Weekend Open Thread

Spot for any interesting new developments or topics...
"the ability to understand the unknown
is an unknown ability to understand"

Observation :> )  The more you know the less
you care ... if you care more than less...
there is more to know.

think small, think fast, peace

I haven't seen this mentioned on The Oil Drum yet. Petroleum Review have produced a report (available from the Oil Depletion Analysis Centre here) looking at the annual and quarterly production from publicly quoted oil companies. Their study looks at the average daily extraction rates for oil and gas from the top 22 publicly quoted oil companies from 2002 up to the second quarter 2005.

Quite remarkably, in the first half of 2005 the top five, the top ten and the top 22 publicly quoted oil companies all produced less crude and NGLs than they did in 2004 and only slightly more than they did in 2003 and 2002.

Given the global increase in production and demand over the last three years it is clear that, in aggregate, the largest private oil companies are losing market share. For ten of the top 22 companies, and for four out of the five largest private companies, the first half of 2005 saw lower crude and NGLs production than in 2004.

Ten companies also produced less in first half 2005 than they did in 2003, while nine companies produced less than in 2002. Clearly, it is no exaggeration to say that the world's largest publicly quoted oil companies are now really struggling to hold production levels, with only a few managing to maintain their market share of global production.

Here are the oil extraction rates ('000 barrels per day) from the Petroleum Review report:
                   2nd QTR    2nd QTR
                   2004       2005
Total Top Five     10,935.1   10,708.9
Total Top Ten      14,718.7   14,463.9
Total Top 22       16,909.6   16,717.3

Extraction Rates Fall At Major Oil Companies

Thanks Chris - I highlighted this out front.  Seems like a really big deal.
Looking at Energy Bulletin, I see that Matt Simmons is still talking about $190/barrel oil and that farmers don't have the cash to invest in next year's crop:

For farmers, a Katrina-like disaster is building. It will soon swamp many family farming operations. Astronomical fuel prices, fertilizer and chemical costs have reached the point that even a modest profit is impossible.

Farmers are receiving the lowest price for commodities that myself or most farmers can remember. Farmers are a proud group, usually not willing to protest. This time, I hope someone is listening. We are literally at the end of the turn row. That's a metaphor for desperation. Agriculture is in serious trouble.

And the Falls Church News-Press has this nugget:

Spiraling costs of materials combined with a frenzy of activity is driving up costs of construction projects throughout Northern Virginia, ...

But, everyone I work with is living as if there are no problems.  Our main office had an open house last week, so we all drove there together.  One lady talks of her son applying to Ivy League schools.  The other guy's wife is expecting a second child.  My immediate boss wants to upgrade to digital cable.  Meanwhile, I'm consolidating and cutting back on everything.

I walk down the street and through the stores and feel oddly removed, as if I have to remember all this because it will be gone soon.

I share your feelings donal; it's eerie. The reports from farmers in several different sectors of the country are crucial. Even if fertilizer costs dip, they will only return to their upward trajectory to a point where no farmer will employ them if they want to remain profitable. The conclusion to be drawn regarding the sustainability of IndustroAg is even clearer as the Cassandras are proven correct.  
That feeling you talk about is nauseating.

And more and more, people are regarding PO as crackpot. The geology profs at the University where I work seem indifferent. I don't know, maybe they're just being like me, biding their time, keeping their mouths shut, staying out of debt, keeping their old cars and motorcycles tuned up, replacing all incandescent bulbs with compact fluorescents, cooking their own food and not eating out, planning a bigger garden next year.

As a tiny farmer (a few cows and horses, chickens and turkeys), I can attest to skyrocketing grain prices. I can't imagine trying to raise a large batch of turkeys. I'm becoming mostly self-sufficient, with an eye toward a future community supported farm. If things don't implode too rapidly.

The Brick Wall Simmons talks about will have a lot of toothy smiles embedded in it.

I agree, it's really strange that so few are aware of all the dark clouds around us. I find it very hard to talk about any of the problems of today without being considered in the 'doom and gloom' catagory.

I applaud you for your personal actions and preparations!

I wonder, how many out there have a personal plan to provide for their own and their loved ones basic sustenance and safety in case of a natural or manmade emergency?

How many of you have a 'Plan B'--caring for yourself and your family for 3 days without outside assistance?

What about 'Plan C'--caring for yourself and your family for 2 weeks with just what is available in your local area without access to stores or government assistance?

And along that thread, Plans D, E and F---caring for your family for extended periods of time if the really 'doom and gloom' possiblilities discussed in TOD were actually to happen?

Glad to hear that you are already planning for D,E & F!!!

It's not just 'hillbillys' and 'hicks' that live in the country. A number of professional people have moved into rural areas over the years to escape the stress, crime and chaos of urban life. AND---a much larger number have developed retreats and cabins to "get away from it all!"

Let's add to the basis of the eerie sense of normalcy brought up by Donal the fact that gasoline prices have dropped nearly to their levels prior to the havoc wreaked upon them by Katrina.  This is the basis for real cognitive dissonance:  How can this be happening, yet at the same time a real danger exist of crippling fuel shortages this coming winter?
I take a weekly trip to my local Costco, ( the Sam's wholesale center moved 15 miles down the road to the expensive side of town, I only visit them once every two months, they used to be 3 blocks away, I have a business card with them.), the eilses are full of Christmas Stuff, Lots of folks have carts piled high, I see the joy on their faces.  Some of them point to the new posted LOWER price of Gasoline out at the pumps, as they drive their big shiny new SUV's and Luxury cars over to get fueled up.  

