DrumBeat II: October 19, 2006

For your threading pleasure... Your topic this evening is undefined. In fact, let's let the newbies (of which we have quite a few) steer this one. Newbies, lurkers, etc., do you have a question that you've been thinking about?

(However, we should pimp the ASPO Conference one more time. There's still time to register! Information and links under the fold.)

2006 Boston World Oil Conference, Time for Action: A Midnight Ride for Peak Oil. Co-Hosted by ASPO-USA and Boston University.

ASPO-USA announces our second "Dialogue with the Experts," a high-level conference to discuss impacts of and responses to a peak in world oil production.

Dates Thursday, October 26 and Friday, October 27, 2006 (plus pre- and post-conference events)
Location Boston University; Boston, Massachusetts

Speakers include Matt Simmons, Richard Heinberg, and many others, including our own Stuart Staniford. This is a conference you can't afford to miss!
There's been an enormous amount of interest and talk of the large surge in investment in alternatives to oil since the price of oil really went up. While the majority of this talk has been focused on renewables, there's also been a lot of investment into very high carbon alternatives - tar sands, oil shale, coal liquefaction, etc. - that I would guess (need to look into it, and open to debate) probably dwarfs the investment in renewables in the past few years.

This is a disaster for the environment - yielding even dirtier oil - but quite frankly, you can see how it works - business is going to look for the cheapest alternatives, and absent carbon regulations in the states, these alternatives might outcompete, or at least coexist with, cleaner oil alternatives like ethanol, hydrogen, efficiency, and electric. What do people think about this?

General question:

401k: good idea or bad?

in my experience a 401 k can be a benifit because you probably really wont miss the money that goes into it      but the particular 401 k i am in only has mutual funds for investment options   my ira has done a lot better even with the (megar) employer match      if you work for a co that even offers a 401k  you may be prohibited from investing in an ira    
Are you getting an employer match?  What investment options do you have? What stage in life are you?
The traditional view was that putting money away in a tax-deferred account was a smart move because you would be in a lower tax bracket when you retired, assuming tax rates stayed roughly the same.  That assumption may not be valid in the future, according to many of those who notice the looming Social Security/Medicare crisis and extrapolate what it might take to pay for it.  See Burns and Kolitkoff, "The Coming Generational Storm."  So it's not as easy a question to answer as it used to be.  
Kotlitkoff also wrote back in July, Is America Bankrupt distributed via the STL Fed.
true that in my case i may be in a higher tax bracket   these witdrawls can be managed to minimize the tax consequences    in fact i dont plan to stop working     just to retire from punching the time clock  
RussianCrude:  401k: good or bad idea?  That really depends upon what your situation is.  My advice is to get out of debt as soon as you can to avoid becoming an endentured servant to the money changers, oops, I meant banks.  (Fractional reserve lending and Uncle Ben make my blood boil!)  

If you have any debts, pick the one with the highest interest rate, pay that one off first and then pay off the rest of your debts in decending order of interest rate.  If you don't have any debt, go for Treasury Inflation Protected Securities (TIPS) if you're a conservative investor but only for the medium term.  These may just become worthless if the govt. can't pay it's debts.  Otherwise pick up as much silver and gold as you can.  That's just my humble opinion and please note that I'm a serious Doomer.  If you ask 10 different people you'll get 10 different answers.

i'm not that bullish on tips       they are a bond just like any other bond    bid down by all the excess money chasing after these so called safe govt securities       it just dont seem to me they pay a sufficient ( inflation )  premium to be of any value     and dont forget the inflation component of these bonds is the cpi         and i hope you dont think that actually represents inflation
I'm not too bullish on tips either.  That's why I say only for medium term (1-5 years) and only for conservative investors.  Many people don't have the risk tollerance necessary to ride through the undulating plateau that lies ahead.  I think the bumps and swings will be quite large in silver and gold.  I'll just be buying during the dips in the 200 day moving average.

I realize that these bonds are related to CPI but when the inflation hits they'll still be better than 10-year notes.  I believe gold and silver will be the best stores of value in years to come.

Again, 10 different people will have 10 different answers.  I've learned a lot from the opinions of others here on TOD.  May I ask what you think are going to be the good investment vehicles in the furure elwoodelmore?

it's different for each person, but so long as your employer matches you I'd milk it for all it's worth.  Just remember to diversify ALOT (especially since we all know that stocks really AREN'T gonna be going up forever and ever).
401K with matching from your employer is a good deal for now.

Adding to what others have said:

  • Diversify your holdings.
  • Financial advisors will advise young folks to play risky.  That is "old" advice that you should perhaps not follow.
  • Put some $ in conservative stable funds, some in diversified bonds, some in international funds (stay away from emerging international right now...mature international funds have done well).
  • I also have done well in midcap value funds.
  • DO NOT put all your eggs in one basket (especially energy stocks).
I have no debt :)
but no matching :(
Excellent on the debt side...not many people can say the same in this day and age.

Bummer on the matching, but still worthwhile...just invest what you can without causing you undo hardship.  Don't invest what you can't lose...even if it's just $100 a month.

No employer match...then look very carefully at the choices offered in the account.  If they are high-expense and low-performing (and these frequently go together) you may be better off in several broad index funds in a taxable account. This is a complex topic and can't really be dealt with in a few words on a drumbeat.  
For me, good idea, especially this year. I just upped my withholding to 50% 'til the end of the year. I'm gonna withhold enuf that I won't have to pay any income tax this year. Let somebody else pay for that effing war.
(Have a 2K credit for solar, will get another "poor person's credit" for putting money in my IRA.).
Not with my money, this year.
Another rule:
Stay away from your company stock in your 401K. If your company gets in trouble and you are canned - then you get screwed twice!
great idea now can someone tell me the co2 balance for corn based ethanol   it would seem to me that ethanol  if it produces any net energy at all would probably result in a net increase in co2 vs just burning fossil fuel directly
Define "newbie", because I'd like to know when we're going to stop doing stupid stuff.
I thought this recent article by Kunstler sumed things up


From Kunstler's article, owning oil (futures not stock in companies) is one of the safer investments.   You are betting that people will keep driving as the prices slowly rise. Higher mpg cars, ethanol, and solar PV will take at least 5 years to have an significant impact on demand. Will people car pool? Not until gas hits $5 or $6 (=crude over $100).

Time to make some money  in oil futures and help save the environment. The nice thing about owning a commodity is that you don't have to decide which company will win. There is only one oil.

I'm not sure Kunstler is the one I would turn to for investment advice. From a finance standpoint, it is wrong to say that oil futures are a safe investment - they certainly are not. Oil is a highly volatile commodity and futures are a risky instrument. A more complex version of this same argument is essentially what caused the $6 billion hedge fund Amarath to collapse.

Oil futures are not just betting on the future use of oil, but making a bet that the market is underpricing it. Slight shifts in perceived supply and demand can cause severe volatility in futures. Timing is also crucial. What Kunstler said was equally true six months ago, but if you had bought options that expired last month, you would have lost a lot of your money.

None of this is to say oil futures are not good investments. However, they are not "safe" and an unsophisticated investor should be careful in considering them. Nate Hagens recently wrote a TOD article on oil futures, which would be a good starting point for learning more about them.

I agree that short term futures are risky because there is no time to wait out short term drops. Long term futures are quite safe if you accept peak oil and given you can cover a margin call down to $45 per barrel.  

