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Drumbeat: September 28, 2010
Posted by Gail the Actuary on September 28, 2010 - 9:34am
Peak phosphorus still a threat to food security, despite new report
Researchers investigating a coming peak in world phosphorous production have urged caution on the revising up of estimates of reserves in a new report.
The long-awaited estimates of World Phosphate Reserves & Resources, recently released by the International Fertilizer Development Center (IFDC), suggests the availability of more mega tonnes of phosphate rock in the ground than previously thought. . .
"We welcome the new report, however this should not be interpreted by policy makers as an excuse for non-action – the new figure represents an estimate of phosphate in the ground that is of markedly lower quality, more difficult to access and more costly.
Offshore wind farms will need subsidies for 15 years, says study
Offshore wind farms will require significant public subsidy for at least another 15 years and doubts over reliability and costs mean they are likely to remain one of the most expensive sources of electricity, a study has found.
The report said all forms of electricity generation had become more expensive in the past five years but offshore wind had increased the most, with capital costs of infrastructure doubling from £1.5 million per megawatt to £3 million.
It said the cost was likely to decline gradually, reaching £2.8 million per megawatt by 2025. But it added: “A significant downside risk remains and it is possible that the costs of offshore wind could continue to go up.”
Scotland to get 100 pct green energy by 2025
Last week, Scotland raised its 2020 renewable electricity target from 50 to 80 percent of total demand, much of which is expected to be met by offshore wind despite costs soaring over the last few years.
Conoco to reassess $30bn Alaska project
Jim Mulva, chief executive of ConocoPhillips, said the company would reassess the economics of its project with BP to build a $30bn pipeline linking Alaska to the lower 48 US states amid a surge in natural gas supplies.
Technological breakthroughs in extracting gas from shale rock have enabled the US to triple supply estimates, much of it in the lower 48 states, to 100 years’ supply, at current usage rates.
This, in turn, has led to a glut, pushing gas prices down to about $4 per million British thermal units, from the $13.69 per mBtu record reached in 2008.
Reilly sees early end to drill ban
“I’ll be amazed if the moratorium is not lifted before 30 November,” Reilly said today in an interview on Bloomberg Television.
Brazil’s ethanol producers take a big bet on biofuels
Brazil’s sugar cane industry has recently been trumpeting that five of its processing mills have been approved by the US government to sell their ethanol in the US. The fact that the mills are bothering to go through the registration process, which includes filling out forms and allowing an engineering review, is significant, and shows renewables are no longer the pet project of many Americans. With the US perhaps distracted by its pressing economic difficulties, producers in other countries have started to get in on the act. . .
Brazilian ethanol already has been designated by the EPA as a low carbon, renewable biofuel, so the California market is a perfect place for it.
“Brazil is the future for the oil industry”..
What is exciting investors and the industry is that estimates suggest the region may contain 50bn-100bn barrels of oil and gas, dwarfing Brazil’s current reserves of 13 billion barrels.
It would place Brazil in the big boy league of oil producers, on a par with Kuwait and Russia.
Dave Cohen: The next oil price shock -- an update
Having done some analysis, I've decided to postpone my projection for the next oil price shock. I have moved the date from 2012 ± 1 year to 2013 ± 1 year. I've updated the graph below to reflect the timing of the next blow-up in oil prices. The change reflects my view that there will not be a price spike in 2011.
Japan to drill for controversial 'fire ice'
A consortium led by the Japanese government and the Japan Oil, Gas and Metals National Corporation (Jogmec) will be sinking several wells off the south-eastern coast of Japan to assess the commercial viability of extracting gas from frozen methane deep beneath local waters. Surveys suggest Japan has enough methane hydrate for 100 years at the current rate of usage.
Lying hundreds of metres below the sea and deeper still below sediments, fire ice is exceedingly difficult to extract. Japan is claiming successful tests using a method that gently depressurises the frozen gas.
Tokyo plans to start commercial output of methane hydrates by 2018. At present, Japan imports nearly all its gas – about 58.6m tonnes of liquified gas annually – and is heavily dependent on oil imports.
Exxon's Sakhalin-1 to Launch Production
The Sakhalin-1 consortium operated by Exxon Mobil Corp. will launch commercial production at a new oil field off Russia's Pacific coast this week at a ceremony attended by President Dmitry Medvedev, the U.S. oil giant said Monday.
With investments of around $10 billion, Sakhalin-1 is one of the biggest foreign investments in Russia and the only major oil and gas project in the country still controlled by foreigners. Production at the project's first field, Chayvo, started in 2005 and reached a peak of 250,000 barrels a day in 2007, while the new Odoptu field will reach peak output of around 32,000 barrels a day within a year, ExxonMobil said.
The Sakhalin-1 consortium--which includes India's ONGC Videsh Ltd., Russia's OAO Rosneft and Japanese joint venture Sodeco--plans to drill 10 wells at Odoptu by the first quarter of 2011. It may later drill an additional 10 wells at the field, potentially increasing peak output level, but so far no decision has been taken to develop the field further.
Deep-Water Drilling in Gulf Won’t Resume Quickly, Bromwich Says
Few companies will meet new environmental and safety rules in the month after President Barack Obama’s moratorium on deep-water drilling comes to an end, said Michael Bromwich, director of the U.S. office that oversees offshore oil exploration.
“Even when the moratorium is lifted, you’re not going to see drilling going on the next day or even the next week,” Bromwich, head of the Bureau of Ocean Energy Management, said at a hearing in Washington today. “It’s going to take some time.”
Finding Common Ground at ASPO-USA’s Annual Conference
What do former Green Party Presidential Candidate Ralph Nader, Rear Admiral Lawrence Rice, former secretaries of defense and energy Dr. James Schlesinger, Human Rights and Environmental Campaigner Bianca Jagger, former CIBC Chief Economist Jeff Rubin, and Republican Congressman Roscoe Bartlett have in common?
It certainly isn’t their politics - they cover the full spectrum from left to right and everything in between. And it sure as heck isn’t their fashion sense. What they do agree on, however, is that the debate over an imminent energy peak is over - that it is time to get on with the hard work of addressing the realities of energy depletion. ASPO-USA is bringing together voices rarely, if ever, heard in the same place and all are speaking out to bring national attention to peak oil.
TVA Inspector: Poor Management Led to Ash Spill
Poor coal ash control practices and the Tennessee Valley Authority management culture led to the huge December 2008 spill on the Emory River in East Tennessee, the utility's inspector general said in a report released Monday.
The report on the inspector general's website describes the spill of sludge laden with selenium, mercury and arsenic as "one of the largest environmental disasters in U.S. history."
TVA, the nation's largest public utility, responded in the report, saying the description as one of the largest disasters is "not supportable." Inspector General Richard Moore refused to change it.
Panel Wants BP Fines to Pay for Gulf Restoration
A large share of the penalties collected from BP for its Gulf of Mexico oil spill should be dedicated to repairing the ecological, economic, public health and psychological damage from the spill, according to a group named by President Obama to chart a course for the future of the wounded gulf.
In a report to be presented Tuesday in New Orleans, Ray Mabus, the Navy secretary and a former Mississippi governor, will urge Congress to create a Gulf Coast Recovery Fund to oversee the restoration efforts. The fund should be managed by a council including federal, state, local and tribal representatives, the report states.
Alabama expects billions from BP over oil spill
Alabama expects to receive billions of dollars in penalties from BP Plc in the wake of the oil spill in the Gulf of Mexico, a state commission said on Monday.
BP and the White House will probably soon reach an agreement on how much money will be available to four Gulf states that have been affected by the spill, said the state Coastal Recovery Commission set up by Governor Bob Riley.
