Drumbeat: January 14, 2011

BP 'set for Russian share deal'

BP is set to announce a major deal with the state run energy giant Rosneft, according to BBC sources in Russia.

The share swap deal could allow BP to drill for oil and gas in the untouched and totally unproven waters in the Russian part of the Arctic.

BP new chief executive Bob Dudley is hosting a press conference later where details are expected.

It could mean the Russian government owning a significant part of the UK's largest oil major.

Gulf-oil studies stalled by scarce samples

An estimated three-quarters of a billion litres of oil flowed from the mangled Macondo wellhead after the Deepwater Horizon disaster in the Gulf of Mexico. Yet since the flood was stemmed in July, samples of that oil have become increasingly scarce for independent researchers hoping to explore the ecological effects of the spill or improve response capabilities. Many now fear that their work, or its legal relevance to the continuing damage-assessment process of the BP blowout, might be limited.

US natgas rig count falls for 6th week-Baker Hughes

(Reuters) - The U.S. natural gas drilling rig count fell for the sixth straight week, according to Baker Hughes data on Friday, stirring expectations the steady decline could lead to a slowdown in production this year from record or near record high output in 2010.

The overall number of rigs drilling for natural gas in the United States dropped by 12 this week to 902.

Peak Oil is Past Tense

According to Exxon's (NYSE: XOM) official spokesman:

All the easy oil and gas in the world has pretty much been found. Now comes the harder work in finding and producing oil from more challenging environments and work areas.

That's the Exxon — the $383 billion market cap, world's most profitable company Exxon.

I wonder what Shell (NYSE: RDS-A) thinks...

It is pretty clear that there is not much chance of finding any significant quantity of new cheap oil. Any new or unconventional oil is going to be expensive.

That was Ron Oxburgh, former Chairman of Shell, back in 2008.

Peak oilers still blind to economic reality

The economists are generally going to be right and, as long as the engineers keep doing their job and deliver the oil according to our demand for it, all will be well.

But the problem is that, as Tom Bowers makes clear in his excellent book Oil, peak oil theory is being factored in to the price of oil by the traders who set the price. In the 1990s, these traders broke the OPEC cartel wide open and pushed oil down to $10 a barrel. Today, they are driving up the price of oil at least in part because they believe in peak oil. It;s no surprise that they should listen to the engineers rather than the economists - they are interested in where the oil is coming from and when, not the end use to which it is put. Yet that decision is having wide-ranging consequences for the rest of us.

Range Fuels Lays Off Workers, Plans to Meet 2011 Target

Here’s the bad news from next-gen biofuel producer Range Fuels: The company has let some workers go. But the good news the company wants you to know, is that Range Fuels is still planning to produce enough cellulosic ethanol to meet a government estimate for 2011.

Evergreen Solar closing Massachusetts plant because of competition from 'heavily subsidized solar manufacturers in China'

BOSTON — A solar panel manufacturer that also runs operations in Midland is closing its Massachusetts facility, citing heavy competition from China and dropping prices, according to the Associated Press.

The company will lay off about 800 workers. Adding to the blow, the company received $58 million in state aid in 2007 to open the factory, which is located at a former Massachusetts military base.

Iranian gas demand hits record high

Iran said its natural gas consumption had hit a record high due to cold weather, despite a subsidy cut on essentials including energy.

"The average consumption of natural gas hit a new historical record of 530 million cubic metres a day," National Iranian Gas Company spokesman Majid Boujarzadeh was quoted as saying by the semi-official Mehr news agency.

Earlier this month Iran said its gas consumption had dropped by more than 20 million cubic metres a day since the government of President Mahmoud Ahmadinejad cut price subsidies.

Chicago gas prices soar to highest in country

And a recent equipment fire at Canadian Natural Resources Ltd. is particularly problematic for the Midwest, which gets much of its fuel from Canada, said Chicago energy analyst Phil Flynn.

While city gas prices usually go up in the summer, a price spike is uncommon in the winter.

“I cannot remember a winter in all the years I have been doing this that we have had so many things go wrong, “ Flynn said. “We hope this is going to end soon, but I have been saying that for a month and a half.”

Output in oilfields expected to rise

Planners at Mexico's state oil company Pemex expect three oilfields to be redeveloped by private companies to contribute 42,000 barrels per day in new oil production by 2016, according to company documents.

The company's strategic planning department forecast output from the Carrizo, Magallanes and Santuario fields would rise to 54,000 bpd by 2016 from just over 12,000 bpd in documents released under an access to information request.

Pemex's forecast assumes roughly $1 billion will be invested in the fields between 2011 and 2016, the documents said.

Mexican regulator announces new rules for deepwater drilling

Mexico's upstream regulator, the National Hydrocarbons Commission, announced rules to govern deepwater drilling within the nation's territorial waters.

The new regulations, published in Tuesday's edition of El Diario Oficial -- the Mexican equivalent of the Federal Register -- are intended to prevent Macondo-like accidents and spills.

In a statement, the commission said the rules apply to all drilling in depths of 500 meters or more.

Analysis: Bender Sees Natural Gas as Larger Piece of Energy Pie in 2011

Austin-based energy consulting firm Bender Consulting forecasts that natural gas will increase in importance and will claim a larger piece of the "energy pie" in the U.S., driven primarily by the supermajors' appetite for stable, proven reserves and the U.S. government's push for greater energy independence.

China's LNG work has eyes on Iran, and beyond

(Reuters) - China may have the technical capability to build a natural gas liquefaction plant within five years, potentially opening the door to vast reserves in Iran where sanctions have kept away western firms.

A breakthrough for Chinese firms would allow them to tap Iran's vast gas reserves, the largest in the world outside Russia, as long as they are prepared to brave sanctions that have scared off Western oil majors.

Refinery outages tighten gas mart

JEDDAH: Supply tightness and looming refinery outages in the Middle East have kept gasoline and gas oil premiums supported this week, traders said Wednesday.

Saudi Aramco, state-run Bahrain Petroleum Co (Bapco) and Abu Dhabi National Oil Company (Adnoc) will have partial shutdowns of some of their refineries between mid-January to mid-February.

Over 39 trillion cubic meters of gas yet undiscovered in MENA

JEDDAH: Over 39 trillion cubic meters of gas reserves remain undiscovered in the Middle East and North Africa (MENA) region, the Dammam-based Arab Petroleum Investment Corporation (Apicorp) said in its study.

Proven gas reserves in the Gulf and other parts of MENA stood at around 84.5 trillion cubic meters (tcm) at the start of 2010 but nearly 39.6 tcm in extra resources are undiscovered, it said.

Firms eyeing Aramco's Shaybah NGL deals

State oil giant Saudi Aramco received on December 29 construction bids for a natural gas liquids (NGL) project in its Shaybah oilfield.

Shaybah NGL is one of two new gas projects Aramco plans to develop to boost gas output and meet domestic demand rising at 5-6 per cent annually.

Sudan partition poses challenges for China

JUBA, Sudan - The looming partition of Sudan after this week’s independence vote in the south poses challenges for China, which faces dependence for nearly five percent of its oil imports on a new country long suspicious of its ties with Khartoum.

Transneft denies allegations

The head of Russia's oil pipeline monopoly Transneft denied embezzlement allegations connected to the construction of a $25 billion pipeline.

Mauritius May Face Fuel Shortage Due to India-Iran Payment Issue

(Bloomberg) -- Mauritius may face a fuel shortage that will disrupt economic output if supplies from India’s Mangalore Refinery are disrupted, Commerce Minister Shawkutally Soodhun said.

Fuel availability: A mirage?

THE year 2011, it seems, will be a good year for Nigerians, particularly in term of availability of petroleum products.

Nigerians are still basking in the euphoria of celebrating the Christmas and the New Year without any case of fuel scarcity as it had been the case for several years where commuters and citizens who need petroleum products for domestic and industrial use queue up endlessly at service stations.

Steel Output in India May Drop on Australian Floods

(Bloomberg) -- Tata Steel Ltd., Steel Authority of India Ltd. and local rivals may cut output and raise prices as floods in Australia disrupt coking coal supplies and boost costs, RBS Equities India Ltd. and Macquarie Group Ltd. said.

South Africa warns on electricity tariff

Energy services company Manoa, Wednesday warned business in South Africa to prepare for a series of steep electricity tariff hikes that is expected to hit the country until Y 2015.

According to the Department of Energy’s latest Integrated Resource Plan (IRP) which details the country’s long-term energy generation and usage prospects, the price increases will be used to help fund urgently-needed electricity generation projects worth Billions of Rand.

Botswana: Fuel shortages to continue till March

Government has authorised the release of 6.389 million litres of fuel from its strategic reserves to petroleum retailers as part of efforts to contain the current shortage that is now expected to continue up to March.

Bots looks to Nam and Moz as fuel dries up

Gaborone- Botswana has approached Namibia and Mozambique for fuel supplies following intermittent shortages since early December and expected to stretch up to March.

Fuel shortage: PSO restores oil supply to railways

LAHORE: Pakistan State Oil (PSO) has decided to restore the fuel supply to Pakistan Railways despite a pending payment of Rs750 million, The Express Tribune learnt on good authority on Thursday.

Alternative energy use urged

Islamabad - Minister for Environment Hameedullah Jan Afridi on Thursday said that use of alternative energy is necessary in the face of growing shortfall of electricity, gas and other sources of energy in the country.

Rwanda targeting 300 MW of geothermal power in next six years

Rwanda plans to include geothermal power in its energy mix in a bid to tackle severe electricity challenges and power its fast-expanding economy.

The East African nation says it has set itself a target of generating 300 MW from geothermal sources in the next six years.

Galway Debate on the Future of Energy in Ireland

Experts will debate the future of energy in Ireland at NUI Galway later this month [Jan 26].

The event, which is open to the public, is being organised by the University's Chemistry, Energy and Physics Societies.

Experts from the fields of energy technology, policy, innovation and business will take part in a panel discussion entitled Averting a Future Irish Energy Crisis.

SOUTH AFRICA: Too much maize

JOHANNESBURG (IRIN) - After a record maize harvest, a bid by South African farmers to form a pool to export the surplus – enough to feed its food insecure neighbours, Swaziland and Lesotho, for several years – has raised questions about the future of the crop and the manufacture of biofuel.

W.Va. Governor Urges State to Embrace Drilling

Acting Gov. Earl Ray Tomblin promised Wednesday night to continue to fight to protect the coal industry and urged state residents to embrace increased natural gas drilling as part of a broader energy production agenda.

But Tomblin did not take advantage of his State of the State address to promote his own Department of Environmental Protection's proposal for wholesale changes in the way drilling is regulated. And the acting governor vowed he would "aggressively pursue" a lawsuit to block Obama administration plans to limit mountaintop removal mining.

Idaho Transportation Department sides with hearing examiner who said highway megaloads are OK

BOISE, Idaho (AP) — The Idaho Transportation Department has rejected arguments by a group that wants the state to deny permits to ConocoPhillips to ship oversized oil-refinery equipment along north-central Idaho's U.S. Highway 12.

Global Oil Companies Discover Cash in Their Trash

Companies like BP and Shell fetch top prices for assets many thought they'd struggle to discard.

Show me the evidence: Growth and prosperity

Most cities in the U.S. have operated on the assumption that growth is inherently beneficial and that more and faster growth will benefit local residents economically. Local growth is often cited as the cure for urban ailments, especially the need for local jobs. But where is the empirical evidence that growth is providing these benefits?

I have completed a new study examining the relationship between growth and prosperity in U.S. metro areas. I found that those metro areas with the most growth fared the worst in terms of basic measures of economic well-being.

Proof that bikesharing works in the USA

For all those who dismissed bike sharing as a woolly-headed European idea that would never work on the mean streets of U.S. cities, the success of the first season of MinneapolisNice Ride bike program will come as a surprise.

Peak oil and our finite world; or, in praise of waste

The reason why Krugman is right is that there’s tremendous waste in everything that we do, especially in rich countries. Tristram Stuart’s fantastic book Waste details the scandal of all the food thrown out at every step in the system, from perfectly good food that’s chucked in grocery store dumpsters to the carrots rejected just after picking because they’re slightly misshapen or bent. Depending on whose numbers you believe, and how you define “waste,” something like half of all the food that’s grown gets wasted.

And of course we don’t need to drive to the grocery store in SUVs. We don’t need to have heated pools that leak all that energy—which was most likely ancient sunlight stored in natural gas, coal, or oil, and then burned to make electricity—back into the sky after we’re done taking a dip. Californians don’t have to fly to Hawaii to enjoy beautiful beaches. And so on.

A world in breakdown

The events of a single day in three continents are a lesson in the interlocking crises that will define the decade.

John Michael Greer: The secret of herding cats

Granted, it was the season for giving, but I’m not at all sure that justifies the extraordinary Christmas present Dr. David Shearman has given the climate change denialist movement. Readers of mine who haven’t yet heard of Shearman need not worry; they will be hearing far too much about him in the months and years ahead.

