Drumbeat: October 7, 2011

Nestle chief warns of new food riots

The head of the world's biggest food company Nestle said on Friday that rising food prices have created conditions "similar" to 2008 when hunger riots took place in many countries.

"The situation is similar (to 2008). This has become the new reality," the Swiss giant's chairman Peter Brabeck-Letmathe told the Salzburger Nachrichten daily in his native Austria in an interview.

Pakistan’s energy shortage

ALTHOUGH Pakistan makes international news for terrorist attacks, anti-American demonstrations and its alleged support for insurgents in Afghanistan, it is the basic inability to switch on a light that is pushing this volatile country closer to the edge. Popular anger over Pakistan’s crippling electricity shortage boiled over on to the streets this week, with riots that paralysed whole cities, unleashing running battles with the police and causing widespread damage to government offices (see picture above).

Chile Energy Min: Water Level In Some Reservoirs Worrisome

SANTIAGO -(Dow Jones)- Low water levels at some of Chile's reservoirs, which fuel hydroelectric generation, are worrisome, Energy Minister Rodrigo Alvarez said Friday.

US natgas rig count at 9-1/2-mth high-Baker Hughes

NEW YORK (Reuters) - The number of rigs drilling for natural gas in the United States climbed by 12 this week to a 9-1/2-month high of 935, data from oil services firm Baker Hughes showed on Friday.

The gas-directed rig count is at its highest since Dec. 17, when the total stood at 941. The count is down 6 percent from its 2010 peak of 992, its highest since February 2009, when 1,018 rigs were drilling for gas.

Russia refiners could shut with fuel duty hike-LUKOIL

(Reuters) - More than 600,000 barrels per day of Russian refining capacity will not survive the next stage of oil product export duty reform, due in 2015, if they do not modernise, Russia's No.2 oil producer said late on Thursday.

Zalmay Khalilzad's not-so-excellent Afghan oil adventure

The private investment firm of Zalmay Khalilzad, the former U.S. ambassador to Afghanistan and one of the most powerful diplomats in the George W. Bush Administration, is upset that a client has lost an oil deal in the country. Khalilzad's son, Alexander Benard, is on the attack in Washington, in particular against the Pentagon, which he says acted against U.S. interests by not advising the Afghan government to favor Western companies in the deal.

ConocoPhillips to Split in Two, Names CEOs

ConocoPhillips announced that its board of directors has chosen the leaders for the two independent energy companies that will result from the previously announced strategic repositioning of ConocoPhillips. Ryan M. Lance will become the chairman and chief executive officer of ConocoPhillips, the upstream company, and Greg C. Garland will become the chairman and chief executive officer of the downstream company. Jim Mulva, the current chairman and chief executive officer of ConocoPhillips will retire subsequent to completion of the separation. The repositioning is expected to be completed in the second quarter of 2012.

Exxon CEO: To Invest over $37B on Capital Projects this Year - CNBC

ExxonMobil Chief Executive Rex Tillerson said Thursday the company expects to spend a record $37 billion on capital projects this year, almost 9% more than it has previously said it was planning to invest.

Poland Leads Wave of European Shale Gas Development

Major oil companies such as ExxonMobil and Talisman Energy are seeking to unlock Poland's shale gas, which some say could significantly change the future European gas market.

USDOT Tries to Resuscitate the HSR Dreams Congress Wants to Bury

High-speed rail has had a rough go of it lately. The House refused to give it a dime for next year, while the Senate only managed to allocate a fraction of what the president wanted. President Obama stuck some money back in via his jobs package, but it already seems clear that the package won’t pass as proposed, and we know high-speed rail is the always first for the chopping block.

Meanwhile, if you look at USDOT, the well of rail funding just seems to keep on giving.

Amtrak: more popular - and more at risk - than ever

U.S. train travel is enjoying a remarkable surge in popularity — everywhere, it seems, except in the halls of Congress. Even as Amtrak posts its best numbers ever, the federal funding that keeps it alive is on the verge of being slashed.

This year's best green homes? Stylish efficiency wins

This year's best green home, a compact and affordable three-bedroom, is designed to use up to 90% less energy and produce all the power it needs via rooftop solar panels, the U.S. Green Building Council (USGBC) announced Thursday at its annual Greenbuild conference held this year in Toronto.

John Michael Greer: The peak oil initiation

I may be wrong, but I’ve long thought that one question above all would haunt my imagined historian of our future: why did we do it? Given that our entire civilization had plenty of warning, and that ten minutes of unprejudiced thought ought to have been enough to demonstrate to anybody the absurdity of expecting to get away with infinite economic growth on a finite planet, why didn’t we do what must, to the eyes of the future, look like the obviously right decision, and downshift to a less energy- and resource-intensive steady state economy while we had the chance? Why, instead, did we keep on lurching blindly forward on a one-way street headed straight to history’s compost bin, all the while angrily shouting down the few that tried to warn us of where we were going?

Sustainable means bunkty to me

A child who wants a pony might first be asked to demonstrate that he or she can feed and take care of a gerbil, then graduate to a kitten, a puppy, a goat, and finally a pony. Currently, we’re not taking care of our gerbil, so we have not demonstrated that we deserve a pony. Perhaps we also don’t deserve to be brandishing the term “sustainable” for chicken-scratch contributions.

Sure, hanging the towel back up on a multi-day hotel visit is definitely a step in the right direction, and I’m all for it. But if we don’t focus on the big picture, these little acts are mere distractions.

Why is it so tricky to define ‘peak oil’?

The debate over peak oil can get pretty slippery at times. Geologists will point out the (obvious, banal) truth that there’s a finite amount of oil out there beneath the rocks and, at some point, we have to reach maximum production. Economists and other peak-oil skeptics, for their part, will say that markets can always adjust. If current supplies dwindle and oil gets pricier, then companies will find it profitable to drill for harder-to-extract oil in the Arctic and Canada’s tar sands and elsewhere. No big deal. Yet often it seems like the two sides are talking past each other.

Perhaps a clearer way of looking at matters, though, comes from petroleum economist Chris Skrebrowski, who argues that peak oil is best defined as the point at which “the cost of incremental supply exceeds the price economies can pay without destroying growth.” In other words, eventually the world will max out on production of the cheap, easy oil — the stuff that comes from Saudi Arabia and other OPEC countries. At that point, as long as demand for crude keeps growing, prices will rise and we’ll have to resort to more expensive oil from the Arctic and tar sands and so forth. And those higher oil prices will cripple the global economy. On this view, then, “peak oil” just means the point at which the price of crude acts as a hard ceiling on growth.

Crude Oil Trims First Weekly Gain in Three Weeks Before U.S. Jobs Report

Oil fell, trimming its first weekly gain in three in New York on forecasts that a projected gain in U.S. jobs last month was probably too small to bring down the unemployment rate in the world’s largest crude user.

Parched Texans Impose Water-Use Limits for Fracking Gas Wells

(Bloomberg) -- An intensifying drought in Texas is prompting limits on water consumption that for the first time target oil and natural gas producers.

Local water districts, which have authority to allocate water from subterranean aquifers, are adding a water-intensive production method called hydraulic fracturing, or fracking, to some of the pumping restrictions they’re imposing on farmers and small towns.

Oil-Tanker Demand Poised to Match Supply by Winter 2012, Owner Teekay Says

Demand for oil tankers will match supply by the Northern Hemisphere’s next winter, lifting charter rates for the vessels, according to Teekay Corp. (TK), the largest U.S.-listed owner of the ships.

“The tanker market is bottoming,” Chief Executive Officer Peter Evensen said in an interview at a conference in London today, adding that the smaller-sized oil tankers which dominate Teekay’s fleet will recover before larger carriers. “We see a recovery in the winter of 2012 going into 2013, when demand catches up with supply.”

Power Companies Borrow Record in Loans as Cost of Fuel Jumps: Japan Credit

Japan’s top five electric utilities, shut out of the bond market following the Fukushima nuclear disaster, are borrowing a record 4 trillion yen ($52 billion) in loans at a premium to pay for the surging cost of fuel.

Moody's says may view any Tepco loan waiver as default

(Reuters) - Moody's Investors Service said on Friday it would likely view any agreement forced on lenders to waive part of Tokyo Electric Power's (Tepco) debt a default that would prompt it to cut the utility's credit rating by several notches.

Japan hopes to keep UAE oil relationship

Japan's trade minister is to meet with Abu Dhabi's top officials as the expiration date for its concession in the emirate's massive offshore fields looms.

Russia to lend Venezuela $4 bln to pay for arms deals

Russia and Venezuela have signed an agreement on a $4 billion loan for the oil-rich Latin American partner to buy Russian weaponry, Venezuelan leader Hugo Chavez said on Thursday.

Insight - Libyan oil export flow a trickle, not a gush

LONDON/TRIPOLI (Reuters) - Libya's prized light, sweet oil is trickling slowly onto the global spot market but demand from domestic refiners, production glitches and an internal struggle for control of the sector means it is unlikely to gush until deep into 2012.

Libyan Council Forces From Misrata Battle Qaddafi Loyalists Inside Sirte

Libyan forces mounted an offensive on supporters of Muammar Qaddafi in Sirte in a bid to control the former leader’s hometown and complete a drive to form a new government.

Mubadala spends $23m for oil and gas exploration site in Tanzania

Mubadala, the Abu Dhabi government's strategic investment company, has bought into an oil exploration block in Tanzania, a nation that has yet to find any crude.

Gazprom unit seeks own generation in Europe, Asia

(Reuters) - Russia's Gazprom , in talks with Germany's RWE on a joint venture in European power generation, is also looking at Asian markets and independent moves in Europe through its power unit, the head of the unit said.

Alpha Hunter Chris Brodie Talks About 20 Years’ Worth of Commodities

There is a structural deficit in oil, even Including the Libyan supply issue: by the time it is resolved, demand will have increased again. Big finds in Norway and Brazil are never enough due to the compounded nature of oil demand. This is best explained by a you-tube video called “Arithmetic Population and Energy” or “the most important video you will ever see” , where a Boulder Colorado Physics Professor talks about the nature of compounding. When you compound demand, you need more and more production to maintain adequate supply. Its not about “peak oil”, because supply could carry on growing and still not meet demand – it’s about structural supply deficits.

Back to the future for oil?

Seismic engineers replaced the wildcatters. Jet drillers supplanted the derricks. And Jed Clampett, that poor mountaineer who barely kept his family fed before he struck black gold, doesn't come around here anymore.

The oil and gas industry isn't what it used to be. It's better, or so says a rising choir of geologists, economists, bankers and various pundits who never thought North America's on-again, off-again romance with so-called green power made much sense.

OilVoice Interview with Richard Kluth, Director of Pulse Monitoring

Production may have already peaked, but I think it will plateau and remain fairly constant for a while rather than going into steep decline. Economics will be the defining factor as the global market negotiates the fine balance between supply and demand.

Brazil and West Africa aside, large 'elephant field' discoveries are becoming limited and the oil is getting harder to extract and so new oil coming online will come in smaller increments and will be much harder to get out of the ground. However, as is being shown in the mature fields in the North Sea, with new technologies and the right kind of investment we are increasingly reaping greater efficiencies and improving recovery rates far beyond what was originally forecast. With this continual focus on efficiency and new technologies I believe we can maintain the current production levels for a while to come.

