Drumbeat: August 15, 2011
Posted by Leanan on August 15, 2011 - 10:28am
Moscow - In a multinational race to seize the potential riches of the formerly icebound Arctic, being laid bare by global warming, Russia is the early favorite.Within the next year, the Kremlin is expected to make its claim to the United Nations in a bold move to annex about 380,000 square miles of the internationally owned Arctic to Russian control. At stake is an estimated one-quarter of all the world's untapped hydrocarbon reserves, abundant fisheries, and a freshly opened route that will cut nearly a third off the shipping time from Asia to Europe.
Crude Oil Futures Decline Before Data on U.S. Housing, European Economy
Oil fell, reversing earlier gains, before reports this week from the U.S. and Europe forecast to indicate that the global recovery is losing momentum.Data this week may show U.S. housing starts and building permits fell in July, while consumer prices rose the least in three months as unemployment restrained spending, according to surveys by Bloomberg News. The euro-zone economy probably expanded 0.3 percent in the second quarter, down from first- quarter growth of 0.8 percent. Hedge funds and other money managers cut bullish bets on Brent crude by 49 percent in the week ended Aug. 9, according to ICE Futures Europe.
Gas prices drop nearly 9 cts at US pumps-Lundberg
NEW YORK (Reuters) - The average price of gasoline in the United States fell by 8.98 cents over the past three weeks due mainly to declines in the crude oil market, according to the nationwide Lundberg Survey.The national average price for a gallon of regular gasoline declined to $3.61 on Aug. 12, according to a survey of about 2,500 gas stations in the continental U.S.
Asia may put GCC on slippery slope
A slowdown in the Asian industrial boom could pull the rug from under oil prices.Producers and consumers alike have lowered their forecasts for oil demand growth not only in western economies but also in the East. That threatens to send crude prices below the US$100 mark - the price floor for most of this year - analysts warn.
Oil price won't delay new projects
Along with other asset values, oil prices have fallen from their spring peak.The International Energy Agency suggests that an economic slowdown could even create a glut later this year. Should the next worry be that the pendulum will swing too far, as in early 2009, and that promising development projects will be cancelled?
New Nigeria Finance Minister Vows Tight Budget Amid Slump in Oil Revenue
Nigerian Finance Minister Ngozi Okonjo-Iweala, who takes office this week, vowed to tighten fiscal policy amid falling oil prices and turbulent global financial markets.Prices for oil, which accounts for 80 percent of fiscal revenue, have slumped 14 percent in New York since July 26, reaching as low as $75.71 a barrel on Aug. 9. At the same time, economic growth in the U.S., which sources a fifth of its crude imports from Nigeria, is slowing.
Iran says India paid two-thirds of oil debt
Iran has received two-thirds of the oil debts from Indian buyers that had accumulated this year due to a sanctions-related payments problem, Central Bank governor Mahmoud Bahmani told the students’ news agency ISNA on Monday.“Two-thirds of India’s debt to Iran has been paid and the balance is being taken care of and there are no problems in this regard,” he said.
Gaddafi defiant as rebels poised to strangle capital
ZAWIYAH, Libya (Reuters) - Muammar Gaddafi urged Libyans Monday to free the country from "traitors," as rebels in the west began to strangle a major lifeline to his capital.
Factbox - Syria's energy sector
(Reuters) - The United States has called on countries to stop buying Syrian oil and gas to pressure Syrian President Bashar al-Assad to end a crackdown against protesters.
56 killed as wave of violence rolls across Iraq
BAGHDAD (AP) — Bomb blasts ripped through more than a dozen Iraqi cities Monday morning, killing 56 people — most of them in the southern city of Kut — in a wave of violence that shattered what had been a relatively peaceful holy month of Ramadan.
Shell mum on flow from oil pipeline leak
(Reuters) - Royal Dutch Shell said an oil leak from a ruptured pipeline into the North Sea was slowing but refused to say how much oil has already leaked into the sea.Oil from the Anglo-Dutch oil major's pipeline has been spilling into the sea since last Wednesday but the rate of flow has been reducing since the company shut off the well the same day.
British government estimates that Shell oil spill off Scottish coast is substantial
LONDON — The British government is estimating that several hundred tons of oil may have leaked into the North Sea from a Royal Dutch Shell rig.
PDVSA’s Petropiar Increases Daily Oil Output to 160,000 Barrels
Petroleos de Venezuela SA, the state oil company, has increased daily production of heavy crude oil at its Petropiar unit to 160,000 barrels, according to a statement today on its website
Ghana to borrow $800 mln from China to develop gas
ACCRA (Reuters) - Ghana will borrow $800 million from the state-owned China Development Bank to develop its natural gas infrastructure and the first gas could be expected by the end of 2012 or early 2013, the head of the Ghana National Gas Company said.George Sipa-Adzah Yankey, who did not give any details on the loan, also said on Thursday that Ghana's gas production is expected to stabilise at around 120 million cubic feet per day.
Q+A-What happened to China's power shortages?
(Reuters) - Earlier this year, China warned that it could be facing its worst electricity shortages in years and that blackouts and power rationing could dent the economy over the summer.Experts said China's fixed pricing system was eating into margins and discouraging power plants from producing at full capacity, especially as coal prices soared.
Tanzanian Energy Regulator Increases Gasoline Prices by 5.1% Amid Shortage
Tanzania, which has experienced fuel shortages at gas stations this month, raised the cost of gasoline by 5.5 percent after international oil prices climbed and the shilling weakened against the dollar.
Business in Dubai hails freeze on utility prices
Businesses across Dubai have welcomed the freezing of the emirate's power and water prices.The Dubai Supreme Council of Energy, a government body that sets energy policy, said yesterday it would keep utility tariffs fixed over the next few years.
EPA’s Outdated Tests Leave American Cars Guzzling Gas: View
The U.S. automobile industry has come a long way since the 1970s. Today’s vehicles are safer, more fuel-efficient and more comfortable. Yet public policy toward cars is marred by standards set in 1978 that are as obsolete as a rusted Chevy Nova.
Consider yourself warned - "[I]n the next few years Iran will be in position to detonate a nuclear device," so writes Ray Takeyh, confidently, in a recent Washington Post OpEd. Why? Because the Iranian government willingly informed the International Atomic Energy Agency (IAEA) that it would begin installing additional centrifuges with higher capacity to enrich uranium.Just like fertilizer can be used to increase crop yields - or make bombs - uranium is a dual use material.
After peak oil, peak globalisation
The reality of a globalised economy is that poverty is its only sustainable phenomenon.
A Half-Century at the Local Tire Factory in a Globalizing World
Many of those who are Peak Oil Aware constantly speculate as to what the future collapse is going to look like. I would argue that for a long time it is likely going to look a lot like what has been happening in my hometown for the past 20 years; a long, slow decay in which daily life just continues to get worse for most people as the jackals count their earnings from the dismantling the remainder of our industrial economy.
What is most impressive in the recent world events is not so much that the authors of "The Limits to Growth" may have predicted with incredible accuracy in 1972 the start of the decline of the world's economic system, evidenced today by the financial crisis. After all, they presented several scenarios with different results. That the "base case" scenario, the one they deemed the most likely on the basis of the available data, may turn out to be right is impressive, yes, but it may have been also a bit of luck.
Time to refine energy security
Now, price signals are important inputs into public policy. But in the case of oil in particular, there are good reasons to be sceptical about the merits of relying on this mechanism as a basis for policy. World oil prices subside when growth declines, and pick up again when growth gathers pace. And as we saw when the oil producing nations began to exercise their market power in the 1970s, they can spike rapidly. But over the longer run, oil prices do a poor job of reflecting the scarcity of the resource.
The new breed of young farmer: Ed Hamer, Dartmoor
Inspired by the Levellers (not the band) Ed Hamer's radical vision of farming involves a commitment to making the land work for the people. And it helps to have a big horse.
At Vacant Homes, Foraging for Fruit
ATLANTA — As she does every evening, Kelly Callahan walked her dogs through her East Atlanta neighborhood. As in many communities in a city with the 16th-highest foreclosure rate in the nation, there were plenty of empty, bank-owned properties for sale.She noticed something else. Those forlorn yards were peppered with overgrown gardens and big fruit trees, all bulging with the kind of bounty that comes from the high heat and afternoon thunderstorms that have defined Atlanta’s summer.
So she began picking. First, there was a load of figs, which she intends to make into jam for a cafe that feeds homeless people. Then, for herself, she got five pounds of tomatoes, two kinds of squash and — the real prize — a Sugar Baby watermelon.
With Post-Its and Checklists, Schools Cut Their Energy Bills
Simple yellow Post-it notes with the message “When not in use, turn off the juice,” pointedly left on classroom computers, printers and air-conditioners, have helped the Mount Sinai School District on Long Island save $350,000 annually on utility bills.Energy consumption in New York City’s 1,245 school buildings is down roughly 11 percent since 2008, as motion detectors have been installed on classroom lights and unused refrigerators and freezers have been unplugged for the summer.
Six stand trial in carbon fraud case in Germany
The fraud works by buyers importing carbon permits in one EU country without paying VAT and selling them in another, adding tax to the price but pocketing the difference for themselves.
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Sobering news
Talk about putting the best face on a bad situation, this one tops them all. Admitting that things are going to get bad, real bad, but not to worry we will muddle through. We will make the transition but there will be pain. Good luck with that one.
Does George know something we don't know? No, far more likely that he knows something that we do know.
Ron P.
He is ahead of my scheme. I said years ago speculators should buy gold, then wait till the right moment, sell, and buy land. Now I can say Soros is doing so to. Only I would sit on my gold if I had any, for a while longer.
I suspect he is averaging out of gold and into farmland over time. Some this year, some next and more later. Now is just the start.
However, at his age (80 ?) and wealth he is not doing this for himself anymore.
Alan
Except you need workers to work that land, equipment and even now you could use security depending on the crop. I just read in Michigan, blueberry fields are being picked clean overnight from thieves. The same is happening in California with avocados. I read a comment by a guy growing avocados in his front yard of his home, he mentioned that one night someone backed a truck up to the tree and emptied it! If food prices continue to go up, agricultural theft will probably skyrocket...think copper, but edible.
Thinking about it a little. My family owns land with about 10 acres of field crops (corn/soybeans). Its mainly corn this year. At 150 bushels and acre for corn (probably more then that, just using an average), that corn crop is worth almost $10K. Yet we never are there. Sooner or later some rogue outfit is going to get themselves a combine and start stealing crops (Obviously it needs to be mature/dried some).
Last year someone stole a whole crop of high quality wine grapes from a vineyard in France. Picking grapes is hard work and requires a lot of people (assuming thieves didn't use a noisy and temperamental grape harvester). Its hard to imagine how an entire field of grapes could be stolen at night and without being seen, but it happened.
My mother is a farmer in Crete. She is old so she is an easy target. Her hamlet is now inhabited by a majority of foreign born people from the Balkans. Her orange grove was stolen of its produce this spring. She knows who did it but she is afraid of reporting the theft. Being old is not safe or sacred any more.
The Jewish Talmud is chalk full of stories of theft from orchards and watchmen hired to prevent it. The problem is that old.
But if people want to prevent it nowadays, the solution is simple:
Shut down the roads at night.
Movable barricades at key intersections, installed at dusk. Removed at dawn.
Rural areas can cut down on the problem significantly with just that measure.
A different version of solution - A Texas-style display of one's investment in semi-precious metals via putting that lead downrange.
Or one could use some open source power - and track the cell phones.
http://news.cnet.com/8301-13505_3-9734052-16.html
"Simple" indeed. I'm sure those rural folks would just love the delay next time they needed an ambulance - what with the barricades having to be big, extensive and clumsy to prevent the bad guys from simply moving them aside or driving around them.
If copper theft continues, they will have trouble summoning an ambulance.
We are having a lot of problems in the Southeastern US with thieves too.I read recently of an entire large field of green beans disappearing overnight not far from here. That would have required a whole busload of well motivated and skillful pickers.
I am willing to bet my last dollar that they were an organized gang of migrant workers, probably in the pay of a local good ole boy who owns a wholesale produce business or a small supermarket chain.You can't hire the local people to do such hard work anymore, as it's still too easy to get a job flipping burgers or bagging groceries where it is air conditioned.
Our usual remedy is to shoot first, but not DIRECTLY at the thieves, with a shotgun from a RELATIVELY safe distance.A few pellets of bird shot from anything past fifty yards are not life threatening as a general rule, but such pellets work wonders in detering two legged thieves.
So far we have not had any recognizable repeat offenders-and we haven't had any complaints or gotten any calls from the thieves lawyers-at least not yet!
But given the state of the legal industry , I wouldn't be too suprised if we do get such a complaint someday.
Hey OFM,
Perhaps a few bird shot pellets in their direction would solve that problem as well >;^)
BTW is shooting with salt pellets just a rural legend?
No, shooting people with salt is not just a rural legend. I know someone who was stealing the hubcaps off someone's car when the owner snuck up behind him with a shotgun and shot him in the butt with rock salt.
He said it was the most painful thing he ever experienced, much more painful than, for instance, being stabbed, shot, or running a motorcycle into a pickup truck at 80 mph while being pursued by police (things he had also tried). He said he literally couldn't sit down for a week afterward.
It was pretty much standard operating procedure for people who didn't believe in getting the police involved in minor law enforcement activities during the less legally conscious times of my youth. It avoided all that annoying paperwork and testifying in court.
Funny thing. If you believe in the principle of individual reward for individual effort, then you must as a consequence also advocate 100% inheritance taxes. And then some. It's inescapable logic.
I've never yet found any logical wealthy person. As I say, a funny thing.
Of course, you would also have to 100% tax gifts of property shortly before death. Or indeed any time before death to block nepotism. And maybe ban charity as well, just for good measure (since it is transferring reward at the discretion of the donor, regardless of effort of the recipient...)
This is just part of a well-known paradox: a society cannot simultaneouly be fair, free and equal. Worse, if it tries too hard to be fair, or free, or equal, then it is likely to end up neither fair, free nor equal.
For example: a fair society must allow unequal rewards for unequal efforts; if it is free, it will then allow transfer of rewards to relatives, friends etc. at which point it is not fair. Quite soon, it is not free either, because free transfer of wealth tends to lead to high concentration of wealth, repressive terms of trade for those who don't have it (also known as "wage slavery"), monopolies and trusts, increasingly repressive laws, policing and so on to keep the have-nots under control, and general undermining of the whole system via the wealthy buying out the politicians, lawyers courts etc. This is the story of "free market" capitalism.
Alternatively, a society that tries to be equal at all costs becomes unfair (reward idle loafers) and repressive (ban charity); and then those in charge of the repression start playing the system to their advantage, so it also becomes unequal. This is the story of communism.
All of which seems to be a good argument for messy, muddly centralism / pragmatism in politics, rather than clean, ideological principle. Nah, that would never work :-)
"high concentration of wealth, repressive terms of trade for those who don't have it (also known as "wage slavery"), monopolies and trusts, increasingly repressive laws"
Sounds pretty much like where we are now. So maybe it's a bit past time to swing toward the 'equal' side of things.
Of course, redistribution of wealth of the wealthy only seem unfair to the wealthy few.