Dudley faces delicate task in rebuilding BP
Bob Dudley faces a delicate task when he becomes chief executive of BP Plc on Friday: convincing investors BP will boost safety, while persuading government and the courts that its safety regime is as good as any in the industry.
Oil Falls First Time in Five Days on Forecast Supply Increase
Oil fell in New York, snapping a four-day rally as analysts forecast that U.S. gasoline inventories swelled to their highest levels in six months.
Futures slipped before a U.S. Energy Department report tomorrow, which may show gasoline stockpiles climbed 750,000 barrels last week from 226.1 million.
Gasoline Supply Climbs in Survey as Use Falls: Energy Markets
U.S. gasoline inventories probably rose to the highest level in six months as demand slipped with the end of the summer driving season and economic growth slowed, a Bloomberg News survey showed.
Stockpiles climbed 750,000 barrels, or 0.3 percent, in the seven days ended Sept. 24 from 226.1 million a week earlier, according to the median of nine analyst estimates before an Energy Department report tomorrow. The gain would leave supplies at the highest level since March 12.
OIL FUTURES: Crude Down On Weaker Equities, Stronger Dollar
Crude oil futures were lower Tuesday in Asia as regional equities fell on profit taking following recent gains ahead of a string of U.S. economic data due this week.
BP Economist: 4Q Refining Margins Expected To Weaken
Refining margins are expected to weaken in the fourth quarter due to high global oil product inventories, BP's PLC's (BP) Chief Economist Christof Ruehl said Tuesday.
"We have bloated OECD product stocks--the highest for at least 12 years--caused by an increase in crude runs over the last few quarters," Ruehl said, speaking at a refining conference.
Oil flows again through pipe that burst in July, polluting Kalamazoo River
In giving Enbridge the go-ahead to restart the pipeline last week, the federal Pipelines and Hazardous Materials Safety Administration mandated the 20 percent reduction until hundreds of anomalies along the line were repaired. The pipeline had been shutdown since the spill.
Chavez May Strengthen Grip on Venezuela Economy as Foes Gain
Venezuelan President Hugo Chavez, after suffering his worst setback at the ballot box since taking office in 1999, may seek to strengthen his grip on the economy and undermine opponents ahead of the 2012 presidential election.
Chavez’s United Socialist Party of Venezuela, while securing 98 of 165 seats in National Assembly elections Sept. 26 after the redrawing of electoral districts, lost the two-thirds majority needed to pass key legislation by itself.
Venezuelan Opposition Scores Victory in Defeat
The Venezuelan opposition scored a big victory, despite its defeat in not having a majority of the National Assembly. The opposition obtained 52.9% of the vote, obtaining 635,000 more votes nationwide than Chavez’ PSUV party. Thus, the opposition not only managed to block Chávez from obtaining a two-thirds majority, its minimum political goal, but also showed how rigged the system is when it obtained a majority of the votes, but only around 40% of the Assembly pending the undecided seats.
The results emphasized how rigged the system is, as the Venezuelan Constitution guarantees in Article 63 the right to proportional representation, but Chavismo, through its control of all powers changed rules and districts in order to insure it could retain control of the national Assembly.
Eni, Mitsubishi to Bid for Iraqi Natural-Gas Contracts
Crude output at the West Qurna 1 field may increase as much as 10-fold, said James Adams, Exxon Mobil Corp.’s head of operations in Iraq, speaking at a separate industry event today in Doha, Qatar. West Qurna 1 is producing between 200,000 to 250,000 barrels a day, down from a peak of 400,000 barrels in 2004 due to a loss of pressure inside the well, he said.
Exxon Mobil wants to restore pressure by injecting water into the field. Iraq’s government has asked the company to help build a water-injection facility that would also serve other fields in the country’s south. Upon its expected completion after three years, the injection unit could pump as much as 15 million barrels of seawater a day, Adams said.
Exxon to Boost Drilling at West Qurna Field
James Adams, Exxon's Iraq vice president, said at an energy conference in Qatar, that the oil major aims to drill two to three times as many wells as the 370 currently in the field as part of long-term plans to boost field output to 2.3 million barrels a day.
Kuwait Expects No Change at Next OPEC Meeting, Al-Sabah Says
“No, I don’t expect it to change,” al-Sabah said in response to questions from reporters in New Delhi. The 12-member Organization of Petroleum Exporting Countries is next scheduled to meet on Oct. 14 in Vienna.
GE Expands in China With Wind-Power Deal
General Electric Co. has formed a joint venture with a Chinese power-equipment company in an effort to win business in that country's booming but locally dominated market for wind turbines.
The conglomerate is joining with Harbin Electric Machinery Co. to make GE-designed onshore and offshore wind turbines.
GE will be a minority partner in the venture, with a 49% stake. The partnership also could involve sharing technology for blades, towers and controls on wind turbines.
Mexico's Pemex Crude Output On The Rise For Most Of September
Mexican state-owned oil company Petroleos Mexicanos, or Pemex, said Monday that crude production during the Sept. 1-26 period averaged 2.587 million barrels a day, compared with 2.559 million barrels a day for the full month of August.
Pemex said September oil production was led by the Ku-Maloob-Zaap complex of fields in the southern Gulf of Mexico, which reached 855,000 barrels a day on average, compared with 833,000 in August.
The company's offshore Cantarell complex, which has been in decline since 2004, produced 491,000 barrels a day in the September period, versus 495,000 barrels a day in August.
Brazil To Export 1.5M Barrels Oil/Day In 2015, MME Says - Estado
Brazil should be exporting 1.5 million barrels per day of oil in 2015 and 2 million bpd in 2019, said Mines and Energy Minister Marcio Zimmermann, as reported by the local Estado newswire.
Insurgent Group in Iraq, Declared Tamed, Roars
This spring, United States military commanders said that Al Qaeda in Mesopotamia was a group in disarray, all but finished as a formidable enemy after American and Iraqi troops had killed or captured more than three-quarters of its leaders.
But even as officials in the United States and Iraq made public pronouncements that reveled in Al Qaeda in Mesopotamia’s demise, the Sunni insurgent group vowed “dark days colored in blood.”
This summer, as if to make good on its pledge, Al Qaeda in Mesopotamia embarked on a wave of terror that managed to shake even an Iraqi public inured to violence: during the past two months, Iraq has witnessed some of its highest casualty tolls in more than two years, according to the government.
Pennsylvania's Tax Level for Shale Drilling Sparks Debate
The battle over what type of severance tax Pennsylvania should impose -- supposedly by Friday -- on the modern day Gold Rush, that is the Marcellus Shale natural gas reserve, has become a duel of two ideals.
China's economy still on track, domestic consumption needs boosting: Asian Development Bank
China's economy will continue growing rapidly, but it must boost domestic consumption to achieve more sustainable growth, the Asian Development Bank (ADB) said Tuesday.
Chinese vice president calls for closer links with Russia
Medvedev said Russia-China relations have reached an unprecedented high thanks to the high level of mutual trust between the two countries.
He said Russia will unswervingly work on developing future-orientated Russia-China strategic cooperation.
Cuba ups gasoline prices about 10 percent
Cuba has upped already-high gasoline prices by about 10 percent amid sweeping changes to the economy, a move that could lead to grumbling among cash-strapped islanders, particularly private taxi drivers who are not allowed to raise their own prices.
The cost of diesel fuel — used by many of the old cars that populate Cuba's streets — rose to $1.19 a liter ($4.50 a gallon), about 11 cents a liter (42 cents a gallon) higher than previously.
China to stick with one-child policy
China will continue to limit most families to just one child in the coming decades, state media said Monday, despite concerns about the policy's problematic side effects, such as too few girls and a rapidly aging population.