Chile protests turn deadly as Latin America buckles under rising energy prices

Santiago, Chile - Two people in the southern Chilean city of Punta Arenas were killed Tuesday night when a truck ran into the barricade where they were protesting the government's plan to increase natural gas prices.

The world's southernmost city, with a population of 110,000, remained largely paralyzed today by a general strike as local residents and elected officials demand that the national government maintain subsidies on natural gas, which is widely used in the region to power vehicles, heat homes, and provide energy for businesses.

The protests are the latest in a wave of anger in Latin America as governments attempt to reconcile budgets with energy prices, which have climbed to levels not seen since the record highs of 2008.

Crude Oil Falls a Second Day as U.S. Economy Signals Slowing Fuel Demand

Oil declined for a second day in New York as signs of a slowing economic recovery in the U.S. bolstered speculation demand may falter in the world’s biggest consumer of the fuel.

Crude fell from near the highest price since October 2008 after a Labor Department report yesterday showed the most first- time claims for unemployment-insurance benefits since October. Futures extended declines as equity prices fell after China’s central bank raised lenders’ reserve requirements.

$4-a-gallon gas: What effect would it have?

Gas prices that already have topped $3 a gallon could approach $4 by summer if past trends hold — forcing consumers, businesses and governments to cut spending in other areas, raising prices on a broad range of consumer goods and slowing an already sluggish economic recovery.

Oil's Record U.S. Discount Lets Investors Quadruple Money

U.S. oil, the cheapest in almost two years relative to other grades of crude, is poised to extend its discount, giving investors who trade price differences a chance to more than quadruple their money.

JPMorgan Recommends Investors Maintain Bullish Bets on Brent Crude Oil

JPMorgan Chase & Co. recommended investors maintain bets Brent oil prices will rise as global supplies drop and demand from developed countries increases.

Wholesale prices post biggest gain in a year

WASHINGTON — Wholesale prices in December posted their biggest rise in nearly a year, lifted by more expensive energy and food costs. But most other prices were largely well behaved, suggesting inflation isn't spreading through the economy.

Iraq's oil expansion plans face major challenges

BASRA, Iraq (AP) -- Hundreds of miles of mostly rusty pipelines cut across the bleak desert landscape near this southern port city under a smog-filled sky, as foreign crews in flak jackets, guarded by armed security, work nearby to extract the crude oil on which Iraq has pinned its future.

They are among the hundreds tasked with boosting Iraq's oil after the country awarded foreign firms access to its fields. But as they begin their work, the scope of their challenge is becoming painfully clear. Pipelines are old and their capacity is too low. Storage terminals are needed. Ports must be upgraded after decades of neglect.

LUKoil faced reserve shortage in 2010

Russia's largest private oil company LUKoil faced a lack of reserves last year but hopes to solve the problem by boosting exploration and efficiency as well as through cooperating with state energy companies, LUKoil President Vagit Alekperov said on Friday.

Norway's $186 Billion Gas Loss to Cement Russian Grip on Supply

Europe may face a shortfall of Norwegian natural gas as soon as 2015 after the country slashed its estimate for undiscovered resources because of a dearth of discoveries from companies such as Royal Dutch Shell Plc.

Europe’s second-largest supplier yesterday cut its estimate for gas yet to be discovered by 31 percent, or 570 billion cubic meters. That’s equal to more than five years of production at current rates and would be valued at about $186 billion based on today’s prices at the U.K’s trading hub.

Norway Gas Production Climbed 9 Percent in December, Crude Output Decline

Norway, the second-biggest exporter of natural gas, said output of the fuel rose 9 percent in December from a year earlier, as oil production fell 9.2 percent.

Flood-Powered Currents, Drifting Fridges, Debris Shut Queensland Harbors

Brisbane, Australia’s third-busiest container port, is among export harbors for coal, cotton, explosives and oil products that remain shut by Queensland’s “raging floodwaters.”

Cnooc Profit Jumps 90 Percent as Oil Producers Increases Output, Prices

Cnooc Ltd., China’s biggest offshore oil producer, said profit rose 90 percent in the first nine months of last year as it ramped up production to meet demand in the world’s fastest-growing major economy.

Marathon Oil to spin off its refining business

Marathon Oil said Thursday it will split into two companies, separating its business of exploring for and producing oil from its lower-margin refining operation.

Russia may hike oil product tax, cut crude duty-FinMin

(Reuters) - The Russian government may consider increasing the oil product export duty, while crude oil export tariffs could be lowered, Interfax news agency quoted deputy finance minister Sergei Shatalov as saying on Friday.

No end to Belarus oil row

Russia has so far failed to clinch an oil price agreement with Belarus with talks set to continue next week.

Trans Alaska Crude Oil Pipeline Will Shut Tonight for Bypass Installation

Alyeska Pipeline Service Co. plans to shut the Trans Alaska system today to install a bypass following a leak on the line that carries 15 percent of U.S. crude oil production.

The pipe will close at 6 p.m. local time so Alyeska can put in a section to carry crude around a breach at Pump Station 1, Matt Carle, a company spokesman, said by telephone from Fairbanks, Alaska. The system may be shut for as long as 48 hours, according to a statement from the operator, state and federal regulators, dated yesterday.

Nebraska bill would shackle oil pipeline

A measure introduced Wednesday in the Legislature would require oil companies to go through an extensive application process before running pipe through Nebraska -- a move that attempts to slow TransCanada Corp.'s plan to construct a pipeline near the Ogallala aquifer.

Nazarbayev May Rule Oil-Rich Kazakhstan Until 2020

(Bloomberg) -- President Nursultan Nazarbayev, who has ruled Kazakhstan since 1989, may remain in office until 2020 if voters back the move in a referendum, putting a potential succession battle on hold.

Nigeria’s Jonathan Wins Party Backing for Presidency

(Bloomberg) -- Nigerian President Goodluck Jonathan won the nomination of the ruling People’s Democratic Party to compete in a presidential election on April 9, easing concern that infighting in the party would destabilize the country.

Nigeria: Anti-graft body questions 12 oil execs

A spokesman for Nigeria's anti-graft body says they are interrogating 12 oil firm executives over bribes worth more than $100 million in the oil-rich West African nation.

Krugman: Can Europe Be Saved?

It all began with coal and steel. On May 9, 1950 — a date whose anniversary is now celebrated as Europe Day — Robert Schuman, the French foreign minister, proposed that his nation and West Germany pool their coal and steel production. That may sound prosaic, but Schuman declared that it was much more than just a business deal.

For one thing, the new Coal and Steel Community would make any future war between Germany and France “not merely unthinkable, but materially impossible.” And it would be a first step on the road to a “federation of Europe,” to be achieved step by step via “concrete achievements which first create a de facto solidarity.” That is, economic measures would both serve mundane ends and promote political unity.

China, Russia reject Iran's invitation to tour nuclear sites

Iran's proposal for a tour of its nuclear sites floundered Thursday after China effectively rejected the invitation and Russia said such a trip could never replace UN inspections or talks between Tehran and world powers.

China Failing to Enforce Nuclear Sanctions Against Iran, Expert Says

China remains “a major gap” in enforcing global sanctions on Iran, with lax oversight enabling front companies to purchase sensitive materials that can advance Iran’s pursuit of a nuclear weapons capability, a leading expert on Iran’s nuclear program said.

“China does not implement and enforce its trade controls or its sanctions laws adequately,” David Albright, a nuclear physicist who inspected Iran’s nuclear facilities for the United Nations’ atomic energy agency in the 1990s, said yesterday at the Woodrow Wilson International Center for Scholars, a Washington research institute.

Upstream expert: Fed Deepwater report ‘balanced’

With the release of the president-appointed Oil Spill Commission’s final report Jan. 11, energy-industry observers and insiders alike have weighed in on the merits of the panel’s recommendations.

Well-known energy expert Dr. Nansen Saleri thinks that, while specific problems led to the blowout and sinking of the Deepwater Horizon in April, the disaster is indicative of broader problems that energy executives will have to fix.

Drilling chief wants higher fines for offenses

WASHINGTON – The Obama administration is considering ways to increase civil penalties for companies that violate rules for offshore drilling, a senior regulator said Thursday.

Michael Bromwich, director of the Interior Department's Bureau of Ocean Energy Management, said current fines of up to $35,000 per incident per day are "patently inadequate to deter violations."

Spill report rekindles Democratic push for reform

WASHINGTON – Democrats in Congress pledged Tuesday to push for tougher regulation of offshore drilling and to make oil companies more financially responsible for spills — steps a presidential panel says are necessary to prevent another catastrophic blowout.

On Gulf Coast, nail-biting over future of domestic oil drilling

Amelia, La. - Three months have come and gone since the Obama administration lifted the moratorium on deep-water drilling for oil and gas, but there hasn't exactly been a stampede back to the Gulf of Mexico to sink wells into the ocean depths.

Estimating spill may be more law than science

WASHINGTON – The amount of oil spilled into the Gulf of Mexico from the Deepwater Horizon rig blowout will be determined by protracted court proceedings rather than purely scientific calculations, the nation's top environmental enforcement officer said Thursday.

Speakers look into the crystal ball of investment future

Mr. Narusis touched on what he viewed as three dominant trends that pushed up the price of gold in 2009 and 2010 and will likely continue to in 2011. The medium-term trends (which mean lasting a few years) are central banking buying, movement away from the U.S. dollar and China.

He discussed the three irreversible trends -- an aging population, outsourcing and peak oil -- to make a point that these inclinations will affect the price of gold for decades to come.

Jack Gerard answers your questions – Part Two

In this week’s readers’ Q&A session, Jack Gerard, head of the API, the voice of the US oil industry, answers your questions.

In this second of two posts, he discusses peak oil, the potential of natural gas, and what the API’s lobbying achieves.

Why coal is the fuel of the future

But if the problem is that coal is dirty, why can't we just stop using it? Because, as Fallows points out, it's impossible to picture an energy future that doesn't involve coal.

Why not? Because for one thing, it's a lot more geopolitically convenient than oil. The US has the most coal reserves in the world. Russia, China and India are next. Each of those nations is a leading economic and political power. Each has every reason to favour a secure, indigenous energy source over any other.

We're also much further away from 'peak' coal than we are from 'peak' oil. And for another, coal simply provides far more energy than most other sources. Coal-burning plants provide almost half of the electricity consumed in the US. Natural gas is a distant second at around 23%, nuclear is on 20%, and renewables (including hydroelectric power) form the rest. As for China, coal supplies a massive 70% of overall electricity demand.

7 years to ensure safety?

The frenzied coverage of last year's Gulf of Mexico oil spill might have led you to reach two conclusions: The whole thing was BP's fault. And the Gulf waters would be befouled for years, if not decades.

Neither turns out to be true, which has important consequences for drilling policy going forward.

Ken Salazar: Proceed with caution

This week, the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling released its final report on the tragedy that killed 11 men and spilled more than 4 million barrels of oil into the Gulf of Mexico over the summer.

The commission's report delivers a strong message: Unless we continue our reforms to offshore drilling rules, standards and oversight, the United States remains at risk of another spill on the scale of the Deepwater Horizon.

Goldman Sachs cautious on utilities in 2011

(Reuters) - Goldman Sachs cut its rating on regulated utilities to "cautious," and remained bearish on diversified utilities, saying that given a significant surplus of generating capacity, supply demand fundamentals should not dramatically improve until coal plant retirements increase post 2014.

Norway's Statoil has panoramic view of a clean future

The ammonia process is a new one for carbon capture, developed in the hope of avoiding certain potential problems with the more standard amine-based technology. Those include the possible release of trace amounts of amine into the atmosphere, where the nitrogenous compounds may react with atmospheric gases to form nitrous oxides that have been linked to cancer. Whether the chilled-ammonia process can be sufficiently cost-effective, however, remains to be seen.

Roaring fossil fuels outpace green energy

Fossil fuel investments will continue to outstrip low-carbon alternatives this year, darkening a sector struggling to shake off the financial crisis and sagging political momentum on climate change. Soaring fossil fuel prices, where the European oil benchmark is pushing $100 a barrel, favour oil and coal producers, while falling gas prices have undermined wind power generation especially in the United States.

Abu Dhabi's renewable energy target can be reached

ABU DHABI // The emirate can reach its ambitious target of generating seven per cent of electricity from renewable sources by 2020, experts said yesterday.

The target was announced two years ago before the World Future Energy Summit, a global conference held in the capital that gathers some of the world's most influential renewable industry players.

Cruise watcher: 'Perfect storm' of woes has ships fleeing Calif.

Another element of the perfect storm, says Jainchill, is the sharp rise in fuel prices in recent years, which has had a particular impact on cruise ships sailing West Coast itineraries, where ships must travel long distances. And to make matters worse, vacationers increasingly are having second thoughts about travel to Mexico (the destination for most cruises out of California) as a result of the growing drug cartel-related violence in the country.

Indonesia Says Targets Geothermal Capacity of 3,772MW by 2016

Indonesia aims to create 3,772 megawatts of geothermal capacity by 2016 to help reduce the nation’s dependence on fossil fuels, Sugiharto Harsoprayitno, director of geothermal development at the Energy Ministry, told reporters today in Jakarta.