Does Expensive Oil Inevitably Cause Recession?

If you scratch the surface, though, claims of a threshold beyond which the economy goes into recession turn out to be pretty shaky.

Let’s start with a basic theoretical point: There is no fundamental reason to believe that 5% (or anything similar) should be a magic number. Petroleum expenditures were equal to 4.5, 4.5, and 4.3% of GDP in 1970, 1971, and 1972 respectively. Does anyone really believe that the U.S. economy would have gone into recession had that spending been half a percentage point higher?

Big ideas take centre stage at the Grand as thinker Jeremy Rifkin touts our sustainable future

Have you ever wondered what our world will look like in 25 years? How about 50? 100? Have you ever thought about how the communications revolution that is sweeping the globe will refashion old ideas of national and political ideology? Or about how we will ever manage to overcome the economic and ecological crises currently ravaging the planet?

New Navy Postgrad Program Aims to Train 'Energy Warriors'

Marine officers last week became the first students of a new Naval Postgraduate School program that aims to make energy a priority for U.S. military leaders.

"We have to change the culture," said Commander James Goudreau, director of the Navy's energy coordination office.

"We have to reach the point where everyone from the deck plate sailor all the way to the secretary of the Navy recognizes that every action they take has the opportunity to either increase our war-fighting capability or increase our vulnerability, depending upon each individual energy decision."

E-Mails Suggest White House Weighed a 2nd Solyndra Loan Worth Almost Half a Billion Dollars

WASHINGTON — Early last year, the Obama administration was so optimistic about the business prospects of Solyndra, the solar equipment manufacturer that declared bankruptcy last month after receiving a $528 million government loan, that officials entertained the possibility of giving the California company a second loan of almost half a billion dollars, according to internal e-mails.

Energy Dept. Loan Director Leaving After Solyndra

Jonathan Silver, executive director of the U.S. program that awarded Solyndra LLC a $535 million federal loan guarantee, is leaving, the Energy Department said.

While Silver joined the Energy Department after the solar panel maker received its loan, Representative Cliff Stearns, a Florida Republican and chairman of the House panel investigating the award, has said he should be fired for his handling of the loan since arriving.

Large solar energy project slated for Puerto Rico

SAN JUAN, Puerto Rico (AP) — Gov. Luis Fortuno announced Thursday that the Caribbean's largest solar energy project will be built in Puerto Rico, an island heavily dependent on petroleum where power costs twice what it does on the U.S. mainland.

Greece Expects $27B Solar Project to Advance

Greece’s Energy Minister George Papaconstantinou said he expects an agreement by the end of the year that will advance a 20 billion-euro ($27 billion) solar power project, part of an initiative to boost the economy.

Contra Costa County supervisors furious with solar company that cut down 100 trees

MARTINEZ -- Contra Costa's Board of Supervisors is furious with the company hired to install solar panels on and near county buildings after the green energy firm ignited a public uproar by cutting down 100 eucalyptus trees near the entrance of a popular regional park near Pinole.

"It's outlandish!" said Supervisor Mary Nejedly Piepho, of Discovery Bay. "I have had it with this company!"

Judge sides with coal industry in EPA challenge

CHARLESTON, W.Va. (AP) — The U.S. Environmental Protection Agency went too far when it began reviewing individual Clean Water Act permits on mountaintop mining operations, a federal judge ruled Thursday.

EPA rolls back air rule; Texas gets most leeway

HOUSTON (AP) — The U.S. Environmental Protection Agency on Thursday proposed easing new pollution restrictions that angered several states and infuriated GOP presidential contender Texas Gov. Rick Perry.

Opposing paradigms converge on Hawaii

Richard Heinberg, a senior fellow at the Post Carbon Institute and author of ten books on peak oil and related issues, will attend Moana Nui. Heinberg says the globalisation of trade is highly vulnerable for two reasons: The depletion of fossil fuels and associated rising costs and the global credit crisis.

"Partly as a result of the gradual failure of our system of cheap energy and transport, we are seeing the unravelling of the global credit system," says Heinberg.

"We need to develop more local resilience, more self-sufficiency and more ability to provision ourselves within our local ecosystems."

U.S. unlikely to hit advanced biofuel goal, study says

"Absent major technological innovation or policy changes, the...mandated consumption of 16 billion gallons of ethanol-equivalent cellulosic biofuels is unlikely to be met in 2022," a study by the council said, referring to long-term targets in U.S. law for the biofuel.

The study, which drew challenges from the U.S. agriculture secretary and industry groups, also said cellulosic fuel without subsidies would be feasible only with oil above $190 a barrel, far higher than the current level near $80.

Group Opposed to Pipeline Seeks More Documents on Lobbyists

Friends of the Earth, an environmental group, expanded its Freedom of Information Act request concerning the State Department’s evaluation of the Keystone XL pipeline proposal, which involves the construction of a new pipeline to carry crude from Canadian oil sands to the Gulf Coast.

Supporters, opponents gather for final public hearing on oil pipeline from Canada

WASHINGTON — Environmental activists, religious groups and young people inspired by the protests against Wall Street plan to rally in opposition to a Canadian company’s plan to pipe oil from tar sands in western Canada to the Texas Gulf Coast.

Bill McKibben: With the Keystone Pipeline, Drawing a Line in the Tar Sands

For environmentalists protesting the Keystone XL pipeline, the battle is about more than just transporting tar sands oil from Alberta. It’s about whether the United States — and the rest of the world — will finally come to its senses about global warming.

EU wins key round in carbon fight with airlines

The European Union on Thursday won a key legal round against US airlines fighting EU plans to force foreign carriers to buy carbon permits to fly to and out of the 27-nation bloc.

Why conservative white men are more likely to deny climate change

White men fear all kinds of risks less than women and minorities do, according to Riley Dunlap, who co-authored the study, printed in the October 2011 issue of Global Environmental Change.

For conservative white men – who tend to benefit most from the current socio-economic system – recognizing climate change would be against the status quo, Mr. Dunlap explained to the Huffington Post.

And not a drop to drink

ONE canary in the climate-change coalmine may have just quietly fallen from her perch. The tiny Pacific island nation of Tuvalu has declared a state of emergency after a fresh water shortage forced it to shutter its schools and hospitals and begin water rationing across the country. Observers blame the shortage on the changing weather patterns and rising sea levels associated with climate change—and warn they could be a sign of things to come for the whole region.

To Rule the Arctic’s Waves, U.S. Can’t Waive the Rules

The melting of Arctic ice as a result of global warming has set off a race to capitalize on the polar region’s suddenly accessible resources and expanding navigable waterways. Yet even as Canada, Russia and others stake their claims to this potential bounty of economic and trade opportunities, the U.S. is choosing to sit on the sidelines.

Why? Because it won’t sign on to the rules of the game: the United Nations Convention on the Law of the Sea. The opponents justify their obduracy by citing a nonexistent threat to national sovereignty. The greater threat to the U.S. lies in its continued failure to ensure it will have a central role on this new frontier.

Regarding the post up top, Why is it so tricky to define 'peak oil', the post talks about peak oil being when high oil prices start causing financial impacts. I agree with this.

Part of this is the impact on debt. As long as we were growing, countries such as the United States have been using increased debt to increase demand, and to increase their ability to buy imports. Once high oil prices started leading to higher default rates, and once companies no longer could see the need to expand endlessly into the future, the amount of debt outstanding started to drop. This debt interaction is part of what makes the problem so great.

(The amounts in this graph exclude federal, state, and local governmental debt.)

(The amounts in this graph exclude federal, state, and local governmental debt.)

...which makes your debt point nonsense. Debt is still growing rapidly. 10-12% of GDP this year will come from the federal government budget deficit.

...which makes your debt point nonsense.

Not at all. If private debt is 275% of GDP, and federal debt is 10-12% as you say, deleveraging of private debt will swamp growing federal debt. To say debt is still growing rapidly is to miss the forest for the trees.

I will write a post explaining the debt issue further in the next few days. It will be on Our Finite World--I don't know whether it will be on The Oil Drum.

You may remember this graph from a post of mine published in July, called The Link Between Peak Oil and Peak Debt-Part 1, showing the combined impact of government and non-government debt (dollars, not as % of GDP):

Here's a commentary from MarketWatch:

Where to next for oil — $50 or $100?

The author, Myra P. Saefong, has been following commodities on MarketWatch for a number of years. This article notes the fact that the price of oil at Cushing, OK, is considerably below the price paid in other markets, due to the glut from Canadian oil. She notes that the price of gasoline has not dropped as much as the WTI price and expects the WTI price to climb toward the price in the rest of the world, once the glut is removed...

E. Swanson

Cheap Fiberglass Insulation

Both Lowe's and Home Depot have R-30 rolls of unfaced insulation (about 31 ft2) for $9.99. Add sales tax and subtract the 10% federal tax credit if you are installing in your primary residence.

Assuming free labor, this lower price changes the break even point for the most economic level of insulation.

Best Hopes for Long Term, Energy Saving Investments,


PS: Note to Texans - superinsulation of your attic will not only lower your utility bills but preserve reasonable indoor temperatures for longer in a black-out next summer (or winter, there was a small one in ERCOT on 2-2-11).

Here in Arkansas if you are a customer of "Entergy" you can have insulation blown in your attic up to 16" regardless of the size of your house for $250. One heck of a deal.

Remember to put in an elevated crawlway first.


An interesting solution.

Use 2x12" or 2x10" lumber and plywood ends to create rectangular boxes in the attic. Buy the $25 sheets of 3/4" AC plywood that Home Depot has on long term special and cut to fit top of box (paint white if you want). Fill the box with insulation (scraps or from a roll).

The boxes above need to be built in place.

This creates storage space (lower overhead clearance).

For walkways, use 2x4s or 2x6s to create a narrow box with ladder frame. Cut plywood to create walking surface. Lay ladder frame in place, fill with insulation and put walking surface on top.

All of the above will allow access to electrical wiring, etc. in the attic.

Best Hopes,


More $ per sq ft gains more storage space.

A couple of years back I took advantage when HD has R-19 at the same price. Unfaced is easy to tear into less thich strips, split it three ways and you have three times the square footage of R-10, if thats what makes sense for your project. Then simply lay it on top od your existing attic insulation. Avoid covering up light fixtures however. You need a face mask, a light portable light, and a sheet of plywood to stand/sit on.

Bunny suit and gloves help too, duck tape the gloves to the suit to avoid wrist rash.


I sweat like a pib if all covered up -especially wearing a mask. I did it at 6am when the attic was 60F. Immediately after finishing jump in the shower. It worked for me, and I have very itch sensitive skin (i.e. I can't wear acylic or I'll turn beatred within minutes). But the fiberglass didn't seem to hurt me. [I wouldn't want to do it everyday -or for more than about an hour]

I know someone that spreads Vaseline on his forearms to prevent itching. No personal experience.

Modern fiberglass has been manufactured in a way to reduce itching compared to fiberglass of a decade ago. And some special low density fiberglass is almost non-itch.

