Friday Open Thread

As crude oil hits $75 a barrel...

[editor's note, by Yankee] Hey! Tomorrow's Earth Day! Do you have any plans to increase your own or others' awareness of the energy crisis? I hope to check out some of the events at Earth Day New York (especially the giant earth images).

Speaking of Matt, I wonder what NY Times editor John Tierney is thinking now a days about his bet with Simmons. Tierney claimed to be a devout follower of Julian Simons' theory that commodity prices always head downwards.

It was way back on August 23, 2005 that they made their $10,000 bet; Tierney swearing that crude would head down while Simmons warned that Twilight was near for the Desert. Whose your sooth sayer now Tierney? Inquiring non-economists want to know.

It's early in the game still.  

Mr. Simmons said he favored a simpler wager, based on his expectation that the price of oil, now about $65 per barrel, would more than triple during the next five years. He said he'd bet that the price in 2010, when adjusted for inflation so it's stated in 2005 dollars, would be at least $200 per barrel.

Tierney's probably not worried.  Yet.

Probably not but you know it's creeping into his head, "mmm, I could end up looking like a total jackass  . . . but the price won't keep going up, will it? of course not, of  course not."
Sorry for busting in here but......

Who is in charge of new open threads?

(Not a comment to you, just near the top....190 comments is to many!!)

Tierney might not be worried... but imagine sitting in the executive suite with the big guys at Ford or GM today and watching that NYMEX number run.

Those guys aren't smelling spring today, they're smelling toast.  

I bet a lot of politicians are smelling toast, too.  If this keeps up, energy prices are going to be the #1 issue for the election this year.

Some survey data from MSNBC. Results below based on 77,416 responses.

21% respondents report it costs more that $50 to fill their tank.
76% have not changed driving habits due increased prices.
64% Of those who have changed habits now stay home more often.
31% will change habits when price reaches $3.25.
76% say they will not change driving habits. They have to drive.

The price is $3.17 at relatively moderate station down the block from my office. They held at $2.99 for a while then leaped to $3.11 and now $3.17 Probably will hit that magic $3.25 tomorrow. (This is Northern California BTW.)
76% say they will not change driving habits. They have to drive.

I think that pretty much says it all.  I have to drive too, because I'm required to have a personal vehicle for work (which they reimburse me at 45 cents/mile).  I brought up gas prices with my manager this morning and he has no idea whether our company will adjust the reimbursement...all he said is, "they usually update it in summer."  So in the meantime, we're all getting poorer.  

My personal responce to such a poll:

I will not yet change my driving my habits until I move closer to work. I already combine trips to use less fuel. Hopefully, I'll live a litre away or less, and have the option of that evil Pace bus.

I would sooner move closer than use the bus as the alternative. (I have possible areas mapped out)

In a push come to shove, I'd rather use a motorcycle or God/Allah/Buddha Forbid, a bicycle, enabled by living closer to work than use that bus.

Compared to even pre-peak Europe, $3/gal is cheap. I'm getting a laugh, surely for now. For those peak-ignorant types: Get Over It! You ain't seen ANYTHING yet!

I will if the opportunity crops up, carpool, though this creates sub-optimal cases. (some people dawdle at the end of the day while I scramble to my car)

One thing's for sure. Peak Oil promises to be a ride of a lifetime, the economic equivalent to a C-130 with upholstered seats like a Pace Bus on a flight through Hurricane Katrina's eyewall! Buckle up! Just for fun, you won't see the evils of Pace buses at the <href></href> website.

Hmm, Erf day, let's see...... I'm considering going to the Make Magazine "Makers Faire" this weekend, and have already decided the train's the best way to get there, maybe I'll just go carfree for the weekend.

I do have errends, bank trip, etc but I can walk 'em, it will do me good.

In my neighbourhood, I walk around, but I leave the car at home on weekends. Not having kids helps. Much shopping I can do by walking or using the CTA (but not Pace), and the CTA is a weekend option. It's that I really despise the Pace buses in Chicago's suburbs. They run once an hour at best and non-existent as the norm, plus their climate control problems, which is inexcusable when looking for ridership.

Unlike most drivers, I'm aware of energy use as I weekly keep track of fuel consumption and all but calibrated the gas gauge onboard my car. That way, I know how much money to put down to ensure it tops off when I get my weekly load of gas. I took a day off and this morning, I loaded onboard 5.0? gallons of gas but drove 144.5 miles for the previous week. 28.9mpg. I live .6 of a gallon away, yet I have coworkers who live 4 gallons away. Guess who's the real fool? The bloke with the 4 gallon commuting mission!

Once I park my car on a Friday, I don't have to touch it until the Monday morning mission to work. That's the way it should be. And all walking-inaccessible shopping done enroute on an afternoon commute. Why waste gas? Given the copious energy use of cars, it could be thought as a road-only aircraft. If you had to pay for that jet fuel, would you waste it? Of course not!. Why more people don't seem to care about fuel use as they drive is hard to fathom, unless they are a Jeff Skilling. (or some airline pays for a pilot's fuel use as he "drives")

My outlook is that basically there is no bright future while we are on this stupid detritus trajectory. So my approach is get through the detritus NOW. Burn it all. Burn it as fast as you can. I used to put $20 in the tank ... now its $30 ... soon ? who cares. As long as I still have some money for food, and the gas stations still have gas who cares. And fortunately my utils are included in my rent so I can help send us back to Olduvai as good as anyone else by leaving the air conditioner on max all the time even (gasp) when I'm out. Yeah, I want this money dominated bank controlled society to fail, so that something better can replace it. I want to be part of the solution but I need to get there .... so ... walk if you're desperate, bike if you gotta, drive if you can -- burn it. Burn it all.
I hope you're not a troll, but your thinking sums it up for most people. Assuming you are sincere, sooner or later, as gas prices climb, you WILL have to make crappy choices. That is one major point behind us Peak Oil people.

I don't know your commute's mission profile, but I know that gas prices if high enough will force you to change behaviour.

You may:

  1. take the bus

  2. carpool if possible

  3. use a motorcycle, scooter or even a bicycle


If that's not enough reason to be aware of fuel consumption, I don't know what is. Yes, your car is your (road-only) aircraft.
Mad Maxout,

I'm pretty sincere yeah, but I suppose I'm lucky -- I work from home. I own a bicycle, but live in the burbs and need to use the car to get anything done. I'd max out about CAD$8 a litre which would have me spending probably about $400/month on gas, (right now its $50-100 with $1.00/liter) before moving to the city (Toronto) where public transit is pretty good.

If I lose my job, I'll find a new one, or do whatever I need to do. I'll find a way. I'll survive. And when my luck runs out ... life will catch up with me.

If the S is going to HTF (and I believe it will) then I just want it to hurry up and do so. Cascading systems failure.

Hate to shine the sun on your funeral procession, but you left out the most surprising bit:
Mr Simmons said, however, that there was no need to fear a recession.

He pointed out that higher oil prices meant more revenue for producing countries, which in turn would help to fuel global growth.

Ain't that something? You guys are all stressing out about depression, nuclear war etc. etc. And MATT SIMMONS says we don't even need to worry about a recession!


I'm still going "WTF mate?" over parallel stories saying that the US stock market is the highest it's been since Jan. 2000, so at least in that sense, we're prospering.  How long that'll keep up is anyone's guess.

There're also a bunch of conflicting (at least at face value) reports saying that a) people can't afford these prices and are pawning items off to fuel their tanks, and b) it hasn't changed demand levels one bit for the past week.  

BTW, "PO Debunked" is one of the sites I check almost on a daily basis.  Good job on it :)

Just keep in mind, the Dow Jones going up does not equate to the average Joe in the US being better off.  Most US companies are barely holding their heads above water right now by culling the herd and cutting costs everywhere.  They are doing anything to not increase retail prices.  

We have lost most of our office assistants, have online payroll and benefits (fewer HR personnel), and office supplies are non-existent.  My analytical team has gone from eight people three years ago down to three people this year and we are supporting more products and groups than three years ago.

I know this not unique to my company.

JMO, but price is not as important as production levels.  High prices and volitility indicate that surplus production has dried up.  The world is currently producing more crude than it ever has, so life is good.  If production starts to fall... then we have problems.
Who left it out?

I quoted those lines in a previous thread.  

And went on to explain why I think Simmons is an optimist...

You betcha.  And the rich get richer.  Good for them.  Tell you what-- if we have a nuclear war, I won't worry about recession either :)
In a severe push come to shove (like a Mad Max flick) being rich would lose its glamour quick. Too many people with pistol-grip crossbows with laser pointers hoseclamped to them. Kevlar works against bullets but not arrows. (speed/weight profile difference)

So, the rich will effectively imprison themselves until a dieoff ensues to near-completion. It in their interests that a dieoff occurs as completely as possible. To foil that strategy, whether intentional or not, is to ensure there are people thriving without them so as they emerge, they can be taken out with said crossbows. If you are a cynic, this is a perfectly good reason to get the word out as a case of "if nothing else".

Already well-off people live in gated communities - prison camps. It's a gilded prison, but a prison all the same. As time goes by, they will want bunkers. THEN they will effectively imprison themselves. I wouldn't be surprised if Bush and Co. has a bunker system with Osama bin Laden as the housekeeper. (OK, a conspiracy theory) If more than some strategic-design minimum number of people survive, the bunker people will be held to account due to the intervening legends. They will end up toast. I wouldn't want to be 80 years old and emerge from an old coal mine only to have that red dot on my chest abd >thoomp!< that arrow makes it Game Over. Especially after 35 years underground. Yeecchh.

5 euro/litre? That's enough to get me to consider taking that evil Pace bus again! Assuming $1.00 per E1.00 (don't know how to make the euro character) E5/L is a whopping $18.90/gallon!  THAT'LL cause some demand destruction. I already intend to move closer to work to hedge against gas prices just to keep gas costs manageable. A price like that would equal 1/4 of my income even as I use "only" half a gallon each way.

We might have found a possible upper range for a critical gas price. A postal worker bailing out despite a 1/2 gal commute could be an upper end. Vast demand destruction will occur WAY beforehand. People who work for the postal service make comparatively good wages, so a price like $10/gal could be about that critical price that screws over so many people that the economy sputters into a depression, as in "I can't come to work becuse the gas costs too much".

If that "expert" is right about $20/gal gas by 2010, we are in for one rough ride. A ride that'll make a Cessna in the middle of Katrina look smooth.

Bicycle! Bicycle! Biiiiiicycle!!

I want to ride my bicycle, I want to ride my biiiiike!

Honestly, the humble bike is the most effecient transpo of anything. Easy to do 50 miles a day, a person can ride all day at 10MPH which means in 10 hours they can do a "century" or 100 miles.

Look for bikes to get really big if this gets that bad.

As I've said to my local gas station guy, this isn't a gas crisis, because I'm old enough to remember a gas crisis. When I see bicycles all over, mopeds advertised on local and national TV, and kids (like us) growing up knowing how to siphon gas, then I'll call it a gas crisis.

No doubt the bicycle is the most efficient vehicle ever invented. A special case come up with me. Until cars and SUVs are grounded, I get startled easally due to anxiety problems, which is my own problem. I have no problem with the idea of a bike using up calories. :) I have a metabolism so bloody efficient that I could pedal a bicycle to the state line and back on one Snickers bar. I drink diet soda, and joke that if I drank a regular soda I would have to jog to the state line to burn it off.

Good thing I'm not a Canada goose. Give me a stomachful of greasy fries and I could pull a Steve Fossett - and still gain weight. As far as bicycle use, the main deterrent in my case is my own being easy to startle. Burning half a calorie is perfectly cool, and I'd like to do it. But that easy-startle deterrent is there. That'll take some SEVERE gas prices to overcome. More than enough to cause world economic catastrophe. That deterrent really sucks for me. The same anxiety problem exists if I attempt to swim, something I can't do.

what about the rubber tires - those won't be particularly easy to maintain/replace, will they?
Also chains, gears and bearings go. My bicycle needs an overhaul. I have it serviced every year or so and it surprises me how fragile bike components are, never mind the amount of punctures I get per year. I pedal about 20 miles a week, a third of it off road as that is the shortest route. I don't know if they manufactured bikes to last much longer many years ago, but current bikes don't seem to last long (or at least with me using them).
You are quite right about the flimsiness of most current-production bikes. They are glittery throwaway machines.

Get an old bike and work with a master mechanic.

