Drumbeat: November 24, 2010
Posted by Leanan on November 24, 2010 - 10:18am
China's Saudi oil imports seen up 11 pct next year-sources
BEIJING/SINGAPORE (Reuters) - China's crude oil imports from Saudi Arabia will likely rise 11 percent next year to hit one million barrels per day, a pace slightly faster than 2010 but off the heady increases in previous years, industry officials told Reuters.China's refining expansion is expected to moderate next year and rising competition of mostly Russian oil via a Siberian pipeline means import growth for the high-sulphur Saudi oil would be limited, they said.
HOUSTON — Houston-based Baker Hughes Inc. said Wednesday 953 rigs were exploring for natural gas and 724 for oil. Ten were listed as miscellaneous. A year ago this week, the rig count stood at 1,137. The tally, normally released on Friday, was advanced this week because of Thanksgiving.
Shell Ordered to Operate 360,000-Barrel-a-Day Pipeline at Reduced Pressure
Royal Dutch Shell Plc must reduce operating pressure on its 360,000-barrel-a-day pipeline from Houma, Louisiana, to Houston by 20 percent, under a corrective- action order issued yesterday by U.S. regulators.The Pipeline and Hazardous Materials Safety Administration found that the company failed to identify an indication of corrosion during a 2007 inspection of the pipeline, according to the order. The pipeline was shut after it leaked about 1,000 barrels of oil Nov. 16.
Aramco to Start Building Jazan Refinery in First Quarter 2013
Saudi Aramco, the world’s largest state-owned oil company, will start building a planned refinery in the new industrial city of Jazan during the first quarter of 2013, one of the city’s developers said today.
Even the IEA raised its global oil demand forecast again — this time by 0.2 million barrels per day, which puts their projected 2011 demand to 88.5 million barrels per day. That's compared with the 87.3 million barrels per day projected for 2010.Although those levels are nothing to boast about, remember that production is still around 86 million barrels per day. Going forward, we can count on that gap widening.
So in 2011, it's likely that we'll see the return of $100/bbl oil.
Rising commodity prices strain corporate supply chains
The rising price of industrial and agricultural commodity futures is straining the ability of many firms to maintain their margins without raising prices. A price increase will always be the last resort, particularly when consumer spending remains depressed and lines of credit are drying up for many buyers. Yet retailers and manufacturers have to find some way to cope with the rising costs of cotton, silver, aluminum, wheat, corn and rare earth metals.Nate Herman, the vice president for international trade at the American Apparel and Footwear Association, recently told Bloomberg/Businessweek that "there's just not any room left to take it in margin."
Lukoil said today its crude oil output fell nearly 1.4% in January-September 2010, year-on-year, due to field depletion.
ConocoPhillips cuts 80 jobs in Canadian gas unit
(Reuters) - ConocoPhillips (COP.N), the third-largest U.S. oil company, has cut 80 jobs in its Canadian unit as part of moves to cope with weak natural gas prices, a spokesman said on Wednesday.ConocoPhillips has said layoffs are among moves that also include shutting off 28,000 barrels of oil equivalent a day worth of unprofitable gas production.
Analysis: Where is gas used next in China? Trucks and trawlers
(Reuters) - Feeling the pain of soaring fuel bills, trawler captain Liang Liming is thrilled to hear that in a few years his diesel-guzzling 400-horsepower boat may shift to natural gas, a cleaner fuel about a third cheaper.Independent firms supplying retail volumes of liquefied natural gas (LNG) around China are targeting hundreds of thousands of users such as Liang, gunning for as much as 10 percent of China's roughly 1.6 million barrels per day diesel market for transport use by 2015.
Italy Eni SpA Will Continue Ecuador Oil Operations Until 2023
QUITO -(Dow Jones)- Italy's Eni SpA said Wednesday the service contract it signed Tuesday in Ecuador will allow it to continue operations in the Andean country until 2023.Eni operates the Villano oil field in Block 10, in the Amazon region.
FACTBOX-Ecuador's new contracts with foreign oil firms
QUITO (Reuters) - Ecuador began preparations on Wednesday to take over the local assets of Brazil's Petrobras, the only major oil company to refuse to sign new contracts designed to increase state control over the petroleum sector.
'Transocean hiding safety audits'
Transocean has failed to turn over rig fleet safety audits subpoenaed by federal investigators probing causes of the fatal explosion of the company’s Deepwater Horizon drilling rig in April, the US told a judge.
T. Boone's BP Capital adds BP shares
NEW YORK (Reuters) - BP Capital, the investment management firm led by billionaire energy investor T. Boone Pickens, has purchased shares of oil company BP Plc for the first time in nearly six years and dropped its holdings in offshore oil driller Transocean Ltd, according to a quarterly report filed with the U.S. Securities and Exchange Commission.
BP made risky decisions before spill-panel document
WASHINGTON (Reuters) - BP made a series of decisions while drilling its doomed Macondo well that saved time but added risks prior to its massive Gulf spill, according to a White House oil spill commission document leaked by a media outlet.
Final oil spill compensation process begins
(Reuters) - The administrator of the $20-billion fund created by BP Plc to compensate Gulf of Mexico oil spill victims announced plans on Wednesday for processing final payments.
Afghanistan: the pipeline factor
Of the many possible reasons for Canada to stay in Afghanistan — ending terrorism, liberating women, educating girls, spreading democracy, keeping NATO from failing — one dynamic is rarely discussed. The TAPI pipeline project has long been the elephant in the closet, quietly supported by Western powers. Countries expect to sign formal agreements in December, with construction to be completed by 2014 — a magic date for Ottawa too. The pipeline deserves attention, as it is likely to be a target for insurgents and a reason for ongoing military occupation.
ANALYSIS-Polish, Czech power markets choose different paths
LONDON/PRAGUE (Reuters) - Czech and Polish power prices show that their markets are becoming increasingly linked with the rest of the continent, but central Europe's two biggest energy markets are choosing different integration strategies.
Wind Power Always Replaces Fossil Fuels
Some people challenge the fact that wind power will reduce the use of fossil fuels to generate electricity. Allow me to make the case that every megawatt-hour of wind generated power will indeed replace the equivalent electricity generated from oil, natural gas or coal, and in that order. Importantly, wind power will avoid the environmentally harmful and unhealthful emissions resulting from those fossil fuel replacements. And the use of wind power will decrease the import of oil and natural gas consequently easing a national security concern and national trade deficit.
There’s a new book out that I recommend giving as a holiday gift, or just purchasing for yourself.Jon Turney has produced an excellent, compelling, accessible overview of futurology that rewards both skimming and deeper reading. Gathering together ideas from many disciplines and opinions from diverse perspectives, he offers a moderate, believable, but still thrilling exploration of what lies ahead.
Unfortunately, even peak oil will not save us. While the International Energy Agency recently confirmed that world crude oil production most likely peaked in 2006 – leading the watchdog’s chief economist Fatih Birol to observe that “the age of cheap oil is over” – there is still enough oil shale, tar sands, coal and natural gas to burn through the first quarter of this century. To be sure, that is not long – but it is long enough to potentially push us off a climate cliff.
The Warming of Antarctica:
A Citadel of Ice Begins to Melt
Of particular concern to scientists is the effect of this warmer water on the Pine Island and Thwaites glaciers, located at 75° South, below the Antarctic Peninsula. Robert Bindschadler, a senior fellow at the Goddard Space Flight Center and an expert on Antarctic ice, believes that the warmer waters are melting the submerged undersides of the ice shelves attached to these glaciers, causing them to grow thinner; in places, the Pine Island Ice Shelf is thinning at a rate of 160 feet a year, and the melting is effectively loosening the grip of the Pine Island Glacier on the sea floor, causing the vast river of ice behind it to accelerate into the sea. The Pine Island Glacier is now charging into the Amundsen Sea at a rate of about two miles a year.Bindshcadler said that if all the ice from the ice streams feeding the Pine Island and Thwaites glaciers were to flow into the Southern Ocean, global sea levels could increase by five feet, inundating low-lying coastal areas from Florida to Bangladesh. Such an event, he said, could happen in the next half-century. Should the ice from the far-larger Western Antarctic Ice Sheet eventually melt, global sea levels could rise by 16 to 20 feet, according to Bindschadler and other researchers.
2010 so far "tied for hottest year"
(Reuters) - This year is so far tied for the hottest year in a temperature record dating back to 1850 in a new sign of a warming trend, the three major institutes which calculate global warming estimates told Reuters.
Bill McKibben - Foreign Policy: Making Progress In Mexico
At Cancun, the demand from the United States and others will be transparency for access to that "fast-start" cash — if you want financing, then you have to provide measurable, verifiable reductions in emissions. The south is desperate enough to keep the talks on track that there probably will be at least some advances on related questions of reporting, monitoring, and verification, and there might be real progress on deforestation, too. The main diplomatic effort will center on keeping the process somehow limping forward toward next year's conclave in South Africa — everyone keeps hoping that if that happens some new opening will emerge. But if the summer of 2010 — 19 countries setting new heat records, Russia on fire, Pakistan underwater — didn't rattle leaders, it's not quite clear what will.
Green Economy, Climate Change Debate Could Turn Out Differently This Time
The big question is, how can we overcome partisan politics and special interests, which are still intervening against society's best interests?Whether it's climate change, peak oil, energy security, keeping the billions we spend on oil at home to grow our own economy, or competing with the likes of China for leadership in new industries, such as wind and solar, everyone can find a reason to support moving to a carbon neutral society.
Why carbon tax will work even if climate change theory is wrong
Just because nobody knows the future is no excuse to do nothing in the face of worrisome possibilities, says Dan Gardner, the author of a solidly researched new book that makes it clear just how shaky – if not dead wrong – expert predictions usually are.Good policy, Gardner writes in Future Babble: Why Expert Predictions Fail – and Why We Believe Them Anyway, stands up as worthwhile even if the forecast that prompted it turns out to be wrong.
Chris Martenson: Economic Implications of IEA's Lowered Oil Estimates
Once a year, the International Energy Agency (IEA) releases its World Energy Outlook (WEO), and it's our tradition to review it. A lot of articles have already been written on the WEO 2010 report, and I don't wish to tread an already well-worn path, but the subject is just too important to leave relegate to a single week of attention.Because some people will only read the first two paragraphs, let me get a couple of conclusions out right up front. You need to pay close attention to Peak Oil, and you need to begin adjusting, because it has already happened. The first conclusion is mine; the second belongs to the IEA.
Oil Fluctuates as Dollar Strengthens Amid Bets on Rising U.S. Consumption
Oil fluctuated in New York after a a downgrade to Ireland’s debt rating weakened the euro against the dollar, denting demand for commodities, while traders bet a report will show U.S. crude consumption is rising.Oil trimmed a gain of as much as 0.8 percent as the dollar strengthened following Standard & Poor’s lowering of Ireland’s rating by two steps. U.S. crude inventories probably declined 2 million barrels, or 0.6 percent, last week from 357.6 million a week earlier, according to a Bloomberg News survey before an Energy Department report today. Yesterday an industry-funded report showed supplies grew.
“The physical oil market is improving, but slowly,” said Thina Saltvedt, a Nordea Bank AB commodities analyst in Olso. “Even though inventories are moving down, they’re still quite high, and we don’t expect a large upswing in U.S. demand.”
Floating Oil Storage Seen Exhausted By 2Q '11 - BP Economist
LONDON -(Dow Jones)- Floating storage of crude oil and oil products is likely to be completely exhausted by the second quarter of 2011, said BP PLC's (BP) Chief Economist Christof Ruehl Wednesday.Almost 140 million barrels of oil and oil products was being stored in ships at the start of 2010 following the demand slump during the 2009 recession, Ruehl said at the Oil Council conference in London. This amount has run down steadily this year as demand has recovered but oil production has remained steady, he said.
OPEC Says It Won't Necessarily Boost Supplies if Crude Oil Reaches $100
Oil prices at $100 a barrel will only trigger action from the Organization of Petroleum Exporting Countries if they are accompanied by a supply shortage, the group’s secretary-general said.