On the other hand, if you notice that the inherent unfairness of life means that most wealth is accumulated with some degree of unfairness, the redistribution of said wealth becomes an exercise in both fairness and equality.
Freedom, of course, can never be total--presumably few want a system where I am "free" to blow your head off if I feel like it with no negative consequence.
And let's not forget 'fraternité'!!
Actually I think it would work. The problem is it is vulnerable to attack, by purists of either persuasion. I've always felt if both ends of the political spectrum hate you, you must be doing something right.
Actually - I think that is totally wrong ... often if your political opponents hate you equally, you are generally doing something which is both (a) a seriously flawed compromise, and (b) very stupid, policy-wise.
I actually disagree with death and inheritance taxes - not because I support the concentration of wealth over generations (or in fact, centuries), but because they are so easy to defeat, subvert, or avoid. So I much prefer seriously progressive income and wealth (especially wealth) taxes on the living - much better, and generally easier to enforce, as well.
Next he needs to start erecting castles for his vassals. ( hey that rhymes.. )
Funny you should mention that. I was talking to a couple today that have already invested in gold some time ago. Today they asked me to keep an eye open for a house with a couple of acres of land for them. Not an easy task as there are few houses with more than an acre available, in many cases even the farmers have to rent the land they work.
I think the trend is basically to have a home that is productive, it helps you to live rather than being a money sink. At a very minimum a home should have a garage/work shop/office which facilitates production of goods or services.
Warren Buffet: Stop Coddling the Super-Rich
http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html
So far every news outlet is as usual missing the point, anyone covering this story is saying Warren says to raise TAXES on the rich! Wich everyone hears as Income Taxes. Warren is simply saying we need to fix the Capital Gains tax rate. Same thing he has been saying for more than 15 years.
Full disclosure I am one of those fringe people who thinks the whole tax code needs to be thrown out entirely and start fresh. I know they will argue ad-nausem as to what Income is, but I do believe everyone, EVERYONE should have to pay some percent of thier Income, no matter how small or large that income is. It is not right that a person earning 12k a year pays nothing, nor is it right that a person making 1.5 million in capital gains pays a smaller percentage than somebody making 70k in income taxes.
People making 12k actually pay local taxes, sales taxes, state fees, etc etc. The argument that everyone does not pay taxes is so loaded. Remember the average CEO pays a lower total tax rate than his secretary does.
Point taken, I just want to see the percentage everyone one pays as part of income closer to the same. Course when you add in all the local, state, etc., etc. taxes/fees, I have no idea how to accomplish this.
I think the system is very broken myself. The taxes that are killing people are the inflated property valuations from the housing boom and bust. You get it with property taxes and interest payments. And then folks talk about removing the mortgage deduction. That would keel a lot of people in the system.
Not sure how you add revenue other than raising taxes at the end of the day. But in this country that is not going to happen -- Hell or High water ;-)
With the mortgage deduction, why not just make it for the first X amount of mortgage debt, and only for the principal residence? Put X at, say $500k. Any interest paid on a mortgage greater than that is not deductible - and if you can afford more than $500k mortgage, then you should be able to afford the interest.
No doubt. That would make too much sense. I am sure the folks wanting housing appreciation would not like this. This scheme favors the wealthy and feeds the beast of the housing boom.
Its really the problem with subsidies. After they've outgrow their usefulness, you find you have created political factions who don't want to give up their gravy train. In this case it is primarily the realestate industry (which has been quite successful at defeating similar proposals). And then the (tax) subsidy is a prop for housing prices, so everyone who owns a house can be mobilized to fight against removing the subsidies/price-support!
Currently X is $1,000,000 for mortgages on first and second homes. You can also deduct interest on up to $100,000 second mortgage or HELOC debt. These are itemized deductions, and the total itemized deduction is subject to the phase out in higher income brackets.
Reducing the cap would gore a lot of oxes, among which would be the very powerful realtor lobby.
And don't forget the banks.
The whole scheme has always struck me more as a way to funnel massive amounts of money to banks and realtors than anything else.
Thanks for the clarification.
Kinda confirms my thinking - what is the need for mortgage deduction on a second (i.e. recreational) house? Those who can't afford that and have an RV, boat, or a timeshare, get no such deductions.
And up to $1m? How "needed" is that?
And I would certainly shed no tears for the realtors. The idea of this deduction was to help people to own their own home, not speculate on real estate.
Related -
Satellite Tour of America's top 20 Foreclosure cities
When first put in place, it made homes more affordable, and helped the economy, via the building of new homes. But longer term, that benefit is translated into higher home prices, so the benefit cancels out. But, by then the constituency for the benefit is too large too dissapoint.
The real cure (I think), is that subsidies must have a genuine sunset provision (that isn't easily circumvented) from day one. If the market understands they are temporary, they aren't likely to become a major crutch for prices.
Ya, IMHO, this is the weak spot in human evolution. It's always seemed to me like our adaptive capabilities are geared towards creating new and more complex behaviors, social institutions, behaviors, regulations and financial instruments. Our species can do this very quickly...
However, when it's necessary for us to strip away institutions, behaviors, regulations, etc. that are no longer adaptive, we are totally clueless. We just can't do it. The right complains about oppressive regulations, the left complains about hedge fund trading and collateralized debt.
We blame business, we blame government, but sometimes I think it's the same problem: We can't make things less complicated. We don't have an "undo" feature at a macro level. We can't get rid of a subsidy once it has outlived its usefulness.
Cool idea, though.
I have had a reversal of my opinion on this issue. Anyone who makes several million per year is not doing so as a direct result of his own physical labor alone, he or she needs and uses other people or some other benefit from infrastructure, etc. The net effect is that they are skimming. It is obviously to anyone that most of these high earners work, the idea that they should pay less than the secretary is morally wrong.
Precisely. Couldn't have put it better myself!
Paul Krugman: The Texas Unmiracle
No paywall here: http://economistsview.typepad.com/
And more here: http://krugman.blogs.nytimes.com/2011/08/15/wages-jobs-texas-and-the-world/
Thanks for the links.
Call it the race for the bottom, but the implication is that if we just lower standards and expectations we can get those globalized jobs back from Viet Nam, Bangladesh,...China. Wow, that would be a coup. My grand kids could get a job making shoes or soccer balls 14 hours a day and live in a box down the alley.
I think it is high time the politicians got a pay cut supreme, had the opportunity to send their kids overseas "to be all they can be", and maybe experience some good old fear and worry. They have become the Boorman/Eunuchs of our age.
When I see Perry on the tube I think of that old film "the flim flam man". He fits it to a tee.
All the best and best of luck.
Perry is walking back his decision on HPV vaccines :-
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&add...
Originally at Texas Tribune, but that link doesn't appear to be working.
I was surprised to find this article printed on 8/3, before Perry announced candidacy.
'Small government' Texas has added lots of public-sector jobs
Is Slick Rick a Closet Keynesian?
That makes him slick. Favor big G and walk the Big B walk and talk the Populist talk.
Neither Keynes, nor Keynesians, nor New Keynesians, among which Krugman can be counted, argue for high levels of government employment.
Not to pick on you in particular, but the knowledge of economics -- of its history as a way of looking at the world, of its basic tenents, and of the divisions among its several schools-- on this list is sad. Of course, ignorance only stops those with humility from spouting off, or worse, frothing at the mouth.
No frothing from me. My question was just a well disguised form of sarcasm to spur discussion. I can't vouch for the article in link, but for the sake of discussion I'll assume it's reasonable. My impression is it says the population growth in Texas has increased the need for folks in education. And this led to state hiring many teachers, administrators and others. And this hiring led to high levels of government employment relative to the nation.
I'm ok with this not being Keynesian and existence of multiple schools of economics. Are there schools of economics that discuss this issue of growing the public sector or is this just the government fulfilling its role regarding education?
New Keynesians, among which Krugman can be counted
Why don't you define that.
Should not be hard for you, what with your presenting how you are all knowing on this topic.
Major Step towards end in Libya
Tactical Map
http://www.libyafeb17.com/wp-content/uploads/2011/08/libya-map-august-14...
Taking the coastal towns of Zawiyah and Surman
- Takes the last refinery under Gaddafi control
- Splits his forces
- Cuts supply line from Tunisia to Tripoli
Taking the interior town of Gharyan cuts the primary line to the south - including overland to Chad, where many mercenaries are recruited from and some smuggled arms came through.
Soon fuel, food and electricity should run short in Tripoli.
Separately, Gaddafi's Interior Minister visited Cairo (via Tunisia) with his family on a tourist visa. Probably a good time to take a vacation.
Best Hopes for Peace and Freedom,
Alan
As I have mentioned numerous times these last six months, the continued loss of high quality oil from Libya is going to continue be a major headache for a number of European countries and the US for some months more - since basically oil lost from Libya has yet to have been made up from anywhere else (except IEA oil/product reserve releases):
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6377933
Libya is picking up the tempo
US officials: Gadhafi fires first scud missile
... or not
Desperation is firing those scuds. How often do they meet their mark?
When the scuds fly,
the end is nigh.
They were nick named "flying garbage cans" in Gulf War I for a reason. Islamic jihad uses a simplier version of the same concept, and they are pleased just to hit the town they are aiming at.
Goes to show how shortsighted the present mismanaged White House administration and mismanaged NATO are. I hope the administration's stupidity with regard to handling Libya is remembered in the 2012 elections - and that the administration is thrown out on its ear.
The administration and NATO, in effect, in the end assisted in handing control of the whole northern African continent to the Muslim Brotherhood - a quasi-terrorist organization.
Not that it's a bad thing for them, but it sure sucks for us!
in handing control of the whole northern African continent to the Muslim Brotherhood
I very strongly disagree ! There is zero evidence for this absurd claim in all that I have read, from a variety of sources, about the Libyan Revolution.
Alan
The people saying this, fear any sort of self determination by muslims. Its just the basic exploitation of islamophobia, which has been a staple of the right ever since 9-11. These arab spring uprisings are primarily secular. What came as quite a surprise, was that a mostly secular path to elimination of the repressive regimes became possible without having to resort to hardcore taliban type religion. The primary motivation of many on the arab street for hardcore religion, was that nothing else had succeeded in overthrowing their repressive governments. Letting (and aiding where possible), this process is our best hope of taking the wind out from under the extremists sails. But, those who see Al Qaeda whenever they see a nonsubmissive muslim, will never understand that point.
"a nonsubmissive muslim"
Wonderful irony in your choice of words: "Muslim" means "one who submits" (to Allah). :-)
An English variant might be "An Independent Member"
As I just wrote on Wednesday's Drumbeat.. a balance of ideals.
No you are being too easily misguided. Think about it this way. The Libyan invasion will be a new way to renegotiate oil contracts under a new regime. That is probably what is going on imho. The US would not be involved if there was not say 2-3 million bbls of light sweet crude at stake. If the US/EU were not involved then, the country would fall into chaos keeping that oil off line for a long time.
Did you mean billion barrels? Because 2-3 million is what - 30 minutes of world usage? Perhaps you meant 2-3 million bpd ... in which case your comment is fair.
But Obama did stop Gadaffi from forming three banks in Africa to handle all African banking needs without the global bankers. So the global bankers should show their thanks by backing Obama big in the 2012 election.
In the next few years Iran will be in position to detonate a nuclear device,"
And when that happens, do you think Israel will sit back and wait for the attacks, posturing, ultimatums?? I would think, that with all the *#it going on over there, and with their own population getting agitated, an attack on Iran by Israel is just a matter of time. But, who knows? They just might draw lines in the sand and say such and such is the limit. Unless leadership changes in Israel to a more accomodating bent, I would think a preemptive strike is not too far away.
As if everything going on wasn't enough, it just seems like it is one thing after another these days. There is a relentless unfolding of bad news.
Gotta live local and in the moment to keep the despair away.
Paulo
Any non-nuclear preemptive attack by Israel would fail to destroy Iran's ability to build more bombs.
Iran sees the risk and has taken a number of counter measures. Thus Israel's assassination of Iranian scientists and cyber warfare.
Alan
I know that. I imagine a trade for bunker busters have already been made, and when Iran dusts off and starts up, retaliate themselves, the fat boys get dropped.
Isralis are pretty resourceful. They probably already have suicide type squads infiltrtaed in the areas.
I don't think the other Arab countries are too excited about an Iran armed up more than it is. They would quietly applaud when the cameras turned off. IMHO.
Iran has no national history of aggression. I would not expect no direct retaliation - but more attacks by surrogates on Israeli interests instead.
Alan
"Iran has no national history of aggression."
Well, that depends on how far back you want to go. Memories are long in the Mideast. Persia was arguably the first world empire, stretching from central Asia and the edges of India to Northern Africa and the Balkan Peninsula.
The West owes much to this ancient civilization, for better and worse.
But I agree that I would not expect retaliation in this case.
Depends on as what you define "Iran". Of course the Islamic Republik has no such history, too young. The Persian states that were there before have a few thousand years of aggressive history.
Not much aggression in the last 1,000 years.
Alan
An Iranian I know say that people there think of battles that happened hundreds of years ago like they were yesterday. So a couple thousand years ago might take you back to last week '-)
But really, Israelis aren't the only ones who have visions of long past (in their case, probably mostly mythical) lost empires.
All that is not to say that I think Iran is the imminent threat many seem to think it is.
"But really, Israelis aren't the only ones who have visions of long past (in their case, probably mostly mythical) lost empires."
Not empires. The Jewish kingdoms did at times extract tribute from their neighbors, but they did not go on wars of conquest or try to assimilate other nations. The one exception was the Jewish king who conquered Edom and forced the Edomites to convert to Judaism, Alexander Janneus. His name is held as a curse word because that was how a certain Edomite family rose to prominence and introduced its scion Herod onto the world stage.
The Book of Joshua is a pretty clear description of the Israelites conquest of Canaan and attempted extermination of the inhabitants.
Yes but the size is what matters. Sure they conquered land some 3000+ years ago. Like ALL of OUR forfathers. If for example you are living in north America and are not a member of a first nation, what your forfathers did outperforms what the israelis did by several orders of magnitude. And it happened just a few centuries ago. But it does not matter, what was discussed was "did the jews have an empire"? Answear "No". It was all the time to small for that. Kingdom otoh, definately.
On the other hand, since the Islamic Conquest, which was complete by 674, there has not been a militarily agressive Persian Empire. Persia has been invaded and conquered multiple times, but never controlled much territory beyond the current borders of Iran or areas of Shiite predominance.
I said "the Jewish kingdoms." That didn't begin until 200 years after Joshua.
... except that there is this nagging thing called archeological finds
... and there is even this wall they wail at
My archeaology tutor always said that there was archaeology and there was Egyptoloy. Only one of them was a science. He didn't mention Isreal at all.
Archaelogy is 99% interpretation at the best of times. Walls don't talk.
Dead Sea scrolls do
Anyone can read the late James Michener's "The Source" and get an accurate picture of what archaeology was like in The Promised Land. There's also this controversial 'proof of the Kingdom of David' (quotes mine) dig that's undermining the Muslim quarter of Jerusalem - they've excavated practically caverns. Ultimately, however, everything's up for interpretation by anyone who wants to make each find mean what they want it to.