ConocoPhillips shuts-in natural gas production to wait for better prices
According to a report from Reuters, ConocoPhillips (NYSE:COP) CEO Jim Mulva revealed at an industry conference Monday that the company has shut-in some onshore North American natural gas production due to low prices.
"We've had a small amount of production that we've shut in because we feel it's not that economic to produce," the executive told Reuters. "And so we'd rather keep it in the ground for when we can produce it at a later date."
Natural gas is currently trading on the Henry Hub at about $3.75 per mmbtu.
While the company is stopping some natural gas production onshore the US and Canada, ConocoPhillips is looking to increase investments in “liquids rich” shale plays, such as the Eagle Ford in South Texas, Mulva added.
Jordan Seeking Bidders for ‘Master Plan’ on Gas Supplies, Minister Says
Jordan, which imports almost all of its energy, forecasts that domestic fuel consumption will increase to 10 million metric tons of oil equivalent by 2020, compared with its current level of 7.5 million tons. The government estimates that electricity demand will almost double over the same period to 5,200 megawatts.
Nigerian oil minister sees new oil law in weeks
Passage of the petroleum industry bill, which promises widespread reforms was expected in late August, but ran aground on the opposition of international oil companies.
Carbon tax could be the ticket for a greener Australia
The Cap or Trap?(pdf) report finds that the second phase of the European ETS will fail to deliver significant carbon reductions. This will be a surprising outcome for many Australians who have been led to believe that emissions trading is 'decarbonising' Europe.
Although a carbon tax cannot 'guarantee' specific targets, it can guarantee revenue.
South Africa launches world first synthetic jet fuel
South African petrochemical giant Sasol (NYSE:SSL) has set a world record after flying the world's maiden commercial passenger flight powered solely by the company's 100 percent synthetic jet fuel, which is made by converting coal into liquid fuel.
''This is a very clean burning fuel and much better in terms of CO2 emissions, compared with conventional jet fuel. Sasol is always considering its environmental impact, and as a company we are looking at full cycle of reducing our carbon footprint, across our processes,'' Davies said.
Saudi wasting up to 30% of groundwater-scholar
Saudi Arabia, the biggest oil producer in the Middle East, is increasingly concerned about the high consumption rate of its natural resources.
Domestic use of oil and natural gas is growing faster than the kingdom’s population and economy, central bank Governor Muhammad Al Jasser said on Sunday.
Replacing groundwater with desalinated water, produced hundreds of kilometres away at the coast, would cost 8.8 riyals ($2.35) per cubic metre, Abahusayn said.
Balancing economic risks: Tips for a well-structured deal
The amount of infrastructure development currently underway worldwide is impressive by historical standards, especially in the Middle East. To offset the risk to private investors, governments are playing a major role through privatization and public-private partnerships, but spreading the exposure across multiple parties in a consortium does not eliminate the risks. This article proposes tools and techniques for owners and operators to minimize the economic risks of large capital projects in the Gulf Co-operation Council (GCC).
[Bric Food File] Emerging markets redraw the world food map
In the past rapid rises in food prices tended to be triggered by supply shocks such as crop failures. But more recently demand shocks are playing a bigger role as countries such as China, India and Brazil become richer.
About 100 arrested in mountaintop mining protest
Among those arrested was climate scientist James Hansen, who issued a statement saying that mountaintop removal "destroys historic mountain ranges, poisons water supplies and pollutes the air with coal and rock dust."
NT govt declares opposition on planned Cameco uranium site in Alice Springs
The planned uranium project attracted criticisms from many environmentalists, who argued that uranium mining activities near the springs could potentially contaminate the area's underground water reservoir.
A number of years ago, Wesley Pierce, a geologist with the Arizona Geological Survey, wrote a paper titled "No Rocks - No Ice Cream." The links in the chain of events that makes ice cream possible reveals that rocks, minerals, fertilizers, grains, cows, milk, cream, and machinery are all essential.
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I want to again thank Debbie Cook and Tom Whipple (of ASPO-USA - the one who does "Peak Oil Daily") for help with this.
Thanks Debbie, Tom and Gail!
Local ethanol producers worry as Congress appears ready to drop renewable energy subsidies to save money while leaving de facto oil subsidies in place.
The discussion around ethanol subsidies seems to be oblivious to oil subsidies, Peak Oil and the implications for development of other ethanol feed stocks. Removal of the blenders credit should reduce some demand punishing more costly ethanol from cellulose and waste.
Since oil will continue to receive the benefits of Wars for Oil Security, the Strategic Petroleum Reserve, the Oil Depletion Allowance and other tax incentives, government policy looks to be tipping the playing field in its favor.
It appears that Congress is counting on the Great Recession to be a permanent situation which will suppress oil demand and they may be right. The effect of reducing ethanol subsidies will be to make permanent corn ethanol as the feed stock of choice in the United States. Good for me but not so good for the energy big picture.
Increased oil imports with bigger trade deficits are a sure thing in the remote chance the economy does recover. But who cares. There is no limit on oil available for import and the electronic printing press at the Fed can spit out infinite digital dollars to pay for it.
Meanwhile President Obama has just signed a tax give away raising the Section 179 deduction from $250,000 to $500,000 and extending bonus depreciation. Only a few years ago it was at $20,000 and not too difficult to exceed.
Now virtually all income of most farmers can be tax sheltered if they use it to buy new equipment. With interest rates very low and prices of new equipment rising despite the myth of no inflation, it is a temptation hard to resist.
This is a bonanza for wealthy farmers and other small businesses who can now write off up to $500,000 of equipment purchases the first year. Gas guzzling pickup trucks are always high on the list.
On the positive side a lot of them are available with flex fuel engines, but mileage is poor.
Nearly everyone around here seems to have a new one already, but I bet a lot of them will be traded in anyway to make use of this tax expenditure give away.
Government seems to be hell bent on undoing with one hand what it is doing with the other.
Nothing new.
There is already a law that mandates the amount of ethanol that gasoline blenders must use. Right now the minimum ethanol use in the RFS standard is bumping close to the " blend wall" i.e. 10% ethanol.All that the blenders tax credit does is pay blenders to do what they are required to as a matter of law. It is nothing more than a gigantic handout to the oil industry. I think if you are going to go on a rant you should at least get your facts right.
While we are talking about subsidies, we should mention the almost $76 billion in subsidies to corn from 1995 through 2009. Source: http://farm.ewg.org/progdetail.php?fips=00000&progcode=corn
While there are probably some good reasons to provide subsidies to agriculture in general, the allocation of subsidies is lopsided and is prejudicial against fruits and vegetables. The small, local farmers in this area and others do not benefit from corn subsidies. In addition, consumers interested in improving their diets with more healthy fruits and vegetables are also prejudiced. Junk food junkies, especially big meat eaters, however, are rewarded for their self destructive behavior.
And yes, let us eliminate any and all subsidies to oil and let us tax oil and its byproducts the cost of maintaining the empire.
My wife and I just went to a local farmers market (chock full of veggies and fruits) where there was a sign on the door stating that the store could not take WIC checks...that it 'was not able to participate' in the WIC program.
Two nutritional strikes against poor folks: many of them might not have been raised to enjoy veggies and fruits, and they can't use their WIC benefits at the farmers markets I guess.
This is true even at many large farmers' markets. The bureaucratic hassles are apparently a nightmare... like the upcoming absurd blizzard of 1099 forms. Unfortunately this is what happens every time the government sticks its nose into anything - the Lobby takes over.
Connecticut has just issued rules for accepting WIC checks at farmers markets. The procedure is appended here :-
PDF warning:-
http://www.ct.gov/doag/lib/doag/marketing_files/05b__WIC_Fruit_and_Veget...