Best Hopes for Less Itching,


Is the WTI anomaly the reason that gasoline yesterday in Albuquerque was as cheap as $2.94/gallon?

I am curious, as the price has been trending down for quite some time.

Previously on this site, invariably, when any one floats the idea of fielding greatly increased efficiency vehicles to cut gasoline use, another person asserts that China and India (and the rest of the developing World) will immediately snatch up the surplus gasoline, and therefore gasoline prices would not drop.

As far as I know, the U.S. consumers have not made a mass switch from their vehicles of preference to Prii or Volts or other high-mileage cars, yet the price of gas has decreased.

Of course the U.S. economy has been, and remains, depressed...Has vehicle miles driven per capita in the U.S. significantly decreased over the past year?

...But wouldn't the idea that oil is fungible in the global market, and the idea that growth in China and India and elsewhere is booming, argue against the price of gas declining, given that oil production has been flat since ~ 2005/6?

If biofuels and tar sands etc are the answer, then why hasn't their lower EROEI kept the price of gas up?

Is the WTI anomaly the reason that gasoline yesterday in Albuquerque was as cheap as $2.94/gallon?

Yes, in my opinion. Slack demand has sustained the surplus at Cushing, keeping the WTI spread high long enough to start pressuring retail gasoline prices downward in the West and Mid-Continent.

If biofuels and tar sands etc are the answer, then why hasn't their lower EROEI kept the price of gas up?

The way I look at it is as follows: market pricing at any point in time represents a complex interaction between long-run marginal costs (where EROEI gets calculated) and short run surpluses/shortages where game-theoretic equilibriums play out. Timing matters too: some legacy tar sands operations have a (short-run) production cost of $45/bbl, so they can pressure the market down quite a bit in a short-run surplus situation (like we have at Cushing) and still make money. Bakken is probably the marginal barrel at Cushing right now, and they need something closer to $70/bbl. That value is a long-run number in the sense that all this development just took place and they need to recover a lot of fixed investment if at all possible. Bakken pricing is probably a floor on WTI/Cushing at current supply/demand conditions.

Long-story short: lower EROEI has put a floor on the price of gasoline, but it's a bit lower price than you might have expected. Just one man's opinion.


Thank you for your detailed and reasoned reply.

I just broke out of my ABQ mode, since I was just in Falls Church, VA, and the southern PA and Metro D.C. area last week...gas there in Falls Church is currently ~ $3.64.

I checked LA...~$3.57

I checked Atlanta: ~$3.09

Boston: ~ $3.21

Seattle: ~$3.55

Gasoline prices have fallen across the country to some extend, it seems.
Are U.S. oil prices for every area of demand in the U.S> based on the Cushing price?

Is it true that as U.S. oil demand declines the oil that is 'left on the table' first is imported oil?

I still wonder about the idea that China and India's explosive growth lapping up every available drop of oil in the market and why oil prices have declined?

Is the World as a whole using significantly less oil today than it did in ~2007, pre-crash?

I certainly agree with you that the oil price market is considerably more complex than some folks have imagined.

These are good observations. My sense of things (and take note of all the hedging language I use...) is that the U.S. coasts (Gulf, Atlantic, West) are more heavily influenced by global prices (say Brent) where the interior takes a stronger cue from WTI. I think your observations bear that out (but why so discounted in Atlanta? No idea...).

Is it true that as U.S. oil demand declines the oil that is 'left on the table' first is imported oil?

I think so. This is the obverse of WT's ELM framework: just as oil exporters will tend to sell a higher proportion of their oil in-country, a country that is reducing demand will tend to back off imports first.

Is the World as a whole using significantly less oil today than it did in ~2007, pre-crash?

The OECD is using only a little more, and this altered growth trajectory is pressuring the supply side. Meanwhile Chindia growth has continued to be strong. A poster earlier this week noted that KSA was increasing its discount to the West for Arab Light, and upping its premium into Asia for the same crude. I would think the Chinese would object, but it's all about what the market will bear.

Although there is a little leeway US gas prices nationwide average out to NYMEX RBOB + 70c (EIA data - although there is a wide spread as prices go up and down). Individual state differences are almost entirely down to state tax differences and differing blends/regulations. Other than maybe a few cents at the most there is no difference due to whether the local refiners pay WTI or Louisiana Spot prices.

Also of note UK petrol prices have dropped by the equivalent of about 35c per US gallon from the peak a few months ago before the IEA stockpile release.

as much as it will hurt me i think those numbers should double at the very least.

The world price is more like $100, so cushing is a stranded anomaly. Here outside of SF it was $3.73 last I looked.
Don't conserve -because those third world good for nothings will just use what you don't is some pretty sloppy thinking (and morals). The best reasons are to conserve our financial resources, both your personal ones, and the countries (balance of payments affected by oil imports).

There appears to be something special about Albuquerque as compared to New Mexico as a whole.

As you can see the Albuquerque price has broken free of the NM state price and widened the tax-based differential from the US average. I doubt this has much to do with WTI but probably some very local factor (price war?).

The reason all prices have fallen recently was mainly because they followed Brent/world prices down (to about $100). Brent is now on the way back up (about $105). US gasoline prices will not fall much further, if at all, unless Brent etc starts to trend back down again. Light Louisiana Sweet is currently $109.17.


Thanks for the great reply and graph!

I do not perceive ABQ as being especially worse-off than the U.S. as a whole...in fact, our housing prices have held up better than many areas, although they have fallen.

Looking at the graph for the U.S, perhaps this price trend signals that the economy is worsening and therefore VMD is trending down?

Don't forget the "obvious". An up to 60 million barrel emergency release of crude worldwide of which 30 million barrels were from the US. This reduced US imports alone by say 0.5 mb/day for 2 months during the period of maximum US demand during the "driving season". This most definitely held crude prices down. US demand is seasonally dropping again now and it remains to be seen how the world oil balance forward plays out with Libya coming back onstream

Of note oil inventories at Cushing are now 5 million barrels below this time last year. That's obviously some strange kind of "glut" the media keeps talking about.

The link in the EU-against-US-airlines story seems to be gone (404 not found.)

Here is another one from Reuters.

A few points on what are some of the fundamentals behind the "Occupy…………….." movement and all of the other movements around the world for that matter.

First the most powerful meme of this movement, the one that scares TPTB to there core, is the fact that it is all about;

1% vs the other 99%

The accounting has been done by multiple organizations. The banking industry in the US and probably globally, have the assets to cover peoples deposits, merchant deposits and transactions, basically all of the "REAL ECONOMY's" money.

Unfortunately this only represents a small portion of the banking and finance industries activities. The other 90% of what they have been doing, essentially gambling and fraud, is what is being bailed out, that is what is at risk if (when) banking collapses, NOT the real economy.

This is a bit over simplified as banking collapse would certainly effect all trade and therefore the real economy but not in the way that they are saying and recovery of the real economy would be possible and maybe even reasonable whereas what is happening right now is that the real economy where 99% of us live, is being sucked dry, thrown under the bus, raped, or what have you, in order to cover the bad gambling debts of the 1%.

It's not just banking and finance it is all big corporations most of which have been augmenting low and declining revenues from making and selling stuff by participating in the financial dealings (gambling and fraud) also.

The politicians currently in charge (and those aspiring to be) got there positions and owe complete allegiance to BIG money. They will do what is best for the 1% NOT what is best for the 99%. In all fairness they are convinced that serving the 1% is whats best for the other 99%. I know this for a fact.

Money = a claim on the future.
1% controls all of the money.
99% have no future.

Bottom line This is a crisis of capitalism but this is where it gets tricky.

Debt driven Capitalism is and has been the optimal system to promote exponential growth. Resource depletion, over population, environmental degradation, are just a few of the detrimental results. A version of capitalism is what every Country around the world uses to juice growth, even communist China. Silly people think they can control capital, LOL!

Capitalism functions like a pyramid scheme in that there are always opportunities for more and more people to acquire wealth but only as long as multiples of additional participants are constantly coming in at the bottom. Oh, yeah, capitalism also requires that there is enough cheap, almost free energy coming on line at a similar or greater multiple in order for those participants to generate excess profit$ to pass on up the pyramid.

Right now there are plenty of willing participants but due to the lack of cheap, almost free energy these participants are unable to generate "excess profit$" to pass up the pyramid. Low life bums. So instead of money flowing, being pushed up that is, the relentless, unquenchable demand that "capital" is simply sucks it up anyway it can even if it has to create virtual participants with virtual excess profits. There is no stoping capital…FEED ME SEYMOUR!

Capital has muscle too and is always looking for cheap, almost free energy. Is it any coincidence that last of the light sweet crude is in Iraq and Libya?

Even that is not enough so it just keeps on expanding debt/credit and skimming off the top.

Debt/credit expansion has continued on well beyond anything that this planet can ever support.

Problem is whenever you talk this way people scream "your a damn communist/ socialist".

Clearly humanity needs to operate from a base of support that includes healthcare for all. education for all, security in old age for all, in order to maintain dignity and humanity and this is socialism. Above and beyond that maybe we can have some form of capitalism that allows people to reach there aspirations BUT CAN NEVER INTRUDE ON THE BASIC SOCIALISTIC BASE SYSTEM.

Truth is we kind of had this sort of setup here in the US for a while but then capital noticed this while heading out for some grub one day and…well the rest is history and here we are.

Maybe instead of Debt based Capitalism we should try Gift based Capitalism.

properly regulated capitalism worked.
properly taxed income worked.
it was only when things were re-regulated to favor the top that things stopped working.
amplify that with globalization and wage-norming that results and folks have to take to the street at some point.

peaking resources (physical or fiscal in cause) is one major factor, as is population overshoot and environmental degredation.

"The beginning is near."


properly regulated capitalism worked.
properly taxed income worked.
it was only when things were re-regulated to favor the top that things stopped working.

Some historical perspective: For how long have those conditions existed? During what time period did it happen?

The answer is of course that it began during the Great Depression (the first, temporary one) and really got going after WWII and the establishment of a global empire and the age of oil. There were so many riches that it was easy to give enough back to enough of the people to create a "middle class" - a large group of people heavily invested in the system, serving as a buffer between the top and the bottom.

What was it like before that? Robber barons and the gilded age, booms and busts, conflict and social strife - a lot of it quite serious. Lots of unequal wealth distribution, which has now returned in spades.

