Drumbeat: February 3, 2012

Once, men abused slaves. Now we abuse fossil fuels

Intriguing similarities between slavery and our current dependence on fossil-fuel-powered machines struck me: both perform roughly the same functions in society (doing the hard and dirty work that no one wants to do), both were considered for a long time to be acceptable by the majority and both came to be increasingly challenged as the harm they caused became more visible.

The history of slavery and its abolition shows how blurred the frontier between what is considered good and evil can be, and how quickly it can shift. We have a mental image of slave-owners as cruel, sadistic, inhuman brutes, and forget too easily the ordinariness of slave ownership throughout the world. To many, slavery seemed normal and indispensable. In the US, George Washington and Thomas Jefferson owned slaves. Lifestyles and healthy incomes were predicated upon it, just as we today depend on oil. Similarly, many slave-owners lived with the impression that they were decent people.

Oil Rises From Near Six-Week Low Before Jobs Report; Brent Premium Widens

Oil headed for a weekly decline before a report that may show U.S. employers hired fewer workers last month than in December. Brent crude’s premium to the New York price is set for the largest weekly gain in a month.

Futures traded near a six-week low after dropping a fifth day yesterday, the longest losing streak since August. The U.S. added 140,000 jobs in January after gaining 200,000 in December, according to a Bloomberg News survey of economists before a Labor Department report today. London-traded Brent’s premium to West Texas Intermediate crude, the U.S. benchmark, widened 30 percent this week to the most since Nov. 12.

(Actual job numbers were way better than predicted.)

U.S. gasoline heads for "epic summer"-Citi's Kleinman

(Reuters) - Refinery outages in the U.S. and Europe and lower U.S. crude prices will support U.S. gasoline refining margins and enable traders to profit from rising U.S. gasoline futures, said Seth Kleinman, global head of energy strategy at Citi.

"U.S. gasoline looks fantastic - it is heading for an epic summer," said Kleinman, speaking at the ETF Securities Investment Conference in London on Thursday. "Structurally it will be very supportive for the entire oil market."

Bets on Raw Materials Rising Most Since ’06 as Factories Grow: Commodities

Investments in commodities are expanding at the quickest pace in six years on signs of rising economic growth, even as JPMorgan Chase & Co. and Goldman Sachs Group Inc. warn that some prices have rallied too fast.

The number of futures contracts on 24 commodities from oil to copper rose 9.3 percent last month, the most since January 2006, according to data compiled by Bloomberg. Speculators are the most bullish since November, Commodity Futures Trading Commission data show. Gold and silver had the best start to a year since 1983, orange juice posted its biggest rally in more than three decades, the LMEX gauge of six industrial metals rose the most since 2006, and cattle futures advanced to a record.

North Sea Oil Exports to Asia at 8-Year High: Energy Markets

(Bloomberg) -- More North Sea oil is being shipped to Asia than at any time in the past eight years as prices fall to their cheapest levels in 15 months compared with Middle East alternatives.

Deja vu as Russia gas cuts hit eight more EU countries

BRUSSELS - Eight EU countries have joined Italy in noting a sharp drop in Russian gas supplies, in events recalling the massive 2009 crunch.

Gazprom deliveries to Austria and Slovakia reportedly fell by 30 percent on Thursday (2 February). Shipments to Poland fell 7 percent and Czech distributor RWE Transgaz said deliveries are "several" percent lower than normal.

EU says gas supplies are down despite Gazprom claim

(BRUSSELS) - The EU executive said Friday that gas deliveries have fallen in eight countries, despite Russian insistence that volumes had increased amid a sudden drop in temperatures.

As temperatures plunged to fresh lows in a week-long cold snap that has claimed more than 220 lives, the European Commission said Austria, Bulgaria, Greece, Hungary, Italy, Poland, Romania and Slovakia had each registered drops in gas supplies.

Ukraine blames Russia for gas shortages in Europe as severe cold spell grips region

KIEV, Ukraine — Ukraine’s government is blaming Russia for natural gas shortages in some European countries as a severe cold spell grips the region.

Fuel and Energy Minister Yuri Boiko said Friday that Russia was shipping some 15 percent less gas than usual because of increased domestic consumption due to the cold weather.

Risks to UK gas security abound - Ofgem chief

LONDON (Reuters) - A lack of sufficient gas storage, heavy dependence on Qatari liquefied natural gas (LNG) and an unknown American capacity to export gas to Europe are all risks to Britain's gas supply security, the UK's energy regulator chief said this week.

"Fundamentally we are very concerned about security of (energy) supply," said Ofgem Chief Executive Alistair Buchanan at a gas seminar on Thursday evening.

Lukoil reserves 17.3 bln barrels of oil equivalent

MOSCOW (Reuters) - LUKOIL, Russia's second-biggest oil producer, said on Friday that proven hydrocarbon reserves as of Dec. 31 were 17.3 billion barrels of oil equivalent, including 13.4 billion barrels of oil and 23.2 trillion cubic feet of gas.

The company also said it replenished oil already produced by more than 100 percent in 2011, with 619 million barrels of oil equivalent added thanks to exploration and a further 197 million barrels of oil equivalent gained by a "reinterpretation of previous assessments."

Huhne Resigns as U.K. Energy Secretary After Being Charged

Chris Huhne resigned as U.K. energy secretary after becoming the first serving Cabinet minister to be charged with a serious criminal offense in modern times.

Prosecutors have “sufficient evidence to bring criminal charges” against Huhne and his ex-wife, Vicky Pryce, of perverting the course of justice, the director of public prosecutions, Keir Starmer, said in a televised statement in London today. The charges were laid after Pryce accused Huhne of lying about a speeding ticket nine years ago.

Employment minister Davey named Energy Secretary

(Reuters) - Employment minister Ed Davey was appointed Friday as Energy and Climate Change Secretary to replace Chris Huhne who has resigned following news he is to be charged over allegations he tried to cover up a speeding offence.

Oil Royalty Raise on U.S. Lands ‘Not Imminent,’ Agency Says

A proposal to increase royalty rates for energy production on federal lands isn’t imminent and won’t be included with President Barack Obama’s 2013 budget proposal this month, an administration official said.

Environmental groups including the Wilderness Society said the administration should consider raising the payments to as much as 20 percent. The federal government collects 12.5 percent of the value of oil produced on federal land and 18.75 percent offshore.

Norway’s Oil Bonds Chase Record Spending Amid Offshore Boom

(Bloomberg) -- Norway’s corporate bond issuance is growing at the fastest pace in at least six years as Europe’s biggest oil exporter prepares for record spending on its offshore industry.

Spain's Repsol begins Cuba offshore drilling-sources

HAVANA (Reuters) - Spanish oil company Repsol YPF has begun drilling the first well in Cuba's long-awaited exploration of offshore oilfields that the communist country says hold both billions of barrels of oil and the key to greater prosperity, industry sources told Reuters on Thursday.

The massive Scarabeo 9 drilling rig, which arrived in Cuban waters two weeks ago, began drilling into the sea floor about 30 miles northwest of Havana on Tuesday night, the sources said.

Uganda and Tullow sign deal to start oil production

Uganda's government has signed production agreements with the London-based company Tullow oil.

The deals pave the way for a $10bn (£6bn) investment in a refinery and crude oil export pipeline.

PetroChina, Shell Deepen Ties for ‘Powerful’ Shale Potential

PetroChina Co. (857) and Royal Dutch Shell Plc (RDSA) deepened their collaboration in exploring unconventional gas resources with the Chinese company investing in a Canadian project and the European oil producer pledging to help it step up drilling to tap shale reserves in the second-largest economy.

Wyoming adopts new gas flaring rules

CHEYENNE -- Top state officials and education advocates say a new natural-gas flaring policy is a “step forward” to securing more royalties for minerals on state school trust lands.

The Wyoming Board of Land Commissioners voted Thursday to accept new standards and procedures to determine when companies can flare gas without paying state royalties.

'Bayou Billionaires' Brings Gas Boom To Reality TV

NEW YORK (CNNMoney) -- The fracking-led oil and natural gas boom that's received widespread attention in the mainstream press has moved to a new medium: reality TV.

Japan protests to China over undersea gas drilling

TOKYO (AP) — Japan has accused China of unilaterally exploring gas deposits in the East China Sea, in violation of an agreement to jointly develop disputed areas.

Chief Cabinet Secretary Osamu Fujimura told reporters Wednesday that Japan protested to China after a flare was seen Tuesday at a Chinese structure at an undersea gas deposit. Japan has made similar complaints several times in the past.

"We have detected a flare, a sign that it is highly likely that there is a gas development going on," Fujimura said. "Any unilateral exploration is unacceptable."

China rejects Japan protest over gas exploration

(AP) BEIJING — China has rejected Japanese protests over alleged improper exploration of gas deposits in the East China Sea.

The Foreign Ministry said Friday the recent activity had taken place within Chinese-controlled waters and was completely normal. A ministry statement said China was strongly dissatisfied with recent comments from Japanese officials.

Egyptian Police Fire Teargas at Cairo Protests After Deadly Soccer Clash

Egyptian police used tear gas to disperse protesters in Cairo and two people were reported killed in Suez as unrest persisted following violence at a soccer match this week that left more than 70 dead.

Crowds tried to storm police headquarters in both cities, the state-run Middle East News Agency reported. Demonstrators blame police for failing to prevent the violence that followed a soccer match on Feb. 1 in the coastal city of Port Said.

Gunmen kidnap 2 Americans and an Egyptian in Sinai

Egypt has faced deteriorating security and a surge in crime since the popular uprising that ousted Hosni Mubarak nearly a year ago. Protesters accuse the military council that has assumed power and the police force of negligence.

The unrest led to a sharp drop in the country's vital tourism sector, with revenues plunging almost 30 percent last year.

Sacrifices in vain on the Afghanistan war path

A NATO report made public yesterday suggests that the Taliban, backed by Pakistan, is set to retake control of Afghanistan after NATO-led forces withdraw.

Although not a strategic study the report begs the question, has the sacrifice of our Australian diggers been in vain? Has our contribution to the war on terrorism as Australian taxpayers been money well spent?

Rights group: Syrian security forces have tortured children

(CNN) -- Syrian army and security officers have detained and tortured children with impunity during the past year, a rights group claimed in a report Friday, as it urged the U.N. Security Council to act on Syria.

The Human Rights Watch report comes as the U.N Security Council considers a draft resolution intended to pressure Syria to end its months-long crackdown on anti-government demonstrators -- and as violence continues unabated in Syria.

Iran's Khamenei warns over military strike, oil embargo threat

TEHRAN (Reuters) - Iran's Supreme Leader Ayatollah Ali Khamenei said on Friday the Islamic Republic would not yield to international pressure to abandon its nuclear course, threatening retaliation for sanctions aimed at Iran's oil exports.

"Threatening Iran and attacking Iran will harm America ... Sanctions will not have any impact on our determination to continue our nuclear course ... In response to threats of oil embargo and war, we have our own threats to impose at the right time," Khamenei told worshippers in a speech broadcast live on state television.

Panetta says Israel could strike Iran in spring: report

US Defense Secretary Leon Panetta believes there is a "strong possibility" that Israel will strike Iran's nuclear installations this spring, the Washington Post said Thursday in an editorial.

When asked about the opinion piece by reporters travelling with him to a NATO meeting in Brussels, Panetta brushed it aside.

New fears over Iran's missile capability

IRAN is developing a missile capable of hitting the east coast of the US, according to an Israeli government minister, intensifying western anxiety over the regime's nuclear ambitions.

The fresh alert was further heightened by reports that the US Defence Secretary, Leon Panetta, believes a pre-emptive strike on Iran's nuclear facilities by Israel looms likely and could come as soon as April.

The World According To Noam Chomsky

With the instability in Iran and scoping the long-term horizon, do you see the potential for World War III, given the natural resources crunch ahead for humanity – with shortages of food, water and oil all looking likely?

"I don't think we are approaching an international resource war, but the problem of natural resources is serious. In terms of fossil fuels, it is not that we are running out – they are actually too easily available. The use of fossil fuels is having a very real impact on the chances of survival. The recent emissions reports from the International Energy Agency and the US Department of Energy indicate that the worst-case scenarios of the International Panel on Climate Change were too conservative. There may be only a few years until we reach the point where the window closes and you can't really do anymore. Now, that is serious. The new techniques on extending the use of fossil fuels, fracking and so on with shale gas and the tar sands in Canada, are extremely dangerous. Not only because they are extending the use of fossil fuels, but also because they have damaging local effects on the environment. They take a massive use of water, which is an increasingly scarce resource itself. They are not only using water, but poisoning local water through use of chemicals. These tendencies are quite ominous, I think.

All this carbon-cutting is a waste of energy

Neither Boris Johnson nor Ken Livingstone is willing to deliver the uninterrupted, cheap energy London needs.

The Peak Oil Crisis: Election 2012

If current trends continue, gasoline prices and U.S. energy policy seem destined to play a larger role in the political debate prior to the November elections than ever before. Gasoline on the East Coast is already within striking distance of all-time highs and most prognosticators are talking about the likelihood of $4+ gasoline before summer. Although the U.S. consumer is more inured to $4 gasoline than four years ago, the crossing of the $4 barrier is bound to set off another round of recriminations and finger pointing as to just who or what is causing this phenomenon. If what happened in 2008 is any indication we are in for another round of bizarre proposals from our politicians - remember the "sue OPEC" legislation.

Economic growth and the future...

Hydralic fracking, digging up the tar sands of Canada and the desparate deep sea oil exploration are some of the signs that peak oil and energy descent is upon us.

The low hanging fruit are all but gone.

The Secret Behind Report 117

What started as a typical call with a friend turned into an hour-long conversation about Peak Oil. Both of us had just gotten word of Australia's Report 117 and the fact that the Australian government was keeping a tight lid on its contents.

“So you're saying it was okay for them to bury it like that?” I asked.

“Nowadays, I don't put anything past them... Besides, it's not like we didn't see it coming.”

Peak oil really could destroy the economy – just not in the way greens think

It is one of the key tenets of the global green religion: ‘scarce resources’ are running out; they must be preserved for ‘future generations’; ergo, we must reduce our consumption of them either through self-abnegation or through state intervention ranging from market manipulation (e.g. taxes and subsidies to drive us all from fossil fuels) to full-on rationing. If you refer back to the previous paragraph, you may detect a certain irony here.

Yes, in the name of averting global economic disaster, concerned greens have been pushing the very policies most likely to cause it. Driving up energy prices, discouraging consumption, increasing regulation, rationing resources: these are not, I think we can all agree, methods traditionally associated with getting an economy out of a depression.

The solution to peak oil

Peak oil is not a theory, it is a fact. Although we cannot be sure of exactly when demand will outstrip supply, the fact that oil is a finite resource means that it will happen. Sooner rather than later. If humanity is going to survive with any dignity we will need to transition back to a system that is based on the ultimate source of all our energy, the Sun.

What a resource-constrained economy means for cleantech

Let me start by asking, ‘What resources constrain the economy?’ In the 20th century the McKinsey Global Institute Commodity Price Index fell by half. This is despite population going up fourfold, and the global economy growing by 20 times (For this and other McKinsey references below see their excellent report on Resource Revolution). Malthus was proved wrong; we didn’t live in a resource-constrained world.

But that’s no longer true. In the last 10 years that commodity index has gone all the way back up. Why? There are more people, and more of those people are prosperous than ever before – –3 billion will be added to the global middle class in the next 20 years. Expanding existing sources is more expensive and more difficult. The world is more interlinked; a small crisis in one commodity can quickly affect many more, creating a bigger shock. And, crucially, we’ve degraded the natural world so much that it cannot withstand shocks like it used to, making us all much more vulnerable.

Bill Rees' Last Lecture

Though tinged with hope, his message rides on tremendous consequences from inaction. Rees quoted from the 2007 Swedish Tällberg Forum which stated, "Do we know what we need to do? Probably yes. Will we do it? Probably not."

Rees laid out it down. "Failure to assert collective reason over instinct will lead to civil strife, resource wars and ecological destruction. That's the summary of the entire course."

Nuclear Reactor Incidents Are Reminders of Need for Preparedness

A reactor at a Southern California nuclear power plant was shut down after a leak in a steam generator tube on Tuesday, Reuters reported. This incident came a day after WIFR reported a nuclear plant lost power and shut down in Byron, Ill., on Monday. While both incidents were determined to not be high emergency levels, they are reminders of the importance to include nuclear disaster planning in individual and family emergency plans.

Wishing Upon an Atom in a Tiny French Village

Even in the wake of the meltdown in Japan, as France’s European neighbors have begun to close nuclear plants, this village quite likes its power station. Just a mile or so from the border with Germany — which closed its eight oldest reactors within days of the Fukushima disaster — Fessenheim seems a fitting symbol of France’s attachment to the atom.

58% vs. 27% - Sharp Divide Between Republicans and Democrats on Energy and the Environment

No issue divides more along partisan lines than the importance of environmental protection - 58% of Democrats say it is a top priority, compared with just 27% of Republicans.

Civic hybrid owner wins in court over too-low mpg

Southern California Honda Civic hybrid owner Heather Peters won $9,867 in a court fight with Honda over what she said was her car's too-low mileage.

Clouds gather over Spain's renewables sector as aid cut

Spain's push to become a world leader in renewable energy risks collapsing after the government slammed the brakes on generous subsidies as part of an austerity drive.

Prime Minister Mariano Rajoy's government passed a decree on Friday to "temporarily suspend" subsidies for all new wind, solar, co-generation or waste incineration plants as it seeks to curb the public deficit.

Federal Government Opens More Ocean to Wind Projects

Enthusiasm for offshore wind projects may have cooled among developers in the United States these days, but the Obama administration is still trying to make a ribbon of wind farms off the Atlantic Coast a reality.

Towards a More Energy Efficient Food System

So how much energy is required to grow food? According to Webber, about 10 percent of the U.S. energy budget is associated with "producing, distributing, processing, preparing and preserving the plant and animal matter we consume." And what's the rate of return on that investment of energy? Unfortunately, it's not very good. "The energy used to make food is vastly greater than the amount of energy we get out of it," writes Webber. In the United States, it takes about 10 units of fossil energy to produce one unit of food energy.

Too much, too fast, too soon? The future of the Arctic in the times of ‘cold rush’

BRUSSELS – Environmentalists, oil and gas industry representatives, the European Commission and certifiers of oil and gas installations were in agreement that the risks of oil and gas operations in the Artic are far greater than in most other places in the world during a European Parliament conference on Wednesday.

EU Climate Chief Seeks Doubling of Global Clean Energy at Rio

European Union Climate Commissioner Connie Hedegaard said countries meeting at a conference in June should pledge to double the share of renewable energy they use by 2030 and give all citizens access to sustainable power.

The nations also need to double the world’s energy efficiency, Hedegaard told reporters today in New Delhi.

Euro Parliament backs low-carbon road map

BRUSSELS (UPI) -- A European Parliament committee this week approved an EU "road map" to a low-carbon economy that seeks to go beyond current greenhouse gas reduction targets.

