Drumbeat: May 6, 2013

The Oil and Gold Booms Are Over

The Malthusian specter of rising demand and shrinking supply has been replaced by a new realization that, for most commodities, demand is flat and supply is rising fast. Oil demand in developed nations has been stable since 1995, because high oil prices have inspired conservation efforts in countries such as Japan and the U.S.

Now, as emerging nations begin to embrace energy efficiency as well -- China is working hard on electric cars, for instance, despite continuing to build dozens of coal plants -- global demand might flatten out this decade. The debate over “peak oil” scenarios may shift from the threat of dwindling supply to the threat of peaking demand.

The fallacy of ‘Peak Oil’ theory

There are plenty of reasons to fret about our nation’s future.

Government debt is growing at an unsustainable rate. Increased taxation and regulations calcify the sinews of the economy and monetary distortions threaten to sow the seeds of a future economic calamity. However, many people fear a world bereft of energy resources.

Politicians and scaremongers stoke these fears through fallacious theories like Peak Oil, which foretell an imminent world shortage of oil, and warn that we must follow a centrally-planned energy policy that conveniently steers millions of dollars to well-connected donors and lobbyists of so-called green energy firms.

Energy Independence and Other Myths: A Q&A with Michael Levi, Author of The Power Surge

Levi has a new book out on the energy debate called The Power Surge: Energy, Opportunity and the Battle for America’s Future. It’s one of the best analyses of the amazing changes taking place in the energy sphere today, touching on everything from fracking to climate change to the Keystone XL pipeline debate. I had a chance to talk with him about Canadian oil sands, the myth of energy independence and why we need a negotiated peace settlement to end the energy wars.

WTI Crude Advances After Syria Blames Israel for Attacks

West Texas Intermediate crude headed for the biggest three-day gain in nine months as air strikes in Syria renewed concern that unrest will spread in the Middle East and disrupt supply. London’s Brent oil rose.

WTI futures climbed as much as 1.6 percent in New York after Syria’s state news agency said Israeli aircraft attacked a military research center on the outskirts of Damascus yesterday. The offensive was a “declaration of war,” Syria’s deputy foreign minister told CNN. Israel didn’t confirm involvement. The Middle East accounted for 33 percent of global crude output in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy. WTI capped a second weekly gain May 3 after U.S. employment rose more than forecast.

Surging US Oil Production Strains Distribution System

NEW YORK - Surging oil production has put the United States on track toward greater energy independence, pushing U.S. reserves to their highest levels in 30 years.

But analysts say bottlenecks in the distribution system are keeping oil from reaching markets.

U.S. Gasoline Prices Rise to $3.545 a Gallon in Lundberg Survey

The average price for regular gasoline at U.S. pumps rose 0.84 cent a gallon in the past two weeks to $3.5447 a gallon, according to Lundberg Survey Inc. It’s the first price increase in eight weeks.

The survey covers the period ended May 3 and is based on information obtained at about 2,500 filling stations by the Camarillo, California-based company. The average price has fallen 25.03 cents from the peak on Feb. 22, and 30.05 cents from this time last year, the survey showed.

Saudi oil output rises in April

Saudi Arabia produced 9.3 million barrels per day (bpd) of oil in April, up from 9.14 million bpd in March, an industry source said on Monday.

Supply to the domestic and export markets was around 9.2 million bpd, up slightly from the 9.15 million bpd supplied in March, the source said. The other 100,000 bpd of oil produced is likely to have been put into storage.

Saudi Aramco Raises June Premium for Arab Light Crude to Asia

Saudi Arabian Oil Co., the largest crude exporter, raised the premium used to determine June official selling prices for its Arab Light blend for customers in Asia and cut premiums for other light grades to the Far East.

Norway's Statoil warns proposed tax change could harm future oil, gas projects

ondon (Platts) - Norway's Statoil warned Monday that a proposed change by the government in the tax regime could have a damaging effect on the development of future new oil and gas projects offshore Norway.

Statoil, 67% owned by the Norwegian state, said a proposed reduction in a tax break on new energy projects from 7.5% to 5% could slow the impetus for development which is gearing up after years of production declines.

U.N. official: There are strong suspicions Syrian rebels used sarin gas

Damascus, Syria (CNN) -- A U.N. official says there are strong suspicions that Syrian rebel forces have used the deadly nerve agent sarin gas in the country's civil war.

Israeli Jet Strike Near Damascus Sends Fireball Over City

Syria threatened retaliation against Israel after an aerial strike on the outskirts of Damascus caused explosions that rocked the capital, increasing the risk of a wider regional conflict.

Israel didn’t confirm involvement in the assault yesterday. Its military also carried out an airstrike in Syria on May 3, The Associated Press reported, citing unidentified Israeli officials who said the attack targeted a shipment of missiles thought to be bound for Hezbollah militants in Lebanon.

Eight killed in Nigeria's Delta oil region gunfight

Gunmen opened fire on a group of former militants in the oil producing Niger Delta late on Saturday, leading to a shootout that left eight people dead, a security official said.

Plans to Harness Chinese River’s Power Threaten a Region

BINGZHONGLUO, China — From its crystalline beginnings as a rivulet seeping from a glacier on the Tibetan Himalayas to its broad, muddy amble through the jungles of Myanmar, the Nu River is one of Asia’s wildest waterways, its 1,700-mile course unimpeded as it rolls toward the Andaman Sea.

But the Nu’s days as one of the region’s last free-flowing rivers are dwindling. The Chinese government stunned environmentalists this year by reviving plans to build a series of hydropower dams on the upper reaches of the Nu, the heart of a Unesco World Heritage site in China’s southwest Yunnan Province that ranks among the world’s most ecologically diverse and fragile places.

Squeezing More From Ethanol

WASHINGTON — Faced with a crop of lemons — too much ethanol, a population of cars not tuned to burn it effectively and a driving public leery of the fuel’s properties — the Environmental Protection Agency is proposing to make lemonade.

The effort to untangle itself from this sticky situation is part of a larger proposal by the federal government to make the most sweeping changes in gasoline since lead additives were banned.

State Sale of 100 Longhorns Stirs Debate, and Proposed Law, on the Breed’s Future

Supporters say that maintaining the herd is vital to preserving Texas’ ranching heritage. But opponents say longhorns strain natural resources and are difficult and costly to maintain.

Neighbors Resist a Plan to Clean a Toxic Canal

Almost everybody wants the Gowanus Canal cleansed of its toxic gunk.

But a $500 million plan by the Environmental Protection Agency to do just that has run into protests from otherwise environmentally conscious residents in several Brooklyn neighborhoods. They want the canal purged of pollutants like PCBs, lead, mercury and raw sewage, but are fighting the methods the agency has chosen.

Canadian minister takes fight for oil sands crude to Europe

OTTAWA (Reuters) - A European Union plan to label crude from the Alberta oil sands as dirty is unfair and could damage Canada's bid to find new export markets, the Canadian resources minister said at the start of a mission to lobby against the idea.

As part of a plan to cut greenhouse gases from transport fuel, the EU's executive commission has developed a Fuel Quality Directive that would single out oil from Alberta's tar sands as more polluting than conventional crude.

Getting rich off global warming

A decade ago, the word adaptation was dirtier than coal. Among professional greens and activists focused on mitigation, even discussing it meant surrender. Only the long stall of international climate negotiations and stark signs of irrevocable climate change put an end to their distaste. If we have already caused warming, possibly setting unstoppable feedback loops into motion, then opposing adaptation was the intellectual and political equivalent of carbon sequestration, of burying our brains in the ground. During the aughts, the major green groups began to build adaptation divisions, one by one.

The Third Option

This time the problem is a “carbon bubble”. The market valuation of the world’s 200 biggest oil, gas and coal companies is about $4 trillion, a figure based on the assumed value of their confirmed reserves that are still in the ground. Or, more precisely, a figure based on the assumption that they will eventually be able to sell all of those reserves to customers who want to burn them.

On the strength of that assumption, the fossil fuel companies have been able to take on $1.5 trillion of debt, and last year alone they spent $647 billion in the search for even more oil, gas and coal reserves. But what if they will never be able to sell all of their reserves? What if the need to avoid runaway warming forces governments to curb the burning of fossil fuels, so that much of those reserves has to stay underground forever?

Hawaii in Climate Change Bullseye

Tropical cyclones of the future may have the Hawaiian islands in their cross hairs, according to a new study of how climate change will alter eastern Pacific Ocean storms near the end of the 21st century.

Va. scientist finds rising East Coast sea levels

In a 2010 study, Virginia Institute of Marine Science oceanographer John Boon looked at decades of tide-gauge readings for evidence of this ever-faster-rising water.

Boon didn’t find the accelerating sea levels, and he was skeptical that they existed.

But using a more sophisticated statistical method, Boon looked at the tide-gauge readings again in a 2012 study. This time, he found that sea levels are indeed rising at an increasing rate from Norfolk to Nova Scotia.

To a layman, this might look like a flip-flop. But to scientists, this is how the job is done.

Rising sea levels threaten migratory birds

Sydney: Millions of birds that stop at coastal wetlands during annual migrations could die as rising sea levels and land reclamation wipe out their feeding grounds, researchers warned Monday.

The study into the migratory habits of shorebirds predicted that a loss of 23 to 40 per cent of their main feeding areas could lead to a 70 per cent decline in their population.

Arctic Ocean 'acidifying rapidly'

The Arctic seas are being made rapidly more acidic by carbon-dioxide emissions, according to a new report.

Scientists from Norway's Center for International Climate and Environmental Research monitored widespread changes in ocean chemistry in the region.

They say even if CO2 emissions stopped now, it would take tens of thousands of years for Arctic Ocean chemistry to revert to pre-industrial levels.

Greenhouse Gas to Reach 3-Million-Year High

The proportion of carbon dioxide in the atmosphere is set to break 400 parts per million this month, levels not seen in 3 million years, according to one of the best climate records available.

Link up top: Saudi oil output rises in April says Saudi production was up 160 kb/d but exports were up on 50 kb/d. The difference, they say, was a rise in domestic consumption.

But Saudi Arabia's own crude oil demand for power generation has jumped by an average of 147,000 bpd from March to April in the previous three years, according to a Reuters analysis of official data.
The increase from March to April 2012 was much lower, however, at just 64,000 bpd, due to more gas supply coming on line in early 2012 to feed Saudi power plants.

But Manifa to the rescue. Manifa project starts first phase of production

Manifa photo Manifa_zps570fb5fc.jpg

Saudi Aramco said the first phase production start-up at the Manifa field commenced recently, 3 months ahead of schedule and well under the program’s approved budget.
The Manifa field’s production capacity is expected to reach 500,000 bpd by July 2013, and is planned to reach its full design capacity of 900,000 bpd of Arabian Heavy crude oil by the end of 2014, while Saudi Aramco’s maximum sustained capacity will be maintained at the level preceding Manifa production.

That was posted April 16th so that likely accounts for the increase... just in time.

Ron P.

That looks like some very expensive infrastructure if the tan colored areas are all landfill. I presume it must be shallow.

The cost, about half way through completion, in 2010, was estimated at 9 billion. The latest updated estimate I found was as of December 2011 the figure had ballooned to 17 billion. I expect the final figure was, or will be, closer to 20 billion. Yes those are all man made islands.

Search: Saudi Arabia’s Longest Well Drilled in Manifa

The development strategy of Manifa is based on optimum use of onshore drilling. Instead of developing Manifa completely from offshore platforms, it is developed from 27 drilling islands connected by a 47-km long causeway, in addition to 16 onshore drill sites and 13 platforms.

And from another link, the water depth averages 5 meters or less.

"The Manifa oil field is situated just offshore of the Eastern Province of Saudi Arabia in the shallow coastal waters of the western Arabian Gulf that generally have depths ofless than 5 metres."

Ron P.

And from another link, the water depth averages 5 meters or less.

By the time they stop pumping from Manifa, water depths will be 7 meters or less.

Yeah, that would be a very ironic feed-back loop . . . if sea-level rise were to swamp all these drilling pads.

Well, they don't think so, not before the field has been pumped dry anyway:

Manifa Field Causeway and Islands, Saudi Arabia

An average sea level rise of 5 mm per year has been assumed resulting in a water level increase of 0.25 m over the next 50 years. This assumption was based on the contemporary Intergovernmental Panel on Climate Change (IPCC) predictions. The end of life (50 years) prediction of the 100 year storm water level was therefore assumed to be 2.45 m above LAT, rounded up to 2.5 m above LAT.

Ron P.

Smart of them to plan ahead! That puts them above that state that tried to outlaw using climate change predictions for sea-side developments.

Of course, the recent predictions that say sea-level rise is accelerating may mean that they underestimated things. But it is all very speculative at this point. At least they made decisions based upon the best information they had at the time.

I don't think they did too bad, SLR will have to pick up a lot to reach 5mm/year.

The average for the last decade was about 3. Its accelerating enough that 5 for the next decade is quite possible.

The IPCC number excludes Antarctic and Greenland contributions, its a lower bound rather than a predicted rise.

If they still are pumping 50 years hence, I reckon they will have piled a bit of extra dirt up on them in the meantime.

"That puts them above that state that tried to outlaw using climate change predictions for sea-side developments."

That'd be North Carolina...and that was before we got more TEApublicans in the state senate and congress and before the Republican governor - now all checks and balances are gone.

This "Even counting votes too scientific for North Carolina" is our latest flap, involving the repealing of the Renewable Energy Portfolio Standards.

North Carolina? You remember: the state against science regarding sea level rise? The state with the Department of Environment and Natural Resources head who doubts climate change science and believes oil is a renewable resource? The state that tried to appoint a head of early childhood education who believed the Fukushima earthquake might have been caused by ultrasonic waves from North Korea? That North Carolina?

The person they mention there that was appointed to head early childhood education was actually a vocal critic of...early childhood education.

And all that expense for heavy crude, not the light stuff. Thanks for the info., very interesting.

On Google Maps, and Bing Maps one cannot find the 47 km long causeway.
But this may be the onshore location:
Zoom in, and some infrastructure appears.

Kurt Cobb: Patient contrarians: The natural gas market isn't what it seems

Maybe it's the gloomy Seattle weather that has made investment manager Jim Hansen and his son and partner, Kevin, at Ravenna Capital Management immune to oil and gas industry hype about the supposed U.S. shale gas "revolution." More likely it is thorough research focused on making their clients money and keeping that money out of harm's way. The Hansens are patient contrarian investors whose time horizon is generally several years. They can't help you if you want advice on next week's or next month's natural gas price. In fact, they're not sure anyone can reliably help you with that. So they focus on much longer-term trends, and they think they've spotted one in the U.S. natural gas market.

About a year ago when domestic natural gas prices hit levels reminiscent of the 1990s, they began to move their clients into natural gas related investments. Amid the media hype about cheap natural gas for decades, they saw a different reality. They believed that high production decline rates in shale gas wells--which now provide about 40 percent of U.S. production--were combining with rapid reductions in the drilling of new wells in a way that would eventually cause falling production and sharply rising prices. They weren't exactly clear on the timing. But, with their patient strategy, they just needed to sit and wait for what they felt was the inevitable.

The report Kurt Cobb is talking about can be found here: The Master Resource Report

This week’s EIA report on natural gas in storage should have opened a few more eyes. Storage is 30.9% below year ago levels, 6.2% below the trailing five year average and only 3% above the 2007-11 five year average (note this excludes the storage bubble in the 2008-12 five year average). Also of note was the 39.4% year-over-year drop in storage in the east region also reported by the EIA.

Ron P.

Several discussions on TOD have surrounded the mixed economic messages in the US. JHK with his weekly blog post takes on this topic with the title; The Deep End of the Risk Pool


What Paul Krugman doesn't know (because he never mentions it), for example, is that oil prices around $100 a barrel (the average between West Texas Intermediate and Brent Crude) crush industrial economies. That implacable downdraft is what motivates USGov.com and the Fed to intervene and manipulate the things that represent economic activity: currencies, asset values, interest rates, and markets, which in turn promotes the detachment of the technicals from fundamentals. Anyone actually paying attention to the weak signals coming through all the noise would hear the faint wail of desperation in the background.

Certainly there is probably something to what he is writing here, i.e. about QE and it’s influence on stock market record heights and rising real estate, but hard to know if it is all true. Reading the economy is as always a confusing situation at best.

Why don't we have inflation as the Fed prints money like water?

Krugman keeps crowing about the lack of any inflation despite the Fed's huge moneyprinting operation. But of course as shadowstats shows energy and food prices have gone up, although oil prices seem stuck between $90-$100. But I just realized a key reason why the Fed's moneyprinting operation has not led to inflation - because it has
not actually put any real money into circulation to stimulate real in the world production or distribution to the 99%. The Fed gives $85 Billion a month to the Banks, who then basically sit on it by giving it to Hedgefunds cornering the market on foreclosures to capture future rents. The money is not going to actual investment, new houses or of course more goods for ordinary Americans. It is like the $300-$500 Trillion of supposed derivatives which of course is more than all the real worth of the planet. It is fake. If REAL production were stimulated then you would soon find out that all this money on paper actually does not represent real material wealth save for a few yachts and mansions for the plutocrats. Or the new Corporate private jet airport expansion planned for Google and Silicon Valley billionaires which is a pittance when actual medium sized airports are being downsized and going bellyup.

If a real stimulus of BAU, Wars and all took place, which did not invest in ending the Wars, Green Transit or the Green New Deal to actually save oil and energy usage, then inflation would roar. But all this money is just going straight into bankers pockets never to be really spent or loaned out.

And there is the problem of how we define inflation.

Stock prices going up are considered to be good news and not a sign of inflation. However, if you are somebody trying to save for your retirement it now costs more money to secure your retirement than it when stock prices are lower. The same is true for bonds.

For people concerned about their retirement which is more important - the declining price of LCD TV or the rising price of securing their retirement? The former we consider inflation the latter not. But inflation is a problem because it costs more to get the same.

I believe for the QE infusion to affect the measured" inflation it would have to get into the hands of consumers and be spent (i.e. chasing scarce goods and services). It's not - it's going to the big banks (financial industries) and they are looking for yield and bidding up equities and commodities neither of which affect the measured rate in inflation.