The nice feature of long term futures is that it just takes one spike in price to cash out. I think $15,000 buffer per contract should get you through most troughs.  Do you think oil is going below $45?

I'm not saying that oil futures as an investment class are not good. I think the chances that oil goes below $45 are small, but do exist. I do think that oil prices over time will continue to rise. I think it makes a lot of sense for people who think that oil prices are going up to get exposure to energy and oil futures are certainly a dircet way of doing that.

However, I don't think there is an awful lot of easy money in publicly traded asset classes. Futures contracts are essentially making a bet with someone else on where the oil price will be at a given time. As we've seen on polls, it is much harder than it looks.

I think for people who don't mind exposure to a volitile asset and want to be able to profit directly from high oil prices in the future, it could be an excellent wager. However, I think someone would be unwise to put a large portion of their assets in oil futures.

I don't understand how you cash out on an oil future if the spike occurs before the end of the contract.

I don't understand how you cash out on an oil future if the spike occurs before the end of the contract.

IIRC, you can cash out any future before the end of the contract, in fact most people do. Unless you want to take physical delivery of thousands of barrels of crude...

JN2 (back from 2 weeks vacation).

Yes. This is right. I meant to show that in "cashing out" before the expiration, you are selling the contract to another buyer, but the contract still exists.

As I noted in another comment to realist, if you have information that a future event will reduce the value of the futures contract, you need to be aware that the field of potential buyers is likely to have this same information of this as well.

So while you can get rid of the contract, you may not be able to "cash out" before the valuation impact.

I don't understand what you are saying. If I sell a contact and make a profit, someone else is stuck with the liability.

The far out futures are thinly traded and generally a very good deal because most professionals are tradjng the front months and trying to make a quick buck. Like Warren Buffet, if you are willing to take a short term loss you can play the long term due to the fundamentals of peak oil. Most "professionals" don't get peak oil. Just look at the 2011 price for the proof. You are assuming that everyone acts rationally with the same information. The problem is that the markets have never seen peak oil so traders fall back on old habits that govern corn futures.

Now is the time to get in  before the institutional investors figure that out.

I'm not advocating moving your entire portfolio into oil. But it seems prudent as a hedge against energy inflation rather than trying to guess which oil company will "win".  

If you are going to sell a contract to someone who will be "stuck with a liability", do you think they are going to take it off your hands at your purchase price, or at a lower valuation that incorporates the liability? There is little doubt you can sell the contract, call it "cash out" or "write down the loss" if you like, but you may still lose your shirt.

I have agreed with you that I think peak oil is not priced in by those who manage money professionally. Whether or not you are smarter than the profresssionals is a different story and one that is based on opinion. Warren Buffet is probably not invested in oil futures and only invests in areas where he feels he has a level of competive knowledge above and beyond that of other investors. I don't think he would agree that any of us meet that criteria.

I do think that oil futures can be a prudent hedge against energy inflation. I'm just saying that there is no easy money. Oil future are volitile, volitility is the definition of risk in finance, so oil futures are risky. I do think it may be a good risk for certain people and for certain portions of their portfolios. I also noted above that as part of a larger portfolio oil futures can actually reduce the overall risk if their volitility is not correlated.

I'm glad you agree that oil futures make sense as a portion of your portfolio. Most fund managers are not savvy enough to deal with long term commodity futures. Are there any vipers tied to 2012 oil?

Anyone who bought during the peak at $75 lost money so it requires some savvy to figure out when the oil companies are going to lower the price for political reasons or to kill altnative energy solutions.

I find it interesting that one of the oil execs at Davos threatened to put Vinod Kholsa out of business buy lowering oil prices for two years. To me these are the biggest risks.

A shrewd investor should be able to figure out when these manipulations are occurring and protect themselves. A typical examples was the mid term election. I stayed out of the market becuase I knew the oil companies were under big pressure by the republican incumbents to lower prices and my prediction turned out to be a good one. You can't always be right but if there is any doubt it pays to sit out for a while.

Once someone starts selling cellulosic ethanol, I will sell my futures and see how the oil companies react, but in the meantime I think we are going to have a slow inflation of oil now that the election is imminent.

I just read Nate's excellent article. Below are my responses to the risks:
1. Since oil is priced at the marginal unit, demand destruction, even in the face of less future reserves, will result in price drops. Large exogenous shocks to the system, like bird flu or some other natural (or man-made) disaster could cause oil prices to drop precipitously.

Protection up to $45 via margin buffer should get you through most disasters. I sold the day after Katrina hit and made a nice profit.
2. Since oil is only storable to a point by end-users, a situation like the one above would preclude end users (that are aware of long term scarcity issues) from `hoarding' at the margin and prices could stay low until the economy recovered.

This is a very slow event and the alert investor should have time to react.
3. If oil prices go high enough, there is the risk of nationalization of the resources, rationing, windfall profits taxes on oil companies, all of which change the dynamics of the oil pricing market.

Oil rationing and new taxes would be announced weeks in advance and allow investors time to sell. 80% of world oil is already nationalized.
4. In a real collapse (New Orleans on a national scale due to a shortfall in production below the level needed to make the system work), money in futures in a brokerage account might be meaningless.

Doomsday is at least 10 years off. Why not pay off the mortgage in the meantime?

For proactive investors who are willing to trade on news that changes their opinion and/or hold during times they think are temporary price drops, I don't disagree with most of what you are saying.

I do want to bring your attention to one key point.  Yes, you may have time to sell in advance of a calamitious event that would reduce the value of the futures contract. But keep in mind that if you know that the future event will impact the value of your futures contract, you have to assume the buyer (market) will as well.

If you hold a 2010 futures contract and news comes out that will cut the value future in half at the contract end, the market value will fall immediately. In fact professional traders are likely to be able to anticipate the news and trade faster than you can.

The same would apply for a stock. If you hold the stock of a company and find out that their main revenue source will be cut off in five year. You would sell immediately. But so would everyone else. The stock would rerate at a lower valuation consistent with the new expectation.


Again, I do think that oil futures can be an excellent investment. I do think that oil prices will go up and I expect that a futures contract enetered into today will be profitable at expiration or for sale to another investor at an earlier point. However, someone considering investing in oil futures should be aware this is a volitile asset class that can move up or down drastically (which is the definition of risk in finance).

Another thing to consider is that oil futures may well have less correlation with you existing assets than a typical investment. in this regard, holding a portion of your assets in oil futures could reduce the overall risk of the portfolio.


I think that sometimes individual investors can have the advantage of a longer term perspective than traders or institutional investors, who may be constrained by trading programs, policies, etc. Further, as some have noted, we here on TOD have some "unique" knowledge of the oil market, which may be good for some profitable investing.  One of the keys to success in this area, though, is active monitoring, which I think Jack touched on.  Don't even think about oil futures as an investment if you're not willing to monitor it constantly. Many people seeking investment "advice" simply want to know where to put their money.  Without more time investment in the subject, these people are likely to experience subpar returns.
Let's say that I might want to put some money in oil futures - how would I go about this?  What is the minimum investment, etc...  Does companies like Fidelity or other stock brokers allow one to buy futures?  I have way to many questions...
if you dont want to invest in oil co.s stocks   and futures are too scarey    condider energy royalty trusts   canada has a ton of them   also quite a few in the us of a
Fidelity won't do it. You need a commodity broker like Lind-Waldock, Refco or I use http://www.infinitybrokerage.com/. I've dealt with Russ Carlson for 2 years and am happy with him. I generally make my own decisions about trading also they would be happy to sell you advice.

