Drumbeat: November 21, 2010

Mexico regulator rejects Pemex oil reserve estimate

MEXICO CITY (Reuters) - Mexican regulators rejected a huge chunk of state oil monopoly Pemex's estimate of how much oil and gas the country has, calling into question the long-term sustainability of the industry.

The National Hydrocarbons Commission ordered Pemex to produce more evidence to back up its claims of probable and possible oil and gas reserves in its northern region, in a ruling dated Sept. 30 but published on its website on Friday.

China’s Xi boosts ties to African oil giant Angola

LUANDA: Chinese Vice President Xi Jinping began a visit to oil-rich Angola on Friday, saying he believed relations with his country’s biggest African trading partner would be stepped up.

Two steps forward, one step back for Iraqi oil ministry

Iraq's oil ministry has signed off on two of the three contracts it awarded to the winners of last month's auction of gas licences. This is progress for the country, but also highlights uncertainties about Iraq's future.

The unsigned contract is the one to develop the Akkas gasfield, the largest of three fields offered in the ministry's October 20 bidding round. It is in Iraq's western province of Anbar, in a desert region close to the Syrian border. The province, dominated by Sunni Arab tribes, has recently been at the centre of protests against Baghdad's energy policies.

Saudi king to go to US for back treatment

Saudi King Abdullah is to receive treatment in the United States for a painful herniated disc, and ailing Crown Prince Sultan bin Abdul Aziz will take over the reins in his absence, an official said.

Cairn forced to cap output from Rajasthan field

NEW DELHI: Cairn India has been forced to cap oil production from its Rajasthan fields as the government is delaying approval for plans to raise output by 20 per cent ostensibly because of its standoff with the company’s majority shareholder.

'Good bargain for us': Al-Qaida group touts small-scale attacks

WASHINGTON — Al-Qaida in the Arabian Peninsula is promising more small-scale attacks like its attempts to bomb two U.S.-bound cargo planes, which it likens to bleeding its enemy to death by a thousand cuts.

The editors of a special edition of the Yemeni-based group's English on-line magazine, Inspire, boast that what they call Operation Hemorrhage was cheap, and easy, using common items that together with shipping, cost only $4,200 to carry out.

North Koreans Unveil Vast New Plant for Nuclear Use

WASHINGTON — North Korea showed a visiting American nuclear scientist earlier this month a vast new facility it secretly and rapidly built to enrich uranium, confronting the Obama administration with the prospect that the country is preparing to expand its nuclear arsenal or build a far more powerful type of atomic bomb.

Automakers mix and match energy alternatives

SEATTLE — Future cars may well mix and match alternative-fuel options … flexfuel and biofuel, diesel and hybrid, plug-in plus gas or all-battery. The exercise is aimed at changing America's energy economy to favor renewable resources and reduce the need for imported oil.

Chevy Volt confronts one final glitch

It's illegal to sell new cars in the United States without an EPA fuel economy label -- and the government still hasn't figured out how to measure the Volt's fuel economy. That means no fuel economy label and that means GM dealers still can't start selling the cars.

Infiniti becomes first to add noisemaker to hybrid

Here's an interesting twist: Infiniti is going to equip its 2012 Infiniti M35h, its first in-house developed hybrid, with a noisemaker to warn pedestrians of its approach.

End Game: Why the Status Quo Is Unsustainable

This Grand Cycle top is unlike any other faced by mankind. We are at peak everything; peak oil; peak food; peak water; peak industrialism; peak credit; but not peak population. There is and will be no excess capacity for growth. The very mechanisms that have allowed homo sapiens to reach such high levels of population density are at or near exhaustion.

Egypt's solar plant a bright spot in energy landscape

On a sun-baked plain 100km south of Egypt's capital, engineers are putting the finishing touches to a groundbreaking solar plant they hope will offer the country a way out of its energy crisis.

The Kuraymat solar thermal power station, which is in a close race with a project in Algeria to claim the title of the first commercial solar plant in the Arab world, features rows of curved mirrors spread over 13 hectares to concentrate the heat of the sun and generate electricity.

Cash Prize for Environmental Help Goes Unawarded

BRUSSELS — Not long ago, it seemed that big money and boundless optimism were all that were needed to solve some of the biggest environmental problems facing the planet.

An initiative from Richard Branson, the shaggy-haired billionaire owner of Virgin Atlantic airlines, was emblematic. In February 2007, he offered a cash prize of $25 million to anyone who could come up within just a few years with a process that would suck large amounts of greenhouse gases out of the atmosphere.

Change terms of climate debate

The Governor's Global Climate Summit came on the heels of the landslide defeat of Proposition 23, the initiative backed by three Texas and Kansas oil companies that would have overturned California's pioneering AB 32 law, which aims to cut greenhouse gas emissions.

George P. Shultz, who was President Ronald Reagan's secretary of state and President Richard Nixon's first budget director, explained the significance of that vote: It's "the only vote on energy policy anywhere in the world."

The "depth and breadth" of the winning vote, Shultz noted, raises an obvious question: "How do we use this victory to get somewhere" on transforming our energy economy?

Past failures shadow Mexico meeting on global warming

NEW YORK — The last time the world warmed, 120,000 years ago, the Cancún coastline was swamped by a 7-foot rise in sea level in a few decades. A week from now at that Mexican resort, frustrated negotiators will try again to head off a new global deluge.

The disappointment of Copenhagen — the failure of the annual U.N. conference to produce a climate agreement last year in the Danish capital — has raised doubts about whether the long-running, 194-nation talks can ever agree on a legally binding treaty for reining in global warming.

Re: Mexico regulator rejects Pemex oil reserve estimate

If only KSA had such regulators.

It does seem extraordinary - and that is perhaps sad. I wonder what is going on there, what makes the CNH different, such that it would feel free to, perhaps motivated to, challenge the reports of the national oil company.

Because that's their job! The CNH is Mexico's National Hydrocarbons Commission. There is no equivalent commission in the US but the closest thing would be the SEC. If they thought that Pemex was overestimating their reserves and did not report it, then they would not be doing their job.

Comisión Nacional de Hidrocarburos (Mexico)

The Comisión Nacional de Hidrocarburos (CNH or Commission) is a technical, independent body created in 2008 to support the Ministry of Energy in the definition and implementation of Mexico's hydrocarbon policy. Its purpose is to supervise and regulate the exploration and production of hydrocarbons by establishing technical guidelines, designing operational efficiency evaluation mechanisms and rule on exploration and production projects presented by Pemex.

There is nothing extraordinary about reporting that Pemex is overstating their reserves and it certainly was not sad. What would be sad if they were just corrupt and did not do what the commission was created to do.

Ron P.

Ron - This may be all BS but for a few years I've heard scattered rumors that there has been a struggle for control over PEMEX by a number of different power bases in Mexico. Mostly from expats with service companies. So maybe CNH is following a noble path or is just a tool of a political gottcha game. In either case it has to be an improvement over the old company line IMHO. Also, for the few that might not know: PEMEX is the big revenue generator for Mexico's federal govt. Who ever controls that cash flow controls the govt...and thus the entire country.

Re: Change terms of climate debate

Here's a quote from the article:

UC Davis Chancellor Linda Katehi captured that can-do pragmatism: "We all know the political realities. We all know that global recession continues. But creative thinking does not stop. Innovation does not halt. We simply cannot retreat and embrace paralysis in crisis. Leaders lead in crisis."

She also captured the urgency of the situation: "We cannot lose another minute, much less another year or another decade looking away and waiting for others to step in."

Trouble is, "we", meaning the US, has already wasted more than 35 years in dealing with the "Energy Crisis". To me, this would portend continued failure to deal with the much less apparent problem of Climate Change, especially as the money interests have been so effective in their efforts to bury the problem away from the public mind. If only those same money interests would put as much effort into burying the CO2, there might be some hope. Branson's efforts demonstrate how hare it will be to solve the problem, even with an offer of $25 Million...

E. Swanson

The biggest problem we face is denial at so many levels. I am (peripherally) involved in a neighborhood discussion over the fate of an empty, commercial-zoned lot in our neighborhood, formerly the site of a small factory providing a number of neighborhood jobs.

The latest plan on the table went from a multi-use development of stores and residences to a cutesy 2-bedroom-unit condo development. The drivers of this plan, apparently, are local realtors, involved in the cargo cult of trying to resuscitate home values at all costs.

Suffice it to say, I attended a meeting in the week where local residents were invited to view the proposal and share their thoughts, many of which were eminently reasonable - what about water-drainage and overburdening sewers, what about parking and impact on traffic, and my question - how do condos provide jobs in order for us to start rebuilding our local economy.

I had the temerity to suggest that the real estate economy was not coming back any time soon. The number of angry people who tore a strip off me for wanting to prevent their property values from "coming back" - well. 'Nuff said. Short of telling them they were in denial, I gave them a copy of the city of Chicago's 2040 development plan, which focuses on livable neighborhoods, jobs close to where people work, the ability to walk and bike to work, etc etc.

I suspect it will fall on deaf ears, and we will get a condo development for wealthy transients (aka. "young professional couples") who will drive their SUV's to big-box retail and move to the 'burbs when they get pregnant.

The Chicago 2040 plan is attached. It is really hard to change the way people think.


"It is really hard to change the way people think."

I've come to the frustrating conclusion that people, even smart people, don't really think about things much. They form assumptions, aquire preconceptions in their comfort zones, put them on some mental library shelf, and move on. When realilty reduces their comfort level they revert back to this collection of previously stored ideals.

It seems that the only way to break this cycle is for reality to burn the library down. Then they're left with ...........

If people really open their eyes and look, reality *has* burned the library down. For some reason, people just don't recognize it. I can't imagine what new, very bad turn of events, except, perhaps, the return to gas prices of $150 plus, would penetrate the veil.

$150 oil

commercial real estate bubble implodes

dramatic weather due to climate change

extreme inflation/deflation post QE2

rising food prices

currency wars escalate

rampant insolvency

energy shortages

20%+ unemployment

real wars escalate

realization that technology isn't going to come to the rescue

Now what? Religion? Palinocracy?

You win a Kewpie Doll or a Bubble Gum Cigar of your choice Ghung. The only thing not current or about to be is the last "item", that would be a "Doomsday 2012"...

"Doomsday 2012"... would be covered by "Palinocracy".

Kewpie Doll would be nice. Thanks!

A sign at the Rally for Sanity and/or Fear: "Palin/Palin 2010: How did The Mayans Know?!?" :D

This article (Zero Point Systemic Collapse by Chris Hedges) was linked on the Yahoo Energy Resources group and is germane to this discussion.

Picked the following up from Jay Hanson on America2Point0@yahoogroups.com;
who said it was �Perhaps the best I have ever read!!!�



Thanks Todd. The article was published last March but I don't remember reading it. I can understand why Jay thought it was the best he ever read.

Zero Point Of Systemic Collapse

Ron P.

Democracy, a system ideally designed to challenge the status quo, has been corrupted and tamed to slavishly serve the status quo. We have undergone, as John Ralston Saul writes, a coup d’état in slow motion. And the coup is over. They won. We lost.

