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Drumbeat: September 16, 2010
Posted by Leanan on September 16, 2010 - 10:25am
EPA on fracking: "we can only do so much"
FORTUNE -- In Binghamton, New York on Wednesday, hundreds of locals filled the Broome County Theater to speak their minds, two minutes a time, to four members of the Environmental Protection Agency. They voiced opinions about a controversial process called hydraulic fracturing, or fracking, to tap into huge reserves of shale gas thousands of feet below ground. New York sits on one of the largest known reserves of natural gas, which many people, including President Obama, have called a new, crucial resource for the country.But residents in places where fracking occurs have raised concerns that the process isn't regulated enough -- that it leaches dangerous chemicals into groundwater and contaminates it with methane gas. Proponents believe that natural gas development can be a huge boon for the area, and drilling needs to happen as soon as possible.
Cheap Gas Coming? [PDF]
In the last decadeAmerica has rapidly developed a newsource of gas found naturally in rocks. It now provides a fifth of national needs. Such gas is present in Europe too, and whether or not it is practical to extract it, it is already having an effect on future supplies.
New study underscores dangers of hydraulic fracturing
A new study by a Paonia, Colo.-based doctor who’s a frequent critic of the state’s natural gas industry, has been accepted for publication in the International Journal of Human and Ecological Risk Assessment.
Crude Oil Declines as Enbridge Says Midwest Pipeline Will Start Tomorrow
Oil fell the most this month as Enbridge Energy Partners LP prepared to start a pipeline that supplies Canadian crude to refineries in the U.S. Midwest.Futures dropped as much as 2.5 percent after Enbridge said it plans to send oil through the pipeline early tomorrow after repairing a leak in Romeoville, Illinois, that was discovered last week. The timetable is in compliance with an agreement with federal regulators. Another pipeline was shut in August.
NEW YORK – Locals thought it was hard getting money out of the oil giant—until they had to deal with the government. Rick Outzen on the Gulf’s cash flow crisis—and anger with the federal “claims czar.”Nearly 1,000 small-business owners from Alabama and Florida’s Gulf Coast were packed into the Orange Beach, Alabama, recreation center yesterday when Mayor Tony Kennon asked people to stand if they had filed a claim since August 23. Nearly the entire audience stood. Then he asked those who had received any payments from the office of federal “claims czar” Kenneth Feinberg to remain standing. All but two dozen sat down. And of that number, only five or so had been paid more than half of what they asked for.
Natural gas may have jump-started oil eating bugs
WASHINGTON – Those oil-eating bacteria that suddenly flourished in the Gulf of Mexico following the oil spill may have gotten a jump start from natural gas, scientists say.
Kenya: Oil shortage spirals out of control as fuel prices rise
Venansco Kariuki vice chairman of Independent Oil Marketers Association said major oil firms have been reluctant to sell products to them, a sign that even oil majors might be readying themselves for a worsening of the situation."There is a shortage and the situation is serious... there are chances that it will even get worse as major oil marketers are refusing to sell to independent marketers," he said.
Pakistan: Five UCs, fuel pipelines face flood threat
The waters diverted through the cut will pass over the Jamshoro-Larkana section of the Indus Highway and railway tracks at different places.PIPELINES: The floodwaters may damage four pipelines of Parco and the SSGC and submerge an oil station in Bubak and the Shahbaz airport in Sehwan.
The main valve and two high pressure pipelines of the SSGC and two of Parco were under threat.
Centrica CEO seeks "rewards" for nuclear generation
(Reuters) - The head of Centrica set out the case for nuclear support on Thursday and said investment decisions were needed now if Britain was to meet its targets to reduce carbon emissions and secure energy supplies."Nuclear power fulfills many of the requirements we have set - a proven technology that can provide low carbon energy at a cost well below that of renewables," Sam Laidlaw, Chief Executive of the British Gas owner said in a speech at the RSA.
"Reinventing collapse" by Orlov (2008)
Orlov points out other equally fascinating paradoxes. Since there was no profit motive in the Soviet Union, there was no incentive for planned obsolesensce in the few consumer products that were produced. Instead, they constructed simple, functional and sturdy (but oh-so-ugly) refrigerators that were sufficiently durable and repairable to function long after production of a model was stopped.
John Michael Greer: Animals II: chickens, rabbits and fish
Plenty of people who object to the appalling conditions and ecological cost of factory farming have responded by swearing off animal foods altogether. This is certainly a choice, but it’s far from the only option, and some of the arguments that have been marshalled in defense of it simply won’t hold water. Those of my readers who find that a vegetarian or vegan diet suits them should certainly feel free to continue their herbivorous ways, but not everyone finds such diets appropriate to their needs, and those who find a place for animal products on their dinner tables are part of a long hominid tradition; our australopithecine ancestors ate meat, as indeed chimpanzees do today, and it may be worth noting that no surviving or recorded preindustrial culture anywhere on Earth has had a traditional diet that does entirely without animal products.
Schlumberger CEO: World Will Need Higher Prices, More Investment To Meet Oil Demand
In a speech yesterday Andrew Gould, chief executive of oilfield services giant Schlumberger said that if the world is to have any chance of meeting aggressive demand growth for energy in the years to come it will require massive investment by oil companies and a need for ever more advanced technology.Speaking at the Barclays Capital conference in New York, Gould said that right now the world is still enjoying a sufficient supply of oil discovered back in the years following the price spike of the early 1980s. Sluggish investment in the 1990s and 2000s has only begun to be ameliorated by an uptick in exploration triggered by the boom period of 2003 to 2008.
Much more is needed, Gould said. He cited as a warning the International Energy Agency’s forecast for global energy demand to grow 40% by 2030, with coal, oil and gas expected to supply 80% of energy needs.
Record Breaking Contango Suggests Higher Oil Prices for 2011
ConocoPhillips is paying $41,000 a day to keep a storage tanker capable of holding 3 million barrels of oil floating in the Gulf of Mexico, according to international ship- and offshore broking firm RS Platou. And the TI Europe is just one of hundreds of oil tankers sitting idle in waters around the world, as energy companies and investment banks await higher prices for crude.
No damage reported to Mexico oil facilities - Pemex
MEXICO CITY (Reuters) - None of Mexico's dozens of offshore oil platforms have been reported damaged due to the passage of Tropical Storm Karl, state oil firm Pemex said on Thursday.
Peak oil and climate must be tackled in tandem
Acting on the looming oil crisis could give politicians the political cover they need to move on global warming.
Scarcity: The Fountain of Innovation
Monday morning Tianjin, China and it's the first session of the World Economic Forum's "Summer Davos 2010" event. Ironically, after a filling breakfast in opulent surroundings, my panel colleagues and I are discussing scarcity. With concerns about peak oil, peak water, peak real estate, peak financial markets - and just about peak everything else - scarcity is on the minds of business and political leaders alike.
Brazil's huge new port highlights China's drive into South America
Reputedly the largest industrial port complex of its type in the world, Açu is also one of the most visible symbols of China's rapidly accelerating drive into Brazil and South America as it looks to guarantee access to much-needed natural resources and bolster its support base in the developing world.When Acu opens for business in 2012, its 10-berth pier will play host to a globetrotting armada of cargo ships, among them the 380-metre wide ChinaMax – the largest vessel of its type, capable of ferrying 400,000 tonnes of cargo.
Millions of tonnes of iron ore, grain, soy and millions of barrels of oil are expected to pass along the "Highway" each year on their way east, where they will alleviate China's seemingly unquenchable thirst for natural resources.
Following the Money in U.S.-Saudi Arms Deals
While the relationship between the U.S. and Saudi Arabia is long and complicated it essentially goes like this. The U.S. built up Saudi Arabia's oil industry in the 1930's and remains its biggest customer. In exchange for Saudi Arabia keeping the supply of oil steady the U.S. government agrees to provide the Kingdom's rulers, the Al-Saud family, with complete protection from both internal and external threats. The one caveat on this relationship has always been that whenever the U.S. defense industry is suffering and a key election is approaching the Al-Saud's pitch in to buy just enough weapons to ensure that workers in key electoral areas like Washington and California are not laid off. The Clinton administration did the same thing in 1992 when Saudi Arabia agreed to buy 72 F-15's for $9 billion dollars just in time for the mid term elections.
WHAT is a champion? Who is a champion? Generally the word “champion” reflects excellence in sports. Almost instantly comes the name of Spain — as the latest FIFA World Cup soccer champion. Yet now the term is being used and applied in the realm of energy too — at least as far as the ongoing World Energy Congress in Montreal is concerned. For the last three days, I have been hearing the word “champion” at the beginning of each day.
China struggles to meet energy efficiency target
BEIJING: China may not meet an energy efficiency target set for this year because its efforts to revive its economy in the wake of a global slump have set back several years of progress on reducing its energy usage, a senior Chinese official said Thursday.
Islamists claim responsibility for Russian bombing
MOSCOW — A Chechen Islamist rebel group has claimed responsibility for last week's suicide car bombing in Russia's volatile North Caucasus that left 18 dead and 140 wounded.The Riyadus Salikhin Martyrs' Brigade says the attack was part of a "jihad" against Russia in the North Caucaus, where most of the republics are predominantly Muslim.
President Zardari favors small dams
ISLAMABAD: President Asif Ali Zardari said on Thursday that construction of controversial dams could damage the unity of the country, adding that the energy crisis could be overcome by building small dams.
Kuwait's nuclear energy project to face challenges
KUWAIT: According to recent news reports on the official statement issued concerning national nuclear energy policy, Kuwait now plans to build four nuclear reactors over the next twelve years. Perceived to be a major step following on the heels of neighbouring countries Saudi Arabia and UAE in the GCC region Ahmed Bishara, Secretary General of Kuwait's National Nuclear Committee, was quoted as saying that Kuwait will be able to develop nuclear energy as long as the price of oil remains relatively stable. The move however, raises questions about the country's capacity to execute a strategic project and the plausible benefits involved.
Bill McKibben: Is Obama Afraid of Solar Power?
I got to see the now-famous enthusiasm gap up close and personal last week, and it wasn't a pretty sight.
3 Ultra-Efficient Cars Win $10M Innovation Award
(AP) An ultralight, gas-powered car that can get 102 miles per gallon is among the winners of the $10 million Automotive X Prize, a contest to develop highly efficient, production-ready vehicles.
NEW YORK — Herb Van Gent points his infrared gun at a square of still unpainted gray shingle and clicks the trigger. He gets an immediate temperature reading: 143 degrees and rising. Then he aims it 5 feet away to a square of roof I have just painted: 98 degrees and decreasing.He smiles.
"A 45-degree difference and we're only on the first coat," he says. That means it also will be cooler inside the building, he says, saving energy.
The Peak Oil Crisis: Is $50 Oil in the Offing?
An interesting question is what motivates the publications that are pumping out stories denying peak oil? If the publishers, editors and writers believe that the possibility of an imminent decline in global oil production is as nutty an idea as flying saucers or the world ending next Friday, why do they not simply ignore the whole topic instead of denouncing peak oil as an unproved theory and concocting silly arguments as to why it can't possibly be true. The answer to what motivates these stories lies right in our daily financial press.
Oil falls to near $75 amid high US crude supplies
SINGAPORE – Oil prices fell to near $75 a barrel Thursday in Asia amid stubbornly high U.S. crude inventory surpluses even after a drawdown of the stockpile last week...."The increases in those surpluses cannot just be dismissed, regardless of the week-on-week improvements," Cameron Hanover said in a report. "There is still more oil than there has been for nearly three decades."
DOE Update: Surplus Drops for First Time in Nine Weeks
Demand decreased 1% week-over-week. YOY demand growth has been slowing. Over the last four-weeks, total petroleum demand has averaged 0.7% higher than the year ago period. Gasoline demand is up 0.5% YOY and distillate demand is up 11.5% YOY.
Oil's Advance Stalls at $84 on Point and Figure Chart: Technical Analysis
Crude oil prices may not rise above $84 a barrel because increases lose momentum around that level, according to technical charts used by traders.
Natural Gas Erodes Coal's Share of U.S. Power Production
Natural gas’s unprecedented share of U.S. power generation is likely to keep growing as the biggest price slide in a year and the prospect of stricter pollution rules erode the market for coal.Gas-fired electricity will climb 31 percent in 2010 from five years ago, while coal use will fall 6.5 percent, Energy Department estimates show. The lowest low gas prices in 11 months and the regulatory outlook may prompt companies to defer coal projects and build plants that burn the cleaner fuel, said James Rogers, chief executive officer of Duke Energy Corp., a Charlotte, North-Carolina-based utility owner.
Japan buys less Mideast light crude than planned
The state-run Japan Oil, Gas and Metals National Corp said it bought 100,000 kilolitres (629,000 barrels) of Middle East light crude for the national reserves, only one-fifth of the amount it was aiming to buy in two tenders that closed on Wednesday.
Emarat denies closure of any of its fuel stations
Dubai (WAM)--Emirates General Petroleum Corporation has denied reports by some local media on closure of some of its service stations in Dubai and the Northern emirates for running out of fuel.
Tropical Storm Karl Strengthens Over Gulf of Mexico, May Become Hurricane
Tropical Storm Karl strengthened as it moved over the Gulf of Mexico and may become a hurricane by late tomorrow, the U.S. National Hurricane Center said in an advisory issued before 4 a.m. local time.
Abu Dhabi Paymasters Fund Fujairah Oil Hub to Bypass Hormuz
The emirate of Abu Dhabi, having spent billions last year bailing out glitzy neighbor Dubai, is turning to more distant Fujairah to ensure safe, quick passage for its oil exports and improve the nation’s food security.The capital of the United Arab Emirates, the fourth-largest crude producer in the Organization of Petroleum Exporting Countries, is bankrolling infrastructure projects in the easternmost emirate, Fujairah, to gain direct access to the Indian Ocean. Abu Dhabi is investing in an oil-storage terminal and a $3.3 billion pipeline and is building the country’s biggest power and water treatment plants as well as a facility to store imported grain.
Alternative gas lights up Gulf
Saudi Aramco’s announcement this week it has discovered alternative sources of natural gas that will be expensive to extract underscores a broader shift in the industry that will significantly increase costs for regional governments.Saudi Arabia, Kuwait and the UAE are weighing the development of costly “unconventional” sources of gas tightly trapped in bedrock or contaminated with toxic substances that make extraction more problematic. Oman and Jordan, which have almost no oil and gas reserves, have already enlisted international help in harvesting difficult “tight” gas.
Liquefied natural gas terminal south of Dauphin Island approved
Gov. Bob Riley on Wednesday approved the creation of a liquefied natural gas terminal 63 miles south of Dauphin Island, after years of rejecting other LNG projects.Central to Riley’s approval of the TORP Technology proposal was its “closed-loop” system of warming the super-cold gas, which environmentalists say poses a much smaller risk to marine life and habitats than other designs.
Cnooc May Pay BP $10.2 Billion for Argentine Asset, Citi Says
Cnooc Ltd., China’s biggest offshore oil explorer, may bid $10.2 billion for BP Plc’s 60 percent stake in Argentina’s Pan American Energy LLC and will probably seek a partner in the acquisition, Citigroup Inc. said.
Taqa buys field to lift European profile
Abu Dhabi National Energy Company, known as Taqa, has bought a North Sea oilfield as it seeks to increase its European presence.The field is linked to the company’s existing pipeline infrastructure but has seen output steadily decline in the past three years.
Angola Plans to Ship at Least 52 Crude Oil Cargoes in November, Plan Shows
Angola’s daily crude oil exports are scheduled to drop in November, according to the preliminary loading plan which excludes shipments of the Palanca grade.Angola plans to ship at least 52 crude cargoes in November, compared with 55 shipments in October, the plan shows. That is a total of 49.8 million barrels, or 1.66 million barrels a day, compared with 52.3 million barrels, or 1.69 million barrels a day in the longer month of October.