Contango on Mideast Oil Disappears on China Diesel Squeeze
The 16-month old contango in Dubai oil, the benchmark grade of crude for Asia, has disappeared as a shortage of diesel in China puts a premium on the quickest deliveries of fuel.The December contract was 15 cents a barrel more expensive than January’s today, reversing a discount that’s been in place since July 2009, according to data from PVM Oil Associates, a London-based broker.
China boosts coal shipments to power plants amid shortages
China said Wednesday coal reserves at some power plants had fallen to danger levels, and pledged to increase coal shipments to power plants to ensure adequate electricity supply during winter.
Monthly Record Seen for Chinese Coal Imports
All-time highs in Chinese coal imports are expected this month and next, the firm said in a report issued earlier this month. Describing its estimates as conservative, Commodore predicts that Chinese coal imports will total about 16.75 million tons in November and 17.25 million tons in December, the vast majority of it steaming or thermal coal used for heat and electricity. The previous record, set in December 2009, was 16.38 million tons of imports, the company said.
Goldman Sachs Forecasts China's Sway in Commodity Market to Shrink in 2011
China’s sway in the global commodity market is likely to shrink next year as the U.S. and Europe assume bigger roles, Goldman Sachs Group Inc. said.“When we look into 2011, the story is not going to be China,” Jeffrey Currie, head of commodities research at Goldman Sachs, said today at a conference in London. “It is going to be Europe and the U.S.”
"Gas is going to continue to play a vital role in keeping the lights on," said energy minister Charles Hendry at the launch of a major new study into gas. Gas currently provides 50 per cent of the UK's primary energy and, as the cleanest fossil fuel, must remain central to the energy mix if the UK is to honour its 2020 commitment to reduce greenhouse gas emissions by 34 per cent on 1990 levels.
Gazprom's board of directors has approved a investment programme of 816.36 billion roubles ($26.02 billion) for next year, down 10% from its revised budget for this year, the Russian gas monopoly said today.
Factbox: List of Asian oil sands investments
(Reuters) - Thailand's PTT Exploration and Production PTTE.BK will pay $2.3 billion for a 40 percent stake in Statoil ASA's oil sands project, marking Thailand's first foray into the Canadian oil sands industry and extending a string of Asian investments in the energy rich region.Here is a list of Asian oil sands investments:
Oil spill company may lose licences
THE company responsible for one of Australia's worst oil spills could be stripped of its offshore drilling licences if measures to shore up safety standards are not up to scratch.Resources Minister Martin Ferguson has decided to review Thai-owned gas and oil giant PTTEP's licence to operate in Australia after a damning report into last year's Montara oil disaster, released yesterday, found the company failed ''basic oilfield practice 101'' resulting in a 74-day spill spewing 29,600 barrels of oil into the Timor Sea.
BPMIGAS sees Indonesia oil output at 970,000 bpd in 2011
(Reuters) - BPMIGAS, Indonesia's oil and gas regulator, sees Indonesian oil production at 970,000 barrels-per-day (bpd) in 2011, up from its projection of 965,000 bpd for 2010.BPMIGAS also sees oil prices at $80 per barrel for 2011, said Hardiono, vice chairman of BPMIGAS on the sidelines of a conference in Perth.
Frontline Says Oil Tankers Still Vulnerable as New Tonnage Enters Market
Frontline Ltd., the world’s biggest operator of supertankers, said the market is still “vulnerable” after almost five months of unprofitable rates. The shares fell the most in 2 1/2 months in Oslo trading.Shipowners cut speeds and idled vessels this year as spot rates plunged as much as 71 percent from January to $25,849 now, according to data from the Baltic Exchange. While the Northern Hemisphere’s winter should spur oil demand, shipping will remain “vulnerable as new tonnage enters the market,” Frontline said, referring to the biggest-ever shipbuilding program.
UK supermajor BP said today it has made a significant new gas discovery in the West Mediterranean Deepwater Nile Delta concession off Egypt.
Lake or sea? A tricky question for the Caspian
Is the Caspian a sea or a lake? Maybe a rather metaphysical question for the business section but the answer could have profound results for the central Asian energy industry, which holds perhaps the largest amount of under-exploited oil and gas reserves on earth....If they had decided the Caspian was lake, they would have had to carve up its resources and the revenue they produce equally, each getting one fifth of its bounty. Azerbaijan and Kazakhstan are especially concerned this should not happen: they have substantially more than that in the current de facto arrangement.
If the presidents had decided it was a sea, they could each have laid claim to areas according to the length of their coastlines. In particular, this would not have suited Iran: with only 13 per cent of the total Caspian shoreline, and the least promising so far in terms of proven hydrocarbon resources, it would have lost out to its neighbours with longer coastlines.
Drilling Session Disappoints Landrieu
A meeting between Interior Secretary Ken Salazar and offshore drilling executives on the Gulf Coast orchestrated by Senator Mary Landrieu, Democrat of Louisiana, failed to yield much progress on streamlining the permitting process for new wells in the aftermath of the BP oil spill, Ms. Landrieu said this week.
Scientists Back Early Government Report on Gulf Spill
An early government assessment of the fate of the oil from the BP spill in the Gulf of Mexico that was criticized as overly optimistic by some independent scientists was largely accurate, according to a revised report by federal scientists released Tuesday.
Feds: Oil dispersant worked better than thought
WASHINGTON – The federal government now figures that oil dispersants did a better job of breaking up the BP oil spill in the Gulf of Mexico than it first calculated.A new analysis released Tuesday says the controversial chemicals helped break up about 32 million gallons of oil — about 16 percent of the spill. That's about twice as much as a federal team figured in August. Scientists say that is mostly due to the unusual method of injecting the chemicals so deep, about a mile down near the busted well.
To spur conservation, power bills highlight subsidies
ABU DHABI // The regulatory agency for Abu Dhabi's water and electricity will add another figure to customers' bills in January: the actual cost. The plan is part of a broader effort to reduce waste and put the nation's development on a more sustainable path, setting the course for potential rate increases.Abu Dhabi has among the cheapest rates for electricity and water in the region due to major subsidies: the Government pays nearly 86 fils of every dirham of power consumed by Emiratis, and 50 fils for expatriates.
Syria’s nuclear stonewalling deepens
VIENNA - Syria is refusing UN nuclear inspectors access to multiple suspect sites and has provided scant or inconsistent information about its atomic activities, an International Atomic Energy Agency report showed.For over two years Syria has blocked IAEA access to the remains of a desert site which US intelligence reports say was a nascent North Korean-designed nuclear reactor to produce bomb fuel.
Cold Snap Opens `Season to Watch' for Electricite de France Nuclear Plants
A cold snap in France over the next week will test Electricite de France SA’s pledge to increase production at nuclear reactors and cut reliance on imported power this winter.
Cameco Agrees to Supply Uranium to China's Guangdong Nuclear Through 2025
Cameco Corp., the world’s second- largest uranium producer, agreed to supply the fuel to China Guangdong Nuclear Power Holding Co. through 2025 to meet rising demand in the world’s fastest-growing nuclear market.Cameco plans to sell 29 million pounds of uranium concentrate to China Guangdong Nuclear, subject to the approval of the Chinese government, the Saskatoon, Saskatchewan-based company said in a statement yesterday. That’s equivalent to about 13,000 metric tons.
Salazar vows to speed offshore wind energy
WASHINGTON – Interior Secretary Ken Salazar vowed Tuesday to spur offshore wind projects in the Atlantic Ocean by expediting permits and identifying promising areas for wind power.At a speech in Baltimore, Salazar said he will institute a "smart permitting process" that could result in leases issued within two years, instead of seven years or more.
Two things happened last month to give us pause to reflect on clean energy. First, Germany added the equivalent of nearly 1 percent of its electricity supply with solar energy between January and August. The first 1 percent took 10 years to achieve; the next 1 percent just 8 months. Second, the author of this revolution, Hermann Scheer, died.
Solar Power Cost to Equal Fossil Fuel Expense Within Decade, BP Forecasts
The cost of generating power by capturing the sun’s energy will fall about 10 percent a year in the next decade until it equals the expense of producing electricity by burning fossil fuels, a BP Plc official said.As conventional fuel prices rise and solar power falls, generation costs may reach parity in as little as five years for some fossil energy sources, Vahid Fotuhi, Middle East director of BP Solar, said at a conference in Abu Dhabi yesterday. Solar power costs about 20 cents a kilowatt-hour now, he said.
Chris Huhne: The Severn barrage will be built
When Chris Huhne, the UK energy secretary, announced last month that he was cancelling public funding for the Severn barrage - the massive tidal power project which was due to provide around 5 per cent of the UK’s electricity needs - it initially looked like the project was dead in the water.But the government had left itself some wriggle room.
Spain Delays $18 Billion Power-Bond Program as Government Yields Soar
Spain has frozen the start of its 13.5 billion-euro ($18 billion) program to sell state-guaranteed power revenue bonds until government debt-market volatility abates, people with direct knowledge of the transaction said.Bankers who were authorized yesterday to begin gauging investor interest in the first tranche of bonds will wait until the yield stabilizes on Spanish debt, roiled by Ireland’s bailout request, said two people who asked not to be named because the process is confidential. The sale may proceed after the yield settles, one of the people said.
DETROIT -- The first mass-market electric vehicles are about to go on sale in selected cities, kicking off the beginning of a wave of new green vehicles hitting showrooms over the coming year.
Government and business at odds over green investment bank
Another faultline opened up today at a briefing attended by both Sam Laidlaw, the chief executive of Centrica and Huhne himself. Specifically, the pair seemed to be at odds over whether the green investment bank could be used to fund energy efficiency initiatives.
Thoughtful living brings about change
"Neil and Kyra's home is practically a demonstration project for reducing one's carbon footprint," Holden wrote.The couple lives in a big, "recycled," as Kyra calls it, house about a mile out East End Road. They've made big improvements to their two and a half acres in the five years they've lived there, adding a solar panel, high tunnel, greenhouse, orchard and ducks. A root cellar and well-outfitted shop are located in the house, which is heated with an efficient wood stove and a passive solar water system. The house is much larger than they need, she said, but it's hard to imagine them hosting their many short- and long-term visitors in a smaller place.
"Instead of investing in Wall Street we invest in our house and our community, " explained Neil.
Egypt says “amazed” by Ethiopia’s Nile remarks
ABU DHABI/CAIRO - Egypt said it was “amazed” by Ethiopia’s suggestion on Tuesday that Cairo might turn to military action in a row over the Nile waters, saying it did not want confrontation and was not backing rebels there.Egypt, Ethiopia and seven other countries through which the river passes have been locked in more than a decade of contentious talks driven by anger over the perceived injustice of a previous Nile water treaty signed in 1929.
California Dreaming? The Golden State Takes the Lead in U.S. Efforts to Combat Climate Change
California is taking the initiative and moving forward with plans to curb emissions of greenhouse gases, even as prospects for national and even international efforts fade.
Satellites reveal differences in sea level rises
Glaciers are retreating and parts of the ice sheets on Greenland and Antarctica are melting into the ocean. This must result in a rise in sea level, but by how much? A new measurement of the gravity everywhere around the globe with a pair of orbiting satellites provides the first ever map detailing the rises across different parts of the globe.
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
China Sets Tough Line in Climate Talks
The Chinese want to be considered a "developing nation":
What's that old saying?
"We must all hang together or we will all hang separately."
E. Swanson
We're all out on the end of the same branch. Sam and Hu are both sawing furiously away at the branch. If it breaks, we all die. Sam - "You need to stop sawing!" Hu - "You've been sawing at this branch for years, look how deep your cut is. You need to stop sawing!" As they argue, they not only continue sawing, they actually pick up the pace.
This is a tough nut to crack, to be sure. Generally speaking, it probably makes sense that places like the U.S. cut way back while providing some slack for places like China which uses a lot less per capita. On the other hand, I don't think it is reasonable for China to continue to go full steam ahead with a transportation system that just repeats our mistakes, that is, massive encouragement of auto production and sales. China is doing things like investing massively in public transportation as well, but it appears they are trying to move ahead on all fronts without prioritizing lower energy approaches which would also result in growth.
And this year, China is melting snow to yield more water. How that works out come spring, I don't know. China is begging everyone else to sanction their destruction of their own environment, including massive desertification and air pollution. Well, good luck with that.
