DrumBeat: December 20, 2006

[Update by Leanan on 12/20/06 at 12:58 PM EDT]

Nigeria militants say ransom offer nixed

LAGOS, Nigeria - A militant group in Nigeria's oil-rich river delta region said Wednesday it has turned down offers of ransom for four foreign hostages, reiterating that the captives will only be freed in exchange for imprisoned comrades.

"As earlier stated, the release of these four individuals is tied to the release of four hostages of Niger delta origin in Nigerian government hands," said an e-mail from an address used by the Movement for the Emancipation of the Niger Delta, MEND.

Feds withdraw rare wildflower proposal

SALT LAKE CITY - The U.S. Fish and Wildlife Service on Tuesday withdrew its proposal to list as threatened a wildflower that grows only in areas of Utah and Colorado where oil shale and tar sand exploration are being done.

The decision prompted environmental groups who have fought for the listing of the Graham's penstemon to accuse the FWS and Bureau of Land Management of choosing energy development leases over a threatened species.

Incentives pushed deep-water drilling

Government incentives played a key role in spurring companies to drill for oil and natural gas in the Gulf of Mexico that might have otherwise been too costly to explore, according to a report prepared for the Interior Department and just made public by the agency.

Middle East crude's differentials higher

Singapore: Differentials for Middle East crude continued to creep higher yesterday, with medium and heavy sour grades gaining the most on the back of Opec's second supply cut, traders said.

Sakhalin-II Stake Sale May Hit Shell's Reserve Replacement Strategy

Given the importance Sakhalin II has in Shell's reserve replacement strategy, any significant loss of future production volumes and reserves under a renegotiated production sharing agreement could be detrimental to Shell's efforts to catch up with its peers in respect of reserve replacement and reserve life, an important parameter to evaluate an oil major's long-term growth prospects.

The Cultural Economist's Report on Oil Depletion

Of all the issues we confront in the 21st Century, resource depletion promises to have the greatest impact on our economic and cultural destiny. And of our dwindling resources, none will have a greater impact on our future than the decline of oil and natural gas production.

Lester R. Brown: Why China Is Rising And The U.S. Is Declining

National policy failures such as not adequately supporting the use of renewable energy technologies have contributed to the growing U.S. trade deficit. For example, the United States should be a leading manufacturer and exporter of solar cells and wind turbines, but it has fallen behind both Europe and Japan. The solar cell, invented at Bell Labs in 1954, is an American technology. But the U.S. effort to develop solar energy was so weak and sporadic that both Germany and Japan forged ahead and developed robust solar cell manufacturing and export industries.

Energy spurs US producer prices surge

US producer price inflation rose at its fastest pace in more than three decades last month as energy and vehicle prices rebounded, helping push wholesale costs higher, government figures showed on Tuesday.

The producer price index rose 2 per cent after a decline of 1.6 per cent in October, the strongest gain since 1974. There was also a sharp rise in core prices – excluding food and energy – which saw the fastest rise in 26 years, with an increase of 1.3 per cent last month.

ConocoPhillips producing renewable diesel fuel

ConocoPhillips has started commercial production of renewable diesel fuel at the company's refinery in Cork, Ireland. The refinery is currently producing 1,000 barrels of the renewable fuel, which includes soybean and vegetable oils among its ingredients.

Sanyo to Spend Y19 Billion to Boost Solar Cell Capacity

China to limit use of grains for biofuels amid renewed worries over supply

SHANGHAI, China: China will restrict the use of corn and other edible grains for producing biofuel, state media reports said Monday, noting concerns over surging prices despite expectations for yet another bumper harvest.

Report backs fuel cell ships

EU tackles aircraft CO2 emissions

BLM Releases Study of Proposal to Ease Pinedale Anticline Restrictions

The Bureau of Land Management released a study last week of an industry proposal to waive seasonal restrictions on natural gas drilling on Wyoming's Pinedale Anticline, which found that the plan "could cause significant adverse impacts to the human and natural environments."

Global energy hunger means boom for Norwegian outpost: Barents Sea's possibilities weigh against ecological concerns

Could Spot Uranium Prices Reach $100/pound?

I feel the uranium market right now is the world’s most unbalanced commodity market. In a sense, the world, through the nuclear power industry, consumes approximately 172 million pounds of uranium per year, and the world only produces about 92 million pounds of uranium per year. The supply deficit is made up through above-ground inventories, which are being worked down pretty quickly.

Oil Prices Impact Negatively On Zimbabwe

International oil prices soared in 2006, reaching an all-time high of US$78,36 per barrel in August impacting negatively on non-oil-producing countries such as Zimbabwe.

Venezuela's Chavez Offers Malaysia Oil Exploration Stake

Venezuela is ready to jointly explore for oil with Malaysia and help it boost its reserves, President Hugo Chavez said Tuesday.

"We can help over there too. We can explore in Malaysia," Chavez told visiting Malaysian Prime Minister Abdullah Ahmad Badawi while touring an oil refinery in eastern Venezuela.

Nigeria: Biofuel - Nigeria Needs 7bn KG of Cassava Annually

China to assess the energy consumption performance of real estate projects

Energy-saving initiatives will be obligatory for all real estate investment applications in China from the first day of 2007, as the country moves to boost energy efficiency.

Is There A Synthetic Fuel In Your Future?

As wider unrest threatens traditional petroleum resources in the Middle East and as industry observers disagree on whether "peak oil" has been reached, the U.S. military is moving forward with plans for half of its turbine fuel to be synthetically derived by the next decade.

The end of Dollar supremacy

The Iranian government has finally developed a new weapon that can destroy the financial system underpinning the American Empire. The U.S. dollar dominance is coming to an end.

Rosneft to boost oil production 8% y-o-y in 2006

MOSCOW - Russia's state-run oil company Rosneft will produce 8% more oil by the end of the year than in 2005, the company president said Tuesday.

Georgia claims energy crisis 'over'

A recent agreement signed with Azerbaijan and Turkey appears to have lessened Georgia’s gas woes just in time for the winter. But the country’s energy talks with Iran remain a wild card - both in terms of the Georgian government’s relationship with the United States, and its ability to do without higher-priced Russian gas.

Army Engineers Work to Improve Iraq's Oil Export

Court gives hope to price-gouging case

A federal appeals court on Tuesday revived California's claim for $1.4 billion in refunds to utility customers for high-priced electricity during and after the 2001-02 energy crisis, saying federal regulators failed to examine whether the state was gouged in long-term energy contracts.

EU New Joiners to Get Biofuel Crop Cash from 2007

BRUSSELS - The European Union's newest joiners, including Bulgaria and Romania, will receive subsidies starting in 2007 to support them growing more feedstock crops for producing biofuels, officials said on Tuesday.

Helping America Take the Lead: A Climate Exchange Video clips from a Sierra Club forum on climate change, including one of our pal, Vinod Khosla.

Oil Rig Shortage Slows Chevron Bid to Tap Gulf of Mexico Fields

A global shortage of deep-sea drilling rigs is costing Chevron precious time as it taps the Gulf, and the equipment deficit may keep oil prices high. A prime example is the $3 billion field dubbed Jack. Chevron and partner Devon Energy Corp. announced the deepest-ever well test there on Sept. 5. Politicians backing energy independence exulted. Investors sent Devon shares up 12 percent and Chevron's up 2.3 percent.

They didn't know the drilling rig Cajun Express had already plugged the Jack well and moved to another urgent job. Drilling at Jack won't resume until at least July, Thornburg says.

This guy's making a movie about peak oil, and he didn't even link to us. What a Way To Go: Life At the End of Empire

A middle class white guy comes to grips with Peak Oil, Climate Change, Mass Extinction, Population Overshoot and the demise of the American Lifestyle.

Gas prices jump in California, U.S.

Retail gasoline prices rose nationwide and jumped substantially in California over the last week, the federal government said Monday, a partial reflection of crude oil prices that have stayed above $60 a barrel for the last three weeks.

Auto trade group names Democrat to top post

Major auto companies on Tuesday turned to tech industry lobbyist Dave McCurdy, a former Democratic U.S. representative, to lead their legislative and regulatory initiatives in Washington.

...Automakers in 2007 will be looking for Congress to approve consumer tax breaks and incentives for companies to retool and develop plants for manufacturing more vehicles that run on ethanol and other alternative fuels.

Honda to invest in eco-friendly cars after record year

Some European birds delay migration due to warmth

OSLO - Some European birds have failed to fly south for the winter, apparently lured to stay by weeks of mild weather that experts widely link to global warming.

It is time to accept Interstate 69 and move on

Some argue we don’t need a new road between Indianapolis and anywhere. We should be rebuilding the rail system we had back in the 1920s. Sorry, my friends, the automobile is a far superior means of transportation than any train. Most of the people who support mass transit would not ride it even if they had the opportunity. They do not want to wait in the rain, walk significant distances with packages, and be out at night unprotected by steel and a powerful motor.

As for the oil shortage: as the price of oil rises, alternatives will be sought and offered. That’s the way the market works. The “peak oil” problem is a crisis that we will never see.

New Zealand's response to Peak Oil

The Transport and Oil Working Group of the New Zealand Sustainable Energy Forum has just released Peak Oil: A Major Issue for New Zealand [PDF, 60 KB], which is designed as a quick guide for the public and the media on what the Peak Oil issue is about, how it affects New Zealand, and how New Zealand should respond.

Impeach the President: The Case Against Bush and Cheney, a New Book - Reason #8:

Denying global warming, disregarding peak oil, and placing oil industry profits over the long-term survival of the human race and the viability of the planet.

Approaching the Year's End

As we approach the end of the year, there will not be a similar energy crisis, because Russia has taken its own lesson from the crisis. At any rate, because it has come to an agreement with the Ukraine, there is no possibility of a crisis emerging. However, it is obvious from now that at the end of this year and the beginning of next year there will be other issues related to natural gas and these will lead to other problems nearby in the region.