Detroit auto show proves how important small cars will be

DETROIT — The business case against small cars is strong. Simplified, it goes like this: Americans don't want them, won't pay the dramatically higher prices required for them to be profitable — and don't need them because gas still is cheap.

And, all else equal, the laws of physics still mean small cars are less safe than big cars in crashes.

None of that matters for carmakers now, though. Federal rules say that the industry's products must average 35.5 miles per gallon in 2016, and proposed regs could boost that to 62 mpg by 2025. That all but mandates shrinking cars.

A Step Toward Car Fuel From Wood Waste

A federal law requires companies that produce gasoline to blend in 250 million gallons of cellulosic ethanol this year, but the Environmental Protection Agency reduced that quota to a more realistic six million gallons.

On Thursday, however, one of the many companies working toward commercial production, the Mascoma Corporation of Lebanon, N.H., said it had reached an agreement with Valero, the nation’s largest independent oil refiner, under which Valero would take the entire output of a commercial plant that Mascoma is to break ground on this year in Kinross, Mich. It is the first such “offtake” agreement in the industry, Mascoma said. The plant is supposed to be running by 2013.

Japanese carmakers in push for hydrogen vehicles

TOKYO (AFP) – Japan's top three automakers Toyota, Honda and Nissan have united with Japanese energy firms in a push to commercialise greener hydrogen fuel cell cars and build a network of fuelling stations.

Widening of I-5 an ill-conceived way forward

First, America is now a second-tier economy, because the love of personal mobility has shut out societal advances in shared transportation. While Europe expands its high-speed rail in all countries, including Croatia, Poland and Western Europe, and while China completes 9,900 miles of 200-plus-mph rail, San Diego will still be constructing a completely useless 23-mile widening of an already massive freeway. Is widening an already wide freeway transportation innovation and progress? Where are the voices in San Diego planning who speak for transportation innovation?

Second, our domestic security depends on weaning ourselves from fossil fuels lest we continue to be held in the grip of those societies who will export every last drop of their oil to dominate one of the great democracies in history. With peak oil comes the realization that the price and supply of oil is a risk too high for domestic security. The widening of I-5, like a co-dependent or alcoholic enabler, says: "I like my citizens dependent on fossil fuels." Wrong now ---- and future generations will scorn the expansion as criminally wasteful.

The most powerful states for solar

FORTUNE -- It turns out that subsidies -- not the sun -- are what really drive solar projects. Photovoltaic plants simply aren't cost-efficient without tax breaks and other government carrots. California leads the country in photovoltaic projects, thanks to a 2006 act that offers rebates to homeowners and businesses that go green. But the Northeast is also, somewhat counterintuitively, a big solar player.

Corporate tax reform: Talk grows louder

CNNMoney asked six tax policy experts which breaks they think should get the ax. Of their top picks, some are poorly targeted. Others are simply lobbyist-engineered loopholes with minimum value to the economy.

Boosting corn as high as an elephant's eye: Oil refineries can take a 45-cents-a-gallon tax credit for ethanol blended with gasoline.

"It predominantly benefits corn-based ethanol, driving up corn prices, distorting agricultural decisions, and having little if any benefit in terms of greenhouse gas emission reductions or fuel savings," said Gilbert Metcalf, an economics professor at Tufts University.

Eliminating the break could save $32 billion over five years, he noted.

Food prices may rise as corn, soybean output drops

DES MOINES — A surprising drop in the U.S. corn and soybean crop sent grain prices surging to their highest levels in 2 years Wednesday. The price increases stoked concerns about higher food prices and tighter supplies of feedstock for food and biofuels.

Wet weather and abnormally high temperatures contributed to lower U.S. corn production in 2010, according to a report from the U.S. Agriculture Department. The report also showed declines in soybean, wheat and grain sorghum production.

INTERVIEW - No cause for alarm now over global food - FAO

TOKYO (Reuters) - A senior official of the UN's food agency played down concerns that tighter supplies of food could lead to a repeat of the 2008 food crisis because stocks were ample.

Lester Brown - The Great Food Crisis of 2011: It's real, and it's not going away anytime soon

As the new year begins, the price of wheat is setting an all-time high in the United Kingdom. Food riots are spreading across Algeria. Russia is importing grain to sustain its cattle herds until spring grazing begins. India is wrestling with an 18-percent annual food inflation rate, sparking protests. China is looking abroad for potentially massive quantities of wheat and corn. The Mexican government is buying corn futures to avoid unmanageable tortilla price rises. And on January 5, the U.N. Food and Agricultural organization announced that its food price index for December hit an all-time high.

Organic and Beyond

Those of us who advocate a new, environmentally sound agricultural model know full well that organic farming out-competes industrial conventional farming in all indicators, including yields, consumer benefits, rural economic development, environmental protection and hunger eradication. We know full well that the methodologies of organic agriculture have as much or more scientific validation than conventional agriculture and that these represent the vanguard of the agriculture of the future. By whatever name it goes- agroecology, permaculture, ecological farming, biodynamics- this modality of agricultural production, which combines the best of ancient traditions with modern science, is our best bet in facing pressing global challenges like climate change, peak oil, the food crisis and the worldwide economic debacle.

In winter, farmers markets turn into value (added) villages

She admits that today is the first day she realized how few farmers are at the market: The kitchen dwellers - the barbecue man, the corn poppers and salsa pusher among them - have the land dwellers outnumbered by more than 2 to 1. She finds it appalling that a farmers market such as this can have so few of them. "You're looking at a food court here," says the vendor, a farmer, who requests anonymity lest she lose her spot at the market.

How to Deal with our Economic & Environmental Challenges Together

Perhaps the most foolish and dangerous misconception of our time is that we must somehow choose between the economy and the environment. We hear it all the time. "We can't establish green house gas emissions caps until we get our economy out of recession."..."The environment's important, but so are jobs."..."We need to balance the economy with the environment."

SLOLA: Saving Seeds For The Future

Over the last two decades, large, multinational companies like Monsanto have taken over family-owned seed companies and focused on producing their own hybrid and patented varieties.

Why is this an issue? These hybrids don’t produce viable seeds and cannot be collected legally and used by farmers or home gardeners.

USDA calls for dramatic change in school lunches

The government is calling for dramatic changes in school meals, including limiting french fries, sodium and calories and offering students more fruits and vegetables.

The proposed rule, being released Thursday by the U.S. Department of Agriculture, will raise the nutrition standards for meals for the first time in 15 years.

Tense time for workers, as career paths fade away

Alexei Bayer, a financial analyst, even questions the very notion of growth, arguing that the past 2,000 years — including the Dark Ages — suggest prosperity is more aberration than given. "At least for now," he writes, "the U.S. may have run out of sources of growth."

DVD: Collapse

Chris Smith's film "Collapse" is not so much a documentary about ex-cop and peak oil activist Michael Ruppert as it is an engrossing platform for his message, which is simple: There's a finite amount of oil on the planet, we've used more than half of it, and the consequence will be nothing less than the collapse of industrial civilization.

Petroleum-based products are part of life

As the news begins its quarterly coverage of increasing gas prices, the argument often arises whether the United States and the industrialized world is addicted to oil. News stories often focus on the cost of gasoline at the gas station.

However, they rarely are able to grasp the scope of how deeply integrated petroleum-based products are in our everyday lives.

The moral of the story is this: Gas prices aren't a sign to panic and tighten budgets. They are simply an indicator to one fraction or facet of life, and we must realize that oil has crept into nearly everything we touch.

Preparing for the move to self-reliance

Peak oil is an idea that has been drifting around on the edge of the mainstream media for a while, but landed with a thud this summer when the International Energy Agency (IEA) announced that, indeed, the world had definitively reached what they designated as 'peak oil' in 2006.

Conventional oil supplies are now officially in decline. This may take a while to sink in due to the background noise of our hectic lives, but is shaping up to be a real game-changer.

END:CIV at Castle Theatre on Saturday

The idea for director Franklin López’s film, END:CIV, started nearly five years ago when he was at a conference on the peak oil movement in New York City.

“At this conference, most people are talking about gardening, food security, alternative energy … and here comes Derrick Jensen, who I’ve never heard of before,” López said, explaining that Jensen “blew my mind and the minds of everyone sitting there.”

The Chinese Eco-Disaster

When Jonathan Watts was a child, he was warned: "If everyone in China jumps at exactly the same time, it will shake the earth off its axis and kill us all." Three decades later, he stood in the gray sickly smog of Beijing, wheezing and hacking uncontrollably after a short run, and thought: The Chinese jump has begun. He had traveled 100,000 miles crisscrossing China, from Tibet to the deserts of Inner Mongolia, and everywhere he went, he discovered that the Chinese state had embarked on a massive program of ecological destruction. It has turned whole rivers poisonous to the touch, rendered entire areas cancer-ridden, transformed a fertile area almost twice the size of Britain into desert—and perhaps even triggered the worst earthquake in living memory.

China sets goals to reduce emissions of pollutants

BEIJING – China said Friday it would cut emissions this year by rejecting construction projects that pollute too much and developing new technologies that curb greenhouse gases.

EPA vetoes water permit for W.Va. mountaintop mine

MORGANTOWN, W.Va. — The Environmental Protection Agency said Thursday that it's revoking a crucial water permit for West Virginia's largest mountaintop removal mine because it would irreparably damage the environment and threaten the health of nearby communities.

Texas: Court Allows E.P.A. to Issue Greenhouse Permits

A federal appeals court on Wednesday lifted a stay granted to Texas last month to keep the Environmental Protection Agency from taking over greenhouse gas permitting in the state.

EPA files lawsuit over eastern Mo. power plant

The U.S. Environmental Protection Agency is accusing Ameren Missouri in a lawsuit of violating the Clean Air Act at an eastern Missouri power plant.

Ukraine 'scammed emission rights aid'

KIEV (Kyodo) Money Japan paid Ukraine in 2009 to purchase greenhouse gas emission rights from Kiev was diverted away from environmental investments, Ukrainian President Viktor Yanukovych said Wednesday.

Sunrise arrives two days early in Greenland

Scientists claim to have discovered more evidence of global warming after the sun rose two days early in Greenland, apparently because melting glaciers have lowered the horizon.

Earth's Hot Past: Prologue to Future Climate?

The magnitude of climate change during Earth's deep past suggests that future temperatures may eventually rise far more than projected if society continues its pace of emitting greenhouse gases, a new analysis concludes.

Did climate change cause rise and fall of Rome?

Climate change seems a factor in the rise and fall of the Roman empire, according to a study of ancient tree growth that urges greater awareness of the risks of global warming in the 21st century.

Wow. . . current spread this morning between WTI and Brent is about $8.

And Brent just topped $100/bbl: $100.24/bbl as of 15:10 GMT.

GW where do you get your $100+ Brent info from?

I'm using this Brent oil chart available at http://www.livecharts.co.uk/MarketCharts/brent.php , but it's never crossing the $100 mark today...

Paal, I use the upstream online info. Link posted below by westexas. Interesting that they do not agree.

According to the ICE exchange itself, Brent has never been over $100 today. Current price (10 minute delay) $98.71


This is interesting as well

ICE Futures Europe Sets Daily Volume and Brent Crude Futures Records

LONDON (13 January 2011) - IntercontinentalExchange, Inc. (NYSE: ICE), a leading operator of global regulated futures exchanges, clearing houses and over-the-counter (OTC) markets, announced that ICE Futures Europe set an exchange-wide daily volume record of 1,429,283 contracts on 12 January. The new record was established on the exchange's seventh consecutive million-plus volume day and surpassed by 2% the previous daily record of 1,399,536 contracts, which was established on 13 April 2010.

The exchange also established a new daily volume record for its benchmark Brent Crude futures contract. Volume in the Brent Crude contract reached 726,578 contracts on 12 January. The previous Brent Crude daily volume record of 713,496 contracts was established on 5 February 2010.

And today's high.

February Brent crude hits $99 nearing expiry, U.S. futures dip

In London, ICE Brent crude for February rose 62 cents, or 0.63 per cent to $98.68 a barrel, at 11:06 a.m. EST (1606 GMT), having traded as high as $99.14, highest since Brent reached $100.31 in October 2008.

The February contract expires at the end of Friday’s trading.

I'm guessing that it's the difference between spot (Upstream) and Futures (ICE).

I wondered about that but according to Bloomberg, Brent Spot is $97.84

See http://www.bloomberg.com/energy/

I'm confused.

Undertow, currently Upstream Online is showing $99.74 for "Brent Blend", apparently for 16:01 GMT. I wonder what the difference is?

[Edit: Ah, thanks WT.]

So is this recent increased spread due to some unique recent factor, or is oil becoming less and less a global commodity and more of a regional commodity? Or do bilateral contracts that tie production to a particular customer make for these greater spreads?

My guess is that it is due to a combination of a few million extra barrels of oil in a remote area of Oklahoma, combined with the fact that the US is more or less in the process of being outbid for a (so far) slowly declining supply of global net oil exports. One would think that this kind of imbalance can't continue indefinitely. Something will have to change.