In regard to punctures, I've had only one during the last 5,000 miles of riding, because some of my tires have the kevlar inserts, and with the others I squirt goop into the inner tubes that self-seals around thorns, nails, slivers of glass, etc. Before I aggressively attacked the puncture problem (about thirty years ago) I might get four flats in a month--especially in the sping time, when the snow and ice melted to leave all sorts of sharp nasty things on road shoulders and bike trails.

A sturdy bike need not be expensive. As a college student I had an old Raleigh 3-speed that I rode rain or shine for many years, up and down steep hills in Berkeley--bought it used for $20 and sold it after four or five years for $15, and except for the usual tires and chain and brake pads, I don't recall replacing anything on the bike, except for a spoke or two. Especially if you live in England, I don't think you can do better than an old Raleigh, but there are other fine old English bikes too.

Now that I am old and wise, I am partial to fat tires and massive and heavy and extremely strong steel frames, and with fat tires at relatively low pressures you can go through mud, sand, gravel, slush, and over forest floors--pretty much anywhere a mountain bike can go, except you have to walk it up steep hills because of no exceptionally low gears.

Alas, I can't remember the source, and it's from a few years ago so it may have changed, but apparently the production of a car uses about the same resources as that needed for producing 40 bicycles.  The cost difference between running a bike and a car are phenomenal (brake pads, tyres, chains/sprockets, oil/grease, ball-bearings, just one or two of the equivalent of those in a car having to be replaced could get you a basic bike). This is excluding the cost of "food that you'd pretty much eat anyway" versus petrol.  

The main problem with bikes these days is that they're being built/designed either for "weekend dawdlers" or high performance racers/mountain bikers.  The former don't mind it being crap because they can always get another one and they're not doing much mileage anyway, the latter prefer lightweight over reliability.

The latest oil price tracker on the right hand side bar seems to be having trouble. It looks like it gets occasional zeros in the price values and then auto scales itself so that the real daily variation shrinks to be almost indiscernible.
Oil Rises to a Record $75.35 on Concern About Iran, Nigeria

April 21 (Bloomberg) -- Crude oil rose to a record $75.35 a barrel in New York on concern that shipments from Iran and Nigeria will be disrupted as the U.S. increases output of gasoline for the summer driving season.

Nope, nothing to see here people. Lets move on. The sky is not falling... let's go, keep moving... Oil is going back to $20. hurry up, quickly now. Have faith in market forces, theres no such thing as Peak Oil. let's go.....

(note sarcasm)

Actually such talks in appropriate moments (without the sarcasm) are our only chance not to go down with a complete breakdown... $150-200 per barrel, hyperinflation or a dolar collapse will not help the world become a better place.
Sorry, it was a bad attempt at humor on my part.  :)  I was following the price of oil all day and I'm still amazed that the stock market doesn't go down and that people think this is all just a temporary thing.
nah... nothing to be sorry about. Personally I think that the system is completely screwed if we found ourselves in a situation like this. Or, maybe more likely we screwed ourselves with that same good old virtue, called greed.
Why not? A dollar collapse and $200 oil would force USA to ASAP become more efficient in producing more value and living per m3 of oil.
That is what Matthew Simmons says.  

Mr Simmons said record oil costs so far have yet to derail growth in oil demand or the world economy. He said western countries needed to adjust consumption patterns.

He suggested that rather than hitting a ceiling at $100 a barrel, prices needed to go "far, far higher" in order to help change consumption patterns and to fund the development of alternative energy sources. Sources which could not compete with oil available at $40 a barrel were now becoming economic.

Hello Leanan,

Gee, I can hardly wait to see what oil prices do when the first hurricane forms in the Atlantic with all the other geo-political events going on. Here is the list of 2006 names with some editorial freelancing:

Hurricane Alberto  VO5  lather, rinse, and repeat-just getting started w/CAT 1 thru 5s

Hurricane Beryl of no oil

Hurricane Chris[t] $5.00/gal of gasoline ! Holy Crap!

Hurricane Debby Devastation

Hurricane Ernesto  Yergin will still be ernestly saying $35/bbl

Hurricane Florence Nightingale: Cat 5 into Houston at 2am

Hurricane Gordon 's Gin-Gimme a drink cause I cannot get gas

Hurricane Helene  ?

Hurricane Isaac Asimov--this baby's a sci-fi classic!

Hurricane Joyce  a Rolls-Royce of a hurricane-high dollar damage all the way!

Hurricane Kirk  Captain, Captain, she can't take anymore!

Hurricane Leslie  Yes, less and less platforms lie above sea-level

Hurricane Michael  All boats ashore, cause this is the biggie!

Hurricane Nadine  No, the nadir of FEMA response to helping people

Hurricane Oscar  This one is must see TV!

Hurricane Patty  Right thru Miami!

Hurricane Rafael A true masterpiece of destruction!

Hurricane Sandy Beaches left in downtown Boston

Hurricane Tony ?

Hurricane Valerie ?

Hurricane William Tell-a big arrow straight thru Long Island

Maybe some other poster can think of something for Tony, Valerie,and Helene. My guess is a big hit in the GoM again is good for instant $5/bbl.

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

Good point.
Murphy's Law predicts that the Hurricanes will hit at the worst possible moment and not until then. ;-(
Murphy's Law is "anything that can go wrong will", and I hope it's Hurricane Michael that KICKS SOME ARSE. That's my real-life name, and I'd love to have a retired hurricane name as a namesake. Especially if it sinks Florida. Texas would be a good target for my namesake. Rev it up, baby! With the GoM already at 80F, this year promises to be a good productive hurricane season. I came to totally hate the South. Let 'em have it!
That would be Hurrican Debby does Houston
And how will we buy the oil, the steel and concrete to restructure our non-negotiatable way of life? I find it more likely USA will choose to annex Iran, Mexico and Canada for the oil and China for the rest of the stuff, than doing it in the business as usual way.
Well, I would say it would be a very good thing if we couldn't "buy" things. We could make them, trade them, and be happy like humans should.
Bring it ...
And how much shipments would annexing former friends give USA?
You would give yourself a cultural heart attack and get nothing for it.

You can buy oil, steel, concrete in exchange for all kinds of export goods, you are still an industrialized country even if you no longer are the largest general manufacturing country. This will be regulated by market forces, there will be very little money for importing plastic crap and you will have to wear your clothes longer before buying the latest fashion.

I agree.

It is an ill wind that blows no good.

Better hardship now than shipwreck later.

Very few in this country today are willing to undergo hardship, sadly.  Most just want their precious energy to be cheap and available. The last couple of days we've seen both of these come under pressure.  Expect panic and demands for oil companies' heads if it continues.
The US printing presses must be smoking right now.  Glad the M3 is not published anymore.  That would REALLY shake us to our bones.
They keep repeating this Iran and Nigeria thing in each recent price rise, like they appeared yesterday. Actually Nigeria is so much down yet, that it can only be up from now and Iran's prospects are no worse now, than it was a month ago when oil was still $60.

I suggest an alternative explanation - FED hinted that it is almost done with interest rates increases and the investors returned to hard assests like gold, silver, oil. Like I said all those hot paper over there has to go somewhere and the recent drop of the USD confirms where the wind is blowing to.

I think the flood of USD's is definitely a strong factor in the rise of the price of oil.  A graph of oil vs. the CRB index would be interesting, and the relative rise is probably much smaller than it is vs. USD.  Even that graph is contaminated, though, because you need oil to make ANYTHING.
, and the relative rise is probably much smaller than it is vs. USD.

Yes it takes quite a while until the paper holders start getting it, and this time fuels even more the "inflation potential" ahead. This time though the FED will probably try to be the first to draw the guns and shoot the interest rates to the sky (and probably leaving me without a job). IMO the trigger factor this time was that our government is more and more apparantly taking a completely out-of control course. A thing we witnessed yesterday... what kind of idiot must you be to insult the leader of the country that can ruined your economy in 5 minutes?

That's a great point.  A more aggressive Fed would have two effects to drop the price of oil:

  1.  Strengthen the dollar, reducing the relative price of crude;
  2.  Slam the economy, reducing demand for oil(though maybe not much -- Stuart's analysis shocked me).

Global demand would continue to be an issue, and if consumption in other countries does accelerate you'd see that ol' Jevon's Paradox in action.

With current CPI/PPI and unemployment levels, it'd be difficult to justify this action in economic theory and impossible to justify it politically.  I've got a lot of faith in Helicopter Ben.  Don't hold your breath, especially with the latest minutes and the soothing sounds of Yellen.

Liquidity pumping (central banks 'printing' excess money) is almost certainly a factor in the present high levels of stock markets and commodity prices, just as it has been in US real estate. All major developed countries are increasing their M3 money supply at between 8% and 12%, USA is actually near the lower end.

The US$ is still holding up well, in its 88% to 92% range which its been for the last 6+ months, and almost exactly where it was 2 years ago, so that is not a cause of the high oil price in US$. That could change soon, it is at the bottom of its range and must bounce back up soon (inside a couple of weeks) or it will drop noticeably.

Now is a very interesting time market wise. Commodity prices and stocks can't both continue to increase at current rates, one or t'other must break down significantly. I can even imagine both dropping before commodities resume their upward climb, but what happens in the short term (next 3 months) is anyone's guess. What happens to the US$ may be a significant determinant or consequence. I expect stocks and US$ to correct down by 20% and 10% respectively before 2006 is out.

Russian finance minister Aleksei Kudrin today said he doubts whether the dollar can continue to be the world's reserve currency.

Any links to this information?

Interesting. I agree with his argument that the US$ as de facto global reserve currency is a problem. I've not seen the argument stated as clearly before by any head of state or finance minister of a major state. But he proposes no solution beyond diversifying currency reserves a little. Substituting the Euro for the US$ is no long term answer.

I've had a radical solution in my head for a few years now: a 'depletable commodities' currency for all basic non-renewable resource commodities (oil, gas, coal, metals, etc) independent of any state or national currency. It would probably have to be administered by the UN and some other global finance institutions, could levy a small tax on transactions which could make funding the UN possible without the current country contributions. Of course, this idea will be impossible while the US benefits from the reserve status of the US$. But that free lunch will be unwinding soon ;)

I thought of the idea of a currency based on energy too. I thought of for the case of a steady-state economy (which would mostly have to be a command economy) where the "dollar" or "euro" or whatever you call it is equal to whatever amount of BTUs. Say, you make it 100 KBTUs. (OK, I'm mixing metric with Yank) You go to a store and buy something, and trade in the number of BTUs needed during the complete supply chain. You buy a windmill? You cash in the BTU-age of cash needed to have made it.

The above is my impression of the technocracy idea. The whole "work ethic" bit would have to change. In exchange for increasing wealth, we all settle for sustainability but innovation makes for more free time, not more toys to never have time for. You work to live, not live to work. What a concept! It would be much like a techno-Sweden. Type-A aggressives would hate it, but long weekends to drink during would appeal to many. The Type-A idiots can always slowly assemble a spaceship to drive off to their death. Let them. Even if there's water on the moon, they will use it up in short order. Meanwhile, we live within our means, with some technology and lots of time to drink up and have fun.

What is called "economic freedom" even sans Peak Oil is a spun-up-like-a-turbo way of saying Social Darwinism. Survival of the fittest and all that crap. It barely works even with chronic growth, but wait. With the oil peak, an awful lot of people will wake up. Look at Bush approval ratings. It's falling like Space Shuttle Columbia did. As it stands, our economic model with Peak Oil is going to look like the not-so-reality game show Survivor, but writ very large.

Thank you kindly for the link (perhaps if Bush is reading he will take note that it's time to be friendly to the Russians).
Hopefully if Puty Po visits, we can get the name of his country right.
And serve him a state dinner, at least.
Oops, we comrades think alike.

here's a quick link to a Google News search, the first page has some interesting results.

Oil tops $75 as G7 calls for output increase

Finance ministers and central bank governors of G7 countries demanded further steps from oil producers to increase the transparency of their reserves and increase investment in production and refining capacity.

[UK Chancellor Gordon Brown] told journalists that it was "absolutely essential" for the G7 to have a "push" on greater transparency in the oil markets, since market participants neither knew the level of reserves nor the likely future supply or demand for oil. "This is an 'open your books' initiative," he said.
I think that someday soon there's going to be a deafening sound as billions of people slap their foreheads at once and exclaim "no one really knows the quantity of reserves for sure!"
I wonder which bit of this Brown and others couldn't understand "Qatari Oil Minister Abdullah al-Attiyah said on Monday the cartel was already producing at maximum levels and was expected to maintain its current output for the rest of the year if demand levels hold and with the current level of prices." From ABC News with a nod to WTRG
This highlights the dilemma OPEC and others now face.