‘Efforts on war footing needed to save planet’
MONTREAL: With the theme of the ongoing 21st World Energy Congress moving on to “acceptability,” energy leaders have been warned that the world needs to mobilize itself on war footing to reduce carbon emission to acceptable levels.“Whatever we do today should not only be acceptable to us, but also to mother nature,” emphasized Lester R. Brown, the guru of the environmental movement and the president of the Washington-based Earth Policy Institute, while delivering his “champion” address before the Congress on Wednesday. “We need to cut greenhouse emission by 80 percent — not by 2050 — but by 2020, if we need to grow, sustain and prosper,” he underlined.
3 Bears Threatening the New Goldilocks Economy
A third area where the US lacks the leverage to reassert herself is in the area of energy. With peak oil on the immediate horizon, we are doing precious little other than burning a lot of corn to prepare for yet another paradigm shift. As long as we’re dependent on foreigners for one of the most important staples of economic growth, we will not be able to effect meaningful changes.
Michael J. Economides: OPEC at 50
OPEC today does not have the excess capacity that it had. From a demonstrable excess capacity of over 10 million barrels per day in 1995, outside of Saudi Arabia, it has been reduced to near zero today. This is not what OPEC’s potential production capacity could be but what it is now “behind the valve”, i.e., oil they can turn off and on at will.The reason is that it takes huge re-investment to maintain production capacity: massive exploration and production budgets. Nigeria, Venezuela and Libya are suffering from gross and chronic mismanagement and Iran is gasping under the sanctions, no matter what the bravado of the leaders of these countries. In Iraq, it is hard to produce oil when people are shooting at you and, when the US military gets out, I am not at all optimistic for the country’s petroleum future. All of the above countries are producing close to one third of their geological potential.
So here we have a commodity costing some $1.50 per barrel to produce in Saudi Arabia, and probably not much more elsewhere in the production universe of OPEC, as well as in much of the installed capacity in other parts of the world where oil is also being pumped and sold into the market place some fifty times its cost.But don't despair as we can learn from OPEC's success. You see we have a commodity easily as critical to the world's economy as oil. We have corn, we have wheat, we have soybeans- all grain crops critical to the world's food supply. We are the world's most efficient and in total, the largest grower of these food grains. The United States is the world's leading exporter of wheat, together with Brazil the largest exporter of soybeans and by far the leading exporter of corn supplying more than fifty percent of the world's rapidly increasing import needs , with its growing population and the world's changing dietary habits consuming increasing amounts of meat, milk, and eggs from animals that eat corn and wheat as feed.
Cornwall ON – The attack at Pearl Harbor, in December 1941, was Japan’s Declaration of War. For them it was a resource war, as they needed oil to continue their war against China. Oil shortages were crippling the Japanese economy and war machine, just as they would Germany’s a few short years later.On Monday, September 13, 2010, the Japanese launched an attack on North America’s Green Harbor, Ontario’s Green Energy Act. This time, instead of unleashing their forces against a naval base they launched a suit against Canada and Ontario through the World Trade Organisation (WTO). The reason for the attack? To ensure Japanese industry doesn’t get competition from Ontario.
As Europe Kicks Coal, Hungarian Town Feels Pangs
OROSZLANY, Hungary — When the directors of Hungary’s last remaining coal-fired power plant announced that they would close the coal mine and begin dismantling the plant at the end of this year, the news sent shock waves through this weathered industrial city, where a statue of three miners stands in the square.It was well known that the legendary Vertesi plant and its mine were kept afloat only by more than $30 million in annual state subsidies. But more than 3,000 of Oroszlany’s 20,000 residents work in industries related to coal. The government-owned plant is one of the town’s biggest taxpayers. And the area’s 5,000 homes, its stores and its factories all get their heat from the Vertesi plant.
“We know that coal is an old technique that is not sustainable here, but we have not found an alternative,” said Gabor Rajnai, Oroszlany’s mayor. “Everyone is thinking about how are we going to keep warm in winter.”
'Rosneft could save billions on tax break'
Russian oil producer Rosneft may save several billion dollars from a proposed extension of tax breaks for its East Siberia greenfield, Vankor, according to reporters.
Putin looks sour loser on Nabucco
Russia seems to have lost its lobbying battle in Europe for its South Stream pipeline carrying gas and against rival Nabucco, which is planned to run from Azerbaijan via Turkey to the European markets. At present, Moscow seeks as a last resort to negate the availability of gas supplies to the Nabucco project in the Caspian basin.
Russia to stand by South Stream under any circumstance - Shmatko
MOSCOW (Itar-Tass) -- Russia does not intend to abandon the implementation of the South Stream gas pipeline project whatever proposals for participation in the Ukrainian gas transportation system may be made to it, Russian Energy Minister Sergei Shmatko said on Thursday."At this point there is no such question on the agenda at all, we have no bargaining. If someone has thought (and hopes) that some better conditions can be offered to persuade us to abandon South Stream, that person got it all wrong. We do not discuss this topic at all," he said.
Norway says 41 oil firms applying for licenses
(Reuters) - Forty-one oil and gas firms have applied to explore for petroleum in mature areas off Norway, the country's oil and energy ministry said on Thursday.The applications are for licenses in mature areas, where the expectation is mostly for smaller discoveries that do not justify an independent development, the ministry said.
Enbridge Prepares to Start Illinois Crude Oil Pipeline After Leak Repaired
Enbridge Energy Partners LP said it’s preparing to start early tomorrow its largest oil pipeline linking Canada and refineries in the U.S. Midwest, after repairing a leak in Romeoville, Illinois.
PG&E had OK to fix pipe near blast; work not done
SAN BRUNO, Calif. — Pacific Gas and Electric Co. got state permission in 2007 to spend $5 million of ratepayer money to replace a 62-year-old section of the pipeline that exploded last week in San Bruno but the work, scheduled for 2009, wasn't done, a utility watchdog said Wednesday.The utility repeated its request in 2009, asking for $5 million more to do the job by 2013, even though ratepayers had already started paying for the project, according to TURN, The Utility Reform Network, citing documents that PG&E submitted to the California Public Utility Commission.
Enbridge, U.S. Regulators, Lack a `Culture of Safety,' Rep. Oberstar Says
Enbridge Inc. Chief Executive Patrick Daniel and pipeline industry regulators came under fire today from U.S. lawmakers following oil spills in the Midwest and a fatal natural gas explosion in Northern California.Enbridge, whose lines have caused oil spills in Michigan and Illinois, lacks “a culture of safety” and the U.S. Pipeline and Hazardous Materials Safety Administration is “a disaster of its own,” James Oberstar, chairman of the House Transportation and Infrastructure Committee, said at a hearing.
BP insists deepwater drilling in North Sea will go ahead
BP is determined to press ahead with plans to drill deepwater wells west of the Shetlands despite criticism of its "outrageous" attitude to the risks of drilling in the US and worries about its North Sea safety record.
Drilling-Ban Job Losses Smaller Than Estimated, Obama Administration Says
President Barack Obama’s moratorium on deep-water drilling is costing no more than 8,000 to 12,000 jobs because offshore rig operators have retained skilled workers during the suspension, according to an administration report.During the moratorium, which began May 28, the average number of rig workers fell by about 2,000 and spending by drillers is declining by $1.8 billion, according to the report to be released today. The additional job losses were from companies that service drilling rigs and other businesses along the Gulf Coast.
Louisiana sues drilling companies over Gulf spill
ATLANTA (Reuters) – The state of Louisiana sued Transocean and Triton Asset Leasing in federal court for discharging oil into the Gulf of Mexico during the BP oil spill, according to court documents.
BP, Spill Victims Clash at First New Orleans Hearing on Combined Cases
BP Plc should face test-case trials over Gulf oil-spill claims within a year, lawyers for victims seeking billions of dollars in damages said in court filings.BP and other companies being sued over the April explosion of the Deepwater Horizon drilling rig should begin pretrial information exchanges next month, the lawyers told U.S. District Judge Carl Barbier in New Orleans.
Transition Barrie's unleashing at harvest fest
That feeling of powerlessness in the face of big change brought a group of Barrie residents together in the spring of 2009 to explore local Transition opportunities. Through awareness-raising events such as Eco-fest, presentations to local groups, open space forums, informal meet-ups and film screenings, Transition Barrie is moving toward the next stage of community engagement, developing hands-on projects. Focus groups are working on diverse topics such as urban food production, seed saving, food preservation and root cellars, local and alternative energy sources, electric cars, car-sharing, and housing alternatives -- all of these to culminate in the grand vision of an Energy Descent Action Plan for Barrie.
From the Roof, to a Battery, to the Grid
In the garage of Peter Rive’s San Francisco home is a Tesla Motors lithium-ion battery pack. It is not connected to Mr. Rive’s electric Tesla Roadster sports car, but to the power grid.The California Public Utilities Commission has awarded $1.8 million to Mr. Rive’s company, SolarCity, a residential photovoltaic panel installer, to research the feasibility of storing electricity generated by rooftop solar arrays in batteries.
Busting Myths About Photovoltaics
The European Union Photovoltaic Solar Energy Conference I just attended stressed the need for public education about photovoltaics — the silicon-based solar cells that turn sunlight into usable electricity — to increase acceptance of the solar-power technology.Myths abound about photovoltaics that hinder their growth, and I’d like to burst some of those misconceptions right here:
Hydrothermal Biofuels Research Pilot Plant opens in Sydney
The NCRIS Biofuels Research Pilot Plant is the first semi-automated, continuous-flow kilo-scale research facility of its kind in Australia. The pilot plant will look at how biomass – particularly woody plant matter – can be used to produce biofuels and other chemicals more efficiently.As Peak Oil approaches, demand for renewable liquid transport fuels is increasing but a cost-effective means to produce non-food based biofuels on a large scale is yet to be found. The pilot plant allows experimentation with the variables of production, with the aim of finding a viable processing method.
Salvos Fly as Ethanol Ruling Nears
The Environmental Protection Agency has said it will rule by the end of this month on whether to allow gasoline retailers to sell a mixture that is 15 percent ethanol and 85 percent unleaded regular, a change from the current maximum of 10 percent ethanol. Coalitions have lined up — on one side, the corn farmers and ethanol producers, and on the other, the oil refiners, auto companies, manufacturers of gasoline-powered equipment and companies that use corn to raise livestock.
York sewage-treatment plant cuts waste, creates a resource
YORK, Pa. - The latest substance from the York sewage treatment plant isn't stinky sludge or bubbly wastewater.It's little white pellets, about the size of small seeds. And they promise not only environmental benefit but real money.
The pellets are fertilizer, and a formulation that incorporates them, produced by an Allentown company, is being tested at Longwood Gardens in Kennett Square.
Credit Suisse selected as adviser to UAE nuclear programme
The Emirates Nuclear Energy Corporation (ENEC) has appointed Credit Suisse as the financial adviser to the country’s groundbreaking civilian nuclear programme.
By 2025 one in two people will not have fresh water -- Swiss experts
GENEVA (KUNA) -- A Public forum hosted by Swiss Agency for Development and Cooperation (SDC) said on Thursday that by 2025, one in two people will suffer from a lack of fresh water. "Population growth, uncontrolled urbanisation, migration, and climate change will place greater demands on the planet's water resources, making water security one of the most pressing challenges of the 21st century" said the SDC experts."Today, one billion people have no access to drinking water, 2.6 billion are deprived of basic sanitation. Every day 5,000 children die as a direct result of a lack of clean water and adequate hygiene facilities," According to the available Data from the UN organisations and NGO's concerned with this problem.
Floodwaters Give New Life to Pakistani Class Dispute
The damage done to the Indus delta by nearly 100 years of extensive irrigation upstream — perhaps the largest in the world — is well documented. It has made Pakistan a food and cotton exporter and helped enrich landowners the length of the river. But so much water is used up that the Indus, one of Asia’s greatest rivers, runs virtually dry before reaching the delta, where the river empties into the Arabian Sea.The lack of river water has allowed sea water to inundate some two million acres of the delta, destroying once fertile paddy fields and killing off coastal mangroves, which are the natural breeding ground for fish, say leaders of the Pakistan Fisherfolk Forum, a nongovernmental organization that works to support the rights of the fishermen communities.
How science will shape climate adaptation plans
Some would argue that the demand for information on how climate change will affect our future outstrips the current capability of the science and climate models. My view is that as scientists, we can provide useful information, but we need to be clear about its limitations and strive to improve information for the future. We need to be clear about the uncertainties in our projections while still extracting useful information for practical decision-making.
Shell, BP May Reap `Serious Profit' by Using CO2 in Oil Fields
Royal Dutch Shell Plc and BP Plc stand to make “serious profit” by pumping carbon dioxide from European power plants into North Sea oil fields, according to Petroleum and Renewable Energy Co.Putting carbon dioxide into old wells may yield profits of as much as $40 a metric ton of oil in the next decade, Stewart Whiteley, managing director at the consultant known as Petrenel, said yesterday at a seminar at London’s Geological Society.
Islanders plead to Australia for help
The people of the Cartaret Islands in Papua New Guinea, who are facing inundation from rising sea levels, have appealed to the Australian government for help.
Who Killed the Energy and Climate Bill?
Several months after it died, it’s still a messy process to piece together just who killed the prospect of climate-change and energy legislation that was up for debate in the Senate this summer. Democrats reflexively say it was Republicans and their Big Oil friends, whose businesses would take serious hits with substantial cuts of greenhouse gases or the federal mandate of a renewable-energy standard. Republicans, meanwhile, point to a series of different factors, including Dems being too ambitious and going too far from what the country could handle.
Arctic storms to decrease with global warming: study
PARIS (AFP) - Brief but vicious Arctic storms known as polar lows are likely to become much less frequent as global warming intensifies, scientists in Britain determined on Wednesday.Polar lows brew in ice-free high latitudes in the North Atlantic in winter and can swiftly become a hazard for shipping and oil rigs.
Ozone recovering but will take longer over poles-UN
GENEVA (Reuters) - The ozone layer that shields life from the sun's harmful rays is projected to largely recover from harmful chemicals by mid-century, but it will take longer over the polar regions, a United Nations study said on Thursday.Ozone depletion will continue for many more decades because several key damaging substances endure in the atmosphere for a long time after emissions end, it said.
Arctic sea ice melts to third lowest area on record
WASHINGTON (AFP) – Arctic sea ice melted over the summer to cover the third smallest area on record, US researchers said on Wednesday, warning global warming could leave the region ice free in the month of September 2030.
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On the BBC news this morning they talked about the trapped miners in Chile. They said the pilot hole for the rescue shaft will probably break through this weekend. They still need to ream it out to a larger size to accommodate the rescue.
They are also talking about a November rescue...
Power and Water Costs to Rise $600
A perfect "Limits of Growth" moment. As growth in water demand increases, it outpaces the ability of the enviroment to provide the service (water). Industrial production must then be diverted from growth to provide the same service, and at high cost.
Land is cheap in Detroit. And it rains there.
You are obviously not an economist. So listen up - You see, as water becomes scarcer and more expensive, we will develop the technology to substitute something else for water. Capiche?
;-) ;-) ;-)
That is unofficially the one millionth time that joke has been made on The Oil Drum.
At this point, I am sure we could save a measurable amount of energy by not going to two million.
http://www.bloomberg.com/news/2010-09-16/bank-seizures-of-u-s-homes-reac...
