DrumBeat: November 2, 2006

[Update by Leanan on 11/02/06 at 1:25 PM EDT]

American car buyers get a case of amnesia

When gas prices take a breather, consumers' common sense takes a hike.

NEW YORK (Fortune) -- Who can remember all the way back to last summer, when we had daylight-saving-time, baseball and $3 a gallon gasoline prices?

Not American car buyers, apparently, and you can see the evidence in the results of October auto sales.

Sales of big pickup trucks and SUVs went through the roof - doubling from the year before in some cases. Sales of small, fuel-efficient cars, meanwhile, remained stagnant. It is as if all that moaning and groaning about price gouging by oil companies never happened.

...The supply of oil is not limitless but apparently the current generation of Americans is all too willing to exhaust it by buying bigger cars than they need and letting their children and grandchildren fend for themselves.

Get Rich - While Exxon Goes Broke

"In 1930, we found 10 billion new barrels of oil in the world, and we used 1.5 billion. We reached a peak in 1964, when we found 48 billion barrels and used approximately 12 billion. In 1988, we found 23 billion barrels and used 23 billion barrels. That was the crossover when we started finding less than we were using. In 2005, we found about 5-6 billion, and we used 30 billion. These numbers are just overwhelming." - Charley Maxwell

Less than 20 years from now - not a long time in the big scheme of things - ExxonMobil Corp. could be flat broke.

Imagine that. One of the biggest, most outrageously profitable corporations in the history of markets... an awe-inspiring behemoth that rakes in tens of billions per quarter in pure profit... broke. Busted. Kaput. Tapped out. Like a poker player down to the felt.

This isn't some whacked-out, nearly impossible prediction. It's based on the analysis of Charley Maxwell, a veteran analyst with Weeden & Co. in Greenwich, Conn.

Bush Admin Appoints Exxon’s Lee Raymond To Solve America’s Energy Crisis

Dawn of the "solar salon" in U.S. living rooms

Across the United States...bankers and hedge fund managers rub shoulders with philanthropists and solar panel installers. These "solar salons" are orchestrated by Travis Bradford, a former fund manager and corporate buyout specialist, in an effort to hasten what he calls the inevitable uptake of solar power.

Tom Whipple - The Peak Oil Crisis: Virginia Writes a Plan

Apocalypse No!: An Indigenist Perspective -Part I

It’s simple. And obvious. We find ourselves in the midst of the most rapid mass extinction in Earth’s history; we have the power to all-but end life on Earth. We can do so with nuclear weapons, today, in Iran, or simply by turning the ignition switch on our automobiles and gliding over paved surfaces where nothing can live. A little more carbon dioxide, just a little, will tip the scale - unleashing our potential for matching the greatest mass extinction ever – the one called The Great Dying.

Vancouver International Film Festival 2006 — Part 4, Political documentaries includes reviews of The Epic of Black Gold and Crude Awakening

The response of the makers of A Crude Awakening is positively Malthusian. One of their talking heads argues that automobiles and air travel will only be available in the future to the super-elite. “Will my grandchildren ever ride in an airplane?” The film essentially argues that the planet has too large a population, especially in the absence of easy access to oil. “How many people can the world support without fossil fuels? Perhaps 1 to 1.5 billion.” The horrifying implications of this startling remark are never worked out.

In their doomsday scenario, the filmmakers and their talking heads envision human society going back to a previous century. The present lifestyle is “impossible to maintain.” Once more, the population is blamed, for its “insatiable demands” and its addiction to “gas guzzlers.” They predict the end of “hydrocarbon man,” while suggesting that “homo sapiens will carry on living in some different, simpler way.”

Volatile markets are the norm

The nine-month chemicals marketplace has been marked by volatility in supply and purchasing that has been slightly lower than expected. While nine-month sales data isn’t readily available, it can be reported that chemical railcar shipments through September were running 1.8% behind year-ago levels. Pricing was relatively stable for some time but then came several unexpected late-summer plant shutdowns that have tightened supply and boosted pricing of ethylene and methanol—just as energy costs began to tumble.

Marathon in Hunt for Canadian Oilsands Partner

BP: Shutting Down Output from Valhall Offshore Norway

BP Plc (BP) is shutting down production and has stopped drilling operations Wednesday at its Valhall field in the North Sea following damaged lifeboat equipment in bad weather, a spokesman said.

Atop Azerbaijan's oil boom: Mr. Aliyev: The country's president is overseeing an uprecedented influx of wealth in one of the world's most corrupt countries.

Russian Oil Output, Exports Fall on Price Drop, Shell Probe

Russia's oil output and exports fell in October after world prices fell and the government threatened to halt work at a Royal Dutch Shell Plc project that's the nation's biggest foreign energy investment.

North Sea oil divers strike over pay

LONDON - More than 900 North Sea divers and support staff have begun an indefinite strike over pay, union officials said on Wednesday, threatening output from one of the world's largest oil producing regions.

Wild Jatropha Stirs Hope of Biodiesel Bounty in India

Namibia: Renewable Energy Could Light Up the Poor

Northeast India separatist group opposes hunt for new oil sources

Government-run Oil India Ltd. is paying US$22 million (€17 million) to Kazakhstan Caspi Shelf — an oil exploration firm based in Kazakhstan — to conduct a seismic survey along a 175-kilometer (110-mile) stretch of the bed of the Brahmaputra River in Assam state.

But the United Liberation Front of Asom called the search another federal government move to exploit the region's resources, while bringing little benefit to local people.

Scientists say White House muzzled them

WASHINGTON - Two federal agencies are investigating whether the Bush administration tried to block government scientists from speaking freely about global warming and censor their research, a senator said Wednesday.

Sen. Frank Lautenberg, D-N.J., said he was informed that the inspectors general for the Commerce Department and NASA had begun "coordinated, sweeping investigations of the Bush administration's censorship and suppression" of federal research into global warming.

Storms batter Scandanavia: Oil platform adrift in North Sea

An oil platform carrying 75 people is still drifting off the coast of Norway. Land, sea and air transport was widely disrupted on Wednesday.

Russia to double gas prices for Georgia

MOSCOW - Russia's state-controlled natural gas monopoly said Thursday that it would more than double the price it charges Georgia, further heightening tensions between the ex-Soviet neighbors.

The Georgian foreign minister said the price hike was the cost of his nation's turning away from Moscow and toward the West.

Nigeria gunmen kidnap American, Briton

LAGOS, Nigeria - Armed gunmen seized two expatriate oil workers — an American and a Briton — during a raid Thursday on a Norwegian oil services ship off Nigeria's southern coast, oil company officials said.

Flat screen televisions 'will add to global warming'

China stockpiling thwarts global price fall

BEIJING - China will add up to 4 million barrels of crude to its strategic storage tanks by mid-December, an industry source said, more than doubling stocks in a move analysts say is providing a floor to global prices.

The new crude will top up China's first state reserves facility near Ningbo to about one-fifth of its capacity, likely spurring debate over whether Beijing will allow its state energy firms to dip into the stocks at will, creating a potentially powerful tool for maximising trading profits.

Some thoughts on options to nuclear:

Given the relative cost and financial risk of Canadian or U.S. nuclear, you have to have a very restrictive set of options or strange idea of economics to conclude a nuclear plant makes any sense.

-- Amory Lovins in an interview with the Toronto Star. Recommended.

Isn't Amory a lifelong opponent of nuclear power, going back to his Friends of the Earth days?

I don't mind people having a political stance, but they should make this clear up front, rather than hide their viewpoint in a cost analysis.

economics drives politics.

where is the surprise?

rather than hide their viewpoint in a cost analysis.

Rather than explain why the cost analysis is wrong, attack the person who put it together supports fission power exactly how?

At some point its looking like Iran is going to be attacked over the issue of 'you have a nuclear plant and are not making a bomb/no you are making a bomb'.   Because nuclear fission power is allowed, 'cover' exists for bomb-making.  

Wonder what assigns the external cost of bombing a nation's fission plants?   Or having a military 'fighting terror over there so they don't attack fission plants here'? Or having a civilization using wind/PV and forgoing fission due to the high cost?

I find it odd to describe Amory Lovin's stance as "political".

Yes he is a long-time opponent of nuclear energy. In the '70s as a scientist and as an environmentalist he laid out a "soft path" to energy policy based on increasing efficiency. At that time he suggested that the economics of nuclear power was an illusion and many utilities would have profited handsomely had they followed his advice rather than sink billions into investments that never paid off. (of course, utilities that subsequently purchased those same assets for pennies on the dollar and shifted disposal costs and risk premiums to US taxpayers have done well)

Recently he published a work - Winning the Oil End Game -  funded by the US Dept of Defense. In this work he details a technology roadmap to substantially reduce our "oil addiction".

Clearly at this time any stance vis-a-vis fossil fuels, nuclear power and energy could be described as political, economic or ecological. Does any such label add to or detract from the merits of an alternative approach to a reliance on a highly-centralized, capital-intensive business-as-usual demand-driven model for generating, delivering and consuming energy?

Despite his claims to the contrary, I would hardly call Amory Lovins an "environmentalist."

The other day, I was browsing in a used bookstore and happened upon a copy of his 1976 book "Soft Energy Paths."

Lovins' stance was adamantly anti-nuclear, yet he endorsed coal as a "transitional" source of energy in his pipe dream of going away from nuclear toward solar and wind!

Granted, few people knew much about global warming in those days, but the facts were certainly known about particulate and sulfur dioxide emissions from coal.  Yet, Lovins liked coal better than nuclear energy...despite the fact that coal dumps its wastes right out into the atmosphere!

McCain does a huge flip-flop on ethanol. The upcoming issue of Fortune tells the tale:

John McCain's Ethanol Flip-Flop

We need to stop this undue influence Iowa is having on national policies.

We need to offer farmers something else (I'm trying to finish a piece on this right now).
Well the farmers in Afganistan couldn't make money with normal crops so they raised Poppies.

Farmers in Colombia could make money with Normal crops so they raised Coca Leaf.

Maybe the Midwest farmers who can't make money raising corn could raise Hemp?

But if they did,  How would the CIA increase it's slush fund income like they do controlling the other two examples??

They could corner the US 'Munchies' markets..
It used to be the gathering of solar energy on a farm provided not only food but fibers.  (and stored energy like wood)   Fibers used in clothes, constuction, making storage containers, furnature, et la.

The demand for the 'fiber' part was destroyed by the (many times better) fiber-from-oil market.  

For the farmers to start winning again, they'd have to produce products which, when their labor is added, exceed the value of old stored sunlight.     Good luck on a solution everyone will find as likeable as the 50 year+ model of oil-> food and oil-> fibers.  Good luck on finding a solution that is just as good per acre for the small 40 acre operators as it is for the 400, 4,000 or 40,000 acre operation.

The inherent problem with agriculture is that, ultimately, all markets are finite.  Typically, it is only the inovators who make money when they establish a home/market for their crops.  There are countless examples of speciality agriculture collapsing as the market became saturated;  kiwis, llamas, emus, wine grapes, etc.  

A current example is organic crops.  Years ago organic growers were the odd balls of agriculture with a limited market - but they made money.  However, as the market has grown, the initiators are being forced out as large-scale organic operations are taking over the organic market. In essence, organic crops are becoming a commodity, not a specialty.  

Years ago I was a small-scale, certified organic grower.  We had the local market to ourselves.  However, we reached a point where we had to either spend a lot of money (mostly for additional greenhouse space) to expand our production or quit. Expansion was necessary to make more than day wages by selling in other towns.  As we looked at the capital cost, the cost of hiring people and the transportation cost to additional towns, we said the risk/reward ratio wasn't worth it.  We shut down.

Sure, there are still niche markets out there such as producing native plant seed but this won't help production agriculture.  There is no good answer.

Todd;  a Realist

I find this ironic in the extreme. The cheap fossil fuels are making it hard to maintain a local-market-driven small business, even if that small business is dedicated to getting away from dependency on the fossil-fuel driven society. Local organic produce may only find a more permanent niche as fossil fuel gets scarce enough to really impact the transportation industry that enables the globalization (centralization) of all economies.
All markets are finite? Maybe in the short term. Arable land is finite. There is a limit to crop yield, especially without fossil fuel-derived additives to the soil. People can only eat so much, but then the population keeps on breeding.

Biofuels changes the game. Demand for gas for the car could swallow everything farmers could grow. Of course, with the ensuing mass starvation, demand might be lessened. Perhaps you're right after all.

You just brushed past the kernel of what I'm writing about.  More later.

It's unclear what your point is; even corn for ethanol is finite.  I get the impression that you don't understand production ag.  What will happen, just like llamas and wine grapes, is that farmers will switch out of a corn and beans rotation to corn on corn and create a glut of corn.  This will drive the price of corn down and beans up so...

At the same time, by switching to corn on corn, their cost of production will go up since they won't have the residual nitrogen from the beans, possibly have to irrigate more, be paying for GM seed and their profits will likely go down short of an explosive increase in their corn price.  This is why so many farm wives work off the farm (and do the farm's books in their spare time) - to balance the variability of income and, maybe, get some benefits like medical.  You got to ask yourself, if farming is so great a profit center why does the farmer's wife work as the elementary school secretary?

But, I was addressing profitable farming in my initial response.  Growing commodity crops is like being a slave to the bank because it is often impossible to plow down and plant crops without a loan each year.

Is overseas demand going to make a difference to farm profitibility?  How are these countries with starving people going to pay for it?  Via our tax dollars to subsidize it all?  Are US consumers going to watch the price of food go up because the .gov mandates ethanol?  How about the reality that new engines aren't tricked into better emissions because of the oxygenates added to gasoline?

In my county, I know of quality wine grape growers who didn't pick last year because they couldn't find a home for their grapes that turned a profit.  The same thing will happen to corn growers.

I don't know the answer.

Todd;  a Realist

They don't have to stop crop rotations. Corn, then beans, then corn, etc.

My point is this:

Corn and soybeans are currently commodities because there has been an overproduction relative to world demand. Subsidies paid to farmers for these make things worse for everybody except ADM and Cargill. Farmers get hosed because they take all the risk and are usually in debt for equipment, land, etc. I'm not an ag expert, but my dad grew up on one and I have plenty of close relatives in Illinois that farm including a cousin that does pretty well. But most do work other jobs. That is the present, though. I'm talking about the next few years, and farmers are excited about a huge new market for their produc. Who can blame them?

There is currently under construction in western Washington a biodiesel plant capable of churning out 100 M gallons of product per year. Similar things are unfolding in Iowa and elsewhere. I added a few of them up and came to 1.2 billion gallon capacity in the next couple of years. Assuming they all use soybeans, that would use a third of the current US crop. But even that much biodiesel doesn't make much of a dent in the amount of diesel fuel consumed in the US. Same for ethanol, assuming that the EROEI really is 1.2 or so. Energy consumption is like a black hole--it will swallow everything and not so much burp.

I'm not saying things will turn out good for farmers, as it rarely does.


I guess we are coming from the same place in most ways - at least we aren't arguing about basics.

I believe that farmers are going to take it by over producing.  You may be right that they have a few good years ahead. I just believe that farm profits, in the long run, won't come from producing commodtity crops regardless of their demand.

My rationale for this is that consumers are going to whoop and howler about farm "subsidies" just like oil profits if it hits them in the pocketbook.  We'll see.

Todd; a Realist

I wonder whether the real value of biodiesel will be as an additive to replace the lubricity lost in low sulphur diesel.  We will probably be close to peak ethanol when there is enough for 90/10 gasohol.  
We'd be better off using ethanol as a co-injected octane booster than blending it with gasoline; savings of 30% aren't enough to save us, but are nothing to sneeze at either.  If we're going to use ethanol with petroleum, that's how it should be used.
I expect that you are right that 90/10 ethanol on a global aggregate basis is probably peak ethanol. In fact, it may be even lower since it does not appear that temperate countries can produce ethanol at efficiencies adequate to justify their use.

However, offsetting 10% of gasoline use with a sustainable, climate friendly fuel such as sugar cane derived ethanol is exactly the type of step we need to take to completely solve peak oil and global warming. 3-4 more silver bul;ets of the same magnitude and peak oil would be a lot less of a worry.

fiber from oil ?    you must be talking about vinyl   is there anything made of vinyl that is worth a shit  ?
Not just vinyl.  Synthetic fibers like nylon, lycra and polyester.
Is there anything made of polyester that is worth a shit?
Hmmm. Nylon makes good casings for bicycle tires. I remember tyres of silk, cotton, and linen, Nylon just as good, or better.
OTOH I have a new silk scarf. Handloomed, wild-gathered silk, vegetable dyes, that sort of thing. Not only do I get looks and compliments, total strangers walk up and want to touch it. You won't get that from oily products.
You won't get that from oily products.

I think you'd be surprised.    

Today's polyester is nothing like the kind that was infamous in the '70s.  You'd never know it was polyester.

And I'm going to miss microfiber if it gets too expensive for ordinary peons.  It's much better than cotton for athletic wear, because it wicks moisture away from the skin.  And I love microfiber dusting cloths.  

Then there's nylon stockings...

Oh you tease.
gimme cotton  gimme wool   gimme linen   gimme weed   er   i mean  gimme hemp   but gimme zero % polyester
there otta be a law again lycra (for some people)   and polyester       that is soooooooooo   disco  see www.liesuresuitlarry for details
I have suggested alfalfa and rabbit ranching. Think of it a perennial nitrogen fixing crop, great protein conversion and reproduction rate.

And the raptors and coyotes would love it too. Need to develop some new products though like Kentucky fried rabbit and maybe buffalo ears.

Seriously though Iowa and the corn belt have seasonal rains and fertile soils. Their production potential for summer  vegetable production and for decentralized grain/meat as crop has been displaced by longer seasons in
California, industrialization of meat production, cheap energy and transportation.

My take on this situation is that it is a temporary situation and that energy futures will neutralize this subsidy driven corn/ethanol market for grain.


real simple solution.
offer them twice as much to use that land for food rather then making fuel.
Offer them enough for their byproducts that they can hold on by selling what they can make from their corn stover, wheat and rice straw, spoiled grain, etc.  If the floor price is set by the warming-abatement payment for the sequestered carbon, there's no way for the commodity price to fall below that.
Saw this in today's New York Times.

As Investors Covet Ethanol, Farmers Resist

MALTA BEND, Mo. -- Farmers do not see fast money very often. But with big profits gushing forth from ethanol plants, dozens of Wall Street bankers, in loafers and suits, have been descending on the cornfields of the Midwest promising to make thousands of farmers rich overnight.

Most of them, though, are proving surprisingly reluctant to cash in.

Is this just my impression, but the last couple of months, theoildrum turned more and more into a forum to discuss alternative/renewable energy sources.