The European Parliament's Committee on the Environment Tuesday passed a report written by British MEP Chris Davies that backs the European Commission's "Road map for Moving to a Competitive Low Carbon Economy in 2050," giving it a key legislative victory.

Bloomberg: Unemployment Drops to 8.3%; Payrolls in U.S. Jump 243,000

Me thinks those people are going to need more fuel.

It sure seems like the economy's finally picking up.

Or maybe not. Denninger's not buying it.

Indeed - this was a shocking number:

"on a raw basis 1.572 million people exited the labor force last month."

The boomers have to stop screwing up the job market for the young folks sooner or later, They just HAVE to die, retire, or just plain give up at some point in time, and considering the demographics, this should continue to happen at an accelerating rate. Which is probably a good thing for the younglings who have been suffering since the 2008 recession.

I wouldn't hold my breath.

Sure, they'll die eventually, but the youngest boomers are only 47 years old now. The oldest are just 66.

On the one hand, you have people complaining about retirees sucking up resources without working for them. OTOH, you have people saying "Younger people need the jobs."

Can't have it both ways. This isn't Logan's Run. If you're not going to pay people to stop working, you'll have to put up with them staying in the job market.

Sheesh, I'm in the middle and I'll likely never completely retire . . . makes me wonder if the next generation will perhaps have the same problem . . .

A lot of people are suffering, Bruce.

I think the key isn't about shifting blame from one distraught group and another, but in noticing that there is still a group out there that is flourishing magnificently, almost unnaturally, while most others suffer, and these lucky few, this band of brothers and sisters is sloughing off the very retirement accounts that would have ALLOWED the boomers to consider stepping off the conveyor belt and making room for their kids. (Except that the belt itself is getting trimmed, too!)

'Welcome to Walmart! May I help you?'

'Welcome to Walmart! May I help you?'

Yes, thanks, but can I have a smaller cart?

In other news: Walmart is reducing greeter positions.

Been done here, even the paqueteria is now lockers (that usually have 10-20% broken).


Yeah well ... I am hard-core baby boomer (born, like many other very lucky people, in 1952). There are quite strong arguments that we are the most fortunate, affluent, and worry-free generation ever to stroll across this blue planet. It might well be very true.

Almost all of us ducked the Vietnam War, all the existing STDs could be solved with a few simple drugs, many of us received a free higher education, and we could all have good careers and good houses ... pretty easily in reality.

[For example, my step-daughter came to sexual age in about 1989, when the heterosexual HIV drama was in full swing - so sex for her could mean death - whereas we had missed all that].

And we certainly grabbed the cheap oil paradigm with both greedy hands.

What was/is there not to like about being a baby boomer in the western world? What could go wrong? Well - not much - but there are many millions of them who have not made provision for their retirement - far more than you would think - across UK, the rest of Europe, North America, Australia, and lots of other places where early retirement is possible, if you have the wherewithal.

Personally - I pulled the career pin at 54 (plenty of superannuation), but more-or-less immediately took on a new career as a graphic designer and niche printer - and working from home (I couldn't stand commuting) - and as busy as ever.

However - while many boomers are undoubtedly very lucky - more than we might think will have to keep working longer than the Gen X might like ... the boomers simply haven't saved enough to have a sufficient cash-flow. And this is in wealthy places like Australia - goodness knows what it's like in basket-cases like Greece.

The boomers... just HAVE to die, retire, or just plain give up at some point in time...

Please note that I'm smiling while I write the following. It's not really a rant, and I'm not trying to provoke a shouting match. As a point of reference, keep in mind that you're making your statement to 56-year-olds (the median Boomer), who can't claim Social Security for at least six years or Medicare for at least nine.

Are you willing to support public policies that make it financially feasible for the Boomers to retire? The Federal Reserve tolerated the tech bubble in the late 1990s and the housing bubble in the 2000s and cost the Boomers a substantial part of their personal savings for retirement. One of the two major political parties in the US is determined to reduce public pensions, and corporate America is using a variety of means (include bankruptcy court) to eliminate private pensions. That same party recently proposed to gut Medicare over the next 20 years.

The other developed countries of the world get health care outcomes comparable to those of the US, for all their people, young and old, for on average about half the price (I'll simply note as a data point that the farther they are from a single-payer health finance system, the more their health care system generally costs). Northern Europe seems to manage, with some adjustments from time to time, to provide their retirees with sufficient income to live in moderate comfort. I could suggest that one of the reasons they manage is that they tend to regard capitalism as a valuable tool for producing wealth that can then be used for the benefit of everyone.

The strain on the boomers budgets will come from the size of homes most middle class workers have aquired since the 50's.And with 10K boomers a day turning 65 for the next 18 yrs when like most trends since the 60's when the market shifts.With the trend of more single households the % of income needed to maintain a larger structure will take a toll since building products prices are tied to peak oil.

30% of adults in the U.S. are living in 'doubled-up' households NOW. Expect that to continue increasing.

Doubled up is defined as non-cohabiting adults, not in school, living together. Examples would include Grandma living with her adult children, 20-somethings living in their parent's basement after graduation, single working adults living as room-mates, etc.

The pertinent age is now 66, BTW. Full SS retirement age has increased to 66 (the first year of the boomers are the first to see this). By the time we reach the last year of the boomers, full retirement age will have increased to 67 under CURRENT law.

Yeah, it hurts a bit when we put things in context. They also report that productivity is up again, another fuzzy measure that sounds good; usually translates to businesses getting more from their workforce for less relative to costs of living.

Nonfarm business sector productivity grew 0.7 percent in 2011, as output and hoursincreased 2.4 percent and 1.7 percent, respectively. The increase in hours worked is the first annual increase in the measure since 2007. Because productivity grew more slowly than hourly compensation (1.9 percent), unit labor costs rose in 2011(1.2 percent). Real hourly compensation, which takes into account changes in consumer prices, fell 1.2 percent in 2011--the largest decline in the annual series since a 1.7 percent decline in 1989.

[bold mine]

Meanwhile, last week Geithner gets the go-ahead to add another 1.2 trillion to the debt which, all inclusive, is now north of 350% of GDP.

"This chart clearly and succinctly communicates the horror of the debt bubble that we are currently dealing with. When this debt bubble pops, it is going to make the Great Depression look like a Sunday picnic."

Borrowing our way to overall lower employment we are.

Yep. A 'recovery' to the tune of 1.2 trillion borrowed dollars a year is no recovery. Was watching Bernanke's face as he testified two days ago.

Even the prospect of unsustainable deficits has costs, including an increased possibility of a sudden fiscal crisis. As we have seen in a number of countries recently, interest rates can soar quickly if investors lose confidence in the ability of a government to manage its fiscal policy.... public debt would increase markedly, we can be sure that, without corrective action, our fiscal trajectory will move the nation ever closer to that point.

That's 41% of all govt spending, borrowed. Unfunded liabilities equal neatly stacked $100 bills twice the volume of the Empire State Building. The US is addicted to 'structural' debt.

The U.S. Treasury Yield Curve is cheap money today for the interest on the Debt but I heard him say the U.S. on the same track as those countries now in crisis. I did not hear him say there was a bail bucket big enough when rates tip over.

Dot com, Savings and Loan, Housing, but this bubble dwarfs them all. That great depression picnic thing seems harsh but real.

Except Denninger, Zerohedge, and Santelli have it all wrong...


Employment: The "Not in Labor Force" actually declined in January

Some readers sent me a link to some terrible analysis that argued over 1 million people left the labor force in January. I pointed out the error. Apparently Rick Santelli at CNBC made the same mistake and reads the wrong blogs!

The Bonddad blog points out the error: No Rick Santelli and Zero Hedge, One Million People Did Not Drop Out of the Labor Force Last Month (CR note: I never read zero).

I pointed out the error

Did you? Where / When ?

From Calculated Risk

The Labor Force Participation Rate declined to 63.7% in January (blue line). This is the percentage of the working age population in the labor force and is at the lowest since the early '80s. The decline in the participation rate is not good news even though it is pushing down the unemployment rate. The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although some of the decline is due to the aging population.

Calculate Risk Graph

I suspect that Labor Force Participation Rate * Median Income would show an even more dramatic decline lately.

If a person..

  1. Doesn't have a job, and they have
  2. Given up looking for work because there are no jobs to be found, and they
  3. No longer receive unemployment insurance

...then they are not unemployed. They are not employed either though.

It would be good if the general media did a better job of explaining that the opposite of 'unemployed' is not necessarily 'employed'.

Also, it would good if most people realized that most of the unemployed (those still in the labor force) DON'T collect state unemployment insurance. In 2011 recipiency (recipients/unemployed) nationwide was only 29% !!! Only 2 states were marginally above 50%. FL was lowest at 18.5%. This is even more pitiful when those not in the labor force are considered. With federal benefits considered, the number was 48% nationwide in Nov 2011.

The U.S. started 2012 with fewer jobs than in 2001. The working age population has grown by about 25M in that time. An additional 4M Americans are institutionalized, primarily prisoners (the incarceration rate has quintupled in the past 40 years).

The employment-to-population level has been fluctuating between 58.2 and 58.5 for the past two years after peaking at 64.7 in April 2000 and reaching 63.4 again in 2006. These levels were last seen in the early 80's, spikes to 58.1% were seen as early as 1953. This looks even worse when the institutionalized population is considered.

Me thinks those people are going to need more fuel.

Not if they telecommute from home.

How many really have (or could have) the sorts of jobs that are conducive to "telecommuting from home"?

I think those jobs telecommuted to India. In many hospitals, I understand, there are only X-ray techs. The images themselves are read in India.

I wonder if we can use actual data points like tax revenue to figure out the real direction of the economy instead of relying on this clearly manipulaated "information". I must admit I am getting a little tired of the propaganda. I am under no delusion that the machine will stop anytime soon.

That is exactly what the annual bench mark revisions do.

Before I provide an additional explanation let me make what I think is an important point. There are about 135Million plus jobs in the economy. If the BLS was 99.9% (a pretty high level of accuracy) that would be an error of 135,000 jobs. So when we all get so very excited about whether the number of jobs reported as 150,000 or 250,000 (difference between a weak recovery and a decent but not great recovery) lets keep in mind it is all within the margin of .1% error.

Once a year the BLS takes its survey data- lets remember that is exactly what the monthly job numbers are its a survey subject to the usual statistical errors- and compares that to the actual employment reports based on withholding taxes etc. In the latest report the March 2011 employment report was adjusted upwards by about 150,000 . While that adjustment is tiny compared to some of the previous adjustments which have been in the millions it is the first time that the bench mark has been revised, Historically, the BLS has overestimated employment when the economy is weakening and underestimated it when it is strengthening.

Sometime even peak oilers can get it terribly wrong:
From Yesterday's Live Chat on Peak Oil, Bold mine.

Comment From Guest
Since you mentioned that non-OPEC nations oil has peaked, when is OPEC production expected to peak?

David Greene:
Guest, OPEC production will peak when OPEC decides it should peak. I side with those who believe they have a great deal of conventional oil yet to be developed. If they expand production to keep pace with demand at prices well below $100/bbl, they might peak around 2050 (very uncertain). But they are not likley to do so since they can make more profit by leaving that oil for the future. I think the world will move to a different fuel for environmental and technological reasons by then and that will make OPEC production peak.

July 3rd of 2008 the OPEC basket price reached $140.73 and every OPEC nation was producing flat out. But by the end of summer the price had collapsed and every OPEC nation except Iraq had begun to cut production. But by the fall and winter of 2009 every OPEC nation except Saudi, UAE and Kuwait had ramped up again to flat out production. But these three OPEC nations kept the faith and held production down as the rest of OPEC pretended they had no quota. These nine nations actually peaked in December of 2007 and was already in decline when OPEC peaked in July of 2008.

Then by January of 2011 the price had started to rise again and these three nations started to increase production. Then in February and March of 2011 Libyan oil production collapsed due to their revolution and these three ramped up production to the maximum they could produce. Saudi and Kuwait reached new highs for this century. Now with the OPEC basket price around $111 a barrel every OPEC nation is producing flat out but December production is still 850,000 barrels per day below the peak of July 2008. Libya is still about 750,000 bp/d below their pre revolution level.

OPEC may not have yet peaked but they are currently producing every barrel they possibly can. Manifa is due to come on line next year and is expected to reach full production by 2015. At that point, it is my prediction that OPEC will be at peak, if not before. Some will argue that IRAQ will massively increase production and push the OPEC peak out much further. In my opinion Iraq may still increase production further but will not get anywhere the dream levels some believe. Of course that point is really academic since OPEC net oil exports peaked in 2005.

The data below is in thousands of barrels per day crude only from the OPEC Oil Market Report. The last data point is December 2011.

OPEC Flat Outs

Ron P.

2005 to 2010 rates of change in net oil exports from top 33 net oil exporters in 2005 (net exports of 100,000 bpd or more in 2005, total petroleum liquids, primarily BP data base):

Some of these regional groupings are pretty interesting.

For example, top 2005 net oil exporters in the the Americas & Caribbean were: Venezuela, Canada, Colombia, Mexico, Argentina, Ecuador, Trinidad & Tobago. Their combined net oil exports fell from 6.0 mbpd in 2005 to 4.8 mbpd in 2010 (-4.5%/year rate of change).

And regarding the item linked uptop about North Sea oil exports (North Sea Oil Exports to Asia at 8-Year High: Energy Markets), there were two North Sea exporters in the 2005 top 33 group: Norway & Denmark. Their combined net oil exports fell from 2.9 mbpd in 2005 to 2.0 mbpd in 2010 (-7.4%/year rate of change).

OPEC may not have yet peaked but they are currently producing every barrel they possibly can.

That is your opinion ?

According to my calculation, previously presented herein, SA is producing 1.4 million bpd below capacity.

Yes, of course it is my opinion. Though occasionally a Saudi official brags about what they can produce actual OPEC production capacity is a closely guarded secret. They publish absolutely nothing about their actual capacity so anyone's opinion or calculation on Saudi production capacity is only an opinion, including yours. The idea that anyone could make any kind of calculation and get within .1 mb/d of their actual production capacity is just not credible. Unless of course that they are actually producing flat out. Then all one needs to do is look at what they are producing.

Saudi is very much worried about the world going into another deep recession. They would like to keep oil prices down to around $100, but try as they may they are unable to do so.

Nansen G. Saleri, head of reservoir management for Aramco, in a sidebar attached to this New York Times article: Oil Innovations Pump New Life Into Old Wells, says Saudi has 900 billion barrels of reserves. Do you believe that? Just wondering. I only post it to give some indication as to the weight of of truthfulness that can be assigned to Aramco officials.

Ron P.

Nansen G. Saleri...... says Saudi has 900 billion barrels of reserves. Do you believe that?

No I don't believe SA has 900 billion barrels of reserves. SA claims 260 Gb oil and condensate proven reserves.

And, no I don't believe Saleri said that.

That is clearly a misinterpretaion. Saleri quoted SA as having 900 Gb initial oil in place and that was with the expected addition of 200 Gb initial oil in place. This is long-in-the-tooth news:


Nope, that won't fly. The Times obviously got their information from some other source. They quote the 260 billion barrels of proven reserves. But Saleri's estimation of 368 billion barrelsof proven, possible and probable reserves is mentioned nowhere in the article you linked to, and neither is the 608 billion barrels of proven, possible, probable and contingent. Those figures are far too specific to be a misinterpretation of what Saleri wrote.

Hey, you simply don't get more specific than proven, possible, probable and contingent. Therefore we must infer that Mr. Saleri's estimation of 900 billion barrels of ultimate reserves was something they got from him in 2007, long after the 2004 article you linked to. If he meant "original oil in place" he would have never used the term "ultimate".

Oh, and I don't believe for one minute that they have anywhere close to 260 billion barrels of proven reserves.

Ron P.

They can have 100,000 trillion barrels, its how many they can get out of the ground in 24hrs that matters.

Daddylonglegs, you don't seem to understand. If you have 260 billion barrels of proven reserves then getting it out of the ground is no problem whatsoever. If they had that much oil in the ground, and they decided to increase their production to 20 million barrels per day they could very easily do so.

Sure it would take them a few months to drill the wells but that would be no problem. Instead they are building islands and causeways in the Persian Gulf in hopes of producing 900,000 more barrels per day of the heaviest and nastiest oil in the ground by 2015.

That is Manifa and it is supposed to have 10 billion barrels of proven reserves, 1/26th of their total proven reserves if we can believe the 260 billion barrel figure. Yet they are spending billions to get at the nasty stuff. Looks to all the world that they are scraping the bottom of their barrel.

What they claim to have matters because the world believes it. Even some peak oilers like David Green, (above) believes it. BP, the EIA, the IEA at least claim to believe it also. But we who have been following this story for a a decade know better because their actions defy their words.

Ron P.

Instead they are building islands and causeways in the Persian Gulf in hopes of producing 900,000 more barrels per day of the heaviest and nastiest oil in the ground by 2015.

Building islands and causeways in the gulf for a 900,000 bpd project is not exactly scraping the bottom of their barrel as you claim. Islands and causeways are sometimes the most economical means of development for shallow water offshore fields.

Is there another project in the world even in that league ?

Manifa's oil gravity is 24 to 27 deg. API. Prudhoe Bay' gravity by comparison is 24 deg API.

Instead they are building islands and causeways in the Persian Gulf in hopes of producing 900,000 more barrels per day of the heaviest and nastiest oil in the ground by 2015.

That might be an interesting article or statistic to post on TOD: the types of oil quality being worked per time period, historically and today, in something like a pie chart.

Then perhaps past pie charts can be compared to recent ones, showing how the fractions of sour/heavy vs light/sweet is changing with time.

So, something like for a time period, total bbls were X, light/sweet was Y fraction, and sour/heavy was Z.

Saudi Aramco's Annual report for 2010:


That should clear up any misconceptions you have about what Saudi Aramco says their reserves are.

Banned, there was never any misconception of what Saudi says they have. All you have to do is go to:

OPEC Share of World Crude Oil Reserves 2010

They told OPEC that they had 264.52 billion barrels or did have in 2010. That figure was never in question. The point Saleri makes is that these are proven reserves. The question is how much proven, possible and probable reserves do they have? Then how much proven, possible, probable and contingent reserves do they have? And just what will their ultimate reserves finally prove to be? Would you believe 900 billion barrels?

Ron P.

Contingent reserves ? There isn't any such thing. Gibberish in the first degree.

If you mean contingent resources, 900 Gb can't be ruled out, in my opinion.

No, contingent reserves is a direct copy from the New York Times and they were quoting, or so they say, Salery. So tell them they are talking gibberish. But it is not gibberish by any stretch of the imagination. Contingent means uncertain, liable to happen or not; uncertain; possible. A reserve is all of a resource that is attainable with current technology and for a profit.

Therefore contingent reserves are reserves that they are simply not yet aware of. I guess that's why they are looking in the Red Sea, two miles below the bottom of the sea under 7,000 feet of salt for some of those contingent reserves.

But 900 billion barrels? Yes, I would most definitely rule that out.

Ron P.

..contingent reserves is a direct copy from the New York Times and they were quoting, or so they say..

There you go, clearly the Times don't know what they are talking about.