My point is maybe it was not so much the proper regulation that made it "work", but simply the riches of empire and fossil fuels that made it possible to share enough to bring stability. We're talking about a period of less than a hundred years, and now we return to the conditions that prevailed before that. There were plenty of people who were taking it to the streets in the years before WWII, but the organizations they were involved with do not exist anymore, so I suspect it will be very different this time around.

valid points, however could you imagine comparing the contracting economy if:

a) on one hand we return to reasonable regulation of capitalism and a tax code that started to close the wealth gap


b) that very same contracting economy if things keep on the same course

so I agree that the unique post-war position of the US propelled it to the "top", but I also think that as things contract, or decline, we have to move the center of power out of the financials/1%/boom & busters hands.

figuring out the long haul is complex... but we have to take the bullets away from the crashers first :-)

One point missing from your historical perspective is that the structure of the US economy isn't anywhere close to what is was previously: Yes, we can change the tax codes and re-regulate and enforce the law, but that will not return the millions of jobs that were sent overseas and helped cause the current depression. Indeed, the structure of the US and global economy must change even more in response to Global Warming and Resource Depletion and ongoing population rise. Somehow we must create 50-60 million new jobs just in the USA that do NOT rely on fossil fuels for power or feedstock as soon as possible--not just to erase the current jobs deficit, but to provide employment for those who will lose their fossil-fueled jobs because of absolutely mandatory CO2 cuts. The fact to be faced is the 100% dysfunction of the current economic and political paradigm and that their replacements cannot rely on the same input or output or philosophies.

Another take. Proper regulation, and taxed income really did help a lot. What saved us was the cold war. We had to make our system seem better than what the Russians offered, so the elites were willing to do thoss things, for fear the commies might win the propaganda war. Now, that that threat is gone, its time to go back to robber barrons.

i think the word capitalism is not adequate or relevant anymore. in some sense it describes something that happens in a growing economy. when the economy doesn't grow anymore we need new ways to organize the society. the concept of capitalism isn't then very helpful. of course there will always be some kind of markets. but is "markets" the same as "capitalism".

in the same way the (political) words "left" and "right" are not very meaningful anymore.

also funnily "liberal" in usa means "left" while in europe it means "right"

There is also a demographic factor that has to be taken into consideration. Harry Dent of "The Great Boom Ahead" related the relative number of people in the 40 to 50 year old age group and compared it to the S&P 500. He did this graphically back in 1993. The relative number people in that 40 to 50 year old age group started increasing around 1982, the beginning of the Great Bull Market, and it started to go negative around the year 2000, near the end of the Great Bull Market and masked by the dot-com crash. The graph is fairly flat until around 2010 when it rolls over and dives until around 2020 when the sons and daughters of the Baby Boomers enter that 40 to 50 year old age group. The 2010 to 2020 time frame is when this wave of people sell their stocks and wonder if they will outlive their money. I should know, I'm in that group and we watched my father live long enough to where it was becoming a concern.

We have reduced our spending and watched how the Quantitative Easings have increased the Federal Debt, enriched some Wall Streeters, and made us realize that that Debt will likely be passed on to our kids.

Divide the Debt by all Federal taxes collected and the factor is roughly 5. Divide it by Federal Personal Income Taxes collected and the factor is roughly 13. Now multiply either of these two amount by the amount **you** paid in Federal Personal Income tax and you then realize what they mean by "mortgaging our future and that of our kids". One is a low number and the other is a high number with the real estimate some where in between with contributions from Payroll Taxes, Corporate Income Taxes, and Excise Taxes.

Of the 14+ Trillion in Debt, I have heard that approximately 4 Trillion of that debt is from the shenanigans of Wall Streeters, abetted by Federal deregulations, and from overlooked glaring discrepancies by Federal regulators. If it was not for this mess, Obama and Boehner's tiff over the Debt Ceiling would have not taken place for several more years and they would not have looked like two bratty kids fighting over a triffle. While the Main Stream Media was trying to guage "Who won???". The answer was that "we **all** lost."

As an aside, I often wonder that since we have gutted our manufacturing selves, we might have an easier time not having to abandon that which we do not have for that which will sustain us on the other side of Peak Oil??? - Provided we recognize what that is and actively develop it.

/* Rant over.

Hope you all have a good weekend.

Corporations have infected our government and the political process. The idea that corporations are "persons" and money is speech has created a corporate super-citizen, able to influence government and the process with unlimited amounts of money and creating a class divide.

The Declaration of Independence provides us guidance when a form of government works contrary to the idea that equality is not being realized by its citizens:

"that whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundations on such principles, and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness."

What we need is a constitutional convention to re-address the idea that corporations are "persons", and money can be used as speech. Until such time that this happens, "We the people" have no control over our government or the process.

Th danger is, to folks with high-paying jobs, is that the USG can construe (without your consent or even knowledge) one's actions, say giving money to the 'Occupy____...' movement, as suspicious activity leading the paranoid folks who track and investigate such things to wonder if the donor does, has, or would like to in the future belong to an 'organization which advocates violent overthrow of the U.S. Government'.

Once again, to be clear, one does not have the right or ability to know what one's government security dossier says about oneself, nor does one have the right to contest it.

Again, the folks who get paid to collect and adjudicate this data do not have to publish their data, methodology, conclusions, etc. for us to see...hidden under the cloak of national security and 'need to know'.

So, CU allow the corporate super-citizen, but woe be to the average citizen who would like to engage in a peaceful protest against the staus quo, and voila, the police will pepper-spray some folks in your crowd, maybe you, and voila, some folks area arrested, and have a 'permanent record' they don't know about.

Like I said, you don't even have to sit, stand,, or march....all you have to do is donate (esp over the Internets), and you are likely logged in various databases as a 'person of interest'.

Also...who gets to go and be heard at a Constitutional Convention?

Do we all just show up if one is convened?

No, I am sure that there is some process where the state legislatures select the chosen few to attend and make everyone's rules.

How is that any better than now?

What is the majority of the folks who are selected to represent wish to abolish some Constitutional amendments?

I heard a good Occupy Wall Street protest sign on Democracy Now yesterday,

"I'll Believe Corporations are People when Texas actually Executes one!"

The "personhood" thing about corporations is silly. All it means is that the officers of a corporation can sign contracts and be sued in the name of the corporation. That is, instead of suing IBM's millions of shareholders or trying to get their vote on every contract, I simply say "IBM".

That's it. That's all the personhood of corporations means. It has nothing to do with the extensive power and wealth of the biggest corporations, or their cozy relationship with the Democratic and Republican parties. It's simply legal shorthand to simplify contracts and lawsuits.

No, JP, that not it.

Corporate personhood gives corporations (according to the Supreme Court) the right to shower limitless $$$ on political campaigns/candidates. This is corrosive as hell to democracy.

It renders dollars into "speech".

It protects corporate officers from the consequences of their actions.

I'm sure there are other ramifications, but I wonder where your apologetic for corporations is coming from.


Corporate personhood gives corporations (according to the Supreme Court) the right to shower limitless $$$ on political campaigns/candidates. This is corrosive as hell to democracy.

Actually, it doesn't. There's nothing intrinsic to corporate personhood that grants corps the right to spend unlimited amounts on campaigns. After all, you are a person, and you don't have that right, according to the Supreme Court. And neither do they.

If you mean Citizens United, there are still heavy restrictions on how much corporations (and flesh and blood persons) can donate to politicians and political campaigns. What CU did was lift the restrictions on "electioneering communications". Those restrictions were not "you can only spend [x]" but "you cannot broadcast mentions of candidates within 60 days of a general election". As Kennedy said, if the First Amendment protects anything, it protects talking about political candidates during election season. Corporate personhood is irrelevant.

As for democracy, the Athenians told you ~2500 years ago that voting was a sham that led to rule by the rich. Livy, in turn, illustrated it repeatedly in his history of Rome ~2000 years ago. I'll bet that wasn't mentioned in your civics textbook; it sure as hell wasn't in mine.

As for democracy, the Athenians told you ~2500 years ago that voting was a sham that led to rule by the rich.

The mechanism has changed -if not the result. They used to buy votes outside the voting booth. Now they buy a cleverly packaged media message. These corps can't directly campaign for candidate X, but they can buy tons of propaganda supporting the positions of their fovored son, and lots denigrating the positions, of their disfovored candidate. So the result is the same.

"The "personhood" thing about corporations is silly. All it means is that the officers of a corporation can sign contracts and be sued in the name of the corporation. That is, instead of suing IBM's millions of shareholders or trying to get their vote on every contract, I simply say "IBM"."

What he means is that is what corporate personhood is supposed to do. Your other point is correct too, as a corporation is should not have free speech, the right to petition the government and so on.

The protection of corporate officers only goes so far, unless they are bankers, who do seem to be untouchable of late. And it also protects workers to some extent. If I screw up at work in my professional capacity, then the company is liable, not me, as long as I have not broken the law. If that were not the case, I couldn't afford to work, as the liability insurance would be crippling given the flammable/toxic/pyrophoric/etc nature of the chemicals in the plant.

There is a case to be made that corporate personhood has gotten as out-of-hand as the commerce clause.

That clarifies the problem, and will make the 3 strikes and you are out law much more effective.
Like people, if a corporation commits three crimes, it gets dissolved, and its assets sold and put into a public fund, for health care or some other much needed service.

At one time Corporations were for a limited time, limited purpose, and if they "did wrong" - they'd get dissolved by the State. My memory says that was in the 1600's however.

Meanwhile - watch the "is there an app for that" space. https://market.android.com/details?id=com.dannyfast.occupy Not sure what it does, but its the 1st "app". The "don't buy gas on this day", the "don't buy anything" (unitedwestand), the labor union and whatever other protests did not have such an app.

(Next up - a union organizer app. Global Guerrilla style spending - $200 for a box to act as a server parked on a street next to a Wal-Mart or a Target means they'll spend many more times that with their anti-union efforts at that store)

That's true. Corporations were originally set up for specific purposes, and if a corporation exceeded those bounds, its shareholders could sue to stop it. This was called the ultra vires doctrine. That doctrine is essentially dead.

General incorporation was primarily an early 19th-century development. It shifted a tremendous amount of power over corporations from the shareholders to the officers. Officers could essentially do anything at that point, so long as they didn't break the law or act in "bad faith".

The "personhood" thing about corporations is silly.

Yes, considering its the SUMMARY of the Santa Clara County v. Southern Pacific Railroad VS the text were different, it is silly.

The court reporter, former president of the Newburgh and New York Railway Company, J.C. Bancroft Davis, wrote the following as part of the headnote for the case:

"The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does."[4]

In other words, the headnote indicated that corporations enjoyed the same rights under the Fourteenth Amendment as did natural persons.[5] However, this issue was not decided by the Court.

Kind of like how growing grain on your own farm for your own use is Interstate Trade - kinda silly.

"Simply Legal Shorthand.." .. never were truer words spoken.. now apply that to some legal version of the exponential function, and we're off to a good start.

I agree, the whole “world where the 99% of us live” line, is grabbing a lot of attention – even if it is slightly hyperbolic.

I don’t expect that much to come of these protests in the near future. However, I think that websites like we are the 99% * are helpful in making people realize how widespread the economics woes of American’s are (we are ever self-centered). It isn’t just lazy people who are out of work, but people who made all of the “right” decisions. Of course, as discussed extensively on this website, the “right” decisions have been leading us to disastrous rates of consumption of natural resources. Here hoping that this is the beginning of the realization that these problems are deep and systemic in nature (what can I say I feeling positive this morning).

I expect that these protests will fizzle out in the next couple of months, but will sprout up again with more backing if/when we plunge into a deeper recession.

* http://wearethe99percent.tumblr.com/

I always thought Peak oil = point of maximum production of oil.

