Drumbeat: February 23, 2011
Posted by Leanan on February 23, 2011 - 9:00am
Jeff Rubin: Why Saudi Arabia can no longer temper oil prices
What’s easy to lose sight of in the chaos sweeping through the Middle East is where oil prices were trading before it began. The Brent futures contract, the world’s new benchmark oil price, had already broken $100 (U.S.) a barrel before protesters in Cairo started sweeping into Tahrir Square and demanding Hosni Mubarak’s head. And the price of West Texas Intermediate CL-FT, laden as it is with record inventories of Bakken oil and Canadian oil sands crude piling up in Cushing, Okla., was trading just shy of $90 per barrel.These are the kind of prices that one might expect to encounter at the end of an economic cycle, not at the beginning of one. But world oil demand once again grew at lot faster than the oil experts at the International Energy Agency were expecting – almost twice as fast, to be precise.
David Strahan: Saudi denial not what it seems
Sadad al-Husseini’s statement distancing himself from the Wikileaked cable written by US diplomats in Riyadh is most interesting for what it leaves out. While robustly denying claims that were not actually made in the original message – always a good tactic when you’re on the back foot – the former VP Exploration & Production for Saudi Aramco pointedly fails to deny the most important passage.
Steve LeVine: Why Saudi is now in play
We keep hearing that al-Saud rule is safe (and the al-Sabahs of Kuwait, along with the al-Thanis in Qatar). But retaining power is only one metric for oil price stability. The chink in the Saudi armor is its oil-saturated, Shia-dominated Eastern Province. Here is Dharan, the headquarters of Saudi Aramco; the humongous 5-million-barrel-a-day Ghawar oilfield; the 800,000-barrel-a-day Qatif and Abu Safa oilfields; the gigantic Ras Tanura oil port; and the Abqiaq processing center. Because of all this, the king has nailed down every movable part in the province with overlapping protection -- private Aramco security, Interior Ministry forces, the National Guard, and the military, all of them manned largely by Sunni personnel and loyal to the royal family.Even so, if the Shia population does start protesting, we will see the oil market's version of pandemonium.
Steve LeVine: If the world calls, will Saudi be there?
So now we come to where the rubber hits the road with the turmoil in the Middle East: Just what is the risk of the entire global economy going south, which is what would happen if the Saudis couldn't compensate for a global oil deficit as they have done in the past?
The Peak Oil Crisis: Inflection Point
It has taken two months for the contagion that began with the immolation of a fruit seller in Tunisia to reach the first significant oil producing nation.As oil production in Libya grinds to a halt and Muammar Gadhafi clings to power amidst increasing turmoil, it is beginning to look as if it may be sometime before Tripoli resumes its normal oil exports. While the 1.6 million barrels a day (b/d) that the Libyans pumped in January may not appear significant in a world that produces some 88 million barrels each day, we should remember that those barrels are being consumed somewhere in a world where they are consumed just as fast as they are produced. If there is anything that we have learned in the last 40 years, it is that relatively small disruptions in oil production can lead to relatively large increases in oil prices.
Revolutions could rob Opec of its ability to manipulate supply
For the moment, the cartel can only wait and watch what happens to production figures. But according to Fateh Al-Khayat, the former director of planning at the Iraqi oil ministry, the outlook is even worse in the long term. He has told an audience at the International Petroleum week in London:Libya might go out of the market for a while. Algeria is a potential trouble spot. If we add Yemen and Egypt, troubled countries produce about 4m b/d. If that supply is disrupted, the other Opec countries cannot in my opinion compensate for that.
Agency sees emergency stockpiles as last resort
RIYADH: The International Energy Agency will rely first of all on OPEC to meet any loss of Libyan oil and would save its emergency stockpiles as a last resort, its executive director said. "We can produce 2 million barrels per day (bpd) for two years but these are stocks and once we use them, they will run out, unlike spare capacity," Nobuo Tanaka said. "That's why the stocks are for great emergencies.
Oil briefly hits $100 - highest since 2008
NEW YORK (CNNMoney) -- U.S. oil prices briefly hit the $100-a-barrel for the first time in over two years Wednesday, as reports of Libyan oil production shutdowns swirled.
NEW YORK (CNNMoney) -- Airlines are hiking their fares at the fastest pace in two years, driven by high fuel prices and enticed by strong consumer appetite.And travelers should brace themselves for more hikes, because there's no reason for airlines to stop now, according to industry experts.
Gasoline shortage feared as Lebanese importers halt supplies
BEIRUT: The Energy and Water Ministry failed to release the weekly update of gasoline prices scheduled Wednesday, sparking speculation over fuel availability in the upcoming days.Oil importing companies announced they would stop the supply of fuel to distributors until the Energy and Water Ministry releases the weekly price updates.
Libya asked oil firms to fund terror suits
Libya's ruling family tried to coerce billions of dollars from Libyan and foreign oil companies, and its leader Muammar Gaddafi exhorted the United States to sow division in Saudi Arabia, leaked American diplomatic cables reveal.
Libya oil production grinding to a halt
NEW YORK (CNNMoney) -- Oil production in Libya is shutting down as companies operating there begin to close facilities due to the ongoing violence.
SINGAPORE: Saudi Aramco's move to set up a trading subsidiary for refined products is aimed at optimising its massive production system, focusing on the fuel oil and gas oil markets, traders said yesterday.The main objective of Saudi Aramco Product Trading Company, expected to be operational by the end of the year, is to maximise profits by selling surpluses from its plants when prices are high and buying external cargoes for its requirement when they are low, they added. Unlike regular trading houses, it is unlikely to take positions in the market.
Does Peak Oil Equal Cyclical Recession?
"Peak oil is the point at which you reach your maximum production level, after which you will never produce as much again," said Alan Stagg, an economic geologist based in Charleston. Stagg read Hubbert's writings when they were first published.We won't know it has happened, Stagg pointed out, except in retrospect.
But the fact that oil's vastly unprecedented high of $147/barrel in the summer of 2008 didn't draw forth an outpouring of new production, some say, is a strong indication of a peak.
Middle East uprisings might mean the end of free-flowing oil: U.S. must find new energy sources
So what's the problem? Oil markets don't like unpredictability. So an oil price spike is possible, even if we have oil stocks as protection. In addition, if chaos spreads to Saudi Arabia and Iran, causing more disruptions, prices will go through the roof.But an even bigger problem looms: We're overusing oil. The International Energy Agency has radically changed its forecast on when that habit will have to end, whether we like it or not. Until recently, it dismissed notions that oil supplies might peak or reach a point where production slows and then decreases.
Richard Heinberg - How Markets May Respond to Resource Scarcity: The Goldilocks Syndrome
Before examining limits to non-energy resources, it might be helpful to consider how markets respond to resource scarcity, with petroleum as a highly relevant case in point.
Greg Palast: We're Not Running Out of Oil, Just Cheap Oil
In this eighth video in the series “Peak Oil and a Changing Climate” from The Nation and On The Earth Productions, investigative journalist and author Greg Palast says the era of cheap fuel is over. Now energy companies are scouring the globe for oil, often extracting resources in more expensive and more environmentally sensitive conditions.The problem, according to Palast, isn't really that we're running out of oil entirely. We've become addicted to cheap oil, Palast says, and we now accept the oil companies digging in sensitive areas, even though “there is a safer way to drill for oil."
President Obama and the Democrats should take their cues from world leaders who are taking on Big Oil in their own countries, Palast says. Ecuadorean President Rafael Correa has refused to go along with “the usual methods of oil companies.” He kicked Occidental Petroleum out of Ecuador and has agreed to support tens of thousands of Amazonian settlers in Ecuador as they sue Chevron for damages to their lives and their land. Only with these kind of bold moves can we hope to take back our environment from the major polluters.
North African Turmoil Could Rocket Crude to $220
If the turmoil paralyzing parts of the Middle East and North Africa brings oil production in Libya and Algeria to a standstill, it could cause crude oil to explode to $220 a barrel, derailing the global economic recovery.According to a new report from Tokyo-based Nomura, a simultaneous production halt from embattled Libya and neighboring Algeria would reduce OPEC spare capacity to 2.1 million barrels a day and may cause crude to spike from about $97 a barrel today to $220 a barrel.
Nomura’s $220-a-barrel crisis oil call
Talk about an oil shock.Nomura’s commodity analysts, led by Michael Lo, are calling for oil at $220 a barrel, if both Libya and Algeria were to stop oil production. Oil’s currently around $108.
If Libya revolts, Saudi Arabia could be next
It is a very dangerous game to try and predict what will happen next in the Middle East and North Africa at the moment, so I report this with all the usual caveats. But John Roberts, an energy security specialist at Platts, has been watching the region for a long time, and he thinks that the possible removal of Muammar Gaddafi blows apart a lot of long-held assumptions about the region.
Saudi king back home, orders $37-B in handouts
RIYADH, Saudi Arabia - Saudi King Abdullah returned home on Wednesday after a three-month medical absence and unveiled benefits for Saudis worth some $37 billion in an apparent bid to insulate the world's top oil exporter from an Arab protest wave.
Muammar's Oil - Libya's Contribution to the World's Oil Picture
Recent unrest in Libya has led to unrest in the world's oil markets. In this posting, I'll take a brief look at Libya's contribution to the world's oil picture.
UK oil workers 'desperate' for Libya exit
A Scottish oil worker stranded with 300 people in a Libyan desert camp has told how the group has just one day's supply of food and water left.
Half of Libya’s oil production shut down
At least half of Libya’s oil production has been shut down in the wake of the violence wracking the country, industry executives estimate.
Big Oil's $50 billion bet on Libya at stake
FORTUNE -- The instability in the Arab world claimed its first oil-rich victim over the weekend with the uprising in Libya. That's bad news for the bevy of international oil firms that have set up shop in the cloistered North African nation over the years, most notably Eni, the Italian oil giant. Libya has become a hot bed of energy investment since the lifting of trade sanctions seven years ago. Major oil companies from BP to ExxonMobil could now stand to lose millions, and in some cases, billions of dollars in investments and expected future revenue if the current regime falls.
At least 3 oil cargoes sail from Libya - sources
Reuters) - At least three oil cargoes have left Libyan ports in the past 24 hours despite a revolt against Muammar Gaddafi's four-decade rule, trade and shipping sources said on Wednesday.
Why you really can’t swap Libyan oil for Saudi
Much discussion on Wednesday of whether Opec could pump more oil from the Arabian peninsula to make up for Libya going offline — so we thought these pointers from Barclays Capital’s Amrita Sen might help:
Last Thursday, February 17th, was a very big day – and perhaps a very good day – for the offshore drilling and energy industries as two separate but related developments could help ensure the near-term viability of deepwater oil drilling in the Gulf of Mexico.
Rising alarm over global scarcities
While the unrest spreading through the region has developed from unique combinations of political, economic and social factors in each affected country, anger over rising food costs is a unifying force. Rising domestic energy prices caused by shrinking state subsidies have also stoked popular dissatisfaction, while regional water shortages loom as never before.Several Arab governments, alerted to the security threats posed by resource scarcity, have recently moved to enhance their buffer of key commodities in a region that imports more than half its food, including staples such as wheat, rice and maize.Last month, Jordan cut taxes on food and fuel. Saudi Arabia announced plans to double the kingdom's wheat reserves to 1.4 million tonnes, or enough to satisfy demand for a year.
This month, the director general of the UAE's National Crisis and Emergency Management Authority said a proposal to build emergency reserves of food, water and medicine would be submitted to the Cabinet in April. Abu Dhabi started building a strategic water reserve last year.
Oil Rises to 28-Month High on Libya, Middle East Supply Concern
Oil rose to its highest in more than two years as Libya’s violent uprising threatened to disrupt exports from Africa’s third-biggest supplier and spread to other crude-producing nations in the Middle East.
Jeff Rubin: Soaring oil prices a double-edged sword in the Middle East
Why is the Arab world convulsing with social and political unrest when triple digit oil prices should be bringing enormous wealth to the region? The answer may be that the link between energy inputs and food prices suddenly makes soaring oil prices a double-edged sword in the world’s largest food importing region.
Oil Soars as Furor Shakes Markets
HOUSTON — The political turmoil sweeping the Arab world drove oil prices sharply higher and stocks much lower on Tuesday despite efforts by Saudi Arabia to calm turbulent markets.The unrest that has spread from Tunisia to Libya pushed oil prices to a two-year high and has spurred an increase in gasoline prices. The specter of rising energy costs and accelerating inflation in turn unsettled investors.
Oil is now at a price not seen since the recession began, and it is more than $20 above goals set in recent months by Saudi officials as strong enough to satisfy the top producers but not so strong they might suffocate the global economic recovery.
Opec holds back extra supplies
RIYADH // Opec held back from releasing extra oil to cover disruptions in Libya as world prices hit their highest level in two years.Oil producer and consumer nations meeting in Riyadh agreed there was no immediate shortage of oil on world markets, and Saudi Arabia and the UAE said they stood ready to compensate for any future supply gap.
Saudi minister: OPEC nations has capacity to produce surplus oil
(CNN) -- Seeking to alleviate concern about rising oil prices, Saudi Arabia's oil minister said his country and other OPEC members have the capacity to produce surplus oil, Saudi Press Agency reported.Saudi Arabia alone has a surplus of about 4 million barrels per day, the agency quoted Minister Ali al-Naimi as saying.
Gasoline, Heating Oil Surge as Violence Escalates in Libya
Gasoline and heating oil surged to the highest levels in more than 28 months as heightened violence in Libya stirred concern that unrest in North Africa and the Middle East will disrupt fuel production and shipments.
The Stealth Return of $100 Oil
The days of $100 oil are back—and not just in Europe, where the Brent crude benchmark vaulted past $108 a barrel on Monday.
Gasoline Gains on Refinery Shutdowns, Crude Slips: Oil Products
Gasoline extended its 28-month high, breaking with declines in Brent crude and West Texas Intermediate oils as refineries slowed production for maintenance. Crude oil traded on the New York Mercantile Exchange dropped for the first time in three days. Heating oil fell. Ethanol was little changed.
U.S. Oil Supply Rose a Sixth Week, Bloomberg Survey Shows
U.S. crude stockpiles probably rose for a sixth week, the longest series of gains since May, as a glut forms at Cushing, Oklahoma, the country’s biggest oil- trading hub, a Bloomberg News survey showed.
Gaddafi's Next Move: Sabotage Oil and Sow Chaos?
There's been virtually no reliable information coming out of Tripoli, but a source close to the Gaddafi regime I did manage to get hold of told me the already terrible situation in Libya will get much worse. Among other things, Gaddafi has ordered security services to start sabotaging oil facilities. They will start by blowing up several oil pipelines, cutting off flow to Mediterranean ports. The sabotage, according to the insider, is meant to serve as a message to Libya's rebellious tribes: It's either me or chaos.
Gazprom takes a hit from regional unrest
The Russian gas giant Gazprom is emerging as one of the biggest potential losers from the continuing unrest in the Middle East.The company has interests in Libya, Bahrain and Iran, all of which are experiencing some level of civil disturbance. Gazprom shares, listed in Russia, declined by almost 9 per cent in the past week.
Italian Energy Company Suspends Gas Pipeline to Libya
ROME — Concerns rose about Italy’s natural gas supplies on Tuesday, after the country’s main energy company, ENI, said it had suspended supplies through its Greenstream pipeline, which runs from Libya to Sicily and supplies 10 percent of Italy’s natural gas.
Libyan revolt likely to leave deep scars on oil sector
(Reuters) - Regardless of what comes next in Libya's lethal political standoff, the OPEC country's oil sector is nearly certain to suffer, bringing long-lasting supply disruptions or even permanent damage.None of several potential outcomes is benign for Libya's oil industry -- the lifeblood of its economy -- or for oil prices. The scenarios run the gamut from all-out civil war and attacks on energy infrastructure to low-level neglect and reservoir damage, as foreign expertise flees the country.
Can the Saudis really ride to the rescue?
The fate of the global economy may hinge on surging oil production from the world's biggest exporter. But it's not clear that the Saudis have the juice.
Spare Capacity Theory and the Libyan Disruption
In truth, the spare capacity that the world cares about—that the oil futures market cares about—is not the inventory level. But rather, actual production capacity that can be brought on immediately. You can see the problem, from a price standpoint. If the world loses Libya’s 1.5 mbpd production for 90-120 days, and starts drawing down above-ground inventories, this only makes the inventory cushion that much thinner for any new supply disruptions. The question on the mind of the oil market therefore is not Mr. Fyfe’s 1.6 billion barrels of crude, but whether countries like Kuwait, the U.A.E. and especially Saudi Arabia or even Russia can lift supply. Immediately.
Saudi Arabia stands by oil forecasts
RIYADH // Yousef al Furaidan, the production manager for one of Saudi Aramco's biggest oil projects, is unsure what more could be done to convince the world Saudi Arabia has the oil reserves, output capacity and spare capacity it claims.The issue of Saudi oil data transparency resurfaced this month with the release by WikiLeaks of confidential cables from the US embassy in Riyadh urging Washington to heed a former Aramco executive's warning that the kingdom's reserves may have been overstated. The rekindled controversy has intensified as political tensions have erupted in parts of the Mena region, with anti-government protests now endangering oil exports from some Opec states including Libya.
Saudi Arabia, the biggest Opec oil producer, has felt only minor repercussions from the furore. However, to many New York oil traders, the kingdom's ability to compensate for supply disruptions elsewhere is again an open question.
Indonesia says may delay limiting fuel subsidies due to high oil prices
(Reuters) - Indonesia's chief economics minister Hatta Rajasa said on Wednesday the government might further delay a plan to limit fuel subsidies for private cars from end-March due to high oil prices and inadequate government preparation.
Frontline Back in Black on Chinese Oil Demand
Frontline Ltd., the world’s biggest supertanker operator, may return to profit this quarter after its biggest loss since 2002 as oil demand from China curbs a glut of vessels that sent freight costs to a 13-month low.
Mexico oil output seen up in 2011, natgas to plunge
(Reuters) - Mexican oil output will rise 2 percent to 2.627 million barrels per day by December from the rate expected to be produced in January while natural gas output will fall sharply, according to the industry's operational plan that the government released on Tuesday.
Fog Halts Houston Ship Pilots’ Inbound, Outbound Boarding
Houston Ship Channel pilots stopped boarding inbound and outbound vessels today as fog limited visibility on the approach to the largest U.S. petroleum port, according to the Coast Guard Vessel Traffic Service.
Chevron Halts Work at Gorgon LNG Site, Apache Shuts Gas Plant on Cyclone
Apache Corp. halted gas production from Varanus Island and Chevron Corp. suspended construction at the A$43 billion ($43 billion) Gorgon project in Western Australia because of Tropical Cyclone Carlos.
BHP to Buy Chesapeake Shale Gas Assets for $4.75 Billion
BHP Billiton Ltd., the world’s biggest mining company, agreed to buy Chesapeake Energy Corp.’s Arkansas shale gas assets for $4.75 billion in cash, more than doubling its U.S. oil and gas reserves.
TNK-BP to sell crude, diesel delivered via Geneva arm
(Reuters) - Russian oil company TNK-BP will start selling crude and distillates on a delivered basis through a new Geneva trading office to open later this year, its head of downstream said on Tuesday.
Iraq rushes to address food-security problems as price of flour trebles
The price of flour in Baghdad has tripled in the past two months, forcing the new Iraqi government to scramble to address its potential food security problems.
Pakistan Case Tests Laws on Diplomatic Immunity
For Pakistanis, many of whom are angry at the apparent impunity with which the C.I.A.’s drone missiles regularly kill terrorism suspects — and, at times, innocent bystanders — Mr. Davis’s case has proved galvanizing. Protesters have called for Mr. Davis to be hanged.But for Obama administration officials, the legal case is clear-cut. They insist Mr. Davis has full diplomatic immunity that protects him against prosecution in Pakistan. Pakistan can expel Mr. Davis, the administration says, but it has no right to imprison him and move forward with a murder case.
Iran says ready to export gasoline
Iranian Deputy Oil Minister Alireza Zeighami said the country had begun marketing plans for the imminent exports of its gasoline, local satellite Press TV reported on Wednesday.
The oil services and equipment sector is the best place to invest over the next few years because these guys have order-backlogs all the way to Mars…The oil services industry is now in a full-blown revenue-based bull market as high oil prices justify expensive exploration by the majors; that’s a trend that will be in place for years to come as Peak Oil is perhaps jettisoned by political instability in the Middle East, and possibly, in the Persian Gulf’s Strait of Hormuz. If Iran goes, then it’s $150 to $200/barrel oil fast.
How to Position Your Portfolio for the Impending Global Energy Crisis
For the past month or two I have been researching and organizing my thoughts on what I believe is an impending global energy crisis. Until recently, I had been unable to fully convince myself that this was likely to happen. However, the recent events in the Middle East and Northern Africa have helped to embolden my concerns. As a disclaimer, I am not an expert and I am limited in my access to information. Having said that, though, I believe this is a very rational concern and is supported by widely available data.My belief that a global energy crisis is impeding centers on the concept of peak oil. This is a topic that has been debated for decades but has recently gained credibility because of the IEA’s acknowledgement of peak oil as a reality.
What 'Peak Oil' Really Means for the Energy Sector
Peak oil is here. Even the International Energy Agency (IEA) has admitted that production of conventional petroleum has peaked, although they forecast continued conventional production at 2011's reduced levels (down 2 million barrels per day from 2006) many years into the future.The attainment of even this plateau, however, depends on rapid increases in Saudi production, for which there are no guarantees and indeed very serious doubts. If Saudi production cannot be raised, global production of conventional crude oil will necessarily begin a precipitous decline.
For sale: refineries producing millions of barrels
2.5 millionThat's how much global oil-refining capacity in barrels per day is up for sale, says IHS Herold's John Parry. It's enough to process the entire crude output of Nigeria or Norway.
Baby dolphin deaths rise along Gulf Coast
The alarmingly high number of dead young dolphins are being looked at as possible casualties of oil that fouled the Gulf of Mexico after a BP drilling platform exploded in April 2010, killing 11 workers and rupturing a wellhead on the sea floor.
The House's decision to rescind about $2 billion in Recovery Act funds and loan authority has jeopardized some $40 billion of private industry investment in clean energy.
Green projects run amok with little oversight. What are we getting for our $130M?
As much as $130 million of one-time money has either been dumped down the drain or committed to fund ex-mayor David Miller’s Climate Change Agenda in the last four years — money which could have been used to offset Toronto’s humongous debt, it was revealed at audit committee Monday.
Britain sign nuclear, oil deals during Cameron's visit
Oil-rich Kuwait and its close ally Britain on Tuesday signed several deals on nuclear and oil cooperation during British Prime Minister David Cameron's visit to the emirate.The official KUNA news agency said Kuwait's Prime Minister Sheikh Nasser Al-Mohammad Al-Jaber Al-Sabah and Cameron discussed the latest developments in the region and issues of common concern.
Nuclear Malaysia: Red flag in a greening global economy
Before the Malaysian government takes the country down the path towards nuclear energy, every citizen must decide if nuclear power is the right choice for the nation.For some, the threat of climate change and peak oil has produced a false choice between either going nuclear or suffering unabated global warming.
But Malaysia, and indeed, the rest of the world, has an increasing number of truly clean and renewable energy options to choose from, such as solar, wind, tidal and wave.
Battery-electric cars will struggle after normal buyers replace early adopters
Some say electric cars will save the planet from man-made climate change. Others see a need to clean up the exhausts of an increasing number of cars clogging up city centers across the globe. Most agree that oil will run out one day, and some manufacturers have bet the farm that battery-only electric cars will be able to rise to the occasion and provide us with viable personal mobility.The evidence is mounting that this won't happen.
WSJ Bigotry, Lies and Abuse of Power or a “Range Fiasco”?
Mr. Khosla comes out swinging at the Wall Street Journal’s take on Range Fuels and biofuels.
Along the Columbia, Concerns for Salmon and Energy Production
STARBUCK, Wash. — The governor of Montana invited himself to Washington State not long ago to explain to people who live along the Columbia River why they should help Montana export its coal across the Pacific Ocean to China.Last month, the governor of Idaho turned up near the Columbia’s principal tributary, the Snake River, to tell Idahoans that it was good policy to barge enormous oil-production equipment up both rivers and then truck it farther inland in triple-wide loads across a scenic highway.
AGL Energy Holds Off on $2 Billion of Wind Farm Plans on Australian Prices
AGL Energy Ltd., the Australian utility building the southern hemisphere’s largest wind farm, said it will likely hold back $2 billion of additional projects until prices for renewable-energy credits increase.
Memo To The EPA: Don’t Mess With Texas!
The Lone Star State is truly going it alone in refusing to comply with the EPA’s latest attempt to apply industry greenhouse gas (GHG) restrictions under the aegis of its Clean Air Act endangerment finding that has declared CO2 to be a “pollutant.” Although at least a dozen other states have joined along in legal challenges to the ruling, all of them are pursuing compliance accommodations until such time that federal courts or Congress reign in the agency’s runaway regulatory rampage.
Unpredictable Oil Prices are Hurting Everyone
Why is the World on this Terrible Rollercoaster?Why… because oil is a particularly inelastic kind of commodity. Oil is not like doughnuts or most other things that are quite easily substituted or done without if prices rise too much. People NEED oil and it is very hard to do without or to substitute with something else — you cannot put coal into your tank.
A Climate Skeptic With a Bully Pulpit in Virginia Finds an Ear in Congress
Yet as the Republican leadership puts the brakes on a climate science confrontation, Mr. Cuccinelli has forged ahead.In the process, his critics say, he has not only made mistakes, but also twisted facts to bolster his case against the climatologist, Michael E. Mann, now a professor at Pennsylvania State University.
Sherwood L. Boehlert, a retired Republican congressman from New York and a former chairman of the House Science Committee, is among those who have sharply criticized Mr. Cuccinelli’s tactics.
“I find no logical explanation for spending taxpayer dollars on this politically designed, headline-grabbing pursuit of his,” said Mr. Boehlert, whose panel in 2006 investigated nearly identical charges by climate skeptics that Dr. Mann had falsified results but found no evidence of wrongdoing.
Arab uprisings foreshadow climate havoc, says British diplomat
LONDON: A string of Arab uprisings are giving a foretaste of the likely havoc that climate change will cause without greater effort to curb greenhouse gas emissions, a British Foreign Ministry official warned.Soaring food prices, stoked by Russia’s drought last year and subsequent ban on wheat exports, were an additional trigger in the popular revolts across North Africa and the Middle East mostly blamed on public frustration with autocratic rule.
“Treat this as a ‘prequel,’ because if we can’t remove some of those upward pressures on resource stresses then crises that are difficult to deal with when they happen will become more likely,” said John Ashton, special representative for climate change at Britain’s Foreign Ministry.
50m ‘environmental refugees’ seen by 2020
WASHINGTON: Fifty million “environmental refugees” will flood into the global north by 2020, fleeing food shortages sparked by climate change, experts warned at a major science conference that ended here on Monday.“In 2020, the UN has projected that we will have 50 million environmental refugees,” University of California, Los Angeles professor Cristina Tirado said at the annual meeting of the American Association for the Advancement of Science (AAAS).
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If inflows are exceeding outflows at Cushing, at what point do they start slowing in inflows? I'm wondering how that decision is made. There's only so much storage, it has to get tapped out at some point.
