Drumbeat: February 28, 2011
Posted by Leanan on February 28, 2011 - 10:33am
Steve LeVine: Did Saudi Arabia really raise its oil production?
As we begin another week of turmoil in the Middle East, and countries further afield batten down the hatches in an effort to preclude being next, here are some of the things we don't know:-- Whether oil prices are going up to $220 a barrel (and $5 at the pump), or down to $70 a barrel and more like $2.50 for a gallon of gasoline in the United States;
-- Whether Saudi Arabia really increased its oil production last week, or if the truth is a bit different;
-- And, finally, whether Russia's gentleman president, Dmitry Medvedev, has been rummaging through Vladimir Putin's archive of paranoid off-the-cuff remarks, and truly does not grasp what is happening around him.
The uprising in Libya has cut its oil output by half, the International Energy Agency said today, but Saudi Arabia's pledge to pump more helped to prevent a further surge in the price of oil.
The Middle East in crisis: Looters take control of Oman's streets
Police have fired tear gas and rubber bullets to disperse a violent mob which set a supermarket ablaze in the seaside town of Sohar, in Oman.
Gadhafi clamps down on protesters in Libya's capital
BENGHAZI, Libya — Libyan leader Moammar Gadhafi maintained a crackdown in the capital Monday as anti-government protesters appeared in the streets of Tripoli and fighting against Gadhafi forces broke out in other cities.
EU: Gadhafi No Longer Controls Most Oil Fields
Moammar Gadhafi's regime appears to have lost control of most of Libya's oil and gas fields to opposition forces, the European Union's energy commissioner said Monday, dismissing the idea of imposing a blockade."There is reason to believe that the majority of the oil and gas fields are no longer under Gadhafi's control," Gunther Oettinger said after a meeting of European energy ministers.
China, India increasing imports of Mexican crude: Pemex source
Mexico City (Platts)- China and India have sharply increased imports of Mexican crude in recent months, apparently because of growing demand from their economies but also as a safeguard against the vagaries of the current market, a source in state Pemex said Monday.The amounts are not great, but they are significant in the Mexican context, the source noted.
Unipec not replacing Libyan supply
Unipec, the trading arm of top Asian refiner Sinopec, has so far declined Saudi Aramco's offer of more Saudi oil to replace Libyan crude supplies.
Saudi Arabia 'committed' to oil stability
Saudi Arabia "is committed to the stability of the market" and to ensuring that oil supplies remain available, the statement said on Monday, adding that the kingdom hopes that Libya's oil production would return to normal soon.The statements came as China National Petroleum Corp (CNPC), the nation's largest oil and gas producer, said on Monday it has halted production in crisis-hit Libya and evacuated all its employees from the country.
Transocean workforce falls by 6%
Offshore rig contractor Transocean shrunk its work force by 6% last year as increased competition for shallow-water rigs led to older rigs being set aside.
Expert says that Venezuelan energy crisis is not over
Guillermo Ovalles, the current president of the Commission on Electric Power of the Venezuelan Federation of Trade and Industry Chambers (Fedecámaras), said the electricity crisis facing Venezuela has not been solved. “The situation has not been overcome. Chaos persists.”
Thousands hold protests against fuel shortage in Karachi
Scores of people held protests on Monday against unavailability of fuel in Karachi paralyzing life in Pakistan’s biggest city.
Tensions are edging toward a boiling point as Pakistani society continues to suffer through an ever-worsening energy crisis.
Dar on brink of darkness as power crisis deepens
The energy crisis engulfing Tanzania deepened last week, as it emerged that East Africa’s second biggest economy is operating on a depleted electricity reserve that could throw it into darkness in case of an outage.In coming weeks, authorities plan to shut down major hydro plants, the main source of power due to falling water levels.
S.Korea grapples with inflation due to costlier energy - FACTBOX
SEOUL (Reuters) - South Korea, the world's No.5 crude oil importer, is facing some of its most serious inflation threats mainly due to rising global energy and raw material prices, the finance minister said on Monday.Analysts surveyed by Reuters last week predicted bad weather, firmer global commodities prices and recent oil price surge would lift the country's annual consumer inflation in February to a two-year high of 4.3 percent.
High gas prices rattle drivers and businesses
NEW YORK — High fuel prices are putting a squeeze on drivers' wallets just as they are starting to feel better about the economy. They're also forcing tough choices on small-business owners who are reluctant to charge more for fear of losing cost-conscious customers.
TransCanada repairing mainline pipeline break
Reuters) - TransCanada Corp has begun repairs on a portion of its main gas pipeline after it ruptured on Feb. 19, restricting natural gas flows to Central Canada and the U.S. Northeast, the company said on Monday.
US approves first deep-water well in Gulf
NEW YORK (AP) -- The U.S. has approved the first deep-water drilling permit in the Gulf of Mexico since last year's massive oil spill.The Bureau of Ocean Energy Management, Regulation and Enforcement says the permit is to continue work on a well about 70 miles southeast of Venice, La.
Venezuela assigns exploration rights to Gazprom
Venezuela has assigned new gas exploration rights to Russia's Gazprom for $20 million, according to today's official government gazette.
Transocean eyes Deepwater Horizon rig recovery
Transocean may attempt to recover some or all of the Deepwater Horizon rig that exploded and sank during last year’s Macondo well disaster.
Kurt Cobb - When the believers stop believing: Chesapeake dumps shale gas assets
Only two years ago Chesapeake Energy Corp. president Aubrey McClendon was telling us about the limitless future of natural gas in North America. It was going to free us from foreign oil by allowing us to convert our vehicle fleet to run on domestically produced natural gas from vast shale deposits. Technology was now making these deposits accessible, and McClendon offered up "research" done by a nonprofit largely funded by his company that showed that these deposits could power America for another century.It is a good thing that McClendon, who still runs Chesapeake, isn't taking his own advice these days. Back in mid-2008 when natural gas prices leapt above $13 per thousand cubic feet, the company was riding high as the darling of the shale gas drillers.
Will oil force the Fed's hand?
Supporters of the Fed would point out that its easy money policies have helped nurse the economy back to a steady, if not spectacular, rate of growth. Low rates, combined with QE and QE2, may also be a big reason behind strong corporate profits and a roaring bull market that's about to hit its second birthday.However, the recent spike in crude prices to about $100 a barrel and resulting stock sell-off in the wake of the turmoil in Libya reminded many of how fragile the recovery still is. It even has some wondering if more monetary stimulus is needed to ensure that the economy doesn't suffer from an oil-induced shock.
Common currency - forget the Gulf, the real default risks lie closer to home
Events in North Africa and in other Arab states are evidently unsettling not just for their own people but for investors globally. But compared to the other elephants in the room, even the likes of Libya is ultimately a distraction. (Awkward questions will undoubtedly be asked about the support of western governments for those autocrats now being messily if democratically removed from office by their own people.) Peak oil deniers will doubtless point to the anticipated post-crisis abatement in Brent and WTI prices; provided there is something approaching resolution to these local uprisings, equity markets may regain a sense of poise. But there are huge and unresolved problems out there that haven't gone away, even if they may have been temporarily blown off the front pages – or the business sections – by rising tensions in the Maghreb and elsewhere.
Mid-East Violence Won't Send U.S. Into Double-Dip Recession; Big Oil's a Solid Bet
Violence in Libya has caused talks of a double-dip recession to once again gain steam. The story goes that Gaddafi's forces will destroy oil infrastructure as they flee, or that different tribal groups will come to control the oil fields, then go to war with each other. Who destroys the oil infrastructure of Libya does not really matter for the story, so long as it gets destroyed. The interruption in the flow of Libyan oil will drive up oil prices, crimping a fragile American consumer, and crushing economic growth. At the same time, doomsayers insist violence will engulf Saudi Arabia, and as that regime is toppled oil flow from Saudi Arabia will also stop. This will cause oil prices to rocket to $220 a barrel, crushing economic growth and crippling the world. While not quite an M Night Shyamalan story, media pundits and stock market bears have painted quite a scary tale. Here's why it won't come true, and how to profit off of it.
Richard Heinberg: 2008 all over again?
As oil prices reach $100 a barrel for the first time since 2008, many people are wondering whether 2011 will see a replay of crashing car sales, nose-diving airlines, and fuel-starved farmers. Food prices—which these days move almost in lockstep with oil prices—are already at frightening levels, leading Lester Brown of Earth Policy Institute to warn of “The Great Food Crisis of 2011.”But there are differences, now versus then.
We Need Better Oil Price Journalism
Left unasked are any questions about why the mere possibility of a 2% drop in global oil production would trigger such a panic. It's eay to blame speculators, but why are these investors so willing to bet on volatility in the first place?Why, for that matter, was oil trading as high as $80 a barrel througout last year, a year the world was supposed to be just crawling out of a sharp recession?
Oil versus light: Jeremy Leggett
This civilization uses oil for its blood. Almost everything we make, buy, and use has oil in it's food chain. You know that.Never mind that we are bleeding carbon into the sky and the ocean, or the developing climate shift. Even if oil was lily white, we are still running out of the cheap stuff - that we need for a global economy feeding billions of humans.
And we are determined to drive right off that cliff, without a Plan B.
What Do We Do When The Oil Runs Out?
Time is running out on cheap petroleum fuels. Recent research states that we have little more than 40 years of steadily decreasing supplies of that type of energy while concurrently its price grows prohibitively high. Then it’s no more cheap oil. Then what? That’s the question being asked -- and answered -- by Howard Johnson, an engineer and author of Energy, Convenient Solutions: How Americans Can Solve the Energy Crisis in Just Ten Years from Senesis Word.
It's coming on springtime and things are breaking loose all over the place. I give Saudi Arabia three weeks before it starts to blow up. And even Iran might get the fever. Plan on a staycation this summer and start thinking about that garden because it's not altogether certain that we'll keep up the conveyer belt of Little Debbie Snack Cakes and other staples of the American table into the supernarkets when diesel fuel hit $10 a gallon and the truckers stay home to watch the Kardashian girls. I'm already getting hungry.
The end of cheap oil - and life as you know it
In spite of what the giant oil companies want you to believe, the end of oil is coming. Regardless of your politics, your nationality, your religion or anything else, if you live on Earth, you life is going to change. The end of oil is coming.
$100 a barrel oil: Bad for Wall Street, good for green cars
When oil prices go into three digits, it's panic time on Wall Street. But on the bright side, expensive oil is good news for green cars.
Food: Getting fossil fuels off the plate
Each ingenious new invention made it easier to get food to the plate—at an energy cost. In 1840 the U.S. food system depended almost entirely on renewable energy sources, including labor from 70 percent (12 million) of the 17 million Americans of the day, more than 2 million of whom were enslaved.1 By 1900 the population had grown to 76 million, less than 40 percent (30 million) farmed, slavery had finally been abolished, and the food system consumed about 3 quadrillion Btu of fossil fuel.
Rich Americans flock to fast food
NEW YORK (CNNMoney) -- When it comes to cutting back, the rich are learning a little secret the rest of us have always known: fast-food is cheap and good (if not good for you).Quick service restaurants, such as McDonald's and Subway, saw a bigger rise in spending by ultra-affluent consumers than any other restaurant type last year, according to the most recent data by American Express Business Insights.
A liberating (but damned uncomfortable) conversion
What do we economists have to learn from Wendell Berry? Many things, but here I will mention only two. First is a definitional correction regarding the basic nature of our subject matter—exactly what reality matters most to our economic life and why? Second, what mode of thinking does this reality require of us in order to understand it as well as possible, without seducing us into spurious substitutes for honest ignorance?
Clive Thompson on How Games Make Work Seem Like Play
But McGonigal dreams bigger. She thinks we can use games to tackle some of our biggest challenges, like global warming. In 2007, she helped design a role-playing game called World Without Oil, which encouraged thousands of players to brainstorm solutions to peak oil. A group of designers is currently developing Lost Joules, an online game that will get players to compete to save energy. What if every smart meter plugged your home into a rollicking worldwide game of seeing who can consume the least? Imagine having bragging rights for all of North America!
Bill McKibben: My life as a communist
My life as a communist actually began without me knowing it, on Friday evening, when Glenn Beck spent his program explaining about a "communistic" conspiracy that included 10 groups in America. One was 350.org, a global campaign to fight climate change that I helped found three years ago. He even put our logo up on his whiteboard - and next to it a hammer and sickle.
Tim DeChristopher on trial for sabotaging oil and gas land auction
The climate activist, who bid $1.7m for land parcels for which he could not pay, faces up to 10 years in jail if found guilty.
Regulation Lax as Gas Wells’ Tainted Water Hits Rivers
With hydrofracking, a well can produce over a million gallons of wastewater that is often laced with highly corrosive salts, carcinogens like benzene and radioactive elements like radium, all of which can occur naturally thousands of feet underground. Other carcinogenic materials can be added to the wastewater by the chemicals used in the hydrofracking itself.While the existence of the toxic wastes has been reported, thousands of internal documents obtained by The New York Times from the Environmental Protection Agency, state regulators and drillers show that the dangers to the environment and health are greater than previously understood.
The documents reveal that the wastewater, which is sometimes hauled to sewage plants not designed to treat it and then discharged into rivers that supply drinking water, contains radioactivity at levels higher than previously known, and far higher than the level that federal regulators say is safe for these treatment plants to handle.
Oil rises $1/bbl as Oman protests fan supply concern
(Reuters) - Brent crude rose on Monday, crossing $114 a barrel, as protests in Oman fueled concern about security of supply from the Middle East and North Africa even as top exporter Saudi Arabia pumps more.
Oil above $114 after Libya cuts
Brent crude rose more than $2 a barrel today as concerns persisted about security of supply from the Middle East and North Africa.The concerns come even after top exporter Saudi Arabia boosted supply to meet the shortfall caused by a cut in exports from Libya, after violent revolt shut down as much as three-quarters of the North African nation's output, according to some estimates.
As protests have intensified and spread through the Arab world, investors fear any impact on output from Saudi Arabia.
Oil Trades Near Highest in Two Years as Unrest Spreads to Oman
Futures had the biggest weekly gain in two years last week on estimates that Libya’s crude flow was cut by as much as two- thirds, while hedge funds raised bullish oil bets to a record. In Oman, two demonstrators were killed and several wounded in clashes with police yesterday, hospital and government officials said. The country is the largest Middle East oil producer outside the Organization of Petroleum Exporting Countries.“The flash-fire is spreading,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark. “The situation in Oman creates speculation the unrest will spread to Saudi Arabia itself, though living standards in Saudi are higher and the country is much richer.”
Oil price set to double if production is cut off
Analysts say a Saudi collapse is unlikely, but if it happened the impact would be dire. "If Libya was Saudi, there would be no producer of last resort," says Chris Skrebowski of Peak Oil Consulting. "It would be like 1974 all over again and the price would go off the charts."
Turmoil rocks Libya's oil sector, slashing output
BREGA, Libya (AP) -- The massive oil terminal at Brega feels strangely deserted for Libya's second-largest hydrocarbon complex. After more than a week of turmoil in the country, production has been scaled back by almost 90 percent with many employees fleeing and ships not coming to collect its products.The most activity on the site Saturday appeared to be a squad of boys from the nearby town finishing the job of tearing apart the local headquarters of Moammar Gadhafi's Revolutionary Committee.
Libyan chaos stirs global panic over oil supplies
Libya's oil industry is in chaos, and that's no exaggeration.Armed men loot equipment from oil field installations. British commandos execute secret raids in the Libyan desert to rescue stranded oil workers as security disintegrates rapidly in remote camps.
Libyan port workers, frightened of being caught up in Moammar Gadhafi's violent crackdown on protesters, fail to show up for work, leaving empty tankers floating around the Mediterranean Sea waiting to load crude.
Secret military mission into Libya
Berlin - British and German military planes swooped into Libya's desert, rescuing hundreds of oil workers and civilians stranded at remote sites, as thousands of other foreigners are still stuck in Tripoli by bad weather and red tape.The secret military missions into the turbulent North Africa country signal the readiness of Western nations to disregard Libya's territorial integrity when it comes to the safety of their citizens.
Iran sees oil price falling once Libya calm -Fars
(Reuters) - Oil prices will fall back to pre-crisis levels once calm returns to Libya, Iran's OPEC governor was quoted as saying on Monday, recommending OPEC not rush into any action to calm the market."As soon as calm returns to normal in Libya, oil prices will return to their previous level," Mohammad Ali Khatibi said, according to the semi-official Fars news agency.
Qatar Says OPEC Can Make Up for Loss of Libyan Production
OPEC members and oil producers outside the group can compensate for any halt in crude shipments from Libya, Qatari Oil Minister Mohammed Saleh Al Sada said, after prices surged last week to a two-year high.“We think there is no shortage of supply,” Al Sada told reporters in Doha today. “OPEC and others outside OPEC can make up for the loss of Libyan production.”
Libya highlights China’s lack of strategic reserves
Beyond the current price spike, Libya’s oil crisis will have far more long-term repercussions in China and India. The supply disruption is a real wake up call for Beijing and New Delhi to speed up the construction of strategic reserves.The result? Higher oil prices as both countries import extra oil for their reserves.
Aramco Says Ready to Make Up for Shortfall in Libyan Crude
Saudi Aramco, the world’s largest state oil company, is ready to compensate for any shortfall in crude supply from Libya by pumping more oil of its own, Chief Executive Officer Khalid Al-Falih said.“We’re ready to supply incremental change in demand from our customers,” Al-Falih told reporters in the eastern Saudi city of Khobar, when asked if Aramco would increase its production to meet a gap in Libyan supply. He declined to specify the amount of additional oil Aramco would provide.
U.S. Offers Aid to Libya Opposition as Unrest Spreads to Oman
The U.S. said it will assist Libyan rebels trying to force Muammar Qaddafi from power, as pro- democracy protests that have swept the Middle East spread to Oman and reignited in Tunisia.
Food prices spiral in Libya capital amid crackdown
TRIPOLI, Libya (AP) -- The West moved to send its first concrete aid to Libya's rebellion in the east of the country, hoping to give it the momentum to oust Moammar Gadhafi. But the Libyan leader's regime clamped down in its stronghold in the capital, where residents said food prices have skyrocketed.
India May Cut Taxes on Crude Oil, Motor Fuels, Times Reports
India’s Finance Minister Pranab Mukherjee may cut excise duties on gasoline and diesel by 2 rupees to 3 rupees a liter and reduce the import tax on crude oil to 5 percent from 7.5 percent today, the Hindustan Times reported, without saying where they got the information.
January air traffic picks up, high oil prices loom: IATA
ZURICH (Reuters) - International air freight and passenger traffic picked up in January but rising oil prices caused by political unrest in the Middle East could make 2011 a challenging year, airline body IATA said on Monday.
Petrobras Profit Rises 38% to Record On Higher Oil Output at Brazil Fields
Petroleo Brasileiro SA, the world’s third-largest oil company by market value, said fourth-quarter profit surged 38 percent to a record after production increased.
March fuel oil exports from Saudi Arabia steady at 500,000-550,000T
SINGAPORE (Reuters) - March-loading fuel oil volumes from Saudi Arabia, the Middle East's largest supplier, hit 500,000-550,000 tonnes for the month, steady to February, with not much more expected, traders said on Monday.
Just how vast are Saudi Aramco Reserves?
WikiLeaks trove of diplomatic dispatches continue to trickle out. A recent release has excited the the "peak oil" theorists because it suggests that Saudi Aramco reserves are overstated by 40% and production may collapse. The Saudi official estimate of proved reserves is 267 barrels. Over the decades, recovery factors have advanced from 10% to 35% today and sometimes higher. Officials have discovered 70 major oil fields that are not on production. Last year the Saudis drilled about 500 wells.
Learsy: Peak Oil. The New York Times' Op-ed Gets it Right and Wrong
The Times' Op-ed, as did the earlier Huffington Post piece, raises serious doubts about the 'peak oil' theory. Lynch hits the issue squarely on the head when he comments about Saudi Arabia "Officials there have discovered approximately 70 major oil fields that they've left untapped over concerns that increased Saudi production would cause global oil prices to collapse." Well and good and so much for the timeliness of the New York Times' revelations.
7 Reasons Crude Is Going to $80/Barrel
Putting aside my long-term bias toward believing in peak oil, I must admit that in the short-run, nearly all signs point to crude going down. A fairly rapid fall to $80/barrel or further is quite likely.Here are seven reasons why.
Iraq's Basra oil exports restored to 1.872 mln bpd
(Reuters) - Oil exports from Iraq's southern Basra terminal were restored to 1.872 million barrels per day (bpd) on Monday after slowing to 1.2 million bpd in the last two days due to bad weather, a shipping source said.
Russia may extend preferential oil export duties to three more deposits
The Russian government may include three more oilfields in the list of deposits that enjoy preferential oil export duties, Deputy Economic Development Minister Andrei Slepnyov said on Monday.The current list of oil deposits, which are mostly located in East Siberia and the North Caspian Sea and enjoy a favorable export regime, amounts to 24 fields.
Pothole politics could drive gas tax rise
A few years ago, when Maryland's economy was cruising along and the tax money was rolling in, Howard County Executive Ken Ulman could count on receiving about $16 million a year from the state to keep local roads in good repair.But this year, like the year before, he didn't even get $500,000. And unless the state can tap into a new stream of money, things aren't looking much better for 2012.
One thing that I have been hoping to learn is the thinking behind the huge investment Buffett made when he purchased Burlington Northern. Specifically I wanted to get some insight into Buffett’s thinking on the future of oil prices.
Panel Report on Gulf Spill Is Delayed
NEW ORLEANS (AP) — A federal panel investigating the cause of the Deepwater Horizon explosion and the resulting oil spill will not finish its final report by the first anniversary of the disaster as it had hoped.
Recovery in the Gulf of Mexico
Jane Lubchenko announces the beginning of the formal public process for restoration of the Gulf of Mexico following the oil spilled at the BP Deepwater Horizon rig during 2010. Vikram Rao discusses the risks involved in underwater drilling for oil. He suggests as regulations are imposed, the likelihood of avoiding spills is high and the likelihood of avoiding environmental impact is extremely high. He says the Gulf of Mexico oil spill has been a grand experiment and the damage may not be as bad as what was originally thought.
Daily Bell: Are you a proponent of Peak Oil? Are we running out of energy?John Perkins: I don't think that the concern is so much we are running out of energy as that we cannot afford to continue drilling for oil and sending carbon dioxide into the atmosphere. The bigger problem is how we use oil not whether we are running out of it or not.
It's one thing for reformed oilman T. Boone Pickens or former CIA Director R. James Woolsey to argue that industrial societies should end their reliance on fossil fuels in order to reduce their dependence on hostile petrostates or combat global warming. But it's quite another to claim that such a massive shift is necessary because we're about to run out of the stuff.
It’s Well Past Time to Start Taking Peak Oil Seriously
Peak Oil is often called a “theory”, as though it wasn’t a fact that oil is a finite resource, and as though it wasn’t a mathematical reality that production must peak, just as global oil discovery peaked in the 1960s, and just as U.S. domestic oil production peaked in the early 1970s. That oil production must reach a peak, after which point it must decline, is not some kind of paranoid delusion. It’s a mathematical certainty we’ve already witnessed as historical fact, on the national scale. Global peak oil production is likewise not a question of if but when. According to world-renowned petroleum geologist Dr. Colin Campbell, the data shows that the peak of world oil production is already behind us, having occurred sometime between 2005 and 2008.
Oil’s decline will change everything! We will not be driving personal cars because we will be forced to use mass transit. It will change the way we shop, eat and travel. Bicycles, my favorite mode of transportation, will become more dominant in our cities. Unfortunately, we do not and have not found a replacement for oil even close to its energy-density and ease of transport.Peak Oil will change how we grow food and its cost. It will change transport of food and materials. It’s already happening! With our humongous 312 million population, it will be interesting to see if we can afford to eat or if we can grow enough food TO eat.