Is oil priced by the WTI exported? Or is it all (or almost all) consumed by US domestic demand? If the latter is the case, then could it be that the price for WTI is not affected by declining net exports?

None of this is happening in isolation. Even though WTI is consumed in the US, it effects imports.

Traditionally, WTI has traded at a premium to Brent, but not recently of course. Another factor that has probably affected Mid-continent supplies is the increase in gross oil exports from Canada (which has been a very slow net increase since the late Nineties).

Presumably, if a producer has access to an export market, he could sell his oil to the export market for a higher price, and I wonder if that accounts for most of the difference between WTI and Louisiana sweet (I'm not sure what the difference is in quality).

Check out the current spreads in crude oil prices, versus three years ago (the global average price is close to $100):


The storage tanks at Cushing, Oklahoma, which is the delivery point for WTI, are full to the top with Canadian crude oil at this point in time, and it is having a substantial effect in lowering oil prices at Cushing relative to global prices. The oil traders are laughing all the way to the bank over this growing price differential.

Oil's Record U.S. Discount Lets Investors Quadruple Money: Energy Markets

U.S. oil, the cheapest in almost two years relative to other grades of crude, is poised to extend its discount, giving investors who trade price differences a chance to more than quadruple their money. West Texas Intermediate crude, or WTI, futures on the New York Mercantile Exchange may drop to $8.50 less than North Sea Brent before it rises again...

The difference between the two crudes has more than doubled this month amid swollen stockpiles at Cushing, Oklahoma, the main delivery point for Nymex futures. Inventories have jumped 18 percent since November as TransCanada Corp. started a pipeline bringing Canadian supplies to the region, according to the Energy Department in Washington. At the same time, outages in the Norwegian section of the North Sea have placed a premium on the earliest deliveries of Brent, the benchmark grade for two-thirds of the world’s oil market.

Brent is becoming more important than WTI as demand from China, India, and elsewhere increases while US consumption is static.

Brent’s growing premium to WTI coincides with a shift in trading away from Nymex oil as China and other emerging markets lead global energy demand. The volume of all Brent contracts bought and sold on the ICE Futures Europe exchange rose 57 percent in the past year, compared with a 26 percent increase for WTI...

I think many people have underestimated the impact of Canadian oil sands production on the US market. Canada is now exporting more oil to the US than it consumes itself, more than any US state produces, and the volumes are slowly but steadily rising.

Canadian Crude
As much as 156,000 barrels of additional crude a day will arrive in Cushing from next month once the Keystone pipeline starts, according to JBC. More may come in during February and March as Enbridge Inc. carries out maintenance on the 290,000 barrel-a-day line between Indiana and Ontario, said Lawrence Eagles, head of commodities research at JPMorgan Chase & Co. “There’s a lot of Canadian crude looking for an outlet and you could see a shift of that bottleneck into the mid-West,” said New York-based Eagles.

And, you can expect the gap between WTI and Brent to continue for a couple more years:

“We do not expect WTI’s discount to disappear quickly,” Sieminski said. The completion of the TransCanada link [extending the Keystone pipeline as far as the Gulf Coast], scheduled for 2013, remains “a long way off,” he said.

Now, the thing about Canadian oil sands production reaching the US Gulf Coast, is that if the gap between Brent and WTI is still as wide as it is now, the oil traders may just load it on tankers and export it to other countries (e.g. China and India).

There must not be enough pipeline capacity between Cushing and the gulf coast refineries or the traders would simply divert ships from the gulf coast ports to other global destinations.

There must not be enough pipeline capacity between Cushing and the gulf coast refineries or the traders would simply divert ships from the gulf coast ports to other global destinations.

Correct. At this point in time the Canadian pipelines can currently take oil only as far as Cushing. However, a proposed TransCanada pipeline extension would take it as far as the Gulf Coast.

The proposed Keystone Gulf Coast Expansion Project is an approximate 2,673-kilometre (1,661-mile), 36-inch crude oil pipeline that would begin at Hardisty, Alberta and extend southeast through Saskatchewan, Montana, South Dakota and Nebraska. It would incorporate a portion of the Keystone Pipeline (Phase II) through Nebraska and Kansas to serve markets at Cushing, Oklahoma before continuing through Oklahoma to a delivery point near existing terminals in Nederland, Texas to serve the Port Arthur, Texas marketplace.

This is not expected to be completed before 2013, however, so the price spread will probably continue for a couple of years.

Sending Canadian oil to the Gulf seems like the long way round anyway. It would be better to build out more capacity in Midwest refineries closer to the consumers.

They are converting Midwest refineries to handle Canadian oil. However, there's too much Canadian oil coming on the market for them to handle, particularly since the stream is increasingly heavy. There are also bottlenecks in the pipeline system to the Midwest.

Gulf Coast refiners are short of feedstock due to declines in oil production in Texas, Mexico, and Venezuela. The Gulf Coast refineries have a total capacity of 8.6 million barrels per day, or nearly half of total US capacity. They already have a high capacity to process Canadian heavy oil since Venezuelan extra-heavy is not much different than Canadian bitumen.

Besides which, the Enbridge pipeline system which carries Canadian oil to the Midwest is nearly as long as the proposed TransCanada pipeline system to the Gulf Coast. The Enbridge system can also deliver oil to Cushing in competition with the TransCanada system.

You probably though Alberta was much closer to the Midwest than to Texas. It isn't really.

Not to mention the cost of building a new refinery in either the US or Canada. In many cases the flow of existing pipelines have been reversed further cutting costs. With this I have to imagine the pipelines are a cheaper option. And of course the people invested in our current refineries are the customers they certainly have some say in the matter.

Now to sort of reply to other posts in the thread the expansion of Cushing storage happened what 1-2 years ago ? And the flow of canadian crude through Cushing has been happening for a while now. I'd have to go back and find the press reports.

In any case the general effect of Canadian crude on WTI prices has in my opinion been priced in for a while a change in inventory at cushing by a few million barrels is unlikely to have a huge effect on the spreads. Also as far at the WTI contract itself I don't know the term at which Canadian crude can be substituted. Its my understanding that the upgraded light syncrude is a valid substitute for delivery using the WTI contract. Feel free to correct me if I'm wrong. However I doubt the heavier crudes has a direct impact on WTI prices regardless of how much is stored at cushing. The correlation would be indirect in the sense that as US has moved to primarly heavy crude processing WTI is itself not a good marker for US oil demand and pricing. A heavy crude index is probably more appropriate.

Now with that said if you look here:

The spread between WTI and Louisiana Sweet which is at 98.71 is umm interesting and indicative that perhaps WTI prices are not at the moment tightly correlated with fundamentals.

One can also look at spreads between WTI and lesser regional grades.


Its not like we have any evidence that suggest WTI seems to have suffered from some intrinsic steep discounting vs its historical relationships with other crudes you don't even have to look beyond the regional market.

But of course we all know that the basic fundamentals are driven by OPEC cutting back to keep prices up not someone trying to force prices down so....

We could of course be seeing this non-attempt to keep prices down failing but that would be discussing how something that cannot be possibly happen could possibly not be changing or something like that :)

You have to realize that there is new Canadian production coming on stream, but it's landlocked production that can't get south past Cushing. The market north of Cushing is saturated with Canadian oil, so the only place it can go is south.

TransCanada has been filling its new Keystone Pipeline to Cushing since December, although the pipeline is not due to start delivering oil to Cushing for a month or two. The Keystone system will be able to transport nearly 500,000 bpd of additional Canadian oil to US markets.

The rival Enbridge system can move 2 million bpd of Canadian to American markets, and it has been expanded to deliver 200,000 bpd of that to Cushing. I think a factor is that it has been carrying more and more Canadian oil south since it was reversed in 2006 (it used to carry Texas oil north).

Canadian oil has been backing up in storage at Cushing, which is depressing prices there, so both TransCanada and Enbridge are trying to get approval to build pipelines to take oil on to the Gulf Coast.

Actually, inadequate capacity to deliver crude oil from the Cushing hub to markets is probably the biggest contributor to the depressed price of WTI. Historically crude north from Texas through Cushing to refineries in the Midwest. This new paradigm of crude oil moving south into Cushing from Canada is something it's not really set up to deal with.

Edmonton to Houston = 3025 km.

Edmonton to Chicago = 2310 km.


Okay, it's 715 km shorter to Houston.

Edmonton to Cushing, OK = 2347 km.

They are actually shipping oil from Edmonton to the US Gulf Coast these days. They send it on the TransMountain Pipeline to Vancouver, load it on tankers, ship it down the West Coast, through the Panama Canal, and deliver it to refineries in Texas and Louisiana.

I wont try to figure out how far that is. A pipeline would be much shorter.

Canada is one country that doesn't have the freedom to sell its oil freely in the world market because of the NAFTA treaty, Canada is required to ship, I think, 30% of its oil to the US. Canada could possibly use the spread to claim unfairness with the deal, and use it as a reason to get out of the 30% requirement. Of course this is mere speculation, but $8-10 a barrel at more than 2 m/b/d is a lot of money.

Oil companies are free to sell oil on world markets. Executives are paid a lot of money to maximize profits. These companies are not charities. In a commodity business, selling at the highest price is a rule of business. I would expect that oil companies would sell all the oil they could at the highest price available. Good luck on oil inventories here going forward with this spread of $8-10.

The NAFTA proportionality clause is more complicated than that. The Canadian governments are not allowed to impose rules that would reduce the proportion sold to the US -- eg, they could not impose an export restriction if it reduced the proportion below the limit. Private producers can make all kinds of decisions and ignore the proportionality clause. For example, if western producers decided to pipe oil to eastern Canada, instead of to the US Midwest, it wouldn't be a violation of the clause, even if the US proportion of total production fell below the limit. Unless, of course, the government(s) had done something to encourage the producers to make that choice.

Like umm not building a pipeline perhaps ?

The issue is not any imposition. It is a party's right if the other party does not act in good faith. Does anyone think that when the treaty was entered into that Canadian companies would be required to sell oil at a $10 discount to the world oil price? Personally I think that the price manipulation of oil is just an extension of the Wall Street's real estate mortgage manipulation. In order to prop up many overvalued equities and keep people spending when many think people should be saving, Wall Street will tell any story to help its case, even a $10 discount to world oil price story.

"One would think that this kind of imbalance can't continue indefinitely. Something will have to change."

Being a total newbie at this stuff, what are the basic differences between the Brent and the rest? This might take a longer post, but I gather that Asian demand is represented more by the Brent, and North American by the other one. Is this too simplistic?

If "a change" happens due to the imbalance and prices seeking equilibrium, what would that look like? Or is all this just trying to peer into the unknowable black box of a complex market?

There must not be enough pipeline capacity to send oil south from Cushing OK to the Gulf Ports?

Where is the best site to get daily prices the different crude blends?

Most folks use upstream online. The delay is annoying, though. I do not remember any other sites that report all blends.

Crude oil spot prices

http://www.upstreamonline.com/marketdata/markets_crude.htm seems OK. Today, WTI is the cheapest of the 11 spot prices that they publish.

Interestingly, the futures spread for Brent itself is as flat as a pancake. Not a single futures price is at or over $100. As I write this, there isn't even a contract at $99. And the only ones at $98 are the 2 closest months. Reminds me of the WTI spread a few weeks ago, which went into a brief backwardation (which didn't last and has yet to re-appear).

Link up top: Jack Gerard answers your questions – Part Two

Jack Gerard is president and CEO of American Petroleum Institute.

We take warnings about “peak oil” and “running out of oil” with a pinch of salt. Nevertheless, the world does need to be making significant investments in new oil development to ensure that supplies keep pace with demand. Governments’ energy development policies should be aligned with this reality.

With a pinch of salt? Yet we need to be making significant investments in new oil to ensure supplies keep pace with demand? What kind of mealy mouth statement is that? Sounds like he is saying peak oil is B.S. but unless we make significant investments we will have peak oil.

Anyway hear Jack Gerard's talk a little bit about what America needs to do to keep the oil flowing:
Jack Gerard on the State of American Energy

Ron P.

Since he was asked a question about peak oil and responded with a comment about running out of oil he gives the impression that he does not understand what peak oil is.

We take warnings about “peak oil” and “running out of oil” with a pinch of salt.

"the Federal government in the United States has had an opportunity to talk about this oil problem over the last fifteen years and successive administrations have chosen to sweep the issue under the rug. There are agencies in the government that have basically been told 'thou shall not speak of this subject, which is typically called peak oil, you will not talk about it, you will give forecasts and provide information to the public that basically ignores this. ... I have anecdotal information and personal information from people inside the Federal government about what orders they have been given." -- Robert Hirsch interviewed by Carl Etnier

Jack Gerard is in the position of having to speak about it without speaking about it.

The American Petroleum Institute is not a government agency and Jack Gerard does not work for the government. He may have his reasons for not speaking about peak oil but whatever that reason is it is not a directive from the government.