Guest Post: Why QE Won't Create Inflation Quite As Expected

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The Fed can create money but if it doesn't end up as household income it is "dead money."

In the consensus view, the Federal Reserve's unlimited quantitative easing (QE3) programs will do two things: 1) boost stocks and other "risk on" assets and 2) generate inflation. The two follow-on effects are related, of course; gold and other hard assets are rising in anticipation of higher inflation.

But all is not quite as it seems when it comes to the inflationary effect of creating money. I'm going to cover a lot of ground here so buckle up and grab your favorite stimulating beverage.


Why don't we have inflation as the Fed prints money like water?

because it has not actually put any real money into circulation to stimulate real in the world production or distribution to the 99%

I agree orbit. If the 99ers were wildly spending an extra 85 billion a month at Walmart, Safeway, Home Depot, etc., inflation for all goods and services would skyrocket. Seems like a very strange idea, but if there is no inflation via QE's then is it free wealth? I mean no one appears so far to be paying the piper, i.e. no negative feedback. They probably were very timid at first about QE, but now they seem to have pinned their ears back and are going for it. Can't generate growth any other way, we'll just QE it!

They are not generating much real growth they are kicking the can down at the bottom of the oil barrel. And then you get ironies pointed out here before such as rising gasoline prices being represented as a "plus" for retail sales since the sheer dollar volume forced to be spent on Auto addicted personal transit in the USA was increasing!

The Fed's QE is preventing a fullscale financial collapse but that is about all. Anyway it has long been known that simple monetary policy on interest rates cannot really stimulate economic growth or even a transition to sustainable Green investment lowering energy/resource usage in the long term. That is like pushing a string.

The only way to get real sustainable growth is for the Federal government to spend money on it and guide the economy towards Green Transit, insulation etc as Green New Deal sustainable investments.

Anyway it has long been known that simple monetary policy on interest rates cannot really stimulate economic growth...

This is only correct in a liquidity trap (when short term interest rates are near zero.)

Under most circumstances monetary policy is quite effective, right now we are in a situation where the quote above is correct, especially if "when short term interest rates are close to zero" is added.


What if our calculation of inflation is more screwed up than even the CPI?

Why doesn't anyone account for the amount of deflation that we would have had if stimulus and QE wouldn't have never been employed.

For example lets say we would have normally had 20% deflation with a 10% unemployment rate during recession and we had actually 0% deflation due to stimulus and QE, did we not really have 20% inflation? The 20% deflation we should have have would have brought prices to a level where people with lower income could afford stuff in the weak economy.

The FED didn't allow prices to fall, so the FED hurt the poor and middles class in order to protect the banks. If you include food and energy we had inflation and if you look at the amount of people in the work force we still have the same level of unemployment as we did in 2009. The FED has failed it's dual mandate on both ends and they play games with the numbers to say otherwise.

Hi Wildbourgman,

Deflation is a bad idea. Four years of 10 % deflation would reduce the price of assets in half. The poor are helped (if they can find work), if you own a home or other asset, you are not.

Check out "A Monetary History of the US", by Friedman and Shwartz where it is persuasively argued that the Great Depression would not have been as bad if the Fed had not allowed the Money Supply to contract so much in the 1930s.

There was quite a lot of deflation during the Great Depression, it did not work out well then, it is good that it was avoided in this case. You may not think a lot of economists, but economists on the right and the left would agree on this point.


How does inflation help the poor that can't find work anymore than with deflation? That's what happens with stagflation. At some point we need to get out of the way of the recession that's going to take place and should have taken place, we can't keep creating asset bubbles in order to get out of trouble.

My larger point is how we calculate inflation to start with might be very flawed at best.

Well some of the money may have got out to ordinary people in the form of home refinancings. Many people have replaced higher interest rates with lower interest rates. However, the extra money hasn't caused inflation. Why? Perhaps one of the workers in the household lost a job or now works at a lower wage job. And some people are paying down debt instead of spending more.

I don't know the full story . . . but the fact remains that we've had lots of QE and besides the stock market going up, there has not been large amounts of inflation. The might know what they are doing.

The pain just keeps rolling along bit by bit for the 99%.
One friend is finally getting kicked out of his house as he was unable to pay his underwater mortgage after the crash. Another who has cancer on top of everything is on the verge of being kicked out as a single Mom with
a kid in college who works and survived all the layoffs as Wachovia jobs were sent to Bank of America and then Wells Fargo. Unfortunately she has gotten no mortgage relief whatsoever from Bank of America despite her being an obvious candidate as a good worker

So slowly but surely 1 or 2% of the former middle-class are slinking into poverty or desperate financial straits...

Refinancing has helped some like my sister who managed to refinance her underwater Florida mortgage to provide some relief but her family is still just scraping by even though all of them work.

If inflation is too much money pursuing too few goods and services, then QE does not stimulate inflation if it stimulates goods and services without actually providing more spending money, e.g. boosting stock market values so companies can extract more resources and generate more goods.

You might think this involves more jobs and hence more money to spend, but increasing productivity, i.e. operating factories at maximum capacity with minimal workers does not add much to consumer spending. The jobless recovery seems to very much depend on the "jobless" aspect.

Inflation has not risen for two reasons. First, there is little buying pressure. This sounds like a duh! But with low demand it is sort of difficult to generate inflation. As part of this the velocity of money is very low (not many turnovers of the same dollar per year). Second, the private financial system has destroyed immense quantities of "near money" - assets that can be used as money at some discount. CDOs from the real estate bubble are widely distrusted and this propagates to other financial instruments. Unfortunately uncle Milty Friedman quit tracking m3 and m4 because he thought that only m1 and maybe m2 mattered, so we don't really have a good handle on this issue.

What Paul Krugman doesn't know (because he never mentions it),

The arrogance and ignorance of JHK's writing is sometimes disturbing. He could have typed 'peak oil Paul Krugman' and quickly learned that Paul Krugman wrote about peak oil in 2004, 2008, and 2010. (And probably additional times.)

But learning that wouldn't fit into his "I know it is going on and everyone else is an idiot" narrative.

JHK is mellowing a bit. I liked his recent interview with steve from virginia.

If anything the arrogance of the BAU crowd which includes debt junkies (that's what they are) like Krugman is simply staggering. They don't see any alternative to continued expansion of the human population and the industrial economy with America in the lead.

"Collapse is not an option" Yeah, right! Not only is collapse an option, it is happening to you, right now, and you better get used to it because it will be happening for decades and centuries to come. Nature is more powerful than we realize and Krugman and his federal government acolytes are going to be taught a very harsh lesson.

Does Krugman even read any history at all? It's as if the British Empire and Soviet Union never existed. In Krugman's eyes, those entities would have lasted forever if only the people in charge acted as if they had an unlimited credit card.

Pitiful, pitiful stuff.

Well apparently unlike some of folks here on TOD, most people do not want a collapse. So dispensing advice on how to avoid a collapse or mitigate it is valued by most people.

The low-interest debt is not just something desperately trying to fund ever more expansion. New debt can actually be a contraction thing! How? Well if you have a mortgage at 7% and you take out a new loan for 3% to pay-off your 7% mortgage, you now have the same the same home with a smaller payment such that you can make less money and stay in the same home. Lower interest rates help many people contract gracefully instead implode.

So don't be so quick to dismiss other people's views without an in-depth look at them.

Low interest rates help those who are in debt which to be honest is quite a lot of the developed world. Those who have savings get the short end of the deal as their savings are reduced in value little by little as inflation runs higher than the interest rates they get.

When the US quarterly GDP came in higher than expected about 2 weeks back CNN mentioned how this showed strength and confidence in the economy as it was mostly due to consumer spending. A few days later they ran a small piece mentioning that the uppeak in consumer spending was driven in a large part by people spending their savings, they also mentioned that such habits could not be expected to keep the economy going in the long run.

If your savings are being whittled away little by little it encourages you to spend them. This is good for the economy in the short team but extremely damaging in the long run.

I wonder if you could have low interest rates for too long...when raising the rates you have a system that is too dependent and built on the low interest rates that any amount of inflation crashes the system...are all student loans fixed...what would the value of your house be if inflation was 10 percent probably 20 percent lower. Without housing you don't have a US economy....there is no way out for the FED maybe they think this can go on forever.

"He could have typed 'peak oil Paul Krugman' and quickly learned that Paul Krugman wrote about peak oil in 2004, 2008, and 2010."

True perhaps, but back on Jan 11 2011. "The way I see it, by the way, is that it’s about shifting the mix away from tons of stuff to quality. You have a small electric vehicle (powered by solar-thermal) instead of an S.U.V., but it drives itself most of the time, and has a great built-in entertainment system. You live in an apartment or townhouse instead of a McMansion, but the brain-wave controlled kitchen turns out gourmet meals on demand. And if we do the GDP accounting right, this will show up as economic growth."

The key point is the "if we do the GDP accounting right, this will show up as economic growth." He is willing to cook whatever books are needed to keep GDP going up, because GDP (and its handmaiden Aggregate Demand) is the only thing that matters.

So as a role model I think he is sadly lacking.

Actually I think Krugman makes a good point here in emphasizing a turn to quality instead of quantity which could also include durable long-lasting goods which are also repairable as opposed to planned obsolescence. But also instead of GDP there is increasing movement towards "Quality of Life" measures
( http://en.wikipedia.org/wiki/Quality_of_life )

Maryland under Governor O'Malley has moved from an emphasis on GDP to Quality of Life.


So there is at least lip service in the right direction. Maryland more importantly is
investing in Green Transit with the Purple Line connecting the Metro spokes from DC and some other projects. Of course no doubt Maryland like most States is still wasting huge amounts on highways. Why they do not just run the MARC which already connects from DC to Baltimore is similar to the waste of invested transit capital in a lot of systems all over the auto addicted USA.

But what I find annoying about Krugman is his failure to emphasize that Military Keynesianism and Auto Addiction Keynesianism, the primary fiscal stimulants after WW II are proving an abject failure and wasting precious nonrenewable resources while also destroying the planet. Krugman never seems to confront this although, again to his credit, he is the ONLY one in the NY Times to even mention the Progressive Caucus budget proposals to stop the Wars and move our tax dollars to health, education and a Green New Deal while also restoring fair taxes on the plutocrats.

Krugman, along with Robert Reich, and a few other so-called "salt water" economists are self-proclaimed ideologues on the left. They use Keynesian theory as an excuse (crutch) for why the government needs to inject money into the economy. To their credit they call for that injection into "worthy" investments. But to their discredit they think those worthy investments should be the typical shovel-ready infrastructure that is going to be worthless in twenty years or so.

Both Krugman and Reich seem to think that oil's high price is a positive since its derivative products sales in the US contribute to GDP.

The simple fact remains that money is nothing more than a token for the energy available to do "useful work". That latter phrase is tricky since the only truly useful work is that which produces a sustained flow of energy! Like food. When you print more tokens than there are units of energy (actually, technically, exergy) then the per token value has to go down (inflation). Or, put another way, you get less useful work for each token. Couple that with the fact that net free energy (in the EROI sense) has been in decline, probably, since the mid 70's and it isn't too hard to understand why the Fed is desperate to make it seem like there really is an economy, and that it is growing, even if very slowly.

Wait till the market crashes (probably not too far off). Then see what happens. All of the derived nominal dollars will disappear because they are just smoke and mirrors to begin with. What is left will "re-couple" with its underlying energy value and prices for real goods and services will skyrocket as a rebound effect. "Oh what a tangled web we weave when first we practice to deceive," Sir Walter Scott.

But to their discredit they think those worthy investments should be the typical shovel-ready infrastructure that is going to be worthless in twenty years or so.

Perhaps the real discredit, given that both these gentlemen are reasonably intelligent educated individuals, is the fact they they seem completely incapable of engaging in systems thinking at even the most basic level.

I guess if all you ever had was a shovel everything starts to look like a shovel ready project will save the day once again. Hey it worked before, right?

“I don't know what's the matter with people: they don't learn by understanding, they learn by some other way — by rote or something. Their knowledge is so fragile!”
― Richard P. Feynman

Wait till the market crashes (probably not too far off). Then see what happens. All of the derived nominal dollars will disappear because they are just smoke and mirrors to begin with. What is left will "re-couple" with its underlying energy value and prices for real goods and services will skyrocket as a rebound effect. "Oh what a tangled web we weave when first we practice to deceive," Sir Walter Scott.

Very interesting take GM on eventual effect of QE. You mean there's no free lunch?! I was beginning to wonder as the stock market goes wild.

George.Mobus... Well put, I couldn't agree with you more. There is this debate about deflation, and all I can do is laugh. Real deflation only takes place in a sound monetary system. The current fiat system we have today with the added bonus of a quadrillion in derivatives is the largest ponzi scheme in history.

Furthermore, gold and silver will show their true "VALUE" due to the fact that they are both stores of "Tradeable Energy Value." Because of the over use of derivatives of all types, the market has no clue of what the real ENERGY VALUE of goods and services truly are.

The public has overwhelming invested its hard earned money into "Future Energy IOUS" which are labled 401k's, pension plans, retirement plans and so on and so forth.

Of course it will end badly for the masses... as it always has in the past.

How is a randomly sized chunk of inert metal a store of "Tradeable Energy Value"? How do you store anything in it? No, it is just another talisman. It's only value is that it is pretty and people have decided it is valuable.

....and people have decided it is valuable

Isn't that what ultimately matters?

What ULTIMATELY matters is that you can do the work necessary to supply food, shelter, etc. It doesn't matter what the trade-able tokens are as long as they are pegged to an amount of exergy. Allowing the token value to float vs. tying it to a specific amount of useful work is where we go astray.

As an aside, I'll be presenting a paper at the upcoming Ecological Econ conference in June that touches on this whole issue. The Biophysical Econ meeting will be held jointly in Burlington. Web site: http://www.uvm.edu/conferences/ussee/

Gold has been valuable for 7000 years, long before there was an industrial revolution. I agree that if we enter a dark age and are reduced to barbarism gold will be worth very little. I don't anticipate entering a dark age and if we end up in that situation I am not going to survive anyway regardless of what I do.

Unsure this is quite understood, but to go out on a limb; pegging already-abstract tokens (of exchange) to yet more abstract concepts like 'amount of exergy' seems confusing and fraught with potential problems. For example, what would its implications be with regard to those with the control of a lot of energy/exergy, like nation-state oligarchies and their centralized grids/energy resource plunders? Having that kind of control would seem to suggest "fiat/thin-air exergy".

"One economic advantage of mutual credit is that the currency supply is self-regulating— the money supply expands and contracts as needed, without any managing authority. The availability of interest-free loans is a great advantage to members of the system.

One downside of mutual credit, as with any form of credit, is the possibility of exploiting the system by running up a negative balance and then leaving. This problem is often addressed by caps on negative balance which can be raised as balances are paid off, or by limiting the system to a small, close-knit community based on trust, where the community holds people accountable."
~ Wikipedia

"English historian E.P. Thompson wrote of the moral economy of the poor in the context of widespread food riots in the English countryside in the late eighteenth century. According to Thompson these riots were generally peaceable acts that demonstrated a common political culture rooted in feudal rights to 'set the price' of essential goods in the market. These peasants held that a traditional 'fair price' was more important to the community than a 'free' market price and they punished large farmers who sold their surpluses at higher prices outside the village while there were still those in need within the village. A moral economy is thus an attempt to preserve an alternate exchange sphere from market penetration. The notion of a non-capitalist cultural mentalité using the market for its own ends has been linked to subsistence agriculture and the need for subsistence insurance in hard times. The concept of moral economy has been used to explain why peasants in a number of colonial contexts, such as the Vietnam War, have rebelled."
~ Wikipedia

Regarding gold, Nicole Foss, for example, may have cautioned against it for one reason or another, and there appears to be a lot of hoarding and re-acquisitions going on, among other mysterious things (attempts at artificial devaluation?) at the moment.

Pegging already-abstract tokens (of exchange) to yet more abstract concepts like 'amount of exergy' seems confusing and fraught with potential problems.

What exactly is abstract about exergy? It is a well defined energy quantity based on the amount of work (of a specific type) that is being done.

Insofar as the control of energy, in a world that did not include selfish, short-term thinking people, things might be different. I'm not concerned with the way things are now with respect to politics, or what most people take to be human nature. Rather I am looking at how things might be once we got past the petty politics. By definition there cannot be a "fiat exergy".

What exactly is abstract about exergy? It is a well defined energy quantity based on the amount of work (of a specific type) that is being done. ~ George Mobus

Aside from attempting to peg tokens of exchange to exergy-- and feel free to elaborate/suggest how that would work-- do you think that most will understand it, or that understanding something used by many people is a good idea?

In thermodynamics, the exergy of a system is the maximum useful work possible during a process that brings the system into equilibrium with a heat reservoir.
~ Wikipedia

Yes which is why it doesn't mater if it is paper or metal.


All fine, but for the inevitable exception that not everybody is in unanimous agreement over where they will allow value to be placed, and due to Gold's Elemental 'indestructability', (as well, no doubt, as it's reliable appeal with Romance Candidates) .. there are and will continue to be many who have far less trust in pieces of paper that can be burned or simply not recognized after some arbitrary political or economic shifts, next to an Element that has remained in Vogue for Millennia..

So yes, I think it matters. In theory, maybe it shouldn't.. but I'd say that's just the sign of an incomplete theory.

Yeah, it is more durable than paper and enough people are convinced of its inherent value, and will remain so, that I think it would be good to have some. Not that I can afford it. My point was that people tend to ascribe special properties to it, when gold and silver are just shiny soft metals.

People ascribe special properties to a dollar bill too and it is just a piece of paper with green ink :-)

Your paper is worthless if the counter party defaults or the central bank hyper inflates. Gold has been considered valuable for 7000 years and cannot be printed. That is good enough for me.

True, the US government could default, or there could be hyperinflation. Under these circumstances money will be a minor problem compared to social unrest. I think it unlikely that gold would be of much help in these circumstances. How much is an ounce of gold worth? Does the price remain constant?


I see the debate about "Real Money" continues. However, some very important aspects are misunderstood.

First, during the Dark Ages after Rome Collapsed gold and silver held their value. They did not become worthless after the collapse of the Western Roman Empire.

