Drumbeat: January 19, 2011

The Peak Oil Crisis: It’s Not Adding Up!

The official bottom line is that IEA's conservative estimate says the world will be consuming 89.1 million b/d this year, while currently producing 88.1. There are only two places the extra oil can come from if we are not to have another damaging and demand killing price spike. Either we draw down global stockpiles or the Saudis increase production. Presently both of these phenomena are underway - OECD stocks fell by 8 million barrels in November and another 33 million in December, not to mention a substantial fall in unofficial floating storage held by speculators. Without fanfare, the Saudis seem to be slowly ramping up production - at least for now.

There are two obvious holes in this rosey scenario that has oil creeping past $100 a barrel this year (It is currently only a couple of dollars away), but not so high as to stunt global growth. First, the problem is whether demand growth this year will be constrained to only a 1.4 million b/d increase vs. the 2.2-2-7 million b/d increase we witnessed last year and near-universal estimates of economic recovery. The other is whether the Saudis really are able or willing to push up production by a million or more b/d to keep prices under control.

Emerging economies will lead energy growth, says BP

Emerging economies such as Brazil, India, China and Russia will dominate the growth in world energy consumption over the next 20 years, according to BP.

The oil firm has published its first ever forward-looking analysis of world energy trends - BP Energy Outlook 2030 - in which its base case scenario indicates that primary energy use will grow by nearly 40 per cent over the next two decades.

$100 Oil to Play Spoil Sport?

IEA’s report has put pressure on the Organization of the Petroleum Exporting Countries (“OPEC”), the oil producers' cartel – an intergovernmental organization that supplies around 40% of the world's crude – to lift its production ceiling and increase supply to tackle the galloping growth in oil demand, or risk high prices that could spoil the economic recovery.

Energy intensity is converging across the world

THE energy required to produce a unit of GDP is falling in most countries around the world.

Record Oil, Gas Prices Loom as Financial Reform Fails

NEW YORK (TheStreet -- The final dam to stopping $150-a-barrel oil and $4-a-gallon gas is being breached, as financial regulation continues its daily erosion into worthlessness.

Rosneft say BP can book Arctic reserves

Russia's largest oil producer Rosneft said UK supermajor BP will be able to book reserves in the companies' joint venture to drill for oil in Russia's Arctic Kara Sea.

Inquiry after North Sea platform production shut down

Shell has said it has no imminent plans to resume operations on its four Brent platforms after an incident in the North Sea.

Swiss tighten economic sanctions on Iran

GENEVA — Switzerland on Wednesday tightened economic sanctions on Iran, including restrictions on finance for the oil and gas industry, to bring them into line with those imposed by some other major economies.

The Swiss government announced after a cabinet meeting that it had decided to move beyond UN sanctions adopted by the UN Security Council last June.

Jordan, Russia want Palestinian state, sign oil deal

Amman - The leaders of Jordan and Russia on Wednesday vowed to work together to achieve an independent Palestinian state and boosted cooperation in the energy sector.

'I have told my Palestinian friends that the eventual target will be the establishment of a modern, unified and sovereign state with East Jerusalem as its capital,' Russian President Dmitry Medvedev said in remarks before starting talks with King Abdullah II.

Geothermal energy: All the benefits of nuclear - but none of the problems

By mass, 99.9% of the Earth is hotter than 100C. That means that not far below our feet is the power to boil unlimited water and generate clean, renewable energy. Is the UK throwing all it can at this extraordinary opportunity? Of course not, who do you think we are? Germans?

Top 10 small-scale renewable energy innovators

From high-rise plant factories to solar rubbish dumps, here is the pick of small companies at the World Future Energy conference.

ExxonMobil warns carbon emissions will rise by 25% in 20 years

ExxonMobil, the world's largest oil company, expects global carbon emissions to rise by nearly 25% in the next 20 years, in effect dismissing hopes that runaway climate change can be arrested and massive loss of life prevented.

Nicole Foss: We Need Freedom of Action To Confront Peak Oil

In the third video in the series “Peak Oil and a Changing Climate” from The Nation and On The Earth productions, co-editor of The Automatic Earth, Nicole M. Foss, explains how energy relates to the economy and what our impending energy crisis will look like. Foss discusses the issues associated with peak oil in financial rather than environmental terms, because she finds that peak oil has much more to do with finance than it does with climate change.

Saudi boosted oil output to cool rally: International Energy Agency

LONDON - The International Energy Agency (IEA) said on Tuesday that OPEC leader Saudi Arabia had stealthily boosted output to cool an oil price rally, while OPEC accused the agency of providing inconsistent oil price views.

Tensions between oil exporter group OPEC and the agency, representing industrialised consumers, have risen as Western countries put pressure on the Saudis and their allies, the only producing nations with spare capacity, to meet unexpectedly robust demand that has driven crude up near $100 a barrel.

Brazil Oil Fields May Hold More Than Twice Estimated Reserves

Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves, more than double government estimates, according to a university study by a former Petroleo Brasileiro SA geologist.

The research, which set out to show government figures were overly optimistic, found they underestimated the area’s potential, said Hernani Chaves, a professor at the Rio de Janeiro State University who worked at Petrobras for 35 years. The forecast, which the study puts at a 90 percent probability, compares with 50 billion barrels estimated by Brazil’s oil regulator, known as ANP.

Coal to rival oil by 2030, BRIC key to growth - BP

LONDON (Reuters) - China, India, Russia and Brazil will dominate energy demand growth in the next 20 years, which will see non-fossil fuels grow fast and energy output from coal almost matching oil, energy major BP said on Wednesday.

"Non-OECD Asia will account for nearly two-thirds of non-OECD consumption growth over the next 20 years and more than three-quarters of the net global increase, rising by nearly 13 million barrels a day," BP's chief economist Christopher Ruhl said in a statement.

Chinese Power Capacity Advances 10% as Consumption Climbs, Xinhua Reports

Installed capacity climbed to 962,190 megawatts in 2010, the news agency reported, citing data from the China Electricity Council. Thermal power capacity accounted for 706,630 megawatts last year, or 73 percent of the total, Xinhua said.

Jeff Rubin: How sustainable is growth with triple-digit oil?

With oil prices within spitting distance of triple-digit levels, it may be time to reconsider just how long this recovery will run.

The fact that we’re seeing oil at triple-digit prices in this cycle should come as no surprise. After all, that’s where oil prices ended up last cycle before deep-sixing the global economy. But to see triple-digit prices again this early into what by all historical standards has been a painfully slow global recovery must be disconcerting to a world economy never hungrier for growth.

Commodities Boom Signals Growth as U.S. Companies Benefit

U.S. investors should welcome, not fear, climbing commodity prices.

The increases are “largely a reflection of the fact that the pace of economic growth, particularly in the U.S., has picked up,” said Nariman Behravesh, chief economist at consultants IHS in Lexington, Massachusetts, and a former Federal Reserve official who has been covering the global economy for more than 35 years. “It’s not something to be worried about.”

Afghan fuel shortage spreads to Kabul

Iran's month-old blockade has brought higher prices and shorter tempers, along with resentment toward NATO forces, which Afghans blame for Tehran's decision to restrict supplies.

Why a political tremor in Africa can be felt in Europe

Revolution in a small African country with not many resources. An undramatic headline, but the weekend's momentous events in Tunisia will be watched carefully in capitals from Doha to Moscow and Brussels, not least for their potential impact on European energy supplies.

... And they all fall down

A new year begins now in earnest, with the dotards who run the crumbling monarchies of the Middle East all quaking in their Gucci shoes as one of their brethren gets the ritual, abrupt boot that has been a hallmark of regime change in the region for over three generations.

Not entirely without logic, the geriatric rulers looking at Tunisia recall the first steps of the downfall of the communist regimes that began in 1989 with an epochal tearing down of the Berlin Wall

Rosneft sees more Arctic technology tie-ups in Russia

(Reuters) - Russia's largest oil firm, Rosneft, expects many future Arctic oil projects to require technology partnerships similar to the firm's recent tie-up with BP, Rosneft's vice president said on Monday.

Russian oil tsar Sechin goes global with BP deal

(Reuters) - BP's $16 billion share swap with state-controlled Rosneft means energy tsar Igor Sechin has delivered on one of Prime Minister Vladimir Putin's boldest dreams: taking Russia's national champions global.

UK says BP-Rosneft tie commercial, not political

(Reuters) - Britain said a the share swap and Arctic exploration deal struck between British oil major BP and Russia's Rosneft was commercial and there had been no political involvement by the government.

Indonesia eyes $23.78bn oil revenue

The Indonesian government expects 215.34 trillion rupiah ($23.78 billion) in revenue from the oil and gas sector this year based on an average price of $80 per barrel, data from the Energy and Mineral Resources Ministry showed today.

Qatar replaces long-serving energy minister

DUBAI, United Arab Emirates - Qatar's ruler replaced the OPEC member nation's longtime energy minister in an unexpected cabinet shuffle Tuesday, state media reported.

Energy Prices Will Be Much Higher in 2011

MidasLetter.com – Rather unanimously, much like calls for higher gold, oil’s forecasters are calling for a return to oil over $100 a barrel. No surprise, really, considering the proliferation of automobiles in the BRIC countries, as growth in that sector averages from 8.5 to above 10%, and is expected to continue in that mode throughout 2011. While the whole “Peak Oil” concept dies a quiet death amid vast new discoveries and technologies, shale oils have added decades to the global supply of oil and gas. Their rather expensive extraction technologies however, demand a higher price for oil, and the market thus cooperates.

Graph Shows Influence of Gasoline Price on Miles Driven in the U.S.

So what are the takeaways here? The obvious one is it takes a lot to make Americans drive less, and it's not just that each driver drives more over time, but also that there are more drivers on the road as population increases

Idaho official signs off on megaloads permits

BOISE, Idaho - Idaho Transportation Director Brian Ness has agreed to issue travel permits that would allow oil giant ConocoPhillips to begin hauling as early as next week large oil refinery machinery along a winding and scenic stretch of U.S. Highway 12.

Energy giants' profits continue to soar

Gas and electricity companies are making even more money out of consumers than they were three months ago, Ofgem's chief executive, Alistair Buchanan revealed yesterday.

When Ofgem announced an inquiry into the power industry in November, margins for the six biggest suppliers had risen by 37 per cent from £65 to £90 a year but following two more price rises those margins had soared by 49 per cent to £97, he told MPs.

Offshore Industry: Waiting for Godot; Will He Ever Come?

The offshore oil and gas and oilfield service industries appear to be playing the roles of Vladimir and Estragon, the two lead characters in Samuel Beckett's Waiting for Godot. The play deals with two days in the lives of these gentlemen who are awaiting the arrival of an acquaintance who they admit they hardly know and probably might not recognize when he arrives. Godot never does come, which forces the two men to fill their waiting time. While waiting they eat, sleep, talk, argue, sing, play games, exercise, swap hats, and contemplate suicide – anything "to hold the terrible silence at bay." It sure sounds like the actions of the domestic offshore industry both during and after the offshore deepwater drilling moratorium.

Noble moves Mexico rigs to US Gulf as work stalls

SAN FRANCISCO (Reuters) - Noble Corp, the world's second-largest offshore drilling contractor by fleet size, is moving five shallow-water rigs to the U.S. Gulf of Mexico from the waters off Mexico after work dried up there.

Snohvit back in business

Norway's Statoil said today the Snohvit gas field in the Barents Sea and its onshore LNG processing facility were back to full production after almost a month of downtime for repairs.

Iraq to pay expenses for Kurdish players

The Iraqi Oil Ministry has agreed with its Kurdish counterpart to pay exploration costs and expenses to the foreign companies working in the northern Kurdish region, a spokesman for Iraq's Oil Ministry said today.

Fracking Study Reviewers Represent Academia; No Industry Employees

A panel of geologists, toxicologists, engineers and doctors that will peer-review a high-profile Environmental Protection Agency study of hydraulic fracturing will include six scientists from Pennsylvania, more than any other state.

Gasland: A review

Fox’s personal style and his knack for storytelling help keep the film moving, although the focus on his personal journey makes it difficult to evaluate the various claims made against shale gas drilling – especially fracking – and put them together into a coherent picture.

And that is where the film falters. By failing to evaluate the claims of his interviewees more carefully, he has left himself open to the kind of takedown carried out by Energy In Depth, the oil and gas lobbyists, last year.

Gazprom to buy more Central Asian gas in '11

(Reuters) - Russia's state-owned energy giant Gazprom will increase gas purchases from Central Asian countries by 2 percent this year to 38.8 billion cubic metres (bcm), the firm said in a statement on Wednesday.

'Significant' China, Saskatchewan Energy Deal in The Works -Official

A "significant" energy deal is in the works between China and the Saskatchewan province of Canada, the managing director of Saskatchewan's trade and investment representative office in Shanghai said Wednesday.

Sinopec teams up with Enbridge for Northern Gateway pipeline

BEIJING — Sinopec Corp., China’s second-largest energy company, has struck a partnership with Enbridge Inc. on the Canadian company’s proposed $5.5-billion Northern Gateway pipeline — a controversial project now under regulatory review.

China's power plan may mean copper imports -Aurubis

HAMBURG (Reuters) - China's plan to modernise its electricity transmission network may stimulate more copper imports and raise Chinese copper prices, Aurubis, Europe's biggest copper smelter, said on Wednesday.

Pakistan president seeks investment in clean energy

Pakistan must more than double its economic growth rate and invest in sustainable energy to improve its citizens' standards of living, says the country's president.

"We are an example of the world's energy crisis," Asif Ali Zardari told an international audience at Abu Dhabi's World Future Energy Summit yesterday. "We face drought, we face massive food shortages and potential starvation."

Population swells by 24pc in 10 years

LAHORE: Pakistan retained its position as the worldís sixth most populous country during the last decade. There had been 24% increase in the population during the last 10 years, says a research conducted by the Development Reporting Cell with regard to the increase of population.

Sasol Abandons $10 Billion Indonesian Coal-to-Fuels Plan, Focuses on Gas

Sasol Ltd., the largest producer of motor fuels from coal, abandoned a plan to build a $10 billion coal-to-fuels plant in Indonesia to focus on opportunities in the gas-to-fuels industry.

Subsidizing Ethanol Is Bad Policy

The federal policy of trying to reduce energy dependence through the use of ethanol runs counter to free-market economics. Increasing the use of ethanol will not reduce dependence upon foreign energy sources, according to a research paper published by the National Academy of Science, which concluded this about ethanol: "Neither can [it] replace much petroleum without impacting food supplies."

Corn Advances to 30-Month High, Wheat Gains on Outlook for Smaller Stocks

Corn rose for a fifth day to a 30- month high in Chicago and wheat climbed amid shrinking global stockpiles. Soybeans advanced on speculation that a strengthening yuan may spur imports into China.

Solar Energy Competitive With Oil in Persian Gulf, New Energy Finance Says

Solar energy may be more attractive than oil-fueled power plants in the Middle East, suggesting governments should encourage sun power and preserve petroleum for export, Bloomberg New Energy Finance said.

Masdar chief: energy field needs competition

ABU DHABI // Governments must encourage competition in the energy field as well as develop policies to further adopt clean technologies, said Dr Sultan al Jaber, chief executive of Masdar, today.

"Competition drives innovation," he said during the opening of the World Future Energy Summit. "We must catalyse the implementation and develop the required regulatory framework that encourages the use of clean energy technologies."

France hopes for UAE nuclear deals

France is seeking fresh nuclear energy contracts in the UAE after losing out on a bid to build the country's first reactors.

"If they have other plans we will obviously bid," said Pierre Lellouche, the French foreign trade minister. "There's plenty of room, it seems, for dozens of French firms."

German Next-Day Power Price Rises to Two-Week High as Windmills Subside

German power for next-day delivery advanced to its highest price in two weeks as forecasts showed production from wind may decline and temperatures may drop.

The New Light Bulbs Lose a Little Shine

California's utilities are spending $548 million over seven years to subsidize consumer purchases of compact fluorescent lamps. But the benefits are turning out to be less than expected.

One reason is bulbs have gotten so cheap that Californians buy more than they need and sock them away for future use. Another reason is the bulbs are burning out faster than expected.

TfL says journeys double on two pilot Barclays Cycle Superhighways

Transport for London (TfL) has revealed that the number of journeys made on the first two Barclays Cycle Superhighways has doubled on some stretches of the routes during rush hour.

Path to greener Loop may be down energy-smarter road

Architecture buffs typically look at the Loop through an aesthetic lens — Art Deco towers, steel-and-glass high-rises, and so on. But Smith and Gill instead view the Loop through the prism of energy.

BP Says Not Enough Climate Progress in UN Talks to Stabilize Emissions

BP Plc said there’s not enough progress in climate-change goals to stabilise emissions, according to the company’s Energy Outlook 2030 report.

In Ventura, a retreat in the face of a rising sea

Higher ocean levels force Ventura officials to move facilities inland, an action that is expected to recur along the coast as the ocean rises over the next century.

Brits Ponder Fuel Rationing

The last time the British government instituted a substantial rationing program was 1940—the Nazis had spread out across Europe and the continent was mobilizing for all-out war. The rationing program, which lasted until 1954, had a profound effect on the collective consciousness of the British public, and is largely remembered not as a time of deprivation but of plucky courage, solidarity and fortitude in the face of a dangerous adversary. So could rationing work again?

Today I attended the launch of a report commissioned by the British parliament that called for the rationing of fuel to help meet the government's carbon emission targets and prepare for future fossil fuel scarcity. The report called for an electronic trading system for energy quotas. Such a system is a long way from becoming law, but it raises an interesting debate about how to mobilize a population around the the fight to slow climate change.

British lawmakers propose energy rationing

A group of MPs have suggested that the UK should introduce a system of energy rationing to deal with what they view as impending energy and climate crises.

Quotas 'would tackle fuel poverty'

A system of energy rationing is needed to tackle fuel poverty and ensure cuts in greenhouse gas emissions, a report commissioned by a group of MPs has said.

Under the tradable energy quotas (TEQs) scheme, all adults would receive an equal free allocation of units of energy credit, which would be redeemed every time they bought gas and electricity or petrol for cars.

With Fuel Rationing On The Way, Can IT Help?

Personal energy quotas could be a wake-up call… and an opportunity for IT companies to help with a global challenge.

Oil rises to near $92 a barrel in Asia

BANGKOK – Oil prices rose to near $92 a barrel Wednesday in Asia, underpinned by a rise in regional stock markets and increases to demand forecasts for this year.

Crude Oil Supply Drops in Survey on U.S. Pipeline Shutdown

U.S. crude supplies probably fell for a seventh week on the shutdown of the Trans Alaska pipeline and as a premium for Brent oil from the North Sea drew cargoes to Europe, a Bloomberg News survey showed.

Inventories dropped 1 million barrels, or 0.3 percent, in the seven days ended Jan. 14 from 333.1 million a week earlier, according to the median of 15 analyst estimates before an Energy Department report tomorrow. Nine of the respondents forecast a decrease and six projected a gain.

Barclays Forecasts U.S. Natural Gas Prices Will Remain Around $4 This Year

U.S. natural gas prices may remain at about $4 per million British thermal units in 2011, according to Barclays Capital.

While gas may slide to as low as $2 per million Btu in the short term, “concerted demand and supply reactions would restore prices” to near $4, Barclays said in a research note dated yesterday. Power plants may substitute coal with gas as the fuel turns cheaper, arresting the slide.

PetroChina Refinery Explosion Injures 30, Fire Under Control, Xinhua Says

More than 30 people were hurt following an explosion at PetroChina Co.’s Fushun refining complex in northwestern Liaoning province, the official Xinhua News Agency said, without citing anyone. No deaths were reported.

India oil depot fire lights up Mumbai skies

MUMBAI, India - An official says a major fire has burned nearly 10,500 gallons (40,000 liters) of lubricant oil at a depot of state-owned Indian Oil Corporation in western India.

Natural gas leak reported at offshore platform

LAKE CHARLES, La. - A natural gas leak has forced the evacuation of an offshore platform in the Gulf of Mexico, and an undersea robot is being used to investigate the source.

Transneft Says Foreigners Tried to Derail Putin's Asian Oil Link Network

Foreign states tried to derail Russian Prime Minister Vladimir Putin’s project to build a network of oil links to supply Asian markets with Siberian crude, national pipeline operator OAO Transneft said.

Occidental wins Abu Dhabi's Shah gas project – sources

Occidental Petroleum has been awarded a contract to develop Abu Dhabi National Oil Company's (ADNOC) Shah gas project, in a deal expected to be worth $10bn.

"ADNOC has awarded the Shah gas field to Oxy," said an ADNOC source in Abu Dhabi.

China to be biggest oil consumer by 2030

Just when you thought you’d heard all the impressive predictions about China in the coming years, BP comes out with another.

In a report released on Wednesday, the energy giant claims that China will be the largest source of oil consumption growth over the next 20 years – increasing consumption to 17.5m barrels per day – overtaking the US as the world’s biggest oil consumer in the process.

Norway steps up Iran sanctions

The Norwegian government today announced more stringent sanctions against Iran that will hit the Middle East country’s oil and gas sector.