Ron P.

I am not up on internet acronyms but I am guessing by ORLY you did not mean the airport in Paris. Perhaps you meant O Really? If that is the case then yes, Yes Really! The American Petroleum Institute is not a government agency. From Wikipedia:

The American Petroleum Institute, commonly referred to as API, is the main U.S trade association for the oil and natural gas industry, representing about 400 corporations involved in production, refinement, distribution, and many other aspects of the petroleum industry. The association’s chief functions on behalf of the industry include advocacy and negotiation with governmental, legal, and regulatory agencies; research into economic, toxicological, and environmental effects; establishment and certification of industry standards; and education outreach.[1] API both funds and conducts research related to many aspects of the petroleum industry.

The API is basically a lobbying organization. Oil and Gas companies pay then to lobby for them. Of course they have other functions as the above paragraph explains.

So yes really!

Ron P.

True, but as Peebee's link points out the API is bought and paid for mostly by our government.

Not that it matters really, left is right, up is down, - waiting on our leaders to grow up proves we are hopeless romantics and delusional optimists.

True, but as Peebee's link points out the API is bought and paid for mostly by our government.

I don't think that is what he meant. I believe he really thought the API was a government organization. In any case he should have made himself clear, not just post a silly acronym.

But you have it exactly backwards, the API is not bought and paid for by the government, the API is bought and paid for by the oil and gas companies who pay the salaries of all the API employees and shoulder all their expenses.

So basically Jack Gerard is, or should be, saying exactly what the oil companies want him to say, not what the government wants him to say. Now do the oil companies want him to say we should take peak oil with a pinch of salt? Yes, they probably do. In which case it would be his duty, as a paid lobbyist, to lie to us and to the government.

Ron P.

Maybe I misunderstood the data in peebee's link, but it looked like a lot of their funding comes from government grants and congresspersons.

Not that it matters really.

We are pissing in the wind, or the tornado.

I'm going to try catching cats using the Druids method in his article above.

Ron, I was told The Collapse would Not be Televised... I keep waiting for the loop of re-runs of Gunsmoke and such, but they just keep broadcasting the collapse anyway.

(must...stop...watching... er, I give up, give me the syringe, goodnight nurse)

His link just copied what was on Wikipedia, which was, word per word, the exact same thing I posted. But no, the API gets no funds from the government, to my knowledge anyway. It would be a conflict of interest if the government paid lobbyist organizations. You must understand that the API represents the oil and gas companies, or about 400 of them anyway.

Ron P.

After reading Greer's article on top along with this Pile of PR Crap from the API, I think we have already lost this war too (public opinion on Peak Oil).

Imagine Obama facing this crisis like Jimmy Carter faced the crisis, and imagine Obama giving a similar "fireside chat" with the American Public (like the one posted in yesterday's drumbeat).

Would such honesty maybe help his presidency?

Or would it condemn Obama, as it did Carter, to being one of the last Adult Presidents among the other 4 failures since Carter?

Could it be that "peak oil" is at least partly conflated with "wild-eyed nut-jobs predicting imminent doom" in Mr. Gerard's mind? As we batted around the other day, that conflation probably exists in many more minds than just Mr. Gerard's.

After all, once a phrase with a bland, literal scientific or mathematical reading (be it "peak oil" or any other) turns into a social or political hot-button, we tend to expect that from then on it comes to us heavily loaded with baggage. At that point it may become hard to tell to what extent a speaker is rejecting the literal concept, and to what extent the speaker is reflexively rejecting the baggage.

Could be. That could also be the case with CC. OTOH there's a whole lot of people out there entirely willing to believe that the world is only 6,000 years old despite evidence to the contrary.

So. Could it be that PO & CC never stood a snowballs chance in h%#l? Could it also be that what Mr Gerard says publicly and what he believes privately are not the same?

FACT SHEET NUMBER: 6 Jan. 13, 2011, at noon.

·Fabrication of the 24-inch diameter bypass line continues in Fairbanks.

Christian Schmollinger - Jan 13, 2011 10:50 PM ET

The pipe will close at 6 p.m. local time so Alyeska can put in a section to carry crude around a breach at Pump Station 1

These guys are fast!

Because of the climate issues things can get out of control fast up there. Execution to the tune of the failed Apollo mission is a must. It does not take a lot of thought to figure out what happens if they get significant ice build up in that pipeline. They are facing a real chance the whole thing could be shut down till summer if they don't execute correctly.

One thing for sure the guys in the trenches for the oil industry are friggin phenomenal !
If it can be done they will do it if it can't they will do it anyway :)

One of the pigs has been captured. This was the one that Alyeska was most concerned about. Alyeska captured pig in pipe

Temperatures are dropping back to more typical levels for this time of the year. As I write this it is -12 F to -15F at Prudhoe and Kuparuk. The forcast for tonight is for -20 F to -30 F in some of the low areas along the TAPS route near Fairbanks.

As I noted in a previous post, besides danger to the TAPS itself, a prolonged winter shutdown creates serious problems/risks in the oilfields as well. The temporary restart has alowed the storage tanks at Pump Station 1 to be drawn down. This gives a cushion so that minimum production can be continued in the fields during the 36 hours it will take to weld in the bypass.

Some other background details at: Oil pipeline restarts in time to avoid freeze-up
And at: With pipeline restart, Alyeska crews clean up oil leak as it happens

FACT SHEET NUMBER: 7 Jan. 14, 2011, at 10:00a.m.

Bypass surgery scheduled for tonight(Friday).

There are some additional details in today's edition of Petroleum News: Winter shutdown (This is a for pay site, but you might find the full article via Google.)

Some quotes:

Alyeska took steps to prevent problems with the line due to cold temperatures and the length of the shutdown, including installing temperature sensors at numerous points on the line and periodically circulating oil within the pump stations to keep pumps, oil and facility piping warm.
.....Alyeska staff planned for both a normal restart and a cold restart. A cold restart ..... is a more complex restart process involving temperature monitoring of the pipe, periodically circulating oil through equipment, implementing various freeze-up prevention measures and installing additional piping and equipment at pump stations and other locations on the pipeline.


By noon Jan. 12, DEC said the rate of flow through the line was approximately 400,000 barrels per day. North Slope producers were providing oil at a rate of 330,000 to 350,000 bpd with the remaining volume coming from the Pump Station 1 storage tanks.


....Alyeska....continues to prepare for a cold restart, should that be necessary. Field crews have installed 95 temperature monitors on the main line and plan to add up to 18 more. DEC said crews also continue to install additional piping and equipment at pump stations, including Pump Station 12, which is normally inactive but could play a role in a cold restart.

The second shutdown and bypass is planned to start tonight. Hope for the best, but plan for the worst!

We're following the story about the strike and transportation disruption at Punta Arenas, Southern Chile. A relative is stranded near a village about 130 km to the north where the bus drivers have gone on strike. Airline connection and critical luggage is stored at this strikebound city.

A general strike similar to this was also averted in Bolivia when government folded to public demands to restore subsidies to natural gas. There in southern Chile, 53 degrees south people are dependent on the resource for heating as well as cooking. Energy subsidies there, other South American countries and across the world are a flash point during these economic hard times and rising energy value.

The natural gas situation in Chile has an interesting history that was covered in a recent TOD post: South America Enters the LNG World.

Earth's Hot Past: Prologue to Future Climate?

The NSF story points to a commentary from Jeff Kiehl appearing in today's SCIENCE (a subscription is required). In that commentary, Kiehl states:

The paleogeography of this time was not radically different from present-day geography, so it is difficult to argue that this difference could explain these large differences in temperature. Also, solar physics findings show that the Sun was less luminous by ∼0.4% at that time (7). Thus, an increase of CO2 from ∼300 ppmv to 1000 ppmv warmed the tropics by 5° to 10°C and the polar regions by even more (i.e., 15° to 20°C)

I find this claim a bit difficult to accept. The Ice Ages began approximately 3.3 million years ago, about the time the Isthmus of Panama formed, blocking the connection between the Atlantic and Pacific Oceans. It has been suggested that this change in circulation initiated the Ice Ages which followed. In other words, the paleogeography has changed in a significant fashion, so much that the previous time period is not analogous to today's situation...

E. Swanson

There's quite a bit of commentary today about "what's causing this bizarre weather?' - by meterologists.
It is being ascribed to La Nina and North Atlantic Oscillation. Enough to make the average reader think they have a "good bead on things".


Funny thing, the "explanation" for last Winter's weird weather was El Nino and the NAO. But, the NAO index doesn't "explain" anything, it's just an indicator of the predominate path which has been taken by the storm tracks and has almost no predictive value. Of course, the CNN story gives no mention of the ENSO oscillation, which involves a change in tropical upper level winds, in addition to the changes in tropical SSTs. That leaves...Climate Change and the Warmest Year since when (which they can't talk about because the Tea Party is about to run things in DC)!

E. Swanson

Wonder how those folks will explain the sun rising two days early in Greenland? Natural variation in calendars?


It appears the industrialized world is far more concerned with a potential shift in Zodiac signs...


Insulation R value changes with temperature.

I stumbled on this ORNL study that shows that fiberglass insulation drops in R value as the temperature drops. It seems to be caused by air currents forming inside the insulation and transporting heat through the insulation. Here in Minnesota that means the fiberglass is at half value when you need it the most!


Here is the site where I found the paper:


I did not realize the standard test did not include low temperatures with a high differential between the hot and cold side.

Hi Jon,

With respect to loft insulation, my rule of thumb is to take the recommended amount for your area and multiple it by 1.5 so, for example, R40 becomes R60. For walls, I would insert a half inch of styrofoam (R3) inside the stud cavity, caulk and seal, then add the fibreglass. This will help keep the fibreglass "warm" so that its performance isn't significantly degraded by colder temperatures (there will be a slight reduction in performance due to compression, but you'll still come out ahead).


Good idea! It looks like dense packed cellulose insulation won't suffer the same issue as air cannot circulate freely. The same is likely true with spray foam. I wish I could afford to reside my house with R40 of EPS. Sadly, not soon!

Thanks for all the heat pump advice over the years. I have started thinking about setting up a winter hoop greenhouse and using a heat pump to harvest the solar energy it collects. The hoop house would raise the air temp and thus the efficiency of the heat pump, but not need to get warm enough to above room temperature to be useful. If it gets above freezing, that is enough to push the best heat pumps back over 2.0 COP. Any thoughts on that idea?


Hi Jon,

I seem to recall that you live in Minneapolis, MN and I'm guessing that you may be more comfortable working with imperial measurements rather than metric. There's a good chance you already know this, but there's an easy way to calculate the annual heat loss through a wall or ceiling -- it's the inverse of the R-value, multiplied by the number of square feet, multiplied by the number of heating degree days for your area, multiplied by 24 (the number of hours in day). For those living in the United States, you can obtain HDD data by ZIP code by visiting: http://www.huduser.org/portal/resources/UtilityModel/hdd.html For the Minneapolis International Airport, it's said to be 7,876 F.

To make things a little easier, first multiple the number of heating degree days by 24. This gives us the number of BTUs per square foot, per heating season, for your local climate -- 189,024 in your case, or 55.4 kWh.

An uninsulated wall might have an R-value of 3.5, so if your home has 1,000 sq. ft. of wall your heat loss would be 1/R3.5 x 1,000 sq. ft. x 189,024 BTU, which works out to be 54,006,840 BTU or 15,828 kWh/year.

If this wall were insulated to R12, your heat loss falls to 15,751,993 BTU or 4,617 kWh/year, a 70 per cent reduction; and if you can bump that up to R20, you're now down to 9,451,200 BTU or 2,770 kWh/year.

Assuming your home is heated by a high efficiency heat pump with an HSPF of 9.4, you'll receive, on average, 2.75 kWh of heat for each kWh consumed, and if you pay 14-cents per kWh, your effective cost per kWh of heat is 5.1-cents. For our uninsulated wall, the cost of the heat lost is $807.00 and at R12 and R20, it's $235.00 and $141.00 respectively. Thus, the incremental savings of upgrading from R12 to R20 in this example are less than $100.00, and as you start to move beyond R20 the economics get tricky; at this point, it's probably best to invest your dollars elsewhere (e.g., improved air sealing).

It's hard to provide you with a proper answer with respect to placing the outdoor compressor inside a hoop greenhouse -- there are a number of factors to consider, e.g., the heat demand of your home, the size of the greenhouse and the potential solar gain during the critical peak heating periods. I guess you could give it a shot and track the outdoor temperature with that of the greenhouse. If average temperatures within the greenhouse remain several degrees higher, then there's a positive gain; if not, you can take the greenhouse apart. Keep in mind that your heat pump may not operate in heat mode if temperatures inside the greenhouse should rise above 70 or 75°F, so this could be an issue during milder/sunnier days. Personally, I'm not so sure I would go this route.


"Assuming your home is heated by a high efficiency heat pump with an HSPF of 9.4, you'll receive, on average, 2.75 kWh of heat for each kWh consumed, and if you pay 14-cents per kWh, your effective cost per kWh of heat is 5.1-cents."

