Drumbeat: October 5, 2012

China Needs Its Own Dream

“Success in the ‘American Dream,’” notes Peggy Liu, the founder of the Joint U.S.-China Collaboration on Clean Energy, or Juccce, “used to just mean a house, a family of four, and two cars, but now it’s escalated to conspicuous consumption as epitomized by Kim Kardashian. China simply cannot follow that path — or the planet will be stripped bare of natural resources to make all that the Chinese consumers want to consume.”

...A decade ago, the prevailing attitude was, “Hey, you Americans got to grow dirty for 150 years. Now it is our turn.” A couple of weeks ago, though, I took part in the opening day of Tongji University’s Urban Planning and Design Institute in Shanghai and asked students whether they still felt that way. I got a very different answer. Zhou Lin, a graduate student studying energy systems, stood up and declared, with classmates nodding, “You can politicize this issue as much as you want, but, in the end, it doesn’t do us any good.” It is not about fairness anymore, he said. It is in China’s best interest to find a “cleaner” growth path.

Oil Heads for Third Weekly Drop Before U.S. Jobs Data

Oil headed for a third weekly decline in New York before data forecast to show rising unemployment in the U.S., amid speculation supply levels are exceeding demand.

Futures slid as much as 1.1 percent. The U.S. jobless rate probably increased to 8.2 percent last month from 8.1 percent in August, according to the median projection of 88 economists surveyed by Bloomberg before today’s Labor Department report. The country’s crude output climbed to the highest level in more than 15 years last week, the Energy Department said. Saudi Arabia, OPEC’s biggest producer, sees no difficulty in meeting demand, Oil Minister Ali al-Naimi said yesterday.

California Refiners Ration Gasoline as Prices Near Record

Exxon Mobil Corp. and Valero Energy Corp. are rationing gasoline deliveries to customers in California as refinery halts cut into the state’s supplies, driving pump prices toward record highs.

Valero stopped spot sales in southern California and is allocating the rest of its deliveries to customers. Exxon is also rationing to buyers at West Coast terminals. Retail prices in the state jumped to an average $4.486 a gallon, according to data published today by AAA, the nation’s biggest motoring organization.

...“We’re really sort of shell-shocked,” said Tom Robinson, president of Santa Clara, California-based Robinson Oil Corp., which operates 34 Rotten Robbie convenience stores. “If you’ve been in California long enough, you know how volatile our market can be. But to see prices go up $1 a gallon since Monday -- I’ve never seen that before.”

Oil has a better chance at $80 than $100

SAN FRANCISCO (MarketWatch) — It didn’t take much to propel oil past $100 a barrel on an intraday basis last month, but apparently it takes even less to trigger a significant price retreat.

That’s because most of the factors already influencing the market tip the scales in favor of a decline.

$4 gas: Get used to it

A new U.N. report says the massive bets placed on the commodities markets are the "root cause" of the volatility in oil and gas prices. And that's not about to change.

Asia Fuel Oil-Oct/Nov plunges to over six-month low

SINGAPORE (Reuters) - Asia's fuel oil weakened further on Friday, with inter-month spreads coming under pressure on increasing supplies coming into the region, while demand remained lacklustre.

The prompt balance October/November inter-month spread plunged to a backwardation of 50 cents a tonne by the Asian close, weakest in more than six months, Reuters data showed.

IEA head sees no golden age soon for European gas

VIENNA: Europe is unlikely to benefit soon from a coming golden age of natural gas as unconventional sources will not transform supply of the fuel and oil-linked contracts will keep its prices high, the head of the International Energy Agency (IEA) said.

"The rosy global outlook for gas is not necessarily reflected in Europe today," Maria van der Hoeven told an energy conference in Vienna yesterday. "The verdict on the golden age of gas in Europe? It's unlikely to emerge in Europe any time soon."

She made the comments just three weeks after the IEA's chief economist, Fatih Birol, re-emphasized his thesis that Europe will benefit from a golden age of gas through the availability of new supply sources.

Where the Jobs Are

Can Governor Romney realistically create 4 million jobs from exploiting our nation's newfound energy sources, as the candidate claimed in the debate the other night?

Shell Declares Force Majeure on South Africa Fuel Deliveries

Royal Dutch Shell PLC said Friday that it declared "force majeure" on some fuel deliveries in South Africa this week as a strike by truck drivers affects the company's ability to fully honor delivery commitments.

U.S. Natural Gas Advances on Forecasts for Colder Weather

Natural gas futures advanced for the eighth time in nine days in the U.S. as a forecast for a blast of cold air signaled stronger demand for heating fuel.

The Energy Sector: Focus On Unconventional Oil And Gas For Long-Term Gains

With world population continuing to grow steadily, with estimates that it will reach as much as 9 or 10 billion people by 2050, demand for oil and gas will not likely decrease. With huge growing economies in Asia, one can easily argue that we will continue to scour the earth inside and out to find every last drop of oil and gas we can extract in a cost effective way. Below, I will explain in more detail why this is the case. In short, it boils down to the fact that even with very high growth in alternative energies, by 2050, they will still be lagging far behind our traditional sources (oil, gas, and coal). The world's energy demands will have to be met by a combination of all these sources.

However, there are some good investment opportunities out there to take advantage of the growth in non-conventional sources of oil and gas. Later, I will highlight two companies I own that are examples of how to do this -- one focused on hydraulic fracturing, and one on deep water drilling. First, however, I will go into some more background on the future growth of traditional and alternative energy sources.

Baker Hughes: International drilling rigs off 0.6%

Baker Hughes Inc. BHI +1.15% said its number of international drilling rigs was down 0.6% in September from August, but rose 6.8% since the year-ago period.

The oilfield-services company said the international rig count edged down to 1,254 in September from 1,261 in August, and increased from 1,174 rigs a year earlier.

Russia's Sakhalin-2 sees flat oil output in 2012

(Reuters) - Russia's Pacific Sakhalin-2 project, in which Shell owns a 27.5 percent stake, expects no change to its oil production this year, a spokesman for the operator said on Friday, refuting media reports of a possible decline.

"This year, we will produce oil in the same amount as it was last year," Sakhalin Energy spokesman Ivan Chernyakhovsky said.

Iraq sets bar lower on oil output and looks to attract foreign firms

Iraq is looking to reduce its ambitious crude production targets, and is working to improve the terms offered to international oil companies (IOCs) bidding for contracts in the country.

Baghdad was contemplating a target of 9.5 million barrels per day (bpd) of crude by 2020, said a senior government figure, in a significant departure from the previously held ambition of pumping 12 million bpd within the next five years.

Iran Seen Sending Own Supertanker to Deliver Oil to South Korea

An Iranian supertanker is heading to South Korea with a cargo of oil, according to shipping data, as the Islamic republic uses state-owned tankers to make deliveries in response to sanctions over its nuclear program.

Behind Iran's currency crash

NEW YORK (CNNMoney) -- Iran's currency is in a free fall, and the sanctions over its nuclear program are mostly to blame.

Officially, the Iranian government offers to sell one U.S. dollar for about 12,500 Iranian rials. But it only offers that rate on a limited basis.

So Iranians, who need dollars to both buy imported goods and guard their savings against rampant inflation, have developed an extensive black market in dollars. It's on this market that the value of the rial has tumbled.

Turkey authorizes military operations in Syria

The Turkish parliament's approval of military operations outside Turkey on Thursday has reignited calls from Syrian opposition activists for international intervention a day after shelling from Syria killed five Turkish civilians.

"It's a good sign," said Hozan Ibrahim, a member of the Syrian National Council, based in Berlin. "Turkey has signaled both to the Syrian regime and the international community a willingness to intervene."

Chavez’s Havana-to-Tehran Alliance at Stake as Venezuelans Vote

Venezuelans voting whether to re- elect Hugo Chavez on Oct. 7 will also decide the fate of a regime that forms the linchpin of an alliance from Iran to Cuba against U.S. policies.

Chavez has tapped the world’s largest oil reserves to provide about $7 billion annually in subsidized crude to Cuba and its Caribbean neighbors, more than three times what the U.S. spends in aid in the Western Hemisphere. He ended anti-drug cooperation with the U.S. in 2005 and signed more than 100 accords with Iran even as President Mahmoud Ahmadinejad’s government faces growing isolation over its nuclear program.

Anti-graft officers get 5 years in jail over $600 bribe in oil-rich but impoverished Nigeria

LAGOS, Nigeria — Nigeria’s anti-graft agency says two former employees have been jailed over a $600 bribe.

Economic and Financial Crimes Commission spokesman Wilson Uwujaren said in a statement Friday that Douglas William and Abba Ishaku were convicted Thursday and sentenced to five years in jail for demanding and attempting to take a bribe of about $600.

Exxon, BP Estimate Alaska LNG Export Project at $65 Billion

Exxon Mobil Corp., ConocoPhillips, BP Plc and TransCanada Corp. said a project to liquefy and export natural gas from Alaska will cost as much as $65 billion and take more than 10 years to construct.

The venture includes an 800-mile (1,300-kilometer) pipeline from the North Slope to Alaska’s southern coast as well as a liquefaction plant and storage tanks, the companies said in an Oct. 1 letter received by Alaskan Governor Sean Parnell’s office yesterday. The governor had asked the companies to “harden the numbers” on the project by the end of September, Parnell said in a statement.

Judge Rejects Binghamton’s Fracking Ban

A court has struck down a moratorium on natural gas drilling in Binghamton, N.Y., yet both sides are claiming victory.

Is fracking behind contamination in Wyoming groundwater?

The US Environmental Protection Agency (EPA) sparked a firestorm in December last year when it released a draft report suggesting that the use of hydraulic fracturing — or 'fracking' — to extract natural gas had contaminated groundwater near Pavillion, Wyoming. Industry officials have long denied that fracking affects groundwater, and Pavillion has become the first high-profile test of this claim. On 26 September, the US Geological Survey (USGS) released data showing the presence of groundwater contamination in the region. Although the data would seem to support the EPA’s assessment — as does an independent analysis released by environmental groups this week — the survey did not seek to determine the source of the contamination. Nature examines the on-going debate and how it relates to broader questions about groundwater contamination from fracking across the United States.

Daryl Hannah arrested in Keystone XL protest

The actor Daryl Hannah was arrested in northeast Texas on Thursday, along with a landowner as the pair protested against an oil pipeline designed to bring crude from Canada to the Gulf Coast.

"They've arrested Daryl Hannah and a rural Texas great-grandmother," said Paul Bassis, Hannah's attorney.

Power shortage risks by 2015, Ofgem warns

Britain risks running out of energy generating capacity in the winter of 2015-16, according to the energy regulator Ofgem.

Its report predicted that the amount of spare capacity could fall from 14% now to only 4% in three years.

Ofgem said this would leave Britain relying more on imported gas, which would make price rises more likely.

Savers Push $374 Billion U.S. Utility Industry to Shift

“There is a quiet revolution in energy efficiency going on in our country,” said Howard Learner, executive director of the Environmental Law and Policy Center, Chicago-based advocates of clean energy.

...The result: demand for electricity is shrinking even as economies grow, an effect that’s starting to erode sales and profit at U.S. utilities from New England to Oregon. They include OGE Energy Corp. and Teco Energy Inc., both of which have underperformed the 10 percent gain this year in the Russell 1000 Utilities index.

$90 Billion for Green Energy? A Closer Look

Three times in Wednesday night’s debate, Mitt Romney said that President Obama had plowed $90 billion of federal money into green energy. “Now, I like green energy as well, but that’s about 50 years’ worth of what oil and gas receives,’’ he said. “Ninety billion — that — that would have — that would have hired two million teachers,’’ he said.

Is $90 billion accurate?

Romney Decides That Thriving Electric-Car Startup Tesla Is a "Loser"

But don’t forget, you put $90 billion, like 50 years’ worth of breaks, into—into solar and wind, to Solyndra and Fisker and Tesla and Ener1. I mean, I had a friend who said you don’t just pick the winners and losers, you pick the losers, all right? So this—this is not—this is not the kind of policy you want to have if you want to get America energy secure.

Tiny electric Smart car will also have smallest price

The battery-powered version of the small Smart car is also going to have the smallest pricetag for an electric car from a major maker.

Smart USA, which is now part of Mercedes-Benz, says it is going to price the two-seater at $25,000 before tax rebates. The convertible version, called the cabriolet will retail at $28,000 when both come to the U.S. next spring. The base price is about $8,000 less than other electrics like the Nissan Leaf.

Are electric cars bad for the environment?

Published this week in the Journal of Industrial Ecology, the "comparative environmental life cycle assessment of conventional and electric vehicles" begins by stating that "it is important to address concerns of problem-shifting". By this, the authors mean that by solving one problem, do electric cars create another? And, if so, does this environmental harm then outweigh any advantages?

The study highlights in particular the "toxicity" of the electric car's manufacturing process compared to conventional petrol/diesel cars. It concludes that the "global warming potential" of the process used to make electric cars is twice that of conventional cars.