It's fine creating the pretence you have adequate supplies of oil, but as the pain of debt-laden OECD economies becomes unbearable, you have to fend off accusations of hoarding and gouging.

I'm sure this is why the Saudi's claim of 1.5/2.0 mbd of spare capacity is now being brushed under the carpet.

OPEC to Brown, I suspect, "I'm all right, Jack."
Very funny. OPEC getting payback from Brown's comments earlier  this year. Good film by the way. Typical of how England used to be, and probably still is in some areas.
In addition to the run-up in the price of the lighter crude grades, what hasn't gotten alot of attention is the runup in heavier grades as well.  For the west Canada situation, at any rate, during February bitumen was trading at 48% the price of WTI, increasing to 63% the price of WTI in March, and is currently 80% the price of WTI, i.e., approaching $60/bbl.  This may suggest that the current price increase is more than simply "speculation" - in the past, these heavier crude grades have been left in the dust as the lighter grades spike.

Any thoughts?

Absolutely, the spreads Brent-to-Urals, Brent-to-Dubai, etc. are smaller than they've ever been.
Yes: oil, almost any oil, is valuable now. That has rarely been true in the past. Also, with light sweet crudes having peaked a couple of years ago, there has been considerable investment in refining facilities to process heavier and sourer crudes.

I also agree it suggests current price increases are not fully explicable by speculation and risk premium. The current price levels surprise me a little, they are a tad higher than I expected in the absence of significant disruption. Could be that peak oil is beginning to percolate into market consciousness. I fancy that my prediction of average WTI next month price of $70 for 2006 is looking good and might even end up being on the low side.

Is there a website out there that tracks all the different market/futures prices for the various grades of oil?  All I ever seen to find is Brent and WTI.  It never dawned on me that there would be a "price" for Alberta crude... though it of course makes sense.

Thanks... I'm on my way home ($CAD1.13/L) here today.  Expect it to be $1.25 by the end of next week.

Note that the collapse of production in the Cantarell Field is going to take a lot of heavy crude off the market.
Phew, that's a relief, we need to lighten up.
Note that we are closer to $100 oil than to $50 oil.
$50 oil is beginning to seem as much of an opium dream as $35 oil a year ago. As I said here on January 2nd:
I expect the oil price to creep up to $70 by mid march. Thereafter I predict a spike to about $95 in response to some external event, it could happen by mid April. Will $100 oil happen in 2006? Maybe not based on current supply and demand but there is a significant probability that geopolitical or supply disruption events do cause a $100+ spike. I do not expect the oil price to drop to $40, even $50 is unlikely since a key support level at $56 has held well in recent months.

I've hardened my view in the last month. I see significant support at $65, unlikely the price will drop below that in the rest of 2006. I expect $100 to be seriously challenged.

$50 oil won't happen again until / unless a major recession happens. Note that a little over a year ago $50 oil had never been seen.

75$... where the hell is Yergin!?! I need a double Yergin, please.
Only single Yergin today; he was on CNBC earlier.  I literally chewed on my tongue watching the guy.  I'd like it if they could get some more variety in the "oil will drop" crowd, but it's the same suspects again and again...
Well, you've got oil at double his price ...
We're out of Yergin, sir. May I offer you a Steve Forbes?
An OPEC oil minister or two will do, Jeeves.
Jeeves should be approaching the early stages of fossildom by now, metaphorically if not physically. Which made my warped mind think... when we die we should donate our bodies to oil!

Yes, it should not be beyond the wit of US man to invent an anerobic pressurised and cooking process that converts our organic remains (and our pets, garden and food waste) into oil. What could be more touching and reverential than driving to work or the local Walmart on grandma Agnes' oil?

Soylent Green!!! Yes!  It has come to this!!!
It is already here:

If it can take turkey no reason it can't take people.

Ah yes...Thermal Depolymerisation will save us all...

Subkommander Dred

Let us recycle politicians and economists and put the resulting oil into our cars! Both species can actually be useful, once made into gasoline.

Here's something fun. If you are a liposuction surgeon, you have an opportunity. Make sure your Hummer takes diesel. When you suck out the fat from patients, what you do is collect it and make it into biodiesel - or in this case lipodiesel. Buy a house in Skokie and drive that lipodiesel fuelled Hummer and burn lipodiesel in the winter for home heat in Skokie. Becuse it'll smell like burning bodies, Jewish neighbours will HATE you for reminding them of the Holocaust! HINT: The Germans regulated oven temperatures by feeding it a mix of starved and fat Jews whereby starved Jews would be endothermic on cremation while fat ones would be exothermic.

Sorry, but you've been beat to the punch - by 60 years!

Let us recycle politicians and economists and put the resulting oil into our cars! Both species can actually be useful, once made into gasoline.

Oups, I should perhaps stop trying to be a constructive hobby politician. One of the bad things with it is that everyting faulty is my fault since I am a politician and previous generations of politicians have promised to fix everything for everybody and they did not deliver. Shame on me for that!

Ah yes, Yergin is soooo right again. Laugh!
Wait, we need lugumbashi to come back and post again about how right Yergin and the fools over at 'The Economist' are.  $35 oil any day now, just keep waiting.  What a joke.
DEC 2012 crude up $1.76, even more than the front month contract...

I think because Iran and Nigeria will be a big concern in 2012.

I've finally put my money where my mouth is.  Those late-month contracts are seriously illiquid and hard to get into, but I'm in.  For anyone charting or analyzing these distant prices, the only contracts that really trade are the Decembers for every year: (CLZxx).

Demand destruction was supposed to happen at 30.  40.  60.  You've seen the graphs HO did earlier.  I was in Greece a few months ago, and the much less fortunate people there with much higher gas prices -- diesel there, mostly -- would sooner go broke than lose the status.


Maybe you can explain something to me here. Why would crude oil futures be consitently in contango (out months priced higher than the nearest month) but the futures market for unleaded gasoline be exactly the opposite?  What is the trading rationale?  Are the traders of these two commodities the same people, or is it a situation where one group rarely interacts with the other group (which seems highly unlikely)?

It seems like a situation ripe for some clever arbitrage.

Sure thing.  One problem is that the unleaded gas (HU) futures don't go nearly as far out as the crude contracts, so it's hard to extrapolate completely, but your observation in all 2006 futures is dead on.

There's a collective belief that current gasoline shortages are not related entirely to crude shortages, and are instead due to a lack of EtOH and refinery downtime.  Also, in later months, less of the crude goes towards gas and more towards heating oil and other distillates.

If you think that's wrong, then you could absolutely short CL and go long the UH.  Personally, I'm more than happy right now making pure directional bets...

They, and users everywhere, may do both.
However, I suggest US e&p's ard and pxp as being potentially more profitable and liquid.
More on the new XOM pipeline getting crude from Canada to the Gulf Coast. From the Dallas Morning News:

Reversing Direction: Canada Oil Goes South: Pipeline That Carried Gulf Coast Crude North Now Flows to Refiners

Source: The Dallas Morning News
Publication date: 2006-04-21

By Elizabeth Souder, The Dallas Morning News

Apr. 21--Canadian crude oil has begun arriving at the Texas Gulf Coast for the first time.

Exxon Mobil Corp. said Thursday that it has reversed the direction of an 858-mile, 20-inch pipeline between Beaumont and Illinois.

No longer is it transporting Texas oil to the Midwest; it is instead bringing Canadian oil to Texas.

"It is a first in the industry," said Mike Tudor, president of Irving-based Exxon's pipeline company. "It opens a whole new market for the Canadian producers, and for refiners on the Gulf Coast, it provides an additional source of supply for them, too."

Canadian oil production has risen as producers develop oil sands in Western Canada. The Exxon pipeline connects at Patoka, Ill., with other lines that draw crude from Edmonton, Canada.

Mr. Tudor said a portion of the pipeline had been idle since 2002, when volume from the Gulf Coast declined. About that time, Exxon began considering reversing the direction of the line, he said.

Three Canadian producers agreed to put about 50,000 barrels a day of crude into the pipeline for the next five years. Total capacity is 66,000 barrels a day.

That oil will go to Gulf Coast refiners, which have the technical ability to process the heavy Canadian crude.

Heavy crude contains more unwanted chemicals and sediments than light crude, so heavy crude is usually cheaper to buy, and more difficult to process, than other types.

Mr. Tudor said the Canadian oil could be processed by refiners closer to the production areas. But as production grows, those refiners may not have enough capacity to handle the flow.

This may be the beginning of a trend. There is excess capacity in Canada. The problem has always been getting it to market.



Nice catch on this but weren't you one of the ones just a few days ago saying the absolute bottleneck is refinery capacity?

Why send oil south if there is no spare refining capacity?

Clearly crude is scarce in Texas, not refining capacity, or else the oil would flow the other way.

At this point I am not listening very much to what people are saying about what is scarce or why prices are high.  I am watching what they are doing to determine what is scarce.

So far all actions reinforce a crude scarcity, at least of crude able to be refined, which to me is the same thing.

At this moment in time, with 2 refineries still down from the hurricane, refining capacity nationwide is short. It will vary from one company to another. However, as these 2 refineries come back up, and companies finish expansion projects, there should be a slight excess in refining capacity.

The other side of the coin is that this Canadian crude has historically been very cheap. So, refining capacity could be bottlenecked, but it may still make economic sense to push Canadian crude down to the gulf and buy it instead of something else.


Do we have excess storage capacity?

If the price of crude is going to continue to climb, wouldn't it make sense to buy more than you can refine now and just tank it someplace?

I read that Exxon had part of their pipeline (that is now bringing Canadian oil to the gulf) shut down since '02, since gulf oil production had dropped off.  It used to feed midwest refineries.  Can't recall right this second which of the half dozen or so articles I read that in, but it may be common knowledge to y'all.

There is lots of excess gasoline storage capacity. That's the problem. Inventories are very low. Crude inventories, on the other hand, are pretty full. Crude inventories are still near an 8-year high, and gasoline inventories are near record low territory for this time of year.


Interesting that texas, at one time the world's big oil exporter, is now bringing in oil from places it once pumped it to... As regions pass peak we will see more interesting stories... Imagine shipping oil to idle saudi refineries (but from where???)
Something a little depressing.

I asked my fellow sysadmins on campus what they were doing to reduce the energy used by all the PCs/Macs they manage.

Out of over 50 people, 1 replied saying that he always kept his machine on to receive updates.


I've been reminding people to keep their PCs off if they are not using them.  I've also tried to prevent people using screensavers when they can just sleep their screens when idle.  I've even started using load-dependent processor speed controls like Intel SpeedStep on desktop PCs.  I think the next thing is to start enforcing suspend after idle...

So that means that the other 49 people probably turn their computers off for the weekend? That sounds like a good thing.
Sysadmins NEVER turn off their computers.  How can you compute fractals if your computer is off? :^p runs on my office machine. How's that for cognitive dissonance. And you better talk to my boss if you want me to turn off my computers. I'm on call - lots of sysadmins are always on call and need access to their machines from home.

I do sleep the hard drive etc. But any feelings of guilt are mitigated by driving past the baseball stadium that has all its lights on while it's still light out.

My company is installing solar panels on the office roofs so soon I can add a couple more machines without guilt!

re: Earth Day

I'm thinking the kids and I might take a bike ride.  There is a city Earth Day celebration and it's always fun to ride past all the people that have to park their trucks a half a mile away (almost no parking at the park where it is held and few streets to park on)

more: Earth Day

Will be participating in a Earth Day fest in Ithaca, NY if anyone is local to there.  Stop by and say hi.

Otherwise here's a good post that I found on what to do on Earth Day, if you are not participating in a clean up event.

Link HERE (last paragraph).

Oh, FYI the event is on Sunday, not Sat.
Let me again float a thought prompted by the work of Mike Bolser (

If we assume that TPTB are not just floating along at the whim of the market, and they have carefully planned the way in which peak oil will unfold then we would:

  1. Expect the markets to be manipulated and controlled. We find evidence for this when we normalize the markets to a Major Currency Dollar Index (MCDI) and plot the 100 day moving averages of oil and gold. They are uncannily straight, pointing to algorithmic price control steering to a preset course.

  2. Expect them to have an exit strategy when all else fails. The BIS have short positions of $1.5 trillion in oil, and the major bullion banks, (Sachs, Morgan, etc) are short more gold than can be produced in ten years. How are they going to cover this without sending the markets even higher and by implication making the dollar even more shaky?

If you think bigger and badder, (like Mike does), then you have to at least consider an international agreement between suppliers and consumers that fixes the price of oil and gold for (say) 10 years. This will immediately render all the long positions in the market worthless. Mr Chavez in recent weeks mentioned fixed $50.00 oil prices. What if that was something that has already been floated?