This definition seems just fine to me. Why do we have to say, "peak easy oil"? Let people add the "the expesive, hard to get oil" (and tar sands etc) into the pile of reserves - does it, or does it not change peak production?

The Yerginites etc might declare that in a perfect world we could reach new highs in oil production - but that perfect world depends on an Imaginary Universe of peace and cooperation, economies and technologies that does not exist and never will.

Re. Chris Sebrowski's definition of peak oil.

Chris Skrebrowski, who argues that peak oil is best defined as the point at which “the cost of incremental supply exceeds the price economies can pay without destroying growth.”

This sounds like part of the mechanism for peak oil, not a definition. There geologic constraints, technical constraints, geopolitical constraints, economic constraints... are not these all just factors in the equation?

Why bother to muddy the waters? Just discuss this part of the equation, and leave the definition alone.

aardy - "...peak oil is best defined as the point at which the cost of incremental supply exceeds the price economies can pay without destroying growth.” I agree that's not a very good definition of PO. Such a condition may have existed many time in the past 100 years. It matters not if oil was selling for $10/bbl or $100/bbl: there will be wells not drilled because the incremental cost to do so exceeds the economic gain. How the price of oil affcts economic growth is widely debated. During this latest period of high oil prices we've seen growth dwindle in many economies. Yet others, notably China, are growing at rapid rates under the same prce pressures.

Economies with high overheads can not grow, mean lean economies can grow, at today's prices. If your economy has to support massive spending for retirement, medical care, military then to show a profit you need cheap inputs. If you spend zero or little on all three then you can make a profit with high cost inputs. That is the beauty and horror of free market capitalism it levels.

Well said. We know what happens to companies that have such high overheads, like GM. I don;t see why it will be any different for countries.

Good points Rockman (and ed and paul).

The definition seems simple enough to me. With a change like this peak production starts to turn into some abstract moving target.

The Federal Reserve and all government statistics agencies would just frickin love this new definition ; )

I think that the way it works is that, the plateau is maintained by the steady increase in price of oil, creating sufficient reward to justify recovery of more oil. This can continue only until the price of oil overwhelms the economy, as it seems likely to do soon.

The only question becomes, what is that price, how long must it be sustained to create catastrophic collapse, and to what do we, as a species, morph without cheap, almost free, energy?


...the plateau is maintained by the steady increase in price of oil, creating sufficient reward to justify recovery of more oil. This can continue only until the price of oil overwhelms the economy, as it seems likely to do soon.

It seems to overwhelm the economy, then as recession fears creep in the markets tank, the price of oil drops and the economy starts to slowly build again, albeit from a lower level.

I'm wondering how long we can do this dance to lower economic activity? Will debt simply be forgiven as a last ditch effort to keep things going?

Or, do we simply watch a society of people disenfranchised at the fringes, while those that can afford today's tougher times continue on BAU? That seems to be what is happening. So far the castouts living with friends and relatives are remaining silent in their suffering. I wonder when they will unite and shout loud enough for the BAU's to hear them, and even then if there is anything that can be done?

If you think about it, the world as a whole seems to be tightening, not only financially, but people's sense of well being. My dentist, who happens to be peak oil savvy, mentioned the growing tension worldwide. Whenever tension builds it must break at some point in some manner. We can only wonder how and when.

Or, do we simply watch a society of people disenfranchised at the fringes, while those that can afford today's tougher times continue on BAU? That seems to be what is happening. So far the castouts living with friends and relatives are remaining silent in their suffering.

Not 100% silent....there is the Occupy someplace events going on.

I think that part of the issue is that under Skrebowski's view of peak oil (and mine), the amount of oil pulled out after peak has nothing to do with the "50% before peak, 50% after peak" view that so many have. Peak, and the shape after peak, is determined by economic conditions. Geology is the limiting factor, but it does not necessarily play a major determining factor in the path down. The path down may be much steeper than geology would suggest.


I get the distinction, and why it's also critical to understand where oil's inflection point may not be exactly where the economy is hit by it, but I'm really not sure why people are being so complicated about the language here. I don't hear many people pushing the '50% before/ 50% after' description when they seek to help someone understand what is commonly meant and understood by the term PO. As Aardvark said, it is simply a measure of what is coming out.. and beyond that, folks can decide which fuels are counted, or what the Barrels/per/capita comes to, lifting cost, spot prices.. but these other factors seems to be logically downstream-cousins of the simple (not so simple in reporting or data acquisition, of course) charting of production output.

like jokuhl i don't really see why the precise definition of peak oil would be so important. the main thing is that there is a certain depletion rate which makes that the production will eventually decline. and when this happens in such a way that the mainstream can't ignore it anymore, it doesn't really matter if this is because of "geological" or "economical" or "political" reasons


I love your work, just to be clear.

Who uses this 50%:50% thing as a definition for peak oil (other than for some modeling to predict when peak could occur)?

I don't understand what you mean when you say "Peak is determined by economic conditions" and then say, "Geology is the limiting factor" ????

Peak production the point of Maximum Production - no matter where it lands on the curve, including some imaginary multi-decade plateau predicated on world peace, international cooperation blah, blah (-cough *yergin* cough-).

Production is a system, and peak production will depend on all variables in the system ~ geologic, technical, geopolitical, economic, resource (e.g water) .... I'm probably missing something that should be added.

I agree geology is hands-down the most important limiting factor, but failures in any of the other systems could end the discussion and cement the date/production peak any day going forward.

See the Soviet Peak and later Russian Peak.

Above ground political & economic factors certainly had an impact on the production curve of that geology.


Perfect example Alan, thank you.

If I am drinking a blue-bunny milkshake through a straw and have a heart attack before I finish...

There seem to be a fair number of people who have not listened to the story too closely. They assume that if we have had oil for the last 100 years, and we are hitting peak about now, we will have close to as much oil as we have had recently for the next 100 years. They furthermore assume that if they are rich enough, and can pay a high enough price, they will be able to buy whatever oil they want for many, many years into the future. They expect almost all of the other services will hang together as well.

Quite a few sustainability models seem to be based on this model. The view is that all we have to do is use a little less oil, and everything will work out fine. People who believe in this way expect to be able to drive to the store and get all of the soil amendments they need 50 years from now, and expect that their electric fences will work forever.

But the issue is the other limiting factors--financial especially, but fresh water, political factors, and all of the rest.

Gail, I understand what you're saying.

All I can say is there will always be horses that refuse to drink, and that there is no way for the "rich man to pass through the eye of the needle" (i.e. industrial homo saps who try to hold on to all of their toys - they won't fit, monkey trapped ;).

Quite a few sustainability models are nothing more than "bargaining" with the monkey trap.


re. 50/50, I just Googled "peak oil half" and got numerous links, even this at Energy Bulletin:
"Peak oil is the simplest label for the problem of energy resource depletion, ... Once we have used up about half of the original reserves, oil..."

I fail to see why peak production should necessarily coincide with a half-way point (half-way point of what? the composition of our liquid fuel supply is ever-changing) and peak oil analysts should probably drop that argument.

I agree with your "all variables" point: other than "peak demand" due to finding a superior replacement for petroleum, it ultimately may not matter that much which which particular set of variables converge to cause production to stall.
That said, some variables could be highly significant insofar as they may help or hinder an orderly (or chaotic) response to oil shocks, so maybe my previous sentence is ill-considered....

" it ultimately may not matter that much which which particular set of variables converge to cause production to stall."

That's it in a nutshell.

Geology is the prime limiting factor and it alters the behavior of the other variables (to include changing their "breaking point" so-to-speak). Now "above ground" variables change in ways that upset the Yergins - he should have paid more attention to Samsam Bakhtiari("post peak none of the old rules apply..." paraphrase).

In a few years, Yergin will be repeating Greenspan's lament, "I found an error in my model of the world" - or some such nonsense.

So which is preferrable, because in today's world it appears to be one or the other?

- Falling stock index and commodity future prices OR rising stock index and rising commodity future prices

Reading the story about the water restrictions for tracking due to drought, I realized that tracking for oil in Israel and Jordan will have some problems.
Does anyone know if sea water can be used for fracking instead of fresh water?

I would doubt it. Salt water corrodes pipes.

From defining peak oil: "In other words, eventually the world will max out on production of the cheap, easy oil — the stuff that comes from Saudi Arabia and other OPEC countries. At that point, as long as demand for crude keeps growing, prices will rise and we’ll have to resort to more expensive oil from the Arctic and tar sands and so forth."

True but not the complete story. Folks do tend to talk past each other especially when the focus is on the AMOUNT of oil left to develop and not the RATE at which it will be produced. While increased oil prices will allow more oil to be developed it ignores the potential size of these undiscovered fields. Consider the DW Brazil pre-salt. Huge fields for sure. But it does not compare well to the number and size of all the old heritage fields. And not just the ME fields. The East Texas oil field was one of the largest ever discovered. Many other super US /global fields. Ignore the cost of developing future fields and focus not just on the cumulative size of this undiscovered oil but another critical factor: field life. All the big DW water fields will have a good/bad production profile: very high initial rate followed by rapid depletion and abandonment with significant unrecovered reserves due the high offshore operating costs. No DW field will be producing a significant amount of oil just 10 years after it comes on line. And it will takes decades to bring all these new Bz fields on production. Almost certain some of the early fields will be near depleted by the time later fields come on line.

OTOH "fields" such as the Eagle Ford and Marcellus may have commercial lives for many decades. But these aren't truly fields in the normal sense. They are "trends". In essence each well can be viewed as a single field. Thus there are many thousands of such "fields" to be drilled but each field will only have a significant production rate of a few years. To what degree these trends are developed will hinge on oil prices. This is a very important distinction between a conventional field like Ghawar and these unconventional plays. Once a convention field is developed the lifting costs are rather small and can thus keep producing when oil prices fall. But the "unconventional "fields" don't have that same financial edge: prices get to low and these "fields" go into immediate rapid decline because new wells cease to be drilled and existing wells drop to stripper levels in just a few years. Consider that Ghawar field kept producing at higher levels than today even after oil dropped to $10/bbl in the mid 80's. Very few unconventional wells will be drilled if oil drops below $50/bbl let alone $10/bbl. I'm not predicting oil will ever fall that low. But, OTOH, no one predicted in 1980 it was going to fall over 70% just 6 years later either.

Thieves steal 50-foot bridge in Western Pa.

According to CBS affiliate KDKA, the 20-foot wide bridge was in a wooded area along a railroad line, about 60 miles north of Pittsburgh.

Police say it was made out of corrugated steel and valued at approximately $100,000. The thieves used a blowtorch to cut the bridge apart. They presumably to sold it for scrap metal.

Radiation in Japan: Hot spots and blind spots

CREST the hill into the village of Iitate, and the reading on a radiation dosimeter surges eightfold—even with the car windows shut. “Don’t worry, I’ve been coming here for months and I’m still alive,” chuckles Chohei Sato, chief of the village council, as he rolls down the window and inhales cheerfully. He pulls off the road, gets out of the car and buries the dosimeter in the grass. The reading doubles again.

