The first weekend thread

Well a couple of us are still trying to find a gas station that's full, so 'til we get back to the office  . . . . (grin, not really).
Am I first?

Mark my words: This is not the peak. It is a good sneak preview of what the peak will be like, though. That is the essay I am working on now.


I see today as early post-Peak Light Sweet crude.  Even with a surplus (yes, shut in production) of Heavy Sour crude, we are having "problems".

Extrapolate to post-Peak Oil (all types), not pretty.

Extrapolate to post-Peak Oil (all types), not pretty.

That's really the important message here. I believe prices will come back down, but in the long run, escalating prices are going to be the reality. It would be nice if we could convince politicians to start preparing for that day now. My fear is that oil prices will come back down, and this is all forgotten about by the politicians until prices go up again and never come back down. I just hope that time isn't already upon us, but I don't believe it is.


RR, sorry if i'm pre-empting your essay but,

i) by come back down, are you talking about $55, or more like $40?

ii) When you say you suspect oil prices will come back down, are you suggesting supply will outpace demand growth, or that high price will surpress demand long enough for a temporary respite, both, or other?

iii) and for the sake of discussion, i'd be interested in your take on distant month, say Dec 2012 prices. If the front month contract falls, what will happen to the distant contracts, already pushing $70?

I made a comment at work after oil crossed $50 that we would never see oil drop below $50 nor gas drop below $2.00 ever again. Nobody believed me. At that time, I was of the mind that a peak was imminent. I talked to a lot of people within my company and within the industry to find their take on the matter. For the most part, nobody was concerned at all about Peak Oil. I asked everyone why. I even questioned my CEO about it, suggesting that some moves into biofuels might be prudent. Some just said they weren't concerned because people have wrongly been predicting peak oil forever. But some were pretty informed about the situation. Part of the problem is that I am working with some information that I can't share. I have a presentation from the chief economist of my company that helped convince me that we are not at peak, but peak could happen within 10 years. I still believe this is true.

I don't think oil will correct down to $40, but I think it will come back off of $75. There is a bit of a bubble there, in my opinion. You have people throwing money at oil who really don't know the first thing about the market, except "Peak Oil is here and it's going to $200." I have to say, though, that market psychology is a hard thing to pin down. I was calling for a top in tech stocks a good 20% before the top. I know people that were wiped out by shorting too soon. The thinking was correct, but the timing was too early. I guess I wouldn't be stunned to see oil run up further, but I don't believe the market fundamentals support the move. You also have to be careful of motives. If I have a billion dollars invested in oil futures, it is in my financial best interest to create as much panic as possible. Some people are sincere, and some have financial motives.

I think there will be some demand destruction at these prices. I think the leadership in Iran will continue to say provocative things every time the price starts to dip, because they are making a lot of money because of the fear they are generating. I think some new projects are going to be completed to bring more supplies online, and more refineries are going to finish up projects to process heavy crudes. The two refineries still down in the gulf will come back online, and they will start pulling the crude they need to run their refineries.

I think the distant contracts will come down as well, but I think by the time we get to 2012, oil will be back above where it is now - and maybe way above where it is now. The supply/demand situation is going to remain tight due to growth in China and India. To me, that is the real story right now, which is giving us a very realistic preview of what the beginning of Peak Oil will look like.

Like I said, I have an essay that I am working on. I am also trying to finish up an article on Peak Oil for I am writing that article from a completely objective view point (here is what the optimistics believe, and here is what the pessimists believe). I need to finish that first, and then I will work on this "Sneak Preview" essay. I also better work in some time for wife and kids, because I have been glued to the computer a lot lately. :)



Right on with the right on! I think you are spot on. We are going to see, starting about 2009 an up tick in production, modest, that will continue for a bit and the energy equation will be rearranged (tar sands, coal, etc.). All these blocks will be rearranged.

The wild cards will be war and GHGs and what we do about them. Will the MSM talk about the latter only on Earth Day?  

I think the leadership in Iran will continue to say provocative things every time the price starts to dip, because they are making a lot of money because of the fear they are generating.

There are reports that Iran has agreed to have uranium enrichment performed for it on Russian territory. If it is correct that there is a $10 -$15 fear premium in the price then this development may take us back to $60 a bbl but it may not correct the short term problems of petrol availability. Imagine the screams in that case: oil goes down yet a gallon of gas stays high.

The provocative Iranian comments are targeted at building support with Shia youth throughout the middle east. These would be Iranian foot soldiers if a conflict occurred. This strategy is working and is creating concern for internal unrest in other countries with Shia minorities.

I don't think that the OPEC nations will look kindly on a price drop. At some point they have to ask: why are we selling our single non-renewable asset at a price that helps the west when we could sell the same asset at a price that better benefits us? Two facts support this view. The first is that there was no apparent negative impact on the consuming economies from the recent high prices. The second is that the high prices have resulted in a flood of money and there is a lack of secure investment outlets for this money given the questions raised over stability of the US dollar.

If the price does correct, I would expect an OPEC decision to curtail production.
The reports have just been denied.


In Moscow, a senior Iranian diplomat played down a radio report that Tehran had a "basic agreement" with Moscow to enrich uranium in Russia and said no new deal had been struck.

Earlier on Saturday Iranian state radio had quoted Iran's ambassador to the IAEA Ali-Asghar Soltanieh as saying only a few technical, legal and financial issues must be ironed out on a joint enrichment project with Russia.

But speaking to Reuters in Moscow, where Iranian officials have held talks with Russian and European counterparts on the nuclear issue, Soltanieh said there had been no new progress on the enrichment talks.

"Of course with the initiative of our Russian friends there have been some discussions with our European friends, but that is all I can say at this stage," he said. "There is no new agreement. This is the principle agreement we have had before."

Russia has offered to enrich uranium for Iran to allay concerns that Tehran could use domestically produced enriched uranium to make nuclear bombs.

But progress on the deal has been hindered by Iran's refusal to bow to international demands that it halt all home-grown enrichment work.

A "basic agreement" on enrichment with Russia was previously announced by Iran in February but talks subsequently appeared to stall.

Soltanieh reiterated Iran's position that its case did not merit Security Council involvement.

"We are appealing to the international community not (to) let this go along the avenue to confrontation," he told Reuters.

"I advise that, rather than deteriorating the situation, let's find a ways and a means to let the IAEA do its own job and (for) Iran (to) continue its cooperation," he said.

I will take a shot at defining my idea that this is peak.

The amount of oil (in the sense of liquid fossil fuels in today's infrastructure) in terms of energy provided/availability for non-oil producers will essentially be in decline from this point, and will never increase, regardless of the effort thrown into it. In fact, this effort will mark one of the major drivers of the downward trend - more energy used for less energy returned is a pithy way to look at my personal understanding of peak.

Notice, this does not include facts in the rigorous sense of projects coming on-line, depletion rates, or future developments (would humanity be stupid enough to keep using fossil fuels after clear evidence of climate change - are we smarter than yeast?).

It does include various disparate elements in a wide view - increasing geostrategic positioning, leading to a decrease in oil available for other uses, for example, or a focus on increased infrastructure being built to keep up with inevitable production declines. Or a mad scramble to keep oil flowing, regardless of the costs (look at the various jet fuel shortages in the U.S. and England to see how a shortage rapidly leads to inefficiencies like trucking jet fuel instead of using a pipeline). Or more ominously, end games involving destruction of oil facilities (see Nigeria, or Iraq).

This displacement means less oil available for what today is considered normal.

We are at peak, regardless of whether production moves up a touch, bumps along, or has started to inevitably slide down. Also regardless of how much fuel costs.

And no, I don't have anything backing it up but an opinion that from roughly this point, we go down the slope. We will never have as much energy available from oil as now, broadly enough defined ('now' is a few months, not a few years). Everything from this point will be a game of musical chairs, and though how long the music plays between chairs being taken away is open, all the players seem to have understood the basic rules.

Of course, if you read something from company sources about abiotic oil, or secret Nazi plans discovered in an attic, or that overlooked Soviet secret field with 68GB URR, then I guess my opinion was wrong.

And if we as a species are dumb enough to use climate change to take advantage of finally exploiting the fossil fuels around both Poles, then we deserve what happens to us.

I think the sense of infinite possibilities is most likely to be at peak, as there is nothing blocking our view in any direction.

Yes, but it will be musical chairs with guns.
Of course, if you read something from company sources about abiotic oil, or secret Nazi plans discovered in an attic, or that overlooked Soviet secret field with 68GB URR, then I guess my opinion was wrong.

Nothing like that. More of a survey of country by country reserves, projects to bring those reserves on line (including some that are in the pipeline and haven't been announced), projects that are timed to come online to meet demand at a specific planned time, pipeline and refinery expansion projects, a refinery by refinery analysis of where the crude supplies will come from, etc. That and some other stuff I have read leads me to believe that we will have a few more upward moves in production, but the potential for a peak within 10 years is still pretty good. It is just hard to see 10 years in the future.