You have to remember that there are different kinds of crude oil. We don't know for sure, but there is a strong suspicion that a disproportionate share of the surplus crude is very heavy sour crude from Canada, because new pipelines from Canada have added more capacity for such crude. There is only a small percentage of refineries in PADD2 that can handle this crude, and they are operating at capacity. If this crude could make it all the way down to the Gulf coast, it could be refined, but as it is, it just accumulates in Cushing and other places, because there are not pipelines past Cushing to take it farther south to the Gulf.
Somehow, the excess crude needs to be moved to somewhere where it can be refined. This may mean putting it on trains to the Gulf coast. The problem is not lack of demand for oil products, it seems to be lack of capacity to handle some of the particular types of crude that are being sent to PADD2.
PADD2 gets oil from both the South (by pipeline from the Gulf area) and the North (Canada and Bakken). If the oil were interchangeable, it seems like the oil from the Gulf would stop or slow down pretty quickly, because of the lower prices now being offered. My post on the WTI-Brent spread and the comments discuss some of these issues.
I suspect Kingfish was referring to the fact that if there continues to be more oil flowing into cushing than flowing out then at some point there just won't be any storage left. Once it's all full then what do they do with the oil? It would seem they'd have to reduce inputs...or just start dumping it out on the ground with the tanks overflowing everywhere. Or start filling up a whole bunch of trains real fast.
Which of those happens depends in large part on price signals. I suspect a combination of all of the above, as well as horse-trading deals between Conoco (with a pipeline asset) and other major companies.
Thanks, that's exactly what I was getting at. Big pipe in, small pipe out, storage fills up, then what? There's only one option -- slow down the incoming flow. Question is, how much spare storage capacity exists at this point? I know they've been building storage like crazy, but as long as oil's coming in faster than it's going out, the storage has to fill up at some point.
Well, oil is backing up all through the system. You have to realize that not only are the storage tanks at Cushing full, but the storage tanks back in Canada and North Dakota are also full.
The problem with the storage tanks is nothing compared to the problems with pipeline capacity. The TransMountain pipeline from Alberta to Vancouver has nominations for twice as much oil as it can possibly move, and all the other export pipelines out of Western Canada are similarly backed up. The North Dakota oil is going into the same pipelines, so it has the same problems. However, there is new pipeline capacity to move oil to Cushing, so that is where it is going. Unfortunately there's no new pipeline capacity to take it past Cushing.
Meanwhile, in the rest of the world, demand from India and China has increased dramatically, but Saudi Arabian exports are down, Mexican exports are down, Venezuelan exports are down, etc. etc. - So there is not much oil available. And now North Africa is blowing up in a major way and Libya is going off production.
This means we have two different oil markets - mid-continental North America, where there is lots of oil available; and the rest of the world where things are tight. Oil marketers are trying to figure how to get oil from the first market to the second, but so far they haven't had a lot of success.
I think the amount of oil piling up at Cushing is due to the lack of pipeline capacity to move it from there to the Gulf Coast, where half the US refining capacity is located. It's not just Canadian oil piling up in Cushing - North Dakota sweet light Bakken oil is filling up the tanks as well. The Gulf Coast refineries can process just about any kind of oil you can ship to them because a lot of Mexican and Venezuelan oil is heavy and sour as well.
However, I think that at this point in time the oil traders are getting skittish and are just buying oil to hold in storage. They don't care where it is as long as they have oil in storage tanks somewhere, anywhere.
If things in North Africa and the Middle East get worse (which they very well might), and the oil prices at the Gulf Coast spike to over $150 (which they very well might), they'll figure out some way to get their $90 oil to the coast.
It may involve large fleets of brand-new tanker trucks running bumper-to-bumper down the highways in Texas. If that's what it takes, that's what you'll see.
Yesterday gas prices went down 4 cents down per litre. I get gas here solely from Alberta.
Yeehah! Westexas quoted in Fortune:
Link
Regarding Saudi Arabia, it's really a story of two countries: (1) Saudi Arabia through 2005 and (2) the post-2005 Saudi Arabia. Let's look at 2002 to 2010 Saudi net oil exports versus US annual spot crude oil prices (EIA):
From 2002 to 2005, the Saudis responded to rising oil prices with sharp increases in net oil exports:
2002: 7.1 mbpd & $26
2003: 8.3 mbpd & $31
2004: 8.6 mbpd & $42
2005: 9.1 mbpd & $57
But then we have post-2005 Saudi Arabia, when the Saudis responded to generally rising oil prices with declining net oil exports:
2006: 8.4 mbpd & $66
2007: 8.0 mbpd & $72
2008: 8.4 mbpd & $100
2009: 7.3 mbpd & $62
2010: 7.4* mbpd & $79
*Estimated
Post-2005 Saudi Arabia has of course shown the same pattern as Texas after 1972, i.e., declining production, relative to a prior peak, in response to rising oil prices.
In my opinion, what passes for excess capacity worldwide, including Saudi Arabia, largely consists of what Matt Simmons called "Oil stained brine."
By increasing their output of "Oil stained brine" and by depleting inventories, I suspect that the Saudis could show some kind of short term boost in delivered oil, but I think that the time has passed when they could bring global prices down via a steady increase in net oil exports in excess of their 2005 annual rate. The Saudis to have some new production coming on line, but that was true of other post-peak regions too.
For example, Sam Foucher looked at new oil fields in the North Sea whose first full year of production was 1999 or later, and these new oil fields had a peak of about one mbpd in 2005 (versus the overall peak of six mbpd in 1999). These new fields, equivalent, at peak, to one-sixth of 1999 production only served to slow the overall decline to about 5%/year.
BTW, there were certainly have two stock markets in Saudi Arabia: (1) Through 2005 and (2) Post-2005:
http://www.tradingeconomics.com/Economics/Stock-Market.aspx?symbol=SAR
Interesting coincidence.
Yet the "Dream Machine" grinds inexorably onward. CNBC last night (Kudlow Report) featured an oil "update" by Brian Shachtman where the usual old saw about Saudi Arabia's 5mbpd surplus capacity was reliably trotted out for the umpteenth time. Later on, I heard a report that the surplus capacity was 8mbpd!
Personally, I'm in the "Darwinian Camp". I doubt that the Saudi's have even 1mbpb surplus capacity at this point.
One wonders when we'll get the tectonic reaction from the markets after they finally stop drinking the Kool Aid. These guys are smart enough that eventually (like probably pretty soon) they're gonna have to wake up and smell the coffee.
It's interesting how Saudi insiders responded to the Saudis' decision, in early 2006, to start "voluntarily" reducing their net oil exports in the face of rising oil prices. It would seem that lots of Saudi princelings decided that they didn't want to keep their money in the Saudi stock market (see chart above).
Yup. Another tidbit worthy of bookmarking.
Also, it's interesting that over the past few years, after dumping their shares in Saudi stocks (basically Aramco + SABIC), they seem to be more interested in buying gold (along with the Indians and Chinese).
J/wt - Here's another take on the situation and a question that might be put to the cornucopians: What's the effective difference between a KSA that doesn't have excess capacity and a KSA that has excess capacity but won't produce it so the can max their profits?
I suppose the only theoretical difference would be that someone could threaten the KSA if they didn't increase production. Of course that would only work if they really did have excess capacity AND took the threat seriously. But given what's going on in Libya and elsewhere would it be wise to do anything that could threaten the stability of the KSA. It would be one thing to force them to increase production yet another to stir up the locals and have all of the KSA off the market. Imagine the world if the KSA production were shut down for just a few weeks.
I can only imagine that certain "Islamic radicals" - UBL/OBL comes to mind - are licking their chops to stir the pot in SA.
This http://www.zerohedge.com/article/if-mountain-will-not-come-muhammad-revo... posted on ZeroHedge and I only reference it here as FYI - not that it is or that I consider it fact. Who knows?
As we all know the USA has significant (military) assets in SA for obvious reasons and I believe an "accord of some sort" to defend the Kingdom.
You can't make this stuff up, but what if the masses do get overly riled up regardless of whether it is influenced from the outside or not? Imagine the USA engaging the locals?! I wonder if it would be limited to protecting the oil pumping/delivery infrastructure, but even that....
Anyone else stomach kind of knotted up?
Pete
I'm not so sure we have very much in Saudi Arabia, certainly not lots of personnel; perhaps forwardly positioned supplies, I'd believe that.
If you remember, one of the reasons for the invasion of Iraq was the loss of being able to station personnel in country within the borders of SA; the presence of infidels in the "Holy Land" being destabilizing to the House of Saud and all that. That pretty much shut down our ability to enforce the "no-fly zones" against Saddam's military in the south and to the north over "Kurdistan" (except at great expense using carrier based aircraft).
I think there is a world of difference. In the later case, if the price spikes high enough they can determine to sell more now "while the price is right". This would mean there is a cap to the potential price. In the former case, we know supply is completely inelastic, (its not about will but way), and the only thing elastic is demand.
EOS - But that was my point: regardless of price what if the KSA won't meet the demand of those willing to pay the freight? Granted it's difficlt to believe they won't sell at $200/bbl. But if oil reaches that level and the KSA puts more out on the market and it drops the price to $130/bbl would they do that...as long as no one points a gun at the king's head?
Just a very hypothetical question.
Rock,
Past performance has shown them to be pretty conservative about raising prices. I think they fear demand destruction and world economic recession. The former is partly recession caused, and partly due to the market response on both the consumption and production side. The later wouldn't only hurt them because of the demand destruction link, but because their soveign wealth fund is widely diversified. So they cautiously allow the price to rise a bit, then wait to see how the world reacts. Once they become comfortable at a given price point, then $10 more doesn't seem so scary to them. So I think they want the price to rise in a slow and sustainable fashion.
Most likely they won't be able to increase production enough to matter IMHO. But the latest headline claimed oil infrastructure damage in Libya may be overestimated, so perhaps we won't get all that much of a shortterm shortfall.
"they're gonna have to wake up and smell the coffee" which is shipped in using foreign oil.
Coffee is setting new highs also.
"Spare capacity theory" is a term being used by Seeking Alpha in a referenced article posted by Leanan at the beginning of this Drumbeat. First time I've seen that term, and it seems appropriate given the uncertainty and doubt by many knowledgeable people with respect to SA's spare capacity. Kudos to the regulars here for trying to pry out the truth from "secret" data.
(I also think of "Peak Oil Theory" as not being about the reality of limits to finite resources, but rather about the details and timing of conventional oil maximum production rate.)
Dave
KSA doling out 37 billion to the regular Joes should up domestic consumption a fair bit, although probably not overnight. The Midnight Flight of cash and gold to Switzerland must be immense right now!
Rising alarm over global scarcities, up top. Nothing new here for TODers. The process of the 'haves', those with ample food supplies, converting body fuel to machine fuel, has been ongoing and increasing in the US in particular. That this results in an increase in the number of 'havenots' shouldn't come as a surprize.
2030?? Sir John seems to be a bit late to the party.
Ghung - Yeah...I suppose Sir John doesn't travel much outside of Britain. Been going on for quit a while in some of the world's worse corners of hell. Maybe he just meant he saw a perfect storm coming for a lot of white people. Yep...that has to be it: now it was going to start impacting the folks that really count.
Just wondering how millions of people will be able to flee from anywhere, when they can't afford food and oil will be in short supply. How far will people generally be able to travel?
I have pondered this very question many times.
How hungry must people get before they move.
How long can they go unfed, or underfed, before they must stop moving?
Craig
There is a line from a song by Rage Against The Machine that has always haunted me: "Hungry people don't stay hungry for long" (New Millenium Homes).
When you think that many famines only last for a year or two, and that you can expect people will eventually riot for food as it becomes sufficiently scarce, the whole time-line can be frighteningly short.
I have done some reading on police riot control techniques and, to their credit, they are getting very good at 'crowd management'.
I wouldn't be surprised, in the event of TSHTF, if things are held together for longer than we might expect and then just completely unravel very quickly.
I saw a photo that was taken of a military training exercise on
crowd control. A guy that was part of the "crowd" was holding
a sign that said: FOOD NOW! So I guess someone has an idea
of what to expect.
I would perfer a cook-off abut how to make swine feed and beef protein feed raw materials as good tasting as possible as a backup plan.
You jest of course, but a wink or a joke is as good as a word to the wise..
Take notice , folks, it is not inconcievable that your very life might hinge on laying in an emergency supply of relatively non perishable, easily stored food on very short notice.
In the event of a real emergency, your best bet might actually be a local farm supply.More than likely you would be able to load your car or truck there easily while people are fighting with clubs and guns over oatmeal and dogfood in your nieghborhood supermarket. The bagged stuff fed to calves,pigs, horses, chickens, and so forth may or may not contain some unsavory ingredients, such as waste animal fat, but a ton of it will keep you alive and healthy for a rather long time,a year or more perhaps, especially if supplemented with vitamins and any fruit and veggies available.
I would steer clear of dog and cat food except as the very last resort.
Funny enough, I just bought a chunky 50lb bag of feed-corn, and it's sitting in our hallway.. and I pass it wondering what the cornflour would be like were I to grind that up for my bread. Anything making it particularly suitable or unsuitable for emergency Purina People Chow?
Bob
Hi Bob,
Isn't feed-corn usually GMO? And not really what you want humans to eat directly?
I believe Airdale posted at length about this - back when.
Hi Aniya;
Good question.. I don't know it's source. I'm generally against GMO as an ag practise, but I don't know whether it's got health implications in human consumption.. my worries over GMOs has generally been what it can do to spread into the gene pools in the fields and connected ecosystems.. and the shift in economic power against farmers when they get hooked into annual purchases of terminator crops (non-reproducing)
Best, Bob
Agreed. To that I would add that it can be surprisingly cheap to do if you just add 20% to your weekly shop and buy non-perishable stuff on special over time - white rice - canned food - etc - this stuff lasts for years.
And you can ramp up as/if/when needed. It just makes sense to have at least a couple of months of food at hand in the event of any kind of disaster that might cut off food and basic supplies. And you don't have to buy awful food. Buy the stuff you will like and if you reach a level of reserve that you are comfortable with for the time being you can just cycle through it (use it) and replace it so that you always have the 'freshest' food in reserve.
You certainly do not want to be forced to be in a large crowd competing for food and it hits a tipping point and turns into a riot; that bag of rice you were lucky to get may cost you your life. At least if you have some food at home you have the option of deciding that maybe it would be safer to try again later and leave the crowd. If you have no food at home you are more likely to take risks in a dicey situation.
I have a question, regarding rice storage. I take a look at the supermarket and rice comes in packages of 1kg and I notice they have an expiry date only a few months away. Is this normal? Can't rice be stored for longer? If I buy several kilos and wrap each one in 1 or 2 plastic bags and then stack them inside a non-transparent plastic box (with lid), can I hold on to them for a couple of years? For white rice, does the grain length affect the time it can be stored?
Here in the US, expiration dates on food really don't mean anything.
I can't imagine why rice would go bad. It can get infested with bugs. (IME, brown rice is especially prone to this.) For this reason, some people put brown rice in the freezer for a few days to kill any critters, then store in it in airtight container.
I've never had much of a problem with white rice. In Hawaii, with its large Asian cultural influence, many people buy 100 lb (45 kg) bags of rice, and just keep them in a spare bedroom. They'll fill up a smaller container from it to keep in the kitchen, and just leave the rest in the bag with the top folded over.
White rice doesn't generally go bad - there's nothing but starch there. Brown rice, with the germ and bran and all, can and does get rancid if not stored very carefully. Very disagreeable.
I don't know about rice specifically, but for any dry foods your storage life enemies are oxygen, water, and temperature. To keep out moisture you could add packets of silica gel (available at craft stores for flower drying). To keep out oxygen, I have taken to filling a small sock with fine gauge steel wool sprinkled with a bit of table salt. The purpose of the salt is to encourage rusting of the iron which acts as a sacrificial metal to adsorb oxygen. These little packets work like a champ for keeping dried foodstuffs fresh.
Thank you everyone for the info. Absitively, thanks for the tips on silica gels and steel wool. Until now I thought wrapping the products in several plastic bags would be enough, I guess I need to be trying harder.
Our own government recommended this. In case of pandemic. They recommended at least two weeks of food that doesn't require cooking. (This hit the news as "keep peanut butter and tunafish under the bed.")
Though I gotta say...I don't think the average American is in any danger of starving in two weeks, maybe even two months. ;-)
Personally, I don't care for the kind of food that stores well. So rather than eating it, I donate it to the local food pantry before it expires, and replace it.
A viable rotation plan is important, especially since you don't necessarily want to donate expired but perfectly edible food.
The rotation is what we struggle with most, and managing inventory. That's my resolve for this year -- plus creating more storage space.
I'm pretty good about rotation. I worked my way through school at a deli, where it was drilled into me.
Still bugs me at the grocery store, when I see they put the new milk in front of the old milk. Even though it makes it easier for me to grab the newer stuff. ;-)
For those who may not know, in the event of a disaster where you might lose power it doesn't mean that you cannot cook food or treat water.
For cookers you have 'solar ovens' that are very effective and simple to make. I have seen a cardboard box with a reflective surface like alfoil on the box's flaps to reflect and concentrate the light into the box:
http://en.wikipedia.org/wiki/Solar_cooker
A project I have lined up for March to make a portable parabolic cooker from an umbrella:
http://solarcooking.org/plans/barbeque.htm
http://solarcooking.org/images/gallery-para.htm
You can also disinfect water with a plastic bottle and sunlight (SODIS):
http://en.wikipedia.org/wiki/Solar_water_disinfection
In my food reserve I have also added plenty of treats - not only because they generally have lots of carbs - but also because I think it will be good for mental health to simply have at least one moment each day in a bad situation where you can just chill and take a time-out of 'disaster mode'.
I look forward to seeing how much extra oil can "really" be pumped by OPEC.
This is simplistic, I know; but the first thought I had after "getting" Peak Oil was that once peak was acknowledged, the world would effectively have no spare capacity -- even in times of reduced demand as we saw in the recent economic downturn. Apart from the collapse in investment and the effect that might have on exploration and development, we would see a tendency to withhold oil and gas by producers as they came to understand that oil and gas would only become more valuable with time. I understand that cash flow considerations may compel producers to pump oil and gas even though they know that future prices can only rise. But my gut says that the oil exporting countries have absorbed the lesson of North Sea oil and have determined that it makes little sense to sell an irreplacable commodity at fire sale prices.
The other problem is that people have to have the income to afford high oil prices. If the people are laid off from work, their demand is pretty low, even relative to oil prices that are not very high. If they are working for low wages, oil prices will become an increasingly large share of their expenditures.
So we pretty much have to expect rising oil prices, followed by a crash as people cannot afford those prices, and cut back on discretionary spending (and some default on debts). Besides oil prices dropping, a credit contraction can be expected. What may happen is a glut of oil, because oil is offered at prices higher than people can afford. Recession is likely.
People don't expect that crashing oil prices and a glut of supply is a likely outcome of peak oil, but to me, it is. It basically is related to declining Energy Return on Energy Invested (EROI). People are not getting the benefit back to justify the high price that they are being asked to pay for oil. The economic system cannot support the high oil prices, because of this lack of benefit. Eventually, the prices must crash. It is really EROI (or something very close to EROI) that determines the upper bound for what can be extracted, not the amount of low quality resources available around the world. Many of these low-quality resources cannot be extracted at an adequate EROI, so will be permanently be left in the ground.
One of the interesting corollaries of high-quality but limited energy is a predilection for lethargy. Large carnivores don't run and eat all day long. They run a little, eat once, and sleep a lot for days.
Shrimp and ants eat and work without stop. They have an abundance of low-quality input to deal with.
As the availability of high-quality energy drops, I figure humans will become more "lethargic" as well -- less travel, less HVAC, less waste, etc. If everybody stays fed then the system can meander along. It's only when the lions get hungry that things get really nasty fast.
Exactly. 40 million people or more on food stamps in the U.S. This is a staggering number, yet barely gets mentioned in the mainstream media.
It means income can't buy food anymore! These people are on a plantation, managed by the banks.
This also explains why suburbia is declining. What was once one of the best ways to live - your own plot of land and house, drive anywhere, access to the country and the city - immediately turns into one of the worst when you become atomized and stuck in your home with nowhere to go and nothing to do.
Everyone will just sit around doing things like posting on TOD. The horror.
Being there, doing that...
E. Swanson
Your statement is only true for high per capita consumption countries; it is not true for low per capita consumption countries. When per capita consumption is low, people can afford much higher price. Expensive oil may trigger a recession in OECD countries, but it will barely slow down growth in Chindia. As a matter of fact that is exactly what happened in 2008-2009. What a recession will do is kill frivolous consumption and that will shift overall consumption from OECD countries to fast growing developing countries like Chindia.
Example 1: An affluent American middle class family lives in a large single family home with a big mortgage, property taxes and utility bills. They barely have any equity in their house. They drive a couple of large gas guzzling vehicles on which they owe money. Both husband and wife have a round trip commute of 40 miles each. Their combined income is $200,000.
Example 2: A young Indian programmer couple live with the husband's parents in a small apartment that was bought for cash 40 years ago and drive a small fuel efficient car to work. They work in the same office park and their round trip commute is 15 miles. Their combined annual income is $40,000.
When oil goes to $150/barrel who will be forced to cut consumption?
With similar thinking to yours, I have wondered if the US is/will be the 'canary in coal mine'.
For now this is going relatively well, except for the people who lost their jobs. When oilproduction goes down, the elasticity disappears and the system will break.
Certainly they don't want to cut food consumption, so more money is spend on food. Left is less money for growing the economy.
You're still "well-supplied" at current prices. Oops, did I say prices?
From up top...
Let's see, it's Ok for governments to prep for scarcities but those of us who do it here on our own are seen as nutcases by lots of people. I save by buying in bulk and in quantity when things are on sale. I'm ahead even if things never get scarce. As I mentioned to some people in an email this week, it's nice to go out to one of the freezers to get some meat that now costs twice as much or a few pounds of wheat berries for the bread I make.
Todd
Todd - So you admit you're a hoarder. I suppose confession is good for the soul. LOL.
Seriously though it wil be interesting to see how some country's effort to "buffer" themselves will be portrayed as hoarding etc. For instance the U.S. is hoarding over 700 miilions bbls of oil in our SPR. So when times get bad you might think we'll share with the less fortunate around the globe. Like China, maybe. Yeah...maybe start paying interest in oil on all that debt we owe them. Or maybe we start pulling some of our grain exports off the world market and trade them directly to the KSA for payment for oil.
Certainly seems like interesting times ahead.
Rock be careful what you say or I'll go on some DHS No-Buy list!
hoarding, surely not!
I prepare prudently
You stock up
He/she hoards criminally
Yet another S. I. Hayakawa (Language in Thought and Action) irregular verb... (scroll down a bit at link)
Rock, "just-in-time" says that hoarding is not only unnecessary but that it creates inefficiencies as it withholds from the market commodities that might return a higher value in some other application. Problem is that the world is not the well-oiled machine that Neo-liberal economists picture it being. Hoarding is an instinctual behavior for a reason. It is the concept of "just in time" that is an abberation. Survival depends upon being conservative with one's resources -- and in times of uncertainty, that means "hoarding." Always did; always will.
Tarzan - Your comment reminds of what was discovered long after the late 70's oil embargo and how U.S. gasoline inventory dried up almost overnight. No, it wasn't Exxon hiding billions of bbls of fuel in hidden underground bunkers. No, it was tankers steaming in circles off the coast of CA as Rivera supposedly filmed. After surveying folks and determining how they reacted to the impending shortage they discovered where all that missing fuel was: it was in everyone's gas tanks. Instead of waiting until they were down under a 1/4 tank (or less) to fill up folks started filling up when they got to half full...or even a little sooner. When they estimated how much this would add up to it almost perfectly matched the "missing" gasoline. So the fuel didn't disappeared...it was now partially stored in some 100 million very small storage facilities (cars).
Here's a question that can't be answered: since matters started going to hell in a hand basket in Libya et al how many folks have been letting their gas gauge get down to an 1/8th or less? With fuel escalating almost daily are folks hedging by filling up more often? Again in the eye of the beholder: hoarding and just good planning? A model: if 100 million vehicles are carrying an extra 3 gallons of gasoline more than they averaged 4 months ago....300 million gal off the market....that's 7.1 million bbls.....gasoline yield/bbl of oil is around 25%...so that's the equivalent of around 28 million bo. Not a huge number but that's just for U.S. vehicle storage. I also wonder how many gas stations are keeping their underground storage topped off? How many U.S. refineries are making any extra runs they can and keeping their storage topped off? How about the rest of the world? Are folks with various fuel storage systems suddenly keeping their inventories higher than usual? I've read Italy gets 80% of their imported crude form Libya. Makes me wonder how many Italians are filling up every extra container they can find with fuel? If you lived in Rome right now wouldn't you? If you had an empty tanker would you fill it with gasoline/diesel and park it in some Italian harbor and wait to see what happens? A gamble for sure...but their are a lot of gamblers in the world.
Sorry but most crude yields 50% or more gas and diesel yields closer to 25%. Remember 321
dip -It varies but I'm sure you're right. I must have been remembering diesel yield.
Yeah, Matt Simmons often brought up this artifact of our 'just-in-time' system. Specifically, the gas supplies can run out fast if everyone fills up their tanks.
I'm wondering if this will soon happen in Italy. Because if I were in Italy, I'd be filling up my tank right now. And a few spare gas cans.
Yes. He said gas stations would go dry overnight if the average half empty tank in each car was filled.
We kind of saw that after the hurricanes in the southeast.
Just try to get John Q Public to believe that, versus some wild conspiracy theory!
Ob viously you are right. Especially all the oil or product going into containers, and gas stations topping off, that could amount to quite a bit. But you gotta be at least somewhat numerate to realize that milions of small hoarders could have a big effect collectively.
EOS - And the more I thought about it the impact could be very major. The combination of 100's of millions (or billions???) of small "hoarders" combined with a very small number of huge hoaders (folks with empty tankers and storsge tanks) might be a real shock.
Yes. And the bigger the impact, the more John G will cling to his conspiracy theories.
Had to chuckle Rockman, topped off my fuel store today. 45 gals treated gasoline, 5 "grill" size propane tanks and 5 gals of lamp oil pretty much always on hand. Guilty as charged I guess.
Don in Maine
Don - For some bizarre reason your post brought back to mind a very old story from another lifetime I had not thought about in decades. It concerns "sharing" limited resources in tense times. A buddy of mine was a Navy SEAL. They had a training exercise: exit from a sub escape chamber. He and 4 others crammed their way in. There were 5 rebreathing devices. No problem: just grab your rebre, open hatch and exit. What the training instructor didn't tell them was that 2 of the rebre's wouldn't work. The objective was simple: monitor their reactions. They did well. But my buddy admitted the thought did cross his mind for a second: what if had to take out one of cohorts to survive. Later, over more than a few beers, all 5 admitted to each other the same thought had flashed across their minds.
Easier to share when you have plenty. Not so easy when you just have enough. And when you don't have enough for you and yours???
Exactly Rockman, the old drill about what to do when the air masks drop on the plane. Get yours on first, then help those who need it. Can't help anyone if you're gasping for air.
