Drumbeat: February 21, 2011

Libya's revolt scares oil traders: "Nothing explodes like an oil refinery and rioters tend to like to burn things," analyst says.

Libyans may be excited about the prospects of change. But energy markets beg to differ. "In general, oil markets prefer stability and stability often comes with [various] modes of governance," said Jones, hinting that markets are not perturbed by dictatorships, so long as the pipelines keep gushing.

"The best case scenario, from the oil market’s stand point, would be for unrest to calm," Jones added. "That might be at odds with the populace." The analyst would not comment on what would happen to energy markets if unrest spread to Saudi Arabia, the world’s biggest oil producer.

Paul Horsnell, head of oil research at Barclays Capital, told the UK Telegraph newspaper that Libya's uprising is "potentially worse for oil than the Iran crisis in 1979".

Fear of contagion drives oil price surge

The unrest in Libya has pushed oil prices to their highest level in more than two years, but analysts say the rise is out of proportion to Libya's contribution to world supply.

Crude oil climbs as unrest in Libya widens

Two months ago, the chairman of Libya's national oil company said that he expected the price of crude oil to surpass $100 a barrel. Thanks to a wave of unrest in his own country, he's turned out to be right.

With signs of disarray in Libya's military and protestors thronging the streets of its biggest cities, anxiety about the security of Libya's approximately 1.2 million barrels a day of oil exports drove up crude oil prices on world markets.

IEA's Birol says oil prices in danger zone

(Reuters) - International Energy Agency (IEA) chief economist Fatih Birol said on Tuesday that oil prices were in the danger zone and could rise higher if turmoil continues in the Middle East.

Birol was speaking at conference in Indonesia on Tuesday as oil prices continued their volatility of recent days on worries over growing violence in crude producer Libya.

U.S. oil prices don't matter at the pump

The gasoline Americans buy is made not just with U.S. supplies but mainly with oil from around the globe, and that fuel is surging in price.

If Libyan unrest spreads, gas could reach $5

If political unrest in Libya spreads to other oil-rich countries and the ensuing chaos disrupts crude oil production, gas prices could hit $5 a gallon by peak summer driving season, industry analysts say.

The Resurrection of Peak Oil

It has been a long wait for “peak oilers,” whose passionate belief is that the world will run out of oil in coming years, sending prices through the roof.

South Stream set for 2015 launch

Russian gas monopoly Gazprom expects the South Stream gas pipeline to be launched in 2015, the company's executive chairman Alexei Miller said today.

BP closes all Christchurch stations after quake

All BP service stations in Christchurch are closed, the company says.

The stations would remain closed until all ground-based tanks and pipes had been inspected, BP NZ managing director Mike McGuinness said.

Power company holds off on cleaning up Chicago-area coal plants

The construction permits are in and the financing is ready to go, but some of the Chicago area's biggest sources of toxic air pollution still might not be cleaned up anytime soon.

In recently filed documents, Midwest Generation signaled it might delay installing pollution controls at its six coal-fired power plants "for the maximum time available," making it more likely the aging units will keep churning out high levels of lung- and heart-damaging soot for most of the decade.

The Great Disruption is here

When we look back at this period of history, we will see that it was a time of Great Disruption. But from the chaos, a better place will emerge.

WHY DIDN'T MORE of us see it coming? After all, the signals have been clear enough - signals that the ecological system that supports human society is hitting its limits, groaning under the strain of an economy simply too big for the planet. But we didn't and, as a result, the time to act preventatively has past.

Now we must brace for impact. Now comes The Great Disruption.

Libya unrest stops 100,000 bpd oil, majors remove staff

FRANKFURT/LONDON (Reuters) - Spreading unrest in Libya shut down 6 percent of oil output in Africa's No.3 producer and prompted a host of energy firms to pull out international staff, sending oil prices to above $105 a barrel.

Libya separatists seen posing oil supply threat

MILAN (Reuters) - Political turmoil in Libya could threaten energy exports to Europe if separatists in the oil-rich east of the country target infrastructure and look for a bigger slice of revenues, analysts said on Monday.

Libya is Africa's fourth-biggest oil producer and a key supplier for Europe. Italy, home to Libya's biggest foreign oil operator Eni, gets one fifth of its energy consumption from the North African country.

Ninety percent of Libyan oil exports come from the eastern region of Cyrenaica, epicentre of the revolt against strongman Muammar Gaddafi.

Fitch downgrades Libya's rating

LONDON (AP) -- A leading ratings agency downgraded Libya's credit rating Monday as the oil-rich North African country reels from days of violence that have reportedly left hundreds of people dead.

Fitch Ratings said its rating on Libya to BBB from BBB+ and warned that another downgrade may be in the offing if there's no clear political resolution or the violence escalates. If it's downgraded another two notches, then Libya's credit rating would be considered junk - surprising for a country with no government debt.

Oil industry braces for fallout from Libya

LONDON (AP) -- Oil producing nations have emergency reserves to draw on to stabilize markets in case the violence in Libya and the wider Middle East escalates to seriously affect energy production, officials said Monday.

International executives and analysts meeting in London were nervously watching developments in the oil-rich region, worried about the sharp shock political unrest is giving to crude oil prices.

'Shtokman decision will be in March'

Russian gas giant Gazprom will decide on the amount of investment in the Shtokman gas field in March, chief executive Alexei Miller said today.

Statoil D-day for Asian yards

Norway’s Statoil has issued a tender for at least two new specialised drilling rigs for use on mature Norwegian fields, with four South-East Asian yard heavyweights reported to be in the running.

Pent Up Behind Aging Dams: Danger

Lake Isabella Dam is just one acute example of a widespread problem: Of the nation’s 85,000 dams, more than 4,400 are considered susceptible to failure, according to the Association of State Dam Safety Officials. But repairing all those dams would cost billions of dollars, and it is far from clear who would provide all the money in a recessionary era.

The Less Discussed Part of Walker’s Wisconsin Plan: No-Bid Energy Assets Firesales

The fight in Wisconsin is over Governor Walker’s 144-page Budget Repair Bill. The parts everyone is focusing on have to do with the right to collectively bargain being stripped from public sector unions (except for the unions that supported Walker running for Governor). Focusing on this misses a large part of what the bill would do. Check out this language, from the same bill (my bold):

16.896 Sale or contractual operation of state−owned heating, cooling, and power plants. (1) Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the department may sell any state−owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project under s. 196.49 (3) (b).

The bill would allow for the selling of state-owned heating/cooling/power plants without bids and without concern for the legally-defined public interest.

With part-time jobs, executives salvage salaries

As the economy sputters back to life, businesses are beefing up their management teams to help stimulate growth. Many small firms that can’t afford to hire executives full time are bringing them in to work a few days a month instead.

Central government building on fire in Libya

TRIPOLI — A central government building in the Libyan capital Tripoli was on fire Monday, a Reuters reporter said, in the latest sign that the revolt against Moammar Gadhafi is gathering strength.

"I can see the People's Hall is on fire, there are firefighters there trying to put it out," the reporter said. The building is where the General People's Congress, or parliament, meets when it is in session in Tripoli.

The privately owned news website Qureyna said flames were seen leaping from the building, and that the headquarters of the Olympics Committee was also on fire.

Polish Gas Firm Pulls Out Employees from Libya

Polish state-controlled gas firm PGNiG said Monday it’s evacuating all of its employees from Libya due to violent clashes between security forces and protesters in the country.

Armed robbers in Libya attack Serb oil workers - media

Some 50 Serbian nationals who work in the Petrolcomet oil company have been attacked by armed robbers near the Libyan city of Ras Lanuf, Serbian media reported.

"Yesterday evening, some 20 armed people attacked our camp, trying to steal our cars and rob us," the B-92 radio quoted an email letter from workers as saying.

Libya's oil money has made it major world shareholder

Libya's vast oil reserves have enabled it to invest more than $70bn (£43bn) around the world – making it a major shareholder in companies such as the Financial Times, Fiat and Juventus football club.

OPEC unlikely to take action in Riyadh: delegates

RIYADH (Reuters) - OPEC ministers meeting on the sidelines of an international conference in Riyadh are unlikely to increase output, OPEC delegates said on Monday, even though unrest across the Middle East has driven oil well above $100.

Russia wants explanation of EU energy blueprint

MOSCOW—Russia's gas monopolist says Moscow wants the European Union to clarify how Europe's new common energy policy can be implemented without harming Russia's interests.

Gazprom's CEO Alexei Miller voiced concern on Monday that the new blueprint, also known as the Third Energy Package, would hurt Russian gas supplies and discourage investors from funding gas pipeline projects.

Economy ministers appear in Venezuelan Congress for hearing

Venezuela's Minister of Energy and Petroleum Rafael Ramírez is certain that if it were not for President Hugo Chávez, Venezuelans would have not the state-run oil holding Petróleos de Venezuela (Pdvsa), oil would be depleted and Venezuela would not be a sovereign homeland.

Geoscientists calls for early utilization of Thar Coal reserves

HYDERABAD: The eminent geoscientists of Pakistan while emphasizing the need of adopting speedy measures for early utilization of indigenous resource of Thar coal said that with establishment of coal power plants would help in overcoming of energy crises as well as boot the economy of the country. They (geoscientists) were addressing the participants of national seminar on Coal of Sindh-Endeavors for power Pakistan” organized by National Centre for Pure and Applied Geology, University of Sindh at Jamshoro on Saturday.

Plea to PM not to yield to petrol lobby & encourage bio-diesel

BANGALORE: BJP President Nitin Gadkari today said he will appeal to Prime Minister Manmohan Singh not to yield to the petroleum lobby and encourage production of bio-diesel through effective implementation of bio-fuel policy.

Vail-area Rep. Polis, some energy experts doubtful oil shale will ever pan out

Congressman Jared Polis, a Boulder Democrat who represents Vail and surrounding Eagle County, is skeptical that vast oil shale reserves just to the west of his district in neighboring Garfield County are what one pro-business publication last week deemed “the brightest hope for America's energy independence.”

Green energy firm finds gold in the halls of power

In the world of alternative power generation, Bloom Energy is golden. It certainly has figured out how to get some the public's green.

Is the case for the green economy now unanswerable?

Given all the current turmoil in the Middle East, it is perhaps timely to trot out the old truism that all revolutions – democratic, military or industrial – look inevitable in retrospect. Peering back through the lens of history it is usually possible to identify the way in which the case for change had become so unimpeachable, so powerful, so right – that change simply had to come. All that is then required is a tipping point, an incident that makes the case for change so compellingly obvious that people take action.

Some schools cut lunch options for kids who struggle to pay

The Agriculture Department — which administers the NSLP — says roughly two-thirds of the 5 billion meals served under the program each year are free or are sold at a reduced price. That means you can't keep raising meal prices indefinitely, because the burden is disproportionally borne by the pupils who buy the one-third of meals sold at full price.

...Here's the option they hit upon in Lee County, one that's similar to steps being taken in an increasing number of schools across the country: Kids who can't pay get one free hot lunch. After that, they get a bare-bones "alternate meal." In Lee County, it's a cheese sandwich and a 4-ounce juice box. Take it or leave it.

It's not as coldhearted as it might sound at first.

Crude oil jumps 4% as Libya protests spread

Crude oil prices jumped 4% Monday as violent protests spread in Libya, raising the possibility that oil supplies from that OPEC nation could be disrupted.

By early afternoon in Europe, benchmark light, sweet crude for March delivery was up $3.10 a barrel to $89.30 in electronic trading on the New York Mercantile Exchange. The April contract was up $3.19 to $92.90. A barrel is 42 gallons.

Unrest in the Middle East and North Africa -- country by country

(CNN) -- Two months ago, a Tunisian fruit vendor lit a match that started a fire that has spread throughout the Arab world. Muhammad Bouazizi's self-immolation prompted anti-government protests that toppled the regime in Tunisia and then Egypt. The demonstrations have spread across a vast swath of the Middle East and North Africa. Here are the latest developments, including the roots of the unrest.

Oil-Price Swings Double as Unrest Spreads Before Saudi Talks

(Bloomberg) -- Oil-price swings have doubled this year as unrest spreads through the Middle East, source of one- third of global crude supply, hampering producer and consumer efforts to stabilize the world’s biggest commodity market.

As officials from more than 90 nations including Saudi Arabian Oil Minister Ali al-Naimi and U.S. Deputy Energy Secretary Daniel Poneman gather in Riyadh tomorrow to seek ways of curbing fluctuations, oil’s 20-day historical volatility has risen to 29.4, according to data compiled by Bloomberg. It was at 12.6, an all-time low, at the end of December. U.S. futures for April jumped as much as 4.5 percent today as violence spread in Libya, holder of Africa’s biggest crude reserves.

Qaddafi's Son Warns of Libyan Civil War, Offers Dialogue

Muammar Qaddafi’s son called on protesters in Libya to engage in dialogue or face a civil war that risks the country’s oil wealth, as a widening revolt posed the most serious challenge to his father’s four decades of rule.

“Instead of weeping over 84 dead people, we will weep over hundreds of thousands of dead,” Saif al-Islam Qaddafi said on state television. “Rivers of blood will flow.”

Libya's Ghanem can't say if unrest affecting oil production

Shokri Ghanem, chairman of Libya’s National Oil Corp, said he didn’t know if unrest sweeping the North African nation has affected its output of crude.

“Until now, we don’t have any information,” Ghanem said when asked about any such impact on production. He spoke in a brief telephone interview from the country’s capital, Tripoli.

BP Suspends Exploration as Libya Unrest Worsens; Eni Drops

BP Plc suspended exploration work in the Libyan desert as shares of Eni SpA dropped on concern that worsening violence in the North African country will disrupt oil and gas production.

BP, which has no producing assets in the country, is evacuating families and non-essential staff, spokesman David Nicholas said today. Eni, the largest foreign producer in Libya, fell as much as 4.1 percent, the most since May.

Wintershall to stop Libya oil output and remove staff

(Reuters) - Wintershall, the oil and gas exploration arm of chemicals company BASF, said on Monday it was preparing to wind down oil production in Libya and fly out international staff in response to unrest.

FACTBOX-Oil companies active in Libya, response to unrest

(Reuters) - Violence and unrest that has swept the Middle East and North Africa gripped Tripoli on Monday, capital of Libya, an OPEC member that produces 1.6 million barrels per day (bpd).

The news helped to push oil prices LCOc1 above $104 a barrel.

Foreign oil companies were reassessing operations in the country, and oil had reportedly stopped flowing at the Nafoora oilfield in Libya's Sirte basin, according to Al Jazeera, although few details were available.

The following lists oil and gas companies present in Libya.

Libyan Protester Deaths Exceed 170 as Bahrain Opposition Prepares Demands

Libyan security forces launched overnight attacks on anti-government protesters seeking to emulate the uprisings in Egypt and Tunisia, increasing the death toll over five days of unrest to more than 170, Human Rights Watch said.

The U.S. and U.K. expressed concern about the escalation of violence. U.K. Foreign Minister William Hague in a call today told Saif Qaddafi, son of the Libyan leader Muammar Qaddafi, that the Libyan government’s actions “were unacceptable and would result in world-wide condemnation,” the Foreign Office in London said in an e-mailed statement.

Bloody Clashes in Tripoli as Gov't Offices Burn

Libyan protesters celebrated in the streets of Benghazi on Monday, claiming control of the country's second largest city after bloody fighting, and anti-government unrest spread to the capital with clashes in Tripoli's main square for the first time. Muammar al-Qaddafi's son vowed that his father and security forces would fight "until the last bullet."

Even as Seif al-Islam Qaddafi spoke on state TV Sunday night, clashes were raging in and around Tripoli's central Green Square, lasting until dawn Monday, witnesses said. They reported snipers opening fire on crowds trying to seize the square, and Qaddafi supporters speeding through in vehicles, shooting and running over protesters. Before dawn, protesters took over the offices of two of the multiple state-run satellite news channels, witnesses said.

Report: Egyptian police officers arrested

(CNN) -- Three police officers in Alexandria, Egypt, have been arrested, and authorities are investigating whether they fired live bullets at demonstrators in late January, a state news website reported Sunday.

Yemen's president compares protests to 'influenza'

Sanaa, Yemen (CNN) -- Yemeni President Ali Abdullah Saleh rejected demands Monday that he step aside, comparing the anti-government protests in his country to a virus sweeping through the region.

"This is a virus and is not part of our heritage or the culture of the Yemeni people," he told reporters. "It's a virus that came from Tunisia to Egypt. And to some regions, the scent of the fever is like influenza. As soon as you sit with someone who is infected you'll be infected."

Teenager dies, 39 hurt in fresh clashes in Iraq's Kurdistan

Baghdad (CNN) -- A teenage boy was killed and 39 people were wounded Sunday evening when hundreds of demonstrators clashed with Kurdish security forces in Sulaimaniya in northern Iraq, officials said.

Bodies found after Moroccan protests

Rabat, Morocco (CNN) -- Five people were found dead Monday, a day after protests were held in cities across Morocco calling for political reform, the nation's interior minister told reporters.

UAE awards $1.1 bln in defence contracts

ABU DHABI (Reuters) - The United Arab Emirates awarded $1.1 billion of defence contracts to local and international firms with more deals to come this week, signalling continued military spending by the oil exporter.

Quashed protests show China's fear of social unrest

Beijing - China's state-run media on Monday underscored the government's heightened concern about its ability to contain social unrest, one day after authorities mobilized the security forces to crack down on attempted anti-government protests.

Policehad dispersed scores of people who gathered in central Beijing and Shanghai after an online call to participate in China's own 'Jasmine Revolution,' following the example of Tunisia.

Sinopec Shares Gain in Shanghai, Drop in Hong Kong After Fuel Price Rise

China, Asia’s biggest oil consumer, increased retail gasoline and diesel prices for the first time this year, aiding state refiners under pressure from $100 crude.

Q+A-Is China's oil demand immune to price rises?

(Reuters) - China raised gasoline, diesel and jet fuel prices on Sunday for the first time in 2011.

Simple economics dictate that demand should fall as prices rise. But in China, the situation is more complicated. Here's a look at the relationship between prices and oil demand in China.

Efficiency is the name of the new game

Pointing to the growing crude demand in the transportation sector and the impact of the rapid growth in the number of vehicles in the developing and the “transition” countries, Appert projects the world may need an additional 15.7mbpd of oil and 5mbpd of substitutes by 2035. In the meantime, carbon dioxide emission could also go up by 33 percent, posing a major environmental challenge to the world. This needs to be changed.

Shell Says It Shut Nigeria Bonga Oil Field for Maintenance

Royal Dutch Shell Plc’s Nigerian unit said it shut its offshore Bonga oil field for maintenance.

“I can confirm there’s a maintenance shutdown for Bonga this February,” Precious Okolobo, a company spokesman, said by phone today from Abuja, the capital. “We can’t say for now when it will end.”

Woodside Profit Rises 7% After Record Sales at Gas Project

Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, said 2010 profit rose 7 percent because of higher prices and record output and sales at its North West Shelf natural gas project.

Maersk Orders Up to 30 of Biggest Container Ships on Oil, Trade

A.P. Moller-Maersk A/S, the biggest container line, agreed to buy as many as 30 record-sized ships in an accord worth as much as $5.4 billion to counter rising fuel prices and benefit from expanding global trade.

Oman to raise oil output 4 pct in 2011-official

(Reuters) - Oman expects to raise crude oil production by 4 percent in 2011, helped by new discoveries, its oil and gas ministry undersecretary said on Monday.

"We expect to reach an average of 900,000 barrels per day in 2011 from 864,000 bpd in 2010 from new discoveries with other producers," Nasser Al-Jashmi, told reporters on the sidelines of a conference.

Russia may balance budget in 2014 - Kudrin

Russia may have a balanced budget in 2014, if prices for oil, its key export, are at about $100 per barrel, Finance Minister Alexei Kudrin said on Monday.

Russia to pay Ukraine $2.75 bln for gas transit in '11

(Reuters) - Russia's state-owned energy giant Gazprom will pay Ukraine $2.75 billion in transit fees for shipping natural gas to Europe via its territory, up from $2.6 billion in 2010, the company told journalists on Monday.

Gazprom says Russia could sign road map for EU gas

(Reuters) - Russia could sign a "road map" with the European Union over gas supplies through 2050, Gazprom chief executive Alexei Miller told journalists on Monday.

