DrumBeat: November 30, 2006

[Update by Leanan on 11/30/06 at 1:02 PM EDT]

Costly fuel cools Americans' love for cars

HOUSTON - High gasoline prices not only slowed fuel demand growth and cut sales of gas-guzzling vehicles in 2005, they also prompted Americans to drive less for the first time in 25 years, a consulting group said in a report Thursday.

The drop in driving was small -- the average American drove 13,657 miles per year in 2005, down from 13,711 miles in 2004 -- but it is more evidence that the market works and prices help control consumption, Boston-based Cambridge Energy Research Associates said.

"Price matters," CERA Chairman Daniel Yergin said.

You can't conduct an orchestra with an invisible hand: The problem with carbon taxes

Historically, large-scale infrastructure changes take place only via hands-on government involvement -- involvement that not only subsidizes technology but helps shape its deployment. This can consist of public works, or grants of land and rights of way that help shape where infrastructure is placed. You can find examples in List 1 at the bottom of this post, ranging from canals and railroads to the internet.

Tom Whipple - The Peak Oil Crisis: The View from Capitol Hill

While up on Capitol Hill discussing the prospects for the peak oil message in the new Congress, I was brought up short by a question from a hill staffer. "Can’t you guys sharpen the time frame when oil production is going to peak?"

“Telling us that all sorts of bad things are going happen sometime in the next five or ten years really is not that useful. Here, in the Congress we constantly hear about so many crises about to befall us— Iraq, budget and trade deficits, global warming, avian flu, Medicare, social security, housing bubble, terrorism, and immigration, to name a few — that trying to put peak oil threat in its proper perspective is difficult.”

Energy expert urges conservation

The days of dancing in oil around exploding derricks is over, and it’s past due time to think about conserving crude consumption, said Scott Waterman. Waterman, who works as the State Energy Programs Manager for Alaska Housing Finance Corporation, is looking to find ways to build more energy-efficient homes as he speaks around the state, taking on a number of education programs.

Canadian Energy's "Exit Stage Right" Plan

With prices approaching $1,500 per barrel, what would ever make investors like Charles Morgan want to sell their stake in the oil industry?

Well, Morgan had noticed that the price of recovering the oil was increasing every year, and foresaw even further rises in the cost of his operations.

The world knew that oil wouldn't last forever, and people like Morgan thought that at the current rate of production the source would soon run dry. Fortunately for him, he recognized this trend and was able to get out of the industry at peak prices, generating a healthy profit for himself.

Peak Oil to Peak Gas Is a Short Ride

Could an 'African Kuwait' Be in the Making?

The discovery of oil in the small West African island nation of Sao Tome and Principe could help turn one of the poorest countries in the world into a sort of "African Kuwait."

South Africa Poised to Embark On Nuclear Route for Power

Opportunity knocks for biofuels industry

Oil prices have eased in recent weeks on the international markets, but the same cannot be said for agricultural commodities.

World stocks of cereals are at their lowest level for more than 20 years, and supply and demand is expected to tighten over the next 12 months.

India worried by gas shortage

India is desperately looking for long-term gas supply contracts with gas-rich nations in Central Asia, Africa and the Middle East to meet the acute fuel shortage that has hit its power plants, which operate at half their capacity.

Brazil May Not Meet Domestic Ethanol Demand

Brazil, the world's biggest ethanol producer, may struggle to make enough of the fuel in the crop season ending March to meet domestic use because higher prices elsewhere are encouraging exports, C. Czarnikow Sugar Ltd. said.

Russian FM warns West against discussing energy security without Moscow

MOSCOW: Russia's foreign minister on Wednesday warned the West against discussing ways to reduce energy dependence on Russia, saying that would not help energy security.

Iraq's oil industry in grip of despair

The present state of Iraq's collapsing oil sector, its economic lifeline, is bleak and its future looks far worse, despairing officials say.

Another damaging oil attack this week, the prospect of British troops handing over the oil city of Basra and virtual civil war have all but crushed hope for Iraqi officials battling to keep exports flowing to world markets.

"One thing is sure. The worst is yet to come," an Iraqi oil industry source said by telephone from Baghdad.

Think tank says Alberta should reap more oil royalties

Biofuel Markets Hinge on Biomass Progress

The fast-expanding biofuels market could falter without significant progress in making fuel from biomass like plant stalks and wood chips, according to a report issued Wednesday.

WRC's 2006 Hurricane Prediction Verifies Again This Year

Stocking Stuffer for a Green Christmas: The $40 Carbon Credit Gift Pack

Naughty little boys and girls get a lump of coal in their Christmas stockings; green little boys and girls get...carbon credits to take coal gases out of the atmosphere and fight global warming.

California tries to terminate greenhouse gases

Arnold's risky power play: The Golden State's small businesses worry that a new energy mandate will dim their prospects.

The next little thing: New innovations coming from small businesses. Two of the items are energy-related: ways to tap the power of the tides.

Global energy demand set to rise: McKinsey

HOUSTON: World energy demand will rise by 2.2% a year through 2020, outpacing the 1.6% growth of the past 10 years, according to a McKinsey & Co report.

..."Under all scenarios, you see future energy growth being stronger in the next 15 years than in the past despite some pretty significant attempts to increase efficiency,’’ said Diana Farrell, director of the McKinsey Global Institute, which spent a year studying energy demand worldwide among sectors including residential and industrial.

GM working on electric version of SUV: Automaker also plans biofueled Hummer within three years, CEO says

Auto industry should speed fuel economy fixes

While plug-in hybrids and hydrogen fuel cells are likely one day to help cut U.S. gasoline consumption, major fuel savings can be achieved now if automakers put existing technologies to work under one hood.

It's Electric!: The Tesla Roadster — a hotshot sports car that runs on batteries

Angola to ask for OPEC membership

US Supreme Court appears divided over global warming

Human waste used to create green fuel

We recently had a great article on the oil drum about the natural gas treadmill.
While officials in high ranking positions and most brokerages seem to be sanguine about the prospects of north american natural gas supplies, one voice of reason has come from a surprising source. Raymond James.
Click on above link and then on Energy Stat of the week. Direct link does not work.
Raymond James paints a picture that is even worse than that depicted here.
Specifically it hits on Branett Shale gas production. This was surprise to me as Raymond James says "First Year Decline rates are about 65%!!!" Mind you this is supposed to be the average.
There is table out there which shows decline rates in some cases exceeding 70%!!.
Raymond James analysts believe rig counts will rise 12% in 2007 utilizing every existing rig and still gas production will be down about 2% in USA.Although RJ points out some scary stats the "down 2% production " is actually based on very conservative numbers i.e. overall decline rates of 2004, mobilizing of every possible rig and very little rig migration.
The supply demand in our friendly neighbour is no better. Barring last week's canadian NG storage data, there were 21 weeks of decreased injection/higher withdrawal compared to 2005. Canadian storage is now 10% below last year.
One nasty winter and things could get pretty bad.
Thanks for the Raymond James link.

This also ties into the India natural gas shortages story Leanan posted above. They passed-up some opportunities to get some LNG long-term contracts at what they considered "inflated" prices -- now they are paying dearly for that. The future U.S. natural gas supply will also depend on LNG to make up future shortfalls. There's no time like the present to start lining up that supply. Thinking ahead is the only way to go here. We Americans are not noted for our long range planning abilities, however. See Iraq.

The latest data is just out from the EIA on natural gas inventories. There was a draw of 32 billion cubic feet. That was way above what was expected. Prices jumped on the news.

Ron Patterson

How is that way above what was expected?

Last year it was -49 and the 5 year average was -40.

-32 looks like about normal to me...maybe even better than normal.



They passed-up some opportunities to get some LNG long-term contracts at what they considered "inflated" prices -- now they are paying dearly for that.

Highly reminiscent of the offer to Nixon by the Shah of Iran in 1969 for a 10 year contract for crude at $1/bbl. Nixon declined figuring that oil had to go down in price from its obviously too high $1/bbl.

My quite limited undertsanding of "tight shale" is that produces a flood of gas at first and them settles down to a long term trickle.  -75% Year One, -5% Years Two, Three, etc. is my understanding.

So, mature tight shale wells are a good long term source of NG.  Better than most others.


It is significant, I think, that energy sources like these trickling NG wells and 'stripper' crude wells are gradually approaching the same kind of 'trickle' of energy flow that one gets from PV installations. If we are destined to have to live on a trickle of energy, rather than drilling 1,000,000 gas wells we should be installing energy extracting devices that have a limitless reservoir to draw from.
  The Barnett Shale does have those huge decline rates in the first year-approaching 75%. But then, the wells level out and are supposed to last 30 years at commercial rates of production. They have to be re-fracked every 5 years too with massive (10,000 bbl) freshwater frac jobs. The gas is very expensive to produce-the gas must be dewatered- and the city of Ft. Worth and all its suburbs/exurbs sit on top of the play. So there is lots of conflict over pipelines, compressors, water trucks, drilling noise-its a landman's and lawyer's dream come true.
   Its a perfect example of the kind of prospects that we will see developed in the post-peak era-expensive, and not productive at commercial rates with old prices Operators are buying pipeline right ofway in people's backyards, using the common carrier statutes to condemn what they can't buy. Its so crazy its almost funny.
In the interest of at least seeing whether every little bit helps, anyone using Windows XP may want to check this link out - http://www.localcooling.com/?www.reghardware.co.uk

The article link is http://www.reghardware.co.uk/2006/11/30/pc_cooling_app/

And since this is not Slashdot or groklaw, no comments about anyone's choice of operating system.

Cute idea, I will put a link on my blog.
you don't need it.
just make sure you install the power management drivers in windows(cool 'n' quiet for amd cpu's(amd64 and newer) powernow(for older k7's with power management) intel's i think is called speedstep). then go to your control pannel -> power management -> and from the drop down menu choose 'minimal power management'.
in linux it's simpler.
to root 'su'
go to
(symlink to the current kernel tree)
make menuconfig
then go to the following.
Power Management Options
         ACPI --->

and then select the following (x = * for built in)

[x]thermal zone

if your also on a laptop also select 'battery, ac adapter, and dock'.
then go to

power management options
    cpu frequency scaling--->

before selecting the following.

[x] Cpu Frequency scaling
[x]    Default cpufreq governer (userspace) -->
[x]    'Performance' Governor
[x]    'Powersave' Governor
[x]    'Conservative' Governor (choose this instead of 'On-demand because it's a smoother transition between states)

under this is the list of cpu drivers for frequency scaling.
choose the following for amd64 based cpu's

[x] Amd Opteron/Athlon64 PowerNow!

or for intel's cpu's

[x] Intel Enhanced SpeedStep

there are other drivers there depending on the arch and whether the system your running is a 32bit or 64bit system.
from then all you have to do is install your favorite cpu freq manager and then tell it what state you want as default(most likely conservative) and forget it :)

for those of you who are wondering why i called the linux method easier, you do not need to go searching for the driver on a cd or on the web before installing it's already in the kernel.

Well, the Register article link pretty much makes the same point that it isn't really anything revolutionary, just that it is fairly simple, which is better than nothing.

Personally, I use openSUSE, and power management is pretty simple from its 'Control Center,' though real tweaking is always done in the conf files - it is just that SUSE has always had the very unfortunate habit of rewriting them anywasy after the tweaking - YAST is a very mixed blessing.

One of the things that makes this application a bit more interesting is the social aspect - most 'marketing' hinges on higher consumption, while this makes conservation the goal.

Of course, making sure that the PC, monitor, and peripherals are truly shutdown to no electric use is a hardware problem. I use a powerstrip with an off switch. The draw of turned off equipment is easily 20W and higher.

personally i would recommend you move away from opensuse due to the recent deal novell made with ms. don't want to be on the wrong side of a ip war. but thats a different topic.
i have tried to explain it to other people to use a power strip to really shut everything off.. though they stop doing it as soon as they find out that when they do that and turn the power back on and find they have to wait 20 seconds to a minute before they are able to turn on their lcd screens they ignore me..
The McKinsey link is broken.
Hello Leanan,

Recall back in the August 31 thread, you provided TODers with an exceptional Bloomberg article on peak oil.  The article mentioned that a GAO report on the issue was going to be released in November of this year.  Was that report ever released, or did I somehow miss it?  Can anyone elaborate on this?  

I haven't heard any more about it.  Roscoe Bartlett's response to the recent CERA thing mentioned that he was expecting a government peak oil report in "early 2007."  Not sure if that's the GAO report.  Perhaps it was delayed - not exactly unheard-of with government reports.
The GAO report is out on Feb. 28, 2007, according to this source.
thank you, Calorie!
To Leanan and Erwin:

The GAO is supposed to have a report out in early 2007, yes.  No one has missed it yet. I think they've been working on it for about a year since it was asked for by Congress or at least some members of Congress.  the Congressional Research Service of the Library of Congress does the research for it.  I've been watching for it but I'm sure it's not going to be out until after the first of the year 2007.

The below article is an excellent article on how Congress-folk think about issues like Peak Oil.  Also Tom is such an excellent writer..worth the read.

Tom Whipple - "The Peak Oil Crisis: The View from Capitol Hill"

IMO, that article explains why we have to make predictions, even if we risk being wrong.  They need to know when.  It's kind of like my office...unless you give them a deadline, they aren't going to do a damned thing.
Right...that's really the big problem with getting governments to take action on PO and GW.  The US National Gov is basically "reactionary" and not "preventive".  

This gets you by during good times, but throw some major crises in the mix people are totally unprepared (i.e., response in New Orleans).  If this does not change, we will continue to put band-aids on larger and larger cuts until the 1,000th cut becomes too much.

Clearly, they reject the Hirsch report showing a 20 year amelieration period as the best course. If they did, then even the CERA peak date of 2030 indicates we should be starting now.  If peak has occured or if it's around 2015 as RR believes we are in deep, deep trouble.  Further, given the time lag before the public buys into peak energy means we are in for an even greater world of hurt.

I'll also add that those who think they will move to the boondocks like me either as a family or a group need to recognize how long it takes to adapt psychologically, develop the necessary skills and to actually build the necessary physical plant.  Based upon 30 years of country experience, my best case is 7 years from the time the decision is made to move.

Two points.  First, the Hirsch report leads with the "executive summary" that:

6. Mitigation will require a minimum of a decade of intense, expensive effort, because the scale of liquid fuels mitigation is inherently extremely large.

Second, the goal from the Hirsch perspective is actually to satisfy a high growth in demand:

World oil demand is expected to grow 50 percent by 2025.4 To meet that demand, ever-larger volumes of oil will have to be produced. Since oil production from individual reservoirs grows to a peak and then declines, new reservoirs must be continually discovered and brought into production to compensate for the depletion of older reservoirs. If large quantities of new oil are not discovered and brought into production somewhere in the world, then world oil production will no longer satisfy demand. That point is called the peaking of world conventional oil production.