Having been a vendor at a farmers market, it seems like a major hassle when most of us generally take cash only. The WIC voucher has to be treated like a check, deposited at the bank and takes several days to clear, assuming it is valid and completed correctly.
The validation requirements at a venue where you may have multiple customers trying to get served at one time, at a table front, rather than lining up, is rather onerous.
Making it a debit card doesn't really help at that kind of venue either, since the majority of vendors at small markets don't come with credit card machines.
Illinois also has a WIC program for farmers markets :-
http://www.dhs.state.il.us/page.aspx?item=38054
The participant is limited to fresh fruits and vegetables on the list only, no nuts, canned goods, honey, baked goods etc etc. so if you are selling a mix of items at your table, you then have to separate them out for payment - the WIC check, and the rest.
WIC Farmers' Market Nutrition Program:
(pdf warning)
http://www.fns.usda.gov/wic/WIC-FMNP-Fact-Sheet.pdf
The housing and employment situation continue to be in the news:
Home Is Where Heartache Is
Commercial real estate crisis worsening
Also, the Federal Reserve Bank of San Francisco came out with a report that says that unemployment can be expected to rise by another 0.5% during the weak "recovery".
Historical data on recessions and recoveries is applicable to the conditions that existed during those historical periods. Whether or not this data is fully applicable to the current conditions of the global economy is not clear. Given the tendency of U.S. firms to export jobs, the fact that many of the jobs lost during the recession are not coming back, and given China's drive to dominate the emerging technologies, it is not clear whether jobs will ever recover regardless of the nature of the recession. Krugman rejects the idea that we have structural unemployment based on traditional measures of assessing the phenomenon. But he may be missing the impact of the fully global economic system with respect to the exportation of jobs and the mobility of capital.
The FIRE economy is not working anymore.
Anyway, some other way needs to be found to accommodate the unemployment problem besides growth. Either way, the conventional "wisdom" is just being replaced by another form of conventional "wisdom". Bring in the Herman Dalys of the world to explain this mess.
ts - Not sure how valid this is but listening to NPR the other day an "expert' described that there has been a notable trend in recession recoveries for many decades. While recoveries always followed recession, the rate of recovery has systematicly been slowing. He did allow that he couldn't say whether the current sluggish recovery was in keeping with this trend...not enough data yet.
I don't follow economic histories so do you recall any past recessions which began with the type of downward pressure we saw with the housing collapse, Wall Street melt down and high oil prices as a lead in? Seems like those factors alone might have pushed us into uncharted waters.
Rockman:
The 1974-1975 and 1979-1982 (a double-dip) recessions are the closest approximations of an oil price shock with other factors thrown in. Some would argue the 1990-1992 recession might also fit part of this model as well (Iraq invades Kuwait).
By recovery, that could mean the period from when jobs first started to fall to the point they recovered to the same number in the workforce as when the job losses began. In that sense, the person you heard on NPR is correct. Between 1960 and 1975 there were 3 notable recessionary periods. All recovered to the same number of jobs (but not necessarily to the same unemployment percentage in less than 24 months.
The 1979-1980 recession lead to a second dip in August of 1981 that took about 27 months for recovery. The drop in 1990 (July) took 32 months to recover back to same number (no net loss) of jobs. The 2001 recession (jobs began falling in March 2001) took 47 months to recover. President GW Bush was nearly the first President since the Great Depression to have a net job loss in during a term of his Presidency.
The recession which began in December 2007 showed its first job decrease in January 2008. By the time Bush was out of office, the economy had shed more than 5.8 million jobs and the net job creation during the Bush (II) Presidency was a mere 338,000 over the entire 8 year span. It seems we have bottomed in this recession at a loss of 8.33 million, since this started.
To put this into perspective, if you summed all the job losses from all the previous recessions and then plotted them on the Total loss versus months after the recession began, the summ of all job losses from all recessions since 1960 is only 8.7 million jobs and that combined loss would have bottomed out at 12 months after the recession began before the combine values began to rise again.
This recession took 2 years to bottom out in job losses (if it really has) but we can hardly say that there has been any real recovery of job loss. And if the last sluggish recovery is any guide, it took about 4.5 years to recover nearly 8 million jobs from the last recession's bottom to the peak before the crash occurred in early 2008.
That is well beyond the next Presidential campaign and may well into the 2016 cycle as well, IF there is any recovery at all.
That should brighten your day.
Great response trooper...much thanks
Another factor to consider is the shift from a manufacturing to service economy.
Most of the measures proposed by economists and/or adopted by Washington seem to be measures intended to stimulate demand for manufactured goods.
But maybe the real problem is how to get customers back into the $60 billion salon and spa business (and other such businesses). When commentators refer to the hard time that "small businesses" are having, many of them are essentially service businesses (unless you consider hamburger assembly to be manufacturing).
I would hypothesis the reason for the increasing slowness of "business cycle" recovery is the increasing concentration of wealth, especially discretionary wealth, in the hands of fewer and fewer actors.
A worthy point...just how many luxury yachts, homes, etc., can those with accumulated wealth really use?
The idea of creative destruction can eventually breakdown because that destruction must also eventually mean the destruction of living humans. We can't all be in the "service sector."
Indeed. As inequality has increased in the US since 1980 the wealthy are left with more and more money to invest in (relatively) fewer productive places. So they (especially those in finance) try to wring returns out of more and more exotic (read more and more leveraged) financial instruments with greater and greater danger to the broader economy. The real economy can only grow (per person) at the rate of productivity growth, the rest is inflation, which at moderate levels acts like grease, or bubbles. So we've had the Savings and Loan bubble, the dot com bubble, the Long Term Finance disaster, and now the housing bubble. The next disaster will probably be sovereign credit collapse as central and southern Europe (plus Ireland) can't get out from under the Euro and German imposed austerity. Yes I know that high oil prices slow real productivity growth, but that only compounds the problem of too much inequality.
lenny - Perhaps but let's not forget it is these same "rich" folks who own the business that have to expand to create new jobs. It would be a great benefit for him if J6P has a few more dollars to spend. But he isn't going to start/expand a new business that might provide a $1+ million in salaries to 20 or 30 families. It's helpful in this discussion to remember that the CEO's making $10+ million/yr and the trust fund babies make up a very small percentage of those 'rich bastards' who are about to get hit with the largest tax increase in the history of the country when the old tax rates expire. The great majority of the increased revenue for the feds will be coming from small business owners who are also facing increased costs due to the medical insurance. Last I heard from the GAO small business account for about 75% of job growth.
So we're going to decrease the amount of capital small business are allowed to keep and they'll thank the country by using their great borrowing capability (read: sarcasm) and expand their businesses and increase employment. And bring home less money and going deeper in debt (if they really borrow any significant amount of capital). Perhaps my view is somewhat simplistic but that doesn't necessarily mean it isn't correct for the most part.
Small businesses create the most jobs, large businesses have the most money.
Provide more incentive to create jobs (say by allowing non-executive pay to be claimed at 110% for taxes), and tax corporate income 10% higher and I'll bet things would sort themselves out in a hurry.
I figure the only real "producers" are the fossil fuel miners
(ancient photosynthesis)
and the farmers (daily photosynthesis).
The rest are consuming more than producing.
Economize - Localize- Produce
What did you do today for the energy/food you consumed ?
Well, I used available off the shelf technology to mine some photons from the sun to charge up some batteries that will power some LED lights tonight. Just my very small middle finger salute to BAU for the day.
But can solar PV replace fossil fuels and/or photosynthesis.
without either the PV toys would not be here.
Certainly not, but anyone who has that particular expectation is either barking up the wrong tree or is bordering on the delusional.
