Drumbeat: December 4, 2010

CNPC, Sinopec, Cnooc Sign Venezuela O&G Deals

China's three main state-owned oil companies have strengthened their ties to Venezuela's energy sector, signing six agreements and increasing their investments to a planned $40 billion dollars.

The deals are the latest of a string of multi-billion dollar South American ventures signed by Chinese companies in recent months, aimed at acquiring major chunks of the continent's rich resources and at helping fuel China's economic boom.

Big freeze: Panic buying on petrol, milk, bread

Britain's families were last night urged by the Government not to panic buy as the big freeze brought fears of shortages in bread, milk and petrol and diesel.

Environment Secretary Caroline Spelman insisted there was no problem with food supply.

But even as she spoke, millions around the country were stockpiling staple foods, with supermarkets rationing some products. And petrol suppliers warned of 'critical shortages' as garages began to run out of fuel.

Politics, oil prices put choke hold on fuel assistance programs

Allston-Brighton — Those old enough may recall the fuel and energy crisis of the 1970s and odd-even gas rationing — when only drivers with license plates ending with an odd number purchased gas on odd-numbered days, and even-numbered plates fueled up on even-numbered days.

“As the story goes, today’s federally funded fuel assistance programs like LIHEAP (Low Income Energy Assistance Program) were a response to the energy crisis of the ’70s. I can remember sitting in friends’ cars, waiting in long lines,” said Kathy Tobin, director of Energy Services of Action for Boston Community Development).

Since then, LIHEAP has helped poor Americans stay warm in hard and cold times. The lines are gone, but according to ABCD, people are waiting. And there is a crisis.

Yellowknife gas shortage questions remain

One week after a gas shortage ended in Yellowknife, some residents say they wonder how prepared the city would be in the event of another shortage.

Gas station pumps ran dry in the N.W.T. capital throughout last week, as worried motorists stockpiled gasoline because of a ferry disruption on the Mackenzie River.

Nigeria: Village raid shows dangers in oil delta

OKWAGBE, Nigeria -- As the heavily armed Nigerian soldiers slipped closer to a suspected militant camp in the country's oil-rich southern delta, they were ready for a fight after suffering casualties only days earlier.

They launched a massive attack including aerial bombings that was aimed at finding a wanted militant. Civilians caught in the middle tried to escape with their lives, human rights activists say.

Producers' Group: NY Is Turning Back on New Jobs with Moratorium

The Domestic Energy Producers Alliance (DEPA) voiced concern Friday about a moratorium on hydraulic fracturing approved by the New York State Assembly Monday.

"This is a victory for those who use scare tactics and fear to further an anti-fossil fuels agenda for America, thereby eliminating much-needed jobs and decimating our economy," said Mike Cantrell, DEPA President.

New NY Congressman Plans Pro-Marcellus Caucus

Newly elected Rep. Tom Reed, R-Corning, said Wednesday that he plans to pull together like-minded members of Congress to push for fuller development of the natural gas reserves in the Marcellus Shale.

Only a day after the State Legislature approved a six-month ban on the controversial process of hydraulic fracturing to release the shale's gas, Reed -- in his first media conference call as a congressman--told reporters that the shale has great economic potential.

Towing ship steams to rescue of stricken tanker

ANCHORAGE, Alaska — A disabled cargo container ship carrying thousands of gallons of fuel oil and canola seeds near Alaska's remote Aleutian Islands began moving again on limited engine power late Friday, responders said.

The 738-foot Golden Seas had been drifting toward shore in rough seas.

Report: Peak Oil Happened in 2006

Peak Oil occurred in 2006, the International Energy Agency indicates. Logically, that sentence should have made world press headlines; stock markets should have fallen; and we should have finally responded to the question: "Knowing that this system is completely bust, when are we going to change it?" with the answer: "Now!"

Glam Chicago home hides its 48 rooftop solar panels

In its traditional Chicago neighborhood, Michael Yannell's new courtyard home has a distinctive butterfly-shaped roof that hides its 48 rooftop solar panels from street view.

His gorgeously green abode, designed to produce more energy than it uses, has other nifty design features. It's composed of two wings that are connected by a foyer walkway, entered via a courtyard. One wing has a two-story living, dining and kitchen space and the other has a den, two bathrooms and three bedrooms.

Green Roofs are Starting To Sprout in American Cities

Long a proven technology in Europe, green roofs are becoming increasingly common in U.S. cities, with major initiatives in Chicago, Portland, and Washington, D.C. While initially more expensive than standard coverings, green roofs offer some major environmental — and economic — benefits.

If the expert is insistent he is right, odds are he is wrong

Life would be so much simpler if only we knew just what we'll have to deal with in the future -- the price of oil or housing, the speed and impact of climate change, where terrorists will strike, the strength of the economy, the real scoop on life after death, all these sorts of things.

So what if I told you that there's an expert out there who has the straight goods on what is certain to happen with all this stuff and more. Because I know that a spot-on prediction has been made for each of these issues. I'm 100 per cent sure of it.

There's a catch, of course. In the vast sea of conflicting expert predictions that engulf most aspects of every issue of importance, I have no idea which one of the self-proclaimed seers is the right one -- only that the Law of Averages says at least one must be.

And, having just read the persuasive Future Babble: Why Expert Predictions Fail -and Why We Believe Them Anyway by Dan Gardner, I'm all too aware that if you look at any given prediction, odds are it's wrong. And the more emphatically stated it is, the less likely it is to be right.

Oil Fluctuates Near 25-Month High on U.S. Jobs Report, Decline in Dollar

Crude oil rose to the highest level in 25 months as the dollar tumbled, boosting the appeal of commodities as an alternative investment.

Oil jumped 1.4 percent as the Dollar Index dropped to the lowest level since Nov. 23 after U.S. employers added fewer jobs than forecast in November. The unemployment rate unexpectedly increased. Futures for delivery from 2013 through 2018 fell below the current month’s price.

“The rally is due to a much lower dollar,” said Hamza Khan, an analyst with Schork Group Inc., a consulting company in Villanova, Pennsylvania. “This is not based on fundamentals.”

Marathon seeks to cancel a rig deal

WASHINGTON — Marathon Oil Corp. is moving to cancel its contract to lease one of Noble Corp.'s offshore drilling rigs - joining a list of operators wriggling out of rig rental agreements amid fears that it could take months for deep-water exploration to resume in the Gulf of Mexico.

Petroleum jobs in Gulf may be lost to other industries

While recruiting technical talent is a new worry for national oil companies in the Gulf region, oil producers based in Europe and North America have been grappling with a skills shortage for years.

Universities in those regions have responded, churning out higher numbers of graduates from their petroleum engineering programmes as oil-patch employers offered tempting starting salaries. Not every engineering student was swayed by growing public disdain for companies pumping "dirty" oil and government policies promoting renewable energy.

Oil world is not men's bastion any more

One of the nuts that all science and technology-based industries must crack, says Michelle Valenzuela, a technical specialist at Dow Chemical, is how to recruit more women to fill large human capital gaps, especially in engineering.

CNOOC wins 2 awards at Platts Global Energy Awards

NEW YORK -- China National Offshore Oil Corporation (CNOOC) Ltd took top billing at Thursday's 12th annual Platts Global Energy Awards, winning two awards in the industry's most recognized awards program.

It is the first time ever that a Chinese energy company has won the sought-after Energy Company of the Year and Energy Producer of the Year awards, since the program made its debut 12 years ago.

Iran Accuses UN Agency of Spying

Iran is accusing the U.N. International Atomic Energy Agency of sending spies along with its inspectors to monitor the country's nuclear activities.

Iran state television on Saturday quoted Intelligence Minister Heydar Moslehi as saying the U.N. agency was sending spies from foreign intelligence agencies, and that the agency should be held responsible. He did not elaborate which inspectors were spies, and he gave no further details.

Q&A: Norway has deep oil ties to Texas

Q: Forty years doesn't seem like a lot of time for a country to grow into a top nation for oil-exploration technology. How did Norway do it?

A: We started with a lot of Texans coming to Norway to help us get started. But through this process we've developed our own businesses and our own expertise so that the sea area between Norway and Britain is now the technological hub in the world, leading for so much innovation in offshore drilling. Houston is No. 2.

Obama's attitude toward oil is deeply ideological

The real problem with the White House's attitude toward oil, and energy generally, is how deeply ideological it is. Few presidents have talked a bigger game about pragmatism while pursuing a dogmatic agenda.

Louisiana oyster beds remain empty after BP disaster

Louisiana's oyster beds have not recovered from the US's worst environmental catastrophe, the Deepwater Horizon oil-rig disaster, and some fishermen fear they never will.

Green investment: Spirit of Scottish samurai generates £100m green cash

Japanese technology giant Mitsubishi unveiled a £100 million investment in the Scottish renewables industry yesterday in a move hailed as a "game changing" commitment by First Minister Alex Salmond.

The conglomerate is to establish an engineering centre in Scotland for the research and development of offshore wind technology, as well as acquiring an Edinburgh University spin-off, Artemis Power.

Buffett Helps Create Nuclear Fuel Bank

Spurred by a pledge of $50 million from Warren E. Buffett, the billionaire investor and philanthropist, the board of the International Atomic Energy Agency voted Friday to set up a global nuclear fuel bank that aspiring nations can turn to for reactor fuel instead of making it themselves.

The goal is to reduce the risks of weapons proliferation by providing an alternative to the production of nuclear fuel, which countries can use to power either bombs or reactors. The built-in ambiguity explains the world’s jitters over plants in Iran and North Korea for purifying uranium.

The new bank is seen as creating a global mechanism to aid the lighting of cities and to hinder the means of destroying them.

Mexico's Bimbo to build $200 million wind farm

(Reuters) - Grupo Bimbo, one of the world's biggest breadmakers, will build a $200 million wind farm to supply almost all of the electric power needed for its Mexican operations, the company said on Thursday.

Harkin: Ethanol tax credits could move in omnibus package

Sen. Tom Harkin (D-Iowa) said Thursday that expiring ethanol tax credits he’s battling to extend could hitch a ride on a possible omnibus appropriations package.

“If we have an omnibus, the chances are pretty good we might get that in the omnibus,” Harkin told reporters in the Capitol.

Local gas prices fuel opinions

"Being on a fixed income, it makes me angry," said 74-year old David Grant of Austin. The Army and Marine Corps veteran said, "My Social Security didn't get a boost because they said there was no inflation."

He recalled the days when gasoline was 25 cents a gallon. He placed the blame for today's price squarely on greed.

"This country is so greedy right now," he said.

New locally made electric vehicle getting ready to hit the streets

Is there a Triac in your future? Maybe -- if your conscience has evolved to a deep shade of green and you have $25,000 to spare on a locally manufactured, three-wheeled gasless electric vehicle with a 100-mile range.

Growth can't continue forever in finite world

Our oil-dependent, industrial food production uses yesterday's photosynthesis stored as coal, gas and oil. Since 1859, we have used up a trillion barrels of oil. An estimated trillion remain, but it is much more difficult to extract than the first trillion. This fossil energy accumulated over 400 million years. To grow enough biomass to replace current oil use of 80 million barrels per day and meet other demands for food and fiber would require 30 to 40 additional planets' worth of farmland.

Change is Upon Us, Part 3: Food Security

The bad news about the world’s population is that we are currently on track to reach 9 billion people by 2050. A rising population requires additional resources to service: more food, more water and more energy. Our resources are already very strained.

The good news is that globally, quality of life has been generally improving these past few decades. More people, especially women, are receiving an education, are better fed, and are participating more fully in the workforce, contributing to the economy. This has led directly to a declining birth rate; in the western world, birth rates are often already lower than population replacement levels, which means that the several decades out, we are likely to experience a decline in western populations. If current trends continue, our population is expected to peak between 2040 and 2070, and begin the process of levelling off.

Tehran On 'Smog Holiday' As Dirty Air Keeps Hold

For the third workday in two weeks, Tehran was effectively shut down Thursday because of "unhealthy" pollution levels. Government offices, schools, banks, factories and many other sites were ordered closed to try keep the eye-stinging cloud from growing any worse.

Lake Erie not about to dry up, but warmer water will evaporate faster, study says

See the cycle? Warmer temps leads to more evaporation, which leads to lower lake levels, which leads to warmer temps, which leads to less ice cover, which leads to more evaporation -- and so on.

UN Aims to Revive Climate Change Talks Amid Rift Between Rich-Poor Nations

United Nations envoys today will attempt to revive progress at stalled climate negotiations, issuing a draft of the meeting’s possible conclusion aimed at bridging differences between rich and poor nations

Southern Africa: Region Collectively Gearing Up for REDD

Cancun, Mexico — The Southern African Development Community (SADC) is moving to support its member countries to tap into benefits from the reducing emissions from deforestation and forest degradation (REDD) framework.

A Low Bar in Cancún? Not for U.S., Envoy Declares

Todd Stern, the chief American climate change negotiator, arrived on Friday in the Mexican resort town of Cancún, where the annual two-week United Nations climate extravaganza has been under way since Monday.

He made clear at an afternoon press briefing that the United States was seeking an agreement that addresses all the major issues that make up the current climate change agenda. He said quite emphatically that he was not interested in some sort of face-saving partial deal that makes progress on some questions but kicks the more difficult problems down the road.

Mexican chief hopes Republicans change on climate

CANCUN, Mexico - Mexican President Felipe Calderon says he can understand why U.S. voters in an economic crisis turned to the opposition party, but he hopes the Republicans will eventually accept the need to protect the planet's climate for "new generations."

"I hope they can realize sooner or later how important it is for the future," Calderon said Monday.

World Bank: Cities should step up climate change fight

CANCUN, Mexico — Cities should play a much bigger role in fighting global warming and can act more easily than governments struggling to agree on a UN climate accord, the World Bank said today.

“The 10 biggest cities in the world emit more greenhouse gases than Japan,” Andrew Steer, the World Bank’s special envoy for climate change, told Reuters. He urged reforms including changes to carbon markets to help cities become greener.

As climate talks drag on, more look to tinkering with atmosphere to curb warming

As climate negotiators grew more discouraged in recent months, U.S. and British government bodies urged stepped-up studies of such "geoengineering." The U.N. climate science network decided to assess the options. And a range of new research moved ahead in America and elsewhere.

"The taboo is broken," Paul Crutzen, a Nobel Prize-winning atmospheric scientist, told The Associated Press.

Carbon Auction Yields $16.9 Million for New York

New York made $16.9 million in the latest auction of carbon dioxide credits, held this week under the cap-and-trade system known as Regional Greenhouse Gas Initiative. But it remains to be seen whether the money will go to the energy efficiency programs it is intended for.

WikiLeaks cables reveal how US manipulated climate accord

Hidden behind the save-the-world rhetoric of the global climate change negotiations lies the mucky realpolitik: money and threats buy political support; spying and cyberwarfare are used to seek out leverage.

The US diplomatic cables reveal how the US seeks dirt on nations opposed to its approach to tackling global warming; how financial and other aid is used by countries to gain political backing; how distrust, broken promises and creative accounting dog negotiations; and how the US mounted a secret global diplomatic offensive to overwhelm opposition to the controversial "Copenhagen accord", the unofficial document that emerged from the ruins of the Copenhagen climate change summit in 2009.

Backwardation to the Future!

First it hit in other benchmarks but now backwardation is seen in the NYMEX crude oil futures chain:

Even if the first couple of months are still in a mild contango, the shape of the curve this morning is radically different from anything we've seen in the past several years. Traders appear to be unwilling to make bets on the state of the economy a couple of years out. I can't blame them. With oil up in the front months, demand may come crashing down again in the medium term.

While this switch from contango to backwardation may not seem as exciting as some of the other numbers that make market headlines, I believe it is a very significant marker.

Fasten your seatbelts.


(chart from the Energy Futures databrowser.)

Marker for what?

From Wikipedia:

"A market that is steeply backwardated — i.e., one where there is a very steep premium for material available for immediate delivery — often indicates a perception of a current shortage in the underlying commodity. By the same token, a market that is deeply in contango may indicate a perception of a current supply surplus in the commodity."

Backwardation was the consistent state of affairs in oil delivery prices during the 2007-08 oil price increase.

Marker for what?

I see the futures chain as a snapshot of trader sentiment about the present and the future. A decade ago, I would have had the following interpretations:

  • contango -- traders believe that demand will outpace supply
  • backwardation -- traders believe that more oil will be found and produced

Today, I have a somewhat different intrepretation:

  • contango -- traders believe that demand will outpace supply
  • backwardation -- traders believe that the economy cannot support current prices, demand destruction will ensue

Combined with the crude oil "price evolution" graph I posted recently, I think this means that an annual average price of $100/bbl may indeed form a price ceiling for oil. There can still be spikes above that level, but some sort of demand destruction will take place to bring the price back down.

Having this evidence in both the futures market and the historical data is useful because it narrows down the range of possibilities for the future price of oil. I no longer think that oil will skyrocket in price. Instead, I think $100/bbl oil will continue to squeeze out the non-productive use of oil and send some folks in search of alternatives. It also means that any deep water or tar sands projects that cost more than $80/bbl to produce may never be profitable.

In predicting the future most people spin plausible scenarios some of which pan out and some of which don't. The reason I follow both the historical and futures data is because I'm trying to figure out what the boundaries of the problem are. If we know the boundaries then we can eliminate some scenarios. At the moment I am very suspicious that an annual price of $100/bbl forms an upper boundary and that plausible scenarios should take that into account


Thanks for the explanation. Doesn't seem like a situation that requires seatbelt-fastening, however. :-)

Bloomberg, etc. are reading this as a sign that the economy is going to turn bad again. But does what traders believe matter? Five years ago, oil futures for December 2010 were in the $30-$40 range.

I agree with Jonathan's characterization - and he has a really great chart!

Backwardation is a future's market vote for deflation and perhaps another liquidity squeeze.

Despite all the well- announced 'easing' getting hands on dollars is hard to do. Backwardation along with questions about the money markets are not sanguine.

Keep in mind that BW is highly complex, it involves interest rates on money, open interest on the various contracts, shipping and 'carry' costs, the amount of spare capacity and trader sentiment. It is not easy to tell @ a glance whether the market backwardation is 'meaningful' or not.

Right now I think it is because the world is experiencing extremely high prices (historically) and the markets MAY be considering what is taking place in the crude markets as a 'spike' and a 'mini- bubble'. BW would suggest that prices will decline in the future as was the case when crude was in BW back in the fall of 2008. That was when the Great Crude Oil Price Spike was collapsing.

If the price is driven higher over the next few weeks the probability of a crash increases. The higher the price, the greater the subsequent crash. The higher the price, the greater the resulting economic destruction. The oil trade is simply acknowledging this.

Inflationary assumptions die hard. If backwardation appears in the oil markets it will suggest that the forward purchasing power of oil consumers is collapsing. Since much of the world's purchasing power resides in inflationary hotbeds such as India and China which (presumably) hold large dollar- and foreign currency reserves. Backwardation would be a very strong overall deflationary signal. Can inflation (in one country or area) coexist alongside deflation? The answers are 'yes' and 'irrelevant'. Backwardation in the crude market would indicate that both the money- value of crude and of (Chinese) products derived from crude are falling. It would reinforce the value of currency. Traders are betting that dollars priced in oil will become more valuable.

It also would mean that the emerging countries' consumption would collapse alongside the US's and Eurozone. Backwardation in crude is a very strong deflation/recession alarm. The last time crude futures were 'backward' was in Autumn of 2008.

May be you should read this: http://www.ritholtz.com/blog/2010/11/brodsky-on-gold/
It might change your mind. The part about inflation expectations in the early seventies is especially interesting.

Many fast growing developing countries can afford $90 oil. If the US $ collapses relative to their currencies they might even be able to afford $150 oil. The average consumer in the developing countries is not as leveraged as the average consumer in the developed world. Expensive oil is a problem for an American soccer mom (with mortgage, credit card debt and car loans) who uses it to drive her SUV to Starbucks for a latte. It is a much smaller problem for a trader in the developing world who uses it to carry his goods to the neighboring town in a small fuel efficient truck. This is because unlike the soccer mom he is getting a return on his investment and he is probably not as leveraged.

The CCI commodities index is now very close to its all time high in the summer of 2008. When energy prices to go up (they have lagged other commodities for over a year) the CCI will easily exceed its all time high. This will cause the price of necessities to rise. The consumer will experience price inflation in the face of stagnant or falling wages. This is not a "demand pull" inflation but a "cost push" inflation.

I think your blind spot is that you don't realize that the consumer in the developed world is now directly competing with the consumer in the developing world for essential commodities. The consumer in the developing world can afford expensive commodities because his per capita consumption is a lot lower. It is not a big deal to pay $10 for a gallon of gasoline if you drive a small car for 1000 miles every year and you live with your parents in an apartment that was paid off 30 years ago. Now imagine a billion people who can afford to live like that. How high will they bid up the price of oil?

The bottom line: The upper limit on the price of oil is no longer determined by what the American or EU consumers can afford. When the OECD countries collapsed in 2008-2009, there was no recession in fast growing developing countries; just a slight slowdown. In countries like India, not a single bank collapsed. Essentially what you are witnessing is a rebalancing of the standard of living across the globe.

This may be true to some degree. BW is an indicator not a control.

Inflation as Brodsky suggests is out of the question because the upper bound on currency value per barrel of oil is where demand destruction takes place. A high oil price will trigger demand destruction. It destruction point is now probably close to or even below the current $91 price! This is what backwardation suggests!

The dollar value cannot 'zero out' because the economy would collapse long before the zero point is reached, taking with it the oil price. The upper bound sets the oil value of dollars.

If you don't like dollars the point of demand destruction sets the upper bound oil value of some other currency such as rupiah, yuan or euro.

Dollars are the benchmark because of the worldwide availability of dollars. Most producers accept all currencies, but the benchmark price is in dollars for convenience as well as the wide availability of dollars. The massive dollar float is a virtue. If rupiahs are not available for some reason then dollars will certainly be, if at a steep premium!

Developing countries cannot support high oil prices by themselves. It is volume of oil @ a particular price that matters. Developing countries can theoretically afford a higher price but not @ US volumes. Remove US consumption all else being equal and price collapses along with economies of developing countries. Fuel would become very cheap in these countries but nobody would have any valuable money with which to buy it.

As the world exchange rate mechanism exists currently, most non- dollar countries are basically hedge funds which arbitrage the value of their currencies relative to dollars and 'inputs' or between dollars and exports. Dollar intermediation determines the oil- value of 3d party currencies.

It is this dynamic that is poorly explained by the 'net export' approach. High prices set by massive industrialized demand provide the 'spread' between cost of oil production and return on oil exports. This spread allows fuel exporters to purchase consumption enablers such as cars, aircraft, A/C, refrigerators, desalinization, modern highways and electric grids, etc. Very low oil prices shrink the spread, and leave little other than production expenses and payoffs to elites. Without the consumption enablers and the return to keep them functioning there is declining consumption in fuel exporting countries.

In all countries including the US aggregate demand is what matters. This demand is a form of return on commerce. Unless there is high value commerce with a good return, high prices for commerce inputs cannot be supported. In other words, a high dollar price of oil must be supported by commerce that provides a high dollar return. In developing countries this is done by export mercantilism -- dollar arbitrage -- or by commodity sales to developed countries. Here, 'developed' means China as well as OECD economies.

The only alternative to high dollar return on commerce is finance Ponzi schemes.

Exporting to developed countries provides high dollar returns. Local commerce within developing countries does not. This is especially true where local commerce makes use of 'modernized' transports that are simply more efficient forms of fuel consumption/waste.

Since economic collapse sets the upper bound value, the point where currency value would 'destroyed' by massive 'money printing' lies beyond that upper bound or collapse point. This would be an issue in China which is currently experiencing hyper- inflation except that oil trade to China is paid for with dollar reserves. By trading dollars for fuel the Chinese amplify their hyper- inflation requiring the trade of ever more dollars for more fuel with more inflation at every step, all of this in a vicious, self- reinforcing cycle.

It is this waste- based economic cycle that is actually destroying the Chinese economy and doing so faster than the waste based economy is deflating the US economy! What you describe in your remark is actually taking place in China (and probably India as well) right this minute. The more China pays for oil with dollars the higher the rate of hyper- inflation is in China.

If by some means the establishment should somehow manage to destroy the purchasing power of he dollar the US would cease to be an industrialized country as it would not be able to import crude oil. It's just that simple.


The most likely outcome of the crisis in the US is that people here will be too broke to buy even the cheapest gas.

In developing countries, their commerce is based on selling cheap goods to the US; essentially exporting fuel in the form of these goods to the US subsidized by their workers' low wages. If the US is too poor to afford the fuel itself it is also too poor to afford the fuel that is embedded in exporters' cheap goods. The dollar will become too valuable to be wasted on 'junk'.

Paying more than commerce can afford to drive in circles is no virtue, it is the same waste- based economic venture that is bankrupting America.

wow Steve, this is an amazingly well thought out comment. It's so pleasant to read well reasoned thought that doesn't require links or other secondary sources to buttress itself. One has to suspect you actually know what you're talking about here beyond just reading some internet stuff....

It will be a truly great day when the dollar again becomes too valuable to waste on the Junk it's currently being used on.

Posts like this are why I keep coming back here and checking for signs of life.

The one question I have is re the fundamental nature of money, not in the somewhat trite definitions that are tossed about as truth, like money is debt etc, but on a deeper level, and how those deeper socially arranged agreements on symbols of value/assets/power are going to handle the scenarios you describe, if they even can.

The second question is which country in the developed world will be forced to step out of the dollar/debt game and put itself first, along with its people and future. Iceland was promising but they couldn't quite bring themselves to do it.

My feeling is the first one to do it may be one of the long term winners in this game, even if they have to suffer apparent short term pain to achieve this freedom.

It's sad, really. The 'Niewe Freedom' of Americans and others is to become debt slaves.

That debt system has one massive weakness, and that is the ability of anyone at any time to step away from the bondage and return to real life. No form of slavery has ever been easier to escape, because it is such a purely abstract form. The way every country out there now views acquiring more debt as the solution of present debt based problems is to me merely the first step on the path to escape, when that model begins to fail, some nation out there is going to realize they are no longer benefiting at all from the debt cycle. Maybe the Euro needs to fail first, but that could happen quite soon, it's not like the Euro has any real history or tradition, it's barely a decade old after all.

My initial guess / hope when this all started was that it would be a European nation that would step out first, that's still I think my hope/guess, Southern Europe probably.

Default then full reallocation of the actual social resources, coupled with political changes that ban any future debt slavery, has to be the forward path given the state of finance/commodity circulation you describe so well.

Painful yes. Possible, yes. The time doesn't seem to have arrived quite yet, but I'm waiting. I had some hopes for Iceland, but it will apparently take further degradation of the systems in question before a country can gain the political will/power to extract itself.

But in the USA, it's easy, very easy, on an individual level. Turning off the television is a first good step, that helps clear up the confusion that is sprayed out constantly.

It doesn't even require any particular effort. I grew up without ever using a credit card, didn't even own one til my late 20s, I was raised that way. It's really not hard, you just buy what you can afford/need, and avoid the junk.

As far as 100 a barrel goes not sure thats the correct way to look at it.

Better to look at precentage of income and also how much other countries pay out of pocket for oil products.
Europeans and even Canadians pay substantially more for gasoline than the US. Enough to consider the upper bound
fuzzy at best but certainly much higher than what gasoline would be at 100 a barrel.

Next the demographics in the US vary significantly from Mississippi to Los Angeles. Precentage income spent
on gasoline obviously does also yet per capita usage is surprisingly consistent indeed often higher in the poorer states.

So again no magic number for income except noting that people can and will use a higher percentage of their income for oil products.

Now there is one very interesting part however and it has to do with the amount of income spent on housing as the precentage of income spent on gasoline climbs housing prices drop lower. I.e houses are substantially cheaper in the poorer parts of the country.

I mention this because the one combination you won't see is low relative wages expensive gasoline and expensive housing in a single demographic at least for long.

Rising gasoline prices played a role in popping the extreme housing bubble and they almost certainly will help accelerate the decline in home prices on the back side.

Other than that as far as and the existence of some upper bound for oil prices I don't buy into it. I don't think it exists.

Now linking rising food/oil prices to less income that can be devoted to housing is easy. Sure to some extent you have less income going to other goods and services but realistically housing is the big one and any major shifts in income allocation require a change in how much you spend on housing. Allocation of income to other goods and services is a function of cost of housing and cost of gasoline food. Housing costs are in general the only large variable people have long term control over and they will adjust their housing costs downwards to keep expenditures for good and services and gasoline/food constant.

Perhaps at first you get some belt tightening sure but it does not take long for adjustments in expenditures on housing to allow people to readjust their expenses to compensate for rising fuel/food costs. The rental market is fluid enough and large enough to allow it to adjust rapidly literally within a year or two. Job loss from other pull back in expenditures and foreclosures allow home debtors to adjust albeit at a slow rate.

The net result longer term i.e after a few years is simply falling home prices and still no upper bound on expenditures for oil simply a period where the ability of the consumer to adjust his expenditures on housing lags the rising price of oil.

Obviously as housing prices where peaking and a gasoline prices rising this synergy was at its peak also. It was and extreme.
Now with falling home prices and rising oil prices we are no longer in the same relationship. All thats required is for the natural trend to accelerate as oil prices rise.

Any real maximum in oil price is probably beyond the short term economy and probably tied to overall debt not price based short term economic situations. This of course get into the longer term effect of defaulting on debt esp mortgages when expenses exceed income esp of course if the underlying reason is rising food and energy costs.

But a different problem and even here its relationship to some sort of maximum oil price is hazy at best.