Can it work?

I think those of us that dabble in the markets should think about this possibility for at least a few seconds before dismissing it. You can wake up Monday morning with this a reality in place.

Seems like any attempts to fix prices of scarce commodities will result in a black market of a size proportional to the demand. I don't think price controls can work except perhaps on a small scale or when the control price is not too far out of line with the percieved market value.

The Chinese have, in effect, had price controls on their currency for a number of years now. This would not have worked without them buying lots of US debt and bringing the market into rough balance with the peg.

Could it work? Not in the capitalist system as you know it, Jim (to paraphrase). It's only normally possible to impose such fixed prices where a majority (in quantity of supply) of the suppliers agree to do so. Also such action - that of a cartel - is abhorred by the capitalist system and the bodies, like the WTO, who attempt to police it.

Uncle Hugo would only be selling oil at $50 to left leaning friends, methinks; the rapacious capitalists would get any leftovers at the market price.

There were some possible signs of the Fed money press aiding their friends who got a mite short on the oil markets in the first week of September 2005, I'm not aware of any recent rumours of such action... yet.

Thursday's action in the COMEX silver and gold pits may have been a sign of such things to come:

The result was a major pull back in silver (14%) and a significant one in gold (2%). Interesting to note that both recovered today (Friday 21st April), gold making up almost all its Thursday loss, silver half its, copper and zinc surged violently to new highs. Gold is up 5.9% in the last week. This article is a good summary of the action:

The gold and silver markets are very much smaller and more susceptible to manipulation than oil markets, and their manipulation by TPTB has been routine for years. However, it is quite possible that control is breaking down if today's action is anything to go by.

Peter Terzakian, the guy who wrote "A thousand barrels a second," has put out a press release, carried at Energy Bulletin:

Will Iran tighten the reins on the global petro supply?

I think if I were Iran I would be thinking about a small amount of "essential maintenance" to about 250,000 bpd of capacity starting 29th. Just to give the markets a fright and a small demonstration without giving any further real excuse to GWB.
"But Iran is not Iraq. Notably, Iran's oil output is over twice that of Iraq, and as mentioned Iran is in a very strategic geographic location. As well, Iran's bombastic leadership appears far more determined to pick a fight and play the trump cards it knows it has in its hand. Finally, Iran has a potentially oil-hungry friend in China; a relationship that makes Iran's trump cards against the west stronger."

Actually, iraq was quite bombastic, and seemingly always ready to pick a fight - indeed, it invaded two countries, something never done in modern times by iran and generally reserved for superpowers, eg USSR and US. And, iraq also had friends in high places, including germany, france, russia and china. Little good it did her.

The real questions are, a) does gb think attacking iran will increase or decrease his popularity? which is not as dumb as it sounds - ask the democrats if we should or should not help israel against their enemy iran, and watch them tie themselves into knots, and b) does gb think it is his duty to the country to stop Iran's (charter axis of evil member) nuclear program, regardless of what it does to his popularity?

Good piece. Thanks for posting that.
As I stare out the office window from my L.A. desk and see the gray haze, I wonder - will higher oil prices finally reduce the smog pollution here in L.A.? Less motoring = less pollution. Or, somewhere down the road, the switch to "anything else besides oil" will cause more pollution? Now that it's warming up, whenever you sweat here in L.A., the pollution particles stick to your skin and clothes and you smell like you were in a fire. It's gross. And we breathe that crap every day.
Maybe you should move somewhere else.
well, Cali is usually about 5 years ahead of everyone else,so look at it as a sign of things to come, especially if coal becomes "King."
In Beijing two weeks before the 2008 Olympics all cars will be taken off the roads and coal plants will be shut down. Problem solved.
I would not even want to be found dead in LA....
You know, if I was Iran I would be seriously thinking that some of those Russian nukes I bought back in the nineties would come in handy, now.
Say, find out where the US gets the most spare parts from for the high tech weapons like ships and airplances and tanks, and then nuke those cities in a premptive attack.
Say, the largest three hundred cities.
Just as a warning, mind you. Not a serious attack that would make us shoot back. Just a warning.
Remember back to the 1880s, when Herman Goering's father was governor of what is now Namibia? He decided to simply kill 85% of the Herero population to stop them trying to keep their land. The Herero were helpless against cavalry with rifles.
The Hereros didn't have nuclear weapons, because if they did Lake Berlin would still glow on moonless nights.
You want to be that Iran doesn't have nukes already, bought instead of made? Do you really feel lucky?
Actually, I think von Trotha, commanding troops in the colony, was to blame.
I have just read the discussion about nukes in the Wed Open Thread.


your and Lieber & Press attempts to bring about a fierce controversy on nuclear affairs are caused by a simple fact: five years ago the Russian side cancelled almost all the American capabilities to know the actual state of the Russian nuclear arms by turning down the proposal of deep American inspections within the framework of the Russian-American nuclear treaties. The US's inspectors can not get beyond the pale of official headquarters and some well-known industrial sites.

Since then the American side undertakes various attempts to infiltrate. For example, a few years ago the idea of miserable state of security of the Russian nuclear stockpiles was in fashion. The English language MSM reeked with articles about terrorists getting old Russian nukes. Less known is the fact that in the same time the Americans requested an entrée to the numbers of active nukes and the places of storage. They had gotten nothing.

Today the US side tempts another tactics. By asserting its nuclear supremacy the Americans try to bring about the meaty discussion to discover the actual state of strategic arms of Russia and China. And my feelings are they again will get nothing, except maybe some traitors.

As for a first -strike capability: as they say in Russian prisons "Why do you cover your head with your hands, if your asshole is loose?"

Two months ago I wrote in response to some stupid war plan:

Imagine. You wake up in the morning, switch on a TV set and see a news report:
There was a nuclear explosion in New York. Almost all the city is destroyed. No one has taken a charge for the explosion. Foreign governments deny their implication.
Do you think this is impossible?
Think again.
There are eight known countries which have got nuclear bombs. And maybe from ten to fifteen which have got know-how and fissile materials. Imagine. Some country has smuggled a few bombs and mined the big cities of its adversary. Just in case if the missiles wouldn't hit the targets.
Do you think this is impossible?
Think again.

From Moscow with sinless smile.

Thanks for reading the discussion; I very much appreciate it.  Your remarks corroborate those of smekhovo, who pointed out that the decay in Russian military infrastructure that took place during the 1990s was followed from 2000 on by a period of increasing prosperity.  And of course, furthermore, advantage was taken of this prosperity to refortify the Russian military infrastructure - of which refortification burgeoning Russian arms sales are a robust indicator to outsiders such as myself.

You add to smekhovo's comments the further point that the U.S. doesn't even really KNOW just how much Russian military improvements have progressed since then - but boy, they sure would like to!  Overall, then, both Russian military upgrades since 2000, and U.S. ignorance about them, completely undermine the viability of Lieber and Press's claims about U.S. nuclear primacy.

You and Smekhovo almost have me convinced.  My only remaining question would be this: Does the U.S. not perhaps have the capability of learning a lot about just what these Russian military improvements are via advanced remote sensing techniques and the like?  My memory on whether Lieber and Press address this point is dim; perhaps they mentioned it in passing....

Aside from that, I would like at some point in the future to solicit reactions from the TOD community about the two other articles regarding U.S. military supremacy that I posted about during that lengthy subthread.  (For the present, though, due to general Nuclear-Primacy-Fatigue, I will simply include a link immmediately following this post that takes you to the point in Wednesday's thread where I posted about those other articles, in case anyone cares to take a look....)

Remote sensing hasn't even found Osama :-)
Some say that Osama is just the public front of a U.S. intelligence black-op anyhow - but be that as it may, wouldn't the significant and concentrated amount of nuclear material needed for any bomb leave some kind of physically detectable footprint that just couldn't be hidden, if the detection technology is sufficiently advanced?

I have no idea; just asking.  Any experts on the subject out there care to share their classified knowledge on the subject with TOD readers?  [You wouldn't be denounced for treason by me, no matter what country you're from!]

All I know is that in his latest video (the one that came out right before the election) Bin laden looked damn well-groomed and sylish for a man whose suppossed to be on dialysis in a cave for 5 years now.

I'm thinking either something is up like it's a psyop or the CIA dispatched "The Fab 5" to metrosexualize his ass.


(Note: The Fab 5 are those gay dudes from that tv show.)

"CIA dispatched the Fab 5 to metrosexualize his ass..." Now that is funny, AMPOD.  
 LOLL-Laughing out loud and long
"Metrosexualize," now that's some funny sh1t.  Put a Manhattan in his hand & complete the picture.
My take on this story was that it was meant at a warning, directed at Russia and China, not to interfere with a US attack on Iran.  

As I noted elsewhere, IMO there is no real difference between tactical and strategic nuclear weapons.   Hersh asserts that there is operational planning going on for a nuclear strike on Iran.    

While a nuclear weapon going off in the States is always a possibility, IMO a nuclear strike on Iran will make a nuclear attack (terrorist or otherwise) in the States virtually a 100% probability.

Ret. Lt. General Newbold, IMO, has effectively suggested that senior officers may refuse to carry out orders from Bush/Cheney/Rumsfeld.   For Sixties Era leftists, it must be ironic that the only thing that may be standing between us and World War III are the uniformed officers in the Pentagon.

Oh, what the heck, I'll just repost the remarks from the 1998 article about the "Revolution in Military Affairs (RMA)"  Any thoughts and comments would be appreciated.

As reported in INTERNATIONAL SECURITY (Winter 1997/98, VOL. 22, NO. 3) in an article entitled "The Utility of Force in a World of Scarcity," by John Orme:

By the late 1990s, observers were speaking of a "Revolution in Military Affairs," that is, an epochal shift in the military techniques, organization, and strategy employed by the United States relative to the Cold War Period.  As summarized by Orme,
The technological bases of the ongoing revolution are

(1) the dramatic improvements in the accuracy and range of weaponry (i.e., the development of "smart weapons"),
(2) the acuity of reconnaissance and surveillance (i.e., spy satellites and other reconnaissance aircraft),
(3) the ease of deception (i.e., stealth technology),
(4) the ease of suppressing enemy defenses (again, "stealth technology and the development of "cruise missiles), and
(5) the effectiveness of command and control (which the "computer revolution" has unleashed).

This technology, when implemented effectively - and, again, only one nation possesses the means and "know how" of doing this - has the effect of reducing to impotence the military establishments of the other nations of the earth.  From a military standpoint, then - and given the collapse of the Soviet Union and the development of RMA technology in the United States military - the U.S. has no equal left to challenge its hegemony. What military forces the rest of the world possesses (and that includes Western Europe, Japan, China and the new Russian Federation) are non-RMA forces. Their navies are minuscule in comparison to the U.S. navy, while their air forces are hardly worth a yawn. Moreover, these nations possess very limited nuclear capability, and the once formidable capability of the Russian Federation has fallen into irretrievable disrepair. None of these nations has even the remotest possibility [either alone or in combination with each other] of building a RMA military machine with any chance of competing with the Americans - and none of them has the capacity to "project" power the way the United States can. No other nation on earth can put 540,000 men onto a battlefield thousands of miles from its home country like the U.S. did in the Gulf War, support that army in the field logistically, and when the time comes, win decisively on the battlefield the way the Americans can.  

  That is quite an impressive argument you have made about US military superiority. Perhaps you might want to tell that to the Iraqi resistance.

Subkommander Dred

As I said yesterday, there is a solution to insurgencies:  Exterminate the underlying population.  In the case of Iraq, the U.S. might do this eventually to a degree that is at least sufficient to enable it to secure the oil infrastructure that it will eventually need access to - though right at the present it does not absolutely require this access.

Lest I be misunderstood, I am NOT advocating this; quite the contrary, I find it morally abhorrent.  But I would not put it past the U.S. elite to decide to embark upon this if and when they deem it necessary to do so.  Moreover, as a general matter, it is precisely this sort of ruthlessness that would give U.S. military superiority (to the extent that it exists - still a matter of dispute, I admit) its REAL power.  What use is raw power, after all, if you are morally hamstrung from employing it to the full?