I interpret the Hirsch "wedge graphs" that way, as attempts to maintain energy growth.

I think people often present Hirsch as if "since we aren't doing the 10-20 years thing, we will crash" ... actually a closer reading of the original would be "since we aren't doing the 10-20 years thing, we probably won't grow energy as much as many people would like.

IMO that leaves us with a good opportunity for conservation to meet alt-energy half way.  See also: Can Energy Efficiency Be as Sexy as Solar?

I've read the Hirsch report several times and I guess we'll have to differ on our interpretations. To me, the central issue is that there is no current alternative to the growth paradigm.  In essence, all of ideas put forth are an attempt to maintain the status quo rather then moving toward some sort of susutainable, stable state.  But this can never be acheived as long as population continues to grow and, further, that the foundation of the financial system is continued growth.
This response isn't far from what I said.  The Hirsch report is about that growth paradigm, and you're right it does not even discuss alternatives.

As an example, "more efficient cars" make a small impact in the Hirsch model because the model expects overall demand to grow (presumably because overall VMT will grow faster than small car share).  That only works with low gas prices and production meeting ever-higher demand.

The key thing is that failure to meet that production-utopia opens doors to all sorts of questions, but it certainly does not prove any unstated proposition about what the world will look like when a HIGH energy growth curve is not maintained.

What a shock!  

But if the parliament is being told, perhaps the info will leak?  Or we might get an idea of what the MPs were told by what they say about Kuwait's efforts to increase/maintain production.

We will not announce it (the reserves)
publicly because we are not obliged to

Don't stick your nose in Kuwait's business where it doesn't belong! Take that, you snooping Oil Drummers!

Dave, you forgot to add:

"now go away or I shall taunt you a second time"


  One of my favorite movies. I often use the insult "I fart in your general direction" when dealing with my thirteen year od nephew. He has a very discerning sense of humor, just like you and me.
while certainly a typ-o, it is appropriate that he is known as your "od[d]" nephew!  and i say that as a die-hard python, and particulary grail, fan.
brilliant pic! excellent movie!
Being of a slightly suspicious nature and after reading both pages of the Reuters story this scenario comes up:

The Kuwait North development project with the involvement of BP, XOM and CVX may also be construed as the Iraq South project. Saddam attacked Kuwait supposedly because the Kuwaitis were siphoning oil from Iraq via horizontals.

The US departs Iraq and instead plants itself in friendly Kuwait and gets the oil from Iraq, anyway.

I wonder if that is technically possible. Anyone with technical knowledge of the area?

This surprise anyone here?
That is just insane.  By saying "we don't have to tell you what our reserves really are" they are admitting that the reserves they publish at 100 GB are false.  Otherwise they would just say, "the figures we publish are true and PIW were wrong."  Instead they say, we don't have to tell you what they are, which is basically admitting that the figures they publish are false.
It's really quite easy to figure out the likely reserves in OPEC countries:  just take their stated figure and divide by 2!
This is an attempt to answer Anyia and Engineer Poet about how to incorporate major changes in policy in a rational way; in particular to the problems of population overshoot and technological solutions.

Good technical solutions to population control involving contraception exist but are impossible to implement without coercion and cultural changes.  I do not think effective coercion will ever be used.  Cultural change leading to negative population growth is happening, but not fast enough in most parts of the world.  

So far as the USA is concerned, most, if not all of the population increase is from illegal immigrants and their children.  I also do not think the problem of the flow of massive illegal immigration will be solved.  Implementing of existing laws regarding the hiring of illegal workers, and changing laws involving secure identification and anchor babies seems unlikely to happen.

Just put me in the doomer group.  I see no hope for future generations.  I like the quote that Anyia ended a post From "SaturnV":

"In fact the application of more and more technofixes like the ones envisaged in this article, and elsewhere, to support increasing production and consumption will not only hasten the inevitable end of the energy sources and other resources that make them possible, but also ensure that the effects of collapse will be even greater than if it occurred today, because more people, infrastructure, and GDP will by then need to be supported when the bottom gives way."

Major "rational" changes (like sustainable policies) pitched to societies built on mass consumption will bounce off the wall of individualism.  In one sense, there is no such thing as "society" (e.g. the commons) anymore.  There's just a mass of individual consumers "expressing themselves" by buying increasing amounts of crap.  Few are willing pay for anything that doesn't benefit them directly.  Mass consumerism has destroyed the conscience and moral fabric of society.
As was described yesterday as the yeast in the petridish rising to the amount of sugar they're given, I think population, by and large is essentially a reflection of the energy available to us.  In other words, as far as reproductive 'controls' are concerned, I think it is mainly out of our hands.

That said, there are statistics that show correlations between education and healthcare availability with a reduced birthrate in populations.  Whatever else might have been affecting the numbers there, it is enough for me to recognize that if we insist on our communities, societies and policies to be set up to provide both of these things, we have the best leverage to involve ALL the people around us to help discover and implement the solutions.  If we do start to see a decline, we will also see a severe shortage in available labor.  This is already a concern in North America, where the Boomers will be out of the workforce soon, without a sufficient supply of genexers, genWHYBothers, etc to fill those ranks.


There are many means to attack population growth without major coercion.

Throw ten billion dollars at my post and the barely-above-replacement fertility rate in the US goes down significantly.  Possibly enough to match the immigration rate.

In Australia, you can get a 3 year implantable hormonal contraceptive called Implanon, with miniscule failure rates.  For 20 bucks.  3 if you're on their national healthcare system.  In the US (following FDA approval a few months back), an Organon spokesman said it's "likely to cost less than $1000."

Here is a second negative Lincoln Journal Star article  about corn ethanol within one week's time.  It quotes Doug Carper, a previous agricultural commodities broker.

"It's a delusion that somehow we are solving the country's energy needs when, in fact, at the extreme, ethanol could never be a substantial solution to the nation's energy requirement. It's patently wrong and absurd to think we can."

Beyond that, he sees so much emphasis on ethanol leading to higher food prices. He sees what he called a tremendous negative effect on the state's cattle feeders, possible disruption in the food distribution system and some substantial portion of new ethanol plants failing to make a go of it as profit margins inevitably narrow.

How sure is he he's right about that last point?

"As sure as I can be that poorly capitalized, shakily managed companies almost always have a fairly high fatality rate."

I'm looking at some preliminary export/import/consumption numbers.  Saudi Arabia (KSA) and Russia from 2004 to 2005 are pretty interesting.

Combined KSA and Russian Production/Consumption/Net Exports (Total Liquids):

  1.  19.64 mbpd/4.24/15.4

  2.  20.6/4.8/15.8

Production increased 4.9%

Consumption increased 13.2%

Exports increased 2.6%

For 2006, let's assume KSA down 4%, Russia up 2%, combined consumption up by 13%.

Combined KSA/Russian Projection for 2006:  

Production:  20.35 mbpd

Consumption:  5.5

Net Exports:  14.85 (a 6% decline, close to one mbpd)

IMO, KSA is in a long term decline, and I predict that Russia is about to start a long term decline.   Consider the compound effects of a long term decline in production with a rapid increase in domestic consumption.

Meanwhle, back in the States

I also briefly compared the first 11 months of total US petroleum imports in 2006 to the same period in 2000.  In round numbers our total petroleum imports went up from about 3.2 Gb to about 4.2 Gb, a long term growth rate of 4% to 5% per year.  

Note that we have required ever greater petroleum imports every year, as our consumption has gone up and as our domestic consumption has fallen.

For 2006, let's assume KSA down 4%, Russia up 2%, combined consumption up by 13%.

How did you arrive at that assumption? Are you taking existing year-to-date 2006 data and extrapolating it for the entire year? Please post your sources and methods.


For KSA, I was picking a midpoint between the current (presumably crude + condensate) production of less than 9 mbpd (8.9?) and last year's production of about 9.6.   Note that the EIA is using total liquids for exports.

Relative to 12/05, I think that Russia has been lower for five out of the eights months of 2006, but most numbers I have heard put production up from about 2% to 2.5% over last year.   Even the Russians are admitting to lower exports as consumption skyrockets (car sales up 11% year over year for example).  

I need to try to track down total liquids production by country for 2006.  For the final 2006 projection, I plan to use the best average year to date total liquids numbers I can find.


The general principle that I derive from your export-land-model is that, as a resource becomes more scarce, its distribution in the marketplace becomes skewed by how much control the producing countries have on the given resource.

I wonder if the ELM would hold true in very poor countries, say Nigeria, where there is no favorable treatment of the local population, hence little increase in domestic consumption. In Venezuela where gasoline is heavily subsidized, I would expect the model to manifest itself in the extreme. Would this be the case?


The principle is that, as a general (but as you point out not absolute) rule, net exports tend to be what is left over after domestic consumption is met.  As you pointed out, in exporting countries that have subsidized energy costs, this is akin to pouring gasoline on a fire.

The really interesting period we are entering is this positive feedback loop, where rapidly surging oil prices increase the domestic demand in many exporting countries, even as their production begins to stagnate or decline.

Note that, as a general rule, exporting countries can export domestic production less domestic consumption (I estimate that this spread is falling at about 6% to 7% per year from the top three exporters).  

Importing countries want to import domestic consumption less domestic production.   Over the past several years, this spread has been increasing at about 4% to 5% per year in the US.

As these two trends--falling exports and increasing import demand--collide, the result is higher (much, much higher IMO) oil prices.

Note that in January, if I had proposed a 13% year over year increase in consumption for KSA and Russia, I suspect that I would have been banned from TOD as a dangerous lunatic.

In case you've been wondering why the stock market keeps going up and the price of a barrel of oil keeps going down, here is the answer.

The Maharishi, reported to be about 89, contends that simultaneous mass meditation creates a wave effect that calms the world, influences stock markets, decreases crime rates and prompts other positive societal behavior.

Supporters claim the positive energy from this city about 95 miles southeast of Des Moines is already paying off.

Since the number of daily meditators in Maharishi Vedic City and Fairfield reached about 1,200 on July 23, the Dow Jones Industrial Index has hit record levels, the S&P reached a 5 1/2-year high, and the Nasdaq climbed to a 5-year high, said John Hagelin, the assembly's organizer.

Once the 2,000 meditators are in place for the assembly called Invincible America, Hagelin predicts the Dow will surge toward 15,000, oil prices will fall below $45 a barrel, the U.S. crime rate will drop 20 percent and tensions inNorth Korea and Iran will be resolved peacefully.

Violence in Iraq will also dramatically decline, said Hagelin, a former Natural Law Party presidential candidate.

"We're clearly on the threshold of a global transformation," said Hagelin, a quantum physics researcher educated at Harvard and Dartmouth.

As a long-time practitioner and teacher of Transcendental Meditation and having lived in Fairfield, IA for one year I can personally vouch for the amazing benefits of this technique.  Consciousness will be the new frontier.  Radical changes will occur as more and more people begin raising their consciousness.  TM is a wonderful and easy way for this to be accomplished.  Anyone interested should visit Fairfield which has more organic restaurants per capita than San Francisco.  Or at the least watch What The Bleep Do Know in which John Hagelin is interviewed.
I have seen that movie (twice) and found it fascinating.  At the end of the movie is an lengthy set of references, names of scientists, and books on related subjects.  Fairfield was also recently featured in this Washington Post article.
I do want to make sure that Westexas and I have an agreed upon debate resolution. My proposal was not to debate Peak Oil, but to debate whether his import/export hypothesis is valid evidence that a peak has occurred. Here is my proposal:

Resolved: Evidence supporting a peak in world oil production is that world net oil export capacity, as predicted by Jeffrey Brown, is declining.

That limits the debate, so we don't spend a lot of time arguing whether HL for Saudi is correct, etc. That is not the issue I am concerned with. I am concerned that the export model is wrong, and critics will use rising imports in the future to discredit Peak Oil. So I want him to explain his model, and then argue his case.

I'm concerned that his ELM is being influenced by production cuts from OPEC.  A 320,000 bpd cut form KSA during October/November accounts for a substantial volume of global declining exports.  And with the demand destruction that occurred this year, is there any question what-so-ever that global exports/imports could have declined as well?
Why on earth do some people always try to fudge the numbers and hope no one will notice. NO, neither OPEC nor KSA cut production in October/November as you state. The production cuts began Novermber 1st! There were no quota cuts in October! Some OPEC nations may have had production drops in October but they were not deliberate cuts.

Production cuts from October to November amounted to 745 million barrels per day according to the EIA.

Ron Patterson


745 million barrels per day? I don't think anyone(other than insiders) knows if any cuts have actually taken place or if they will.

OPEC met and made the decision mid-October. They had been talking seriously about it for at least two weeks prior to that.

The cuts were officially to have gone into effect on Nov. 1st. You yourself have stated we wouldn't know until the historical numbers come out at the beginning of February.

The cuts were officially to have gone into effect on Nov. 1st. You yourself have stated we wouldn't know until the historical numbers come out at the beginning of February.

Well, I don't remember saying that but perhaps I did. I was simply wrong. The cuts have been confirmed by petroconsultants as well as by buyers.

Within OPEC, Algeria has cut November oil supply in line with its pledge with group, trade sources said on Nov 3, making it the third member, after Saudi Arabia and the United Arab Emirates, to have supply cuts confirmed by buyers.

Of course 745 million barrels per day is just over half the official announced cuts. So I don't see what the problem is. Let us remember that this is not a new thing with OPEC. They have cut production several times in the past and successfully so. Why would anyone think that no member would comply this time?

And of course the oil market will, after about a six weeks delay or so, confirm the cuts. There will simply be less oil on the market.

Ron Patterson

I think you mean 745 thousand barrels per day.

Here is the OPEC press release announcing the cuts:

OPEC Press Release, October 19-20, 2006

In the light of the foregoing, and in order to ensure market stability, the Conference decided to reduce production by an amount of 1.2 mb/d, from current production of about 27.5 mb/d, to 26.3 mb/d, effective 1st November 2006. This interim arrangement will be reviewed at the Extraordinary Meeting of the Conference scheduled to convene in Abuja, Federal Republic of Nigeria, on 14th December 2006. In the interim, the Conference requested the Secretariat to continue closely monitoring the market.

Part of the recent price runup seems to be a reversal of the skepticism that OPEC would actually go through with the cuts. I read yesterday that traders are accepting that a good chunk of the announced cuts have indeed occurred.

Yes, of course I meant 745 thousand barrels per day instead of million barrels per day. Of course this number is just a wild ass guess by the EIA. After all it was made on November 7th, only one week into the month and their projection was for the entire month of November. But I would guess that is pretty close. Of course that is also just a wild ass guess on my part. ;-)

Ron Patterson

That mistake was not entirely your fault.  Table SP1 in the EIA page you cited is erroneously labeled "OPEC production million barrels per day" when the figures are clearly thousand barrels  per day.
And just as a point of interest...