Second, gold and silver are not just pieces of metal, they take a certain amount of energy in all forms and in all stages to create each ounce. That is why they have been a store of value for thousands of years.

Third, the market value of gold and silver have been depressed due to the explosion of the derivatives & debt market. This also applies to all commodities including energy.

Lastly, the reason why individuals and the public do not understand the "STORED ENERGY VALUE" of gold and silver is due more towards ignorance of the physical energy dynamics than anything else.

Yes, the gold still had value after Rome collapsed because there were other societies and tribes that valued gold. If the US government collapses, I don't think other countries are going to be in great shape either. Clearly the gold will still have value, but it will have less value that it has now. (But much more value than a collapsed dollar of course.) This 'if the USA collapses' rationale for gold doesn't seem to work well . . . I think you'd be better off with canned goods, bullets, guns, seeds, and farmland.

Energy is required to extract the gold but you cannot extract any energy out of the gold. So it is not "STORED ENERGY VALUE", it is gold.

Second, gold and silver are not just pieces of metal, they take a certain amount of energy in all forms and in all stages to create each ounce. That is why they have been a store of value for thousands of years.

I think you are really stretching here. We're not talking about iron, or even bronze or copper - gold and silver melt at relatively low temperatures.

It kind of reminds me of economist Stirling Newberry's old essay, Billionaires for Peak Oil.

The last energy transition is not reassuring - in the late 19th and early 20th century, internal combustion began to replace steam power. The coal economy of that time could not keep very many people in affluence - though it could keep more people in affluence, and many more people alive than the previous mechanical water/wave economy. The 1899-1918 period saw a series of conflicts which could be labelled "the last of the rock wars" - the last wars over access to coal and gold, the two key commodities in the coal age. Coal ran the economy, and gold measured the economy. Since wealth was created by digging rocks out of the ground and turning them into things, gold was a good measure of the flow of raw value into the society, and therefore a good incentive to productivity.

The first world war made it clear that the rock economy was doomed. The great war machine of that economy - the battleship - was both useless - naval power was indecisive at Jutland and in sufficient to force a landing at Gallipoli - and awe inspiringly expensive in gold terms. It bankrupted major industrial nations, whose economies could not support the war machines that their economies required to have in existence.

Someone else pointed out here awhile back that gold and silver are money precisely because they are worthless. Money has no intrinsic value because if it did, people would use it up rather than use it. As we saw during the commodities spike, when people were smuggling pennies and nickels out of North America to melt down for scrap in China.

Gold and silver are too soft to be useful - at least if you're making swords, plowshares, or pots. I suppose that might no longer be true, with modern use in electronics and all.

As we saw during the commodities spike, when people were smuggling pennies and nickels out of North America to melt down for scrap in China.

Leanan, a good reason to follow Canada's lead and phase-out the penny and round to the nearest nickel.

Best hopes in phasing out the penny.

Industrial uses of gold: wires in integrated circuits, electrical contacts, dental fillings, medicine, thermal insulation jackets (as on satellites), dye

Industrial uses of silver: photographic film, mirrors, conductors in photovoltaic panels, silverware, medicine, textiles, electronics

The death of film photography must have hurt silver.

The use of silver shifted from photographic film to photovoltaic panels and electronics.

Thanks for that link Leanan, really good historical perspective; a keeper. The distinction between industrialisation and mechanisation is very good, as are the resource and technology analyses of the 20C Great War [of two parts].... We are in the middle of a big step down from the ICE made world, and if we're smart and lucky we may make it to a much lower energy intensive electron based civilisation I just hope for everyone's sack we manage to do it much less violently than previous transitions....

BTW who is Stirling Newberry?

He is an economist who believes in resource constraints. Writes for a lot of leftwing political sites like Daily Kos.

Oddly, that article is based on energy analysis, and yet it demonstrates a lack of knowledge about energy.

While I have stated that debating about money is a waste of time, I have to allow myself to be a hypocrite once in a while.

Gold and silver have been stores of value due to their due to their store of TRADEABLE ENERGY VALUE.

Furthermore, the Shanghi Exchange took delivery of 1,000 metric tonnes of gold in the first 4 months of the year. Also, the Chinese acquired 232.2 metric tonnes of gold just in March. Those Asians must be really silly acquiring all of that barbarous relic.

Funny, the East is buying up gold and the West slaps itself on the back for printing money and creating more worthless derivatives.

Ironic... isn't it?

Can you explain how you extract the energy out of gold?

It's not a store, but a marker of energy consumption.

Bitcoins will be similar (assuming the security remains stable), as the energy and computer costs has to be rolled into the cost of generation of each new coin. Interestingly, they should get cheaper to find as computing power expands, but they get harder to find as each is found.

In the near term the supply should be reasonably abundant, and nobody really wants many, especially as they seem to be getting easier to find (for now). Before long, they will be hard to create, and if demand increases they'll become scarce. Kinda rhymes with oil availability, doesn't it?

Now I have two great laments: not buying stripper wells in the 90's, and not buying bitcoins when I first heard of them.

"It's not a store"

Exactly. So calling it a 'stored energy' is wrong and misleading. It is gold. Gold is valuable but it is gold not stored energy.

Eventually the crisis passes and we emerge on the other side. Lots of countries have had hyperinflation or deflationary depression and generally people are not reduced to barbarism. If you keep some wealth in gold you are more likely to come out on the other side with at least some of your wealth intact.

Very good point suyog, I think the entire gold and silver debate could be widdled down to one question. What if we have a currency collapse, but not a societal collapse?

Wouldn't you want a little gold and silver to use for exchange? What if you have adequate farm land, seeds, guns, bullets, fresh water? Why not be an at least a little optimistic and prepare for other than the worst case?

I don't understand why most people in the US and EU don't buy at least a few ounces of gold. Granted the future is unknown but what do they have to lose by buying a few ounces as insurance? It is not that they can't afford it. The average price of a car is around $30,000 and 15 million of those are sold every year in the US alone. They could buy a $15,000 car and invest the rest in gold coins.

I think the problem is that most people simply don't see the big picture and assume that just because things have been peachy so far they will continue to be peachy for the rest of their lives. It is what we call "normalcy bias".

Like every other commodity, gold is worth what people will give in exchange for it.

If you are ever in a situation such that you need to trade gold for the necessaries of life, then a lot of other people will be in the same situation. The price of gold will fall dramatically.

If you want disaster insurance, learn a valuable skill such as first aid. People can kill you and take your gold by force, but they can't take your skill.

Well maybe a lot of people are buying this gold. And that is what has run up the price over the last few years.

And then when things change and they all try to sell it at the same time . . . well, they might not get the same price they paid for it. Or who knows?

What is the main use of gold? Jewelry. If TSHTF . . . are the desperate people going to be interested in jewelry? I think not. Gold is worth what people will pay for it. No more, no less. It is an investment vehicle. But what it is worth is totally determined by the market.

People don't buy a car, they take out a car loan or lease it. They want that high end car to demonstrate their social fitness - a couple of gold coins tucked away won't do that.

I'll also add...a lot of people do have gold. Just not in the form of coins. Even in the poorest neighborhoods, you see people wearing a lot of "bling."

This is another reason I think gold might not hold its value as it has in the past. In the old days, the average person might have a thin wedding band to pawn when times were tough. Now, even people who aren't rich have a lot of gold. (Witness those "gold parties" that were all the rage a couple of years ago. My mom went to one, taking with her all her mismatched earrings - the ones where she'd lost half of the pair. She got $800 for them.)

Leanan, most people in US/EU don't have a lot of gold; they have very little. The glittering jewelry they have is practically worthless 14kt gold or gold plated base metal. Gold holds its value when you buy .9999 purity bullion (Maple leaf/Kruggerand coins or Johnson Matthey bars) or least 22kt jewellery like the Indians do.

Witness those "gold parties" that were all the rage a couple of years ago.

People sold their scrap gold at these parties and got maybe 50c/$. The gold was melted, converted into bullion bars and coins and exported mostly to Asian countries.

After the social unrest, some form of government may emerge that prints a new paper currency. Guess what the exchange rate will be between the new paper money and gold.

The price of gold is not the issue during currency collapse. The value of gold is what's important and it's been fairly stable through the years as opposed to fiat currency. In the last 1000 years many currencies have collapsed but gold has never been woth zero.

Although the value of a currency can go up or down depending on the supply. When the Spanish empire took huge quantities of gold/silver from south America they ended up with serious inflation.

That's reasonable because Spain increased the money supply all at once. The problem with fiat currency is that you can print much faster than you can mine or even steal gold and silver. Gold's value as a currency is just that, you can't increase the money supply without real labor or conquest. People trust the value of hard currency to be relatively stable for long periods of time because of that. The dollar used to have that characteristic but we are screwing that up.

The boss of Pimco Mohamed El-Erian had a quote on CNN Business the other week regarding this. I can't remember exactly what he said but it he basically said that there was a 50/50 possibility that QE would have collateral damage in the long run.

I googled pimco boss on quantitative easing and the related article from January 2013 explains the problems quite clearly. A couple of quotes from the article

The future price tag of printing six trillion dollars’ worth of checks comes in the form of inflation and devaluation of currencies either relative to each other, or to commodities in less limitless supply such as oil or gold.

Capital vs. labor; bonds/stocks vs. cash; lenders vs. borrowers; surplus vs. deficit nations; rich vs. the poor: these are the secular anomalies and mismatches perpetuated by unlimited check writing that now threaten future stability.

Even Warren Buffet said recently that we could have some serious consequences once QE is pulled back. I think Ben Bernanke has a tiger by the tail, he can't let go and he doesn't want to hold on. That wouldn't be a problem if he was alone but he's taking millions of people for the ride with him.

I think the entire bankster group has a problem with cognitive dissonance and/or hubris. They are conditioned to think that our economy can't have a currency crisis because we are America, but it's happening as we speak. Some of them know that what we are doing with QE will eventually have us all paying the piper but they can't see any other way out.

I'm curious how long we can keep the shell game going!

My country (Norway) just had the socialist government increase taxes on the oil industry so that the non-oil industry could get a 1% tax relief (general elections in September).


The oil industry in Norway is very dominating, and oil and gas is about 50% of our economy. With a leftist welfare state, with a very big public sector, its not a lie when I say we live off of oil and that oil prices are very important for us. Production today is 1.8 mbpd, half of the 3.2 mbpd in 2001. We'll hit less than 1 around 2020, and might be temporarily saved by the new 3.3 bn barrel big oil field Johan Sverdrup that comes online in 2018, producing a predicted .250 mbpd.

Latest production numbers: http://www.npd.no/en/news/Production-figures/2013/March-2013/

The election will most likely be won by the non-socialist coalition with the Conservatives (social democrats too, really) and the Progress Party (libertarians, conservative, right wing) and will probably result in lowering of the taxes to some degree and help create a more diversified economy.

Based on recent ECI data (ratio of total petroleum liquids production to liquids consumption), which fell from 15.5 in 2002 to 8.1 in 2011 (BP), Norway would approach zero net oil exports around 2040, in about 27 years. Using a rough rule of thumb, I estimate that Norway will have shipped about half of post-2002 CNE (Cumulative Net Exports) by the end of 2015.

Yes, as long as consumption stays flat at around current usage of 250 000 bpd. With gas prices at $10 a gallon, there is still room for more consumption with less tax on the fuel, which is 65% now I think. But with a pop. of 5 million, I guess its limited of how much it can increase and have an impact on exports.

Norway's consumption is of course low as a percentage of production, but consumption has been on an upward slope, increasing at 1.8%/year from 2002 to 2011 (BP), and increasing 2.0%/year from 2005 to 2011.

I don't see their consumption growing much. It is a thin mountainous nation where it is very difficult to build roads to even handle much more traffic. The population growth is pretty flat, the gas taxes are very high, and they have big incentive programs for EVs such that it is probably the market with the largest percentage of EVs sold.

EVs are not the answer to significantly reduce the energy usage and greenhouse emissions caused by Auto Addiction. Look at Sweden which heavily promoted EV's and alternatively fueled cars rather than the Green Transit of Swiss cities which have doubled Green public transit usage:


Published on Friday, June 10, 2011 by CommonDreams.org
The Green Revolution Backfires: Sweden’s Lesson for Real Sustainability
by Firmin DeBrabander

What if electric cars made pollution worse, not better? What if they increased greenhouse gas emissions instead of decreasing them? Preposterous you say? Well, consider what’s happened in Sweden.

Through generous subsidies, Sweden aggressively pushed its citizens to trade in their cars for energy efficient replacements (hybrids, clean diesel vehicles, cars that run on ethanol). Sweden has been so successful in this initiative that it leads the world in per capita sales of ‘green cars.’ To everyone’s surprise, however, greenhouse gas emissions from Sweden’s transportation sector are up.

If mountainous Switzerland can run Green Transit virtually everywhere, surely it should be possible for Norway...

In early 2006, I used the oil shock model to make this prediction for Norway

It is in units of billion barrels per year instead of per day, but it looks like the same trend as Rune gets.

"If mountainous Switzerland can run Green Transit virtually everywhere, surely it should be possible for Norway..."

Cog trains and telecabines powered by the Grande Dixence. Here's a picture I took at 2400 meters elevation. Not for the week-kneed.

Time will tell, but it's nevertheless interesting that with the highest, or among the highest petroleum prices in the world, Norway's petroleum consumption grew at 2%/year from 2005 to 2011. Norway's 2005 to 2011 rate of increase in consumption is not terribly far below the overall (2005) Top 33 net exporters' rate of increase in consumption from 2005 to 2011, 2.7%/year.

Denmark and Norway are examples of net oil exporters with very high levels of taxes on petroleum consumption, and Denmark has shown a -2%/year rate of change in consumption from 2005 to 2011, versus the +2.0%/year rate of change in consumption in Norway, from 2005 to 2011. Even with declining consumption, Denmark's rate of decline in consumption was less than their 2005 to 2011 rate of decline in production (8.7%/year), and consequently their net exports fell at 21%/year from 2005 to 2011.

These examples show how hard it will be to make a material difference in "Net Export Math" given production declines in oil exporting countries, especially where consumers have gotten used to petroleum subsidies.

Maybe its because the Danish see that they are closing on to become net-importers.

(government prediction I think)


These examples show how hard it will be to make a material difference in "Net Export Math" given production declines in oil exporting countries, especially where consumers have gotten used to petroleum subsidies.

The problem that the exporters with fuel subsidies are facing is that they have to persuade their citizens to pay a higher price than they would have otherwise have paid (and/or try to introduce rationing measures)--so that consumers in importing countries will pay a lower price than they would have otherwise have paid.

In any case, Norway, Denmark, Saudi Arabia and all other oil exporters are facing the same mathematical reality, to-wit, given an inevitable decline in production, unless internal consumption falls at the same rate as the rate of decline in production, or at a faster rate than the production decline rate, the resulting net export decline rate will exceed the production decline rate and the net export decline rate will accelerate with time. A corollary to this mathematical fact is that net export declines tend to be "front-end" loaded, with the bulk of post-peak CNE (Cumulative Net Exports) being shipped early in the net export decline period.

Saudis say fuel subsidies distort economy, must be cut

RIYADH, May 7 (Reuters) - Saudi Arabia should cut energy subsidies that are burdening public finances, the economy minister and the head of the state-run utility said, a move that would also tackle the issue of erosion of crude exports.

Rock-bottom prices for gas, power and gasoline have turned the world's 20th biggest economy into its sixth-biggest consumer of oil, producing less than $3.70 of economic output for every kilogram of oil equivalent that it used in 2010, compared with the global average of $6.20, according to World Bank data.

"This has become an increasingly important issue as these subsidies have become increasingly distorting to our economy. This is something we are trying to address," Economy and Planning Minister Mohammed al-Jasser said on Tuesday. "Rationalisation of subsidies, particularly on fuels for non-targeted participants", is needed to improve Saudi productivity, he told a financial conference in Riyadh.

"Saudis say fuel subsidies distort economy, must be cut"

And there we go. Another tacit admission that Saudi Arabia is struggling to keep production up. First we had the desperate moves to get off oil for electricity generation by starting a big solar program. Now we have the move to cut gasoline subsidies. SA must be approaching (or is at) peak. Why do these things if you have the oil reserves that are so massive that it would not matter?

Saudi is definitely at peak production. They did cut production in 2008 and kept that cut until late 2010 then ramped up to full production in early 2011 in response to the Libyan revolution. Except for a few OPEC cuts now and then they have been at full production for years. What has kept them from going into steep decline has been new, previously mothballed fields, brought on line primarily Khurais and Shabaya.

Now they have brought the last of the last, Manifa, online. But their older super giant fields still produce 70 to 80 percent of their total production. These are Gahwar, Safaniya, Berri, Qatif, Abqaiq, Zuluf, Marjan and Abu Safah. All of these fields are in decline and perhaps even steep decline as of late. It remains to be seen how long the new oil from Manifa can keep all Saudi production from steep decline.

Ron P.

I suspect that more and more Saudis are beginning to contemplate what happens to net oil exports when oil exporters show generally flat to declining production versus a continued exponential increase in consumption.

Right. I am Norwegian, and... well... to me your comment seems more American than Norwegian. So for the benefit of our readers on the other side of the pond...

To take the last first: Yes, Norwegian oil production is falling and the long-term future of the industry is not bright. That's old news to anyone reading TOD. But it is now also seeping into the mainstream narrative:

Oljen vi skal leve av etter 2025 er ikke funnet (Dagens Næringsliv, in norwegian) [Title means, "The oil we're going to live off after 2025 has not been found". Dagens Næringsliv (roughly, "Business Today") is Norway's premier business daily]

So no quarrel from me on that point.

You say:

The oil industry in Norway is very dominating, and oil and gas is about 50% of our economy. With a leftist welfare state, with a very big public sector, its not a lie when I say we live off of oil and that oil prices are very important for us.

Yes, the oil industry is very dominant. I actually suspect that much more than 50% of the Norwegian economy is oil money (if you include services to people and businesses in the oil service business, etc). But this is not, absolutely NOT, the fault of "a leftist welfare state". The social-democratic distributionist model is the main reason Norway as a nation has benefited from the oil, and not just a few oligarchs.