Pedestrians, bicyclists beware: You're a bigger percentage of traffic deaths in New York, Los Angeles

New York and Los Angeles see far more pedestrian and bicyclist fatalities as a percentage of traffic deaths than the national average. In New York, pedestrian fatalities accounted for 49.6 percent of crash deaths, more than four times the national average of 11.4 percent, according to the study. In LA, pedestrian fatalities made up 32.4 percent of all traffic-related deaths.

Fatal crashes involving bicyclists also made up a higher proportion of traffic deaths in the two cities. In New York, that number is 6.1 percent, more than three times the national average of 1.7 percent. In LA, 2.8 percent of fatal crashes involved bicyclists.

Idaho nuclear lab fined after workers exposed to radiation

The U.S. Department of Energy fined a nuclear research lab in Idaho more than $400,000 on Thursday for multiple safety violations stemming from two mishaps last year that caused workers to be contaminated with radiation.

Hydro-Québec learned from Point Lepreau's mistakes

Quebec’s decision to shut down its only nuclear generating station comes as New Brunswick's Point Lepreau Nuclear Generating Station is preparing to come back online after three years of delays and more than $1 billion in extra costs.

Edison Seeks to Restart San Onofre Unit, Run Below Capacity

Edison International, owner of California’s second-largest utility, has proposed restarting Unit 2 at its San Onofre nuclear power plant in California and running it at 70 percent of capacity to avoid shaking damaged pipes.

Five months after the restart, Edison will shut Unit 2 to inspect the steam generator for tube wear, the Rosemead, California-based company said in a statement today. Unit 3, which leaked radioactive water from a steam generator, will remain shut for further study. Edison didn’t propose a restart date. Both units have been shut since January.

Belarus Needs Nuclear Regulator - UN Watchdog

Belarus should create a regulatory system covering the construction and operation of its first nuclear power plant, said International Atomic Energy Agency (IAEA) expert Donald Kovacic in Minsk on Friday.

“The question of critical importance is the creation of a strong regulatory body,” he said.

Food is the New Oil and Land the New Gold: Lester Brown

The United Nations food agency reports that food prices are rising again, reaching 6-month highs and nearing levels not since 2008. Higher prices then spurred food riots in the Middle East and North Africa, which fueled the Arab Spring.

There's no sign of widespread food riots now but eventually there could be, says Lester Brown, president and founder of the Earth Policy Institute and author of the new book "Full Planet, Empty Plates: The New Geopolitics of Food Scarcity."

"The term 'food unrest' will become part of our daily vocabulary," Brown tells The Daily Ticker.

Blue and green honey makes French beekeepers see red

(Reuters) - Bees at a cluster of apiaries in northeastern France have been producing honey in mysterious shades of blue and green, alarming their keepers who now believe residue from containers of M&M's candy processed at a nearby biogas plant is the cause.

A Modest Rise in Global Food Prices

Prices increased only 1 percent in the all-important cereals sector, with gains in rice and wheat prices somewhat offset by a drop in corn prices. The overall figures suggest that the price run-ups that accompanied this summer’s weather problems in several producing countries – including the United States, the world’s largest grain exporter – are now largely factored into the market.

And, barring some fresh disaster early in the Southern Hemisphere’s growing season, it probably means we will get through this year without witnessing the peaks in global food prices seen in 2008 and 2011. Those, readers will recall, set off global unrest and prompted renewed commitments to agricultural development in poor countries.

In Organic-Hungry Hong Kong, Corn as High as an Elevator’s Climb

As millions of Hong Kong consumers grow increasingly worried about the purity and safety of the fruits, vegetables, meats and processed foods coming in from mainland China, more of them are striking out on their own by tending tiny plots on rooftops, on balconies and in far-flung, untouched corners of highly urbanized Hong Kong.

“Consumers are asking, will the food poison them?” said Jonathan Wong, a professor of biology and the director of the Hong Kong Organic Resource Center. “They worry about the quality of the food. There is a lack of confidence in the food supply in China.”

Drought Leaves Cracks in Way of Life

BUTLER, Mo. — They have canceled vacations. Their children are forgoing out-of-state colleges for cheaper ones close to home. They are delaying doctor’s visits, selling off land handed down through generations and resisting luxuries like new smartphones.

And then there is the stress — sleepless nights, grumpiness and, in one extreme case, seizures.

Lost amid the withered crops, dehydrated cattle and depleted ponds that have come to symbolize the country’s most widespread drought in decades has been the toll on families whose livelihoods depend on farming.

Although most are not in danger of losing their homes or going hungry, the drought is threatening the way of life in rural America.

The Peak Oil Crisis: Global Dynamics

It is sometimes useful when confronted with the flood of information we all receive these days to step back to ponder the major forces that currently are shaping our civilization. Although these forces are too varied and complex to give much of a picture of what life might be like 25 or 50 years from now, they raise many warning flags that we may or may not heed before it is too late.

Japan May Meet Kyoto Emissions Cut Target, Ministry Estimates

Japan is on target to cut greenhouse gas emissions by an estimated average of 8 percent for the five years ending in March, meaning it will meet commitments under the Kyoto Protocol, the environment ministry estimated.

Kyoto’s binding obligations limiting the release of emissions among industrial nations stipulate Japan must cut greenhouse gas output by 6 percent from 1990 levels for fiscal 2008-2012. Emissions are projected to be 1.277 billion metric tons for fiscal 2011 and 1.316 billion tons in the twelve months ending March 31, 2013, Kentaro Doi, a ministry official in charge of emissions data, said by phone today.

Arctic melt opens door for big oil's next boom

In these Alaskan waters of the High North, sea ice has melted at a record pace this summer, shattering a record set in 2007 and marking the greatest Arctic melt since scientists began monitoring it by satellite in 1979. Some scientists calculate it is the greatest melt in the history of humankind, and there is little disagreement that it poses a perilous development for the planet.

For Royal Dutch Shell and other oil companies, this melt is serving to open up the once ice-locked waterways that big oil will need to set up drilling platforms and staging areas to pull the crude and natural gas up from beneath the ocean's floor.

Russia discusses Arctic oil licenses for foreign companies

Russia is considering allowing foreign oil companies not only to operate on its Arctic shelf, but also to own licenses for exploration in the country’s Arctic waters.

The proposal was being discussed in Russia’s Energy Ministry, although no final decision had been taken, the Financial Times reported, citing the country’s Energy Minister Alexander Novak. He stressed that only technologically advanced companies with secure environment friendly operations, would be allowed to obtain licenses.

Exploitation of the Arctic must be reined in

Rampant economic activity in one of our last wildernesses is a disaster in the making. The world needs the Arctic and we have a responsibility to protect it.

Climate change may force evacuation of vulnerable island states within a decade

One of the world's foremost climate scientists has warned that vulnerable island states may need to consider evacuating their populations within a decade due to a much faster than anticipated melting of the world's ice sheets.

Michael Mann, director of the Earth System Science Center at Pennsylvania State University, said the latest evidence shows that models have underestimated the speed at which the Greenland and west Antarctic ice sheets will start to shrink.

In New Orleans, Entergy Prepares for the Next Big One

After Hurricane Katrina devastated the region in 2005, executives at Entergy realized that climate change threatened not just the company’s infrastructure but its customer base. “Katrina was kind of a focusing moment where you could see what the future might be if we didn’t get our arms around climate change,” says Jeff Williams, the company’s director of climate consulting. Five months after the storm, Entergy had fewer than 500,000 customers in Louisiana, a 40 percent drop. “We had tremendous damage to our system, and yet no revenue coming in to pay for repairing it.”

Heads up. This is the biggest OPEC news to come down the pike since the Petroleum Intelligence Weekly announced in 2006 that Kuwait's proven reserves were only about 25 percent of what they claimed.

Opec believed to overstate oil reserves by 70%

Oil, gas and mining analyst Rick Nariani said Opec’s stated reserves skyrocketed from 878-billion barrels to 1.2-trillion barrels throughout the 1980s and 1990s, without any new significant discoveries being made. With cumulative oil production of 449-billion, the true reserves for Opec could be as low as 428.94-billion, which would result in global price shocks by 2020.

Ron P.

It'll be interesting to hear the response from OPEC if there's any response at all. If they ignore this article, they'll be seen as admitting that it's true. If they insist that their stated reservers are true, they'll lose all credibity -- you can argue that they've already done that.

It's not like this is the first time this accusation has been made. Simmons, Deffeyes, and others have made similar claims.

They may ignore it because the publication that outed them, "Engineering News" is not that widely read in the industry. When the news that Kuwait had massively inflated its reserves it started a firestorm in Kuwait. But then Petroleum Intelligence Weekly is widely read in the industry, worldwide. PIA said Kuwait's proven reserves were about 24 billion barrels and their non-proven reserves were about the same, bringing their total proven plus non-proven reserves to 48 billion barrels. Here is what PIA published:

Table 1: Kuwait Oil Reserves As Of Mar. 31, 2001
(million bbl)	Initial Oil  Original	Cumulative       Remaining    Reserves
Area	        In Place     Reserves	Production   Proven  Nonproven    Total
South	        88,480	     46,435	26,209	     14,912    5,314	  20,226
North	        41,038	     21,610	 4,532	      4,336   12,742	  17,078
West	        29,888	      9,613	 1,104	      4,281    4,228	   8,509
Divided Zone	 9,503	      3,547	 1,244	        677    1,626	   2,303
Total	       168,909	     81,204	33,088	     24,205   23,911	  48,116
Source: KOC, report of Reserves Categorization Project, Dec. 2001.

A year and a half later the debate was still raging in Kuwait: Is Kuwait Lying About Its Oil Reserves?

Kuwait had a closed door session to discuss its reserves with Parliament before reaffirming the country’s proven oil reserves at 100 billion barrels.

As Xinhua points out, this is a odd and troubling set of events. Parliament had refused to pass the budget, which shows a large deficit, unless the oil ministry came clean with them about the status of the country;s reserves, hence the private briefing.

Ron P.

OPEC has convinced importers they have more product than they probably do, but that only assists them in selling their remaining product if those importers continue on with BAU as if no crises looms on the horizon. Therefore a retraction should not be expected.


I am reminded of a quote I recently came across:

"Never believe anything until it has been officially denied." - Claud Cockburn

According to the same article, the U.S. has 4.6 trillion barrels in oil shale. I don't think we really have to worry about those overstated middle-east oil reserves.... my sarcasm added.

Ron, in the previous Drumbeat you posted an article that proposed Russia is peaking in oil production. Unfortunately, I came in late, but I think my reply to that post can apply here, too.

Here's the revised version:

Ahem. Ron, haven't the Saudis heard of fracking? After all, it's already saved The American Dream, right?

[snarky grin]

Let's assume that in 2002 your company had 11 dollars of gross income for every dollar of expenses. But the ratio of gross income to expenses began to fall. Net Income = Gross Income Less Expenses.

From 2002 to 2005 (a three year period), the ratio of gross income to expenses fell from 11.0 to 8.9, a rate of change of -7.1%year.

From 2002 to 2008 (a six year period), the ratio of gross income to expenses fell from 11.0 to 7.0, a rate of change of -7.5%/year.

From 2002 to 2011 (a nine year period), the ratio of gross income to expenses fell from 11.0 to 5.3, a rate of change of -8.1%/year.

Over the nine year period, the ratio of gross income to expenses fell by more than half, and the rate of decline in the gross income/expense ratio accelerated in recent years. At the 2005 to 2011 rate of decline in the ratio, gross income would = expenses in only 18 years, around 2030. And if we looked at post-2005 Cumulative Net Income, and extrapolate the 2005 to 2011 rate of decline in the ratio of Gross Income to Expenses, then I estimate that almost half of total post-2005 Cumulative Net Income had already been consumed by the end of 2011.

If the foregoing numbers were accurate for your company, and if I presented the foregoing gross income, expense, net income and post-2005 cumulative net income facts and projections to you, would you be concerned? Would you especially be concerned if I told you that I estimated that your total post-2005 estimated cumulative net income had been 50% depleted in only six years?

Of course, replace Gross Income with Global Net Exports of oil (GNE*) and replace expenses with Chindia's Net Imports (CNI) and you have the data for Available Net Exports** (replace Net Income with Available Net Exports).

I estimate that there are about 157 net oil importing countries in the world. An extrapolation of the six year 2005 to 2011 data suggests that the total post-2005 cumulative supply of global net exports of oil that will be available to about 155 net oil importing countries (about 168 Gb) was about half depleted by the end of 2011.