"China is begging everyone else to sanction their destruction of their own environment, including massive desertification and air pollution. Well, good luck with that."
We, in the west, have been sanctioning (funding) this meme for decades, avoiding our own environmental and labor laws, and exporting the related consequences/costs, enjoying the low cost of goods from China, etc. I can understand how they would consider it hypocritical for Western countries to insist that they clean up their act, interfering with their growth plans.
Point well taken. The U.S. is not in a position to insist that anyone do anything. On the other hand, environmental laws need to be similar across the board. Otherwise, the playing field is even less level.
TPTB, Wall Street, et.al., don't want a level playing field. They worked too hard to acheive what we have now. They're working just as hard to maintain the status quo. Demonize scientists, environmentalists, tree hugging green weenies; all in a days work.
Many of the "deplorable activities" in China are being done by US company subsidiaries or "joint ventures".
http://www.theatlantic.com/magazine/archive/2010/12/dirty-coal-clean-fut...
Here is a slightly more optimistic take on China. I'm not sure the link will work for non-subscribers. The gist of it is that there is a significant amount of cooperation going on among technical people. We can't reduce our carbon footprint to acceptable levels without CCR, and China is the only place to learn how to do this because they are the country building almost all of the new coal plants.
meanwhile:
In case of apocalypse, Shanghai will have one week of food
In event of EMP from CME or high altitude nuclear, America is nine meals from chaos and three weeks from massive dieoff ... so what else is new? WOW look at the price of crude!
Should be 30 minutes from chaos after EMP. Many would have their plans in place, and go "shopping" instantly. That's the way to survive most emergencies -- have at least some sort of plan in place, and you'll do better than 95% of the populace.
Survive the first winter and your options will improve come spring.
I have a three-month supply of non perishable foods in my small apartment. I also have enough beverages to last for one month plus a new bottle of bleach to make nasty water potable with just two or three drops per quart. Much of my (chlorinated) water is stored in old wine and liquor bottles and also 2 liter soft-drink bottles. I almost never throw away good bottles.
From "Bull Cook and Authentic Historical Recipes and Practices", by George Leonard Herter & Berthe E Herter, Waseca, MN, 1963
In Case of a Hydrogen Bomb Attack You Must Know the Ways of the Wilderness to Survive
...
The first bombs will knock out all gas lines, transportation, and electrical lines and the factories controlling them. Food in your deep freeze will spoil. If the weather is cold, all canned goods will freeze and spoil.
Make the following preparations in general as applied to your particular situation.
a. If the weather is cold, have a wood stove that can be set up in an abandoned house or shelter. Wood is usually available. Coal would not be available.
b. If the weather is cold, have a reserve of lots of blankets.
c. Have a reserve of food consisting of dried beans, dried peas, dried potatoes, dried milk, bacon, canned shortening, sugar, peanut buttter, powered coffee and tea, chocolate, salt, pepper, macaroni, flour and baking powder. Have at least 1000 matches in a waterproof container. In World War II, matches in some countries were $25.00 a box on the black market when available. Keep such things as flour, sugar, salt, dried milk, dried potatoes in 5 gallon milk cans that have press fit covers.
d. Have a small .22 caliber rifle and at least 1000 rounds of ammunition. It will kill small game and birds and can be used to protect your home. Bombings bring looting and the looting is done in most all cases by so-called friends who live near you. This is what happened in World War I and II.
e. Have six number 1 1/2 traps and two twenty foot coils of woven picture frame wire for snares. Have 100 fish hooks in assorted sizes and 200 yards of nylon fishing line in a variety of weights. The above items can supply your family meat, fowl, and fish if properly used.
f. Have a half pint of iodine, a year's supply of laxative and 100 bufferin tablets. If you live in an area where biting flies and mosquitos abound have a year's supply of bug dope and ten yards of bug net.
g. Have 5 one pound cans of tobacco. This is your fortune. If ther is any food or material available that you need, the tobacco will get it for you when money will not.
I already have most of a. through g. Note that to go along with the tobacco it is logical to have a large supply (5000?) cigarette papers. A little hand-rolling machine is also nice to have when one sets out to be a cigarette merchant. Pipes and pipe cleaners are also good. A few boxes of sealed cigars (e.g. Bering Imperials) are good for wealthy customers.
I recommend increasing the hoard of .22 ammo to 5,000 to 10,000 rounds. A .22 cartridge will probably be like money in terms of liquidity. .22 rounds come in boxes of 500, so you need only ten boxes ("bricks") to get up to 5,000 rounds. This is a compact way of storing wealth--far far better than gold.
Toiletries, especially toilet paper, soap, toothpaste, will be high value items. Things related to basic sanitation are often overlooked. A true doomer may keep a supply of broad spectrum antibiotics in the fridge or cool cellar. If human meds aren't available, livestock antibiotics such as Oxytetracycline may save lives in a dire emergency. Good for pneumonia, diptheria, etc. Dose as for swine. This is a "hope for the best-prepare for the worst" item that costs a few dollars, could be worth many times its weight in gold.
I always keep an excellent/up to date first aid kit for humans and our animals as well. Includes a basic surgical kit, lactated ringers, sucher kits, more.
Atop my list of essentials is training/knowledge. Take courses on first aid and CPR, most available at community colleges, red cross and schools. Learn about local edibles, including small game. How many readers here know how to dress and cook a squirrel without spoiling it? Rabbit? Cat?
I know how to trap both rabbits and squirrels and have a couple of appropriate traps. I also know how to make rabbit snares from brass wire. Furthermore, I also know how to skin and butcher small animals. I could also do that with a deer, but one-man butchering and skinning of a deer is a big job. I've eaten cat meat and snake meat--both are fine. Rattlesnakes have a lot of meat on them, and they are dumb and pretty easy to kill. Worms are good meat too, though somewhat gritty.
I have a complete bush pilot's survival kit from Victor Tool Company--nice to have for a bug-out bag.
Back in the 1950s I worried a lot about a Third World War in which Russia and the U.S. would exchange all their H-bombs and A-bombs. For a long, long time I've been reading suvivalist literature. If EMP wipes out all electronics I'd still be fine for at least three months, and possibly more.
Deer's easy. Two trees about 20' apart, 2 pieces of rope and a come-a-long. I would give details, but it's way out of TOD's range.
If you are around farming folks who still use draft animals, a single-tree works admirably for hanging a sizable ruminant. It's amazing how strong the achilles tendons are for putting hooks through and raising the animal with your come-a-long.
I love venison. Deer is truly 'fast food'.
Don, this reminds me of the Bo Diddley lyrics from 'Who do you love'.
I walk 47 miles of barbed wire,
I use a cobra-snake for a necktie,
I got a brand new house on the roadside,
Made from rattlesnake hide,
I got a brand new chimney made on top,
Made out of a human skull,
Now come on take a walk with me, Arlene,
And tell me, who do you love?
Just kidding you know. :-)
e. Traps
Way back I used to have a trap line using leg-hold traps. They are still useful but I switched to Conibear traps (which was bought out by another company but still available - do a Google) a few years ago. They are neat traps that come in three sizes. The biggest ones will take a 60# beaver and actually require a clamping tool to set them. They are "clamping" traps. I've used them both as "head" entrance traps and as leg-hold. I love them.
Here's an example of how they work: Something was getting into a garden area and eating the plants so I set one using peanut butter as the bait (PB is probably the best bait there is). Anyway, a skunk was trapped. The action was so fast that the skunk didn't even have time to spray before it died.
As far as snares go, find snares that are "cam lock." The problem is that animals can work their way out of them. Cam lock traps don't allow the animal to work free but only tighten. There are also attachments (springs) that yank the snare tight when the animal reaches through it. I've taken big stuff with snares.
If you want to trap but don't know squat, buy The Trappers Companion. This book came out in 1946 from Harding Pub. and is still available. It's the first book I bought as a kid. Not many bucks. For a more obscure book look for How to Get Out of the Rat Race and Live on Ten Dollars a Month by Herter and Herter. Lots of good info along with trapping.
Last of all you might look (Google - try buckshot+dvd) for some DVDs by "Buckshot." He had his own site until he got divorced and his wife Linda drove it into the ground. These are down to earth DVDs and worth the money.
Todd
PS And don't forget "Have-a-Heart traps" to take game just to eat.
PSS Look, I don't want to make it sound like I like killing stuff. But sometimes you have to do it. And, if it hits the fan you will.
In case of apocalypse only 1 week of food in Shaghai? I'm not sure we'll be any better off. How long does it take for grocery store inventory to deplete? If trucks are not getting to the stores we'll probably have a week's worth of food available, maybe even less with hoarding.
There is a Spanish proverb that we are only 9 meals from chaos.
If by apocalyspe you mean a nuclear bombing, I read one article a while back that asserted the US was only 3 large cities away from a complete breakdown in the economy and food getting to stores. Those 3 are NY, Chicago and LA, the major connecting hubs.
It's a pretty tenuous situation humankind has progressed into with 7+ billion people. Each woman eats an average of 2800 calories and each man eats 3400 calories 'every day'. Those numbers were much lower only two decades ago. If there are approx. the same number of women as men, then the average calorie intake is 3100 a day x 7 billion = 21.7 trillion calories a day! If anything should occur to upset that ongoing, Sun dependent, massive, integrated, transport dependent system then look out!
Ahh yes; we have the acronyms, the organizations, the flow charts, the powerpointers, the mission statements, the board of directors, staff, website and 'inneractive' widgets. All we need is somewhere to put three tons of CO2 for every ton of coal we pull out. And three times as much coal production considering that a third goes to extraction of CO2 from the exhaust stream and another third will probably go to compressing it into some hole in the ground. So if a coal plant is 30% efficient to begin with...still a carbondioxymoron or CDM.
Where is Ben Franklin when we need him?
Seriously, we could use more witty, party-going, senior statesmen to help pull us all through our NIMBYisms and finger pointing.
Peak Oil Risks Becoming An Apocalyptic Cult
This article gets it all wrong but the very the thing it got so very wrong was this paragraph.
He is referring to this article: But what is "Community"? and the article absolutely does not deconstruct the idea of “community”. In fact it elevates the community above everything else.
The author, Erik Curren, probably got confused because Yevgeny states that in Russian there is no word for “community”. Instead they use “society, union, locality, district, hostel, state, population, residents, communal ownership”, or some other term.
However the final words in the article stress that we must place “community” above everything. But he does not call it “community” he calls it “your people”. And he assumes, correctly, that after the collapse everywhere will look like a third world country.
Ron P.
I, for one, am doomed.
Go out on a weekend and socialize with people. It's an interesting past time.
Yes. It gets especially interesting when you start talking about peak oil, climate change, financial collapse, perpetually rising unemployment, mass extinction events, societal collapse, die off ... unless of course you run into one of those wackos that is desperately looking for someone to talk to about that kind of stuff. Sort of takes the sport out of it. ;)
Whew! Got that out of my system. Happy T Day everyone! "Think light thoughts, think light thoughts, don't disturb the family ..."
Some won't agree, but we try to go out drinking about every month or so. Alcohol is such a wonderful drug when its used for good. I'd be out a lot more but every day after I always tell myself..."that was the last time i'll ever do that".
Linked on Drudge:
http://www.chinadaily.com.cn/china/2010-11/24/content_11599087.htm
China Daily: China, Russia quit dollar
The link isn't working for me, even via Drudge. I posted a while back that the US is being handed its reserve currency hat. Perhaps this is the next step to being shown the door. Inevitable, IMO.
Try the link Notalemming posted yesterday.
Or any one of the thousands of near identical ones posted over the last five years.
I cleared my cache and tried it. Works fine for me.
Greg Jeffers wondered if China might be sending the US a not so subtle message, via North Korea shelling South Korea:
http://americanenergycrisis.blogspot.com/2010/11/north-korea-china-and-u...
I think the US needs to watch out for falling BRICs. Do you think Obama's recent trip to India was partially an effort to break up some BRICs?