In general it seems that we have plenty of room for people to adjust their expenditures over time to absorb rising food and energy costs the number one adjustment is in expenditures for housing. As long as this adjustment is capable of freeing significant amounts of income to allow people to keep their other expenditures constant then we have no maximum.
Only when housing costs approach some sort of real shelter costs does this no longer work and a real maximum in possible.
We are a long long way from that point.


I think there is a lid on oil prices, and it is being set by KSA. In my opinion, KSA still has about one and a half million barrels per day of excess capacity. If the price of oil goes above $95 a barrel, then I think the Saudis will increase production to bring the price back to their announced target level of $90 a barrel.

Of course, this excess capacity of KSA (assuming it exists) will not last for long. We may have oil price stability during 2011, but in my WAG 2012 will be the year when TSHTF.

The Saudis have been remarkably good during 2009 and 2010 at maintaining their announced target prices, first $75 per barrel and now $90 per barrel.

Well if you want to get into the price stability thing then it can't be the Saudi's and physical crude the supply chain is too long. The price stability had to be done financially if it was done at all.

That does not mean the Saudi are not involved or physical oil is not involved simply that I don't believe a producer can alter his/her production at a rate needed to keep prices in a narrow band with zero financial moves.

If its a mixed situation which seems far more likely then what exactly is the mix ?

Next if you look at the market data there is no indication that someone was trying to prop up prices. At the minimum one would expect that prices would be falling through the floor price fairly often not going towards the upper end of the range.
And you can look deeper into the technical moves they show a clear and fairly obvious systematic attempt to pull prices down not keep them up at least in my interpretation. Other technical analysts are free to chime in with their own opinions.

At the very minimum if you believe this then you should compare with past cases where the price had fallen and started to recover.

Its a big subject and one I think deserves exploration.

Next of course we have plenty of info that indicates a significant amount of crude was stored offshore in 2009/2010 whoever was storing the crude had to also be involved in any attempts at price stability. If we had a swing producer in 2009/2010 it was almost certainly oil stored offshore during the price crash Saudi oil may not be required.

I'm not saying real crude is not involved simply the role the Saudi's would play in the implementation of price control becomes progressively less and less important as you look into the situation.

Indeed I've see no real reason for them to be involved at all outside of making announcements. You don't need to invoke spare capacity on the part of the Saudi's to get the price band. Plenty of other information points towards a different mechanism.

One I've written about in the past and called the oil bank.

Obviously I'm not disputing the fact that prices stayed banded simply suggesting that if you look at the data it looks to me like a classic case of rationing and price controls which as always eventually leads to a shortage condition.

The claim of withdrawing production to support price has zero support in any variable not defined by the Saudi's themselves.

And of course its trivial to discern the truth in time. If it was a case of price controls and rationing then as I said the eventual outcome is real shortages and a ruinous price spike. Its been the model I've been following for a while.

Whats really neat is in private email's as I developed the model over the last few years to get prices constrained till now required substantial SPR releases. There was no other way we could have done it if Saudi's had effectively zero long term spare capacity and storage was acting as a swing producer.

If my model is correct the obviously the entity capable of controlling oil prices in a narrow band can readily be identified.
Its not the Saudi's.


I most respectfully disagree. I think the Saudis are the price leader in a classic oligopoly cartel--and what they say goes for 2009, 2010, and probably 2011.

Time will tell.

Depends on if oil is in surplus or scarcity. Your assuming a surplus I'm assuming the opposite.

As far as the price drop itself goes as the Fed releases more and more data the event was obviously a financial panic deeper than I even realized. Assuming normal market forces across a panic makes no sense.

Assuming a financial panic as the market detected that oil supplies where dropping rapidly however is very sensible.

As a precursor look at what happened in the Saudi stock market that WT keeps posting.

If you pick and choose your 'facts' and ensure they are not tainted by data they eventually leads back to the Saudi's which cannot be verified then you can create a model of a increasingly desperate world thats faced declines for almost ten years and recently found those declines accelerating accelerating.

As you say time will tell. With my model things have pretty much hit the wall now adding in SPR draws was the last desperate event I could come up with and still have a reasonably valid model.

As I've said a few times it fails fast indeed took me a while to decide to include SPR draws as I past the point where I thought it should have failed. In the end it does not buy a lot of time certainly can't get us through 2011.

The only nice thing is now that I'm certain I need to invoke SPR draws to keep my model going I'm also pretty dang sure its basically the last desperate act. It both allows me to be correct and also sets a pretty hard limit on how much longer things can go without blowing up. Still plenty of uncertainty but I can't see us making it very far into 2011. To pin it better we need to watch price action over the next few months.

Assuming that we don't have another economic collapse in the near term I'd argue that even without my model everyone would agree that the Saudi's will have to start increasing production sometime in the first part of 2011.
You don't need my tinfoil hat stuff for that :)

If they obviously can't then the reverse is probably true my crazy tinfoil hat model could well be close to correct.
Even though I had to make it extreme and add hidden SPR draws :)

The one piece of "certain" data that we have is prices. When Saudi announced a $75 price for oil, we had $75 oil for more than a year. Now Saudi has announced a price of $90 for a barrel of oil--and I think we shall see this price (plus or minus a few dollars) for oil through 2011.

That is a prediction on my part.

Time will tell.

whoa....it strikes me that the Saudis have said a certain price is fair and supportable after it is clear that the price is established.
Once the market crosses a price, they suddenly come up with a new price. Have they adjusted their exports to raise or lower the price? It seems they have done more justifying (weak dollar, world economy, etc.) than adjusting. *Maybe* they have temperered price fluctuations, but I haven't seen the evidence.

Anybody have a list of Saudi target prices to superimpose on a graph of real oil price and export volume?

Having previously worked in a trading room of a major Wall Street firm where oil futures were actively traded (albeit more than a few years ago now), my opinion is that the forward futures prices for oil don’t actually tell us very much about the future. They do however tell us much about the present, but even there, short term speculators or perhaps a vested interest like OPEC or the secret US Exchange Stabilization Fund can push prices even in the opposite direction of the forces of supply and demand – the short term being up until a few months.

We may now have entered in late 2010 a long term situation where long term oil demand exceeds long term supply. This is possible because there are still some surplus oil inventories around the world, although the quality and location of these inventories outside of governmental control is open to debate. This leads us finally eventually to a more serious problem – the oil ‘superspike’ – which will likely result when the overshoot of demand over supply that appears to have started eventually runs through whatever surplus supplies are available.

Being that the oil markets and products operate with considerable physical lags (such as shipping oil from the Mideast to the US) , when the world gets to its bottom barrel of inventory over the MOLs (minimum operating levels) there may be a sudden realization that there is no longer enough oil to go around. Then the price will go up, and up, and up, $100, $120, even $150 will not be a price barrier because of the built up momentum in our economic systems.

Granted there will be a negative economic effect at some point, but that will come with considerable delay and not equally to all countries in the world. In fact, oil exporters will enjoy somewhat of a boom at first as oil prices rise.

Predicting just how high oil prices could go in this kind of unstable system will be very difficult – that is if demand now is truly taking down inventories. On the other hand, if I am wrong, and the Saudis have millions of barrels in inventory just sitting in the desert and they truly have the ability to put out more quality oil, well then yes you could see prices move back down again for maybe another year. Right now, there is no indication what so ever that the Saudis are stepping up exports – even though as we speak oil is already close to $90.

I predict that for the year 2011 that the price of oil will stay in the vicinity of $90 per barrel, because that is Saudi Arabia's target price. If demand falls, they can just shut some valves. If demand increases, I think they still have one and a half million barrels per day of excess capacity, and I think that will be enough for 2011.

IMVHO, 2012 is the year TSHTF.

I posted a response to Don but just to let you know I've evoked SPR releases as being absolutely mandatory beyond a shadow of a doubt in maintaining the recent price stability. If my model is correct :)

I had no choice but to add them in. It was the only reason I could have gotten my timing wrong if my model was right.
I did not say much because the implications are obvious.

Anyway I've enjoyed your writings and simply wanted to let you know about that conclusion. In reading your response it seems your on a similar track. So I decided to let you see where I ended up.

Lets all friggin hope the Saudi's have some oil I no longer like the results I'm coming up with.
I really really want to be wrong and I hated adding in significant SPR draws to balance things but I had no choice and
it made everything work perfectly.

Regardless I'm sure if you do the same calculations you will see that surplus oil beyond what we absolutely needed for real emergencies is now gone from the SPR or soon will be. Primarily its the expansion which allowed a drawdown. And we can be pretty sure all offshore storage is drained. This leaves land based storage draw downs.

Finally its would then be up to the Saudi's to really surge if they can or more correctly can for long.
At the minimum it seems we need 1mbd of real production to enter the market over the next few months and stay to stabilize things.

If we do assume the Saudi's have spare production then perhaps they will let storage draw down for three or more months and slowly bleed new production online. We shall see but I can't see more than three months before the Saudi's would have to show real production increases. On the price side perhaps you could say they would wait till prices had entered the 110-120 range before expanding production slowly to pull them down. If my SPR hypothesis is actually correct and the Saudi spare capacity is also correct one would assume that we would steadily slow SPR draws as the Saudi's expanded production. This would keep the price under 100 a barrel.

In any case SPR draws is a friggin crazy idea and it does not seem consistent with Saudi's having much spare capacity at all I'd say they are mutually exclusive as hidden SPR draw are in my opinion the height of desperation. So a combined model is highly unlikely.

So either I'm right and was correct in adding SPR draws to fix my model or I'm 100% wrong and the Saudi's are telling the truth.

Like I said I absolutely hated adding in SPR draws I really wanted to simply say I was wrong however if my model of price controls and rationing is correct I had no real reason to not go ahead and add in the SPR outside of the political implications. If it was and attempt at price controls and rationing then eventually it would end with SPR draws before the policy was abandoned. It makes to much sense to drop it and it was required to get the price stability band out to now or more correctly to Aug-Sept and perhaps Nov. Assuming of course the idea is right to begin with it all depends on how it was/is implemented and what the shortfall was etc etc etc. However if you try and add it in its surprisingly easy to constrain how long it can last. Obviously SPR draws would not happen for a fairly small shortfall and a large one limits how long you can draw too large and its not worth doing and also probably not physically realistic. So your left with a well defined range where if your running a price control/rationing scheme where SPR draws work and make sense.

And to repeat I really really hated doing it however also I think its worth throwing out to people that are interested in the problem. Its certainly and outside the box solution :) Indeed it suggests we might not have a box much longer.

Although I cannot be certain, I do not think there will be any draws on the Strategic Petroleum Reserves (SPR) during 2011.

I think the Saudis are playing hardball.

Thats the beauty of tin foil hat theories :)

Obviously by definition to accomplish the goals of such draws they would have to be hidden.
If they where public then they would not have resulted in price stability.

No more than making the full extent of the scale of the financial crisis and who was supported would have worked.
For the financial intervention to have its desired effect the parties by definition had to remain secret at the time
and preferably forever.

Announcing SPR draws to maintain price stability would have resulted in what exactly ?

And given the charter of the SPR the political implications are far worse than the technical effect of using it to allow a new swing producer to replace the Saudi's.

It obviously means that at the top the US has already effectively undergone a silent coup.
Our democratic machinery has been fully usurped and we no longer have any control.

If so then I'd suggest its no longer about oil but simply a matter of when martial law is declared and the real situation becomes obvious.

Hidden SPR withdraws are in my opinion beyond extreme once you consider the political implications.
Invoking them just to keep a questionable model alive is chilling.

I'd much rather believe what you do I assure you. But my model itself is based of the fact that recent data about the oil supply has been corrupted by people powerful enough to both corrupt the data and also in position to perform secret SPR withdraws. Once you assume that our current data on oil production and storage levels etc has been throughly corrupted then adding in SPR draws on top is not that hard. As I said its the politics that are bothersome not the act itself.

The Saudi's may well be telling the biggest fish stories but the real liar is the US what the Saudi's are doing is irrelevant to be honest. Its what the US is doing that matters. If our own storage levels and production numbers are highly distorted then the US is the critical point not the Saudi's. Obviously we would not go to such extremes if the Saudi's where actually telling the truth. But hopefully you can see its not that the Saudi's are lying that the problem its the US coverup of the lie that eventually causes the real problems.

Indeed you can readily and simply reverse it. If the Saudis are really lying their ass off about their real situation then a high level US cover up makes a lot of sense. Its hard to imagine that they would be lying and the US would not be involved.

So perhaps looking at it from the reverse view point makes a lot more sense. If Saudi production is declining and they don't have any real spare capacity outside of some surge capabilities because of the nature of their fields and the US has said nothing then its very likely we are deeply involved.

I think presenting it this way makes a lot more sense i.e if the Saudi's are lying then its practically certain the US is also lying. If they are not then we are not and effectively all the public data is basically correct with perhaps a bit of hyperbole on reserves. Most importantly the claim of several million barrels of spare capacity is almost certainly the truth.

Or its a web of lies thats going to come crashing down in the near future.
Pretty black and white really.

memmel - Secret SPR draws? Possible perhaps but I wouldn't bet on it staying secret for long. Most of the operation isn't run by govt employees. It's the subs that run the day to day show. I know a few folks that work at the storage facilites and a lot more at the refineries. There would probably be several hundred civilians who would know immediately about a 'secret draw'. Then there would be several hundred bar tenders who would know about it in a day or so. And then many thousands of red neck bar patrons who know about it by the end of the next weekend.

That's one of the reasons I always get a chuckle about stories about oil field conspiracies. I.E.: the three basic forms of communication: telegraph, telephone and teleoilfield hand.

No doubt about that and it would have to be big moves like 10 million barrels or so at a whack.

Can it be pulled off dunno obviously there would have to be some sort of cover story.

The problem is again not what I'm suggesting but the secrecy part.


How and the hell can you hide multi million barrel draw downs week after week ?

Obviously what ever the mechanism given what your saying it would have to be something being done in plain sight esp of the workers.


On Christmas Day 2009, a tanker ship arrived at the Teppco terminal in Freeport, Texas with a special delivery for the SPR - the final 493,000 barrels of crude oil that would take the Reserve to 726.6 million barrels, completing the fill program (actual capacity is 727 million

So we know it was filled but then what how and the hell do you hide pumping out a crap load of oil ?

One more book link.


First and fore most this type of storage is widely used in the area. Basically either oil is pumped in and brine out or brine in and oil out. As far as I can tell the procedure seems highly automated. So first how many people actually need to know the details of some operation happening at the storage site ? I've not really got much further than that. Hiding the fact that something is happening at a given site is I agree impossible.

As far as how its operated this is the law I've not actually read the full text.
Energy Policy and Conservation Act (P.L. 94-163)

Snippets are here...


I also don't know how the SPR rules interact with other national security laws. By that I mean the ability to legally make a secret draw down might be because of the relationship between the SPR rules and other laws not necessarily explicit in the direct SPR rules.

One has to imagine that there is a mechanism for allowing SPR draws without public statement.

But back to emptying literally hundreds of millions of barrels of oil out of the SPR ...

With no one being the wiser.

Obviously no matter how you do it you have to replace oil with brine. So the basic mechanism is to pump in brine and pump out oil. That something that has to happen. Also of course it means the pumps would be running whatever the reason.

Next you need a reason that people would accept is there anything about the storage that could be used to justify some activity.
Indeed there is.


Salt falls have been a persistent problem. And of course we have the recent substantial expansion.

If I was going to hide movement I'd most likely do it as some sort of internal move related to say continued reconditioning of the caverns or testing etc. The expansion had to have caused a significant amount of activity on site even though its supposedly over there could be continued work in progress. It would not be the first time that a major project was announced to be complete while neglecting say a significant amount of finish work or large related project like refurbishment.

My point is there are valid reason that a particular set of caverns might be drawn down. Indeed given the recent expansion all kinds of activity may still be occurring on these sites.

Indeed we find a interesting little tibit in all this..


Title V: Strategic Petroleum Reserve - (Sec. 501) Authorizes the Secretary to drawdown and sell petroleum products from the Strategic Petroleum Reserve (SPR) to construct, purchase, lease, or otherwise acquire additional capacity sufficient to permit filling the SPR to its maximum authorized level.

Requires the Secretary of the Treasury to establish the "SPR Expansion Fund." Requires deposit of sale proceeds from the SPR into the Fund.

Permits the Secretary to obligate amounts in the Fund to implement SPR expansion.

The SPR expansion is tied to a selling oil via a drawdown.

We have activity we have a cover story indeed we have a mandate to allow drawdowns as part of the expansion.
We have a lot of oil moving in and it seems also perhaps out of the reserve.

As far as the final fake out well I can imagine a simple trick to cover the situation. Perhaps all thats needed is for a tanker to offload oil mixed with brine as "oil".



All you would need to do is offload a cargo of "oil" that was really simply brine.

Dual purpose pipelines exist.


Dual-purpose brine and crude oil pipeline - 104 miles of internally-lined 40".

It not clear if subterfuge is really required at all. But if so that one way to get brine in and oil out without being obvious about it. Obviously I'm not and expert at these matters but its clear that moving brine and oil is the norm not the exception.
As long as the activity had a reason no one is going to say much about it as it would be considered normal.
Perhaps its simply a matter of hiding the details of the size of a given operation. My brine trick or more likely a realistic variant conceived by someone who actually knew the piping arrangements.

In fact why not simply assume that allowances where made for "secret" operation in the first place. If I was going to blow that much money on that much oil I'd like to have at least the option for discreet movement of oil. Given its a strategic reserve and semi-military its hard to believe that such and option was not built into the complexes in the first place.
The obvious use case would be supplying the military itself with oil in the event of and internal crisis.

It seems that a commitment to security was made back in 2003.


I agree that such and operation would undoubtedly need some sort of cover story even from most of the workers.
However I'm not convinced that its impossible to accomplish. I don't think the SPR's are as loosely operated as you suggest.

Indeed I would actually expect them to be reasonably capable of large secret operations if needed. Not making allowances for that would be a major oversight IMHO. A strategic reserve with no mechanism by which the military can take direct control over the removal and refining of oil during a crisis ?

Indeed the omission of any details about military access to the SPR actually suggests the opposite that such capability exists simply none of it is public knowledge.

Again I think its extreme I've said that a thousand times. However I don't think its impossible and if it was considered and emergency then I disagree I think the mechanism does exist or can be created to draw down the SPR discreetly.

Again consider what I'm saying I'm not talking out my ass and I actually had no desire to mention this "theory" even though I've been considering it for a while. I'm only bringing it up now simply because my thresholds where breached. Basically this concept of secret SPR withdrawals was needed to get us into the fall with low prices. But then it starts to fail. Well it looks like the low price regime failed shortly thereafter. You read enough of my writings to know I expected prices to start rising vigoursly during the first half of the year based on my estimates of commercial reserves. Certainly we saw some price moves back then but then everything settled out. I eventually came around to SPR withdrawals as the mechanism. And of course the obvious that they would not last long 6-8 months perhaps.

Trust me I don't like making these claims but on the same hand so far at least they fit the data despite their implications.
Given whats happened recently I no longer see that it makes sense to dismiss them. Might as well throw them out to the wind and see if anyone who is interested picks up any info that might be pertinent.

More likely than not there is public info out there that I've not seen that could help verify or disprove such wild accusations I'm simply willing to now throw it out as a concept I can no longer dismiss.

For now at least my crazy theories about whats really going on have forced me to accept this rather outlandish claim or admit I'm wrong :)

Needless to say I'd really really like to see KSA turn on the pumps soon. Imagine for one second the implications of actually believing what I'm saying yet for now at least I have no choice but to do so. I don't mind if you dismiss what I'm saying but I do hope you consider for a few moment the implication of what I'm saying. I find it highly disturbing myself. One of the skills of being a scientist is to run a theory until it hits a contradiction and can be dismissed readily. Claims of secret SPR withdrawals ups the ante thats for sure but also unfortunately for now at least I don't see that it results in the needed contradiction allowing simple dismissal of the theory. It does take the game to a whole new level but that does not mean its wrong.

It does however suggest that the utter collapse of the theory is now trivially possible all that has to happen is for KSA to clearly and decisively support some price level all my storage arguments are now in the past having evoked SPR draw downs nothing else is out there that can work to allow KSA to avoid real action to support some reasonable price level. And any demonstrable action on their part now in my opinion completely blows away my theory given I have the US making very desperate moves. So taking it to this new level also makes the whole concept dramatically easier to eventually disprove.

Or not.

Just to repeat myself there is no indication that the Saudis will be 'turning on the tap', if there is a tap to be turned on, anytime soon:

Saudi Arabia May Boost Arab Light Oil to Highest Price Since August 2009

Dec 3, 2010 12:15 AM ET

Saudi Arabian Oil Co., the world’s biggest crude exporter, may raise the official selling prices of all of its January-loading supplies to Asia as a surge in processing profits boosts demand for crude.


So if the Saudis don't bail the world out in 2011, who will? Well yes, calls to open up the SPR will turn up very soon if and when the price of oil goes over $100. While those at the top of government may want to play down any potential use of the SPR, ordinary government workers as part of their normal duties will be forced to at least statistically report on SPR levels. I don't think information on the SPR can be buried like, for example, what's happening at the Federal Reserve, since the SPR is under direct control of the Department of Energy, and not some quasi-governmental agency.

Regardless, Robert Rapier says in his review, Book Review: The Impending World Energy Mess, from Robert L. Hirsch,

This book takes scenarios like that a step further. First, it makes a strong argument that it is a no-brainer that gasoline will be rationed, and then goes into several well thought-out options of how that might be accomplished.


Well I didn't get the book yet, so I don't know when and how Hirsch thinks gasoline will be rationed, but I definitely think that some combination of using the SPR and rationing will be implemented within a few years - but not before we get to roughly about $5 a gallon nationally for gasoline. That may take a bit of planning, since SPR oil is located at some distance from the east and west coasts, which will present a logistical problem of getting oil to right locations. Quite possibly this will come after initiating some form of emergency declaration - with or without the approval of Congress. I can easily imagine at that time that all US based oil futures trading and speculation will be halted, or at least severely cut back. So in our future will be worried more about the availability of oil, than its price.

I know some here don't agree with me about rising prices and the phase out of the market price system, but that's what makes the TOD a great place to discuss ideas.

I'd just like to say first and foremost my natural inclination is to agree with what you just wrote 100%.

Any use of the SPR is safely in the future nearer the tail of the crisis.

However the more I learn about the financial crises the more I wonder just where we are on the path.

As your aware I'm a proponent of the shark fin production model basically oil production will be highly asymmetric post peak.

This of course means that you have a transition period from peak to steep decline. Originally I thought it was a cliff now I propose that its a fairly long period if fairly low percentage linear decline before finally being followed but the steep drop.
The correction of my original concept is fairly simple first and foremost reject the public production numbers. Next simply consider that the technology that allowed us to achieve asymmetric production still worked for a while even after peak resulting in a fairly mild decline rate. The transition period makes tons of sense once you think about it. All it requires is rejecting the claims of a long production plateau and instead assume a 1-3% decline rate or so for years now.

Price action is certainly supportive of a real decline that significant but not deadly if you will.

However this simply delays the final onset of the steep drop it does not eliminate it. Its still there. When it hits is fiendishly difficult to even guess.

In any case consider what would happen if I'm right and we suddenly go from a mild decline rate to a substantially accelerated one. Say jumping from 1-2% decline rate to 8% over the course of a year ?

Prices would skyrocket suddenly of course but what else ? Perhaps the economy would implode or more correctly be imploded on purpose out of desperation. Certainly it would be a monumental event unlike anything else before. I can of course now guess its nature looking in the rear view mirror but also its clear now that exactly what would happen initially is anyones guess.
Some sort of panic for sure with then very high oil prices as part of the equation.

So although I do agree with you in the general sense and hopefully as time goes on we will see exactly what your saying happen.

However being a shark fin proponent I also must consider and alternative which is that the situation can obviously deteriorate rapidly perhaps in a surprising fashion but nonetheless go through a rather obvious and dramatic change as you finally go over the cliff.

If I'm first correct about the general nature of post peak production and second correct that we did go over the cliff then I've got little choice but to assume we are now in a world thats going increasingly and rapidly out of control as the rapid increase in the rate of decline of oil production becomes a huge problem even for our crippled economy.

Or as always I'm wrong. I'm only writing what I've written about the SPR simply because its the end of the line.

The rationing and use of the SPR to keep oil prices low that you think is in the future is now in the past.
It already happened and we have played that card. Doing it in secret makes a lot of sense if you think about it.
Most bang for your buck so to speak. Next on the financial side we absolutely needed this period of stability to allow our financial system to heal. If we had suffered the financial crisis we went through and oil had say dropped to its more natural low of 60-70 then rebounded back to well over 100 over the last few years then I think you would agree we would not have made it.

There is no way our economy could have taken the financial crash then faced high oil prices again in a matter of months. Assuming that world oil production was indeed now crashing then the time to introduce rationing and prices controls was back in 2009 not in the future.

Today things are different we have all the extraordinary powers in place to protect the financial system for the next crisis.
These years of relative calm and deep recession have not been wasted in that sense. If a return of very high oil prices is on the horizon then the bankers are well protected against financial calamity and that is what matters.

And of course if your primary aim is to protect the bankers against the effect of high oil prices well the timing of a decision to enact price controls and SPR draws might be different from what you would do to try and stave off high prices for citizens. The reason is fundamentally different. The bankers desperately needed a period of stability to prepare for crisis back in 2009 if they are the most important then what we would consider and early move is not all that early.

Regardless invoking the concept of secret SPR draws only delays things its needed to get a reasonably low price regime to last as long as it has if I'm assuming underlying production is now falling rapidly. I think you can see that there is no way we could have made it this far with the current oil prices without and SPR draw if the Saudi's and indeed the world not only have no spare capacity but are actually seeing production continue to fall at and accelerated pace.

And of course just as obvious all it does is buy us a bit more time. The financial system has to be stable now not yesterday if I'm right then oil prices can no longer be suppressed. Makes you wonder how the US feels about the PIIGS after all its done :)

I'd suggest that the US would probably feel like the EU has indeed frittered away a very limited window of opportunity.
If so then one of the signal if you will that might mean I'm right is that the EU adopts and effectively infinite liquidity policy just like the US fairly shortly EU politics be damned.

If they don't then life might get really interesting.

And of course on another tact if oil supply is really dropping rapidly then there are no constraints left as far as war goes.
No one has anything left to lose. For now at least no reason to start one right now as far as I can tell but also no real reason to stop one or stand down. One can expect US policy to push nations increasingly close to the brink with little pull back if any.

Next of course the middle class will be officially thrown under the bus its DOA and little will be done to support it at best measures will be taken to keep the peace but thats about it. This means housing won't be saved for example. Probably not blatantly allowed to sink but not saved.

The 99er's or current unemployed are and interesting case my new cruel world suggests they won't get and extension and they are only the first that will fall through the cracks. This is offset to some extent by worry about riots in the short term.
Not sure which way it would go but a defeat of any attempt at and extension would bolster our move to a new tougher America.

Underneath the covers prices for oil should rise at and ever quickening pace as brinkmanship and what look on the surface like suicidal financial moves become the norm not the exception.

And of course if I'm reasonably close to right then the entire situation is already incredibly unstable the whole thing could unravel at any time or not. There is now simply no way to really tell how long things will take to many factors are changing to rapidly. I'd suggest that at a minimum if you take the last year and future years and compare conditions at six month intervals starting say in Jan 2008 your will see that the overall situation as obviously worsened vs the previous six months.

Six months from now right now will look significantly better to most. This does not mean everything is moving in unison downwards but that the collective situation has obviously deteriorated. For example obviously financial conditions where much worse in 2009 however we had not yet done QE1 and then QE2 with no really significant improvement. Certainly housing prices where falling but they still had not fallen below historical trends which is starting to happen now. My point is some numbers are arguably better but not really once you consider whats been done and the effect it has had. And every one of these actions are actions we cannot make in the future. QE10 won't accomplish anything if QE1 did not.

My point is not to expect simple linear moves of all the variable but look at the sum position thats where the truth lies.

And more importantly in my opinion if rapidly falling oil production is real then all these other variables and situations that I've mentioned probably will begin to change much more rapidly even as prices rise. Indeed given what I think has been happening to control prices oil prices are probably a lagging indicator of the real situation.

As far as I'm concerned things could now blow up before we even see 100 a barrel. The knowledge that its certain to come and get a lot worse could well result in actions that precipitate a crisis that rips apart our civilization before it ever even happens. The US could decide to make a preemptive strike and or simply respond aggressively with no constraints.

If I'm right then no particular reason exists for waiting till oil prices skyrocket again. Depending on whats really going on inducing a world wide crises now might precede a certain oil shock by week or months. No way to really now thus don't expect prices to be a indicator. Hell for all I know the Eastern Seaboard is days away from serious shortages or not. I really don't have a clue as you know I don't believe the numbers and also I think things are going to get bad fast.
However on the same token because of both situations I think I know very little about the future as I don't know exactly whats happening now. In time obviously we will either find out or all hell will break loose before we do.

I am most definitely worried about the coming effects of the “shark fin”, or basically the net amount of oil that will be left over for the domestic economy. You are quite right that once events begin to unfold, they will probably unfold very fast. I am most concerned that the effects of the downturn will come too fast for our system of government to effectively deal with the downturn. Mostly I don’t think the growing class of long term unemployed will go quietly and resign themselves to living in large cardboard boxes.

You may remember that in late 2007 and early 2008 I said that the Fed would issue trillions of new dollars to restore the financial sector of the economy. At that time, this news was not warmly greeted even here at TOD – and those that somewhat agreed with me thought I meant billions and not trillions. No, I meant trillions. The funny thing is – recent disclosures by the Fed indicate that things were even worse than a ‘pessimist’ like me thought. What if the oil situation is worse than even most of us think now? Well yes, we would suddenly see some actions by the government that would appear preemptive, but may be rational based upon those who know the true situation – in the much the same way that quantitative easing by the Fed was at first unexpected, and then much greater than assumed necessary.

