Fortune: Are You Ready for $262/bbl Oil?

"Be afraid. Be very afraid." That's the message from two of the world's most successful investors on the topic of high oil prices. One of them, Hermitage Capital's Bill Browder, has outlined six scenarios that could take oil up to a downright terrifying $262 a barrel. The other, billionaire investor George Soros, wouldn't make any specific predictions about prices. But as a legendary commodities player, it's worth paying heed to the words of the man who once took on the Bank of England -- and won. "I'm very worried about the supply-demand balance, which is very tight," Soros says.
Only if I have placed a buy bet on the oil futures market beforehand.
Still got time.  Its only 66.
The new thread starts: Be Afraid. Be Very Afraid...

I guess we won't see the regulars here poking fun at Kunstler for a while will we?


It's a quote from the article...not a general stance.  I think we'd rather it be "Be informed, be very informed."
Is this a change of Fortune?  They're pretty establishment.
Don't know about the establishment connection, but if you go over to their web presence you see the following stories in addition to "Be very afraid". Read the blurbs, sounds like COSMO-shit to me...

Catch a Rising Star

Top talent has never been more valuable, nor the competition for it more fierce. In this issue we profile 12 leaders who are one step from superstardom. They're not CEOs yet, but they're on deck -- at the biggest companies on the planet. Learn from them.


How to Beat the High Cost of Gasoline. Forever!

Stop dreaming about hydrogen. Ethanol is the answer to our energy dilemma. It's clean and green and it runs in today's cars. And in a generation, it could replace gas.


Why Wall Street had a record year and you didn't

The S&P had a measly return of 4.9 percent. Securities firms gave out a record $21.5 billion in year-end bonuses. That's fair.

Exxon (3rd qtr results) reports approx. $100 billion in sales, almost $10 billion in net profit, they get hauled before congress to explain themselves. (like a gang of school kids). Annual bonuses for 2005 total about $30 million amongst 17 people.

If I were a bettin man, I'd say the security firms made most of that bonus money trading oil futures, or oil company stocks. Even though Exxons' bonuses are chump change compared to $21.5 billion. Why are they (securities firms) not being hauled off to see the principal?

comparing apples to oranges? i suppose, but i bet the security firms made their most money from oil related trades.

i feel better now


I don't want to impose on TOD by quoting my whole piece from my own site about this, but I blogged about this the other day.

In short, the kinds of predictions they're talking about are so completely at the mercy of things beyond the scope of the model that the prices they arrive at are useless.

The worst scenario they came up with, the $262/barrel one, was related to the fall of the House of Saud.  Trying to map that kind of geopolitical event to a precise price level is beyond silly.  Anyone here could easily cook up a sets circumstances under which that same central event results in a price substantially higher or lower than $262.

But golly gee, it sure makes for some nifty headlines, doesn't it?  I'm beginning to think that this kind of prediction and the resulting breathless articles are nothing more than the econometric and media equivalents of the movie SAW--a cheap thrill that no one uses as a basis for real action, and that makes you feel good that it hasn't happened (at least not yet).

Careful. "Saw" is a great movie.
Yep, I liked SAW a lot, also.  But my point is that it didn't change how people live their lives--they had the thrill and the entertainment, but then went back to business as usual.
Why the umbrage?  They're talking about scenarios that involve massive shut-offs of oil overnight.  If Saudi (or Venuezuela or Nigeria) just quit we probably would be talking about over $200/bbl.  Their cost vs supply regression probably has a lot of error but we all know that it would be bad.
I get upset over that kind of predictions (and the inevitable breathless media coverage) because they're meaningless.  As I said above, you simply can't predict the prices caused by those hugely disruptive events, and tossing around specific numbers is wildly misleading.  If one or more of those things were to happen, the actual price level could be much higher or not nearly as high as they're predicting, thanks to factors their model can't take into account.

When I was in economics graduate school, I had a professor who liked to say some times you can make up a totally convincing, precise argument based on econometrics that's laughably wrong.

I'm an economist by training and I have great respect for people who work with statistics and economic modeling; whether they're explaining relationships between factors in the past or trying to predict the future, they provide a very useful service.  But I also think that one of the main things we all should keep in mind is the limits of such analysis, and how incredibly easy it is to step over the line from reasonable conclusion into utter gibberish without even realizing it.

[quote]and how incredibly easy it is to step over the line from reasonable conclusion into utter gibberish without even realizing it.[/quote]

Goes with the job, doesn't it?

Sorry, thousand apologies, but I just had to say that. grin

I would say $262 is a somewhat low. My rough rule of thumb is a short term spike of 50% increase for each 2% shortfall in supply. Saudi produce about 10% of world oil at present, that's 5 multiplicative 50% increases, giving approximately $500 from a starting price of $68. That should fall back to between $300 and $350 fairly quickly (within a week or two) but thereafter any price decline would depend on how soon the shortfall is reduced by restoration of supply or demand destruction.
Fortune has run two very apocalyptic article on rapid climate change, one in 2004, and the other very recently.  Also, they had the "Rainwater Prophecy" article, regarding Richard Rainwater's concerns about Peak Oil.  