Unproven reserves are based on geological and/or engineering data similar to that used in estimates of proven reserves, but technical, contractual, or regulatory uncertainties preclude such reserves being classified as proven.[11] Unproven reserves may be used internally by oil companies and government agencies for future planning purposes but are not routinely compiled. They are sub-classified as probable and possible.

A more sophisticated system of evaluating petroleum accumulations was adopted in 2007 by the Society of Petroleum Engineers (SPE), World Petroleum Council (WPC), American Association of Petroleum Geologists (AAPG), and Society of Petroleum Evaluation Engineers (SPEE). It incorporates the 1997 definitions for reserves, but adds categories for contingent resources and prospective resources.


Bannedetc,please do not muddy the waters just to win an argument.

Who else would even be in a position to know? There can't be more than a few people in the world who know what he knows, and are qualified to offer an opinion on such a technical topic.

Bruce, you have not been paying attention. We have thrashed this straw for well over six years now. The question is not who knows what but Why does OPEC lie about its oil reserves?

Why does OPEC lie about its oil reserves?
How many real oil barrels do you see here? OPEC wants you to believe there are 3. But only 1 is real, they made up the other 2.

Ron P.

:) That's a great graphic Ron.

Sorry, but I didn't notice anyone with Saleri's qualifications refuting his statement. While it is fun, you, me, and random internet denizens playing at being a Saudi reservoir manager, we don't have his information, his experience, or his track record of reservoir management for the second largest flowing oil field on the planet.

Okay, let me try this one more time since my message don't seem to be getting through. No one is questioning Saleri's qualifications as a reservoir manager. The question is whether he is telling the truth or not. This did not start with Saleri, it all started in the mid 80s when every OPEC Middle Eastern nation dramatically upgraded their reserves. Every Aramco official and every OPEC official has claimed the massive revisions in the 80s were real. And Saudi reserves have remained almost flat since 1988. They have magic oil, for every barrel pumped another barrel magically replaces it.

As I said we have thrashed this straw for over six years and you just came in on the tail end of the debate. Try catching up. You can start here:
Middle East OPEC reserves revisited
This is just one of many special threads that The Oil Drum has done on this one subject. There were many others but this one special thread linked here is a good place to start.

Ron P.

They have magic oil, for every barrel pumped another barrel magically replaces it.

Not quite.

Any company that wants to stay in business will need to at least replace production, nothing majic about that. Here is a reconcilliation of SA's reserves and production since 2003.

year reserves  prod	add     replacement
2003	259.4	3.0	3.0	1.00
2004	259.7	3.2	3.5	1.09
2005	259.8	3.3	3.4	1.03
2006	259.9	3.3	3.4	1.03
2007	259.8	3.1	3.0	0.97
2008	259.9	3.2	3.3	1.03
2009	260.1	2.9	3.1	1.07
2010	260.1	2.9	2.9	1.00

All figures in billion barrels. The data comes from SA's annual reports. As you can see, SA's reserve replacement has ranged from 97 % to 109 %.

Are you for real?

Please stop posting if this is the sort of crap you are going to keep coming up with.

Please stop posting if this is the sort of crap you are going to keep coming up with.

Do you have anything to add to the discussion ?

I posted a reconcilliation of Saudi Aramco's reserve additions. Saudi Aramco's website is easy to find:


It doesn't ring a bell near you when you see such a perfect I/O -operation at 1:1 -every single year - over 8 years? no?

And one more thing ; Please give a direct link to the source you refer and not just 'the entry page' of a gigantic company. I tried a few searches just to check whether Aramco really is as stupid as your table suggests... but with 'no match' as a result.

It doesn't ring a bell near you when you see such a perfect I/O -operation at 1:1 -every single year - over 8 years? no?

You are clearly not reading the table, or the post. SA's reserve replacement was 97 % to 109 %. That is 0.97:1 up to 1.09:1, not 1:1.

You would have to search for the annual reviews, like I did. You are apparently doubting the figures I posted.

I tried a few searches just to check whether Aramco really is as stupid as your table suggests...


To clarify, the data for year end reserves and production came from SA's annual reports, of which there are 9 (including 2002's year end reserves).

If you are not familiar with what it means to reconcile reserves, it is rather simple:

Ending reserves = starting reserves + reserve additions - production.

Reserve additions include discoveries, extentions, reevaluations and reclassifications.

Sorry you were unable to navigate SA's website. I downloaded these annual reports (pdf's) sometime ago. So you will have to take my word for it or find it yourself from the links I provided. SA refers to their annual report as an annual review.

Posters on TOD spend a lot of time debating someone's interpretation of what someone says SA said about something. SA's website is apparently taboo.

How does this reconciliation suggest Saudi Aramco is stupid ?

SA's reserve replacement was 97 % to 109 %. That is 0.97:1 up to 1.09:1, not 1:1.

If you include the rounding-error - and with a little bit of mental flexibility , this is 1:1, and so poorly arranged to only fool a few ....

The story of the political/paper barrels of OPEC oil is legendary. Clearly there has been some gaming of the numbers. However, I think a lot of peak oil people have probably overblown the story. Western oil companies have been having reserve growth for decades now. Partly because the reported SEC reserve number was so conservative and party because new technology has made the amount recoverable higher.

The same is probably true for the various OPEC countries. Although they probably did create bloated numbers back in the 80's, the numbers have remained fairly constant over the years. So the actual real reserve number probably has grown due to better technology and higher prices per barrel that allows them to go after previous uneconomic small fields. I'm certain the various reserve numbers are wrong but they are probably not as wrong as many might contend. The actual real reserve number may have 'caught up' to the bogus number created many years ago.

But it really sucks that no one really knows what the real numbers are.

So we might as well go with the numbers that we have some reasonable degree of confidence in--annual and cumulative production data and consumption data. Following is the chart that I first presented at the 2007 ASPO-USA conference in Houston, showing Sam Foucher's projections, using actual data through 2006, for future Saudi production (total petroleum liquids), consumption and net exports. The actual data for 2007, 2008, 2009 and 2010 are circled. I estimate that 2011 Saudi net oil exports will be between 7.5 and 8.1 mbpd, versus their 2005 net export rate of 9.1 mbpd.

As noted down the thread, the Saudis showed increasing net oil exports from 2002 to 2005, in response to annual Brent crude oil prices doubling, but from 2005 to 2011, the Saudis showed declining net oil exports, relative to 2005, in response to annual Brent crude oil prices doubling.

How many more peaks can Saudi Arabia have? Does Laherrere add any more peaks to their production rate in his multi cycle modeling?

Saudi Net Oil Exports 2002 to 2011* (Total petroleum liquids, BP), versus annual Brent crude oil prices. Note divergence after 2005:

*(2011 is estimated) I estimate that 2011 Saudi net oil exports will be between 7.5 and 8.1 mbpd

Well, it looks like they're back on the right track. They should be exporting enough to cover world demand. Heaven knows I don't demand any more. At $3.50 a gallon for gasoline, and $800 to fill up my heating oil tank, I will need a pay raise before I could demand any more of anything.

Of course, in early 2006, they started complaining about a lack of a demand for their oil, even their "light, sweet oil." They conveniently forgot about their early 2004 pledge to support the $22 to $28 OPEC price band, but to be fair, they did their best, from 2002 to 2005, to bring oil prices down:

The annual Brent crude oil price rate of change from 2002 to 2005 was 26%/year.

In response, Saudi net oil exports increased at 7.3%/year.

But then we have the post-2005 pattern:

The annual Brent crude oil price rate of change from 2005 to 2011 was 11.7%/year.

In response, Saudi net oil exports fell at about 2.6%/year*

*Using 2011 Saudi net export estimate of 7.8 mbpd

Hello Westexas, with all the talk about Iran and the posibility of conflict, I'm surprised the price of oil isn't higher than it is right now.
What do you think?

That's why I like average annual data; it tends to average out anomalously low and anomalously high values.

This audio program was very interesting:

The news presented today was: America and Israel agree that Iran is not building a weapon. Panetta's posturing was observed.

Put me in the camp of "OPEC may not have peaked yet." Iraq is still rebuilding and recovering from war. They may be able to significantly increase production if the country is stable and the investment is made. Venezuela could also significantly increase its output. Hugo Chavez may get voted out of office and a new regime may be more friendly to outside oil developers. Venezuela has a LOT of heavy oil that can be put online. Libya just finished a war and is recovering.

The future of OPEC production is very difficult to predict, IMHO.

I agree, OPEC may not have peaked yet. And perhaps they have. But they are pretty close either way. And that is very important. That is OPEC has little hope of drastically increasing production in the long run. and that is what the IEA is counting on, the long run.

Venezuela doesn't have anything coming down the pike except a small project in 2015. It is not likely that anyone will be willing to pour the billions needed to develop the Orinoco Bitumen. Counting on Chavez getting kicked out is a real long shot. And anyway that would not make any difference for ten years or so.

And what a disappointment IRAQ is for those who bought into their grandiose plans for a massive increase in production. It has not happened yet and has really little hope of ever happening. Sure, their production will inch up but not by any great amount. And it could collapse, and likely will if conflict again breaks out among the Shia and the Sunni. And the Kurds are a wild card. Who knows what will happen there.

No, OPEC may not have yet peaked, but they are close, damn close, and that is the important part.

But even more important than that, OPEC net oil exports have definitely peaked, they peaked in 2005. That is the oil OPEC supplied to the world has definitely peaked and will decline... forever. And that is far, far more important than whether OPEC production has peaked or not.

OPEC oil supplied to the rest of the world has peaked. End of story.

Ron P.


Aren't we arguing over moving targets here. It was around 2005 that Peak Oil got my attention, and as I understood it the definition of Peak Oil was when conventional oil flow peaked. Now conventional oil was defined as:
1/oil produced by primary and secondary means, ie natural flow from a well and or water or gas injection.
2/Produced from Land or Shallow water, not sure what the cut off depth was.

The production methods that were not included were,
1/EOR, CO2
2/Deep water
3/Artic oil
4/Tar Sands
5/ Extra heavy oil
6/Steam assist
8/Fractured shale I can't remember it being mentioned, but I sure it would have been on the list.
9/ Bio fuels

In other words the cheap oil is going to decline, and if you want any more it is going to cost you.

What i am seeing today is more and more of these non conventional oils are being included in the normal oil production figures, eg Venezuela, we would need to strip out their extra heavy and see what they have left. I think if the non conventional oil were stripped out of the US & North American production the result would be quite shocking, no Shale oil, no deep water, no SAGD, no tar sands.

My point is, total liquids may still go up for some time but the back bone of the oil production is continually showing signs of decline. This also applies to Saudi, where Chevron is planning /using SAGD methods in the Neutral zone, etc.

No, we are talking about Crude + Condensate, no matter where it comes from. And that includes the Canadian Tar Sands, Orinoco Bitumen Deep Water Oil, Arctic Oil and any other kind of oil that comes out of the ground no matter how you coax it out. It does not include bottled gas, (normally called NGLs), ethanol or any kind of biofuels. It is all the stuff that can be refined into gasoline, diesel, asphalt and all the other petroleum products that comes out of a refinery. We are not talking about anything called conventional oil though some people do like to talk about that.

Crude + Condensate peaked, so far according to JODI, in 2006. The highest year, so far according to the EIA, was 2010 though all their 2011 data is not in yet. However we have been on a plateau since 2005.

But... net oil exports, again crude + condensate, peaked in 2005. That is, the kind of oil that refineries want and refine into all those petroleum products, peaked in 2005 for all importing nations.

Also note, the EIA and JODI publish the data on Crude + Condensate. No one to my knowledge keeps up with the production of "conventional oil". So I would have no idea when or if that has peaked.

Ron P.

re: Peak oil really could destroy the economy – just not in the way greens think

Last year, for the first time since the 1940s, the US became a net exporter of oil — helped by such discoveries as the Bakken shale beneath North Dakota, which is reckoned to have between 4 ­billion and 24 billion barrels of recoverable oil. Around the world, despite a drilling rate of around 93 million barrels of oil a day, the quantity of known reserves at the end of each year is increasing, not decreasing.

AGAIN we have the ridiculous claim that the US is a net oil exporter! This bit of MSM fiction even appeared on Obama's web site until somebody in his office who actually knew something corrected it. Anybody who pays any attention to the oil industry would know that the US still imports over half of its crude oil.

The claim that known reserves are increasing is also bogus - a lot of OPEC countries have increased their reserves, but this is paper oil. They haven't found any new oil by drilling, they have just said they had more oil than they previously thought. Venezuela, for instance, made a huge increase in its estimated reserves despite the fact that its production has been falling for over a decade.

This appeared in a British paper, and I hope the Brits know that their North Sea oil production peaked in 1999, and is now in steep decline. I suspect that most of them don't know, and that bodes ill for the future of their country.

As Mark Twain said, "A lie can travel halfway around the world while the truth is putting on its shoes."

Most of this net exporter nonsense seems to be related to the WSJ article that highlighted the fact that the US, because of weak domestic demand, became a net exporter of refined petroleum products last year. The US remains dependent on imports (especially Canadian imports*) for about two out of every three barrels of crude oil processed in US refineries. Based on the BP data base, about 84% of the decline in US net oil imports since 2004 was due to reduced consumption, as we were outbid by the developing countries for access to a declining supply of GNE.

*And of course, US Mid-continent refineries continue to provide billions of dollars in incentives for the Canadians to take their oil elsewhere.

I hope the Brits know that their North Sea oil production peaked in 1999, and is now in steep decline.

RMG --

You're obviously not paying attention to the headlines:

North Sea Oil Exports to Asia at 8-Year High!!!


What does record export to Asia say about total oilproduction from the North Sea ?

Nothing at all, of course. I'm just anticipating how that particular headline will be misinterpreted.

ok, so 'sarcasm on' Callahan. Missed ;-), but it appears on my screen as ;-)

"Last year, for the first time since the 1940s, the US became a net exporter of oil-"

This is the level of knowledge, about oil production, for your average peak oil denier. This should tell one all they need to know about the peak oil deniers camp.

Ron P.

"Last year, for the first time since the 1940s, the US became a net exporter of oil-"

Although it is getting more and more irritating to see this erroneous assertion appear in articles I find it interesting that the comments section on articles like this are showing a large increase in responders who are slicing and dicing the assertion by just citing real data. More people seem to be aware of reality.

Unfortunately the vast majority though are just "watching Dancing With the Stars". Beats thinking.


They also fail to mention how production in Alaska has fallen off a cliff.

AGAIN we have the ridiculous claim that the US is a net oil exporter!

That 'net exporter of oil' meme is all over. And it is propagating in chain emails, talk-show call-ins, messageboard comment sections. Certainly people love an optimistic meme that holds out the promise of $1.50/gallon gasoline.

They will be sorely disappointed.

That would be an interesting debate question. "If elected president, what will gas prices be at the end of your first term?"

I haven't heard Newt offer a number, but like eveyone one here, I had to cringe when he said he would bring us lower gas prices AND a stronger economy. The moon base is a bonus!

Regarding U.S. gasoline heads for "epic summer"-Citi's Kleinman

One can generally get a sense of where things are headed by reading the business section as long as you invert the context and ask what impact the next big opportunity for profit will be on the 'rest of us'.

The alternate reality of news in the Business section or on business web sites always amuses me. What will be for most people financially painful presents great opportunities for profit to those on Wall Street. Shock doctrine?

And I wonder if this statement will haunt the quoted analyst in the future.

U.S. crude is also coming under pressure from production growth in North Dakota with the use of shale gas technology now being applied to oil extraction.

"What is going on there will change the world - it's the death of the peak oil hypothesis," Kleinman said. "The same companies that destroyed the natural gas market are now rolling into the oil market."

"What is going on there will change the world - it's the death of the peak oil hypothesis," Kleinman said. "The same companies that destroyed the natural gas market are now rolling into the oil market."

What is meant by this statement? Is he saying that there will be so much oil produced by theses "same companies" that the price will collapse?

"-it's the death of the peak oil hypothesis,...."

What is it that these people don't get about limited (no matter how large, initially), non-renewing resources? Eventually, like my cup of coffee, it will be consumed. Not an hypothesis; a fact of the real world.


"What is going on there will change the world - it's the death of the peak oil hypothesis," Kleinman said. "The same companies that destroyed the natural gas market are now rolling into the oil market."

He's missing the fact that the game-changer in the US oil market is not shale oil but Canadian oil sands production. Canada is now exporting 2.4 million barrels of crude oil per day to the US, and most of it comes from the oil sands. That's nearly 5 times as much oil as the North Dakota Bakken Formation produces.

US Midwest refineries have access to all this cheap oil (Canadian and Bakken) so they are laughing all the way to the bank. Northeast refineries do not - they have to pay Brent or OPEC prices - so they are going bankrupt.

Recent Prices:
Brent North Sea: $112.70
West Texas Intermediate: $96.36
Western Canadian Select: $65.11

Man, that is getting to be a big spread! WCS is trading for not much more than half the price of Brent! That won't last forever - someone will figure a way to get it onto the international market.

Northeast US refiners are going to greater and greater lengths to replace falling oil imports, especially those from Nigeria (down 56% in just one year) with cheaper Canadian oil - at least for those refiners that can process that oil.

In addition to the current operation of some refiners of getting Bakken crude by shipping by rail to Albany, NY, then by barge to the greater Philadelphia area, plans are being made to ship Canadian oil by rail all the way from Saskatchewan to the Northeast US.

Canadian Pacific expands its oil by rail operation to Lloydminster, Saskatchewan
February 02, 2012 | Calgary, Alberta
New transload facility to serve NuStar Energy with planned expansion in 2012

Canadian Pacific (TSX: CP) (NYSE: CP) today announced that, by leveraging its North Main Line infrastructure, the company is now shipping crude oil by rail from a new transload facility near Lloydminster, Saskatchewan. This new facility is a key enhancement to CP’s growing energy portfolio. It accommodates the initial transload and transportation needs of NuStar Energy LP (NYSE: NS), with a further planned expansion in 2012.

Canadian Pacific is the only North American railway to serve the Alberta Industrial Heartland, the Bakken Formation and the Marcellus Shale. In addition, CP is the only Class I railway to connect the energy hubs of Alberta, Saskatchewan and the U.S. Midwest to the Northeast U.S. The Lloydminster facility, operated by Torq Transloading, enables CP to transport oil by rail to NuStar’s terminals in the Northeast U.S. and Gulf Coast.


I would really prefer it if we referred to it on TOD as "tar sands" - to be nearer the reality. To call it "oil sands" sounds like spin to me! Within a year it could be called "Alberta Medium Light" - if we keep this spin cycle up.

The problem I have with the name "tar sands" (since I have a degree in chemistry) is that tar is a man-made substance produced by the destructive distillation of organic material. The sands do not contain tar, they contain extremely heavy oil. They are more accurately known as "bituminous sands". The most important difference is that a heavy oil refinery can refine crude bitumen into products such as gasoline and diesel fuel, whereas it cannot do anything with tar.