If we were then going to trace the public or covert use of the SPR, we would probably want to know what refineries could use this kind of oil. Unfortunately this kind of information is hard to come by, but maybe there are some here at TOD who could actually figure something like this out.

Also if anyone understands what Hirsch has come to think about gasoline rationing, maybe they could share their ideas?

Hirsch commented about plans for gasoline rationing, and the difficulty of doing it (per Bezdek's experience) in his October interview on Financial Sense with Jim Puplava (40:00 mark)


Here is also another opinion about oil in 2011 out today, note that the way to balance increasing demand with supplies is - drawing down inventories. We'll see how long that can last.

Oil Demand's Triumphant Return

By Frank Holmes | December 5, 2010 4:50 PM EST

Chinese oil demand is expected to grow at the fastest rate of any country in the world at 10.4 percent this year. Figures on China's share of global oil demand growth range between 25-40 percent but there's no question that there is still substantial room for Chinese demand to grow.

Macquarie expects global oil demand to grow by 2.3 percent on a year-over-year basis in 2011, which the firm says would be met with drawdowns in oil stockpiles, higher prices and an OPEC response.


Can't say I share the concern in this thread for oil actual oil supplies to the United States. Though, I do share the concern that oil prices are going to spike, and take OECD economies down--and possibly down hard. US inventories of oil are enormous these days. They've advanced from a low of 290 mb in 2008 to the current, massive level over 360 mb. I used to argue hard that inventory measures on an absolute basis were not very meaningful as the days supply measure was better. (Though I think paying attention to both is helpful). Accordingly, now that the US is in a depression it's carrying oil inventories at higher levels than in 2006 and 2006. And this is with 15+ million people out of work, busted States, and cutbacks galore.

I frame this problem very differently, like others in this thread. This isn't about an oil supply problem in the US. It's about getting taken out of the market totally, as the marginal utility of oil is so much greater for the new user in Asia. The new user cares not whether oil is 60, 80, or 100. They are consuming so much less, per capita. And yet, from that small amount derive a huge upgrade coming off of a lower base--in lifestyle terms.

Yes, with regard to the SPR, we are way way past the point where releases would function either structurally or psychologically as a dampener to price. It would be pointless I think. Worse, in the current environment as peak oil gains the attention of conventional mainstream thinkers, a move by Washington to release oil from the SPR could look like panic. It would look dumb. But of course, Washington is very dumb so I'm not making predictions here. :-)

It appears to me, finally, that part of our higher sustained level of oil inventories may be related to our spare refining capacity. The US looks like it's exporting diesel/distillate, and lots of it. Given that the current oil price advance is being driven by EU GASOIL, I would expect the US to go full throttle to export even more distillate.

I'm not concerned about shortages of oil in the US. I think the bigger concern is that economic descent is proceeding apace, which is all bound up in a dynamic of not being able to afford the oil.


Thanks for your detailed response. I agree with most of your well thought out expectations – especially the fact that China, India, and other similarly situated countries will be able to get by quite well on $100, $120 oil.

However implicit in your statement about excessive oil inventories is the expectation that the right oil is in the right place at the right time for US refiners to use as they need. This seems to be a very common assumption even among many well known energy analysts. But why should this be so? To the best of my knowledge, most of the extra oil stored in the Oklahoma and Gulf Coast area was oil that was shipped North to South by pipeline through the Midwest from Canada, and most of that was originally tar sands oil that was upgraded for transport. The type and location of this type of oil won’t be of much help to most refiners in the northeast quarter of the US, or along the west coast.

I think it’s quite likely over the next year or so we that we will be slowly finding out more about the quality of these ‘excess’ inventories of oil.

Regarding the post-2005 decline in Saudi production and (more importantly) net exports, I have made three principal points:

(1) Based on the logistic models, Saudi Arabia in 2005 was roughly at the same stage of depletion at which the prior swing producer, Texas, peaked in 1972;

(2) From 2002 to 2008 we saw six years of year over year oil price increases. Over the first three years, the Saudis increased their net exports in response to rising oil prices. Over the second three year period, the Saudis reduced their net exports, in response to rising oil prices (relative to 2005)--and it directly contradicted their stated goal in 2004 of supporting a $22-$28 price band. This production/net export pattern versus higher prices is quite similar to the production responses (versus higher prices) that we saw in post peak regions like Texas and the North Sea after 1972 and 1999 respectively;

(3) In what I think is quite a coincidence, the Saudi stock market crashed at the same time that the Saudis started (involuntarily IMO) delivering less oil to the markets (early 2006).

Some links to prior Saudi statements and to the Saudi stock market chart:


It is interesting, but maybe odd, that the SA stock market collapsed with their loss of increased exports. Why didn't the increasing prices and thus revenue help the markets keep rising until late 2008? Their exports bounced around by about 10%, but their revenues skyrocketed until the oil price collapse.

My theory is that Saudi insiders started selling Saudi stocks like crazy when they found out that Saudi Arabia could not maintain, or increase, their 2005 net export level of 9.1 mbpd.

But Saudi makes more net profit by selling a slightly smaller amount of exported oil at a substantially increased price. Why would that crash a stock market? After all, what counts is net profit, not gross production or even net exports. Thus, IMHO, KSA has an extremely strong incentive to voluntarily cut output to jack up prices, first to $75 and now to $90.

Usually a cartel such as OPEC will break up because one country after another starts selling more oil than is their quota. And indeed, many (most?) OPEC countries ARE producing over their official quotas. But because almost all OPEC countries (with three exceptions) are producing flat-out, Saudi Arabia is in a position to ignore these violations of production restrictions.

As an economist using Occam's Razor, the simplest explanation for price behavior of oil over the last several years is straightforward oligopoly theory, with KSA as price leader of a cartel.

I really don't see rationing happening at all. Rationing is something done back in the days where people felt Americans should help each other because they were fellow citizens.

Those days are dead. Long gone. We are in two wars and only less than 1% of the population is directly involved. The rest of the population doesn't want to pay taxes to pay for those wars . . . especially those that pushed the hardest for those wars! Conservatives long hated Nixon not because of Watergate but because he instituted price controls. In today's Tea-Party hypocrite world people won't go for rationing (but don't touch their medicare or social security!).

Rationing is not going to happen, so you better make an alternative plan if you feel we are in for oil shortages. Bike, EV, public transportation, efficient hybrid, move closer to work, etc. You are on your own.

It should be obvious that there will be rationing. It might be that we will see "rationing by price", in which the price to the consumer rises so high that the Joe 6 Packs couldn't afford to pay for as much as they would like (or, need). Or, a decent allocation system might appear, along with a white market to trade allocations. I expect that events will force prices higher, then the public will suddenly want a rationing system to provide everyone with their "fair share", what ever that turns out to be. Allocating some amount to every consumer would blunt the cries for tar and feathers and ropes with nooses - for a while. We might also see efforts to increases taxes on those with high incomes and the holders of wealth, to punish them for their greed...

E. Swanson

Well my point is that it will be 'rationing by price' . . . which isn't really 'rationing', it is just the normal market system. I seriously doubt there will be a return to the 'only cars with odd license plates can fill up on X days' type of rationing. You have seen this Tea-Party, right? Such rationing would be denounced as another socialist/marxist move by that Kenyan Muslim!

But I certainly could be wrong . . . if things got REALLY bad, I guess such rationing could occur. I doubt that. But if rationing happens then you KNOW it has really gotten out of control.

@memmel: I'm just catching up with this thread. What rate of SPR drawdown are you modeling? The last time I looked, the maximum official rate at which the SPR can be drawn down is four million barrels per day, but I suspect the actual rate would be far lower. Even if it were possible (or desirable) to withdraw a sustained 4 mbpd, that could only go on for 6 months...but who would ever suggest draining it completely?

My call is that the new oil price ceiling is under $120/bbl, and is most likely $100. See ‘Peak Demand,’ Yes, But Not the Nice Kind

Chris - That’s a great article. Please note that I agree oil prices of around $200 (in 2010 dollars) may be some kind of absolute limit that the world economy cannot move past in the next few years, although I believe in a war involving Iran – where Iran strikes back at KSA – oil could easily move past even the $200 level. However I am by no means predicting a new Mideast war, and it’s a little early to say for sure if we are entering the oil superspike period I mentioned, or if we are just going through a short term phase with oil stopping more or less around $90 on our way to something more dire further into 2011.

Supporting the positive case for price stability is that for now, at best as I can determine with limited shipping information, is that China’s extraordinary demands on Europe’s diesel and oil supplies appears to peaking. This would explain why petrol is in short supply in England and fuel prices are high in general throughout western Europe.

Of course there is an additional wild card of the weather, which doesn’t seem to be helpful for the situation across the Northern Hemisphere.

While I totally agree with the concept of net energy, or the shark fin as memmel and others have put it, what we have now as a main driver in late 2010 is a mismatch of the right oil and oil product supplies not at the right place at the right time. Look out if the shark fin effect becomes a more powerful underlying trend in 2011.

Given the complex relationships of oil, currency, refining activity, etc. I would expect demand destruction in the OECD to set in quite rapidly north of $120/bbl. But that's mostly an educated guess and I have no idea how it might be modeled (other than oil expenditures as a % of GDP, as Dave Murphy & others have detailed). Any price "superspike" would have to be short-lived (a few weeks, or months). I view $200/bbl as extremely unlikely, especially on a 120-day moving average.

That said, I expect the next oil price spike and crash in Q3-Q4 of 2011.

As I understand it, China's current diesel demand problem mainly owes to mandated idling of grid power plants. It could be alleviated by lifting those mandates, or raising US refining activity. In any case, I expect it to drive diesel prices higher more than oil prices in general.

With European gasoil at $90 and above, we could find the pain tolerance limit fairly soon.

As I understand it, China's current diesel demand problem mainly owes to mandated idling of grid power plants

Reported in the press but is it true? Not according to Chinese refiners who have been reported as saying that the shortage is due to them being currently prohibited by law from buying oil on the open market. Instead they must make do with what they are supplied with by the state and that's not enough.

Also there was no central mandate requiring the recent rolling blackouts (supposedly they were local decisions) and even these increased diesel demand only by about 1% at most. Despite this coal stocks at power stations are said to range from low to dangerously low.

We live in "interesting times".

Not according to Chinese refiners who have been reported as saying that the shortage is due to them being currently prohibited by law from buying oil on the open market.

Yes - the Chinese clampdown on domestic refining also plays a role - meant to mention that.

Edit to previous comment - I kinda mixed apples & oranges there. European gasoil is now +10.75 to $778/ton See also Europe Gasoline at 2-Year High

If I may add it appears that China has become more open to importing raw materials and resources - and thereby increasing demand for imported oil and especially imported diesel faster than before.

The question we all may be asking ourselves in the oil spike next time is - do we really want China to be the high bidder, taking supplies that may have otherwise been used in the US if the oil markets weren't totally free?

This would explain why petrol is in short supply in England

Eh? Ok I'm in Scotland not England but apart from hearing the isolated case of filling stations running dry (and the media will find these unusual cases) because tankers could not get through the snow to them, I haven't heard of real supply problems. In fact in the worst snow hit areas petrol usage will have dropped through the floor in the last week as most of the cars were stuck in side streets for days and not using any fuel.

What there does appear to be a bit more of s slight shortage of is diesel in some areas because most large commercial vehicles aren't stuck in side streets and are still moving about the country as best they can.


Brian Madderson, chairman of the RMI, says 500 forecourts could be without diesel by tonight.

"The whole of the east side of the country is caught in this Arctic weather and that means that fuel terminals and refinery terminal all the way down from Aberdeen past the Thames to the Hamble are having difficulties getting supplies out.

"What we do not have is a shortage of product - all the refineries are working and the stocks are there. The real difficulty is getting the tankers on the road and out to the forecourts to refuel them."

All main roads in the UK are currently open after a break in the snow and I'd be surprised if any regional shortages of diesel remain after a day or so - unless there really is an underlying problem other than the weather.

Although living in a badly hit by snow east coast area myself, I have not seen any local station out of any type of fuel and prices have not gone up that I can see.

That's about what I meant, probably would have been clearer for me to say low supplies, but I understand that there were some shortages here and there that were traced to supply problems not directly related to the weather, but probably indirectly related to generally strong demand.

I don't think memmel is suggesting anything like that kind of draw-down rate but he can contradict me if I'm wrong. I would assume something like the order of a few hundred thousand barrels per day which could then be included in apparent US production. At least that would be one way to do it in theory. Hypothetically current US production could be say about 5.25 mb/day instead of the much vaunted recent rise to the claimed 5.5 mb/day.

The huge jump in GoM production in 2009 exceeded the EIA's wildest dreams for example (and made ace's prediction look downright idiotic). Was it all really oil pumped for the first time?

Curiously 2009 reported production matches the previous annual peak in 2003 to 4 significant digits at 1.559 mb/day - which is one hell of a coincidence if nothing else!

I can't imagine for a second you could draw down the SPR at 4 mb/day in secret (assuming you can do it at all).

Yes the daily draw down would be on the order of a few hundred thousand barrels.
We also have had and unknown amount being drawn from offshore storage. Say 150 million barrels. Perhaps as high as 300 million barrels.

Assuming the SPR was drawn down by 300-400 million barrels then your talking about a max of about 700 million barrels or just over 2mbd more than enough to keep price in check. Also I might add I suspect its not just US storage but Japanese European and Chinese drawdowns.

However there is no way that any realistic amount of commercial storage could have been used to keep prices in check as long as the have been. That alone would have run out by mid 2010. Where I was originally predicting a price spike.

Its still a substantial amount moving in any given month millions of barrels.

Its easy enough to guess about how much makes sense. If consumption globally was 4mbd higher than production then clearly storage would have been drained rapidly and also the deficit so large that using storage to offset production declines to hit a price target does not make sense. If the differential was low say less than 1mbd then one would think that slightly higher prices would have worked to match demand with supply. It would have to be a difference that would have resulted in a price shock but also small enough to deal with over a reasonable time period. Globally this would in my opinion mean something on the order of 1-2mbd with say a 500kbd or slightly lower deficit in the US. Commercial surpluses from the crash would obviously work for a while but eventually they would have run out. Indeed the success of draining commercial floating storage may well have encouraged using the SPR. The argument to buy more time would have been powerful.

This of course suggests OPEC was going full bore and has been for some time. Obviously I also suspect that we saw a significant acceleration in the decline rates globally. However from the crash we also probably had at least a 2mbd drop in demand perhaps as high as 4mbd at first. So you had a significant albeit short term over capacity even if production was falling rapidly on and annual basis. We certainly had a few months with real excess capacity in late 2008 perhaps even into 2009. Indeed given what the Saudi's said I'd say the peak was probably 4mbd of spare capacity at the depth of the panic.

And of course as prices fell every ship with a cargo was steaming as fast as it could to unload. Before this slow steaming and longer voyages had resulted in a significant amount of oil at sea. Say perhaps 150 million barrels or so over what was normal in the past. All that got offloaded into land storage. Then a significant amount of the tanker fleet was turned into floating storage. Obviously anyone willing to gamble on floating storage back in 2009 probably had some price assurances.

The 70-80 number is not magic it was simply the highest known stable price before all hell broke lose thats clear from the charts.

As far as the Saudi's go perhaps they where confident they could stem their decline rates given time who knows. Certainly buying them time to allow various projects to come online makes sense. In general across the board from finances to oil first and foremost people simply needed time.

For a long time I think people though that the actions of the Fed and the other CB's would not only calm the markets but result in a renewed economy capable of handling expensive oil. People that print the money tend to believe money can solve everything.

In any case obviously as time went on storage dwindled and holding the 70-80 line became impossible. Demand crept back and storage was drained. What was once a 1-2 mbd or so deficit has probably climbed into the 2-3 mbd.

For the sake of argument assume that its now 2mbd. However perhaps we are also winding down 1mbd from strategic withdrawals and 1mbd from commercial withdrawals. I'm assuming that if this is happening they are smart enough to not simply shut the taps suddenly. However you can see how the situation in France throws a big monkey wrench into all this along with China.

No matter how you slice and dice it your eventually left with a world that is using 1-2mbd probably closer to 2mbd more oil than its producing. Figure the US has a 500kbd short fall now thats. 15 million barrels a month.

If we are really are at 360 million barrels then we could easily draw down to say 300 no problem so you have 4 months.
I suspect that we actually are not that high. probably close to the bottom of the average range. So the US is not good for four months but perhaps only a couple. One has to imagine that if I'm even close to correct about secret SPR draws highly inflated storage level claim are also part of the game. It would all have to be a big lie or not.

The problem is in my opinion fairly obvious. Fairly desperate measures can allow a 1-2mbd production deficit to be hidden for a surprisingly long time however its large enough to ensure when these prices finally fail that we are faced with sharply rising prices.

The exact numbers are not so important the basic concept is a bit less than 1 billion barrels of oil in storage including strategic reserves coupled with a short fall of 1-2mbpd results in a situation where prices could be constrained for a year or two. But no more. A large shortfall and its not worth it. A smaller shortfall and I'd argue price could ensure supply and demand are met. If price stability was achieved via storage draw down then the situation really has to be in a fairly narrow range. Big enough of a problem to both prompt using storage even draining the SPR yet small enough that doing so buys significant amounts of time. Given a reasonably upper bound estimate on how much storage could be devoted to such and effort and the fact that being off by say 100-200 million barrels does not make a huge difference then you can get a result in agreement with recent price action.

However it still ends about not or more correctly over the last several months. So the Saudi's suddenly happy with high prices right when this strategy would be failing is awfully suspicious.

You made a very good point that just the oil being transported accoss the oceans is very significant by itself. For example,

A total of 469.22 million barrels of crude will be on board tankers in the month to Dec. 18, up 2.2 percent on the Nov. 20 figure of 458.92 million barrels, according to Oil Movements.


That's just OPEC movements, who knows how much oil is at sea from other oil exporters.

So swings in prices tend to accelerate the amount of transported oil, which as you say, creates a feedback loop re-enforcing price trends.

At this time, excluding Iran, oil floating in tankers as storage is insignificant - after reaching a peak of maybe 150 million barrels of mostly oil and some oil products early on in 2010. For reasons of which I am still unsure, most of that oil ended up in the US, but most of the diesel ended up in Europe. Thus we have have a good explanation as to why US oil inventories are so 'high', for now.

I conducted some further resaerch on shipping trends, and an unusual number of supertankers were either near China or headed that way. Regular TOD readers know that I follow the EIA weekly inventory report closely. Well I will make an early prediction about that: I don't believe that in the remainder of 2010 (last three weeks) we will reach on average the 9.0 or so mbpd of imported oil needed to maintain present oil inventory levels in the US.

So the bottom line is - we are in a kind of supply hole of China's making, and the mini-spike we see in the price of oil may not be over.
But this 2010 mini-spike is only a warm up to the possible 2011 (or 2012) superspike.

If you are only partly right, that superspike will be on its way before long.

Thanks, Jon. I had a feeling that we were in new territory, but this gives a bit more context for it, beyond the bare price, which is now about as high as it's been since the '07-08 peak.

When I passed the petrol station a couple of days ago the price was €1.42/ltr ($7.11 US gallon). So prices are at or near the 2007-08 highs here in France although the price per barrel is some $50-$60 less than 2007-08 high. I'm not sure why, but the pain is being inflicted on Europe at a much lower price per barrel than it was two years ago.

Markets just seem to be broken everywhere with increasingly bizarre results. I'm certainly beginning to get sticker shock when I venture out to the shops and check the prices of essentials. It does however give me a push to pick up the speed on my self-sufficiency projects to further reduce reliance on the money economy.

Yes the price of gas has been going up quite some in France recently. The main difference with 2007-2008 is in the rate of change between dollar and euro: 1 Euro was 1.55 $ in July 2008 when oil was at 147$, now the euro is around 1.31 $. If you had the aftermath of the stike in oil refinery, it probably explain much. By the way, gas was at 1.35€/l in Villefranche sur Saone, a bit south from you.
Price of food is also fairly high specially meat and many here blame it to the change from Franc to Euro which sounds silly so many years after. Since I'm back in France after over 15 years abroad, I cannot really juge the price changes but many things are more expensive than in Southern California... except avocados and tomatoes :)

Oh, look a vote of "no confidence" from the buyers, traders and economists. whooda thunkit?

Re: Oil Fluctuates Near 25-Month High on U.S. Jobs Report, Decline in Dollar

Oil jumped 1.4 percent as the Dollar Index dropped to the lowest level since Nov. 23 after U.S. employers added fewer jobs than forecast in November. The unemployment rate unexpectedly increased. Futures for delivery from 2013 through 2018 fell below the current month’s price.

“The rally is due to a much lower dollar,”

OK so the dollar is at the same level as on Nov 23. Back on that date WTI front month was $80.99. Now it's over $89. But we continue to hear this mantra that oil is rallying due to the weak dollar. While the dollar dropping certainly will enhance any dollar pricing of oil it cannot be said to be the driving force as far as I can see. I am sure that we will continue to see these claims being reported though.

Nothing new here. If event A occurs in close proximity to a rise or fall in oil prices, then obviously event A is the cause. No further thought required.

Russia and Qatar

2 oil exporters win soccer games for 2018 and 2022

I can envision that they will have to fly in the spectators at their own expenses, Russia and Qatar's expenses that is. I rest my case.

Aren't they talking about air conditioning the outside for the Qatar cup? I find that obscene in an era of global warming even if they planned to do this with solar. I think this calls for a world wide boycott.

Beckenbauer already asked them to hold the games in January or February, otherwise it would be too hot in Quatar.

Just like the winter olympiad, there might be a winter world soccer championship.

And maybe Russias strong man is already thinking about making a start with winter games in Russia, instead of having high payed soccer stars playing in the biting smog of peat fires? Why not make a championship in Siberia, in stadiums with a roof, cozily heated from siberian natgas?

Re: If the expert is insistent he is right, odds are he is wrong, lead article up top.

Expert Vinod Khosla is wrong again. In an article posted at Greentechmedia.com he writes:

Corn ethanol has helped in the development of the biofuels infrastructure and by serving as a stepping stone for the next-generation of biofuel technologies. But all subsidies should come with expiry dates, be they with corn ethanol, cellulosic biofuels, electric cars. With respect to fuels, for the next few years, I believe subsidies should be directed towards non-food based cellulosic biofuels, with a variety of technologies (and fuels) that have the potential to scale at economic cost to meet our liquid fuels dependence while making meaningful reductions in our carbon footprint. As mentioned earlier, we have a multitude of efforts across various fuels and may be perceived as conflicted[3]. But our portfolio is simply one of many and if we agree on the reasons to subsidize technologies, my arguments still hold. In the long run, biofuels can make a major dent in our oil and compete unsubsidized with fossil crude oil. Support for these new technologies should also have an expiry date before 2020.

He claims that 30 year old ethanol is mature and no longer needs subsidies since it has a government mandate and seems to forget that that 100 year old oil is heavily subsidized despite being mature in the U.S. since about 1970 or 40 years ago and has its own mandate of in place oil using vehicles and the oil distribution system.

Evidently he believes that bio fuels can compete in a liquid fuel market with subsidized oil without subsides of their own. This a unique view of economics which implies that aid to one competitor has no effect on the success of other competitors. This defies common sense.

Furthermore Khosla thinks subsidies paid for ethanol blending go to billion dollar oil companies while at the same time claims that ethanol subsidies go to ethanol producers and corn farmers. Can’t do that. If $6 billion is paid in ethanol subsidies then it goes to one entity or is shared. That six billion does not multiply at least in as far as government expenditure is concerned.

It probably multiplies in the economy as its effects result in increased ethanol production, investment and employment. Oil companies collect it but the economic gain (profit) is shared by ethanol producers and feedstock suppliers as a multiplier effect. The overall economy gains as wealth is retained inside the country instead of being sent outside the country to pay for imported oil. The evidence for this is the rapid increase in corn ethanol production and the relative prosperity of ethanol producing areas during the Great Recession.

Ethanol subsidies go to all three. Oil companies for use of their blending, distribution and sales infrastructure. Ethanol plants for their production facilities and to corn farmers for supplying feedstock. They all benefit in more or less equal shares.

Any new liquid bio fuel will face the same feedstock, production, blending, distribution and sales problems as corn ethanol. They will need to use oil’s infrastructure just like corn ethanol or create their own which is economically silly.

There may be a limit to oil’s ability to provide this service without compensations in the face of Peak Oil with low refining margins due to high imported oil prices, declining domestic oil production and falling demand for oil products as better mileage cars, electric cars and ethanol sap demand for oil products.

He also believes that there is a technological solution to the energy situation if only more money were applied to his projects. This despite that money and technology applied to oil has not stopped oil depletion, only delayed its consequences and that money for cellulosic ethanol has not accomplished much in terms of actual increase in production so far.

He disregards the importance of feedstock supply and infrastructure thinking that cellulosic ethanol feedstock is more abundant than corn despite no evidence and that its feedstock and the associated infrastructure will appear like magic. He should name the feedstock, market price and the supplier of cellulose or other bio fuel feedstock.

Mr. Khosla thinks that it makes a difference when non food crops are grown for ethanol rather than food crops. Food is one those abstract nouns like energy, grain and metal. All food is not the same. Corn is mostly animal food commonly called feed. Indeed the feeding of corn to hogs, chickens, cattle, turkeys and such will have to be reduced since it is such a waste of energy.

He forgets that the other major supplier of ethanol in the world, Brazil, uses a food crop, sugar cane, for ethanol feedstock. In this case the crop being used is for sure actual human food but appears to be sanguine on the issue.

He should remember it is the same land that grows both and when land resources are devoted to non food crops, land for food is reduced. This makes it difficult to gain anything by shutting down ethanol or other bio fuel production in the case of crop failure. This is happening even now as Brazil cane production is going for sugar rather than ethanol due to rising sugar prices thus pricing Brazilian ethanol out of the world market. This has opened the door for American corn ethanol exports.

And finally he sees solar energy more promising than wind. Perhaps in sunny California he has a point, but most of the world is not like California. Wind in some areas is more abundant than other areas whereas the sun shines uniformly everywhere at least during daylight hours and at the same latitude. Wind blows at night while solar is only available during daylight hours. These facts can not be ignored.

I use to think the guy had some smarts since he supported ethanol. Not anymore.


I do not necessarily agree with Khosla's conclusions but clearly there are areas that are unsuitable for crops like corn but may be suitable for grass. One would be able to grow grass in places like Wyoming but most of Wyoming would be completely unsuitable for corn. Therefore, cellulosic ethanol should be able to increase the amount of land available for feedstock like grass. Those same areas would not be available for corn production.

This isn't to say that cellulosic ethanol has any real future whatsoever as it is still mostly a dream, a magical way to continue bau without any negative side effects. Part of the difficulty so far is the amount of energy and the techniques available to break down the cellulose. This is still in the R&D phase and, therefore, may be a suitable area for continued subsidies. Corn ethanol, whether it makes sense or not, is clearly in the relatively mature production phase.

None of this is to say that we should not also eliminate the subsidies for oil and other fossil fuels. Generally speaking, it does not make sense to encourage the more rapid decline in the availability of a finite resource.

Frankly, I think the focus should be on reducing as much as possible the requirement for personal vehicles, especially those which require liquid fuels. Part of this substitution will occur with the proliferation of electric or hybrid eletric vehicles. Regardless, however, the number of vehicles, whether liquid, electric, or hybrid electric, should be minimized, especially in and around cities.

You used to think he was smart because he supported corn ethanol. There are many here who probably find that comment very amusing. It may very well be that his intelligence lead him to the logical conclusion that corn ethanol should not be further subsidized.

I also think that solar and wind are still in a phase characterized by declining costs and higher efficiencies due to continuing technological breakthroughs and improvements. Part of this improvement is a result of incentives provided by government. Whether or not either of these technologies will be sustainable over the long run is still an open question.

It may very well be that nothing will be sustainable except a situation where the global population is reduced to a few million. I'll leave that for nature to decide.

He claims that 30 year old ethanol is mature and no longer needs subsidies since it has a government mandate and seems to forget that that 100 year old oil is heavily subsidized despite being mature in the U.S. since about 1970 or 40 years ago and has its own mandate of in place oil using vehicles and the oil distribution system.

The mental gymnastics you go through to justify keeping that welfare heading your direction are amazing. The oil companies are forced to buy ethanol. That is a real mandate, not like this pretend mandate that the ethanol lobby has conjured up by saying there is no other choice than oil, and that is a de facto mandate. In fact, if people in the Midwest would embrace E85, you would have the biggest possible market going for you. But you can't compete on price, and so you have to compete by people being forced to buy the product.

If $6 billion is paid in ethanol subsidies then it goes to one entity or is shared.

There is no debate there. It goes to the oil companies, and they have said they don't need it:


What better reason does one need to get rid of it? The oil companies still have to buy it. I am just amazed at the level of dependency here; not only a mandate, but a subsidy and protective tariff too. Unreal.

Irony is that I have been critical of Khosla for years. He used the NRDC for his arguments, and some of the NRDC's arguments came from me: http://switchboard.nrdc.org/blogs/ngreene/must_read_on_biofuel_tax_credi...

Now there is some real irony for you.


To self-deception there are no limits.

I am astounded and amazed by your continuing patience in replying to obviously self-serving comments.

It is my policy never to reply to a comment unless it is intelligent.

Several months ago I posted a comment hypothetically specing a system using PV to charge an EV at home, including a battery bank for storage. The speced system would be capable of charging an EV and also act as an off-grid backup electrical source. Purely for discussion, I speced a vehicle from Green Vehicles in CA. I was slammed (by whom doesn't matter) for specing a vehicle from a company that was running a scam.