Since you are talking about Minneapolis, how do you factor in the time when the backup heaters are running (it's too cold to run the heat pump?) Is there a generally accepted factor, or do you need the actual backup heater run time?

HSPF or Heating Seasonal Performance Factor is defined as "the total space heating required during the space heating season, expressed in Btu’s, divided by the total electrical energy consumed by the heat pump system during the same season, expressed in watt-hours." (ARI Standard 210/240-2006). This value includes any supplemental or auxiliary heat where applicable.

A properly sized heat pump should have a balance point in the vicinity of -5°C/23°F. In other words, the heat pump should have sufficient heating capacity to maintain its set temperature down to this outside temperature without calling for auxiliary heat. Note that the compressor doesn't actually shut off at this point; rather, it continues to operate until temperatures fall below its lower limit.

I attended a home show a number of years ago and picked up a data sheet from one of the heat pump vendors (I believe it was Trane). The handout included bin hour information for Halifax, N.S. and the heat output and COP for one of their display models at various temperature points (sorry, I don't recall the particular model or its HSPF rating, but it was one of their premium offerings at that time and I'm guessing the HSPF was in the range of 8.0).

Here's the breakdown:

Temp Bin   Bin Hours   BTU Output   COP
   17°C        956       42,700   3.61
   14°C        941       40,467   3.50
   11°C        884       38,233   3.38
     8°C        809       36,000   3.26
     6°C        799       33,767   3.13
     3°C        998       31,533   3.00
     0°C        959       29,300   2.85
   -3°C        528       27,067   2.70
   -6°C        353       24,833   2.55
   -8°C        245       22,600   2.38
  -11°C        174       20,367   2.20
  -14°C          81       18,133   2.02
  -17°C          44       15,900   1.82
  -19°C          12          Off   N/A
  -22°C            1          Off   N/A
  -25°C            0          Off   N/A

Thus, according to this table, there are just thirteen hours in a typical Halifax winter when temperatures fall below -17°C/1°F, i.e., the point at which this particular heat pump shuts down and the backup resistance elements become the sole source of all heat.

I don't have bin data for Minneapolis, but the heating degree days for Halifax International Airport are 4,367°C/7,861°F which is pretty damn close to Minneapolis at 7,876°F, so the results should be fairly similar.

I should add that ultra high efficiency ductless heat pumps with inverter technology operate at lower temperatures (e.g., -25°C and below) and that their HSPF ratings can reach as as high as 12.0 (Fujitsu 9RLS).


The COP performance drop with temperature is what gave me the greenhouse idea. A ground source heat pump has the advantage of a higher working temperature and so a higher COP. But you have to pay for the energy to pump the water and $30k for installing the vertical pipes in the city. That is a is a lot of money (or insulation!).

But a ground source heat pump need only reach a (from your example) 3 degrees C to hit a COP of 3. So what about using a season extending green house to assist the heat pump during the coldest hours of the winter? It might be possible to have the air source heat pump outperform a ground source heat pump, and still have the hoop house available for spring and fall garden work. Instead of putting the money into water loops, put it into something that captures the heat in the darkest of winter, and is useful during the rest of the year. Maybe a glassed porch for keeping off the mosquitoes. You would need a way to disconnect the arrangement during the spring, summer (especially), and fall.

Edit: I calculated the weighted COP of the example above (COP * hours / total hours = real COP) and it is 3.1 for the winter. So quite good already for even that model. Roughly equal to a ground source heat pump without the cost and no water pumps to run. I would love to find the hourly bin data for Minneapolis...

I think that using a greenhouse as a heat source in mid winter could work, the question is, how well would it do so. The problem is, the thermal energy captured by the greenhouse would likely end up in the soil on the "floor" of the greenhouse. There's no easy way to extract that thermal energy and move it to the heat pump. Simply ducting the warm air from the highest point in the greenhouse would not provide much thermal energy as the thermal mass is down below.

One could build a "half" greenhouse along an east-west orientation, using an insulated wall on the north side. If some sort of thermal mass were included in the wall or located next to it, the energy captured would slowly heat the air for night time warming. Similar approaches have often been used with attached greenhouses, where the insulated wall is part of the house. Or, one might build a greenhouse with a water source heat pump by placing the tubing inside the greenhouse at a shallow depth. That would tend to capture the warmth from the soil and would not require a large expense for deep burial. What ever approach is used, a simple "hoop" greenhouse with a single layer of plastic sheeting isn't a good solar collector because of rapid heat loss and thus one should consider using a multi-layer cover material, as available from several suppliers.

Either way, some of the cost of the greenhouse should be included in calculation of the heating cost, since the greenhouse could not be used for plants during the time the thermal energy is extracted from the floor, as this would make the temperature inside the greenhouse rather cold...

E. Swanson

Hi Jon,

As you probably know, I'm not convinced that residential ground source heat pumps offer the best value for the dollar. Personally, I'd rather spend the extra money on insulation and air sealing and once you've done that you may find that your space heating requirements have been cut to the point where even electric resistance starts to be cost-effective.

Just in broad brush terms, if a home has an annual space heating requirement of 100 MM BTU/29,308 kWh*, an air source heat pump with an HSPF of 9.4 (seasonal COP = 2.75) would consume approximately 10,657 kWh per year and at $0.14 per kWh that works out to be $1,492.00. And if we were to assume that a GSHP could obtain a seasonal COP of 3.5, then the number of kWh falls to 8,374 and at $0.14 per kWh the difference in operating costs is approximately $320.00. If the premium for a comparably sized GSHP were $10,000.00, say, and I hope that's a reasonable number, then the simple payback is over thirty years!

Also, I would caution against using the above table to compare air source and ground source heat pump performance as they're two very different technologies, e.g., the energy consumed by the GSHP's field circulation pump is an additional overhead not reflected here.

With respect to enclosing the compressor in any sort of structure, again, it's not something I would do myself. I would encourage you to consult a qualified HVAC engineer before going forward.


* For comparison purposes, our 2,500 sq. ft., 43-year old Cape Code in a climate not unlike your own has an annual space heating requirement of approximately 13,000 kWh. Our electrical consumption last year (space heating and cooling + DHW + cooking + lighting + all plug loads) was 10,439 kWh. We also used about 120 litres of fuel oil for supplemental heating and DHW, mostly to exercise the boiler, so that brings the final total to something in the range of 11,500 kWh or a little less than 50 kWh/m2.

in a climate not unlike your own

HiH - I am not an expert, but it seems pertinent to me to point out that while total HDD may be similar in Halifax and MN, they are distributed very differently, in a way that would affect heat pump performance. MN has a much greater seasonal temperature variance, meaning two things. First, it is colder in the heart of winter. Re: your table above, there are a great many more than 13 hours in MN that are below 1 degree F. Second, much of the HDD in Halifax are spread out over the shoulder months, with temps in the 30's-50's F, where the COP is high. For example, in September, the avg temp in Minneapolis is 65, meaning (statistically) no heating load. Whereas in Halifax, the mean for Sept. is 57, meaning a light, easily handled heating load of 8 HDD per day. MN makes up for those HDD in the depths of January when the COP on the HP would be much less.

I got my temp data from Wunderground, Halifax and Minneapolis

Hi Clifman,

You certainly raise a good point; the Atlantic Ocean moderates our weather so we don't experience the same temperatures extremes as does Minneapolis and our shoulder seasons are indeed longer. Bin data would make these types of comparisons much more legitimate.


One advantage of very cold days is that they are often clear and sunny. But how to harness that heat when the outside air is trying to steal every BTU?

That's also true and it does help offset some of the heat pump's diminished efficiency and capacity at these lower temperatures. In terms of solar insolation, Minneapolis has a bit of a leg up on us during the critical winter months, so that helps too.

Passive solar, where possible, is a simple, reliable and relatively low-cost solution. There are also solar heaters offered by firms such as CanSolAir (http://cansolair.com/index.php) and they're one more option.


Ah, a light turns on. I had done a rough model of my house with the heat usage calculator at Build It Solar. But I did not connect the dots to cost this way. I had seen a comment over on the Green Building Advisor about there being a point where it is more cost effective to add solar panels than to add insulation. With a 2.75x gain supplied by the heat pump the solar panels get a very high value multiplier.

Greenhouse - have you looked at the sunny john design?

This one? I had not seen it before. It looks pretty interesting. Using water vapor and water in the soil as the phase change storage element is pretty clever!


Interesting finding on how insulation really works.
The log home industry has been saying this for years. That thermal mass of 6-7 inch log walls (with lots of trapped air in the tissue) are better insulators than conventional walls with insulation. This is due to both barrier to air currents transmitting heat and the lignin mass retaining heat itself. Multiple effects of thick wood walls/roof vs thin walls/roof with barrier provide for a more constant temperature on the inside of the structure.

I think you need to discuss that with ASHRAE. They disagree with this common misconception. For one, thermal mass does not change the heat transfer thru a wall for a constant temperature difference. For at typical stud wall, the wood studs acts as a low R-value bridge, which allows heat to move faster than it does thru the insulation. For another, maintaining the seal between logs is not guaranteed over time. Also, the loss in R-value is said to apply only to "low-density", loose-fill fiber-glass attic insulation ceiling to attic insulation, not to that which is tightly fitted within walls...

E. Swanson

For one, thermal mass does not change the heat transfer thru a wall for a constant temperature difference.

From a physics perspective I agree with that 100%. The greater thermal mass will reduce day/night temperature swings, which can be a plus however.

It's quite striking how much less fuel you use when you insulate a log cabin. Your firewood consumption drops to a fraction of its former quantity. However, if you have an unlimited supply of firewood in the forest behind it, like they did in the old days, this doesn't matter much.

But log houses are difficult to insulate esthetically. If you build a 2x4 wall on the inside, you lose the interior appearance, and if you put foam board on the outside you lose the outside appearance. People still do this because they don't really care what it looks like, and they just want to be warm. I've seen a number of farmhouses that look like they are modern 2x4 framing, but are actually 1-2 century-old log buildings built by the original settlers.

You can retain the appearance of a log building by splitting the logs vertically, separating the halves, building a 2x4 or 2x6 wall between the halves, and filling it with insulation. You need more time and/or money to do this kind of thing, but it can be worthwhile.

I find this technology intriguing, and leaves the timbers exposed both in and out. A combination of several ideas - the thermal mass of solid wood, passive solar, and the envelop house.

There are products available as siding that are made to look like logs, but have insulated interior walls. My neighbor built two houses using heavy siding which was cut to give the appearance of a "hand hewed" 12 inch log. Too bad he got hit by the construction downturn and lost one to the bank. He's been trying to sell the other for about a year...

E. Swanson

The story up top: $4-a-gallon gas: What effect would it have? is an example of the insidious impact of the costs of energy as it propagates through the economy. Right now the CPI core inflation rate is very low (compared with food and energy), but give the $85 to $95 range of oil for much longer and you will see the creep of increasing costs working its way through non-transportation products/services.

Just published this last night: Energy Costs and the Economy


It will probably all be blamed on the Bernank and speculators.

"Latest Inflation Riot Tally: Algeria, Tunisia, Morocco, Yemen, And Jordan"


Don't forget Chile. Link up top.

Not quite sure what you mean by this.

Inflation has to find a place somewhere, and it will usually do so in areas in which the fundamentals are supported, to a certain degree.

So yes, higher energy and food prices are a given, but on top of that lies currency devaluation / inflation.

Now...if the people of those countries breed like rabbits and their politicians don't have the balls or intelligence to protect themselves from Wall Street, that's their own fault. I'm not somebody who believes that every last person and nation is responsible for every other person and nation on the planet.

The Backlash Is Brewing Against Chinese High-Speed Rail: Here's Why It's In Trouble

Rather than moving people more quickly, [China] should build a rail system that moves goods and makes people more productive where they already are.

Cut fares by half to increase volume? I guess it would depend on whether or not the high-speed lines are running at capacity which the article doesn't mention.

Also, I find it interesting that people moved "down" the travel meter from slow train to buses. This would indicate a problem with slow train rates and has nothing to do with high-speed rates.

Depending on high-speed volume, it would seem the only ones losing out on this deal are the airlines.

The Backlash Is Brewing Against Chinese High-Speed Rail: Here's Why It's In Trouble

The article misses the significant fact that the Chinese are building the high-speed passenger rail system to get passenger trains off the existing freight railway system. The large number of passenger trains is screwing up the movement of freight trains, and there is not enough capacity to move both.

Passenger rail and freight rail have two incompatible goals - passenger trains need to deliver large numbers of people to their destination as fast as possible, and freight trains need to deliver large quantities of heavy goods as cheaply as possible. It's very difficult to do both at the same time. For instance, US railways are very good at delivering huge amounts of freight cheaply without government subsidies, but very bad at handling passengers. OTOH, European railways are very good at getting passengers rapidly to their destinations, but require large government subsidies to deliver freight.

The Chinese want to do both, and they have the population to support two different rail systems with incompatible goals: A high-speed system to deliver passengers rapidly, and a low-speed system to deliver freight cheaply.