Gazprom: Shale gas won't help Ukraine reduce reliance on Russia

The shale gas deposits that Ukraine hopes to find and develop won't reduce its reliance on gas from Russia, the head of Gazprom Export LLC's contract structuring and pricing department, Sergei Komlev, said at a roundtable on current problems in the European energy sector.

"There is no point in hoping that shale gas will be the magic wand that ends Ukraine's dependence on gas from Russia," he said.

Gazprom says no to revision of gas contract with Ukraine

Russian gas giant Gazprom is not planning to revise its gas supply contract with Ukraine, CEO Alexei Miller said on Monday.

"Under the current contract, gas is supplied with a 30% discount compared to the price for European consumers. We do not plan any changes to the price formula or the contract," Miller said.

India’s $555 Million Coal Tax May Fund Electricity Lines

India may use part of the 25 billion rupees ($555 million) it raises this year with a coal tax to fund new electricity-transmission lines for helping distribute power from clean energy projects.

Why Obama can't save infrastructure

Washington talks a good game about transportation infrastructure, but refuses to agree on how to fund it. So let's stop waiting for Washington.

Gas pipeline explodes in east-central Canada

BEARDMORE, Ontario - Police say a natural gas pipeline ruptured and exploded into a huge fireball in northwestern Ontario, but no one was injured.

Take Your Tech Off the Grid

What do a tree-hugging hippie, a die-hard survivalist with a year's worth of Campbell's soup, and a sensible bill-paying adult have in common?

If you were expecting a dirty joke, sorry to disappoint (this is PCWorld, after all). The correct answer is: They don't like to waste electricity. Maybe you're worried about peak oil and wasting natural resources, maybe you want your tech to work on the power you get from your home generator, or maybe you just want to save a few bucks--either way, we have a few tips, tricks, and tech toys that can help you cut down your power usage.

Hold tight, it is going to be a bumpy ride

There is a running argument among oil experts as to whether the shortage has got to the stage called 'peak oil'. Some geologists believe the world has already passed that point, which is reached when new oil resources are not being created to match the depletion of oil reserves.

I have been following this argument for the last 40 years. Many of us thought the world was running out of oil in the Seventies, but new deposits were found. Not so in 2011.

Indonesia Orders Utility Listrik Negara to Buy Geothermal Power

Indonesia has ordered state-owned utility PT Perusahaan Listrik Negara to buy power from the country’s geothermal plants to support investment in the alternative energy source.
The Australian Capital Territory parliament approved legislation to extend a feed-in tariff to support the installation of medium-sized solar power plants.

The law increases the size of projects eligible for feed-in tariff support to as much as 200 kilowatts from 30 kilowatts, with plans to extend the assistance to larger projects by the end of the year, according to a statement from the territory’s government.

Australian Capital Territory Increases Support for Solar Power

Australia: Looking beyond electric vehicles

Current transport paradigms are no longer affordable or sustainable. Electrification of our urban transport system is urgently required, but we need to think beyond electric cars.

Renewable energy conference disallows dialogue on effective alternatives for conservation at UM

Last Thursday I attended the Renewable Energy Meeting held at the University of Maine and finally witnessed the politics that rule our lives firsthand.

I observed as 20 representatives from the University of Maine System laughed and hugged in complete agreement on the direction and material future in which students will learn.

From here on out, the UMaine System will be indoctrinating our children into believing the myth of “free energy.”

Got Food? Consider yourself lucky

With every purchase of industrially farmed food, Americans are voting to undermine food safety and security at the expense of the local farmer. Cozy “free trade” deals that favor food importation over local production have lulled Americans into complacency and a false sense of security. The battered U.S. dollar is still accepted as the global reserve currency today, but what will happen when the dollar crashes and there is no longer a surplus of food available at a price your family can afford?

How Much Longer Can the West Look to OPEC for Oil?

Even though OPEC's share of global oil production has been declining as a result of the west's desire to slip, or at least loosen, the supply noose held by OPEC, the cartel, as a whole, is still the largest single source global oil and Saudi Arabia is the largest, also known as the "swing producer".

Climate change? Yes, now is a good time to freak out

With all the exciting developments from Egypt, one news item may have slipped your notice: Reporters combing through the Wikileak cables revealed last Tuesday that the Saudis are very likely overestimating their oil reserves by 40 percent.

If these reports are right, the price of oil is not being driven up by speculation - it is being driven up by scarcity.

Cotton carrier bags need to used 131 times to be 'environmentally friendly'

They found that cotton bags may cause more global warming, as a greater amount of energy goes into making a cloth carrier than a polythene one.

And that a cotton bag has to be used 131 times before it has the same environmental impact like its plastic counterpart.

And if a plastic bag is re-used as a bin liner, a cotton bag has to be used 173 times - nearly every day of the year - before its ecological impact is as low as a plastic bag on a host of factors including greenhouse gas emissions over its lifetime.

But researchers found that most of us only use the bags around 51 times before they are thrown away.

US has modest goals for S. Africa climate talks

JOHANNESBURG – The U.S. does not expect this year's climate change conference in South Africa to yield a binding international agreement to stop global warming, the top U.S. negotiator said Monday.

But Todd Stern, on the first of what he said would be several visits to South Africa before the Durban talks open in late November, said he does expect progress on several fronts, including some of particular concern to Africa, the continent expected to be hardest hit by climate change.

European Union faces legal action over fraudulent carbon emissions trading

The European Union faces legal and political challenges over its handling of the carbon markets which remain in chaos after a cyber attack forced partial closure of the Emissions Trading Scheme.

UK opts out of EU's common carbon auction platform

(Reuters) - Britain will opt out of the EU's common carbon permit auctioning platform from 2013 and set up its own national platform, the department of energy and climate change said.

Climate change will force 40% shift in asset allocation

Institutional investors need to shift 40% of their portfolios into climate-sensitive sectors, including infrastructure and agriculture, to safeguard returns against the impact of global warming, according to consultant Mercer.

US scientists predict prolonged drought as Indian Ocean warms up

East Africa will receive less rainfall in years to come due to effects of climate change, a new study has found.

Scientists from the US Geological Survey (USGS) and the Geography Department of the University of California, predict continued drought spells in future during the long rains, usually between March and June, when farmers plant their crops, thus impacting negatively on the region’s food security outlook.

The following article from the BBC has a very interesting chart showing, among other things, the median ages for various countries in the Middle East. For example, the median age is 24.2 in Libya, and 24.9 in Saudi Arabia. For comparison, the median age in the US is apparently 37.

BBC: Middle East protests: Country by country

That's a great chart. The Guardian has a Twitter chart here - you can follow the latest tweets without having to read too much 'noise'.


There's now a video circulating reportedly showing the charred bodies of soldiers who refused to fire on civilians.

Edit: Al Jazeera now reporting that Libyan fighter jets and helicopters have just landed in Malta carrying at least 7 passengers...

Now Al Jazeera saying rumours of military aircraft firing on unarmed civilian crowds. In addition mercenaries are firing indiscriminately into crowds in 'drive-bys'.

Latest: William Hague claims Gadaffi is on his way to Venezuela. Not confirmed from any other sources, but that seems like a rather big claim from the British Foreign Secretary.

Reuters also reported that Gaddafi was headed to Venezuela, but they are now reporting the Venezuela is denying it.

Yes, Al Jazeera also saying that official sources in Venezuela are denying the claims. Seems like a very odd claim for a Foreign Secretary to make though?

Edit: The fighter jets that landed in Malta were piloted by senior colonels who defected after being ordered to bomb protesters in Benghazi (and after watching their comrades actually carry out the orders.)

Malta is the nearest european destination from Tripoli being only about 350km and my guess is they would not have been given any more fuel than necessary.

Very astute Tony, I never would have thought of that. Scary to think of those that supposedly followed the (supposed) orders in question.

I assume the planes were armed? Did they happen to say the make, I'm assuming MiG's?

Mirage (French)

Just listened to a doctor being interviewed on Al Jazeera. He said that they're using dum-dum bullets and he'd never seen such horrific wounds, even from car crashes.

He also said that at one point a security guard, or mercenary came into the A&E room and opened fire on the doctors and patients saying that they shouldn't be treating the traitors.

"William Hague claims Gadaffi" not exactly, here's his words

"..but I have seen information suggesting that he’s on his way to this country”.."

Fair enough, still strong language when compared to the usual diplomatic sweet nothings you expect to hear.

Am now hearing reports on Al Jazeera that Italian planes / units are being hired by Gadaffi to attack his own people. If true, I'm shocked.

Following the defection of two Libyan fighter pilots with their planes to Malta, Italy has put its forces on high alert and is moving assets to the south. There is no way (IMHO) that official Italian forces are involved in the attacks. It is possible that Italina commercial planes have been hired and then used to transport mercenaries.

Agree, Hague has used language (despicable...) that is very strong by normal diplomatic standards, good for him.

Where are the Arab nations?? just sitting on their backsides and not condemning:-(

There is no way (IMHO) that official Italian forces are involved in the attacks

I haven't heard anything else since it was initially mentioned so perhaps a misquote. Otherwise I could only think it was the Mafia. Certainly not official Italian forces (although is there so much difference these days??..)

The Arab nations and the UN - the peacekeepers should be stepping in to stop the massacre.

Where are the Arab nations?? just sitting on their backsides and not condemning:-(

That's b/c most of them are sitting on their own powder-kegs surrounded by exploding fireworks.

Once the Libyan domino falls (and with every passing minute Gaffadi's hold on power is slipping) the big question on their minds is who's next?

Right. There's even talk about this spreading to mainland Africa - wonder if Mugabe's giving it more than a passing thought?

igreewithnick, if Mubabe is not giving it more than a passing thought, he really ought to.

Maybe time for a lot of these long time dictators to retire some place far, far way.

Fascinating article by Al Jazeera here:


They have a point. Up until now I didn't even realise things were kicking off in Gabon at all!

if Mubabe is not giving it more than a passing thought, he really ought to.

The question is do you need the sense of brotherhood that I think goes along with Islam, for this to work. Or can people who are much less united also succeed. [I know Eqypt is 10% Coptic, and the movement was very secular, but there was a real sense of one people sticking up for each other, that might not transfer to other cultures.]

Brotherhood? Naw, self-preservation is a much better motivator.

I was just talking to someone from Togo, and she said that tribalism is a very big factor in preventing citizens of sub-saharan African nations form uniting against their oppressive regimes. The northern Arab states are much more unified linguistically and culturally.

Update: apparently iagreewithnick, Mugabe is giving this more than a passing thought.

Posted on AJE Libya blog:

12:53am: Dozens of students and political activists have been arrested in Zimbabwe for watching Al Jazeera's reports on uprisings in north Africa, reports the New York Times.

Are these thugs too dense to know that the world is watching them too?

Arrests do not play well on the home front either.

Arrests do not play well on the home front either.

They've worked well for him in the past. I bet China's pre-emptive arrests (and other actions) will easily be able to contain this (there was some action in Bejing). As for R Mugabe, I don't know if he can waether this. But African nations usually have severe tribal differences that can be exploited.

I'm sure this is being watched carefully in Thailand, although you would know it from the English language press, which is ignoring the issue almost completely.

But the Thai military did kill 90 something protestors in Bangkok last May to preserve a semi-democratic regime against popular (although not universal) movements for change.

The Thai government has also been systematically arresting dssenters and shutting down websites. There was a significant arrest last night, although I doubt any link to the Middle East as this is part of an ongoing effort.

The parallels aren't perfect, but I am sure change in the Middle East will boost opposition movements here too.



What do they care of the world?

Will other nations stop trading with them? Probably not.

Will the UN act militarily? Don't make me laugh.

Will strongly-voiced condemnations or a resolution stop a flying bullet? Not likely.

If Egypt manages to claw back or freeze much of Mubarek's wealth, the die will be cast. Any despot will spend his money while in power to buy allegiance and punish dissenters rather than ducking and running. Why hide in poverty rather than rule in riches, if the only thing in the way is big pile of bodies?

I wondered if Quaddafi had an umbrella yesterday to shield him from drone cameras. Maybe the leaders worry about disappearing in an unexpected missile explosion? If so, I think they far exaggerate the reach and speed of the CIA these days.

The umbrella was to demonstrate that he was talking live or very recently recorded (it was raining in Tripoli) at the time of the broadcast). He claimed he had just come back from Green Square where he had met young people there in the rain. That's what he said anyway.

Are these thugs too dense to know that the world is watching them too?

And what is "the world" gonna do to them, as individuals?

Right now the thugs have what to fear? If they are profiting from the thuggery in the now, it'll continue up to the point when it is no longer profitable at which point they will go and "thug" for the next guy.

Libya if I remember correctly is in mainland Africa

You know what I mean! ;-)

Am watching Gadaffi implode live on Al Jazeera right now. Calling everyone rats and saying how he will die a martyr..

Hopefully somebody obliges him soon.

Talking from the remains of his home bombed by the US Air Force in 1986?

Apparently so. He's calling for pretty much all out civil war from what I can make out..

According to wiki, the Libyan air force has ten C130s and about a dozen helicopters of US origin. In order to prevent these from being used for "crimes against humanity", the 7th fleet should "reposess" them.

Urgh, I think things are going to get quite nasty tonight.

"Hello, Onstar."

"Yes, I have a fleet of choppers that are being used to oppress a population outside the boundaries of the use license. Can you help me?"

"I've disabled the vehicles, sir, and alerted the UN. You'll hear from the Secretary about entering arbitration shortly."

Somehow I doubt we have a back-door into the systems. Putting a cap on flights for the country would involve a good bit of risk. Has anybody said that is even an option under consideration?

Paleo - If the Libyan aircraft are properly equiped they should detect being lite up by one of our jets. That should produce a radical change in attitude without firing a shot. The bigger question is whether the Navy would put planes in Libyan airspace right now.

Canadian General Lewis McKenzie who was a commander in Serbia in 1992 said something to the line that nothing brought Serbian compliance better than low altitude high speed overflight of a few F-15s.

Ahh Serbia. When an embassy got bombed "by mistake".

(the Internet version - a government was passing military intelligence so the embassy was mistaken for a target)

I wouldn't be at all surprised if exported systems included back doors, kill switches, or a variety of useful-to-know-about flaws.

After all, who puts all those bugs in Windows? Could it actually be that insecure by accident?

Yeah, it really could be that insecure by accident. "User friendly" for mass market is more important than secure, and as such, colors the designers work.

I wouldn't be at all surprised if exported systems included back doors, kill switches, or a variety of useful-to-know-about flaws.

I bet foreign buyers are very paranoid about that possibility. And the hardware vendor selling the aircrafts loyalities lie with his beancounters, not with the Pentagon. So really I doubt it.

Usually the pressure points that can be applied have a lag time, denying spare parts, and technical assistant with maintenence. But if they stockpiled spare parts, and trained their own maintenence crews, rather than relying on expats, they can simply waitout any such boycott.

Who would have thunk it that a simple vendor in Tunisia, setting himself on fire, coupled with the presence of Facebook would turn out to be such an incredible Black Swan event. This is going to get even more ugly and the interesting part will come when the winners of "democracy/ freedom" have to figure out what that means.
I would be more worried but I just heard a talking head on cable assure everyone that Saudi Arabia has 4 million barrels per day of spare capacity they can turn on at will, so no problem on the Libyan losses. Sometimes you just want to tear your hair out.

I'm not sure that this qualifies as a "Black Swan." Just because it wasn't in the public eye of the west doesn't mean it wasn't completely predictable, indeed to be expected.

Haha, I think in a weird, self-unfulfilling way you've qualified that as a Black Swan event:

Based on the author's criteria:
1. The event is a surprise (to the observer). It was obviously a surprise to a lot of the West.
2. The event has a major impact. This is probably the biggest global event since 9/11 if not 1989.
3. After its first recording, the event is rationalized by hindsight, as if it could have been expected (e.g., the relevant data were available but not accounted for). This is where you come in *grin*

1. The event is a surprise (to the observer). It was obviously a surprise to a lot of the West.

The arab and most of the Islamic world has been oppressed for well over a century. And other than a few military coups, this really is without precedent. I really don't think it could have been forseen. Its more like the butterfly effect setting of a nonlinear instability. By this a mean a quasi stable instability, unless the disturance is of great enough magnitude it dies down (dissent is crushed), but if it has enough initial energy it can pass the tipping point. That tipping point is mostly mass psychology, and seems to have been crossed.

Very similar to having a drought striken forest. If a wildfire ignites it will be catastrophic. But most of the time it doesn't happen, and the forest is still there when the rains come back.

If the "surprise" aspect of a Black Swan is defined only from the perspective of the "observer" than it begs the question of who privileges the particular observer?

It seems to me to make little sense to say an event is a Black Swan simply because western media wasn't paying attention to it. Did the Arab world know this was coming? Did the Russians, the Chinese? the Institute for Advanced Black Swan Detection?

This could quickly get you to the rather absurd position that an event could be a BS for the population of a country, but not to its government, or what is a BS to one country is "common knowledge" to another.

And the reality of this particular event is that if you had any particular interest in region, you would have known that this was coming. Maybe not the particular day, month or year, but the internal pressures building in these countries was simply not going to let the current set of autocrats rule happily ever after.

Did the Arab world know this was coming? Did the Russians, the Chinese?

I really doubt it. As I said above they've been oppressed for generations. The main attraction of Islamic fundamentalism and terrorism was more one of desperation as a possible means of liberation. Now suddenly a primarily secular means seems available.

I've always wondered about tyranical leaders. Most of the population wants them gone (usually dead), and only fear and lack of organization with no capability to coordinate prevents an immediate overthrow. Clearly if everyone suddenly just said NO simultaneously, the tyrant would be completely powerless. So maybe modern comminications has enabled something like that to come about. Perhaps we are witnessing an unexpected phase change in the way the dynamics of human societies function. If the population can plot revolt faster than the kings henchmen can investigate and shut them down, monarchy has suddenly become untenable.

If the population can plot revolt faster than the kings henchmen can investigate and shut them down, monarchy has suddenly become untenable.

2011 as it was in 1774, 1789, 1848, 1917...

A lot depends on what military leadership says and does.

There were articles back in August talking about how there will likely be Egyptian unrest after gain export from Russia was banned, so I'm not sure it wasn't predicted at some level.

the big question on their minds is who's next?

I think they all know they are on the list. The big question is how to stop the revolutions. So far they don't have a model of an approach that works. If Qaddafi prevails (I'm not taking it as given that he won't), then they have an example to copy, and the wanna be protesters see that it can go horribly wrong. I sure hope it doesn't go down like that, that would be pretty horrible.

This domino effect was belittled when the Egyptian protests came onto our TVs, but did you notice the reaction of the stock markets in Saudi Arabia and the Arab/north Africa ETFs? There was barely a ripple in the Dow, but these markets sold off about as badly as the Egyptian market. This was not a celebration of democracy in the region or higher oil pricing. I wrote an article about these market reactions over at Seeking Alpha.

The contagion may play out well for what The Momentum Peak Forecaster is now predicting. If you're not aware of this, it is a market signal invented by Institutional Advisors that has issued only 6 warnings over the last 40 years. A historic collapse in the market being monitored happened withing 3 months in all 6 cases. It just issued its 7th warning December 31, 2010. I wrote an article I just published also at Seeking Alpha all about its implications. This model doesn't have any geopolitical components, but the collapsing Middle East regimes will greatly exacerbate what may be happening.

But the man is not infallible. CXO Advisory issues grades on "the gurus", listing their bull/bear market calls and tabulating the rights and wrongs. Hoye's report card is only a 39%. Their average guru score is 48%. A coin flip is 50%. If you look over the calls on his report card, you see that he is something of a permabear. He is of the opinion that running the economy by committee, which all of the non-BRIC, Anglo-European bureaucracy of the old world has taken to doing, has always proven disastrous throughout history. He is going to be right about that - eventually.

I allowed myself to cut and paste a paragraph from your article.

So we have a 39% man in a 50% world who assumes a "permabear" position..so certain number of times he will be right. Same would happen to a permabull too, eh?. And then you make the guy sound like Delphi.

Yes, kudos to Hague. The time for diplomatic language is over.

And in more ways that one. Reporting from AJE:

9:24pm: BBC reports Libya's ambassador to India has resigned. If confirmed, he will be the seventh ambassador to quit their posts in protest at the violent crackdown against civilian demonstrators - and may signal the beginning of a collapse in Libya's diplomatic corps.

