Wednesday Open Thread

Since we missed having one yesterday.  In re the Mexican discovery (just to pinch a bit of space) there is a pdf of Powerpoint given by the VP of Pemex last August on their exploration plans here. Have fun!
Will the United States learn something/anything from the United Kingdom's problems relating to the energy gap?
If your world view says the market will solve all
problems it is heresy to admit to any problem. Australia's Special Broadcasting Service just ran a story on flex-fuel cars in Brazil, even pointing out many cars were made by GM's Australian subsidiary. The host asked why Australia can't implement such a program. Go back to the first sentence.
Wasn't there something in the Government Constitution about not mixing religion in with good governance?

Yet every morning they gather in circles,
Hold hands
And rectite:

I pledge allegiance to the Unifying Words of Adam Smith,
And to the Invisible Hand for which he stands,
One Globalization under God,
Indivisible, with liberty and market solutions for all,

That gave me a good chuckle. It also reminded me, for some perverse reason, of this snippet of dialog from the movie Independence Day:

President Thomas Whitmore: What do you want us to do?
Captured Alien: Die. Die.

I keep seeing economists screaming Whitmore's question at the heavens as the world melts down around them with the universe laughingly playing the part of the captured alien.

And then of course, the Secret Service Agents pull out their whoopee do dad pistols and shoot the psychotic alien dead just as his manipulative mind control techniques are about to take over the President's brain. Will Smith swoops in, Jeff Goldblum activates his science-crunching mind, the virus is unleashed; and the world is once again saved.

If only the Secret Service of real life could shoot PO dead and could shoot Global Warming dead with their sex pistols.

No. My posting wasn't a joke (except for the part about the circled wagons and the hand holding). Watch the Senate Hearings on Oil Company Concentration and you will see the Pledge to the Ledge played out in real life. All the Senators and All the King's men believe that the Market Solution will for sure, put our Humpty Oil Genie back together again. No kidding.

One of the problems I have been working (along with everyone else) on is: What signs and symptoms will we see as we roll over the peak.  Obviously, more expensive gas at the pumps is the most obvious.  (Unleaded-nymex is at $1.7480 at this moment).

What I am watching for is how other countries handle supply issues.  I feel for you UK but temporary disruptions is not what I mean.  What's going to happen to Guatemala, the Philipines, pretty much all of Africa when the supply doesn't meet demand?  I've seen a few headlines but nothing near the flood I expect.

How will the really small countries (the Bahamas, Costa Rica, etc) handle the event?  

Any thoughts?

Reading this article in the Guardian about a Chinese city of 10 million set to grow to 20 million by 2019 that I had not even heard the name of, Chongqing, brought home to me that peak oil is not the point at which the crisis will hit. The effects of 1.3 billion people in china and 1 billion people in India heading from third world to first world status at a pace many times that at which such change occurred in America or Europe means that even  quite rapid growth of the oil supply will insufficient to stop  it being outrun by demand and causing rocketing prices. Not even a Pauline conversion of America to fuel economy and the joys of cycling and walking will offset the effects of this Juggernaut. Nor will all the renewable energy schemes in the West prevent the environmental effects of opening the equivalent of a new 1GW coal fired power station every week.
Mathematically, the first derivative of oil growth is still postive before we hit peak, but the second derivative (rate of increase) has already turned negative-production is increasing but at a decreasing rate - this is being outweighed by higher demand hence prices have gone up 500%+ in last 6 years. The asymptotic rise in oil prices will come when first derivative of world production goes negative (peak oil).
Interesting. Good work. But what I want to know is: About when will the function become discontinuous?

Calculus cannot help there, and even catastrophe and complexity math do not help much to make real-world forecasts.

As an economist, I find it fascinating to see the demand for "prophets" to increase--people who write newsletters, astrologers, consultants, and authors of the "Left Behind" series of apocalyptic Christian novels.

Aye, that website is more fun than TOD. Thanks, we should all go there more often.

And the Wittengenstein reference has wheels within wheels to us philosophy afficianodos--about 3 levels of puns.

McDonald O'Sailorman:
I'll eat when I'm hungry,
I'll drink when I'm dry,
An the poteen don't get me,
I'll live till I die.

Did you know that (along with some help from the Arabs) the Irish saved civilization while Europe stank into its Dark Age?

The article you link to is indeed staggering. Chongqing used to be anglicized Chung King, which you may have heard of, at least as a brandname for frozen Chinese food.

I have always tried to think in terms of positive actions for the near and medium term as the energy situation become acute. Sometime this is difficult, obviously, and when getting even a tiny idea of the incredible monetary inertia and masses of humanity and human nature at work in a place like Chongqing, as describe in this article, even those with the sunniest dispositions would need to sit down and catch their breath. Surely no amount of windmills or reccyling or local farmer's market or organic gardening or public transportation stands a chance. Indeed, no amount of oil, coal, or globalization can handle the crushing forces swamping places like Chongqing these days for any significant amount of time. It mocks the concept of sustainibility.

But you just do what you can. I guess.

"...positive actions for the near and medium term as the energy situation become acute."

If our situation doesn't call for radical political thinking, what situation would? Luckily, I have discovered ideas which are up to the task. Of course "local action", "putting sustainable practices into one's life", and other such piety is useless -- so useless, they named a special paradox for Jevon. What would possibly be NOT useless? What is the smallest useful ambition (SUA)?
    I say that the SUA is: to think myself the citizen of a surviving State which exists, say, 100 years from now, and to act as such a citizen. And if I look for an example of a man - even a "chatterer and dilettante" - who thought of a state and had a state grow from his thought, I find that there has been such a man, and that that thought was what we cal "nationalistic" - and "racialist". The SUA pushes me toward nationalism and racialism: I don't think liberal-democratic universalistic piety will work too well in the coming crisis. Now, it is not enough to be a racial nationalist in theory. One has to find a particular racial-nationalist idea. This is not difficult if one has a mirror handy.

Rogers Park National Front

Congratulations - you've been beating around that bush for quite some time now (rather transparently), it's good to have you come out and say it.  Do tell - which race have you decided will survive?  And how do you plan to finish off the others?  What rubbish.  Read the link Nick posted above, and see how hard "the others" will work to survive - think they'll roll over so easily?  

If you think that racism will save you, you may consider me your enemy.  

Twilight, do you think Theodore Herzl was a racist and would-be genocideur? That is what you imply. Did he "plan to finish off the others"? If not, then why am I those things for  wanting to emulate him? [I know why. Will you say it?]
I'm going to give you the benefit of the doubt. I don't think you really mean all that stuff about WNEF. Your probably an ok guy underneath it all. You know that kind of thing is really not the anwer to our problems. Not Peak Oil and not the population question. The world is just too complicated and hard to control to believe in such ideological simplicity. And please don't think I'm attempting to patronize you, I not. I'm just trying to understand you.
writerman, people have always used times of major upheaval to further whatever agendas they already had.  The idea of having the constraints of society's limitations loosened has all sorts of bats flying out of the belfry.
You pushed one of my buttons. Herzl was not a racist, he was not into genocide, and more specifically, he was not the kind of real estate developer that stole the Palestinian's land and marked it up to sell to Jewish immigrants.
Herzl believed and advocated a Jewish state that was urban and that did not steal land from Arabs, and didn't steal their water, either. He was intent on letting the Arabs have the land, the water, the pasture, the fishing industry, and any minerals that turned up. He wanted to build a Singapore, not an Israel.
Which is why he and the rest of the German Zionists were purged by the Russian Na-Zionichki in 1904 or sometime, and lost control to the steal the land and run off the natives fruitcakes running Israel now.
He wrote "Altneustadt" (literally "oldnewstate") about what he thought Israel should be like. Read it sometime, if you can find it.
By the way, I fail to understand how I have beating around the bush -- is it possible that you haven't read my posts? I think that the phrase "white nationalist ecofascism" is not all that subtle. And yes, I do consider you my enemy, and I am happy to have matters between us so refreshingly clear.
White Nationalist Ecofascism, somehow I think not. I'd prefer to put my bet on Brown Internatinalist Socialism. That is of course if I had to choose.
... have BEEN beating ...
I disagree.

China just committed to a $22 billion high speed rail line from Beijing to Shanghai.  

Annual oil consumption ?

Several hundred barrals of lubricants for many billions of passenger-kms.

China has the capability to develop in a high efficiency/low oil use way given their massive capital investments (~50% of GNP).  They certainly seem to be hedging their bets (massive subway programs, railroad improvements, new hydro, HSR above) as well as following the path of the EU & US.

I could see a Chinese electric grid that was 90% nuke + hydro + wind with gasified coal making up the balance.  I could see a per capita GNP five times that of today with annual oil consumption slightly lower than todays level.  Pollution levels much lower than today.  A sustainable (sort of) China.

Nick, the article is humbling - it's almost incomprehensible, like reading about a city on some other planet in a sci-fi novel.  It's hard to imagine what we can do in the face of such things.  

I guess in the end, like the bang bang man and his wife, who gave away their children and work like slaves to support them, you do whatever you have to.  

The horizons for people who live like that must be very short - not a lot of time for big-picture thinking.  It bodes ill for the ability of the human race to make the kind of rational, reasoned decisions that are needed.  After reading that I'm thinking about the humans vs. yeast question again, and I don't like the answer much.

Yeah, Nick, what can one say? It's almost like a socio/economic version of tectonic plate theory. Huge, enormous and unstopable forces are moving inexorably in one direction. After a couple of centuries of decline China is on its way back to the position it occupied before the ascent of the Europeans to world domination.