Let's have a look at the direction the Norwegian economy has taken since 2008:

Oljesektoren går som bare det, andre går utfor stupet (Aftenposten 2013-02-06, in norwegian):

- Oljesektoren går som bare det, mens andre går rett utfor stupet, sier Sunde.

Han forteller at stadig flere av deres medlemsbedrifter vrir seg over til olje og gass.

- Det er helt naturlig. Siden finanskrisen fra 2008 har det bare vært ett område hvor det har vært vekst, og det er olje og gass. Der har vi vært så heldige at vi har det rett utenfor stuedøren. Mange av bedriftene ville vært konk om de ikke vridde om til olje og gass, sier Sunde.

["The oil sector is booming, while others walk straight off the cliff", says Sunde.

He tells us ever more of their member businesses turn themselves towards oil and gas.

"It's quite natural. Since the financial crisis of 2008 there's only been one area of growth, and that's oil and gas. There, we've been so lucky as to have it right outside our front door. Many of the businesses would have been bankrupt if they hadn't turned to oil and gas", says Sunde. (Aftenposten ("The Evening Mail") is Norway's largest conservative paper)]

So what we have here is first and foremost a bad case of Dutch disease.

Make no mistake about it: We had that before 2008.

But as the (bubbly!) Norwegian housing market locked up the winter of 2008/2009 AND the krone surged against the US dollar and the euro, Norges Bank had no choice but to lower interest rates dramatically.

That was enough to restart the housing market (and blow the bubble to its current epic proportions), but not enough to rescue export-oriented businesses outside of the oil and gas sector. However it is hard to see that anything could have saved them: the combination of subdued demand abroad, particularly from Europe, and fierce competition for competent workers from 1) the oil industry, and 2) the also-booming construction/housing industry, has squeezed them literally between a rock and a hard place.

It is this intense competition that drives Norwegian salaries upward.

Read carefully between the lines of the Aftenposten piece I linked to:

Yes, there is cost inflation in the Norwegian oil and gas sector.

Yes, foreign firms are winning more and more contracts.

BUT the knee-jerk "conservative" quip that "salaries must come down" is IMO entirely misplaced. (And the demand that the central bank lower interest rates is delusional; they are already dangerously low).

The more fitting story here is that the Norwegian oil and gas service industry has been running at capacity for some time; and that there is a need for additional capacity that is so large, that business after business decides it is better off stopping doing what it was doing, and entering the O&G sector instead.

The demand void that the Norwegian economy is unable to fill (it is, after all, small compared to the size of the oil service boom currently taking place) is filled by foreign firms.

This is basic economics: demand increases, supply is scarce, prices rise to attract more supply. Surprise, surprise (not): Additional supply arrives, domestic as well as foreign.

How, pray tell, are lowered taxes going to change this dynamic and "create a more diversified economy"???

The source of the problem is our enourmous "comparative advantage" in hydrocarbon production!

Main factors that could stop the rush to the oil and gas industries are: Lowered oil prices; stronger Euro / an end to the depression in the Euro area; rise of a new industry that can generate at least as much income as the oil industry.

All unlikely in the foreseeable future; all external. There is nothing any Norwegian government can do about it, nothing that is big enough to matter, anyway.

Symbolic actions are of course possible, but they do, by definition, not do much -- except as signals.

However, this concentration in the O&G sector is a real threat to the long-term well being of the Norwegian economy.

Because, as you realize, this is The Last Hurrah of the Norwegian Oil Adventure.

The scary thing here, and this is really scary, is that all the things that would reduce our reliance on oil would also, most likely, mean the popping of our housing bubble. Why sharply reduced oil income would do this is obvious. Less obvious is that a Euro resurgence would do this; the reason is that lots of (relatively low-paid) europeans have come to partake in our construction boom, pushing housing demand up. If they decide to go home... And this time, there isn't room to lower interest rates much.

The current government sees this.

Their measures are desperate; symbolic.

I don't think they will work.

But they are trying; and they, at least, are pushing in the right general direction.

A "conservative" government is likely to do worse, not better. Arbeiderpartiet [Labour] has been the dominant political force in post-war Norway; through luck, pluck and determination they have built and run the world's richest country. Don't change a winning team and all that... Liberals and libertarians are likely to repeat the mistakes that the US made, that enabled the fraud-fest that exploded in 2008, that the world is still recovering from; mistakes that still remain uncorrected.

But then again... Which political party doesn't want to open Lofoten for the petroleum industry?

The Greens?


I'm not surprised. Consider the fate of REC. In 2006 they had three major PV factories in Norway and a module plant just across the border in Sweden.

Today they have a post office box in Sandvika, and a plant in Singapore, and the two US polysilicon plants. Quite a change, and not the diversification or benefit of the Norwegian economy.

I did visit Norway last fall. Aside from the beautiful scenery, I came away with the following:

  • Norway's an extremely well organized country.
  • Everything's very expensive for a tourist, but Norwegians appear totally unaffected by high prices.
  • Norwegians appear to have gotten lazy. All the menial work seems to be done by Swedes, Ukrainians, Russians, and other foreigners.
  • The infrastructure is heavily dependent on oil. Almost every tiny village along the coast is accessible by a paved road. Railroads are non-existent in large parts of the country.
  • Norway doesn't seem to know what to do with its enormous sovereign fund. Why not use it to build infrastructure that will be useful after the oil boom ends? Building electrified rail lines like the Swiss do would seem like a logical option.
  • In my opinion, except for the expensive fuel, the Norwegians have gone down a path similar to other petro-states such as Kuwait.

The entire sovereign fund will go into funding a hugely bloated public sector and their pensions. We'll be a nation built on welfare and too high salaries, and a wave of elders to take care of and a crumbling infrastructure. We've used our oil revenues like a drunken sailor, living a lazy life where the government provides everything and we dont have to create anything. The oil and gas is there to keep it all going.

You (Norway) had a welfare (distributional) state long before you had oil & NG.
So did we here in UK.

Oil shocks in the 1970s did put post WWII economic growth in question and manufacturing across much of OECD began the long decline.
Kode above, however, tells a story I am familiar with in UK, despite differences in timing and relative size.

UK version of recession 1979 - 1982 was exacerbated by rapid and very large changes (down and then up IIRC) in the value of sterling; the 'up' in large part a result of the obvious potential for UK sector North Sea petroleum (oh yes ... from 1979 both the down and up were in part due to the Thatcher government). The 2 years to 1983 saw a sudden dramatic further decline in British manufacturing (~30%) and by 1984 a rise in unemployment from 1.4 million to over 3 million.

We have played our part in the recent OECD bubble economics, people making money from owing money on their houses, i.e. 'ponzi'; and we are now entering the next phase somewhat ahead of Norway.

A lot of our country never recovered from the 1980s. Our 'under-employment' never recovered to its 1960s low point. I remember 250,000 unemployed although more women were 'inactive' (sic!) in those days. There are ten times that now unemployed and many more 'under-employed'. Our housing stock is ill-prepared for higher utilities bills; our manufacturing has shrunk a lot further and our financial 'industry' is too large. Wages and now salaries have been kept low, and now it is the turn of pensions (public & private). We seem to have abandoned in place much of the old industrial areas, and many people are going to have difficulty affording to eat. Prison population doubled in 20 years although crime has been well down, and there is a visible obesity epidemic. (Sounds like USA?) We have or are selling off public assets and utilities to 'rent seekers' prepared to take a risk on our future ability to pay. Norway can still sell us and the rest of the EU some NG for a while. You have a few years longer.

Yeah, the government is using its oil money to hire people in attractive public sector jobs with attractive pensions, just to keep the unemployment rate low. Basically all "real" jobs have moved out of the country, and our biggest airliner is now also moving out, although its one of those national companies that do good, and that we should attract. They want to hire Asians as cabin personnel, doubling their salary from what they're used to, but our government calls it social dumping, because they demand the use of Norwegian standards (highest salaries in the world) and demands the companies to pay high salaries in a competitive market. The result; industrial flight. Soon all we have left is a declining petroleum industry and huge public sector. It is possible to grow an economy and industry outside the oil sector, but its easier not to. The unions are now demanding even bigger rise in salary, which is absolutely insane. The taxes should be lowered instead, and the privet sector should take over much of the government's responsibilities. The result is the same all over Europe, declines and poverty, while the US is doing somewhat better, growing at around 2% annually. We're just not there yet because of oil.

US GDP figures are manipulated, a very large percentage of GDP are imputations and intangibles are going to be added to the GDP figure soon. Most of the growth the U.S. economy sees is really just inflation.

Interesting, and in the case of Norway, how would you say increasing (or decreasing) oil and gas extraction tax (royalties) would affect the "dutch disease" ?

And is it possible to say boradly what percentage of these taxes revenues are put in "sovereign funds", used for "national budget opex"(social security cost, other) and used for national investment ?(like infrastructure)

Re: The Third Option

Here's an article from a Turkish news source by an American journalist, Gwynne Dyer. She discusses limits to carbon emissions, referring to a report from the Grantham Research Institute at the London School of Economics. Here's a quote:

Their conclusion is that if we are to have a 50 percent chance of stopping the warming before +2 degrees, then at least two-thirds of the currently listed fossil fuel reserves will have to stay in the ground permanently. If they cannot be burned, then they have no economic value. Therefore, the market valuation of the fossil fuel companies is three times higher than it should be.

The report assumes that rationality will prevail, and that at some point a limit will be imposed on the burning of fossil fuels. In this new reality, the debt burden of the fossil fuel companies becomes unsustainable and there is a financial meltdown that dwarfs 2008. Global warming is held to +2 degrees, but at the cost of the Mother of All Recessions.

No wonder the fossil fuel industries oppose any discussions of Global Warming...

E. Swanson

Side note: Mr. Gwynne Dyer is a London-based independent Canadian journalist, syndicated columnist and military historian (Wikipedia)

My Bad! I was (somehow) thinking of Gwendolyn L. "Gwen" Ifill of NPR fame...

E. Swanson

re Gwynne Dyer:

about 10 years ago I heard Mr. Dyer expound on current politics and the Middle East. I raised my hand and asked him if the Iraq invasion was about something else other than oil and he stated that it was about the neo-cons wanting to implement democracy and that oil had nothing at all to do with the invasion. Hmmmm. (That didn't sound right to me).

And that was that. He gives a great speech in his leather bomber jacket but I'm not sure that what he says is worth too much...imho.

Mother of all recessions versus mass extinction and a mostly uninhabitable planet. How do we choose? Of course!!! Let us avoid recessions at all costs. After all, the effects of global warming are merely speculative. Scientists could be wrong. So why worry. Especially since it's just future generations who never did anything for me.

Somehow they/we don't even see/care that if Global Warming isn't held to only +2 degrees, the cost will be orders of magnitude worse than the Mother of All Recessions. The Mother of All Recessions sounds good compared to the alternative!

[edit] But as tstreet notes, the worse alternative won't happen to they/we, only those who come after. Who cares about them, they're nobody!

...the worse alternative won't happen to they/we, only those who come after.

That's the mindset of modern homo collosus, i.e. to use the planet as if it were disposable within a lifetime, our lifetimes, not those (innocent) fools being born too late for the oil age party.

Innocent fools? Hah! They'll be from our stock, and given half a chance, they'd do the same to us!

What? Like steal our pensions?

Sorry. Not funny.

I think we have some odd altruism complex -- noble savages, sage founding fathers, innocent heirs. Sure, they'll steal our pensions if there is no other value linkage. Some cultures venerate the aged, but not ours.

Oil usage borrows from the past and the future. Globalism takes from the powerless. Debt borrows from the future too. We're a happily indebted nation, in so many ways. Not funny? Indeed.

An interesting question: what would you do if you found yourself in a world with 5B copies of yourself, instead of a world of strangers?

America where are you now?
Don't you care about your sons and daughters?
Don't you know we need you now
We can't fight alone against the monster


Can be downloaded as a ringtone for your cellphone... >:-(

The presumption is that we going to have "come to Jesus" moment when we are all going to realize that burning fossil fuels is really really bad and it will be a series of really cataclysmic weather events that will precipitate it. i.e. we would have tipped the climate. But at that point even reducing CO2 emissions to zero is not going to have any impact on the climate that people are going to face for at least the next 3-4 generations. Even with geo-engineering how much CO2 are you going to be able eliminate to tip the climate back to what we knew it to be - and how much energy would that take?

At that point adaptation will go into full drive and that will takes globs of energy. Bottom line no generation of human beings are going to drive their standard of living lower by huge amounts probably 80%+ for the well being of generations unborn. If we were capable of doing that we would have done it by now.

If we were capable of doing that we would have done it by now.

Some of us already are, won't you join us?

May I suggest you follow the flight of the SolarImpulse for the next month.

Solar Impulse has started to fulfill the good-citizenship role for which it was designed. The solar airplane provokes discussions amongst the highest political and economic authorities about technological solutions currently available to help them achieve the world’s agreed CO2 reduction targets. And it also allows them to tackle the problem of resistance to change, which risks locking us for too long into the dangerous and costly consequences of old habits. It is with the aim of promoting such processes of change that Europe is using Solar Impulse, to give an example of what clean technology is capable of achieving. Hence the patronage of the Presidents of the European Parliament and the Council of Europe, as well as the European Commission.

“Our airplane is not designed to carry passengers, but to carry a message.” Bertrand Piccard

“From the very start of the project, we understood that our primary goal was to save energy.” André Borschberg

To be clear, a big part of this is redefining what a good standard of living really means. In my view most Americans have a pretty lousy standard of living and living with less crap and wasting less energy might raise it a notch or two... So what are you going to change in your life today?

My concern is that we're telling people that technological solutions will mean they won't have to make sacrifices, which is simply not the case. We're perpetuating the myth of endless progress, and refusing to look at the reality that fossil fuel energy got us where we are, in terms of prosperity and material wealth and in terms of climate change. I know many believe we can stay at that level of personal access to energy with "technology" and renewable sources, but I believe that simply using less will be the way it goes. And learning to live with less energy will be difficult.

Sadly, I do not think many will choose to use less, but perhaps it will happen.

Dyer says we have two bad choices- burn the ff and with it the planet, or don't burn it and have a huge recession.

Obvious other way- get together, shut off the river of ff and its production of crap, use those resources to go for solar and it's derivatives and


Most people hereabouts are depressed because Their Work is Meaningless/Harmful. If they had a great meaningful, moral, beneficial-to-all Crusade going on, the whole pile of them would be Much Happier.

Just my opinion, of course- and damn right opinion it is, too (my opinion).

PS, Sure, energy ain't the only big problem, we got population, food, environment, and so on. But energy is one of the big problems, which in fact isn't the problem at all! Just looks like a problem because we have our heads screwed on wrong.

Except for the CO2 I exhale all the time anyway I do not generate any greenhouse emissions when I play or jam on my acoustic guitar! Music, dance, theater, education are a lot of fun without destroying the planet!

And riding my bike is a lot more fun than any other way of traveling except perhaps for a scenic long distance Rail trip which invariably goes by woods, streams but also junkyards and factories you never see by Auto addicted travel!

My son is a musician. He consumes more energy than the rest of the family combined -on travel! It seems to be a very "ungreen" profession in practice.

Written by crazyv:
The presumption is that we going to have "come to Jesus" moment....

Another possibility is that the old timers will take the old ways with them to their graves while the younger generations, impoverished from low paying and insufficient jobs, adopt the new ways. Think about the transition from the horse to the automobile as the principal means of transportation.

Austria: 100 people/km2 of land
5766 people/km2 of water

If two thirds of the world's reserves become uneconomic according to the assertions in this article, then the remaining one third of reserves will more than triple in value. There will be no financial meltdown.

The report assumes that rationality will prevail

One of the worse assumptions you can make about humans. Well, actually, we are 'rational' in that we care about our own interests. We just don't give a hoot about our grandchildren. We either don't care or go in denial about it. The latter is quite popular.

Face it . . . in all likelihood people are just going to burn everything.


Do you have grandchildren? If yes, is it true that you don't care about them?
Based on your comments at TOD you don't seem to be in denial, so you are likely referring to other people besides yourself.

Personally, I don't have grandchidren, but I do have chidren and care very much about their future, I doubt I am the only one.

If that is correct and there are more than just a few people that care about more than just themselves, it is simply a matter of convincing others that things like peak fossil energy and climate change are real and that we need to change our ways.

It is correct that technological solutions will not allow BAU, but it will help to some small degree. We will also need to use fewer resources and use those resources as efficiently as possible.


Yes, I have a child. And I do think most people care about their children but not enough to overcome the changes people would need to make to make things sustainable.

But worse, I just don't think humans are built to understand and care about long-term things that affect people in the distant future. It is much easier for them to say "They've been whining about climate change for over 10 years now . . . nothing has happened! It is not real!". As a species, we just can't comprehend it and appreciate it enough to restrain ourselves from immediate gratifications of a big SUV and McMansion.

Just look at Fukushima. Japan's tsunamis were well known. There were ancient stone markers saying "Do not build below this line." But we build a bunch of nuclear plants right down near the water. Sure we put them a few tens of feet above the ocean but it wasn't enough for a big one. What went wrong? Well, we just didn't appreciate natural disasters that happen on a 300 to 500 year timescale. It most likely wouldn't happen during my lifetime so screw it . . . and that is what humanity thinks about climate change. And they are right . . it WON'T be a big deal during the lifetime of the people in elected offices and in power at big corporations. So why would they do anything about it?

And those people in power . . . well, even if you somehow managed to convince them that it is a real problem AND get them to care enough about their own children . . . well, they'll calculate that they are better off doing what they are doing and making a lot of money for their kids such that their kids will be rich and can deal with future problems using their money. The rich can buy their way out of trouble . . . it is the poor that are always screwed.

Wow an unexpected response. Do most people still think smoking is healthy?

How is that related? Part of the reason that people can rationalize in the way you suggest is that many are confused due to a great strategy by the same people that kept the cigarette companies profitable, now they work for the oil companies, pipeline companies, and coal companies. Maybe some day people will believe in science. I think those that understand the science are more likely to change their behavior.


Smoking has come down . . . but a lot of people still smoke. I'm sure you know some. And although it is down in the USA and parts of Europe, it is still very popular around the rest of the world.

And the same will apply with fossil fuels (and religion). The west may be able to reduce its fossil fuel usage . . . but like the cigarette makers (and the catholic church), fossil fuel usage will grow in the developing world. We all know how China and India are both massive coal burning monsters.