Also note in the article:

Rather than capturing lower-end traffic from slower trains and buses, it appears the new high-speed lines are drawing higher-end traffic away from China’s airlines.... the fast trains have forced some airlines to cancel short-distance flights along high-speed rail lines.

For example, the Wuhan-Guangzhou high-speed railway, where every few minutes trains zip between the two cities via Changsha, has carried 20.6 million passengers since its opening in December 2009. During that period the number of flights between Changsha and Guangzhou has been cut from an average of 11.5 flights a day to three flights a day...

People here have been saying, "The high cost of fuel will put the airlines out of business." It might do so. The Chinese will be ready when that happens. Instead of flying, people will take the high-speed electric train, powered by some of the 250 nuclear reactors they are planning.

Behind a paywall, but viewable through Google:

Mexico To Invest In Refining Capacity As Fuel Imports Soar

MEXICO CITY (Dow Jones)--Mexico plans to invest about 334 billion pesos ($27.6 billion) over the next 15 years to increase refining capacity of state-owned oil company Petroleos Mexicanos, or Pemex, particularly for gasoline, according to an Energy Ministry plan.

January 11, 2011 revised to include today's crude oil close

Here's a chart based on the weekly gasoline price update from the Department of Energy with an overlay of Light Crude, which closed today near its intraday high, up 1.73% to 91.37.


Did you guys see the top of DrudgeReport?


Excellent article by Greer up top:

Still, I’ve come to think that a third factor has played at least as important a role in gutting the climate change movement.

This is the pervasive mismatch between the lifestyles that the leadership of that movement have been advocating for everyone else and the lifestyle that they themselves have led.

When Al Gore, after having been called out on this point, was reduced to insisting that his sprawling mansion has a lower carbon footprint than other homes on the same grandiose scale, he exposed a fault line that runs straight through climate change activism ...

I always pick on Al Gore for this reason. But as the Druid points out, we probably lost the battle from the start because of the : 1) astonishing political naivete of the climate change movement," and 2) the " prestige of institutional science ... has undergone a drastic decline."


For me, this quote said it all:

"spokespeople who mistakenly assume that their professional expertise – significant as that very often is – can be cashed in at par for influence on public debate."

The people who like to dump on Gore, like to dump on Gore.

The Inconvenient Truth did add to the polarization around CC, as it is basically a progressive statement saying 'Our Lifestyles and Industries have to change if we want to fix this', which created a vast army of opponents, but also of supporters.. to the cause if not necessarily to Gore. And he opened the conversation into the public sphere in a way that the Science Community had not been able to do.

But it's no surprise that the deeply entrenched interests of both Habituated individuals (all of us to some degree) and many mega-corporations who could be shriveled by the implications of this set of changes, that they would be a monumental set of forces that this issue will have to continue battling against. Gore got a cannonball into their Poop Deck.. but just one.

Sorry He's a Geek. Sorry Carter was a Geek. They did the right thing, as best they could, and history will remember. Already, that Sweater speech is starting to look more like David/Goliath than Mr. Rodgers Neighborhood. (Yet another Geek-hero of mine)


'I can dance a tango, I can read Geek-,easy. I can slay a dragon, any old week-,easy.'
Sondheim ANYONE CAN WHISTLE (paraphrased)

Part of the problem is that Gore's lifestyle doesn't mean the message of CC and Inconvenient Truth was wrong, or even that he hasn't been sincere in his concern about getting the world to take a growing environmental crisis seriously. PR work, advocacy and Writing and Public Speaking take a lot of time and effort. So does rebuilding your house and lifestyle. He did a lot of one, and some of the other..

As with 'Only Nixon can go to China', it often takes people with money and prestige to get that kind of airtime, which Gore did very well. The fact that he can't be the 'perfect personal model' for just how each person in the statistical average is supposed to live to make this a sustainable world, is more a convenient tool to tear at the messenger and to cut to sidetrack arguments than it is any kind of a refutation of the argument itself.

But the debunking junkies on all sides of the aisle just can't get enough of it! It's more fun to beat up on 'personalities', even if they've tried to use their celebrity in positive ways, than it is to do the work of improving our impact on the world.

"As with 'Only Nixon can go to China', it often takes people with money and prestige to get that kind of airtime, which Gore did very well."

No, no, no. "Only Nixon can go to China" refers to the case where someone whose credentials as a pro (or anti) something are unimpeachable, and then that person does a U-turn and comes out for the opposite of their previous position.

Hence Nixon the anti-communist comes out for normalizing relations with communist China.
Hence Clinton the "I feel your pain" Democrat comes out for a major reduction in the welfare system.
Patrick Moore, the founder of Greenpeace, the rabidly anti-nuclear (and everything else) group decides he was wrong and comes out for nuclear power is another example that fits.

But Gore has always been pro-environment, at least in words. He has not changed his previous position.

If and when he comes forth and publicly admits he was wrong and that global warming was just a temporary blip now fading away as we slide into a new solar and climate minimum, then he will qualify as another "Nixon goes to China" event.

The fact he would make even more money on the next book and movie deal is irrelevant.

I don't think the comparison has to be quite that literal to make sense, PV.

The term about Nixon can fairly be compared to Gore as 'someone who is an unlikely messenger, but oddly enough is the one who can deliver the message.' .. not that his stated ideals have changed, but that his position (rich guy with a mansion) has an awkward contradiction to the message.

Suggesting that 'he's simply in it for the money' are just more of the same.. noisy sidetracks. He's put the profits back into environmental causes, as I've heard.. so blame the greedy environmentalists, if you must.

The fact that you would consider his future Book and Movie deals such guaranteed financial winners shows that you don't know enough about Book Publishing or Producing Documentaries. The money put into 'An Inconvenient Truth' was surely a long shot that paid surprisingly well. Should someone be ashamed of that success?

Jokuhl, Gore might have had a little easier time of it if he hadn't made some real boners like naming his house boat the BS1. I know, it was supposed to stand for bio-solar 1, but come on, can you really be that clueless.

And given the proposed solutions are 70% wasteful and line the pockets of the Investment Banker class on a 1:1 ratio - for every unit spent on effective Carbon reduction, a unit goes to parasite class of the Investment Banker - the observant decide the solutions offered are rigged.

Please, please, stop repeating this same tired lie. Or at least link to that old press release you used to flog over and over.

There are a lot of good reasons to opposed carbon trade. You might find some here:


Engineer Poet did a wonderful job of showing flaws in the scheme in a previous Drumbeat. Or just try Google for some new material.

But as I have pointed out, now dozens of times, that press release that you must have linked or refered to 100 times is by an organization with a competing commercial interest and doesn't even say what you are claiming it says. Go ahead and link it again, I'm happy to keep proving you wrong, but do need the source material.

I've gotten way beyond the point where it is worthwhile arguing with you on this point. I had hoped you would eventually drop this line of argument like you finally dropped the 911 conspiracy stuff.

But if you are going to keep it up, please get educated and try a bit harder.

Please, please, stop repeating this same tired lie.

That Investment Bankers are parasites? Is that what you consider a lie?

you finally dropped the 911 conspiracy stuff.

I can continue posting on that matter just for you Jack - just because its not being posted doesn't mean that the "matter" is "dropped". (whatever the matter is to be considered. Any rational person knows that the offical report is not 100% correct - the debate becomes the details of what the report had gotten wrong). Management has made it clear the topic generates far more heat then light and in the interest of keeping the light - I see no reason to point out some of the points which are not correct because what ends up happening is the Islam bigot come out of the woodwork to proclaim the government they live under is 100% right and then it goes downhill even faster than pointing out there are bigoted opinions about Islam.

that press release that you must have linked or refered to 100 times is by an organization with a competing commercial interest

Interesting. So your position is if you have a commercial interest you are not a reliable narrator?

Care to explain to everyone your ties to the Investment Banking industry then?

In this case more than most, I should avoid responding in to hominim attacks. However since you persist in try to slur me, I will say that I have no ties, financial or otherwise, to either the investment banking or carbon trading industries. In fact, while I think a carbon price needs to be applied, I am open to either tax or trading-based regimes.

However, I'd be happier if you would link to your old press release again so we can discuss the issue.

TROUBLE in TUNISIA - Tunisian PM takes over as interim president of embattled country.

This is related to peak oil and high energy prices, because the cost of food has risen so rapidly that the young people are unemployed, hungry, and protesting. They forced the President to leave the country.

Could this happen in Europe too?

Analysis: Tunisia riots offer warning to Arab governments

CAIRO — Nervous Arab leaders watching young Tunisian demonstrators force an aging strongman into sweeping concessions are wondering if their own old established formula of political repression will have to change too.

A quote from a different article further down gives an indication on how fast the end comes.

Anger has been growing against Mr Ben Ali since Wikileaks published leaked cables from the American ambassador describing how his family had seized control of financial institutions and businesses and lived a life of luxury was eagerly transmitted around the country through the internet.

Richard Field, a teacher who has lived in Tunis for five years, said: "There were gangs of youths going around breaking everything. They seemed to outnumber the police.

"The police just let them go on breaking things and setting fire to things.

"I'm shocked at how fast everything has happened. Anything that was destroyable, they destroyed."

Although the Tunisians are probably more grounded in reality than the average Westerner, its just a matter of time for our corrupt Western governments too. While the privileged, like the banksters, are looked after and get ever richer, everyone else pays the cost and slip deeper into poverty. Things happen fast once a tipping point is reached.

Jordanians protest living conditions, blame govt

AFP - Thousands of demonstrators took to the streets of Amman and other Jordanian cities on Friday to protest at soaring commodity prices, unemployment and poverty, calling for the government to be sacked.

Despite government measures to create jobs and control increasing prices, around 8,000 people took part in peaceful demonstrations across the kingdom.

Carrying national flags and chanting anti-government slogans in downtown Amman, demonstrators including trade unionists and leftist party members called Prime Minister Samir Rifai a "coward" and demanded he resign.

"Jordan is not only for the rich. Bread is a red line. Beware of our starvation and fury," read one of the banners carried after mid-day Muslim prayers, amid a heavy police presence.

"Prices, particularly gasoline and food, are getting out of hand,'' Buthaina Iftial, a 24-year-old civil servant, said.


People are going to have to learn that governments can't do much about the problem because oil depletion hits all political parties equally.

In the USA, I full expect to hear "Drill, baby, Drill" make a come-back within the next 2 to 5 years. Never mind that such a policy would do nothing to address the real underlying issue and could actually make it worse by simply burning through the limited oil we do have left that much faster.

Gwynne Dyer: Riots spread as global food shortage worsens

"We are entering a danger territory," said Abdolreza Abbassian, chief economist at the Food and Agriculture Organisation. The price of a basket of cereals, oils, dairy, meat and sugar that reflects global consumption patterns has risen steadily for six months, and has just broken through the previous record, set during the last food panic in June 2008.

"There is still room for prices to go up much higher," Abbassian said, "if, for example, the dry conditions in Argentina become a drought, and if we start having problems with winter kill in the Northern Hemisphere for the wheat crops."

After the loss of at least a third of the Russian and Ukrainian grain crop in last summer's heat wave and the devastating floods in Australia and Pakistan, there's no margin for error left. It was Russia and India banning grain exports in order to keep domestic prices down that set the food prices on the international market soaring.

There are quite a few countries that import both food and oil. Their future is not bright.

I got an idea.

Line the north African coast with nuclear powered desalination facilities. Pump the water south to the Sahara. Turn the whole thing into one huge crop field :) Problems solved@!

What would be the EROEI on such a project?

I think you mean to point out that the project wouldn't work economically, or would be a bad use of energy.

The input is energy and the output is water. It doesn't have an EROEI.

It costs about $1/ton to desalinate sea water by that method, but it takes about 1000 tons of water to grow a ton of grain, and you can buy grain on the international market for considerably less than $1000/ton.

It's best to leave the grain growing to areas with natural rainfall or river water for irrigation. Countries which border on the Sahara should reduce their birth rates so they don't overrun their water resources.

That being said, desalinating sea water makes perfect sense for human consumption in cities, if people use it rationally. $1 is not much money and a ton of water is a lot of water. It's just not a good idea for increasing agricultural production.

Umm, err... the ultimate output is FOOD, which is the most critical energy to humans. The project would indeed have an EROEI. The most basic one of all.

OK. But then the comparable is something like fertilizer or mechanization. These are the competing calls on energy to produce food. Or you have to calculate the change in energy content of food produced with and without irrigation. You can run the numbers if you want, but I'm not sure the result will be meaningful.

Awww, who cares!

We'd be saving humans by giving 'em potable water to take what used to be forests/cropland and making 'em forest and cropland with cheap, clean and too cheap to meter Nuclear power!

Along the seashore where rising water from global warming or waves from underwater moves of the earth can hit 'em.

What's not to love about the idea?

Our young people drive on GTi to the beaches to dance and drink all night long -at least in Spain, most of them.
Seriously Cool one, the difference in standards of living between the European shores and the shores of North of Africa they are worlds apart. The Spanish young is worried about his next car, the next disco, the next girl and going to ski in the snow, the Tunisian young is worried about his next crust of bread.
And the young French and Italian live even better than the Spanish.