Every time I see 'Hague', being American I think The Hague/Den Haag, i.e. the seat of the ICC. Hopefully they get involved soon enough...

I think of Alexander Hague, the guy who was so ready to take over the country when Reagan was shot.

Am now hearing reports on Al Jazeera that Italian planes / units are being hired by Gadaffi to attack his own people. If true, I'm shocked.

I too would be shocked. Although with Berlisconi (spelling?) in legal troubles who knows....
Realistically if planes have Italian markings, it is almost certainly a false flag operation meant to portray the protestors as part of a foreign conspiracy. Italian would be the scapecoat of choice as they occupied the place from 1911 to the end of WW2.

And, for the believers in Nostradamus there was some kind of 'Italy gets involved with a military attack' supposed to happen in 2010/2011.

(I prefer a theory about a conspiracy to fake an attack, but those who don't want conspiracies can choose prophesy)

Don't forget our US neighbor, Mexico. Mexican population has increased faster than India, increasing to more than 4 times the population in 1950. The distribution of population is similar to the Mid Eastern countries, with respect to age, with the median age at about 25 years. And, as we know too well, Mexico appears to be running out of oil, which is the source of considerable income for their economy.

E. Swanson

I think any attempted revolution in Mexico has a huge problem. It might be easy to get the official government to give in, but the Mexican gangs aren't going to roll over and go away. And, there is no doubt that they wouldn't be squeemish about using brutal means to prevail. I could imagine the US getting drawn in.

If the US gets dragged in to Mexico, expect it to be ugly in all the ways wars are traditionally ugly, and too close to home for John Q Couchpotato to ignore.

Yes. Any Mexican troubles would have at least three major sides, the government, the people, and the criminal gangs. It could be really messy.

As I've been saying for a few years now . . . there is currently a (drug) war raging just south of our border than has taken far more lives than have been lost in Iraq in the past 3 years or so.

more lives than have been lost in Iraq in the past 3 years or so

Would that be US military lives or Iraqi lives? Or both? Just curious...


PS: I agree, the situation in Mexico is tragic.

BEIJING (AP) — China is raising its state-controlled gasoline and diesel prices as global oil prices continue to climb. The move is expected to be unpopular as citizens wrestle with rising prices for food and other items.

Gasoline and diesel prices will go up 350 yuan ($53) per ton starting Sunday, according to a statement posted Saturday on the website of the National Development and Reform Commission.

China's top economic planning body said that means a jump of 0.26 yuan (4 cents) per liter of gasoline and 0.3 yuan (5 cents) per liter of diesel.


Still have no idea what the current going price for a gallon of gasoline in Beijing is...anyone?

China's gasoline and diesel prices are higher than ever and Chinese motorists pay much more than U.S. drivers. In Beijing, the price of 93 octane gasoline rose 0.28 yuan to 7.45 yuan per litre ($4.28 per gallon).


Jeffrey J. Brown & Samuel Foucher just made the astounding finding:
"Note that in four years Chindia’s net oil imports as a percentage of GNE (Gross Net Oil Exports) rose
from 11.3 percent to 17.1. If we extrapolate this rate of increase, it suggests that
Chindia will be consuming 100 percent of GNE around 2025."

That forces US imports of 65% of oil consumption to ZERO in fourteen years.
OR US & Chindia skyrocket prices as they scramble for the little that is left.

Our critical issue is to rapidly transition to alternative fuels NOW.

See: Egypt, a classic case of rapid net-export decline and a look at global net exports

This follows up on their 2010 presentation:
Peak Oil Versus Peak Net Exports--Which Should We Be More Concerned About?
Jeffrey J. Brown, Samuel Foucher, PhD, Jorge Silveus

"Our critical issue is to rapidly transition to alternative fuels NOW."

That's a production increase of around 1 million bpd/year, for the next 14 years (if you mean liquid fuels). Whether or not these fuels are going to be compatible with current ice vehicles or replacement vehicles compatible with other fuels (LNG, ammonia, E85), that's a tall order. I expect it ain't going to happen, nor will the US scale up rapid transit enough in this time frame.

We need to seriously discourage discretionary uses of fuels (ICE Toys) now (ain't happening) and replace ICE tools (lawn mowers, generators, tillers, etc.....ain't happening), oil burning furnaces (happening now), find alternatives for the manufacturing of products (drives up costs).

I'm glad I know how to repair bikes and grow things.

As noted in the article, we really don't think that Chindia will be consuming 100% of global net exports in 2025, but I don't think that there is any question about the trend line--and it's useful to illustrate what the current trend shows. And of course a crash in China and/or India is always possible, or some would say likely; however, looking at the Thirties case history, global oil consumption, after falling in 1930, rose throughout the Thirties.

There is trouble all over the Middle East, especially in North Africa, that could easily affect oil production somewhat and oil prices dramatically. In the soon to be divided nations of North and South Sudan it looks like there will be serious problems ahead.

Big oil trouble brewing in South Sudan

The state of South Sudan that will become the world's newest nation in July will not share its oil wealth with North Sudan. The secretary general of the Sudan People Liberation Movement, Pagan Amum, told reporters that "the notion of sharing wealth will not be there." The South will only pay a fee for the use of the pipeline to Port Sudan. North Sudan is currently in economic crisis with soaring inflation and shortages of hard currency.

Okay, got that? North Sudan is in serious economic trouble and South Sudan will not share their oil revenue with them, but will pay them a pipeline fee for the pipeline that runs right across North Sudan to the Red Sea. However North Sudan could easily just shut the pipeline down. After all the export point is in their country. Or if some local citizens get really mad they could easily just blow it up.

Ron P.

We might finally find out for sure what the Saudis can produce on a sustained basis, if there are production disruptions elsewhere, but not in Saudi Arabia. Their 2005 production rates were 11.1 mbpd (total petroleum liquids) and 9.6 mbpd (C+C). Their 2005 consumption was about 2.0 mpbd.

At their current rate of increase in consumption, their 2011 consumption would be up to about 3.0 mbpd. So, if they wanted to match their 2005 annual net export rate of 9.1 mbpd, in 2011 they would have to average a total liquids production rate of about 12.1 mbpd (assuming 2011 consumption of about 3.0 mbpd).

Here is what BP shows for recent annual total petroleum liquids production for Saudi Arabia:

2005: 11.1 mbpd
2006: 10.9
2007: 10.4
2008: 10.8
2009: 9.7

Right now we are just stumbling and bumbling into the long emergency, something that is imperceptible to the vast majority and to those currently in charge of our political system. The long emergency, like the frog slowly boiling, won't get people's attention until it is too late, if it is not already too late. People are either in adjustment mode or denial mode or both without any real understanding of the forces that our shaping our world.

Perhaps what we need is a sort of shock doctrine on steroids, not for the purpose of imposing a neoliberal paradise, but for the purpose of causing radical and immediate change in our consumption patterns and the things we invest in to prepare for the current and coming decreases in oil production. Besides, our continued support of the autocratic regimes of the middle east is anathema to our values and anathema to our self interest in terms of defense expenditures and our security.

The shock of a sudden decrease in availability of oil from the middle east, however, may do little to change the perceptions of those wedded to the idea that there is plenty of oil available in the good old U.S.A. Instead of a massive effort to increase conservation, efficiency, and alternatives to oil, the current crop of crazies may just dig in their hills and desperately seek solutions through attempts at even more intense drilling.

My sense is that something radical needs to happen to shake up the political order. On the other hand, the consequences of that are not at all clear.

My sense is that something radical needs to happen to shake up the political order.

Sounds like someone wants to start a protest for regime change - go for it, it seems to be working in the ME.

A protest is not what I had in mind. What I had in mind is events on the ground that would force people to see that we cannot go on as we have been. We are gradually descending into the abyss and there is virtually no one at the political level who recognizes that or is serious about really doing anything about it. They are too busy playing games of chicken as to who will be blamed for shutting down the government. In the face of crisis, there are many in congress who are totally happy with shutting the government down. This is insane.

Well, screw it. I hope everyone is happy trying to pay for gas for their SUVs for their 30 mile commutes. Good luck pumping enough oil right now to make up for the possible shortfall in the middle east. Oh, but they will blame all the wrong suspects.

Come to think of it, a mass protest would be a good thing about right now.

Come to think of it, a mass protest would be a good thing about right now.

But, to quote you "Oh, but they will blame all the wrong suspects."
Including especially peak oil proponents.

"Right now we are just stumbling and bumbling into the long emergency, something that is imperceptible to the vast majority and to those currently in charge of our political system."

The "impercetpible" part is what bothers me. Over the years I kept telling myself that as conditions got worse, more people would start to "wake up" and there would be more people to work with.

It seems the opposite is happening. Most people seem less willing to "discuss" our situation rationally, and instead seem to be digging themselves deeper into the hole. They want to focus on the issue causing them pain and ignore the bigger picture - it just confuses them and the do not have time or patience to think clearly anymore.

And as discussed in yesterday's DB, because of financial hardships many people now are falling through the cracks and they no longer have many, if any, options.

My "15 Minutes" Titanic Analogy

Consider the first 15 minutes after the Titanic hit the iceberg versus the last 15 minutes before the ship sank. In the first 15 minutes, only a handful of people knew that ship would sink, but that did not mean that the ship was not sinking. In the last 15 minutes, it was readily apparent to everyone that the ship was sinking, but by then it was far too late to try to get to a lifeboat.

Roy Zimmerman put your analogy to music.

"End of the Ship" by Roy Zimmerman


Reminds me of the example Nate gave in the Prophets of Doom show. People who lived several miles downstream from a damn were far more worried about the danger of its failing than those living right under it. The more danger, the deeper the denial.

Leanan, a dam is a barrier to obstruct the flow of water. Damn is a cuss word. Sorry to be such a damn nitpicker. ;-)

Ron P.

In this part of the world, those words are often interchangeable, as in "Glen Canyon Damn," an true obsenity.

Hi Leanan,

Interesting. Maybe those "under" could not as easily think about ways to cope, there being fewer of those ways and/or the coping might involve considering more drastic options. (i.e., move.)

Are we talking to 'influencers' or are we just preaching to the choir?

Sustainability solutions need the power of networks

"Instead of trying to communicate with thousands of people, we can be more effective by using the structure of social networks to spread information," says Thomas Dietz, MSU assistant vice president for environmental research and a sociologist. "By communicating with the people who influence decisions in a network, we can have a dialogue with them and learn what is important to those groups. The influencers then spread the information to the rest of the network."

That's pretty much the gist of what us doomers have been saying...

As the squeeze of the long emergency sets in, we will: 1. Do the wrong thing. Lower gas taxes, blame the immigrants and public workers, relax rules and regulations, generally make our predicament worse. 2. Be unable to do the right thing. There won't be money for massive investment in alternatives and mitigation. We'll be locked-in to our high energy, high cost infrastructure and we'll have neither energy or money.

The public is less informed. Less educated. Less able to relate to others. Has less money.

Why would this end well?

Happy Monday morning!

Hi Snarlin.

I had an experience 2 weeks ago that cheered me immensely.

We went to two small parties (25 people total) over the course of a weekend. In both cases, 50% of the people were very casual acquaintances or strangers.

Out of those people, 2 were very peak oil aware- one had bought a Yaris nearly identical to mine under the same rationale- and the other had a pal who had been invited and couldn't make it as he had recently purchased and moved to a farm because he thought food was going to be an issue sooner rather than later. And the guy telling the story didn't think the guy on the farm was nuts.

So 2 occasions where I was not the most radical person in the room. And where I had not known the other people previously.

Now admittedly, both rooms had a preponderance of computer programmers and science fiction fans.

But I don't think I'm the only person at the Oil Drum with smart friends.

I suspect that our numbers are growing, and while we are certainly not mainstream, the Peak Oil argument is not as far out there as it was 5 years ago.

Or maybe it's a Canadian thing. :)


I brought up peak oil at a gathering of friends recently and was surprised at the level of knowledge and acceptance.

It appears that among "certain circles" it is already background knowledge.

Or maybe it's a Canadian thing. :)

No. I think we have a few percent of people who have figured this out. But we have many many more who are either indifferent or plugged into disinformation.

And yes SciFi fans would be far more likely to think about the big picture.

My experience is that those who are already struggling are more receptive (misery loves company), and those who are still doing relatively well will change the subject quickly, especially realtors, developers and financial service sector types. Limits to growth don't compute.

I tend to agree. I'm a Power Systems Engineer and my wife a Director for a consulting firm. We both make good money in the DC area but my wife makes about double what I make and is very successful and very intelligent. I tried the whole "convincing my wife" BS. She's more onboard than most, but me dwelling on it generally does no good. As an Engineer I come at it from a giant science experiment perspective, but she doesn't see it that way and generally trusts in human ingenuity. Plus frankly gas would have to be $15/gal before it really hit us in the pocketbook to the point where she would start to panic. And who am I to blame her, so far she's been very successful and high oil prices haven't hurt our lifestyle one bit. Like Ron always says - people react to events, not rhetoric (or something like that).

If we were in a different financial situation then I'm sure the tables would be completely turned. I'm still slowly working her into it. We now have a precious metals account that we use to buy PMs. I bought a whole bunch of silver American Eagles at $14/oz and they've more than doubled in value in just a few months and now she's excited about that. I've also gotten more into growing our own vegetables and she's onboard with that. As long as I frame it in terms of saving money and shy away from the whole TSHTF type thing then it's cool. She also got big into firearms last year so now we have a whole bunch of guns and ammo.

Hi ty454

That's great you have financial resources. Good luck with figuring out how to prepare and use them well.

re: "She also got big into firearms last year so now we have a whole bunch of guns and ammo."

In DC? How come?

re: At the risk of repeating this link: www.oildepletion.wordpress.com, or previous comments (last few days)...(please see http://www.theoildrum.com/node/7518#comment-769138)...

Since you live in DC area, and you have both a "science perspective" and Director spouse, plus financial resources, you're in a position to promote the above strategy.

It's one that makes use of the science/engineer perspective, *and* "human ingenuity" - although perhaps not in the direction your spouse has in mind.

Ingenuity nonetheless.

If gasoline reaches $15.00 a gallon, the question is not whether you can afford to fill your tank, it is will you or your wife still have a job?

Gas could hit $15 a gallon by the middle of the year as an expression of hyperinflation and not as supply.

$15 without other wage/price increases is where things get "interesting"

My sense is that something radical needs to happen to shake up the political order. On the other hand, the consequences of that are not at all clear.

Personally I think the consequences are quite clear and I think it is answered in: Is the case for the green economy now unanswerable?

When you look at the coalescence of economic forces driving the shift towards a green economy – climate change, rising oil prices, collapsing fisheries, depleted minerals, desertification, falling renewable energy costs, choking air pollution, the rise of emerging economies, stalled living standards in the industrialised world – it is clear that opponents of the green economy will be remembered in much the same way as those first Model T Ford customers who famously just wanted "faster horses", or the IBM chairman who once predicted there was a global market for five computers.

As the UNEP report makes plain, critics of the green economy are on the wrong side of the economic argument and the wrong side of history. The case for a green economy is increasingly unanswerable – all we need now are the tipping points that will help business and political leaders realise that this change is inevitable.

I think what is happening right now in the ME is precisely one of those tipping points! It is one of the consequences of the "Brown Economy" and shows clearly why it was a flawed paradigm. It's already having affects in Europe and China as well. As to which side of history the majority of the American people will be on? Perhaps the world will just pass them by and make them irrelevant. America, like everyone else, will giving up BAU in the near future, whether it wants to or not. What remains to be seen is, if it can ride the giant wave or if it will have a spectacular wipeout. Surf's up, boys and girls, hangten!

The 52 page synthesis for policymakers crosses many of the T's and dots the I's.

So far, when asked about Libya, the Saudis still say supplies are "ample".

Also, the media seems to have forgotten that they reported in late January that KSA would make a "stealth increase in output" during February - due to events in Africa and the Mideast. Shipping reports indicate, if anything, that KSA has reduced exports during February.

Lacking any movement by KSA, I assume that the sustainable output level from KSA for all practical purposes is, well, pretty much where they now.

Saudi Arabia Says Oil Market in Balance, Inventories Ample
By Wael Mahdi - Feb 21, 2011 12:49 PM ET

Oil market supply and demand is balanced and inventories are ample, Saudi Arabia’s second most senior energy official told reporters before an international forum aimed at reducing price volatility.


The Financial Times is reporting that the Libyan Crisis has led to the shutdown of the Libyan ports and refineries. The problem then might become one of lost refinery capacity, not just the loss of crude in to the world's markets. Even if it turns out that the Saudis can provide the crude oil, it can't be converted to products without refinery capacity. Or, the location of the available refinery capacity might not be near the markets where the products would be used. Not a good situation...

E. Swanson

The problem then might become one of lost refinery capacity

So what is Libyan refining capacity? If it is just enough for domestic use it is probably a non issue (I think domestic consumption will be very low until the crisis is resolved, so they probably won't be importing refined product). But, if it enough is for significant refined export (i.e. they optimized the business, by doing the value added refining themselves), then it could be an issue.

That's a good question and I don't know the answer. The EIA says that Libya produced about 1.6 mbbl/d in 2009. There's also data regarding Italy, which imported about 1.93 mbbl/d in 2009, of which 0.47 mbbl.d came from Libya. Italy's net imports, however, were 1.36 mbbl/d, so they must be refining the crude and then exporting product. There was a news story today about the Italian Prime Minister, Berlusconi, had called Qaddafi today. Do you think Berlusconi might be worried about the oil supply for Italy?

E. Swanson

Last evening I was talking with my mother on the phone and we started talking about the state of the economy, jobs, etc.

Then she said: But the people on the TV said that we are in a recovery! When I mentioned the paltry number of jobs that were created and how we needed a minimum number of jobs per month created to just stay up with population growth and that the govt didn't count people who stopped looking for work in the UE number...

...She said, but the people on the TV said that Americans are becoming more confident...they are investing more...look at the stock Market, it touched 12,000 the other day!

I switched the subject to the weather.

This followed my unsuccessful bid to convince my wife that we should sell our mutual funds now (we were trapped in the big crash)...she doesn't want to sell "because we will pay tax on them"...I asked here how she would feel if the market crashed again and never came back as high...She obviously has more faith in the market than I do.

A mindset is a terrible thing to waste...

Can't really blame them. The story just about everywhere is that the economy's improving.

For the wealthy, a return to luxury spending

Wealthy Americans seem to have decided that it's OK to splurge again — a hopeful sign for an economy mired by slow growth, stubbornly high unemployment and depressed home prices.

Luxury and high-end marketers have picked up on what they hope is a growing trend, offering products that bank on a looming spending spree. Germany's PG-Bikes is rolling out the $80,000 Black Trail, a battery-powered bicycle. Swiss watchmaker Richard Mille is selling $525,000 timepieces. Steinway has launched a John Lennon-themed grand piano — at $90,000 and up. After selling out a $245,000 model, automaker Porsche is planning the 918 Spyder, a hybrid car that could sell for more than $630,000.

Maybe you and your wife could compromise, and sell part of your mutual funds?

Hmm...my concern is twofold: Is this a 'real improvement', and no matter the answer to that question, how long till the bottom falls out again?

I was thinking of using the proceeds of selling our mutual funds to pay down our mortgage...or to keep in cash...

Selling a small portion of our modest mutual funds holdings may be the best I can negotiate.

We certainly won't be buying any of the conspicuous consumption items you listed above!

Even if we won many tens of millions in a lottery we wouldn't be interested in that stuff...

Maybe I should lobby Congress to cut Social Security and Medicare/Medicaid/SCHIP to fund bigger tax cuts for the wealthy and more investment in the MIC sector so the stock market goes up and we all feel richer and keep our money in there...

I was thinking of using the proceeds of selling our mutual funds to pay down our mortgage...or to keep in cash...

FWIW, cashed out my very modest IRAs in '06 & '07, paid the taxes, took the 10% penalty and did just what you suggest with the balance. Very glad to have done so...

Good luck with the spousal unit.

I salute you for your wisdom.

I didn't even raise the idea of cashing out our IRAs due to the 10% penalty on top of the taxes.