However, my position shouldn't be regarded as suggesting we don't have to worry about anything yet. We certainly need to be taking steps NOW in preparation. As Stuart Staniford recently said, "Our positions may not be that far apart." Believe me, they are not. I take Peak Oil very seriously, and and I very interesting in knowing when it will take place.


It really does not matter much which year will later be identified as "The" peak.

IMO, you're guestimate of depletion rates is too low, but I want to emphasize that in terms of what needs to be done, it matters diddly squat whether peak was last year--or will be in 2011.

Why does the exact peak matter? I can see that as an intellectual puzzle it is interesting question, but in terms of policy or our personal responses, what difference does it make? Any at all? Some? A very little bit?

Here is why I think it matters. If everyone calls for a peak this year, and production increases, what do you think the public is going to do the next time everyone calls for a peak? What I worry about is that premature calls of peak will cause the public to ignore it when it is very clear that a peak is imminent.

You are correct, in that it won't matter much if peak is 3 years from now and people are calling for a peak this year. But if the peak is really 10 years away, and this is apparent in 3 years, we have some time to start preparing. But if we start warning people in 3 years, it is going to be hard to get their attention when they say "Didn't you call for a peak in 2006?" That's already happening to Deffeyes and Campbell. A lot of people have stopped taking them seriously.


Good points!

However, I think we should not obsess on "The" peak (which in a post a couple months ago or more I pointed out was profoundly ambiguous) and instead focus on constructive responses, as both you and, for example, Alan do.

In other words, I do not like to see intellectual and emotional energy going into less important issues at the cost of very pressing practical issues.

For example, the question of whether biodiesel has much greater potential than ethanol (which you believe) is both urgent and important. You may be correct on this issue, you may not be correct--but clearly the development of alternative fuels from various sources is something we should focus on with great intensity. And what I have found is that when I focus on one problem at length (e.g. "When is the peak?"), then I have less time and motivation and urgency and resources to pursue other issues.


I know someone who left the oil business for the environmental business, and is now seeing their business pulled back toward biofuels.  (Amusingly client execs are happy about their biofuel intiatives, even when they don't actually know which biofuel they are doing!)

I'd say there is some danger from a pendulum swing, but on the other hand, this is the "repsonse" we wanted.  Things are moving.

So far, the peak has been December 2005, I don't know that this will hold, but Deffeyes hasn't really been proven wrong yet.
But he has called it wrong in the past:

The fact is that he has been lucky so far that 3 refineries were down in the first quarter and the Nigerian situation flared up, or his December prediction would already be toast.


So far, Angola, Brazil, the Caspian and the Canadian oil sands are coming through as planned. If that trend holds up, only geopolitical disaster will give us a peak within the next two years.
After that though, the numbers get worse and worse. Unless you're ready to bet the farm on Saudi promises.
It's not just what comes on - it's what goes. Kuwait failed in increasing Burgan, Norway, Great Britain are seeing increasing losses, Russia seems to have gone flat, and North Slope production has resumed its decline. Exxon had it's endeavors come on about as planned - according to plans should be up 1mbpd from 2000, but oops- their net shows a production decline. I don't think the oil sands are coming as planned, my last read was that they had flattend out also due to a variety of problems such as natural gas availability.
He and others like Campbell - I basically agree. That's why I believe in playing it safe. I do think that the paradigm is changing with the super-giants all entering decline about now - my personal opinion. I think those (including the above and people like Yergin) who make blatantly wrong predictions shoud frankly own up to this, then try to learn from their mistakes rather than moving ahead as though nothing had happend to challenge their model. There is also a precision issue - I would consider anyone who calls it within plus or minus 2 years as "spot on."

I understand that non-geological factors are reducing production now, but this is in fact all a piece of the equation that I am considering. I agree that Nigeria made a big difference. As I have stated before, it is only because of the persistence and growth of these factors in the face of increasing decline numbers that I think we could be at peak. As a corollary, if all suddenly became blue sky, I'm sure we'd see a production rise for awhile. I'm not so persuaded that the refinery situation changed the production figures that much.

A straightforward question then, Robert - what will it take for you personally to admit that peak has occurred? 5mbd drop? 30mbpd? TEOTWAWKI?

The IOCs have a horrid track record regarding peak around individual fields that have actually peaked. Why should global peak be better from them? Why should I now believe the same people who were wrong about the lower-48, the North Sea and other locations that turned out to have peaked and headed downward ever after?

Even if you really are relying on internal corporate documents, why should they be any more correct than Exxon's past mistakes which were clearly far too optimistic? Stuart did a bangup job showing how decline was wrecking ExxonMobil's planned increases in production over the last 6 years. Why should I believe they (or your company) are doing any better handling declines now?

In short, why should I believe your sources given the past history of the IOCs, which is arguably even worse than Campbell and Deffeyes?

A straightforward question then, Robert - what will it take for you personally to admit that peak has occurred? 5mbd drop? 30mbpd? TEOTWAWKI?

Well, right now all we have is a bit of a plateau, that wouldn't even be a plateau if you added Nigeria and the GOM back in. We have even seen flat production for a solid year before it spiked up again.

I have made my case before. I don't think we are at peak, because there is oil available that is not being sold. There is shut-in production. There is a lot of heavy oil still available. Oil inventories are at 8 year highs, and until last week had been increasing week after week. These things are not indicative of a production peak. What I see is a recent plateau, and very good reasons that explain it.

What it will take to convince me that we peaked is a couple of years of clearly declining production. If you look at production graphs from previous years, we have seen a year on year production decline before. So far, we don't even have a single year of declining production in the current case.


Yes RR, as the production vs price graph that you posted showed, the previous declines in production were only AFTER a decline in price. This time the decline is during a enormous rise in price.
Current plateau (not yet decline)
The other side of the coin, which I have also mentioned, is that production is brought online to meet demand. Producers don't want to have too much excess production brought online at one time or it will depress prices. When these projects were being planned, the price of oil was not forecast to be $75. Now that it is, they can't turn production up on a dime.

That is a key to my argument. A combination of factors explain the plateau. If not for those factors, production would have continued to grow, along with demand, and new production would continue to be brought online as needed. Producers miscalculated their economics, and certainly didn't foresee the geopolitical factors and the hurricane doing so much damage. So they don't have the production ready to go yet, to take advantage of prices. It will come online soon enough. You will see new production records set this year, barring severe demand destruction or war with Iran.


'You will see new production records set this year, barring severe demand destruction or war with Iran.'

I could add 3 or 4 additional things which could prevent new production records (any charismatic leader of a major oil producing economy dying in spectacular fashion, more hurricanes/typhoons/monsoons in production regions, any group of terrorists with global reach hitting major facilities - Chechens in Russia, for example, etc.). At this point, the knife edge has been reached - that is also a definition of peak. Everything has to work out perfectly to maintain balance. The planning has to essentially remove equally likely bad results, such as a depletion rate of 7%, not 5%? - the disclaimer 'previous results in oil production do predict future results' is likely more accurate than saying the past results have nothing to do with future results. This is what makes peak so fascinating - reality finally intrudes on all our dearly held concepts and beliefs.

Personally, this is what makes Carter so fascinating a figure to me - first, he attempted to convey a reality out of sync with the political system he was in, and then seeing that he was unable to change it, he turned his back on moral solutions and returned to a policy (guns for oil - Iraq War I was Carter's planning, not Bush's) which America had no problem following. I also suspect, he knew that his failure would lead to long tem disaster, which also tends to motivates his seemingly sincere Christian life. Sort of like Begin, post-Lebanon invasion - sometimes, leaders actually know they have failed morally. Luckily, American is currently in the hands of people who never make mistakes, least of all in their own eyes, so we don't have to worry about their atonement at all.

Perhaps the trick is to declare peak consumption. (something Carter considered). We pick a number and say not more.

Then find the courage to defend it with intelligent tax and industrial policy. The drama of peak production is lessened. So is the economic impact.

What I worry about is that premature calls of peak will cause the public to ignore it when it is very clear that a peak is imminent.

I don't think a peak will ever be clearly imminent.  I suspect Hirsch is right: we won't see it coming.  We'll be years past peak before it's "very clear" that that was indeed the peak.

At first it looks like a temporary drop.  Nothing to worry about; just labor problems, bad weather, technical difficulties.  We'll be back on track next year.  Only they aren't.  Nor the next year, or the year after.  Then they start to realize.

Even if the peak is this year, I don't expect it to be widely admitted until 2010 or later.  For several years, we'll hope that new production will come online, political hotspots will calm, hurricane damage will be repaired.  Until it becomes clear that even if it happens, it won't be enough to offset the declines of the aging giants.

When we see a shortfall of gasoline like we have for the last few week where gasoline supplies have dropped 5Mb/wk is this a reflection of the MTBE shortage or are these numbers for gasoline without the additives?
Do the plans include the sinking of a VLCC in the Straights of Hormuz in 2007, Chavez's pre-emptive invasion of Columbia in 2008, or the 'Triple Strike' hurricanes of 2009?