Remember that futures accounts are regulated and protected by the SEC. Do not open a hedge fund that is not protected. I had my account with Refco when their hedge fund collapsed but because my money was in a futures account it was protected and I did not loose a dime.

Check out the SEC website for more information before investing anything. http://www.sec.gov/answers/cftc.htm

   In that article citied from the Daily Reckoning, I never suggested or even hinted that anybody ought to buy energy stocks.  This is just a false assertion.
--Jim Kunstler
There seems to be an implicit assumption in many discussions that the only options to save oil are either technological and require large investments or disruptive lifestyle changes. This is not necessarily so. Slight changes in individual and collective behaviour can lead to significantly lower energy demand.

It is, for instance, perfectly possible that many people with multiple cars have switched to using the smaller, older, "less sexy" car, leaving the new "large iron" in the garage.

And speaking from my own experience I can certainly say that many have switched to taking the local train to work and did not go back to their old habits of driving. The result is that it has become much harder to find a seat on the train...

In case of heating oil the difference between wearing a t-shirt and a sweater will have a 5-10% impact on heating bills. Something as simple as closing the door to an unused room will do the trick and save a few percent energy.

Any one of these rather trivial changes can explain short term demand destruction on the percent level.

The longer term demand of transportation fuel will, of course, be dominated by falling sales of large SUVs and trucks vs. rising sales of compact cars and hybrids. These changes are cumulative and far from trivial for either the automobile or the oil industry. Hybrid sales are growing at 50-100% year over year and are only limited by manufacturing constraints, not demand for these vehicles. And one can only speculate how many people do not choose a hybrid or even a compact but are buying a car one size down from what they would have bought if there had been no fuel price pressure.

Is that your blog? If so, where in Oklahoma do you live? I was born and raised in SE Oklahoma.
Yes, it's mine. I live in Norman.
Are you at OU? I am from Hugo, and naturally love those Sooners. :-) Although this season has been a bummer.
Yep, go Sooners! Things aren't so bad. Only two losses so far. Thompson's been playing well. Peterson is sidelined, but it's not serious. Patrick and Gutierrez will try to fill his shoes this weekend. Hugo, that's pretty country down there.
Alright...alright...watch it or I'll start talking KU Jayhawk basketball...


Glory be! The midwest is well represented here tonight. ;-)
The most time I've spent in SE OK was at Lake Eufaula years ago.
Did anybody happen to read "Making Fire from Ice..."?  

Is there any validity to this?  It seems extremely dangerous to me, with a problem quickly expanding to the point of environmental catastrophe?

Oh yeah, methane clathrates really do exist, really exist in incredible quantities, and really are extremely difficult to "mine."  The problems are great depths, that they either have to be heated in place to melt them into gas or mined somehow, and they can result in nasty things like underwater landslides and methane bubbles that can easily sink ships.  They sometimes occur in permafrost as well.

The big problem with them is that they are one of two sources of methane that we may be melting due to human induced climate change (permafrost is the second), along with methane released from drying peat bogs.  Heat the oceans enough and we could get a world-wide release of methane clathrates from the oceans.  Heat the land enough and we release methane from permafrost and peat bogs.  Release enough methane and Lovelock will clearly be right that we're cooked.

I'm sorry, I meant when are we going to stop doing really stupid stuff.
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Sorry, it is a picture of this:


I bought a 2011 oil futures contract for $62.40 a few weeks ago. It is now up to $65.40 so I made $3000 with an investment  of about $4000. Should I sell it or wait for oil to go back to $75? Making $13,000 is very tempting but I'm not sure if it drop down to $55 or lower.
wow. I like the story from the floor, looks like it is worth holding on for a while.
Nobody ever went broke taking a profit.  :)
Well...worth waiting until after the elections...see where it goes for a few weeks and then decide.  I don't think things are normal right now.
Take the money and run. If you are really interested in oil and gas investment then take a look at royalty trusts., where companies sell interests in already producing fields and pay royalties to the investors. Excellent returns and you are a heck of a lot less likely to be stung by world events. A couple of good ones to consider are the XTO Crosstimbers Royalty Trust, or the Louisiana Land and Exploration Royalty Trust.
  Another possibility is investing in individual wells. I personally am putting together some reentries, but there are lots of excellent operators in the US. This is a real gamble though, and not for unsophisticated investors. The producing interests are hard to sell, so they are illiquid.
  But as far as fairly low risk, I'd look at oil service companies with a good dividend and track record. With peak oil these are very busy and will remain so for years. I'm t alking about Schlumberger, Baker Hughes, Corelabs, National Oilwell, and well run drilling companies like Rowan or Patterson UDI. They also vary in price with the price of oil, but the stock doesn't have an expiration date like a contract for oil or gas, so its a lot easier to hold on..
Oilmanbob, what's your take on Valero  (if you have one)?
I'm glad I didn't take your advice. My contract went from $62 to $65 for a $3,000 profit in the last 2 weeks. Looks like oil is headed higher still.
Is anyone aware of an electric bus system that relies heavily on batteries?  I've been looking at the various permutations of mass transit, and IMO a 1-3 compartment trolleybus is the easiest electrification of urban/nearurban mass transit to implement right now.  Largescale PRT is just about impossible, heavy metrorail is expensive as hell, trams require you to dig up the street, reroute underground gas/water/electric/signal lines, place a track in traffic, and then run overhead wiring to boot (unless you go for a mildly dangerous third rail approach).  Rubber-tired trolleybusses do require more road maintenance, but they only need an overhead wire, and can dodge through traffic to some degree.

It seems to me it would be a hell of a lot easier if the busses only had to hook up to the cable on portions of the route where construction costs for electrification are cheap, as opposed to staying connected through every single turn, every single intersection, and every windy subdivision feeder road.

I know there are numerous battery techs coming out now, super and ultracaps are available, that there have been advancements in brushless and wheelhub motors in the last decade or two, and I'm curious if they've been applied to a trolleybus that only has to operate on electrified track half the time.  How far has this brought streetcar technology in the last 120 years, and how much easier/harder will it be to implement than the last time we did it at the turn of the last century?

You may have to wait for Alan.  He's the expert on electric transit.  I know that Seattle's system uses some buses that can run on diesel or electricity.  My family took one from downtown Seattle to the airport a few years ago.  It left the downtown overhead electric grid at the end of the Seattle transit tunnel.  The driver started the diesel engine and we took off to the airport.  A good solution for the future for the fringes where the electric systems end.
Portland has developed a process that spans underground utilities (one can dig under the line and repair, say, a water main while streetcars roll overhead).  Cost is $300/track foot.

Electric trolley buses have their place (add ~80 hp diesel to motor around gaps in the line at slow speed and without air conditioning.  The need for a/c negates an all battery option for "half the route").  Instead adapt a hydrid bus to run off a pantograph when in a multi bus line street and run off diesel the rest of the route.

Best Hopes


AFAIK (I have talked to Charlie Hahn of Skoda who has done most of the 5 US trolley bus lines) Seattle trolley buses have larger diesel engines (than 80 hp) but small air conditioners.

80 hp was in the range for some in New Orleans (diesel used strictly for yard and getting around obstacles.  No a/c when under diesel power).

I see a good place for electric trolley buses, and they may be quicker to build & install than streetcars.

See my Step #3 in reducing US Oil Use by 10% in 10 to 12 years.


Best Hopes,

Alan Drake

How much energy is taken up by air conditioning?