Book Ideas for Christmas

Here's a warning: this generation that is alive now is in for a very rough ride. While the above books are gut-wrenching and entertaining in a reality-TV sort of way, The Long Emergency paints an alarming picture of a world filled with catastrophe. Kunstler is an excellent writer, and a very well informed one. Being forewarned with so much insight, and so much sensible detail about the "converging catastrophes of the 21st century" may be depressing for some, I found it very helpful.

Wind On The Line

Despite the potential of wind as an alternate energy source for Idaho, a recent proposal by Idaho Power Company makes some wind developer plans seem quixotic at best. The state's largest utility wants some of the windmill wild-catters to pay for power grid upgrades to transmission lines and then some.
Mexican oil production for November has been published. At 3,163,000 bpd, production was 10,000 bpd down on October and about 150,000 bpd down on November last year. This was the lowest monthly production of the year so far.
mmm NGLs down heavily as well, interesting.
GWB would be wild as a gambler (or running a hedge fund). The more he loses the more he bets. He reminds me of Bogie in that movie about the strawberries.http://www.washingtonpost.com/wp-dyn/content/article/2006/12/19/AR2006121900880_pf.html
hell i though you were going to link me to a bogie movie   i've seen them all (i think)   but the one about the strawberries     ?  you lost me
Elwood: The strawberries part might be wrong. I think it was called "The Caine Mutiny". He played a chief poobah on a boat who thought they were stealing his strawberries (I think it was strawberries).
  It was ice cream, might have been strawberry ice cream though... Great flick BTW
Captain Queeg had earlier (on another ship) solved a mystery involving missing strawberries; he insisted that the same logic would provide the same solution to the missing ice cream; that is why he collected all those keys, working on the theory that somebody had an unauthorized key.

People who believe they can repeat past victories with methods that worked before would be well-advised to look at evidence to see whether the underlying situation has changed. Nothing fails like success.

"Nothing fails like success."
Nice one Sailorman! Is this yours?
A credo for a doomer like me.
i think dubya and his neocon handlers were intoxicated" with bush's daddys success
I don't know who originated "Nothing fails like" success, but I saw it in a Peter Drucker book some thirty years ago.

Another nice variation is:
Nothing fails like excess.

Could be the motto of our wasteful "happy motoring" society in the U.S.

I put this late in yesterday's Drumbeat. I am willing to put up $1,000 that oil won't hit $100 in 2007. Consider it confidence that I am correct about the reasons the Saudis dropped their exports. If I am wrong and they have actually peaked, then oil will probably hit $100 in 2007.

If we can find an agreeable arrangement, I will bet $100 per person for up to 10 people, or any combination up to $1,000. If there is enough interest, I may bump it up to $2,000. My suggestion would be that the money goes into a Paypal account by early in January. The account could be administered by one or more of the editors here. TOD could keep the accumulated interest for administering the account.

The bet would be for a specific contract on a specific benchmark crude. Something like the front contract on WTI.

Any interest?

Not from me. I'm a strong believer that the price of oil depends not just on the availability of oil, but on the availability of money, ie. it depends on interest rates.

That is why I think, for instance, the large fall we saw this year in the price of oil from $78, was due primarily to rising interest rates around the world. Unlike many, I don't think it was due to the high price of oil reducing demand, I think it was the high price of money which reduced demand. I tend to believe in many of Andrew McKillop's arguments in this regard.

So, since I don't claim to know what is going to happen to interest rates, I am not going to bet on the price of oil.

I'm a strong believer that the price of oil depends not just on the availability of oil, but on the availability of money, ie. it depends on interest rates.

This is true, which is what I think the "$100 oil in 2007" voices are missing. For me, betting against $100 right now looks like a safe bet.

So you're basically selling a future call contract?  You will pay above $100 and you get paid below $100.  Have you done anything to hedge your bet?  :)
It could be possible for oil to be peaking, AND for the price of oil to go down. e.g., if the housing bubble continues to pop, we could have a deflationary recession a la Japan 1990s.
Actually I firmly believe next year is deflation, followed by excessive fed credit which translates to higher than avg inflation, but I'm starting to moderate my view on hyper inflation ala Wiemer.

I just read that all of 2005 the Fed conducted three permanant fed open market operations.  As of this morning they have conducted NINE!  3X's as much credit was pumped into this economy in the last year, than the preceding year.  The pump is being primed.  Oh and we're only talking about $14B ((this year)) against roughly $4B last year.

What is an "open market" operation?
RR: Actually, oil staying under $100 in 2007 doesn't prove your point. Even if Saudi production has peaked and is declining, $100 in 2007 is unlikely IMO (but quite possible).
Of course it doesn't "prove" the point. But you have a much higher probability of $100 oil if Saudi has peaked. If they haven't, then I think there is near zero chance of getting $100 oil. Since I have seen a number of voices here call for $100 oil, I just want to make it clear that I am willing to put some money up in a friendly wager.
Some people would argue that Saudi production has already peaked, yet oil still didn't reach $100 per barrel.

Widespread acceptance that Saudi oil has peaked would probably guarantee oil went to $100 (barring interest rate increases), but the peak itself might not be enough to do so.

And then there is Russia....
Well... I'm not quite sure 1 year is enough of a timeframe to validate this. The cushion of petroleum stocks and "soft" demand (curtailed by minor price increases) is enough to keep the lower price party going for much longer IMO. 100$/barrel will require not "peaking" but crashing of SA oil ouput.

BTW crude oil stocks are down 6.3 mln.barrels. Maybe OPEC will manage to spoil our Christmas parties after all...

"Even if Saudi production has peaked and is declining, $100 in 2007 is unlikely IMO (but quite possible)." By the same token, oil trading at or above $100 is not proof that Saudi production has peaked. I think there are a number of geopolitical scenarios that could see oil above $100. A serious escalation in Iran, a regional escalation of the mess in Iraq, or a successful terror strike on a key Saudi oil installation would all have a chance of pushing oil to a $100 spike... Only the latter scenario would involve a reduction in Saudi exports, albeit a totally involuntary one.
Count me out as well. I happen to believe that the price of oil is controlled by the FEDs through derivative trading,  and has very little to do with perceived shortages. Since I dont know what they have in mind, I dont know what the price will be.
I tend to agree with you on this to some extent.  I believe there are times they intervene and times they let it ride.
Robert, I am totally convinced by your arguments and the data I've seen, and if I was to participate I would be betting on your side (with your permission of course).

But I have reasons to refrain. 2007 is preelection year. Who knows what the neocons will think out of desperation for losing office. Israel bombing Iran - and there you lose otherwise certain (in my view) bet. Your arguments may still be valid but in the end it may encourage the cry-wolf-and-lose -credibility crowd.

Basically every year is 'pre-election' year by that standard :P  Come on now, lets leave the conspiracy theories out of it this time.
Simply labeling something a "conspiracy theory" is not helping your point. If I magically forgot all that happened in past 4 years and somebody told me that the US presidency will use fabricated intelligence information to invade a sovereign country (on a preelection year, what a coincidence) I would have told him to beat it. So would you, right? Now wake up for the reality of today's world which is already slightly mad.

Israel bombing Iran with US support is a quite probable threat and you need to be much more argumentative to convince me on the opposite.

I'm sorry, but stating that the 'evil neocons are going to try to get revenge for losing sometime next year' is a conspiracy theory.
Please quote me where I stated that. This is entirely your interpretation and I did not even hint something in that direction.

Partly it is my fault because I did not extend my thought, I just assumed you know what I was implying. Inventing an external enemy and/or fighting it is a century-old priom used by any government to strengthen its positions at home. Just look at the Bush ratings prior Afghanistan or Iraq. Just look at the timing of all wars lead by the US in the past 50 years. Every president has his war, have you heard of that? And please don't tell me that you are from those "war on terror" believers, because I'll totally write you off.

Levin: It is amazing how few remember how popular the Iraq adventure was when GWB landed on that aircraft carrier (I think he had his approval rating up to 91%).
Actually, W's approval ratings hit the high 80s/low 90s in the wake of 9/11 and then began their inexorable decline. By early 2003, they were in the high 50s/low 60s. The "success" of our invasion of Iraq pushed his approval ratings back up to the high 60s/high 70s - appallingly high for the job he'd done as of that date, but still nowhere near 90.

Complete history here: http://www.pollingreport.com/BushJob1.htm

Piano: My mistake. I mixed it up with the honeymoon period post 9/11.
"But I have reasons to refrain. 2007 is preelection year. Who knows what the neocons will think out of desperation for losing office."

How would you like to interpret this phrase?

Like this you dim witted miscreant....

Gee...this woman name Valerie Plame gets outted after her husband makes some rather snide comments about the reality of Iraq before we entered which it so happens was the TRUTH.  However his family takes the fall with him.  Yeah thinking that people want to get back at you for losing is a conspiracy theory.  What an idiot.

I don't think Levin is a native English speaker. His statement is ambiguous, but I think he was referring to what the neocons would do because they were afraid they'd lose the next election. Not out of revenge for the election already past.
I was assuming it and was surprised that some other interprations also were found... personally I find the idea that "revenge" could have any place in a political game where billions are at stake a pretty ridiculous one. This is not a soap opera for God's sake.

No, if they do it it will be out of the most simple and pure reason on Earth - greed for power (and money as it's flip side).

I invite you to join me in my New Year's resolution never again to respond to trolls.
Thank you. I think the guy gets his rocks off by getting serious people to respond to him. He asks the same dumb questions and twists comments in the same disingenuous way time after time.

He particularly goes after WT, partly because WT's "important," and partly because WT is a gentleman who always responds resonably and at length. What better way to get reactions than to bait him day after day?