Don in Maine
Reminds me of the old joke in bear country: "Remember...you don't need to run faster than the bear...you only need to run faster than your buddy!"
Certainly seems like interesting times ahead
That is a rephrase of a Chinese curse, isn't it?
CC: I believe the curse is: "May you live in interesting times and attract the interest of important persons"
Thanks!
Not a chance. The U.S. would give China the middle finger over its debts before the SPR could feasibly be sent off to China. The public would scream bloody murder.
I wonder what the amount of US or more generally western direct investment there has been in China over say, the last 20 years. I know it's a very large amount.
People who think the US can simply default specifically on China's portion of the debt have to be mindful that under such extreme circumstances the Chinese may simply seize all the physical plant/equipment of US entities in China.
Of course, a net benefit analysis would have to be done, as the Chinese have their foreign direct investments(largely oil related as is so often mentioned in these pages) overseas also, and in many different nations. The political dependability or not of many of these places is likely to be the hinge upon which WWIII starts, as these events unfold. Leastwise, that's my guess...
The U.S. would give China the middle finger over its debts before the SPR could feasibly be sent off to China. The public would scream bloody murder.
Now wait a minute. Before you give China the middle finger and start screaming bloody murder, keep a couple of things in mind.
1) The Chinese could buy the SPR and give it away as a door prize. 700 million bbl * $100/bbl = $70 billion, while the Chinese are holding roughly $2.5 trillion in foreign exchange reserves,
2) A lot of the oil being shipped to the US at the moment belongs to the Chinese, unbeknownst to most Americans. However the Chinese don't have any way to ship it to China, so they sell it to Americans. Enjoy it while it lasts.
3) Buying Canadian oil is a lot cheaper than buying American oil, and the Canadian government is less paranoid about foreign investment, so the Chinese already have bought billions of barrels of Canadian oil reserves through joint ventures and other vehicles. They'll probably buy even more billions of barrels in the future.
1) You are assuming the markets will stay open, instead of people slamming down capital controls. The free market, global market, or whatever you might call what is happening to day has not really faced such a stress as "Oil supply goes to hell".
2) If they don't have physical access to their own capital, they I'm not sure you can really say you have control over it. Paper ownership only matters when people respect those bits of paper.
3) Certainly, but I'd wager good money that the U.S. would lean very heavily on Canada first, or quietly fund environmental groups opposed to infrastructure projects that could give the oil sands access to Chinese markets.
In sum, I don't think people will play fair/nice when the chips are down.
In sum, I don't think people will play fair/nice when the chips are down.
Yes, but you have to remember, if you don't play nice, none of the other kids will play nice, either.
You will realize that everybody has stopped playing nice when they stop accepting payment in dollars, and start demanding payment in gold. For your oil imports, I mean.
I'll be too old to care when Canada stops exporting oil, unless I'm seriously mistaken on the reserve amounts. Or do you think I'm an American just because I have a gloomy outlook, and expect the U.S. to not play nice with all their weapons and money?
Not so sure of the efficacy of weapons. The BBC showed burned out armoured personal carriers from Libya, taken over by unarmed youth. That should give people who think they can bully people by giving fancy toys to toughs. I was pretty impressed!
No - And if China refuses to buy U.S. debt will the rest of the world? Last I think I heard our about 50% of the fed budget is being paid with borrowed money. So if China and the rest of the world stops buying our debt the feds will cut their budget in half? And how many tens of millions would then be unemployed? I guess the politicians would have to decide what bad situation the would want to be yelled at for.
Nope, but if/when the U.S. repudiates its debt, it's going to be a big old party of debt repudiation. I honestly don't think the U.S. will go first, they'd probably be near the end of the line for that party. I'd bet countries in the EU-zone would be the first to go, maybe Italy if the situation in Libya doesn't let up. Italy will have a neat scapegoat, at the very least.
I mean, it wouldn't be the first time in history a government repudiated its debts. Heck, I'd wager that the politicians would find somebody to scapegoat, it is one of America's grand traditions, it seems to work fantastically on people there. I mean, why bother with the truth when a lie will suit? Isn't that the credo of politicians everywhere.
*edited, sorry about earlier language.
Theere is no reason whatsoever the U.S. would need to repudiate its debt. And it doesn't matter if China and other countries no longer buy U.S. debt and/or sell what U.S. debt they own.
The reason is that the Federal Reserve will buy up all this debt--in other words printing money and causing massive inflation.
Printing money that is vanishing. Like the several billions of home equity that has vanished, won't cause inflation. You have to look at both the sources and sinks. If wealth is vanishing you could in principle print the same amount as vanished and keep the supply constant.
p - A simple question: if the fed printing all that money instead of U.S. sending $billions in interest payments over seas is a viable solution then why aren't we doing it now?
Well, first off, we have to still pay the interest, only using printed money, which is worth less and less over time (as is their principal).
Second, we are pretty much doing that, with Bernanke having the Fed buy up a pretty good fraction of the newly issued bonds.
The downside is that every mortgage, savings account, and $20 bill in circulation becomes worth less and less over time. A little bit of inflation is desirable -- it sucks down savers (small fry individuals) and transfers wealth to banks (any body charging interest will factor in the inflation factor). Wages go up over time, so you feel good about yourself while grumbling about the rising cost of food.
If you're on a fixed income or pension, it sucks to be you. But hey, the organization paying it is happy -- they're making money by loaning the basis paid in, while discounting the payouts. Past debt tends to shrink in the rear-view, so you can always borrow more later.
What's not to love? As long as you're part of the gov't or moneyed elite, anyway.
Good explanation.
The real question is not that if the debt will be repudiated, but how. I'd bet it will be defaults for the EUzone, and printing dollars for the U.S., but I suppose that isn't exactly a controversial statement.
I suppose the interesting question is whether or not the Euro as a unit of money will survive, or will countries go back to national currencies?
If you have rising population and rising production, then to keep the net value of the currency in circulation the same, you do gotta print more. So a sustainable printing rate as a percentage of the money supply per year should be: the inflation rate, plus the rate of increase in production. In normal times those numbers are something line 2-3% each, so you can print from 4-6% of monetary base each year sustainably. [Of course we just give it to the banking system rather than use it for the people, so its just "tapeworm food" to use my new prefered term for bankster.]
In addition, it is the US bond market more than anything else that has made allowed the dollar to retain its positons as the world currency, and all the benefits (if you see them as such) that follow from that status.So, we still sell bonds.
But as enemy of the state explains, the money supply must expand so printing is nescessary. It is the Congress that prints, not the Fed, when it authorizes spending in excess of tax receipts.
But, isn't it the Fed that controls the money supply. Feeding or starving the tapeworms to try to keep it within prescribed bounds? Obviously, its the net money creation/destruction that matters, but the Fed is the designated "swing producer".
Last I think I heard our about 50% of the fed budget is being paid with borrowed money.
You're not even borrowing it now, Bernanke's printing it on demand.
+10
Of course when we have millions of unemployed, then the Chinese will also have millions of unemployed as we stop buying their products and people main use their money for food & rent.
And the Chinese really don't want millions of unemployed since it will be quite destabilizing for them.
Ugh . . . it is impossible to know how this stuff will play out. But I think I can sum it up in one word: badly.
I'd guess the U.S. will look more like Cuba (local farming, more repairing rather than buying new, generally crappy with a rich minority and what have you) and China will look like a war zone.
US like Cuba.
We wish.
The US pop by and large have no ethic of communal mutual aid.
We will mostly not come to each others' aid.
We will try to f our neighbor, not help our neighbor.
The sub-atomic small mindedness of me-first, me-always, me, me, me, me of the dominant homo-economic, neo-conservative nit has dominated all levels of society and will doom us to annihilation once things going remotely in a southerly direction.
Meanwhile, in the land of the freaks and the home of the depraved:
http://www.desdemonadespair.net/
Badly? Badly!!??
When this all began to spread to Egypt, I asked if this was what the "beginning of the end" looks like?
The Jury is out, Speculawyer... Did you do any voir dire? Sure wish I had.
Craig
Yes. Saudi Arabia, Jordan, etc. try to keep the peace by giving their people money, fuel, food. China's strategy is to give their people double-digit economic growth, and the jobs that go with that. As you say, this probably won't end well.
If China stops buying our debt, IMO, the Fed will pick up the slack with QE3, 4, 5, ... n. That would really give the old bird to China (and everyone else, for that matter).
Can you say, "Hyperinflation?"
Craig
Craig - And that was my point. I lived through the days of 10%+ inflation and 16% prime. And this is the solution? I recall the feds clealry depicting this as THE problem and struggling to find a solution. I easily recall Ford's "WIN" buttons (Whip Inflation Now). Heck of a solution...buttons. Rates right up there with "WTF" IMHO.
If the money printing gets out of control > inflation takes off > the value of the dollar crashes > the price of oil rises, for US consumers > the US can't afford it > the US enters depression > everyone else takes a breath and can use the US consumption to aid their transition away from oil.
Net result, the US is destroyed and everyone else lives.
As such, the money helicopter has about been used up. No more scope for action should, say, another crash be around the corner. The next turn takes someone way down, methinks.
I'm sure other countries wish it were so easy for them. But since the US dollar is a reserve currency, it takes down many other countries with them. And it takes down countries with pegged currencies. And it takes down countries that use the USA as a big market for their goods.
garyp, I think you describe a likely scenario.
I don't think that the US will be destroyed. We will be evicted from our favored position and forced to get back to work. We will be able to feed ourselves at least. But it will be HARD work; sorry, no more video games.
But maybe no tougher than what Iceland, Ireland or Greece are facing.
Hey .. . c'mon. With digital distribution, videogames are a great post-peak entertainment source.
I read you wall to wall and treetop tall, Todd.
We buy almost everything in bulk and maintain a well stocked pantry-we have never thought of it as an emergency reserve, but we could eat for a few months without buying anything at all, if necessary.
Likewise we maintain a store of diesel and gasoline, fertilizer, pexticides, rat poison, hardware, a spare well pump, two generators capable of powering up our freezers and domestic well pump, and last but not least plenty of guns and ammo-probably the second or third thing to become unobtainium after food and fuel when the sxxt eventually hits the fan.
We can expect the govt to do what it can to bolster food and fuel supplies, but as far as weapons are concerned........I have zero intention of depending on law enforcement when things start falling apart; the likelihood of a timely appearance by the cops out here in the country is vanishingly small.
We haven't grown our own corn for a good while, since we don't use much, except for sweet corn, but this year we are putting in enough field corn to take care of feeding us, our pigs, and our chickens, a steer for beef, and establishing a reserve.
I guess we will have an old time gathering of mostly retired family picking the field by hand-something we haven't done since I was a child ,as we don't have a corn picker, never have had one. It'll be a lot of fun, maybe some of the kids will show up too.
The little kids can play in the creek besaide the bottomland field, and we can have a cookout for dinner-lunch to you urban types.
I guess I need to hunt up an old hand cranked sheller and motorize it.
There is still a more or less local mill running that will grind our meal for us.
I'm giving some thought to buying some flour for long term storage -maybe in a freezer set aside for that purpose.Electricity is still cheap and dependable here, and is likely to remain dependable for a long time.
If I were a powerful politician, one of my very top goals would to be the establishment of a substantial national reserve of food grains and any non persishable foods available in the markets.
Have you considered planting some sorghum cane for producing molasses? Some friends of mine do that and there's great fun come Fall when it's time to boil the juice down to syrup. It takes all day to do it right and they make a party out of it for the community, but it's worth the effort. One might also find a use for it in the distilled form...
E. Swanson
We have batted the idea around, but we haven't been able to find a cane mill at an affordable price. There are groups that do make molasses every fall, mostly associated with local churches.
The real problem is finding time to do everything you would like to do-small scale production can take almost as long as larger scale, and the labor costs involved in making just a few gallons of molasses are prohibitive, unless you see it as a hobby or family activity..
Our local artisinal distillers are well supplied with corn, apples, and peaches most years, and haven't to my knowledge shown any interest yet in making rum. As you can imagine, they are a pretty closed mouth clannish lot, but local good old boys of long standing can find them easily enough.
We have had liquor stores in this area for a long time now, and they have just about driven the self employed distillers out of business;the very few left are more or less hobbyists producing very limited quantities for their own and friends use.
We are only going back to raising some field corn because we see doing so partly as a family activity and partly as a hgedge against grocery prices that might skyrocket soon.
Even at seven dollars a bushel, we can't earn an hourly wage growing just a few acres, with tractors, but harvesting it by hand.
Just curious, do you ever think to worry about power outages? May I recommend a solar powered freezer...Nah, that's probably too crazy, you wouldn't want people to think you were a nut case. On the other hand, how far ahead would you be with a freezer full of spoiled meat?
Cheers!
Fred
For some there'd be a whole lot of canning by kerosene lamp if the lights went out forever. I like the idea of a solar-powered freezer, some of the really expensive ones already can be run off of 12 or 24v.
.. and then there's the idea of making a 'PassivFreezer' (made it up, there's no such thing..) .. that of superinsulating your freezer space, so that when/if/how power does go out, you have far more time to hang onto those temps.
Of course, with modern chest freezers, you have to know which outer surfaces offload heat.. don't want to super-insulate there, but really would want to simply separate the compressor/radiator components to many inches away, with the insulation in between.
If there's one thing I discovered by this point in my life, its that whenever I think I'm making something up someone has come along and actually made the darn thing... A 'PassivFreezer' may not be all that far fetched an idea.
I was at a solar conference last week and met the sales manager for US. Renewable Energy Inc they've developed a passive solar air conditioner using evacuated vacuum tubes. They're working on something that will produce even more heat so I imagine it could be possible that they might use that technology to produce a 'PassivFreezer'.
I saw a picture of a PassivFreezer, I thought it was on TOD. Someone buried a schoolbus, then filled it with ice during the winter, and put large insulated panels on it in spring. Apparently it kept things frozen through most of the summer.
(President) Jefferson had a cave/cellar on the north side of the building in Monticello that was filled with river ice (yes, rivers ice,it was cold enough then) in winter and it lasted till late summer.
The trouble with super-insulating an existing appliance is that you can get a lot more condensation around the doors due to cold bridging. I'm trying to figure out how to get around it. Oh, and cats love to eat the polystyrene.
NAOM
Re: A Climate Skeptic With a Bully Pulpit in Virginia Finds an Ear in Congress
The article points out that Mr. Cuccinelli hasn't bothered with the science, even though his interest extended back to the time he was in the Virginia state Senate. He said that he did "basic reading" on the science, which makes one wonder what was on his reading list. He also has chosen to ignore the findings of several investigations into claims of misdonduce based on the stolen e-mails, later dubbed "Climategate". One can only hope that Marc Morano, who was Inhoffe's staff bull dog opposing the climate change problem, turns out to be correct with his warning for the Rethugs. Is learning the truth about Global Warming the "trap" which Morano warns against?
E. Swanson
It's all over.
http://www.youtube.com/watch?v=FE9gRD0_yTQ
The link up top, What 'Peak Oil' Really Means for the Energy Sector , is really good. Finally some truth about peak oil. This “Seeking Alpha” a web site dedicated to giving market advice but occasionally they have some really good stuff.
He then discusses conventional verses unconventional oil and why the flow rates of unconventional will be much, much slower. You will have to read the article to get that because it is too much to copy and paste. But he says that if conventional oil starts to decline by 2 percent per year then peak oil is behind us because:
Saudi has already admitted that their old giant fields are declining by an average of 8 percent but they say that they have gotten these decline rates down to almost 2 percent.
The admission:
But they have gotten that massive decline rate down to almost 2 percent.
Actually it was almost a decade ago when they started getting their decline rate down to almost 2 percent with horizontal MRC wells. That sucked the oil out a lot faster. That helped their decline rate but made their depletion rate much greater.
At any rate that 2 percent decline rate is already here. Now we are going to see if "unconventional oil" can keep pace.
Ron P.
If producing a new 1.5 mbpy of oil a mere 2% of world production can keep conventional on its plateau than it seems technically doable.
The problem is mainly political.
2/3s of world conventional oil comes from 10 countries and Russia, the USA, Canada and Mexico represent 1/2 of that oil.
The problem with the 'size of the tap' theory is that some countries are overproducing their reserves and some are underproducing for obvious reasons (fear of running out, keeping prices high).
Unfortunately most of the world conventional reserves are in the politically unstable MENA.
In the case of unconventional oil (a different animal) there are
certainly huge problems is producing oil at nearly as high a rate as drilled oil which is no surprise.
So the whole thing comes down to prices and politics, not taps.
In the end, oil production will rise up to meet demand at higher prices.
As far as MENA goes, the thirst for US style consumerism is going to increase production (between revolutions) but less will go to
the old customers who will have to look to less platiable unconventional oil for the difference.
If the world really was in for a permanent decline in oil over the next 50 years(2%) it would leave about 50% of conventional reserves in the ground and that ain't gonna happen;
28Gb/yr x 50 x 1/2 = 700 Gb out of 1300 Gb reserves.
You have to have operating pipelines, refineries, and a trained work force to extract oil. I don't think we can really "save oil for the future" in the ground, to any significant extent, because pipelines are already getting old, and need to be replaced. Workers need to have jobs, and equipment must be kept repaired. Perhaps usage can drop down a bit, but we soon get to the point where pipelines are wearing out, and we don't have the cash flow to replace them. We talk about pipelines having "minimum operating levels", but I think this is true for the system as a whole as well.
Cummon Gail.
Do you really think the oil business is falling apart?
There are 55000 miles of oil trunk lines in the US and 40000 miles of feeder lines. If things were falling apart we'd be hearing a lot more bad news. Instead new pipelines are being built.
The reason pipelines deteriorate is that they are no longer used due to dropping field production so there is less money to repair them. For example Alyeska.
http://www.pipeline101.com/overview/crude-pl.html
It's probably true that most smaller producing countries have difficulties maintaining production in part because they have chosen not to invest sufficiently in their oil infrastructure (possibly due to low oil revenues) and instead spend money on consumer subsidies, military, or other crap.
Banks should provide capital for the to support the oil industry expansion in smaller producers but the national sovereignty politics/graft will raise the price of such improvements.
But that's politics or economics, not EROI or geology.
Also Simmons point. Strange is that the documentary 'life after humans' mentions that the Alaska pipeline will be one of the longest things to last, because it is so good protected against corrosion.
Reminds me of those future apocalypse movies that show the ruins of NYC, and how the World Trade Towers are always there. 'Predictions are tough, especially about the future' Yogi
Well.. they are immortal now, just not in the way we'd thought they'd be.
Very few. KSA is strange, no ? Short time ago $ 60-70/barrel was ok, then $ 70-80 then $ 80-90. And now only if Libya has oil export problems they are going to open the taps.
Yeah, the world isn't like Texas and the North Sea. Geological Peak oil will be defeated.
No, it won't be 2% yoy. And there is much more than 1300 Gb left.
According to upstreamonline.com, every market is pricing oil above $100 a barrel, except WTI. And still, the MSM is reporting oil prices using WTI, as I learned listening to the AP report this morning on the radio. Either the MSM doesn't get it or they don't want to awaken the restless natives. Shhh! Don't stampede the sheeple!!!
E. Swanson
But you'll have the MSM quizzically asking why gas prices are disproportionately high given the price of oil.
Apparently there is a firewall between the MSM and reality. Also heard yesterday on CNBC that there is plenty of oil in Texas and North Dakota so this is a game changer and too bad that only CNBC knows this little known fact. Implication was that peak oil is so yesterday. This was Cramer talking.
Black Dog,
It's the cowboys singing to the cows, no doubt- I've never seen it myself of course, being an Easterner, but they do say it keeps them calm at times when they are restless.
I am quite familiar with cows, and can vouch for the fact that sometimes it doesn't take very much to set a bunch of them off in a panic.Around here thirty or forty is a pretty good bunch. Getting just that many back into a pasture is a mankiller of a job once they get into the woods or well scattered, since we don't have cow ponys here.
If and when the general public wakes up to the facts as we here on TOD generally see them,a panic is virtually gauranteed.
We should never forget that the MSM is mostly beholden to the big corporations that do the bulk of the advertising, or else simply owned outright by such corporations.
Very important. People must always factor this into their calculations.
Louisiana Sweet at $112.08 is currently the most expensive I see. Alaska North Slope at $105.86
every market is pricing oil above $100 a barrel, except WTI. And still, the MSM is reporting oil prices using WTI, as I learned listening to the AP report this morning on the radio. Either the MSM doesn't get it or they don't want to awaken the restless natives.
Yes, the MSM is not at all aware of what is going on in the global oil market. The fact that WTI at Cushing, Oklahoma is just a local market nowadays just hasn't gotten through to them. Texas oil production is only a fraction of what it was 40 years ago, and there is now far more Canadian oil going into Cushing than WTI, so WTI is just a proxy for Canadian oil trading in the mid-continental US.
The MSM doesn't understand this, so they use what was kind of useful 40 years ago, when Texas was a major oil producer, most of the US oil refining capacity was in the Midwest, and Cushing, Oklahoma was the trading hub for that oil. Things are completely different now.
What you really want for global oil price is a proxy for Arabian oil trading in Europe, Asia, or the coastal US, so you need to use a water-borne crude - Brent or Dubai are good choices. Any of the water-borne crudes will follow them, but WTI is a land-locked crude so it can get disconnected from the world market.
Heard a guy on the radio say that Libya was no supply concern because the US only imports 100kbpd from there. And went on to mention that SA has millions of barrels spare capacity.
From AJE Libyan blog:
wtf?????
Rodents. Leaking ocean going vessels.
cognitive dissonace? i'm sure he thinks he is different to all the other despots and dictators.
There is a big difference between using riot police and using bombers to supress dissent.
Qaddafi is probably killing as many per hour, as Ahmadinejad did in a month. Scale does matter.
Throw into that Iranian papers might not have been able to report on the repression domestically and there may be a fair amount of folks there unaware or unconvinced of the veractiy of reports of brutality used against their own protestors.
Just because it’s neon doesn’t mean it’s green
I read you loud and clear, but after long study, backed by some actual experience in the field, I have concluded that nuclear electricity is one of our best hopes for a relatively soft landing-one in which a good many of us walk away from the crash.
The problems and dangers are very , very real, but compared to the alternatives, they look pretty good to me.
This is my pragmatic view also, though mixed with a desire for higher efficiency consumption and a strong buildout of renewables. I think we could, even with a late start, take care of most of societies needs, with the very notable exception of personal transportation fuel.
Nukes WILL be built en masse by China and elsewhere. Any global-impact accidents are going to happen anyway. We might as well get back in the game as well, and have the benefits since we're sharing risks.
On the contrary, apart from my other objections, it seems clear that they are in a financially extremely vulnerable position, as they have to be built with heavy financing, and their ongoing supply chain is similarly precious.. both for fuels and parts. A lot of security requirements, a lot of highly trained personnel, a lot of high-performance materials built under demanding conditions.
It's like saying we need strong people in the coming days, and then looking to Olympic Athletes for this strength, they're only strong within a very specialized framework and depend on a string of rarified conditions.. we don't need thorobreds for this challenge.
I agree. They are the least evil of many bad solutions. Only question is whether we will any surplus wealth available to build them. I'm starting to think not.
It's not the one and only question.
Far more important question is: Will we have enough energy also to decommission them safely, when their time to die comes, or we just let them pop...?
Future issues will always be discounted compared to current needs. Even if they end up as radioactive ruins, they would still be built if the near-term value is sufficiently clear.
Of course. We always do that - killing our grandchildren to feed our children. :-/
Oh well, it will be our grandkids with two heads, not us, so why bother, eh..? :oP
I think you dramatically exagerate the problem. The most obvious simple solution is, once a site is established, never to de-commission it, simply keep it operating. But that's perhaps too logical for the religious anti's, who "need" de-commissionings to further their cause.
Exactly, but that requires accounting for maintenance costs upfront, for a "perpetual" site plan. I think we're heading this way, given the difficulty of permitting new sites and the cost of adding infrastructure - grid connections and such.
And I think you dramatically oversimplify the problem.
There are no materials, that can last forever. Even if we are set never to de-commission nukes, they still will need heavy repairs. Are modern reactors built to last forever, without repairs? Repairs that will require energy?
I will not take your remark about "religious anti's, who "need" de-commissionings to further their cause" personally and/or as insult, because I'm not one of them, so that remark was for whom it may concern. I'm not anti-nuclear, but at the same time very cautious, because Chernobyl disaster happened only 560 miles from us, so pardon me, if I'm a lil bit cautious...
So, we will see in 40 years what will happen and how successful we'll be in non-de-commissioning those luvly nukez. Hopefully you'll be still around to see it. :)
Here in Canada the nukes are completely refurbished every 25 years, and there appears to be no reason that cannot continue indefinitely because it is clearly economically competitive with even our huge surpluses of N. Gas, produces no emissions, and can (eventually, if ever economical) re-use spent fuel. Advantage of the CANDU is no pressure vessel to wear out, just tube replacements needed. Not clear what "no materials, that can last forever" refers to. Even the concrete foundations could be re-done if necessary I suppose.
Radiation damages metals over time. Also, the pipes tend to wear from the erosion on the inside from the high flow rates of steam and water. Some of those pipes and valves are quite large, requiring special fabrication. As noted elsewhere, the containment vessel is very difficult to build and can not be repaired on site. Not to mention the fact that much of materials in the plants become radioactive over time, so there's more to worry about than just the fuel rods. Face it, machines wear out over time...
E. Swanson
"Radiation damages metals over time"
In principle you can anneal the reactor vessels in place and repair the radiation damage. Whether it's been tried on that scale I don't know. Pipes can be replaced fairly easier, and the post-weld-heat treating is a well-understood process.
Robots should be able to a lot of the high-radiation work soon, sidestepping that issue. I wonder how much cobalt they were able to get out the civilian plants. Co-60 was the main maintenance problem. Once the core is out, everything else goes away in a few weeks. In fact, by the time the core was out Co-60 should be about all that's left at all.
In 1952 Jimmy Carter was assigned to help clean up the infamous Chalk River NRX heavy water reactor--a high neutron breeder. CANDUs aren't particularly safe when compared to LWRs. Today it is closed.
http://en.wikipedia.org/wiki/NRX
Here in Canada the nukes are completely refurbished every 25 years
Yes, but they were supposed to last 50 years before being rebuilt. The only reason they were refurbished at 25 years was because of premature failure of many of their components. It doesn't really bode well for their long-term operation.
In Sweden the nuclear reactors were supposed to have a life-span of 30 years at the time they were built. I think most of them are past that age now. And there seem to be no technical reason to close them down in any foreseeable future.
Yes, a couple of reactors have been shut down, but that was due to political reasons. Pressure from the Danish among other things. Those reactors were within sight from the Danish capitol. Of course they do not mind buying electricity from us. And they do not hesititate to produce electricity from coal. With the predominating south-west winds in this geographical area most of the pollutants from that falls in Sweden.
The reliability of light-water reactors such as Sweden uses have improved with time, and operators have been able to improve them as they got older. The reliability of the Canadian CANDU reactors has gotten worse as they get older.
The CANDU reactors are a unique heavy-water design that uses hundreds of small pressure tubes rather than a big pressure vessel to contain the uranium. The pressure tubes have been found to suffer from premature failure due to rapid corrosion and cracking, which has shortened their life considerably.