I usually Buy cheese and eggs, and cat food.  I try to slap my hand at other things, Because I know the Shiny NEW things are just an Illusion.  This is the Make Believe World where Nothing Is Going Wrong.

I recently had a Trip with other Elder's in My "Lutheran" Church.  Most of them are business owners who have houses that mine could fit in the garage's of, Have weekly budgets that make my Monthly budget look sick.  They know something is up, but they couldn't get a handle on it.  They knew that the housing bubble just can't last, They knew that something is going to fail, just not what.  I told some of them privately that the "something" was energy.  Only to get that look of "Technology will save us", but being Christians they also knew that even if the troubles ahead are going to be dire, that we as a group had to help the helpless.  It did bother me that "they" knew something was up, but were still planning on a status quo future, just like in years past.

I don't worry about many things, including this.  I just warn who I can, and get prepared to help the folks that will need it sooner or later.

But the weekly visits to the shiny world of Tomorrow Land, is a good free vacation every week, You all should TRY IT!! Great Fun, Free Samples and Lots of Toys for the Kids to play on while you Dream of a new Tool for the Tool box.

I'm having a hard time trying to understand this.  I had always thought that when fossil fuels-based costs went up, farmers would always be able to pass them thru to their products, just because eating is the most basic human need.

Basically, if chemical costs go up, it affects both farmers and toy manufacturers, to choose just two examples.  Both sectors raise their prices.  When consumers have to choose, which product will they buy?

If US farmers cannot raise the price of their products to at least cover rising costs, and moreover they are receiving the lowest price in history, the only explanation I can find is that there is excess worldwide supply and much of the non-US part of that supply is not being affected by rising costs.  You should find out what other countries export the products in question and whether they subsidize their internal energy prices.

The good news is that, in the long run, that cannot be sustained, as all competing countries will feel the energy squeeze.  The bad news is that in the long run you will be bankrupt if you do not get a government subsidy now.

BTW, learning about peak oil made me see the wisdom behind governments subsidizing agriculture particularly in Europe.  Hadn't they done that, foreign competition would have driven farmers out of business and turned their land into golf courses.  And after peak oil, when that land  had to be put again into farming, the skills would not longer be there.  (Of course, I very much doubt that politicians did that out of that level of foresight.)

I think you've got it right in considering world-wide produce suppliers. I opened a juice box for my little cousin today. . . " contains concentrates from China, Poland, and Italy" mmmmm good old applejuice. meanwhile, my neighbor is trying desperately to keep his 72 yearold family apple orchard profitable.

I seem to recall that the US gives the lowest level of subsidies for agriculture compared to most other major agrricultural producers( Chile, European Union, etc. . .)

My only suggestion is to lobby your gov't reps. election years make for stronger voter leverage :)

In support of sneakpeak's comment: "I think you've got it right in considering world-wide produce suppliers. I opened a juice box for my little cousin today. . . " contains concentrates from China, Poland, and Italy" mmmmm good old applejuice. meanwhile, my neighbor is trying desperately to keep his 72 yearold family apple orchard profitable. "

Here in Lithuania, we finished the apple harvest a week ago. If I recall correctly, the going wage rate in the countryside was 14 Lithuanian cents (5 American cents) per kilogram of apples. How many Americans would even get out of bed for that wage?

And no subsidies are involved -- this is a branch of agriculture that hasn't (yet) been sucked into the EU bureaucracy's vortex.

I understand that feeling too.  Feeling disconnected is not all that new to me, but it is increasing rapidly now.  One group will turn out to be right, probably with serious consequences.  I look around, and everything seems so normal.  The stores are indeed still full of new goods, and I am still tempted by the life-long habits of consumerism, but I resist.  I no longer believe that I will finish my career as an engineer - with another 20 to 25 yrs to work, it just seems very unlikely, especially with a 45min commute.  But it does not bother me - I have the skills to build and fix things, we have relocated to property with land and water and wood, and my only real ambition now is to maintain a home for my family.  I'm keeping debts as low and equity as high as I can.  

It certainly makes for interesting thoughts during long planning and budget meetings at work.  I look at the rest of the people in the room and wonder how many of them have any clue.  I all seems so unreal - flying around the world for 1day meetings, sales projections based on the assumption that the future will be like the past.  Some of the engineers I manage seem to understand that something is wrong, but have different ideas about what it is.  I try not to preach to a captive audience.  Sadly, my main focus at work is trying to maintain my salary and that of my team, so that all of us can have as much time to prepare as possible.  Meanwhile I'm looking for a job doing design work again, and thinking hard about how to earn money closer to home, and without a company backing me up.  I hope I can get my kid's teeth fixed while I still have dental benefits.  

I know the weather can be beautiful right before the storm hits, and sometimes I wonder if my tinfoil hat might not be a bit too tight.  Very few of the people I know take this seriously, and even those that I suspect do are unwilling to discuss it much - I suspect they are unsure.  

I am still purchasing things, of course, but they're of a different nature.  The wood stove is in, and the garden will be planned this winter - I'll need some additional tools and supplies for that.  I try not to purchase anything that does not look like it will last, or that does not appear to be repairable (quite a challenge now).  

I know that I am looking at the same things all the people around me are - it's just increasingly obvious that I seeing something different.

I wish I knew more about the timing of all this - I'll post separately about that.  I have to get out and split some more wood - I don't have nearly enough and it should have been stacked months ago.