Security added at Gulf oil spill claims meetings

ORANGE BEACH, Ala. – The shooting of a congresswoman and rising tempers along the Gulf Coast have prompted increased security for meetings between BP's oil spill claims czar and residents seeking compensation.

Crude Oil Poised for Significant Breakout: Ways to Play

Crude oil prices seem poised for a significant breakout in 2011. Here's why.

Global production of crude oil and condensate has now reached the levels of production seen in 2005 and 2008, just shy of 74 million barrels per day (mbpd) on a twelve month rolling average of production (Source: (EIA)). Six years of frenzied drilling and elevated prices have not yet produced the additional barrels needed by a growing global economy. Prices remain high despite significant unemployment in the OECD and anemic economic growth.

Why Don't High Oil Prices Reduce Demand, Why Don't Big Demand Drops Reduce Prices?

Why haven't high oil prices reduce demand? In simple terms we appear to be in a period of price inelastic oil demand. According to interesting research by Stuart Staniford "In the post 2004 interval, large price increases are required to produce more oil. I christened this the "era of inelastic oil" (in search of a less loaded term than "peak oil", as well as one that is less empirically disputable)."

Where are the "peak oil" alarmists?

Where are the "peak oil" alarmists when we need them to spice up the news of rising gasoline prices? Have they all gone into hiding?

Gas prices in Colorado are about to crack $3 a gallon again and possibly stay there for some time. Isn't the moment ripe for doomsayers to emerge, blaming this market fluctuation on America's fossil fuel "addiction" and the depletion of world petroleum supplies?

Peak Prices Or Production Peak? Ominous Signs For Oil At The Start Of 2011

Ominous signs were there right at the beginning of the year. On January the 3rd, it was reported that the world price of crude oil had reached its highest level in two years. The price of a barrel of brent oil was stated to be 94.84 Dollars. This, energy analysts were quick to point out, represented a more than two hundred percent increase over the price of crude at the beginning of last year.

Inflation soars as commodity price surge hits the high street

Inflation has jumped to a two-year high, ahead of City expectations and adding to pressure on the Bank of England to raise interest rates, as food price inflation rises to levels even higher than those seen in the Great Inflation of the 1970s. Pensioners and savers are being hardest hit.

Food shortages across Northern Rivers

IF you faced the shock of going to the supermarket this week and finding there wasn’t any fresh produce to buy, you weren’t alone, with reports of stock shortages across the Northern Rivers because of floods to the north and south.

2011's most fuel-efficient cars? Not just hybrids, electrics

This year promises huge leaps in fuel-sipping (even zero-fuel) vehicles as electric cars like the Nissan Leaf and Chevy Volt enter the U.S. market. Car companies, prodded by U.S. requirements to boost overall fuel efficiency, are turning out an array of cars getting at least 30 miles per gallon, including SUVs and a station wagon.

Retail outlets adding electric car charging stations

Retail stores around the USA are installing charging stations for electric vehicles to serve owners of an emerging fleet of electric cars, bikes and scooters.

"There weren't any retail charging stations in the Reno market so it was a chance to become a leader," says Steve Reimer, 53, who opened an Einstein Bros. bagel shop here in December and installed Reno's first such charging station. "It just seems like the right thing to do from an environmental standpoint."

A Reality Check on the Plug-In Revolution

What’s really needed if we are to turn the Plug-In Revolution into the main event, instead of a colorful but distracting sideshow?

Tysons Corner project wedges Silver Line metro amid traffic

A Virginia suburb of Washington, D.C., is undergoing the largest reshaping of a dense suburban landscape in the USA — with minimal disruption, say engineers and urban planning experts.

The work will extend Washington's subway system to Dulles International Airport and, planners hope, turn Tysons Corner, a maze of office buildings, shopping malls and parking lots, into a walkable neighborhood.

City dwellers are 'greener'

People who live in the biggest cities are most likely to recycle, volunteer for environmental organizations and participate in other "green" behaviors, found a new study, which surveyed urban dwellers in a variety of Chinese cities.

Grassroots group sees future in seeds

JOSHUA TREE — On the eve of Martin Luther King Jr. Day, nearly 100 Hi-Desert residents planted the seeds of a local revolution, both within and beyond the confines of the small United Methodist Church hall they met in.

“Seeds in the Sand: How to Grow Organic Food in the Desert,” was the third public meeting and potluck held by Transition Joshua Tree, a burgeoning grassroots organization that tackles issues such as peak oil, climate change and economic crisis on a community level, by building local working groups.

When you're dying for a lower carbon footprint

From dust we are, and to dust we shall return — by burial, cremation or emulsification.

As some Americans push ever harder to leave a smaller carbon footprint on the environment, the funeral industry is taking a new step to help us go even more gently into that good night. Instead of a traditional burial, which takes up space six feet underground, or cremation, which uses a surprising amount of energy, the dead can now be dissolved.

Kalamazoo writer Kurt Cobb is to present novel on "peak oil" this week

KALAMAZOO — What happens when all the Earth’s known oil reserves have been extracted?

Some fear that the ongoing demand for the precious natural resource will drive the world to the point of social, economic and environmental collapse.

After years of research, local writer Kurt Cobb puts the discussion of “peak oil” in novel form. Peak oil is the term given to the point in time when the maximum rate of global petroleum extraction is reached. Cobb’s novel, “Prelude,” is the story of a young energy analyst named Cassie Young, who questions her Washington, D.C., firm’s stance on world oil supplies and becomes involved in a secretive, treacherous world of big business and the arrival of peak oil.

Deep Green: What the Greens got right

Peak oil: Ecologists and geologists have warned about oil depletion for decades. Geophysicist M. King Hubbert described the phenomenon in 1956. He was largely ignored. Global peak oil per capita occurred in 1979 and we have now arrived at the absolute peak - just as predicted.

Net Energy: Oil depletion and society’s oil addiction drives us toward lower-grade reserves, such as tar sands, with a low net energy, costing more energy to retrieve, returning less to society and emitting more CO2 pollution. Researchers such as Charles Hall at the State University of New York warned society about this in the 1970s.

Pushing the Energy Envelope With China

At a joint forum, officials say the two nations could work together in areas like energy efficiency and carbon capture.

BP hydrogen plant awaits Abu Dhabi's 'endorsement'

ABU DHABI (AFP) – A joint venture between BP and Abu Dhabi's Masdar to build a $2.2 billion hydrogen power plant has been delayed as it still awaits government "endorsement," a BP statement said Tuesday.

Special Report: Is a solar trade war about to flare?

Now there's a different foreign presence in Finow. When the first solar modules arrived for installation they came not from a local manufacturer -- German solar company Conergy runs a factory just 45 minutes away in Frankfurt an der Oder, for instance -- but from China's Suntech Power Holdings, now the world's largest maker of photovoltaic (PV) solar modules. "We were quite surprised when the trucks brought Chinese modules, and not German ones," Kobbe says. "But they were probably cheaper." Solarhybrid, which spearheaded construction of the park, says reductions in Germany's renewable subsidies meant it had to use Suntech modules to stay competitive.

Conservation group sues to stop California solar plant

LOS ANGELES (Reuters) – A U.S. conversation group has sued the federal government over its approval of a major solar power plant in the California desert, the latest in a string of challenges to the nation's renewable energy goals from the environmental community.

EDF's Solar `Time Bomb' Will Tick On After France Pops Renewables Bubble

France’s solar power boom that’s led to farmers building unneeded barns just to cover them in panels is costing Electricite de France SA more than a billion euros ($1.3 billion) a year as it meets state pledges to pay above- market prices for renewable energy.

Danes pin hopes on wind farms

The Danish wind turbine maker Vestas Wind Systems has not given up on the long-term future of wind power despite a disastrous third quarter last year in which the company closed five Scandinavian factories, cut 3,000 staff and lost €104 million (Dh509m) before tax.

For Devotees of Wind Power, a New Product Label

The label would guarantee that a product was manufactured with some wind power.

Climate Change Not All Bad For Some Nations: Report

The United States, China, Ethiopia and some northern European countries are among those that are expected to be able to grow more crops as a result of temperature changes and rainfall, according to a study released Tuesday.

However, the gains in those countries would not be nearly enough to stave off an inevitable increase in world starvation and price spikes for food as a result of shortfall in three out of four main cereal crops, the study said.

Online news service promotes false climate change study

An online news service sponsored by the world's premier scientific association unwittingly promoted a study making the false claim that catastrophic global warming would occur within nine years, the Guardian has learned.

Five EU states shut CO2 registries

(Reuters) - The Czech Republic, Greece, Estonia and Poland closed their carbon trading accounts on Wednesday, after Austria closed its registry on Tuesday, according to national registries and the European Commission.

WWF-Canada Report Shows High Cost of Carbon to Investors

TORONTO, ONTARIO--(Marketwire - Jan. 19, 2011) - Today, WWF-Canada released a ground-breaking report highlighting climate change as a new risk for institutional investors, and providing insights in carbon risk assessment of an investment portfolio. The report Carbon Counts: Assessing the Carbon Exposure of Canadian Institutional Investment Portfolios was prepared for WWF-Canada by Mercer and Trucost to identify the carbon exposure of Canadian institutional pooled investment products.

Insurance Industry Worries about Growing Risks from Climate Change

Insurers are struggling to assess the risks from climate change, industry officials say, with the floods in Australia and Brazil highlighting the potential losses from greater extremes of weather.

Scientists say a warmer world will cause more intense drought, floods, cyclones as well as rising sea levels and the insurance industry says the number of weather-related disasters has already soared over the past several decades.

Given the last conversation about law/lawbreakers I bring you this link via Ars Technica discussion about the idea that cell phones are like clothing and can be searched when placed under arrest.

For one thing, many Americans are criminals and they don't even know it. Due to the disturbing phenomenon known as "overcriminalization," it's very easy to break the law nowadays without realizing it. A May 2010 study from the conservative Heritage Foundation and the National Association of Criminal Defense Lawyers found that three out of every five new nonviolent criminal offenses don't require criminal intent. The Congressional Research Service can't even count the number of criminal offenses currently on the books in the United States, estimating the number to be in the "tens of thousands."

I'll also point out how
is the basis for 95% or so Federal crimes. (go ahead - think about that, your growing food for your own self is established by law interstate commerce)

Pretty good definition of a Police State; when there are so many laws and of such complexity that it is a practical impossibility to be in compliance.

Reminds me of back in the 90's living in LA. Basically everyone I knew was working some scam or other just to get by. I recall thinking, in spite of everyone's dreams, what a miserable life it was truly where every waking moment was spent in the pursuit of money and/or status, and neither was ever really gained. Of course a side-effect of this was that few could afford to dot the i's and cross the t's, and if "all were known", everyone I knew, and myself, could have been put away for life based on the volume of petty daily offenses. "The Criminalization of Normal Existence" is how I thought of it then.

Today I live in a small city and that sort of thing is much less of an issue, though I do commute to work by bicycle on a route not really designed for safe riding. I break 18-24 minor traffic laws daily - lane changes unsignaled, rolling stops here, sidewalks jumped there - and probably could still be put away for life based on accumulated petty offenses...

upstreamonline.com is showing Brent at $99.28. Bloomberg is reporting the Euro at 1.3504 to the US dollar at this time. zFacts.com's data shows the National debt going through $14.1 trillion today and 46 days to the debt ceiling.

The Tunisian government has been overthrown and unrest continues. The proximate cause was rising food prices but simmering anger at a repressive regime run by corrupt leaders living in luxury fueled the uprising. Anger at rising food prices is spreading. The rising prices can be attributed to some bad harvests due to weather problems as well as the monetization being undertaken by the central banks of almost all industrialized countries. The rise in oil prices over the last 6 - 9 months should be just beginning to bite in terms of agricultural inputs. If oil prices remain at current levels for the next 6 months, let alone rise further, rising food prices are a certainty.

There are many counties in the position of Tunisia, ie, not wealthy oil producers, impoverished populations, unpopular repressive regimes. And not just in N. Africa/Middle East but elsewhere. These countries cannot afford to do what Kuwait did yesterday - hand out thousands of dollars to each citizen to purchase food.

So the question is, is Tunisia a one off event, a harbinger of things to come over the next 5 to 10 years or a precurser of widespread unrest in the very near future?

This has the look of what I have expected to happen as we hit the peak oil wall. The poorer countries will suffer first and devolve into social unrest and chaos as basic needs cannot be met. Chaos because the new boss can't do better than the old boss.

In the developed world, the population will have the luxury, for a time, of protesting and rioting over higher education costs (UK), falling pensions and later retirement (France) or enforced austerity (Greece). All are examples of inevitably declining living standards. In the third world the issue is the availability of food to survive, a much more visceral concern.

I think we may be at the cusp of some widespread upheaval if oil prices don't drop soon. Do others agree?

It's possible that we are on the cusp. I think there are few regimes around the world where a new leader could come in a have a fighting chance of doing any better than the previous incumbents.

It's also possible to read too much into these events. I'm not raising the Doom flag just yet, but I'm also not making any plans that involve any extra travel this year.

My gut feeling is that things are getting more unsettled around the globe, but then am I just more receptive to them?

According to Wiki, the first lady of Tunisia used a government 737 to fly to Paris and Milan to do shopping. I'm guessing that didn't go over too well with the unemployed, starving masses.

One of the problems in Tunisia is that, in common with many bureaucratic countries, business is controlled by permits and these permits have been given to the families of the elite. For example, the Ford distributor, some private banks (the son-in-law of the former Tunisian president) (wife of the former Vice President). Being able to operate a business with limited competition is almost a guarantee to wealth.

Remember the guy who immolated himself was beaten for not having a permit to sell vegetables & fruit.

As for "used a government 737 to fly to Paris and Milan" this is probably taking all the business class seats on the national airline Tunis Air and bumping off anybody else - also happens in the Middle East to my knowledge.

Edit: those members of "the Family" who have not fled are being arrested. You'll probably see all the old party politicians resign from the party:-)

I'm not going to say you are wrong, but...

There is a danger in lumping together countries into economic categories like developed, poorer (or that all time loser, "third world") when their are regional, cultural and unique national components of the big picture.

I'm no Tunisia expert, but I do know that they are not a "poor" nation when compared globally or to the rest of North Africa. Certainly there is poverty there, but they aren't the classical top 1% extracting wealth from the 99% poor. Infact, their GINI coefficient put them in the approximate neighborhood of the U.S.

I also know that they have gone through a period of more than a decade of fairly strong growth (apparently a result of their being a reasonably safe place to travel and do business from the EU). So, it's possible that we're seeing a little bit of "rising expectations" going on here as well.

Of course, I do not know that oil prices are not the issue, but I think it premature to think that this is a sign of things to come across the world.

Another item to consider here (and in general when we talk about how different peoples will cope with post peak economic decline) - the poor are already there, they already have learned how to cope with hard times. You can't say that about those who live in the luxury of the high end of the global economy.

Predicting political hotspots: Professors' global model forecasts civil unrest against governments

The forecast for predicting the next political hotspots could be much more accurate because of a model developed by two Kansas State University professors and a colleague in New York. The model, named the Predictive Societal Indicators of Radicalism Model of Domestic Political Violence Forecast, is currently five for five in predicting which countries will likely experience an escalation in domestic political violence against their governments within the next five years.

To date the model has successfully predicted civil unrest in Peru, Ireland, Ecuador, Italy and most recently, Tunisia. Iran is currently at the top of the list.

...In order to forecast domestic political violence, three concepts are accounted for: coercion, coordination and capacity.

What probably has the elite worried is this was a worker and secular revolution, based on rights and conditions of the workplace and food.
This was not a religious based uprising.
Nothing has happened like this in the Arab or Persian world sense 1979, and that spun into a religious revolution.

I think we may be at the cusp of some widespread upheaval if oil prices don't drop soon. Do others agree?

Absolutely agree. As oil price remains high or goes higher, food prices will also go up and in many parts of the world where the top dogs bathe in luxury and the rest scavenge for scraps to get by on, unrest is always just a few meals away.

And although the suffering of those masses does not impede us much here in the developed countries, it could if the wrong types get into power in some country with nukes, like Pakistan. All is well until they can threaten everybody else.

Somehow I don't thing the trek down the complexity ladder is going to be anything like the gradual climb up, but rather it will be fast and furious. Once a 100 million people that previously had food no longer have anywhere near enough, then things will begin to unravel very fast. The bottom feeders are use to that position in life, but those that are use to regular good meals are not the type of people to just take it. They'll be mad as hell.

Re: Brits Ponder Fuel Rationing

and Quotas 'would tackle fuel poverty'

This sounds very similar to my proposed rationing with a white market approach.



But, the idea for TEQ's has been around for a while, having been published in 2009. The details of this latest version may be found HERE...

E. Swanson

It's important to realise that since the fuel protests of 2000, the UK has had a strategic plan to deal with supply constrictions. That plan includes, early on, rationing of fuel.

Now, assuming the civil contingencies lot at the cabinet office aren't stupid (and I don't think they are) then they have given time, thought, attention, and probably some action, as to how they could implement rationing in the UK. From the available evidence, that would seem to be a case of a true 'white list'. Key users would be given a card that would enable them to get preferential access to fuel supplies, while the rest fight it out for what's left.

Such a scheme is relatively easy to implement, and can be extended to more refined rationing/pricing attempts, via debit/credit cards. ID cards would have made it even easier, but they are dead.

As a for instance, you could insist on debit cards, then price the fuel in light of the amount of fuel purchased previously, linking bank debit card info with the electoral role. Use lots of fuel and the rate you pay for it soars - unless you are a key user.

TEQs, as such, are probably a non-starter, but I'd be surprised if there were not a report/plan or two already in people's filing cabinets as to how rationing could be implemented as above.

Brits Ponder Fuel Rationing?

Yes it was all Plucky Brits and Stiff Upper Lip when the enemy was a bunch of foreigners about to invade. I think things will be a little different this time round as the enemy is now seen as the greedy speculators and Big Oil companies making a profit from us.

Oh, and add in the pampered, selfish lifestyles that we will all have compromised by this and it's an instant "out-of-office" moment. Not many politicians can face that route.

The only glimmer of good news is that they are at least mentioning it. Possibly trying to butter us up to the idea in "the future". Not now of course, just in another 20 years or so.

Don't forget that when you drive, you don't drive alone. You drive with Osama. Saving gas to fight terrorism replete with appropriate banners and posters throughout the nation. Why should just the soldiers have to do all the fighting? Would be nice to have a war against oil as opposed to a war for oil. It would be interesting to see the effects on SUV owners if they knew that next year they would, for example, have the half the gas they have available now. The rich, however, could just simply buy more TEQs from the frugal and the poor. But at least the frugal and the poor would benefit from the rich's profligacy.

I suspect terrorism will be a transient thing. As the amount of world travel declines with ever rising fuel costs, the world will once again become a big place.

We will be less effected by what goes on "over there", for any given value of "over-there".

As for a war on oil, that style of game has been played too often for people to care anymore. The UK population has raised cynicism to an art form.

I have an explanation for that image on p.375 of http://TheOilConundrum.com

It came out of the US government's oil conservation push during WWII. Instead of Osama, the original character was Hitler. It's a classic case of striking juxtaposition.

Only 99 days to the Royal Wedding!!

British rationing up top and tradable energy quotas. This is essentially cap and trade for consumers and makes perfect sense. The other major form of rationing, higher prices, is a crude form of rationing and features a lot of uncertainty given the inelasticity of demand. In addition, it requires that the poor bear the major burden of dealing with co2 emissions.

With rationing in the form of TEQs, the frugal consumer (FC) wins twice. The FC pays less for gas because he uses less and also benefits because he can make money on those quotas not used. Further, because demand could be kept low, this could keep gas prices down while also keeping consumption down, something not available using a free market approach.

TEQs represent an explicit recognition by government that it is essential that we address global warming seriously. Further, those who sit home banging away on their keyboards on TOD could make money as they type since they would not be venturing out and using gasoline. The race could go to the slow rather than the swift.

I actually like the idea in principle - except for the fact that the TEQ is based on the carbon footprint. That implies using FF will cost more than renewables. This is, on the face of it, a good thing.

However it also puts all fuel on a level playing field. It doesn't readily distinguish between any of the fossil fuels. In theory, I could use less gas and electricity and spend most of my TEQs on oil. That helps the carbon footprint bit not the liquid fuel shortage.

On balance though, I think I'd be in favour of this idea. But then I was in favour of the poll tax too and look where that ended up.

There are two ways to allocate a shortage, the price mechanism and direct allocation. With the price mechanism, those with money can "out bid" the poor, thus the poor (which may soon mean most of us) simply won't have the energy they need. With a decent rationing scheme, one will have access to the which is available, but one may choose to sell some (or all) of one's allocation in the white market. Better yet, having a white market undercuts the tendency for a black market to form. Best of all, those who waste energy would be hit hardest. The result would be considerable effort to conserve by all parties involved. The alternative would seem to be chaos and blood in the streets as the poor would be left with no option but to take whatever measures are required to get what they need...

E. Swanson

But the TEQ is direct allocation with a "white market" to replace the black market. The poor win by legally selling their unused quota to the highest bidder. It is progressive taxation as the poorest often use the least energy at present, and it is environmentally progressive as it actively encourages energy efficiency and conservation.

Of course it is complicated to administer, and liable to corruption like all these schemes. However, it is the pick of the bunch,

The poor AND stupid will continue to drive their SUVs, up to the limit on their credit cards, until it is repossessed.