To put it a touch differently - does Piper Alpha explode, or does a major pipeline break starve downstream facilities?

At peak, these questions become all important, since there is no way to replace the lost capacity at that point. The downhill slope is pretty much one way at that point.

This is apart from any question of depletion rates, likely higher than commonly believed - certainly, most known facts involving modern large oil field management/production currently available point to much more rapid fall off than a couple of percent.

I do understand the point about being too confident though - my definition is fuzzy enough to withstand any precise attack, most likely.

Peak means less from now on, and that is beginning to occur, in a number of no longer so subtle forms, in my opinion. This is what peak means to me - the excuses and beliefs now have to deal with reality, not merely other excuses or beliefs.

The Indonesians are now living in a peak world in terms of oil. The Italians live in a peak world now too, though in their case, it is NG, not oil, and they may be able to alleviate it in the future.

Peak is not something which will be the same for everyone everywhere, which also makes this discussion difficult.

But in my view, peak oil is now, not 5 or 10 years later.

You may certainly be correct. I'm not declaring one way or another but think peak is possible now primarily because of the ongoing political and climatic factors truncating the peak.

I am certain, however, that however good your chief economist is, s/he does not know the facts in terms of decline rates & timing to expect with the world's greatest fields - why?- because no one does. For this reason, no matter how good their work, they don't have a read on 50% of the equation and it's pretty dangerous being certain right now.

There's an altruistic reason for some highly placed people to create a panic about peak oil now: in order to create political pressure to start the switch to alternatives now.  
Suppose that a man predicts that tommorrow his mother-in-law will die. Every day he makes the same prediction. Because he has repeatedly been wrong some people, let's say investment brokers, come to the conclusion that his mother-in-law will live at least another 50 years and loan her a million bucks to be paid back through future social security checks. They say technological improvements will keep her alive perhaps by using abiotic snake oil or cold fusion cream. They cite the story of the 124 year old French woman as proof she won't die soon. The next day she dies and the brokers who risked somebody else's money cry foul. Nobody told them she was a chain smoking, drunken, high stakes poker player. Except her son-in-law who was always wrong.
To repeat my earlier post in the danger to your career of always crying wolf...
A senior and highly respected British Intelligence analyst had retired after fifty years yeoman service and was attending his fortieth Eton reunion. His schoolmate asked him why he had been so successfull at MI5.
He answered "I was asked every peace time year of my career if the Germans would attack in the next twelve months. I always answered no and was wrong only twice. I was correct ninety six percent of the time and I clearly had a better record than anyone else so I always got promoted!"
Ask me an oil question, and I talk about export capacity.

IMO, oil prices are unlikely, without a sufficiently severe recesssion/depression in the short term, to fall back down again--because of a lack of sufficient net export capacity.   I think that the current run up in prices is being primarily driven by a bidding war between importers scrambling for declining net exports.

Just look at the big four--Saudi Arabia and Russia on the exporting side (SAR) and the US and China on the importing side (USC).   The big fields in all four countries are old. Consumption is increasing in all four countries.   What SAR can, or will, export is almost certainly declining.  What USC wants to import is increasing.  In any case, note that if SAR were the sole source of imports for USC, it looks like they would be incapable of meeting the demand, and in fact it looks like USC may consume more imports than the net exports from the top four net oil exporting countries combined.

I agree with Alan that we are at or past Light, Sweet Peak.  However, Heavy, Sour Peak may not be that far behind, with Cantarell declining at up to 40% per year.  

2004 Top Net Oil Exporters:

Fact Sheet: United States, China Pursuing Common Goals in Economic Relations
(Priority topic for April 20 meeting of President Bush, Chinese President Hu) (1260)


China is the world's second-largest energy consumer after the United States, although per capita energy consumption is still only one-eighth that of the United States. China's energy consumption is expected to continue growing, with some experts predicting it will double by 2020.

Coal is China's main energy resource, and represents approximately 70% of its energy consumption.

China became a net importer of oil in 1993, after years of growth in consumption and stagnant production. In 2004, oil imports surged to 6.5 million barrels per day; that makes China the world's second largest petroleum consumer behind the U.S. (we use about 20 million barrels per day). The U.S. Energy Information Administration projects China's oil demand will reach 14.2 million bbl/d by 2025, with net imports of 10.9 million bbl/day. As China has grown more dependent on imported oil, its concerns over energy security and stability have become closely linked with those of the West

Brent Blend and West Texas Intermediate(we've got the full version here at TOD :D ) had always been similarly priced, with WTI generally trading for a few dollars more than Brent.

Something strange happened a couple months ago; Brent started to cost more than WTI; one or two dollars more.  Brent didn't suddenly get lighter or sweeter.  Could that reflect increased oil demand in Europe and the first bidding war?  That preceded oil prices' break out of their recent trading range.

This was my thought as well.  And it hasn't been a couple of months.  The switch with IPE and Brent leading WTI is recent.  I have wondered about this.  It seems resonable that Europe would want to buy from the European markets and the US would want to take advantage of the WTI oil first because of shipping costs.  Is the US buying more agressively from IPE?  It is interesting because Nymex up until yesterday matched WTI as it usually does, but now it matches the IPE price.  Nymex is the typically reported price.  How is this (Nymex)price determined?  What do you make of these shifts we're seeing?
You have certainly committed yourself and opened with a bit of a provocative declaration.  We'll see.
I just saw an expert on CNN saying that the problem is people worrying about peak oil.  All this talk about things getting worse in the future is driving up prices.  Quit talking about peak oil, and prices will go back down.

Nope, no peak here, move along, folks, nothing to see...

"Mark my words" is a funny phrase for this day and age.  It brings to mind quill pens and parchment ;-).  I suppose the modern equivalent would be "Bookmark this page" ... but that doesn't carry quite the same weight. <chuckle>

Mainly, I approve of any fearless prediction.

While this still feels like peak, I'm not sure yet.  I do think, on a personal and private level, that it would be just plain funny if Ken Deffeyes called it exactly, and the peak was this past December.

But obviously it would be sad for the great masses, caught flat footed with their new SUV, staring peak oil in the teeth.

We are going to make a fortune thanks to peak metals.  Peak Peak Hooray!
The sudden recent runnup is copper prices worries me. Copper is easy to store, much easier than oil. Is oil going up because of a shortage, or because it's the start of the flight from the dollar?
High gasoline prices at three dollars is bad enough. If the dollar goes completely down the toilet, you'll find out what high gasoline prices are.
Recent movement in a variety of commodity prices is already shockingly volatile.  Silver dropped 14% in a single day and still ended up 0.5% on the week.

I'm not sure the question you pose is really an either/or, and there's a strong argument to be made that excess liquidity is simply piling into anything with a risk premium.  See The Stir-Fried World by Andy Xie, Morgan Stanley's second pessimist behind the infamous Steve Roach:

This is part of my hesitation in crying Peak just yet.

I think you nailed it here wkwillis. There has to
be a flight going on from worthless dollars to hard
commodities that will have a real value, i.e. gold,
silver, copper, etc. Perhaps it's more than a flight
from the dollar; a flight from all paper currencies,
due to a fear that a dollar conflagration will consume
all paper currencies.
We are or very close to peak production Its a rear veiw mirror event and I think we have seen it March 2005. Note Everyone is producing flat out there is NO excess capacity Texas railroad 1972 repeated. Forcasts of increased production back then never accured and they wont this time. The Market is starting to get a whif of the problem. If oil production is down hill from here what should the price realy be???? $100, $200 a barrel??? I think the market still hasent figured it out but its getting there.

One things for sure its going to be an interesting time to be alive.

I am not usually a demonstrative person, but today I was.

I walked 1 mile (each way) from my parents house to their bank on the unused (ever) sidewalks of Phoenix.  While crossing Tatum at the stoplight a bright yellow Hummer was waiting at the red light.  I gave him a thumbs down sign as I walked in front of him or her (windows tinted, hard to see).  A series of honks back.

Did I do any good ?

Other motorists saw me (the odd walker).  The Hummer owner got the idea that owning a Hummer was not that cool (as gas was $2.979/gallon).

Remember the Hummer ad where soccer mom dropped her kid off at school and her precious little boy basked in the status of having been dropped off in a Hummer as the other, larger  boys said "Cool ride" ?

Letting people know that the largest SUVs (Hummer, Escalade, Expedition, Titan, etc.) are uncool is worthwhile.  But what methods are best ?  Handouts in windshield ?  Thumbs down ?
Any ideas ?

How about a bumper sticker on the SUV saying "harpoon me".
Bumper sticker: Your kid served in Iraq, and all I get is 12 miles per gallon.
Go to the propaganda remix website. There are excellent bumper sticker opportunities.

Of course you will need to get agreement with the owner.

Unfortunately, he has not posted anything new since last October, I am wondering if he was 'extraordinairily rendered'.