Iceland Channels Volcanoes to Win Europe's Energy-Supply Race
Europeans left stranded at airports last year as an Icelandic volcano spewed ash across the continent may soon benefit from the power that seethes beneath the remote north Atlantic island.
The U.S. Department of Energy (DOE) and Masdar, Abu Dhabi's multifaceted renewable energy initiative, announced that they will collaborate to test the performance of specially coated solar photovoltaic modules designed to avoid the moisture and cementation problems currently faced by PV module producers worldwide and prevent dry dust adhesion.
Ethanol may hold key to future economy
One reason ethanol is a viable product is because the oil used to manufacture gasoline is becoming an increasingly expensive commodity. Many people say oil is becoming more costly as it becomes more scarce. A few people even believe the world has already reached peak oil production, although that is a hotly disputed hypothesis.
Solar ‘Gold Rush’ in U.K. May Die With Incentive Roll-Back
Cornwall, the poorest county in England, said five months ago it expected a “gold rush” of $1.6 billion in solar energy investments. Now, the U.K. government may get in the way.
Khosla-Backed Sunborne Says India's Budget Ignores the Solar Industry
James Abraham, managing director and chief executive officer of SunBorne Energy Technologies, a solar power developer backed by billionaire Vinod Khosla, said India’s proposed budget for the fiscal year starting April 1 ignores the needs of the solar sector.
On February 18, Unit 5 of the Kashiwazaki-Kariwa Nuclear Power Station (NPS), owned and operated by the Tokyo Electric Power Co. (TEPCO), was returned to commercial service, nearly three and a half years after the station was struck by the Niigata Chuetsu Offshore Earthquake on July 16, 2007, according to the Japanese Atomic Information Forum. A periodic inspection had been underway at Unit 5 when the earthquake occurred.
Lawyer representing Texas in environment and health suits has ties to industries
A prominent Washington lawyer long connected to conservative causes is helping craft legal strategy for the State of Texas as it fights federal proposals on health care and environmental regulation.
U.N. leader asks Hollywood for help in fight against global climate change
'Together we can have a blockbuster impact on the world,' U.N. Secretary-General Ban Ki-moon tells Hollywood heavyweights at a forum on global climate change.
China minister warns pollution, waste imperil growth
BEIJING (Reuters) - China faces acute environmental and resource strains that threaten to choke growth unless the world's second-biggest economy cleans up, the nation's environment minister said in an unusually blunt warning.
China vows to cut energy, carbon intensity by 2015
China aims to cut the amount of energy and carbon dioxide emissions needed for every unit of economic growth by 16 to 17 percent from this year to the end of 2015, Chinese Premier Wen Jiabao said on Sunday.
Hong Kong, Singapore and other cities that are providing Asia with a path from poverty to prosperity also provide an urban approach to reduced energy use.
Could a small nuclear war reverse global warming?
Nuclear war is a bad thing. Right? Scientists from NASA and a number of other institutions have recently been modelling the effects of a war involving a hundred Hiroshima-level bombs, or 0.03 percent of the world’s current nuclear arsenal, according to National Geographic.The research suggests five million metric tons of black carbon would be swept up into the lowest portion of the atmosphere.
The result, according to NASA climate models, could actually be global cooling.
India Will Use Coal Tax to Fund 2 Billion Rupee Green Clean-Up
India will use 2 billion rupees collected from its carbon tax on coal to clean up the nation’s air, lakes and rivers.
New rice varieties can temper high prices -IRRI
Rice prices are likely to remain high as demand rises, but countries can boost supply and temper prices by switching to climate change-ready varieties, the head of a rice research agency said on Monday.
If climate scientists are in it for the money, they're doing it wrong
So, are there big bucks to be had in climate science? Since it doesn't have a lot of commercial appeal, most of the people working in the area, and the vast majority of those publishing the scientific literature, work in academic departments or at government agencies. Penn State, home of noted climatologists Richard Alley and Michael Mann, has a strong geosciences department and, conveniently, makes the department's salary information available. It's easy to check, and find that the average tenured professor earned about $120,000 last year, and a new hire a bit less than $70,000.That's a pretty healthy salary by many standards, but it's hardly a racket. Penn State appears to be on the low end of similar institutions, and is outdone by two other institutions in its own state (based on this report). But, more significantly for the question at hand, we can see that Earth Sciences faculty aren't paid especially well. Sure, they do much better than the Arts faculty, but they're somewhere in the middle of the pack, and get stomped on by professors in the Business and IT departments.
Federal spending favours fossil fuels, study finds
AUSTRALIAN taxpayers spend 11 times more encouraging the use of fossil fuels than on climate change programs - and the sum is growing.Fossil fuel incentives and subsidies will cost an estimated $12.2 billion this financial year, compared with $1.1 billion spent on programs designed to cut greenhouse gas emissions and boost clean energy research.
Can a group of scientists in California end the war on climate change?
The Berkeley Earth project say they are about to reveal the definitive truth about global warming.
Philippines considers climate change "survival fund"
BANGKOK (AlertNet) – Lawmakers, aid workers and activists in the Philippines are throwing their weight behind a national "survival fund" to tackle climate change after severe flooding caused by unseasonal and persistent heavy rains.
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The Guardian piece makes Berkeley Earth Project sounds pretty arrogant. What blocks consensus on climate change is not the failure of climate scientists, but the fact that dealing with it seriously means not burning carbon-based fuels.
Maybe the newspaper played up that angle, and these guys are better than the article portrayed.
with the doves:
Hmm, I didn't get that impression.
The Guardian:
I'm all for transparency. I can't see any down side to such an approach.
Sure, transparency is great. Many climate groups make their data available on the web. The statement you quote from the article carries the implication that climate science has until now lacked transparency, which is not really true.
From what little I can see at this point, the Berkley group is integrating data from other sources. This isn't primarily 'new' data. Rather, it is a data integration and re-processing effort.
For instance, examine the dip station records around 1972 in this image:
Compare it to the dip in station records in this image:
So we can expect that their land data is roughly GHCN + GSOD.
The GSOD data has already been looked at by bloggers (including myself)
It doesn't diverge significantly from the GHCN data.
http://rhinohide.wordpress.com/2010/05/23/gsod-global-surface-summary-of...
http://rhinohide.wordpress.com/2010/06/29/gistemp-with-gsod-round-2/
http://moyhu.blogspot.com/2010/07/global-landocean-gsod-and-ghcn-data.html
One of those associated with the project has often mentioned their belief that the sea data prior to WWII is 'disasterous.' So maybe they have something interesting there. Or infilling for central Africa or central South America where data is sparse for both GHCN and GSOD. But I don't expect Berkley to do anything along the lines of 'overturning' the findings of GISTEMP, HadCRUT, NCDC, or JMA analysis.
But good on them on taking a fresh look at these data sources and I look forward to seeing their results.
As I understand it, the data you have worked with is what might be called raw data which is not corrected for such obvious problems as station moves, changes in time of day and instrumentation. If this is correct, the data is not very useful for detecting the small changes in temperature which we may be experiencing due to Global Warming. This is one big problem and some denialist, such as the Idso's, have failed to consider this issue in years past, selectively cherry picking data from the USHCN to "prove" there's no warming. I wonder how well the computer adjustment process will work to correct for these distortions...
E. Swanson
Climate Progress has a different take on the Berkeley Study.
http://climateprogress.org/2011/02/14/exclusive-richard-muller-charles-k...
Clearly, this is a horrible idea.
Well, well - the Berkeley group gets money from the Koch family. Lovely. Thanks for that link.
Best comment on the items:
Don't hold your breath waiting for that integrity, though. These guys have no shame.
Craig
Haha found out already !
What a shame, sorta. Yup, another example of astroturf exposed !
Thanks for the detective work !
The beliefs of Joseph Romm and Climate Progress are a lot more alarmist than the IPCC consensus. Anyway, let's wait until the Berkeley group actually publishes something and then judge whether it is good science. Ad hominems don't really shed any light on the problem.
We can judge the independence and good faith of this group now. One doesn't see them providing "the definitive truth about climate change."
That concept is absurd anyway. Many truths are already well known (Carbon dioxide traps heat and is a key player in earth's climatic shifts). Others cannot be known until they happen (how fast do ice caps melt, precise regional climate effects).
They may have some insights to contribute, but not to the degree ballyhooed in the article.
And yeah, they're funded by the Kochs.
Further, the guy leading this is a hypocrite both in his language and in his stacking the deck. And he is plainly incorrect on at least one point.
This is supposed to be an objective analysis, yet he says, "Scientists will jump to the defence of alarmists because they don't recognize that the alarmists are exaggerating," which is a heavily biased view that there is nothing to be alarmed about and that he believes some scientists are exaggerating.
He's already proven this report is a pile of donkey poo.
This is supposed to be an objective analysis, yet he chooses a known climate denialist in Judith Curry, whose shrill and disrespectful insults are becoming legend as we speak. She hangs out with the folks at Watts' disinformation site rather than a place like RealClimate because they challenge both her skill as a scientist and her disingenuous commenting. What's more, she's not really much of a climate scientist. Read virtually anything about her and it becomes clear she's become a media junkie and is doing little, if any, science and doesn't even understand what her peers are producing.
http://tinyurl.com/4gfk8vm
This one is entertaining:
And there are far worse in terms of her ability to deal with the science, let alone her very vocal support of denialist claptrap. Based on her handling of the science, she belongs nowhere a review of 150+ years of science.
Which brings up another point, how do you go through an entire area of study in such a short time with such a small team if you are starting from tabla rasa? Obviously, you don't unless you know the answer you are looking for already, as is obvious from all the above.
To make matters worse this guy claims statisticians are the gatekeepers, except the use of stats used in climate science are not the same as typical stats. You can't assess climate models without knowing something about climate, and their sole climate scientists is obviously not among the best in her field.
Then there's the funding.
I can tell you now what this report is going to say.
Sensitivity is on the low end.
Natural variability is ignored.
Solar influences are larger than assumed, or at least are improperly calibrated.
Clouds are likely a large forcing that is sill poorly understood.
Methane is unquantified and likely not to be important except possibly on centennial time scales.
SLR is nothing to be alarmed about.
Ice melt it still too uncertain and is overstated.
Dissent is squelched.
Data is removed to push the agenda.
And on and on.
http://www.realclimate.org/?comments_popup=6649
Spoken by someone who probably doesn't know many 'REAL' scientists, nor has much understanding as to how science is done. Another self-aggrandized idiot or a paid shill pushing an agenda, possibly both... Bah!
The use of the word alarmist does not lend credibility to your post. If Romm is less conservative than the IPCC, there is a good reason as things are happening more quickly than the IPCC forecasted. Yes, let's wait until the study funded by the climate denier funders, the Koch brothers, finishes. Not.
Absolutely. I seem to recall items or comments in peer reviewed magazines (usually Science, Scientific American, and BAS) in the late '90s and early 2000's about the political pressure on IPCC to tone down their next report.
Conclusion: Due to political pressure and the need to be somewhat politically correct, the past two IPCC reports understated both the problem and the speed of transition.
I should have cut and saved them... if only I had known how weirdly anti-science we would become in the ensuing decade or so.
Craig
Models guiding climate policy are ‘dangerously optimistic’ – ‘The reality is far more depressing’
Something I've been pounding the guys at RealClimate on for years. Their tone is a bit stronger of late, as it should be. The link to the slideshow on clathrates posted by dohboi says it all. http://tinyurl.com/4bksve8
Let's keep pounding, pri-de.
The fact that sf called RC 'alarmist' and in the same breath attacked posters here for ad hominem was really pretty laughable on a number of levels.
One of the main reasons that most current models are optimistic is that they ignore or under-represent so called 'slow feedbacks': methane and CO2 from melting tundra and drying soil, methane from sub-sea clathrates, forest die off, reduction of ocean CO2 uptake because of heating, saturation and phytoplankton die off (now underway)...
The latest edition of Philosophical Transactions of the Royal Society A, the oldest scientific journal in the world iirc, is devoted to examining what happens when global temperatures exceed four degrees C. They admit that this has been under studied, since most were not anticipating that the world would be getting anywhere near there for centuries. But now most think it probable within the century if not much sooner. In the "Research" section of the intro article the list the feedbacks above specifically as the ones which need attention. All of these feedbacks/tipping points are now in play in some fashion.
http://rsta.royalsocietypublishing.org/content/369/1934.toc
Yes, I read through that the other day.
Science is a peer-reviewed journal. Scientific American is a well-respected magazine, but it is not peer-reviewed.
Anyone else notice that the spam attack is limited to the section where we are discussing GW?
False. The standard canard you toss out here is a logical fail: citing the IPCC to undermine more recent climate science. The date in the the 4th Assessment was all from 2005 and the previous 30 years. There has been a massive change in conditions and the science since then. To claim current fears are "alarmist" because they don't match data from between 6 and 30 years ago is absurd.
Just a few things we didn't know then or were too recent to be included in the 4th Assessment:
1. Antarctic melting
2. Methane seeps
3. Thermokarst lakes
4. Dramatic declines in Arctic sea ice
5. 2/3 of ice shelf and glacier melt bottom up due to ocean heat content
To be "alarmist" about something, you have to be presenting scenarios outside the bounds of the possible or probable. With climate, to be alarmist you'd have to claim we'll hit +4C in 2050 or some such, as opposed to the very possible by 2100 - 2200.
It is, given the evidence, now delusional to deny serious climate change is already in process. That comment in no way is an overstatement.
I don't think "psychotic" need be in the definition.
Anyone read the Climate Files by Fred Pearce yet? I'm about 1/2 way through and I'm finding it to be a page turner. It may be a game changer in that both McIntyre and Monbiot like it.
It's just a bad article. "ugliest and most hard-fought debate of modern times"? What? 0.75 degrees C over 100 years? Global warming is a meaningless and pointless waste of intellectual energy. Even if the US shut down its entire economy to reduce carbon emissions to zero... the rest of the world would quickly jump on the lowered fossil fuel costs and they would rapidly industrialize to absorb what we once consumed. Tragedy of the commons. No way to stop it. No reason to stop it. People are stupid to waste their time thinking about global warming. And even dumber to give their already corrupt governments more power to try and stop that which clearly cannot be stopped. There is no global warming debate. There are only suckers and fools and dupes. Every real point of debate and every real issue is squashed by a handful of very rich people who very easily control what the sheeple waste their time thinking about.
That's simply not true. If we were none the wiser about the risks of CO2 then what would be to stop us going all out trying to dig as much coal as we could out of the ground and making the biggest, baddest, most poullutin'est vehicles available to aaaaall the world?
At least it's on (some) people's conscience now, especially the younger generation.
Sorry, I think I missed the /sarc there.
I really hope one was intended.
Icon, afraid that is the case. Hope to be proven wrong though.
Your comments are the reason Homo sapiens failed. LOL
Here's another commentary about Libyan oil from the NYT, dated yesterday:
Tremors From Libya Threaten to Rattle the Oil World
The authors claim that the Saudis are adding 700,000 bbls per day to their production...
E. Swanson
Within the realm of the possible. But it is a losing game and is just noise in the long run. Of course it could give us all a few more years to get prepared, something I personally welcome.
Source: Robert Hirsch's ASPO presentation last October
Here is a more detailed look with real-world data based on Chris Skrebewski's oil megaprojects database:
Figure 3.2a. The Oil Crunch, UK Industry Task Force on Peak Oil and Energy Security
My thesis is that declining oil cracks the world financial system this decade:
It's only 2011, and on CNN tv they were already talking about a bankrupt U.S. Big problems even with oilproduction on a plateau.
True. The impacts seem to begin even when oil production stops growing. Actual decline will be deadly.
Deadly to the financial system and social structures than depend on them. Kind of like a cosmic hint to get our priorities straight.
"cosmic hint"
I must ask: are you from the UK, by chance? Such elegant understatement :-).
he - No, I'm a Yank;)
Priority is economic growth.
From Rocky's comment:
This decade the MENA countries need to create 100 million jobs for the young population.
Right, kind of a self-annihilating priority.
Very true. Big difference between when oil was cheap & solid percentile growth was a given vs. plateau production vs. what it will be like when there is Descent oil production. If budgets cannot be balanced during the plateau, then the wheels will come off during ever less oil to compete over.
The plateau has been with us now since May 05, which will be 6 years in May this year, 2011. Like a swimmer treading water in a sea of uncertainty.
Great charts! I concur, over the next 2-5 years the whole global economic edifice will crumble. Kind of like a big reset button.
You say 'world debt/money in circulation'.
Which is it?
Rich countries have far more debt than poor countries. Do you think poor countries are better positioned to survive a crash than rich countries? When has that ever been true?
You have money in circulation skyrocketing when oil levels off/declines. Are we suffering from hyperinflation or the opposite?
Did debt cause the crash or high oil prices in 2008?
Did a crash in oil production pop the bubble?
Your graph raises more questions than it answers.
Money in circulation comes almost completely from debt in our system, so they are essentially the same thing. If you want to know how much debt there is, just count up how much "money" is in circulation in all forms.
Trace Mayer modified Exter's pyramid to create the following:
As for your other questions:
We all fail together, with just a few months or possibly years between each country. The periphery of the current US economic empire seems to be failing first (Ireland, Greece, Portugal, etc.). The center of the empire, the U.S. itself, may be one of the later failures but fail it will.
We currently are in contraction, or at least some portions of the world are. This will continue a while then will be followed by hyperinflation. The overall debt level must be reduced before money printing can make a significant dent. I discuss this more in part 2 of my video. Keen and Nicole Foss also discuss it at some length.
There is no single cause. I don't believe in single causes. There is a context in which a proximate cause operates and it may appear that the proximate cause did the damage but only if one complete forgets the context in which it was operating.
Said another way, "yes, in part, but that's far from the whole story."
It has begun, in my view.
This is very analogous to the question "Did AGW cause the hurricane Katrina?" While there isn't a single causal link, the context of AGW makes the likelihood of the killer storms much more likely. Just as the global economic context makes deadly market distortions much more likely.
Katrina was not a killer storm. It went down to class 3 at the time of landfall. New Orleans is squarely on the US Army Corps of Engineers for failing to maintain dykes.
Cat 3s are not killer storms? Somebody tell all the dead from all the Cat 3s to rise: It wasn't the storm, it was the _____.
I think "killer storm" a figurative rather than literal expression. Or maybe I did not understand the irony.
The Category 3 thing is a bit misleading. Katrina was the strongest hurricane ever recorded in the Gulf (at that time). It might have been Cat. 3 when it actually made landfall, but it was Cat. 5 before that, and thus arrived with a Cat. 5 storm surge. It was the storm surge that did the damage to the levees.
Figuratively, I think Cat 3 is a "killer" storm. If properly prepared for, short- and long-term, no storm is a killer storm, right?
The estimate of debt looks quite inflated.
The amount of US money in circulation M2 is ~$8.5 trillion dollars.
http://en.wikipedia.org/wiki/Money_supply
The US mortgage backed securities totals $9 trillion.
http://en.wikipedia.org/wiki/Mortgage-backed_security
The US stock market is $15 trillion.
http://www.usatoday.com/money/economy/2010-12-09-net-wealth_N.htm
US bank accounts total around $1 trillion.
2010 US national debt is $9 trillion.
http://en.wikipedia.org/wiki/United_States_public_debt
The total US state's debt is $460 billion dollars.
http://money.cnn.com/2010/07/30/news/economy/state_debt_levels/index.htm
The municipal bond market is $3 trillion dollars.
http://www.themarkettraders.com/aggregator/sources/1?page=6
All these 'debts' total $46 trillion dollars. Let's assume the USA represents 20% of 'world debt'. That means the world debt is
at most $230 trillion dollars, which is a lot of money but still much less than the pyramid says.
The world GDP-PPP is ~$75 trillion.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
So it couldn't be paid off right away but who allow a run on all banks everywhere?
On a GAAP basis your accounting falls apart. Even without a GAAP analysis, the National debt is $14.287 trillion at the moment.I think what you forgot to add what the Government owes to the SS and Medicare Trusts it borrowed the difference from. You also don't count the looming deficits of SS and Medicare that GAAP accounting surfaces. Pension funds of states also would balloon. The negative net worth of the Country is around $75 trillion on a GAAP basis. I guess the "devil in the details" saying has teeth.
Complete hooey.
You are confabulating actual debt with projected debt. If you owe a debt it's real but worrying about a debt you could conceivably (or inconceivably) owe is demented.
Right now SS is in surplus and will be until 2037.
It was recently weakened slightly as demented Republicans (with the complicity of Marxist tyrant/panderer Pres. Barack Obama--the majority of Congressional Democrats opposed it) insisted on giving themselves a payroll tax 'holiday'.
States haven't kept up with pension obligations because they like
deficit spending but counting ever increasing deficits only works if you accept the GOP notion of ever increasing tax cuts or tax freezes.
There's no Devil or details, just bogus 'debt projections'. The only thing that gives credence to this joke of an argument is
idiot logic of giving out tax cut/gifts ( out of a sense of 'fairness') to super rich people who pay little or no tax anyway and are obsessed with creating jobs in Chindia or Africa.
The top 10% own 71% of the USA, so they need to pay for what they own.
http://en.wikipedia.org/wiki/Distribution_of_wealth
Conservos like Rush Limburger complain that the top 20% pay 80% of the taxes. Since the top 20% own close to 85% of the wealth
(and 90% of the investible wealth)
I'd say they doing better than okay.
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
You meant to say, "If we had all the oil we wanted SS is in surplus and will be until 2037."
Right?
Otherwise you are, I believe, not accounting for the whole picture.
What I mean to say is that the expected payroll tax being paid into the social security fund($807 billion) plus what's in there now (2.5 trillion dollars) is adequate to support the expected number of retirees for the next 26 years. In 2009 $686 billion dollars was paid out as OASI and disability benefits to about 52 million people.
It's true that the babyboobers are retiring and the number of retirees in 2020 could be 66 million. Let's assume that leads to a maximum $100 billion annual deficit in the SS trust fund, so 25 years x $100= $2.5 trillion dollars, then we reduce benefits by 25% shrinking the tax from $720 to $540 billion dollars under a proper pay-as-you-go system.
http://www.ssa.gov/oact/trsum/index.html
Of course we could also make the system pure pay-go (and cut benefits to balance the deficit) this minute and give the $2.5 trillion dollars in tax cuts to the super rich (even if we give tax cuts to everyone the laws of economics will put the money into the pockets of the rich).
Since changes in GDP will directly impact payroll taxes, we need look to see what the elasticity of oil price to GDP is.
A rise from $25/b oil to $35/b oil, a 40% increase was judged by the IEA to result in a 0.3% reduction in US GDP, therefore a $25/b to $250/b increase in oil will produce a 2.14% decrease in US GDP and thru payroll taxes. Even a 25% reduction in GDP would only reduce payroll taxes collected by ~25%.
http://tiny.cc/e9a8p
Uh, where is the money that's in there now?
$2.5 trillion in government bonds
So, Security Security, a wholly owned subsidiary of the federal government, has a $2.5 trillion asset, in the form of Treasury bonds.
And, the Treasury Department, a wholly owned subsidiary of the federal government, has a $2.5 trillion liability.
And the net value is?
So what happens when we print up another $2.5T with which to redeem these, given that there won't be tax income since that will be servicing debt?
Seems like however you slice it, it ends up being pay-as-you-go.
The government isn't really borrowing from itself.