If you want a preview of 2013--if we have a Republican president, with the GOP in control of one or both houses of Congress--you probably need to pay attention to Texas, where the GOP is in full control of state government, and from Perry on down, they profess to being determined not to raise taxes to balance the budget. A link to a column from Texas Monthly follows (full article available with free registration):
http://www.texasmonthly.com/preview/2010-12-01/btl
Let There Be Right
For a number of reasons, 2011 and 2012 could be the years for huge cutbacks in state and local government spending, with 2013 being the onset of the draconian cuts in federal spending, but as I said, Texas may be an interesting preview of coming attractions. Of course, what is interesting about the Texas situation is that state spending per capita is already the lowest of the 50 states.
In Illinois, another low tax state(Illinois GOP think it should be lower) Democratic politicians generally
won't raise taxes unless Republicans join them. It's been like that for decades. Quinn, the re-elected governor is advocating an increase in the state income tax from 3% to 4% but that will only raise ~$4 billion against a $14 B deficit. It was the same situation under
Blagojevich(Dem), before him Gov. Ryan(GOP) and Edgar(GOP).
Something has to give?
Pah-lease.
State government is already tiny and the deficits are huge because scared legislators continue to borrow.
I wonder what would happen if they were forbidden to borrow from the private sector?
Better to declare bankruptcy and start clean.
Watch closely. The more they cut, the worse the budget situation in Texas will become. And I'm not just talking state budget. Watch what happens to houselhold budgets as well: food may come down in cost as demand is reduced by involuntary hunger, but insurance costs will rise, as will fees for about everything and anything.
Texas might escape its self-made slippery slope if the TeaParty President decides that the US has to be better prepared for conflict, and decides to spend big time on Texas made jock-straps for every male citizen, or some other similar manifestation of the state security/military Keynesianism so popular with all those who otherwise hate the idea of government.
Which reminds me: I see that 'defence' expenditures are not funded in the future. I guess this means that the Pentagon etc is even more sunk than Social Security.
Forget it Texas. You might as well leave now. Go south. The north is socialist and unsafe for non-heathens.
Texas does have its share of Bomb Factories, so conflict is always a plus with its economy.
Texas is by far the best state in the union. Current temp is 82F in Austin... Come on people. Get there while your legs still work. Oil, open space, jobs galore, oceans, beaches... Leave while you have time.
Yeah, everybody. Go to Texas! Have a great time!
Me, I'll stick to a place where I understand the culture and already have established connections.
But I'll write, promise!
Bob
But, yes, it's a dry heat!
IMO Federal budget deficits are going to rise about as follows:
$1 trillion
$2 trillion next year
$3 trillion year after next
$6 trillion with President Palin and a strongly Republican Congress dictating to the Federal Reserve Board.
Anywhere from $10 trillion to $100 trillion deficits by 2020.
Most of my prediction is based on political factors, and hence a change in the political majority would alter this estimate of mine. Regardless of politics, I think the dollar is going to go the way the Mexican peso has since about 1950.
Of course my projections are only SWAGs.
If that happens, then Americans will really have to learn to live with less... much less... in fact, much much less.
One of the reasons why the United States is a superpower is that it exacts a tribute from every other country in the form of dollar reserves. Though not always openly stated, the U.S. standard of living is directly contingent on the U.S. dollar being the de facto (and through the Bretton Woods system to a large measure, the de jure) world currency. Commodities and goods on the international market place are primarily bought and sold in US dollars which means that every country (with perhaps North Korea excepted) will hold on to a huge cache of greenbacks.
So far, it is in everybody's interest to keep the greenback solvent, viable, and strong. Nevertheless, if America is hell bent to self-destroy the value of its own money, nobody is going to want to keep it on their books anymore. (As dissident rightly pointed out on yesterday's blog.)
My question to many Americans is this: do you honestly think that U.S. wealth (and it is by far the wealthiest country on the face of the planet) is because of hard work and good looks alone? If so, I have a nice bridge in Brooklyn to sell to you. No, it's b/c practically everybody pays you so that, in return, they can continue to have a big market pool upon which to sell goods and services. And as insane as it sounds, the system works in everybody's self-interest since a rising tide raises all boats - so long as American prosperity is big and bad enough to spill over into the rest of the world.
Being the only proverbial 600 lb gorilla on the block gives the U.S. a great deal of leverage. In light of this, issuing worthless pieces of flax tissue is not a sound policy option. It's merely a perverse Alchemist recipe for turning paper (fiat currency) into cold, hard metal (gold and silver, thank you very much).
American power, like it or not, rests on the mystical and magical charm of the almighty dollar. Destroy the dollar and the spell that enchants the world will be broken, forever. Not the rosiest thought on the eve of American Thanksgiving, but perhaps grizzle on which to chew nonetheless. If I was an American I would be damn protective of my dollar.
What is interesting is that weaknesses in the Euro are likely to result in the complete implosion of that currency. Which means that no fiat currency in the world, save the dollar, can even pretend to act as a world reserve currency.
I expect this to result in a continuation of the present zombie like condition for some time, even when the downslope begins.
However, behind the scenes, countries, especially China, are slowly beginning to divest themselves. But it's happening very slowly, because they don't want to simultaneously crash the system.
I still think it makes the most sense for long term minded individuals to steadily accumulate gold and silver, insulating themselves from the depredations of all fiat currencies.
However, to answer your question, it's also the case that the dollar owes its status to the size and strength of the U.S. economy. It's not necessarily the other way around. We have the largest economy and most powerful military in the world, and therefore, the dollar enjoys its status.
This in turn benefits the U.S. economy further, in a self-reinforcing feedback loop. Still, there is evidence that having the world's reserve currency necessarily means inflating it to oblivion, as this is the only way to provide liquidity for the world's economy.
So we may have an even stronger currency if it wasn't the world's reserve currency.
Strange situation.
Precisely!
I suspect this is the rationale behind the latest "quantitative easing."
I would argue, however, that QE1 or QE2 only serve to diminish the life blood of the world economy simply b/c any attempt to inflate the greenback to oblivion further erodes confidence in the whole system - and confidence is what makes it work. The self-reinforcing feedback loop thus kicks in again, except this time to weaken rather than strengthen economic activity among the players. Besides, if the implied desired effect of QE was to weaken the dollar and thus make American goods and services more competitive in the world marketplace, it surely backfired. All it showed instead was the inherent weakness of all other fiat currencies.
At the end of the day, the U.S.A. really is the only 600 lb. gorilla on the block. Which reduces the options for reserve money to either the greenback or metal - gold being the likely alternative.
Returning to a gold standard may prove to be the last surrender of BAU. Nixon's little experiment with unhitching the dollar and gold has had a good long run. After forty years - a generation - perhaps it's time to rethink the policy anyway.
In one sense, given the dollar's position as the international reserve currency, when the Fed prints a bunch of money through QE it is acting to supply the whole world with enough cash, not just the US economy. Looked at this way, the amount of dollars created is not all that awesome.
Does this make sense to anyone?
ET, the numbers sure don't look as intimidating when spread over 6 billion global residents as to when they are applied to 300 million or so American citizens only.
QE1 (2009) - at $2 trillion = $333 per man, woman and child on earth
QE2 (2010) - at $6 billion = $100 per man, woman and child on earth
If I'm reading this right, all is fine and good, as long as American taxpayers don't get stuck with the entire bill. It's a leap of faith to go this route b/c it assumes BAU and the on-going international purchase of US dollars. If the merry-go-round ever stopped, Americans would be a heck of a lot poorer than what they are now. That's why it's in everyone's interest to keep this going for as long as it can.
To me a country's currency is its book value per share
(Assets-Liabilities)/ dollars outstanding
With Assets going down (home values and property plant, equipment) , liabilities going up, and shares increasing, how does one increase its currency?
Thank you, FF, for a rather concise definition of fiat currency.
Fiat currencies are relational to one another. The US greenback can be strong abroad even with dire economic news at home b/c the news elsewhere is even more dire.
Once again, it's part of a feedback loop. A rising tide raises all boats; conversely, a retreating tide lowers all boats. As American prosperity tends to spill into the wider world, so too does its poverty. It's the direct result of the U.S.A.'s role as economic engine (read, consumer) to the world.
How does one increase its currency? I would argue from an US perspective by doing nothing. As noted elsewhere, inflating the dollar to jump start economic activity is a sure-fired way to slide the whole apparatus downward. Right now, most of the world's currencies are anemic. What would benefit them most would be a strong dollar. Since the US government seems intent on weakening the dollar, then the other currencies get even more anemic. A weakened dollar, therefore, becomes a paradox: it gains strength by being the unwanted gift that keeps on giving.
The republican House is already 'in irons' as the 'austerity' experiment in the Eurozone turns out to be a complete failure. Instead of promoting 'fiscal rectitude' it has massively increased deficits in all countries embracing it with Greece's expanding from 15% to a whopping 32% in a year.
http://news.xinhuanet.com/english2010/world/2010-11/15/c_13608057.htm
The new republicans will be held to the standard of increasing growth dramatically. If they cannot find the 'magic formula' they will be rejected as were democrats in the recent past election.
Next year the terms 'Peak' and 'Oil' will together become part of the public dialog. What will happen when peak oil's effects arrive?
If the past is prologue business activity will decline sharply and unemployment will increase. A rise to 20% is not out of the question. A decline in US business will accompany hyper- inflation in China which will reduce the demand for goods in that country. Hyperinflation is a form of default and China's variety is the result of massive, unsupportable real estate speculation. (This hyper- inflation is already underway). While many analysts suggest and deflating property bubble, the fact that speculators are members of China's political elite indicates they will be 'bailed out' at the expense of ordinary citizens whose savings will be vaporized.
Both peak oil and China hyperinflation indicate a double dip recession. Obama will be blamed, of course. Gasoline will be rationed. Shortages will be permanent.
If possible, get rid of the car and buy a bike. There will be many fewer cars on the road and biking will be safer. TIP: tires of all kinds will be scarce, buy plenty and get tubes, too.
As in most recessions demand will plummet along with prices. Many goods will be cheap but people will not have any money. They won't be able to afford even cheapest prices. Food stamps will be a form of money along with various 'coupons' that people will trade for goods and whatnot.
People will stop paying mortgages and will squat instead in vacant buildings. A large percentage of peoples' incomes will go toward basics such as food and clothing, particularly in cities. Food transport will be difficult for the first year but afterwards entrepreneurs will use 'unorthodox' means such as sailboats and barges to bring food to cities from newly- organized farms and farm communities.
Shoes and socks will be hard to get along with knitted goods. There are currently very few companies making clothes, particularly durable wool or linen clothes in America. A good business to start will be making well- fitting clothes and shoes. Buy extras now as there may be a long period before these items are available.
Dollars will be very scarce. Business will slow and forms dependent on fuel will cease altogether. Airplanes will be novelties as they were in the 1920's and 30's. The first peak oil year will be an adventure to many but by the fourth and fifth year the majority will be desperate and discouraged.
Many banks will fail but not all. There will be few computers and no internet. Old- fashioned rotary phones will be treasures until entrepreneurs start making newer versions. Like all finance crisis, people will adapt, the difference is that the deflation will not end until fuel use is reduced by a staggering amount. A good government will make this a game that some intrepid folks can win. A new economy that rewards thrift and conservation will emerge from the ruin of the current, waste- based version.
*****
Remember, your great- grandparents thrived in a country without oil or conveniences. They had other assets and could claim something we gadget addicts cannot ... a real civilization. They had great music, great beer, good food and many lived in nice houses. They had stable communities - which we don't have, they had a wide range of skills and abilities - which we don't have, they weren't afraid of hard work - which we are terrified of, they had less expectations of a utopian future - which is spam we have been spoon- fed for 60 years.
They read the bible and expected rewards in the hereafter ...
I have spent time in S. America and 3d world countries and I can say by experience that most of the people I have met there are friendly and generous. Violence and selfishness is not a good survival strategy for poor people. Where there are criminal gangs and drug dealers there is violence but this on the whole is an import from the USA.
Good things to have is sense of humor and willingness to help. Water is good to have. Flashlights and batteries are good to have. There will be fuel for a long time to come but not 50- 70 gallons a week as has been the case for decades. Americans will be rationed, I suspect most licensed drivers will be entitled to 3 or 4 gallons per week @ $10/gallon. This ration will be a form of money that will allow many to live in comfort. Some people will pay any price to drive. Let them do so!