Now this, above:

New locally made electric vehicle getting ready to hit the streets ,

...about Green Vehicle's Triac (I had speced the "Moose" minivan from Green Vehicles) http://www.greenvehicles.com/


I still believe that a small EV suitable for most uses and charged by a home-based RE system could be marketed as a package at an affordable cost to many.

Primary Energy Dilemma for cars

While I agree with the premise of the paper and that the entire automobile infrastructure as it exists now is insupportable, I believe that there will be those in rural and outlying areas that will still rely on cars/trucks in some form, if only to get to the nearest electric trolly or rail line. I also believe that local roads will be maintained locally to some degree for bicycles and small altenergy vehicles (or horse-drawn carts perhaps). Having a small electric vehicle that can be powered independent of BAU systems is an idea that appeals to me, even if it can't be maintained over the very long term. Nothing lasts forever.

There are many retirement communities whose primary transportation mode is electric golf cars or similar vehicles. This seems like a good fit with solar electric, whether or not combined with a backup approach.

I just drove up to our camp in the woods yesterday, got our Xmas tree, greens with my Sister, and did some seasonal preps.. I noticed a few towns out there in rural Western Maine which had closed general stores and gas stations, and I was wondering about the rate we'll see the Gas Stations closing down again.. it's a vulnerability in our small towns that I think is hardly on their radars out there.

I expect their case will be used against EV's, since the range of them won't fix this predicament.. and yet we need to create the counter-argument that says 'You have to figure out how to make those remote places sustainable again.' Small towns used to have a repairshop, a hardware store (not 30-40 miles to the Home Depot..), butchers or small groceries, a tailor.. nearby farms, etc.. people lived a couple miles from the sources of most of their daily needs, and the longer term needs were ordered from Sears, and you knew you'd have to wait a little for it to arrive.

I did find an actual bakery in Fryeburg, since my hankering for a fresh donut wasn't satisfied by the Little Debbies plasti-wraps that were hoping to get adopted at the Gas-Station Qwikie-Mart.

As they used to say on Scooby-Doo.. "If- we- could just - get - to a phone, may-be we could WARN them!" (Cut to the Local Hero closing shot, of the PhoneBox in Firness, ringing to itself...)

Nature guards her treasures jealously. Just a decade ago, these fields were beyond our reach; we didn't have the technology. Today, a Knox engineer will tell you that he might need a little time, but he'll get the oil.

He knows a little time is all that we have left.'

'Local Hero'-Bill Forsyth film, 1983

I remember remote places as they were sixty years ago. Today is quite unlike then. It used to be that you could live in a town of 2,000 population and make a trip to the city only about twice a year. Gas stations used to be able to stay in business pumping only 3,000 gallons a week (or even less).

Today I live in an urban center for good reason: I can walk to do business. The one gas station in Highland Village, St. Paul is a BP convenience store that pumps a prodigeous amount each week, but they still don't make much on gas. They make much more by selling small jars of peanut butter at high prices. I'm not one to complain, because they still have free air for inflating one's tires--something I check every month.

I am glad to see companies developing products such as these.

Some points:

For me to drop $25K on either of these, in addition to me thinking the vehicle would meet my needs by test=driving it (perhaps as an overnight or 2-3 day test drive), I would want a 10-year warranty, including for the battery. Tire replacement and certain brake component repairs would be on the owner.

That way, my $25K (I'm using round numbers here) would amount to an amortized vehicle purchase cost of $2500/year, which is close to $200/month. Then add whatever the electric bill would be.

Even if a company offered a long warranty, I would be afraid to pitch away my money on a car whose manufacturer may cease to exist several years after I bought it...

Too bad the Moose is an NEV and that NEVs are limited to streets with a speed limit of 35 MPH...the major surface street in Albuquerque have 40 MPH speed limits, with at least one I know of with a 55 MPH speed limit.

These type of vehicles would work very well in ABQ: the road/street surfaces are in very good shape(compared to other parts of the country) and we have very little rain and even much less snow and ice. Pretty flat terrain as well.

These vehicles have plenty of range for me...commute to work each way is about 10 miles. They would be easy to park as well. We have a Nissan Versa hatchback which we bought used about 6 months ago...my wife and I love that we can park at Target or wherever, even between a pair a huge SUVs parked right on each side line, and we still have plenty of room to open our doors...

smaller can be beautiful.

These type of vehicles would work very well in ABQ: the road/street surfaces are in very good shape(compared to other parts of the country) and we have very little rain and even much less snow and ice. Pretty flat terrain as well.

Albuquerque is anything but flat. The elevation gain from the Rio Grande to the Eastern edge of the city is approximately a thousand feet. The West and South sides may qualify, but certainly not the east side, where most of the wealthier residents (who would be more likely to go for electric) live.

You are correct about the elevation from the Rio to the foothills.

However, everything is relative...ABQ is pretty darn flat compared to my old stomping grounds in Central and Western Pennsylvania.

My commute is almost directly N-S and back again....pretty flat...a slight down slope down Wyoming or Eubank from Paseo Del Norte to KAFB and a slight up-slope back.

My point is: ABQ has terrain and weather that seems be not be a barrier to EVs to me.

Even if a company offered a long warranty, I would be afraid to pitch away my money on a car whose manufacturer may cease to exist several years after I bought it...

That is a reasonable concern - my suggestion is to separate the battery warranty from the car. Have the battery warranty provided directly by the battery mfr, who is more likely to be around in the future than the carmaker. A123 systems has been around for a while,as has ThunderSky, Kokam, etc and I would trust any of them ahead of this car company, Zap, Xebra, Aptera, etc.

Of course, you can take it a step further and lease the batteries, but then the car does not get the $7k tax credit.

Good ideas you have here.

I just looked at the Nissan Leaf web site:

# Q: What kind of warranty will this car have?

A: Nissan North America has recently informed consumers that the Nissan LEAF Basic Warranty Coverage is 36 months/36,000 miles. The Powertrain Coverage is 60 months/60,000 miles. The Lithium-ion Battery Coverage is 96 months/100,000 miles.

Eight years or 100K miles battery warranty is a good start.

Nissan is a company which I expect to be around for a while.

Cost of replacement batteries still TBD.

100 (or maybe more realistically even 70) miles of range would cover all of my driving /needs/ in Albuquerque.

Travel /wants/ (Visiting El Malpais, Carlsbad, Jemez Mountains, Santa fe, etc) could be covered by a Volt or some other hybrid or efficient ICE vehicle if practical.

Another route to EVs is to get an existing vehicle converted. There are places around the country that do that sort of thing. Here's one for example:
You can easily exceed the capabilities of NEVs and have no speed limit restrictions. You can get a conversion or do it yourself for around $10 to $15k or less depending on how much you scrounge, using lead/acid batteries. An ideal donor vehicle is a small pickup truck where you can put the batteries under the bed.

I, myself, got a GEM (Global Electric Motors) 2 passenger truck (eS) model) back in 2005. It's on it's second set of batteries (6 - 110ah) which cost about $1500. It gets us to the store and the doctor, what more could you ask as a retiree?

So, at last I've discovered somebody with real experience of using an EV for more than one set of batteries.

What I would like to know is ... what sort of batteries you use(d) and how quickly does the max range fall away?

Gel lead acid, and performance fell away suddenly and dramatically...and to my mind suspiciously. I was getting over 50 miles per charge on my Zenn. I took it into the shop for some problems with the starter. When I got it back, suddenly I was only getting about 25 (in warm weather). Unfortunately, there's only one shop to bring it in to around here, so, being mechanically un-inclined, I don't have many options for second opinions...

From the start, I would lose much of my capacity in the coldest parts of our MN winter. I pretty much don't use it from Dec-March or so.

The history of our 2005 GEM is a bit tortured. We live on the east plateau 275 feet above Lake Washington creating a 3/4 mile 10% grade to get home from the valley. The original pack consisted of 6 - Group 31 95ah gel lead/acid batteries.

At about 1400 miles, the vehicle started to drop into "turtle" mode (battery saving) while climbing that grade. The controller senses pack voltage and if it gets below about 63 volts, it goes into turtle mode. Well, turtle mode was like 5 mph up that grade and was unacceptable. Even though none of the batteries had failed, their internal resistance had increased to the point of causing an unacceptable voltage drop. I cured this by adding a second string of 55ah AGM SLAs in parallel to the main pack. in addition, I placed a switchable 6v pack of D cells in series with the controller's voltage sensing line so that I could fool the controller to keep it from going into "Turtle" mode by artificially boosting the pack voltage.

This arrangement lasted for 5500 miles when I switched out the original pack for Group 31, 110ah AGM SLAs costing about $1500. The second string is still in service. Adding in $700 for the second string and dividing by the mileage give 40 cents a mile battery replacement cost. The original gels are still in service as my solar system backup. While Gels have a good cycle life they have about twice the internal resistance compared to AGM. AGMs would be a better choice for hilly country.

This EV, built in North Dakota (by Chrysler) is truely a flat land vehicle. On the flats, I would expect close to 9,000 miles on the original batteries which would bring the replacement cost down to about 17 cents a mile. We rarely use more than 50% of the pack's charge. Our longest trip was about 15 miles. I wouldn't plan on more than 20 miles.

(sorry for the verbal diarrhea)

Here is a PDF file that shows the AAA's calculations for total driving costs (internal combustion):


Here are the composite numbers for sedans (small, medium and large averages):

10,000 miles/year: 74¢/mile ($7,400/year)

15,000 miles: 57¢ ($8,550/year)

20,000 miles: 48¢ ($9,600/year)

I see from your link that the average operating cost for an ICE car (excluding tires) is about 15 cents a mile. I don't have numbers for charging cost but is is negligible compared to battery replacement. It looks like the GEM (on the flats) could be cost competitive with a gas powered small car.

If we get into another situation similar to the oil embargoes of the 70's, we can easily make it to the grocery store, our nearest one being only 2 miles down the road.

Thanks for the info guys - it's clear that batteries are an unpredictable part of an EV at present but, like my electric bike, an EV seems good for local shopping/trips.

Does anybody know how batteries normally fail, is it a gradual thing or do they suddenly lose a big chunk of their capacity?

From my experience and what I've read, quality lead/acid batteries give up the ghost slowly. If they fail abruptly it's probably because they've been mistreated, usually by being left discharged too long and discharged too deeply. I religiously plug in the charger after each use and rarely use more than 50% capacity.

I recently put together a rather neat electric bike with a good hill climbing ability. It's a Citizen "Barcelona" 20" folder with a BMC 600watt "speed" geared hub motor on the front, a 50 amp controller and a 36volt Ping LiFePO4 20ah pack. And I treated my old butt to a UK Brooks (est. 1866) sprung leather saddle. There's a basket on the front and it has a deep step-thru frame, much easier to get aboard, weight 65 pounds. I used a folder because I could not find a regular full sized bike with 20" wheels. They are all folders. I wanted to use 20" wheels to get more torque from the "speed" version of the BMC motor. The torque from the motor is just at the traction limit of wet pavement on a 10% grade. That makes it useful to pedal up steep grades on wet pine needles to help the motor from slipping.

Top speed is about 20 mph.

My bike has a 900W motor on 26 inch wheels which gives about 20 mph top speed - not strictly street legal but who would know? :-)

If we get into another situation similar to the oil embargoes of the 70's, we can easily make it to the grocery store, our nearest one being only 2 miles down the road.

If you are still of sound body, and have a wheeled way to tote the groceries a 4mile round trip is not unreasonable.
My brisk walk speed is about 3 miles an hour, so that would be under an hour walk each way.

A 3wheel bicycle that can carry groceries (more cost) can probably get you there in about 15minutes at a leisurely pace....

Just buy a $80 kiddie cart for your bike from Nashbar. An adult can bike ~300 lbs about 5-7 miles per hour. Use a mountain bike on low gear. Get a pair of panniers $20 each for two more bags of groceries. Put groceries in the back pocket of the cart. If you dont take kids, then you can fill it up with tons of stuff. The kiddie cart has rain protection as well. I checked it out in a downpour recently. Everything was dry as a bone. I bought rain gear from a vendor in Oregon -- nice outfit ~$250 -- but you cannot get wet in it at all.

It seems like it wont work but it is magic.


Using the on-board 3.3 kW charger[42] and 7.5 m (25 ft)[43] cable included by Nissan, the Leaf can be fully recharged from empty in under 20 hours from a standard household outlet (120 volt, 15 amp breaker, 12 amp maximum allowable draw[44], 1.4 kW) in North America and Japan

Now a person would never run it to empty, but the Leaf would still most likely require a heck of solar array to recharge.

Now a person would never run it to empty, but the Leaf would still most likely require a heck of solar array to recharge.

You certainly couldn't power it with panels on the vehicle itself. But if put up a PV array onto the roof a typical residential home, you can easily supply all the electricity for your driving needs.

Ghung, your earlier comment you mentioned above was what got me to thinking about my own situation. I know a lot of people who are car savvy and need some money, so we got together and are working on a local business offering a small car/pickup retrofit for BEV commuting, My thought is why start from scratch when there are so many little cars moping away in junk yards.

Looks to us that it will come out not very expensive, and I am the first guy on the list. I also am looking around for the right PV to charge my quick change battery packs.

And, as always, I am pecking away at a wood fired battery charging engine, and I have another guy working on wood gas generator IC engine battery charger for when the sun is done gone-- like right now. Dec. is appalachia is pretty gloomy, but we got lotsa wood.

I go only 11 miles a day, but it's up down up down up down, way up, way down, all the way.

I keep coming back to 'Bumper Cars' Wimbi.

I know the idea of a live, bare wire overhead makes people twitchy.. can't imagine why.. but being able to take those hills with only a minimal battery pack onboard is awfully compelling! Seems it would hardly draw much power for single seat vehicles. (which most of them should be..)

But then I come back down the complexity ladder and see that cute little Velo- Pedal-Electric Coupe, (UPRIGHT Seating.. none of that Dentist-chair stuff for me), and I let go of stringing Bug-zapping wires all over Cumberland county. I'd put skis on the front in winter, and cranking those wheels would keep me warm!

But as we descend down the torturous slope of oil depletion and depletion of everything else, let us pause for a few years and have some fun. Going down a slope can be fun if you think of things like skiing or coasting on a bicycle. Bumper cars are one of my favorite childhood memories. We can crash into each other to our heart's content and still live to tell and think about it. They have overhead wires for street cars and buses so why not bumper cars. Bring on the fun.

You guys do know that the original patent (1890) for "electrically powered vehicles", that would become bumper cars, was intended as a real world transportation system, right?

the history of bumpers is here;

It is the only system I can think of that would turn a traffic jam from a pain in the neck to something fun!

Actually, the old Peel microcar is probably a better bet than all the EVs on the drafting boards http://homepage.ntlworld.com/andy.carter/ Another site has some UTube stuff but I lost the link.

This site has great pictures. It sold for 199 pounds when introduced and had a 42cc engine IIRC. Had a max speed of around 40 mph. I'll never be able to afford an EV but I'd seriously consider a Peel if they were still made and cheap.


Surely you recall the King Midget? They were kit cars that were sold thru adds in magazines such as Popular Mechanics. then, there were the Crosley cars. My first road car was a 1949? with a 4 cylinder 26hp engine that had overhead cam and 4 wheel disc brakes. Those were the days...

E. Swanson

My guardian had a 1949 Crosely. He was worried about Peak Oil. A bit ahead of his time, but he had the right idea. His theory was that all the cheap oil had been pumped during World War II. He was a wise man, but an imperfect prophet.

You know there is an EV Peel P50 around, don't you?


A photovoltaic (PV) system can support electric vehicles at an affordable cost.

A 3 KW PV system, turn-key installation, is now about $18,000. There is a 30% federal tax credit off of that, and some localities (including Austin, where I live) have additional subsidies. An expense, yes, but this pays for your transportation for the rest of your life. (Panels are guaranteed for 25 years, but likely will last 35 or more.)

In Austin, we get 5.5 hours average insolation; most of US gets 4 or more. So the 3 KW system is giving 16 KWH per day average.

An electric car such as Leaf or Volt will give about 4 miles/KWH, so the 3 KW PV system is giving 64 miles per day average.

One can get much higher mileage from an electric motorcycle (e.g. Zero, at $9K), electric scooter ($3.5K), or electric bicycle ($500 - $3.5K). Electric transport doesn't have to be cars. Honda plans electric motorcycles, which will lower cost and provide reliability, parts, and service.

So the 3 KW system is giving 16 KWH per day average.

Beware averages, especially when it comes to EV, they take a long time to recharge unlike ICE vehicles.

My gas usage is about 1250 KWh per month but as you can see from the graph I almost never use the average amount!

gas usage

A 3 KW PV system, turn-key installation, is now about $18,000.

Here's an example of an off the shelf turnkey 3.8 KW system from a local vendor in my area. (South Florida) Disclaimer; I am not affiliated with them and have not researched this particular system and am citing it as an example only. The 30% Federal tax credit still applies and despite their comment about additional expenses for installation you'd be very hard pressed to bring the total up to the $18,000.00 you cite for a 3 KW system, especially if you do the installation yourself.

3780 W SUN-A-210-FA2
6 Strings of 3 module
s in series
$ 3.00 PER WATT

18 Sun Solar Panel 210 Watt 18.7 Volt - SUN A-210-fa2 $1.82 / Watt unit price $382.20 total $6,879.60
13 1 Foot Battery Cable - BC-1, 2/0 AWG unit price $8.16 Total $106.08
12 Battery - USP-U-225C U.S. Power 225 Amp Hour 6V unit price $112.45 total $1,349.40
6 Breaker - MNEPV20 unit price $10.40 $62.40
6 Solar Panel Cable - MC-4 Connectors 30ft Evergreen and Kyocera unit price $37.74 total $226.44
4 OBB-80-150VDC120VAC-PNL unit price $25.50 total $102.00
2 Delta Lightning Arrestor 18 Inch Leads LA302DC unit price $40.00 total $80.00
2 Cable - BC-5, 2/0 unit price $35.70 total $71.40
2 Outback Power Solar Charge Controller 80A FM-80 unit price $586.50 total $1,173.00
1 MNPV6 unit price $93.84 total $93.84
1 MNDC250 unit price $188.00 total $188.00
1 Xantrex Trace 3600VA Off Grid Inverter Charger TR3624-120-60 unit price $998.00 total $998.00

Grand Total $11,330.16. Lets round that up to $15,000.00 installed.

So after 30% Federal Tax credit which is $4500.00 you could end up with a 3.8 KW off grid system for a little over $10,000.00 that should last you at least 15 years with very little maintenance... that's equivalent to about 200 fill ups for your ICE powered car at the local gas station at roughly $3.00 gal.

The fact that batteries are included implies an off-grid system. Last I looked (in 2007 when I installed my system), off-grid wouldn't qualify for the tax credit.

I did it anyway :-)

The fact that batteries are included implies an off-grid system. Last I looked (in 2007 when I installed my system), off-grid wouldn't qualify for the tax credit.

I have a friend who owns a pool screen enclosure business. He has been adding solar panels LED lighting and solar DC pool pumps to his packages, everything completely off grid. Because the systems are low voltage DC there are less hassels with permitting and his customers get the 30% Federal tax credit off the price of the aluminum screened enclosure because it also supports solar panels.

There is a significant savings in electricity by running solar powered pool filtration systems and at least in my neck of the wood this qualifies for incentives even if it is not connected to the grid.

If you install yourself, it can be very cheap. But there is no way you are going to get professionals to install the above system for $3700. Installation generally doubles the price of the system. And where you are you getting those 210 Watt panels for $1.82/watt price? That is significantly below market price. But to reduce the price, you can get rid of the battery & charge controller. Unless you live out in unabomber territory, you don't need them and they are more hassle than they are worth.

This is what I don't like about the emerging PV market...the solar companies which have web sites in Albuquerque (and there's not many) do not post even ball-park cost expectation figures.

I get it that PV the installation part of PV installations is the part of the cost that will vary according to the type and area and orientation of each house's roof, and each house will have a different breaker box and so forth, but it seems impossible to 'shop around' for ROM pricing (based on how much juice you want)...

Previously several TOD posters strongly advocated that I should look at solar hot water...I think I found a whopping one business that claimed to handle residential installations of such...in a city that has over 300 clear sunny days a year.

Even the process of shopping around for a new NG furnace appears to involve a litany of meeting with different company reps for an hour or so each in one's home to get the dog and pony sales routine (including the inevitable pitch for a 300-500 buck discount for signing on the dotted line then and there...

Faced with the high capital costs and the fear of getting swindled, I can see why may folks sit on the sidelines rather than take the plunge for a major home retrofit such as new windows, HVAC, PV, etc. Add to that the uncertainty of the job market and the possibility that one may have to sell one's house and downsize and not be able to recoup such improvements in the selling price, the tendency towards inertia is all the stronger.

Installation generally doubles the price of the system.

I work with solar and that simply isn't true. Unless you are dealing with ripoff artists.

And where you are you getting those 210 Watt panels for $1.82/watt price? That is significantly below market price.

That's retail price direct to the public from this particular vendor as listed on their website yesterday.

But to reduce the price, you can get rid of the battery & charge controller. Unless you live out in unabomber territory, you don't need them and they are more hassle than they are worth.

For the record I live in a densely populated urban area... Repeat after me: Paradigm change, Paradigm change, Paradigm change, Paradigm change, Paradigm change, Paradigm change...


I work with solar and that simply isn't true. Unless you are dealing with ripoff artists.

$ 8.94 avg cost/watt <10kW
$ 7.74 avg cost/watt >10kW
last updated: 12.2.10

That's retail price direct to the public from this particular vendor as listed on their website yesterday.

Please share the link!

I go here and except for a few outliers on small output panels, everything is more like $2.20/watt for a good deal:

For the record I live in a densely populated urban area... Repeat after me: Paradigm change, Paradigm change, Paradigm change, Paradigm change, Paradigm change, Paradigm change...

What do you mean by 'paradigm change'? A doomster outlook?

You're confusing panel cost with total installed system cost, and wrt the panels, probably confusing wholesale cost with retail cost as well.

No, I'm not.

He touted a $15K system (including installation) that does 3.8KW . . . that is $3.95/KW. A very low price compared the quotes around me and the costs of the systems installed in California. And California tracks it all as part of their incentive program.

And he said "That's retail price direct to the public from this particular vendor as listed on their website yesterday." regarding the $1.82/watt price. That is a possible price but definitely a very low price. And I'd like to know about where the price is from so I can buy panels from them!

I think these folks are the same folks which used to sell panels and parts thru eBay. Their prices have been around $2 a watt for a while, although I've not looked lately. some of their panels are for off-grid use, which doesn't require the certification as for grid tie panels, thus the lower price. Also, they may be selling last years model panels, which have slightly lower efficiency thus lower watt ratings...

E. Swanson

That's a great price on Evergreen As, Dog. $1980 for 1 kw, UL listed. Wish I had the extra cash.

Thanks! That must be the site he is referring to. It is a little concerning when you click on the 'Shipping & Returns' link you get this:

Shipping & Returns
Shipping Sample Text ...
This section of text is from the Define Pages Editor located under Tools in the Admin.
To remove this section of the text, delete it from the Define Pages Editor.

But the site looks real enough. I think I need to make another run at the local building department and get my plans approved. Then just add an EV and I'm driving oil-free! :-)

That's a pretty nice system as speced, Fred. I'd swap out the inverter for an Outback Smart RE (hybrid on/off grid, 240vac). More money but worth it to sell excess to the grid. Then I'd add Outback's Hub system to the inverter and controllers to network and monitor the entire system. Add an old laptop and Righthand Engineering's software; sweet system for under $20K. I would do the install for about $3k, plus costs. Need to add mounts/racking.

Charge up your Triac and smile as you pass the que for the pumps. C-ya at the beach!

Aquestion for you guys. Most of the grid ties I've seen are 240V. The preponderance of electrical supplies here are 120V or 120-N-120V (either 2 phase or 2 of 3 phases). How do you tackle that?


Grid inverters are designed to sink with the grid they're connected to. They can be ordered in most any configuration but most grid tie inverters in the US are 120+120 60hz. I get 240 (120+120 vac) off grid using two 120s connected by a sync cable.

Grid inverters are designed to sink with the grid they're connected to.

Which is why the charge controllers have a FLOAT configuration setting to top off the batteries and make up for sinking grids... >;^)

That's what I love around here. All these wise perspectives coming from Divers viewpoints!

'What's in your tank?'

Not a problem - the right inverters & wiring can handle 120V or 240V, 2 or 3 phase output

Link up top: If the expert is insistent he is right, odds are he is wrong

Okay, a lot of experts, in fact most experts, have been dead wrong in their predictions of the future. But wait... were they really wrong or just too early with their predictions?

For a short time in the mid 80s I was a Stock Broker, and played the stock market for many years. Insiders, that is executives of any company, if they file their intentions with the SEC, can trade their own stock. And their trades are published to the public. There was a saying, and a very true saying about insider trades. "They are almost always right and almost always too early." That is they knew exactly what was going to happen but almost always predicted it would happen well before it actually happened.

I see the same thing happening with prognosticators of the future like Paul Erlich.

Gardner has done his research, and he names -- some of them big ones who, despite the spectacular failures of their specific predictions in the past, still have an enthusiastic following. Paul Erlich, whose still-famous The Population Bomb was wrong in almost everything it forecast for the 1970s, is one. Arnold Toynbee, the man who saw in the deaths of older civilizations a blueprint for the imminent end of our own, is another. As are all those upbeat market analysts who more recently saw ever-rising oil prices, or endless prosperity and the end of the business cycle, and on and on.

Okay, I think both were right but both Erlich and Toynbee were right but just way too early. But concerning the future, what can we know? Here are just a couple of things that we can know with absolute certainty.

1. We know (already) that the world population was able to explode with the aid of fossil fuel. That without fossil fuel and the agricultural, industrial and medical revolutions that did happen would never have happened. (There would still likely have been a small industrial revolution due to water power but it would have been a pittance when compared to the fossil fuel driven industrial revolution.)

2. We can know that finite resources will eventually be depleted to the point where it is no longer economical to extract them. That is oil extraction, natural gas extraction and coal extraction will eventually go to zero.

With the two above premises we can construct a syllogism. A syllogism has two premises and a conclusion.

First premise: The cheap and abundant fossil energy enabled the world's population to explode.
Second premise: Fossil fuel will eventually disappear.
Conclusion: The population will collapse.

But we don't know when though our guesses are getting a little closer each year.

Of course some will argue that even though we know the first two premises are true the conclusion might not be true because we do not know for sure that a population of over seven billion cannot survive on "renewables" like corn ethanol and such. But my position here is the same as it is with the flat earth advocates, these people should be ignored, not argued with.

Ron P.

But wait... were they really wrong or just too early with their predictions?

Obviously we were composing our posts at the same time or I would have responded to yours with my post below.

I don't buy the premise in the above quotation. I used to believe it, but not anymore.

Timing is the essence of prediction.

I really don't understand what you disagree with here Mike. I wrote: But wait... were they really wrong or just too early with their predictions? And you say you disagree with that premise? Sorry but that don't make any sense, there is no premise there, I am just asking a question, a question that can be answered either way.

Ron P.


What I think Mike means is that if you are too early with your prediction, then you are flat-out wrong. Thus, for him, a valid prediction must contain a date by which the prediction is supposed to come about in the real world.

Your own position is one with which I sympathize. For example, except for timing, Malthus was right. But his timing was off by about 200 years.

On the other hand, Paul Ehrlich was emphatically wrong in his famous $10,000 bet he made with Julian Simon. He "just" had his timing wrong. But is it not the case that stating a correct time fore a forecast to come true is of the essence of the matter? Consider weather predictions . . . .

Don, that is my thinking as well:

"Timing is the essence of prediction."

The National Hurricane Center forecasts that a hurricane will strike Long Island, NY, at approximately 0900. The storm's translational speed slows for a period and the storm actually hits at 1300, still delivering devastation.

Having the wrong timing did not make the hurricane disappear.

In this scenario, what is more important: The forecast of timing, or the forecast of conditions?

For forecasts of major economic outcomes due to Peak Oil or other influences, the 4-hr weather forecast difference above might equate to 4-40 yr.


"Timing is the essence of prediction."

Probabilities are the essence of prediction. If people do not understand that, then we might as well not discuss it any further.

Hi WHT. I agree.


Yeah, just trying to hammer the point home. There is a probability of timing, a probability of magnitude, etc. Feed this into a mill and you can get a most likely outcome, but it also has a great uncertainty about this most point due to the spread in probabilities.

Of course obtaining the probability of civilization decline (civilization anti-matter) is kind of hard to assess. You only get one civilization to decline after all. Same goes with Global Warming/climate change issues. You only get one planet to modify (what is the control in that experiment???)

How many experiments do you get to do to evaluate your predictive prowess?

If I has a random number algorithm, how many spins of that algorithm would it take to approximate the probabilities for each possible random number (assuming there were finite number of numbers possible).

It would take more than an n=1 data; and you do not even get n=1 in predicting civilization decline do you.

For the predicament of predicting civilization decline issues, I think timing is not as critical as saying -- "HEY FOLKS some of these things we are doing may not last very long at this rate!!! Here are some production curves for this and that. AND here is the world population. AND pollution. AND here is the number of people per arable acre of farmland!!! These differential equations are not in equilibrium. They cannot be."

Web - You've remined me of my very early days with Mobil Oil. The geologists would assign a probability of success for each well. Discounted cash flow analysis was done using our reserve number X Ps. Granted not very sophisticated but this was the mid 70's. But a couple of years after starting I saw some numbers that didn't quit fit. One of my engineers took me aside and explained: the engineers had a list of very unofficial "geologist risk factors". They ranged from around 30% to 80%. Each geologist's risked reserves were reduced further by this factor and that's how NPV was calculated. Thanks to my being one of the few new geologists with formal petroleum geology training in school I had a decent rating. Most interesting was that the lowest ratings were held by some of our oldest geologists.

