DrumBeat: December 17, 2006

[Update by Leanan on 12/17/06 at 8:56 AM EDT]

Slow Going for Alt Vehicles

According to the EIA, hybrids will constitute 10 percent of new light-duty vehicles by 2030, and the same amount (2 million per year) will be flex fuel vehicles. In both cases those numbers indicate slow growth that won't do much to reduce vehicles emissions or petroleum consumption. The number of diesel vehicles sold will increase to 1.2 million annually.

Even though the fuel cell car has received the most hype and funding of any of the Bush Administration initiatives for alternative propulsion, the EIA says the combined market share of fuel cell, natural gas, and electric vehicles will be just 8 percent in 2030.

Energy supplies: Abundant - and off-limits

At least part of the solution to high oil and natural gas prices lies right under our feet, but Congress has failed to change the laws and regulations that keep this domestic energy locked up.

New Zealand: The politics of energy

Even if you don't believe in climate change, believe in the energy crunch. The days of cheap, easy, secure energy supplies are over for the world. That's a massive challenge to NZ industry. Large chunks of it have depended for generations on abundant, cheap power to process low-value commodities.

Shell exec makes case for market decisions

Shell Oil Co. President John Hofmeister has led his company to 16 U.S. cities this year as part of a 50-city tour at a time of high oil-company profits and relatively high prices at the pump.

The tour, which could take as long as two years, is a way for Shell to listen to Americans' concerns about the industry, he said. And the talks give Shell a chance to talk about why it believes it should be able to drill offshore in areas that are now off limits.

Iran offers to share nuke know-how with neighbors

TEHRAN, Iran - President Mahmoud Ahmadinejad said Saturday his country was ready to transfer nuclear technology to neighboring countries, nearly a week after Arab states on the Persian Gulf announced plans to consider a joint nuclear program.

China looks to develop more domestic energy sources

BEIJING - China will look to develop domestic sources of energy in the years ahead, with conservation at the heart of the energy agenda, said Ma Kai, chairman of the National Development and Reform Commission.

India, China sign key MoU on oil & gas exploration

Beijing: India and China today further cemented their friendship and strategic ties by inking a major pact envisaging joint exploration, production and acquisition of oil assets in third countries which could substantially reduce their energy costs.

Saudi Government goes ahead with oil refinery at Jizan with private participation

Saudi Aramco will supply the refinery with crude through a tanker, as experts consider that building a pipeline from oil wells to the refinery is not economical. The refinery aims at serving foreign clients in Europe, the United States and Asia by supplying products of high specifications.

Russian oil output up 2.2%, export down 0.5% in first 10 months of 2006

Carmakers fight global warming lawsuit

SACRAMENTO, Calif. - The six largest automakers asked a federal judge to toss out a lawsuit by California that accuses them of harming human health and the environment by producing vehicles that contribute to global warming.

Climate change melts Kilimanjaro's snows

The total loss of ice masses ringing Africa's three highest peaks, projected by scientists to happen sometime in the next two to five decades, fits a global pattern playing out in South America's Andes Mountains, in Europe's Alps, in the Himalayas and beyond.

Almost every one of more than 300 large glaciers studied worldwide is in retreat, international glaciologists reported in October in the journal Geophysical Research Letters. This is "essentially a response to post-1970 global warming," they said.

Renewable Energy in America, Part 1: A Changing Climate

Broadbased - from the grass roots up - calls have been building for the U.S. to focus efforts and resources on the development of renewable energy sources and infrastructure, following the latest steep and sustained run-up in petroleum and fossil fuel prices.

Bay Localize & Green Roofs: An Interview with Ingrid Severson - transcript and podcast.

This is in response to global warming and peak oil. I don't know if people know what peak oil is, but it is basically just the phenomenon that refers to petroleum depletion. It has massive impacts on the economy and the stability of our resources, etc. It affects the whole world. We're working on a local level which is why we're called Bay Localize because we are striving to bring production of our goods and services more on a local level within the Bay Area.

Let them wear hats

It made me realize where we were as a country. After all, if installing a programmable thermostat was supposed to be the best way to become more energy efficient and here we had cut our bill by 20% by uninstalling one, that means that we are using way more energy than really needed and are not paying attention to energy use at all.

Colorado: Democrats lay out energy bills

Democratic lawmakers will introduce a slew of bills in the 2007 General Assembly to propel Colorado into becoming the "renewable energy capital of the world."

The top gift for science geeks: It's a nuclear-powered toy. Really.

   The EIA is about as big a waste of taxpayer dollars that exists in the US government. Their projections have more to do with the fantasies of the lobbyists than the facts. I'd guess that their projections of the growth of hybrid cars reflects their projections of a $40/bbl stable fuel price for internal combustion engines.
the whole freakin government is a waste of taxpayers dollars (or more like it taxpayer debt)   well a waste except for the part about "provide the common defense, promate the general welfare and secure the blessings of life, liberty and the pursuit of happiness"    (i may have made part of that up)
This may be why when/if TSHTF, local government entities may be what matters most in our everyday lives.  The ineffective behemoth of our "federal" government will NOT take care of us.  It will be too busy fighting the world and it's own citizens.
Have you every been involved with the local government?  I actually think the level of corruption is worse than at the state and federal level.

My Dad spent 10 years as a member of the town council and my uncle was a county commissioner.

Shit constantly happened that NEVER made it into the papers.  Town secretary caught embezzling from the treasury three times in a row (embezzled the 2nd and 3rd times to pay back what he stole the first time).   Politically connected people didn't have to pay taxes or sewage bills.   The police chief was a drunk who was kicked off the state police, and ended up breaking into his mistresses house then held her and her mother at gun point.  All this from a town so small it didn't have a stop light.