SS surpluses from payroll taxes were accumulated in the Social Security Trust Fund as government bonds and when the SS system goes into deficit those bonds will cover the deficit.
It's true that the politicians have been using that SS annual surplus to giggle the books to hide their annual deficit spending but it doesn't have any meaning as far as the public debt goes.
It's just an accounting balance sheet trick.
The government borrows money to finance operations all the time
(at low rate and payment at expiration meaning it pays back old debt first)and it must pay the money back eventually.
The government isn't really borrowing from itself.
And the Federal Reserve has a 'reserve' and is federal, just like the name says....
The Federal Reserve is a private banking institution whose members are appointed by the President.
The reason for this is that in 1910 the pro-market politicans didn't want another Bank of the United States and this was the compromise.
The Fed before the Fed existed was Mr. J. Pierpoint Morgan--the banker of last resort who owned(along with JD Rockefeller) the USA in 1907.
It issues/creates all the money out of thin air(the Treasury makes the paper money and coinage drawing on an electronic credit account at the Fed). The US government Bureau of Debt is just another bank serviced by the Fed.
The Fed markets US debt and makes a profit from the sale of securities.
So in a sense the US government can never go broke.
The purpose of the Fed is to issue money to make the economy go
and if needs be raise interest rates to rein in inflation.
This is why the debt scare is nonsense. The owners of public debt are ultimately on their own.
For those who are appalled by this perpetual motion machine I can only say,
“In the long run, we're all dead.”--JM Keynes
The potential appointees presented to the President are selected by the banks.
There are so many problems with this statement I don't even know where to begin. So I won't. Maybe someone else will want to.
Lets chain some ideas all together shall "we"?
The government isn't really borrowing from itself.
The Federal Reserve is a private banking institution
This is why the debt scare is nonsense.
At the point where the "money" is not "produced" by the government and by a private bank, then "the government" isn't technically borrowing from itself.
But that sure seems like cold comfort.
The end result of repudiation and perhaps dissolving the Union like happened with the Contential / Articles of Confederation will sure seem like the same place of 'the government borrowing from itself'
Chin up tho, the 2012 solar flares will make you want MORE problems with funny money *wink*
Marjorian said: This is why the debt scare is nonsense.
Well, I don't have much time today, but duty calls, so I'll do it.
Marjorian, archangel is exaggerating, nonetheless you should remember that the debt poses a theoretical risk in the long run due to rising medicare and medicaid costs.
Yes, I'm aware that some leading economists dispute the claim that this even this risk exists, but I think there enough good reasons to keep medicare and medicaid expenses under control in any case, that conceding this point doesn't force you to take sides in that argument.
"theoretical risk"
Good lord, I thought you folks understood what was happening with our debt.
The point is that the system as its constructed works fine — until it doesn't. Then it tends to collapse and all the folks who kept saying, "Don't worry" might apologize for being completely wrong but it doesn't really help at that point.
As Keen points out, "In real world economics, debt actually matters."
You know, you would think on a peak oil site people would make the connection. Put simply; Peak Oil =Debtocalypse
But the SS fund IS an owner of that debt, since they hold bond "IOUs", right? So, when the SS fund needs to sell bonds they'll be selling into a glutted market. The gov't will then need to print money or raise taxes to 'make good', either by buying the bonds or funding the Fed to buy the bonds (which is how we float our debt today, mostly).
In the end, it's a megatrend problem using macro-scale tools, IMHO. I don't see how having an aging populace who will be selling assets plus a gov't agency who will be selling bonds into a shrinking market of workers can succeed. The best you could hope for is for newly wealthy Chinese to buy them up, but they'll probably be dumping into a soft market then too.
Debt renege, inflation, working longer, and living shorter appear to be the tools. Or, most likely, some combination of the above. Devalue the dollar so less real money is being paid out, and the working longer and living shorter items will take care of themselves. Debt renege would be necessary only if you want to stick it to investors over the public, and so far that concept seems to have no legs in the US. Iceland and the Irish seem to get that notion at least.
Actually Social Security is backed by non-negotiable bonds which can't be sold in the market.
http://en.wikipedia.org/wiki/Social_Security_Trust_Fund
First the government doesn't create money, the Fed does.
Its job is provide liquidity and raise interest rates for loans and margin requirements when inflation is a problem. If the government needs money the Fed will offer it at interest.
What is interesting is that during the financial collapse the Fed
didn't create any money to bail out the banks, it asked Congress to bailout the banks which was the Fed's job. This was probably because the Fed lacked all credibility having let the system fall apart--Bernanke should have been fired but that hardly would have produce confidence in the markets.
With QE2 Bernanke felt strong enough to print $600 billion dollars and surprisingly the Chinese
bought even more treasury bonds from the Fed.
See, no problemo!
A bit dated but some solid insight, still valid IMO.
The Coming Generational Storm
2006 Podcast; download here:
Laurence J. Kotlikoff on Long-Term Fiscal Problems in the U.S.
Kotlikoff is a Fair Taxer, i.e. 23% uniform federal sales tax rate, a uniform deduction of ~$5K based on federal poverty level so people at poverty level would pay no taxes. The very poor <$25k would pay less then they do now(zero), the middle class $25k< <$75k would pay more, +$75k would pay less, the superrich would pay a lot less. The fact that it is about the same as the current phony tax system shows how unprogressive our goody filled tax code is.
http://www.factcheck.org/taxes/unspinning_the_fairtax.html
He's just another RW flim-flam man out to fool the public.
Watch your wallet.
It was his assessment of unfunded liabilities that I found compelling, not his solutions. They did a good job of quantifying what we face. As for solutions.........history and evolution have a way of deciding.
Important to know that Kotlikoff has changed his tune on the root causes of increasing total medical costs drastically since Generational Storm was published. He now acknowledges the correctness of more recent studies showing that the increases are 10% due to demographics and 90% due to the availability of increasingly expensive treatments.
In short, he now acknowledges that the problem with health care costs is not that seniors account for, and will continue to account for, about one-third of total health care expenditures. The problem is that health care expenditures are forecast to rise to 45% or so of GDP.
The 2010 Financial Report of the United States as released by the US Dept. of Treasury a few days ago is the reference for GAAP treatment of Federal debt.
'Undeflated'.
Debt is what you owe other people.
…"Broader GAAP-based federal deficits, including the Social Security and Medicare unfunded liabilities, have been in the $4 trillion to $5 trillion range in 2008 and 2009, and 2010’s deficit again likely was near $5 trillion, remaining both uncontainable and unsustainable. The federal government cannot cover such an annual shortfall by raising taxes, as there are not enough untaxed wages and salaries or corporate profits to do so. On the spending side, all government spending, except Social Security and Medicare could be cut, but the broad GAAP results still would be in deficit" Shadow Government Statistics John Williams,Dec. 2010
Not sure it will work out as planned with the world wide debt system collapse and all.
"Marxist tyrant/panderer Pres. Barack Obama"
Perhaps you could provide a particle of evidence for this totally offensive inference.
I had a conversation with Trace about where he got the numbers. He pointed out that they change but ran through the various sources, like the Bank for International Settlements and such and I was left confident enough to use the slide in my presentations.
If you are interested, you should engage him directly about the numbers but that's really missing the point. The numbers are horrible even if they are only 50% of what's listed. With a declining energy base neither the larger nor smaller amount of debt will be paid back.
In other words, quibble all you want with the numbers but I have no interest in doing that with you. Our economic future is sealed, in my view.
You're quite right. Early in the process the banks close and any money you thought you'd get out would be trapped, likely forever.
First in line in a bank run and you'll get your money. If you're in the middle of the line, forget it. We tend to trust our banks in the Western democracies but this will soon change.
Remember IndyMac?
Federal regulators seize crippled IndyMac Bank
A run on the Pasadena thrift ends in one of the biggest financial failures ever. Doors will reopen Monday.
http://articles.latimes.com/2008/jul/12/business/fi-indymac12
There will come a point when the doors will not reopen.
It is a myth that the banks have even 10% deposit reserves. That's only for personal accounts and they play games with even that low amount, like checking account sweeps.
The system couldn't be designed better for failure during contraction. It's a mess all the way through.
They don't have your money.
The sooner you internalize and plan for that the better off you will be.
IndyMac wasn't actually a bank. It was a "thrift", supervised by the "Office of Thrift Supervision", as the article says. "Thrift" was the new name for "savings and loan" following the savings and loan debacle in the '80s. However, while the name was changed, the behavior did not - the foxes stayed in the hen house.
Most of the thoroughly corrupt home lending in places like California was done by thrifts like IndyMac, Countrywide, Golden West and Washington Mutual supervised by the toothless Office of Thrift Supervison.
Little of the corrupt home lending was done by actual banks supervised by the Federal Reserve and the Office of the Comptroller of the Currency.
yes, but how exactly does that change what I'm saying?
You are failing to distinguish between the risk levels of putting your money into different types of institutions. For FDIC insured deposits you will always get your money back up to $250K. The government will simply create it. This may cause inflation, but you will get your nominal deposit returned to you.
For deposits above the insurance limits, you are much safer in large commercial banks supervised by the Federal Reserve and the OCC than in thrifts (aka S&Ls) supervised by the OTS, state-supervised banks, credit unions, or other non-bank institutions, such as mutual money market funds.
I agree with Andre, that there will come a time when 'Federally Insured' won't mean much.
Ashes, ashes, we all fall down...
Merrill,
I think we always need to remember the caveat used by Samsam Bakhtiari for his Four Phases of Transition
I don't know why we should assume any rules enforced today will continue to be enforced a year from now.
Why would the government stop ATM cards from working and stop ACH and wire transactions from completing?
It basically costs the government nothing to keep these running. They don't even have the cost of printing paper currency and minting coins. They just have to tell the computers to keep on processing the messages.
"Why would the government..." has usually been followed by "no one saw that coming" the past few years (and in some cases of financial fraud, the government still does not see it coming).
What if congress audits the fed, or stops their monetizing of newly issued bonds? What if banks are allowed to fail ?
Now that we are entering The Transition, I don't know that I would count on any of the old rules applying much longer.
Exactly.
I don't expect your assumptions to be correct as time passes and I do believe there will be discontinuities in the system that you aren't accounting for.
While there may be some newly-elected members of Congress who would precipitate a collapse, the "old bulls" in the House and Senate are mostly part of the establishment. They would go along with whatever it takes to keep the system running.
If they didn't, the president would invoke his emergency powers, which are vast, since they envision emergencies including thermonuclear war.
The national security establishment would not willingly see the nation collapse, although they might screw things up inadvertently.
"For FDIC insured deposits you will always get your money back up to $250K. The government will simply create it."
Recall that in normal times, the money you get back is from a premium charged to all banks that are FDIC insured -- that is, it's a government-run, but not government-funded, insurance program. The government guarantees that benefits will be paid in the case of a wide-spread financial crisis like the current one, when the FDIC trust fund is insufficient, but that's not the normal operation. Note that banks are screaming because the FDIC has increased premiums to try to avoid the need for government dollars to pay the benefits.
At least IMO, the real criticism to level at the FDIC (and Congress, who creates the rules) is that the premium structure looks nothing like a real insurance program would. Any private insurer would insist that the banks open their books (to the insurer) so that they could make a legitimate estimate of the risks the banks were running. If such were the case, things might have played out quite differently, since the big banks would have been being charged very high premiums for their deposit insurance.
FDIC Regulations & Examinations
Office of the Comptroller of the Currency Examinations
Federal Reserve Examination Manuals
Welcome to the Federal Financial Institutions Examination Council's (FFIEC) Web Site
Commerical banks insured by the FDIC are examined. Perhaps the insurance premiums are too low, but they have been adjusted upwards. There is considerable political pressure to keep them low for small and regional banks, some of which are the most risky due to lending on commerical real estate and to real estate developers in particularly depressed areas of the country.
Congress would not allow Sheila Bair to increase the premium as she forewarned about the sub-prime crisis. The law that extended FDIC insurance coverage to $250,000 forbid her from increasing the premium to cover the higher level of coverage. Congress was pandering to the bankers. Another fault was allowing some banks to become larger than the FDIC's fund could cover in the event of insolvency.
If the Saudis have the excess capacity they say they have, then why don't they make their records and findings completely transparent? They want us to believe that they have plenty of oil to discourage alternative energy investments. Therefore, if they are telling the truth, transparency makes perfect sense. Without transparency, the doubts will persist.
At the end of the day, and even with the great work by people like WestTexas, there is this black hole of uncertainty, at least for me.
I would like to see a plausible explanation that reconciles plenty of excess capacity with lack of transparency.
Even if they do have plenty of capacity, however, there are plenty of reasons to import less of their oil.
Ranking oil supply disruptions:
http://www.businessinsider.com/chart-of-the-day-oil-supply-disruptions-2...
Joe Wiesenthal takes a lot of flack from commenters, many times justified. But he just keeps posting.
The trouble with this chart is that the world has changed since 1978 and the Iranian Revolution.
It is a different time and situation than 30 years ago. Alternative sources of oil are not as plentiful nor as cheap.
So a much smaller amount of crude gone missing is likely to have a larger effect on prices.
Comparing nominal amounts of crude over long periods of time without taking into account crude demand, supply, availability and price is wrong.
I have learned through bitter experience that it only takes one unit of excess demand or supply to move a market. This is because the imperative of markets is to clear at a given instant. This is accomplished through price.
And physical demand and supply are not as important as market participants perception of the future situation. A small supply disruption can result in a big price change if it is perceived that the supply can not immediately be increased and needs to be rationed.
This is now going on in the corn market and perhaps also in the oil market.
Indeed the world is a different place. We have a strategic petroleum reserve to soften the blow from disruptions in oil supply that we did not have in the 1970's.
725 Mbbl is about a one-month supply. It will certainly soften short-term disruptions but not much help with long term shortfalls. My fear, and expectation, is that there will be political pressure to draw it down quite early-on to offset minor disruptions like Libya which threaten price rather than later disruptions which threaten to create "Sorry - no gas" shortages.
To me, "strategic" means a store you COULD draw on for a war or such to reduce the potential to use crude supply against the US as a weapon. As soon as we start using it for minor disruptions it's merely a tactical backup, and any strategic value will be lost.
Not that we don't need more short-term reserves such as Cushing. JIT doesn't cut it anymore in any tight market, IMHO.
The SPR can not be drawn down at 21 Mb/d. Since the maximum drawdown rate is 4.4 Mb/d, it provides protection from disruptions similar to Libya (~1.6 Mb/d). Since other OECD countries have SPRs, the maximum global drawdown rate is larger. If Saudi Arabia's oil exports suddenly halted for whatever reason, the U.S. SPR would not be enough to compensate.
More detail about the drawdown rate:
Don't have time to find it now, but I remember a post in the past 10 days or so that KSA would ship from their stored oil and call it new production. I don't know how much they have stored, but 700,000 bpd could not be sustained for long in any case, so I guess we will be seeing the truth of that sooner than later.
I would not be surprised that the could do that much now, though. In 2008 they added more than 500 wells, and could not add even 500,000 bpd (the volume they claimed they would add) to production from all of that. Today demand is still a bit depressed, and additional wells could well have put their capacity up to it. Again, we can doubt that actually producing that much could be sustained for very long without accelerating their depletion rate. Which is why they have delayed so long in doing it, and will no doubt stop quickly, either by design or by impossibility.
Any other thoughts about that 700,000 pbd figure? Is that their absolute max out? How long can it continue?
Craig
KSA has learned that they don't actually need to ship any oil. They just promise to ship more oil, and then explain later that the market is well supplied.
According to zFacts.com. the National debt is at $14.287 trillion today and will reach the debt ceiling by Friday. If Freddie, Fannie, FHA, FED and other toxic debt that was socialized so Banksters and Wall Street could privatize profits were included, an additional one or two trillion would have to be added to the National debt. Further pressure on the dollar will be the growing trade account deficit as oil and commodity prices move up. As gasoline,food, transportation costs move up, most of GDP growth will be due to the unreported inflation as consumers are restricted in discretionary spending. As 40% of present GDP spending now comes from government spending, how much will a 5% haircut across the board affect the economy
Don't forget private debt, which doesn't get the attention the public debt does. However, it too is out of control and will soon be completely unmanageable.
This debt gave us the Illusion of Prosperity, as all credit does. Now we must pay for our ignorance and lack of foresight, and pay we will.
This is US debt, btw.
Private debt appears to be in control -- dropping steadily of late. Poor bankers!
Yes, right now. That's why I said "will soon be completely unmanageable."
In part that is because in times of fiscal crisis the public often takes on the debt formerly owned by the private sector, which we have seen in our situation. Note that the public debt ticks up just as the private debt ticks down. Some of that is paying the debt off but much (perhaps most, I don't have the numbers off the top of my head; Keen has the numbers for the curious) of it is a simple transfer to keep the system solvent. Only the public purse has deep enough pockets to keep individual private players from failing. This can continue for only a little while, of course.
A simple (but still very accurate) way to look at it is like this. A little bit of debt and the economy is like the table below, stable:
But add too much debt and the economy becomes "top heavy." Small changes start to have outsize impacts, like a few percentage points rise in the interest rate. When debt is small compared to the overall economy a few percentage points have little impact. But when the debt is $50 trillion, a few percentage points can topple the economy.
As Keen points out, the debt starts "steering the ship" and the productive economy loses its stability, much like the unicycle in the slide below:
BTW, it is insight like this that is completely missing in the worldview of people like our beloved, yet almost completely wrong, Nick. That's why he makes assertions like the following:
Only someone who has no clue of our current situation could say something so completely and utterly misguided.
Please post images that use less bandwidth. A 172 kB image uses 172 kB of bandwidth to download, even if it is displayed scaled down.
Shrink images to 50 kB max *before* posting them. Make them clickable to link to a bigger image.
(I am on dial-up and TOD pages are unnecessarily HTML-intensive. Even without images they are bandwidth hogs.)
They are big this round, my apologies. I'll shrink them next time.
Though if your browser cache is working properly, they should come down only once.
At 56K, each 172kB image should take ~40 seconds to come down — but only the first time.
http://www.ssmedia.com/utilities/calculator/
I make it 25 secs. Whatever. It's just the page took longer than usual to load, and I got annoyed. Please continue to post images.
I thumbnailed them for you. They were awfully huge for the amount of information in them.
Thanks, Leanan. Before posting them again I'll do some compressing, too.
Government needed to take the place of debt creation to stop in from collapsing. Everybody simultaneously saving and not taking on debt will hasten collapse. An internal contradiction of a debt-based monetary regime. It's a grow or die system on it's deathbed,
One take on the US and its suicidal monetary policy:
A trip to Hell...
There were four people on a panel on CNBC discussing the stock market. On the far left was a youngish guy, bullish on the market, the two CNBC analysts in between that were rah rah bulls and the 4th person on the far right that was bearish. The rah rah male CNBC commentator interrupted the bearish guy by pointing out he had some snow on top, meaning gray, older, maybe more cautious because of his age. What does that have to do with his argument against this market? Either his reasoning makes sense or it doesn't.
I for one think the market has gone where no market should go with the debt situation and devaluing dollar (as you pointed out in your post Ghung) where they are. The Dow is at about 12200 and the high before the shake down in 08 was 14500. That's not much of a difference considering how tepid this recovery is. I'm expecting a big drop sometime this year, maybe after oil hits 130.
Federal Reserve would remain hell bent on devaluing the U.S. dollar.
Technically the Federal Reserve puts out Federal Reserve NOTES.
Like technically the US of A is a Republic.
At the point where the rest of the world won't accept a VCC or VGG state or small green pieces of paper in exchange for goods/services, it won't matter to the US of A any of those technicalities.
A fascinating, and at the same time frightening, insight. Thank you.
It is as if, if everyone suddenly acts prudently and wisely, we are now certain to fail.
The irony is - well - overwhelming!
Craig
Actually, bank lending is going up somewhat. However, banks provided only about 1/3 of private debt. The other 2/3 were provided by insurance companies, pension funds, mutual funds, hedge funds, sovereign wealth funds, hedge funds, private investors, lending companies, government authorities, and other non-bank entities.
Private debt is falling only as public debt increases. One cannot be sure that private woud fall without public injections of cash.
Maybe folks are gaming the system using government money to pay down their obligations.
One way we are gaming the system is massive tax cuts which allow people to pay down their credit cards. of course they are taking the money from the treasury to fund the cuts.
Of course, I have also heard that private debt is just being destroyed by forgiving debts of people that cannot pay it back.
Aangel, My gut feeling is that since American domestic oil peaked, and the U.S. became a net importer, America has been living beyond its means. Like a retired pro athlete who keeps collecting cars after retirement, not realizing the party is over until he is broke. America was once the KSA like oil supplier to the world, but we are not any more. We spend money and have a living standard like we are, like physical resources don’t matter with our central banking and our big military. The bill is coming due. Thanks for the graphs!
Mark
You're very welcome, Mark.
It will cause a great deal of misery for a lot of people.
Self-described fiscal conservatives will be cheered by this suffering as to them it is Christian.
Government debt will grow as government spending cuts reduce demand and leads to even less investment.
Investors, including those who are sitting on the trillion plus in unemployed profits currently held by US corporations, will have even less reason to look for opportunity in the US and will try to get in on the growth occurring in countries with more enlightened economic policies. They'll continue to claim that socialism is crippling the economy as they try to reduce whatever remaining taxes affect them, their executives and shareholders. A coalition of the self-important, the ignorantly opinionated, the morally righteous, and the empathically-challenged among the underclasses will march under their banner.
In the meantime, a few people will continue to try to inform the public that the economic problem at this time is neither the deficit or the debt, but idle savings.
Thanks, toil. It seems to be a case people don't want to hear.
I think that is a bit of an exaggeration. Cut spending by a dollar, and the feedbacks from the economy will make the governments balance sheets, by less than the dollar saved. I think if it were otherwise the economy would be violently unstable. But it is surely a receeding horizon. But those proposing such cuts aren't actually interested in cutting the deficit, they are more interested in gutting government and helping the plutocrats. Or in the case of Wisconsin, gutting the unions.
TOD is filled with excellent commentary today.
Government debt will indeed increase since payment of such depends on tax receipts of some sort (call it fees or taxes, it is all the same). If the economy fails, those receipts will fail as well. Then, we can look at more spending cuts, fewer jobs, more significant decreases in revenues, and a depressed economy. including the worst of deflation and the worst of inflation. True living expenses may rise, as discretionary costs decline. Since social programs like Social
security, as well as private pension plans use the 'official' cost of living, and that is spun by the banksters and the corporatists, the lot of the elderly, the poor, and what is left of the middle class can be projected to become untenable. At which point we are just like Egypt, Lybia, and the rest... just another third world country with widespread riots, civil unrest, and private military shooting at the citizens.
Any suggestions how to stop this circus before the tents are raised?
craig
San Jose police ground helicopter in search of savings
Between local budget crises and expensive oil, I think this may become a popular thing to axe.
At first glance this excerpt seems to indicate that they are paying cops 200 large in San Jose.No wonder they have budget problems!???
Probably 4 cops and 4 observers, and their benefit packages sent back to patrol...so more like $125,000 each. This still sounds a little high, but in my experience, when politicians talk about savings from cuts, they're usually exaggerated.
Lloyd
$125K would be total cost of compensation, which includes taxes that roll back around into the system, health insurance, retirement plans, and what-all else.
What most people would consider their salary is probably well under $100K.
Even at the $250K each (assuming that they fly solo, so only four people total), the actual salary is probably around $150K, which for a chopper pilot is probably about right, it is a high-skill position and should pay better than the average beat cop.
There is also dispatching, hangering, depreciation and interest, communications gear, insurance, etc.