Rainwater is worth about $2.5 billion, and he is putting in greenhouses, storing diesel fuel and drilling water wells in his farm in the Carolinas.  The article is at:

Richard Rainwater has an uncanny knack for accurately picking future trends.  He took the Bass Family's fortune of about $50 million and turned it into $5 billion.  He said that making money off Peak Oil is a no-brainer, but he is deeply concerned about the survival of the human race.   BTW, one of his favorite websites is TOD.

From the article:

<<"This is a nonrecurring event," he says. "The 100-year flood in Houston real estate was one, the ability to buy oil and gas really cheap was another, and now there's the opportunity to do something based on a shortage of natural resources. Can you make money? Well, yeah. One way is to just stay long domestic oil. But there may be something more important than making money. This is the first scenario I've seen where I question the survivability of mankind. I don't want the world to wake up one day and say, 'How come some doofus billionaire in Texas made all this money by being aware of this, and why didn't someone tell us?'" >>

Thanks to Leanan for originally bringing this article to our attention and thanks to Prof.Goose for giving it the attention it deserves.

Can anyone comment on the source of this article. Obviously it came out of Davos. But what is the context? Was this reporter simply asking the opinion of high-fliers in the crowd and chose Browder and Soros as the focus, due to their "numbers" ?

Soros doesn't give a figure and Browder's are obviously extremely high.

What is the news? Simply the $262 figure. What the hell is that? If I were in Davos and said 263, would you be reading my name now in place of Browder's?

Was this a joint statement? Was this a joint speech? What is this? The article doesn't give any clues. The obvious conclusion would be that it was neither - but I'm not going to draw that conclusion. I await further input.

Was this the consensus of some round table and Soros and Browder were chosen as the spokespeople? Who knows.

No mention of peak oil.

This is the best Soros can do. That is what this is. This is all about Soros.

Also, I'm not impressed with Browder either, if he's still invested in Russian oil companies.  If oil really hits $262/barrel for a significant period of time, does he really think that Putin is going to allow him to extract that wealth from Russia?
I recently emailed the US State Dept suggesting they print and ship to Iran ten million Persian language versions of Jay Hanson's website.  If the pen is mightier than the sword: this may be the best way to avert the nuclear gift-exchange of WW3.  If the Iranians wish to avoid becoming the first nuclear Dieoff victims, a universal understanding of Dieoff ramifications is the best and cheapest way to convince them to change course.  If they stop nuclear enrichment and flare off all their oil and natgas so that the only exportable items are delicious dates and figs, and ornate Persian rugs, then they can live in peace free from the worry of ceaseless attacks from the US/Europe/Russia/China as we jockey and fight for access to their fossil fuels.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

Iran is well aware of peak oil.  Their oil minister talks about it in public and everything.

I believe that is one reason they want nuclear power.  They cannot support their current population on exports of figs and rugs alone.  

Leanan,  I would argue that it is better for Iran to self-determine their own internal Dieoff process, in full consideration of their own cultural traditions, than to have it inflicted by the predominant first world powers with nuclear weapons.

The same goes for all countries.  The adoption of ASPO's Energy Depletion Protocols is going nowhere because the world PTB have decided that fighting it out is the best path ahead.  Transnational summative carrying capacity will inevitably shrink with decreasing net energy, look to the problems already with Russian natgas exports.

If Iran flares off all their oil and gas so that nobody has a reason to attack them it will preserve more of their infrastructure and biodiversity than trying to eak out a few more multi-billions from exports.  The Carbon Age is coming to an end, those countries that are early movers to get past this addiction will be the leaders in the next phase.  But Jay Hanson suggests that we are not that smart and will go down like every other civilization since time immemorial.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

I don't think you'll find any government in the world that voluntarily decides to kill 90% of their population.  

It's likely to get quite nasty in the Middle East, even without nuclear war.  It's a desert.  They're all dependent on imported food.  

If the Iranian government does decide they need a dieoff, it will not be via mass starvation.  I think they're far more likely to declare war on one of their neighbors.  Israel, or perhaps Iraq.  That would generate a large dieoff, and also a lot of glory by their "cultural traditions."

Leanan,  Thxs for responding again.  Easter Island was a good example of its citizens forming 'governmental groups' to reduce their population 90% or more to attempt sustainability.  This was a society propelled by crisis-- they only reacted to events.  A proactive society making the required, but heart-rending decisions has the better chance.  Consider APOLLO 13-- their proactive powerdown decisions saved their lives.  Proactive worldwide decisions is the only way to optimize the squeeze thru the Dieoff bottleneck. A full-on ICBM nuclear gift exchange will represent the failure of humanity to take mitigation measures-- it will be the last gasp of crisis reaction.  We are genetically inclined to party-on our Titanic voyage than to take the time to figure out the best way to pack the optimum mix of people into the lifeboats.

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

I think Iran is one of the few countries in the world that is actually planning for peak oil.  Nuclear energy is part of their plan.  Nuclear weapons, too, probably, but I'm sure they hope they don't have to use them.  Just as we do.