Caspian oil field to produce 25% more.

I wonder what other revisions will occur in the future at other upcoming projects...

Maybe more oil out of Kashagan, but when will we see it?  The article mentions that the start date will be pushed back again to 2009, and I've read 2010 elsewhere.  Given the problems to start production, one has to question their rosy forecast about URR.
Good ol' pRojECtionz again... stupid fucking Homo Sap and the childishly ignorant delusions he plays on himself.
Westexas is the king of cherry picked projections :P
Hothgor is the king of childishly ignorant delusions.
As well as the king of unsolicited personal attacks.


Have you bothered to read many of WTs recent posts?  It's rare for him NOT to mention me by name in some idiotic troll rant.
Yes actually,  I've been following the Hothgor VS WT ordeal since it started.  Many have come to your defense, stating that your young, give you a break etc... I will state one more time that I feel you do have allot to offer TOD, but you really must cease with the personal attacks.  It only hurts your credibility.  I would suspect that if you continue to go on the attack at every opportunity that people will begin to just skip over the post when they see Hothgor attached to it.  I'm sure you don't want that.



Oh, right.  And you throw out an article on a 25% increase in oil that you seem to take as gospel.  The article is so filled with obfuscations that there isn't one clear sentence in it.  One thing for sure, the field won't be pumping oil for a while.  
Apparently you failed to realize that this is one field that WT has touted in his production forecast that now has had a significant upswing in probable production rates.  I wonder how many more fields will experience a similar upswing on his short list...
Kazakhstan wants audit of rising Kashagan oil costs

"Delays and capex overruns are increasingly being seen as an industry issue, not just specific to Eni or Kashagan," analysts at Lehman Brothers said earlier this week in a research note.

Costs are rising, projects are being delayed, but those good ol' decline rates just keep rollin' along...

Well, why don't we just argue whether or not 2006 production and price data support  my January, 2006 prediction that we are facing a "permanent net oil export crisis."   Note that this prediction was based on HL analysis.

Note that the combined net exports from the top three were basically flat in 2005 (18.5 mbpd) compared to 18.31 mbpd in 2004, and as I warned, they are now down versus 2005, while oil prices traded in a range that was 50% to 100% higher than the previous (nominal) record.  Also note that the growth in consumption in Saudi Arabia and Russia was vastly higher than I would have guessed. I was using a 20% increase in consumption over a five year period, while the KSA/Russian increase in one year was 13.2%.

Posted on Friday January 27, 2006 at 2:47 PM EST
Guest Post by Westexas

Hubbert Linearization Analysis of the Top Three Net Oil Exporters

Let's assume that we have a world where all oil production is from one country--Export Land--that produces 20 mbpd, consumes 10 mbpd, and exports 10 mbpd to oil consuming countries around the world.

Export Land hits the 50% of Qt (URR) point, and over a five year period production drops by 25%.   Over the same time period, Export Land's consumption increases by 20% to 12 mbpd.  This causes Export Land's net exports over the five year period to fall from 10 mbpd to 3 mbpd, a decrease of 70%--resulting from a combination of increasing domestic consumption in Export Land and a 25% drop in production.

Let's look at real world production with our hypothetical Export Land as a model.

Based on the EIA's list of top net oil exporters, those exporting at least one mbpd or more, the top three net oil exporters in 2004 were Saudi Arabia (8.73 mbpd), Russia (6.67 mbpd) and Norway (2.91 mbpd), a total of 18.31 mbpd.  This is slightly less than half of the total net oil exports from the top exporters (38.31 mbpd).   I suspect that total world net oil exports are probably on the order of 42 mbpd or less.

 Stuart's original Hubbert Linearizaton analyses for Saudi Arabia and Norway indicate that Saudi Arabia is 55% depleted, Russia is 88% depleted and Norway is 67% depleted (thanks Khebab).

I believe that Saudi Arabia is on the verge of a long term decline in production.   Texas, the former swing producer, with a similar P/Q intercept, showed a 29% drop in production over a 10 year period after its 1972 peak.

 Russia peaked at a broad plateau around 53% of Qt, and production is down about 25% from its peak.   Although production has been increasing recently, in all likelihood this was just compensation for the dramatic drop in the Nineties, which was probably due to both natural depletion and political problems after the Soviet Union collapsed.  If this assessment is correct, Russia is on verge of a dramatic collapse in production, almost certainly in the double digit percentage per year range.

 Norway peaked at 55% of Qt, and has been following the predicted downward slope exactly as predicted.

 As predicted by Hubbert Linearization, two of the three top net oil exporters are producing below their peak production level.   The third country, Saudi Arabia, is probably on the verge of a permanent and irreversible decline.   Both Russia and Saudi Arabia are probably going to show significant increases in consumption going forward.  It would seem from this case that these factors could interact this year produce to an unprecedented--and probably permanent--net oil export crisis.

Well, why don't we just argue whether or not 2006 production and price data support  my January, 2006 prediction that we are facing a "permanent net oil export crisis."   Note that this prediction was based on HL analysis.

It is not clear to me why you aren't interested in debating what I proposed we debate: Whether your import/export hypothesis is evidence of a peak in oil production. That is the challenge I put forth, which you accepted. I have no doubts that once oil production peaks, there will be an export crisis. But what you have been repeatedly suggesting is that falling imports, as predicted by you, support the fact that oil production has peaked. It is this claim that I dispute, and this claim that I wish to debate.

Again, here is my proposed resolution:

Resolved: Evidence supporting a peak in world oil production is that world net oil export capacity, as predicted by Jeffrey Brown, is declining.

Once again I ask: Is this, or is this not what you have suggested? And if it is, do you wish to debate this point?


I have made three central points (all primarily based on Khebab's HL analysis):  

(1)  We are facing a permanent net export oil crisis:  http://www.theoildrum.com/story/2006/1/27/14471/5832
(January, 2006)

(2)  Deffeyes is probably right that world crude + condensate production peaked in 2005 (primarily using the Lower 48 as a model for the world):  http://www.energybulletin.net/13575.html
(March, 2006)

(3)  Saudi Arabia, in 2006, is probably at the start of a permanent long term decline in production (using Texas as a model for KSA):  http://www.energybulletin.net/16459.html
(May, 2006)

I would be happy to debate any one of these three points, or any combination of two them, or all three of them.

I could be wrong, but I don't think that I have ever asserted that #1, in and of itself, supports #2.  

I would point out that:

(1)  Net exports by the top three net oil exporters are down;

(2)  World crude + condensate production is down;

(3)  Saudi oil production is down.

For what it's worth, I would like to see a debate on claim #1: We are facing a permanent net export oil crisis. (Please clarify whether "we" is the U.S. or the world, and exactly what constitutes a "crisis"). Claim #1 is narrower than the other two and as such might make for tighter and more focused arguments during the debate. Plus, claim #1 is different than the more generic peak oil claims which are going to be debated endlessly on these pages and elsewhere, until an irrefutable peak is called with the benefit of several years of hindsight.

Robert, if claim #1 is true, that is arguably another manifestation of your "peak lite," which I understand gives rise to peak oil symptoms without requiring an actual production peak. In the "export land" model, all that is required for peak lite is domestic consumption rising faster (in absolute terms) than production.

I must not be making myself clear, so let me try again.

Yesterday, in this post, you made a claim that imports were down, as you predicted, that the math seemed obvious, etc. You warned "I think that the only option left to us is a triage operation of sorts, with large parts of suburbia being abandoned."

You have made these claims before. Now, my contention is the import situation is readily explainable without implying that we have peaked. In my opinion you have used ad hoc reasoning to explain the import data, and I believe you have completely ignored data that did not fit your model.

It is that point that I challenged you to debate. I wish to debate the import data, and what they mean. Again, I ask you if you believe that the import data suggest that we have peaked? You have used (selected) import results to suggest that we have peaked. Will you debate that point?

There is no doubt in my mind that once peak occurs, there will be an export crisis. But exports can fall without peak having occurred. That is my contention - that the export data we have seen this year is a very poor argument in favor of Peak Oil. What you are saying is "If A, then B." But I agree with that. But then you are saying "We see B, and this supports A." I say that B, in this case, does not support A. Furthermore, I say that we aren't even seeing B; that the appearance of B is because you have cherry-picked and ignored certain data.

If you do not believe that your falling export hypothesis is evidence of Peak Oil (which I believe you have claimed outright, but you have certainly implied this) or you do not wish to debate this issue, then let me know. I have offered a couple of resolutions:

Resolved: The import/export model proposed by Jeffrey Brown provides compelling evidence that world oil production has peaked.


Resolved: Evidence supporting a peak in world oil production is that world net oil export capacity, as predicted by Jeffrey Brown, is declining.

I believe you have made these claims, and I am willing to debate either of them. What I am not willing to debate is that if oil production peaks, we will see falling exports/much higher prices. Frankly, I think that is pretty obvious.

The key question that I am trying to answer here is "Are oil imports down, and if so, why?" I believe that you think the answer is "yes, because oil production has peaked." However, I disagree with this answer. I would argue that even if oil production has peaked, this is not why we have seen the import data that we have seen this year.
The key question that I am trying to answer here is "Are oil imports down, and if so, why?"

I believe that world oil exports are falling, and I believe that they are falling because of a combination of two factors:  involuntary reductions in production and rising consumption in most exporting countries.  

I have authored or co-authored 10 articles on the Energy Bulletin plus the January, 2006 post on TOD.    Again, I may be wrong, but I don't remember ever arguing that lower exports--per se--mean that we have peaked.   So, you are asking me to debate a position that I don't think that I ever took, but I would invite you to peruse all eleven of these documents to see if you can find a specific example.

As I outlined above, I have repeatedly outlined the quantitative case for three central warnings/predictions using multiple graphs and thousands of words.  

The three specific things that I predicted and/or warned about are all--so far--coming true.  

Ummm...has the debate begun?

OK, lighten up guys...we want you two to remain friends.

I believe that world oil exports are falling, and I believe that they are falling because of a combination of two factors:  involuntary reductions in production and rising consumption in most exporting countries.

OK, I don't want to quibble all day about what we are going to debate. I think this statement will suffice. Will you debate this resolution:

Resolved:  World oil exports are falling because of a combination of involuntary reductions in production and rising consumption in most exporting countries.  

Again, I may be wrong, but I don't remember ever arguing that lower exports--per se--mean that we have peaked.

What you have argued, many times in fact, is that we are seeing falling exports, and this supports Deffeyes claim that we have peaked. In other words, "B supports that A has occurred." After all, what was the point of saying yesterday "look, imports are falling, batten down the hatches"? What I am saying is that import data doesn't support that view; that the data are easily explained from other factors. This is the particular point I wanted to debate (and "falling exports supports peak oil today" is the position that I believe you have staked out), but the resolution above shall suffice.

So, is that wording acceptable?

I'm really focusing on the top three, but we might as well adopt the EIA's designation of top exporters:

Resolved:  World oil exports are falling because of a combination of involuntary reductions in production and/or rising consumption in most of the top (one mbpd and larger) exporting countries.

Good enough, but this is a bit of a softening from the position you have been staking out. I might find after your initial essay that I really have nothing to rebut, because I may agree with the angle you have taken. What I wanted to debate was the disagreement I had with the statements you made yesterday ("imports are falling as I predicted, batten down the hatches"), but the resolution you have suggested might be good enough to get to the heart of the matter.

So, I accept that resolution. If you prefer, you can send the essay to PG so I don't get a sneak peak. I have no problem with leaving the essays open to comments if you are in agreement.

"Resolved:  World oil exports are falling because of a combination of involuntary reductions in production and rising consumption in most exporting countries. "

I know we promised not to butt in, but may I suggest you change "Resolved" to "Hypothesis".  I don't ever think WT has stated that he thinks what he is purposing is 100% for sure.  It's a working hypothesis.

I know we promised not to butt in, but may I suggest you change "Resolved" to "Hypothesis".  I don't ever think WT has stated that he thinks what he is purposing is 100% for sure.  It's a working hypothesis.

That's just the way debate proposals are typically framed. I understand that what he has is a hypothesis. What I want to do is discuss whether the observed import data support his hypothesis.

involuntary reductions in production

In ordinary words: because they have peaked? Isn't that exactly what RR is saying you are saying, but you are saying that you are not saying that?

Or words to that effect...

confused bystander {:/

In ordinary words: because they have peaked? Isn't that exactly what RR is saying you are saying, but you are saying that you are not saying that?

Yes, there is a bit of tapdancing going on, in my opinion. But I am willing to work with his suggested resolution. I think we can get to the heart of the point I want to make, although I think there will be some rabbit trails involved.

a debate about the debate    psst   my money is on westex
Mine also, and I would stick with HL being the point of reference and this makes the export land model logically follow suit.

I think that there is a problem here.  If we are going to split hairs on PO (2-5 yrs +/-) then after it becomes "rearview mirror" clear we will have wasted that much more time and money (similiar to Bushco's Iraq). Each week, month, or quarter, brings out a new minor point to get the next pissing match started.

What I don't get....Everyone seems to agree that there are few, if any, good options to replace liquid transport fuels - and the economic complications are bigger yet.

There is alot of money involved here.  Keeping us hopelessly "addicted" to the last barrel is very important to producing nations. I call into question postings with personal attacks - it makes me suspect. I think that WT has been the most vocal in a public way (TV, etc.) and is foremost in thier crosshairs.  Why not (also) trash the Hirsch report, Khebab's excellent work (among others), The CEO of Shell Oil, National Geographic, along with numerous articles that lend support to PO.

Paying someone to trash WT would be "pocket change" to the players involved. I would be naive (IMO) to think that they wouldn't.  I think there is something going on...WT must have stepped on someone's flying carpet.  

I think that there is a problem here.  If we are going to split hairs on PO (2-5 yrs +/-) then after it becomes "rearview mirror" clear we will have wasted that much more time and money (similiar to Bushco's Iraq).

I think some of you are seriously confused about my position. First, it is not his model I object to. I think the model is logical. It is that he is using current export data to sound the alarm. I don't think the evidence is with him on this, and if you want to put your money against me in that debate, I would be glad to take it from you.

What you don't seem to understand is that nobody is going to take PO seriously if we throw evidence out there that is easy to poke holes in. If someone says "Look out, imports are down, we are in serious trouble" I think they seriously undermine credibility, because I don't think the evidence supports this view. It was that which I offered to debate. This is not about pinning an exact date on the peak. It is about making sure the evidence we use is good enough that we will be taken seriously.

But if it makes you feel better to believe that there is a conspiracy out to get Jeffrey, there really isn't much I can do about people's delusions.