It is amazing how simple marketing ideas can be panted and talk hold in the mind as immutable truths, not to be disturbed by evidence to the contrary.

Hi Heisenberg,

re: "A mindset is a terrible thing to waste..."

Speaking of mindset, a friend recommended this book, and I find it so far, interesting: http://mindsetonline.com/

Just be prepared to find a substitute for the definition of success.


Thanks, I will take a look.


What Is the New Normal Unemployment Rate?

By Justin Weidner and John C. Williams

Recent labor markets developments, including mismatches in the skills of workers and jobs, extended unemployment benefits, and very high rates of long-term joblessness, may be impeding the return to "normal" unemployment rates of around 5%. An examination of alternative measures of labor market conditions suggests that the "normal" unemployment rate may have risen as much as 1.7 percentage points to about 6.7%, although much of this increase is likely to prove temporary. Even with such an increase, sizable labor market slack is expected to persist for years.

Don't focus to much on the unemployment rate. Other measures, such as total earnings of employed workers are also important. In particular, it is unlikely that the unemployment rate will go back down to the 5% range anytime in the next several years.

Paying down your mortgage is generally a good investment, depending on the interest rate. If you have N years on your mortgage at I% interest, paying down your mortgage is equivalent to buying a N year bond at I% interest. A $1000 deduction of mortgage interest exactly offsets a $1000 interest income, provided that you are itemizing deductions due to other taxes, medical expenses, etc., and provided that your deductions are not subject to phase out.

I was thinking of using the proceeds of selling our mutual funds to pay down our mortgage...or to keep in cash...

Personally, I'm wary of keeping cash based assets. Whether you are a financial catastrophist, a long slow decliner, or a hyperinflationist, these scenarios all see a decline in the value of the dollar. If you are investing dollars I would be looking for investments that return a higher rate than my expected decline in the value of the dollar.

Paying down the mortgage might be a mixed bag - the only win there is the long slow decline. Still, owning outright is certainly superior to having someone with ability to put a lien on your property.

Hard assets (e.g., gold, silver) and money spent on education (for whatever knowledge you think would be valuable in the future) would seem to me to be the best places to park any wealth.

I have a hard time justifying paying down my mortgage in advance. For example, I'm 30 years old and my wife 29. We got a 30yr fixed mortgage and 20yr fixed (80/20) in 2006 in order to avoid jumbo loan status. No money down, it was the boom years and our first home...of course. In any case I saw the writing on the wall in 2007 and promptly paid off the 20yr mortgage as we are in a high income bracket with plenty of spare cash each month.

So now I'm left with about $480k on the 30yr fixed. I want to pay that thing off so bad because I hate the feeling of being in debt that much. But the way things are going, what if I start paying ahead and get down to say $300k principle left and all of a sudden we lose our jobs or some medical problem happens? Then I pretty much lose all that "equity" as the house value is barely treading water at today's values.

So my current plan is to *pretend* as though I'm paying my mortgage ahead of time and put that money into a separate cash account. That way if I save $350k+ in cash and society holds together fine and all is well then I can just pay the mortgage off whenever I want to. But if TSHTF before then at least I'll have some cash to either pay off the mortgage or bail out to wherever we end up bailing off to.

Sure I'm losing out on the 5.75% mortgage interest payoff by not actually paying ahead and instead putting it into a 1% APR savings account, but the peace of mind knowing I have more flexibility makes it worth it.

So my current plan is to *pretend* as though I'm paying my mortgage ahead of time and put that money into a separate cash account.

Not such a bad plan. Having an emergency stash is important. IMO $350K is too much -unless you are earning comparble interest to whats in the mortgage. As your emergency stash grows, I'd start putting some of the cash flow into paying it down as well. Say <100K, and 100% goes to rainyday fund, 100-200 and 33% mortgage 67%rany day ...

Yeah I'm still fine-tuning it. (un)Fortunately I don't have to worry about amassing an extra $350k really soon so I have a couple years to change the plan as conditions in the economy change. The Engineer in me says put the money to principle now to save in the long run but the doomer says keep cash to be safe. Like you say there's probably an ammortization schedule that can balance both. It's a battle of good vs evil. Who knows, maybe we'll all be making $1M a week in a couple years and paying off the house will be the least of my worries...

One key is how long it takes to save all that money. 3-4 years and it's no big deal as the wasted mortgage interest isn't that much. If it were to take 10 years or longer then it would start to add up. We'll revisit the plan during our household "mid year" State of the Household Finances meeting between my wife and I.

I was thinking of using the proceeds of selling our mutual funds to pay down our mortgage

You could always look to see if you have fraud in your mortgage and if so, make a decision to sue over the fraud.

The story just about everywhere is that the economy's improving.

JPMorgan Is Making Big Profits From Food Stamps!


Love the Irish brogue... it really sets off my irony meter!

Yeah, Fred. I wrote a long comment a few weeks ago about private administration of programs, mainly food stamps (EBT) and child support. It wasn't quite on topic and came across as being so angry that I chose to delete the rant. What we losely refer to as Capitalism is nothing but a culture of gaming the system.

Indeed, as Mr Patton so succinctly put it, JPMorgan is a 'Delivery Mechanism'.

Angry rants, are rather lame in comparison to what would like to see these people experience. Hint, it would include a highly precise and specialized delivery mechanism loaded with necrotic porcupines in an advanced stage of rigor mortis...

Sure, the economy is improving, but only if you look at the average (read mean) income, and not the median income.

A few years ago I spent several hours online, trying to find the median income for various US states, including Maine, and how the median income compared to the mean income. No luck of course. It was easy to find that same info for all the Canadian provinces, but that sort of information is apparently well hidden here in the US.

Wouldn't matter much anyway. Most people don't even understand even basic statistics.

Agreed, especially the fashion models who pass for journalists nowadays. The slighest hint of math or science skills is apparently enough to disqualify anyone from jobs in the msm.

But for anyone who even remembers the term median income, I invite you to search for some up-to-date figures for median income in the US.

I wonder if Wikipedia has a good explanation of median income?

Median income is where half the people have an income above a certain point and half are below that point.
Medians always appear when fat-tail statistics are involved. Many fat-tails don't even have a mean. That is the problem with incomes combining with growth effects like compound interest. Entropy will push the system to extreme disparities so that the largest incomes will keep rising and the smaller ones bunch up.

Study up on econophysics as they are the only ones really working this angle.
See also The Oil ConunDrum, as I have a whole chapter on econophysics.

Incidentally, size distribution of oil reservoirs is also best described by a median and not a mean. Give me a median oil reservoir size and the number of reservoirs in a tally and I can tell you accurately how many super-giants will occur in the bunch. Oil reservoir sizes are fat-tail statistics. You won't find this in any geology textbooks because they don't teach any of that kind of stuff either. Classical resource geology is like classical economics, they are both outdated in their methods and a new finite-resource-based econophysics will have to take their place.

Unfortunately, it will finally be accepted when we are well down the resource curve.

Did you try Wikipedia: Household income in the United States

Try the Bureau of Labor Statistics. This 2009 data may be the latest available:


You might find the figures at the Working Group on Extreme Inequality:


"Consumer Confidence Index: Now at a 3-Year High"

The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through February 10. The 70.4 reading was higher than the consensus estimate of 67.0, reported by Briefing.com and a rise over the January upward revision of 64.8.


Statisticians may assign little significance to a regression through this sort of data. But the slope clearly resembles the regression trend for real GDP shown below, and it is probably a more revealing indicator of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference. Today's reading of 70.4 is significantly below the 84.9 of the current regression level (17.1% below, to be precise).


I empathize. There are couples all over the world in which one person sees the precarious situation we are in, and its inevitable collapse, and the other doesn't.

What's particularly thorny is that it's difficult to get agreement on the most important decisions for setting yourself up for the future because they happen to deal with the foundation of the relationship (what to do with the money, where to live, send kid to college or not, go on an expensive vacation, etc.).

I've had many conversations in which one spouse has felt "trapped."

Inertia is a very powerful force...especially intellectual inertia!

I read the 'hold on, its going to be a bumpy ride' article above, and read how the author believe an inflationary era is coming upon us. I think that is another reason to pay down our mortgage...get the balance smaller, then let inflation do its work on the rest, since I have a military pension that will likely be the last such benefit to fall.

Gasoline passed $3/gallon a few weeks ago here, and nary a whisper.

A bigger story here is millions of dollars of water damage from broken water pipes when the NG was turned off to certain areas and institutions.



Maybe I should join the hypnotized and attend one of those 'Rich Dad' seminars they keep having around here...

As I recall, $4.00 a gallon was the point that the barely audible whispers turned into SCREAMS...

But that was because the development of far-flung residential communities in the sand states collapsed when they no longer looked attractive to commuters. The housing and flipping speculators abandoned their non-recourse mortgage pyramids, throwing more supply on the market. Prices went down, more mortgages went under water, more homes were abandoned, etc., etc.. This caused a number of financial institutions to become insolvent, LIBOR went through the roof, and the financial crisis ensued.

This particular set of dominoes is no longer standing in a row. (Not saying that there isn't another set of dominoes, but probably not until you are well above $4/gallon.)

I don't think a price point will mean much unless it is an instant doubling or some other such shock.
The real concern which western governments desperately avoid is shortages.

When fuel cannot be had at any price that IMO is when a leg of the chair gets broken or kicked out.
You will see the very worst in human nature in queues, which will not only be at the gas station but in the myriad of services, deliveries and facilities dependent on regular supplies of fuel.

What/who will be blamed if the weekly fix is not available? Expect plenty of scaped goats, not only foreign but internal.

Maybe ethanol to date has prevented much of the disruption which would have occurred if we had been totally reliant on oil. Can it continue to take up the slack? Can we conserve, ration, substitute or abstain sufficiently for long enough to avoid some sort of collapse? I personally doubt it and the signal for me that the house of cards is about to fall would be prolonged or chronic fuel shortages.

Screams, you wusses over this side of the pond it's already twice that
1.30 x 1.62 x 3.79 = 7.98 per US gallon.

I'm kinda surprised an office building (and a military one at that) could cool to the point where pipes would freeze, assuming no loss of electrical power. The first thing I would do is turn on every light in the place and leave them on 24/7; that in itself should generate sufficient waste heat to keep temperatures from falling critically low. If not, plug in some electric heaters (check under the desks, you'll find 'em there), power up the photocopiers, PCs and monitors, crack open a few taps, cover the windows with plastic; in other words, do whatever you need to do to keep the pipes from freezing.


The first thing I would do is turn on every light in the place and leave them on 24/7; that in itself should generate sufficient waste heat to keep temperatures from falling critically low.

You assume two things. One a basic understanding of physics, which I've found surprisingly lacking in otherwise smart people. And, two, if everyone affected tried that, the grid would go down -especially if generation was affected by the same deficit of NG.

You raise an important point, EoS. In a severe weather event such as this and with a loss of natural gas service, the electrical grid would be subject to tremendous stress, i.e., unusually high demand coupled with, potentially, a loss of generation resources. I don't know how much of the state was affected by this particular natural gas outage and if any of the utility's gas-fired plants were taken off-line, but it's easy to imagine how desperate things could become; and if these unusually cold temperatures/gas disruptions were widespread, the ability to import power from neighbouring utilities would be presumably limited. Under these conditions, major power consumers would be asked/expected to curtail consumption, not add to it, and my advice should be tossed out the window.


Just leaving water running works. There was a fairly cold snap in Ottawa in the 90s (something like daily high below -20 for 10 consecutive days and nightly lows around -30). The ground was freezing deeper then expected and and water pipes which were laid shallow, perhaps cheating on the code, were freezing. Leaving water running was enough to prevent freezing, continuous flow of 10 deg water at a fast drip. (Not deep enough means less than 6ft underground)

Hi CC,

With a complete loss of heat, the sprinkler pipes could be the major risk. If electricity were in short supply and the building contained sprinklers, I would do my best to keep the plenum at a safe temperature.

BTW, I don't know if this coincides with the time you had in mind, but I was working in Ottawa in February 1992 and recall some brutally cold weather -- no offence, but I was never so happy to wrap up my assignment and get the hell out of there.



Did not think about it...Running water was advice directed at residential homeowners and it worked.

February 1992 makes sense.

Frozen pipes

We have a farm near Kingston, Ontario and filling the water-troughs and stopping them from freezing is an annual nuisance.
Those frost-free taps with the long extensions used to rupture all the time until we tried relieving the pressure. Now when it's cold we leave the taps open and kill the pump... some water remains in the lines but it is not under pressure, and when it freezes there is some room for expansion and the pipes rarely split (maybe twice in a decade).

If I knew that we were going to have no heat in sub-freezing temperatures, I would shut off the main valve (or in the country, kill the well pump) and bleed off all the water that I could. The pipes might well freeze, but if the water inside them is not under pressure, the expansion may go lengthwise and not sideways, and the pipes might survive.
But I don't know how sensitive those sprinklers are, and they obviously hang down from the supply pipes, which would not help.

A few years ago, someone developed a spongey plastic rod that was placed inside a pipe that was at risk of freezing (insulating isn't always practical option), the material would take up the expansion pressure from the water to save the pipe. I haven't seen it for years now though.

One reason for using dry rise sprinklers, no water in them until needed.

I have heard reports of farmers using large piles of used animal food to keep pipes to troughs freezing, don't know if that would help you.


Now when it's cold we leave the taps open and kill the pump

Solder a brass air coupling onto a valve so you can shut the water off to the line and be able to pump in air with the other valve. It'll do a fine job of voiding the line of water and give expansion space.

Funny that my sprinkler system has that arrangement for purging the lines, but nobody thinks of that for homes. With a little valve turning I could purge my house lines with the same system.

You can always pour antifreeze into the traps, too, though the city sewer people might object. Even salt would help add a few more degrees.

I'm kinda surprised an office building (and a military one at that) could cool to the point where pipes would freeze, assuming no loss of electrical power

Pipes in outer walls with little or no insulation - I had that happen many times in my life. Both to "my" pipes and other people's pipes.

100% with you.Mine ended in a divorce.

I share your pain/situation. There is also a faith in how "good" people are and that "it will all work out".

She said, but the people on the TV said that Americans are becoming more confident...they are investing more...look at the stock Market, it touched 12,000 the other day!

The Government Propaganda is working - they are gaining a false confidence in the general public, even thought the general public is not feeling any better off:

Economic Sentiment is Split

By Barry Ritholtz - February 19th, 2011, 11:49AM

Floyd Norris points out an oddity of the general sentiment: People seem to think the economy is improving — but their personal finacial situation is not...

Interesting comments follow the post.

edit: from the Rasmussen Consumer Index, taken daily:

"Overall, consumers and investors share similar views regarding the country's current economic status.

Nine percent (9%) of both consumers and investors rate the economy as good or excellent. Around half of each group (54% of consumers and 50% of investors) give the economy a poor rating. "

The stock market, of course, is not the economy. Increasingly, it represents the fortunes of companies who don't even do most of their business in the U.S. or employ people in the U.S. They are U.S. corporations in name only. The U.S. can be down the tubes and those companies will still do well if the international market holds up, including, of course, China. Anyway, this seems like a very good time to sell if one has anything left in the market. At least you know you won't be selling at the bottom.

I agree, but public perception does not care about reality. The Fed knows the stock market is key to people's perceptions and so they will do all they can to keep bending reality to keep the masses docile.

The stock market, of course, is not the economy.

It is part of the economy. It makes sense that it is rising even though the general economy isn't. The longstanding class war in the US (investment class, versus the working (or unemployed)) has been decisively won by the investment class. So investments are doing better, because they are claiming an increasingly large section of the pie. Everyone else feels worse off, because their pie slices are under attack and shrinking.

Our dilemma as well. Mutual funds: to sell, or not to sell.

Is this really binary, or do you have other options?

If you could shift mutual fund money across assets classes, this would seem, at first pass, the obvious thing to do.

If you take tax and penalty hits on witdrawal and put the money is U.S. dollars cash, you are taking an enormous risk, which could work out if scenarios play out in a certain way, but are far more likely, in my opinion, to be a disaster.

Could you move some of your money into bonds and diversify the currency base?

I would expect that a diversified portfolio of low risk debt would outperform U.S. dollar cash in almost all scenarios after taking account of penalties and taxes.

But I don't know your particular situation.


1) Accordning to EIA, Angola's Crude Oil Production Capacity is down 400,000 b/d since December 2009.

2) Angola Plans to Cut Crude Oil Exports by 13% in April

Angola plans to reduce daily crude oil exports by 13 percent in April from a month earlier, a preliminary loading program obtained by Bloomberg News shows.

When I opened the link to the report about Angola, there was a banner add on top for a Buick Enclave, with the note that they have better mileage than any other 8 passenger crossover, 17 city/24 hwy. An enclave sounds like just what the rich are going to be a need'n as the price of oil continues upwards and the world turns against the rich...

E. Swanson

Funny thing is, that's actually pretty good mileage, compared to a Suburban or Expedition!

The real question is how many passengers will it actually carry? Use it for a car-pool, good on ya. By yourself, it'll get expensive fast!

I'm looking forward to getting a cheap, large SUV late this year or 2012 when prices for such crash (again). I just won't plan to drive it much at all.

Well this brings up an important point, forgive me if its obvious but it often gets overlooked.

Oil can no longer be wasted, so efficient vehicles depreciate slowly but the price of inefficient vehicles plummets. In the end, if you purchase a car you are paying the same either way (higher upfront cost for an efficient vehicle but lower oil cost, and lower upfront cost for an inefficient vehicle but higher oil cost). It's zero sum! If this is true we should expect a great buyer's market for used SUVs at bargain prices. And for the people who own efficient vehicles currently, they may not have as much of a seller's market as they would like, as nobody will even have the money to buy their product. So the price of a Prius will drop, but the price of an Escalade will drop further.

The only solution is to get off oil. That's it. Doesn't matter if you drive a Prius or an Escalade.

Which basically means less driving, or no driving at all. Stay at home or take the subway/train/bike. Now that's the endgame one way or another. Until that time of course we can enjoy driving, but in the back of our mind, we should understand this whole way of life is going to go away. Whether or not people drive efficient vehicles is utterly meaningless.

Electric cars is a whole different story, harder to really see what's going to happen there.

The possible future of personal transportation:


The thing about the Enclave, I posted similar thoughts a few years ago:

enclave (n) : a distinct territorial, cultural, or social unit enclosed within or as if within foreign territory

Soon to come: the Garrison, the Fortress, the Anchor, the White Elephant.

Haven't posted for a long time.

This morning I got a natural foods email and one of the articles was interesting. The young man believes taht gas stations will be gone by the time his four year old is old enough to drive. They will by replaced by electric or alternatives. I left him a comment that I didn't think so.


Linda H

Hi Linda,

Nice comment. Looking at the replies to yours, it seems people understand part of the "peak oil" problem - just not the full implications.

I wanted to share this with you and I welcome your comments. Please check out www.oildepletion.wordpress.com.

My contact info in user profile. I've been bringing it up lately - (not to much for Leanan's discerning eye, I hope!) - because I think this strategy would help bridge the gap where objective information can help.

The Great Unraveling might be taking hold in Germany?

"Massive Collapse" For Angela Merkel Following Today's Hamburg Election As Germans "Just Say No" To More European Bail Outs

As the results of the first of seven German regional elections hits the wire, the German people are heard loud and clear: "no more bail outs."

The outcome of the Hamburg election is nothing short of a disaster for Angela Merkel and her ruling (for now) CDU party.

Bloomberg reports that "Chancellor Angela Merkel’s party lost control of Hamburg, Germany’s richest state, in the first of seven state votes this year that threaten to limit her scope to respond to Europe’s debt crisis, television projections show." ...

"no more bail outs."

The Hamburg election was a typical (person) head against head election, the SPD candidate Scholz is much much more popular than the stiff CDU man Ahlhaus, which only became mayor of Hamburg because the popular CDU mayor in Hamburg, Ole-van-Beust, gives up.