I don't think we're genetically inclined to party on.  There are some societies that have been sustainable for thousands of years.  

But one thing about all of them - they are all isolated.  Mostly, they are island nations.  I think this is because unsustainable societies have an advantage in any conflict, if only in numbers.  The sustainable societies get overrun, unless they are somehow isolated from greedy neighbors.  

If Iran doesn't have nuclear weapons, their neighbors will overrun them.  If not for their oil, then for their food and water.  


Our basic difference here is that I am talking in terms of a much longer, almost geologic timeframe, while I think you are talking within the timeframe of one or two generations.  Humans need to move past this short-term orientation once and for all.

This is exactly the problem-- our willingness to overrun others to take their resources.  Basic, fundamental competition, no different than yeast in a bottle.  Humans need to move past this modus operandi.

I am sure you have heard of the example of the bacteria in a petri dish doubling every minute starting at 11:58 [1/4 full],11:59 [1/2 full], 12:00 [full & everything starts dying].  This Overshoot and Dieoff occurs all the time in Nature, try googling it for yourself.

Some Historians think the human race experienced a 90% plus dieoff when the Toba volcano blew up about 78,000 years ago. But our starting numbers were so small, and our detritovore use so insignificant [just woodfires], that it had no measurable effect upon the planet.  Think 11:03 in time.

It happened before in the Americas when the first Spanish explorers spread the European diseases among the natives back in the 1500s.  North America was basically depopulated of 90% of the former native population when the white man started colonizing America in the late 1600s & early 1700s.  So even human dieoffs are not unusual.  Think 11:15 in time.

But this will be the first time for a Global Dieoff of immense magnitude because our fossil fuel detritus usage has allowed us to reach, for the first time, a supermassive Overshoot of almost seven billion.  Now think of 11:59 in time. Or maybe it is actually closer to 11:59.99?

So now the human population needs to unwind again to roughly 100 million, but tragically it won't been done in the early stages by a 'pure' survival of the fittest  fashion.  You can be a combined genius and a world class athlete, but that won't do you much good in defending yourself against a bullet, a death camp, a bomb, a BioWMD, starvation, pollution, or radiation.  Much less a machete blow from your neighborhood mob trying to steal the last of your family's food and water.

We would actually be better off if we could all get naked and reduce our numbers in pure, unarmed tooth and fingernail wrestling battles to the death without any exosomatic weaponry from 'stick and stones' on up.  But this is not likely to happen even though all other lifeforms utilize this bare 'fang & claw' method to equilibrate their numbers.

The next best step is for each country to decline on their own by whatever method they decide is best in keeping with their native traditions, with no interference from outside powers.  Armies facing in, if you will, than armies facing out.  Instead of one global petri dish using every resource at its disposal to whittle us down, break the world up into discrete petri dishes and leave them alone.  Create hundreds of Easter Islands from one planet.

By actively being proactive in our desire to decline and Powerdown it will eliminate much of the destruction to infrastructure and other biodiversity.  By doing nothing till we have to react to a crisis, we might be at 9 or 10 billion and there is no other choice but to go down by full scale nuclear war.  Just my two cents, but humans generally choose the worst case scenario.  Maybe we will get lucky this time.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

The problem is that in order to think long-term, you have survive short-term.  That is never going to change.  

You might want to read Jared Diamond's Collapse, if you haven't.  He talks about what it takes to succeed as a sustainable society.  People do it, so obviously, it's possible.  We can be smarter than yeast, under certain conditions.

One interesting thing that's come out of anthropology research...size matters.  Societies that succeed in becoming sustainable are either small, with "grassroots" control, or large, with strong "top-down" control.  Medium-size societies (and large societies with weak central control) cannot be sustainable.  

Very small societies are small enough that everyone can see the problems, and everyone has a stake in fixing them.  With very large societies, individuals can no longer see all the problems their society is facing.  But the king can.  And he has a stake in protecting his entire kingdom, because he derives his wealth from the entire kingdom.  And he wants his heirs to inherit said wealth and kingdom.

But medium-sized societies suffer Easter Island-like collapses.  They are too large for individuals to understand what is going on throughout the society.  But they are not large enough for a central government to arise.  People may have a stake in their own valley, but not in the one next door.  So they collapse in internecine conflict.

So your idea of "small petri dishes" might work...if all the petri dishes agree that sustainability is the goal.  My worry is that some will try to maintain their standard of living.  For example, Ohio could burn tons of coal, not caring that it causes acid rain that kills all the crops in New England.  Canada could dump pollution from tar sands and other mining into rivers that flow through the U.S., not caring that they're poisoning people downstream.  

Technology today has global consequences; that being the case, I really don't think "grassroots" will work.  Eventually, we will return to small petri dishes.  We won't have the energy to do otherwise.  But the powerdown has to be managed by a strong central authority.  

"We would actually be better off if we could all get naked and reduce our numbers in pure, unarmed tooth and fingernail wrestling battles to the death "

Sounds like a new Fox reality show.

Our basic difference here is that I am talking in terms of a much longer, almost geologic timeframe, while I think you are talking within the timeframe of one or two generations.  Humans need to move past this short-term orientation once and for all.