Exactly these technologies will be the locomotive of our economy in the first half of this century. One reason is the - almost daily now - growing concern about climate change, the other one is the PO.

Two months ago, I read two books.. Both written by rather famous authors/scientists.

Jeremy Legget concludes in his book  "Half Empty" that the coincidence of both phenomenas is a major imperative to act as soon as possible. For him, the renewable energy sources are capable to supply the world's demand, replacing the gap which will occur on account of oil and gas depletion and reducing carbon emissions. So Legget is quite optimistic about the renewables.

Lovelock, in his book "The revenge of Gaia" seems not to be fond of renewable sources. For him, only nuclear/atomic energy is the solution to prevent a real climate disaster. He doesn't use the ecpression "global warming", he writes "global heating". The renewables in his opinion are just a drop in the ocean and will not help us to deal us with the global warming.

Now the question. Two very smart and experienced authors with reputation. Both see the problem(s), however provide very different solutions. Who is more right?

Someone once posted a link here to a paper that showed that after a certain point nuclear energy was a dead loss, costing more in terms of energy to process the ores, etc., and actually contributing to greenhouse warming. At least that is what I remember of it. In short, nuclear energy is no option at all, according to that paper. And that was leaving out any consideration of the potential for environmental damage from waste storage and so on.

Pity I didn't bookmark it and can't remember what it was called. Perhaps whoever posted the link can do so again. The paper appeared detailed and well-argued. Certainly it gave me a much lower opinion of nuclear energy than I had held.

A more recent comprehensive report by Storm van Leeuwen is available at the Oxford Research Group, Energy Security and Uranium Reserves.

Look for Factsheet 4, and download the pdf.

I think we (TOD) have been through this one before - and decided it was crap - too many conservative assumptions.

Like many other areas - we need a Uranium expert in TOD.  Australian listed Paladin Resources - one of the fastest growing stock in the world a couple of years ago - was founded on the basis of a global review of U resources - and they picked the Langer Heinrich prospect in Namibia as their first project.

U prices going through the roof here:


Small investors can buy uranium yellowcake shares through the exchange traded fund Uranium Participation Corporation on the Toronto Stock Exchange, symbol U.  (Sorry, you cannot take delivery of the yellowcake, it is stored in a secure location.)  My shares are up 56% since March.  Current price CAD11.61 per share.
IMO in the short term you can make some money but I expect that eventually the market will be flooded with U from reopening mines and increased development. It will take some time, but it's a certainty.

What people don't realise while comparing U with oil is that geologically it is totaly different. Oil is a byproduct of buried biomass under specific conditions, while U is an relatively abundant periodic element - with occurance in the crust of some 2.3 parts per billion. Thus it is much more evenly spread throughout the world and its total recoverable amount will be in the trillion tons.

The other thing about radioactives as compared to oil, is that while still far and away from an efficient solution, we could go to space to find more.  The likelyhood of finding oil however is as slim as us finding life on another planet at the moment, not to mention transporting it would be far tougher than moving refined Uranium from mobile mining and processing space facilities.

Not mention adding more radioactives to Earth's sphere is probably less detrimental than adding tons of new hydrocarbons which would increase the total carbon available for fueling GW.

It may sound like pie in the sky at the moment, but if we can get off this rock, radioactives and the technology surrounding it are likely to be a key factor in our travel in space, and our planet based industries, both here on Earth and elsewhere.

The way I see it, if the future society stays as stupid, short-sighted and conservative as the current one, we will probably not be able to survive, forget getting out of this rock. The artificial nuclear waste problem is just another illustration of the tragedy of the commons that got us into this at the first place. In this case the commons wasted are measured by the CO2 that will go into the atmosphere and the amount of suffering we are leaving for the next generations to experience, because we were simply too lazy and complacent to start doing something real for the future.
I think we (TOD) have been through this one before - and decided it was crap - too many conservative assumptions.

I recall no such consensus on uranium supply ^_^;

Perhaps I'm being too conservative myself, but I have to ask myself why it is that on the oil side we have CERA and Exxon and various governmental agencies going all cornicopia on oil, while on the nuclear side the International Atomic Energy Agency and the US Army Corps of Engineers are so conservative.

Re-reading the prevous atomic energy thread, there were comments that implied the reason the reserves (of uranium) are so low is that we have not been exploring enough, and that we will find plenty more if we just bother to go looking for it. Surely, there is always more to be found, but I have not seen the sort of 'Twighlight in The Desert' structured analysis that predicts such finds are likely. (Olympic Dam, the largest known deposit was found in 1975 - 31 years ago) I have to suspect that with the gianourmous costs of opening a mine that the very best prospects are already being exploited. It's also illustrative that another of the big mines is in Namibia - it's not exactly the ends of the Earth, but you can see them from there.

I'm just saying when jumping from Peak Oil, we should look before we leap.

the same logic that applies to oil does apply to uranium.
that it's a finite resource.
that all deposits are not equal.
that some deposits do not make since from a energy point of view(though make sense from a nuclear stand point).
Then there's this aspect, the CO2 emissions of nukes, illuminated by Dave Kimble of PO Australia.
I think John Busby's paper (recently updated it seems) is quite good as well:

Why nuclear power is not a sustainable source of low carbon energy

All of the 5 links posted in reply so far are the direct work of Storm & Smith or are based on their work.  I beieve that the Storm and Smith statement on nuclear viability is something alot of "antinuclear" people like to hear, so they uncritically parrot it.  IMHO, the quality of Storm & Smith's work on nuclear CO2 emissions and nuclear EROI is questionable.  They seem to be off by a factor of 100 for EROEI.

The work of Matt Sevior and the students at the University of Melbourne is a strong rebuttal to the work of Storm & Smith.  See:   http://www.theoildrum.com/story/2006/8/7/195721/3132


"Uncritically parrot" doesn't sound smart, Everett. Is that what you do with the Melbourne file?

You can ask Storm for a rebuttal?! I think he deserves a chance to rebut in turn. I asked him a while back if his depleting ore dates (2016/2034) included all the new reactors planned around the globe. They did not, they covered UK only. So it may get a lot worse still, based on his data.

As fas as I know, much of the critique of his work comes down to breeders. And, as I AM very fond of parrotting, simply because it's a great soundbite, "BREEDERS ARE DEAD" (for the next 3 decades, minimum, according to MIT).

The UK has pledged to expand its nuclear industry without ANY public funds. That may be a good testcase for the rest of the world. It's certainly never been done. Breeders, even with public funding, have all closed.

I try to read and understand every article that I support or criticize, so maybe I critically parrot the Melbourne file ;-)   I am sorry to offend, but when I see 5 references basically to the same source, it does seem like an echo chamber effect.  There is alot of noise but not so much content.

As far as rebuttal, if you had looked into the link I provided, you would see that Melbourne published a rebuttal from Storm & Smith, gave a response, published a further response from S&S, and gave a reponse to that! I think Melbourne has been beyond fair in giving Storm an ample chance for rebuttal.  See:  http://www.nuclearinfo.net/Nuclearpower/SeviorSLSRebutall

My impression is that EROEI and estimates of construction and decommisioning are the main areas of criticism. There is not so much to criticize regarding breeder reactors; they are only a small part of the S&S statement, and I have seen more in-depth pros and cons for them discussed right here on TOD.  I have really been turned off all soundbites lately, what with the WAR ON TERROR and all of that...  

The UK seems to have made alot of bad decisions about nuclear power, so maybe they will be an outlier test case. Even taking into account the national-pride-induced apoplexy, they would probably be better off hiring the French to run and develop their nuclear program! 8-)

Everett, I owe you a "my bad" in that I realize I read that Melbourne thing, , including the rebut, way bacj when, just didn't have time just now to reread.

I'm still wondering why the numbers diverge so much. Maybe drop Storm a line and see if we can get the whole thing cleared up.

And you're right, there is a lot referring back to the same sources. But then again, the nuclear lobby is powerful, and not a lot of people have the guts to contradict them. For that reason alone, there is an underdog feeling; how much of what I see is spurred by lobbies?

More than 50% of all US energy subsidies went to nuclear in the past few decades, I remember reading somewhere.

Why would breeders be worth investing in with so much uranium around?

Even spent fuel has massive amounts of uranium, but U is so common its cheaper to get it out of the ground.

TOD is also being forced into becoming a sort of political/economic/personal agenda blog -- though it is mostly the Drum Beat section where that is happening. Maybe that is the price of success.  I read it for the well-researched energy articles, even though that is not my professional field. And sometimes I can't help myself from posting, since it is invited, even though I have no engineering experience.

I trust that the moderators are on top of the trolls for the most part.

This board (blog really) is not "moderated" in the sense that posters are banned, or perhaps no one has been deemed obnoxious enough to earn it, at least as long as I've been here. I recall one being chastised and threatened with being ignored, and that's about it. I'd like to think the discourse here is better than other boards--I migrated here from the "other" PO place because of the trolls there.
The only ones I know who have been banned are outright spammers.  The kinds who post huge blocks of off-topic links.  Usually in Chinese.
We need both.  Renewables and Nuclear (along with conservation) will each contribute to offset reduced use of fossil fuels.  If we were smart we would be ramping up all non-fossil alternatives to battle Global Warming.  Since we are not so smart, the depletion of fossil fuels will force the migratation to the alternatives.

I've also noticed that the discussion on TheOilDrum has shifted somewhat.  When I first took notice of Peak Oil, I saw no way for our economy/society to effectively deal with the depletion of oil.  I've grown more optimistic for a number of reasons.

First off, Peak Oil isn't so scary, Peak Energy is.  It has been demonstrated that we can transport ourselves using other fuel sources.  And the epiphany that came with that realization was that the ICE (Internl Cumbustion Engine) is remarkably inefficient.  We would be better off using the energy in oil to run power plants and then charge electic cars.  

Another revelation is that renewables are more viable than I had assumed.  Wind is and Solar will be serious contributers.  By themselves they may not be the answer, but augmented by nuclear, there is light at the end of the tunnel.  

The first step to energy security is energy agnoticism.  By that I mean transitioning to a fuel independent distribution system for our transportation needs.  I.e. electric cars.  Plug in hybrids for the forseeable future, but all electric if the recharging challenges are resolved well enough to provide acceptable range.

Peal oil is not "solvable", but it doesn't need to be.  Peak energy is solvable, maybe not while retaining every aspect of today's lifestyle, but well enough to prevent the Mad Max scenarios.  


I hope I played at least a small part in that realization 'in regards to personal transportation' Testudo :P

ditto to the applauses

I have often said that the technical side of the problem has never worried me much. There will be some transitioning period of shortages until the public learns it has to take its pills (my take - conservation & nuclear & higher prices braught by reneawables, in that order). Probably in the beginning there will be some push for more wind and such, but when it becomes obvious it won't be enough everything will come into place (though we will certainly have several not very pleasant decades).

On the demand side I am mostly attracted by the idea of plug-in or all-electric vehicles with swappable batteries. It will take some time to implement it but it is about time to move away from the highly inefficient ICE.

My real concerns are the societal inertia and the governments' shortsightedness. If US of A starts going to wars for oil, basically all bets are off.

Heh, I have consistently kept my eye on the ball so to speak in regards to EV/PEHVs and the future they will be found in.  But I'm apparently just a troll!
No, not a troll.  But you need to improve the quality of your position as I advised you to do a month ago.  See my recent post on Altair International Gold that is now Altair Nanotechnology and has made a battery "breakthrough" you linked to.

I am not a doomer (agnostic, it may happen, but I want to reduce odds) and work only on mitigation.  Not a fan of EVs & PHEVs (like nukes, a secondary or even niche solution, should not be our primary emphasis).

An all EV 'solution" would just postpone disaster for a generation.  I prefer 20 to 1 improvements in efficiency ! Paths that lead to a sustainable solution.

You have a vision and you are searching for any data, breakthrough, etc that could lead to this vision.

I take a more skeptical view of my own proposals and look for the barriers to implementation.

Best Hopes,


I agree.  Sometimes I get carried away and bundle ahead into something I regret posting later :P

BTW: the kind of EVs Im thinking about are similar to the Obvio! 012E.

It could be that renewable fuels or energy generation technique may be able to answer some of the PO and global warming problem, but I'm not readilly convinced.

The first reason is that recently George Monbiot pointed that each year we collectively use 400 times the energy accumulated in that year by the whole biota on the globe.  By biota we mean everything living, by accumulated in that year, we mean what has grown in that year.  That's in order to sustain the current way of life.

Will using nuclear energy able us to sustain a in between way of life?  By this I mean living more localy and getting the advantages of electricity (gosh, I love computers).  This question is not easilly answered.  There is both logistical and economical reason we may not be able to do so.

Appart from political reason, nuclear power plant are very safe piece of equipment.  So the safety is not an issue more than the perception of safety is.  The main problem would be  that in order to get lots (like in a very large number) of new nuclear power plant built, we would need fast track political, environmental and (foremost) the public acceptance.  In order to get this, we need more than a little shock.  

What kind of shock?  I think not being able to watch TV for a whole week or something like that may do part of the trick.  This would probably be blamed on the power lines or power companies to forgot increasing the power output by building new plants.  This would also put the web and computer use in the dark (oh no!).

Apart from these scenario, I dont think something will wake any western living person from it's day to day way of life.

Also, you cannot really hope for any change in the behavior of any person living under the capitalist way of life until that very system is colapsed.  I told many friends that this system will go on until it will break.  You do not choose to throw away capitalism, it can only break apart.

Well, this is my two cents.

Appart from political reason, nuclear power plant are very safe piece of equipment.  

Compaired to a car, or a plane or a threshing machine, sure.

So the safety is not an issue more than the perception of safety is.

No, the cost of failure is FAR higher for others than the failure of a car, plane or threshing machine.   When a car/plane/threshing machine has an accident - unless its me that fell into the theshing machine - it really doesn't harm me.  

The failure mode on nuclear fission - lets discuss the real issue than compare the 'safety' of other machines.

(Nuclear fusion isn't that safe either.   Compare Mars with no magnetic field VS earth and its flux'n core)

Nuclear fusion isn't that safe either.

Correction! Nuclear fusion isn't!

Ron Patterson

That big ball in the sky that provieds photons sure is!
Don't be such a wise ass. You know very well I was talking about here on earth.

Ron Patterson

And I thought I was clear that I ment the sun.  

We do have fusion on earth BTW.  Sonofusion, hydrogen bombs, tomahawk, shivia laser-style and perhaps cold fusion.

Without nuclear reactions there would be no life on earth.  If it wasn't for the byproducts of old reactions, there would be no planet and the bits on the planet.

The main problem would be  that in order to get lots (like in a very large number) of new nuclear power plant built, we would need fast track political, environmental and (foremost) the public acceptance.

In order to get public acceptance (including mine), it is essential that the industry and government figure out how to deal with nuclear waste. My understanding is that not one liter of this waste has been adequately disposed of.

But is the risk of this nuclear waste lower than the public's perception of its risk? In other words, are the measures currently being used to manage nuclear waste sufficient? Do we really need Yucca Mountain? Has anyone been affected by the storage of nuclear waste in the US? Please provide references if you know of any such cases.

Tom A-B

Much of the nuclear waste problem is perception. An aquaintance many years ago was in charge of dredging up 55 gallon drums of nuclear waste, dumped off the Farralon islands outside SF's Golden Gate. He was disgusted, and said it was merely paper towels.

Most high level radiation, alpha and beta particles, have incredibly short half lives (which is why they are dangerous), which also means that in a few years they are virtually harmless.

With geologic time, most of this will be pretty moot. The problem is that the wastes are not necessarily separated, and are stored in temporary containers. And since many of these waste products are very corrosive, they need to be dealt with before they leak.

The worst problem in this country is Hanford, on the banks of the Columbia River (go ahead and google it).

I'm of  the opinion that the toxicity of the wastes is probably worse than the radiation. For instance, the US Army maintains that depleted uranium is "safe," because it has a half life of 4.5 billion years. But unfortunately it is far more toxic than lead, and large parts of Iraq and Serbia have been poisoned,since shells with DU explode and spread the stuff around widely.

I'm of  the opinion that the toxicity of the wastes is probably worse than the radiation.

Over time, yes.   The question becomes 'if we move to splitting every atom we can get our grubby little mits on to power things' what is going to power the 'keeping the waste out of the biosphere' over time.

All the plans seem to assume 'plenty of energy' to manage the waste stream over time.  

You're right. And considering that Yucca mountain seems to be ruled out, it's difficult to see any long term (let alone "permanent") solution any time soon.

Plus, whether the toxicity is worse than the radiation, we should remember that we get both of them in one messy package!

Plus, whether the toxicity is worse than the radiation, we should remember that we get both of them in one messy package!

Twice the DNA splitting fun!    

And since many of these waste products are very corrosive, they need to be dealt with before they leak.

That would be waste solvents from the nuclear weapons program and PUREX reprocessing plants, a good reason not to use PUREX. Spent fuel is not corrosive at all. Its mostly solid oxides.

The worst problem in this country is Hanford, on the banks of the Columbia River (go ahead and google it).

Which has nothing to do with civilian nuclear power.
But unfortunately it is far more toxic than lead, and large parts of Iraq and Serbia have been poisoned,since shells with DU explode and spread the stuff around widely.

Its only about as toxic as lead. The danger comes mostly from it being used as a projectile in a firearm: It self sharpens on impact and gets shocked to dust far easier, rather than being squished like lead does, so more of it is airborne longer, and can get in the lungs easier.

But eating a gram of DU and a gram of lead is roughly equally stupid.

Its only about as toxic as lead.

Based on what studies?   Got links to 'em?

The danger comes mostly from it being used as a projectile in a firearm: It self sharpens on impact and gets shocked to dust far easier

Interesting view.   Wrong, but interesting.

"Because of the heat created, the particles of depleted uranium start burning.

What does it do to the soldiers under attack?

This is not pretty - the immediate effects of this weapon on a tank's crew will almost certainly be devastating. Aside from the shards of metal flying around, there is a danger of being burned or suffocating as the oxygen inside the vehicle is used up. "

O2 being ued up sounds like burning to me.  Not just 'shock'

Again, feel free to quote actual studies showing DU and lead  are 'about as toxic'.

"What does it do to the soldiers under attack?"



Well, since it is used in projectiles that are designed to penetrate the armored vehicles that those troops are travelling in and to kill those same troops, I would imagine that is what it frequently does to those soldiers.

Did you have some better ideas about how to disable a T-72?

If you've seen the documentary "Battleground:21 Days on The Edge of the Empire," you will recall the part where the Iraqi blogger makes a trip to the destroyed-tank boneyard. He walks around in nothing but a t-shirt and jeans, measuring the radiation coming off the destroyed hulks and warning the workers there who are busy cutting things into scrap that the stuff can cause cancer. Nobody seems to care.

