW last year made about £150 after tax on each new car it sold. So for the time being at least there is more money in filling up cars than in building them, even at the top end of the market.
This is where the problem lies. For electric cars to become a reality, large parts of the refuelling market will have to change hands – and if we all switch to electric cars, the oil companies stand to lose everything. So as their shareholders would expect, they are investing heavily to avoid this outcome.
The focus is on technologies which compete with electrification, especially biofuels. BP has spent $100m this year acquiring a North American ethanol business, and will spend another $250m on a production plant. Exxon Mobil has a budget of $600m to make motor fuel from algae ..

etc, etc
The comments are well informed, except perhaps on the matter of H2 fuel and cars.

How Big Oil will stop my children from driving electric cars

Sad, isn't it. Big Oil stopped me from driving electric cars, it stopped my father from driving electric cars, it stopped my grandfather from driving electric cars, and it stopped my great-grandfa..."

Oh, sorry, they didn't have Big Oil or gasoline cars back in my great-grandfather's day, although they did have electric cars. So, it was Big Horses that stopped my great-grandfather from driving electric cars. That, and the fact he couldn't afford an electric car, and the fact they were impractical.

Some things never change. They're still too expensive and not practical enough.

I fear that electric cars are a lot more practical than the people making the choices.............

Some things never change. They're still too expensive and not practical enough.

As illustrated by this story, from today's Globe and Mail, via treehugger

http://www.treehugger.com/files/2010/09/we-need-higher-fuel-prices.php

In 1915 the electric cars cost 4x as much (as a model T) and had a range of half. Today the electric car (Leaf) costs three time as as much (as the Versa it was based on) and gets 1/4 the range.
You are paying a $20k premium for an electric version of the same car. The only time that makes sense is for anyone who wants the publicity, so we can expect to see governments, movie stars electric utilities and companies like Google and so on buying them, but it's not a practical option for the average motorist.

It makes great sense when the vehicle fits your commute or primary trip needs.

The Leaf and the others are all just getting into the market. They don't have the numbers to compete on cost yet.. it's simply snarky to put them up against ICE on that basis. The drivechain is far simpler, all else but the batteries then are practically identical to any other cars, and should be able to compete easily with the Gas cousins. With the weight improvement of Lithiums over Lead, the efficiency (KWH/Mile) gains, if you are looking at LCA should easily be able to overtake the increased cost of those newer batteries.

Yes, range is shorter, but the motor's lifetime range is far greater, too, and the service requirements and disposable materials used are FAR less. ( some motors rated for 1 million miles of EV service) For cars that charge on 120 AC, there is a massive infrastructure of 'Filling Stations' available, while still somewhat inconvenient to the street, creative people are figuring this out. There are tradeoffs, (maybe that's the part that makes you guys call it impossible, NO COMPROMISE) but clearly plenty of testimonials from ACTUAL non-celebrity EV owners that attest that it's been worth the effort and costs. (Go to EV Nut for some)

While I'm sure it pushes your 'Smug Alert Meters' to the max, those who've been able to set up PV, are now progressively powering both their homes and their transport from the roof and producing no emissions from either..

Perhaps ironically, the people for whom EVs such as Leaf are most practical, are those least dependent on ICEs today.

For me, the longest trip most years is an about 28 mile RT to the airport to pick up/drop off friends (perhaps 3 or 4 times/year). The Leaf can certainly do that, even with a/c running.

And in an evacuation, it could get me far enough to be out of harm's way, if not to an adequate shelter, etc. If I had too, I would drive to the intersection of I-12 and I-55 and recharge there (before storm hits), perhaps at closed store, etc. Safe enough to wait there till storm passes. Either go back in if OK or onward to Baton Rouge. A few hundred watts of PV for a trickle charge would be VERY nice to pack.

But for someone with an everyday 22 mile commute (each way), I can foresee problems.

Best Hopes,

Alan

It makes great sense when the vehicle fits your commute or primary trip needs.

Jokuhl, I could not agree more with this statement, it's just that, as alan says above, that is currently a narrow subset where it will fit, and it's a very expensive fit. The part I don;t understand is, given it so much simple (no ICE drivetrain) why is it $20k more for, in the case of Nissan Leaf/versa, essentially the same car?
My view is that they have tried to play the ICE's game (four person car, with ICE type performance), where they can;t win. I think they would have ben better off, to start, by producing a small, lightweight 2 seater car - similar, in fact to the original GM EV-1. Given their main target is the commuter, if that meant a car that is cheaper and/or better range, then you have addressed the two biggest hurdles. Lots of Smart cars have been sold worldwide, and their owners love them.
As for the lifecycle cost, I don;t think you can recover that $20k. With a Versa at 30mpg, and let's assume $3gas, you are looking 10c/mile. For the electric at 5mi/kWh and 10c, you are looking at 2c/mile. So you are ahead by 8c/mile. If they drive 15,000miles/year, the elec is ahead by $1200/year, and will take 16 years to come out ahead. Yes there are other savings (no oil changes etc, but you have had the massive up front cost to bear. It is just not a good economic decision for most people. That is why I think they need to come up with something cheaper.

