Drumbeat: April 23, 2011

Iraqi cleric's followers demand U.S. troops leave

(Reuters) - Hundreds of followers of anti-American cleric Moqtada al-Sadr took to the streets of Baghdad on Saturday, trampling U.S. flags and vowing to escalate military resistance if U.S. troops fail to leave Iraq this year.

It was the second major demonstration by Sadr's followers in recent days after the cleric issued a warning on April 9 he would unleash his Mehdi Army militia if U.S. troops were not out of Iraq by December 31. More than 5,000 marched in the streets of Basra, Iraq's southern oil hub, on Thursday.

Weekly Address: "Instead of Subsidizing Yesterday's Energy Sources, We Need to Invest in Tomorrow's"

WASHINGTON – In his weekly address, President Obama laid out his plans to address rising gas prices over the short and the long term. While there is no silver bullet to bring down prices right away, there are a few things we can do. This week, the Attorney General launched a task force dedicated to rooting out fraud or manipulations in the oil markets. The President called for finally ending the $4 billion in taxpayer money that the oil and gas companies receive annually. And, we need to continue safe, responsible production of oil at home. But in the long term, we need to invest in clean, renewable energy. That is why the President strongly disagrees with a proposal in Congress that cuts our investments in clean energy by 70 percent.

Behind the Rising Cost of Food

Fuel costs are to blame, and so is a shift in how the rest of the world eats. The demand for food is up around the globe, driving prices up. The cost of food worldwide rose 37 percent from February 2010 to this year, according to figures compiled by a United Nations organization.

The cost of meat in particular is running high, according to a wholesale price survey by the Agriculture Department. At the retail level, that means that the brisket on the Passover table costs 17 percent more this year than it did last.

What's Driving Gas Prices, From An Energy Insider

The average price for regular gas is now well above $4 a gallon in seven states, and some analysts say we could reach $6 a gallon in some parts of the country as the summer driving season approaches. Host Scott Simon talks with John Hofmeister, founder and CEO of the non-profit group Citizens for Affordable Energy and former CEO of Shell Oil, about viable energy policy.

Gov't to help TEPCO pay for damages if survival at risk

TOKYO — The government is arranging to help Tokyo Electric Power Co pay for damages incurred from the nuclear accident at its Fukushima Daiichi power plant if it comes to a point where the company’s survival is at risk due to ballooning compensation costs, government sources said Saturday.

The government is considering the specific situation in which it would exempt the utility from further burdens, but its actual assistance is expected to be limited considering the possibility of a public outcry in the event the state decides easily to inject public money, the sources said.

South African Govt Places Moratorium on Fracking

South Africa's government placed a moratorium on licences for fracking, a technique used to extract gas in the Karoo Basin region, pending further research.

Mubarak Faces More Questioning on Gas Deal With Israel

Persistent public suspicions about corruption and mismanagement that swirl around Egypt’s secretive deal to sell natural gas to Israel prompted Egypt’s public prosecutor on Friday to extend the questioning of former President Hosni Mubarak for 15 days, judicial officials said.

Egypt orders ex-energy minister, former officials tried

(Reuters) - Egypt on Saturday ordered former energy minister Sameh Fahmy and six other officials to stand trial on charges related to a natural gas deal with Israel, the public prosecutor said.

The decision is part of a crackdown on graft during the 30-year rule of deposed President Hosni Mubarak by the government appointed by the military generals who now rule Egypt.

Libyan Forces Withdraw From a Besieged City, and the Rebels Wonder Why

BENGHAZI, Libya — In a sudden shift after nearly two months of heavy siege, government forces withdrew from the western city of Misurata on Saturday.

By afternoon, forces loyal to Col. Muammar el-Qaddafi had abandoned all but two buildings, where they were surrounded and under pressure to surrender, rebel spokesmen and independent observers said.

But there was little celebration in Misurata as government forces on the city’s outskirts continued to launch barrages of artillery into the heart of the city, killing 24 people on Saturday alone, local doctors said.

Syrian Security Forces Fire on Mourners in Several Towns

BEIRUT, Lebanon — Syrian security forces fired their weapons into crowds of mourners in at least three towns on Saturday as tens of thousands of people buried protesters who were killed a day earlier in the worst bloodshed since the uprising began last month. Human rights activists and witnesses said at least 11 people were killed on Saturday.

The death toll from the protests on Friday, one of the bloodiest days in the so-called Arab Spring, had risen by Saturday to 109 people, a number that activists said was likely to rise as more bodies were returned to their families. Another group said 114 people had been killed.

Myanmar set to sign contracts with foreign firms for oil and gas exploration, state media say

YANGON, Myanmar — Myanmar’s state oil firm is set to sign contracts with companies from China, Singapore and South Korea for oil and gas exploration, state media reported Saturday.

The Crash Course: The Book

Many of you are already familiar with Chris Martenson’s “The Crash Course” video and website. Chris now has a book version which joins the small shelf of books I recommend as starting points for understanding our collective future: The Crash Course: The Unsustainable Future Of Our Economy, Energy, And Environment.

Saudis see need to pump 9m bpd of oil

SINGAPORE: Top oil exporter Saudi Arabia needs to pump at least 9 million barrels per day (bpd) of crude for the next few years and is considering boosting capacity to meet rising demand, Petroleum Intelligence Weekly (PIW) said in a report citing Saudi sources this week. Rising fuel demand led by growth in China, India and the Middle East has outpaced Riyadh's expectations, and Saudi Arabia now sees medium to long-term oil consumption higher than it had previously anticipated, trade publication PIW reported.

Saudi sources expect the kingdom will need to keep oil output around 9 million bpd or higher over the next few years," PIW said. Saudi Oil Minister Ali al-Naimi said on Sunday the kingdom's April oil output may rise from March, when it pumped 8.292 million bpd. Output was above 9 million bpd as recently as February, when the kingdom produced 9.125 million bpd to plug the gap left by Libya, where civil war cut exports.

Why gas is so expensive, when oil isn't

NEW YORK (CNNMoney) -- Gasoline prices have been rising for months and are within striking distance of their 2008 all-time high of $4.11 a gallon. But while oil prices are above $100 a barrel, they're still 24% below their 2008 all-time high.

So why is gasoline so expensive, when oil is so far off its record price?

Gas prices hit smaller companies

Rising gas prices hurt most small businesses, but sometimes they help others.

Orlando gas station charges $5.69 a gallon

NEW YORK (CNNMoney) -- Gas prices are on the rise nationwide, but one filling station in Florida has earned the dubious distinction of having the highest prices in the country.

Suncoast Energys, located near the Orlando International Airport, was charging $5.69 a gallon for regular gasoline on Friday. That's the highest of any gas retailer in the nation, according to price tracker gasbuddy.com.

Total to Boost Russia Output 30-Fold by 2020 on Projects to Develop Arctic

Total SA (FP) is seeking to boost output in Russia more than 30-fold within a decade, as the French producer develops Arctic projects.

Total plans to produce between 300,000 to 400,000 barrels of oil equivalent a day by 2020, Pierre Nerguararian, head of Total E&P Russie, said in a presentation in Moscow today. In June, the producer marks its 20th anniversary in Russia.

Coast Guard Report Helps BP’s Quest for Transocean Payment

A U.S. Coast Guard report that cited safety failures by drilling-rig owner Transocean Ltd. may help bolster BP Plc’s effort to recover some of the costs of last year’s oil spill in the Gulf of Mexico, an analyst said.

An Ecologist’s Surprising Assessment of the BP Spill

Much of Safina’s book recounts the worst-case assumptions common in the early weeks of the spill — that huge areas of the gulf would be rendered lifeless, that “dozens of vulnerable fish species” might fall extinct, that toxic dispersants used by BP to reduce the visual shock value of the spill might do more harm than the petroleum, that government was supine while BP relentlessly lied about the spill volume. “Oil companies basically own the whole gulf region,” Safina writes, viewing American addiction to petroleum, indifference to greenhouse gases and political genuflection to the oil lobby as more disturbing than the failure of supposedly foolproof devices to prevent the blowout.

Schlumberger Misses Analysts' First-Quarter Estimates on Libya Disruption

Schlumberger Ltd. (SLB), the world’s largest oilfield services provider, said first-quarter profit missed analysts’ estimates after the company shut its Libyan operations due to political unrest.

Qatargas to supply LNG to Centrica

DUBAI (Reuters) - Qatargas said on Saturday it signed a 2.4 million tonnes per year three year contract to supply liquefied natural gas to Britain's Centrica.

"As per the agreement, Qatargas will deliver up to 2.4 million tonnes per annum of LNG from the Qatargas 4 project to the UK Isle of Grain Terminal for the next three years," it said in a statement.

Source: Security forces in Syrian town fire at funeral procession

(CNN) -- Security forces in a Damascus suburb opened fire at a funeral procession Saturday, a witness said, as thousands of people across the country turned out to mourn the dozens of protesters slain the day before.

The eyewitness told CNN that the assault in Douma occurred as thousands of people shouted "the people want to topple the regime" and "leave, leave," an apparent reference to the government of President Bashar al-Assad.

Wash. considers electric car fee to make up for lost gas taxes

After years of urging residents to buy fuel-efficient cars and giving them tax breaks to do it, Washington state lawmakers are considering a measure to charge them a $100 annual fee — what would be the nation’s first electric car fee.

State lawmakers grappling with a $5 billion deficit are facing declining gas tax revenue, which means less money to maintain or improve roads.

“Electric vehicles put just as much wear and tear on our roads as gas vehicles,” said Democratic state Sen. Mary Margaret Haugen, the bill’s lead sponsor. “This simply ensures that they contribute their fair share to the upkeep of our roads.”

Other states are trying to find solutions to the same problem, as cars become more fuel-efficient and, now, don’t use any gas at all.

Chicago's New Incentive for Hybrid Taxi Cabs

CHICAGO — A new program may bring more hybrid taxi cabs to the city of Chicago.

Mayor Richard Daley announced The Green Taxi Program yesterday. That initiative will reimburse cab companies for using hybrid cars or vehicles powered by natural gas.

Obama Says U.S. Can’t Afford Cuts to Clean Energy Investments

(Bloomberg) -- President Barack Obama said proposals in Congress to cut investments in clean energy technology would hurt efforts to stem rising gasoline prices, which climbed to a 33-month high April 21.

In his weekly radio and Internet address, Obama said while “there’s no silver bullet that can bring down gas prices right away” increasing U.S. oil production, investing in clean, renewable energy, and ending $4 billion in taxpayer subsidies to oil and gas companies each year will help curtail rising gas prices.

The Empty Pulpit: The Obama Problem

Obama’s focus on jobs over the environment is especially harmful as the progressive narrative is that whether we like it or not our human economy is a wholly owned subsidiary of ecology. Wall Street investments and indeed the whole gamut of market economics and employment, if based on non-ecological principles, are not only not sustainable, but actively speed the exhaustion of the remaining stores of the earth’s resources. Appropriately, there has been much talk about peak oil. But we also face peak water, peak topsoil, pollinator collapse, and a myriad of other crises all exacerbated by climate destabilization. Obama’s unwillingness to take a leadership role in redefining our societal relationship to the natural world at this critical time may be his most lasting failure as a leader.

Free Rain Barrels for New Yorkers

New York City is giving away 55-gallon rain barrels to homeowners to help conserve water and reduce pressure on the city’s sewer system, which is often overwhelmed during heavy storms. The city started promoting the barrels by distributing a few hundred of them in Queens in 2008 and 750 more in 2009 to homeowners who applied for them. This year, 1,000 free barrels are being distributed to owners of single- and two-family homes on a first-come-first-served basis at events in the Bronx, Brooklyn, Queens and Staten Island.

Sizing Up the Greenest Colleges

A free online listing of the 311 eco-friendliest colleges in the country is meant to help environmentally conscious students choose a school that reflects their principles.

Worldwide, Blame for Climate Change Falls on Humans

WASHINGTON, D.C. -- World residents are more likely to blame human activities than nature for the rise in temperatures associated with climate change. Thirty-five percent of adults in 111 countries in 2010 say global warming results from human activities, while less than half as many (14%) blame nature. Thirteen percent fault both.

Will Steger laments the global warming change of heart of Tim Pawlenty

Polar explorer Will Steger tells Mother Jones that he's baffled by the way former Minnesota Gov. Tim Pawlenty has changed his tune on global warming.

Steger had worked with Pawlenty on programs to fight climate change, but that ended in 2008, when Pawlenty began his run for president and came out against efforts to fight climate change. Earlier this month, Pawlenty said human efforts are only a minor contributor to global warming.

The big city fix for climate change

FORTUNE -- Jay Carson is CEO of the newly formed C40 Clinton Climate Initiative, which combines previous efforts led by former President Clinton and New York Mayor Michael Bloomberg to leverage big cities in the fight against global warming. He'll have a budget this year of $12 million and a staff of 65.

In Texas, Questions of Drought and Climate Change

Some are wondering whether the severe drought affecting the oil and gas hub of Midland, Tex., is related to global warming. In Texas, that's a delicate question.

Melting ice in Canadian Arctic bigger player in sea-level rise

Melting glaciers and ice caps on Canadian Arctic islands play a much greater role in sea-level rise than scientists previously suspected

For instance, the 550,000-square-mile Canadian Arctic Archipelago contains some 30,000 islands. Between 2004 and 2009, the region lost the equivalent of three-quarters of the water in Lake Erie, found a study led by the University of Michigan.

Oil Crisis Just Got Real: Sinopec (Read China) Cuts Off Oil Exports

As if a dollar in freefall was not enough, surging oil is about to hit the turbo boost, decimating what is left of the US (and global) consumer. Xinhua, via Energy Daily, brings this stunner: " Chinese oil giant Sinopec has stopped exporting oil products to maintain domestic supplies amid disruption concerns caused by Middle East unrest and Japan's earthquake, a report said Wednesday.

Now many will say this is a non-story because China has been a net importer for years. Yes, but like the US, China has been exporting lots of refined products to its neighbors. In 2007, the last year that the EIA reports exports of refined petroleum products for most nations, China exported over 388,000 barrels per day of refined petroleum products. In 2009 the US exported 1,876,000 barrels of refined products per day.
Total Exports of Refined Petroleum Products

So hording is not just for net exporting nations. Importing nations can hoard their refinery output as well. And it is already starting to happen.

Ron P.

This story actually broke last Monday. A big part of the reason for this is China's price controls. The same thing happened during the last price spike. Because refiners aren't allowed to pass on the cost when crude oil prices rise, they stop refining and/or export the refined products rather than sell them domestically. China's solution is to block exports and crank up the state refineries to try and make up the difference when private refineries refuse to operate at a loss.

As I posted a few days ago, similar strange things will happen in India as crude oil prices rise. The government owned oil companies are not being allowed to pass on price rises to customers because of state elections this year. The oil companies are not being fully compensated for the losses they are incurring. The only thing they can do is to withhold supplies from the consumers. This definitely happened in 2008 and I expect it to happen again this year. I was in India at that time and saw near-panic among citizens as fuel supplies ran low at many gas stations.

In 2008 they were saved when the financial crash in OECD countries reduced oil consumption by 4 mbpd. I am wondering what happens this time. The day of reckoning draws close.

Hold on tight, sy. You're in for a bumpy ride--as are we all.