Note that an extrapolation of the initial six year rate of change data for the Six Country model (Indonesia, UK, Egypt, Vietnam, Argentina, Malaysia or IUKE + VAM) produced a Six Country Cumulative Net Export (CNE) estimate of 9.2 Gb--which was too optimistic. Actual post-1995 CNE for the Six Countries were 7.3 Gb. The following chart shows normalized Six Country total petroleum liquids production (1995 production rate = 100%) versus remaining post-1995 CNE (post-1995 CNE at the end of 1995 = 100%):


Note that combined Six Country production in 1999 was slightly higher than the 1995 production rate. So everything seemed fine in 1999, except that they had shipped, in only four years, about 53% of total post-1995 CNE.

We can argue about what may happen in the future, and there are signs of slowing demand in the Chindia region, but what has happened in recent years is clear, and if we just focus on the last three years of annual data, the 2008 to 2011 rate of decline in the ratio of Global Net Exports of oil to Chindia's Net Imports accelerated to almost double digit levels, 9.5%/year.

This following chart shows the 2005 to 2011 ratio of GNE to CNI and it shows the estimated remaining post-2005 Available CNE by year:


This chart shows the 1995 to 2007 ECI ratio (production to consumption ratio) for the Six Country Model (IUKE + VAM), versus actual remaining post-1995 Six Country CNE, by year:


Of course, I think that the ECI (Export Capacity Index) ratio, or the ratio of production to consumption in oil exporting countries, is analogous to the GNE/CNI ratio, the ratio of the global supply of net oil exports to the Chindia region's net imports.

As the ECI ratio in an oil exporting country approaches 1.0, the volume of net exports from that country approaches zero. As the GNE/CNI ratio approaches 1.0, the volume of global net exports of oil that are available to about 155 (net) oil importing countries approaches zero. And from 2008 to 2011, the GNE/CNI ratio declined at almost a double digit rate.

*Combined net exports from top 33 net oil exporters in 2005, BP + Minor EIA data
*Available Net Exports, or ANE = GNE less Chindia's Net Imports

westexas... at what point in time (how many years), do you think the world really feel the impact of declining Available Net Exports?

I think that we have already felt it. Our data base shows that ANE fell from about 40 mbpd in 2005 to 35 mbpd in 2011, as annual Brent prices doubled from $55 in 2005 to $111 in 2011.

But net export declines are "front-end loaded." I think that we are only maintaining something resembling BAU because of sky-high post-2005 CNE depletion rates. Production rates can increase, stay the same, or decline, but as Ron pointed out, an increase in production is an increase in the rate of depletion. And a net export decline, especially an Available Net Export decline, is a decline on steroids.

In 2001, the estimated six year (1995 to 2001) rate of depletion in post-1995 Six Country CNE was 15%/year (based on six year 1995 to 2001 ECI decline rate). The actual rate of depletion in post-1995 Six Country CNE was 23%/year from 1995 to 2001. Therefore, the actual post-1995 CNE depletion rate was about 50% higher than estimated.

In 2011, the estimated six year (2005 to 2011) rate of depletion in post-2005 Available CNE was 11%/year (based on the six year 2005 to 2011 GNE/CNI decline rate). Since we don't know the actual volume of post-2005 Cumulative Net Exports that will be available to importers other than China & India; all we have is the estimate.

But we do know what the case histories show, and we know what recent historical data show:

In 2005, for every barrel of oil that the Chindia region (net) imported, there were 8.9 barrels of Global Net Exports.

In 2011, for every barrel of oil that the Chindia region (net) imported, there were 5.3 barrels of Global Net Exports.

But if you are into really dark humor--and given my estimate that about half of the total post-2005 cumulative supply of global net oil exports that will be available to importers other than China & India may have already been consumed--you have to appreciate what the oil importing OECD countries are currently doing. They are borrowing money, both from real creditors and from helpful central banks, in order to maintain and increase consumption.

westexas... I get your drift. However, can you explain this sentence: "I think that we are only maintaining something resembling BAU because of sky-high post-2005 CNE depletion rates."

Maybe I am a bit confused, but how does sky-high post 2005 CNE depletion rates help maintain Business As Usual? To me, these high decline rates would not allow business as usual. What am I missing here?

Yes, you are missing something. You are confusing decline rates with depletion rates. They are totally two different animals. An oil company can get decline rates down with massive infill drilling and installing horizontal wells right at the top of the reservoir. Then, if they can, increase the water pressure at the parameter.

That would decrease the decline rates but would cause the depletion rates to go sky high as Jeff indicated.

The decline rate is how fast your above ground production is falling. The depletion rate is how fast the below ground oil is disappearing.

Ron P.

As Ron noted, production rates can vary. They can increase, stay the same or decline. A production, or net export, decline is a negative rate of change in volume. So, you can say that the production rate of change was -5%/year, or that the decline rate was 5%/year.

Depletion is a one way street. Our estimates of remaining reserves/resources can vary, and reserve estimates can increase due to price changes and technology and due to new discoveries, but we are always depleting remaining resources.

Regarding the Six Country (IUKE + VAM) model, their production fell by 6% from 1995 to 2001, an annual production rate of change of -1%/year. However, they were depleting post-1995 CNE at the rate of 23%/year. So, over a six year period, the production volume fell at 1%/year, but the post-1995 "Net Export Fuel Tank" fell at 23%/year.

So, the observed 2005 to 2011 rate of change in ANE was -2.2%/year, a 2.2%/year decline rate. However, I estimate that the post-2005 cumulative supply of global net exports of oil that will be available to importers other than China & India fell at about 11%/year, from 2005 to 2011. The 11%/year number is the estimated depletion rate.

The bank balance model. Assume that you deposited $55,000 into a bank account and then immediately withdrew $10,000. One year later, you withdrew $9,000, a year after that you withdrew $8,000, and so on.

I’ve broken the annual withdrawals into thirds:

Index Year: $55,000 - $10,000 = $45,000

Year One: $45,000 - $9,000 = $36,000
Year Two: 36,000 - 8,000 = 28,000
Year Three: 28,000 - 7,000 = 21,000

At end of Year Three, annual withdrawals down by 30% from Index year, but post-Index Year bank balance down by 53%

Year Four: 21,000 - 6,000 = 15,000
Year Five: 15,000 - 5,000 = 10,000
Year Six; 10,000 - 4,000 = 6,000

At end of Year Six, annual withdrawal down by 60% from Index Year, but post-Index Year bank balance down by 87%

Year Seven: 6,000 - 3,000 = 3,000
Year Eight: 3,000 - 2,000 = 1,000
Year Nine 1,000 - 1,000 = Zero

Note that it took nine years to go to zero withdrawals (when the bank account was empty). But only three years into the decline period, 53% of the post-Index year bank balance had been emptied. This appears to be a pretty consistent rule of thumb for net export declines. About one-third of the way into a net export decline period, about one-half of post-peak CNE have been shipped.

Ron & Westexas... okay, I see what you are saying. A decline rate in an oil field can be kept at bay by EOR, however this significantly increases the overall rate of depletion.


Regarding a successful EOR program, these would be reserves that would almost certainly not be fully produced without EOR. I think that Ron pointed out that an intensive infield drilling program might boost the current production rate, but it would result in a faster depletion rate (and closer spacing might, depending on the reservoir, somewhat increase the recovery factor). An interesting question is whether horizontal drilling in high permeability reservoirs is increasing the ultimate recovery, or mainly just increasing the short term production rate (and thus increasing the depletion rate, i.e., getting the oil out at a faster rate).

But my point is that given the nature of "Net Export Math," almost no one is taking into consideration the Global and Available CNE depletion rates.

Incidentally, the Six Country model took 12 years to go from the start of the production plateau, in 1995, to zero net oil exports, in 2007. One-third of the way into the net export decline period, they had shipped 53% of post-1995 CNE, even as production increased slightly, from 1995 to 1999.

Couldn't a depletion rate go positive if EOR or high prices increased the size of the recoverable reserve faster than production depleted it? What is the unit it is measured in, is it production over total resource, or production over recoverable reserve?

Consider a field like Prudhoe Bay. Absent an extremely unusual situation where the oil reservoir is being recharged via faults from a deeper reservoir, the number of oil molecules in the oil reservoir is fixed (at least in any time frame relevant to humans). (Even in the rare circumstance where a reservoir is being recharged from another reservoir, the number of oil molecules in the combined reservoirs is fixed.)

Based on economics and technology, the EUR can increase, versus the initial estimates, but we can't increase the number of molecules of oil in the reservoir. So, depletion is always a one way street, in the sense that we are reducing the number of remaining oil molecules in the reservoir. The key metric is the recovery factor, which is the percentage of oil recovered, versus Original Oil In Place.

The Cornucopians generally refer to Peak Oil as an erroneous claim that we are "Running Out." Of course this is not accurate regarding production, but it is accurate regarding net oil exports. I've compared a production decline to an airliner doing a very gradual descent for landing, while a net export decline is more akin to a near vertical dive into the ground.

Well sucking the oil out a lot faster cannot possibly increase the oil in the ground. That being said, infill drilling and closer spacing can increase the ultimate recovery rate. But these new wells are still pulling from the same reservoir and they are increasing the depletion rate. They can in no way make the depletion rate go positive.

They can of course increase the total amount of oil recovered but I would imagine that the amount would be not all that great as compared to the total oil that these new horizontal wells pump. There are many kinds of EOR and more and closer spaced wells will not increase the total amount of oil eventually pump all that much. In fact I don't think one could call more wells ERO at all. I have seen wells in Southern California spaced only a few feet apart, and that was over fifty years ago. No one called that EOR.

Ron P.

In some cased, sucking the oil out faster can damage the reservoir and actually decrease the total amount of oil which can ultimately be recovered.

Well, clearly, it would be immensely useful to find out how much horizontal drilling increases the total amount of oil recovered. Because there are those who want to convince people that the total amount of oil recovered is being greatly increased because of the observed increase in production rates. Further, what is the ultimate difference in production in drilling wells every few feet vs horizontal drilling? Until we have a reasonable number in this area, the drill,baby, drill crowd, including Romney, will seriously distort what is actually occurring. This is probably a disaster in the making but as I say I don't really know without fairly hard numbers.

If people believe in the independence meme born from so called new technologies, it makes it impossible to seriously support renewable and low carbon alternatives.

Depletion is a one way street.

This is words to remember. Then the oil age is over every discussion about how long it will last will probably look quite ridiculous.

Should be a bumper sticker...

Westexas, I think you are looking for this Chart
GNE/CNI ratio


Just guessing but I would say no later than 2008, four years ago.

Ron P.

The data would seem to indicate that global exports have already topped out, irrespective of Chindia consumption. Can a decline in real terms be far behind?


Excerpt from an essay I'm working on follows. Incidentally, combined Cumulative Net Exports (CNE) from the top 33, as noted below, were 96 Gb for 2006 to 2011. While we don't know what the total volume of post-2005 Global CNE will be, we can say that this number, whatever it is, has been reduced by almost a hundred billion barrels in the six year period from 2005 to 2011.

As noted below, I do have an estimate for post-2005 Global CNE, and an estimate for the post-2005 Global CNE depletion rate. As noted up the thread, this approach produced an estimated Six Country 1995 to 2001 CNE depletion rate that was too optimistic (actual CNE depletion rate was about 50% higher than estimated).

Global Net Exports of Oil (GNE)

Our data base calculates the combined net exports (in terms of total petroleum liquids) from the top 33 net oil exporters in 2005, which we define as Global Net Exports of oil (GNE). We primarily used the BP data base, plus minor input from the EIA. Net exports are defined as total petroleum liquids production less liquids consumption in oil exporting countries. Our data base shows that GNE fell from 46 mbpd in 2005 to 44 mbpd in 2011.

The following graph shows the combined ECI ratio for the top 33 net oil exporting countries in 2005:


The 2008 to 2011 decline in the ECI ratio was faster than what the 2005 to 2008 rate of decline (2.2%/year) predicted we would see. Note that production from the top 33 net exporters in 2005 has been on an “Undulating Plateau” since 2005; however, three of the top 33 net oil exporters in 2005 (countries with net exports of 100,000 bpd or more) were Vietnam, Argentina and Malaysia, which were net importers in 2011, and three other countries, while still in the net export category, fell below 100,000 bpd in 2011. So, on average we lost one major net oil exporter per year from 2005 to 2011.

Based on the six year (2005 to 2011) rate of decline in the Top 33 ECI ratio, estimated post-2005 CNE for the (2005) Top 33 net oil exporters are about 445 Gb. Cumulative top 33 net exports from 2006 to 2011 inclusive were about 96 Gb, putting estimated post-2005 Global CNE about 22% depleted, with a 2005 to 2011 estimated post-2005 Global CNE depletion rate of about 4.1%/year.

As usual, OPEC is being disengenious.The stated reserves are meant to be original 2p,not current 2p reserves.Taken this way, they are correct.That is why the reserve number has not changed all these years!If you want to give them some slack, you could say the 'reserve' number represents OOIP.

As long as the usual American tune (official version in wikipedia and everywhere) regarding the first oil shock is "first oil shock= Arab embargo", when the very simple reality is "first oil shock=US 1971 production peak", one can safely say that Americans are the biggest liars by far (especially towards themselves) in this story.