Alan's example is good. Those who are seriously dependent on their ICE's this is not a solution. But there many places where ICE's make sense, though I don;t think they are being pursued enough.
this is a great use;

Canadian made EV refueling the A380 at LAX. more at http://www.canev.com/
There is lots of scope for specialised EV's in niche markets, such as airport vehicles, postage delivery, specialised city fleet vehicles etc etc.
I really like the airports, ports etc as they areas are flat,the driving distances are short, the vehicles can even use lead acid batteries.
Even the port of LA has gotten in on it with this one;
http://www.wired.com/autopia/2010/04/electric-truck-can-haul-a-trailer-o...

I am very happy for someone who can self power their house and their car. I self heat my house (get my own firewood) but can't do solar or wind as it to shaded/protected by trees. I know a landscape guy in Calgary who converted a truck to electric, put PV's all over the canopy roof, got all electric equipment, which he can power from the truck, or the house plug in, and called himself the Quiet Revolution Landscape Company. he has been very successful - there is a great application for Ev's.

An affordable ev car and light duty pickup/cargo vehicle (somewhere above the NEV type, but less than normal PU's) would be great for rural towns, like where I live, where many people do lots of short trips in a week. But who in those rural towns can afford $33k to save $600/yr on gas? The range extender trailer, like the electric rav-4 owner built is a great idea, but none of the new ev's even allow for that - the carmakers probably see it as admitting a shortcoming instead of as adding a feature..

My point is, there are many great applications for EV's - but the carmakers are chasing the worst - the normal car. They should seek out where ev's are best, and let the EV's define their own turf first. High oil prices will help them along soon enough to take on the mainstream

My problem with this evaluation is that you're hanging a lot on that $33k. I think it's clear that a principal EV style will have to develop in the direction you indicate.. essentially as a sub-compact. Just because the first stabs of the Mainstream car companies are still looking at bigger styles, and are very likely designing vehicles that will have a better chance initially, even if it's from a more elite class of customer of recouping the design investment, doesn't mean this is going to be the definition of 'EV'.

My judgment is that Nissan wanted to create a "halo" effect around the entire line-up of cars, trucks & SUVs by bringing out the first "main stream" EV (like Toyota did with the Prius).

Supporting this hypothesis is that Nissan's ad budget seems to have increased AND EVERY AD IS ABOUT THE LEAF !

Using an in production frame as a starting point probably cut 2 to 3 years off development time and costs dramatically.

Just to re-enforce the "halo" effect, and maybe even make some money, Nissan should have your 2 seater commuter EV in development now. And maybe even some sort of delivery truck.

Best Hopes for more & better EVs,

Alan

Hi Everyone,

Nicole Foss (Stoneliegh) will be speaking in Minneapolis, Minnesota at the end of September. I know a bunch of oil drummers are from around this area, but I don't have names and emails, so I thought this might be the best way to reach everyone. Send me an email at grandpa.trout1 [at] gmail.com if you want to help out (and remove the 1 in my email address, that is to send spam bots that don't read to the wrong address).

She is also touring Michigan: http://localfuture.org/stoneleigh.htm

Minneapolis event:
Thursday, September 23rd
7:00PM
Auditorium 150
MCAD (Minneapolis College of Art and Design)

Sponsored by the Sustainable Design Online Post-Baccalaureate Program
and Transition Initiatives in the Twin Cities (community-based responses to peak oil & climate change)
http://www.transitiontc.org/

I also want to give you a heads up that Richard Heinberg will be speaking on November 11th in Minneapolis at South High School. There will be an afternoon event of brainstorming ideas and connecting to others working on the peak oil issue.

Hope to finally meet some of you in person!

-Jon

India auto sales up 33 percent in August compared to a year ago.

http://seattletimes.nwsource.com/html/businesstechnology/2012846107_apas...

Ford Motor Co. expects India to be the world's third-largest auto market by decade's end, after China and the U.S. Like other global auto majors, it's pushing hard to gain market share from industry leaders Maruti Suzuki, Hyundai and Tata Motors. Ford plans to launch eight more India models by the middle of the decade on the heels of its successful Figo launch.

The EIA's International Petroleum Monthly came out a few hours ago with the production data for June. World oil production was down 71,000 barrels per day but this is after production for May was revised up by 50,000 barrels per day.

The EIA's data for June OPEC C+C production was up 239,000 bp/d while non-OPEC production was down 310,000 bp/d. Most of this drop was due to North Sea maintenance. North Sea production was down 375,000 bp/d. The big non-OPEC gainer was Australia, up 102,000 bp/d while the biggest loser was Norway, down 330,000 bp/d.

China, India, Russia and OPEC's Qatar all reached new peaks in June.

Ron P.