There is a certain amount of spin on both sides of this topic. The federal and provincial governments in Canada renamed the reserves from "bituminous sands" to "oil sands" to promote their development many years ago. In recent years the environmental movement has been trying to change it to "tar sands" to imply that it is much more environmentally hazardous and toxic than it actually is.

It became colloquially known as "tar sands" in many parts of the world because it resembled the coal tar that was dumped around plants that produced coal gas (town gas) in many cities around the world. Coal tar is really quite nasty stuff and difficult to get dispose of, but crude bitumen is easy to dispose of by feeding it into a heavy oil refinery.


1. A dark, oily, viscous material, consisting mainly of hydrocarbons, produced by the destructive distillation of organic substances such as wood, coal, or peat.
2. Coal tar.
3. A solid residue of tobacco smoke containing byproducts of combustion.

Bitumen (Canadian definition)

A thick, sticky form of crude oil that is so heavy and viscous that it will not flow unless it is heated or diluted with lighter hydrocarbons. At room temperature, bitumen looks much like cold molasses. It typically contains more sulphur, metals and heavy hydrocarbons than conventional crude oil.

Oil sands

Oil sands, also known as tar sands or extra heavy oil, are a type of bitumen deposit.

The sands are naturally occurring mixtures of sand or clay, water, and an extremely dense and viscous form of petroleum called bitumen.

They are found in large amounts in many countries throughout the world, but are found in extremely large quantities in Canada and Venezuela.

Sadly, the number of deaths continues to rise...

European cold snap death toll leaps to 169
Officials set up 3,000 heating and food shelters in Ukraine

Russia and Ukraine both took precautions on Friday to protect homeless people, scores of whom have frozen to death on the streets of Europe during its brutal cold snap.

As the death toll from the weeklong tragedy rose to at least 169 on Friday, Russian Emergencies Minister Sergei Shoigu ordered the creation of feeding and medical-assistance facilities nationwide for the homeless.


Authorities also have set up nearly 3,000 heating and food shelters.

See: http://www.cbc.ca/news/world/story/2012/02/03/europe-cold-freeze-deaths....


On the one hand this is a terrible tragedy, but I keep hearing tidbits come out that break my brain, like people trying to keep lakes from icing over to protect the fish.

Still, -32 is no laughing matter even if you are in a region with properly weatherized housing.

maybe there is a misunderstanding. people wait for the ice so they can fish:


I sure hope there is a misunderstanding. From the article linked above.

In northern Serbia, hundreds of tonnes of fish in the Ecka lakes were in danger because the water was icing over. Dozens of people have been working nonstop to break the ice, using hammers and all kinds of tools, and sometimes even falling into the freezing water.

And that picture does bring back some great memories from when I was younger, looks like a fun time was had.

I read in another article that those lakes usually don't freeze, so perhaps it is a problem.

The only problem I can think of with lakes freezing over is that one of the main sources of oxygen (wave action) would be cut off. If there is no other source of oxygenated water entering a lake, the fish would eventually die due to lack of oxygen. Given that we are already well into winter, it would be hard to imagine that happening to these lakes. Lakes in Northern Canada don't seem to have any problem sustaining fish populations even though they are frozen over almost half of the year.

I think the problem is if the fish are used to it or not.

Fish who live in lakes that freeze over go into a sort of suspended animation. They don't eat or move. If these fish aren't used to the lake freezing over, maybe they don't "hibernate." The loss of oxygen would be a problem then. (And I would assume the people saw signs of distress - gasping at the surface, maybe? Or they wouldn't bother to try and save the fish.)

Not quite: If fish under ice were refraining from eating, there wouldn't be any people engaged in "ice fishing"... But perhaps there are some other differences between species.

I was thinking of goldfish and koi, actually. You don't feed them in winter, at least if it gets cold enough to freeze.

I've heard mixed advice on whether ice needs to be broken up. Some people say as long as the pond doesn't freeze solid to the bottom, they'll be okay. Other suggest making a hole in the ice with a hot kettle or pond de-icer.

My aunt said her goldfish pond froze to the bottom one winter, and the goldfish were fine after it thawed out.

If a gold fish pond freezes will the fish come back to life when it thaws?

Yes the fish will be preserved in the ice and put into a sort of 'hibernation' state, if you will. When the spring comes and things begin to thaw, and as soon as you can break the ice, take them out one by one, and slowly warm them in with a washcloth that has been soaked in lukewarm water. You may need to massage them to get their hearts pumping again, and you may not. Depends on how deep of freeze you had. Don't worry about keeping them out of the water even if it takes you a while to revive them, they will be fine. Once they do come back to life however, they need to be put back into the pond immediately.

Goldfish, Koi and Comets are species of carp and some can actually freeze (to a certain point) and survive. My garden pond used to freeze every winter and I could see the Comets in the ice, clearly frozen, and very few would die. The little green heron that came every summer was a much bigger problem.

We had a horse watering trough near a barn where I worked in northern Arkansas. (No horses -- the barn had been converted to headquarters of a book club.) The thing was full of mosquito larvae, so I caught a small perch (sunfish?) and put it in. It ate all the larvae nicely. I worried when winter came and the trough froze, but when the ice thawed, the little fish was still there, eating away.

I dabbled a bit in ice fishing when I was in Wisconsin. The fish slow down, but they are still looking for tidbits to eat. They are great to eat, nothing fresher than throwing a fish on the ice where it freezes. I can recall taking one out of the feezer a month later, and it woke up on the fillet table!

Of course these were species and ecosystems that were used to freezing. There was a fear during some winters that shallow lakes might freeze to the bottom. Those aren't becessarily the coldest winters, snow cover insulating the ice has a great deal to do with how thick the ice gets.

Was vodka involved in this fish-rescuing exercise? I've chased fish across frozen ponds on my ice skates many times, and they didn't seem to have any trouble with being under the ice.

I keep thinking the paragraph should have ended, "...and after they rescued the fish from the lake, they fried them up with butter and a little lemon."

It's a double edged sword, esp if the lakes are shallow. Fish overwinter frozen lakes by relying on oxygen stored in the water column. If the population is too great, the lake too shallow, it's a dieoff. Plus, limited photosynthesis is stopped by ice and snow cover, while decomposition continues to consume stored oxygen. Breaking open areas of ice rarely works, mostly a stop gap for fish that can "gulp" atmospheric oxygen.

The dieoff is usually much greater than what the lake might have otherwise supported. Weakened fish usually die shortly thereafter. Disheartening.

I believe that these "lakes" are actually ponds used in fish farming of warm-water species. If the ponds are shallow, there's some risk of them freezing solid during an extended period of severe cold, which probably kills the fish. Not sure how breaking up the ice cover would stop that. Perhaps these particular fish are sensitive to low oxygen levels — icing over would result in a decrease in the water's dissolved oxygen content.

A simple aerator/bubbler would keep a portion of the surface ice free and oxygenate the water as well. Moving water generally doesn't freeze.

Our ponds freeze over almost every winter and the fish do fine. The bream and bass seem to go into a sort of hibernation as Leanan mentioned, using very little oxygen or food.

It doesn't look like the ponds will freeze this winter as it's been so warm; lots of rain but virtually no snow, though winter isn't over yet... Many of our plants are budding out and my figs are showing leaves already, about 6 weeks early. The frogs were having their spring orgy last week, very early as well. I'm sure we'll have a killing frost soon, which means a poor mast again, and fewer fruits and berries. The wild blackberries seem to be the most tolerant.

At least we'll have a surplus of firewood for next year.

Although respiration declines, your bass and bream are still breathing quite a bit. Around 3-4 ppm is winter deadly for them, 5 ppm for salmonids IIRC. The typical rule of thumb for temperate ponds is 8 feet in depth to prevent a dieoff. Not freezing whole-those fish found frozen are dead long before freezing. The rule of course is tempered by the length and severity of your winter. With a short window of ice cover, your fish will fare better, as the oxygen levels may remain high, depending on population loading and depth. It is surprising the amount of photosyntheseis that can occur, even under clear ice. Once snowfall or cloudy ice enter, this respite ends, though decomposition continues to rob the column of oxygen.

Other factors you might consider is leaf fall in a deciduous forest area. If this occurs shortly prior to ice over, it presents a huge drain on the oxygen budget of your pond. Best those leaves are in the pond and well into decomposition prior to ice over.

Aerators are another stop gap IMO, usually unable to prevent large moralities. Certainly better than nothing, but a bunch are required in critical situations. My earthen ponds will ice over from anywhere from 2-5 mos, depending on the winter. I rely on surface creek flow to maintain my populations. In some winters, I've had the creek inlet freeze up, and everything else. It generally can't be fixed till mild weather, and I've resorted to "industrial" aeration schemes with compressors and networks of aerators. The losses pile up, but I assume they would have been worse without.

Thanks, that would explain it. They weren't busting their butts because of concern for the poor little fishies. They were working to save their livelihoods.

Slab City, Here We Come: Living Life Off the Grid in California's Badlands

"Chicago" Joe Angio and his wife Anna did everything by the book to secure their slice of the American Dream. They earned college degrees, started a small business, bought a house and pair of cars, paid their taxes and credit-card bills on time. But when the economy tanked, so did the dream. Between two jobs they could barely pay their mortgage, reaching a point where they had to choose which creditor to shortchange at the end of the month in order to keep the lights on. With foreclosure no longer a matter of if, but of when, the couple looked on the Internet for the ideal place to lay low, spend less and experiment with solar power to "get more for our buck out of our environment." They bought a used RV and went off the grid. Way off.

..."It's pretty much as close to the Old West as you're gonna get. Most of us don't own guns or none of that garbage, but if we have problems, we take care of [them]," says Ray, 56, a former drug addict turned born-again Christian who has traversed the country six times with a giant wooden cross on his back. Katie Ray, 30, a perennial visitor from Oakland, Calif., calls the place a "postapocalyptic vacation zone."

The article didn't mention one important thing. Where and how do they get their food? What about toilets and clean water?

"What about toilets and clean water?"

When I visited the slabs in the mid '90s there was a water truck that came around and filled folks' tanks for a fee. Most RVers dug a big hole in the ground to dump their sewerage into and gray water was just allowed to evaporate in the sand; pretty nasty/unsanitary. It was quite a bazaar place back then; I can only imagine now. There's a "Save Slab City" organization trying to clean things up, but participation doesn't seem very high. I expect the State to intervene at some point. Like some of the folks in the article, I find myself strangely drawn back to the anarchy, though there are better places for 'boondockers' to go. I stayed at a 'ghost town' on BLM land in Nevada for a few days where a small community had formed.

A friend near here has an RV park on a stream and his base monthly rate is $125; nothing fancy but quiet and well kept. A port-a-potty truck comes once per week to pump and flush people's sewerage tanks for a fee, and there is free water. Electric hookup is extra, but wifi is also free.

Along Roosevelt Lake, in the PNW - the lake created by the Grand Coulee Dam, there's miles and miles of sandy shores. In the summer, revelers arrive by their boats and leave nasty surprises - holes in the sand straddled by those neat fold-up chairs, hole cut out the center and other such unpleasant things.

A long time ago (1980's) I visited a kind of small colony of US hippies in a remote spot in the high-altitude forests of Peru. They arranged an "outhouse" built over and discharging directly into the pristine stream flowing through their encampment. I can only hope there was somebody upstream doing it too... :-(

That would have made me want to go upstream and...


I remember, in the early 80's, a Park Ranger at the Grand Canyon (where I was camping with my folks on the North Rim for free) talking to the kiddies about the rules on packing out your own feces on Colorado River rafting trips (which catered to the affluent), since if you dug down to do your business you would find someone else's.

BTW, the 'real' Roosevelt Lake is in AZ (behind TR's namesake dam) and provides most of the storage for Phoenix's gravity fed water supply and flood control. Our dam was made of locally quarried sandstone and limestone blocks, placed by cableway in a cyclopean masonry structure which two Model-T's could cross abreast. Only 282lbs of concrete per yard were used (about 7%). The Territory was a major priority of the B of R, in part based on Roosevelt's fondness for the area where 3/4ths of his Rough Riders had been recruited.

Dealing with poop in a good way is always the biggest issue in hippie and related communities. Such is life.

These people do not have a "safety net".
Sewage is dumped on the ground, into fields, or into the agricultural drainage ditches which lead to the Salton Sea.
There are trailer parks on a nearby reservation (sovereign nation) where people live in worse conditions.


Oasis Park:

Two airlines collapse in one week. That's a new record, right?

Spanish Airline, Spanair, is probably one of them, but what is the other? American Airlines parent company declared bankruptcy on November 29, 2011.

I remember reading on TOD that airlines were forecast to be an early casualty of peak oil because a large fraction of the price of a ticket represents the cost of fuel and because recession reduces discretionary vacation travel. Airlines going bankrupt is another clue that the world economy is choking on the high price of crude oil and economic data reportedly showing recovery is incorrect (intentionally deceptive?). Meanwhile a propaganda campaign alleging peak oil is false enters high gear. The greater the deniers and vested interests are threatened by reality, the louder they wail about the imaginary. Too many stand in denial, whisked away by a revery of times past, as their world slowly crumbles around them. Give them false hope to hasten our yeasty demise.

But all across the world - in tourist-oriented precincts at least, not the least in SE Asia - planners, boosters, and shills are still talking about 30% pa increases in tourism and associated air traffic - right through to 2025, and are planning more terminals and more facilities. Forward orders for the A380 are very high. Where will all this end?

Interestingly, both Boeing and Airbus have huge backlogs, and cannot produce their airliners fast enough to satisfy their customers desired optimum timelines. Boeing is executing a plan to ramp up its 737 production over the next few years...

Where will this all end?

Probably with a 'bang' of yet another bubble popping in the familiar boom-bust industrial cycle, as amplified by the ever-increasing costs for energy.

I maybe wrong, but aren't most of the new aircraft orders and backlogs due to airlines doing fleet replacement of old fuel inefficient aircraft.eg Qantas plans to replace all their old fuel hungry 747s with 787s and A380s for 20% improved burn rates. Therefore the increase in aircraft orders can be seen as a result of peak oil rather than in-spite of it.

Toolpush, you are correct...partially.

In the mature U.S./Canada and European markets, passenger growth is small, and most of the new aircraft sales are to replace older, less fuel-efficient aircraft. I expect the '737 Classics' -100/through-500 to go extinct a lot quicker than the 727s and DC-9s did...in fact, the older 737 'Next Generations' -600 through -900 will be replaced as well somewhat quicker than some thought by the '737 Max' series and by the market competitor from Airbus. You are also correct that the larger 777s and A330s have/are replacing many of the 747s. Two engines vs. four engines.

Airlines are going to do whatever they can to control their costs and retain market share and passenger-miles by offering as ticket prices as low as possible...airline employees wages will be driven as close to Federal minimum wage as possible...Maintenance, Repair, and Overhaul work is already being outsources to lower-wage counties...add-on fees will still be pushed as hard as possible, and airlines will continue to do their best to hedge their future fuel purchases, and to operate the most fuel-efficient fleets possible.

However, there is substantive growth in global passenger-miles...outside of the U.S. and Europe...in large swaths of Asia and the Middle East, for example. Were it not for this market growth outside of the U.S. and Europe, Airbus/Boeing backlogs would be substantially smaller.

American Airlines began replacing 76 old aircraft in 2009 with new Boeing 737's only to land in bankruptcy by November 2011.

American Airlines replacing old aircraft with new Boeing 737-800s, Aircrew Buzz, April 19, 2009:

Last week, American Airlines took delivery of the first of 76 new Boeing 737-800 aircraft that it plans to add to its fleet by the end of 2011.

Boeing’s American Airlines Deal: A New Mini Stimulus?, Time, Roya Wolverson, July 21, 2011:

officials of AMR, American Airlines, Boeing and Airbus announce a major airplane manufacturing deal during a news conference at the airport in Dallas, Texas July 20, 2011. American Airlines on Wednesday split a giant order for 460 single-aisle jets worth up to $40 billion between Boeing Co and its European rival Airbus, which scrambled to win any of the narrowbody deal. The record-large order placed by the AMR Corp unit gives Airbus a stronger foothold in U.S. markets. The deal also rapidly refreshes American Airlines' aging fleet with more fuel-efficient planes to better compete with U.S. Rivals.

American Airlines buys Airbus, stings Boeing, AUBREY COHEN, August 4, 2011

American previously ordered 207 737s, including 52 still remaining to be delivered.

American Airlines' Boeing and Airbus order is 'rock solid' despite bankruptcy, The Telegraph, November 30, 2011

But the deal is now at the mercy of a New York bankruptcy court.

"My guess is that today Boeing wish they had a firm order," one industry executive told Reuters.

Analysts said American Airlines needs the new aircraft cut costs and be competitive, with fuel accounting for as much as 40pc of a carrier's operating expenses.

Deliveries of the new aircraft will begin in 2013 and run until 2022. American currently runs a fleet of 616 Boeing jets.

Lots of aircraft were ordered by a bankrupt company that now wants to restructure so that it can be competitive. The airline industry is shrinking.

Wright Brothers 1903.
Lindberg 1927.
SR71 1964-1999, 3530 MPH.
Apollo moon landings 1969-1972.
Concorde 1969-2003, 1334 MPH.

The decline is well underway

RE: Once, men abused slaves. Now we abuse fossil fuels

I was watching a show on TV a couple of years ago that stated slavery was made illegal after the slave trade business had less influence from eroding net incomes. I thought that climate change legislation could also follow the same path after oil production costs and decreasing production erode the net incomes of XOM and the like. I think we are on that path but I don't know how long until their incredible influence wanes.

Greer posits this week that humans are actually enslaved by their energy slaves, I suppose in much the same way that slave owners were enslaved to slavery. Their entire ways of life depended on it. He takes it even further, now that machines do much of our "thinking" for us. Quoting from Frank Herbert's 'Dune":

"Once men turned their thinking over to machines in the hope that this would set them free. But that only permitted other men with machines to enslave them." The same dynamic is present whenever people allow themselves to become dependent on machines,...

The article quoted on top correctly notes that the abuse of human slaves stopped only when a "better" alternative was at hand: steam power, or more generally fossil fuels. And the article then says we need to develop "green" energy sources to make the transition away from fossil fuels acceptable, i.e., to be able to maintain our high-energy lifestyles. What happens if that's impossible, as I think it is (having learned from Greer, et al)?

What happens if that's impossible? Most people will have to go back to doing things for themselves or in small groups. Oh! The horror...

Of course, under today's circumstances, that too is impossible.

This analysis is silly at best, and in more than one direction. The ultimate silliness is the rather obvious point, which is that it's not "men" who are addicted to fossil fuels. It is capitalism.

And the addiction is to more than just fossil fuels. The ultimate problem is the systemic requirement for huge and expanding waste of materials, energy, and labor. That is a deeper problem than mere fossil fuels. Capitalists are quite willing to indulge the notion of alt-fuel automobiles, even if they don't really believe their own stories. A future without a car in every driveway? Now, that's unthinkable to the fortune-squatters among us.

P.S. Enslaving a human being was always way more controversial and fraught than burning oil. Slavery's heyday was also hardly timeless and universal. It ran for only a few centuries. Dumb article.