Neither would any part of our technological industrial civilization including all our fossil fuel based toys. Though I assume based on your comment that you are of the mindset that only the Oil based industry and economy can be the adult serious no nonsense paradigm. The only problem is that very mode of thinking is what has brought us to our current (no pun intended) crisis.
I'm sure the big bad dinosaurs must have been amused at the funny little furry mammals scurrying about beneath their feet. Yes, a lot of the little critters got crushed, stepped on or eaten but some of them did survive while the dinosaurs either went extinct or evolved.
So given that most people here agree that fossil fuels are going to be more and more difficult to get access to in the not too distant future my suggestion is for many more people to learn how to do something useful with some of those PV toys because your fossil fuel toys just won't work anymore...
r4- interesting point. Not saying your assertion isn't correct but do you have some numbers to back up the capital distribution anecdote. I know the individual capital in a mom&pop biz is small but there are thousands of those for each Ford Motor. I have no sense of the scales though.
Unfortunately I do not have hard numbers to back up my assertion. It is mostly based on my impressions from having seen the public balance sheets of large companies and knowing quite a few of my local small business operators.
Anybody who really believes that a typical small business owner clears $250K/yr is wishing really hard, by the way, it's a tough market out there and you need to be taking margins off more than 50 employees to clear that kind of money and stay competitive in most markets.
I think thats pretty much true, although I didn't save any statistics. Most small businesses are small, many don't make any money at all, my former carpool member had "invested" in a toy shop that only lost money and was sold at a loss. And just about every doctors office qualifies as a small business. True there are some that are big enough to generate high incomes for the proprietor (I happen to work in one), but for the most part they aren't making enough money to see the increase.
Even, then its largely a case of trying to get more from the few big winners. What has happened over the last 30 to 40 years is that the bigtime rich have been
gaming the systemrewriting the rules in their favor -usually one small eye-glazing-over boring detail at a time, but the net result is a tiny minority is accumulating great wealth, and the great bulk of the people suffer. Besides its not a tax increase, it is the expiration of a past (unjustified) cut. The evidence isn't there to show that marginal rates have much to do with economic growth -but the well funded (by superrich people) institutions will all tell you otherwise.This is as good as any place to post this 2 cents to the tax discussion:
President Obama Signs Small Business Tax Bill:
http://taxprof.typepad.com/taxprof_blog/2010/09/president-obama.html
How many small business will pay increased taxes?
http://news.yahoo.com/s/bw/20100924/bs_bw/1040b4197030541676
Another look at the same question:
http://www.npr.org/templates/story/story.php?storyId=129914120
C or S Corporations? What about LLCs Could certain small businesses benefit from changing their business tax filing status?
http://www.allbusiness.com/legal/laws/434628-1.html
Complex issues, to be sure.
I wonder why the economy did pretty well during much of the 90s before the Bush tax cuts?
Maybe Congress should decrease real federal spending ten percent over the next 5 years across the board (everything except interest payments, including pensions, Medicare/Medicaid, DoD, DOE, DOJ, farm aid, etc) and lower all tax rates by 5 % phased over the same next five years...that would be an interesting experiment.
EOS - Based upon this site it doesn't appear any of us have a clear perspective of small businesses in this country. I can't vouche for it's accuracy but they gives their data sources which are all easily searched if you want to take the time. Notice the definition of a small business is less than 100 employees...and 99% of all busineses fall into this category. I haven't found a source for income distribution but looking at the stats they seem to follow what folks like even CNN are reporting: the new tax schedule will strip capital from the major source of new jobs in this country. Just the fact that small businesses generate around 50% of all retail and wholesale revenue they must represent a huge portion of the tax base. As far as small businesses not making much revenue: half make less than $3.6 million/yr...and half make more than $3.6 million/yr. That's over 4 million small businesses making over $3.5 million EACH per year.
Large businesses of 1000+ employees: 8,000
Midsize businesses of 100 to 999 employees: 93,000
Small businesses of less than 100 employees: 8.1 million (does not include homebased businesses)
Small businesses
- represent more than 99% of all employers
- provide 60% to 80% of the net new jobs annually
- are 53% home-based and 3% franchises
- account for 97% of all U.S. exporters of goods
- produce 13 to 14 times more patents per employee than large patenting firms
- 52.6% of all retail sales
- 46.8% of all wholesale sales
- 24.8% of all manufacturing sales
The average annual revenue of a small business is $3.6 million. The average annual revenue of a small business with a website is $5.03 million
Here's the source: http://www.patsula.com/smallbusinessfacts/#sbgen
Sources for Facts: The following small business facts have been compiled from publications by: U.S. Bureau of Census, International Data Group (IDC), Small Business Administration (SBA), and numerous other publications and online sources.
Since our hyper-complex/leveraged systems are teetering on the brink, including our tax systems, I'm not paying much attention. The Govt giveth, the Govt taketh away. I expect these obscenely complex systems to begin their implosion before I have to worry about some tax increase threshold. Your
mileagetax rate may vary.Embrace simplification.
Rock,
I'm not sure the size of the business is the relevant measure, most likely the corporate givernment and tax filing status. Public corporations, and other entities have different tax regimes. The one I work for could be public, and be in a different tax regime, but the owner wants to keep it as an Schip (whatever that means), which I think means corp profits are taxed as if they were his persoanl income. So a lot of this revolves around organizational details. Obviously some charters are just not good for the business model of plowing almost all profits into growth (as the profits are taxed before investment...)
But, in any case, we gotta have some sort of communal or government component, there are a lot of functions that just won't happen otherwise (like universal education a,d healtcare, and fire, and ...), so we gotta have a means of raising government revenue. The current obsession with demonizing all things government, is profundly destructive, and plays into the hands of the plutocrats. If government is so bad, why are the Scandinavian countries doing so well? Our problem is that we see bad government, and our reaction is to throw out the baby with the bathwater. Isn't that what Mexico did with their corrupt law enforcement? Well in large sections of the country it's been taken over by criminal gangs ( a form of government beyond control of the people).
Rock,
Perhaps whats needed is a separation of business nominal profits from individual income tax rates. If an owner wants to recirculate most of his profits as investment in order to grow his business, thats a quite diferent thing, and the tax law should accomodate it. More than half of the richest Americans are not small business owners, but CEOs and financial industry big wigs. We ought not conflate the needs of the grocercy store owner with theirs.
EOS -- I'm not opposed to financing govt activities. That's a prime responsibility of the citizens. But I am opposed to the idea that any monies taken from businesses don't have some negative effect. But every biz has to contribute to the system. And I'm very opposed to the perpetuation of the idea that all the new taxes will be raised from fat cat CEO's and trust fund babies. That's just the spin the politicians like to use on folks who hate those rich bastards. It's nothing more then self-serving deception IMHO. The numbers I dug up just don't support that fantasy.
And yes...a small percentage of the population owns a large bit of the wealth. But as you point out, the small businesses are going to be hit with the same tax increase. Hell.. take 100% of the monies from the rich who don't own businesses. But that isn't the program. As far as the govt giving small businesses some tax break as you suggest…how can that happen…it would be a huge decrease in govt revenue. And the govt certainly shouldn't be required to spend less. Should it? And what about corporations who don't pay taxes? They don't pay taxes for the most part because they deduct dividend payments from their income. But the shareholders pay taxes on the dividends. Since those monies aren't used to expand the business why not take 90% of those dividends in taxes? Maybe because no one would buy the stock perhaps. Heck...who needs a vibrant stock market anyway...just another group of fat cat bastards.