The only way to fix them is to shut them down, take them apart, and replace all the pressure tubes and many of the other components, which requires the reactors be shut down for months or years, and costs billions of dollars.
The CANDU reactors were supposed to last 40 years without rebuilding, and many other reactor designs really do last 40 years or more without rebuilding, but the CANDU's need to be completely rebuilt every 20-25 years.
It's a huge expense that companies which operate more conventional light-water reactors don't have to face, and it's a recurring expense because the new components don't last much longer than the old ones.
Welcome to the Ship of Theseus. The nuclear reactor will probably have a lifetime of 60 years before all its parts are replaced piecemeal. The problem will probably be with the older model custom build reactors, rather than the newer ones which will probably have more standardization.
I see a stable market for legacy parts in old nuclear reactor designs.
Also, I wouldn't worry about a Chernobyl issue, everybody designs for a less than zero void coefficient nowadays. Only Russia has the positive void coefficient reactors still running, AFAIK.
Given more than 500 needed (including replacement of aging plants), that would set the cost at more than 6.5 Trillion USD.
o, let's say we have the will to do it. We start one a week (probably not possible, given global demand and limitation on parts availability_, that would take at least 10 years at 650 Billion a year.
I just have to think we have waited way too long without taking any action.
Humans with two heads may be a good thing. Look at the mess we got ourselves in with only one.
Yes. From the Nature point of view it may be a good thing. With each head as stupid as one today, they will be soon at war with each other, and that will enable us to kill ourselves two times faster. Which is a good thing => other species will have bigger chance to survive. :P
You are right, two heads might be a good thing after all! :D
;)
I'm surprised Zaphod has had nothing to say about two heads.
Here on the HOG, I find nothing surprising about 2 heads.
Craig
Suggestion:
Get kids, give them a good education, maintain the tools for building nuclear powerplants and then let them build the next generation of powerplants or something else. As there is power and eductaion it is possible to easily decomission the worn out powerplants as a small part of the work of running a society.
The other thing is, you have to live in a sane country - like France or Canada.
I am not holding my breath for the U.S. to invest in safe, sustainable nuclear for the benefit of all.
Do you have any idea how much "surplus wealth" we have handed over to Wall Street?
Plus we would rather use our technology and manpower to push around Iraqis and Afghanis. Why? Because we can. Because that's our card to play. Has been since WW2.
And we can't withdraw - because that's admitting defeat to terrorism! It's a wonder, a miracle that we ever got out of Vietnam.
The fat lady has sung on our country.
In a way we haven't. Our politic conversation is still dominated by redblooded rednecks versus peacenik hippies. We can't get beyond that and start looking at the real problems.
Last I heard there are only two companies in the world (one in Japan, the other in France) who can make nuclear pressure vessels, and the output is 4 a year each. Think they have a 2-3 year backlog.
Can anyone confirm this? Kind of puts a crimp in any ramp-up of plants.
Well, if you're willing to buy in bulk, just send a purchase order to China. I'm sure they'd be happy to work things out for you in between the 20 / year they're setting up for now. Alternatively call AECL, (Atomic Energy Canada Ltd) whose reactors don't use a pressure vessel, simply a tubed calandria, sort of like a double-tubed boiler with the pressure contained in multiple small parallel zirconium tubes.
And the several almost ready mini nukes that several outfits are designing.
Not sure how accurate, but:
to replace the rest, we'd need 520 total, 416 new. Also, that does not add in replacements (many, no most, of the 104 are near the end of their life). So, let's say someone gets it, and starts doing that... adding 416 and replacing 104. How many could we build per year. At what cost in energy? Oh, and while those 520 new plants are going up, we need to find fuel for them, right? Of course, in the meantime, no one else will be doing the same thing... How much Uranium is available, even with breeders going at it?
And, of course, that is just for electrical energy. Who is going to be manufacturing all those batteries for all those EVs? Where are the rare metals coming from? At what cost in energy?
Also missing from these problems is any consideration of the real 500 lb gorilla. Human population passes 7 Billion this year. Past 9 by 2050. Those people will probably want some energy for themselves in a real consumer society. And, of course, our soft landing will enable consumers to continue to use resources. "They" will find a way. Our way of life is just not negotiable.
/sacrcasm off
Craig
Are we talking about the US here? The place that can't builds bridges that suddenly collapse and rockets that suddenly explode? Perhaps we could hire a lot of Frenchmen to come over and build them for us?
Oil prices continue into the stratosphere. Brent spot/front month future are leapfrogging towards $110.
As reports on the ground start coming in, it is clear that Libya is rapidly heading for major bloodshed. Probably already thousands dead. I sincerely hope that the mercenaries see the writing on the wall and leave, but many of them have been in Libya for decades, and they have nowhere else to go.
Their best hope is that someone pragmatic on the Gaddaffi inner circle puts a bullet through his head.
major bloodshed indeed, an unconfirmed French report says "...Benghazi was attacked on Thursday. On the first day our ambulances brought in 75 dead; the second day 200; then more than 500 ... At first they were firing at people's legs and midriffs, then at their chests and heads. Then we saw mortars and anti-aircraft artillery fired directly into the crowd. It was carnage – people burned, blown to pieces. In total I think there have been more than 2,000 deaths, and (the injured) filled two 1,500-bed hospitals... During those days I saw warfare. In Benghazi there were snipers everywhere..."
There's a fair chance someone will shoot him, but he surrounds himself with the most loyal people who also have something to lose. Human Rights Watch says anyone, including Muammar Gaddafi, ordering or carrying out atrocities "should know they will be held individually accountable for their actions, including unlawful killings of protesters".
Gaddafi is becoming more isolated as parts of the army have switched sides. The first western city (Misrata) has apparently fallen to the protesters.
There are reports that another pilot has bailed out rather than bomb their own people, just heard another plane on the way to Malta so the airforce is getting smaller:-)
Malta starting to panic about refugees followed by Italy and Greece who are meeting now, expecting 200/300,000.
The real issue is that the protesters know they've got nothing to loose now. They can't "settle down and go back to their homes" under the old regime because they know they'll then be individually hunted down and executed by the secret services. Several have expressly stated this in media interviews.
The same has got to apply to the other side as well. His inner circle, and those members of the security services who can be identified by witnesses, must know that if their side capitulates, there will face an accounting. Thats whats so bad about this sort of situation, you rapidly escalate the degree of commitment by all sides -nobody dare back down.
"Green" biofuel policies are directly harming and starving the poor.
Modeling the relationship between the oil price and global food prices, J. Applied Energy, 2010, doi:10.1016/j.apenergy.2010.02.020, Sheng-Tung Chen, Hsiao-I Kuo, Chi-Chung Chen
[6] Runge CF, Senauer B. How biofuels could starve the poor. Foreign Aff 2007;
86(3):41–53.
Buying farm votes starves the poor.
Call your legislators to push for competitive alternative transport fuels that do NOT compete with food, and avoid those that do.
I think it is important to point out where these poor people live. I'm pretty sure most of them aren't going to be American voters.
Except through starvation, how is population going to be managed? Seems like Malthus needs some willing partners -- why not Ethanol? A taste for prime Angus beef can play its role in this as well.
It's unfortunately that so many people choose to be born in areas with neither food nor energy. What were they thinking?
Speaking of, better get busy with that border-fence thing. It's going to be needed someday soon.
/sarcanol
Given that the US imports a lot of fuel and exports grain, why would we NOT want to see a shortage of grains and a lessening need for imported oil, from a purely economic perspective? I'm pretty sure Saudi Arabia will trade wheat for oil.
The US has a lot of desert in the SW. It could be exporting both solar liquid fuels AND grain - without starving the poor. Just need to focus on making solar liquid fuels cheaper than oil, rather than propping up marginal ethanol.
Cheaper than oil will happen on its own. Cheap enough to support society is the real trick. :)
What would be the conversion chain to get to solar liquids? I think the easier goal would be to require much less liquid energy.
David wrote:
Paleocon replied:
And you are both wrong. First there is no such thing as solar liquid fuels unless you are talking about fuel made from plants. And second there is nothing cheaper than oil. Everything else has to be grown, then harvested, processed and distilled using fossil fuels. Nothing, absolutely nothing is cheaper than oil.
That is the point that seems to be lost on everyone. Oil is cheap... very cheap. When it is gone everything else will be much more expensive and available in much smaller amounts.
Ron P.
My bad joke was that oil will become increasingly expensive compared to any renewable source all on its own; it does not require renewables to get cheaper.
Solar liquids is a new term to me. Not sure what that really means.
One process I know of is from a company in Canada, SHEC Labs, who (presently) use a medium-size concentrating dish to thermally crack methane + water into H2 and CO2. What they're working on is catalysts to eliminate the methane feed, and directly crack H2O into H2 and O2. Once you have hydrogen you could readily combine it with CO2 to produce several liquids, though not economically yet.
http://www.shec-labs.com/articles/2005-05-01-ESE.php
A catalyst to separate H2O into hydrogen and oxygen? Well no, according to the second law of thermodynamics that cannot be done, not with a catalyst anyway. Water is basically hydrogen oxide, or spent hydrogen fuel. When hydrogen oxidizes or burns, it gives up energy in the process. The only way to separate them again is to use as much energy as they gave up in the joining process. Water electrolysis will do that but that requires a lot of electricity.
Doing that by just passing water over a catalyst would be a neat trick, but impossible.
Ron P.
Completely agree. This is in essence photosynthesis, which requires roughly 5 electrons per electron released by the splitting. A long way from equity (~20% output before losses).
NotSoCertain - I am curious how does one count 5 electrons in this crazy carbon cycle. Do not remember much from biochemistry courses:-(
Ron, The direct photolysis of water is the holy grail. There is a physical problem that energetically it takes two blue or three green photons to break an OH bond. So one would like to "hold" the water in some kind of molecular structure, excite it with one photon, hold for "a second" and hit it with another photon. One can relatively easily do it with a big laser in vacuum. A friend from university went to work for Shell in early 90's and they were definitely doing some research related to catalysis and I could smell it was not just regular hydrocarbon or sulfur-related catalysis.
Ron P.
The method is to use thermochemical cycles to split water or CO2, driven by concentrated solar energy. The iron or cerium oxides used are typically called "catalysts". e.g., see google scholar "solar thermal splitting catalysts"
Spot on, Ron. And, the second law of thermodynamics says you do not get 100% energy back.
Another problem is that H2 is very unstable (it wants to go grab that Oxygen), and its molecules quite small. It leaks and is difficult to store.
Notwithstanding claims in "The Hydrogen Economy," of several years back, hydrogen is not the answer to transportation fuel. It is, at best, a storage and transfer of energy system. If having too much energy was the problem, then maybe we would see widespread use of H2.
Every time I run the numbers of electrolysis, I run in to the same problems: negative EROI, danger, storage and transportation (imagine a train with hydrogen carriers... now imagine our RR roadbeds, and the wreck... ). Other than that, it looks perfect.
Craig
Yeah, the 'hydrogen economy' seems about as wise as our pools of subprime mortgage. The numbers don't add up. There is not natural source of H2, so you have to create it somehow. That is currently done mostly by steam reforming natural gas but you lose energy in the process. Why not just burn the natural gas as is? It is a great energy source. So all long term systems look at electrolysis and again, you lose a lot of energy when creating it. And after you create it, it is very difficult to store since the molecules are so small and it needs to be pressurized (which takes more energy input).
I think H2 does serve some purposes. It can be used as a 'battery' for storing energy when you have excess that you don't currently need (such as heavy wind days). Perhaps it can be used when you need something energy dense . . . but various synthetic liquids would seem better for that.
I think the whole hydrogen car biz has been a huge pipe dream. Again, there may be niche applications . . . buses in areas where you don't want any noxious emissions.
Nat gas buses and batteries are more realistic than H2, IMO.
Ammonia is a better fuel in many ways than gaseous H2. I'd rather see research money go to Stranded Wind's solid state ammonia reactors than H2 synthesis.
use a medium-size concentrating dish to thermally crack methane + water into H2 and CO2. What they're working on is catalysts to eliminate the methane feed, and directly crack H2O into H2 and O2.
Very funny. Part one could be accomplished with a match (just set it in fire). Part two could be done with an electric current, but the problem is that it would be endothermic (i.e. it would consume more energy than it could produce.)
There's this small technical difficulty with the process called the Laws of Thermodynamics.
Anyone want to buy a bridge?
RockyMtnGuy
Suggest doing a quick search before pontificating. Organizations in the EU, US, Japan etc are working on solar thermal splitting water to H2 or CO2 to CO. Once you have syngas (H2 + CO), the rest is standard chemical engineering. These processes work very well with the all of the Laws of Thermodynamics!
Yeah, but it's the Second Law that kills you. See the comments of Ron and Craig, above. They're perfectly correct.
Go read the reports by JE Miller, R Diver etc from Sandia
Practical end to end solar on dish to fuel out at least 10%.
Solar thermochemical has potential for up to 76% theoretical energy conversion from solar delivered to the reactor to fuel output.
That's from engineers and physicists very familiar with all laws of thermodynamics.
RockyMtnGuy
Solar to fuel end to end efficiency at least 10%.
Solar into reactor to fuel out potentially up to 76%.
That includes all laws of thermodynamics by engineers and physicists & being verified by experiments.
Go read the reports by JE Miller & R Diver.
Weigh carefully comments by those who have no understanding of the systems involved, lest you become like them.
It is interesting that Miller report, dated late 2009, lists references dated in the 90s and some 2005-2006. In applied science that's a hint that the subject is either dead or commercially/strategically "hot" and the main players have been taken out of academia or publicly funded research. Happens in pharma research all the time, must happen in energy research too.
Before prognosticating, check your facts. For more current information, see google scholar on:
hydrogen ferrite
27,900 hits with 2180 in 2010 and 2011! NOT a dying field.
$100/barrel will make solar thermochemical liquid fuels competitive that much faster.
Actually... there is such thing as a solar synthetic hydrocarbon (methane I think?). Sandia had a working prototype back in 2008, I do believe.
Of course it uses cobalt as a catalyst, and the output is tiny, but it is possible, if not feasible to date.
We have a guy pushing "Windfuels". Excess wind production electricity, plus CO2 (from a pipeline) plus water yields hydrocarbons. He recons he can compete with oil at less than $90/barrel. But that assumes almost free electricty (i.e. wind turbines when they produce more than the grid will take), and cheap CO2 (from carbon sequestration). But his "optimistic" business plan is 1 million barrel per day in twenty years. So while it may be a good business (just like WTs oil) it can't come close to replacing anything like the current scale of use. If someday we overbuild solar, (and still have CO2 available), you could use excess solar as well.
The $90 price point is ridiculous.
Cheap oil is what made alternatives and substitution possible. Expensive oil will not make them viable. EROEI will always keep the pot of gold over the next hill.
If the economy can't afford liquid fuel at a certain price point, why does that then make the economy able to afford an alternative at the same or higher price point? We would need growth and the ability to say "to hell with oil or gas I'll use something else and continue to grow".
If world economies continue to break apart due to liquid fuel problems, then substitutions like tar sands could be the first to go. Tar sands are a substitution requiring expensive and high energy technology, a healthy economy and consistent demand. Tar sands and others like ethanol have been made viable during a period of cheap, abundant and reliable supply of oil, gas and coal.
As has been pointed out by many others, expensive oil will mean a retreat to cheap alternatives not the opposite. Cheap means burning anything within easy reach. Your imagination can run amok with that premise.
Cheaper than oil today to start with. (<$100/bbl). Then target cheaper than $50/bbl in the Middle East. etc.
On solar liquid fuels, solar = source of energy, liquid fuels = methanol, gasoline, diesel, DME etc etc.
Method is produce syngas of H2 and CO via solar thermochemical splitting of H2O and/or CO2, with water/gas shift as needed.
Syngas to fuel = standard chemical industry technology.
See Sandia Sunshine 2 Petrol program. e.g. for a 1 page poster see:
J.E. Miller Reimagining Liquid Transportation Fuels: Sunshine to Petrol
J.E. Miller Sunshine to Petrol
For a detailed presentation see:
Solar Driven H2O/CO2Splitting via Thermochemical Cycles Richard B. Diver May 4, 2010
Search for Richard Diver CR5 for details.
Regarding water in the desert, in their 1971 book "Power for the people", (LC# TJ810.M44) Aden & Marjorie Meinel described the first large scale solar power system in the SW deserts capable of providing all the power for the US - and in the process, providing 2/3rds of the fresh water. e.g. by bringing seawater in via a canal and desalinating it.
Right, but what is the point - what is the goal?
First let's talk about putting banksters in jail and withdrawing from the M.E.
Then we'll talk about if we are capable of sustainable energy.
The Goal - replace the depletion in conventional oil plus the growth from population and economic growth, in sufficient volume to enable rapid economic growth by developing countries.
On why - see Jeff Brown & Sam Foucher.
http://www.energybulletin.net/stories/2011-02-21/egypt-classic-case-rapi...
Chindia's consumption of global net oil exports increased from 11% in 2005 to 17% in 2009. Projecting that rate results in Chindia using 100% of all global net exports in 2025.
I will let you figure out the consequences of that.
Uhhh... what about water? Indeed, you can make the desert bloom but not without water. Then you have other agricultural inputs -- not the least of which are fuel, pesticides and fertilizers. Increased demand for those inputs will put pressure on the cost of producing food elsewhere. So, you are effectively right back where you started.
In my opinion, you will never produce any significant quantity of liquid fuel from any sort of process, in a desert environment. If growing biofuels on a large scale makes any sense at all -- and that is doubtful -- it would only make sense on so-called "marginal" lands in humid regions -- and then only if you can raise a low-input crop.
I am referring to solarthermochemical processes, NOT photosynthesis.
You give a self fulfilling prophecy. You appear to not have read what I said or to have a sever lack of vision.
I didn't read carefully enough. Multi-tasking.... My apologies.
A friend of mine spent a year on death row in Egypt back in the 1960's after he was caught spying for the Israelis (photographing military installations). Only the fact that his father, an old friend of my father, had connections in the upper echelons of the then West German government, allowed him to escape his death sentence and eventually return to Germany.
My friend is German and was raised Catholic. When he learned, at university since in those days it was not taught in schools, about the holocaust that had occurred a few short years earlier, he abandoned Catholicism and adopted Judaism, as an act of rebellion against his profoundly Catholic father and of rejection of a culture which had permitted the unfolding of the holocaust. Moral revulsion led him to take direct action involving great personal risk.
As the link between food shortages and the mandated misuse of agricultural resources, especially land, becomes more clear, I expect the ranks of the morally revulsed to grow dramatically and the ranks of those prepared to act against the 'state' of things to climb significantly.
The national security state will soon have to put its spies not only in mosques and universities, but in churches as well, because the churches will soon be hotbeds of anti-ethanol activism.
It is another benefit of the peak oil era, now in its second decade, that moral issues will be profoundly debated and that our civilization will reexamine, once again, the foundations of an ethical order. It has happened before, such as during the anti-slavery struggle.
Note the irony that politically well-connected but despised Daddy still came to the rescue of well-meaning but rebellious Junior. Ah, such as it ever was!
Another plus is that music should improve. Look at what the angst of the 60's/70's provided versus the debt-wealth of the 90's/00's.
I was thinking along these same lines as i reflected on the course of events in this latest crisis
Tunis-CBS New Jan 10
So...a desperate man, an educated man, driven by need presumably, to take a humbling course of earning any money, has even that basic human dignity stripped from him... destroys himself.
A timeless, unremarkable story, except this man doesn't do so in the privacy of his own home but publicly... and that touches such a nerve that a nation erupts in anger.
And that revolt spreads to another country, which in turn lights another fuse...
So this is a narrative view of history and it does depend on some tenuous causation, granted. But to neglect the moral component and reduce it to a 'food riot' is obviously wrong.
Re: "...but in churches as well, because the churches will soon be hotbeds of anti-ethanol activism."
It's true, those passionate Unitarian Universalists are helping to foment anti-ethanolism! Once again I'm co-teaching the Resilient Communities in Response to Peak Oil and Climate Change (Transition Town handbook) for the Adult Religious Education program.
Other churches most acutely aware:
(St. Luke's Episcopal Church (just donated land for community garden), Our Redeemer's Lutheran Church (community gardens established last year), and Trinity United Methodist Church (gardens and a free soup kitchen every Wednesday, plus the gift of firebrand minister Rich Lang with his own progressive Christian talk radio show).
Finally, it's been the support of local churches using their land to host the tents of Nickelsville (ironically named for the former mayor of Seattle, darkly inspired by Depression-era Hoovervilles) that's helping propel the coalition of homeless into a permanent home on city land, including a wider interfaith task force.
"Green" biofuel policies are directly harming and starving the poor.
Americans have to realize that there are consequences for converting food into fuel.
Many of the people in the world have become dependent on cheap American corn to feed themselves. When the US takes its surplus corn and converts it into fuel ethanol, these people no longer have anything to eat.
This is really the basis for the current unrest in North Africa. Due to excessive population growth, there are far too many people living there for the agricultural resources, and they have to import most of their grain, much of it from the US. They are really poor and do not have a lot of money to pay for this grain.
The price of grain has doubled or tripled in many of these countries. In the US this may mean little or nothing to the average person, but in these countries that means that the average person can no longer afford to eat.
So, they overthrow their government and hope that the next government will be able to do better. But the government ultimately responsible for their plight is the US government.
Your narrative neatly lays blame for a yet to be solved conundrum squarely at the US gov'ts feet.
Using the same logic, the green revolution was also the US's fault, and so was world progress on fighting disease. The grandparents of today's hungry should have died in childhood from starvation or disease, and that would have prevented the current suffering. So yes, the US global policy is completely at fault, at least twice over.
Seriously, what if corn stayed cheap for another 20 years? Then you'd have about twice as many people after another full generation, and the problem then would be twice as bad as today. The real problem is population, the secondary problem is cheap energy, and the third issue is food. All are related and interconnected globally, and the global economy is ultimately at fault, covering both the mechanisms of wealth aggregation and resource allocation.
Quite obviously to me, the only rational course is to intentionally manage human population well below the carrying rate of the earth. Otherwise, population WILL teeter on the knife edge of whatever that carrying capacity might be, and it will be a bloody and horrific knife edge indeed, just as it is for a starving hyena cub or a hopeless gazelle with a limp seeing the cheetah approach.
This is the crux of Paleo's Fork: Every well-meaning step taken to alleviate current suffering and death tends to promote an even greater suffering later. Every step not taken tends to unnecessarily promote suffering of the weakest earlier.
So, yes, the US should come up with better ways to help control world population. Starvation and war don't seem to be terribly popular so far. Disease has nasty uncontrolled blow-back issues, and is socially unpalatable as well. What then? Ahh...birth control! Who decides the target population per-family, per-nation, or per-Ethnic group? If you cut down a few Americans, you could support 100 Ethiopians. But Ethiopians would like to live like Americans too, so you have to plan for the day when resources are better redistributed, so that's not a great solution. You could cut back the most prolific reproducers, but they're mostly poor and politically disadvantaged, and would see that as yet another form of oppression.
So, the best you might hope for is a flat, across the board 1 child per person mandate. How do you prevent a man from fathering more than his fair share? If two gay men want a child, what do you do? What happens if somebody manages to have a secret baby? How in the world do you even manage such a plan? The devil is truly in the details.
In the absence of effective and fair population control, the best solution to minimize overall human suffering over time (the area under the curve) is to make the sustainable population be a minimum, reducing as quickly as possible the carrying capacity of mother earth. This, at least, we can apparently do with gusto and enthusiasm!
So, ethanol is a fine solution, as is a meat-centric diet. So is using up all the world's energy, phosphate, and trace minerals. So is making antibiotics ineffective. Nuclear energy and proliferation certainly hold promise -- renewables not so much. War and dangerous living only have short-term appeal - they actually only reduce population, not carrying capacity, unless they involve longer-term impacts, like salting fertile lands or turning human habitats into radioactive wastelands. Over-fishing and over-logging, climate change, industrial pollution, and many other activities will certainly help, but may have downsides to the natural world as well - they aren't very species-specific.
On a related note, this is why I think the first words of a truly sentient computer might well be a suicidal "I wish I were dead", with helpful suggestions to take humanity into the void as well. After all, it is likely that only the rather human time discount rate promotes current happiness over future suffering. Maybe this is the key to long-term birth control -- a growing awareness that life may not be worth living after all. Truly a bleak prognosis, if so.
About a year ago, I posted a concept of tradable birth rights. Herman Daly wrote something similar as well (see my comment). Those who study "sustainable economics" have faced this same question on numerous occasions. Here's one such report...
E. Swanson
Although I can agree with your logic, I think the next steps are impossible. The devil is no-where near the detail in this case.
There is a strong tendency to believe that policy can really addresses everything, whereas in practice this is a discussion piece only, with no method of enforcement (short of war, disease, scarcity, - the usual).
Please don't take this personally, it is rhetorical, but tell me, how would you get this addressed within 50 miles of your own house? Then the rest of the country? To be frank - I certainly could not, but what makes you think that this is achievable at all?
The best you can hope for is for people to discuss it and think. Good luck even with that across the whole population!
Quite obviously to me, the only rational course is to intentionally manage human population well below the carrying rate of the earth.
Okay, free of charge with every bag of inexpensive corn, a giant-economy-sized box of birth control pills, complete with instructions. Take the money out of the military budget.
Population growth is far from being an insoluble problem. People are smarter than yeast. If you give them the means to manage their population growth, they will manage it.
Most countries are managing their population growth adequately, but some countries need a bit of assistance - particularly in Africa.
I can just feel the white man's burden dripping from this post. It's like rural, agrarian economies measure wealth in the number of sons that can support an old fart in his dotage or something. Nope! It must be because them Africans are too dumb to know anything.
/sarcasm
I used to think so, too, that we COULD, but I just don't see proof that we WILL solve the population problem peacefully. I think the jury is still out on the yeast wisdom angle.
Most nations are either aging and in decline but being overrun by immigrants (from higher-reproduction areas) or growing and expanding. Secular areas tend to be reproducing less than more religious areas, including fundamentalists. Unless the non-breeders can somehow corral the breeders, the latter will of course quickly outnumber the former.
I'd be willing to give your notion a chance, but I'm dubious that the pills would be used. Would be interesting to include a random medicine, including birth control, in each big bag. But you're still facing the issue of expensive corn to put it in -- who pays for it all? I can pretty much guarantee that the military will out-lobby food aid for cash.
The best correlation I've seen for dropping birth rates is the adoption of the twin social values of education and equal economic opportunities for women. How to introduce this into a given society is a difficult question to answer, but it has percolated through quite a number of countries just fine.
Just shoving pills at people and saying "stop making babies" is paternalism at its worst.
Also access to health care - so the children you have have a good chance of surviving - and urbanization. Kids are free labor on a farm, but just another mouth to feed in a crowded city apartment.
There has been some success. Egypt has gotten a lot of criticism here for their high birth rates, but they've improved a lot. They did have a government family planning program, and their fertility rate dropped from more than 7 kids per woman in the '60s to under 3 now.
Your statement is totally false, but for sake of argument let's assume it is true.
The question then becomes who is responsible for who. For example, are Americans responsible to feed Egyptians who have bred themselves to numbers that can in no way be supported by the thin strip of fertile land along the Nile? Do Egyptians have any responsibility for themselves or are they free to increase their numbers forever as they are guaranteed cheap American grain?