Thanks for your reply suoorting my position.

than kyou for your reply suppoting my position.


Has anyone been affected by the storage of nuclear waste in the US? Please provide references if you know of any such cases.

This question highlights IMO the biggest problem with potentially toxic wastes of any kind. The way toxic wastes are currently dealt with places the burden of proof on the side of those asserting the possibility of hazard to society of a given waste, rather than placing the burden of proof on the disposer of the waste to 'prove' to a certain degree of certitude that the waste will not be a hazard given the disposal method.

Until we change this and place the burden of proof on the disposers (polluters) and the disposal process, we will go on willy-nilly disposing of the thousands of potentially toxic chemicals and radioactive agents that we currently dump into the biosphere.

We are treating our biosphere as a free-for-all sewer.

Dare I bring up the Precautionary Principle?
Precaution Shmecaution. Rub it in your hair. Tablespoon for baby at bedtime. Radiation'll cure what ails ya
Only for another few million years, then we can talk.
No, the cost of failure is FAR higher for others than the failure of a car, plane or threshing machine. When a car/plane/threshing machine has an accident - unless its me that fell into the theshing machine - it really doesn't harm me.

No, the potential cost of worst-case failure is worse for nuclear. In practice, the cost of failure is FAR higher for things like automobiles, where there are 40,000+ deaths and more than 2.7 million injured each year in the US alone according to the NHTSA 2004 Annual Assessment. The potential cost of failure of a particular car/truck trip would be set by the loss of a commuter train full of people if it were derailed because of a car/truck. We now know that the potential cost of failure of a plane crash is at least 1500 people dead and thousands injured, since the two planes that hit the World Trade Center caused 3000 deaths between them.

I'm much more concerned about the safety of the roads I bike to work on than about the safety of our regional nuclear plants. That seems perfectly rational considering the actual results.

Given the war on proverty and the war on trugs have been won and we've moved onto the war on terra - the cost of terrorists using nuclear fission or fission byproducts is never mentioned by the 'lets keep big power producers in business so they don't have to change their model so lets build nuke plants' supporters.
WOW. I did not know that I am a 'lets keep big power producers in business so they don't have to change their model so lets build nuke plants' supporter.

I prefer to think of myself as 'let's keep the lights on' supporter. But what do I understand, of course...

"No, the potential cost of worst-case failure is worse for nuclear. "

I disagree. And if you thought about it a bit more, I think you would, too. Bear with me, and follow along this train of thought:

Worst case for nuclear; big accidents kill lots of people and extremely long term environmental poisoning from improper radioactive waste disposal kills lots of people and ruins environment for a very long time, in a few areas. I think we can agree on this, right?

Worst case for coal; Climate change from CO2. What is worst case climate change? Geologic history tells us that the Permian/Triassic extinction was the worst climate change on record. Was it caused by increased CO2? Can't tell exactly, but it is clearly correlated. The biggest delC13 excursion of all time is found at the P-T boundary. So it can't be ruled out as the immediate cause of the extinction event.

What would be the result of that worst case climate change if it happened today? The death of 99.9% of all living things, and the extinction of 50-90% of all species - just like the P-T event, and a vast bloom of fungi that eat all the dead bodies (the P-T boundary is marked by a thin layer that contains fungal spores as the sole, single, only type of fossil remains).

If you want to compare worst cases, you have to look at the actual worst case.

While I said that nuclear power could allow us to live somewhat like today, I dont think It will be implemented fast enough.  I think it will be kind of too late, logistically.  

In order to build any complex system, we need ever complex society wich carry each a small part of the effort needed to build it.

So I think that solution that have some chance to be implemented are the one with lesser complexity built in.  Complex solution are : PV solar cells, anything nuclear (fusion, fission, coldfusion) hybrid cars, hydro electric dam, etc.  

Solution with lesser inbeded complexity are mass brick stove, walking and biking, solar heating, different kind of housing.

Those will be implemented only on a local basis.

So I think that solution that have some chance to be implemented are the one with lesser complexity built in.  Complex solution are : PV solar cells,

Yet there is a benifit to PV cells (high grade flexible electric power and no gathering cost) so while the process may be 'complex', there is enough reward to keep 'em going.  And the failure mode of a panel may be a problem for the panel owner, its not a problem for others which keep people away for years.   And I can have a solar system that is panel, diode and load.   Not as nice as a MPPT, DC-AC inverter, grid intertie...but it is simple and when your load is a water pump into a tank...does it need to be complex?

As an example, mass stoves require something to burn.   Somehow that burnable stuff needs to be grown, then processed, then moved in to burn, then the waste processed.   May be 'low tech' but given the number of people and all of them demanding energy....how ya gonna find enough mass to burn?

Ok, maybe you ought to know that Aluminium, silicium, glass, coper, etc is needed in order to build each solar panel.  Whitout counting for any other material.

Aluminium need electricity (very large amount) comming usually from coal in China and Hydro power in Quebec. Silicium is not coming from sand, you also need to mine it and refine it.

Solar cell fabs technology is akin to computer processor technology and has almost the same complexity.  

We are not going to power aluminium factories with PV cell.  PV cell are not going to transport the product.

PV cell is not for replacing other power generating technologies, it is for having electricity in remote location where electricity is not available.

My father has a company that was selling PV cells since 20 years.  He plan, install, repair and replace PV cells for some clients.  It is always and ever better to use small scale wind turbines to get remote power.  He would never advocate using any of those two technologies when local power grid is available.

While I cannot make aluminium on weekends, I do go in the forest to chop some wood each year with my father.  Mass wood stove are available since centuries, they were used by the Romans.  There is far less imbeded complexity in a mass stove.

Where I live, trees grow without our help whatsoever.  It is called a forest.  Maybe if you are stuck in a large city you may not appreciate the very large amount of wood available in a forest, but I can tell you it is far more than what we would need.

Because I think these wood stove will not be implemented on a large scale before it is too late, I dont think it will adversly affect the forest.  Also we will build them after the begining of the colapse, when most of wood products prices would plumet.

Stick to your PV cell if you want, it's not going to save anyone.

Ok, maybe you ought to know that Aluminium, silicium, glass, coper, etc is needed in order to build each solar panel.  Whitout counting for any other material.

Glass?  Aluminium?    Better not tell Ovonics that their unisolar product is lacking bits and therefore their panels can't work,

Feel free to let nanosolar know that they are foolish too.

PV cell is not for replacing other power generating technologies,

PV cells do the best job of converting photons to electricity.

Photons are what add energy to the biosphere.

But feel free to disprove how photons drive the energy systems .

I do go in the forest to chop some wood each year with my father.  Mass wood stove are available since centuries, they were used by the Romans.  There is far less imbeded complexity in a mass stove.

Lets see...that material used rock that had not reacted to form limestone and volcanic ash.   How does a planet of 6.5 billion humans get material like that?

(not a bad book BTW)

you may not appreciate the very large amount of wood available in a forest, but I can tell you it is far more than what we would need.

Bring it.   Come on, prove this.   Show that after all the other wood products are made from managed forests, woody agriculture that there is enought wood left over to provide heat to mass wood stoves.

Below are uses to deduct.
http://www.fungi.com/    (both examples of wood-based food.)
One manufacturer even added sawdust to replace the lost bran, calling it cellulose on the label and advertising it as "high-fiber" bread.

Because I think these wood stove will not be implemented on a large scale before it is too late, I dont think it will adversly affect the forest.

And once stoves are more commonplace?  Then what?

Stick to your PV cell if you want, it's not going to save anyone.


1,320,000 hits.  Huh.

I told many friends that this system will go on until it will break.  You do not choose to throw away capitalism, it can only break apart.

It will certainly break apart. Capitalism is based on a money system which contains an imbedded growth. As long as the existence of 'interest" is increasing the amount of money continously, the whole system is driving faster and faster into a dead end.

It is the 'interest' which forces us to grow our economy. There needs to be a balance between the amount of money and the amount of products and services. Therefore, as long 'interest' is increasing our amount of money year after year, the use of natural resources and of human labour (especially in places like China) is increasing as well.

No question this cannot happen forever. Capitalism is going to break down, when the whole system cannot match the financial side anymore. PO will play a major role, but others as well.

So we need to find a economic model which is based on technology (or whatever else) which can grow. Renewables are maybe in part a solution for a time, but eventually the planet cannot be covered with wind generators or solar cells. But for the next decades there is enough place for this.

I told many friends that this system will go on until it will break.  You do not choose to throw away capitalism, it can only break apart.

perhaps something like 1929 times 1,000.

Well, in 1929 it was pretty damn near capitalism colapse. I think it is given to Eddie Barnays to have bring us propaganda and call it public relation that saved most of the capitalism paradigm.

TV and CNN live did not exist at that time.  Newspapers were printed on press usualy powered by electricity or coal.  The coming crisis will probably even shut us off from the actual hourly feed of news.

It will not be cool.

The first reason is that recently George Monbiot pointed that each year we collectively use 400 times the energy accumulated in that year by the whole biota on the globe.  By biota we mean everything living, by accumulated in that year, we mean what has grown in that year.  That's in order to sustain the current way of life.

This is a common misreading, and I think that Monbiot is a bit disingenuous with his argument.  The actual fact is that if one wanted to make a given amount of oil, certainly it takes 400 times the amount of energy in the form of plant matter (plus a whole lot of time) to do so.  However, this is purely an argument for the ultimate finite nature of oil/coal supplies, not for climate change or the like.   It is equally true that we use something like several thousands of years worth of helium production (via radioactive decay) each year.  (For reference, the Earth makes 3.4 liters of helium per cubic kilometer of rock each year, roughly 3e+9 cubic meters, and we use roughly 1.5e+8 cubic meters.  However, very little of the helium produced in the Earth can be accessed, either because it escapes to space or is trapped deeply in the Earth.)   Big whoop, it's a finite resource, and has no implications for climate change.

The actual numbers show that the vegetation flux of carbon from decay to the atmosphere is about 60 gigatons per year, about a factor of 10 larger than the fossil fuel based flux of 7 gigatons per year.  The issue, of course, is that the biosphere also takes up about 60 gigatons of carbon per year, so the fossil fuel contribution ends up accumulating in the atmosphere and even more so in the ocean.   However, the carbon flux through the biosphere is still about 10 times more than the flux through fossil fuels.  There is the question, of course, of how much of that flux we divert to fuel uses, as a reasonably large fraction is probably already being put to other uses, e.g. food, and it might behoove us not to teraform the entire planet...

Seems to me you are missing his point. We are faced with the potential problem of replacing 400x/yr what plant matter produces in terms of the energy we are using, given the concentrated nature of fossil fuels. Simple math. I didn't thing the global warming connection was the point at all.
"Who is more right?"

I would alter the question to "How is each one of them right?"

Both are intelligent men, though like all of us, they've reached some differing conclusions.  I don't doubt at all Lovelock's commitment to the environment, even with his support for Nuclear, just as I resent the charge that my own opposition to Fission (as it now is used) suggests my ultimate disregard for the earth or humanity, or my tacit infatuation with coal.

Both are right in that

 a) we have Nuclear, Coal and Oil today, and derive huge amounts of power from them, much of which is used wastefully, or just as 'makework' energy to prop up the economy (ie, cheap, plastic use-once products)   and so,

 b) We need to be using that bounty to make the 'drop in the ocean' of renewables into two drops, then four, then a bucket full.  We can't assume we'll be creating a whole ocean again, I have to say.  Of course,(always as the afterthought) we really need to learn how to live with FAR less energy consumption.  Those who say it's simply not in Human Nature to change until an event propels us into a change are only looking at those who haven't changed.  Many have changed or started changing, even if it's a small percentage of the population, or the changes are small.. but the model is out there to be copied when others hit their own (11th hour) decision points..  and some won't change.  But you can't rule out the exceptions, the avant garde, the scouts.  Few in number, but they are the tip of the arrow.

I think the insistence that we build out a great string of new Reactors is to me akin to heading out on a journey across the desert and loading the camels up with Champagne in refrigerated boxes.  We drink Champagne every day, right now, and the thought of subsisting on water seems completely unviable for many people.. but we have to start to understand what we need to live, not just what we want, or what we've grown accustomed to.

.. Now, back to work!

Bob Fiske

I agree. The argument I use when a 'pro-nuker' (especially the rabid variety) says I'm favoring the toxic pollution of coal by even expressing doubts about nuclear power is this: The technology for clean use of coal exists, but we are not using it for various economic and political reasons. Why should we not expect the same situation to obtain in use of nuclear power? I.E. badly build plants, improperly disposed of waste, total ignoring of the immense and growing problem of mine tailing wastes, etc. etc. etc.

Going whole hog into nuclear is like us saying 'whoops, this coal thing is screwed up, let's try nuclear.' And leaving the mess coal has created to go create another mess.

Is this just my impression, but the last couple of months, theoildrum turned more and more into a forum to discuss alternative/renewable energy sources.

Oddly, others complain that the mood at TOD has become much more pessimistic.

Maybe both are correct.  Former cornucopians now believe we are at or near peak, but renewables will save us?

renewables will save us

Renewables can not keep for us the present model of cheap energy.   (ok, ok... the old model of cheap energy).

Humanity can exist on renewables, without going back to a subsistance style life.   But its not going to be like the life most of the middle/upper class of the west have enjoyed.  Nor will it be a life that can be had living off the excess capacity cheap energy has created.

I think we can conserve about 90%, based on the fact that my wife and I use about 400 wh/day of electricity, compared to 20 plus KWh per normal family.

That said, if it is true that we use 400 times as much energy as the earth's biota produce per year, then even dramatic conservation will only smooth the transition.

Since it appears unlikely that the energy from solar and wind can be concentrated enough to smelt the next generation of solar and wind, then even that is merely a transition.

And transitions are crucial, to whether the entire global economy collapses into Oldavai in a massive spasm, or slowly shuffles off into the mists.

One image that keeps with me is from the first film from the Indian classic "Apu Trilogy." It shows an Indian nuclear family (Brahmin) in the countryside, living in the crumbling  remains of what was once a very impressive house, and struggling to keep hold of an upperclass lifestyle (not working).

Highly recommended.

I just finished Revenge of Gaia by Lovelock. Highly recommended.

One of the amazing aspects of Lovelock's book is his contention that nuclear plants and the waste they produce are safer than most people believe. He states that cancer is a natural consequence of living in an atmosphere containing oxygen, and that our fear of properly managed radiation at levels generated by nuclear power plants is unfounded. He goes so far as to say that he would be happy to store a year's worth of nuclear waste from a nearby reactor on his property, and he would use it to heat his water and home.

His attitude on "renewables" is that they cause more harm than good, and are a waste of money when compared to the efficiency of nuclear power. He makes the assertion that renewables are pushed so hard because companies can make money off of them.

I tend to agree with Lovelock that our biggest issue is that we are destroying the climate-regulating systems that the Earth has used for millions of years to optimize conditions for life. A big part of this disruption is due to greenhouse gasses. Nuclear power, on the other hand, is much more efficient and doesn't direcly produce GHGs and nature doesn't care about the radiation created. Case in point is Chernobyl, where the area has turned into a wildlife sancuary due to lack of human interference since the meltdown. From the perspective of Gaia's ability to regulate the climate, Chernobyl was actually a good thing.

Toward the end of the book Lovelock discusses "Technology for a Sustainable Retreat". He talks about techno-fixes that block sunlight and methods to create more cloud cover, but ends up saying that these activities will require energy and will have the side-effect of emitting more GHGs while carrying out these procedures. Other solutions considered would require that we abondon agriculture and instead synthesize the food we need and use sailing ships and sailing airships. In the end he says that "the well-being of Gaia must always come before that of ourselves: we cannot exist without Gaia."

All very nice, but unlikely in my view.

First, we won't stop burning coal and adopt we won't adopt nuclear power. People don't trust nuclear. Burning coal is easy to understand, nuclear is like magic voodoo.

Second, we won't proceed with a "Sustainable Retreat", we will continue doing whatever we need to do to stay comfortable. And that means "developing" countries will do whatever it takes to get hot water, HDTVs, and automobiles as cheaply as possible.

Third, Lovelock's proposals would require that we citizens of the world actually cooperate, with rich nations spending money on poor nations so that they use non-GHG emitting technologies (like nuclear power) instead of coal power. Consider the amount of cooperation occurring between western countries and Iran to help them get their nuclear power generation going. Rich countries only care that they can produce power for their rich citizens. And they want to ensure that only the "right" countries are able to use nuclear power.

In my opinion, Lovelock does a marvelous job of laying out the elements that got us into this global-heating mess. The weakest parts of his book are the areas dealing with "solutions" because all of the solutions take for granted that everyone will recognize that we have to let the earth's ecosystems heal (i.e., give the earth back to nature), and that humans will sacrifice comfort and cooperate globally to accomplish this. Unlikely, in my view.

Tom A-B

He also adds that he has the bias of the physician, he believes that something can be done with technical means, and that he could be wrong: eventually the solution is from the "deep ecologists", that is step back and let the nature recover by itself.
In my opinion, Lovelock does a marvelous job of laying out the elements that got us into this global-heating mess. The weakest parts of his book are the areas dealing with "solutions" because all of the solutions take for granted that everyone will recognize that we have to let the earth's ecosystems heal (i.e., give the earth back to nature), and that humans will sacrifice comfort and cooperate globally to accomplish this. Unlikely, in my view.

Just wanted to express my support to this and also to the likely course things will take. Most likely any plans for nuclear power ramp-up on planet level will fail because of the current state of the international relations. The bad news for our planet is that there are still enormous amounts of coal, tar sands, natural gas and even oil in the ground. How can one possibly hope that these will not be burnt? Just because of the warnings of a handful of scientists and enviromentalist and the hypocritical concern of media and public? No way IMO.

On the other hand Lovelock had to offer some solution, even though politically it is too distant from reality. Maybe at some point in the future we as a humanity will grow up to fix our system and let international cooperation replace fierce competition. Maybe this was what he had in the back of his mind while writing his book. Well, I'm not an optimist but a tough cause is better than no cause.

I completely agree that he had no choice but to offer solutions. But I find it disheartening that one of the foremost experts on the subject can offer only token solutions. It reinforces my view that there are no good solutions to solving this problem. In other words, it's not solvable.

Tom A-B

One comment on the Chernoble exclusion zone. yes, there are lots of wolves, wild boar and other endangered creatures.

But we need to remember that cancers might take 15 to 50 years to develop, and most wild animals are lucky to live 8. Therefore, they might not be much affected by radiation, while long lived humans, living off agriculture, might have epidemic rates of cancers by the age of 25 or so.

Also, his idea of abandoning agriculture and "synthezing" food seems daft.

I think he might be following a long line of brilliant scientists who, upon reaching great fame, start pursuing dumb ideas; like Sir Issac Newton spending his autumn years pursuing alchemy.