Zoning changes were very blatantly  for sale.   At one point a couple of county commissioners emptied the treasury into there own pockets by manipulating contracts and padding the payrolls.  In the end they bankrupted the country then got jobs with the state government.

Do not expect any help from your local government.  

(This occurred Pennsylvania if anyone is interested)

I think it depends...I have been involved in some local government activities and come away pleased.  I have heard of stories like yours as well.  All I was really trying to relay to folks is that we have a better chance of making a difference at the local level in getting them to respond to something than the federal these days.  Sometimes successful, sometimes not.
I think local government is corrupt as hell too.  It's just as bad if not worse in a larger city.  People are given jobs through blatant cronyism, whatever their qualifications.  If anything it is worse than on a State or Federal level because there is little or no scrutiny on that level.  
Actually, the part that promotes the common defence is doing so well lately either.  Talk about your fraud, waste, and abuse.
I meant "isn't" doing so well.
invading a sovereign nation looking for wmds does not qualify as "poviding the common defense"    that comes under the title " promoting the corporate welfare"
"the heritage foundation"   roflmao  
China expected to import 140 mln tons of crude oil
BEIJING, Dec. 16 (Xinhua) -- China's crude oil imports are expected to reach 140 million tons in 2006, up 10.2 percent on last year, according to the Ministry of Commerce (MOC).

    Liang Shuhe, deputy director with the Foreign Trade Department of the MOC, said that China's demand for crude oil would total about 290 million tons this year, of which 48 percent were imports.

    According to Liang, China's total output of crude oil is expected to reach 183 million tons in 2006, with 7.40 million tons for exports.

    Liang said the fast growth of the economy has forced China to depend more and more on imports because of the limited domestic production, predicting that the steady increase in imports was likely to continue.

    Statistics from the MOC show that China's crude oil imports increased by 14.1 percent in the first ten months of this year to reach 120 million tons.

    The Chinese government removed tariffs on oil imports in November and opened its domestic oil market to foreign companies in December to cut the cost of oil imports.

From whose hide will this oil come?  Haven't we just about bled the oil turnip from the poor countries?  At what point does this come out of the richer countries like the U.S.  Assuming we've already peaked, isn't this a good time to invest in oil futures?  
With it's further considered that exports from both the two leading oil exporters (Russia and Saudi Arabia) are dropping, as well as continued demand growth from India and Far East countries, one wonders just how much poorer countries can offset China's huge oil demands.

The answer, I suspect, is when the book is closed on the 2006 year, we will find world oil and product inventories less than in 2005.  This will also be very true in the US - despite the strong contrary impression given by the media.  As of last week, 12/08/2006, US oil/product inventories were only 4 million barrels ahead of last year.

And that clearly explains how global oil inventories are near their all time highs.
The IEA reports a 41 million drop in world inventories in October - well before the typical seasonal winter fall.  In addition, the EIA has US inventories dropping significantly in November.

Next time I will only respond if you document your position first.

Out of several billion barrels in inventory.  And that drop was precisely what OPEC wanted when they cut their production by 1.2 million bpd.  If anything though, it shows they only needed to cut production by about 600,000 bpd to bring the market into balance.
Charles forgot to mention the rest of the paragraph.  Nov 30th inventories were at 54 days vs 53 on that date last year.
And just think, this is all in light of the fact that we apparently experienced dramatic reduction in exports around the world, as WT has been saying these last few months.  That or all the post peak production countries have had a miraculous turnaround this year! <chortle>
Wasn't it shown here that net exports from exporting nations are declining.
China can only import more if someone is losing the bidding wars.
Or there is oil stored somewhere "off the books" that is being sold.
Is "losing the bidding wars" at all different from "conservation"?
Except in Africa conservation means

  1. You are unable to run the generators at the hospital.
  2. You can't afford cooking fuel
  3. You can't afford gasoline to run your farm

etc etc

Soccer moms are using the fuel that poor African are "conserving"

My question was partially rhetorical and I don't disagree with you. I do think that we at TOD have a tendency to create these value-laden words, such as "bidding contest", which in my mind obscure, rather than clarify, meaning.

I also dislike the frequent comments here that say the solution is "conservation", without any thought or plan for what it entails.  In response, I have noted before that I think that price is by far the strongest driver for conservation. Legislative and voluntary conservation do suffer somewhat from Jevon's Paradox, which in the context of abundance weaken conservation as it just shifts demand to others.

So in this regard, true conservation is going to come from those most sensitive to price. I'm not saying it is good, just that it is.

I am not entirely convinced that the poorest will bear the brunt of "conservation" in volume terms, although it is likely to be the most painful for them.

Two countries in our part of the world, South Korea and Thailand have the most imported oil intensive economies in the world (oil imports to GDP approached 10%). I would expect that in economic terms, the overall populations of these countries will also be hit hard. Soccer moms, poor commuters, and others with the ability to reduce their oil consumption in the US and other rich countries will probably cut the highest volume, but may barely notice.

I do think my point remains true. That a "bidding contest" is the single most effective means through which conservation will occur.

I am not entirely convinced that the poorest will bear the brunt of "conservation" in volume terms, although it is likely to be the most painful for them.

Two countries in our part of the world, South Korea and Thailand have the most imported oil intensive economies in the world (oil imports to GDP approached 10%). I would expect that in economic terms, the overall populations of these countries will also be hit hard. Soccer moms, poor commuters, and others with the ability to reduce their oil consumption in the US and other rich countries will probably cut the highest volume, but may barely notice.

I do think my point remains true. That a "bidding contest" is the single most effective means through which conservation will occur. And there will be no large scale conservation without people paying more for fuel and gaining less of its benefits, especially the poor.