I agree Jim.  Why anyone responds to this person is beyond me.  Don't feed the animals...
I would like for take this occasion to nominate Hothgar for the:

Blowfly Award

The blowfly is only good at eatting shit and bothering people.

Yergin Hoth-bore is my new name for him.  My theory is that he really is Yergin because he is very suave with misrepresenting the numbers.

Robert, is this a bet you would take me up on?

Hothgor = Yergin

Poor RR! He makes one little friendly wager, and now it's like he's the local bookie!  :-)

- sgage

I'll take that bet.

Dragonfly41, I will bet you $1,000,000 that I am not Yergin, or even distantly related to him, nor have any connection whatsoever to him.

Want to take me up on my wager? :)

Well...the bet was with Robert.  How would you prove yourself?
You already know my name, and where I live, what else would you need?
When did you give me this info?
Will do - (good idea), but it's not 2007 yet....
My interpretation was, "Who knows what the neocons will think of out of the desperation that comes from the fear of losing office."

The original phrasing was not perhaps sufficiently perspicuous, but I think the meaning came through.

No, Hothgor, it's a prediction.  'Conspiracy theory' can only be used for actual [past] events.
That the neocons are evil is not a conspiracy theory. That much is fact.
Robert...I don't like the $100 oil price bet.

How about a bet that oil will break the price set in 2006? What was it...around $75?

Robert, an interesting wager, I'll pass myself.  I wouldn't bet against T. Boone Pickens, for one thing.  But I think what's gonna happen, next year or '08, is total collapse in the ME, cutting off the oil supply.  This will crash economies.  Americans won't be able to get gas. Discussions about geological peak will become moot, and we'll blame the Muslims for all our problems as we've been trained to do since 911.
Keep in mind that if/when worldwide economic collapse happens, the reduction in air pollution will allow worldwide temps to quickly rise as the true effect of greenhouse gasses is felt without the counterbalancing effect of air pollution reflecting energy back into space.
And Bush just told us all to "keep shopping".  Sigh...
Cmon, that was less then 6 months ago!  Surely your simply jesting that you forgot what the all time high was already!
some guys were telling me about hyperinflation yesterday, maybe they'll step up ;-)
There are a number of actual prices to pick from when making this bet. Let me suggest the front contract of BRENT IPE, which would be February 08.

I would further suggest that you adjust this price for any currency variations - i.e. if the dollar were to significantly weaken, then oil prices may rise in $ terms but not in real terms for the rest of the world. You are betting on the "scarcity" of oil - not currency fluctuations.

The Federal reseve publishes a "Major Currency Dollar Index" that can be used as a factor to determine the real value of oil.


One thing that's interesting about Robert's offer is that a person might rationally accept it without having any real belief that oil would go above $100.

eg. as a hedge against an oil shock.

But it seems like an expensive hedge.  I wonder what sort of upside protection you could get for $2000 on the crude options market.  (It's all OTC, I believe.  Public quotes available?)

I was recently looking at the annual report of an oil sands company.  They had sold calls on a chunk of their future production with a strike of $90.  But they didn't mention how much revenue that generated.  They were also buying puts with a strike of 40.

Sshh! Don't mention options - you'll ruin Robert's scheme. He can't lose...
For sure.  If those way-out-of-the-money calls are really cheap, then one would be able to offer an eye-popping wager to the peak community at no risk to oneself.  Maybe even 2 or 3:1 odds.

But we need a quote on those jan 08 calls before we open shop.  :-)

Data for Dec 07 calls:


RR can definitely afford to sweeten his terms considerably and still come out ahead!!

Come on Robert, offer us as least 5 to 1.

A $100 call option in Dec 07 WTI futures is valued at $0.58 (or $580 per lot).

Thanx for the quote.

Can you give us quotes for strikes in the 90's for jan 08?

Is there a link to this data?

tempting...not because of issues related to PO but with Iran ditching the dollar...hmmm
Dollar value dropping...1) demand destruction with more consumer dollars going to pay for more expensive yet nec. items? 2)recession with related demand destruction - housing bubble colapse reducing those giant housing ATM's supporting the consumer economy. 3) The world has had enough of GWB and decide to squeeze his balls - oil prices rise to $120.00 barrel...war...oil at $150.00...

No thanks, great idea! See you in dec 2007 god willing.  Cheers!

um  eh    gambling on the  internet is ellegal  ...............      but imo you are making a risky bet      and not about whether or not the saudis are peaked or not       $100 is as close as another hurricane or search for wmds away
but imo you are making a risky bet
Actually, it's not risky at all. Robert is offering even money for something that traders on the Nymex consider quite improbable. By arbitraging the two outcomes he can be a winner either way.
By arbitraging the two outcomes he can be a winner either way

He can not be a winner either way, best case he can be at draw either way. I I were him I'd buy a forward contract now that would cover the bet in case he loses. He can buy 30brls. @ 65$ at 1st of Jan, and if oil touches $100 sell the contract to cover the bet he lost and he is at 0$ profit at the end.

If oil is between 65 and 100 at 1st of Jan he gets both the bet and the contract premium. If it is below $65 his profit drops and if it is below $30 at 01.01.2008 he will even be at net loss.

He can not be a winner either way
Robert can buy a Dec 07 $92.00 call option for $910.

If oil doesn't hit $92.00 RR wins $90 ($1000 - $910)

Anything above $92.00, and RR starts raking it. e.g. at $100 he receives $8000 - $1000 (bet) - $910 (option cost) = $6090.

I take this wager as a sign that RR thinks oil will hit $100 in the next 12 months and wants the option cost covering :)

Hah... I had no idea that the market is pricing so low the probability of oil hitting $92 in a year... for less than 1% of the value of the contract you can virtually hit a jackpot. Much better than lottery methinks.

What you missed is that oil can hit 100$ any time until Dec, 2007 and then retreat to say 85$ in December. Thus Robert can both lose the bet and the option money.

The perception that these are "risk free" money means that the market is much more conservative than we are here at TOD (because it's giving some 1% probability of oil @ 92$).

But one cannot buy a contract for 30 barrels. One crude oil contract = 1,000 barrels. That is the smallest contract one can buy. If he bought one January 08 contract, (that expires in December 07, at $68.46, the price as I write, and oil was at $100 at expiration, he would make $31,540, minus commissions.

Ron Patterson

And if oil is at $60 he would lose 8 grand. The miracle of leveraging. BTW I think there are some stocks where you can participate with smaller amounts... I know there is GLD for gold but I have not researched it enough if there are for oil.
It is possible in the UK at least to spreadbet on the price of anything including Oil and also in the UK it is tax-free (mainly because most people lose money day trading so it wouldn't be a money earner for the government). So you could hedge doing that - although is that illegal in the US? I use Finspreads, which is a pretty good platform, although I mainly use it for buying and selling shares. So that way you could hedge.
Try USO.
"traders on the nymex consider quite improbable"   roflamo       do you suppose these "traders on the nymex" have a knowledge of the future ?   nostradomians ?
gambling on the  internet is ellegal

Is that true? I just did a Google search of Internet gambling, and a lot of companies are advertising it:

Internet Gambling Alive and Well

but imo you are making a risky bet      and not about whether or not the saudis are peaked or not       $100 is as close as another hurricane or search for wmds away

Yeah, that's what some have been saying. That's why I offered the bet. I don't see it as a risky bet. In fact, I wouldn't even hedge it.

If you want to change the bet to a $90 price on WTI in '07, I'd take the other side for $100.  Otherwise, I'd be interested in the $100 level, but you have to give me odds.  I'm giving you a bargain with 1:1 odds at $90, given where the price of oil is today.

Whaddya think?

If you want to change the bet to a $90 price on WTI in '07, I'd take the other side for $100.

I am not actually a gambler by any means. I have just seen some comments over the past few days from those who believe oil is going to $100 in the near term. In fact, I think someone offered to wager on this. I view this as a pretty sure bet on my part, but if we start lowering the price, putting currency fluctuations in, or giving odds, then suddenly it is gambling to me. If I feel I have only a 70% chance at doubling my money, I won't take it (unless I can make many separate bets with these odds).

I won't say definitely not on $90 WTI. I think there is only a 20% chance of that in 2007, and that is starting to get into my comfort range for risking money. I will think about it.

Totally understandable.  If you can find some of those 70% likely bets at even payouts, in good amounts, let me in on some of that action too.  Especially if it's legal.

It's always tricky to actually put a price AND time on future events.  For me, that's half of what makes markets so interesting--you have a very candid feedback of whether or not you were right by seeing your returns over time.

Your original proposition was very provocative and an excellent idea to put in front of so many oil price bulls, but a short time frame to take the other side.  A 50% rise in WTI, which we've had in several annual periods, wouldn't quite hit $100.  But who knows, right.....

Your original proposition was very provocative and an excellent idea to put in front of so many oil price bulls, but a short time frame to take the other side.  A 50% rise in WTI, which we've had in several annual periods, wouldn't quite hit $100.  But who knows, right.....

That is really my hedge right there. If oil went to $100, I would lose a thousand or so, but my oil investments would go up by much, much more.

I am amazed in the change in tone here since Monday when "oilmanbob" offered the bet originally:


He said he'd bet $100 that oil would hit $100 in 2007. He even said he was hoping to find a "cornucopean sucker" who would take him up on it. "InfinitePossibilities" chimed in to say he'd offer the same bet if a "sucker" could be found.

Well, I offered to take his bet (making me a "cornucopean sucker") and laid out the same data regarding option prices that have been mentioned today:


Then Robert spoke up and offered even higher stakes, as he has repeated today.

But suddenly today, everyone's cautious and conservative. They want odds in their favor, they think Robert is taking advantage of them. It's pretty interesting to see how things change when real money is on the line.

Cautious and conservative is the only way to play if one wishes to preserve and gain wealth.  Despite Friday's $1 drop in silver, I am still looking to finish 2006 with over a 100% capital gain.