"Capitalism" and so-called "Free market enterprise" goes where the profits are and that place is called China. "Capitalism" almost seems to have a life of its own. The "market" appears to be a system above and beyond our understanding and probably control. It reminds me of Frankenstein's Monster in many ways.

"Capitalism" has no master and no home. It has no country and no language anymore. What's happening in China is of historic proportions and importance. The great golden scales are tipping away from us and towards China and they may nevr tip back again. A true giant has awoken with all that it implies for the rest of us and the environment.

Do you think China will make it to full FMC?
1.3+ billion People, Agriculture now dependent upon Hydrocarbon Inputs, Serious issues with Water resources,
A growth economy reliant on increasing Hydrocarbon inputs and export of goods. Who will she sell to deep into post peak?
I dont think it will make it. I dont think she has enough time.
Granted a lot of what you say is true. There are lots of constraints on China's development. You're correct. Lots of stuff can happen in the future. The question is what? I'm just assuming for the sake of the argument that the bottom doesn't fall out of the world economy, that we avert environmental disaster and that Peak Oil and economic meltdown aren't just around the corner! That is if the end of civilization doesn't materialize anytime soon, China will become the the giant it wants to become. There is amazing capacity/potential for growth and profit in China. More than anywhere else in history. Given the system we have now - "capitalism" I can't see how China won't come to dominate the world. There are of course those who say, now way. They will slow down soon for various reasons, just like Japan did. Only Japan grew for about four decades before they slowed down. Of course things are different now. The one that comes up all the time is they need us as much as we need them. We buy all their stuff don't we and they are kind enought to lend us the money to do it! It's mutually beneficial reciprocal arangement. Which is true, but for how long? Soon China will have an enormous and realatively wealthy domestic market. It will begin to move away from exporting goods to us and provide for its home market instead. Their are enormous pressures to raise living standards in China already. A positive feedback will start to kick in. Then the loans to the U.S. will begin to dry up and we will have to go through a painful period of economic transition. Who knows how that will pan out? I fully expect to be slaughtered by the economists around here for these speculations and ideas. But what do they know. Economics is mostly ideology anyway as the Marxists would say.

I am not so sure about China.  They have resource depletion issues just as bad or worse than the rest of us.  On top of that they have a huge population.

There was a program on public radio the other day where they were talking about increasing desertification around the world and in China in particular.   Of the land area in China about 27% is now desert, and it is increasing every year.  Over-grazing and other such agricultural practices are the primary cause.

One thing that that they mentioned which I hadn't considered before was that when you see a disproportionate increase in the goat population, then you have an indication that the land is under stress.  The reason is that goats can survive on lower-quality plants that other animals cannot eat.

Podcast here:

Yeah, I'm not sure about China either. I'm just speculating about the future and who knows what happens there. If I was a real seer I'd be very, very rich. I'm just kicking around some ideas. I write fiction so I have a tendancy to "go off on one" as we sometimes say. It's also know as a flight of fancy and one just follows the Muse. Sorry about all the typos. I've been writing stuff with different heads for almost sixteen hours today!
China is also the home of the largest current tree planting plan to reclaim desert.  Worked to reclaim the US "Dust Bowl", parts of the Soviet Union, etc.
Small countries are going to be in big trouble if they don't adjust quickly. At least that's how I feel this will play out. I hate sounding pessimistic about these places. We're talking about real people here, who are going to really start hurting bad.

I see these countries gradually being "peeled off of civilasation." If I was them I would be looking at, and trying to emulate Cuba. Cuba is a small country which has gone through a sharp energy transition after the fall of the Soviet Union and come out the other side without falling apart. I know lots of Americans have problems with the Cuban model, but I just think, looking at it neutrally, there may be a lot to learn for third world countries.

Africa is, of course, another Big problem as oil prices rise towards heaven. I think it's here we'll really see some societies begin to disintegrate before our eyes. Not a pleasant thought. They got enough problems already.

The really big question is India and China. Their rates of economic growth are staggering. How on earth are we going to feed their growing appetites for energy? It's of course not only energy, but nearly all other raw materials. It's a real conundrum.

So one the one hand we've got lots of small countries and on the other India and China. We are going to be living in very interesting times.

Napoleon once said, China is a sleeping giant, when she wakes the world will tremble.

Many months ago there were Energy Bulletin posts, like this one:, media articles like this one: and many comments here about third world countries "falling out of the game" when they could no longer afford to buy or subsidize oil.

Lately, we've been talking more about problems in Nigeria and the industrialized world, but I'm sure Eritrea, etc. are still in deep trouble.

T. Boone Pickens says the market is so tight "if Iran pulled one million barrels of oil off the market, the price per barrel would jump to 75 dollars in 24 hours."

The answer, he says, is $5/gallon gas - all over the world.

This is a better link:

The story is more complete.

Pickens says a Congressman accused him of talking up the price of oil.  

He also says Bush is deluded if he thinks switchgrass is the answer.

Maybe YOU Can Make a Difference

I met Boone Pickens at the 11/1/05 Simmons/Kunstler event in Dallas that I helped organize, and that Mr. Pickens helped underwrite.  At Mr. Pickens' request, I met with a couple of his staff members, and we discussed the Hubbert Linearization (HL) models.  

It may be coincidence, but on 3/6/06 I wrote Mr. Pickens a letter, along with the article that Khebab and I wrote that was subsequently published in the Energy Bulletin, asking Mr. Pickens (and Richard Rainwater) to publicly support a move to abolish the Payroll Tax and to replace it with a petroleum fuel tax or a fossil fuel tax.  However, I was particularly struck by the following passage from the AP article:   "I (Pickens) said you ought to think about moving up to a world index price of say $5 for gasoline" to reduce demand and perhaps create enough government revenue to cut payroll taxes."

Again, it may be a coincidence, but perhaps one person--you--can make a difference.  I strongly urge all of you to join this effort to abolish the highly regressive Payroll Tax and to replace it with an energy consumption tax.  We need to replace endless talk with endless action.

BTW, Norway, which has the highest gasoline tax in the world, also has the highest standard of living in the world, perhaps because their rate of car ownership per 1,000 people is one-half of what it is here in the US.  

Link to Energy Bulletin article:

Jeffrey J. Brown
Addison, Texas

You wouldn't expect the NY Times and T. Boone Pickens to be on the same page about anything, but they are on the gas tax/payroll tax.

Ain't gonna happen, though.  Social security is still the "Third Rail," as Bush found out.

Raising benefits or lowering taxes has been a proven vote-getter for decades.
I've got news for T. Boone: the price of gas here in Germany is about $5.60/gal at current exchange rates and has been at or above that level for some time. I don't see any signs that that price has had much effect on demand. There are more cars than ever on the road here, and ever more of them are SUVs.

Did he really say Bush is deluded if...? Seems like a naughty thing for a friend of VP Cheney to say. (A recent article in Newsweek claimed that Cheney and Pickens had been hunting partners.)

I don't see any signs that that price has had much effect on demand.

Not in Western nations.  $5/gallon would kill demand in Third World nations.  

Though I'm not sure from the article whether Pickens was pushing for that.  He may have been instead supporting the NY Times tax plan: raise gasoline taxes, and refund it via a drop in the payroll tax.

"$5/gallon would kill demand in Third World nations."

Yeah, it could. (I haven't figured out how to put quoted text in the gray boxes yet.)

"Everything is relative," as a prominent German may have said. So $5/gal gas is already in Europe and would require a 100% (or so) increase in the US. How big an increase would it be in, say, Chile or South Africa?

There must be some place where we can look up the price of gas in any country. URL anybody?

Not to beat a dead horse here, but prices in Brazil are $4.73 per gallon.  Caveat Emptor, is the nation of Brazil still deemed to be the third world?
Brazil is a country with very polarized income distribution.
$4.73 may be cheap for some 5% and affordable for another 15%, and they will drive.
The rest 80% will probably not drive at all.
oil of Brazil: nice landscapes
Beautiful Brazilian woman and her works of art.(my wife)

As to the comments about income stratification.  Yup, the black people where I am are so poor they will never ever own a car.  I have two maids who I pay about $200 each a month.  That said there is a middle class here.

My wifes mom is a Philosophy Professor, who teaches at a private and public university.  She is divorced for 20 years , raising 3 children.  (Husband cheated with a country bumpkin because he felt intellectually inferior) Her salary affords her a 4 bedroom apartment, a small inexpensive car, an occasional vacation.(only where the currencies are strong)  She earns enough to enjoy what many consider their birthright in the US, but nothing more.  My wifes sister is a lawyer who is trying to become a judge.  She studies and does a little law work on the side.  She to owns a car thanks to the South American custom of never leaving mom and dads house!  Her brother, 24 years old, just bought himself a car.  He is trying to make it in a proprietary food business with his dad.  He earns very little, but lives with mom and is also able to afford a car.  So yes the incomes are straddled, but they find ways around this problem, to an extent.  Overall though your point is valid, that there is a vast underclass in the part of Brazil I live, and they are 99% black.


I just realized to my surprise, thats my wifes picture.  The right bottom corner, the signature says Daniela Merces.  Thats her.  How did you find this?

You put her web page in your profile.
Oil, how do you see Brazil's chances of dealing with peak oil?  Between ethanol, oil resources and power being I think 90% hydro, Brazil would seem to be fairly well situated relative to a lot of places.  

Are you thinking about re-locating?  Better shore up on your portuguese!