What you are suggesting with regard to Iraq is perfectly plausible. Iraq has dratically reduced medical care, reduced availability of clean water, essentially no remaining sewage treatment, an abundance of depleted uranium and they are dependent on imported food. The UN administered oil-for-food ration system is currently being officially phased out and also simply evaporating. Could they be starved to submission? Of course. Probably the American public would never know. Or care. Clearly no one in Bushworld cares if Iraqis live or die, or what the rest of the world thinks.
Iraq is also depopulating by emigration.
Is there a conscious plan to depopulate Iraq? Who knows?
Read some history. Colonial wars particularly are rife with de facto and purposeful depopulation/extermination.
Iraq is a textbook classic perfect and complete colonial war and very large scale loss of population is assumed
These are all additional considerations that I myself didn't bring up, suggesting that the extermination card is even being deployed now.  It's all very depressing.  Also worth mentioning in this connection is Daniel Pipes' recent lauding of escalating civil war in Iraq as advantageous for U.S. strategic objectives, and therefore desireable.  See the following link:

It's morally repugnant and sickening, but there you have it.  

  For all our military prowess (and I agree, a country that spends close to half a trillion dollars a year on the Department of War is going to have a formidable military), for some strange reason the word 'Dunkirk' keeps coming to mind when I think of our guys in Iraq. Is it just me, or does the prospect of lengthy (and perhaps untenable) supply lines along with the very technical/ power intensive basis of that military might be our main weakness? This does not even to begin to take account of the lack of strategic planning, the refusal to admit past mistakes or even the blatant lies and stupidity of those who advocated for this war in the first place.

Subkommander Dred

Thanks for your note, SD.  A few points by way of reply:  First, I think that, at the present, the U.S. military still has ample access to all the raw materials it needs in terms of energy, strategic minerals, etc.  Second, it is anticipating that these won't be so ample anymore very soon, and is accordingly positioning itself to secure vise-like control over them in the current period.

As far as the logistical feasibility of securing their ultimate objectives in Iraq is concerned, I admit that I am sketchy on the details.  What I am speculatively envisioning is the horrific scenario where Iraq has been sufficiently depopulated so as to make it feasible to hermetically seal the oil production and transportation areas of Iraq from harm by "retail terrorist" antagonists.  How realistic this is I truly don't know.

But in a more general sense, it is also worth mentioning in this connection that the oil fields and associated infrastructure in the entire Middle East is very heavily concentrated in quite a small geographical area within and near the Persian Gulf itself.  Moreover, it tends to be far away from major population centers, particularly in Saudi Arabia.  As for Iran, it is a large country, but the vast majority of its oil fields and associated infrastructure is in its southwest region - and abuts against the southern border of Iraq.  All of which raises an interesting question:  How realistic is it to envision a broadened view of a depopulated Middle East, with the U.S. able to hermetically seal virtually all of that vast area of oil and gas reserves against "retail terrorist" attacks?

"No other nation on earth can put 540,000 men onto a battlefield thousands of miles from its home country like the U.S. did in the Gulf War, support that army in the field logistically, and when the time comes, win decisively on the battlefield the way the Americans can."

Relax. You have convinced me that you are the greatest fan of the AMERICAN MILITARY MACHINE.

"(1) the dramatic improvements in the accuracy and range of weaponry (i.e., the development of "smart weapons")"

If so, why did the American diplomacy strive to prevent procurement of Russian-made GPS jammers on the eve of the war in Iraq?

"(3) the ease of deception (i.e., stealth technology)"

You have to tell about those technologies to the Serbians who had brought down F-117 with the old Soviet-made C-125 anti-aircraft missile.

As for the carriers, their battle life in the real nuclear exchange would be 60 minutes.

I am not the greatest fan of the US military machine; quite the contrary.  I find the U.S. military machine abhorrent and frightening.  I am just trying to determine the objective state of things today with regard to relative degrees of military power among the U.S., Russia, China, and Western Europe.

What would the GPS jammers have done for the Iraqis?

The last line in your email seems to indicate your opinion that the Mutually Assured Destruction (MAD) paradigm essentially still prevails today - i.e., that the U.S. and Russia are essentially in a state of nuclear parity.  Do you have any publicly available (or even classified - be my guest!) data to offer about current Russian ICBM, strategic bombing, and nuclear-based warhead capabilities?  Do you have any hard data about Russian early warning, radar, etc. capabilities?  So far, all the argumentation on this angle of the question has been an argument from silence:  The Americans don't really know what the Russians have, but it COULD be a lot.

Do the RUSSIANS know what the Russians have?

At least I know what I see on the Russian state TV channels:

1)the new intercontinental quasi-ballistic() missile with 6 maneuverable hyper-sonic() nuclear warheads capable to penetrate the anti-ballistic missile defense.

2)restoration of the Soviet global navigation system GLONASS, an analog of the US's GPS

3)new generation of nuclear submarines - smaller and quieter.

4)resumption of production of super-sonic bombers and heavy transport aircrafts.

()Quasi-ballistic means that the missile can deviate from a ballistic trajectory if necessary.
(**)maneuverable hyper-sonic means that the warhead is capable to fly like a cruise missile on hyper-sonic speed.

I should like to tell more but I am not a military expert. I am sure you could find all those news on special military sites, at least in-Russian.

Thanks, RussFag; that is significant to me.  I did not see any of this noted even in passing in the Nuclear Primacy article.  Maybe Westexas is right and it was simply the U.S. mafioso/goverment's way of trying to put the screws to the Russians and warning them to back off vis a vis U.S. meddling with Iran.
I certainly agree that the US has overwhelming high tech military superiority. This is not surprising given that 50% of global military spend is US and that 5% of US GDP goes directly to military.

Several 'howevers', however. While the US has by far superior capability to 'project' its military force worldwide it takes much less expenditure locally to resist them. One might ask why a 'peaceful' nation wishes this force projection capability, too. For all the advantages of high tech military it also has greater vulnerabilities. US military hardware is very expensive, how high would you wish military spend as % of GDP to rise in response to consumption / destruction of the hardware / consumables, 10%, 20%? Now begin to limit resources (energy, metals): foreign wars vs. domestic consumption of critical resources?

Most other countries concentrate their military spend on their own defence, acheivable much more cost-effectively. The US is the only country that biases its spend towards offensive projection capabilities.

Part of my thesis is that the U.S. may begin deploying its force-projection capabilities with increasing ruthlessness precisely so that it has continued guaranteed access to all the raw materials and othe resources that it needs - among other reasons.

As for U.S. military vulnerabilities: I grant as an integral part of my argument that the U.S. is ill-equipped to deal with

  1. Insurgencies such as those in Iraq; and
  2. "Retail" (as opposed to state-sponsored) terrorism

As far as 1 is concerned, one can always exterminate the insurgency-producing population as a last resort.  There were some in the U.S. during Vietnam whom essentially advocated this solution then (e.g.: musings about bombing the Red River dikes, about using nuclear weapons, etc.).  If this was taken seriously then, WITH the Soviet and Chinese threat of the time being much greater than now, then what makes it beyond the realm of the possibility that the US would do so NOW?  I have been saying since 2002 that the inner logic of U.S. involvement in Iraq is tending inexorably towards precisely this dismal end.

I read through (scanned truthfully) your thread and all I can say is "who the hell knows?" Nothing would surprise me one way or the other these days. It's the type of thing though I'd need to invest at least a couple of days reading the various articles to even have a remotely intelligent opinion on.



Thanks for scanning it, Matt.  I agree that it's a matter that requires a considerable investment of time to get to the bottom of - as my floating of the idea here on TOD has revealed.  (But that's exactly why I floated it on here - I don't want to violently veer off onto belief paths that are fundamentally mistaken, which is something that I'm constitutionally prone to.)

At the same time, I would say there are some things that are more worth seriously researching than others, and I would say that the exact degree of U.S. nuclear primacy/military supremacy (or at least some reasonably reliable ball-park notion thereof) would be one of the things at the top.  Don't you agree?

Well, I certainly appreciate the distinction between you postulating that the US has overwhelming nuclear and conventional firepower over the rest of the world and you cheering it on.  Having recently read "The Unconquerable World," however, I'd like to hear more about why you believe the US would resort to exterminating the population to smother a guerilla war(or "people's war," as Schell would put it).  For example, do you believe the US public would accept the extermination of the Iraqi population without protest? How could that be "sold" to the American public? Has this method ever been sucessfully implemented by any empire?
Here are some thoughts:

  1. Certain figures in the U.S. power structure seriously contemplated what would have amounted to mass-extermination of at least a partial sort during Vietnam: Nuclear weapons and bombing the red river dikes were explicitly contemplated among other things - despite the fact that the Soviets and Chinese posed a much more serious deterrent then than they do now (although this latter claim is being heavily assailed, I admit).

  2. How much of a tender spot in their hearts do you think Bush, Cheney, Rumsfeld, etc., actually have for the poor struggling masses in today's Iraq?  Not much, if any, I'd wager - though I'm open to counter-evidence.  (In this connection, it's worth recalling Madeleine Albright's infamous remark to Leslie Stahl on 60 MINUTES in 1996 that the sanctions-caused death of 500,000 Iraqis was "worth it."  What does that tell you about the willingness of the elites to engage in mass-extermination under the requisite circumstances?)

I had some other thoughts, but I'll have to reread your message again; in the meantime, I'll just post this....
3) To a very considerable extent, this can be "sold" to the American public simply by concealing it from them, according to the standard methods employed by U.S. government disinformation and the main stream media.  Much is even being very effectively concealed now, I believe.  At a certain point, perhaps it will become impossible to hide, and then maybe it will have to be genuinely sold to them.  But this may turn out to be a lot easier than many people would like to think if the shit has hit the fan full scale by that point with regard to the ramifications of Peak Oil.
This is quite an interesting idea, and I may need more time myself to think it through, but it occurs to me that exterminating the Iraqi population would be the equivalent of using nukes against Iran--it would inflame the entire Muslim world against us, at the minimum.  I question whether mass extermination would be able to be kept secret from the American public (the MSM is pretty stupid, but not that somnolent).  I certainly don't question the motives or will of those in power to accomplish this if they believe it is feasible.  In the end,though, I concur with those who believe that the use of violence is not a sign of power--to the contrary, it reveals weakness, and in the case at hand, would be truly counterproductive to the objective.  Our overwhelming military force in Iraq has been stymied by a small group of rebels, supported by some (or most) of the population. Exterminating an entire nation (genocide) would produce more blowback on a more global scale,IMO.
There is no doubt about the blowback aspect of the situation.  "Retail" terrorist attacks against the U.S. mainland and assets overseas would probably tremendously escalate, and the danger of a "smuggled nuke" destroying a U.S. city would also much increase.

But I think you have to look at all this from the point of view of the elites in particular, not the American population in general.  Consider George Bush's ranch in Crawford, which is apparently outfitted with every sort of the most advanced alternative energy gadget and widget so as to enable a lavish lifestyle even in the event of a complete loss of access to the electricity grid.  What does this example imply if not a willingness on the part of the elites to tolerate great increases in "retail terrorist"-type blowback, since they have the wherewithal to live in great comfort amid the carnage anyhow?

See in this regard the post by Oldhippie, from earlier in this thread:

It would appear that perhaps the extermination card is already being played, and its unfolding won't be noted for a long time precisely because much of the violence is of a passive rather than an active sort.

As for U.S. military vulnerabilities: I grant as an integral part of my argument that the U.S. is ill-equipped to deal with

Insurgencies such as those in Iraq;

As far as 1 is concerned, one can always exterminate the insurgency-producing population as a last resort.  There were some in the U.S. during Vietnam whom essentially advocated this solution then (e.g.: musings about bombing the Red River dikes, about using nuclear weapons, etc.).

Chomsky's noted, referencing Bernard Fall, that

Look at what he wrote in 1967. He said this just before he died. He said Vietnam is literally dying under the worst attack that any country has ever suffered and it was very likely that Vietnam as a cultural and historical entity was going to become extinct under the American attack.

And yet the Americans still lost.  And this was in the days that rendering a third-world country "extinct" was more less acceptable behaviour.  Even if the U.S. were to somehow pull it off politically (say, by "turning off" the Internet, so that news doesn't get out), it seems to me that the only way it could succeed militarily is by destroying the country so fully that it wouldn't be able to extract the oil.  And then you've still got to deal with the economic consequences.

"Retail" (as opposed to state-sponsored) terrorism

You said yesterday that U.S. elites don't care how many Americans are victimised by terrorism.  I'd agree.  But they'll damn sure care when systems -- pipelines, terminals, refineries, power plants, etc. -- are targeted (as has already begun in Iraq, Arabia, and Nigeria). Ever see that Frontline episode about how fragile our electricity grid is?  And it may not even take terrorists to deliver a knockout blow -- just a few more well-placed hurricanes could do the trick.

Incidentally, earlier this week a retired general gave the opposite view to your authors' over at Asia Times.