With Federal Heating assistance down, the towns are trying to step in and fill the cracks.. of course the one thing they're NOT doing with these funds is filling the cracks ..

Knock wood that we can get some of that money to the local carpenters!


Not every town has a municipal heating fund. Places like Brunswick, Portland and Bath refer residents to area nonprofits, or to the local general assistance office.

But among town officials whose communities have a fund, there is nearly unanimous agreement that they serve an important role in the community.

Living in a warm home, Scarborough Town Manager Tom Hall said, is a "fundamental human right" he hopes the town can continue to provide into the future, even if more LIHEAP money becomes available.

my bolding. Hope we can clarify our expectations, and to help distinguish between 'rights' and missed opportunities..

in the first link of this drumbeat Jean Francois Mouhot notes that once. men abused slaves, Now we abuse fossil fuels.. In an interesting essay the late Donella Meadows compared her love and use of the land with that of Thomas Jefferson. They both used slaves.


Greek foresters filed 1,500 criminal complaints last year, twice as many as in 2010. About 70 percent of Greece's forests are public, with most of the rest belonging to various religious institutions.

Bokaris attributed the rise to a sharp drop in national funding for forest management, coupled with a near-doubling of oil prices in 2011.

He said forest funds had been slashed from 20 million euros ($26 million) in recent years to 10 million euros from now on.

Again... this is what peak oil looks like.

I hope it will not become a modern Easter Island.

You mean where the Greeks would expend vast amounts of human and natural resources to put up huge monuments to their gods?

Never happen

Will the Ecocide guilty verdicts in the Supreme Court of Britian catch on? If they do, will they have an effect on the oil barons? Or is this simply mockery?

Dredd - Interesting way of framing the issue as well as the outcome. "...with fossil fuel bosses in the dock at the UK supreme court in London..." and "The jury found one of the CEOs not guilty on the count of damage caused by an oil spill in the Gulf of Mexico."

In fact, the actually extraction of hydrocarbons causes very little damage compared to the consumption. And very little of the oil/NG in the ground belongs to the oil companies. They vast majority belongs to individual citizens in the US and the govts in most of the rest of the world. Almost no oil/NG would be produced (let alone burned) without the approval of the citizens of the US or the govts of the world (including the 100's of $billions produced/burned yearly from federal leases... leases that are collectively owned by our citizens). So who is more responsible: the folks who produce the oil/NG with the approval of the owners (the populace), the folks who benefit from the burning of oil/NG/coal (the populace) or the companies that make a profit from extracting the oil/NG/coal from the earth.

But they don't convict in the case where a company was directly responsible for causing a major oil spill? What...the jury was loaded with BP employees/shareholders? LOL.

Maybe a fun analogy would be to describe the oil industry as the get-away driver. And it's the govts/citizens of the world who are the bank with guns drawn. So would you convict they driver of the car and let the leaders of the mob go free? If no one robbed the bank the driver wouldn't have the opportunity to break the law...except for maybe double parking. Reminds me a bit of a complaint my brother made long ago after being convicted of stealing materials from a construction site: if the company had secured the materials properly he would not have tried to steal them. And yes...he was serious.

If the damn companies didn't produce all those hydrocarbons we wouldn't be burning them.


There is an actual case in the Fifth Circuit (Comer v Murphy Oil) which may be a harbinger of things to come.

Sooner or later people will panic and when desperation sets in and the pitchforks are sharpened, who knows where it will go.

What is interesting about the case in Britain, is that international attention on this subject matter is ramping up.

ASU, Berkeley researchers find cost to park is more than we think

There’s no such thing as a free lunch, according to the old adage. And there’s no such thing as free parking, either. Not when you factor in the economic costs, energy consumption and environmental impacts of building and maintaining extensive parking infrastructure on the scale that exists in the United States.

Mikhail Chester ... estimates that there are as many as 844 million parking lot and parking structure spaces in the United States, or roughly three spaces for every automobile. That amounts to paved surfaces for parking covering nearly one percent of the land in the country – an area about the size of West Virginia.

If the area used for curbside parking is added to the count – spaces that go unused most of the time – then there may be as many as 2 billion parking spaces.

Abstract: http://iopscience.iop.org/1748-9326/5/3/034001/
Article: http://iopscience.iop.org/1748-9326/5/3/034001/pdf/1748-9326_5_3_034001.pdf

Amazon fungi found that eat polyurethane, even without oxygen

Until now polyurethane has been considered non-biodegradable, but a group of students from Yale University in the US has found fungi that will not only eat and digest it, they will do so even in the absence of oxygen.

That's actually very interesting. How wonderful if we could get rid of some of our plastic waste that way.

Not actually that surprising. Fungi do a bang up job of cleaning up oil contaminated soil, so it's only another step for a polymerised hydrocarbon like polyurethane.

Fungi are simply underappreciated in the biological world, but there is a lot they can do.
fungi can also degrade PCB's, dioxins, pesticides, herbicides and so on.

Great 4 minute video here on an oil remediation trial from the guru on fungi, Paul Stamets;


Check out his photo of oyster mushrooms cleaning up diesel at 2:52

Great TEd talk here (17min)


And more on Stamets at his website,


No, not suprising, however, that is very exciting news. Now, we need to find something to break-down polyethylene.

Life will find a way.

If there is net chemical energy to be exploited, some microbe will eventually figure out a way of metabolizing it.

What happens when we let this fungus loose on all of our polyurethane infrastructure; car parts, insulation, cryotanks, your favorite corner bar, etc.? "New! Fungi resistant polyurethane foam, now available at a retailer near you."

You nailed it, Ghung!

Polyurethane is used almost everywhere: your shoes, your mattress, your car, boats, electronics.... many newer homes are glued together with polyurethane adhesives. Unintended consequences are a human specialty; toads in Oz, pythons in Florida, carp in Chicago... fungus amungus. Just sayin'. It could end up looking like the final scenes of 'The Day The Earth Stood Still' (2008) :-0

Maybe we can create nanites to control the stuff; "fungus-herders".

I wouldn't get too worried. Fungi, like anything else, need certain conditions to thrive - usually prolonged damp, dark and cool.

That said, something that ate up all the polyurethane car parts might mean we give on the damned things sooner rather than later...

"Fungi, like anything else, need certain conditions to thrive - usually prolonged damp, dark and cool."

I can think of many things that apply. Insulation/floatation in boats, machinery mounts in the bilges of ships (pumps, engines, etc.), the spray insulation/sealer on my foundation walls, insulation and abrasion coatings on buried pipes and culverts, the coatings on nuclear waste canisters stored outside?!, coatings on buried fuel tanks... I know, I'm likely taking this to an extreme, but hey, the road to hell is paved with , well....

Does anyone recall a similar storyline in the novel 'The Andromeda Strain'?

Except that had a happy ending.


Yep...I think it was the author's best novel.

For those not familiar with the book:

The killer super-bug 'mined' from the upper reaches of the atmosphere (as part of a classified effort to find new bio-weapon 'bugs'), which killed humans by solidifying their blood quickly: towards the end of the story it had mutated away from killing humans into a having the capability to 'eat' plastic and rubber...

"Now, we need to find something to break-down polyethylene."

Sunlight seems to do fine.

In fact, one of the first reactions you learn in organic chemistry is UV + hydrocarbon chain + halogen ==> halogenated hydrocarbon. Once you get a "handle" on the molecule you can all sorts of other things to it.

Polyethylene is quite valuable. The liquid hydrocarbon fuels have CH2 chain lengths say 7-18 units long. A chain of 8 is octane. High Density Polyethylene, HDPE, the stuff of plastic shopping bags and milk jugs and crates, has chains hundreds of CH2 units long. It is solid fuel. HDPE can be processed into the common liquid fuels or decomposed and used as producer gas.

Folks on the farm:

Another reason to keep my model train room fungi-free.

A 'natural' solution for transportation

As the United States transitions away from a primarily petroleum-based transportation industry, a number of different alternative fuel sources—ethanol, biodiesel, electricity and hydrogen—have each shown their own promise. Hoping to expand the pool even further, researchers at the U.S. Department of Energy's Argonne National Laboratory have begun to investigate adding one more contender to the list of possible energy sources for light-duty cars and trucks: compressed natural gas (CNG).

CNG currently costs the equivalent of about $2 per gallon, roughly half that of current gasoline prices, according to Wallner. "The price of CNG has been and will probably continue to be both cheaper and more stable over the long term than gasoline," he said.

In order for CNG to take hold, many more stations will need to offer it as an option, and the infrastructure for delivering and distributing the fuel around the country will have to be built up. There are currently fewer than 1,000 publically available CNG refueling stations in the United States, in comparison to nearly 200,000 gas stations.

have begun to investigate.. CNG

Gee, nice to know the Gov labs are up with the times...

Yes, the government leaps into action and attempts to catch up. I remember working for an oil company that converted all its field vehicles to natural gas 20 years go.

It's not really rocket science, although Argonne National Laboratory might wish it was. The actual conversion is quite simple - the main problem for the North American transportation industry is finding the money to do it.

It helps that dual-fuel conversions are easy to do, so vehicles that can't find a CNG station can continue on using gasoline or diesel fuel. Building the infrastructure to allow all the gasoline and diesel stations to provide CNG is a more difficult process.

ROFL. Love the image of scientists laboring to figure out how to add another decade or two to the pipedream of having everybody scurrying around in their very own 3,000-pound, mostly idle grocery fetcher!

As the United States transitions away from a primarily petroleum-based transportation industry ...

I assume there is some evidence for this ... that most of us seem to have missed.

The business-as-usual scenario in Limits to Growth converting to the next energy source when the previous one's ERoEI drops too low yields:

crude oil to natural gas to coal to renewables to collapse.

Harnessing nature’s solar cells

Photovoltaic panels made from plant material could become a cheap, easy alternative to traditional solar cells.

... Because the system is so cheap and simple, he hopes this will become a “way of getting low-tech electricity to people who have never been thought of as consumers or producers of solar-power technology.” He hopes the instructions for making a solar cell will be simple enough to be reduced to “one sheet of cartoon instructions, with no words.” The only ingredient to be purchased would be chemicals to stabilize the PS-I molecules, which could be packaged inexpensively in a plastic bag.

Essential details of this concept missing from the article:

How cheap is "cheap", including the electrodes, wiring, etc? With the falling prices of conventional PV panels we're already to the point where these additional components are the majority of the total cost - which is still substantial.

How long will such "cells" work, before they do what dead leaves do - turn brown? Conventional PV panels can last for 30 years.

I do wonder what would happen to the BOS costs, if you knew the panels were too cheap to worry about, i.e. if they get damaged, simply toss them out and buy new ones. Instead of fancy mounting racks, lay them out on the ground and secure them with ropes perhaps.

Congress Calls for Accelerated Use of Drones in U.S.

A House-Senate conference report this week called on the Administration to accelerate the use of civilian unmanned aerial systems (UAS), or “drones,” in U.S. airspace.

The pending authorization bill for the Federal Aviation Administration directs the Secretary of Transporation to develop within nine months “a comprehensive plan to safely accelerate the integration of civil unmanned aircraft systems into the national airspace system.”

“The plan… shall provide for the safe integration of civil unmanned aircraft systems into the national airspace system as soon as practicable, but not later than September 30, 2015.”

And just what, exactly, are these "civil" unmanned aircraft for?

What civilian can buy and operate one today, and why would they want to?

Or are they just trying to super size the RC model aircraft industry?

The FAA has been studying this for years

Unmanned aircraft promise new ways to increase efficiency, save money, enhance safety and even save lives. Interest is growing in a broad range of uses such as aerial photography, surveying land and crops, monitoring forest fires and environmental conditions, and protecting borders and ports against intruders

And just what, exactly, are these "civil" unmanned aircraft for?

One thought:
Why pay for an expensive police helicopter, pilot, and spotter if the police department can simply orbit a UAV instead?

Besides, there is also the fact that Skynet needs Drones ;)

And just what, exactly, are these "civil" unmanned aircraft for?

On the N Slope, the oilco's have been experimenting with a small helicopter drone to do inspections on equipment that is difficult and/or dangerous to approach. I believe they have used them to inspect flare towers, among other things. A drone was also used to scout the route through the ice for the icebreaker Healy and the tanker that just hauled finished a fuel shipment to Nome.

With even a small bit of imagination, one can think of numerous civilian uses for drones. That is not to say that drones can't or won't be put to other, much less desirable uses.

Pipeline and transmission line ROW patrol are good examples of things already being done, though still not terribly widely adopted.

These are fun:

Maple Seed Micro Air Vehicle:
The sound of these things...

Towards A Swarm of Nano Quadrotors:

For urban use:
US Air Force Flapping Wing Micro Air Vehicle
The best of the lot. I hear the hummingbird is fielded:

AeroVironment's Nano Hummingbird - Outdoor Indoor Flight

Very Confusing.

Locavorism is a good example. Usually, when consumers insist on eating only food grown within a short distance, energy consumption for that food goes up. Of all the energy that goes into the production of food, transportation is the smallest piece, and food preparation is one of the largest. Home preparation makes up about 25 percent of the energy expended on what we eat. We would do better starting there.

So we should all start eating at McDonald's?

I much prefer the meat and organic vegetables from my local farmers's market.

That was the conclusion that came out of that Swiss study on the carbon footprint of food. Well, not McDonald's, but a local restaurant (presumably one you walk to, not one you drive your monster SUV to). Or...eat with friends more often, instead of by yourself.

I think he has vastly oversimplified the food issue.

He talks about transportation energy - without considering fossil fuel inputs to growing the food, such as fertiliser and pesticide, processing, packaging, and the deleterious health effects of the "modern" diet, requiring the enormous fossil fuel inputs to the health industry.

Also, while carbon emissions declined slightly in 2008, they have escalated dramatically since then, 2010 being about the worst year on record.


It doesn't really matter - the long distance industrial food system cannot continue indefinitely, so people who eat will eat locally produced and prepared food. People who don't eat will .... not.

I think you're right. Reading Owen (and perhaps the Swiss study, Leanan?) I think I hear the assumption that some form of large-scale, industrial, long-distance ag is still possible under an energy descent. I guess that assumption depends on the depth and rapidity of the descent.

I also imagine their calculations use a marginal pricing approach to producing and transporting the next unit of industrial food. That's okay if BAU is stable, even if a new, stable version of normal emerges to match the descent. But the instability of BAU is what we're struggling with, not just comparing local/organic to distant/industrial food in an otherwise stable system. And thus analysis using marginal pricing might mislead us.

But such analysis may be moot. Soon there may be no choice but to live simpler lives, eat local and in season.

The challenge will be maintaining high enough levels of the necessary phytochemicals (anti-inflammatories, anti-oxidants) from local, in-season foods. After I allocate my ration of fuel to EMS, fire, police, and the local farmer's combine, I'll probably opt for acquiring a broad range of phytochemicals over a drive in the country. And this is the other key issue here. It's not sufficient to talk about quantities of food (local or long-distance). The quality of that food is crucial to individual and community well-being. I don't see the quality issue brought up in the articles I'm reading (e.g., Owen).

The challenge will be maintaining high enough levels of the necessary phytochemicals (anti-inflammatories, anti-oxidants) from local, in-season foods.

This is true, but it can be done, though maybe with some help of preserved foods. Winter greens like spinach, lettuce, chard, kale etc provide a lot of vitamin C and other good stuff, and we can grow these, anywhere on the continent, all through winter - we don;t need to have oranges, bananas etc etc all the time, or, really, even any of the time.

Also, a lot of the industrially grown stuff (especially hydroponic greenhouse produce) has very low levels of those micronutrients anyway. Hydroponic tomatoes picked green and ripened in the dark with ethylene gas are a poor substitute for the real thing grown in real soil under real sunlight, as your taste buds will instantly tell you...

...though maybe with some help of preserved foods.

Yes. Provided we use preservation techniques that maintain the quality and broad range of phytochemicals. Preserving and eating a broad range of colors helps; the pigments are often the phytochemicals.

Much of what we do for sterile storage (e.g., high heat, acidify) can destroy these chemicals (which often results in washed out colors). Maybe, post-carbon, we'll need a strategy beyond just lots of cheap, unblemished food.

And then there are the counter-intuitives. Fruits and vegetables create increased phytochemicals when they themselves are damaged (these chemicals help reduce disease and rotting). So consuming bruised fruits and vegetables (provided the bruising was while still growing and not the result of handling and transport) can be healthier for us than consuming unblemished foods. Imagine selling that idea in an ad!

Of course, at the other end of bruising is rotting, so timing is everything.

Preservation and storage techniques are key to preserving nutritional quality of foods, something that's been known for millennia. Our vegetables and berries are canned or dried within hours of picking (sometimes minutes) and put in a dark root cellar. Our neighbors who share our garden built a beautiful set of shelves in their kitchen to display their colorful canned bounty like trophies. It looks really nice with the various colors being slowly degraded in the warm light, along with the nutritional value.

We vacuum pack dried fruits, berries and herbs in large canning jars and they stay cool and dark until needed. Onions, shallots and garlic are strung up and hung from the root cellar ceiling, and even store bought staples like rice, oats and flour are stored out of the light and heat there, often vacuum packed as well. Pickles and jams are also staples. In season, we plan picking/canning parties ahead of time so the kids and grandkids are here to help, and they love it. I expect that all of the grandkids will be accomplished food preservers by the time they are ten. It's amazing how seriously they take it, memorizing all of the "dos and don'ts".

Cold frames allow us to grow greens throughout most of all but the coldest winters, and we pot some herbs which do fairly well in a sunny window. We have oregano, parsley, basil, sage and thyme plants that are several years old. Even a small bit of fresh parsley added to canned tomatoes a couple of times a week will provide enough vitamins to stave off scurvy and other nutrition related maladies through a tough winter. Many wild greens also are available for picking here in all but the coldest of months. We have beautiful dandelions growing even now, in February, since it's been so warm.

Being a locavore certainly doesn't translate into malnutrition or starvation. It just takes a bit of knowledge and forethought, and a bit of hard work.

Drying has to be just about the best all round preservation method there is. Does not require any chemicals, nor enzyme destroying high heat, the resulting product can be compressed/ground for compact storage, and so on.

Other low temperature methods like fermentation (sauerkraut) work well too.

As does good old freezing.

Our neighbors who share our garden built a beautiful set of shelves in their kitchen to display their colorful canned bounty like trophies. It looks really nice with the various colors being slowly degraded in the warm light, along with the nutritional value.

Sounds great, my grandmother used to do that - have you got a photo of that?

There is a great article on the No Tech Magazine about storing food in plain view;

Saving Food From the Fridge

"Our Neighbors ...display...with the various colors being slowly degraded in the warm light, along with the nutritional value."

"We vacuum pack dried fruits, berries and herbs in large canning jars and they stay cool and dark until needed. "

Notice his point, keep them out of the light and in a cool place.

This is true, but for short term storage - as in the length of time from when you buy stuff at the store (where it isn the light) to when you eat it, the light is not a big deal.

The thrust of the No Tech article was that none of it needs to be in the fridge, and neither do you need a root cellar - you can create ideal storage conditions in other ways. Stuff that is in the fridge, especially out of sight in the crisper drawer, often spoils as it is forgotten about.