In the short term we're all dead.

Every pop forecast gaussian curve puts humanity at less than a billion by 2100.

Back up via Game theory along the Gaussian and 40
years from now we have maybe 3 B.

Backup 70 years and pop is down by a billion or maybe stabilized at current levels.

Just stabilization means 325,000 humans must be
removed over and above the current rate of dieoff.

You're talking major human relocation and readjustment.

Meanwhile today-
By Paul Craig Roberts

01/29/06 "ICH" -- -- Two recent polls, a Los Angeles Times/Bloomberg poll and a New York Times/CBS News poll, indicate why Bush is getting away with impeachable offenses. Half of the US population is incapable of acquiring, processing and understanding information.

America has become a rogue nation, flying blind, guided only by ignorance and hubris. A terrible catastrophe awaits.

Finally "fat tail"s (think inverted Gaussians at asymptote)
are prime breeding grounds for Self Organizing Criticality.  Think sand piles and which falling grain of sand will cause the certain avalanche.

We have not seen the greatest event to occur in our lifetimes.

I'm curious about your statement "Every pop forecast gaussian curve puts humanity at less than a billion by 2100."

But I feel a need to say that 'short term' to 'medium term' should be considered as less than 5 years in current human society, probably related to our political cycles. Our eyes need to see a generation and more ahead, seems we have lost that ability lately.

My best guess at global population 25 years hence is 3 billion, it could be a bit more, it could be a lot less. If we made a significant rational shift it could be a sustainable 5 billion, but that is almost certainly beyond the bounds of rational probability.

Yes, the US is the major 'rogue nation'. "Half of the US population is incapable of acquiring, processing and understanding information." now that is another example of blind optimism, lol.

"relocation and adjustment"? More optimism. Very many are going to die.

True, the coming events will probably be more seismic than any ever experienced by humankind, the global wars of the 20th century will seem trivial.


This is exactly the problem-- our willingness to overrun others to take their resources.  Basic, fundamental competition, no different than yeast in a bottle.  Humans need to move past this modus operandi.

Yeast in a bottle are not subject to competition with other organisms - there is no other yeast (or anything) trying to eat their limited food.

It appears to me that many groups who never adopted our cursed modus operandi lived near other groups that did. The short term disparity usually involved the eradication and/or absorption of the former by the latter.

The earth is not a bottle and we don't all behave the same.  Yeast do not kill each other for limited resources and bottles do not have renewable resources.  We kill each other regularly for things that sustain us - allowing the limited but renewing sustenance to better sustain the survivors.  It ain't pretty but it is smarter.  

Why the geological timescale?  If we must consider our actions in that frame, why stop there? Let's work on preventing the eventual cooling off of the earth's core or the death of our sun (whichever comes first).

So you think ALL OTHER SPECIES regulate their numbers by getting into "tooth and claw" fisticuffs?  I'd vet my sources if I were you.  That's ridiculous.  Starvation, pestilence and disease are the regulators - just as they will be for us.
British robins are pugnacious birds. In the breeding season they fight, sometimes to death, to protect their territory. But now, in winter, they are much more tolerant of one another. In summer only one pair inhabit my garden, now I regularly see 4 or 5 individuals simultaneously.

One that was particularly friendly even came into my house a couple of summers ago, had a good look round all the downstairs rooms, perched on my computer screen while I surfed, spent an hour inside.

BTW, british blackbirds REALLY like sultanas (other soft dried fruit too but especially sultanas), so please put a handful out on your bird table every day.

Everybody knows you should avoid those bloody British Robins - except in the winter of course.

We have wimpy American Robins here and they just sit about all day reading the news and surfing the web.

What are sultanas?

Sultanas are dried white grapes, as are raisins. Both are about the size of a peanut.
I suggest reading Guns, Gerns, and Steel by Jared Diamond. I would argue the opposite, that we are genetically programmed in many respects and the only reason that some societies did not develop certain technologies or practices was exactly as Diamond asserts - geographic, ecological, and biological limits. His assessment is quite interesting and he shows again and again that as soon as certain things become available in areas that had ecological or biological deficits, that the new things were adopted just as rapidly as by other humans elsewhere.
I have read Guns, Germs, and Steel.  I love Jared Diamond.  I used to read his articles in Discover, before he'd written any books.  One of his earliest articles, arguing that agriculture is the biggest mistake the human race ever made, is still one of my favorites.

I agree with the premise of Guns, Germs, and Steel. I think he was arguing, not that we are genetically programmed to invent computers and cars, but that circumstances are what drove that invention.  Not racial superiority, not the inherent superiority of Christianity or democracy or free market capitalism, but accidents of geography.

IMO, Diamond's work does not imply that complex technology is inevitable.  The underlying premise of his work is that humans are all the same.  We can develop very different cultures in different circumstances, including sustainable ones.  We can also suffer the fate of the Easter Islanders, despite our fancy technology.

don't forget Pistashio nuts!
LOL what an idea... 800 Tcf of NG in the atmosphere? Global warming anyone? Yes, 2 please :)

I think (theoretically) it would be much more wise to contaminate the oil and gas fields with short lived radiation making it useless for say 50 years. The children would probably know how to use the energy better. If I were a mighty dictator of Iran and I did not have 70mln of people to feed I'd do exactly this same thing. But if I had 70 mln. ppl to feed I'd be researching nuclear power like mad. Got to keep on living, being hungry or dead is not very pleasant they say.