That's a bit of a preposterous thing to say about the country that bombed a Jewish community center in Argentina.
IMO a large scale conflict in ME is unlikely as it will send oil prices through the stratosphere, any attack on Iran esp will drag in KSA, Kuwait etc etc as well as other powers like Russia, China
Do you consider that Iran may be intent on having that capacity for EXACTLY the same reasons as we the US do.. and largely everyone else?
The thought that Tehran would think they could build a bomb and preemptively hit Jerusalem with it- and not have considered the next moves that not just the IDF, but the US and the world would initiate is simply mindboggling to me.. yet these hypotheticals keep getting floated in the media and here at TOD every 6 months or so.
The great fallacy behind it all is the legend of MAD being a disincentive to proliferation. It was the greatest weapons purchasing initiative in history. Ask Russia.
Why would Iran detonate a nuclear device?
Creative ambiguity has worked for the Israelis, so it would probably work for the Iranians as well.
Besides, their next door Islamic extremist nation of Pakistan has already tested the design.
http://en.wikipedia.org/wiki/Vela_Incident
Creative ambiguity, indeed!
http://en.wikipedia.org/wiki/South_Africa_and_weapons_of_mass_destruction
In the next few years Iran will be in position to detonate a nuclear device,
That was the "name of the game" - why Nation States wanted their own fission reactors - so they could join the "Nuclear weapons have club" back in the 1970's/1980's and still a reason for a few Nation States.
If the laws on the books are enforced - certain things are forbidden for you to get if you have nuclear bomb capacity and have not declared such - then why would Iran joining the club be a problem?
If the idea of Mutually Assured Destruction is not Madness - then what would be gained by using a nuclear device if you would be destroyed?
an attack on Iran by Israel is just a matter of time.
Why - because Iran is a Nation-State based on theology with a bow on the box that says 'we have elections'?
If nuclear power is considered an acceptable path out of the End-Of-Cheap-Oil or Saving-The-World-From-Carbon-Emissions - some Nation-States not being allowed access to the "human right" of energy looks like a way to increase the haves VS havenots and yet another variation of "White Mans Burden".
Eric and I are often on different sides of many issues. But, not here. We've really been the victims of fearmongering wrt. Iran. Statements by the foll Ahmadinejad have been taken out of context, and blown completely out of proportion. He once said he wanted Israels present government dstroyed. But, this was deliberately morphed into, he will destroy the entire country and all its inhabitants, just as soon as he gets the capability, retailiation be damned. But supporting the most agressive possible interpretaion of anything Iranian has become necessary, if one is to be considered to be a "serious person".
Plus. Why should we get into an existential snit, over a small countries (Israel's) security needs? I know, tow things. Domestic politics. And millenialist religion (need greater Israel to bring on the second coming).
We've really been the victims of fearmongering wrt. Iran. Statements by the foll Ahmadinejad have been taken out of context, and blown completely out of proportion.
That is the nature of Propaganda - or "public relations". Use emotion to change POV.
I find it interesting that none of the "pro nukes for energy" people actually dispute the idea that access to energy being a human right, the issue of haves VS have nots or even a new "White Man's Burden".
BNSF increases 2011 Capital Budget by $300 million to $3.8 billion
http://www.progressiverailroading.com/financials/news/BNSF-boosts-2011-c...
All railroads together have announced capital investments of $12.3 billion (- BNSF = $8.5 billion). With rail revenues of a bit over $60 billion, they are investing 19+% of gross revenues.
An interesting sidenote. Rail moves more ton-miles than trucks in the USA. Yet the cost of fuel for trucks, about 700 million barrels/year of refined ultra low sulfur diesel, costs more than total rail revenues.
If rail can grab the premium traffic taken by truck, their revenue should multiply several fold. The increased revenue would afford the capital improvements required to improve service to take the premium traffic from trucks.
Best Hopes for More Capital Improvements,
Alan
I guess that is what Warren Buffet is counting on.
Warren does not have a reputation as a fool.
For those not aware of this, Warren Buffett's investment firm bought BNSF railroad, the second largest in North America. His friend Bill Gates, bought 10% of CN (formerly Canadian National) railroad.
BNSF is clearly leading the capital investment race.
BNSF has invested over $2 billion improving their Southern Trans-con - Los Angeles to Chicago - 2,217 miles from memory. The #1 container railline in the world (the Trans-Siberian is #2). Most of that money has gone to double tracking sections not previously double tracked - almost 1,000 miles.
When BNSF started the improvements, capacity was 50 to 60 trains per day. Average speeds have increased by almost 20 mph since then.
Earlier this year, they added 5 miles of very difficult double track in Abo Canyon, NM. This was a major bottleneck with steep grades and tight curves. Capacity increased from 90 to 100 trains/day to 135/day with that 5 miles of double track.
The last major section of single track# is where BNSF crosses UP tracks with an overpass in New Mexico. They are building a second multi-mile ramp now.
# There is a section with 20+ miles where an alternative, much longer track is used as a second track.
By comparison, the State of Louisiana is spending $1.2 billion to go from 4 to 6 lanes on the Huey Long bridge. The State of Wisconsin wants to spend $2.3 billion rebuilding the Milwaukee Zoo interchange.
Best Hopes for wise investments,
Alan
Way to frame it! Improvements on interchanges to alleviate grid lock is in essence of waste of capital. The same investment on the rail lines really makes a difference.
In the old days these improvements of the interstate system to shave 10-15 minutes off a person's commute will end up wasting tons of oil products and capital. They are almost net negative GDP investments at the end of the day in the face of constrained oil production, especially if traffic is reduced over time, which will be the case and has been the case since 2007. What a waste of money.
To make this work we need a base change to the way rail and distribution centers are setup in most cities. As an example I used to work for a large printing company, of all the raw materials Paper, Ink, Solvents, etc. 95%+ came in by rail, 100% of the finished goods were shipped out by truck (some even trucked and then air freighted). Only thing that was sent out by rail was the waste paper for recycle. Either the Wal-Marts and Costco's of the world need to be placed or have rail placed by them or maybe better we need massive distribution centers placed by rail heads that the retailers send trucks to a couple times a week or more often for perishable goods. I wonder what efficeincies could be gained on the rail side with something like this, at the printing company if I received 25 railcars in a day probably 24 of them were sent back 100's of miles empty.
What we need are more multi-modal centers.
Best example is Florida East Coast Railroad. They have 5 intermodal centers on 317 miles of mainline - one right next to a WalMart distribution center. 80% of FEC business is intermodal (60% before housing bust).
Walmart used to have ZERO, as in no rail access at their regional distribution centers.
Their model was cheap land, out in the boonies, next to an interstate interchange, and not far from a second interstate (one E-W, the other N-S). Attract low paid workers from a large rural area (drive miles to work). Trucks in, trucks out, low cost operations - till the price of oil increased.
A Liberal Arts major in management at Walmart mandated that WalMart trucks were to double their fuel mileage. Some small increases, but not x2.
So they are beginning to move new regional distribution centers near both interstates and rail.
Alan
I used to buy printed goods from the Mid West. If shipped by truck they would be delivered in 3 days. If shipped by rail it could take 3 weeks. The railroad did not seem to think it important to deliver my goods on time. This seems like a problem that could be fixed if someone paid attention to it.
Some railroads are changing. At least one is not.
Alan
At least as I understand it, the biggest hurdle that the railroads face in trying to capture premium traffic is problems with scheduling. Truck companies are able to guarantee, for example, pick up at a somewhat isolated factory outside of Los Angeles on Tuesday, with delivery to a warehouse in Cedar Rapids, Iowa, the following Monday. In that situation, rail has to deal with (a) truck transport from the factory to the rail yard in LA, (b) similar transport from some rail yard to the warehouse in Iowa, and (c) the possibility that the container will sit in one or more rail yards while suitable trains are assembled.
Trucking firms have been reinventing themselves as not just transportation companies, but logistics companies: move this big pile of stuff from point A to point B according to a schedule. Can the railroads offer that same service?
The short answer is YES !
I have had a number of hour long to multi-hour conversations with a freight broker - who sees that same Peak Oil problems that we do. He has been insightful into the "real world" issues - including the differences between RR managements. Sunday we agreed that every VP of one particular RR should be fired and retired VPs from other RRs hired in their place.
A denser network of multi-modal centers is a key. Sometimes he cannot ship by rail because there is not a near-by multimodal center. Also "paper barriers" prevent rail sometimes.
On the southern Trans-con, BNSF can beat the speed of a single driver truck now.
However, predictability is more important than speed for most shippers. Trucks are + or - a couple of hours on deliveries. Rail used to be + or - several days, but most railroads are getting better.
Best Hopes for Better Run Railroads,
Alan
I was under the impression (from quite a while ago) that it typically takes about two weeks to move a freight car across the country even under fairly good conditions. In this day and age of "just in time" and manic control of inventory costs, that seems just so early-twentieth-century, just so hopelessly quaint. If just the uncertainty is to be measured in days (for crying out loud), then it seems likely that the dilatory pace hasn't changed much. Has it?
So, OK, the RR's might clear up a bottleneck here or there, or provide a few more intermodal access points. Two cheers, maybe, but do they have any honest-to-goodness plans to enter the transportation business instead of the storage business? Honestly, do they plan ever to haul themselves out of the early twentieth century, or are the plushly paid executives just too comfy and cozy lollygagging in the distant past?
Freight trains get a fuel economy of about 450 ton-miles per gallon. That's their big advantage over trucks, not speed of delivery.
They don't necessarily travel that slowly, though. Many people have been killed at level crossings because they underestimated the train's speed.
I recall driving across Wyoming at about 80 mph, and being passed by a freight train on an adjacent line. I already know the speed limit on the main lines was 90 mph, but I thought that was for passenger trains. I thought freight trains were geared lower.
If they want the freight trains to go faster than 90 mph, they really need to electrify the lines.
Actually the issue IIRC wasn't the speed at which the freight trains moved. It was more that the management of the operation was so utterly poor and incompetent, reminiscent in a way of the "licence raj" in India, that the freight cars spent (spend?) most of the two weeks sitting still in yards or on sidings.
Edit - note that no shipper needs to give a stuff about "ton-miles per gallon", for the roughly same reason that people in the 'awl bidness' need not give a stuff about ERoEI. Basically the overall $$$ says it all, or at least almost all. And from the other thread, "A truck haul for 700 mile round trip in Texas would cost approximately $8-9/bbl." And from this thread it apparently costs around $12/bbl to haul three times the distance by rail.
So it looks like it depends on what you're hauling. If you're hauling low-value rocks, rail probably wins. If you're hauling something of value, you've got to look closer because of the weeks versus days issue. It costs money to carry inventory, only to have it sit idle for weeks on on some incompetently run railroad stuck in the early twentieth century. (IOW same problem as with slow, erratic pax rail - time is often money.)
I think you are missing the idea. Rail was neglected because of cheap oil and the dramatic expansion of the US interstate highway system which was and is funded by the US taxpayer -- The Big G. No doubt you are correct. But that is not going to be the way forward. I cannot imagine shipping will continue to rely on trucks shipped at 4-5x the fuel costs. I cannot imagine any more big road omnibus spending packages to keep the roads and bridges in top-top shape. More tolls. Most costs ahead. But maybe for very high-end items you are correct. I see people literally strap high value equipment into a first class seat on a plane to fly it back. We are talking about a piece of science equipment that is worth ~$100k - 500k or thereabouts. Now that is not cost effective but I have seen it with my own eyes. I even asked why didnt you check that. (with a grin of course) The guy was adamant about the guys that heave luggage and their competence.
While rail is cheaper in terms of fuel costs, they have to pay taxes on their rail lines. The truckers do not pay for the highway system with the same level of taxation. Interestingly that bottom line number you speak of reflects the fact that the trucking system is pretty darn subsidized by the Big Gobbermint!
The rails need to be electrified. The source of electricity can be debated or adjusted as the technology advances.
Railroads have union problems. That's why you cannot have an intermodal stop at your factory where you unload it and send it and the container on its way.
In theory you could have drive on drive off trucking on trains. But the unions would not like it.
"I cannot imagine shipping will continue to rely on trucks shipped at 4-5x the fuel costs."I
In the very long run, maybe, but as Keynes observed, we'll all be dead by then anyway. In the meantime fuel cost is not everything, and for many goods (leaving rocks aside) it's hardly anything. For example, massively featherbedded railroad labor is still a significant factor (even if the style has shifted somewhat from blatant overstaffing to endless makework.) Much US shipping is already relying on trucks consuming fuel at around 3-4x the cost of rail. Even in Europe, with diesel 2x or 3x more expensive owing to confiscatory taxes, railroad freight somehow often manages to be but a vestige (which is partly what the endless fights over trucks transiting Switzerland are about), with a much smaller market share (ironically perhaps) than in the US.
This isn't all going to change overnight. In the US the change will delayed by the railroads having a long history of overweening arrogance, execrable service, featherbbedding, endless delays, price-gouging, etc., which began essentially on Day One - and which is widely remembered especially west of the Mississippi (where in some quarters, RR's are viscerally hated to this day, with a spillover effect on Amtrak.) And as and when fuel gets more expensive, so will the direct and opportunity costs of carrying idle inventory. That may well track at less than 1:1 but it will further muddy the waters.
Deregulation changed a lot of things in the rail industry.
The productivity of employees has more than tripled for one. And there is a remarkable range of management attitudes between railroads as well.
BTW, Gasoline prices are heavily taxed in the EU, but diesel is usually much cheaper in the EU than gasoline.
Alan
I don't think you're paying attention to current trends. The percentage of intercity freight carried by US railroads has been on an upward trend and is now at 42% of all freight on a ton-miles basis. Over 90% of that is carried by the seven Class I railroads (five American and two Canadian).
The railroads excel at carrying heavy loads long distances, which is why they they carry 42% on a ton-miles basis but only 10% on a revenue basis. Trucks are able to deliver more quickly over short distances, but they are expensive and on long hauls with heavy freight where cost savings are important, the railroads beat them hands down.
As fuel prices continue to rise, trains will win over trucks for shorter and shorter hauls. This is going to be the trend in the post-peak-oil era we now live in.
The railroads are also far more efficient than they used to be in the pre-deregulation era. Their operations have been extensively modernized and efficiency is their main goal these days.
Survey Sees Major Shift of Truck Freight to Intermodal
"...which is why they they carry 42% on a ton-miles basis but only 10% on a revenue basis."
That pretty much summarizes my point. They're very good at carrying near-worthless stuff provided that the shipper doesn't care a whit when it might get to where it's going. (And indeed I see hopper cars of rocks drifting past once in a while; what kind of rocks, I don't know, buff-colored ones.) But rather less good at doing anything timely. To grow that 10% substantially, they're going to have to move from the 19th to the 21st century.
If some are making that move, good on them. But there's not a national system until they've all done so. (Note - I'm not readily finding long term perspectives on that 42%. Just bumf about current year-on-year or even quarterly increases, which leaves any trend lost in the noise of volatile oil prices and economic conditions.)
At the time of deregulation, 1% of fruits and vegetables went by rail. The latest data I have is that 15% went by rail - but that data is for 2008.