As opposed to those who I will not name Robert you appear to me to be more moderate.
Perhaps I should also clarify.  When I read about all the revisions to production numbers going back in some cases a few years then you have to wonder about their current pertinence.  However, there will eventualy be a tipping point somewhere and WT thinks it is now.  I think  this data problem is why HL as a prediction tool looks about as good as anyone has ever come up with (is there another one?). The longer wave - like a long wheel based car- smoother ride, fewer bumps.

My other point is that there looks to be a swelling ammount of articles such as the CEO of Shell in the Oregonian, National Geographic, etc. about the looming crisis.  This makes me think that if WT grabs a number set that doesn't have a long enough history to justify it's use to you and others that the perponderance of other evidence makes me wonder why is it so important to pick it apart(such as the Rig Count vrs production blog at the top).  

I think this is a very serious problem we are facing.  People will fall all over the range of belief to contempt in PO.  The economic implications are stagering IMO, and I can easily see that there will be some people who will try and denounce anyone who rocks the boat and WT is a boat rocker.  If you think I suffer delusions about people out to attack WT then I wonder why you find it so implausable that it couldn't happen.

The last point I'm trying to make is that this is a longer term(longer wave form) issue.  I think so many people lock onto a week, month or what ever period that you want that debunks PO and grind that number into the dust or hold it up as proof that there isn't a problem. Meanwhile we are taking a slow but never ending march to the enivitable.

The items(trends) below I think speak louder than anything either you or WT could possibly say to the other about anything in the short term of the last year.
1)Discoveries vrs. Production/Consumption last 10 yrs or so.
2)Rig count vrs. Production (look at todays blog.)

IMO the writing is on the wall if we want to look.

I'm in no way an oil person(botany/nursery production) and you are very welcome to dismiss anything that I have to offer.  I believe the crisis is set to unfold - when is a more minor issue IMO.

Unfortunatly I believe that there is no way you are going to steer public perception with or without accurate short term number trends. The change is too fundemental for people to consider for more than a couple of nano seconds.  They don't want to hear that technology won't save them.  They do not want to work in a hot dusty field.  They don't want to be cold, hungry and poorer. They don't want to hear this is thier childrens future.  IMO it will take a crisis and then it may not be clear what caused it.

I wish you all the best and I look forward to your debate.  
Whether it will futher PO awareness and needed mitigation I have serious reservations.  IMO you would be better off in joining forces with WT and getting the word out.  


IMO you would be better off in joining forces with WT and getting the word out.

Well, I am ultimately on his side. I just think we need to police ourselves, and I don't think the export data this year support the point he has been trying to make. My belief is that by debating this, it will help tighten up and strengthen his argument. I can tell you if he threw that out to the scientific community (the export claims) they would eat him alive. You have to have a tight model if you want people to listen.  

I am very much looking forward to this debate.

In three months, after the EIA year end data has come in in early March, I will have a debate of my own. I will try to show, with the data, that we are post peak. I am currently building my case and it looks rock solid.

To quote Matt Simmons, "Data trumps theories every time."

Ron Patterson

Darwinian, hopefully we have 3 months to wait for the "debate" before T1 Chaos sets in like the Winter Chill hitting parts of the US now.

We have seen Peak Oil.  All that is left to deny it are ProJECtionz and lint picking.

To bad the Geopolitical Blizzard is "arriving early" (according to Mahmoud Ahmadinejad) and will obscure the view from the complacent Ivory Towers.

"...the Winter Chill hitting parts of the US now"

Speaking of which...Kansas City is in the middle of a frickin blizzard right now...and it's a bone-chilling 18 degrees F.  Not three days ago, we were pushing 75 degrees.

I hope Toto ain't in Kansas anymore - or has a highly efficient dog house ;)

The same has started in my neck of the woods... time to get to work on that superinsulation, passive solar, radiant floors coupled with High Mass storage for solar heating...

Run, rabbit run.
Dig that hole, forget the sun,
And when at last the work is done
Don't sit down it's time to dig another one...

Re: Carbon Taxes

The promise of carbon taxes is the hope that they will cause a utility, for example, to conclude that it does not make economic sense to pursue a new coal fired plant that does not sequester co2.  Therfore, they will choose sequestration or some other approach like natural gas or wind.

If the carbon tax did not elicit that decision, then many of us would want to raise the tax until it did.

But, if the result is the same, why wait for the carbon tax to be passed, implemented, and responded to. That approach will take years. In the mean time, dozens of new coal fired plants might be under construction or completed.

The clearly egregious and harmful technologies need to be prohibited now. Utilities like TXU of Texas need to be told to take those coal plants off the table now. After all,  they are rushing through these plants so they will be well under way before congress or others come down with the carbon tax hammer.

Tell it to Scalia.

He wants a timetable for the Cataclysm.

I think you have to clearly illustrate the effects that CO2 will have on Duck Hunting  (typo was 'Dick Hunting'..  I think I have to put the tinfoil up again)

Hello Jokuhl,

If Scalia and the rest of SCOTUS want a timetable--forcibly parachute them into Darfur, Zimbabwe, or some other ravaged African country--I think once they overcome their societal jetlag: they will reset their GW + PO timetable clocks appropriately.  =)

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

I think this is right. Even if local opposition to coal gets a lower court decision in their favour http://news.ninemsn.com.au/article.aspx?id=65100 ultimately the Feds have to set the rules. When the coal plant is already up and running a soft start carbon cap puts the emissions in the baseline.
This is why the major form of enforcement needs to be plain carbon taxes, no "tradeable permits" issued to existing emitters (and rewarding them for having created the problem).
I'm surprised this hasn't gotten any attention yet:

Economy stronger than first thought in third quarter.

Not only was the economy stronger then expected last quarter, but growth is expected to continue at a moderate pace through 2007.  I wonder if its possible for the Feds to be that wrong.  After all, aren't we supposed to see 0.0% growth in the 4th quarter?

And just for 2 seconds of gloating, I predicted that the GDP would be revised up around half a percent here

"My 8-ball is telling me that Q3 GDP will be adjusted up 'around' half a percent, and the housing 'crash' will turn out to be a 'dud' for the PO community yet again."

I will stick with what Nouriel Roubini has been saying.  Like this most recent piece.

Goto the link because he has many hyperlinks in the text.

Expect Fourth Quarter U.S. GDP Growth to Be 0%  

After correctly forecasting Q2 and Q3 growth I have been arguing for a while that the U.S. economic slowdown will worsen in Q4 and 2007 and lead to a recession by, at the latest, Q2 of 2007. Professional forecasters - who overestimated by a wide margin growth for Q2 and Q3 - most recently deluded themselves into the belief of a Q4 rebound of growth to 2.6%. I have instead been arguing for months now that Q4 growth will be even lower than Q3 at between 0% and 1%. I am now comfortable to forecast that Q4 GDP growth will be closer to 0% than 1%.

My 0% growth forecast for Q4 is based on a series of recent economic indicators suggesting that the economic slowdown is even worse than I had initially predicted. Today's data on faltering durable goods orders and falling consumer confidence strongly signal that the housing recession is spreading to consumption and investment. The housing recession is becoming a non-residential construction recession, an auto recession, a manufacturing recession, a real investment recession and soon enough a retail recession. Today's figures on durable goods and on consumer confidence, together with a more sober assessment that the holiday retail sales season is off to a mediocre start, lead me now to forecast that real growth in Q4 will be 0%. Consider the various components of aggregate demand and supply:

  • The housing recession is getting much worse as housing starts fell over 14% last month while building permits fell another 6%. Housing is nowhere near bottoming out as the glut of unsold homes is rising, prices are falling, defaults and foreclosures are  rising. Expect housing to reduce growth by at least 1% in Q4 and throughout H1 of 2007. Expect job losses of at least 700K in housing in the next 12 months. And today's blip upward in pending existing home sales is exactly a noisy blip of no relevance: it does not include the sharply rising home purchase cancellations. In the meanwhile existing home prices are now sharply falling and the glut of unsold homes rising to another high (7.4 months of supply).

  • Non-residential investment - that was growing at annual rates of 20% and 14% in Q2 and Q3 - is also faltering - based on the latest non-residential construction spending data - as empty housing "ghost towns" are leading to a sharp contraction of non-residential construction (why to build shopping malls and offices around empty new residential areas?)

  • The auto sector and the manufacturing sector are already in a contraction of production while manufacturing capacity utilization is decreasing. Manufacturing is already in a recession with falling output and employment.

  • Durable goods orders for the first month of Q4 are showing a dramatic drop, a 8.3% headline fall and a  1.7% fall even excluding the volatile transportation component.  Orders for non-defense capital goods excluding aircraft, a good proxy for future corporate investment, fell a whopping 5.1%. Thus real investment in software and equipment by corporates is off to an annualized 8% drop at the beginning of Q4. Since there is no reason to expect a recovery of real investment in November and December, real investment in software and equipment will be negative in Q4 giving a negative contribtion to growth. Thus, all three components of fixed investment - housing, non residential and software and equipment - are likely show a contraction in Q4 given the recent data.

 - The retail sector  and real private consumption is off to a mediocre start in Q4 and the holiday season in spite of the initial spin - that turned out to be mostly smoke - about a sharp rise in Thanksgiving weekend sales. The fall in sales at Wal-Mart and other indicators actually suggest a weak holiday season for retailers. Same store sales at retailers increased year-over-year 2.6 percent in November, the smallest increase since March, the International Council of Shopping Centers said today. 2.6% y-o-y nominal growth means negative real growth once you adjust for inflation. Consumer confidence is sharply down - based on data reported today - in spite of lower gasoline prices (and oil prices are now rising above $60 a barrel). Consumers are nervous and more pessimistic about their current and future conditions and about job prospects as real median wages are not growing much, the labor market is softening, household savings are negative, housing wealth is falling and housing and consumer debt servicing costs are rising.

  • The labor market is weakening. 92K jobs only created in October, mostly in government, health care and burger-flipping food sectors. Employment falling in housing, manufacturing, retail and temporary jobs. And the labor market conditions of today's consumer confidence report were also weak. The labor market differential (the share of consumers reporting jobs asbeing "plentiful" less the share reporting jobs as being "hard to get") fell from 3.8 in October to 3.4 in November. And forward looking indicators of the labor market (Help Wanted Index and its online equivalent from Monster.com) show a sharp slowdown from the rapid growth of early 2006.  Expect negative job creation in the next few months and a sharp increase in the unemployment rate as job losses in housing, construction, manufacturing and retail dominate modest job creation in some service sectors.

  • Inventories increased 0.8% in October. The inventory to sales ratio has steadily increased from 1.30 in December 2005 to 1.40 in October. This rise in inventories relative to sales strongly suggests a likely downward inventory adjustment in the next few months and further manufacturing production contraction ahead as firms cut production to reduce the inventory of unsold goods.

When you add it all together on the demand side and the supply side it comes to a 0% growth for Q4. Hard landing and recession are ahead for the US economy and the  wishful thinking forecasts of the consensus that growth will sharply recover in Q4 from the anemic Q3 level are being shattered every day as the onslaught of bad macro news increases by the day.

Update. I am in good company in predicting a sharp Q4 slowdown and a recession in 2007:

  1. As reported in a Bloomberg interview Shiller of Yale Says Housing Downturn Could Lead to Recession  

  2. Deutsche Bank is now revising down its U.S. Q4 growth forecast to 0% from its  previous 1%:  

Also take a look at the #7 reason in this article.

Eight Market Spins About Housing by Perma-Bull Spin-Doctors...And the Reality of the Coming Ugliest Housing Bust Ever....  

You do realize he no longer 'correctly predicted' Q3 growth, right?  How can you base your entire argument on that premises when you have now been proven to be wrong?

Posting a giant article about it just paying lip service to a now dead horse :P

And housing data released just days after Greenspan said "the worst may be over" was worse than ever before with housing starts down 27% year over year, amongst other things. Wal-Mart is telling investors this will be one of their worst years in a decade.

""As you know, a substantial correction is going on in the housing market," Bernanke said, using stronger language than he had in recent months, when he described the real estate cool-down as "orderly." The process is one of the "major drags causing the economy to slow," he said." -- Ben Bernanke discussing the housing slump.

Walmart sales drop for the first time in a decade.

Now, on top of all this, the stock market is nowhere hear its 2001 high point when you factor in inflation. You can even ask the Federal Reserve Bank of Minneapolis questions about inflation and they have a web page that will cheerfully calculate what a dollar value then would be now or vice-versa. So the roughly 11,700 Dow high in 2001 won't even be matched til the Dow hits about 13,300 (or higher depending on how many years it takes to get there).

Finally the government is fooling you, Hothgor. Each year the underlying methodology of gathering statistical information changes in important but significant ways. John Williams has been tracking the shadow statistics that remove these changes so you can compare year to year data realistically. He's been doing it for decades and his most important data is via subscription only but he does release some general information to the public. You might want to familiarize yourself with what he is saying and has said. He's been right far more often than any other economic source I can recall. For instance, did you know that in recent years the government has been weighting the inflation chart with a factor they call "hedonics" (as in hedonism). That is to say, that washing machine you bought did not cost you 20% more really because some of that increased cost was the "pleasure" of using its shiny new electronic controls instead of noisy old dials. (That's a sampling of how absurd the manipulation of government stats has become.) So the real inflation number is reduced because, perhaps, you are filling your car with that "newer, better" reformulated gasoline and it gives you "pleasure" despite costing more. We're way off in 1984 country now where Newspeak is the norm and you are totally brainwashed into accepting it.

If the entire worlds financial market trusted the shadow statistics website, we'd all be !@#$@$.  Fortunately most people are a bit more rational then that.
That's right's Hothgor,  come back to CNBC... Come back to Kudrow,,,Listen to Goldman/Fed, They are here to help, Things are ok, The sun is out,  You are getting sleepy....

Thanks Hothgor, Got the affirmation I wanted from your response. Williams and ShadowStatistics.com is bunk right?

Good luck with your worldview... What ever your mission is to spread it.

My last reply post to you sir.

Good day.

<ouch> sweet!
that may well be however imo the ministry of truth will report a nice gain in 4q2006 gdp doubleplusgood
Really?  That's funny because they also just said they were WRONG on wage growth....

http://www.marketwatch.com/news/story/feds-big-inflation-worry-gets/story.aspx?guid=%7B662FC525%2D23 EA%2D4B73%2D97CC%2DF8CF11E912B8%7D&siteId

A huge spike in wages and salaries in the second quarter proved to be an illusion, according to the latest data from the Bureau of Labor Statistics and the Bureau of Economic Affairs.
The revisions released Wednesday show that growth in unit labor costs (and therefore in inflationary pressures) has been much lower than assumed. That's good news on the inflation front.
But they also show that consumers don't have as much money as everyone thought they did ... $100 billion less on an annual basis. That's bad news for growth.