The Hamburg election was not particular against Bailouts and not represenative for the overall national mood.

some thoughts on silver backwardation as microcosm of biophysical disconnect

Silver futures are now in record backwardation. Front month futures are $1 higher than 1 year out and $2 higher than 5+years out. In a commodity that can easily be stored, this makes no 'financial' sense as there is a clear arbitrage to selling the front month, and keeping the cash in interest bearing account until the lower price future month arrives - locked in (digital profit). Also, there are rumors abounding that a cabal of investors are going to stand for delivery of Mar, Apr and May COMEX silver contracts, of which the COMEX doesn't have enough to deliver. Open interest in the next few days will tell the story - if it declines (as usual) the game continues til another day. If it stays high, those open contracts will want physical silver - kind of a musical chairs phenomenon. Though the COMEX can cash settle with a premium, that just keeps the ball rolling as many of the silver investors who got cash will look to turn it into physical somehow.

Though this is interesting to silver traders, and potentially a financial regime changing event, I wanted to explain how I view this as identical to our system where commercial banks (and lately central banks) create a loan and deposit at the same time.

In futures markets, contracts are created from thin air. At the beginning of a contract/months existence (in any commodity - oil as well as silver), there is zero open interest. When someone wants to initiate a position, either long or short, they enter an order, which is filled at a price that equates the interest of both the buyer and seller. Over time the 'open interest', or the amount of longs and shorts that both exist in that contract, increase. Since in the end the vast majority of people trading - longs and shorts, winners and losers, hedgers and speculators, only care about increasing their digital marker account of dollars, unless they truly need the silver (or oil or corn) will close out their position for a cash profit or loss close to expiration. If they are expressing a longer term view, they will roll this contract into the next expiration date. Typically open interest thus collapses near 'first delivery date' as it is far more convenient to funnel ones digital marker capital to a new investment rather than the bulky, cumbersome process of taking delivery of 10s of thousands of ounces of silver. But now this may change - people are realizing that keeping those digital markers in the market runs the risk of never actually owning the silver, so some (many?) are deciding that the lack of liquidity and cumbersomeness of taking delivery is outweighed by the certainty of physical ownership. This trend will manifest if open interest stays high near expiration.

This same dynamic exists in our money creation system. First off, the vast majority of financial analysts out there discussing our governments 'debt to GDP' ratios are missing the greater truth - that ALL our money is effectively debt, not just the government portion. Commercial banks create a loan and deposit at the same time, out of thin air. (note: the interest on the loan is NOT created at that time, requiring a growing economy to make these 'contracts' fulfillable in aggregate over time). In this way, our money creation system can kind of be seen as a series of future contracts with one day expirations. The vast majority of people will just roll their liabilities and assets into the future at each renewal date, never wondering what those digits in their banks or paper in their wallets really represents. The 'open interest' in our monetary system in OECD land is about 250 trillion $ (govt, muni, private, corp) (NOT including derivatives most of which is offsetting and shouldnt be included unless there is counterpart risk). Conventional wisdom is to play the game each day with intent of increasing the digital markers. Few analyze or even consider the disconnect between these markers and what can be physically paid back - let alone serviced-with our remaining natural capital/technology combination.

Just like in the silver market, there has been no reason to 'take delivery', or even consider what 'taking delivery' would mean. But if there is such a moment in silver or other commodity market, particularly if it is over concerns of currencies health en masse, it might psychologically trigger people to consider this anecdote Ive just outlined above. The slightest 'backwardation' in currencies would be a very bad thing (if unplanned for).

Just some musings on a snowy Presidents day morning...

Oil and gold are both on a tear this morning. Last I checked oil was up over $4 and gold was over $1400.... my guess is Libya.

Good insight, thanks.

Steve Keen seems to be the economist with the best understanding of the crisis, what we should be doing today to mitigate, and what needs to be done in the future to prevent a recurrence. He also "gets" peak oil and climate change which gives him even more credibility in my eyes.

I recently came across this late 2010 talk by Steve Keen. It is superb if you are looking for a deeper understanding of the economy and the current crisis.


Steve also did a recent interview with predictions of what we can expect in 2011:


Yes, Keen is important to learn from. Nicole, Mish and I all credit him for a lot of what we discuss.

He also properly includes debt in his models, unlike most other economists, because he works off Minsky (emphasis added):

Financial fragility now poses a clear and present danger to the continued prosperity of well nigh all financially sophisticated capitalist economies. In many economies financial fragility can now induce attempts, simultaneous or sequential, by banks and other financing institutions to “make position by selling out position”. A collapse of asset values, which forces the price of capital assets below the cost of production of investment output, could occur in many countries. This would assure that a deep an[d] long world wide depression will take place.

Marx saw this all a long time ago:

It is by no means the strong demand for loans which distinguishes the period of depression from that of prosperity, but the ease with which this demand is satisfied in periods of prosperity, and the difficulties it meets in times of depression.”

Which is why I keep repeating that we will not have the capital to move to renewable energy systems. We will mostly watch the current fossil fuel system decay and give it as much capital as the system can muster to keep parts of it going. Such is how things goes when the money gets tight. It often makes more sense to maintain the current system, even if it has no ultimate future, if there just isn't the extra capital to replace it.

Marx goes further:

Talk about centralisation! The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner– and this gang knows nothing about production and has nothing to do with it.

This is a true as far as it goes but doesn't really get to the heart of the matter. Marx's "solutions" looked like they were systemic transformations but it's not until we get the ecological economists that a more comprehensive systemic view starts to take shape. The EEs don't focus on production/workers/owners/capital like Marx does but instead on something more basic: the energy and resources the run it all. Marx seemed to assume limitless resources and thus focussed on what were, to him and many people of his day, the most pressing issues.

Of course, it's much too late for steady state economics and similar systems since we are deep into overshoot. Now we will just watch the current system fail as we each do our best to limit our personal and community damage on the way down.

I like Keen's clarity. Banks make money by creating debt. Hence they are motivated to create as much debt as possible. Unfortunately organic real growth is often too low for ambitious bankers so they encourage the use of debt for asset speculation which results in bubbles, instability, and eventual crashes; and these bubbles do nothing to increase the underlying real wealth generation in society. This Ponzi scheme works because the average citizen is motivated by greed to speculate in assets, and our brains quickly forget lessons of the past. Keen also has shown that asset speculation transfers wealth from the poor and middle classes to the upper class.

FYI: Steve actually, I hate to admit, has a model (he has been known to make the program available) for a balanced economy that isn't via pow-wows and time banks. Getting from here to there involves a number of modifications and some degree of Jubilee, but he seems to make a fairly normal-looking economy work. Won't be debt-driven, though.

As per presentations and discussions at the 2010 International Conference on Sustainability: Energy, Economy & Environment back in November.

Tainter said he'd become pessimistic whereas he'd been positive about our chances not long ago.

We're in the wobbles, friends. Chaotic transitions ahead.

The silver problem is even more striking because there is a limit as to how many contracts can be used each month to request physical delivery (5,000 contracts) on the futures market. No there is even a deeper problem here than just the futures market - which nate has noted - that is the entire derivatives markets.

There may be many more paper derivative contracts around the world representative of 'paper' silver, in addition to those contracts on US futures exchanges. I have no idea how many there are but based upon the price action in silver (backwardation) I would say a huge amount of paper silver sellers have now been caught short without the physical product.

I don't know how this problem will be resolved. The price of silver probably will continue to rise, but in addition, it is also quite possible that some sellers of silver derivatives may just fail to make good on their contracts. That is they will default.

At some point in the future, maybe not in the far future, it will become more apparent that even money, that is paper money (dollars), can not be used to buy something of value. The coming derivative failure in the silver market may give us a clue as to what happens when digital contracts - even digital units of account - no longer have some value.

Silver Supply vs. Demand Equals a Continued Higher Price

It is now estimated that 54% of the annual global silver supply is used for industrial purposes. At present most of this silver is lost with very little recovered. Current global silver inventories are at low levels, estimated to be around 600 million ounces. Whereas just 22 years ago, in 1989, the global silver inventory stood at about 2.3 billion ounces. As a comparison of supply versus ever increasing demand, above ground silver bullion in 1950 was over 9 years worth of demand. At present this global silver supply now sits at a little over 10 months (pdf) of demand.

Got silver?

33.890 Up 3.95%

Owning Silver is like being in Fight Club - you never talk about it to anyone

I thought about posting these a few weeks ago and decided against because of being off topic and having a conspiracy theory tone. But since Nate brought silver up, here they are:




It isn't rocket science. The disappearance of oil, or more properly the lack of future production, means the disappearance of money, or more properly what we presently think of us as money.

Which of course means the reappearance of what has always been money all along, gold and silver. Some other precious metals may also play a role.

The key, the absolute key, is not to give up your gold and silver too early. Only give up your gold and silver if you really need to, such as for food, fuels, seeds, tools, etc. But otherwise just hang on to it, and only trade it for currency if you are 100% confident that your currency can immediately be traded back (in other words, a metals backed currency).

I don't want to believe this is true, it's an incredibly dark vision of humanity. But the facts are staring us straight in the face, we are simply incapable of managing unbacked currency.

Saying the same thing (I think) with different words...

Our money, because it is created by credit, is a claim on wealth that is expected to be created in the future. Peak oil will prevent the creation of most of this future wealth. Hence our money will trend towards being worthless.

Gold/silver represents the value of the capital/labor/energy required to mine and smelt these scarce metals. Hence gold/silver is real wealth and is not a claim on future wealth that may or may not be created.

Yes you say it much better.

Our present monetary system is only 40 odd years old, which is not too long, all things considered.

But it was a remarkable run, I'll give it that much. One for the history books.

I think that the old notion that "real wealth" is gold and silver misses some basic points. First off, you can't use either to drive a car or heat a house and cook your food, once fossil fuels become in short supply. Second, both metals require considerable effort to hold on to, as theft would become a problem in hard times and thus, there are storage costs associated with each. Third, gold and silver have some uses in industrial applications, but, once the economy dries up, those uses will fade, which would tend to reduce the value of those metals. In 1998, the Asian Crisis resulted in less consumption of gold by nations which "consume" gold in the form of jewelery, thus the price of gold fell.

The ultimate question is: What is wealth? I suggest that wealth is the ability to control peoples actions, i.e., what we might call power. In olden times, ownership or control of land meant power as that allowed one to produce and control the food supply and also to control commerce in the area. If you were a king, your wealth allowed you to build a security force, providing pay and provisions for troops and to purchase ships to project your control to other domains. In a Mad Max world, as governments fade, the holder of the largest local store of lead and gun powder might be the most "wealthy" in real terms...

E. Swanson

I get everything you are saying. My point is that gold and silver will always be exchangeable for human services and whatever surplus real wealth the resources of our planet permit us to create. There may not be much to buy, and it may very expensive, but gold/silver will always be the best money to buy it with. Several thousand years of history supports my belief.

I'm not so sure.

Gold, silver, etc. are historic items of value, but with little intrinsic worth. Its chief quality has been portability. Although you can repeat the past through habit, what do you do when someone with something you want says 'nope, that shiny metal is worthless'?

I'd suggest energy, and the ability to put that energy to work, will be more valuable in this Mad Max world. In particular, high energy density will be valuable.

Given that, starvation will the agent of the population collapse, as people attempt to grow wealth.

I agree there may be times when only barter will work, such as food for fuel in times of starvation. But I stand by my claim that when tokens (money) are used in an exchange, gold/silver will always be the best money. No need to argue this further because neither of us can prove our claim. Time will tell.

Kye Bay, I'm with you on this one. It will never be convenient to deal purely in barter. Gold and silver have been used for millennia as a medium of exchange because they are convenient and difficult to counterfeit. I see silver especially becoming "money" as the gold piece is too valuable. Time will tell but for the foreseeable future, I see gold and silver hedging fiat currencies very effectively.

It would probably be better to say that during times of instability, metals are better stores of value than credit, but credit is more powerful when a stable system exists.

What people seem to forget is that specie as money is really, really easy to steal, and people can just raid you for it just fine. Historically, people go to war much more often when specie is the standard unit of money rather than credit.

Throwing in modern weapons like nuclear arms and thermobaric weapons into that mix leaves me very worried. At least I have my industrial manufacturing textbooks and a good store of knowledge about brewing beer (been amateur brewer since I turned 22). I think I'll do okay during the twilight of the age of oil.

I see silver especially becoming "money" as the gold piece is too valuable.

Above ground silver is less than above ground gold. And silver is "needed" for more "things" than gold.

So if actual use and how much of something drives price - silver could one day have more economic value than gold.

"Commercial banks create a loan and deposit at the same time, out of thin air."


Would you be willing to (briefly) explain the mechanics of this? We had a discussion about this the other day, where I said this was possible and others disagreed, but maybe I just got the mechanics wrong.


See the Steve Keen links I provided above.

Seems to me Nate is describing the "multiple claims to each slice of the pie" that Stoneleigh talks about.

This also puts deflation squarely up front for the future. IMO hyper-deflation is possible.

(note: the interest on the loan is NOT created at that time, requiring a growing economy to make these 'contracts' fulfillable in aggregate over time).

Right, and if my limited understanding serves, this is why our financial system is often compared to a ponzi scheme. New money, as markers for "wealth", has to be constantly created just to pay off past promises. Nevermind keeping up with growth in population and consumption.

As you observed, the system is also compared to a game of musical chairs. The moment that one person is not paid as promised then the music stops and confidence in the scheme is destroyed. Suddenly panic sets in and everyone wants to get their money out at the same time, but due to leveraging in general, and fractional reserve banking in particular, the money simply isn't there.

For every 100 people who think they have a dollar in the bank, 99 of them will eventually find out the hard way that only the first person in line will get an actual physical greenback.

At which point the whole thing collapses.

Again, I am certainly no expert, but if I understand correctly:

  • this is essentially what happened to Bernie Madoff
  • what happened in the bank runs of the 1930's (and countless other boom-and-busts)
  • what almost happened to the financial system of the entire world in late 2008 (by some reports by mere hours) if not for many trillions in promised backstops from government treasuries.

And here we go again, more and more mutually exclusive claims made on the same shrinking physical wealth pie. But for how long? How long before trillions in promises to pay are revealed to be worthless? How long before the next global crisis in ponzi scheme confidence? How long before many millions more people at the bottom of the pyramid find out the hard way that their "wealth" doesn't exist?


There are plenty of links this morning to feed what I lately refer to as 'Informed Doomerism'. My unease regarding our future has generally been a result of my understanding of how our systems are interconnected, and of how many of our systems are reaching critical breaking points these days. Several good articles (thanks, Leanan!) touch on this meme:

Got Food? Consider yourself lucky

A good overview of how connected our food, energy and currency systems are.

At a time when per capita global food production and national food self-sufficiency ratios are shrinking, a hungry world is set to grow by another 1.6 billion people in the next 15 years. This is like adding another China to the world population. China has now replaced Japan as the second largest economy and has become the No. 1 importer of oil after the United States. As economic pressure on already scarce natural resources intensifies, the availability of locally grown food will be worth its weight in gold.

So… who’s your farmer?

Climate change? Yes, now is a good time to freak out

Touches on connections between Climate Change, Peak Oil, and how our ideologies interfere with meaningful action:

Of course we expect the oil and coal magnates to keep us in the dark about peak oil and climate change, but why do so many people seem willing to turn a blind eye to the worrisome (and publicly available) data even as they embrace the half truths and outright lies of people who clearly have a financial stake in spinning the rosy scenario? What can lead consenting adults to such ostrich-like positions of denial?

Even Kunstler is warning us again about the liabilities of our interconnected stuff:

This could be a helluva week. We've flattered ourselves for years about how wonderful it is that everything is connected in this world - the Tom Friedman fantasy about the eternal sunshine of the global economy. Now, we're more likely to see the dark side of connectedness...

At a time when it is easy to debunk good news and even easier to support alarmist conclusions, I have to ask Leanan; what happened to the new, less doomer TOD? Is reality trumping the staff's desire to promote a more positive, solutions-based discussion?

Here's to Informed Doomerism ;-/

Here's to Informed Doomerism Realism ;-/

All I can do is start seeds. Planted my cold frame this weekend.
Oh, and cashing out my retirement annuity...(what freaking retirement?) - I figure I should put a new roof on the house before asphalt shingles get out of control...

Yeah, s_t, I started some of my seeds last Friday, trying to get an early start on some things. It makes me feel I'm doing something. I'm starting cukes early this year, hoping to get some to our local market before others. Pickling cukes demand a premium around here, especially if one can harvest early. I plan to grow them on the roof in containers. Just a sideline.

BTW, I picked up a pack of 'USDA Organic' Martha Stewart Living Sumter picklers, just for fun. Planted in starters Friday; 100% germination as of this morning. Three days. Wow! Martha must be getting some good advice on what to put her brand on. We'll see how these cukes do. We started carrots a couple of weeks ago. Doing nicely as well.

Best hopes for a good harvest this year. I think we're gonna need it.

I have about 200 onions seedlings going, started another 200 and started 130 broccoli and cauliflower seeds last night. Will start herb seeds under heat mats today and plan on taking some hardwood cuttings from the blueberry plants.

Still VERY early up here in Wisconsin with about 10 inches of snow on the ground and no warm air in the extended range.

I would suggest growing and eating a 3 sisters diet plus an oil crop

I started about 200 onion seeds and 3 germinated. The seed was three years old. Lesson learned, don't hold on to onion seeds past a year.

I am no farmer, but I started my seeds 2 weeks ago here in CA -- colder-type plants. Lettuce is sprouted now. We got kind of cold though -- usually low to 37 F. Lettuce seems hardy in the cold.

Ready to plant more but waiting for better/warmer weather.

Lots of rain though. Ground is saturated now.

Want to grow a lot of squash and beans and potatoes. Pumpkins seem to sprout out of my compost bins. Maybe I should start squash now.

Any tips?

Squash, pumpkins and cucumbers all need to wait to be planted until the ground is consistently warm. Here in Kansas that means late May. Although you could start the seed indoors.


Thanks for the tips. I will wait until later March. I like the butternut squash. Those pumpkins in my compost keep sprouting.

Maybe the heat from the compost is keeping their "soil conditions" in there warm enough to sprout.

Ready to plant more but waiting for better/warmer weather.

Yes, waiting here as well. The weather pattern has shifted, and now the west coast is in a longwave trough, so we are having some of the coldest weather of the season. And longwave troughs sometimes take quite awhile to move on. This looks to be here for at least another week. I don't want to plant till the frost risk is minimal. If we were starting a long warmspell I'd probably risk it.

So, EOS, how long you planning on waiting?

There is a strong possibility of snow down to sea level in San Francisco this coming Friday. It's going to be a challenge for you NorCal coastal gardeners this year. This will be a very cold spell for this close to spring - the 1962 and 1976 snows were in January.

From NWS Monterey, Forecast Discussion:


Snow is rare in San Francisco itself, with only 10 instances recorded since 1852, most recently in 1976 - an event that I remember well. The last one before that was in 1962. Like those last two snow events, the forecast snow event is associated with a strong La Nina. This past weekend, the higher hills of Sonoma county as will as 4,000' Mt. Saint Helena had a nice dusting of snow, but this is much more common than sea level snow here. Also, since SF is tempered by water on three sides, near seal level snow that sticks is less common there than for some surrounding areas at sea level like the North Bay counties of Marin, Sonoma and Napa.


In '76 we had some pretty good snow on Mt Diablo. I remember the Chronicle headline, "Ski TransAmerican."!


Here is to hoping my lettuce survive the snow of 2011. LOL

I will keep you posted.

Indeed this weather is very strange but being from the midwest I always wonder what strange is out here.

Snow is rare in San Francisco itself

I'm on the otherside of Mt Diablo, which this time was about the whitest I'v seen it get. Most years from the East side, you usually some snow on it a couple of times per season. Over here in Brentwood, I think they've only had snow once or twice. During the summer, we are definitely the hot spot in the bay area -the worst day was low 84 high 115, but in the winter we seem to be colder, since as regards the hills, we are on the central valley side of the hills (january was awful with cold Tule fog, while the bay area weathermen were ecstatic about 60degree sunny days! I think Tule season is over, too much sun to maintain the inversion. But, at least the polluted air goes around us.

I have dug two holes, in which I plan to put Avocado trees. In any case I think the nurseries won't have any until well after I'm ready. It's just frustrating, having had several seventy something days, and now having to wait and wait for spring.

Welding together discarded metals + using the "why did you save all the pallets/wood you hoarder" this next week for my seed starting project.

(Was able to swap a 120 lbs worth of metal oxygen tank I found on the curb for a smaller Oxygen and a acetylene tank so I can now actually weld)

My contribution to "Informed Doomerism"!
Past the Point of No Return


Interesting debate you got going over there.