Jevon's paradox is not valid when a cartel will withhold poduciton when price declines.
I agree. I did say "in the context of abundance". It does not apply so well in the context of scarcity, delibrate or otherwise.

So 10 percent of new light-duty vehicles, and the same amount (2 million per year), will be flex fuel vehicles by 2030. Fascinating!

The Asian Development Bank believes that there may be 15 times as many cars in 30 years' time in China (a total of 190 million) and 13 times as many in India. I guess no one from the ADB looks at this site.

If the EIA is bad, it does not make the ADB any less unreal.

According to the EIA, hybrids will constitute 10 percent of new light-duty vehicles by 2030.
Are these moving vehicles or do they include vehicles left on the side of the road?
I wouldn't worry much about these statistics. They fall under the category "640kB should be enough for everyone" and we know how that played out. In any case... it does not matter, much. 50+% fuel savings can be achieved without any wonder-technology simply by building smaller cars better suited to the problem at hand: to get Dad to work, Mom to the grocery store and the kids to school. Except in tv ads neither task requires trucks which could transport concrete for a medium sized home improvement project or expedition class rovers whcih could drive across the Himalayas.

The good folks of the EIA also do not understand that most people think with their geek-gland and thus what starts out as a novelty (hybrids) can become the standard within rather short time. I-Pod anyone? Toyota, on the other hand, understands that quite well... look at their efforts to offer a hybrid version of mainstream cars like the Camry.

Smaller cars? OMFG!! Do you hate America? Are you on the side of the terrorists? Watch your step, Big Brother is watching you.
The EIA projection is ridiculous.  How accurately could the current overabundence of SUVs have been predicted in 1980?  They are projecting so far out that it's basically just guessing.  
While Colorado is becoming the "renewable energy capital of the world", there was not one word on conservation in the linked article. Also, while they are talking about increasing their renewable portfolio to 20%, they are doing nothing to reduce overall demand. Overall demand will swamp renewables meaning that energy from fossil fuels will increase. As I wrote my legistlator, the percentage of renewables don't mean a great deal if we continue to build coal fired plants and do nothing to address energy consumption in those parts of the different sectors which have nothing to do with electricity.

Part of this mix will be ethanol.  Even assuming a positive return on energy, one shouldn't apply the total gross energy returned in attempting to calculate the 20% renewable energy contribution.

Colorado cannot claim to be at the forefront unless they set specific caps on greenhouse emissions with a plan to reduce them starting now and at least through 2050. Otherwise, it is the usual lip service.  Those legislators, both local and national, that I write to, either provide me info on positions that are irrelevant to the issue at hand or don't respond at all knowing they don't have any good answers.

As I think too many people missed this yesterday:

It seems that Bush has gotten through the most critical three and four letter agencies, and is now all the way down the list to the USGS:

The White House has begun implementing a new policy toward the U.S. Geological Survey, in which all scientific papers and other public documents by USGS scientists must be screened for content. The USGS communications office must now be 'alerted about information products containing high-visibility topics or topics of a policy-sensitive nature.' Subjects fitting this description might include global warming, or research on the effects of oil drilling in the Alaska National Wildlife Reserve.
I ran that on Thursday.  It was the top story most of the day in Thursday's DrumBeat, and I believe was re-posted by someone else on Friday.  That's probably why there was little response to your post.
Ahh... sorry.
My brother-N-law is a geologist with the USGS and he was complaining about this in 2001.  This is not new it has been policy for years.


Interesting.  What does your BIL think about peak oil, and the USGS reserves estimates?
I had a long conversation with him in June about this stuff....he says obviously there is a limited amount but the HL is a model not scripture.  He also said he thinks politics and economics will screw up most predictions especially long term ones.

As for the reserve estimates he has never commented to me on that but I'll email him.


"The low-energy beta radiation from tritium cannot penetrate human skin, so tritium is only dangerous if inhaled or ingested. Its low energy also creates difficulty detecting tritium labelled compounds except by using liquid scintillation counting.

"Like hydrogen, tritium is difficult to confine; rubber, plastic, and some kinds of steel are all somewhat permeable. This has raised concerns that if tritium is used in quantity, in particular for fusion reactors, it may contribute to radioactive contamination, although its short half-life should prevent any significant accumulation in the atmosphere.


Two hydrogen atoms meet. One says "I've lost my electron," The other says "Are you sure?" The first replies "Yes, I'm positive."

Tritium is hydrogen!
You might have trouble getting those sent through US customs, though. IIRC there is a regulation disallowing the use of radioisotopes for "frivolous purposes" or some wording like that.
I think Litvinenko had one of these keychains.
NPR Weekend Sunday edition for December 17, 2006, has the story Venture-Capital Firm Puts Faith in Clean Technology.

The venture-capital firm Kleiner Perkins Caufield & Byers, which backed Google, Amazon, and Netscape in their start-up days, has now begun investing in clean technology. John Doerr, a partner at KPCB, talks about the projects his firm is backing, and what these investments may mean for the future of the market.

In the short piece he talks about biofuels, investing in ethanol production and the risks and infrastructure.

Ironically, the very next story is about human decision making when faced with a moral choice.

Manage reserves but avoid yuan jump - China official

http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-12-17T145841Z_0 1_BAN753884_RTRIDST_0_OZABS-CHINA-ECONOMY-RESERVES-20061217.XML&archived=False

Jiang said: "Against a background of expectations of a stronger renminbi, businesses and residents have no strong desire to hold foreign currencies."

By buying dollars to hold down the yuan, China has built up the world's biggest horde of reserves.

Jiang said the reserves were rising too fast. While reflecting China's rising strength and ability to withstand economic risk, the explosion in reserves was fuelling excessive credit growth and making it harder to run monetary policy.