However, it has zero change of becoming law, this side of a state of emergency.

However, it has zero change of becoming law, this side of a state of emergency.

I agree - however we in the UK are experiencing rapid post-peak oil, gas, coal and nuclear declines, with an unsustainable exponential increase in debt to other nations to allow us to continue to live beyond our means, to say nothing of climate change obligations - so, maybe the state of emergency might be much closer than we think.

Don't let the "global warming" argument here fool you. That is simply a way for governments to sell the real problem which is looming scarcity of oil and rationing of fuel supplies. This of course will be terrible for the economy and slow things down even more, it is simply another form of austerity. I agree with you that the only upside to this is it may provide some stability when shortages arrive but it won't matter when unemployment is higher due to lower productive capacity and you can't buy TEQ's anyway.

The global warming marketing approach is being used to prepare people for peak oil because it is the only way you can sell it, nothing more. The greens need to understand that in the coming years the oil supply is going to fall dramatically and this is going to cut carbon emissions far faster than any government imposed fuel rationing austerity program or cap and trade program. The earth will be just fine but you won't have a job or anything to eat.

This is not a positive story, it is a recognition of a lower standard of living that is coming for us all.

I think you are missing the point. The TEQ's are handed out, not sold, to the public. If anything, the average person might be a seller of TEQ's, not a buyer, as the few wealthier, more extravagant, consumers push up the per capita average beyond what the poorer fractions are presently using. It's a bit like the difference between the median and the mean prices of houses or cars. As Peak Oil really begins to impact the economy, the poorest might not be driving or have a job, but they might also be able to stay warm in winter and buy food with money from the allocations they might sell.

I don't think this is about a ploy to use global warming as a smoke screen to prepare the public for Peak Oil. That's because one can expect that after Peak Oil, relying on the market would shift the focus toward other forms of fossil carbon, such as tar sands, coal or even oil shale. All those alternatives would produce more carbon per delivered unit of energy than does oil. Only natural gas and LPG would produce less and those are going to run out eventually as well. The TEQ plan is set up to provide quotas based on carbon content of the fuel, which would hit the higher carbon emitting fuels harder than the alternatives...

E. Swanson

I would also add that a lower carbon lifestyle is a healthier lifestyle. A lot of deprivation is in the idea of the beholder. Of course, if one is determined to sit on one's fat ass, then this is all seen as a downside.

What I am saying is that the world economies don't face a problem of producing too much carbon in the future, they face the problem of having an energy deficit. These carbon based alternatives you list are very expensive and induce recession through higher energy prices. That means fewer people working and maintaining high energy lifestyles and thus lower demand for all carbon based fuels.

It would be wonderful if our biggest problem in the world was how to devise schemes to contain carbon because that would imply continued economic growth. Well, we know economic growth is not in the cards in face of energy shortages and/or very expensive energy so why waste our time talking about carbon containment? I believe it is because it is the only way you can "sell" energy scarcity and get people willingly on board with trading down their standard of living.

The Peak Oil problem isn't about more growth at all. Economic growth is an increase in production/consumption of what ever people want/need. A reduction in energy availability implies a reduction in output, that is, negative growth, at least over the short term. Just staying even, that is, maintaining the production of goods and providing services we now expect, will be difficult. Yes, some of those high carbon alternatives are also going to be expensive, but, coal isn't a high cost alternative at the moment, nor is natural gas. These will become more expensive as the demand for them would likely increase rapidly after Peak Oil, because that's the way the market works when there's a shortage.

One major benefit of a rationing scheme is to slow the rate of increase in market prices, as the rate of increase in demand of those high carbon fuels would be kept low or even turned around. There will be no need to "sell" energy scarcity, as Peak Oil brings higher prices to the existing market for all to see. Of course, given the vast network of economic commentators who have no clue, the public may be confused and not see the basic problem, which is, there isn't going to be as much oil available next year as last year, as production declines...

E. Swanson

"Economic growth is an increase in production/consumption of what ever people want/need" - which directly ties to an increase in energy consumption. So if energy supply is declining than increasing consumption cannot be maintained and as a result all carbon emissions are reduced. Wouldn't you agree? I doubt you accept the neoclassical economic view that production and consumption are simply a matter of labor and capital as that completely ignores natural resource scarcity.

Your approach to this is highly academic and doesn't see the real world unintended consequences here. Rationing will not slow the rate of market prices, it will simply accelerate recession and unemployment. You wouldn't get enough global cooperation to stem the tide of rising prices. If the U.K. rations the OPEC nations would just consume more internally or send it elsewhere. As we know ivory tower solutions have terrible results when applied to the real world.

The production of goods and services depends on energy supply, but not in direct proportionality. For example, the incremental net energy to download a book to a Kindle is less than the incremental net energy to harvest timber, make paper, print books, warehouse books, and transport them to the customer.

But what is the energy cost of maintaining the infrastructure such that you can build Kindles cheaply in China, ship them globally, sell them at an attractive price point, and maintain the Internet?

The cost of making and selling Kindles is less than the cost of maintaining pulp wood forests, paper mills, printing plants, book warehouses, book retail stores, etc.

The costs of creating and operating the internet have to be spread over the various services carried on the communications infrastructure. So you have to compare the cost of the communications system with the costs of the transportation system. The communications system is a smaller part of GDP than transportation.

If it didn't cost less, we wouldn't be going to digital media instead of physical media.

Note that there is also less waste, since there are no books to be sent to the landfill or incineration plants.

Sending books to landfill is an environmental and cultural crime.

Better to send 'em to a worm bin and make vermipost.

99% of all books are not worth saving. Take this short list for example:

1. The Tae-Bo Way by Billy Blanks
2. Awaken the Giant Within by Tony Robbins
3. Courage and Consequence by Karl Rove
4. Collector's Guide to Dolls of the 1960s and 1970s by Cindy Sabulis

I encourage this meager method of carbon sequestration.

True, books should be recycled. But I'm never sure whether they are eligible for recycling or not because of cloth and/or plastic in the covers. Even if you cut off the covers, there can still be cloth and thread in the binding.

It would be nice if books had a recycling indicator like the trangles on plastic containers.

the embedded energy of a Kindle is huge, compared to a tree, and has a larger carbon footprint, if the tree is replanted. The useful lifetime of a Kindle is the shorter of - accidental damage, electronic failure due to tin whiskers, being dumped in favour of Kindle 2.0, or the collapse of the internet/global finance. The useful lifetime of a book is between 30 and 300 years, depending on quality of construction. A lot of people can read it in that time.

The useful lifetime of a book is between 30 and 300 years, depending on quality of construction.

If you believe that, I have some DOS manuals that you can have for list price.

I couldn't quickly find any statistics, but I'd bet that the book that walks out of Barnes and Nobles today has a better than 50% chance of being in the trash within a year after being read by 3 or fewer people.

I think people who buy books tend not to throw them in the trash. Not least because they're so expensive. They keep them, or pass them on to friends, family, coworkers, or even total strangers - by donating them to charity, or reselling them, swapping them through websites like Bookmooch.com, or just releasing them (Bookcrossing.com - I've considered donating some peak oil books that way).

Indeed, one of the biggest problems people have with the Kindle is that you can't resell or lend your books. Amazon has sort of addressed that by allowing you to lend titles.

There are some books with built-in obsolescence. The DOS manuals you mention - though really, few people actually bought those. They came with the software. I confess, I only recently threw out my old DOS manuals. I'd kept them for reference, but finally realized everything I needed to know could be found via Google. Textbooks are another example. You can't resell them or even give them away. (But people who buy them tend to keep them for years before realizing they no longer need them.) I see people trying to sell Sylvia Porter's New Money Book for the 80's on eBay, but they'd probably be better off tossing it.

I'm tempted to get a Kindle, not least because it allows you to keep a ton of books at hand without cluttering up your living space. But you're at the mercy of Amazon if you buy a Kindle. They can reach out and remove things from it, without so much as a by-your-leave. They've also been known to cut customers off for crimes such as returning too many purchases. You'd still have the Kindle books you purchased, but couldn't buy any new ones.

Amazon Book and Textbook Buyback will give you a gift card in return for used textbooks. Other book merchants have similar services for buying used books.

However, most books that I have are not eligible because they are not worth what it would cost to ship, warehouse and resell them.

Only for certain books.

Textbooks in particular have a short half-life. It's the only way their publishers stay in business: constantly coming out with new editions.

As a college professor, this burns me up. The textbook industry is a hideous scam, like the rest of our culture has become. They often come out with new editions after a couple of years with essentially no new content - just rearranged chapters and page numbers to screw up your syllabus.

And now my college requires that you specify the newest edition of the text in order to get the best deal from their book service, so there is no market for used books. These things are not inexpensive. When I was a student, you could save big bucks by buying a used book or the previous edition, which was good enough.

Our (talkin' USA here) whole culture has become a money-grubbing, greedy, money-is-the-only-measure-of-anything cesspool. I guess it's just the logical conclusion of Life, Liberty, and the Pursuit of Money.

In conclusion, ack!

Money grubbing as the publishers of books and periodicals are now, I think that it is about to get worse.

In the future, results will be incorporated into information systems, somewhat like Watson, the system that IBM has built to win at Jeopardy. Once the information base has been integrated within such a system in a data center in the cloud, you will be able to ask it questions and get answers. However, you will never be able to gain full access to the complete set of data and logic in the information base, and you probably couldn't make use of it if you could.

Users will, for a price, be able to formulate questions about topics. The user will be able to get back something like a wikipedia article, but it will be specifically tailored to provide the answers to their individual question, rather than being a dump of a static page on a topic.

That way, the holders of the information will no longer worry about users getting their hands on a meaningful part of the underlying information and they will have great control over their intellectual property.

this burns me up. The textbook industry is a hideous scam

My son complained to his prof about having to pay $330 for a general physics text. He couldn't get out of it, because the price includes the software license for turning in the homework. Definitely seems like a scam to me.

Yes, that's the latest way they extract money. They link the textbooks with the software that allows students to turn in assignments. No sharing books or photocopying someone else's textbook any more.

Here are some free college level science books http://www.techbooksforfree.com/science.shtml

Here is a good general physics textbook for free. http://physics.nmt.edu/~raymond/books/radbook1.pdf

$330 for a general physics text is criminal and the prof should be held accountable!

The problem is that the professors have to use the software, and that means the students have to buy the expensive textbooks that go with it. The choice of software is usually made by the school, I believe. Plus, these classes are so huge - hundreds of students, sometimes - that there's no other way homework can be tracked and checked.

Basically, they're replacing people with software. They're even getting rid of the teachers.

Basically, they're replacing people with software. They're even getting rid of the teachers.

Well, I guess that makes everything all hunky dory then! Pretty soon they can eliminate the students too and replace them with software as well...

And while I understand your point, the reality is that nobody HAS to do anything.
BTW back in the 70s I went through what is a right of passage in Brazil, a full year of college prep, the classes were filled with hundreds of students and we had class material that was xeroxed and stapled together.
Somehow most of us managed to get into a university. We didn't have any software either...

1) Replacing the teachers with software can lead to no need for the school building and all of its costs - instead the parents get to foot the bill for keeping the kid at home, using the software.
2) Many of the graduated students have been replaced with software. Gone is the typing pool and many workers are replaced with automation.

Sooner or later the scam will break down. All the students will get iPads or equivalent e-book readers and download a year's supply of textbooks off the University web site for a nominal fee (e.g. $9.99 a book). The professors will get a modest royalty on sales like they do now, the grad students will do all the grunt work of word processing and uploading for their usual coolie wages, and the textbook manufacturers will be cut out of the loop completely.

This will occur over the dead bodies of the textbook manufacturers, of course. It will do to them what Wikipedia did to the encyclopedia salesmen. Let's hope they don't get the politicians to gimmick the laws so students are forced to buy textbooks only from official bureaucratically-certified textbook floggers.

The linked software scam will break down, too, because it's easy to find open-source software to do the same thing, and there are lots of underemployed grad students to set it up. Again, the textbook manufacturers will try to find some pretext to prevent this.

Sooner or later the scam will break down.

It sure will. 80%+ of higher ed will be shut down by 2020.

Here is a very good question to ask: what value is a university or college education in a period of massive unemployment? Should the debt be avoided and other skills learned now?

I have about 3,000 books in my library, somewhat chaotic from Mills and boon to all my school text books to my well thumbed editions of the American Civil war salvaged from an American library on a Base that closed down here in Europe. The word salvage stamped in the front cover always causes me to winge. I tend to treat them rather callously turning down the corners of the page to leaving them face down on my desk open so I don't lose my page. My main complaint thou is that many are not printed on acid free paper. I have a first edition of a novel from 1789 the pages are almost a white now as they were when they were printed, but many of my penguin editions that I purchased in the 70s are brown and crumbling, give them a few more years they will less than useless. Books on how to do things such as how to make Portland cement, prune a tree or shoe a horse will be more important to our children's children if they are to survive. I have never spent one penny on buying a battery to read them. Well produced books on acid free paper is a better investment for our future than than all the knowledge in the world etched onto a blue ray disk that costs a couple of dollars when your lights go out for good. Just my ten cents worth as you say in America,

As a business model it's about to come to a shuddering halt.

It's much more cost-effective, and practical, for the poor penniless student to get hold of an eBook version of the text - made either by scanning once-purchased copy, or by removing DRM from a published eBook. Not only it their total bill tractable, they can also carry their entire year's tomes in a pocket.

The golden goose has got strangled by publisher greed.

As a business model it's about to come to a shuddering halt.

There are a couple of different open textbook models. As I remember 5 announced, 2 with books, and a newer one who's goal is to have open source textbooks about open source.

The golden goose has got strangled by publisher greed.

The publishers have slit their own skin, tis true. But they don't understand that they've been drinking the cheap booze of higher ed while sitting in the bathtub of public education. The end of higher ed as they know it is coming - loans and a lack of jobs for the masses with degrees and the temp is going to be turned up on the bathtub in the form of budget restrictions. The publishers are bleeding out and just don't understand they are bleeding out in that bathtub.

if you are willing to invest in some USPS transport, or want to meet on a street corner with you media i suggest


It is a form of collaborative consumption. buy one book and share it with others.

When zipping along in your SUV down I 84, stop into this place. Lot's of writers have over the years, and the Chicken Pot Pie ain't too bad.

Traveler Food & Books
1257 Buckley Highway
I 84 Exit 74
Stafford Springs, CT 06076
(860) 684-9042

Drop off your old ones and pickup some new ones..

The Martian.

Yep! I've been there. Though I was driving a vintage 4cyl manual trans Volvo wagon with four adult passengers, plus luggage on board, at the time. Though I have to say, while their fiction section is pretty good the science books are pretty thin... but hey, any book exchange is a good thing!

However,the embedded energy of a Kindle is huge, compared to a tree

Really? How ya doing that energy accounting?

Because on a mass converted to energy - a tree of 30+ years (say used for dimensional lumber VS a bonzi) wins both chemically and atomically.

If the oil used to make the Kindle came from yearly crops VS old ancient sunlight - the photons captured to make the items are far more in the tree than the Kindle.

I'm betting you can have more toxic metals in the tree, if one was trying to have the tree be filled with metals and toxic ones.

eMergy accounting - A kindle should score higher there - but that one could spend hours debating how many dancing Odum's you could get on a pinhead too.

So - exactly how are you coming to your claim?

He pulled it out of his a... I mean he pulled it out of his hat.

Oh gosh no, nothing the least bit energy or resource intensive, or even the slightest bit toxic about mass production of electronic gizmos. Nevermind that all those e-books will be worthless when the gizmos stop working.

I could say something about "pinheads", but unlike some of the other comments on this thread I will attempt to respect the recent TOD policy calling for "better comments".

You can have a thousand of the best flashlights in the world, but not one of them will do you any good if you only have one battery.


Thanks for the restraint, Jerry.

Clearly, they are apples and oranges in many ways (Kindle/Book) .. I'm not averse to digital tech, but I'm particularly not a big fan of the proprietary e-books in particular. Besides needing Power and Functioning Hardware and Software, it has tendrils of quasi-ownership and wireless access that can surely reclaim what it likes if the right Gremlins take charge, at whatever level they will.

Considering the mention of DOS above, I'd still be happy with most of my essential E-titles as ASCII files, save for the really important stuff, which I want in paper. PDF and DOC are ok, as long as I can make a hard-copy and keep it on whatever disks or cards I want to.

Go, Gutenberg. IP is OK, but don't fence in all thought!


The PDF/A standard is probably the most appropriate way to store documents that can't be represented by ASCII text. It is a restricted subset of PDF that removes dependencies on the reader environment. For example, fonts are embedded in the document instead of being assumed to be available in the reader. http://en.wikipedia.org/wiki/PDF/A

I could say something about "pinheads"

You could. Like how it sure sounds like 'arguing about how many Angels can dance on the head of a pin'. You'll also note the gent referenced is the long dead Howard Odum - creator of the eMergy accounting method. Dancing is not really something he can do anymore, on the head of a pin, a bunch of baby crickets or a bamboo floor.

You could have also actually shown energy math for a whole tree VS a Kindle or even paper VS the Kindle. Keeping in mind that paper EQ have tolerances so tight that you have to keep the big drum rolling because if you stop it its own weight will take it out of true.

Wildcatter wrote:

Rationing will not slow the rate of market prices, it will simply accelerate recession and unemployment.

The problem is that Peak Oil will appear as a shortage in available energy to the world's consumers. One scenario says, with today's economic system, that shortage can be expected to lead to higher prices and also, recession. Another recession (assuming the last one is over) would cause more unemployment and thus less energy use, which would push the prices for oil down. But, lower prices for oil would remove the incentive to find more oil, setting up a situation for a further decline in available oil. This process could lead to financial collapse, whether or not it were possible to keep the oil flowing at a slowly declining rate under ideal conditions. A rationing system would not stop the price rise, only slow the rate of rise and lessen the hardship for the people living in the importing nation, IMHO.

The problem is, what course of action would be best for a nation (or nations) to address the instability of the impending shortage? I think it's rather obvious that a raw market price mechanism would become highly disruptive in short order, including military adventures to forcibly extract those reserves still available in OPEC. Is that what you want? If not, what's your alternative, other than the usual 'Merikan red neck genocidal attack?

E. Swanson

"What I am saying is that the world economies don't face a problem of producing too much carbon in the future, they face the problem of having an energy deficit."

And what I am saying is you are incorrect. We have been raising the level of carbon in the atmosphere since at least 1850. That means economic and physical activity would have to roll back to at least that level just to keep emissions from rising, let alone start falling. With 7 billion people on the planet, as opposed to about 1.6 billion then, good luck with making that happen by sheer chance.

Worse, we know that natural sources of GHGs are rapidly increasing in their emissions from melting land- and sea-based clathrates. If they continue to accelerate, they will overtake even civilization-based emissions. Since we know now that Greenland can melt out at even 400 ppm CO2, the chance of those emissions shutting down and stopping are non-existent without reducing temperatures back to the levels of at least 1850, and we can only do that by removing carbon from the atmosphere.

Yet, in a post peak world of shortages, what do you think people will do, particularly if this means chaos ensues? They will use what they can get their hands on. Use of coal and wood will skyrocket. People will burn what they have to for energy, to eat and to stay warm. The black soot alone would likely lead to continued melt even as emissions fell. But let me repeat: reduced emissions solves nothing. We must start to draw down the carbon content, so emissions must be net negative.

You need to stop listening to people who do not understand climate science and are PO zealots if you hope to understand our predicament.

That's because the industrial revolution started in the 1800's - it is now reversing as fossil fuels deplete. In a post peak world of shortages - carbon emssions will fall off a cliff as high energy lifestyles will shift to low energy energy lifestyles as they won't have enough money to maintain anything else.

While I don't deny that the climate may be changing it is a fools errand to try and create impractical solutions for such a predicament. Especially since energy shortages will have a far greater effect on your immediate future including your ability to be concerned with issues that will become far less important when you are struggling to get by.

As Black Dog pointed out, you are the one creating a fool's errand. As with Aleklett, Rutledge, Hirsch and some editors here, dismissing the rapidity of climate change and the extent already is worse than a fools errand, it is a disconnect with facts.

I pointed out that clathrates are destabilizing and that this is accelerating. (See Walter, et al., '07 - '10) Not only that, but there is still a minimum of 0.6C warming coming from inertia in the system. That means the system will be warming for another 100 - 1000 years regardless of what we do with emissions unless we can actually get to a net decline in atmospheric carbon. This is because natural processes of sequestration act on very long time scales, thousands of years. A fall or collapse will not necessarily lead to a reduction in emissions to cause a draw down of emissions.

Your analysis and conclusions are both fatally flawed because you do not take these two issues together, as equally dangerous parts of a system. If you are going to argue this as anything other than ideology or PO myopia, you'll have to give us an accounting of emissions that shows a decline sufficient to begin sequestration on a scale of < 100 years.

If climate change is happening it is due to carbon that has already been released into the atmosphere and we now have no control over it - the damage has arguably already been done.

In addition do you really expect to achieve a "net decline in atmospheric carbon" without kicking many people off the industrial train and into poverty? That IS how you achieve this. There is no policy prescription or technological "magic" that can achieve these reductions and maintain economic progress much less maintaining a global "middle class".