Plus, $125 K/employee is not so large if it is the fully allocated employee expense, including all health and pension benefits, employee supplies, occupancy, training, vacation allowances, allocated costs of management, allocated parts of other departmental expenses.
Politicians will also cut those things that are most visible and impact the public the most to justify crying for more money. I expect they could save as much at their own HQ without affecting public service at all.
NAOM
Until some cute little (white) girl is lost, and not found in time!
What we see from the decision in San Jose to ground a helicopter is a trend that will continue away from airflight. The Shuttle is being mothballed, funding for satellites is being cut, fuel for jets is increasing which reduces number of flights, etc.
Flying of any kind is expensive and as the price of oil rises and the economy continues to shrink there will be less flying. Our first major sign of entrenched post peak oil will be the stoppage of most flying. That will be a strange transition but very telling.
The Shuttle is being cut because maintenance is becoming impossible, no parts available and the companies who made them long gone. Not to mention the only way to inspect/replace all the wiring means disassembly of sections not built to be disassembled. The worst satellite cuts seem to be in the climate monitoring area due to political ideologies.
NAOM
Actually, those utility users of airborne surveillance who are smart are moving towards UAVs.
Little required to fly or use them and much cheaper on the fuel and maintenance.
I expect UAVs would be shot down around here. Too many growers.
Police raid at the last reported GPS position. You could use some really cheap UAVs, no instrumentation, just a GPS phone and when it stops squawking go take a look.
NAOM
EDIT: Given the cash the cultivators tend to carry, seizures could fund the replacement UAVs.
An O-4/Major aviator in the USAF will gross ~ 100K/year...Base pay, 'Flight Pay', housing allowance, 'food allowance', etc. This does NOT include the free medical and nearly at-cost groceries at the commissary, and the defined benefit retirement etc, and some other stuff I am forgetting about.
Granted, a municpal chopper driver/observer etc likely doesn't make as much, but the estimates you all have made here for their compensation sounds plausible.
Helicopters are VERY expensive to operate.
I did a quick search, and my quick estimate is that DoD operates ~ 4,000 helicopters.
I found a source that claimed we operated ~12,000 at the height of the Vietnam War.
Fascinating, I happened to drop in on my local town hall meeting a couple of weeks ago and the chief of police and mayor were talking about purchasing predator drones for surveillance work, my guess is, it's cheaper than flying choppers... Ironically some in the audience were objecting on the grounds of invasion of privacy. As if choppers hovering over your house with spotlights were any less obtrusive. Methinks the people have lost all sense of perspective.
In the Independent in the UK
http://www.independent.co.uk/news/uk/politics/move-to-raise-motorway-lim...
Sometimes I just can't believe how stupid we are, and then I see the evidence before my very eyes!
Probably just the economic impacts (so to speak) of the increased number of accidents, providing more healthcare and insurance money-mobility.
Our State is working on a new form of 'Environmental Impact Statements', using the Shotgun and Flamethrower approach to Woodland Management and Job Creationism.
I wish it were something so banal as the actual and incidental cost of accidents.
The argument is that with a higher speed limit, much less time is wasted in travelling, and as we all know time is money. A recent call to drop the speed limit (ala 1974) due to the rising cost of crude was met with the opposite argument. Even worse, it was assumed that this previous attempt had caused the the economy to shrink - nothing to do with the price of oil then?
Sometimes I just feel like crying.
Move to raise motorway limit to 80mph 'will boost economy'
Did authorities in the UK not notice that North Sea oil production peaked in 1999, and is now in a state of steep decline?
Perhaps they should plan toward having the British population drive much less in future, and forget the idea of having them drive much faster.
I don't think driving faster is going to save them from the economic consequences of rising global oil prices.
Doesn't this just remind you of the old joke about the (insert favorite demographic to mock here) person driving faster and faster because they are almost out of gas, so they want to hurry up and get to the gas station before they run out?
Doesn't this just remind you of the old joke about the (insert favorite demographic to mock here) person driving faster and faster because they are almost out of gas, so they want to hurry up and get to the gas station before they run out?
It's not just a joke - people actually do that kind of thing. One of my sisters once told me that she almost ran out of gas one time, so she drove faster so she could get to the gas station quicker. She couldn't understand why I laughed at her. She also leaves messages on my answering machine asking me to call her back and tell her if I don't get the message. There's a certain essential fuzziness to her thinking.
Some people are just unable to connect the dots on subjects like this. Unfortunately, so are some governments.
Or have enough velocity to coast further once the engine cuts out. Of course physics doesn't work that way. But, in one sense it is logical. Most probably they will reach the gas station, so the only thing they will suffer is the distress of not knowing if they will make it. This strategy reduces the time of uncomfortable uncertainty.
I have to contrast that with the action the Spanish goverment are taking - as of 7th March the motorway speed limit is reduced by 10 kph to 110, at the same time commuter and short distance rail tickets prices are cut 5%. This due to the import bill for fuel.
Fernando Alonso is not impressed "I don't support this measure. To reduce fuel consumption there are other measures that are much more effective than this one. At 110 kilometres an hour, it is even difficult to stay awake," .
I guess we could start by cancelling the entire F1 calander for 2011. Or for eternity.
Yeah, I wonder how good Mr. Alonso's siesta would be if he were swinging in a hammock while the wind was blowing at 110 Kph... What a moron!
Re: 7 Reasons Crude Is Going to $80/Barrel
There are enough popular misconceptions in this that going through it point by point is worthwhile.
1. Crude inventories are up
Crude inventories are up in mid-continental North America because Canadian and North Dakota production has increased and there is insufficient pipeline capacity to take it to any coast. This means that the price of WTI at Cushing, Oklahoma is depressed because the tanks in the huge tank farms are full of oil, but it does not mean there is surplus production in the rest of the world.
2. The global economic recovery is slowing
Not really. The US and Europe are slowly recovering from their deep recession, but China and India are growing like gangbusters. Chinese demand for imports is up dramatically from last year, and China is perfectly capable of ignoring "global" economic downturns - it ignored the last one.
3. Geopolitical pressures should blow over
Or not. The political blowups in North Africa are growing and spreading, not blowing over. This round of coups-detat and revolutions looks different from previous ones. It's area-wide and driven by the fundamentals of overpopulation and higher food prices.
4. Geopolitics cannot drive the oil price in the long run
It's not geopolitics that are driving it, it's geoeconomics and geology. The big spike in 2008 was caused by excess demand in the US and Europe and the inability of OPEC producers to meet that demand. The only way that supply could meet demand was by demand destruction caused by economic collapse. This round of price increases is caused by excess demand in China and India and the inability of OPEC producers to meet it, once again.
5. Oil is historically overvalued compared with natural gas
Or more accurately, natural gas is undervalued because of excess new production from shale gas reservoirs. The problem there is that oil and gas are not fungible. You can't run your car on natural gas, at least without a lot of expensive modifications to the car's fuel system and the refueling stations.
6. The U.S. dollar is stronger than in 2008
It's only stronger compared the Euro and British pound. Try comparing it to the Canadian and Australia dollars some time. The big problem is that it is weak compared to the Chinese yuan, and the Chinese are the ones buying up the world's oil supplies. They have $2.5 trillion in foreign exchange reserves.
7. Oil faces significant resistance
Again, he's talking about the price of WTI at Cushing, and to reiterate, the problem is that the tanks at Cushing are full and more oil is coming in from the north. The oil there is only facing resistance from the fact it can't get to the coast. Louisiana Sweet oil is $20 more expensive than WTI.
The bottom line is that there is nothing to stop another price spike to over $140 per barrel. We're already very close with Brent trading at $112. Another political blow-up in a major oil producing country could put it over $140 tomorrow. The only way to get it down would be through demand destruction caused by economic contraction.
Checking the various PADDs 5 is flat to down, but overall the US seems to be on a trend that started back in 2002.
Jiabao says he wants to trim things a bit: China to slow GDP growth in bid to curb emissions | Environment | guardian.co.uk
They've already passed some austerity measures, like limiting license plate sales in Beijing, in order to take some of the steam off. Dunno what shaving off 1% would entail; growth figures for demand last year were ca. 1 mb/d. "Only" 750 kb/d?
Checking the various PADDs 5 is flat to down, but overall the US seems to be on a trend that started back in 2002.
The trend started in 2005 and is DOWN.
Canadian consumption is also down since 2005, although Canadian production is up. Hence, Canadian exports to the US are up significantly. The trend of increasing Canadian exports to the US started about 1981 and is ongoing with no end in sight. Not shown in the graph is a substantial increase last year.
I was talking about inventories, not demand. Your readymade graph from EIA would suggest a secular trend up in either case, too, unless you think demand has reached an asymptote with the current local peak in 2005. 2010 is already a bounce back from 2009, so unless you can ram through bona fide increases in automotive efficiency - not as simple as you might think - or convince people to stop having children or immigrating here, US petroleum demand will bounce back tout suite.
Inventories are more or less irrelevant to the picture. Millions of barrels of Canadian, Texan, and North Dakotan oil are piling up in the vast tank farms in Cushing, Oklahoma because there it is no way to get it to the coast. Meanwhile, the coastal refineries are short of oil because of the increased demand from China, India, and other developing countries, and the failure of OPEC and North Sea producers to meet that demand.
The key thing is that US demand has been in steep decline since 2005, and given the high fuel prices, demand is going to continue to decline. A lot of people just can't afford to drive as much as they used to. Some can't afford to drive at all. If Joe Sixpack can't afford gas for his Ford F-350, the only thing he can do is stay home and drink (which is why I invested in liquor stores instead of gas stations).
Increases in automotive efficiency are easy to achieve - just send the big gas-guzzling SUV to the junkyard and buy a Toyota Prius or similarly fuel-efficient vehicle. Or buy a new bicycle if you were forward-thinking enough to buy a place within riding distance of work.
Look at the EIA data for demand, it has been rebounding since Dec '09, not maintaining some permanent downward trajectory. You're welcome to build a forecast around the US being in permanent recession, curbing demand in the process; otherwise we will regain old heights within a few years, contrary to all the forecasts of Peak Demand.
LDVs are still being sold; fuel efficiency is still just one item on a list of priorities people have for car purchases, along with huge irrelevancies like cupholders or color of trim. Did you read my link? It's worthy reading. Getting the automotive industry to do the gov's bidding involves more than simple regulation. MPG is a misleading benchmark, the current spate of increases won't have a commensurate effect to what happened in the 80s. Also our vehicle fleet is much larger now, hence new cars have less impact on fleet efficiency overall. Add 'em up and the latest CAFE regs won't send gasoline consumption down very far.
And of course we use petroleum for more than passenger cars. A huge part of the crash in demand 30 years ago was excising use of oil in power generation, which hardly anyone seems aware of now. I wrote a whole guest post for TOD on what transpired then if you're interested; an academic paper came out a couple years back based around the same notion - that much of the low hanging fruit has been picked.
People are responsive to price signals, even Americans. If you can't afford to buy fuel, you just have to stop buying fuel. How you do that is up to you, but it's not negotiable that you can't buy fuel. Nobody's going to sell it to you.
But realistically, Americans can use much less fuel than they do. They don't have to drive giant gas-guzzling SUV's and live 20 miles from work and 20 miles in the opposite direction from the nearest shopping center.
Americans may not like it, but they have to change. They are not going to get a choice in the matter. The oil producing countries are not going to offer them a choice. OPEC can't produce the oil that Americans want to buy.
How they manage this problem is something for Americans to solve. So far, they have solved it by trying to ignore it and hoping it will go away, and that hasn't worked at all well.
Hardly any American power companies burn oil any more. They are responsive to price signals, much more so than private individuals.
I agree here. Even taking into account our built suburban, sprawled environment, Americans use far more oil than they need to.
The key is thinking about it. Americans aren't used to thinking about it, but they've started to and the process will continue.
Why do I need to drive to this dinner party to mingle with people I dislike? Why do I need to drive 200 miles to visit Aunt Betty for the 12th consecutive Thanksgiving? Why I am driving this Suburban when a Civic will do? Why should I go to the NASCAR race when I can spend my weekend gardening?
All you need to do is ask the question, that's how the tsunami starts.
Of course, this has a limit and ultimately it will be reached. Maybe not soon, but it will.
That's why I plan on leaving this country. Not because of anything 5 to 10 years down the line, but I'm thinking even beyond this...I'm thinking 15, 20 years down the line when people are stuck in suburbia with their Priuses, prisoners in their home, and there's no more demand left to cut. That's the endgame that I keep my sights on.
There is certainly a lot of fat in the system that can be trimmed. But it is not going to be easy. We can't push the houses & businesses closer together. And we can't make the SUVs that are already out there (and still are selling) get high MPG. There is already a lot of sunk investment. I call it "the gas guzzler bubble". There are going to be a lot of cheap SUVs & pick-ups available a few years down the road.
But things are already starting to change. And when we hit $4.50/gallon, things will begin to change a bit faster. And even higher prices will move things even faster. But it is going to be an ugly transition.
It's going to be difficult for a lot of Americans because many of the far-flung suburbs are going to be abandoned (they'll look like Detroit does now) and many of the big SUVs scrapped.
Sunk costs are irrelevant when people can't afford to live in the houses and can't afford to drive the SUVs. They just have to walk away from them, and it becomes a deadweight economic loss for them. Americans experienced a lot of that in the last few years.
The process of abandoning distant suburbs has started, but the problem of suburban poverty is also growing. There are a lot of newly poor people living in the suburbs these days compared to the central cities, and the suburbs are not at all equipped to cope with them.
With a little forward planning, walkable suburbs could have been built out at a much higher density and people encouraged to buy more fuel-efficient vehicles through higher fuel taxes. Since American oil production peaked and started to decline 40 years ago, there was lots of time to plan before the rest of the world went through the same process.
However, unlike other countries, high density suburbs and high fuel taxes seem to be a no-no in the American political system. The result is that the American people will have to adapt retroactively rather than in advance, and it will be a bad experience for them, as if its not already.
Then Joe Sixpack starts to drive again/more. In most European countries gasoline is much more expensive and in countries with not so high unemployment people still drive like crazy as if there is no tomorrow, and this even with only moderate efficient cars, not Prius like cars. In the U.S. it is more because of high unemployment that gasoline use is down. Without work people don't buy a more fuel efficient car. If they can, gasoline use will start to rise again but this is contradictory with the oil export crisis.
In the U.S. it is more because of high unemployment that gasoline use is down.
Well, that's what demand destruction is all about. If people don't reduce their gasoline consumption voluntarily, then the economic system will reduce it for them by putting them out of a job so they can't buy gasoline. It is not a voluntary process.
A better alternative is to buy a much more fuel efficient car, reduce your gasoline consumption voluntarily, and keep your job.
Rocky,
I beg to differ. I believe that all of the points listed in the original article are more or less valid. I believe that one of the biggest drivers will in fact be 5. The world is awash with natural gas and more production is being added all the time - The economy will most certainly be modified to run on natural gas as long as the current price differential remains in place. Also. The CURRENT geopolitical pressures will most certainly blow over at some point and will almost definitely lead to an increase in crude outputs from the region. As Iraqi and Brazilian oil production increases this could even lead to a supply glut. Although I don't particularly expect it I wouldn't be in the least surprised if oil prices fall back to the USD 40 level some time this year, even WITHOUT a complete economic meltdown. I also disagree with you with respect to 2. There are most definitely signs that the economic growth is slowing in Asia and in China in particular.
Let's see what happens but I believe that it is far from improbable that oil production (crude + condensate) as well as total liquids will make a clear jump up from the now famous "bumpy plateau" and that oil prices will level out at 50-80 USD/BBL. (Short term of course we could see some massive spikes in prices, particularly if there is real unrest in Saudi Arabia - which is of course a very real possibility. But unrest doesn't reduce reserves it merely delays production!).
The world is awash with natural gas and more production is being added all the time
The US has a surplus of natural gas at the moment, but it is far from being world-wide. UK North Sea natural gas production, for instance, is declining and the UK is having to import more and more natural gas. Saudi Arabia is also short of natural gas and is having to burn oil in its power plants to compensate. This is cutting into Saudi exports of oil.
The economy will most certainly be modified to run on natural gas as long as the current price differential remains in place.
I don't see any sign of cars and trucks being modified to run on natural gas in the US and Europe. It's a hypothetical solution. Someone has to do something to make it reality or it won't happen.
The CURRENT geopolitical pressures will most certainly blow over at some point and will almost definitely lead to an increase in crude outputs from the region.
I don't see how the geopolitical pressures will blow over when the underlying problem is overpopulation and food shortages in countries in North Africa and the Middle East, and the population of those countries is increasing rapidly.
As Iraqi and Brazilian oil production increases this could even lead to a supply glut.
Increases in Iraqi oil production are dependent on the ongoing civil conflict coming to an end, and I don't see that happening soon. Brazil may increase production, but that will take a long time given the technical difficulties of developing its offshore discoveries. The essential problem is that the output of many other producers (notably Mexico, Venezuela, and the UK) is in decline or about to go into decline, and it is doubtful that Iraq and Brazil will be able to compensate.
There are most definitely signs that the economic growth is slowing in Asia and in China in particular.
There's not much sign of growth rates in China declining, and China has been growing on an exponential curve for two decades. The problem is not so much the growth rate as the growth volume. The volumes are becoming very large. China was a net oil exporter a few years ago, and now it is becoming a very large net oil importer.
I believe that it is far from improbable that oil production (crude + condensate) as well as total liquids will make a clear jump up from the now famous "bumpy plateau"
I don't believe in the "bumpy plateau" hypothesis. I think it is just statistical noise as the bell-shaped supply curve peaks - before it starts to go into steep decline.
Sounds like hedging and uncertainty disguised as run-on negative logic. My attempt at a translation: "I am not sure but it is probable".
Next time you should reference a model or some analysis and make a more precise claim.
"7 Reasons Crude Is Going to $80/Barrel" from Seeking Alpha gets my nomination for most clueless article on today's drumbeat. I like it because it doesn't read like the cornucopian trash we usually get. You get the impression that the author has been sitting in front of a computer staring at charts for way too long, and has lost all connection to external reality.
Part of his problem is treating oil as if it were a stock (equity) instead of something that actually gets consumed (and people have a need for other than as an investment vehicle).
Yeah, I think you nailed it.
I thought this statement, from the drumbeat article Just how vast are Saudi Aramco Reserves?, was pretty clueless:
You read it right - I checked the original article - it said 267 barrels, not 267 billion barrels. Whoops! The demise of copy editing, eh?
It's just parroting Lynch's NYT Op Ed. Critical bits aren't carried over into the next version, sort of a pundit version of Telephone or Chinese Whispers. "Discoveries peaked in 1935...Hub Art predicted the USS would peek in 1945...shale oil has fewer btus than packing material..." Well, that might actually be true of shale. And it's actually comforting that someone isn't just copy/pasting articles whole hog. Sort of.
I will wait to pass judgement until some time in the middle of the year... I very much think Seeking Alpha could be right and you could be wrong. Anyway. Let's wait and see.
Nordic Mist -
I saw what you wrote upthread. I think we won't see oil at $80 without another round of demand destruction and economic disruption. But, yeah, we'll find out for sure if we just wait. In fact, I hope you're right and I'm wrong.
Peace.
Re: Secret military mission into Libya
Anyone that presently thinks that oil production from Libya will quickly return, once the conflict is resolved, should consider the large numbers of foreign workers who are being evacuated. Surely, a large fraction of those who are leaving are the people with the necessary experience and training to run the production system. Without their expertise, things won't get back to where they were for quite some time. Then too, without the guards in place to keep the looters away, it's difficult to predict what will be left of the equipment...
E. Swanson
The US seems to wrong-footed at every turn:
- late to denounce crackdowns
- slow to evac citizens
- unable to provide capable ships for evac (what would we do if we wanted to LAND some troups?)
- apparently behind the curve with extraction of stranded workers
I still hope to hear that the US workers were either extracted capably by their companies or by special forces....rather than left to work their way out themselves.
Are you sure your not confusing S and K?
If it's any consolation, that seems to be a common cry from most European countries too.
It appears that most governments were expecting a relatively quiet revolution as the preceding few had been. When it all went a bit pear shaped they were wrong footed and then had to work out how to get several thousand people out of a war zone.
Am I imagining things, or was the popular story at the time around when the 'Lockerbie bomber' was released and Libya 'gave up' chemical, nuclear, et al weapons (yes, chronologically I think that might be backward, but still...), was that the country would begin to see massive increases in petroleum production soon.
Seems this is the two steps back from that one step forward?
Schizophrenia.
That is what the business world is going through right now. I'm not going to link them all, but if you read the top stories on Bloomberg, you must feel for them.
going up,
"Pent-up Demand Boosts U.S. GDP Outlook, Economists Say"
no down,
"Pending Sales of U.S. Existing Homes Fell 2.8% in January"
no wait up,
"Auto Sales May Approach `Clunkers' Highs as U.S. Rebounds"
on and on...
How about sales of homes down 11.2 percent from December to January, and more than 18 percent year on year.
Housing market is presently down 80% from 2005!
http://money.cnn.com/2011/02/24/real_estate/january_new_home_sales/index...
But, we are in a sustained recovery. Just ask Wall Street Banksters and the US Department of Contempt for Public Intelligence.
Craig
Re: Oman
In the last drumbeat somebody doubted whether the unrest in Oman would actually amount to much. Well, here's what As'ad AbuKhalil, who is extremely well informed about all things Arab, writes on his blog today:
http://angryarab.blogspot.com/
We'll just have to wait and see.
Oh, great, Marxist Muslims - the sum of all fears for the right.
Melburnians face rocketing water bills to pay for desalination plant
Melburnians face at least a doubling of water rates. Put in terms of a family budget, for me that would be the equivalent of a 50¢/gallon rise in gasoline prices (assuming consumption of 1000 gallons of gasoline per year and a yearly water bill of $500+). Oil prices get all the headlines but what of the impacts of rising water rates on economies?
On the positive side, rising rates are likely to cause Australians to curb their wasteful ways. At 500 litres per person per day, they have the second highest consumption in the world after the US:
http://www.data360.org/dsg.aspx?Data_Set_Group_Id=757
Markets do work and consuming 500 litres per person per day is what I would call discretionary consumption. People living in an arid environment should be expected to conserve water.
Jon
Hi Jon,
Five hundred litres per person, per day, is obscene. Our two person household uses, on average, 110 to 120 litres/day –– 55 to 60 litres per person -- and we both shower daily, run the dishwasher, do multiple loads of laundry, flush toilets, bath the dogs, power wash the cars and so on.
BTW, the cost of the 10 m3 of water consumed over this ninety-one day billing period was just $4.13.
Cheers,
Paul
When we purchased our house, I found out that I'd also received grandfathered irrigation rights, as such, I have two pipelines coming to my house (semi-urban) - one that comes to the house by way of meter, and the other, directly to my sprinkler system - not metered - which waters about 3/4 acre.
No-one has any idea how much water I use in a summer. If I choose the "healthiest" setting, I'll mow at least once per week, but I usually tone it down from dark green to a little lighter color and mow once every other week.
Our household water bill is about $12/mo.
Rainwater collection and usage for toilets, etc. cuts the water usage significantly - such that they could happily double the water charge and I'd hardly notice.
If you haven't got it, its time to install now.
Is that 500liters domestic consumption, or does it include agriculture? Also of course, if you are going to keep lanscaping alive, in Halifax I bet you very rarely need to water. But in Oz, even stuff like cactus probably needs watering.
That's true, EoS. Rain is seldom in short supply in these parts but, even so, we'll experience an extended dry spell from time to time. Fortunately for us, we have a fair size pond in the backyard that we can draw upon to help keep the gardens happy.