There will be intermittent shortages of many goods. Have toilet paper and parts to fix the toilet. These are cheap and twenty dollars now will give you the parts to fix your toilet for a lifetime.
Go or stay: for suburbanites this will be a hard choice. Office and retail jobs will vanish, 'handi- person' jobs will arrive. Hispanic immigrants will be tough competition with office- bound softies. Get a shovel, learn to dig. Suburbanites who stay will be able to farm the land left by others. Anything less than 10 acres is not efficient. There will be 'ag coops' to buy the community tractor and the allotment of diesel to run it. Suburban exiles will go to the city and squat in vacant office buildings. Some will salvage but the most will labor. After the Tea Party flirtation a new government will institute work programs and hire folk to build streetcar systems, rail systems and demolish ruined buildings.
America has a lot of good land and talented farm folk aren't far off. This is not the case in many countries. Industrial ag will not last long but will survive for a few years post- peak. Countries that will suffer will be in Asia and Africa. Fortunately, there will be little teevee and few newspapers. Most won't care about problems overseas as they will be preoccupied with adjusting themselves.
In fifty years the waters will have risen and much of what is USA will be unrecognizable. The human population will be greatly reduced, probably much less than 500 million. This remainder will be chastened and humbled by hubris and catastrophe. Life in the next century ... who knows? I can't see that far. Maybe the human science experiment will fail altogether.
Jeez, Steve. Waxing a bit Nostradomic tonight.
"Violence and selfishness is not a good survival strategy for poor people."
This is a lesson I hope folks learn quickly.
ROFLMRBOOI
(Rolling on floor laughing my rational brain out on it)
Did you ever stop to think that those people whose grandparent(s) did not thrive, don't even exist?
[ i.mage.+]
typically, there's more to the story than what the war machine wants you to realize.
http://www.youtube.com/watch?v=O33sfN00oDk&feature=player_embedded
I can't find any confirmation of that. The source you have is Russia Today and the presentation shows clear anti-Western bias. They don't show any South Korean official stating that they fired first so I'm filing this under "Rumour".
This is only about a million barrels per day through this pipeline (ultimately), but it is an interesting mental exercise to think about how it will be priced, given Russia's history with pipeline operation
http://www.bloomberg.com/news/2010-08-29/russia-will-boost-oil-exports-t...
The article suggests that they will use their own currencies for all trade, not just oil. I agree, as others have suggested, that other major players have grown tired of being beholden to the Fed and the results of its largely US centric policies.
Is this a test to determine how much (or little) they are dependent on US currency to conduct major trade, or an indication that the decision has been made?
Durden says "don't worry about it", yet:
Shouldn't this be bad news for the US dollar? I can't understand how it could be viewed any other way?
edit: OK ...that is the rub...they own so much US debt that by devaluing it, they screw themselves...
From zerohedge: Much Ado About Nothing: China, Russia Drop Dollar In Bilateral Trade
Everything always begins with testing.
Yeah, the same Drudge that has been increasingly linking to Alex Jones.
RE: Frontline Says Oil Tankers Still Vulnerable as New Tonnage Enters Market
So VLCC tanker rates have been unprofitable for most of 2010 and they are increasing the amount of storage by 27% over the next two years. I wonder what the crude shipping companies think of the latest IEA report. They have to feel mislead, don't they.
Now, I could make the argument that crude oil and product supply will increase because the amount of shipping storage is increasing. But, I won't because corporations and governments do not necessarily make intelligent decisions.
Tankers are a bit like pipelines. The "flow" in barrels per day is a function of the size of the ships and the time required to transit the distance between ports. If the distance increases for a fixed fleet, the rate of flow declines. It's a long way from West Africa to China or Venezuela to China, thus, as the available flow from the Persian Gulf begins to decline, the number of tankers required to deliver the same net "flow" to China might of necessity increase...
E. Swanson
I like that analogy. But there is currently an oversupply of vessels with a 27% increase over the next two years and we are facing declining global net exports (implicitly stated by the IEA {grin}).
China imports most of the W. African oil from Angola where the production has plateaued and ELM should be in full effect. China could lose their foothold in Venezuela just like the IOCs. China is closer to the Persian Gulf so increased imports from there would reduce the distances.
INTERVIEW-UPDATE 1-Iran's NITC storing crude on 2 tankers at sea
Germans devise co generation system that heats your house with waste heat as it supplies home current and charges your electric vehicle. This may be the silver bullet for the United States.
It takes the load of charging electric vehicles off the grid and uses our surplus of natural gas without creating a natural gas vehicle infrastructure. Then as natural gas depletes a switch to other forms of electric power like wind would not require replacing obsolete natural gas vehicles.
http://www.thetruthaboutcars.com/2010/11/home-invaders-volkswagen-turns-...
The neat thing about this is that the unit sounds powerful enough to charge/power several electric vehicles/homes. So a family or a group that had electric vehicles would not need to each buy one.
It appears only one home or apartment complex would get the heat co generation benefit. The others would have to use electric heating/cooling devices to capture the surplus power output of the generator.
One of the advantages of this type of distributed generation using natural gas is the removal of the transmission losses involved in centralized generation. A cubic foot of natural gas has the same energy content at the wellhead as it does at the point of use, minus the energy used to process it and move it through the distribution system. The same cannot be said for a KW of electrical energy at the generator and at the distant point of use.
My gut tells me that these transportation losses will be greater than the line losses over a similar distance. I'm sure one of the many engineers reading this could straighten us out.
Alan from the islands
Regarding transmission losses:
I attended the Future Energy Conference in Seattle two weeks ago and had the opportunity to ask Lee Hall about transmission and other losses between generation and consumption. (Lee is the Smart Grid Program Manager at the Bonneville Power Administration.) According to him, actual 'transmission losses' are often in the single digits and are weather dependent. It is when you add losses throughout the delivery system, including at substations that you get total losses upwards of 30%.
Think about that for a minute. More than one fourth of the power generated in a hydroelectric dam in the Pacific Northwest is 'lost' before it gets to the consumer. For every 3 gigawatts we consume, 4 gigawatts need to be generated. This has important implications. Cut your personal consumption of electricity by 1/3 and you cut the amount generated for you by 1/2. Want to cut Chinese coal burning by 10%? Improve the efficiency of their electrical use by 7%.
That leads me to the conclusion that reducing electrical power consumption should be at the absolute top of our priority list. Hats off to HereinHalifax for his efforts in this arena.
Reducing consumption is the cheapest, easiest, fastest and smartest thing we can do.
One of the biggest barriers to implementing this is the fact that most privately owned power companies can only increase revenue by increasing sales. The phrase 'decoupling' was heard many times at the conference. This refers to the 'decoupling' of revenues from sales. A bizarre concept in a capitalist society. There is a lot of discussion in power circles about how to move toward a 'fee for service' model where users would pay a higher base fee per household regardless of how little electricity they used. It is only with this guaranteed revenue stream, the utilities insist, that they can move forward with large scale efficiency projects that will ultimately reduce sales of their product.
Interesting ideas that will require significant changes in the legal and business framework of how we in the US and Canada provide electrical power to consumers. I should end by noting that publicly owned Seattle City Light's energy conservation program is one of the oldest and most progressive in the nation.
Best Hopes for reduced consumption this holiday season.
Jon
That's nonsense - at least for the UK. I have heard that 30% figure quoted before by someone who should have known better.
http://en.wikipedia.org/wiki/National_Grid_%28UK%29#Losses
Checking US data According to the IEA US Grid losses amounted to 5.6% in 2008.
If we stretch the definition of losses to include all electricity used by the industry itself (including pumped storage inputs) then US total "loss" is still only about 13%
Undertow,
Normally, I place a lot of faith in the the information available from Wikipedia. In this case, however, references [6] and [7] are broken links so I have no way of evaluating those numbers.
Is there anyone else on this forum, BC_EE perhaps, who could comment on total distribution losses to low voltage users in a typical power system?
Yeh, I noticed the link was broken so edited in a working link for the US but probably you didn't see it.
US data http://iea.org/stats/electricitydata.asp?COUNTRY_CODE=US
UK http://iea.org/stats/electricitydata.asp?COUNTRY_CODE=GB
I've looked into this before so I didn't immediately double check the Wikipedia links as I knew the figures were about right.
Thanks for those links.
Energy efficiency, part 4
Posted by Joseph Romm (Guest Contributor) at 5:06 PM on 30 Jul 2008
California and its utilities have achieved remarkably consistent energy efficiency gains for three decades. How did they do it?
In part, a smart California Energy Commission has promoted strong building standards and the aggressive deployment of energy-efficient technologies and strategies -- and has done so with support of both Democratic and Republican leadership over three decades. I talked to California energy commissioner Art Rosenfeld -- a former DOE colleague and the godfather of energy efficiency -- about what the state does, and here are some interesting details he offered, as discussed in "Why we never need to build another polluting power plant":
Many of the strategies are obvious: better insulation, energy-efficient lighting, heating and cooling. But some of the strategies were unexpected. The state found that the average residential air duct leaked 20 to 30 percent of the heated and cooled air it carried. It then required leakage rates below 6 percent, and every seventh new house is inspected. The state found that in outdoor lighting for parking lots and streets, about 15 percent of the light was directed up, illuminating nothing but the sky. The state required new outdoor lighting to cut that to below 6 percent. Flat roofs on commercial buildings must be white, which reflects the sunlight and keeps the buildings cooler, reducing air-conditioning energy demands. The state subsidized high-efficiency LED traffic lights for cities that lacked the money, ultimately converting the entire state.
California adopted regulations so that utility company profits are not tied to how much electricity they sell. This is called "decoupling." It also allowed utilities to take a share of any energy savings they help consumers and businesses achieve. The bottom line is that California utilities can make money when their customers save money. That puts energy-efficiency investments on the same competitive playing field as generation from new power plants.
If you really want the specific strategies that California utilites use to save energy, here are the "approved program implementation plans" for 2006-2008 from one of the state's largest utilities, Southern California Edison.
The cost of efficiency programs has averaged 2 to 3 cents per avoided kilowatt hour, which is about one-fifth the cost of electricity generated from new nuclear, coal, and natural gas-fired plants. And, of course, energy efficiency does not require new power lines and does not generate greenhouse-gas emissions or long-lived radioactive waste. While California is far more efficient than the rest of the country, the state still thinks that with an even more aggressive effort, it can achieve as much additional electricity savings by 2020 as it has in the past three decades.
The energy-efficiency resource is enormous, and it is as limitless.
It is time to stop building polluting power plants.
http://gristmill.grist.org/story/2008/7/30/122051/313
That % of air loss is stunning and suggests a quick money back for many people world wide. Rather than every 7th house maybe they should roll a d8 to avoid manipulation or is it already randomised?
I've commented on white roofs (makes a BIG difference) and LED traffic lights (you can also see them in full sun - yippee). As for street lighting they had a campaign of changing the sodium 'light up the sky with orange' lights for some sort of fluorescent down only fixture. It seems the program has stalled but they did manage to do a lot of them around here. They are GREAT!!!! the light is where you need it, on the street, and the contrast is way better. The big one though, is that the light is not in your eyes. Although I like dark skies and not wasting light by lighting the sky the big advantage is that you do not have each and every street light shining straight in your eyes. If they want to change the lights in your area go for it.
NAOM
Thanks, Jon, for your kind words; much appreciated. Total system losses for Nova Scotia Power in 2009 are reported to be 7.0 per cent of NSR (net system requirement).
Page 79, http://www.nspower.ca/site-nsp/media/nspower/SRCombinedREDACTED.pdf
Note that these loses vary considerably by customer class; e.g., as you can appreciate, large industrial clients do not incur the same distribution losses as residential customers (or none at all if they're connected directly to the transmission network, which in some parts of the province operates at 69 kV).
For a break-out by customer class, see: Exhibit 9A, page 51, ibid.
BTW, when I was a young pup, Seattle City Light was a "beacon of hope" for those of us who believed there had to be a better way. Hats off to them for showing us the way.
A safe and happy Thanksgiving to all our American friends.