While everyone seems to have labeled you as a troll, I advise you to sit back and grab a beer because this is going to get ROUGHT next year.  Hothgor who really cares about numbers that are fake?  You and I can both look around us and make our own judgements especially when you talk to those around the country.  Tell me who is making SO much more money today than a year ago today?  I know of only a few and that's because they have a nice union contract with again, BOGUS, cola #'s, but at least it's something.  I have been told in no uncertain terms that I better not expect anything.  Thats fine since I'm looking to leave anyway once the ink sets on that degree.

Let me add one last thing.  I don't know where to find the backup info, but I recall a rather telling fact about economists and their ability to predict recessions.  In 2001 prior to the 9/11 attacks only 2 of like 60 economists surveyed believed we would have a recession in the coming two quarters.  It turned out years later when ALL The data was in that at the time OF the survey, we were already in a recession.  Two people had an idea and these are the "smart" ones.  Now go buy a box of salt, you need it. :)

Nah, he's not a troll. I think it's high time that we welcomed George W. Bush to the TOD community! Just to be sure, though, ask him if Iraq is in civil war.
If we are doing so great, please ask your 8-ball why the dollar is as low as it has been in the past 25 years, and dropping like a rock.
Dollar is at it's lowest point vs the Euro since 2005

I didn't realize 25 years on TOD was in fact only 18 months in the real world.

"The dollar has tumbled about 2.5 percent against the euro in the five sessions through Tuesday. Although the greenback came back a bit Wednesday, the dollar's near its weakest against the Euro since March 2005. The dollar also fared badly against the British pound, though it's done slightly better against the lowly Japanese yen."

Now I highly doubt that the Dollar could only decline that much vs the Euro, but still be down to a 25 year low vs all other currencies worldwide.  But perhaps your referring to something else?

They also go on to talk about how currencies have on averaged followed a 6 to 7 year cycle of major fluctuations up and down.

"Currencies typically have a six- to seven-year cycle of adjustments, said Quincy Krosby, chief investment strategist at Hartford Financial. "If you look at February 2002 as the strongest point in the cycle, I do think [the dollar] will ease a bit more. But that's also just part of the adjustment process that began [almost seven years ago] and is continuing.""

Yes, I'm trembling at the thought.  The Dollar clearly is headed towards rock bottom, and were all doomed just like you said! <chortle>

And as for why the Greenback didn't rebound yesterday on the GDP report:

"Perhaps the dollar's muted rebound against the Euro Wednesday can be traced to the news that new home sales fell a larger-than-expected 3.2 percent in October, quelling hopes that the worst of the real estate slump was over."

The housing market is continuing to cool, though there is little in the way of economic indicators that consumer spending is being so adversely affected that we are going to enter into a recession in 2007, much less headed for 0.0% economic growth in the 4th quarter.

And for future reference, I commented on the Wal-Mart problem earlier here.  And just for reference:

"The problem with wal-mart is two fold:

   1.  Their target client group feels significant pressure from high energy/food costs.  That is, the higher these costs get, the less this group buys in terms of disposable goods and services.  The first businesses that will experience the squeeze in profits are those that primarily cater to the low income group.  But this can not be used as an indication of the economy as a whole: 95% of the gross income earned annually in the US isn't used in these areas.  You need to watch where the money goes, not what the poor do.

   2.  Prices can only come down so much.  There gets to be a point to where no matter what volume you purchase a good or service, the price will simply not decrease by any significant amount.  I know this sounds wrong when compared to the 'economies of scale' theory, but that only applies to rational goods, and as many of you noted, can not continue forever in a non-flat earth.  Wal-Marts success has been based on continually decreasing prices for 'bargain hunters'.  When you can no longer do so, your growth hits a wall."

And what do you know, Wal-Mart has suddenly hit a brick wall in profits.  But lets at least be honest about their sales decline: It was a pathetic 0.1% drop for the month of November.  DOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOMED!!!

Look Ma, I can quote too.  My new and improved quotes even come with citations.

"The USD is now at 14 year lows against the Sterling and EUR/USD is only 4 cents away from an all time high."


I bet the Euro makes the 4 cents necessary for an all time high.

Exactly what pleasure do you get from posting on this website?  If you don't see the serious economic problems looming for the US and the world, you really need to take your blinders off.

Perhaps if we start adding up the current lows for the Greenback compared to every major currency in the world, we will get to around 25 years :P
He's 24. He's got a brand new mortgage on a house bought at the height of the bubble. I'd assume he's also carrying at least some college debt and like most young Americans some credit card debt as well.

My guess is he really can't afford to "see the serious economic problems looming for the US and the world", ie cognitive dissonance

But as to why he posts here, you got me.

Actually, my house fell through.  The homeowner failed to disclose the property had chronic plumbing problems and so I backed out before closing :/  Shame too, it was such a nice house, but I didn't feel like spending 15k to replace the works.

BTW, I have 0 credit card debt, and I worked my way through college.  I'm what you could call a penny pusher :P

I stand corrected and withdraw my supposition.

Glad to hear about the debt free situation. Sounds like you are well on your way to ELP.

Instead of my (incorrect) guessing, Why are you here?

Peak Oil used to scare the shit out of me.  Now, I can see a few hundred possible silver BBs to the problem, and I don't expect there to be any catastrophic disturbances that destroy mankind.  EPs recent article was a huge eye opener too :)
Engineering Poet.

His post about using charcoal as a source of power production and for agriculture needs was very impressive :)

Personally I remain unconvinced about the Silver BB scenario. I was looking there for some hope for a while but...

There are too many technical hurdles that must be overcome. They are doable, but nobody is actually doing any of that doing.
If you could point to massive investment in battery tech, infrastructure, alternative fuels, conservation etc etc I would feel a lot better.
While things like the Tesla EV and super capacitor batteries are promising they are a long way from showing up in my driveway and even longer from showing up in the driveways of India and China.

Don't even get me started on the social engineering it would take. Even you admitted that getting Americans to take drastic changes (space heaters, closing off unused parts of the Mc mansion etc) are wishful thinking. Next we have to convince the Chinese and Indians they can't have a middle class lifestyle too. Good luck with that.

Where do you see hope?

There has been a lot of progress towards a future without hydrocarbons.  For starters, Toyota, Nissan and GM have all announced plans for plugged in hybrids, and in the former 2s case, full EVs in the next 3-4 years.  Additionally, Solar MW capacity has been growing at an exponential rate.  And next year, Wind power is half of all planned power increase capacity across the nation.  Additional breakthroughs in regards to a thorium nuclear cycle are both truly innovated and extremely promising for long term electrical power capacity.

Certainly there are some dark spots in the future: wars with oil producing nations, massive new coal plants, Americas love affair with the gas guzzlers, ethanol, but the picture overall is no longer as dark as it has been in the past.

I suspect you have just a wee bit too much faith in the progress of technology. What did you study in college?

Full EV are more than 3-4 years away (where did you get that info). More likely 10-15 years away from widespread adoption.

Solar is growing at an exponential rate because the install base is ridiculously small. It has very big scaling problems.

Wind Power is half of all planned power increases, that is true and a bright spot. But increases in electricity production are a tiny fraction of the installed base. And as with solar, you can't rely on it for baseline generation.

Thorium nuclear power? Give me a break. I have a lot of hope for nukes, but that's a generation or two away.

And this is our best hope? All these BB's are dependent on cheap oil. It will only take a very small shortfall in oil production to cripple the world economy. Ask anyone who lived through the 70's oil shocks what that was like. And that was only a short fall of a few percent and lasted only months.

And I would still like to see the massive investment the world is taking to implement these BB's.

That actually is the scariest thing. Its not that the US couldn't massively ramp up wind/solar power. It not that industry can't develop better batteries to power EVs.
The scary thing is nothing is being done.

If peak was 20 years out we would have a good shot at mitigating the worst of the problem. But with peak 5 years out (or worse, 1 year ago) and next to no investment now, what hope is there in these techs?

  I believe we have a lot of potential BB's too.  I have to say we're just painted way into the corner because it takes a lot of BB's to do what just a couple Bullets would do, however.

  I try not to make sweeping 'predictions' about where things will go with energy or climate, but I do think that our margins-for-error and cushions are increasingly scant, so it wouldn't take much of a bump to put us in a very bad spot.  (ie, slimming grain stocks, household savings vs debt, local preparedness and community involvement for emergency mgmt, aging grid, reactors, highways, air fleet.. etc)  So your 'not expecting disastrous catastrophes' is where I see it differently.  I don't say they definitely WILL happen, just that there are now clearly several massed at the borders, and we are poorly prepared for, and in denial of most of them.  Leaving aside climate and energy for a second, this War on Terror has been so poorly concieved and conducted that it has both increased the world's vulnerability to desperate Fundamentalist groups (and bringing the Iraqi insurgents or Al Quaeda into the black with black-market oil and Afghani poppies) , and at the same time weakened the US in economic, diplomatic, military and energy fronts.

The BB's are great.. I just don't know how well they work against Tidal waves, literal or metaphoric.

The thing is, doom has always been just around the corner.  Nothing is different now then it has been in the past.  Instead of the cold war where we faced nuclear annihilation, we face a war on terror.  Instead of the black plague, we face a growing pandemic of antibiotic immune bacteria.  Instead of a potato blight, we face the destruction of viable farmland by suburbia and ethanol production.  And instead of a new ice age, we are faced with global warming.

We have somehow managed to plug along for a few 1000's years thus far, I highly doubt that will change in the future.

"We have somehow managed to plug along for a few 1000's years thus far, I highly doubt that will change in the future."

The human race has survived for quite a few thousand years, and I doubt anybody thinks we won't survive for quite a few more.  However, human history is full of rises and catastrophic falls of civilizations, death, disease, fanime, etc., etc.  In fact, every single civilization has declined or collapsed, every single one.

The fact that we have easily survived and generally prospered over the last century, during the greatest expansion in energy usage ever, means absolutely nothing when compared to the scale of history.  What in humanity has changed so drastically that you would think that we are no longer subject to setbacks?  I would argue that modern society is much more subject to potential setbacks when compared to ancient rome, the aztecs, etc.  Our overpopulated, overused world and our interconnected, extremely dependent civilization is (IMO)in a very fragile situation, and we are in grave danger.

You can't look at the last century and think that is how things are supposed to progress forever.  I am sure that the yeast would think (if they could think) that their exponential growth in the petri dish is the only way life could exist, and that it would go on forever.

We citizens of TOD might get lucky and have things muddle along for the next 50 years.  We also might have an economic collapse next week and you will be picking through landfills in a year (if you are alive).  What I do know is, short of the discovery of an unlimited, clean energy source, and invention of interplanetary migration, our civilization is doomed.  History shows that without continual expansion, collapse is inevitable.


Here is an article I think you would like. It's not new, and I probably discovered it on this site when it was originally published. I was cleaning up my bookmarks and just reread the article.

The Story of Wheat

Thanks for the link!  I'm adding that to my favorites list :)
Hello TODers,

Apropos of nothing except being in Europe on business/pleasure:

I have seen the future and it looks a lot like Holland. New, GINORMOUS wind turbines; solar panels atop the sound barriers along the highway powering the roadway lights; small cars that go just as fast (seemingly faster!) than SUVs in the States while using a lot less gasoline (don't feel as safe however); smaller, more compact houses; hot water at home that is heated as needed, no constantly-filled hotwater tank; a bicycle culture; multiple streetcar, rail and bus public transportation options...

And gasoline at around $7 a gallon!

And a fully-functioning first world economy/culture!

And beautiful women everywhere! (Including my Dutch wife).

Maybe there is hope after all if we all follow this model? (Not necessarily the wife part, although I'd recommend it).

Too bad the other part of Holland wont be coming over, like I dont know - social responsibility.

You never know - if the government gets desperate enough for tax revenues....  Anything could happen.


The Dutch area relatively homogenious group, hence they enjoy Dawkinsian coherence.

The Dutch are not sending billions (or the equivalent for their economy) of dollars to Israel

The Dutch are not the Hessian mercenaries of the word, as the US troops are.

The Dutch are not funding an enormous military

The Dutch I believe have a sort of "social welfare" state of the type that works well with genetically related populations, certain things like housing and education and job training and medical care are fairly much guranted.

Among the Dutch, lot of things like drug problems and teenage pregnancy are treated as medical rather than as crimes.

Hence they do not have a huge prison-industrial complex.

They probably have fairly strict anti-usury laws.

This is the way the US was heading until the international capitalists realized it would be much more profitable to them to import vast numbers of other tribes from other nations, remove usury laws, make more and more things illegal and punishable by unpayable (for the lower class) fines or prison time, then have prisoners work for 10 cents and hour, subsidize oil and the auto industry and form society to make Americans as dependent on oil as heroin addicts to junk, and so on.

George had me sold at "beautiful women everywhere", but these are some good points too.
While the future may look a lot like Holland, let's hope, in the future, that Holland is not inundated by rising ocean levels.

We need to create our own little Hollands throughout the U.S. but more than likely this will only occur by necessity, not forethought.

Aha and that brings me to what I was going to add to an already long post, that Steve Sailor (www.isteve.com) is probably correct that the US will break up into ethno-states.
The future won't look like the Netherlands (Holland is a province of the Netherlands):

- the Dutch have a famously egalitarian society (biologists think this may also be why they have become the world's tallest society-- whereas a generation ago Americans were taller, even adjusting for ethnicity, the Dutch are now taller).

The world, by contrast, is getting less equal (within countries) not more.

  • the Dutch have the multicultural problem in spades: the recent murders of a right wing gay politician (only in NL could you have the leader of a right wing party be a public and flamboyant homosexual), and of a film maker making an anti-Islamic film, have underlined the problems between the rapidly growing Islamic minority and the rest of the society

  • along with Bangladesh and some Pacific Islans, the Netherlands is the first country to go as the sea level rises

There is much to admire about Netherlands:

  • on the economic front, the combination of a high level of social security with job market flexibility and low unemployment;

  • on the social front the functioning, high quality, welfare state;

  • on the libertarian front the relatively relaxed attitude towards the human tendency towards drug experimentation (note: Netherlands is not actually a place where drugs are legalised, that is a myth-- the penalties for dealing in illegal drugs are quite severe)

However I don't think the Netherlands is the model for the future in a world where displacement and inequality are likely to be the rule, rather than the exception.
So...the USD is down today, DOW is down, crude (priced in USD) is up, gold is up...who the heck is profitting off all this?