Cheers,
Paul
That figure is NOT for domestic use
In 2008 when Melbourne water storages were at lows, the government introduced at Target of 155 Litres per person per day
This target was actually achieved
Watering lawns was banned several years ago, as was washing cars in your driveway
We had saturation government TV and radio advertising asking/begging people to take less than 4 minute showers !!
This was how serious the water situation had become after years of drought
History of Melbourne's Water Supply
The desalination plant was seen as a must have insurance policy, the thought of the second largest capital city running out of water was obviously untenable, yet there was and still is a very real possibility of that happening.
The cost of the desalination plant, however, does raise serious questions - we are definitely going to have to pay much more for water (and I am old enough to remember when water was unlimited, ie no usage charges !!)
Ironically, we have had major floods over the last few months !!
Water Usage in Australia
Water Account Australia, 2008-09
Water consumption per person reflects total water drawn divided by population. It does not accurately reflect what a household consumes, but rather includes industrial consumption, and agricultural consumption in the total drawn.
And, industrial water use is subsidized, in most locations, by special rates (negotiated by lobbyists, of course) for the corporations, and concomitantly higher rates for individuals. It is another way that corporations externalize costs and the public pays them. Socialized costs and privatized gains go along with unregulated free market capitalism, in much the way that we see global temperatures rising as global CO2 increases. It is a built-in, guaranteed to happen circumstance, and will continue to be so until the definition of efficiency includes as a cost of its economic impacts all ecological and social costs (health costs, clean up, remediation, etc., as well as indirect costs such as mental health, environmental degradation and the like).
Craig
I thought desalination costs were typically quoted as in the US$0.50 to US$1.00 range per cubic meter (i.e. kiloliter), which would be about the same in A$ right now. So how utterly incompetent (or absurdly hobbled by outrageously foolish regulations, or just plain stupid) are the involved Melbourne authorities, that they need on the order of 20 times the going rate?
I don't see why it should cost the Australians $13.58/m3 to desalinate seawater, when the Israelis can do it for $0.52/m3. See the Ashkelon Seawater Reverse Osmosis (SWRO) Plant.
Not to mention the fact that the Mediterranean is saltier than the Pacific, so the Israelis have more salt to remove.
Exactly; I was hoping one of our Australian commenters might have some idea about what the heck is wrong in Melbourne...
The Great Shell Game
The Saudis are not increasing oil exports. I’ll say that again – the Saudis are not increasing exports. In fact, if you re-read today’s article up top, they never actually said they did:
It’s only an offer. In fact, Reuters reported today that China did not request additional supplies from KSA. I’ll repeat that too: Aramco’s customers are not requesting additional supplies.
What’s up with that you say?
Well, China appears to have gotten to what is left of Libyan oil shipments first. So as far as they are concerned, there is no shortage of supply. Refiners in Italy and other European countries don’t share the same good feelings, as they may not be able to process the type of oil the Saudis can devliver.
What we do know is that the Saudis have shifted oil supplies from the east coast, by pipeline across the desert to the west coast port of Yanbu. From there it will be sent on its way on smaller tankers. I don’t know how long it will take to ship oil from east to west there, maybe a few days or so.
Meanwhile on the Persian Gulf, shippers are planning to export less, that’s right - less - in early March out of the Persian Gulf region – although it’s not clear if this is entirely related to the Saudis or worries about politics in Oman and Bahrain, among other locations in the ME.
One must admire the way the Saudis move the shells around to fool most everyone.
The Saudis have the problem that their "surplus" oil is not nearly the same quality as the Libyan oil that was cut off, and refineries processing it will get about 1/3 the diesel fuel cut out of it that they would get out of Libyan oil, assuming they can process the Saudi oil at all.
The Saudis are aware of this problem and explained that West African nations, who do produce oil of the same quality as Libyan oil, could send their oil to refineries whose Libyan supply has been cut off, and the Saudis could send Saudi oil to their customers to replace the West African oil.
The response of the West African nations has been something like, "Sorry, we're sold out, the Chinese bought it all," or words to that effect. So, I don't think this solution is going to work that well.
Ho hum.
Peter Boockvar macro-notes over at Barry Ritholtz' place that
And down about 75% over the last 5 years.
If we can stoop to tabloid level for a moment, did anyone notice that Colin Firth's statement "I have a feeling my career has just peaked" got a rouse from the audience at the Oscars last night?
Yes, I did.
But its just a "theory."
Middle East in Crisis: a Worst-Case Scenario
http://finance.yahoo.com/news/Middle-East-in-Crisis-a-cnbc-512724560.htm...
What does it mean when the headline says "worst case" but the content says "fairly likely", all in all? Proxy battles fought by worldpowers through the factions of the ME seems downright predictable.
China scored a point with a tanker full of Libyan crude headed East, while the EU next door apparently gets nothing.
This is not the worst case scenario. The worst case scenario is, well, I don't even want to talk about it.
Note that I said last December that we could have a super-spike in oil prices in 2011 - without, yes without - any political problems in the Mideast. This is mostly because the West in general is going to have to outbid China to rebuild supplies, now that China is apparently now grabbing export share away from the West.
'Inside Job': Rampant Conflicts of Interest, Cronyism Led to 2008 Crisis, Charles Ferguson Says
http://tinyurl.com/4gld2ry
A new electric aircraft has been released for sale this month. It's called the Taurus Electro G2. See the link below for details including video.
http://www.pipistrel.si/news/introducing-taurus-electro-g2-available-now
In a world of $100+ oil, electric aircraft could become the cheapest vehicles for long distance travel. Electric aviation could be cheaper than diesel road transport for freight and passenger travel. A Boeing 737 consumes about 5000 lb of jet fuel in an average takeoff and climb to cruise altitude. That fuel cost is $2000+ at current jet fuel prices compared to a projected $650 for an electric take-off. There is a strong business case for airports and airlines to deploy the technology to reduce their consumption of jet fuel.
You can read more about the economics of electric aviation at http://electrictakeoff.com.
Assuming the launch efficiency turns out to work as envisioned, how about the flight itself? Launch may be a "significant fraction" of the energy, but what about the rest?
Electric rail would offer the same efficiencies over a diesel train. Other than speed, how can airplanes possibly compete?
Diesel engines on trains drive electric generators which turn electric motors.
This is unlike the combustion turbine mounted on the aircraft wings and or fuselage.
I didn't mean diesel train. What's the point of that?
The point was that using an airborne launch conduit you could electrically power the plane during launch phase, thus carrying neither battery weight nor fuel for the launch energy. Ditto for an electric train, which has no diesel engine or fuel to be transported, either.
But once you're moving, the plane needs engines and on-board power/fuel to fly, while the train can continue to be off-board powered. What you end up with is a "hybrid" airplane with a fuel engine or a desperate need for lighter, higher energy density batteries to handle cruise.
A 747 can be almost half fuel weight at takeoff. The fraction used for takeoff for an intercontinental flight is small. The fraction for an up-and-down regional hop would be higher, of course, but for those the time savings is smaller too (given two hours in security, checkin, bag retrieval, rental car, etc).
I'm unconvinced that the amount of fuel saved justifies the complexity. I'm almost positive the consumption per pound will be considerably greater than for any ground transport of people, but I haven't done the math. I'm absolutely positive it makes no sense for freight.
Paleocon,
You are correct that rail freight is cheaper than electric air freight. However, there are thousands of towns around the world that do not have a railway line, but have a local airport. Most towns are primarily served by diesel powered trucks for freight. We could deliver electric air freight at a cheaper rate than diesel powered trucks. The calculation assumes that the freight aircraft is gliding across the country with landings every 200 miles for another electric ascent. This would replace jet fuel with electric power at intermediate airports.
Aviation may have lower capital costs than rail. Maintaining an airport in each town is potentially cheaper than building and maintaining rail lines with bridges, overpasses and land acquisitions. I haven't calculated the capital costs of an electric take-off system, but I am guessing it will be around $10m - $20m per airport. Electric air freight could offset some of the maintenance costs for the interstate highway system.
For passenger service, electric aviation has the advantage of point-to-point service and shorter travel times. Using a ground based winch, we could hoist an aircraft to 35,000 feet in two or three minutes. After releasing from the cable, your aircraft will continue on a high speed gliding descent to the next airport or burn some jet fuel for a longer cruise.
For intercontinental trips, you are correct that the fuel savings are not as high with an electric ascent. However, we could extend the infrastructure to higher altitudes and speeds using longer cables. Potentially, we could deliver electric suborbital flights for intercontinental journeys. Imagine flying from the US to Asia or Europe in one or two hours using no jet fuel. You would board a suborbital vehicle that would ascend to the edge of the atmosphere on the cable and then glide at hypersonic speeds. This would require a whole new fleet of suborbital vehicles, but it is theoretically possible with the same electric take-off infrastructure.
John
I don't understand your ground based winch. Its hard for me to imagine lifting anything more than maybe a kilometer that way. With a very long horizontally pulled cable, you could probably pull the thing like a WWII glider, up to some height, but obtaining stuff like cable clearances would be really difficult.
I take it that your not an aerospace engineer. The distance a glider might travel horizontally from some height is usually close to the lift/drag ratio. If that happens to be about 20:1, your 35,000 ft (6.6 mi) lift would allow a horizontal travel distance of about 132 miles while descending to the launch elevation. But, there would be no room for error, no go around if the landing didn't work out or there was some weather problem. Not to mention, how the heck would you arrange your cable hoist, a "sky hook" to heaven?
E. Swanson
Good point on the gliding distance. There are aircraft with lift/drag ratio in the range of 25-35. Some examples are on Wikipedia http://en.wikipedia.org/wiki/Lift-to-drag_ratio. In a world of expensive fuel, it is logical to increase the L/D ratio on future aircraft designs.
The system could lift aircraft to the top of their service ceiling. The Cessna Citation X flies up to 51,000 feet for example. Combining a higher L/D ratio and higher service ceilings should give a 200 mile gliding range. For older freight aircraft, the simple solution is make more frequent stops (e.g. every 120 miles).
You are correct that the aircraft will need to carry jet fuel for go around, weather problems and landing. The amount of energy required for landing is relatively small. In future aircraft, the landing could be powered by batteries that are charged during flight.
As for the "sky hook" to heaven, please review the diagram below. The sky hook is one or more electric tow planes powered by electricity from the ground. The electricity is transmitted via standard aluminum cables. Note that aircraft in level flight can generate an excess of lift. Lift is proportional to the square of velocity.
http://electrictakeoff.com/wp-content/uploads/2011/02/Electric_takeoff_design.png
You can download a spreadsheet of my assumptions and calculations from this link:
https://spreadsheets.google.com/pub?key=0ArN3BBRS37YcdHVkTGN0dl81NWFFSDdWcDBaTDd0MlE&hl=en&single=true&gid=0&output=html
Yup, looks like a "sky hook" design. I like your cartoon which uses what looks to be a B-26 as a platform, an airplane with a design load of 5,800 lbs plus fuel. The B-26 had two engines with 2400 hp each. Think about how much electric power would be required to lift a craft which which weighed only 20,000 pounds and get back to us. Don't forget to consider the weight of the multi-thousand hp electric motors.
And, you had better think of using a L/D of 17, which is that of a 747, that is to say, an aircraft designed for maximum cargo capacity. Those other high L/D designs are meant for most efficient flight with little cargo mass and thus were built with long wing spans and short cords. Those wings won't work for a heavy lift aircraft design.
EDIT: I forgot to mention one other big problem. The air drag on a round cable is quite large and your design apparently uses 3 or 4 to connect the "sky hook" to the ground. Your concept would require a quite large amount of power just to pull the cables thru the air. That's because the lift from an airfoil is a function of the speed and for highest lift, the horizontal speed must be rather large. The alternative is much larger wing area at low speed. Just another reason that your idea won't fly...
E. Swanson
There are so many interconnected engineering issues to examine all at once. Unfortunately, ignoring these also means, as you put it, the idea won't fly (though the interesting theorem when I was in scholl was when the the mass of the paperwork equalled the mass of the aircraft, then and only then, would the aircraft actually achieve flight).
Like the mass of the cable itself (or the drag that you mentioned). No matter how counterbalanced a system is and how many pulleys one deals with, stuff has mass.
There also appears to be a fundamental misunderstanding of what and how aircraft fly. While it might be an intersting mind exercise and might open consideration of other alternatives, physics has a way of imposing reality.
As a long time pilot, good luck getting someone to fly it. When the fan quits pilots tend to inhale the seat cushions up their ....s, and I would bet a million _______ the FAA or Transport Canada will never approve such a stupid idea.
I would like to see the designer take the first flight. Do you really think a passenger will get in one? Come on!!!!
Cheers....Paul
Certainly for jet liners. Takeoff speed is something like 200mph, while cruising speed is more like 600, so the booster would only save a ninth of the kinetic energy. Then there is the gravitational energy of getting it to thirtysome thousand feet. Probably more than that in fuel, since a jet isn't going to be very efficient at low speed, and maybe it cuts engine wear, as takeoff is done a full throttle.
The thing that sound sensible to me, is electric plane tow vehicles for getting between the runays and terminals. A 747 going 20mph can't be very efficient at all.
There's an overview diagram below. It is part of the introductory article on the electric takeoff web-site.
http://electrictakeoff.com/wp-content/uploads/2011/02/Electric_takeoff_design.png
The electric tow plane flies at cruise altitude. There is a ground based winch and a pulley beneath the tow plane. The winch is pulling the payload vertically, not horizontally. There's no additional land required as the winch is placed next to the runway at an existing airport. Once the payload reaches cruise altitude, it is flying at the same speed as the tow plane. Most of the energy transferred is gravitational potential energy, but there is a significant amount of kinetic energy also.
35000 ft cable will break under its own weight.
But...If NASA is willing to give money to do some research on this kind of stuff, hat's off to entrepreneur. On the other hand maybe NASA could learn something from it; at worst having tests done to see that it will not fly; at best seeing the physical limitations. Breakthroughs happen by shooting thousands of blanks, but usually there are some technology spinoff.
I'd use a blimp.
I like how they ripped off the Apple slogan for the iPhone 4 in that piece.
Everyone flying with electric planes? No. Don't see it, sorry. The plane is just a basic powered glider concept. Sure, it has advanced Li-ion batteries, rather than an ICE engine, but it's still nothing like a Short 360, let alone a Boeing 737. And it sure as hell isn't going to revolutionise personal travel for the masses.
Clearly this is just really cool hobbyist stuff. And it show that electricity can definitely power transportation. If you can create an electric airplane then clearly you can create satisfactory electric cars. And they do.
I made a post a few days ago about maximum theoretical energy density of electrical lithium batteries and showed that it is quite hopeless.
The reason ICE works is only because we carry fuel and oxygen comes from the air, three times as much as fuel, by mass. Fifteen times as much if one remembers that air is 80% nitrogen. So imagine a car with 40kg of gas (that's a tankful) and extra 600kg of compressed air. Maybe. Or 200,000 lb airplane with 60,000 lb fuel and 900,000 lb compressed ooops....
Exactly same problem happens with electric batteries. I seriously doubt it is actually possible to make a large plane take-off on its own electric batteries. I found this snippet:
This data is provided for a Boeing 747-200 airplane cruising at Mach 0.9 at 40,000 ft (12,190 m). the power generated by the 747 airplane engine in this case is calculated to be about 87,325 hp or aprox 65,100 kW. the data was provided by this site: http://www.aerospaceweb.org/question/propulsion/q0195.shtml That is 15kV at 4000 A. Ooops. And this is cruise, not full power takeoff. Pigs can't fly.
In science and engineering its good to do sanity checks. If something is beyond physics, there is no point trying to build it.
Cute piglets, yes, they can fly.
One can make a super efficient glider fly: http://www.electraflyer.com/electraflyerc.php and http://translate.google.com/translate?hl=en&sl=de&tl=en&u=http://www.dg-... but that's about it.
Solar powered dirigibles are a possibility, however.
You have to give up something to get efficiency. The solar airplanes give up cargo capacity. A solar dirigible would be giving up speed, but could definitely carry people and goods far more efficiently than current commercial aircraft.
Solar powered dirigibles are a possibility, however.
Around the world in 80 days...
Seriously, electric trains and LNG-powered ships are far more practical than solar-powered dirigibles, and high-speed trains would be far faster than the dirigibles.
Blimps could be an option for unwieldy stuff to remote places. A 100 ton blimp, however....e.g. There is (or maybe was) a pile of oversize equipment for oils sands, waiting for highway permits to go through Idaho. Or one has to move something larger after ice roads thawed.
Of course.
But solar dirigibles would be faster than similarly efficient ships, not have the routing issues inherent with trains, and actually be able to carry a meaningful amount of cargo or passengers which electric heavier-than-air craft do not appear capable of.
It may never happen, but I see the potential of a meaningful niche there.
It all comes down to the cost balance of time efficiency vs. energy efficiency, and I definitely see a future with a wide variety of transportation options.
Solar = not enough power to even remotely move it forward.
Did anyone else find this a bit...humorous (from the fourth article above):
"“The flash-fire is spreading,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark.
The headline should have read "Flash-fire in Middlefart!"
OK, back on topic. Is there any other MENA country for this fire to spread to besides KSA? Does anyone really think that they won't be next?
The first that comes to mind, since it is already having big demonstrations is Oman. Oil exports are about half of Libya's. But if you lose them both the gap just keeps getting bigger and bigger. Then maybe throw in one or a few of the emirates.... Also Algeria. What about people feeling oppressed in non arab lands. This could be a blueprint for revolt in other places as well. Like long suffering Nigeria, and some of the other black African oil exporters...
Things have been kicking off in Ivory Coast for a while now (due to the old President refusing to step down). Gabon has problems and I have a friend in Cameroon who says that the youth are gathering..
Mugabe has arrested 45 people for discussing protests. Vietnam has also arrested people plotting a protest.
I don't think it will stop in MENA.
Perhaps even Mugabe isn't immune?
http://www.voanews.com/zimbabwe/news/Zimbabwe-Government-Deploys-Armed-P...
The Orwellian 'Thought Police' are purging the internet of any 'Inconvenient Truths' about Libya/US business/government dealings in the recent past.
to wit: The US-Libya Business Association website along with it's twitter account 'disappeared' (but fortunately saved by web.archive.org)
Note the logos of Founding Members (column on right side)
Whoosh...down the memory hole.
In another manifestation of the ickiness factor:
http://www.theglobeandmail.com/news/arts/music/nelly-furtado-says-shell-...
Stuart Staniford had a pair of ripostes to the fracking NYT: Some Basic Sanity Checks on the NYT Radioactivity Piece and Radioactivity in Shale Gas Drilling Wastewater.
KLR - If you caught my post to my Yankee cousins this was exactly what I warned them about. There is very little danger of damaging the acquifers by the frac'ing process itself. Their concern struck me as a self-induced red herring. Improper disposal of the produced fluids was always the big danger. As I pointed out: in the bad old days in Texas improper disposal ("midnight hauls") of produced fluids caused most of the ground water pollution...not drilling or frac'ing. Stop staring at the fractrucks and keep an eye on those tanks trucks running down the road at 2 AM. What I couldn't understand was how local waste water management systems would allow anything to be pumped into them without certified tests. I can't dump water on the ground in Texas w/o analysis and landowner approval let along into some municipality's plant.
From GAO HighLight: A Comparison of the Costs of Road, Rail, and Waterways Freight Shipments That Are Not Passed on to Consumers
Full Report: http://www.gao.gov/new.items/d11134.pdf (illustration on pg 20 shows how subsidies and external costs can distort competition and reduce economic efficiency)
Warren Buffett's favorite Chinese car company, BYD, tests Volt competitor in Los Angeles:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/02/27/BUQE1HQGHN.D...
I think that they're moving things in the right direction, pricewise (compared to Volt and Leaf). I also like the options:
Video here
Berkshire Hathaway, invested $230 million in BYD in 2008
Well there you go. The savior of the car culture -- a Chinese Auto -- with a Walmart pricetag.
LOL. Who would have thought cheap and Chinese would save the day? end of snark
Should put a little pressure on the GM boys to make a cheaper version of the Volt, unless they want to cede marketshare
"Should put a little pressure on the GM boys to make a cheaper version of the Volt, unless they want to cede marketshare"
Don't hold your breath. See my link to the GM Denali Hybrid, below.... and we bailed these folks out. Kind of hard to swallow.
I am kind of fed up with GM now. Clearly they failed to make a broadly marketable product.
I may have to buy a Chinese car just to make that point. LOL (but I am a little afraid)
Don't blame them for making what the market seems to want. Be happy to have the Volt subsidized by the Denali buyers who are going to seriously regret that purchase.
It is just a matter of time before they start offering some pure electrics. I agree the Volt is too expensive and it fell short of its goals. But it was a damn good start and it is an impressive pieces of machinery. Swap out that iron-block 4-banger with something more efficient, get the battery price down, and cut some other costs to make it a bit more palatable.
Yeah the Volt concept is great but damn trim like $10 k off the thing of wasted nonsense.
Nothing like Market competition though to spur innovation. I am sure it woke up Detroit a little.
Does anybody know what the pump price for unleaded needs to settle at, now that the Brent price seems to be holding at 111-14?
In my area, it just moved up to around 3.30 from 3.12 last week. Is that it, or is there still more adjustment?
Be thankful you're not here in CA where the prices are 3.80 for reg. unldd. at the cheap station and 3.90 at the higher priced stations, like Shell, Chevron, etc. 4.00 middle octane & 4.10-4.20 for super.
USA National Gas Price Heat Map
And yes, California is a bright shade of red indicating regular unleaded at > $3.67 / gallon.
This is much more indicative of economic impact that price of crude per barrel.
Tom Keene on Bloomberg devoted his noontime TV program to oil. One of his guests from Deutsche Bank said that the Brent and Bonny Light prices were much more indicative of US prices, since that was the price paid everywhere outside of the MidWest. Another guest from BofA ML said that he did not thing that oil production would decline steeply, but that it was on a plateau. No cornucopians on the show while I was watching.
That might be out of date. Either that or we pay more in our part of the State, a couple of hours north of SF.
I just paid $3.64, Western NC, for regular non-ethanol. I'm willing to pay the premium because they're my neighbors/friends, and they don't believe ethanol is a good move. Paid $3.59 for off-road (dyed, untaxed) diesel. Highway diesel was $3.99. All up about $0.40 in 5 days.
Paid $3.09 to fill my little car's 10 gallon tank. Thanks, Canada!
USA National Gas Price Heat Map
You can kind of see where the oil pipelines run down from Edmonton, Alberta to Cushing, Oklahoma on this map. The dark green areas get first dibs on it. Note that Alberta is directly north of Montana.
None of the Canadian pipelines run to California. But bright red California has its own exotic brand of government-mandated environmentally sensitive gasoline that none of the other states are using, and nobody else is interested in producing.
This map is interesting because it shows what new Canadian oil production is doing to US oil prices. The volumes are getting to be big enough that it is starting to make a difference, to the US at least.
Here we pay $2.99 for regular 85. Bozeman, Montana is 120 miles west of Billings, and Billings (Exxon, Conoco and Cenex) refineries get their crude from Fort McMurry and N. Dakota. The map can be misleading. The state of Montana has ~1 million people, whereas LA County has ~9 million people.
The colors on that map are scaled to the current overall price, so it always looks about the same. Note that New Jersey is in green at this writing, despite it being on the East Coast. That's because for some reason the tax is anomalously low there. Subject to the note about California, which is practically a separate country anyhow, it's basically a gas tax heat map.
I'm in a slightly cheaper part of CA, filled up at $3.719 today.
Paid US$3.97/gallon for 91octane in San Gabriel today.
My area is bright red on that map, but I ride my bike. Would like an electric car, but man they are expensive for what they are.