'U.S. Home Seizures Reach Record for Third Time in Five Months'
Now this is an interesting tidbit:
Obviously there is an attempt here to control the downward sprial of home valuations artificially, by not only controlling inventory on the market, but also to influence the stats potential buyers are receiving as far as default notices goes. More flim-flam when what we need is more transparency.
Our home is underwater by 1/3 of the mortgage value, and I was discussing with my wife, asking at what point do we walk away from what turned out to be a bad investment? It's an interesting question, because all we have right now is hope-juice that prices will rebound to at least get out of being underwater. But it looks from articles like the one above, that prices will continue to decline. I asked her, "What if we are 2/3 underwater? Do we walk then?" She wryly laughed. But the bigger question is for the millions of others in a similar situation. I'm vexed. Any thoughts of what's best to do from Drumbeatland?
Tough question, Earl. Stoneleigh would likely say run like hell, rent something cheap and stockpile cash. Our situation is that 3 years ago we had almost 80% equity in our place per appraised value, which I would guess has been cut in half considering how home prices have crashed. Banks don't care about equity it seems, just that you can make the payment. In our case, we plan to stay here for the duration, so we are motivated to pay off the (relatively) small amount that we owe (really hard these days). We don't see our place as a financial investment. It's much more than that.
When does a home become just a house that makes you a lifelong credit/tax slave?
With land prices dropping and rental costs down, it might make sense to walk away, save your money and buy a some property for cash. At least you guys would have a place to pitch a tent WTSHTF :-(
If you are going to walk way, then stop paying, and hoard the cash now. It'll take them more than a year to kick you out. A year rent-free can be nice.
Don't do it until you've spoken to a lawyer and accountant and understand all the possible implications, though. In some places they can come after your other assets. And your credit will be trashed anywhere.
I think you have to ask yourself a couple of questions :-
1. Do you like your house ?
2. Do you like where you are located ?
3. Were you planning to stay there for the forseeable future, or planning to relocate ?
4. Is your mortgage payment higher or lower than an equivalent property for rent ?
5. Can you pay it off in your lifetime ?
Then you can decide whether you have a home or an "investment".
If it truly is a home, what does it matter if it is "under water" ? hah - figuratively speaking ;)
This gets to the heart of the matter.
A house is not an investment – it is a depreciating asset.
This national obsession (one article called it a “fetish”) with house “values” borders on mental illness.
A certain amount of disconnect has to occur when engaging in the real estate market because just below the surface everyone has at least an inkling that it really is nothing more than a ponzi scheme whereby “investors” are always trying to unload their house on the next Greater Fool.
Trouble is most people willingly bought into this and didn’t really care as long as they had a roof over their head and it didn’t bankrupt them – but once the ponzi prices kept ratcheting up – the whole thing choked when the system couldn’t provide more and more fools without the use of BS “financial instruments”. Tell me how we can continue to sell houses to each other at ever increasing prices while real wages have been decreasing for decades – this is fundamental and it just does not add up.
I don’t understand all this underwater stuff anyways – it’s all fueled by propaganda from the real estate – industrial complex. Home prices went up what 50 – 75% in about 10 years with NO underlying fundamentals to support that kind of increase – that was all BS. I consider the underwater nonsense to be similar BS.
Buy a house – live in it – make it a home. Stop supporting the NAR nonsense by endlessly shuffling homes back and forth.
I agree.
People recognize that when they pay $30,000 for a new car - by the time they drive it home from the dealer, it is only worth $25,000 and yet they pay it off.
Same with $100 pair of shoes purchased on credit. You wear them one time, they are worth $10 on eBay.
What we've been suckered into is the fact that mortgage terms are now 30 or even 40 years, and incomes are so low we'll mostly never pay them off.
Even deeper: Who conned all Americans into thinking that "you get married, buy a house, raise a family" ?
Think of all the family wealth that exists once one family generation _has_paid_off_a_house_ and then subsequent generations live in that house?
The subsequent generations now have no mortgage payment. Ponder that one a while.
Catskill and s_t,
I am with you - I bought my place to be my home, not an "investment". I hope to live here for the rest of my life. I rented for years until I found this place, and though employment issues are becoming a problem, I intend to make my stand right here.
This is my home.
Other people (and particularly younger people) seem happier being nomadic, which is fine. That's what rentals are for!
We now have two houses, one our primary residence, both with rental apartments, and knock wood, all occupied. This, I hope is the exception to your statements above. Another exception on top of that (literally) is how much energy production you can eek out of your rooftop. Since we include Heat/Hot Water in our rental agreements, this can show us a direct financial benefit. As it stands, we largely just break even on the Mortgages ATM. Great incentives for both insulation and generation, though.
If you can make your house a 'producer', either of energy or of housing spaces, then you do have an investment with a measurable return, even if the return is still net-negative requiring you to continue paying for aspects of it that other homeowners will always pay, you've wedged an advantage out of it, just the same.
Bob
The ol' argument that any amount of mortgage makes sense to pay no matter how underwater a mortgage holder is, doesn't make sense because a home is both a home and an investment. For example, let's say the value of the home is 100k and the loan is 400k. Now figure out the total cost/payements at say 6% interest on a 30 year note and what are the total payments made. Let's say you stay for the duration and pay 700k to own a home now worth 100k. Does that really make sense just because you can call it your home? Home is really any house you happen to be living in at any one time. It's nothing to get too attached to emotionally, because it might be a real dumb economic decision to stay.
And from what I've read, the wealthy bail on their bad real estate investments, including their primary residence, and banks seem fine with the wealthy doing that, but the banks expect joe everyday to stay put and suffer the economic consequences of a past real estate paradigm.
There is some math, some point or threshold of percentages when it just makes no sense to stay put. I'm wondering what that math is. If real estate dives another 20% does it make sense to live and work simply to help the bank realize their original investment. Well, the original bank sold off our package several times, so how can we have a loyalty to a 3rd or 4th party recipient?
There's a reason why the rich walk away from bad properties and its because the bottom line doesn't work. Rich or not, I want to make the right decision. I suppose at some point it will be obvious.
My point is there are reasons other than economic ones for being in a certain location. If you are only looking at the numbers side of it, you've missed the point by a mile.
Look around your house - how many things have you purchased because they have an intrinsic value to you which has nothing whatever to do with the price you paid, or their current value, whether or not you paid them off over years on a credit card or loan, or paid cash ?
A house can be :-
1. Shelter
2. Source of revenue
3. Family heirloom
4. Source of food
Why should you care what "rich" people or bankers are doing ? And so what if you pay $400K over the life of the loan on a purchase of $100K ? How much would you pay in rent over the same period? Try paying in more every month to principal, to reduce the term, if it bothers you.
Sure, there are other expenses related to home ownership that renters don't have. But you can do things with the property that renters often can't do, unless you have a particularly good relationship with the landlord.
My other point is - since the entire paradigm we live in is changing, time to get off the platform of "how can I make more money?" People are spending so much time worrying about whether they made the right call in order to make money, or rather, not to lose money (the prime cardinal sin of western civilization) they end up missing most of the rest of life.
It never ceases to amaze me, particularly in the US, how people are so focused on whether they are going to make or lose money.
When you get to being 100 years old, are you going to look back and see all the great things you did with your life, or are you going to forever regret paying too much for a house ?
A house can be a :
1) Millstone around your work
2) An endless expense for repairs and replacements
3) Family boondoggle
4) Hole for food money to flow into
With rent, the typical renter shops for the least they can pay for what they need now, and they typically stick with it until it fits like a shoe that's too small. But if they need to move for a job, or because they lose a job, the end is always in sight. Expenses are static and known in advance.
With purchase, the typical buyer buys as many square feet as they can afford, heavily mortgaged, with corner-cutting on quality and efficiency. Getting out is hard, and always slow, and you make life decisions based on the house over many other factors. Expenses are fluid, growing, and often unexpected.
It's not a question of money alone, it's about how you run your life. If everybody paid cash, then sure, buy a house. But 95% mortgaged on a teaser rate with a payment that necessitates a solid income robs you of options, and is a gamble that go bad at any point.
Note that a young couple could choose to buy a cheap fixer-upper, pay it off quickly, bank the payment for a couple of years, and trade up. Do it a couple of times and you're 35 with a paid-off McMansion. Do it the normal way and you're in your second house, with a 30-year note refi'd for the third time and all the potential equity gone to finance fees.
Better still, make the first house a duplex - live in one half, rent the other, and have it make the payment for both.
"Expenses are static and known in advance"
Every rental contract I've ever seen has an annual escalation clause. If one is renting in an apartment building, costs are divided up amongst all the units. If there is maintenance required on a building, that's planned in advance and included in the calculated rent, projected out a number of years.
If someone moves out of a rental, and maintenance costs have increased since the former tenant was there, it's pretty typical to see the rent for the unit go up.
All the small businesses I work for have seen rents continue to rise, even as they are earning less, meaning that rental cost becomes a larger percentage of overhead.
"With purchase, the typical buyer buys as many square feet as they can afford, heavily mortgaged, with corner-cutting on quality and efficiency."
It is a pretty recent development that people could buy this much house with no, or a small, downpayment. That wasn't true in previous decades. It wasn't true as late as 2000. It's only been relatively recently that the explosion in prices and the proliferation of teaser rates and other creative mortgage products have been seen in the marketplace.
There are plenty of people I know who have put down sizeable downpayments on well-maintained and well-constructed homes, and still have plenty of equity, even though values have fallen.
And they purchased for reasons other than to do a quick flip for profit. Some followed jobs. Some followed certain school districts. Some had family reasons.
Just because some people overextended themselves during the bubble period doesn't mean everyone has.
Many of the problems we've been seeing are in the condo market. There's been a proliferation of new construction, every year with more and more bells and whistles, in order to make the units more appealing than the competition. Condos have become commoditized - they are purchased by "transients" - often young professionals who don't plan to stay long. Three year old condos are suddenly obsolete, and can languish on the markets for months, if not yeas. If you don't have granite countertops and stainless steel appliances, separate shower and tub, dual vanity, latest and greatest finishes, you are obsolete.
This is not real value - it is hype and marketing by realtors and developers.
I took on an extremely reasonable fixed-rate mortgage in '93 on a small house, a barn, another outbuilding, and 15 acres of land. My monthly, including insurance and property tax to escrow, is not my biggest financial worry by a long shot.
I love it here. I bought this place because it was where I wanted to be. The thought of leaving here never entered my mind. Indeed, with all I have put into this place, the thought of leaving here fills me with horror. Ain't gonna happen.
My choices had nothing whatsoever to do with bubbles and flipping and all that crap. I honestly don't understand that mindset.
But if it goes up more than you want to pay, you can move.
They also usually don't raise the rent as much on established tenants.
The rent can also go down if market conditions warrant it.
Agree with Paleo that multi-family homes can be profitable, if you don't mind the work involved. My friend who made his fortune as a landlord never bought single-family homes. He said it wasn't possible to make a profit renting them. Even now, when he's retired and spending his time partying and playing golf...he lives in a house that's been divided into two apartments. He and his wife live upstairs, and a tenant lives downstairs. He's a wealthy man and could easily afford it, but he just can't bring himself to "waste" money on a single-family home.
Leanan, I don't see anything in your post other than the profit motive. It seems to me that is an obsession we'd be doing well to steer away from, knowing what's heading our way.
Perhaps you should stop reading the financial websites ;)
"But if it goes up more than you want to pay, you can move."
This assumes there is something cheaper available in the same area, if someone wants to continue to be close to a certain job, or transit, or family. It assumes everyone *wants* to be transient.
Usually, if rent in one building is trending up quickly, the general neighborhood is, also, which means that a person would then have to move further away, resulting in increased travel costs, to a fixed place of employment. No free lunch there.
"They also usually don't raise the rent as much on established tenants."
'They' raise the rents according to the lease agreement. Sometimes I've seen people be successful in negotiating a change in the terms - at least, temporarily.
"The rent can also go down if market conditions warrant it."
Only for new tenants, in a situation where there is a glut of rentals, and a lot of competition in a given market. If there is high demand for rentals, the rents generally go up.
On the contrary, I think looking after one's own financial welfare is going to be more important than ever...knowing what's headed our way.
No, it doesn't. What you want doesn't really enter into it.
I've rented a long time, and I've never seen any raise built into the lease agreement. Rather, the lease is for one year, and at the end of the year, they tell you the new rent. You decide if you want to pay it or not. It's usually higher, but sometimes lower, depending on market conditions.
I am paying several hundred dollars less for rent than many of my neighbors, simply because I've been here awhile. I'm a good tenant, pay on time, and don't cause trouble, so they don't raise my rent. They don't want me to leave. People who don't pay on time, or who cause problems, get their rents jacked up. IME, that's the way it works whether your landlord is a one-man operation or a huge corporation.
I've done the books for several rental companies and I can't recall seeing rents fall in recent memory for existing tenants, unless, perhaps, there was a specific case of financial hardship or illness.
If you are a long-term tenant and paying less than your neighbors, it substantiates what I said elsewhere - that if you move out, they'll jack up the rent on your unit to be more in line with the others that turn over more quickly.
Rentals also factor in increases in property taxes and maintenance costs, although upgrades such as new refrigerators are generally regarded as capital investments.
It's possible your jurisdiction has limits on the amount the rent can rise every year on existing tenants.
Sure, one can move to cheaper premises if the rent gets too high - but that's not a cost-free exercise. One could lose a security deposit. Then there are the costs of relocating phones lines and such. And the moving costs.
No, that's not it. They can raise the price to whatever they want. It's just not in their financial interest to do so.
True. (Though I suspect few lose their security deposits. My family has always gotten theirs back. And deadbeat renters are likely to claw it back on their own by simply not paying the last months' rent.)
But you may be forced to move anyway, even if you "own." It's not like having a mortgage means you never have to move. It just means it's a much bigger pain if you do.
I know some people are preparing for peak oil by accumulating stuff. Children's clothes, tools, solar panels, toilet paper, whatever. I'm trying to cut back. To make it easier to move, if necessary.
All of which, once again, leads me to conclude that, all things being equal, renting vs owning is totally a matter of personal preference, and vision for the future.
In my reply I didn't say numbers only, I said 'home' and 'investment'. Meaning, aspects relating to both are important. If the area is so important, then maybe a foreclosure down the street would make more sense to avoid several hundred thousand dollars in losses. For most of us a house will be the biggest investment of our lives.
You are aware that the wealthy are walking away from big losses on their homes in much greater numbers than those with less, right? Wealthy, meaning they understand better than most how to make a lot of money, and maybe that doesn't include sacrificing one's hard earned money to make the bank happy? I have lots of clients that are quite well off, and they leave those bad investments in their wake and have attorneys handle the details. Do a google search on it - you'll see I'm right.
No, I'm not super-wealthy. I don't give a rat's &^% what rich people are doing since I really don't know any.
Most people I know are just living their lives, and trying not to let things get too much on top of them. Some are in pretty dire straits - but are pretty resilient and just concerned about making the best of some bad situations.
What I do know is that money comes and money goes. Ask Bernie Madoff. And no, I don't know him.
Over a lifetime, one minute you have it, the next minute it is gone. What you are left with is what is inside yourself.
I think, seeing what is coming down the pike at us, it is of more value to have internal resilience than cash in the bank.
You sound like you're ripe for the ol' saying, 'A fool and their money are soon parted'.
Is money the only thing you think about ?
I've hiked across 5 continents - the people I've met along the way are my most valuable "acquisition", along with what I've learned along the way.
You'd have to have visited a place like Lhasa in Tibet to understand what I'm talking about.
If I end up with any money left over, I'm instructing my executor to donate it.