My idea was that with fast-charging batteries and super/ultracaps available now, building an electrified overhead line that gives 5x the current over 2km of the route is probably quite a lot cheaper now than running the normal amount of current over the whole 10km route - particularly if we're talking 2 or 3 10km routes that share that corridor.  Brakes can be charged regeneratively like any other EV - and the flexibility of being able to double-dip overhead portions with multiple bus lines looks like it would vastly lower the barriers to streetcar implementation.

There is a wide gap between many-hour-operation capabilities of EV's and the emergency batteries / regenerative break capacitors I'm reading about used in trolleybusses.  It appears that hydrocarbons are the first answer engineers give to go between electrified areas, but then again, they're the first answer for all bus power.  Does a fixed-route urban/suburban trolleybus really require a full-on fossil-fuel hybrid bus?

How much weight/volume would we talking about for a battery that can power a bus for a solid 10 minutes off-grid with air conditioner / heater on, and recharge that in 1-5 minutes on-grid?

And what kind of benefits are there in shared-traffic tram lines over trolleybus lines, other than road wear?

*Streetcar meaning electrified in-traffic mass transit vehicle, rather than segregated grade or right of way.
I have been told that there is a section of line in San Francisco that supports both trolley buses and streetcars (streetcars need only the 600 V DC line, trolley buses need a second return wire.  Streetcars return current via the track)

The biggest, and most important delta is that streetcars stimulate TOD, buses (electric or FF) do not.

Streetcars get higher ridership than buses (trolley buses do seem to get 5% to 8% more ridership than diesels, but still are far short of streetcars).

Human preferences rather than engineering "facts" explain why.

I, and the local billionaire, frequently used an un-airconditioned 80+ year old, loud, vibrating streetcar.  A modern bus stop on a parallel route is equidistant from my home yet I never use it.  I am sure the billionaire would NEVER be caught dead on a public bus.

The unimportant technical details.

Streetcars require one overhead wire, trolley buses two.  Streetcars have much lower rolling resistance.
Streetcars can weigh more, allowing a stronger, more durable frame and longer service life.  
Streetcars can be longer, taking many more passengers (more efficient labor).
Streetcars can have level boarding (some types) allowing roll on access for wheelchairs, strollers & luggage.

BTW, streetcars can (and do) travel in traffic, but also in reserved ROWs.  The St. Charles Streetcar Line in New Orleans has 1 mile in traffic in the CBD (bracketing a 51 story building) and 6 miles in reserved ROW (out of service access to the barn is in street).  The 5 mile Canal Streetcar Line includes a 1 mile spur down Carrollton in street.  The rest is in reserved ROW (except 150' of one track at the Cemeteries terminus).  The Riverfront Streetcar Line is 100% in reserved ROW.

All except Riverfront have at grade crossings at every street.

Light Rail can travel in mixed traffic, but almost never does in the US.

More later,

Best Hopes,


Bus air conditioners have, at best, a 10 EER.  That means that 4 tons (minimal for a bus I think, but I live in New Orleans :-) has 48,000 BTUH and needs 4,800 watts to run.  Our new streetcars have 10 tons of air conditioning.

Electric resistance heat takes far more.

8 km of stop & go bus route should take close to 30 minutes (certainly 20) and that takes a lot of energy for heating or cooling plus moving (including weight of batteries).

Some routes will have hills (unless you live in New Orleans :-), so extra drain there.

Buses are restrained as to size.  Low floor buses lose seats and that can be a problem.  Add a big old battery and the floor space becomes an issue.

I am afraid that hybrid buses are the best available choice for mixed use.


Hello TODers,

Below is a copy of what I posted on Reddit to help bring eyeballs to Nate Hagens recent keypost on Windmills:

Energy Returned on Energy Invested [ERoEI] is the least understood, and the hardest to define component of detritovore existence.  A cheetah clearly understands that it needs to catch more gazelles than the energy it expends to run them down, otherwise it quickly starves to death.  Sadly, humans, when filling their car's gastank, or flipping  a light switch, do not consider that the 'gazelle' they are burning was captured over 100 million years ago.  It will be a very long time before the next 'gazelle' comes along.

Capturing energy from wind can be compared to the last deep breaths of the cheetah as it desperately tries to close the distance to bite down on the fleeing gazelle.  No guarantees that sufficient energy will be captured, then the cheetah reaches exhaustion: and can only stop and pant heavily as it watches its future disappear into the home of Olduvai Gorge; the Serengeti.

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

  Good description of EROEI..  Right now, my Daughter (3) is 'Baby Cheetah'.  Her nomination.  I'm 'Daddy Cheetah', Les is 'Mommy Cheetah.... anyway, you made the point in a very clear way.  Good job!

  I think you might consider posting a link to the 'Totoniela Glossary' in the footers of your posts.  Some of your terminology is a little off-putting when there isn't a refresher course readily available.  'Detritovores', for example seems self-explanatory enough, but as an avowed Dumpster-Diver myself, I often forget whether it's a compliment or a title-of-dread..

Anyway.  Thanks for your devoted contributions here.  I read as much as I have energy for, but your muse usually outstrips me!

Bob Fiske

One man's trash is another man's art supplies!

     Recent posts continue to foster the belief that Iraq has somewhere in the vicinity of 112 Billion barrels of oil reserves. This would appear not to be so. A report by MK Horn and Associates from an American Petroleum Institute site www.searchanddiscovery.net/documents/gong03/index.html show that in 2003 their 28 largest oil fields held 41 billion barrels. Fig.1 shows a good map of all the Middle East oil fields, whilst Fig.2 shows the 55 Iraqi Oil fields the remainder obviously being below 50 million barrels each.
If one goes below Fig.17 and clicks on Table 1 below Table Captions, the full details of each of these fields is shown in tabular form. It is interesting to note how depleted the major fields are from when they were first discovered. From talking personally with Ali Samsam Bahktairi I believe that his figures for Iran of 35/40 billion are correct but I won't elaborate, therefore Iraq and Iran probably don't have more than about 40 billion barrels each which shows why their production will never reach the figures often mentioned by people who don't know what they are talking about.

Wow...a newbie with inside information...you can't beat that.

Thanks for sharing.

Great information! Page 19 of the PDF from the referenced site gives a table of reserve amounts by field.

I couldn't get the link you gave to work until I changed the .html at the end to .htm

Those maps are amazing...really gives you sense of where the oil breadbasket sits in the ME.  I highly recommend everyone take a gander at the PDF above.
Sorry about that, you were right about the htm. Those maps of the ME oilfields show you why the US is in Iraq, right in the the middle of the 800 mile triangle that Matt Simmons talks about
indeed, circulating to the eds right now.  great catch down under...
          I have known about that link for quite awhile and have given it to Colin Campbell and Ali Samsam Bahktairi who were not aware of it either. It is a very well sourced document by over 30 people. Here is another interesting little piece of the jigsaw.  www.asahi-net.or.jp/~ny3k-kbys/contents/ghawaroil.html  It tells of two Japanese engineers who were given a chance to visit Ghawar in 1982. Note the reserves they were told, 177.9 for Saudi and 68 billion for Ghawar in 1981/2
Correction, the year was 1981, Note the water injection at 4 million barrels per day whereas now it is 9.5 million per day
Update on the USS Eisenhower:

BTL:US Sends Warships to Iran, Pre-Election Attack Possible


Supposedly this is just a military exercise


i have heard there is a mindset that the GOP uses a scare factor, to persuade the voting public to continue to vote in favor of GOP. Its a few weeks to election, could it possibly be a scare factor?
Remember a few years ago, the timing of the Bin Laden video? The weekend prior to election.
Now Iran is in the news, so is North Korea.
Is this all coincidence?
Or am i alone in this thinking.
You are not alone.
Count me in.
Explain North Korea. Do you think Kim and Bush are in cahoots? Or was the bomb test a fake?