I believe your comment shows why Kunstler is correct and that suburbia is going to go bye bye.
Craig
Two words: les banlieues.
That is, the necessary experiment has already been (partially) carried out. The Euro-French model shows not that suburbia goes "bye-bye" - not in even the wildest stretch of the imagination - but merely that it becomes more slummy. Even now, most ordinary people can't possibly afford the breathtaking rents, exorbitant grocery prices, and confiscatory taxes characteristic of the big-city cores. They certainly won't be able to afford such extravagance in severely straitened circumstances.
The future will be lumpy, in my view, i.e. not evenly distributed but the overall trend will clearly be down.
Some suburbs will be abandoned or will see a few people eking out an existence. Others will have higher density and will essentially look like slums where people reuse whatever material they can get their hands on, just as they do now:
In 20 years all major cities will have significant slums attached to or within them.
Everything we will see in the future already exists now. Just expect to see more of it and spread more widely.
Here is where we find slums now:
Hey, what's that big circle doing in my backyard? Who let THAT be built just south of the border?
Who? Maybe the Catholic Church had something to do with it, as the result of their anti-birth-control efforts. They weren't the only ones, either...
E. Swanson
OK, How come no circles in Brazil?! Ever been to Sao Paulo or Rio?
Sorry, take it up with wikipedia, the source of the graph.
Here in the Tokyo area (cheap compared with Western areas of Japan) regular gasoline is now 140 yen/liter...That is about US$ 7-8 per gallon! Ouch....
On the other hand I don't have a car, so gas prices seem remote, but I am sure we'll be seeing amazing food price hikes soon, plus a new wave of closed shops.
I often read about the suffering of laboratory animals. I hope and pray that gas prices and oil prices go up and up until all sorts of animal experimentation becomes just impossible to finance. All creatures have a sacred aspect, and human beings are not the only creatures who deserve respect. Being eaten by an owl is not as bad as being experimented on, tortured basically and killed.
The suffering of people is also something we (OK, especially doctors) can work to alleviate, but let's remember that everyone is mortal.....
The abundance of oil has brought humans to a point where we have somehow separated ourselves from animals and nature and we live alone now in everyway, in cement and asphalt. How can that lead to anything good? That is why I celebrate the rising price of oil and gasoline....it is ourselves who have suffered most from the oil and gas bonanza, probably.
So, maybe I worded the question wrong. I am able to look at my local prices and the gasbuddy map just like everybody else. My real question was, with Brent oil stabilizing at around $112, what will the new stable gas price be? It looks like an average of around $3.36. Is there any relationship chart data?
I don't think there is a very good "should be" price. If you go to the historical chart on gasbuddy and check the "crude price" overlay option, you can see how the prices mostly track, but there is a lot of noise.
Really, there hasn't been much experience at these price points, but if anything gas seems to lag crude in jumps up, so maybe we're mostly of the way to feeling the hit for this round.
Gas buddy blog says most of the rise is behind us, another 10c to go. No idea of how accurate his predictions might be.
http://blog.gasbuddy.com/
Edit: Be sure to read the comments to see exactly how screwed we are, given the common perceptions.
Paleocon:
My favorite comment among the first few:
eastex- I'm not sure if there was ever a well defined relationship but I suspect there's even less possibility now. I live across the highway from the largest refinery in the country as well as an area of huge oil imports and typically had the lowest fuel cost in Texas if not the entire country. But now with WTI at Cushing selling so low thanks to all that Canadian oil piling up there, I've seen fuel costs from areas with easy access to Cushing oil selling at $.50/gal less than I'm paying.
Here in sunny London UK it's GBP 1.30 per litre, so that's 1.30 x 3.785 x 1.63 = USD 8.02 per US gallon.
I missed this news item a couple of years ago.
http://ecocentric.blogs.time.com/2011/02/28/a-monkey-wrenching-environme...
Are there other cases of people sabotaging oil auctions?
I think the guy who did that was just sentenced to prison, so no, not too many are following in his footsteps.
Either that, or he could just pay the bid price and sit on it. Of course not too many enviros have that kind of cash sitting around.
I just received one of those irritating chain letters from my business partner regarding the Bakken shale deposits.
I suggested he investigate how many barrels of fresh water are required to process a single barrel of this oil, then calculate how many barrels of water would be needed to satisfy just one per cent of US oil demand, then ask who would supply this water and what he would propose to do with the contaminated remains when done.
Cheers,
Paul
Yeah, Paul, I got the same chain letter a couple of months ago from another dog lover. She travels around to dog shows, pulling her Escalade behind her big diesel motor coach; her 'dream retirement'. She's one of the folks I'll be happy to say "I told you so" to. I have visions of her Poodles harnessed to the front bumper of her Cadillac, trying to make it out of the parking lot ;-)
Her husband sort of gets it. He just bought a Denali Hybrid :-/
Sadly, it won't play out that way. The people that get killed, literally in some cases, from high oil prices are the very poor. While people like that motor around clueless. With maybe a few grumbles here and there about gas surges from oil spikes dipping into their money allocated for manicures. Until the who economy really collapses, and it probably won't be noticeable from oil, they will be oblivious to the world crashing down around them.
It'll be a rude awakening. These folks aren't even close to understanding the level at which oil subsidizes their lifestyles.
Kustler's post, today:
Methinks this applies to all of us; some more than others.
Gotta say it,
Kunstler has filled this one with some of his most vicious quips yet:
...
...
What? Is something going on with good ol' Charlie? Shouldn't we be spending all our time talking about that instead of these silly discussions about resources, economics, bla, bla bla...
The local news this morning thought so, and they always have their priorities straight--about five minutes on Sheen, about five seconds on Libya.
[/sarconol]
Outside of sarcasm, one is left nearly speechless at such inanity.
Sheen may be crazy but really not much crazier than most of America. He has a sense of entitlement and thinks he is invincible. So how is that different than most of our so called leaders?
That's quite the mental image there, Ghung... kinda reminds me of this clip:
http://www.youtube.com/watch?v=KE0-zQBL-Sc
Cheers,
Paul
Ha! Good doggies!
I just received one of those irritating chain letters from my business partner regarding the Bakken shale deposits.
Everybody should be aware that this is not a game for amateurs.
The Bakken Formation is a pretty nice play, and companies are getting a lot of oil out of it, but the companies who are successful are highly experienced with the technology and very good at cost control. If you aren't an industry insider who already knows who these companies are, maybe it's not the investment for you.
The Bakken Formation is large in area, but it was discovered in 1951, and it is only recently that they have figured out how to get decent amounts oil production out of it.
Bakken Formation
I suggested he investigate how many barrels of fresh water are required to process a single barrel of this oil, then calculate how many barrels of water would be needed to satisfy just one per cent of US oil demand, then ask who would supply this water and what he would propose to do with the contaminated remains when done.
No, no, no. You have to realize this is very different from what you are talking about. You are talking about oil shale, as exemplified by the Green River Formation, which is NOT shale and does NOT contain oil. It is marlstone and it contains kerogen. The fact that it kerogen and not oil is a big, big problem in producing it.
The Bakken Formation, IS shale and DOES contain oil, although it is very difficult to get out. It can be done, and doesn't take very much water to do that, though.
Promoters will try to confuse you about the difference. They have certainly managed to confuse the US media about it. I think the confusing nomenclature is deliberate.
This.
The Bakken shale play seems like a nice windfall for those able to do it. But more than Saudi Arabia? C'mon. You gotta be joking. By what I understand, this is using clever techniques to get at small pockets of oil traped in the shale. There is just is not some massive traditional oil field. People are going to get rich . . . but this is not going bring back to the 1970's production peak or anything like that.
"The U. S. Geological Service issued a report in April 2008 that only scientists and oil men knew was coming, but man was it big. It was a revised report (hadn't been updated since 1995) on how much oil was in this area of the western 2/3 of North Dakota, western South Dakota, and extreme eastern Montana ..... check THIS out:"
This particular chain letter must be having a resurgence. I got two of them sent to me this week. Both from relatives. One of the easiest ways to point out to them that this is phony is to send them to the USGS 2008 report referenced here which in its headline says "3 to 4.3 billion barrels potential in the Bakken". Because the chain letter goes on to say that the Bakken has 503 billion barrels. So I point out to them the big lie - that the USGS report says 4 billion and the letter says 503 billion. A slight difference.
What the liars in this chain letter did was to talk about the 2008 report but then quote a 1999 estimate of the total resource (not potentially recoverable) made by a geologist in the EIA. It makes it sound like the USGS report said 503 billion barrels.
Another factoid of all this is that the 1999 EIA estimate was made by a single geologist who died before completing the report and it was issued without peer review. Subsequent reanalysis since then has reduced that total resource estimate to the 200 billion range.
The chain letter I received further went on to mention the Green River formation and referred to it as oil - never mentioning that this is kerogen, not oil. It also left the impression that it was economically recoverable - without saying that the current production is exactly zero.
The entire letter is a breathtaking lie - but my relatives, who are desperately hoping I am wrong about peak oil, jumped all over it and wanted to believe it so badly. I am becoming increasingly unpopular in my family.
Both of my relatives that bought this are college educated, although not in science or engineering.
FOR ALL: Just to emphasize what a potential loss for unsophisticated public investors in the hyped plays let's not even talk about them. Here's the view from very sophisticated and experienced oil patch hands like RMG and others. The magnitude of potential profits for us buying into plays from reputable operators does not come close to what the public is being pitched. For a simple reason: no one gives away free money. Assume I've generated a very good prospect that will likely yield a 50% rate of return on the drilling investment. So I go show the deal to a knowledgeable company like RMG, Inc. He loves it and wants to buy in. So I show him the PROMOTE on the deal. Promote does not have any negative vib...it's the standard term we use to describe what an investor has to pay EXTRA, beyond the cost to drill a well. RMG, Inc might have to pay 100% of the cost to drill the well but only earns 75% of the net revenue. This is a somewhat standard "1/3 for a 1/4" promote. I also spent $2 million in leasing costs. RMG has to pay me $3 million to cover my expenses. And then the geologist that generated the deal get a 2% overriding royalty (2% off the top). Bottom line: Even if a well will makes a 50% ROR , RMG may only get something closer to a 20% ROR. And that's if everything works perfect.
But look closer at the really hot plays like the Bakken and Eagle Ford Shales. I'll focus on the EF since it's close to home. RMG, Inc won't compensate me $3 million for the $2 million I invested in the leases. Originally before the play got hot I was paying $400/acre. But now the play is the hottest in Texas and lease costs have soared. So RMG, Inc will have to pay me $10,000/ acre. So instead of paying me $3 million on the front end he has to pay me $50 million. And that's on top of the interest promote I describe above.
And RMG, Inc will pay this heavy promote because the return is acceptable in his company's biz plan. He won't like it but he'll play because his boss told him they had to have a piece off it so they can announce it to the shareholders who want to know why the company is missing out on all that oil. Back to the point: this is how we trade each other. RMG, Ins. is a sophisticated player and won't pay a promote that doesn't yield an acceptable return. Public investors have no ability to understand these types of trades and thus really don't have a clue as to what's acceptable. But the public promoters ( a very different breed than promoters who only pitch to folks like RMG, Inc.) thrive off this ignorance. I've seen private investors not make a penny from a commercial well. And they weren't even cheated in the sense that the promoter did exactly what the deal called for. It was just a very bad deal for the investor. Very few companies who make a living by actually drilling and producing ever get involved with private investors. Probably the closest is having a very big fund participate. OTOH there is a group of companies that have never actually drilled a well and may never. These are the ones who specialize in finding the sheep. And with today's oil prices the sheep are pounding on the door begging to get in.
So how does a small-time investor "buy a royalty share" for a local stripper well? I saw a guy at my bank depositing a 1" stack of checks, each for a small royalty. I guess I should have asked him. Seems like for a little guy, having a few bucks in each of a bunch of producing wells is a great hedge. They hardly ever seem to go away -- they stop when prices are low, and run when prices are high.
Paleo - Buying royalty is typically much safer for the unsophisticated than buying a working interest. I've seen many less than scrupulous companies operate a WI owner to death: maybe 95% of the revenue going to the company as "operating" expenses. Legal but still nasty. An royalty owner pays notheing for operating costs: that money comes straight off the top from the gross cash flow. But as a result buying royalty is very expensve. Taking 6 to 10 years just to recover the initial investment is not uncommon. And you can imagine how high the price of an oil royalty interest purchase would be today. IMHO if there is any good royalty investment now it would be on NG wells. NG prices are still low. The bet would be on NG rising significantly is a few years. I don't deal with such things at all but there are some royalty funds out there one could buy into. But you have to watch out for them chewing up your profit with "management fees".
So how does a small-time investor "buy a royalty share" for a local stripper well? I saw a guy at my bank depositing a 1" stack of checks, each for a small royalty.
Well, the best way is to own the land in the first place. The second best way is to buy the mineral rights from a landowner, while he keeps the surface rights. You can also lease the mineral rights from him. And then there are farm-ins, swaps, pooling agreements, and increasingly weirder interests in land, but small-time investors don't normally get into those.
The guy probably just owned a lot of land, and leased the mineral rights to an oil company. They drilled a bunch of oil wells, and every month they send him a royalty check for his share of the production on every well. Alternatively he may have bought or leased the mineral rights from a bunch of landowners who wanted cash up front, while he got the long-term royalty income.
T_E
Thanks for the summary and background on the Bakken...
I'll be sure to forward this information as a pre-emptive (hopefully) strike on friends and family who are definitely going to latch onto the chain e-mail as a means of "energy independence".
Catskill
I feel your pain. Many people prefer not to let facts get in the way of their desires. Any scrap of garbage information that appears to support their preconceived notions is shoved in your face as evidence how wrong you are.
This kind of meathead thinking (it happens in my family too) is a prime factor that will make the post peak oil slide downhill a nightmare. Rationality will be the first thing that gets thrown out the window as the new harsh reality sets in.
Umm 10% of 503 billion is roughly 50 billion right? And how long will that last at current rates of consumption?
Granted if it goes to $250.00 a barrel it will be worth a whole lot more and maybe last a little bit longer. (Sigh!)
People really don't grasp the fact that 20 million barrels a day can add up pretty darn fast.
Good news for NYC residents:
New Heating Oil Rules Would Affect Thousands Of NYC Buildings
See: http://www.ny1.com/content/top_stories/134749/new-heating-oil-rules-woul...
Cheers,
Paul
I would point out to anybody using heating oil in NYC that it is a BAD IDEA.
NYC is exposed to international oil prices, and future heating oil prices will reflect that. Much like 2008, worldwide demand for oil is rising, and OPEC production is not keeping out.
Natural gas is a much better choice. It is trading for a fraction of the cost of oil on a heat-equivalent basis, and international competition for it is not a factor.
I don't disagree, RMG. I'm guessing the high cost to replace these oil-fired boilers is the main stumbling block -- three local universities recently converted their central heating plants to natural gas and the cost in each case was in the millions. What else could be holding them back?
Cheers,
Paul
The universities I'm familiar with use district heating and chilling. If so, any fuel switch would be a big effort, but carry massive value. If building by building, then I guess the relative cost would be higher, but the effort less.
Check out UT Austin's physical plant. They've got it going fairly well (though still plenty of issues to address).
Thanks, Paleo; I'll take a look at it now.
I need to correct my previous statement. My alma mater reportedly spent 1.3 million on their conversion (http://www.smu.ca/newsreleases/2008/08-13-2008.html) and for Dalhousie the cost was pegged at 1.8 million (http://www.heritagegas.com/press/switch-to-natural-gas-supports-dalhousi...). However, the price tag for Mount Saint Vincent was a more modest $490,000.00 (http://www.msvu.ca/en/home/aboutus/mediacentre/mediareleases/Sept28_2010...).
Cheers,
Paul
http://www.utexas.edu/know/2011/02/09/power_plant/
I understand they are now self-funding new improvements using savings from past improvements. As with most large organizations, there is no shortage of waste and inefficiency.
Many, if not most, industrial designs historically did not do a very good job of considering efficiency. For example, if you had a variable design need for a pump that would peak at 120hp but average 40, the pump engineer would conservatively spec a 144hp pump, and the motor engineer would round up and select a 150hp motor least-cost fixed-speed motor. When the system turned up the output pressure would be high, so the installer turned down a valve a bit on the output of the pump and let a pressure controller dump the rest back to the source. Maybe the motor runs hot and had a design for water cooling, but the closest line was a chiller line instead of the desired cooling tower line, so that got plumbed instead.
10 years later somebody notices that a there is on average 120hp extra (real-world average need was 30hp pump, not the 40 spec'd, and never the 120hp peak) driving into a partially closed valve and a pressure reducer, with the dissipated heat being dumped in to expensively chilled water. Even so, to rectify the situation would take a smaller motor, a variable speed controller, and retuning the system after some time off-line for installation, and of course everybody is busy with urgent repairs and new design issues, and there is no budget for contractors. What do you do?
With a little spare time and a budget, you do the upgrades and maybe straighten out some right-angle pipe bends that rob power while you're at it. The 150hp draw drops to a 30hp average, with the ability to follow the load closed-loop. The much less heat dumps into a waste heat path where it belongs, and you save a ton of money while increasing pump and motor life and reducing heat and noise in the pump building.
Amory Lovins tells stories like this all the time. It is notoriously difficult to get the staff time and budget to rectify such situations even when the ROI is incredible -- some times 2 or 3 months -- given the conflicted priorities of the managers. They have their customer/public commitments and issues to deal with, upper management expectations, and a host of other budget items to fund, and also lack the time to really understand the issues.
I'm sure you see this with your lighting projects as well. How to crack this and actually get the go-ahead to make improvements?
Thanks, Paleo, for sharing this; an impressive accomplishment, UT. Well done !
What you describe is all too common and it frustrates me to no end.
Yesterday, as I was wrapping up a lighting audit, the business owner told me that he wouldn't be interested in pursing this work unless it saved him at least a $1,000.00 a year on his power bill; anything less than this he would consider a waste of his time. Personally, if it saved me even $50.00 a year, improved the lighting so that my employees could see better (they're a cabinetry maker) and cleaned up the numerous code violations with respect to their current wiring, I'd be all over it like a dirty shirt.
Last night I grabbed a bite to eat at a fast food restaurant and one the serving staff turned on the hot water tap at the counter sink for some reason, walked away and left it running for the fifteen or so minutes I spent eating my salad -- everyone else standing around totally oblivions. All I could hear was the sound of this steaming hot water splashing down the drain imagining an electric water heater frantically trying to keep up. The two things I hate the most -- waste and stupidity.
Cheers,
Paul
Zenga Zenga song goes viral in Arab world with 1.5 million hits.
http://www.youtube.com/watch?v=cBY-0n4esNY
Article tells the story with link to no girls version:
http://www.theworld.org/2011/02/gaddafi-in-ahip-hop-remix/comment-page-1/
I have no idea what's being said, but those moves - aye carumba!
Folks read the article linked up top>: Steve LeVine: Did Saudi Arabia really raise its oil production? But most important of all watch the Jim Rogers video imbedded on this page.
Who is right? How much has Saudi increased production? I guess we will just have to wait and see.
Ron P.
Ron, if oil traders some day reach a point of becoming convinced the Saudi's cannot increase production no matter what the circumtances, won't that be like a pack of hyena focusing in on an injured wildebeast? Meaning, a perception on the part of those buying oil, that supply cannot be increased much if any, in effect locks in a specific max. oil supply against ever rising demand, mostly from Chindia. Wouldn't that cause the oil price to skyrocket?
Just like the hyena's (in effect) daring the wildebeast to escape their chase with an injury, won't the oil traders start daring oil supply to increase to offset increasing price? Or, to some extent maybe that's already happening?
Well the oil price will rise most definitely, until the economy knocks it back down again. But oil futures traders don't dare with their hard cash, they just place bets. And remember futures traders don't trade real oil, they just place bets on which way the futures price will move.
That being said there is no avoiding that sooner or later that realization will come to the world. So would it be better that we find out now... or later?
Ron P.
Ron
That will be a very interesting event when the true reality of PO hits the markets. As you have pointed out on many posts, the oil markets are made up of almost equal parties of Longs and Shorts. This creates a balanced market with self correcting oil prices. Too high and the shorts jump in, too low and the longs jump in.
So what happens when the shorts become fearful of their ability to cover? What happens when the longs realize that the forward curve is to be bought, be hoarded at all costs? Would we not at some point resort to an "auction" type market where cargos are floated to the highest bidder? I understand the market currently works that way in principle, however, the decline of future supplies renders the forward curve a buy at all costs. Interesting thoughts indeed.
No, not almost equal parts, but exactly equal parts. For every long there is a corresponding short. Every contract opened or closed has two sides.
As I said oil futures speculators never buy or sell real oil, they just place bets on which way the price of crude will move. Of course the futures market affects, in the short run, which way the spot market moves. But in the long run the futures market follows the spot market, it does not lead it.
Think of it this way. Picture a water skier behind a boat. The skier is the futures price and sometimes swings to one side or the other of the boat, which is the actual supply of oil. But the skier must follow the boat regardless of his liberty to swing to each side of the boat. Likewise price of oil, the spot market, must follow the supply of oil though it will have wide swings that vary either side of the actual supply.
So if you are talking about bidding for actual oil. Yes, oil buyers, refineries and such, do that all the time. And the futures speculators are always trying to guess what the actual oil buyers are doing. They are right exactly 50 percent of the time. For every winner there is a loser.
But of course some traders, especially funds or ETFs, to buy or sell many contracts at a time. So it is possible for the actual number of traders to be unbalanced. ETFs are mostly always long so there would always be more speculators on the short side. But unlike ETFs the so called hedge funds often go short. I say so called hedge funds because hedge funds do not really hedge. Their name is a misnomer.
Ron P.
As I said further above, the Saudis have not increased exports. They actually didn't say they did, just that they could. While they may have increased output, which no one has been able to verify, if that extra output isn't exported, it doesn't help the rest of the world.
As it stands today, exports out of the Persian Gulf region are expected to fall in the first 10 days of March. On the other hand, more small tankers have been hired for the western port of Yanbu, but it is not clear if those additional west coast exports will make up for the fall on the east coast of KSA. BTW - almost all of the Persian Gulf exports lately are headed East.
The confusion of 'oil shale' versus crude oil extracted from a shale formation strikes again.
A pretty good episode of Jim Puplava's Financial Sense Newshour has a terrible section where they are dumbfounded about how some people are saying they are getting oil from the Bakken shale while other experts say that you need $200/barrel prices to extract oil from shale. :-/
It is bizarre . . . this confusing language is going to end up guiding U.S. energy policy. :-(
http://www.financialsense.com/financial-sense-newshour/big-picture/2011/...
If you have any hint of a clue as to what is going on in the ESAS, you know that the earth is now in its death rattle (aka Cheyne-Stokes: http://www.youtube.com/watch?v=bDebRCRVN08)
http://symposium.serdp-estcp.org/content/download/8914/107496/version/1/...
I would be more upset, I guess, if the only real data included in the slide show did not end in the year 1997.
It looks like an old problem, that was known many years ago. How far has this progressed? Is there any current data that supports rising concern. How fast does the Methane percolate upwards and enter the atmosphere, under what conditions, and for how long in a given period of time? Is it increasing? At what rate?
In general, the material supports what I already knew, but adds little. Is there any current material available?
Craig
The Trofimov seep field data looks to be from 2009 and here is latest CH4 counts;
http://www.esrl.noaa.gov/gmd/ccgg/insitu.html
CH4 Accelerating rapidly and sinks are slowing down.