Soylent Green: plenty of base raw materials to make this "synthetic" food.
  Alchemy isn't dumb, it just happened to not be the correct approach to the world for the invention of modern technology through physical science. The study of alchemy is the study of the processes of change. Out of its researches sprang a lot of modern medical science (Paracelsus) and chemistry.
  It also contained a spiritual element. Dr. Carl Jung wrote rather extensively on the subject of alchemy, particularily about the changes in the Alchemist through the processes of following the recipes.Jung believed that by studying the writings and oral traditions of people prior to modern technology we could rediscover a lot of truths about our own nature. He thought the ancestors understood many things about our humanity but couched them in terms that are hard for our rationalist civilisation to understand.
   Newton was a true scientist. He examined many hypothesis. I will summarise by quoting William Blake: "What is now proved was once only imagined." We are going to need all kinds of different ways of thought to make it through the mess of our modern  western civilisation.
   Bob Ebersole, known to you as oilmanbob.
you forgot to add the most important part.
the part that natural selection would select those that were more resistant to the radiation to survive.
with the short life span of the animals there, natural selection works faster.

Case in point is Chernobyl, where the area has turned into a wildlife sancuary due to lack of human interference since the meltdown. From the perspective of Gaia's ability to regulate the climate, Chernobyl was actually a good thing.

A while back Leanan posted this link. I don't see how Chernobyl could be seen as a good thing in any sense except to scare hell out of people about nuclear power.


Techno-believers have a deep need to find that The Tech is Good.
"who is more right ?"
I think that none of them really adress the fact that we are spilling far too much energy and it should be possible, through legislations, to spare a lot.
Even the IEA made some suggestions, like reducing driving speed, that were never really pointed to by the governments and MSM.
Of course nobody would like it because it means reducing our lifestyle and lowering the GNP, that is not as sexy as raising money for expensive and illusionary projects.
All this talk about nuclear or renewables being the answer and not talking about population; misses the whole problem.  Every bit of energy saved allows increased population somewhere else in the world.  Until we get world population under control and heading in the right direction --- this whole idea of riding your bike to work, growing food in your backyard, or powering down is ludicrous and just makes things worse.  If population doubles again; your hard earned powering down is totally wasted.  When will Bush, Gore, the UN, other nations, the catholic church, and other religious leaders around the world stand-up and make an announcement about population and it's inevitable consequences with steps and money to start working on this issue?  This is our single biggest threat and all other threats steam from this...  Everything else from, global warming, energy, food, pollution, etc. --- all could be made a little easier if population was heading in the right direction.  We don't have a few hundred years to change this - we don't need free AID drugs for Africa for example -- we need free birth control for anyone and everyone in the world that wants it...


Amen ... except in Russia and Iran, where they are telling their peoples to be fruitful and multiply... they proJect more cannon fodder will be needed for their teams in the future.
Philip Longman describes the reality of population trends including these comments:

"Russia's population is already contracting by three-quarters of a million a year."

"Postrevolutionary Iran has seen its fertility rate plummet by nearly two-thirds and will accordingly have more seniors than children by 2030."


Quebec, as well as many other jurisdictions, encourages childbearing.  Is this to generate cannon fodder?

Yours is an ill-informed comment that betrays prejudice.  Have you just ingested too much Fox TV?  Or do you wilfully intend to cement public paranoia about the 'enemy' beyond the stockade?  

Probably both. Pig-ignorant and a Zionist fanatic at once.
The trends you point out are what scares the leadership - both countries presidents told their peoples to step up the reproduction and both said it this year.

Sorry I do not have the links for FoxTV that you requested.  Do a google search or maybe ask your cousin or neighbor.

When will Bush, Gore, the UN, ... make an announcement about population and it's inevitable consequences with steps and money to start working on this issue?

Never. Our population will take care of itself.

BTW, I agree with you. Population looms over all of these issues.

Tom A-B

I believe we do have willpower in certain respects, but overall population seems to me to be purely a function (in part, anyway) of available power, and will simply be a reflection of it.  I expect the pop. curve to trail, but match the overall energy curve.. unless something else gets us first.

Bob Fiske

As is always the problem when dealing with population.

Are you(collectively as a nation) going to be the first to de-pop yourself?

Cause if you are, guess what?  Your neighbor is going to be eyeing all that nice available land and resources that just got freed up, and since you won't have the bodies to fight off an invader due to your de-population trend, you won't have any way to counter them.

This is also the fundamental problem of "power-down".  the nation who does it first is going to be the nation that gets conquered militarily, or pushed out economically.  No nation is going to volunteer to power-down or de-pop first, because to do so in a world of growing power demand and population, would be suicide.

So now you are faced with a problem.  Either you hold the course and pray you can maintain your growth longer than everyone else can maintain theirs, therefore giving you the chance to remove them from competition once they falter, or figure out a way to build a sustainable infrastructure to support the population(ever growing) and economic activity(ever growing) regardless of whether your competition falters or not.

Given that option B is highly unlikely in a finite sphere, I believe, and I sometimes wonder if our leaders believe also, that option A is the name of the game.  And hence I look at world events like the US building a military presence in the the Middle East through a lense that they don't honestly believe this will keep the world afloat, but rather it might keep the US afloat longer than everyone else.  Or worse, if the US believes it can't hold onto those resources in the Middle East, it will certainly be within US capability to at least deny those resources to everyone else.  A few small scale nuclear devices rigged to each oil well will make the Middle East a whole lot less important in a strategic sense in quite a hurry.

Remember in Chess, the game is equally about moving your own pieces, and denying your opponent the ability to move his.  And ultimately the world political moves are just a big game of Chess.

Yes, irradiating the oil the fields does seem like an option. A rather drastic option, but an option. Hopefully things won't get that desparate.
That is one of the reasons I would prefer a further power-up of non fossil fuel power sources and efficient infrastructure in my home country. But the strongest motivator for that is that I enjoy living in a rich country with prosperous neighbours, powering down into hardship would be a depressing goal.
I get sick to death of seeing this population red herring raised again and again on TOD.

The fact is that our predicament (Peak Oil/global warming) is due to massively disproportionate energy usage by comparatively small percentages of the world's population. As is often cited, the US, with under five percent of the world's population, uses about a quarter of world energy.

We are not the famed reindeer eating ourselves into extinction. Reindeer are roughly equal in the extent to which each individual can consume resources, and therefore, for such creatures, population levels and resource crashes can be closely correlated. For humans, this is no longer so.

A simple thought experiment: every person in the Third World (including India and China) is killed (with the First World somehow miraculously getting along with exactly the same material existence). Does Peak Oil go away? Does global warming appreciably slow?

Population is not the problem. We are facing doom because a small number of us burn everything we can get our hands on to sustain an extremely complex and resource-intensive lifestyle.

I don't believe anyone would argue with your reasoning that a small population is having a disproportionate affect on oil/climate change.

However, I would argue that that small population is actually growing, not decreasing. That is, although population growth of consumers is slowing in the US and Europe, the fact remains that China and India are now growing their own populations of consumers.

It'd be like Earth containing 4 "United States" with the result that we have 4 times the consumption/pollution on the same planet.

While what you say about disproportionally small number of people using a large amount of energy is true, that does not remove the population issue from the table.

Many third world nations really on First World products (mainly food and medicines) to sustain their populations in areas that are normally hostile to human life.

Africa, portions of Asia, and even parts of South America are seeing increases in population density due to the fact that they have held onto their cultural values of large family, in combination with technology allowing those large families to live longer than previous generations.

Where previously an 8+ children per couple birth rate wasn't a threat leading to overpopulation due to high infant mortality, and generally lower life expectancy, that rate now in conjunction with better medical care, vaccines, and more plentiful/nutrient rich food which can be shipped anywhere with ease due to cheap energy is making those birthrates dangerous.

When cheap energy ceases to exist, so too will the desire to move food over long distances.  In fact with the end of cheap energy I fully expect a much more localized economy to re-emerge for most nations, and I wouldn't be surprised if in conjunction with the loss of cheap energy we also see more protective trade arrangements arising and an end to the WTO simply because globalization will simply not be efficient enough to be profitable any more.

What this means ultimately for the third world, is that even their cheap labor which make our clothes, toys, shoes, and widgets will not be viable to trade for food stuffs we provide their nation.  Not to mention the industrial damage some of these countries have done to themselves will further put constraints on these populations when foreign food stops coming.  Large reserves of water in China and Southeast Asia are unusable now because of the industrial pollution they have suffered.  India has several notorious cases of industrial poisoning of land and ground water.  These will eventually bite them in the butt if the imports of food and other things stop coming, and they have to try and revert to a localized economy.

Population has major implications as a part of the Fallout from Peak Oil/Peak Energy.

Population is very much the problem.

A simple thought experiment: every person in the Third World (including India and China) is killed (with the First World somehow miraculously getting along with exactly the same material existence). Does Peak Oil go away? Does global warming appreciably slow?

My guess would be "yes," at least for the latter.  Consumption has been soaring in India and China.  They are cutting down the rainforest in South America, which could prove to be a climate catastrophe.  They are burning the dirtiest coal imaginable in China, in crude stoves or even open firepits.

And they are emigrating to developed countries, where they are embracing the Big Mac-eating, SUV-driving, McMansion-dwelling lifestyle.

The U.S. population is certainly the biggest problem, and our population growth is driven by immigration.

Is this just my impression, but the last couple of months, theoildrum turned more and more into a forum to discuss alternative/renewable energy sources.

Anyone who's been reading TOD for a while pretty much gets the message that the path we are on is headed for very grim times, in our lifetime.

We can deny the facts, wallow in despair, blindly trust humanity to the invisible hand of the market, or use all of the tools at hand to strive for a solution.

We already know the solution. In 100 years we will be using only renewable energy, because that's all that will be left.

Now we can start now, while we still have half the oil left, or we can wait until things get ugly.

The Oil Drum has made the day to day information gathering of at least me a bit easier.  I agree with Leanan that the Drumbeat is not the place to look if you want the true meaning of the site.  The Drumbeat is where we hash out our ideas with each other.  The other threads are where we stay on the topic of the main post and try to assimilate the information given.

We have over the course of time been talking about the same issues over and over again, only with new thoughts, new people, and new information from those people out in the field.   But we still just talk about the same issues over and over, that fact can seem like we are getting no where.  Which in light of what is happening in the real world, the slowness of it all, verses our discussions and what we perceive drives us crazy.   Here we are seeming to find the solutions and then the people that make the decisions are taking forever to implement our solutions.

If our solutions really work, if our opinions really matter, we will never know if nothing is tired.  That is where any discussion of any problem hits reality.  We think we have the answer but there is real world time constraints to it all.

Just take that into account when you feel that nothing is getting fixed in a timely manner.  But don't stop doing what you think you should be doing.

For those interested in Peak Oil/Green Energy related investment ideas, Powershares came out with two new ETFs, both energy related.

PZD: The PowerShares Cleantech<sup>TM</sup> Portfolio tracks the Cleantech<sup>TM</sup> Index, which is designed to identify cleantech companies with the greatest capital appreciation potential within the cleantech industry. A company is considered to be part of the cleantech industry if it produces any knowledge-based product or service that improves operation, performance, productivity or efficiency, while reducing costs, inputs, energy consumption, waste or pollution.

PUW: The PowerShares WilderHill Progressive Energy Portfolio is based on the WilderHill Progressive Energy Index. The Index is comprised U.S.-listed companies that are significantly involved in transitional energy bridge technologies, with an emphasis on improving the use of fossil fuels. The modified equal-weighted portfolio is rebalanced and reconstituted quarterly.

And most of you are probably already aware of the existing 100% clean energy portfolio:

PBW: The PowerShares WilderHill Clean Energy Portfolio seeks to replicate, before fees and expenses, the WilderHill Clean Energy Index, which is designed to deliver capital appreciation through the selection of companies that focus on greener and generally renewable sources of energy and technologies that facilitate cleaner energy.

This is great! Thank you for posting this.

On Halloween the Canadian government dropped a bombshell on the income trust industry.  In direct contradiction to explicit campaign promises (e.g., click here for short mp3).  Canada's finance minister, Jim Flaherty, announced that with the exception of some REITs all trusts will be taxed as corporations by 2011.  The market reaction was swift.  Estimates of destroyed value range as high as C$28 by the time the dust settled on November 1st trading.  Many issues can be addressed when examining this policy shift, but the ramifications to the Canadian oil and gas industry should be discussed here.  

To what extent will this reduce oil and gas production in the future?  The recovery of aging oil and gas resources is but one example of business activity that is ideally suited for trust structure organization.  It is therefore logical to question the degree to which extraction activity might lessen in the event that the threshold of non-economic business activity materializes quicker.  Unfortunately, I do not have the data to make educated guesstimation on any of the issues that grow out of the tax law change.  But it is clear that many in the oil and gas industry feel betrayed, and we haven't heard the last word from the industry. 

In the least, the Canadian government could have limited near-term turmoil by simply announcing its intention to tax all future trust at the corporate tax rate, while simultaneously grandfathering all existing trusts for no tax treatment change.  The government has maintained that it is most worried about future trust conversions and the revenue shortfall this might create (some experts contend declining revenues will not result;  see 1 and 2).  Rather than a restrictive four year transition period, full grandfathering of existing trusts would likely have prevented the massive destruction of equity November 1st, and bought government and industry time to fineness an ideal regulation regime going forward.  On the assumption that the Conservatives would keep their word, billions were invested by individuals and corporations following the campaign promise to not tax trusts.  Full grandfathering of existing trusts would have at least prevented what amounted to a reneging on a contract with the Canadian public. 

So, what sayeth the wise members of TOD?  Did the Canadian government just shoot itself in the foot, making it more difficult to extract oil and gas from aging reserves?


Note:  Links to the three Globe and Mail news articles above might default to a registration page at some point.  To get around that, you can go to Google News and it will successfully pull the stories up for at least a few more weeks.  As a short-cut, here are the three news stories via Google News.  Find the headline that matches the phrase in the search engine box:  article 1, article 2, article 3, in order of appearance above.

whoops.......that should read "Estimates of destroyed value range as high as C$28 Billion"
Just what you would expect from govt. They destroy 28 Billion in wealth just to get about 500 million more in taxes. Wow - how smart is that? So far today, looking at Toronto exchange, they have probably killed another 10 billion.
There my be a glimmer of hope - a lot of Canadian pension systems had big holdings in these stocks. Maybe they can get the govt to moderate their stance a little?

This from Roger Conrad:
There will be opposition to the government's proposal in
coming weeks, as the trusts themselves organize their efforts
to block it. And I advise investors to contact the following
persons with their views: Dan Miles, Director of
Communications Office of the Minister of Finance at
613-996-7861 and David Gamble at 613-996-8080. In addition, if
you'd like to receive automatic e-mail notification of all
news releases, please visit the Department of Finance Web site
at www.fin.gc.ca/scripts/register_e.asp.

It's debatable if the change will result in increased taxes.  Many people argue it's mostly a problem of deferred tax revenue flows as investors with retirement accounts are not taxed, but that ultimate tax revenues are larger given the support of increased business activity and eventual collection of deferred taxes.  Even in the business trust arena, there are companies that have grown strongly that would not have grown as fast as they did (or at all) were it not for the innovative and readily available financing found with Bay Street's support of the income trust model.  This business creation results in more tax revenue, and runs exactly counter to the arguments by many (including the finance minister) that Canada was at risk of becoming an "income trust economy."  

Obviously, my bias is readily apparent.  I think this policy change is incredibly short-sighted.  But I'm particularly interested in hearing from the folks in the oil/gas industry and their thoughts about how much damage this might do to future production flows.

Thanks for Conrad's contact info suggestion.  :-)

- Ziggy

I also wonder if we will hear a few weeks down the road about a few hedge funds blowing up that had large holdings in trust?
Is there such a thing as a "hedge fund bubble" that is bursting?

Check that link out.  I will plead ignorance on the entire issue, but from a pure econ POV it depends where you sit on this one.  Taxes are generally bad as they discourage invesment and missallocate resources.  However from the small article above it seems that ALL companies were going to move their companies into a trust setup and destroy the tax base in aggregate.

If they let it proceed as was planned, most companies would be forced to convert as CEO's are suppose to deliver max shareholder value and it would be a tough sell to maintain the current structure when your competitors are using the advantage.  If you let all these companies convert, then you're taxes dry up and how do you perform gov't functions?  

Like I said, I don't know enough and I'm intrigued a lot about this whole setup.

Tate: Basically you summed it up. After they made their original promise to leave it alone, things really snowballed.
Nah, the option for income trust organization would never pull in all companies.  The structure works well for companies that spin-off large cash flow and that also have modest or well defined capital expenditure needs.  A great many companies simply wouldn't fall into that category, and their optimal structure wouldn't be to organize as an income trust.  However, a great many people - and the Canadian government wags justifying their policy change - have been making the argument that Canada would turn into an "income trust economy" as ALL firms flock to the structure.  That argument is hyperbole, at best.

Thanks for the link.  Alas, I don't have a lot of free time to post but I've been on TOD almost from day-one and I've read something like 50% of what has been published here, including many of your great posts.  Thanks again :-)

It gets better - check out this Bloomberg article:


A surge in foreign takeovers of income trusts would mean the government's attempt to stem a decline in tax revenue by taxing trusts may have the opposite affect, said Lee Goldman, a money manager at First Asset Funds Inc. in Toronto.

``They get too cheap and they get taken out, so you have a whole stream of companies moving south of the border, and you lose the tax from that company anyway,'' said Goldman, who helps manage $971 million at First Asset. ``It could come back to bite the government.''

Ron Kirby agrees with my contention that this "reform" is going to reduce Canadian oil and gas production.


ROBTV will have a great line-up today with oil/gas industry executives speaking to the damage this policy change entails.  Enerplus Resources Fund is the oldest Canadian trust and Gordon Kerr, the president and CEO was on today.  Also, the CEO of Arc Energy Trust will be on (not yet in the archive at the time of my post here but it will be there eventually).  Also, check out the scathing interview with Dennis Gartman.  All of these interviews can be found on the Thurs., Nov 2nd. archive listing.  Click here to pull it up (and click on the "Thurs." tab if you come to this message after today).

TOD digerati, read this:


The Canadian oil and gas industry is coming out of shock and is about to fight back.  I get the feeling the Canadian government has no idea how much they have shot themselves in the foot.  The Globe and Mail article I link above speaks mostly of the take-over threat and what that will mean.  But that's only part of the story here.  The turmoil that has been thrust upon the trust industry is going to result in lower production of oil and gas from marginal fields - the fields that Canadian energy trusts specialize in.  I'm not able to quantify the magnitude just yet, but I know the business and financial market turmoil is going to have an impact.  I also don't know the percentage of production Canada derives from secondary recovery of marginal oil and gas fields, but I know the percentage is quite significant.  