My point wasn't about not taxing those incomes that don't substantially help the economy expand. But again, a very big chunk of the the increased taxes will be coming from the revenue of small businesses. For the same reason Dillenger robbed banks: that's where the money is. The govt cannot function without taxing small businesses as far as I can tell. So the question seems to boil down to a choice: increased capital available to either expand the govt or expand businesses. It seems to be close to a zero sum game: can only do one or the other. Add that to the increased costs from the med plan and it amazes me that anyone wouldn't consider this as a serious job killing situation. Granted the govt can continue to hire more folks but that isn't a business that generates any revenue...big difference IMHO. And then add to that the increased costs business will face as we get hit with more of the affects of PO. PO is coming...not another dotcom booom or housing boom or clever new stock market derivative boom IMHO. I know part of the theory is that inflation will erode the value of our mounting debt. But having a lower debt value won't be much help if we have fewer folks earning a living to pay it. And as you so correctly pointed out the largest source of revenue for the govt is the tax collections of the IRS. BTW...the second largest source are the royalties from oil/NG production on federal lands.
Can you see the lie in that statistic?
I can, because taxes are on profit and profit is revenue less expenses.
Here's a decently researched article that supports my intuition on this:
http://money.gather.com/viewArticle.action?articleId=281474977453286
Here's a direct link to the Census Bureau report on average income:
http://pubdb3.census.gov/macro/032008/perinc/new09_001.htm
The best average income over a broad group is under $100K/yr according to the Census report, and that is from "property" income such as interest, dividends, and trusts. Even that is way under $250K average.
Let the rich whine about having to pay taxes. If they were going to put that money back into the economy in a serious way without having it ripped from their hands we wouldn't have a recession right now.
"who are about to get hit with the largest tax increase in the history of the country when the old tax rates expire. "
That's wrong, this is just a roll back of Bush "2", tax cuts. Look back through Bush "1", Ford, Nixon, and Reagan and this bracket was always taxed at a higher rate, as high as 90%. This restores the rate charged during the Clinton administration and that was a lower rate than previous Republican administrations.
"largest tax increase" is just seriously blowing smoke.
Don in Maine
exactly... it was 91% under Eisenhower (that well known liberal commie)...
highest top marginal tax rate eras correspond to the highest re-investment in businesses... the owners were essentially forced to put money into their business because it was the most efficient shelter for it and this often led to significant expansion of their business and even decent wages for their workers...
what an amazing concept...
Sounds like COMMUNISM, the dirty red! The HUAC have been informed of your propaganda.
That would not work today for a number of reasons. The money would simply leave the U.S. and very few were affected by these high rates. When Eisenhower was President much of the world was still in ruins and capital didn't have many places to go.
That tax rate was for people making over $400,000 a year. In 1953 dollars, $400,000 is equal to $3,172,184.95 in 2009 dollars.
I imagine very few people make over 3 million dollars in income. If they do it's most likely in the form of Capital Gains.
Yet if you listen to the representatives of those who would "suffer most" from allowing the tax cuts to run out they obsess over the idea that an "increase" (i.e. letting it go back to more historical norms) in this tax will hammer small business... despite almost no small businesses having an income even approaching levels needed to trigger the top marginal rates to kick in.
It's clear that this rate targets the highest earners and not all the other sob story "victims"... and rather than pay their share they'd rather take their ball and go home (hence "the money would simply leave the U.S.") - but of course they are a vocal group and have direct lines to Washington so their victimhood gets most of the play. I really don't care if it 40, 60, or 91% but as Warren Buffet said it's ridiculous that he get's taxed less than his help...
Edit: and as for that empty suit threat of the money leaving the U.S. - so how is that materially different than what these thugs have been engaged in for the past 30 years - outsourcing, setting up 500 subsidiary off-shore entities, moving to UAE or wherever... Trouble is we've been so de-sensitized to it we can hardly even be bothered to care when an entire industry engages in economic terrorism - as the big financial institutions engaged in collusion to blackmail the US taxpayer (neat how that happened after all top tax rates got slashed) with the ominous warning... "if you don't TARP us, we're bringing this sucker down..."
It doesn't really matter where Capital goes, it goes to where it is treated the best and earns the best returns. The U.S. will never again be like it was in the 60s, it must compete with much of the world now and it simply cannot. There is no such thing as American Exceptionalism. If I had issues preserving my wealth due to tax structures I would leave the U.S. There is no capital gains tax in Costa Rica.
Don't worry, you have to earn capital gains in order for them to be taxed.
Just because equity markets in the U.S. have not been performing well does not mean this is the case in other parts of the world.
FL - Check my post above: over 8 million small businesses (with less than 100 employees) earned an average of $3.6 million in revenue. Granted that doesn't say what the owners average incomes are but it would seem that there are a lot of folks making a lot of money and not just from capital gains.
Don - then take it up with CNN. That's their calculation...not mine. Might confirm my suspicion that CNN is actually run by a right wing nut out to ruin the president.
Don't have to Rockman, I make it a habit not to repeat something I know to be patently untrue even if it is hyperbole in the mass media.
Don in Maine
Don - With all due respect what you "know' isn't of much relevance to the folks here. Neither is what I "know to be patently untrue". What independent data can you offer other to back up your position? TOD abounds with opinions and "feelings". But what makes TOD valuable is when folks can offer valid sources to support their positions. What you and I "believe" contribute little to TOD IMHO.
At least on the employment front, economists have pointed out that the nature of unemployment during recessions has changed.
Prior to 1981, the employment impact tended to be an "inventory" effect: inventories were too high, manufacturers laid off workers, once demand recovered and inventories had been depleted, workers were hired back to the same position. In the graphic Kingfish posted below, V-shaped job losses and recovery.
By the 1990 recession, the picture had changed dramatically. Positions where workers were laid off were never filled again. Some of it was automation; some of it was offshoring or relocation within the country; some of it was structural, in the sense that assembly line workers were laid off during the recession but programmers were hired during the recovery. As a consequence, job recovery is very much slower. Even though 2001 was a very mild recession by other measures, employment recovery was very slow.
One of the big-name labor economists made a fairly extreme statement the other day. He said that if you were 55 or older, and had lost your job in this recession, there was a good chance that you would be un- or underemployed for the rest of your working life. I have been saying for years that the first public policy crisis that the Baby Boomers precipitate will not involve Social Security or Medicare; it will be the millions who can't afford to retire, but whom the private sector will refuse to employ.
It may be worth noting that FDR sent people out into the field to see what was happening shortly after he took office. At least one of those people reported that it looked like anyone 45 or older who had lost their job would never find another one. There was some truth to that; full employment for older workers was eventually restored when the federal government used its authority to pull several million young male workers out of the civilian workforce.
I wish I thought it was an extreme statement, but unfortunately recent experience ( fortunately not myself I'm 58 ) indictates that that is a simple statement of fact. Some are claiming the age where your chances of regaining your past glory is now around 45! Those of us with very strong math/science, until recently could have joined the K-12 teaching profession at usually greatly reduced pay. The only person I know who did that was laid off within a year. Now that option is essentially dried up. Maybe if you are willing to move to North Dakota which has a budget surplus due to Bakken shale revenue you might be OK. [I would do it, used to spend Christmas up there with in laws, its not that bad, and low crime and every low living expenses -but I suspect 99% of Americans wouldn't consider it].
I'd say we are in uncharted waters:
Looks kinda like my chart as well (with a few less recessions). I was just too lazy to post it from my Excel file. Thanks for posting this.
Interesting graph, and I observe that what I'd call the dominant period, or frequency component in the cycles, does seem to have been steadily tending longer, over time.
This could indicate a steadily increasing latency in the Economy.
Thus 2001 > 1990 > 1981 > 1974
Note the 2007 one, is actually (slightly) shorter in period than 2001, but greater in amplitude.