Shakhova and Semiletov are the scientists most actively working in the area. They know the most current information. The stunner is toward the bottom--the "bad news" slide:
"Interpretation of acoustical data recorded with deployed multibeam sonar allowed moderate quantification of bottom fluxes as high as 44 g/m2/d (Leifer et al., in preparation). Prorating these numbers to the areas of hot spots (210×103 km2) adds 3.5Gt to annual methane release from the ESAS. This is enough to trigger abrupt climate change (Archer, 2005)." (my emphasis)
The Leifer article referenced is recent--yet to be released.
Current anthropogenic CO2 emissions from all sources comes to about 30 Gts a year. Methane is 105 times the global warming potential of CO2 over decadal periods. If we are anywhere near the prorated estimates, that would mean that we are getting the equivalent of an additional ten plus years of GHG emissions every year from this source alone.
Perhaps it is invalid to prorate from one hot spot to all the others. Perhaps this is an upper bound that is just presented as a very worst case scenario that no expects to take place. Perhaps.
Some of the monitoring stations have shown spikes in methane in the last year or so, but one would expect to see something pretty dramatic and sustained as far as methane levels go if we were really getting this upper range. But winds could be keeping much of this concentrated in the upper Arctic for now.
The fact that methane concentrations are much higher near the Arctic than elsewhere in the world does suggest an on going source up there. Since methane breaks down fairly rapidly (years to decades) in the atmosphere, to sustain elevated levels requires on-going high levels of emissions. And increasing atmospheric levels that we see require increase in those high levels of emissions.
The ESAS is vast and shallow and hold some 1,4000 Gtons of methane, much of it free and ready to bubble into the atmosphere once the thin layer of clathrate that caps it dissolves. Much of that is right at the edge of the temperature at which it could melt. Once that feedback starts, it is hard to see how it would stop.
And it certainly seems to have started.
Check out Fig 4 for relative effects.
http://www.esrl.noaa.gov/gmd/aggi/
I'll be waiting to see any actual measurements to show this hysterical 3.5 Gt/year drivel that some internet "experts" are taking as a matter of faith based on a single slide from a talk PDF found on the internet. This slide explicitly states that it is produced by multiplying the area of the CH4 outgassing ("hot spots", 210,000 km^2) by the *peak* CH4 observed during the 2008 ship campaign run by Semiletov and colleagues (44 g/m^2/day).
Look up the definition of the word peak in the dictionary. It is not the same as mean or average.
I have never seen such scientific rubbish at conferences and workshops that I have attended. Shakhova's paper intended to quantify current CH4 release from the ESAS at 7.98 Tgram/year of CH4 carbon somehow is unimportant in the face of an absurd upper bound that serves no scientific purpose whatsoever. If you are going to estimate the gas flux from a region you calculate the time mean release typical over this region. A one time spike is neither a yearly nor regional mean. In fact it can be thousands of times the yearly and regional mean. And indeed this is the case, since Semiletov's team observed CH4 spikes at the water surface of no more than 8 ppmv with typical values during all the ship measurements of no more than 2.9 ppmv (and the ESAS is a hot zone for CH4 in the Arctic). If 3.5Gton/year had any reality to it they would have seen surface concentration spikes well over 500 ppmv with typical values around 100 ppmv. The ESAS mean depth of 45 m is too shallow for the CH4 to be chemically destroyed in the water through dissolution of the bubbles, which are able to reach the surface.
In Shakhova et al. (2010) there is *no* mention at all of any factor of 1000 more flux from the ESAS. The 7.98 Tgram/year is the conclusion of the analysis of the observations from the ship campaigns. This is the same data that observed the 44 g/m^2/day *peak* seabed flux.
Great approach to spread AGW awareness: run around claiming the end of the world is coming tomorrow. /sarc
This politicization of the science by AGW deniers and hysterics is beyond annoying.
"So what if there's smoke? I'm not leaving my recliner till I see flames. It's probably just he neighbor burning some leaves."
There's drivel, then there's drivel.
this hysterical 3.5 Gt/year drivel
Ditto. You do not engender any support for your position by insulting honest hard work. When a person makes such a statement, they are being hypocritical. If the data can be generalized, then we are in an emergency situation. Denying that as a possibility is not just hypocritical to those screaming "alarmist!" but is dangerously poor risk assessment. No matter what the outcome, there is a lot more methane coming out of the land- and sea bed-based methane than there should be based on scientists best guesses as little as 6 years ago. Such changes were among those not expected to be seen for a century or more.
What is it, considering the above, that you cannot parse? I think next time I'm in my truck I'm going to use your logic and not start slowing down until I'm sure the car in front of me really has stopped. Should work out ok, don't you think?
Nothing in your little attack rant has any scientific content. Your reading skills are apparently lower than a 10 year old.
To repeat: Shakhova et al. (2010) uses the measurements to derive the ESAS outgassing as 7.98 Tgram/year, not 3.5Gton/year. That is 0.3% of the ridiculous figure AGW hysterics worship as the God's own truth. Various internet "experts" such as yourself have decided that she and her coauthors really meant 3.5Gt/year even though it is not mentioned once in her paper and the *only* figure in that paper for the ESAS outgassing is 7.98+/-1.3 Tg/year. Only internet "experts" would think that is the normal approach for peer reviewed publication.
That paper is her latest work on the subject.
Uh..oh... I'm not sure whether we are reading the same paper. I'm reading this one: 1A_Shakhova_Final.pdf - the link dohboi posted.
And there, on the page/slide No. 34:
Emphasis all mine, of course... Am I missing here something, or you do, dissident?
You're out of line. Make your point without making personal attacks, please.
Thanks for data source... I am still not wholly on board with the idea that this is about TEOTWAWKI. Too many weak data points, strained methodology and the like, And a bit too much hype. I am looking for someone selling something based on this particular play.
Craig
Levine and Ruppert in this news report video ....
https://www.youtube.com/watch?v=kL_yDVnbW14&feature=player_embedded
The EIA's Monyhly Energy Review is out with the data for January. Alaska's pipeline problems pulled the US's total production down by about 145 thousand barrels per day. And the lower 48 after reaching the highest point in October since 1998, has started to decline but only slightly. But according to the weekly reports it appears to be up slightly in February.
Crude production in thousands of barrels per day.
Lower 48 Alaska Total US 2010 September 4,953 614 5,567 2010 October 4,998 618 5,616 2010 November 4,989 606 5,595 2010 December 4,982 610 5,592 2011 January 4,980 455 5,435Ron P.
From what I read, the Alaska pipeline will start to have operational problems due to low flow when volumes drop to around 500,000 barrels per day. This is about 1/4 of its design capacity. We're getting close.
Below 200,000 bpd it won't work at all, so we are getting into the range where it is difficult but not impossible to transport oil out of the Alaska North Slope. This is why companies are getting antsy about drilling the Beaufort Sea and the Alaska National Wildlife Reserve. They need more oil to keep that pipeline operating and keep producing their existing fields. Once they shut the pipeline down, its all over. They'll plug and abandon all the wells, sell all the production equipment to China for scrap value, and walk away.
I seriously doubt there are any more big fields to find up there, but a bunch of small ones could keep the pipeline operating for an extra decade or two.
I think that the declining flow rate thru the Alaska Pipeline is one reason that there's been calls for drilling ANWR. If the drilling doesn't happen or if the flow from these new wells isn't large enough, it might be possible to keep the pipeline working by shutting down the flow and storing oil in summer, resuming flow thru winter when the cold temperatures require a flow great enough to keep the oil from thickening or freezing. Using this approach, it could be possible to transport an average of only 200,000 bbls per day by running the line at 400,000 bbls per day for 6 months of the year. This scheme would require something like 40 million bbls of storage at the north end of the pipeline. For reference, the tanks at Cushing, OK can store around 35 million bbls...
E. Swanson
Silly questions -- why does it have to be oil? Given some specialized pigs and corrosion protection, might it be possible to mix down with hot water?
I suppose it would be worth asking: Why there is a lower limit on flow and is the problem a seasonal one? Anyone?
E. Swanson
Eric, yes the problem is seasonal because of the extreme cold weather. I cannot find the link right now but I remember reading somewhere that the trip for the oil in the pipeline once took about four days while now it takes about two weeks. Less oil the slower it moves.
And the problem is there is water in the oil. Water separates from the oil and freezes. If the flow is fast enough it does not have time to freeze between the pumping stations, where it is heated also. So if the trip gets up to around four or five weeks, the water in the pipeline will turn to ice and block the pipeline.
The pipeline is heavily insulated but given enough time and cold enough temperatures the heat does escape and the pipeline simply freezes up.
Hope this answers your questions.
Ron P.
In addition to water dropping out of the oil as it cools, freezing in low spots, creating ice plugs, and plugging the pipeline, there is also the problem of wax precipitating out of the oil at low temperatures, adhering to the pipeline wall and clogging sensors. Both these problems increase corrosion of the pipe.
The viscosity of the oil also increases at low temperatures and it becomes harder to pump.
In summary, continuing to operate it at low flow turns into a continuous maintenance nightmare.
Your description is just what I was thinking. Cut the summer time flow and increase the winter time flow to keep the oil warm enough to prevent freezup. This could be done progressively, as the daily production rate is reduced in future years. For example, assuming that 500,000 bbls/d was the minimum acceptable flow in winter and the production had dropped to 400,000 bbls/d, run 300,000 during summer and 500,000 in winter, etc. Add more tanks every year or so to accommodate the storage between seasons. New production could delay the need for more tanks...
E. Swanson
Would the oil cool in the storage tanks while it waited to be pumped into TAPS?
They could put heaters in the tanks. Heating a tank is much easier than heating a pipeline, and they have vast amounts of natural gas with no access to market.
It is not an usual thing to have heated tanks in heavy oil, where if they let the oil cool, it turns solid. That was the great thing about heavy oil - if you have an oil spill in winter, you can clean it up with a shovel.
You're going to need a lot of tanks.
NAOM
A lot of tanks that can safely float on 'the soil formerly known as permafrost'.
Yes, so it would appear. But, stopping the flow at production rates below 300,000 bbl/d would leave lots of oil in the ground. Once the tanks were in place, production rates way below 300,000 bbl/d could be captured. Also, given enough tanks, another option might be to switch to summer only pumping. After TAPS is abandoned, the tanks could be used to fill tankers during summer, as the sea-ice can be expected to continue to decline, sad to say...
E. Swanson
As I have commented several times before, the longterm viability of TAPS is an issue, but probably not quite as dire as some people tend to think. From what I have heard, TAPS is probably viable down to somewhere around 300,000 bbl/day. Conoco in particular has been pushing the "500,000" barrel/day number, but this is probably more related to trying to convince the State to reduce taxes. The main issue, at least down to around 300,000 barrels/day or therabouts, is that the oil takes longer to make the trip and cools down more. At low flow rates, if there was an unplanned shutdown in winter, there would be a shorter time window to restart the pipeline. This problem can be dealt with by installing heating at some of the pumpstations. This of course would be expensive, so whether or not it is economic to do it is really a function of oil price.
In a recent issue of Petroleum News there were two interesting and somewhat contradictory articles regarding TAPS. In comments to the State Legislature Tom Barrett, president and CEO of Alyeska said the recent shutdown took him "closer to the edge of the cliff" than he wanted to go. Obviously this was an attempt to convince the legistlators to reduce ACES (Sarah Palin's parting gift to Alaska). In the same issue, regarding a proposed order by the Feds to upgrade cold shutdown capabiltiy Mr. Barrett said “Alyeska has been, and will continue to be proactive to address risks resulting from declining flow”, in effect saying Alyeska handled things just fine and doesn't need the Feds telling them how to run a pipeline. (See my drumbeat comment on Feb 25 for more quotes and links.)
There is additional oil that is now comming into TAPS, with more in the next few years. ENI just started production at Nikaitchuq, which is expected to add 23,000 bbls/day. Several other projects are expected to come on line in the next couple of years. At Pt Thomson Exxon will add about 10,000 bbls/day, assuming they get their permit issues solved. BP currently plans to start drilling at Liberty in 2013, adding about 40,000 bbls/day. Conoco found a modest extension to Alpine, if they can get their permit issues regarding crossing the Colville River solved that will add some additional oil (don't have a numbe of barrels for that one). None of this is yet to be found oil. There are other projects which may or may not come to pass. Not enough to return TAPS to it's heyday, but these will certainly keep it in operation a good while longer than some seem to think.
Is this based on your vast detailed knowledge of Alaska geology? I suppose it depends on how you define "big fields". I would agree that another Prudhoe size accumulation is not likely, though not impossible in the Beaufort or Chukchi. However in the offshore there is certainly potential for one or more fields in the 500 million to 1 billion size range. Onshore discoveries in the 1-200 million size would not be a huge surprise.
Is this based on your vast detailed knowledge of Alaska geology? I suppose it depends on how you define "big fields".
It's based on having worked for a company that ran a fleet of 25 or so vessels on the Canadian side of the Beaufort Sea and Arctic Islands for years, spent several billion dollars, and drilled up just about all of the available prospects. We found a lot of interesting things, but we didn't find any big oil fields.
By big I mean larger than 1 billion barrels, preferably much larger. Smaller oil fields that would be economic in southern climes just aren't economic in the high Arctic. Between ourselves and our competitors we drilled about 600 wells and found about 65 oil and gas fields - the largest of which was 500 million barrels - and it wasn't enough to justify developing anything. Well, there was one good oil well which produced for years, and they took the oil out by icebreaking tanker once a year, but one well isn't much to show for the effort.
The US side of the Beaufort Sea isn't as large as the Canadian side, and doesn't seem to have as many obvious prospects, so I don't hold out a lot of hope for it. You might find enough oil to keep the Alaska pipeline going for a while longer, though.
There's lots of gas up there, but there's lots of gas south of 60, too.
You have a marvelous grasp of the obvious. ;<)
That's right. My understanding has always been that the problem on the Canadian side was that you never found a big "anchor field", one that would justify building a pipeline. You never found your Prudhoe Bay, in other words. Fortunatey in Alaska we already have a pipeline. Anywhere near TAPS a ~500 million barrel field onshore is certainly economic. Offshore is tougher, of course. I don't have any insight into Shell's thinking, but they seem to think they can do something out there. They certainly have been willing to spend money to find out.
Over the years the N Slope infrastructure has been expanding both to the East and West. It is worth noting that the Badamai pipeline now extends 30 miles to the East. If (as seems likely) Exxon completes thier Pt Thomson development, this puts onshore pipeline all the way to the ANWR boundary. Shell's Sivulliq prospect (formerly Hammerhead) is just north and east, and Shell's Kuvlum is not far east of that. While the challenge of getting the oil ashore would still be formidable, having nearby onshore pipeline access has to positively impact their economics.
As you are aware, Exxon and BP have also spent big bucks leasing in the Canadian Beaufort, and have been shooting 3D out there. My understanding is that this area is a good deal further offshore, in significantly deeper water, than anything Dome et al explored in the earlier round of Canadian Beaufort exploration.
We will all have to wait a few years to see what happens, but I suggest you might want to keep an open mind. Past failure to find economic reserves in the Canadian Beaufort does not preclude future success in other areas, either in the Alaskan or Canadian offshore.
I'm just saying don't get your hopes up. A lot of people lost a lot of money in the Canadian Arctic. I used to work with a lot of ex-Dome workers (there were thousands of them), and their company pension plan consisted of company stock. They lost it all when the company went down.
The Canadian government lost a lot of money too. It took decades for them to work off the debt. Fortunately they learned from the experience and they won't do it again. In fact, the Canadian government is now in far better shape debt-wise than the US government, and they keep a close eye on the money nowadays.
Alyeseka has a short ppt presentation on the topic of keeping the flow going below 600bpd: http://www.alyeska-pipe.com/Inthenews/LowFlow/LowFlow.html
Thanks, that link provides much information, especially this report...
E. Swanson
Iraq is increasingly becomming more and more unstable. Now journalists are being rounded up and executed:
http://www.guardian.co.uk/media/greenslade/2011/mar/01/journalist-safety...
This was posted today.
And apparently war with Iran is on the British government's mind:
http://www.telegraph.co.uk/news/worldnews/middleeast/dubai/8228244/Brita...
Edit:
I might add this too.
On Saudi Arabia:
http://www.guardian.co.uk/commentisfree/2011/mar/01/saudi-arabia-protest...
FOR ALL - More chatter about doing an SPR draw down to lower fuel prices. Here's some pure speculation. Not a prediction but just a "what if". What if the feds order a 2 million bopd draw down? The numbers say they could do so for just 12 months (probably less from a practical stand point). So the KSA says fine...we'll drop our rate 2 million bopd. That would represent around a 20% drop in cash flow for the KSA. But for the last year they've been banking a lot more income they had expected IMHO. There is also speculation that a fair bit of their current production is from marginal wells (oil stained brine) and thus more costly to produce.
Given that the stated purpose of the SPR is national security and a buffer to soften a supply disruption (and not to lower gasoline prices) would we not be required to start refilling the SPR once it's drawn down? So in 12 months or less the U.S. would began buying as much oil as is available on the market to replace the SPR?. And what would happen to oil prices if the U.S. companies started to bid the price up of ever bbl of excess oil? Just MHO but it sounds like we might go from $4 fuel to $3 fuel to $6+ fuel in just a 12 month period. Again, not a prediction but...what if?
That is exactly my fear, given a populace that believe that supply issues are political, not structural. We are as likely to waste the SPR as we were the oil before it -- in other words, very likely indeed.
The SPR has value as a strategic deterrent, not as a day-to-day fuel source. If there is a pipeline break or a hurricane or a revolution or riot somewhere, and there is a need to buffer supply, we should put in place a more tactical buffer for that. Such used to be called "inventory" back when that wasn't a dirty word to be minimized.
Obama's re-election in November 2012 is ALL important. Most people, that are undecided now, will make a decision on how he did in the first term by next summer. Between now and next summer, the big guns will be coming out. Spending the SPR the temporarily suppress the pain at the pump is a real option. We can all pay higher prices to refill the SPR after he is re-elected.
World food prices rise for seventh consecutive month, reach new historic peak
Does somebody have some informed updates on the food situation?
We may be staring too much on oil. The food crisis will be brewing quite badly and will be compounded with the deteriorating oil situation by summer.
China is poised to make the leap from more-or-less self-sufficient to massive importer due to the recent crop fails.
It's possible we will have counter-revolutions and re-revolutions in the Middle East if the prices of food continue to go to hell.
The masses don't care about structural arguments. Hang the king/despot/monarch/prime minister!
It will really suck for those countries who need to import both oil and food. China probably has cash on hand to force price up. Those without such cash, well, they'll do without.
There is a lot of hidden food in the meat market, though. As meat prices rocket, those consumers even in wealthier economies will cut back, and that will help buffer grain prices a bit. Ditto for ethanol. Such buffering will likely be slow and insufficient, though, compared to suffering for poor third-world importers.
I figure the system will get a good shock as the slack gets yanked out of the food chain, rather like we had for oil a couple of years ago. It'll be interesting from a systemic response perspective.
Depending on what system you are talking about, it has already gotten quite a shock. Most analysts agree that food prices are a major factor in the unrest an revolutions going on in MENA. We are likely to see this spread to much of the rest of the 'developing' world. There people spend over half their income on food and are still just barely getting by. When food prices triple, they have no recourse but revolt. Of course, the new gov will be mostly not much better than the old at feeding people under these circumstances.
Those who can afford it will continue to eat meat, further depriving the poor of affordable food.
And of course, now that grain prices are locked even more tightly to oil prices with ethanol, PO-driven price rises will exacerbate an already horrid situation.
Perhaps the Biblical floods and droughts we've seen in the last twelve months are just an odd aberration and we'll go back to mostly mild weather that mostly stays within historical limits from now on. Perhaps.
But with methane now bubbling out of tundra and sea bed at alarming rates, the last year may soon look like a pleasant stroll in the garden compared to the climate apocalypse steaming down the tracks toward us.
Best wishes to all on our doubtless interesting future, especially to those busily knocking holes in the bottom of our sinking boat (or paying for others to do the same--i.e. all of us).
1st - oil going to $80....wasn't the "model" things were built around $10? And wasn't $40 supposed to be the 'target' a while ago?
2nd - http://www.floridaoilspilllaw.com/oil-rain-confirmed-nasa-chief-mission-...
Appeal to authority argument - NASA chief scientist says there was oil rain.
Bernanke warns recent oil price surge could impede U.S. growth
It will be anti-inflationary if it results in debt collapse. Stagflation still seems to be a concern, given the level of new borrowing, especially if the economy shrinks.
Anti-inflationary, indeed. Oil puts Bernakes plans in check. I'd say the oil spike was a good systems test of what the economy can handle. Another 10% increase and things will get hairy, they will have to shed jobs again.
Paleo - Granted I'm just an old rock licker and not an economy wizard but isn't a recession one of the proven methods for stopping inflation? In fact shouldn't we be looking for deflation: cheaper house, autos, etc?
Sounds like good times coming (remember how I make my living).
"shouldn't we be looking for deflation: cheaper house, autos, etc?" at the same time he said the propect for deflation was tiny.
It would seem reasonable to hope for cheaper prices for homes etc but then existing mortgage holders would be underwater and all the efforts of the Bernanke have been aimed at maintaining the price of houses otherwise all the banks would be bust.
Yes you should be looking for cheaper houses, autos, etc, but in the probable future economic environment they should be smaller houses, autos, etc. And have a bicycle and living within riding or walking distance of work and shopping is not bad idea, either.
Just a gentle hint to warn you that the future might not be suburb-friendly.
Nate said he was interviewed briefly on BBC World on Sunday night. I haven't been able to find the interview, but a lot of their stuff is blocked for US residents.
This is the BBC World schedule for Sunday 27th Feb:
http://www.bbc.co.uk/worldservice/programmes/schedules/2011/02/27
Which program was it? I thought it could have been 'One Planet' (http://www.bbc.co.uk/programmes/p00dvnq5) but I had a listen through and couldn't pick him out. Perhaps he was on 'From Our Own Correspondent' but there are more of those so didn't get a chance to listen.
I can't vouch for any of these sites, but you could try a proxy browser. I think if you view the site from a proxy server in the UK, then you will solve your problem.
try: http://proxify.co.uk/
I hope somebody can find a workable link to the interview.. if not maybe one of our members there can listen to it and summarize it for us.
Going back to the end of suburbia for a minute-I don't doubt that oil and gasoline prices can send us into a tailspin and wreck the whole economy; I actually expect exactly that to happen, perhaps this year, ormaybe a few years down the road, unless something else finishes wrecking it sooner.
But I believe those of us who believe the end of suburbia is near due the DIRECT effects of gas prices are wrong-a suburbanite might very well lose his job due to a declining economy, but I have lived the life style , and know many who live it currently.Suburbanites can and will adapt-but not until forced to do so.
A few early adapters can get out of the outer burbs and into the city, or move closer in, but urban housing in the requisite quantity simply doesn't exist for a massive population shift; urban prices and rents , relative to suburban, will go thru the roof.
The suburbanite who still has a job can and will stay put even with gas at eight or ten bucks-that will be cheaper than moving.
Among the ones I know, and talk to regularly, the plan-if it becomes necessary- is to give up one or two cars, buy a second hand small car, or a new one if possible, and cut way back on driving by combining trips.
A friend who has commuted a good way in a fullsize pickup for decades and used twenty five or thirty gallons a week total just bought an Escort that will use less than half the gas, and he is finally buying his groceries, etc, on the way home, and staying home, rather than going back to town a couple of extra trips every week to shop or eat out.Ten gallons a week in the Escort, which is cheaper to insure and maintain than the truck, even at ten bucks a gallon , will be a much better deal than moving out of his nice paid for house-plus at that price, paying for it will hurt enough that he might even FINALLY seriously consider a carpool-which would be easy for him, as a couple of his coworkers live near him.