Cheers,
Paul
I thought you were a professor or something, but you got the math entirely wrong. Regardless of the transmission losses, if I cut my use by X%, I cut the amount generated for me by the same X%.
Yes the absolute amount generated for me is greater than my nominal number, but by the same factor on either side of the equation.
Duh! Thanks for catching that. I had a brain freeze switching from amounts (gigawatts) to relative amounts.
Best Hopes for checking your figures before posting!
It is the holidays, I'll assume that either or both, you had a stiff drink, or your mind was on other things.....
It depends on the state of repair of the pipelines and distribution systems, but the industry as a whole probably loses 1 to 2% of the gas as leakage, and the gas needed to run the pumps pressurizing the pipelines to about 1000 psi causes "shrinkage" of 1% every 200 - 400 miles.
So both gas and electricity lose a few percent in distribution.
The trouble with that 1 to 2% leakage is that a lot of natural gas is consumed in the world and it is mostly methane, which over a 20 year timescale, has 72 times more global warming potential than C02 ... and TPTB thinks moving to natural gas is a good way to carry on with BAU and slow global warming and consequent climate change!
German media, as far as I have read, don't put so much focus on recharging EVs, instead they report features like remote controling of these ICEs by cell phones.
Natural Gas: Worse Than Coal & Diesel in Greenhouse Emissions?
....and the debate continues.
how oh how did the coal lobby figure this one out. coal mining and oil and gas operations both release plenty of methane. my guess is that coal mining releases more. oil and gas operations try to flare any 'waste gas' and that of course releases co2.
Coal seam methane leaks also kill
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10691213
29 people killed.
Think of the amount of waste heat that gets sent into the environment everyday in this country (100+ nukes)... Probably heat entire neighborhoods with that waste heat.
Chalmers Johnson has died.
http://www.nytimes.com/2010/11/24/world/24johnson.html
I've always admired him for his well considered opinion that the U.S. should have scaled back empire in the face of Soviet dissolution.
If we had followed his advice, our situation would have been so much better than it is.
Why weren't there more like him? Or were they all overwhelmed in the face of the machine that is the U.S. military complex?
I have Blowback on my bookshelf.
Clearly, if you don't buy into the whole imperial fantasy, you won't be considered to be a "serious person", and you won't be invited to join the Council on Foreign Relations.
Summary of Weekly Petroleum Data for the Week Ending November 19, 2010 [PDF]
WTI jumped about 70 cents on the news. Despite increasing imports by 1.2mb/day total petroleum inventories still dropped very slightly. That's 4 weeks in a row. Will this week's import jump be sustained next week? Traders immediate reaction seems to suggest it will not and the US will have to bid for more oil.
This week, imports from Mexico increased by 860,000 b/d: http://www.eia.gov/dnav/pet/pet_move_wimpc_s1_w.htm
Mexico's Pemex Crude Output Figures Down Briefly On Bad Weather
Arrived this week?
So 1.7 million bpd was imported from Mexico last week. That's not sustainable and must have been met from stocks as well as some of that delivery temporarily held back. The 4 week recent average has been about 1.1 mb/day so without that boost from Mexico, total petroleum stocks would have fallen by about 4.5 million barrels. No wonder crude is shooting up.
On the flip side...maybe the drop in imports this fall was due to the bad weather in Mexico? They've closed their oil ports due to bad weather a lot this fall.
In 2009, US Crude imports from Mexico averaged 1.1 million barrels per day. Mexico crude exports to the US peaked in 2004 at 1.6 mb/day. Although there are signs Mexico has been able to slow the export decline for now even if they can hold to 1.1 mb/day on average for the next few months that still leaves the US short by about 600 thousand barrels per day that will have to be found somewhere (if demand holds up).
Edit: Interestingly annual crude imports from Russia peaked (so far...) last year at 230 kbpd (averaged over the year) and that was up from 116 kbpd in 2008. In June 2010 crude imports were running at 416 kbpd. The latest 4-week average is 112 kbpd.
The ability of Russia to boost crude supplies to the US in 2009 is probably due only to recession induced demand contraction in Russia. As Russian demand picks up it seems unlikely the US can obtain much more oil from Russia.
They're back – that is diesel spot shortages.
This kind of snuck up on us, even here at TOD – I recently said not to expect any diesel and gasoline shortages until 2011.
[Sorry I searched in vain for web links to these news articles, but there are no links yet available]
Actually today’s oil inventory report only indicates very low supplies of both gasoline and diesel in the Midwest, but not low enough to trigger a shortage. The pipeline problems I mentioned yesterday are probably the immediate cause.
The other posts above basically also sum up my general view of this week’s report: we were bailed out by an increase in oil imports from Mexico. Looking further ahead, shipping reports do not indicate that Mideast OPEC exporters have increased exports to North America much, if any, in recent weeks. In the two articles about offshore oil storage above, we don’t see much hope for more oil imports from floating storage.
I also found a very good report on the current gasoline situation, and why we saw a rise in Northeast US gasoline prices about 10 cents/gallon faster than the rest of the country in recent weeks.
http://www.reuters.com/article/idUSN2420657020101124
Mexico is having issues with attacks and kidnappings at oil facilities. I doubt if they will state if that is having an impact on production or the extent to which it is happening but I cannot see that it is helping. Maybe the figures are affected by this?
NAOM
NAOM - This could be complete BS (heard during a coversation over drinks): the expat service hands are the high value targets these days. So there's been a battle between the service companies and PEMEX over security. The scuttlebutt: the service companies have/are about to contract groups such as Blackwater for security. I would imagine the offical Mexican govt response would be outrage. But unofficially PEMEX is trying to get permission to allow certain expat operators to start investing/managing projects for PEMEX. Though that technically violates the Mex. constitution they think they've found some wiggle room. Obviously such ops would be an even higher value target.
I've got some inquires out about expat insurance rates in Mexico but you can imagine how closed mouth the players are.
Interesting, thanks. I wouldn't be surprised if there are some 'foreign workers' who don't seem to do much at the plant and have rather 'handy' skills. I would expect them to be ignored unless they made themselves too obvious. A few of the bad lads turning up at the side of the road would just be put down to having trod on another gang's toes.
NAOM
Aggrieved Fliers Ask, ‘What Now?’
This sounds to me like the beginning of the deconstruction of the air travel industry. Look for more features coming your way as we head down the other side. At least in Europe, (high speed) rail transport provides a somewhat acceptable alternative. I guess unless some major changes happen very fast, when it's all over most North Americans will just have to do a lot less long distance travel.
I experienced a couple of these cut rate flights over the weekend. Very tight operations with very quick turnarounds at the airports. For the relatively short flight from Jamaica to South Florida, I expect I'll be sing them a lot more, at least until even "low cost" flights get too expensive.
Alan from the islands
2 hrs, 40 minutes, SF -> LA; Downtown SF or mid Peninsula to the end of the runway of SFO... 2 hrs.
http://en.wikipedia.org/wiki/California_High-Speed_Rail
http://www.cahighspeedrail.ca.gov/project_vision.aspx
=
The expedited timeline comes as the authority banked a $2.25 billion stimulus
grant Thursday, allowing it to unlock voter-approved Proposition 1A money that
brings the prize to $4.5 billion. They expect to get more federal money in
coming congressional budgets and leverage the funds for untold billions in
private investments.
Initial work would involve digging and moving underground electrical wires to
make way for track foundation, said Diridon, a Bay Area representative. At that
time crews could also begin work on some of the previously designed and approved
rail bridges, called grade separations, required in cities such as San Bruno and
San Mateo.
The heavier construction work, including track laying along the Caltrain line,
could begin as soon as late 2011 or early 2012, Diridon said. Another Bay Area
board member, Quentin Kopp, said he estimates the heavy construction in the
region could start in 2012.
The authority must start building the rail system by September 2012 and finish
by September 2017 or it would lose the stimulus money. The $42.6 billion
railroad from San Francisco to Los Angeles would then open for business by 2020,
with a Bay Area-to-Southern California trip expected to take two hours, 40
minutes and cost about $105.
http://groups.yahoo.com/group/BATN/message/43990
==
Dear Friend,
Earlier this month, we passed an important milestone in our fight to bring high-speed rail to California: the groundbreaking for the first HSR station! The new Transbay Terminal will be home to San Francisco's HSR station, and serve as a hub for many other mass transit agencies.
I was honored to attend the groundbreaking ceremony along with many of our distinguished local and HSR Authority leaders to see the beginning of a modern-day Penn Station. Check out the website for the station — don't miss the renderings of the final project!
http://ga6.org/carising/notice-description.tcl?newsletter_id=30227973
I was going to point out that the TSA in its infinite wisdom could decide to require the same level of screening to board a high-speed train (which would be idiotic and pointless, but hey, that hasn't stopped them so far...), but they may never get the chance - just came across this:
GOP House aims to take $2 billion back from California high-speed rail
Trains, That Guy From The Other PartyTM supports them, therefore we must be against them. What a way to run a country (into the ground).
It was our money in the first place. If they piss us off, we'll keep our money at home and their states can go belly up...
California bails us out. It has been bailing out the rest of America since, oh, about 1849 — before it even joined the union.
Californians are so productive that every year they send billions of dollars in surplus dollars to the rest of America. Year after year they have sent vastly more in federal taxes than they ever get back in federal spending.
California isn't our Greece, it's our Germany. It isn't Little Orphan Annie. It's Daddy Warbucks...
The numbers are simply staggering. In the quarter century through 2005 (the most recent year for which we have data), Californians bailed out the rest of America to the tune of about $620 billion in today's dollars. In 2005 alone it came to nearly $50 billion.
http://www.marketwatch.com/story/the-truth-about-california-2010-11-22
It must be a very brittle or marginal project indeed, if shuffling a mere 5% of the funds is enough to kill it outright.
High price oil will kill the airlines. As soon as oil production declines and/or oil is greater than $120/barrel look for airlines to go out of business. Virtual travel, anyone?
The airlines problems are that there have been too many competing airlines and each airline is a high fixed cost, low variable cost business. This leads to over investment in airplanes, etc., and price wars that drive revenues down to cover variable costs without recouping fixed costs, leading to bankruptcies.
The consolidation to fewer carriers, e.g. Continental-United merger, and higher variable costs for fuel help solve these problems for the industry.
The airline industry is likely to become profitable and stay profitable, although somewhat smaller with time.
High-speed rail will compete with short hops, but these are not very profitable segements of the airline business.
TSA is not helping:
http://www.youtube.com/watch?v=QZM4Bpt3xZU&safety_mode=true&persist_safe...
I think the airlines know this and are starting to wean people from airtravel by making it more and more inconvenient or even disgusting.
They are completely dependent on oil, and oil is running out. You can't put batteries on planes and make them electric--the batteries would be too heavy.
Biofuels are about to crash and burn when their subsidies are removed.
I wouldn't rule out dirigible travel, but that is even slower than fast trains.
I gave up flying a few years ago and have not regretted it one bit. I now just stare amazed at the absurd multiple indignities fliers undergo for the privilege of annihilating space and time (not too mention dumping massive quantities of GHG into an already overloaded atmosphere, supporting the terrorist countries that supply us with oil, using up the last of a precious irreplaceable liquid...)
Dohboi-
Add to that the fact that for people who can't afford better tickets, the cheap seats blow. Those really common 737's and A320's are pop cans with seats. You have no leg room whatsoever. There is usually a baby screaming somewhere, people are rude, everyone is sick...some kid gets up to go to the bathroom every 5 minutes so you have to move...oh God...I'll stay home and sit on my couch and watch Rick Steves.
I always imagined cruise lines were screwed, but those ships have got to be pretty efficient when it comes down to it. Maybe that will be the future (they sure haven't stopped building them)? Get your butt to Florida by shoes/bicycle/school bus/train/car and jump on a boat for your vacation. Maybe they'll sail them right up to Minneapolis (smaller ones). I know in Europe they have some long cruises that go quite a distance up into the bowels of Europe :)
A320s and 737s? Luxury!