I live in the Northeast, where it is warm all year round.  We do not need to heat our apartments or homes.  Air conditioning makes our lives comfortable, but is not a life or death situation.  I was peak oil paranoid enough to buy an apartment with a front and back varanda, so my living unit gets a strong breeze and a ventilated living space all year round.
We do get most of our electrity from Hydro, which is great except when there is a drought.  A friend of mine tells me there was a major drought here a few years back which awoke the government to the need for backup sources.  Climate melt down will affect us going forward.  
The transportation system here in the Northeast I would liken to San Francisco´s or Los Angeles´s.  We are a big sprawling city, in which you need a car to get around.  Right now there is no Metro because the freakin government stole the funds.  The metro is about halfway completed, and with sufficient funding and honest politicians we can get it done.  We have very good bus service, however, so if you need to get around without a car you can.  I remember reading the feds have some abitious plans for ethanol by 07 or 2012, but who the heck knows with climate change.  For example the Amazon had a record drought this past winter.(northern hemisphere summer)  
As far as I know there is no interstate train system, and once you get out of the city, at least here in the Northeast, you must have a car.  Buses run infrequently and there is vast amounts of land uninhabited.  One unique problem we will face due to peak oil is tourism.  I think there were 5 million unique visitors to Rio for Carnival, I know Salvador had between 2 and 4 million.  I imagine that the governments, airlines, hotels and local businesses generate significant revenues due to the holiday of Carnival.(Mr. Sailorman I know what you are thinking right now!)  

Very interesting, thanks.  Yes, I would have to start from scratch with Portuguese, unless some Spanish would be any help.  I was intrigued by what I read about Curitiba and its intelligent approach to town planning, transport, housing, etc. here.  But I can see how drought and/or a dropoff in tourism would threaten Brazil and Brazilians.  
Actually, Sailorman has a multitrack mind and I can go a full 2.6 seconds without thinking about sex;-)

What concerns me about Brazil are
1. Extreme income inequalities combined with
2. Lots and lots of guns

When TSHT, as always, the lowest income people will be hit the hardest. The fat cats have platoons of bodyguards and armored vehicles and helicopters already, but who is going to watch the bodyguards? Once urban rioting and looting and burning begins, what is going to stop it?

(I haven't figured out how to put quoted text in the gray boxes yet.)

Try <blockquote>...</blockquote>
Thank you. I've learned something new today.
$5/gallon would kill demand in Third World

Here in NZ, petrol has just risen to around
$1.50, which equates to $6.75 a gallon. Now our
currency is rather weak again (0.65) so that
comes out as $4:40 US.

But simple comparisons of fuel prices are
invalid. Much depends on average wages and
general living costs. The problem here is that
there is virtually no public transport system.
The government committed to cheap oil long ago
and still persists in encouraging car use,
despite the alarm bells ringing loudly. Indeed,
the Clark government has committed to massive
extension of motorways etc. It does not stop
there unfortunately: there is currently a
massive commitment to construction of additional
shopping malls, marinas etc.

We in the PO awareness groups are bemused and
horrified as we ponder whether the monumental
misallocations of resources currently under
construction will even be completed before PO
causes a crash.

We are already experiencing a 'soft' period
= economists' technospeak for a collapsing

A few observations: large numbers of SUVs
and large-engined cars now parked bedside the
road with 'For Sale' signs at much reduced
prices.  Vacant car sale yards. Vacant
commercial premeses.

Yet the mantra churned out by the media (of
bigger cars, more overseas holidays, more
shopping.... more of the easy life) continues.
Indeed, it probably is reaching new heights as
the ship starts to go under.

The crucial factor for NZ now is how to pay for
imports of all this stuff, including oil, now
that the balance of payments is being blown out
of the water. In that respect we are in the
similar boat to a lot of other nations, though
we have probably taken on a lot more water than
others  -spending around $1 billion more than
we earn every month.

Of course truly dedicated petrol heads are not
the least detered by rising fuel prices and
continue to accelerate toward red lights and
generally drive like there's no tomorrow, as
encouraged by the media.

Your rant sounds a lot like mine. Actually, I don't have a rant yet. I'm new to the PO scene and haven't begun to evangelize. I still have a lot to learn.

From your observations, it sounds like NZ is further along than Germany or the US if people are starting to try to unload their expensive toys. I have no numbers to back me up, but I've observed an increase in the number of SUVs on the roads here, and most of them are new. Not a lot of used ones for sale yet.

You point about comparing gas prices in different countries is valid; others have made it in this thread too. Gas at 5 $/gal might be too expensive for typical citizens in some countries. Here in Germany it definitely isn't. Maybe it will be at 5 euros/liter. We'll know soon enough.

Just use <rant> then </rant>.  

Super G thinks of everything!


I would hope that the recent publicity around the un-explored hydrocarbon basins offshore will come to something. Continental NZ is actually really big, there is a massive area of relatively shallow water, and apparently quite good prospects for a big oil find, according to Matthew Simmons (see link)

About petro-dependence: I would also argue that Wellington has very well used public transport- around 1/3 of people use PT to get to work. Auckland on the other hand is woeful.

NZ will be badly hit by peak though, no doubt. Hopefully, the govt will start planning massive electricity and rail infrastructure projects now, while oil is cheap...

There must be some place where we can look up the price of gas in any country. URL anybody?

EIA has weekly gasoline/petrol prices for Belgium, France, Germany, Italy, Netherlands, UK, and US:
These are from Jan 1 '96 to present.

Not sure about the rest of the world, but numbers are out there somewhere.

Not only naughty but knowing the VP's hunting skills dangerous too.....
Arrrrrrgh, Cap'n,
Sailorman here to report: Just because you do not see the effects of gasoline at over $5 per gallon does not mean they are not strong. With all due respect, please check the following data:
1. How many licensed drivers are there in Germany?
2. What is the total consumption of gasoline and diesel in Germany?
3. How many licensed drivers are there in the U.S.?
4. What is the total consumption of gasoline and diesel in the U.S.?

Alternatively, you may find it quicker to use numbers you find in Google to directly compare per-capita gasoline consumption in the two countries. Personally, I like to work from the rawest data I can get to my own conclusions, and then try to figure out if any adjustments are needed or any additional data are needed.  

Note that Germany is a more densely populated country than the U.S., and this fact favors good public transportation. Thus "other things are not equal." That being said, the excellence of the European systems of European public transit compared to the much less adequate ones in the U.S. has much to do with the higher price of fuel in Europe.

I will be interested to see what numbers you come up with, and then we can discuss why diesel and gasoline consumption in Germany is so much less (per capita) than in the U.S.

Another number that is interesting to compare is average fuel economy for personal cars in the two different countries. Yet another number to look at is just the crude ratio of cars to people in the two different countries.

I post no numbers myself, because as an old teacher I believe that to understand data we should each do our own homework. Facts, by themselves, are meaningless, and as we work and maybe sweat with them, then I think our interpretations tend to get better.

And, probably even more importantly, understanding the nature of the data - where did it come from and how was it derived? What are the definitions, whats in and whats out? How were the parameters actually measured and by whom? Or was it a SWAG? A census (surprisingly difficult to do well)? An extrapolation from a sample? From what list frame was the sample obtained (how well does it represent the population of interest?)? How was the list frame established? What are the likely biases and how large might they be? What was the sampling process -  randomly sampled or one of convenience? What are the precisions of the estimates? Precision costs and precision in the face of large opportunity for bias is useless. Any subsample validation?

If somebody is required to report something, what gets missed? I once sat in a minister's office watching him fill out a national report to an international agency on the numbers of this and numbers of that. To someone looking at the compiled national data, it would all look very empirical. It was all complete bullshit. He and I both knew he had absolutely no way of establishing those counts as they required laboratory work and his ministry's laboratories were completely non-functional.

Then there is the matter of the information in the distribution in contrast to the information in the central tendency (mean, average or median). The devil is often in the tails and the median is often much more informative than the mean or average. The old joke about the average salary of Duke English BA's being $60K one year because one had a very nice NBA contract comes to mind. Ecological fallacies of means across groups are always interesting traps.

The devil is in the details of the subsectors burning that fuel and their fuel costs as a component of their cost structure and profit margins. Think food.

Hey sailor, I came here to spout off, not to do research. ;-)

Seriously, your points are taken. I'm also aware of them and their relevance, though I don't have the numbers. By the time I do, this thread will be stale. What should I do with them then?

Indeed they do have better public transit here; I use it every day. That's why I, as a licensed driver and car owner, am able to keep my driving down around 10000 km/year. If the gas price doubles, I'm sure I can reduce that number further.

I'll add a fifth entry to your list:

5. How much tax is charged per gallon of gasoline/diesel in each country?

and a sixth:

6. What is that tax used for?

All I wanted to do was make a couple of harmless observations and now I've got a homework assignment....

I'll hold you to your word: If I ever catch you posting any numbers, I'll keelhaul ye.

Catch the Sailorman, aye, and that will be the day. We pirates know the importance of speed, and my good 13 year old Audi with 214,000 miles will do an honest 165 m.p.h., and perhaps more if I fuel with aviation gasoline for higher octane.

I likes your German master-race attitude toward speed: Rich folk in their BMWs and Mercedes and Audis can run off the marvelous Hitler-inspired autobannen all 'dem little Fiat cars. Speed limits are for wimpy Americans and limp-wristed Brits, but kraut-eating squareheads know that if the speedometer goes up to 300 kph, then the car was meant to drive that fast.