And for Americans the question becomes which of us are to pay for this cheap Egyptian food? Are we willing to pay higher taxes to buy grain from farmers to ship to Egypt at low prices? Or are farmers suppose to take the lower food price for grain rather than the higher energy price?
If you are willing to pay higher taxes to buy grain to feed Egyptians so that they can continue expanding their population indefinitely, you may have a case. But do not ask farmers to take on the support of Egyptians while other Americans bitch and moan about taxes and deficits.
Farmers are finally getting close to what their grain is worth largely according to many because of ethanol. True ethanol is a factor, but a relatively small factor since it uses only about 3% of world grain supply. It uses a large percentage of American corn supply, but this is mostly animal feed which also has a large energy loss when fed to hogs and such.
The main cause of the run up in corn and other grains is bad weather in several parts of the world at the same time i.e. Russia, Ukraine, Pakistan, Australia and Argentina.
The other cause of the run up in prices is uncontrolled population increases in the Muslim World and rising standards of living in Asia among other places.
Blaming everything on ethanol has a ring of truthiness to it, but the problem would still be here without ethanol. Cheap corn would mean increased hog feeding in China and other Asian countries. Cheap wheat would mean population increases in the Middle East even larger than what we are now seeing.
The day of reckoning might be delayed a little, but bad weather events, increased animal feeding and population growth would still bring about higher grain prices eventually.
Grain prices are not really that high historically when adjusted for inflation. It's just that people think that subsidized low grain prices are a right and that market prices that reflect high input costs and, yes, a small percentage use for ethanol are an outrage.
Farmers are not willing to support uncontrolled populations of animals and people around the world unless they earn a good return.
Ethanol helps make sure they get that good return without as much in grain subsidies.
How anyone can be against ethanol with ME/NA countries in turmoil and Brent closing at $111 is beyond me. It looks to me we are headed for $4 gas this summer. Without ethanol it would likely be even higher.
X has made his case today, and made it well.
The sxxt is pretty well in the fan in respect to food supplies, ethanol or no, at least at current levels of ethanol production.
But I am still opposed to ethanol; we would be far better of, as a society, to put the money into efficiency and conservation.
Of course I would feel like X does about this if I owned a few hundred acrea of good corn land-which unfortunately, I don't. :(
A major ramp up of ethanol production would really put a fire under the food price powder keg.
I think it's a little more complicated than that.
What about what NAFTA has done to Mexico? Cheap US corn drove many Mexican farmers out of business. We said that was okay, they could grow cut flowers and other high-price items instead. Then came the tortilla riots.
Having made them dependent on us, it might be argued that we have a responsibility to make sure they don't starve.
And even if you don't accept that...they're right next door to us. Their problems will be our problems, one way or another.
Leanan,
I'm not sure just which comment you are responding to-but ethanol has definitely raised rather than lowered the price of corn-although as X points out , the amount going into ethanol, as a percentage of world wide grain production is pretty small.
I agree with your take on subsidized American corn ruining small Mexican farmers- but Nafta and ethanol are not really the same kettle of fish.
Furthermore, there is no reason Mexicans cannot go back to growing corn, if it is now sufficiently expensive enough to pay them to do so; but if the Mexican consumer can't afford cheap American corn, she can't afford more expensive Mexican corn either.
Seesawing staple food prices are a thoroughly sufficient justification for the maintainence of a national reserve of such foods in each and every country, excepting possibly the very richest ones.
The problem wasn't that Mexicans couldn't afford Mexican corn. It was that they preferred cheaper corn. Just like Americans can afford US-made clothing and TVs, they just prefer the cheap made in China stuff.
Which is fine, as long as there's no scarcity.
As for going back to farming...it's not that easy. The farmers have sold their land and moved to the city (or emigrated to the US).
Once that happens, it's not easy to go back. Rich people own the land, and they may have little incentive to grow food for poor people.
Mexico has also experienced a major increase in total population over the past 60 years. There are about 4 times as many Mexicans now as in 1950. Even if they were able to go back to small farms, it would be 4 times more difficult to feed themselves. Mexico is already in the midst of major civil unrest, which one might expect to worsen due to demographics and the continuing decline in their oil exports...
E. Swanson
So is the US to be blamed for making food too cheap or too expensive? If cheap food is exported it is blamed for hurting farmers in food importing countries, but if cheap food is consumed domestically via ethanol it is blamed for starving the poor in developing countries.
Why is OPEC not being blamed for not selling their oil at $20/barrel? If OPEC can maximize their profit by selling their oil to the highest bidder why is it such a big sin for the US to consume US grown corn as ethanol (barring EROEI concerns)? Why is the US responsible for feeding people in other countries?
I don't think "blame" is the right word. I don't think there was any malice involved. (Unlike, say, a big company that drives all its competition out of business through predatory pricing, then jacks up prices when there's no competition left.)
But there was a lot of short-sightedness. I think Jeff Rubin is correct: globalization is going to unwind, as it has before. And that will leave food-importing countries very vulnerable.
Lewanan has made her points well-but I would counter that just because the land formerly owned by small farmers is now owned by rich(er) folks,does not mean that it cannot be farmed.As a matter of fact, it is quite possible that it might be farmed more efficiently, given access to a little capital supplied by the landlord to his tenants.
Black Dog brought up the real problem-excessive population.
Leanan and Jeff Rubin are right about globalization unwinding.Before too long, the political pendulum is going to swing in such a way that politicians are going to find it very hard indeed to avoid implementing protectionist measures, never mind the effects of the price of fuel to transport goods in trade, etc.
Even if socalled free trade survives, it represents in many respects a race to the bottom-just what can Egypt, for instance, hope to export to pay for food that the Chinese, or the Vietnamese, or the Germans, cannot produce cheaper?
How anyone can be against ethanol with ME/NA countries in turmoil and Brent closing at $111 is beyond me. It looks to me we are headed for $4 gas this summer. Without ethanol it would likely be even higher.
I think fuel ethanol makes not the slightest bit of difference to world oil prices. The EROEI of producing ethanol from corn grown in the US is approximately 1:1. It's just an expensive way of converting diesel fuel into gasohol.
If you imported Brazilian ethanol made from sugar cane, which has a much higher EROEI than American corn ethanol, you would be somewhat ahead, but you're not allowed to do that. It's purely a subsidy program for American corn farmers.
And unfortunately it has the side effect of causing food riots in other countries.
The EROEI of producing ethanol from corn grown in the US is approximately 1:1. It's just an expensive way of converting diesel fuel into gasohol.
E-ROI isn't important. What's important is liquid fuel return on liquid fuel invested. Only about 20% of the energy input to ethanol is diesel.
Why? Because you say so?
Just think it through.
RMG said " It's just an expensive way of converting diesel fuel into gasohol. "
Well, if only 20% of the input is diesel, than that's not correct, right??
Whether RMG's statement was literally correct on a gallon for gallon basis or not isn't the point, though nice try at obfuscation. Think this through:
That RMG's statement might not have been correct doesn't, logically, prove that EROEI doesn't matter, nor that the only thing to consider is liquid FF in to ethanol out. Not sure where you get your 20% figure, but in any case you're just sweeping under the rug a lot of other FF inputs.
How about "It's just an expensive way of converting fossil fuels into gasohol". This is true. Corn ethanol is a welfare program for agriculture.
Ethanol is the current method being used to convert natural gas to a liquid fuel.
Ironically, it contributes to instability which raises the price of liquid fuels since the amount of corn produced is limited. Since over 10% of the US passenger vehicle fuel consumed is ethanol, if we stop producing ethanol, you will see a dramatic rise in oil prices. Our first solution to decreasing global oil exports has put the world in quite a pickle.
Why angry? We're on TOD to think things through...
Not sure where you get your 20% figure
Robert Rapier.
How about "It's just an expensive way of converting fossil fuels into gasohol".
Not literally true. The BTUs in the diesel don't end up in the ethanol. Nor do the BTUs in the energy source used to distill it.
Corn ethanol is a welfare program for agriculture.
I agree. But, it's not just an ag welfare program. It does provide liquid fuel, and it does increase the net amount of liquid fuel available.
We're facing a shortage of liquid fuel, not natural gas, coal or electricity. That's why a million BTUs only cost $4 from natural gas and $2 from coal, while they cost $20 from oil.
It's a desperate attempt to keep liquid fuel production up.
The BTU's are wasted then.
We use energy to drill for oil (electric motors, etc). That energy doesn't end up in the oil produced, but it's not wasted.
I know Nick, but to produce corn ethanol, liquid fuels like diesel are used. And that 'only' 20% is substantial on Peak oil, let alone on the downslope of crude oilproduction.
I dunno: 5:1 E-ROI is pretty good.
And, of course, one can go to NG fueled or electric tractors and trucks.
The LNG trucks in the article below appear to save about $33k per truck per year (25k gallons per year x $1.25 savings per gallon). At $100k extra per truck, that's a 33% ROI. And, of course, that premium will disappear with volume ( Production volumes of the trucks are so low that their cost remains high, about $200,000, compared with only about $100,000 for a standard diesel truck, according to Kara Gerhardt Ross, a U.P.S. spokeswoman.)
If NG is at $4 per decatherm, then 140k BTUs of NG would cost $.56. How much does the liquefaction cost, including energy, capital expense, operating costs, etc? $1.25 savings per gallon seems low.
"UPS (NYSE: UPS) today announced it has purchased another 48 heavy tractor trucks equipped to run on Liquefied Natural Gas (LNG)...UPS is the only private delivery company using this technology in its fleet and now has more than 1,100 natural gas-powered vehicles in service.
LNG technology uses natural gas as the main fuel with a small amount of diesel delivered at high pressure to the combustion chamber. Westport estimates approximately 95 percent of the diesel fuel usage is replaced by energy generated from the natural gas. The U.S. Department of Energy (DOE) estimates that this displacement will amount to about 1.25 million gallons of petroleum annually.
"The added advantage of LNG is it does not compromise the tractor's abilities, fuel economy or drivability, and significantly reduces greenhouse gases," added Britt. "These trucks have a solid 600-mile range and with reliable fueling infrastructure make an excellent alternative fuel system."
UPS currently bases its 11 LNG tractors in Ontario, from which they can make the round trip to Las Vegas on one tank of fuel. UPS is working closely with the DOE's Clean Cities program to construct a LNG fueling station in Las Vegas. Once that facility is completed in 2011, UPS will base the 48 new tractors in Las Vegas and dramatically expand the number of long-haul routes in the West on which they're used.
"UPS has shown environmental leadership in expanding its natural gas fleet of delivery vehicles to a fleet of heavy-duty interstate trucks powered by Westport HD," said Clark Quintin, President of Westport HD. "Connecting California's existing LNG fuelling stations with developing ones in Utah will create valuable LNG capability on a busy goods movement corridor."
http://www.pressroom.ups.com/Press+Releases/Current+Press+Releases/UPS+C...
--
http://green.blogs.nytimes.com/2011/02/22/u-p-s-finds-a-substitute-for-d...
I'm not angry.
The 20% liquid input figure is not that important, though I wonder what it includes.
Of course it's not literally true that the BTU's end up here or there. You're logic-chopping.
In your pricing report you neglected the real price of a million BTUs of corn ethanol.
Of course it's not literally true that the BTU's end up here or there. You're logic-chopping.
I'm just making sure that everyone is clear that the "conversion" thing is a metaphor. I think some don't understand that. If you understand that it's a metaphor, you can remember that, for instance, different inputs are possible (even ones that don't use fossil fuel at all), and efficiencies can increase.
neglected the real price of a million BTUs of corn ethanol.
An interesting question. We'd have to look at the impact of the marginal contribution of ethanol to liquid fuel supplies, and consider the elasticity of demand/supply in setting prices.
In other words, the lack of a small amount of liquid fuel raises the price of all liquid fuel. A complex analysis.
We'd also have to look at things like the substitution of ethanol revenue for crop subsidies; environmental costs of farming vs oil production; etc, etc. A very complex analysis, and I don't know the answer.
Still, it's clearly not true that ethanol has no impact on oil prices. That's where we started.
How about "It's just an expensive way of converting fossil fuels into gasohol". This is true. Corn ethanol is a welfare program for agriculture.
That's a more general way of stating it. I used diesel fuel as an example. But in reality, fuel ethanol is an expensive way of converting diesel fuel, natural gas, coal, and other energy sources into automobile fuel, while at the same time using up surplus corn production which other people in the world rely on for food.
A more efficient solution is just to drive more fuel efficient automobiles. Everybody else in the world does.
I agree.
Still, ethanol production does supply some consumption of liquid fuels. Oil prices and the US trade deficit would be noticeably higher without it.
Of course, it has destroyed countless chainsaw engines along the way :-)
Yikes.
Well...maybe it's time for electric chainsaws. Surely DeWalt could do that??
Electric chainsaws would be great, except that the natural gas we could have used for making electricity went into making corn ethanol!
:-) :-) :-)
Definitely time for some wind turbines, then, with the NG reserved for low wind periods.
Plug in your EV at night and charge up from windpower, drive out to the back 40 the next day and plug your chainsaw into your EV.
I'll rely on the 50 MW hydroelectric plant down the block to run my electric chainsaw, thanks. I don't want to be felling trees while the wind is blowing hard.
Sure - use the windpower when it's there to save the hydro, and use the hydro when the wind is low.
Or, as above, use the wind during the night to charge the EV, and power the saw from the EV.
Well...maybe it's time for electric chainsaws. Surely DeWalt could do that??
It's past time for an electric chainsaw. I've had one for 20 years.
It's a lot simpler plugging in a long extension cord than mixing oil in the gas and fueling up a gas chainsaw when you've just got one spindly little tree to cut in the back yard. The only thing is it can't handle the big timber.
However, neither could the Sears gas chainsaw. I knew when it started smoking and the fuel started boiling in the tank that the cutting was getting too tough for it. I gave it away to my brother and got a Husqvarna to handle the 100-foot trees.
I would need a mighty long extension cord! Or a generator, which would sort of defeat the purpose ;-)
That's why you power it off your electric truck, charged at night with cheap windpower.
I had an electric chainsaw for a while. It was cheap. But when the chain failed, I happily went back to hand saws. Now I don't live in the mountains anymore, so I don't do wood heat. But I know you can find really good hand tools for lumberjacks, and if I were to do it again, thats what I'd use.
Electric Chainsaws on Amazon.com (You still need to oil the chain, however)
Remember Crocodile Dundee line about a knife? Type "hot saw" to Google.
Still, ethanol production does supply some consumption of liquid fuels. Oil prices and the US trade deficit would be noticeably higher without it.
The low EROEI of fuel ethanol indicates you are not actually gaining anything by producing it. If you use diesel fuel to produce ethanol, you could instead burn the diesel directly in the car as the Europeans do. If you use natural gas, you could burn the NG directly in the car as some companies I worked for did. If you use electricity, you could have driven an electric car instead.
What it really involves is double-counting of energy. You count the diesel once when you burn it in the tractor, and again when you burn the ethanol in the car. It makes US energy statistics look much better than they really are - as if US oil production is not in a state of terminal decline, which it is.
But the worst thing is that you are destroying food to create fuel. This has more consequences for people in the rest of the world than in the US, as we see in the riots in North Africa.
Compressed natural gas requires extra energy for compression reducing its ERoEI below ethanol, and natural gas is not compatible with the current gasoline distribution system requiring a build out. We gain something because ethanol reduces crude oil consumption at the expense of increasing coal and natural gas consumption. It is a BAU approach that delays the effects of peak oil by switching transportation fuel to other fossil fuels. When we get to peak natural gas in the U.S., then we become dependent on a foreign supply of LNG. When we get to global peak natural gas, then maybe TSHTF.
As the U.S. decreases its consumption of crude oil (by increasing unemployment, reducing travel and improving efficiency), I suspect the production of ethanol will remain roughly constant allowing it to become a larger fraction of the mixture with gasoline. This is how our transportation system will become more dependent on natural gas as crude oil production declines.
As for running our cars directly on natural gas, the required build out of infrastructure and the increased demand would make the price of NG rise creating a recession/depression as the increased cost of cooking, heating, electricity, fertalizer, plastics and perhaps other things draws money away from the rest of the economy. By the time we would finish the conversion we will have traded a dependence on a foreign supply of crude oil for an expensive foreign supply of LNG.
Disclaimer: I am not advocating ethanol. I am explaining what I think will happen with ethanol.
Compressed natural gas requires extra energy for compression reducing its ERoEI below ethanol,
Compressing natural gas into CNG only uses about 1.5% of the energy value of the gas, so the energy use is negligible.
The problem with producing fuel ethanol is that you will use the same amount of natural gas anyway. It takes (as a rough estimate) 6 Mcf of gas to produce 1 barrel of ethanol. That 6 Mcf of gas, if put into an engine, will produce the same energy as that 1 barrel of ethanol.
So, the increased demand for NG is the same whether you use it to make ethanol or burn it directly. If you would have to import LNG to power the vehicles, you would also have to import LNG to make the fertilizer to produce the ethanol to power the vehicles.
These are the results of the fact the EROEI of fuel ethanol is around 1. There is no escaping the consequences of that. You're not gaining anything in terms of energy.
The real way to mitigate the consequences of peak oil is to make the vehicles more fuel efficient, and in the long term to switch transportation from cars and trucks to electric rail systems. It's not BAU, but its a solution that would actually work.
That 6 Mcf of gas, if put into an engine, will produce the same energy as that 1 barrel of ethanol.
Ethanol allows much higher compression, so you get more energy from the same BTU input.
You're not gaining anything in terms of energy.
Again, you are increasing the liquid fuel supply. You may prefer direct use of NG in vehicles, but that's a different question.
The real way to mitigate the consequences of peak oil is to make the vehicles more fuel efficient, and in the long term to switch transportation from cars and trucks to electric rail systems
I'd agree (as long as we include EVs in the mix).
The low EROEI of fuel ethanol indicates you are not actually gaining anything by producing it
The correct way to phrase this is that you're not gaining an advantage over direct use of NG in vehicles. You are improving the liquid fuel supply.
And, as pointed out elsewhere, you don't have to build as much infrastructure and convert vehicles. That building and conversion is a real problem, even if we wish it weren't.
Would it be a tinfoil hat theory that we (the US) heavily subsidize grain production to keep KSA and other oil producers well fed so that the oil flows are not disrupted?
Kind of sick if you think about it.
It is basically a loop that is creating a giant population bubble.
Several links up top either question Saudi Arabia's ability to increase production or try to assure us that they can. One guy, Gregor MacDonald, doubts that they can, or doubts that they can do it very quickly anyway.
You're Dreaming If You Think OPEC Can Boost Oil Production At Will
Soon "everyone will know" that Saudi Arabia is blowing smoke.
Ron P.
http://www.theoildrum.com/user/gregor
The Revolution Will Come To Saudi Arabia On March 20
http://www.zerohedge.com/article/if-mountain-will-not-come-muhammad-revo...
Is this reputable at all? I mean, we all know such discussions are being had on Facebook and elsewhere, but what makes this particular article and date credible?
Facebook was 100% on target for Egypt, Libya, and others too. It is the tool of choice now.
Saudi is next on the list.
Reminds me of a comment on economic forecasters - "Forecasters have correctly predicted 9 of the last 5 crashes".
Considering that 75% of the Facebook user base is from the US and Europe , I would not rely on it as a good indicator for the Middle East.
But, are the would be protestors reading the list? "We can't start now, because country X stands before us on the list". These people are either figuring out how to get a critical scale mass protest going, or not. They couldn't care less about a list.
This is a big baloney. General Saudi population is not yet hungry, angry or miserable enough to start a revolution. Zerohedge might be unwittingly participating in some sort of a social engineering exercise.
One could say the same of the Bahraini population, yet something like 20% was out in the streets yesterday.
Not hungry, but horny. Frustrated, unmarried young men abound in Saudi Arabia, and they're increasingly unwilling to take abuse from the religious police.
Why would the organizers want to give the Saudi authorities one month warning?
Maybe to scare the authorities to give the potential protesters what they want, even without actual protests. That would be a brilliant peaceful form of protests now, wouldn't it..? :D
And it already seems to work, as King Abdullah Pours Money Into Saudi Housing, Welfare Amid Regional Unrest. :)
With the current older generation of ruling princes getting well along in years, a very interesting question is going to be succession.
There's no success like succession.
The recent rise in the price of oil has just wiped out all of Bernanke's QE2 money.
Wonder when he will start QE3? Soon the dollar and yen will trade on par 1:1.
This could also reverse the so called "economic recovery" that is mostly fictional anyway.
Obama promised to stabilize the middle east and bring the US back into good standing.
Good luck with that....LOL. WWIII is about to break out now.
It won't be long until protests in the US reach the levels seen in North Africa.
Don't think it can happen? That is what Gaddafi said 3 weeks ago, and now he is hiding out...
Dollar Plummets As Expectations Of QE3 Spread! See article at zero hedge:
http://www.zerohedge.com/article/dollar-plummets-expectations-qe3-spread
On Morning Joe today Jim Cramer was going on about how much oil has been found in the US over the past couple of years. After he was done spewing the typical cornucopian BS, Steve Rattner tried to gently disagree. Cramer then came back in a confrontational manner and Rattner shut him down by saying recent discoveries are tiny compared to consumption and that we are at peak oil. Yes, he said we are at peak oil. If anyone can find a clip it was a beautiful thing to watch.
I found a clip. It's 5 minutes and the whole thing is worth watching.
http://www.clicker.com/tv/morning-joe/rattner-mideast-oil-dependence-is-...
Morning Joe with Jim Cramer and Steve Rattner
This is a 16 and 1/2 minute clip and Rattner and Cramer comes on after about 3 1/2 minutes.
Ron P.
Jim Cramer is such an idiot. He is a con man. Literally, a con-man . . . he works on confidence. There is no way anyone can know everything about every stock on the market and every sector. But he'll spew an opinion on anything with so much confidence that suckers will believe him. And by random luck, sometimes he is right and sometimes he is wrong. The believers will remember his winners and forget the long line of losers (including Bear Sterns, LOL).
This is just another example of Cramer spouting off on something that he really doesn't know squat about. Yeah, some companies drilling in the Bakken are going to get rich off the oil they found. But Rattner is completely correct in saying those amounts are trivial in the big picture.
Yet Rattner is completely mistaken when he says OPEC has 5 million barrels a day of spare capacity, virtually all of it in Saudi Arabia. Well, at least he realizes that the rest of OPEC has zilch in spare capacity but completely wrong in believing that Saudi has 5 million barrels a day of spare capacity. If that were true then Saudi could produce, if they felt like doing so, about 13.5 million barrels of oil per day.
Not even close. The situation is pretty bad when even the skeptics are so far off the mark.
He also said that our fate is in the hands of one country, Saudi Arabia. If that is the case then we are in deep doo doo indeed.
Ron P.
But there are so many Jim Cramers around! I know several---they are in my family. They have an innate inability to get their heads around the concept of a major discontinuity in the middle class lifestyle BAU stuff that they have been raised to believe is their birthright.
It is almost a religious idea...it iseems based on utter faith alone, not anything else. They are the eternal optimists, the eternal risk-takers, the venturers, the gamblers, the people who would in the past, present, future invest everything in a risky deal---because it was too attractive to pass up, because the thought of someone else winning the prize was too awful...
This kind of person looks scared now, with a deer-in-the-headlights kind of glassy eyed gaze (look at Cramer in the video).
Still, we can't abandon the fact that maybe we need this kind of person sometimes in human history.... They drive the path forward, go for the big deals and in the recent past, with their deals, their ideas, etc. they helped make sure that energy consumption went up exponentially. No hand-wringing for them. No "go-slow, caution!" types of ideas would get their attention or stop them.
And so indeed everything expanded as fast as it possibly could.
So now everything collapsing is that much more (shall we say) "interesting" for all the rest of us cautionary types to watch..is that a good enough silver lining??
And listen to Scarborough . . . "conservation" . . . the government should step in and help with switch to natural gas. I guess the more liberal-tilted MSNBC is affecting him. Interesting.
Why do you guys still watch these people?
I'm not trying to be negative.
The point is that they are irrelevant. What they say or think doesn't matter one bit, not in this day and age. Maybe 15 years ago.
The internet blogosphere suffices for information. I don't watch TV news at all anymore, and I sure as heck wouldn't watch any of these buffoons even if I was watching TV, which is rarely.
Moreover, you are just wasting money on a cable bill, and you are wasting time watching them, then thinking about them, then posting about it.
Plus, by watching them, you are paying their salaries through higher ratings.
Stop watching them, and they will go away, quite literally!
I mean, ultimately we have to take responsibility, we really do. The best thing that anybody can do is to STOP FEEDING THE SYSTEM.
I have no cable TV and have not had it for years. I just pick up bits here & there on the Internet.
But what news & political hacks does matter. It does reflect the debate and it can guide the debate.
Ok, so suppose viewers stopped watching NBC, and the network became unprofitable and went to the government asking for a bailout, because after all news "matters" and, well, if NBC goes under the whole system goes under, and where are Americans going to get their daily dose of Joe and Cramer?
Do you believe that story? Would you support a bailout?
Do you believe that, should there no longer be a Morning Joe, we would lose all newspapers, radio, internet, and forms of communication, and immediately be back into the dark ages?
If you believe that then sure, NBC matters, just like AIG and Goldman Sachs and Fannie and Freddie.
Wow, I didn't expect this to turn to discussion of the media itself. The interesting part is that Rattner came right out and said peak oil is here folks. His recent shaping of GM operations and strategy along with his close ties to the Obama administration means that he is a window into the thinking about these issues at the highest level of government and industry.
Ohio Braces for Oil Shale Boom
This 'oil shale boom' shows how the English language is twisted out of all recognition to confuse the public as lawyers have done for centuries.
They mean applying fracking to shale deposits to release oil and not the heating of shale to transform kerogen which is a solid bituminous compound into a pumpable liquid.
Some deposits of light oil do existing is small pockets in the low permeability strata like Bakken.
http://www.energybulletin.net/node/42850
All of which proves is that the Big Oil Scam artists have been unleashed once again on the ever gullible US public.
The whole idea of fracking is dubious IMO.
It will probably succeed in destroying groundwater, the main source of US drinking water for relatively small amounts of natural gas and miniscule amounts of light oil.
I read somewhere that they're using diesel oil to frack in Pennsylvania.
Sounds delicious.
I do think you need something a bit more recent.
Some recent Continental Resources wells' IP rates, for example
And I believe these numbers are about 90% oil.
And some nifty wells' IP rates from BEXP. These numbers are all-oil.
LINK
If you look at page 8 of BEXP's latest presentation (PDF) you'll learn that the typical Williston Basin well EUR is up to 500-700 boe.
They're getting some pretty decent results out of the "sweeter" parts of the Bakken these days.
I don't think it's a game-changer for the US as a whole, but there is a lot of new production out of North Dakota. It's a lot better than the rest of the US, which frankly, is pretty dismal now and due to get worse soon.
Oil producers in North Dakota and oil refineries in the mid-continental US are pretty happy these days. Everybody else, not so much.