I pray the WW3 proponents are wrong.
But then again, "Peace in our times" has a hollow ring to it.

Nissan readies ultra-low CO2 petrol engine for Micra

Nissan's presence at next month's Geneva Motor Show may be dominated by its Leaf e-car and ESFlow concept e-sportster, but it will also be unwrapping a petrol engine it claims will deliver the world's lowest carbon output. Dubbed the 'DIG-S', the engine, which is being designed for the Micra, pumps out 95g of CO2 for every kilometer driven.
Nissan said the DIG-S engine produces 72kW (96.6 horsepower) and 142Nm of torque. That, the company claimed, gives the 1.2-litre engine the same power output as a conventional 1.5-litre four-cylinder job.

The Volkswagan group has been building cars with a 1.2l diesel engine, producing 89g/km of CO2 for the last year.

I plan to buy one this week... don't like the look of Libya.

The current Micra puts out quite a lot of CO2 based on the small size of the car, so Nissan are a bit behind the curve. I've just down sized to a Golf (petrol/gas), it's the smallest car i've had in 30 years:-) and wife has a VW Bluemotion. You have to be a little careful with the bluemotion diesel if you do lots of town driving the soot builds up so you need to either have a run every week or keep the revs up to burn the soot off.

I'd bet that if the US had gasoline selling for $8 a gallon, Nissan would be selling these gas sippers to us. I've owned a couple of Nissans, one that ran for 13 years and I bought it used. The Miller Cycle takes advantage of a difference in effective piston stroke to give a rather large expansion ratio without unduly high compression pressures and was also used in the Masda Millenia. I think the latest FORD EcoBoost turbocharged engines might use something similar, but I've not investigated that.

About 25 years ago, I put together an experimental engine based on similar thinking, but without a supercharger and fuel injection, it did not work well. Still, I was able to run 13 to 1 compression on regular gas...

E. Swanson

Relationship between Growth and Prosperity in
100 Largest U.S. Metropolitan Areas

This study examines the relationship between growth and economic prosperity in
the 100 largest U.S. metropolitan areas to determine whether certain benefits
commonly attributed to growth are supported by statistical data.... The study finds that faster growth rates are associated with lower incomes,
greater income declines, and higher poverty rates. Unemployment rates tend to be
higher in faster growing areas, though the correlation is not statistically significant
at the 95% confidence level. The 25 slowest-growing metro areas outperformed the
25 fastest growing in every category and averaged $8,455 more in per capita personal
income in 2009.

Forgive me if this was previously posted.

Thanks Shaman for the link to the study about growth and prosperity.

I am involved in local politics. When I challenge pro-growth advocates
about evidence for any benefits, they seem astonished and offended - but never offer any evidence to support their position. It will be useful to have this report available to support the idea that a stable community has got more going for it that a rapidly growing one. Of course getting people to change their views based on evidence is expecting a lot.

Molotch's 1976 "Growth Machine" paper explains the role of "landed interests", banks, the media, and elected officials in promoting urban growth despite the lack of evidence that the public would benefit. In short, higher land prices (driven by growing local population) means more wealth for land owners.


Does this imply that zero growth would mean prosperity for all ;-}

The graphs show a lot more scatter than the linear fits show slope. The alleged correlations of high growth with high unemployment, lower income, etc., are probably more a result of the type of recession we just had -- a collapse of the residential and commercial real estate industry -- than a result of any general principle regarding growth.

Check the listing of 25 fastest and slowest growing metro areas. Slow growers include areas like Detroit, Youngstown, Cleveland and St. Louis -- areas which I can't recall being notably prosperous. Fast growers include real estate basket cases like Stockton, Bakersfield, Phoenix, Fort Myers., but they also include more prosperous areas like Raleigh-Cary, Charlotte, Houston, and Dallas.

Local politics will almost always be pro-growth because the politicians are heavily supported by local bankers, real estate developers, engineering firms, environmental consultants, realtors, construction companies, etc., who form an entire small business constituency for growth. This is true regardless of the party in power, and at the local level, one party or the other tends to hold power for relatively long periods of time as a result of the stable flow of contributions, approvals and contracts.

They do say that the study covers the years 2000-2009, so I'm not sure that you can make the criticism based on the uniqueness of an 18 month period out of the study.

New reports from the Congressional Research Service (CRS) and others on natural gas and other topics: (all pdf).

Implication’s of Egypt’s Turmoil on Global Oil and Natural Gas Supply February 11, 2011.

Israel’s Offshore Natural Gas Discoveries Enhance Its Economic and Energy Outlook January 31, 2011.

Global Natural Gas: A Growing Resource December 22, 2010.

Is Biopower Carbon Neutral? January 25, 2011.

Is China Next For Social Unrest? February 17, 2011

Pipeline Threat Assessment 2011 w/Worldwide Threat Picture February 18, 2011

Calling Westexas!


From your article on energybulletin.net I wonder if you might explain this part of your conclusion, I don't really understand it:

Furthermore we believe that we are currently maintaining something close to Business As Usual, only because of a very high rate of depletion in post-2005 global CNE, especially in Available CNE

Much obliged and thanks for the article. (and thanks to TOD for hopefully allowing me to question here rather than there...!)

There are two missing tables in the article, which are linked below. (Edit: This is weird, I don't see the tables at the ASPO-USA website, but I do on the EB).



CNE = Cumulative Net Exports

Available CNE = CNE not consumed by Chindia

Chindia's combined net oil imports, expressed as a percentage of post-2005 global net exports, rose from 11% in 2005 to 17% in 2009. If we extrapolate the trend, Chindia would be consuming 100% of global net exports in 2025. While I don't think that will actually happen, the trend line is definitely up.

There are three key characteristics to net export declines: (1) The net export decline rate tends to exceed the production decline rate; (2) The net export decline tends to accelerate with time; (3) The bulk of post-peak CNE are shipped early in the decline phase. Eqypt is a case in point, shipping more than half of post-peak CNE only four years into a 15 year net export decline period. Over this four year period, Egypt's post-peak CNE depletion rate was 19%/year (the rate at which they were shipping the total supply of post-peak CNE).

So, not only are we depleting global post-2005 CNE at a high rate, the volume of oil available to non-Chindia importers is being consumed at an ever higher rate. It's just a question of the depletion rate, which is a function of the rate of increase in Chindia's net imports, as a percentage of global net exports (which was increasing at 11%/year from 2005 to 2009).

If we do extrapolate the Chindia trend out for purposes of illustration, then Available post-2005 CNE are being depleted at the rate of about 12%/year.

A question for you then.. if it takes about 3-4 years after the Net Export peak for the CNE to go over 50 %, then that means that Saudi Arabia is pretty screwed, right?
Since they peaked in exports in 2005 and it's already been 5 years and we're into our sixth.

Unless of course they have that magic 4 mb/d spare capacity everyone talks about but they haven't used(even in 2008).

As for the world, would you say we are at, past or near our peak in exports?
How many years to go to get to the point when BAU is dead? Seeing forced petrol rationing, etc.

Is yahoo finance wrong? Or did CLJ11.NYM just jump 7 dollars?

Last Trade: 97.13


The BBC site has that as well
West Texas Intermediate Crude Oil Futures $/barrel $97.78 +$8.09 +9.0%

make that $98.05!

Showing on the ICE Exchange as well


WTI $97.15
Brent $108

Gaddafi Just appeared on Libyan tv in a vehicle under an umbrella and said "I'm in Tripoli, not in Venezuela. Do not believe the news reports. They are dogs. Good bye."

According to upstreamonline.com at 7:30PM EST (0:30 GMT):

   Brent Blend     104.5   +2.15
   Tapis           107.72  +0.35
   Louisiana Sweet 108.47  +5.82
   WTI              90.22  +5.19

Are we seeing the overseas markets opening for tomorrows trading? I suppose WTI is catching up with Louisiana, which has been closer to Brent lately but now is ahead...

E. Swanson

"Nymex Crude $97.45" just flashed by on CNBC ticker. Asian trading open. Nikkei down 1.8%

Denninger has exploded

Bernanke, You Stupid B&st&rd

Now let's look at what happened just today.

Oil went up almost $7 today for the WTI contract. For each dollar that crude oil rises, we transfer roughly $95 billion (estimates vary from $90-100) outside of the United States.

That's a direct hit to GDP.

In ONE DAY the entire impact of your so-called "QE2" was ERASED.

...So here we sit as Americans, with no solution. There is nobody in Congress or The Administration that has the balls to stop you, and you're too much of a douche to admit you blew it and do what should have been done three years ago.

As a result, all we have left is to be prepared for what's to come.

It's not going to be pretty, and I hope Americans are ready for it.

Congratulations Ben Bernnake. Your place in history is secure, and I'm sure Beelzebub thanks you daily for your cooperation.

Some day I'm quite sure you'll meet him face-to-face.

Noticed the number of 'downgrades', in ratings and earnings expectations, recently?

It's almost as if someone knows something which hasn't been recognised more widely.

Maybe connected to this from Moody's/FT saying they don't expect "distress in the municipal sector" to lead to "potential for systemic risks" - honest.

6.3 quake hits Christchurch New Zealand.


Alert Information

Red alert level for economic losses. Extensive damage is probable and the disaster is likely widespread. Estimated economic losses are 6-40% GDP of New Zealand. Past events with this alert level have required a national or international level response. Yellow alert level for shaking-related fatalities. Some casualties are possible.

There appears to have been a second quake, a 5.6, in the same area shortly after. The first was at 2011/02/21 23:51:43 GMT, the second was at 2011/02/22 00:04:18 GMT...


E. Swanson

Multiple casualties reported including probable deaths. Extensive damage. Happened in the middle of the day local time. Also very close to surface at only 5km depth.

These were shallow earthquakes:

Reference Number: 3468608
NZDT: Tue, Feb 22 2011 1:46 pm
Magnitude: 4.4
Depth: 5 km
Details: 10 km east of Lyttelton

Reference Number: 3468595
NZDT: Tue, Feb 22 2011 1:21 pm
Magnitude: 4.5
Depth: 5 km
Details: 10 km east of Diamond Harbour

Reference Number: 3468575
NZDT: Tue, Feb 22 2011 12:51 pm
Magnitude: 6.3
Depth: 5 km
Details: 10 km south-east of Christchurch

Reference Number: 3468510
NZDT: Tue, Feb 22 2011 9:16 am
Magnitude: 3.1
Depth: 3 km
Details: 10 km south of Christchurch


About the same depth as the Macondo well.

Watching live coverage from New Zealand tv being carried by CNN International. Looks bad.

Wow. I don't think of 6.3 as being that destructive, but buildings have collapsed.

Is this unusual for New Zealand? Do they design for earthquakes, like California and Japan, or are quakes this strong not expected there?

So near the surface and so close to Christchurch, et al, 6.3 is bad. Northridge was 6.7, 17km deep, and caused ~ $20 billion in damage.

This was only 5km depth and virtually underneath a populated area.

Best hopes ......

Exactly. Depth is important. Shallow quakes have the tendency to produce stronger accelerations at the surface. Though the correlation is not perfect in part due to subsurface factors and the orientation of the fault and direction of slip, a M6.3 quake at, for example, 20 km depth generally would produce lower accelerations relative to the same magnitude quake at 5 km depth.


Also depends on the type of fault (strike-slip or thrust), the soil/geology at specific locations, which waves resonate through that geology, how long it lasts, displacement and more.

I think Northbridge had vertical acceleration, which was unexpeceted and more damaging. But, isn't New Zealand very geologically active, and so should have very high quake resistance standards? I agree if it is very shallow, it could be pretty intense, but for a fairly small area.

Northridge 1994 indeed had very strong vertical accelerations--apparently above 1g in some places--but there were also significant lateral accelerations as well. AFAIK, all earthquakes produce shaking in both vertical and lateral directions, but the amplitude between the different orientations can differ depending on a number of variables. Seismic wave frequency is also a factor in the types of damage observed.


Yes, the ground moved in ways that were not anticipated, and buildings that weren't supposed to collapse did. Sometimes it's really rather alarming, how little we know about civil engineering.

It was also a pretty strong quake at 6.7 - a lot stronger than 6.3, since it's a logarithmic scale. It was initially reported as even stronger - 7.0, IIRC. (Seems like that happens a lot - the official rating is lower than the initial rating.)

Well, there is the engineering aspect related to building design, the actual construction and maintenance practices, and the understanding of quake propagation for an area. Chances are good there are some issues with all area, but for widespread damage from an expected-range quake, the latter items are more likely at fault.

The Northridge quake was really a big deal for civil engineers. We thought we understood how to build for earthquakes, but Northridge (and Kobe) showed us that we didn't.

In particular, the vertical ground movement was completely unexpected. It's shear they worried about with quakes - sideways movement. That's why in California, if you look up under overpasses, you see steel cables running along the I-beams. You don't see that in the northeast.

No one ever worried about vertical movement before. There's no need to hold a building to the ground; gravity does that.

Civil Engineering had a cover story on Northridge, with an illustration of what it would take to earthquake-proof the Golden Gate Bridge with our new understanding. It showed it with as many cables running down below the bridge as above it. As many holding it down as holding it up.

"No one ever worried about vertical movement before. There's no need to hold a building to the ground; gravity does that."

This is not entirely accurate, but I am sure the story involving the design of structures in earthquake zones and communication between seismologists and engineers is probably a complicated one. For example:

R. N. Iyengar, M. Shinozuka, "Effect of self-weight and vertical acceleration on the behaviour of tall structures during earthquake." Earthquake Engineering & Structural Dynamics, Volume 1, Issue 1, pages 69–78, 1972.

D. H. Weichert, R. J. Wetmiller, and P. Munro. "Vertical earthquake acceleration exceeding 2 g? The case of the missing peak." Bulletin of the Seismological Society of America, October 1986; v. 76; no. 5; p. 1473-1478.

K. Dan, T. Ishii and M. Ebhara. "Estimation of strong ground motions in meizoseismal region of the 1976 Tangshan, China, earthquake. Bulletin of the Seismological Society of America, December 1993; v. 83; no. 6; p. 1756-1777. (2000 cm sec^2 vertical accelerations noted.)

Just three examples of significant awareness about vertical accelerations in earthquakes (granted that the last paper appeared just before the Northridge event, but the Tangshan quake happened nearly two decades before).

I suspect that Northridge 1994 and Kobe 1995 earthquakes simply demonstrated that it is easier to make an earthquake-resistant building than one that is earthquake-proof (depending on factors such as intended use, structural materials utilized and overall mass of the structure; in other words it might be easier to make a wood-frame house that can weather a quake than say a steel-reenforced concrete hospital). Those two temblors probably left many civil engineers stunned and looking for reasons for the myriad catastrophic failures that occurred, but the evidence for significant vertical acceleration was well available before 1994.

I should add that many major earthquakes have produced peak accelerations in the (roughly) 0.1 to 0.5 g range (and anything above about 0.2 is quite significant). Vertical accelerations above 1 g were not unprecedented in the record before 1994 (e.g. the above-mentioned Tangshan earthquake), but they are certainly quite rare, and maybe were considered unlikely to occur during the design life of many structures.


I suspect that Northridge 1994 and Kobe 1995 earthquakes simply demonstrated that it is easier to make an earthquake-resistant building than one that is earthquake-proof

That is always an issue, but in the case of Northridge, there were failures that were not supposed to happen with that magnitude of quake. Kobe as well.


It huffed and puffed, but the 82-ton-force, earthquake-simulation shake table could not knock down the straw house designed and built by University of Nevada, Reno alumna and civil engineer Darcey Donovan.

The full-scale, 14-by-14-foot straw house, complete with gravel foundation and clay plaster walls, the way she builds them in Pakistan, was subjected to 200 percent more acceleration/shaking than was recorded at the 1994 Northridge

I assume the surface acceleration is a square-law function of the depth? So 6.3 versus 5km is really a 40 versus 25 factor, making the surface impact 8/5 stronger assuming the same magnitude?


The map. Epicenter is practically downtown. Ouch. Not as bad as Port Au Prince, but bad enough.

USGS Shakemap projects potential damage even to earthquake resistant buildings as Mod/Heavy for 320k population and Heavy for 6k. Seems it was not only very shallow but also in virtually the worst possible place.

CNN International just spoke to someone stuck on the 12th floor of an office building. Stairwells below have collapsed and they are stuck there.

tow - If I heard the report on NPR correctly this morning Christchurch is built on a sandy sediment alluvium fill with a high water saturation. I think they said it was an aquifer system which would also explain in part why the town was built in that location. Most probably understand the liquification of such deposits when hit with seismic waves. If I recall correctly this was the same reason some sections of San Fran suffered disproportionate damage in some quakes.

Besides strength the time duration of a quake is a important factor in damage. Even structures that are built to withstand a 7.0 can only do so for a limited amount of time. But I've heard nothing yet about the duration. You?

..... Christchurch is built on a sandy sediment alluvium fill with a high water saturation. I think they said it was an aquifer system which would also explain in part why the town was built in that location. Most probably understand the liquification of such deposits when hit with seismic waves. If I recall correctly this was the same reason some sections of San Fran suffered disproportionate damage in some quakes.

It could be liquifaction, or simple slumping. Much of the damage in Anchorage from the '64 quake was attributed to liquifaction of the "Bootlegger Clay Formation" that underlies much of the western part of town. On the other hand, Seward AK was severly damaged by slumping on deltaic sediments. Part of the port slid into Ressurection Bay. The slumping at Seward ruptured some petroleum storage tanks, then when the water rushed back in it was covered with flaming oil. Then about 25 minutes later Seward got hit with the Tsunami. (A bad day in that little town!)

If my aging memory serves, much of the damage in San Francisco in '06 came in areas built on poorly consolidated fill, where part of the bay had been filled in. The point being that while the exact mechanism may differ, what a town is built on has a huge effect on what kind of damage can be expected from an earthquake.

geo - Wasn't one of the reasons the Anch. quake caused so much damage was the unusual length of the tremor? Something like more than 2 minutes?

Yes, that is thought to be part of it. My house was originally built in 1958, before the quake. It is near the famous "Turnagain Slide", which was the largest failure on the Bootlegger Clay, but my house survived nicely. (Long before I lived here.) There were however, cracks extending into my area. Some geologists think the slump was progressive, and if the quake had gone on longer my area would also have slid. Others think the Bootlegger Clay in the area where I live had been dewatered previously (based on several lines of evidence), and hence is less prone to failure. Maybe I will find out in the next big quake?

Earthquakes, volcanoes...Anchorage is an interesting place for a geologist to live!

A lot of the damange in SFO was due to fires and not the actual earthquake. The story is that the firemen were reduced to using dynamite to try and create firebreaks, but their inexpert usage of the dynamite sometimes created even more fires.

Re: Christchurch.
Apologies for being a bit late on this.

The East shore of the city is dune sand, backing onto drained estuarine/swampy ground. Soft ground predominates westward to just west/north-west of the CBD, from where it gives way to glacial outwash alluvium. The South of the city is bounded by the Port Hills/Banks Peninsula, a presumably extinct (3 Million years) hotspot volcanic complex.

Max horizontal acceleration at epicentre (solid volc rock on port hills just north of the port of Lyttleton) was 1.26grav.
Corresponding recorded maxima were 0.7-0.85grav (9-10 Mercalli) in the CBD and 1.88grav (>10 Mercalli) at a pumping station adjacent to the sewage works near the Heathcote/Avon Estuary.
Max accelerations fell to less than 0.2grav within a couple km to the west of the CBD. I could not find any vertical acceleration data.

When I was at Engineering School 30 years ago a typical design criterion for horizontal acceleration for structures was 0.4-0.5grav.
This is somewhat beyond building design-you'd be looking at offshore yacht or ship design criteria to handle such shaking.

In the grand scheme of things this is just a training quake.
There's still the Alpine Fault 150km away (Richter 8.5-9 at 200-300yr intervals-last one 270 years ago).
The capital (Wellington) is also up for a a similar magnitude quake (AFAIK 50% chance in the 50 years).

Thanks for the info. That certainly fits with the pictures on the web of some of the damage. Best wishes for as few killed and injured as possible, and for a speedy recovery for Christchurch. While my comments above regarding Anchorage were somewhat flippant, it was in the nature of "whistling past the graveyard". I've lived most of my life in earthquake country (Alaska and elsewhere), and am well aware of how serious these things can be.