"I likes your German master-race attitude toward speed:"

Not mine, sir. I just live here.

A speedometer may go up to 300 kph, but with all the traffic on the autobahn, it's hard to drive even at 200 for very long; too much danger of running into one of those Fiats. Or a truck.

Aaargh.  I found driving on the Autobahn to be enormously frustrating- just about the time you get settled in at 200 kph, you come to another construction zone and everybody has to crawl along at 70.  Even without the lorries and Fiat Unos clogging up the two right-hand lanes, it's impossible to really enjoy the full benefits of no speed limit.

The Autobahn is highly overrated (at least the sections I've driven; I'm told other stretches are much better.  

On the other hand, those European sedans are incredible.  Last time I rented a Volvo with a high-performance diesel engine and a 6-speed tranny.  Incredible performance at around 35 mpg.  Wish I could get one here, but probably couldn't afford it anyway.

"The Autobahn is highly overrated (at least the sections I've driven; I'm told other stretches are much better."

You just have to be on the right part of the right autobahn at the right time; then you drive as fast as you can.

... running into one of those trucks.

Problem soon solved in that German speaking (sort of) nation to the south.

Switzerland is getting 60% of the funds for building their massive dual trans-alpine rail links (one Zurich-Milan, straight & level @ 250 kph, the other Bern-somewhere in Italy/France @ 200 kph. 34.5 km rail tunnel in one link, 58 km in other link) by taxing heavy trucks per km.

A major modal shift that will serve them well post Peak Oil.
About 20 billion CHf in taxes on trucks by my calculation.

IMHO, taxes DO work.

If you want more of something, subsidize it.  If you want less of something, tax it.

Not being in the EU may have its advantages. The Swiss can raise taxes and build tunnels and so on. Will that drive the north-south truck traffic to Austria? The Austrians might not be able "resist" in the ways the Swiss can.

Whatever either Alpine country does, I don't know if it will have much effect on east-west traffic, which has increased dramatically as the EU has grown.

Here is some data about gasoline use in Germany and the number of licensed drivers:

183,52 million barrels of gasoline per year
211,99 million barels of diesel per year

Both for the year 2004

Source: (link to Statistik in german and then multpliy by 7,33 to get numbers in barrels)

For me interesting, there is more consumption in diesel than in gasoline. I didn`t find a number, however percentage of new cars with diesel engines is between 40 and 50% in Germany. There is also important to know, that there is a considerable ,,gas-station tourism" to places like Luxembourg or Poland. The german railway system uses not much diesel, because most of the tracks are elctriefied.

The number of licensed drivers is around 49 millions. The whole population is 82,5 millions.

Further data:

number of vehicles: 54,5 millions (2005) , 53 ,6 millions (2003)
passenger cars: 45,4 millions (2005)
trucks: 2,6 millions (2005)

The per capita use for gasoline is some homework for others.

Yet more fun links inserted randomly in an off-topic manner (I apologize)...

Fusion Power strikes again!

Forget coal gasification (well, maybe not), how about running your car on wood?  It looks so stylish... I remember these from some pictures during WWII  

All right!  The Mexicans are going back to nuclear - maybe now we can have more of their oil and NG...

Could oil sands be toxic in some way?  Don't worry, we can just give folks a few more bucks and everything will be ok.  Either that, or everyone in the whole area will have to wear respirators, and drink purified water.

This is an interesting way to store hydrogen in water bubbles, at high pressure ayArticle/0,1602,7377,00.html  Yes, I know, we will need all of any additional hydrogen for industrial processes, and what we put into the cars will blow us to tiny bits, but when the government puts tons of money into a subject, we get results!

Someone attempted to build solid rocket fuel using tar and very highly compressed microbubbles. Maybe methane and tar, with methane released when the tar melted?
Probably not methane, more likely an oxidant.  To burn anything you need a fuel plus oxygen.  In a solid rocket there is no air intake or oxygen line feeding oxygen to the reaction vessel, so you have to include the oxygen as part of the fuel/oxidant mix.
CAUTION: Rocket Science!

You may be thinking of the Burt Rutan rocket. That consists of a pipe with tar in it with a hole down the middle. At one end, liquefied laughing gas (nitrous, the oxydant) and a sparkler or other ignition source is used. Once a solenoid valve opens, the laughing gas and tar burn in a nice hot high pressure flame, pushing the spacecraft. The above rocket was used with the X-Prize winning SpaceShipOne.

Of course, a better propellant would include liquid oxygen instead of laughing gas, eliminating the dead weight of nitrogen atoms. Solidified butane would have more calories from hydrogen, lessening weight from carbon. A possibility is solidified natural gas in the pipe, further improving the calories to weight ratio. The LOX is kept in a thermos tank and allowed to pressurise part-way like the laughing gas does in the Rutan rocket. Of course, getting a cryotolerant solenoid valve will be a challenge. Grainger doesn't sell them.

I should have made my post more clear. The rocket was tar and oxygen. I was suggesting methane in tar as a cheap, non catastrophic failure mode way of storing methane in a car for fuel. No expensive and explosive tanks, no liquid methane system, etc.
The Bank of England's Spring '06 Quarterly Report includes a study of the forward market for oil. A separate PDF is available here:

The forward market for oil

The study mentions that the Dubai Mercantile Exchange is due to open in the fourth quarter of this year. From the DME's blurb:

"The DME is a 50/50 joint venture between the New York Mercantile Exchange, Inc. (NYMEX) and a subsidiary of Dubai Holding."

They go on to say that the exchange "will initially develop and trade a Middle East Sour Crude Futures contract in the heart of the world's largest hydrocarbon province."

"The DME aims to meet the growing market need for price discovery of Middle East Sour Crude whilst simultaneously addressing the time zone gap between Europe and Asia by providing a hub for the trading of energy futures, options and other products."

Interesting read... thanks for posting it.
David Friedman, a prof at Santa Clara University, has posted a different and interesting take on peak oil, one that partially blames the situation on the lack of secure property rights. Quite an interesting read. His post is Ideas: Peak Oil?. Related posts are here and here.
That's a great piece, thanks.

FWIW, I think that Hotelling's model might also work better with a resource that depletes on a short-term, human, timescale.  If most producers and consumers plan on a 10 year time scale (or less), and depletion is not the biggest factor in that time scale (probably not, projects and discoveries provide a masking 'noise' factor) ... then who's to say anyone will think "Hotelling" the reserve is a good bet?

I think the main thing working against this version of the Hotelling effect for oil producers is the need to make long-term investments in order to pump all-out. No one is going to to that when property rights aren't secure.
Jared Diamond's Collapse sort of implies this, though he doesn't go into it, probably because it's a can of worms he didn't want to open.

He points out that one of the factors in large societies becoming sustainable is a ruler who gets his wealth from the entire kingdom, and therefore has incentive to protect and care for it all.  Not only that, he has incentive to protect his lands for future generations, because he wants his children to inherit the kingdom after him.  

The implication in that model is that democracy doesn't lend itself to thinking about future generations.  You may only be in power for a few years, and there's certainly no guarantee your children will "inherit" your position afterwards (the Bush dynasty notwithstanding).  So politicians in a democracy have even more incentive to loot the country now, rather than save it for future generations.  

Is that why the Chinese Communist Party is doing better than, say India's democracy, in terms of pure economic development?
What if the ruler turns out incompetent (very easy when there is nobody daring to point out your mistakes)? Then he would still be interested in looting the country while the country itself will be much worse off. The point of democracy is this not to happen and the point of division of powers is that the governors elected short-term do not use the power for their own good.

It seems the problem is that both systems lack a mechanism to ensure that the elected/inherited governors will care about the country long-term. Was the governor of Easter Islands elected?

Easter Island had several different methods of government.  I suspect their problem was not their method of government, but their size.  They were probably a medium-sized society.  That is, one that was too large for grassroots control to work, but not large enough to support a true central government.  According to Diamond, such medium-sized societies cannot avoid collapse.  Smaller or larger societies can, but not medium-sized ones.

He also suggests that large societies with weak central control will suffer from the same problem.

He also suggests that large societies with weak central control will suffer from the same problem.


The Norwegians have an approach somewhat like this.  They want to maximize the length of production (with an undertsanding that oil in the ground appreciates in value, but they are uncertain whether the rate is higher or lower than interest earned on earlier production surplus to their immediate financial needs).
That is an interesting take.  

He's arguing that Hotelling's model doesn't work in the case of oil, because people are worried that they won't own the oil in the future.  Tyrants worried about regime change, CEOs who want to earn profits (and bonuses) now, or politicians who need the money to consolidate their power...all have reason to pump the oil now, not later.

That argument suggests that peak oil could be a lot nastier than predicted.  

That argument suggests that peak oil could be a lot nastier than predicted.

Wow... That's deep. You mean it could actually turn out worse than an endless great depression and massive die-off??

Much worse. I might have to make me own gin.
There are a number of flaws in David Friedman's argument. The core of his argument is as follows:

The argument is straightforward. Owners of oil underground can choose when to pump and sell it. If the price of oil is rising fast enough so that oil in the ground pays a higher return than money above ground, it pays to leave the oil in the ground--postpone production in order to get a higher price in the future. That reduces present supply, shifting the present price up, increases future supply, shifting the future price down. In a world of secure property rights and perfect information, the process continues until the projected price of oil, net of pumping costs, is rising at exactly the market interest rate, forever. Any faster than that and people shift production to later dates, any slower and they shift it to earlier dates.

  1. The argument only applies to a world of "perfect information." That world does not exist therefore this argument applies to no known location.