A lot of countries are in the same boat. Several of them tried to decrease subsidies when the cost of oil dropped, with the idea that people could be gradually weaned to paying market price. But many are being forced to increase subsidies again, now that prices are going up.

They can't keep doing it forever. Eventually, they just aren't going to be able to afford it.

I guess the question is, which economy crashes first? A significant oil consumer has to crash to create more breathing room for others.

I don't think that's going to happen.

The pain will be shared among the world consumers. Some smaller developing nations will no longer be able to afford to subsidize oil, and their consumption will drop. (That is happening in Nepal now. For years, they've struggled to pay their bill, and have suffered shortages when they're cut off for nonpayment.) Others will manage to increase prices a little (as China has done).

Meanwhile, in countries like the US, with relatively few taxes or subsidies, consumers will be directly exposed to rising prices, and that will cause demand destruction.

We might see global demand drop as happened in the Great Recession, but I don't think we'll see one major country crash.

Japan, Spain, Italy

Of more interest in the US is the question of when Mexico crashes. A large part of the Mexican federal government's revenue is derived from oil exports; domestic fuel prices are subsidized by that federal government; and there is the impending threat of net exports reaching zero. They're already a net importer of calories, in part because their small grain farmers couldn't compete when NAFTA opened the market to huge US commercial farm operators. The US military has suggested in its planning documents that drug-related violence has the potential to make Mexico a "failed state" even before the oil crisis hits.

Great! Declare a failed state. Wage yet another preventative attack to impart regime change.
Destroy 'em to save 'em.
Been working well so far, eh?

Leanan, do you or someone else have a list of the countries that are subsidizing the price of fuel for this citizens? It would be interesting to see the price that they are each paying for gasoline. I think Venezuela has the lowest price at $0.12 per gallon. It would increase the price elasticity of oil if these subsidies could be gradually lifted.

There's this from Wikipedia. It's not quite directly responsive to the question, but - very roughly - when the retail gas price is below the wholesale crude-oil price, it's a safe bet that a subsidy is making that possible. (In some cases, the subsidy could theoretically be implicit, for example the gasoline is coming from oil on a cheap long-term contract, which means someone is carrying the opportunity cost of selling it below current prices.)

Typically quoted price elasticities [pdf, see table 3.1] for oil are so low that aside, maybe, from extreme cases like Venezuela, the quantity saved by lifting the subsidy might very modest, although the effect on balancing national budgets could be quite substantial. By and large, people seem to meet increased oil prices almost exclusively by taking the money from something else. Consider, say, the incredible traffic in a place like Bangkok, despite incomes being much lower than in Europe or North America.

PaulS, thanks for the information.
I'm sure the higher oil prices will be putting pressure on the government budgets to reduce the fuel subsidies in the contries that had been doing so.

So, the net effect will be that those neighbours will have to go looking elsewhere to replace what they lose from China, thus squeezing the supply situation further for all?
But if China exports less won't they have to import less?
Is the 1,876K barrels the U.S. exports included as part of the U.S. daily consumption amount?


The very reason China is exporting less is because of their loss of some imports from the Middle East.

No, refined products that the US exports is not counted as US consumption.

Ron P.

I agree with your statements, except more specifically China is still importing much more oil than six months ago - although over the last month it is importing somewhat less than the high levels seen from Nov. 2010 to Mar. 2011, mostly due to the steep decline in OPEC exports over the last six weeks.

In general, China's oil demand has accelerated significantly in recent months, and yes, Japan did increase imports of some oil products from China over the last month. That may have put additional strain on demand for oil products within China, at a time China was also worried about rising levels of inflation.

China's implied oil demand, calculated by Reuters on the basis of crude throughput volumes at domestic refineries plus net imports, rose by 11% y-o-y to 9.16mn barrels per day (b/d) in March 2011. Consumption declined 4% from February, which saw the second highest ever levels of Chinese oil demand on the back of increased refining runs ahead of scheduled maintenance in March. China National Petroleum Corporation (CNPC) in-house researcher Dai Jiaquan attributed the strong March figures to the start of spring ploughing ahead of the main harvest in May-June. Dai said consumption would increase further in Q2.

Helping to keep the country's oil import bill low, Chinese producers increased production by 6.7% y-o-y to 51.36mn tonnes (4.18mn b/d) in Q111, possibly as part of a drive to lift industrial output in line with the 12th five-year plan (2011-2015). Growth in March was slightly lower y-o-y, rising 4.2% to 4.14mn b/d. Against a production decline at some of China's nine giant oil fields, this increase appears to have been driven largely by substantial output growth at CNPC's Changqing oil field in northern China. Changqing production rose 24.5% y-o-y in Q111, to a record 10.83mn tonnes (878,400b/d) of oil equivalent.


I don't think this is as big a deal as Zero Hedge makes out. China has always done this when prices increase, and changes they've made to pricing strategies have actually reduced the problem.

Yes, part of it is rising prices and consumption. But they are passing on more of the increase in cost to consumers than they used to before the changes. And yes, a lot of the reason for Sinppec's ban on exports and increase in refining is to make up for private refineries that would lose $2/barrel selling to the domestic market. So they're changing who's doing the refining more than the amount refined.

I stopped considering zero hedge a reliable news or analysis source, and started ignoring anything coming out of their site, some time ago, much to my well being I might add. In other words, to be read for entertainment purposes only.

ZH used to have some interesting financial perspectives, now it seems to be stuck in the perma-bear camp. It has attracted the gold bugs, bigots, and a number of others with fringe political perspectives.

Speaking of China's importing - I've been seeing long trains (>100 cars) on the main rail line between Portland OR and Vancouver BC filled entirely with Wyoming coal, headed to China. Several daily. They want to build a coal exporting terminal in Longview WA on the Columbia for this sole purpose as well. The amount on coal headed to China this way is staggering.

The amount of American coal being shipped to Asia through Vancouver, BC is about 1/10 the tonnage of Canadian coal being shipped. So, in the overall scheme of things the amount of American coal going to Asia is minor.

Westshore Terminals near Vancouver is the largest export coal terminal in North America. US producers ship 2 million tonnes a year to Asia through it, while Canadian producers ship 21 million tonnes. Australia is by far the world's largest coal exporter, though, and ships about 250 million tonnes per year.

Yep - we (Oz) are a quarry and a beach: coal, iron ore, aluminium, nickel, gold, and uranium - we got it all. Plus we're a really good tourist destination: best accessible beaches in the world, without a doubt. Being a lucrative quarry and a beach ain't so bad - and we are all still living high on the food chain - for the time being at least.

Yes, Australia has it all. Except oil. Domestic production is in free fall and there are no projects in the pipeline to reverse it.

In other news, bicycle use is growing strongly. So there's hope yet.

Coal exports to China are trivial compared to the actually amounts produced domestically in China or the US. It is just big time money for coal producers that is why they are so angry about the slowness in getting that terminal opened

Of course, the same restrictions happen when a wind tower is erected or power lines are proposed or an oil pipe is to be laid. So Big Coal just needs to be patient like the rest of the energy businesses. LOL. Boy are they ever testy. I sometimes think Coal people think they are above the legal system. Just get those lawyers in there, go to Court, and lobby congress and get it done, Coal. You know how to bend the world to your will -- through the legal system ;-)

Yes and also a new port proposed near Bellingham, Washington too!

This is the proposed 'Gateway Coal Terminal


“SafeGuard The South Fork” an association of Whatcom County residents is sponsoring an Environmental Forum at the Acme Elementary School, on Turkington Road in Acme on April 28 at 7:00 PM. The Forum will focus on “Coal Trains” and the possibility of round the clock, mile and a half long, open load coal trains on their way to the proposed Gateway Coal Terminal at Cherry Point. Coal trains have a history of degrading human health, water and ag and forestry land, making communities along the possible route through Burlington, Sedro Woolley, Acme, Van Zandt, Deming, and points north and west out to the coast extremely vulnerable.

Re: In Texas, Questions of Drought and Climate Change, up top.

I find it an interesting coincidence that this drought started around last October after the horrendous Gulf Oil Spill. It seems to me that oil slicks might reduce surface water evaporation.

Since moisture from the Gulf is the main source of rain for Texas, wouldn't reduced surface evaporation possibly contribute to this long dry spell?

I understand other small oil spills are occurring all the time in the Gulf. Perhaps it was the big spill that put the system over the tipping point leading to drought.


Oil demand likely to rise in Latin America as cars sales boom:


I suppose that it would be some sort of cosmic justice were Texas to be the area to experience the first impact of global warming...

E. Swanson

We probably cannot blame Texas though for the fact they had a nice oil endowment, but the Middle East and Texas will be getting a terrible dose of drought and climate change if current trends continue forward.

Oct - Bring it on, baby! LOL. Having worked in S Texas for almost 30 I can tell you we won't notice much difference. Damn hot and damn dry is not very different from a little more damn hot and a little more damn drier. Sort of like saying the Mohave Desert's rain fall will drop 30%....who's going to notice the difference.

It's not so much people not knowing the temp/rainfall differences in their industrial workaday life that's the issue -- it's whether food crops (grains, veggies, forages) can tell the difference. And they can. That's the troublesome part.

Houston is not without moisture/humidity. LOL.
The west though is not doing well -- and of course the wider American West.

It's a global La Nina event. This usually translates into warmer and drier weather for Texas. See the National Weather Service Climate Prediction Center

Probabilities of below normal temperatures are enhanced from the Pacific Northwest eastward across the northern Rockies through the great lakes region, into the middle Atlantic Coast region. The OCN predicts probabilities for above normal temperatures across the interior Southwest.

One impact of the current la Nina was abnormally low precipitation in the South, and unusually abundant precipitation in northern sections of the CONUS during much of the cold season. The resultant soil moisture conditions increase the likelihood of above normal temperatures in the southern U.S.

The La Nina event appears to be weakening.
Here are graphics for 1 January and the latest from 21 April 2011...

E. Swanson

Satellite observations would seem to support the impact of the La Nina event.

Drought and Heat Create Hazardous Fire Conditions in Texas


It was a very strange La Nina in Southern California this year. Last year we had a dry El Nino because I think we had normal rainfall instead of above average, and this year we had a wet La Nina.

Everything is backwards in California.

Of course, it varies from place to place in the West, and from time to time (note: for various reasons, I use the same definition for "Western states" that the Census Bureau does, and Texas ain't one of them).

Some California reservoirs are currently filled to capacity for the first time in decades.

The Colorado mountain snowpack in the upper Colorado River basin is at 133% of normal for this date. Additional heavy snow is forecast for those mountains today and tonight.

Much of the West doesn't have a water scarcity problem, but it does have water management problems. They don't have enough storage, and they "waste" too much of it irrigating the wrong things.

Here's the forecast, based on the US Climate Change Impact Report for the Great Plains region overall.

"Over the last few decades, average temperatures have risen throughout the Great Plains, with the largest increases occurring in the winter months and over the northern states. Relatively cold days are becoming less frequent and relatively hot days more frequent.

In the future, temperatures are projected to continue to increase with larger changes under scenarios of higher heat-trapping emissions as compared to lower. Summer increases are projected to be larger than those in winter in the southern and central Great Plains. Precipitation is also expected to change, particularly in winter and spring. Conditions are expected to become wetter in the north and drier in the south. Projected changes include more frequent extreme events such as heat waves, droughts, and heavy rainfall. "

With regard to Agriculture, specifically :-

"Agriculture covers 70 percent of the Great Plains. As temperatures continue to rise, the optimal zones for growing certain crops will shift. Pests will spread northward and milder winters and earlier springs will encourage greater numbers and earlier emergence of insects. Projected increases in precipitation are unlikely to be sufficient to offset decreasing soil moisture and water availability due to rising temperatures and aquifer depletion."

Also having an impact, Texas is on the leading edge of the depletion of the Ogallala aquifer:


apparently it is the first state where agriculture is beginning to be abandoned, as the source for irrigation water is going away.

I think the most important thing happening in the Great Plains at this point is the continued depopulation. 2010 census figures show that the shrinkage of the rural population that began in the 1930s continues. It appears to me that it has reached the point where positive feedback has kicked in: the population is too small to support services such as a doctor's practice, and lack of medical care drives away even more people. Climate change is simply one of the last nails in the coffin.

Colorado is seeing one of the interesting side effects of the Plains depopulation. In drawing new maps for Congressional districts, one of the stated goals is to allow the Plains area a "meaningful" voice in government. Drawing such a district is proving difficult: the Plains area now has too few people to be its own district. Certainly by 2020, that part of the state will be attached as an afterthought to one of the Front Range districts (or more likely, split between two), and Congressional candidates will be able to safely ignore the Plains in their election planning.

It seems to me that we will see an increasing separation of East and West attitudes towards various policy problems facing the US, separated by the 500-mile physical gap between the two groups. Certainly it seems to me that East and West need to take different approaches to energy policy.

I disagree a little with that Rocky ... having lived in the tropics for a couple of decades, plus the searing hot deserts of Central Australia for five years - a degree or two makes ALL the difference indeed. If in the tropics it is 100% humidity and 32C, it is unspeakably horrible, but 100% humidity at 34C is near enough to unbearable. Same in the desert - 38C is a lot better than 40C. Climate change will affect extreme climate places more awfully than temperate ones, I reckon.

When the dew point is close to the temperature of the human body, we can no longer cool ourselves by sweating. That would be roughly 96F or 36C. So, you are right that 100% humidity and 34C is unbearable, it's also nearly fatal, even in the shade...

E. Swanson

Of course, Texas has been the source of lots of oil which was burned, but my point was as much political as physical. Texas as a state has produced many politicians that fit the conservative mold. Bush 41 & 43 are prime examples, as is Dick Armey of Freedom Works and Rick Perry.

When driving across Texas years ago, the change in vegetation around Fort Worth was quite striking. That marked the dividing line between the Eastern US and the West in my mind and that line extends all the way to Canada, roughly along the 100th meridian. If Climate Change means that this dry line moves toward the East, even if only for short periods, the impact on the people living there will be immense...

E. Swanson

Projected effects of global warming have long been that the Southwest (not just Texas) will be toast.

Albuquerque NM is heading towards water restrictions this summer, especially if our Monsoon season (Jul-Sep) is a bust.

Same with most of the rest of NM.

I will know the fires up North have started when I start to hear the water bombers taking off from and returning to the Albuquerque SunPort.

to experience the first impact of global warming

You just being lazy or what? You know far too much about this topic to make such a blunder.


He probably means the first heavily populated region in the US to confront Climate changes most significantly. "First" is not a mistake as much as a reflection that English is imprecise.

But it would be hard to know who gets what the worst.

A blunder? Could be, as there's lots I don't know about climate change. As far as I know, there's no solid, unequivocal evidence of climate change which is obvious to a majority of the residents of any state in the US, except possibly Alaska. There are lots of hints and possible effects, but the change in global temperature is still too small to register in the minds of the public. In other words, the evidence is still so obscure that the man on the street can't sense it in their daily lives. If there were a BIG DROUGHT from Texas to the Northern Plains, worse than the Dust Bowl, that might get their attention...

E. Swanson

No level of drought or any other event or condition, no matter extreme or how widespread, will sway the denialist.

Events and conditions do not come with announcements of their cause. It will always be denied.