You're acting like its a black and white issue. Like I have to choose gaining personal insight through interesting experiences that I can reflect back on, or I can choose money. Black and white thinking is not my thing, I prefer to weigh all aspects related to an issue. And that's part of the wisdom of which I have accumulated as an adult. But if black and white thinking is the viewpoint you've chosen in life from your experiences, then by all means go with it. But you may find over time its somewhat too simplistic. Afterall, isn't it the complexity of issues like peak oil and climate change disruption that draw so many in to discuss them? Isn't it the nuance of life that beacons us forward? Hmm, well, at least think about it.
It's precisely the complexities of Peak Oil and Climate Change disruption that have made me realize that worrying about mortgages is a waste of time. I'll keep paying mine as long as it is still feasible, because I happen to like where I am, and, if I can't, I'll rely on my well-tested ability to know how to make a plan.
Excellent. Now if you can just stop judging for people for not being as cool as you, everyone will happy.
The poor guy has explained he's 30% underwater on his mortgage. He has to think about money.
I'm enjoying myself at the moment too. I live in a great place, am doing fun work (and not much of it) and have no debt. But, I don't need to rub other people's faces in it.
"...But, I don't need to rub other people's faces in it."
It seems you just did :-0
I am quite sure you recognize the difference between saying something and rubbing it in someone's face.
However, if Peakerl feel I have rubbed this is his or her face, I will be glad to apologize. If not, will you say you were wrong?
Jack, you use "you" alot ;-)
"The poor guy has explained he's 30% underwater on his mortgage."
Read his post again - he never said he couldn't afford the payments. He wouldn't be complaining if the value had gone up instead of down.
spring_tides,
I've not had quite the travels that you have, but I have been around in Central America. I think I know what you mean.
There are people who understand nothing but numbers. I call them "lost souls".
You and spring_tides ought to meet and rub your two nickels together.
Peak Earl, you strike me as a lost soul.
But probaby your'e just trolling. No one could possibly be so obtuse.
Enjoy your "wealth". Whatever that means to you.
You sound like a soul looking to elevate itself by trying to pass judgement on others. Whereas I am soul that sees the beauty in all souls - even one's that cannot see all aspects of a topic.
Of course I pass judgement. I judge that people whose measure of value is strictly numerical/monetary/dollars are lost. Obviously that's my judgement. That was the entire point of making the post. If that doesn't represent your position, feel free to rebut.
That's what we do here - we make judgements, and we debate, and so on and so forth. Clearly you just judged me. Don't get all self-righteous. I am fairly well acquainted with the condition of my soul. Believe me, it's not a matter of "elevation".
You seem to be itching for a fight.
I'm thinking people in the US are going to have a very hard time adjusting in the coming years, because they have a long way to fall, in resource terms, compared with people in other countries.
Now that I can agree on - here, here. Ok, let's all be friends and go on our merry way. I need to go back to work, because I am definitely not rich.
spring_tides:
The rabbit hole is deeper than you think.
The plutocrats now have so much money that energy is no issue for them, and never will be. They have the means to bypass anything which might happen in society - starvation, disease, war, revolution, you name it.
Which means they and their children survive, and we and our children don't.
Think about that for a second.
Please!
Write a screenplay or something.
They might have plenty of Means, but they're still as vulnerable to bad luck and unintended consequences as anyone. Over mystifying the rich is a pretty dry fantasy.
"After the game, the king and the pawn go in the same box."
Interesting comment.
So, if your grandmother had made that mortgage loan so you could buy that bigger house, you'd stiff her because the value declined. It is all her fault because she believed you would actually make the payments you agreed to make. Since she must have had more money than you (she could write the check) then she is obviously rich and deserves to get stuck with a loss. Wonderful thoughts for any lender to ever read.
The earlier poster recounts how his mostly paid off house has declined in value. Who will write him a check for what he is now underwater, compared to the high value? Nobody will. But I suspect that he will have to contribute in some way to the payoff of the default on a walk away. so he gets to pay for two houses and only owns one. Sweet.
The people with two $50,000 cars in the driveway know they will be of little value in a few years. They keep paying and driving anyway. Both of those cars will move with them when they decide to just quit paying the home loan because the house is not profitable. How wonderful is that?
Corporations aren't people, and shouldn't be treated as if they are.
Exactly. Neither is the gov't. There are multiple angles to this, all rooted in public policy and the associated regulations. Most people don't make friendly deals with sociopaths, and that's how you should view a relationship with any major corporation.
If you don't want people to walk from underwater mortgages, don't have policies which incent 95+% mortgages and low teaser rates. The simple fact is the gov't wanted people to buy houses, and so they backstopped loans and pushed easy deals. The lending world was happy to oblige, with little risk and nice returns on servicing fees.
In the end, all the risk is shared between the borrower and taxpayer, but all the proceeds go to the lenders...except for equity upside, with is variable, long term. Where is the "fairness" in that?
A more reasonable (dare I say conservative?) model is to require much high down payments, and clear equity risk splits between the borrower and financier according to their contribution. Of course this means the lender would need a higher interest rate or a share in the upside equity to make the risk worthwhile, but that's OK.
Naysayers would say "we'll all be renters or live in hovels", but real-estate prices would be much lower, probably below the cost of construction, and the entire system would be much smaller. And that's the real problem for the gov't -- they want that housing contribution to GDP to be large.
Yes. I know some would argue, "But if you don't pay back your loan, you're hurting other borrowers in the long run."
But that's what needs to happen. Some banks should go under. If that makes it harder to get loans, so be it.
Some people in California, where home prices have dropped 50% in some neighborhoods, are arranging a new mortgage, buying the house next door for half the price, then walking away from their underwater mortgage. They get a black mark on their credit histories, but they're saving so much money on the payments they don't need credit anyway.
But why would another bank agree to give them a mortgage, when it must be obvious what they're planning to do? Because they don't care, as long as they make a profit.
Clark Howard has been advising people who have been foreclosed on on his TV show. He says you can still get a mortgage if you have a recent foreclosure; you just need a 30% down payment instead of 20%.
Again, why would a bank give another mortgage to someone who's "welshed" on his previous one? Because they think they can make money on it. They aren't interested in punishing people for their sins. They only want to profit from them. The banks don't see it as a moral issue, and neither should the consumer.
The bank would do the same thing to you and call it good business.
As the crisis in the world economy deepens, the laws that currently let you walk away could change. You might want to consider that in your deliberations. (Just as bankruptcy laws might get stiffer, again.)
The regulatory environment will change but how and when are the key questions.
In the UK you cannot and have never been able to walk away from a secured (or even unsecured) debt. Debt agencies will chase you through the courts and take all of your personal assets, a percentage of your future income, and/or destroy your credit rating for life, for a trivial level of unpaid debt, unless you get a decent lawyer or have dependant children.
Well, this isn't the UK.
I think it's likely prices will continue to decline. Look at Japan - 20 years later, and prices are still way below the peak, and may not have hit bottom yet.
Japan has a declining population. Not saying that U.S. prices will not continue to decrease but our growing population may be a mitigating factor.
That's true...but the average home in the US is more than twice the size as in Japan. We could double up, and still have more room than in Japan.
...and the massive demographic shift from boomers who have lived in their homes who now want to downsize or sell to get their cash out is another major trend to consider.
On balance, the forces that will push prices down far exceed the magnitude of any force pushing the prices up.
Real estate will continue to be a bloodbath this decade. Unless they are certain they have found their landing spot, I advise people who have equity in their homes to get it out while they can (if they can).
This brings up an important point about the housing bubble. The basic assumption of home-as-investment, "real housing prices generally go up", assumes that there will always be unmet demand for houses.
But as of 2007, we sold a house to everyone in the U.S. who could afford one, and then we sold a lot of houses to people who couldn't afford one, and then we built a whole lot more houses for buyers who didn't exist, and then we started having the federal government help pay for houses for people who couldn't afford them...
The only way to make housing prices rise again is to create demand. Creating demand means creating people who want houses. How can we do that? In the long term, only two ways. A) Have lots of babies. This is too slow, they won't become homebuyers for decades. B) OPEN THE IMMIGRATION FLOODGATES. Come on in, everybody, get a job, pay your taxes, get a mortgage and become part of the American Dream!
If I remember my highschool economics correctly, creating demand is only one way to increase house prices. The other is to decrease supply.
There is simply no way we should be building any more houses. We should be stripping many of the empty ones and tearing them down for scrap. Lots of areas desperately need (or will soon realize that they desperately need) local land to grow food on.
It's time for much of America to emulate Detroit and massively down-size the urban infrastructure and re-ruralize much the urban landscape. The sooner we get to it, the more resilient our neighborhoods will be.
Many of those immigrants you seem to fear so much will have fairly recent experience in growing food and all sorts of other self-sufficiency wisdom. You should be so lucky to have such a neighbor.
The problem is, the construction industry ranks just short of health care as a U.S. economic sector. "Just stop building houses" has some fairly significant economic consequences. (Personally I think they're going to have to downscale one way or another, but they won't go down without a fight.)
As for scrapping old houses, great plan, but who's gonna pay for it? Median home price in the U.S. is currently $170,000. If you buy old houses valued at 1/2 the median, and you buy as many houses as are currently being built each year (270,000), the price tag comes to $22 billion/year.
On the other hand, you could also fill those homes with 1 million new immigrants per year: the cost to do that is essentially zero. We can still do your "scrapping old houses" plan: I guarantee you it'll be a whole lot cheaper to buy and scrap their old house in Guatemala or wherever than to buy their new one in the U.S., and the environmental effect will probably be larger too.
There's another way.
C) Tear down lots of older, energy inefficient houses and rental units, which would create demand for housing. Replace them with dwellings which use better insulation and low energy consuming appliances. Require that these new houses take advantage of the latest in renewable energy sources.
E. S.
Maybe my perspective is a bit extreme here in Florida, but its been interesting to see the change in perspective over the past few years here....from 200?-2005; 'Home prices never go down!' "Buy now or never'
to
2008-2009 - 'Well too late to sell now...forclosures everywhere...and besides, I'm sure we've hit bottom....'
It's pretty rare to hear people around here talk about hitting bottom now in regards to home prices, but even so I think there is the glimmer of hope that happy(ier) days will be here again soon.
I'm supposedly to the point where my mortgage is right around what it's 'worth'. I still couldn't see myself leaving unless I lost my job. But then again, being a few dozen grand underwater might change my mind...
Reminds me of this graph, which was much-posted a couple of years ago.
lol!
"Ha ha ha See there is no bubble."
I believe that land in the countryside is stable now in price---if you want to buy a house near some water with a bit of land you will pay no less than you would have 10 years ago. Those places are not near cities. Cities have had some property declines. There are a lot of empty buildings! That is hurting the construction companies who would like to build more. (Hooray for PO because it stopped the monster.)
Living in a "sustainable" house in a place with good water and near to a small town, yet you don`t need a car...the prices of that kind of land are stable, even increasing.
I'd say, talk to a cognizant attorney, talk to a good accountant, and make your decision ASAP. If the situation is fuzzy, acting earlier will provide you with options, while if you wait some options are likely to evaporate.
Given the tone from both parties, the goal certainly seems to be to lock homeowners into loans and keep the banks and multi-national investors whole (even though most of the money is ostensibly "owned" by the taxpayers now in FM and FM!). The chance that the banks will be forced into a broad haircut while you get some equity is tiny, indeed, I'd say.
JMHO, though.
You need to talk to a real estate lawyer in your state about what options your lender has in the event of default (and in some cases there is a difference between how first and second mortgages are handled). In some cases they can and will go after you for the deficiency, in some cases they can't (or won't). But IMO, you should assume that if they can come after you, they will.
Some other options are a short sale, or a deed in lieu of foreclosure. Forgiven unpaid mortgage balances used to create a taxable gain on the unpaid balance, but I think that there may have been some changes to the tax law, so I would also consult a CPA about possible tax consequences.
But in any event, I agree with Leanan, in most cases get out if you can.
The first and most important question is, can you afford the payments or has their been a change in your life circumstances where you will no longer be able to make them? "Underwater" is a stupid concept when it comes to houses, unless you really need to sell the place right now. After all, doesn't every rent payment take you further underwater while every mortgage payment bring you closer to the surface?
The next question is, do you like your house and want to stay there? If so, why would you walk away from it?
Forget about how much your house is "worth". That question is irrelevant unless you need to sell it right this instant, or you can't make the payments any more. What matters more is, how much time is left on your loan before you pay it off. Walking away from your mortgage means you destroy your credit score, probably won't be able to take out another loan any time soon and will pay higher interest rates for a long time on everything. If you can afford to keep making your payments and walk anyway, it also means that your word and promise is only good when things go your way. That might or might not be important to you, but you gave your word in the loan paperwork to pay back the money you borrowed. It didn't say that you could welsh on your obligation if the house value went down. I find it sad that we glamorize those who walk away instead of those who stuck it out and eventually paid off a mortgage. How do you see yourself and what kind of person do you want to be? Would you walk away from other promises that you have made when things got a little bit tough, or would you stick it out until and unless something majorly life-changing occured?
Imagine yourself 15-20 years down the road in either situation. If you can and do keep making your current mortgage payments, you will probably be done, or close to done with your mortgage. You will have a fully paid house to live in. When you get to the end of your mortgage, your monthly expenses for housing will be very low... essentially just your property taxes and upkeep. Ask someone on a fixed income how important low expenses are. When and if its time to move, you will be able to sell that house and get *something* for it, who knows how much. Or, if you and your wife have kids and stay in the house until the end of your days, you will be able to pass it on to your kids to live in or sell as they see fit.
Now, think about walking and paying rent for the next however-many years. 15-20 years from now, where are you? Still paying rent? A new mortgage on a different house with many years to go and a higher interest rate due to your previous choice? When you reach retirement age, are you still renting? How will you pay the rent on your fixed income? What happens when the landlord raises your rent? You won't be able to sell the place to cover your expenses, or leave it to your children... and if you continue to rent you will have nothing to show for your years and years of rent payments. If you are "underwater" in your mortgage right now, how about after you pay rent for 15 years? No equity/ownership in a home and 15 years of rent later is the very definition of underwater.
So, although many folks on the Drum seem to think renting forever is the road to happiness, I'd caution you to think of what you are throwing away before you let a decrease in your home's current value cloud your long term outlook. If, on the other hand, you can no longer afford to keep making your payments, thats a entirely different situation. Good luck to you.
I don't think many of us or any us for that matter here think this way.
Most people underestimate the actual cost of owning both cars and houses. A conservative estimate is that one will spend about 5% of the value of the house every year just on ownership costs--property taxes; insurance; maintenance; etc.--even without a mortgage payment.
Assume a house worth $360,000. It would (conservatively) cost about $1,500 per month to live here, even with no mortgage payment. Let's assume you owned it outright. You could sell it, and rent something for $1,500 per month (the carrying cost of owning the house) and have the $360,000 in your pocket (less transaction costs).
Otherwise known as a double standard. Corporations default on their contractual obligations all the time when they find it financially beneficial to do so. They either pay the penalty clause in the contract, or the two parties litigate. Happens all the time. If I could get away with inserting a middle finger salute, I would do so.
inserting a middle finger salute
Consider it inserted.
You conservatively estimate $18,000 a year to live in a fully paid off house?!? Must be one heck of a property tax rate where you are for the taxes, insurance and maintainance to rack up that high on a yearly basis. If the upkeep on the house was that high, the rent for an equivilent size dwelling must be $3000 a month, in order to pay both the upkeep and the owner's mortgage payment.
As for what some other guy, or in your case, corporation, is doing... I was raised to only pledge my word if I intended to keep it, and to not cut corners or take the easy way out. "Everyone else is doing it" didn't cut it with my folks, you did what was right, not what was convienient. Some might say its okay to cheat on your spouse... after all, lots of people do it right? What difference is it that you pledged your word to reamin faithful...