Russia's RTS Climbs to Record on Oil; Lukoil, Gazprom Advance


Note that the exporters showing lower production are probably (IMO) going to see higher income, as prices go up faster than production is falling, thus reinforcing the positive feedback loop in exporting countries--causing domestic consumption to skyrocket.
. . . at least until they can't export any more oil.
It's very interesting that at the same time as Russian equity indices are soaring, those from the Gulf states are crashing.
Russian production (temporarily IMO), up

Saudi production (permanently IMO), down

The Saudi stock market collapse coincided with the first of the many "voluntary" cuts in production this year--the one where they announced that they couldn't even find buyers for their light, sweet oil, which resulted in my announcement that Texas has "voluntarily" cut production because we too could not find buyers for all of our oil, even our light, sweet oil.

The "rules" of this game are becomming more apparent each and every day.  

Those that wish not to see it will later shake their heads in dismay and think, "How could we have let this all happen?"

What did the Saudi princes know, and when did they know it:  http://www.ameinfo.com/financial_markets/Saudi_Arabia
And just how much are the Saudis investing in China and Russia now?  I would really like to know this!!!
The irony is that if you believe the HL plots, and I do, Russia is much more depleted than Saudi Arabia (regarding oil).  

My 2007 prediction is that the big news worldwide will be the confirmed simultaneous declines in Saudi and Russian oil production.

BTW,  I plugged in a continued 13.2%/year increase in KSA/Russian oil consumption and assumed a 5% combined decline rate (highly conservative IMO).  KSA/Russia's combined net exports would drop by close to 60% (by 9 mbpd) in five years.  

Remember that the average Saudi family has something like six or seven kids.  

The problem with this kind of analysis is that it is overly static. It is not clear to me that KSA/Russian oil consumption will increase at 13.2%/year for the next five years in the face of 5% decline rates, because if they allow their exports to drop as much as you suggest they will be forgoing a lot of revenue. Yes, the price of oil will probably increase, but they will usually be able to realize more oil revenue by suppressing domestic consumption and increasing exports. I'm not predicting they will do this, but the opportunity will be there, and the money will be attractive.
I think you are missing a major aspect of KSA economic strategy.

It is correct that KSA has a large and growing population and this population is dependent on the state for employment. KSA and other ME countries are moving from raw material exports to intermediate product exports. Instead of shipping NG they will ship polystyrene pellets or whatever. So more of a product's value chain will in future be located within the Kingdom. This will enhance earnings and job growth within KSA.

If more of the raw product is being directed to intermediate product mfg within KSA then there will be less available for export. As the growing KSA middle class seeks to emulate western consumption patterns (houses, cars, swimming pools, suburbs built on reclaimed islands, etc, etc) there will be less raw product available for export.

This is not simply a KSA strategy. In the past few years there has been a trend for energy intensive plant to be relocated from USA to be closer to source of energy supply in ME. US firms have moved plant to China to benefit from lower labour costs and they appear to be moving plant to ME to ensure access to needed energy supplies. Historically, this has been a standard pattern in development with nations seeking to avoid raw materials exports and instead seeking to move up the product value chain toward the export of finished goods.

This transition to finished goods export strikes me as central to WT ELM and I am slightly puzzled at RR's position. But I am looking forward to the debate to clarify both positions.

This transition to finished goods export strikes me as central to WT ELM and I am slightly puzzled at RR's position.

Simple. The export data this year are not evidence that a peak in oil production has occurred. In fact, at times this year the data contradict what one would expect if a peak had occurred. There are other logical explanations for export data, which I will delve into.

I was somewhat confused over your objection to WT's ELM. From your comment above you appear to be objecting to a tight couple between ELM and Peak Oil and any claim that current export data is supportive of PO within the current timeframe.

I do not see the precise date of PO as being very relevant. If Hirsch is correct then we encounter problems if PO is anytime in the next 20 years. If PO is 35 years out we will still have problems if we wait 29 years before commencing mitigation.

Saw another recent post from you today with regards to US capital being withdrawn from local plant and being moved overseas. This relocation of capital would be supportive of the ELM as plant operation would divert some portion of domestic supply and reduce the amount available for export. This consumption, together with increased consumption due to improved lifestyle of population, should have the result of bringing PO impacts forward in time irrespective of Geologic Peak  (GP).

Not to put words in your mouth, but am I correct that there are two issues here?
  1. Issue 1 is the ELM which I sense you would not have objection to.
  2. Issue 2 is using current export data as evidence to support inference that GP is occurring now.

Sorry to butt into your prospective debate, but I was a little confused over the terms of reference and perhaps Jeffery was as well.

Not to put words in your mouth, but am I correct that there are two issues here?

Correct. I have no issue with 1, as I agree that this will take place when production peaks. But, the issue is 2. I think it is being used to promote the idea that oil has peaked, and I don't think it supports that at all. My concern is that using weak evidence to support a viewpoint really exposes us all to criticism, and will cause Peak Oil claims not to be taken seriously.

Yes, I understand KSA's economic strategy of forward integration.

My point is different. Assuming that KSA and other major oil producers are subsiding domestic consumption, i.e. allowing domestic consumption to occur at below-market prices, then there is an opportunity cost to allowing such domestic consumption to occur versus selling the product on the open market; that is, they will be leaving money on the table. Indeed, some smuggling will doubtless occur to recapture some of this opportunity cost. But at a minimum, the leaderships in the major oil producing countries will be acutely aware of the money they are losing by subsidizing domestic consumption. (The subsidies can take the form of cheap gasoline, royalty payments to citizens, or low or no taxes.)

Some subsidies may be necessary, in the view of the leaderships, to avoid social unrest and to try to stay in power. Perhaps the best long-run strategy would be to gradually remove the subsidies as their economies strengthen and diversify.

Maybe Tom Clancy knows.
Does anyone really wonder why Russia is kicking everyone out of their resource booty?  

They see the writing on the wall and they want to capitalize as much as possible before the wolves come knocking at their door.  And when the pack arrives, they will have some big ass guns waiting to scare the wolves away.

So...the USD is down today, DOW is down, crude (priced in USD) is up, gold is up...who the heck is profitting off all this?

Me. I loaded up on my company's stock several weeks ago, when oil prices were falling and the stock was hovering near a 52 week low. That investment, currently a substantial part of my portfolio, is up 16% from my purchase price.

I'm profiting too, my portfolio has completely recovered from the September energies massacre.  In a secular bull market, long positions will always come through in the end.
Which is another reason why I think you have a real conflict of interest when commenting on oil supply, reserves, the future of Big Oil, and the like. It is not you personally, but rather your position; so please don't dismiss this an 'ad hominem' attack.

Is an employee of one of the major oil companies (Exxon Mobil perhaps?) who also owns substantial stock in that company more likely to take a position favorable to his employer and stock portfolio or a position unfavorable to his employer and stock portfolio?

If you think that is being unfair, then ask yourself this: would you have the slightest chance of being on a jury in a court case involving a lawsuit against a major oil company?  Of course you wouldn't. Why? Everyone would agree that it would be an obvious conflict of interest.

It's been my experience that engineers (like myself) tend to have trouble believing they could possibly have a conflict of interest. Engineers are highly analytical and objective by nature. As a result they feel that just because they are employeed by Company XYZ, they have no conflict at all in commenting on issues directly affecting Company XYZ. But somehow, their analyses almost always conforms to what is good for Company XYZ, often without their even realizing how they coopted their own thinking.

I have not read all of your many posts, but from the posts of yours that I have read, I don't recall a single a thing you have said that was strongly critical of Big Oil. This may just be a coincidence. Or it may not.

It is not you personally, but rather your position; so please don't dismiss this an 'ad hominem' attack.

How about if I just dismiss it? Period.

Honestly, I have a long track record, in the public domain, of what I am all about and what I support. If some anonymous poster called Joule wants to question my motives or objectivity, then that's his/her problem.

If you have an issue with a position I have taken, then let's rumble. As I have said before, even if I am the Crown Prince of Saudi Arabia, you still have to address the factual basis of my arguments. Focusing your arguments on who I am is in fact an ad hominen argument. Try to address the positions, OK? Going for the ad homs every time suggests to me that you are unable to rebut my position.  It seems to me that you don't have anything substantive to say, and are intent on wasting my time.

See, you're getting touchy again.

I am not rebutting your 'positions' because I generally agree with most of them, particularly as they relate to the downside of ethanol from corn.  Nor am I saying that your positions are necessarily wrong or dishonest because you work for Big Oil and own stock in Big Oil.

But what I AM saying is that there is a good reason why your or I hold a particular position, regardless of how rigorously and effectively we might defend that position. And that has to do with one's biases.

A person who has worked for Big Oil for a long time will natural have pro-Big Oil biases.  Those biases will often dictate what positions he intends to adopt. I know because I've been there. Once upon a time I was in the corporate environmental department of a large chemical company, which at the time was grappling with a whole bunch of regulatory issues. Well guess what: my 'position' at the time very much conformed to what the Chemical Manufacturers Association position was. Now that I have long been away from the chemical industry, I realize that in many regards they were wrong and the environmentalists were right.

So, if you are going to presume the role of self-appointed authority on all things oil, you should at least admit to yourself that you have biases and be honest as to what those biases are. If you were with GreenPeace and took an extremely greeny environmenal radical position, I would likely be busting your chops in the same way. (I'm an equal-oppurtunity pain-in-the-ass in that regard.)

And no, what you cannot seem to get through your head is that it is not WHO you are (one Robert Rapier), but rather WHAT you are (Big Oil employee and Big Oil stockholder) that raises some issues regarding point of view, etc.

And if you didn't want to waste your precious time, you wouldn't have responded, but I know that you love to argue and consider yourself an excellent debater.


A person who has worked for Big Oil for a long time will natural have pro-Big Oil biases.  Those biases will often dictate what positions he intends to adopt.

Well, Hubbert, Deffeyes and Campbell all worked for big oil, does that mean that their argument is invalid? Does that mean they have, or had, a pro Big oil bias? Does that mean that their arguments must be taken with a grain of salt? And I worked five years for ARAMCO, does that mean that my arguments have a pro-Bib Oil bias?

Rellly Joule, simply because someone works for an oil company does not mean that they cannot be objective in their arguments. If that is the only thing you can come up with to refute an argument, that they work for an oil company, then you have no argument at all.

It would behoove you to try to be a little more objective yourself.

Ron Patterson

First of all, I am not 'arguing' with anybody; I was just trying to point out that we should be aware of certain inherent pro-oil industry biases. That's all.

I should also point out that people like Deffeyes largely became highly vocal and publically visible AFTER they were no longer in the employ of Big Oil. It's a good thing, because if they had expressed many of their opinions earlier, they surely would not have been thus employed for very long. (Didn't Hubbert get into some hot water when he first came out with his theory?)

Yes, we could all be a little more objective - I freely admit that I've got many biases myself - but I think if one doesn't recognize one's own biases, then one is deluding onself.

Not everyone thinks that the oil industry is the benign force that some Big OIl employees who post here would like us to believe.

While maybe during the early 1950s  it was once true that 'What's good for General Motors is good for America', I think today one cannot assume that what's good for Exxon Mobil is good for America. It is probably getting less so with each passing year.

No, Hubbert did not get into hot water for his prediction. His bosses tried to change his mind but his job was never threatened. And I doubt seriously if Robert would get into hot water for anything he writes here.

But you miss the entire point. All you are saying to Robert is that his argument must be flawed because he works for an oil company. Well, that may be but just saying as much is no argument at all. You must point out any flaws in his argument in order to have any credability yourself. If all you can say is you work for an oil company, then as I said before, you have no argument whatsoever. You are just wasting bandwidth.

It is likely that everyone has biases and very good reasons for them. But searching for their biases is a useless endevour. You job, if you choose to accept it Joule, is to find the flaws in the argument, not search for any biases a man or woman may have. A man once wrote: If you cannot answer a man's argument, all is not lost. You can still call him vile names. Joule has a new verson of that. If you cannot answer a man's argument all is not lost. You can still accuse him of being biased.

Ron Patterson

I would respond that arguments seldom exist in a vacuum, unless they are arguments of a purely logical or mathematical nature. For example, if one considers the proposition [that if A =B and B = C, than A =C], then it doesn't matter if Leibnitz said it or Paris Hilton said it, it's validity can stand on its own logic.

But on the other hand, if say the Oil Minister of Saudi Arabia says he can produce 12 million bpd for the next 10 years and that we shouldn't worry about future supplies, it IS legitimate to question the credibility of that statement solely on the basis of who is making the statement.

And no, I am not saying that Robert's arguments are flawed; and no it is not my job to find flaws in his arguments. I am merely saying that the motivation for the arguments and the way they are framed can be strongly  influenced by one's allegiances. There is nothing inherently wrong with this, but it at least should be acknowledged.

And how, pray tell, am I calling anybody 'vile names'?

I see your point, but at the same time I've always assumed that RR is somewhat constrained by what he can and can't say on TOD, and I've built that assumption into my interpretation of his posts.

My one objection to Robert's stance is that his rebuttal to any argument for a peak in oil production right now is that he knows he can access additional supplies without difficulty, and sees no signs of any impending shortage. Whilst this may be true on a local basis, I'm not sure how any oil company employee, no matter how high his position, is able to extend this to an assessment of worldwide supply capacity. Then again, he's in the industry, and I'm not.

I have always found RR's arguments and critique to be based on a stance of persuasive argument and an appreciation of the scientific method, and for that reason I rate him is one of this site's most valuable contributors.

I rate the work of Westexas equally as highly, but in this case I feel Robert has sound grounds for concern. WT's export model makes complete sense to me, but any scientist when presented with a set of facts which support his hypothesis would also ask whether there are other explanations which may lead to the same results. I don't think WT has done this, or at least if he has, he has not articulated his dismissal of those alternative explanations to us.

I for one am thankful that we have two such strong contributors to this site, and I think it says much for both of them that they have conducted their difference of opinion in such a courteous manner.

I've always assumed that RR is somewhat constrained by what he can and can't say on TOD...

This is true. I never discuss things that impact upon my company. Well, I have been critical of tar sands development, and my company is involved in that. But Joule has never been interested in substantive debate with me. It's like I have told people before: Some people will hate you because of the business you are in. They will hate you, but they will keep filling up an driving their cars. They depend on your product, but they still hate you. It doesn't matter what you say or do. So just learn to live with it.

My one objection to Robert's stance is that his rebuttal to any argument for a peak in oil production right now is that he knows he can access additional supplies without difficulty, and sees no signs of any impending shortage.

Well, that's not the sum total of it. I also know about all of the projects/fields we are bringing online, and I know where we have production that is not running at capacity. But I can't discuss those things, which is why I don't debate the timing of the peak. I say that I don't believe it is now. I will not try to debate and convince you that it is in 5 years if I have to resort to data that I can't talk about. However, if you assert that peak is now, and use selected import data as part of your evidence, I think I am on solid ground challenging that with publicly accessible data.

You are also on record as saying that you are not a depletion expert:

April 7, 2006

I don't work on the drilling side, so I really don't know what the average depletion rate is. But I agree that if we deplete very quickly, it will be disastrous.