After 35 years in the biz I can't argue with that approach. I would say maybe only 30% of the geologists I've worked with were consistantly good at generating viable prospects. The pressure to drill is typically so great that many will push a poor project. At least drilling something that has a small chance of working is prefered to not getting anything approved. At least there's some small chance of success.

"Timing is the essence of prediction."

That's another one of those "sounds like sound logic to me" statements that can be falsified if only the listener would give it another second of critical thought.

But in today's fast sound food gobbling world no one gives anything pause and time for reflection.

Exactitude is often unnecessary for a prediction to be correct

So let's pick a quick & dirty example of how exactitude does not negate a correct prediction:

Say your doctor warns you that if you keep smoking and drinking, you health will probably suffer in a serious way.

That is a prediction.

"But unless you tell me exactly when, Doc, my smoking will give me cancer," you retort back, "your prediction is invalid".

The illogic of the above is clear.

But who has time to think to that level?

Peak Oil predictions are invalid unless ....

you correctly pinpoint the timing and extent of every consequence

Do we have to dig deep into why the above is not rational?

Again, it "sounds" good.

But "sound logic" is often wrong logic.

You're refuting a statement I never made, so what you have is a straw man. In the process you define "prediction" in such a way that you find congenial: it conveniently seems to take the doomer chorus off the hook for their failures.

"But unless you tell me exactly when, Doc, my smoking will give me cancer," you retort back, "your prediction is invalid".

But if someone does make a prediction that the subsequent passage of time disconfirms, then that prediction is wrong. This is what peak oil pundits have been doing for years, continually moving the goal posts forward as they go. (The exceptions perhaps are those who have made specific predictions within a reasonable time frame, Deffeyes, et al., and we will have to wait a little longer to see if those predictions hold. If they do hold, then these are extraordinary works of scientific analysis, not the armchair doomer dogmatism we see so much on the Internet.)

The doctor in your example would not make such a "prediction" because he knows better; so he reiterates principles learned by hard and repeated testing and analysis of many case studies. Look at the long, complicated journey that cancer research has had to take in order to make "merely" probabilistic statements. (My father began smoking at twelve. He is now 75 and healthy.) Doctors know the parameters in which they operate: they wouldn't think of making such ridiculous predictions as the one you state in your quote. Which is entirely my point: Those who make such firm predictions are fairly destined to fail.

I think you're simply trying to rationalize the ever-growing mountain of self-disconfirming predictions that peak oil pundits, mostly non-experts, have made over the years. If their predictions had come true, I'll bet you wouldn't bother to make this argument.

peak oil pundits have been doing for [this] years,
continually moving the goal posts forward as they go

what you have is a straw man

you define "prediction" in such a way that you find congenial

"Prediction" is part of a broader process of "modeling" the world/universe.

We all have internal models (in our heads) of how the world/universe is put together and/or how it works.

The purpose of a "model" is to predict, to be able to act proactively rather than after the fact when it is too late.

Take for example, a cheetah stalking its prey.

The cheetah is fast and lethal.
But has limited energy and range.
If the cheetah repeatedly fails to model the situation properly in terms of wind direction, escape capabilities of its targeted prey, distance, speed; --and yes timing-- it may likely die.

Proper modeling, prediction and timing is a skill necessary for survival.

However, better models do not arise out of thin air.
They are constantly remade, refined and tested.
This is the essence of the scientific method.

It appears that you are faulting the entire modeling process of the Peak Oil crowd simply because we did not get the timing part perfectly and exactly right.

However, the basic Peak Oil model (URR= area under the production curve) is unquestionable mathematics.

The area under the production cannot, as a mathematical certainty, exceed the URR (ultimately recoverable amount of resource).

We all know that dirt is opaque and thus we cannot see underground.
So we cannot see what the URR number exactly is.
However, the rate equations (e.g. Hubbert prediction curves) provide a good clue of what is going on.

It happened in lower 48 USA.

And yet you deny validity of the model.

It happened in North Sea.

And yet you deny validity of the model.

It happens well after well and export country (ELM) after export country.

And yet you deny validity of the model.

From a systems perspective, the purpose of a model is to answer a question. Often we hear naysayers decry the accuracy or resolution of an existing model, or be desirous of a new model, without clear comprehension of the fact that the adequacy of a model is coupled to the problem specification. A weather prediction for whether to carry an umbrella today is not the same a prediction for planting a crop today or for adding a carbon tax today, and so the adequacy of models to make such predictions cannot be broadly stated.

The most basic aspect of solving a problem is that of stating the problem itself.

I am unconvinced that properly predicting the year of peak oil is of paramount importance. I am also unsure that any reasonable model will answer this question, as it is intrinsically coupled to the economy, and by that to everything from population to weather, to eating habits, to geo-political realities. I think the price of energy, regardless of production, is the more significant parameter for western-style societies.


Your insights about models are spot-on with my experience.

I have some experience making models for the USG for a certain of its 'Enterprises', and I am continually amazed how poorly people understand their own problems and how poorly they are able to phrase their questions.

A few other observations:

- Show people some output, even from a relatively simple deterministic Excel 'model' (actually a fancy custom calculator) and even General Officers and Senior Executive Servants (GS GO-equivalents) can go ga-ga and think you have delivered Delphi's Oracle to them!

- Of course this leads to all kinds of instant demands that the 'magic model' software be able to answer all manner of additional questions and scenarios other than the original (poorly specified) question and situation. When one explains the Level-Of-Effort required to morph the software, including for additional V,V&A, the decision-makers become disappointed that your model is not the instant-gratification super-magic 8-ball after all.

- I have seen some models become very useful to be used to play 'pin the tail on the other guys' when they are used in supply-chains analysis among different organizations...just play a little bit with your assumptions and voila, the other organization is the problem, not yours! This is especially possible when the modeler belongs to the 'cast blame' organization and the organization doesn't ply 'open kimono' with their model with all the Enterprise stakeholders (the problem of the black box.

- In my experience in the USG, different organizations are very jealous and protective of their operations data, to guard against the issue I just mentioned. I have seen organizations offer high-level abstractions of their data vice the actual data so that they could mask their true nature from the other stakeholder organization they work with in the government. This is especially manifest when organizations make predictions of their future performance...I have seen more rosy rectally-extracted future prediction 'data' than I care to remember...

- In sum, modeling would be much easier if organizations knew what their processes are, collect and store the process data in a useful, logical fashion in an appropriate database, and were willing to share their process data with other organizations in their value chain.

So, just eliminate incompetence (not knowing your processes and not collecting or usefully archiving your data) and political CYA (lose the fear of not looking good in the shower, losing budget, etc) and personal biases (these are huge when they belong to the decision-makers... "I don't like the answer, so I don't like your model."

I can certainly see some seeming parallels between what I have to deal with and the energy industry / government mess.

Should be...
Timing is the essence of useful prediction.

Ahh, now I understand. Thanks Don. But there are differences in predictions. If an insider sells stock in his company, thinking it will go bankrupt next month, and it is really six months before the company goes bankrupt, then he was still right, just early. He still got out before the crash.

As hard as I tried I still think perhaps I did not make my point clear. Those who predict a peak in oil production cannot possibly be wrong. Oil will peak, the only question remaining is when, or perhaps the question is "has it already happened".

The current birth to death ration, worldwide, is almost two point five to one. But it is a lead pipe cinch that deaths will, one day, equal births. The only uncertainty is in the timing. That was my entire point. Collapse will happen! It must happen because fossil fuels will decline and eventually be nil. We just don't know when. But we can make an educated guess.

Ron P.

You hit the nail on the head when you emphasized the importance of "educated" guessing. In looking at the future the BEST we can hope for is Scientific Wild Ass Guesses.

I think your comments are excellent examples of SWAGs. I especially like your nondogmatic style and your willingness to answer comments that do not seem to reflect a close reading of what you wrote.

Sometimes I have mere opinions, and I label these as such. Sometimes I've done the numbers and have more than mere opinion, but it is still not "knowledge" as Plato defined knowledge.

As of 2009, the average birth rate for the whole world is 19.95 per year per 1000 total population
The average crude death rate for the entire world is estimated to be 8.6 deaths per 1,000 population.

Ratio is 2.32.

The World Population Clock reads 6,885,692,223.

So the birth rate is about 137,000,000 per year and the death rate is about 59,000,000 per year for a net gain of 78,000,000 per year.

The US population is 310,846,222

So a population equivalent to the United States is added to the world every 4 years.

But note that the (estimated at this point) death rate rose this year for the first time in a while, and this may be the beginning of a long term trend toward ever rising death rates.

Meanwhile, birth rates have been falling, and will probably continue to fall. This combination of rising death rates and falling birth rates, depending on how fast they move or accelerate, could whittle down that 78 million/year to nothing and then negative much sooner than the usual 2050 date.

Many here expect the death rate in particular to start rising dramatically soon.

One problem is that urbanization has been one thing driving reduction in birth rates. As mechanized ag goes away, more and more people will need to go back to the land. Will this prompt a rise in population? As an earlier poster noted, one strategy that helped Bangladesh cut its birth rate dramatically was raising the legal marriage age. In conservative countries like this where out-of-wedlock births are still strongly frowned upon, such policies (including the many policies that empower and educate women in various ways) could go a long way toward dramatically lowering birth rates.

Death rates rise when a population ages. Have you used age-adjusted numbers?

No, and I assume that age-related deaths are a big part of what is going on. It just seems to be showing up earlier than most demographers had predicted.

Infant mortality rates continue to drop globally, so the increase in deaths is not coming from that.

The larger point is that since the late Middle Ages the death rates have been generally falling globally.

We appear to be at a historical turning point when they will start rising for a number of years--at first, perhaps, mostly because of aging of the birth booms in the second half of the 20th century, but ultimately, I believe, because of the exhaustion of resource sources and waste sinks.

Meanwhile, of course, the death rate of the rest of life continues at rates only seen a very few other times since the beginning of complex life on earth.

It is incorrect to think that population is always increasing. Around 1850 the population of China was about 400 million and then decreased by about 60 million. http://www.wsu.edu/~dee/CHING/TAIPING.HTM

How reliable are these population data from China?

There are few times and places from which we have valid and reliable population statistics.

There appears to be good agreement that the Taiping Rebellion resulted in 20 to 40 million fatalities by arms, executions, massacres, starvation, etc. However, During the 1850 -1875 period there were several other rebellion, famines, etc., and the Yellow River shifted course with significant impacts.

Taiping was the bloodiest war until WW I&II.

What happens to population in Asia and Africa matters. Population elsewhere is too small a percentage to have much influence on global demographics.

"It is incorrect to think that population is always increasing."

I don't recall making any such claim, especially for particular countries. But over time, China's population did increase in a wavy curve from Han times to 1900. As horrific as death tolls from famines and rebellions are in the short term, they barely effect the longer term trends even locally, much less globally.

The main point is that we are likely to be entering a time when death rates globally increase for decades if not centuries. This has not happened on a long term basis globally for a long time.

No, you didn't make a claim that population is always increasing, but the impression that I get from reading many commenter is that most think that a period of decreasing population is unprecedented in historical times. Perhaps it is on a global basis, but certainly to people in China following the end of the Han, Tang, or Song dynasties it must have seemed that population in the whole known world was decreasing. They would not have had the ability to distinguish between a Chinese and a global population decrease.

http://www.tabel.tcu.edu.tw/ChinaPop.jpg shows, for example, a decrease from over 55 to less than 20 million people at the end of the Han dynasty.

So population collapses are not limited to primitive cultures like the Mayans or Easter Islanders, they are not limited to small groups in hostile climates like the Greenlanders, and they are not limited to prehistoric volcanic eruptions like Toba.

A reduction of global population by half in a globally interconnected world would not be different in kind than a reduction in population of China by half in what was then the known world so far as most Chinese were concerned.

Good points.

As others have pointed out, it is a bit odd that Diamond did not focus on these really large collapses (besides the Maya). A new study that compares the collapse of the Han and the collapse a couple centuries later of the Western Roman Empire and some other larger scale collapses may be more useful meta-analysis than Diamonds investigations of mostly much smaller societies.

Do you have any predictions about where China is headed. Booms are generally followed by busts, and it is hard to describe what China has been undergoing in the last couple decades as anything but a boom. My own view is that they are going to become increasingly aggressive about externalizing both resource sources and pollution sinks.

Every country, including China, needs some resources that are only available at a reasonable cost through trade with other countries. China has been diligently setting up trading arrangements with other countries, but so far hasn't shown much interest in pursuing political control of othe countries through some form of neo-colonialism. China does take a paternal interest in the off-shore Chinese minorities in Southeast Asia, and if there were repeats of the Indonesian or Malaysian pogroms against Chinese minorities, China would probably take more effective action than it has previously. The actions would probably be more economic than military.

The Chinese still have more effective controls over their populations and businesses than most other countries. So I think that they can ameliorate any bust following the current boom. In particular, they have pursued a strategic financial plan such that international speculators will find it difficult to trigger a bust in order to profit from a change in exchange rate, changes in interest rates, etc. A classic George Soros '92 breaking of the pound type of manipulation, or the manipulations going on regarding Greek, Irish, etc. debt, is not possible against the yuan and the Chinese financial system. The Chinese and some Southeast Asian economies took the lessons of the '97 Asian financial crisis to heart and have worked to secure themselves against Western financiers.

The Chinese have the best chance of any nation to succeed in making the transition from oil and coal to nuclear fission to nuclear fusion as the prime source of energy for their economy. The key will be negotiating the transtion from a position of economic and military strength such that the inevitable catastrophe in the Indian subcontinent, and the possible catastrophe in Southeast Asia, does not damage them too much. Meanwhile, they have immense reserves of coal and will burn whatever then need in order to make the transitions.

"the inevitable catastrophe in the Indian subcontinent"

I can think of any number of catastrophes that I might refer to as inevitable in South Asia. I'm just curious which one(s) you might be referring to here.

China is an amazing and bewildering place, investing in all sorts of renewable technologies even as they continue to build lots of coal plants (though more efficient, less polluting ones recently); but I haven't heard much about their nuclear program. Are they really investing heavily in nuclear power right now?

Some subset of rising fossil fuel prices, fertilizer shortages, failed monsoons, reduced glacier-fed river flow, Hindu-Moslem religious strife, caste conflict, tribal/maoist conflict, ineffective population control, nuclear weapons, and ineffective and/or corrupt governments in Pakistan, India and Bangladesh should be sufficient to guarantee catastrophe.

Nuclear Power In China

- Mainland China has 13 nuclear power reactors in operation, 25 under construction, and more about to start construction soon.
- Additional reactors are planned, including some of the world's most advanced, to give more than a tenfold increase in nuclear capacity to 80 GWe by 2020, 200 GWe by 2030, and 400 GWe by 2050.
- China is rapidly becoming self-sufficient in reactor design and construction, as well as other aspects of the fuel cycle

Plasma Physics and Controlled Fusion Research

Thanks for the links. As for south asia, don't forget the problem of ground water draw down.

Can you imagine these young overweight little pork chops we all see walking around having any chance of making it into their 70's or 80's? Its a question I've never really seen discussed. I have a hunch the life expectancy in this country is just going to fall off a cliff, even without the effects of PO. Cancer, heart disease, diabetes... I think I see plenty of growth in those 3.

Offspring of hot mom, You raise an interesting question. The increase in obesity could definitely affect death rates, especially if we find ourselves unable to afford the extensive medical services that now keep many alive beyond what would have occurred even 25 years ago. If you are correct it will have an excellent effect on the financial structure of social security.

This recommendation to help solve our current fiscal deficit problems by raising the retirement age to 69 in 2075 is the silliest damn thing I've seen recently.

Who knows what anything will be like in 2075? Certainly not this collection of ossified politicians.

Economic projections beyond some reasonable number of years like 20 should be avoided, or at least supplied with very substantial error bars.

Actually, 10 years is probably too long a horizon for reasonably accurate projections. How many in officialdom in 2000 would have predicted anything like our current situation?

Yes, given the possible effects of energy, resource depletion, and global warming, the current retirement age may be more than adequate. Mass dieoff should guarantee no problem with respect to the retirement age. People will retire rather early as it were, but they will be dead.

We do, after all, have an actuary on this site. Do the current projections on ss solvency take this increased obesity into account? But there will be a tradeoff with medical costs.

"Can you imagine these young overweight little pork chops we all see walking around having any chance of making it into their 70's or 80's?"

This issue has in fact been widely discussed, see for example:


"The cumulative effect could be the country's first generation destined to have a shorter life span than its predecessor. A 2005 analysis by a team of scientists forecast a two- to five-year drop in life expectancy..."

This is a global problem, and I expect both obesity and lack of food are playing a role in the apparent earlier than expected change in the death rate from regular annual decrease to what may be the beginning of a number of decades (at least) of increase.

But it is obviously too early to say for certain. We could have a few more years of return to lower death rates before the inevitable long term rise really kicks in.

The current birth to death ration, worldwide, is almost two point five to one. But it is a lead pipe cinch that deaths will, one day, equal births. The only uncertainty is in the timing. That was my entire point. Collapse will happen! It must happen because fossil fuels will decline and eventually be nil. We just don't know when. But we can make an educated guess.

Actually, timing is not the "only uncertainty." There's not just "when," but "where," and "how," and "by how much."

Will "collapse" be general and unmanaged? Local and mismanaged? General and managed? Managed and local? Will one part of the globe "dieoff" while another part thrives? Will it come by famine, disease, war, or some combination thereof?

These things make a difference. I'd like to be able to make an entry into my planning book because I'm merely human and would like to know what the hell to prepare for.

(It's my belief that we can't prepare for the unknowable.)

"we can't prepare for the unknowable"

The future, by definition, is unknowable, yet most of us make some kind of preparation for it anyway.

One thing that should be done is to overhaul education to begin to start to teach "useful" skills rather then feel-good stuff. Activist Post has a list of ten http://www.activistpost.com/2010/11/10-skills-needed-to-thrive-in-post.html You might not agree with their list but I think many of us who live outside the mainstream would agree it's a good start.

I grew up in an upper middle class suburb but kids were required to take shop or home economics in 7th through 9th grade (I started junior high in '49). For the boys that included not only stuff like drafting but also using shop equipment like table saws and joiners (I'm sure current educators would puke at the potential liability of actually having kids use "dangerous" equipment.)

Interestingly, in my HS about half took college prep courses while the other half took "shop." I was college bound but still took a shop class in my sophomore year (house wiring -nob and tube no less). The shop wing was amazing with everything from machinist classes to automotive repair. Unfortunately, it was closed years ago. FWIW, there were 2,500 kids in this 10-12 HS.

In any case, it would take a generation for something like this to be meaningful which is well within the boundaries of when serious trouble will start.


PS Forgot the HS also had a theater program so kids could learn stage craft (the school had a 2,500 seat main commercial quality auditorium and an 800 seat "little theater." And, there were even dressing rooms.

These capabilities are still around in some places.

I went to JH and HS in a ~ 60,000-person town (Altoona, PA) in the late 70s and early 80s.

JHS had a comprehensive shop: woodworking, metalworking, drafting classes, etc.

JHS and HS each had wonderful, large auditoriums, theater programs, and bands, orchestras, 'stagebands', choral programs, etc.

The HS has an indoor Olympic-size pool, and a planetarium.

The Vocational technical school (right next to the HS, had (and has) small engine repair, auto engine repair, auto body repair, HVAC, plumbing, electricity course, carpentry...

The city library (very nice) sits right next to the HS, Vo-tec, and the JHS.

These capabilities and offerings continue there.

I went around the country to other places such as Shreveport/Bossier and Albuquerque and see schools with a main building and a bunch of 'relocatables' (modular metal buildings)...and to get the capabilities I mentioned above that my home town provided through taxation via public schools, one would have to go to one or more expensive private academies.

The first premise is not true and the second important only to the extent that adapting to civilized life with less and less fossil fuel will be hampered by entrenched interests and unimaginative determinists.

The British agricultural revolution was underway in the century before the industrial revolution. It was in every aspect, from rotation, breeding and mechanization to changes in the concept of property, rooted in the Enlightenment. As was the industrial revolution. The Scottish Enlightenment produced some remarkably skilled thinkers, including my favourite, James Hutton, who led our reconception of time while fathering modern geology and who also contributed to the agricultural revolution.

Fossil fuels have created a lot of illusions, including the illusion of their indispensibility.

I don't for a moment underestimate the costs, including the cost of lost opportunities in times yet to come, of wasting so much fossil fuel in a bonfire of vanities. I also regret how the low cost of fossil fuel based technologies imposed their substitution for other ways of acting.

But fossils were not only wasted. They have also fueled a civilization whose knowledge broadens and deepens every day and whose capacity to exchange information gets faster and less expensive while we breath. This is the platform from which we face declining fossil fuels. Those fossil fuels embedded in the growth and distribution of the body of knowledge are not lost to the world because the knowledge is not lost, and even though the growth and distribution of the body of knowledge requires ever less energy, by orders of magnitude, that energy used expanding it and disseminating it can not now be said to have been wasted. The growth and distribution of the body of knowledge is now well on the road of current solar dependence.

Our species is well suited to environmental adaptation, including radical changes in resource availability. Such is the only explanation for the range of our habitat in times long before James Watt.

Our adaptive skill and our knowledge faces new challenges, from peak oil to climate change. Here we go again. The challenges are huge, so are the intellectual resources.

Still, the adaptive process in some badly informed social organizations might be retarded by anti-enlightenment tendencies leading to a lot of people to suffer unnecessarily.

The latter problem raise a moral dimension from which, it appears, some people wish to escape with thoughts of inevitability or fate.

The first premise is not true...

Toil, the very idea that the population explosion would have happened with only the aid of crop rotation, breeding, different concepts of property and... deep and skilled thinkers like James Hutton..., that it would have happened anyway even if we never had found a lump of coal, barrel of oil or a cubic foot of gas is... is...

Sorry Toil, I simply cannot argue with such an idea. I would have no idea where to start. So divorced from reality is such an idea that I... I...

Bye now,

Ron P.

While I seriously doubt that we could have (nearly) reached 7 billion without fossil fuels, there is clear data that world population was on a significant rising trend before the industrial revolution and certainly before fully industrial agriculture.

China's population, for example was already on an exponential trajectory before 1900, though very little of the industrial revolution had made it there by then, particularly in the countryside.

But even if we COULD sustain populations near the current level without ffs, the question is SHOULD we? Haven't we that learned at least for population, 'growth' is not = to 'good.'

It took about half a million years, give or take, for the world population to reach 900 million. It reached that figure in 1800.

World Population Growth History

Then in the next 210 years the population increased by 6 billion. Now it just might have done that without the industrial revolution, the green revolution and the medical revolution, all made possible with fossil fuel.

Yes it just might have done that anyway. You can believe that if you wish. After all, some people still believe the world is flat.

I cannot find a historical chart that I can reproduce here but it looks like a hockey stick. The curve in the hockey stick actually starts to creep up in around 1700, the beginning of the industrial revolution. And the closer we get to the present the steeper the curve gets. Then it really took off in mid 20th century when the green revolution happened.

Ron P.


The inflection point for population growth was around 1650--well before the Industrial Revolution. But before the Industrial Revolution was a first "green revolution," the introduction of the potato to Europe.

In 1800 Ireland had a population of about 4 million, mostly living on potatoes.
In 1846 Ireland had a population of about 8 million, mostly living on potatoes.

After the potato famine, Ireland again had a population of about 4 million, which is roughly the population of Ireland today. To account for the 4 million decline, roughly half emigrated and the other half starved to death.

Today, of course, there is no place for large numbers of people seeking emigration from starvation conditions.

History always repeats itself. Perhaps the first time is tragedy, and the second time is farce--but the tragedy of drastic decline in human population is still in the future. Not the distant future.

A demographer I know traces the rise in European population to the discovery that turnips could be grown in fallow fields and poor soils and either eaten directly or (much more often) fed to pigs and other farm animals. This dramatically increased the reliably available calories to many communities.

Increased understanding of the importance of sanitation and some medical advances like vaccines greatly reduced mortality. While these were obviously facilitated by ff use, whether they would have been completely impossible without ff is rather hard to tell, imo.

But again, I find it very highly unlikely that the dramatic rise in global population since 1900 or so would have been possible without ff.

A demographer I know traces the rise in European population to the discovery that turnips could be grown in fallow fields and poor soils and either eaten directly or (much more often) fed to pigs and other farm animals.

Actually, there were two major technological breakthroughs in the Middle Ages that contributed to the rise of population in Europe - the moldboard plow and the horse collar. The moldboard plow allowed people to break the heavy soils of northern Europe and create furrows to drain the wet farmland, and the horse collar allowed horses to pull moldboard plows. Prior to that time, people were limited to cultivating the lighter, dryer soils of southern Europe by hand.

After America was discovered, Europeans also got some crops that had much higher yields than native crops - e.g. potatoes and corn (maize). And also tomatoes, without which Italian cooking would just not be the same.

On the flip side, the Americas got horses (with collars and moldboard plows), chickens, pigs, cows, sheep, goats, soybeans, wheat, barley, rice, peas, apples, oranges, bananas, coffee, tea, etc. The net effect was a huge increase in global food productivity.

Yep. I remember learning about the first of these from Lynn White's famous essay published in Science in '67: "The Historical Roots of our Ecological Crisis."


Still a great read.

All good points, but Toil is correct about timing in development of both British / European and USA farming.
British population started to rise above previous highest carrying capacity from 1750 and tripled by 1850. After 1850 the UK needed larger and larger inputs from newly farmed lands overseas. The USA could spread out across the interior. The key large scale synthetic fertilizer and mechanization inputs in US farming kicked in during the 1920s. This also happened to Britain's domestic farming in WWII when mechanized horse-power and NPK about doubled.

Key parts of China have been carrying much higher density populations for 2000 years.

Obviously coal-based transport and metallurgy played an enormous part in making food available in the vast new urban populations in the West. The role of the colonial and commercial powers with their extended global reach, and the effects on traditional societies, (including increases in their populations), has been a complex process, even where some already high density populations continued with traditional productive systems of semi-subsistence agriculture.

At present synthetic N fertilizer takes needs 1% to 2% of the global fossil energy supply, and something closer to 5% of natural gas, although China uses coal for much of their N (urea) production.

An exponential function yields a curve that is quite flat in the beginning and then has the 'hockey stick' look as it grows. Food may have enabled exponential population growth but I wouldn't necessarily call it a causal relationship since the underlying mathematics of doubling work out to yield this curve anyway.


ET, we are all aware of what kind of graph an exponential function will yield. But the population growth was not an exponential function until the last few hundred years. In a pure exponential graph that yields the kind of graph you show, the doubling time does not change.

The doubling time of the world's human population, a few thousand years ago, was in the thousands of years. The population was held in check by the same factors that held all other animal populations in check. Then when we invented agriculture the doubling time decreased. But it still took hundreds or years for the population to double. Then the industrial revolution enabled more people to leave the farms and find employment in the cities. The doubling time shrink dramatically then.

But then came oil. And the doubling time shrink again. Then modern sanitation and the medical revolution came along and then the doubling time shrink even further. Then in the 1950s the Green Revolution came about and the doubling time shrank to only a few decades.

I am 72 years old and in my lifetime the population of the world has more than tripled! It is the rate of increase that the industrial revolution, medical revolution and green revolution has changed.

But not to worry because that rate will hit a brick wall and a lot sooner than most people believe.

Ron P.

The thing that made me roll my eyes about this is that the article completely misstates Toynbee's case. Toynbee did not predict the imminent collapse of Western civilization. What he predicted was that Western civilization had peaked, and would reorganize after the crises of the two world wars under a global empire, which he expected to be centered in the USA. There would be further rounds of crisis spread out over a couple of centuries, and then the empire would collapse and a new dark age would begin.

These predictions fill close to half of Volume IX of A Study of History, so it's not as though there's any difficulty figuring out what Toynbee had in mind. I haven't read Gsrdner's book, but if the mistake is his and not the reviewer's, it's not exactly a good sign.

Toynbee is one of my favorite authors. My high-school history teacher knew Toynbee and had long conversations with him.

Winter is a good time to read (or reread) Toynbee--an alltime heavyweight thinker.

Don, very true -- and it's good to find another Toynbee fan here. The one-volume abridged version can be gotten through in a couple of evenings, especially with a glass or two of decent scotch; still, I admit to a fondness to the ten volume set plus atlas -- you can dip into it just about anywhere, once you've got a sense of Toynbee's basic ideas, and come up again with a renewed sense of perspective.

I don't think Ehrlich was right. A key part of his thesis was that there was nothing science could do to prevent the oncoming famines. He was famously made wrong by the invention of intensive farming of high yield wheat by Norman Borlaug aka the Green Revolution.

The same science that led to the population boom found a way to feed it.

It seems to me that the advent of biotechnology provides a mechanism to develop further improvements in the food chain including sustainability in the absence of synthetic inputs. There are some interesting projects underway towards that end.

I think peak oil isn't going to lead to mass famines. It is more likely that other limits to population growth will arise - for example water or arable land.

The end of cheap fossil fuels means the end of the Green Revolution.

The use of fossil fuels for petrochemical feedstocks to produce insecticides and herbicides, for the production of fertilizer, and for ICE driven tillage will outcompete other uses of fossil fuels, such as personal transportation.


When the price of fossil fuels goes to roughly double where it is now, then the Green Revolution goes into reverse. Price rules.

Refering to table 2 in Energy Intensity and Productivity in Relation to Agriculture-Bangladesh Perspective and doing a little math, I get a $400 per hectare input of energy for tillage, irrigation, fertilizer and pesticide given an energy price equivalent to $3/gallon for gasoline. The output is given as 2.98 tonne of food.

So the question boils down to whether the commercial energy input at $800 / hectare is still economically affordable given the same output of 3 tonne of food?