My freight broker friend and source assures me that today is higher than 2008. Reefer rail cars offer everything from -10 F to 40 or 50 F or just fresh air exchange (all that white and yellow onions require) and the available lines with reefers keep growing.
Alan
NY's Hunts Point Market is rebuilding all its rail delivery tracks.
Interesting ! A concern of mine.
97% - 98% of food for NYC area (14 million people) comes by truck.
Please post a link and send my an eMail (click AlanfromBigEasy to get my profile).
Thanks,
Alan
They're very good at carrying near-worthless stuff provided that the shipper doesn't care a whit when it might get to where it's going. (And indeed I see hopper cars of rocks drifting past once in a while; what kind of rocks, I don't know, buff-colored ones.)
Actually, rocks are high priority because of the cost of the railroad equipment vs. the value of the material (and thus the price that can be charged). The rock trains around Philadelphia are quick overnight moves with on day on each end to load or unload and very high equipment cycles.
Low priority shipments would be stuff like chemicals and plastic pellets being held in rail cars as forward placed inventory available for sale, and shipments like trash, scrap paper, scrap metals, and similar.
Paul you are arguing against labor while supporting a trucking industry that is labor intensive. How many drivers are replaced by a single train. In this day and age of efficiency, I imagine there is real pressure to make rail and trucking less labor intensive, hence the triple long trailers for trucking. You think they are doing that for fun? That is being done to save 2 drivers.
I think you underestimate rail and put too much historical angst onto it. I think the oil folks used to hate the railroads, but today they are going to have to cozy up and become friends again it seems.
Some other negatives about trucking: pollution, casualties, and gridlock. All those are higher with trucks according to a GAO study. Even better than rail move more freight to waterways!
I think it may well happen ... but in due time, not quickly ... because of all the baggage. And it wasn't particularly "oil folks", it was folks in general, often farmers or people related to farmers; farmers were the ones who really got reamed nine ways from Sunday.
This year, less than half of road maintenance is paid for by fuel taxes.
A trucking subsidy of $30 to $40 billion/year.
Alan
That is the devil in the details that few Americans appreciate. We pay taxes from other things to keep trucking cheaper. Now the pity is that trucking increases pollution, gridlock, and casualties. Not a good trade-off if people understood it better. Of course for certain premium goods indeed air and truck may be better no doubt.
Double or triple trailer trucks, are also much more fuel efficient (measured in freight ton miles per gallon). They are unfortunately a hazard for other road vehicles.
Double and triple trailer trucks also don't come close to paying for the road damage they cause in fuel taxes. In fact, private automobiles are subsidizing trucks, and, overall, they only pay for 70% of the cost of highway maintenance in the US in recent times.
Railroads pay for their own maintenance.
Depends on the railroad. See my comment @ VPs earlier.
BNSF Los Angles to Chicago "Z" trains (their premium service), Los Angeles Harbor to Cicero IL is in the low 40 hours. Within two years, sections of that line will see freight operating at 90 mph.
One article about schedule speed-ups.
http://www.railwayage.com/breaking-news-archive/bnsf-touts-reduction-in-...
OTOH, it can take 36 hours to get through Chicago. So a $5 billion public/private partnership CREATE proposed a long list of improvements. A number have been built.
http://www.createprogram.org/
BNSF is being aggressive and innovative. Norfolk Southern is probably #2 in that department (they just opened up double stack clearance from Norfolk VA to Chicago) with Columbus OH south and NYC to New Orleans next.
Best Hopes for the Good Railroads,
Alan
I noticed you did not list CSX...they are the road that is airing a lot of TV commercials about how many trucks their trains have replaced...are they all hat and no cattle?
If giving your opinion compromises your efforts, I will understand your reticence to comment.
I doubt that attack researchers will ever go through all 7,000 of my TOD posts ... but I also look at the cost-benefit ratio.
There is a general ranking of Class I managements by railfans. CSX is not at the top, or the bottom of most lists.
Alan
Its not two weeks to get across the country unless the car is low priority and does not need to move fast.
High priority intermodal trains and unit produce trains move across the country in about 4-5 days.
I had an interesting conversation with someone who is moving crude oil from Northern Alberta to the US Gulf Coast by train.
The economics of this are somewhat mind-boggling. Due to the current lack of pipelines to take oil to the Gulf Coast, landlocked oil (e.g. WTI) is trading far below seaborne oil (e.g. Brent). At the moment the price spread is about $23/bbl, which is just crazy considering you can move WTI to the coast for about $9/bbl by rail.
If you're moving Oil Sands Bitumen, the spread is even bigger - $45/bbl between Northern Alberta and the Texas Gulf Coast. The Gulf Coast refineries are short of similar-quality Mexican Heavy and Venezuelan Extra-Heavy because of declining supplies, and it's very very difficult to move this stuff by pipeline, hence the price spread.
It costs about $12/bbl to move a tank car that distance, so the gross profit margin is $33/bbl. A tank car holds 600 bbl, so you can make $20,000 per tank car, or $2 million for each 100-car unit train of bitumen delivered to the coast.
Now the thing is, you need tank cars to move the oil, and they cost less than $120,000, so you can pay for them in six trips. You need loading and unloading terminals, but you can buy abandoned grain loading and unloading terminals real cheap, and the railroads will refurbish the tracks for you. And then you need weigh scales at each end to scale the trucks in and out, and you're in business. It's not a really complicated business.
If you can somehow find 1000 tank cars and move 10 trains a week, you can make $20 million a week, or $1 billion a year. That's just ridiculous amounts of money. No wonder Warren Buffet and Bill Gates are involved.
But that Billion a year business depends on spread. What is plan B when the spread narrows? I am thinking that they believe that there will be more freight on trains. That is the long term. I think the oil business is that short term way to bootstrap the investments into a longer term phasing in of the rail business again.
What is clear to me now is that Gates and Buffet know about our oil predicament.
Oct - Exactly. That's the problem with volitility in the oil patch, has been for decades and looks to be getting worse. Consider the E Texas shale gas play. When NG prices rose above $10/mcf operators couldn't buy leases and drill fast enough. The play looked great...on paper. The about 8 months later NG fell below a level where most of those wells could be economicly drilled. Nearly destroyed the likes of big companies like Chesapeake and Devon. I knew of a rig building company that went from running 3 shifts 24/7 to laying off most of the employees in less than 6 months.
Easy for us armchair entrepeneurs to cook up big profits...on paper. Another thing when you have to liquidate what's left in your 401k to buy those tank cars. And anyone of us can pull the trigger tomorrow: take your savings and buy oil futures based upon the price needed to make the rail transport expansion profitable. Tends to shake one's confidence a tad when matters are taken from the theoretical to really risking one's money. As we say in the oil patch: If you ain't got skin in the game your opinion don't mean nuthin. LOL
Well that is why real poker with real money is more fun than playing for plastic chips! Yeah, fun to armchair a billion dollar deal.
I do look at the oil patch infrastructure here in No. CA. The Chevron in Richmond. I see 2-3 big oil tankers in the water and a lot of oil tanker cars in the rail yards. It is quite a facility there. I told my wife when we stop seeing tankers in the water then we ought to be thinking about plan B. She rolls her eyes at me. I guess I need more credibility to convince her.
Finding money does not appear to be a problem. There are some multi-billion dollar investment funds that are looking at it for a quick return on their money in these uncertain times, and this rail car exercise would turn it around very quickly. The real constraint is finding the experienced people to put the facilities together fast.
I didn't mention the flip side of this scheme. There is a shortage of diluent (condensate and NGLs) for the oil sands operations in Northern Alberta. They need to dilute the bitumen with lighter liquids to get it to move through pipelines. On the return run the tank cars would carry diluent from Texas to Northern Alberta. It wouldn't make as much money as the Alberta to Texas run, but it would be enough to be profitable all by itself.
The alternative would be dual pipelines - a bitumen pipeline running south and a diluent pipeline running north. That would be more cost-effective, but as long as the environmentalists and US government hold up the pipeline approvals, the railroad system will make money.
The railroads don't need any approvals to move oil anywhere, they got the approvals they need 150 years ago, and they have tracks everywhere it needs to go.
Hey, RMG do you think Buffet's influence on the President may have anything to do with holding up that pipeline? I am not a railroad guy so I do not know the lines involved.
I think Buffett is more ethical than that, as witness his recent statement that he wasn't paying enough taxes, and that rich people like him should have much higher tax rates. He get's full points for telling it like it is.
The culprits in this case would be the usual ones - Exxon, Shell, the Koch Brothers, etc. They're all buying oil at landlocked prices, and selling the products at the world price. If a pipeline was built, their feedstock prices would rise to the same level as all the other refiners. Expect them to do their best to quietly lobby against pipeline approvals.
ConocoPhillips has a pipeline from the Gulf Coast to Cushing that it could reverse to carry the other direction, but it said it has no interest in doing so. The main reason is that its refineries already have access to landlocked WTI, and it doesn't want to give its competitors the same break.
The Plan B is to take the money and put it somewhere else. Obviously, it is an unstable situation to have a price spread of that magnitude, and someone will build pipelines eventually. So far the environmentalists and current US government have been really successful at stalling the pipelines, and as long as they hold them up, moving the oil by rail will make money.
The tank cars, loading terminals, etc. will all be paid for years ago, and the big pile of accumulated cash can be put into something else. The railroad tracks are already there and will still be there after it is all over.
The oil doesn't necessarily go to the Gulf Coast. There are railroad tracks everywhere. If it doesn't go the GOM, it can go to Pacific Coast - e.g. California, or more likely, to BC ports and then to China and India.
Speaking of which, US government officials don't seem to be aware that Canadian government officials are getting seriously P.O.d at their stalling on pipeline approvals. This is costing the Alberta government $2 billion a year and the Canadian federal government even more. They're getting really, really keen on shipping it to China. Previous US governments have worried considerably more about the security of their oil supply. This one will probably find any upcoming oil shortages coming as a complete shock.
Peak Oil Blues - "We're All Bozos on this Bus" says the Peak Shrink:
http://www.youtube.com/watch?feature=player_embedded&v=2Jkbyv15A8I#at=35
This is a great video. Another link is here: "People Are Annoying": the Secret Key to Facing Peak Oil? (Video) with commentary.
Ron P.
yes; she gets it re environmental, & social collapse as well. thanks ron!
'we are all bozos on the same bus'...annoying ones too.
She seems to miss the most usual response of people: the self-sufficiency kick. So many people go on a 'pastoral idyll' road - despite the lessons from history that say sufficiency farmers have always been at the very bottom of the pile.
Taking a contrarian view - you need to avoid, and exploit, that drive. Not follow it.
'The bottom of the pile' ??
I think for much of the last few thousand years, they WERE the pile. Just because the representation of them in the age of Silver Air Car dreamin' has been more about the mud than the meals, family agriculture has been the norm, and it has taken countless different forms as well. You can paint a picture of indentured sharecroppers, if you wish, or you can easily find examples of communities surrounded by various growers who have gotten by fairly well, and have even had some fun in the process.
The Self-sufficiency is usually misunderstood as some kind of pure isolationism, both by some newcomers to it, and by outsiders.. but as with those 'Colonial House' shows, that pitted a few neighboring houseloads of Moderns against one another in their success at living 'the old way', as if it really had to be Each Family for themselves,.. naturally the thing they overlooked was that success often meant working together, lending and borrowing, bringing in extra hands for overwhelming jobs..
To paint that response as a mental condition..? I disagree. Calling is the 'Pastoral Idyll' is using a Stereotype that doesn't really cover most of those who go there..
On the subject of war against Iran. There are three powers in the world China, US, and Russia. The EU is a client of the US and does not choose to waste much money projecting military power. So the question is will Iran become a client of China or Russia or neither. If neither it will be captured for its oil and gas by one of the three. At this point it looks like China is a more powerful patron than Russia and the US is not an option.
How many aircraft carriers will China need to insure delivery of oil from Iran?
No a/c carriers required.
China is building a standard gauge rail line through Kazakhstan, another ...stan and Iran to Turkey and the EU.
Another line is being built between China and Pakistan, and Pakistan will convert from Indian gauge to standard. The rail lines of Pakistan and Iran finally meet (last year ?).
China imported over 1 million b/day from Russia for decades despite the change of gauge (gangs of Chinese jacked up each rail tank car, slid the wheel on the axle, and dropped it back on the narrower standard gauge).
It will be easier this time - standard gauge already in China and Iran.
Alan
Considering that it would be really easy to run an oil pipeline from Iran to China across a couple of the "Stans" (Turkmenistan, Kazakhstan, Pakistan, etc. pick any two) I don't think an aircraft carrier will be required to ensure delivery. Just enough bribe money in the right pockets.
CNN Money reports that markets are being cheered by merger activity. Oh, good. BAU is alive and healthy. Monopoly and oligopoly reign supreme! No wonder oil demand is up. We will need a lot of oil for the lubrication necessary for the next steps.
Craig
You mean, Boo YAU ... yes? Or do you not watch mad dog Cramer on CNBC?
Born in the USA: Philips’ L-Prize LED bulb
Article continues and test results are included.
Hi Merrill,
I was looking at some test reports that had been provided to me by another party and the thing that just blew me away was the lamp's lumen maintenance. As noted in this article, it's 99.3 per cent at 25,000 hours. There's no other light source that comes even remotely close to matching this level of performance. I'm trying to get my hands on a pre-production copy and I'll let you know if I'm successful.
Cheers,
Paul
Also as noted in the article, the aging test was at 45 degrees C to simulate operation in a closed fixture.
That's true. Lamp testing is normally conducted at 25°C, but 45°C is a more realistic temperature in this case.
I have a number of lighting retrofits that are being held up due to the lack of LED products, in particular, Philip's 17-watt EnduraLED PAR38s (I'm so desperate at this point I'm threatening sexual favours).
Cheers,
Paul
New GM corn heats up food vs. fuel debate again:
http://www.guardian.co.uk/environment/2011/aug/15/gm-corn-development-fo...
I wonder why they add the enzyme amylase to the corn when they could make the enzyme in the yeast. Why engineer corn to do he breaking down when the yeast have to be added anyway?
More weather weirdness
New Zealand blizzards 'heaviest in 50 years'
How much you want to bet they have another one of these '50 year' storms in the next 5 years?
-------
Also the East Coast (NY,NJ,CT) received 2 months worth of rain in one day. This is the 'New Normal'
U.S. cities prepare to adapt to climate change
dd posted an article on the east coast deluge:
http://www.desdemonadespair.net/2011/08/more-rain-flooding-for-already-d...
Something has changed in the last year or so. We really seem to be getting extreme, record-smashing events on a steady basis now. I suspect that a tipping point (or many) has been reached.
This recent study suggests that we are just at the very beginning of things to come, and they may be coming strong and fast from here on out:
http://www.youtube.com/watch?NR=1&v=tDAQ9lXzc1c
Please do take the time to watch it. And all the others in that series are well worth a view. Or if you prefer the as-yet unpublished paper, complete with lots of nifty graphs, go here:
http://groups.google.com/group/geoengineering/attach/d805b8db9be274ac/Cl...