E Blair claims I'm "pro-banker". I consider myself pro-bank depositor, and pro-taxpayer... you know, the people who actually get hosed when too many folks act irresponsibly and willingly default on their obligations. If you can't afford to buy a house, don't buy one. If you want to rent forever, go for it, no one is stopping you. But if you borrow money and pledge your word to pay it back, then unless something life-changing happens to you, be honest and pay it back. Would you treat the loan the same way if you borrowed the money from your mother or grandmother?
Go read all of runeshades past pro-banker posts - shows the bias of the poster.
Yes, I have a bias. I believe if you open a tab at the corner store, its important that you pay it off so that the owner can remain in business and meet the needs of all the other customers in the area. I believe that when you go out to eat, you should pay the bill in full and leave a tip for the server and not slink out the door when no one is looking. I believe that when you say pledge to remain faithful, you shouldn't then go out and cheat on your spouse. I believe that I am intelligent enough to know that when I take out a loan, I have to pay the money back. I'm biased in that I believe you should treat others fairly and honestly, the way I'd hope to be treated in return if I was on the other side of the transaction. Thats my bias... whats yours?
Yes, I have a bias.
Good for you. Hopefully you'll use argument by analogy so I can pick it apart with facts.
I believe if you open a tab at the corner store, its important that you pay it off so that the owner can remain in business
How nice. Now the reality:
The banks are not 'a corner store' - they are international concerns who are so mismanaged they had to have government bailouts.
Your 'belief' as stated above has an owner who is not making 20-400X the wage of the lowest paid in the firm - like the banks.
So when your 'belief' does not equal the system you are modeling - you won't have the proper response.
Thankfully for you, I'm here to tell your your 'belief model' doesn't match the actual conditions.
You are welcome.
I'm biased in that I believe you should treat others fairly and honestly, the way I'd hope to be treated in return if I was on the other side of the transaction.
And Ma'am - that is why we have laws and a court system. Take the bankers to court and sue 'em over their fraud. TILA and RESPA. Check the paperwork VS the law. Find the fraud and sue.
Thats my bias... whats yours?
Clear up the ignorance.
You are welcome.
Really? Have you looked at the list of failed banks? Most of them are certainly not international concerns... they are mostly
local banks, county banks, etc. Sure, there are a few big names, but certainly not the majority.
Personally, I find it priceless that in one breath you can state the the banks are so "mismanaged" that they had to have government bailouts, while simultaneously advising people who borrow money from those banks to walk away from their legimate debt. I guess you define mismanagement as expecting people to pay back what they borrow.
As to your bias, I'd say that it seems to be that everything that happens is someone else's fault.
Small banks generally don't let out consumer mortgages.
Most consumer mortgages are owned by big banks, Fannie and Freddie, or are sliced and diced and owned by a bunch of entities.
People with loans from monster entities should not feel morally obligated to support them when the obligation is not reciprocal.
If I owned a subdivision cookie cutter house and could sell it,profitably, I would probably do so and rent for a WHILE, for there WILL be a BOTTOM, after a while.
In the meantime, if our society survives, it remains a democracy of a creaky sort, not totally unresponsive to the needs and the votes of its citizens.
If it crashes, nearly anybody holding cash money is going to be holding fiat money-intrinsically worthless paper unless he recognizes the bottom of the deflation in time to convert back to hard assetts.I doubt if such people will be substantially better off than a homeowner with an affordable mortgage, and they will likely be less well off than someone who owns outright.
Personally I believe it is SIMPLY INEVITABLE that Uncle Sam is going to inflate the currency, as there exists no other FEASIBLE means of survival from one year to the next as the economy shrinks;the govt gets to spend the printed dollar first, as payment for everything for fuel for fighters to medicare to school lunch subsidies.
Everybody else, including the medicare beneficiary, will likely see the value of his tax paid service or earned or unearned income shrink;but the govt will not have the MUCH TOUGHER job off cutting off whole classes of people at a stroke.
The amount of paper and electrons that will be sloshing thru the economy before Washington is done will result in some very serious inflation-let's hope it doesn't get totally out of hand.I wouldn't be surprised at a ten dollar minimum wage and nearly everybody with a job making much more in a few years.
This will not be prosperity brought back to life by Jesus of course;but it will be life support for our society, from year to year;people holding cash , or mortgages, will see the value of THIER ASSETTS shrink, from year to year.
Joe Sixpack will see the REAL value of his wage or salary shrink too, but his NOMINAL INCOME-the income needed to pay a FIXED mortgage payment-will be rising.At some point these nominal incomes will be high enough to take the excess housing inventory back off the market, and start prices rising again..
If it takes the election of a demagogue to bring this about,we will elect him or her cheerfully, and maybe stop off on the way home from the polls to bust a few bank windows.I expect some out of uniform cops will be glad to help, if it gets this bad.
When I'm not whiling away my time posting or reading TOD, I spend it reading history these days, or sociology, or anthropology.
This scenario is fully congruent with history.
I can only guess at how long it will take to get inflation off and running of course;for sure it won't be while OBama is still in office, as his administration is even better stocked with bankers looking after banks than the last one, so far as I can tell..
I remember buying full size Cokes and Hershey bars for a nickel each;my grand parents in thier youth sometimes worked for a dollar a day-when they could get it -and paid the same prices on rare occasions when they could splurge a dime.
Uncle Sam knows how to inflate the currency when it suits him to do so.
The voters have not yet sent him the message, but they will.
Only an idiot could believe that the currency CANNOT be inflated.
China and the UK both reported about 3.5% food and fuel inflation. John Williams is talking about hyperinflation in the U.S. 6-9 months from now. The BOJ intervened in the forex mkt to lower the value of the yen. And gold hit a record last night. PERHAPS (I don`t say definitely) the bottom of the deflation is here now.
AT least I think it is here in Japan. But Japan is a bit ahead of other countries......they had their end-to-growth credit bubble 20 years before the US one. But now these cycles are going faster. The spiral is tighter and smaller and quicker and nearer the drain. It`s thermodynamics at work for us!
"The spiral is tighter and smaller and quicker and nearer the drain."
That one deserves a place in the quotable quotes spot at the top of the page!
A few years ago we stepped off the home price escalator and set up for retirement. The place we paid quite a bit for is worth less but we have no intention of selling. Another factor to add to your decision matrix, especially if this is a retirement home, is the fact that the city/county/state will up the taxes. Our taxes on this place have gone up about 15% in four years. Sales tax and income tax are going up as BAU for governments become less and less sustainable. Of course the income hasn’t gone up. The squeeze is on but not bad … yet.
You signed a contract that not only falls under the words of the contract but laws for fraud.
Have you bothered to read the contract? Compare the math of what the paperwork says you owe VS what you are paying? How about the fees you paid?
You may have the basis to go after the lenders on TILA and RESPA violations.
Would you stay where you are if you got quiet title per a judge?
People who are in the MERS system *MAY* be able to get a judgement based on the possible inability of MERS to provide a clear title (due to the slice/dice of ownership that MERS has been involved with.) So far, the positive results are tied to the other party not showing up - but if you challenge their ability to collect and they don't show a win is a win - even on a technacality.
Before you pack up an leave - consider filing a lawsuit on the basis of fruad (if you find it) or on the basis that they lack title. You can't win if you don't pick a fight.
eric- do you have any first hand knowledge or a media/blog report of anyone filing or winning a suit to quiet title where MERS was named in the deed of trust and the note subsequently sold? I've searched but haven't found anything.
The court records keep getting sealed :-(
Randy Kelton claims some wins, but not on the MERS (as far as I know). The wins are on fraud then via defaults.
But a win is a win.
Today gold hit some sort of record and two days ago the BOJ stepped in to devalue the yen a bit-----it was a unilateral move so there is some speculation other govts will follow because their exports won`t be competitive unless they do. John Williams is predicting the possible beginning of hyperinflation in the US between 6-9 months from now.
So although I really respect Stoneleigh and her deflation prediction, I think that serious inflation is coming....she says 10 years but I think sooner than that. I think govts know that without inflation the oil will not be coming out (getting pumped) of the ground because the economies will "die" with deflation. So they are starting to inflate. It is the better of two evils.
So how does this apply to your house situation?
Probably the more "sustainable" your house is---that is, the better you can do without a car there, the closer you are to farms, the better your climate and water situation is, the farther away you are from a huge city...yet nearer to a small town with a doctor and a dentist, a hardware store..those structural things surrounding you will support housing values in a situation of high food and fuel inflation....and eventually shortages.
Even if you have a high debt, if the whole situation around you is OK then the debt won`t matter probably in the long run. Your house might maintain its value in an inflationary spiral. The debt will disappear also.
On the other hand in a desert or middle of nowhere-suburbia, that house will be worth nothing.
But I am not a finance expert! Just a teacher....
IMO, constrained global net oil exports are acting as an accelerant, like dropping napalm on a forest fire.
Hi PI!
May I ask what you teach?
I am quite impressed with your comments.I also wonder if you may have some difficulty in this respect-discussing things with your students the school may not want discussed, introducing them to values not consistent with the materialist values of thier parents, and so forth.
Hi OldFM,
I teach basically courses in the field of humanities.
Sometimes lit. sometimes related stuff.
I often wish I were better able to understand science because it is so important for understanding PO!
I have had complete freedom always, in answer to your second question.
http://www.qatar-tribune.com/data/20100917/content.asp?section=Business1_2
Got gold?
Some say the world will end in fire
Others say in ice
From what I`ve tasted of desire
I hold with those who favor fire
But if it had to perish twice
I think I know enough of hate
To say that for destruction ice is also great and would suffice.
OK/ Robert Frost said it first. It isn`t a war he`s talking about...it is inflation (fire) vs deflation (ice). Either one is enough, but inflation is far more likely.
Either one is better than war, of course!
The deflation believers and Prechter followers don't have any gold :-) What they don't understand is that the government will borrow and spend large amounts of money to counter contraction of credit in the private sector. When there are no legitimate buyers for mortgage backed securities and treasuries the Fed will create money out of thin air to buy them. To some extent this has already happened. All this will destroy confidence in paper currencies in general and US $ in particular. Gold and commodities will skyrocket.
If you buy now don't forget to sell when it touches $5000/oz.
Well, there's the rub. Why would you sell at $5000/oz. if you still had no faith in the currency?
My own opinion is that gold does not go down from here, relative to other goods. It basically remains a buy until we've burned the last barrel of oil.
Moreover, it's not all or nothing. When something is in a bull market then you sell whenever you need the cash to buy stuff and count your blessings.
The current situation will not continue forever. After some years the dollar and Euro will be revalued with respect to gold, and we will have a new equilibrium in which the US, EU and possibly the rest of the world will be a lot less wealthy than it is today. Most of the debt will be paid, but in depreciated currency. Picking a top is difficult; my current estimate is around $6000/oz.
In the meantime, the deflationistas and Prechterites seek safety in treasury bonds and cash which is precisely the wrong thing to do. The banksters are probably laughing hysterically as they strike a match to the cash hoardings of these people.
Gold topped $1283 this morning, silver pushing $21.
http://www.marketwatch.com/story/uk-mining-stocks-rise-gold-at-new-highs...
Perk Earl, quite a conundrum you pose there, but there are ways to gauge whether a property is worth keeping or not.
Firstly a property must not only provide you with shelter it must also provide you with the ability to live. This may be in different formats for example:
1. the property provides need resources directly such as water, food, firewood and/or a cash generating business;
2. the property puts you within reach of paid work;
3. the property generates a rent or investment income.
The way the property facilitates your ability to live must then be aligned with the future. So a property that will be destroyed by climate change, be close to a source of paid work that no longer exists due to economic depression or fail to provide investment income upon which you need to live, for example, will have lost its utility and be worthless to its owner and should be sold.
Secondly, can you receive the same utility from a property that is rented, cheaper than owning a property and paying a mortgage? Again, some assumptions regarding the future need to be made, namely whether property prices are going to rise or fall.
You can do a kind of stress test on your property. Given economic depression, climate change and energy depletion creating a creeping collapse of society, state and economy. Will your home still provide shelter and the ability to live? If the answer is no, then sell.
Finally, we only have a moral obligation to living things, corporations are not living things. If you are legally allowed to walk away from a mortgage (which, IIRC means the "grip of death") then there is no moral decision to be made.
Even that well-known anti-business socialist, Mish Shedlock, says it's just business. If banks can do it to consumers, consumers can do it to banks.
A friend owns a convenience store/gas station, very busy. He is current on his loan payments yet the Bank has cut his line of credit and is calling his loan because his profit margin has dropped below some preset level. Again, he is in the black, just not enough to satisfy the Bank (a Bank that itself had to be bailed out).
Funny thing.....within 48 hours he recieved an offer to buy the business, at a loss. Devils rules.
You folks who want to compare a bank to my Grandmother have a very strange world view. The only similarity is that they are both dead. At least my Granny knows it.
I think the wisest suggestions are to immediately consult with a mortgage lawyer and accountant. My biggest concern would be that, once the term of your mortgage has ended and the time has come to renew - if you remain underwater and the bank asks for an appraisal because (insert reason here) they may choose not to renew for you. In which case you would be stuck either seeking alternative financing or moving in a hurry. These scenarios would be stressful and expensive.
If I were in your situation I would like to know under what circumstances it would be better for the banks to decline to renew the mortgage (or even if they can).
Just some thoughts,
Al
I think the wisest suggestions are to immediately consult with a mortgage lawyer and accountant.
$2000 from endless fraud detection.
WTPRN.com has archives of the show where Skidmore yacks about the idea. If you care, you'll use the search engines.
Is the rent in your locale less than the payments for the same house? In Britain rent is higher so the up/down value doesn't matter unless you have to move soon.
"The Peak Oil Crisis: Is $50 Oil in the Offing?"
The author has it partially correct.
The deniers of Peak Oil essentially have a religious belief in economic growth which they correctly understand fundamentally underpins our entire political, social and economic system, not to mention the global hegemony of the Empire of the United States. As faithful followers of the Church of Endless Economic Growth, they understand that Peak Oil is the secular equivalent of Satan.
But this is the point; they DO believe what they say. The author of the article is wrong in supposing that peak oil deniers are secret apostates who are trying to pull the wool over the eyes of the general population. However, like all religious believers, they understand on some level that their views are not substantiated by any rigorous factual analyses. This is why their choice of weapon for use against the facts is simple fanaticism.
And this fanaticism exposes the weakness of their view. One cannot be a fanatic on a subject over which there is NO doubt. No one runs around fanatically shrieking, "The Sun Is Going To Rise Tomorrow!"; because everyone knows that indeed it will. One only digs in one's heels with fanatical resistance when one understands full well that the issue is very much up for debate.
If God can create the Earth in 6 days, he can certainly get us some more oil when the tank runs low. The current Republican Senatorial candidate from Delaware believes that,indeed, it took six days to create the earth.
I agree,however, that the actual year of peak oil is up for debate.
Economic growth is necessary for our political, social, and economic system. I don't think that requires a religious belief. What does require a religious belief or at least ignorance of the exponential function is the belief that growth can continue indefinitely.
The hard part is putting together and implementing a different system that does not require growth. Or, is there any system that is both sustainable and conducive to a reasonable quality of life with respect to things like food, health care, housing, transporation, and maybe a few amenities thrown in. The doomers' consensus is no.
In the short term, the rich will fight will all their dollars and cunning against the idea that we should go to a steady state or shrinking state on purpose. As long as their is cream on top, they will figure out a way to collect it.