LevinK, come to think of it, I agree your short-term radioactivity is probably a better idea.  Whatever it takes to force the Powerdown mitigation.  Jay Hanson talks about how the world's leaders will probably revert to the infantile argument: "If I can't have the oil, then you can't have it either." versus following ASPO's Depletion Protocols.  Recall that Iraq's retreating troops blew all of Kuwait's wellheads instead of leaving them alone--what a waste!  Expect Iran to do the same thing if they are losing the battles.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

Everyone should read, including all the liked material. The specific relevance to dates and rugs escapes me, since there is LOTS more to Hanson's thesis than just "Wars will start over increasingly scarce energy resources."

This morning on ABC Chuck Hagel (Nebraska Senator) said that a new energy "Manhattan Project" was "the most important priority besides the preservation of the rule of law." It was sort of a throwaway line in the middle of other topics, but still.

i have been debating whether or not to get a new leather couch or get a well
i am now leaning towards the latter
Get the leather couch while they're still cheap. You are going to need something comfortable to sit on with your shotgun while you guard your well.
You might want to keep an eye on the EIA import numbers.  The most recent number was down 800,000 BOPD from the week ending 12/30/05.    I believe that the release of emergency reserves last year may have obscured the developing shortfall in export capacity worldwide.

Also, no one tracks crude oil inventories on the basis of quality.  I suspect that the increase in crude oil inventories year over year consists largely of heavy, sour crude which is obscuring a growing shortfall in light, sweet crude supplies.

"Perfect Storm" is an overused term, but it nevertheless is a pretty good description for what is probably going to happen this year.  

You raise excellent points here. With apologies to Gertrude Stein, in reference to oil, "A barrel is not a barrel is not a barrel." The assumption that oil is fungible (stated over and over again in text books and elsewhere) never has been exactly true and is becoming less true.

In regard to perfect storm brewing, I am a follower both of Yogi Bear and Yogi Berra, "Predictions are hard to make, especially about the future." Almost any "news" is likely to be bad news. Refineries catch on fire. Pipelines burst. Supertankers go aground. Straight-line winds are clocked at 110 knots. Anarchy makes further progress in Africa, which seems to about as certain as the second law of thermodynamics. The dollar collapses in purchasing power against other currencies. The Dow Jones Industrial average crashes down to 4,000 in four days, and then declines to 1,000 during the following weeks. The Chairman of the Board of Governors of the Federal Reserve system has a nervous breakdown and has to be institutionalized. President Cheney has a fatal heart attack.

Cheer up, things are going to get worse.

Re: "Are You Ready for $262/bbl Oil?"

Without putting too fine a point on it, my answer is NO!

What don't I simply choose a quick painless death now rather than a slow suffering decline later?

Seriously, these doomsday scenarios coming out of Soros and Browder are not just some kind of fearmongering. What they seem to actually represent is the high level of anxiety out their in the financial community about peak oil and natural gas issues.

I would point out that according to the article, "Soros ...wouldn't make any specific predictions about prices." I would also point out that the $262/barrel in the headline refers to Browder's worst case scenario. I don't see anyone panicing over Browder's $79/barrel due to unrest in Algeria scenario.

A few grains of salt are in order, I think.

Um, let me clarify: I'm agreeing with Dave. I think this article is more indicitive of general awareness of PO in financial world than about the sky falling, in spite of that somewhat combustible headline.
But that is another equally ridiculous part of these scenarios. Oil could be $79 in three weeks without any unrest in Algeria, or anywhere else, for that matter.
Oil in the short term, as discussed here by others, will have violent price swings at certain tipping points. The case may be made that the current price of oil may be getting ahead of itself. As more and more people buy into peak oil, there may be this overall false sense that oil prices will rise in a linear fashion. Even a large spike in prices due to world events may be of a fairly short duration in the short term. Tracking the number of news articles concerning peak oil may be an indicator of this froth and the reason for such articles: Fortune: Are You Ready for $262/bbl Oil?

For some stock traders, this is a signal that a short term top may be at hand. There is no certainty that oil prices will not retrench back to lower levels in the short term (6 mos to a year). A short duration price spike to let's say $130 a bbl of oil may lower overall worldwide demand in the ensuing months that returns to its long term advance after many have exploded financially.

Remaining long in oil takes a lot of nerve especially if you have a lot of money on the line and may need access to it. Being long oil can be a significant cash flow problem for some if severe downward price movements take hold. There are a lot of businesses with excellent potential that failed due to cash flow. If one can weather the changes then being long oil is an overall good bet. I would wager many investors would not take the short term pain if prices tanked for a year or so. They would panic and lose out.  