Those are some pretty high accelerations, I guess that explains the damage. At least a 6.2 shouldn't last very long. A great earthquake (say 8-9) may not have higher accelerations, but the shaking would go on for a long time, as it can take a few minutes for the rupture to spread over the length of the fault. [I did this stuff on the geophysics side in grad school, but never professionally]

The old Richter scale was based on the P wave strength in the first second or two (its been so long I don't remember the details, although I did work up some in my time). But for anything bigger than maybe a 4.5 to 5, most of the energy release comes later on, so that scale wasn't very good for big quakes. I was gonna do a thesis comparing seismograms of modeled earthquakes to measured data, but ended up never completing it.

I've seen some reports of it shaking for about a minute but these may be very subjective.


More details slowly starting to come out about the NM NG debacle a few weeks ago:


George Schreiber, the president of Continental Energy Systems—the parent company of New Mexico Gas—explained the company’s decision to shut off service related to the location of two main gas valves. “The one in Bernalillo and the one in the town of Taos we could get to within the timeline .... ,because what was in jeopardy was a loss of the entire system,” he explained. “We had to find vales that we could turn quickly to try and reduce that load.”

Still, he says, his company communicated poorly. “It really is unacceptable for our customers to be without gas for this kind of situation,” Schreiber apologized.

He said that installing more valves in the system may be key to preventing future mass outages, so if the gas needed to be turned off, less people would lose service.

State officials also discussed creating back-up power sources so that another power outage in Texas would not put New Mexico’s gas service in jeopardy.

I looked this up on the net after I just heard one of the local TV station news folks talking about this...they said that the representative from NM Gas said that if the selected northern NM communities weren't shut off then the whole system would have collapsed, including all of Albuquerque (~ 870,000 people in the metro area).

Apparently the local military base valve was easy to reach, and some number of the relatively new base houses experienced burst pipes...from some of the pics in the base paper, it looked like the pipes were in the ceilings. The shut-off notification on base came with not much time to prepare...and folks were instructed to let their water facets drip.

All that base housing damage (lots of $$$, to be fixed with our tax $$$) for what ended up to be a relatively short service disruption (but the CE folks took a while to re-start all the furnaces).

If only state officials would have used what used to be called the Emergency Broadcast Network to blank out all over-air, cable, and satellite TV and inject messages to implore all residents to turn their thermostats down to 60 degrees F...I also believe there exists automated telephone calling systems to call every resident as well....perhaps those folks up in Norther NM could have been spared what was, for some, a good 5 days without NG service.

Our fireplace came in handy!

Oil Price Superspike - Redux

In late 2010, I predicted here a possible oil price ‘superspike’ in 2011:

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

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

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

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

I went on to say the ‘superspike’ would probably not start before Spring – but could occur sooner in the next few months if there was war in the Mideast. We don’t have war in the Mideast, but Spring isn’t too far away now. The Saudis have not increased exports since December, and general speaking, OPEC hasn’t either. Even both the EIA and IEA now say world demand in 2011 will exceed supply, yet they tell us not to worry – well at least not too much just yet – as we tap into available local above-ground stored supplies.

But time is running out, the price of Brent oil is now $108 - 20% higher than just two months ago. Moving past the troubles in Libya, even more oil supply problems loom ahead. The event trigger for the superspike could be almost anything now - a succession fight in Saudi Arabia, a counter-revolution in Iran, or perhaps something as simple as North Sudan blocking oil shipments from South Sudan. Odds are in this climate of chaos something is going tip over the delicate supply/demand balance that existed through most of 2010 – and send us on our way to much higher oil prices.

I'd be interested to read what Memmel has to say. He usually has some terrific insights when events like this occur. None of his predictions have yet come to pass, all the same he usually makes logical assumptions and draws quite a few comments.

I'd be interested to read what Memmel has to say. He usually has some terrific insights when events like this occur. None of his predictions have yet come to pass, all the same he usually makes logical assumptions and draws quite a few comments.

OK, here is some brief deconstructed memmel-bot logic:
X is TRUE unless X is FALSE then X is either TRUE or FALSE

LOL I agree but I like him, he wears his heart on his sleeve with his writing and usually has some insights I never thought of. I filter what I need to.

Don't forget memmel has dyslexia. A lot of times he writes just about events that can possibly happen. I like his brainstorms too and also filter.

Explains why he mixes up true and false statements.

M-bots unleashed on these forums is like monkeys pounding on a typewriter to me. Somebody at work suggested an interesting premise that goes like this: "Yes, of course millions of monkeys could produce The Collected Work of Shakespeare or Some Genius Theory, but that implies that someone else has to go through and filter out all the good stuff from the nonsense".

Much of what we discuss on TOD eventually comes down to the Law of Diminishing Returns, yet when we see something like this happening in rambling text, no one really says a word against it.

The more drivel we write indiscriminately, the less proportional chance we have of saying something significant.

The more holes we drill indiscriminately, the less proportional chance we have of finding significant oil.

The more holes we drill indiscriminately, the less proportional chance we have of finding significant oil.

I'm quite discriminating about where I drill my holes. That's why they keep me on the payroll.

I couldn't speak to how you drill yours?


Precisely. You would use a variety of automated decision aids to plow through the data and rule out unlikely areas. Just like you scan through a memmel-bot post before tossing it.

Would you quit this constant sniping at memmel even when he isn't posting. It's starting to look like you have some kind of unhealthy obsession. If I constantly attacked another TOD member I'd expect to get my posts pulled. I wonder if you've even noticed that some of your previous attacks on memmel have been deleted?


I guess I misunderstood your original post.

You said "The more holes we drill indiscriminately, the less proportional chance we have of finding significsant oil."

I guess I took that to mean you have some actual experience in those matters. If you indeed have "..a variety of automated decision aids to plow through the data and rule out unlikely areas" then you ought go into business and start drilling wells. There could be a great future for you in exploration and production.


Yes, the old proverbial "we".

After looking at the Brent vs WTI price graphs drawn up by Stuart Staniford in his recent blog post about the spread between the two, and looking at the slope of the Brent price that has been occurred in recent months, I think that one might be able to argue that the next super-spike has already begun. Just your quote of "20% higher than just two months ago" is alarming. I suppose it all depends on what defines a super-spike. Does Brent have to reach something like $125/bbl for the current situation to be considered a super-spike? Or is the near-$110/bbl enough? In other words, if key economies around the world soon went into another tailspin and oil prices crashed from something akin to current highs back to $40/bbl by May, would the current spike be a "super" one, or just a garden-variety event? ;^) Maybe a super-spike should be quantified in some way. Perhaps something that allows for changes in currency value, such as when ≥5% of world GDP is chasing after oil.


Good points. I would say a 10% gain a month for three months, or 30% in one month, might qualify as a spike. There may be other fair ways to define what a spike is based upon relative prices, GDP, etc.

My main point further above, more specifically, is that oil prices will rise rather fast in a short period.

There has been much debate as to how high a price of oil ($80, $100, $120 etc.) could be sustained before there is some negative economic effects. I generally agree with those ideas, but I think figures like 5%+ of GDP are not hard and fast turnback points for the economy, but points where the economy basically runs into headwinds - of increasing velocity as the price rises. So at first, the economy may continue to forge ahead for a while, but then may be blown down.

More serious is the problem of outright shortages. The oil shocks of the 1970s and 1980s, at least in the US, were also supply shocks where there just wasn't enough oil to go around. Something like that again most clearly would send the economy reeling.- no matter what the price of oil.

Yes, the rate of price escalation is a key consideration. And also a good point about the difference between the impact of high prices vs having outright shortages. One thing I find intriguing about 2008 is that there were shortages, including in the United States. Initially spot shortages (typically in remote areas) in the US, but then becoming much more significant when the hurricanes struck. I sometimes wonder about the interplay there: Hurricanes shutting down a major pipeline, but also during a time when the oil distribution system had approached critically low levels (close to MOL), which suggests a peak-pleateau/imports connection on the situation. And how might the shortages have contributed to the economic downturn that was then underway? Thoughts for consideration.


Yes, the impact of localized shortages in 2008 was probably glossed over by most. My own opinion is that those local shortages caused significant economic problems locally, which may have contributed to an overall economic decline - on top of the impact of high prices.

One more thought about the NM gas debacle...

Most folks will probably chalk this up as a freak event, or due to poor management by the recently privatized NM gas company (used to be part of PNM until a couple of years ago), or just forget about it.

I think it is wise for NM Gas to say they need to install new valves and implement better emergency communication and management procedures, and they should get a rate hike to pay for all that IMO.

I think the following would be even better in addition to the above: Pass a tax (and/or use the PACE program being blocked by Fannie and Freddie) to subsidize mass replacements of old ~ 65 efficient NG furnaces with 95-98% AFUE NG furnaces, and/or heat pumps, and to conduct home and commercial building energy assessments and subsidize certain insulation projected.

Use rate/taxes to pay for efficiency improvements, rather than only for new production and better pipe valves etc.

When I posted before the New Year about my investigations into getting a 95% AFUE NG furnace, a helpful poster posted a link showing that my issue in ABQ was cooling degree days instead of heating degree days...in the average, of course he is correct...but most of us use swamp coolers (evaporation coolers) which don't draw as much trons as 'refrigerated air) what the local call 'air conditioning' here.

Hopefully this winter freeze is an outrider event not to become customary (-5F in ABQ is rather atypical, esp for several nights/days in a row).

And another tidbit to answer previous questions: Yes, during this Weather event we in ABQ, and I assume other parts of the state, started to hear news reports about conserving trons...the electricity grid was under high load as well. I wonder how much more Palo Verde had to give us? AX was a little chilly as well...Our local NG peaker plant North of ABQ sure wasn't able to help!

In The Oil ConunDrum on p. 271, I deconstruct the reserve numbers for Libya. In this I use a model of the production process and extrapolate numbers from Campbell's data.

Reuters has reported that Suez Canal officials have confirmed that two Iranian naval vessels have passed through the canal into the Mediterranean Sea.

This will no doubt excite the Israelis...

...and the oil markets.

Follow up: BBC Iran warships sail via Suez Canal amid Israeli concern

Notes from diplomatic correspondent Jonathan Marcus

The passage of two Iranian naval vessels through the Suez Canal represents yet another clear sign of Tehran's widening strategic horizons. And for Israel and its main ally - the US - it sends multiple signals.

It underscores that if a significant number of Western warships can operate in the Gulf - what Iran sees as its maritime backyard, then Iran too can deploy vessels to the Mediterranean - what Nato countries would regard as their maritime backyard.

The Iranian ships are to be based at a Syrian port, thus solidifying and symbolising the close ties between Damascus and Tehran.

And coming at a time of significant turmoil in the region, the deployment illustrates that Iran is eager to secure its widening strategic interests. If this annoys the Israelis or the Americans, then so much the better.

A growing edgy defiance and rolling revolutions in the region are leaving America & Israel without much of a say.

Unthinkable just a few short months ago.

The times they are a-changin'.

"The times they are a-changin'."

Always changing, though there's a US SSN right on their butts as sure as I'm typing this. That hasn't changed. "Tubes one and three loaded, aye.....Standby!".

Big and Black, you never come back.

Go Navy!

Maybe you're right. Maybe it is really an Obama policy worthy of Teddy Roosevelt, "Walk softly and carry a big stick."

Yet considering that the ships wouldn't have even crossed the threshold of the canal a few months ago, it shows how much has changed.

Iran is appearing more emboldened - partly b/c defiance should help stem rebellion at home (contagion anyone?) and partly to assert for itself an activist international role.

Such assertions are proving to have diplomatic drawbacks. BBC live Middle East blog is saying:

0030: Reuters news agency is reporting that Senegal has severed diplomatic ties with Iran, saying Tehran supplied rebels with weapons which killed Senegalese troops.

PS Ghung: The times they are a-changing. What's happening today is significant, probably the biggest geo-political shift since 1989. I suspect that's America's role in the region will look very different than ever before.

Time will tell how silent or loud this ultimate new U.S. voice will be / can be.

I have no doubt that a shift is underway, though from a military standpoint, this stunt reminds me of a 90 pound weakling with a tiny penis taking his first strut down the nude beach. It may make him feel like studly guy for a while, but nobody will pay attention for long, or care much about what kind of statement he's trying to make.

This is a small 1500 ton Corvette and a support ship, probably along in case the Corvette needs repairs. Both are about 40 years old. The fact that these ships were allowed through the Suez doesn't surprize me much. That they made it without breaking down does.

They're in NATO's pond now.

jmy - "Oil industry worries". I'll modify that statement a bit. Those companies with Libyan production are very worried. Those companies with production in potentially unstable other ME countries are somewhat worried. The rest of the oil industry, especially in the U.S., are giddy over the potential decrease in oil on the world market. Of course that requires ignoring the human suffering going on now as well as an escalation in the future. But folks in the oil patch are no different than other Americans: they aren't "us" so it doesn't really matter very much.

Of course, our gain will be short lived. We just had a good lesson in the relationship between energy costs and demand destruction. I had a fellow geologist just last week argue with my assertion we could see $50 oil again one day. He essentially made the classic PO argument. OTOH I have no trouble recalling what a sever global recession did to oil prices from the late 70's to 1986: a 70% drop in oil prices from the high to the low.

Sure...we'll make a fortune in the short term. We'll have to put up with the calls for lynching everyone in the oil patch (we actually kinda like that banter) and politicians pulling out the ole Excess Profit Tax. But I doubt it could enacted fast enough before demand destruction brings the oil patch into a recession. It might be a cold comfort to many but the oil patch also suffers from this country's lack of a long term response to our ever increasing dependency on imported oil. Yeah...I know we make a killing when prices peak. But then we get slaughtered when the bottom falls out. In my 36 years I've seen many more companies destroyed by this volatility than have prospered. Trust me: if the God of Oil waved her magic wand and oil prices stayed at, let's say $50/bbl, for the next 30 years the oil patch would be very happy and would do well. Every price spike has pushed most companies to expend capital in an unrealistic expectation that high prices will endure for a long time. Especially true of the public companies. But it never happens. Maybe being on the cusp of PO it will be different this time. But I'll have to see it first to believe it.

I think that you are overstating the effects of the market in the price crash of 1986. Back then, there was surplus supply available and the OPEC producers were supposed to limit their production in order to maintain higher world prices. Of course, as the markets reacted after the 1079-80 shock and prices began to slip, the usual OPEC cheating kept the supply above demand, aggravating the decline. The Saudis then opened the taps and that pushed priced down to roughly $10 a barrel.

Nowadays, the World is using much more oil and The Peak may be upon us. As a result, this time around it appears that there's no extra production to offset any shortage. Not to mention the fact that much of the excessive consumption has already been forced out of the market, given the high prices in 2007-08. While it's likely that another price shock would hit consumption, we are getting down to the bottom of the barrel (pun intended), thus the decline in price isn't likely to be as severe as that in the mid 1980's...

E. Swanson

Dog - I was selling oil for $6.35 (high S) in 1986 so I don't think I'm overstating some of the effects. But I also agree: this ain't 1986. At least WRT production capabilities. But in the end it will still be a footrace between supply and demand. It may be unlikely in everyone's mind that demand could drop so low this time around. OTOH no one thought that way in 1980 either. I'm not in the prediction business. More like the what-if business.

... I'm not in the prediction business. More like the what-if business.

Exactly. That's why most oil companies do their economic evaluation of prospects, drilling programs, and EOR projects at a much lower than current oil price.

geo - Exactamondo. We won't use anything north of $75/bbl in our economics these days. And we're a little nervous about that. It hasn't been that long since I saw some companies running NG at $10/mcf in the analysis. They were a tad off the mark when NG dropped below $3/mcf.

Yeah, oil prices fell hard. Here's EIA data that shows why:

Year   1980  1981  1982  1983  1984  1985  1986  1987  1988  1989 

Saudi  10.3  10.3   6.9   5.4   5.3   3.8   5.3   4.7   5.6   5.6

World  63.9  60.6  58.1  57.9  59.6  59.1  61.4  62.0  64.3  65.4

SA $/b 26.00 32.00 34.00 34.00 29.00 29.00 28.00 16.15 17.52 13.15 

Notice the jump in Saudi production between 1985 and 1986 and the reversal in supply/demand which followed. Happy days were here again (for the consumer, that is)...

E. Swanson

Dog - Yep...I vividly recall the oil "experts' saying that it was inevitable for the KSA to crank the valves open. They had projected that had the KSA kept reducing their production (to support OPEC prices) within 18 months 100% of their production would be shut in. Of course I would have been more impressed had these "expects" made that point before the KSA cut lose and not after the fact.

Courtesy of AJE Libyan blog:

7:28 am CNN's Ben Wedeman, a Cairo-based reporter who covered the uprising in Egypt, is the first international journalist known to enter Libya. In an article posted last night, Wedeman describes the scene after entering through the border with Egypt:

"Your passports please," said the young man in civilian clothing toting an AK-47 at the Libyan border.

"For what?" responded our driver, Saleh, a burly, bearded man who had picked us up just moments before. "There is no government. What is the point?" He pulled away with a dismissive laugh.

On the Libyan side, there were no officials, no passport control, no customs.

I've seen this before. In Afghanistan after the route of the Taliban, in Iraq after the fall of Saddam Hussein. Government authority suddenly evaporates. It's exhilarating on one level; its whiff of chaos disconcerting on another.

Bahrain killings bring Mid-East turmoil to epicentre of world oil supply

"The real issue is whether this will spread to Saudi Arabia," said Mr Itani. "The Kingdom's Eastern Province is also mostly Shi'ite and contains the vast majority of its oil reserves. When markets start to make the connection between the region's political geography and the location of the oil, that is when they might react."

The province is the headquarters of the Saudi oil giant Aramco and holds the huge Safaniya, Shaybah and Ghawar oilfields.


From a rolling news feed on the BBC:

US Deputy Secretary of Energy Daniel Poneman is calling on Middle East oil producers to increase output in a bid to curb crude prices, which have topped $107 a barrel over unrest in the region, reports AFP. He was speaking at energy talks in the Saudi capital Riyadh.

Looks like we might soon find out who's telling the truth in the Middle East, and who will be mumbling and looking at their feet.

I doubt it. Didn't we go through this before, when oil hit $147? Aramco will just say that there's plenty of oil, they can't find buyers for any more, and it's just speculators driving up the price.

True - but this is the second time in recent months that SA have been called on to make some comment. Their previous claim to raise production in Feb didn't result in any extra exports. If Libya now causes 1.5 Mbd to go off line then that's going to cause a huge amount of pressure on the world markets.

I think you're probably right though. The Saudis will claim the market is fine and hope it all blows over fairly soon. It will probably depend on how long and to what effect Libya's enforced drop in production causes problems, and to what extent there is some slack in the system.

Saudi net export numbers for 2007-2010 fell between Sam Foucher's middle case and best case projections, and a key point to keep in mind is depletion.

In round numbers, Saudi Arabia has already shipped (2006 to 2010) about 25% of what Sam projects as the best case estimate for post-2005 Saudi CNE (Cumulative Net Exports). His most optimistic projection is that the (2005) top five net oil exporters will have shipped about half of their combined post-2005 CNE by the end of 2014.

Saudi Arabia:


The administration, like all administrations, claims to want to get off mid east oil. So, here is an opportunity. I call on Saudi Arabia to cut output so we can get on with the business of dealing with the future. Win The Future. Yeh, right. Oh, and the administration also wants to do something, but not too much, about global warming. Some day. But now now.

The administration, like all administrations, claims to want to get off mid east oil.

The administration can make speeches, pass or veto laws, and such, sure, just like previous administrations have done.

...But it is my opinion that it is really up to the People to act to reduce their consumption.

It will not be done via speeches and laws, but by what people's actions are (or are not).

Census estimates show 1 in 4 US counties are dying

Hit by an aging population and a poor economy, a near-record number of U.S. counties are experiencing more deaths than births in their communities, a phenomenon demographers call "natural decrease."


Kunsler will Love this

I don't think this is a new phenomenon, is it?

Haven't we been experiencing the hollowing out of the 'Rust Belt' for decades now?

I did read the article and noted that it said that some previously 'booming' counties were now 'dying', but, in whole, this is the on-going story of migration from places of perceived low economic opportunity to places of perceived higher economic opportunities.