Bottom-line:  the Canadian government freaked out about all trusts in general, but there's a very big difference between the hundreds of new "business trusts" that have burst on to the scene and the more traditional oil and gas trust industry, and industry which has been around for decades precisely because the trust structure is an ideal structure for marginal oil and gas recovery efforts.  Heck, even the US has had for decades Limited Liability Partnerships and trusts in the oil and gas industry.  You haven't seen the US government throw a freak-out session (I guess we leave the freak-out sessions to our foreign policy empire building bureaucrats and bright presidents).  

There can be no denying that a lot of harebrained Canadian businesses have been abusing the trust structure.  It is also clear that government bureaucrats had just cause to fear the potential loss of future tax revenue if a tidal wave of other companies converted to the trust structure.  But in their freak-out session, they've done more damage than good.  They should have grand fathering all existing trusts and instituted a moratorium on future trusts, buying time to poll all constituents to design a well balanced policy going forward.  

Hopefully, oil and gas industry executives can get Ottawa bureaucrats to see the light.  There really needs to be a segregation between the oil and gas industry and other trusts.  Ottawa put a firewall between REITs and the rest of the trust law change simply because REITs are found on all major international markets and Ottawa was afraid that private equity firms would just buy properties and make the question of what to do with REITs a moot point.  

I'll post more tomorrow.  I'm going to go do some research and catch up with more news.

I own the following hydroelectric income trusts (in Canada) as an US citizen.  I am reinvesting all dividends (less 15% Canadian dividend tax).

Algonquin (some wind & other)
Great Lakes Hydro

I bought the above during the last scare and am looking at more now.

How does this affect US taxpayers ?  Dividend cuts due to company payment of income taxes ?



Hi Alan,

I'm not 100% certain at this point but I'm looking into this question.  As it happens, my mother owns shares in Great Lakes Hydro and Innergex -- and other income trusts.  Given that the utility income trusts tend to have extremely predictable business models (reasonably well known capital costs, power generation purchase contracts that often average about 20 years in duration, etc.), it's indeed likely that their migration to the Canadian corporate tax rate would directly translate into less free cash flow, and thus, lower dividends.  I'm pretty sure the power trusts are not exempt under the new regulations Canada is talking about - only certain qualifying REITs are exempt.

I wouldn't be surprised if a whole lot of contingency clauses and exemptions are introduced in the weeks ahead.  Trying to make sense of the tax ramifications on anything at this point might be a moving target.  We'll see.

Finally, I know you know this, but for anyone reading this that might not automatically assume the following, please note:  I'm not in a position to give tax advise to anyone so make sure you do appropriate due diligence before you make any decision.

For Canadian readers I should clarify what I wrote in the first paragraph above.  Note, I was speaking strictly to the impact on American holders.  As Canadian income trusts move to the 31.5% Canadian corporate tax rate in 2011, some of the shift will be mitigated by the dividend income tax credit Canadian residents can apply.  I believe this pertains only to distributions of income (trusts often make both distributions of return of capital and distributions of income).  As I said above, I'm by no means in a position to give tax advice to anyone, and certainly not to Canadian residents.  I have enough trouble slogging through the American tax code :-)  If anyone knows more about the tax issue - or the possible impact on oil and gas production for Canada - please post!


Unfortunately, it appears that the effect on US-based owners will be very bad.

I got walloped by that move as I had significant investments.

Before (for US based people)

Trust pays no internal income tax (like a mutual fund),
distributions to non-Canadians are taxed by Canada at 15%.

You get 0.85 of original income.


Trust pays 20% internal income tax.
Distributions to non-Canadians are taxed at something like 41% (!!!)

So you end up getting 0.80 * 0.59 of original income.

Yes, they now impute tax as if it were Canadian personal income as well as provincial tax I believe.  

It is horrible.

And of course the IRS taxes it too for you---but you can attempt to claim a foreign tax credit, which may or may not (depending on what seems to be the phase of the planets) result in a matching offset.

The Canadian minister's assertion that such a structure was not allowed in US and Australia is flatly untrue.  In the US there are tradable limited partnerships to which the income flows through to the owning partners per share, and is not generally taxed at the partnership level.   A number of them in oil and gas no less.

Per the EIA current (4 wk avg.) gasoline + distillate demand is up 832 KBrl's/day  y-on-y
August ethanol production was 327 KBrl's/day up 69 KBrl's/day y-on-y
When will bio-fuels exceed demand increases?

Per DOT, API data 2003 US vehicle mileage averaged 16.6 miles/gal. If current mileage avg's. 20 miles/gal on 9.5MBrl's/day and avg. mileage could be increased to 22.5 miles/gal the US would reduce demand by more than 1 million barrels/day to less than 8.5 MBrl's/day.

Note: I think 16.6 includes all registered vehicles, trucks, busses, auto's; gas, and diesel.

How are they ever going to solve this? If 70-90% of cities' water supply is contaminated, from aquifers and rivers, then what?

China runs out of water fast

About 75 percent of China's 20,000 natural lakes are suffering algae pollution, while the nation has lost nearly 1,000 lakes in the last 50 years due to human activity, state press said Wednesday. The major causes of the losses were industrial farming, overuse of water and pollution, which destroyed ecological systems in lake and wetland areas

In central China's Hubei Province, known as the "paradise of lakes", 217 lakes with an area larger than one square kilometer (0.4 square miles) and 522 smaller lakes have disappeared since the 1950s, Xinhua said.
The total size of natural lakes in Hubei had shrunk to 2,438 square kilometers, 34 percent less than 50 years ago.

More than 70 percent of rivers and lakes are polluted, while underground water supplies in 90 percent of Chinese cities are contaminated, previous reports have said.

Nearly 25 years of unbridled economic growth in China have come with little regard to the environment with the nation's water resources severely depleted and air pollution covering most of the country's urban areas.

How are they ever going to solve this? If 70-90% of cities' water supply is contaminated, from aquifers and rivers, then what?

The problem simply will not be solved. Water tables are dropping; rivers and lakes are drying up. All the while the population is growing, and growing more affluent as well. Sooner or later they will hit a brick wall where the water problems affect the health of the population and also dramatically affects the food supply. Then you know what happens.

China will hit peak water at about the same time it hits peak oil. This means peak food and peak people.

Unless of course science or God steps in and fixes everything. (That was just a bit of sarcasm in case anyone was wondering.)

Ron Patterson

THEN we can BOMB em!  He he...i'm joking too.
>China will hit peak water at about the same time it hits peak oil. This means peak food and peak people.

FYI: 2/3's of China's population (about 700 Million) is infected with hepatitis from polluted water.


>Unless of course science or God steps in and fixes everything

Looks like nature will take care of things for us.

The article says China has 2/3 of all hepatitis B patients in the world. 700 million is not 2/3 of China's 1.3 billion people.
Actually 700 million is close to 2/3rds of China's 1.3 Billion(I believe 866 million is a bit closer to truly 2/3rds), but I'm guessing what you meant to say was that 2/3rds of all Hep B patients probably don't make up 700 million people?
>The article says China has 2/3 of all hepatitis B patients in the world. 700 million is not 2/3 of China's 1.3 billion people.

Approximatly 53.84615384% of China's population is infected. Happy Now? I just did a quick google search to find the link I included, based upon knowledge that I came across years ago. I didn't bother to read it.

When I original came across the 700 Million estimate (in  2001 or 2002) at that time China's estimated population was about 1200 Million which was closer to 2/3 than 1/2 (58%). The estimate of 700 million is probably outdated and it's probably much higher.

Perhaps you can go do a detailed investigation to find the latest estimate. Post your findings.

Whether the its 1/2 or 2/3, its a significant portion of the population. hepatitis B is a serious disease, and I would imagine a significant number of infected patients do not have access to medical treatment which will promote further spreading of the disease.

A lot of coal-powered desalination plants?
A lot of coal-powered desalination plants?
They'll try, but that won't come close to solving anything in coastal towns, let alone inland. If the only way to get water is to pollute, it will be done.

This month's New Yorker has a very long article on water, focusing on India, but covering problems worldwide.


Confronting the possibility of a global catastrophe

Water is often seen as the most basic and accessible element of life, and seemingly the most plentiful. For every gallon in rivers or lakes, fifty more lie buried in vast aquifers beneath the surface of the earth. Yet at least since the cities of ancient Sumeria went to war over control of their rivers--long before tales of Moses parting the Red Sea or the Flood described in the Bible--water has been a principal source of conflict. (The word "rivals" even has it roots in fights over water, coming from the Latin rivalis, for "one taking from the same stream as another.")

By 2050, there will be at least nine billion people on the planet, the great majority of them in developing countries. If water were spread evenly across the globe, there might be enough for everyone. But rain often falls in the least desirable places at the most disadvantageous times.

Delhi gets fewer than forty days of rain each year--all in less than four months. In other Indian cities, the situation is worse. Somehow, though, the country has to sustain nearly twenty per cent of the earth's population with four per cent of its water. China has less water than Canada--and forty times as many people. With wells draining aquifers far faster than they can be replenished by rain, the water table beneath Beijing has fallen nearly two hundred feet in the past twenty years. [...]

Half of the hospital beds on earth are occupied by people with an easily preventable waterborne disease. In the past decade, more children have died from diarrhea than people have been killed in all armed conflicts since the Second World War.

Simply providing access to clean water could save two million lives each year. As cities have grown, many rivers have turned into fetid sewers. The amount of fecal bacteria in the Yamuna River, the principal source of water for New Delhi, has increased thousands of times over the past decade.

Seems to be a disconnect here... 9 billion people are recognized as the problem while at the same time people dying is also the problem.  There are a lot of signs that we will not get anywhere near 9 billion, and it is too late for all population control to happpen at birth.  

Eventually the problems of overshoot are corrected, hopefully not to me or mine.

Life expectancy is continuing to rise rapidly in India. Rising more slowly in China as well, at a much higher level.
RE: "...air pollution covering most of [China's] urban areas"

Pollution has a greater effect on morbidity and mortality than most people realize and China's air pollution is formidable.  Chinese peasants riot when new coal-generated electric plants are built in their vicinity.  Some urban dwellers resort to wearing surgical masks.  China is home to 16 of world's 20 cities with the worst air pollution.

About 5 years ago, a member of my medical research team and neurologist from China told me he used to smoke a pack of cigarettes a day.  I chided him for smoking when he knew very well the links to cancer, heart disease, and stroke.  He said that it was customary in China for patients to curry favor with doctors by bringing gifts, and typically the most common gift was a carton of cigarettes.  Consequently, he took up smoking and explained that he had read a study which concluded air pollution in China's largest cities was equivalent to smoking 5 packs of cigarettes a day, therefore, he had rationalized that smoking a pack only increased his health risk by 20%.  Imagine that level of pollution!  China's air pollution even finds its way to the Pacific coast, damaging forests and ecosystems there.

I don't think that humans are on the verge of reaching very dangerous levels of air and water pollution (as Darwinian suggests), I think we are already there.  
The problem is the effects are often so insidious that most people just ignore it.  

We have clear scientific evidence that air pollution in the U.S. facilitates or exacerbates such things as the development of asthma in children, COPD, cancer (esp. lung), increased miscarriages and fetal deformities, etc.  But, until people start hemorrhaging or dropping dead in the street it will remain out of the consciousness of the vast majority.

I don't see a way out of the global pollution dilemma given the number humans on this planet.  If we try to limit or reduce fossil fuel usage then people will just burn more biomass to compensate for the loss.  IMO, if we don't address the population issue, then conservation and new technologies will just be microbandaids that fail to alter the current trajectory.  It will be analogous to bailing out the incoming water even as the boat goes down without ever having made a good faith effort to repair the breach.

I believe that  its preposterous that Exxon-Mobil will be flat broke in 30 years. There is no doubt that they are the largest public oil company in the world, but XOM is an integrated company. They not only produce oil, but refine it and market the products in the largest chain of convenience stores/gasoline stations. Their profits are made when the products are sold, not when they produce oil and gas.
  Exxon stopped exploring for US hydrocarbons onshore in about 1970, when they were still Standard of New Jersey and the Humble Company. They began selling their producing US onshore assets after their merger in the mid-1970's. They stopped exploring much in offshore US waters in the 1980's, and are divesting their offshore assets. Now that diminishing returns has set in in world E&P I believe they will divest themselves of their production and become a refining and marketing company only. Because thats where the future money is for the majors.
  Exxon is too much of a lightning rod for attacks on the oil and gas production industry. As a consequence they cannot explore in about 80% of the basins of the world, the frontier areas are under national oil company control.
They have zero chance of bidding for concessions in the most promising and prolific areas of the world.
  XOM's overhead in E&P is a lot higher than medium size oil companies. They employ many different specialists that raise their costs prohibitively for the smaller oil fields that remain to be found. And that's why they are holding on to immense piles of money and doing stock buy-backs.  .
  The same facts are true for all of the larger oil companies in the US. The only thing that might slow this process down is opening the eastern Gulf, the East Coast and California to exploration-but I wouldn't count on that with the current political climate. So if you want a long term E&P investment I suggest switching to large US independent producers such as Apache, Marathon, Anadarko. But thinkin Exxon will go broke is crazy. They will be refining and marketing as long as there is money to be made.
Bob: I agree that the article was far-fetched. IMO, what is likely is that eventually XOM will be going on an acquisition spree.
The article is an advertisement.  
Personally, I like smaller, younger e&p's with cheaper reserves and sharply climbing net, production, and reserves; ard and gpor.

xom will have less refining to do as production shifts to opec and their growing down stream operations.  eg SA is rapidly expanding their refining. Imagine the world producing 50mmb/d; the majors' refining operations will be increasingly starved of crude.  And anyway, what will happen to xom profits when their crude production ends, regardless of how much they are refining and distributing?  I can imagine opec countries buying the majors' distribution networks, like venezuela (citgo) and kuwait (Q8, britain) in the past, and just as russia is doing now in buying up ng systems in western europe.

Bush 'would understand' attack on Iran

Talkbacks for this article: 31

President Bush reportedly said he would "understand" a preemptive Israeli strike against Iran s nuclear sites.

Maariv, citing diplomatic sources, reported Thursday that French President Jacques Chirac discussed Iran s nuclear program with Bush on the sidelines of the recent UN summit.

Iran test-fires long-range Shihab-3 pictures

Asked by Chirac if Israel could attack Iran to prevent it getting the bomb, Bush reportedly said: "We cannot rule this out. And if it were to happen, I would understand it."

The report could not be independently confirmed.

Israel endorses US-led efforts to curb Iran s atomic ambitions through the threat of UN Security Council sanctions but, like Washington, has hinted that military action could be a last resort.


Hey...that's my storyline obsession...you pre-empted me, dude!!!
We should keep in mind that unlike most other Middle East conflicts, the U.S. and Israel do not have the luxury of operating independently in the question of an attack on Iran. If Israel attacked, the U.S. would be widely blamed, because a quick look at the map shows it is unlikely Irael could pull it off without U.S. acquiescence. If the U.S. attacked, retaliation would likely fall on Israel first.

Having said that, I don't expect an attack on Iran soon. For Israel, the mission is just too dauntingly difficult. For the U.S., even if Bush was inclined to attack (which I doubt), he would want to get a congressional OK, like he did for Iraq - but that's just not going to happen. And for either the U.S. or Israel, the consequences of an attack would be extremely dangerous. So I doubt it will happen. That's just my opinion.

It doesn't look like there is anything remarkable about the current deployment of the U.S. Navy, with one carrier in the Gulf of Aden, one that apparently just moved from the Meditteranean into the Red Sea, and no carriers in the Persian Gulf. The day before the Iraq War, there were four carriers in the Persian Gulf. The nearly up to date location of U.S. ships can be followed at: http://www.navy.mil/navydata/navy_legacy.asp?id=146

NASAguy -

I would definitely agree that the US and Israel are in it together should either one launch an attack on Iran.

You pointed out that we currently have no carriers in the Persian Gulf, whereas on the day before the Iraq War there were four carriers in the Persian Gulf. I don't necessarily think this fact suggests an attack is not imminent. Rather, a case could even  be made for exactly the opposite.

At the time of the invasion of Iraq, we did not have to worry very much about the safety of our carriers, as Iraq had no credible anti-ship capability at the time. The same is hardly true for Iran, who is thought to have a substantial anti-ship cruise missile capability and a very rugged shoreline perfect for hiding missile launchers. It also has some submarines and a fair number of small torpedo and missile craft. While most of these would probably be destroyed if they attacked our battle group, it only takes one or two lucky shots by an anti-ship missile or homing torpedo to put a carrier materially out of action.

If our carrier battle groups were to be stationed in the Persian Gulf, they would for the most part be little more than 100 miles from the Iranian coast and therefore within easy range of cruise missiles or massed surface attack.

It has been suggested by one military analyst that if an attack is launched on Iran, our carrier battle groups would not want to be caught dead inside Persian Gulf and would probably station themselves in the Arabian Sea at a safe distance from the Iranian shoreline.

If that is indeed correct, then the fact that our carriers are not inside the Gulf could be a more ominous sign than if they were.  But time will tell.  

I agree that if an attack were to be launched, US carriers would not want to be caught in the Gulf - where they would be vulnerable.  Too bad the world's supertankers do not have the luxury of staying out of the Gulf.

Attacking Iran is economic suicide.  If the US/Israel attacks Iran, Iran will stop tanker traffic through the Straights of Hormuz - until all occupying armies leave the region.  

That much is almost obvious.  But maybe the Iranians have a wider gambit up their sleves.  Maybe the price for turning the oil flow back on is not just expulsion of the Americans, maybe it is the right of return for all Palestinians.  Followed by democratic elections that would mean the "destruction" of Israel.  Widening the political conflict to encompass Palestine would paint the Iran-US confrontation in a way that might pull the Saudis in on the Iranian side.

The Iranians have been one step ahead of the Americans throughout this whole confrontation.  As someone said "Ahmadinejad is playing chess, while Bush is playing checkers".  The Iraninas are looking to create a new political reality, the Americans think problems can be quickly solved by dropping bombs.  If the Americans make a stupid move they will start a sequence of events that will wipe the US off the board.

Attacking Iran is economic suicide.  If the US/Israel attacks Iran, Iran will stop tanker traffic through the Straights of Hormuz - until all occupying armies leave the region.

I think this depends. In case of a full scale ground offansive (which is out of question IMO) it could happen and the iranians can act out of desperation.

But in case of an air strike I am almost completely sure they will not retaliate in any way other then trying to shoot down the attacking planes. They very well know they are the military weaker side and will try to avoid escalation by all means. No, they will simply lay back and watch US and Israel getting deeper into trouble in Iraq and in home respectively.