(meaning I more than doubled my supply of imaginary electronic USD fiat currency, which could be frozen in my brokerage account if the US adopts capital controls - oh well, life is risky, then we die)  

But still, why mess around with small internet wagers when much better wagers are available every day the markets are open?

Well, from Robert's perspective, oilmanbob offered EVEN ODDS that oil would hit $100 in 2007, so that is certainly attractive given that market odds are more like 20 to 1 against.

However that leaves the question of why believers in high prices would take unfavorable even odds rather than the high odds they could get in the market. Possible reasons include: it's complicated to set up a futures trading account and get into position for options trading; these accounts require you to buy contracts controlling at least 1000 barrels at once, so you can't bet as little as $100; buying a single contract may have relatively high commissions especially for far out of the money options like these ones; options can be illiquid and it might be hard to cash out.

But frankly I think the reason is largely social, a way to show that you are a card-carrying Peak Oil True Believer by publicly making rather extreme claims. It remains to be seen whether anyone will be willing to follow through with their bet offers. It's easy to brag about how confident you are but a little harder to put money on the line.

The real issue at the heart of what Robert Rapier and West Texas have been arguing ad nauseum for quite some time is this: has Saudi oil production peaked or can it be sustained at  higher-than-current levels? The other facet of this argument has been: what constitutes acceptable proof one way or the other?

However, price really proves nothing regarding the question of whether we have or have not peaked. There could be a physical peak, but if we have an all-out global recession, the price of oil might go nowhere.  Conversely, we might not be anywhere near peak, but if there is an all-out war in the Middle East, the price of oil could go through the roof.

So, instead of wagering whether the price of oil will hit $100 in 2007, why not be more direct and wager whether total 2007 Saudi oil production will exceed total 2006 Saudi oil production? You will find out one way or another in early 2008 when the production figures for December come it.

While both the price of oil and oil production are at the mercy of a variety of 'aboveground' factors, oil production is a far less volatile number and far more indicative of what is actually taking place.  

Regardless of where the price of oil goes, if indeed we see that Saudi production has been flat or declining for several years in a row, the weight of the evidence for peak having arrived gets heavier and heavier.

 I think that proof of peak won't come with a bang, but will gradually sneak up on us and will finally get to a point where even the most die-hard optimist can no longer deny it.

The real issue at the heart of what Robert Rapier and West Texas have been arguing ad nauseum for quite some time is this: has Saudi oil production peaked or can it be sustained at  higher-than-current levels? The other facet of this argument has been: what constitutes acceptable proof one way or the other?

Only time will tell. When OPEC lifts its quotas, and Saudi is unable to get production back over 9 mb/d, this will be proof enough. And I expect that point to come sometime in 2007 or early 2008.

But right now the best hand is definitely held by Roger, (West Texas). Saudi production is down by .6 mb/d since last summer. Even though they claim that they were deliberately cutting production because they could not find buyers, we must remind ourselves that no one else in the oil exporting world had any trouble finding buyers. In my opinion only a very naïve person would buy that line. No offense Robert. ;-)

Ron Patterson

Saudi production is down by .6 mb/d since last summer. Even though they claim that they were deliberately cutting production because they could not find buyers, we must remind ourselves that no one else in the oil exporting world had any trouble finding buyers.

Of course that's not true, Ron. I have pointed out on a number of occasions that there continue to be locations that can't sell all of their crude and have some production shut-in. Stuart and I discussed this earlier in the year, and he agreed that this looked to be the case. So, the Saudis certainly would not have been an isolated case. Sorry.

Of course that's not true, Ron. I have pointed out on a number of occasions that there continue to be locations that can't sell all of their crude and have some production shut-in. Stuart and I discussed this earlier in the year, and he agreed that this looked to be the case. So, the Saudis certainly would not have been an isolated case. Sorry.

Sorry Robert but I missed those posts of yours. But if it is not too much trouble please tell me which nations had shut in capacity because they could not sell their oil? How much was shut in? What percentage did they drop. Was it as much as 6.25% which is the amount Saudi dropped, from 9.6 mb/d to 9.0 mb/d.

Sorry for missing those very important posts Robert. But if you will just catch me up this one time I promise not to ask such a favour of you again.

Perhaps it was Mexico?

Ron Patterson


Lots of fields in Canada have spare capacity. Also, there have been news stories that the Williston Basin has shut in production. This was the topic of my discussions with Stuart. Here is one mention:


Here is specific mention of Williston:


Sharp cuts of $10 to $30 a barrel off the posted regional prices in the Williston Basin are being reported, and some producers have started to shut down wells rather than sell, even if there is room on a pipeline to ship it out.

The static refining capacity in the United States, increased production in the Canadian Tar Sands and limited capacity on pipelines are among the reasons given for the steep pricing discounts. The Williston Basin straddles the northeastern Montana, northwestern North Dakota border. The highly productive Bakken field near Sidney is part of the basin.

"This is sending seismic shock waves through the Northern Rockies," said Tom Hauptman, a Billings oil and gas producer. "Some are being told, 'We don't want your product.' The posted prices are being discounted by $20.45 a barrel."

This is just the part of the world I am most familiar with. I would bet that there are other areas not producing flat out. But the conclusion is that the Saudis weren't the only ones who couldn't sell all of their oil. As far as I am concerned, their story adds up. The inventory picture at that time, as I showed in my debate with Jeffrey, also supports them.

Here is one more where we really covered the subject in detail:


Robert, this article makes it clear that this is a regional problem. Regional oil prices drop off, and the article goes on to describe, in great detail, why it is a regional problem. It all took place in the US Midwest and Canada.

Refining capacity in Alberta is also limited, so the Canadian crude is being piped south into Montana, Wyoming, the Midwest and Colorado.

For example, Suncor Energy Inc. in Calgary has two refineries in Denver. The larger one has been shut down because of a fire in December and for its annual turnaround. Refineries undergo maintenance and production changeovers annually to begin refining for the spring and summer petrol demands.

There is not the remotest possibility that these Midwestern problems affected markets in China, Japan or anywhere else in the world. But I can certainly see how this bottleneck would cause Midwestern oil to be discounted.

Is this the only example you can come up with? Do you have an example of world markets being flooded with oil, causing nations to hold back on production. If you do then methinks it just might have affected prices a wee bit.

Ron Patterson

Is this the only example you can come up with? Do you have an example of world markets being flooded with oil, causing nations to hold back on production.

I am not talking about being flooded with oil. That was never the issue. I am talking about not being able to sell all you can produce. And I can give lots of examples of crudes being discounted in various areas.

The point is, the Saudis were not the only ones who couldn't sell all of their crudes. The Canadians couldn't either.

Yes I know heavy sour crude is being discounted. It is discounted by as much as $17 a barrel because less and less light sweet crude is coming on the market and more and more heavy sour stuff is available.

And of course crude, even light sweet crude, is being discounted in various areas. That is how the market works. Supply and demand you know. That, Robert, is the entire point! One can always find a market for any product you have for sale. All you have to do is price it at the price in which the market will bear.

High prices have, especially in many third world nations, driven down demand. And when demand is driven down one must price the commodity at a price that the market will bear.

Saudi Arabia could have easily sole every barrel of oil they pumped. All they had to do is price it at one dollar below what Kuwait or Russia was pricing theirs. If you have no buyers at $60 a barrel you will still have many buyers at $55 a barrel.

Saudi, who was always worried about the price of oil being too high, now seems all too willing to cut production to keep it over $60 a barrel. But the earlier cuts was not to drive up prices, those earlier cuts was (supposedly) because of "no buyers".

Sorry Robert, but I simply do not believe it. But as I said earlier, only time will tell.  

Ron Patterson

Don't mind Ron, he doesn't understand the concept of spare capacity.  Aramco have said on several occasions that there present sustained production level is 8.6-mbd.  When they exceed this and drop back, Ron thinks Peak Oil is upon us (again).  He doesn't understand the roll of a swing producer or inventory mamangement at all.  
The real issue at the heart of what Robert Rapier and West Texas have been arguing ad nauseum for quite some time is ....

While it is not very flattering of what we do here at TOD (arguing ad nauseum about the exact moment of global PO), I found this psychologist's assessment regarding our compulsive behavior to be spot on. In essence we all agree that the light at the end of the tunnel is a bus coming head on for us. We do not agree however on the size of the bus or the exact moment of impact or the degree of injury. So we stand here, caught in a compulsive stance; staring at the headlights like deer and calculating and recalculating the time to impact. We try to prove beyond the shadow of any doubt that the bus is indeed coming and that all too soon it will be upon us. We argue that this is the only "rational" way to proceed.

Excellent point and well said!

Denial can take so many different forms, and the easiest person to fool is oneself (I do it all the time).

I can't remember the name of it, but back around the 1960s there was an offbeat play that was televised about a remote army garrison in the desert of some unamed country. The garrison had been set up many, many years before, and though there had been no hostilities for decades, red tape and bureaucracy dictated that it still be fully manned. Not surprisingly, the soldiers settled into a mind-numbing routine, with their only enemy for years being bordom and creeping insanity.

Day after day and year after year the lookouts would scan the desolate desert horizon and see absolutely nothing.

I forgot what took place in the interim, but the play ends with the same lookouts scanning the horizon. However, this time in the background is the unmistakable sound of tanks advancing, cannon fire, and troops marching.  The lookouts neither see nor hear any of this and keep on scanning the horizon while engaging in their well-worn banter in a vain attempt to relieve the boredom. That I think is where too many Americans are today.

Damned if I can remember the name of it though. Sound familiar?

(By the way, where do you get all these cute little images that you sprinkle into your posts?)

I use Google Image Search

If you want desert rats, just type in "desert rats" :-)

No, I don't think that was it.