Link up top: ‘Efforts on war footing needed to save planet’
I really get tired of Yergin, and others, using this old saw. If that is the only argument they have against Peak Oil then they have no argument. The basis of this argument goes like this: "Those in the past who made such predictions were wrong therefore those who make the same claims today are also wrong". In logic this is known as the "Poisoning of the Well Fallacy". Discredit someone in the past then link your opponent to them and in the process discredit them as well.
Yergin says that there is plenty of oil in the ground, all we must do it throw huge investments at the problem. More money will discredit Peak Oil theory. Throw money at the problem and it will go away.
We shall see.
Ron P.
As I watch this video, even disregarding the hell this landowner has gone through, I just can't see how shale gas production costs can be low enough to be sustained at current prices. I mean, they have to negotiate for relatively small drilling areas, they have to make roads, install machinery, and truck out the gas. How can this make sense economically? And how long will people allow this to happen on their property? What is driving this market?
Video
Kingfish, great video but I really don't get the connect between this video and the post you replied to.
I assume you did this by mistake and we all make mistakes. But please try to be more careful in the future because this really messes up the thread. That is two entirely different subjects all mixed up in one thread.
Ron P.
Yep, that was a mistake. Sorry.
The reality is ... money clearly isn't being thrown at the problem in the countries that are actually past peak production, because of the absolute need to make a profit ... those same countries still have plenty of oil in the ground though!
I think that is a little broad.
I get upset when things like this get said. Im not mad, but I need to say something.
Many people have no idea what govs ARE doing. Its VERY wrong to say Govs are "NOT" throwing money at this.
What I am saying is not just in reply to you, but to EVERYONE here, even my own self... Please, -ALWAYS- keep in mind that as we all look at those around us, so UNAWARE of Peak Oil... so too are we unaware of all things being done to counter it.
And im not even talking about the classifed stuff.
ARPA-E
http://arpa-e.energy.gov/About/About.aspx
Recognizing the need to reevaluate the way the United States spurs innovation, the National Academies released a 2006 report, “Rising Above the Gathering Storm”, that included the recommendation to establish an Advanced Research Projects Agency—Energy (ARPA-E) within the Department of Energy (DOE).
Ed Moses: Clean Fusion Power This Decade
http://fora.tv/2010/06/16/Ed_Moses_Clean_Fusion_Power_This_Decade
Ed Moses is director of the National Ignition Facility (NIF) at Lawrence Livermore Labs. Focusing massive amounts of laser light for a billionth of a second, the NIF is expected to demonstrate ignition of a fusion reaction (more energy out than in) for the first time in the coming year
I also recomend
NYC wants to bring back Brooklyn streetcars
http://www.wcax.com/Global/story.asp?S=13131096
And:
The US Infrastructure Bank
http://www.c-spanarchives.org/program/295421-3
Thanks for the links. Nice lecture by Ed Moses. So if we can survive the next 30-40 years without killing each other or roasting the planet, according to him we'll be out of the woods, energy wise. I feel better now ;-)
Link up top: Michael J. Economides: OPEC at 50
I know people are tired of me making this rant, but please indulge me because this is the one most important Peak Oil issue today. Its importance cannot be overstated. And it is the very reason that people like Economides, Yergin, and agencies like the EIA and IEA play down Peak Oil. They do not believe it because of those vast OPEC reserves.
We have all heard the story about how OPEC, in the 1980s, took a pencil and added hundreds of billions of barrels to their "proven" reserves. And they are still doing it. Venezuela, just last year, added 12.34 billion barrels to their "proven" reserves. But ignore this dramatic and ongoing pencil upgrade of OPEC reserves for just a moment and consider something else.
Does it make any sense that a group of countries that produces 42 percent of the world's oil has almost 80 percent of the world's oil or 1.064 trillion barrels. And the group of countries that produce 58 percent of the world's oil has only 20 percent of the world's oil or .273 billion barrels. (Economides says OPEC produces 32 percent but that has to be a misprint.)
The point I wish to make is that Economides, and most all of the other "No Peak" folks base their whole argument on the assumption that OPEC has vast resources that they could call upon if needed. This is THE flaw in the No Peak argument. I am more than a little shocked that more people, especially the EIA and the IEA has not questioned OPEC absurd claims.
Sooner or later the truth must come to the surface. And I expect it to be sooner, or in the next two to three years.
Ron P.
Ron, try using "new math" with Arabic numerals. Works out just fine!
Sarcasm, off.
You articulated the argument quite well as usual. And I think there is a standard answer to your question as to why people continue to accept OPEC's absurd claims. 'Denial is more than a river in Egypt.' The alternative is too difficult to think about or to accept.
Ron
What are your thoughts on current oil supplies? Much has been said regarding the recession that crushed demand in the OECD. However, during this time China has seen a steady increase in demand. If I remember correctly, last December China for the first time ever imported some 5mb/d. I believe they have met or exceeded that number at least a few months this year.
I "get" that most countries are close to peak or past peak and that internal demand at exporting countries are reducing oil available to importing countries. And yet, our inventories of oil continue to be at or near record levels depending on the methodology used.
Pipeline problems, weather problems, fires, gulf moratoriums, nothing seems to slow the constant stream of oil available to the US.
Is it possible we are under estimating production numbers?
Thank you
Of course that is possible but I think it more likely that the opposite is true, and has been all along, or at least for the last ten years or so. But they are pretty close so it really doesn't matter that much that the estimated production numbers are off a bit. Anyway they are the only numbers we have so we will have to make do with them.
Anyway, the production numbers are pretty high. Why should we doubt very high numbers. Average world production, C+C, for the first six months of 2010 is only 340 thousand barrels per day below the average for 2005, the peak year for C+C. Yet total petroleum products supplied, for the first seven months of 2010, is 1,819 thousand barrels per day below the average for 2005. With that kind of production and that kind of consumption we are supposed to have a glut.
That is what is really happening, we are just consuming less petroleum products. We are still in the teeth of a deep recession as far as employment and wages are concerned. Therefore people are just consuming less, at least here in the USA.
Ron P.
Or there is something wrong with the numbers.
I suggest at the least strong skepticism.
Whats sad for me at least is I've tried to drum up support for investigating alternative measures to judge the oil supply to no avail. Everyone seems happy to run with the numbers we have. I don't agree with this attitude.
I even offered and alternative which gives a significantly different answer from the official numbers using C02.
Right or wrong at least I tried which is a lot more than what others have done.
One thing I have consistently seen is if you do look at alternative measures of all sort your able to repeatedly get a result thats divergent from the published production consumption numbers. All my approaches always result in peak production in the 2002-2003 time frame with declines since then. Price alone is sufficient to follow peak oil at least into late 2007. From then on its gotten interesting to say the least.
Heck one can simply look at US VMT and assume a time shift between consumption in the US and falling production.
This is because the US is a fairly deep pocket consumer its not going to be the first to cut demand.
http://www.fhwa.dot.gov/ohim/tvtw/10juntvt/figure1.cfm
With the housing bubble going full steam and heloc mania the US had even more cash. Thus a time shift correction between the real peak in oil production and peak demand in the US given the financial situation from 2002 onwards makes sense. Perhaps depending on how you decide to do it you end up putting peak at 2004 good enough as production declines at that poing where small anyway. My point is its trivial to take a look at a lot of measures and find 2002-2004 as a reasonable peak for production. And it seems very reasonable to assume that at peak price would still be low.
I whish I had more data back int the 1990's for the Baltic Index's its hard to find.
http://www.cotzias.gr/baltic_indices.htm
However you can see the volatility in the tanker markets as oil prices rose.
I'd argue that indicates intrinsic problems with supply meeting demand.
Now of course the counter argument is that demand has grown dramatically over the last several years yet at the same time it was so fragile prices collapsed.
Dunno.
My point is not my conclusions simply stating that if you look you will find plenty of data that support the position that oil production numbers since prices started rising should be treated with skepticism. This of course means the demand side is also suspect as well.
So no you don't have to accept the official numbers plenty of ways to at least check the credibility of the official number for me at least attempts to check have simply made me increasingly skeptical of whats really happened since late 2001-2002.
Memmels work on CO2 was illuminating - tip of the hat in that direction. Just as in climate change, there are direct readings and proxy readings. Each measurement goes into the pot to add to the knowledge base.
Given the number of intangibles and the amount of secrecy around various 'claimed' values I think the only thing we can say for certain is that we are losing the race to stand still on world production, reserves are very unlikely to be anywhere near the figures quoted and consumption is only heading in the up direction. This leads us to conclude that we're heading for an "Oh bugger" moment. Putting figures on these values without even knowing a decent margin of error can be worse than helpful. It could lead us into complacency if we think it's 30 years away, or panic if we think Christmas is going to be in the dark.
Afraid not. Looking at subtle wiggles on a full dynamic range that changes by much less than an order of magnitude is not conclusive of anything. When that is buried in noise, it makes it even more untenable.
It's very weak research so I will call it out.
This is a proxy measurement, and so is bound to have a lot of noise. There does appear to be some amount of signal in that noise, and following the line of "if you don't look, you won't find" I commend him for looking into it. I may not aggree with some of the conclusions or the strength of those conclusions, but I wouldn't call it very weak research.
As I posted before, I wouldn't have this as the main weapon in my arsenal, but this work hints at an amount of correlation. I wonder whether a negative result would have been viewed more positively.
Read what Memmel says. He thinks the CO2 data is showing a "slight downward" trend!
He believes in his "theory" so much that he is not seeing straight. I shouldn't have called it weak research at all, it is just a hyperactive imagination.
"...it is just a hyperactive imagination."
That's what makes his posts so enjoyable, WHT. Asimov, Heinlien, Clark, all had hyperactive imaginations.......and they were often correct in what they imagined. I would posit that this site hosts many such enjoyable imaginations.
I am exasperated and am currently experiencing a "screw this" moment.
I posted a comment to the DrumBeat asking people to seriously look at this trending, and Leanan or some other editor deleted it.
At one time, I thought that TOD was the last bastion of logical discussion, but I don't even know if that holds true anymore.
I don't read SciFi but if I did I would read those authors instead of this Memmel stuff, because at least they would admit that they were writing fiction. Here on TOD we have guys duping the naive public into thinking that what they are saying has any relation to reality. The people following Memmel are very sincere and you can see their gullibilty shine though. They apparently don't have the critical eye to see through the facade that you do, Ghung.
BTW, Ghung, you do know your stuff and I usually read what you write, but certain things I just can't take. It must be a character flaw on my part.
You've been here long enough to know the rules. "What happens in Vegas, stays in Vegas." Don't bring old arguments into new threads. Hash it out here as much as you want. Don't re-post it to the top of a new thread.
It worked well enough. I was able to get a few people to look at the old thread and expose the incredibly odd statements that Memmel continues to make. And to top that off, some people believe in what he says!
I have been here long enough to know that people don't look at old threads unless they get prompted to.
"I thought that TOD was the last bastion of logical discussion"
I believe it still is, yet to insist on pure logic is........inhuman. There is much intuition and speculation exibited here that I also find valuable. Though I usually don't fully agree with Mike's conclusions, I still enjoy the way he thinks. I read your posts with the same levity.
"Ghung, you do know your stuff and I usually read what you write, but certain things I just can't take. It must be a character flaw on my part."
We all have our moments, it seems. I don't see it as a flaw, just character.
"I posted a comment to the DrumBeat asking people to seriously look at this trending, and Leanan or some other editor deleted it."
Gosh, Web, I have no idea how many times some of my best posts have been deleted. The site and it's editors owe me nothing, but if I have a moment of clarity that may merit a response or something to share that may be of value to another reader, I appreciate an opportunity to hang it out there and hope the editor/reader shredder has a little mercy. I haven't found a better place to do this than TOD.
Time to cut more firewood. Real income!
Well I get way into this stuff and have a huge intellectual investment attached to many of these topics. If someone posts something with some authority, I will typically spend my free time doing a careful analysis of the situation to see if I can make some further headway. Its not a matter of enjoyment, just to wring the last bit of insight I can get out of people's ideas. Everyone of Memmel's musings has been a dead-end, AFAIAC.
I understand your aversion to "disinformation" and appreciate your hard work at filtering out the noise. I tend to ignore threads that are likely to waste my time, but acknowledge that others may find them useful. I disagree with Gail's take on renewables sometimes, but it isn't productive to challenge her every time she posts something I don't agree with. At some point it all becomes noise.
You are absolutely right. I go on a rant on Memmel's stuff every year or so. It almost always comes about by someone else saying what a great theory that memmel has on some topic. I tend to ignore it otherwise, because it is punishing to try to comprehend.
Yesterday's trigger was DoomUK's mention that Memmels work on CO2 was "illuminating". It bothers me when someone else gets taken in by this stuff.
I think you are either intentionally misinterpreting what he means or haven't woken up yet. How on earth can you possibly think he means that average atmospheric CO2 (minus seasonal effects) is on a downward trend?
Because that's what he wrote.
He had a comment where he elaborated http://www.theoildrum.com/node/6960#comment-721299:
This is pretty obvious. His first sentence says that he watches the CO2 data. His second sentence says that it has been on a downward trend for some time.
There is no problem with my misinterpreting what he is saying. There might be a problem with his translating his thoughts into logical sentences.
But you know well that the only reason he watches the CO2 data is to calculate oil consumption. You also know him at least well enough surely to know that he doesn't think that average CO2 is going down (especially as he linked a graph showing an obvious continuing upwards trend) yet you claim that's what he means. I assumed he meant oil use - after all posts are not proof-read before appearing and some interpretation of what was meant is very often needed.
Hopefully Memmel sees this thread and clears up what he meant though.
But the only way he can make these claims is if CO2 actually starts going down! There is not enough dynamic range in the CO2 data to make any kind of correlation to oil use otherwise. The interpretation his post requires is to imagine dancing fairies doing something in the background.
BTW, Why do you insist in trying to defend Memmel? The only thing that exists on TOD are words and sentences. If these are not constructed logically, they have no reason to exist. It is a waste of time to disambiguate each word in each paragraph of each comment that Memmel has posted over the years (thousands).
He will just go on and on about something else, further clouding the issue.
The amount of oil in transit at any given moment in time is quite huge. Then in addition, tankers have been used as a kind of floating storage - mostly held offshore where it may become needed. Up until recently about the only oil or product left in floating storage is held offshore Iran, being Iran's output that won't be bought by boycotting nations.
So it would make sense then that shipping rates should be going down then if shipments were falling, which they were recently. However when rates fall low enough, it becomes cheaper again to store oil offshore instead of on land. This appears to be happening within the last few weeks.
All together there are many dynamic interactions that with shipping transit times cause many flucatuations in the price of oil and shipping rates.
So I am saying looking only at the price of oil or shipping rates doesn't always give us a true picture of where supply and demand are heading.
If I assume you are correct about the data, then lacking any good data that includes both seaborne and land based supplies around the world, the only was to tell if there really is enough supply is when we are at or near the minimum operating level (MOL). For newcomers, that is the minimum amount of oil and products needed in pipelines, storage facilities, your local gas station etc. to keep everything smoothly functioning.
Again for newcomers, there is probably only about 2 days supply difference from having 'plentyful' supplies right now and the chaos of falling to the MOL - or below. This is not a fact the government wants us to discuss. In fact, I conducted an extensive investigation of this issue a few years ago and found that the government does not really want anyone to know what these levels may be, and makes such documents on the subject difficult (although not impossible) to find.
It annoys me greatly to hear almost everyday in the media about how 'much' oil supply we have as compared to the 'five year average', especially since new pipelines and storage facilities were built the last few years that intentionally had to take up more supply. Wholesale gasoline prices rising 30 cents/gallon (15%) in one day last Friday in Chicago show how delicate the balance is between supply and demand.
In the end we might never even get to fully test out your theory, because probably by the time it is realized we are close to a shortage the supply system will devolve into a chaotic state.