I'm changing the climate - ask me how!
How about

'One less bike".

I think that $4-5 gas will do just fine in making the Hummer look uncool.  You actually telling the poor owner that he is uncool may result in you not having to worry about PO (because you have just been run over by a 8000 lb machine).

Along those lines, we just had an accident in Pittsburgh where a chipper machine, weighing about the same as a H2, came loose from a truck and plowed into a minivan with a father and his triplets.  Killed the father and 2 of the three children.

Exactly why is it that we think the car culture is so great?

Exactly why is it that we think the car culture is so great?

Who's we?

I'm looking forward to much higher prices. Hopefully fewer people will drive their wretched cages on the same roads I ride my bicycle. Plus I get to laugh at those who drive, knowing that the Oil Price Hammer will pummel the hummer.

Hopefully fewer people will drive their wretched cages on the same roads I ride my bicycle.
Me too. I always ride outside of the door zone which puts me 1/3 of the way into the lane. Some of these a-holes in their monster trucks just buzz me as they barrel down the road in 8,000 lbs of steel.

I'd like to see us become a 2-wheel culture, whether it's a bicycle, moped, or motorcycle.
Yep you ride on the street, Nelson Vails better be your patron saint. Speed is your friend. You have to get very good at sussing out what cars are about to do, the door zone, all that.

That will change a lot when say half the travelers on the street are bicyclists and peds mind you. The biggest problem now as a cyclist is generally you're out there alone, but when there are always others out there cycling or walking and a car driver knows they can't just run you down without lots of eyes seeing, things will mellow a lot.

That being said, I did bike only for about 4-5 months last summer, and once I was back in the groove of riding on the street, I had zero problems while out on my own, but I got into the tutti-frutti jersey crowd and that was by far the most dangerous riding.

I can happily report that in Chicago we now have bicycle traffic (as opposed to occasional individual riders). It's nothing like half, but it's enough to make bicycles appear a normal thing to motorists. Motorists are still careless and blind, but the sort of overt hostility we used to endure is mostly gone. And from time to time you even experience thoughtful considerate reasonable behavior out in traffic.
At the cultural level it's become more accepted to bring bikes indoors for shopping or work, provision is often made for bike parking.
Well, it's far from perfect. It has changed for the better
My GirlFriend can't move closer to work.  3 miles is as close as they have houses to the Cafe on the Interstate Highway, where a Lot of local Farm and Truck drivers eat meals.  Can't bike to work, In the snow.  A motorcycle is not safe to take a 5 year old to day care, or school.  And 3 miles there and back again in the her car is rather cheap.  In her town, Pop.  about 250, There are few jobs paying as high as she is making, if any at all.  

These are the people that Higher gasoline prices are hurting.  The real honest to goodness Rural folk that can't just move to the Big city to get better jobs, because of other issues.  Who wants to give up a Nice unlite sky at night for never seeing a star in the big city.

If I get the house fixed in time, she will move further from work, but not have to pay rent, so there is a trade off.  

Her job is fairly secure, even if the business slacks, her parents own the place.    

Times are just going to get tougher for the little guys, while the Hummer driver can think about not going out to eat 3 times a week, but still drive to work everyday.  

These are the people that Higher gasoline prices are hurting.  The real honest to goodness Rural folk that can't just move to the Big city to get better jobs, because of other issues.

We shouldn't lose site of this. We like to bash the people who commute to work in gas guzzlers, but there are a tremendous number of people out there just trying to live ordinary lives who never dreamed something like this could happen. My parents fall into that category. They are good farming people on limited incomes who are being squeezed hard by gasoline prices. My in-laws are much the same, and still can't understand my explanations for gas pricing (since Bill O-Reilly is telling them otherwise).

Real people are getting hurt, and sadly, this is probably just the tip of the iceberg. The only thing we can do is to provide comfort and advice when we can, and take care of ourselves and our families by making the choices that we can make to mitigate the issue as much as possible.


100% agree. How can we, who are practically obsessive about this issue and still have honest disagreements, expect an average person with lots of other things on their mind to make sense of the peak (or supply/demand) oil issue. They are bombarded by experts who deny the existence of the problem throughout the media and you really can't know what to think or even form your own ideas without an incredible amount of personal research.

In the meantime people pursue the path that seems best for themselves and their families.

I think driving a Hummer when gas prices are high will be an EVEN bigger status symbol and thus won't abate simply because of social pressures.

When the choice is between driving a status symbol and food or smelling bad because the hot water at home is turned off  (thus accruing negative status points that cancel out the "positive" status points of being able to consume conspicuously)  we will see Hummers converted into dog kennels and starter mobile homes.

Dream on - for anyone making $200K a year or more - even $10 gas won't make them park the Hummer - it is just a drop in the bucket for them.
I question how constructive this vein is. Thumbs down, thumbs up for the hybrid driver, and yes this is cute: "Your kid served in Iraq, and all I get is 12 miles per gallon." But do we move the discussion or are we just venting?

Working in construction, I borrow my wife's Prius from time to time and the red-neck/Rush Limbaugh crowd still look at it as a novelty. Last night over beers, one of the guys was telling me (after I asked) that on the highway he might be getting 15-17 mph with his new and very big diesel pick-up. (At least he had the sense to buy a diesel.) If it was Rush's radio show he would say that if you have it, flaunt it.

I am not convinced one way or the other on how we educate the great unwashed on this issue. . . .  Comments?

I assume he has a better chance of using his truck as a truck than an office worker commuting in the same thing.

In general, I think people who use big and/or fast cars as self-branding tools will keep them, until they are spending too much of their work day earning money to feed them.

And the shrewd will look for self-branding opportunities that are also efficient.  I mean, look at the Mini.  It's not percieved as an "efficiency" buy, but it is efficient.  It's harder to think of a truck that is macho and efficient ... but a Harley gets as good mileage (but worse emissions) than my Prius.

I "self brand" with my pristine, low mileage white Mercedes 240D.  I try to keep it waxed and a "head turner".

Just what am I "Self branding" myself as though ?

There you go!  That is an excellent example of a good frugal self-branding choice.  Out here, folks put surfboard racks on their 240D Wagons, just to push the message a little harder ;-)

You are correct - he is a driller and the bed is filled with tools and a big diesel tank to fuel his equipment.

Don't worry about it.  In 5 years it won't matter, everyone will know just about as much as they do now.  Guess I am in a pessimistic mood about it all.  

My little part is I rarely drive now and will keep that up or even decrease my driving.  Though it is a bit to carry roof supplies on my back, or on a bike, guess I will have to drive for some things.   I will make one awful big drive and guzzle an awful lot of gas doing it.  But compared to 2 years ago, it will still be only a months worth of driving.
Except now the cost is about double.

I have told folks, and if they heard me then they heard me, folks are not going to listen till it hurts them.  So let it hurt them some, then when they ask you, you tell them.  Do and tell by your example and let it go, worry about something else, or don't worry at all about it.  

I am currently giving or selling 90% of my junk to someone else.  Storing a few keepsakes and pakcing light and going on.  Look in your closets, if you have not used it in 5 years, do you need it still?  

I'm going to assume this gentleman bought the car on credit/with a loan. Even if he didn't, most like him did. So perhaps asking him in a joking way the following:

  1. You know Bob the more oil you use the higher the price goes which means more money flows to those raghead A-rabs in Iran like Al-Qaeda. I'm thinking maybe I should report you to Homeland Security. After all, =if you're writign a check to the terrorists, I think they have a right to know!

  2. You know Bob some Chinese investors own that bank. Why don't you just submit yourself to the nearest chinese embassy for a full on financial ass-fucking? Be cheaper for you, quicker for them than what you're doing right now.

Think that would work?



Here's something to consider:

Your run-of-the-mill SUV driver doesn't make $200k/year, and those that make $200k/year and drive a hummer, etc. are all banking on the gas prices that existed when they bought the vehicle. Most of these people are not sitting on tons of disposable income. Instead they have pushed themselves to a financial breaking point. High gas prices will force them to abandon the SUV, go broke or both.

Remember: The illusion of financial strength accompanying the hummer is just that, an illusion.

     Of course they're all rich.  Anyone who "gets it" is getting rich off real estate investments.  Don't you know housing prices ALWAYS go up?  San Diego condos for everyone!  Wink, wink, nudge, nudge...
I went out looking for the old "I'm changing the environment- ask me how " bumper sticker that you slap on these freaks auto when they're not looking and came up with this
I think most toders will enjoy it's driving humor
I love it.
"When you fill your gas tank every other day, you're filling your tank with freedom."

Roger that.

This is one aspect of the end of cheap oil which I personally am going to enjoy:  the downgrading of the big-ass-SUV-owning suburbanite to phariah status.  These stupid ugly vehicles are the perfect symbol of America's gluttonous energy habits, and it will be a pleasure to stamp their owners as the selfish roadhogs/gashogs they have always been.  But especially now.
As a bicyclist, I'm most concerned with the tint people put on these big SUVs.  It used to be illegal to tint so much that you can't make out the occupants (and maybe it still is).