If tens of millions dead in Europe in'03 didn't convince them
if most of the most populated parts of a whole country, Pakistan, under water didn't do it
if the current extreme droughts and heat in Europe and elsewhere didn't do it
if the collapse of Arctic Sea ice volume didn't do it
if the consensus of the global scientific community didn't do it...

if none of these and all the many other many dramatic events, conditions and realities--overwhelmingly convincing to anyone with even the slightest amount of intellectual honesty--have convinced them, then nothing is going to.

It is not a position based on evidence or logic, therefore it is not alterable by any quantity or quality of evidence or logic.

"tens of millions dead in Europe in'03"


he surely meant tens of thousands

>no solid, unequivocal evidence of climate change which is obvious

There is LOTS of evidence that can be perceived by the average person.

Aside from temperature (115 F in September in Austin a few years ago, way past any record), there are many other effects.

Google "Grand Lake, CO", click on the satellite map and zoom in, then move to the east of the lake. You are now in Rocky Mountain National Park, one of America's premier national parks. Look at all the dead trees. Those trees were alive just a few years ago.

Glaciers in RMNP (as in the rest of the world) are melting. A few years ago a woman from Estes Park sent me a message thanking me for my "now historic" on-line photo of Tyndall Galcier; to everyone's surprise, most of the glacier suddenly fell down the mountain and melted.

Marmots in Colorado are going into hibernation 45 days later and coming out 45 days earlier if they hibernate at all. Dr. Camille Parmesan of Univ. of Texas has documented such changes in huge numbers of animals worldwide.

And so very much more. Many people perceive winters as being colder than these days, though the negative phase of he Arctic Oscillation is beginning to confuse ha. Many perceive Spring as coming sooner in many ways. Bugs ha are where hey didn't used to be... the list is endless. Russia, Pakistan, US flooding and droughts, a land hurricane over the northern tier of the US, reports from First Nations across the Arctic, glaciers melting everywhere, near-record ice extent low and the fifth year or more straight of record ice mass loss in the Arctic despite good conditions for ice retention in 2010, and on and on...

and all in line with scenarios from climate models - except much of it is far ahead of schedule. What really scares me is when the butterfly wings start throwing the truly unexpected at us.

What really scares me is when the butterfly wings start throwing the truly unexpected at us.

We need all be scared.


I agree that those events and the ones listed in the preceding post (especially the decline in Arctic Sea Ice) could be evidence of AGW, but they might also be simply part of natural variation. The test for the man-in-the-street in the US might be to see the same type of event repeated year after year, this being evidence of a new "normal" in people's perception. I suspect that most people take weather as it comes at them, with the memory of events fading rapidly with time. How many people keep records of temperature to be able to point to a day with a record temperature in one year and compare that with the same date in other years? We saw a few years with strong hurricanes in the decade between 2000 and 2010, but we also experienced a couple of years with no large hurricanes hitting the US mainland. How is the average person supposed to interpret this weather history, does this represent more or less hurricanes going forward???

E. Swanson

I agree that those events and the ones listed in the preceding post (especially the decline in Arctic Sea Ice) could be evidence of AGW, but they might also be simply part of natural variation.

Uh-huh. Even the scientists don't equivocate as much as you are here. I don't remember you being so reticent. IMO, and as I read the science, you are splitting too fine a hair here. Find me a useful scientist who would equivocate on the broad strokes here... and I'll show you a scared scientist or a poor scientist.

I think you're wrong there. Scientists are often very conservative when it comes to drawing connections like that, and it doesn't mean they are scared or bad scientists.

"There is LOTS of evidence that can be perceived by the average person."

The operative word here is "obvious". There's a difference between "can be perceived" (but passes unnoticed) and "obvious". Traveling to the big Western national parks is a nearly unaffordable luxury (in terms of both time and money) for most folks, so they'll do it just once in a lifetime or not at all. So, one sample or none - no experiential baseline against which to observe change - no change observed. Temperature records are entertaining, but it's a big country with some of the most tumultuous weather on the entire planet, so records are set all the time. Yawn. And anyway, with only around 1F overall so far, again, no experiential baseline, so nothing observed. Too little to notice except with well-located and well-calibrated instruments.* And marmots? Please. Marmots?? Who but a highly specialized biologist tracks, cares about, or even notices the hibernatory habits of marmots? Yet again, no experience, no experiential baseline, nothing observed.

*BTW nothing extraordinary to see here with respect to Austin - there's no gigantic one-day or two-day temperature-record spike that stands out, as there would be if a truly extraordinary single record had been set.

Your post didn't provide public perception as a parameter, only that it might be the first to experience it.

Do note the wink.

Aside: As to all the equivocating about what is provable or not... please, let's not pretend we are still in doubt about what's happening with climate. Let's leave the equivocating to the scientists, for whom it is appropriate and necessary. In the public arena, we have the luxury of basing our comments on reality.

Replying to you and the others who posted above.

Certainly, there are now many people who look at weather events and blame them on Global Warming. I've certainly done that on occasion as well. But, my perception is that the average person isn't aware of these events as evidence of AGW, if only because they don't understand the science. If the majority of the population did think AGW was a serious existential threat, why would they have voted in large numbers to elect Republicans who claimed follow the path of the so-called Tea Party, that is, to dismantle the US climate efforts thru the EPA, NASA, etc and to instead, "drill, baby, drill"?

E. Swanson

Some of Bob's fellow Mainers are following in his footsteps:

Going solar
Local businesses, home owners harness sun’s power for electricity and hot water

Whether it’s to save money or the environment, or both, many people are turning to the sun to power hot water, heat or electricity.

Fred Greenhalgh, online marketing manager and sales associate with ReVision Energy, said the company installed more than double the number of solar electric systems in 2010 as it did in 2009. He said the solar systems have become more competitive in recent years and technology has improved.

Pierre Janelle, owner of The Edgewater Motor Inn in Old Orchard Beach, had solar panels to heat hot water installed in his 36-room motel in 2009.

Janelle estimates that since the installation, his heating oil bill has been reduced more than 25 percent. He said going into the project, he thought there would be around 20 percent reduction.

See: http://www.journaltribune.com/articles/2011/04/23/features/doc4db220666f...


Energy savings bloom in the Midcoast

In neighborhoods from Belfast to Rockland, area homeowners are displaying bright yellow lawn signs around Earth Day to signal their participation in local efforts to save energy and reduce the region’s carbon footprint through home weatherization and energy efficiency upgrades. The homes have all recently had energy audits and energy efficiency measures installed that will help the homeowners to save energy today and money tomorrow as the price of heating oil and fossil fuels continues to rise.

Michaleen Sawka, living in an 1800’s cape at 23 Birch St. in Rockport, is one of two dozen homeowners who want to let their neighbors know what a positive difference the work done on their homes by local energy professionals means for their comfort, bank account, and health improvement.

See: http://knox.villagesoup.com/place/story/energy-savings-bloom-in-the-midc...


I visited ReVision a couple weeks ago. Yeah, they said they were running hard, a lot of jobs keeping them busy.

Met a dad in a preschool parking lot yesterday, and he is marketing a Small Children's Product that has solar recharging as a feature. (I won't disclose more, as he is working on protecting his product and brand.. no easy feat in today's unaccountable corp. climate.) You can just try and guess whether it's a small product, or is for small children. Le Jeux sont Fait! (sorry if misspelled, I studied German.. and as a Yank, I get to pretend that ignorance is sorta cute!)

Earth Day Portland was a bit dismal, it seemed to me. I had to work during much of it though, and maybe missed the better parts. But I used my breaks to amble down the roadways of Biddeford and pick up the bits of junk that are usually overlooked. As I said at another Earth day, years ago, "I'm not saving the planet, just giving Mother a Kiss.."

McKibben and Van Jones were pretty good at the "Power Shift" rally a few days back.

Shift the power politically, and don’t l et anybody tell you that you should only hold one party in this town accountable. You have to be wise enough to hold both parties to high standards. Both parties. Hold this whole town accountable. Hold people, but keep them accountable, because that’s how you can shift the power.

And don’t stop there. Don’t stop there. It’s not just shifting power in the political sense. We need you to shift the power in our energy system, because we have an energy system and a civilization that is powered by death. The civilization that you live in, that you were born in, is fueled by death. That’s not hyperbole. Why do they call them fossil fuels? Because they’re living?..

Hey Bob,

You may be pleased to know your neighbours to the north have stolen a page from your play book:

See: http://www.youtube.com/watch?v=HkjNHpMrHGA


Good to see! I wish them every success (as long as they leave just ONE success available for me!)

Home Builders Still See No Sign Of A Recovery

From David Streitfeld at the NY Times: Builders of New Homes Seeing No Sign of Recovery

Builders and analysts say a long-term shift in behavior seems to be under way. Instead of wanting the biggest and the newest, even if it requires a long commute, buyers now demand something smaller, cheaper and, thanks to $4-a-gallon gas, as close to their jobs as possible. That often means buying a home out of foreclosure from a bank.

CNN has an interesting interactive graph where you can compare gas prices across the U.S. but also their share of the disposable income of the average consumer.

View it here

In some states, gas prices constitute well over 10 % of the disposable income of what people have.

Huh. Just curious - how come Hawaii gets such a good deal? Seems odd seeing as it's so far out of the way?

Hawaii doesn't have a good deal. They have the highest gas prices in the nation.

However, the cost of living is also the highest in the nation, and has been for generations, so it's sort of "built in" to incomes.

Ah ok. Well it's still quite interesting that they have one of the lowest expenditures on gas in terms of percentage of their income.

Maybe driving a car is not as necessary on an island; at least long road trips would be kinda repetitive, going 'round and 'round..

My wife and I drive <1000 miles/year (total miles using two cars); but we do work from home. All the roads are pretty tightly packed with giant air-conditioned trucks holding a single passenger during commuting hours; it's just that $4.50/gallon is still preposterously cheap for what gasoline does. We look forward to $20 gas and rationing. On this island you could do pretty well with solar-recharged golf carts and bikes if you could just get the SUV's off the dang roads.

Hard to believe that the recovery, such as it is, will continue.

That is interesting, thanks for the link.

Odd that some of the states with the lowest prices are also the least able to afford it. That reminds me of what people have been saying about debt deflation. As the money supply shrinks due to debt default it really doesn't matter how low prices go because people with no money still won't be able to afford it.

Also, don't be misled by averages across entire states. The eastern half of Washington state is much more like Idaho than their high spending neighbors to the west of the Cascade Mountains. I suspect that is also true for eastern Oregon and probably northern California as well.


"Suncoast Energys, located near the Orlando International Airport, was charging $5.69 a gallon for regular gasoline on Friday."

Which is about the average price in eastern Canada. Out west, the gasoline price is in the $1.15 to $1.20 per litre range. I filled up yesterday at $1.17. First time since early 2008 that it cost me more than $50 to fill the tank on a Honda Civic. Fortunately I only fill up about once a month.

My oil royalty cheques are up though. Wheeee!

Not too far off the mark, Dale. Locally, regular sells for $1.352 a litre, which works out to be $5.36 a gallon after converting to US funds.

$100.00 to fill the Magnum (HEMI happiness comes at a price).


Here's an article from today's Wall Street Journal:

Reactor Team Let Pressure Soar

Looks like TEPCO messed up big time...

E. Swanson

I read the same article but had a different take. The Japanese version of the NRC (nuclear regulatory commission) is very stringent on radiation releases. During a time of critical infrastructure outages including power and phone, TEPCO personnel were trying to FAX (because that is/was the required format) specific forms to their NRC. Imagine the difficulties in trying to use a fax machine when you don't have power and you don't have phone lines working, oh and the paper forms you're supposed to use are all wet and muddy?

From the article: Another key difference: U.S. rules put the person at the controls of the plant in charge of venting. In Japan, it is common for operators to bump the decision to company or government superiors when there is a chance radiation will be released.

I'll have to dig around to find the exact links that talked about faxing the forms, remembered thinking at the time how difficult that must be in those circumstances. Meanwhile here's a fairly comprehensive timeline of events. Apparently they didn't get the memo that the quake was upgraded from 8.9 to 9.0 if my math is right that's about 140% difference.

The 15 Most Expensive Places To Buy Gas In The World

#1 Eritrea: Price per gallon for gas: $9.61
#2 Turkey: Price per gallon for gas: $9.54
#3 Netherlands: Price per gallon for gas: $8.06
#4 Norway: Price per gallon for gas: $8.02
#5 Greece: Price per gallon for gas: $7.76
#6 Denmark: Price per gallon for gas: $7.57
#7 France: Price per gallon for gas: $7.49
#8 Finland: Price per gallon for gas: $7.34
#9 (tie) United Kingdom: Price per gallon for gas: $7.27
#9 (tie) Monaco: Price per gallon for gas: $7.27
#9 (tie) Hong Kong: Price per gallon for gas: $7.27
#12 Germany: Price per gallon for gas: $7.19
#13 (tie) Sweden: Price per gallon for gas: $7.08
#13 (tie) Italy: Price per gallon for gas: $7.08
#13 (tie) Belgium: Price per gallon for gas: $7.08

I was surprised to see Norway and Denmark on the list. They are both net oil exporters.

Ron P.

Everything's expensive in Norway and Denmark in comparison to the rest of the world - that rate seems pretty reasonable.

I was more surprised by Turkey - only the mega-rich must drive over there!

Netherlands must be feeling the pinch too..

Edit: Wiki has a more up to date list:

Country/Territory US$/L US$/US gallon Date of price
Turkey (Istanbul) 2.77 10.49 2011-04-23
Norway 2.60 9.84 2011-04-06
Netherlands 2.52 9.54 2011-04-14
Denmark 2.36 8.93 2011-03-10
Belgium 2.33 8.82 2011-04-07
Finland 2.30 8.71 2011-04-06
Germany 2.30 8.71 2011-04-07
Sweden 2.30 8.71 2011-04-06
Greece 2.29 8.67 2011-04-06
France 2.28 8.63 2011-04-06
Portugal 2.25 8.52 2011-04-06
Italy 2.19 8.29 2011-04-19
United Kingdom 2.19 8.29 2011-04-08
Ireland 2.15 8.14 2011-04-06
Eritrea 2.13 8.06 2009-06-01

Holy moly, look at Netherlands! And Turkey... I don't know how anyone can afford to drive in Istanbul!

One should take into account the dollar's purchasing power in different countries when you compare gasoline prices. It can be done via the BigMac index and show that the petrol price in Sweden for example, differs little from the U.S.

BigMac index for Sweden is $7.66. Petrol price $8.71. Gasoline costs therefore 14% more than a BigMac. BigMac in the U.S. is $3.80 which is equivalent to $4.33 for gasoline.

High gasoline prices are not a problem in Sweden. The problem is that in U.S. you are running too far with too gas-guzzling cars. The big issue for Sweden are the coming effects of ELM.


Disagree with that. The Big Mac Index is misleading in this case. Sweden's per capita income isn't much different to the US. In fact the US's Purchasing Power Parity is higher than Sweden's yet petrol (and a Big Mac) is half the price.

The price of fuel may not be a problem per se but there's still a vast gulf in difference between the relative costs of petrol in the US and European countries.

'iagreewithnick' has it mostly right, and you are dead wrong when it comes to purchasing power between the U.S. and Sweden.