Yeah. Thanks Todd :-/

Democracy, a system ideally designed to challenge the status quo

Major changes to the status quo have typically resulted from the work of dictators and absolute monarchs.

For example, Napoleon created the Code Napoleon which reformed the legal system of Europe.

In a democracy, everybody's got an opinion and nothing big gets done.

So presumably you view the Magna Carta as something imposed on the nobles by King John?

Seems that in this case, power did not travel very far down. The 'nobles' were likely still absolute rulers over their fiefs and so on. Sort of like a republic :-(

The Magna Carta was a reaction to the unpopular King John, and a resurrection of the Charter of Liberties granted in 1100 by King Henry I upon his accession to the throne. It was then further modified during a period of hostilities between the nobles and three kings, some of it during open revolt. It was a charter between the King and nobles, and not a very democratic document. It was not thought to have wider scope until after Elizabethan times.

Had King John been elected by the nobles in a democratic (oligarchic actually) system, the Magna Carta would never have been written. After 8 centuries of wrangling between the monarch, the nobles, and Parliament, 3 of the articles of the Great Charter of 1297 issued by King Edward I still remain in force; most of the articles have been superceded.

When great events force democracies to change, they typically concentrate power in the hands of a small number of individuals, who then act to make the changes needed. Sometimes this is done formally, such as with the war cabinets of Lincoln or Roosevelt, and sometimes more informally, as with the framers of the US Constitution. In between, democracies mostly muddle along.

Well, you clearly have a very definite lens through which you are determined to see everything, so it is probably not worth asking. But do you see no democratic pressure behind the civil rights and other reforms of the sixties? Or do you not consider these to be major changes?

Major changes to the status quo have typically resulted from the work of dictators and absolute monarchs.

I wouldn't say the converse (that an election can never cause a major change) is true. The best counter example was Germany in 1930, the people wanted a major change and voted for Hitler. They certainly got a major change! And you could say that their previously problems pretty much became nonissues as a new set of exitential issues arose. In this case it the attribution of the source of the change is muddied. The democracy "voted" to replace itself with a dictatorship.

Nazis in 1930 were 18.3% between the Social Democrats at 24% and the Communists at 13%.

In 1992 Ross Perot won 18.9% of the popular vote.


Using the Nazis to suggest that popular voting causes democracies to vote themselves out of existence is a typical right-wing canard.
Hitler came to power by a parlimentary coup.

What makes this amusing now is the latest conservative talking point --that some Teabaggers want to repeal the 17th amendment, which changed the Constitution to have Senators directly elected by popular vote. Previously they were elected by state legislatures.

What about FDR? Through honest elections he revolutionized the U.S. economy and society.

What makes this amusing now is the latest conservative talking point --that some Teabaggers want to repeal the 17th amendment, which changed the Constitution to have Senators directly elected by popular vote. Previously they were elected by state legislatures.

The 17th is also the amendment that prevents the states from taking away the 'militias' guns. Methinks that in their haste to demonize 'dark people', the FoxPublican Tea-Baggers haven't thought things through (do they ever?).

Thanks, Todd.

I always feel that if one can influence at least one other person to change their view, it is worthwhile to keep trying.

edit: I see Ghung beat me to the quote I wanted to post, so I'll add the next best part:

The election of Barack Obama was yet another triumph of propaganda over substance and a skillful manipulation and betrayal of the public by the mass media. We mistook style and ethnicity – an advertising tactic pioneered by the United Colors of Benetton and Calvin Klein – for progressive politics and genuine change. We confused how we were made to feel with knowledge. But the goal, as with all brands, was to make passive consumers mistake a brand for an experience. Obama, now a global celebrity, is a brand.

Everyone I know still thinks we can vote ourselves out of our problems. This is a very powerful myth.

"This is a very powerful myth."

It goes to the stories that we tell ourselves and each other. When the culture becomes defined by the stories it tells, rather than sustained by them, when the talking stick is held by those who seek only to better their positions of profit and control, when the collective becomes immersed in these stories to the point of saturation, the myths become realities. Rarely is the cycle broken through civil means.

Interesting times.

The talking stick was held too long by those in Ireland who seek only to better their positions of profit and control.

Ireland Sells Out Its People To UK, Germany Bankers, Will Apply For Rescue Tonight

And so the can has been kicked down the road one more time as Ireland's Brian Lenihan has just sold out his country to the IMF, the ECB and the Fed for a few extra years of puppet control...

What is not discussed is how the Irish people, now likely furious at being manipulated over a lost cause will express their anger over being the latest sheep used to bail out Europe's ever more insolvent banking system.

I see it differently. The Irish people should rather express their anger about themselves on how stupidly they managed a booming economy to bring down their country.

I think the Irish people are likely to pay for their excesses through "austerity measures."

But when it comes to "who should pay" - what about the fools who lent the money, will they part with any of it?

Neither a borrower nor a lender be. *

(* at least not while Goldman Sachs has offices on the continent)

That link won't work for me.

I think that we in Ireland can blame the fact that wholesale funding for banks is not illegal as it should be and ultimately the fact that the global monetary system is debt based. Everything else follows from that.

Chris Hedges is a great writer. I recommend his "War is a Force that Gives us Meaning" (2002). The mag it was originally from, "Adbusters," is also a great resource.

My favorite quote from the piece (and there are many good ones) is:

"A society that no longer recognizes that nature and human life have a sacred dimension, an intrinsic value beyond monetary value, commits collective suicide. Such societies cannibalize themselves until they die. This is what we are undergoing."

Hedges: The indifference to the plight of others and the supreme elevation of the self is what the corporate state seeks to instill in us.

And what the Military State and "Communist State" wishes to instill is the subsumation of the self in deference to the community or tribe or troop or state or similar aggregate social construct.

The key is in finding the balance between the self and society - between the rights of the individual and the rights of the community. If there is a better form of government to achieve that balance than some variant of democracy, I have yet to see it.


I think the issue of balance is not between self and community but between people and the rulers. Or, in the case of the military, between high commanding officers and the rest who actually face violence in battle.

I think we might still have pretty good instincts for balance at the level of a tribe. The trouble is that the tribe really doesn't matter any more. I base this on what little I know of natives of pre-Columbian North America, and natives of Asian Steppe before the spread of Islam.

Having said this, I notice you did not use the word community, but the word society. Perhaps the balance might better be described as between people, and high society. Both community and society are fraught with hidden meanings. Its hard to choose.

Thanks Todd.

Aleksandr Herzen, speaking a century ago to a group of anarchists about how to overthrow the czar, reminded his listeners that it was not their job to save a dying system but to replace it: “We think we are the doctors. We are the disease.”

Exactly, no point wasting time engaging with the dying system. A good article, well worth reading.

That article was first posted in the February 13 Drumbeat, but got little notice. Overshadowed by the news of Bill Gates' energy investments, I guess.

You have quite a memory, even to think of searching for it. I tip my cap to you.

I remembered reading it. I believe it's been posted by others since then as well. That bit about not saving a dying system but replacing it is quite memorable.

Sometimes it is just not feasible to read each and every article on each and every Drumbeat, due to the other demands of life. If there are duplicate postings from time to time, it gives some of us the chance to catch up.
Some days I find myself just scanning titles, and then the phone will ring, or something, and I may not come back that day, and just skip to the next day.

These communities, if they retreat into a pure survivalist mode without
linking themselves to the concentric circles of the wider community, the
state and the planet, will become as morally and spiritually bankrupt as the
corporate forces arrayed against us.

except you can't decouple from the system at large, not in this case and especially in america. by law you don't own a thing if you can't pay your property tax. wither it be land where you made a house out of local materials and where you grow and make your own food to any sort of vehicular transportation up to a bicycle but not including the bicycle. because of this you have to maintain a connection to the system where you can earn money and then spend it on those taxes. if you have children your options are even less since you have to maintain a certain level of pre-determined living conditions to even keep your children, stuff like compositing toilets while not violating the letter of the minimum sanitation laws to keep children at your residence, can be determined to violate the 'spirit' of the law because technically they are a bit less sanitary then a normal toilet. since they keep the waste in the room, on your property till you manually remove it. in the process potentially exposing your children to waste born illnesses. this country does remove kids from houses if they loose their water service by the way.

i forget the term used in biology that describes this situation but it is used when a system is so entrenched that even if a better system is found and is used by people the sheer size of the current system kills it. it's like when proper mammals evolved during the days of the dinosaurs, technically the mammals were better adapted but the dinosaurs were so entrenched in just about every niche that the mammals were not able to take over. a outside force, in this case the meteor had to come along and change the game dramatically in favor of the mammals before they could take over. the current political and economic system is at that point right now. you can create all the alternative systems you want, but due to the sheer size and prevalence of the current system you either still have to work within it or be crushed due to violating it's laws.

You're correct in saying we cannot decouple from the system. But, you can lessen the degree of interconnectedness and manage the interface with the main system. You can reduce your dependence on the money economy and minimize the level of connection to the main economic system. You can shun the corporate economy and transfer your business to the local economy. You don't have to play by the rules, just make sure you don't break them and always take more out of the system than you put in.

We have to put our imagination and ingenuity to work. Surviving means accepting a certain level of inconvenience and change in return for succeeding. From my experience, most people baulk at this first hurdle which immediately precludes any effective response to the problems at hand.

i was trying to point out that you can't lessen the degree of interconnectedness between you and the system as much as you think.

you can do all the local stuff you like but i seriously doubt the feds will take chickens and what ever local currency your using when the federal marshal comes to kick you out of your house and property because you did not pay your yearly property taxes. don't get me wrong though the idea of a local currency is interesting and reminds me of the early colonial days here, but you have to be realistic. same with your vegetable oil powered car made from locally grown sources because you did not register it nor pay yearly property taxes on it, if you have one. this is not even mentioning child welfare issues when dealing with rules and regulations for safe habitation of children written when inexhaustible running water and constant electricity was considered the norm. same with locally grown stuff like dairy, look at the raw milk movement to get a good idea what the feds will do to keep the fda revenue rolling, putting aside all the health issues which is not the point i am trying to make.

due to the size of the system and prevalence of it here in the states at least you either have to mostly live by it's rules till it dies or completely abandon it. doing anything in between is running the risk of bringing on a world of hurt to you and your family as the feds and even the state governments crack down on even minor stuff just to get the much needed revenue they need.

on a side note someone needs to do a analysis of what technology's would hasten or slow(but not stop) the collapse. for example i would figure any non gas powered car until the feds decide on a way to tax it would hasten the destruction of the road system as they are not only causing wear on the roads but their operation is not pumping the needed tax revenue into the right programs to get the roads fixed. while less more efficient gas cars would slow the collapse but not stop it since they are still dependent on the same finite resources.

No, I don't believe this is the case, it doesn't need to be all or nothing. It is possible to pay taxes, etc. without being sucked into the whole system 100%. But firstly it is necessary to be fully concious of our dealings with the system which requires that a mental interface is acknowledged and setup to control contact with it. The troubles of the State and its economy mustn't be allowed to feed back through interconnections into our own internal survival system.