Ah, but that's just it - the US DIDN'T pull out all the stops in the end in Vietnam.  They did kill 3-4 million people in Indochina, but the U.S. elites didn't quite have it in them to pull out all the stops and drop a handful of thermonuclear weapons on Indo-China - which would have involved killing 30-40 million, rather than merely 3-4 million.  In my mind, there are basically two reasons for this:

  1. Fear of serious reprisals by the Soviets and/or the Chinese, and of the unforeseeable consequences for world incineration that this might involve;
  2. A certain lingering sense of humanity that prevented them from going quite that far.  Even Kissinger (a.k.a. "kissMyAssInger"), whom I love to hate, is recorded somewhere of having said to Nixon something like "But we just can't do that!" when the latter was at one point musing about just nuking the goddamn place.

But 1), in my estimation, is essentially gone as a factor - or at least greatly reduced; and 2) will be increasing reduced to nothing as a consideration in direct proportion to how desperate the U.S becomes in coming years due to Peak Oil.
As for exterminating populations while preserving infrastructure, I don't have any doubt that the U.S. has been feverishly working to develop such weapons over the past 15 years.  From time to time, I've even come across news articles to that effect - only, I can't cite any offhand.  But even as far back as the Carter years, the U.S. was seriously trying to develop the controversial "Neutron Bomb."  Remember that one?  Its specific intent was to wipe out urban populations while preserving urban infrastructure.
I read the Atimes article you linked, and it certainly seems to call into question the part of my original thesis that the U.S. can attack and destroy China with impunity.  It does need to be said, though, that the Atimes article focuses on a scenario involving an attack with chiefly conventional weapons, with aircraft carriers at the core; whereas the scenario envisioned by Lieber and Price involves a nuclear attack, with ICBMs, Nuke-carrying subs, and strategic bombers at its core.  

If I were a U.S. planner, I would allocate resources like this: Save the conventional, aircraft-carrier stuff for weak, non-nuclear foes who don't stand a great chance of actually sinking a carrier, if any(such as Iran, Venezuela, Nigeria); and play the Nuclear Primacy card against the Russians and Chinese, against whom the conventional, aircraft-carrier card is insufficient.

Who would make our shoes? I can hardly imagine a greater act of self-destruction than to destroy the manufacturing core of our economy. Nuclear Primacy is totally worthless as a practical option. We need diplomacy. War is obsolete.
The only weakness the US Army has is its dependence on volunteers. While high tech can win battles it still takes boots on the ground to hold territory. The army has run out of boots. TPTB are very reluctant to put their children and grandchildren in harm's way so a draft is unlikely.
I read a story on AVWEB about Boeing's Wichita plant is laying off 400 workers due to a cut back in military orders.
Could financial incentive's to enlist is not leaving enough for new airplanes?
No worries. Just trash the economy so the only job is the military and you get lots of "volunteers". With a choice like the Army or dealing dope - not even McDonald's - and you get the idea.
Yes, it is certainly possible, Andrei. No doubt US security services are very alert to the possibility, but no one is 100% effective.

The odds are probably 50/50 of something similar happening in the next 5 years. I will be slightly surprised if the next 10 years pass without a nuclear explosion being used in anger for the first time since August 1945.

I am really scared that such event is well possible in Russian cities. That's why I have bought a house in New Zealand and plan to move there in a few years. I think the 21 century will be the century of nuclear war, maybe by way of nuclear terrorism. And IMO New Zealand and maybe some islands would be a few of the safe places on earth.
Yes, if that comes to pass, New Zealand is probably the largest safe and pleasantly habitable land area. I don't think it will get quite that bad but your logic is sound. If things do get that bad I would guess that death by AK47 or disease is as likely as nuclear for most of Russia.
Hmm Kiwiland, that would be the ultimate bug-out Heaven.
If you genuinely believe in societal collapse, I would move soon, before all immigration is halted.  That goes for all such "safe havens", they all have a limit to the numbers they can support, and will react as soon as they realise what is happening.
Any other suggestions as to a des res when TSHTF ?
I moved my family from the UK to Canada a few years ago because I didn't fancy the idea of riding out a storm on a small, over-crowded, over-priced island at the wrong end of a long energy distribution network (however much I liked the place, especially the Celtic fringes). Real estate prices have gone up enough in the UK to finance a move to a wide range of less expensive destinations with better prospects.

My relatively ordinary house in the midlands bought me a small farm over here, with enough left over to kit the place out with renewable energy infrastructure and survive with no income for long enough to get re-established career-wise. Canada doesn't exactly make it easy for foreign professionals or academics to get established here (as they place very little value on qualifications or experience gained elsewhere IMO), but expertise in energy helps (my partner and I are power system consultants these days).

The whole "retail terrorism" angle on this is one that I haven't adequately addressed, I admit - as well as the "smuggle nuclear bomb into major enemy city and detonate it" scenario that some have been envisioning.  But I am very weary this evening, fellow TOD-threaders, so that will just have to wait until tomorrow morning, and/or a future thread.


Smuggling a nuke is almost too easy. In Asia, get a cell member to take up being a trucker hauling sea containers. One fine day, he takes that sea container from the Chinese factory and pulls over and meets up with other cell members. They clean out the container and place a nuke in it that is set off by a photocell. They close it up with nuke set and the trucker takes it to the port.

The container and nuke gets loaded onto a ship. The ship drives to San Diego and the nuke is offloaded. Now the fun part. Remember that photocell? Now, if the TSA inspects it, they will open it. The photocell catches light, and the nuke goes off. No more San Diego. The alternative is that it goes uninspected and ends up at the town with the WalMart hub warehouse. They open it and again, kaboom. No more WalMartville! This is a case where you WANT lax security!

We need the diplomatic equivalent of nuclear war because war is obsolete. After all the trillions of dollars spent we are struggling to controll two little countries and going broke trying. The ineffectiveness of conventional military forces will be obvious as oil prices go up. The people will no longer tolerate such a large waste of resources when they can't afford to drive to work. Military spending should be cut in half as soon as possible. Our future would be brighter if we recycled half the military's useless hardware right now.
Behind the subscription wall at Barron's Online, there is an article, dated April 21, by Steve Gelsi, "Complete Production Svcs Taps into Energy Craze."


NEW YORK (Dow Jones) -- Complete Production Services Inc. traded well above its offering price Friday as the oil and gas exploration services firm tapped into the energy craze for its stock market debut.

Complete Energy Services (CPX) raised $624 million as the second richest IPO of 2006 by offering 26 million shares at $24 a share with underwriters Credit Suisse Securities, UBS Securities, Banc of America Securities and Jefferies & Company.

Complete Energy Services is majority-owned by Houston businessman L.E. Simmons, who is son of Zions Bancorporation (ZION) Chairman and CEO Harris H. Simmons.

Simmons moved to Houston with his brother Matt to set up an investment banking firm in 1974 to specialize in the oil field service industry, Simmons & Co., according to his biography.

(Full disclosure: I am not a shareholder, I have no interest in this company. The reason I post this is, the majority owner is Matt Simmons's brother. Just jumped off the page at me.)

If you subscribe to Barron's Online, check it out.

Im trying to understand the issues with MTBE.  I always understood that MTBE was to increase the oxygen content of the fuel to reduce pollution (which does nothing when burned in a car with an O2 sensor but reduce the fuel mileage).  If we are  getting rid of it, why must we substitue anything for it?  Why do people think it helps with pollution?
I'm no expert but I think MTBE is an oxygenator for gasoline combustion = helps provide oxygen for the combustion process. Ethanol performs the same role when mixed with gasoline. The advantage is more complete combustion, hence greater efficiency. The reduction in pollution would be a result of the more complete burning of the hydrocarbons.
OK, that was what I thought.  

Oxygenating the fuel only increases the volume of fuel used.  The EFI system will adjust to maintain a constant exhaust oxygen level.  

If you indroduce more oxygen into the intake air stream, the system will compensate by increasing the amount of fuel.  This does not have to mean that you'll use more fuel, as you would normally reduce the throttle opening because you'd be making more power that way.

However, if it is the fuel that is carrying the oxygen, then the control system will need to put in much more fuel, as each additional amount of fuel also brings more oxygen.  Therefore you will use more fuel.  It may not use more oil, but it uses more of the fuel you have to pay for.


Even for a properly tuned open loop carburated car, it will only lean out the mixture, which can result in poor combustion, more pollution, and more fuel used.  

The key phrase in your comment here is "Even for a properly tuned open loop carburated car". You're exactly right, although MTBE also raises the octane of what most produces make to sell as gasoline. HOWEVER, improperly tuned pre-1984/pre CARB vehicles and vehicles with damaged O2 sensors or MAF sensors account for a huge percentage of the non- or partially oxidized hydrocarbons present in the air over large cities. Enough of it, in fact, that it's a large win to get oxygenating additives into the gas for these cities during high UV months.

Note that the process used to make MTBE from isobutylene can be modified to produce iso-octane instead, and I suspect that we may see a decrease in the price differential for premium grades in markets with reformulated gas requirements....

All this means is that we are using an additive instead of inspections and enforcing maintenance of vehicles.  This just does not sound like a reasonable trade-off.
I agree :)
And the answer to "why are we replacing it with anything" is "farm lobbyists", I suspect.
And it should be noted that the replacement with ethanol is not to meet oxygenation requirements, which have been removed from the RFG requirement by the energy policy act of 2005... it is to reduce the vapor pressure of the blend during hotter months.
Addition of ethanol actually raises vapor pressure:

Conventional gasoline is allowed to have Reid Vapor Pressure (RVP) of 9 pounds per square inch (psi) during the summer months.  Conventional gasoline blended with ethanol receives a 1-psi waiver from the RVP standard, since the addition of up to 10 volume percent ethanol raises RVP to 10 psi.  This paper provides background on the 1-pound waiver and how its removal can affect gasoline volumes.


Ah, I guess that should be clear given that Ethanol's vapor pressure is over twice that allowed for the blend as a whole.

Sooo... if oxygenates are no longer required and it makes the volatility porblem harder to solve (since Ethanol raises the RVP of lower volatility gas by more than that of higher volatility gas), is the only rationale for adding it these days the octane boost?

Rep Louise Slaughter (D-NY - Buffalo, I think) has posted a diary over at:

Unfortunately she is going on about price gouging.  Same as Chuck Schumer - is there something in the water up there that all the Democrats are drinking?  

People have already commented about peak oil (with links to this site), and how the things she is suggesting in these 2 bills are probably not going to be effective.

The good news is that it appears that she (or a staffer) is reading the comments, so there is some hope that we can bring some of our elected officials up to speed.

If it's possible, I get more & more disgusted whenever I see the Democrat's reaction to the free-market equilibrium price of oil.

Our corrupt officials are aware of the situation and try to spin it to their advantage to get re-elected. Folks, get ready for our oil problems to be greatly exacerbated by politicians interfering with the free-market. Sure, you can buy gas for $2.50/gal... if you can find it.
Absolutely right, sir. I find the Dem pandering on energy to be reprehensible.  If all they stand for is to tell people what they want to hear, we're driving quickly off the cliff. We need honesty in government today! Not that we'll get it, but that's what the problem demands.
What needs to happen is for George Soros or some other billionaire democrat financier to have the living-shat scared out of them by Kunstler. Once that happens the dem's will start talking about the real problem real fast. Worked over on the republican side.



Several months ago Kunstler came to a College near us and I asked him, since he acknowleges being a Democrat, if anyone in the Democractic party had ever approached him to talk about Peak Oil or have him brought in as a resource to consult with. He frankly responded as if the question was absurd. Basically said that 'they' had no great interest in the subject.
Not talking about Peak Oil makes perfect sense given the mindset of the American population.  It may not be good leadership, or the right thing to do, but it is reasonable.
I used to think this would be like a batting practice fastball for the Dems.  But the only people at the highest levels of our society who are really talking about it directly are Repubs and either rich or religious: Pat Robertson, Roscoe Bartlett, Richard Rainwater, Matt Simmons. (Roscoe B. is a devout seventh day adventist I believe, Rainwater and Simmons have more money than God.)

I have some ideas about why this is the case but nothing really firm.



Notwithstanding the contributions of people like yourself and Heinberg, Kunstler et al. I think it is very helpful that many folks at the forefront of the peak oil discussion are religious and mainstream 'practical' conservatives.  
Couldn't agree with you more. The size of the crisis is so huge (and terrifying) that any normal person is naturally going to look for an excuse not to have to deal with it. If the messenger is an ardent enviromentalist or anti-capitalist type for instance, this gives the person such an automatic out: "well why should I belive him? Sure he SEEMS convincing but it's proably just more enviromental claptrap I'm sure. Besides this person is just jealous and hates anybody who drives a car, etc."