Besides, what has ELM have to do with anything with Sweden? We were never exporters to begin with and our imports are very small, around 0.2 mb/d. Norway, Denmark and Russia is our main suppliers and will remain so for most, if not all, of of this decade. Sweden certainly does not have it easy but has a far better position than almost all other importing nations in the world.

Not all cars in Holland use gas though. I'm not sure if this distribution is typical in Europe though.


80pct use gas, 17pct diesel and the remaining couple of percent use LPG


Hmm, not sure either. Just found this about the UK after a quick google: http://www.guardian.co.uk/business/2010/aug/05/diesel-car-sales-overtake...

The Society of Motor Manufacturers and Traders' (SMMT) latest survey of new car registrations showed that in July diesel cars took an all-time high of 50.6% of the market

Edit: Here's a graph of sales from their latest report.

And seeing as the average life of cars in the UK is about 14 years you can get a rough idea of the current ratio of diesel/petrol.

Worth pointing out that diesel is cheaper than petrol in the Netherlands but the other way around in the UK. Odd.

Diesel fuel is cheaper than gasoline in Holland, but the annual road tax is way higher for diesel cars...


I was more surprised by Turkey - only the mega-rich must drive over there!
I don't know how anyone can afford to drive in Istanbul!

God knows :)
It seem not only mega rich but everyone can drive.
As an Istabuler I can give some insight.

It was affordable ten years ago. Taxes are increased to compensate damage after a big quake in Kocaeli (100 km to Istanbul) in 1999.
A special tax has been added to fuel prices to increase goverment income. It's said that all additional revenues from that tax would have been spent for quake damage and it would be temporary. This additional revenue seemed so much sweet to goverment that they could not go without and we still pay this tax.

Almost 75% of fuel prices is tax in Turkey.

First, SCT (Special Consumption Tax) is added to refinery output price (that's fixed)
Then VAT (Value Added Tax)is applied to whole price. Thus they get tax of tax :)

A huge LPG transition happened during last 4-5 years to escape from high gasoline expense. Almost half of the gasoline car owners have LPG kit now.
Diesel car sales was 4% ten years ago. Now more than half of all car sales are diesel. I have two vehicle ( A Hyundai Getz and a Land Rover Defender 110) and both are TDI, I never buy a gasoline car.
It can be said that small cities are not affected so much because we have no suburbans, almost everything reachable by walk and people mostly use public transport if they need, even if they had their own vehicle. But high fuel prices drive the price of everything, in the first instance food prices. That's hit people as a consequence of high fuel prices more than individual transport need.

In Istanbul People still find money to drive car but I don't know how and from where they find.
To drive in Istanbul still like a torture because traffic jam in everywhere and everytime, all roads are full of cars, although we use most expensive fuels in the world.


an ordinary instance from Istanbul roads:

Great info! Thanks for that. Seems there's still a fair bit of capacity for prices to increase elsewhere in the world then...

Seems there's still a fair bit of capacity for prices to increase elsewhere in the world then...

I'm suspicious that Turkey will be a good reference as capacity for prices to increase in the other parts of world.

The higher oil/gas prices the higher car sales and usage in Turkey.

Last year it was a record in car sales, even a new record is expecting in 2011 according to numbers of first 3 months despite skyrocketing fuel prices.

If you want to buy an new brand VW in Turkey you have to wait at least 4 months becuase importer company could not supply the demand enough fast. People paid the downpayment and wait their car will be delivered. That's surge the 2nd hand as well. I'll give a funny example: A 2nd hand VW which's bought maybe 1 month ago is more expensive than new one in 2nd hand ads. If you don't want to wait for months you'll pay much more. People buy cars like crazy. SUV sales were doubled.

Everything seem illogical in this country, against to economical and physical realities .

So much for the idea that high gas taxes will significantly affect demand. Or is Turkey somehow unique?

Turkey's GDP growth has been quite stellar, between 6-7 % a year. Real wages go up a lot and compensate for higher prices.
Stagnating GDP growth would not be able to keep up the growth in prices in Turkey.
In my humble opinion, Turkey is doing something very unsustainable, which I think the government knows(hence the superhigh taxes) but it doesn't seem to do much about the situation. They probably have to increase the taxes more to get consumption down.

I agree with your comments.
Just to give an idea about GDP, for last 10 years:

1999   -3,4

2000    6,8

2001   -5,7

2002    6,2

2003    5,3

2004    9,4

2005    8,4

2006    6,9

2007    4,7

2008    0,7

2009   -4,7

2010    9,2

Credit volume inflated for 6-8 months and central bank try to cool economy with some interventions.


Turkey is not unique, still vulnerable, but we have some experiences come from past.

We lived several big economic/politic crises, crashes for las 20-30 years.
Long term unstable life/economic situations made people of Turkey very adaptive and able to cope with hard times.
Turkish people has elastic nature and easily can adapt to new conditions whether it's hard or devastating.
It's like a bacteria develops new mecahanism against to antibiotic medicines and survive.

Strong family and relative connections in Turkey are a good support to cope as well, especially in small cities, towns. People helps each other.

When life get hard to survive poeple find a way to overcome it, change their way of life.
First reactions are consume less and avoid of unnecessary expenditure.

Annual car taxes are calculated according to engine size in Turkey. When engine size increases, tax do raises like a hell. Car buyers preference rapidly changed for last 10 years. Mostly small-size engines are demanded. Please look at the car sale numbers and types for last year, 2010 (First 30):

1-Renault Symbol        16-Fiat Grande Punto
2-Hyundai Accent Era    17-Toyota Auris
3-Renault Fluence       18-Renault Megane HB
4-Toyota Corolla        19-Chevrolet Cruze
5-Ford Fiesta           20-VW Polo
6-Ford Focus Sedan      21-Nissan Qashqai
7-Opel Astra HB         22-Mercedes Benz C-Series      
8-Fiat Linea            23-VW Golf  
9-Fiat Albea            24-Renault Clio HB
10-Opel Corsa           25-Opel Astra Sedan
11-Honda Civic          26-Dacia Sandero
12-Hyundai Getz         27-Chevrolet Captiva 
13-Ford Focus HB        28-BMW 3-Series 
14-VW Passat            29-Citroen C3
15-VW Jetta             30-Peugeot 206 

Most of them are diesel and have 1.5 litre (91 ci) or under 1.5 liter engine size, much 1.4 (85 ci) or 1.2 (73 ci).
Even Mercedes C-series are delivered with 1.6 l engine then raised its sales.

LPG transformation in gasoline engine cars got acceleration that people who still use gasoline seem very rich or crazy.

Turkey uses 650.000 b/d daily and extracts 50.000 b/d .
Net import of around 600.000 b/d.


@IHG, Thank you for your on-the-street posts from Turkey. Do you have any comment on this article?

I had already heard of a thriving business smuggling oil from Iraq into Turkey but the exporting oil from Turkey has me surprised.

Oil smuggling is not secret and it could not be prevented for decades because of hard to control borders between Iraq and Turkey. It's like nature of flow of water, it finds its own way. If you raise gasoline/diesel prices with irrational and cruel taxes, not seeing average income of population, then people try to find another way to afford it, legal or illegal.

Nowadays new trend is using Number-10 oil instead of diesel fuel in diesel engines. Nr10 oil is a mix of used engine oil + fried oil + raw engine oils + some chemicals. Its price is half of regular diesel. It harm both engine and environment in long term. Especially hauling trucks, private public buses and other heavy vehicles prefer it. For instance a private public bus can save around $4000 monthly or $48000 annualy. So they dont care if it harm the engine becuase they remake or renew it and they still save huge money. Using Nr10 oil in diesel engine is illegal but it seem noboday can control or prevent it.

As for exporting oil from Turkey, I think that something is wrong in the article or misunderstood. Turkey does not export oil but end product. Especially gasoline is exported because whole rafinery gasoline output can not be consumed domestically . But its export price's very low when compared to domestic sale prices. That's drive people crazy and raise anger, saying that we use gasoline very expensive and export it to foreingers 1/4 price.

Turkey imports oil, processes it in own rafineries, exports surplus gasoline and import diesel fuel that does not come from rafineries enough for demand.


The most ugly prised unleaded (95) in Norway today is ---- hold on to something ---- 12.2 US$/US gallon . Location : Grong 14,39 nok/liter saturday 16:30 o'clock

Source : http://www.dinside.no/php/oko/bensin/vis_prisliste.php (lower most listing) , but there are even worse places than this, further behind the mountains between some remote fjords behind a still winterlocked mtn_pass .......

Blimey! Can anyone beat that??

Here (!) I located one of them bastr***s in Google Maps. yx-station(!)
That Grong-place is not even that remote, they even have a roundabout.... :-)

Nice :-) What's Hammerfest showing these days?

that gas station looks really familiar, we drove by there and may have even stopped there last summer I think, not positive. Definitely not out of the way though, E6 is a major road.

How many people actually experience these taxes across Europe, and how many get around them (at least partially) by way of fiddles such as the very widespread "company" cars in the UK?

Which taxes?

I don't think you can avoid the taxes at the pumps if that's what you mean - at least in the UK. Even if your employer provides you with a car and additionally provides you with fuel for private use you still have to pay a 'Car Fuel Benefit' charge on your tax return.

There surely must be a sound reason why employers in the UK (and possibly elsewhere in the EU?) so often bother to provide cars as a benefit (and advertise them in job listings when applicable), and why employees are OK with filling out a rather complex form from HMRC for that charge. In the USA it's more typical, and much simpler, for employers to reimburse employees by the mile according to the price set by the IRS for that purpose, and let it go at that. So what exactly is the fiddle under the complex UK system? (It must be a good one indeed to justify all the effort.)

For employers it's mainly a saving in National Insurance contributions and in some cases VAT plus where a car necessary for the job it means the employee has a reliable serviced car.

For employees it can be cheaper to take a car as part of a benefits package but most take the cash alternative in salary and pay tax as usual - 'cash in hand is worth more than a BMW on the drive' if you don't need to travel extensively on business as tax rules mean on travelling for business, not commuting, is allowable against tax.

Regular gas in Sweden costs about 14.84 SEK / a liter where I live. I've been around the country in the last week or so because of spring break. It's mostly the same everywhere. 14.84 is far higher than $7 a gallon. It's much closer to $8.50+.

I'd thought I would point this out because if such a fundamental error was in the article then I don't expect the rest of the data to be very reliable.

Aren't they lucky..., and smart....

The age of cheap energy is over, IEA Executive Director warns

...by 2035, three-quarters of the world’s oil production from existing fields will need to be replaced, Mr Tanaka said.

That works out to just over 50 million barrels per day, which is equivalent to about four times the production capacity of Saudi Arabia, the world’s largest oil producer.

IEA analysts calculated that this amount of oil is needed to compensate for the predicted decline in production at existing fields, as they pass their peak and their production rates drop. (Crude oil output from fields that were in production in 2009 is expected to fall from 68 million barrels per day in 2009 to 16 million per day by 2035).

...“Another 15 million barrels per day of oil-production capacity is needed to meet the increase in global demand. We project that it will come from natural gas liquids and unconventional oil [sources].”

What was it that the Pilot said in 'Mad Max: Beyond Thunderdome'?
Were not gonna make it. ... there isn't enough runway

Just a report on my progress post-TOD.

Went to Chicago rail workshop and then onto Madison, Wisconsin.

At the workshop, I asked a question of a VP from BNSF and I used a phrase from a TOD article I published 2.5 years ago in my question. His response was "You must be Alan Drake. You write very well." So some TOD articles are read by decision makers, and making some impact.

I spoke to some Wisconsin House Transportation Committee members in an informal lunch (one week after the demonstrations died down), I was thanked by a Republican for creating a "Kumbahha" moment. The next day a Democrat saw me and walked down the hall to thank me for creating a moment of comity as well as useful insights into solving a variety of problems.

60 people showed up for my lecture at UW Engineering on a 14 degree F (-10 C) night with snow flurries. No one left in a 45 minute speech, two left before Q&A and one left during 25 minutes of Q&A. 57 out of 60 stayed for over an hour. Compliments afterwards.

Made some interesting contacts (I will be speaking to Board of American Assoc of Private Rail Car Owners on April 29th - I was told that they are all "movers & shakers').

Possible invitation for a two hour brain storming session with Wisconsin Secretaries of Transportation and Commerce and their staff later.

"Interesting" developments in California, with a retired, well known (only in state) politician helping push my ideas. Not public yet.

And other efforts elsewhere :-)

An unscripted play is being acted out.

Best Hopes,


Nice update.

Have you considered having your own blog for your status updates? It seems like these things will get lost in the DrumBeats.

My own blog is still on the list of "Things I need to do, one day" :-((

Not so great hopes,


I guess that implies that you are too busy to do it, which I suppose could be a good thing.

I keep hoping that someday I will open up the news and see orders for electric locomotives (or at least dual-modes). If diesel stays expensive for long enough, we might see it sooner than later..

Last year at ASPO we were chatting, and you were hoping that the Dulles airport Metro station would be underground. It seems that you may get your wish, but people here are upset because it will be another 2-300M$. While I understand the theory for why people might think this is a good idea, I can't help but wonder whether in 25 years the airline industry will have withered to the point where most of the facilities out there will be unused..

If there are five commercial airports still operating in the USA, Dulles is likely to be one of them.

International flights to the US capital will be the last to go.

Take DC Metro to get to Union Station and one can take a sort of high speed electric rail line to Philly, NYC and all the way to Boston today. Tomorrow ?

Charles de Gaulle Airport is becoming a TGV hub today. Copenhagen airport is on the Sweden-Germany rail line. Heathrow and Frankfurt have HSR access, etc.

On smaller airports I am ambivalent about about Urban Rail access.

Airports, once they close, become inviting areas for redevelopment# post-Peak Oil. Much more inviting if they already have Urban Rail access.

I suspect that National Airport (DC) will be developed into TOD one day and the Metro stop there today will serve that, instead of airline passengers and airport workers.

Best Hopes for More Urban Rail,


# Can parking garages be converted into energy efficient retail and housing ? I think they can be.

Perhaps they can convert a parking garage into retail - we are about to find out where we are. But the old saying is be careful what you wish for - you might just get it.

In our case, we have a commercial parcel that is 1/4 mile from one of the Metro stations that is under construction. The owner tried in vain to find a tenant - the only one they could find that would bite is Walmart. The existing structures on the site include an old (closed) Hummer dealer, and they had built a 6-story parking garage in back. The plan is apparently for the store to occupy parts of the lower two levels.

The thing I don't get is where they think the customers are going to come from. It seems highly unrealistic to think that anyone would come via Metro to shop at Walmart (paying a minimum of $1.60 each way), and schlep home big bags of stuff. Far more likely that they would drive, but given Tysons traffic, would they really? And this store will only be 79K sq ft - not the megastores, with more of a focus on "groceries". I would rather walk to Metro, get on a train and go to Arlington to the farmer's market than buy any of the junk in Walmart.

You would be surprised at the transit riders that will shop at Walmart. I have a Walmart 7 blocks away (far fewer parking spaces than standard) with walk-ups (me) and bus riders. Cheapest laundry detergent, housewares, best place to buy shoe laces, and more.

As they say in Arkansas, "If you can't buy it at WalMart, you do not need it".