But for long term storage, yes cool and dark is the way to go.

Just threw out the remains of 2 carrots that I did not put in the fridge. They didn't last any time out of it. Other stuff I prefer to keep in the freezer - 'Where's the salt?' 'In the freezer.' '!!!'.


Part of the problem on vegetables is how old they are by the time you get them from the store.

Wow! Something's wrong there...

I've stored my monthly vegetables under an oak tree up off the direct ground and covered with paper bags and a tarp. There is a small "mouse tax"... but it all kept quite well: cabbage, carrots, potatoes, rutabagas, onions, peppers, tomatoes. Only softer things needed more care: broccoli, lettuce, celery.

Probably depends on where you live. In particular, heat and humidity.

There are heirloom varieties of apple that were grown just because they kept well in warmer temperatures. They didn't taste very good (the more sugar, the less well an apple "keeps"), but they were grown in the more southern areas of the US, for eating in winter. They were considered trash apples in northern states.

Exactly and one reason I pinged this up. Here, storing food can vary a lot depending on season and, often, day to day as heat and humidity change. Can't keep bananas in the fridge but forget about them for a couple of days and they start dripping out of the fruit basket :/ At the moment my salt is ok in the spice draw but I will have to put it in the freezer when the rainy season starts, maybe my paprika as well as I had to throw out the last jar due to mold.


How hot is it there? It was not winter here.

We've been running 25-27 C max while the average high for the time of year should be 26 and the records for the day sit at around 28. Night has been about 16-18 average about the same but record lows much lower. Around this time of year the mornings/evenings tend to be chilly enough to wear jeans and jumper but this year shorts are fine. Humidity has varied a lot. Sunshine very variable, cooked rice by sun yesterday but didn't chance it today. Maybe too average is how I would sum it up, the cold snaps have been missing.


I think he has vastly oversimplified the food issue.

I agree. It is especially so when you lump everything under "energy". Most of the domestic food preparation energy is electricity, which can be renewable, and we are not running short of. [some use is NG, of course, but it doesn't have to be]

And the prep energy consumption is the same whether the carrots came from California, Chile or down the road. BUT the oil consumption (and fertilisers, pesticides etc) for those three is *vastly* different.

If you eat local AND in season, [and eating local encourages seasonal eating] then the picture changes even more, as imports of exotic, perishable (i.e refrigerated) fruits and vegetables are almost eliminated.

Having food, especially fresh (refrigerated) stuff, criss crossing the globe is a huge waste of oil, regardless of how it is prepared at home.

Eating local enables one to try heirloom varieties of things like tomatoes, which are often a lot more flavorful than the bred-for-cold-storage hybrids in existence today. Supermarket-perfect, but pretty unappetizing.

It also eliminates the need to pick fruits and vegetables before they are ripe/ready, in order to allow for transit time - they can be picked at their peak and delivered to the customer almost immediately. This ensures the nutrients are at their highest level. One never really knows how old a supermarket fruit or vegetable is. It may look good, but the nutrient content may have seriously degraded.

What do people make of the articles up top "Deja vu as Russia gas cuts hit eight more EU countries" nd "EU says gas supplies are down despite Gazprom claims".

By the sounds of it Russia is sending up to 30% less gas than usual in the middle of the sever cold spell which will push up gas consumption in the EU. For the moment it appears to not be too much of an issue as the EU can draw on their gas storage or obtain gas from other sources. Furthermore it looks like the reductions are legit with respect to the gas contracts between the Russia and the EU which allow for reductions during high consumption in Russia.

However I am wondering what this means for the EU gas supply future? Is this just a short term political dispute, a technical problem or a mismanagement of expected demand? Is it completely normal that the highest demand periods cannot be met by pipeline and they are always handled from storage? Or can Russia no longer supply the expected demand?

Also, how does the new Northstream gas pipeline to Germany play into this? Wasn't that supposed to increase the supply to the EU significantly and protect against things like the Russian-Ukrainian gas disputes?

FWIW, Jerome a Paris says that the problem is the pipeline. There's plenty of gas at the source, but the pipeline can only distribute so much gas a time. If demand jumps suddenly, it can't keep up.

So what happens - those who connect to the pipeline at a more upstream location get all they want, and those downstream get a lot less?

Being in the NE US, I am thinking of the analogous (?) situation WRT the Colonial pipeline from the SE US, as many of the refineries in NJ and PA are being closed down.

It's a little more complicated than that. The pipeline is designed to carry the load spread out over the whole year, but most of the gas is used in winter. To deal with that, gas is stored in various places along the way. But if there's a sudden spike in demand, all those stores are used up. When that happens, Russia prioritizes their domestic consumers, because it's a matter of life or death for them.

So from what I understand...yes, it sucks to be at the end of the pipeline, but how much local storage you have also makes a difference.

apmon - Also FWIW I don't know for sure if this is a factor in the EU but: even in the US with our extensive NG pipeline system, we can't transport NG fast enough during high demand period to meet all needs. In the NE they have undergound NG storage used to suppliment demand. In fact, even if the p/l system did have the capacity our NG wells don't flow at a high enough rate to meet peak demand. We also have extensive NG storage in the Gulf Coast to help meet the demand peaks.

NG reserve storage is an obvious advantage but it is expensive. In addition to developing the storage sites and the p/l connects to them, they have to be initially filled with a "working volume" that isn't going to be produced. Thus a lot of NG has to be bought that won't be brought to the market until the storage site is abandoned...maybe many decades down the road. Thus the working volume would effectively be a loss from a practical time frame. I've seen more than a few NG storage projects fail to be built not because of the cost to construct the storage site but the lack of capex to buy the working volume.

Just connecting the dots ...

3 Chase Bank Workers Busted in Million-Dollar Frauds: Feds

Three employees of J.P. Morgan Chase Bank and another person have been charged with participating in two separate schemes to defraud the Internal Revenue Service and New York State of almost $5 million, federal prosecutors say.

Court papers filed in federal court in Manhattan describe the two similar schemes in which stolen identification information, including names, birth dates, and Social Security numbers, of Puerto Rican citizens were used. The Puerto Rican identities would then be used to file fraudulent tax returns claiming large refunds. The tax refund checks were sent to addresses controlled by the conspirators or addresses along specific mail routes assigned to US Postal Service employees who had been bribed to pull the checks from the mail. The checks were then cashed at a Chase branch where Chase employees had been bribed to facilitate the transactions.

Tax Officials Clarify Debit Card Benefits

State tax officials must provide JPMorgan Chase with taxpayers’ Social Security numbers in order to issue their refund checks as debit cards, but an agency spokesman said the bank cannot share that personal information or use it for marketing.

DRS and the treasurer’s office, which negotiated the deal with Chase and People’s United Bank, said the switch from paper to plastic provides greater security and benefits to taxpayers, eliminates check cashing fees and saves $290,000 annually.

Banking giant accused of laundering billions

In his position as an account relationship manager, Cruz worked in the HSBC southern New York region, which accounts for about 50 percent of HSBC’s North American revenue. He was assigned to work with several branch managers to identify accounts in which HSBC might introduce additional banking services.

Cruz told WND he has “firsthand knowledge and proof of how HSBC transferred billions of dollars through accounts linked to companies that did not exist.”

Cruz said that in the two years he worked for HSBC, he eventually discovered that money laundering was being carried out not only by branch managers but also by senior officers of the bank, both within the U.S. and internationally. “From what I saw, I came to suspect HSBC had become the Mexican drug cartels’ bank of choice,” he said.

The customer account records suggest identity theft was used to capture legitimate Social Security numbers and create bogus retail and commercial bank accounts through which HSBC employees could deposit and withdraw hundreds of millions of dollars on a daily basis, apparently without the knowledge of the identity-theft victims.

The state is telling me again this year that I should e-file my tax returns. This year for the first time they did not mail the state tax paper forms. E-filing saves money, they say. But I'm supposed to pay a fee to use that service, provided by a private third party?

As they explain:
"The government believes private industry, given its established expertise and experience in the field of electronic tax preparation, has a proven track record in providing the best technology and services available. Additionally, Treasury has indicated it does not want the IRS to enter into the tax software business. The Government believes a partnership with private industry will provide taxpayers with higher quality services by using the existing expertise of the private sector; maximize consumer choice; promote competition within the marketplace; and meet objectives in the least costly manner to taxpayers."

I suppose this is not quite as bad as the privatization of the prisons.

My wife works for a professional tax software developer and, IIRC, all professionally prepared US tax returns must be e-filed beginning the 2011 tax year (it could be 2012 for over 10 filings). There are a few rare exceptions when a paper form must be filed.

Many Tax Return Preparers Must Use IRS e-file Beginning in 2011

A new law requires many paid tax return preparers to electronically file federal income tax returns prepared and filed for individuals, trusts, and estates starting Jan. 1, 2011.

The e-file requirement will be phased in over two years. As a result of the new rules, preparers will be required to start using IRS e-file beginning:

January 1, 2011— for preparers who anticipate filing 100 or more Forms 1040, 1040A, 1040EZ and 1041 during the year; or
January 1, 2012— for preparers who anticipate filing 11 or more 1040, 1040A, 1040EZ and 1041 during the year.

The rules require members of firms to compute the number of returns in the aggregate that they reasonably expect to file as a firm. If that number is 100 or more in calendar year 2011 (11 or more in 2012 and thereafter), then all members of the firm must e-file the returns they prepare and file. This is true even if a member prepares and files fewer than the threshold on an individual basis.

Clients may independently choose to file on paper.


For now, individuals can still file a paper form but expect that to change soon. States will require electronic filing soon (some already do). My wife says that the clients are bitching like crazy, especially the ones overseas. The IRS was a bit late getting the new tax codes to the software companies, so the customer service reps really had to cram over the holidays. My poor wife is already frazzled with 2 1/2 months still to go; 65 hour weeks - good money but brutal hours.

Back in the 1980's the phone company (in New York State) tried to charge me extra (about $1.50 per month) for Touch Tone dialing, even though I am guessing that it cost them less to provide that service by then, relative to the old rotary dial mechanisms - and it also cost them money to enforce the selective access to tone dialing. I refused that extra charge, and had the switch on my phones (and modems) set to "pulse" dial. (Had to switch to "tone" when "talking" to a voice menu.) After some years I found out that tone dialing was working for me, although they never bothered to tell me that the paywall has melted away.

Ah, telephone network history time!

Broadly, telephone switches used to be electromechanical, and the dial pulses generated by the rotary dial actually drove things. Adding DTMF signaling (Touch Tone) to those switches required putting dedicated gear on the line to convert tones to dial pulse. Later, the Bell System deployed switches where digit receivers were centralized, but there were still separate receivers for pulse and TT. Eventually, computer-controlled switches included receivers that handled both, at which point there was no difference in cost, but only on those switches. For better or worse, tariffs had to be filed on a state-wide basis; while the cost of providing touch tone service for some customers was the same as dial pulse, for a lot of customers TT still had extra costs associated with it.

At some point (late 70s, early 80s), when deployment of the computerized switches was sufficiently widespread, the additional charge was dropped. When it got dropped varied from state to state. IIRC, in most states it simply disappeared from bills; if you didn't have the service, your bill didn't change. Some states required the phone company to provide notice and some didn't. About that same time, Bell Labs was designing a new digital switch. The boards that handled customer dialing would have been significantly cheaper if dial pulse were not included. I was peripherally involved in a systems engineering study that compared those savings against the cost of replacing customers' rotary phones with TT. The final decision was made by the lawyers, who didn't think we could mandate that people who owned their own phones convert, even if we were paying for the replacement instrument.

Ah, the old days...
Vintage Telephone Network Sounds

I wish I could find the blongs and gongs that ran in the background of conversations on the old crossbar systems.

That brings back memories. As a Switchman I often worked late nights in the central office when all was quiet. Every once in a while you could hear someone make a call.

First you heard the marker connect the register when they went off hook.

Then if pulse dialing you could hear each digit, and possibly recognize the number from previous nights.

After the seventh digit you would hear the call being set up through the office all around you. After a while you would either hear the party answer(a couple relays operating). Or all the crossbars dropping at once.

That's fun... Thanks!

Seems like Dumb and Dumber to me - you simply cannot get away with basic theft/fraud any more.

Lawsuit Seeks Info, Damages In 7-Year Oil Spill

NEW ORLEANS (AP) — An environmental watchdog group filed a lawsuit Thursday against the company it blames for an oil spill 11 miles (18 kilometers) off the coast of Louisiana, claiming oil has been flowing into the Gulf of Mexico for more than seven years with few details about what's being done to stop it.

Waterkeeper Alliance says satellite imagery and an analysis of oil slicks indicate oil is leaking from the site at a rate of 100 to 400 gallons (378 to 1,514 liters) per day from the site where an offshore platform and 28 oil wells owned by Taylor Energy Co. were damaged by a seafloor mudslide triggered by Hurricane Ivan in 2004.

Imperial approves $2 billion oilsands project

Imperial Oil Ltd. is going ahead with a $2-billion expansion to its Cold Lake oilsands operation in northeastern Alberta, part of a plan to double overall production by the end of the decade.

The project, called Nabiye, will add 40,000 barrels per day of bitumen production after it starts up in late 2014, a 25 per cent boost to Cold Lake’s current output, the Calgary-based oil company (TSX: IMO) said Friday.

“I’d call it a key element in our plan to double our production to about 600,000 oil-equivalent barrels by 2020,” said Imperial spokesman Pius Rolheiser.

Cold Lake is the largest thermal in-situ oilsands project in the world, and Imperial’s biggest producing asset, comprising about half of its daily liquids production.

B.C. abandons self-sufficient energy plan

British Columbia will abandon its current commitment to move the province back to a position of energy self-sufficiency, Premier Christy Clark is announcing today.

The watered-down version of the policy is being rolled out as part of a new energy strategy aimed at fuelling a new liquefied natural gas industry.

Because the province does not expect to have enough electricity to supply the energy-intensive production of LNG, the targets to wean the province from relying on electricity imports became an integral part of the natural gas development plan.

"This opportunity will not be before us forever," Ms. Clark said at a news conference announcing the change in direction. "The strategies that we are setting out today will take a resource that exists in the northeast, move it to the northwest and add value to it before export."

Natural gas is worth a lot more in Asia, she said. "Climate change is a global issue - by using natural gas to displace other fuels we can be part of a greener future."

The current law requires BC Hydro to expand its energy supply to the point that it could meet domestic demands by 2016 even when water supplies are critically low – plus some additional supply as insurance to meet changing demands.

Under Ms. Clark’s new policy, the targets will be lowered so that BC Hydro only needs to supply its domestic market with home-grown power when water levels are average.

When water supply is below-average, the province will still have to rely on imports – often from coal-burning electricity producers.

Just to get this straight: Burn coal to make electricity to liquefy natural gas to ship overseas to offset coal use somewhere else to help the environment... Sounds about right :-0

Well, yes.

But, this one is *all* about the money, and, if nothing else, it is at least a tacit admission of such by the prov. gov.

The province wants to jump on the LNG export bandwagon to exploit the huge spread in prices between NG and LNG (from $3 to$18/GJ), and it doesn;t even need to be it's own NG, anyone else's that can be piped here will do.
So, the province is a partner in oil and gas speculation.

As for BC HYdro, they are in an enviable position of having ,massive hydro resources, so they run flat out at peak times and export at high prices, and shut down off peak and import (coal fired) at very cheap prices. They are net negative on electricity by about 15%, but are net positive on $ by quite some margin.

While the plan was for "self sufficiency" (zero *net* imports) this did not mean an end to all imports - it would have mean even more peak time exports, and probably negligible reduction in imports.

I still think net self sufficiency is actually a very worthwhile goal - whether these LNG plants happen or not. if that means the increased capacity is used for peak/off peak horse trading to draw in $from the US, then so be it. But if things go bad and that trade dissappears, we can still supply all our own electrical needs - and as you know, that is a very good position to be in.

I thoroughly support getting this province off fossil fuels as fast as possible, but I don't mind making money off them from others who still use them...

Yes, the wonders of globalization. It reminds me of an article I read a few years back, starting in a junkyard in Tennessee. The owner crushes a junk car that gets trucked to a rail yard and sent to Savannah on the train and put on a ship that goes via the Panama Canal to China where the steel gets melted and turned into sheet metal which gets shipped to Japan where it is made into a car part that gets shipped to Long Beach and put on a truck which takes it to the Toyota plant in Tennessee, just up the road from the junkyard. Essentially hypothetical, but not far from reality... And we can keep this up how much longer?

And we can keep this up how much longer?


The globalisation that really counts, in my opinion, is communication. The internet allows great communication of information, so lets have global information swapping - on how to do local production and consumption.

And, i think that is happening, but very slowly, and painfully...

The internet allows great communication of information, so lets have global information swapping - on how to do local production and consumption.

Makes sense. I was wondering whether the memebers of Facebook, 850 million strong, could become a voting block? Could the voting power of so many people online influence decisions like whether there should be a pipeline from Candada to the US Gulf? Could decisions like whether the US should invade wherever is next be impacted by a facebook vote?

Also, could the internet connections being made worldwide be used to help develop a website created to provide a generic govt. to help country's that have ousted their despot leader and now seek ways to then move their country forward? There could be a generic constitution, framework for political checks and balances, percent of revenue to go into education, etc.

It's like the little local postcard I got up in this nearby fishing town.. picturing the view right outside the window. Looking on the back, it was from a company in Germany and printed/distributed out of Australia!

Just found a really sweet little wooden puzzle at the goodwill for $2 yesterday, had some Virginia company printed on it.. an all-wood 'M.C. Escher Cube' puzzle.. produced out of Canada, and manufactured, where else, in China!

One might wonder where Premier Clark might be getting her advice?

Now with Morgan advising her -- and donating $10,000 to her leadership campaign -- don't expect Clark to pay any mind to environmental concerns. He's not only originally a Calgary energy industry boss but also someone who says "we applaud the government for trying to open up the offshore" of B.C. for oil and gas drilling.

For those considering the social impacts of peak oil and declining EROI and wondering why we humans are so not doing the right things...

What is a smart species like us doing in a predicament like this? A review of Craig Dilworth's "Too Smart for Our Own Good".


Economist Calls Gateway Pipeline an Inflationary 'Threat'

"I assumed that it would be a wealth generating project," the 56-year-old retired investment and financial affairs economist told the Tyee. "But when I started digging none of those assumptions held. The project is an inflationary price shock to the economy."

Ha! the former CEO of ICBC (the provincially owned auto insurance monopoly) knows a lot about about creating inflation!

But on this one, I just don;t get it;

Moreover the project, if built, would raise the price of every oil barrel by $2 to $3 dollars in Canada over the next 30 years, and thereby create an inflationary price shock

$2 to $3 over 30 years is some kind of "shock"? - that is less than the normal weekly fluctuation in crude prices!

Here's the original report.

"An Economic Assessment of Northern Gateway" (pdf)

With Northern Gateway, the oil industry in Canada is making decisions and taking action to ensure the
price of oil goes up for every barrel they produce without any real change in production or efficiency.
For the Canadian economy this means inflationary pressures, and although projections vary, this could
represent inflationary pressures of between 2% - 10% each year, for decades, over and above what
would exist in the absence of Northern Gateway.