Just curious. That one seems a wee stretch.

I was speaking mostly of news content being controlled.  The purpose being to scare the peasantry.  The following quote is great for this:  

""It is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. The people can
always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the peacemakers for lack of patriotism and exposing the country to danger. It works the same in any country."

Reichsmarschall Herman Goering April 18th, 1946

This is just one possible explanation, I still get to keep my p.o. credibility shield, right? There is a bit of circular logic involved. Tinfoil hat also req'd. Bush evokes the worst in people. Then, when they act up, he says: "See, the world is a dangerous place, vote for us and we'll protect you." Also, just as Bush lamented potential political instability in China recently, I believe China also has a vested interest in keeping Bush in power. TPTB are worldwide, they wouldn't play the money games they play if they weren't. It wouldn't take much for them (China, the US PTB) to push the right buttons that make Kim play the part of "wildcard madman" right before the elections. I know, far-fetched isn't it? I don't believe the world is divided according to the map, but rather, rich and powerful vs. ant people.
There is a possibility that Bush and Kim may be acting as objective allies. No collusion between them is required. That was my perception about Saddam and Clinton, who tweaked each other around for years in a carefully-timed manner for mutual domestic political benefit.
Or was the bomb test a fake?

Maybe a fake - or a really SMALL one based on results. If it was small then maybe they are working on suitcase variety?

that made me wonder too    at first the us was downplaying the possibility that it was actually a nuclear test     that there was no radiation detected      and then   it was leaked that there actually was radiation detected       seems like actively managed news at the very least      but i am wondering if KKKarl rove thinks the iraq war creates a "positive issues environment "   ?
Doubtful that Kim and Bush are in cahoots.  On the other hand, undeniable that they need one another.
Undeniable? How? It seems Kim depends on bribes and protection from South Korea and China and is able to ignore Bush. I don't see Kim being a major part of Bush's justification, more of an embarassment that has brought attention to his failed policies.
"A people that trade present liberties for the promise of future security deserve neither."
Ben Franklin
It appears to be a theater wide deployment including allied NATO deployments.


They will be in place according to most articles by Oct 21st, but that could be as early as tomorrow with the date difference.  I have been wondering about this for the last couple of weeks.  It is certainly according to PNAC that we control Iranian energy.  I have wondered about the 1.2 MBD OPEC cut and the lowering of gas prices.  Seems like good preparation for something.

So here's a (conspiracy) theory for you.  We strike Iran and the response is devastating to the region's oil production.  Repercussions rapidly spread around the world.  Prices jump in the US, gas, food, everything.  Venuzeuala cuts shipments to the US in retaliation.  China, France, and Russia complain and take remedial measures, short of open defiance.  Chaos ensues around the world.  Terrorists attack the US on US soil.  Rioting breaks out in various places as fuel and food prices rise.  The President, reluctantly, is forced to declare martial law and cancel the Nov. elections until order can be restored.

Or howzabout this?  It is just a military exercise and nothing happens.  Life goes on, gas prices low, and the Republicans manage to hold onto both the House and Senate through the November elections.

Bush knows TimezUp.  Iranian counterpart knows TimezUp.  

But who goes for their gunz first?

Chaos Calling, someone pick up.

Ya...I was just cruising the news and saw this as well...

Oil jumps as OPEC surprises with inflated cut

http://today.reuters.com/news/articleinvesting.aspx?type=hotStocksNews&storyID=2006-10-20T023719 Z_01_SP200217_RTRUKOC_0_US-MARKETS-OIL.xml&WTmodLoc=Home-C3-Investing1-hotStocksNews-3

Oil prices leapt more than 1 percent to above $59 a barrel on Friday after OPEC unexpectedly increased the scale of its first output cut in over two years to 1.2 million barrels per day, and some hinted at more to come.


Some ministers said a further cut of 500,000 bpd could follow when OPEC next meets in the Nigerian capital Abuja in December to address high fuel stocks in consumer countries, particularly the United States, and a projected drop in demand for OPEC oil in 2007.


OPEC's biggest member Saudi Arabia, will shoulder around 32 percent of the cut, amounting to 380,000 bpd.

Iran, Kuwait and Venezuela will cut at least 100,000 bpd.

...I don't like all these odd little things happening simultaneously...makes me more paranoid than usual.

"OPEC's biggest member Saudi Arabia, will shoulder around 32 percent of the cut, amounting to 380,000 bpd."

Gosh thanks Saudi Arabia.

So I heard a little blurb on Bloomberg...  (commentator interjects something about the world economy has shown it's ability to thrive on $60 oil)... then sounded like the Saudi oil minister was saying the cut would let/make consumers appreciate the true value of the resource ...said it is necessary to achieve 'balance' in the oil markets.

What gets me is how convienient it is for the Saudi's et all to commit to these reductions just when the likelyhood exists that production collapse is a reality for them anyway. Gives the illusion of them having some control in the market which is rapidly becoming a real street brawl. The old 'wizard of oz' maneuver. Remember before it was "$30 dollars is right for the world economy" and higher prices would be a refining bottleneck or rebels in Nigeria or some other annomoly.

So if the converse is true upon reaching the magic $60 mark (now what....say  20 cents away) then the spigots will instantly reopen?

No yet another ruse... I'm sure, let me guess if $60 is good then $70 is better. (Don't get me wrong I happen to agree with that) But then it'll be higher prices, 'a measure to keep consumer nations from hoarding so much', or maybe yeah this is it, or keeping an $80 floor so prices won't plummet to $75 or or...

Acting as if OPEC can put the squeeze on anytime they want when the reality is we are past production peak and the SQUEEZE is already 'ON' geologically speaking.

IMHO for all who buy this rhetoric it mainly serves to politicize and muddy the process. (and enhance the probability of resource wars)

Instead if we followed Simmons recommendations or Richard Heinberg a clearer prodution picture could emerge and we could get down to the serious business of making needed changes. As long as we believe there is plenty of oil out there(albeit continually more expensive oil) we can play the politics/influence game instead of the conservation/conversion game.

The frog isn't sitting in a pot of steadily hetted water, it's crude oil, and OPEC just cranked up the burner a little more...no problem life goes on...does it feel a bit warmer in this pot or is it just me?

Stop that! The second paragraph is too damn realistic.
I'm betting on 2, however I'm not sure about the R's holding on to the house and Senate.
Also 380 thousand over 9.3 million is about 4%, I wonder how close that is to depletion rate plus new production.

Your USS Eisenhower updates have become a staple of Drumbeat II, beloved by all.

Ahanamanidejadayad (sp?) doesn't seem to be too worried about it, though:


Keep up the good work.  If you can go two weeks without re-arranging the furniture, you know you're winning the battle.

Hmmm...interesting...how'd you find this?

(pulled from your link)

Attitude Towards the U.S. and Bush

"... The president of America is like us. That is, he too is inspired... but [his] inspiration is of the satanic kind. Satan gives inspiration to the president of America...