He tells me he expects to fill up the truck only once every couple of months from here on out-when he tows his boat, or hauls firewood, or takes care of other truck chores.
His house would not rent for much, given the location, but renting or buying near his job would be very expensive indeed. Furthermore, if he moves he would have to give up his workshop and nice backyard garden.
Ten dollar gasoline will hurt him bad, but it won't kill him- not so long as his job lasts.
My own situation is similar.So long as we can earn some money, or at least not spend down our savings too fast, we will survive ten dollar gasoline ok.
I already have a good economy car ready to go-but so far it is cheaper just to drive the compact pickup truck than insure an extra vehicle for the fuel savings.Our unnecessary driving is down to well under five thouasnd miles per year now-most of that is to visit relatives and friends.
I think that's accurate, as well. The best model I've found so far for the unemployment heading our way is still Peter Victor's of the Canadian economy if growth were simply to stop beginning in 2015.
Actual contraction will send unemployment skyrocketing. Debt skyrockets soon after, though I think there will be a fracture before long so we won't actually see those debt levels.
Our courses repeatedly tell people, "begin treating every dollar as precious because, if it isn't already this way for you, making money is going to be very, very difficult."
A rather specific, hypothetical example, but I'd like to know what would happen if a nation's economy totally collapses and you have a large amount of debt (i.e. an unpaid mortgage) - does the enfeebled government come to repossess the house or do you get to keep it for free?
Or in other words, is it better to clear all of your debts before the crash or physically secure as much 'stuff' as possible? (Assuming you have little conscience about the fate of your fellow humans of course!)
i - depending on how you view "total collapse" I doubt anyone will be worrying much about their credit rating or home repossession. More likely physically defending your home and family will be your focus. So perhaps you're thinking about a really bad recession or a down right depression. See a lot of stories now regarding efforts to deal with the mortgage meltdowns. A lot of bad situations for a lot of folks but not hittng most folks directly. Personally I've always opted on reducing debt so dealing with unemployment might be easier. OTOH some folks would rather have the cash (or gold) at hand when TSHTF. I suppose your plan has to be based on just how bad you assume the situation gets.
Sure, that's a good point. I guess it's a bit of a gamble eh! Although I'm sure it hasn't even crossed the minds of the vast majority of people who are currently looking to get on the property ladder.
And for me personally, I don't think I'd have the stomach to physically fight off my neighbours. Fingers crossed it doesn't come to that.
That has been a topic of discussion here for years. Some people argued that it was worth going into debt, because so many people would be going bankrupt that it would be impossible to go after them all. In particular, some felt that it wouldn't be worth foreclosing on people, if everyone was delinquent on their mortgages.
They were partly right. Some people are getting to live for free for months, even years. But in the end, most are evicted.
I think what's happening in Detroit is probably a clue on how it's going to unfold. Some houses holding their value, some being sold for $80 on eBay, depending on the neighborhood. The city is offering to give houses to police officers who agree to move into the city. The city gets the houses off their hands, and gets the taxes the new residents will pay on the properties. And the cops get free houses.
I suspect that's how it will play out, at least for awhile. It won't be ordinary homeowners who get free houses, but certain people - particularly those responsible for maintaining law and order.
According to Tainter, this was how they handled collapse in the Byzantine empire. They gave the land to military commanders, and let them run it.
I guess my kids might re-learn the true meaning of: "worth your salt".
Thanks Leanan, makes sense.
I personally don't have any debt, but then again, I don't have a place to call my own either! I just found the concept quite interesting.
It's good to be presented with the Detroit example as it's not common knowledge over this side of the pond (well, at least not to me anyhow!). I didn't realise that was already going on.
Like Rockman says above, I guess a lot will depend on how big the crash is and to what extent fundamental infrastructure breaks down.
Our courses repeatedly tell people, "begin treating every dollar as precious because, if it isn't already this way for you, making money is going to be very, very difficult."
Very good advice.
I tell people this as well.
Yesterday one of our volunteers (a retiree) told me about the "Happy 21st B-day" party he and his wife are tossing for their daughter. They plan to spend several hundred dollars so their daughter can get smashed with some friends.
I told him that in a couple of years he and his wife will be crying very bitter tears over the wasted money. I know I sound like some sort of puritan scold when I give this sort of advice, but I believe it totally. People just cannot grasp the dire situation we're staring in the face.
On the flip side, when you're standing on a future hillside, bathed in the red glow of the crumbling cities aflame below, you might well be harbouring some pangs for those kind of social events.
Probably worse things to spend money on :-)
Middle-school parties can easily cost several hundred dollars. Just wait til you see the budget for a wedding!
Oh, I know all about the budgets for weddings.
I used to be a commercial photographer; for over twenty years.
$20,000 dollar weddings are going to go away real fast, too.
My simple plan is to hold equal parts cash and precious metals. In that way, I protect myself both from severe deflation as well as hyperinflation and quite possibly profit in the process. Also, the cash is to spend (on things you need), not to hoard.
I prepare prudently, you stock up, he hoards criminally:-)
aangel! How can debt skyrocket when unemployment has already skyrocketed? Unemployed people cannot borrow money. Or do you mean debt from not being able to pay rent, utilities, etc.?
Craig
I think he means the public debt, that is the federal debt, not private debt. When the tax base shrinks because the tax base becomes unemployed, revenues shrink, causing the debt to skyrocket.
Ron P.
Very good analysis. I think that what will kill suburbia is not the price of gas. More likely the price of diesel fuel, combined with the JIT supply paradigm that demands that everything be delivered by truck. The first move will be to longer supply times, larger storage, and transit by rail.
Centralized warehousing implies urban, not suburban, systems. Close in markets, more local produce, and lack of maintenance on the area roads will do more to end the sprawl than just high priced gas.
Of course some of those subrubanites will no doubt be farming their itty bitty lots, plus the park and the school grounds. And, if they have a surplus, they will find a way to transport it the 20 or so miles in to the city.
Maybe they will set up stands in convenient locations, thus creating new markets. Others will have those power tools out, manufacturing needed items for the restructuring of a sustainable society. Meanwhile, I am afraid that many will simply not make the cut. My library of woodworking, masonry, electrical and plumbing techniques is growing, along with volumes on intensive agriculture in small areas.
Frankly, I am more worried about water than gas. Hereabouts, the city provides the water. Maintaining those water mains and sewer lines is a big expense. With fewer wage earners, how will they pay for that? "Will work for water?"
Craig
Not locked in a bunker with Kunstler again I hope.
Someone called in to a syndicated talk radio show today and said that we have high gas prices because Obama wants Government Motors to sell lots of electric vehicles.
Another called in and said the top two companies are Exxon and Mobil.
I then called in to respond to a question on why diesel prices are higher than gasoline. I was able to get a plug for The Oil ConunDrum at the end, and the host wanted me to pay for an ad.
Such is what passes for right-wing talk radio.
Right-wing talk radio is heavily censored.
Only the "right" thinking kind of people are allowed to air their views.
More interesting are the free for all talk shows like CSPAN's Morning Journal.
Lay people call in with all kinds of crazy ideas about why gasoline and oil prices are so high and ideas of what "we" can do to end our addiction to/ dependence on "foreign" oil.
You mean Washington Journal, I think.. but yes, you do get the 'honest' appraisals of many different views, and at least there's a strong bit of signal there, to go with all the noise. It's probably in a reasonable proportion to the percentage of voices I'd expect to have well reasoned ideas to offer.
I haven't been able to watch much lately, but it's a very encouraging program for me, almost exclusively because they seem to maintain a politically fair position and allow, even encourage the perspectives from across the spectrum to weigh in.
Washington Journal is horrible because the hosts just sit there like zombies and take it. No matter how stupid the caller sounds, the talking heads won't say a word apart from "next caller". Might as well listen to random phone conversations.
Zombies? Not at all.
They give the audience the respectful benefit of the doubt to make their own judgement on the content of calls, and use a great deal of restraint and respect in doing so. It's a forum where a caller can simply make their point, and it stands or falls (in the audience's ear only, or with the response of a guest..) on it's own merits. Editorializing on this input would be distracting noise, and I'm grateful that they have the temerity to resist it.
To me, this shows an ideal model of 'reporter's neutrality'.. I'm smart enough to figure out what is being said, so I don't need it interpreted by the Anchor.. they DO take the topic of calls and apply to them relevant stories of the day, but they don't try to answer questions, rhetorical or otherwise that are posed by callers.
To me this is the Television equivalent to Democracy in action. I'm sorry to hear you don't think it's valuable.
EDIT: One thing I'm often encouraged by at C-span's Wash Journal, as well as at TOD, is that with an open spigot, I not only get to see just how foolish some people are, but also just how Wise a great many others are as well. Let me see the baby AND the bathwater, so I can know the balance of things.. a 'bathwater filter' in that situation would just screw up the view. Context.
Agree.
The polite-listen aspect of WashJ is an example of democracy in action.
We might not like it when some of our lesser informed fellow citizens rise up to speak, but that is what democracy is: everyone speaks, the wise, the foolish and even those who do not know how deep down foolish they really are.
p.s.
When I listen to on-air pundits, be it on CSPAN's Wash Journal or on a left or right wing TV/radio show, or on a finance cuckoo bird show (CNBC), the more interesting aspect is how the speakers "frame" things.
For example, if you get someone who is a science illiterate "economist" head, he or she will often frame their talk (a window into their world view) in terms of econo-babble speak. They might for example say, "The fundamentals are sound despite a mild chance of unexpected headwinds".
Well, there area couple of birds on the electrical lines in my neighborhood that also make fundamental sounds (coo koo, coo koo!) which are of equal intellectual value.
And yes, even I can almost hear the winds blowing around in the cranial echo chambers that some of these headwind pundits have for brains.
It just gives you a better appreciation of the other members of our species who populate the world and make it what it really is.
(Your other option is to stick your head in the sands and pretend the real outside world just isn't there.)
I was thinking about the majority of time when they have an open forum and they identify the callers as to their political stance and make sure they have equal numbers from each side. I listened to this on the radio but it is deadly on TV where you have to watch the host staring blankly as these people calling in babble along. The hosts are horrible.
I think the hosts are trying as best they can to be apolitical when under the TV makeup they each probably harbor some well rooted, right of left wing ideology. :-)
Iranian forces reportedly fire tear gas on protesters
Yemeni protests grow; leader blames U.S., Israel
Put on your tin hats!
http://www.washingtontimes.com/news/2011/feb/28/financial-terrorism-susp...
hank - Kinda amusing. But I might still vote for domestic terrorists. Or as Pogo said:"We have met the enemy and he is us".
The Moonie Times. Oh they crack me up.
Libyan crisis leads to cut in OPEC output: survey
Libyan output was down 230,000 barrels per day and the OPEC 12 was down 200,000 barrels per day. So someone helped out by pumping an extra 30,000 bp/d. ;-)
Seriously we will have to wait until we get a breakdown of who else was down and who else was up to see who has any excess capacity to pump. The OPEC Monthly Oil Market Report comes out on the 11th of this month.
Ron P.
http://www.forexyard.com/en/news/OPEC-output-falls-in-Feb-on-Libya-Reute...
Pollux, thanks for posting this. It is very revealing... so far anyway. Saudi increased production 150,000 barrels a day. If that was all in the last week of the month then that comes to 600,000 barrels per day for that week. But they may have been doing the very same thing they were doing in January, increasing production all they could to take advantage of these very high prices.
I think it goes without saying that everyone else in OPEC is producing flat out. They want to take advantage of these $110 prices. I expect that is what the average OPEC contract price is right now.
The Iraq number is interesting also, down 140,000 barrels per day. The surge appears to have hit a snag.
Ron P.
Bloomberg also provides data for OPEC countries:
Thanks Pollux, could you post the link for this whole index. I cannot seem to locate it from the four links you posted or from searching on Google.
Ron P.
FOUR BUCKS A GALLON at the local Shell station here in CA! Drove past and it was 3.90, and the cheapo was 3.80. 1.5 hrs later the cheapo was 3.96 and the Shell guy was just finishing changing the price to 399.9/10th, call it 4.00 a gallon!
http://www.oil-price.net/
Brent 115.42 up 3.62 on the day!
Dow down 168!
While out, I went to the Dr's and there was a woman there with her four kids, all under the age of 6 - the youngest a newborn. She's got 4 kids 6 or younger, almost 6 years after oil peaked in May 05. So her and her husband started their big family just as oil hit a production plateau. Ironically, in the waiting room was a National Geographic and the cover stated, 7 billion people (in red letters). Now that's timing - wait until the pop. of the world is hitting 7 billion due to cheap energy, then start your family just as oil peaks. Now that's throwing the dice...
It's interesting how some trigger events, the 100 dollar mark for oil, the 4 dollar a gallon gas price, makes people rush out of their protected shells and proclaim all sorts of doomsday scenarios.
I'm not better, I did the same at the beginning of the Libyan uprising and I saw how the commenting section was boiling with fear(and excitement).
I do not think we'll have to wait until summer for something significant to happen.
We're already ahead of '08 in terms of both prices and events.
Back in '08 we had food riots, now we have revolutions.
Since '11 is bigger in almost all ways, will the crash be much bigger and more, er, spectacular too?
Either way, if we see significant trouble in Saudi Arabia or Iraq(or maybe even a place like Oman), I'll be tuning into the comments section here to get a glimpse into how people think, really think, in a situation of crisis where the fin-de-siècle atmosphere is bringing the unfiltered truth out of people, sharing it with virtual strangers.
Fascinating, really. And utterly compelling.
I find myself checking constantly at work when I have time on how the situation unfolds. I have the Beeb, Guardian, the Yahoo! stocks app and so on, so I can keep up to date. I tend to go in and out of being a peak oiler, given some days I feel really down about it (my general mood swings aside, I somehow have less real ambition since finding out all about this in early 2007, despite knowing about limits far longer).
The way this year has unfolded so far is fascinating in the extreme. I don't see how these revolutions can just fritter out and die, like some expected. We've seen two nations fold because of them, numerous others have protests from their fallout, and now Libya is essentially in civil war. With the KSA expecting protests on the 11th and Iran and Iraq joining Yemen, Algeria and Oman, I don't think the oil markets will get any respite.
Personally, I really hope the centre-point for all this, Saudi, is hit hard. The sooner that regime dies a death, the better. And it will have the added benefit of waking everyone in the complacent West right the hell up.
Crude-oil supplies down 1.08 mln barrels: API
Normally, we would see total inventories stay the same or slightly increase about this time of year. Instead they fell about 7.5 million barrels, which would be a steep fall any time of the year.
To confirm a drop of this size, we get the EIA figures tomorrow. They are also likely to show that a slowdown of oil imports into the US is starting to have a rather significant effect.
I believe that there was a common presumption among even well known energy analysts that the US would maintain its share of oil from oil exporting countries. However as exporters struggle to maintain output and exports, the US share of those exports is falling. The US actually needs higher imports in 2011 than 2010 due to increased product exports, but is getting less.
American Parent AMR Cuts Seating With Fuel at Highest Since 2008
Newt Gingrich uses ethanol to curry favor among Iowa conservatives many of whom take a liberal view of his personal life. He appears to be leading in Iowa and is well connected and financed.
Local politician Linda Upmeyer who is also Iowa House Majority Leader is supporting Gingrich:
http://www.huffingtonpost.com/2011/03/01/newt-gingrich-presidentia_n_829...
Should his considerable efforts pay off and he becomes the Republican Presidential candidate in 2012, voters will have a choice between two ethanol supporters in the November election.
Upon taking office in January 2013, he will be 69, a year younger than Ronald Reagan was at his inauguration. At his side will be wife number 3 whereas Reagan took the oath with wife number two at his side.
A lot of Iowa's conservatives don't think breaking marriage vows is any big deal. Being for ethanol, now that matters.
I think we will see the army play a bigger role in the years to come in American public life.
Can we get off oil now?
VW unveils new model of microbus loved by hippies
As someone who owned seven air-cooled VW micobusses, this got my attention. I credit my '66 21 window bus for instilling me with great patience. I drove her coast to coast twice, lovingly restored her, sold her for 6 times what I paid, and cried when she drove away.
The Bulli Bus Concept
Detailed review:
According to zFacts.com, the National debt ceiling of $14.294 trillion will be reached tonight.
Don't worry, newman, there is just a theoretical risk of that debt being a problem.
Monday, March 1 @ 6pm PST: WTI @ $100.34, Brent @ $116.10. It looks like the supply increase to lower and stabilize prices didn't work.
Anyone hear news besides Gadhafi's forces retaking a couple of towns near the capital today?
I heard two cities nearby fought off attacks early today. Did the news change later? MSM seems to have no details.
Here's something from AlJazeera:
http://english.aljazeera.net/news/africa/2011/03/201131134823430392.html
It sounds like his advance was just to a border region. I wonder if they are securing a route for his exit. The army seems to be split, and the part Gaddafi controls is not doing well.
"Witnesses said pro-Gaddafi forces battled opposition fighters for six hours overnight but could not retake control of the city.
An assault on the opposition-held town of Zintan in the Nafusa Mountains was reportedly also repulsed by armed residents and allied army units.
But some analysts doubted that Gaddafi would launch a widescale military offensive to regain captured territory given the outside pressure.
"Gaddafi is finished if he does it [military attack] and finished if he doesn't. In both cases he is very vulnerable," Ashour Shamis, a UK-based Libyan activist, said.
"He is losing out sections of Libya very very fast. He has no influence except in Tripoli and even there very small areas
are under his control."
Gaddafi's influence over the desert nation has drastically shrunk following the deadly protests. The opposition movement is in control of most of the eastern region, and several cities elsewhere have also slipped out of Gaddafi's hands.
Numerous tribal leaders, officials, military officers and army units have defected, weakening the leader who has ruled Libya for more than 41 years."
That he has no firm control even over Tripoli is quite telling.
Yahoo News has this in an AP report in their world news - sounds like things are still sorting out.
Details are sketchy at best. The opinion of most news reporters and pundits seems to be that Gadhafi is finished.
Dave
The Guardian paper is running a live blog, here's the link for today:
http://www.guardian.co.uk/world/blog/2011/mar/02/libya-uprising-gaddafi-...
I've just listened to Gaddafi's latest rambling speech, the guy is in total denial and IMHO will not stop at anything to cling to power:-(
Looks like MadMax days are fast approaching:
Gas thieves drilling holes into tanks of parked vehicles
This is even more destructive than cutting the catalytic converter off a parked car and also dangerous. It would be simpler to cut the fuel line and hot wire the fuel pump, directing the gas into a container, but that would require some understanding of the system...
E. Swanson
Nothing new, they were doing that 20 years ago in the UK. Trouble was that if they were looking for petrol (gas to the gringos) and found diesel they just left it running out or V.V..
NAOM
Even an incompetent thief should be able to recognize a diesel vehicle;they are stylistically badged, smell to some detectable extent if you put your nose to the filler ,as there is an occasional spillage of a few drops when refueling, and usually carry a sticker at the fuel inlet specifying diesel at the filler pipe.
Many years ago, a redneck acquaintance showed me his personally constructed, technically sophisticated "carolina credit card" aka known as a siphon hose.
He had a small electrically operated fuel pump wired to his taillights mounted in a hidden spot in his trunk, with a long piece of siphon hose attached that could be pulled out thru a hidden hole, from outside the car. The delivery outlet was directed into the filler pipe of his gas tank.
The siphon could be retracted by pulling on a cord run under the seats and carpet to the drivers seat.
He would stop to talk to a buddy in the parking lot of a closed service station, drop the siphon into the underground tank, and fill up in three minutes. Nobody had locks or even screw off caps on the tanks in those days, just flip up covers.
These days, we find it necessary to park our farm equipment at the house rather than in the fields;otherwise we all too often find it necessary to lug a tank of fuel out to the field in jerry cans.
People operating heavy equipment such as bulldozers clearing house lots have learned to fill up in the mornings, rather than at quitting time.
Saudi Aramco to use CO2 to boost Ghawar oil field output by 2013
Regards,
Nawar
Thanks Nawar, Saudi has been planning this for some time. Here is a link from October 2009:
Saudis eye CO2 injection at Ghawar
Ghawar is in steep decline and they are in a panic trying to stop it. But then they say they have over 260 billion barrels of reserves. Yeah right!
Ron P.
Thanks for the clarification Ron, I agree actions speaks louder then words.
Regards,
Nawar
The U.S. (DOE) claims they can extract 89-200 Gb with CO2-EOR. We had the discussion before. Numbers only are meaningless. When KSA is in decline nothing is going to stop that. Neither tertiary EOR, nor their undeveloped smaller fields. That is why they are looking for giants in the Red Sea and hope and pray...
The Peak Oil News and Forums website has been out of commission most of the day today. Anyone know what's up with that?
I'd like to hear some skeptical opinions concerning Joule Unlimited's claims that they have created an organism that can produce diesel fuel from water, carbon dioxide, and sunlight.
http://www.huffingtonpost.com/2011/02/28/joule-unlimited-diesel-fuel_n_8...
The first thing that comes to my mind: if it uses fresh water that could be a problem as we are running out of that and it would probably take more energy to desalinate water than the organism outputs.
This company has come up before. Here's one brief discussion about it:
http://www.theoildrum.com/node/7097#comment-743438
John Hofmeister was on the BBC Radio 4 Today programme this morning. In the course of the interview, he said that the US is a major part of the oil price problem because it has more oil than it will ever need but refuses to exploit it preferring to export the risk overseas. What on earth is he talking about? Oil shale?
The link to the listen again in the UK is here:
http://news.bbc.co.uk/today/hi/today/newsid_9411000/9411359.stm
The comment is at about the 3 minute mark.
Beats me. EIA says 21 billion barrels (or 8 years at current production rates)
http://www.eia.gov/emeu/international/reserves.html
I heard that too - it all seemed to be going quite well until he came out with that comment. I can only assume he's afflicted with the common confusion between oil-shale and shale-oil.
Doom - Usually such flubs just make me smile. But I think about the time when the really bad aspects of PO start to pop up. It would be nice to believe that more accurate and sane commentary will develop. But with what appears to be an ever growing gap between the Repubs and Dems it's difficult to not expect the demagogy on both sides to worsen with even more confusing sounds bites thrown at the public.
Even with some intellegent voices out there will they be heard above the noise from the incompetants?
Yes, some commentators are becoming downright delusional about the situation, as it steadily deteriorates.
I've seen that happen to people before, when they were under stress. Eventually the little white men with butterfly nets took them away to a nice white hospital room, the friendly doctors put them on medication, and after a little therapy and counselling they were right as rain. Downright happy, in fact, and often almost rational in their thinking. Not that I'm going to mention any of my ex-girlfriends by name.
But I don't think that we're going to be able to get any of these commentators on medication, so I guess we'll have to have to live with seeing them on TV.
The problem is that many people take what they say seriously, and that can be disastrous if they make the wrong decisions regarding buying a big house in the suburbs and a big new SUV to make a long drive to work and shopping. There's not enough oil left to support that lifestyle.
I just listened. This is shocking coming from a former Shell CEO. He is obviously talking about the Green River Shale. All the Green River Shale is not on government land. There is quite a bit of it on private land including the part that Shell has been trying their great "freeze the perimeter but cook the inside" experiment. They seem to be putting that one on the back burner lately. I wonder why?
Ron P.
Ron - About a year or two ago Shell made a public statement that they were delaying the GRS pilot project fron 2011 to 2014. I think.
He of all people should understand the meaning of the term "economically recoverable". Or maybe he thinks the government should hand out enough money to make it economical.