Wow King...really dramatic in a visual. Onteresting that the latest has a similar downward slope but just kept on going. I guess we could see a half dozen reason why: from blaming President Bush to a failed stimulus effort by President Obama to credit crunch to uncertainty in the biz community.
If we are really concerned about global warming and the catastrophic implications for a "planetary burp" as the methane hydrates melt - shouldn't the focus be on leaving the natural gas that is in the ground where it is and using as much of methane hydrates as possible?
"We" aren't the Japanese government or the companies involved, and it is hard to tell someone else what to do.
I suspect that the Japanese government is concerned about their current population--will there be adequate food and will other needs be met, without adequate energy supplies.
To them, the issue would be a concern for increased mortality now without using methane hydrates, and the possibility of increased mortality later, if there is a burp. They must weigh things so the former is more important.
In a world where near-optimal policies are possible.....
I think that in mining the hydrates the risk of accidental release is not well known, but it could be an important risk. I think a lot depends on how the undersea methane is released. Most of the McCondo methane dissolved into seawater, and I think this means it will oxidize to Co2 before it reaches the atmosphere. So releases into deep water that are slow enough not to bubble to the surface are probably a lot less harmful climatewise.
But, obviously is methane hydrates actually function as a climate timebomb, then defusing them would be a useful risk reduction strategy.
You really only needed the first eight words of your post... "If we are really concerned about global warming..."
Not sure if you mean that on a global level or from the perspective of one of the top carbon emitters on the planet but if it's the latter then I've seen very little evidence that anyone is really concerned.
There are a small group of scientists, concerned citizens, some of us here on TOD - overwhelmed by a vast majority who think it's a one world gov't conspiracy, a hoax, a way for scientists to get rich off of grant money (?!), tree huggers wanting to infringe on other's rights... a million other things besides a "real concern".
By the time this becomes a real concern (sooner rather than later IMHO) resulting in popular outcry for "something to be done" - we'll be deep into experiencing some nasty effects from climate change.
I'm quite convinced we could go so far as completely cooking the planet and a large, vocal group of deniers will, with their last breath, insist it's due to solar cycles, recovery from the last Ice Age, or the gravitational impact of Pluto before admitting that AGW actually occurred.
Yesterday, L.A. set an all time record of 113 degrees. And it isn't even still summer. Sounds kind of like a nasty effect to me. Anecdotal? Sure. But string enough years of anecdotes together and you get a real problem.
That same day, CAISO shows the potential of using PV and CSP to carry increasing amounts of California's peak utility electrial load on sunny days:
The peak load yesterday was approximately 45,000MW. Of that PV only contributed 350MW (less than a percent), yet if we look at when the PV power curve existed, it was mostly during peak load.
http://caiso.com/outlook/SystemStatus.html
http://www.caiso.com/green/renewrpt/DailyRenewablesWatch.pdf
I would like to see that PV contribution soar to at least 10%, and the sooner the better.
It was kind of humerous, I read Jeff Masters blog post on it, it happened pretty early in the day, as soon as the record was broken the thermometr broke! So you say it was a thermometer busting heatwave. They claimed Beverly hills hit 119. But I think LA is a bit fluky, I looked up some of the weather stations down there, the hottest came before noon, and some stations fluctuate quite a bit. Probably has to do with downsloping winds off the mountains, versus ocean air. In any case as soon as I get done posting I have to go out 104 at Livermore! More worrisome are the high end precipitation events. Looks like the east coast is due for one tommorow, from this bizzare "monsoon low" (same kinda beast that blasted Pakistan), which is supposed to go up the coast. Jeff seems to think another one may form and follow it a few days later. So just maybe we are starting to really see the consequences....
EoS -
Big fan of Dr. Masters here - definitely some interesting weather times ahead for us.
But it means nothing to most folks - unless they happen to be the one drowning in it.
And don't even think about bringing up climate change as a catalyst for all this weirdness - your conversation will work something like this:
Man, that was some storm - a foot of rain in 3 hours, then it snowed, then it was 70 degrees a day later... I guess the predictions of much more wild swings in weather due to CC look to be coming true...
That's just a hoax - I remember back in '52 and '74 we had crazy rain like this...
Yeah but this is our 8th rainfall of over a foot this year...
Well, you just don't remember back that far, the climate is always changing - we've had rainy stretches and dry stretches...
Yeah but this is our third event like this in one month...
Well this happened before in history, thirty years ago we were headed for another ice age, there's evidence there was a lot of rain 250,000 years ago etc.
Yeah but there were no humans around these parts with very particular needs for agriculture, flood control etc.
Well it's just normal cycles the planet goes through, sunspots, isostatic rebound, solar intensity variations
Yeah but... oh nevermind.
EDIT: adapted from a conversation with a co-worker
If you're interested in anecdotal support it looks like green houses gases must be lowering temps: Fron US Bureau of Stats: Record high: July 10, 1913 at Greenland Ranch = 134 F
It was a really nice day here in Eastern WA (86), but not a record. That was 94, and set in 1963.
I heard about about LA's record and had to look.
I think most meteorologists think that was simply a bad measurement. Death valley hasn't broken 130 since, and most meteorologists don't think it ever did. The issue of temperature records is actually a messy one, as sites move and instruments change, and built environment changes.....
Only a few years ago the phrase "Ghawar is dying" was quite en vogue, there even was a sticker on sale (for your SUV, maybe).
Now a report from Emirates 24/7 Business claims quite the opposite: "World’s largest oilfield to get even larger".
The article doesn't really explain how Ghawar is expected to become 'larger', though. It gives a nice historic overview and states somewhere near the end:
The concluding paragraph in the Emirates article:
Here is my standard response to the conventional wisdom that Saudi Arabia has magical oil fields that generally don't deplete:
Saudi Cumulative Net Oil Exports Versus US Oil Prices
2002-2005 & 2005-2008 (EIA, Total Liquids)
One of the primary contributors to the 2002-2005 increase in crude production, followed by the 2006-2008 cumulative crude decline was Saudi Arabia, but let’s look at Saudi net oil exports, which are defined in terms of total liquids, inclusive of natural gas liquids and refined products.
Here are the average Saudi net oil export numbers per day by year, versus average annual US spot crude oil prices:
2002: 7.1 mbpd & $26
2003: 8.3 mbpd & $31
2004: 8.6 mbpd & $42
2005: 9.1 mbpd & $57
2006: 8.4 mbpd & $66
2007: 8.0 mbpd & $72
2008: 8.4 mbpd & $100
Relative to the 2002 net export rate of 7.1 mbpd, in the following three period, 2003-2005 inclusive, the cumulative three year increase in net exports was 1,716 mb, versus a three year increase in oil prices of $31.
But then we have the 2006-2008 data.
Relative to the 2005 net export rate of 9.1 mbpd, in the following three year period, 2006-2008 inclusive, the cumulative three year decline in net oil exports was 841 mb, versus a three increase in oil prices of $43.
Note that in early 2004, the Saudis reiterated their support for the stated OPEC policy of maintaining an oil price band of $22 to $28, and they made good on their promises to support lower prices as they significantly increased net oil exports in the 2003-2005 time frame, but then in early 2006, they started complaining about problems finding buyers for all of their oil, “Even their light/sweet oil,” even as oil prices continued to increase. Apparently no one thought to ask them in early 2006, as oil prices traded over $60 per barrel, why they didn’t offer to sell another two mbpd of oil for $28 per barrel.
2009: 7.9 mbpd & $62 ?
preliminary numbers for 2010?
I think that there was some voluntary reduction in Saudi net exports in 2009, but there is "voluntary" and there is "voluntary" (I suspect that the Saudis needed to curtail the production from some of their older fields after what I think was probably an all out effort in 2008). But it's interesting that the average annual price in 2009 was more than twice the upper limit that the Saudis unsuccessfully tried to defend in the 2004 time frame.