The shale oil play (not oil shale) has been and/or is becoming sort of a game changer for the US petroleum business, but I don't think it really has a significant effect on a world-wide peak oil type basis. I have been drilling wells in West Texas for several years now and I think it is fair to say that I have been "pretty happy" with the way it has worked out. They are not big wells by any means, but they definitely work at current prices. Overall it is a really active play and a lot of work, but its not quite as extreme as strip mining for tar sands.
Saskatchewan's share of the Bakken Formation is working out well for them, too, and Alberta has a somewhat similar play called the Cardium that is adding a lot of conventional production.
However, Alberta has the oil sands, and they are definitely a game-changer. They account for most of Canada's oil production now, and in a decade or so from now, I think Canada's oil production will be bigger than that of the US. Not a lot bigger, though, and that won't really be enough oil to make a difference on the international market.
Enough of your BS majorian. Tell me how many ONE MILE DEEP water wells are on a farmer's property? It only costs $3MILLION to drill a well that deep. So you're imagining that aquifers are going to get contaminated by THAT? The entire concept is ridiculous, only a trial lawyer could dream it up, oh, that's right, it WAS dreamed up by trial lawyers!
So they've figured out how to get a hole one mile deep without going thru the zero to 2,000 ft or so where the aquifers are?
Science is going to save the day after all!
/Sarconol off
They put in casings to put a wall between the well and the surrounding area.
That said, with these fracturing operations, even if you drill real deep before fracturing, once you crank up the pressure for fracturing, can't those fractures (and the chemicals) move upward to the less deep areas? Considering that things become less dense going upward, I would think the fractures would move up.
spec - Actually what you describe (fractures propagating thousands of feet upwards) to the aquifers) is physically impossible. A huge amount of money and researched has driven the service companies to design fracs that can propagate up 100' to 200'. And they don't always succeed even at that.
But there are others ways to contaminate the fresh water column by frac'ing. When the frac is pumped the shallow casing could rupture and allow those nasty fluids to leak into the aquifer. But this is very rare event. And when it does happen we can tell from pressure transients that it has happened and you stop the pumping. As much for self preservation as saving the environment: the pressure involved are equivalent to a small bomb going off. A well site with 300,000 horsepower pushing a fluid is a potentially dangerous place.
But as I've pointed before there is a serious potential threat to fresh water resources from frac'ing: much of those nasty fluids pumped down flow back to the surface up the frac'd well. Then it's hauled off for "proper" disposal. At least that what the regs require. In the bad ole days almost all the worst pollution problems were caused by improper disposal of nasty stuff. Proper disposal, usually by injecting into deep salt water reservoirs, is expense. A disposal/hauling company can greatly increase their profit margin by doing an illegal dump. We call them "midnight hauls" in Texas: one those harmless looking tankers (that many folks think are hauling gasoline) stops next to a bridge at 2 AM and in 15 minutes can dump 200 bbls of the worse chemical into a creek. Once an oil company doing a frac turns the frac fluids over to a disposal company they don't tend to worry about what happens. They can show they paid for proper (and expensive) disposal.
No one in the drilling/production biz has any respect for folks doing midnight hauls. Folks need to remember that the majority of the oil patch also live out in the country and many of our children (like my 11 you daughter) drink well water every day. A midnight hauler has more to worry about than getting turned in by some oil field hand - we all travel armed when in the field. I've personally helped bust two of midnight haulers...I'm often on the road at 2 AM.
And I've pointed this out to my Yankee cousins: stop focusing on the frac process itself. That's not your potential problem. It's when all the big noisy trucks, the press and the public are gone from the drill site and the regulators are asleep in their beds. It when that unassuming tanker is rolling down the road late at night.
A well site with 300,000 horsepower pushing a fluid is a potentially dangerous place.
Is 300,000 hp to be taken literally or figuratively. If literally, I want a picture.
GOOD NEWS!!! We've all been needlessly worried!!! Isn't everyone relieved?
"Geithner Says Not To Worry About Surging Oil Prices: "Central Banks Have A Lot Of Experience In Managing These Things""
http://www.zerohedge.com/article/geithner-says-not-worry-about-surging-o...
Heh. Print money and spin, spin, spin. Nothing to worry about until they start tossing bricks through the front window at 1600 Pennsylvania Ave.
I had said previously that I thought that the next downward drop in the long emergency would hold off until spring or summer but that events in Tunisia might accelerate things. It appears that Tunisia did accelerate things. The oscillations in the global system appear to be multiplying at an alarming rate. The restriction or cut off in oil/gas exports from Libya to Italy is a major problem. Italy relies on those exports for more than 30% of its needs. Italy's economy dwarfs those of Greece, Iceland, Ireland and Portugal and is larger than Spain's. Italy may be in a world of hurt and with it, the EU.
There have been reports that Ghaddafi has ordered the destruction of the Libyan oil/gas infrastructure. That could be catastrophic.
Denninger is right that the run up in oil prices is wiping out Bernanke's QEII. The run up will also slam global economies in 3 to 6 months if it continues much longer. Bernanke may have to launch a QEIII or there could be a rather dramatic financial/economic collapse. I really can't discern a third option.
There is an ongoing bank run in South Korea and at least 8 banks have now collapsed. This may seem of little import to the rest of the world but recall that the collapse of an Austrian bank triggered the panic of 1929.
Finally, it appears the fate of the entire global economy rests on the single thread of Saudi Arabia not teetering into turmoil. Reflect on that for a minute or two.
In light of the above and much else going on, it may be prudent to make some preparations for TS hitting TF soon and in an unexpectedly rapid fashion. If one is able, it may make sense to keep some extra cash on hand in case access to cash is restricted or disappears for some period of time as almost happened in the fall of 2008. Stockpiling necessities may also make sense now. If nothing happens no harm is done.
I am not prone to panic or drama but I am concerned that things may spin out of control. And remember, although generally one should not panic, if there is going to be panic it is always best to be among the first to do so.
Twinpeaks- I have to agree, it appears that the probability for a rapid unwinding of the global economy just went up. If KSA goes up in smoke, I don’t think it is a stretch to say we could see a good old fashioned collapse. I would start looking for those life boats because this unsinkable ship appears to be sinking.
Good post. Don't think we are that far yet, though.
I can't help but feel that a total fast BAU collapse would be good, because almost all businesses would shut down with governments still fed and employed. Governments would still have resources to corral basic commodities and distribute them (essentially the energy that went into maintaining BAU would go into a limited-time (5-10 years) transition of dismantling, moving, redirecting, replanning, rethinking).
In a sense that is what has been happening slowly already with all the people on food stamps. Fast collapse takes this one step further.....eliminating the shops and cars that were necessary for the transactions to take place before.
The energy that lit those shops and drove those cars would go into knocking down empty malls and planting fields. Meanwhile people have to be fed.
OK it's tough but with a little planning, things don't have to be that bad. After all, the sun shines everywhere. It is more like a state of mind that has to be changed.
Shipping News – Floating Storage/Tanker Rates & Pirate Update
Now $114.98!
http://www.bloomberg.com/apps/quote?ticker=USCRLLSS:IND
WTI now $99.88
Will it cross the $100 mark...
EDIT: May WTI contract now above $101 (April is the current front month).
Further Edit: April Contract Just briefly crossed $100 before pulling back a bit according to CNBC
It doesn't actually matter. Brent is at $111.66 according to Bloomberg. http://noir.bloomberg.com/markets/commodities/cfutures.html
It matters psychologically because it is still the main index seen on US tv.
Possibly, but the bulk of the people mainly go by the price on the pummp.
Traders in oil and derivatives would know enough not to only pay attention to WTI.
$3.62/gal for unleaded 87 octane at a discount gas station in Petaluma, CA this morning. I wouldn't be surprised if it hits $4.00 somewhere in the SF Bay area this week. I really don't understand the mechanism of retail gasoline price changes with respect to crude prices.
I know that our local refineries (Chevron in Richmond being the largest) get oil from several countries via tanker and from the old fields in the southern San Joaquin Valley via pipelines. Obviously, current gasoline prices are not closely correlated to the cost of it's source crude oil bought by the refinery a month or two ago, or the price wouldn't jump for a few weeks. Plus, retail always goes up much faster than it goes down when crude prices drop.
Is $4.00/gal a "tipping point" for consumer reaction here in the U.S.? We'll see.
Dave
We're pretty much there in my corner of northern California (Arcata). They were flirting with it yesterday:
Regular $3.85
Medium $3.95
Premium $3.99
Today they gave up on that:
Regular $3.96
Medium $4.06
Premium $4.16
You have to realize that California is more exposed to global oil prices than the mid-continental US. The California refineries don't have any pipelines bringing cheap oil in from Canada, unlike the mid-continental US, which is awash in Canadian oil at the moment. Canada is now producing far more oil than California, or Texas for that matter, and those volumes are reflected in the prices in areas receiving Canadian oil.
Not that the mid-continent refineries give their customers much of a break on prices - they prefer to put most of the price difference in their pockets - but it does cost money to truck gasoline over the mountains to California, and California prices will reflect that.
Plus California has about the highest tax in the country...
I'm not at all convinced of that. Sure our prices will always be higher, but the differential has to be self-limiting, people would figure how to arbitrage on the price differences. In our case (CA), at least some decent fraction of the population is driving fuel efficient vehicles.
Californians can't arbitrage price differentials because the state has its own "boutique" blend of gasoline which no other market has. It might take a week for an out-of-state refinery to adjust its processes to meet California standards, and they usually can't be bothered.
The California market is tight and isolated. 95% of the gasoline is provided by local refineries, and they are running close to capacity. They don't have access to relatively cheap West Texas Intermediate or even cheaper Canadian blends, they're mostly running more expensive Alaskan or foreign non-Canadian crude oil. The difference between the WTI and Brent markets is around $15 per barrel at the moment, and California refineries are mostly paying the Brent price, which is 35.7 cents per gallon higher than WTI.
Everything the State of California does increases the price of gasoline. I guess it's the price of living there.
It matters psychologically because it is still the main index seen on US tv.
It matters psychologically because it is like schizophrenia:
Gosh! It sounds just like most of the dialog on the Oil Drum here. I'll have to talk to myself about that.
Boom . . . the $100 barrier has been crossed. Time for everyone to freak out.
http://finance.yahoo.com/news/Oil-prices-jump-past-apf-2875436686.html
Of course, this is largely Qadaffi-fueled right now so I don't think peak oil will be big in the news. But it will be there somewhat.
Somewhere, Jeff Rubin is smiling in that his 'triple digits' prediction came true.
I wish Matt Simmons was alive.
He left the party just before it started winding down, not a bad thing really.
STEPHEN SCHORK: WHY $4 GAS IS COMING THIS SUMMER
Go to the article to get the link to the Bloomberg Radio interview of Stephen Shork with Tom Keene.
Stephen gives a pretty clear explanation of why the landlocked Cushing, OK market is irrelevant to global oil prices or to the prices paid for oil outside of the the US Midwest market.
The East Coast refineries use sea-borne oil marked to Brent.
Is this the same Steohen Shork who predicted at the end of December that oil prices were set to tumble down?
Yes, I think so. I guess reality caught up with him.
Just curious, how many "Yergins" are we at now? Or will that "standard" be changed by its namesake?
Dispatch
http://www.haaretz.com/news/international/report-gadhafi-ordered-sabotag...
I think the title says it all.
A significant part of the fields and pipelines are in eastern Libya. This area appears to be under control of the insurgents and army units that have gone over to them. Of course, Gadhafi might be able to order air strikes on the facilities, but that is becoming questionable.
For installations in the south and west, I'd guess that control depends on whether units of the army have stayed loyal or not. The port of Azzawiyah is west of Tripoli. My recollection is that some of the cities west of Tripoli are now under insurgent control.
If the main fighting is only in Tripoli, things may not be so bad for oil production.
Maps of Libya showing fields.
Even if no intentional damage is done you need workers at their posts (including critical foreign contractors who have fled or are trying to get out). Reports on twitter that main port city of Ras Lanuf is still under government control and some ships have been able to leave with cargo. However apparently the main refinery at Ras Lanuf has just shut down and fighting is reported nearby. I imagine the crude pipelines are also shutting down if they have not already done so.
But the real question is how much damage will be done and how quickly will production be restarted after the civil war?
Another question, will be, how much more oil will be kept internally to keep the masses happy, probably in all OPEC countries. This will translate into a serious drop in net exports. All of this chaos is probably a permanent game changer. The leaders of these countries have two options, they can either give the people cheaper gasoline and more cars, or engineer higher prices on the world market to bring in more cash to keep people happy. Either way, the OECD countries will ultimately suffer.
Saudi Arabia is already getting ahead of the curve and pouring money into new social programs:
http://www.bloomberg.com/news/2011-02-23/king-abdullah-pours-money-into-...
that of course, will not be free. The trick will be, to raise world prices high enough while not bringing on another recession. All the while, Bernanke will be printing dollars making them more and more worthless to the people and governments of OPEC countries.
At some point OPEC leaders will have to stop exchanging their black gold for printed paper and demand something more substantial in return.
The population of Libya is only about 6.5 million, so subsidies may not be too much. I'm not sure whether the 6.5 million includes the 1.5 million Egyptians that are trying to go home.
But it is a good question, since throughout the Middle East, a change from despots to democracy will result in a call for not only greater sharing of the oil wealth but also a call to get a higher price for oil to provide greater oil wealth.
They will want water. Belgium is already swapping water-for-oil with the Saudis.
Food is another prospect, which plays nicely into the hands of both France and the U.S.(if America can get off it's weird ethanol policies).
Other than that, I think you'll see risks of another invasion by U.S. forces, this time without the intent to 'help democracy' but rather an overt act of stealing oil. But it will probably take a few years before the public is desperate enough to accept anything over their scruples.
As for Libya, I just read on Reuteurs that the damage will most likely be permanent, as similar events never made Kuwait or other countries subject to disruptions get their oil exports up again at previous levels.
This bodes ill for Europe, especially southern Europe.
This will hasten the decline.
I think the exact timing of the Peak, as defined as the moment where there is not even a slight chance at a better day(even for just a brief moment), will be decided ultimately by geopolitical events rather than geology.
This is the X-factor a lot of projections on Peak Oil have failed to disclose: as energy prices move up and general instability ensues, the risks to supply is increased at a huge rate. Those who have brought it up at all have made it sound almost like a footnote.
Now we see the magnitude of that mistake.
"Those who have brought it up at all have made it sound almost like a footnote."
Jeff Vail has written a number of articles on the subject of geopolitical feedback loops. Probably worth a revisit:
Geopolitical Feedback Loops in Peak Oil is a good place to start.
-best
Excellent point! As energy prices increase there is less to go around, and like Rockman explained in a post the other day in Egypt (which he had observed while there for Exxon) the country simply ignored a portion of the population allowing them to starve and get no healthcare, and as we can see the result is revolution. People at some point figure there's nothing to lose by instigating a revolt. In their eyes it means they will get more rights and food. But the unfortunate reality is, as oil revenue in these countries declines there simply less per capita. Even if the remaining wealth is carefully spread amongst the people, it will still be less and less as its oil declines.
This also goes to over population. All over the ME and northern Africa the populations have soared and the majority of the population is less than 30 years of age. It's what William Catton referred to in his famous book 'Overshoot' as operating on phantom capacity. Well, now that finite resource is depleting, it will no longer sustain that large a population and chaos will ensue until the population decreases in line with what the countries resources can maintain.
Yeah . . . egypt may have freed itself from a dictator, but he wasn't a completely evil dictator. His regime was paying for substantial subsidies for food & oil.
And yes, it was oil exports (and now some natural gas exports) that helped pay for those subsidies. What will a new government do? Keep up those unsustainable subsidies?
These countries need to start addressing cultural taboos and encouraging people not to reproduce like rabbits.
earl - I apologize if I mispoke but my story was about Equatorial Guinea, next door neighbor to Nigeria. There is zero chance of a popular uprising there...even the police aren't allowed fire arms...just the president's security folks. OTOH they could easily be invaded by any major military force. And not even fire a shot: just park a carrier off the coast (just a mile off the shore line...very deep water). And invite the president to take his in crowd and hop a flight to Zurich. OR ELSE. The president's merc's aren't going to put their butts on the line if El Presidente isn't around to sign the checks.
BTW: If you didn't already know M. Thatcher's son tried this about 10 years ago. Didn't work though...didn't have a carrier. Had about 80 mercs but that wasn't quit enough to get the job done...or even started. The boy coped a plea in England to avoid having his butt shipped to EG. Good thing...the mercs they caught in EG got the classic tire necklace.
That requires an expansion of the oil consumption infrastructure, like cars, and fueling stations, and fuel trucks/pipeleines etc. Most likely post revolution the internal economies will contract until things can be sorted out. The question for short termish exports (a couple of years timeframe say), is whether production will contract faster than internal demand. On a longer timeframe your argument holds. But don't expect it to happen quickly.
Merrill - one more big question: even if there is zero damage and the oil can flow tomorrow who will be selling it? IOW who will be the govt? It will have to be a legitimate govt recognized by international law. If Italy's ENI wants to buy a supertanker of Libyan oil who do they make the check out to? Any buyer will be concerned of the legitimacy of the seller. if an international court latter rules that the seller didn't have legal title to sell the oil. ENI could be on the hook for the settlement. Egypt may have a functioning and legitimate govt soon. From the bits and pieces coming out of Libya now I have serious doubts.
They can make the check out to me. I'll make sure it gets to the right people. ;-)
In the Red Queen Land of Spain
The trade deficit of Spain increased 4.2% in 2010, to ~52 Million euros (4.9% GDP/pib) fundamentally because of the increase of the price of imported oil. Spain imports practically all its Oil, Methane Gas and Coal.
Exports had increased 17.5 % in 2010 after a drop of 15.5% in 2009 -because of the well-known problem with percentages I don't even know if that increase made up for the previous drop, but let's suppose.
Sebastián, the Minister of Industry, Tourism and Trade said that had the price of Oil remained stable at the level of 2009, then the total Trade Deficit instead of increasing would have diminished 8.4.
Spain exports last year were 186 billion euros; all sector increased their output, specially machines and cars.
Not all is bad news, the trade deficit with the EU was closed.
So, in Red Queen Land, Spain increases its exports but because it has to increase the imports of Oil and Gas to produce more, and more expensive oil at that, the net result is that we are worse off than before.
Sebastián today has asked OPEP to increase its output of Oil to drive down prices. I wonder what's in it for them to do that!
There are two gasoducts under the Mediterranean that connect Spain to Algerian and Libyan gas. I don't know if there's a connection to the European gas net coming from Russia, so I think that the decision taken a generation ago to link Spain to the North African gas fields, by Gas Natural and the government, looks now very unsafe.
President Felipe Gonzalez who took that decision at the time is now a member of the board of Gas Natural.
The upside is that the overbuilding of the renewables sector (from a too generous FIT), might well start to look like a smart thing.
Anyone know about LNG in trucks?
The LNG trucks in the article below appear to save about $65k per truck per year ($1.25M x ($3.50 per gallon of diesel - $1 per 140k BTUs of LNG)/48 trucks). At $130k per truck, that's a 50% ROI!!!
If NG is at $4 per decatherm, then 140k BTUs of NG would cost $.56. How much does the liquefaction cost, including energy, capital expense, operating costs, etc? I've assumed $1 total cost, but is that realistic?
------------------------------------------------------------------------------------
"UPS (NYSE: UPS) today announced it has purchased another 48 heavy tractor trucks equipped to run on Liquefied Natural Gas (LNG)...UPS is the only private delivery company using this technology in its fleet and now has more than 1,100 natural gas-powered vehicles in service.
LNG technology uses natural gas as the main fuel with a small amount of diesel delivered at high pressure to the combustion chamber. Westport estimates approximately 95 percent of the diesel fuel usage is replaced by energy generated from the natural gas. The U.S. Department of Energy (DOE) estimates that this displacement will amount to about 1.25 million gallons of petroleum annually.
"The added advantage of LNG is it does not compromise the tractor's abilities, fuel economy or drivability, and significantly reduces greenhouse gases," added Britt. "These trucks have a solid 600-mile range and with reliable fueling infrastructure make an excellent alternative fuel system."
UPS currently bases its 11 LNG tractors in Ontario, from which they can make the round trip to Las Vegas on one tank of fuel. UPS is working closely with the DOE's Clean Cities program to construct a LNG fueling station in Las Vegas. Once that facility is completed in 2011, UPS will base the 48 new tractors in Las Vegas and dramatically expand the number of long-haul routes in the West on which they're used.
"UPS has shown environmental leadership in expanding its natural gas fleet of delivery vehicles to a fleet of heavy-duty interstate trucks powered by Westport HD," said Clark Quintin, President of Westport HD. "Connecting California's existing LNG fuelling stations with developing ones in Utah will create valuable LNG capability on a busy goods movement corridor."
http://www.pressroom.ups.com/Press+Releases/Current+Press+Releases/UPS+C...
Go ask T. Boone Pickens. He'll talk you ear off. He is a big proponent of converting the heavy truck fleet to natural gas.
http://www.pickensplan.com/
That's helpful. The Pickens site links to a NYT article, which gives more info:
The LNG trucks in the article below appear to save about $33k per truck per year ($1.25M gallons per year x $1.25 per gallon/48 trucks). At $100k extra per truck, that's a 33% ROI. And, of course, that premium will fall with volume - "Production volumes of the trucks are so low that their cost remains high, about $200,000, compared with only about $100,000 for a standard diesel truck, according to Kara Gerhardt Ross, a U.P.S. spokeswoman."
http://green.blogs.nytimes.com/2011/02/22/u-p-s-finds-a-substitute-for-d...
Perhaps worth noting that the large majority of the 1100 NG vehicles are local delivery trucks running on compressed natural gas (as distinct from cryogenic LNG). So far most of those seem to have been placed in California and Colorado. That makes it more likely a matter of air pollution concerns than anything: California has already cracked down on mobile NOx sources and Colorado is getting ready to in anticipation of new EPA requirements.
There are delivery trucks running on cng all over the place-there was one in my driveway only a couple of days ago, even back here in the hills and valleys of southwest Virginia.
Anybody who runs a few trucks on fixed daily delivery routes can run them on cng if the ng is available by pipeline in sufficient quantity at the home garage;I'm not sure how many trucks are needed to make the investment worthwhile, but it seems to take at least a dozen or so for now.
I worked for an oil company that ran its entire truck fleet on CNG. It's perfectly feasible to do. The only thing is that they needed a bit of diesel fuel to start the engine and to keep it idling.
They were all dual-fuel units. If they couldn't refuel with CNG, they could just switch to 100% diesel. However, they preferred to run them on company CNG because it was much cheaper.
With natural gas stuck at $4/Mcf and the price of oil going through the roof, it may be the way to go. On an energy equivalent basis, $4/Mcf is equivalent to oil at $24 per barrel, or about 57 cents per gallon.
Natural gas in a compressed state suitable for consumer use can be procured in a few places now with many more to come.
One of my friend was looking at conversions to duel fuel gasoine CNG scheme. Parts well under $2000 [IIRC under $1500 most of which is the cost of the tank.] The cost / need for a certified tech to install them and requlations / testing by the state???
With natural gas selling for the equivalent of $35 per barrel of oil ... the reduced fuel costs alone would make this appear to be a very viable proposition. Hate to sound like a commercial, but cheap, clean burning, and engines are reported to last much longer. Couple that with the potential to avoid the lines at gas stations when / if the supply of gasoline drys up.
A good idea until / unless natural gas supplies get tight and at that point get in line for gas with everyone else. Thoughts anyone?
Range is impressive - as the article says - it's for long haul.
LNG has to continuously boil off, wonder how much the thermos bottle costs?
Wonder if they have a mini liquidfy train or just a NG storage depot around.
OK as long as the engine does not break down. Perhaps there are a bunch
of bar-b-que grills to burn the boil off if the truck engine dies.
Don't think there is any LNG transported on American roads???
FT
Libya shutdowns send oil soaring
Remember the days when 'force majeure' was exceptional rather than normal? Ah, nostalgia is not like it used to be.
NSC
FT
Libya’s impact on oil
Hunt for top-grade crude sources begins
Libya: the Italian connection
And tons more - some serious analysis going on.
NSC
As to Greg Palast's theory that We're Not Running Out of [Abiotic?] Oil,
maybe his next journalistic adventure should be entitled:
Palast has a penchant for grabbing onto and propagating conspiracy theories. Sometimes they are right but sometimes they are not. From what I heard one a Max Keiser interview, Palast seems to downplay the scarcity of oil and puts a lot of blame on OPEC, evil oil companies, elites, etc.
Interview is in the second half of this video:
http://maxkeiser.com/2011/02/17/keiser-report-welcome-to-fakeville-e122/
There is certainly kleptocracy, but that does not trump oil scarcity. And obviously, we would not be dealing with these kleptocracies if we still had lots of oil of our own.
If God had wanted us to have an oil of our own, he would have made all of us Saudi princes. ;-)
_______________
And he would have said, Don't call me Shirley or JC, call me Allah.
Nice handy chart.
NSC
What are the implications to European Union finances if Italy no longer has 25% of its oil imports?
As was mentioned further up, there is a good chance of an Italian default. They too can call 'force majeure'.
In practice this depends on EU strategic petroleum reserves and how they might be released.
Perhaps someone in the field could comment on how this might physically take place?
NATO will force Libya to supply oil to Italy. Obama is already working on it.
Back in the 1973 oil boycott the Netherlands was boycotted by the Arab countries (while most of the rest of Western Europe wasn't). What happened? It had as much oil as anyone else (because the big oil companies rerouted shipments from elsewhere). The same will happen with Italy. Any shortage of oil will end up being shared equally by other European countries.
Great chart! Looks like Italy is in deep $hit!
If they lose 24% of their oil, it could cause Italy to have a revolution too!
Die Presse reported Austria's OMV get 11% of its oil from Libya, with one of its refineries using about 20% Libyan oil. OMV's been active in Libya for decades, and their stock took a hit today.
Yes. Do you have a link for the other oil exporters. On stratfor I don't know where to look. Where is it at EIA ?
I don't have any other source but I am sure others here will if you wait.
ANE = Available Net Exports = Net Oil Exports not consumed by Chindia
ANE were about 41 mbpd in 2005 and may be down to about 35 mbpd in 2011, probably trending down to about 27 mbpd in 2015.
So, a loss of 1.5 mbpd of global net oil exports from Libya would be on the order of 4.3% of ANE, based on the foregoing.
Thanks westexas.
4.3%? Ouch. Of course this will be shared equally across all countries ;-).
I would figure that this means significant annoyance to a dozen countries or near catastrophe to one or two? 5% of 257 countries is...
Sorry - of course Saudi 'excess' heavy-crude will be a direct replacement.
Analysis: Europe's refiners struggle to replace Libyan oil
BBC Radio Wake Up To Money programme today had an interview with the head of the UK Oil and Gas trade body. Mentioned peak oil, UK North Sea decline rates and investment.
Available to download for seven days:
http://www.bbc.co.uk/podcasts/series/money
Thanks for the link. Yes, very keen on the investment discussion but did admit the unavoidable decline aspect...
Interesting.
In a hundred years the history books will tell how the Great Oil Barons and their Central Bankers warned the world about Peak Oil, but the people didn't listen. Many were saved by the Oil Barons' selfless promotion of Clean, Renewable Energy and Environment Saving Regulations.
"This is why we work their fields and follow their lead. This is why our children sing their song."