Now if they block the Straits they will lose international support. And international support is the only thing they can count for to stop the US aggressive policy in the region.

I believe you are mistaken to think that the Iranians feel they are in such a weak position.  They are acting confidently because they feel feel they are in a very strong position.  Americans may look at their military position and feel they can escalate the conflict until they win.  But the Iranians are not playing a military game, they are playing a political game.  The Iranians have decided that they can escalate politically and defeat the Americans.

Where international support will go if the Iranians block the Straights is an open question.  Today the Chinese and the Russians announced that they will not support sanctions against Iran over Uranium enrichment. Those 2 countries share the Iranian goal of getting the the US out of the Middle East.  And if the Iranians bring the Palestinians into their "solution" and the American adventure in Iraq continues to descned into a hellish mess...  who knows.

Your logic lead to my conclusion - they play a political game. They know they can not drive the US out using crude force and are just playing their game with what they have - the nuclear program, their advertised ability to block the Straits... it's that very old game in which the weaker guy is trying to trick the stronger to do something stupid. In this case attacking Iran (in any form) will be that stupid thing... I can largely see it the turning point in which the world finally realises that the neocon regime is the greatest threat this planet has faced since the end of WWII. It will be merely the end of American hegemony.

But if the Iranians are so stupid to retaliate, uncle Sam will have the great opportunity to play what he always wanted to play - the hero policeman that beats down the bad guys and saves the world (and during the mess, nobody notices how he takes the bad guys' oil... errr cash).

I don't see Iran waiting for world opinion to somehow force the US out of the Middle East.  How does that work?  What do the Neocons care about world opinion?  It will take more leverage than that.

Iran may be playing a political game, but that doesn't mean that they will hesitate to use military force (in the morally justifiable defence of their territory) to achieve those aims.  They aim to make the US position untenable, and oil flow is the American Achilles Heel.

Iran is led by revolutionaries.  They understand that to make progress it is necessary to break the status quo, sometimes violently.  It is not wanton violence but violence with a purpose.  Unleashed at the right place and the right time.  The Straights are that place and after their territory has been violated is that time.

I believe the US military sees this disasterous scenario as clearly as the Iranians.  And that is why it won't happen.  The US will rattle their gunboats, keep Israel on a tight leash and stew.  A post-neocon administration will draw down US forces and declare victory.  ...probably.

US is already pretty much isolated after Iraq, Iran would basically finish it. The almost uniform international resistance against Iraq had its reasons. Every weaker nation in the world could easily put itself in their shoes. That's why we presumably have an international law.

Now the only chance for Iran is to hold on to that same international law or otherwise all of the big guys will unite against it. If they are so stupid to put a blockade on international waters their navy will become a legal target for the US. Will they hold long enough to harm us? I strongly doubt it. US navy and air force will bomb the hell out of every naval base they have, and destroy their supporting infrastructure as an extra. It will be a low-cost punishment operation with predetermined ending, from the type of which the Washington generals are dreaming every single day. After the smoke settles Iran will be the biggest "danger for the peace" and US will be the saviour. The damage we could have taken in those days of fighting will be more than offset with the US gaining stable positions in the region. Most likely the area of the Straits will become international protectorate, which will be guarded by - you guess whom. In fact provoking such an escalation of the conflict would be a better cause for air attacks for the US than the advertised nuclear facilities take-out. I just think that our strategists are not stupid either and can easily see couple of moves ahead (that the Iranians will pass and US will face the rage of all Muslim and other world). If all actors act rationally it is a tie situation.

They don't need ships to blockade; you can sink an oil tanker or two from shore with a few missiles.
 I could very easily picture the Iranians doing a sort of international political 'rope-a-dope', in the manner of the great Muhammed Ali.

By that, I mean that if Iran absorbs the punishment of the initial US/Israeli attack and does nothing, then the international community might rally to its side, as Iran can then portray itself of the innocent victem of US/zionist aggession.

There is some advantage in being a weak little guy when fighting a big strong guy. If you win, everybody is pleasantly surprised and scornful of the big guy. But if you lose, everybody thinks, "What a disgrace: that big guy beating up that poor little guy!"

If nothing else, the Iranians know how to play chess.

First I am more than sure that they are working hard to make the effect of air strikes as minimal as possible. Scattering the equipment around the country, burying it underground - it can be done relatively easy.

Any unilateral strike will have to be very massive, destroying infrastructure and taking civilian lives. We already saw what this achieved with Lebanon - more terrorism, weaning international support etc. In that case they at least had some excuse (Hesbulla), but how will they justify it this time? Again playing the WMD song? Who are the fools to believe the same lies twice?

The elected leader of Iran was trained as an engineer: he knows damn well that a cutoff of oil would put the US in a tough position.  Never underestimate your foe.
The elected leader of Iran was trained as an engineer: he knows damn well that a cutoff of oil would put the US in a tough position.

No, it will put the world in a tough position. US can survive without any imports or rationing for 60 days just by drawing down the SPR. With prices going sky high and with some minor rationing measures this can easily be extended to half an year. Now you may think the iranians can hold on the Persian Gulf for so long while the whole world (including the whole Middle East!) is united against them, but I clearly don't believe so. Despite some other people suggestions, I don't think they are crazy, neither idiots to try doing anything as stupid as this.

But do the Americans actually have 60 days worth or crude? Or has it already been drawn down for political and hurricane-related reasons?
Drawing down the SPR is not as mathematically easy as you suggest. There is a maximum rate at which oil can be extracted, (about 4.4 mbpd which takes 15 days to achieve once authorised) but that rate is only applicable for a few weeks/ one month maximum and it takes almost 2 weeks before any of that oil is delivered to a refinery. The rate then goes down progressively the longer you draw down the oil (maximum of 1 mbpd from 60 to 90 days?). As America imports 11 mbpd of crude oil, if all crude oil imports were stopped, then America would need to place major restrictions on petrol and diesel usage. If all oil products were stopped as well (about 3 mbpd), and then America would be in even more serious trouble.

The good news for America is that it is very unlikely that all oil imports would be stopped. Canada and Mexico would still continue exporting to the US, but Saudi, Iraq and Kuwait would not be able or Venezuela not want to export to the US which makes the problem a more manageable one for a short space of time.

If you visit the American SPR web page there are some awesome pdf documents showing the size and how they were created. I have some of the documents, but no web links now.

Imports from Mexico are winding down.  Total Mexican oil exports are down -18% YTD.
"Ahmadinejad is playing chess, while Bush is playing checkers"

...I wonder where Ahmadinjad learned to play chess???  Up north, me thinks.

Cars, or lack of them, a factor in evacuations

About 21% of New Orleans households (38,000) were carless when Katrina hit, according to the Census Bureau. In the metropolitan area, about 58,000 households -- more than 11% -- had no vehicles.

As Rita approached Houston, about 800,000 people were expected to evacuate in cars that would carry an average 2.1 passengers. About 2.5 million people hit the road -- more than triple what was expected -- averaging only 1.2 people per vehicle, says Carol Lewis, director of the Center for Transportation Training and Research at Texas Southern University.

Iraq is going to hell in a handbasket:

What's Behind the Growing Baghdad-Washington Rift

Analysis: Faced with a choice between the U.S. and his own political base, Nouri al-Maliki does the only thing he can

...The rapidly deteriorating conditions that underlie the political arm-wrestling recall the opening months of the wars that accompanied the breakup of Yugoslavia. "Ethnic cleansing" has continued apace inside Baghdad, as Shi'ite militias extend their control over mixed neighborhoods by violently forcing out Sunnis. But if the Shi'ite militias control much of the capital, reports suggest that Sunni insurgent groups are tightening their grip along road-transportation routes into and out of the capital. Such tactics have previously allowed the Sunni insurgents to choke fuel supplies into the capital. With that kind of virtual stalemate prevailing, Maliki won't likely be taking orders from Washington anytime soon.

Yesterday, Tony Snow, on CNBC, explicitly mentioned the oil issue.  He said that if the US leaves Iraq, we would leave a terrorist regime in control of the second largest oil reserves in the world.

I suppose one measure of desperation in the Bush Administration is that they are gradually being forced to tell the truth.  I suspect that we might see oil security as a more explicit justification for staying (and perhaps attacking Iran) after the election.  They will be able to say that they discussed oil security before the election (via Snow's comments on CNBC).  

Why didnt someone in the gallery at the press briefing ask the simple question, "So if we're not leaving because they've got so much oil, and we found no WMD because we were lied to; why did we go there in the first place if the only thing keeping us there is some oil?"

Another dire Iraq story:

Baghdad is Under Siege

Sunni insurgents have cut the roads linking the city to the rest of Iraq. The country is being partitioned as militiamen fight bloody battles for control of towns and villages north and south of the capital.

As American and British political leaders argue over responsibility for the crisis in Iraq, the country has taken another lurch towards disintegration. Well-armed Sunni tribes now largely surround Baghdad and are fighting Shia militias to complete the encirclement.

The Sunni insurgents seem to be following a plan to control all the approaches to Baghdad. They have long held the highway leading west to the Jordanian border and east into Diyala province. Now they seem to be systematically taking over routes leading north and south.

Excellent article. The Brits have real journalism; the Americans are afraid of upsetting the government.

I suspect that once the Americans step back, the siege of Baghdad will be lifted by Shia militias.

Americans do sweeps, shoot things up and move on. But the various Shia militias such as the Badr Brigades are probably, out of the limelight, being trained and equiped by Iran to be like the Hezbollah. When the time comes, I suspect they will sweep through, clean Sunnis out of their chokeholds, and hold the positions afterwards.

We have seen what the Sunnis can do; but much of the Shia militias are keeping a very low profile.

The Iraqi "army," under the command of American infidels, is full of serial deserters who are collaborating for a paycheck. It is difficult to see them as much more than a "Potemkin village army" put on by Bush.

About a year ago, Sunni guerrillas were besieging Baghdad, systematically knocking out electicity, gasoline and water to the capitol. Then the civil war began, and they shifted their strategy towards taking and holding neighborhoods on the south and west of Baghdad. It looks like Baghdad is being systematically divided, with the two sides having an eye towards territorial continuity with the rest of their territory.

If things break down completely (i.e., the Americans pull back), the Sunnis are in trouble. Not only are they outnumbered 3:1 by Shi'ites, but the Shi'ites have backing from Iran, while KSA and Kuwait are kind of afraid of the al Queda sorts operating in the Anwar province.

However, if the Shi'ites overplay their hand, it may force the Sunni countries to step in to prevent a massacre of their co religionists.

Saudi Arabia (KSA) Announces Further "Voluntary" Cuts in Production

Posted 11/1/06


Saudi Arabia, the world's largest oil exporter, is shouldering the bulk of the reduction. Its customers say they have already been informed of cuts amounting to 380,000 bpd.

Lower 48, Russia and KSA

These three regions have very similar Qt's (estimated Ultimate Recoverable Reserves, using the HL method)--from about 180 to 200 Gb.  All three regions had very similar peak production levels, from about 9.4 to about 11 mbpd.   Russia is a complex case, but its post-1984 cumulative production fits within the predicted HL limits.

The critical difference between the three regions is the size of the Ghawar Field in KSA.  The largest oil field in the Lower 48, the East Texas Field, made less than 6 Gb.  Ghawar has already made about 10 times that much, but remember that the Qt's for the Lower 48 and  KSA are quite similar, which means that KSA--and the world--are hugely exposed to a production decline from this one field--and we have  a credible report of a production decline at Ghawar, which is reinforced by continued reports of "voluntary" KSA production cutbacks.

Again, when all four of the current one mbpd and larger super giant oil fields are almost certainly all declining, expecting smaller fields to allow us to increase production is like trying to stop an avalanche by throwing handfuls of pebbles back uphill when boulders are crashing down the hill.

IMO, this is not a drill.  It is the real thing.  I would recommend that everyone again consider Richard Rainwater's warning:

"The Rainwater Prophecy"
Published 12/12/05

"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?'" . . . . "I just want people to look out. 'Cause it could be bad."

There have been a fair number of posters on TOD that fall into what I call the PSC (Primal Scream Cornucopian) Camp.  Basically, they seem to desperately cling to any scrap of data that would seem to suggest that we have not peaked.  I suspect that  lot of people in the PSC Camp are financially dependent on an expanding, debt driven economy.  In other words, many of them may want you to go and ahead and buy the SUV on credit to drive to and from your new $500,000 suburban mortgage.

Well, look at the data and make your own decision.  

Insofar as  I know, Rainwater, who has a track record of making 100 to one return on investment decisions, has never been wrong.  I don't know what you were doing when oil was at $10 in the late Nineties, but Richard Rainwater was aggressively buying oil companies.

What is Richard Rainwater doing tonight?  He is integrating himself into small town life in the Carolinas and increasing his ability to grow his own food.

My continuing recommendation:   ELP (Economize; Localize and Produce).

I suspect that we are seeing a "stealth" migration out of major population centers by wealthy people that are in effect implementing ELP by getting the hell out of suburban Dodge, while they can, and moving to small towns in agricultural areas.  

Texas and US Lower 48 oil production as a model for Saudi Arabia and the world
Jeffrey J. Brown & "Khebab", GraphOilogy

First published May 25, 2006

Based on the Hubbert Linearization (HL) method and based on our historical models, we believe that Saudi Arabia and the world are now on the verge of irreversible declines in conventional oil production.
Re:  KSA--Note that I did not use the title of the Money/CNN article.
I believe I've seen this on TOD before, but is there a "user's guide" to investing in oil as Rainwater suggests? Any references would be much appreciated.

Tom A-B


If you don't like individual stock picking, buy sector funds in the energy, natural resources, gold mining, and energy service industries.

Or you can try some of the exchange traded funds (ETF) that allow you to invest more directly in specific commodities and/or sectors and trade just like stock.

For example:
USO: tracks the price of a barrel of oil
GLD: tracks the price of gold
XLE: tracks the energy sector
PBW: 100% renewable/green energy
DBC: basket of commodities (gold, crude oil, gas, heating oil, aluminum, wheat, etc.)
PZD: invests in companies that provide technology to increase energy efficiency

I would also add SLV to that list (for silver).
It's had a great run-up the past few months, so keep that in mind (both good and bad).
Sorry for the double post, but this is an even better place to put it.  Don't forget Uranium Participation Fund on the Toronto Stock Exchange, symbol U.
"Primal Scream Cornucopian" Bwaahaaahaaa.  I like that.  Have you come up with a good name for the "Technology will save us" crowd?  How about the "Invisible hand will save us" camp?  

BTW, I just planted sunchokes and locust trees in my permaculture zone 3.  If we are in trouble, those will be a stash of food and firewood.  If we aren't, they'll be pretty flowers and nice shade trees that improve the soil.  Count me in the "expecting trouble but not sure how much" camp.

Oops.  Should have been zone 4.  Zone 3 is already pretty full.
There have been a fair number of posters on TOD that fall into what I call the PSC (Primal Scream Cornucopian) Camp.  Basically, they seem to desperately cling to any scrap of data that would seem to suggest that we have not peaked.  I suspect that  lot of people in the PSC Camp are financially dependent on an expanding, debt driven economy.  In other words, many of them may want you to go and ahead and buy the SUV on credit to drive to and from your new $500,000 suburban mortgage.

Do you mind naming some names of this "fair number of posters?" Most of the counter-arguments, including my own, have pointed out that extraordinary claims require extraordinary evidence, and have offered up logical explanations for all of these up and down movements. But I am certainly not in the "go buy that SUV" camp. Then again, I really can't think of a poster here who is. Hence, my request for names.

"Then again, I really can't think of a poster here who is. Hence, my request for names."

Hothgor, Freddy, and Beechdriver come to mind.

I actually thought of Freddy right after I posted. :-)
Hey - I am not the buy the SUV type either. In Nov 2003 I traded my old V8 Merc Cougar for a 2004 Acura TSX with a 4 cyl engine. I saw the handwriting on the wall. Maybe it is peak time - maybe some really smart guys in the Nymex pits are trying to make a boatload of money. Either way - I saw gas going up.
A year later my wife decided she needed a new SUV to replace her Explorer. Tried as hard as possible to get her to look at cars - but for some reason women seem to like those SUVs. So we compromised and she got a Ford Escape with small V6.
but for some reason women seem to like those SUVs

IMO the reason for this is the captains chairs with the space in the middle to put a purse, are easily adjustable, and raise the person up enough to see above the steering wheel. As far as I am concerned, that these issues are not addressed is a gigantic failure in car design(and it is so simple to fix). It is the equivalent of not putting any cupholders in a car - it's not somthing that is immediately apparent but as soon as you get in the car with a drink you are sure gonna be pissed. Also we have had decades to address this but I guess it could be attributed to the lack of female engineers.

Actually, the F350 has a hook for hanging a purse but it seems to be an afterthought and is poorly executed(disclaimer: I am not actually sure that it is meant as a purse hook, I just haven't been able to think of anything else for which it can be used).

In England there are apocryphal stories of women pulling out the choke cable to the maximum and using it as a handbag/purse holder for the whole of the journey. This is before the time of automatic chokes and engine management systems.
Still waiting on that explanation of how the 'phantom gas' was magically mined/used/stored in the 30 years after you stated NG production peaked, when the statistics show this to be around 2000 :P
Hothgor, you are not very clear in what you are talking about. What "phantom gas" are you talking about. What does statistics show to be around 2000.

Natural gas peaked in the United states in 1973, only three years after crude oil peaked.

Ron Patterson

Gross gas production is meaningless.  It counts gas that is recycled through gas caps, so it is "counted" several times.  

Natural gas actually delivered to US markets peaked in 1973, three years after oil production peaked.

Most of the counter-arguments, including my own, have pointed out that extraordinary claims require extraordinary evidence


I would turn the argument around.  

Given the fact that the world is showing exactly the same kind of production response to the 50% of Qt mark that we saw in the Lower 48 and the North Sea and given the fact that at least three of the four (and almost certainly all four) current super giant one mbpd and larger fields are either declining or crashing, I think that the burden for extraordinary evidence is in your camp--not mine.  

What you are doing here is attempting to overturn a reigning paradigm. You will not do this without extraordinary evidence. That is what I am trying to tell you. When all of the oil companies are united in their projections of oil production, and it is a small minority making the other position, you need to have a bullet-proof argument. Your argument is not bullet-proof. I have poked holes in it from time to time. We can't afford to falsely call the peak, and it doesn't help our crediblity by having the case ultimately rest on the requirement that the Saudis are lying.
If memory serves, the major oil companies disputed the predicted peaks for the Lower 48 and the North Sea also (I think that Hubbert's supervisor at Shell was trying to talk him out of giving his speech in 1956 right up until Hubbert took the podium). And would you expect the Saudis to admit that they have peaked?  