Around here, only WestJet flies the 737 and they're the biggest planes regularly flying out of YXE. The rest are god-awful regional jets, CRJ and E190s. I'd rather be in a C-172! As someone who is about 6'2 and 280 lbs, I'm very glad I don't fly much any more. Well, that and the increasingly invasive "security" screenings.
Ships in general CAN be quite efficient. But most cruises I've heard of are notoriously IN-efficient (though I would be happy to be proved wrong here).
Airlines have going for them that there is little alternative. If you need to travel intercontinentally, they are by far the most efficient.
Nope, I think your daily commute is going to be hit first. It's better to allocate valuable oil to air travel than it is inefficient trips to work. Its also a bigger pay off to cut through that than to lose all of air travel.
Plus, when you are fractionating the oil, that Jet A1 has to go somewhere.
Link up top: OPEC Says It Won't Necessarily Boost Supplies if Crude Oil Reaches $100
Question: How can speculators cause an oil shortage? Speculators don't use oil, don't really buy oil because they never take delivery on the contracts they trade and of course cannot make delivery either because they don't have any oil. Perhaps he meant that if the price hits $100 a barrel because of speculators bidding the price up then they will not increase production.
So just read between the lines here. If the price does hit $100 a barrel it will automatically be blamed on speculators therefore production by OPEC will not be increased.
Ron P.
And a possible corollary read: 'We are producing as much light sweet crude as we possibly can, and our spare capacity consists of heavy sour that no one will buy at $100/bbl.'
EDIT: Taking this a step further, let's suppose that their highest quality crude has a very low cost basis, coming from fully amortized drilling operations. By contrast, the stuff they are pulling out of the ground now is more recent and both higher cost (new rigs) and lower margin (heavy sour). If a producer in this position put more sour barrels on the market in response to high prices, the best they could hope to do is cannibalize the margins of their premium product to push their lower margin product. It would make almost no sense for a producer to do this.
Seen in this way, statements of OPEC, KSA, et al make sense to me.
And another thought. We have previoulsy scratched our heads over why KSA would plan to build power plants to burn oil. Maybe the oil they intend to burn is so poor it is not worth the trouble to offer for sale in global markets. Admittedly, this is all speculation.
Speculators buy oil just as much as Jet Blue or Southwest when they go into the futures market. They can drive the market up without burning a drop. The observation that they don't really bid up the price because they don't really use the commodity doesn't make a bit of sense to me. If speculators start bidding up futures the price action percolates backward in time to the present.
Look at the market action today. Do you REALLY think it's Southwest Airlines responsible for a $3 jump in the price of oil because the UMich report came out more optimistic than expected?
Would you also claim that bidding up the wheat futures doesn't affect the price of wheat? Speculators can do great damage in the short term by "edge enhancement." They take a trend and accelerate it This causes mini-booms and mini-busts which in turn keep the oil companies and alternative energy people from wanting to commit large sums for future supplies due to price volatility.
I'd take Goldman Sachs and their kindred looters out back and gut shoot the bunch of 'em. They've been gaming the system by encouraging pension funds to hold commodity futures in their portfolios. These are long only bets - most, according to what I've read, can't be effectively shorted. The government for years after the New Deal rigidly limited how much of the market a commodities trader could own with the express purpose of keeping commodity futures focused on the real purpose - to even out fluctuations in price caused by crop failures, etc. Speculators were not allow to own more than a small percentage. Goldman Sachs circumvented that via a series of letters of agreement between it and the FTC starting in the '80s. This allowed GS to create commodity funds that can corner the market.
If you want to know more about this I'd recommend you read "Cornered" by Barry Lynn wherein he'll tell you more than you ever wanted to know about the level of corruption in our present day system and how it originated. Excellent book.
LJR, no one, to my knowledge anyway, has ever said that speculators cannot drive up the price of oil. We have thrashed this same straw over and over and over again going back about five years. Yes, the futures market can be, and often is, responsible for short term swings in the market. But they are never responsible for long term trends. That is impossible if you know anything about the futures market.
The average futures contract is held only a few hours. And the selling of that contract puts just as much downward bias on the market as buying it put upward bias on the market. Every contract has two sides, a long side and a short side.
I have no idea what you are talking about here but you are definitely not talking about the futures market. There is no such thing as a "long only" bet in the commodity futures market. Of course you or anyone else can be long only but someone else must hold the other side, the "short side" of the contract. For every person betting "long only" another person or firm must be "short only".
In the equities market the vast majority of bets are long only. But in the futures market every contract must have two sides! I would suggest you re-read that book by Barry Lynn because you seem totally confused here.
Crude Oil Spot Prices
Notice that only the Oman spot price is cheaper than WTI, the contract traded on the NYMEX. In other words the contract driven up and down by those damn Wall Street speculators is almost the cheapest oil in the world. Those damn speculators are driving the price down, ;-)
Ron P.
Actually, speculators can and do create shortages. This happens frequently during famines when speculators buy and hoard grain as the citizens starve. Why do speculators do this? To make obscene profits.
For more information, try Googling "speculation finance" and "speculation economics".
With all due respect Don, I do not need to google to find out about speculators. I have been a speculator and was once a commodities broker myself.
And yes speculators can cause shortage if they buy and hoard grain! And if speculators could buy and hoard oil then they might create an oil shortage. But they do not! Futures traders, whether it be grain, oil or pork bellies, do not buy and hoard the product. They trade only paper contracts.
Oil futures traders cannot create an actual oil shortage, or grain shortage, or a pork bellies shortage because they never actually buy or sell the actual product. I thought I made that very clear in my original post but perhaps I did not. If I did not make that clear then I apologize.
Ron P.
Ron,
I am sorry to say that speculators are the international scape goats for high oil prices. No amount of logic and prof that this is not possible will make any difference.
Christoph
Speculation accounts for perhaps 10% of the price of oil; I do not believe that speculation in the long-run has much to do with oil prices.
In the long run, oil prices will tend to follow the marginal cost of extracting an extra barrel of oil. Temporarily, oil prices can go considerably above or below this level.
Yes, speculators can easily be responsible for swings that swing 10% above or 10% below the market price of oil. Supply and demand and nothing else determine the long term trend.
Well.... I am really unsure how to respond to that statement. "The marginal cost of extracting an extra barrel of oil. Perhaps. The cost of extracting 90% of the oil is likely between $10 and $20 a barrel. What do you think it cost Saudi to extract a barrel of oil from Ghawar? Probably less than $5 a barrel. And the cost of extracting that extra barrel from the oil sands, or Tupi perhaps? I really don't think it cost anywhere near the $84 a barrel or what WTI closed at today.
No, the price of oil is determined by supply and demand. The average cost of extracting a barrel of oil is probably somewhere around $20 a barrel today. Much lower in some places and much higher in other places, but my wild ass guess would be about $20 a barrel overall. It is my humble opinion that the price of extraction has only a marginal effect on the spot price of crude oil.
Bottom line, the price of oil is determined by supply and demand. That is why the price reached $147 in July o 2008 and $37 a barrel a short time later. The demand was high and the supply was short. Then suddenly the recession hit and the bottom dropped out of demand but not supply. That is exactly why the price dropped so dramatically.
Dammit! My point is stop blaming the speculators. And don't even blame the hedge funds. (Hedge funds are not speculators by any stretch of the imagination. To speculate is a step up the risk/reward ratio and to hedge is a step down the risk/reward ratio.)
Bottom line: The price of oil is determined by supply and demand. That is the way it always has been and barring rationing or price fixing that is the way it always will be.
Ron P.
The way I like to think about it is that speculators can help to convince people to pay higher prices for oil, but somebody actually did pay that price, which means there was enough demand for oil at that price.
Exactly!
Ron P.
Economic theory would tend to support the marginal cost idea but I believe that the reality you aptly describe is primarily different because theory requires a perfectly competitive market and a decision to maximize profit on the part of the producers. OPEC was established to ensure that the market is not competitive. The exact reason for that decision is debatable. They don't want prices too high because a wrecked world economy would change the demand curve which would start the whole process over again. Economic theory would suggest that increases in supply would increase total profit up to the marginal cost of production. Their raison d'etre is to restrict supply. Some believe they don't have a choice because of peak oil.
To say that price will be determined by supply and demand does not mean that the supply offered won't eventually be impacted by marginal cost. One cannot provide oil to market indefinitely at below marginal cost and, therefore, the statement that price follows marginal cost makes sense.
The continuing debate here, of course, is to what extent does OPEC have a choice with respect to total production. Some would even argue that they don't really have a choice.
As far as the speculators go, if they really could move the market, why are they waiting so long this time?
Well no... not exactly. Explanation below.
Really? You mean to say that OPEC is not a competitor? Or that OPEC is not acting in the best interest of OPEC, which is precisely what all other competitors are doing?
The point you are missing is that even if OPEC does restrict supply, what oil that eventually does find its way to the market is still the supply! Supply is still supply whether or not it is manipulated by one of the competitors. And that supply, restricted or not, is still what, when matched up against demand, determines price. And in the absence of rationing or price fixing it cannot possibly be otherwise.
Ron P.
ts - "One cannot provide oil to market indefinitely at below marginal cost". To some degree with the major producers such as the KSA I could agree. But smaller producers, especially in the US, it's not true IMHO. In fact, forget about us not producing below "marginal costs" (not exactly sure if that means production costs or what it costs to develop those reserves). I and many other operators have sold a lot of oil well below what it cost to develop that production. I.E.: taking into account all drilling, completion and production costs a well took $40/bbl to bring on line. If oil is selling for $30 most operators will sell. In fact, as counterintuitive as it sounds, they'll often try to beat even more production out of their wells during low pricing periods. It matters little to the operator or nothing to the buyers what it cost to bring that oil to market: the oil is going to sell at market price that day. An operator's only option is to not sell. Given how critical cash flow is to most companies that option is seldom exercised. Yes: me and a lot of other operators have sold oil/Ng for less than the costs to replace that production if that's what folks mean by marginal costs.
A very good recent example: there is a huge volume of NG that has been sold the last two years from SG wells at prices that don't come close to the develpment costs. Those companies have two choices: cut back their production rates or continuing to produce full out so there's enough cash flow to pay salaries, loan payments and continue drilling ops. Obviously holding out for higher prices doesn't do a company much good if the effort puts them out of business.
I suspect the KSA has similar demands for cash flow. They won't "go out of business", of course, if they reduce cash flow. But much of their cash flow goes towards maintaining political stability. Given the discontent at various levels in the ME it's difficult to imagine the KSA to give up their leveage just to optimize profitability of their remaining reserves. Filing bankrupcy is one thing...a bullet in the back of the head (physically or politically) is another. Just ask Pahlav, the last shah of Iran.
In fact, forget about us not producing below "marginal costs"
Yes, the key factor is not "marginal costs", but "avoidable costs". If you cannot avoid paying the costs you may as well go ahead and produce the oil because the amount of money you are going to lose is the same. In fact you might lose a bit less money.
So, a lot of producers will continue to produce at prices well below their marginal costs - if they can recover their avoidable costs. They will lose their shirts, but their losses will be less than if they stopped producing completely. It's better to lose your shirt than your shirt, pants, and underwear.
A key factor is "sunk costs". Once you have spent it, it's gone, and there's no use in crying over spilled milk. Some people learned this in play school. Other people never learn it.
Rocky - We all know sunk costs. How do you define marginal and avoidable costs?
Gracias
Marginal cost is the cost of producing one more unit of production, e.g. the cost of producing one more barrel of oil or one more Mcf of gas, over and above what is already being produced. So, to use the shale gas example, it is the cost of producing one more Mcf of shale gas. Mathematically, it is the first derivative of total cost with respect to quantity (dC/dQ), which for a mathematically inclined person is much more meaningful.
Market prices are usually determined by marginal costs, rather than average costs. Most people don't understand that. If demand is increasing, it doesn't matter what it costs to produce a barrel of oil in Saudi Arabia, because the marginal barrel will be produced in the Canadian oil sands or the offshore Gulf of Mexico, and that is what will determine the world oil price.
Avoidable costs are costs that will not be incurred if an activity is stopped. For instance, if a company which has a shale gas program decides not to drill any more wells, it is the money that is not spent drilling the wells, less the cost of cancelling the contracts for the drilling rigs, etc. An unavoidable cost is the cost of cancelling the contracts.