Adopt simple rule sets that advance survivability and block the systems influence (eg. take out more than you put in), cut ties and dependencies to the system, bend the systems rules but don't break them, build community connections. Change location if necessary to advance self-sufficiency, remove dependencies and improve community connections.

Inconvenient?, Yes. Necessary? Yes. The other option is to stay plugged into the system at large, have no control over events or future and go down with it as it collapses.

I like the image of memory as a library in the mind. It includes much of what is the problem. The books in this library are not easily burned. They should be read over time and restacked in an orderly arrangement, and some discarded. The time available to do this is severely limited by the constant din of attention grabbing modern messaging. When the library does burn much good is lost with the bad.

Thanks, Ghung.

I've come to the frustrating conclusion that people, even smart people, don't really think about things much. They form assumptions, aquire preconceptions in their comfort zones, put them on some mental library shelf, and move on. When realilty reduces their comfort level they revert back to this collection of previously stored ideals.

Exactly right Ghung. I've come to the same conclusion. In fact they will look at all the data you can throw at them and then start going the other way. For example there is a move on right now by the AGW denialists claiming the planet is 'carbon starved'. That's right starved of CO2, because levels were much higher in the time of the dinosaurs.

Some articles on oil also seem to go the other way from the data available, by claiming BAU at least through 2030.

And when their library is burned down, they will claim the realists got their wish. That's how much their thinking is magical, like the poster yesterday Magical Thinking, they adhere to ideas of perpetual growth, BAU.

Most economists would agree. Break 'em down. Insert your ideology.

Excuse me, please. How exactly do you know what most economists would agree to?

"It is really hard to change the way people think."

Like other commenter's upthread, this caught my eye too.

It may be that the greatest peak we have passed is not peak of oil, but the peak of sanity, and so it will take something no one wants to use or experience to convulse the lizard brains we all have, but the lizard brain not enough of us "keep in the cage".

If we are outside the consensus opinion then others view us as the crazy ones. I get blank stares when explaining peak oil - and get branded as loony. I manage money and have to figure a logical plan to protect assets in the face of the coming oil production decline.

In the day of Franklin, Jefferson, Washington, Adams, etc., the population of the American colonies was about that of present-day Philadelphia (or some such, figure not checked). US literature of the twenties and thirties (Fitzgerald, Hemingway, O'Neil, et al.) was written for a populace half the size of today's. I wonder -- intelligence seems to thin out, the more people it's spread over.

A reason for optimism?

"It's OK to wear a condom (in some cases), says Pope"


Translation: "if you're already going to hell, may as well use a condom (but not for birth control)."

Such is about 100 years too late. Do you suppose that the Catholic Church has begun to realize that they might be called upon to feed their "flocks" in nations where The Church promoted unlimited population growth? How else can they maintain their claim to the moral high ground and fulfill their image as the center of humanitarian concern??? Mexico comes to mind as well as Haiti...

E. Swanson

The Church did not promote unlimited population growth. It promoted abstinence and/or the rhythm method as a means to avoid unwanted pregnancies.

I guess it worked. Italians stopped having sex several decades ago, if population numbers are anything to go by. You might think the same thing about Quebeckers, but I just can't believe it. Unlike Italians, Quebeckers have rhythm.

90% plus of Catholics ignore the pope and use birth control. Thank god!

eeyores enigma,

A reason for optimism?

"It's OK to wear a condom (in some cases), says Pope"

I think he was talking about getting into a TSA line just before boarding a plane.

Hi double e,

This is the part of the article I found interesting:

"In it the Pope cites the use of condoms by prostitutes as ‘a first step towards moralisation’..."

1) Meaning, the prostitute will take a step toward becoming moral?

2) The client of the prostitute will take a step toward becoming moral?

3) The client of the prostitute and all others of his "colleagues-in-clienthood," i.e., others of those in the position of superior wealth and power - will then do all they can possibly do to provide education, employment opportunities, etc. for the person in the role of prostitute, so that this role is no longer a role of last resort?

4) Or, better yet, the potential client refuses to ever use superior force, wealth or power in any form to obtain the "end goal" of the experience itself?
And, rather shares his last loaf of bread with the would-be prostitute?

Eric, the biggest irony is that once we've gotten over this 'global recession' everyone can get back to consuming more and burning more fuel and generally pumping more C02 into the atmoshphere - then and only then - when people are back in their 'consuming comfort zone' will people maybe start turning their attention back to AWG (thats the really ironic bit!!) Not that it has turned Chindia's (the greatest growth market on the planet) attention towards AWG.

Truth is I think the sky relly will have to fall before anything meaningful is done. There are so many 'bigger' problems in the world right now that are more apparent to everyday Joe Blogs.

I've recently started up a new business and it's only now i'm appreciating how much it would actually cost me to 'go green' and drastically reduce my carbon footprint - it would make my product if not virtually impossible to manufacture then unable to compete with other not so consciecence ridden parties. I can't imagine how many millions of manufacturers out there in the world would cope and have begun to underdstand now why the business lobby is so strongly against AWG policy and how us as consumers probalby wouldn't have half the stuff we do at such a low cost - maybe a blessing in disguise;-)


You are certainly correct that for an individual company, or an individual, for that matter, to "go green" while others don't is a recipe for failure. That's why the only hope is for a global response to the problem. One country, even one as large as the US (which emits around 25% of the total), can't solve the problem alone. Worse, a few countries that willfully decide not to participate with all the other nations can surely benefit from their lack of concern. And, if the big emitting nations insist on continuing BAU while waiting until it becomes crystal clear that climate is changing, it will be too late to stop things from becoming worse as far as emissions are concerned. We may already be approaching one of those "tipping points", from what I can see. The temperature outside my door hit 62F today, while a snow storm blasted the upper mid-west yesterday...

E. Swanson

If only those same money interests would put as much effort into burying the CO2

The parasite class doesn't need to. They are getting 70% of the take based on data out of Europe.

Ahhh...yes... Just another tidbit on the TSA groping policy... The rich need not have to deal with those trivial things.

There is a way to pretty much avoid the security hassle at the nation’s 450 or so commercial airports: Fly instead on a business jet or any other private aircraft. (O.K., most of us don’t have that option.)


I really believe a lot of people will get fed up seeing their families molested and skip using air travel. I can see more and more people taking to the roads.

I really believe a lot of people will get fed up seeing their families molested and skip using air travel. I can see more and more people taking to the roads.

If they change their destinations, perhaps. I don't see people who are flying 1,000 miles or more putting the family of four into the car and driving instead. In that case, you swap a half-day of travel on each end of the trip for at least two days of travel on each end.

Personally, I don't really understand why so many people object to the full-body scan. The radiation dose from the back-scatter technology is less than what you get from flying at 30,000 feet anyway. The person who sees the scan never sees the individual being scanned. Granted, I would have insisted on having a system where software scans the image first, and only invokes a person if there is an anomaly. Looking at the images is deadly dull work, and human performance is going to be haphazard. Properly trained neural net software is already better than humans at reading various sorts of x-rays (all mammograms taken at the Stanford Cancer Center are read by both humans and software); you have to believe that such software could deal with >90% of all scans, and the computer doesn't get bored.

The thing I find the most frustrating about all of this is that it's driven by 9/11, which was the result of using a protocol for dealing with hijackers that was basically developed in the 1960s. A protocol based on maintaining flight deck security and emergency landings would have avoided the problem entirely.

I did get to fly on the corporate jet a couple of time in a previous life -- nice.

Apparently, there are two different technologies being used, the backscatter technology is the one that some scientists are questioning.

Are Scanners Worth the Risk?

But guess who was on the committee that developed the guidelines for the X-ray scanners? Representatives from the companies that make the machines and the Department of Homeland Security, among others. In other words, the machines passed a test developed, in part, by the companies that manufacture them and the government agency that wants to use them.

That’s one reason Peter Rez, a physics professor at Arizona State University, has been pushing for more data to be shared so that academics can do their own analysis. “The scary thing to me is not what happens in normal operations, but what happens if the machine fails,” Professor Rez said. “Mechanical things break down, frequently.”

Other medical experts are worried that the government has not adequately evaluated the health risks of such extensive X-ray screening, particularly for children, pregnant women, cancer patients and people who are sensitive to radiation. One concern is that the data the government is relying on underestimates the amount of radiation absorbed by the skin, potentially raising the risk of skin cancer. “It’s premature to put a whole population through this thing, not without much more due diligence and much more independent testing,” said John Sedat, a biochemistry professor at the University of California, San Francisco, who, along with several colleagues, sent a letter to the Obama administration calling for independent evaluations of the X-ray scanners.

In any case, as I noted yesterday, an Israeli security expert that he could easily smuggle a bomb through the scanners, and they don't use the scanners in Israel:


There is nothing unusual in the part that you have emboldened. The technical experts are more likely to be employed by the contractor than the government and thus the government tends to write very vague requirements if it fails to rely on contractors. There are corporations that offer the government technical consulting expertise when it wants a third party to be involved, but that works better for known technologies and mature fields than stuff on the cutting edge.

In any case, I share Professors Rez & Sedat's concerns--especially for children.

BTW, on a different topic, I have no idea what the new rules are for posting Oil Drum contributions, but given your background in state government, I would think that you could probably write a pretty good article on the challenges facing the various state legislatures next year, as they try to balance their budgets. I would especially be interested in an article that focused on the areas that are most difficult, or virtually impossible, to cut, versus the areas that they can more easily cut, and presumably the easier to cut areas will see the biggest cuts. I wouldn't be surprised to see any state level funding for energy conservation efforts and alternative energy almost completely eliminated.

Perhaps you might take one state budget and use it as an example. Of course, the largest problem in the somewhat longer term is underfunded pensions plans.

I suspect that state and local budget cutbacks in the next two years are going to have a huge impact on the country, and probably 95%+ of the country doesn't have much of a clue as to what is coming. I'm pretty sure that a lot of people in elected positions are going to be wishing, as Tom Brokaw put it, that they had demanded a recount.

Higher education is one area that may be cut. Really, not everyone is qualified to go to college - I would restrict college aid to those most qualified.

I agree with you even though my salary tells me to shut up.

Its your freedom. I will never fly again, but that is because i'm easily annoyed and even past experiences have turned me off to flying. I can drive a lot of miles before the plane even gets off the tarmac. Figure where I live, you have to drive to MKE or MSP to fly out to anywhere worthwhile (2+hrs), wait 2hrs+, board the plane, delays, etc...same on the other end (wait for baggage)...

Now throw in the fondling and Chertoff's full body nude xray scanners (he flies private) and add on even more time.

I'll pass.

This is becoming a police state, but people don't seem to care...weird.

Analyst: TSA methods 'will kill more Americans on highway'

“Driving is much more dangerous than flying, as you are far more likely to be killed in an automobile accident mile-for-mile than you are in an airplane,” said Horwitz. “The result will be that the new TSA procedures will kill more Americans on the highway.”

Will TSA scanners cause more American deaths than terrorists?

Other than 2001, the number of deaths due to terrorists has been only noise in the overall homicide rate, not to mention the traffic fatality rate.


Maybe resources for military, traffic safety and health care should be allocated according fatality. God bless America if the priests start count the natural fatalities it may end up as in Egypt a few thousand years ago.