Has anyone here thought about a possibilty of another soon to occur staged "terrorist" attack on the US? The Superbowl is next week and with one out of two sheeple tuned in, you really don't get a better bang for the buck ($US) for war jingoing.
Seattle vs. Green Bay isn't it? Not notably Republican places and certainly not the Dallas Cowboys. Hmmm, possible.
Seattle versus Pittsburg -- it's being played in the Detroit dome.

None are big Republican-type cities. It's a Democratic Superbowl!

There's something else you are forgetting about Detroit. I won't mention it in order to avoid fearmongering.
Hello Ignorad,

The Yahoo forum: AlasBabylon has been speculating ever since 9/11/01 when and where the next 'terrorist' attack will occur to complete the North American lockdown and full conversion to a total military machine for the Global Resource War.  Your membership would be welcome if you do not try to sell anything or violate the cardinal rule: boring postings.  Hold on tight, because speculation on global trends runs rampant.  

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

oops, slight proof-reading error: the cardinal rule is NO boring postings allowed.  Generally the moderator [Scott Meredith] never gets involved in deleting members unless he warns you first, and he has lots of terrific speculation in his own postings.  The membership is generally well-behaved and self-policing, much like the crowd here at TOD.  Basic difference from TOD and AlasBabylon: data-driven vs political-driven-- like I mentioned earlier, hold on to your hat!

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

is there realy a way to be ready for $200 dollar + oil?
Sure, have a profession that people want even more of when oil is $200+.
A ricksaw driver? :)
I would not be surprised if the more apocalyptic peak oilers bought some to store in their basement. It would make more sense then manny other extreme survivalist plans.
Don't know if this should appear in this thread on the Iran thread. In the Sunday Times today, there is an article about North Korea selling plutonium to Iran in exchange for oil and gas. I am not sure if there is an online article yet. I am sure the MSM will pick this up though.
Did anyone see this

Iraq aims to boost crude oil exports by about 300,000 barrels per day (bpd) to 1.5 million bpd within six weeks, Iraq's Deputy Prime Minister Ahmad Chalabi said.

"We will make it up to 1.5 million bpd within six weeks," Chalabi told Reuters on the sidelines of the World Economic Forum in Davos.

Link below

Ahmad Chalabi might occasionally be seen flying low, unaided, in the skies over Bhagdad. He does look a bit like a pig.
And The Guardian in the UK just posted this:
Iran crisis 'could drive oil over $90'

Opec says it won't increase quotas to cover for production shutdown,,1697136,00.html

Iran is certainly aware of 'peak oil'. Dr Ali Samsam Bhaktiari has spoken at a number of ASPO Conferences and came on a speaking tour to Australia last year- he works at the National Iranian Oil Company and had to get their permission to come 'down under'. Interestingly, in trms of Aussie impact, ASPO-Australia convenor Bruce Robinson gave a series of presentations to the University of Petroleum in Beijing in 2003, and seemed to spark their interest in the topic (when oil was still US$35 a barrel)- remember those days? :)
(Also Posted on the HL Analysis of Top Three Exporters)

Re:  Blindingly Obvious Idea for Testing the Validity of Hubbert Linearization (HL)

mcgowanjm had a post on "Backward Induction" that gave me an idea that is, in retrospect, blindingly obvious.  FYI--mcgowanjm also posted a link to a FSU oil shock analysis:

We have data on several large regions that are well past the 50% of Qt.  Examples are:  Texas; Lower 48; Total US; North Sea and Russia.

I propose that the HL gurus take the data through the 50% of Qt mark--AND ONLY THOSE DATA POINTS (i.e., pretending that the data after the 50% mark don't exist)--and estimate what Q (cumulative production to date) should have been through 2004, and then compare those  predictions to the actual data.  This would be especially useful for testing the validity of the HL model as applied to Russia.

This seems so obvious that it would seem that someone should have tried this before.  Anyone know if it has been done?

If as I suspect, this analysis confirms that we are at the threshold of a severe net export capacity crisis, I think that someone needs to hold a press conference.  

Re:  Proposal for Action

I used to say that the suburbs are dead;  the suburbanites just don't know it yet.  

It's probably more accurate to say that the suburban commutes are dead; the suburban commuters just don't know it yet.

This is probably a pipe dream, but in my opinion an excellent proposal is to abolish the payroll tax (Social Security + Medicare) and replace it with a liquid transportation fuel tax.  We can take the assets in the "Trust Funds" and use them to pay off the liabilities that the Treasury Department has.  Of keep them--it doesn't matter, there is no real value there either way.

The majority of American households pay more in the payroll tax than in the income tax.  This would be a tax cut for most households and it would a massive tax increase on those who are profligate in their use of energy.  No matter where you live, your cost of goods would go up, but if you lived close to where you work, your effective tax rate would go down. Of course, those who persisted in long commutes would pay the price.

There would of course be very powerful forces opposed to this idea--the housing industry; auto industry; airlines; trucking--the list goes on.  But the fates of these industries are sealed.  It's not a question of if they will contract/collapse; it's just a question of when.  The sooner it happens, the better off we all will be.  This idea would cause an immediate across the board push for greater energy efficiency.  As energy consumption falls, we keep jacking up the tax rate to keep the money flowing for Social Security and Medicare, which causes an even greater push for energy efficiency, and the cycle goes on.