It is complete academic fantasy to think we can achieve such carbon emission declines without severe economic pain and that includes yourself. I am suggesting that you need not worry about a net decline as we will go into it naturally through fossil fuel depletion. Whether you like it or not that is how it will happen - it will not happen through legislating or market manipulation because there will be no concerted effort around the world to willingly push economies into this type of energy recession. Market forces will dictate that through high energy prices and ensuing market corrections i.e. higher unemployment.

the damage has arguably already been done

How many times in history have people reached a point where they thought "it can't possibly get worse", and then later only dreamed of being able to get back to that point?

What I am saying is that the world economies don't face a problem of producing too much carbon in the future, they face the problem of having an energy deficit.

You mean you believe it is either one or the other? Either/or? No, it is definitely a case of either one or the other, both are true. We are definitely producing too much carbon and we face a huge energy deficit, more so in the future than right now. And the energy deficit will not solve the too much carbon problem, it will only make it worse, much worse. As we convert to more and more coal for energy and perhaps even coal to liquids, the problem will get worse.

However it is my belief that the energy problem will manifest itself much sooner than the CO2 problem. Of course we are already feeling the effects of both but the energy problem will hurt much sooner and much worse than the global warming problem. Unless you are a polar bear of course.

Ron P.

Your comments on climate are factually incorrect. Climate science predates PO by at least 50 years. It's popular awareness predates popular awareness of PO by two or three decades. The interplay of climate and energy is vital. The two should not, and cannot, be separated. Convincing yourself it is propaganda is self-defeating because the solutions chosen must deal with both issues effectively, not just one of them.

Falling economic activity does no guarantee a drop in emissions as people do whatever they must to survive. Coal use would likely rise, in fact, providing a double whammy of emissions and soot.

Some sort of managed program is needed, though it would be best if change were voluntary. As with dieting, a diet based in a distortion of daily life rarely holds, while a change of lifestyle can last forever.

Shift to coal?


Humanity will go from tree to tree, woodpile and collection of plastic they can find and burn for heat.

The stripping of trees from the land will cause a change in the hydrological cycle and the washing away of the soil.

It shall not be pleasant - but it will smell of charred wood and plastic.

The future is non-linear. An unmanaged decline is chaos, in the colloquial sense.

An unmanaged decline is chaos, in the colloquial sense.

Did you misspeak here or what? I would imagine the exact opposite, an unmanageable increase in chaos. Perhaps you were thinking of an unmanageable decline in order?

But yes I believe it will be very non-linear. Catastrophic events are never linear or gradual.

Ron P.

I think you misread. ;-P

The stripping of trees from the land will cause a change in the hydrological cycle and the washing away of the soil.

It is already happening. The recent floods in North East Australia had washed away (to the ocean) millions of tons of topsoil in only three weeks. Technically they are doomed, with agriculture down in production for a decade and they are also forced to export all coal at a lower price and import food and going almost bankrupt for that... But theorically they could switch, now, to permaculture as a new law for agriculture in Australia.

Aleklett, Hirsch et all are not dumb people. Are they blind?

What binds these people together is that they see Peak Oil as coming soon, and not as a bumpy road, but rather a movement which is monumental in it's scope and implications and which will alter the world without comparison for the next 15-20 years minimum once the subtle decline sets in. Because even with 2-4 % decline per year, after 2 or 3 years there will be need for wars to cover your expenses and food supply for many countries. This means that even with your 0.6 C that comes with inertia, the switch to coal will not be quick or strong enough to save(in lack of a better word) the world from any real meltdown.

I'm agnostic on climate change. There's no scientific denial that it has occured and continues unabated(and will continue to do so even if all emissions stopped today) we must realise that any real progress in this area will not be voluntary. If not even the most environmentally aware sphere of the world, The West, can do anything significant about this, what do you expect of the rest of the world?

What we should keep in mind is that human beings are terrible at forecasting. If you asked most of the respected names in the PO movement 10 or 7 years ago they would almost all paint you extreme scenarios by 2011. PO may not be an Old Testament-style collapse but a series of crises and collapses all around the world stretched out for quite some years after which one region/country may re-emerge from the chaos stronger than the others.

Climate change falls in this category too. You can take most of the respected climate scientists and look for a lot of ridicolous predictions of imminent Doom. James Hansen is just one of many, many people(his 1988 prediction about New York under water 20 years onwards, which would be 2008) who have done this.

Does this discredit the entire climate science? Of course not. But the very fact that many of the most prominent and leading figures in both the PO and climate change communities have often been far more grim and more prone to talk of the Imminent Doom is a fact of life.

Again, this does not discredit neither area but it should remind us that although things will inevitably get worse with added complacency, it musn't necessarily mean the end of life as we know it. Reality is simply far too complex for that.

But to both climate change and PO zealots these are words of heresy and any millimetre one steps away from alarmism is countered with something which can be best compared with religious fervor. Skepticism, not denial, is the foundation of an intellectual debate.

Climate change falls in this category too. You can take most of the respected climate scientists and look for a lot of ridicolous predictions of imminent Doom. James Hansen is just one of many, many people(his 1988 prediction about New York under water 20 years onwards, which would be 2008) who have done this.
But to both climate change and PO zealots these are words of heresy and any millimetre one steps away from alarmism is countered with something which can be best compared with religious fervor. Skepticism, not denial, is the foundation of an intellectual debate.

James Hansen did not predict in 1988 that New York would be under water 20 years on.

In an interview in 2001, a person whose interest is extreme weather recounted talking to Hansen about the subject in 1988 and remembers Hansen describing a scenario in which the West Side Highway would be under water, windows would be taped (an obvious reference to an extreme weather event) and so on. Hansen also predicted more cars in New York's future, without reference to the cars amphibious capability, so presumably he meant driving would still be on relativively dry asphalt roads.

You have done nothing but introduced a non-fact in order to make a point about your presumed reasonableness.
(edited for defammatory content)

Tokens managed by the collective are a solution to "The Tragedy of the Commons". Such a solution could work for any shared resource, including natural resources.

The difficulty is in the management of the pool -- who gets to decide what the per-capita level should be? How do you manage resources outside your own borders -- some sort of tariff mechanism?

The government can't keep its current systems working and secure. Not to mention the cost of setting this project up and it's huge abuse potential. It's a nice idea but would fail. Its link to carbon crediting is enough to raise red flags just on that.

Energy companies should be forced to sort out their tariff system before thinking of adding a more complex, government controlled system on top of an already stupid system.

Also weren't we supposed to be paying more so that energy companies could invest in greener energy. Is it me or is that money just going straight into big profits for said companies? Since they have such good profits, perhaps they should be setting up and/or paying for these schemes instead of the government.

The government can't keep its current systems working and secure.

What is worse is when Government creates a law that the service must be done and done by private industry.

Its how the vampire squids run up a 26 million dollar charge for 9 thousand in lP gas or make a 25 million dollar water project cost 250 million.

Or create situations where for every unit spent on actual Carbon reduction, a unit goes to the Investment bankers.

The last official energy-related rationing act in the UK was in 1942 as central heating was prohibited during summertime (yes it is : as they used to swim in large reserves of coal, brits used to build poor insulated homes and then heat them even in summer months) and domestic coal was also rationed, but anthracite were not.

Now, the closing of smaller gas pumps and the high cost of fuel in UK are no longer able to cut down consumption and we are approaching the point of no-return. A quick nationwide lack of fuel could cause riots spreading in the country.
A rationing act could avoid (for a moment) riots and a sudden economic crunch.

By-the-by I think the last energy-related rationing in the UK was during the Suez crisis around 1956 to May 1957 where petrol was rationed.

Thank you.
You are right. From 17 December 1956 to 17 April 1957. A 10% cut in persian oil export caused britain gouvernment (and others) to take a rationing decision on petrol.

I'm copying here a text from the BBC UK on-line pages ( here : http://news.bbc.co.uk/onthisday/hi/dates/stories/november/29/newsid_3247... )

(november 1956) Supplies of fuel from the Middle East have been blocked ..., causing fuel shortages throughout Europe.
...Businesses will be allowed an extra 100 miles a month in petrol, in addition to the 200 miles a month issued to normal car users. Farmers, religious ministers, and essential local authority workers will be allowed 600 miles a month. A third group, including doctors, midwives, disabled drivers and veterinary surgeons will be allowed whatever petrol they need.
...All petrol stations are asked by the government to restrict daily sales ... so that supplies can be spread throughout the month of November 1956 (and until the end of the rationing period).

How on earth did they control the number of miles? An army of odometer-readers? Was there a black market in odometer adjustment/disconnection?

I have to apologize for asking the following in a DB, but I have no idea as to which thread would be a better fit.

Does anyone know how much gas is there in a cubic foot or cubic meter of rock on average? (I have data for mcf/day/well, but I can't find data for gas/rock, i.e.: volume/volume (normal state) or mass / mass [the latter being more informative IMO])

What is the usual composition of shale gas? How much methane, etc.

Furthermore, can you guys give me a hint as to where I should be searching for the energy used to fracture and (horizontally) drill a typical well?

I'd like to use the data for three purposes. (1) Ballpark guessing EROEI (2) Understanding energy density of shale rock (3) Comparing all this with the enegy stored in the rock as heat at some 10 thousand feet below the surface

Any help would be really appreciated, folks. Thanks in advance.

a)gas saturated pore volume = phi*sg

phi - porosity (fraction)
sg - gas saturation(fraction)

the number of moles, n , of gas in 1 cf is given by n= pv/zRT

p - pressure (psia)
v - volume (cf)
z - gas deviation factor (a function of pressure,temperature and composition of the gas)
T - temperature deg K
R - universal gas constant - 10.73 for the units given.

and for a working example, let

phi = 0.20
 sg = 0.8 
  z = 1.05
  p = 3015 psia
  T= 610 deg K

then n = 0.38 or ~150 scf. (1 mole of gas occupies 379.4 cf at standard conditions). if the gas is methane, then the mass is about 6 lbs.

b) shale gas composition varries all over the map. haynesville is essentially 95+% methane. others may contain as little as 60 % methane. exxon is producing gas in wyoming (not a shale gas) that is ~15% methane with the balance h2s,co2, and n2.

Thanks for the answer. Most of this is taught in high school, I think. (pV = NkT = nRT and the like.)I'm not very comfortable working with US units, but I tried to follow you. :-)
(I'm more of an SI guy as I'm in Europe.)

One question: do I understand you correctly? Your example basically says there is 6 pounds of gas in a cubic foot of rock? Am I right?

If so, is this number reasonable? (As in 'real')

yeah, basically hs physics applied to an ideal gas. for a real gas, you need to introduce the gas deviation factor , z, which accounts for the actual volume of the gas molecules which becomes significant at higher pressures and temperatures.

the 6 lbs methane/cf is correct for the example given 0.38 moles x 16 lbs/mole ~ 6 lbs.

One last question: is this amount reasonable? (I don't know a thing about shale gas... sorry if the question is dumb.)

So assuming there is 6 pounds of gas in a cf of rock, or 96 kgs in 1 cubic meter of rock... does this sound right to you? Realistic? That would amount to roughly 6 thousand moles of methane. That would be 14500 m3 of gas in 1m3 of rock. And that would be 518 GJ.

So roughly 500 GJ in 1m3 of rock. Am I mistaken? If not, is this reasonable?

I'm getting lost...

the 6 lbs methane/cf is correct for the example given 0.38 moles x 16 lbs/mole ~ 6 lbs.

1 mole = 6.022 X 10^23 molecules, right?
1 mole of methane = 16 grams, right?

I'm not sure how you worked out this 6 pounds... 0,38 moles of methane is roughly 6 grams in my book. Which would give 215 grams / m3 or 300m3 of gas in 1m3 of rock. In other words: 10.8 GJ in a m3 of rock.

I may be wrong and you may be right, but we cannot both be right. Where did I commit the mistake?

sorry for the delay. i am refering to lb moles - the molecular wt expressed in lbs. the units work themselves out in the universal gas constant which is 10.73 [psi*cf/deg R].

the universal gas constant is 0.08206 [L*atm/deg K] in si units or 8.314 [J/deg K].

the shale gas plays i am familiar with are overpressured and higher temperature than for my example. porosity and gas saturation are more complex and difficult to evaluate because of the dual porosity (fractures + matrix)reservoir. give me some time and i can work out a typical gas content for the haynesville.

this gets in to an area of controversy. my own opinion is that most of the gas that can be recovered from the haynesville is contained in the fractures while public traded companies want us to believe that the nanodarcy permeability matrix will contribute a significant part of recoverable gas(over a 65 yr well life).

in short, there is no easy or typical value for gas in place that would apply in any general way to shale gas plays.

You wrote:

(1 mole of gas occupies 379.4 cf at standard conditions)

AFAIK 1 mole of gas occupies 22.4 liters (or: 0,0224 m3) at standard conditions. Are you sure your calculation is OK?

let me restate that: 1 lb. mole of gas occupies 379.4 scf.

22.4 liters is the volume of 1 gm. mole of gas.

Thanks for the clarification. Sorry for not having understood it the first time, but I studied biophysics and chemistry at the university back in the day, however, we used the metric system all the time, so '1 lb mole of gas' had up to this point no meaning to me. :-(

I'm looking forward to seeing your calculations as for the usual gas content per cf or cm of rock. In case you don't want to litter this thread, I'm giving you my e-mail address:

gmail and bpartos

(BTW, we have a shale play in my country [Hungary] let me know if you are interested in developing...)

yeah, i will see what i can find on the haynesville.


petrohawk is using a phi*sg of 0.09. the pressure is somewhere in the 8000 psi range, temp around 300 deg F and with a molecular weight of 16(methane), z would be about 1.23(from correlations), then gas in place per cf of bulk rock volume would be about 0.07 moles = 1.14 lbs or 27 scf.

using petrohawk's claimed 10 bcf/ well eur would indicate a recovery in the 7 % range for their best wells on 640 acre spacing. petrohawk is claiming they can drill and complete a well for ~$ 10 million or $1/mcf (~$1/mmbtu).

Thanks a lot.

I'm trying to digest it.

eastie - When you looking at the amount of NG is present in a rock there are several parameters. First is the pore space (porosity)...how much isn't rock but open areas between the very small rock particles. A high porosity can be 30+%...low porosity less than 10%. But the porosity isn't 100% NG. There almost always a certain amount of water present...the water saturation. The water can be as low as 10% and can range to 70+%. So 1 cubic foot of rock might have 25% porosity (0.25 cubic foot of pore space). But maybe 35% of the pore space is filled with water so there's only 0.25 cf X 0.65 = 0.163 cf of NG in 1 cf of rock. But rarely can you produce 100% of the NG in the rock. A good recovery factor can be 70% so that 1 cf of reservoir rock might only produce 0.163 X 70% = about 0.1 cf of NG. So how many mcf is 0.1 cf? Depends on the pressure. A high pressure reservoir might contain 1500 mcf/acre-foot. A low pressure reservoir might only contain 300 mcf/acre-ft. An acre-foot is one foot thickness of the reservoir covering 1 acre. There would be 42,560 cf of rock in a one acre wide by one foot thick reservoir.

To make it more complicated those numbers apply to the more conventional type reservoirs. That approach doesn't work well with reservoirs like the shale gas plays. The best we can do is guess that there is X mcf per cubic foot of shale gas reservoir. Guessing a recovery factor is even more difficult even after you've depleted a well: you rarely know how much of the SG reservoir you actually drained. So you'll see folks estimate so many mcf from a specific volume of SG reservoir that might be produced: take that number as a very rough guess.

Composition: a wide rage but typically it's predominantly methane with little heavier hydrocarbons. As far as the energy used to frac a well I can't give you a number. In the oil patch we talk horse power and $'s...not energy units. But I will offer that the energy input into frac'ing even a modest SG producing well is very small compared to the energy gained from the production. So small that the energy input has virtually no bearing on the value of drilling such a well. The total cost to drill, frac and produce the SG well is the critical metric.

EROEI is a very tough nut to crack: do you count the energy used to build the drilling rig and then amortize that number by X number of wells drilled? Do you count the energy used to run the overhead of the company generating the shale gas drilling projects? Do you factor in the energy used to transport the NG to a distribution center (pipelines don't function w/o energy input)? Do you count the energy used to make the steel casing used in the well? Do you count the energy used to mine the iron ore that was needed to make the steel?

In the oil patch we use a much simpler metric: $'s. It cost $X to produce Y mcf of NG from a SG well. If it can be done at an acceptable profit level you drill the well. If not you don't drill it. Though the EROEI may be an important number in some quarters it has never been nor will ever be used in the decision making process of developing a SG resource IMHO. If a company has a SG well to drill that will make an accpetable profit they'll drill it regardless of what the theoretical EROEI might be.

Thanks, ROCKMAN.
(I read your posts a lot. I'm not very active posting myself these days, but it is always a pleasure to learn form you guys.) To the point, though.

To make it more complicated those numbers apply to the more conventional type reservoirs. That approach doesn't work well with reservoirs like the shale gas plays. The best we can do is guess that there is X mcf per cubic foot of shale gas reservoir.

Can you give me a typical guesstimate?

It is a SHALE play.
Let's say the volume of the reservoir is 10^12 cubic feet. At which point do you drill? How much gas needs to be there for you guys to drill it?

a) mass ?
b) volume ? (as if it were at sea level and 32 degrees Fahrenheit or 0 degrees C)

What are the typical numbers?

eastie - Finally an easy question: typical estimates of shale gas in place? It has been measured as low as a few thousand mcf/as-ft to many millions of mcf/ac-ft. And these are not just guestimates: they'll collect full diameter cores from test wells, take chunks and grind them up in blenders and measure the NG liberated. This approach is the source of some of those huge multi-trillion cubic feet of IN PLACE RESOURCES. Note: I said RESOURCES and not RESERVES. I'm guess you're trying to come up with some sort of material balance approach to measure viability of SG trends in general and perhaps compare different plays. I'll make an over statement and point out that such analytical approaches (used by all the serious SG players) tend to be worthless. In another over statement it makes no difference how much NG there is a unit volume of a SG reservoir or, in fact, in the entire trend.

In the end the value to the economy of any SG trend is a function of the recovery per dollar spent drilling it. The reservoir dynamics of the SG are about the most complex you'll ever find. One SG play might have the highest NG concentration per unit volume on the planet and yet be one of the worse investments around: the majority of the wells lose money, negative EROEI, ultimately very poor ultimate recovery. How much NG is in the reservoir isn't the key...it's how much will be drained. Much to complex to try to cover in any meaningful detail so I give a simple example. SG play X has a per until volume of 1 million cubic feet of NG in place. By regulations wells are drilled on 80 acre size units with the reservoir being 200' thick. I'll save you the math: that's 16 million mcf or around $60 million a today's prices. A well costs $6 million. A great investment, eh? The problem: that $6 million well can't drain the entire 80 acres. In fact, in some of the poorer areas the well only drains 5 acres. So that $6 million investment recoveries less than $3 million. But realize: many of those money losing wells will be drilled. You don't know it's a money loser until a year or so after you began production. Unlike many conventional reservoirs you really can't tell if a SG well will be profitable until you not only drill and complete it but also produce for some time. Maybe 1,200' away another horizontal well recoveries $30 million so that investments looks pretty good.

So consider this when someone like the USGS says there are 10 trillion cf of reserves IN PLACE in some SG plays. So how much will be produced (at a particular price, of course. Remember wells that aren't drilled because of low NG prices don't produce anything)? If one of the most knowledgeable SG drillers has a damn hard time guessing what a well drilled between of his existing wells will recover how much would you bet the Survey can make a good guess about recovery from areas where no wells have been drilled. And I'm not saying certain SG plays aren't viable even at low prices. But I'll let everyone in on a little secret how the oil patch views the SG plays. We call them P&P plays. That would be "poke and pray". Lots of very smart folks will study a play in tremendous detail. But in the end you still have to drill a well and pray it makes you money. And even when the last well made an obscene profit (from my lips to God's ear) it doesn't mean the next 3 won't be losers. We had a boom in SG drilling a few years for one primary reason: rising NG prices allowed optimism that even mediocre wells would still do OK. The now low NG prices have destroyed that hedge. Now companies have to be very precise in their analysis to drill any well. And to be blunt in most plays the analysis cannot be that precise.

I don't want to discourage you from your exercise...it's a noble venture and a good mental exercise. But just be prepared for a difficult road that could lead to a dead end for your goal.


I really appreciate your time and effort. I think I now get it.
(Actually, it wasn't me who had this question. I was asked about it, and had a gut feeling roughly the same you've just given: It makes no sense comparing in situ gas content. But me being an absolute non-expert when it comes to gas, I thought it would be a good idea to ask you guys here.

Thanks one more time to both you and elwoodelmore.

WTI - Brent: Increasing Brent Premium
Here is a question to the group. If it has been discussed before please point me in that direction.