When you're riding, you NEED eye contact for saftey, and with these freaking window-tinted SUVs you can't get it.

(I suppose the Hummers tint because they are hiding in there .. I sometimes give them a thumbs-down too.)

I just got back from a 1500 mile road trip (and yes I feel guilty about it) and I tried to count the Hummers I saw on the road but I didn't see any at all.  This was from the Bay Area to Arizona and back.

I did take a Hummer off-road tourist jaunt in Sedona, AZ out of curiosity.  It is pretty cool how it will climb over rocks and stuff.  There was a woman on the trip from Birmingham Michigan who noted this must be why all her neighbors have them.  I think Birmingham must be the home of auto execs.

I didn't have any trouble finding gas, but I did have to be careful.  It was 3.69 for regular in Needles, CA but the next town was 3.19.

The elderly uncle I visited was a 30 year Ford Motors guy.  He was in a group that analyzed the competition.

They got in a Toyota and he called Henry Ford (jr?) to come down and try it.  Right before Ford came down, my uncle started the engine.  Ford didn't realize that the car was running and started it again.

They also got in a VW.  Ford took it out someplace but couldn't figure out how to get it in reverse so he called my uncle at the office.  My uncle was still there and came to show him.   Then he went on and on about putting this as overtime on his timecard.  

Anyway he told Ford that these imports were going to bite him in the butt.  I'm not sure when this all happened but my uncle started at Ford's (as they call it) in 1950.

I saw my first giant GM thing at a local train station just a couple of months ago. Since the streetcar had a few minutes before arrival (KVV has a digital display system to let you know when trains are arriving, in real time, though the system is pretty silly in practice), I walked around the first one I had ever seen unmoving (I had seen another earlier on the A5 Autobahn with NL plates).

I finally decided not to spit on the driver's side of the windshield, but it was a very close thing. In the end, I decided it just wasn't the right sort of behavior for anyone holding themselves to a certain standard. As for spitting on the door handle, well, not that time either.

Those cars are truly a symptom of some form of insanity, I am quite convinced. Luckily, like so much from America these days, they are mainly image, not reality - I'm pretty sure in an accident with a similar sized Mercedes truck, the GM monstrosity will look a lot worse for the wear, especially since SUVs cut a lot of safety standard corners.

Greetings from Japan.  Thanks to everyone for all the excellent analysis on this site - it's extremely educational.

Just saw this on the BBC...

Washington has asked Moscow to reconsider selling Iran anti-aircraft missiles as the crisis over its nuclear programme continues.
What, miss the opportunity to
make some money and perhaps
help a secret ally defend itself
from an agressor?
What really interests me is the question of what the US economy can take in terms of sustained high energy prices.

Have any studies been done into this? What areas of the economy will suffer most and which will suffer first. What are the tell tale signs?

Will we all just blunder blindly into debt trying to maintain our current lifestyle hoping that the prices will come back down because we don't know about peak oil.

Its a near impossible question because it comes down to the choices that we the people make but for me its the most intriguing question.

Will the fast food places be able to keep their $1 menus? Will people cut back on movies?  Will Ford and GM go bankrupt? Will we still go to coffee shops? Will the US government be able to fund the debt from abroad? Will interest rates have to keep rising?

Man that's so hard to say.  Because, US'ians complain and yes, are hocking their attic junk to buy gas now, but there's so much useless stuff that's considered essential. Take for instance TV, hardly anyone uses 'bunny ears' these days, nope, it's cable for $80 a month. Cell phones, another $50 a month and up. $40 haircuts. $20 tee shirts. You can go into a Denny's and spend well over $10 for lunch, or get a Grand Slam for about $5 including coffee, or cook the same thing at home for about $2.

Me: no cell fone, no TV, do my own haircuts, love to buy clothes at thrift stores, eat out a lot but at least know the places to get a good meal for $5 (hint - ethnic) and just spent nearly a grand on a radio. Expensive? Not compared to a cell fone! And I love this thing!

The point is, almost all 'murricans have so, so, far to fall. It's just that there are about two full generations now that have never grown beans or used a washboard.

You make an interesting case.  If Americans ever did start to cut back on those things, the U.S. economy would severely faulter because we're a very heavily "services-based" or "information economy."  Other people consider this a bunch of mutual backscratching, but if we stop scratching each others' backs, monetary velocity slows down and we can end up in a recession.

This would tend to be deflationary rather than inflationary, which would mean Americans would refuse to take on debt at any low, low interest rate, because they're choking on enough of it already and deflation makes debt a very expensive hooker.

The problem is not the velocity of money.

The Really Big Huge (RBH) problem is going to be unemployment.

This unemployment will come in two varieties:

  1. Cyclical, due to the recession that I believe is coming soon.
  2. Much worse and much longer lasting--structural unemployment.

I see no way to avoid high rates of unemployment persisting over many years, because there is no way we are going to get half a million useless lawyers to work on expanding our railway system. So the brokers, bankers, mortgage closers, high-end hair stylists, etc. can become security guards or maybe grocery baggers, but my guess is that few of them will have the intelligence or determination to become bicycle mechanics or roughnecks in the oil fields or miners of coal or tar sands.

Most of the high-paid services provided by people nowadays are luxuries that people will quickly do without to pay for food and rent and gasoline at $5+ per gallon. You think people who are depressed are going to drive to their therapists every week after they lose medical insurance? No way. Look for 100,000+ unemployed clinical psychologists, some of whom might be able to make it as bartenders. Look for more hundreds of thousands of unemployed people in the auto industry and possibly as many unemployed as residential construction crashes. However, most people who work in residential construction could probably also work in mining, other energy or railroad industries, because they have genuine skills and are willing to travel.

When people cannot afford to eat out or travel, there will be devastation in the tourist and hospitality industries. Hotel management? Forget it. Airline pilots? Well, most of them are handy and resourceful types; many can get by as handymen, motorcycle salesmen, etc.

What about growth industries?
How about being a repo man for all those big cars people quit making payments on? How about security guard? Foreclosure specialist? Coal mining, almost for sure.

I do not advise prostitution or pimping as careers for the future, because in hard times the price of women falls dramatically due to increased supply. Illegal drug production and distribution already is a highly competitive industry and probably will become moreso--and possibly much more violent.

Financially strapped state and local governments and school boards probably will have to lay off millions of people. Look for a serious deterioration in already inadequate public services.

I did some calculations in my head at the Board meeting of our small Geotechnical firm last Wednesday and figured the price rise will mean our firm of 35 will spend 6% instead of 4% on fuel this coming year. So it is an impact but no where near the 50-55% we spend on salary for our $2 million a year grossing firm.
Sure, unemployment is obviously the horrible result(and RBH problem), but a slowing in money velocity would probably come first as people begin to spend more and more discretionary income on a disposable commodity.  It's one of my canaries.  I'm thinking more and more that high oil prices combined with our debt load are actually severely deflationary for the U.S. economy rather than inflationary because they represent demand destruction.  Personally, I aspire to be a usurer.

I'm enthralled by Debt Deflation, so I'm biased.  What do you say -- inflation, or deflation?

I've posted this before and probably will again:
Odds against any deflation at all, 10:1
Odds against serious deflation comparable to Great Depression, 50:1

The Federal Reserve System and other central banks have both the power and the will to avoid deflation. By education and tradition they will choose inflation over deflation as a way to mitigate economic downturns.

The only way out of the debt mess we are now in is inflation. Unexpected and rapidly accelerating inflation will wipe out creditors if it is severe or greatly reduce their wealth if it is only in double digits per year. Note the enormously superior influence of the debtor (middle and baby-boomer) class compared to creditors, who are relatively few voters.

"Odds against any deflation at all, 10:1"

Are you using the formal definition of deflation here, a contraction in the money supply?

I'd think a housing market and stock market crash to be more likely than 10:1 against, and I would think that would bring, at face value, a reduction in money supply.

let us assume housing falls to one half of current prices, and that the S&P 500 falls to one-third of its current level as interest rates roughly double.

O.K., what then? Does the Fed sit back and wring its hands as banks and other financial institutions fail by the thousands? No way. They will monetize the debt and bail out the financial institutions, just as the savings and loans were bailed out back in the eighties--at a cost of some hundreds of billions, which we are still paying for in various hidden ways.

There is NO LIMIT WHATSOEVER on the Fed's ability to create money and bail out financial institutions that are failing. For that matter, the Fed has legal authority (which I do not think it has ever used--but it could do so) to lend as much money to almost anybody they feel like lending to. Thus, I believe the law is written so that--if they felt like doing so--they could lend thirty billion to GM and twenty billion to Ford, etc. By tradition, the Fed does not lend to nonfinancial corporations, but they have the legal authority to do so. Also, the Treasury has the legal authority (going back to the Civil War) to print "United States Notes" in place of "Federal Reserve Notes." In other words, unless there has been some change in the law that I am unaware of, the Treasury could legally print up a few trillion ten-dollar bills, have them loaded into FEMA helicopters and sprinkled over the urban rioters to distract them from the liquor stores.