Thats the situation right now in my opinion before that the high volatility in tanker rates suggests competition for limited supply. After the price blow up in my opinion the US is playing a huge bluff claiming to be amply supplied.
If you think about it who is going to call the bluff prices are good and stable the use of offshore storage has worked to significantly dampen the volatility in tanker prices and the problem of competition. In short for the moment at least I'd argue that the oil supply has been managed. The claim is that OPEC is doing this via managment of a significant excess capacity. I don't buy it. If I'm right or wrong who knows but its clear than in general all the players in the oil market are very satisfied with the current status quo.
The problem is of course it only works until someone hits MOL the moment that happens then this management rapidly breaks down and real storage levels become apparent. Sooner or later if this is the game thats being played then the bluff will be called. Someone somewhere is going to be forced to panic and make a large purchase sending a wave rippling through the carefully balanced system. If OPEC really does not have the oil they claim to provide the critically needed real oil to balance then it breaks down.
Obviously such a situation would require coordination of purchases to ensure that there was no rush for oil. However I'd argue its less than is needed to keep the various central banks in control of the financial system.
As with the banks the goal is to prevent panics and effectively a run on the bank for oil supplies. The volatile tanker prices indicate that until 2009 an number of runs on the bank if you will happened.
Whats really really interesting right now is that oil prices remain robust and the various tanker indexes are steadily approaching values seen at the depth of the financial crisis.
Seemingly small events like this are fascinating.
http://www.arabianbusiness.com/597252-japan-buys-less-mideast-light-crud...
In any case if the US government wants to bankroll shorting oil to ensure a certain price range works and also is willing to publish fraudulent inventory numbers then I'd argue that absolutely no reason that oil prices won't remained bounded. The combination of a short with infinite pockets and fudged data alone should be sufficient to manage prices. Also I don't exclude some room on the supply side esp with the natural seasonal swings in consumption this alone ensures that at certain times production can exceed consumption. Seasonal surpluses are certainly viable. Offshore storage during these periods to cover when demand exceeds supply is doable.
So if one assumes that supply and price are currently being managed one obvious part would be the US claing excessive inventory levels given that you really don't need a lot more manage. Another part on the price side is oil has moved in some really interesting ways to just break certain technical levels indicating a change in trend for technical traders. A few weeks later it invariable rises and eventually as it nears 80 we see signs of some big players making big moves pushing the price down rapidly.
My opinion is the only way to get such a narrow banding for oil prices at these price levels is via financial moves physical oil simply cannot be moved to cause thus. The real band is even narrower close to a 5% flux.
http://futures.tradingcharts.com/chart/CO/W
The one time it got above the band it was brutally and rapidly forced down. That was a financial move.
This sort of managed market signal seems really common across numerous markets.
The one really interesting exception is gold. I have to imagine that the central banks don't really care about a gold bubble right now indeed if you think about it its probably the best bubble you could have. They have enough gold reserves to pop it whenever they wish and all its going to do is squash some gold bugs.
I don't really have a problem with this actually if the US and others are managing oil prices to find one that works for the global economy no problem good work. However the problem is this is really simply price controls and historically attempts at price control always end in shortages.
So If I'm right about price controls then its a sure bet the next stage is real shortages not just high prices.
The only open question is when will they hit as price controls also have and interesting effect of working till they don't and the timing of when and attempt at price controls fail is fiendishly difficult to determine.
I think everything is basically in place for price controls to collapse if they exist its simply now a matter of some sort of trigger event to start a run on the oil bank. Indeed I think that the situation has been primed for collapse for the last six months. So no telling how long it will go.
Its instructive to look at what I consider a similar situation in the past.
http://www.investopedia.com/articles/optioninvestor/09/silver-thursday-h...
The irony of course is Uncle Same is playing the role of the Hunt brothers and is moving to keep prices steady.
I'd argue the Hunt brothers successfully floated silver as a viable alternative currency to the fiat dollar indeed they showed just how weak the fiat currency really was vs silver which was sufficient to be a viable metallic based money unlike gold which simply was in to short of supply and tightly controlled. As far as their goal of making silver money they did a fine job till they where taken out.
Controlling oil prices to trade in a narrow band is far easier ...
Until it fails.
The BOJ intervening in the forex mkt (arousing the ire of US congressmen) is one indication of things getting a bit sticky in the oil mkt I believe. The govt hasn`t intervened since 2004 and then, I believe, it was an arranged thing between the US and Japan. But this time it was just Japan alone. It is a sign of desperation. The stock mkt was tanking, which means that a lot of the capital (held in stocks) in banks was decreasing.
WHat a mess, basically. Just wait, I think it will get even more interesting!
No doubt any actual shortages in the US will be quickly followed by allocation controls, if not actual price controls. They may work to a limited extent but not in severe shortage situations. However even limited allocation and/or price controls will depress economic activity - which is not a desirable outcome when true unemployment levels are probably somewhere about 17%.
It is much easier to influence the price of oil, and it seems that most of Wall Street and the media are willing to accept rather ridiculous oil reserve figures and other 'facts' that make people believe that oil 'should' be at such and such a price.
As far as the price of gold and silver, I don't have time to explain in great detail but a careful review of Roosevelt's policies in the 1930s depression reveals that the devaluation of the dollar against gold was the key instrument used to move the economy out of depression - and damn the rise in consumer prices. Many people have the mistaken belief that the 1930s was one long strectch of falling prices when in fact consumer prices had a rapid 4 year climb in the middle of the 1930s after the dollar devaluation against gold.
So in my opinion the price of gold will be allowed to rise but the price of oil will be bashed down anyway possible, until of course we run down to those MOLs.
Oh one more thing I still watch the C02 data.
http://www.esrl.noaa.gov/gmd/webdata/ccgg/trends/co2_trend_mlo.png
Its been effectively flat with a slight downwards trend for some time now in good agreement with oil prices.
Its a lagging indicator but so far at least everything I watch except for the collapsing tanker index has been in agreement with the successful management of oil supply and prices.
Thats why I focus on the tanker index right now its the one major outlier that suggest that things are not as they seem.
What are you smoking? Egad man, can you not read a graph? The CO2 data does not show a downward trend.
I have to post that image:
I guess he may mean his recent calculated oil use has been flat with a slight downward trend. Clearly he doesn't think atmospheric CO2 (minus seasonal effects) is flat with a slight downward trend. That would be pretty much impossible unless we'd completely stopped burning hydrocarbons in the last few months or something very strange indeed had happened.
Why do we even pay attention to anything Memmel says?
Whatever comes out of his mouth is completely uncorrelated to any real world data. Either that or he has a chronic problem with communication and maybe he should just write stuff and post it to the great bit bucket in the sky, i.e. /dev/null, if he needs to get it out of his system.
In your interpretation, he says that oil use is flat but then shows a graph of CO2 rising? What's up with that? He must realize that there is a huge time lag (of years and years) in CO2 trending in the system in any case.
There is a point where we should really stop trying to reverse engineer his logic. It really is not worth our time.
Because we know that he calculates his oil use figure from that data. Presumably he can only mean that CO2 isn't rising as fast his model says it should if oil use had actually increased over last year. That seems obvious to me.
For various reasons I tend to suspect that Memmel may be more right than wrong. Nobody was going to admit that Ghawar (just for starters) was crashing and we really passed the final peak some time ago. The ongoing post-Carter psy-op continues to THE END.
I'd like Memmel to be wrong though as otherwise "THE END" may be a lot nearer than we think...
You cannot do that. The long-term response to a CO2 input stimulus is dozens if not hundreds of years. The seasonal adjustments are huge in terms of CO2 kinetics, yet all that remains is the slight oscillation you see. The change of oil use is a slight perturbation on top of this. If he thinks that he can dig this out of the data, he must have incredible signal processing credentials and skills.
Are you suggesting he just made up his graphs then?
Someone posted a paper attacking Memmel's analysis that showed that other researchers had found exactly the same inconsistency that Memmel found between published annual hydrocarbon use and atmospheric CO2. However rather than suggesting that the data was wrong, IIRC, they postulated some kind of additional unknown variable sink. Clearly they thought they were able to extract a signal as well even if you claim it to be impossible.
Of course there is a link between FF usage and CO2!
I have done just that analysis myself:
http://mobjectivist.blogspot.com/2010/04/fat-tail-in-co2-persistence.html
http://mobjectivist.blogspot.com/2010/05/how-shock-model-analysis-relate...
The difference is that I know how to do the analysis, which involves a long integration process over decades of time. You cannot tell the effects of current yearly variations for dozens of years based on the CO2 response time. Memmel is just making stuff up. His own graphs are essentially garbage.
If Memmel wants to know current oil production, he should just google "current oil production". He shouldn't make up same fantastical claims on how he can do a better job and have gullible people fall for it.
Read my posts if you need some schooling on the subject.
To Undertow skipping WHT posts sorry:
Actually it is flattening the large jump you see near the end corresponds nicely with the cold winter we had.
Certainly the overall trend is up and over time C02 levels are trending upwards its just that the rate of overall increase my well be slowing. Dunno there not enough data yet it would take several more years to even guess if this was true.
Perhaps I should make it very clear exactly what I'm saying. The measurments at Mt Loa all add the link agian
http://www.esrl.noaa.gov/gmd/webdata/ccgg/trends/co2_trend_mlo.png
And this is a good read.
http://www.skepticalscience.com/co2-measurements-uncertainty.htm
They of course get the wrong result but you can see the Mt Loa obviously trends higher than the south pole measurements for example. It takes years for C02 generated in the northern hemisphere to mix with air over the pole.
And you can see from the little movie thats on that page that Mt Loa is uniquely situated to sniff northern hemisphere industrial aka man made C02 production.
Now the measurements themselves are very precise the data has a long history and correcting it for seasonal flux is a fairly straightforward problem. The remaining issue is is the result accurate enough to sniff changes in industrial activity. I believe it is. I don't know any easy way to prove such a belief as the actual industrial production levels is the variable I'm interested in. I do know quite a bit about measuring radio isotopes to reconstruct atomic blasts and you would be amazed at what you can figure out. I'm not suggesting that the Mt. Loa data has this level of accuracy simply that its not correct to dismiss the possibility out of hand.
The alignment of the bump in C02 with the cold winter we had is a perfect example of what I'm saying the sensitivity seems to be in the data. Afterwards we have a flattening of the curve consistent with flat economic activity. That is consistent with all the economic data I know. Now we can assume that Coal and NG usage has steadily increased over the same time period this means oil would had to trend downwards. The big bump form the cold winter simply shifted the curve upwards.
Next although it might be difficult to ever get the data accurately I suspect that the rate of increase in Chinese coal consumption has finally begun to decrease. They are unable to expand their coal consumption at anywhere near the rate they did over the last decade. Thats not to say its not still expanding against a large base simply that its no longer on the insane exponential growth curve of the past. At the minimum they already have built sufficient indeed more than enough heavy industrial capacity. Further expansion is probably for internal electrical generation.
In general the overall rate of growth of man made C02 sources should now start to flatten atmospheric C02 levels will of course continue to increase over the longer term averages thats not what I'm talking about.
What I am doing however is calling a peak in Northern Hemisphere industrial production which is basically peak global economy. Since we are still injecting more C02 than can be absorbed C02 levels will continue to trend upwards over any reasonable averaging period say six months.
Now the contribution to atmospheric C02 levels from Chinese coal consumption over the short term is a big unknown but for now at least it does not seem to be shrinking. NG consumption globally has been on a steady upward trend.
Thus oil consumption must have probably continued to decline over the last six months to get the C02 flux we see correcting for the cold winter bump.
This simply means that the global economic engine has been steadily slowing over the same time period thats all.
This makes a lot of sense if you think about it almost all the post 2009 crash stimulus has gone into the financial sector with effectively zero job creation nothing has been done to stimulate the "real" economy therefore economic activity should be flat to downward trending.
The only question is is it supply or demand ? Although oil prices have been contained within a narrow band they are far from low so I don't see pure demand contraction as the root cause.
Back to chinese coal the key ingredient if ferreting out oil.
http://www.im-mining.com/2010/04/21/chinese-coal-production-up-led-by-gr...
No reason yet to dismiss growth despite my own internal feelings that they are close to max.
Natural Gas consumption should continue to increase at a steady if not increasing rate its more constrained by infrastructure expansion than availability. Expansion of NG infrastructure support globally is fairly steady.
So again we return to oil demand and supply well demand from C02 would have had to fall over the last several months thus supply would have had to follow demand.
In any case with all that the final result is.
Flat oil production and flat prices are impossible they did not happen. The choices are:
1.) Falling production flat prices.
2.) Falling demand (consumption) falling prices production exceeds demand even though falling.
3.) Falling production falling demand rising to perhaps flat prices but unstable.
Basically any answer works but flat. My opinion is case 3 is probably whats really going on except that production has been falling faster than demand the upwards pressure on prices has been contained for the time being.
Indeed in general I believe demand has been flat and that strained/supplies shortages in the poorer parts of the world have been the locus of supply shortages. Outright shortages have the nice effect of curtailing a significant amount of demand over a short albeit painful time period. Since at least at first these happen in the developing countries with poor infrastructure the real nature is hidden.
This means of course to ensure that the status quo is met and that prices are contained that oil supplies are not being distributed fairly right now. They are not going to the highest bidder on demand. They are being rationed.
Successfully I might add at least so far. The problem is of course one has to imagine that quite a few participants in the global oil economy should be wrestling with their various MOL levels. Someone somewhere in the globe is repeatedly seeing strained oil supplies. If so then the situation is unstable.
I might also add if this is correct then on can expect little to be done to prevent a continued economic slow down over the next year. If the above analysis is correct then it makes sense that the path we will take will be into a deepening recession in hopes it will take pressure off oil demand. Obviously at the same time you don't want the financial system to collapse but outside of continuing to shore up our financial system I don't expect anything will be done to prevent the global economy from continuing to cool down.
Now my own work suggests that oil demand is intrinsically structural below a fairly small blow off top. So I don't believe that further economic weakening will change oil demand all that much. Or more correctly oil demand is now basically a constant barring another collapse. The global economic engine is now idling along very close to its own minimum operating level. Further declines in oil production will thus have to result in a return to rising prices or more likely outright obvious shortages then rising prices.
And finally this is why I'm so keen on the Baltic Dirty tanker index. As its the marker that supports my claims.
Something has to blow up soon.
Memmel
I suggest that perhaps you should get some medical help for your psychological issues. If you are doing this because you have some sort of compulsive/obsessive need to type at the computer,that is one thing. But if you are doing this to intentionally create some sort of fantasy land that only acts to waste people's time, then you possibly have some sort of socio-pathological problem.
Not one thing you said makes sense. You are seeing things in the data that are not there. If you are just playing with us because you got sick of on-line gaming, please go away.
BTW, I didn't just fall off the turnip truck.
LOL guess I have to respond somewhat to that.
Indeed that whats really really interesting about the collapse of complex system.
They collapse because near the end they successfully hide the real situation.
They lie.
By definition anyone that discerns this must be a minority. Anyone that decides to announce their minority position is almost by definition branded with some derogatory label.
The really interesting part is such a person is probably at least half right given they are dealing with and unknown by definition i.e the system has generally been successful at hiding its true state even if you do see this it does not mean you get the truth right.
So yes certainly I'm probably wrong at some parts of my thinking to some extent indeed it would be amazing if I managed to get it right given my basic assumption is I'm dealing with highly distorted data disguised as fact.
So my overall conclusion is really interesting. If I'm right or even partially right then given the way complex systems work very few should actually listen. Next authoritative attacks should be the norm not the exception. Refuting them is difficult since the intrinsic problem is data corruption which is often used as the basis for the authoritative attacks in the first place. Next of course a touch and sometime more of other ways to discredit someone come into play.