“Typically, a sustained 10 percent increase in energy prices yields a 2-3 percent increase in the
long-run price of most foods, with this relationship being stronger in high income countries that use
particularly energy–intensive technologies.


Numerous studies have been undertaken and the majority have concluded that the phenomenon of the Dutch Disease is real in Canada. It has been suggested that the Canadian dollar could be considered a “petrocurrency” and this pressure is responsible for the loss of a significant number of manufacturing jobs. As well, studies have pointed to the fact that a rapidly appreciated dollar dramatically reduces the breadth and resiliency of the business sector, making our economy dependent on high commodity prices and exacerbating regional tensions in the country. Close to 95% of Canada's oil reserves are located in Alberta while 75% of manufacturing output is produced in Ontario and Quebec.

Close to 95% of Canada's oil reserves are located in Alberta while 75% of manufacturing output is produced in Ontario and Quebec.

Not to mention that 75% of the country's farmland is located in the underpopulated West.

Canada is unusual among industrialized countries in that it has put most of its manufacturing industries and population at the opposite end of the country from its natural resources. Eventually the manufacturing and the people will migrate West to where the natural resources are (the shift is ongoing) but it will be a long, slow, and for Ontario and Quebec, painful process.


You're assuming Alberta and Saskatchewan will have enough water.

Stuart Staniford : Another Terrifying Drought Report


You're assuming that they won't have enough water. The geological record suggests that in previous episodes of global warming, Alberta got warmer and wetter rather than warmer and drier. That just promotes plant growth.

The population might have to shift north to take advantage of it, but in Alberta the population is already quite far north by Canadian standards. The capital city of Edmonton is the most northerly major city in Canada, but is in the the heart of a major agricultural area with thick, black soils. An extreme case of global warming would just put Edmonton into the Corn Belt (it doesn't get hot enough to grow corn commercially there now).

Yes they indeed have plenty of water, though it is not all where they can use it.

They can always do a diversion from the Athabasca to send water south for irrigation. Just put a connecting pipeline/canal to the N. Saskatchewan River, and you have your distribution system. Could have some other system going further south into the S. Sk basin (Red Deer river) if desired.

10% of the average flow of the Athabasca (more than double)what the oil sands currently use) is 62 cu.m/s, which will irrigate 150,000 ha (375,000 ac).

More importantly, when the irrigation water is needed - June-August is the high time for the Athabasca, the daily flows are well over 2000 cu.m/s (average maximum flow is 4790 cu.m/s), so this diversion is about 3% of the daily flow.

Like Australia, there is plenty of water, just most of it is to the north of where the people and farmland is...

@ Paul Nash

Hi Paul over at the sunshine coast

"Ha! the former CEO of ICBC (the provincially owned auto insurance monopoly) knows a lot about about creating inflation!"

Don't get this reference. My insurance is 1/2 what I would have to pay for private (basic). Furthermore, when my kids began to drive they were not discriminated against for their age. (total safe driving records from day one, for both)

When Billy Bennett won against Dave Barrett in 75 my insurance climbed by 2.5X on the rush to privatize. $272/year before Bennett....$649.00 after Bennett with Socreds interfering.

Yes, there are some problems at ICBC, but by and large it has proven to be a bit of a cash cow for provincial coffers while still keeping our rates far below private suppliers. Of course, when we talk about the add-ons beyond 'compulsory basic for all', the private suppliers cream the extreme low risk drivers and decline coverage for other groups. This presents a false argument for private insurance.

What would be great is to get away from insuring the vehicle to insuring the driver. This would allow one to park the old truck most of the time and switch plates to a low cost commuter. Swap back for a work run. This would really aid to reduce fuel waste when forced to compromise in selecting personal transportation options.

Why bring this up on an energy forum? BC Hydro is the same. IMHO, re-instate monopoly with transparent oversight for major projects and distribution, mandate net metering on all other projects with environmental oversights...no subsidies, either. This would take care of private initiatives. "Sure build what you want, butyou wiill only get ..... what we are paid, political contributions, notwithstanding". Keep the Govt. out of all aspects of day to day operations, including taking a % for general revenues. Give our industries requiring large electrical inputs a further competetive edge by providing continued cheap electicity.

Do you think site C will ever be built?


Hi Paulo,

Well, ICBC is yet another "crown corporation" that has become a bloated and inefficient operation. Over paid and over benefitted mgt and staff, and, like the any gov group, it will be very difficult to downsize this organisation when it should.

It has been an easier target for fraud - the Alberta companies wouldn't let all those "soft tissue" injuries that happen in Surrey get past them...

I am not convinced my insurance is cheaper here than it was in Calgary...

I do agree absolutely (and have long been an advocate) about shifting the (third party liability) insurance from the car to the driver. The car is just insured for its own value, and the rest goes with the driver, and the driver pays once regardless of how many cars they have.

The only wrinkle in this system is what happens to those who don't own a car and rarely drive? They are then paying insurance for the right to drive, but are clearly not much of a risk, compared to those that drive lots. But, there must be some kind of way to work that.

I have always though that a fuel tax surcharge would be one way of addressing that. If you aren;t driving, you aren't using fuel, and if you drive lots - so are more at risk - then you are paying more.

As for BC Hydro...

Well, another bloated inefficient crown corporation. Their payroll has gone up 50% in the last decade even though they deliver about the same amount of electricity. Huge wastage on "analysts" and "marketing" and the like, as well as the usual stuff on pensions, overpaid management etc... A neighbour of mine is a long time BCH employee and he says he can't believe how many people there are (now) that just sit in front of computers all day doing "analysis" and "optimisation" and "marketing" and so on... The meter reader jobs will finally dissappear with smart meters, but they will probably hire more analysts for the mountains of (largely irrelevant) data, so no net benefit...

BC Hydro already IS the monopoly on transmission and distribution. It is the distribution that is the real monopoly - you can only have one set of wires coming into the house. I am OK with them being that monopoly, though I would like their feet to be held to the fire about their staffing costs. You don;t need to have much marketing and PR when you are a monopoly...

But on the electricity supply/generation side, they should NOT be the monopoly, at all. I have no problem with them owning the big facilities they do, but that doesn't mean others should be precluded from generating and selling power - there is plenty of room for lots of players at this table.

Full disclosure - I am speaking here as someone who is developing small (very small) electricity projects - micro hydro and micro biomass. There are *many* opportunities to do these, and I don't like the idea of the government saying no one but them is allowed to produce electricity. There are many opportunities for innovative power projects in BC, mostly at <20MW, which government simply can't do cost effectively.

So, we have a model where private producers can supply, but the delivery is done by BCH.

We already have an operating model of this - BC Liquor. They are the monopoly distributor (with some of the bloat and inefficiency you would expect with that) but their suppliers are anyone who makes anything alcoholic. No one (thankfully) is saying that the gov should have a monopoly on beer and wine production, and we have a thriving industry in wineries and boutique breweries. I see no reason why we can;t do the same with electricity.

So the model could comprise options where;
-you can pay either a set (time of use) rate from BC Hydro, or
- you pay a delivery charge from BCH (still ToU related) , and a supply charge from one of several suppliers. These companies can compete, offer different rate plans, terms etc.
-or you can contract directly with a producer - e.g. your favourite/local wind farm or micro hydro producer. Think of it as like a farmers market for electricity. Just like the farmer use public (monopoly) roads to transport their produce, so too does the producer, but you and they are agreeing directly on a price.

This third option, in particular, opens the way for local electricity co-ops to come into existence. Then you can have local ownership and participation in local generation, and buying of the product. This would really kickstart local projects - from landfill gas to small wind farms, micro hydro, and (small) biomass.

Once people can start deciding on where they want to buy their power from, some interesting purchasing patterns will emerge - who wants to by the power presently imported from the nuke plant in Wa state?

So, monopoly on delivery and wire ownership - fine - someone has to.
But on production, absolutely not. Just like I *demand* the right to grow and sell food, or to drive the monopoly owned roads, same to produce and sell electricity. And, just like food, compulsory labelling of my electricity so I know, and can choose, where it comes from.



Iran vows revenge for EU oil embargo

Iran is warning the West it will retaliate against the European Union's oil embargo. The threat comes as talk of a possible Israeli attack on Iran again heats up.

An earlier Washington Post report said US Defence Secretary Leon Panetta believed that there is a strong likelihood Israel will strike Iran in April, May or June.

As a local seed company once advertised: "Why wait for spring, do it now!" Why is Israel waiting until April? If there is such a narrow window of opportunity, why all the bluster and forewarning?

The same holds for the other side. Iran has no advantage to wait for an European embargo, so I suspect they'll cut off crude to Greece and Italy within days. With fossil fuel supplies tightening, does anybody think Club Med is going to honour what few banking commitments it still has.

Meanwhile, the rhetoric continues to heat up. And nobody is backing down.

I can't see this ending well for anybody. If Israel attacks Iran, $200/barrel oil will be cheap and that may be the least of the West's problems. Meanwhile, misery for the Iranian people on a scale unimaginable.

This audio report was very interesting today:
About 2/5ths of the way in, it is stated that Israel and the U.S. know Iran is not building a weapon.

Kalimanku, not only does there appear to be no evidence of a nuclear weapons program, but even Mossad is harboring serious reservations about a possible conflict.

The growing tension is fueled and imprisoned by the domestic politics of Israel and the United States rather than any reality on the ground.

We are all being played. The only thing real is the game... and I am afraid the game is quite real: there are immense amounts of atomic fear spawning atomic hatred.

This is not serving the majority of the people.

The reasoning given in the piece for this endless gaming is that allowing Iran to have simple political power within its region is not good for our outside interests... I guess that would be oil money. As far as belief systems go, without Israel there, Revelations is stranded.

Source: 1 unit at BP Whiting refinery not running

BP Plc has shut one of two gasoline-making fluid catalytic cracking units at its 405,000-barrels-per-day (bpd) refinery in Whiting, Ind., for unplanned work, sources familiar with refinery operations said Friday.

Canadian heavy crude differentials began to slide two days ago, falling from the low $20s a barrel less than benchmark West Texas Intermediate to as much as $32 a barrel less than WTI on Friday.

Traders of Canadian crude had chalked up much of the deepening discounts to booming production in western Canada and no growth in pipeline capacity to major markets such as the U.S. Midwest.

Chicago cash gasoline differentials surged 6 cents per gallon on news of the shutdown.

The BP Whiting plant is undergoing a $4 billion upgrade to expand its ability to process heavy Canadian crude. The project involves a replacement crude distillation unit slated to come online in October, a new gasoil hydrotreater and a coking unit slated to start up in mid-2013.

Canadian heavy crude differentials began to slide two days ago, falling from the low $20s a barrel less than benchmark West Texas Intermediate to as much as $32 a barrel less than WTI on Friday.

Yes, and the spread between North Sea Brent and WTI has widened to about $16/bbl. That means the spread between Canadian heavy crude and international oil is now an astronomical $48 per barrel.

There are some huge profit-making opportunities for anybody who can somehow get Canadian heavy oil into the international market. It costs about $19/barrel to move oil by rail car from Northern Canada to the Gulf of Mexico, so the remaining $29/barrel would fall into the shippers lap as profit.

Lets see: $29 per barrel times 600 barrels per tank car times 100 cars per train equals $1.74 million profit per train load of oil delivered to the coast (any coast). Yes, more or less a license to print money for anybody who can get hold of tank cars.

I think Warren Buffet (Burlington Northern) and Bill Gates (CN Rail) are already making money at this, but if you're not a billionaire already, could be tough to get into the game. Only the big boys can afford to play with the full-size train sets.

In my opinion, ad hominem attacks, zero counter-facts:

The Unfounded Fear of the 'Peak Oil' Monster

The authors are James Murray, an oceanographer, and David King, former British science adviser and a physical chemist.

What would a physical chemist and an oceanographer know about forecasting oil production?


I find it ironic the naysayers about climate change say trained scientists don't know what they're talking about while untrained politicians and pundits do.

In Fuel Oil Country, Cold That Cuts to the Heart

With the darkening approach of another ice-hard Saturday night in western Maine, the man on the telephone was pleading for help, again. His tank was nearly dry, and he and his disabled wife needed precious heating oil to keep warm. Could Ike help out? Again?

Ike Libby, the co-owner of a small oil company called Hometown Energy, ached for his customer, Robert Hartford. He knew what winter in Maine meant, especially for a retired couple living in a wood-frame house built in the 19th century. But he also knew that the Hartfords already owed him more than $700 for two earlier deliveries.

The oil man said he was very sorry. The customer said he understood. And each was left to grapple with a matter so mundane in Maine, and so vital: the need for heat. For the rest of the weekend, Mr. Libby agonized over his decision, while Mr. Hartford warmed his house with the heat from his electric stove’s four burners.

“You get off the phone thinking, ‘Are these people going to be found frozen?’ ” Mr. Libby said. No wonder, he said, that he is prescribed medication for stress and “happy pills” for equilibrium.

See: http://www.nytimes.com/2012/02/04/us/maine-resident-struggles-to-heat-hi...


People need to get off heating oil. The situation is only going to get worse. Natural gas is the obvious answer but the pipes don't run everywhere. Propane has to cheaper than fuel oil though. Pellet stoves. Wood. Just get off that oil.

If my calculations are correct, propane in Maine is roughly 30 per cent more costly than fuel oil once you adjust for their relative heat content, so one million BTU of fuel oil at $3.71 a gallon is $26.79 whereas the equivalent amount of propane at $3.15 a gallon will cost you $34.39.

In addition, propane tanks are typically leased and so there's that added cost (I believe my annual rental fee is $170.00) and, with that, you're effectively locked into a single provider; at least with fuel oil, there's the possibility of shopping around based on price. I happen to be with Scotia Fuels and their prices are always ten to fifteen per cent higher than the discounters, but they're good folks and so I don't mind paying a bit more (granted, my last fill was August 24th, 2009 and I don't anticipate that I'll need a top-up again for another seven to ten years, so price isn't a major factor).


Local price survey, December 12th: www.thechronicleherald.ca/business/42076-heating-oil-prices-halifax-stab...

I don;t normally think that education programs achieve a great deal in the water and energy efficiency world, but in this case, if this guy was a bit more educated, he might make some better decisions.

The photos show *every* window in his house having neither a mylar type heat film nor a curtain or some other curtain/blind type covering. Now, it is possible the curtains were opened to make for a nice "warm" photo, but I am not sure on that.

The photos also show uninsulated copper water pipes in the basement - those would be the ones he was trying to prevent from freezing.

And then this, from the NYT article;

And, just about every day, Mr. Hartford drove to a gas station and filled up a five-gallon plastic container with $20 of kerosene. “It was the only way we had,” he said.

So, just to get this straight - the guy drives his 17yo Town Car (noted a noted vehicle for fuel efficiency) to get kerosene for $4/gal, when he could have had heating oil (with the same energy content) *delivered* for $3.71? This was sending him backward $1.50/day plus the cost of his round trip.

Using Paul's number of $26.79/million btu for heating oil, and assuming 75% efficiency for his furnace, he is paying $35.72/mmbtu for his actual heat.

Now, for electricity, in Maine there are the "suppliers" and "delivery companies" Electricity Maine is a supplier for his area, and their residential rate is 7.07c/kWh.

His utility (delivery company) is Central Maine Power and their standard residential delivery charge is 6.03c/kWh.

That makes a total of 13.1c/kWh, which works out to $36/mmbtu, so no advantage there..

BUT if he uses CMP's Time of Use tariff, where the off peak charge is just 3.93c/kWh, then his effective cost is $30.47/mmbtu, a 15% improvement.

The off peak times are from 8pm to 7am, which conveniently, is also the coldest part of the day.

So if he signs up for the ToU rates and runs his electric heat all night, he is coming out ahead.

Finally, at $1200 a month income, he qualifies for CMP's low income assistance program, which he should take advantage of.

But the first thing is to stop driving to buy even more expensive kerosene, and instead do a trip to get some window film and curtains. Even a double layer of bubble wrap will help.

And then next summer, get a heat pump installed, and then next winter run that day and night for all it's worth...

All correct, plus people can shut off part of the house and heat just a core area.

Meanwhile here in Vermont, whenever they run short on low income heating assistance funds, they raid the low income weatherization fund. Short term relief, long term pain. Classical example of the Energy Trap, which happens at all levels from the individual level to the Federal level.

Hi Paul,

I was wondering if TOU rates might help this couple and so I appreciate you taking the time to work through the numbers. The only downside that I can see is that if they should fall in arrears with CMP (and I wouldn't be surprised if that's already the case) I don't imagine the utility would treat them as kindly as poor Ike. As painful as it is to have to pay for the energy that you use as you go, as in the case of oil, I think that's a better option than to be billed thirty or sixty days after the fact, as once you slip into that hole it's virtually impossible for anyone living on the edge to dig themselves out.

Additional work to make their home more energy efficient would definitely help and some of the measures that you mention are relatively inexpensive and highly cost-effective. Hopefully a local church or community group can rustle-up a couple volunteers and a few bucks to help them out. As I understand it and perhaps Bob can confirm this, due to federal cuts to LIHEAP, state monies that had been originally earmarked for various home weatherization initiatives have been redirected to providing fuel assistance; if so, then these same missed opportunities are being played out at an even grander scale.


As I understand the rules, the utilities can't cut people off until April, so they can get through the winter.

What really bugs me is that I can work all this out with half an hour of web searching, and this guy, who agonises over this every day, can't or won't. And neither, it seems, is the LIHEAP program, who should have all these facts at their fingertips.

I will add that the ToU rates are a well kept secret. They were actually mandated in one of Bush energy bills, that ALL utilities must offer them. So they do, but they sure don;t advertise them. It is only because I know they are there, somewhere, that I kept searching through the websites until I found them.

I sure hope I'm wrong about him not having curtains or the like - that is huge energy loss right there.
Not sure what the temps are there, but I expect that the goo mini-split heat pumps would still have a COP of better than 2?

If his elec service is a small one, like a 60 amp or something, would it be possible to have the heat pump on the same circuit as the stove, and then a double throw switch so you can only operate one or the other? The stove circuit could certainly power any of the 9-18,000btu units.

There seems to be plenty of from for improvement here, and I'll cut the guy some slack for not being an efficiency guy like we all are, but there should be someone there that is, and is doing this.

Maybe Bob can create a side job for himself doing this....

Your logic is perfectly fine, Paul, and I certainly share many of your sentiments, but we're more or less cut from the same cloth (OK, maybe mine has a frilly lace border). A lot of folks aren't as knowledgeable on these matters or they're not analytically inclined, or they simply get caught in a downward spiral that prevents them from executing some of these better options. Believe me, I see this all the time.

A ductless heat pump could work well, but the unanswered question is who will pay for it. I'm not even sure that this couple own this home; they could very well be renters, which obviously complicates matters. And as much as I'm enamoured with these devices (God knows I never shut-up about them), it makes more sense to spend this same money on insulation and air sealing -- that has to be priority one.