The gradual depopulation of some rural Western areas helped give birth to the 'Buffalo Commons' concept.

Also, if 1 in four counties are losing population, then what can be said of the other 3 out of four counties?

Given that the U.S. population is predicted to increase from ~ 309M now to ~ 400M by 2050 (if not a few years sooner), then I would say that there are plenty of areas that will see a population increase.

Is it not true that a large chunk lives within 50 miles of the coasts?

Anyone remember Eagle Rock, IA? From the old comedy movie 'Cold Turkey', where the dying town quits cigarette smoking for a month?. If I didn't know different, I'd swear they filmed that in some of the communities in ND I have passed through.

This intro clip from the movie makes me smile...if you don't have much time skip the old folks' community meeting and go to 1:46 and enjoy the song and the walk down the dusty road to Eagle Rock...


H - I can tell you where a lot of those folks are going: Texas and more specifically Houston. I haven't seen it documented but as hard as it might to believe 75% of all the new jobs created in the last two years have been in Texas. Yep...the other 49 states added the other 25%. Just yesterday morning NPR had a story about the new population stats: Texas, and again Houston in particular, are booming. I think they said Harris County (Houston) was the fastest growing county in the nation. Maybe not so surprising last time we saw such a boom was right after the oil price spike of the late 70's.

Counties are too small and too tied to old geographic boundaries to make sense as demographic or economic units. West Virginia has 55 counties averaging 33,000 people each. The median population is a lot lower, since the average is skewed upwards by a few populous counties. Counties with small populations are often highly dependent on a single industry, a mine, a factory, a specific agricultural crop. Therefore, they will fluctuate considerably in population if new factories move in (e.g. a new auto plant) or move out (e.g. a mine closes).

North and South Dakota have 119 counties averaging 12,000 people. In many cases, farms continue to consolidate, rural towns continue to wither away, and population goes down. Lots of counties in the Midwest had larger populations prior to WW I. Farms were originally 160 acres, families were young, and extended families worked on the same farm because of the high labor inputs needed.

Interesting Merril. But in Texas our counties are like our egos: much bigger than everyone else's. For a decade or two Fort Bend county was the fastest growing county in the country. It is just SW of Harris Co (Houston)... part of our big urban sprawl. We'll have to see how PO impacts our wide spread population. But it might not hurt as much as some folks expect. The majority of our urbanites don't work in d/t Houston...they work in the burgs where they live. One of the booming industries around here is medical. Maybe 20 years ago you might be able to just find a tiny clinic in the burgs but now there are very big medical complexes out there. Many of what some would call Houston suburbs are really more like fully contained towns. For instance I live in what some folks would call a distant Houston suburg about 25 miles from d/t. But we have a hospital that normally rates in the top 3 of all of Texas. BTW I also live across the highway from the largest refinery in N. America. We used to have the cheapest gasoline in the country but now, thanks to the Cushing log jam, I think some folsk in the mid west have the cheapest.

TX, especially Houston, is still doing OK, Rock. Here's a nice map:


Thanks Paleo...nice link

If you go to the price history graph and overlay crude price, it makes an interesting graph. We're back in territory only seen once before -- in 2008.

Rockman -- Predictably enough, Texas has more counties (254) than any other state. However, they are only 1057 square miles on average and average about 98,000 population. Because there are so many, they are far smaller in area than California's 58 counties of 2822 square miles and 637,000 population.

Texas also has the least populous county, Loving County, with 67 souls. http://www.lovingcountytexas.us/

While a prevailing theory is that the suburbs were created by people moving out from the cities, I think that there was also a very significant movement of people from farms and small towns into the suburbs. They found the suburbs more similar to back home than the cities, and they were attracted to the idea of owning a small plot of land with their own house on it.

Manufacturing tended to move out of the cities more or less at the same time that the suburbs were growing. Ford's headquarters were in Dearborn, not Detroit. GM move into the suburbs and to small towns upstate like Flint and Saginaw. Western Electric started in Chicago and then moved to Cicero and subequently Lisle/Naperville.

Headquarters buildings followed. Exxon moved from NYC to Irving, TX.

Now metro areas have a structure of an urban core with banking, finance and government buildings, plus entertainment, gambling and sports venues. This is surrounded by a ring of "edge cities", which are older suburbs that have large populations and which offer a full spectrum of shopping, health care, and other residential services, along with office parks and light industrial sites. Scattered around will be specialized suburbs containing heavy manufacturing, refineries, and other more distasteful enterprises. In many cases, these will be located even farther out in medium size cities that specialize in these enterprises. For example, Cat in Peoria.

Besides the continually dropping farm population, smaller towns which had a couple of manufacturing industries but were bypassed by the interstate system really have a hard time of it. A relative lives in a small town in PA that was dominated by two manufacturers, one of which went out of business and the other was acquired out of bankruptcy. Although it still has rail service, I think that the fact that it is 15 miles off the interstate really hurt its prospects.

Apparently Texas is also currently #1 for US powerplant CO2 emissions, too.

"US Power-Plant, CO2 Emissions Up 5.6% In 2010 - Top Ten Emitter States Named"

Texas, which has a very energy intensive and strong manufacturing base, has been holding it's own economically, in spite of having suffered the same housing crash the rest of the states did.

Texas has added power generation capacity to feed real, not hoped-for, demand. The politics of Texas defend the economy of Texas, in other words. They are the Coal Alamo.


flash - And you do understand that Texas takes pride in those polution stats? LOL. It all blows over to Louisiana anyway so who cares.

I don't know if you caught my other post: shortly they'll begin construction of a coal-fired power plant on top of a NG field I'm currently drilling. NG that I'll be selling at bargain basement prices...at least for a while. I imagine they ran their economics on this project based on a much different pricing structure for future fuel sources.

Azerbaijan Oil, Natural-Gas Output Production Fell in January

Oil output fell 3.8 percent in the period to 4.1 million metric tons (970,000 barrels a day), while gas production declined 11 percent to 2 billion cubic meters, the committee said on its website, without giving a reason for the change.

Not exactly what EIA expected.

Oil Prices Surge To New Highs -- When Will They Wallop The Economy?


My guess is that it's started but because of the lag in the system we won't see the impact till summer.

Rising oil prices: 'The fear is that airlines didn't see it coming'

...industry trade group International Air Transport Association has forecast a profit of $9.1 billion for the world's airlines in 2011. However, that assumes the price of oil at $84 per barrel.

Airline Business writes "by IATA's calculations then, if oil averages $90 per barrel this year, the industry will return to losses unless it can find significant cost savings. For an industry frantically cutting costs since the 2008 oil price spike took prices into the $140s, major cost-cutting will not be easy."


Airlines still holding out on summer airfare deals, finding bargains could be harder
If the airlines have hedged their summer fuel costs, but haven't sold cheap leisure travel tickets for the summer, they should be able to keep fares high and profit on the spread.

Fallout from Libya = Higher Gas Prices $

...Over the next seven to 10 days, says Lipow, the U.S. consumer is going to see rising prices -- almost immediately. That's because there's not a lot of lag time when it comes to pricing.

Helsinki runs out of arctic-grade diesel

HELSINKI, Finland, Feb. 21 (UPI) -- Neste Oil in Finland said Monday it had run dry of diesel fuel tailored for use in arctic conditions in the nation's capital region

No big deal, some Finnish saunas are still heated by wood stoves.


Opec ready to raise output of oil

Saudi Arabia and other leading members of Opec stand ready to produce more oil if Libya’s political crisis were to disrupt global supplies, the Saudi oil minister has said.

Ali Naimi, the de facto leader of Opec, said that no such interruption had yet occurred, but his first remarks on Libya’s turmoil were designed to reassure the oil market.

“I don’t know if anybody right now knows what is happening in Libya,” said Mr Naimi. “Whatever is happening in Libya, the disruption to oil markets has not happened. When we see a shortage in supply, we will rectify that immediately.”

He added: “There’s absolutely no reason to be concerned on the supply side even if disruption were to happen.”


“We have done this so many times, responding to emerging crises on the side of supply,” said the minister. “We have enough credence to tell you that we will meet any shortage. I want this to be transmitted to the markets so people can sleep tonight.”

Mr Naimi spoke after a meeting in Riyadh of the International Energy Forum, a body that brings together the world’s leading producers and consumers of oil.

Observers at this gathering played down the impact of Libya’s crisis on the oil market. Libya produced 1.58m b/d in January, according to the International Energy Agency, making it the ninth biggest producer out of Opec’s 12 members.

If the country’s entire output were to be lost, this would amount to less than half the spare capacity retained by Saudi Arabia alone.


These unilateral decisions by Opec members have increased the club’s total production by more than 500,000 b/d since November last year, according to the IEA, reaching 29.85m b/d last month.

Mr Naimi repeated on Tuesday the kingdom’s long-standing view that oil prices of $70 - $80 per barrel are fair for both producers and consumers.

So, given "fair" price of $70-80, why are prices at $100? And have been over $80 since October, during the traditional "cheap" time of year?

Come on you know the drill. Evil speculators.

"These unilateral decisions by Opec members have increased the club’s total production by more than 500,000 b/d since November last year, according to the IEA, reaching 29.85m b/d last month."



So it used to be that the MSM was all lies. Now it's selective lies, depending on where you look.

Angola's losing 0.5 mb/d in April, Azerbaijan's oil output fell almost 4 % in a single month:


And Saudi Arabia, of course, is losing 2 % in exports over a single month, more than 300,000 barrels a day.

So who do we believe, Bloomberg or FT?
FT has a rather sordid history of blind cornucopianism, though.

My initial impression was that the FT was just trying 'not to scare the the horses'. However, if you read the other almost adjacent article I posted below, they are not pulling their punches there. There is more in the article on the risk to other oil producing nations in the region also.

Between the two you get 'the oil will be stopped by the weekend or earlier' and 'don't worry Saudi will save us'.

I think the reality will be significantly more complex. And on the basis that most markets are irrational who knows where this will go, even if the situation on the ground is quickly resolved (and I can't see how it could be).


In any event, it's zero sum.

Increase production now, and you'll be forced to decrease production later. Keep production low now, and you'll have more to produce later.

In fact, the single best thing that could happen to the world right now is to have a quick, catastrophic drop in oil production. This would create a huge shock and mean a very hard transition, but at least the remaining oil could be produced at a slower rate over a longer period of time. Now I know there's EROEI, debt collapse etc. but as long we maintain the productive capacity and infrastructure, it's better to produce less and produce it more slowly.

In fact, I partly have a doomer view because I know this will not happen, the Bernanke's of the world will simply not allow it. The bankers must be kept whole.

So . . . if 1.6mbpd were pulled off the market, could OPEC really cover that? With the same quality of oil? Hmmm

I have not seen any indication from shipping reports that OPEC, in general, has increased exports in February, and in fact they quite likely will be lower. Looking ahead, Mideast shippers are not planning for much change in shipments when we enter March - although of course things could change either way by then.

Mideast crude tanker rates softer, Libya watched
Mon Feb 21, 2011 5:44pm GMT


More problematic for the US is the fact is that in recent weeks China has taken a larger share of Mideast exports and Europe appears to be taking a larger share of Black Sea and Mediterranean exports.

Not surprisingly, fuel oil prices have been caught in the updraft...

Heating Oil Price Trend for February 22: +12¢

Chaos in the North African nation of Libya that broke out of the weekend caused a major spike in crude prices, which in turn produced a huge two-day increase in retail heating oil prices since last Friday. Libya, a member of OPEC, is home to the largest crude oil reserves on the African continent and produces about 1.7 percent of the world’s crude, according to the Wall Street Journal.


Today’s average retail heating oil price in the Northeast is 12 cents higher per gallon than Friday’s average price.

See: http://www.heatingoil.com/blog/heating-oil-price-trend-for-february-22-1...

According to today's Kent Group report, the average cost of fuel oil in Canada is now $1.081 per litre ($4.09/gallon); that works out to be about 12.3-cents per kWh(e) at 82% AFUE.



Oil prices surge as Libyan refineries close

The escalating violence in Libya kept oil prices elevated near 2½-year highs, with the Opec basket of crude oils – the most representative measure of physical oil prices – rising above $100 a barrel for the first time since the financial crisis.

Most oil ports and refineries have shut down in Libya, the world’s 12th largest oil exporter, according to traders. At the same time, international oil companies were evacuating their staff from the country in a move that executives and analysts said would probably lead to a sharp drop in oil output.


Libya, which produces 1.6m barrels of oil a day, is a medium-sized member of Opec. Beyond the concerns about the potential loss of Libyan output from the oil market – which would disproportionately affect Italy, Germany, France and Spain, the main importers of the country’s crude – traders are worried about the spread of unrest to other countries in the region.


While Libya’s state-owned national oil company controls the majority of the country’s oil production, international oil companies are key to sustaining output through joint ventures. Subcontractors are also essential to run the fields.

Wintershall, a subsidiary of Germany’s BASF, was the only company to confirm publicly it was shutting down production in the country. But executives at other leading oil companies privately conceded they were implementing emergency plans to repatriate all their staff and shut down output. They added that subcontractors, key to managing the complex oilfields, were already leaving, forcing them to follow suit.

Executives asked not to be named as their companies were still in the process of evacuating staff. The oilfields in the south of the country run by international firms have their own airstrips. Until the last staffer is pulled out of the country, a process that could take hours or a few days, companies planned to keep production up.

“But the last man will switch off the button,” an executive said.

Interesting that the WTI/Brent deviation seems to be smaller now, that before the Libya thing. You would thing that since the United States is not the most directly effected importer, that the Brent price would show more response than WTI. I guess we Americans just flinch too hard.

It could be that oil traders are getting skittish, and are just buying up available oil to put into storage, without worrying particularly about where it is.

If things go really wrong in the international market, oil prices could easily spike to $140-$150 per barrel, and that is probably what they are worried about. Having some $90 oil sitting around in the storage tanks would be a nice buffer against that.

Cree designs LED as halogen bulb replacement

The XLamp MT-G LED is the first in the industry binned and tested at 85 degrees C which can simplify luminaire design calculations and speed time-to-market. With a 9mm x 9mm footprint, the MT-G LED delivers up to 560 lumens at 1.1A at 85 deg. C or up to 1525 lumens at 4A at 85 deg. C in warm white (3000K).

Cree has engaged driver, thermal and optic providers to create an MR16 lamp reference design to further enable its LED customers to quickly address this market. The reference design is available for free here.

Interview just on Al Jazeera from a Libyan airline pilot who claimed that Bhengazi airport is still under government control and that he had been forced to fly in over 100 mainly foreign mercenaries on his flight alone (and he said there were many others) to fight the uprising in Bhengazi. He said he was from Behngazi himself and that's why he had to get the message out. No way to verify that yet though.

Still no confirmation of the pilot's story. Most reports say the runways have been destroyed and can't be used for evacuation but the pilot clearly said he flew in to Bhengazi. He did state that there were some unusable runways in the east but that he was able to land and drop off the mercenaries at Bhengazi. Perhaps he was referring to a military runway though and not the main airport.

Climate change an issue in Canada: Survey

Respondents on both sides of the border were asked their opinion on a range of issues on climate change, starting with whether they believed it was real.

In Canada, 80 per cent believe in the science behind climate change, compared with 58 per cent in the United States.


That sentiment points to another difference discovered by the survey: Just 43 per cent of Americans believe their national government has a great deal of responsibility to address climate change. In Canada, 65 per cent of respondents believe the government has a role to play.

In fact, the poll suggests Canadians want to see all levels of government —from Parliament Hill to provincial capitals to city hall — do something about climate change.

And unlike Americans, Wood says, Canadians are willing to pay for it.

In Canada, 80 per cent believe in the science behind climate change

Do you think this has to do with the very warm winter you had last year? Or is it due to other factors, like less corporate propaganda?

Hey enemy,

Good points. Yep, these may have been factors to some degree.

Last year's warm winter likely confirmed what many Canucks suspected.... tho the consensus on climate change, from where I sit, has been there for quite a while.

And I should note, we in the Maritimes are having a good old fashioned winter this year (consistently cold & snowy) just the way I like it!

Less corporate propaganda? We're swamped by it just like you, but it tends to take on a different tone and IMHO is less political and ideological.

The divide is probably more cultural and historical.

U.S. foundations lay in the 18th c. enlightenment underwritten by a pervasive dose of English Whig liberalism and culminating in rebellion against authority. "Life, liberty, and the pursuit of happiness", and all that jazz.

Canada's foundation lay in 18th c. imperialism (French and British) underwritten by a pervasive dose of English Tory conservatism with its emphasis on loyalty and the commonweal. "Peace, order and good government", and all that jazz.

Gaddafi orders oil sabotage, source tells Time columnist


If you can't take it with you.

Eerie echo of Saddam Hussein's destruction of Kuwaiti oilfields.

And this just compounds onto the little itty bitty depletion problem.

So much for the models. This sucker is going down a little faster than the geologists ever thought.

A burning oil field is kind of a problem for oil flows.

I guess the oil world will get smaller a whole lot faster.

So much for the models. This sucker is going down a little faster than the geologists ever thought.

What models did the geologists ever provide? Which industry geologist ever gave us an honest global model?

Web - I would glad to give it a try. But first we'll have to find someone to pay me to do it. In the mean time my owner just shoved another $125 million down our throats he wants spent with a drill bit this year. I fear even my time on TOD may become more limited.

So I think I'll just let you keep doing the heavy lifting.

Maybe I do not understand what happens when oil fields burn. I thought perhaps they were destroying the oil field but perhaps I am wrong.

I also was thinking that they basically not only stop flow but they kill the supply as well by simultaneously burning it up.

I have not seen models that include oil field destruction yet. Sorry I was merely saying real human experience shows things that are hard to guess at.

Well this should do something positive to oil prices. Now keep your eyes glued to Saudi Arabia -- what are they going to do?

Interior minister resigns rather than carry out Gadhafi orders

Interior Minister says regime will likely only last for another 48 - 72 hours and that the end will come when somebody takes Gadhafi out. He will die rather than surrender.

Where are the suicidal nutters when you need one?

A martyr to walk in and snuff Gadhafi's flame before the country goes down in flames.

I hope Khadaffi has seen Der Untergang ...

Saudi Arabia Uprising Could Mean $140-Plus Oil

David Rosenberg, chief economist and strategist for Gluskin Sheff. “Do the math: we’d be talking about $200 oil.”


"Cotton carrier bags need to used 131 times to be 'environmentally friendly'"

Is that a joke or what?

My wife and I have had cloth bags for ~10 years and they have not been thrown away. We use them every week for groceries and farmers market runs. So I estimate we have used our bags like 2000 times.

Why are people so worried about using a re-usable bag? Are they worried about less waste? I have serious trouble believing that these bags could ever wear out. The only thing that is worn is the color which faded with time. Now seriously who is throwing away a cloth bag after 1 year of use? LMAO. That has to be a bold-faced lie.

I have trouble believing the 131times figure. I bet 20 is probably more like it. At least if I go by cost (I get $.06 every time I use a reusable bag, and they cost a buck or two). Occasionally I forget to bring um, thats the toughest thing -remembering them.

Yeah worst case you could make a bag from old blue jeans for free. LOL.

A Great Depression 2.0 quilt bag.

Is that a joke or what?

No its picking a target and making the numbers fit the target.

In this case, it is tracking one small variable - Carbon Dioxide emitted. And I'm betting the values used on one side were the highest cited and on the other side the lowest cited.

Suddenly seems to be a lot on MSM TV news about oil. Get this one; On PBS the commentator said the experts they had consulted with claimed that the US economy would only be negatively affected if the price at the pumps went up to 4.50 a gallon.

I remember filling up in Santa Rosa, CA in 08 for 4.78 a gallon and it wasn't much after that when the bottom fell out. But even at 4.78 in CA, that's still less than 4.50 in the rest of the country. Anyone got a price estimate for a barrel of oil that would push the price at the pumps to 4.50 a gallon?

Anyone got a price estimate for a barrel of oil that would push the price at the pumps to 4.50 a gallon?

I believe the last time the barrel price was $147(ish).

Oil per barrel isn't the only factor. On Sept 11th 2001, a local station had gasoline at $4.99 a gal for a short time. One of the calls on the telephone was "quick - fill up, prices are on the rise" from one of my mates.