BTW, a high gasoline gas does not necessarily equate to a lower standard of living.  Norway, with the highest gasoline tax in the world, has the highest standard of living in the world, perhaps partly because their care ownership per 1,000 people is about half of what it is in the US.  

There would be some other benefits.  As we turned to walking, biking and mass transit, our health would improve.  There is pretty much a linear correlation between obesity rates and total miles driven (here in the US, we are the world champs in both categories).  

Completely correct WT, but now you must find a means of selling this to either or both of: the US population, US politicians. I look forward to your strategy.

The US should have been increasing gasoline etc tax for a decade and more, all rational developed countries have. That it hasn't is just an indication of how corrupt the US political system is.

That the American people don't want their gas tax raised could be indicative of many things, but I am struggling to see how corruption is one of them.
As long as the rest of the world is kind enough to finance the huge US trade deficit - that is exchanging goods for paper US dollars - the US government and the average US citizen can live well beyond their means - and better than most of the rest of the world.

VP Cheney already said the US way of life is not negotiable - and backed that up by an invasion of Afghainstan, Iraq, and maybe Iran to come.  I don't think Americans will voluntarily accept a lower standard of living - even in return for a better future.  Hope I'm wrong about this.


Are you suggesting that the motive for Japan, China and other to hold US dollar assets is kindness?
Temporary self interest, temporary mutual interest. Diminishing.
I agree. Now let's try to define temporary. You suggest the period of mutual interest is ending now. I see little evidence to support this. I contend that prior to developing a domestic market to replace the export dependency of its economy, China is stuck with holding large amounts of dollar assets. I do not think that China's economy can thrive without exports to the US and that thriving is essential to China at this point in time.

I believe that the US is in the stronger position now, but that this may be shifting. I do see a very strong argument that in ten years or so, China could hold the power to damage the US economy and role of the dollar as global currency. However, ten years is a long time and I don't give much credence to the power to predict that far out. There are a lot of assumptions that need to be made to support this.

So I think that mutual interest could be expanded to read "equal mutual dependence"; that the factors required to change this do not exist; and that refering to the holding of dollar assets as "kindness" is symptomatic of misinterpretation of this issue by the doom-mongers.

As I always have to say, this does not mean that I think US dollar policy is good, that the dollar is invulnerable or that I am a neocon. I just think it is better to look at the fact than to hurl around ridiculous assertions.

IMO the least reason for worry are the central banks of China and Japan (holding roughly $2 trillion). There are other much more fuzzier and unpredictable speculative forces that can trigger a runaway from the dollar, a thing that would probably force those two to join - total US assets held by foreigners are $11 trillion and rising.

In short it might not be of anybody's interest from the majors, but it ain't guarantee it will not happen.

I should say a little more about this before you all pile on! I too think it's a good idea from the perspective of discouraging driving. And yes, it will be opposed by the usual suspects. But, like all proposals to cut taxes on income and increase sales taxes, it is highly regressive: the poorer you are, the more it will hurt. And as we discussing earlier on TOD, it seems that the poorer you are the more you drive. This is why most Americans will oppose it and their opposition, IMHO, rather than corporate lobbying, will be the decisive factor dooming any proposal to increase the gas tax.
Yes, good point, sales taxes are regressive and, since CPI measures significantly understate inflation for low income groups, probably more regressive than might at first seem, especially if on benefit. However, before too long low income groups may not be able to afford to own and run cars, perhaps they would be wise to adapt sooner rather than later. Let's face it: if gas taxes are not increased to suppress US profligacy then oil and gas prices will rise more than otherwise to accomplish the same aim. Such are market dynamics.
i myself am curious as well. gasoline tax? first there is the price of gasoline, then add on federal, state and maybe a few cents to the gas station charge (if that). Thats it.
pretty cut and dry. and we still don't like paying tax, I can't see where corruption falls into this at all.
I was speaking of those who stump up the money necessary for US politicians to succeed. Methinks the most significant contributors would not wish gasoline taxes to be increased. That is what I mean by corruption.

The american people don't want increased taxes on anything, lol, but then many of them are barely aware that they fart.

Well!  I certainly don't fart and there's the end of it.
This is a really good, well-thought out idea and I'm sure Bush will mention it or something like it in his State of the Union Speech.  I have to go now--monkeys seem to be flying out of my ass.  Seriously, good idea.
I don't recall the exact numbers off-hand, but the real gas tax has not been raised in some years.  I believe the gas tax was not even adjusted for inlfation for some years, then adjusted once in the 90's for inflation, but not touched since.  anyone know, off-hand?

Talk about a tax taboo!

Government will not tax gas because we like our energy so cheap we don't have to think about it.  Of course, we'd prefer "too cheap to meter" but we'll take the cheapest price we can get.

By the way, an increased gas tax alone would have a negative impact on the poor, but this impact could easily be off set by devoting a portion of the collected tax as an energy rebate for low income folks.  This would help with increased cost-of-living due to the gas tax, but also due to rising energy costs which hit the poor disproportionately in many ways.