My feeling is that the demand for food is less elastic than the demand for driving to the mall.

"My feeling is that the demand for food is less elastic than the demand for driving to the mall."

Nicely put. Of course people are putting the equivalent of bushels of corn (and even larger quantities of water) in the tanks of their SUVs to go the mall around here while a billion people in the world suffer from chronic lack of adequate food.

If the economy were logical or empathic, this would not happen.

But the economy is anything but logical and caring.

Currently, the supply of food outstrips demand in the United States. However, due to our foreign trade deficit we will soon be in the position of having to export much more food in order to pay for energy and other imports. The price of food will go up sharply.

Ultimately, the price and supply of both food and crude oil will be controlled by governments and the trade in both will be negotiated between governments. Most likely, the governments of South, Southeast and East Asia will strike better deals with the governments of the Middle East, Central Asia, and Russia than will the United States, since we don't have the cash anymore. The United States will have to make do with Canadian tar sands and Venezuelan tar.

"Ultimately, the price and supply of both food and crude oil will be controlled by governments and the trade in both will be negotiated between governments. Most likely, the governments of South, Southeast and East Asia will strike better deals with the governments of the Middle East, Central Asia, and Russia than will the United States, since we don't have the cash anymore. The United States will have to make do with Canadian tar sands and Venezuelan tar."

I would have to agree that this is a likely future scenario.

Now if only we could depend on government to be more rational than the market '-)

You all forget that the "Green Revolution" has more, recent, surprises than just the good old artificial fertilisers. The dream is kept alive by the concept of no-till farming combined with precision pest-control and genetically engineered varietes. This type of agriculture is expanding rapidly, notably in Australia and Brazil, and consumes far less ff's. Why? more organic matter, more nitrogen producing bacteries, less draining of minerals, no need for heavy tractor work, and greatly reduced irrigation needs. I don't know the exact figures but it can be a reduction over 50%. Well, if these farmers will discover that they don't need Monsanto, and that pest control can be realised also by rotation and locally existing, farmer-improved varieties, it would be a true revolution. Now unfortunately soil and crop biodiversity is still being destroyed in short sighted manner.

Good points, but I hadn't thought of these as extensions of the GR. If, as you say, we move toward systems that foster biodiversity, we can really call it a GREEN revolution.

I think peak oil isn't going to lead to mass famines. It is more likely that other limits to population growth will arise - for example water or arable land.

Oh, I see. Water scarcity and the reduction of arable land will keep peak oil from causing mass famine? They will cause mass famine well before the decline in oil production can cause mass famine?

Does it really matter what causes mass famine? Are we really going to argue about that?

Ron P.

The Green Revolution is another word for 'Kicking the ball down the field'.. if it's managed to prevent mass famine (which I'm not all that sure it has), it has simply invited Super-mass famines down the way a piece with this 'big family' that has grown up on it's first feasts.

As Scotty said in some Star Trek. 'Don't tell them you can do it in an hour.. they'll just want you to do it in half an hour next time..' (Very bad paraphrase..)

I think the Green Revolution has caused a nutrient famine which is filling hospitals and doctors waiting rooms with diseases label as "genetic". Like everything these days, progress creates an illusion which is difficult to see through.

If so, is it Green Cryptonite that makes this chart possible?

Early on the Liebigs limiting factor was calories. But in the rush to generate more calories above anything else, we have produced an industrial ag system that is very bad at generating affordable fruits and vegetables and is very good at producing twinkies. This has produced a world wide epidemic of obesity where people are more and more overweight but are often deprived of basic nutrients.

Note that this years estimated world life expectancy at birth is still around 67, about where your chart shows it in 2005.

So it looks as though we may have reached peak life expectancy about the same time we reached peak oil.


The other thing about the Green Revolution is that it produced a whole lot more people who ultimately won't be able to be supported by the ecosystem both in terms of sources and of sinks.

"If so, is it Green Cryptonite that makes this chart possible?"

No, probably better access to medical treatment. That's the trouble using simple metrics to assess the situation. What the chart doesn't show is how healthy the population is. Many I see around over say 60 are kept going by drugs or medical interventions.

The Green Revolution increased the amount of calories available allowing populations to grow, but I'd argue that those populations aren't as well nourished as a result. It's a bit like Jared Diamond's essay on the origins of farming (The Worst Mistake in the History of the Human Race):

Another example of paleopathology at work is the study of Indian skeletons from burial mounds in the Illinois and Ohio river valleys. At Dickson Mounds, located near the confluence of the Spoon and Illinois rivers, archaeologists have excavated some 800 skeletons that paint a picture of the health changes that occurred when a hunter-gatherer culture gave way to intensive maize farming around A. D. 1150. Studies by George Armelagos and his colleagues then at the University of Massachusetts show these early farmers paid a price for their new-found livelihood. Compared to the hunter-gatherers who preceded them, the farmers had a nearly 50 per cent increase in enamel defects indicative of malnutrition, a fourfold increase in iron-deficiency anemia (evidenced by a bone condition called porotic hyperostosis), a theefold rise in bone lesions reflecting infectious disease in general, and an increase in degenerative conditions of the spine, probably reflecting a lot of hard physical labor. "Life expectancy at birth in the pre-agricultural community was bout twenty-six years," says Armelagos, "but in the post-agricultural community it was nineteen years. So these episodes of nutritional stress and infectious disease were seriously affecting their ability to survive."

In my view the same process is still continuing to this day. Modern humans are a sickly bunch, but their condition is masked by modern medical treatments. Hence the illusion.

In other words, we have been able to build our house far taller than ever, and those that only measure height are duly impressed.

But the house is made of cards, and the faintest breeze will collapse it.

And there is a category 6 hurricane on the way.

Modern medical treatment, not so much. Life expectancy has gone up because of disease control - chlorination of drinking water, vaccinations etc. greatly reducing mortality from disease.

Healthy lifespan hasn't really gone up very much - what has improved is far fewer people dying before they reach old age.

In 20th century America average lifespans increased by 30 years over the century. Usual estimates are the public health measures accounted for 25 of those years.

CDC (1999). "Ten great public health achievements—United States, 1900–1999". MMWR Morb Mortal Wkly Rep 48 (12): 241–3. PMID 10220250

Modern humans are a sickly bunch, but their condition is masked by modern medical treatments.

What a minute... Vaccines for polio, mumps, measles, etc. are mere "masks"?

Pasteurization is a "mask"?

Pre-natal care is a "mask"?

A balanced diet provided by modern supermarkets, and exercise provided by free time merely mask our "sickliness"?

Humans have the longest life expectancy in history...because of masks?

Yeah Mike- we are all tricked by these damned "masks". And if I'm not wrong all the "real stuff" is happening over in Socrates's "shadow worlds".

How to enter the "real" reality? : Rid the "masks" and enter the "shadows". Harry Potter land is nothing. Buckle Up!

Yes, modern humans are a sickly bunch. If it weren't for modern medical science keeping them going they would succumb to their poor health and life expectancy would plummet. So yes, modern medical science is masking the poor health of populations. The over 60s are increasingly becoming zombiefied were they're kept alive, but at the cost of increased deterioration to their physical and mental health due to the treatments. So life expectancy has increased but for many the additional years are spent suffering from chronic illnesses.

"A balanced diet provided by modern supermarkets, and exercise provided by free time merely mask our "sickliness"?"

Now that is pure nonsense. People aren't eating balanced diets, even if they try thanks to food processing and modern agricultural techniques. And free time for most humans means sitting in front of the telly stuffing themselves with unhealthy processed food or out binge drinking. Which brings us full circle to poor food nourishment creating poor health which is masked by the patching up done by modern medical science.

Of course this is nothing compared to what is coming where we have both food of poor nutritional value and insufficient calories. The result will be an onslaught of modern genetic diseases and the older natural diseases making a comeback which will overwhelm medical resources. The chart up post will look more like a Hubbert's curve by then.

In addition, I think it's fairly obvious that the support of anybody and everybody would eventually be highly dysgenic.

We tend to forget, but in pre modern times babies with defects were simply discarded, or they died early.

Also, few in the West want to admit how Christianity has changed along with the modern world. In the past, Christianity was about saving souls. So babies were baptized, so that when they inevitably died, they went to heaven. But the eugenic nature of this process was still in place.

Now, the Christian medical people spend millions to keep them alive, and pat themselves on the back.

However, IMHO the fossil fuel age is not going to last long enough to lead to Idiocracy.

We are fast returning to a Darwinian world.

100% agree!

It's a race to the cliff:

Peak Resources + Global Warming + Dygenetics (worldwide) + FIAT-dept-system = ...

How's first?

We are fast returning to a Darwinian world.

We've been in a Darwinian world for quite some time.

People made the assumption that human evolution came to an end when anatomically modern man appeared some 100,000 years ago.

Recent DNA analysis has shown that is not true. Human evolution has speeded up in recent millenia. Human beings seem to have been under enormous selective pressure ever since they left Africa some 50,000 years ago, and the selective pressure seems to have increased after they invented agriculture and started building cities.

You don't need to worry about the unfit surviving, because the "unfit" are being selected out and the "fit" are taking over at a very rapid rate. What you do need to worry about is what "fit" means in this context. Researchers can determine which genes are being selected for, but they don't know exactly what traits they produce. Research is ongoing, speculation is rife.

Researchers believe from DNA studies that Genghis Khan has about 32 million descendants in the modern world. He is obviously the "fittest" man in history, in the Darwinian sense.

I think peak oil isn't going to lead to mass famines.

Wrong! Since we already today consume almost everything we produce on an annual basis- the famine-factor is a given when TSHTF.

Rule of thumb ; 3/4 of all food produced today is BECAUSE of mechanical farming, pesticides and fertilizers (and other tech derived from fossils) according to UN/FAO.

Paralell topics here with David Attenborough

How Many People Can Live on Planet Earth? (part 1 of 6 here) http://www.youtube.com/watch?v=LF15YAvT9G0

It's about water, land, people, energy, Malthus and all that.......

I agree 100% Paal. Thanks for the Youtube link. It was fantastic. I had not seen that one before.

Don't you find it astonishing how some people have no clue whatsoever? Almost everything we touch, eat, work or play with or watch has an oil connection. And that goes doubly for the food we eat. How can some people be so clueless about that fact?

Ron P.

Parts 2 and 3 on fresh water are eye openers as well. Watching the time-lapse satellite photos of huge bodies of freshwater (i.e. Aral Sea, Lake Chad) being consumed by overuse and drought is revealing, and these are supposedly renewable resources. There are few more glaring examples of the dastardly fusion of overpopulation, overconsumption and climate change.

Another David Attenborough eye opener on population:

"Why most of us need to die"


edit: seems to be a remix of the previous link.

Great link - thank you !

Interesting to contemplate carrying capacity - stated in the video as anything between 1.5B (based on current US consumption levels) and 15B (based on current Indian consumption levels). i.e. based on current energy usage.

If we expect oil field depletion rates of somewhere in the region of 4% - 6% per annum, afer peak, this has to result in a fall in consumption levels and therefore a fall in carrying capacity. I don't know if that calculation has been done anywhere.

You totally missed my point, and then quoted something else that said the same thing I did.

Water and land will be the limits, not peak oil. Artificial fertilizers can be produced from a variety of fossil fuels - natural gas, coal, not just oil. And then there are the organic methods that may compete with intensive agriculture, or the bioengineered sustainable crops that are in development.

Saying that we eat everything we grow is an oversimplification. There is tremendous inefficiency in our food chain. One pound of meat costs 20 pounds of grain to grow. Many parts of the world still practice very inefficient agricultural methods. And so on.

I'm not missing your point, nor is Darwinian missing your point ...... all roads lead to Rome- didn't you know?

I was just pointing to the fact that PO has the sole power to lead to mass famine all by itself - water and arable unchanged. Given my FAO ref.
You seem to have little or no grasp at all as to the magnitude of modern farming and dependencies. Are they using hand-cranked combines in your organic farming scenario? Is the whole village out there hunting bugs and fungi ? How big a task is possible to expect from whatever NG is left after oil is halved ? How many Q's can you offer an adequate answer to ?

Saying that we eat everything we grow is an oversimplification.

Yes it is , but on a forum like this it suffices B/C it's roughly true. But in knowing that 1 billion people are going hungry to bed every evening I can make an argument that we already grow too little food and that before PO has kicked in.......... and those hungry people are busy all day long with your organic farming methods. Mind you.

But in knowing that 1 billion people are going hungry to bed every evening I can make an argument that we already grow too little food and that before PO has kicked in.

Paal, it's not a matter of food quantity. In developed countries a lot of food is thrown away each day. Oil production decline can cause famine and dieoff in the first place because of economic reasons like rising unemployment and its consequences like (civil) wars.

I hope that there are no further improvements. These will just lead to prolongation of population growth which will just lead to more suffering. And why would we want more people anyway. Human beings are a plague upon the earth. Haven't we done enough damage for Christ sakes already?

The U.S. may be going in the wrong direction soon with regard to efforts to educate the public about birth control:

From Mother:


The other big goal of conservative anti-abortion opponents is a heavier lift: defunding Planned Parenthood and groups like it... The federal money that currently goes to Planned Parenthood—some $300 million of it annually—is monitored so that none of it is used to fund abortions. Instead, it pays for things like family planning, condoms, sex education, and other programs that defenders of the group argue actually reduce the number of abortions in America. But the Republicans, led by Rep. Mike Pence (R-Ind.), a possible presidential candidate, want to cut the money anyway. Pence's bill (HR 614) has 103 cosponsors. A version of it got 183 votes back in July 2009. But big conservative anti-abortion groups, like Concerned Women for America and the Susan B. Anthony List are pushing hard for it.

The World's religions need to step up and educate their flocks that the right way to honor their Gods' creation is to have no more than two children per woman per lifetime.

Ugh. Don't get me started. Various religions are extremely harmful with their no-birth control and 'be fruitful & multiply' messages. They are planting the seeds for massive poverty and starvation. And the damn GOP and their insane "Mexico City Policy". Their policies are crazy. Does god want world-wide poverty, starvation, war, genocide, etc. Those are the inevitable results of such policies.

The world's religions need to step back and educate themselves about science and modernity, then stop trying to indoctrinate anyone.

The "don't indoctrinate" aspect is hopeless wish. Every organization must grow, else eventually die as more aggressively growing entities squeez them out. Religions will always seek to evangelize, as will nations with their individual world-views.

Society itself indoctrinates everyone -- it's easy, because people are largely self-indoctrinating. It takes specific effort and pointed education to re-indoctrinate yourself into a different perspective. Some few people seem to be inherently wired to seek out a new path, and thus become evangelists for something new, but most are wired to go with the flow.

Hoping for a vacuum of indoctrination is not the right goal, IMHO. We need education (a new indoctrination) that urges people to tackle difficult problems rationally and peacefully, and scientifically. I don't think major religions will do that anytime soon, which gets us back to you point.

I think sometimes the Right wants the population of the US to grow.

These additional babies will create economic growth in their eyes.

Which they do indeed if they:

a) are smart enough, average IQ > ~100
b) there are enough resources available

If both of these requirements are fullfilled remains the question of the day. My e guess: no!

It's not just the right. Both sides want the population to grow, because the pyramid scheme needs a constant supply of new consumers coming in at the bottom. They may have different opinions on whether that growth should come from Americans having more babies or an influx of immigrants, but both sides want the population to grow.

Agree on that, and must point out the compromise coming in Congress -- the Reps get to give all the tax cuts they want, and the Dems get to give the unemployment freebies they want, and the bill will go straight to the deficit.

Unfettered deficit spending allows both parties to get what they want, and the American people as well.....for now.

The system is fundamentally flawed, and must eventually fail, but cheaply available resources, growing population, and per-capita growth would help it last longer.

I suspect most members of Congress simply want the game to continue another few years, as do most CEOs. They'll all retire wealthy, and let somebody else deal with the fall-out. Ditto for population issues.

The article "If the expert is insistent he is right, odds are he is wrong" is exactly right.

It matters not the ideology -- every-one's ox gets gored. Including, I admit, a few cherished beliefs of my own.

I plan on getting Gardner's book because it looks like it articulates clearly some things I've been thinking about regarding "predictions," chance and coincidence, and statistical contexts.

--Given the vast number of "analysts" making predictions, if one, or a few, should happen to be "correct," how do you tell they are correct and not simply selected out by chance? To me, if predictions are not focused, specific, and given clear time frames, they are useless. (For example, I consider the "expiration dates" for both Stoneleigh's and Ilargi's predictions about the crashes of both the stock market and oil prices to have long since expired.)

--There is no correlation between the confidence one has in one's beliefs about the future and the likelihood that a prediction is true. This issue comes up in memory studies frequently: The level of correlation between our confidence in our memories of events and what really happened is startlingly low (see the book The Invisible Gorilla; and if our confidence in our very memories is so fault-ridden, then how much more so in our predictive abilities.

One almost dares to claim that there is a negative correlation between confidence and ability, predictive or otherwise.

--As Thomas Kida says in Don't Believe Everything You Think,

...the amount of knowledge we have in a certain area will not help us predict what will happen if the events are inherently unpredictable.

This doesn't mean I'm some cornucopian who thinks "no problem." ANY prediction, cornucopian or doomer, is most likely, well, doomed to fail. It seems almost a good strategy to bet against any prediction made with confidence (e. g. Robert Rapier's win, albeit by a close shave, of the $100/barrel bet in 2007).

Let's assume peak oil happened in the 2005-2008 and mull over some of the "predictions" that were made about that event: Matt Simmons, $200/barrel oil by end of 2010; Robert Hirsch, $500/barrel oil; James Kunstler, "stock market 6,000" and people having to "grow kale on their front lawns" in suburbia; Mike Ruppert, "the end of globalization"; Matt Savinar, et al., "TEOTWAWKI." Please feel free to add to the list.

"Just wait" is no longer a viable response.

Who gets respect? Those who predicted a specific event--"peak oil"--within a specific time frame: Hubbert's forecast (revised after the embargoes of the 70s to fall around 2005; Deffeyes' 2005 forecast; the late Samsam Bakhtiari, "2005-2008, more or less."

Of course, this begs the question of whether 2005-2008 is the peak. We shall see. I'm still rooting for geologist Craig Hatfield's prediction of a permanent decline beginning between 2011 and 2013.

As for predictions of what the EFFECTS of the decline will be...well, forget it.

And that is our tragedy.

As for the effects of the decline, here was my 2¢ worth, although I did not offer a specific time frame:

ELP Plan (April, 2007)

I have been advising for anyone who would listen to voluntarily cut back on their consumption, based on the premise that we were probably headed, in a post-Peak Oil environment, for a prolonged period of deflation in the auto/housing/finance sectors and inflation in food and energy prices. . .

In my opinion, the unfortunate new reality is that we are going to see a growing labor surplus--against the backdrop of deflation in the auto/housing/finance sectors and inflation in food and energy prices. By reducing your expenses now, while you can do it voluntarily, you will at least be better prepared for whatever the future may bring. . .

The biggest risk to family finances is trying to maintain the SUV, suburban mortgage way of life in a period of contracting energy supplies. Beyond that, one of the next biggest risks in my opinion, is excessive and unwise spending--especially debt financed spending--on college education costs.

Regarding oil prices, I was pretty much in the Simmons camp. I suggested that would see a series of doublings--$50, $100, $200, $400--but I weaseled out of predicting a specific time frame for a specific price, given the difficulties in predicting demand. I do think that the progression in annual year over year price declines is very interesting, from $14 (1998), to $26 (2001) to $62 (2009), with each successive year over year decline falling to about twice the level of the prior decline.

The year over year increase in price for 2010 is going to be about the same as the average rate of increase from 1998 to 2008 (about 20%/year). If the 2009 to 2019 rate of increase averages 20%/year, we are looking at a price of about $460 in 2019. Note that at Chindia's current rate of increase in net imports, as a percentage of global net exports, they would be consuming 51% in 2019, versus 17% in 2009.

If the 2009 to 2019 rate of increase averages 20%/year, we are looking at a price of about $460 in 2019.

Very possible on paper, however do we ever get to that high a price? Even if it's possible or even a reasonable projection, aren't we back to what oil price the economy can support? At this point we are not absolutely certain that the max. price the economy can handle is 147, because of deregulation that led to the greedfest mortgage meltdown, however so far it is the highest price ever recorded. In any case, I'm predicting that 200 a barrel will be an economic wall that cannot be surpassed. As that price nears, shipping charges skyrocket and orders get cancelled. Jobs are lost, the stock market tanks, foreclosures pile up and we are in another major 2008 style economic Step Down and the price of oil drops significantly.

However, due to reduced oil exports via depletion and hoarding, oil price will probably build back in much faster than it did previously. If so, economic contraction will certainly lead to very high unemployment, of 30-50%, quickly leading to collapse.

MikeB "--There is no correlation between the confidence one has in one's beliefs about the future and the likelihood that a prediction is true. This issue comes up in memory studies frequently: The level of correlation between our confidence in our memories of events and what really happened is startlingly low"

Makes me think Will Rogers was pretty smart. I'm paraphrasing but I believe he said that It ain;t what we don't know that gets us in trouble, it's what we know for sure that just ain't so.

treeman - Perhaps the oil patch is unique but for 35 years I've seen an almost perfect correlation between confidence and results. A perfect negative correlation that is. When someone showing me a drilling deal is emphatic about their interpretation being the only viable conclusion I automaticly assume they're wrong. Then I immediately look for the weakness they've avoided presenting. And very seldom do I not find a deal killer or at least very good reason to up the risk factor.

BTW: I've drilled two sure "shot - can't miss" prospects in my 35 years. And 98 out of 100 geologists would have agreed. And both were dry holes. One twinned a well with a 100' thick NG reservoir. The replacement well landed just 200' away from the original well. Not only was the reservoir not productive at that location but 9 more wells on the lease failed to find the reservoir again. Not just a NG filled sand...never saw the sand again...period. I've mentioned this project before: an offshore GOM field with two P&A discovery wells. The first 5 wells I drilled off the platform (based upon the exploration geologist's maps) were dry holes. By the end I found 25 bcf and 1 million bo instead of the 125 bcf and 25 million bo originally mapped.

treeman - Perhaps the oil patch is unique but for 35 years I've seen an almost perfect correlation between confidence and results. A perfect negative correlation that is.

This has the simplicity and beauty of a parable.

I'm a different variety of pessimist: I'm a pessimist because of the very fact that we are unable to predict our futures. We can project. We can extrapolate. But we cannot predict.

That's unfortunate, because we're human and we need to be able to mark our calendars.

None the less, I stand by my prediction that oil cannot exceed 200 dollars a barrel. I'll remind those that were not on TOD in the rise to 147 a barrel, that some predictions suggested oil could go to 2000 dollars a barrel and more. Once it collapsed from 147 to 35, there was a realization that the economy can only handle so much due to the imbedded nature of oil on all products via transportation. So it's not a statement with nothing to back it up - it has history to support that position.

I vote with you Earl. Granted others factors were kicking the economy in the groin when we hit $147 it’s difficult to not attribute a major portion of the down turn to the price run up. And what was the quantitative value? I have no idea since I’m not an “expert”…thank goodness. Otherwise I would be required to force feed that model to TOD. So I just keep my analysis as a qualitative vs. quantitative model. To be honest I’m a little surprised the economy is handling $70+ oil as well as it is. Not that the economy is doing great, of course. Perhaps it an indication of how much energy we waste without a true need. We just dropped much of those discretionary purchases in lieu of keeping the house warm and the car running. Of course, those discretionary expenditures paid a lot of salaries that are no longer being collected these days. Based on plots I’ve seen of post recession employment gains we do seem to be in unprecedented times. Don’t have the link but re: unemployment we’re running the better part of a year behind the typical recovery curve. Maybe this is part of the sustained down turn some refer to…maybe not. Like PO we may have to wait to see the picture clearly in the rear view mirror.

"There is no doubt" that Saddam possesses WMDs. Tax cuts will create jobs. Derp derp derp.

"If the expert is insistent he is right, odds are he is wrong"

The fact that this expert insists that this claim is right gives me pause '-)

DHS is apparently flexing its muscles to monitor and police the internet:


I will figure that TOD has wandered too close to the truth if I ever click on the icon in FF and get the DHS display...

More likely you will just get a '404' error saying 'no such site found.'


Yes, that's what Thailand does. We used to get a page with the ominous Center for the Resolution of the Emergency Situation warning page, now we just get the 404.

The Power of Renewables:
Opportunities and Challenges for China and the United States

The United States and China are the world's top two energy consumers and, as of 2010, the two largest economies. Consequently, they have a decisive role to play in the world's clean energy future. Both countries are also motivated by related goals, namely diversified energy portfolios, job creation, energy security, and pollution reduction, making renewable energy development an important strategy with wide-ranging implications. Given the size of their energy markets, any substantial progress the two countries make in advancing use of renewable energy will provide global benefits, in terms of enhanced technological understanding, reduced costs through expanded deployment, and reduced greenhouse gas (GHG) emissions relative to conventional generation from fossil fuels.

Within this context, the U.S. National Academies, in collaboration with the Chinese Academy of Sciences (CAS) and Chinese Academy of Engineering (CAE), reviewed renewable energy development and deployment in the two countries, to highlight prospects for collaboration across the research to deployment chain and to suggest strategies which would promote more rapid and economical attainment of renewable energy goals.

Main findings and concerning renewable resource assessments, technology development, environmental impacts, market infrastructure, among others, are presented. Specific recommendations have been limited to those judged to be most likely to accelerate the pace of deployment, increase cost-competitiveness, or shape the future market for renewable energy. The recommendations presented here are also pragmatic and achievable.

You have to have a lot of nerve to call economics a science. Doing so appears to me as an insult to intellect.


That is a very interesting blog with a heavy statistics slant. I find it has much more insight than Freakonomics but along the same vein.

Yes, the idea so often quoted on economics blogs that "what matters is predictive success", aka "all models are wrong but some are useful", is almost precisely what distinguishes engineering from science.

Thomas Kuhn pointed this out years ago, in The Copernican Revolution. For years, decades, after Copernicus's death, the heliocentric theory gave worse predictions than the Ptolemaic model. But pretty much all astronomers became convinced it was right nonetheless.

"Big freeze: Panic buying on petrol, milk, bread"

Being that today is the first Saturday of the month, I ventured out in our first snowfall to do my monthly bulk-buy. I believe the forecast is for 4 - 6 inches of accumulation today, carrying on into tomorrow.

I generally do stock up extra - I filled my gas tank, I always think of Matt Simmons when I do that, bought extra of my regular staples, and added a bit to my "just in case" section. Big-box parking lots were all full with shoppers, and the roads here are pretty clear.

O'Hare airport had flights running late and the expressway, apparently, was at a crawl, but nothing unusual other than a somewhat early snowfall for the year.

We are promised a warmer-than-usual winter with a lot of precipitation, aka: a lot of digging out.

Seems that the "just in time" delivery system is pretty fragile, though, when British stores are running out of bread and milk. It could happen here pretty easily too.

Edit : on the topic of Yannell's green home, I've been wanting to drop by and see it for a while. It's not too far from where I live. My understanding is that not all his neighbors are that happy with it. Pretty traditional, upscale neighborhood.

"Seems that the "just in time" delivery system is pretty fragile, though, when British stores are running out of bread and milk"

Bread and milk pretty much have to be "just in time", along with most produce. Keep an eye on canned good, flour, and so on.

Around here, people expect the passes through the Cascades to get closed several times during the winter and stock up accordingly. A half-dozen extra cans of evaporated milk can be handy when the frontal systems come through. Being snowed in is a fine time to bake some bread too.

"a fine time to bake some bread too"

Great idea ! Time to get the bread book out. I get a bit lazy in the summertime.

Haven't heard much discussion on here about Chinese high speed rail. Yesterday an unmodified passenger train hit 302mph.

XUZHOU, Jiangsu - Imagine how it feels to sit in a passenger jet as it hurtles down the runway just prior to take-off. That is the feeling a lucky group of passengers got to experience on Friday when China's newest fast train set a world record during a trial run as it hit 486.1 km/h on the Beijing-Shanghai line.
"It is the world's most advanced but cheapest high-speed train. It is also reliable and comfortable to ride."

The train that broke the record was a 16-car bullet train that was designed and built by CSR Qingdao Sifang Locomotive and Rolling Stock Co Ltd. It was designed for daily work on the Beijing-Shanghai high-speed line.

The 403-meter train can seat 1,027 passengers and will ordinarily travel at 350 km/h and hit a maximum speed of 380 km/h while in normal service.


Imagine this... A HSR from Chicago to Miami...roughly 1300 miles...at 302mph...just over 4hrs. We can dream :)

Keep in mind the 302 mph was a speed trial, and the service speed will be 350km/h=220mph. So if the train went non stop to Miami, it would be six hours.

BUT if you have HS line from Chicago to Miami, what are the chances that it won't stop somewhere along the way?

That's the problem with HS, to go fast, you don't want to have intermediate stops, and then all the places along the way get no benefit from the line. It makes C and M closer, but everywhere in between more isolated.

Assuming the line ran similar to the I-65 I75 corridors, can you imagine that service not stopping at Indianapolis, Atlanta, Jacksonville and Orlando? Every city along the way will have their hand out to be included. Once the line is built, there are those cities that do have stops, and those that don't - how do you decide? It is easy to decide in China, but the process here would be tortuous.

Logically, you probably would have stops in those major cities, averaging say 200 miles per segment. Now factor in the time to decelerate, unload/load and accelerate again, and your six hours has become at least seven.

You can get a roundtrip airfare for $198, and it is 3hrs each way - which is better? (yes you have airport security etc, but you will probably have the same on HSR too).
Even if oil doubles in price your fare is still only $300.