And with smoking . . . that is something that operates on a 20 to 30 year scale. We all know people who gotten cancer, emphysema, or died from smoking. Climate change works on time scale of 100's of years, so humans are oblivious to it.

I just don't have much faith in humans. It is the 21st century and we are still fighting over who has the cooler god. That is pathetic. But that is humanity.

On smoking, most of the people that smoke that I know, started when the dangers were still disputed. Once you start its notoriously difficult to quit.

A lot fewer people smoke today (in percentage terms) at least in the US.

I agree with your points on climate change, it will be a harder sell, but if we can at least get educated people to agree, we might have a shot.

In addition peak fossil fuels will eventually occur and the solution to two major problems are complementary.

I do not think that the necessary changes are easy or likely, they are necessary.

I clearly have much more faith in humans than you (or most on TOD). Without that faith I would be quite depressed. Your view is likely more realistic.


I clearly have much more faith in humans than you (or most on TOD). Without that faith I would be quite depressed. Your view is likely more realistic.

You're being more realistic. TOD tends to be too pessimistic. It makes it an interesting source of skepticism towards "BAU", but you have to screen out the pessimism as you read.

Gwynne Dyer is male. Canadian.

Peak oil is dead, The fallacy of ‘Peak Oil’ theory, Peak oil theory debunked . . . . yet the price of oil remains high. Actions speak louder than words.

"Don't tell me what you value.. Show me your BUDGET, and I'll tell YOU what you value."

I heard Biden offering up this well-used trope on C-SPAN this morning, and I happen to think it's a good one so I don't really tire of it.. As you point out there, so many people are crazy about money, but they don't necessarily let the numbers tell them any truths from it.. so the price under current conditions doesn't seem to be ringing their bells. ..ach, mensch!

we always think that we are the only ones that can see the problems-----peak oil...limits to growth etc...but what if the people that are in power can see this too...what do you think they would do? It is a scary proposition because they are already doing it.If the masses thought we were running out of oil coupled with economic slowdown I think you would have a lot of panic... and that is not what you want right now...like angry bees you need to lull them back to sleep keep shopping everything is just fine...

Just found this, it is very interesting: 2013 U.S. Geological Survey Petroleum Resource Assessment of the Bakken and Three Forks Formations

It is a very large PDF Slide Presentation so I am unable to copy and paste from it. It has the total assessment of probable production of the Bakken and Three Forks and it even maps out the "sweet spots". It also has a U.S. Map of all other possible shale oil plays in the U.S. The Williston Basin (Bakken - Three Forks) is by far the largest.

Ron P.


Thanks for that link, I had not read that study yet. Near the end of that presentation (slide 18 of 20) the USGS breaks out the mean contribution from Montana, North Dakota, and South Dakota. About 7.4 billion barrels of oil (BBO) is technically recoverable in the Bakken/Three Forks in all three states, 5.8 BBO is in the North Dakota Bakken/Three Forks or 78.6 % of the total. At the 5 % probability level the North Dakota estimate is 9 BBO (I got this by taking the 11.4 BBO estimate for the entire Williston Basin (at the 5 % probability level) and multiplied by the 78.55 % contibution from North Dakota.

If the USGS assesment is accurate, this indicates that the well profile used by Rune Likvern in his recent presentation may be too high. When I use the well profile presented by Mr Likvern and assume reasonable levels of decrease in average well productivity over time ( say 12.5 % per year starting in 2015) then total output from the Williston Basin in North Dakota ends up at 14 BBO from 1953 to 2073.

My well profile also is a little high and results in 8.6 BBO from 1953 to 2073 for the North Dakota Bakken/Three Forks. Both of theses scenarios assume 42500 wells are drilled by 2028 starting with 1800 wells per year through 2015 and increasing to 3000 wells per year by 2025.

By slowing the ramp up to a maximum of 2640 wells added per year by 2022 (39000 total wells drilled) and having well productivity decrease more quickly (by 80 % by 2022 vs 56 % in previous scenario) total output falls to 6.3 BBO from 1953 to 2073, fairly close to the USGS mean estimate of 5.8 BBO. Using the above scenario with the higher well profile in Mr Likvern's analysis gives 10.4 BBO from 1953 to 2073 from the Bakken/ Three Forks.

Note that a decrease in well productivity means that the 30 year EUR of new wells is in year x is lower than wells drilled in year y (where y>x), so if well productivity is 300 kb for the 30 year EUR in 2013, an 80 % decrease in productivity for wells being drilled in 2022 suggests a 30 year EUR of 60 kb for the wells drilled in 2022.



What oil price would make a well with an EUR of 60 kb profitable?


Well if they can get their cost down to a hoped for 8 million dollars per well then their break even point would be about $135 a barrel for a 60 kb well.

Well costs for Bakken producers beginning to abate?

However, in its latest press release Continental noted, “Continental also achieved progress in reducing average drilling and completion costs per well in the fourth quarter of 2012… Continental recently completed its six-well Florida-Alpha project for $46.8 million, or less than $8 million per well. This compares with an average ECO-Pad® well cost of $8.5 million per well in 2012, as disclosed at Continental’s Investors Day in October 2012… Pad drilling is the future for full-field development, and, given our transition to more pads, we are on track to meet our goal of reducing average operated well costs in the Bakken to $8.2 million per well by year-end 2013, a reduction of $1 million per well in early 2012.”

2013.02.28 - CLR Bakken Well Costs

Ron P.

Ron, thanks!

$135/bbl that is for recovering the cost (CAPEX) of the well (just to keep it simple let us here deal with undiscounted values).
OPEX may come in at around $5/bbl.
Taxes and royalties at 25% (of gross) and estimated at the wellhead brings the break even cost to $185/bbl (or thereabout), then add $15/bbl (or thereabout) to bring the oil to the refinery and you are looking at unit costs in the area of $200/bbl.

So when will consumers be prepared to pay $200/bbl?


I don't get it. If they need $200/barrel to produce this oil, then why have they been producing it since 2008?

We are discussing a situation with a well having an EUR of 60 kb.

Most wells now have an EUR around 400 kb, that makes some difference.

Rune, one thing I forgot. That figure of $135, as well as your $200 a barrel, was over a 30 year period. Now who, or what company, is willing to wait 30 years for their investment to break even.

Basically, in my opinion, it comes down to what percentage of their investment can be recovered in the first three years, or five years at the most. Once first year production drops below 200 barrels per day, it's all over.

We actually might be pretty close to that figure right now. Average barrels per well in the Bakken is right now 135 barrels per day. Of course that is for all wells, not one year old wells. But 60 percent of all Bakken wells are less than 2 years old. Those Bakken well drillers are today, still profitable, but they are not making a lot of money. If production per well falls very much, or the price of oil drops by very much, then it's all over.

Ron P.

Any oil company in the business of oil/gas extraction is there to make a financial profit.

No one would now drill a well as discussed here (EUR of 60 kb). When companies decide to drill a well they have some informed expectations about what the well will produce. They will from these expectations make Net Present Value (NPV) estimates and Internal Rate of Return (IRR) and will start drilling their wells, starting with the one having the highest NPV (provided they hold the acreage by production). The most profitable wells are not necessarily those with the highest EUR.

To illustrate this and for what it is worth; for the well with an EUR of 60 kb and assuming a return of 7%, total well cost of $8M, a company would likely not consider to drill it before the oil price was around an estimated $310/bbl. A higher rate of return increases the price.

Wait . . . they trademarked their new fracking technology "ECO-Pad®"?

That has got to be a new low (or high?) in greenwashing.

It's not a fracking technology, I think, but just their particular padsite layout. It's always cheaper to drill on a pad than to drill independent wells. I assume they call it "eco" because the land impact is much less -- fewer roads, less well-site area, fewer pits and ponds, less pipeline disruption, etc. It's a spin name, but there is a good bit of truth.

I'm not quite sure why, but oil drillers tend to use fewer and smaller pads than gas drillers. If you have 12 gas wells on a pad, a walking rig will punch holes just a few feet apart (maybe 20?). If you have to dismantle and move a well to another site, you significantly increase the downtime and the site prep effort.

It produces ECO-freedom oil for my Ford ECO-boost engine. /sarc

Hi Rune,

That is an excellent question. I have assumed that the real oil price will rise enough to make the wells profitable at a breakeven level. This may not be realistic, I agree. The point of the excercise is to find out how much is it possible to produce if prices rise enough to make it possible, to find the upper bound of output so to speak.

To take a stab at actually answering your question, I will make some simplifying assumptions (which are also likely to be unrealistic, but I am hoping you will correct my mistakes).

First lets assume average wells cost 8 million to bring online (drilling and fracking costs)and that the breakeven for the average well is $80/barrel. I will also assume that only the first 5 years of output will be considered to reach breakeven. The Jan 2013 average well in my model has a 5 year EUR of 191.5 kb which generates $15.32 Million over 5 years at $80/barrel. As this is a breakeven calculation, other costs besides the cost of drilling and fracking the well must be $7.32 million. As well productivity decreases the breakeven oil price must rise. A final simplifying assumption is that the rise in energy costs due to rising oil prices will be offset by improved efficiency in operations (including drilling and fracking operations) so that in real (inflation adjusted) dollars the $15.32 million (in 2013 $) will remain fixed. This last assumption is the most problematic and these breakeven oil price estimates are likely on the low side.

Under these assumptions, in April 2022 the 5 year EUR of the "average well" has fallen to 38.156 kb and to generate the $15.32 in revenue to reach breakeven the real breakeven price per barrel is $401.5 (in 2013 $).

This number may seem absurd, but keep in mind that real oil prices rose from $17/barrel in 1998 to $100/barrel in 2008 (april 2013 $), so a quadrupling in price in 9 years is possible especially if peak oil becomes obvious to all but the most skeptical by 2022.

Just for kicks, I looked at breakeven prices out to Dec 2028 where (same assumptions as above) they reach $1829/barrel (2013 $). I am not suggesting prices will reach this level ( demand would decrease or the economy would crash, likely both). For anyone interested, starting in Dec 2023 the breakeven oil price in 2013 $ each Dec is 584, 739, 918, 1163, and 1444 in Dec 2027. These estimates are likely on the low side because my simplifying assumptions would be far off in the out years.

My guess is that if the decrease in well productivity is as steep as I have assumed that production would be unprofitable by at least Dec 2023 because I do not forsee the real oil price breaching $600/barrel.

Would anyone else like to venture a guess as to how high real oil prices can rise?


...the real breakeven price per barrel is $401.5 (in 2013 $).

This number may seem absurd, but keep in mind that real oil prices rose from $17/barrel in 1998 to $100/barrel in 2008 (april 2013 $), so a quadrupling in price in 9 years is possible...

No DC it just doesn't work like that. Because the price quadrupled in 9 years doesn't mean prices can quadruple again, which would mean it would it would reach a figure of 16 times the original price.

The collapse in 2008 was largely caused by oil prices going above $140 a barrel. The recession continues today in many parts of the world because oil prices remain above $100 a barrel. Higher prices would deepen the recession, dropping demand and dropping the price of oil with it. Last time prices dropped from $147 a barrel to below $40 a barrel.

I don't know at what point prices would trigger a sudden deepening of the recession but I doubt they could go much over $150 a barrel. Parts of Europe are currently on the cusp of collapse right now. $150 a barrel oil would likely tip them over. And others would likely fall like a row of dominoes.

Or perhaps I am wrong. Perhaps prices could go to $175 before causing a collapse of some economies. But the point is the higher prices go the worse the economies of nations get. That kills demand and prices collapse.

Ron P.

Hi Ron,

Mostly I agree that $400/barrel in 2013 $ by 2022 is unlikely. My point is that the annual average oil price has stayed at around $90/barrel from 2008 to 2012, in the four year period a decade earlier(1998 to 2002) it was about $28/barrel (real prices in April 2013 $). Prices tripled and it was not TEOTWAWKI (the end of the world as we know it).

If we remain on a plateau for C+C at around 75-76 MMb/d for say 5-10 years, and the world economy continues to grow at 3-4 % per year, would you expect prices to rise? A rise of 10 % /year in real oil prices for 9 years gets us to $266/barrel (from $102.5/barrel in 2012)in 2022.

Also note that for my scenario with a less rapid decrease in well productivity and taking account of breakeven price we get 7.1 BBO from 1953 to 2073.

This assumes a 7 % rise in real oil prices per year ($216/ barrel by 2023) so that breakeven is reached by year end 2023 at which point new wells added ramp down quickly to zero in Nov 2025 from 2000 new wells/year in 2023. Total wells producing in this scenario are 28,335 wells from 2026 with no further increases.

The scenario with a more rapid decrease in well productivity under the same oil price assumptions as above reaches breakeven in 2017 at about $147/barrel. Wells per year briefly reach 1985 wells/a in 2017 (from 1800 wells/a in 2015) and then ramp down to zero in Nov 2019 due to low well productivity relative to oil price. Total wells producing only reaches 16321 in Nov 2019 and total output is 4.9 BBO from 1953 to 2073. These two scenarios bracket the USGS mean estimate of 5.8 BBO for the North Dakota portion of the Bakken/Three Forks play.

Economics below (essentially a summary of Krugman's views as I understand them):

I realize that many here at TOD thik the rise in oil prices caused the great recession, I believe that the primary cause was a financial collapse which had as its root cause, a lack of regulation of financial markets, particularly home mortgages.

In a normal recession, monetary policy can be used quite effectively to get the economy moving, currently with short term interest rates at zero only fiscal policy is an effective means to get the economy close to full employment without waiting for a long time.

Unfortunately the economics profession has forgotten what it had learned about macroeconomics during the Great Depression. Any college student that has taken (and understood) introductory macroeconomics could have done a better job than the politicians in the US and much of Europe. "Expansionary austerity" is a recipe for a stagnant economy.

For all those that think that government debt is such a terrible thing, have you ever owned a home? Did you pay cash? If there is ever a time when government deficits are appropriate, wouldn't it be when there is a high level of unemployment? Note that government spending only crowds out private investment when the economy is close to full employment, the time for government austerity is during an economic boom, not when the economy is barely growing.

It is likely that the beatings will continue until morale improves.


If we remain on a plateau for C+C at around 75-76 MMb/d for say 5-10 years, and the world economy continues to grow at 3-4 % per year, would you expect prices to rise? A rise of 10 % /year in real oil prices for 9 years gets us to $266/barrel (from $102.5/barrel in 2012)in 2022.

A 10% rise in real world oil prices, meaning 10% above the rate of inflation, cannot possibly be sustained by many world economies, especially those in the Eurozone that are teetering on the edge right now. You are multiplying oil prices by 2.5 times. Increasing the price slowly does not make it any easier on the economy.

But there is one thing you are forgetting. The number of wells being added each month in the Bakken, (new wells minus wells shut down), averaged about 630 per year right up until the surge began in July 2011. But since then additional wells have averaged 1710 per year. Again, a lot more wells than that were drilled but I estimate that at least 250 wells per year have been shut down since the surge began.

But the point is, almost the entire Bakken has already been drilled. Now they have decided that they can place the wells even closer together than the two square mile average. Go to my link above of the: National Geographic map of the Bakken Then look at areas marked 2, the Sanish field and 3, the Parshall field. These two were the sweetest of the sweet spots. The chart below only goes through 2011. It has undergone considerable decline in the 16 months since then. Notice the decline began only about 1 year before the end of data for this chart.

 photo SpanishParshallField_zps48eaa03a.jpg

The point is, drilling between the already drilled plots, which everyone in the Bakken is doing today, must eventually cause a steep decline. I think you are estimating way, way too many wells.

I understand that you think the price of oil had little to do with the recession and continues to have little effect on the ongoing recession which is really deep in some parts of Europe. Otherwise you could not possibly believe that multiplying today's price by 2.5, after inflation, would not crash the economy. I think that is pure rationalization on your part.

Ron P.

Hi Ron,

I agree that the oil price has an effect, I just think it is more complicated than oil prices rise and the economy crashes. I think two problems arose in tandem, the financial crisis and the rise in oil prices. I agree that the current oil plateau puts a strain on the economy due to the rising prices, in fact because the 10 % rise per year resulted in such a high price, I used a lower rise of 7 % in my scenarios which results in $175 in 2013 $ in 7 years.

I believe you had suggested $175 as a possible upper limit, but you may have meant over a longer time frame or in nominal $.

I agree that at some point the high oil prices will either crash the economy or cause people to adjust there behavior (smaller cars, hybrids, carpooling, move closer to work, take public transit, demand more public transit be constructed). I do think that how long it takes for prices to rise makes a difference. Lets say prices rise to $200/barrel over 27 years vs 9 years, you don't think an economy would have a better chance to adjust if it had 3 times as much time to change behavior?

Keep in mind that when I say if x, then y, does not mean that I believe that x is likely. I agree that there will be great difficulty adjusting to higher oil prices. By economic crash, I envision more of a Mad Max scenario (minus the fuel), not just a recession, the scene we have witnessed since 2009 will seem a blip by comparison.

A big part of the problem in Europe is the Euro, without it, countries with their own currency (Iceland comes to mind) could take steps to get their economy going. The other problem for the US and the UK is that the economic policy response to the recession has been very poor. The US tried a stimulus policy that was too timid and did not get the job done and now has decided that austerity is a good idea. The UK turned to austerity in 2010 and the result has been anemic growth.

Also keep in mind that Europe already has relatively high fuel taxes (compared with the US). To create an artificial example lets say US gasoline prices are $4/ gallon and in Europe they are $8/ gallon. If we assume $4/gallon of the European price is a fuel tax, then a doubling of oil prices would double US prices to $8/gallon, but European prices would rise to $12, if the fuel tax remains at $4/gallon. In the US a 100 % rise in price vs a 50 % rise in Europe.