Wasdell is saying that climate sensitivity is more than twice as strong as has been assumed, making all the (inadequate-in-any-case) climate goals proposed so far worthless.
At current atmospheric concentrations of CO2, we should expect global temperatures to stabilize at 5 degrees C above pre-industrial levels at a minimum, based on fuller accounting of all known feedbacks and on the most recent paleo-climate studies.
Perhaps Leanan could include these in tomorrows Drumbeat lead articles?
Thank you very much for the links to that paper.
As Hansen has pointed out in earlier works, 4-5 C is already baked in the cake - which is more than enough to trip positve feedbacks like converting the Amazon from a sink to a source and the release of East Siberian Shelf methane. This paper is very disturbing; each iteration pushes the minimum temp higher and higher.
Yes, thanks for the links.
AS Seraph comments above re climate sensitivity, I was reminded yesterday of a widely publicised 2006 report by NatGeo that predicted that the Arctic could be ice free in late summer as early as 2040.
IIRC, this caused quite a bit of buzz.
Now, a mere 5 years later, if one looks at the extrapolated PIOMAS data, we could have an ice free condition as early as 2014, and ice free for 6 months by 2021!
Even considering the wide latitude of the early models, and the conservative nature of scientists, it appears, IMVHO that we are already into a tipping point condition, without factoring in sea bed methane/hydrates and permafrost thawing. This is reinforced by "50 year" storms and floods that seem to be occurring regularly.
I know, I know, one year or even several years is not proof, but data from so may disparate locations and fields of study, make me very concerned.
BTW, I had a gut feeling about this. Being from the frozen north, I noticed that a virgin snow sidewalk would stay covered for days, but even morning footprints from one person would cause the whole sidewalk to be clear that afternoon. Similarly a slight bit of slushy, dirty water splashed by traffic would have an even more dramatic effect.
I see a strong analogy here for the Arctic and it does not bode well.
The frustrating part for me is that many sceptics/deniers do not realize that these changes are happening "overnight" in relative terms.
A farmer would probably get it, but those raised on instant gratification and the 5 second sound bite, it's no big deal.
Riiiight! Back to your XBox then, and don't worry about a thing.
Finally someone who agrees with what I've said for years. Gonna watch the video now.
And let me tell you, by God, that was a lot of rain.
Edit: No sooner do I hit "Save" and it starts again. A complete wall of water.
From NOAA Global temperatures were seventh warmest on record for July
Food Prices Could Hit Tipping Point for Global Unrest
Big Storms Slipping Toward Earth’s Poles
Power consumption makes historic drop
Unfortunately most of the electricity cost increase is in distribution networks (larger transformers) to cope with peak summer demand for airconditioning.
So there is some good and bad news in that story. Nice to see people switching to more energy efficient alternatives - incandescent bulbs were phased out in 2009.
Hi EfA,
Solar DHW and heat pump water heaters have become increasingly popular in Australia and likely account for the lions share of the drop given that water heating typically accounts for twenty-five per cent of a home's energy budget.
See: http://www.sa.gov.au/subject/Water,+energy+and+environment/Energy/Energy...
See also: http://www.australianhotwater.com.au/hot-water-system-rebates.htm
I seem to recall hearing of rebate fraud a few years back (e.g., companies installing twenty or more heat pump water heaters in commercial/institutional applications) and presume that this has has been since corrected. [I'm counting on Paul Nash to set the record straight.]
Cheers,
Paul
Hi Paul,
I don't have any direct information about the rebate frauds - other than the fact that *everyone* knows it happened and there still some lawsuits going on. After the '08 crash the Oz govt, same as Canada, US etc, did rush "stimulus" spending on "weatherisation" and "efficiency" projects. As you can imagine with a rushed gov effort to spend money - lots of money spent, but results were not always obtained.
Lots of fraud on insulation projects, so would expect some gaming of the system in other areas too - if there is a rumour, chances are there is at least some basis in reality for it.
The DHW heat pumps are relatively new on the scene, but the Solar DHW have been around for a long time in Oz (40yrs), but have indeed become more popular in recent years. Being a sunny place with most of the big cities being frost free environments makes solar DHW a good choice - as do residential electricity prices of 24c/kWh!
As for the all the energy efficient appliances (the highly efficient fridges, front loading washing machines, ductless heat pumps, CFL lights etc). Generally, Australia is about 5-10 years ahead of North America in this regard.
So, I am not surprised to hear that energy use is starting to decrease. But a part that is also the continual reduction in domestic manufacturing activities - very hard for local mfrs to compete with all of SE Asia on the doorstep.
Easier to just sell them coal and food...
Thanks, Paul. The things you describe certainly underscore the need for good programme design and rigorous oversight.
Canadians consider low-cost electricity a national birthright and whine incessantly when rates increase by as little as two to three per cent per annum. I shudder to think how they would react to Australian prices ! And unless rates move sharply higher we'll never see any tangible reduction in our usage.
Cheers,
Paul
The problem really was, that when they were in such a rush to "do something", that rigorous design and oversight got thrown out the window. The gov (state and federal) was trying to be all things to all people. Transgressions were accepted as an inevitable result of trying to "get the money out the door quickly" - sound familiar?
I am of the opinion that governments should, mostly, stick to governing. There are some programs worth pursuing, like your long term energy stuff, or the water stuff I have worked on, but the knee-jerk projects *always* end in boondoggles. For "stimulus "money, for those that believe it works, I am of the opinion the best thing that can be done is either just pay a rebate/grant to all individuals and let them do what they want, or pay a grant to the perpetually impoverished local govts - X$ per registered voter or census population, and let the muni's work out what to do - they all have a long list of projects.
it is always frustrating to see when govt money ends up being concentrated in the hands of a few, in the name of the public good, to then see very little result for it. Companies that continually do that do not last for very long.
Best hopes for sensible government!
Knowing that Australia phased out the standard incandescent bulbs in 2009 makes me wonder why some citizens in the US have such difficulties in starting to phase out the 100 Watt incandescents next year.
Call it a lot of money from people that want us to waste electricity. I am convinced these monied folks want to enrage the public and get the politicians to stampede around like peacocks in the House about the lightbulb issue.
Meanwhile, the Titanic sinks another notch.
Those particular US citizens are not inclined to be as blindly and passively obedient as Aussies, LOL? Australia is an altogether different culture - vide, say, the serious discussions of installing a national Chinese-style Internet-censorship firewall.
Old style inefficient incandescents were mostly phased out in Australia. While it's true that supermarkets don't sell 40/60/75/100w light bulbs any more, it's possible to get incandescents at some hardware stores as long as they're coloured or a special shape.
Halogen incandescents that burn 30% less power and fit in the same light sockets as traditional light bulbs have come down in price over the last couple of years and are sold everywhere along side CFLs. They're now almost as cheap as good quality incandescents were before the phase out. Of course CFLs are popular and I have been using warm-white models for about 15 years.
What I don't get about the USA debate over phasing out incandescents is why a minority get so extremely upset about it. These light bulbs are terrible at producing light. Only 3% of the power that goes in comes out as light. The heat produced is pretty useless too (in winter), as it's generated at the ceiling and not where people live. I can understand that some people don't like CFLs due to colour differences or the mercury content. Fine. Just use halogens. They look the same, last longer than traditional incandescents, use 30% less electricity and you'll recover the higher price (and more) through saved energy.
Very large oil fields being found in the North Sea lately. Discoveries are now way above production for 2011 and there are still a large number of wells to be drilled this year. Aldous field now estimated to contain over 1 billion bbls of oil. Further discoveries expected soon in the same area. Skrugaard also a very large discovery.
Production of C+C will be about 27 billion barrels this year or about 31.5 billion barrels of total liquids. Would you kindly point out those massive discoveries that put discoveries WAY above production this year?
Ron P.
I guess he means Norwegian yearly production..
I was only referring to the Norwegian North Sea. However, I believe that world-wide reserves have also increased in 2011.
World oil reserves have increased almost every year according to the BP statistical review (Thousands of millions of bbls):
1990: 1003.2
2000: 1104.9
2009: 1376.6
2010: 1383.2
The increase from 2010 to 2011 is likely to be much larger than the increase from 2009 to 2010 due to the large discoveries in Brazil, Norway, Iran, Iraq, Venezuela, USA etc. but we will have to wait until next summer to see the figures.
Remember: Despite the impression you might get as a casual reader on TOD, oil reserves are not falling.
Despite the impression you might get from reading the BP Statistical Review reserves are falling. All those new reserves some people crow about are all political reserves. Iran and Iraq, and most of the rest of OPEC, increase their reserves every year, with a pencil. They just "declare" their proven reserves to be such and such.
Most of the addition to reserves this year come from Venezuela. They decided to add the Orinoco Bitumen to their proven reserves.
Any true reserve increase must come from new discoveries.
Ron P.
Ron, See my post lower down this thread: There are lots of NEW fields being discovered in Kurdistan and Iran this year. These are not old fields with adjusted figures. They are new discoveries. Ignore them at your peril!
Nordic - Not disputing your claim: "...oil reserves are not falling." Just any honest question since I don't track the numbers. But in the last 12 months global reserves decreased around 30 billion bbls of oil due to production. And since 2005 global reserves have decreased over 170 billion bbls of oil. So you've seen reports that new discoveries in the last year have exceeded 30 billion bo? By how much? Thanks in a advance.
But I will take one shot across your bow: IMHO PO isn't about reserves. PO as generally used is referring to peak oil production. Peak oil reseves would be another interesting metric. But they are two different animals. POP will have a significant impact on the global economy. POR...not so much...at least in the short term. In fact, until they go online POR represent a capital drain and big negative EROEI. Brazil may have 50 billion bbls of oil sitting under 6,000' of water. But if there's a military flare up in the ME and the world loses 20 million bbls of oil per day those Bz reserves won't be of much help if they aren't being produced. They will some day...but not tomorrow or a year from tomorrow.
Rockman, I don't disagree with you: It is definitely production that matters. But as long as reserves are increasing it is unlikely that production rates will fall off a cliff. And they could even increase quite a bit. Will be interesting to see how things play out. I believe oil production will start falling at some point due to an adoption of alternatives. But that is still a way in the future. Some of the Brazilian reserves (from Tupi) are already being produced and Brazil will continue inceasing production over the coming years. Norway will most likely see production continue to fall for up to another 5 years but after that production will probably start increasing again. US production is of course increasing at the moment as well, while consumption is falling so US net imports are dropping quite significantly. (This is the other side of the mouch touted ELM model). Yes, countries that are exports often increase domestic use and thereby reduce exports - but conversely countries that are net-importers usually decrease domestic use and thereby reduce imports. Hence the ILM (Import land model)! :-) Things will probably not quite turn out as we expect, but there could be some elephants lying off West Africa that haven't been woken up yet. Certainly wouldn't bet on there not being any!
Nordic - I fully agree: no cliffs in my future vision. We've gone thru boom/bust cycles long before I began in 1975 and there have been no natural cliffs. Even man-made disruptions didn't amount to much cliff diving. LOL.
In truth I suspect the above ground economic/political/military factors will make reserve increases, production rates, ELM, etc, secondary order factors. Since I'm nearing the end of the trail I wouldn't think much about it. But having an 11 yo daughter: makes the issue very important to me
I can think of below ground cliffs, or at least very steep, too steep, downslides.
Single field collapses in production over, say, 3 or 4 years are pretty well known. All oil fields are getting the same price signal. It is not too much to think that a bunch of old gray mares will feel the whip, run a bit and then keel over pretty much at the same time.
Northern Ghawar watering out would likely be the key, along with a several other major fields about the same time.
Let's say some 60 year old Iraqi oil fields get their production doubled or tripled, as promised, and then they collapse, more or less together.
Meanwhile, China's Daqing giant oil field finally collapses, along with much of the US shallow water GoM production.
One can mix and match fields - the basic premise is that a number of major fields coincide in their rapid declines.
Best Hopes for Oil Free Transportation,
Alan
Don't forget Cantarell, cliff diver extraordinare!
@Nordic_mist
If reserves are increasing and I am not disputing your numbers or claims here why is Fatih Birol asking Governments to prepare for PO, shouldn't he be asking people to ramp up production, these guys know all the numbers right.
The_Mist is only reporting from and on behalf of Planet_Norway or so... and therein lies his flaw.
That said there is a google-translated article illustrating the top bigger global finds this year - and if accurate someone should call Houston immediately with regards to global reserve replacements.
Note: The numbers on the picture represent mboe
paal - Thanks. But if I read the link correctly it's indicating, at max, global oil reserves increased 2.5 billion bo from those "huge" fields so far during 2011. But we've produced over 18 billion bo during the same period. So unless I'm misreading global reserves decreased 7X as fast as it the link's stated increases. And you seem to be implying that link is being optimistic.
That isn't really news to those of us here in Houstion. When I started with Mobil Oil in 1975 my first mentor explained the critical issue the oil industry faced AT THAT TIME: reserve replacement. The rest of you folks call it Peak Oil. We still don't use "PO" in the oil patch. It's still the "reserve replacement problem" for us.
The link that Paal provided ignores all possible discoveries in the Middle East. There is always politics involved when Iran and Iraq etc. announce discoveries, however, from what I hear from the grapevine some of the discoveries are very real such as: http://www.presstv.ir/detail/186108.html with over 1 billion bbls. There have also very recently been truly enormous discoveries in Kurdistan:
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/8693947...
1.9 billion bbls.
http://www.iraq-businessnews.com/2011/05/27/gulf-keystone-updates-on-sha...
Shaikan 5-10 billion bbls...
etc. etc. If you only take into account non Middle East Oil of course the number is lower...
Shaikan was discovered in 2009, so I believe that one is already accounted for over at the "reserve-bank"..
As mentioned above the most important issue is the flow rates. What if we had a 100 billion barrel discovery off the coast of Africa but the max flow rates from the discovery will ber 100k per day because of the complexity? Does this help the world supply situation? It is kind of like wining the lottery but only getting $500/month. I have heard estimates that Canada has more reserves than Saudi Arabia but how many people believe the oil sands will ever produce 10 million barrels per day? Most of these new reserve estimates are not conventional oil, they are large engineering projects...Salkin, Heavey Oil, Ultra Deepwater, ect
Nordic - I agree about the voids in the data base. Doesn't make it easy especially if the smaller discoveries add up big. And there may be a few more than you suspect. Though most international big boys are public companies not all are. We're privately owned...you'll never see a press release from of us touting a big discovery. Of course we're a little company so we would never have an impact either way. But for a number of reasons, like tipping off the competion, some companies will minimize or completely hide a new discovery. Seen that in the DW GOM first hand myself.
Still, at the end of the day, we need to find around 30 billion bbls of oil per year just to stay flat. Big task to say the least.
The link that Paal provided ignores all possible discoveries in the Middle East.
It is POSSIBLE that more will be found. It is also POSSIBLE that none will.
And even if more is "found" - how does that change the infinite demand on a finite world problem?
What they announce as a new oil discovery is usually some unspecified mixture of crude oil and natural gas. They also tend to report an estimate of the oil in place (OIP) and not the ultimately recoverable resource (URR) without stating such. These practices artificially inflate the "oil" discovery to laymen.
We are probably on the same page.