Is the increasing Brent premium (~$8) to WTI indicative of price manipulation at Cushing? We know that the U.S. is, by far, the largest consumer of crude oil. If the Saudis were intent on keeping prices below $100 per barrel to ensure that the world economy does not go 2008 redux (redestroying the price of crude), wouldn't it make sense for them to take steps to 'flood' Cushing so that it appears to us and the rest of the world that there is ample supply? That is, U.S. transparency on consumption, production and supply levels is greater than any other place in the world and, if you want people to notice your signal that there is plenty or excess crude, then the U.S. is the place to send the signal. Is the increasing Brent premium reflective of relative shortages in other markets created by an attempt to influence the U.S. supply levels? I.e., is this increasing premium actually a reflection that there is very little to no excess supply capacity?

If the Saudis were intent on keeping prices below $100 per barrel to ensure that the world economy does not go 2008 redux (redestroying the price of crude), wouldn't it make sense for them (the Saudis) to take steps to 'flood' Cushing so that it appears to us and the rest of the world that there is ample supply?

Now how would it be possible for Saudi to flood Cushing? Saudi Arabia sells oil, via contract, to buyers all over the world. Some of those buyers are in the US. Are you saying they are conspiring with Exxon, BP, Valero or some other oil company in the US to buy oil from them then ship that oil for storage to Cushing? Naw, I really don't think so.

That being said I really don't think the Saudi's are all that anxious to cut the price of oil right now. But I do think it is true that they have little excess capacity.

Ron P.

My view, cygnusx1, is that the rising prices of both WTI and Brent are indicating that there is rising global demand and little spare capacity. The price difference between WTI and Brent is an indicator that relative demand is weaker in North America (especially the U.S.) than in the far east, especially Chindia.
But, what do I know?

Saw an article in Bloomberg yesterday about this. First, there are some shortages associated with North Sea fields that have increased the price and second, Brent may become a "replacement" for WTI as a pricing metric as there are a number of Asian, European, and some ME supplies tied to the Brent value. Finally, Brent does not seem (for now) as subject to the short-term speculation as WTI is.

WTI / Brent


Just in case this hasn't been posted:

The EIA sent this out yesterday. Good background on Strait of Hormuz and alternate routes:

World Oil Transit Chokepoints

Located between Oman and Iran, the Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Hormuz is the world's most important oil chokepoint due to its daily oil flow of 15.5 million barrels in 2009, down from a peak of 17 million bbl/d in 2008. Flows through the Strait in 2009 are roughly 33 percent of all seaborne traded oil (40 percent in 2008), or 17 percent of oil traded worldwide.

the Strait of Hormuz ... is the world's most important oil chokepoint

Sergei Troush, Senior Research Fellow at Russian Academy of Sciences, said in 1999 (at the Brookings Institution’s Center for Northeast Asian Policy Studies) that :

“with such a heavy dependence on the Middle East for oil, U.S. strategic domination over the entire region, including the whole lane of sea communications from the Strait of Hormuz, will be perceived as the primary vulnerability of China’s energy supply. It would not be an exaggeration to say that the key objective of China’s oil strategy will be to avoid this strategic vulnerability.”

Troush also argued that China’s rapidly rising demand for Middle Eastern oil would inevitably forced it to challenge the United States for regional influence. And that was one of the major reasons for the war in Iraq. And recently builded Russia-China pipelines are there to clarify the question.

the rest here :

Nicole Foss is speaking in Chicago tonight at Transition Rogers Park.


RE: Climate Change Not All Bad For Some Nations: Report

The link is broken. Not your fault, Leanan, I think they removed the story. Maybe because of this:

Climate change study had 'significant error': experts

A climate change study that projected a 2.4 degree Celsius increase in temperature and massive worldwide food shortages in the next decade was seriously flawed, scientists said Wednesday.

I do not believe any regional projections of crop yields have a high probability of being accurate. Not for this year and not for a decade from now. There are so many unknown unknowns that the only thing that is nearly certain is change.

Reality is scary enough. No need for errors to give it a boost.

An article:

A new analysis of the Northern Hemisphere's "albedo feedback" over a 30-year period concludes that the region's loss of reflectivity due to snow and sea ice decline is more than double what state-of-the-art climate models estimate.

The findings are important, researchers say, because they suggest that Arctic warming amplified by the loss of reflectivity could be even more significant than previously thought.

"The cryosphere isn't cooling the Earth as much as it did 30 years ago, and climate model simulations do not reproduce this recent effect," said Karen Shell, an Oregon State University atmospheric scientist...

...compared Northern Hemisphere cryosphere changes between 1979 and 2008 in 18 different climate models to changes in actual snow, ice and reflectivity measurements of the same period. They determined that mean radiative forcing – or the amount of energy reflected into the atmosphere – ranged from 4.6 to 2.2 watts per meter squared.

During the 30-year study period, cryosphere cooling declined by 0.45 watts per meter squared.

The research:

Its interesting how the models all seem to be skewed more optimistically than the unfolding reality. I wonder if its a psychological trait of humans or if the cards are simply not falling our way. IMO we will do little to reduce climate change. Our window of opportunity has closed or soon will. Eventually, exhaustion of fossil fuels will halt the process but in the meantime I agree with the point made above: we will burn everything in sight in our attempt to hold onto our standard of living or to simply feed ourselves and keep warm. I also believe that some of the policy attempts being undertaken in the name of halting climate change are disguised policies for preparing for the approaching energy crisis. Climate change is easier to address, perhaps paradoxically, because, after all. its effect will not show up for "another 50 or 100 years." The looming energy crisis, OTOH, would cause immediate panic if it were widely understood. Can't have that.

RE: Climate Change Not All Bad For Some Nations: Report

The link seems to work for me
I think this was discussed in detail over at Realclimate http://www.realclimate.org/index.php/archives/2011/01/getting-things-right/

Getting things right
Filed under:

* Climate Science
* Greenhouse gases

— gavin @ 20 January 2011

Last Monday, I was asked by a journalist whether a claim in a new report from a small NGO made any sense. The report was mostly focused on the impacts of climate change on food production – clearly an important topic, and one where public awareness of the scale of the risk is low. However, the study was based on a mistaken estimate of how large global warming would be in 2020. I replied to the journalist (and indirectly to the NGO itself, as did other scientists) that no, this did not make any sense, and that they should fix the errors before the report went public on Thursday. For various reasons, the NGO made no changes to their report. The press response to their study has therefore been almost totally dominated by the error at the beginning of the report, rather than the substance of their work on the impacts. This public relations debacle has lessons for NGOs, the press, and the public.

The article linked up top; Saudi boosted oil output to cool rally: International Energy Agency and this article: OPEC 'hikes output as oil prices rise' get their information from a release yesterday of the IEA's "Oil Market Report". This report is subscription only and this information was not in the "Highlights", also released yesterday. Anyway...

But the IEA, which advises 28 industrialized countries on energy policy, reported Tuesday that Saudi Arabia, the world's largest oil producer, has been quietly raising output over the last six months...

The kingdom's December output was pegged at 8.6 million barrels a day, 100,000 bpd more than a revised November estimate of 8.5 million bpd, the agency said.

That is well above what all other estimates put Saudi's increase last month. Their own "secondary sources" put the increase at 62 kb/d. However...

The IEA said "preliminary market data" indicated Riyadh "is on track to increase production again in January."

That is the opposite of what Tanker Trackers are saying, at least for all OPEC.

Shipments will drop 0.9 percent to 23.51 million barrels a day in the four weeks to Jan. 29 from 23.72 million barrels in the period to Jan. 1, Oil Movements said today in a report. The data exclude Ecuador and Angola.

And that is down 1.7 percent from the four weeks ending December 25th. Those four weeks averaged 23.91 mb/d, 400,000 barrels per day more than the four weeks ending Jan 29th. So if the IEA is right and Saudi does increase production in January then some other OPEC nation will take a huge hit.

However I am guessing that the IEA is just guessing, and guessing wrong. Anyway in spite of all the cheering by the IEA OPEC production in December was still 62,000 barrels below the 2010 record set in February.

Ron P.

The EIA is talking about production whereas Tank Trackers is talking about Shipment. Are shipments exports only or does that include domestic demand as well?
In other words, is the equation


Weekend, we are all aware that the IEA, (not the EIA), is talking about production. Yes shipments are exports only and it does not include domestic consumption. They would not ship oil to themselves. And yes production includes both domestic consumption and exports.

However it should be quite obvious that the more an exporting country produces the more they export and vise versa. I did not mention that because I just assumed everyone knew it. Though most exporting nations are increasing their consumption it is a gradual process. Their consumption does not jump up and down as their production and exports often do.

One more point. The Baltic Dirty Tanker Index fell another .19 points yesterday to its lowest point in months. It had dropped from a high of 1079 on December 21st to 687 yesterday. A tanker glut is indicative of a dearth of oil to ship. That is just another reason I believe OPEC production will be down in January. But we shall see.

Ron P.

Thanks for the reply. The reason for my seemingly naïve question is that (for example) SA exports oil but imports gasoline.
Therefore the domestic consumption is (Production-Exports)+Imports.
BTW, the Baltic dirty tanker index is tricky though because of the change in the underlying number of ships.
You may also want to look at
for a more European focus
http://www.vesseltracker.com/app , a google earth plug in – free if you’re ok with delayed data.
also may be of interest.


BTW, the Baltic dirty tanker index is tricky though because of the change in the underlying number of ships.

Thats and understatement :)
And for tankers you have the single hull/ double hull problem. Forget about DWT slow steaming throws a huge monkey wrench into the game.
On top of this you have fuel quality laws, bilge cleaning etc.

This was useful.


The scrapping yards are conveniently unregulated. And you also have conversion of tankers to permanent floating storage which has become more prominent as deep water plays open up. Some conversion to bulk transport also happens.

And you of course have the price of steel playing a role in deciding to scrap.

In the end after everything is said and done Tanker fleet owners have way to many options to dispose of older tankers if tanker rates are low.

You have to be careful when you read about DWT. I think this article is very balanced and can serve as a sort of guide in the bewildering world of shipping.


As far as changes in DWT effecting the monthly flux of indexes like the BIDY in my opinion its highly unlikely to be true.
Its a bit of and internet myth and I've not seen any internal industry reports that suggest such a linkage.
The vast majority of new ship deliveries are taken in conjunction with a long term contract. Thats not to say some are not built
or end up in the spot market just that it seems to be rare.

Its certainly one of the factors effecting longer term trends say six month or more averages but volatility is high and other factors such as slow steaming and temporary floating storage have just as large and impact.

Another article that downplays the scrapping rate in my opinion it does suggest that gasp Tanker owners are at least planning on a balanced market not a glut.


And one more calling for tightness just to round out just how scattered news items about shipping are.

In many cases it seems large swings in shipping demand from China of all types contributes to a lot of the swings.
Vestiges of a command economy certainly play a role in this but its a entire area worthy of examination. The lunar new year alone is a big economic force.

In the end you just have to read and watch and form your own opinion.

Mine is these factors tend to create a slow changing baseline for shipping indexes against highly volatile short term demand swings.
The churn in DWT is slow enough and scrapping and new deliveries balanced enough that its unlikely to be a factor in the short term movement of these indexes. The tanker market esp VLCC's and ULCC's is in the end a small market with a few large key players.
Its not and explicit Cartel but its unlikely that the players in this market are going to do something really stupid unless key
economic factors change suddenly. One factor thats seldom mentioned is the role of insanely cheap money in driving the decision to build now not later.

Now with that said despite all the volatility clearly some time after 2008 there has been a dramatic change in the relationship.
Either the world was swamped with new builds and scrapping rates did not keep up or we have seen a sudden and steep fall off in oil production.

One of the main reasons I've adopted to BIDY as a important indicator is I believe that the latter has happened. We actually did see real oil production tumble and its not recovered.

Indeed how BIDY has changed is what lead me to consider that perhaps the price runnup in 2008 was not from a rapid absolute change in oil supply but from a slower change in oil supply that lead to a distillate shortage not a sudden oil shortage.

But this is and educated guess and I have done my best to educate myself as the obscurity factor is huge for tanker DWT if anything its more opaque than oil supply :)

In the end determing whats really happened with the tanker fleet and supply will simply have to wait for time to pass.
If my assessment is correct and the oversupply of tankers is from a rapid change in oil supply that occurred after the distillate wall peak well then BIDY is a valid indicator of this. The relentless collapse of upstream profits as dwindling supply ensures excess capacity with spikes only resulting for short term shortages should hold. Month after month regardless of the price of oil Tanker owners are now I think faced with the fact that supply simply is not there and fewer and fewer tankers are needed.

If so then I'd expect at some point we will see wave after wave of cancellations for new builds and a real crisis develop in the ship construction industry as orders finally dry up.

Perhaps its to late to make this prediction :)


At least 47 tanker newbuild orders have been cancelled so far this year, said the president of a shipping company.

According to Ragnar Nielsen of Singapore-based Masterbulk, some 434 newbuild orders have been cancelled, including 298 bulk carriers and 74 box ships.

Nielsen told Tankerworld that in spite of the tanker cancellations, the number of bulk carrier newbuild orders cancelled "reflects sentiment that the tanker market will be more stable than the dry bulk segments."

In any case clearly we have and excess of tankers regardless of how its happened thus flux in the BIDY is far more likely to represent supply and demand changes. Given and excess of at perhaps least 50 if not more VLCC's on the market changing this number even by say ten is unlikely to impact BIDY.

Sorry for the scattered post I challenge anyone to write a comprehensive article on DWT logistics and BIDY as I said earlier you have to decide on the importance and also timescales of all the variables to decide just what BIDY means now and what it meant in the past.

The peak in BIDY prices matches up rather closely with what I said about the sudden increase in Chinese demand in December - especially mid-December.

There has been another small uptick in tanker demand by China this week, which according to shipping reports - say the Chinese want to book some tankers before an upcoming holiday. Curiously the BIDY is not responding this time, and it is otherwise reported by tracker "Oil Movements" (see my posts below) that OPEC is not increasing exports - and they are in fact decreasing exports. So much for the Financial Times' 'stealth increase' in KSA output (up top). The increase in KSA 'output' has not shown up in tanker loadings (exports).

Yes as I said I think given the current circumstances BIDY is a pretty good secondary tracker of what the oil market is doing.

As far as any small Chinese surge well if KSA met the last one from storage well they would then not have any more oil to sell right now.
I think its safe to a assume no matter what if they drain their storage the will refill it price of oil be damned. Which fits pretty well with OPEC's recent statements btw.

Thus if there is and ongoing Chinese surge well they would have to be buying oil on the spot market if so this explains to some extent the ongoing strength in oil prices even though the large surge is clearly over. As far as it not having a big influence on the tanker prices well clearly more tankers are being freed up than are being charted to meet the Chinese mini-surge if it is happening.

I'd not call it a surge myself simply it seems any cargo offered on the spot market is being snapped up fairly quickly. Not enough to cause another increase in BIDY and not enough to send prices soaring but enough to keep what seems to be and increasingly firm floor on prices above 90 outside the US.

So far at least it seems that as long as the US is not forced to bid aggressively for oil the market seems to have temporarily stabilized.

I'd guess the big question is not so much the temporary price stability but if its happening against a net draw down of stocks.
If so then it won't last long and eventually the US will be increasingly outbid for imports and forced into a storage drawdown.

I think you can see the problem that brewing if you assume this scenario.

1.) US still well supplied not bidding aggressively for oil.
2.) Other countries have low stocks but are bidding.
3.) This bidding is not aggressive thus not causing a spike but also stocks are still falling.
4.) Bidding heats up sending prices higher and higher as stocks reach critical levels.
5.) Oil to the US slows to a trickle and our stocks fall rapidly.
6.) We are forced as the largest consumer to enter and already heated market with more desperate bidders.
7.) How high can prices go ?

Clearly if draining of storage is being used to keep prices in check then the game will still turn nasty indeed the way things are going the way we are doing it if the above is true is likely to result in a worse outcome than simply bidding till stocks are balanced.

To justify the above game clearly everyone is simply trying to find the price point where OPEC will up production. For now at least people are willing to drain stocks as they try to narrow in on OPEC sweet spot. Quota or not its the price at which OPEC members outside of Saudi Arabia begin to cheat. At some point someone is going to say 99.99 is a good price for oil ship it :)
Or at least that seems to be the game as far as I can tell.

China is large enough to move BIDY with a surge other players are unlikely to do so but if stocks are now falling world wide more and more players will be forced into increasingly desperate purchases on the stop market sending it steadily higher.

This suggest that over the short term we should see a ever weaker BIDY and steadily stronger spot market for oil. Perhaps no serious surge in prices but very strong price support with prices steadily approaching then surpassing 100.

The of course OPEC will announce that 120-140 is a good price for oil the market reached those prices in the past this time it seems strong enough to sustain them :)

Well done. Whether intentional or not, it appears that the US is currently being outbid for marginal oil supplies coming to market, which I believe explains part of the large difference between US oil prices and the rest of the world. Until OPEC and others can stop describing US oil supplies as 'comfortable', we are going to see a general run down in US inventories - although seasonal trends at this time of year may obscure that fact.

As for myself, to be brief, the coming oil price 'super-spike' won't come about until basically all the major players realize they can not reduce oil inventories any longer and must bid for oil at the market - what ever the price. Surprisingly, China only managed to add 12 million barrels to its strategic reserve last year. While it is somewhat of a secret as to just how much they wanted to accumulate, they may have excess SPR capacity of about 50 million barrels by the end of 2011. If they for example decide they can't wait for lower prices, the price of oil may rise even before US oil inventories hit MOLs (minimum operating levels).

I've been making some detailed posts about information from "Oil Movements" and other similar shipping sources over the last two months. I became especially interested in how China coped with its November diesel shortage.

OPEC exports (not output) was very stable in November and stayed so until about mid-December. Then for about a week or so, China chartered a high number of supertankers in the Mideast, and somehow managed to get them filled. I would bet poster memmel would say those extra exports came from storage, and in this case, I would agree. In the last week of the year, OPEC exports fell rather significantly - although the total increase for December appears to be in line with the article saying KSA increased output by 100 k bpd in December (if you count supplies from storage as output).

However January shipping reports indicate that OPEC exports are slipping below December levels, and will even close out the second half of the month at a slower pace than the first.

Or in other words, there is no shipping evidence that there is a stealth increase in exports under way by KSA, although it is possible they may increase output for themselves or to refill some storage that may have been taken by China. Keep in mind there are agreements in force between KSA and China to stabilize supplies, and that is what may have happened in December. As for January, the IEA may be right but that extra 'output' is not ending up as increased exports.

Thanks for this information Charles. It is extremely helpful and informative.

Ron P.

I don't know if I "think" Nicole Foss is full of #hi& or just "hope" she is

If it helps, Nicole Foss is former Oil Drum staff member Stoneleigh

I thought most of what she said made sense and was not too hard to follow.

But she said really bizarre things about climate change.

Apparently, either:

this is a problem whose consequences are so far of in the distant future that it is silly to worry about it much right now;


it has already out of control so there is nothing we can do about it anyway.

Both of these conveniently mean that no responsible action (or restrictions on action) need to be considered.

Can't she do just a bit better than this? The depth of this kind of logical disconnect coming out of her mouth really makes me wonder about the rest of her schtick. But then many people have problems wrapping their minds around CC.

If one follows the comments on the automatic earth you'll see she's got some who believe in the Bulls hit version.

Jim Pulplava thinks enough of her to have her be a monthly guest on his podcast.

If you'd feel better just visit TAE for the links and not the analysis.

eb and ut, I've been following illargi and stoneliegh ever since I was introduced to them as the editors TOD Canada. Puplava as well. I'm about 70% sure he's full of it.

What she says is so convoluted and complex that it is hard to know what to think of it. She's got theories of how prices can go up and go down. Basically, she seems to say anything can happen . . . and that is not very useful information.

I went to her talk last night. I did not stay for the Q&A - it was pretty depressing. Basically, it's about deflation, depression, renting and being mobile, unless your house is paid off and you are where you think you ought to be. Credit contraction. Reduction in the money supply. Oh, and localising. Not to vastly oversimplify, of course. A model basically of the last Great Depression but more so.

It still appears to be viewed as an event (with no projection of what happens after the event) instead of a continuum. Precious metals, if you can afford to hold them. (to what purpose?)

My sentiments are yours exactly. Of course, nobody really knows how the future will pan out - everyone is just trying to project outcomes based on past experience.

I do agree that a mindset of resilience is important, as well as having backup systems in place to do simple tasks, such as cooking. Local food systems, community building, etc.

Having tried to raise awareness of the issues in my community, if I can get even 1% on board with planning, that would be great. I can't help wondering how we will cope with the other 99% ?

Housing Bubble Graphs : Renting vs Owning :-



According to Greer the first step down is behind us and we are currently experiencing the 2nd step down. Nicole Foss is basically saying the same thing though she doesn't talk about the 1st step. The only question seems to be, how big of a step will this one be?


I am a member of Transition Rogers Park, which sponsored the presentation. I was one of the folks managing the sign-in table. Are you a member?

I understand exactly what you mean, although I don't think she sees this as just an event per se. I had dinner with her the night before and last night we chatted after the presentation at the residence she was staying at. She describes what's coming and what to do to protect yourself, but it's not like we experience this and it's over. She clearly sees this as a total change in how we live and how we determine we are happy and fulfilled in our lives going forward. That's why she emphasized being sure you would be happy wherever you were 'stuck' at.

Perhaps that part of her talk needs adjustment. We understood it is always a work in progress.