I don't think you'll have long to wait for a crisis to begin, but I don't think it'll be peak oil that hits us first - I'm betting it'll be 'peak money'. In other words, my view of the world includes an imminent market crash followed by a rapid descent into a vicious deflationary spiral. I would expect peak oil to exacerbate this scenario by throwing energy supply disruptions and extreme price volatility into the mixture. It wouldn't surprise me if the crash occurred within the next month or less.

As for preparations, they'll be much more difficult to make during a liquidity crunch. Most people won't have any money and those who do won't want to admit it (by visibly spending large chunks of it at once) for fear of losing it through crime or quasi-official confiscation of one kind or another. I'd suggest taking action as soon as possible.

I've been preparing for this for several years. I used to be an academic working in energy studies. Now I live on a small farm where I haul wood, muck out barns and grow vegetables, among other things. I have an outdoor wood furnace, 3 kW of PV panels in my back field, a battery bank in my basement, a solar thermal system, a generator, solar ovens, solar battery chargers, a rechargeable battery supply, a wind-up radio, stand-alone solar LED lighting, hand tools, bicycle-powered generators with portable battery packs and a dog sled team. Fortunately, I love the rural life and am much happier than I was as a member of the rat race.

KEWL!!!! Applause!!!!!
I tend to view the economic, political, and environmental problems we face as all related, with the root cause a way of life that requires an unsustainable amount of energy.  It doesn't really matter in the end which symptom manifests itself first, although the details of which preparations to make first might.

I also like the rural life, but I'm not under any illusions about how hard it will be to get by with significantly less energy.  I'm working first on heat and food.  Electricity will be one of the harder issues to solve (PV is out of my price range at present).  I will be exploring the feasibility of wood fired steam generation at some point, but I expect to find the amount of wood required to be too large to be practical.

Heat and food first-----now that's the most practical statement I've heard from these comments. I agree with you completely. I've been working on these basic principles for many years along with my 'normal' job and raising a family.

I can proudly say that I'm about 80% locally food self-sufficient---you can't do it alone. I've learned that we need to network with others in our local communities to develop sustainable and varied food supplies. I'm about 60% locally energy self-sufficient. Friends and I are slowly accumulating the items necessary to convert waste cooking oil into biodiesel but I figure biodiesel is just a temporary measure because of all the outside inputs required. We are also planning to purchase a team of pregnant Belgian mares. Horses may not be practical for most people but I've worked with them for years and they fit well in my personal situation.

Other important things to consider are:
--local and natural health care in case the modern medical systems become overloaded or inaccessible. Improving our personal immune systems thru improved nutrition, exercise and reduced stress.

--eatable and medicinal herbs, wild foraging and wilderness skills.

--networking with local neighbors for mutually benefical assistance including developing a system of trading and bartering with neighbors to save money and increase community bonds.

--developing 'low tech' skills and facilities that can last for generations regardless of 'peak oil' and other changes to our society i.e: solar greenhouses & season extenders, root cellars, skills like knife sharpening, food processing, woodlot management and on and on.

---And ultimately to teach these basic skills to our children and grandchildren because it is within their lifetimes that extreme changes will occur.

I'm not saying that you 'Urbanites' need to immediately 'head for the hills'. But you do need to start considering what you would do JUST IN CASE............

My wife is establishing the connections with the rural community we live in, mostly through the people we deal with in regards to horses, goats, chickens etc. we've got running around.  Through these connections we have met several great people knowledgeable in sustainable organic farming techniques.  I leave everyday to return to the dying end of another lifestyle - because I need the money and it is still available there.  For now.

As for health care, well the medical community is excellent in fixing us when we are broken (I would be long dead otherwise), but not so useful in dealing with illness and with keeping us fit.  Mostly they serve as a distribution network for pharmaceuticals.  And the cost of this is astronomical, so I wonder how it can possibly be sustained.  We are already well versed in homeopathic remedies, but they have not always been powerful enough (i.e. the Lyme epidemic in these parts).  So I assume that for those who do not have large amounts of money, the future will often be difficult when it comes to health issues, as it always was up to very recently.

Twilight, you perfectly captured my feelings, including the totally surreal budget and business growth meetings. Amazing that your entre post was word for word of my current feelings / actions.

It would be interesting to know how many other people who read TOD are in the same thinking / action taking.

As for the timing of economic hardship, I hope that we have until at least 2009 before any real change, I have only been in PO thinking for 6 months and need at least 3 more years to make the smooth transition to a sustainable lifestyle.

But, everyone I work with is living as if there are no problems.  ...  One lady talks of her son applying to Ivy League schools.  The other guy's wife is expecting a second child.  My immediate boss wants to upgrade to digital cable.

Imagine ---heaven forbid--- that you just saw your doctor, and he said you had cancer; 6 months to live.

As you walk out of the office stunned, you look about at the sidewalks, the stores. Commerce is humming. People are going about same as always, "living their lives" so to speak. They do not have in their heads, the thoughts running through yours. You are both in the same physical space, and yet living in two parallel universes. What is wrong with those people? Do they not understand that the end is near?

Well, no they don't. They have their whole lives in front of them. You have 6 months.

Everything is changed once you have the new information implanted in your head. Just a moment before meeting with your doctor, you were one of them. Now you are in a different world.

For those who think I am being insensitive about the cancer thing, I apologize. I personally had a tumor removed recently. Luckily for me, it was clear margins. But I very much empathize with those for whom results are less optimistic. It is a horrible thing to go through, whether directly or if happening to a loved one.

OK. It's crudely the same when you became Peak Oil Aware. Suddenly the world is not the same for you. But it is for all the others. They go on living their lives, just as before.