What we can say is that by the end of 2010 Saudi net exports will have been below their 2005 rate for five straight years, while the average annual oil price probably exceeded the $57 level that we saw in 2005 for all five years, and four of the five years, all but 2009, in all likelihood will have shown year over year price increases.
As far as I know Manifa has not produced anything yet, because the oil there is of low quality. It was discovered, explored and sealed again in the Fifties.
Saudi Aramco has a report dating from 1963. There has been some talk lately about Manifa being developed after 2011.
Maybe the author of that Business 24/7 article should have done a little more research.
What they are writing about is more a realization by Saudi Aramco that perhaps not as much oil as predicted was dislodged from the Arab-D reservoir rock. There is still some oil trapped in micropores, even in completely flooded-out areas of the field. One question is whether or not this oil was previously counted as part of the reserves or not. My hunch is that it was, and that this investigation was initiated because the only way they could history match the production in their bazillion-cell computer simulations was by using porosity values lower than suggested by gamma measurements. The waterfront was just moving too fast.
What's curious about this and other articles appearing now, in sources such as the above, is that the Dimensions article talking about this came out in Fall 2008. I had some fun with other aspects of that article here:
Five Easy Leases: Ghawar's Discovery Wells
So why is this appearing now as news? Some Saudi Aramco PR people make some calls? In any event, that the oil is there is one thing. Getting it out is another. They have some ideas, but this will not be trivial -- especially while they are trying to get the rest of the oil out the old fashioned way. And it probably won't flow fast. The whole "Ghawar gets bigger" meme is comical.
Re: Manifa -- they have spent a lot of money in the past couple years building out infrastructure for this, including artificial islands. They have pushed back the completion date, but contractors are still working on various aspects of it.
JB
More meat eaters will require doubling of world livestock
"World Meat Congress" Just love the sound of that. "Where the meat meets" The solution is simple. Destroy what is left of the planet. Frankly, by 2050, there will be a lot of things to suffer through and worry about. Where one can find enough meat will be the least of their problems.
I just did a "back of the envelope" calc: That amounts to more than a 1/4 pound of meat per day for every one of the 9 billion. That's some wishful thinking. They must be serving prettty stiff drinks at the MeatMeet.
This is good news, as it gives more capability to soften the tail of finite oil.
There was a risk of Coal being the 'fall back' fuel.
Will the USA now see a push to truly Gas powered vehicles ?
Dual Fuel, and Direct Liquid Injection are quite low hanging fruit here...
jg - A couple of points to bear in mind. First: "enabled the US to triple supply estimates" = this is an absolute worthless estimate IMHO because it doesn't include the pricing assumptions. There are 100's of TCF of shale gas that can be produced...at $30/mBtu. Very little at $4/mBtu. The drop in rig count in the SG plays supports that. Second, from my perspective the "gas glut" has been caused mostly by a drop in demand. SG did add some rate but most of those wells have declined below 80% of their intitial rates by now. But since many thousands were drilled they have developed a softer plateau than the cliff some have predicted. The impact of over 1 BCF/day coming onto the market in a single day from the offshore Independence Hub and the new big pipeline from the Rockies back east had a very big impact on the markets. But the DW GOM NG fields will deplete in 5 to 7 years. And it doesn't look like DW drilling will be ramping back up anytime soon. I haven't seen the numbers but the Rockies reserves may have a significant life.
As far as the $30 billion Alaska pipeline did you notice at what price assumption it will take for them to commit to build it? Bet you it's not anywhere close to $4/mcf. In the US increased NG driling might help keep coal at bay for a while. But last report China is still starting up one new coal fired plant every 3 weeks.
Of course there is a price elasticity here, but it does show an important time-stretch is possible, in the finite fuel aspect.
That will influence the shape of the tail.
Yes, China is building coal apace, and also ramping fields closer to home, as they can foresee some supply risks from more developed countries.
- and this was also good news for finite fuel tail :
No price mentioned.
Keep that NG cheap. Last year was dirt cheap to heat the house. More money for me to blow on cheap trinkets and even cheaper women.
i drift into the oil conundrum very rarely now. it's always BAU by TPTB. a mass of conflicting info.
pundits and shills banter back and forth. it's all fluff, colorful graphs &c.
let me "clew" you in on uhmerikan manufacturing. i work in a shop with all old people, including myself. i just went on a job interview with intent to bail out. one young guy was there the rest old.
in my town a heroin endemic. young adults using and dealing. i dont like being in manufacturing. work hard in unsafe, unhealthy and dirty conditions for low wages. why would any young person find that attractive?
the crash will come. and it will be a crash.
but...there is hope. titan a moon of saturn is filled with methane. so much methane even the japanese couldnt possibly use it up.
i submit we build a fleet of space ships shaped like oil drums and go get it, robotic space ships.
yeah, like you know anything. just go post something on clusterfuck nation. that will make you feel better.
the world's greatest boffins have it all figgered out. get on their site and post your reasons why it wont work, if you can out think the big boyz.
http://www.centauri-dreams.org/?p=14513
Project Icarus, introduced to the IAA at last year’s Aosta conference, made quite a splash yesterday at the International Astronautical Congress in Prague, with four presentations by Icarus team members and related work on the FOCAL mission by Claudio Maccone. Icarus is the attempt to re-examine the Project Daedalus starship study of the 1970s in light of technological developments in the intervening years. A joint project between the British Interplanetary Society and the Tau Zero Foundation, it’s now in fully operational mode.
Fueling Up a Starship
There is much in these papers worth comment, but today I’ll home in on the issue of helium-3 and where to find it, presented yesterday and drawing on the work of Andreas Hein, Andreas Tziolas and Adam Crowl. Daedalus was envisioned as a fusion mission using deuterium and helium-3 as fuel, a reaction that has advantages over deuterium/tritium but one that has yet to be demonstrated in a working reactor. Assuming we do figure out how to light this reaction, we still have problems in that helium-3 has a very low abundance on Earth, which is why Project Daedalus’ planners came up with the idea of entering Jupiter’s atmosphere to collect it.
According to zFacts.com, the US National debt will run through the $13.6 trillion mark on the way to $14 trillion by years end. Also zFacts has computed the source of the debt and finds that $9.2 trillion is due to Republican Administrations. Supply side economics,"debt doesn't matter", policies by Reagan and repeated by Cheney have damaged the Country's currency and economy while enriching the wealthiest few per cent. High oil prices and gold, high unemployment,a credit crisis, and falling real estate prices are unintended consequences of Republican economic theory and practices.
Supply side economics is just a way to increase aggregate demand, but it is done on the supply side. We continue to experience Keynesian failure.
http://money.cnn.com/2010/09/28/markets/gold/index.htm?section=money_lat...
'ooray and up she rises!
I posted this on August 15:
Four out of five ain't bad (bond yields dropped).
Anyway if the Federal Reserve does follow through with a US Treasury bond plan discussed in the news today, also know as Quantitative Easing 2, we should not only expect further gains in the price of gold and silver, but also gains in the price of just about all other commodities - including oil.
Perhaps even more surprising to the many pessimistic investors here, I fully expect the stock market to continue its upward trend that started about six weeks ago - until the time comes when long term interest rates start rising again.
While I think that paying off debt is the best investment one can make these days, and have chosen lately to invest in self-sufficiency and sustainability, I enjoy watching those who've told me in the past that gold and silver aren't a good investment. They just squirm when I ask them, "got gold"?
A relative who came into some cash last fall asked me what to invest in. I gave her two suggestions: Ford and GLD. She did neither.