Rail is at its most competitive on the medium length trips - up to about 400miles, and it doesn't really need to go 220mph. Assuming there isn't an airport style pre-board security farce, and you have a 15minute lead time, the 220mph will take 2hr 5min. A 150mph train will take 2hr55min, but but will be MUCH cheaper to build and operate. A 100mph train will take 4hrs 15min and will be cheaper still. The cost of the train ticket will at least go up as the square of speed (the cost of the construction will go up as the cube of speed, if not more)

Driving that would be six hours, and flying, including the security farce, will be at least two. With both driving and flying you can't be productive for all/some of that time, but on the train you can, and you arrive much more relaxed.

So, the train is always faster than driving, and always slower than flying. But the train does not need to match the flying time, and it can't, it just needs to be a better option than driving. For that we don't need really high speed trains, we just need trains period! Medium speed ones are more likely to get built, IMO.

Just look at what the $20bn for high speed rail can buy - not even the line from LA to SF. But it could buy a hell of a lot of 100mph trains and lines.
One of the things we will have to get used to with peak oil is going slower - while we won't have the oil to drive fast, if we can drive at all, we simply won't have the money for really fast trains.

A high speed train could deliver more passenger kilometer. Basically if a high speed train is used between two cities it will travel more times and more tickets could be sold each day which may make it competitable and I guess the extra tickets would be easy to sell because of shorter traveling time.

I am almost sure that the only drawback with high speed train is the extra construction cost for tracks. For some reason very little effort have been spent on tracks for trains since the automobile became popular. It seems automobiles and trucks/lorries have been considered superior without ever checking the fact.

I live in central part of a small town with train service to the closest city. It take at least 15 minutes a little bit more maybe 20 minutes during winter to drive with car and the train take 10-11 minutes. There is a newly built road with almost highway standard that opened one or two years ago while the railroad opened the 3rd July 1865. So if a choice should made where to spend money why not choose the one that have lasted for more than one hundred years with very little effort spent on improvement.

It is also worth noting the maximum allowed weight for a freight train is 1600 ton while a truck lorry is limited to 60 ton. Maximum length for a freight train is 750 meter and for a lorry 24 meter. Wagons that are the same length as a truck/lorry is common although some wagons are shorter and trains are also wider than trucks/lorries.

One reason for the choice may be that the necessary infra structure for cars are mostly paid for via taxes. It is not just the construction cost maintenance is also mostly covered by taxes. This is a huge government subsidy. I am sure that this subsidy have a very large impact on the cost per kilometer driven on all vehicles using roads.

Karlnick, I'll take an educated guess that you are in the UK?
Trains here are quite different - freight trains have no weight, or length limit. The freight trains are now getting towards being two miles long! The passenger trains, if they are to operate on the same lines, must meet safety rules fro crashing into freight trains!

No question about the subsidies given to roads - in the US the Interstate is (partly) paid for by the Dept of Defense, while the privately owned railways have to pay property taxes on their lines!

Now, for really high speed trains you have a few drawbacks;
-The construction cost is indeed much greater
-your choice of route is more constrained (grades, curve radius etc)
- it divides areas where it runs, as the only crossings can be completely grade separated
-and it isolates them as you want to minimise intermediate stops.

But the two worst effects are;
1.If we are interested in carrying the most people, the ultimate capacity decreases as you get faster, as the headways between trains must be greater, to allow stopping distances. A line operating at 60mph has a theoretical maximum of 50 trains/hour, go to 220mph, and you can do a max of 25 per hour (source http://www.lowtechmagazine.com/2007/04/planes-on-whe-1.html)
2. The energy used goes up as the square of the speed, so it takes four times the energy to travel at 200mph as it does at 100mph

So, the faster we want to go, we spend more money and use more energy to transport less people, serving fewer locations! Does that really sound like a sustainable solution?

We have a system that is optimised for speed and not for energy efficiency, which is more important in a post peak, less wealthy world?

I am all for rail transport, but high speed trains are the rail equivalent of Ferraris - very sexy, but very expensive and not as economic or environmentally friendly They will only benefit the large cities they serve, yet will be subsidised by all the people who live in areas not served.
A more extensive network of medium speed passenger trains, that serves more people for less cost and less energy is a better solution, IMO. Those who really want to go that fast, can pay the exorbitant cost of flying in a post peak world.


I was not aware that Interstate highway building and/or maintenance was a line item in the DoD budget.

Do you have a reference?


I was not clear there, I meant the initial construction of the system, as it was the the "National Highway Defense System" , and (I thought) was partly paid by DoD. My understanding is that maintenance is nothing to do with DoD

But, since you questioned me, I questioned myself, and on doing some digging, I see that even the original system was not funded, even in part by DoD.

looks like I have been suckered by the "myth"

So, I stand corrected - Federally funded, but not DoD.

Eisenhower wanted it funded by user fees, fuel taxes etc so as not to add to the federal deficit - not the sort of thinking we see today!
It is not clear if the funds raised actually covered the costs, but that was clearly the intent.

Thanks for pulling me up - I'm guessing it's not the first time you've corrected someone on that!


Great reply!

I had thought that I had read that the idea that DoD funded the Interstate system was a myth, but I wasn't sure...if I wasn't decorating the tree and the house with my love, I would have looked it up myself.

FWIW, from what I know of the man, I like Ike!

Even though the DoD didn't fund the Interstate system, and apparently it is also a myth that stretches were designed as emergency runways, many of us here may agree that funding a robust double-tracked (or more), for double-stacked trains, national rail system, with appropriate parts electrified, such as Alan Drake has advocated, would be a good investment for the U.S. to transition away from the amount of oil it presently uses.

I really like the musings of several folks here that we should build out more medium speed (80-100 MPH)trains, as opposed to very-high or high-speed trains. I like the presentation of how speed geometrically increases energy usage, and the comparisons between times and costs for driving, taking a train, and flying.

I used to be mesmerized by the idea of super-dooper high-speed trains, even maglev, fantasizing about 300 MPH+.

Now that I am older and a little wiser, I realize that my earlier expectations were unsupportable...we need to learn to slow down and take more time do do our tasks, rather than rush breakneck willy-nilly and burn ourselves out. I'm talking mental health here, in addition to energy use. Needs vs. wants. Basic capabilities vs needless luxuries. More shared resources vs. too much individual under-utilized consumption.

Can the people of the U.S. turn the mental corner and adopt a lower, slower, yet more relaxing and satisfying, life style?

Can we make higher-quality, built-to-last-longer, stuff in the U.S. vice importing most of our stuff from abroad? Can we use, and re-use, less stuff for longer time periods?

When I see all the commercials about 4G super-'smart' phones that are promised to allow all you own one to be young, urban, hip, and be able to multitask 4 things at once and be masters of their little self-important universes...I shake my head and wish for the majority to embrace simplicity and slowness....deliberateness...savoring each moment...understanding that tomorrow is another day.

I definitely learned a few things about the Interstate today! I had never believed the one about the runway strips. Seems the only real DoD involvement was related to overpass height, where their minimum was higher than the Highways minimum.

Ike certainly was a different breed from our leaders today, or maybe it is the nature of government back then was different? One wonders how he would govern today, or how O or W would have governed in the '50's...

I too used to think high speed trains were bee knees, but after travelling a couple of times on the "medium" speed ones when I was in Britain, I concluded they were "fast enough". Looking at the cost of the high speed ones, you end up with a taxpayer subsidised system that many people can't afford!
I read some accounts that talked about the "isolation" caused by the HS lines, with no at grade crossings, rural communities get divided by them, as only main roads have overpasses.

But the article at the Low Tech Magazine is what clinched it for me (that place is a great one for questioning complexity!). I knew they used more energy, but was amazed that 220mph mark is where they use more energy than flying!

When I lived in Calgary, I had supported the concept for a high speed train to Edmonton (180miles away), it seemed like a perfect candidate. As talk has continued over the last decade, the places in between realised what would happen - they would be marginalised, and devalued, as they would not have access to it. A medium speed train system could be set up with some services having intermediate stops, and some express, would cost much less to build and operate, and is more likely to be built. The difference between a 1hr travel time and 1.5 is several billions - and either everyone subsidises it or it so expensive that most can't afford it, in which case it ends up being subsidised anyway!

We need practical solutions, not Cadillac ones, and high speed rail is the most Cadillac one of all!

"go to 220mph, and you can do a max of 25 per hour"

So what? Is this a barrier anywhere outside China? It seemed like about six trains per hour was typical for the Shinkansen in the Tokyo region, with its wall-to-wall ground-to-sky people. Somehow I have a hard time picturing a call for more than about two trains per hour almost anywhere in the thinly populated USA, and many routes may be hard pressed to support a train every two hours.

I agree that we are unlikely to push the upper bounds of capacity, but we should still be aware that we would be building a system that is of much lower capacity, and much higher cost and energy consumption. I'm sure airport designers in the 50's never thought that major airports would have a plane movements of 200 per hour!

I came across an interesting report by the Brookings Institute about air travel trends in the US, and its implications for future transport planning;
(don;t know if this has been discussed on TOD before)

Some of the key points relevant to this discussion;
Trip length (Table 3)
- 30% of flights and 15% of passenger trips are less than 300 miles
- 20% of flights and 16% of trips are 300-500 miles
- 28% of flights and 29% of trips 500-1000 mi
- 23% of trips and 40% of passenger trips are more than 1000 miles

So clearly, the shorter the flights, the less full the planes are, and vice versa.

And this (p18);

the environmental pollutants produced per mile are far greater on short-haul routes versus
all others. This causes the average short-haul flight of 250 miles to have an emissions factor of 0.64
pounds per mile per person, while medium flights of 800 miles emit 0.45 pounds per mile per person
and long-distance flights of 2500 miles emit 0.39 pounds per mile per person.

And this (p18);

the ten metropolitan areas
generating the largest shares of flights traveling less than 500 miles were also the source of 42.2
percent of all domestic departure delays.

So the shortest flights, (<500miles) are the least occupied, use 50% more fuel per pax-mile, and are the least reliable - which markets should rail focus on?

The report quotes studies from Europe that show that rail is best at displacing trips of 300miles or less.

They have a good analysis of flight "corridors", where they group the airports in a region. Top of the list is NY to Miami, at 8.75m trips/yr, next is LA-SF at 6.3m/yr
Three of the top ten were less than 500 miles - LA-SF, LA-Vegas, and LA- Phoenix
Atlanta to NY and Atlanta -Miami were also in there, combining with NY -MIami you 18m pax/yr, or 50,000 every day. So a line from NY to Atlanta to Miami would have plenty of air travellers to lure away.

They also identified ten corridors less than 400miles with more than 2m air trips annually.

So given all this, the niche for passenger rail is clearly the less than 400mile market, and these are also the most expensive routes for the airlines to operate.

So, for a 300 mile trip, are travellers prepare to pay more than double the cost for "very fast", 220mph, and travel time of 1.5hrs, versus "fast" at say 120mph and 2.5 hrs?
if the fare difference is $100 each way, which would you choose? $50, 30?

The fare cost goes up as the number of travellers goes down. if a corridor can;t support multiple high speed trains per hour, then it can't support high speed trains, period.

Hopefully the flight corridor analysis distinguishes between passengers going to Atlanta and passengers hubbing through Atlanta for other destinations, since the latter would generally not be candidates for moving to rail.

On the other hand, a train picks up and drops passengers at intermediate stop, so a seat moving fom Washington to Boston can be occupied by different people on different segments of the route.

They didn't distinguish - it was total passengers. But I don;t see a problem with that. If you are connecting through Atlanta to somewhere else, you could take the train to get to Atlanta just as easily as a plane.
In fact, if there was going to be a lot of that sort of thing, AND the train went to Atlanta airport you could give the train a real advantage. Have a separate car or three on the train for air passengers. While on the train, they check in and go through security, and then at the airport get they disembark into a secure area and go straight to the gates. Saving the hour of dead time at the first airport would be a real benefit.

That said, their corridor was Atlanta- MIami and Atlanta - NY. Those are all major airport hubs, how many flights from Miami, or NY would go to Atlanta first , rather than direct?

The fact that a train seat can be used to transport multiple people to multiple destinations is a definite plus - the shorter the train trip, the higher the load factor, whereas the shorter the plane trip, the lower the load factor.
The trick for the train is not having too many stops to make the average speed too slow.

Major train stations are downtown in urban areas, since that is where the population of riders is highest and due to historical reasons. Airports are far away outside the urban core where land was cheap and there was open space to accommodate crashing airplanes. There is almost no intermodal communication between air and rail except for the occasional urban transit system. Cleveland is the only airport that comes to mind for long having had good rail from the airport to downtown, although there are others now. Typically, rail to the airport is fought tooth and nail by the taxi, limo and bus businesses.

Miami is a hub for flights to the Carribean and South America. Getting to Miami on a train for a flight to South America seems awkward. Similarly, Atlanta is a hub for smaller airports in the southeast, and to be desirable a combined train and air trip would need to have very good intermodal facilities, as well as coordinated ticketing, scheduling, etc. The old quote (Kahn?) is "People in Birmingham may not know whether they are going to heaven or hell, but they know they'll go there through Atlanta."

PS-- passenger rail also has some awkward connections of its own. To get from Portland, ME to Providence, RI on the train, you take the train from Portland to Boston North Station, take the T from North Station to Boston South Station, and then take a train to Providence. I guess they need another Big Dig to connect Amtrak rail directly through Boston. From either station, you can take the T to Logan airport, plus a shuttle bus to the terminal.

The only light rail Minneapolis has is between the airport and downtown.

Actually, between Mall of America and downtown via MSP. Any data on ridership by air passengers? I have it on good authority that people park for free in the Mall of America ramps and take the train downtown.

"people park for free in the Mall of America ramps and take the train downtown."

Yes, I believe that was part of the plan.

I don't have stats, but I live a few blocks away from a station and pretty much every time I take it, I see at east one person or family who are clearly going to or coming from the airport. We generally use it for this purpose, unless it is at a very late or early hour.

I'm very long walking distance (easy biking distance) from the rail line in Minneapolis. To me it appears often quite crowded and perhaps unpleasant. Yet the people I know who use the rail line all love it.

"People in Birmingham may not know whether they are going to heaven or hell, but they know they'll go there through Atlanta."

Sure, but in doing so, are they flying from Atlanta to Miami or NYC, and then to H or H, or is it a direct flight from Atlanta?

That's my question there -how many flights go from Atlanta to Miami to X, or from Atlanta to NY to Z, that can't get there directly from Atlanta. Of the 18m people per year, that is probably only a small number.

In any case, the real appeal is the downtown to downtown service - that is why Amtrak in the NE works. If you have two cities within 2-300 miles, and a rail link from dt to dt, and the airports are both 1/2hr out of town, I'll wager that train service would work, if you can get the average travel speed over 60mph, ideally to 80 or so.

As long as the trains is as least as fast as driving, and cheaper than flying, there will be a market for it.

"if a corridor can't support multiple high speed trains per hour, then it can't support high speed trains, period"

Well, then maybe that's the conundrum. If the trains are not high speed - and virtually none of the ones proposed in the US program are - then they're even less useful than high speed ones, simply because the complete trip takes that much longer. Even in the Northeast corridor the longer lines don't run multiple trains per hour. I'm still left to wonder whether the US could ever support much of anything at all, except maybe in a doom scenario where the main alternative is horses and buggies.

And I'm not even sure about that. As I've said before, executives at the lines running north and northwest out of Chicago circa 1890 habitually moaned about the competition from bicycles. The bottom line seems to be that the time consumed by the total trip - which goes from door to door, not just train station to train station, and which includes time wasted waiting - has always been a very difficult issue except either in cherry-picked circumstances (e.g. the whistlestop on a line running frequently between two huge cities, which Homeland Security will probably make financially impossible anyway) or else in places crammed wall-to-wall and ground-to-sky with people (Tokyo region, metropolitan France, Shanghai region, etc.)

I would be happy if I could take the train from Denver to San Francisco without having to stop a dozen times for coal trains. I have taken that train and the problem is not the top speed but the stopping and starting constantly. Despite that, I would take it again. Love the scenery and really enjoy the people one meets as well.


Couple things. Air travel is dead. Those cheap fares will disappear in the years ahead. The common person isn't going to be taking the two kids to Orlando. Plus if you've flown lately, the "process" of jumping through so many hoops and then having to be squashed in a small seat with no room is like being in a coffin.

Driving sucks. Anything over an hour is torture (for me). A train allows you to get up and move around, read a book, eat something, surf the internet... Plus its cheap and VERY EFFICENT.

I agree completely on stops. There would be many. The only thing I could add to my dream is many train sets moving south (and north) with various ones stopping along the way, while others are nonstop :) I doubt you need much spacing between trains. Each one holds 1000 people.

The Chinese say they can go faster...500km/hr.

I don't need high speed, but something that goes a little faster then the automobile would be nice. I live walking distance from the Amtrak station here, so I could easily jump on that and go to Seattle or back to Chicago and then so on...I'd rather they just add more lines to that to broaden the choice of places to travel by rail.

I'm taking the train from SF to St Louis, via Chicago this coming week.
We mine as well start adapting now, and lowering our footprint.
Besides, one gets more of a perspective, and see the land, read, and interact.


i wouldn.t be so quick to write off air travel, unless we do have a real collapse. It will be come more expensive and less frequent, similar to what it was in the '50's, and we will learn to use it less, but I think it will still be around for a while.

What really concerns me is if the TSA ends up putting the same security requirements on train travel! I hope not, but I wouldn;t put it past them.

The Chinese say they can go faster, but so what? This is sounding similar to the claims of the supercar makers - they are impressive engineering achievements, but they are not really solving a problem.

Our problem here in north America is not how fast the passenger trains go, but that we have hardly any of them in the first place. The existing Amtrak services are too slow, and don;t go everywhere, but with HS we will have service that is too expensive and still doesn't go everywhere.

For China, I think HS rail is their version of the Apollo program - it is a chance for them to lead the world in a technology, so they are all over it. Just like the Apollo program, it will be a great technical achievement, and will even have many spin offs, but in and of itself, it won't really achieve much.

HS trains here will be the same - a great achievement, even a domestic tourist attraction, where people pay to ride the train once, and then go back to normal. They may be great for business travellers, but how does that help a family? should we be subsidising business travel on HSR, or let them pay the full cost of flying?

Speed is just not worth it. The sooner we give of up on the concept, the sooner we can get on with building something useful.

Two problems. First, the government will soon enough force rail passengers to jump through the same hoops. After all, the "consumer movement" has spent the last 50 years training us to spend $1000 for 10 cents worth of "safety" and it has succeeded beyond anyone's wildest imagination. Plus, Political Correctness forbids us to focus our security efforts on people who actually pose a risk, as is done successfully in Israel (and as we presumably claim to be able to do successfully with pilots, who, no matter how thoroughly we would strip-search them, always have access to a weapon of mass destruction, namely the plane itself), as we discussed the other day. Our theory is that if everyone is miserable, it follows both that everyone is "safe" and that we are being "fair". (And who knows, maybe the Safety Nazis will attempt to make us a part per trillion "safer" by forcibly strapping train passengers into their seats, as with airline passengers.)

Second, the government, or whatever corrupt, inept, self-serving quango ends up running the trains, will soon enough figure out how to apply cram-and-jam airline seating principles to trains. See the crammed, overcrowded trains in England for a preview.

The train ride takes longer than the plane ride, so once the other factors have been made equal, the train trip will be the more miserable of the two.

I don't need high speed, but something that goes a little faster then the automobile would be nice.

I agree. For me it would be fine if the train could average about 2x the speed of automotive travel. That would allow me to go from Los Angeles to San Francisco in about three hours.

With all the fondling, er, security at SFO and LAX and needing to be at each over an hour before takeoff, it might even be near break-even in terms of gross commute time to a flight....

forget gross commute time. how about gross grossness/

look at what you have been reduced to==

you are gropes, prodded, x-rayed, stuffed into too small seats, denied every basic dignity and service....and of course you are charged an arm and a leg for the fortunate high privilege of suffering these multiple indignities.

I think flying is actually a very good window is a very good window into the totalitarian cluster fk that looms in our very near future.

Why would you think the same procedures won't be imposed at intercity train stations sometime in the near future? It's not like they aren't considering it; IIRC there was a test at Silver Spring, Maryland sometime back and that was at a local station.

I actually think we need to mostly give up on the idea of doing much long distance travel, except maybe by bike or sail boat.

Why do we feel the need to constantly zoom around the planet? Why not be where you are?

C.S. Lewis said air travel annihilates time and space. This was more literally true than he thought and applicable to more than just air travel.

Sailboats rule. Give me a good old 28' Triton and I can safely sail anywhere in the world that has a coast line--or sail all the way up the Mississippi to St. Paul--or sail the Great Lakes and the St. Laurence Seaway to the North Atlantic. Plus, I can fish from the sailboat. And of course you can use small wind turbines or solar PV to charge your batteries, so you do not need an engine. A trolling motor with at least 55 pounds of thrust is ample for maneuvering in and out of crowded docking areas--though I make it a point to dock or anchor or tie up to a buoy with only sails as much as possible.

You would be using you motor at my local marinas - many of them here (coastal BC) will not allow docking under sail - they have had to many hits and near misses from the swirling winds in these coves.

But I am impressed by those that use sail wherever possible. Not a sailor myself, but I see a lot of "lazy" sailors here who motor along most of the time. The wind is either so light that they deem progress to slow, or the wind is too strong, and they don't want to have to "work" and get wet from spray, or the wife doesn't like the boat heeled, etc etc.

Those that love sailing, clearly love sailing. Those that do it because they think it is cheaper than powerboating, seem to be the lazy sailors.

Intercity rail at 200 mph speeds is incompatible with the current freight rail infrastructure. A complete build of new tracks on new rights of way are required in many places.

If you look at existing rail lines on google maps, you will see that in hilly or mountainous terrain the rights of way are very indirect with many sharp curves. Since the Chicago to Miami train would go through Chattanooga, that would be a good place to look at mountain routes.

Freight railways typically have no more than 1% grade. High speed rail in Germany has up to 4% grade. Therefore, freight rail is built to follow closely the best topographical route, often adjacent to winding rivercourses. High speed rail can be routed more directly using the higher grade limit with reasonable tunneling and viaduct construction. In fact, high speed rail has to be more direct, since the curvature radius has to be larger in order to limit centrifugal force. Part of the centrifugal force is compensated for by banking the rails. However, the banking required for 45 mph freight trains is far less than the banking needed for 200 mph passenger trains.

Lastly, the US requirements for passenger car construction require much higher crush limits, since the cars coexist on rails with 286,000 lb freight cars. This makes the passenger trains heavy, energy inefficient, prone to breakdowns, and high maintenance.

So except in fortuitous cases where passenger tracks can parallel freight on existing straight freight rails in flat country, the high-speed passenger service needs to be built from scratch on new right of ways.

the high-speed passenger service needs to be built from scratch on new right of ways.

I'm not sure if that's really necessary. A good chunck of the HST righ of ways are already in place. Just convert part of the Interstate freeway system into HST. All the overpasses have already been built, and only a small amount of land would need to be purchased away from the cities. The cost would be substantially less than starting from scratch. If the Chinese can do it, so can we.

See http://en.wikipedia.org/wiki/Cologne%E2%80%93Frankfurt_high-speed_rail_line for a nice description of the issues in building a high speed rail line.

The interstate system has grades up to 6% (6 feet rise or drop per 100 feet of travel) and it has many curves tighter than 3,320 meters (10,892 feet) radius. I think that the overpasses are too low (14 to 16 feet) to allow a passenger train plus the overhead space needed for the catenary. http://en.wikipedia.org/wiki/Interstate_Highway_standards

Are you sure about freeway overpasses being lower than rail overpasses with overhead wires. I`ve stood on top of both -- the height above the rail bed or road surface appeared to be about the same in either case but I didn`t actually measure it.

Jeez, these discussions aren't the same without Alan.

We discussed a couple of months ago that both freight rail and Interstate rights-of-way are generally geometrically incompatible with highspeed rail. Curve radii too small, grades too steep in the case of Interstates, though I'm sure that there are thousands of miles of rail and Interstate where this doesn't apply (Great Plains, Tx, etc.). Areas such as I-75 through Tn. and Ky. would be an extreme challenge. Best to stay in the plains and valleys, IMO.

Yeah, we really need Alan. But I do not think he is coming back to TOD after the way the editors have treated him here.

It's like moving out of a great neighborhood because you're mad at city hall. Some of us need to go down to the Quarter and talk some sense into the boy.

His contributions will be missed by many.

After the Shenanigans the other day, I don't blame him for staying away for a while.

Don - I didn't catch the flack between Alan and the staff. I was wondering why he wasn't jumping head long into the high speed rail chat. Yes...certainly miss his contributuions. I was just thinking about have a cup with him in the Quarter but had to cancell my trip to a barge rig outside of Nawlins. I always appreciated his passion for his positions even if I wasn't 100% onboard with everything. But perhaps his absence is also a result of such strong emotions. Too bad if so.

So except in fortuitous cases where passenger tracks can parallel freight on existing straight freight rails in flat country, the high-speed passenger service needs to be built from scratch on new right of ways.
And there is the problem - that is hugely expensive to build a new system from scratch.

While I think the collision requirements for passenger trains are onerous, they can be met, as the Acela trains show, but there are indeed some issues. The Acela trains also show what happens with fast trains on a slow system! But the safety requirements could be changed a little, and the design of the trains can improve on what was done in the mid -90's with Acela.

For the lines between cities, you would want to have separate passenger lines, and to allow the trains to get to, and stay at 120mph. This is the easier part. But when you get into the cities, you can slow down, and use existing lines, bridges etc avoiding the most expensive to build items. This is how the UK trains do it.

If the train can average 80mph for the journey, you are fast enough to compete with driving. make the train 180mph, and you are so expensive that many people can't afford to take it.

I would agree that 80 mph is probably our optimum for most of the country. By the way, the current speed limit outside the Northeast Corridor is 79 mph, a speed set by Congress shortly after the end of World War II. Federal regulations do provide a means to upgrade track so that a maximum speed of 110 mph can be reached without total grade separation, but it is expensive. Most of the federally designated high speed corridors will actually operate at this limit or lower, so the correct term is probably "higher speed," not "high speed."

That said, a viable national rail system will need to utilize a number of Class I and Class II freight railroads and operate within their speed limits. The result will be slower speeds than may be desired, but those railroads will need federal subsidies to upgrade to passenger rail quality. Don't forget about the cost of the new unfunded congressional mandate for positive train control systems on all passenger rail lines.

While urban areas of 50,000 population or more are obvious choices for stops, the logical spacing of stations will require stops in more isolated communities of 25,000 population or even less. A policy goal would be to have most of the population within an hour's drive of an Amtrak station. Today, we have urban areas greater than one million people which are two hours or more away from Amtrak (Columbus, Ohio; Louisville, Ky.; Nashville, TN). Amtrak bus connections may be viable for linking some communities to the rail system.

CSX actually submitted a proposal circa 2006 for a combined freight/passenger rail corridor from DC to Orlando, with grade separation for the high speed lines in the middle (passenger and express freight). While it did not get funded, it is a potential model for corridors that can support the investment.

Unfortunately, only a few national engineering firms have staff qualified to do the design work, and some of the new governors in states with high speed rail funding awarded are balking at the potential operating costs. Nonetheless, this issue is going to continue to move toward the center of the stage as peak oil unfolds.

I think some new marketing term needs to be coined for the 80-120mph rail. Medium speed sounds like we are compromising, and "higher speed" implies it will keep getting higher. "Express passenger rail , XPR may do, but I'm sure someone could come up with something better.

In any case I think that is the sweet spot, faster than you can go in a car.
The positive train control should not be needed on the sections of passenger lines that are exclusive passenger lines, but for the rest, so be it. I would also like to see the railco's concede priority to the passenger trains, though they would want some compensation for that, and fair enough - maybe the passenger service takes over maintenance of the shared portions.

some of the new governors in states with high speed rail funding awarded are balking at the potential operating costs.
There is the problem. Why build a system that we know will cost a lot to operate, and have less ridership? If you ask any of the engineers how to substantially reduce the costs, the answer will be to design a slower system.
One HS white elephant and then nothing will get built anywhere for at least a decade.

Really, to build a system that is pushing the limits of engineering expertise, is certainly pushing the limits of acceptable costs, and what benefit, exactly, is conferred by the extra speed that all this cost buys us?

"and what benefit, exactly, is conferred by the extra speed that all this cost buys us?"

Depends on how much extra speed costs how much extra money. And on how capricious and arbitrary the 1920s-oriented regulations that impose much of the extra cost might be, and whether it's possible to bring any of them into the 21st century.

IMO the trouble with the 79mph rail that is being falsely touted as "high speed" (which by contemporary global standards is a very sick joke) is that the rail part of the trip is barely faster than driving even before one accounts for the rest. The rest includes waiting an hour or three for the train to show up, getting to and from the station at each end of the trip, and possibly being gouged for an overnight hotel stay if one misses the last train of the day. When all is said and done, the so-called "high speed" train trip will often take many times longer, and cost substantially more, than the car trip.

So the train becomes a dead-on-arrival boondoggle and financial black hole until and unless the car trip becomes unavailable or at least nearly so. And even then, the train trip might well still not be an issue for most people:

First, train capacity (particularly availability of railcars) would fall so utterly short of demand that few potential passengers would have the slightest chance of getting aboard. It would be a huge lottery, or require who knows how many hours standing in line, or they'd be just as close to the bottom of the priority list as they would for gasoline rationing. Second, many or most would have no practical way to get to the station at one or both ends of the trip. Third, the economy would be such a disrupted mess that many potential passengers would be unable to afford the fare, or fearful of spending on such things when they expect that their income might well disappear tomorrow.

So the question becomes, where is the sweet spot, and does a sweet spot even exist.