I personally do not think Peak Oil is going to be as traumatic as some make out here on this site. We still have coal. Why do you think Hollywood is putting out these new coal miner's daughter movies now, North Country? They are getting the rest of the people acclimated to the concept of returning to the mines. Well, at least it's a job. At least we will go on working and living.

Problems on the other side...

of the Atlantic. The US overall energy situation is much brighter than that of the European Union. The US energy self-sufficiency is about 70%, which is relatively high among the OECD countries. In the Western part of the EU (without the newly joined East and Middle European countries - this is for better time series) that percentage is only 46%, and if we take into account the fact that all uranium for nuclear fuel is imported, only 30%. (All number from BP)

Worse yet, the EU self-sufficiency is rapidly diminishing. Coal has still leading position in the domestic energy supply, but the production has rapidly decreased - it is down 65% from 1981 and decreasing. New EU members produce some coal - especially Poland - but also their production is decreasing rapidly so not much help from there.

Oil production in the North Sea helped a lot from the middle of the '70s to the '90s - the EU North Sea gas and oil made at best (1984) 20% of the total EU energy consumption. But the production has started to decline rapidly. As the North Sea (+ Netherlands gas) make still a almost half of the Western EU domestic energy production this is really bad news. Overall EU oil production peaked in 1999, gas in 2001.

Total Western EU domestic energy production peaked in 1996,  fossil fuel production already 1985. Russia is a very important gas and oil supplier with gas pipelines to EU, but its oil production is obviusly having a second peaking right now and it will not have easy job trying to offset the decreasing North Sea Gas. The first real OECD energy crunch since the '70s seems to be this winter in the UK, where natural gas shortage threatens (or is a reality - GDP growth has stalled already).

EU has no realistic prospects in increasing its domestic energy production. Its coal has mostly depleted, oil and gas are rapidly depleting. Very little else - some oil shales in Germany and Estonia, some lignite left in Germany - nothing much. Very little uranium.

No wonder EU is talking much about the Climate Change and the Kyoto agreement. These are obviously just code words for the energy crisis. (The Climate Change problem is real but the EU agenda has nothing much to do with it.) Under this pretext it has created some kind of a rationing system aimed at energy efficiency. Not a bad idea as such, but not very successful. Energy consumption and imports are still growing. Now it has a better idea: If Turkey becomes an EU memeber then the EU will have an almost direct access to the Middle East oil.

The EU experience tells that conservation is not easy. European energy efficiency is better than in US and primary energy consumption per capita clearly lower - only 49% of that of the US. This doesn't help much now. The EU oil consumption is about 15 mbpd and none of the new members is an oil producer. Gasoline taxes are high but consumption is up. The EU has no clear plan - almost all of the easy measures are already taken.  Only the difficult ones remain - cutting consumption and getting a severe recession.

Why do the Americans complain?

I think it's funny that Arab News is arguing against western oil taxes:


On the surface value, it makes sense for the oil exporters to protest high taxes on the oil importers.  But then, it also makes sense for Canada to be ... annoyed over the softwood lumber taxes that the US has imposed on Canadian wood because of imagined subsidies.  The cheaper something is to the consumer, the more they buy.

When the Bush administration throws money around to friends and family - who ends up paying?

You know - a few hundred billion for Iraq, two hundred billion for reconstruction, a few hundred billion for highways..... and so on

At first you would think future generations will pay (since we are running a deficit and have to borrow any new spending). But you would be wrong.

In the past we relied on foreign central banks and hedge funds for all of this lending but our debt is already so large that can NEVER be repaid - so you think our children will be safe  - we are going to stiff the lenders and they will pay... or so it seems. But you would be wrong.

When you look at the inflow of foreign capital buying treasury notes (TIC data) you realize that actually the Fed is substantially printing and lending the government money itself through the "Carribean Funds" operation. (This is called monetizing the debt). So foreign central banks are lending us a lot less money than before and we are just printing money to make up the difference. This should normally lead to inflation and a drop in the value of the dollar - so you conclude that we are all paying for this excess spending over the short/medium term through higher inflation and lower purchasing power.

But then you look at the daily currency fluctuations, and you realize that the value of the dollar is being managed through other central banks printing their currency and buying dollars - thus importing our inflation into their countries in turn.

So - the answer is.... every citizen of every country belonging to the IMF is paying for the excesses of the current administration to the extent that their central banks are inflating their money supplies in order to manage their currency against the dollar.

Who gave the Bush administration the power to tax the world?

Who gave the Bush administration the power to tax the world?

Me thinks our fearless leader is in constant contact with a Higher Father.

Besides that, we got an arsenal of nuclear tipped bunker busters.

But honestly, why does the world hate America? We're really a nice bunch of people. Ya all come over for a nice Texas style barbecue. Don't stay long though. We got a thing about "illegal" immigration (a.k.a. you don't look native american to me)

Does anyone know if Wilma is expected to affect oil production in Mexico?
Everything I know says it won't.
This is what google indexes now from theoildrum.com. Results appear to be some old site (only cached results available)that has nothing to do with this site.
Google is obviously useless here. I use Technorati beyond the search box provided. Here's a TOD search for CERA there. It appears they update TOD content frequently. Posts made today are already indexed.
forget ambulance chasers these guys chase hurricanes...

this is from today financial times uk

Lawyers aim to pin blame for Katrina on big business
By Ben Bain and Patti Waldmeir in Washington
Published: October 22 2005 03:00 | Last updated: October 22 2005 03:00

Plenty of people have been blamed for the devastation of the US Gulf coast after Hurricane Katrina - but most of them cannot be sued.