“Driving is much more dangerous than flying, as you are far more likely to be killed in an automobile accident mile-for-mile than you are in an airplane,” said Horwitz. “The result will be that the new TSA procedures will kill more Americans on the highway.”

Well, I'm going to pull a WHT nitpick here and take this person to task for not understanding how statistics works. My chances of being killed in an auto accident have never, to my knowledge, been researched. The figures they use, presumably total US vehicular miles traveled and total US vehicle accident fatalities, apply to the population that supplies the numbers, not to the individuals who make up the group. If they were to add a number of qualifiers in the research such as driver's age, accident record, eyesight, part of country driving in, etc. the statistic could gradually converge on my actual chances, with the more specific the qualifiers, the closer to describing ET's chances of being killed in an auto accident. Of course, the paradox is that, since I have, by definition, never had a fatal auto accident, my personal chances couldn't realistically be determined.

OK, OK, I realize that this statistic is meant to give only a general idea of the hazards of driving, vs the hazards of flying. I'll bet there are other hazards of flying that might tip the overall risk factor the other way, such as likelihood of contracting a case of flu while on a plane trip, or other things like that.

Also, of course, there is the likelihood that road traffic will be much less in the coming years, presumably reducing the hazards of auto accidents (but possibly increasing the chances of being waylaid by a highwayman).

No matter how you wash it out ET, driving is very dangerous. Even if a person drives defensively other drivers do unanticipated things.

If you've never had a close call, which if it had gone just slightly differently you'd bought the farm, then you are one of the lucky ones. I had a truck pass a car on a blind mountain sharp (25mph type)corner, and although I was driving at the correct speed for that road and conditions, but I split the difference between the oncoming truck and rock embankment. It went through 1/2 the engine and all drivers door, missing my shoulder by inches. Without the seat belt my face would have been desicated. Fortunately just a stiff neck from turning to watch the truck pass by. "Oh $%#@^!!!"

Two other incidents I can quickly think of could have cost me my life, both of which were not my fault. Just in the wrong place at the wrong time.

Oh, I know driving is dangerous. I've had one, luckily fairly minor crash, and a few close calls. Still, I don't think much of the extrapolation this guy is making: TSAsucks=more highway fatalities.

Actually, I foresee less air travel in the future as oil goes up in price, or if economy tanks even worse keeping oil down but also reducing air travel, and auto travel as well.

When I read about the financially beleaguered airlines cutting costs to the bone, I get queasy thinking about what effect cuts in maintenance will have on air travel safety. That is one tipping point I don't want any part of.

All travel is gradually being suppressed by a cohort of different factors (financial collapse, climate change and energy depletion). I fully believe that tourism will be an early casualty.

Quite so. I have seriously thought of driving my 1993 Audi out to California this spring. Not a good idea. My better choice is to take Amtrak, though that is expensive and inconvenient. Some of my best days have been spent travelling on trains.

It's a great argument for passenger rail

TSA video from SNL... About right:


I'll stick behind the wheel. I'm a good driver, its the rest of the people out there! If people would stay off those cellphones and keep their eyeballs to the road, it might help.

Re Infiniti becomes first to add noisemaker to hybrid

But never missing a marketing opportunity, apparently Nissan luxury division Infiniti wants to underscore how quiet the new M is by having the warning system when the car goes on sale early next year.
The car can travel up to 62 miles an hour on electric power alone, when it would travel almost silently, but can only do so for about a mile at a time before its batteries run dry and are recharged by the engine.

Putting noisemakers on hybrids and electric vehicles is mostly humbug.

Stand at a street crossing and listen to cars approach. Listen for the sound of engine noise versus tire noise. Cars moving at constant speed seldom produce an engine noise that is louder than tire noise, and cars approaching an intersection on idle throttle while braking rarely do.

Most ICE powered cars produce an engine noise that can be heard over tire noise only while accelerating.

But from a car company perspective it is much wiser to slap in a $1.00 news maker than to face the multi-million lawsuits that will inevitably arise.

Nissan is putting one on the Leaf. I suspect most companies will follow suit.

And as you point out, they do make noise while accelerating so that will be enough for some deaf person that gets hit by a car.

But it is kinda sad in a Harrison Bergeron way. We need to handicap the new silent EVs because the old technology was noisy.

It is sad - to me one of the cool things about ev's is their silence.

And being cool is much more important than not running into pedestrians.

I'd like to hack a DCC sound chip from a model train and hook it up to an EV. Accellerate away from a stop sounding like an unmuffled EMD 12-645E. That'd be cool. :)

Most ICE powered cars produce an engine noise that can be heard over tire noise only while accelerating.

I think the arena where it may matter is the parking lot. Coasting towards a parking spot at say 5-10mph, the electric/hybrid is very quiet. Also walking behind
a parked car in a parking lot, it is nice NOT to hear the engine as that is an indication it can't suddenly back up. So the electrics/hybrids are pretty stealthlike in that setting, at such low speeds tire noise isn't very much. And most hybrids have low resistance tires which make less noise anyway.

A few weeks back, there was a Drumbeat blurb on a game called Fate of the World. The game is based around reducing global carbon emissions and/or dealing with and attempting to minimize the effects of global climate change. As a gamer, the subject caught my attention so I headed over to the website and pluncked down what turned out to be about $16 for a beta copy with a free upgrade when the full version comes out in Feb. Let me say first off that the game is not finished (obviously), and only one of 6 scenarios was available for me to play. That scenario was "Oil Crisis" however, which was what I was most interested in anyway. So after many games involving unintentionally frying the world, starving off half the population, and most commonly, pissing off everyone in the world so badly that I was run out of office, I finally finnegaled a victory or two. In short, the game is actually fun.

There are currently 6 listed scenarios, and in one of which your goal is actually to see how badly you can screw the world up (called Dr. Apocalypse). I had a good time playing personally, so if gaming is your thing, you might consider checking it out at...


They recently sent me an email with a couple of things to consider. If you are interested in the game, there will be some changes very shortly (Monday at Noon), that might make you either want to order before then (more content) or after then (cheaper price). Here is a copy of what they sent me for those interested.

Dear Fate of the World purchaser,

Thank you so much for being an early adopter. The response for Fate of
the World has been encouraging to everyone here at Red Redemption and
your support has been warmly received. The feedback many of you have
sent in has helped us prioritise what we need to do to make the final
launch of Fate of the World good. We are grateful for everyone who has
taken the time to leave feedback.

We are new to digital publishing and have needed to do some course
correction as we go along. That has meant that, without our intending
it, the version of the game available now on Steam has ended up with a
bit more content than the version from our site. To fix that, you will
be receiving free access to our first expansion pack, which will be
available soon after launch in February. Upon launch of the expansion,
you will be sent a key and free download as a thank you for your early

The Red Redemption Special Edition which you have pre-ordered, with
the music, research notes, and supporters wall, is now very limited
indeed. On Monday it will no longer be available. Any pre-orders after
noon (GMT) on Monday will only gain access to the regular version of
the game come launch day. Pricing will also at that point
change--favourably--for North American customers.

We are not making any other announcements about the end of the Special
Edition availability. If you or your friends want copies please ensure
you order before noon on Monday.

Once again thank you for purchasing Fate of the World!

Best regards,
The whole team here at Red Redemption


I bought that game too.

I haven't managed to win yet despite maybe 6 or 7 tries, congratulations on your success! Hopefully the full version will be good also.

Thanks for this link, Leanan:
End Game: Why the Status Quo Is Unsustainable


Nice tool in my "things-are-about-to-change-bigtime" warchest. It begins by equating our Fed created monetary system with counterfeiting, a conclusion I reached some time ago.

Our problems began in 1913 when the Fed and therefore de facto centralized planning was established. And every generation that ignored the fact that counterfeiting money and lending it at interest is a scheme that has catastrophically failed in all previous attempts deserves what eventually befalls them -- results equal intentions....

....The situation is untenable. That an insolvent government (starting from a 106 trillion dollar deficit) and facing global peak resource utilization, will somehow effectively manage to administer to a huge retired population whom have no savings, assets that they will only be able to sell at a loss and pensions denominated in a worthless currency, as a line of thought, is at best, imprudent. I take no pleasure in stating, and do so without any hyperbole, that you are about to forget about Katrina.

Think that the diesel shortage in China won’t crimp US diesel supplies? Think about that again.

Yesterday a news link to Sinopec Trading Unit Hires Tanker to Ship Fuel to China From Rotterdam http://www.bloomberg.com/news/2010-11-19/sinopec-trading-unit-hires-tank... was posted. The very large crude carrier, Athenian Success, is going to pick up 275,000 tons of ‘something’ on December 4. What might that be, and where will that oil or oil product come from?

As best as I can determine, the Athenian Success was used by Shell to transport something, presumably oil, on November 10 from the Black Sea to Rotterdam. While I don’t claim to be a shipping expert, the ‘something’ that the Athenian Success will be picking up is probably diesel. If China wanted the oil, the tanker could just turn around now and head to China.

While it may not seem at first rational, the US has been increasing its diesel exports these last few years to Rotterdam significantly (see also http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MDIEXNL2&f=M).

On the other hand, the US appears not be to exporting any diesel directly to China. But the diesel the US is sending to Rotterdam lately may very well end up on a VLCC bound for China.

It’s not surprising then that both China and the US would want to keep something like this secret, especially if diesel and/or gasoline shortages crop up in the US early on in 2011 – as US oil and oil product inventories fall at a rapid pace due to lagging imports.

China rolls out measures to fight inflation

The State Council, China's cabinet, announced Sunday a slew of measures to rein in rising commodity prices to ease the economic pressures on the people.

Local governments and departments are required to boost agricultural production and stabilize supply of agricultural products and fertilizer while reducing the cost of agricultural products and ensuring coal, power, oil and gas supplies, the State Council said in a seven-page circular.

The cabinet urged local departments to step up vegetable-planting efforts while stabilizing winter vegetable production and strengthening grain and edible-oil production field management to ward off supply shortages.

To reduce delivery costs, road tolls for vehicles transporting fresh- and live-farm produce will be forbidden from Dec. 1, the circular said.

The cabinet also ordered local authorities to continue to reduce the prices of power, gas and rail-transport for chemical-fertilizer producers while ensuring coal supplies for power generation companies and increasing production of oil -- especially diesel -- to guarantee sufficient supply.

Inflation challenged as diesel shortage looms

Meanwhile, China's largest oil refiner, Sinopec said on Friday it has suspended diesel exports as the domestic market faces shortage and the country fights rising inflation.

Sinopec also said it is seeking to import 200,000 tons of diesel.

PetroChina Co, China's largest oil producer, has also ordered 200,000 tons of diesel, among which 35,000 tons has arrived.

...The diesel shortage and inflation are linked. Farmers need diesel fuel to run tractors and other farm equipment, so the diesel shortage could directly worsen a shortage of vegetables because farmers can't plant and harvest as many.

China’s price fighting measures don’t do anything to reduce the demand for diesel. In fact, if anything, imported diesel demand should increase as the Government takes measures to reduce domestic price gouging and unnecessary inventory accumulation, plus it makes it easier for the farming sector secure diesel supplies. Marginal supply must clearly come from imports, and they expect that their $3 trillion of accumulated foreign reserves will be able to pay for that – at whatever the market price is.