When it's from Bartlett, Rainwater, etc., they obviouls can't do that.



As a liberal Peak Oiler, I wonder about this too.  I think that part of this is that liberals who understand issues of sustainability and such are more focused on climate change.  And probably less likely to have insider knowledge of the oil industry, like what we are exposed to on TOD.  Not to mention a lack of trust of large corporations, which when combined with recent profiteering serves to convince that it's all a scam.

This may come as a surprise but due to how far past the point of no return we've gone, I'm glad the media-government aren't telling the peopel the truth. At this point there would just be mass panic if everybody thought the way even a peak oil moderate thinks.

Imagine, if you wil, Peak Oil Moderate Mike. He doesn't  believe civilization as we know it is coming to an end but he does think when in for a major recession or depression and has thus pulled his money out of the market with the exception of energy stocks and has a lot in PMs. Sold his overpriced home to move into somethingn moderate and has decided not to buy a new car.

Well if most people did as he has done, the markets would plummet over night, gold would be $1,500 an ounce and that probably wouldn't serve anybody's interests.




Agreed. On a day like this, I just shake my head in wonder at how people (and my government) can ignore this stuff, even though I actually do know those things you mentioned--it would be a disaster to the growth-at-any-price crowd, and people will not willingly give up their rights to cheap energy, cheap goods, McMansions, etc. without something apocalyptic (debt? collapse of the dollar?) happening. (Hey wait,was that a thermonuclear device I just heard?) I think your idea of getting the Rainwater crowd involved is as good as anyone could come up with, given the cluelessness of the public and the mendacity of the leaders in this country. BTW, gold may get to $1500 without the any special enlightenment...just a few more doubts about the dollar as a  reserve currency would do it, I think.

True, it's all gonna happen (gold going to $1500, market to 4,000, insert catastrophic economic dislocating event here) I'm just hoping the rise from $600 to $1,500 happens over say 5-10 years and not 6-12 months. More time for those of us who haven't drunk the kool aid to beter position ourselves.



Ah, the thought occured to me reading your earlier comments: smacks of wanting more time to get ready.

We really can't know. Gold could be at $1000 to $500 at the end of 2006, $750 would be a reasonable bet. Things should hang together for another 6 months but I wouldn't bet on too much longer, I expect signs of serious economic distress by this fall. When does TSHTF for real? About two years time is what I'm currently thinking but with contingency of being close to ready in 1 year. Time now for it to be the major determinant for your decisions.

Things could move very fast when they choose to. If they happen in stages and / or controllably we should have a fairly clear idea of how fast and how far they may go, but if it all happens shockingly fast then it's mostly guesswork. What constitutes 'appropriate positioning' is dependent on the speed and depth.

Time now for it to be the major determinant for your decisions.


It already is. Aside from my financial preps, I'm in the process of outsourcing my store (at LATOC) so I can move around a bit more. Right now I can't even go visit land for a few days or anything.



I have this nasty hunch that money will have much reduced worth a bit over two years hence. I am usually premature on my future perceptions so 3 to 4 years is possibly a more accurate working view, though I have been trying to correct my future time error and there are signs I'm succeeding. Factor in the possible evaporation of current money value beyond two years, convert it into usable 'stuff' when you see the first signs of evaporation.
I resemble your "Moderate Mike" but that might be because I had these behavior patterns, and peak oil only justifies them ;-)

I wouldn't worry about the world ceasing consumption, etc. on a dime.  Even if they know what they "should" do, it will be like going to the gym or changing your diet ... next week ... next month ...

The population will vary with the rate at which it actually does change.

Oh, I can't resist.....

What do the Republicans stand for?  Is their military solution to the energy problem working any better?  

The profiteering by the administration's big oil buddies only serves to convince people that PO is not real.  It'll be a hell of a thing to convince them otherwise now.

Well, here we are again, with the "who's worse" argument.  Criticizing the Dems for their spinelessness and mendacity over energy doesn't mean we like the current regime. Bushco has actually been so bad in so many ways that any change would be an improvement, but "less bad" is not the standard to which we should aspire to get a handle on the massive problems we face. I honestly believe from their public statements, that the Dems would say anything to regain power. I actually expected better from bad.
My opinion has long been the Republicans are there to screw you and the Democrats are there to make you think there is alternative to getting screwed.



I always heard that Republicans are afraid the
voters won't understand their agenda, and
Democrats are afraid voters will understand
their agenda.
Two sides of the same coin now, and I don't much like the currency.
I think the key is to consider the Republicans as a coaltion government.  It is Religious Right, plus traditional conservatives, held together by a group of rank opportunists.

It is also, for a lot of people, the default outcome following the fall of socialism.  The whole world (and not just Americans) went on a free market jag.

It's good to see Louise Slaughter has the balls to solicit opinion on this at DK. Of the two proposed bills:
HR3964 - I don't know enough about US oil retailers' zone pricing to validly comment.
HR3722 - is wrong headed and displays a fundamental misunderstanding of the situation. If this is the way Dems are thinking then they are just stupidly ignorant.

If she and her staff seriously checkout stuff on PO at DK and here (mentioned several times in comments) they are in for a shocking weekend. Best she has an hour's chat with the Rt Hon (I think he deserves that title) Bartlett. Her website seems unaware of peak oil.

From the insurance trade press:
Oil Producers Scramble for Coverage

Insurance premiums for GOM offshore and onshore oil production and refinery facilities will go up 200% to 400% at their July 1 renewals.  Capacity is very much restricted:  in this instance--underwriters are able to assume the risk of loss for the values that are out there for a single event, but for more than one event the limits will be exhausted.

I guess for the major oil companies, self-insurance is an option, since they do have some spare cash sitting around.  On the other hand the values involved at off-shore platforms and refinery facilities are enormous.

Predictable. It will be interesting to see the effects of producers' risk assessment in what production and exploration they continue with in the GoM. If the 2006 hurricane season is as bad as 2005's maybe the GoM will become non-viable for new production.
The water temp in the GoM at Pensacola is now 84.2 - HIGHER than the average temperature for June. Can we declare it hurricane season a month and a half early?

It does seem to be a bit of a large coincidence that the world hubbert peak and global warming starting to slam us seem to be coming down at the same time. And both much earlier than many people thought.

Oh I don't know - on a geologic time scale we've essentially released 50% of the stored CO2 from millions of years of plant growth instantaneously.  So we used it up, and the climate started to change at the same time.  No coincidence to me.  

Oh, I forgot - it's just a theory, and we need to study it more before we think about acting!

I wish folks would post their references when they make absolute statements.
According to this map Pensecola would appear as bright red, when the map shows
blue and 72F. Here at TOD we admire accurate data.
This is the web link that ryvr is referring to :-

He mentioned the web page a few days ago, and I took a bookmark of it. He is now wrong. As of Saturday 22nd April it is 85.1 F, i.e. above an average July temperature, not June. I use another web site for sea surface temperatures, but like yours it is large scale :-

I expect that the colors on the maps are more accurate than the temperature posted. The temperature is an outlier and that makes me suspicious. Figure the color map is 22 degrees celsius, so that's 71.6 not 85 degrees fahrenheit. It's not so far out of whack. Still a few more degrees to go before the hurricanes start.
Water temp at the beach can be very different than those out of sight of shore. Shallow water heats up faster than deep water due to the lower specific heat of sand and rock.
Along the same lines of higher ocean temps earlier in the season, I have some local observations.

April 2006 in the Midwest:

  • Dandelions run amok (usually not until June).
  • Lack of rain (usually not until July).
  • June bugs on my porch (usually in June, hence the name).
  • Several record highs already set for April.

This does not bode well for the summer.
I was window-shopping for sailboats last weekend in the Houston area...the broker mentioned that a sale had fallen through last week because buyer couldn't obtain boat insurance...seems that insurers are pulling out of the area because of the hurricanes.  Not directly relevant, I realize, but germane nevertheless. Wouldn't like to be living on the coast the next 10-20 years...
Holy guacamole.  CNN just ran a story that was like "The End of Suburbia" lite.  They said high gas prices would kill the housing market, because of long commutes.  And that that would result in people losing their jobs.  

It ended with something Kunstler might say: that we could be in big trouble, because our houses are too far out, our cars are too big, and our corporate executives' salaries are too high.

This on Lou Dobbs Tonight, a supposedly business-oriented program...

Actually, Lou Dobbs has become something else than just a business show...railing about "broken borders," the "war on the middle class," etc.  Interesting that his show should pick up on this though--he hasn't mentioned anything like it before.
There's a new populism happening, primarily within the Republican party, I think.  Immigration played into it, and gas prices will too.
Would a return to 55 mph speed limits help?

Would it send a strong message that the people of the USA are 'in it altogether'? Or just create a panic?

What happened last time?

Obviously it would "help" a little, if you mean demand reduction/destruction.  I think 55/45 for cars/trucks would be a good step, though a minor one.

The bigger question is: would Americans accept 55MPH again?  Though I am too young to remember what people were saying about it when 55MPH was implemented, I definately remember all my relatives grumbling about it during the 80s.  But Americans are a good bit crazier and more selfish than they were back then, so this time around I don't think it can be passed before prices empty the roads.

 Yes, the 55 MPH speed limit would reduce consumption. Maybe not a whole lot, but a bit. I can't speak to other vehicles, but my current ride (a BMW Dakar...a single cylinder 650cc bike and my only means of motor transport) functions most efficiently, fuel wise, at the range of 55 to 60 MPH (70 miles to the gallon). If you want to get someplace with the efficient use of fuel, decrease your speed. However, I get the impression that most folks don't care about efficiency, but speed. Alas, there is the rub. At present, I think re-instituting a 55 MPH speed limit, even given the current freak out of the populace over fuel prices, is a non-starter with the vast majority of my fellow citizens. Unfortunately, I think most of the folks in this country have a very strange sense of what 'Rights' they are guarenteed (to cheap gas, to drive as much as they want, as fast as they want, ect, ect...).
  We truly live in very strange and frightening times.

Subkommander Dred

If you live where I live, better drive 75-80 mph or you'll get run over, by massive SUVS, giantic pickup trucks, etc.
Why should I be restricted to the same speed limit as those getting 1/3 the mileage I am?  I'd rather see a rationing program, whereby your fuel cost is increased after the first X gallons per month.
you said it, man.  Those guys ought to be in the SLOW lane.
Sorry so late coming back to this.


  1. A national limit of 55 mph would galvanise the the nation into addressing why there is a problem.
  2. Open up debate on the fuel efficiency issue
3)Get people to question the 'right' to drive gas guzzlers.
4)Although I am no fan of GWB, were I an advisor and suggest this, this (contrarily) may up his ratings:

  • Doing something / looking like a leader for a change.
  • Recognising the problem
  • Trying to ensure that all sections of society retains mobility, rather than rationing by price
  • A by-blow would be a response to carbon emmissions.

If it were me, I would rather go on the telly and do this now, than go on later telling the people not to panic and stop shooting each other in gas lines.

It would be a start. Super tankers turn slowly, but you have to start somewhere.

Kunstler's about to move into the big leagues. His aim is true, he stays on message and the target's moving into range.
Does that mean he will no longer have time to answer my e-mails? :(


The current (May) issue Outside Magazine (no web link yet) has an account of Jim's trip to Dallas, with a minor supporting role by yours truly (Jeffrey Brown).  It's really a pretty funny, and pretty accurate, article.   You haven't lived until you get to spend two hours in a car with JHK driving around a suburban wasteland in search of little pockets of New Urbanism.

I was qouted as saying we had two trillion barrels of oil left.  I assume I must have been talking about crude + condensate + NGL's + GTL + Bitumen + CTL + The Kitchen Sink.

This issue NEEDS a loud, radical voice, and James Kunstler does a superb job.  To me, he is simply top notch, and quite prescient as well.

By the way, I have a question to entertain you folks with.  I fear that Kunstler's prediction of a massive suburban devaluation due to the ramifications of peak oil is going to be right on the mark.  It is just a matter of when.  I am thinking of getting out by the spring of 2008.

Or will that already be too late?

Bedwetters make bad investors, I will buy your house.
I'd say do it now...better a little too early than a little too late. Use this time wisely, there may not be the same opportunities later, grasshopper.
Spring 2008 is probably too late if property price is your criterion, you have probably missed the peak already (dependent on your location). You may be looking at between breakeven compared to now to -50% if you are in the wrong place and things go moderately bad.

That's maybe getting close to serious fuck-up time in other respects, best be prepared to move sooner but the odds are you would be lucky as late as spring 2008.