So you are actually saying there will be (brief) deflation, and that it will then be (over) compensated.

You certainly know more about this than I do, but I think I expect a middle line.  I expect FDIC deposits to be covered, but I expect any Ford or GM bail-out to be restrained.  The companies may live, but I don't see the government guaranteeing a lifetime employment for current employees.  We aren't England and GM isn't British Leyland.  The sentiment would be strongly against such a British solution, yes?

BTW, if you get to the helicopters with money stage, then you obviously have had deflation, yes?
My guess is that there will be no deflation whatsoever.

Here is one likely scenario [N.B. NOT a prediction, just a fairly likely type of outcome:
Inflation in 2005   4%
Inflation in 2006   7%
Inflation in 2007  10% along with rapid increase in unemployment due to serious recession
Inflation in 2008  15-20%  Note that 2008 is an election year, and the Fed is exceedingly unlikely to tighten money in a presidential election year

Inflation in 2009  15%-20% as illusion of stable and tolerable inflation along with 15%+ unemployment continues

Somewhere between 2010 and 2012 as exceedingly rapid depletion of major oilfields utterly overwhelms increased output of production developed 2007-2009 TSHTF.

Having read "Fooled by Randomness" and taken it to heart, I now see my fickleness, and lack of commitment to any one scenario, as a strength and not a weakness.

I can see mild inflationary/deflationary scenarios as most likely, and I have least commitment to "disaster movie" scenarios at the extremes.

Right now I've got some real estate equity and mutual funds on the assumption that things will keep going, and some money markets as a hedge that they will not.  The question would be, if I do get a strong signal of looming high inflation, what to dump the money into ... would real estate have crashed hard enough at that point, where would gold and mining stocks be, etc. ...

I believe that the U.S. government as we now know it is likely to survive through the twenty-first century.

What I am advising all my friends and acquaintances to do now is to put money into TIPs, Treasury Inflation Protected Securities. The easiest way to do this is through a mutual fund, such as Vanguard's which has low fees.

Stocks could crash to 20% of current levels within a year or two, and if GM and Ford go bankrupt, that is not going to help investor psychology. Commodities can crash if there is a global economic decline (as seems likely, at some point). Real estate is mostly way way way overpriced at this point and is likely to go down by 50% or more in many markets--even as inflation and interest rates go past 15% going up.

Money-market funds provide no protection at all for capital.

The sad thing is TIPS have performed very poorly lately, just like all bonds.  My real problem with TIPS is that they're tied to the CPI, which I feel is highly likely to (continue to) understate actual inflationary pressures.  Still, you're right that they're better than most anything else.

You can't just tell people to buy a bunch of index puts.  Goldplated tinfoil hat time: what do you think of the ol' bullion?

I think CPI-U works pretty well for someone who is older, and owns their home (and 12 month CDs beat it by a little bit).  It is obviously a bad measure for anyone saving for their first home, or chasing bigger 2nd or 3rd homes up the price curve.

The last few years have been very bad for anyone in a "should I wait or should I buy" position, especially on their first home.

  1. Plot TIPs vs. S&P 500 over the past six or seven years. TIPs win big.
  2. Gold can do again what it did in 1978.
  3. Copper, silver and other metals can also crash in price if there is a severe global economic downturn--as seems fairly likely at some point during the next three years.
Great, I really value your opinions.  Call it a barbarous relic if you will, but humanity seems to have a hard time getting rid of those in most instances.  Wonderful thread guys, real useful to me and I hope others.  Thanks.
     The "barbarous relic(s)" (gold and silver both) have a better and longer track record than fiat currencies.  I believe that they are fast becoming the next bubble, unfortunately.  I have acquired some small amounts, just to retain the value of earned wages, but do NOT enjoy watching their new gains.  I can't believe that at this point, they are driven by fundamentals, unless one subscribes to the fact that they have been manipulated for a long time and are actually just being restored to their fair market value.  Jury's still out on this one.
     Warren Buffet sure likes silver, that is something to consider.  And I can attest from personal experience that the colloidal form is a GREAT antibacterial and antiviral agent.  This idea is coming back in style amongst the main stream medical field as so many bugs are developing resistance to the most common antibiotics.
Gold and silver do better than fiat currencies, except that you can invest the fiat currencies in bonds. While the bonds do get wiped out every hyperinflation (which I expect soon) they also allow you to use the dividend checks to invest in stocks, property, education, child support, and eventually gold again.
If you had bought gold in 1932, how far up would gold have to go up to equal buying treasury bonds and reinvesting the interest in more bonds?
If you had bought gold in 1932 it would have been confiscated in 1933 at a price set by the FDR administration. Also, laws were passed that voided contracts written in terms of gold payment--as opposed to the legal tender of dollars. The more laws were passed that made it a felony crime, punishable by imprisonment, even to bring lawsuits that had as a goal enforcing payment in gold that was mandated by government.

History of gold as a safe investment--dismal.

You might also suggest to your friends (although you probably already have) that they hold a proportion of their assets outside the US. And I mean outside, not in foreign currency accounts at a US bank.

This is the one aspect of risk diversification that I see most lacking in private investors, primarily I suspect due to the difficulty and hassle of making such offshore arrangements.

The Fed may well monetise in the way you describe, but don't expect the rest of the world to sit idly by as it does so. There will be a very real risk of dollar collapse. As soon as the FCBs realise that the game's up there will be a rush for the exits.

In my opinion it's almost impossible to say how these structural imbalances will be resolved. So from a portfolio point of view, the best strategy is to assume both scenarios will happen, and spread one's investments accordingly. If either scenario unfolds and you're hedged against it, you will do tremendously well, even if the opposing portion of your portfolio is savaged.

The two best funds in my current 401K porfolio:

Date Range:  01-01-2005 to 04-21-2006:

  • Developed International (Western Europe & Japan) - 37.4%
  • Emerging International (Emerging markets in Asia and Latin America) - 66.4%

The best US fund in my portfolio:

- Mid Cap Value - 18.3%

And the explanation for what happened to Japan is?

There seems to be deflationary potential in a liquidity trap, if the Fed's own writings are to be believed.

And as a side note - what brought Hitler to power was deflation, brought about by government expenditures being tightened, not hyperinflation. Nobody in the U.S. seems to think of Hitler in terms of deflation (certainly major aspects of his emotional appeal was certainly based on the  hyperinflation experience of Germans after WWI), but that is what led him into power with a declining base of supporters.

There are a number of ways for an economy to fall into a deflationary spiral - especially when too much capacity exists, (currently true worldwide in essence), and competition leads to supply destruction, so to speak, trying to outpace/outlast the ensuing demand destruction. That, to me, is a good way to view deflation - the currency measurement is essentially meaningless. And yes, this is arguably moving the goalposts or something.

Money is a measure - the same way that unemployment spiralling above 30% is a measure, or the same that factory capacity for 1 million units a day against demand of 600,000 units a day (where a minimum of 800,000 units needs to be produced to continue operating) is a measure.

I will agree that a direct replay of American, Japanese, or German deflation is unlikely (apart from the ECB stability pact - which is being ignored anyways). We have many elements for the first global deflation, if this is defined in the sense of too much supply destroying itself, resulting in lower revenues and mass unemployment, leading to the destruction of more supply. Often, times of true mass unemployment tend not to be marked by inflation, but deflation. Not always, of course, but often enough that the relation cannot be ignored.

In regard to Hitler coming to power, I believe most historians rate the hyperinflation of 1923 as more important than the Great Depression. Indeed, the unemployment of the thirties in Germany favored the Communists rather than the Nazis.

In regard to Japan and its relatively benign experience with deflation for the past fifteen years, I have posted elsewhere, some weeks ago, reasons why I think the Japanese situation is extremely different from what the U.S. is likely to face in years to come--should not be to hard to find, if you are interested.

   as I noted, part of Hitler's appeal was rooted in the hyperinflation Germany experienced, along with a number of other resentments due to the loss of WWI.
   And certainly, Hitler's rise was fueled in part by the fear of Communism - his thugs were considered better than Stalin's by a broad swath of German society. But as to deflation bringing him to power, the following gives a bit of background - -

In Germany, Minister of Finance Brüning tried to prevent inflation by balancing the budget. It didn't help. The country's "experience under Brüning (1930-32) was actually severely deflationary"(2). It is not clear, if Brüning had any other option, as Canadian analyst have found: "despite the speed and depth of Germany's deflation in the early 1930s - fear of inflation is evident in the bond, foreign
exchange, and commodity markets at certain critical junctures of the Great Depression. Therefore, policy options were more limited than many subsequent critics of Brüning's policies have been prepared to admit."

And though I don't expect America to suddenly decide to actually start living within its means, and then go a step further and actually tighten its belt, deflation can be forced on a political system for political reasons - due to the previous hyperinflation, Germany's then political system destroyed itself fighting against a return of inflation.