I'm not a member of Transition Rogers Park.

I guess I take a bit of issue with the notion of "being sure you will be happy wherever you are stuck at". I'm not clairvoyant - I can do a fair bit of analysis based on what I imagine might happen, and figure out I'm in the right place, but one doesn't have any idea what the other 99.99% of people are going to decide.

I think the thing to point out is that we still have the luxury of being able to ponder on what we are going to do with "our money" and what things are going to "make us happy" - essentially a privilege of the relatively wealthy.

People who are really poor and struggling don't sit back and ask themselves how they are going to be happy and fulfilled, and which way real estate is going to go - they are too busy trying to provide for themselves the food, clothing and shelter to survive.

It's all just such a - well - "first world" - way to took at things, so to me it has an air of total unreality.

That doesn't sound like the context of what she was saying.

I think the kind of 'be happy' Nichole must mean with such a comment (paraphrased, it sounds like).. is that we are making our beds with every purchase, every choice. Even the very poor, or especially so, as you suggest, are going to have to sleep in the beds they/we've got.

If the information and the support for making better choices isn't out there helping us 'be happy' , IE, survive.. then it could be that there will be a considerable amount of suffering on all fronts if nobody has had a chance to physically or mentally prepare for a great change in how we will be living.

I think it's fair to say that "Pursuit of Happiness" is not just about Comfortable Middle-class Contentment.. it really means being able to put together what you need to live.

Putting together what one needs to live without the benefit of fossil fuels, in the face of a lot of competition from other mouths, depleted environment and crop failure isn't going to be a very happy affair.

I understand the idea that we have to look for simple pleasures, rather than being happy for a split second after purchasing some cheap electronic gewgaw.

I just think that, comparatively speaking, the process of the change is not going to be a very happy process.

Maybe there will be an element of happiness in the end result.

While the idea of storing gold coins under the mattress may feel like a kind of insurance against bad things happening, and I'm not saying at all the transition movements are in any way a bad thing, I just wonder if we
are really capable of imagining a truly new way of living, or whether we are (consciously or unconsciously) trying to apply known experience to the future, and mostly failing.

are the Saudis really able or willing to push up production by a million or more b/d to keep prices under control?

The saudi Ghawar oil field answer is NO , because these reserves are largely o·ver·es·ti·mat·ed :

An unprecedented oil supply crunch is taking physical form and is next to show itself. It will take down world oil production with a steep oblique angle from spring 2011 almost to 2014.

Cicerone, you should point out that your blockquote came from the link up top: The Peak Oil Crisis: It’s Not Adding Up! And also where you got your Ghawar base case production model. You will save us a lot of searching and googling when you do.

But great post, thanks. I rather agree with you but just don't have the nerve to say it will start in the Spring of 2011. Not just yet anyway.

Ron P.

The graphs would be more convincing if they said "production" rather than "poduction"...

hahaha, good eye. maybe we should interpret that to imply that productive cities will turn into Podunk towns.

Well just eyeballing the revised chart it looks like we won't make it to Spring without the wheels wobbling like hell if not quite falling off. Maybe there should be a poll: will a supply crunch become evident in 2011? Are polls permitted under the recently revised TOD operating system (TO DOS)?


This is a bold prediction.

How confident are you in your prediction?

Is there any kind of TOD expert consensus on this prediction?

Heisenberg, this is actually Euan Mearns work. Just click on the link, the data is his and any prediction is his. And the replies or posts that follows the article will give you an idea as to the consensus that exist.

I take it seriously and am confident that Ghawar is way past her prime. I would not be at all surprised if the chart proves to be pretty close to the facts.

Ron P.


Thank you for giving me some context and the point-out to Euan's work and your personal judgment on the matter...I will read Euan's material.

One of the comments on Euan's article is remarkable. Does someone know how is proceeding this ?:

Link to a document about Iran's plan to convert their whole car fleet to natural gas by 2015- maybe they are aware of what's happening in SA too?

A special committee set up by the government came up with a four-point program which includes:
1. Conversion of most existing cars to run on natural gas within five years at a rate of 1.2 million annually. This will begin with conversion of 600,000 public and governmental cars to NGV.
2. Phase out of very old cars (approximately 1.2 million) by 2010.
3. As of June 2007, most of the newly manufactured cars will have to be able to run on natural gas.
4. Within five years most of Iran’s 10,000 refueling stations will be retrofitted to serve natural gas.

I'd say Iran's actions are mostly based on Iran's own domestic situation. Iran has a very large amount of natural gas and a good amount of oil. But natural gas tends to be something that you can only sell locally with pipelines. (Yes, you can export it by ship but that requires expensive ships, you lose a lot of the energy, and natural gas market prices are relatively low these days.).

So . . . Iran wants to burn more of their NG domestically and save the oil for export. They've wisely started to reduce oil/gasoline subsidies. If Iran can burn NG locally and export more oil, that will greatly improve their economic situation. That's their plan . . . Ghawar peaking will help their plan since that will push up the price of oil further but it is not the origin of their plans.

The USA should be doing a similar sort of thing . . . although I'd prefer skipping a natural gas stage and moving straight to electric cars. The current NG bonanza might not last as long as many people think. With electric cars, you can 'fuel' them with electricity made from natural gas, coal, nukes, solar, hydro, wind, . . . anything. And we are moving in that direction with the current tax-credits for EVs & PHEVs.

But natural gas tends to be something that you can only sell locally with pipelines.

Or sell abroad with pipelines like Russia does.

By the way, I searched on internet how Iran's 'gas-car program' is running and found is (from 'Tehran Times' sept 2010):

Iran ranks 2nd in using gas-fueled cars

The number of Natural Gas Vehicles (NGVs) on Iran's roads has reached 2 million, ranking the country second out of five states with the highest number, an Iranian official says.

NGV is an alternative fuel vehicle that uses Compressed Natural Gas (CNG) or Liquefied Natural Gas (LNG) as a clean alternative to other automobile fuels.

Two million out of 11 million vehicles in the country's roads are using the alternative fuel, Hamed Houri-Jafari, an Iranian Oil Ministry official said on Sunday.

He further pointed out that the number of gas-fueled cars in Iran placed the country second in the world after Pakistan.

According to Houri-Jafari, there are more than 11.5 million NGVs in the world and the number could reach to 65 million by 2020.

Worldwide, there were 11.4 million NGVs by 2009, led by Pakistan with 2.3 million, Argentina (1.8 million), Iran (1.7 million), Brazil (1.6 million), and India (935 thousand).

The sale of gas-fueled cars is also rising in Iran due to the low price of natural gas in the gas and oil-rich country.

The Iranian government hopes the switch to dual-fuel will provide relief for motorists affected by gasoline rationing, as there are no limits on the supply of CNG. Dual-fuel cars can run on CNG or gasoline.

The information presented is interesting, but I have a question:

If this estimate is on-target or close: What is the probability that the US Government does not know this information?

Even if Ghawar is the largest single conventional oil field/complex in the world, it is still likely only a small fraction of world oil production,no?

Even so, a decline in either 2011 or 2015 of the magnitude depicted would likely count as a significant canary in the coal mine.

So, the choices seem to be:

1. Prediction is on-target, and USG is unaware.

2. Prediction true, USG is mum.

2a. USG hoping for a miracle

2b. USG knows that other oil sources will on on-line

2c. USG has some kind of as-yet un-revealed mitigation plan

3. prediction is 10 or more years pessimistic

I cannot figure how, if this prediction was accurate and USG was aware, announcing this info now (or in 2007) wouldn't be the best strategy. The markets would adjust before the fact, and by the time it happened, it would be less of a shock, perhaps even 'old news' and accepted as the 'new normal'.

Am I out to lunch here?

Ghawar is about 7% of global crude oil production.

And since KSA net exports more than this, assuming that they are unable to cut domestic consumption that rapidly, the more important statistic may be that Ghawar is about 12.5% of global net exports.

I'm sure that the CIA and DOE have people who have looked at these scenarios, and probably some people who think that this is likely. Whether that person's boss allows that information to go up the chain, however, is a different question.


Thank you for the clarification on Ghawar's contribution to World net oil exports.

I understand what you are saying about the potential glass ceiling for bad news ideas, but I would be very surprised if information of this gravity could be kept buried for long ...kept from being briefed to the President (President Obama? GW Bush? Clinton? ???...)

And besides, the USG is not the only game in town...plenty of other governments have intelligence apparatuses with some competent folks...

Two people can keep a secret...as long as one of them is dead...

The only option that seems credible is that no one in power believes this prediction.

Note that I am not saying that I don't believe the prediction...logic dictates that the decline will happen at some point.

If USG or other governments did find the prediction credible, then I would find it hard to believe that they would take no actions and just sit on their hands and wait to see what happens.

So...I am not sure what to think at this time.

Two people can keep a secret...as long as one of them is dead...
So...I am not sure what to think at this time.

I'll go with thinking is based on the data one has .... thusly:

If one is not informed of some fact - is that a secret being kept or just an unwillingness to become informed?

There may very well be people/groups who have the "correct" data ... and that "correct" data is being shared with yet more groups/people who "should not know it" - but if that never gets down to "us" ... is that a "successful secret" being kept?

The CIA should have hacked Saudi Arabia's well and production databases, downloaded all the information, and had industry experts analyze them and come up with their own estimates of future Saudi production. This is what they are paid to do, but whether they actually did it, I have no idea.

The real problem with the CIA and other US intelligence agencies have a problem with selective inattention. They don't listen to things they don't want to hear. Also, they are mostly Harvard and Yale boys, they don't have many agents who speak Arabic, and they don't trust the ones they do have. So the intelligence feed they give to the President is heavily filtered toward the Ivy League interpretation. If you want a complete exposee of how this works in the CIA, read Legacy of Ashes: The History of the CIA by Tim Weiner.

George W. was a Yale boy himself, so the CIA told him what he wanted to hear, which was that there were Weapons of Mass Destruction in Iraq. The French disagreed. There was a huge kerfuffle in the US (remember "freedom fries") when the French opted out of the invasion.

This set off alarm bells in my mind because I have worked for French oil companies and worked with Iraqis (not necessarily at the same time). I know the French have good intelligence connections in the Middle East, left over from their former colonial empire, and they still have a lot of Arabic-speaking agents in place. Unlike the US they don't trust Arabs because they have had too much experience in fighting them.

I figured that if the French were not on side, it was because they were getting different intelligence from their Arab agents than the US was getting from its Ivy League types. They had probably vetted it carefully to weed out the inevitable lies and deceit. That turned out to be the case, the French intel was accurate, and there were no WMDs. However, it came as a huge shock to the US government that they couldn't find any WMDs after they had invaded the country at vast expense.

My concern with Saudi production data is that the CIA is not doing its job, hacking the Saudi Aramco databases and getting in a few industry pros like Rockman to interpret them (it could be a good revenue source for seasoned oil men). They are probably listening to what the Saudis are telling them, and believing every word the the Saudis say. This is usually a mistake, as the French well know, because the Arabs are not good at telling the truth. They will usually tell you what you want to hear because they consider it impolite and also bad business to disabuse you of your illusions.

Actually, there are a lot of countries in the world in which people will tell you what you want to hear rather than what is true. Americans really don't understand this because it's not part of the American culture. Intelligence organizations, in particular, should be very skeptical of their sources. They need to distinguish good intel from bad intel, and thats difficult to do when you don't even speak the language.

The CIA had hundreds of agents in South Korea during the Korean War, and not a single one of them spoke Korean. After the war was over the CIA learned, to its horror, that every one of its Korean interpreters had been a North Korean double agent. That's the sort of thing you have to watch out for in the intelligence business.

Because saudis "cannot eat oil" they will continue the export job until the end of their oil industry period. But I see the situation really hard for the saudis to export from Ghawar at spring 2015... And total exports from Saudi fields is going to be zero at 2025 and not in 2055-2065 as we usual read in official reports.

And because oil -> food has to be translated via money, plants, and fertilizers the Saudis are buying greenhouses elsewhere in Africa and shipping the food in.

About the only way I can think of KSA exporting oil in 2055 is if they have some other energy source to dump into getting the oil out of the ground/keep the population happy.

I'll leave it to the pro nukers to argue that the house of KSA should have fission reactors.

Heisenberg I rather agree with you but see the situation somewhat different. I think most people have the wrong idea about the CIA and/or any other government agency including the USGS. They are just people with no superhuman abilities or knowledge. Remember George Bush the First was once head of the CIA. Think about that.

The CIA deals primarily with espionage and have no reason to have experts on geology or oil reserves on their staff. The CIA would simply have no reason to do what is seen as another agencies job. The US government looks for this kind of information, oil reserves and such, from the USGS. But the USGS has no experts on this sort of thing on their staff either. By that I mean finding foreign secret information. They are experts in geology and reserves but Saudi is completely off limits to them. So they believe what the Saudis say or else rely on outside experts such as Dan Yergin and CERA.

And you know how that story goes.

Ron P.

The CIA deals primarily with espionage and have no reason to have experts on geology or oil reserves on their staff.

that is funny, as in ha..ha..ha. the cia was sending students to oil industry training courses in '1980.

the cia was sending students to oil industry training courses in '1980.

Please quote your reference for that Elwood, or a link would be even better. I was not aware that the CIA publicized what kind of training courses they sent their agents to. If they made that kind of information public then I would find that alarming.

Ron P.

i attended the same courses they attended. under company name it was always: doe langley,va. they didn't advertise that they were from the cia, but everyone knew what was going on. there were also a lot of mid-eastern countries represented.

an iraqi student didn't show up for one of these courses - war had broke out.

no, i don't have a link - just firsthand knowledge.

There were Iraqi and Iranian students studying nuclear technology at my college in London, 1980. The Iranians were funded by the Shah. Then the Iran/Iraq war broke out. The Iraqi embassy was on one side of the campus, the Iranian on the other. Interesting times :).

no, i don't have a link - just firsthand knowledge.

Oh... You have firsthand knowledge that they were actually CIA agents even though they said they were not! No that is alarming.

But I am really glad you informed us of all this firsthand knowledge you have Elwood. That is a real eye opener and will be of great assistance to me when reading your posts in the future.

Ron P.

Jeez, remind me to never post anything I know from personal experience but can't document.

Kingfish, think for just one moment. A bunch of guys attend an oil or geology course of some kind. They say they are from the DOE, the Department of Energy. Seems perfectly innocent so far... right? But now a person suspects that they are from the CIA, a clandestine oilfield geology operation.

So now they come on line and say as if it were a fact that the CIA sends people to oilfield geology classes so they can spy on the Saudis in their oilfields or for some similar reason. And to add weight to this story he declares that "everyone" knew they were really CIA agents only pretending to work for the DOE.

Really now! Everyone has personal experiences but when those personal experiences involves a clandestine CIA operation... well now I ask you...

Oh never mind.

Ron P.

Please quote, anyway I find that is not alarming that the Central Intelligence Agency could send agents to have a better view on what is the oil industry and how does an oil market work. Oil is 80% of all energy we use in the world and is the 100% warranty of United States of America's way of life. I think it's normal that C.I.A. uses to send apprentice or even infiltrate a national or foreign oil industry's sector with a spy.

yeah, why wouldn't the cia send agents to industry training schools ?

But if they said they worked for the DOE, why would you doubt them? Why wouldn't the Department of Energy send agents to an oilfield geology class? Of course they would.

Well hell, you could attend any kind of class and find people there who were sent there by the government or industry. They could all be CIA agents!

Who is qualified to say they are all lying? Who is qualified to say they are really CIA agents?

If you claim that the CIA is doing this or that and lying about who they really work for you need more than just your suspicious instincts. That is not grounds for making a hard and fast claim about what the CIA is really doing.

Ron P.

yeah, the cia has agents attending training courses wearing name tags with a big smiley face:


Why not?
They'd send *analysts* to those classes anyway, not field agents.

Put the knowledge where it will do the most good.

Who is qualified to say they are all lying? Who is qualified to say they are really CIA agents?

And who's qualified to say hard and fast things like:

The CIA deals primarily with espionage and have no reason to have experts on geology or oil reserves on their staff.

What about Ken Deffeyes' account in his book, Hubbert's Peak? He mentions that after meeting with Chinese counterparts, the CIA contacted him practically as soon as they left, wanting to know how much the Chinese petroleum geologists knew, and the state of petroleum geology in China.

I think it's pretty clear the CIA is interested in this topic (along with many others).

And people who work in various businesses often have access to information that others don't. We welcome that here, even if they can't post a link to prove it. Some of our best information has come from such sources (such as when "Bubba," who worked for an oil company that ran some offshore rigs, had information about production shutdowns and the like).

Leanan, when the CIA contacted Ken Deffeyes they surely identified themselves as being with the CIA. Mr. Deffeyes would surely have mentioned if he were only guessing they were with the CIA.

I have been around for a long time Leanan, I have heard more sea stories than you could listen to in years. I can easily recognize when someone is "padding their resume".

Ron P.

well, it is 'illegal' for the cia to spy on us citizens, so why not avoid the appearance of such by registering as a representative of the doe ? how would that be lying ?

I have been around for a long time Leanan, I have heard more sea stories than you could listen to in years.

you haven't been around long enough to know truth from fiction. only one of us knows if i am telling the truth and i can say unequivocally that you are talking out your a$$.

you can't offer anything that would discredit what i am saying, so you are just resorting to ad hominem ? and don't you think this dead horse has been beaten long enough ?

what the he11 resume' are you talking about ?

I can easily recognize when someone is "padding their resume".

And how is that different from claiming to know someone is a CIA agent even if he doesn't say so?

Grant others the same right you grant yourself.

Good Lord girl, I have never made such a claim! I have never granted myself such a right! I have never said someone was a CIA agent. To my knowledge I have never met a CIA agent in my entire lifetime. Obviously you are confusing me with Elwood here. He was the one that made that claim.

Ron P.

I did not say you made the claim that you could spot a CIA agent. I was drawing an analogy between your claim that you can spot a "resume padder" and Elwood's claim that he could tell that some of his classmates were CIA agents.

Ron...I'm kind of worried about you. You often misunderstand posts here. It's become very noticeable recently. Perhaps it would help to read comments over slowly before responding?

Sorry sorry about the misunderstanding Leanan. And you are correct I should read posts more carefully.

However I have met a lot of resume padders in my lifetime. It is really quite easy to spot them when they claim to know something that could not possibly be known. When a person claims to know that someone they met in a classroom is a CIA agent when they say they are not then they are a resume padder. That is they know that the man, or men, are CIA agents when such knowledge would be impossible without hard evidence.

I really think it is a bad sign when a person starts seeing CIA agents behind every tree. Far worse than not taking time to read a post more carefully. ;-)

Ron P.

Maybe Elwood was in a class with Tom Whipple (former "Gov't Analyst") .. wouldn't that be a hoot!

Ron - I'm not sure what all the excitement is about. In the ealy 8o's I met a friend of a friend in Georgetown who was a geologist with the CIA. He actually tried to recruit me for a job with them. I looked at the salary, the cost of living and how boring the job was and passed. Additionally I also seem to recall ads in the Hosuton newspaper advertizing the same job. I get the impression that some folks think the CIA is just a bunch of "double naught spies" as Jethrow Bodine use to call them. I'm pretty sure you know it ain't so. I would guess most of the folks on the CIA payroll are paper pushers and not special ops types.

Rock, in the mist of all this hoopla we have lost sight of what the discussion is all about. The argument by some folks is that the government knows all about peak oil, that they know all about those inflated OPEC reserves and know very well that there is no 6 mb/d of spare capacity. They know this, supposedly, because of the CIA's clandestine operations in Saudi and the rest of the Middle East.

Well it may very well be the case that some within the CIA are aware of the problem but if so their advice is falling upon deaf ears. I doubt seriously that the President is fully of the dire consequences that peak oil imposes. And for damn sure Congress does not have a clue.

What they wish to do, that is the cloak and dagger believers on this list, is to make us believe that almost everyone in government is fully aware of the problem but are engaged in a conspiracy to hide the true facts from the public. I think that is pure poppycock! In general, those in government, are just as uninformed as the general public. And for their advice on the subject they turn to the experts on the subject, Daniel Yergin and CERA.

Ron P.

The CIA deals primarily with espionage and have no reason to have experts on geology or oil reserves on their staff.

I think you are clearly misinformed. From the CIA web site:


The Central Intelligence Agency (CIA) is an independent US Government agency responsible for providing national security intelligence to senior US policymakers.

Perhaps you have forgotten earlier situations involving oil. For example, Japan went to war with the US, for the express purpose of obtaining material resources, primarily oil, allowing the US to enter WW 2 against both Germany and Japan. One reason for the US involvement in Indochina was the oil being produced from Indonesia, an interest which began before WW 2 and continued thru the Vietman War. There was a concern that the Communists would capture the access to this resource and sink the Western economies which depended upon it. Similar fears were often expressed regarding Soviet intentions in the Middle East and elsewhere, particularly in the time of Nasser and the Arab League.

E. Swanson

For example, Japan went to war with the US, for the express purpose of obtaining material resources, primarily oil, allowing the US to enter WW 2 against both Germany and Japan.

And don't forget that the attack was after a multi step plan was implemented which was calculated to bring on an attack.