We Europeans are a bit to blame for what happens now in Tunisia. In this we have behaved very much like the Americans toward Central America, turning a blind eye to dictators and undemocratic governments in North Africa in the name of stability.
Ben Ali had been dictator twenty three years and was protected by many European governments, notably Berlusconi.
Today a military coup and before even the bodies are buried our pundits already write about the "democratic revolution" in North Africa. They are a bit premature.
As from Oran, Algeria you can see at night over the sea the lights of Alicante, Spain in the horizon small wonder that they cross every day in the ferry al-Jazair to enter Europe, often to rob, steal, nick cars to sell them in Africa.

In the beach of Alicante I have often seen Islamic preachers doing their thing among the poor illegal immigrants from Africa, blacks from West Africa, North Africans. What they say I don't understand I don't speak Arabic, but I don't think they praise us.

I guess you'll be receiving some uninvited immigrants from the south soon.

Lose the guilt!

You are not responsible for the world.

Concentrate on protecting yourself and your family, and if you are active politically, advocate border controls and try to speak out against open immigration.

Trust me - open your country up to Islamic immigration, and Spain will fall apart and you will have undone all the work of the Reconquista of your ancestors.

The post peak world is not one for global compassion. That time has passed, and, well, humanity f-cked up.

Immigration effects one of the variables in the following equation:

Total energy used = number of people X amount of energy used per person

Any class of immigrants that have some "unified" "other" to rally about will be seen as a problem to a group that is not a part of the "other".

Typically immigrants are looking for a "better" life - and that "better" is usually trying to get to a higher energy per person level.

'...usually trying to get to a higher energy per person level.'

or just trying not to get shot at.

Really, the generalizations you guys are willing to blast out are amazing.

Trust me - open your country up to Islamic immigration, and Spain will fall apart and you will have undone all the work of the Reconquista of your ancestors.

Just send them to Canada. We'll Canadianize them and put them to work running major corporations and government organizations.

The new Mayor of Calgary, Naheed Nenshi, is a Muslim whose parents came from Tanzania. He holds a B.Comm from the University of Calgary (where he was President of the Students Union) and a Master of Public Policy (M.P.P.) degree from Harvard. He was a business professor at one of Calgary's universities before becoming Mayor.

See, that's what you should do with poor immigrants from Africa. Educate them and integrate them into your society. Religion, race, and social status are irrelevant to this process.

See, that's what you should do with poor immigrants from Africa. Educate them and integrate them into your society. Religion, race, and social status are irrelevant to this process.

And after all that, who knows, being humans they might even disagree with Oilman and think that in a post peak world there is room for global compassion after all...even towards people like Oilman.

Britons forced to flee Tunisia as violence erupts on streets

I think what's happening in Tunisia is a good example of how financial collapse, energy decline and climate change can impact BAU. Part of my conjecture about our future is that travel will increasingly become expensive, difficult, dangerous and increasingly unnecessary. So no doubt we will see ever more stories of naive tourists being ripped-off, stuck, killed and fleeing from the onslaught of collapse. Eventually even the most pollyannaish travellers will get the message and become more careful, causing an overall decrease in travel.

I was reading about this last night, and then on TV there was an episode of Modern Marvels about "Supersized Food". Without a hint of irony they talked about 250lb burgers, 7lb hot dogs, 5lb gummy bears and other assorted stupidity. They talked about the super sizing of food like it was some sort of advance, but they didn't talk about how it leads to a need for supersized pants.

Re. "END:CIV at Castle Theatre on Saturday" near the bottom of the leanan's links.

In the trailer provided at the link, it is suggested we deliberately try to end industrial civilization... (I'm surprised Guy McPherson is not interviewed in the program).

Is this incendiary speech ? Will homeland security be taking names of those ordering the DVD or attending showings ?

deliberately end does not equal destroy or blow up. i'd say it's closer to walk away from or abandon, but really it means simplify and de-industrialize to a significant degree. that's not incendiary.

What nonsense. Even if we were to have oil spills, nuclear waste, and heavy metals poisons everywhere; life would still go on in some fashion. Even if we were to have nuclear war and wipe out lots of life . . . life will go on. So why is current life on Earth better than the life after we did the worst environmental damage possible?

I'm certainly not advocating for such destruction . . . I'd hate that. But my point is that he is making a very silly arbitrary value statement in that current natural life is better than post-nuclear apocalypse life. Why? Are we better than the dinosaurs? Were the dinosaurs better than when animals only existed in the oceans?

I think we need to contain ourselves and limit population growth . . . but there is no reason to destroy civilization. I think civilization, science, knowledge, engineering, are great goals. I think having matter understand itself as best as possible is a cool goal . . . better than just trying to stick to the current ecosystem in perpetuity.

if we were to have oil spills, nuclear waste, and heavy metals poisons everywhere; life would still go on in some fashion.


And, I believe most humans care about Human life continuing on planet Earth.

But hey, if the defence of Man creating a place as stated about is "life will go on" - by all means keep shining on you crazy diamond.

I'm unable to understand that last sentence.

Pink Floyd
Shine on you crazy diamond


Shine on you crazy diamond

Remember when you were young, you shone like the sun.
Shine on you crazy diamond.
Now there's a look in your eyes, like black holes in the sky.
Shine on you crazy diamond.

The song is a eulogy to former band member Syd Barrett, who had to leave the band due to severe mental illness.


The reference could be misapplied, or a bit of a compliment. Beautiful song.

Coal industry fumes as US revokes mining permit

AFP - The withdrawal of a permit for a controversial "mountaintop removal" coal mining operation has sparked outrage in the US industry, but was hailed as a victory for environmental protection and the health of nearby communities.

The move Thursday by the Environmental Protection Agency (EPA) to revoke licenses for a major open-pit mine in West Virginia, at the heart of the Appalachian wilderness region, was a landmark move against Mingo Logan Coal Co, a subsidiary of the leading coal producer Arch Coal.
Withdrawn to comply with the Clean Water Act, the EPA's decision would halt the practice of mountaintop removal at site known as Spruce 1.
Senator Jay Rockefeller, a West Virginia lawmaker with strong ties to the mining industry, said he was "deeply angered" by the "unfair" decision, and has written to President Barack Obama to protest the withdrawal of what he described as a "rigorously reviewed and lawfully issue permit."

Well, the coal industry has a powerful lobby, but sadly, the future does not. And neither do those who live downstream.

The counties where mountaintop removal mining occurs are among the poorest in the nation. Coal jobs and teaching are the only thing there. I fear southern WV's mountains and streams will be completely decimated as coal may become more and more expensive in future resource depletion scenarios.

Here’s the bad news from next-gen biofuel producer Range Fuels: The company has let some workers go. But the good news the company wants you to know, is that Range Fuels is still planning to produce enough cellulosic ethanol to meet a government estimate for 2011.

There was no good news, Range Fuels just provided a misleading picture of what was actually going on. Unless of course "some workers" means almost everyone and a shut down of the plant:



A South Georgia plant that turns wood waste into fuel is stopping production right after they make their first batch of ethanol. Range Fuels in Soperton is also laying off most of its employees. In 2007 the Colorado-based company broke ground on its Georgia facility in the heart of timber country. At the time it was supposed to be the first plant in the country to make so-called “cellulosic ethanol.”

Since then they’ve received 320-million dollars in state, federal and private money. But now they need more. Range Fuel technical advisor Bud Klepper says this first run of ethanol is part of an agreement with the federal government.

“This run campaign is to demonstrate that facet of the technology and when we’re done doing that then we’ll shut down.” Klepper says they plan to keep four employees at the plant while they raise more money and work through some technical issues.

I find that 'Peak oilers still blind to economic reality' quite offensive.

It has some real crazy rhetoric and whoppers in there.

Indeed, but why should this worry us? The economists are generally going to be right and, as long as the engineers keep doing their job and deliver the oil according to our demand for it, all will be well.

So if they don't deliver oil then the engineers are not doing their job? What if there is no oil to deliver? What if the oil is just really really hard to extract?

But the problem is that, as Tom Bowers makes clear in his excellent book Oil, peak oil theory is being factored in to the price of oil by the traders who set the price. In the 1990s, these traders broke the OPEC cartel wide open and pushed oil down to $10 a barrel. Today, they are driving up the price of oil at least in part because they believe in peak oil. It;s no surprise that they should listen to the engineers rather than the economists - they are interested in where the oil is coming from and when, not the end use to which it is put. Yet that decision is having wide-ranging consequences for the rest of us.

Wat? Traders didn't break the OPEC cartel! Hard working oil-men in the North Sea, Alaskan slope, and elsewhere did. It was the increased supply of oil that drove down the price, not the traders. And the price is going up today due to increased oil demand, more difficult extraction, and depletion. Traders can only make small & temporary changes in the market. Traders certainly pushed the price of oil up to an overshoot area at $147/barrel but only a little more than a 'real' price. The collapse was not just because it was a speculative bubble . . . it was because demand collapsed in the wake of an economic collapse and demand destruction.

Traders just try to reflect the real conditions . . . yes, they can over-react and push things temporarily a little bit out of whack but unless they have trillions of dollars and can 'corner the market', they just don't control the price, they ride it.

Read more at the Washington Examiner: http://washingtonexaminer.com/blogs/opinion-zone/2011/01/peak-oilers-bli...

Great post Speculawyer. You are correct on all points. There is the economist position and the geologist position, (mislabeled as "engineer" in the article). The latter is real and the former is imaginative. The real always holds sway over the imaginative in the end.

Ron P.

I thought engineers could make oil from scratch -- just mix CO2 and water together and -- POOF! -- new oil.

I also heard here that the 2nd Law of Thermodynamics was proved wrong on myth busters -- so all is well.

To think these people are actually paid to write articles is astounding.

Coming from the Washington Examiner, not surprising to see garbage. It's not fit for much beyond toilet paper.

Spec – Re: “as long as the engineers keep doing their job and deliver the oil according to our demand for it”. Occasionally such statements pop up and I usually ignore. But this time I’ll add some rather blunt realities as viewed by us pros in the oil patch: it ain’t our job to satisfy demand. Never was…never will be. If folks want to buy into the PR puff pieces put out by Chevron et al that’s their choice. Our objective (industry wise) is to make a profit just like all other commercial enterprises. On a personal level our goals are to keep our jobs and make a good paycheck. We’ve never signed on for anything else.

The best current example I can toss out: the oil pipeline that delivers around 600,000 bopd from the N Slope. BP has a plan and it’s not to “deliver oil according to our demand for it”. It’s to max their profit from the operation. That may mean spending $billions to maintain the line. Or, if it better improves the bottom line, cut maintenance expenses and upgrades. There appears to be a clear history of BP not spending sufficient funds to keep the line in good shape. That was a decision made by profit motives. And that’s BP’s job: max profits. And if that goal conflicts with maximizing the life of N Slope oil deliveries than guess what? Profits win.

Hopefully the situation with Saudi is equally obvious: to max the economic viability of their oil reserves…not supply the consumer’s “demand for it”. The KSA oil reserves belong to them…not the consumers. The KSA has no obligation to explain the reserves to anyone. Nor are the obligated to deliver a volume based upon demand.

These words may seem unnecessarily harsh. But this is the reality of the world we live in. Ignoring this reality doesn’t help in dealing with the future. Personally I'm just getting feed up with the optimistic fluff coming from the public CEO's and most of our politicians. Now I'm off to og one of our wells. Hpefully it will add to our obscene profits. If it adds to the demands of the consumers so be it...just a happy coincident

Rock, I greatly appreciate your invaluable insights here on TOD, but feel I must quibble with you on this point - were it not for 'demand', you would have no income, let alone profit. So while you and your colleagues and competitors may not see yourselves as responding directly to consumer demand, ultimately, that is in fact all you are doing.

IMO, looking at supply and demand gets you turned around in knots. I prefer to take the approach that assumes a steady level of greed will always apply. People will use as much as they can, always. This is not a bad approach to take from a modeling perspective in that scientists have long used "greedy algorithms" in their analysis. In that sense, greed does not pass along any value judgements, it just exists, much like the "path of least resistance" or "the principle of least effort" or even the maximum entropy principle.

Many optimization algorithms are solved by the use of greedy algorithms and is a principle that applies many places, in my opinion.

What's with the vanishing comments?

There is a moderator now. Paid, I believe. Isn't that part of what was announced with all the changes?

She already got me.

Evolution. Some posts evolve in bad ways and are proved unfit to survive.

I'm glad TOD asks us to act like adults. It's rare these days.

If you have a question about comments that have been removed, please e-mail me privately, rather than asking about in the comments.

There are two ways comments are removed. Sometimes, they are removed by a staff member. Sometimes, they are "voted out" - if a comment gets enough flags from regular users, it will disappear, along with its replies.

We had a little of both in this thread, and for good reason. Personal attacks, profanity, and racist comments don't belong here.