I am afraid that you nailed it.... If the plutocracy survives, that will be the narrative in the history books.
That battery-electric car article just doesn't "get it"
So gee Toby . . . what do you think all those consumers will do then? Just walk? LOL!
No . . . when the price of oil gets high enough, people will start to accept the limitations of the EVs. Duh.
He seems to think we'll have $3/gallon gas until 2050 and then it just runs out. No, that is not the way it works.
From The Detroit News: http://detnews.com/article/20110223/OPINION03/102230301/Battery-electric...
I got the same feeling from the Detroit (status quo) News, Specu. I think people would be thrilled with a 40 mile electric range if it comes down to rationing or $6 gal petro
Absolutely correct, Sir !
It's all in what you get used too, and we will get used to cars with a forty mile range pdq when we can't afford anything else.
....or get used to looking at a horses ass. It beats walking if the nearest shoe factory is halfway around the world.
"Gettyup Boy!"
A huge proportion of the population, when suffering from high food and energy prices and few income increases simply won't be able to afford the $40,000 for a Chevy Volt (or comparable vehicle) either.
If it is not economically viable it is not sustainable.
Well . . . if they got rid of the gas burning iron block, the exhaust system, overly complex transmission, the gas tank, and some other stuff then the GM Volt is your 40 mile range EV right there.
But if you only need 40 miles of range, an EV is affordable today. The Nissan Leaf with a range twice that is $32K w/o tax-credits ($25K with the current $7500 tax-credit).
So if gas costs $10/gallon, there are other options.
We may be 2-3 weeks from a new world.
Facebook users in Saudi are trying to set up anti-govt demonstrations for 11 March. Best of luck to them.
BTW: did anyone note that the ex-Justice Minister (I think that was the position he held) who just left the Libyian govt stated to the press in Eur that he had direct knowledge that Gadhafi personnaly ordered PAN AM 103 to be blown up.
Between the 3 planes known to have been blown up by the Libyians I knew 4 people who were on them and I was supposed to have been on one myself. I think about that often.
Yes, I heard it. And after enduring a bunch of comments by someone claiming it was a false setup -"it was the Iranians who done it".
Who says he isn't just telling us what he wants to hear? The guy supported Gaddaffi for decades. When the balloon goes up he jumps ship and says 'It was him! ->'
I always wonder where this idea comes from that he was not the one who ordered those planes destroyed. Are people just so enamored with conspiracy theories that they cannot think?
It would be great if the US could blame the Iranians. It would give us an excuse to do whatever. But we know he did it.
Given that the Iranians are far worse enemies to us than the Libyans you can be that if there was a way to hang it on them instead of the Libyians we would have. Reagan tried to kill him by dropping bombs on his house. He killed one of his daughters and many others.
We know he blew up the UTA flight out of N'Djamena as well. That was primarily targeting American's and his opposition as well. At teh time we were supporting Chadian forces who were fighting Chadian's backed by Libya. LIbyian forces had just been defeated and forced out of Chad.
http://www.newstatesman.com/international-politics/2009/09/pilger-megrah...
I amazes me that so many people take the official line at face value.
There is a ton of evidence that it was not Libya.
RalphW
Let me put it this way.
I, personally, have 1st hand knowledge.
It was Gadhafi.
Sure there was lots of ambigious info in the news. Your misplaced suspicions of "official" lines need to be balanced by equal suspicions of why someone who does not have access to the real info decides to put out info to implicate the Iranians.
Do you happen to recall all the great info used to justify our 2003 invasion of Iraq? Not-withstanding the subsequent denials of officials, most of their let's go to war excuses were known to be inaccurate and false by those inside the community. But, hey what the heck, any excuse to go get Saddam is worth bending the truth a bit.
Just didn't work out for them in the case of the Iranians. Better heads at the time. Or maybe just better luck.
The next hot spot after Libya wont be Bahrain, Yemen or Iran (while all those are hot spots), the next serious unstable spot in the region will be Iraq; many people believe Iraq is not as much subject to the people revolt issues faced by Libya, Tunisia and Egypt due to the so called nascent democracy in Iraq; however the Iraqis continues to be deeply divided, the Sunni backed Allawi which legitimately won the elections was cast aside by Irani backed Shia groups and the compromise government continue to be very weak with several key cabinet posts vacant. The Iraqis are getting fed up with lack of services, lack of jobs, lack of security, rampant corruption and ever rising food prices; major demonstrations are planned for this Friday: ( http://www.csmonitor.com/World/Middle-East/2011/0223/Iraq-attempts-to-de... ) ; several smaller demonstrations took place the last couple of weeks and some were severely oppressed with the organizers arrested and claim to be tortured; likewise in Kurdistan thousands of kurds have been demonstrating against corruption and political monopoly by the two major Kurdish parties (http://arabinform.org/news/iraq_kurds_protest_against_corruption_and_two...) resulting in several deaths and 100 injured.
In the midst of this the revolt of the Shia in Bahrain is making Saudi Arabia more worried, since a Shia dominated Iraq and a possible Shia dominated Bahrain would mean a more empowered Saudi Shia minority emboldened by Iraq, Iran and Bahrain; thus it is vastly in the interest of Saudi Arabia to de-stabilize Iraq which represent both an ideological threat, as well as an economic threat due to its ambitious (yet unrealistic) oil production targets.
Should Iraq Friday demonstrations prove to be widely followed, I expect the Allawi bloc to withdraw from the government as a result; with so much anger against the government I don't foresee Allawi and his party ready to take the blame for Malaki mismanagement, such withdrawal could open the door to a serious deterioration in the security situation and thus adding more fuel to the people discontent; a weak and unstable Iraq is in the interest of all major players in the region, Iran would rather have such an Iraq then have a Sunni ruled Iraq, and likewise for Saudi Arabia in the case of a Shia Iraq.
And while the world looks the other way, Iraqi oil pipelines continue to be bombed by the saboteurs: http://www.iraqoilreport.com/security/energy-sector/pipeline-bombed-as-p... ; if the northern pipeline is hit (which is usually a frequent target), this could take out another 500K from the world markets in a heartbeat.
Regards,
Nawar
Is it really correct to say "Iranian backed Shia groups"? My understanding was Iraqi Shia were/are fiercely proud to be independent of Iran. We hear a lot of this from Neo-Cons, because they know Americans freak out about Iranian influence. But, what is the real ground truth, unmarred by someones agenda?
Yes the Iraqi Shia are generally suspicious of Iran and are independent of Iran, many of my personal Iraqi shia friends don't trust Iran; however the political shia groups that are in power were ALL backed by Iran and were hosted by Iran throughout Saddam hold on power.
Regards,
Nawar
Thanks,
I figured from your name you were close to the action.
The API weekly oil report, out late today NY time, shows slower inventory growth than expected.
http://www.marketwatch.com/story/api-reports-small-crude-supply-increase...
Before any trouble started in North Africa, I posted here that US oil imports were on there way to lag last year's levels following a fairly significant shift of Mideast oil exports to the "east" - mostly to China. More specifically, the ratio of Mideast oil exports heading "west" as opposed to "east" changed at the start of November 2010 and has not returned back to the pre-November 2010 ratio after four months now.
Also Mideast shippers do not expect any change in Mideast exports in the next week, although if OPEC was to increase output, they may do that at the start of the new month.
Could you shoot me an email? westexas At aol.com
http://online.wsj.com/article/SB1000142405274870452050457616278001120524...
'Rising Oil Prices Raise the Specter of a Double Dip'
That article actually has a chart showing the connection between high oil prices and past recessions. Hey, way to go MSM!
Yesterday PBS said the experts they talked with said the price at the pumps would need to go to 4.50 a gallon to cause economic problems.
Ok, so MSM is putting some numbers on what they think it would take to cause an economic hiccup.
Those guesses probably go hand in hand, as 120 a barrel will most likely lead to 4.50 at the pumps.
Earl - Up to now I hadn't worried too much about the stability of Saudi. The oil wealth is spread around a good bit (the king can afford to be generous...they have so much). I'm sure they have a reasonably sized internal Security force also (again, they can afford it). But I watched a report on NPR discussing the situation in the KSA with some apparently well educated and comfortable YOUNG Saudis . They were expressing a clear desire for a more democratic society and a political system comparable to western societies. As always, talk is cheap. But it has me wondering if there is some potential for political change through less violent efforts then we've seen elsewhere. It will be up to the royal family how to deal with this sentiment. Even if there were a huge step change in KSA political structure it might not interrupt the oil flow. But the process itself could send a message that could push the market place to an even lower level.
Again, just a few folks expressing their feelings so maybe nothing will come of it. Just surprising to see those thoughts put out publicly with apparently no fear of retaliation.
You and I must be watching a lot of the same programming, PE.
I caught those same reports.
Smells more and more like entrenched denial to me.
I don't believe the analysis that the economy is strong enough to absorb the current round of oil price increases. Now, the stock market, that's a little bit different. With continuing money pumping by the Fed, perhaps the equity markets can continue to rise, but Main Street....Not so much!
My thinking is that demand destruction begins around $3.30 on Main Street, meaning it is already beginning.
Nicole Foss makes a very good point IMO that nominal prices are not the most important thing to watch here. Where the rubber meets the road is with "affordability". With declining real incomes over the past few years; salary reductions, benefit reductions and above all, reduced credit availability, Main Street is not in any shape to tackle rising oil prices.
We are poised, in my view, to witness a renewed cycle of significant reductions in the discretionary economy, i.e. the retail sector including things like auto sales.
Tripoli: a city in the shadow of death
Report by Robert Fisk, who was in Tripoli.
Also Cruel. Vainglorious. Steeped in blood. And now, surely, after more than four decades of terror and oppression, on his way out?
Juan Cole's (informed comment) claims that now 90% of the country is in rebel hands. With any luck it will be over shortly.
Yes, with luck it will be over today. Which begs another question, what's after Gaddafi?
What future would a post-Gaddafi Libya face?
Reconstruction will not be easy. Little left to build on.
What's after Gaddafi?
From the Halls of Montezuma / To the shores of Tripoli /
The Marines have been there before.
From the Halls of Montezuma / To the shores of Tripoli
The Marines have been there before.
Yes, but that was over 200 years ago, in the First Barbary War
...and it cost the US money to get its POWs back:
The crown prince of Libya is actively calling for international intervention. Is this someone around whom some structure of government could coalesce?
http://english.aljazeera.net/video/africa/2011/02/201122416028655869.html
If he could take his cue from Queen Elizabeth II and rise of above faction and politics to reign and not rule, a restoration may not be a bad idea.
Monarchy can be a source of unity and legitimacy as long as the head of state confines his/her role to "be consulted, to encourage, and to warn."
It's may be a direction the kings of Bahrain and Saudi Arabia and Jordan may consider giving a try too.
I think any major intervention is unlikely. Europe and the US can avoid it by saying they need a UN mandate. There is no way China (and probably Russia as well) will OK that, they don't want to set a precedent in case they gotta crack down on their own people. So that maybe allows a US enforced no-fly zone -proposed to eliminate the flying in of mercenaries. I wouldn't be surprised if (revolutionary?) Tunisia and Eqypt might send some help. Particularly if the report I heard that Tunisians and Libyans in Tripoli are being rounded up and killed (because they are blamed for spreading the contagion I guess) is true. But I'm not sure what shape either nation is in to intervene. Maybe it just needs a bit more of a push to alter the balance of power enough in favor of the revolution to finish the collapse of the gov?
An invasion is probable, IMO. There is a lot of oil in Libya.
I think their medium term odds are better than Eqypt. Their population is only 6M, and they have enough exportable oil to finance development and keep everyone well fed. Eqypt has to deal with a very difficult new dictator (Thomas Malthus), but I think Libya can avoid him for at least a couple of decades. Agreed that their governmental infrastructure is probably lacking, we will also see how strong tribalism versus nationalism plays out. But I think having prevailed in a difficult revolution, and pride in that accomplishment (a lot of self sacrifice by a lot of people) might give them a real chance for the later spirit to prevail.
Way too may people with violence fantasies out there:
http://motherjones.com/politics/2011/02/indiana-official-jeff-cox-live-a...
Makes me wonder how some of the violence-obsessed screwballs in our lovey country will react when major oil supply problems become manifest?
What? Was he taking hints on public speaking from Muammar Gaddafi?
Nutbars are nutbars, but usually in Western democracies, government officials (even if they are nutbars), don't say out loud that they want to use live ammunition on protesters.
The rhetoric in the US is getting excessive. Actually, it has been excessive for a long time.
He wasn't speaking in an official capacity.
I would guess this is more a case of people who turn into jerks on the Internet than an example of government run amok.
Nine times out of ten, I would bet that the person being a jerk online would never dream of being so rude in person.
Part of it not knowing who you're talking to. The default setting of "human" is white male, and people have a tendency to assume that's who their audience is. If they could actually see the people they were talking to, they'd filter their comments. People post misogynist, anti-semitic, racist, etc., comments in the Drumbeat that they would never say if they were looking at the faces of their readers.
But some of it is just a weird personality change that comes with online communication for some. I'm reminded of that old Disney cartoon, where Goofy turns into a maniac once he gets behind the wheel of a car. Only substitute keyboard for car.
Good points, Leanan. I imagine you're an expert on this aspect of humanity by now. :)
There are also nuances that often get lost online -- hyperbole and sarcasm get missed, and typos can be set in concrete (miss a negative here and there, and the whole meaning changes). There is also a practical value in taking somewhat extreme positions in excess of what you personally feel to stir discussion.
I think there is also one more dimension beyond the default setting and on-line personality points you make, related to the audience size. Most of us blog and forum post as though we're sitting in our den with a few buddies and a beer, or with the guy next to us on the bus, not as a speaker in front of a 1000-seat auditorium filled with who knows what sorts of people. Ad-hoc positions and quick rejoinders are easy to toss out informally one-on-one or on-line, but few would be as fast and loose in front of a large audience.
There is an element of TV personality where the successful person often has an unusual talent for seeing themselves from an external perspective -- they're good at projecting "image" in real-time, just like a marketing guru does more methodically. I suspect some on-line success depends on that same talent to gauge how points will come come across, and probably people like you and Nate have a sense of this far better attuned than that of an occasional forum poster like me.
Precisely. Well said, Paleocon. Scary, really.
Leanan & Nate, we really do rely on you to keep us in line. Keep up the good work!
I think this is an example of our "wetware" being poorly adapted to modern technology. We're still dealing with the world with brains that evolved in the Stone Age. In particular, Goofy in the car and Jeff Cox pounding on his keyboard are both sheltered from seeing other people as human beings. Several really interesting experiments have shown that we use different parts of our brain when dealing with people face to face versus in abstract...and often come to different conclusions about what we should do.
Does that apply to telephones and direct conversations with those known to you? I imagine not so much?
Perhaps the best thing an on-line community could do is to have meet-and-greets, to establish a better sense of humanity?
The experiments I was thinking of involved asking people about hypothetical situations while in MRI machines, so they could see what parts of the brain were used to make a decision.
For example, people are generally willing to kill one person in order to save five others, if it's accomplished by flipping a switch. They are not willing to do it if they have to kill someone with their own hands - by pushing him off a cliff, say. The MRIs showed that people thinking about the first scenario used a part of the brain that's used to solve practical problems. (Which route should I take to get home?) But when the scenario involved killing someone by pushing him off a cliff, the section of the brain that deals with moral issues is the one that lit up.
Another example: a child is drowning. Do you rush in to save him, even if it means ruining your expensive clothes and shoes? Of course you do. Choosing to let the child die in order to protect your clothes is something only a terrible person would consider. But...you basically made the same decision when you bought the clothes in the first place. (Or your nice car, house, iPad, electric guitar, whatever.) If you gave the money to Oxfam or the Red Cross, they could save many children with it.
As for online communities...I think we're eventually going to recognize they're not really communities at all. We'll see them for what they are: the new version of TV.
And our wetware evolved to deal with a village sized compliment of people. Compassion beyond that group requires an excercise of imagination.
I don't think it's limited to the Internet. There's quite a history by now of people who go over the top as their audience spreads. Limbaugh and Beck are possible examples. But, isn't the entire entertainment industry built on presenting images of people in larger than life sketches? Many actors even take on new names to separate their new self from their old one. Politics may be the worst of all, as the politician seldom goes far if he/she presents a controversial or extreme position and personal indulgences can sink a career. In politics, the name of the game is to appeal to just one more voter than the number which you might alienate with your statements and history. I think Shakespeare understood this when he wrote "Life is but a stage..."
E. Swanson
Note: the actors may also take on new names whether they want to or not, because the guilds require that no two members should use the same name...
I think there is more of it now, and not just related to the internet. We have an entire segment of the entertainment industry, based upon demonstrating hatred of liberals. And the only way to stand out from the croud (and make the big bucks), is to be more outrageous than the other guy. And some viewers don't always distinguish between crazy overthetop entertaining to some statements from the real world.
This was probably always the case pretechnology (radio and TV seem more important for this phenomena than internet), but as the size of the echo chamber gets bigger, the selection for the wildest craziest voices get stronger -and the rewards greater.
Right wing talk radio is financed by far-right corporate money. The pressure to get crazy isn't random - it comes from above.
"The billionaire brothers Charles and David Koch are waging a war against Obama. He and his brother are lifelong libertarians and have quietly given more than a hundred million dollars to right-wing causes."
http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer?curren...
Soros makes up for them on the left, though. Talk radio is financed by advertising -- enough people listen to be a viable audience. Kinda like Fox -- Murdoch probably doesn't care as much about the politics as serving his market fraction, for the advertising dough.
True. But left side talk radio has never been able to catch on. Partially I think right and left are composed of different personaility types. And partly most of the money is advertisng -by large corporations. I have heard that about Murdoch, the revenue/profits are probably a greater driver than the politics/ideology. He made his billions because he figured out what audiences want.
Soros makes up for them on the left, though.
What do you mean? What activities by Soros have you seen?
Talk radio is financed by advertising
It would be nice if they were just pandering to their audience, but it goes much, much further than that.
I expect you are right in saying that corporate mooney has a lot to do with talk radio, but let's be realistic. Ilisten mostly to NPR and the BBC-NPR in the car or truck, and BBC in the house, BUT I also listen to some talk radio on the road, especially when the local NPR affialiates are having a love fest with some local democrat, or playing organ music, which is even worse than pop.
There is only one kind of talk radio, really, the Limbaug Beck sort excepting sports and such.
These guys do not have any problem whatsoever attracting large, fairly well heeled audiences-and with the audiences come the advertizers.
They don't need no stinkin' corporate money-not that they won't gladly take it of offered of course-they got their own! ;)
I'd say they do. There are two types of it. One donations, and Two advertising. The advertising isn't nearly as political, the advertisers want to make money. But the corp execs also often have political/ideological agendas, so the decision of where to buy advertising isn't entirely based upon marketing logic. And marketing effectiveness is notoriously hard to measure, so gut feeling of the execs can be pretty important.
You might want to read about the politics of Clearchannel, the owner of many of these stations.
It would be nice to find out that they're just pandering to their audience out of corporate greed, but it's worse than that.
I was reading an article, well, this article the other day, and, while I thought the article had some good points, it was mostly a forgettable mildly anti-feminist screed that totally ignored the class and economic issues involved in male-female relations (the author is a fellow at the William Casey-founded Manhattan Institute)(yes, that Bill Casey, also a founder of NewsMax, former CIA director who conveniently died just before being scheduled to testify about Iran-Contra).
But what really struck me was the comments - what a bitter bunch of women-hating twerps. If they have any luck with foreign women (which is what a lot of them propose trying), it can only be because foreign women can't understand them. I sure hope my daughter doesn't ever encounter men that hateful towards women.
L,
I would like to share your optimistic view...
http://www.salon.com/news/politics/republican_party/index.html?story=/po...
Will privatizing WI state-owned power plants lead to better energy infrastructure and effective energy distribution?
Language from the 'Budget Repair Bill' embedded within a letter to the governor:
Wow, I wish my company could get to bid on contracts with over-arching sweetheart terms like these...
Walker proposes selling state-owned power plants
Be careful what you bid on.
We saw stufflike that in Calfifornia. Sell state owned building to private contractors at lowball prices, then lease them back at high rents. It helps feed the "spending is out of control" propaganda, and rewards cronies with rent-taking opportunities. Whats not to like!
Jeff Rubin in an article of his up top, says:
The reason the basic supply-and-demand forces were ignored was because the mortgage meltdown and oil price speculators were blamed instead. There was very little if any connection made between fundamentals and the price of oil in the MSM.
What I'm figuring is the other shoe will fall in the 2nd economic step down we are soon to experience, because real estate is already down for the count and probably won't get the blame, and blaming oil speculators has probably lost its denial of fundamentals cache'. If the fundamentals are once again rejected for whatever old or new reason/s, then we will need to experience at least a 3rd economic step down before that realization can possibly take place.
I'm not even sure what we do once peak oil is widely accepted, i.e. if it makes any difference to the outcome of inevitable collapse, but it would be nice if the majority of people can get past the denial stage and onto acceptence. It might provide a glimmer of hope for humanity.
The reason the basic supply-and-demand forces were ignored was because the mortgage meltdown and oil price speculators were blamed instead. There was very little if any connection made between fundamentals and the price of oil in the MSM.
The MSM is not generally aware of the fundamentals, nor is it very good at connecting the dots. They will generally go for the Conspiracy Theory - i.e. we don't understand it so it must be a conspiracy.
It is fairly easy to sit down with a computer spreadsheet and calculate how a sharp rise in oil prices will trigger mortgage defaults in the US. You just have to look at how much money people have left over after paying for transportation and housing, and then calculate how much they will have left over if fuel prices skyrocket. If the number is negative, then they are going to have to stop paying for fuel, or for their mortgages, or for both.
It's also fairly easy to calculate how a sharp rise in food prices will trigger riots in the Middle East and North Africa (MENA). Most of the people there have only a limited amount of money to pay for food, so if prices rise too high, they can no longer afford to eat. So, naturally they will overthrow the government.
The real problem is that there is a positive feedback loop involved here. Rising oil prices raise costs for farmers in the US, US farmers need more money for fuel so they raise prices on the food they export to MENA, people in the MENA can no longer afford to buy food, so they riot. The riots reduce oil production in MENA, so oil prices go up, US farmers need more money for fuel, so they raise food prices to MENA, and it goes on and on.
Most people are sensitive to feedback loops in their stereo equipment, but they don't expect them to come to their local gas station. And even less to their local bank.
I was going to explain how converting corn to ethanol created a similar feedback loop, but I tried to explain it before and it seemed to get a lot of people upset, so I'll just put it out there and run, duck, and hide.
They've long since learned it is about storytelling -especially stories with emotional resonance. Analysis and exposition loses viewers (and the few that remain make poor marks for the advertising).
Saudis So Far Not Pumping Extra Oil On Libya - Saudi Oil Official
So again, no one is asking for their oil. We heard that exact same story back in 2008. The world is watching a lot closer this time however.
Ron P.
Ron - As you know about polling: how you ask the question greatly influences the results. So when the KSA says no one is "asking for more oil" they obviously aren't saying no one isn't asking to buy oil: they sell millions of bbls everyday to folks who ask to buy it. So they say no one is asking for more oil than they did before the crisis. But when a potential buyer wants to make a purchase he has to consider the price: can he afford to pay the going rate. If the Rockman were to fire off a email to ARAMCO expressing a desire to pick up 500,000 bbls in the next couple of weeks they would respond with a price. I have no idea what they would say but let's just assume they quote me $130/bbl. It's their oil: they can price a spot purchase at any level they want. Heck, even if I had the money I might not buy. Besides having to pay a premium what if things settle down in Libya et al in a month and oil production picks back up. And now I have a tanker carrying 500,000 bo that I paid $130 but can only sell it for $95.
So no: I'm not going to ask the KSA to sell me any additional oil. Thus, at least in the case of the Rockman, the KSA statement is true: I'm not asking to buy more oil from them
Yes, I understand that Rockman. Saying that no one is asking for more oil is really a trick statement. What they are really saying is that no one is asking for more oil at the current price! What most people don't realize is that there is always sufficient oil on the market at the current price. If the supply falls then the price rises until demand drops to meet the current supply.
If Saudi just started pumping more oil then the price would drop and demand would rise to meet that new supply level. That's just the way the oil market works. Saudi Arabia knows that very well. They are just playing word games. The question is why don't someone in the mainstream media point that simple fact out? Or... are they really that dumb?
Ron P.
As noted up the thread, we have seen two Saudi Arabias in recent years, the Saudi Arabia that rapidly increased net oil exports, in response to rising oil prices from 2002 to 2005, and the post-2005 Saudi Arabia, which showed lower net oil exports, in response to generally rising oil prices. Funny how Saudi insiders stampeded out of the Saudi stock market precisely at the point that the Saudis started "voluntarily" cutting their net oil exports in early 2006.
So, let's assume that Saudi Arabia has a couple million bpd in their back pocket. It is obvious that $119 is not ASKING! hard enough. Then, does it really matter that they have more? Because, even if they did, I am going to quit asking$$$ at the point that driving to work costs more than I make.
Thanks eastex. So if anyone found Rons simple explanation too easy to understand, please read Eastex's complex and convoluted version instead!!!LOL.
Even if a few more mbd would bring the price of oil down, it doesn't matter much in this peak oil situation. The extra oil would be quickly absorbed by Chinindia and other developing countries. In short time oilprices will start to rise again.
I remember back in 2007 and 2008 Saudi Arabia kept the markets very well supplied with press releases about its willingness to keep oil markets well supplied. That approach seems to work much better for them than merely keeping oil markets well supplied.
Essentially all oil is "well supplied" because it comes from oil wells
_____
Oil sands oil may be the exception. It is dig-out, wash and rinse cycle supplied.
There's an additional problem the Saudis don't mention.
Most of Libya's production is sweet, light, Arabian crude. It's truly lovely stuff, it's the French Champagne of the crude oil market. Most of the "excess" productive capacity Saudi Arabia has is really dreadful crude oil. It's heavy, sour, and is badly contaminated with heavy metals and other things too gross to mention.
So, if a refinery has its supply of sweet, light, Libyan crude cut off, and the refinery goes to Saudi Arabia looking for replacement oil, the Saudis are going to offer them whatever they can't sell to anybody else. This is the same ugly crude that they claimed that people didn't want to buy during the 2008 price spike.
I don't think this is going to work. The refineries will just shut down rather than put the poor quality Saudi oil into their processes. They can't get any significant amount of gasoline out of it, and it will probably damage the equipment.
Based upon shipping reports up until and including today, KSA has not increased exports this week. In addition, despite media claims made in late January, KSA did not make a "stealth increase in output" in February to compensate for disruptions caused by Egypt and pirates - and probably shipped less in February from January.
However they probably will get a "request" from Italian refiners for more oil, and it will be quite interesting to see exactly what they do about that.
Suicides reveal tragedy behind Irish crisis
""even though this largely Catholic country did not decriminalize suicide until 1993.""
Was this because of the numerous complaints of deceased being unresponsive when questioned in the court house?
Marco.
Many people who attempt suicide fail. If suicide is illegal they get prosecuted because they attempted an illegal act. Ireland did the right thing in this case.
Dang, and here was me thinking that "Dummies Guide to Suicide" was the defacto instruction manual.