Those with monthly passes (all federal workers for example) find a trip on Metro much cheaper. When I lived elsewhere in New Orleans, I would surprise tourists by bringing my laundry on the streetcar to & from the laundromat. With a monthly pass, no marginal cost.

A number of people live & work car-less at Metro stations. Having a WalMart within walking distance of a Metro station makes weekend shopping there cheaper than renting a car (even the by the hour ones I have seen at Courthouse Station).

Walmart should buy some small ads at different Metro stations, advertising their "by Metro" access.

Is this an open station or on the under construction Tyson's Silver Line ?

Best Hopes for Linear Retail at Metro Stations,


A silver line station that is still being built. Currently about 1/3 the way done.

The thing I dislike the most about Walmart is the abysmal quality of the merchandise. And if they start trying to sell this as a grocery store, what will be the quality of the produce as compared to some place else? And will you need to worry about all kinds of weird shortcuts just to get the price down (like Japanese spinach or other sorts of contamination/pathogens that they can slip past the regulators).

I suppose if you limit yourself to things like laundry detergent or name-brand toothpaste, the risk is minimal. But let's take another example that I happen to know a lot about - bicycles. Walmart bikes are notorious for being worthless pieces of junk. They use a cheap grade of steel and thus it tends to be really heavy and prone to rust. Cheap paint to "protect" the cheap steel. The bearings aren't properly heat treated, so they wear out prematurely (like in a year or two). And the people who assemble them generally don't know bikes so they make errors, and they don't know how to fit people to a bike. I could go on. On bike forums when people come in and ask about cheap bicycles, we generally tell people to look on craigslist for something used and stay away from Walmart bikes. My sense is much of the other merchandise is of a similar quality.

Bicycles and WalMart "furniture" are both disposable crap_ Several other items as well.

Produce varies, check closely (including origin).

Name brands seem unchanged in quality when bought in Walmart except Stanley tools (crap_ sold through WalMart). Many "special models" by name brands sold only through WalMart though.



Walmart are no dummies. There's a piece in the now-paywalled NYT about how they're fighting off the challenge from dollar stores by cutting the number of product lines in a store and cutting prices. They're also moving away from megastores, as you note.

It looks like the expected change in urban form and lifestyle is under way already. For once, the law that says "it always takes longer than you think, even when you take this law into account" seems to have been broken.

It surprised me when WalMart's venture into Germany went tits up. As I understand it, the Germans simply out-competed them, plus there was a healthy dose of culture ignorance on WM's part.

I was working for the company that ran WM's portrait studios, so we had a front row seat to the goings on.

Point is, WM is far from invulnerable.

OK, perhaps they're not as smart as I thought. Trying to out-compete Aldi wasn't a good idea.

I might be wrong but, I have formed an opinion of Germans that was reinforced when I visited the Country in the summer of 09. They expect durable goods to be, well, durable! Sort of like, "if I'm gonna have to throw it away when it breaks, why not throw it away right now and buy something that's worth fixing?" Good is more important than cheap. Just look at their cars. Can't see them buying the disposable crap that Walmart's famous for!

Alan from the islands

The NYT allows you 20 free articles a month. I believe it's also free if you go in through a social media site like Twitter.

You can get around the limit by deleting the NYTimes.com cookie (under your browser's options).

60 people showed up for my lecture at UW Engineering on a 14 degree F (-10 C) night with snow flurries. No one left in a 45 minute speech, two left before Q&A and one left during 25 minutes of Q&A. 57 out of 60 stayed for over an hour. Compliments afterwards.

Not surprised Alan, keep up the good work!

An unscripted play is being acted out.

Yes, best hopes for the play being a smash hit. But some of the best plays are Shakespearean tragedies...

A pleasure to see a post with your handle! I’m a doomer beyond compare, but am inspired and heartened by your optimism, pragmatism, and sound arguments. Transportation consumes what, 50% of our liquid fuel? Your suggestions for smart transportation would go a long way to postponing what I feel to be the inevitable. Congratulations on getting an audience with the king (or at least the king makers). And write to us more often.

I have frequently compared Alan to Rhett Butler* at the end of the Civil War.

But at least Alan has a plan to make things "Not as bad as they would otherwise have been." Unfortunately, Alan's message is generally not what Americans--who have been listening to the Siren song of infinite energy supplies--want to hear.

Having said that, a few years ago Alan gave a presentation on Electrified Rail transportation in Dallas and did a joint radio interview with a representative of DART (Dallas Area Rapid Transit). I can't proven causation, but the fact remains that Dallas is now working hard on plans to expand the remnant of electrified street car lines that we still have (and of course DART has a large electric light rail system). Until the late Forties, Dallas/Fort Worth had about 350 miles of electrified streetcar lines connected by a regional electric interurban system.

I would suggest that readers contact Alan about bringing him to your communities to speak. What works best, in my experience, is teaming up with a local college.

*Scarlett: [pleads with Rhett as he is about to leave to join the Confederate Army] Oh, Rhett! Please, don't go! You can't leave me! Please! I'll never forgive you!

Rhett Butler: I'm not asking you to forgive me. I'll never understand or forgive myself. And if a bullet gets me, so help me, I'll laugh at myself for being an idiot.

I hope he comes to Los Angeles. We need more mass transportation. More light rail.

A good friend of mine is Darrell Clarke, "the Father of the Expo Line".

LA is doing some innovative things to extend the Red Line to Brentwood - one day it will be "The Subway to the Sea" and pushing forward elsewhere.

However, the Los Angeles basin is so far behind ...

If only you had not scrapped 1,000+ miles of the old Pacific Electric (it transported oranges as well as people). The largest electric railway in the world in 1925.


Best Hopes for More,



Keep up your great efforts.

Perhaps some day Albuquerque will get the clue and build some light rail and real bike/walking paths.

I figure 5 North-South trolly lines and ~ 10 East-West trolley lines, plus a similar number of discrete bicycle paths would do wonders for offering very credible alternatives to the car rat race in this city.

Of course, with 310 sunny days per year, every roof could be an electricity generating station, at least for 6-7 hours per day. We could use some of that to re-charge our electric golf cart-like / NEVs as well...limited to 30 mph...ah, it is nice for me to fantasize now and then! We would then have a basis, combined with a robust energy conservation initiative, to lessen our dependence on coal-fired electric power in this area.

Mayor Berry and Governor Martinez do no strike me as being very interested in these ideas though...

We do have plenty of road lane-additions/widening/re-surfacing/widened interstates though (ugh!).

Great work! Keep on (not) truckin'

Congrats, Alan!

I'm with UTAH. I'm a convicted (although not yet executed) ultradoomer (they keep telling me), with little patience for cornucopians, but your spirit, energy and resilience are inspiring.

I do not deny the possibility, or even probability, of something like "doom" (mass deaths, political-social-economic collapse).

However, my response is to seek 1) a way of reducing the odds and maximum impact of "doom" and 2) make a post-doom world (if it happens) a better place. I am *FAR* from certain of success, but I chose to try and make things a little less bad.

I note that in the Liberian Civil War (doom as defined above) villages banded together to save the tracks from scrap buyers. They used the rails for home made carts to transport food, goods and people between villages. Not BNSF Railroad, but still useful. Likewise Cambodia.

Creating a means to transport food, essential materials and some people across North America with a few barrels of lubricating oil and a less then 100% electrical grid is a "game changer" if we are under great stress.

Add cities that can operate largely (not completely) with bicycles, Urban Rail and walking and the hope for islands amidst the doom grows. Add some local delivery electric trucks ...

I have mused that if all else fails (gov't, finance, economy) that the railroad corporate organization might grow and create it's own social/gov't/economic organization due to the necessity of transporting food etc. Establish it's own shops & supporting industry (located near large hydro ?). Rail employees are likely to do what needs to be done to keep running.

Such a controlling force would probably not be benign, but it would be better than chaos, anarchy and complete collapse.

The durability and low tech alternatives already known for railroads lend themselves to survival in the worst of times (see German rail during WW II bombing).

If we add second tracks, electrify, rail over rail bridges, smooth curves, etc. - much (not all) of this infrastructure will survive no matter what.

Best Hopes for Improving the Odds,


Alan, I wish you best hopes for improving the odds also. You are doing great work and we all appreciate it I am sure. However even if all the transportation problems are solved with mass transit and bicycles, I do not see that as the primary problem. Here are what the two main problems will be as I see it.

Food production will be a serious problem however that is only the second most important problem.

People's ability to afford food and to afford the other basic necessities of life like clothing, shelter, medical help and heat in the winter will be the primary problem.

If indeed the world's oil supply starts to decline at two or three percent per year this will be devastating to the world’s economies. This will mean that all GDPs will begin to shrink. Unemployment will grow and... Hell, I don't need to go any further but you get the picture. It will be the Great Depression but much, much worse. A huge percentage of the population will just not have any money. And their numbers will be too great for any government dole program.

Roosevelt's social programs like the WPA, CCC, NRA and others were great but I think WWII was what really pulled us out of the depression. And that took massive amounts of energy and more energy was required when we finally did get back on track. The world runs on energy and without energy to build things, things that people buy and give employment to the masses then there is no hope.

So please keep up the good work but alas....

Ron P.

Nice to know, if we go down, we'll be going down in first class. We have quite a bread basket in this country. I think food and water are serious issues in other parts of the world, and I believe there will be some relocation in the U.S. (Las Vegas should not even exist).

But there is plant of water in the Pacific Northwest.

Plus, the U.S. is not as overpopulated or as densely populated as other parts of the world. We need to get smart fast and try to prevent that from happening.

In this country we need to focus on population, (I am Hispanic and I do not believe the U.S. can be an immigration country forever), Light rail, and the re-design of cities to be denser and foot-friendly.

If America's population does decline, it will not fall as much as Chindia.

Les, all this will happen within the next 20 years or so. The population of the US will not have time to do anything in that span of time except increase a little. But our population was between one half and one third the current population during the Great Depression. A low population didn't seem to help much. It doesn't matter what your population is if half the people are unemployed.

Ron P.

There can be no change without pain and suffering.

I have some hope that the children in nations that are preparing (Sweden, France & others) will have a quality of life comparable to their parents and grandparents. Not so our children in the USA.

Massive unemployment, a decade or so drop in life expectancy (hopefully not 20+ years) seem quite possible and even probable.

Ideally, these could be almost avoided with a significant switch (say 5% to 8% of GDP) from consumption to investment in energy efficiency (all forms) and renewable & nuclear energy production.

Such investments have long life expectancies and long paybacks with upfront investments. Pay now (with reduced consumption), payback later - again and again and again.

I can only do what I can do. Perhaps some measure of success to make things a little bit better than they would otherwise be.

Or maybe a breakthrough in a moment of national panic - when people are willing, and may even even want to change.

Best Hopes for the Coming Struggle !


Hey Alan, good to hear from you! You have been in my thoughts quite a bit lately as jamaica takes baby steps towards the resumption of passenger rail service.

You may be aware of the facts on this web page:

The Jamaica Railway opened on November 22, 1845, only 15 years after the first railway was inaugurated in England. It was the first railroad outside of Europe and North America and the second British colonial railroad after Canada's Champlain and St. Lawrence Railroad of 1836.

According to the above article (and this Wikipedia entry it has a checkered history, passing from private to government hands and back a couple of times. It appears that the advent of motorized road transport led to it's demise as a profitable enterprise, (sound familiar?)

I remember riding on the train from the capital city, Kingston to my hometown along the Kingston to Port Antonio route as a teenager, when it was sometimes impossible to secure a seat on one of the few minibuses that went through my town. Contrary to the claims in the above articles, I remember Hurricane Allen in 1980 skirting the north east coast of Jamaica and damaging the lines to the point where service to the north east was discontinued. The large losses the railway was experiencing meant that the extensive repairs required could not be justified. As a result, when I went off to college in Kingston in 1980, travelling home by train was no longer an option. Damage causrd by Hurricane Gilbert in 1988 closed the line from central Jamaica to Montego Bay and after continuing limited service with heavy losses, the entire passenger rail service was terminated in 1992, leaving the trains operated by the bauxite mining companies as the only trains running in Jamaica.

Recently a glimmer of hope has been returning first,

Train coaches roll into Old Capital for test run

then this

The train is coming, so get on board!

In the video accompanying the second story, the excitment in the spectators along the tracks on seeing a passenger train running again, is palpable. There's an old lady talking through the window to the interviewer that is as excited to be taking the train again, as the the teenage girl who was taking a train for the first time.

I've driven past the train station in the old capital of Spanish Town, where the trains are going to terminate for the time being and they appear to be doing a lot of work rehabilitating lines and sidings. Once this limited first step is complete, the crucial next step will be to rehabilitate the line between Kingston and Spanish Town. It is a very busy corridor which I am sure any prospective buyers for the railwaya will be very keen to acquire as a going concern. Electrification is very far off but, after the past couple of weeks anything is possible! I look forward to once again being able to take the train to my old hometown someday.

Kingston also had a tram service back in the day the owners of which morphed from running electric streetcars to become the islands electricity utility. No chance of that coming back:-(

Alan from the islands

Yemen’s President Saleh agrees to step down in return for immunity

SANAA, Yemen — President Ali Abdullah Saleh has agreed to relinquish his 32-year hold on power in exchange for immunity from criminal prosecution after months of pro-democracy protests across the country, a Yemeni official said Saturday.

The political opposition said it had “officially accepted” the deal but was still negotiating conditions that could derail a final agreement.

Japanese government considers underground wall to contain Fukushima radiation

...According to Tepco, it has poured about 7,000 tons of water into the No. 1 reactor's pressure vessel. The company said it believes almost all of that water is still inside the pressure vessel and the containment vessel. However, the firm said it has injected about 14,000 tons of water into the No. 2 reactor and 9,600 tons of water into the No. 3 reactor since cooling operations began. In both cases, the amount injected exceeds the about-7,000-ton capacity of the reactors' containment vessels.

...Meanwhile, at the No. 4 reactor, Tepco has attached cameras and other equipment to a concrete pump used to inject water into the pool containing spent nuclear fuel rods to monitor the water and radiation levels around the clock. According to the company, water in the pool was 91 C (196 F) on Friday, and the water level was about 2 meters (about 6.5 feet) above the spent fuel rods.

Hey all, first time commenter, looong time lurker. Love the site! Anyway...

How much of a price premium can the Brent Crude sustain relative to WTI?

The reason I ask is because we had the CEO of Noble Energy give a seminar at my university and I asked him if it was ever possible that we could ever increase production rates of crude oil enough in the US to decrease oil prices significantly. Basically, I wanted him to admit that increasing drilling in the US does not mean cheaper gas prices and therefore the rhetoric that we hear on a daily basis from Republicans.

He took a while to think about it and said basically, "I was going to say no but the recent conflicts and outages in the MENO region which have caused a $20 premium on Brent relative to WTI show that production in the US can keep prices cheap relative to the rest of the world".

To me, it seems that the difference in WTI versus Brent can only get so large before it become economical to pay for shipment overseas. What are your guys thoughts on this?

Unplugging the bottleneck at Cushing would be nice. Any prospects that this might happen in the next ten years?

Count – From what I understand the current battle is over right of way/public domain. If/when they clear the legal issue they estimate 2.5 years to build the pipeline that could clear Cushing to the Gulf Coast refineries.