(impressive how the "embargo period" is also the steepest spike in US oil imports, isn't it ? )

Did you know that the embargo lasted 3 months, was ridiculous in terms of barrels put out of the market, and wasn't even effective at all from Saudi Arabia to the US ?

If you add the fact that the counter oil shock or oil glut (also the period when all OPEC members cheated on their reserves to produce more under OPEC quota internal rules) has a lot to do with Reagan admninistration dealing with the Saudis in order for them to increase their prod, lower the barrel price, and put the last blow to the USSR (and it worked), it does not make the picture better, about this below for instance :

Very good. Naturally it is much better for the existing power structure to find someone to blame it on rather than admit there is a problem, and of course the masses would rather have someone to blame too, because that means they can believe it's temporary. So the US peak was very effectively disguised in plain sight.

This is a common thread though - when things go wrong we look for someone to blame, and quite often there really is someone doing mischief, so it is merely necessary to find one and point the finger. But in fact, the reason they've been able to take advantage is because there is some underlying real problem that makes people vulnerable, thus providing the opportunity for the unscrupulous. So instead of accepting it when we're told who to blame, even if that appears to be real, we should always ask how did they pull that off and what was the enabling factor?

"we should always ask how did they pull that off and what was the enabling factor?"

The thing is that the "pseudo embargo" was a very practical public relationship thing on both sides :
- for the US (or western world) to put the blame on "the arabs" regarding the oil shock and cover up the US peak towards the general public American in particular
- for the Arab producing countries and Saudi Arabia in particular to show "the arab street" that they were doing something "for the palestinians" (when they really didn't care that much at all, especially gulf countries).

I am not defending U.S. energy policy or interpretations of events, but the U.S. peak production in 1970-71 was followed closely by the Arab Oil Embargo in 1973. In 1973 it was not obvious that the downtrend in production was a trend or a momentary blip. Of course in hindsight it is clear that 1970-71 was a significant event. Other than Hubbert and a few others, The significance of the 70-71 peak was just not apparent at the time.

The point is that the embargo was a complete NON EVENT in terms of the actual oil market, in terms of number of barrels put out of the market if you prefer.

Check Maugeri pages 112 113 114 below for instance :
And Maugeri can for sure not be qualified as "peak oil doomer" or "pro OPEC" or something, just read the whole chapter, his historical recollection regarding the bare facts is quite good, even if able to write in the introduction :

And then write :

or :

Moreover tankers kept on going from Saudi Arabia (US best or seconf best friend in the region don't forget) to the US (army in vietnam in particular) throughout the "embargo". Akins (US ambassador to Saudi Arabia at that time, also the guy that audited US prod for Nixon after US peak) very clear about this in below interview (dubbed unfortunately) part 2 after 20:00 :
Basically :
- Tankers kept on going from KSA through Bahrain to make it more discrete to the US
- Some senators started to have "strong voices" about "something needs to be done about the embargo" (should be easy to find traces back in papers archives)
- He asked the permission to tell them what was going on, got it, told them, they shat up, there was never any leak

If you consider the first oil shock for what it was : the price of the barrel moving through a steep transition to a new plateau, it is about :
- the period is OPEC countries getting out of the "seven sisters" era and wanting a bigger share of each barrel revenue extracted from their soil
- The US production peak in 1971 (with shortages and price rise starting from there, much before the embargo), the US being by far the first producer of the time let's not forget, and in a growing market.
- Bretton Woods dropped and the dollar devaluated also after US peak so the barrel increasing even more in $
- The so called "embargo" further to Yom Kippur war, also influencing price rise even if towards a few countries (holland, US, portugal), from a few countries (not Iran, not Venezuela, Not KSA effectively for the US), with very limited impact in terms on number of barrels "retained", lasted 3 months
- However chosen as the label or name for the first oil shock

Not forgetting that :
- for the western "majors" a higher barrel price is always better (even in a distribution role)
- US peak meant for the majors that a higher barrel price was required to start and invest in more expensive plays : Alaska, GOM, North Sea
- This also corresponds to the majors keeping a higher market share outside of OPEC and in particular less dependency on foreign oil for the US
- And the fact is that US diplomacy PUSHED FOR the barrel price rise (through Akins, Kissinger, in particular)

" Other than Hubbert and a few others, The significance of the 70-71 peak was just not apparent at the time."

No at all, quite the contrary, the stop in the growth of US production in a growing consumption environment was indeed very apparent.

In the above linked documentary Akins is talking about his audit of US prod in 1971 under Nixon :
- Nixon named him to audit US prod
- He went over all US major producers telling them "this isn't for the press, there will be no scandal, but we need to know what is going on, this is a matter of national security"
- He went back with the results : we are in a very serious mess, no spare capacity at all, results also provided to OECD

You can also check his 1973 paper (in April before the embargo) "the oil crisis : this time the wolf is at the door" :
where he is writing quite a bit about this audit (if I remember well)

This "mindset" that "people don't know about peak oil at the top we should tell them !" is simply completely false, they do know, might hope for a solution as anybody, or don't care that much in a "domestic politics sense"(what does it change ?), but of course they know.

And in the same documentary Matt Simons is saying something like :
"I remember somebody right before US peak saying something like "do you remember that weird guy everybody was making fun of when he retired about US prod peaking ? We have never produced more !""

So when Romney says,

"My plan has five basic parts. One, get us energy independent, North American energy independent. That creates about four million jobs. . . .

The third area: energy. Energy is critical, and the president pointed out correctly that production of oil and gas in the U.S. is up. But not due to his policies. In spite of his policies. Mr. President, all of the increase in natural gas and oil has happened on private land, not on government land. On government land, your administration has cut the number of permits and license in half. If I'm president, I'll double them. And also get the — the oil from offshore and Alaska. And I'll bring that pipeline in from Canada.

And by the way, I like coal. I'm going to make sure we continue to burn clean coal. People in the coal industry feel like it's getting crushed by your policies. I want to get America and North America energy independent, so we can create those jobs."

He's basically lying through his teeth? That's the issue I'm always grappling with in interpreting our "leaders'" statements: are they lying or just plain dumb?

Don't know what they could do besides delivering some hope?, but in this precise case and regarding oil, I think Romney is perfectly aware of the situation, as he has written below (2) :

And the fact that he mentions coal, allows one to interpret his statement as he isn't pretending the US or North America is about to become oil independent, but as there is a lot of coal for the energy aspect, so it could be ok.

About coal, he mentionned that 3 billions were spent on CCS R&D, is that true ? (or read that somewhere)

(btw I think that CCS is totally stupid overall, estimations put something like 30 or 40% added energy (coal in that case) required for CCS for the same energy produced, and we are talking heavy industry here, no "moore law" type of progress to be expected, so that it will never see the light, besides increasing coal usage pollution not linked to CO2 (mining pollution for instance) by so much, and coal resource consumption for the same energy as well, as always investment should be primarily targeted towards less energy consumption (insulation, smaller vehicles), and simple volume based taxes on fossile fuels are for sure the best policy for that (as well as favoring alternative energy production), the key advantage of volume based taxes on fossile fuels : you don't need to define the "solutions", you just favor any of them making sense)

Agree about coal, it's just another way to extend and pretend. What might happen is they could push for lots of CTL plants and who knows, maybe America could become "energy independent" for a while. I don't know if the numbers for this are totally wild but given how adept Americans are at building oil refineries I can't imagine how they couldn't do the same with CTL plants, and coal has the very positive net energy return that might make it viable. I still think it would be a stupid use of the coal resource.

Now if they argued that they should use their coal to build solar, wind and yes, nuclear reactors, along with electrified mass transportation and a unified commitment to better efficiency of use as well as an end to economic growth, then maybe I could get behind coal. But I see that as unlikely to happen.

It follows the idea of successive peaks that I've brought up here a few times - oil gets scarce, turn to natural gas and coal. Use them to replace oil, see huge spike in their use, turn those "hundreds of years" of resources into something that is wiped out in a decade.

Yeah, the fossil fuel treadmill is not going to get us far. I try to explain this, but people are market fundamentalists that thing we will magically turn to solar and wind at just the right time, and we just aren't at the "right time" yet. Thankfully wiser countries like Germany and Denmark are putting a lot into wind and solar, so they just might be right. But I'm not counting on it; I expect the US at least to hit the wall at full speed and end up in a deep depression.

As for coal, I seem to remember that mountaintop removal mining was an issue once, and some people were hoping the EPA under Obama would ban it. But then... nothing happened. So, we have two coal candidates, just that one of them at least admits to being a coal candidate. BAU requires fossil fuels, so fossil fuels it is, forever and ever.

If we insist on developing every FF source available, there should be more like 50 years worth to exploit. But, as the cost estimates on some recent projects have shown, the cost of exploiting these resources is rising rapidly.

My guess is that we will need to try the GTL and CTL approach and ramped up tar sands for awhile. If it becomes obvious that the costs are more than the NREL nth size plant projections than maybe the public out of desperation will be ready for a new approach.

Hello Null, Adam and Non,

Given your points, in particular,

1) re: "there should be more like 50 years worth"

2) "the cost of exploiting these resources is rising rapidly."

3)"If it becomes obvious that the costs are more than the NREL nth size plant projections"

Question and comments:

Obvious - to whom?

Also, your statement assumes that the funds/labor/energy is and/or is going to be available to carry out "GTL and CTL approach." Plus time, which the Hirsch report brings up.

Interesting that when Heinberg wrote this article, oil was at $60.00


"The report’s authors dismiss these claims. Price signals warn only of immediate scarcity; however, the mitigation efforts needed in order to prepare for the global oil production peak must be undertaken many years in advance of the event. Hirsch, et al., maintain that, “Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic. …”"

One idea is for the National Academy of Sciences to do an immediate study to cover impacts (of decline in global oil supplies) and policy options.
www.oildepletion.wordpress.com. (Feedback, help and comments most welcome.)

The public may well be desperate, however, this does not mean they will have any concept of underlying cause(s).

The NAS could fulfill their mission - esp. since politicians are reluctant (understatement) to talk about "peak" - even assuming they understand it.

"does not mean they will have any concept of underlying cause(s)"

Hi Aniya,

Sitting here, glass of chardonnay pinot noir in hand (typing one-handed), sun breaking through on dusk, Sting's "Police" drumming in the background, thinking, "Damn, ignorance really is bliss"...

Coming up to five years visiting TOD, wondering, with all my attempts at rationalising PO and limits-to-growth to loved ones, who's lives I may have impacted on. Short answer: No-ones. Including myself, to be honest - I'm no closer to a carbon-neutral/sustainable/whatever existence. My kids still leave lights on, the wife (a math-science teacher, 40 IQ points ahead of me) continues to roast us with the central heating, peak hour congestion is alive and well.

Though I'll be free of personal debt within the year (fingers crossed), really, so what? My three kids are now teenagers, ahead for them a path I'm fairly pessimistic about. When global times get difficult, perhaps they'll remember their old man's dumb attempts to explain his views on the near future and adjust their life-styles accordingly. Or more likely, they'll just keep on keeping on, as their workmates and friends do...

So many great memories in my 46 years and sure there's plenty to come as my kids find love. But gee, can't help but feel this plateau we're on is more like a plank on a pirate ship.

Better go re-fill the glass and start the barbe.

Cheers, Matt

Given Romney's educational background, professional background, and extreme wealth (mainly accumulated by raiding ailing companies and cleverly gaming the tax code), I'm pretty confident we can rule out "stupid". That, plus his propensity to lie about almost everything and switch positions and the drop of a hat (when it suits his political ambitions), and... Liar it is!

And not to forget: the late Matt Simmons was Mitt's friend and close advisor. Although by no means stupid, Romney is blinded by ambition and once again learned from the reaction to that debate that telling a lie with force and conviction is a winner in politics.

[Pres] Carter also was aware of the situation and commissioned an analysis in 1977 called The Global 2000 Report to the President . One of it's findings ...

... There will be fewer resources to go around. While on a worldwide average there was about four-tenths of a hectare of arable land per person in 1975, there will be only about one-quarter hectare per person in 2000 [actual = 0.20]. By 2000 nearly 1,000 billion barrels of the world's total original petroleum resource of approximately 2,000 billion barrels will have been consumed. Over just the 1975-2000 period, the world's remaining petroleum resources per capita can be expected to decline by at least 50 percent.

Over the same period world per capita water supplies will decline by 35 percent because of greater population alone; increasing competing demands will put further pressure on available water supplies. The world's per capita growing stock of wood is projected to be 47 percent lower in 2000 than in 1978. The environment will have lost important life-supporting capabilities.

By 2000, 40 percent of the forests still remaining in the LDC's in 1978 will have been razed. The atmospheric concentration of carbon dioxide will be nearly one-third higher than preindustrial levels. Soil erosion will have removed, on the average, several inches of soil from croplands all over the world. Desertification (including salinization) may have claimed a significant fraction of the world's rangeland and cropland.