Considering the past reactions of nation-states to a lack of oil, things in play like "The Carter Doctrine" and even nastier weapon systems now than back then - how does humanity steer the leaky dingys to a safe harbor?

Agreed. Just look at the CIA World Factbook. It has information on demographics, politics, religion, economics, transportation, etc. I don't doubt they have experts on geology and oil on staff, as well as many other economic issues.

The only option that seems credible is that no one in power believes this prediction.

Note that I am not saying that I don't believe the prediction...logic dictates that the decline will happen at some point.

If USG or other governments did find the prediction credible, then I would find it hard to believe that they would take no actions and just sit on their hands and wait to see what happens.

Well . . . I think it is a combination of many thing simultaneous. Remember, our 'government' is not single-minded entity. It is a sharply fractured government with political parties that have very different views on things. So, I think
1) Many don't believe such predictions at all.
2) Many probably have no opinion since they don't understand the issue in the slightest.
3) Some do believe and they've what little they can do with the resources available to them. Although he won't mention it publicly, Steven Chu understands the threat of peak oil and his Department of Energy has quietly spent a very large amount of money on alt-energy research, smart grid, Li-Ion batteries, biofuels, EV component manufacturers, EV manufacturers, high-speed rail, etc. Granted it is much less than many would like, I think they've done more than pretty much every administration before them (except Jimmy Carter.)

And speaking of Carter, the whole Carter administration has put a damper on any politician talking about energy limits. The 'malaise speech' goes down in history as one of the biggest flops ever. I think the who carter administration experience has stopped people in government from ever acting alarmist. So don't expect to get a warning from the government on peak oil.

Even if Ghawar is the largest single conventional oil field/complex in the world, it is still likely only a small fraction of world oil production,no?

Yes Heisenberg, but Ghawar could be a sort of indicator for other supergiants and giants that are in production for many decades to (more than) half a century. If the Ghawar-graph comes true it would (in a time-scale) not be far away from what happened with Cantarell.

Out to lunch? No. But you are attributing to the US gov't a unity of identity, knowledge and purpose that is not warranted.

Do some pieces of the executive bureaucracy have the information that would allow them to piece this together? Almost certainly. Will they put it together? Will those who do so think it worth their effort (and job?) to take it to their management? Will that management push it up to the undersecretary? Will the undersecretary believe it? take action? The secretary? The president's inner council? Will they value this info more than getting re-elected? more than the various wars? etc.

And that's only the bureaucracy. Do members of Congress have access to the info? Will their staff make it available to them. And so on.

As with most "issues" - getting attention on them (much less actual action taken) is far more complex than simply the apparent importance of the information. And what may really important for you or me may actually be threatening to someone in a position of authority or power.

Any of you Dataloggers ever check out this site?


I was just looking for a map of the Bay of Campeche, but in reading some of the text, I realized that all of the history since the field started depleting has had the BPD numbers removed (or they just don't show on my browser) ..

Is there a Wiki-war going on where people are trying to remove such figures?


The Mysterious Honey Bee Extinction [infographic]

For one bite of every three we should thank a bee.

Start pulling random threads and things will manage to hang together for awhile, but eventually the whole tapestry will unravel.


According to avazz, scientists increasingly blame one group of toxic pesticides for their rapid demise (neonicotinoids), and bee populations have soared in four European countries that have banned these products. But powerful chemical companies are lobbying hard to keep selling this poison. Our best chance to save bees now is to push the US and EU to join the ban -- their action is critical and will have a ripple effect on the rest of the world.

You can read more about it and sign the petition here:


to date over 1 million people have signed this petition.

Where are the "peak oil" alarmists? http://www.denverpost.com/carroll/ci_17130121
If we do suffer an oil shock in the next decade, it will be the product of political constraints, not played-out reserves. Otherwise, remain calm. Oil historian Daniel Yergin's Cambridge Energy Research Associates, which never hopped aboard the peak-oil express, expects supplies to grow for the next two decades. And any longer forecast is suspect on its face.
After all, who knows what technologies will be employed by then to reduce the need for petroleum or to boost its supply?

Is carroll a dimwit, a mouthpiece or a puppet of influential parties interested in misinformation?

"Is carroll a dimwit, a mouthpiece or a puppet of influential parties interested in misinformation?"

Apparently, yes. Brief research indicates he is a right wing ideologue who believes climate change is a hoax, peak oil is a hoax, etc. He has been described as "slightly to the left of Mussolini."

If we do suffer an oil shock in the next decade, it will be the product of political constraints, not played-out reserves

If we do suffer the progressive and irreversible depletion of oil in the next decades, it will be the product of played-out oil reserves. Before the oil industry's collapse it's the collapse of the oil industries regulators (politics). The corruption and indecisiveness of the politicians which is playing the bad role now.

A review of Mathematical model explains how complex societies emerge, collapse and the Original Paper

By using a mathematical model, the researchers were able to capture the dynamical processes that cause chiefdoms, states and empires to emerge, persist and collapse at the scale of decades to centuries.

..."Our model provides theoretical support for the view that cultural, demographic and ecological conditions can predict the emergence and dynamics of complex societies."

I looked at the paper and don't see how they came up with empirical numbers to compare their model against.

You have to have population numbers for these societies, but that has got to be hard to determine.

Considering that it is a peer reviewed paper on Cliodynamics: The Journal of Theoretical and Mathematical History UC Riverside. I was left wondering, what happened to the math?!

Mathematical modeling of historical dynamics

Many historical processes are dynamic (a dynamic process is one that changes with time). Populations increase and decline, economies expand and contract, while states grow and collapse. How can one study mechanisms that bring about temporal change and explain the observed trajectories? A very common approach, which has proved its worth in innumerable applications (particularly, but not exclusively, in the natural sciences), consists of taking a holistic phenomenon and mentally splitting it up into separate parts that are assumed to interact with each other. This is the dynamical systems approach, because the whole phenomenon is represented as a system consisting of several interacting elements (or subsystems). In the dynamical systems approach, one must describe mathematically how different subsystems interact with each other. This mathematical description is the model of the system, and one can use a variety of methods to study the dynamics predicted by the model, as well as attempt to test the model by comparing its predictions with the observed dynamics. This is the approach that the cliodynamics suggests to apply to the study of historical dynamics.
Source Wikipedia

Were the mathematical descriptions hidden deep in the papers listed in the references?

I am thinking that at least some of the models would derive from conflict scenarios. In war-gaming I think they use force-on-force models. And then there would be some contagion scenarios perhaps. The mind reals as to how they would sort all this out. A bit harder than an oil depletion model that we can track before our eyes.

Some Renewable Energy News

Breakthrough in converting heat waste to electricity
...The material exhibits a high thermoelectric figure of merit that is expected to enable 14 percent of heat waste to electricity, a scientific first. Chemists, physicists and material scientists at Northwestern collaborated to develop the material. The results of the study are published by the journal Nature Chemistry.

Study claims 100 percent renewable energy possible by 2030
...Achieving 100 percent renewable energy would mean the building of about four million 5 MW wind turbines, 1.7 billion 3 kW roof-mounted solar photovoltaic systems, and around 90,000 300 MW solar power plants.

India aims for Asia's biggest tidal power plant

New reactor paves the way for efficiently producing fuel from sunlight

"The material exhibits a high thermoelectric figure of merit"

Looks good, then it turns out to be tellurium based. They will have to fight it out with the solar cell guys.

From Wikipedia; "
With an abundance in the Earth's crust comparable to that of platinum, tellurium is one of the rarest stable solid elements in the Earth's crust. Its abundance is about 1 µg/kg."

Going on to the USGS for production data, you find the production rate is secret, not a good sign. What numbers they do have are in double digit tons. World total reserves are given as 22,000 metric tons.

There is a possibility that tellurium may occur in ores other than copper. That is the good news.


If you want to have a widely deployed massive scale system, you should stay out of the yellow zone on that graph. If it's more rare than moly and tungsten, then you are going to feel the pain on large scale deployments, if you can find enough at all. Moly and tungsten happen to concentrate really well, so are cheaper than they should be based purely on atomic abundance.

(I hope they bring back the user profiles so I can add parts of the above to my profile. Nice info PVguy)

Just a thought!

While sitting watching television tonight, "Independence Day" recorded off cable, the thought suddenly occurred to me. Saudi Arabia increased oil production in December anywhere from 62 to 100 thousand barrels per day, depending on who you believe, then all other OPEC nations should say to themselves, "If Saudi can do it then we should be able to do it too." After all, Saudi is the de facto leader of OPEC and whatever they do everyone else should be able to do also.

So January and February should give us a clue as to what the rest of OPEC is able to produce, or rather how much they are able to increase production.

As you might have guessed, I am getting a little ance about OPEC production in 2011. I think something dramatic is about to happen. 2011 will be the year of the news that shocks the world. I am talking about the subject of peak oil of course, nothing else.

Ron P.

r how much they are able to increase production.

Why should they? In a capitalist world, maximize the profit. And higher price will help 'em do that.

2011 will be the year of the news that shocks the world.

Yes - there is plenty of oil! Worry not citizens!

(ok, that is a shock here. The rest of the world is not shocked and knew Peak Oil was bunk.)

(ok, that is a shock here. The rest of the world is not shocked and knew Peak Oil was bunk.)

Perhaps you need to read my post again Eric. Of course the world is not shocked yet because the shock has not yet happened. The rest of the world believes everything coming out of OPEC including that vast spare capacity of 6 million bp/d and those vast reserves of over one trillion barrels. When they find out the real truth they will be shocked.

The shock will be when they find out that peak oil is not bunk!

Ron P.

But the 'shock' won't come in 2011 due to a lack of supply on the market due to what a functioning KSA can pump.

Energy shock in 2011 would come from infrastructure destruction. War, Earthquake, terrorism. If one wants to call a collaped currency used in world trade "infrastructure"....sure why not. My guess is if there is a chance of a collaping world-trade grade currency the holders of said currency would rather see a war to have someone else to blame.

(my infrastructure destruction 'shock' looks towards the New Madrid fault line going off and thusly collapsing the natural gas feed lines to the northern states in the winter not to mention screwing up many of the wells)

"shocking news" about energy has been talked about for years - and the meaningful change has been?

No, for your 2011 predictions to be held as correct the level and nature of the shock will have to be defined VS handwaving. So care to tell us the 'shock' beyond a theory that the princes of the KSA haven't been telling the truth?

But the 'shock' won't come in 2011 due to a lack of supply on the market due to what a functioning KSA can pump.

If Ghawar production takes a nosedive this year, don't count much on KSA spare capacity.

But that talk has went on for years and the commonly accepted reply has been 'other sources pick up slack'. That message worked for the 1970's end of the Texas oil fields as an example.

The 'cost of a barrel of oil' arguments won out last time....got to $147 and the consumption collapsed.

I'm not seeing how 2011 is the magical difference. For most Americans the knock off effects of Canterell's collapse and the pemex -> Mexcican government -> collapse -> migration chain will be an issue with border migration long before the oil stained water from Ghawar. 70+years is a long time for one party to be in charge of a nation - oil has propped up the Mexican government for quite some time. Without the external input of oil and the light of the shining city on the hill to da north - Lou Dobbs moths will come a flocking to the light of the better life.

As others have stated - the big oil consuming economies can take up the slack in the flab of their consumption. The weak hands will fold, more businesses will collapse, the economy will contract, demand/price will dip and then the price gets to be run up again.

If Ghawar was announced dead tomarrow - it would not be a shocker. The technocopians would just chant "Drill bay-bee Drill" or "get on that cold fusion" or some other message. Others would rightly point out that it has been known for years Ghawar was in prodcution decline and then point out the 'other sources' argument. If the topside of Ghawar was turned into green glass, now THAT would be a 'shock the world' moment.

So no, still not buying the "2011 shocker" product being sold.

If Ghawar was announced dead tomarrow - it would not be a shocker.

Disagree, that will be a shocker. Then exactly will happen what Darwinian mentioned many times as a possibility: exporting countries start hoarding oil. Oilexports could decline many mbd.

"shocking news" about energy has been talked about for years - and the meaningful change has been?

I have been talking about "shocking news" coming out of OPEC for years myself. I have never said exactly when but I expect it to come before 2015.

Yes, I have stated several times that news will come out of OPEC that exposes the fact that those vast reserves are a myth. Also those 6 mb/d of "spare capacity" is a myth also but the biggest shock will be when the world figures out that Middle Eastern OPEC nations are depleting just like the rest of the world.

I cannot find the link right now but some time back the IEA was saying that OPEC production would eventually be 41 million barrels per day. That will never happen.

The shocking news will come from OPEC, not non-OPEC. I firmly believe that and I think it is obvious to almost everyone on this list that OPEC reserves are vastly overstated. Sadad I. Al-Husseini, former VP of Aramco, admits that those reserves are overstated.

Oil reserves over-inflated by 300bn barrels – al-Huseini

“Reserves are confused and in fact inflated. Many of the so called reserves are in fact resources. They’re not delineated, they’re not acessible, they’re not available for production”. By his estimate 300 billion of the world’s 1200 barrels of proved reserves should be recategorized as speculative resources.

Sooner or later the world will be slapped in the face with this alarming news and it will be a shock felt around the world. That is all I have ever said and I stand by that.

Ron P.

Sadad I. Al-Husseini, former VP of Aramco, admits that those reserves are overstated.

Take his word for it.....or not. Anyhow, he also said this (reported on ASPO-USA 2008 Peakoil Conference):

Sadad al Husseini says that the world basically has no spare production capacity left.


"natural declines in existing capacity are real, getting KSA to 12 mbpd of production would wreak havoc within a decade."

Things are getting more and more interesting with the govt debt problems....and this prediction seems to offer some more to think about on the horizon.

I will finally pinch myself and really, really say, "wow..PO---it's here" when the cars are gone. That is what I hope to see this year or next year. If there is some kind of shock with the oil supply then there will be a problem for the cars. The cars unable to function en masse is the best signal we can hope for for people to rearrange everything.

The shock will be when they find out that peak oil is not bunk!

Peak Oil? Um, What's that?!

Go USA!: America Is NOT in Decline, Says Altman


All I have to say is .... Um, I'm speechless! Well mostly because the words I'd like to use to comment on this, would get me permanently banned from this site.

Edit: I posted this comment there...

Hmm, let me see if I've got this right? Pollution respects borders and stays in poor dirty countries. The US is going to prosper by selling our advanced technologies at higher prices to poor countries, who can't afford it, because we speak better English and are better at hucksterism... Yeah that makes sense! And the Chinese are ROLFing!

Go USA!: America Is NOT in Decline

Exactly. One day someone will figure out the truth on that topic, but 2011 and the fact that someone's theory about a group of businessmen working together to lie about that status of their productline won't be a "shocker".

It'll be about as common and shocking as 9V batteries on the tounge.

And the Chinese are ROLFing!

Now why would the Chinese adopt that particular form of massage therapy in response to that argument? ;-)

While I am in sympathy with the tenor of your remarks, what I find interesting is that the typical assumption is that the US is declining while China is ascending.

This thought pattern belies a particular lack of understanding about the discontinuities that we are facing. So, rather than suggesting that the US is in decline, I like to think of it as the US is becoming irrelevant (as is China and every other state). Yes, there will be death throes, and some likely quite violent. However, my bet would be that 100 years hence most people will have no sense of what it was like to be a member of one of these polities.

While I am in sympathy with the tenor of your remarks, what I find interesting is that the typical assumption is that the US is declining while China is ascending

You are right and I actually don't think the Chines are ascending at all, that was just my way of indicating sarcasm and it was directed more at the author and readers on that site than at TOD readers.

That guy Daniel Altman is living proof the USA is in decline. He couldn't even sell his pile of BS optimism on the Yahoo financial message board. Just read those comments. It is clear that his message and his ability to sell that message are lacking.

If the world is shocked and the root cause is peak oil there is still a pretty good chance other events will preoccupy the media. Partly because of the complex chain reaction. The headline might be the collapse of a bank or a war in Yemen. I'm not predicting these things of course, just saying the root cause may not be immediately apparent.

Report Questions Role of Shale Gas as Bridge to Low Carbon Future

The Report:

...There is little to suggest that shale gas will play a key role as a transition fuel in the move to a low carbon economy. Measured across their respective lifecycles the CO2 emissions from shale gas are likely to be only marginally higher than those from conventional gas sources. Nevertheless, there is little evidence from data on the US that shale gas is currently, or expected to, substitute, at any significant level for coal use. By contrast, projections suggest it will continue to be used in addition to coal in order to satisfy increasing energy demand.

Well, it's a report.

It is apparent that they know close to nothing about the subject of shale gas, but they are willing to go on for about 90 pages on the subject.

As they say, there is very little known about the shale gas potential of the UK. This report will add very little to the knowledge base.

The shale gas potential of the US is huge and is being exploited on a major scale at this point in time. They seem to have read a lot of US studies on the subject, but have learned very little from them which would be applicable to the UK.

Link up top:

Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves, more than double government estimates, according to a university study by a former Petroleo Brasileiro SA geologist.

WHT, maybe you should consider updating your model's database.

My model assumes close to 3 trillion barrels URR. This gives quite a bit of slack for finding new pockets. Unlike any of the other models, this has dispersive discovery built in which extrapolates for future discoveries.

So I suggest that you read the new book at http://TheOilConundrum.com.

Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves, more than double government estimates, according to a university study by a former Petroleo Brasileiro SA geologist.

"WHT, maybe you should consider updating your model's database."

Consider 123 Gb = OOIP and URR = 40-60 Gb. It helps, but not a lot. And with giving false hope it is only counterproductive. IIRC a 30% increae in URR only shifts Peakoil about 5 years.

Han has it right. The shift is indeed only about 5 years and you can see that in the book http://TheOilConunDRUM.com starting on page 139.

BTW, my model would only fail if no more discoveries were found. Like I said, future discoveries are built-in based on the dispersive discovery model. This incorporates past discoveries according to an accelerating search function over a finite volume. Uncertainty in the rates and subvolumes gives the long dispersive tails for the future extrapolation. Hubbert would have died to have this kind of formalism to use back in his day, but, alas, the math of stochastic processes were only starting to take hold.


Have you marketed your energy/oil analytical services to USG or other organizations?


It certainly seems that our leaders need all the help they can get.

I have on my to-do list: reading your on-line book (OilConunDRUM).

It will be fascinating to see how the World oil supply situation unfolds over the five years, given some of the predictions on the table.

Thanks to all for the enlightening discussions and info....to include stuff such as swap.com

I am sending it to Al Franken and his staffers for certain. He's the best policy wonk out there and his staff is first rate. I'll see what happens.

I sincerely hope that your work prompts some positive action.

Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves, more than double government estimates

When are they going to drill through the salt and start extracting from that Brazilian super-giant, world ff saving, cornucopian dream come true oil field? Since they are drilling so deep and through salt, is it possible there could be a blow out? How much will oil prices drop once it comes on line?

Earl - It's actually pretty easy drilling. The salt layer is thin...a few hundre+ feet and the section is normal pressure. Blow outs can always happen but the driling risks are rather minimal compared to the GOM subsalt plays. I worked on one GOM well that entered salt at 600' and didn't drill out of it till 24,000'. That's a lot of salt and we didn't have a very good idea of the pressures we would see when we exited the salt. OTOH the water depth off of BZ...that's the big technical and economic challenge.

Sanyo starts production at HUF 4.5 bln solar cell plant in Hungary

Japanese electronics giant Sanyo has started mass production at its HUF 4.5 billion solar cell plant in the Hungarian city of Dorog, the company told MTI.

With the start of production at the plant, Sanyo has boosted annual output at its base in Hungary by 30% to 315MW, said administrative chief Csaba Horváth. The investment has created more than 300 workplaces, he added.

(HUF 4.5 billion = 16.5 million EUR or 22.2 million USD)

fidusz, I was in Hungary last summer and I didn't notice much installed PV solar anywhere. The news story doesn't mention if these panel are intended for local consumption or more for export. Do you happen to have any other info on this?

That graph of energy intensity for world GDP up top in the Drumbeat is a very big deal. The gains are so consistent that they can be counted on and it's the difference between being squeezed and choked.

Yup, that's one really interesting graph.
One wonders exactly how that is measured.
One question that immediately comes to my mind is how much of that implied efficiency increase is simply the result of coasting on built up existing infrastructure? And what happens when it's time to replace all the worn out infrastructure?

Good point.

I'v seen data to suggest the world economy increases it's energy efficiency by about 1% a year.

But the same data set implied that depreciation of civilization's infrastructure is higher than that. In fact there is great research saying that the reason the developed world hit on a 2% inflation rate as a target is because that's rate at which things depreciate generally. (much variation in particulars, of course)

A government that keeps inflation at zero is making a promise the is very difficult to keep. i.e. entropy is decaying things at a 2% rate, while money is kept stable. Cash holders are given too much! Why should they be exempt from the effects of wear & tear?

There are firm theoretical foundations for having to run (or at least walk) in order to stand still!

For some details see Garrett's latest 2 papers here:

One of the proposed Texas budget cutbacks (see item below) is to eliminate state funding to counties for road maintenance. Leanan has posted items before about counties turning paved roads back to gravel roads because they can no longer afford to maintain the paved roads. Another preview of "Coming Attractions," gravel roads?

Another preview of "Coming Attractions," gravel roads?