So, I can't give any weight to the collective wisdom and public utterances of the major oil companies and the Saudis regarding Peak Oil.  Among my other reasons for this position is a collective (and justified) fear of punitive taxation, by the majors, and of a military takeover (by the Saudis).

I have several articles on the EB, largely based on Khebab's technical work, that lay out my case in excruciating detail that we are at or past the peak.  

How about doing an article for TOD outlining your case that we have not peaked?

I don't think you need to write an article to show we haven't peaked. A quick look at the numbers should show you that. If you want to look at it on a monthly basis. August was higher than July and July was higher than December and May of 2005.

Otherwise, if you want to take the Simmons view that it will only be clear in retrospect, then you will need at least another 18-24 months of falling production with rising prices, rising demand, and global economic growth to even begin to come to that determination.

As far as measuring a peak by how much we have used of the oil that is in the ground - we don't know how much oil is in the ground.

August was higher than July and July was higher than December and May of 2005.

This only applies to total liquids, not crude + condensate (C+C), and a lot of the total liquids number comes from gas reservoirs, not just oil reservoirs (plus the other definitions of total liquids that Darwinian as outlined).  

I define "oil" as the feedstock that refiners buy to refine into petroleum products.

Robert and WestTexas, I've got to agree with Jeffry on this one. First, look at how the bonuses and retirement of the Major's top management is calculated-its based on a growing business and an increasing stock price. So if they admit that volumes of crude consumption must go down because of geological factors, they will be prsiding over the depression of the majors decline and not get the bucks they have worked so long to get. This is another factor in why I think the integrated oil companies will get out of production soon besides the reasons I stated in my post upcolumn. Secondly, the definition of crude and all liquids keeps being changed in order to cover up the declines in crude production. That doesn't give me much confidence that production is rising and will continue to rise. Its sort of like the change of the reasons for the war in Iraq-too many explanations leads me to doubt all explanations as rationalsation.
  But whether the peak was last year or in 2010 (if I'm remembering Robert right) it probably will not be determinable before we are on a serious downhill slide, not at the current plateau, perhaps two to five years. And no amount of evidence will convince the deniers for years, as that is the nature of denial. The more wrong they are the more extreme positions-like the war in Iraq. The more wrong that the Cornucopians are, the more the will vigerously oppose the truth. Unfotunately, thats human nature.
Let's assume that you are right.

What now? What would you do differently now if peak is here vs. a couple of years off? What should society do?

Most importantly, how long will it take before the reality sinks in? Until that happens, nothing will be done to confront the problem. Initially, it will be viewed as a OPEC cutbacks or some other temporary glitch in production. Stay the course.

Joules: IMO, it will be spun as lack of demand (which is the current spin). When the price is at $150, global demand will be less than currently, and the spin will be there is lots of oil available yet no demand. What would be the current global demand for oil if the price could be immediately rolled back to $20?
Maybe for awhile, but at some price, there will be lots of excitement. There are a lot of petroleum-dependent businesses with low margins that will be impacted first. At $150, I would expect a lot of pain. One scenario would be that the world economy just slides downhill without anybody knowing why.
Both of you guys have stated and outlined your opinions many times from the comments I have read; however I believe you are both slightly wrong!
IMO the world has seen Max oil production, however that is not max potential production. Right now production is down because of so called excess storage due to high prices. Also the falling price is currently a cause for further reducing production. Soon folks will realize they are actually short of product and prices will again rise. That will further reduce demand and by the time they get it all sorted out the real depletion will start taking affect. So we may never see actual production over 85 million Brl's.
Oh Ya; I forgot: In the sorting it out time you will no doubt need to include a world wide recession.
"What you are doing here is attempting to overturn a reigning paradigm. You will not do this without extraordinary evidence. That is what I am trying to tell you. When all of the oil companies are united in their projections of oil production, and it is a small minority making the other position, you need to have a bullet-proof argument."

For some reason I was reminded of the following comment from Einstein:

"The intuitive mind is a sacred gift and the rational mind is a faithful servant.

We have created a society that honors the servant and has forgotten the gift."

Maybe the "reigning paradigm" is also the reigning mass delusion.

What qualifies as "extraordinary evidence" that would alter the industry "paradigm" ?

Robert, I am curious. You do not think the Saudis are lying about production but what do you think about their claimed proven reserves? Do you really believe they have 260 billion barrels of reserves? Do you believe they have another 200 billion "yet to be found" as they claim? And perhaps more important, do you believe there is approximately 750 billion barrels of proven reserves in the Persian Gulf area?

The reigning paradigm is based on this last supposition being true. I think...well, you already know what I think. I have published it here many times. I think there is less than half that amount of oil under the sands of the Persian Gulf area.

Ron Patterson

Robert, I am curious. You do not think the Saudis are lying about production but what do you think about their claimed proven reserves? Do you really believe they have 260 billion barrels of reserves? Do you believe they have another 200 billion "yet to be found" as they claim?


On the reserves, I have no idea. They may very well be lying about their reserves. But when they said they had extra crude to sell earlier in the year and no buyers, I don't think they were lying. That's just too easy to verify. Yet the majority opinion here was that they were lying. This was presumed with absolutely no evidence, and a pretty good way to verify their claims. Crude traders can just call them and check what they have got. And if crude traders needed the crude, that's just what they would have done.

But the point is, and I will address several posters with this comment, it doesn't matter whether you believe the reigning paradigm is rational. The very fact that it is the reigning paradigm means that some pretty stout evidence needs to be brought forth to convince the masses. If the evidence is all speculative and circumstantial, it won't do the trick.

Robert, thanks for the reply. I would like very much to address the "current paradigm" to which you give so much weight. But I am currently engaged in other activities and at the moment simply do not have the time. But I hope to post on this subject tomorrow and would be anxious to get your reply.

Thanks again,

Ron Patterson

What the criteria, or stout or extraordinary evidence, might you or others like you (as opposed to Yerginites) in industry consider convincing?  

I'm not being a jerk - I sincerely don't know what data you might consider convincing.


No, that's a perfectly legitimate request. If I demand to be convinced, I have to be able to lay out the evidence that would convince me. But, it is not really me that needs convincing. It is the public. It is the oil companies. So the better question is "What would it take to convince them?"

I struggle with just what evidence would be good enough. Here is my dilemma. I am pretty close to the crude purchasing decisions. We have a tremendous number of crudes to choose from each month. We choose crudes based on what the current economics look like. But there has never been a supply problem with any of the crudes. It's always "How much do you want?" In a post-peak world, I don't think this will be the case. I think we will hear "You can only have this much." People will be allocated product. Prices will skyrocket as people can't secure the supplies they need. Inventories will be pulled down.

That is just not the situation I see. I see a situation in which if demand required it, we could easily pump more than 85 million barrels of oil. But the demand for it isn't there right now. But if demand picks up and we start pumping more, the credibility of those calling peak now will be in the toilet. So when the real thing comes, people are less likely to listen.

Thank you, that makes sense considering which end of the elephant you are fondling (and which end Westtexas = market or production ends).

So in your working model, the availability of various crudes at the wholesale level is one criteria.  Excess available supports the "No Peak Yet" model, and low or no availability in some crudes at least would suggest the "No Peak Yet" model may no longer be accurate and that the "We are At/Past Peak" model is likely now a reality.

Now if only peak geopoliTics did not cloud the issue... you know yergin will blame geopolitics for messing up his drawin' boardz.

What confuses me Robert is if there is more than enough oil to meet demand all the time, why is the price of crude so much higher than it was 5 years ago.  What has changed?  Was it just a needed adjustment in production costs that was long overdue?
In a way, this can't be true - the supply of Alaskan crude (which you may have nothing to do with, of course), has gotten quite flaky in the last couple of months - and replacing a million or two barrels is simply not that easy.

Of course, declining demand/rising storage in general can cover this point, but some people are likely having real problems getting the crude they expected from Alaska (or are drawing down storage) - unless that oil was pumped on spec, sort of like new homes (just a poor joke, there).

The thing is, the various Saudi claims and statements seem lacking in consistency - of course, they are as human as the rest of us, but the claims of swimming in oil along with 'voluntary' cuts (while explainable), don't quite fit with an extended prior period of high prices (while explainable), combined with a program to expand production capability to 12 mbpd, combined with the reworking of old fields which can't be economic at a low price which swimming in oil would seem to imply is what we would see for a while (or do the Saudis expect high prices even after their cuts? - hmmm), combined with now buying fuel oil on the market for the first time (it was a bargain, according to them) combined with their obsessive secrecy, which wouldn't make much sense (in very broad terms) if they didn't have things they want to keep hidden.

In a sense, the problem with Saudi Arabia is the difference between people operating in a market, looking for their best advantage, and the reality of oil production from a few massive fields. We all agree on decline - except the Saudis keep insisting in public that decline is not coming on their watch, so just keep buying crude, trust us. Without ever showing any public data that anyone considers very reliable in terms of this debate.

I find the burden of proof to be quite hard to assign. It is certainly true that Saudi Arabia has met all contractual obligations, has played a dominant role in the world oil market for a generation, and that the market is 'transparent' - but then, depletion/decline is also a proven condition - and quite honestly, the Saudis simply haven't addressed that in a convincing manner in my eyes. And their various explanations are starting to collide - if the world is swimming in oil, why are the Saudis increasing their drilling program so extensively? Again, explainable - but my opinion is that what the Saudis say has little to do with they are doing - running hard to stay in place, with a little help from those voluntary cuts, and maybe a lot of help from an economic slowdown - possibly resulting from high oil prices? Of course there are a number of factors in what the Saudis are doing - a major economic dislocation, on the order of the late 1970s/early 1980s, or 1929 on would also play a major role in Saudi decision making. And it has a been long time since such an event occurred.

It may just be that the Saudis really are fantastic market players, and will be able to ride their decline down at great profit and minimal risk, at least long enough for various royals to get their London properties in order before going on extended vacation.

If it is so easy to verify that sa had oil to sell and no buyers, why not go ahead and verify it? Who turned down this crude, what was its quality, and at what price was it rejected? It must have been worth around 50/b no matter how bad it was... was it offered at 60 or 40?
what we hav  hea is a failua to comminucate
Hmm, it's hard for me to see anyone who reads this site promoting SUV gas-guzzling (besides maybe a few trolls). That was a major point of disconnect for me when reading your comment.
Hmm, it's hard for me to see anyone who reads this site promoting SUV gas-guzzling (besides maybe a few trolls).

You will note that I used a lot of qualifiers, but I think that our friend Hothgor (an ardent anti-Peak Oil poster), for example, stated that he was in some kind of (booming) consumer related business, and that he only expected things to get better.

Yes, I remember reading that comment of Hothgor's. I didn't know his tendencies at the time so, to me, it was a startling anecdote.

In terms of commentary on the coming recession, I've found  "Mish's Global Economic Trend Analysis" to be great reading:


Keep spinning westexas, its what you do best bro!

I'm not an ardent anti-peak oiler.

I'm an ardent anti-collapse-dieoff doomer :P

You guys and your crazy mad max dreams will drive me crazy.  So does flying halfway around the world to all meet in a conference in Boston when you should be conserving energy/oil by having a peak oil video conference.

But I guess its a required trademark of the ILL Doomer community to burn as much oil as possible to realize their world view.  An 'ILL Doomer' is an IrrationaL-Logical Doomer: one that wants to do as much damage to the world without embracing any solutions that don't include a massive die off :P  After all, to them its only Logical that we burn what we have now as fast as possible to make their predictions come true!!

Now you're resorting to personal attacks again. And it's a rather stupid one to. Where have westexas and others written that they expect a mad-max future.

You may think it makes you look clever, but all it does is show you got no real counterarguments. TOD is not FOX News, you may throw mud but it will not stick.

1 july and aug, at 85mmb/d (EIA), indicate that production is in fact up. This would help explain the price crash.

2 accordingly, opec is quite serious. the cuts have started. imo, prices will move up sharply after the election.

3 it seems surprising to see falling prices at the peak of production, certainly in the absence of recession, but volatile does down as well as up, and there was the goldfinger caper.

4 True, SA may have peaked, 2.5x more rigs and lower production with record prices is very suspicious. But, peaking sa does not mean the world is at a peak, especially as they are no longer #1.

5 OTOH, the various pundits who predicted peak in 2010 and later did not see 06 lower than 05, which looks likely with opec cuts and possible without them. Since mega projects seem to be more or less on time, this can only be because decline is higher than assumed.  US is declining at 4.5% (first 8 months 06), I would bet that rest of world is averaging 5-6%, and this rate is increasing.  

6a Plateau will continue thru 2010, sharp drop thereafter, just in time for the NA ng crash.

6b Or, Bakhtiari is dead on, peak in 2H06, plateau ending end 07, followed by rapid decline as opec surprisingly finds themselves unable to achieve their previous max production.

1 july and aug, at 85mmb/d (EIA), indicate that production is in fact up. This would help explain the price crash.

C+C is still down.  Note that Khebab's total liquids HL plot would put the 50% of Qt mark probably in 2006 or 2007, if memory serves.  Deffeyes's C+C HL plot put the 50% of Qt mark in late 2005.

4 True, SA may have peaked, 2.5x more rigs and lower production with record prices is very suspicious. But, peaking sa does not mean the world is at a peak, especially as they are no longer #1.

You sure you want to stand by this assertion, especially since the new #1, Russia, is far more depleted (as least from existing producing basins) than SA is (based on HL).

C+C is in fact down, but the discrepancy between that and the all liquids number is only slight. Using some type of a margin of error, it is pretty clear that production all around is flat. This can easily be attributed to(but we won't know for sure until we are looking at it in retrospect) the fact that production basically equals demand and demand has flattened due to elevated prices.

It is better to look at the numbers with moving averages of 6-months or more, or by looking at quarters. Looking at individuals months, especially with all the revisions that are taking place, seems problematic.

Every single month from January 2005 was revised again. Look at May,Oct,Nov 2005. Big changes. Who's to say what the case will be a year from now - just based on revisions? Again it is safer to use some type of moving average scheme and a margin of error to look at these numbers.

This can easily be attributed to(but we won't know for sure until we are looking at it in retrospect) the fact that production basically equals demand and demand has flattened due to elevated prices.

That pretty much sums up my position. When production has fallen, it has corresponded to falling or flat demand, refinery turnarounds, etc. If this were not the case, prices would be spiraling out of control. Right now, the traders obviously believe that supplies are adequate to meet demand, hence no need to push production.

traders don't push production, producers do. up until this month producers have been pushing every barrel they can find out the door - not an ounce of restraint.  It may be that we are still in the goldfinger effect, or that production did, as indicated by the eia, climb significantly in 2h06. Regardless, producers are now and only now withholding production.

No evidence that peak is, or is not, behind us. Quite a bit of evidence that most producing countries and regions are in decline. Pretty strong indication that opec is determined to cut until they successfully manage oecd stocks down and prices up.

up until this month producers have been pushing every barrel they can find out the door - not an ounce of restraint.

That's not true at all. In fact, I got Stuart Staniford to acknowledge way back in the spring that producers in Canada and in the Williston Basin were not producing at max rates. They haven't for a long time.

Such behavior, while news to me, makes sense if you think prices will be higher.  So, what fraction of the world's production has been held back? My guess is that it is so far too small to be significant, although some, like kuwait, are under increasing pressure to restrain production.  Maybe kuwait and others never come back to their prior peaks, regardless of their previously announced plans. In this case the peak is brought forward as geology and politics intertwine in a confounding way.

I wonder if persian gulf countries realize the extent to which their claims of future production have set themselves up for blame, or worse, as we move past peak and their production stagnates or even declines.

And my guess is that its actually a significant percentage of what we could be producing.
So, what fraction of the world's production has been held back?

That's a key question, but nobody knows. I know that in my area - which includes Canada and the Williston Basin - oil is always available at a reasonable price. My guess is that there is at least 10% spare capacity in this area, but I don't think the excess world capacity is nearly that large. We just don't know, which makes for interesting debate.

BUt, people are trying for the gold ring based on hitting the peak on the nose - if not the month, then the year. It seems unlikely that the two largest producers would peak in the same year. Even if SA is past peak russia might well manage to boost production for a while, helping the many punting at 2010.

Anyway, we will soon hear critics say it has nothing to do with geology and all about opec greedily cutting their production to unfairly squeeze our innocent suv drivers.  And, there will be an element of truth to it, leading many to think that as soon as oil gets back to 65 or so the spigots will open wide, more or less forever.

As opposed to the doomers stating we wont know the peak is now due to demand destruction.  You can spin a globe both ways you know :P

Honestly though, if you guys put even 1/10th as much effort in helping the alternative energy future come into focus as you do on propping up westexas collapse/mad max world view, we might have found a viable way to power down in a manner that doesn't require us to return of a feudal system based on a serf-like working class!

I'm far more optimistic about oecd society solving energy problems. Solar will be the ultimate solution, with hybrids/electrics/car pooling/nukes the short term one. Discomfort, as often accompanies crisis, for sure even for those relatively well off such as oecd. For those regions ruled by criminal thugs, like africa, where education, even human life, has no value even now, absolute disaster for most living things.
Um, you realise that saying SA is no longer no. 1 but that the world is not peaking is roughly the same as saying Texas is no longer the no. 1 producer in America, but the U.S. isn't peaking?

I mean, the Russians being the North Slope has a certain frosty connection, but the North Slope didn't really change the picture all that much in the grand scheme in terms of America inevitably declining.

When the former heavyweight falls, it may be for other reasons than the challenger being heavier still.

I guess its a good think you took your vacation when you did Westexas.  Burn those FF's to meet your goal!
Good to have you back, WestTexas.

Is there any chance you could indicate the source of documents when the source isn't clear from the URL?  I started to read the reviews for "The Epic of Black Gold" and "Crude Awakening" from my office computer, only to realize that they were at the World Socialist website.  They already think I'm some kind of subversive around here because I bike to work (I'm not joking).  The last thing I need is to have them check my browsing history and find I'm looking at socialist websites.

Thanks for your great work!

If you hover over the link prior to clicking on it, down in the lower left corner of your browser you should be able to see the url of the site linked.

Tom A-B

Yes, Tom, I know that, but WSWS didn't mean anything to me.  I knew that the link for the flatscreen TVs was OK, since it was at the Independent.  You can tell just by the URL.  However, for some sites, like the WSWS site, you can't tell anything about the site without taking the leap.  
Very revealing comment.  Enjoying our freedom, are we?

Tell you what, just click on the Wall Street Journal a few times each day and then maybe your minders will lay off.

It's hard to not have the impression that this announcement in a report by the IEA is very welcome for the US on the eve of next week's Kyoto conference.

Plus, "the biggest polluter" is a pretty empty term when the type of pollution is not specified, it could mean juist about anything.