Iitate is located 45km (28 miles) from the Fukushima Dai-ichi nuclear power plant hit by a tsunami on March 11th this year. In the mountains above the town, the forests are turning the colour of autumn. But their beauty is deceptive. Every time a gust of wind blows, Mr Sato says it shakes invisible particles of radioactive caesium off the trees and showers them over the village. Radiation levels in the hills are so high that villagers dare not go near them. Mr Sato cannot bury his father’s bones, which he keeps in an urn in his abandoned farmhouse, because of the dangers of going up the hill to the graveyard.

Iitate had the misfortune to be caught by a wind that carried radioactive particles (including plutonium) much farther than anybody initially expected after the nuclear disaster.



Tokyo: Cesium at triple gov’t limit in radioactive compost made by elementary school children — Using fallen leaves!

Kyoto science prof: “Possibility that radiation will not only spread, but will start to accumulate in large concentrations”

Osaka: 700 microsieverts of radiation from parts of bridge made in Koriyama — “Serious concern” from residents

More on Dead Fukushima Nuke Worker: Internal radiation level unknown since early Sept. — “Died suddenly” — TEPCO not revealing cause

Meanwhile the BBC continued its series of pro-nuclear power adverts disguised as documentaries this week with an episode of "Bang Goes the Theory". This concluded that the maximum number of early deaths from Chernobyl was 140 and that nobody at all will die because of Fukushima. Although they talked to a "professor" who said this, there was no mention whatsoever that other "professors" had described their "professors" as either idiots or liars. No mention was made of the recent Russian Chernobyl study (100s of thousands of early deaths) even to attempt to debunk it. No mention at all of the claims that tens of thousands of the clean up workers have died very early deaths. Not even the usual excuse that they all had mental health problems and/or drank themselves to death.

No mention at all of Professor Chris Busby at the opposite end of the scale to their pet academics - not even a mention to debunk him - just ignored him

Professor Chris Busby

Busby was a member of the British government sponsored Committee Examining Radiation Risks from Internal Emitters (CERRIE), which operated from 2001 to 2004.[6]

In 2001 he was appointed to the UK Ministry of Defence Oversight Committee on Depleted Uranium (DUOB).[6]

In 2003 he was elected a Fellow of the Faculty of Medicine, University of Liverpool, in the Department of Human Anatomy and Cell Biology.[6]

In 2004 he was named Leader of Science Policy for (EU) Policy Information Network for Child Health and Environment PINCHE based in Arnhem, The Netherlands.

Massive nuclear incidents such as Chernobyl and Fukushima are nothing to worry about according to the BBC and the radiation risks are minimal even if you are exposed. There is no scientific debate about this according to the BBC.

Massive nuclear incidents such as Chernobyl and Fukushima are nothing to worry about according to the BBC and the radiation risks are minimal even if you are exposed. There is no scientific debate about this according to the BBC.

Considering the British were the ones replacing the bones of nuclear workers with broomsticks because they did not want analysis of the bones for radioactivity and decades later issued a public apology - why should the British be trusted in this matter?

(and say - has TEPCO found any of the missing workers? The 140+ of 'em they admitted to "loosing track of"? Rather hard to say 'its all good no one has died' when you are not tracking over 100 people)

Illinois town evacuated following fiery train derailment

The town of Tiskilwa was evacuated early this morning after a freight train derailed and several tanker cars containing ethanol exploded in flames that could be seen for miles.

Twenty-six cars on the 131-car train derailed around 2 a.m., including seven to nine loaded with ethanol, according to Mick Burkart, chief operating officer of Iowa Interstate Railroad. Seven to nine of the cars were on fire, he said.

Illinois train explosion: How safe are ethanol tankers?

Transporting ethanol by rail increased 400 percent between 2000 and 2009, according to the Association of American Railroads (AAR), an industry advocacy group located in Washington, D.C. Today, there are more than 200,000 carloads of ethanol being shipped, which Patty Riley, a spokesperson for the AAR, says is the result of the increase in ethanol production during the past decade.

Map: Occupy Wall Street Spreads Nationwide (Updated)

The loose-knit protest movement known as Occupy Wall Street has stirred action from New York City to Los Angeles and many cities in between. While questions remain about the anatomy and goals of the movement, one thing is clear: It has grown in scope (99 cities), tapping into widespread American anxiety about the grim economy and anger over corporate greed and the increasing concentration of wealth in the hands of a few.

Map, Charts and Graphics

You have to watch what the white working class does in this country. They make the country run, and for 30 years they haven't complained because they got the trickle down crumbs and in return the political establishment agreed not to redistribute those crumbs around.

Now the crumbs are gone, and the recriminations begin. "But I did everyting right!" is the common refrain. As if serving your country and showing up to work means that you are valued, that you are not just another easily replaceable denizen of Empire.

Nigeria’s oil production fell by 80,000 barrels in September:

Saudi Arabia, OPEC’s biggest producer, reduced output by 90,000 barrels, or 0.8 percent, to 9.76 million barrels a day
Iraqi production rose 90,000 barrels, or 3.4 percent, to 2.77 million a day this month, the highest amount since October 2001.


UPDATE: Iraq Oil Output Hit Post-war High At 2.9 Mln B/D:

Iraq's crude oil output Monday hit 2.9 million barrels a day, the highest level achieved since the U.S.-led war against Iraq in 2003, the country's oil minister said in a statement. Iraq's crude oil output Monday hit 2.9 million barrels a day, the highest level achieved since the U.S.-led war against Iraq in 2003, the country's oil minister said in a statement.


Analysis: After Heat Wave, Texas Debates Power Needs Next Summer

The summer heat wave that pushed Texas' power grid to the brink of blackouts has faded, but the debate over how to keep the lights on next summer is just warming up.

State regulators and utilities are weighing a myriad of short-term and long-term strategies to encourage companies to build new power plants at a time when long-term wholesale power prices are barely half the level needed to justify new investment.

...The ERCOT forward power price for 2012 is about $45 per megawatt-hour, "well below the $70-plus you would need -- not in one year but consistently for many years" -- to support investment in a new gas-fired plant, said Kamir Barbir, senior vice president of strategy and risk at IPR-GDF Suez NA.

... market critics say the inability of the market to maintain robust power reserves is a sign that electric deregulation has failed.

related Gulf Coast Power Association 2011 Fall Conference Presentations

... market critics say the inability of the market to maintain robust power reserves is a sign that electric deregulation has failed.

$45 per megawatt-hour is essentially a marginal cost based on gas-fired peaking generation. As the analyst said, prices need to go to fully-loaded cost new for new generation to be built.

But Texas should not be surprised at the failure of an energy-only competitive wholesale market to bring in reserve capacity. Energy-only markets failed spectacularly in California over a decade ago, and were unsuccessful in the Northeast. So the energy-only model has been supplemented with capacity auctions to encourage construction of new power plants as well as contracts for demand-side response. California is still dickering around, but capacity auctions have had some success in the Northeast.

Texas didn't want to implement capacity auctions because they had high enough reserves that the price for capacity would have been pretty close to zero in an auction. Now that reserves look tight, maybe they should take another look...

S - Maybe that's why the only new Texas power plant I know of scheduled for construction is the White Stallion plant just approved by the feds to be fueled with Illinois coal. BTW: they seemed to have over come the water problem: redesigning to "dry cooling" as opposed to "wet" cooling. Still uses water but just a small fraction of the original volume. I wonder if the Lower Colorado River Authority negotiated themselves out of some revenue. Given the White Stallion power plant won't face the anticipated competition from the cancelled nuke plant expansion and the increasing demand on the system I doubt you could wipe the smiles off the White Stallion faces with a basebal bat.

"Dry Cooling" will increase both the capital and operating costs by several % - which will reduce the ROI significantly.

No free lunch.


""Dry Cooling" will increase both the capital and operating costs by several % - which will reduce the ROI significantly."

Capital cost, yes, definitely.

Operating costs, maybe not. Depends on the costs of water. And whether they can do a surface discharge of the cooling tower reject water. Running cooling towers is not a cheap as you think. And its getting more expensive all the time. Zero discharge is the future. Actually it already is the present in parts of the country. And if zero discharge requires RO systems, brine concentrators, crystalizers, and marketing to sell the salts left over once the water is gone, those radiators look pretty cost effective.

Been there, did the ROI study, fin-fans rule, at least in the desert.

The analysis I saw a decade plus ago suggested that a major negative of "dry cooling" was the increased house demand for power. Every MWh used by fans reduced the MWh that can be sold.

A high thermally efficient coal fired plant will reduce the cooling demand - more heat > electricity means less heat to dispose of.

In this case, the plant will be very close to the Texas coast. Discharge of salt is not an issue there.


Alan - It's even easier than that: the White Stallion plant is being built on the banks of the Colorado River. Unfortunately too close to the Gulf so they can't take water from it. So they'll pipe LCRA water from upstream. And that's where they hit a snag: negotiating the water volume with the LCRA. Just a guess but I suspect the economics made more sense to go with dry cooling. I saw one report that wet cooling would use over one TRILLION gallons a year. Given this year's lack of rain the cost/politics were probably too much to over come.

So the news is good: we still get to burn a lot of coal from the Land of Lincoln (and the POTUS), make cheap electricity and send the pollution most of the time to the states to the east now that the EPA has backed off the rules. Thank goodness we have a Democrat in the White House...a Republican might not have been willing to take the heat with the re-election cycle starting now. So life is good!

Has the EPA delayed or repealed the coal mercury/pollution intra-state rules ?

I see where coal is still running ads against the new EPA rules and I had not heard - from other lists and sources - of this.

There is a probability of black-outs in Texas next summer (because there is a strong probability of continued drought & heat wave) and a reasonable possibility of repeated blackouts (one or two 30 minute to hour long/day) or grid failure (15 to 36 hour long black-out) in 105 F heat.

Closing down coal plants just before this would focus anger on the EPA.


More on ERCOT plans for next summer -


They overlook the two measures that will take the load off both transmission and transformers - conservation and solar PV.


Parched Texans Impose Water-Use Limits for Fracking Gas Wells


And next, we have a fight between energy devotees and food devotees.

Any bets on the winner in that fracus?


Energy addicts will win over "food addicts".

Almost half of this year's corn crop will be burnt as fuel - not food.


I hate it when the use the term "heat wave". It implies an unusual, transient, temporary phenomenon. The heat experienced in Texas is part of an ongoing phenomenon that will only get worse as global warming exacerbates. Now that global warming has caused this situation in Texas, they want to double down with carbon spewing plants that will help make the future situation worse. Talk about your positive feedback.

If Texas realy wanted to rapidly builtout capacity in the summer peak hours, then possibly photovoltaik would be a great option. E.g. Italy managed to build something like 6GW in 6 months, in some month Germany managed to build more than 2 GW per month. As peak PV production coincides very well with the peak consumption of air conditioning, it could help to very quickly alleviate capacity shortages in summer. PV, also doesn't consume any water which would be another bonus. However, it would cost a little bit more than $45/MWh.

3M Shows Photovoltaic Film for Windows

3M drew press and viewer interest earlier this week at CEATEC with its show of special film that the company has developed to coat ordinary, existing windows and convert them into solar panels. The product was shown on curved and regular glass surfaces. This “windows-transformative” film is to debut next year. Not only does the panel generate energy in sunlight, but it also serves as a heat-blocking layer.