"Investment of our country's foreign exchange reserves is mainly in U.S. bonds. Although liquidity is quite good, the rate of return is not high. The U.S. dollar shows a very clear long-term softening trend, and we face the risk and pressure that the real value of the bonds we hold will shrink," he said.

The concern of Jiang and other about the risk of holding too many dollars is generating support for the creation of an asset management agency to wring higher returns from the reserves.

Economists say the go-ahead for such an agency could come at another high-level policy meeting due in February.

Taking into account import payments, bond payments, foreign firms' unrepatriated profits and other factors, China's basic foreign exchange reserves should be about $700 billion, he said.

As well as exploring alternative investment channels for the reserves, Jiang advocated reforming the structure of exports and ending as soon as possible tax breaks that have been used to lure foreign investors.

ALERT:  GoldSeek article below(skewed towards precious metals investment, but I still like to read them anyhoot).

DECEMBER 2006 (#2) Vol. 10 No. 12-2


 As you read this the meetings in Beijing will still be in progress. The reason for the meeting at this time is that everyone on the inside knows the dollar is header lower and there will be significant adjustments out of the dollar and that it is time for the dollar to fall. As an aside, we do not believe that the central banks want to sell more gold or they simply do not have anymore to sell. The wish is for a controlled decline. This will involve coordination of selling and China as a high holder will want to be a seller along with others. OPEC members have been sellers along with Russia and they will continue to be and even Sir Alan Greenspan tells us the dollar is going lower. It would seem that China is the last to agree to the controlled fall of the dollar.
I was a student in Taiwan in the mid '70s.  I went to Taiwan specifically because I believed that the Chinese had a different way of knowing and I wanted to try to understand what I could of it.

I got my first lesson when Mao died.  My landlord, a pharmacist, had always impressed me as an insightful man so I asked him what he thought the impact for Taiwan would be of Mao's passing.  His answer was the beginning of my insights into China's way of knowing.

He said, "Politics are for politicians.  Mao was a politician, I am a pharmacist."  That was his last word on that subject.  While it could easily be mistaken for a brush off, his simple statements went to the core of Chinese philosophy.

The Chinese tend to their business.  They don't tend to meddle in, or offer an opinion on other's affairs.  They also don't over react to current events.  Their history is so long, and their faith in themselves as a people, so deep, that they have seen it all and realize that any particular moment is but a moment.  Dynasties come and go, China goes on.

China has had since 2001, a stated national policy of cooperation with the US. Within the framework of that policy China has instituted reforms.  However, if reforms come to quickly (as the case in Iraq), there is chaos.  China understands this through the harsh lessons of a long and often violent history.

Things did not go well at the Summit in China last week.  China will protect its national interests and the blunt US approach to China was rebuffed strongly with a speech detailing all 5,000 years of China's history.  My landlord gave me the same lesson in fewer words.

The key demand coming from the US is that China allow the Yuan to float on the world markets.  This would cause the Yuan to increase in value against world currencies at the same time that the US dollar is falling.  China does not consider that a cooperative attitude.  In China's view, that is a "defection" in game theory terms, or an uncooperative position.

Floating the Yuan, along with other US market liberalization demands, will cause an economic crisis in China. While China realizes that, in all things cooperation is the preferred model, China also understands what it should do in the face of a "defection."  The first step is to state, in equally blunt terms, that a return to cooperation if expected. That was last week's message.  If that doesn't work, China with its millenial way of knowing, will not hesitate to sacrifice every one of its few recently rich for the better good of China's 1.3 billion people as a whole.

I was once faced with the unfortunate position of having $2,000,000 worth of thinly traded penny stock foisted on me for goods delivered.  It was better than nothing, but I wanted out of that position because I had no faith in the stock.  Selling it slowly (in an orderly fashion), over a period of several months, netted me only $1,000,000 even though the listed price of the stock stayed relatively flat over the period.  For every seller there must be a buyer.

China wants out of its US dollar position and it wants to get out in a cooperative fashion.  With few buyers and many sellers including the ME and Russia, some damage must ensue to the value of the dollar, and some damage must ensue to China's net treasury value.  China's cooperative view is that every party should suffer the damage in proportion.

The days of US dollar dominance are coming to an end. The US has spent itself into a corner and it cannot avoid economic damage.  The wisdom China is cooperatively attempting to impart to the US is, if everyone cooperates, everyone, including the US will get the best possible outcome from this situation.  It will not, of course, be the best possible outcome any one participant in the process could achieve by acting unilaterally.

In the history concious eyes of the Chinese, the US painted itself into the economic corner it finds itself in today.  The one partner to the process of orderly disposal of US dollars it will not tolerate a "defection" from, is the US.  I believe China, if backed into a corner by the US, would sacrifice its billionaires and dump its US treasury bonds, forcing the US into a deflationary spiral and an import commodity crisis it will likely never recover from.

I understand the word China comes from importing procelain from China, perhaps from the Qin dyanasty. But the Chinese word for China is jung gwo, central kingdom.  It reflects where the Chinese see themselves.  We in the west might do well to at least begin to see them in the same way.  Learn from my landlord's words.

John McFadden
Ottawa, Ontario

thanks for your insight
also, a thanks for your insight.
Wise words, John.  Thanks for sharing.  I agree that the Chinese will have the patience and pain tolerance that far exceeds us all, including Russian.
Of course, we have been talking about the declining dollar since early 2000.  How is it going to be any different this time then it has in the past?
If you don't get a bite in one thread, just keep recasting in another eh Hothgor?

Trolling Trolling Trolling...

I must say, Rethin, you seem to only ever post after I say something.

I guess this troll has his own trollette.