My gut-feeling tells me the pace of global replacements seem really grim so far this year, although there has been a notable up-tick in Norwegian waters- but that doesn't change the bigger picture IMHO. The general info in the article is from Rystad Energy, an euphoric PO-slaughterhouse, so there...
If you read swedish you can check this out from the Swedish Television web site:
http://svt.se/2.22584/1.2503635/jattefynd_av_olja_i_norge
For those who have not mastered tha language of glory and heroes I'll gracefully sum up the details:
Two different findings turned out to be joined into one. All in all the field have between 500 and 1200 million barrels of OIL EQUIVALENTS. So this figure is including gas, I guess.
Statoil estimates the field to "contain" 400 to 800 BOE. Given that this news have been filtered through journalists I guess this later estimation is the URR, and the larger number the OOIP.
Statoil announces huge North Sea oil discovery
The Baltic Dirty Tanker Index is now below 700 (695) for the fist time since early February. Doesn't make much sense. It was the lowest in January when OPEC production was the highest, then shot up in March when the bottom dropped out of OPEC production. Now OPEC is producing at levels not seen since 2008 and the index is near its lows.
Apparently it has as much to do with an excess of tankers as it does with the availability of oil, or demand for oil.
Ron P.
I think the reason for the sudden jump in March was refiners scrambling for additional tankers to replace expected shipments from Libya. Tankers booked for Libyan oil could generally not immediately be re-tasked to perhaps a completely different part of the world but this effect tails off as assets are moved around and the system comes back into equilibrium.
By Joao Oliveira and Peter Millard
Aug. 16 (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s
state-controlled oil producer, plans to export 3.2 million
barrels a day by 2020, Chief Executive Officer Jose Sergio
Gabrielli said today at an event in Sao Paulo.
Rgds
WeekendPeak
WP - And when I was much younger I had a plan to be a retired millionaire by 50 yo and living the easy life. For the sake of my 11 yo daughter I truly hope his plan works out better than mine did. LOL.
I wonder what the projected consumption of Brazil is in 2020.... that would give us perhaps some insight into what they they think they actually can produce then. I have little faith in those types of projections.
Rgds
WP
Weekend, I would love a link for this story. I googled it every way possible and got nothing but this story.
Petrobras Second-Quarter Profit Surges 32% on Increase in Offshore Output
That article talks about profits but does not mention production.
Ron P.
Ron - I copy/pasted it straight from a bloomberg terminal. The story was published at 11.21 EST. perhaps it will be on their website at a later date....
Rgds
WeekendPeak
Ron,
This pretty much covers it:
http://en.mercopress.com/2011/07/26/petrobras-plans-to-double-oil-output...
"Petrobras aims to increase daily output to 4 million barrels of oil and equivalents by 2015 and to 6.4 million barrels by 2020. Output averaged 2.64 million barrels a day in June."
Nordic
They plan on almost tripling their oil output by throwing money at the problem. True it will take an awful lot of money to bring all that pre-salt oil to the surface. But...
If they do succeed in increasing production to 6.4 mb/d, (boe), that means only 2.88 mb/d, (boe), will come from the pre-salt deposits. After all that hype I have been hearing about those vast pre-salt deposits, and how they were supposed to save the world, this seems like a huge let down.
And to get the rest they will need to increase production from their current producing fields by about 68 percent, to about 3.52 mb/d. That sounds like an ambitious plan that will cost a lot of money.
I am skeptical.
Ron P.
Ron - That big gain from non-DW Brazil puzzled me. But based on the fact that I only know a tiny bit about Bz overall oil plays my opinion isn't worth much. So a quick and dirty search:
http://www.reuters.com/article/2010/05/03/firstreserve-barra-idUSN036228...
"May 3 (Reuters) - A new Brazilian independent oil company, Barra Energia, will seek to develop prospects in shallow water and onshore Brazil with $500 million in financing from First Reserve Corp, officials said Monday. Oil industry focus on ultra deep discoveries offshore, and expected tighter Brazilian control over them, make shallow areas attractive, Chairman Joao Carlos de Luca and CEO Renato Tadeu Bertani told Reuters at the Offshore Technology Conference. "There is so much concentration going to deep water that opportunities are being left behind in shallow water and onshore," Bertani said. The new company plans to apply new geologic concepts and advanced technology to mature areas of production to increase output, much as new techniques have allowed companies to exploit shale to boost U.S. gas production, Bertani said."
Not sure how much of this non-DW oil potential is hype or not. But I can see where there may have been a delay in non-DW oil development in this country as well as any country where the national oil company dominated the arena. As we see today the NOC are really designed to go after the big fish. The small independents and private mineral ownership in the US has made a huge difference in developing small fields the majors passed on. So maybe there is something real about a bunch of supposed low hanging fruit in Bz just waiting for some private $'s to be thrown at it.
Don't forget that there is also OGX which has a large portofolio of fields and plans to increase production to 1.4 million bbls/day by 2020.
http://ri.ogx.com.br/Show.aspx?IdMateria=LgtwyxSi87MKjcdde8J5JQ==
OGX is a highly capable company led by ex Petrobras top people so OGX can be expected to perform.
Also: Don't forget that there are large fields in Brazil operated by other majors such as Statoil owned Peregrino.
Is the ramping up you speak of in Brazil unprecedented historically speaking? Has any country ramped up that big that fast given the resources Brazil has to exploit? Do you think these numbers are a little inflated?
It is likely that they are largely inflated. Remember Brazil is trying to raise money, a lot of money. From Nordic Mist's link up thread:
You don't raise that kind of money by quoting small expectations.
Ron P.
Oct – It may be unprecedented on a national scale. I’ll try to research independent oil operators in Bz when I have some time. Lots of smaller scale example I could offer. The dynamics would be based on the same factor: profit motive. A real life example: me. In the mid 80’s when the oil patch was dead after the KSA flooded the market with cheap oil. I was struggling consulting just a few days a month. I started handling operations for a tiny company barely surviving. I worked Goliad Co., Texas for them. And I knew as much about that trend as I do about Bz petroleum: almost nothing. I told them I would stay on but we had to switch to another area…Goliad was a dead end. Only very small independents drilled in those parts…the majors had given up on the trend in the 60’s. No big field potential left. Big independents followed them out shortly afterwards. Mostly just very small shallow NG prospects left. And extremely difficult to find: success rate less than 10%.
Now the magic. Just before I gave up on the trend a company shot a seismic line across one of our leases. They were looking for a deep play and it wasn’t there. The small operators didn’t use seismic: too expensive and didn’t do any good. I got the seis line and SHAZAM! There was a beautiful “bright spot” at 2,700’…the depth of the most profitable reservoir in the county. Bright spot: I’ll skip the long tech explanation but under the right conditions we can see a direct indication of a NG reservoir. A very common tool used offshore in the GOM where I had been trained by Mobil Oil. Literally it was like shooting fish in a barrel. Typical success rate 10%...my success…hit 23 out of 25 wild cats. I sold the NG from my first discover for less than $1/mcf and, thanks to the very cheap drilling costs, made the company a 1,200% profit. And the two that I missed: one I’m not sure but for the other one I found the seis line had been mis-surveyed. The NG was there but I drilled the wrong spot.
And this is my point: technology transfer. There were no less than 5,000 geologists in Houston who could have done what I did. In fact, I found another seis line that revealed my discovery that had been sold to 22 other companies at least 3 years before I drilled my well. And I’m sure there wasn’t one geologist who saw the line that didn’t see the reservoir as clearly as I did. But they worked for big companies that didn’t drill those small wells: not profitable enough. But these were the same companies going out of business because they couldn’t find enough prospects to drill.
And that’s the same attitude you find in all the big NOC’s. They just don’t have the manpower/capex to chase prospects that don’t offer the big bang. I have no doubt there are many thousands of small oil fields in the KSA that weren’t explored due to this protocol. Collective how much could these small fields add to their reserve base? I have no freaking idea. But I’m certain they wouldn’t drill for a FIELD with less than 5 million bbls when they have individual WELLS with greater than 5 million bbls. And now the big “what”. But what if there 3,000 such fields? That’s 15 BILLION bbls of oil. I have no idea if the 3,000 I pulled out by butt is viable. But I also don’t know that 15,000 such fields aren’t viable either. That would be 75 billion bbls of oil. You can’t prove something doesn’t exist until you go look for it. And the SA probably hasn’t.
Nutty idea? After I started drilling bright spots in Goliad a few others caught on. And then a few more caught on, etc, etc. By 2000 tens of thousands of bright spot prospect were drilled in the onshore Gulf Coast. In fact, by that time most companies wouldn’t even review a prospect let alone drill it if there was a bright spot on 3d seismic. And not just small shallow reservoirs. Most of the major onshore discoveries in the last 15 years have been based on this technology. In the last 27 months I’ve spent $300 million drilling nothing but these types of prospects. Yes: back in the 80's when the oil patch was nearly terminal the Rockman and a handfull of other hands started the prime exploration exploration protocol used in the onshore Gulf Coast for the last 20 years. And it ain't braggin' if it's true. LOL.
So why isn't Chesapeake et al chasing such prospects? They did for a while but they couldn’t find enough to spend their budgets on and thus couldn’t replace the produced reserves. And thank goodness they are throwing their money at the shale gas plays: even without their competition I can’t find enough prospects left to drill. I’ve got around $200 million left in this year’s budget I won’t be able to spend.
An easy what-if: what if Mexico allowed foreign companies to explore in their country on typical terms as we have here? How many billions of bbls oil and tcf of NG would be discovered in short order? Again, I have no freaking idea. LOL. But for decades PEMEX has complained about the govt not leaving enough of their income with them to adequate develop their reserves. Last I saw 40% of the entire Mexican budget was supplied by PEMEX. A few years ago the politicians started talking about amending the constitution to allow foreign counties in and there were riots. So now, as Cantrell goes down the toilet fast and PEMEX has even less capex to spend, the Mexican people can feel secure that no one will benefit from their resources…even them.
Years ago Shell Oil et al were developing DW GOM fields on our side of the international line. Last I heard Mexico was still waiting on the delivery of their first DW drillship to BEGIN exploring on their side. And IF they have the money to explore and they make a big discovery are they going to have the $billions to develop it? Again, no freaking idea but I do have doubts.
So there you go. Maybe our resident cornucopians aren’t seeing some potential sitting right before their eyes. But hold on! Maybe many 10’s of billions of bbls of oil hiding in plain sight. But it won’t be the same as Ghawar. It will take many, many times the capex to develop these smaller fields and decades longer. And many times the number of oil patch hands and equipment as we have today. And I can promise you that me and most of my contemporaries won’t be involved. Our rodeos are about over. And even if the money and bodies are found you won’t see the production rate ramp up very quickly. And these smaller fields won’t individually produce significant volumes for decades like their grandpas.
My finger is tired…I quit.
Rockman,
Thanks for a truly great post.
This is exactly what happened with shale gas as well. And there are many more areas where similar things may happen. eg. What if one company finds sub-salt oil in West Africa? Or it turns out that the Aldous Major discovery in the North Sea leads to many more similar discoveries (Highly likely as far as I understand)? Or what if the increased reserve figures in Iraq, Iran and Venezuela are right and they really get drilling? What if discoveries are made in new areas of the GOM or other offshore areas of the USA? What if there turns out to be oil in formations previously not thought to contain oil anywhere in the world?
There are many, many, good reasons for weaning ourselves off oil. But an imminent collapse in oil production just isn't one of them.
Remember another thing: A large number of very deep-water rigs have been delivered over the last few years and many more are on order. This will lead to greatly increased drilling in DW and for sure there will be a large number of new discoveries.
Can Brazil ramp up production as predicted? In a word: Yes. I believe they can. Might they even exceed the predicted production rates? Absolutely.
The oil industry is currently in "employee-the-people you can get hold of" and "drill-everything-you-can" mode. As long as it stays in that mode an increasing number of discoveries will be made and an increasing number of fields developed. World crude and condensate production will very probably increase significantly. However, how long can we stay in this mode? What happens when the next drop in oil prices comes along? Always hard to guess. But the oil majors have funding to keep going for many years regardless and do not usually allow themsleves to be too greatly affected by the business cycle. (The smaller companies do). Petrobras are currently raising all the debt they can - simply because they can now and have a management team with enough experience to know that you raise money when you can. Not when you desperately need it.
Aldous Major will now lead to a mad drilling spree in the North sea - on both sides of the UK/Norway divide.
Recent huge discoveries in Kurdistan will lead to a mad drilling spree there.
Libyan oil now looks as if it could be back on the market in a relatively short period of time.
Things change but it wouldn't suprise me if we see new records in c&c production by the end of the year.
Nordic.
Kurdistan:
http://www.ft.com/cms/s/0/e1f5729e-bf84-11e0-90d5-00144feabdc0.html#axzz...
and that's ignoring all the black gold in the South of Iraq....
mad drilling spree in the North sea - on both sides of the UK/Norway divide.
Not on the UK side. Only small pockets of oil that were not economic at lower prices remain.
Aldous Major South Preliminary volumes are estimated to be between 200 and 400 million barrels of recoverable oil equivalents (boe)
http://www.oilvoice.com/n/Det_Norske_Discovers_Oil_In_Aldous_Major_South...
The trend as one moves north is more gas & less oil. Norway did *NOT* "Drill, Baby, Drill" but held back on leasing it's Northern waters.
If Aldous Major is mainly gas, the economics of this discovery will be marginal, even at today's prices.
And 150 million barrels of oil produced (a very reasonable guess today) is 1/2 of 1% of one years oil production. Good for Norway - not so much the rest of the world.
Your optimism is more dreams and hopes than a realistic assessment.
Alan
The figure you are giving is not for the complete field - only a part of it. A second well proved up another similar amount, and there is the Avaldsnes structure as well: Total recoverable oil being reported by Statoil as between 500 million and 1.2 billion bbls with potential for a lot more oil in Aldous North to be drilled next month.
http://www.offshoreenergytoday.com/norway-aldousavaldsnes-discovery-one-...
What is interesting is that the oil was discovered in a formation which was initially not believed to hold any oil at all and was therefore not drilled. That is the reason that I believe this will lead to more drilling in other areas - there are a lot of North Sea geologists out there just now going back over old Seismic data and revisting it.
Aldous is mainly oil and has very high reservoir quality. (www.npd.no).
Taking the most optimistic #
1.2/30 billion barrels = 4% of one years global production. Two weeks worth.
0.5/30 is less than a week.
Not much Hope from new Discoveries,
Alan
FOR ALL To expand a bit: improvements in seismic data. This could be something of significant support for the cornucopians. The data I used to drill my program back in the 80's had zero value in drilling the deep NG prospects I go after today. First, it was 2d and not 3d seis. The contrast to one of the first personal computers and a modern PC pales in comparison to the change in seismic utility we have today. I use a very powerful (and very proprietary) software to improve the success rate. In fact, my owner won't drill any well unless qualified by this last step. Similar reprocessing of seis data is available to other companies by private contractors but can take up to a year to do. We knock it out in less than 5 weeks.