The question is – does China outbid the US as oil output plateaus and then starts its long decline? (clearly yes because their energy efficiency per barrel is higher) and does China draw down US diesel supplies – directly or indirectly – to the point where shortages also develop in the US? (I think yes, eventually).

Solar power soon to power enhanced oil recovery

“There are many countries in the Gulf that suffer from a shortage of gas, or, to be more specific, the gas is over-committed. Some countries are actually looking to import coal, and importing coal into a petrol exporting country is crazy,” says MacGregor. “ The reason they are doing this is because one of the huge users of gas is enhanced oil recovery, but they want that gas for power generation, desalination and the domestic industry, and of course to export.”

What aspect of EOR requires gas? Do their EOR methods use steam made from nat. gas? What they should use is concentrated solar thermal power to make steam or electricity (either could be used to pump sea water) and forget about coal. Maybe when coal grows in price due Chinese demand this may happen.

From this article, I suspect that the peaking of oil will cause escalation of price for all fossil fuels. Appears they are all connected in one way or another.

Yes, the decline in oil production will likely escalate the demand and the price of other fossil fuels - and uranium. This poses another complication. Solar may become more competitive as other fuels jump in price.

I think Solar will become more appealing as other fuels either rise, as you say, or seem more vulnerable to supply issues.. but I also think that PV might be artificially low right now, as well, due to the economy and struggling demand for what are seen as essentially 'luxuries' at this point.

Solar prices will also rise, both with rising demand (I think- depends on particulars of a 'recovery'), and rising costs of fuel and hence for producing PV or anything.

What aspect of EOR requires gas ?

gas is routinely used for pressure maintenance. oil can be displaced down dip by gas injection into the gas cap. this certainly constitutes 'enhanced' oil recovery when compared to pressure depletion alone. the process is very efficient at a low rate which takes advantage of gravity segregation. recoveries in the 65% range of ooip are typical.

on the other hand pressure depletion of an oil reservoir, whether a gas cap is present or not, will result in gas coming out of solution. when gas saturation reaches critical(gas saturation), gas will begin to flow as a separate phase. owing to the low viscosity of gas vs oil means ever increasing gas will flow. pressure depletes rapidly and a lot of oil will be left behind. typical recovery from such a reservoir might be in the 15 - 20% of ooip range, absent a significant primary gas cap and 20 -30% of ooip with a gas cap.

hydrocarbon gas can also be used for 'miscible' (high pressure)displacement. miscible displacement is very efficient and has been known to obtain 85 % recovery of ooip. i havent seen much written about miscible gas displacement in mideast reservoirs.

besides all that, a remote location means that gas will be injected into the oil reservoir for no other reason than to avoid flaring.

enhanced recovery of condensate in a high yield gas/condensate reservoir, by gas cycling, presents additional opportunities.

Reading the news lately I am becoming more and more optimistic that the transition away from fossil fuels will be fairly smooth. (One major assumption: The affects of climate change will not be dramatic in the near future).

The key reasons for my growing optimism are the following:

1. Recent discoveries of oil and gas mean that there will be no acute shortage of fossil fuels in the near future. R/P has been more or less stable for as long as it has been measured. Shale gas is just in its infancy and is likely to provide large gas supplies in many parts of the world. Oil and gas prices are therefore likely to remain stable for the foreseable future - although they may fall if the current mountain of debt leads to another down-turn.

2. Renewable technologies for electricity production are nearing the point where they become competitive without subsidies. Also the number of people now working with renewables means that there are now unions fighting for renewables and not just unions fighting for oil: In short I believe that we are very close to reaching critical mass for renewable electricity generation.

3. The electric car is finally here and it is here to stay: Car manufacturers are now talking about producing electric cars in the 100's of thousands within the next few years. In addition, in my opinion, the Chevy Volt is a game changer. Although it has a petrol generator for the batteries, in practice it is likely to be zero emission for most of the time for the majority of the customers.

2. and 3. are likely to result in an increasing disconnect between GDP and fossil fuel use while 1. will mean that we have plenty of oil and gas available in the mean time.

I know of course that I will now be attacked from all sides and told that depletion will cause massive oil price spikes in the near future. I doubt it however, and the facts will be the proof in the pudding. (Ps. To those of you on the attack: Remember to explain why production has not collapsed as your "brilliant" models have been predicting for the last 3-5 years and also to explain why, with so much excess capacity in the market, oil prices should suddenly peak in the near future).

In short: I am predicting, with a fair amount of confidence, that oil prices are highly unlikely to rise mcuh above 100 USD/bbls in the next 3-5 years.

Things are looking good: We just need to focus on increasing the use of renewables and converting our transport to electricity. Birth control is of course also vital - and the Pope's announcement today that condoms aren't as dangerous as he thought is another very optimistic signal.

If we are to have a smooth transition to other energy sources, then such a transition would have to be on a large scale to be meaningful. By large scale, I mean most countries. Otherwise if the US, for example, doesn't transition as fast as other countries (which seems likely), then disruptions in the US economy could disrupt the world economy. The events from 2008 until this very date (see Ireland) prove this.

I am not saying it's impossible, but not likely based upon the present infrastructure. For example, cars could be powered by natural gas, but it would take some time and investment to do so. I'm not sure what you see here as far as transition goes that most here don't concerning alternative transportation fuels.

However if you wish to engage in some constructive debate, you should withdraw your comment that oil production was expected to collapse by now. Yes there may have been a few persons that said so, but even at TOD, that would have been a small minority opinion a few years. Even now, the pessimists don't talk of collapse in supplies next year.

Granted there is a group of even well-known energy analysts saying we have too much supply. They will be proved wrong - mostly because they are not looking at quality of oil stored, its location, and current rates of usage. For example, we almost had a shortage of gasoline in the Northeast last week this despite the fact that gasoline supplies in the Gulf of Mexico coast states had too much gasoline. Also oil is being used in the US faster than supplies are being provided, etc.

You can quote me in 3 months if I am wrong.

Trust me. I will. :-) By the way I don't understand your comment: "Oil is being used in the US faster than supplies are being provided".

Currently stocks are at record highs and way above the historical level. There certainly seems to be no indication of an impending lack of supply:


With stocks so high and with US imports falling it is highly probable that oil prices will fall considerably during the next 3-6 months. (Also as OECD demand as a whole is falling and that the Chinese economy is unlikely to continue expanding at the current rate).

Anyway. Let's see what happens in the next 3 months for a start.

Over the last three weeks EIA reported US total commercial petroleum stocks have decreased by 27 million barrels. That's 1.3 million barrels per day. In other words recent US net import rates are massively below consumption levels. That situation can not continue indefinitely without things breaking.

Right - it actually doesn't even matter if we were at marginal record supplies in the US if imports came down a 1 million bpd or so less than needed for an extended time, as little as 90 days.

Commercial oil supplies are roughly about 19 days of usage, but since we need at least about 270 million barrels or so for minimum operating levels (enough oil to keep pipelines going, storage tanks at a useful level, etc.), there are really only about 5 days at most of extra supplies. That's not really enough to get through what is probably coming in 2011 (reduced imports as compared to 2010).

Granted the SPR can and will be used in an emergency, but that is not a very desirable situation to be in.

Of course it can't. But stocks go up and down. Every year. And this year stocks are high: 20 million bbls higher than last year in fact.

Stocks (Million Barrels)
11/12/10 11/5/10
Crude Oil (Excluding SPR) 357.6 364.9

Crude Oil (Excluding SPR) 336.8

Come on! Starting talking about "indefinitely" from a 3 week trend must be nonsense! :-)

Ok 20 million barrels. That represents an increase of about 50,000 barrels a day of extra supply over 1 year. That's about 1/4 of 1% of oil usage in the US per day.

So you are saying we are in great shape because we managed to obtain 1/4 of 1% more supply than we actually needed.

Basically if we can stay balanced on this very sharp knife edge indefinitely we will be ok.

Good luck with that.

I actually agree with you. But I don't see how you can argue that falling stocks for a week or two is a sign of imminent disaster! :-)

falling stocks are a sign of shortages and increasing stocks are a sign of bad data, or so it seems.

Haha.... Agreed!

Oil inventories usually increase in September and October, so a counter-seasonal drop in inventories would have been unlikely without some unusual occurrence (e.g hurricanes). Unfortunately the downslope in oil imports has already been ongoing for three months, and the peak in 2010 oil imports coincides with those reports in August that floating offshore oil storage more or less suddenly disappeared around the world (with the exception of storage near Iran) around that same time.

Granted there are more recent reports that floating storage has increased some from low levels, but it would be a gamble to say for sure those stocks will end up in the US.

Based upon what is happening in China, which has indirectly lead to an increase in US diesel exports (see my post further above), US commercial supplies are on there way down for at least the next month.

Frankly I have no wish to live through another gasoline shortage; it wasn't much fun back in 1970s. But we are headed in that direction, and in the not too distant future.

Both reported diesel and gasoline stocks are actually lower than last year at this time though strangely enough.

Care to take a guess what would have happened to the oil price over the last month if the US had purchased an extra 1 million plus barrels a day to stay level?

And has recent world demand been met only by draw-downs of floating storage? Maybe we'll see soon.

Indeed. It's not the right now that you need to be worried about. It's the near future if this trend continues, which it may well do without some significant strong arming from the US to get hold or more exports. They have months to play this game at most at present draw down rates. If things don't change, then the SPR comes into play.


The perception issue: Is the glass half full? Or is the glass half empty? The data points of peak oil are similar. The issue is what to do to minimize maximum losses if one or the other is wrong. Can our society minimize losses if peak oil arrives within 5 years by the status quo rate of change? What losses would a more rapid pace of change cause if peak oil is many years down the road?
To me, it appears that Europe, Japan, and China are moving in a direction that would avoid maximum losses if peak oil is near. The US's policies today would minimize maximum losses if peak oil production or declining oil available for exports is many years down the road.
Certainly using 26 barrels per capita a year is more risky than 2.5 in China,or 8 in Japan, or even 13 in Europe. Even if peak oil or declining imports is far down the road, Does Europe, Japan and China risk much?
20 million barrels in two weeks in the fall is not predictive in itself. But a relatively high price through the fall, the growth in China, India, and the declining export of crude oil issues, coupled with being within 67 days of reaching MOL if import declines average one million a day and WTI pricing being $2 under the world price, raises many questions concerning the price of oil here going forward IMO

Definitely trying to be constructive!

But nearly all posts on the oil-drum predicting future oil production have been similar to this one:


If you look at the figures for 2010 they clearly show that a large drop was expected by 2010.

Also read the introduction to the post:

"As everyone knows, there is never a post on The Oil Drum that the entire staff agrees on. Nonetheless, Tony bases his findings on solid research, and a staff survey shows that most agree with a 2008 peak. A post discussing whether an alternate scenario with a second later peak might be feasible is planned for later."