1) Because of cost/energy.
2) Because where we are going we don't need roads in our DeLorian.

Guess which one (1) will be the right one (1) to pick from?

2) Because where we are going we don't need roads for our DeLorian.

always love to hear that BackToTheFictuture line!

Demolition by Neglect

Fascinating history and series of photographs of North Brother Island, in New York, which has been abandoned for over 50 years. It was where Typhoid Mary spent the last two decades of her life.


The author calls it a case history of "Demolition by neglect." It's an apt term for a good deal of US infrastructure, e.g., the many bridges that are in danger of collapse.

Only if you believe their projections.

Cut the graph off at present, and look at just the US. Seems we've reached plateau. The last 50 years are simply switching from biomass to importing the new technology of the developed world.

Mish has a long post on the continuing crisis in local and state government budgets, focusing initially on the Vallejo, California municipal bankruptcy (cities can, with some restrictions, file bankruptcy; states have to default on their obligations):

Vallejo Bankruptcy Plan Offers Unsecured Creditors 5-20%;
JPMorgan CEO Forecasts More Municipal Bankruptcies;
Bernanke Will Not Rescue Cities

And here in Texas, the budget battle--which will determine who loses the least versus who loses the most (no winners in sight)--has started:

 House budget plan puts Texas in reverse, stalls progress, critics say

AUSTIN — Outraged groups — from doctors and health executives to teachers, the elderly, advocates for abused children and even some Republicans — ripped the proposed House budget Wednesday, saying it would send the state backward.

Critics heaped scorn on the House GOP leaders’ all-cuts approach to the state’s giant budget hole, particularly for reductions in education that would eliminate pre-kindergarten programs, shutter four community colleges and close university opportunities for tens of thousands needing financial aid. Any advancement in curtailing high school dropout rates, improving college graduation statistics and preparing Texans for future jobs would be, at best, placed on hold, budget leaders conceded.

The GOP is currently in full control of the state government in Texas, and it's going to be very interesting to see what happens as the reality of the scale of these budget cutbacks begins to sink in with voters.

On the federal level, given the scale of the deficits, it would seem that the government has two primary options*: (1) The Texas plan, i.e., huge budget cuts; (2) We continue to borrow and spend, with the Federal Reserve continuing to gradually take over as the buyer as last resort of US debt, as foreign creditors fade away.

And of course, as I have previously noted, we are seeing similar local, regional and national government budget battles in most OECD countries.

*Technically, there are three options, if we include the Illinois Plan, which involves huge tax increases. It will be very interesting to see how much additional revenue that Illinois actually raises. I doubt that they will be successful in materially increasing their revenue.

It will be very interesting to see how much additional revenue that Illinois actually raises.

See goghoner's post below. I think there may be an answer in there somewhere. ;)

Here's a great business model -- charge your customers for the energy they don't use !

Propane dealer Pyrofax scraps fee for low use

After complaints from customers, propane gas supplier Pyrofax Energy is giving its Vermont customers refunds for so-called minimum usage fees it charged in 2010 and says it will not charge minimum usage fees in 2011.

The minimum usage fee is the difference between the gas capacity of a customer’s tank and the amount of gas a customer actually uses in a 12-month period, said Jon Whittle, vice-president of operations for Pyrofax. For example, if a customer has a 400-gallon tank and orders 300 gallons of gas during the year, the minimum usage fee would be the cost of 100 gallons of gas.


Tom Jones of Milton said this week he heard from the company it was going to void a $562 surcharge from last month after delivering 100 gallons of propane to his home.


Jones said that in addition to the $562 surcharge, he was charged $412 for the propane that was delivered, or $4.12 per gallon, for a total bill of $974.

See: http://www.burlingtonfreepress.com/article/20110120/NEWS02/101200322/Pro...

Hmm, $974.00 for a delivery of one hundred gallons of propane. Would have loved to have been a fly on the wall when that statement was opened.


Hmm, $974.00 for a delivery of one hundred gallons of propane.


The REAL charges are 26 million to deliver $9000 worth of propane to the fighers for freedom over in Iraq.

(Congress did approve payment BTW)

You got me! [hangs head in shame, scuffs left shoe]

I can see why those PV systems could make good sense. Where sufficient capacity exists, induction cooking could potentially offset a large portion of their propane usage. As the following video shows, a 3.0 kW commercial induction hob can vastly outperform a 10 kW gas unit (see: http://www.youtube.com/watch?v=H2dxbMtrgms), so roughly 6.0 to 8.0 kWh of PV supplied energy could theoretically displace a gallon of propane. In actual practice, the savings would likely be higher because as soon as you remove the pot from an induction hob its energy consumption falls to zero, whereas gas burners tend to be left on as pans are raised and items are shuffled on and off. It would also make the kitchen a lot cooler.


[hangs head in shame, scuffs left shoe]

Awww, don't feel so bad Man. We are all pikers VS groups that can screw up, get a government bailout, then get million dollar bonuses on top of our millions of dollars salery. But its tough being an investment banker.

Where sufficient capacity exists, induction cooking could potentially offset a large portion of their propane usage.

Why think PV tho? Use the sheffer dish tech. (points at profile of myself where I used to have links)

Gas price hike would raise Indiana joblessness, cut tax revenues

Based on the researchers' models, a $1 rise would mean a 1.3 percent to 1.5 percent rise in the state’s unemployment rate, which was 9.8 percent for November, the latest month available from state officials. The models also show a decline in state tax revenues of nearly half a percent.

The researchers noted the rise in gas prices that began in 2007 and culminated in June 2008 at $4-plus a gallon caused a recession nearly a year before the stock market crash began in the fall of 2008.


Global oil prices effected every country, could you explain why German unemployment rate went down from 2005 to Aug 2008


why German unemployment rate went down from 2005 to Aug 2008 ?

We have no Aladdin's lamp. Anyway it is not only because of changes in global oil prices that a country sees the unemployment rates go up or down... And the change in these rates is sometimes visible months later. It's not an high cost of oil that causes problems, but fast changes can really do (inflation or deflation movements, if hitting too hard are really like a severe flu for old and unhealthy firms).
Example? A labor market neoconservative act could bring down in 6 weeks a rate with detaxation of labour cost, even if that bring the internal revenues go down in the newt months/years causing other problems in economics. In this situation, higher costs of energy (fuel) for commuting or operating in small/medium firms and companies are largely balanced, poised and an observer cannot see clearly the bad influence of high costs or strong, heavy changes in quotations and prices.

I agree it is not just as simple as oil prices going up, but many factors involved.
One of them surely is how much oil a country uses, in the UK we are 60 million people and use 1.6 million barrels a day. If the U.S. used the same amount per person they would use 8 million barrels a day and there would not be a problem.

One of them surely is how much oil a country uses, in the UK we are 60 million people and use 1.6 million barrels a day. If the U.S. used the same amount per person they would use 8 million barrels a day and there would not be a problem.

Yeah, but what percentage of the population in the UK owns and drives a vehicle? How many vehicles total in the UK vs. US? Once someone is 16 here they have a driving license and a car. Only a small percentage living in city centers that take mass transit do not. And the vehicles themselves are massive here. Get out on the highway even in a mid-size truck like a Ford Ranger and you're dwarfed by the massive SUV's and trucks.

There is an ad that's been running lately for the new ford F-150. It's massive and they claim at the end of the ad that it represents the future - 'This is the Future'. I've been in both countries and this is a completely different culture. Please visit sometime in a bullet proof vest and see for yourself.

If US used the same amount of oil per person as UK there would be 12 million barrel each day left to burn another day either as spare capacity or to be drilled later.

"If" is a mighty big word. If the Moon was like Miami. If cancer could be cured with vitamin C. If the scarecrow only had a brain. If, if, if...

Ford F150?! Pfft... that's for widdle wusses! Real men wouldn't be caught dead in anything less than a F55O


That's the future...

Thanks for the laugh FMagyar.

Wow . . . are those numbers right? If so, we actually almost could be energy independent if we lived like you.

Of course, that is impossible given the situation as is. We cannot just push all our houses closer together.

And this is why I focus so much on electric vehicles.

IF can be turned into WHEN.


The U.S. citizens are sending their dollars to oil producing countries at a rate of one Billion a day.

High speed rail between cities, Electric trains to local suburbs, trams, and trolly buses in cities and electric cars for people to get to the stations would keep much of that money in the country.

You would not have to artificially create jobs, these would be real jobs. Building trains and rail lines. Bus drivers etc.

The U.S. imports so much oil due to decisions made in the past, these can be undone, it just takes enough people to want to.

Just in case anyone is interested here are the last three weeks of US production as reported by EIA Weekly Petroleum Status Report

Week Ending   Total US  Alaska  Lower 48 including GOM
Dec 31, 2010	5598	610	4988
Jan 07, 2011	5575	605	4970
Jan 14, 2011	5205	239	4966

The data is in thousands of barrels per day. This data can be found under:
9 U.S. and PAD District Weekly Estimates
Petroleum stocks can be found number 4 and all imports under number 7.

Ron P.

Weird. Everyone was predicting inventories would fall, but instead, they increased.

Oil down about $2.50.

How could the drop in US production (posted by Ron) not have any material impact on inventories for the week ending January 14?

Has to be imports, I would guess.

Massive "adjustments" applied. 3.8 million barrels added to crude stock by "adjustment" and 1.8 million barrels added to product stocks. That's a total upwards "adjustment" to commercial petroleum stocks of 5.6 million barrels.

The crude oil "adjustment" field was formerly labelled "Unaccounted for crude oil". So the EIA says that an extra 542,000 barrels per day of crude appeared last week but they don't know where from.

If only we could count on the "unaccounted for crude oil" to grow in output...

What they do is just call the refineries and storage facilities and ask them how much oil they have on hand. Is it any wonder that the figure is not exact and does not rise or fall in accordance with imports and production?

Ron P.

I don't expect it to be exact but missing that sort of volume seems extreme to me. Large positive adjustments seem to happen suspiciously when they are handy (such as pipeline failures and the close of the WTI front month today). But then I'm suspicious by nature :)

Helped greatly by some rather large ‘adjustments’ made by EIA totaling 3.8 million barrels of oil, this week’s EIA report show a gain in US crude supplies. Over the last four weeks the EIA has adjusted upwards crude supplies by 10 million barrels, not to mention additions of 4 million barrels to product supplies in the same period, which is the largest series of adjustments I’ve seen after following these figures for five years.

Still making the (dubious?) assumption for now that the EIA is correct, the apparent adequate supply of oil presently conceals a very deep problem: that is net imports are not growing and are falling well behind the increase in demand.

The reason the US will need more imports this year is because, to put this simply, US demand for oil has increased over 2010 – especially as compared to the early part of 2010 when the US economy was sluggish. Accordingly to the EIA’s STEO, the US will need to import a net additional amount of 500,000 bpd of oil/products in the first quarter 2011 as compared to the fourth quarter 2010 – mostly due to the fact that US demand is expected to be about 500,000 bpd or so higher in the first quarter as compared to the year ago (2010) first quarter. US domestic oil output is not expected to change much and therefore is not expected to influence the supply/demand equation (unless, for example, deteriorating infrastructure causes another ‘unexpected’ shutdown of the Alaska pipeline).

In sum, for the second week in a row, total crude imports and total net crude + product imports were very similar to the week from one year ago. Therefore with US oil demand running well over last year (715,000 bpd increase so far in 2011, although 433,000 bpd is due to increased product exports), an early 2011 year build in stocks won’t be anything like we saw in early 2010.

Oil Movements report:

Exports from the group will fall to 23.55 million bpd on average from 23.80 million bpd in the four weeks to Jan. 8, UK consultancy Oil Movements said in its latest weekly estimate.


Over the last four weeks the EIA has adjusted upwards crude supplies by 10 million barrels, not to mention additions of 4 million barrels to product supplies in the same period, which is the largest series of adjustments I’ve seen after following these figures for five years.

Freak wormhole in a pipeline somewhere leaking in crude from hyperspace?

Yes, the US is becoming a Refining destination for global oil. We have lots of spare refining capacity in the face of domestic, US oil demand that has barely recovered in the post-crisis period. In my research over the past 6 months, digging into the details of overall US exports, product and especially distillate(s) are becoming a significant component of US trade--by value. I have actual, US domestic oil demand in 2010 up around 250-300K per day, over 2009.

One emerging issue that macroeconomic pessimists like myself need to be aware of, is that as the US gets cheaper it becomes a potential destination for inward investment from foreign regions with surplus capital. This capital may decide to invest or build in HSRail, or factory floor space, or even refining capacity. Who knows, but the rattle is shaking already in this area. Meanwhile, total value of US exports is potentially headed towards 2 trillion. At that level, US exports by value would start crossing 15% of GDP. Not enough to rescue the US from all its troubles, but, enough to stay the hand of certain tipping points.

Let's see, meanwhile, if US oil product exports can hit even newer highs in 2011 over 2010.


How could the drop in US production (posted by Ron) not have any material impact on inventories for the week ending January 14?

Is it possible oil shipments bound for other countries, undeveleped ones that decided they couldn't afford the new prices, ended up coming here?

I remember during the 08 rise in oil price a similar scenario transpired.

As I mentioned elsewhere here [post above], OPEC exports in December to the US appear to have actually fell at the same time the Financial Times otherwise reported a ‘stealth increase’ in KSA output. This is due to two reasons: 1. A greater % of OPEC exports were sent to China and 2. Not all the increase in ‘output’ ends up as exports (see posts elsewhere on the exportland model). Therefore don’t look for OPEC imports into the US to help with the unusual seasonal build of US oil inventories in January – although it’s possible other non-OPEC sources, such as Russia, may export more to the US in January.

The impact of the above may not be fully reflected for a few more weeks, due to tanker shipping times of up to six weeks.

No Earl that was not the cause. US production was down by 370 kb/d. Crude oil imports were up by only 137 kb/d. Gasoline imports were down by 149 kb/d and distillates imports were down by 127 kb/d. The difference was just in reporting, that and past adjustments.

Ron P.

So I happened to catch a late night talk radio show last night where the guest and a visiting expert were discussing the Chinese leader’s visit to the US etc.

The discussion soon moved to how China’s economic policies have deliberately played down trying to create a significant “consumer” driven economy – instead focusing on policies that strengthened their export industries. The show was decidedly conservative in nature and continually derided the Chinese gov’t for not doing more to make sure that the masses of Chinese consume, consume, consume MORE !

The whole thing ended up smelling of desperation and resembled a bit of a temper tantrum being thrown by the BAU crowd because, although China was reaping the benefits of a booming economy based on exports, they hadn’t went all in on closing the loop and embracing western style consumption (there were complaints that something like only 15% of potential credit was being exploited by Chinese “consumers”).

Realizing that they weren’t getting anywhere with that line of argument – the host and guest moved onto their next favorite boogeyman – saying that the Chinese policies of not letting the masses embrace their true “inner consumers” was a way of communistic repression of free will etc. etc. And that efforts really need to be made to speed along the inevitable transformation to an open consumeristic culture (no differentiation between capitalist vs. communist at this point – just a one world “consumerist” system).

To which I thought – to what ends ?– so that the Chinese can trade their form of slavery (thought / political slavery) for our own unique brand (thought / polticial AND debt slavery) ?

In general just left me thinking – who is really more backward thinking in their actions ? Tough for us to say that the Chinese are making the worse choice by not getting their people massively in debt. Also left me wondering how much their realization of world energy issues played into their policies and how perhaps they were actually being conservative in trying to take action to ratchet down a potential explosion of consumerism that would likely undermine any energy preparations they were making as a country.

Don't oversell the wisdom of the CCP and it's leaders. They are an inherently conservative bunch very jealous of their power. If you want a good reason for them avoiding the development of a consumer society it may lie as much in their desire to maintain control as it does in any awareness of where the global economy is going.

Err, most people who get power want to keep it.

It would be nice if the leadership was better people than, well, most of us are.

Consumers like being told they are important. And for most leaders, their underlings are just not that important.

Here's a useful summary of what it would take to transition the energy system away from fossil fuels.

There's lots of claims in the story which make it seem impossible to move to renewable energy sources. For example, the claim that:

“In some real sense, we need to replace all of the power-producing infrastructure that we have today within 30 or 40 years,” says engineer Saul Griffith

This quote and others sounds like it will be impossible to build enough renewable to accomplish this. But, during the early 1970's, the US growth rate of electric generation was running at 7% a year, which works out to a doubling in production in only 10 years. And, within 40 years, a large fraction of the generating capacity presently in operation will have passed it's useful life and will need to be replaced, whether or not there is any further growth in capacity. One would conclude that there's going to be a massive building effort required, no matter what source of energy is used to meet the demand.

The article suggests that the area required for generation using PV would be very large, requiring a massive commitment of land. This might be true, but we have already made a large commitment of land which has been dedicated to buildings and roadways. Most of those buildings will need new roofs within the next 40 years. That presents an opportunity to use PV roofing instead of the conventional roofing materials, thus no new land would be required. These buildings are already tied into the grid and the grid can be used to send current from the structures to other locations where the electricity is used, such as manufacturing plants or commercial buildings.

The negativity in the numbers given gives one the impression that there's no hope for renewables. It's only in the last paragraph that the scale of US production is mentioned, the last sentence saying: "We can do it". How many people take away that hopeful message after reading all the previous negative comments?

E. Swanson

First they laugh at you, then they laugh at you some more, then they put their finger on their chin and speak in 'reasoned tones' about how your plans are questionable and 'ill-advised' and 'feelgood' ...

To hell with them.

In the mean time, the Republicans are introducing bills to gut conservation efforts like incentives for insulation. So, really, even if such a grand scheme were technically feasible, it ain't gonna happen without a paradigm shift unlike any this country has ever seen. Maybe we can do it, but we won't do it. How can anyone in the 21st century be so clueless that they would be against conservation, much less spending money on renewable energy? Oh, I forgot. If we just drill widely enough, we can restore the glory of America's past.

Boo hoo Boehner's swan song:

Don't Cry for us Argentina: We're going to make your collapse look like a tea party

Looks like NGG11 has gone from $4 to $4.75 low to high over the last 3 months. Has natural gas begun its move back to $8?


Will NG go higher than the last previous high ~$12?

I wonder how the economy will respond to high oil and gas?

Kind of like a dope addict coming off of heroine I imagine. Not good. But in the near term it will be good for NG drillers to make some money. I am just worried that we cannot keep any of these commodity prices stable, which makes your business models worthless if you are proposing to use NG to make something.

The price has been $12, $8 and $4 over a very short period of time. Eh! I know trade commodity derivatives and futures to protect a company, but ... who will want to offer a future low price when the trend is up and up. lol. Maybe I do not understand or maybe the derivatives thing is another Ponzi scheme to hide the central problem of scarcity.

Whoa there turbo, I think you need to zoom the x-axis out on that MW graph there a bit. $4.75 is a looooong way from $12. We were just discussing internally how much new gas transmission we are bringing online to transport new projects from the Marcellus Shale this year. It's supposed to be very cold over the next few weeks and storage draws have accelerated recently so it's expected prices should rise. I'm sure we'll be doing some nom'd sendout over the weekend with the arctic blast expected.

I know but historically, natural gas was way up there at $12 -- I remember my heating bills. I figure there was a real supply problem back then.

Maybe US manufacturing that left the US for China will lower demand in the US enough that it will not creep back up so fast in the States.

However, I have noticed the uptick over the last 3 months. The price is now on the up-trend again.

Could be winter demand too!

Oct - To expand on ty's position what's shocking to me is that NG is only up a little less than 20%. I don't have the data handly but historicly the price bump from summer to mid winter has been typicaly 40% to 70%. Given the series of arctic blasts (what we oil patch hands would fantasize about during the summer low price period) that they've seen up north for more than month it has to show just how soft the NG market is today. I know a lot more operators who worry about NG dropping below $4 than who smiling about the prospect of $6 NG.

Proposed California budget cuts $500 million from UC

California Gov. Jerry Brown proposed a balanced, deficit-closing 2011-12 state budget last week that includes a $500 million reduction in support for the University of California, part of a $1.4 billion cut in the state’s entire public higher education system. The 16.4 percent drop in state general fund support for UC would result in a historic shift in how California’s public research university is funded: For the first time in UC’s 143-year history, student tuition revenue will surpass what the state contributes to the university’s core operating budget. UC President Mark Yudof addressed this issue in an open letter and in a statement to the UC Regents.


Lenz gave examples of several approaches to save money, emphasizing that these approaches were examples, not recommendations: laying off 1,000 employees, deferring 775 faculty hires, reducing enrollment by 10,000 California residents or increasing student fees by 6.5 percent. Each of those actions could save $100 million.

"I want the campuses to come back (in March) with permanent changes in how they operate and the service level they provide and what the impact will be on affordability, access and quality," said UC Regent Chairman Russell Gould. "We need to lay out the implications of what the cuts mean to California."

In other words, a bureaucrat says to the dedicated tax payer of the last 2 decades waiting for their child to go to a CA school, "Let them eat cake!"

Just for a short notice, I dare to mention: we, in Hungary today pay $8(!) for a gallon of petrol, and our average monthly income actually less than $1000 (per family). So, sometimes I feel more than a bit frustrated about those American whining about petrol prices... $5 for a gallon? We'd die for such price!