Still, expect to see it repeated a lot. Ideal fodder for spin doctors.

China to top US as biggest polluter by 2010

CHINA'S reputation as the world's biggest polluter is expected to be confirmed next week, posing a new environmental dilemma as Australia confronts the challenge of climate change.

A report by the International Energy Agency is expected to show the Asian powerhouse will become the world's biggest polluter by 2010, displacing the US and dramatically bringing forward earlier projections of 2020.

Can anybody recall why UK oil production dropped from 1.453 mbpd in July to 1.198 mbpd in August? The lowest level since I think the beginning of time. A drop of 17% in one month.

Was there any specific reason like a planned shutdown or an attack by the Nigerian rebel navy? Or is their production just completely finished?

Try this article:


Claim summer maintenance?

Thank you very much. Interesting source :)
The aggregate North Sea HL plot shows a pretty steep P/Q intercept, about 0.14, which implies a rapid decline rate, which is what we have seen:  http://static.flickr.com/67/158784886_5c7a813465_o.png

The HL model suggests remaining North Sea C+C reserves of about 16 Gb.  The August production level is an annual rate of about 1.5 Gb per year.  Note that this is light, sweet crude oil.   As I noted yesterday, in this one region, 5.4% of world oil C+C production is showing a rapid, terminal decline in production.

I agree. Norway and the UK are pretty scary. Thank God for Kazakhstan :)
OK - so here's some of the good news - UK oil production back at 1978 levels - that was the dark ages I think - pre Maggie.

So much of this is covered by Chris here:


She wolf of travelling again.  The kids are out sweeping the streets trying to help pay for that darned expensive trip to Boston and I'm recovered from jet lag and near total starvation.

There's more to come...

Thank God for Kazakhstan :)

Borat, saviour of the OECD

I got some pictures of me that I'll post later - just got to go round the streets crying Wolf for a bit.

what a sight - a picture only Freud could love

definitely need to reboot after seeing this

The chart comes from this Bullitzer Prize winning piece of energy industry journalism:


The red "future" decline curve is 7.5% per annum - which is the average of the last 5 years - 1 good year and 4 bad years.  Decline in recent yeas has been running at 10 to 13% per annum.

One problem faced by all forecasters is maintaining objectivity.  If yor're an objective  bear (or a wolf) you may want to avoid being over pessimistic - but right now the 7.5% per annum decline looks over-optimistic. The upper DTI forecast looks like total fantasy.  I'm going to the Oil Decline conference in London next week (had to cancle the kids skiing holiday to do this) - you going to be there? - I'm looking forward to asking the DTI folks to explain their so-called forecasts.

So if I had any pounds I guess I'd sell them.  My guess is that the £GBP wil have to join the Euro much sooner rather than later.

And so I turn to my immaciated state - ask Dave - I'm real skinny - and this:


So three of us turned up, one of us was very sociable, but we three never f* talked to each other.

I forgot to say - there's more... - scary pictures to come - but now I'm off to chat to Matt...
Don't feel bad, Cry Wolf.  I put my foot in my mouth too today.  I told some lady in the elevator that she had a nice, "permaculture" hairdo.  After the awkward silence, the only thing I could think to say to try to recover was, "I make a mean tuna casserole."

Maybe i've been spending too much time on TOD.

SAT - my uranium stocks are doing great.  And oil is heading for $100 bbl (reserved judgement on time scale here) - if you ever want to invite me to lunch - I'd be more than happy to oblige - just make sure you turn up.
So here I am, Cry Wolf - A Carniverous Petrolehead

The serious point here is how to wean folks like me off meat and gasoline?  Nate's you man on this topic - canine neurology.

I got pictires of my pups if anyone wants to see them (those are Aberdeen pups not Paris pups).

Dude, hate to break it to you but your steering wheel is on the wrong side...
So here is my youngest born - Megan

We've spent years weaning her off rats and on to apples - which she likes and has found are all together better for her health.

This has all to do with relative fitness and trust - what do you beleive in what people write here?

Where does the truth lie?

You go figure it out.

When did you stop beating your dog?

In the final days before the November elections, George W. Bush administration surrogates have taken to asking whoever they are conversing with about the Iraq war, "Do you want us to win in Iraq?"

"Since the 'stay the course' sound-bite was recently abandoned by the White House and is no longer the accepted frame, it makes sense that a replacement had to be found.

Within the same 24-hour period, both Lynne Cheney, the wife of vice president Dick Cheney, and Bill O'Reilly, the host of the highly rated -- for cable television -- Fox News Channel programme "The O'Reilly Factor," used the question in separate interviews.

O'Reilly unveiled the question during an appearance on "The View," ABC television's morning talkfest. This time O'Reilly's target was two of the liberal co-hosts of the programme, Rosie O'Donnell and Joy Behar:

O'REILLY: Hold it, hold it, hold it. Want America to win in Iraq, by the way?
O'DONNELL: I don't think it's possible.
O'REILLY: Do you want, do you --
O'DONNELL: I think it's an ill-thought-out plan and I think we should get out of that situation before [more] Americans are killed. Out. Out of Iraq.
O'REILLY: Do you want America to win in Iraq?
JOY BEHAR (co-host of The View): What does it mean to win?
O'DONNELL: I want America to be what the founding fathers wanted it to be, a democracy, where we the people --
O'REILLY: OK. So you don't want America to win in Iraq.

"It's a 'when did you stop beating your dog' sort of frame," Scott Silver pointed out. "You ask the question and the person to whom you are asking it flubs the response. Or you ask the question knowing that no one wants to lose or would want to say 'I want the U.S. to lose.'"

"Listeners are meant to have the knee-jerk response that says: 'winning is good -- losing is bad'," he said. "[They] are expected to make the association between the party saying we need to win in Iraq and the party for whom the listener is expected to vote."

The question is not meant to be thoughtful, said Silver. It is specifically "un-thoughtful. It's a knee-jerk/reflexive frame, a frame which may not actually dictate an answer, but makes it extraordinarily difficult for anyone to answer 'No' or 'Maybe' or 'I don't know'. 'Yes' is the only simple response to the question."

Roel, do you watch The View?

Just kidding. My wife likes it, and occasionally she shows me something on there of interest. I have seen enough clips to have a high respect for the intellect of Joy Behar.

O'Reilly is such a blowhard. I would turn the questions around on him. First, as Joy asked, "What does it mean to win?" Second question "How many lives will you consider worth the price of winning?"

Or, say that because the war was bungled so badly by rumsfeld that it is no longer possible to win and the only question is how may arericans are killed and maimed before we leave.
Sorry RR, but I would still not put my bets on you. People like him are proficient in manipulation techniques.

He will most probably ignore your question, talk it over or intimidate you, maybe saying something like "Oh, you think our boys are scared to give their lives for the democracy, right?". Old bastard, that's what he is.

Roel, do you watch The View?

Robert, the Geneva Convention bans mental torture..

I left the quote in as is, because it is an essential part of how it's played: it addresses the most susceptible part of the population first. The View lays the foundation. Then O'Relly did it on Letterman. Next step, and very effective. W will start this weekend.

I think people should be aware of how these things work, much more than they are at present. There are no TV commercials that address your rational brain. It's all subconscious connections, that you will actively have to look for to be "protected". If you are asked in front of a group, small or millions, if you still fancy choir boys as much as you did 10 years ago, the first reaction is "NO!". And that is the wrong answer. It admits you liked them 10 years ago.

Jeff Brown yesterday made a link between Hitler and W's position vs warfare. That made me think of Goebbels, the king of propaganda. So much of what we see in politics stems from that. And he, of course, took it from Freud. Which in turn makes me think I should finally watch The Century of the Self on Google video, on using Freud to control people.

Here's my suggestion for an answer to "Do you want America to win in Iraq?"

"I want the Iraqis to win in Iraq. I want the people of Iraq to have the opportunity to provide themselves with the basic necessities of life, with water and food and shelter and medicine, without the constant very high risk of being murdered or tortured or imprisoned. If there are things that the United States of America can do to help bring about a safe and prosperous Iraq, I hope we can afford to do those things. I hope we don't let ourselves be blinded by greed or hatred to the point that we actively impede Iraq's progress toward safety and prosperity."

Insurers hiked rates, but this year's storms never came. Ka-ching!

Hurricane season was a bust.  All-State made out like a bandit.  Amaranth did not.  And CNN bought a bunch of fancy hurricane tracking equipment that went unused.

I find the October surge in sales of large heavy vehicles to pretty discouraging. It seems to border on the irresponsible to lock in higher consumption for the next 10 years in order to report a bit higher profits (or is that lower losses) for the next quarter.

There are really not technological barriers to preventing the US vehicle fleet from becoming more fuel efficient. It just takes leadership (sadly lacking I'm afraid).

The Christian Science Monitor had an article a couple of days back that talked about Detroit's coming inventory sell-off.  The Big Three are sitting on months worth of production inventory in large trucks and SUVs -- even 2006 models -- and the expectation is that for the next five or six months, dealers will be doing everything that they can to move these trucks.

You have to admit that Detroit has an interesting business model:  Sell trucks that they can't afford to manufacture to people who can't afford to buy them so that America can continue to burn large amounts of petroleum that we no longer have.

The Road to Hell, for sure, for sure...

Deal reached to bring 2-seat Smart car to U.S.

Three-cylinder auto gets 40 miles per gallon, retails for less than $15,000
Leanan - how many Smart cars can you fit inside the average American?
Here in the UK we can get the Peugeot 107 for less than $12,000 and it gets combined 61.4 mpg (UK gallons, 51.1 mpg US). It also has a 3-cylinder engine (made by Toyota) but seats four adults. The Smart is only a 2 seater; cute, but you pay for the styling.
Yes, I wouldn't be tempted to buy one of these.  My Corolla gets 39mpg highway and has a back seat.  And it's cheaper.  
Has anyone painted teeth on one of those yet? (the Peugeot)  It looks like it has a big smile or something.

The Smart is a pile of sh*t and I wish it would die.  The Echo gets the same gas mileage, has room for 4 - 5 adults and a trunk.  The Smart just perpetuates the belief that you have to give up functionality for fuel economy - and it doesn't even do that great for what it is.

The bottom of the windshield is about the same level as the bumper on an H2?
Wouldn't last too long around Atlanta drivers.
The ZAP is already in America.  See ZapWorld.com.  They are also selling electric cars thru dealers and on Ebay.  The little company that could.
Oil Falls as U.S. Weather Warms, Kuwait Cautions on OPEC Cuts

By Mark Shenk

Nov. 2 (Bloomberg) -- Crude oil fell amid forecasts for warmer weather in the U.S. and calls by Kuwait for OPEC to pause before cutting production further.

Above-normal temperatures will cover most of the U.S. from Nov. 7 through Nov. 11, reducing heating demand, the National Weather Service said. The Organization of Petroleum Exporting Countries, producer of 40 percent of the world's oil, should wait before deciding on additional output cuts because current prices are ``reasonable,'' the Kuwaiti oil minister said.

``We are down in large part because of the six-to-10 day weather forecast,'' said Aaron Kildow, a broker at Prudential Financial Derivatives LLC in New York. ``It will be warm almost everywhere. Also, we were unable to break through $60 yesterday, which makes us look weak technically.''

Crude oil for December delivery fell 85 cents, or 1.5 percent, to $57.86 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices are down 3.2 percent from year ago. Futures have traded in a range from $56.55 to $63.32 for the past month.

``In the six-to-10 day forecast we are looking for above- average temperatures in the Midwest, Northeast and much of the South,'' said Michael Palmerino, a forecaster at Lexington, Massachusetts-based Meteorlogix LLC. ``The only below-normal temperatures we may see are in the interior Southwest.''

Temperatures in New York and Boston will be below normal during the weekend and rise to 2 to 4 degrees above normal by Nov. 6 and stay above-normal through the coming week, Palmerino said. The normal high in New York at this time of year is 57 degrees Fahrenheit and in Boston it is 55 degrees, he said.

World oil demand peaks in the fourth quarter as refiners in the U.S., Europe and northern Asia make heating fuel for the Northern Hemisphere winter.

OPEC Agreement

OPEC agreed last month at a meeting in Doha, Qatar, to reduce output by 1.2 million barrels a day starting Nov. 1. OPEC ministers will review their cuts when they next meet on Dec. 14 in Abuja, Nigeria.

``The market needs to translate the cuts we made in Doha last month before we can make a decision in Abuja,'' Sheikh Ali- Jarrah al-Sabah said in a phone interview from Kuwait today. The Persian Gulf nation will cut 100,000 barrels a day from ``actual'' output of 2.5 million barrels a day by the end of November as part of the OPEC decision, the oil minister said.

Venezuela, OPEC's fifth-largest producer, is prepared to propose another cut in December, Rafael Ramirez, the country's oil minister, said yesterday.

``The market is very skeptical about what is happening in OPEC,'' said Luis Giusti, a board member of the Centre for Global Energy Studies, and former head of Venezuela's state oil company. ``The perception is that from the 1.2 million barrels a day that was agreed by OPEC, only about half a million will come into effect.''

Brent crude oil for December settlement fell $1.14, or 1.9 percent, to $57.84 a barrel on the London-based ICE Futures exchange.

Hello TODers,

Recall the previous polls on crude oil prices.  Generated lots of discussion.  How about TODer predictions on world death rates? We could revisit at the end of 2007 to see who had the best prediction.  I don't know if this is the best metric for measuring world decline--I am open to suggestions-- but the CIA Factbook seems like a valid source.

But whether by Nature and/or by the violent hand of man: I think population curve matching to Peak Everything is inevitable. Currently the projection is: 8.67 deaths/1,000 population (2006 est.)

If TODer Westexas is correct in his Peakoil projection, and world grain supplies gets alot lower than the current 57 days:  My guess is we will see 12.00 deaths/1,000 population when the 2007 numbers are released by the CIA.  Just my hunch, no number crunching on my part.  Please submit your prediction to the same precision level of digits: XX.XX  Thxs-- may the best Grim Reaper win!!!

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

Global Production (update Nov 2nd)

With most recent revisions for August 2006.

That's very interesting. Where did you get the numbers from?
EIA tables t11c and t14.
No point trying to start this new professional looking thread way down here.  My charts are way better - lots more lines on them - but I just manged to delete my last post - making my mood a bit more grizzly.

So while I go to fetch another bottle of Australia's fienst red - why 13 months?

I wanted to ask, what were the units on that UK chart? they didn't seem to be barrels-per-day. Tonnes per year?

I normally use trailing 6-, 12-, or 24-month trailing moving averages, but I adopted the form when Stuart started using a centered moving average. The 13 is so you can have a center. It's 12, with one more in the middle.

Or as Spinal Tap would say,"This one goes to eleven."

M3 - but that doesn't really matter - cos its the up down patern that counts - I got it converted to bbls per day - just need to re-write the post now I got my bio-fuel in.
Hello Oil CEO,

Big Thxs for this graph!  Notice the increasing gap over time between the C+C and all liquids; the 'spread' between the two lines.  IMO, this gap represents some % proportion of the ever decreasing overall ERoEI--  when this spread starts to converge together, then we know we are in big trouble!  This convergence will clearly show that further attempts at heroic efforts after extraction [C+C] will be futile because above ground ERoEI for [all liquids] will approach unity, or even negative as an energy sink.

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

Non-Conventional Spread

I haven't updated it since June, but it looks the same. The green and blue lines are just the moving averages on the first one I did up above. I called it "conventional" back then, but I guess we now call it C+C. I raised the bottom blue line up by whatever the difference was in the first time period to show the spread. I also subtracted tar-sands out of the bottom line, because they don't belong there.

What software are you guys using to generate these graphs?
Just Microsoft Excel. But OpenOffice Calc or any standard spreadsheet program should do it.
Now that we have the long view, we can zoom-in a bit.

Global Production Zoom

Then we'll zoom in on Crude and Condensate only. I've added a trailing 12-month average to this one and gridlines marking 1-million barrel-per-day increments.

Global Production C+C (Zoom)

We moved 4 million bpd in 2003. 2 million in 2004. and only 1 million in the last 20-months. But from the first chart I posted today up above going back to 1995, this has happened before. And then of course, we can debate "why?" or "what is different this time."

"what is different this time."

Ehhh, CEO, You answered this yourself earlier in the day: It's the Nigerian rebel navy

like your graphs

Apparently the Chinese are selling them boats, so they've got real striking power now.
Hello TODers,

Brief news roundup for you to consider in your analysis of Peak Everything:

Living near the seashore may not save your family:
A new study shows that the oceans' fish are being depleted so fast that eating seafood might be just a memory in 40 years.  The researchers say more is at stake than our diet, for they find the dwindling of fish stocks hurts the world economically and the ocean environmentally.  Researchers say it is not too late to reverse the trend.

Mexico update:  they are still flogging it out in Oaxaca instead of solving the true crisis of declining detritus energy/capita for all Mexicans.

Various road blockades are breaking out elsewhere in Mexico as a show of support for the Oaxacans.

Georgia-Russia may be set to do the same thing as Russia wants to double natgas prices for Georgians.

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

PEAK FISH !  Interesting to read about the rates of decline for fisheries ... a renewable resource even.  

Peak energy and matter... at least for "awhile."

'Oil dependence threatens US and Israel'

Woolsey argues that America's reliance on oil as the primary source of fuel is one of the greatest barriers to national security and threatens both the US and Israel...

..."One of the ways to convince these regimes that their system won't work, is to convince them that they can't continue to just sit and pump."

The only way to do that, he argues, is by moving away from cars than run on petroleum. The US used 140 billion gallons of gas last year, and a little over 40 percent of oil consumption is used for cars and other light transportation...

...One such alternative that Woolsey is promoting is a plug-in hybrid car, which would draw power from the electricity grid...

http://www.jpost.com/servlet/Satellite?c=JPArticle&cid=1162378316436&pagename=JPost%2FJPArti cle%2FShowFull

Just as I have been promoting all along :P
Just as I have been promoting all along :P

While they still have life left in them US automakers should concentrate on designing more fuel efficient cars and including diesel engines for its existing range, rather than trying to resurrect the electric vehicle by another name. Oh and paring down "fat ass consumption" wouldn't hurt either.
fat ass consumption - mean this?
A bad sign and an interesting assumption about the future.


Even in Kuwait, Shiite-Sunni ties fray

..Although the danger of an open Shiite-Sunni rift remains remote, it cannot be entirely ruled out since members of the two sects rarely intermarry and hardly any tribes count Shiites in their ranks...

... "The high standard of living and the stability of Kuwait provide a safety valve and ease people's minds despite the tensions," said Hassan Jawhar, one of only four Shiite lawmakers in Kuwait's 50-seat parliament. "The Shiites here, like other Kuwaitis, will never want to live anywhere else."