No question that some old regulations are in the way here, but that aside, the question that needs to be answered is how fast is fast enough for a train service to be viable? I agree that it needs to be faster than driving, but go too fast, and it is more expensive than driving.

The problems you describe like waiting for the train to show up are more indicative of the lack of American experience in operating trains. The British system does it (many of their trains are operated by Virgin Airlines!). But we have all the delays etc that you mention with planes, and yet lots of people still fly.

As for train capacity, anyone who turns up without a pre-booked ticket is asking to be left behind - you wouldn't go to an airport like that. It is very easy to have online reservations, I don;t see why you would expect the trains to not do that, and why, for travelling from one city to another, you would not plan ahead?

Reliable train service is not rocket science, it is actually subject to far fewer variables than flying. If we can get 70% on time performance for planes, I would think 90% for trains is quite achievable.

They may not be as convenient as cars, but that is not the point, they need to be competitive. That will mean different things to different people - business travellers can be productive while travelling, and can often get the train from city centre to city centre. Non car owners will find it cheaper than renting. Families will find it no cheaper to visit Grandma than driving, but Grandma can get to the family without driving.

The system does not need to be all things to all people, it just needs to be enough to enough people to be viable. From there it will grow, roughly in step with oil prices!

The problems with waiting for the train to show up are not just about poor service, although poor service makes matters worse. They're also about infrequent service. Tokyo region Shinkansen run every ten minutes or so, but then they have more than 25 million people on the acreage of one small-ish US county, and somewhere north of 60 million on a narrow coastal strip that can (mostly) be served by a single line. If you're going to a meeting at 11AM in the city, and the trains only run once in three hours - IMO a likely figure at low US population densities and small US city sizes - you are likely to end up cooling your heels somewhere for considerably longer than it would take to drive. (I figure that there may be no scenario that solves this problem and still leaves the train affordable.)

WRT reservations, I was tacitly assuming a system built around reservations - and that in the event of an oil shortage, one's chances of getting a reservation would be as dismal as one's chances of getting gasoline either to make the trip or maybe even to get to the train stations. Track capacity won't be a problem in the hinterlands, but ten times the usual number of locomotives and railcars won't suddenly appear by magic.

But now that we bring that up, it only adds yet another sticking point, that such a system accommodates solely pre-planned trips - which in the event of fuel shortages might have to be planned many months or even some years ahead. That's an exceedingly poor match to real life, which is oftentimes not planned months or years in advance. (Grandma dies of a heart attack and you're headed for the funeral. You get the flu and you don't want to risk giving it to Grandma; sorry, your reservation is gone and you can try again in three years if she's still alive. Your business's office in the next city over needs attention now, not three months from now. And so on ad infinitum.)

And yes, a lot of people fly, for two reasons. One is that you can't drive over the oceans. The other is that even with the delays, it's still (usually) quicker than driving, for the longer distances, although I have on occasion regretted choosing not to drive for distances up to 1000 miles (!) A train will hardly ever be quicker than driving if its top speed is only 79mph.

I do agree that as you say, trains would need to be competitive. And obviously, therein lies the rub. I simply don't see any way to make old-fashioned 79mph trains competitive under most US conditions. I think one has to find just precisely the right scenario to make them work. If the scenario is too close to business-as-usual, such trains will be too hopelessly slow for the complete trip to be of any use except in rare cherry-picked circumstances (which is why the service is so infrequent where it even exists.) If the scenario is too doomish, then most people won't have the income to use them anyhow. So I'm left still looking for the sweet spot, because I suspect that those two scenarios may overlap in a manner that leaves no sweet spot.

P.S. I'm not at all impressed by the modern British system. Cram-and-jam airline-type seating, with far too many service failures owing to the wrong kind of leaves or snow on the line, random excuses, and other such nonsense. Ugh. I am impressed by the Japanese system, but then that's supported by tremendously high population size/density combinations unknown in North America.

I have never been to Japan, but am glad to hear you like their system. My time in Britain the system served me just fine, but that does not mean it does not have service disruptions, but then so do roads, and airplanes

There must be something I am missing in your world view, with regard to reservations. You are saying a system that can only be pre booked means we have to plan months/years in advance, yet we have an air system that has to be pre booked, and we only need plant days or weeks in advance - why would rail be any different?
If it was that popular that you had to book months in advance to get a seat, then I'd say it is successful. Even Amtrak's reservation system works fine, and I'm sure it could be improved.

So to find the sweet spot, we simply have to identify what trains are good at, and what cars and planes are not.

First, planes - they are not good at less than 300 miles, and certainly not for less than 200 (see my reference to the Brookings Institute report above). For these short hops they are not fuel efficient, more likely to be delayed, and the dead time (travel to from airport, security) has a dramatic effect on average speed. This is particularly so if the drive to/from the airport is in city traffic.
Over 300 miles, the planes will usually win, so lets leave that for now.

Cars -
The first weakness is that you have to have one. For a non car owner, this is a problem. For a company that wants employees to sue their own cars, they have to pay mileage rates
2. City/suburban traffic which can often mean your average speed is well below the limit. This can make travel times unpredictable - you will be delayed in traffic far more often than with train and plane. The interstates around the SF/bay area area notorious for this.
3. Fuel price - which will be highest for a single occupant trip. A car full of the family is actually quite cheap and efficient.
4. You are of limited productivity - you can talk but can't write/text/surf/get something to eat without stopping.
5. You can't have a beer while driving

The big advantage though, is you drive point to point.

Trains (advantages)
1. Higher travel speed assume we remove the 79mph limit and are at 100mph out side the cityo
2. no traffic delays
3. Train lines usually run through or close to the city centre (airports are usually some distance away)
4. You can be productive
5. You can have a beer
6. Highest energy efficiency

There are disadvantages to trains, of course - maintenance, government staff (usually), and their point to point may not be yours. The frequency of service is important, and I would suggest two hours as a maximum interval, and hourly or less is ideal.

So what is the sweet spot?

I would say people that want to go from city centre to city centre, as fast as a car, and be productive along the way. That sounds like business travellers.
Also, people who don;t own a car - that sounds like urban condo dwellers, tourists and seniors.

Look at the Acela service and that is probably what you have. It is also what you have on Via rail between Toronto and Montreal. For a business traveller, you will book the trip, just like a plane trip, and plan the day around the travel time, confident that it will be accurate.
For the urban condo-ites who don;t own a car, they will take the train just for fun (what I did in London) same as a car owner would go for a drive.

So the key thing is cities that have a bustling downtown, both business wise and residential. Vancouver to Seattle to Portland, for example, LA to San Diego (not that LA is an ideal city example), the Texas triangle (DFW-San Ant-Houston, and there are probably many more on the East, though I am not familiar with that side oft he continent.

The LA San Diego corridor already has a train, and shows how NOT to do a service. According to Google maps it is 120 miles (downtown to downton) and 2hr4 min drive BUT- 3hr 30 in traffic. That is what I call "unreliable", and for business travel, you are likely driving in the times of day when "traffic" is the worst. But flying from one to another, is a pain in the neck, and more expensive than driving (assuming you own the car) .

And, their is a rail line between them, and Amtrak has a service. So far so good, except that the service makes 7 intermediate stops and takes 2hr 50min for the trip, for an average speed of 43mph. It is almost as if this train is designed not to be efficient - it is for tourists who want to, in Amtrak's words, meander along the coast and enjoy the scenery"

Now, if this track was upgraded even to 100mph, and they ran at least some express services (maybe one intermediate stop at Orange County or Anaheim), so that your travel time was, reliably, 1hr45min (average speed 70mph) then you would have a useful service - faster and more reliable than a car, cheaper than flying, downtown to downtown and you can be productive and eat and drink beer along the way!

I think one of the biggest problems with rail is that is normally government owned and operated, so has the level of customer service and innovation you expect from a government monopoly. Instead, ask how, say Southwest airlines would run a train business, and you would end up with something quite different.

Opportunities are out there, it is just that when only government can take them, they are usually squandered. And for private companies, it would be seen as a huge risk - but that doesn't mean it can't be done - there is a huge opportunity out there...

For business travelers, the real solution is to book a video conference.

For routine stuff yes, but for setting up and closing the deal, and general maintaining of customer relationships, you can't beat face time.

Sales accounts for maybe half of business travel. Lots of business travel is professional/managerial/technical people traveling between company locations or to customers that they already have contracts with.

I would think that the best route for extending the Northeast Corridor to the south would be Richmond, Petersburg, Raliegh (Triangle), Winston Salem (Triad), Charlotte, Spartanburg, Greenville, Anderson, and Atlanta. This would pick up the large metro areas of the Piedmont.

The coastal route to Florida involves a large gap between Petersburg and Florida with only smaller metro areas over quite a distance. It would also seem to be more expensive with respect to bridging larger rivers.

Beyond Atlanta, it might be better to route west to Brimingham and eventually to Dallas via the Meridian Speedway, again avoiding the more difficult terrain along the coast which is expensive to build and may be expensive to maintain in the face of rising sea levels and more intense hurricanes.

Here is an article from MSNBC talking about the budget crisis looming over many U.S. states:


I think of my Mom, who is 66 now, who worked hard for low pay preparing meals for mentally challenged people in a PA state institution. And of my MIL (72), who worked in the main Penn State Library...both of whom receive pensions now.

They worked hard...didn't call off sick for no good reason, didn't dodge the dreaded 'mandate' phone calls to come work unscheduled over-time at the drop of a hat...did their work as good and as quickly as they could.

What is to become of their pensions? Trust me, they are not living high on the hog....they manage their very modest incomes and live simply.

And then there is me and my military pension and 'TRICARE For Life'. What will become of that?

Yet we need to implement government austerity such as has been done by the British.

What would chap my hide, though, is that we will try to do this on the backs of little old ladies, while we absolutely will never entertain allowing the GWB tax cuts for those making over $250K/yr to expire.

Even better, many politicians will not entertain the idea of letting these tax cuts expire for people making more than $500K, or $1M, or any amount of income.

Most of the same politicians would not countenance cutting military spending either, the mother of all sacred cows in the U.S.

We need the spending cuts and the tax increases...but the cuts and hikes need to be based on shared sacrifices...

The NYT article is very good, and it touches on many of the things that we have been talking about:

But some analysts fear the (state & city credit) ratings are too sanguine, recalling that the ratings agencies also dismissed the possibility that a subprime crisis was brewing. While most agree that defaults are unlikely, they fear that as states struggle with their growing debts, investors could decide not to buy the debt of the weakest state or local governments. That would force a crisis, since states cannot operate if they cannot borrow. Such a crisis could then spread to healthier states, making it more expensive for them to borrow, if Europe is an example.

Meredith Whitney, a bank analyst who was among the first to warn of the impact the subprime mortgage meltdown would have on banks, is warning that she sees similar problems with state and local government finances. “The state situation reminded me so much of the banks, pre-crisis,” she said this fall on CNBC.

Here is a link to a separate NYT article about Arizona reducing funding for Medicaid funded transplant operations:


Very well said. I have noticed that in anger at Govt. many seem to confuse the hard workers that make the contributions with the #!~&**s posturing on the tube. Then, they all get tarred with the cry for cut em back and hang em high. The bottom line is that all deserve a modest pension in a caring society, perhaps somewhere south of golf links, nevertheless, is the austerity call a demand for a human trash heap once their economic contribution is over? I also hear sour grapes in many comments couched in self-righteous calls for austerity. We ask for military protection, schools for our children, even libraries and fire departments....safety (police), and then bitch about meeting contracted obligations while the real robbers are picking our pockets clean. MHO and I apologize for the rant.

Best of luck with shared sacrifices. Sharing is a learned skill and does not seem to be a natural function of life. I think of my sheep butting into the feeder to woof it all down first.

For those missing the 'personal views' in this kinder gentler oil drum, may I suggest a return to Post Carbon.org interviews? The Q and A format works well and the interviewed are highly knowledgeable and don't get slammed by posters. It is a very enjoyable and well mannered way to think about post/peak oil issues. I had forgotten about it with the hours of TOD use.

This morning I reread a Martenson and JHK interview.

all the best .....Paul

Thank you for your good words...it is refreshing to find others whose values go further than the law of the jungle and Adam Smith's dead hand.

And thanks for pointing out the Post Carbon Institute...I lost my 7-year old XP machine to an unknown malady and lost all my bookmarks with it...I used to have bookmarks on a password-protected Website called 'OnlyOneClick.com' but it has gone away too.

I wouldn't mind making my share of the contributions/sacrifices (increased TRICARE premiums. decreased pension, decreased Social Security, higher taxes, etc) but only if I know that everybody is paying their proportional fair share...everyone all along the spectrum of wealth.

I would much rather work my arse off outside, up on people's roofs,installing/servicing solar PV systems than reviewing and making PP slides and Word Docs and spreadsheets for 'the man' to support 'the machine', but guess where the jobs are here? Not in renewable energy, that's for sure.

If the Feds spent half as much on a campaign to subsidize PV rooftop installations locally as is spent on the local MIC Enterprises, every roof (and many parking lots) in this town would be covered with PV in less than 10 years.

But, hey, there's a small DOE PV research facility on base (been there at least since 2001, likely a lot longer)...pretty small beer compared to the other ivory towers and sacred cow operations on base...

But, that's our priorities in the good 'ol U.S.A.: If we want to push the envelops for engines, fuels, materials, aerodynamics, etc. to produce hypersonic missiles to pummel our imagined enemies (for all the god that will do), we spend the money and we make the stuff; same with low-observable (stealth) technologies and directed energy (laser beam weapons, high-power microwave weapons, etc)...

But, go try to promote a campaign to subsidize PV on most every roof in the SouthWest...or to subidize better insulation, replacement windows, white roofs, etc...those kinds of fantasy idead are dead on arrival thanks to people who scream 'socialism' and 'government waste' at every thing except the MIC, which gets a Carte blanche.

I think that Texas is going to be a fascinating case history for a number of reasons, among is that we have what Texas Monthly called the most conservative legislature in history confronting the worst projected budget deficit in history. The GOP is in solid control of state government, and from Perry on down they profess to being determined not to raise taxes.

It will be interesting to see how legislators respond to the primal screams from constituents, as constituents start to see what kind of spending cutbacks the state is going to have to implement. Basically we may be seeing a trial run as to how the GOP would handle the federal deficit in 2013, if they are in full control of the federal government.

As Tom Brokaw said in 2008, which I think is also true of all post-2008 elections, "The winner should have demanded an immediate recount." Politics is now not about winners and losers, it's about who loses the least, versus who loses the most.

FOR ALL - And what makes WT's point all the more interesting is that Gov Perry is setting himself up as the next POTUS from Texas. He might take such drastic actions as to damage his political future in Texas but at the same time ramp up his national cred up...especially with the Tea Party wing. If folks didn't like our somewhat stumbling last Texas POTUS wait till they see Rick. Many consider him one of the slickest snake oil salesman in the state. And that's the opinion of many who support him.

After LBJ & Vietnam, and after Bush 43 & Iraq War II, I wonder why kind of mess a third Texas president would get us in?

I thought that Texas governors were relatively limited in their powers, with several major areas of the executive branch being overseen by other elected officials and boards.

What makes the Texas governorship a good training ground for presidents?

Merrill - You're correct. A Texas gov isn't as powerful as most. I didn't mean to imply Texas is a good training ground to hone one's leadership skills. But IMHO it's an excellent environment to learn how to manipulate public opinion and horse trade with TPTB. For the last 30+ years or so those seem to be required skills for running for POTUS.

Palin/Perry 2012?

Perry/Jindal 2012?

Gingrich/Thune 2012?

Pawlenty/Jindal 2012?

Pence/Huckabee 2012?

Perry/Santorum 2012?

Barbour/Pence 2012?

Pawlenty/Barbour 2012?


The 2012 election cycle will be interesting, for sure.

Do any of these folks, singly, or in combination, have any proclivity to 'get' PO and other resources/sinks sustainability issues?

Not that we've had any Presidents to-date who 'got it'...Carter seemed to come the closest, but he didn't make any difference...in fact, his Synfuels and Rapid Deployment Force ideas were prescriptions to continue BAU...

Greer/Kunstler 2012

Make it so, Number One!


Is nobody taking seriously Donald Trump's suggestion that he's thinking of running (said in a UK tv interview recently)?

Does it matter? The Government is on autopilot and it makes little difference who is put in front of the Teleprompter, the results will be the same. The style and character of government may vary, it's the only part people can vote for, but the systemic part of government (the part that matters) will not alter.

Agreed. The non-elected officials and advisors do not come-and-go.

"Collapse" had an insightful comment about the circumstances for whomever the current president was.

The cycle of decline is now firmly in place.

Nobody in their right mind would choose to helm this sinking ship.

Which ensures that the people who do will be the least qualified.

As they say, Obama should have demanded a recount. We have a whole host of people who will run who are not in their right mind or any mind. So I guess I just need to learn to embrace the insanity.

An interesting read over at Zero Hedge regarding cyclical decline and generational overturning;

Guest Post: Will 2012 Be As Critical As 1860?

Yet we need to implement government austerity such as has been done by the British.

The transition from a compassionate worldview to a dog eat dog worldview is unavoidable, so long as we give a self selected set of billionaires control over our public discourse. They have been at this project, pushing the Overton window relentlessly towards the right for decades now. Now that we have a global financial crisis (largely of their making), we can't expect them to let a good crisis go unexploited. It looks like they will be able to call the shots, and reorganize the political world as they wish.

[Good thing a proofread, instead of dog eat dog, I had dog eats god!]

Shock Doctrine for the U.S. We were warned. They have sucked trillions out of the Government and the Fed. But that is not enough. More money must be sucked out of the pockets of the pensioners, the sick, the lame, the old, the tired. The monster that is the financial sector cannot be satiated. It can only be fed until the rest of the society is completely destitute. The monster has to be stopped before it consumes itself.

Ah, so now we must implement austerity. Where were the calls for austerity when the banks were getting their trillions. Talk about doing the monster's bidding. Yeh, just freeze or cut the salaries of the government employees and all will be better. Do the math. It just doesn't add up.

Obama's attitude toward oil is deeply ideological
Dec. 3, 2010, 8:19PM

Pot . . . . meet kettle.


I see we've had no new drumbeat today. If drumbeats are only being posted every few days now will interesting news stories be saved over for inclusion in the next drumbeat or is it better that we post anything interesting we find ourselves?

Any guidance (is a drumbeat planned for tomorrow for example) or should we just play it by ear?

We're on the new schedule, it seems. I say post away!

From 11/28:

And for those interested...the plan is to continue daily Drumbeats for another week, then switch to a Monday-Wednesday-Friday-Saturday schedule.


A weekly Campfire would be nice.

It is nice to see the 'The Best of' article at the top. It doesn't deserve to be lost down below the cut. I hope it stays up there for people to refer to.


Crumbs! It only seems like last week that QEII was being announced. Things are now happening so fast that it's becoming impossible to even keep track of what is going on.

Bernanke’s QE3 faces stiff resistance

Transcripts suggest that Mr Bernanke is sufficiently worried about the risk of an economic relapse next year - and a slide towards deflation - that he is already mulling further “credit easing” or QE3 as it is dubbed.

Chaos reigns!

Here's a cute video on QE3:


That video is great! should be compulsory viewing for everyone, but especially the politicians!

I actually don't mind the gov dumping lots of money into the economy. I just don't think it should go through the banksters any more. The fact that the country is now run by GS, though, should be obvious to all by now.

If you are interested in the movie "Collapse" ( http://collapsemovie.com/ ) I was able to watch it today on Netflix online. It is currently in the 'new releases' category.

I found it educational and interesting.

Saudi Arabia fixes its reserve levels as it sees fit, doesn't it, regardless of the true (in as much as they can be) reserve levels, which means their figures cannot really be relied on. Have these in the past been genuinely related to supply I wonder; more likely revenue? But if the KSA declares that $100 oil, or $120, is appropriate, they need not pump more - even if they could - and if they really cannot increase extraction rates they have parried world panic somewhat by promoting their own world economic view (even if just fakery) to disguise a new supply side crisis. No?

The fact that China is doing deals now with Venezuela is interesting. I know oil is supposed to be frangible, but what if China has exclusive rights to a certain quantity of oil, and uses its own exploration, loading and tanker facilities. How is such oil now frangible? Just wondering.

Oil at $90 when the world economy is in such a relatively depressed state is interesting indeed.

But if the KSA declares that $100 oil, or $120, is appropriate, they need not pump more - even if they could - and if they really cannot increase extraction rates they have parried world panic somewhat by promoting their own world economic view (even if just fakery) to disguise a new supply side crisis. No?

That's exactly what I've been thinking and wondered if anyone else would consider the same possibility. What if westexas is right and Saudi production is declining. Wouldn't their willingness to agree to whatever price oil is currently selling for fit perfectly with that scenario? That way, as you point out, they delay the inevitable media frenzy and stock market cataclysm resulting from that information coming to light. The tactic buys time and saves face for a while longer.

It becomes a what came first scenario, of did declining production come first or the desire to sell oil at a certain price? At this juncture I'm leaning towards the former.

Can you imagine the panic if that information came out via wikileaks or by whatever means? A shock heard round the world - 'Saudi Oil in Permanent Decline!'

Can you imagine the panic if that information came out via wikileaks or by whatever means? A shock heard round the world - 'Saudi Oil in Permanent Decline!'

My theory is that the panic only reverberated around the royal palaces in Saudi Arabia, causing the royal family to sell Saudi stocks like crazy, leading to the interesting coincidence that the Saudi stock market crashed at precisely the same time that the Saudi oil minister announced that they were "voluntarily" cutting back on net exports, due to a lack of demand for all of their oil, even their light/sweet oil. Note that this change in Saudi policy, due to a "lack of demand" occurred, in early 2006, as annual oil prices were increasing from $26 in 2002 to $100 in 2008.

Some links to prior Saudi statements and to the Saudi stock market chart:


My theory is that the panic only reverberated around the royal palaces in Saudi Arabia,causing the royal family to sell Saudi stocks like crazy, leading to the interesting coincidence that the Saudi stock market crashed at precisely the same time that the Saudi oil minister announced that they were "voluntarily" cutting back on net exports, ...

But wouldn't that mean all the grandiose talk by the Saudi's of spare capacity was unsubstantiated? If so, it would go down as one of the biggest whoppers ever. But I could see that occurring out of the ME.

It's not so much about saving face as making the most money possible.

If, hypothetically, the Saudis knew their oil production was going to crash in the near future, they wouldn't tell the world about it because it would cost them large amounts of money. World decision makers would institute a crash program of bringing alternative energy sources on line as fast as possible. The additional oil substitutes flooding onto the market would drive down the price of oil, and the Saudis would get much less money for their last few remaining barrels.

However, if they kept it secret and convinced the world they could flood the markets with cheap oil at will, they would discourage investors from bringing alternatives on line. Then, when their production actually did collapse "unexpectedly", world oil prices would shoot up to astronomical levels, and they would make a fortune from their last remaining barrels before the alternatives belatedly came to market.

The result is that, if Saudi oil production really was about to collapse, the Saudis would be the last people who would tell you about it, and if someone else predicted it, they would deny it vociferously. This makes people like me and Westexas very nervous about what is really going on in those big Saudi Arabian oil fields. If you can't get access to the raw field data, which you can't, then you can't make an informed judgement for yourself. Where is the CIA when you really need them?

World decision makers would institute a crash program of bringing alternative energy sources on line as fast as possible. The additional oil substitutes flooding onto the market would drive down the price of oil, and the Saudis would get much less money for their last few remaining barrels.

Good point, but extremely self involved of them. However, I suppose Wall Street types would applaud the drive for the highest profits possible. Afterall in this time period, it seems to be about profits and not our connection to one another.

(Incidentally, I think that you meant to say "fungible.")

An excerpt from my July, 2007 "Iron Triangle" essay follows:


If one resides in the oil industry leg of the Iron Triangle, and if one has concluded that Peak Oil is upon us, or extremely close, does one say, "We cannot increase our production," and thereby encourage massive conservation and alternative energy efforts, or does one say "We choose not to increase production and/or we are temporarily unable to increase production for the following reasons (fill in the blank)?"

The latter course of action would tend to discourage emergency conservation efforts and alternative energy efforts, and it would encourage energy consumers to maintain their current lifestyles, perhaps by going further into debt to pay their energy bills, and it would in general have the net effect of maximizing the value of remaining reserves.

I always find it interesting that people like Matt Simmons (who are encouraging energy conservation) are widely blamed by some critics for high oil prices, while some major oil companies, some major oil exporters and some energy analysts are--in effect--encouraging increased energy consumption.

Yes, fungible. I must have been thinking about food at the same time - thanks!

Now: substitutes for oil. What are these exactly? I know we are told that the world is now awash with more gas than a White House spokesperson, but there's more to getting about, and eating, and everything else, than what appears to be possibly a bit of a flash in the pan. And although I am aware of shales and sands I do wonder at them being the future for all mankind. The sun keeps shining, but...

I have to think that a little conservation, while at the same time applying real effort to finding substitutes, and also encouraging conservation for all resources (water anyone) might be a very good governmental idea.

Instead, I see big trucks are selling well again because the price of oil is suddenly so affordable.

In AD 407 the price of slaves fell like a stone in the slave markets of Rome, because a battle had just been won against a northern tribe on the frontier and there was a glut of captives.

Earlier that year the Rhine froze and whole nations of barbarians crossed into Gaul, and never left. In 410 the city itself fell to invaders for the first time in over seven hundred years. Saint Augustine reacted by writing his City of God, which basically said, give up here on earth, true profit and salvation can only be found in heaven, and the old man then himself died while his African city of Hippo was being besieged by the Vandals. It was all over did the complacent Romans but know it, and it all happened very quickly.

Where do we all stand on substitutes I wonder, because I know that hubris can quickly encounter nemesis?

U - China's horse trading with Vz isn't new. Two years ago they cut a deal for a fixed volume of Vz heavy to be sent to China. For their part China agreed to build 3 special tankers to haul the heavy stuff and also 2 refineries built in China designed to handle this stuff. Additionally China has direct ownership of oil in Vz, Angloa and other countries. If I understand "frangible" it isn't about who has access but rather how do specific purchases effect the market. IOW if China buys 1 million bbls of oil from Country X then that's 1 million bbl of oil available from other sources. Of course that assumes there is another source with that oil to sell.

Yes. Very good. Other oil sources, that China hasn't also done a deal on. They might sell it on I suppose, at only a small profit. I can't believe that the US would not play the same game, but I do wonder if the independent US oil companies have the clout that the Chinese state companies do. Of course, the US still produces a huge amount of oil and in extremis would direct that production to essential users, I suppose. Which would anyway kill the economy stone dead. But then, such an extreme measure would be in answer to an equally extreme situation, so the disaster would already be set in place.

Does the Monroe Doctrine still carry any clout?

Since there was no Dec 5th Drumbeat, I will post a few articles of interest for today:


Branson predicts oil-price upheaval

The price of oil will hit US$200 a barrel, ushering in an era of unprecedented economic upheaval and mass unemployment, says Sir Richard Branson.

This doomsday scenario was predicted by the flamboyant British billionaire, whose businesses include commercial aviation and space travel, at the opening of the UN-sponsored climate talks in Cancun, Mexico.

Such a disaster would be averted only by a dramatic change in energy policies, he said.

"We are going to have the mother of all recessions if we don't sort out our energy policy fast," Sir Richard said. "We think we've got it bad today. In five years' time unemployment could go to 15 per cent without any difficulty at all in America."


Saudi Aramco Increases January Crude Oil Prices to Asia, the Mediterranean

Saudi Aramco, the world’s largest state oil company, raised official selling prices for all crude types for customers in Asia, widening the premium for light grades to the highest levels since the third quarter of 2008.

The company, the world’s largest crude exporter, also increased all formula prices to buyers in the Mediterranean and most to the U.S. and northwest Europe for January. The premium for Extra Light crude to the U.S. was set at the highest in more than six years, according to Bloomberg data on past prices.


Banks see further rise in oil price: Goldman Sachs sees oil rising to $100/bbl. next year

ING and Deutsche Bank joined several peers in raising their crude price forecasts on Friday, with a growing number of major banks saying prices have room to rise as supplies tighten.

Analysts are calling for oil prices to gain more than previously expected over the next few years, including several forecasts for them to top $100 a barrel.


JP Morgan analysts said Friday they see prices at higher levels still, with NYMEX crude likely to average $93 a barrel next year, up from a previous forecast of $89.75.

The bank sees crude rising as high as $120 a barrel by the end of 2012.

Thank you for those posts.

They corroborate my feelings perfectly. I know Branson has been calling for action, and I also know that his words seem to have been met by media, shall I say, quietness.

Whether oil does in fact top $200 is moot. Certainly in will one day, but since it appears that any incremental (if $5 can be called incremental when a whole barrel cost only twice that sum fifteen years ago) rise seems to trigger growth stoppage, or reversal, will this happen?

All the governments and bankers are predicating paying back these vast QE sums by overtaxing indebted nations, and then demanding they grow their economies. It seems a bit Lewis Caroll to me - I practically expect Jean Claude Trichet or Bernanke to come out of a burrow carrying a pocket watch with a March Hare in attendance - but they speak as if they mean it.

China is hoovering up the world's resources in a desperate attempt to fend off the inevitable at home while we in the west still seem to believe diplomacy and regular trade systems will do the job, which is odd when we have alienated so much of those parts of the world we hope to depend on for very survival, and are bankrupting our people to keep the banks alive.

I am expecting economic disaster within two years. I am a pessimist I know, but am I wrong to be?

"come out of a burrow carrying a pocket watch with a March Hare in attendance"

That would lead up to a...Tea Party, wouldn't it?

Really, most on here are pretty much with you on collapse or a major further step down in the next couple years, though some put it a bit further out.

We desperately need an economy based on something other than endless growth and consumption of finite resources. I am doubtful we could get there by any other means than collapse.