I just think that deflation can be defined in terms which do not rely on monetary measures - and in that sense, the chances of a deflationary spiral aren't that bad. Whether this manifests in dollars being worthless or being somehow worth more is not the only measure of an economy stuck in a contracting mode where fiscal responses are essentially overtaken by massive bankruptcies and unemployment. In other words, could deflation outrun inflation? Maybe, as long as enough overcapacity needs to be removed. Speaking broadly, inflation does not seem to lead to supply destruction like deflation does. For example, the world truly seems to have too many car factories - the result of production fitting itself to demand is very unlikely to be inflationary as entire economies attempt to protect themselves by underbidding other producers. However, the value of currency may be destroyed - yes, I realize this ends up putting a round peg in a square hole. (This is also why reading Fed musings about deflation also seem surreal - there no longer seems to be any connection to real production of real goods by real people being paid real money for their real labor.)

I did read previous postings about inflation/deflation. Sort of like with peak, my definitions are a bit to the side of convention. In the end, I think if deflation is defined as enduring collapse of production, the chances of deflation are much higher than a few percent. And this apart from peak oil - with peak oil, well, we enter a different economic realm most likely. Personally, my bet is on a kind of reverse image stagflation, where the continuing loss of real production is masked by high interest/inflation rates.

Hate to drag you into the pile entitled "conventional", but in fact, your insights are precisely what economic models predict.
My views are utterly conventional - except so many people think deflation (supply destruction of production capacity) is only measured through the value of money.

This was especially true of many people in Germany over the last few years, who thought that deflation meant their money would stretch farther.

In my eyes, deflation isn't really a monetary issue at all, and I don't believe helicopter money will make any difference at all.

In other words, I can imagine incredible inflation in monetary terms while deflation is ravaging an economy's real production. Throw in peak oil, and I currently think the results will be roughly comparable to the 70s stagflation, except that instead of levelling off of production, it will inexorably decline. In other words, if inflation is defined as too many dollars chasing too few goods, the time after peak by definition will be inflationary, as fewer goods are likely to be able to be produced, even if the amount of money in circulation remains unchanged. On the other hand, the inevitable destruction of production (think GM/Ford for a concrete example - and really think about it, as that would be a classic deflationary impulse, pulling down an entire interwoven structure of companies and various financial institutions faster than any coordinated response is likely to counter) will be classically deflationary.

That we could agree on true mass unemployment, regardless of inflation or deflation, is likely a given.

Krugman on the liquidity trap, various policy responses(chapter 6), and why they may not always work.  I'd imagine if we hit it hard enough and fast enough, we can end up with inflation instead, and Schiller believes Bernanke's just the man for the job.

So again the central bank would have to sustain purchases at a rate several times the ex ante savings-investment gap; in this case the BOJ might find itself purchasing long-term bonds at a rate of 10-15 or more percent of GDP.
I quite agree with Don, as I stated before at

BTW, the definition of deflation is analogous to that of inflation: a decrease in the money supply relative to the quantity of available goods and services.

10 breads, 10 $ => 1 bread = 1 $
40 breads, 20 $ => 1 bread = 0.5 $ (deflation)

Now deflation has two consequences:

  1. Discourages consumption of discretionary items: you do not postpone buying food because next year it will be cheaper, but you do postpone buying durable goods.  That prevents the economy from growing at the rates that were achievable before PO (which were ultimately unsustainable, but nobody knew that at that time).

  2. Makes debt more burdensome.  That's quite easy to see: if you are a producer of something, and both your product's price and your costs drop by 50%, your gross income drops by 50%.  All while your debt payments (principal and interest) do not drop a cent.

Problem 2) is easily solved by just expanding the money supply. Note that the Fed does not need helicopters for that.  With the government running fiscal deficits, having the Fed buying all the debt the government issues is enough.  You keep the Government running and indebted people happy.

For solving Problem 1) expanding the money supply is not enough, as you also need to prevent the potential consumers from flying to harder currencies.  Hence the gold confiscation in 1933 and the gold price covert manipulation since 1993.   The good news is that, after PO, Problem 1) is no longer a problem.  As I said at the post lined above, after PO the "limits to growth" (actually the "enforcement of negative growth rates") in economic output will not be the consequence of insufficient demand but of a relentless physical constraint from Nature, namely the decline in the production rate of fossil fuels. Stimulating aggregate demand with monetary policy will not be able to increase output at all.

The following notes are just for those interested in monetary issues:

a. In Krugman's case for Japan's liquidity trap it was not necessary to prevent Japanese investors from moving their savings into harder currencies - which BTW would have been a case of dollarization/eurization - because that would have caused the yen to be devalued against those currencies, which in turn would have boosted foreign demand for Japanese goods.  This assumes that there was a big potential foreign demand for Japanese goods, which obviously was and still is the case.

b.  In contrast with Japan's case, in 1933 there was very little potential foreign demand for US goods, because the whole world was in a slump and/or implementing  protectionist policies.  So, in order to stimulate aggregate demand for goods and thus the economic activity, only local demand was available. Thence the need to prevent the people from converting their dollar savings to a harder currency that could not be inflated (i.e. gold).

c. Analogous to the 1933 US case, considering now the whole set of OECD countries as one entity and their currencies as the "OECD Fiat Money Complex" (OFMC), it was not acceptable that investors globally fled the OFMC and parked their savings into precious metals for the same reason: there was no foreign demand outside of OECD. Thence the need to keep the public away from gold.

This scenario suggests to me that a lot of people are going to be trying to sell the family silver, or whatever other assets they have available in order to cover their debts and generate enough money to live on. As the supply of assets for sale increases dramatically and the pool of buyers decreases dramatically at the same time due to loss of purchasing power, I would predict a crash in asset prices across the board. People might also want to access their savings all at once, which would be bad news for a banking system that would already be wallowing in bad debt. I know the Fed could bail out banks (and Fannie Mae/Freddie Mac etc, etc), but I still think there is a very significant danger of a crash in the money supply (deflation). (I don't think deposit insurance is worth the paper it's written on.)

Commodity prices, which I would say are currently driven beyond the fundamentals by fear and momentum-chasing speculative greed, would also be likely to fall (at least temporarily) under such a scenario, although they may fall by less than other prices. If commodity prices do fall, that need not mean they would become more affordable for ordinary people as purchasing power may fall even more rapidly. I would expect the energy squeeze to be particularly harsh, partially due to the psychology of shortage. In other words it wouldn't matter whether we were actually at peak or not as long as either the Powers That Be believed we were, or were convinced that their competitors believed we were. Once that state is reached, competing polities are likely to act accordingly (violently if necessary) to secure supplies. In doing so, they could destroy the international market for energy supplies in the same way that motorists can crash the local gasoline supply merely by panicking on a rumour of shortages or price spikes to come. The fact that we genuinely seem to be near a peak would only make things worse.

However bad it gets, Clinical Psychologists should not, repeat not, be ever allowed to become bartenders.

If I want a beer, I dont want to be analysed or asked if I have unresolved issues with my Mother / Father etc.

I just want a beer.

Good bar tenders are worth more than any social scientist ever produced.

The psychologists can dig tatties and analyse each other.

I made a long post on the structural unemployment issue in February:
(Forget the part following "Follows the math".)

There I used as a simplified model the Easter Island case and I still think it is a useful conceptual tool.  Assumming that half of the people were employed in fishing, etc. and that half of the people were in monument carving, transporting and set up, the society could have avoided collapse if all statue-related activities were ended.  Then they had 4 options regarding the people that were employed in those activities:
A.1. Share the workload: everybody fishes 3 days a week.
A.2. Feed the unemployed while they relax on the beach.
B: Let them die.
The remaining option was the worst:
C: Have them keep on setting up monuments (i.e. let the whole society collapse soon).

The first modern example that comes to my mind is car racing (F1, NASCAR & the like): it is obvious that it should be ended right now. But what about the people who make a living out of that?  As I see it, the whole of society would be better off paying them just to stay at home rather than keep on wasting fossil fuels.

Of course, the best solution is A.1., workload sharing.


Regarding the price of women: this reminds me of a truly disturbing passage from "Confessions of an Economic Hitman." (CEH)

Here in the U.S. most sex workers from stippers to prostitues have a strung out look which is not surprising given their line of work and what goes with it. It doesn't make sense for a truly attractive woman who can flash a authentic looking fake smile to go into these trades as she can support herself as a hostess or bar tender at an upscale restuarant or bar. I had an acquaintance (friend of a friend really) in college who did this and she made more money doing that part time than some make full time at office jobs.

In CEH, the author recounted an experience in some third world coutnry where the strippers and sex-workers were the most beatiful women you could imagine and that it was "survival of the best-looking." That really disturbed me for some reason but I couldn't figure out why at first. Then it hit me: in these countries the women who would be working as hostesses at upscale restuarants in a place like the US in 2005 have little choic but to become sex workers.  The women who would be sex workers here in the US become bag-ladies.