Re: The American Dust Bowl Returns

The headline is misleading, at least in the sense that the problem they are describing is inadequate flows in the Colorado River basin, while the American Dust Bowl was a Great Plains phenomenon. The geographic overlap between the Colorado basin and the Dust Bowl is exactly zero. I'm also not sure what the author means when he says that the Southwest has "transitioned" into permanent dust-bowl conditions. The Southwest has always been drier than the Great Plains were during the Dust Bowl days.

The emphasis on urban use seems odd. In the upper basin states, 90% of diversions from the Colorado River and tributaries are for agriculture; in the lower basin states, 85%. Embarrassingly, in the upper basin almost 90% of the agricultural diversions are used to grow animal and ethanol feed. Nevertheless, eliminating urban diversions entirely wouldn't fix the problem that the river is over-committed; it's the agricultural uses that have to be addressed.

Yesterday I said

Note that gasoline supplies in the upper Midwest are in short supply, due to the Enbridge pipeline break in Michigan, but not low enough to cause local shortages yet.

The key word being yet.

After the second Enbridge pipeline break last night along a different pipeline, gasoline supplies in the upper Midwest are in extremely short supply, with wholesale gasoline prices 30 cents/gallon higher than in NYC:

prices for cash products in the Midwest jumped on Friday morning following news of the Enbridge outage.

Chicago gasoline for cycle 2 traded as high as 33 cents over the front-month NYMEX RBOB futures contract early on Friday but came down to 28.00/32.00 over futures in mid-day trading.

http://www.reuters.com/article/idUSN1022966520100910

Was it only yesterday we were told by some of well known energy analysts that we had abundant and excessive supplies in the US? Why, yes it was in yesterday’s Drumbeat.

But the minimum operating level (MOL) functions on a local basis. In other words, it doesn't really matter how much oil is stored in Cushing, OK or some other major storage facility if there is not enough oil and product in the distribution pipeline (literally and figuratively) that can be delivered to your local gasoline station.

From that Reuters article comes an interesting tidbit:

U.S. refiners typically perform maintenance during the spring and fall, between the summer driving season and the winter heating oil season, with work expected to be heavily concentrated on the Midwest in the coming month, the survey showed.

Some of the work on U.S. refineries was originally scheduled for the spring but was pushed back so refiners could capture good profit margins ahead of gasoline season.

If this is true then could the extra refining in the spring help explain some of our higher than normal inventory?

I know it's hard to take a news story as accurate of the true situation, but it's worth a thought...

DD

Good point, that quote is a good take.

If my memory is correct, the upper Midwest gasoline situation did not end up 2009 in good shape and for reasons that may have to do with other different pipeline problems further up the line in Canada, they weren't catching up as fast in the Spring as expected so they may have deffered some maintenence.

Although they were planning to undergo some maintenence soon, it would be quite an exaggeration to say that the refiners would not be greatly affected by pipeline problems of this magnitude.

This is just a wild guess, but based upon what happened in the first pipeline break, I would not expect Enbridge to get approval to reopen this second pipeline very rapidly. Keep in mind that Enbridge has not received approval to fully reopen the first damaged pipeline after some weeks.

Possibly if outright gasoline shortages occur, approvals may be sped up - but then again, maybe not - especially since this event had the bad luck to happen almost the same time as the California NG line explosion. My guess is that shortages will be barely avoided by extra gasoline imports by seaborne tankers into lower Canada, Maine, and to Philadelphia (where it will be sent along by other pipelines).

Kleen Energy, up top:

In theory, it's a simple procedure -- highly pressurized nitrogen, steam, air, or natural gas is propelled through pipes to clean out debris.

OK, on the face of it, using natural gas this way comes off as infinitely more stupid than wiping something down with a gasoline-soaked rag. Infinitely more stupid because natural gas wouldn't move any debris whatever that air or nitrogen wouldn't also move. At least, with the gasoline, there's the excuse that it dissolves types of crud that water won't touch.

So why on earth would anyone ever do this? Any of the oil patch experts here have any idea?

Umm, because they were for pipes that carry natural gas?

"In theory, it's a simple procedure -- highly pressurized nitrogen, steam, air, or natural gas is propelled through pipes to clean out debris."

We do it all the time, except we call it "shim-stocking". Put a piece of shim stock in the line in the same way you would put a blind flange, pressure up the one side, and then the shim blows out it is supposed to create a sudden pulse of pressure that will clean the line. But we use nitrogen, or air on water lines. You'd have to be insane (or suicidal) to try it with natural gas, have they never heard of the diesel effect? Fuel, air in dead leg on line, and sudden compression. Boom.

And then (famous last words):

"This is a gas plant -- what do you expect to smell?" a supervisor said, according to the affidavits, only moments before losing his life in the explosion.

I would not expect to smell natural gas in a gas plant, and if I did, I would expect it to be accompanied by the sound of loud alarms and people running for the exits. That's what gas plants have gas detectors for. They give you a much more accurate reading of gas levels than your nose does.

However, they probably had all the alarms shut off while they worked on the plant, and nobody was walking around with a portable detector looking for problems. The whole operation sounds like a disaster waiting to happen.

'A disaster waiting to happen'

That phrase has as bit of a ring to it.