And of course in the end the really interesting part is if I actually do turn out to be right and the truth becomes obvious then the system will try and act like it was not hiding anything all along. As it becomes clearer what the truth is the system will attempt to alter its position towards one thats less distorted. For example today you see zero noise about OPEC attempting to destroy the move to electric cars. Amazingly no one questions this.
In any case your attacks are actually perfectly predictable indeed sadly I would know for a fact I was wrong if you did not attack. Given the nature of the problem "scientific" types should be going bonkers.
Thats because science itself has a weakness its easily defeated by distorting the data used in the scientific method itself. GIGO. Scientist who are caught falsifying data are destroyed professionally and often personally. However science itself is blind to the act of falsifying data as long as the conclusions are reasonable. Only when attempts to replicate the data occur can science discern the falsehood. It certainly can detect it after the fact simply the scientific method is itself not a good way to deal with a suspected corrupted data set. In this case its not just corruption but gamed data.
As far as I know attempts to correct a situation like this require you to develop a theory to understand or gauge how the data has been manipulated then apply a correction factor. I don't see any other way to do it. Forensic investigations of the forged balance sheets of failed companies for example. Doing it a priori without access to the cooked and correct data is challenging to say the least. Consider how few people really understood the depths of deception at Enron before it collapsed. Some did which is the amazing part really.
In any case I'm finally responding because I really don't mind your attacks they don't bother me indeed as I said they are predictable. I'm actually interested in a way out of these sorts of situation. Right now my only solution is you have to never entered.
For oil this means back in the 1980's when OPEC made questionable adjustments to their reserve figures we should have raised holy hell and demanded open accounting and oversight. Indeed if I'm right and the system is now beyond hope. Indeed assuming you actually read my paper on my blog the most important part is what actually happened back then not now. Its the onset of fraud thats important not attempts to try and figure out the truth much later after a fraud has been executed. The lies back then are far more important today is simply the end game or result.
Back to Enron the same of course holds for them. It was the initial lie that mattered later when they finally collapsed it really did not matter if someone discerned the truth or not the layers of lies had reached the point that collapse was certain.
And back to oil given the above I don't actually have to be perfectly correct just reasonably right about whats really going on. This sort of approach is not capable of timing anything the timing is at best guesses on top of guesswork. The key is the smoking gun that leads to todays situation is obvious and blatant and ignored. Attempts to correct the OPEC reserves are not good enough because by getting away with it they allowed the system to establish a pattern of distortion thats festered for decades.
Thats not solved via simple adjustments to some old data.
Thus in the end I don't have a real problem writing about my guesswork since I don't have to be that correct at this point just ballpark close is good enough. Thirty years of lies and deceptions more than cover any mistakes I could make. Perhaps my timings are off by months or even years thats certainly possible. Does not really matter if the system has propagated lies about its real condition over decades and given we have had a real price spike then its not going to last much longer. The challenge is to try and guess where its at thats the fun part. Piercing and end stage fully developed fraud is fascinating to me.
Watching how the fraudsters attempt to hide a situation thats falling apart is also fascinating. Heck I might even get reasonably close on my timings who knows. Regardless as with Enron at this stage in the game the end result is collapse regardless of how things play out its too late for the truth even if I happened to get it right.
Add paranoid delusional to the diagnosis list. If you think I am The Man trying to shut you up, you are sadly mistaken. This is just mano-a-mano cutthroat peer review, not for the squeamish. If you can't handle it just say so.
I hope you understand now why I didn't want this at the top of a new thread.
No, not really.
Let's just say the sheer length alone is not ideal for the top of a new thread.
Thanks. That explains a lot since I don't recall ever seeing Memmel at the top of a thread. He always tends to dominate discussion somewhere in the middle.
I stopped reading him a long time ago. I think he confuses his fantasies with facts, sees what he wants to see, conjures up a lot of elaborate conspiracy theories, rambles, is often incoherent and his posts are too long.
Remember when he was asserting repeatedly that the oil crash during late summer/fall of 2008 was engineered by Bush administration and Saudi Arabia in order to make it possible to attack Iran? That is when I stopped reading him. His pet theory at that time was that the crash was caused by a temporary spurt in Saudi oil exports created by releasing all the oil from storage at once. After a few weeks oil was supposed to reach $165/barrel when storage was drawn down.
Thanks for the Cliff's Notes version. It takes a lot of time to decode some of those theories.
Well we shall see how close we came to war then at some point in the future.
Plenty of stuff now about many close situations during the cold war. And the Iran things not over yet. 30 billion in arms to Saudi Arabia is no laughing matter.
As far as oil prices go obviously I continue to expect them to climb never have changed my tune. Or as I often try and add head towards 50-60 a barrel. One way or another. This 70-80 trading range is one result I still cannot create a stable scenario for. Its surprising we managed to last this long. One thing to remember however is even as oil climbed over 100 a barrel we never had actual shortages in the western nations regardless of price. So the supply was there to meet demand and even I'd agree that demand and supply where higher then than today. We did have some hurricane induced shortages but we never had gas lines etc like during the 70's.
This is important because it means the oil was there whole time to meet demand we never hit MOL never had outages. As long as that remains true then if you want to play games with the market you can. If the market is being conned well the only way we can know is if you pull up to the gas station one day and no gas. Assuming I'm right then the US probably has seen several episodes of tight supplies but if they hide it then the price is not going to move.
Dunno what to say if I'm right then a fairly desperate move was made to keep things together if I'm wrong I'm wrong no problem. Now if things are as published then that fine. However OPEC has then been shown to be a very powerful and cohesive group capable of controlling oil prices and Iran will soon be capable of nuclear weapons if they are not all ready.
Not sure whats better me wrong or a nuclear capable Iran and credible powerful OPEC so be careful what you decide. For me at least being wrong is even more worrisome since it takes on a path that leads fairly quickly to a major war. Sooner or later OPEC or Iran will flex their political muscle.
I'm gonna try to be polite about this so I don't get lumped into the WebHubbleTelescope camp, though I understand his frustration:
That's a *hell* of a lot of run-on text and reasoning round in circles, the goal of which is to turn a clear rise in the annualized atmospheric CO2 graph into a *drop* in emissions.
If I understand the basic argument: CO2 is going up slightly slower than usual, so since coal and natural gas usage hasn't dropped, oil usage must be falling.
* Untested assumption: coal and gas use are continuing to climb. No data is presented to justify.
* Untested assumption: atmospheric CO2 depends only on emissions. Not true: CO2 *sinks* vary from year to year (for example, there's a detectable El Niño signal in the CO2 data).
* Ignored data: actual oil consumption data from industry. Readily available.
* Poor data: since emitted CO2 takes a year to spread over the globe, point measurements can only be representative of the global average if you're looking at changes over several years.
In short, twisty analysis of poor data to reach a counterintuitive conclusion with lots of untested assumptions and no corroborating data.
You're trying to pound a square peg into a round hole with your shoe.
Thank you.
(And I do understand the WebHubbleTelescope camp is the group of people that appear as anal-retentive math-dweeb a-holes. That characterization I can deal with.)
Memmel's original post (for reference) http://mike-emmel.blogspot.com/2010/02/checking-exhaust-pipe-for-peak-oi...
See the blue line and how it drops. No way can that be correlated to CO2. Over that period (2000-present) CO2 continued to rise.
Eh? Even if his blue line had dropped to zero atmospheric CO2 would have continued to rise as there's coal and natural gas still being burned (and coal use in particular has sky-rocketed over the same period).
http://mazamascience.com/OilExport/
So you are trying to assume a differential analysis on top of the other assumptions?
That an increase in CO2 from coal use is counteracting a decrease in CO2 from a drop in oil use?
And this is precariously balanced so that CO2 is maintaining the same trend?
Look at the bottom curve that you show. On average the slopes are all equal over the last 25 years.
Well thats it in a nutshell no way is coal consumption going to take off like that without it disturbing the trend in C02 emissions. It would have shown up it did not therefore some other source had to decline the obvious one is oil given price actions.
Next as far as overall C02 emissions increasingly steadily decades even as the distribution of energy sources changes thats fairly simple in the big picture its all energy i.e the world effectively runs on BTU's. The global economy grows as a surprisingly steady pace. Often growth in one area is offset by contraction in another. The overall net growth rate seems to be closely tied to simple population growth. This actually fits very well with a lot of the economic data which suggests that on a per capita basis wealth has been flat or even falling for a while.
I actually think its fascinating that as you look at the overall picture it seems as if the world has been sort of running on a treadmill for decades with population growth giving the illusion of real growth. In reality it seems that as the base of the economic pyramid expands this expands all the other levels this is viewed as "growth" or upward mobility but its really simply the pyramid getting larger each year. Little real upward mobility is actually happening. Basically if you double the population of a town you would double the number of people at the top yet nothing really changed.
You are blind or insane. Before that, the coal emissions were DOWN. Why didn't the CO2 go down then? HUH?
LOOK AT THE ENDPOINTS OF THE CURVE !!!! COAL IS ABOUT AT THE SAME RELATIVE LEVEL NOW AS AT THE BEGINNING OF THE CURVE!!
ITS ESSENTIALLY F'ING NOISE THAT WILL GET INTEGRATED OUT AND IT WON'T EVER SHOW UP ON THE CO2 CURVE BECAUSE OF THE DAMN RESIDENCE TIME LATENCY!!!
GO AWAY!
I'm not looking at global C02 data I'm looking at one station that happens to both have the best long term measurements and situated to capture variation in Northern Hemisphere data.
Its a very special station. Indeed as far as I know it was originally established because its unique and can capture certain events.
http://www.esrl.noaa.gov/gmd/obop/mlo/programs/old/nmsu/nmsu.html
Its not the only one.
http://nzic.org.nz/CiNZ/articles/Currie_70_1.pdf
With that I'm simply point out that these stations are sensitive. The C14 measurements simply enforce that they are accurate.
Ok fine so there is a detectable El Nino signal fantastic yet changes and human C02 emissions are undetectable ? So sink changes are ok but source changes are not ?
All that does is reinforce the notion that C02 data is sensitive enough to measure fairly large scale changes. Correct for El Nino go ahead not a problem. I did look at Mt Pinatubo as and example of and obvious natural distortion.
Not ignored that the variable however if you read what I did you will see I assume that that perturbations from published data are relatively small or to be more precise data distortions are not continuous but politically motivated and not unreasonably large.
Well at least until recently its only the last eight years where there is serious divergence. Even the divergence back in the 80's was a lot smaller. Its really been since 2002 that the "truth" and published data have diverged. Right now I'd guess my calculated data would be off by 12 mbd vs claimed production. I'm willing to give a +/-4mbd error in production numbers you still have a real and significant divergence.
Your joking right ? Jeeze I'm writing about previous work on the drumbeat.
Indeed I actually wonder whats up with coal right now. I don't expect coal production to continue to climb now that oil production has fallen as much as it has. At some point falling oil production will hinder coal and natural gas and overall economic activity.
Indeed in my paper I even state that I suspect that Coal and NG production may well start to see distortions. Not because we are running out of either but because flat to falling coal/NG usage is a clear signal that your economy is slowing. We should actually move to a state where practically every number has at least some distortions. But I had enough data to establish what I think the real trend known the curve I don't need "real" data any more I have a model 1-2mbd in annual oil production over the last eight years. Potentially accelerating and certainly approaching our structural limits to handle further declines and hide the situation.
Russia and Canada are jockeying for position to have their Arctic claims recognized by the international community.
The Northern Dispute.
Although oil and natural gas reserves in the Arctic ocean have not been quantified, the possibility of fossil fuel riches is adding incentive to have these respective territorial claims sanctioned by the U.N. The U.S., Denmark (via Greenland), and Norway also border these waters.
Another reminder that the days of cheap and easy to find oil are over. The high Arctic is a forbidding and hostile environment; aside from the Antarctic, the remotest frontier on planet earth.
I believe what we are heading towards is something I like to call:
"The Geo-Strategic GRAND Northern Alliance"
Where in, you'll see a binding of "Northern" Nation-states economically, and as a natural product of that, militarily and culturally.
Russia is terrified of China. Not so much as it stands today... but what what happens when the Gov falls when oil markets combust, and ULTRA nationalists take power in China?
Write off Australia... China will own 'em.
and Russia will feel tremendous nervousness
that they might be next.
Thus pushing us all into a "North V South" Geo-political world.
I have a -HUMUNGOUS- in depth post on this topic on Facebook,
[Im the family "Crazy Uncle"]
But, I don't know how to re-post it here, W/o the pics
[Anyone have HTML to embed pics from server into TOD posts?]
But, if your interested, here are some nice places,
to start pondering...
Russia and Norway ended a 40-year dispute in signing an Arctic border treaty: http://uk.reuters.com/article/idUKTRE68E2UO20100915?rpc=401
France agrees to arm Russia with assault ships
http://www.csmonitor.com/World/terrorism-security/2010/0209/France-agree...
And if you REALLY have nothing to do at all,
for the next six or so hours...
http://csis.org/node/24731/multimedia
Interesting stuff, I suppose, but where does it fit into the Drumbeat? Also, may I suggest that you give a link to your other work instead of posting it here. Or, why not start your own blog or publish it as PDF and put it on a file server?...
E. Swanson
My posts fit in, as much as the posts I was responding to. I've been told by others here, that this "was exactly the place" to post such things. I've posted them before in conversations fallowing the "drumbeat", and other posts with no complaint. I regret this didn't seem appropriate to you.
If it's really long with a lot of images, please post a link rather than posting it in the comments here. Comments shouldn't be "humongous."
Record number of Americans living in poverty
It's only a matter of time until the poverty line will have to be lowered (as the average wage continues to decrease) but for the foreseeable future the poverty ratio will continue to increase and likely to "alarming" levels.
aangel - not sure what you mean. Why will the poverty line have to be lowered - so the government can keep up a fiction about what percent are poor? Or because society will become used to having less and not feel poor at the same level as they once did?
The US has been manipulating statistics for years so we won't realize how the middle class wealth is shrinking and the lower class is becoming ever poorer, while the upper class is getting richer. See http://www.shadowstats.com/ for some more accurate stats such as inflation and unemployment. What they have done is manipulate how they figure inflation and unemployment etc more commonly called lying.
But of course poverty lines aren't what tell someone they have become poor. It is when they have lost their job and their house and are living in a tent city that they realize
Findings from a U.S. Department of Education study found that school districts nationwide reported nearly 957,000 homeless students were enrolled during the 2008-2009 school year, a 41-percent increase over the previous two school years.
http://www.stnonline.com/resources/operations/related-regular-transporta...
Just as all assets are currently priced for an economy at the end of a several century fossil-fuel bubble, so are all assumptions for what is "rich" and "poor."
I'm simply pointing out that as our civilization becomes poorer all these sorts of numbers will be adjusted. No different than the process they went through during expansion but in reverse.
Agreed that what is "poor" changes. The lives of lords and ladies of the middle ages might seem "poor" to many now. The process we will go through in reverse however will be the speeded up version and quickly no one will be counting how many are poor and what percent are poor. Nor will they be counting calories or weighing in on scales, or exercising at the gyms. More likely before long the important data will be is there anything to eat today....
That hit the nail on the head. The massive automated assembly line processes to make bread, snacks, canning vegetables, pasteurizing milk, etc. will go silent, and when they do, we'll all be looking for a morsel amongst a rapidly shrinking inventory.
Lowering the poverty line would show we are winning The War on Poverty!
If The War on Cancer was not going so well, the piles of dead would translate to worker churn and therefore progress on employment.