The gap between the richest and the poorest will have increased. By every measure of material welfare the study provides - per capita GNP and consumption of food, energy, and minerals – the gap will widen. Great disparities within countries are also expected to continue.

... Perhaps the most troubling problems are those in which population growth and poverty lead to serious long-term declines in the productivity of renewable natural resource systems. In some areas the capacity of renewable resource systems to support human populations is already being seriously damaged by efforts of present populations to meet desperate immediate needs, and the damage threatens to become worse.

... they've known for OVER 30 YEARS!

In 1975 I sold my forest green 1963 Volvo turtle back 544 because of :A) The oil shortages were going to get worse.
and:B) Air pollution/CO2 was causing 'Greenhouse effect'.

37 years ago.. ;)

The way for the USA to become really strong and lay out a path for their future would have been to embrace this and develop the new technologies and way of life to deal with it. They wouldn't be buying solar panels from China now and their reliance on FF would have been slashed leaving them with huge reserves for the future instead of trying to use the last drops as fast as possible.


Will be interesting to see if the story makes it into mainstream US news.

Re: Daryl Hannah arrested in Keystone XL protest

For those who haven't been following the "debate" about the Keystone XL pipeline, the article notes:

However, he (President Obama) encouraged TransCanada to reroute the northern portion of the pipeline to avoid an environmentally sensitive area of Nebraska. He also promised to expedite permitting of a southern portion of the pipeline from Cushing, Oklahoma, to the Gulf Coast to relieve a bottleneck at the Cushing refinery.

TransCanada began construction of that portion of the pipeline this summer after receiving the necessary permits. Some Texas landowners, joined by activists from outside the state, have tried through various protests to stop or slow down construction.

So, it won't be much longer until the price differential between WTI and the price of oil along the Gulf of Mexico goes away. Some concerned about the environment might think that higher prices for oil to be a good thing. That won't happen until after the election, of course. Damn the protestors, full speed ahead!..:-)

E. Swanson

Dog - "He (President Obama) also promised to expedite permitting of a southern portion of the pipeline from Cushing, Oklahoma, to the Gulf Coast." I think you already know but for others: the feds have nothing to do with permitting this section of pipeline. It's controlled by the state. And those permits were granted long ago. And the bottle neck has already started to leak some months ago when one pipeline was reversed and has been moving 150,000 bopd for a while. With an additional parallel line this will be increased to 600,000+ bopd in about 2 years.

As I understand it Daryl wasn't protesting the p/l per se but the eminent domain ruling allowing the p/l to cross the lady's land. OTOH I can be a bit sympathetic with the lady's situation. OTOOH I doubt there is a single TODster that isn't receiving any of their utilities (-e, water, NG, sewage, telephone, TV cable, etc) that hasn't passed through some land that was accessed via ED procedures. Likewise I bet many here daily drive across roads that wouldn't exist had it not been for ED. Some folks objecting may not even care that's it's an oil pipeline: that might be just as opposed if it were moving fresh water through the line. They just don't want their land disturbed. I've also seen more than one land owner fight ED that didn't give a crap about the land but was just trying to get a better price for the ROW. And it usually worked. For instance, in Texas, if the surface owner is different than the mineral owner I can drill on that land and use it for production and don't need the surface owner's permission nor pay them a penny. But as a rule we usual try to do both to try to keep it friendly. My production hand might be watching over $500,000 worth of equipment for a half hour every day. That pissed off land owner is out there unobserved the other 23.5 hours. It's just common sense.

I did a James Howard Kunstler impression on my blog yesterday regarding the awful presidential debate.

The Presidential Debate: A Dismal Failure

I played on his 'signals that reality is sending us' topic. My vocabulary isn't on par with his...that's for sure!

1st Presidential Debate. On "energy",
Romney said:

My plan has five basic parts. One, get us energy independent, North American energy independent. That creates about four million jobs. . . .
Middle-income families are being crushed. And so the question is how to get them going again, and I've described it. It's energy and trade, the right kind of training programs, balancing our budget and helping small business. Those are the — the cornerstones of my plan. . . .

The third area: energy. Energy is critical, and the president pointed out correctly that production of oil and gas in the U.S. is up. But not due to his policies. In spite of his policies. Mr. President, all of the increase in natural gas and oil has happened on private land, not on government land. On government land, your administration has cut the number of permits and license in half. If I'm president, I'll double them. And also get the — the oil from offshore and Alaska. And I'll bring that pipeline in from Canada.

And by the way, I like coal. I'm going to make sure we continue to burn clean coal. People in the coal industry feel like it's getting crushed by your policies. I want to get America and North America energy independent, so we can create those jobs.

Obama said:

I think it's important for us to develop new sources of energy here in America, . . .
On energy, Governor Romney and I, we both agree that we've got to boost American energy production. . . .

And oil and natural gas production are higher than they've been in years. But I also believe that we've got to look at the energy source of the future, like wind and solar and biofuels, and make those investments. . . .
And the reason this is important is because by doing that, we can not only reduce the deficit, we can not only encourage job growth through small businesses, but we're also able to make the investments that are necessary in education or in energy.

Jobs report was better than expected:

September jobs report: Unemployment rate tumbles

NEW YORK (CNNMoney) -- Friday's monthly jobs report changed the picture of the U.S. economy in more ways than one, showing the unemployment rate fell to the lowest level in more than three years and hiring was stronger than originally reported throughout the summer.

Unemployment unexpectedly fell to 7.8% in September, down from 8.1%, as a survey of U.S. households showed 873,000 more Americans had jobs compared to a month earlier.

The last time the unemployment rate was that low was in January 2009, the month President Obama was inaugurated.

Denninger thinks there are shenanigans going on. And he notes that things got worse for the educated.

ZeroHedge guys found something interesting in the numbers

A Statistical aberration in BLS numbers

What are the odds of this happening naturally ?

About one in 600, since they divided two numbers each with 3 significant digits. If you look at enough numbers, you'll see events like that often.

Only if it's a random number generator. Real world values operate within much bigger constraints and hence actual probability is much smaller.

What are the odds of this happening naturally?

About 30%.

There are two major issues here:

1) Any simple ratio -- 2/3, 1/2, 1/3, 1/4, 3/4, ... -- would be considered "interesting". About 1/2 will be divisible by 2, 1/3 by 3 (which gives 1/3 and 2/3), 1/4 by 4 (which gives 1/4 and 3/4), and so on. A large number will, on average, have ln(N) factors, meaning a randomly-chosen three-digit number will have about 6 "interesting" ratios to exploit (or more if you consider non-factors like 3/4). This alone gives 1-in-150 or more.

2) There are many numbers in the report, and the chance of a coincidental common factor rises as N^2. With 11 3-digit numbers in just the first part of the report, that's about 50 pairs to look at, meaning 50 times the chance of finding something "interesting". That raises the odds to about 1-in-3.

We are creating jobs but in the background more and more people are dropping out of the labor force. This is a massive change, people, and it suggests the economy is going backwards.

Moreover, any decrease in unemployment now must be accompanied by an increase in energy, particularly oil, consumption, as that is the nature of jobs in America. So any attempt at credit reinflation through massive stimulus (monetary or fiscal) to support the existing structures will only result in higher oil prices, which will choke off any durable recovery.

Not only that, but these jobs are not all that they are made out to be. They are mostly low paying with meager benefits. And if you do earn more, you get taxed more to support the people on food stamps. And the value of the dollars you earn is inflated away to support the people with unpayable mortgages. And the food stamps will never be taken away, lest there are riots on the streets.

America has become a socialist debt junkie.

We are witnessing the doomer scenario being played out right in front of our eyes. This is huge. Do not underestimate just how far things have come already in the span of 4-5 years.

Mark my words, in the coming decades this country, and the world, will be unrecognizable.

I agree with you in almost everything, but please replace the word 'socialist' which has been deliberately misrepresented throughout history [socialism was around before communism] by elites of all flavours. I realise it's almost hardwired with constant media brainwashing etc. Call it a 'plutocracy' 'kleptocracy' 'corporatocracy' or anything closer to the aims of those in charge.

After all, I wouldn't accuse capitalism of operating in a 'free market'

I saw a good explanation for this -don't want to go hunting back for the ref.
Firstly the BLS survey has a margin of error of 400K, so a blip of this magnitude isn't very rare. Second the seasonal adjustment factor is changing rapidly at this time of year -mostly students ending summer employment, and it could be that the average timing of this has changed, i.e. the adjustment may not be up to date, because that will take some time to sort out. So, all in all, its almost certainly a statistical fluke.

"So, all in all, its almost certainly a statistical fluke."

Last month's numbers were unexpectedly bad, this month's numbers were unexpectedly good. Looks like normal variation to me. Watch the longer trend.

Most of the new jobs were part time, which is not a ringing endorsement of the situation.

Locally I can't tell what's going on. First freeze was last night, and in this heavily agricultural area it's a sign of the season, and hiring is always slowing drastically this time of year.

Glut of Solar Panels Poses a New Threat to China

BEIJING — China in recent years established global dominance in renewable energy, its solar panel and wind turbine factories forcing many foreign rivals out of business and its policy makers hailed by environmentalists around the world as visionaries.

But now China’s strategy is in disarray. Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.

The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.

Of course, once they have gone through bankruptcy and written off their capital investment, they will be able to produce solar panels even more cheaply.

"Of course, once they have gone through bankruptcy and written off their capital investment, they will be able to produce solar panels even more cheaply."

Those that survive. And some of those will toss quality in the gutter to make a price point, and woe unto those customers. And then all of solar gets a bad name.

The pity is not that PV production capacity dies in Germany - large scale production of low tech stuff is not our stength and should not be. The real issue is that we lose R/D capacities for which the Chinese do not compensate with own.

At the moment even the Chinese companies makes huge losses, so they actually give subsidies to the German customer.

Mexico makes new deepwater crude find in Gulf of Mexico


For LNG, a Web of Vulnerability

Concerns about a gas supply crisis usually focus on pipeline disruptions, but large parts of the world depend on liquefied natural gas (LNG). Japan, South Korea, Chinese Taipei and India rely entirely on LNG for their gas imports, helping LNG represent a total of 9% of global gas demand. Those economies' dependency brings critical and specific vulnerabilities, especially since any disruption to LNG supply would have global implications.

LNG can be redirected fairly easily, and the liquefaction trade has increased significantly since 2009. But that growth hides the fact that global LNG trade is very dependent on one gas producer: Qatar, which provided 30% of the 2011 LNG trade and sent almost half of that supply to just those four most dependent economies. Any event significantly reducing Qatari LNG supplies could have severe effects on energy security. Not only would the LNG importers suffer, but so would other gas importers, with prices potentially rising sharply as economies dependent on LNG diverted supply from other markets.

There is currently little spare LNG output capacity in the world, as LNG producers tend to produce as much as they can. Therefore, other options would have to be used: primarily increased domestic output, notably in the Americas and possibly China, and fuel switching in the power sector.

... close the Strait of Hormuz - block Qatar - watch the dominoes fall

UT Austin: Over 12 percent of all U.S. energy consumption is directly related to water

A new study by researchers at The University of Texas at Austin has estimated the energy embedded in the U.S. water system. The study, “Evaluating the energy consumed for water use in the United States”, appears in the September issue of Environmental Research Letters.

“Although we’ve been saying for years that there is a lot of energy embedded in water, we really didn’t have a number to back that up. We wanted to know whether “a lot” was 5% of annual energy use? 10%? 15%? As it turns out ~13% is a lot,” Kelly Sanders explained in an email.

The study also identifies an interesting policy issue: roughly 25% more energy is used to heat, cool, or pump water than is used for lighting (in the residential and commercial sectors) in the United States – about 5 quads. So why are more efficiency policies and technologies targeted towards lighting and not water conservation?


S - "So why are more efficiency policies and technologies targeted towards lighting and not water conservation?" An easy answer...I like that. Because any fool can look at a satellite photo of the US at 2 AM and see all those lumins being wasted. Can't see those water lines and hot water tanks from space. Out of sight...out of mind. SOP in much of the world...especially the US IMHO.

Rock - You're right. Out of sight, out of mind. But, another reason is the same reason that folks haven't conserved fossil fuels [until now]. Cost.

As the article points out ...

... Part of the issue, I think, is water pricing. Water is insanely cheap (at least in the United States), and conservation efforts like low flow showerheads only reduce revenue for those who make money by selling water. Saving water might be a good thing practically, but a utility generally sees its job as selling more, not less, or its product (like water).

At least for some electric utilities, energy efficiency measures can be rationalized in terms of avoided kilowatts – eventually summing up to an avoided (and costly) power plant. What is the corollary for a water utility? As long as there is water in the reservoir, why not sell as much as possible? And if water is cheap for the end user, why spend money on conservation efforts?