Is there any evidence suicide is deterible by sanctions? Prosecution after the fact only makes worsens an already bad situation for the individual involved. They need emotional and possibly psychological counciling, not prosection.
I agree. That is why I said Ireland did the right thing by decriminalizing it.
suyong. Sorry, my mistake parsing too many negatives (or something).
That's not the point. Ireland was supposed to be the purest most Catholic country, and church canon law forbids suicide. Ergo, suicide needs to be illegal. It took a long time for the Irish to even start using utilitarian logic on the floor of their Parliament.
It provides a necessary tool to compel counseling. It's pretty hard to make somebody get psych help before they're demonstrated a danger to themselves or someone else.
Oil surges 7.5% as Libya unrest cuts supply
Priced in Sterling, Brent oil reached an all time high today, before falling back a £3.
If anyone is interested on how I man-handled two resident Oil Cornucopians on PeakOil.com check out the tail of the massive discovery thread:
http://peakoil.com/forums/catalog-of-recent-oil-discoveries-t35194.html
My last post is a thing of beauty with a an additional Shock Model of the USA not included in the book. I included Alaska in this model.
Discovery data transcribed from this figure; the discoveries seem to end in 1985, so I extended the data with a dispersive discovery model. I added in Alaska North Slope at 22 billion barrels in 1968 and a small 300 million barrel starter discovery in 1858.
.
The blue line in the Dispersive Discovery Model is this equation, which is essentially a scaled version of the world model:
DD(t)=(1-exp(-URR/(B*((t-t')^6))))*B*((t-t')^6), URR=240,000 million barrels, B=2E-7, t'=1835.
I did not include any perturbation shocks to keep it simple. Apart from the data, the following is the entirety of the Ruby code; the discovery.txt file is yearly discovery data, which is from the first graph. The second graph shows reserve.out and production.out.
This model is essentially immune to criticism, as it reflects the reality of oil production with the simplest description one can imagine. Those parameters model real temporal quantities and the discovery data is a best estimate based on information available, while the two adjustable parameters work the two curves simultaneously. It is way better than Staniford's weak attempts at doing a heuristic fit (using a Gaussian) which fails rather miserably in projecting future depletion as the tails are not fat enough and the actual curve is asymmetric: http://www.theoildrum.com/story/2006/1/8/25235/83999
The reason I wrote the book (http://TheOilConundrum.com) is to educate people on how the oil production process works at the most elementary level. This is no academic exercise; as you can see I only have a dozen lines of code in the analysis, and it only consists of adds, subtracts, and multiplies. The few resident cornucopians on PeakOil.com (including this guy who posts on TOD as Abundance.Concept) are doing a cataloging exercise to show that new discoveries are turning the tide, but I say it is misguided unless they also do the simple grade school analysis like I do above. I assert that is why we take calculus in high school, it helps to understand the world we live in.
If anyone is interested in hosting an Oil Shock Model web server, let's discuss. The calculation is essentially the script above which is just a Ruby CGI script that is trivial to implement on the server side. Or if someone wants to point me to a free cloud location I can do it myself.
Just on CNBC Erin said with a chart the USA has 800 Billion barrels of oil more than Canada and SA it's just were not producing it.
Geology must have endowed the Good Ol' U.S.A. with the spout for the caramel filled ("black gold, Texas tea") Easter egg called mother Earth.
Which begs the question (c/o of advertising): "Just how do they get the caramel in a Caramilk bar?" Abiotic anyone?
To stretch the advertising theme even further: the U.S.A. is really the "Energizer Bunny". Don't worry about the energy supply. "Keeps going, and going, and going."
It's getting bad with the misinformation. The 200 to 300 year event horizon for oil is spreading on the right-wing radio stations and is spilling over to the regular media. Sen Inhofe is promoting this on his committee. I am also hearing about abiotic oil on some stations. Whenever the boogeyman comes up, all these science fiction topics start resurrecting themselves.
I also see the advertising meme re Doritos, "Keep crunching, we'll make more".
I beg your pardon. It is not SCIENCE fiction, but fiction only. Or fantasy... you know the stuff with lots of magic.
Yeah.
Last night, CNBC's "Go to oil guru", Yergen was on again. Really, the analyses CNBC relies upon at this point are so out there that it's pointless to view their perspectives even as constructive counter-argument.
It makes more sense at this point to just tune into the Disney channel.
I can't see how science fiction is any different from fiction. Personally, I only got into Vonnegut and only because he had an absurdist/funny streak.
Well, I was just trying to make a joke. :-)
You were defending the good name of science fiction, as well you should.
I can't see how science fiction is any different from fiction.
I'm not sure how it differs from fact. A lot of the stuff that happened in the science fiction I read as a kid has come true, and I find that somewhat disconcerting. I thought I was reading fiction.
Maybe I was reading it because, deep in my heart, I knew it wasn't fiction, and I wanted to know what was going to happen in the future.
Two words, RMG...
Flying Car
:-)
My mother told me that my grandfather was sure they were going to have flying cars, but then the Depression screwed up the timeline. By the time I was born, I think the science fiction authors had pretty much given up on it. Not Hollywood, though!
Yes, smiley required. There are only three problems. 1. Where to take off and land. 2. FAR regulations on what constitutes an airplane 3. DOT regulations on what constitutes a car. Zero technological obstacles.
Every now and then, I hear about some guy trying to make it real. But, that future assumed liquid fuels would be too cheap to meter. And thats not the world we are moving into. Flying cars are not impossible, just impractical and expensive.
Jet packs are far worse. Massively expensive to fly just a few hundred feet. And also very dangerous. Great for the occasional publicity stunt. But thats about it.
If jet packs become common it will only be a matter of time before someone decides to see how high they can go before running out of fuel.
NAOM
The big problem with flying cars is what happens if you run out of fuel or the engine quits for mechanical reasons. In a regular car you just coast to the side of the road. In a flying car, you would make a big hole in someone's roof.
It only happens occasionally with aircraft, but there aren't a lot of them and they are flown by professionals. If everybody had a flying car, it would be a regular occurrence.
Hammacher Schlemmer sells one.
The best SciFi was about human societies, and human relations. Change some major parameter in the society (usually technology) and explore how that effects things. Get people thinking outside the box.
Of course most is just an excuse for the usual good guys versus bad guys shootup. But thats just plain pulp fiction with rayguns.
And the SciFi channel seems to think it can peddle superstition and horror off as SciFi. And I guess it is working. And most of this ^%$# looks pretty darn cheap to produce.
The idiot fringe loves to make up their own viewpoint, by claiming climate change is a hoax and there's enough oil for 200-300 years. There's no sense trying to convince these people otherwise because they just make up stuff to fit their 'feelings' as they go along. But unfortunately it further pits the right against the left, wrong information vs. correct information.
Sure, maybe if it was economical to squeeze out every single drop of oil in every crevice from sea to shining sea, but the reality is only so much of it is economical to extract. If they don't think so, then just look at the price of Brent oil.
Don't blame those were are believing misinformation. The misinformation comes from people who know better:
"A dark ideology is driving those who deny climate change. Funded by corporations and conservative foundations, these outfits exist to fight any form of state intervention or regulation of US citizens. Thus they fought, and delayed, smoking curbs in the '70s even though medical science had made it clear the habit was a major cancer risk. And they have been battling ever since, blocking or holding back laws aimed at curbing acid rain, ozone-layer depletion, and – mostly recently – global warming.
In each case the tactics are identical: discredit the science, disseminate false information, spread confusion, and promote doubt. As the authors state: "Small numbers of people can have large, negative impacts, especially if they are organised, determined and have access to power."
http://www.guardian.co.uk/commentisfree/2010/aug/01/climate-change-robin...
How can you blame people for thinking we have 800 billion barrels of recoverable oil here in the U.S. when the Bureau of Land Management is saying just that? Link
Yes, she was obviously counting the Green River Shale, which is not oil at all but many cornucopians count it as oil. She just didn't know any better.
I guess that just goes to show.... Well hell, just what does that go to show?
Ron P.
That BLM press release says congress has prevented the BLM from issuing final regulations for Green River oil shale.
Is that correct??
Morons.
I just can't understand thinking like that. There is just no logic in it. If we really had that much oil WHY WOULD WE NOT BE PRODUCING IT?!?! Think! THINK!
Unfortunately, the answers people to come up with tend to be conspiracy theories. Tree-huggers, Government, etc.
Assuming that number wasn't just pulled out of someone's butt, my guess is that in this case, it is because it would cost more to produce that oil than it is worth . . . it is mostly likely referring to oil shale . . . which really isn't oil at all.
This just in this morning from CNBC.
Reserves:
Canada: 170 billion barrels
Saudi Arabia: 260 billion barrels
United States: 800 billion barrels
Erin Bernett of CNBC stated this morning that most people don't realize this and it puts things in perspective, whatever that means. I take it that the perspective is that we don't have a real problem and the current situation is just little nastiness we will get over after we focus on getting all this oil out of U.S. oil fields. "We have tons and tons of oil, more than anyone else". We just need to do the necessary investments. Oil shale plays in North Dakota and the rockies are the answer. I am not sure what CNBC means when they use the term "oil shale", which is a key issue. If they are talking about kerogen, then that changes the "perspective".
I am not sure what they are talking about but I believe that there is a growing belief that we can reverse declines in oil production and go back to producing at least as much as we did before the peak in the 70s. I do remember the hype about oil shale in the 70s in Colorado and we saw how that turned out. If CNBC is counting on that kind of oil shale, then I think they are out of luck.
To Erin's credit, she did state that the problem is production, not reserves. But we knew that. However, no one was brought on the program to provide a different perspective. They used to bring on Simmons a lot, but no one seems to be around to take his place.
But regardless, the myth persists which is part of the reason nothing will be done about peak oil. Because, of course, it doesn't exist. We just need to invest a lot more.
A Tale of Two Scenarios:
(1) Chindia, based on 2005 to 2009 data, is on track to consume 100% of global net oil exports by 2025 (as they say, Somthing's gotta give);
(2) We have trillions and trillions of barrels of unconventional oil "reserves" worldwide.
Take your pick.
Guess which scenario the various legs of the Iron Triangle generally favor:
http://www.theoildrum.com/node/2767 (July, 2007)
“Suburbs represent the biggest misallocation of resources in the history of the world.”
How big a victory garden could each property in the suburbs have, and how many people (or % of a person) could it feed? Granted I'm sure all the actual houses are far too big and energy inefficient, but just wondering if there is a small upside in having a parcel of land as opposed to people living in a block of flats with no garden.
In a lot of places the soil has been scraped away before the lawn was put down. You have to start by creating or bringing it in. It can be done, but it gets difficult on a large scale.
Then I hope someone is making lots of compost bins. Or rabbit hutches.
Well, during WWII the British population managed to grow most of the vegetables they needed in their tiny little backyard gardens, and their health improved dramatically as a result. They had a healthier diet during the war than they have had before or since.
Using techniques such as Square Foot Gardening you can grow an amazing amount of vegetables in a very small space. It can be a lot of fun if you get into it, and it doesn't take much work. You don't need the vast lots that houses in American suburbs stand on (and you don't need the vast houses either), a cozy little English-size garden will suffice.
Lots the size that American suburbs have, planted to grass, are only useful if you are raising your own herd of sheep or goats, and I think in most American suburbs that's illegal.
I doubt that the Brits health improved because they grew vegetables in their back yards. The claim (made numerous times) that they were healthier due to that fact (or even healthier at all) needs to be proved and I bet it never was. Probably an observation made because there were less heart attacks or something.
Sugar and bread were seriously rationed as was meat, fish, lard, coffee, milk and other (healthy) foods. Probably the air cleared due to reduced industrial activity, which returned with a vengeance in the 50's.
If they grew their own vegetables and continued to consume copious amounts of sugar and bread there certainly would have been no observable change in overall health.
There was less of everything to eat.
The Health of a Nation in World War II
You said.............
That is not true and that was what I was responding to.
They ate a much simpler diet. They consumed less sugar and calories overall were restricted.
Petrol was certainly rationed but public transport was well utilized.
The point I was making was that little vegetable gardens did not alone improve health.
Neither would small vegetable gardens now make any difference to health, without other restrictions.
I doubt there were any scientific studies on the health of the population during the war. The conclusions above were simple observations but obviously plausible.
Geoffrey,
That's highly unrealistic.
The average cost per mile for cars in the US is about $.14 per mile, at $3 gas. A Prius can give the same cost for $6 gas. A Prius with one passenger can give the same cost for $12 gas. A Nissan Leaf give the the same cost at any oil price.
Peak Oil is a big problem, but suburban commuters aren't really the first thing to worry about.
There you go again "just buy a Prius" So you are trying to tell us suburbia is saved because of the Prius and Leaf.
You must think we are all idiots Nick.
Do you think that all high gas prices or shortages will do is "enable" people to change cars to a Prius or Leaf? That the economy will grow a new leg with new car sales or something. Buying a new car doesn't buy you a new job.
I would rather bet that high prices and shortages will create suburban ghost towns, similar to Detroit.
People will move to where there is work because most live pay to pay without the means to "just buy a Prius".
The new refugees will be suburbanites and they will drive the cheapest damn ice vehicle they can afford or use the bus.
If a $20K vehicle enables someone to pay hundreds of thousands less for a house, yes, I think it is viable. But that implies there must be a steep price diferential. So the real estate won't be a good investment. But that is different from decaying cities.
Why would inner cities do better than suburbs in an economic collapse??
I would rather bet that high prices and shortages will create suburban ghost towns, similar to Detroit.
Actually, the suburbs around Detroit are doing much, much better than Detroit itself. Detroit's experience is strong evidence in favor of suburbs.
Most consider suburbs' chances not so good. Detroit is not the best example.
The reason the 'burbs fare poorly is that they were designed for the ICE age... When you're 2 miles from groceries, 3 miles from retail shops, and 25 miles from work, $100+/bbl oil screws things up pretty quick.
On another note, maybe AGW is a good metaphor for the ICE age?
Craig
Most consider suburbs' chances not so good.
That's a common opinion, especially on TOD. I suspect it's unrealistic.
they were designed for the ICE age... When you're 2 miles from groceries, 3 miles from retail shops, and 25 miles from work, $100+/bbl oil screws things up pretty quick.
But why wouldn't a Prius or Leaf fix that??
Prius would help, and a Leaf better. Reason they won't help: no jobs, no money, no electric (can't pay the bill). Sure, a suburban survivalist might have a leg up in being able to farm the nearby park or school yard, or the 1/25 acre backyard he has (and if smart, the 1/30 acre front yard). That is a while after the real crunch when our JIT food delivery fails, there is no gas, or it is rationed and costs $12+/Gal. For a few months, things will be really dicey. My predicted job growth area: grave digger. Between starvation and disease (weak people contract diseases easier... and there will be no way to get to the hospital, if it is even running), there may be some unexpectedly empty homes.
After the worst is over, the suburban infrastructure will not allow continued BAU. People will have to work near where they live. How many suburbanites will be able to live on subsistence farming? Workers, who will be centralized for protection, and convenience, will be part of a continuing structure of trade, including farmers' markets (where suburbanites will haul their produce in carts, IMO, or if lucky on mass transit of some sort). Unless we pick up the pace and redo our energy grid, and production, and set up that mass transit, we are in really big trouble. Once things get started, there will be no stopping and no going back! All that wasted time is gone. And, even though we cannot afford to do it, we are still putting off the unpleasant and denying the inevitable. Which is why the common opinion on TOD is what it is.
In a word, when it is too late, and your power system won't work, and new cars are unaffordable and existing ones cannot be run due to lack of fuel, you will be trying to live off your dreams.
And, keep in mind, I am not very happy about this. It just happens to be what I see coming... how do you suggest we change things so my future is not what you have to live? I am open to suggestions, Nick. And, you would certainly have my vote if you have a plan that even might work
Craig
I think we agree that a Prius or Leaf will work, as long as our economy continues to function.
So, will the economy collapse without oil?
No.
There is this puzzling assumption that oil can't be replaced, that it is somehow magically necessary for industrial/modern civilization. Oil has been cheap and convenient for the last 100 years, but the industrial revolution started without it, and modern civilization certainly will continue without it.
• 130 years ago, kerosene was needed for illumination, and then electric lighting made it obsolete. The whole oil industry was in trouble for a little while, until (Benz) someone came up the infernal combustion engine-powered horseless carriage. EVs were still better than these noisy, dirty contraptions, which were difficult and dangerous to start. Sadly, someone came up with the first step towards electrifying the ICE vehicle, the electric starter, and that managed to temporarily kill the EV.
Now, of course, oil has become more expensive than it's worth, what with it's various kinds of pollution, and it's enormous security and supply problems.
• 40 years ago oil was 20% of US electrical generation, and now it's less than .8%.
• 40 years ago many homes in the US were heated with heating oil - the number has fallen by 75% since then.
• 50% of oil consumption is for personal transportation - this could be reduced by 60% by moving from the average US vehicle to something Prius-like. It could be reduced by 90% by going to something Volt-like. It could be reduced 100% by going to something Leaf-like. These are all cost effective, scalable, and here right now.
I personally prefer bikes and electric trains. But, hybrids, EREVs and EVs are cost effective, quickly scalable, and usable by almost everyone.
Sensible people won't move to a new home to solve this problem. That would be far, far more expensive than replacing the car. It makes far more sense to buy an EV and amortize it over 20 years at a cost of less than $2k per year (about the amount they'd save on fuel), versus moving to a much higher cost environment (either higher rent or higher mortgage).
• As Alan Drake has shown, freight transportation can kick the oil-addiction habit relatively easily.
We don't need oil (or FF), and we should kick our addiction to it ASAP.
The only reason we haven't yet is the desperate resistance from the minority of workers and investors who would lose careers and investments if we made oil and other FFs obsolete.
Some might ask, what about our current debt problems?
Debt is a symbol, a marker - what matters is the underlying productive capability of our economy, which will be just fine. Could we screw up the management of our economy, and go into a depression? Sure. But it's not likely.
Don't these transitions take 50 years?
The transition from kerosen to electricity for illumination took roughly 30 years. The US transition away from oil-fired generation took very roughly 20 years. The transition away from home-heating oil was also faster than 50 years (though uneven).
The fast transition from steam to diesel locomotive engines is illustrative. There were a few diesel locomotives in use in the U.S. during World War II but steam dominated in 1945. However, the steam locomotives had been very heavily used during World War II, and they all wore out at approximately the same time the first few years after 1945. When steam locomotives wore out, they were invariably replaced by diesel in the mid 1940s. By 1949, almost all steam locomotives were gone. There were still some steam locos made in the late 40's, and they were still in service in the 50's but dwindling. The RR's also relegated the steamers to branch line and switcher use - replacing the most used lines with diesel first as you would expect. Cn rail retired its last steam engine in 1959.
Other, very slow transitions are not a good guide to the future. For instance, the transition from coal could be very slow, because there was no pressure - it was a trade up, not a replacement of a scarce resource.
And, unfortunately, we have more than 50 years worth of things we can burn for electricity. Fortunately, it doesn't look like we will. For instance, coal consumption in the US dropped 9% last year, about half of that due to loss of market share.
The transition from heating with wood to heating with coal took a lot more than fifty years. Electrification of the U.S. from small beginnings in the late nineteenth century to finishing rural electrification during the Great Depression took at least forty years.
Sure. These involved an enormous amount of infrastructure. On the other hand, EV/EREV/HEVs are manufactured on the same assembly lines as ICE vehicles, and roughly 75% drivers in the US have access to an electrical plug where they park.
If we mobilized all our resources as we did in World War II with the single objective of getting off fossil fuels as fast as possible, wouldn't the transition still take at least twenty years, and probably longer than that?
It would be much easier than that. A transition to EVs requires only a change within the automotive industry (for most drivers).
Nick, I love your enthusiasm and optimism. I only wish it was so easy.
The real problem, of course, is the continued growth of population on Planet Earth. And, the increasing energy use.
What is needed is clear. Transition to sustainable energy. To do that will require a new energy paradigm, resulting in a complete redo of infrastructure. That, in turn, will require a huge investment, and it will be needed now. I do not see it happening. Hence, my pessimism.
More than that, replacing all of our automobiles is not a small task in inself. With more than 200 Million autos in the US alone, and a cost of more than $25K per unit, there is not sufficient capital available for doing so in less than 20 years. Do you see the auto industry changing anything? 10,000 Volts at $35K per is not very promising.
And then there is the question of what happens after oil dies out? NG will not last very long, especially if we require it to replace Oil. Coal would fall off much the same way, and do incredible damage to the environment in the interim. After that, we are left with a network of solar and wind, with a bit of geothermal and hydro. Maybe some wave generators as well. The problem again is timing. We will be needing these replacements in 10 years... we are not able to build and deploy fast enough, and to date I see no real effort being made outside of Boone Pickins' 'plan.' Driving out I-10 toward El Paso, or around Corpus Christi, you would think that wind has taken over. And yet it remains a small percentage of delivered power.
I have often expressed my opinion that nuclear energy would be necessary to help during the short to mid term, and again I see no move in that direction. There is not sufficient political will, and there is not sufficient capital to do all that is needed in the mid to long term when we are not even taking care of what is needed now.
Sorry Nick. IMO, my grandkids are thoroughly screwed. Every so often I call one over and tell him or her that I am sorry. They don't understand why yet.
We had the chance in the 1970s and early 80's to take responsibility for our actions, to make hard choices, and to change. St. Ronnie the Wrong offered us the easy way instead. That turned out to be a total con, and it has been a race to the bottom ever since! Our best hope now is to try to soften the landing. It won't change the long term future, but it may make life better ... maybe even quite pleasant as compared to a crash landing. If only we come up with the guts, grit and determination needed.
Craig
What is needed is clear. Transition to sustainable energy. To do that will require a new energy paradigm, resulting in a complete redo of infrastructure.
We could build enough wind capacity to replace coal for $400 billion. Coal supplies half our electricity.
The US generates about 50% of our electricity from coal, which amounts to an average of 220 gigawatts. Wind, on average, produces power at 30% of it's nameplate rating, so we'd need about 733GW of wind. Wind costs about $2/W, so that would cost about $1,466 billion. Transmission might raise that about 10%, to about $1,613 billion.
Now, roughly 50% of coal plants need to be replaced in the next 20 years, so about 50% of the $1.6T coal replacement investment is needed anyway; new coal plants are just as expensive per KWH as wind, so that half, or $800B of the investment can be eliminated from our considerations.
Coal plants cost about $.035/KWH to fuel and operate, which is about 50% of the cost of wind. That's an expense that we'll have either way, so we can eliminate 50% of the remainder, which is about $400B: all told, we can discount the wind investment by 75%!
Wind's intermittency is often raised as another source of cost: I address that here.
--------
So, that gives us a cost of roughly $400B, or $40B per year for 10 years. That's a small % of US manufacturing, and a very small % of GDP.
A bargain.
-------------------------------------------------
With more than 200 Million autos in the US alone, and a cost of more than $25K per unit, there is not sufficient capital available for doing so in less than 20 years.
New cars are driven more than old ones. 50% of vehicle miles come from vehicles less than 6 years old. 6 years!
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NG will not last very long, especially if we require it to replace Oil. Coal would fall off much the same way, and do incredible damage to the environment in the interim.
We have a lot of both, for better or worse. Wind can extend and then replace them fairly quickly.
Earlier on CNBC John Hofmeister was on and as my wife said to me that guy's a PR man.Hofmeister said with intense drilling we could be at 50% of consumption in the US in a few yrs.But the statement that put a smile on my face was the "earth has more oil than we could ever use".Dang me Dang me!
vapor - Just another example of how partial truths are used to confuse folks. Yes...Mother Earth has enough oil inside to satisfy us for hundreds of years. The rest of the truth: Mother won't give it up easily and the vast majority won't be economical to recover. But it is there....that is true. Just like the millions of ounces of gold in the world's sea water. Just costs more than it's worth to get it out. But, like the oil, it is there.
I keep a little chunk of oil shale on my desk to show people who tell me what they "just heard on the news" (Unfortunately, I don't actually know where it came from). They can handle it, scratch 'n sniff it, taste it if they want. Then I ask how fast that will flow through a pipe when the valve is turned. "You're holding a nickel's worth of hydrocarbon there....how much work to get it out and processed?" Anyhoo...just showed it off a few minutes ago. Sigh.
I don't remember the reference, but years ago someone calculated that oil shale had the same amount of energy as a potato on a per weight basis.
Actually, that's not bad. "oil shale" (aka kerogen) burns quite nicely, though the residue is a bit messy.
The problem: it's not so easy to convert potatoes to oil.
Vodka, sure, oil not so much.
What are these idiots going to do when the price of gasoline keeps on going up? The mob will be baying for blood since there is so much "untapped" oil. Launching a crash drilling program all over the US will do nothing to deliver and will take over 5 years just to spin up. This is an example where lying succeeds at digging a deeper hole for the liars.
If it was only the liars that were in danger of suffocating when the hole collapses, I'd be cheering them on.
Same thing they did last time. Chant Drill Baby, Drill and gush over Sarah Palin.
You have to realize that they pay her to look pretty and talk about things she knows nothing about. She does look pretty, and she knows nothing about the topic.
In this case, she is probably talking about the huge US reserves of "oil shale", which has two problems - it's not oil (it's kerogen) and it's not shale (it's marl). And nobody has done done sufficient research to figure out how to get it out of the ground and turn it into oil.
So, until someone does do some research (the US government doesn't seem to be showing much interest) and gets a successful "oil shale" pilot plant working, you should use the official US proven oil reserves, which were 22.3 billion barrels as of the latest data on the US EIA website.
Rocky - Get's old beating that same dead horse, eh? BTW I've been looking at a number of Eagle Ford Shale prospects in S Texas the last couple of weeks. It is the real thing but overhyped as usual. For the rest of you folks this is not a shale gas play nor an "oil shale" play like the Green River. It is a shale formation with fractures that contain NG and oil. Just like the SG play in E Texas the lease costs have boomed: leases 4 years ago could be had for $150 ac. Now some folks are trying to sell the same for $25,000/ac (yes...they were asking alittle over $1 billion for their acreage position). There have been horizontal wells with initial flow rates of 1,000+ bopd. But, like all fractured reservoirs the decline rate is just as stunning. Some folks are using an 80% DR/year. A well coming in at 500 bopd might not recover it's investment let alone make a profit. The well cost around $6 million completed.
There hasn't been enough long term production to get a good handle on any sort of URR per well. But as long as oil prices stay above $80/bbl we'll probably recover billions of bo. Maybe 1 or 2...maybe a lot more. The plays is expanding towards the east. No telling if it will stay as good as the stuff in S Texas or not. But right now the players in the trend are tying up every piece of drilling/production equipment they can. If there's a drastic drop in the price of oil there will be a lot of players slaughtered just as it happened in the E Texas SG play when NG prices collapsed. But, of course, the oil market is very different than the NG market. It may take a year or more to see an up blip on Texas oil production but if prices hold it will come. Of course, all this new Texas oil won't have any significant effect on PO. But I'm surprised the MSM isn't all over the play right now. They can't show a single drill rig in the Green River but there will be hundreds of EF wells drilled in S Texas this year. And lots of photo ops showing oil gushing into oil tanks. Unfortunately typical MSM incompetence. Perhaps the hottest oil play (right behind the Bakken) in the country today and they're talking about the GR where, as you say, there is no oil.