June 6, 2006

That is correct. I am not on the drilling side, and I am not basing my comments on any of the depletion models.

Because of your admitted lack of expertise on depletion, I have a hard time understanding how you could rule out a peak in any particular near-term time frame. I suppose you could be reasonably confident of your prediction if you knew of several million barrels per day of imminent new production capacity, enough to overcome any reasonable decline rate of existing fields in production. However, any imminent capacity increases that large would most likely be public knowledge and would be reflected in the oil price. As it is, the oil price has more or less held up and the futures market is in contango out to September 2008.

Also, in the same June 6 post, you made a prediction:

If demand stays strong this summer, we will set additional production records.

What did happen? Did we set additional production records? Freddy Hutter says yes. Westexas says no.

I look forward to your debate with westexas.

What did happen? Did we set additional production records? Freddy Hutter says yes. Westexas says no.

We did not set additional production records, because demand did not stay strong. Prices fell. Margins eroded.

As far as the depletion aspect goes, we would first have to deplete and consume the excess capacity that is setting around. And then, we would have to deplete in addition to that the projects and fields in the works (short-term). In my opinion, that level of depletion is unlikely in the short-term.

Incidentally, since I am moving into upstream production on Feb. 1, I will know much more about depletion and African and North Sea fields. Of course I won't be able to share that information, but I think it will enable me to be a bit more informed when depletion discussions take place.

I disagree because peak world oil is a messy concept some parts of the world are already experiencing peak oil now for example in the third world countries as subsidies are reduced.
In fact Indonesia and Mexico both oil exporting nations will probably be the first countries to crash from peak oil followed by Britain. These national peaks are a harbinger of whats to come because no one can make up the lost production. In the big picture West Texas is right on the money with the export land model. The remaining oil exporters will spend as much oil revenue as possible to try and diversify there economies and in doing this they will increase domestic oil usage. The problem is they will increasingly be in a position of trying to sell products with no buyers. And of course oil prices will be all over the place as demand destruction makes the markets volatile.

Basically peak oil is a financial problem as oil prices rise you are no longer able to maintain your standard of living either via economic collapse or inability to pay the price.
This is the demand destruction side of peak oil. Certainly other economic factors are at play now and will probably hide the peak for a number of years. But peak oil will ensure that oil prices remain high and worse ensure that the global economy will never recover from the coming slump.

This slosh of demand destruction and roller coaster prices are expected at the peak. Shortages which you seem to consider peak happen well after the peak when oil supply hits inelastic demand in large parts of the world. It will be years before we see real shortages in first world countries.

Its a lot better to think of peak oil as peak GNP since the two our closely related. I think you will find that we both never produced and much oil as we did in 2005 and that it was the height of world wide wealth. From here on out the world will get progressively poorer ever year. Peak oil and peak wealth are wedded together. For example oil companies and oil producing countries will probably make a lot of money over the next few years but this money will be eaten up by spiraling expenses and for the oil producing counties investments that continue to lose value.

Think about the Japanese buying spree in the US years ago every investment lost money. The wealth of the oil producing countries will dissipate in the same way. They I'm sure will go on a buying spree again but the real value of the assets will drop year after year. And I'm sure one day that their foreign assets will be nationalized and seized. And you can bet that same will happen to the remaining public oil companies but probably via brutal taxes.  It does not take a genius to figure out if oil hits 200 a barrel US oil companies will be nationalized or we have a revolution.

Needless to say I don't expect the post peak glory years for oil exporters and public oil companies to last more than five years if that before the open oil market is destroyed.
My guess is 3 years post peak before oil becomes a rationed national commodity.

And maybe just maybe at this point we will begin talking about electric rail :)

Robert...being in the Biz..what is your take on this article and why would Shell close something that is a profit maker?  Is it just that the profit margin on some refineries is too low to maintain the operation?

AP Analysis: Firms Crimping Oil Supplies  


The company says it could make more money on other projects. It denies it intended to squeeze the market, as its critics would claim, to drive up gasoline profits at its other refineries in the region.
Robert...being in the Biz..what is your take on this article and why would Shell close something that is a profit maker?  Is it just that the profit margin on some refineries is too low to maintain the operation?

That's pretty close to it. You have a capital budget. You want to earn money off of that capital. If you have a refinery that is going to take a lot of money to upgrade, but you have other opportunities for that capital that promise to earn you more money, what are you going to do? Either sell the refinery (and I have never completely understood why they didn't do that) or shut it down.

I never really understood why people think that crimping supply is a crime. Flooding the market with product, even when you can, is not smart business. Prices fall and so do profits. So, you make what the market demands (if you can). Look at Microsoft. How many copies of Windows XP do they make? They make enough to fill the demand. They don't make a huge excess beyond that. They have "crimped" supply in order to maintain their profits. All businesses  try to manage their supplies so they don't create a glut, and if there is a glut they will probably back off on production.

So Robert...if running a refinery in the US is such a bad profit margin...why is anyone doing it here?  Why don't we just let the countries/companies that want that slim profit margin from refining go ahead and do it and then we import it all from them?  

That would be the smart business move instead of investing all that high-price capital and maintenance on a dead horse.  Is this going to be the trend in the future?  The outsourcing of all our refinery operations?  Might as well jump on the bandwagon.

So Robert...if running a refinery in the US is such a bad profit margin...why is anyone doing it here?

The long-term average profit margins, currently at around 10%, is about 7%. That is better than you can earn by putting that capital in a bank. But you can see from the long-term stock returns that the market treats us as a low margin business. PE ratios hover in the 5-10 range. Compare that to a Microsoft. But we have a lot of capital already invested, and what else are we going to do with it - build a pharmaceuticals plant?

Is this going to be the trend in the future?  The outsourcing of all our refinery operations?  Might as well jump on the bandwagon.

Actually, that's not far from the mark. I would estimate that the majority of capital from oil companies is going outside the country at this point.

sigh...join the club.
Robert, that was a shrewd move on your part. Very quietly, the S&P energy index has reached new all-time highs:

What to do now? Buy some more, hold, or sell and book your 16% profits?

Disclosure: I've been long XLE for years and plan on holding.

My I respectfully suggest diversifying to reduce "single company" risk.  An example would be the Exxon Valdez.  Exxon took a several billion $ hit with minimal impact on industry fundamentals.

I like APA, ECA, CNQ for oil & gas.

Best Hopes,


Every little bit counts....

lease fasten your seatbelt and cross your legs...

BEIJING (Reuters) - A Chinese airline has calculated that it takes a liter of fuel to flush the toilet at 30,000 feet and is urging passengers to go to the bathroom before they board.

As Chinese airlines come under increasing pressure to cut fuel expenditures, China Southern's latest strategy is to encourage passengers "to spend their pennies before boarding the aircraft," Xinhua news agency reported Thursday.

"The energy used in one flush is enough for an economical car to run at least 10 kilometers," Captain Liu Zhiyuan, who flies regularly between Hangzhou and Beijing, was quoted as saying.

Citing a survey by the company's logistics department, Liu said carrying one kilogram of items such as blankets and pillows by air for one hour uses 0.2 kg of fuel.

"This means the blankets and pillows on board the aircraft eat up 60 tonnes of fuel every day. If each seat is loaded with three 450-gram magazines, another 60 tonnes will be consumed," Liu explained.

I would think that, with their tradition, the Chinese airlines would save the 'night soil' to sell to the farmers. Then it would make sense to encourage people to use the head in the airliner. I'm sure some method of recyling flush water could be worked out (not sure about feasibility of recyling toilet paper...).
Hello Leanan,

LOL! Expect the airlines to offer instant pre-boarding cash-back discounts if you 'poop & peep' just before heading down the boarding tunnel to the plane.  Bonus cash for nervous flyers if they barf early in the airport terminal!!!

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

This is from yesterday's topic, but 330 plus posts it will get bured again.

Population controls needed. how to do it without killing people or having them die in random amounts. The just way, Or just a thought,,,

An answer to Those that responded to my sterilize human babies issue.

IT was Humane I made it random in that the odd number of birth years got it..... Should I have said even years....  

The point you so clearly point out is there is not good right and prefect way of doing this.

There will be death and mayham..

Face it...
 YES I am a Christian,, and Death and Mayham is a fact of life even for the Christian.

 We live on a sinful planet. and we will all die.  some of us will die really nasty deaths.  Death is not the issue for most Christians,  Life is the issue.  whiel we are alive we do our job of caring for each other.  Simple job, we screw it up a lot IMHO.

 We have 6.5 billion people with estimates of 2.5 to 3.5 billion more coming to a planet near you in the next 1 to 50 years, energy supplies being equal, and since we know they are not going to get bigger, we can't even think this is the case anymore.

 The last numbers I heard on an NBC nightly news of years ago was, 96 million new people per year.  What are the latest numbers?

 Humane does not mean fair, it means you die or live in the best way we can make it for you.


So, after all it wasn't just a Black Friday anomaly:

€ vs $
Dont know if it was posted yesterday but check out this article on peak gas in relation to peak oil over at financialsense


Coming to grips with, even accepting the idea of Peak Oil has taken at least 10 years, like the acceptance of climate change and the need to do something about it - which has taken about 15 years. How long will it take for Peak Gas to be accepted as fundamentally linked and related to Peak Oil ?
Re:  Peak Gas

Kurt Cobb made some similar points:  http://www.energybulletin.net/newswire.php?id=21849

The drop in driving was small -- the average American drove 13,657 miles per year in 2005, down from 13,711 miles in 2004 -- but it is more evidence that the market works and prices help control consumption, Boston-based Cambridge Energy Research Associates said.

"Price matters," CERA Chairman Daniel Yergin said.

54 miles per person, the drop in 2005 over 2004. One trip to the mall and back. Just look at the demand elasticity of gasoline despite the large price rise in 2005 over 2004. Just more evidence the market works and prices help control consumption.

Price Matters says Yergin. C'mon, admit it people, the man is insightful, he is deep.

54 miles per person, the drop in 2005 over 2004. One trip to the mall and back.

Good gravy, man, where do you live? :-)  I consider 5 miles (10 miles round trip) a long way to go to a mall.  Even that I tend to avoid as I have a nice little shopping street within walking distance.

Back to the Yergin comment: the report itself says "Miles driven per motorist was down partly because there are more elderly people driving, and they tend to drive less".  So, we have a statistically insignificant change in average distance driven per person, probably less than can be accurately measured (54/13711 = 0.39%), combined with a reason for that drop, and the conclusion is that people are reacting to higher prices?!?  I would conclude that they are not changing their behaviour, at least not in any significant manner, if miles driven per person is essentially unchanged despite significant changes in price.

All the while, demand actually increases as that 0.39% drop per person is overwhelmed by population growth.

Sigh. I'll remember -- for you, JustZisGuy -- to use the <sarcasm> tag.

Allow me to introduce myself. I am the Senior Contributor listed on the top right side of this page. I am the author of the TOD rebuttal to the CERA/Yergin report on why the "Peak Oil Theory Falls Down". I am the author of

Have a nice day.

Allow me to introduce myself. I am the Senior Contributor listed on the top right side of this page. I am the author of the TOD rebuttal to the CERA/Yergin report on why the "Peak Oil Theory Falls Down". I am the author of

    * Cornucopians - A Guide for the Perplexed

    * Getting to Know Daniel Yergin

    * Perception Management -- CERA and IHS Energy

And I'm the Emperor Napoleon!

You may call me the Little Colonel... but I would have to kill you.

Re: You may call me the Little Colonel... but I would have to kill you


But seriously, perhaps JustZisGuy will understand my Daniel Yergin sarcasm when next he reads it. How should I tell someone to look at previously published work on this website -- and not come off sounding like some pompous asshole? Try it, it's not as easy as it sounds. Yeah, I know, I should lose the sarcasm. But, hey, we're all fisherman here, casting our nets to see what we can catch.

I look at sarcasm as a necessary survival tool in this day and age.  Without sarcasm, I would find it difficult to chuckle some days.
You guys are going off on Zis' but he's the only one that attempted serious analysis (aging propulation, etc.).  If you want to thump chests how about with some data?

How does that relate to past years VMT growth, and does it demonstrate a deflection  in the long term curve?

I understood that the last part was sarcasm, but the bit about 54 miles... you'll have to excuse me, I once lived in the Bay Area and in my experience commuting 27 miles each way to work was not thought to be outrageous.  I lived about 2 miles from work, and lived without a car.  People thought I was, shall we say, eccentric.
This just confirms the view that because of the very low price eleasticity of gasoline, that raising gas taxes is an incredibly inefficient method of reducing demand.  It doesn't make sense to have a tremendous increase in the amount of money spent on energy with very little reduction in the consumption of same.

Of course, no politician is seriously considering higher gas taxes much less what is really needed which is a cap on gas consumption and tradeable gas coupons.

The key would be a tax on carbon.

Or tradable carbon permits.

Which you would level at the level of the producing industry: the coal mines, the oil importers and refiners, the gas companies.

The rest would simply filter down through the economy.

On price elasticity of demand for gasoline, the numbers I have seen are 0.1 for the short term elasticity (+10% price rise, -1% consumption) and 0.5 for the long run (+10%/-5%).  Estimates range from 0.25 to 0.5 I think.

however the income demand for gasoline is positive: more income, more driving, more cars, more gasoline consumption.  Over the long run, that tends to overwhelm the price elasticity.

As a marker, the UK has twice the gasoline prices of the US, and 60% of the GDP per capita (not at today's dollar exchange rate ;-).  Our fuel economy is about 40% more I believe (35mpg US gal v. about 22mpg US gal)?  I'd have to check that number.

54 miles would include several trips around the parking lot to get the very best closest parking space available that way they dont burn anymore calories than necessary and their suburban asses can get ever fatter
Hey he's got to have a straight face when he picks up his check, doesn't he?

our CERA nonsense costs you
one thousand dollar -- Oh, yeah, Baby!

Hey, if Yergin said it, I believe it. Let's inscribe as he 11th commandment on Mose's Tablets of Law


Moses - "The lord Jehovah has given you these fifteen... (drops stone tablet) Oi. Ten! Ten commandments for all to obey!"

       -History of the World: Part I, Mel Brooks

No, not 11th commandment, more like new addition to The Ferengi Rules of Acquisition

perhaps a corollary to:

#162. Even in the worst of times someone turns a profit.


#189. Let others keep their reputation. You keep their money.

Yergin et al might want to take special precaution for rules:

#44. Never confuse wisdom with luck


#243. New customers are like razortoothed grubworms. They can be succulent, but sometimes they can bite back.

It even more insignificant than that.  2004 was a leap year, it had an extra day which just about covers the extra miles.  If someone wanted to pick nits you could look at how many work days there were in the year and how many weekend days and see if the difference correlates with the average miles for each.