On the Bakken, you think 16,000 wells is too high? Your estimate of 250 wells per year being shut down since the surge began might be correct for all of North Dakota, but I am only concerned with the Bakken/Three Forks where most of the oil is currently produced. Over the period from 1993 to 2004, there was a decrease in the number of producing wells from 256 to 189 or a total of about 67 wells. Producing wells in the Bakken increased from 67 in 1984 to 256 in 1993, an increase of 189 wells, then the 68 wells already producing in 1984 were shut down from 1993 to 2004. This leaves the 189 producing wells in late 2004, 157 of these started producing after 1988 (99 producing wells in Dec 1988). The other 31 started production between 1984 and 1988, if we assume these 188 wells only will produce for 20 years then 31 would shut down between 2004 and 2008, the rest would shut down between 2009 and 2013. So between 2005 and 2008 about 10 wells per year would be shut in and between 2009 and 2013 about 31 to 32 wells would be shut down per year or between 2 and 3 per month.

Bottom line, 189 producing wells in Dec 2004, most (about 158 wells) of these were likely shut down by Dec 2012, if each well lasts on average 20 years, if they last 30 years they will all be shut in by 2023. The newer wells added since Jan 2005 are unlikely to shut down before 2025. If we simply assume all 189 wells producing in Dec 2004 are shut down by Dec 2012, that would be about 23 wells per year or 2 per month. If we assume they are all shut down by 2022 that would be about 11 per year (if spread equally). We don't have specific numbers on new wells we can only guess based on number of producing wells and make assumptions about how long the average well lasts.


Your estimate of 250 wells per year being shut down since the surge began might be correct for all of North Dakota, but I am only concerned with the Bakken/Three Forks where most of the oil is currently produced.

I have reasons to believe that an awful lot of wells shut in in the Bakken were shut in since the surge. If you look at the yellow dots on the National Geographic map my link provided, you will see literally hundreds of yellow dots out in the tight oil area of the Bakken. Th surge in the Sanish-Parshall area in 2008 but it was in July 2011 before the surge started in the rest of the Bakken. And there are hundreds of yellow dots, that is dry holes or shut in wells, that have been shut in since July of 2011. That is easily 250 per year.

Before the tight oil plays there were still lots of wells in the Bakken, but they were conventional wells along the anticlines. There are still a few there but most are shut down.

DC, if only North Dakota would publish the number of wells shut in and why then we would have a better handle on things. I do believe that the vast majority of wells shut in each month are in the Bakken because that is where the vast majority of the wells are and where they are drilled each month. And it is not correct to talk about the average well lasting 20 or 30 years. That is a very long time for a tight oil well. After about 5 years they become like stripper wells. But some wells start out as dry holes or very near so. Search: Chesapeake Drills Unsuccessful Wells in Southwest ND

Chesapeake's attempt to find the southern edge of the Bakken, is being described as the largest failure in drilling in the state since the 1980's.

There are a few well sites in western North Dakota that look more like ghost towns than multi-million dollar holes.

Chesapeake secured leases in a large part of the state, south of I-94.

They drilled 8 wells, only 3 produced oil -- but at minimal amounts.

So little that all holes have been shut in.

Director of Mineral Resources for the state of North Dakota, Lynn Helms, says "geologically, there were some surprises. We knew that there wouldn't be any lower Bakken Shale in that area. What surprised us was to find out there's no upper Bakken Shale in that area."

They are running out of places to drill and they are drilling a lot of dry holes. The Bakken is just not as big as they thought it was. And that is about the extent of my knowledge of the Bakken. All I can do is follow the data. But the data tells us a lot. Barrels per well has dropped from 144 in June to 130 in January. In January there were 115 additional wells in the Bakken yet barrels per day dropped by 31,402. But with 170 new wells drilled in January and a 150 well increase production was up 41,580 barrels per day and barrels per well was up to 135.

Ron P.

DC, thanks for your efforts and sharing!

Presently I would not bet on how the future oil price (as expressed in $ 2013) will develop, but recent developments in petroleum consumption for OECD countries suggests we are at limits for affordability for consumers. Consumers unable to add more credit is responding to the higher price with lowered (petroleum) consumption. It turns out oil consumption is far more elastic than previously thought.

To me the 1 600 lb GORILLA I suspect most people are missing is the use of debt during the last 3 decades (creditism, as one of my friends refers to it).

This allowed consumers to negate growth in oil prices and entertain some growth in consumption. To meet this demand the oil companies also took on more debt (leveraged up), and now they are approaching debt saturation; their debt overhang represents a uncomfortable risk and at the same time they (on aggregate) have had little success in growing supplies. One way to look on this is that the oil companies leveraged as a response to the private and public (debt) leverage.

Now private and public are trying to deleverage, but are not succeeding as it happens too slow…public have only managed to reduce their deficits and still have contracting economies (in real terms).

Affordability for higher priced oil was based upon growing debt, this game has come to an end and gradually things will change…or it could happen suddenly.

Another thing to watch is companies’ debt leverage and how much remaining capacity they have to take upon themselves more debt.
Further, development in companies net cash flows.

Just my 2 freshly printed. ;-)


For what it is worth.

What if you tried simulations with say two different oil prices (say $80/bbl and $120/bbl) and as the wells became unprofitable no more wells were added.

A possible scenario is that all the wells that now are expected to be profitable will be drilled. As drilling moves to the periphery of the sweet spots, wells will become unprofitable without (and primarily) a considerable growth in the oil price.

A possible scenario is that all the wells that now are expected to be profitable will be drilled, then if the oil price is not high enough, follows a slow down in drilling until the price again allows for more drilling.


I ran a basic "Bakken Sample" well through our economic engine using some simple assumptions, and $200/bbl oil would be marginally profitable:

Production - starts 2013-1 at 300 bpd, final rate = 20 bpd, volume = 60kb which means initial decline is 82% (well life of 1.6 years). no associated gas.
Price - $200/bbl flat across every year
Interests - 100% WI, 87.5% NRI
Opcost - $5/bbl, nothing else
Capital - $5MM intangible drilling costs, $3MM tangible drilling costs
Tax - standard 36% federal + ND tax

Results: ROR = 45%, NPV = $392 @ 10% disc rate

Breakeven: $187 flat price.

Hello and thank you!

Let me see if I understand your assumptions right; Your well produces 60 kb over a period of 1.6 years?

If 60 kb was produced over 30 years, how would your break even come out?

DC, thanks for the update. I really think 42,500 wells by 2028 is overly optimistic. I think that wells per year will decrease in the coming years rather than increase. You notice that the 7.4 billion barrels of oil are "undiscovered technically recoverable resources". The "technically recoverable" is the trick phrase. Technically recoverable could mean that most of it will not be recovered because of economics. That is, the barrels per well may drop considerably as they move further and further away from the sweet spots and technically recoverable oil will just be left in the ground.

But one other thing the survey brought out. The USGS says there are 13 billion barrels of "undiscovered technically recoverable (tight) oil in the US. Of that 13 billion barrels, 7.4 billion barrels, or 57 percent, of all the tight oil in the US are in the Williston Basin (Bakken-Three Forks).

That has to be a severe blow to those who believe the US will soon be the new Saudi Arabia and will become a major oil exporter. I have heard these guys toss around numbers like "Over 20 fields with over 20 billion barrels of reserves each." The next time I read something like that I will just say, "Oh yeah, well here's what the USGS has to say about that."

Ron P.

Hi Ron,

I agree that wells added per year will eventually decrease, in my scenarios they stop abruptly in Nov 2028 (this is arbitrary, I just stopped adding lines to my spreadsheet at that point.) I used the presentations at NDIC and Rune Likvern's enlightening presentations as my guide. At NDIC they predict 39,000 to 44,000 total wells so I aimed for the midpoint and missed (1000 wells high, it should have been 41,500). So the aim was to show that even if we drill that many wells there will only be 8.5 BBO.

I do think the wells added per year may increase from 1800 to 2000 wells/year for a few years, maybe to 2017 or even out to 2020 depending on well productivity and oil price and well costs. As Rune points out a lot will depend on oil prices. What would your guess be as to total number of wells in the Bakken/ Three Forks of North Dakota?


In February there were 5,312 wells in the Bakken/Three Forks area. That was 1,818 above the figure for February 2012. I would expect the number of wells per year to decrease, not increase. After all, there was a race to gobble up all the best of the sweet spots and now that race is about over.

Now 1,818 was not the number of new wells drilled during that 12 month period. That is the number of new wells minus the number of wells shut in. And there were a lot of wells shut in. I don't have that number because North Dakota does not publish that number.

But if you go here; National Geographic map of the Bakken All the yellow dots on this map are "Inactive, dry or abandoned wells". They are hard to see but if you notice there are several hundred of these yellow dots, perhaps a thousand or more. True, many of them are along the anticlines, which means they are conventional wells that have been shut down because the conventional oil has just petered out. But many of them are out in the tight oil area of the Bakken. This means that they are currently drilling a lot of dry holes or short term producing wells.

So I think total wells in the Bakken are approaching the half way point. So my guess is there will be no more than about 12,000 producing wells in the Bakken at its peak.

Ron P.

DC is being modest here. From my read of the report, he absolutely nailed it by reproducing the USGS estimate of 7 billion barrels for the current coverage of the Bakken. Check it out:

The USGS is essentially adding another 7 billion barrels by speculating on "undiscovered" oil in adjacent formations of the Bakken and Three Forks.

Hi WebHubbleTelescope,


I think the USGS estimated 5.8 BBO for North Dakota Bakken/Three Forks and 7.3 BBO for the entire US Portion of the Bakken/Three Forks, so my estimate was a little on the high side. It could be that a well profile with a thinner tail or a more rapid decrease in well productivity would match better.


Nice overall view of Bakken. I'd say "all other possible" is a bit of a stretch, as exploration continues, and there are multiple plays with significant activity NOT on that map, and some that are there are way low. No way that Permian has only .5B left, even just of shale alone.

Are are saying that the USGS has done a complete about face? That they have gone from massively overestimating reserves to massively underestimating reserves? I wonder why they would do that?

Ron P.



I am not sure about the Permian basin (I haven't really researched it).

I agree that USGS has probably underestimated the potential of the Eagle Ford Play. The play is about 20,000 sq miles and roughly 60 % of the area is the liquids part of the play so 12,000 square miles. The Bakken in North Dakota is about 15,000 sq mi and the NDIC assumes about 45,000 wells will be drilled(3 wells per sq mi).

If we assume these numbers are valid for the Eagle Ford play (a pretty big if), we get 36,000 wells eventually producing in the EFS (Eagle Ford Shale).
We could further assume that the 30 year EUR of the average EFS well is similar to the 311 kb of the average Bakken well, this would result in about 11 BBO in the EFS. Note however that for the Bakken we get 14 BBO by using a similar calculation, but realistic scenarios give 5 to 7 BBO for the Bakken.

So a reasonable approximation for the EFS is 4 to 5.5 BBO. The USGS seems to have estimated about 1.73 BBO for the EFS, it may do a future reassessment where this rises.

The other plays may not amount to much, it depends in part on oil prices, time will tell, but my guess is that the oil companies are focusing on the best prospects first and so far these are mostly the Bakken/Three Forks and EFS.


I find is interesting that although likely most people on this site think it would be better to use/burn less resources than more, if it hadn't been for the fact that our ancestors burnt every tree, lump of coal and oil/gas they could get their hands on chances are that our current situation would be quite different, and not necessarily better in all aspects. Perhaps is our foremothers and fathers had not turned the earth inside out to the best of their ability the "interweb" would not exist and the exchange of ideas/data/views - like here on TOD - would be a fraction of what it is now.
There seems to be a move to extremes to some extend. On the one hand we deplete and poison the earth as fast as we can yet on the other hand the awareness that we are doing so also seems to be increasing.
Do we need to do bad to become good?


Don't get me wrong, I love the internet and TOD, but I'm not convinced this Information Age is necessarily better. It seems to have led to further fractioning of society, with more and more self-selected groups intolerant (or ignorant) of other groups. You can spend your entire time on the internet feeding your confirmation bias.

Society is now so fractured that "anything goes" while at the same time no one can agree on anything, and change or reform becomes impossible (witness the US Congress). Societies values, goals, and mores have been overwhelmed by opinions and there is no center to hold.

We can argue over which is better, everyone reading the same newspaper every day, or everyone reading separate sites on the internet, but it looks to me like the information age is fomenting dissent and discord at a time when society at large needs to pull together.

It seems to me that people in other times and places have been quite able to think and share ideas without the internet. This looks like the technological version of Greer's religion of progress description. The internet can be a fantastic tool for people to share ideas, but that is just a tiny fraction of what it is used for (the majority being of no value). I think mostly it just changes who is able to be involved in the discussion, (partially) removing the restraint of needing to be physically present.

I have put a fair amount of thought and effort into the many words I have typed here on TOD in the last 7 years - I suspect this has had very little impact on the present, nor will it have much impact on the future. It remains to be seen if this type of conversation is important or not. I believe there will still be a few leading voices who make the difference, and that the majority of any impact they have will be from actual meetings of people in a low tech way.

people in other times and places have been quite able to think and share ideas without the internet

Well, sure, but they had to do it with the people around them. Now, you don't have to talk to your neighbor or anyone else around you and you can still find and socialize with a group that holds whatever wacky opinion you want.

My larger point was that the internet is not bringing people together, it is splitting them apart. It may be leading to new paradigms, but it's leading to so many of them as to be more or less useless for the purposes of moving society toward any specific goals.

Successful societies have a common vision, a common language, a common world-view. I would argue that being a part of such a society was more rewarding than having a million websites to choose from. Not to mention the time involved and the stress induced by being constantly "plugged in".

Well, in general I agree, although I'm wondering if it mostly just doesn't have much real effect at all. And that common vision and sense of purpose is a characteristic of societies on the rise, not of ones who have past their peak and are heading for collapse.

common vision and sense of purpose is a characteristic of societies on the rise, not of ones who have past their peak and are heading for collapse

Bingo. So, who's happier? People living during the rise, or during the fall?

As to it having no real effect, I'm not so sure. It seems like the divide and conquer strategy has splintered us into small, ineffective politcal groupings and the internet just makes it that much easier and speeds it up. Maybe if we weren't chatting here together, we would be chatting with someone face to face and building real social capital and not virtual social capital. Maybe we would be happier.

My larger point was that the internet is not bringing people together, it is splitting them apart. It may be leading to new paradigms, but it's leading to so many of them as to be more or less useless for the purposes of moving society toward any specific goals.

Couldn't disagree more! Case in point while the Solar Impulse was about 2 hours from landing I was logged in to a live chat with their control center as were people from every nationality from all over the world. Yeah there was one troll cracking stupid jokes but the vast majority of the people were interested in the flight and what solar could do do benefit society today. The airplane was a living tutorial in alternative energy management. Specifically on how to do more with much less!

At one point I specifically asked if they could bring the cockpit instrumentation to full screen view and a second later they had complied and many chatters chimed in to say thank you.

I think everyone logged in to the chat had a common vision, a common language, a common world-view despite being from all over the globe. Sure we could have been gripping about the Kardashians on Facebook or commenting on some idiocy over at Faux News, instead we were gathered in this spot to learn and talk to each other and share our vision!

Yes, it feels good to chat among your peers in a self-selected group. TOD is a great example. But while you were entrenching the group's vision and world view, what percent of internet users would you say were there? Even one percent?

Compare that to the beginnings of mass media when there was maybe one or two choices total. If they were talking about Solar Impulse then everyone was listening to talk about Solar Impulse. You could bring it up to a neighbor or co-worker the next day and they would know what you were talking about. While your group was bonding over solar flight, hundreds or thousands of other groups were bonding over gun control or immigration reform or some celebrity. The effect on society is everyone going off in different directions.

Yes, it feels good to chat among your peers in a self-selected group. TOD is a great example. But while you were entrenching the group's vision and world view, what percent of internet users would you say were there? Even one percent?

Fair point, however Solar Impulse is flying across the US and is figuring prominently on MSM for the rest of the month. It's been all over the news. The whole point is to engage as many people from all walks of life in the discussion about changing our energy use paradigm.

To be clear I am not naive about the difficulties associated with changing our paradigm!

BTW this is NOT about solar flight. That just happens to be the vehicle for the message...

What, precisely is that message?

provokes discussions amongst the highest political and economic authorities about technological solutions currently available to help them achieve the world’s agreed CO2 reduction targets.

The word "help" gives an out, as I suppose anything can contribute a little and I would surely support any effort in this direction, but I guess my problem is that I don't believe there are technological solutions currently or foreseeably available are going to do the trick, or even come close. I think we need to move away from placing our hopes on technology to save us. I also don't think we will, so it's a moot point.

While the technology in the solar plane is pushing some sort of limit, it is still a long way from a Piper Cub in speed and load carrying capacity. As such, the message on the receiving end of the MSM might not be so great. We know how to do lots of ways to improve efficiency and to take advantage of available renewable energy sources, yet, most people are still buying and driving gas guzzling SUV's and pickups. And, the MSM keeps pumping out all those stories and advertisements telling folks that there's a lifetime of oil and gas out there for us to use (waste) as we see fit.

Somehow, at some point, there's got to be a change in attitude on the part of almost everybody out there on the road and flying in those jet planes. Sorry to say, I don't see that happening any time soon, especially in the US. Dreaming about some utopian future is great, but where's the motivation to get there?

E. Swanson

While the technology in the solar plane is pushing some sort of limit, it is still a long way from a Piper Cub in speed and load carrying capacity.

That is missing the point.

“Our airplane is not designed to carry passengers, but to carry a message.” Bertrand Piccard

Obviously that message is not yet getting through to most!

I think you miss the message most will get from such stunts, which really don't demonstrate anything useful directly - that message is: "Technology will save us and we won't have to change or sacrifice." That may not be the message intended, but it doesn't matter.

I think you miss the message most will get from such stunts, which really don't demonstrate anything useful directly - that message is: "Technology will save us and we won't have to change or sacrifice."

You'll have to take that up with the Solar Impulse team. I'm pretty sure they would strongly disagree.
Couple points though:
1) this is not a stunt! Very far from it.
2) it is demonstrating in real time how alternative energy can be managed to achieve useful goals.
3) the message is most definitely NOT that technology will save us!

The other Pilot's message BTW is:

“From the very start of the project, we understood that our primary goal was to save energy.” André Borschberg

The message is about paradigm change. I know hard it is to accept that.

As I said, the message received may not be message intended. They will read the headline, they will hear "solar powered airplane", and that is all the attention it will get. It will go in there to be mixed up with EVs, smart grid, new oil extraction technology, the US is becoming the "New Saudi Arabia", etc. All of which means good times can continue.