IIRC didn't that block 80% of the light?

Kind of misses the point of having a window, doesn't it?


A little follow up on my post about various US entities pulling oil/NG (mostly NG) off the market through various contract arrangements. I mentioned this was a common practice back in the late 70's after the embargo coincided with a NG shortage. Yesterday I attended a pre-spud meeting on a new well in which we own a non-operating interest. The operator is also a very large metal ore processor that has been taking NG off the market for decades by drilling wells themselves. Not only do they own their share of the production but have also reserved the right of first refusal on its partners' share. Over the years this one company has accounted for 100's of $million of NG not being available on the open market to be purchased by other end users.

First chance I had to visit face to face with my new partners. As I expected they did talk about a major push to expand such efforts. And the new NG wells don't have to be close to the plant. The new production could be 500 miles away but as long as they have the call on the production they can swap it on paper with another company for NG that can be delivered to their furnaces.

I've also been asking around about the utility companies and what moves they might be making to pull NG out of the market place through such arrangements. So far the silence from my contacts has been deafening. When I've asked face to face I get a suspicious look back. My interpretation is that there are a lot of discussions going on that no one wants to publicize. Remember the basic plan: utility company A delivers NG to end users (residential and commercial) in State X. By contractually owning or having ROFR they can effectively require NG that could have been shipped to State Y to be shipped to them.

Given the low prices and the amount of NG on the market now I doubt anyone would pay much attention to this activity even if it were made public. But these deals are typically made with 10 to 20 year terms. The resource plays are keeping NG production up. But here comes that double edge sword: if the economy recovers and demand (especially commercial demand that took a big hit) increases so will the prospect for shortages...even if just short term. Just my WAG but I guess in a 5 year time frame. A big WAG given I have no idea how the economy will roll in the near future. But somewhere down the PO trail the politics of pulling oil/NG out of the market place by various end users will be a very contentious issue. And it might happen even sooner: the NG delivery system is not, nor ever has, been designed to handle max load. The pipeline system can max out during high demand periods in the winter. As someone pointed out the feds can declare an emergency and curtail commercial deliveries to the benefit of residential. But that's a whole different ball game than the feds taking NG essentially owned (through their utility company) by residential consumers in State X and requiring delivery to residential consumers in state Y. And it won't necessarily be Texans letting those folks freeze in the dark. It might be next door neighbors of NY or PA.

It's another potential example of what I call the 'lands issue, or "Unequal Resource Distribution and Allocation Meaning Nearterm Express Decline".

What it means is the potential resource pie gets sliced to keep privileged users fully supplied and you and me get the slice of pie that suffers all the reductions in available pie size. That result in rate of decline that are far above the rate which can be adapted to.

'Exportland' is one such instance, but there are many others, and this is one. And they are cumulative for those facing the wrong slice of pie, as well as accelerating in percentage terms over time. Specifically, we're likely to be on the wrong side of the cut on:

  • Domestic vs Export segments (exportland)
  • Military strongarming vs weak countries
  • Economic strongarming vs weak economies
  • Reserved usages vs market driven usages (rationing)
  • Economic haves vs havenots

As I've pointed out before, once we are on the downslope, we have to expect Joe Shmoo to not be driving within about 7-10 years, which at current data means before 2020.

Afghanistan's Energy War

... Unknown to most Afghans, in January 2009 the government implemented a new Hydrocarbon Law that transforms its oil and natural gas sectors from fully state-owned to all but fully privatized. In April 2011, the Afghanistan Ministry of Mines launched the first of what it expects to be "several tenders for Afghanistan's oil and gas resources over the next few years".

As in Iraq, the contracts include production-sharing agreements. ...(45 years or more, including the exploration phase, under Afghanistan's law).

The Afghanistan contracts, moreover, would not require foreign companies to invest earnings in the Afghan economy, partner with Afghan companies, or share new technologies.

Afghanistan is not only an energy producer, it is also a potential "energy conveyer". Negotiations for the creation of a Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline are progressing at a rapid rate. Just last month, Afghanistan Minister of Mines Wahidullah Shahrani reported, "The implementation of the TAPI project will begin in 2012 and will be completed in 2014."

Couldn't find Afghanistan on the Energy Export DataBrowser. Its known resources include 1.6 billion barrels of crude oil and 15.7 billion cubic feet of natural gas, primarily in the North.

Maybe I should get dressed up for Halloween as the Ghost of Mossadeq..

J - You piqued my interest. I had to know.

Ghost of Mossadeq

From the linked article...

As an Evangelical Christian, I don't believe in ghosts.

What?! you don't believe in Daddy'O, JC and the Holy Spook!

Or is that only some Christian denominations?

Jeez, Fred, I hope you didn't stop there.. it's like the third sentence. (And my comment had no connection to this site, in any case.)

Actually, I didn't know there was a "Ghost of Mossadeq", I made it up when I heard that we were once more undermining a people who actually had a public stake in their energy resources. That's really all I was working with..


Jeez, guys, lighten up! It was an attempt to be funny... obviously a failed attempt!

Puts tail between legs and slinks away...

Apologies, Fred.

These interesting times have me way too easily tweaked lately.

Taking my pill, if - I - can - Only - OPEN - DAMNED - BOTTLE...


(Actually, my 'pill' today is taking my daughter to the Fryburg Fair or Pumpkin Land and just having a nice day. 38 deg the other night, supposed to be 75 today in Maine)


No apologies needed! I understand exactly where you are coming from and I certainly find myself in the same boat.

Have a wonderful day with your daughter! That's what really counts anyways.



He's right. The link is about the history of Iran, the Shah, the U.S. CIA, USSR and oil.

Pakistan lawmakers rally against energy crisis

Islamabad: Pakistani opposition lawmakers and activists staged a sit-in outside the president's house on Friday in protest at perceived government inaction over the nation's crippling energy crisis.

The severe energy crisis has triggered rolling power cuts of between six to 10 hours in urban and rural Pakistan. Shouting slogans "no to corruption" and "no to Zardari government" the lawmakers condemned the routine electricity load-shedding or power cuts.

Italy and Spain debt downgraded by Fitch

Fitch cut Italy's rating by one notch, from AA- to A+, following fellow agency Moody's downgrade earlier this week. The agency also cut Spain's rating by two notches, to AA-.

It talked of the "small but no longer negligible risk that a further worsening of the eurozone debt crisis and volatility in the value of Italian government bonds will further erode confidence in the banking system".

The agency said a "vicious cycle" could emerge where a growing lack of confidence in Italian banks could knock confidence in government debt, which could in turn undermine the banks further.


UK financial firms downgraded by Moody's rating agency

In a statement, Moody's has downgraded the credit rating of 12 UK financial firms including Lloyds TSB, RBS, Nationwide and Santander UK.

The ratings agency said it now believed the government was less likely to support firms that got into trouble. ...Moody's also downgraded nine Portuguese banks, blaming financial weakness

and Bank of England governor fears crisis is 'worst ever'

Bank of England governor Mervyn King has said this financial crisis could be the worst the UK has ever seen.

His comments came after the Bank authorised the injection of a further £75bn into the economy through quantitative easing (QE).

"This is the most serious financial crisis we've seen at least since the 1930s, if not ever," he said.

The story about the Bank of England has a good quote from the Chancellor of the Exchequer (the British equivalent of the Finance Minister or Treasury Secretary);

Mr Osborne had said in 2009, when he had been in opposition, that "printing money is the last resort of desperate governments when all other policies have failed".

That about sums it up.

The part that I really don;t understand is why they use that printed money to buy gov bonds, in the hope that this will somehow stimulate the economy.

Seems to me a better "shot in the arm" for the economy would simply be to give the printed money to each and every person as a tax rebate.

There is a fundamental disconnect by the Chicago School bunch who run the economies of the West as to the role of wage earner as consumer. They really do not have a clue that those people whose wages they cut to nothing need more money before they will consume what is being produced.

Really... I have had long and loud discussions with not a few of them. The do NOT understand! No clue!

Which is why we are, basically, doomed.


A man whose ideologies are threatened by a new school of thought is likely to bar such thoughts from ever getting into his school (Chicago or elsewhere rooted)

--Author: ___ (somebody important)

The do NOT understand! No clue!

Interesting. Their patron saint Henry Ford, did understand that he had to pay his workers enough that they could buy his cars. Worked out pretty well for him.

Osborne knew in 2009 that he was spouting rubbish, pandering to people's ignorance of financial mechanisms. He knew very well that, among other things, the UK government does not 'print money', that this is the role of the Bank of England.

Increasing the demand for bonds lowers their yield pushing down interest rates.

The main problem western economies face today is unemployment: unemployed labour and unemployed capital.

What the Bank of England is trying to do is to push down interest rates, trying to get the British portion of idle capital off its duff (the trillions sitting in corporate accounts) and back to work. The lower interest rates are, the higher are the opportunity costs of sitting on cash. Indebted households are also a burden on the economy at this time, so relieving the cost of carrying that debt carries some benefit to the economy as a whole. Of course, people with savings will scream, but generally these screamers ignore the importance of the health of the overall economy for their own well-being.

Sending every citizen of the UK a cheque for about $1200 ($75 billion) is simply not likely to benefit the economy for more than a few days or weeks.

As Mervyn King made pretty clear in his remarks to journalists, monetary policy is necessary, but not sufficient, to see idle labour and capital re-employed. Fiscal policy measures are also required; i.e. stimulation of aggregate demand by higher government spending, until such time as the savings glut is dealt with.

We can always hope that Osborne and his PM eventually clue into how valuable it would be to undertake a multibillion pound building retrofit program in the UK. This would be a short-term win and a long-term win.

Fiscal policy measures are also required; i.e. stimulation of aggregate demand by higher government spending, until such time as the savings glut is dealt with.

The problem is to 99% of the population, that sounds like getting something for nothing. So according to the fairy tales we've grown up with, the expectation is that wrathful vengence will strike down a country that does that. On the make politicians pander to those folk economics, and we get austerity and gold standards....

What the Bank of England is trying to do is to push down interest rates, trying to get the British portion of idle capital off its duff (the trillions sitting in corporate accounts) and back to work.

The problem with that is, if you have some idle capital, do you invest it into a moribund economy with lots of downside risks and an exchange rate hit by QE - or do you invest in into a growing economy, with less risks and where exchange rate movements are likely to increase your £ wealth even sitting still?

People aren't going to invest in the UK. They will invest in more healthy economies - making a fool of the BoE and the economists who are wedded to what they think *should* happen, rather than the real world what *will* happen.

Seems to me a better "shot in the arm" for the economy would simply be to give the printed money to each and every person as a tax rebate.

In the US, QE works this way:

1. The Treasury decides to auction off some bonds to raise money.
2. At the auction, banks and other investors purchase the bonds.
3. The Federal Reserve creates dollars from nothing, and uses them to purchase the Treasury bonds from the banks and other investors, at a small profit for the banks.