  2. If I leave  my oil in the ground, I get nothing for it. No one is willing to provide me with a stream of payments based on my claim of possible future extraction. There are those who will claim that this is simply a temporary market imperfection, one that may easily be corrected by making slight modification to the present futures markets.

I hope that they make this market modification and that they make it soon. Once this Neu-Futures market is up and operating, I intend to sell forward all of the labour to be produced by my as yet unborn children. I assure you that my proposed family is both extremely large and very highly skilled. Not only will I offer forward all of my immediate progeny, but I will also sell forward the labour of all of their progeny, and all of the generations to come after those.

All that is required to make me the equal of Bill Gates is a world of secure property rights and perfect information. Oh, almost forgot: a little sex too. Gotta get to work.

You forgot this flaw:

3.    The delusions that we human critters are "rational" actors operating in an ungamed, "fair and balanced" market place where valid "information" (as opposed to disinformation) is freely handed out to all players.

(Who ya gonna bust? Who ya gonna trust? --Ghoul diggers! I ain't fraid of no Ghouls ... --to tune of Ghostbusters :-)

If I leave  my oil in the ground, I get nothing for it. No one is willing to provide me with a stream of payments based on my claim of possible future extraction.

Are you sure about this?  Governments have sold mining rights to firms for years without those rights being exercised.  What if an oil company were to pay a Nigeria enough to keep its despots happy and didn't drill for ten years? Imagine the value to both the oil company and the despots when they did begin to pump oil.


There is also the problem of long-term gain versus short-term.

If ExxonMobil has rights to a large field an isn't pumping it, they are showing less profit now than they could be.  They then need to sell their investors on the idea that it's better that the company they invested in doesn't sell their product because the product will be worth more later.

That's especially difficult when many (most?) investors don't believe oil is close to peaking and so may disagree with the opinion that big gains are to be made by postponing sales.

"Since I am neither a geologist nor an engineer, I prefer to look at what economics can tell us about the situation."

The Invisible Hand: Nanlyzing the Reacharound with Full Release

Doesn't anyone see the hypocrisy of a "Professor" saying You must learn my "economics" babble but I don't have to learn the rigors of your geology or engineering know-how?

We have to learn your stuff, but you are excused, you  get a teacher's hall pass from learning ours? That you call  fair? (Nu, vus zigsta chacham of local San Jose University? :-)

How can economics ever become a real "science" if its practitioners insist on operating in a vacuum with no bounds set by the realities of human nature (irrational actors), of thermodynamics (no free energy lunch), of geology (limited porosity of rocks), of physical mathematics (there are no infinities in the real world-- the Earth is of finite volume and surface area), of physics, etc. etc?

This is why economists get such poor grades at this web blog site (TOD). They want us to play by their rules and they grab the basketball and run home the minute we non-economist techno-nerds start asking them to play a little bit according to our rules (well, actually not ours, they are Mother Natures' rules --you try to foul with her and you get tossed out of the game-- that's the ultimate rule.).

Well stated.

Peak Oil transcends disciplinary boundaries. The "Imperial Economics" view that sees all essential truths as aspects of economics is profoundly wrong--and all great economists know that.

Big problem is that there are not too many great economists around; most of them discorporated some time ago, and not very many people study their books. However, there are still a Few Great Economists and I think even more important at this point, some fine economic historians still around. One of the things that really drives me up the wall is that people tend to talk mostly to people who have similar educational backgrounds.

Lawyers talk to lawyers mostly, and that tends to make them useless for understanding most things. Economists despise sociologists, and the feeling is reciprocated in spades. Few sociologists understand econonomics, and I have yet to meet a Ph.D. in economics (and I know about 150 of them) who has even a faint clue in regard to sociology or the vocabulary of sociology or anthropology. [To be fair, there are a couple of economists who know about these things, but they are not known to me personally.]

I like to hang around physicists and engineers, because they are really smart and good at explaining important things. Geologists are a lot of fun too, and for some reason often have great senses of humor . . . maybe being alone among all those rocks does things to them. Oddly enough, to understand the essence of things, I've found that the three poets I know are as good as even the Nobel Laureate physicists I've met.

Historians of science and technology know a lot of neat stuff too. Pilots and sailors travel a lot, and thus we pick up stuff that may not be noticed by many others.

And therefore what: You want to know something . . . well, go find somebody who does and have a couple of drinks with him or her. On the other hand, if the somebody is Russian, you may need about twenty shots of vodka to learn anything, and my doctor says I cannot (or should not) use that technique anymore.

Ah, doctors, what do they know?

Your mostly correct. But isn't the problem really the degree of specialization required to master any field of study in a highly advanced society like ours. We all have to hack and hack in our individual furrows to get on and we rarely have the time to look up and see what the other guys are doing in the other furrows in the big field?

As Shaw I think said about this tendancy, we know more and more about less and less, relatively speaking that is, that last bit is me I'm afraid.

The idea/ideal of a broad, liberal education is a thing of the past. I meet highly competent and educated people who are at the same time really ignorant of almost everything outside their narrow speciality. I think we may be talking about the difference between education and training here. There is more and more training, and less and less real education. I hope this doesn't sound too much like snobbery and elitism.

What I think I mean is, that we no longer have fields of study, they been replaced by furrows of study. A couple of centuries ago an individual who had the money, time and inclination and education could almost know everything there was to know about a chosen subject. There were far fewer books and one could just about read them all during ones lifetime. Today reading everything about any one subject is impossible. Sure I'm sure you'll say one can read all the best books, but I'm not sure that's true anymore.

The point about professionals from one furrow only talking to guys from the sam furrow is true though. Bur even that I think has a lot to do with social stratification in our society. Sure one chats to the hired help, but does one interact anymore? It's almost as if we're becoming tribal again.

How's any of this rarified stuff relavant to Peak Oil? Well I suppose it means our political leaders have specialised in a very narrow furrow indeed. The long and soul distroying climb up the slippery pole of political power. Only a tiny percentage of them have any sort of overview at all or real vision. They are just fairground hucksters on the spinning wheel of "capitalism" and just like the rest of us, they're holding on for dear life, and not get thrown off the ride.

Speaking of fields and furrows, we lemmings prefer to restrict our studies only to burrows.

As far as we're concerned, either you are burrowing your way to prosperity or you are just digging a hole for yourself.

Well put writerman.


Truth be told --until I became Peak Oil Aware, I knew nothing of how pervasive and fundamental the black gold is to our non-negotiable way of life, I knew nothing of geology, of trap zones, of rock porosity, of drill casings, ... of crude futures markets.

More importantly, there is the "visceral knowledge" that comes with all the abstractionist talk.

When I step out of the house and see my car sitting in the driveway, it hits me in the stomach that in the near future it will be a piece of rusting metal with no go go juice to make its gears spin.

When I step out of the house and see my car sitting in the driveway, it hits me in the stomach...

After all the spew you write about unsustainable practices, it turns out that you drive?? LOL. Hypocrite.

Truth be told -- I heat my house with NG and air condition it in the summer.

It's easy to talk the talk.
It's a whole other animal to walk the walk.

--Rolling and Laughing along with ya brother.
What size is your engine?

I don't have an engine, or a car. Guess that makes me a walker, talker. ;-)
I'm not the last Renaissance Man; I'm fortunate to know scores of people who are strong in the natural sciences AND liberal arts AND social sciences. But the problem is that they are all between the ages of 60 and 94. Fairly abrubtly, in the late 1950s and 1960s U.S. universities stopped educating their students in favor of ever-narrower training in specialties.

I saw this on a personal basis when I was in a Ph.D. program at the University of California in the 1960s--as soon as I'd passed a breadth requirement (e.g. in foreign languages), the requirement would be cancelled. Harvard U. went from a solid curriculum for its undergraduates to a "cafeteria style" where students could load up on "junk food," and the rest of academia followed.

Today students graduate from high school with never having taken a real math class, or a real science class or a real lit class. Instead we have "Business Math" (percentages), "Applied Biology" (sex education, presumably:-), "Contemporary Writing," which is maybe edited reprints from the "Reader's Digest."

There is some good education in private schools, and that is why the children of the rich and a few lucky scholarship kids go there. The public school system in the U.S. is broken beyond repair. In education there is a kind of Gresham's Law of reform, where the fads and trendy foolishness drive out or dilute to meaninglessness any genuine reforms, such as the critical thinking movement.

Grump. Arrghhhhhhhhhh!

I wonder about your cut-off of age 60.  I am 52 and took a "hard" course in Roman History as well as Russian with my undergraduate BS in Physics (Math Minor) at the University of Alabama.  Tuscaloosa High School graduate with a good founding in Shakespeare, Economics (yes, in high school, and a decent introduction) as well as French, and a superb Chemistry course.

Independent reading has added to college credits.

O.K., I'll lower my cutoff to 52;-)

But the trend toward dumbing down our public education has been going on for a long time, and I see little in the way of good news in regard to things actually accomplished.

To save money our high schools cut such frills as art, music, literature, lab sciences, advanced math, honors programs, . . . because we have to make room for drug education, sex education, driver education, computer education (i.e., learning to keyboard), sensitivity training and the School Board alone knows what else.

Where do you think the money to pay for increased fuel costs for buses is going to come? I doubt that basketball will be cut . . . .