It is a stunt . . . a fun techno-geek stunt.

And people won't draw logical conclusions from it. Some idiots will think we'll be able to build solar planes in the future . . . even though the team says otherwise. The important message to get out about solar PV is that it is cheap now and that message won't get out because who knows what they paid. A more subtle message that would be nice to get out is how good Li-Ion batteries are these days in that they can be put into a light-weight plane and fly it. If we can build EV planes then surely we can build EV cars. But I don't think people will be smart enough to get that.

Most purchases are made because of the emotional value of the product, not the utility. So if this "stunt" makes PV cool, then more people will consider it. Maybe in a few years they will be demanding plugin vehicles, which also charge from PV on the roof and hood.

"Most purchases are made because of the emotional value of the product, not the utility."

You sure have that right.

"...which also charge from PV on the roof and hood."

Consider a Leaf-like vehicle and the size of a 225W panel - you might be able to squeeze maybe 600 Watts of PV on there. If you parked in the sun at the optimal angle during the best part of the day you're going to get something like 2,700 Wh out of it. Which at 270 Wh/mi is 10 miles. That's at amazing optimum levels. Park on a flat spot, or in the shade, or in a garage, or at and angle on a north facing slope and you're doomed. The little panel you can get the Prius with is a nice compromise (though absurdly expensive) - it keeps the car ventilated when it's hot - and it only gets hot in the sun, so a rather nice synchronicity there particularly if you live somewhere really hot.

Here's an attractive system for the Prius that makes 1,200 Wh/day: http://www.solarelectricalvehicles.com/

Figures I'm digging up show the Prius uses about 250Wh/mi (which struck me as a little low, but the CdA is 5.84 compared to 6.84 of the Leaf) so that would mean a gain of 4.8 miles (if left directly in the sun).

So...I guess there are situations where it looks like this could be at least somewhat practical and it would serve as a nice conversation piece and rolling billboard for PV (and probably better than a single-person plane that can't get wet). Also if you live in an apartment and want to PV something - this would give you something.

A question: I've seen published data on drag coefficients for cars, but haven't run across data for CdA. I know that one might simply do the math, but finding frontal area for older cars might be difficult. If you have a link to such data, I would appreciate your posting it. Also, I've been interested in the net impact of those so-called "spoilers" which one finds on more sporty cars these days. I've removed one from an older car I recently began to drive and think that the drag coefficient is lower and the MPGs have increased...

E. Swanson

These are the numbers that I found: http://ecomodder.com/wiki/index.php/Vehicle_Coefficient_of_Drag_List

Spoilers...hard to say. If you were feeling frisky you could do some tuft testing and see if there's more or less stagnation/backflow with or without the spoiler. You'd be looking to see if the air is remaining attached and to what point it's remaining attached. It doesn't necessarily have to be laminar, but if it is buffeting like mad and curling back on itself it'd be a pretty good sign of drag. A small spoiler can keep flow attached and provide a clean break, but if it's separated from the trunk lid and huge it's likely designed by the art department and not engineering.


Yes, Fred, I agree with everything you're saying and I'm not trying rain on your parade. Heck, if we could bring everyone over the TOD way of viewing the world, by whatever means and however few at a time, then we would have a common vision and maybe society could actually move forward.

I was just responding to the OP about how the internet makes life better and we probably wouldn't have it if our ancestors hadn't burned so much FF. I raised my suspicion that maybe we're really not better off and showed an example of how it can be a bad thing for Social cohesion.

Really, my head is still spinning from reading William Ophuls latest book "Immoderate Greatness". This is a short little book that packs a huge punch and I recommend all readers of TOD to check it out. It basically puts most of what we've talked about here for the last 8 years into 69 well-written pages.

So, I just re-read the chapter "Moral Decay" and I'm seeing the world differently as I try to wrap my brain around it. I see things like internet sites and Cinco De Mayo differently now.

"Heck, if we could bring everyone over the TOD way of viewing the world"

Curious how you would describe that singular TOD way of viewing the world beyond "resources are finite and at some point we will reach peak extraction rates". Seems to me that even if there was complete agreement on that statement - the responses to it are certainly not a singular world view. It would be a great pity if TOD ever became that - it would then just be another big echo chamber.

Hey Water, don't worry I actually agree with most of what you say and I don't consider your comment to be rain on my parade. Ironically I was looking up the book your are recommending and I got a bit of a chuckle out of this first attempt response. I guess I'd better become a better internet shopper, before they take me away, eh?

Your search - immoderate greatness why civilizations fail - did not match any shopping results.


Make sure that all words are spelled correctly.
Try different keywords.
Try more general keywords.
Try fewer keywords.

I found a Kindle version for under five bucks that I might download that.


My question wasn't so much internet centered but more general. For example, is/was it a necessity to increase entropy as much as we could/can to for example end slavery, increase opportunities for people who previously didn't have any, more access to education, the space shuttle and sous vide controllers?
In other words, is destroying our eco system an inevitable necessity to get all the above done?

Or, to sum it up in one sentence: Is it turning the earth inside out an unavoidable precursor to progress?

(edit: add summary sentence)

Or, to sum it up in one sentence: Is it turning the earth inside out an unavoidable precursor to progress?

Weekend, A very interesting and a rather profound question. Perhaps it depends in part as to how we define progress...

Ecosystem Thermodynamics, Aiko Huckauf

Exergy is the amount of work a system can
perform when brought into thermodynamic
equilibrium with its environment.

Exergy indicates a system’s distance from
thermodynamic equilibrium: The higher the exergy,
the farther the distance.

Exergy is the available (or: usable) energy of a system
and hence a measure of energy quality: The higher the
quality of the energy, the smaller the energy loss (e. g.
as waste heat) when it is used.

Storage of Exergy
The ripening of ecosystems increases their ability to
consume incoming solar exergy. This tendency has
been formulated as the tentative Fourth Law of

If a system receives a throughflow of exergy,
it will utilise this exergy to move away from
thermodynamic equilibrium. If there is more
than one pathway of movement, that one is
likely to be chosen which yields most stored
exergy (and creates the longest distance from

With as caveat that my knowledge of history is far from complete I still think I'd rather live now than 500,400,200 or even 100 years ago, so to me it seems that "things" have overall gotten better - again, from a very myopic POV.


How about 75 or 80 years ago? I don't know, my imagination will and did run circles around an " I-pad "

I have read "Immoderate Greatness: Why Civilizations Fail"... twice. I have a habit of highlighting in yellow all the really good stuff. I have an awful lot of yellow in this book.

Thus complexity breeds more of the same, and each increase in complexity makes it harder to cope, while at the same time escalating the penalty for failure. In effect, civilizations enact a tragedy in which their raison d'etre--the use of energy to foster the complexity that raises them above the hunter-gatherer level of subsistence--becomes the agent of their ultimate downfall.

Ron P.

One good turn deserves another...

"...Bluntly put, human societies are addicted to their ruling ideas and their received way of life, and they are fanatical in their defense. Hence, they are extremely reluctant to reform. 'To admit error and cut losses,' said Tuchman, 'is rare among individuals, unknown among states'...

... the hubris of every civilization is that it is, like the Titanic, unsinkable. Hence the motivation to plan for shipwreck is lacking. In addition, the civilization's contradictions and difficulties are seen not as symptoms of impending collapse but, rather, as problems to be solved by better policies and personnel..."
~ William Ophuls, 'Immoderate Greatness: Why Civilizations Fail'

So does it look like states are going to 'admit error and cut losses' before serious collapse? How much more info do we want to be sure?

One thing I would say about the prospects for government action. Governments are crowds. They are reactive not proactive. And essentially it means that whatever they do, they're... extrapolating past trends forward and not anticipating trend changes. So that's like driving your car, flooring it, while looking only looking in the rear view mirror. It's practically a guarantee of a really nasty accident. Plus the people who are in power tend to have the most invested in the status-quo. They tend to have benefitted greatly from that. These are not the people you are going to look to to change that kind of system. I more or less ignore them and I pay attention to municipal politics and things at lower levels, but I don't expect anything good from the top down... ~ Nicole Foss

"Every Good Boy Deserves Favour is a stage play by Tom Stoppard... The play criticizes the Soviet practice of treating political dissidence as a form of mental illness."
~ Wikipedia

Arab Spring!

During Iraq War I by Daddy Bush I had to wait months to get independent information from
progressive peace groups as opposed to Corporate Media cheerleading for the War.

Iraq War II I could get more independent reports from the Times of India and the Independent as well of course as the Guardian in UK.

Then Occupy managed to get live streaming before they were ousted by TPTB.

So I think the Internet can be a major rallying point and provides fresh opportunities for ordinary citizens to communicate, relay facts on the ground and express alternate opinions to the owners of the Corporate Media.

It is always interesting to read NY Times articles like the faux debate between Larry Summers and Glenn Hubbard with the typical right to far-right slant. Then read the
most recommended comments which invariably skewer their whole slant with hundreds of recommendations for the 99% vs the 1%. Before the internet one had to get past the censors of the Letters columns to express a contrary opinion and only a few letters ever get published. Now commenters have a space

I agree. More information doesn't necessarily mean more answers, it can create more confusion. I didn't want to be a internet news junkie so I severely cut back on my internet usage, feels a lot better now.

Indeed. I'll be taking a two week trip the end of May which should be a total news blackout. The wilderness is good for that. The whole world could come apart and I won't know nothin' about it until I get back.

I'm looking forward to it..

I disagree entirely. Politics, human challenges, national and world problems are invariable painted with agenda driven views and with such a huge brush that they can't possible be right. If there were 20 political parties instead of two I would want a 21st that fit my views. This is the way it has always been. Sites like this that provide links, data and expert opinion only help define changing viewpoints. in a fast paced world. Have faith in your own narrative and look for more information on every subject that might change it.

Politics, human challenges, national and world problems are invariable painted with agenda driven views and with such a huge brush that they can't possible be right.

Well, I don't know what you mean by "right", but that society needs an agenda is kind of my point.

If there were 20 political parties instead of two I would want a 21st that fit my views.

See? Where does it end? 330 million people in the US, 330 million political parties?

This is the way it has always been

I very much doubt that. I think through history your choice of who (political party, lord, warlord) to support was pretty limited to what was available.

Sites like this that provide links, data and expert opinion only help define changing viewpoints. in a fast paced world

It does but one shouldn't get into the trap of thinking that we are in control of the situation and that's where I was coming from. Information also has a diminishing rate of return once you get a decent amount of information. I doubt that most of us are looking for more info when we read Orlov or Greer or Knustler, most of the time it's like an echo chamber.

Sure, guys like Darwininan, Westexas are doing an incredible job of collecting oil related stats but unless you are an energy analyst following this on a day to day basis or data collection is one of your hobbies, it makes very little sense to you, as a layman this would make much more sense if you just read about this on a monthly basis. It would give what's called a bird's eye view of things on the ground. This is also what Taleb refers to when he says that one is better off reading weekly magazines instead of day to day newspapers.

It actually took me some time to realize this, I always thought that having more and more information made me better prepared but then I saw that information needs to be supplemented with survival skills and instincts or else it's completely useless and spending too much time on the internet was taking away the valuable time that I could have spent on honing those skills. All I am saying is that you need a balanced approach, following these things on a day to day basis seems like an excess to me.

I think I too will take a sabbatical from all of this, a 1 month blackout would do me a lot of good.

Re: Excellent Statement

"I always thought that having more and more information made me better prepared but then I saw that information needs to be supplemented with survival skills and instincts or else it's completely useless and spending too much time on the internet was taking away the valuable time that I could have spent on honing those skills. All I am saying is that you need a balanced approach, following these things on a day to day basis seems like an excess to me."

What seems to work for me is 1/2 hour or so before work and other research if the weather is crappy. Sunny and garden time? = gone. I have noticed that many friends are also cutting back on emails and economic forwarding links as they have gotten on with their lives.

Gas shot up by 10 cents/litre overnight and I kicked my butt for not filling the Gerry cans last week. My wife and I are progressing with our gardens and lifestyle which includes 'developing' 15 acres into gardens/areas that can be fallowed without interruptions in production. We have 10 acres in woodlot which needs narrow tracks cut through to facilitate access to trees we want to cut down. We have encouraged the elk and deer to hang out in the woods and grass tracks with select clover and grass covers along with water sources.

It is our lifeboat and Linus blanket and is for the kids and grandkids if needed. BAU continues? They can sell it it or use it for vacations after we croak.

Off to welding course!!! 3.5 months left. Today it is open V groove butt joints to prep for eventual pipe work. Verticals and overhead. Awful stuff. 30 degrees in the shop and encassed in leather head to toe trying not to curse the slag splatter thinking "57 is too old for this sh#!. (My fellow students are in their twenties. One 17 year old.) I think that is the honing of skills you referred to. It hurts but feels good at quitting time.

I urge fellow TODers to get off the keybpards and take construction courses or learn other practical skills that have a use in the real world not so able to support specializations. Perhaps the world after this undulating plateau. Of course if USA becomes Saudi America we can all go work in the North American oil industry!!


If you haven't read "think fast think slow" I would strongly recommend it. It has profoundly altered my way of looking at the world.

The premise of the book is that the "slow thinking" part of the brain - the portion that does critical and comprehensive analysis has limited capacity and will more often than not choose not to challenge the conclusion of the the "fast thinking" the more reflexive part of the brain; the slow thinking part preserves it limited resources to things that are considered really important. I used to think that the answer was always more information- if we just ran information filled campaigns we could get people to change their thinking. This book completely destroys that assumption. Provide all the information you want and if people don't think it important they just will not focus. (IMO Republicans understood this even before the science caught up.)

In thinking about this the logical extension to me is - the more people are concerned with the stress of day to day living the less mental resources they have to devote to the really big issue. Is the person who doesn't know how they are going to feed their child really going to devote much attention to the future that will face the potential child of their child? Perhaps we have lost the capacity as a society to deal with really big long term problems because we are too stressed with the daily problems of survival. Perhaps there is a link between the number of people on food stamps and the apparent lack of willingness to confront big problems.

Agree - Great book by Kahneman. I also read a couple of books by Gazzaniga - they are a bit more focused on the physical underpinnings. I can't say that most of these books were enjoyable but they very insightful and have helped me a lot.
I think in the olden days "Gentlemen" in the UK used to say that "Gentlemen read books, not news papers" (or something along those lines). And, have gotten the underpinnings from the books I just mentioned they're probably, at least, partially right (not the gentlemen part per se of course). on a daily basis I force myself to answer the question why I would want to read a particular article beyond the headline aside from a quick dopamine release. It has cut my web reading time by 80% or so. Most articles don't inform but emote (if that is a word) and that messes with my thought processes.


Sure, I don't think we can blame humanity for much of what we did to the environment for the vast majority of our history. (The bigger problems were slavery, wars, racism, etc.)

But starting around maybe the 60's, we hit a turning point. We stopping killing each other so much and grew like crazy. We starting causing real pollution problems. And by the 1970's we recognized those problems. And to our credit . . . we actually did fix a lot of those problems! Clear air act, clean water act, creation of the EPA, cap & trade for acid rain, we significantly reduced birth rates, getting rid of ozone depleting chemicals, etc.

But during that whole time, we kept growing. And much of the the third world that was mired in poverty has climbed out of poverty such that it is consuming more. (And sadly, many of those places do not have the environmental standards instituted in the west.) It is now not so much pollution issue as a resource constraint issue. And this is our problem to deal with.

So, no . . . I don't blame our predecessors for consuming so much . . . it wasn't really a problem back then and they had more serious problems. But I do blame people if they can't see the problem now or see it but refuse to do anything about it.

Quite cool. The Rolls Royce of electric bicycles it seems @ 2.5K quid!
That could be a lot of peoples budget for an inexpensive second hand car.


I think very few people are running their car for £59 per month after petrol, insurance, repairs etc...

The average cost of using a used car in England is supposed to be about £370 per month when all costs are taken into account.

Quite true, I'm sure. However, I was referring purely to the purchase price of a small, second hand car.
And, in terms of utility, comparing an electric bike to a car is apples to oranges for most folk. Unfortunately.
Nice looking machine though.

Perhaps if you're going to be talking about car replacements you might want to narrow the parameters a little to bikes that can carry some cargo. The folks that make the CycleAnalyst have an interesting looking long-tailer: http://www.ebikes.ca/store/store_edgerunner.php

Although if you're talking cargo, then one of those crazy Dutch "bakfietsen" would be hard to beat.


Indeed. Much as I'd not mind one of these (or getting any nice bicycle, let alone one that's battery powered), they're just nowhere near as useful as a car, even an old second hand one that isn't as amazing with the economy as a newer vehicle.

However, I was referring purely to the purchase price of a small, second hand car.

My niece just bought a used car for £500. Got everything else sorted... but then couldn't afford the insurance since she's a new driver. So ends her dreams of freedom.

But you're right. People really don't see electric bikes as car alternatives.

I've seen motoring shows from England where they get used, very good condition cars for what seems absurdly low monetary units. You guys have something called the "MOT" which appears to be quite strict and pushes yearly costs substantially as well. Here in the US as long as most of the lights work and the tires ain't bald they'll pass inspection.

"So ends her dreams of freedom."

So begins an opportunity for her uncle to get her a nice bike. :)

Here in the US, many localities require emissions inspections. The larger cities now include real tests, that is, dyno operational testing. Cars which fail may not renew registration until repaired. Such repairs can be very expensive, so these cars tend to be pushed out to the rural areas which don't require emissions tests, where they can be driven without repair. That might be good economically for the rural buyers, but the air pollution emissions would also be shifted, often adding to pollution in air which later blows over the metro areas, with the result that air quality still being reduced...

E. Swanson

Low water levels in Great Lakes cause concern

Some lakes have lowest water levels in decades due to warm weather, low precipitation

CBC News Posted: May 5, 2013 12:24 AM ET

Historically low water levels in the Great Lakes may seriously impact the environment and consumers.

Water levels in some of the Great Lakes have dropped to the lowest levels in decades, reports CBC's Aarti Pole, and experts say these steep drops are due to a lack of precipitation and warm weather.

Less ice during the winter increases evaporation, said John Nevin of the International Joint Commission, which is tasked with assisting the Canadian and U.S. governments in finding solutions to problems in waters that lie along or flow across the border.