I'm not sure why you are planning to move two years' hence? Seems a long time horizon. Better to be ready to jump within a year and then delay should things stay stable.

Dude, I read that Outside article and wasn't too impressed.  Kunstler sounded like all he wanted to do was sprinkle gloom and shock on his audience, then bolt for the door when somebody wanted to engage him in a discussion about what's to be done.  Maybe it's a hassle to deal with members of the audience who actually want to do something about the problem at hand, but as any "expert" speaker knows, that's sometimes part of the deal.

I thought he came off as a kind of depressed Hunter S. Thompson figure, but without the drugs.  What fun is that?

You know, I've seen Kunstler on BBC and heard him debate Michael Lynch.  He's...not that good. Repeats stuff directly from book, doesn't have a firm grasp of peak oil facts and stats, can't think on his feet. Even so, he's got the suburbia thing down. Just don't expect him to be a petroleum engineer--you need Simmons, Deffeyes or Heinberg for that.
The last five minutes of End of Suburbia gave me the idea for the Simmons/Kunstler event.  What was remarkable about it was that there were just shades of gray differences between Matt and Jim at the Dallas event.  Matt also said that if we fail to take concrete action to address Peak Oil, Jim Kunstler will have "turned out to be an optimist."
Jim was pretty tired,when a guy tried to pin him down in his detailed plan for rail transportation.  We had just had an hour long joint Q&A with Matt and Jim.
Kunstler is an idiot.

Oil and natural gas are peaking? Good.

Oil and natural gas are fundamental to our lives because they were always cheap and easy to use. As these resources become more expensive due to scarcity, we have an opportunity to use replacements. These replacements vary from country to country but here are the ones in the country I know best, the USA:

Biomass-based Plastics and Fibers
Natureworks LLC is already producing 126,000 tons of 100% corn-based plastic in Blair, Nebraska. Production started in 1997, before the price of oil started to spike and now it is even more profitable. The plastic can be molded into cups, plates, forks etc. and has the added benefit of degrading completely in compost in 45 days. Another division of the company turns the plastic into clothes, pillows, mattresses etc. ADM has partnered with Metabolix to develop PHA Natural Plastics and Dupont brought their Sorona product line to market.  

Vehicle Fuel
Ethanol works as a fuel mixed with gas in all car engines at a level of 10-20% and for some engines at a level of 85%. The only added equipment for the 85%-capable engine is a fuel sensor and different fuel lines and gaskets. These costs less than $200. Ethanol already displaces ~3% of gas in the US but this can easily double every few years. In the US, we don't have to displace 100% of our gas right away anyway. We are still one of the world's largest oil producers, we just need to match production declines. You say it is heavily subsidized? So are oil and gas, the difference is ethanol is getting cheaper to make and oil and gas are getting more expensive. You say that oil is necessary to make the corn to make the ethanol? Well why not use grass or willow that don't need fertilizer. Or make the fertilizer from coal.
Speaking of coal, in North America there is an estimated 300 years worth of coal to make diesel using the Fischer-Tropsch process. Obviously, if we depended solely on coal, it would get used up in less than 300 years, but we only need to mitigate decreasing oil production. Even without investing the huge amounts of R+D resources that the petroleum industry has done since 1859, 1 ton of coal can produce 1.5 barrels of diesel at a cost of less than $1/gallon.

Even better, the cabon dioxide byproduct can be sequestered like at the Great Plains Synfuels Plant in North Dakota

Electricity and Heat
Coal and nuclear already produce most electricity in the US so this is not a problem. Even so, it is interesting to see that solar is booming and wind produces electricity at less than 4 cents a kilowatt hour. If they receive the same R+D that coal and nuclear have received these may be significant additive sources of energy in the future.

Many Other Technologies and Ideas Ready for Implementation
Don't forget about using abandoned oil wells for geothermal energy.
We will also save electricity using solid state lighting that Cree and Color Kinetics already produce. Biodiesel is another commercially available automobile fuel gaining acceptance. Working from home, city living, mass transit, bicycles, mopeds, ethanol-fueled hybrid cars, rail transport and many other technologies and ideas that already exist will become more prevalent.

Is the peaking of oil and natural gas production a crisis or an opportunity?

In the days of steamships, sailboats and the horse and buggy, oil and the engines that burned them were considered alternative. Now these are dominant, but we are already transitioning to the technologies I described above. Mitigating oil and gas depletion will usher in a new era of investment, low unemployment, innovation, environmental stewardship and energy security.

I should sit and fiddle with an ear of corn and figure out how to mold it into plastic... man, that would be some good trading stuff with the neighboring tribes. And I'll bet we can do this without petroleum input too??

Snark aside, don't you think we can save a lot more people from dieoff if we work on biointesive tribal food-raising through composting and other methods, rather than some corn to plastic alchemy? Plastic was a very bad idea in the first place and still is. We need to make food! That is what is going to be missing for billions of people very, very soon!!!

The worldwide obesity problem is a growing epidemic. We are swimming in food. Where is your evidence?
do not feed the troll...hehe
Cough . . . "pump" . . . cough . . . "and" . . . cough . . . "dumper" . . .  cough . . . "alert" . . . sneeze



Re:  Jim Kunstler  
I disagree with your eloquently stated and superbly documented analysis of Jim Kunstler's work. And I might add that Richard Rainwater, who probably has a slightly greater net worth than either you or me and who has a superb, proven track record of making accurate predictions, disagrees with you also.

Re:  Alternative Energy  
The problem is the rate of production as we begin to lose two to four mbpd per year in conventional production.  IMO, we are facing a long period of net energy supply contraction until the rate of growth of alternative energy production is equal to the rate of decline of conventional energy production.

Rate of Production...

Well, we're about to get a bunch of Empty Ford Factories to set up Renewable Mfg works in..  think they'd be convinced that panels are actually selling and they should keep those 40 plants and 30k employees on for some new work?

"Mitigating oil and gas depletion will usher in a new era of investment, low unemployment, innovation, environmental stewardship and energy security."


Either that or a worldwide war that will not end in our lifetimes, investment in all sorts of advanced killing tehchnologies, catastrophic weather events in oil-rich areas all while the polar ice caps melt. Mmmm. . . I supposse the jury's still out on which path we've chosen.

Anyways you got some very nice talking points you've got there. Very well done and professional. Your corporate trainer has taught you  well. Tell me does he use bleach or a rolled up newspaper?



He's got one of those inplanted Fox News chips with the talking points about switch grass and clean-coal technology.

And nucular energy.

Wery good points, Keithster.

Technology is not the problem. We have had adequate technologies to make a successful transition away oil for at least the past forty years. Well then, what are the problems?

  1. Economic dynamics: In other words, how do we get from where we are now to where we will be fifty years from now without depression, hyperinflation, the wiping out of the middle class, and a humongous increase in structural unemployment?

  2. Politics: Because of the shortsightedness of politicians, their servitude to vested special interests, and the rational ignorance of voters, we will find the political process blocking rather than encouraging needed changes.

  3. Social/Cultural/Educational/Media: Most Americans are innumerate and lacking in fundamental critical thinking skills. They will seek scapegoats, take more drugs, riot, and watch more porn and Fox News before they transform their lives. I am not beating up on Americans as such: for 2,500 years philosophers have observed that the masses are materialistic asses who cannot or will not achieve wisdom and happiness.
Oil and natural gas are fundamental to our lives because they were always cheap and easy to use. As these resources become more expensive due to scarcity, we have an opportunity to use replacements. These replacements vary from country to country but here are the ones in the country I know best, the USA:

Yet both oil and natural gas are major inputs into the ethanol process. Almost every ethanol plant in the U.S. is heavily dependent upon natural gas. As it becomes more expensive, so does ethanol. Switch to coal, you say? That will take capital and time, and will mean ethanol loses its "green" distinction. I imagine there will be even more people coming out against ethanol when it helps accelerate global warming.

Ethanol already displaces ~3% of gas in the US but this can easily double every few years.

I checked the link, and didn't see the calculations. Can you reproduce them here? First of all, at 4 billion gallons a year, that is 1.85% of the energy value of our annual gasoline consumption. Furthermore, a tremendous amount of natural gas was consumed in the making of ethanol. As I showed in this essay:

It takes 6 gallons of ethanol to net the energy content in 1 gallon of gasoline because of all the energy lost in making it. Similar calculations have shown the same:

So, in reality, 4 billion gallons of ethanol nets to about creation of the energy value of 0.5% of our annual gasoline consumption. Furthermore, if we used the entire ethanol crop for ethanol, it could displace about 6% of our nation's gasoline consumption:

You say it is heavily subsidized? So are oil and gas, the difference is ethanol is getting cheaper to make and oil and gas are getting more expensive

If oil and gas are subsidized, then those subsidies benefit ethanol as well. Ethanol benefits from direct subsidies and corn subsidies also. I have calculated that ethanol is subsidized at the rate of $4.00 to displace 1 gallon of gasoline. The zfacts post above says it is over $7.87 when the corn subsidies are added in. No other alternative energy source comes close to this level of pork.

That's probably enough for now.


Just two quickies.

When oil and gas wells are abandoned, they are plugged (pour concrete down them).  So they cannot be used for geotehrmal purposes later.  Any new abandonments will produce low temp hot wtaer.  Good if you have a farmhouse near by in a colder climate, there are no groundwater issues, etc.  Otherwise, useless.

In 2004, 94.5% of new powerplants in the US were natural gas fired.  Been that way for a decade.  Marginal source of elelctricity about everywhere in US is NG.  It will take well over a decade to build enough coal fired plants to offset the current NG fired electricity plants, even with normal conservation steps.

VERY optimistic timeline has first new nuke in US (Anna Virginia owned by Dominion) in 2014 at earliest.  Enough nukes to make a difference?  2020 is too early IMHO.

LEDs bulbs ?  I have a couple of 1 watt ones (night lights, outdoor near my door, etc.)  Compact fluorescents do better at about 3 watts (more light, $4 vs. $36/bulb).

I also use LEDs in my car (never burn out, less drag on alternator & battery > better fuel efficiency & lower repair bills).

See for house & auto (some new ones coming as well, a 3 watt red tail light LED)

Has avocado been blessed, Batman? I am curious how it was presented (since I'm not in USA): was it a 30 second sequence of soundbites or did it spend a few minutes and superficially explore the issues? Actually I would say that business is ahead of the media and population on this, though that is saying little. Most mention of oil prices and its implications in UK are heard in business and finance related programs and slots.
Has anyone recently considered the near PERFECT solar power?

Plants. All around us. They efficiently use the energy of the sun to grow food for us to eat, material for clothes and shelter, and just about everything we need.

Humans came up with a very bad misconception centuries back that our "technology" could improve upon nature. The reality is we are nature and everything we need is there.

Alternative fuels? Yep! Join and sing around the campfire in rejoice that they are all around us. Just remember that hooking wires up to them is the first step to destroying our humanity.

I'm still looking for that plant that grows the 60" plasma screen tvs.
Somehow the latest gas prices still don't seem that impressive to me. Maybe it helps that I hardly ever drive. But I was wondering how the prices compare in inflation adjusted terms. A quick google search came up with the following; not sure how accurate it is, but it is interesting to see that the prices of the past 20 years (excluding the last couple) were unusually low. From the late 40's to the late 70's a gallon (U.S.) was around $2.00. So the latest prices are higher, but not all that much higher.

Though I guess another way to put it is, we're pretty close to an all-time high right about now.

What does that graph look like if you can account for hidden costs, subsidies on top of the pump price?  I don't know the history or the economics enough to gather how much that factoring has shifted over the century, but that 9/05 $3.03 is worth a little discussion, isn't it?


I'd be interested in the price of gas in terms of the median hourly wage.  Oil/gasoline/consumer/commodities inflation are interrelated and mutually reinforcing.  How is the average person's buying power holding up? (how fast is it decreasing?).
Talking head on Fox news Oreilly factor saying that gasoline prices will hit $5 a gallon within the next 45 days. Sorry i have no link to give, (even after searching foxnews site for a reference)  i was only watching the telly and overheard the conversation about oil and gas. The premise was about How much will it have to rise for the public to start reducing demand? $5, ouch!
I guess the suburbs are really dead, they just don't know it yet!
well, we can only hope...
Our local community college here in south suburban Dallas held an Earth Day event this morning in conjunction with three of the suburban school districts in its service area.

More than 200 students participated; given that this was the first such event, that's not bad.

Speakers included someone from the Dallas office of the EPA, a homebuilder who builds all the way up to "zero energy" homes and a company that does home energy usage audits.

I'll be doing my part by giving it sufficient play in my newspaper next week.