It was more of an avante-garde play with a mythical garrison in a mythical land. It was purposely left vague, so as to add to its creepiness.

I tend to think that the orginal play was by some well-known playwright, but I am not sure.

Anyway, the core message of the play was the human penchant for denial in the face of certain doom.

I guess something to the tune of the Band continuing to play onboard the Titanic even as the ship goes down:
You're getting closer.
I have an indication of acceptance for the full thousand via e-mail. Just trying to work out the details. I would probably still pick up a few individual $100 bets.
For $1800 I can buy a NYMEX WTI Crude Oil December 2007 call option with a strike price of $85:

CRUDE OIL Options :-14:20 - Wednesday, 20 December
Dec 2007 Exp: 11/13/07 Days to Exp: 328 Futures: CLZ07 68.60

        Last        Value
  85.00C    1.80      1800.00

What this means is that I would double my money if oil reached 85 + 1.8 +1.8 = $88.6

If oil went to $100, I would make (100 - 85) x 1000 = $15,000 return on a $1800 investment, for a sweet 733% profit.  Obviously, this is a much better deal than RR is offering.  Robert's 100.00C option is extremely overpriced and no sane person with trading access to NYMEX would take it.


Although I am more pessimistic about oil supplies than you are $100 for barrel is high. I cannot bet againt it.
But even if average price ( not peak ) for 2007 is 75 - it woudl be quite a lot. It would keep demand to be the same as this year, which means we are around the peak.


I'll pass.

I expect the global economy to crash before oil got that high, that would lead to some serious demand destruction.

I do believe oil would get that high if it came to a US-Iran war however.

I'd be willing to make a wager but the odds of $100 are not favourable. I can see a spike to $95 maybe, with disruption such as a hurricane or two in the GOM. $100 only seems possible in exceptional circumstances, such as a major ME crisis (which is always possible). Plus the US economy looks somewhat wobbly.

For fun, I'd bet $100, but I don't regard it as a serious money making proposition.

I also add it is not necessarily proof of a Saudi peak. I discount the idea that the PO concept will suddenly take hold of the markets. There is plausible denial by OPEC for many years yet. I may be wrong, but I don't believe the futures market really pays much attention to future supply fundamentals. I think the trading is mainly technical. They may have expert analysts, but we all working from the same dodgy data.

At this point it seems all but certain that Bush will go with the so-called 'surge' option in Iraq. It also seems even more certain that this will fail miserably. So, in 6 months, we begin abandonment of Iraq in a 1975-type leaving Saigon type frenzy. Iraq becomes even more chaotic and oil exports drop to zero. Crude price soars on the 'fear factor' to > $100/bbl.

Still, unless you count getting married, I'm not a gambling sort of person.....

ooh, Robert Rapier serious man. Do not make bet with serious man. Let fools bet with serious man, lose money, laugh at fools.
For those who say the cost of finding oil is coming down

From the top Leanan posted this morning

It costs about $120 million to drill a well in deep water, with no guarantee that oil or natural gas will be found. The diamond-crusted bits used to drill into the Earth's crust cost $50,000 apiece. One well may chew up a dozen, LeGros says.

The first six exploratory wells Chevron drilled with the Discoverer in the Gulf were so-called dry holes, or wells with too little oil to turn a profit, Thornburg says. About 80 percent of the exploratory wells in the Gulf are failures.

``It's lots of money, it's lots of equipment and it's a total crapshoot,'' says Driver. ``Of course, we don't publicize the dry holes.''

$120 million to drill a dry hole, and 80% of all wells drilled are dry holes. One well in five is not a dry hole. That means that each producing well costs about $600 million. Each producing well must produce 10,000,000 barrels of oil before the reach the break even point at $60 a barrel.

That is a lot of oil from just one producing well just to break even.

Ron Patterson

Yeek.  Is anybody saying the cost of oil is coming down?!
Arggh.  I meant the cost of finding oil, of course.
This reiterates the position of many people involved in alternative energy, who believe that their industry would be better off if the government got completely out of the energy business. Unfortunately, that isn't going to happen, so gov't subsidies for alternatives are probably the second best option.

The government subsidized these GOM operations to some degree, and the resulting brouhaha over "Jack" convinced many people that PO was not something to be worried about just yet. What a waste of taxpayers money!

I should read the articles more closely before commenting. The government support was in the form of relief from paying fees. Foregoing income is not the same as expenditures.
and there are still those who deny peak oil
Darwin says "$120 million to drill a dry hole, and 80% of all wells drilled are dry holes.", referring to an article about the deep water GOM.

The article described "exploratory wells", not "all wells".
There is a big difference.  Most wells are not exploratory, most are development, and nowhere near 80% of development wells are dry.

>120 million to drill a dry hole, and 80% of all wells drilled are dry holes. One well in five is not a dry hole. That means that each producing well costs about $600 million. Each producing well must produce 10,000,000 barrels of oil before the reach the break even point at $60 a barrel.

I would think it would need to be much higher, since I don't believe this includes production costs, ie getting the extracted oil to market, well pressure regulation, maintaince, etc.

     Wouldn't you have to drill a lot more than 10 million, what about production costs in getting ashore?
Yow...this man is going get a draft going no matter what:

Bush: Army, Marines need to increase in size


Democrats have been putting up proposals to reinstate the draft for a few years now. Extremely liberal Democrats, like Rep. Charles Rangel. When Rangel raises the idea he gets pats on the back for wanting to make all sectors of society carry the defense burden rather than the poorest sectors. Yet if Bush raises the idea, it must be for nefarious purposes. By the way, note that there is no mention of a draft by Bush in this article yet you leap to that conclusion. Yet when Rangel does this year after year and specifically introduces legislation to reinstate the draft, people don't say a word.
It's because they know Rangel isn't serious. His calls for reinstating the draft are his way of protesting the war.
When Rangel suggests a draft, he is clearly trying to force an issue. Nobody "pats him on the back", but they understand what he's up to. And he has a good point, when you think it through. And in any case, people do say a word.

Bush has not raised the idea of a draft, nor will he, I believe. The last thing TPTB want is a draft. BTW, no one has said anything about nefarious purposes - you projected that yourself, though Dragonfly seems to think Bush will -need- a draft to increase the numbers.

Since the armed forces are having a pretty hard time meeting recruitment goals as it is, it is hard to imagine how they might increase the numbers short of a draft, but whatever.

But your post was pretty much knocking down some strawmen.

- sgage

Easy. Enlistment increases when the economy is bad. Can't afford food and rent? Get three hots and a cot from Uncle Sam!
Many thought we were stretched too thin to consider Iraq in the beginning.  So we pulled NATO conmittments.  Armed forces personnel were aghast that they used the Guard-few could believe it. (and many think the casualty rate proves their point that those guys  aren't soldiers)

But Bush wants another 70,000, as of yesterday.  I imagine he'll find a way.  But not a draft, not without another major escalation like Iran gone bad.  The congress and the American people won't allow it at present.

How about setting up recruiting offices in Tiajuana and Juarez?  If you survive a tour in Iraq automatic citizenship for you and the Mrs.
That would be an excellent opportunity for many young mexicans.

Option A: Sneak across the border and get paid little for doing crap jobs always in fear of government.

Option B: Ride across border in US government transportaition.  Get paid substantial money to be a soldier for four years after which you have all sorts of VA benefits and legal citizenship.  

We have only lost 3,000 soldiers the odds are no where near as bad as trusting coyotes and mother nature to not kill you in the desert.  I would gladly support granting citizenship to any foreigner willing to serve in our military.  


Summary of Weekly Petroleum Data for the Week Ending December 15, 2006
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) dropped by 6.3 million barrels compared to the previous week. However, at 329.1 million barrels, U.S. crude oil inventories remain well above the upper end of the average range for this time of year. Total motor gasoline inventories increased by 1.0 million barrels last week, but remain below the lower end of the average range. Distillate fuel inventories rose by 1.2 million barrels, and are in the middle of the average range for this time of year. Increases were seen in both high-sulfur distillate fuel (heating oil) inventories and diesel fuel inventories (a combination of ultra-low-sulfur and low-sulfur). Total commercial petroleum inventories fell by 7.9 million barrels last week, and are just above the upper end of the average range for this time of year.
Inventory report is out:

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/curren t/txt/wpsr.txt

I only made one prediction this week: Gasoline inventories to rise. They did, but there was a huge draw on oil inventories this week.

Ah shoot...way to go, Robert!!  I said all three would draw.
I am surprised that no one has mentioned gross imports. They were down 1.151 mb/d from last week. Last week they were 12,915 mb/d and this week they were 11,764 mb/d.

That is huge. Perhaps the OPEC cuts are having an effect.

Ron Patterson

Ya...I did notice that.  I was waiting for WT to bring that one up.  
We don't know what effect the two days of fog in the Houston Ship Channel had.
The report is for the week ending Friday December 15th. Did we have two days of shutdown before that? At any rate, I think I heard on CNBC that about 13% of the nation's petroleum products comes in through the Houston Ship Channel. Two days, if indeed it was that, would not have had that great an effect.

Ron Patterson

Please read the entire report, specifically:

"Total products supplied over the last four-week period has averaged over 21.1 million barrels per day, or 0.4 percent more than averaged over the same period last year.  Over the last four weeks, motor gasoline demand has averaged over 9.4 million barrels per day, or 2.3 percent above the same period last year.  Distillate fuel demand has averaged nearly 4.3 million barrels per day over the last four weeks, or 2.0 percent above the same period last year. Jet fuel demand is down 7.2 percent over the last four weeks compared to the same four-week period last year."

So total petroleum products, the litmus test WT has used in the past, are in fact 0.4% above last years rate.

Please look at the data. Ten week averages for imports of Crude + Gasoline + Distillates are at the lowest point since Katrina and Rita closed down most imports a year ago this past summer.