You see, you can't just print money and give to people to pay off credit cards, student loans, bad mortgages, etc. Stimulating the economy may not be an entirely fake explanation, but it's a minor one. The real goal is steady, easy, risk-free profits for big banks. Or more simply, welfare. If you help ordinary people out of crushing debts, how exactly do the banks profit?

Markets for the poor, bailouts for the rich. Good thing we have the Democrats in office to protect us from Evil Republican Big Business. LOL

Tale of a Modern [Indian] City

How can Indian cities keep up with the nation's dramatic economic boom? India is richer than ever before, and could surpass China's economy by 2013. But its growth is a mix of dynamism and dysfunction as can be seen in the city of Gurgaon.

Gurgaon barely existed 20 years ago. Today it is a booming metropolis of apartment buildings, shopping malls, golf courses and luxury stores. But it lacks basic infrastructure like sewerage, electricity, public transport and roads.

The city suffers from traffic jams and flooding due to poor infrastructure, and those living there say government bodies are struggling to keep up with developers who helped build the city.

Facing inefficient government, corruption and bureaucracy, consumers must provide their own resources, including generators, water tanks, private security and transport, which is leading to growing frustrations.

Alex Tabarrok -- libertarian economist at Marginal Revolution -- periodically posts about Gurgaon as a model for the glories of minimalist government and private markets. Based on the comments from people who have lived there, if you're a private multinational company with the resources to build or lease space in largely self-contained office complexes and gated communities, it's a fine place; if you have to go outside those areas, not so much.

Even the firms who thought the self-contained part was a feature when they built their office complexes are expressing concern about the price of the diesel that they depend on to run the generators. I'd be willing to place a small bet that within the next 10-15 years, the whole thing implodes as diesel becomes much more expensive and deliveries are considerably more erratic.

Re: And not a drop to drink, up top:

Tuvalu residents use King Tides Festival to draw attention to their plight. (3 part video)


Re: Nestle chief warns of new food riots from up top

Ran across a WikiLeaks cable on www.cablegatesearch.net about a month ago that echoes Nestle CEO's view on food and water security. What is important to note is that this is not just his personal view it's the Nestle corporate view.

See World’s Largest Food Company: Forget The Global Financial Crisis, The World Is Running Out Of Fresh Water

… (SBU) Nestle sees the world, and global food production, largely in terms of the water economy. Its management is convinced that growing shortages of fresh water, rather than land, will become the Achilles heel of global agricultural development. This -- and not the current financial crisis, oil depletion, or global warming -- is the most dangerous near-term threat to the planet's well-being.

On present trends, Nestle thinks one-third of the world's population will be affected by fresh water scarcity by 2025, with the situation only becoming more dire thereafter and potentially catastrophic by 2050. Problems will be severest in the Middle East, northern India, northern China, and the western United States.

Parts of Texas have had under 4 inches of rain VS the "normal" 17. As I was told, Thunder Bay Ontario has issues if you drill for groundwater sometimes you hit salt water.

There is a need for thewaterwell.com - discussions about water and the future.

Permaculture and re-watering

Permaculture designers believe that through intelligent landscape design, it is frequently possible to go beyond conservation of water to actually recharge groundwater supplies. As far as I know, most permaculture designs have been carried out at a relatively small scale, but results so far seem to show amazing promise that deserves much more study.

The best known permaculture water-conservation demonstration site is undoubtedly the “Greening the Desert” project by permaculture designer Geoff Lawton in Jordan. Through a combination of mulching, contour swales, micro-irrigation and careful planting, Lawton’s team managed, in a short time, to grow food where no one thought it was possible.

The shortage of water is partly a global climate issue... higher evap and so on. But it is also the result of deforestation and shockingly destructive and wasteful agricultural practise, i.e. industrial cash crop monoculture. Hell, even the Romans managed to deforest and desertify big stretches of N Africa by practising a smaller-scale, non-fossil-boosted version of this extractive ag pattern. Intelligent, restorative permaculture not only requires less water input, but in some cases can actually restore water resources.

Only problem is, it doesn't fit w/in the rigid industrial-capitalist paradigm: permaculture is most effectively practised on smaller land parcels with higher levels of more expert human stewardship, supporting rich polycultures instead of machine-harvestable monocultures. Its widespread practise implies land reform and relocalisation of foodsheds, both of which would interfere with the current flows of profit and the social hierarchy they have created. So the mighty and powerful, predictably, will resist land reform and food system reform until the 99 percent waving torches and pitchforks are at their doors... :-)

Please don't misunderstand me: I love permaculture and if I could figure out how to turn my tiny balcony into a food forest without the land lady evicting me I would but, I suspect that there are drawbacks.

The first one that comes to my mind is that in that project in Jordan I understand that they brought in large organic of mulch to get things started. It would be tough to do that throughout a whole region. Another drawback might be the labor requirements. From what I remember the project in Jordan was partially abandoned and years later there was still some residual benefit, but not as much as if it had been kept up as planned.

Yes, exactly. The greening the desert project used massive organic inputs. Robbing Peter to pay Paul.

Nestle thinks one-third of the world's population will be affected by fresh water scarcity by 2025.

There was a special on Discovery a few months ago, with a panel of experts on various subjects. Nate Hagens of TOD was on there discussing what he perceived as a coming financial collapse. Michael Rupert and Howard Kunstler were discussing peak oil. One guy was suggesting robotics would be our undoing. One was on climate change, and one person figured water scarcity would be a major problem moving forward.

Guess there's plenty of categories of different ways civilization can collapse. But also, it could be that all (except robotics - ha!) will contribute to a contraction of human development and population.

Re: Poland Leads Wave of European Shale Gas Development, up top:


The EV Market In Context: 15 Cars That Are Selling Worse Than The Nissan Leaf (And Chevy Volt)


Peak oil, peak fossil fuels treated as capital crisis and not resource crisis

One thing which has really been bothering me about the treatment of peak fossil fuels in scientific modeling and here is that they have been treated as if they are a resource. Whilst they are resources by any technical definition, in my mind they should be treated as capital goods. They do not follow the same model as any other resource given the fact that their EROEI is typically greater than 10:1 and the production of other resources tend to be energy sinks. Their consumption pattern and the consequences of their shortages are different. In the absence of iron or steel due to a lack of enough iron ore the iron demand could be substituted or deferred for a time. However in the absence of say natural gas a significant proportion of the capital stock in the economy from power plants to fertilizer plants are useless and the direct substitute for moving away from fossil fuels is durable capital such as renewable energy.

I propose that instead of calling peak oil a resource crisis that instead we could call it a capital crisis. There is a special difference between a resource crisis and a capital crisis. In a resource crisis such as rising prices for phosphate does not significantly reduce the utility nor utilization of existing capital stock. I resource crisis involving oil on the other hand significantly effects multiple classes of capital from transportation to remote power generation for mines. The supply of oil acts as a multiplier value on capital and in a complete lack of oil gives a multiplier of 0, I.E. the capital is rendered useless. The crux here is that capital is needed to create capital and the substitute for oil is increasing different types of capital stocks to act as a substitute whilst at the same time the effective base of capital which is needed to build additional capital is contracting due to a lack of supply of oil.

Given the ways oil is used and the fact there is a lack of an adequate substitute for it if the supply of oil becomes too problematic then it presents a catch 22 to the worlds economies. Oil is needed to power capital to build the substitutes to oil but the capital needed will only be built if there is a clear and present danger of shortages in oil and by that time there isn't going to be enough oil flowing to power the capital to easily build the substitutes needed to replace the oil demand. This is the trap the post peak oil world will have to deal with.

I think you're spot on, but good luck trying to convince an economist of any of this.

The problem with economists is that peak oil theory is a giant red mark all over their theories of the invisible hand of the market steering the right course without need for intervention and the base principle that people are rational. Since they've been given a seat of power they effectively have a vested interest in denying resources are finite because otherwise it would undermine their credibility to shape policy all around the world.

I find the talk about what "economists say" somewhat vexatious because I used to design computer software to do economic modelling for major oil companies. Economists cannot predict future oil production because they are not geologists and do not know what the future supply of oil will be.

What you have to do is get all the oil reservoir data from the geologists and use some engineering equations to calculate a probable supply availability curve. Then you have to feed the oil supply into the economic supply/demand models and calculate a price. Then you have to take the price to the production model and calculate a new supply curve. Then you take the new supply back to the economic models and get a new price, and take the price back to the production models, yaddah, yaddah, yaddah.

At the end of it all you have a fairly realistic estimate of production and prices, but you have burned up an awful lot of computer time.

The basic point, though, is that you have to combine expertise from several different fields to come up with a realistic estimate. The economists cannot come up with a good prediction on their own, nor can the geologists or engineers.

The real problem on the national scale is that the politicians and media look at the resulting supply and price curves, and don't want to believe them. So rather than adjust policy and taxes to fit the reality, they try to adjust reality to fit the policy and taxes they want to have. This usually involves getting the government geologists to fudge the reserve data and consultants to fudge the economic models.

TEPCO claims nuclear worker's death unrelated to radiation exposure


It wasn't the fall - it was the sudden stop /sarc

Two bombs hit Iraq Rumaila oil pipelines-official

The impact on production from Rumaila was not immediately clear, but firefighters were working to put out blazes caused by the blasts, two sources said.


Rumaila is the largest Iraqi oil field; with the stalling of the political process, I expect much more attacks of this type once the American forces withdraw.


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September 2011 Dashboard: Consumers Favor Trucks Over Hybrids

All the top hybrid sellers dropped in September and are down for 2011—a year in which hybrid sales were expected to rise. In September, the hybrid take-rate was a disappointing 1.68 percent of new car sales.

Diesel volumes were also a letdown in September—falling 5 percent compared to a year ago. However, sales of clean diesel vehicles are up 30 percent for the year.

The documentary, The Secret of Oz (VIDEO-2 hours), explains the original Wizard of Oz story as being about monetary policy.

Baum's children's book is filled with monetary reform symbology. Yellow Brick Road (gold), Trek to Oz (Washington), silver slippers (coin), Scarecrow (western farmer), Tin Woodman (factory worker), Lion (William Jennings Bryan), poppies (opium wars), field mice (populist movement), "seven passages and up three flights of stairs" (Crime of '73), Wicked Witch of West (Rockefeller), Wicked Witch of East (JP Morgain), water (liquidity)... The power of the witch in The Wizard of Oz is the power to create money.

The following was printed in United States Bankers magazine in 1892.

   We must go forward cautiously and consolidate each acquired position, because already the inferior social stratum of society is giving inceasing signs of agitation. Let us make use of the courts... When, through the law's intervention, the common people shall have lost their homes, they will be more easy to control and more easy to govern, and they shall not be able to resist the strong hand of the Government acting in accordance with ... the control of the leaders of finance.
   We must keep the people busy with political antagonisms. We'll therefore speed up the question of reform of tariffs within the Democratic Party; and we'll put the spotlight on the question of protection ... for the Republican Party.
   By dividing the electorate this way, we'll be able to have them spend their energies at struggling amongst themselves on questions that, for us, have no importance whatsoever.

Gold and money are separate things... Gold is the trick mechanism by which you can control money... that is the root of all evil.
- Thomas Edison (12/6/1921)