That ties in with what I heard from a guy trying to get a piece of the financing action - somewhere in the 2ish year range.


right of way/public domain

I think the phrase is "eminent domain", unless this is yet another Queen's / Yankee English difference?

According to auntie Wiki, in Queen's English it's "compulsory purchase". Which I can guess the meaning of. It means the sale is compulsory. ;-)

Eminent Domain

Eminent domain (United States), compulsory purchase (United Kingdom, New Zealand, Ireland), resumption/compulsory acquisition (Australia) or expropriation (South Africa and Canada) is an action of the state to seize a citizen's private property, expropriate property, or seize a citizen's rights in property with due monetary compensation, but without the owner's consent.

I'm in Canada, where it would be called expropriation. However, the company wouldn't expropriate the land, they would first attempt to negotiate an Easement and if that failed, get a Right of Entry (ROE) order from the government.

The company then has the right to enter the lands for the purposes stated in the order, such as construction of a new pipeline or facility or to repair an existing pipeline.

This makes it a lot quicker and more straightforward than in the US. There is no transfer of title and no constitutional issues involved in an ROE. They just come, put in the pipeline, and leave. The landowner gets compensated for inconvenience, nuisance, and any damages. They can quibble, but they can't really fight it.

More countries separated by a common language. Normally I'd think of expropriation as connoting confiscation without payment...

The use of "eminent domain" is largely confined to the US, whereas "expropriation" is somewhat more generally used in the world. However, "expropriation" can mean confiscation with or without compensation.

Canadian governments would normally compensate the owner for taking land, but there have been instances where they haven't - there is no constitutional requirement to do so, and they use "expropriation" to avoid implying that there is.

US governments have taken land from people without compensation, too, but they try to pretend it didn't happen because it is theoretically unconstitutional.

l - Right of way was the term I specificly chose. Private enterprises have little chance of using eminent domain to push a pipeline thru at least in Texas. A govt body can try for ED but a private company has to acquire a right of way from a landowner. And landowner can't be forced to grant ROW. From what I've heard that's been the big problem. IMHO no local politician would try to push ED anyway...a sure way to not get re-elected, at least in Texas. BTW: the expansion of the S Texas nuclear plant, which was just cancelled in reaction to events in Japan, had to pay $88 million for the acreage. And this was a rather small bit of real estate compared to the ROW they'll need to purchace for the p/l.

Check out "right of way" in the dictionary...Yankee or Queens. LOL

The odds of a private company being able to use eminent domain are better than they used to be however.


How can it be? They are people. How do individuals use eminent domain? Looks like law has not caught up to law.

Businesses use eminent domain by, for instance, proposing a project that is consistent with a local planning authority's preferred use for a site and, when faced with intransigent opposition from a neighboring owner whose property is needed for the project, convincing the local council to condemn the problem property.

Happens not infrequently.

k et al - The deal in Texas is such that if a biz wanted to use ED and went through local authorities it would be dead on arrival IMHO. Folks may think the oil patch has a strong lobby system but it doesn't compare to ranchers and farmers. No local politician is going to throw himself on his sword for the pipeline IMHO. Now if the feds try to butt in it could be a different matter. But I suspect the lawsuits would delay such efforts for years.

But also as far as I know the pipeline snag has nothing to do with folks down here not wanting a pipeline. In Texas we love pipelines. Pipelines mean a lot of money for right of ways. In all likelyhood any rumblings you hear will just be part of the negotiating effort. I've seen it take longer to buy up ROW's than to actually lay the line. The Golden Rule applies: he that owns the gold rules. And in this case the gold is the ROW.

Obvious, but not my point.

Yair...but when that oil hits the coast won't it sell at a premium because it is not "landlocked" any more and can sell on the world market...or at world market prices i.e.not WTI?

Yes, that is Rockman's point below. If congestion diminishes, the price spread will diminish.

scrub - It can be a bit confusing but the prices you see for WTI are the futures postings..not what any oil, WTI or any other, is selling for. It's used as an index so folks can agree to prices for long term oil sales contracts. A refiner might sign a contract to buy X bbls/month of La. Sweet for the next 12 months. But at what price? The buyer/seller agree to use WTI + $10 for the sales price. So as the WTI index moves so does the price they pay for the La Sweet. It all boils down to the negotiation between buyer and seller.

So when all that Cushing oil shows up on the Gulf Coast it will sell at what ever price the current market dictates. Depending on the specific oil it might sell at WTI or $X more/less. Some wil be sold on long term contracts and some sold on the spot market. But the price for either will be determined by negotiations. If any oil in the US is selling at exactly the WTI index on any given day it's just a coincidence.

Bio – If you’ve read my posts you know my opinion of his proclamation: total BS. And I’m a conservative geologist with 36 years experience. I’m a registered R in Texas for the same reason I’m a registered D when living in Louisiana: it’s the only way to feel your vote counts for anything. I’ll be sitting on a drill rig in S La. though the Easter holiday doing my part to add to our reserve base. Doesn’t matter how much oil we might add domestically…the oil exporters will still dominate the price of oil in the future. If we’re really lucky and oil prices stay high we might be able to drop our domestic decline rate a bit. But our future oil production decline was essentially written over 30 years ago IMHO.

But I think I confuse some folks. IMHO: no…no amount of domestic drilling will prevent PO. At best maybe delay a very small bit. OTOH the country/govt should encourage as much new drilling as can be done responsibly. The national economy is a big winner in this effort in a number of critical areas. But no…no amount of drilling will free us from the influence of imported oil.

As far as the low cost of WTI being due to US drilling is an absurd position. The oil that is hitting the choke point at Cushing and causing the lower price is CANADIAN OIL…not US production. And as soon as the pipeline is built to carry that oil to the Gulf Coast (or until the Chinese figure out how to get it shipped to Pacific terminals and take it away from US refiners) the price differential will drop significantly IMHO.

Rockman, thank you for all your sage and sublime comments over these many Oil Drum moons.

As far as the low cost of WTI being due to US drilling is an absurd position. The oil that is hitting the choke point at Cushing and causing the lower price is CANADIAN OIL…not US production. And as soon as the pipeline is built to carry that oil to the Gulf Coast (or until the Chinese figure out how to get it shipped to Pacific terminals and take it away from US refiners) the price differential will drop significantly IMHO.

Good point IMO, but, we all know that this pipeline "reality" is years away... Considering recent statements by TPTB, we'll be lucky to get approvals and permits in less than two yrs.

So my question is, at what price/shortage will alternative shipping arrangements be made. Are such shipping arrangements even viable in quantities that would matter?

1 - I don't have the details but it's easy to assume the oil can be moved out of Cushing via some sort of trucking/rail combination. That would cost $X/bbl. As Rocky points out when this makes economic sense it will happen...possibly is to some extent already. But how quickly would this approach be maxed out? Again, I don't have the data to make a rough guess but I assume we lack enough of this infrastructure to make a big dent. The infrastructure could be expanded but that would take a while to do. Additionally, who would make such an investment knowing a cheaper pipeline method could be in pace in a few years? Thus the potential for the pipeline would inhibit expanding any current efforts IMHO.

Thanks for the reply Rockman. I have missed any discussions on why the price of Brent has increased relative to WTI recently and wanted to better understand it.

The differential between WTI and Brent is caused by increased Canadian production from the oil sands, and to a lesser extent, increased North Dakota production from the Bakken Formation. It has little or nothing to do with increased Texas production. This new oil is landlocked oil with insufficient pipeline capacity to take it to any seaport. The closest it can get is Cushing, OK.

However, the differential between WTI and Brent can only get so big because, beyond a certain point, marketers will start moving oil to the seaports by rail and truck. That's more expensive than moving it by pipeline, but not overwhelmingly more expensive.

You're mostly right but it's also a pipeline issue. Not enough pipelines to ship the oil out at a sufficient rate yet so it stockpiles in Cushing.

One should point out that, as even MSNBC reported a few days ago, WTI is mostly irrelevant for the U.S. as a whole. Most blends that the U.S. uses are over $120, including for the South, West and most of the East coast. WTI is quite marginal, but somehow it's the benchmark. It's completely wrong and I ask, like others before me, why WTI is still the standard on the ticker on the right on this site? It's not representative for either U.S. or World prices.

SuperG was trying to find a ticker for Brent, but if it hasn't changed, I guess he couldn't find one that worked with this site.

Most of these tickers ( like oil http://www.oil-price.net/ ) use javascript. I just keep a link handy.

To get the oil price, please enable Javascript.

L - WTI is not a standard per se. It's simply one index used to adjust long term contract prices. A S. La crude might be getting $120/bbl. But what is being paid is actually WTI + $X. These long term contracts could just as well use Brent as an index. But typically the buyers/sellers like to use an index close to the particular market. Regardless of what index is used a bbl of oil will sell for what it will sell for. All an index does is allow long term contracts to adjust their price as the market place changes.

Another choke point is Midland. There is only one pipe to Cushing (Plains Basin) and to Houston (Sun WT Gulf). There is a sweet play west of Hobbs and there is no additional capacity to get it out. The oil is being trucked to Jal and Denver City. Since Navajo went straight sour and Western is only 100,000 BPD the oil does not have a local market. The only other consumer of crude is Alon at Big Spring and it is 65,000 BPD with a high sour slate.
What West Texas is going to need is a pipe to a market other than Cushing. That leaves Houston or Corpus.
Someone want to take a line south from Midland toward Corpus with a branch at Laredo to PEMEX? I bet Plains still had the All American and could take WT crude to the west coast.
If you cant get it to a market you are destined to take what is offered by the speculators. Once it is produced ya cant eat it!

North Dakota has similar problems with the Bakken oil. So far they are dealing with it by trucking oil north into Canada and putting it into the Canadian pipeline system, or moving it south by rail or truck.

However, the Canadian pipeline companies are extending their pipelines into North Dakota, and US pipelines are extending north, so it's just a matter of time before they get the transportation they need.

The chokepoint at Cushing is still depressing prices on it, though.

Thanks for the reply and info!

The Coast Guard report cited in one of Leanan's items is posted at this Deepwater Horizon Joint Investigation web page


and is titled DWH ROI - USCG - April 22, 2011.pdf

Coast Guard members of the JIT have released their findings related to issues under Coast Guard jurisdiction. The findings, which comprise Vol. I of the Joint Investigation Team Report, cover five aspects of the disaster – including the explosions on the Mobile Offshore Drilling Unit (MODU) Deepwater Horizon; the resulting fire; evacuations; the flooding and sinking of the Deepwater Horizon; and the safety systems of the MODU and its owner, Transocean. The findings released do not include an analysis of what led to the loss of well control or other aspects of the investigation that fall under BOEMRE jurisdiction.


The JIT has been granted an extension of the deadline for its final report. This approval was provided by USCG and BOEMRE. The final report is due no later than July 27, 2011.

288 pages with security and redaction. I did a search for Leanan and for oildrum and didn't hit anything. I tried scrolling through to see if I'd recognize anything but I gave up half way through. What did they use?

Oh and fwiw Firefox 4 / Adobe Reader choked on it but Chrome opened it in browser and downloaded it fine and once saved to my PC Adobe Reader opened it fine.

oh, i see, reading comprehension fail on my part. Leanan mentioned the report previously and you linked to it. I jumped to the thought that they used something he posted here in the report.

Sometimes I'm not clear. Sorry.

From up top Wash. considers fee for electric cars to make up for lost gas taxes

This is inevitable if electric cars reach a significant percentage of the fleet

Federal fuel excise is $0.38/litre in Australia (current petrol around $1.43/litre), so thats a big hole for the government in future budgets. EV manufacturers have been trying unsuccessfully to get the Australian government to support EV tax credits, but the government knows that eventually it would actually have to tax EV's, not give them tax breaks.

An Article called the Era of Extreme Energy:


I agreed with the overall theme of the article (Paraphrasing...The cheaper and easier oil has largely been found and the harder to extract oil is what has been found recently and most of what will be found going forward)and thought it was an important message to publish, but I cringed when I read the first paragraph below:

Once upon a time, most of the oil pulled from the earth was stored in vast, bladder-like bubbles beneath the surface. Puncture the pouch with a drill and the oil spurts out, Beverly Hillbillies style.

Canada's bitumen is mixed up in the land like an egg in cake batter, making things more complicated. The process to extract that dirt-oil mix is supersized -- and costly.

The rythum isn't good. For the 7 years prior to the mortgage meltdown my bus. was very consistent. When the Great Recession hit the frequency of inquiries dropped considerably. As the so called recovery took hold inquiries increased, but not back to pre-recession levels. Now the inquiries are dropping again and fewer of them are turning into orders. In other words people are calling around looking for a bargain.

Based on this track record my business seems very good at gauging economic health. And the gauge looks like its going to be a very tough Spring/Summer. Good thing while bus. was slow in 09 I branched out to add a 2nd sideline bus. or I'd need to start looking for a full time job, 'if' I could find one.

I'm a bit confused, is 'bus' shorthand for your business or is it something about buses? Because you change between bus and business and it's hard to determine what exactly you mean.

Because it seems whatever you're doing, it's very dependent on gas prices.

As for myself, I nearly went over to America(that'd be a huge mistake) and pay ridiculous amounts of cash for a so-so education. Instead I stayed in Sweden(after a brief tour of Britain), and I'm now doing what I consider fairly recession-proof studies(and studies that I enjoy), namely the study of energy, water and food. It's certainly scientific and very rigorous, one of our top 3 universities and one of the best in the whole of Europe on the subjects I'm doing, but it's enjoyable. Very clever people in my class and peak oil is a natural subject, so I don't have to contend with dimwits or people clinging on to BAU in desperation or ignorance.

We're more into Peak Water and Peak Phosphorus by now, as Peak Oil has been a bit exhausted by now.

The employment stats for people who enter the workforce from my program is around 97 %. The only groups that can at times outcompete us are doctors and sometimes graduates of mathematics(we're all hovering between 95-98 % employment, and it changes every year).

Part of me is sort of smug about how clever my career move have been, from a financial and educational standpoint, as well as personal(I enjoy what I do very much), but then again if TS(really)HTF, then it won't matter much except that I'd know a lot of useful stuff that would make me a very valuable individual in a group since I would know so much about soil, water and the rest of it(in a post-Peak scenario, that's certainly better than to be an ex-lawyer or what have you).

But I also look at some people in my generation, who go for studies like political science and I just am saddened by how unfair life is. They're mostly good, decent and generally smart people, but they are basically reliant on the mainstream media for their information. And as a result, they are completely screwed, even if you take an optimistic post-Peak scenario of a rough transition that won't involve mass starvation and famine and all the other gory stuff ultradoomers like.

And then you have to remember university education is free in Sweden. I can only think of how hard it must be for smart, American kids going into college now, even into very good schools, with ultrahigh debts (unless they're into Ivy Leagues and come from a minority background) and little prospects for employment unless for a precious few subjects. Employment for youths in Sweden is not great either, but at least our education and healthcare is free. If you're poor in Sweden, you can count on to have your basic needs met(they've cut the excessive welfare in Sweden dramatically over the last 7 years so some myths about this countryis untrue). Still, you won't have to be financially ruined if you're seriously ill or can't find a job after 99 weeks.