Rethin. Cool It. Those of us who pay attention know you're the only one H-man's age who can reign him in. Unfortunately we still like him more than you. So WAKE THE FUCK UP.
China wants out of its US dollar position and it wants to get out in a cooperative fashion.  With few buyers and many sellers including the ME and Russia, some damage must ensue to the value of the dollar, and some damage must ensue to China's net treasury value.  China's cooperative view is that every party should suffer the damage in proportion.

A recent report on currencies by Merrill Lynch noted that this also occurred in 1972 or when central banks transitioned out of the gold standard. They realized that if they all sold, it would destroy value for all of them. So they instead agreed to maintain reserve levels and reduce new purchases. The report suggested something like this arrangement could be a model for handling dollar dependency in the future.

In some ways, it would be much easier in the case of the dollar. First, a large portion of central bank dollar holdings are in long maturities, which can only be sold to someone else, not "cashed in". Second, substantial dollar holdings will also be required for exchange rate purposes. Third, at some point the dollar reaches equilibrium and becomes a better deal than competing currencies.

That being said, to claim that China wants out of its dollar position is stretching the point. China would like to diversify its reserves in a way that maintains its exchange rate and provides healthy returns.

But its options are limited. The Yen provides almost no income because of Japan's low interest rates. China can't move wholesale into Euros because it would ruin their dollar denominated business, add risk through pure Euro exposure and the Euro could not absorb all of the reserves of central banks. Real assets are less liquid and investing in the country would have inflationary impacts.

Currency values are extremely difficult to predict. Currency markets are very efficient and all future information should show up in spot prices fairly quickly. If financial markets had the same conviction as TOD commenters on the future of the dollar, the price would already reflect it.  The issue seemed just as obvious two years ago, but very little has happened since.

Yes, I didn't mean to imply that China wants to liquidate its dollar holdings.  That would be a virtually impossible and undesirable outcome.  There are too few Euros and too many dollars.  If everybody madly chases after Euros it will result in chaos.

Nixon started the process of abandoning the gold standard in the early 70s as a result of concerns by France, in particular, with the value of the dollar.  France started showing up at the US Treasury demanding to "cash in" their dollars for gold.  There simply wasn't enough gold for that to continue.

The early '70s currency problems will be of interest to the TOD community and I'm sure many are aware of the issues.  This was the beginning of petrodollar recycling as a result of the US need to import oil from the ME and export dollars.

The merchantilist oil market that existed in the early '70s made it possible for KSA to "target" the US with an oil embargo.  This ushered in the urgent need for cooperative, multilateral liberalization of markets, especially capital and energy markets, and the formation or strengthening of such entities as the WTO, IMF, and BIS as well as the NY and London commodity exchanges.  It was the period of Kissenger's shuttle diplomacy.  The message was, if everyone cooperates everyone will share in the petrodollar recycling and everyone will come out fine.

However, two significant things came out of these efforts.  First, there is some evidence to support the idea that, while Kissenger was promoting cooperative multilateralism, some preferred access to petrodollars was arranged with KSA.  Also, an unintended consequence of liberalized markets and the nature of the banking system put in place was that the economic consequences of petrodollar recycling fell on the backs of the non-industrialized nations.  They could not access petrodollars using the same mechanisms and at the same price as industrialized nations.

So, many things came together very quickly in the early '70s that required urgent action and cooperation.  The winding up of the expensive Viet Nam war, peak oil in the US, moving off gold backed currency, and the advent of petrodollars and the need to efficiently recycle them.  All of this led to Globalization as we know it today.

Like the frog in warm water, I enjoyed the benefits of liberalized markets, which made it much easier to do business all over the world, without understanding why things were getting easier or what the long term consequences might be.  In fact I very nearly boiled.  I have nothing to complain about, however, because easy access to global markets was beneficial to me overall.

Going back to China, I believe China is trying to impress upon the the US two key points.  First, in the spirit of multilateralism, which I believe will be the renewed US agenda, China will not tolerate secret bilateralism.  Second, while China understands the need for cooperation and liberalization, it also takes a long term view and it cannot allow disruptive liberalization of its markets.  

I believe China is signaling that it is willing to "take a hit," in order to cooperate with the US but it doesn't want to take a disproportionate hit or damage its ability to keep the enormous internal issues it is facing from becoming chaotic.  China will liberalize and China will reform, but it will control the pace to the extent possible.

The good news for everybody is that there are now formal mechanisms in place for the US and China to exchange views at several levels, down to the undersecretaries of state, across a broad range of issues.

So thank you for the excellent response, and also to the rest of you who expressed appreciation for my ramblings.  As a newcomer, I think I should feel honoured that Hogarth dropped by as well.

And thank you to all the TOD contributors.  I read extensively in a wide range of areas that have a global effect on our lives and I find that TOD provides me with very valuable information and insights as I try to gain some understanding of the world we live in.

We can see that just US peak oil changed the world in which we have lived our lives in profound ways that certainly I never recognized as being a direct result of peak oil.

While I managed to jump out of one very hot pot with my skin nearly intact, I am learning that I have only jumped into another much larger pot that is getting pretty hot.  I don't quite know how to get out of this pot, and this time around I am less inclined to worry about only my skin, so it is my profound hope that we will all work together to turn down the heat.

Please do keep posting here. Your comments on China are balanced and informed. They add to an important topic area that I feel is covered frequently, but not well at TOD.

I live in Thailand, where the authorities don't seem to be showing the wisdom of the Chinese. The Thais are struggling to figure out their balance in global economy and are entering a crisis point. I'm cautiously optimistic about the future, but terrified about how the country is going to get there.

Never get the credit they deserve.
Aaaaagggghhh! That's the thing. I won't never post giving away Jack. Jack is the shit. You never give away Jack.