Our two 3.5 kW Sanyos are both 15-amp/ 120-volt and their maximum draw is about 1,500-watts (this in "turbo mode"). Our average hourly temperature yesterday was -10°C, and over the past twenty-four hours the upstairs unit consumed an average of 738-watts and the lower unit, 821. Although I would not personally recommend this, you could conceivably wire one to an existing circuit, provided it was lightly loaded and you're willing to carefully manage everything else -- no different from plugging in a 1,500-watt portable heater except that the power draw of an inverter heat pump starts off at 10 to 20 watts and slowly ramps up from there,then flattens out at wherever it needs to be to maintain its set temperature; by comparison, a portable electric heater randomly cycles on and off at full power whenever it so chooses, and its brutish behaviour in this respect can be far more annoying and potentially troublesome.


He actually does own the home - article says he just bought it a few months ago, so he is now finding out all these things, and likely finding out why it was sold!

With the heat pumps, a neighbour of mine was in this situation - a 60 amp service, drafty house, oil furnace. To avoid using the oil furnace he would run plug in electric heaters. BUt, these would trip the breaker if he was using it while cooking, or doing the laundry.

They have installed a heat pump now, but upgraded the main service to do so (cost $2k). It seems to me a double throw switch on the stove circuit would have solved this problem, as the two biggest loads could then not be coincidental. Would have also kept the max draw down too - something the utility would like.

Even though this arrangement is less than ideal, at least when the stove is on (and the heat pump off) the stove is adding heat to the house.

The electrician was insistent that they upgrade the service, but I remain unconvinced it was necessary.

I suspect many homeonwers get this same answer - another barrier to the heat pumps..

Thanks, Paul, for confirming his home ownership... completely missed that.

My business partner was forced by his insurance company to upgrade his panel to 100 amps. I was somewhat surprised to learn that he hadn't done this years ago (well, actually, I'm not).

Our convection oven draws an obscene 5,500-watts and for this reason I refuse to turn it on. We can do just about everything in our Breville Smart Oven (http://www.breville.ca/the-smart-oven-tm.html). However, where possible, we use our slow cooker which draws a maximum of 170-watts; in fact, we can cook an entire meal in our slow cooker using less electricity than what would be needed just to bring our big oven up to temperature.

With regards to stove top cooking, we now use a portable Vollrath Mirage induction hob (prior to this we had a couple BergHOFF induction units which I've since passed on to friends).

Although it's rated at 1,800-watts, it draws a little over 1,400-watts on its maximum setting. Most of the time we operate it at 30 to 40 per cent power, which means it pulls anywhere from 250 to 600-watts. I obtained our first induction hob by redeeming credit card points, the second for $20.00 through Kijiji, and this last one for a song from a restaurant that was going out of business.

For anyone routinely tripping their main breaker, I'd scour the neighbourhood Good Will or rummage sales for some small kitchen appliances and forego using the electric range altogether.

Update: I couldn't figure out why our Vollrath was drawing just 1,400-watts. It seems the American version is rated at 1,800-watts because most US kitchens have 20-amp counter circuits. We Cannuckleheads get a less powerful version that won't overload our 15-amp circuits, i.e., the 59510P as opposed to the 59500P (see: http://www.vollrathco.com/catalog_sku.jsp?id=9866&fid=5705&cid=209). Ah, another mystery solved.


Electric cooking is not very big around here as electricity prices rise as you use more. Use too much and you jump onto high usage rate. I uprated the insulation on my gas oven as it used to get very hot when breadmaking and was surprised to find it had no thermostat. It just balanced the variable burner against heat loss through top, sides and especially the back. I took a look at many other stoves in the shops and found most were the same, I couldn't find and with thermostats! Next stove will get a GOOD work over before going into use, the insulation save a LOT of gas.


Fortunately for us, our rates at 13.336-cents per kWh are not unreasonable (they've increased by 60 per cent over the past sixteen years but during this same time fuel oil costs have just about tripled).

We currently pay about a dollar per litre for propane. One litre of propane contains about 7.2 kWh of heat but a gas burner is only 45 to 50 per cent efficient in its energy transfer, so you're looking at roughly 3.5 kWh net; that means each kWh of propane heat effectively costs 28-cents. Induction at 90 per cent efficiency is 14.8-cents, or a little more than half that. The potential savings can be slightly higher because whenever you lift a pan off an induction unit it suspends operation immediately, whereas you have to turn a gas burner off to accomplish this same end (I often raise pans if something starts to stick or I'm rolling something around).

It's amazing just how little electricity these things use. For example, when making pancakes I typically set the power level to 40 per cent -- six hundred watts at fifteen minutes cooking time, say, works out to be a measly 0.15 kWh.

I use to swear that I'd never cook on anything but gas.... now, I can't imagine going back to gas again. Our kitchen stays cooler, there's no lingering propane odour and I don't have to run our exhaust hood to remove the excess humidity that's generated along with all the other combustion by-products. It's also safer (no open flame and the surface of the unit stays cool to the touch, except for the heat that's radiating back from the base of the pan). And if anything spills, you simply give it a quick wipe with Windex and paper towels.


We get clobbered if we use too much electricity. From the CFE web site for February 2012

Use less than 175kWh
first 75 kWh 5.78 canukcents
rest 7 canukcents

Use more than 175kWh
first 75 kWh 5.78 canukcents
next 75 kWh 9.7 canukcents
rest 20.5 canukcents

Use too much and it is
620 canukcents + 27.3 canukcents per kWh

It is one thing to take care with your air-conditioning in the summer but add in electric cooking on top can hurt.


I can appreciate how important it is to avoid these more costly tiers, or punitive rate codes as the case may be. I guess my takeaway point is that if your cooking requirements are relatively modest, it shouldn't have a material impact on your monthly bill; at an average of 30 minutes per day at 600-watts, say, (medium power) your total usage for the month is less than 10 kWh. If you run the risk of losing your preferred rate class then, obviously, I wouldn't push your luck, but if there's some room to spare, then I think they're an excellent alternative to gas or conventional electric cookers.


Now that is what I call a "conservation" rate!

Where these rate structures have been used in water utilities, they are very effective at getting people to stop watering to stay in the cheap tiers.

Still, 25 canuckcents is what my family in Australia pays for ALL their electricity! Even though it is all coal sourced, it is very expensive!

Still, 25 canuckcents is what my family in Australia pays for ALL their electricity! Even though it is all coal sourced, it is very expensive!

Which is interesting. Part of the hoopla against the introduction of any Carbon pricing mechanism was that Australia has cheap electricity and we can't afford to lose our competitivness. I am shocked to hear that the meme might not actually be true. ;)

I bought and used an inductive hotplate in a lab where we had to boil a cup of water as part of a procedure. Because of the coupling difference between the radar cross-section of a cup of water versus the thermal exposure/admittance of a cup of water held within the bottom of a pot, the inductive hotplate would bring the volume of water to a boil much faster. It was an impressive demonstration.

I guess the (9-15,000btu) heat pump is not a big incremental load, but I am surprised that there is not some load management controllers appearing for the residential market. Some off grid systems have it, and I would have thought the utilities would be interested in this. Between space heat, hot water, and ranges, there is a lot of load that can be juggled to avoid coincident peaks.

I have become a covert to the (good quality) convection toaster ovens - have done great whole chickens in them. That said, the built in convection oven (AEG 24" wide) only draws 2000W.

I like the look of those plug in induction units. I have read how people love them especially in summer, to keep the kitchen cool. Saw an outdoor kitchen set up for serious tomato canning that used two of those with two pressure canners - that would have to be about the most energy efficient way to cook stuff you can get. Certainly would make canning much more pleasant than in a (non AC) house in late summer!

I'll look out for one on Craigslist - thanks for the tip about the wattage of the US ones!

I would be shocked if even 5% of the population had the analytical tools to figure out their home heating situation analytically. Most people require (or think they do) specialist assistance. The Weatherization Assistance Program averages about 100K homes per year (at 6500 ea), with 2-3X that since ARRA passed. It needs to be about 10X that in perpetuity. It's only about 10% of the direct subsidies provided by LIHEAP (which obviously aren't covering the full need given how typical stories like this are). Given the slow employment recovery among construction workers, WAP ought to be even bigger until full employment returns. The argument was that it couldn't be ramped up fast enough given that boom times would be back by now. The argument now is that we 'can't' afford it. If WAP were big enough to even keep up with the deterioration of the housing stock, it would allow LIHEAP to be smaller eventually. Given current federal interest rates there is no excuse for not expanding this program dramatically. We could do a comprehensive energy audit of every home in the country for $30B (probably less if we were actually doing every home). If WAP were not to be expanded, utility on-bill financing, or home energy mortgages would provide alternative cost-effective financing paths.

Unfortunately, policy is driven by the 'need' to allow folks like Romney to pay less than 15% in income taxes, instead of keeping folks like Bob and Ike from scrabbling for crumbs. Half the population is below average and always will be. That doesn't mean they deserve to eat dog food and beg for heat in their old age. Given the income mentioned in the article, I would bet it consists entirely of Social Security (and that Bob has been low income his entire life), which plutocrats also continue to insist we cannot afford.

Note that my utility would LOVE all of our customers to be TOU, and that I would bet on it being mandated at some point in the next decade.

You are spot on, the WAP - properly done- is about as good a value "stimulus" project as you will get. And even more so if it is targeted at heating oil users.

I am amazed at the willingness to subsidise the consumption, and not the reduction.

Given current federal interest rates there is no excuse for not expanding this program dramatically.


If the gov is willing to lend money at 0% to Goldman Sachs, how about doing the same for a bunch of energy efficiency and energy infrastructure projects (wind, hydro, transmission lines etc).

At least then something useful gets done.

I would love ToU to be mandated, I am always amazed at the hysterical resistance to it here.

I would also like to see the demand charge come into the residential tariff - even though many people would have a hard time understanding it at first. This would actually benefit those houses still with 60 or 100 amp services, and for those McMansions that have 3 and 400amp services, well, if you want to ride that train, you pay the fare.

With the smart meters, this should be (technically) easy to implement - thought politically almost impossible.

On residential demand metering -- my folk's house was on a pilot residential TOU demand metering program starting 30 years ago. At some point they discontinued the pilot but were forced to continue serving existing customers on the tariff. They kept getting told they couldn't discontinue the rate for grandfathered customers but a few years ago there were so few customers left that they successfully snuck a rate change thru that made it wildly uneconomic and he jumped off onto their standard offer TOU rate.

I'm not up on the current literature, but I think the belief is that due to load diversity within the residential customer base, the actual reduction in total demand at a distribution circuit or higher level is pretty small for demand metering over simple TOU. However, given that the cost to implement is effectively 'nil with smart meters, and that the effect has to be some demand reduction, however small, we may see this implemented (particularly with EV and PV penetration increasing).

Agreed, the smart meters make the cost effectively nil.

They could do it voluntarily 9to start with) but then, only the low demand types will adopt it. But still.

I read sopmething in the vancouver paper last year about a street where the people were hitting the limits of some of the transformers, and the line in general.

Over the years, people have added basement suites and the like, and the same-address load growth had been significant. People are now starting to build Laneway Houses, which, of course, need electricity.

BCH wouldn;t allow any more people on this street/line to do so, unless they paid the cost of the upgrades. This seems like a classic case of tragedy of the commons - get in and get your service upgraded before everyone else does.

A demand tariff, where you pay according to the service capacity AND your monthly peak, would limit/stop this sort of thing.

Time to internalise, rather than externalise, these costs. After all, a house with a 400A service is, potentially, the equivalent of 4 x 100A houses.

I'd never heard of 'laneway housing' before, thanks. In a lot of older "built-out" SoCal neighborhoods during the boom, the primary means of growth was to knock down the original (small) single story home and rebuild. In low end neighborhoods the replacement was usually 8 apartments or condos (4 per building), in mid-range neighborhoods, it was a divided lot with several two-story single-family homes, in higher end neighborhoods it was a single McMansion built out to the minimum lot setbacks. The ridiculous property 'values' made the transformer replacement costs (which were billed to the developer) irrelevant. If buying an EV drives a transformer replacement in my area, it will make the EV uneconomic (unless they only charge offpeak). For a small number of customers I'd probably want the smart meter to be able to tell the charger (or some other load) to turn off if the transformer were overloaded, rather than counting on the customer billing incentive. For a high number of customers per transformer demand meter would help.

Yes, and in addition to the heat pump, they need to put a lot more insulation in that place. A minimum would be R20 in the walls and R40 in the roof, and more is better. Given the probable peak oil scenarios, twice the minimum wouldn't be unreasonable.

The photos of his basement show bare concrete walls, and you typically lose 25% of your heat through the basement. Last year I put 1.5 in. of foam board plus 3.5 in. of fiberglass batts in my basement walls, which I believe gives me R19.5. It's quite cozy down there now, and if things got really tough, I would just move to the basement and light up the gas fireplace.

Speaking of which, Maine needs to put in a rural natural gas distribution system, although this might be a huge conceptual departure for them. However, half the oil refineries in the Northeast are going to shut down this year, so next winter could be REALLY bad for the heating oil users there.

Hi Paul;
Did you see my article up above, about the muni's also digging deep to help people fill these tanks? It's painful, especially that they only look one layer in, just 'Pay that oil bill'.. until the emergency of the moment is averted.

From your article, this section stood out for me..

They thought that with Ike’s oil sense and Gene’s business sense, they’d make money. But Mr. Libby says now that he’d sell the company in a heartbeat. .. “You know what my dream is?” Mr. Libby asked. “To be a greeter at Walmart.”

I think I'm going to talk to the friends my Mom used to work with at Habitat for Humanity, and see what it might take to create a 'sweat equity' alternative to the housebuilding that they do, and put a similar effort into hardcore Insulating and Weatherizing..

So far, the work I've done on my three-unit building has brought the oil use down by a solid third.. and I've still got a good list of bits to attack next.

Hey Bob,

That quote stung me hard too, but this last bit helped ease the pain somewhat:

Two days later, Mr. Hartford drove up to Hometown Energy’s small office in his weathered gray Lincoln, walked inside, and made his desperate offer: The title to his car for some oil.

His offer stunned Janis Carlton, the only employee present. But she remembered that someone had offered, quietly, to donate 50 gallons of heating oil if an emergency case walked through the door. She called that person and explained the situation.

Her mother-in-law and office mate, Diane Carlton, answered without hesitation. Deliver the oil and I’ll pay for it, she said, which is one of the ways that Mainers make do in winter.

If you can co-ordinate the ground action I'm more than happy to help contribute to the cost of the materials by calling in my VISA.


"I think I'm going to talk to the friends my Mom used to work with at Habitat for Humanity, and see what it might take to create a 'sweat equity' alternative to the housebuilding that they do, and put a similar effort into hardcore Insulating and Weatherizing.. "

Please keep us posted. As we all know there are a lot of low capital weatherization measures that could make a substantial difference for folks like this, and while most of us aren't in a position to donate many heat pumps, I'd be happy to buy some caulk, duct tape, window film, pipe insulation, thermostats, etc if you can get folks to organize the sweat equity and knowledgeable volunteer supervision.

Right behind you, Ben. Anyone else interested in kicking-in a few extra bucks to help out the cause?

Sound doable, Bob?


Thanks, Guys!

I have to talk to some likely co-conspirators, and if something seems to be coming together, I'll make sure I get word out here.

Meantime, our two incomes are under the gun, and we're working the angles just to remain stable ourselves.

(I just repaired a couple more appliances for neighbors, though, tieing in a couple themes from today and yesterday, and making a few bucks..)

Yep, I'm up for helping too.

let's make sure he gets that info on the ToU rates...

Chesapeake Update:

Major oil company uprooting near Dickinson

Chesapeake Energy, a major oil company with work sites south of Dickinson, is uprooting two rigs and could possibly move out of North Dakota, said Kelsey Campbell, coordinator of corporate development and government relations for the company.
“We’re moving our rigs out of the area for the time being and not drilling anymore wells until we have a better idea of where we want to continue our exploration in the future,” Campbell said Thursday.


Over the past two years (based on 2011 data through October), as the US (oil) rig count has increased, the incremental net increase in annual US crude oil production per rig has fallen, from 170 bpd per rig per year in 2010, to 100 bpd per rig per year in 2011.

This doesn't bode well for other, generally more expensive, shale provinces around the world.

And of course, the EIA recently announced a massive reduction in estimated US shale gas resources in the US, while some recent shale gas completion attempts have been non-commercial in Poland

Cheaspeake's drilling was on the fringes of the Bakken play, in Stark County, ND. In an area where the Bakken (source rock) is absent or thin. Oil (in the Devonian - Three forks) in this area is interpreted as being expelled from the overlying (Mississippian) source rock.

You may be more familiar with this stratigraphy in West Texas, where the time equivalent is called the Woodford shale.

Excessive drilling, in less than ideal areas, could easily account for the decline in the rate of increase in annual production per rig.

Yes. As the samples are generally inconclusive, and gas flares difficult to interpret, the only practiclal way to evaluate these wells is to drill a 10,000 ft. lateral, case and frac. That is currently costing up to $ 11.5 million a shot. The operators usually, but not always, get something - like an $11.5 million poke in the eye for example.

FOR ALL: ban - I suppose being too close to the subject some of us assume everyone understands the details. In additional to the more obvious factors there's a huge difference between exploring for conventional ff vs. the shale plays. I can drill a 16,000' vert well for $4.5 million, log it and know it's a duster right then and now. But I can drill a 10,000' vert well and then drill 6,000' horizontally. Cost to this point: $4.5 million. And how sure am I that it's now worthwhile to complete and frac the well...at the additional cost of $6.5 million? I may have some small indications of profitability but often with the shale plays you don't know much more than before you spudded the well. Essentially in the great majority of cases once you decided to drill you've committed to completing and frac'ng the well. BTW: the last Marcellus well I saw the details - the completion and frac cost 3X what the drilling phase cost.

As a pore pressure analyst at Devon I was occasionally tasked to evaluate the potential for completing a hz Haynesvilles hole. Seldom could I make the call. Some wells with great shows where money losers. And some wells with no indications of NG were the more profitable. Thus as the hz shale booms expands it would be natural for the capex per "discovery" to be higher than conventional plays. Rarely does a hz shale well get classified as a dry hole. Even if it only returns 10% of its cost. It's still a completed NG well. Rarely does a conventional well I complete lose money...almost always a nice EROEI. Of course, that's not factoring in the dry holes I don't complete. Without that understanding it will be difficult for the public to appreciate some of the stats being thrown around.

Reports from locals vary. Some of CHK's recently drilled wells are rumored pumping and others are rumored dry holes.

The $11.5 million is the highest I have seen. Another AFE was for $ 8.5 million, some of which may be salvageable upon plugging.

As we in the oil industry established conclusively in the 1970s, just because you drill more wells doesn't mean you find more oil and gas. If it's not there, it's not there, and drilling harder doesn't change that. It just increases costs.

The pundits in the MSM who believe that the US is now an oil exporter and all its energy problems are solved are going to experience a reality check in the foreseeable future. However, they'll probably blame it on oil companies not being allowed to drill in national parks and wildlife refuges.