The bottom line is that the "decrease" is statistically insignificant.

The problem with the year to year comparison is that the big price spike in 2005 was only from August to November.  A month to month comparison might give more significant results.  The last study I looked at on demand elasticity said it has been about 7% since 2,000.  In other words, a doubling of gas prices should result in a 7% drop in per capita consumption.  (sorry, I don't have the link handy.)  However, at a certain price level, the demand curve for commodities in general tends to become much steeper, as an inflection point is reached.  In the late 70's and early 80's the demand elasticity was more like 20%, probably because there was much more political leadership pushing the market that way, and CAFE standards were actually effective.  
Don't give up on price mechanisms.  Increasing the cost of gasoline remains the most effective way to reduce consumption.    
Good points. Also, one needs to look at gallons of gasoline/diesel consumed, both total and per capita. For example, I have changed my habits by using the most efficient car for weekend trips and errands rather than the biggest car. My total miles driven might not have changed, but I have reduced my gasoline consumption. Furthermore, consumers' automobile buying patterns have changed significantly this year, with big SUV sales way down, and sales of smaller cars up. This change in consumer behavior will start showing up in the numbers over a longer time frame. And the automobile manufacturers seem to be accelerating their efforts to produce more fuel efficient vehicles, as evidenced by the ongoing LA auto show.
Did you notice that they didn't comment on total passenger-miles for 2005 vs. 2004.  It isn't on the DOT website yet, but I bet total miles increased.
Yesterday several people wondered about foods from their McMansions....

First off you are not going to be growing wheat, rice, corn or the things you normally get in most of the cans or packages from the store.  

You can grow these things from a 1,000 square foot garden.  

 Beans,  green and dry.
 Fruits, several fruit trees for each kind you like, all the shorter varities the short ones that have been grafted to full size root stocks.
 Ground fruits, strawberry, vine berries, bush berries.  All can be stored by canning, freezing, or drying.
 Ground veggies, Most climates in the USA can have crops up into the hard freeze winter months.  Learn to love winter greens, and winter harvested root crops.
  Root crops,  jerusalem Artichokes, Potatoes, sweet potatoes, turnips, beets, leeks, onions, and several others.
 Tree nuts, acorns, walnuts, hickory nuts, dozens of others, pine nuts too.
 You can plan to grow tomatoes and beans and corn and other things all in the same field if you plan and plan at ther right times.

 You can water with gathered rain water, gather it year around, store it in buckets, barrels, old fish tanks.  You use the gift that everyone has A BRAIN to think of better ways to get water to your plants.  Do not use city or well water if you can help it.  Rain water stored can supply almost all of most people's garden's needs if they plan to do this for the rest of their lives.

 I can get 5% of my meals out of my parents front lawn, so you should be able to grow 5% to 75% of your food on your own land within 5 years, just plan and change your eating habits.  You will have to to think about changing the tastes of your family.

 You can't have lobster, unless you can help the lobsterman out for a few days and get lobster from him.  Look at what was the norm 50 to 250 years ago.  Not what is the norm now.

 Do not use cash,  go to a barter system and pat gets a tap gets an apt response.... pat= tap= apt,, learn to mutate that words and ideas you use for the betterment of yourself with out wasting letters.  LOL,  Okay you don't write for a living I get that, but I don't make a living writing I do it for entertainment, and I eat of the fruits of my labors.

 The area I live in has 20 to 40 pecan trees, pecans are gathered and stored by me and my family and If I can get them to sort and crack more of them I will be making breads and soups of them more often than not.  It was a decent year pecan's wise, but the acorns was better.  I did not stor as much water as I have in the past and my 1,000 square foot garden is growing sheds, so I have to plan around them.  

 If you limit yourself that is your fault not mine.  any hunk of land grows things in these US of A places.  Even when they tear up the Topsoil and let the native plants move back in.  Learn which of the plants you see show up are edible and eat your fill.  Pretend you are an indian and you have to live off the land and then ask one if you are doing it right.  

 Don't give up so easily and run crying to the Gov't when you have nothing to eat, look around you, you might be missing the bounties of the land you are already living on.


 Look for Recipes from the edge posts.

Gas Spike

Is there a problem with NYMEX feeds for Unleaded Gas? It is showing a spike of +0.33
to $2.00/gal? It opened at $1.67. The other numbers - Oil & Nat Gas look fine. I get my feed from Reuters.

Bloomberg is showing the same thing.  Has to be glitch somewhere I suppose.
Yeah - I guess so the market market is only up about $30.00.
If gas had really spiked that much, the Dow would have been up +$200 by now, the way it is discounting ALL bad news ;-)
Several top thread posts by leanan...

The good little kids get carbon credit papers, but the bad kid gets a lump of coal,,, ummm the bad kid gets the coal and stores it in his closet and never burns it there by making it a better carbon sink than the little kids that forced dad and mom to cut down a tree to make paper to give to their kids.... who is reaping and who is sowing???

The tidal sea bottom tide flow turbines have been out there for a while, why no one has not been building them is beyond me... Oh yeah no money..

Food is going to be the new money of the world soon.  I have food you need, I need labor, you eat if you labor.  

It is going to be cold here in the next few hours. Cold enough that my running around in shorts will be looked on with pity by some people.  I love cold weather and shorts are my cold weather gear,  If I am wearing pants it is below freezing and I have to be out in it long enough to risk frostbite.  I might be crazy, but I am not stupid crazy.   Then again It has never been cold enough for me to risk frostbite in Central Arkansas,  I wonder what new norms that will bring me here in the south.

"Winter Sorrel" the common name, not found in the listed soucre below,  for your Vitamin C needs, Looks like shammocks and is a plant grown in most of North America,  Un-cut lawns it is taller, in cut lawns it is very small but still there.  A handful of the leaves and flowers and young seed pods will provide your day's supply of Vitamin C.  If you like citrus and lemon tang, more the better, great in teas and as a salad herb.


http://www.smh.com.au/news/science/scientists-decode-ancient-astral-computer/2006/11/30/116477772126 0.html

For those that wish we were back in 1300 AD I wish us as far back as 45BC.. Why?  read the article and see where we have been and where we are going.

Knowing a thing is not so important as knowing we know a thing.

Who are we to say we never knew what we know now?  

We just stopped using the things we knew how to do, cause CSI is on TV and we can't bare to miss an episode.  Now you ask why I don't watch TV.   I can Make bread with the tree nuts in my yard and live off the land.  It is raining a bucket a minute now, where am I?  Inside on the computer, If I had no house or compuer, I'd be on high ground in the pines and have my small rock and dry wood fire giving me heat or laying flat out and resting with the damp all around under dry cut pine branchs.  No knife, pull them off with your hands.  and keep them out of the weather and dry.  


"TV and we can't bare to miss an episode."  

A very bright fellow who teaches solar tech to newbies tells the class about his father - a television station manager in Duluth, MN years ago - who would turn off their TV and tell the kids, "they don't call it programming for nothing."

Hedonism Central - tv, computer games, chat and scat roomz... the modern romans fiddle as the global village begins going up in flames.

More late night Russian news...these guys are looking to ruffle feathers:

Russian Official Says New U.S. Space Policy Will Lead to Military Confrontation


A senior Russian space official sharply criticized an assertive new U.S. space policy signed by President George W. Bush, saying Wednesday that it would increase tension and could lead to military confrontation in space, The Associated Press news agency reports.

In the first revision of U.S. space policy in nearly a decade, Bush signed an order earlier this year asserting the United States' right to deny adversaries access to space for hostile purposes and saying the United States will oppose treaties or other restrictions that seek to prohibit or limit U.S. access to or use of space.

"This document can be seen today as the first step toward a serious deepening of the military confrontation in space," the Interfax news agency quoted Vitaly Davydov, deputy head of the Russian space agency Roskosmos, as saying.

"Now the Americans are saying that they want not only to go to space but they want to dictate to others who else is allowed to go there," Davydov said, according to the report.

The order says the United States will "preserve its rights, capabilities, and freedom of action in space; dissuade or deter others from either impeding those rights or developing capabilities intended to do so" and "deny, if necessary, adversaries the use of space capabilities hostile to U.S. national interests."

Davydov criticized what he said were U.S. plans to deploy weapons in space and said that Russia could respond if the United States does so.

The White House has said the policy does not call for the development or deployment of weapons in space.

As the U.S. space policy was being reviewed last year, Russian Defense Minister Sergei Ivanov threatened retaliatory steps if any country put weapons in space.

Moscow's concerns about space-based weapons go back to the Soviet-era space race and U.S. President Ronald Reagan's 1980s plans for a "Star Wars" missile defense system.

Bush's order, signed more than two months ago, was not publicly announced.


Someone who thinks that Solar has Potential


I personally love the idea of distributed power with local generation. There have to be substantial savings in the distribution infrastructure, offset by the need for local power conditioning and storage. However, if one looks outside the US/EU/Japan/China then most countries do not have reliable grid power. People who live there are used to managing their lives with intermittent power and many many middle class families are willing and able to commit the capital necessary to install a self-sufficient solar electric system. However the devices and distribution infrastructure (availability, sale and installation) are all non-existent.

I assert that all that will change, gradually at first but then accelerate as technology and economies of scale come into play. I asset that Solar is coming and coming big, it will start in Japan (the author of the link above also mentions Germany) and then spread into countries and regions where grid power is low quality (availability, voltage, frequency and cost) and likely to remain so (for several reasons). The United States will switch to solar a little slower because of our
(1) large reserves of coal & willingness to burn them
(2) high quality and inexpensive grid power
(3) the (perceived) need to have vast amounts of grid power available to every dwelling 24 hours a day

It's late in the thread, but I wrote about a story I saw today:

Ethanol Demand Boosting Corn Prices

I wonder if all of the people projecting ethanol costs falling in the future will update their graphs next year, since costs increased in 2006, and look to again in 2007. Vinod Khosla has claimed numerous times that the production cost for ethanol is less than $1.00/gallon. One thing we know for certain: That claim is not true (and it never has been).
FWIW I noticed a new article about Vinodin the news.

Also, things are heating up between cattlemen vs. corn growers in today's story.

And, it hardly bears repeating, but a conspiracy theory I saw on a local blog yesterday claimed that in Texas, rumor has it that big oil is buying up the corn supply and perhaps corn-producing land, as well!!  (Thought you'd get a kick out of that.)

Anyone think there is any truth in this story about a move to the "Amero"?

London stock trader urges move to 'amero':
Says many unaware of plan to replace dollar with N. American currency


In an interview with CNBC, a vice president for a prominent London investment firm yesterday urged a move away from the dollar to the "amero," a coming North American currency, he said, that "will have a big impact on everybody's life, in Canada, the U.S. and Mexico."
Steve Previs, a vice president at Jefferies International Ltd., explained the Amero "is the proposed new currency for the North American Community which is being developed right now between Canada, the U.S. and Mexico."

The central planners consider the NAU to be essentially a fait accompli.  There has been intensive behind the scenes planning on this for quite some time.  I believe we are at stage 3 of a 5 stage process.  Stage 3 being "deep integration" on the verge of absolute free movement of goods and workers (first step signifying the end of the nation state).  Stage 2 was facilitated with NAFTA's acceleration of corporate/financial intermingling between the 3 countries.  Next will be formal agreements that blend the three govts.  Already Bush signed the Totalization Agreement with Mexico to blend our Social Security system with Mexico's (but hasn't been approved by congress, yet).  Also, steps have already been taken to coordinate the militaries and develop a North American energy "plan".  The Security and Prosperity Partnership is another gateway into this arena.  Rice and Cherthoff have already been tapped to lead/oversee the new tribunal.  Incidently, very recently a high ranking Mexican official said publicly that the NAU needs to be in place before the Boomers start retiring en masse - so a seemingly short timetable.    

Sorry, don't have links for you.  Too late to go digging right now but you might want to search for some articles at globalresearch.ca.  It does seem like the Amero is more than a remote possibility if all continues to go according to plan.

Lou Dobbs did a story on this the other day.  (Let's just say he didn't support the idea.)

So far as I know, it's purely theoretical.   A figment of academic coneheads' imaginations.

It already exists.

It's called the US Dollar.

In North America there is a $12 trillion dollar economy, a $1 trillion dollar economy (Canada), and another $1 trillion economy (Mexico).

I would guess the Carribean and Central America are another half trillion.

So out of say 15 trillion dollars of GDP, the US is 80% of that-- 12/14ths of North America proper.

The US controls its own interest rate, monetary policy and has its own exchange rate.  It also has the best credit rating in the world.

Why would it want anything else?

If Mexico, or Canada, chooses to dollarise, as El Salvador has done, then well and good for them.

Ah...but with the USD going into the crapper...they could start all over with the "new and improved" currency.

1 Amero = 100 USD

See...inflation just vanishes.

To continue in regard to some remarks made yesterday- a good introduction to Farrington Daniels is here:


It would be interesting to know if he and Hubbert ever crossed paths.  It seems as though the two were on the same wavelength.

Would the human race be better off if we were burning 100 mpd? I'd say no. Ultimately our quality of life is not improved limitless greed. TPTB are the masters of greed. TPTB are the winners at the top of the pyramid of greed obsession. TPTB will never understand that greed is stupidity. Greed is a destructive mental illness. TPTB have designed our economy, our way of life, on the false premise that greed is good. TPTB will not act to save the world from their destructive obsession. The love of greed will destroy the world as we know it.

but at least we'll go laughing:


(okay, I admit it's childish... but I laughed.)

Hello Franz,

Yeah, it was humorish, but I don't think it is totally childish.  A few months ago, some TODer posted a link to a video of methane bubbling up off the California coast, and some scientists think the 1946 Scotch Cap Lighthouse tsunami, along with many other 'slow earthquakes', were caused by underwater landslides from a methane burp. PDF warning.

Here is a Google link to more lighthouse images.  Poor souls didn't have a chance. Incidently, this same tsunami wreaked havoc in Hilo, Hawaii--causing the US Govt. to then established the Pacific Tsunami Warning Sysytem.

I have posted numerous times over the years on this phenomenon.

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

While plug-in hybrids and hydrogen fuel cells are likely one day to help cut U.S. gasoline consumption, major fuel savings can be achieved now if automakers put existing technologies to work under one hood.

My wife and I drove to visit relatives in LA over Thanksgiving and achieved an average 55 mpg in a 1991 Geo Metro.  The problem is not efficient technologies, which have been around for a long time, but consumers brainwashed into satisfying wants over needs.

We visited a cousin in the LA basin whose 3 children and husband all have asthma - and there's no family history of the disease.  Do you think she might consider an alternative to the gargantuan air poisoner - a Ford Excursion - that she owns?  No way.  Here's a perfect example of a consumer who puts her wants ahead of a basic need - for clean air!