... Intelligent Design 101 and
....Premptive Paranoid Schizophrenia 2006

that's what else

I agree with you that public school curricula have been dumbed down and that teachers' expectations of students have been drastically reduced. However, what one gets out of an education depends on what one is prepared to put into it. A child these days can still get a decent education provided they don't take the path of least resistance. Parents' expectations, and how they instill those expectations in their offspring, matter more than the expectations of teachers or school boards.
I'm a big fan of David Friedman. I have his Price Theory book and I've read some of his other books as well. He is the son of Nobel prize winner Milton Friedman, BTW.

I have posted several times here on the Hotelling model:

There are a couple of problems with this model. The first is that it should apply over the entire history of production of an exhaustible resource such as oil. One of its predictions is that the price should rise steadily in real terms (adjusting for inflation) at a few percent a year. But over most of the 20th century oil's price did not have a rising trend. It ended up about where it began.

The second problem is more subtle. Ignoring Friedman's concern about companies losing their rights to oil, oil producers would like to see prices rise as I just described. But this does not tell you what the initial price should be. Ideally prices will rise at a steady rate, and just as oil gets too expensive to use, we pull the last drop out of the ground. But there is no way in practice to predict demand out into the future as would be necessary in this model. Hence it does not really say what today's price should be.

Despite these problems Hotelling's basic model still makes sense. If you have a commodity and could sell it in city A or city B for the same cost, and you get a higher price in city B, that's where you'll sell it. The same principle applies to time. If you could sell it at time A or time B, you will sell it in the time where it is higher priced. With time we have to "discount" the future, and generally that is figured at a few percent per year. This leads to the prediction that producers will aim to keep prices rising at this rate, so that they expect to make a steady and constant profit stream, when discounted.

I like Friedman but I'm skeptical of his argument for departing from the Hotelling model. First, realistically I don't think most oil companies risk losing their oil rights in thie next few years. Second, the truth is that most sellers in the oil markets today are national governments and nationalized oil companies. Traditional privately owned oil companies like ExxonMobile and BP are marginal players today. National governments have the same incentive to follow the Hotelling model as do private parties, and they face almost no risk of losing rights to their own oil.

Summing up, the Hotelling model is instructive but does not describe the actual price history of the oil business. It is possible that as we enter the end days we will see this model beginning to play a larger role. Its prediction of gentle, steady oil price increases suggests that adapting to an oil production peak will be easier than anticipated by the Peak Oil movement.

The Hostelling model exibits a certain intellectual elegance and appeal; I distrust it for that reason.

In addition, as you point out, the model does not map very well to real world pricing. It certainly does not appear to apply under conditions of scarcity and I am thinking here of present NG pricing trends in the UK.

I have trouble with the fact that a ubiquitous renewable resource is priced at twice the price of an increasingly scarce non-renewable resource - I am thnking of bottled water vs gasoline. One product comes out of a tap, goes through a filter, gets trucked across town and is worth $2 a litre. The other product is the result of a capital intensive discovery/extraction process, is shipped halfway round the world, and undergoes extensive reprocessing before it too is filtered and trucked across town to be sold for $1 a litre.

The Hostelling model does confirm that oil is a good inflation hedge. The future price rise can be expected to match the prevailing interest rate and the future interest rate will be derived as some function of the rate of inflation. Since the price of fuel (realized as transport costs) has significant impact on the inflation rate, this suggests a self-referential pricing function with the only true independent variable being the delusional madness of the prospective buyers, myself amoung them.

It's of interest to read Douglas Reynolds paper The Mineral Economy, which takes a different approach than Hoteling. He argues that the main dynamic is that during the development of a set of oilfields we don't actually know how much oil there will eventually be. So prices don't follow Hoteling's law, and instead decrease over time as we acquire more knowledge about how to find oil. But then at a certain point, we realize we've found it all and then prices go through the roof.
There's an interesting new paper published by the UK Department of Trade and Industry, Intelligent Infrastructure Futures

It looks at different scenarios -including peak oil, and the impact on society.

Just thought I'd use this open thread to share a recent experience I had. There is a Tesco threatening to open in my local community (Mersea Island, Essex, UK), and I've been criticising it in public - a story which got picked up by The Guardian, then by local media, and then by The Daily Mail, which is a major national (picked up because I'm a priest and they thought it interesting). The reporter came to do an interview with me, which lasted for an hour - almost all of which was devoted to talking about Peak Oil. Out of that hour only two sentences were quoted, and it was 'spun' so that all the Peak Oil context was removed. (Did get a big picture of me in the paper though).

So that was the bad news - major media only interested in their own agenda of confected conflict, not the underlying issue. (No change really).

However - some good news. Having been pictured in a national newspaper, the local media picked up on it, including the regional TV (BBC and ITV) - who featured me earlier this week and - hallelujah - Peak Oil and energy got mentioned. I'm pretty sure that the Church papers are going to pick up on it, so even if it hasn't penetrated into the inner sanctums of the Daily Mail, it is at least percolating around just under the surface.

I'll end with a prediction: it'll break through the surface when the gas supplies to industry get cut off in a week or two....


The National Business Review

Major oil strike ahead if PR campaign succeeds

A major oil strike is on the cards if the government campaign to attract explorers to New Zealand's mostly off-shore fields succeeds, according to peak oil guru and adviser to US President George W Bush, Matt Simmons.

(I guess Simmons is still a big moeny elite after all, whose only concern are money and wealth and privilege and power.)

Sometimes I just don't get it.  There's a shortage of off shore rigs.  So, even if a major new source is found and developed within ten years, assuming that to be possible, most or all of our existing sources will be in decline.

That, married with the highly probable link between burning fossil fuels and climate change, it seems some form of madness has overtaken the elite and the proletariat in every country as they try to halt the unstoppable.

Why would we want to invest the effort and natural capital and human effort in "developing" these fields when all we'll do is waste the opportunities we have now to modernise and achieve a human life pattern which is both good for people and good our planet as a whole.

Sometimes, I just despair and wonder, why bother?  Then I realize what I really want is a world where my daughter can have clean air and clean water and healthy food and a chance to enjoy the beauty that surrounds and embraces us all.


The NBR is one of the most right-leaning publications here in New Zealand.

My guess is that they ignored 95% of what Matthew Simmons said (much as the Daily Mail did for Sam above) and chose to highlight how we can be awash with oil if we put our back into it.

No real surprises here.

I have been seeing promos for the CNN program "We were warned".  Simmons makes a brief appearance in the promo and says:

My worst case scenario is so bad you don't want to go there.

CNN still hasn't updated their main page for CNN Presents.  It will ultimately show up here:

Some stuff has started to appear.  There is a student guide here:

It is September 2009. A Category 5 hurricane roars through Houston, destroying oil refineries, drilling platforms and pipelines--the complex system that provides a quarter of our nation's daily fuel supply. Three days later, terrorists attack two key oil installations in Saudi Arabia, the world's largest supplier. In the days and weeks that follow, gasoline prices hit record highs, food prices soar as trucks cannot afford to make deliveries, and Americans begin to realize that their very way of life is in peril.

In We Were Warned: Tomorrow's Oil Crisis, CNN's Frank Sesno explores the potential ripple effects of this frightening scenario. The events depicted are hypothetical, but oil experts believe the scenario is entirely plausible. His interviews with energy experts reveal that we are nearing the point at which the world, led by the U.S. and China, will begin to consume more oil than can be pumped from the ground and the oceans. Tracking the global race to find new pools of oil, Sesno also considers the viability of alternative fuels, such as ethanol, which is used as fuel for 40% of cars in Brazil. Throughout his investigation, Sesno tries to find out whether any of these ventures can solve our looming energy crisis or whether we are already too late.

I continue to be baffled by the rise in oil stocks (now up to 340 mb from 335 mb). Where is it going? Who is buying it all? Is there room for it all? At some point it seems people will have to stop buying crude, with the price declining as a result. All this said, 5 mb is only a little over 3% of a week's worth of US oil consumption, but it has been a consistent if not relentless build which has to stop sometime.

Anyone more in the know with some enlightenment?

No one tracks heavy, sour crude inventories versus light, sweet inventories.  I suspect that growing inventories of heavy, sour are obscuring falling inventories of light, sweet.  

This is supported by the considerable spread between light, sweet and heavy, sour prices.   In effect, we probably  have a  crude oil supply shortfall crisis brewing right under our noses.

If alot of the oil stockpile is heavy and sour, then we should eventually see something like a "refining crisis" as the many refineries that can only handle light and sweet compete for that limited resource.
Why would companies continue to buy heavy, sour crude under these circumstances? They can't use what they have and they have to pay for it? Is there some arrangement with exporting nations where have to agree to buy sour/heavy in order to get light/sweet?
A missing piece may be the fact that many refineries are in transition from heating oil distillation to gasoline distillation as part of the normal seasonal demand changes.  The shutdowns during the conversion would backlog the pipeline from oil field to consumer at the crude oil stockpile stage.

Once the refineries come back online they will start drawing down the crude inventory.

My cynical view is that people are stockpiling. If you're an oil buyer, and you think there's reason to believe it will become more scarce in the future, the logical thing to do is buy more.
5 mb is only a little over 3% of a week's worth of US oil consumption
That's 5 hours of U.S. consumption, right? Not a huge amount of oil.
The USD declined with close to 1% for just a couple of days. I think somebody is getting nervous out there.
We are about to enter a week that holds the possibility of being the most consequential week in the 21st century. I know we here at TOD 'like' doom and gloom, but by no mean do we 'want' things to go down as bad as they could.