Suing the federal government, or the much-maligned Federal Emergency Management Agency, is very difficult. So now enterprising lawyers - many of whom hail from the south - are trying to hold insurance companies, oil companies and mortgage lenders responsible.

Post-disaster lawsuits are a fixture of modern American life: many were also filed in the aftermath of September 11, and many get nowhere. But the US Chamber of Commerce says post-Katrina suits are hampering the relief effort. It is pushing for legislation to protect companies involved in relief and reconstruction efforts from liability.

Big oil companies such as Shell, ChevronTexaco and Exxon Mobil are being sued on the grounds that their refining and production activities in the Gulf cause global warming, which in turn caused Katrina. Lawyers are trying to turn that lawsuit into a Mississippi-wide class action.

It claims that oil companies are the "greatest single source" of global warming and that their activities "produced the conditions whereby a storm of the strength and size of Hurricane Katrina would inevitably form and strike the Mississippi Gulf coast".

Oil companies are also being sued for causing ecological damage to coastal marshes that had protected New Orleans.

The global warming suit, which was filed in federal court in Mississippi by the New Orleans law firm Maples & Kirwan, also targets insurance companies and mortgage lenders. Several other suits have also been brought against insurers, including one by the Mississippi attorney-general.

Most homeowners' policies exclude flood losses, and the federal government provides flood insurance to compensate; but many homeowners did not buy it. The Mississippi attorney-general is trying to get the exclusions voided on grounds that they violate state public policy.

Such actions impede recovery, says Tom Donohue, the Chamber of Commerce president: "It becomes more difficult to attract resources and risk-takers if insurance companies aren't able to participate without the fear of having their policies changed after the fact." He says a small group of class-action and mass-action lawyers are exploiting the disaster.

"If these lawsuits were successful they would essentially be rewriting contracts after the fact and that's something that has serious implications not just for insurance contracts but for any contract under the US legal system," adds Julie Pulliam of the American Insurance Association.

The Association of Trial Lawyers of America rejects this. "If the insurance industry and big energy companies acted responsibly there would be no reason for lawsuits, but many times the last resort for victims is the civil justice system, and they are given no other choice when negligent corporations do bad things," says its spokesman Chris Mather.

F. Gerald Maples, who filed the global warming lawsuit, says part of its point is to raise public awareness. He hopes the suit "will bring dialogue and resources to solving the problem".

On a lighter note, what's the difference between a rooster and a lawyer?

The rooster clucks defiance...

I don't get it

[ducks, anticipating embarrassment]

Decliance is the word you are looking for...
Ugh, I'm so ashamed! I love spoonerisms.

Cough a cuppee, anyone?

Are there any rigs in Wilma's path?  87 octane is close to $2/gal and diesel is over $3/gal.  Is this because of more poeple buying home heating oil?

Does it really cost 10 cents a gallon more for the "additives" to make 89 and 91 octane?

When I was in highschool (and lived in the US) regular was 91.9 cents a gallon, extra/silver was 101.9 cents a gallon and supreme/gold/whatever was 111.9 cents a gallon.  The markup on the grades seems to be standard.  Heck, one station to get business would have two days about every month where all grades of gas would be the same price.  I always wondered about the people who filled up with regular/silver during those times, as I did see some people doing that.  I guess avoiding temptation to be hooked.

Similarly, in the time I've lived in Canada, while gas prices for regular have doubled, the spread between the grades has stayed consistent.

Long article on "demand destruction" in China:

"Money-eating" tigers dampen dreams of drivers
www.chinaview.cn 2005-10-21 09:33:36

    BEIJING, Oct. 21 -- For Xu Wenhua, a trusty bicycle is looking more and more attractive than the petrol-guzzling Citroen he now owns.

    "I should have bought an electrical bicycle, not a car," lamented Xu, who lives in Changping, a suburban district some 40 kilometres north of downtown Beijing.

    Currently, there is a saying in Beijing: "You may afford buying a car, but you may not afford the cost of using it."

    Xu couldn't agree more. To his dismay, fuel prices had kept soaring in China since he bought a car early this year. The steep costs had come in response to skyrocketing oil prices in the world market, once exceeding an all-time US$70 per barrel in late August.

    Now, No 93 petrol, the most popular fuel grade in Beijing, was sold at 4.26 yuan (approximately 8.11 yuan against the dollar) per litre in early August.

    "My heart falls the most when I hear of news that the fuel prices have risen again," said Xu, 35, who works at a company in Qianmen, a business district in the heart of the Chinese capital.

    The soaring fuel prices have dampened potential car buyers' enthusiasm. Some have postponed and even abandoned their purchase plans. Those who planned to buy a mid-end car changed their minds and instead, have bought economy models.

    Since March, Chinese authorities have raised the fuel prices five times, starting at 3.92 yuan (US$0.48) per litre, to the current 4.26 yuan (US$0.53) per litre. The price of refined oil shot up to an average of 0.5 yuan per litre within 28 days, from June 25 to July 23, "something without precedence in history," according to the Beijing-based China Economic Times.

    Experts and other people interviewed noted that in Beijing, a person has to spend about 1,000 yuan (US$123) a month on his or her car, including the cost of fuel as well as the maintenance and parking and insurance fees.

    For average wage earners, this is no small sum. According to local press reports, a white-collar worker at a foreign-funded company in the Chinese capital makes 3,000-4,000 yuan (US$370-US$493) a month. Their cars used to be their pride, but now many of them complain that cars have become "money-eating tigers."