If water cost 10% of one's daily income, like in some third world country [with no guarantee that it was safe to drink], it would change usage patterns tremendously. Not that water companies have a right to 10% for a resource from the commons.

why are more efficiency policies and technologies targeted towards lighting and not water conservation?

I suspect that our net water consumption is more or less fixed by supply constraints. So whatever I conserve my neighbor will use. I also imagine there isn't too much low hanging fruit efficiency wise. With lighting, new technologies, particularly LEDs open up the possibilities of huge improvements in efficiency.

More efficient residential water heaters, dishwashers, and clothes washers have been a big focus - greater that the recent focus on lighting, I'd say. Try buying a washer that uses enough water to get your clothes clean and the detergent rinsed out!

The energy in residential water use is mostly associated with heating it. There is not much embedded energy in cold water, so you can still water your lawn and wash your car.

Evaluating the energy consumed for water use in the United States is the orginal paper, which is a lot less muddled than the blog entry on Scientific American.

Thanks for the link.

In California pumping of water is allegedly 30% of electricty use. Of course some is returned, for instance water is pumped uphill, and recovered on the otherside of the hill, I don't know if the accounting covers this. Also during wet years water is actively pumped underground to recharge aquifers, and pumped out during dry years. Most of this water is used by agriculture, not residential use. I expect much of this energy cost has to do with pumping, either to move the water, or to get it out of the ground.

But, obviously if you heat or cool water, it takes a lot of energy.

The energy used for pumping water in irrigation systems are sparse, so we based our analysis on work done by a 2009 analysis done by Khana et al. and a California study by Dinar published in 1994. Khana et al. measured the water-energy ratio (defined as the ratio of energy consumed for irrigation to the total energy input) for wheat, barley, and rice production. The water-energy ratio was higher for tubewell systems (pump irrigated), than in canal or rainfed systems. Pump irrigated systems had a water-energy ratio of 19.0, 35.4, and 47.5 for wheat, barley, and rice production, respectively. Canal irrigated systems had a water-energy ratio of 12.7, 12.9, and 37.9 for wheat, barley, and rice production, respectively. Water-energy ratio values for rainfed production were zero. [23] (These values o ered insight into the relative percentage of water-related energy use for several irrigation practices, that we could then weight according to farming practices in the United States.) A prior energy analysis, published by Dinar in 1994, on California's agriculture sector. It concludes that in 1972, 68% of the electricity and 2% of diesel in the agriculture industry were for irrigation, and by 1991, 87% of agricultural electricity demand was for irrigation in California suggesting that electricity is playing a larger role in irrigation systems. During this time, approximately 80% of the pumps sold to agricultural producers were run by electricity; the remainder were diesel.

We assume 75% and 2% of electricity and diesel used in the agriculture industry is for water-related activities, respectively. We base this estimate on the premise that the majority of fuel used on the farm is in the form of liquid transportation fuel for farm machinery, whereas electricity is not widely used for purposes other than irrigation, lighting, and other small stationary loads. We include a large margin of uncertainty on this estimate since little data are available regarding energy consumption in the agriculture industry.

Supplemental Data

There is not much embedded energy in cold water, so you can still water your lawn and wash your car.


Indeed, heating water is a large source of energy demand with respect to water. That said, treating water to a potable standard, and pumping it to residences so that it can be used to water the lawn and wash cars is pretty wasteful.


Water Use and Energy EPA

You may wonder what water use and energy have to do with each other. In most cases, electricity or gas are used to heat water, and this costs you money. In addition, your water utility uses energy to purify and pump water to your home, as well as treat sewage generated by the community. Currently, about eight percent of U.S. energy demand goes to treating, pumping, and heating water, which is enough electricity to power more than 5 million homes for an entire year. Water heating also accounts for 19 percent of home energy use.

By reducing your household water use, you not only reduce your water bill, but you also help to reduce the energy required to pump and treat public water supplies. In addition, by reducing water use and saving energy in the process, you are decreasing the amount of greenhouse gases produced to generate electricity, thereby helping to address climate change. In fact:

- If just 1 percent of American homes replaced an older toilet with a new WaterSense labeled toilet, the country would save more than 38 million kilowatt-hours of electricity-enough electricity to power more than 43,000 households for one month.

- If one out of every 100 American homes were retrofitted with water-efficient fixtures, we could save about 100 million kilowatt hours (kWh) of electricity per year-avoiding 80,000 tons of greenhouse gas emissions. That is equivalent to removing nearly 15,000 automobiles from the road for one year!

- If 20 percent of U.S. homes used high-efficiency clothes washers, national energy savings could be 285 billion BTUs per day - enough to supply the energy needs of over one million homes.

Water use and energy use are closely related!

I don't wash my car. Having a clean and shiny car isn't as much of a big deal around here as it was back in the Midwest.

As for the lawn -- what comes up and grows on its own, I cut. Otherwise, I don't annoy it. We have a lot of shade anyway.

Hi Merrill,

re: "I don't wash my car."

I don't wash my bike, either. :)
Sometimes I dust off the spider eco-system that develops occasionally in a particular spot on the frame.

Pedal bike? parts last longer with grit rinsed off. Also salt from roads if you live in those places. The jury is out on whether to strip chains back to metal and regrease. Most think it does as much harm as good.

The question that bugs me, is what is the best chain lube for a hot dusty climate? Forget all those fancy brands, I am limited to what is available here - household oil, motor oil, transmission oil, various automotive greases etc.


I question those low flow toilets. The one at work, I always have to flush twice -after waiting for the tank to refill, because it never gets it all in one flush.

I saw a toilet the other say that has two flushing options, one for "liquids only" that used about 60% of the other one. it was in a busy restaurant and seemed to work well (I went with a group of people and did survey :D )

In many public washrooms -at least the male ones, there are urinals, and stalls, so the separation of types has been made ahead of time.

And lets not forget the lunacy of defecating in our drinking water in the first place, probably save a lot of water by not doing that, just sayin.

In case anyone is interested, Maximum Performance testing (MaP) is the standard used to assess the efficiency and effectiveness of HET and UHET toilets.

One should bear in mind that there are a lot of ineffective 6 litre toilets, as well as 13 and 20 litres ones still in use out there. There is a lot of water and the energy needed to pump it that could be saved when you consider that 30% of internal household water demand goes to flushing toilets.

RE: Where the Jobs Are

The article asks:

Can Governor Romney realistically create 4 million jobs from exploiting our nation's newfound energy sources, as the candidate claimed in the debate the other night?

The answer depends on who the real job creators are.

As it turns out, according to a recent university study of global international businesses, international private entities comprise a private empire that determines global economic reality.

California Gasoline Price Superspike Update

The California price superspike has lasted one week now in the wholesale market, although the full effects of wholesale price rise and supply limitations may take weeks more to show up at the retail consumer level.

Friday morning, California time, major energy companies were still allocating gasoline supplies. That is gasoline stations associated with the majors were not getting all the gasoline they wanted. In addition, this likely means independent distributors might, in some cases, not be able to get any gasoline.

The state government of California, has so far resisted issuing a state waiver or otherwise requesting a federal waiver for the use of different grades of gasoline not normally used in warm weather, or even gasoline from out of state sources (which would not follow the environmental formula used for California gasoline).

At this hour, no waiver has been issued but there is some speculation that the state government will relent and will issue or request a waiver.

10/5/12 Reuters News 01:10:34

The California Independent Oil Marketers Association , which represents the state's gasoline station operators, asked the California Air Resources Board to grant a waiver which would move up the date for selling winter-blend gasoline. Winter-blend gasoline is not sold in the summer because it more easily evaporates into smog-causing compounds, is scheduled to go on sale beginning Nov. 1. Allowing an earlier sale might reduce tight supplies in the state. "Southern California is currently enduring a heatwave and air quality will be given primary consideration before any final decision is made on a waiver," said refined products markets analyst Bob van der Valk of Terry, Montana. The California Energy Commission , which will advise the Air Resources Board on the request, may not see a need for a waiver. "There is ample supply of gasoline in the state," said Alison Roberts, a commission spokeswoman. But, some areas are seeing tighter supply than others, Roberts said. "We are certainly seeing a dramatic price spike," she said.

[no direct link] thomsonreuters.com

October 5, 2012

Calif. gas stations ask state for winter fuel waiver -agency

HOUSTON, Oct 4 (Reuters) - California gasoline station operators asked the California Air Resources Board on Thursday to allow the early sale of winter-blend gasoline to ease tight supplies in the state, according to California Energy Commission.

Gas stations can begin selling winter-blend gasoline, which more easily releases smog-causing substances, on Nov. 1. Until that date, only summer-blend gasoline, which is less likely to evaporate into smog causing chemicals, can be sold.

no direct link] thomsonreuters.com

ENERGY: Gas prices rocket amid refinery problems, mandated formula switch

The independent stations asked the state for a waiver to sell winter blend early, but state officials said they'd need time to assess the situation. The winter blend can't legally be sold until Nov. 1.


At the local fuel stations in my area, I saw that yesterday evening that 91 octane unleaded (super) is running about $4.80/gallon.

California gasoline prices jump 17 cents a gallon overnight

SAN FRANCISCO -- California gas prices rose 17 cents a gallon overnight due to supply disruptions at some refineries and seasonally low inventories, bringing the one-week increase in the Golden State to nearly 36 cents.

The average retail price of gasoline was $4.486 on Friday morning, up from $4.315 on Thursday and $4.131 a week ago, according to AAA data. The average price was $3.818 a year ago.

The average price is just 12 cents below the highest recorded statewide price of $4.61, which was reached in June of 2008.

"It's insane," said Matt Hurd, 35, who works in real estate. "Especially with this thing," he added, motioning toward his white SUV. "It's going to cost triple digits to fill it up."

I guess driving something smaller than "that thing" is out of the question...

Valero halts Calif. gasoline sales as prices jump

Valero Energy Corp. said Thursday it temporarily stopped selling gasoline in California's wholesale market as a string of refinery outages resulted in a regional gasoline shortage.

Valero said it will met its current contracts to supply gasoline, but won't sell into the spot market. But spokesman Bill Day said resumption of spot sales "will depend on markets and inventories."

The company also will continue to supply gasoline to its branded and licensed retail stations in the state, Mr. Day said.

Gas shortage shutters Costco stations, prices skyrocket

... Experts said the price increases could continue for weeks and the average might even break the $5 mark. Already by Thursday afternoon, at least five Los Angeles area gas stations had crossed the $5 per gallon mark, according to GasBuddy.com, including one charging $5.29 per gallon in Burbank and another at $5.11 in Norwalk. One station in Calabasas was even charging $5.69. | See photo gallery.

Costco employees in Laguna Niguel, Irvine, Fullerton and Tustin reported dry pumps. An Irvine employee said the discount store's gas was being diverted to keep stations in Fountain Valley, San Juan Capistrano and Garden Grove running.

$5.69 at a California gas station as shortage fears hit prices at the pump

... The Low-P station in Calabasas charged $5.69 Thursday. The pumps bore hand-written signs reading: “We are sorry, it is not our fault,” the Times said.

Last time I filled up it cost me over $7.50/gallon(US) here in France for 85oct unleaded. Although I'm getting 41mpg(US) from my 10 year old car. But I guess if the average mpg in the US is lower than 30mpg (a quick google suggests it is) then I guess the cost difference isn't really that much different in actuality.

Try Norway where a few weeks ago I paid 15.95 NOK/L = 1.00 US$ / 5.67880 NOK * 3.785412 L/gallon = 10.63 US$/gallon. This price doesn't seem to faze the avererage Norwegian who appears to be filthy rich -- I did see a bunch of gas guzzling SUVs on the road (maybe not quite as big as the North American ones).

Since most people live on a budget, a price spike on essentials is difficult or impossible to manage. If the price of gasoline went to $2 in Saudi Arabia the whole country would immediately collapse. OTOH, gradual price increase can be budgeted for.

Source: Zerohedge.com

While there is still no report of any gasoline waiver being issued (until they find out "if there is really a shortage" ???), there is some good news coming out of California this evening:

Calif. refinery back online amid soaring prices
GILLIAN FLACCUS, Associated Press
Updated 4:45 p.m., Friday, October 5, 2012


Update: California has not yet requested any gasoline waiver from the EPA

EPA says California has not requested winter fuel waiver

5:20 p.m. CDT, October 5, 2012

WASHINGTON (Reuters) - The U.S. Environmental Protection Agency has not received any request from California for a waiver to allow early sale of winter-blend gasoline, the agency said on Friday.


I stopped on the way home from work and had to pay $4.65 (this is the very of of the bay area and normally about the cheapest in the Bay area (two weeks ago it was 3.99)). I had toyed with waiting, as I heard the refinery is back up, and expect this spike to be short lived. Instead I compromised and only put $20 worth in,that should buy me about a week -after the recent tuneup the Prius is doing about 55mpg.

Ouch, that's over a dollar per liter! I did the conversion, and the sign down the road said "1.43" which, if my calculus skills are still useable, is $1.43 per liter.