The point being: we are a very aggressive predatory shop: we have a simple plan: exploit every viable oil/NG resource in our theater of operation. And private mineral ownership and reasonable regulatory policies make it possible. And that's where I have to take the shine off some of the cornucopian dreams I may have fostered. Most of the remaining oil/NG resources around the globe belong to the national oil companies. Compared to my company's MO most of these NOC's are essentially brain dead. Between being run by govt bureaucrats, limited capex thanks to being most govts' cash cow and the attitude of some of their citizenship, I see a very little possibility of these smaller reservoirs being developed very quickly. And when they are I suspect it will be more of a response to ELM than a desire to aid the rest of the world.
So unfortunately this brings us back to same frustrating roadblock we smack into when looking at any number of responses to PO: there's what COULD be done vs. what WILL be done. The world should be very thankful that Brazil has a petroleum exploitation system that is allows development of their resources in a relatively timely manner. Had they been like Mexico their billions of bbls of new oil might only not be on a development track but they might not have even been discovered yet. Had all the nations along the west coast of Africa or the countries flanking the N Sea had similar policies to Mexico we would not have developed the huge reserves found in those areas as we have. The practical difference between having a huge untapped resource that isn't developed and that resource not existing is minor IMHO. I'm sure at some point these smaller fields will be pursued. But is suspect it will be still much farther down the road and at a very slow pace. And just like rust: depletion never sleeps.
The Americas, Not the Middle East, Will Be the World Capital of Energy
If "Foreign Policy" is saying it, it must be true! Sound the all clear.
EROEI will leave most of this stuff in place ... for the next 1 million years, accordingly AMY MYERS JAFFE should engage her other half of brainpower to simply power down.
EROEI has nothing to do with it - it is the high total $ cost of extraction that is the killer - of which energy input is only a minor part.
The high labour costs, safety and environmental compliance, and other regulatory issues all contribute to making these things much more expensive in the US and Canada, than, say, China, even if the EROEI is the same in both places. That is why China is actively processing oil shale while the US is not.
So the economy has nothing to do with energy? You mean with slaves the production of energy from negative EROEI is viable, even sensible.
You know what they say.......better off saying nothing than opening your mouth .....
I didn't say the economy has nothing to do with energy - I am saying that EROEI has nothing (or at best very little) to do with decisions about energy resource extraction.
Producing electricity from coal has an EROEI of 0.3, yet it is the most common, and cheapest, way to produce electricity around the world.
producing it from uranium is probably 0.25, yet this is commonly done too.
Producing oil from oil shale is simply a matter of if you can produce it, consistently, for something less than you can sell it for, then you have a profitable business - regardless of the EROEI.
Berry Petroleum in Bakersfield, CA is now using a solar system to produce steam for enhanced heavy oil recovery. It is quite possible that it will have negative EROEI, but if the solar system is paid off, and you are getting the steam for free, would you shut the operation down just because you are using more GJ of (free) steam than you are producing of valuable oil?
The economy is indeed based on energy, and different forms have different values, and much of the modern energy industry is based around using low value forms to produce higher value ones. As long as the $ returned on $ invested is greater than 1, someone will probably do it - that is the economics of energy.
Well said Paul.
I've made this point before and I'll say it again, EROEI is a useful metric but it is NOT the holy grail, because it does not address energy quality, equivalence or availability.
I can think of many more sub-unity EROEI processes and I think the number will increase, not decrease, as time goes on.
As far as China goes, in many cases it will be "EROEI be damned", and in practical terms all it means is that it sucks to be a peasant.
I don't disagree with your main point, but your breakdown of EROEI is using the concept incorrectly, I believe.
"Coal has an EROEI of .3" .. are you conflating the conversion efficiency of the fuel itself into the calculation of how much energy was simply invested in retrieving and creating the systems FOR converting it into Power. If coal really cost us 3 kw (equiv) for every kw it delivered, we wouldn't be using it, would we?
Just like the Input energies of the sunlight itself are not weighted into Solar's EROEI.. only the energy WE have to expend in order to get it's energy onto our lines.
Hi Bob,
You're misquoting me here - I said electricity from coal has an EROEI of 0.3. Mining coal itself is probably 20:1 or something like that, but then what do you do with a pile of coal?
So, I prefer to look at the system where the energy "returned" is in the form in which it will actually be used - coal is an intermediary stage - electricity is the goal. And we truly do use 3kWh of coal per kWh of electricity.
And then, (almost) every business and household that uses the electricity has an EROEI of less than one.
The point is - many businesses, including energy businesses, operate with fractional EROEI, but as long as they are making money (and following the rules/laws) they can be successful businesses.
I will qualify this by saying you can't use more of your product than you produce, obviously, so you use different/cheaper energy for your inputs, as much as possible. You could say the Product Returned On Product Invested has to be greater than one, probably greater than 3:1, for an operation to be worthwhile. For an energy business, the product is all energy, in some form, but not all energy is product - as the solar example shows.
NOTHING!!? ... wow-wow ... Great !
- so what you are saying is that if we only put a money-printing machine next to every unconventional fossil source we can get hold of every single drop, whiff or chunk of it ??
And if you didn't know- your list of non-EROEI stuffs (as you seem to believe)
The high labour costs, safety and environmental compliance, and other regulatory issues all contribute to making these things much more expensive in the US
are part of eMergy --- and eMergy is just actually part of and adding to the deteriorating EROEI-equation on a philosophically higher level, but I don't expect you to grasp this claim of mine at all.
Learn about eMergy here : http://en.wikipedia.org/wiki/Emergy
Good luck!
Paal, we can get into exergy and emergy if you want - both of which illustrate that just using straightenergyreturn on energy invested, is an incomplete measure.
Can you show me an annual report for an oil company that ranks their prospects by EROEI, or even mentions EROEI?
If a prospect has high EROEI, but is unprofitable for other reasons (e.g. very high tax rates from the local government) should the company proceed?
Do they pay their suppliers, employees and shareholders in EROEI?
SASOL in S. Africa has been turning coal into oil - a very low EROEI process - for decades. But highly profitable.
As long as these things are a business, the primary determinant will be that the operations are profitable, and produce a return on $investment. It may have low EROEI but so what?
We only need to look at the old oil wells in the US to see this. When the oil price is high, and stays high, many of these old wells are put back into production. The physical EROEI has not changed one bit - and some may even have EROEI <1 (where you need heat to release the heavy oil), but the profitability has certainly changed, and that is the basis for the decision to produce or not.
paal - I know it frustrates you logical view of the world but I'm probably just one of a handful of the 100's of thousands of oil patch hands that couldn't even tell you what EROEI stands for let alone it's implication. There obviosly is a relationship between oil field economics and EROEI. We just don't address it in the oil patch...never have...and never will IMHO.
Now stop grinding your teeth. LOL.
Agreed- no oil patch will ever be shut down in the name of EROEI- nor due to reaching actual EROEI =1.
We have a few abandoned and decommissioned offshore-platforms here in Norway - those were not abandoned due to EROEI .... but economics ... but the actual culprit behind the scene was EROEI/ eMergy's relentless churning - IMHO.
I wouldn't bother to answer Paul N if it wasn't for his silly EROEI has nothing to do with it-comment to my initial reply uptop. It just tells me he never understood the shades of EROEI- he thinks everything can be solved by pelting monies at a challenge. I disagree.
EROEI is discussed thoroughly here on TOD and to me that metric is real and understood (I hope)
One more thing Paul N seemingly doesn't understand is the difference between primary energy and secondary energy ( electricity, jet fuel, gasoline) .. to get the latter (for fun and action) we need the PRIMARY stuffs first and that source you'll never get with his misunderstood examples of EROEI's in the 0.3 range . Just telling.
Paal,
You started out by saying that these unconventional oil sources would remain in the ground for millions of years because of EROEI. I disagree, saying it is not a decision factor, and now you are saying that "no oil patch will ever be shut deon becsue of EROEI" - isn't that basically saying the same thing - it is not a decision factor?
I do agree there are "shades" of EROEI - I prefer to use exergy myself, but these shades just show that EROEI in and of itself, is not that useful, and is very subjective depending on where you put the boundaries. For most companies of course, those boundaries are simply their inputs and outputs.
Neither have I ever said that everything can be solved by throwing money at it - look at hydrogen fuel cells, cure for cancer research, fusion, etc lots of failures despite massive amounts of money invested.
What I am saying, and I chose my words carefully, is that the decision to extract a resource, or do any energy operation (e.g. electricity generation) is only made when it is profitable to do so (or, sometimes, in the "national interest" even if it is not profitable)
That is not saying throwing money will solve the problem, only saying that those problems will only be solved when there is money to be made. And it is rarely, if ever, that EROEI is a decision variable.
As for primary and secondary energy, of course I know the difference - but it doesn't actually change the argument here. If you can use 2GJ of NG or 4GJ of coal, to extract 1GJ of oil - all primary energy sources - you still have negative EROEI, but with coal at $1GJ and oil at $15, that can be a good business.
You can't cheat thermodynamics, but by using the cheap energy to produce valuable energy, negative EROEI can still mean positive cash flow - and that's how any company makes its decisions.
You are rearranging facts, Paul N!
Go up again and read my initial reply on AMY MYERS JAFFE's article posted by Merrill... !!!!!!!!!!!!!!!!!! what do I say ?????????????
I say : EROEI will leave most of this stuff in place ... for the next 1 million years, and I'm correct right there, mind you.
... b/c MOST of those - MORE THAN 50% to be precise - VERY HARD AND IMPOSSIBLY EXPENSIVE UNCONVENTIONAL HYDROCARBONS WILL STAY RIGHT THERE WHERE THEY ARE TODAY INTO ETERNITY.
Why can I claim that - you wonder ? - well SINCE more than 50% of the oil in most sweet easy flowing crude oil reservoirs - are stuck down there forever - you better take me at face value >> that also goes for all unconventional stuff, and right here you have my gist at my reply to Merrill.
You call it economics, fine - I stick with EROEI. It's the same combo_bugger in the end.
Well, if you are saying >50% will stay down there because even 50% of light sweet oil stays down there, I would say that is geology, not EROEI that is governing there.
I agree that most (>50%) of the stuff will remain there, but that's not really important. What is important is that if up to 50% (or even 20%) were to be extracted that is a LOT of oil, and would be enough to make her prediction of America being the epicentre of production, true.
Now, I don;t think that even 20% will get extracted, because most of it is, as you say, "impossibly expensive" - regardless of the EROEI.
But in the places where it is not impossibly expensive, like the Cdn oilsands, it is being extracted. With current oil/ng prices spreads, it would still be profitable at EROEI =0.5
Again Mr Paul "Argue" Nash ...Please!
You don't understand EROEI- so why waste your time on it?
Since "tight geology" is equal to bad and after some time no-go EROEI you clearly don't understand this.
Just learn to live with it - but quit interfering with people discussing it. Fine.
And one more thing - We can live without 'your' monies... but not without energy.
The Stoneage_man and the Future_man would/will understand my argument - but just look at yours with a glazed over stare.
The Stone Age man (and every age since) has had some sort of money system. It is only the industrial economy that has depended on "energy".
So I would say we can live (very uncomfortably) without energy, but even then, we will have some sort of money. As long as we value certain things more than other things, we'll have some sort of monetary system for trading them.
for some reason you even seem not to understand what energy is. I rest my case.
Yup, FP can always be counted on to blow its horn loudly for whoever came along two years ago with what sounded at the time like a "bold new plan" and then proclaim them one of our brightest thinkers of our time, as the ultimate arbiters of such distinctions, without considering or even recognizing all the problems that "so-called experts" have been pointing out with the subject's grand unifying theory that they seem to believe is the hot new thing on the block? I will say it's the perfect publication for Washingtonians, those wonderful people who find it more important to sound "wonky" and knowledgeable at a bar or a Hill mixer than to acquire any actual *ahem* depth of knowledge on important issues...
Anyway, who wants to go ahead and let Ms. Jaffe know you're not supposed to drink the red Koolaid?
Obama administration to invest $510M in biofuels industry to power ships, jets
"domestic biofuels industry, a key sector in farm states that will play a major role in the 2012 elections"
This is, of course, what it has most to do with.
Oh, the inanity.
This is a slap at Rick Perry and most of the Republican Candidates who have been against ethanol subsidies while continuing to support oil subsidies. Obama successfully played the ethanol card in 2008 and appears ready to do it again.
I do not like bio fuels going to the military. There is not enough of it to support the military. If oil becomes so scarce that the military can not get it's hands it, it's game over.
If the military's function is now to fight perpetual wars for oil security, which is what it has been mostly doing for the last 20 years, using biofuels to fight these wars is in effect biofuels subsidizing oil.
Biofuels have frequently be knocked for using oil to produce them (in farm machinery and trucks). Now the tables are turned.
Now it is not enough that oil receives the wars for oil security subsidy, it also is going to drain the domestic biofuel supply.
This is madness beyond anything yet seen in the post peak oil world.
The only thing good about it is that it is conclusive proof that the President and the military are taking Peak Oil very seriously.
"using biofuels to fight these wars is in effect biofuels subsidizing oil...This is madness..."
For once, we can agree.
I swear I have heard madness somewhere else on this issue...
Oct - Sadly true. But consider the big picture. Is it any worse to turn corn into fuel then turn it into fat hogs we can eat too much off and destroy our health? Or burn up fuel driving to the beach then have some thrid world farmer could use it to irrigate a field that could feed his whole village? Countless other examples, eh?
In fact whether we want to shoot arrows at one segment or another it still boils down to one big net subsidy: how the industrialized nations, with the US at the top, uses energy to subsidize our life style. One can argue one area isn't as bad as another. But is it really worse to subsidize biofuels than Sunday afternoon NFL games? The net result is the same: we get what we want...the rest have to make do. In that aspect it's seems to be a zero sum game. We can debate the morality of any one individual subsidy but to the poor of the world does it make any difference if that corn is used to make part of my next tank of gas or my next batch of baby back ribs?
I suspect some folks (not you and many others on TOD) jump on the anti-X band wagon because it allows them to not focus on those energy sources they utilize to maintain their little bit of BAU
No doubt, Rockman. Our waistlines tell the tail of the fossil age. We could shave energy and corn use in so many ways alas.
I just was thinking about the word madness and I just read that exact phrase with regard to corn ethanol.
I guess the food corps will be at odds with the fuel policy cause it does cut into food consumption -- especially all those processed goodies from Nestle and Bluebell. ;-P
Waistlines should be spelled "wastelines" here in North America (including my own, as my wife is fond of reminding me)
"Is it any worse to turn corn into fuel then turn it into fat hogs we can eat too much off and destroy our health? "
Good point.
I highly recommend the film 'King Corn.'
http://www.kingcorn.net/
It's about two guys who go to Iowa (where both of their grandparents lived) to raise an acre of corn so they can understand something about the 'big picture' as you call it. In the process, they come to realize that just about everything that their acre's worth of commercial corn was likely to be used for--whether for high fructose corn syrup, or unnaturally fattened cows--it was likely to lead to more misery in the world. They did sell their corn, but then used the proceeds to buy the acre to be sure it was never put into corn growing again.
Deep message conveyed with a light touch.
A couple of views from the military.
Defense Energy: Small, Incremental Steps Do Better Than Sweeping Reforms
To a hammer, all problems look like nails.