"Evaporation is actually the number one cause of water loss in the Great Lakes," he said.

It makes you wonder why the St Lawrence Riveris so high right now; it,s higher than it's been in a long time (almost two meters higher than it was last summer, when it was exceptionnally low). Given that the water level is regulated by a number of dams, I don't understand why they let so mauch water flow so early in the season.

The Future of Housing in America

Carter Scott is building and selling whole neighborhoods of affordable spec homes that produce more energy than they consume

FineHomebuilding : by Kevin Ireton

Carter Scott is dedicated to building houses that don't contribute to global warming, and he is constantly looking for ways to improve their energy efficiency. He has gotten so good at this that, with state and federal subsidies factored in, he is able to sell his houses for the same price as comparably sized houses that are built to code and that don't have photovoltaic panels on the roof. As editor at large Kevin Ireton explains in this article, though, Scott is not running a charity; in fact, his company has doubled its revenues every year since 2010. Unlike most production builders, who find what works and stick to it, Scott is constantly experimenting with materials and techniques in an effort to increase energy performance while keeping building costs down. He has reached the point where net-zero energy use is the standard rather than the goal and has set his sights on a new goal: building houses that produce more energy than they consume. A sidebar illustrates how Scott is able to get to net zero by reducing energy use and then adding a robust PV system.

A teaser, as you have to subscribe or pick up the "FHB Houses 2013 Awards Issue" at a news stand. Also in the awards issue, the Best New Home this year is a Passive House!

The article is really worth reading; go read it at a magazine shop.


Deltec Homes has teamed up with Appalachian State University to bring an attractive, flexible, and livable new net-zero home design to the market. The Solar Homestead, an award-winning entry in the 2011US Solar Decathlon, is now available nationwide through Deltec Homes.

Local company - they do modular designs (famous for the round houses), built offsite and then assembled on-site. I think they were claiming because of the cost efficiency they can put into it that one of their net-zero homes costs about the same as a site-built of the same size.

The Deltec Zero Energy home is a 3-bedroom, 2-bathroom floor plan that features 1500 square feet of living space and a 1-car garage. Designed to be net-zero in the US mid-Atlantic climate, the energy efficiency features, including super-insulation, air-tight construction, passive solar design and efficient electrical design, all work together to create an efficient and cost-effective net-zero home in the climate around Asheville, North Carolina where our headquarters are located.

They had an interview in the paper where they noted that what used to be considered far-out cutting edge in energy-efficiency is just simply expected now. Day late and a dollar short, but y'know..

We met with Deltec in 1998/99 before breaking ground on our home. I discussed some changes in exterior wall design (using SIPS or offset framing), earth berming and increasing passive solar potential. They wanted a $5k "engineering retainer" but wouldn't make any promisses. Seems pushing them outside of their little box (or circle as the case may be) was going to be quite expensive. The salesman called a few days after and said that if I didn't reduce some of my "radical expectations", I would never get my house built.

About 2 years later our per square foot costs were less than half that of the Deltec I had envisioned. A little scrounging, blood, sweat, and tears were involved.

"Good" stuff in this bit by the folks at TAE, but I found this point rather salient:


Our definition of work has slowly slid from doing something that is useful to yourself, your family and the society you live in, to doing something, a job, that will allow you to buy as big a car and home as possible, and consume as many products as you can whether you need them or not, in order to keep the economy growing. This change in definition has gone largely unnoticed until now, but in light of the levels of - youth - unemployment we see in ever more places, maybe we should take another look at what it means.

Then there's this WTF moment:

Better be quick though: the EU has one of its numerous edicts coming out soon that bans people who grow their own food in their gardens, in small plots and allotments, from using their own seeds. They must instead by law buy their seeds from vendors "ordained" by Brussels (yeah, there's Monsanto again...).

Don't believe everything you read. The proposed EU rules on seeds is intended to regulate commercial seed sales, e.g., by Monsanto, and specifically excludes small scale-use and marketing of seeds. The purpose is to prevent the large-scale introduction of, e.g. genetically modified plants. TAE is deliberately inverting the objectives of the proposed rules.

You can read if for yourself:

From the PDF link:

The impact assessment concludes that no single option succeeds in achieving the objectives of the review in an efficient, effective and coherent manner and suggests, in line with stakeholder opinion, a preferred option which combines elements from option 2, 4 and 5. The proposal thus creates an environment providing legal security for professional operators and consumers, guaranteeing high quality of plant reproductive material and securing competitive advantage on the internal and the world markets. This combination aims at striking a balance between flexibility for professional operators (option 2 and 4) and biodiversity (option 4) and the necessary rigor in health and quality requirement (elements of option 2 and 5) for the fair functioning of the market and for maintaining the quality and health of plant reproductive material. This is combined with elements allowing minor crops or crops with particular uses low-burden access to specific or small market segments, but with coupled minimum obligations ensuring traceability, health and information to the consumer so that a level playing for all professional operators is established.

More layers of complexity... more 'control'...

From the folks at Earth First News New EU Seed Law Would Ban All Non-Registered Varieties:

Cross Posted from Real Seeds

On Monday May 6th a draconian new law will be put before the European Commission, which creates new powers to classify and regulate all plant life anywhere in Europe.

The “Plant Reproductive Material Law” will regulate all plants. It contains immediate restrictions on reproduction of vegetables and woodland trees, while creating powers to restrict all other plants of any other species at a later date.

Under the new law, it will immediately be illegal to grow, reproduce or trade any vegetable seed or tree that has not been tested, approved and accepted by a new “EU Plant Variety Agency”. Moreover, an annual fee must also be paid to the Agency if that particular variety is to be used by anyone.

Following a huge outcry from consumer groups, small-scale farmers, and genebanks, last-minute alterations have been made, allowing home gardeners (but not farmers) to at least give seed to each other for free without breaking the law.

But the rest of the law is still hugely damaging to the seed supply and will make it much harder for people to get hold of the seeds they want to grow at home....

Bio, Tks for the link, I tried to read the document but I still find the need for a 147 page document regulating plant reproduction and seed dispersal to be beyond ridiculous and quite pathetic.
The mice, squirrels, birds,a few remaining bees, the wind and streams and most of all the plants themselves all scoff at such hubris. Genetic material will continue to mix regardless of this ludicrous attempt at regulating nature at it's most basic. I can only imagine that Darwin and Mendel are rolling in their graves.

ROFL, 147 pages 0f sh!t like this... who are these humans trying to kid?! They can't even properly fool themselves anymore. lawyers, legislators and corporations need to be slapped upside the head very hard and multiple times.


4. The Commission may decide, by means of implementing acts, that the authorisations referred to in paragraphs 1 or 2 are to be repealed or amended, in case those measures are not in compliance with the conditions of those paragraphs, or are deemed inappropriate or disproportionate to achieve the objectives of those
paragraphs. Those implementing acts shall be adopted in accordance with the examination procedure refe
rred to in Article 141(3).

Article 38
Plant reproductive material which is not finally certified

1. Plant reproductive material, other than the seeds referred to in Article 39, which has
been harvested in one Member State, but has not yet been finally certified as pre-basic, basic or certified material pursuant to Article 19(1), may be made available on the market by reference to those categories if:
(a) prior to the harvesting, a field inspection has been carried out by the competent authority and has confirmed compliance of that material with the production and quality requirements referred to in Article 16(2);(b) the plant reproductive material is identified as not finally certified material pursuant to Article
19; and (c) the requirements set out in paragraphs 2 to 6 are fulfilled.

2. Plant reproductive material referred to inparagraph 1 may be made available on the market only once from one professional operator to another, without being further transferred to any other person.

3. The professional operator shall inform in advance the competent authority concerned of its intention to make available on the market plant reproductive material referred
to in paragraph 1...

One country mouse with it's cheeks full of seed looks at it's cousin the city mouse and starts laughing so hard he sprays seeds all over the place... the wind scatters the seeds they fall in the stream and the birds eat them and fly far away where the sh!t them out and little illegal plants start growing all over the place where they mate and exchange genetic information with the wild varieties. According to paragraph 5, section 2b the mice need to be prosecuted.

..."who are these humans trying to kid?! They can't even properly fool themselves anymore. lawyers, legislators and corporations need to be slapped upside the head very hard and multiple times."

Yeah, Fred, for all the good it'll do. It's just one more sign that the current 'system' is on its way out. From Wikipedia:

According to Tainter's Collapse of Complex Societies, societies become more complex as they try to solve problems. Social complexity can be recognized by numerous differentiated and specialised social and economic roles and many mechanisms through which they are coordinated, and by reliance on symbolic and abstract communication, and the existence of a class of information producers and analysts who are not involved in primary resource production. Such complexity requires a substantial "energy" subsidy (meaning the consumption of resources, or other forms of wealth).

It gets especially fun when a society's problems and solutions are all the same, stuck in a revolving door of cluelessness.

"'Round and 'round she goes,, where she stops, nobody knows"...

The language is typical legalese, but that's not the point. Let's say I would like to introduce pink grass into Europe because I can also sell a product that turns it green again. One introduced, the pollen spreads the pink gene around. What kind of legal framework do you need to prevent this from happening, covering all loose ends, and still allow agricultural normal seed use?

In a Drumbeat many years ago there was a discussion about regulations on peanut butter procurement for the military, as I recall. It was very complex and even specified the maximum percentage of insect parts allowed in the peanut butter. There was a lot of eye rolling about bureaucracy and legalese. I think it was Leanan, who commented that the language was probably adopted as a result of bad experiences with excesses of insect parts in previous peanut butter shipments.

Most people are decent, but there are people who would not hesitate to dangerously mess with seeds to make a profit.

Most people are decent, but there are people who would not hesitate to dangerously mess with seeds to make a profit.

Yes, and the very people *most* likely to "mess with seeds for profit" are the mega-corporations with the deepest pockets with which to bribe politicians and employ armies of lawyers to "tailor" legislation to their exclusive benefit. I seriously doubt that a 147 page behemoth of legalese is likely to go against the strategic interests of Monsanto, Cargill, ConAgra, etc.

FM, I like what Dr. Ian Malcolm, played by Jeff Goldblum in Jurassic Park said, "John, the kind of control you're attempting simply is... it's not possible. If there is one thing the history of evolution has taught us it's that life will not be contained. Life breaks free, it expands to new territories and crashes through barriers, painfully, maybe even dangerously, but, uh... well, there it is."

All that paperwork is just a way for the corporation involved attempting to limit their liability once it spreads because they established the parameters of how it should be handled prior to usage. The insurance company that carries their coverage probably helped extensively with the text.

Sorry to correct you on this, but as someone who knows the new law inside out, and the background (I am a plant geneticist who runs a seed company), you are wrong. It was introduced by and for the benefit of the global seed industry. It is part of a complex battle between the old-school agriseed industry and the biotech industry, both of whom want to monetise the seed supply in different ways.

The first, second and third drafts , over a two year period, specifically outlawed seed swaps between individuals. This may have been sloppy drafting, or deliberate.
It was not removed until 24 hours before the final law was laid before the Commission, and this was only due to a huge public outcry.

The point of the law is to create a framework that will eventually let GM and WTO-gene-patented plants be marketed in the EU. This is expected to be fully functional in 2019.

That and to create employment for a few thousand more faceless civil servants in a shiny building in Brussels.


I'll back you on this Ben.
It is a good few years since I was professionally involved in GM regulation and 'risk assessment'.
It was always about positioning for ownership of the world crop inventory.
The propaganda was aimed at 'public education’ in the USA and spreading control via GM worldwide. First the chemical industrial biggies got involved buying seed companies; those who owned actual assets like breeding lines and who dominated supply across continents, and then pharma with its long experience of patents wanted in.

Impossible Promises ( a new 'green revolution') were made 25 years ago to my certain knowledge.
Nothing realistically big enough has come of it as far as I keep up with the scene.
Another boondoggle to soak up investment ambitions IMHO.
I guess the dot.com investment made more real strides than this.
Sure, some people will make a lot of money from time to time.
But that’s progress for you ...

I try to reconcile the chaos that I am expecting as our social, political and economic systems break down the years ahead, with attempt like this to control even the seeds people might use to grow food. I can imagine anything from laughable and irrelevant failure to causing mass starvation and being the flashpoint for violence. I cannot, however, think of an example of hubris any more extreme than this.

See it more as a number of 'arms races' nested within larger position making, having control of strategic capital. When the music stops most places could be left with people hoeing weeds and hoping to get by. I still have hopes ... yields often can double under the right conditions using just what is to hand and a better regional economy, but I wouldn't bet the farm ... anywhere. A lot of useful local stuff has been lost in countries where farming is bound to always be difficult, like Afghanistan (long sad story).

Oh yes, there are many jockeying for position, but it remains to be seen how many of these plays pay off. I suspect many will simply be erased and become nothing. It is hard to tell where the power bases of the future will come from, they could be quite unexpected.

My point was that the explanation given for genetic crop engineering was deliberately set with cornucopian expectations,(it was 'the new wave' of BAU). What actually was happening was as Ben said above. My contention is that on practical grounds it is a bad bet, and as you say quite likely to evaporate. On the other hand, people, though I do not mean 'us', given the right context can develop sufficiently adapted local responses and can be helped or hindered in their so doing. (My old Prof from the 1960s – he had vast world experience - was arguing this toward the end of his life in the mid-1990s contrasting it with what was on offer from GM. This was when I was trying to write an account). A major problem is that we have an imperial (see below) export-led ‘industrial’ business model set in an unrealistic ideology (religion?) of Progress: or something like that.

Why all the concern about a few corporate sociopaths playing dice with the planet's collective genome for short-term profit? What could possibly go wrong? We should all trust authority and go back to sleep like the rest of our fellow consumers.

Well, there were some nice guys and even some True Believers doing their bit for Progress, but it was a very rough and uncouth scene. Think for comparison of the ruthless British Empire back in the day.

You are right that I don't know the history and background of the law, but as it is currently written, it does not apply to small businesses and individuals,which was the claim being made. All or almost all regulation favors big corporations. Big corporations have more resources to influence legislation and the cost of compliance is diluted by larger sales volumes.

Here is an interesting story:


Maybe the EU should rethink the issue of seed swaps among hobbyists.

The Eia's new Short-Term Energy Outlook is just out. They are expecting non-OPEC Liquids Fuel Supply, (All Liquids) to be up by 1.11 mb/d in 2013 over 2012. All that increase, they say, will come from North America. The rest of non-OPEC, they say, is a wash.

Canada         up .24 mb/d 
US             up .88 mb/d  
Mexico       down .01 mb/d 
Europe       down .19 mb/d
F.S.U.       down .03 mb/d
Middle East  down .11 mb/d
Asia & Oce.    up .09 mb/d
Africa         up .10 mb/d
Cent.&S.Amer.  up .17 mb/d 


Ron P.

They are expecting all new supply to come from North America? No problem! I'll start digging a hole to find oil in my backyard just as soon as I get home from work.

GE Adds Energy Storage to Its Brilliant Wind Turbine

After premiering its 2.5-megawatt, 120-meter rotor Brilliant wind turbine in February, GE is now announcing the commercial installation of the first three models that will integrate energy storage capability.
GE has also announced that three Brilliant turbines will be installed by Invenergy at a Texas wind project by the end of 2013. Each will integrate 50 kilowatt-hours of battery storage, allowing the individual turbines to add a set of three possible functions.

The batteries, situated on a nearby ground pad, are integrated by the turbine’s intelligent operating system. They make three uses of storage, which GE calls applications, available to project operators.

The Invenergy turbines’ storage will be used for the first of the apps, labeled "predictable power" by GE. That is short-term storage to “sure” the delivery of committed output, explained GE Wind Product Line General Manager Keith Longtin. Increased certainty that a wind project will meet contractual obligations makes it more competitive with generation sources that face fewer intermittency challenges.

That's like two Nissan Leafs worth of batteries. I guess batteries are getting cheap enough that adding some buffering is probably useful.

If covering a sudden cutoff from full power of the turbine, its 1.2minutes. Twice that if its a linear rampdown. Of course variability isn't that extreme, but capacity divided by the turbine nameplate is a god figure of merit.

Reactor problem under warranty: NB Power

FREDERICTON – The president of NB Power says all 780 fuel caps at the Point Lepreau nuclear reactor will have to be replaced at the expense of Atomic Energy of Canada Ltd.

Gaetan Thomas wouldn’t say what the cost would be, except that it is a warranty issue that won’t be borne by the utility and its customers in New Brunswick.


The original $1.4-billion project to refit the plant cost an extra $1 billion and took three years longer than expected.

Thomas says some adjustments to the plugs will be made in the short-term, but they will need to be replaced in the next year or two to ensure their long-term reliability.

The plug issue has slowed refuelling of the reactor and forced the plant to run at just 35 per cent capacity.

See: http://metronews.ca/news/canada/662770/reactor-problem-under-warranty-nb...

Just incredible.



China Export Gains Spur Renewed Skepticism of Figures: Economy

China’s export growth unexpectedly accelerated in April even as shipments to the U.S. and Europe fell, spurring Bank of America Corp. and Mizuho Securities Co. analysts to say the figures were inflated by fake reports.

The 14.7 percent increase, reported by the General Administration of Customs in Beijing today, was led by a 57.2 percent jump in shipments to Hong Kong that highlighted suspicions of false transactions used to mask capital flows into China. A customs spokesman said last month that the agency would investigate the “extraordinary” gain in trade with Hong Kong.

“Exports actually haven’t done all that well,” Louis Kuijs, the RBS chief China economist who previously worked for the World Bank, said on Bloomberg Television from Hong Kong. That reflects a “pretty weak global picture, weak demand for Chinese exports” and the impact from yuan appreciation on China’s shipments, he said.

Do these people know a stat when the see one? 57.2% increase!! Ever hear of a calculator? They did seem to learn not to lie about flus, or at least we hope they learned that, and now it’s off to the Moon with skyrocketing economic activity even though shipments to the US & EU are down?! Don’t believe your lying eyes.

Certainly does seem a bit fishy. There are lots of other markets besides the US & Europe . . . but I would think those markets are a very large percentage of their exports and it would be very hard if not impossible to make up for a drop in those markets with increases elsewhere.