America, on the other hand, has truly become a horrendous place to grow up in if you're a young person and not part of the top 5 % of the intellectual élite or simply born very wealthy.
It was always different but growing up it seemed like a right-wing alternative, it seemed like a place of prosperity and opportunity. Today, it seems to me that the costs are much higher and the opportunities are dwindling, leaving American youths straight towards forming one, giant lost generation.

Hey Leiten, is your course one of these Scandinavian ones that they teach in English?

I'm looking to do a Master's in a similar field at some point and figured I might as well take a trip down that way seeing as tuition prices are exorbitant here now. But I haven't decided between Norway, Denmark or Sweden yet.. Finland seems a bit too far out the way.

I would personally choose University of Copenhagen. It's the best university for a master's in these subjects according to my profs, and yes, it's all in English too. Denmark has far less ethnic tensions than Sweden have, but in Sweden it's simmering under the surface. We have the highest immigration per capita of all the nations in the OECD, and unlike Canada, we don't pick the educated middle classes, but rather the bottom of the barrel from places like Afghanista and Iraq. This has created an explosion of ghettos. We had 15 no-go zones in 1990, today we have over 150 which is a huge number for a population of 9 million.

A record number of young Swedes are fleeing this country and I'm on my way too. Especially academics are going in a massive exodus, which is just now being covered in the media. Norway or Denmark is the safest bets. Finland is turning a bit isolationist and the education there is frankly not great.

My tip is: Denmark or Norway. Those are my two countries of preferance.
Denmark has always been more cosmopolitan and Copenhagen is a much bigger city than Oslo, plus it's closer to the continent. But Norway's energy situation is golden, as you know. So take your pick.

Great advice, much appreciated! I have some friends in Copenhagen and really like the city so it was high on my list anyway, this might just swing it for me.

I've never been to Norway, although I would love to do some hiking there some day.

Hmm, excellent - time to give this some serious thought.


Bus. is for business and if I only put bus, then I meant to put Bus.

Only dependent on gas prices from the standpoint of Ground shipping. If that goes up it digs into profit and because of competition if product price is increased then there is a loss of sales.

Today, it seems to me that the costs are much higher and the opportunities are dwindling, leaving American youths straight towards forming one, giant lost generation.

I agree. But isn't that a symptom of peak oil? As the price goes up every opportunity gets squeezed and the competition reaches a point where people become frustrated and many I am sure, like you write, feel lost.

Generally speaking, each subsequent decade starting from when I can remember, the 60's, has offered less opportunity and greater competition, at the same time a bigger chunk of the pie has been gobbled up by the top 1%. In the 60-90's the only person out of work was simply lazy or unwilling to change professions. But now it really is possible to be well trained, motivated and out of a job.

Sounds like an interesting experience you had in Sweden. So valuable to get other cultural perspectives. That's something sorely missing from middle America - intellectual perspective.

... and I'm now doing what I consider fairly recession-proof studies(and studies that I enjoy), namely the study of energy, water and food. It's certainly scientific and very rigorous, one of our top 3 universities and one of the best in the whole of Europe on the subjects I'm doing, but it's enjoyable.

Are you genuinely serious? Do you really think that "university study" has the slightest relevance to anything relating to peak oil, or anything relating to basic economic decision-making? Who is fooling whom, here? I find it intriguing that you have such faith, TBH.

Ah, once again, the ineffable cultural difference between the USA and the rest of the world, here apparently manifested as USA-centric doomer-ness. Please do note that while tiny amounts of oil have been used from time immemorial, the existence of universities predates its significant use by many centuries.

Sure, but college was for the wealthy, not the ordinary folk. People didn't see it as an investment in their future. Heck, only a few generations ago, many people dropped out before high school, and didn't even learn to read.

An interesting new program feauturing Chris Skrebowski, Jeremy Leggett and a very candid(in my opinion, even borderline despairing) interview with the head of the IEA, Fatih Birol.

I found it via the Energy Bullentin:


It's a podcast but worth listening to, to get away from the near-term noise and digest the big picture which is still the main point to be focused on.

Skrewbowski was interesting and added a lot of ifs and buts to his predictions, assuming stability and predictability(which is a big if in itself considering the events of the last months).

Jeremy Leggett also had some good points but I found the Birol interview the best. He sounded like a despairing, broken man. I don't think he believes most of his own work anymore. Perhaps he is only staying to feed and provide for his family, because he seemed very off-message in contrast with the IEA track record.

Great link, but scary... Fatih Birol sounding more and more like a commenter at The Oil Drum. (Wonder if he's a reader?)

Note: He also repeats the assessment of crude peak in 2006.

Interesting to compare this previous interview, for anyone who hasn't seen it.


I think Mr. Birol will definitely have taken up smoking by his next interview.

Faith Birol appears to have decided to come completely out of the closet and has taken the gloves off. In the recent ABC Science Show broadcast,where he said:

the news is not bright. One one hand we see the global oil demand increase substantially, driven by the transportation sector ... when we look at the production side, the prospects are rather bleak. We think the crude oil production has already peaked in 2006 ... but in any case it would be very challenging to see any increase in production to meet the growth in demand. ... the age of cheap oil is over ... We all have to prepare ourselves, as Governments, as industry, as a private car driver for higher oil prices. I think in general Governments are not well prepared for the difficulties we are going to face in the oil markets.

If we are to find a solution for our oil problems, we will have to change our mobility habits.

To move from an oil based to an electricity based mobility system, we should lower the oil demand growth ... it will be too optimistic to say any of the governments ... are ready to face this challenge.

Prices may go up substantially ... 20% to 30% higher than now for the next few years to come.

If the economic recovery starts to happen soon rather than later, we can see difficulties in the markets 2 to 3 years time and this in turn may mean strangling the economic recovery efforts .. putting pressure on the trade balance and through that economic recovery efforts can be well strangled.

[Now, here's the kicker]

Oil and geopolitics will become more and more inter-woven. [Reporter: you mean war?] Yah, different types of that.

The second worry is the sudden increase in prices.

Illustrating the financial strain that higher prices will cause, he pointed out that the amount of increase in monies monies paid for EU oil imports is equal to the combined budget deficits of Greece and Portugal. The message being that those debts are shaking the foundations of the EU and the future price increases will cause worse upset.

He essentially is putting the next oil crunch at 2014 or earlier, that none of the Governments are prepared for it, and that high prices will strangle any economic recovery.

As was mentioned in the audio program, "senior officials never normally talk like that." In the past, Dr. Birol has tried to gentle the message by focusing on the carbon constraints. But, now I suppose it is obvious to him that business as usual will prevail and it is time for blunt communications.

Sigh, it is almost enough to make me shift from the "we will adapt" to the doomer camp. Nonetheless, humanity will adapt, but the result won't be as gentle as it could have been (see David McKay's plans for the UK, http://www.withouthotair.com/). One good aspect, the strong price signals will finally be correct for motivating rapid deployment of alternatives.

I think it's time to plant another few rows of beans and to start designing the new fireplace (the former to cheer me up and the latter to prepare for the worst).

Lurker, thanks for the great post. I think Briol is overly optimistic in putting the next oil crunch in 2014, three years away. People are hurting right now. US consumption is down considerably. The next oil crunch, in my opinion, is right now. I believe it will get worse as we move into the summer.

Not to nitpick but it is "Fatih" not "Faith". We hear it pronounced in different ways by different reporters but when I was in Saudi I knew an Indonesian with that name and he pronounced it Fa' tey or Fa' tee. He said that was a very common name in Indonesia.

Ron P.

Please be wary of premises based on simple typographical errors.

This is old news but a new slant. Someone is finally beginning to doubt Saudi Arabia's ability to produce more oil.

Saudi Arabia Posts Major Oil Production Decline: Back on the Roller Coaster

You can take Thursday's news two ways. The announcement may mean Saudi Arabia has decided oil is in surplus and it does not need to increase production after all (This is the official Saudi position.) Or, for whatever reason, the kingdom was simply unable to increase production after an initial February boost. Intuitively, you would think they would go all out, capitalizing on record high prices.

The article goes on to add further doubts as to Saudi's ability to pump more oil. I think it likely that the truth is beginning ts seep into the minds of a few reporter's minds.

Ron P.

Being a fervent believer in Ockham's Razor, I'd say that the main reason for recent Saudi behaviour is likely to be that the Sauds need $85+ oil to pay for the bribes they've promised their people, and they're doing their best to ensure that they get $85+. They'll make whatever announcements they think best designed to achieve that.

The increased rig count and talk of restarting Manifa suggest that they are worried about the future, though. They don't want the price to get too far above where it is now, lest it encourage substitution away from oil.

Gregvp, I am a great believer in Ockham's Razor also. The Saudi's are not getting $85 for their oil, in the week ending 8/15/11 they got $119.82 per barrel for their oil.

Manifa is not restarting it is being started for the first time. Though it was discovered in 1957 it has never produced a barrel of oil because it is so heavy, sour and contaminated with vanadium that there has never been anyone capable of refining it. They finally built their own refinery to handle it but it will not be open for awhile. Saudi will have to sell Manifa oil as refined products and it is really unknown when that will happen.

But all this is beside the point. I really don't think they are designing their announcements in order to achieve a specific point. I think they cut their production because they suddenly hit their production peak, the water cut shot up and decline was obvious. So they cut almost one million barrels per day, to a level that they thought they could hold for a few months to a year or two in order to hide the obvious, that they have peaked and are in decline.

So they announced that they cut production because the market was fully supplied and they couldn't find buyers for their oil. That is partially true, they could not find buyers for their very heavy sour stuff at such an elevated price. But any fool knows that if they just dropped their price by $10 a barrel or so they would find buyers galore.

Bottom line, they are bumping up against their production peak and are doing everything in their power to hide that fact. At least I think that is what Franciscan friar William of Ockham would say.

Ron P.

Manifa is not restarting it is being started for the first time.

Sorry, loose usage on my part. The project to start producing from Manifa was under way in '08, but was deferred in the Great Recession. Now it's starting up again.

Aramco is widely believed to be the most competent of the NOCs. I have a hard time believing that they'd be caught unawares by their superstraws.

The Saud family has powerful incentives right now to "talk up" the price of oil--they want to stay in power in Arabia. If Arabia's production peak has hit right now too, that's a powerful coincidence.

Aramco is widely believed to be the most competent of the NOCs. I have a hard time believing that they'd be caught unawares by their superstraws.

I also think they know exactly what is happening. But water does hit suddenly. BP is a competent company also. They were shocked when water hit Thunder Horse and cut production so early. They didn't expect it for another twenty years.

But what has been happening to Ghawar and the other giant fields has not been so sudden though it probably happened sooner than expected. But I really don't think they are all that surprised. Yes, they know exactly what is happening. And though they are trying desperately to hide the facts, a lot of other people know exactly what is happening also.

If Arabia's production peak has hit right now too, that's a powerful coincidence.

Naw, Saudi peaked in 1980 at 9.9 mb/d C+C. Of course they could have probably produced more had they been producing flat out. But they cut production in the 80s and several times since. But what they are producing right now is nowhere close to their peak of 1980 or their second peak, slightly lower, in 2005 or their third peak, slightly lower than that in 2008. So the fact that they could not match even their third highest peak now is not really surprising, or any kind of coincidence for that matter.

Ron P.

Ron, for the record, I'm not a "peak oil sceptic" or any such thing. No-one who's ever squeezed a sponge can be. There will be a downslope, soon, and it will start when Ghawar goes unequivocally into decline. I just don't like the coincidence.

The sooner Gharwar collapses (and the method of exploitation means it's likely to collapse rather than have a slow decline), the better. It will have two benefits:

1. It will blow the cornucopians out of the water. The entire world will have to recognise Peak Oil and start dealing with it.

2. It will be the end of the line for the House of Saud. They've been maintaining a 7th Century social structure by giving the citizens social security cheques to live on, while importing a proletariat to do the actual work. With oil production close to halved, and exports more than halved, something will have to give and the house of cards will collapse.

Another OPEC nation cuts their production.

UAE producer cuts Murban crude supply by 5% in June

llocations for Lower Zakum, Umm Shaif and Upper Zakum will also be supplied at a 5 percent cut, compared to no cuts in May ADNOC said.

“We have decided to cut the allocations for June in order to comply with our OPEC quota,” said an official from ADNOC.

These places are UAE oil fields and they are cutting oil production from these fields. They are doing it in order to comply with their OPEC quota. If you believe that I have some beachfront property in Arizona I would like to sell you.

Ron P.

Don't worry, The Donald will look them in the eye, and as the straightshooter he is, he will tell them no holds barrel:

'Fellas, it's over. You've had your fun. You're not going to do it anymore.'

Clearly they will be so shocked by his combover that they will immediately comply.

He's got enough oil in his combover to stop peak oil. And plenty of biogas from his b.s.

As Moses did in days of old,
The Donald will come froth and with bold,
Raise his mighty staff over a barren rock,
And make the oil gush forth by force of will and sheer mock

Ron – Not saying your inference is wrong BUT…if I’m an oil exporter that clearly sees my future reserve/rate decline I’m very aware of my personal PO. And if my current cash flow, thanks to the surge in prices over the last months, exceeds what I had budgeted for a year ago why wouldn’t I cut my production back to my original projected cash flow? My income is adequate, the reserves I’m not producing will be there for future sales and cutting my production might actually boost oil prices bit (especially if other exporters do likewise.)

Maybe the KSA sees a similar path for themselves.

and cutting my production might actually boost oil prices bit (especially if other exporters do likewise.)

Rockman, do you think Saudi, Kuwait and the UAE are unaware of what happened in 2008 when world prices were only a few dollars more than present? And are they aware that higher oil prices drive the search for ways to cut oil consumption?

I am not saying that they don't have a reason to cut production but they see both sides of the coin. They are fully aware that of the negative effects that very high oil prices could have on their future as an oil exporter.

But you got it right with your first sentence:

...if I’m an oil exporter that clearly sees my future reserve/rate decline I’m very aware of my personal PO.

Hell that was my point Rockman! They cut their production for that very reason. They see their water cut rising and their production per well declining. Like Saudi, they have to drill more and more wells just to stay in the same place. So they cut back. That is what Saudi did and that is what they are doing also. They would like to keep production up because they don't want another recession and another oil price collapse. But their PO problem overrides all those concerns. So they cut back exactly for the reasons you stated.

Ron P.

Ron - I've felt all along that OPEC, especsially the KSA, would keep prices low enough to avoid demand destruction. So maybe they have a different model. Or maybe they don't have the ability to bring more oil to the market. Maybe we'll have to wait until DD is severe and watch their reaction.

Or maybe I'm giving them too much credit.

Rockman - the Saudis probably are keeping prices low enough to avoid demand destruction...at least for a decade or so. There are two factors operating, both short term and long term: the price elasticity of oil: how much less you use when the price goes up, and the income elasticity of oil: how much more you use when your income goes up.

Now, when the price changes, we don't use much more or much less. But when a developing country's income changes...different story. China's GDP is growing at 8% to 10% per year, which means its oil consumption grows at 6% to 8%. And China's now big enough to matter.

Stuart's doing some posts on the IMF WEO chapter about oil scenarios--mainstream economists trying to understand peak oil, LOL. This one is worth a read, including the comments. From it you can see that when the price of oil goes up 10%, we use about 0.25% less--yes, a quarter of a percent. But when a developing country's income goes up 10%, it spends about 7% more on oil. In the short run.