Your "large drop" was about 2.5mb/day. If we have actually have lost over 2mb/day of sustainable production since then it could easily be lost in the noise. If Chinese production for example (just to avoid picking the "usual suspects" for a change) is actually 1mb/day lower than they currently claim, how would you or anyone else know? Especially as they've just jailed someone for attempting to pass on field level information.

The financial crash obfuscated things. The next few months to a year will likely tell a story. I hope it's the happy story you imagine but I personally think the tea-leaves point in a much bleaker direction.

It's interesting that your last quote is, well, does not exactly discuss the 'collpase' we all agreed to that you mentioned in your first post - to put it nicely.

It would have been better if you had defined what is large, and whether you are talking about just crude oil, or all liquids, or something else. I don't have the exact figures handy. Doesn't the person trying to make a point usually present his/her own facts and figures?

Anyway the basic idea of your referenced TOD 2008 post was correct: regular crude oil peaked out in the past, and is now in decline.

I'm not sure what you found so very wrong about that.

The general idea was right????? Surely you are joking???????

Let's go graph by graph:

The first graph (labelled world oil production) in the post projects a crude oil and lease condensate production of approximately 67 million bbls/day by the end of 2010 (down from 73.79 in 2005). Currently production is running at approximately 73.5 million bbls/day. (Using the same reference source).

Ie. Instead of a drop of 6 milllion bbls/day crude oil and lease condensate production is now at the same level as it was in 2008. And yes: I would call predicting a fall in production of 6 million bbls/day in just 2 years predicting collapse.

The second graph (labelled world liquids production) shows total liquids production falling from 85.47 million bbls/day in 2008 to 82 million bbls/day by the end of 2010. Currently production is at 86 million bbls/day - An INCREASE - rather than a decrease of 3 million bbls/day as predicted.

Looking at the model presented in the referenced post in the rearview mirror it is easy to see that it is absolutely wrong.

Here's what Steven Chu presented in 2004. I don't know why he arrowed 2010.

Nor do I. :-)

But look at the predictions of the EIA. Look at the predictions of the IEA. Look at the ratio of R/P. Three years from now I will be linking back to this post and pointing out that total oil and gas liquids did not fall as expected. :-)

Check out the latest data from the EIA as well:


Crude Oil production has not peaked. It is rising. How far does it have to rise before you accept the fact?

So why did the IEA just post that it peaked in 2006?

In one scenario they indicate that "conventional" crude oil may have peaked.

Also from the IEA


Will Peak Oil be the guest or the spectre at the feast?

Crude oil... never regains its all time peak of 70mb/day reached in 2006

Although they do (to be fair) project NGLs and "unconventional" to grow and allow a continued slow increase in "Liquids" when combined with their "spirit-level" projection from fields "yet to be developed or found" . I don't project that but I'd prefer them to be right.

Crude Oil spookily flat-lines for next 25 years says IEA

That is from the New Policies scenario.

I could also quote from the same report:

"Clearly oil production will peak one day, but that peak will be determined by factors affecting both supply and demand. In the New Policies scenario production in total does not peak until 2035"

"Unconventional oil is abundant but costly"


We are desperately, desperately screwed. They just can't quite come out and tell us that. I sincerely hope I'm wrong and that you and Elwood are right. As I am willing to accept the idea that I'm wrong, I just ask you to imagine other possibilities as to where we really are today.


You may of course be right: I joined the Oil Drum about 3 years ago and after my first months reading articles on this site I was absolutely convinced that you were right.

Since then however I have become less and less convinced. The more posts that I read predicting sharp falls in oil production that were proved wrong the less I believed the theories behind them.

Oil prices did not continue for ever upward. In fact barring the speculative peak and then the overcorrection to the speculative trough oil prices have just gently trended upwards. (Also remember that for consumers using other currencies such as the Euro the peak and the trough were not so dramatic - as the US dollar moved in the opposite direction at the same time).

I still think that we face huge energy challenges in the future and I believe that we will need a mixture of all energy sources for a long time to come until we are able to gradually move over to an ever increasing percentage of renewables. I do believe that our transport sector will move away from fossil fuels far quicker than anybody has predicted.

Undertow. Please believe me when I say that I consider all the possibilities every day. When I meet somebody who believes we have endless supplies of easily available oil and gas I take your side of the debate. However, when I meet doomers I have a tendency to take the other side of the argument.

Nevertheless, I have become more and more convinced that we do not face an imminent drop in the supply of oil and in fact can probably keep increasing the total oil supply (including everything) for very many years to come. I hope we don't of course as I believe that following such a course might lead to uncontrollable climate change.

I believe that demand will start dropping before supply starts struggling and that we will therefore not see very high oil prices in the foreseeable future. (Perhaps never).


I am a petroleum engineer and I have a masters degree in energy management. I have worked with every part of the supply chain from down-hole to down-stream. I understand how the energy market works and know it from the inside. Every day I discuss the challenges of energy supply and demand with other oilfield and energy market professionals.

I know that on TOD there are a lot of people who just attack if you say you work in the oil patch. But they should know that almost all professionals working in the oilfield, from geologists to process engineers to economists and to CEOs discuss peak oil and energy supply on an almost daily basis. The discussions are usually very frank and very open. In my experience there is absolutely nobody working in the business who is not open to the discussion or to the concept of peak oil.

I have been lucky enough to discuss peak oil with analysts at the IEA and with CEOs of oil service providers. I believe that none of them have finally concluded about how the future of our energy supply will play out. That is why I sometimes get a little agressive on TOD: When so many people are "sure" (to an almost religious degree) I get that uneasy feeling that they are almost bound to be wrong.

Here's the view on State tv from a major member of OPEC


Converting 18 wheelers to ng cost $66,000 per rig according to Pickens, I believe. He's proposing a 4.5 billion subsidy to get the ball rolling. Converting to ng is not easy or cheap, and for 18 wheelers not economic without subsidy, apparently. Conclusion - converting transportation to ng is harder than most expect. I support the Picken's plan - and the money could come out of the military budget - since oil is a national security issue. Pickens has reportedly spent 80 million promoting his plan.

There is lots and lots of oil out there. The problem is that the price cannot rise high enough to get it out, because the country goes into recession with high prices, and they don't have to be all that high - $85 barrel or so. Read David Murphy's analysis. This is closely related to Energy Return on Energy Invested (EROI). If the price of oil could increase without limit, then that would be pretty much equivalent to our being about to use any out of energy to extract a barrel of oil. (I also talk more about the issue here.)

At some point in time, it just becomes too difficult for the price to keep rising. Not enough products are made with the oil that is extracted, and not enough transport services are provided. As the price goes up, people cut back on discretionary spending and some default on their loans. Eventually, the economy goes into recession.

100% agree with you Gail.

The problem is that the price cannot rise high enough to get it out, because the country goes into recession with high prices, and they don't have to be all that high - $85 barrel or so.

but doesnt the $4 gas price provide some lift to offset the drag of $85 oil ?

does this mean a)that planes will fly slower and higher, b)that planes cant fly in a vacuum 3)that we are headed for inflation or 4)none of the above, it is all gibberish or 5) all of the above ?

Europe effectively operates with $200 oil via its gas tax and operates without recessions at that level. Market forces don't have arbitray limits in a world economy. Supply and demand will control and there will be winners and losers.

"Europe effectively operates with $200 oil via its gas tax and operates without recessions at that level."

We hear this often, newman, yet now that the EU has adapted to this meme of higher fuel taxes/higher energy costs, this is their current baseline. What happens if oil/gas prices double? Will EU countries lower their taxes to offset the price increases, or pass these costs onto their economies. Will they even be able to compete for available resources? Either way, it's a big hit to the bottom line. More austerity measures? More demonstrations? More PIIGS?

"Supply and demand will control and there will be winners and losers."

The current state of financial/energy overshoot leads me to the realization that there will be far more losers than winners. What then?

I always find myself pulling back from a focus on oil, and energy in general, and reminding others that, considering the overall systemic picture, oil is only a large piece of a bigger puzzle. We've discussed before how only a fairly small increase in energy prices or a small shortfall in supply has repercussions throughout global markets.

As time passes, I see less slack in the systems that we all rely upon to sustain our economies, ourselves. There's a profound difference between "just in time" and "not quite soon enough". IMO, we've been drawing on inertia, energy stored in the system, for longer than most believe, much of it faux energy (credit, fiat currencies, promises). All it will take to tip this tenuous balance is mass realization that we have borrowed (stolen?) all we can from the future.

Viable fallback positions are woefully inadequate at this point.

Ghung - I really like your inertia concept. Wish there were an easy way to quantify it. I'm sure each of us has anecdtotal examples in our own fields to back it up. One of mine is the current NG pricing structure. The consumers are benefiting from the over shoot in both shale gas and DW GOM NG development. That "production inertia" was generated during times of high (an anticipated higher) NG prices. The fact that those expectations have been smashed to bits hasn't changed the current NG rates. Not yet anyway. But there's a blow back to that same inertia: NG development will continue to lag well beyond when increased price signals start to materialize IMHO. This has always been the case in the oi patch except that the boom/bust cycles used to run about every 10 -12 years some decades ago. Now the cycle seems closer to 5 years. Seems like just too short a cycle for the economies to adjust quickly enough: just as low prices begin to help recoveries the next price spike shows up. And then your inertia just can't react quick enough to compensate.

Thanks, Rock. I'm glad some folks out there get it. It's hard to explain to most folks that the oil patch they rely on so heavily has been developed over many decades. The exploration, infrastucture, technology, capex, and especially personnel, are reaching the end of their useful productive lives. They are not being replaced at a rate which can keep pace with future requirements. Further, this applies to most of the things our economies depend upon to function. Transportation, agriculture, overall energy systems, governmental policies, finance,,, all are living on borrowed time.

Previous generations payed most of these things forward. The inertia they created has propelled us up at remarkable rates. This rocket we've been riding for the last ~100 years has failed to reach orbit and is running out of fuel.

Look out below! We've screwed the pooch!

NM = "on TOD there are a lot of people who just attack if you say you work in the oil patch." I gather you and I have had different experiences on TOD. Most here know I've been a petroleum geologist for over 35 years. Except for some heated dicussions with some fools who didn't think Blue Bell ice cream was the best I've always been given a fair hearing. Not that everyone agrees with me on everything (the fools) but I get my say unstricted.

Peak oil versus peak exports:


The combined net exports from the 2005 top five net oil exporters (about half of global net oil exports) continue to fall between Sam Foucher's middle case and high case projections. Sam's most optimistic projection is that they will have shipped about half of their post-2005 CNE (Cumulative Net Exports) by the end of 2014.

And here is the Texas and North Sea "Peaks Happen" slide from the captioned article:


Although the absolute North Sea peak was in 1999, in reality, the region showed a production plateau starting in 1996, with 1999 production being only slightly higher than 1996 production. The real decline did not kick in until 2003.

If the start of the North Sea plateau were in 2005, the real decline would not kick in until 2012.

Globally, I think that the key point is that annual crude oil production has so far still not exceeded the 2005 annual rate, despite the fact that annual oil prices will apparently exceed the $57 that we saw in 2005 for five straight years, with four of the five years showing year over year increases in oil prices. This is similar to the post-1972 Texas and post-1999 North Sea production case histories, which both showed flat to declining production in response to rising oil prices.