Litvenyenko. Poem in on e word.

You just float downstream.

I never give up my Jacks and my Jacks never give up me.

We'll meet. Many years from know, and over some beers.

Thank you.

Wow! No sooner said than done.  I see this morning that Thailand has implemented strict capital flow controls.  In effect, they have forced deflation by restricting the transaction rate severely.

It will be very interesting to see how this unfolds, but it might work out well.  Malaysia did something very similar a while back and it seems to be working out for them.

There is a lot of money out there and it seems to be chasing 'tipping point' speculative bubbles, taking on a life of its own.  I can't blame governments for trying to protect themselves from what they perceive to be pure speculation.

My overall impression is that this is a positive move for Thailand.  What will be interesting to see unfold is whether other governments follow suit as speculative money pursues fewer and fewer opportunities.  A general trend towards slowing down the transaction rate in emerging economies will bring money back to the US.

I can't remember the fellow's name off the top of my head, but one of the PayPal founders who runs an exclusive hedge fund out of the Presidio in San Francisco is betting on exactly this scenario.  His hedge fund is long on the dollar.  He may be on to something.

He is also betting on peak oil, by the way.

Actually, I can't claim any predictive credit. The capital controls had already been announced when I wrote the comment. As you probably know, they have now been lifted.

I agree that Thailand needed to do something to slow the appreciation of its currency. An export oriented economy can not afford to have the "best performing" currency in the world. However, capital controls are a blunt instrument and markets are fickle.

I believe the Bank of Thailand wanted to learn from Chile's experience that partial controls can be evaded and made the policy apply to all investment. I am surprised that they tried this drastic step after not lowering interest rates at the Monetray Policy Committee meeting just two days ago.

Part of the problem was that American mutual funds can not by law put cash in the custody of a foriegn central bank and many Thai only funds can not allocate 30% of their total capital to cash. Foriegners have been large net buyers this year and when it appeared that they might not be able to buy anymore at all, the market bottomed out.

Regional central banks were quick yesterday to announce that they would not impose similar controls. However, as you noted there is a lot of money floating around and a premium on anyhting that isn't the dollar. While I suspect fear over the dollar's crash are exaggerated, I do think that countries caught beteen China's managed Yuan and the uncertain dollar are at risk.


As I was driving in the car yesterday I was thinking the curbs were pretty drastic, but that it gave Thailand lots of room to back down.  It looks like they backed down pretty quickly.

I understand they released the stock market yesterday.  I understood that controls on monetary instruments were still in place.

I was surprised at how quickly markets reacted in other ASEAN areas.  That may have been a reaction to the restrictions on the stock market, but it was probably also taken by speculators that their behaviour is unwelcome and could be curtailed.

Here is my chief concern, and I'd welcome your take on it.  Genuine investment is clearly a good thing for emerging economies.  However, pure speculation, particularly in monetary instruments can be very dangerous.  Speculators come in with sophisticated 24/7 computerized trading systems.  Locals get involved in the game, but don't stand a chance.  When the computers move on to the next market, and they can do it in a nano-second, the local gets left holding the deflated bag.

I see the issue as being more than simply a strong currency hurting exports, which it will.  I see pure speculation from external sources as uncooperative, and unfriendly damaging behaviour.

Now here is a thought. If China were to suddenly allow the Yuan to float in the financial markets, without any controls, how high would speculators run it up before "profit taking?"

Thailand has done something very significant (from a chaos theory point of view) at a key time in the economy of the US.  I don't know how this is going to turn out, but it is going to be extremely interesting to watch.  We may be able to trace back some near to mid-term future events in the US economy directly to Thailand's recent actions.

Fascinating stuff.  

What do you think would be the result if China does dump its US treasury bonds?

First of all, I am convinced that dumping bonds is the absolute last thing China wants to do.

If China were to begin a wholesale dumping of bonds other nations will surely follow in a mad 'run on the bank.'  That would drive the trading value of 30 year bonds and greenbacks to virtually zero.  It is hard to imagine how the world financial system could continue.

In effect, it would be an act of (economic) war.  I say economic because it would be world economy destroying and it is China's best weapon.  China could not want, and is not equipped at this time for, a military war with the US.

Best weapon.... now there is an oxymoron if I've ever heard one... mumble, mumble, mumble...

Let the games begin!

India joins oil buyers club

The following link is not to EIA but rather to AEI.
Also (importantly) it is a talk given over a year ago (2005 not 2006).
An economics professor (Hamilton of UC San Diego) talks about his projections for Peak Oil.
It is interesting to see what "they" (the economists) saw over a year ago and compare it to what the CERA-topians see today.

If you are going to watch this video (kind of long), I suggest you open the same one in 2 windows and mute/pause one of them. Then when the professor puts up a slide, you can fast forward & pause to the slide in your muted version because the camera switches to him talking most of the time even as he focuses on the slide.

Also if you start watching, I suggest you watch the whole thing to the bitter end because what the professor seems to be saying in the middle is not where her ends up at the end. It's sort of a surprise ending to what seems to be a cornucopian economist's analysis in the middle.

Question to Kehab, Westexas or other grapholigst: At time point 0+35:33 the Professor puts up a slide showing continuous increase in production through 2005. Very different from the plateuing we see here on TOD. Is he lying or are both graphs true, and if so, how can that be?

11/2005 Professor Hamilton on Peak Oil video here

Prof. Hamilton is the guy who runs Econbrowser, and he has had blog-conversations with TOD contributors (each blogging and referencing the other).

FWIW, I think the main difference between his charts and the ones we commonly see here is scale (on the time axis).  Generally, TOD folks zoom in to the last few years.