Hopefully, the U.S. congress will allow Bush to have a larger deficit... (I cry when I think that 6 years ago we had a SURPLUS)

Hopefully, the U.N. will NOT put sanctions on Iran. (They really can't, and they know it)

Hopefully, someone at the Fed will come to their senses and stop running the presses. (I hope the world does not panic when we stop publishing how much U.S. currency is in circulation)

Hopefully, people don't realize that the U.S. GDP is now negative. (Or attribute it to a slowdown after the "Holiday" season).

If one of these things does not happen as I hope, we can cope. Unless maybe that thing is Iran. However, if all these events go wrong, it will spell the end of global civilization, and quite possibly many of our own lives.

Cheer up, things will get much worse before TSHTF.

'kinda like when you're out sailing and the barometer reads normal (29.92 inches) but is falling
At 29 inches with wind rising from the south you got problems.
At 28.50 inches you soil your pants.
At 28.00 inches your pants blow off and you cannot distinguish rain from spray or waves.
When the barometer sinks below the range with marks on it into uncalibrated territory, then you do have a problem.

Once I saw a recording barometer run down off the scale on the low side to what appeared to be a new "Guinness World Record" low reading. However, at the time I was not thinking about Guinness.

I've always been awed by the toughness of our ancestors who toiled on pre-mechanized farms on the frontier and who manned sailing ships going around the Horn. I've chopped down a large tree with an axe, and I've been on a small boat in a bad storm; and let me tell you: neither is much fun. These people were one TOUGH SOBs!  

What puzzles me is that when you look at some of these old photos of frontier farmers, north-woods lumberjacks, and tall-ship sailors, most of them don't look at all very impressively built as far as musculature goes. In fact some look rather scrawny. Hell, you could go into any suburban fitness center and find dozens of young guys who look far more 'built'. So, what is the difference?  I do believe (and I don't claim to be able to prove it) that people of that era were far more inured to hardship: they could better endure extremes of heat and cold, they could go hungry for longer periods, and were far more resistant to fatigue.  Their muscles were enduring rather than strong. They might not be able to bench press 350 lbs, but they could spend all day out in sub-zero weather chopping down trees and not think twice about it.  

If it came down to a real-life version of that stupid TV program, 'Survivior', I for one would much rather have as my partner some scrawny redneck backwoods farmer from say 1900 than some buffed-out Nautilus-machine aerobic jockey of today. On a certain level, there is physically more difference between people then vs now than a lot of people realize. The bottom line: we are evolving into wimps with nice-looking bods.

I would say that the general lack of hardness is threatening to make us wimps, not only the lack of toil.

The modern life is giving us everything ready-made - from things we used to make with our own hands to truths and knowledge you have to reach for by yourself. Moreover it aims to eliminate anything outside the narrow set of values it is offering us, because it is simply not profitable activity from market point of view (how much value added do we make by hanging around in TOD, hm?). Thus we would surely become wimps sooner or later. Fortunately we'll soon have to deal with some interesting times that could fix things a bit.

You make some interesting observations about the apparent pyhsical "weakness" of our ancestors compared to the muscle-bound giants we have become. They were also shorter than we are. If one visits someone who lives in an old cottage one is continually bumping one's head, well at least that's what I find.

However, I'm not sure it's the shear physical difference that is the main factor involved in how "tough" they were compared to us. I think there may be another reason for their apparent stamina. I think it's their mental ability to simply hold out and get on with the job at hand and not give up. It's question of morale if you like.

I don't want to make a big deal out of this, but I think there is actually some anecdotal evidence for this idea. We are not as mentally strong or resilient as they were. Our lives are softer than theirs. We are softer.

They were able to do what they did because they had no real choice. They chopped trees down with an axe, because people had to chop down trees with axes. How else would one chop down a tree? We try, get a little sweaty, a little tired and we begin to look around for a power-saw!

Look at what soldiers had to go through on the battle-field. The carnage of the American Civil War. Hundreds of young men marching in rows across fields towards rows of muskets. Thousands killed in few hours and still they kept on attacking.

It's hard to imagine us going through that today isn't it? We loose thirteen hundred soldiers in three years and we're more or less finished. We lack mental stamina, because we no longer believe. On the other hand the resistance in Iraq can loose twenty, thirty or forty times our loses and they still keep going, against the world's greatest army. It's kind of amazing really that those guys can take so much punishment and still keep on fighting. Without armour, artillery or air-cover. Why don't they just give up? How come our "shock and awe" tactic doesn't work on them? I would suggest it's a question of morale and mental strength. They aren't going anywhere. It's their country. They know they are going to win eventually. The army of occupation is going to tire and leave, one way or another. It isn't pretty, but guerilla warfare isn't meant to be. The more we kill, the more of them step up to replace the ones we've killed.

I also believe that if the United States was occupied by a brutal enemy that destroyed our cities and slaughtered our people, the average American would prove to be just as tough and determined as the Iraqi resistance. Which is why fighting colonial wars are such a bitch and one always loses.

Don't be so gloomy... There is a good reason for everybody around the world to keep propping up our balooning economy. This can save our collective ass for a while but I can hardly bet for how much longer.
CNN is reporting that the charred bodies of four oil workers have been found in Texas.  They were caught in the wildfires.  High winds are expected to fan the flames today.

Meanwhile, in Hawaii, the dam failure has cut off the luxury resort of Princeville from the rest of the island.  People are in a panic.  Electricity and water has been restored, but the grocery store is being mobbed by customers who fear running out of food.  

The owner of the property the dam is built on recently agreed to a $7 million dollar settlement for illegal grading and construction around the dam and reservoir.  There's some suspicion that drainage channels meant to keep the reservoir water levels down were filled in.  

But it might just be age.  The dam was built to irrigate a sugar plantation over a hundred years ago.  Since the plantation closed, no one has been maintaining the dam.  And the amount of rain they've been getting is ridiculous.  It's already the rainiest spot on earth, but this year has been crazy even by Kauai standards.

Could someone explain the price per barrel difference between
New York Mercantile Exchange and ICE Futures exchange?


Two different benchmarks. Two different types or "brands" of crude. One is  "West Texas Intermediate" the other is North Sea "Brent."
Also, I know they trade "Brent" on the Nymex, so the price differential there may be due to time, where the respective market sessions are not happening in sync.
Ok you economists out there, I need your help.

First of all, I've always had my doubts about economics.  I've come to believe that Dungeons and Dragons is a lot like economics.  Made up and administered by a few games masters for the "benefit" of the gamers.

What I'd like to know is how you'd counter Jay Hansen's FIVE FUNDAMENTAL ERRORS.

I still find myself struggling with the notion that it's "too expensive" to make the necessary changes to our human way of life in order to prevent what seems to be inevitable catastrophe.

Are we beholden to a discipline which is neither sufficient to be a "science" nor philosphical enough to be a "religion?"


Jay Hanson's FIVE FUNDAMENTAL ERRORS is so riddled with mistakes, nonsense, and misinformed drivel that it is hardly worthy of a serious response. It is one long "straw man" fallacy--attacking positions never taken by any economist of any note.

Let us take his five points one at a time:
1. post hoc ergo propter hoc fallacy attributed to economists

Adam Smith taught logic (in addition to other aspects of what was then called moral philosophy) and not once in his thousands of pages of writing did he ever commit this fallacy, nor even come close. Indeed, no noteworthy economist has ever committed this fallacy, because Smith (among others) warned against it, and I hereby challenge Hanson [or anybody] to cite one single example of any economist listed as a winner of the Nobel Prize in Economics, from Ragnar Frisch and Jan Tinbergen in 1969 through the winners of Oct. 2005 who committed this fallacy.

2. A fundamentally inverted world view
Hansen cites Herman E. Daly, a well known ECONOMIST to criticize this "fundamentally inverted world view." The book, STEADY STATE ECONOMICS is full of articles by economists and citations to scores of other articles by economists who reject the "eternal growth" view.

3. . . the economist sees "money" as nothing more than a medium of exchange rather than as social power--or "political power.'
This statement is not only false, it is also ludicrous. No textbook I have ever seen (and I've seen over 500) has ever defined "money" as only a medium of exchange. More serious, Hanson fails to understand that "money" is not at all the same thing as "wealth." He is fundamentally confused and ignorant to a truly remarkable degree.

4. incorrect view of human nature
Hanson cites Lester Thurow, a well-known and highly respected ECONOMIST to support his (Hanson's) position. Then he goes on to cite one of my very favorite ECONOMISTS, Herbert Simon. BTW, there is a kernal of truth in Hanson's critique of econometrics: Much of it is just as useful as astrology. On the other hand, without astrology, astronomy would have taken much longer to develop.

5. . . . incorrect view of economic elan vital: the economist sees economic activity as a function of infinite "money creation," rather than a function of finite "energy stocks" and finite "energy flows."

There are so many mistakes in #5 I hardly know where to begin, but just let me note that every economist from Adam Smith on knew the difference between "money" and "real capital" and "natural resources." Hanson, on the other hand is either ignorantly confusing distinct concepts or he is doing so on purpose. In any case, he is once again profoundly ignorant and totally confused.

No economist ever anywhere has ever suggested that energy flows can be infinite. Even the energy released at the Big Bang was finite.

If you want an enjoyable introduction to what economists actually think and some idea of the variety of ways in which they see the world, let me recommend once again,


Heilbroner, by the way, was a socialist. Thousands of economists have been socialists. Thurow still is one. Heilbroner and Thurow had one of the best principles of economics texts around for many years a couple of decades ago; you can get it very cheap at some bookstores, and I recommend it as one of the best and most readable ones around--though it has been out of print a long time. Maybe has them--probably does. I like the paperback macro and micro versions of that text, but the hardcover one is fine too.