    In fact, Chen Gang, an editor with local media, has passed on driving his car now opting to cycle to work and back every day.

    Chen, 28, said that he has to pay up to 200 yuan (US$24.7) more a month for fuel than in the past. Earning about 5,000 yuan (US$617) a month, he has a family of three to support.

    A government employee, who identified himself only as Mr Yang, used to drive to Inner Mongolia in the summer to escape from Beijing's choking heat and humidity. But he, too, had a change of heart.

    "I went there by train this summer to save money," he said.

Read the whole thing:

Thanks, Michael. This is very interesting. Maybe Chinese demand is really on the "thin edge" of things (prices). Even if there's little demand elasticity here in the US, there may be a great deal in China. I believe oil prices (NYMEX) will be rising soon (see HO's recent post on the subject).
In terms of personal transportion, China is very well set up for alternatives to single-occupancy private automobiles (as these are still a recent arrival on the urban-planning scene), so you are probably right about demand elasticity in this regard.

There will be less elasticity in goods transportation and mechanized agriculture, of course, and these do represent a significant chunk of demand growth.

Hydrogen/Natural Gas

 Vehicles fueled with hydrogen/natural gas blends (HCNG) are an initial step toward the hydrogen-based transportation of the future. HCNG vehicles offer the potential for immediate emissions benefits, such as a reduction in nitrogen oxides (NOx) emissions. At the same time, they can pave the way for a transition to fuel cell vehicles by building early demand for hydrogen infrastructure.


Also this is interesting too:

Honda seems to have the answer, don't they. But it operates with natural gas, and the cost of NG is going nowhere but up!

it may be more enviromentally safe, but what about the costs?

mp3 audio files from the Oct. 5th Petrocollapse Conference have been posted to the web page:  http://www.petrocollapse.org/  (see bottom of page).

I'm not sure if this was posted here.  I read most everything at TOD but I may have missed someone else posting.  My apology in advance if this has been posted.

The engineer in me is very interested in the numbers and details that this site does such an excellent job of presenting - but only in the context of the impacts that these numbers will have on my family and friend's lives.  The real numbers I'm trying to get a handle on are:

1.    When will the significant impacts be felt?  I'll call this T
2.    How rapidly will change come?  I believe that the rate will be one of the most important issues.  If changes happen rapidly, the impacts will be very much greater.  So we have d/dt
3.    How big will the change be?  I'll use D for "depth"
4.    How long will it last, which is of course related to D.  Call this L?

The more I look at it, the more I think that the aggregation of all the world's oil supplies peaking at separate times, with different slopes, and combined with various external issues will product something that is less a classical Hubbert peak and more a rocky plateau.  But this could change I suppose, if several of the biggest fields peak at once.  And it obviously depends on where we really are along the timeline.  Regardless, the real impact on our lives will be due mostly the difference between supply and demand, and the rate at which those two diverge.  

There are just too damned many variables in reality, and I expect in the end that I shall just have to use my best "engineering judgment", but this site is an invaluable tool in gathering data along the way.  Thanks to all for the efforts you're putting into it!

Well, just a little bit of what I think of as good news.

My two sons, both high tech guys on the west coast, just got out of their rat races with Moore's law and went into things that cannot be exported to China- or at least not very easily or right away. One went into videos of weddings, and the other into solar and biomass stirling engines.  This last one is in my view, really going to rocket ahead, given recent big technical advances coupled with the sudden realization on the part of venture capitalists that renewables are here to stay.

Meanwhile, back at the old farmhouse, I and my wife relish the possibility that peak oil might at last rid us of the inundations of crap that we never asked for and do not want- catalogs, credit cards, pleas to buy, buy, buy things that never should have been made in the first place.

I laugh at the weepings of so many folks contemplating depravations from peak oil, when  I remember the life of my parents in the depression, and the situations in Madras, Mexico, Africa and you know how many other places.  The waste of energy, food- everything -here is absolutely criminal in comparison.  

There was not one single fat guy in my high school graduation picture. We were all stick thin from running around throwing 50 lb. hay bales and scraping up cow poop.  And the ones who didn't get shot down by the Luftwaffe are still alive and happy today.  Then look at the kids now!  Labor saving has gone way too far.

And even then cheap fuel powered those tractors.  You'd have to go a bit farther back to get to agriculture that did not depend on cheap gas or diesel.  In fact I'm sympathetic to your sentiments, even though I'm considerably younger.  But I worry that along with the crap we do not want, the planet will also need to shed a considerable portion of humanity if we do not have sufficient petroleum to power the agriculture that feeds us now.  Even if the oil is available, if it costs too much, or there is too much re-training required, the food supplies could fall off dramatically and quickly.  While I'm doing what I can to try to insulate my family from this possibility, I would really hate to see it happening to others either.  And there is only so much of that kind of misery that any society can withstand before collapsing.  Such are the nightmare scenarios that some believe will happen, and while I'm not convinced it will go that far, to be prepared is to be prudent.  I'm just not sure I'm going to be welcoming it.
I have lived all my life on or near a farm.  And I have spent a lot of time as an engineer working on things that take fuel and turn it into power.  So I look at my very satisfactory diesel tractor and think- why couldn't I run this thing on dirty moldy old hay that I don't want but that I and my neighbors have a lot of?  The answer of course is that diesels like really nice fuel like diesel fuel, and hay is not nice.