As long as the KSA keeps prices just below the point where we get another recession, they'll be fine for a few years.

But this probably is too clever, as you say. It's going around teh internets that KSA needs $85+ oil to pay the bribes it has promised its people. The Sauds are probably focused 100% on trying to make sure they're still boss come September.

the Saudis probably are keeping prices low enough to avoid demand destruction..

Yeah, that's what they were trying to do when they were producing about 9.1 mb/d but when they cut their production by 833 kb/d that could by no stretch of the imagination can be construed as an attempt to keep prices low.

As long as the KSA keeps prices just below the point where we get another recession, they'll be fine for a few years.

And how is Saudi keeping prices low? Libya once exported about 1.3 mb/d but are now exporting nothing. Saudi just cut production by 833 kb/d and I would bet their exports declined at least that amount. And the UAE just announced that they are cutting exports. Oil Movements says OPEC exports are down about 1.3 mb/d. Yeah, that should keep prices well below $150 a barrel. Well... perhaps.

Sorry for the sarcasm but my point is Saudi is not doing one damn thing to keep prices below a level that will cause another recession. Their actions could only be interpreted as an effort to drive prices so high that we will definitely go deeper into this recession.

But I really don't think that is their intention. They simply have no choice in the matter.

Ron P.

I wasn't clear .. I put in all the detail, but not the punchline.

The point of all that gabble about elasticities is that when the price goes up, we pay it. And when China's GDP goes up, China buys more. So "low enough" actually means quite a bit higher than it is at present, possibly up to $140. Even higher, if they ratchet the price up slowly enough.

And as I said above, I have a hard time with coincidences. The Saud family wants a high price, and by chance Arabia hits its production peak just then? Really?

First and foremost, the key point to keep in mind is that 2011 will likely be the sixth year in a row that Saudi net oil exports will be below their 2005 annual rate of 9.1 mbpd (total petroleum liquids), despite the fact that it appears that annual US spot crude oil prices will have exceeded the $57 level that we saw in 2005 for six straight years, with five of the six years showing year over year increases in annual oil prices. (Soon, the Saudis will have been showing declining net oil exports, relative to 2005, longer than the Second World War, 1939 to 1945).

2002 to 2010 Saudi net oil exports versus US annual spot crude oil prices (EIA, total petroleum liquids):

From 2002 to 2005, the Saudis responded to rising oil prices with sharp increases in net oil exports:

2002: 7.1 mbpd & $26

2003: 8.3 mbpd & $31

2004: 8.6 mbpd & $42

2005: 9.1 mbpd & $57

But then we have post-2005 Saudi Arabia, when the Saudis responded to generally rising oil prices with declining net oil exports:

2006: 8.4 mbpd & $66

2007: 8.0 mbpd & $72

2008: 8.4 mbpd & $100

2009: 7.3 mbpd & $62

2010: 7.6* mbpd & $79


Post-2005 Saudi Arabia has of course shown the same pattern as Texas after 1972, i.e., declining production, relative to a prior peak, in response to rising oil prices. Texas & Saudi (C+C) production, Texas in black:


Greg, there is no coincidence whatsoever. Saudi produced and average of 9.9 mb/d in 1980. Their average in 2010 8.9 mb/d, or one million barrels per day below their peak. Their average this year will likely be 1.5 mb/d below their peak. So they are nowhere near their peak in time or in production. And the Saud family have always wanted high prices, that's why they formed a cartel called OPEC. Their peak would have naturally coincided with their desire for high prices since they have always wanted high prices. It could not have possibly been otherwise.

And as WT points out Saudi is nowhere near peak oil exports. They are way down the backside of that peak. With exports falling like a rock is it any wonder they want high prices?

Ron P.

There is somewhat of a delayed effect between oil output and exports, well at least in the last six months as KSA output has varied. It appears to take a month or a little longer for exports to follow the trend of output.

As best as I can determine, KSA exports are only down 450,000 bpd from about March 15 - although as I have been saying since January they never increased exports last January to exactly match up with an output increase then. Exports were lagging output increases by about 200,000 bpd, which I assume was put into some type of storage for their summer high demand season.

So my best guess is that exports will bottom about 600,000 bpd to 650,000 bpd less than March 15 by about May 15 - well that is assuming there is not another output cut on its way and/or an increase in storage trends.

Various Saudi oil ministers have stated that one of their objectives was keeping prices low enough to avoid demand destruction (but high enough to put lots of money in their pockets).

The fact that they have cut production in the face of higher prices, which they know will cause demand destruction suggests to me that they can't maintain current production levels no matter what they want to do.

So, they have to fall back on their backup strategy - stay calm, assert that there is no problem, and try not to shake or sweat visibly in front of the cameras.

If I were planning for "my people" I'd do what I could to maximize cash at minimum oil flow, hopefully expanding a rock solid infrastructure to boot....but if I were paying any attention to the unrest throughout MENA I would be maximizing cash by whatever means I could. Invest other people's money into infrastructure, and pump all the money I could into assets far away...US dollars, real estate in Malibu, farmland in South America, and gold...heaps of gold in vaults in NYC, Tel Aviv, Zurich...etc. In a couple of years I would happily hand the keys to the kingdom to some convenient fall guys-maybe democratically elected, maybe religious leaders--and sail away.

Carbon dioxide bubbling through algae in an algae biomass operation at an ethanol plant is the lead story in this week's "Market to Market":


At the end of program the market analyst thinks silver is in a bubble as do some other analysts like this Business Insider reporter:


Others say no way:



The Y Article

On Friday, April 8, as members of the U.S. Congress engaged in a last-minute game of chicken over the federal budget, the Pentagon quietly issued a report that received little initial attention: "A National Strategic Narrative." The report was issued under the pseudonym of "Mr. Y," a takeoff on George Kennan's 1946 "Long Telegram" from Moscow (published under the name "X" the following year in Foreign Affairs) that helped set containment as the cornerstone of U.S. strategy for dealing with the Soviet Union.

The piece was written by two senior members of the Joint Chiefs of Staff in a "personal" capacity, but it is clear that it would not have seen the light of day without a measure of official approval. Its findings are revelatory, and they deserve to be read and appreciated not only by every lawmaker in Congress, but by every American citizen.
The report places considerable emphasis on the importance of achieving a more sustainable approach to security, energy, agriculture, and the environment. Again, it is important to stress that this narrative was penned by senior military thinkers, not the Sierra Club. The simple fact is that any clear-eyed analysis pretty quickly comes to the same conclusion: The United States has established an incentive system that just doesn't make any sense. It continues to pour tens of billions of dollars into agricultural and oil subsidies every single year even as these subsidies make the gravity of the environmental, health, and land-use problems the country faces in the future ever graver. As the report argues, America cannot truly practice the use of "smart power" until it practices "smart growth" at home. While some may be quick to argue that the Pentagon should not be considering issues like smart growth and investments in America's youth, this goes to another key point from the authors: America won't get its approach to policy right if it leaves foreign policy and domestic policy in tidy little silos that ignore the interconnection between the two.

The article at Foreign Policy has a link to the downloadable pdf of the Pentagon report.

Great article Merrill, thanks. I often wonder if the military is the last bastion of integrity in the US.

I have a great deal of respect for the military. The military is often put in terrible positions by the politicians.

Although I think we spend way too much on the military, feel war has always historically caused inflation, wars of choice are immoral and think the military budget should be cut, I have a great deal of respect for the people running the military. My experience was (spent a few years as a Naval officer on a nuclear sub and surface ship), the military has more ethics, more merit based opportunity, less prejudice, less politics and in general better run than corporations and the government in general.

I think nuclear power in the hands of corporations and people that make huge amounts on cutting cost is a near suicidal thing to do, I feel much more comfortable with nuclear power plants in the hands of the military than the quarter to quarter driven, money grubbing corporations.

Bottom line I trust the military much more than the rest of the government and certainly more than the short term, amoral behavior of most corporations.

The Russian military dumped their nuclear subs in the sea where they now sit. Since we can never know what will change or what will happen to any society that runs any nuclear plants, it's a safe thing to say that the only safe way to run nuclear is to not run it. Anything else is a fantasy. The military won't be able to do anything without money, and there's no future guarantee of sufficient funding that I am aware of, even with the most responsible practices, which, by the way, the US military is not to be considered as a good example historically. Remember the nuclear tests? The uninformed victims? Agent orange? Etc? No, I'd say nobody can be trusted with these systems since they outlast everyone's lifetimes who makes the decisions.

No-one can be "trusted" but we still have to do something, or have it done to us. There are no "good" decisions left. You get to choose between "horrible" and "awful". Now, if the choice is between having a Chernobyl every year for the next century, or rapidly falling back to the planet's ex-fossil, ex-nuclear carrying capacity of a billion and falling, to me that's easy. I choose the Chernobyls, for the sake of my kids. And like farmera1, I least distrust the military to do the best job of minimising the inevitable harm.

If you choose Chernobyl or Fukushima, why not move closer to them, that way your kids get all the advantages you are so willing and eager to hand off to our future generations just because you aren't willing to cut down your consumption today?

The notion that this stuff is going to forestall anything is comical, all that is going to happen is that we will construct enormously dangerous complex devices that require large functioning infrastructures to handle failures of, then, when those social systems crack and begin to fail, your beloved children will be left holding the toxic piles of radioactive waste in their hands, and hopefully cursing your generation for the horrible mess you left them. Make sure to frame what you posted on your wall and give it to your kids so they can really appreciate that sentiment over the next 50 years.

Make sure to frame what you posted on your wall and give it to your kids so they can really appreciate that sentiment over the next 50 years.

The alternative, that you seem to have ignored, is that they have a life expectancy of 45 years. Or less. As I said, the choices are "horrible" or "awful". This is not Disneyland. There are no happy endings. Others whose thinking I respect think that we can stave off the crack up of social systems for a couple of centuries if we really want to, and are prepared to be grown-up about it. Nuclear is a worse option than solar PV, but more achievable politically.

your beloved children will be left holding the toxic piles of radioactive waste in their hands, and hopefully cursing your generation for the horrible mess you left them.

This is risible. No-one will be "holding radioactive waste in their hands", and as for cursing my generation...nuclear is way down the list of things we messed up.

As for cutting down my consumption... my income last year was under $6000. It's already cut.

Saudi Arabia to Keep Oil Production Capacity at 12.5 Million Barrels a Day

Saudi Arabia, holder of the world’s largest crude oil reserves, has no plans to raise production capacity beyond 12.5 million barrels a day, a Saudi Arabian oil official said.

Reports that the country may boost its output capacity to 15 million barrels a day aren’t true, the official said by telephone today, declining to be identified by name because he isn’t authorized to speak publicly.

Basically what they are saying is don't ever expect their production capacity to rise again. Which is another way of saying that they will never raise their production again, or very much anyway. Actually what they are hoping to be able to do is keep production right where it is for the next 20 years. They hope... they hope...

Ron P.

Fukushima nuclear plant’s radioactive emissions six times higher than thought: 154 terabecquerels per day, 90 days to reach Level 6 event

The Nuclear Safety Commission under the Prime Minister's Office disclosed on April 23 that the amount of radioactive materials being released from the TEPCO Fukushima I Nuclear Power Plant was 154 terabecquerels per day (1 tera is 1 trillion) as late as April 5 when the amount being released was considered stabilized.


On April 5, the estimated amount of radioactive materials released from Fukushima I Nuke Plant was 0.69 terabecquerels/hour for iodine-131 and 0.14 terabecquerels/hour for cesium-137. When the numbers were recalculated according to the INES method (converting cesium amount into iodine equivalent), the amount released turned out to be 6.4 terabecquerels/hour (which was 154 terabecquerels per day. Previously, the Nuclear Safety Commission had simply added the numbers for iodine-131 and cesium-137, and announced it was less than 1 terabecquerel per hour.

I don't know anything about cesium and iodine equivalents, but that's startling. Reminds me of one subcontractor submitting plans in metric units while another subcontractor submits plans in English units.

It's perhaps not a coincidence that this was released when the exclusion zone was sealed: Fukushima no-entry zone sealed, residents fear they will never return home – ‘It is better to just die’.

TEPCO discloses radiation map

Radiation levels around the Number 3 reactor building, which was damaged by a powerful hydrogen explosion, are higher than in other locations, and 300 millisieverts per hour of radiation was detected in debris on a nearby mountainside.

Saudi Arabia Sees Need to Pump More Oil

I thought they didn't need to sell more oil. Very confusing.

Saudi Arabia Sees Need to Pump More Oil

I thought they didn't need to sell more oil. Very confusing.

Very confusing is right. Over supplied? price caused by speculators. Under supplied? Price too high? Price just right? No need to pump more. Need to pump more.

Please just stand still for a moment Saudi's and get your story straight. Then slowly enunciate each syllable, make is short and sweet, and then stick with that line and don't deviate.

It just seems if they have all these convaluded and contradictory explanations they must be awful nervous about the truth. Which probably is they cannot extract anymore oil than they are right now. Spare capacity is a phantom the saudi's use, hoping it will hold down oil price (so the world economy doesn't shrink back into a recession causing demand destruction).

What I'm still wondering is how the oil traders will respond once it becomes common knowledge the Saudi's are pumping at full capacity? Do they just tee off or does oil slowly go up in price?

In case anyone missed this, basically here is an admission that KSA has no 'spare capacity' other than for sour crude, which explains some of the erratic and inconsistent statements made by KSA since January:

"The problem is that the only spare capacity in the Middle East is sour," said Barclays Capital London-based analyst Amrita Sen. "Even if the Saudis increase production, there will still be a deficit of light sweet crude."

"Mr. Naimi might have thought, 'What is the good for me to put 800,000 barrels per day of sour crude in the market that nobody wants?'," said Sadad al-Husseini, an oil analyst and former top official at Saudi Aramco, the world's largest oil company.


Brief update on Nigera:

Swedish media now states that the amount of deaths is over 500(according to Nigerian human rights NGOs), and the amount of people who have fled have now surpassed 75,000, with over 100,000 people disposed of violence and a secterian unrest approaching fast.

If you look at the trend, the violence shows no signs of abating but neither does it appear to be intensifying, it's going in the same pace. Since there are no signs of escalation, unless something dramatic and drastic happens, it seems likely that once we reach a peak this week, things will calm down slowly but surely.

Here's hoping..

Also seems South Sudan is in a bit of strife:


The SPLA is at war with at least seven armed groups, and traditional tribal clashes have intensified with the onset of the rainy season, according to the UN, which says more than 800 people have been killed this year.

Analysts warn the south risks becoming a failed state and destabilising the region if it cannot control the crisis, with tens of thousands displaced by the various conflicts affecting nine of its ten states, according to UN figures.

Perhaps it will have an impact on its 250,000 bbl/d exports?

Probably already posted, but here's the famously fiery speech by McKibben:


It's looking like record flooding on the conflunce of the Ohio Mississippi at Cairo Il in about ten days.


65 The river will reach the top of the protectio at Mounds and Mound City.
64 The river will reach the top of the protection of Cairo.
59.5 This flood will exceed the highest stage on record.


Check the 1226PM advisory statment.

"Kalimanku was right."
In the shale thread.

I honestly have no idea where that comes from.