Thanks for linking Dr. Hamilton with Econbrowser. A detail I had not paid attention to before.
Thanks much for this link, step back. As you probably know, Dr. Hamilton and I have gone back and forth a bit -- mostly in agreement about things. Stuart has also done the same with Hamilton in the past.

There's yet another story in my local paper about the increasing reliance on local food banks this year.  This story focuses on rural people who need the food aid and the difficulty for them because they can't afford the gas to get to the center.  They also cited an example of someone needing $3 milk but it costs them $9 to make the trip.  The price of gas is mentioned repeatedly.  I figure that for every 25cent increment in gas price, an increasing percent of our population is going to need social services, food and energy assistance, and medicaid.  Combine that with increasing infrastructure costs to our local and state governments, reduced sales and income taxes collected due to a recessionary environment and higher unemployment, aging demographics, and higher food and heating prices for everyone.  As for the rural perspective, one possibility is that these same people who were down on their luck causing them to move to be near relatives in the country to save money will be forced to move back to towns and cities where they will be closer to the services that they need.  At some point they will also realize they have to give up the car to afford their necessities.  Then what?  Our infrastructure isn't prepared for this.  I've also heard that "meals on wheels" programs are having difficulty finding volunteers because of higher gas prices.  I apologize for posting my thoughts on this because I realize none of this is new news or anything any of us haven't thought about before, yet, I don't think everyone realizes how quickly it's coming at us.
Consider what will happen to Social Security once the economy starts to tank. This and Medicare are nothing but ponzi schemes based on the current workforce paying in so that it can instantly be paid out.

When those checks stop and the EFTs? Hell will be unleashed.

Our economy is barely surviving as it is.

social security is taking in $ 172 billion more than it pays out (2005)  unfortunately these "trust funds" are being "invested" in us debt which is $ 8.7 trillion
 $ 1.86 trillion of that debt is the social security "trust" fund     social security is not currently insolvent   it is the us treasury that is insolvent    so if we desire to "fix" social security  we really need to "fix" our addiction to government debt      
Peak Oil is not a technical problem, it is a social/cultural/economical problem.

The food-bank news is the tip of the iceberg.  When the holiday-season-cheer-powered holding-together of the financial markets ends, and the dollar collapses further, what then?  When the housing bubble bursts further, causing not only problems for overextended homeowners, but decreased "consumer spending" overall, what then?  Likely increasing unemployment, causing further drop in that vaunted spending, etc?

Sometimes I think that the most important thing to do to prepare for the initial impact of peak oil is local currencies.

They also cited an example of someone needing $3 milk but it costs them $9 to make the trip.

In the 'old' days people living in rural areas would get milk from their cows.

   No mammal past infancy "needs" milk, and only one species uses it much from another species.
Actually, in the old days, rural people went to town once a week and stocked up on everything they needed.  There were no frivolous or unnecessary trips.  It took careful planning and budgeting.  Times have changed in many ways.  I didn't mention that the article also said one of the families in need had five children.  All of those things do not answer the question of how can social services adjust to these growing needs?
Perhaps not with everything else currently available in our diets, but milk consumption by adult humans has proved useful enough in the past 3 thousand years such that the genetic ability to digest lactose post infancy has evolved independently in separate populations.
Absolutely, so much so, in fact, that the "normal" gene for lactose intolerance became maladaptive. Those "mutants" who could tolerate lactose survived droughts, etc.

I milk my own cow.

I wouldn't go that far.  The majority of humans on the planet are lactose-intolerant. That hardly suggests it is maladaptive.
Of the societies with lactose tolerance vs intolerance, who has the longer life expectancies?
Japanese are lactose-intolerant, and have the longest life expectancies in the world.

The Masai are not lactose-intolerant, and like many in Africa, have life expectancies almost half of the Japanese.

Icelanders are lactose tolerant (apparently 100%) and their lifespans rival the Japanese.  Like the Japanese, they eat LOTS of fish (until the introduction of pizza that is).

Best Hopes for Fish eaters :-)


Best hopes for fish-eaters is likely to be very bad news for fish.  ;-)
Already is.

"The Wholesomeness of Icelandic milk
Iceland's breed of cow has been virtually isolated from other breeds since the country was settled. In Europe and the USA, however, crossbreeding of cows has long been common. New research shows that the uniqueness of milk from Icelandic cows is even greater that previously thought: the fat and protein make-up is different than that in neighboring countries, and to a large extend more wholesome."

"Icelandic cows are nourished on unusually nutritious feed. One reason for this is the clean environment - in part due to most of the island being uninhabited. Fresh air and crystal clean water translate into pristine vegetation. Iceland is situated in the high north where spring and autumn are long, summers short and winters mild because of the Gulf Stream. This combination makes for healthy, lush vegetation which gives Icelandic milk its unique taste"

ah, of course. I stand corrected.
In a free market this is exactly what declining oil production will do. Prices will rise for the basic necessities. The real crisis initially will be for the poorest. The overall well being of our society is never a consideration. The goal by our elite is greed driven exploitation. How can we milk these suckers for profit? It will be nearly impossible to have any real economic growth with declining oil production. All economic growth will be an illusion created by debasement of the currency. How long can the illusion be maintained before the mountain of debt comes crashing down?

I can see the oil crash could come in phases. Over 50 years the drop may only average 2-3% per year, However, if the depletion of the large fields like Cantarell and Ghawar occur at the same time there could be a period of 4-6% production drops.  

TEHRAN, Iran - President Mahmoud Ahmadinejad said Saturday his country was ready to transfer nuclear technology to neighboring countries, nearly a week after Arab states on the Persian Gulf announced plans to consider a joint nuclear program.