"[With regard to the news that U.S. aircraft carriers have been sent to the Persian Gulf,] I say to you now to let your minds be at ease. If two warships come, let them come... Why did you say nothing two months ago, when 140 of their warships left? Actually, I think that the fact that they are coming means that there is no possibility that anything will happen.

"What is dangerous is if they leave the region; then, it will be clear that they have a plan. That is exactly what I said at the Supreme National Security Council meeting some time ago. [I said,] be certain that the departure of those American warships from the Persian Gulf is the beginning of a bad event. Then [indeed] we saw that they caused the Lebanon war."

...and ya...I tend to be a little restless

You said oil prices would drop when it was touching $79/barrel a couple of months ago.  You were right on with that call and deserve credit for standing by your guns despite taking a fair amount of heat for it. What do you think happens from here?
What Big ideas have people learned in the last year from TOD?

I think my biggest learning is that we should try to electrify as much of our transportation as possible instead of trying to use ethanol. (Alan from Big Easy + Robert Rapier)

          I agree that electrical power for as much surface transport as possible should be the goal but it will have to come from 4th Generation nuclear power which I will post on when I get time. All the recent posts on wind are not facing reality and it would seem most don't know too much about the physics of electricity and power grids. It would benefit everyone to read the 2004 and 2005 Wind Reports by E on Netz the large German Grid operator which has more experience than anyone in the world in having to intergrate large scale wind power into grids. They are definitely against it and there reports show why. To read them Google E on Netz it is very sober reading especially how wind fell away to nothing in 10 hours on Christmas Day 2004. I will post more on this when I have time using the work of highly qualified Electrical Engineers from Holland and the UK as well as my own experience of operating multi generator electrical systems on jet aircraft. As so many posters keep bringing up better batteries to run cars, busses etc. I wonder if they could explain why no battery seems to have been developed for aircraft that will give them emergency power for more than 30 minutes as that seems a greater priority than any ground based need
Eon is too cheap to build pumped storage to compliment wind.  Unlike their competitor Vattenfall.



I have also heard that Eon is too cheap to expand it's transmission lines (another requirement for high % wind).

Eon would rather just burn natural gas than spend the capital to make wind work well.  They throw stones at wind due to their own faults.

Best Hopes,


Simple - batteries are bloody heavy, and drag is at least somewhat proportional to lift.  Aircraft are a very fast, very energy-intensive mode of transport.  Batteries are not anywhere near as energy dense in the mass aspect as hydrocarbons are.  It takes a hell of a lot of energy to keep an airplane in the air, while it takes zero energy to keep a car on the ground.  High-friction motors are also a much more efficient means of propulsion than generating giant air vortices.  These three things means that noone will ever make an aircraft fly economically on current batteries or evolutionary improvements.  The weight increases the energy required to keep it aloft, which increases the weight...

Cars are less limited in this aspect - mass is only one component of fuel efficiency, one which is relatively trivial for highways compared to aerodynamic drag, and regenerative breaking makes it less of one.

You missed the point I was making. I was not talking about powering the aircraft's flight by batteries but providing it's essential electrical services in an emergency. With the loss of generators the power available for the electrical system won't last more than thirty minutes. They have not been able to increase battery capacity to overcome this problem - it is not so much a weight problem but the limitation of chemical energy that can be provided by the battery under conditions of high current draw, just as it will be in larger forms of ground transport
If it's not a weight problem (a volume problem?), extend the fuselage a few inches and add more batteries in parallel with what you've got now.

Double the batteries = double the current for the same chemical stresses to the battery structure, or double the time to discharge, depending on what your problem is.

Sorry if I sound patronizing, I just don't quite understand what you're talking about if it's not a weight problem.

Welcome to the board.  Can you please break up your lengthier posts into manageable paragraphs?  It gets hard to read and I'm interested in what you've got to say.

Re: Big Ideas

Well, I have been able to further verify something that I already knew -- that there are no perfect substitutes for conventional oil (crude + condensate + NGLs). Electricity for transport is a good idea but it depends on where the electricity comes from, the start-up infrastructure costs of using it as a substitute and what happens to the carbon from generating it from coal or natural gas (if not from biomass) -- know what I mean?

But Campbell, Simmons, Duffeyes, Heinberg, Kunstler, many, many others I could name and also (special kudos to) Matt Savinar (the Alpha Male) knew this years ago. Endless talk about the fact that such substitutes are inadequate are a necessary part of the debate but the real question is, as always, where do we go from here?

Here's my thinking on electricity:

  • You can make it from pretty much anything, including renewables
  • For the fossil fuels, it's much more feasible to sequester the carbon (and other nasties) from fixed sources like power plants, than from millions of tailpipes.
  • It doesn't require many exotic new technologies, batteries and more flexible electrical grids seem to be the technology needs
  • It works well for mass transit (subways, streetcars, buses, etc), long haul freight and short haul automobiles.
  • An electric driven transportation system re-centers life around towns, cities and transportation hubs.

It certainly won't be cheap to build out the infrastructure required, but over the long term, I think it might be our best shot. At least that's what all the evidence I see now tells me.
Algal biodiesel is the only biofuel that scales to 'perfect substitute' level in ideal conditions, according to yield estimates, much much higher than agricrops at the expense of the evaporation levels(and salination/PH management problems) of an inland lake, and the predator/competitor management problems of any single-celled organism in a wild environment.  (see this)

Time will tell whether the studies on it can master a means of reliable algalculture.  Government studies were a casualty of cheap gas prices, and university studies tend to be private/patented.  If only there were votes to buy, people already farming the stuff, it could have potential.

I vote Alan to be National Director of Transportation in the next presidential administration.
Remember, the ASPO-USA conference presents an opportunity to meet me and give me a really hard time about all the rude things I have sometimes said to people on TOD in various threads. Surely, some of you would not want to pass up such a unique opportunity, which, while not nearly worth the price of admission, would clearly be a rewarding activity just so you could tell me to go to hell and -- also -- you would have the chance to remind me that some -- even false -- humility is a human trait that increases social fitness.

Otherwise, I would go to the conference for the trivial, inconsequential reason that the global economy depends on what happens in the next 5 to 10 years regarding the production peak of oil -- this will be discussed. It's your choice, but I would go to the conference either way if you can afford it.

Hey folks, we're at poptech in Maine. Great session this afternoon with Thomas Friedman Stewart Brand Lester Brown Robert Freling Peak oil all over. The words were spoken !! Had dinner and drinks with Lester last night.

There is a live stream that you can access here.
http://live.poptech.org/ Funded by Yahoo, they have a DS3 sat feed sitting on the main street of town. I expect the archive of the sessions will show up shortly.

Dawkins is here to speak as well. Schedule here.

Don in Maine

Good on ya, Don!
  I musta missed the memo!  I'm stuck in Portland this wknd, or else I'd come up!  But my Brother might go, for Eno if nothing else.  I'd love to hear what the YES men are up to, also!
  I'm doing penance by getting my Solar HotAir Boxes moved forward.  (Designed by Bill Kreamer, up near Belfast.  Know him?)


As an ex-newbie now mostly lurking in other haunts, I don't know if anyone has made this point in recent days but it sure crossed my mind like a thunder bolt out of the blue...

Remember in "Hubbert's Peak" when Deffeyes describes how he knew Hubbert was right in 1973? It was no dramatic headline, just a cryptic notice in some journal read by oil patch insiders, mentioning that quotas on production had been lifted (a first).