To return to exports, the so far slow decline in global net oil exports simply means that we are depleting post-2005 global CNE at a ferocious rate, since the model and numerous case histories show that net export declines tend to be front end loaded, with the bulk of post-peak CNE being shipped early in the decline phase.

Global warming is already here and is having an impact. Catastrophic warming may be some years off but every bit of greenhouse gases we emit now, will exacerbate the problem and just contribute to the total atmospheric load, making things even worse in the future.

Yes, I can see how it might be easier to be an optimist if you simply ignore the impacts of drilling for and burning fossil fuels. You said that the volt was emission free, indicating that you do not really understand the problem. The Volt, rest assured will be indirectly emitting fossil fuels in almost all c ases and directly in all cases where the vehicle has exceeded its electric range.

The pope announcement is irrelevant as it applies to male prostitutes having sex with men. Protected sex between those two parties will obviously not do anything to stop population growth.

I'm afraid GW may have to take a backseat to basic needs. If the world is in a depression because of $200 oil then gov'ts are going to ok conversion of coal to liquids - etc and not worry about GW.

I am in the minority here because I believe that GTL, CTL. and EOR may cap oil costs at $200/barrel - but only after a ten year or more Manhattan project size buildup. As to your point (1) - it's not oil discoveries that count but rather the amount oil production can increase due to these discoveries. Also, the surplus of ng is not very helpful since it is not easily converted to liquid fuel. I advise going to the APSO-USA site and looking at some of the PPT presentations.

Hi. I've read just about everthing on the ASPO-USA site and also on the Oil Drum for the last three years. I am definitely concerned about climate change and about security of supply of crude oil. I just don't believe we are facing an impending crash in supply. That's all. And as a result I'm fairly optimistic for the future. I also remember working at a renewable energy presentation centre in the summer of 1990 (Yes. 20 years ago!) where I was trained to tell the public that oil would run out in about 40 years - R/P was about 40 then and it is about 40 today with a higher level of production!

A sudden crash need not be the problem. A simple lack of growth is every bit as worrisome, as we have been seeing over the last four years or so. It's unravelled a lot of the financial industry, and is hitting manufacturing and causing the world to play more games with numbers to try and avoid accounting for the real cost of what we're doing. There's only so long you can pretend you're not in a hole before you figure out you can't climb out again by digging more.

Unless oil grows, or any other liquid fuel production does, over the next few years to allow economic growth, then the whole house of cards collapses. I never expected us to lose 40 Mbpd production by 2020 or something. But it turns out we don't have to. We just have to keep on this same level we're at now for a few years and then we'll feel it, net exports and geological decline or not.

Also, as oil production has stagnated over the last five years per capita oil production has declined - as world population has grown.

A very good point. Per capita global production is the most relevant statistic.

My understanding is that the effects of the oil embargoes of the 1970's only involved about 5% of the world's oil supply. It was enough for the USA to pass a national speed limit!

Reading the news lately I am becoming more and more optimistic that the transition away from fossil fuels will be fairly smooth.

i'm more or less in agreement although i dont think the world needs to drill their source rock for ng just yet.

1)massive gas and ngl deposits in the mideast, russia, south america, africa, asia and australia.

2)flared gas worldwide alone represents 1/4 of us demand, alledgedly.

3)the price differential between oil and gas will result in greater utilization of gas.

4)relative price stability will result in expanded capacity in oil and gas. wti average oil price is $72/bbl going all the way back to 2006 and $75 going back to '09('08 speculative noise notwithstanding).


Let scale be your guide as to whether we are to have a smooth transition or not:

  • Make your own assessment of how you think the oil (not gas) supply will vary over the coming decade. Think in percentage and barrel terms.
  • Now take those barrels and work out the energy.
  • Now how much extra energy would be required from renewables to meet that level (or higher if you want some growth).
  • Now what is that in terms of %age growth rate in renewables, given the current levels.

At this point, if you've been reasonable, you will find the wheel comes off. And that's without considering the reality that its liquid fuels we need.


Hi Nordic,

re: "In short I believe that we are very close to reaching critical mass for renewable electricity generation."

It seems what you're really talking about is a "transition" from a liquid-fuels-based infrastructure for the global industrial economy, to an infrastructure based entirely on electricity - yes?

This has to be the end-goal, in any case, if we posit a decline in LF production over time.

So, the question I ask and receive no reply to is as follows:

1) Where is the "top-level" analysis that shows what is required - (money, machine-power, energy - whatever relevant inputs you'd like to use) - to achieve this "transition"?

2) Is it possible, given the interdependency of FFs and LFs with electricity production and consumption?

For example, in order to maintain the electrical grid, it's necessary to maintain roads. Road maintenance requires heavy equipment, which, in turns requires diesel.

3) Are there enough FFs and LFs left in order to build out this electrical infrastructure? (While still providing basic necessities to people.) If so, what has to happen?

4) And then what? In terms of how to run an economy? Growth? No Growth?


Response to NYT Krauss article

Energy Bulletin and PCI have just published an open letter to the NYT by veteran Canadian geoscientist David Hughes, explaining why Krauss' article is "inaccurate, misleading and unhelpful:"

There is quite an interesting dialogue between Stoneleigh and the inflationists--especially Jeff Rubin--at theautomaticearth.blogspot.com

After reading this dialaogue, I place the odds against a deflationary depression at 3:2 against.

Yogi Berra said that in human affairs one should never post odds greater than 3:2.

IMHO, deflationary deflation was probably a fantasy promulgated by financial journalists such as Mish. IMO, QE talks and B.S. walks.

I'd have to ask, which inflation?

  • There's money supply, which all the economists will tell you is the only thing that matters.
  • There's the price thee and me have to pay to buy things, which seem often to be disconnected from the headline figures.
  • There's expenditure as a percentage of earnings.
  • Then there's the big mac index.

Frankly the discussion about inflation vs deflation seems to weave between theses definitions. Much of the deflationary talk seems to centre around costs being unaffordable, such that prices have to fall to match available funds. The inflationary talk says commodities will have to rise in price, and so everything else as money supply gets out of hand and currencies collapse.

In the end, I'd suggest the biggest effect will be a shift between the 'values' put on various items. The price of oil is dependent on the effort to get it out of the ground, which comes back to wages and taxes. As such its not going to fall in cost to match ability to pay - its simply going to stop being available in large amounts. Whereas the price of real estate has no intrinsic value and so is free to fall to zero. Food is somewhere in the middle.

Rather than simple headline predictions of inflation figures, I'd be much more interested to see predictions of the relative share of available funds - I think that area is more illuminating.

Most economists, including me, define inflation to be a rise in the GDP deflator or other valid index of prices. Most (almost all except Austrians) economists define deflation to be a fall in the GDP deflator or other valid index of inflation.

Yes, it is that simple.

The TAE folks must be Austrians then? Or of their own school?

The existence of these "schools" or whatever one might call them always confuses me a little bit. We generally don't have "schools" in the 'hard' sciences.

Actually, Physics has "schools" in certain theoretical areas, and there have been schools while scientists were divided over, for example, the wave versus particle nature of matter. The existance of schools typically identifies a frontier topic where alternative explanations of observations are possible. Usually they disappear when further observations become available.

Economics seems to be a frontier topic in its entirety.

The TAE earth people, Ilargi and Stoneleigh are both autodidacts in economics. They have been greatly influenced by some popularizers of the Austrian School of economics. IMHO, some of the Austrians, e.g. Joseph Schumpeter, have made large and lasting contributions to our knowledge of how economies work.

I'm eclectic, and if I see a sound idea or some good data interpretations from any school of economics at all I'll glom onto it. Note that the Austrian School of economics rejects both monetarism and also the policy recommendations of John Maynard Keynes.

For more on this, see any edition of THE WORLDLY PHILOSOPHERS by Robert Heilbroner--one of my alltime favorite books. It is a lively discussion of some of the greatest thinkers in economics and is exceptionally well written.

Did the US have deflation during the Great Depression? I seem to recall it did.

Did the US have deflation during the Great Depression? I seem to recall it did.

Yes, so much so that ranchers protested low prices by pouring out their milk into the gutter. There were many other such examples.

Mish talks about Following the Path of Japan and the Madness of Bernanke Fighting Just That

Following Japan's Path, So Far

In the United States, the core consumer price index, which excludes food and energy prices, rose 0.6 percent in the 12 months through October. That was the smallest 12-month gain since government calculating the figure in the 1950's...

Our problems are structural in nature and everyone needs to admit there will be no quick solutions and we cannot spend our way out of this mess. The only thing that can put the US back on track is fiscal prudence and sound monetary policy. Unfortunately, no one wants to hear the truth

Thus, whether you view inflation from a price perspective, or from the proper perspective of credit expansion, Bernanke is simply wrong. His policies have failed.

I notice Denninger calls it "margin compression" - I think he sees inflation but I think he speaks in terms of prices, not money supply. Correct me if I'm wrong and anyone cares ;)

What nearly everyone cares about directly about is rising price level, i.e. the extent to which their savings are being confiscated. The now-famous bunnies, or whatever they are, are right on that particular point. No one but the economic technicians cares directly about the size of the money supply.

Trouble is prices can rise for different and unrelated reasons such as due to shortages or false demand created by advertising, so I don't think it helps to call these price increases inflation. Linking inflation to its root cause seems to be a more sensible solution, such as increasing the money supply without increasing the goods available causes price inflation. Goods increasing in price when the money supply is stable indicates something different going on than simple inflation.

Many of her predictions have already been falsified.

First, she expected oil prices to stay high much longer than they did:

April of 2008:

"A prolonged period of low interest rates will perpetuate the bubbles in energy and commodities..." http://theautomaticearth.blogspot.com/2008_04_01_archive.html

In June of 2008 at the peak of oil prices, and just before a sharp decline, she strongly discounted the possibility of an imminent fall in oil prices:

"But, in a statement alongside its decision, the US central bank missed an opportunity to show how seriously it takes inflation by conveying that inflationary expectations are flat, and oil prices could soon tumble. Both assumptions look badly wrong." http://theautomaticearth.blogspot.com/2008_06_01_archive.html

That day's posting had several 3rd party predictions of imminent $170-200 oil, and one about the possibility of an oil-shock induced price fall, but the above appears to be written by the blog authors.

She expected a sharp decline in international shipping to continue and get worse (which didn't happen):

"Also in the real world, trade itself is increasingly in danger. "The Baltic Dry shipping index, a proxy for world trade flows, suffered its second biggest-ever fall yesterday, to 11%, which took it down under the $2,000 mark and it fell another 8% today to $1,809. The drop means it has fallen more than 80% since July's peak of around $12,000 and is now at a three-year low." Translation: there will be a lot less goods on the shelves in your neighborhood stores, and a lot less raw materials to process in your factories." http://theautomaticearth.blogspot.com/2008/10/debt-rattle-october-15-200...