I should have said LRMC, Long Range Marginal Cost. LRMC includes an amortization of exploration and development of an oil field or an oil well.
In the long-run you cannot continue operation if price is less than LRMC. Why? Because each extra barrel would cost more to produce than the market price.
In the long-run you cannot continue operation if price is less than LRMC.
Well, you can if you are state-owned oil company. This is actually an argument against state-owned oil companies.
The Canadian experience with Petro-Canada when it was government owned was that it lost some nebulous amount of money variously estimated at between 8 and 16 billion dollars (governments don't favor accurate accounting for boondoggles). However, once it was privatized, it became profitable, increased oil production, and made money for the investors and taxpayers rather than losing it. Canadian oil production continues to rise, taxes remain relatively low, and people continue to have jobs and free health care. Big grins all around except for the proponents of Marxist economic theory.
At this point in time Pemex, the Mexican state-owned oil company, is losing a fortune developing the Chicontepec field to arrest the decline in Mexican oil production. This is an argument for having the Chicontepec field developed by independent oil companies, who would probably spend far less money and contrive to make a profit at it. If Pemex keeps up its current strategy, it could bankrupt the Mexican government.
I completely agree with all your comments about speculators and speculation.
Since there is almost zero hoarding of physical oil, speculators can only influence the markets at best for short periods - possibly up to a few months.
However in my daily life interacting with otherwise intelligent people, some with business and financial degrees, higher prices for energy - and many other things - is almost always blamed on speculation.
Since we have many well educated people that don't even want to consider that energy supplies may become constrained, I envision that US society will be very slow to adapt to the decline of oil.
hoarding ? i dunno, but holding of physical oil such as at cushing,ok and floating storage worldwide, how can that be interpreted as anything other than speculation ?
Strong economic theory says that the long-run price of petroleum will approach the cost of developing and producing an extra barrel of oil.
In the long run, even in an oligopoly or cartel (such as OPEC), the marginal cost and price of the marginal barrel will tend to approach the market price. A cartel can temporarily boost prices by cutting production, as the Saudis have been doing.
Of course, this theory has nothing to do with short-term market fluctuations that are driven by several or many causes. I think most of the daily fluctuation of oil prices is due to speculation and rapidly changing expectations of future oil prices.
Don - I'm sure you understand but perhaps a few don't. There are various sales points for crude. For me all that matters is well head price. That doesn't vary on a weekly basis let alone daily. At the end of a production cycle (when my oil tanks are nearly full) the crude buyers are posting a price for my oil. I either sell at that price or shut my wells in...can't produce if your tanks are full. Very few operators can afford to give up cash flow waiting for a better price. Once the oil is delivered to the initial buyer then the inventory game begins. Obvious this is an even more dynamic situation when you look at floating storage. I couldn't guess how many buyers there might be between me and Cushing (or where ever my oil ends up). At each level there should be a greater potential to hold/liquadate oil on a daily basis.
So while it's interesting to watch the daily supply/demand/inventory game be played out, it doesn't have real impact on the production end of the business. At least for the smaller producers. The majors and NOC's have more options available given the volumes they control.
For the spot price its hard to imagine otherwise. Look on a longer time scale, and expectations of price drive investments in both oil extraction and alternatives.
I'm pretty sure this just happened in China with garlic. They were actually hoarding it causing all kinds of problems. I noticed at the grocery store that the only garlic was from CALIFORNIA of all places...where in the past it use to be always Chinese garlic. Price was a lot more then I remember in the past (I grow my own, so i usually don't need to buy any).
Gilroy, California claims to be the garlic capitol of the world. There are tens or hundreds of thousands of acres planted in garlic in N. California. I used to fly over these fields in my airplane: At 155 m.p.h. airspeed it might take me more than ten minutes to circle around a big garlic-growing group of farms.
Anyway, IMHO, California garlic tastes better than does Chinese garlic. I buy nothing grown or made in China. Consider Chinese honey--a horribly inferior product compared to Calif. or Minnesota honey. Indeed, the only honey I buy is produced within about 125 miles of where I live.
Don-
Hardneck garlic is the easiest crop I grow in my yard. I plant cloves in late October and harvest in early/mid summer. Plant it and forget it. WI/MN could grow huge amounts, should someone take the jump. Organic garlic, locally grown, sells for $8+/lb.
I use garlic/onions everyday in my cooking (I cook a lot).
Grassley tweet asks if colleagues who want sunset for ethanol subsidies are willing to sunset oil and gas tax subsidies:
http://www.dtnprogressivefarmer.com/dtnag/common/link.do;jsessionid=22E9...
This is why he gets re-elected despite his ultra conservative positions on other issues.
Since he is the ranking minority Senator on the Finance Committee, he carries some clout. The oil lobby may think twice if their ox gets gored.
Let's see if the oil lobby can take it as well as dish it out. Oil has something to lose in the ending of ethanol subsidies whether they realize it or not.
Maybe Grassley can wake them up.
End all subsidies and price energy properly. Let the consumer decide. Spend only R&D money in the way of government grants to develop alternative fuels and technologies.
Three Dead After Gas Leak at Oil Refineries Haifa Plant, Israel Police Say
Link up top: Chris Martenson: Economic Implications of IEA's Lowered Oil Estimates
The IEA'a estimates of future oil production from 2004 to 2010. Can you spot the trend? Will the trend continue next year.
The IEA says "conventional oil" production will remain flat from now until 2035. However they have existing fields declining sharply. By 2035, according to their chart, production from existing fields will be less than 30 percent of what it is today. The oil to keep production flat will come from "crude oil fields yet to be developed" and "crude oil fields yet to be found". The lions share of this oil is supposed to come from those vast reserves in the Middle East. In other words OPEC will rescue us with their vast supply of oil which is almost 80 percent of the world's total remaining reserves.
The problem is that OPEC does not have 80 percent of the world's remaining crude oil reserves, they have less than half that amount. Therefore the IEA's yearly estimates of oil production will continue to decline year after year. Well, at least they will be consistent with their revisions, they will continue to be revised downward.
Ron P.
If IEA's revisions follow a linear trend they hit zero by the year 2040.
Irish unveil harshest cuts, tax hikes in history
It seems that the best thing that the Irish could do is to exit the Euro.There would no doubt be some short term pain but they would regain sovereign nation status with control over their own currency.
The rest of the PIIGS would likely follow,whether willingly or no.The EU was a reaction to the disastrous conflicts of the 20th century.It appears that EMU was a step too far and a good example of hubris.
Or perhaps national collapse is the initiating step for disastrous conflicts of the 21st century?
If there is one thing history teaches, is that today's solutions are the birthplace of tomorrow's problems.
Irish frozen out of bond markets or just plain frozen.
http://www.irishtimes.com/newspaper/ireland/2010/1123/1224283932498.html
http://www.fao.org/news/story/en/item/47733/icode/
International community must be aware of possibility of even higher food prices in 2011
17 November 2010, Rome – International food import bills could pass the one trillion dollar mark in 2010 with prices in most commodities up sharply from 2009, FAO said today.
In the latest edition of its Food Outlook report, the agency also issued a warning to the international community to prepare for harder times ahead unless production of major food crops increases significantly in 2011.
Food import bills for the world’s poorest countries are predicted to rise 11 percent in 2010 and by 20 percent for low-income food-deficit countries.
This means, by passing a trillion dollars, the global import food bill will likely rise to a level not seen since food prices peaked at record levels in 2008.
“With the pressure on world prices of most commodities not abating, the international community must remain vigilant against further supply shocks in 2011 and be prepared,” FAO said.
Weather partly to blame
Contrary to earlier predictions, world cereal production is now forecast to contract by two percent rather than to expand by 1.2 percent as anticipated in June. Unexpected supply shortfalls due to unfavourable weather events were responsible for this change in direction, according to the report.
Breaking news, there is a God after all... maybe. Tom DeLay may be going to prison!
Ex-House Leader DeLay Found Guilty in Texas Case
Well, we can only hope.
Ron P.
I'm sure it will be a slap on the hand type punishment. Suspended sentence or a long probation period. Something where he doesn't actually have to do anything. But we can always hope I suppose.
Robbery!
l was robbed at gunpoint today.
At 10:30 this morning l was riding my electric tricycle back from the gym when 2 latino teenagers crossed the street in front of me about 3 blocks from my house. (Mesa, Az)
The skinny one pulled a snub-nose 38 and said he wanted my bike. He had stopped about 15 feet in front of my tric and l was going 15 mph so l ran into him. He went down and l went down pinned under my tric. His partner started to go for my pockets when l pulled out my gun. He yelled and they both took off with my cell phone (which fell out of my shirt pocket). l'm not the sort to shoot someone in the back so they got away.
David A. Douthit
Glad you're OK, that sounds like some scary stuff.
Thank goodness you are ok. Was the robber trying to prepare for peak oil? Bright side, anyone?
I remeber my first business trip to Phoenix (maybe 15years ago), stayed in a hotel on 51st street. Walked to the nearby market, and people told me I shouldn't be out! From what I heard it went downhill after Califonia passed the three strikes law, and gangmembers with two strikes would be shipped to Arizona.
Wow! IS this normal activity for that area or something new? Good going on getting out of that in one piece.
Man .. Wow - quick move, Perhaps time to install a
helmet cam.
Do you have a pic or make of the Trike?
Wonder if it was random your were singled out due to the
weirdness or uniqueness factor? What were
you packing? Did the law ring or trace the phone?
Too bad no snow tires in Mesa
"What were you packing?"
A Glock24L (.40 SW with a 6" barrel)
"Wonder if it was random your were singled out due to the
weirdness or uniqueness factor?"
A very quiet street, no traffic, and l looked like an "easy" mark.
This is an unusual event for this neighborhood particularly this time of day.
"Did the law ring or trace the phone?"
They can't "ping" the phone without a "court order".
You are not even allowed to have your own phone "pinged" without a court order. To add insult to injury even if you pay for a "locator service" in your contract you can not use it unless the person with the phone allows you!!
David A. Douthit
The Decline of British Sea Power
Tears as last Harrier jets leave Ark Royal
Time for the Argentinians to take back the Islas Malvinas... errr... I mean the Falkland Islands. No task force to stop them now.
Ironically, it was during the early Thatcher years that an Argentinian junta mistook the Conservative government's policy for downsizing the navy as an admission of weakness. Now it's another Conservative government (albeit in coalition) that is set again to gut Britain's ocean defense.
What has become of the once proud and mighty British navy? Must say it saddens me to see HMS Ark Royal subject to the latest round of austerity:-(
Whenever HMS Ark Royal has been in the port of Halifax, N.S. on N.A.T.O. maneuvers, she always drew the gaze of the crowd. A popular favorite when the fleet was on review. She is one magnificent ship. Bravo Zulu!
And of course, God save the Queen.
The U.S. will follow suit...
The steel an be recycled to make wind turbine towers.
And rails...
"The steel an be recycled to make wind turbine towers.
And rails..."
In China...
Don in Maine
Unfortunately you may be correct.
We in the U.S. made the choice to outsource many of our manufacturing jobs in the name of globalism and comparative advantage.
I understand the idea of comparative advantage, but I also know that people need jobs.
The previously proposed ideas that folks who formerly worked in manufacturing will work in service industries and that the U.S. will always 'stay one step ahead' of the developing countries by innovation and developing new technologies has not played out.
Witness how large the FIRE sector became in the U.S. and how well all that has worked out for us.
Trickle-down,indeed.
Well, Britain doesn't really need aircraft carriers now that it doesn't have an empire. A few guided missile frigates could deal with any modern problem that they might have with obstreperous third world countries.
I never understood why the Argentinians didn't just buy the Falkland Islands from Britain. I'm sure the Thatcher government would have cheerfully handed them over for enough money. And it would have been much cheaper than fighting a war with Britain. A trifling few million pounds sterling and it would have been theirs.
Unfortunately, the Argentinian military dictatorship of the day just didn't think in those terms.
The United States bought Alaska from Russia for $7,200,000, and the Louisiana Purchase (basically the middle of the US) from France for $11,250,000. Argentina could have done the same. Money talks. Why don't dictators listen?