So I take the recent OPEC quota tightenings as compelling evidence that we have not reached peak.

Another thing, about Kunstler. Didn't he predict that by December 2005 the Dow would be down to 4000? Well December rolled around and it was nowhere near 4000. So he was all, "I was right, I was right... just called it a little early. By December 2006 it will be down to 4000 -- yeah, no way around it. Those Kapitalist Klowns can no way keep this madness up!!!"

Uh, doesn't look like THAT's working out too well... (though seriously, maybe he's just early again :)

I have a strong "guess" that the OPEC quota tightenings were not entirely voluntary.  With Venezula (which bought Russian crude to fulfill it's contracts earlier) the problems may be above rather than below ground.  OTOH, most other "voluntary" cuts may have been involuntary depletion.


I think OPEC production is being cut for the same reason that Texas production gets cut.

Kunstler is frequently wrong. He was predicting $100+ per barrel oil for Christmas last year as well. But like all good forecasters of the future, he realizes that it's that one time you are right that counts, that gets you notoriety, and not the hundreds of times that you call it wrong.

Professional psychics use this method all the time: Make a pantload of predictions, crow about it when you get right just by virtue of making so many predictions, and silently ignore the rest.

Note, I'm not saying that he's wrong in his general thesis that 3,500 sq. ft. homes that require a 1-2 hour commute are unsustainable. I'm just saying that his specific predictions tend to be off by a fair amount. In my humble opinion he'd be better off not making them. But I guess his eagerness to see the current "American Way" come to a crashing, burning ruin overrides his better judgement sometimes.

I was watching International Dateline, an Australian show, on Link TV the other morning. We pay for DishTV because we can only get CBS on the rabbit ears.  I could probably get a few more stations with a $150 antenna, but I do like Link and FSTV.


There were segments on the EV1, on bike-sharing in Lyon and cultures in Vanuatu.

Lyon is repeating the freely available bike idea tried in the Netherlands, using electronic monitoring to keep better track of the bikes.

They were showing these two groups on Vanuatu. One group had a bunch of ersatz military uniforms and raised the American flag in a ceremony. The leader sat near a volcano and complained about waiting for the Americans to bring them trucks and cargo. I had read about this in Diamond's books, but it was strange to actually see it.

The Lyon program is the biggest ever done. And it works. 2500 bikes, and 30,058 bike trips in one day last week (OK, it was during a public transport go-slow...)

I was an early adopter, commuting several days a week last winter. Now I use the bikes about once a week on average, intra-city shopping trips or moving between two work sites (much easier than by car!) A bike station is, on average, as close as the nearest bus stop, and closer than the nearest tram or metro station.

The funding model is interesting : the system is provided for free by a private company, Decaux, as part of a street furninture and advertising-space contract signed with the municipality. Lyon is the test site for this, and probably no other city will get such an unbeatable deal (no cost to the municipality, practically none to the user!)

They are rolling out this model in other European cities : Vienna (Austria), Cordoba and Gijon (Spain), Brussels, and recently signed Aix en Provence and Marseille too. However, none of the other projects are on the scale of Lyon, yet.

It's interesting to note that Decaux is very present in the US urban-furniture market. If conditions were right, they could roll out the bikes on a large scale.

Yes, I was in Lyon a few weeks ago and was very impressed with the public bike service-- hop on and drop-off at your destination.

In fact, I found Lyon a superbly accessible public/mass transit city.

Be sure to check out the Chiho Aoshima exhibit @ MOCA. First rate

I saw the same show.  Very interesting.  If only some American MSM showed stuff like this.  Dreaming, I know.  I keep paying my Dish bill solely for access to FSTV and LINK.
First: I have been a lurker here a long time.

Second: I believe this is a first rate forum, very in touch with the reality of peaking.


Why is there no discussion of War?  Surely there will be war over oil which will greatly skew the downside of peak oil.

For instance:  If I was a leader of a country with vast oil reserves I would have a choice before me in the coming years.

Choice 1: Countinue to sell oil at market prices, hoping that the profit I make and invest will benefit my country for years to come. In other words, I will make a fortune now and hope that when I run out of oil in the years ahead the world economy is the same (stable) as now so that I can buy what my country needs for years to come with my riches.

Choice 2: I realize that the world is peaking. I see that in ~20 years oil will be the most valuable substance on earth. It is irreplaceable. So I sell the bare minimum of oil I have to to keep things going knowing that in the years ahead my oil will be worth a thousand times what it is now and my countrymen will live like kings. And we will dictate our selling terms to the world. Or we will be the only nation with oil and we will be powerful (Russia????)

Soon, I think, some nations will choose number 2 and that is when the other great powers will choose war as the only alternative to oil starvation.

What is there to discuss about war?

I mean, seriously, it may come to that, with the First World powers coming to blows over resource-rich territories. It is one of the oldest reasons to go to war in the book.

But it's even less predictable than Peak Oil, and is not an issue that is part of the core skill sets of the frequent contributors here. So I ask what, exactly, is there to talk about?

We talk about Iraq all the time around here.  We are in an oil war, the second or possibly third by some peoples esimations.
You forgot Choice #3:
The USA and others are starting to become creative about alternate fuels. They COULD make a big breakthru and then all my crude could become worthless very fast THEREFORE I will keep selling while the price is where it is. I will only tighten the spigots when the price goes too far downside. The more I reduce consumption the more I fuel the desire for them to replace oil with and alternative.

If they are peaking (the oil producers) then it would be wise to insist that I was tightening the spigots in order to hide the fact that they are running out of oil ...

which is Choice #4 Be a wily coyote,lie like the devil and price is as needs be to stay the course and play the game. Keep them guessing over on that dratted TOD website.

airdale-- Are they good poker players? Nah,they are running scared.

  1.  Wood, an abundant resource in my neighborhood, was once used to run trains.  Is there anything in the literature on the efficiency of steam engines versus diesel coming from the Fischer Tropsch process?

  2.  Is there any serious work on the oilseed potential productivity of hemp versus soybeans?  This is a favorite topic for long-haired dudes in coffee shops.  
Interesting questions sf since I grow oilseed and my neighbours grow hemp but not the kind suited to fuel oil. We are starting to experiment with methane digesters and wood gasifiers. I think the issue with wood is storage and handling for transport applications plus low energy density with high ash and tar.  FT diesel from biomass has around 35-40 megajoules of energy per litre if I recall correctly with dry wood less than half of this. As well as the oil/fuel yield of different crops you need to think about useful byproducts after fuel extraction. While legume type oilseed can produce cattlefeed after crushing I don't know of any fibre or solid human foods.
Illinois Railway Museum publishes a quarterly newsletter/magazine for its members. They had something in there in late 2004/early 2005 about steam efficiency vs. diesel efficiency. In it, the author maintains that steam is more efficient than diesel in some applications.

What wasn't discussed was using wood as a fuel source instead of diesel/oil/coal. Given wood's inherent inefficiencies (doesn't go through a tube well, hard to automate fire tending, etc.), I doubt that wood generated steam is as efficient as diesel, but I'll bet its within reasonable shouting distance.

I'm posting here as a newbie, although I did discover this column a little while ago and have lurked.

I read an interesting debate regarding the economists who say that we have always maintained 40 years of reserves; and of course the more geologically minded (majority here) who take the hard line that there is a finite amount of reserves left.

If there is anything I can add to this debate, its this: they are both potentially correct, simultaneously.  Once explained, this should make sense.