Might be a little too "compassionate" for today's so-called "conservatives, though, eh?

Take the rest of the gas tax to fund energy R&D, and serious projects related to transit, walking, biking, and relocalisation of manufacturing and agriculture.  Add in a bonus for new businesses making "sustainable" products or services in a sustainable way.

Hmmm....can we say "political inertia"?  We'd better get pragmatic about the growing income gap combined with rising energy costs.  At the very least, such a fuel tax plan could be offered as a pragmatic approach.

LUKoil Cuts Exports

 LUKoil said on Friday that it would cut fuel oil exports by a quarter in February to meet local demand at a time of extreme cold. Traders said other firms might follow suit. A LUKoil official said the firm would cut exports by around 118,000 tons in February from the 435,000 tons it intended to send abroad in January.

 "LUKoil confirms it is ready to deliver fuel oil to [power monopoly] UES, and the housing sector as electricity demand has peaked because of the cold snap," the official said.

 Private major LUKoil has always tried to maintain good relations with the Kremlin and has often been among the first to react to state requests, such as a call for a cut in gasoline prices or a reduction in fuel oil exports. (Reuters)

I thought you may be interested in the new technology I high light to deal with this largest problem of them all, Climate Change, Energy and Space propulsion.

There are three companies pursuing hydrogen-boron plasma toroid fusion, a form of aneutronic fusion , Paul Koloc, Prometheus II, Eric Lerner, Focus Fusion and Clint Seward of Electron Power Systems . A resent DOD review of EPS technology reads as follows:

"MIT considers these plasmas a revolutionary breakthrough, with Delphi's
chief scientist and senior manager for advanced technology both agreeing
that EST/SPT physics are repeatable and theoretically explainable. MIT and
EPS have jointly authored numerous professional papers describing their
work. (Delphi is a $33B company, the spun off Delco Division of General

Vincent Page (a technology officer at GE!!) gave a presentation  at the 05 6th symposium on current trends in international fusion research , which high lights the need to fully fund three different approaches to P-B11 fusion (Below Is an excerpt).  
He quotes costs and time to development of P-B11 Fusion as tens of million $, and years verses the many decades and ten Billion plus $ projected for ITER and other "Big" science efforts:

"for larger plant sizes
Time to small-scale Cost to achieve net if the small-scale
Concept Description net energy production energy concept works:
Koloc Spherical Plasma: 10 years(time frame), $25 million (cost), 80%(chance of success)
Field Reversed Configuration: 8 years $75 million 60%
Plasma Focus: 6 years $18 million 80%

Desirable Fusion Reactor Qualities
* Research & development is also needed in
the area of computing power.
* Many fusion researchers of necessity still
use MHD theory to validate their designs.
* MHD theory assumes perfect diamagnetism
and perfect conductance.
* These qualities may not always exist in the
real world, particularly during continuous operation.
* More computing power is needed to allow use of a more realistic validation theory
such as the Vlasov equations.

  • ORNL is in the process of adding some impressive computing power.
  • Researchers now need to develop more realistic validation methods up to the
limits of the available computing power.
* Governments need to fund these efforts."

I feel in light of the recent findings of neutrons, x-rays, and gamma rays in lightening, that these threads need to be brought together in an article.

You may  see my efforts with my "A New Manhattan Project for Clean Energy" article:

which got published on Sci-Scoop and the Open Source Energy Network but rejected on Slashdot. The New Energy News will soon run an article on these companies efforts toward aneutronic fusion.

About a year ago, I came across EPS while researching nano-tech and efficient home design. I started a correspondence Clint Seward, Eric Learner, and Paul Kolac, sending them science news links which I felt were either supportive or contradictory to their work. I also asked them to critique each other's approaches. I have posted these emails to numerous physics and science forums. Discussion groups, science journalists, and other academics, trying to foster discussion, attention, and hopefully some concessus on the validity of these proposed technologies.
My efforts have born some fruit. Clint and Joe Dwyer at FIT have been in consultation on Clint's current charge transport theory for cloud to ground lightening.
I have had several replies from editors, producers, and journalists expressing interest. From organizations as varied as PBS, Popular Science, Popular Mechanics, New Energy News, the Guardian (U.K), and the San Francisco Chronicle. However, none of this professional interest has resulted in a story yet.

I have been responding to all of the articles that filter in via my Google alerts on "fusion power". The most recent was the "Happy News" article by Kris Metaverso.

This post is a plea to the science writers among you to craft a story covering aneutronic fusion, the P-B11 efforts, Eric's Billion degree temperatures and x-ray source project, Clint's lightening theories, and DOD review, and Paul's review by GE. The minimal cost and time frame for even the possibility of this leap forward seems criminal not to pursue. If you read my Manhattan article, you may have noticed that I am not a writer. I am a landscape designer and technology gadfly wondering why this technology has never been put in the public eye.
My hope is that someone, more skilled, would step up to give a shout out about these technologies. Please contact me for copies of my correspondence with the principles, interesting replies and criticisms from physics discussion forums and academic physicists who have replied to my queries.

Thanks for any help

Erich J. Knight