"We are seeing the beginning of a global demand collapse, as the credit crunch takes an ever increasing toll on global economic activity and international trade. Already we are seeing the dire effects on shipping in the Baltic Dry index, thanks to the difficulty in obtaining letters of credit for shipments. Consumers in developed countries are tapped out and trying to repair their tattered balance sheets by cutting back, as are companies and banks. Consumption is therefore falling, which will hit exporting economies very hard indeed. They have spent vast sums, and used huge amounts of raw materials, to build what will now be shown to be an enormous excess of productive capacity. Their demand for raw materials will not recover any time soon, as there will be no demand for their products for a very long time. " http://theautomaticearth.blogspot.com/2008/12/debt-rattle-december-7-200...

There was also a prediction that a post-2008 crash of oil prices would be sustained (I'm still looking for a link).

March 31st, 2008, her partner Ilargi didn't anticipate a rally: "Not that I see a significant rally this year, not even a bear one, the model is already too broken." http://theautomaticearth.blogspot.com/2008_03_01_archive.html

In November 08, they were advising people to short the stock market: "Sell equities, real estate, most bonds, commodities, collectibles (or short if you can afford to gamble)". This strategy would have lost a lot of money in the last 2 years.

Similarly, in 2009 she said the Dow would crash that year, and reach 1,000 in 2010: instead, the US stock market was up in the fourth quarter of 2009, and as of September 2010 it was up for the year. She predicted sharp, dramatic price deflation - as of September 2010 all measures of prices showed growth.

Here's a prediction from November 2008: "We appear to be beginning a market rally at the moment, which should lead to precisely this set of trend reversals. Such a rally is only temporary relief however. It may last for a couple of months, but then the decline should resume with a vengeance." http://theautomaticearth.blogspot.com/2008/11/debt-rattle-november-29-20... . That was 24 months ago...


You are correct: TAE has a miserable record of failed predictions. Why believe anything they say?

Note that both Ilargi and Stoneleigh are financial journalists; they are not economists and have had little or no formal education in economics. They claim to be autodidacts in regard to economics, but they keep making foolish statements that no professional economist (such as Jeff Rubin) would ever make. Stoneleigh has accused Ben Bernanke of being a monetarist. Twaddle. Nonsense. Bernanke is an eclectic Keynesian and a million miles away from being a monetarist. From all this I have to conclude that Stoneleigh is totally ignorant of what it means to be a monetarist. First semester freshman economics makes it clear what a monetarist is and what are the policy recommendations of monetarism.

So far as I can tell from their writing, neither Ilargi nor Stoneleigh had either freshman or sophomore economics.

On the other hand, TAE does post some interesting articles by financial journalists, but none (so far as I can recall) by professional economists of any stripe--mainstream, environmental, steady state, or socialist economists.

That sounds right. I wasn't aware they were journalists. I wonder where they started out?

Do you have any thoughts about leverage, and deleveraging?

I've been looking, and haven't been able to find quantitative analysis showing just what leverage levels "should" be. How do we know? Do we just look at a chart, and say "boy, that looks high!"?

Here are my thoughts so far:

Debt levels vary depending on one's economic model. For instance, in a renter society, debt is low: one class owns the property, another rents it. In a owner society, debt is high, but the cash flows are very similar. The risk is the same, but it has moved to different places, and is counted differently. So, if renters become owners, is that somehow riskier or less sustainable?

Is rising leverage always bad? Consider the change from a landlord-renter relationship to a owner-lender relationship. The owner may have exactly the same cost of living, but now they have a mortgage payment rather than a rent payment. Are they worse off? No, they're better off, because they have the benefits of ownership: capture of capital gains, control over their lives, etc. Risk moves from landlord to mortgage holder and the new owner. The new owners take different risks (overborrowing, casualty loss, responsibility for maintenance, etc), but it's better to own than rent.

For every borrower there is a lender - net debt doesn't rise. Leverage can rise, but net debt is always zero. Debt is a symbolic marker, showing relative ownership. If it gets excessive, then adjustments must be made, by bankruptcy and such things. How those adjustments are handled are a social question, that certainly can screw up the management of an economy. But, the underlying reality of physical assets and productivity are different.

Orlov guest post: But what is "Community"?

I read your article about differences in “komyooniti.” Let me ask you as a linguist, what's the most adequate Russian word for it?

It's been hammered into my head that the most important things are food, a roof over your head, security and mobility—the first two especially, and everything else is just there to tempt you. And it seems that the best way to procure food is not to take it away or steal it or buy it, but to grow it and to guard it, because there are always people to guard it from. That is, to be close to food. And when the local industrial agriculture kicks the bucket and the food will stop being delivered to the cities, won't the residents of backward little villages be the winners? You can imagine gangster raids into rural places, rifling through barns and fields, and forcing people to pay a tribute, as in feudal times—but that's only if they find enough fuel to get there and back.

As usual with Orlov, that article (link) is provocative. However, with respect to, "won't the residents of backward little villages be the winners?", one guesses maybe not. If things are allowed to get so bad in the US Midwest that people become isolated villagers who cannot trade, then the first string of bad squall lines will do them in for good.

The USA seems to be, among other meteorological nastinesses, the tornado capital of the entire world. Maybe the weather is more equable in Russia?

In a recent Drumbeat, BC EE had mentioned that he's been working with pressure reducing valves that can, in effect, generate "free" electricity (see: http://www.theoildrum.com/node/7124#comment-744824). I said that I would relay this information on to Julian Boyle, our city's energy manager, but I guess I can scratch that off my to do list:

Halifax Water planning pilot project to generate electricity

The growing global focus on green energy and sustainability has caught the attention of Halifax Water.

The utility wants to start tapping into energy generated by the public water system that is currently being wasted.

"We have a lot of opportunity and a lot of ways to recapture energy," Julian Boyle, Halifax Regional Municipality’s energy manager, said earlier this week.

There are hundreds of kilometres of pipes supplying water in the city that are owned by Halifax Water. Most run downhill. To stop the gravity-pulled water from bursting the pipes, the utility has installed pressure reducing valve chambers in locations throughout metro.

Now, the utility wants to turn the energy created by the falling water into electricity by installing electricity-generating turbines at two of the chamber sites at an estimated cost of $100,000, said Boyle.

See: http://thechronicleherald.ca/Business/1213017.html

The pilot system is expected to generate up to $60,000.00 of electricity each year; roughly speaking, that's enough electricity to power over 2,000 of the city's new LED street lights.

I had said earlier that Mr. Boyle is a man on the move and that's an understatement.


Is it ok if I comment on a Nov 20th article in this thread?

When I clicked through "IEA On Board, sort of" yesterday, Deffeyes had this to say about natural gas:

The Times enthusiasm for increased US natural gas production, at bargain prices, is not misplaced. Although the new gas production is usually referred to as "shale gas," the production comes from a very special subset of shales. The targets are mature oil source rocks; organic-rich shales that have already delivered oil into conventional oil fields. Left behind in the source rock are modest amounts of natural gas. Horizontal drill holes and massive hydrofracture treatments open up economically rewarding amounts of natural gas.

The "natural" price for natural gas is based on the energy equivalence to oil. Burning 6000 cubic feet of natural gas generates heat equivalent to a barrel of oil. Since oil is now around $80 per barrel, divide by 6 and natural gas ought to sell for $13 per thousand cubic feet on an equal-energy basis. However, natural gas in the USA is now selling for $4 per thousand cubic feet. Natural gas is currently a huge bargain. How huge is it? Installation of new solar and wind energy facilities is now being held back because it is much cheaper to generate electricity from natural gas. Some day, some day, natural gas will run out, but it may be 100 years from now.

Is he saying that there's all the shale gas we want and our energy worries are over?

No - I don't think he is saying that.

Assuming his 100 year figure is right (some might disagree with it)100 years is not that long. And if "running out" is 100 years away then "peaking" is much sooner. Remember "peak" in most resources occurs far sooner than extinction of the resource. Lots of undesirable things might happen once peak is reached. Our energy worries would not be over.

Joe - Here are some basic facts about SG and its future. You can draw your own conclusions. The expansion of SG was spurred by two factors: price assumptions of $8+/mcf and development of better (read: expensive) fracing tech. Low NG prices today are a result of two prime factors: lower consumption/demand and increased production from the SG and the DW GOM (back in '08 over 1 bcf/day came online when the DW NG hub Independence began gathering NG.

So where are we today with respect to NG development? The high prices that spurred all NG drilling are gone. At the peak we had over 1,600 rigs drilling. Now it's less than 1,000. There are some sweet spots in SG plays still being drilled but the great majority of the leases (which operators spent billions acquiring) will expire undrilled. BTW: the hot Eagleford Shale pay in S Texas is not a SG play per se. It's being drilled for its oil production. The great majority of SG wells that contributed to the rise in production have now declined significantly. The good news is that they now provide a low volume but low decline rate reserve.

It's also important to point out that many SG wells will never recover their costs at current low prices. But little NG can be shut in by the operators. The wells may not have been profitable to drill but they still provide badly needed cash flow. Any operator that could afford to choke back rates to wait for better prices have done so. But there are very few who could afford to do so. When will SG drilling kick back into high gear? When NG prices dropped below $6/mcf (50% higher than current prices) Devon let go of 14 of the 18 drill rigs they had in the E Texas SG play and paid a $40 million penalty to do so. Chesapeake was able to hang on a little longer thanks to selling futures on their NG: when others were receiving less than $5/mcf they were getting $10+/mcf for much of their NG. But those days are past. A few weeks ago Chesapeake announced not only were they not focusing on SG any more but they had no interest in developing any NG. They were sticking with oil. During the SG decline many folks touted Chesapeake's stated faith in the SG plays as proof that it was still a viable component of our energy supplies. Don't hear much out of those folks today. DW GOM was a big contributor to our supply run up. But DW fields are developed for max flow rate. Add the high fixed costs of operating in DW we'll see a dramatic decline in those fields in 5 to 7 years IMHO.

Do we have a 100 year supply of NG? Sure we do. We even have a 1,000 years supply. Of course I didn't say how much NG we can produce over the next 1,000 years. And even if I had thrown in that number it still wouldn't mean anything if I didn't also include the price assumptions. Given the drop in SG drilling when prices fell below $6/mcf it's rather safe to say we won't see much development with current prices below $4/mcf. We don't know what the price platform for NG will look like for the next 50 years. We don't know what the demand profile will be for the next 50 years. We do know that current prices have shut down much NG development. We do know that existing NG fields are depleting every day and will be contributing very little of our needs 10 years from now. We do know that there are huge inplace reserves of NG in the various SG plays. We also know that most of those reserves can't be developed at current prices. And we do know that if energy prices rise significantly SG drilling will pick up. But we also know that a significant rise in energy prices will induce demand destruction which will, in turn, decrease energy prices to some degree. Is there or isn't there a 100 year supply of NG here in this country? There is no simple answer. Or you can make it a simple answer: yes, if demand/prices are right and no, if demand/prices are not adequate.

Hi Dear TODers,

Has this article been posted on DB?

I was wondering if anyone read and commented.


Was up on EB Nov. 21: (Second link down.)

Another potentially enormous oilfield found in Brazil:


Always nice to have an update from Fantasy Island, where oil fields don't deplete.

Always nice to have an update from Fantasy Island, where new oil fields don't exist.