2. He could attack Iran and turn the world upside down. This would guarantee his place among - not just the worst US presidents of all time - but the worst world leaders of all time. Attacking Iran would rank among the biggest military blunders in history.

Do you know about the spy sting on Iran?

Hello TODers,

Has the migration to the last sustainable habitats begun?  From the LATimes: Circling the Welcome Wagons
Equity-rich boomers who yearn for wide-open spaces are heading for the Rocky Mountain West--Montana in particular--where the locals are waiting. With pitchforks.

If you believe that civilizations should be predicated on preserving the natural systems that sustain them, and on sharing them evenly with other species and people, then the balance has, in fact, tipped, not only in Montana but in the other states in the Rocky Mountain West. The migration has become an invasion.

I don't know what the answer is. What the interlopers are after is the lifestyle of the people who live here--a lifestyle that can't be possible if too many more people join us. Just like logging and mining and overgrazing, population growth is a threat, perhaps the major threat.
It may be too late for us TODers on the lower rungs of the economic ladder to make the move to more desireable and possibly survivable habitats.  Such is life.

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

Oregon has been hostile to newcomers for decades, probably since the 1970s.  However, money talks.
Hello TODers,

Allan Sibanda, 23, has been coming here on and off for the past five years, scuffling with baboons and vultures for the least-rotten scraps. Since midsummer, garbage has been his sole source of food, he said.

Food shortage threatens Zimbabwe's poor
Even the well-off are running out because of low crop yields

"There could be widespread famine here," said John Makumbe, a professor of politics at the University of Zimbabwe in Harare. "I think we could have 60 to 70 percent of people desperate for food by February."

"If you care about poor people dying in great numbers, then Zimbabwe is a story that should have the attention of the world," said David Coltart, a member of parliament from Bulawayo.
Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?


Hello TODers,

Have you bought your children a wheelbarrow yet?  

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

Hello TODers,

"Mugabe sweeps through Harare in a gas-guzzling limousine and has his own ambulance, while ordinary people are ferried to hospital in pushcarts and wheelbarrows.
"Eish! Here come Bob and the Wailers," laugh Harare wits as President Robert Mugabe's massive motorcade approaches.

It is a play on Jamaican reggae group Bob Marley and the Wailers, much admired by Zimbabweans, and the ironic nickname, Uncle Bob, they give to the octogenarian head of state.

You can hear Bob and the Wailers approaching from three kilometres away.

When frustrated motorists unable to get fuel at a petrol station shouted recently at the passing Mugabe parade to do something about the shortages, heavily armed Presidential Guards stopped and beat them up.

This article is a good read, but hopefully it will help convince US people to buy bicycles and wheelbarrows.

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

Hello TODers,

Is this Time Magazine article entitled Wheels of Misfortune premature?

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

Hello TODers,

Ninety-nine years ago this month a crew of workers carrying picks, axes, shovels and wheelbarrows climbed a hill outside Mindoro, Wisconsin and started digging at the rock.

The old road to the cheese factory in town was just too steep, so over the course of a year the workers made a cut 74-feet-deep, 25-feet-wide and 86-feet-long without the aid of any machines.

"For the people that worked on it, it should be a tribute for those that worked so doggone hard," Moore said of the Mindoro Cut being placed on the historic registry.

"If you wanted something done you just went out and did it."

Now that is the kind of spirit we need for the postPeak age!  Just add 150 million wheelbarrows!

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

Hello TODers,

The Happiest People on Earth?

Nintendo has just introduced the most realistic video game ever!  Avid enthusiasts will go to any lengths to protect the theft of their considerable investment in the Wii-barrow!

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

  I'm not sure I'm fully 'Grokking' the wheelbarrow theme yet, but as an intrepid advocate of simple and useful, hardworking tools, I thought I'd chime in..

  For my birthday, (42), Mom showed up with two, big brown paper bags.  I thought there must be a frozen turkey or two in there, but no.. clueing in from some offhand comment of mine, had seen a deal at a surplus store and gotten me 4 Wheelbarrow wheels, with which I'm making a "hybrid" Wagon, BikeTrailer, Camera Dolly, Mini-Rolling-Parade Platform..  Great wheels!  Then again, I could have 4 Wheelbarrows!

  Second thought.. when we built our cabin back in a roadless woodlot in Maine in the 70's, Dad fashioned the 'One-wheel Carrier' to get lumber into the site.  It was like a Stretcher with a bikewheel at the Center, for two people to manage long piles of wood through narrow wood trails.  Brought to mind a Siamese-twin Wheelbarrow!  Great Device!

Bob Fiske in Portland

Hello Jokuhl,

Thxs for responding.  The Chinese invented the wheelbarrow for their military, and considered it a secret weapon because it saved so much labor.  

Did you see my earlier link above to the 1970s photo of about 50,000 chinese laborers using wheelbarrows in a giant earthmoving project? America had lots of earth-moving equipment in the 1970s because we had lots of cheap energy and resources.  One barrel of crude = 25,000 man-hours of physical labor! Two guys on bulldozers could replace these 50,000 workers.  In a worstcase scenario: sometime postPeak we won't have bulldozers, but we will still have workers.  We can accomplish alot more work if we have lots of wheelbarrows.

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


from your link.

"Sail driven wheelbarrows became a widespread and well developed technology in China".


Best Hopes for human ingenuity,


Great to see your posts together.. Bob Shaw's request got me thinking that we could keep the SWR safely and productively loaded aboard your SRR (Strategic Railcar Reserve, right?), for handy deployment!

Gotta look at those 'windbarrows' now.. I may try not to buy Chinese, but I've gotta love em!  Relentlessly pragmatic! (Can't beat em, join em, right?)


Aww. C'mon know. My Boobs are quite big.

Let's just talk about this gay thing after you and Leanan figure it out.