Ten week averages for these three imports averaged 11.120 mb/d for the last ten weeks. Twelve weeks ago that ten week average stood at 12.122 mb/d.

Imports of crude oil, gasoline and distillates, the ten week average, have dropped by over one million barrels per day in the last twelve weeks.

What is left out of the equation are natural gas liquids. I do not track them.

Ron Patterson

I forgot to add, one year ago, at week ending December 16th, the ten week average for curde + Gasoline + Distillates stood at 11.543 mb/d. From that point one year ago, imports for these crude and crude oil products, have dropped by 423,000 barrels per day.

Ron Patterson

Wait a cotton picking minute! How did I let you sneak this one by me Hothgor?

"Total products supplied over the last four-week period has averaged over 21.1 million barrels per day, or 0.4 percent more than averaged over the same period last year.

This is Total products supplied over the four week period, as compared to the same four weeks one year ago. This includes US Crude Oil Production! At this same period last year we were still recovering from hurricanes Katrina and Rita. US crude oil production was still way down. The four week average, December 16, 2005, for US crude production was 4,902 mb/d. For the four weeks ending December 15th, 2005 US crude production was 4.902d mb/d. For the same four week period this week, it was 5.276 mb/d. So 374,000 bp/d of that increase was US crude oil production.

That was the only reason for your increase. Imports of crude, gasoline and distillates were down 860,000 barrels per day from that same four week period one year ago.

The rest of the difference, which is considerable, was natural gas and natural gas liquids production That was down considerably for that period also due to Katrina and Rita.

We were discussing imports only Hothgor. Get with the program!

Ron Patterwson

It looks like total net petroleum imports were down by 1.6 mbpd from last year (four week running average in both cases, 11.4 versus 13 mbpd).  11.4 is the lowest for this time of year since 2003.

We are continuing to draw down both our crude oil and product inventories--by a total of 60 million barrels since early October.

Again, you need to keep focused on this chart that Khebab did:  http://www.theoildrum.com/uploads/28/Data_4weeks.png

The long term trend since 1990 is that we need close to 5% more total petroleum imports every year, because of declining domestic production and rising consumption.  

Our imports are falling below where they need to be to meet the combination of rising demand and falling domestic production, thus the continuing draw down in inventories.  

The WSJ noted that we have been drawing down our inventories at a rate that is more than five times higher than normal for this time of year--with a very mild heating season so far this year.  Imagine what will happen if we have anything approaching a normal winter in January.


Two things I notice from that chart:

  1.  It looks like there are variances of 12-15% from the trend line over the past 10 years.  (That's a rough ball park estimate just from looking at the graph)  I'm sure Khebab could get us a more accurate figure.

  2.  It also appears that the longest period of time we have gone WITHOUT a new high in imports is approximately 2 years.

The trendline is currently at 12.5 mbd.  So if we break below 10.6 mbd (12.5 * .85) that's a major signal.

Likewise, if we don't set a new high in imports by December 2007, that is also a major signal.

I won't say it confirms peak, because there have been declines before in the past, but if we have a double confirmation that a 14 year trend (1992-2006) is ending, especially if prices continue trending upwards...  Well, lets just say it won't be good news.

Ahh geez..   That was really directed towards Westexas.  Sorry about that.

All I want for Christmas is an 'Edit' button.  :)


Prices have also averaged extremely high for the past year.  People who believe this has caused no demand destruction are fooling themselves.  It may very well be that we are using less oil OVERALL, and hence require less imports.  This also explains why our inventories are WAY above the 5 year average 'and near an all time high'.  And I'm sorry, I doubt exports are down worldwide due to increasing demand in exporting countries.  Its just not rising fast enough for the numbers WT has touted.
All summer i mentioned that their was surplus supply of 1.9-mbd.  OPEC responed with quota cuts 'cuz everyone was doing it on their own already.  Now Ronny et al are surprised that supply is down and blame it on PEAK OIL.  TOD will never make it as a tier one info source with these neophytes eating up the bandwidth...
Troll in concern mode.
>The long term trend since 1990 is that we need close to 5% more total petroleum imports every year, because of declining domestic production and rising consumption.  

IIRC, This should begin to accerate since some production from Alaska will be shutting down in the next couple of years. I read an article that North Slope production is planned to switch from oil to natural gas as the fields become depleted in the next couple of years.

As your aware, many good regions are off limits and even if the laws were changed today, it would be many years in development before production could be brought to market.

Prudhoe Bay has a 75% water cut.  Like Ghawar, Cantarell, etc., it's on its way to where East Texas is now--a 99% water cut.

So, even if we froze our consumption at current levels, our demand for imports would increase as our domestic production continues to fall.

We are fast approaching a collision between the expectations of continually increasing imports and the reality of declining exports.  


Can they still get oil out of a field with such a high water cut?
At what point do they just give up?

It is quite possible to turn a profit with a 1 percent oil cut in an onshore area with good infrastructure and reasonable rates for electricity.  

Running a 250 HP REDA [submersible pump] moving maybe 2500 bbls of fluid per day with an electric bill at $10,000 or $12,000 per month.  The water goes down an adjacent well bore into another formation on a vacumn at very little cost.  

25 bbls per day of oil.  30 days per month. $60 per bbl.  20 percent to the mineral rights holders.  7 percent [Oklahoma] to the state in severance taxes.  $33,480 in net revenue to the producer.  $2,000 per month for costs other than electricity to operate the lease for a total of let's call it $12,000 with electricity.

$19,400 monthly net on an operating basis.  If you factored in the costs of drilling a new producing well, a new disposal well [typically deeper and thereby more expense to drill ... and about as expensive to equip as a producer] and the economics don't look as good, but "yes" in the right circumstances a 1 percent oil cut is more than enough to be economically viable.


So you could just keep pumping a field to the bitter end and still make money off of it.
But I guess at the same time your production rates would plummet.


Depends a lot on the field.  A strong water drive and good porosity / permiability is required for this sort of production.  An irregular oil water contact may actually be a good thing.  

The perfect situation is probably a field that was produced too rapidly initially and where the old producers weren't plugged.  

Remote locations / offshore locations -- probably not.

The real life model I was describing is in Oklahoma.  The wells in that field were produced at rates up to 1000 bbls per day in the 1930s.  The wells watered out prematurely leaving a lot of oil in place outside the cones of water around the existing wells.

In the 1980s the field was redeveloped with REDAs and new well bores strategically drilled between the old producers.  At slow rates of fluid extraction, all the fluid would be drawn from the cone of water.  As higher rates that could be achieved with submersibles, more of the fluid outside the cone bearing higher oil cuts became mobile.  

That play in the 1980s was very lucrative. Still a lot of oil there.  How much is economic depends on engineering and obviously prices.  :<)


Are there any fields near Enid or Tulsa that one could see the use of water drive to increase production?

What I was referring to are natural water drives.  The productive zones in these sorts of reservoirs are large, with a lot of permiability and porosity, and a figurative ocean of water that moves toward the well bore as the pumps do their thing.  

I am not that familiar with much of OK production.  The field I described is one that I have a small fractional interest in in the general vicinity of Shawnee.

A classic water flood is a secondary recovery technique that uses injected water to maintain pressure and [like the natural massive water drives] sweep the oil toward a producing well.

There are probably a lot of old fields, and reservoirs that were never developed because when tested the water cut was deemed unacceptablely high where oil will be produced in the future using these sorts of techniques.

This is good news in terms of managing the decline in oil production, but to some extent the effect is trading electicity [typically coal fired] for somewhat more energy content in the form of oil.  The return on energy invested is positive, but nothing like a flowing well or most wells produced in the standard pumping units.

I would bet Ron, that oversight was on purpose.

He's a pro.

Hence my theory that he is really Yergin!!  He knows how to "misrepresent" the numbers.
At last, my metamorphosis is complete.  I've gone form being a red neck hick that beats his wife, to Yergin, chief disinformist of the world!!! <chortle>
So hothgor, are you still beating your wife?

LOL sorry I had to ask.

I'm not even married :P
I think it was more than two days of fog (before Friday's deadline). According to Accuweather, the fog cleared today and there are a lot of oil tankers backed up waiting to go up the channel. It should affect next weeks numbers as well, but after that there should be some record imports of crude to bring back the numbers. Gulf coast dropped 10 million barrels, the rest were up and down small amounts.

I was more surprised by an increase in distillate and gasoline stocks, given the small amount of imports of those products.

Yeah, thanks, my bad. Looks like the Channel closed on the Monday.
The drop is jet fuel demand is curious. Perhaps a fluke of the calendar?
It is higher than two weeks ago. Perhaps a normal fluctuation. I don't know whether weather grounds flights over a large area, reducing demand or less business/holiday trips before Christmas.

In the UK, Heathrow is badly affected by fog today, cancelling lots of flights. Probably going to occur tomorrow as well.

To your diaries:

Oil prices rose Wednesday after U.S. inventories dropped more than expected, but bullish sentiment was tempered by expectations that inventories will rebound once fog lifts in the Gulf Coast and shipping there returns to normal.

Since Monday, Dec. 11, the U.S. Gulf Coast region has been engulfed in dense fog, which has significantly disrupted shipments in and out of the ports, according to the Port of Houston Authority. Weather reports forecast that the fog should move out by  Tuesday.

"We may see another week of inventory declines because of the fog, but the week after that we'll probably see a rebound when those supplies in the Gulf are unloaded," Flynn said. "Overall, though, the numbers are still supportive for the market."


SO in two weeks, there must be a rebounce..

And then, for WT (same source):

While traders were initially skeptical of OPEC's ability to get members to comply with the October cut, a drop in production from most of the cartel's 11 members has given more weight to the last decision.

The Time may be set out..

Correct me if I'm wrong but the best indicator to watch is "Total stocks", which is down 7.9 mln.barrels.