I think you're both right or wrong. Hanson's 5 points were directed against that subset of economic science which has been very well established as current government ideology, and is the mainstream presented to the public.

I can say that especially 1) is very much valid for a lot of crap I've encountered in some economic theories. For example for my thesis I studied the major economic theories for exchange rates formation. All of them postulate that all market participants are "rational" and that all information is becoming immideately available to everyone. And so it goes, the economists are stubbornly insisting on these predicaments, even though the real world data speaks exactly to the contrary. And yet monetaristic theories are what we are still studying at school, and what the government is using as an ideology (actually an excuse for letting the rich become richer and the poor poorer).

2) is actually the same as 1), or more precisely 1) is consequence of 2). And yes, it is true for the same reason - at least part of the economics is designed to be an ideology, not science.

For 3) you are technically right, but this is not that relevant. He has the point that by itself the accumulation of wealth creates severe deviations from the perfect market predicament. Yet this is also not accepted by MSM economics.

  1. Again you are right, that some economist got that right, but again they are not the MSM.

  2. May lead us to scholastic discussion, but yet it is a fact of the books that monetarism is viewing the economy as a black box, a perfect machine (by definition) that needs just the correct money supply to work fine. Of course ignoring the natural and social environments the black box works as an "externality". Monetarism may be a compromised theory nowadays, but at least in US or in the IMF policy towards 3rd world countries it is still applied, in US - to justify government inaction, and in 3rd world to protect contemporary neocolonialism.
Good response--thanks.

But I am sticking to my guns that Hanson is attacking a straw man, because the discipline of economics is not this caricature of "mainstream" economics that he has cobbled together.

There is today no more a single main stream to economics than there is to the Platte River. There are many different currents of thought, as is well illustrated, for example by the recent Nobel Prizes in economics given to institutionalists and other non-"mainstream" economics.

In my opinion, Hanson's basing of "mainstream" economics makes exactly as much sense as the WALL STREET JOURNAL's editorial page bashing of "Keynesian economics." The WSJ editorial writer's know squat about what Keynes actually said, and from his uninformed and confused wording I must conclude that Hanson knows squat about economics.

BTW, in your research on exchange rates, what did you think of Keynes's analysis in his "Treatise on Money"? Now, there is a genuine book of economics.

"Hanson's basing" should read "Hanson's bashing"
Thanks to LevinK and Don Sailorman for the timely and substantial replies. :)

I must admit, while you have dispelled Hanson's "rant," I remain doubtful of economics as a "science," and have yet to be convinced of the "benefits" it brings to the human race.


Let me give you one specific and important example of how economists (and hence economics) have benefited the human race.

To a large extent, national income accounting (GDP, GNP, National Income and all those related measures) was developed in the United States to help in mobilizing economic resources during the second world war. Germany had nothing corresponding to the Gross National Product data or even the concept, and partly as a result of this deficiency was unable to mobilize its economic resources efficiently until Speer did it in 1944--way too late. The Germans frequently did really dumb things like taking troops away from the Russian front to help with the fall harvest--which helped their GDP very little but may have cost them the war. They never encouraged women to get into the labor force, which cost them plenty in terms of lost output, and on and on.

To organize a wartime economy you have to figure out how to increase output a helluva lot, and if you have no overall measure of output, then you are going full speed ahead in the dark without your lights on.

By the way, there is not one single economist of any note today who says, implies, or suggests that GDP is a measure of human welfare in modern prosperous societies. The only reason GDP growth is important now is to keep levels of unemployment down.

Great economists such as John Maynard Keynes have always seen economic growth not as an end in itself but rather as a means to an end--the goal is to eliminate poverty and create decent lives for all. Indeed, Keynes did some simple math in 1930 and said that around 2030 (assuming no important wars and no major population increase) that the economic problem would be solved in "progressive" (i.e. industrialized) countries, and then the big problem would be what to do in our leisure. Until then, he cautioned, we had to pretend that "fair is foul, and foul is fair," because the only way to achieve the economic growth that is prerequisite to decent lives for all was through capitalism, the pursuit of profit, and all the rest.

Of course we have had and do have important wars and population increase since 1930: With a 1930 population of roughly 2 billion in the world our energy and environmental problems would be far more manageable than they are now with population perhaps peaking somewhere around 7 billion in the near future.

One of the things you cannot blame on economists is ignoring the problems associated with population increase, because way back in 1798 economist Thomas Robert Malthus brought this problem to the world's attention, and since then the "anti-Malthusians" are essentially a deviant and fringe group of economists who failed to understand the validity of Malthusian analysis.

Some fools said Malthus was wrong because he did not foresee the Industrial Revolution, the Green Revolution, etc. They attacked Malthus for basing his analysis on the principle of diminishing marginal returns--which assumes a fixed technology. But of course Malthus was right in the essentials, as we see today in the fact that there are more poor people, more people undernourished, malnourished and at the edge of starvation than ever before in history--and their numbers increase each day.

In Nigeria, for example, TSHTF years ago, as it did in most African countries. There is far more rural poverty today in both China and India than there was 100 years ago, because there are far, far more people in those two countries than there was 100 years ago.

The cornucopians make a lot of noise, but it is hard or impossible to find reputable economists who subscribe to the silly ideas of those who have no clue as to the implications of the laws of thermodynamics or the problems of environmental decay.

Unfortunately I stopped keeping track of what is happening with the discipline after graduation. I can say though that I welcome the tendencies you are talking about that I can briefly call "internalization of the externalities". The evolution of economics from the sterile science of blind "effectiveness" it used to be to a more real-world and human related discipline can convert it to a useful science, and if people could see it, and saw that affecting their everyday life, they would appreciate it.

On the other hand, as an outsider I can tell that this evolution is not what people see on the surface in the face of government and corporate policies. People see only government slaughtering social programs and the safety net, reducing environment regulations, removing subsidies for cultural and scientific programs, cutting taxes for richer and raising them for the poorer, etc. etc. all justified with that same old vulgar "Lasse fare". And they also see shining books in the bookstores, where presumably smart scientists persuade them that "The world is flat", that life is great and that we live in the best of all possible worlds, because you see we've removed all possible burdens to the "market".

What I expect from economics is the following:
First of all, remove that stupid self-implied goal of maximizing the human material welfare and replace it with the much harder goal of maximizing the quality of life. So far I have not seen an economy theory internalising all the "great" things our economy produces in the line of less security, loss of social cohesion, alienation, apathy, loss of free time and touch with nature, etc. etc. FWIW the economics still views humans as not much more than those greedy bastards Adam Smith thinks we are.

Second, abandon that almost supersticial belief in free markets. That infamous words "the market will provide" should start reading "the market can provide" this and that. Like any human created structure, the "markets" (a so high-level abstraction that it almost does not make sense anymore) have also their limits and they can not provide everything. Even worse, a consumptional society putting material welfare as its central value, tends to create its own limited "virtual reality" in which markets seem to provide everything, because there is a strong vested interest people to believe that. Clearly a corrective mechanism is needed, and a much better one than simplistic socialist approach, relying on government to deal with everything. I think this will be the greatest challenge to contemporary economics - to go out of its market-based shell and start to deal with economic related problems which are now attributed to other disciplines - environmental science, philosophy, psychology even physics and engineering.

Regarding Keynes, whom I consider one of the last great economists, by the time I studied economics it was presented to us as "socialistic" leaned, much on the same level as WSJ critics is. He was additionally "discredited" by the government we had those days which was being perceived as "Pro-Keynesian" and happened to lead the country through a financial crisis (BTW I wonder what Keynesian policy would mean in a country having the GDP of a town like Cincinnati, OH?). Of course, the reasons for the crisis were much different and complex but this is a simple example how people are being led to believe all sorts of crap if there are interests that dictate so. I did not study his theory of exchange rates, but I know about his ideas for a global currency suggested at the Breton-Woods conference. IMHO if they were accepted we would have lived in a totally different (and much better) world now, and maybe even we would not have that much to talk about in this blog too.

Ooops that should read:
...can convert it to a much more useful science...

I did not mean to imply a totaly denying opinion for the past/present state of economics.

Good post.
May I suggest a modified defintion:

The Markets might provide a useful output, but only if the Return on Investment exceeds competeing ROI's from less useful, or destructive, other outputs.

IOW, burning fossil fuels is a destructive "other output" of the market system. It's economical ROI will exceed that of green technology for a  long time (because COAL is part of fossil options) and therefore The Market probably will not provide green solutions unless heavily subsidized by government.

Thanks, step back

I completely agree with your modified definition. I can only add that the critical resource wasted by unbrindled capitalism  (besides biosphere, topsoil etc.) is time. Eventually, maybe in some 20-30 years green technologies will have a higher ROI than fossil fuels, but the danger is that by that time we will be so much pressed for maintaining our way of life that we will not be able to allocate the resources needed for the transition.

anyone have any more information on this?
Two geological basins in northern Afghanistan hold 18 times the oil and triple the natural gas resources previously thought, scientists said Tuesday as part of a U.S. assessment aimed at enticing energy development in the war-torn country.
Has anyone looked at this site:

I seems that it is the anti-oildrum.  

It's just JD in disguise.
He's using the opposing message to draw them in.
Often he has good stuff on his site.
Please excuse my ignorance but who is JD?  
This is JD

You can use that "Search" feature on this site to find users, topics, etc. :-)