Worms Clear Air around Canadian Toilets

The worm-powered design is a first of its kind in North America, according to Écosphère Technologies international sales representative Frederic Neau. It was developed near Nyons, France.

A half-kilogram (1.1 pounds) of Eisenia fetida or red wiggler worms native to Europe imported from France and raised locally by Helene Beaumont are placed between layers of dung and straw in an underground space beneath the toilet.

The washroom uses neither water nor electricity, and can be used 10,000 times before needing maintenance.

Ecosphere's toilets are not cheap at Can$40,000 (US$40,800) each, compared to competitors that charge an average of Can$1,800. But Neau said the price will likely drop as sales increase

Courts Rule Inconsistently on Corporate Identities

When the Supreme Court ruled in Citizens United vs. Federal Elections Commission in 2010, it effectively stated that corporations are people under the First Amendment, able to spend as much money on some forms of political speech as they wish—and the world inside and outside of politics took notice.

A University of Kansas law professor has authored an article arguing the court failed to consider the real power brokers—corporate groups—and that the opinion illustrates how courts are often taking different views of what it means to be a corporation in the same area of the law, or as in Citizens United, in the same opinion.

The Supreme Court is currently hearing the case Kiobel vs. Royal Dutch Petroleum Co., which raises similar questions about the role and identity of multinational corporate groups under international law. The case centers on Nigerian forces that undertook a campaign of murder, rape and abuse against local activists who demonstrated against oil exploration there, allegedly with the support of Royal Dutch Petroleum Company.

There is not currently a single definition of a multinational corporation, and this case will go far in determining how the identity of multinationals under international law will be viewed by courts in the United States, Harper Ho said.

"I'll believe a corporation is a person when Texas executes one"

Presumably as a result of shared responsibility that will include all employees too. It would certainly test where peoples loyalties lie :)

Presumably as a result of shared responsibility that will include all employees too.

Since you mentioned shared responsibility, let's not forget the shareholders either...

If you own stock you too are an accomplice!

Got to round up all the shareholders too. And if your retirement plan is invested in an index fund, like the S&P index, you are toast. Quite a cure for overpopulation!

+10 great line!

Also High court to hear farmer, Monsanto seed dispute

The Supreme Court is agreeing to hear a dispute between a soybean farmer and Monsanto Co. over the company's efforts to limit farmer's use of its patented, genetically engineered Roundup Ready seeds.

GM to Move Fuel Cell Research from NY to Michigan

... The company says most of the 220 salaried workers in Honeoye (Hun-ee-OY) Falls, N.Y., will be offered the chance to move to GM's engine and transmission research unit in Pontiac, Mich.

Hydrogen fuel cells were the loser picked by the Bush Administration. The Honeoye Falls research center was always a weird thing championed by specific executives at GM who are no longer with the company. I think that a significant part of their funding came from DoD, but DoD may have run out of patience and money.

Weather-Making High-Pressure Systems Predicted To Intensify As A Result Of Increasing Greenhouse-Gas Concentrations

High-pressure systems over oceans, which largely determine the tracks of tropical cyclones and hydrological extremes in much of the northern hemisphere, are likely to intensify this century, according to a Duke University-led study published online this week in Nature Geoscience.

The study's findings suggest that as summertime near-surface high-pressure systems over the northern Pacific and Atlantic oceans strengthen, they could play an increasingly important role in shaping regional climate, particularly the occurrence of drought and extreme summer rainfall, in coming years.

Would these highs steer hurricanes into the Gulf?

The current Pacific Ocean high (a bit east of where shown) is certainly keeping the Pacific Northwest drier than usual.

Seattle about to break their dry spell record this weekend:

The Sad State of Biodiversity

Factfile on biodiversity ahead of talks opening Monday under the UN's Convention on Biological Diversity (CBD) in Hyderabad, India.

— Out of 63,837 species on the "Red List" updated annually by the International Union for Conservation of Nature (IUCN), 19,817 are at risk of extinction.

— Of these, 3,947 are critically endangered, 5,766 endangered and 10,104 considered vulnerable. Sixty-three species have become extinct in the wild and 801 have been completely wiped out.

— Last year, scientists wrote in the journal Nature that Man may have unleashed the sixth known mass extinction in Earth's history—the last having wiped out the dinosaurs some 65 million years ago.

Now how does one square this report where actual numbers are presented with the oft stated "fact" that dozens or hundreds of species die out each day?

This I must read and learn a bit more. The numbers around species extinction always seemed like a bit of hocus pocus to me. But then, perhaps I'm too skeptical...

"The numbers around species extinction always seemed like a bit of hocus pocus to me. "

Find the list. If 63 species are extinct in the wild, then to know that they must have a list. And another list of the 801 species completely wiped out.

If they start muttering about statistical measures, then you have found the hocus-pocus. Or at least possible hocus-pocus.

'Connecting the sun': How Europe's electricity grid can integrate solar photovoltaics

... The increasing role played by renewable energy sources, including PV, requires a new perspective on Europe’s power system management. Under all scenarios envisioned for the coming decades, PV will play an important part of Europe’s electricity mix – as much as 25% by 2030. “Connecting the Sun: Solar photovoltaics on the road to large-scale grid integration”, shows how Europe’s electricity system can integrate high levels of solar PV in the coming decades.

The main findings of “Connecting the Sun” include: ...

20 megabyte PDF awaits the brave.

From a lobbyist

Commercial aircraft 'Not Viable Strategy' for Geoengineering

Employing commercial aircraft to inject sulphur into the stratosphere is not a viable strategy, according to Finnish researchers. Even if planes flew at higher altitudes and emitted ten times the current legal limit of sulphur, the cooling effect would be lower than if the same amount of sulphur was injected over the tropics.

Numerous injection methods have been considered, including military jets, modified artillery, chimneys and high-altitude balloons. This is the first detailed study of injection from commercial aircraft.

Also the commercial airliners are already busy with producing chemtrails. Presumably the mind control is having some effect, the Republicans are still being taken seriously.*

  • (*please note, this is intended to be farcical, any recognition of Republican policy or people is strictly coincidental)

  • Africa's oldest park threatened by rebels, now oil

    VIRUNGA NATIONAL PARK, Congo — Just a few weeks ago, rangers and militiamen were engaging in gunfights in Africa's oldest national park. Cannons boomed as Congolese army troops shelled rebels. That fighting in Virunga National Park, where virtually every rebellion in eastern Congo in the past 30 years has started, died down in August but the park still is facing threats from a new rebel group and from a controversial decision to open it to oil exploration.

    Now, instead of well-heeled tourists, a quarter-million people displaced by fighting in eastern Congo are camped along the park boundary and are cutting down trees for cooking fires. And conservationists fear oil exploration may irrevocably harm the park.

    French oil company Total has pledged not to exploit the 30 percent of its concession that falls in Virunga but London-registered SOCO International has said it will go ahead with exploration of its concession, with 58 percent in the park. SOCO points to an exemption under the conservation law and says its exploration is "scientific research."

    Sounds like Japan's "scientific whaling".

    Pipeline for Natural Gas Gets Approved

    Canadian-owned Alliance Pipeline recently received regulatory approval for a proposed pipeline that would ship natural gas from the Bakken to the Chicago market.

    The 106.5 million cubic-feet-a-day pipeline would run from Tioga and connect to the Prairie Rose pipeline near Palermo. From there, the gas will connect to the Aux Sable Liquid Products location in Channahon, Ill., 50 miles southwest of Chicago, where it will be processed.

    Installation of the pipeline should reduce the amount of flares seen across North Dakota oilfields, which have been a product of boosted hydrocarbons involved with drilling techniques and a lack of pipelines.

    According to the North Dakota Department of Mineral Resources, one-third of the gas produced in June was burned via flares.

    The United Nations food agency reports that food prices are rising again, reaching 6-month highs and nearing levels not since 2008. Higher prices then spurred food riots in the Middle East and North Africa, which fueled the Arab Spring.

    There's no sign of widespread food riots now but eventually there could be, says Lester Brown, president and founder of the Earth Policy Institute and author of the new book "Full Planet, Empty Plates: The New Geopolitics of Food Scarcity."

    "The term 'food unrest' will become part of our daily vocabulary," Brown tells The Daily Ticker.

    Silly Commie-doomers. Dont'cha know that if we can't produce enough food for the 7+billion (+ 80 million added per annum), some brilliant go-getting "job creator" will just invent a substitute for food? We are the Chosen Species, and God would never allow the Species made in His Image to fail like that. Of course, to spur entrepeneurship in the field of food substitution, we must cut taxes for the obscenely wealthy, and grant even more legal rights and privileges to corporate "persons". Personally I support the reorganizing elections around the principle of "one dollar, one vote". It's pretty obvious that the Creator favors the wealthy and is punishing the poor, so this is a clear sign the .01% are the most fit to make decisions for the rest of us.

    When green turns toxic: Norwegians study Electric Vehicle life cycle

    Questioning thoughts arise from a bracing study from Norway. The electric car might be a trade-in of an old set of pollution problems for a new set. Thanks but no thanks to a misguided cadre selling on the green revolution. Electric cars will eventually be one more pollutant source to campaign over.

    The study, "Comparative Environmental Life Cycle Assessment of Conventional and Electric Vehicles," appears in the Journal of Industrial Ecology. Researchers from the Norwegian University of Science and Technology declared in the study that "We find that EVs powered by the present European electricity mix offer a 10% to 24% decrease in global warming potential (GWP) relative to conventional diesel or gasoline vehicles assuming lifetimes of 150,000 km. However, EVs exhibit the potential for significant increases in human toxicity, freshwater eco-toxicity, freshwater eutrophication, and metal depletion impacts, largely emanating from the vehicle supply chain. ."

    They concluded that, "Although EVs are an important technological breakthrough with substantial potential environmental benefits, these cannot be harnessed everywhere and in every condition. Our results clearly indicate that it is counterproductive to promote EVs in areas where electricity is primarily produced from lignite, coal, or even heavy oil combustion."

    Earlier this year, reports of a study of vehicle types in China concluded that electric cars have an overall impact on pollution that could be more harmful to health than conventional vehicles.

    Human civilisation tends to have a stupifying effect on its inhabitants. Energy and resources are poured into useless projects that benefit humans little in real terms. So history is littered with fantastic but useless projects such as the pyramids, temples, incredible skyscrapers and all manner of wealth destroying folleys and artistic trivia. Hardly worth destroying the planet for and yet vast amounts of time and energy from the neolithic to today have been committed to doing such.

    Using our dwindling energy and resources to convert our failed civilisation to run on a different energy source may well be up there with the dumbest. Why not question the assumptions underlying our civilisation rather than trying to re-engineering the whole dysfunctional system to work on a different energy source.

    Perhaps its time that humans actually earned the right to call themselves intelligent.

    I agree. We have been diligently working on a project for millennia, working hard and giving our all. It turns out to have beeen the wrong project. Oh well.

    But the fantastic and useless projects make everyone feel a sense of power. If we were all running around in the forest, we would avoid the grandiosity and folly associated with ambition, but we would not feel momentarily powerful and mightly: even able to stare death down.

    Human beings want to feel that they have accomplished things that can outlast time. Humans understand mortality and wish to defy it.

    At least temples and pyramids were'nt built to be useful.

    The usefulness religion is for sure the most destroying one that ever were

    The Pyramids were built to transit the Pharoahs to Heaven, where they could intervene with the Gods and ensure that THey continued regular floods of the Nile and ensured good harvests. They are entirely practical.

    Speaks of the incredible trust the ancient Egyptians had in their political leader, the Pharaoh, to look after his people's well-being both in life and after he retired (a.k.a. died) from this earthly role.

    Most of our secular citizens don't trust their political leaders to look after their interests while in office let alone do anything for them afterward.

    Could be argued that such implicit trust is a very practical devise missing from today's governance toolbox.

    The study simply reaffirms that the grid needs cleaning up.
    If it referred to the improvement in using EV cars as against petrol in France, then it would show that they are much, much cleaner, because France has a sensible nuclear way of generating electricity, unlike Germany which burns coal whilst pretending it is powered by fairy dust.

    No references

    France imports energy from Germany.

    Image: http://www.go100percent.org/cms/typo3temp/pics/France_is_a_net_importer_...

    "The German switch from nuclear to renewables – myths and facts"

    In the first half of 2011, Germany crossed the 20 percent threshold for renewable electricity in its power supply (the figure for the US is less than five percent excluding hydropower). By 2011, 25 gigawatts (GW) of photovoltaics had been installed. Solar power can already peak at an astonishing 40 per cent of power demand on sunny summer days (see chart).

    Presented for the data on Germany:

    Image: http://thinktosustain.com/marketspace/wp-content/uploads/2012/05/t2s-gua...


    My dogs want in... feeding time is over. No reply is sought.