In the light of it I am amazed at the market reaction, which is close to none. Actually the price even dropped slightly. Let me suggest that the market is some sort of "self-induced sleep mode" and everyone is waiting for the end of holidays to do anything.

The market has been aware of the channel being fog bound for quite a while (since last Thursday at least). Everybody got surprised a couple of months ago when the same channel shut down for several days and crude stocks dropped by a big amount. Nobody in the market knew about the shipping channel being shut down for a few days, so the market reacted in a big way.

This time it seems either the authorities are relaying the news or more people in the market are keeping an eye on the channel and were aware of the fog related problems. The market has reacted in the past few days but everybody was expecting bad crude figures this time, hence hardly any market reaction. With news of lots of oil tankers queuing in the Gulf waiting to off load crude, the market can see that it is a temporary problem that time will sort out.

I agree with LevinK. Total stocks do matter ... and they have been dropping since October. A large part of the build this summer and early fall was attributable to abnormally large volumes of imported gasoline.

If the drop in this week's numbers was caused by weather disruptions, then we should see some rebound in the next two weeks. If the rebound amounts to less than half of this week's shortfall, then clearly something else is going on.

RR: Would you know what the record one week draw on US crude supplies is? (Is 6.3 close to a record?)  
Off the top of my head, that's the biggest draw I remember. There may have been some bigger right after Katrina, though. I would have to check. My guess is that this wasn't a record, but it was certainly much bigger than expected.
RR: After asking you I googled- the biggest I found was 9.1- so I guess 6.3 is pretty impressive.
Thought this might interest the TOD community - especially those readers and contributors who are far more familiar with the ethanol "debate" than I...

Sierra Club has come out with an editorial that apparently points out how ethanol ain't all it's cracked up to be...  

From their Jan/Feb 2007 magazine...


apologies if this has been referenced already...

Sierra Club hit piece on an easy target - corn ethanol and GM FFVs.

Drummers like yourself should know the difference between 'ethanol' and 'corn-ethanol' by now.

Did you notice they also discussed cellulosic ethanol in the article?  This is what they said: A lot of research remains to be done before cellulosic ethanol will be ready for prime time.
I thought Catskill's post was informative, as I had noticed Sierra Club's silence on this important issue.  
Boston ready to go green

Boston is expected to become the first major city in the nation to require private developers to adhere to a strict set of so-called green-building standards, officials said yesterday.

The standards will be required before permits are issued for all projects of 50,000 square feet or more. The goal is to make new buildings more energy efficient and environmentally friendly, by promoting, for example, use of efficient heating and cooling systems, recycled building materials, and careful separation and disposal of waste.

And for those who think we don't experience peak energy, look at the uranium link in leannan's compilation.

And here a site for a graphic illustration of the historical price of uranium. It seems peak uranium is already history.

For those who hadn't noticed, Canada and Russia are now the batteries of the world. For the french readers here, you thought that our "all nuclear" strategy will help us overcome the peak oil crisis ? Well, think again ...


Gaz de France (GDF), the national nat gas provider for France has signed a deal with Gazprom yesterday, specifics unknown. The merger GDF-Suez seems to be postponed (if not definitely burried) until June 2007. Officialy because of our constitution counsil didn't accept the privatisation of GDF before then and because of a deadline issue with belgian unions or such a thing. Less officialy, a lot of shareholders from suez listen to the sirens from gazprom whose leaders have now sometimes a direct access to our economical broadcast network.

I think it is abit premature to announce peak uranium based only on an increase in price.  The linked article describes the artificial situation with the US Enrichment Corporation.  Their access to a large stockpile of Cold War uranium has until recently depressed uranium prices.  This has seriously impacted uranium exploration and development.  Total world uranium exploration and development is less than 1% of oil and  NG E & P.  Compared to oil and gas, uranium extraction is at a very early stage.
I think the French are very smart about their nuclear power and only hope that they are willing to share their expertise!
A) Uranium at $100 remains a very tiny piece of the cost of running a nuclear power plant.  Uranium at $500-$1000 becomes a moderate expense, enough that breeder reactors(with 100x the fuel efficiency) become viable in that range.

B) Uranium's role historically has been primarily military: That's why the stocks were so high, which is why prices were so low, which is why the mining industry in the expensive-labor / environmentally-sensitive modern US was destroyed when we stopped racing to build a nuke for every fishing village in the USSR.

C) Did I mention that uranium is cheap versus the energy it provides?  Oh, yes, in A).  We could mine it into the low part per million range from a number of high-yielding rock groups, down all the way through seawater, rather than the major high-quality ore deposits we've mined thus far.  When you take those into account, there's disgustingly little chance that breeders will take hold in the near future.  We're busy with implementing passive safety mechanisms and reducing plant costs.

Canada and Australia control more than half the world's uranium and are unlikely to play 'oil politics'. Case in point; GWB is leaning on Australia to supply India which has not signed the Non Proliferation Treaty. The big non-Russian suppliers will stick by the rules. Rather than a pricefixing cartel like OPEC they will co-operate to blackball rogue customers who divert uranium for non-peaceful purposes.
I think you are being very optimistic about the nuclear Djinni.

The world cannot prevent itself from going nuclear in its attempt to cope with diminishing energy from Fossil Fuels.  As such peaceful nuclear applications will be developed and if those can be developed so can non-peaceful applications.

I strongly suspect that this India move in conjunction with the obvious flaunting done by N Korea, Iran, along with the less obvious interests of nations like KSA, Kuwait and other entities, are the harbingers of the death throes of the non-proliferation treaty, and frankly I think its about time.  

The ability to police all these nations and organizations dealing in nuclear technology is simply impossible to keep up with.  I think MAD proved itself out on a macro scale between super powers the first time around and I believe MAD on a smaller scale within the confines of say the UN security council will suffice in being a deterrent in the future.  Certainly from an EROEI stand point, we are probably seeing diminishing returns as spy services which were "decent" against a monolithic enemy like the USSR are being stretched impossibly thin against a network of enemies composed of multiple facets.

Anyhow, the first country to use nuclear weapons as a tool of aggression needs to have a joint immediate response from the US, Britain, France, Russia and China of being wiped off the face of the planet.

That being said, I suspect within the next 20 years we will see a small scale nuclear event in a local theatre war.  Could be something as small as a "suitcase" nuke used to take out a dam or bridge in a hurry or something larger scale such a nuclear device taking out a military target like a base, or carrier group or possibly in the case of terrorism a civilian population center.  But once that event happens, the response needs to be sudden and utterly horrible to the aggressor nation or else the Djinni truly will be free to run amok and nuclear weapons will become part of the "conventional" force make up of future conflicts.  And yes, I fully mean, wipe every man, woman, and child of that country off the face of the planet.  Consider it the ultimate in feces throwing at the bad monkey(s).

Actually, one of the most hopeful signs for Nuclear Weapons is that they can be 'downgraded' into fission fuel.  While I have heard and can fully believe that some of the reintensified push for more Nuclear Energy is to support a new set of weapons that the US and presumably other G8 nations are setting up (Bunker Busters, for one)..  it will be an interesting set of pressures that makes nations look at their stockpiles in one 'security' hand, and their Manufacturing Muscles in the other, and have to choose where to put that material.

I oppose the building of, (and thinking we can rely on) a new network of reactors and the complex system that must support them, but the gift horse of reprocessed weapons fuel is too good to miss..  smoke 'em if you've got em!

Bob Fiske

So, following that logic, the first nation that should be nuked is the USA - first to use the bomb against civilians.
Nice try, but you have selective reading.

the first country to use nuclear weapons as a tool of aggression

The US was fighting a defensive war, not a war of aggression.

At Bush's news conference this morning, he made several references to energy:


In my judgment, we're going to have to get off oil as much as possible to remain a competitive economy.

Any bets on a military draft being called up in 2007-2008 time frame?
No thanks. My impression is that the Army and Marines are having a hard time now making their recruiting goals. If that is the case, I don't know how they could increase the size of the military without a draft. My bet is that there is a draft.
I'd bet any amount of money that a military draft will NOT happen as a result of Iraqi defeat.

The idea is so incredibly unpopular that any party seriously proposing it would go down to devastating defeat in the next election

What does Bush have to lose now?  Plus, it would happen on the Democrats watch...perfect scapegoats.
TPTB do not want a draft.  A draft brings dissenters into the ranks.  That was one of the "lessons" of Vietnam.

There are other ways to increase the number of enlistees/re-enlistees:

  1.  Cash bonuses.
  2.  Money for education/job training.
  3.  Lower recruitment standards.
  4.  Offer citizenship in exchange for military service.
  5.  Increase the unemployment rate.
  6.  Stage an attack on the homeland.
...and now you know my secret.  I can't count to six.
6. Cause a nasty recession in which many unemployed youngsters will gravitate toward the military as 'employer of last resort'
They didn't know the drilling rig Cajun Express had already plugged the Jack well and moved to another urgent job. Drilling at Jack won't resume until at least July, Thornburg says.

Who don't know Jack now?

Apparently most of the media, the DOE, and even some industry analysts don't know jack about Jack.

I'm not taking the fact that thye've plugged 'Jack' and let it sit for another 7 or 8 months as a good sign about its future potential - to put it quite mildly, since there are a lot of readers who may get disturbed about what I really think of 'Jack'.

From the Bloomberg article:

For now, the Jack well that was tested is sealed with a yellow fiberglass cap the size of car tire's rim.

I'm impressed!!!

Neon9, this is a fantastic site. Thanks a million for posting it.

The first law of Thermodynamics: There is no free lunch.

Ron Patterson

Even some doomers are overly optimistic.

Well, not so much as optimistic as just simply wrong.  They are falling for the current paradigm that is so terribly, terribly wrong. For instance, reading the web page of an obvious doomer posted by Neon9:

But two-thirds of the remaining oil is in the Middle East.