As the finite reserves are consumed, prices will rise. Few would argue this.  The economists believe that this will spur extra developments, alternative energy supplies, and so on.

It might do, but its irrelevant to the argument.  We price oil such that there is 40 years of reserves; or rather the price of oil has sparked enough investment and exploration to about this time line and beyond this companies and governments lose interest in further exploration.

People take this as a justification for a future ability to expand - as prices rise more oil fields will be found.

That is where the argument fails - there is nothing in this that implies that new oil sources need to be found for a 40 year reserve to be maintained.

If the price rise in oil were to halve demand (and extreme example) then our 40 year reserve becomes an 80 year reserve, without any more exploration.

I'm not saying that the idea of 40+ years of reserves will be maintained, just that as prices rise, the amound of oil purchased will eventually fall (although its relatively inelastic in response).  Therefore the known world reserves increase, when expressed in years remaining at the reduced level of consumption.  We will never run out of oil, and will therefore always have some known reserves of it. This says nothing about the quantity of the reserve, nor its cost, and I think that people are using one economic relationship (which may well be valid, or might not be) to justify another thing (that thare are an infinite number of new sources).

It seems to me that rising prices will spur alternatives, and I'm not doom and gloom about that - but its clear that the adaption will be harder than alot of people realise (ie oil prices will go up because so far we haven't found a cheaper alternative - we will know the true cost of an alternative when the oil prices fail to rise further) and that in particular the energy density of hydrocarbons has made energy storage for the purpose of transport very easy; without them it will be very hard.

Anyway, this is my first post here, so apologies if I have misunderstood something here, but I hope that this commentary on oil reserves might be of some interest to some readers.


I have a wind turbine. I also have solar panels. Wind and solar does work, but it doesn't work the same for everyone. I live in a fairly isolated area and my house is atop a 2100 foot high mountain with good wind and sun.  People down at lower elevations and in the valleys don't have anything like as much wind or solar potential.  Wind and solar energy can be captured, but there's degrees of everything. Having a wind tubines and solar panels in a situatioin like mine is unquestionably a good deal but my situation is probably fairly unusual. I give that information to show that I'm not an advocate of solar and wind who has no actual and direct experience with it. I do. And I understand the limitations of it; I have a solar water pump and that's about as good a demonstration of the wonders and limitations of solar power as I can think of. Stand in front of the solar panel and the pump stops, step aside and it runs. One thing you come to appreciate is that relying on solar/wind power is that the scale of things will be substantially different if that's the sole source of power.  It would require a lot of solar panels ( @  $6/watt now) to operate cattle feed lots and chicken factories on the scale we see now. We all know how business costs cascade down to the purchaser.

One of the things I can't quite think through all the way has to do with maintenence of the grid. I'll bet that it takes a lot of direct petroleum power (gasoline and diesel fuel) to maintian the grid; think of all those electric company trucks that are always on the move. Expecially after a snow, ice, or wind storm. As long as we have a sort of centralized system then it seems to me that the grid will always be there and have to be maintained. But if we decentralized the system as much as possible by encouraging people in rural area to cut loose from the grid (look out for the electric company lobbists) by providing some sort of incentives then the total distance of the gird could be reduced substantially.
But would that help much given the magnitude of overall use of petroleum?  I'm an 'every little bit helps' sort of person, but don't have any figures about gasoline/diesel use required to keep the physical electric grid up. Has any of the readers out there thought this through? Is it important enough to allocate mind space for?

Couldn't agree more mOO5e.
People come out from the city and see the solar pumps on the vegie patch and go home thinking the future will be OK. They can't compute the prospect of serious sacrifice. My no. 1 conclusion from the difficulties of self sufficiency is bring on nuclear. Yet urban know-alls think that a few wind turbines, solar panels and backyard gardens  will solve everything. The big reality check is coming fast.  
m005e--I wish a grid expert would respond to your question, because I have wondered the same thing--it seems feasible at some point that cities will have their own grids and rural people will need to be independent in some way.  Of course, by that time, the population may be much less. Most likely, the strong regions of the existing grid will do better and last longer, and the areas already stressed and less maintained will fail first, or parts of them.  The closer one is located to a coal power plant, for example, the less likely your grid would fail.  Repairs may take longer.  The government may determine priority areas.  And whenever there is a discussion of this nature one has to ask "when are we talking about?"  twenty yrs from now?  50? 75?  It would be a nice thought to think that rural people could all function satisfactorily off-grid, eventually.  Subsidies to do this are important and the city people need the success of the food growers.  Right now, an effort is underway to create more power corridors across country.  We'd probably be ahead to be working at decentralizating instead.  Anyway, congrats to you on your situation.
Mgv: Yep. The floor on oil prices keeps rising, year after year.The reserve years will always be there but soon the global consumption of crude will fall. It is unclear if the global economy can adapt and function as effectively with a continually declining consumption of crude oil.
Perhaps I am still in that cloistered status of newbie.
I threatened to quit but was of course drawn back by the sheer inanity of 'Death comes to Ahmurkah' and the level of discourse.Sorry..maybe next time.

Anywho I was hoping that someone at some point in time, before its all over, would put up a vote/poll of those who are doomers vs cornucopians. Two categories. Good/bad.

I know there are many who would want more catergories however it really boils down to these two in the end. Either you are hopeful that things will turn out ok or you are not and see a bad moon on the rise. Its gonna be ok or its gonna be bad.

How about it? Has one been done in the past?

I would like to know the makeup of the members.

Airdale: IMHO, you are not going to get many TOD posters eager to slot themselves into one of these extreme categories. How about a third category for those who believe: "The future won't be like it used to be" to paraphrase Yogi Berra.
Thanks, yes I see.

33% doomers. The largest percentage.

Thought it might be in that neighborhood.

I wonder though if it might not have grown larger , what with continuing bad news and no gun/s firing a silver bullet in sight. Lots of silver bb's perhaps but not enough to bring down the gazelle.

I extremely pragmatic to a fault at times and when I depend on the various experts within their fields, it becomes clearer each time how dire it may possibly be.
I have a question about offshore drilling.

In regards to the Jack2 "oil find" in the Gulf of Mexico: as I understand it, they were drilling in 7000 feet of water. What I want to know is this: assuming that the oil companies decide to go ahead and commercially exploit this field, how will the oil be moved from the drilling platform to the shore? I used to think that oil tankers could park at the drilling platforms, but from some of the posts I've read, that isn't how it's done. Oil is normally sent from the platforms to the shore by pipeline, correct?

And if the above is true, does the technology exist to build pipelines in 7000 feet of water? I really know nothing about underwater pipeline construction - how is it done? For example, are divers sent down there, or submarines? In 7000 feet of water, would it be feasible using existing methods, or would it be necessary to use robots? Or can you float a pipeline on the surface and then sink it to the bottom? Don't you need people down there to weld sections together (not to mention making repairs later on should a leak develop)?

Thanks in advance to anyone who can answer.

Robert (Ozonehole)

"It's just so far from anything," Sunderland said. Operators are considering using floating production, storage and offloading vessels instead of pipes. But any natural gas produced from the wells wouldn't be able to be transported that way and may have to be reinjected into the reservoir or released into the atmosphere via flaring.


The technical issues you raise are the very reasons those here at TOD regard it as nothing more than a yawn.
indeed there are many technical difficulties to be overcome    chevron is not even sure at this point that this oil deposit can be economically produced      therefore at this point the jacks 2 discovery   remains an oil deposit