    It's fine that they show the worst case scenarios, but I think it's continally misleading to offer that conclusion as their headline. Like anything, it has to be applied appropriately, and we have to be engaged in putting it into its best-case conditions.

    They offer the context of Coal and Oil powered grids, and they put forward the unsurprising caution of "these cannot be harnessed everywhere and in every condition.." , as if that has then turned them into a lost cause.

    They can be applied in an enormous variety of situations where they would be able to be powered with several completely clean electricity sources, and their batteries and control circuits, as the central sources of toxics are well enough contained that they can be managed decently in manufacturing, usage and end-of-life.

    It turns out that the guy who taught me to Juggle 32 years ago has now installed the second (I think) dual-axis solar tracker in Maine, with which to charge his Leaf AND Run his house.. very little Lignite will be harmed in the driving of this car. http://www.youtube.com/watch?v=SCJ7oLcO6GY

    It's ALL about application and context.

    Linked near this video was another one with my Clown-School Teacher showing a Vancouver-built Snow-Bike adaptation.. the possibilities might not be 'endless', but in practical terms, I think that for us they're within a rounding error of it.

    (or as they say in some remote Maine towns.. 'We ain't at the end of the world, but you can see it from there..' )

    PN Bakken: Enbridge questions Bakken numbers
    Apparently Enbridge is a bit skeptical that Bakken production is going to reach the levels some predict. Petroleum News has a paywall, but you can ofen find the articles for free after a few days. Also, one can often find them on Google.

    Enbridge is not going to shape the expansion of its pipeline strategy around sky-high forecasts of incremental growth in Bakken production and is cool to the idea of shipping those volumes to the Cushing, Okla., hub, the company’s liquids pipelines President Steve Wuori said at an investor day Oct. 3.

    While conceding that as little as two years ago no one in Enbridge saw the explosive growth in light crude output from the Bakken and Western Canada, he said Enbridge is taking a more “muted” view of general forecasts that Bakken volumes could rise “hundreds of thousands” of barrels a day to 1.2 million bpd.

    “We have no intention of building pipe capacity” to meet that target “because the business does fluctuate.”

    “If you look at production growth profiles, our view is that we should not be trying to attack the top of the curve. Our view is to compete for the core that’s going to be there for a long time to come,” Wuori said.

    Someone in the pipeline business said that he found that with the shale gas plays, it was almost impossible to match the gathering system infrastructure to the production. By the time that infrastructure had been ramped up to match the production in a given area, overall production in the area had started into a sharp decline. So, as a general rule, there was too little gathering system infrastructure, followed by too much, with a pretty short time period in which everything was in balance.

    That logic pretty much ensures most of the NG production will continue to be flared, I guess?

    I think it's quite obvious that an economic implosion is ineluctable. All this talk of a logistic decline is unmitigated insipidity. We've simply accommodated short-term expediency over long-term constancy for too long.

    I know that this has most likely been repeated verbatim more than enough times before on this forum, but I'm new and don't know what else to say. It also seems as though I'm the only one here who isn't a geophysicist.

    Yeah, nuclear is an utter joke. Most won't tell you this, but the legacy subsidies of the '80s that were initially designed to underwrite reactor construction are estimated to exceed seven cents per kilowatt-hour (¢/kWh)—an amount equal to about 140 percent of the average wholesale price of power from 1960 to 2008, making the subsidies more valuable than the power produced by nuclear plants over that period. Without these subsidies, the industry would have faced a very different market reality—one in which many reactors would never have been built, and utilities that did build reactors would have been forced to charge consumers even higher rates.

    Low-end estimate for subsidies to existing reactors (in this case, investor-owned facilities) is 0.7 ¢/kWh, a figure that may seem relatively small at only 13 percent of the value of the power produced. However, it represents more than 35 percent of the nuclear production costs (operation
    and maintenance costs plus fuel costs, without capital recovery) often cited by the industry’s main
    trade association as a core indicator of nuclear power’s competitiveness; it also represents nearly
    80 percent of the production-cost advantage of nuclear relative to coal. With ongoing subsidies to
    POUs nearly double those to IOUs, the impact on competitive viability is proportionally higher for
    publicly owned plants.

    The most important subsidies to the industry do not involve cash payments. Rather, they shift construction-cost and operating risks from investors to taxpayers and ratepayers, burdening taxpayers
    with an array of risks ranging from cost overruns and defaults to accidents and nuclear waste management. This approach, which has remained remarkably consistent throughout the industry’s history, distorts market choices that would otherwise favor less risky investments.

    It's analogous to the corporate law revolution of the 19th century (overturning of common law, 14th amendment, etc., etc.) For example, in the federal courts, the “due process” and “equal protection” rights of corporations as “juristic persons” have been made the basis of protections against legal action aimed at protecting the older common law rights of flesh and blood persons. For example local ordinances to protect groundwater and local populations against toxic pollution and contagion from hog farms, to protect property owners from undermining and land subsidance caused by coal extraction—surely indistinguishable in practice from the tort liability provisions of any just law code—have been overturned as violations of the “equal protection” rights of hog factory farms, mining companies, and other industrial processes.

    Hi FMAC;
    Welcome to the chat. You don't have to be a GeoPhysicist.. on the Oil Drum, nobody knows just how many of us are merely good dogs!

    It's still important to offer either links or references to the source of particular claims, like the Nuclear subsidies you mention, so we can keep the discussion well grounded. (I'm not an official.. I just talk like that..) I still come down squarely opposed to fission, so I want to know that any arguments I hear here have some solid backing to them, lest I chance making a stab in some discussion that ends up hurting the cause because it turns out to be easily invalidated.

    The good news is that Nuclear is quickly being hoisted upon its own price-points.. the bad news is that we, the people will still be left holding the bags of spent Trans-uranic Pixie Dust when the plants all have been abandoned..



    Thanks for the warm welcome! Yes, I realize that you don't require a PhD in Geophysics to comment here. I'm just trying to absorb fragments of information in order to get a more in-depth understanding of the geological and economic mechanisms behind peak energy. The analysis here is superb, so I should be able to extrapolate quite a lot of information from this publication and its comments, as I already have.

    I actually come from an economics and statistics background, which still serves a huge purpose, here, though.

    Ah, yes, sources. I must have gotten carried away with myself:

    I essentially put words to the Union of Concerned Scientists' graphs and estimations:

    http://www.ucsusa.org/assets/documents/nuclear_power/nuclear_subsidies_r... (pgs. 104-107)

    Their analysis relies heavily on the EIA's 2009 power prices entailing comparable busbar plant generation costs.

    Perhaps it was overkill to assert that nuclear fission is an "utter joke," as its potential in the short-term is considerable, but I don't think that it's viable in the long-term, especially in the face of such things as shortages of economically-extractable uranium, and, as I mentioned, the gargantuan amount of subsidization involved in almost every stage of the production process. And now you hear everyone proclaiming that thorium is nuclear energy's messiah, but this push for "safe" and "cheap" thorium is tragically misguided.

    Contrary to the claims made or implied by thorium proponents, however, thorium doesn’t solve the proliferation, waste, safety, or cost problems of nuclear power, and it still faces major technical hurdles for commercialization. Thorium is not actually a “fuel” because it is not fissile and therefore cannot be used to start or sustain a nuclear chain reaction. A fissile material, such as uranium-235 (U-235) or plutonium-239 (which is made in reactors from uranium-238), is required to kick-start the reaction. The enriched uranium fuel or plutonium fuel also maintains the chain reaction until enough of the thorium target material has been converted into fissile uranium-233 (U-233) to take over much or most of the job. An advantage of thorium is that it absorbs slow neutrons relatively efficiently to produce fissile uranium-233.The use of enriched uranium or plutonium in thorium fuel has proliferation implications. Although U-235 is found in nature, it is only 0.7 percent of natural uranium, so the proportion of U-235 must be industrially increased to make “enriched uranium” for use in reactors. Highly enriched uranium and separated plutonium are nuclear weapons materials.

    And let's not forget that while the mix of fission products is somewhat different than with uranium fuel, the same range of fission products is created. And India is always sited as an example of a country that has utilized thorium to produce energy, but it actually hasn't done so in an commercial scale, yet. And compared to uranium, the thorium fuel cycle is likely to be even more costly. In a once-through mode, it will need both uranium enrichment (or plutonium separation) and thorium target rod production. In a breeder configuration, it will need reprocessing, which is costly. In addition, as noted, inhalation of thorium-232 produces a higher dose than the same amount of uranium-238 (either by radioactivity or by weight).

    As for nuclear fusion/hydrogen, the fusion process alone currently does not achieve sufficient gain, and it's nowhere close to being viable on a commercial scale, so. Same with artificial photosynthesis, whose advocates never fail to mention how unbelievably expensive and difficult it is, even at a nano-scale, let alone an industrial-scale. Not to mention that most of its catalysts are highly unstable.

    Sorry for the tangents,


    FreeMarket – Welcome. And thanks for teaching me a new word...”Ineluctable”. I may be wrong but we have a few geologists here and a smattering of engineers but I think I’m one of the few geophysicists in these here parts. Maybe you just caught a short term seismic burst. LOL.

    “... short-term expediency over long-term constancy for too long.” Yes...we’ve whipped this bastard child many times on TOD. In particular the absolute obsession in the oil patch with rate of return which demands a short time frame mentality. A key metric in the oil patch is NPV...Net Present Value. This essentially discounts the value of future oil/NG production. Depending on the exact discount rate most production beyond 7 or 8 years is reduced to an insignificant NPV. One reason why capex for Deep Water production is so high: max short term production rates often at the expense of ultimate recovery. The current emphasis on the fractured shale plays is the poster child of this philosophy: produce fast and get the ROR up and then do it again as the well quickly depletes.


    Thanks for the warm welcome!

    "And thanks for teaching me a new word...'Ineluctable'."


    "I may be wrong but we have a few geologists here and a smattering of engineers but I think I’m one of the few geophysicists in these here parts."

    Ah. I'm pretty sure I got that impression from the lengthy altercations between you and Darwinian about various geological subtleties, which I now obsessively stalk, as I've been trying to absorb bits and pieces of the discussion of the geological, physical, and chemical mechanisms behind peak energy. My background is in economics and statistics, but energy has had me entranced for the past 2 months. Not to brag, but I'm pretty adept at being able to grasp things without any kind of formal education, or at least I think I am. LOL.

    "In particular the absolute obsession in the oil patch with rate of return which demands a short time frame mentality."

    True. From what I've extrapolated from conversions on this forum, this assumes a snap-shot of the situation at any given kind; a static analysis, without taking into consideration the dynamics at play. It's analogous to the short-comings of neoclassical economic models, which may be able to determine price in the short-term, but falls short when forecasting prices in the long-term, which are determined by cost of production, not necessarily supply and demand. I particularly like Rune Likvern's work on how you can't extrapolate long-term progressions from short-term noise, which should seem obvious, but isn't in many energy circles.

    "capex" What exactly is "capex?"

    "One reason why capex for Deep Water production is so high: max short term production rates often at the expense of ultimate recovery. The current emphasis on the fractured shale plays is the poster child of this philosophy: produce fast and get the ROR up and then do it again as the well quickly depletes."

    I see. So the decline rate is mitigated, but depletion rates, which are more latent, experience near exponentiation. I'm pretty sure that's right. Correct me if I'm wrong, but the depletion rate is the decline in the amount of oil under the ground that is economically-extractable, and the decline rate is the declination of the amount of oil above the ground, right? I've heard the 2 used interchangeably.

    FreeMarket – Capex is just a simple shorthand for capital expendatures or a company’s budget. Essential how much is spent. Depletion rate/decline rate: we all have our “fingernails on the chalkboard” reaction. This confusion seems to be Ron’s but I’ll jump in for him. Decline rate is as simple as you understand: the change in production volume over time. You’ve probably picked up on the ongoing debates of estimates of future DR’s. Can’t argue about historical numbers. It gets more complicated when folks combine DR’s for existing fields with increased production from future wells to predict net decline (or increased) production rates.

    Depletion rate is not a common metric in the oil patch. We’ll more likely use recovery factor: a field has recovered 20% (RF 0.2) with a projected RF of 0.4, for instance. With your economics background you understand NPV and how cash flow vs. time factors in. The complication comes in when discussing proposed future decline rates incorporating enhanced oil recovery projects and new drills especially horizontal wells.

    As the man said: predictions are difficult…especially about the future.

    “unattended ground sensor,” or UGS, disguised as a rock.

    "And they won’t just be used overseas. U.S. Customs and Border Patrol today employs more than 7,500 UGSs on the Mexican border to spot illegal migrants. Defense contractors believe one of the biggest markets for the next generation of the sensors will be here at home.

    “They could be used for border security or even around corporate headquarters,”"

    ...advanced warfare and surveillance technology prove useful as the oligarchs retreat to their compounds.

    Solar powered!

    M&Ms, biogas, and bees

    Image: http://blogs.voanews.com/photos/files/2012/10/reuters_france_honey_comb_...