No it is not! My best guess is that about 42% of the remaining oil is located in OPEC nations, with even a smaller percentage of that in the Middle East, give or take 5%. That Middle East lie about those vast proven reserves has been repeated so many times, from so many sources that we have been hypnotized into believing it.

And this myth dear hearts, when it is finally revealed as a myth, will be the bombshell that rocks the world. How could so many people have been so wrong about one simple fact? Those vast Middle East reserves are a myth. Already Saudi Arabia and Iran are in decline. Kuwait is not far behind. But when it finally sinks in that there is no pot of gold behind the Middle East rainbow, it will shock the world.

Ron Patterson

The HL model gives KSA, Iran and Kuwait remaining conventional reserves, probably crude + condensate, of about 180 Gb, or about 18% of Deffeyes' estimate of 1,000 Gb (C+C) for the world.

At current rate of consumption, the world will use about 180 Gb of C+C in seven years, which (as Ron knows) is why world oil production is declining.

Based on HL, KSA is 60% depleted.  I believe that Iran and Kuwait are about 50% depleted.  

Roger, I agree with you on Kuwait, about 50% depleated, but definitely not about Iran. Iran, in 1974, produced over 6 million barrels per day, C+C. Today, they are producing less than 4 million barrels per day. I think Iran is at least 60 percent depleted, perhaps 65 percent depleted.

Kuwait, in 1972, produced  3.283 mb/d, C+C. Today they are producing about 2.55 mb/d. Well hell, I guess they are well past 50% as well.

Ron Patterson

I'm sitting here reading posts on this website when there is a knock at my front door. Being located at the dead end of  a gravel road in an isolated and somewhat forested area in South Central Illinois I wondered who the hell would be knocking at my door out here. Turns out it is a representative from a land servicing company that wants permission to do seismic testing on my property to check for oil. There are some old depleted fields north of me with stripper wells on them, but I figured the whole area had been thoroughly searched. They must be really getting desperate. Quite ironic that here I am at my ten-acre farmette I bought for my retirement and as a place for a post peak world and someone now wants to seek oil on my property. ARRRGGHH!
The first thing to check is to see if you own the minerals.    There is a some pretty good reef production in the Illinois Basin, if memory serves.  

Assuming 40 acre spacing, and a 3/16ths royalty, if you own all of the minerals on your property, you would receive about 4.7% of the cash flow, at no cost to you, assuming a 40 acre unit.  At current prices, this would be about $4,400 per month per 50 bpd of production.  If Matt Simmons is right about oil prices, you would receive $14,000 per month per 50 bpd in 2010.

I don't know what the law is in Illinois, but the mineral estate takes precedence over the surface estate in Texas.   In Texas, a surface owner can't keep a company off the surface, if the company has an oil and gas lease from the mineral owners, although the company has to pay for damages.

I'm going to go the the courthouse tommorrow and research the title. I recently purchased the property in fee simple but ownership of mineral rights is not normally stated in closing documents or on title insurance. I'm guessing the company that asked to do the testing already researched my land and the surounding properties because they mentioned if something is found they would ask to lease the property. Time to pull out the law books I haven't looked at in thirteen years.

This is a 2002 AAPG article on the Illinois basin.  They were talking about a horizontal well doing 2,000 to 3,000 bpd.

Thanks for the articles. Very interesting. When I bought the property out of curiosity I checked maps indicating where oil fields were in my area. There is one fairly close, Roslyn. At that time I did not see anything that there were new plays in the area.
Today's Wall Street Journal, page C5, bottom, last paragraph:

It's not called Peak Oil, it's called "reduced organic growth opportunities" for Big Oil companies.

(ROGO means no go.)

Anyone feel like arguing about the war? I just don't have the energy for it this evening. See comments by "PowerPointSamurai":

War Not About Oil

I have to disabuse your friend of that myth he seems to be clinging to about the war in Iraq being about oil. That is simply ridiculous, the blood-for-oil argument is completely facile, and and as someone who fought in that war and has extensively studied the strategy involved in fighting it, that argument is quite tiresome.

I wonder why helping people in their struggle against oppression is not considered worth an investment? Oil or no, the West was going to have to confront problems in that region sooner or later, and Iraq is becoming a focal point for a wide range of these issues.

There is a spectrum of argument, with one end bracketed by "Bush is an oilman, and wanted US ownership of Iraqi oil." This one is tiresome, and is often repeated.

Dig in a little deeper, and ask why we're in Iraq, and not Darfur or Burma or Congo? Why do we care about the Middle East, and "protecting" people who hate us? Nope, can't be about the oil. Must be about human kindness to strangers.

The first argument stems from Marxist conceptions of how 19th Century imperialists ran their mercantile empires. England, France, et al, had to actually own the resources. Now, under the guise of globalism, we don't have to own the sources of strategic raw materials. We just have to ensure that they are sold to the highest bidder, and that most states play the same capitalist game.

The danger posed by Saddam was that he wasn't playing by the rules, and by invading Kuwait and surviving his expulsion, he was always going to be waiting for the chance to use force to create a local, anti capitalist monopoly on persian gulf oil. As soon as sanctions were lifted (which was becoming more inevitable), Saddam would be unleashed.

Now he's out of the picture, and US troops are stuck in his place.

The danger posed by Saddam was that he wasn't playing by the rules, and by invading Kuwait and surviving his expulsion, he was always going to be waiting for the chance to use force to create a local, anti capitalist monopoly on persian gulf oil. As soon as sanctions were lifted (which was becoming more inevitable), Saddam would be unleashed.

The US is 3 years into an occupation of Iraq and this is the first time the above argument has been raised as a justification for US action.

Perhaps you can explain all of the US posturing prior to the war. Was the US presentation to the UN based on the fact that those of us in the rest of the world (ROW) are just credible monkeys to be bought off with some smoke and mirrors about rolling bio-weapon factories?

Were all of the presentations to the US congress and the US people just another act in a Bush administration manipulative farce, one that has cost almost 3,000 lives and 30,000 US wounded, not to mention 600,000 civilian deaths?

Do you really believe what you write or do you just make it up as you go along as did Feith, Wolfowitz, Bremer and the rest of Bushco?

The danger posed by Bush was that he wasn't playing by the rules, and by invading Iraq and surviving his re-election, he was always going to use force to create a local, capitalist monopoly on persian gulf oil.

That is your text, slightly edited. The world is sitting on the brink of regional war in the ME, Bush may be intending further military adventures in Iran, the world distrusts the US and is organizing against it, the American way of life is "non-negotiable" despite the fact that such uncaring arrogance will further AGW and impact those least able to mitigate or respond to those impacts. And you believe Hussein posed a threat comparable to this?

I believe in terrorists and revolutionary states. I respect the terrorists of Lexington and Concord Bridge, the rag tag army that took on the greatest military power on earth and sent its members home in humiliation and body bags.

Sadly, those terrorists had no descendants and the constitution they proclaimed goes unread by every living American. You, and every contemporary American, are a dishonor to your own history and to the liberties and freedoms that your forefathers named as self-evident and proclaimed to the world.

Why can't the reasons be D) All of the Above ?

I have no problem with the idea that Saddam was not complying with WMD inspectors, that it was believed he had WMDs, and that he needed to be dealt with on this topic.

I have no problem that he was a nasty dictator that killed hundreds of thousands of his own people, attacked multiple countries in the region, and in general was making himself a threat to the worlds most precious resource.

I have no problem that Saddam flaunted multiple UN resolutions, and treaty arrangements from Gulf War I and that his flaunting needed to be dealt with.

I have no problem that he was suspected of harboring terrorst (Al Qaida or otherwise is irrelevant) and that as such he was in violation of the doctrine on the War on Terror.

I have no problem that we are trying to spread freedom and democracy to this region of the world in an effort to not only topple this regime, but several other hostile and dangerous regimes in the area.

And ultimately I have no problem that at least part of the reason for this war was that the oil in that country and the surrounding region needed to be secured away from a despotic and repeated aggressor.

I know the liberals in this country believe its all about the oil, and I know many of the conservatives believe its about spreading freedom.  And I'd tell both sides, its about both reasons, and that neither one of them are a bad thing.

We won't go to Darfur, and places as such because it has no/little value to US interests.  This isn't some charity after all.

So-Damn-Insane's army was defanged after the first gulf war.  There were "no fly zones" where his ramshackel airforce was not allowed to fly.  He had absolutely NO power to project force to challenge any other oil producing country in the region period.

But what he did have was lots of projected reserves which if the west(the US) could produce, then the west could control the price of oil strategically by opening up the pipelines acting as a swing producer in a manner like SA.  The western oil companies, shrub's buddies, would get a profitable piece of the action.  WMD's and Freedom for the Iraqi's were a cover story for an oil grab.

Next after this was  accomplished, Iran would be next to be subverted by the neo-cons. "Democracy" in Iran would entail western interests developing their gas and oil for long term profits and seal the US's hegemony in the area.

It was a play to militarily dominate the oil and gas producing regions by force.  Any other interpretation of the events is outside of historical trends.

<Why can't the reasons be D) All of the Above ?>

Because it is untrue.  There were no WMD.  Saddam could Not pose a threat to other oil producers anymore.  Conservatives gave not a whit for the freedom of people's whom they overthrew their democratically elected governments.  Their was no Al-Qaida support and camps in Iraq.

I have big problems when facts and truth is distorted to fit neocon fantasies.  Lies are lies.  The facts are not open to "interpretation" because it makes you feel good.

I've updated my USA Gasoline Components Analysis graph.  With all the movement in gasoline wholesale prices in the 24 months since the last update, it may be surprising that there has been very little movement in the Spread from Wholesale and the Profit:

please CLICK link to see 2005-2007 and y-axis: http://trendlines.ca/economic.htm#Gasoline
Freddy, do you get paid a remittance each time someone clicks on your website?