But (and I have said this too many times, but it's true) it is easy to make a stirling engine that WILL run on old hay or corn trash, and that will do the same things as the diesel tractor.  So why not?

I hasten to define "easy" in the above sentence- easy as used above is something we know how to do and would do if we had an incentive to do it.  Like, for example, a cruise missile is "easy".  Passive solar homes are easy.  Fusion power is not easy.

So, we don't need oil to run our tractors to make hay (or you name it).  All we need is hay -or you name it.

I looked at Stirling engines quite a bit - I had some ideas in regard to a stationary engine - but in the end I was convinced that a flash boiler steam engine made more sense.  With the added expansion of a phase change, the steam engine just has more capability and is easier to control.  

But yes, if an entire nation put some of its resources behind it, we should be able to make external combustion engines that could be used with various "waste" fuel materials.  We'll need to recapture a variety of different things that can be used as fuel sources.  However, the investment in infrastructure would be enormous to make a difference, and most of these things are better suited to stationary jobs.  No matter, we could save the diesel for agriculture.  But you see, I don't really think most of these things will happen.    

It is very frustrating to me.  As an engineer, I would love to work in the area of alternate energy.  I've got lots of ideas, and I'd love to go out on my own and try some of them.  But the costs of health and other insurance are too high, and the costs of conventional energy are still too low to make it practical.  Electricity is still what - about $0.10 a kWhr?  There is too much energy in heating oil and NG to compete with.  It will only be when people are ready to accept either living with much less energy and/or with much less convenience that other reasonable alternatives will be viable.  By then, it may be too late to make the investment.  So we'll just run this train 'til it runs out of track.

Steam engines have a basic thermodynamic problem- either they run at  low temps, or they run hotter at very high pressure.  Either way they are tough to make efficient in small sizes (say less than 100kW).  Not impossible, but tough. And they have service demands.  Stirling engines can run at the max temp the metal will stand, and can be efficient in small sizes.  And the free piston stirling pumping gas over a turbine-alternator is cheap, relatively speaking, and has a very long service-free life, as NASA will tell you.  

I have run litttle stirlings on wood pellets, feeding the pellets in one at a time with a pretty high velocity preheated air jet.  The pellets disintegrate and burn like a squirt of gasoline in the hot ceramic vortex chamber, and the hot gas blows the little bit of ash right out.

These things work, they exist right now, and the only thing stopping them is the big one- the investment in the factory.   I would buy one, and a lot of people I know who also have biomass by the ton would too.

 Simmons takes a shot at tar sands:

 http://ca.today.reuters.com/news/newsArticle.aspx?type=domesticNews&storyID=2005-10-19T191553Z_0 1_MAR969247_RTRIDST_0_CANADA-ENERGY-CANADA-OILSANDS-COL.XML&archived=False

"The whole process (tar sands) uses far more energy than it ends up producing, Simmons said"

(This is a bit of a stunner.  Even I didn't think that the tar sands process is an energy loser.  I did think that one should look at the effects of depletion from conventional Canadian sources of oil and at the energy input necessary to get the bitumen out and processed into oil.)  

Jeffrey Brown

OTTAWA (Reuters) - Canada is squandering valuable natural gas in trying to develop its much-vaunted oil sands reserves, a Houston-based oil expert said on Wednesday.

"We shouldn't be laying a foundation of saying we can replace Saudi Arabia's reserves with Canada's tar sands," analyst and investment banker Matthew Simmons told a business and media audience in Ottawa.

"They are extremely energy-intensive, to turn it into usable energy, and natural gas is in decline."

He says the oil sands, centered in northern Alberta, would be more appropriately called coal. Natural gas is used to heat steam which is injected into the tar sands to help convert it into oil.

The energy industry is investing tens of billions of dollars on projects to develop the massive resource, which now accounts for more than one third of Canada's overall oil production.

The resources rival Saudi Arabia's conventional oil reserves in size, but are far more expensive to develop and operate, partly due to the need for natural gas as a fuel.

Referring to Arctic gas which is set for development in Canada's Mackenzie Delta, he said: "It would be a tragedy to use all of that for converting tar sands into low quality oil. Natural gas is just too valuable."

The whole process uses far more energy than it ends up producing, Simmons said.

Also, in regard to Canada, a Canadian businessman (I think CEO of Dow Chemical Canada) said that using natural gas to process tar sands is like using $100 bills to light candles.  

There is increasing resentment in Canada over the fact that U.S. demand is raising the price of domestic energy in Canada--and rapidly depleting their conventional reserves.  Once the reality of Peak Oil sets it, how long is it going to take for energy producers to begin to think that it is not in the own self interest to ramp up production of a depleting resource to meet an insatiable demand?

Also, the U.S. is supposed to become a net food importer this year, a trend that will probably be worsened by the fuel/ferilizer crises in the farm belt.

We are borrowing hundreds of billions of dollars each year to pay for imported food & energy--which is driving up the world prices of food & energy.  How long will it be before our creditors realize that  lending us money--that will probably never be repaid and that has the effect of driving up food & energy prices--is not a good idea?

One of the provocative theses advanced by Matt Savinar of www.lifeaftertheoilcrash.net is that the US will eventually invade Canada.  In light of the previous post, the motivation might not merely involve energy, but also food production.  Is this a plausible scenario?
Why not?  we invaded Iraq (in part) because we coveted their oil. So, in the long run, what is to prevent Canada from suffering the same fate? Hey, if you have hydrocarbons, you are of big interest to the US.
The US wouldn't need to invade Canada. Canadian federalism is weak and western separatism may yet deliver Alberta into the American embrace. It wouldn't need to be formally annexed - as long as the energy kept flowing south it could be independent (in theory if not in practice). The rest of Canada would be of relatively little interest to the US in comparison.
Not an answer, just a link to Jevons Chapt. 7 (thanks):
What do we know about the Barrent Sea?
This BBC Article seems to think they'll be brining on a lot of gas and crude in the future.