If we produce more food, then we will get more people. If we use some of the food to make transportation fuel, then maybe we will get fewer people.
Ethanol for population reduction?
How about returning some of the corn land to native plants, which also sequester large amounts of CO2??
And note that, while at some absolute level food=population, the immediate reality is that many countries with the highest birth rates have the lowest amounts of food while most of the countries with the lowest birth rates are very well provided with food.
As with everything, reality is more complicated than the most simplistic assumptions.
Gail (ourfiniteworld) has a speech by Admiral Rickover given in 1957 that covers PO completely and exactly in 1957!!! Amazing.
Ed,
I agree: like Hubbert and Harrison Brown, Rickover saw it coming over half a century ago.
Roscoe Bartlett never misses an opportunity to quote from it... that's how I encountered it.
Most people are so fast to bad mouth the military that they fail to consider that it must be cut the same serious slack, in practical terms, as any other large, buearcratic, precedent bound organization, when it comes to changing policies and direction.
There are, it seems to me, as many serious forward thinkers in uniform as anywhere else, exceptig possibly the research community.Expecting them to be the persons in charge of policy and operations is a bit too much!
You don't get to the top of any organization by upsetting your superior's applecarts.when you do finally obrtain a position of power and influence, you musty move gradually and b e careful not to antagonize too many old line thinkers-who are probably numerous enough and powerful enough to upset YOUR APPLECART
Look at what S Chu undoubtedly knows versus what he says in public for instance-and then ponder the fact that he is not only a couple of notches down from the very top of the power pyramid, but also free of any professional oaths or obligations -other than political pragmatism-to keep his mouth shut.Furthermore, I am willing to bet my shirt on the proposition that he doesn't need his paycheck.
Military thinkers are often and jusiafiably accused of being hidebound, but they are as far as I can see about as fast to recognize and adapt to the obvious as anybody-and to take scientific data seriously.For instance, when the Confederates were in a tight pinch nmilitarily, they cam up with an iron clad warship-and the Union was able to respond with a SUPERIOR ironclad within a matter of months.
It cuts both ways of course.The military genius R E Lee could not see that having his irreplacable men charge a fortified enemy line in a war of attrition when the enemy was armed with a new type of weapon- the breech loading long range,straight shooting rifle- kinda proves that even the best of them are blind to reality sometimes.It wasn't as if he had no opportunity to learn better-or a lack of good counter advice from Longstreet, II rc.
Or maybe he did realize-and knew it was an all or nothing gamble.I've read it both ways.I'm only an arnchair historian, not an authority .
Otoh, I see an obvious lack of perception of reality almost anywhere I look.
IIrc, the British Armiralty canceled work on all the wooden warships under construction when they got the news.
One of the things many people forget is that defence people are BETTER at long term thinking than politicians - in part because equipment procurement takes so damn long.
The platform you are setting the requirements for today won't be ready for 10-15 year, and will be expected to be used for a further 50. In addition, it will be expected to be useful in the world that then exists, with the foes that are then in the ascendant.
It's no wonder its often got wrong, and that quite a lot of attention is given to 20 year timeframes.
A political time horizon is 3-4 years, a military one 15-25.
Good point, Gary
Again, that is a reason to include military analysts in government examinations of energy security (as per Officer Marsh in the RAF who has had the courage to ask for same). Usually these gov't review panels are composed of bureaucrats and industry reps, each with their own vested interests and short-term horizons. We need other perspectives.
Military analysts (at least the ones that I've encountered) tend to be well-informed, unafraid to speak their mind, and very practical.
Just what we'd want around the discussion table.
Military analysts (at least the ones that I've encountered) tend to be well-informed, unafraid to speak their mind, and very practical.
Just what we'd want around the discussion table.
And that is probably exactly why the pols and bureaucrats don't want them at the table - if they speak their mind, instead of the gov line, then are the classic "loose cannon" - what politician wants that on his rubber stamp committee?
Gary and Rick,
I appreciate what you are trying to believe, but the holy grail in military equipment acquisition is to greatly/shorten/ the timelines for assessing capability gaps, translating those into material solution concepts, conducting analyses of alternatives, technology maturation, engineering and manufacturing development, developmental and operational testing, and system/equipment fielding culminating in Initial Operational Capability and then Full Operational Capability (FOC).
Often by the time we get ICO and FOC on stuff the threat, counties, and even types of warfare have greatly changed. Then we spend a great deal of more money and time going through the same process to add/amend capabilities on fielded platforms. But, wait, let's mention the fact that on many weapons systems the initial fielded units are found to have significant design and/or manufacturing deficiencies which must then be either accepted and lived with or corrected at great expense.
Cost growth is enormous. My rule of thumb in military acquisition (U.S.) is to take the initial cost estimate and double it, then add 50% more, and hope that it isn't more than that.
The joke for years (decades) has been that some day the air force will be able to afford one copy of its next-generation airplane (fighter, bomber, pick your favorite and insert here)...the entire budget will be one shiny silver bullet! Tongue in cheek, but...
Plus...we still haven't gotten the idea of design /requirements freezes and 'good enough'.
It is irresistible to keep gold plating 'requirements' when one is playing with monopoly money and the attitude is 'any cost is worth the advantage in combat'. The idea of 'Threshold' (Must have) and 'Objective' nice-to-have items in requirements docs is lost on many people...even when we added 'Key Performance Parameters' (KPPs) to ID the really really must have performance criteria.
As for PO....I continually, for the past 23+ years, have run into profound lack of awareness of the idea. Just yesterday I had a 20-minute conversation with a fed co-worker who pronounced that now that he has read about the extensive deposits in the Baaken formation in ND, he has totally changed his thinking about the oil situation...he said that at current prices, the World is awash in oil, and will stay that way for the foreseeable future. Many head nods and 'you got that right' comments from cubicle land.
Go ask the aircrew whose planes flame off 20,000 pounds of JP8 (kerosene) per hour, who live and breath the yearly training flying hours contract, and must, must flame off all 2000-3000 yearly flying hours by 30 September (even if all the training requirements can be met with 80% of the allocated flying hours) or commit the unpardonable government agency sin: not spending all your budget...
Thes are, by and large, the same folks who openly mock folks who drive Prii (or any small cars) and who favor giant, manly pick ups/SUVs, or, alternatively, sports cars. I fly with a number of folks who had their mid-life crises and had Corvettes and Harleys etc. in the quest to make themselves happy.
I think some folks have the idea that because a rather small number of military analysts seem to 'get' PO, that this awareness extends to the majority of military folks.
Incorrect.
Sorry to bear the news of reality as I see it from the inside.
H- thanks for your regular dose of depressing reality from inside the corridors of the MIC!
You do realise that you are one of these loose cannons, and threat to the perceived invincibility of your workmates lifestyles.
Best hopes for the few military analysts that get PO.
Paul,
I truly wish I could report to all all happier observations.
I also realize that speaking my mind, even on a forum with a pseudonym, is a non-trivial potential risk.
I do hold out hope that, over time, true PO awareness will spread in the military.
Remember the only ones who count are the General/Flag officers.
One-stars are low-rent...two buttons slightly better...three buttons a tad better, ...4-stars are starting to be counters. 4-buttons who command the services (Chief of Staff of the Navy, Army, AF) and USSTRATCOM are players.
If the Chairman of the Joint Chiefs of Staff is on board, that is big.
Get the SECDEF on-board, then the next necessary 'Hill' to climb is the Hill...and also get the President to believe enough to act.
H,
No quarrel with any of your observations, of course. You are inside and I'm not, and you know what you observe.
I can only offer what I've observed, which is a half-dozen oversized binders full of military analyses of PO and other aspects of energy security relating to oil, almost all of which has been published since mid-2005 (following the release of the Hirsch Report).
Perhaps half of these documents are theses and don't carry much weight, though they do indicate recent & growing interest.
But many of the others are future-oriented studies undertaken by teams of military analysts (like the JOE in USA, FSE here in Canada, DCDC's Strategic Trends in the UK, work by Bundeswehr's Future Analysis team, etc).
My sense is that these teams have some independence in calling it as they see it: at last year's ASPO RADM Rice mentioned the "push-back" that they got re PO in the JOE, but they held their ground.
Same in Germany one would think, where Bundeswehr top brass upheld the concerns of their draft PO report and released it (not watered down) to the public.
Militaries are as diverse as any other sector, and I see no evidence of widespread understanding of PO within it (especially since I'm not in it). But I do see evidence within subgroups that matter: at the War Colleges, among the Future Analysis teams in several countries, within the Energy/Fuels branches, and from several mid-range officers (Major to Colonel) in several countries who speak as individuals.
So it's a start, and given the lack of awareness or lack of concern in most civilian sectors (among politicians, bureaucrats, emergency planners, media), it's an important start. Energy security is an essential aspect of economic security & national security and is therefore within the purview of Defence, so they may have some authority to provide a bit of push-back of their own, one would hope.
I also believe that the inclusion of military analysts at ASPO conferences can be an important win-win. They can lend credibility to our concerns, and they return to their teams with current sourced data and new contacts. Last year's National Security panel was an excellent first step.
RickM,
I respect your efforts, and please sodier on!
The journey of a thousand miles begins with smal steps, or words to that effect.
Without hope backed by effort to educate, adapt, and change our trajectory, at least somewhat, ...we have nothing.
I bet S. Chu's home institution (Berkeley?) is getting lots of money. He brings the bacon home, he is a politician.
Coast Guard Soon Will Require More Resources in Arctic, Commandant Says
related Greenland posts Cairn oil spill plan to combat fears
SPR oil release fails to stop steep fall in US gasoline oil inventories – per API
According to a report from the Strategic Petroleum Reserve released last week, the SPR was to distribute about 5 million barrels of ‘Louisiana Light Sweet’ oil in the week covered by this API report. Despite that, per the API, crude oil inventories managed to only increase by about 1.7 million barrels. Even worse, although the SPR has been releasing high quality oil for about three weeks, gasoline inventories took a steep 5.4 million barrel fall. While it is possible that much of the SPR has not yet reached its intended final destination – which may be some Northeast US refinery far from the Louisiana/Texas area where most of the SPR oil is stored - the drop is unusually steep under any normal circumstance. This indicates that the recent drop in gasoline prices may have actually increased gasoline demand. MasterCard reports a slight incremental improvement in gasoline demand as compared to the prior week.
Also the nation’s largest pipeline, the Colonial Pipeline (which transports refined products from the near the GOM to the U.S. Northeast), continued to run its gasoline transport lines at nearly maximum capacity for another week. A refinery outage also has severely affected gasoline supplies in the Memphis, TN area.
As usual, tomorrow’s weekly EIA will give us a more accurate representation of where the oil and oil product supply/demand trends are heading.
http://www.marketwatch.com/story/api-supply-data-show-crude-rise-gasolin...
http://af.reuters.com/article/commoditiesNews/idAFN1E77F1GY20110816
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=20110816...
I see a lot of posts here on declining inventories. What does this mean? Are we headed for gasoline shortages, lines, rationing? Is this created by the market or by the politicians?
No, declining inventories just mean (likely) higher prices to cut demand and keep inventories high. Politicians have nothing to do with it. They haven't a clue as to what's going on. They would have absolutely no idea how to create an inventory shortage if that was the most important thing in the world to them.
Inventories was and wane. It happens.
Ron P.
Electronic Recycling news...
I noticed today's Target announcement of Nextworth electronics trade-in program? I think they had this before and today's announcement adds calculators and DVD discs.
The NextWorth website gives online quotes and lists additional items such as iPad, iPod, game consoles, laptops and calculators. I was curious so I tried a couple of items I have. My Sony PRS-505 eReader gives $23.62 but my Treo 650 cellphone gives $0.
I thought it was a nifty idea for recycling and am kind of embarrassed since I shop there quite often and didn't know about it until today.
WHAT'S HAPPENING IN EUROPE??
Spot-on satire.....soooo funny!
http://www.youtube.com/watch?v=5D0VhS8qXT0
And now for something completely different:
http://www.mcclatchydc.com/2011/08/16/120906/why-do-mexicans-love-a-fung...
Has anyone reading this tasted this stuff?
Yes.
Sounds disgusting but it's actually very tasty (and expensive). Trying to dress it up too much just makes the masks / hides the flavor.
Rgds
WeekendPeak
Intriguing...the article says that canned stuff is a pale shadow of the fresh stuff.
Gosh, I remember reading about this idea 25-30 years ago...
I thought it was impractical then, and I haven't altered my opinion:
http://www.livescience.com/15593-iceberg-drinking-water-tugboat-simulati...
Towing icebergs from the poles to slake thirst populations...surrounding the bergs with a textile bumper/wrap/skirt...
Make the fleet of 100s of ocean-going tugs nuclear-powered to be FF-free, and voila, another feel-good story right out of Popular Mechanics/Science!
Would have been better 30 years ago for the World to adopt a strict two-child policy...wouldn't have as many thirsty folks now and in the future...
http://www.politico.com/news/stories/0811/61531.html
'Obama bus tour brings out fighting mood'
This is what I don't get about this guy. He's tough on the campaign trail, but listless in the ring of actual politics on capitol hill. He fights to become prez, then becomes sickly sweet to the repubs once in office. Now he's running again, he's getting tough on the repubs. Why can't the Obama that's on the campaign trail be the same one in DC?
I wonder how many people are like myself. Voted for him in 08, but will not vote for him no matter what in 2012.
That's easy - when you're campaigning you don't actually have to worry about doing any of the things you say you're going to do. So it's easy to sound tough. When you're elected then you actually have to do work...well maybe not, but it would require effort to follow through on promises, and politicians don't seem to be interested in doing that.
Sort of like being anonymous on an internet forum. It's easy to talk tough when nobody holds you accountable.
Same old crap. Has the equivalent effect on my stomach as a tall, steaming glass of hog fat.
I really wonder what it's going to take to end the stupidity.
I hope the bi-faced weasel runs out of gas somewhere really obscure. IMHO.
I wonder how many people are like myself. Voted for him in 08, but will not vote for him no matter what in 2012.
Perk, assuming you don't fin the R candidates to your liking either, does this mean you will likely not vote at all?
Will this polarised election see the die hard supporters voting strongly, and the people on the middle abstaining, because they don't like/trust either?
It seemed that O appealed to a lot of centrists, even moderate R's, who didn't like McCain and could see Palin for what she was. But that O has now dissappointed those very same people that gave him the win - they, like you, are unlikely to give him a second chance
I "feel" as you do, but ...
... are we really going to have "choice" if the election winds down to:
1) the O or the Bachman?
2) the O or the Palin?
3) the O or the guy with the magic underwear?
4) the O or the guy who treats 'em pretty ugly back on the home turf?
That's an easy one to answer.
It's that chameleon changey (and hopey) thing.
As a political chameleon, you instinctively change to match with your environment and you hope they don't notice.
[ i.mage.+]
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[i]= image, [+]= more info
more images here and here
My 19-year-old daughter showed this video this evening about First-World problems...
http://www.youtube.com/watch?v=D2p5svFJ9cQ
+5
Yup, we've definitely got big problems.
That final scene with our love stuff going down the toilet is epic.