It is the calm, or at least relative calm, before the first clouds of the storm roll in. People are going about their business, certain that tomorrow will be yet another day, the same as yesterday was. This is the nature of humanity, and one reason crisis overtakes us so easily.

I am figuring on having at least until 2010 to get ready, and possibly 2015. But that readiness entails having a home for my as-yet-unbelieving children to run to, and so it will not be a shack in the backwoods.

It is very interesting to me that there are only a couple of places to actually purchase a full-size, workable steam engine. Otherwise, it is lost technology.

It is interesting to me that nobody is even contemplating ethanol as a fuel, when it can be made from basically anything with sugar or starch, and will run in a standard IC engine with less pollution and more performance. You can build a still to make ethanol for a few hundred dollars - a decent sized one too. Mine sits behind my garage. And potato peelings, apple peels, anything with sugar or starch value will produce ethanol. With gas fluctuating between $2-$4 a gallon, buying bulk molasses will let you turn out ethanol at around $2 a gallon. You can cut your gasoline with it to drop costs or switch to it completely with minor engine modification. I'm not worrying about global production here, but MY OWN production - MY FUEL. I am worried about this beacuse I watched what happened when Katrina and Rita hit - gas was gone in a day. And those were very localized effects. What happens when there really is a gas shortage?

I don't know what is going to be the straw that breaks our economical camel. But my spine is itching and my stomach feels flutery reading about so many things that are at "their highest levels" - credit, debt, storms, oil usage, cement, steel, inflation and on and on. People have a 6th sense - they need to listen to what it is saying. The US a net food importer? People - read that again. We were the breadbasket of the world...

Infrastructure the world over is in need of repair. Every country is stretched to the limit in terms of delivering water, electricity, food and other staples of life. Where does this leave the average city? What happens when something really clobbers electrical generating capacity?

When earthquakes are coming, animals freak out. When big storms come, animals disappear. Christians in many places are getting ready for tribulations. Muslims are as well. Both are for different reasons, but their goal is one and the same, and at the same point in time. Never has the "free press" in America been as controlled and censored as today. Why is that? What is it about our world today that requires such manipulation of information? That should be a warning as well.

I don't know from what quarter it will originate, but we have had a very cheap and easy ride for the last century, and it appears to me that our own excesses are driving us into a cul de sac. I want to turn down another road, one with a better future.

The signs are everywhere around us - listen and watch. But get ready - something is slouching towards us. Everybody feels this, but few have the constitution and certitude to act on it. Most cannot put a face or name to what it is they are sensing. But everywhere people are feeling these same dire feelings of dread and uncertainty. You can read it in financial papers, technical journals, any newspaper or magazine. Go read these same publications 10 years ago - unbridled optimism. People are sensing an unknown something ahead, and it has a inimic and malignant quality to it.

You are left with two choices - listen and get ready for some dark times ahead, or deny what you are feeling and go forward. I think that those who deny their inner sense are the same ones who debunk everything having to do with change. Their strength comes from their fear of change, and their inability to contemplate the same change.

Just some thoughts...

... readiness entails having a home for my as-yet-unbelieving children to run to

Good post.
Let me suggest that one can only "see the signs" if one has first become Peak Oil Aware.

That may explain WHY your still-unbelieving-children do not see the signposts struck out in front of their very noses.

(..same with my family by the way.)

For many in our society, the rightful rulers still influence the gods --> http://www.jaguar-sun.com/ideas.html

Lloyd's of London may quadruple insurance rates on rigs in the Gulf of Mexico

What does that do to the cost of recovering a barrel of oil there? What price is needed to make a barrel of oil profitable and what size field (i.e. number of barrels) is needed to justify the cost of the rig, the cost of drilling, the cost of operation in increasingly dangerous ocean waters, and the cost of insurance?

Some approximate rig drilling math:

Average Well Depth = 14,500'
Average Time to Drill = 36 days
Average Rig Cost = $75,000 per day
Operating Overhead = $65,000 per day
Well Hardware = $1,000,000
Completion Cost = $1,500,000

75000 + 65000 = $140,000 X 36 = $5,040,000
+ 1000000 = $6,040,000 drilling cost.

6040000 + 1500000 = $7,540,000 for a completed well

Now, that's without a pipeline to get the oil somewhere. It's also without a platform to base the well on.
It contains no corporate overhead.
It contains no insurance fees.
It doesn't take into account the chunk of revenue the government takes out of production.
It doesn't take into account any pumps or compressors or dewatering equipment.
It assumes no production supervision.
It assumes no workovers needed, ever.
It doesn't take into account any financial charges.

That equates to 150,800 bbl to pay the well off with $50/bbl oil. If we assume these other charges amount to doubling the drilling cost (low number), then we are looking at 301,600 bbl at $50/bbl just to pay the well off.

If we then assume investors are looking for some kind of return on their money, it looks like the minimum would be about 500,000 bbl of oil to make something barely justifiable offshore.

If you take a look at land operations, this number is probably much lower due to costs (200,000 bbl, maybe even less), but even more sensitive to location, partnership agreements, land use restrictions and available infrastructure.

Any oil guys want to chime in?