I will never forget the extremely attractive professional that tried to pick me up in Venezuala when I was working on a project down there.  If they all looked like, then wow.
High-end prostitution has been lucrative for attractive women in the U.S. for a long time. At the highest end are the trophy wives, and as a lawyer I suggest you get into the business of handling their divorces and recruiting them for your suvivalist cult. (In case they are short of cash, you can offer them "special discounts":0)

As far back as the fifties, some dozens of attractive co-eds from U.C. Berkeley would drive or take the bus up to Reno for a weekend or two every month and earn more than enough (legally in most cases) in a few nights to pay for a semester's living expenses plus nice clothes. Standard price that was fixed for many years was $400 per night for first-class call girl, plus tip. Current price is negotiable in the $3,000 to $5,000 range, plus large tip is expected if you ever want to date the woman again. (recall derivation of "TIP" is "To Improve Performance")

Thus, because of high demand and limited supply, high-end call girls often do very well. Now. But. I expect the supply of prostitutes to increase greatly and the demand to diminish somewhat, except in areas that service energy workers and executives.

Note that in places such as Berkeley, prostitution cannot flourish because of all the amateur competition;-)

I always thought consumption at Starbucks, et al. would be the thing to watch.  With almost any consumer advice columnist, one of the first things they suggest cutting back on is the $5/day magnifico supremo latte.

On the other hand, I think Starbucks has most of its customers addicted, so maybe it won't be a leading indicator.

Well, if we were smart we'd obviously be "selling" them an answer to peak oil.
From the "Smoke and Monetary Policy" article on

For an outstanding example of the broad and pervasive manipulation of economic parameters by the government, take a look at this fascinating interview with economist John Williams. Williams shows how, for at least the past 25 years, the government has systematically manipulated the most fundamental of economic parameters such as the Consumer Price Index (a measure of inflation), the unemployment rate, the growth rate of Gross Domestic Product, and more. This isn't just a case of minor fudging of the numbers--Williams provides a compelling argument, for example, that current US unemployment is currently over 12% (compared to the reported 4.6% in Jan. 2006), that the CPI is actually around 7% (compared to the reported 4% WITH energy prices included), and that the US economy actually shrank 1.9% in the last quarter (compared to the official, and already alarming "rise" of of 1.1%). Take a look at Williams "Shadow Government Statistics" site for more.

[end excerpt from article, shown as text. To make the embedded links work, go to the original article.]

Now, let's assume the assertion of cooked statistics on inflation is essentially true. After all, it makes sense that it would be. Making the CPI artificially lower limits the payments made to recipients of social security, makes the minimum wage less and less of a living wage, and so on.

We have this model which says that oil at $80 a barrel in current dollars is equivalent to the maximum price per barrel back in the 1970's. Yet, oil at or near this price is not having the crushing effects on the economy that would be expected. The model is not working.

If Mr. Willaims is right that real inflation has cumulatively been underestimated by about 70%, then the real current dollar equivalent to the previous maximum price would be somewhere around $135, at which price the crushing effect on the economy would be evident.

That's a good observation.

Guerrilla energy  (An exploration of the mix of the practical and theoritical in changing energy supplies and sources)

"Dignity is more than a new pair of shoes."  French writer, anti-Fascist, guerrilla propagandist, and philospher)

If we accept that for the time being (3 to 5 years) fossil fuel is going to be the only real way to get around, and if we accept the crisis we are seeing is at this time essentially a liquid fuels transportation problem, and if we accept that a fair portion of the population still has to get around by automobile  (to take kids to school, to get to work, to get food) and are unable to take full advantage of other types of transportation, (mass transit not available, distances too great to walk, distances too great for bicycle due to health, age of the potential rider, safety concerning highway dangers, severe weather, need to carry at least some cargo a considerable distance, etc., then we arrive at the conclusion that what is needed is a bit more of a strategic way to cope with the current and potential future "liquid fuels" transportation problem.

Enter guerrilla energy strategy.  What is it?  Guerrilla energy has it's roots in guerrilla warfare and has it's methods in common with them.  These include  individual and small group action based on local conditions and readily available tools and technology, WITHOUT the need for centralized control, communication and direction. The tactic requires learning the lay of the ground, and then moving where the chance of success are greatest at the lowest possible cost.  Then the hardest part:  Actually having the nerve and practical ability to change quickly, put the ideas in play, and IMPLEMENT the operation.

What does this mean in guerrilla energy strategy?  We must look for the ways to dodge the problem, and maintain the original goal:  Freedom to move about at least the needed amount, at most, the desired amount, while dodging prohibitive cost.  Important point, we are looking for a way to do this LEGALLY.  Stealing gas or Diesel is off the table, but be sure that some will do it, so knowing that, protecting your "stash" of it is important.  We are talking about moving with stealth (and that's important, share among fellow like minded folks, but DON'T brag if your strategy works...because one of the reasons it will work is because not everyone is doing it), looking for gaps, and being able and willing to move on them quickly.  How?

First, stretch the resource.  My father commuted 21 miles each way per day in the 1970's energy crisis and seldom complained.  Inflation adjusted oil prices were higher then than now, even at the current record $75 a barrel.  Divide the per price barrel by what the average income was then...I made $1.50 an hour when oil went over $30 dollars a barrel in the late 1970's, or twenty hours a barrel.  Now, at only $75 a barrel, most folks make over $7.50 dollars an hour, which would be only ten hours per barrel.  If you make $15 dollars an hour, that's 5 hours per barrel.  Why was my father so nonchalant about gas prices?  He was getting 50 miles per gallon.  Not only that, he was burning Diesel, in a Volkswagen Rabbit Diesel.  He moved to it after having driven an Oldsmobile 98 for years...his fuel costs actually went down, while the cost of oil went up!

Second, play against the crowd.  Right now, Diesel is a bit cheaper than gasoline, but it is no longer a huge advantage.  But Diesel is not being caught up in the MBTE additive mess.  It will however get caught up in the low sulfur mess.  Diesel gets better fuel economy for a given weight of vehicle though, and if there is a panic that causes everyone to top up, the effect on Diesel will be reduced by Diesel autos being such a small percent of the car market.  Diesel is "counter season", in that it comes from the same distillate base as heating oil.  So in the summer, the stress on Diesel production/price is least when it is the most on gasoline due to summer driving demand.  So Diesel is not the perfect fuel, but has some considerable advantages when gasoline is suffering hardest on price/supply/demand, which brings us to....
Thirdly, flexibility.  Most people have more than one car, because they need more than one, or because they want more than one.  If this is the case, consider the advantages mentioned above, and consider one gasoline, one Diesel.  In the summer, the Diesel supply price is in your favor.  In the winter, when heating oil prices drive Diesel up, the gasoline car may be the one that will save you money and assure you supply.  It is worth thinking about, but you still have only two avenues of fuel supply, which brings us to...

Fourth, think outside the box.  What other fuel is out  there that is not experimental, that is well known as a motor fuel, and is used in far greater percentage in other nations as an auto fuel than it is in the United States?  It is well developed, easily stored, and very clean environmentally, and you can store a season worth in a tank in the backyard if you choose to.  It is LPG or Liquid Propane Gas.  That's right.  Propane is made from both natural gas production and oil refining.  It is stored in hollow salt domes in Kansas, Canada, and a few other places.  it is seasonal, in that most is used in the winter for heating, so propane is also "counter seasonal" when compared to gasoline.  It is cheapest when you drive most.  Not only that, it is flexible.  Most Propane cars are also gasoline cars (they start on gasoline, and switch over to propane, and can run on either).  If a person owned 2 cars, one gasoline/propane, the other Diesel, they could move between 3 fuels and stay counter season almost all the time!   The idea situation would be to add a small cheap electric to the mix, (picture a Volkswagen Rabbit Pickup truck on electric batteries) for around town use.  The mix and match would give the person or family staggering flexibility to move about at reduced cost, and with a far greater assurance of transportation.

 If the true ideas of "small cell" guerrilla energy strategy were to be used, and several families were to join forces, then a half dozen vehicles could be modified or purchased, to be used between say 4 households, with a combination of Diesel, newer gasoline "flex fuel" vehicles, a propane gasoline car or pickup truck,  electric "scootabout" for teenaged kids or around town, and in areas where it is an advantage, CNG (Compressed Natural gas), all designed to be used in a "counter seasonal" way....depending on the needs of the households, so that no one would be completely without fuel.

Household consumption, by the way, could be done the same way, with a mix of solar, windmill, gardens and greenhouse for food and/or heat,  woodlot and wood stoves (younger stronger members of the group cut wood for the older less able members, and to keep the kiddies warm, while the kiddies help in the gardens and greenhouses), and propane tank for reserve (both transport  and CHP (Combined Heat and Power for the homes)

Everything mentioned above is viable on current technology, (even 30 year old technology would do), it would merely take a "guerrilla" mentality.  And here's the great part:  As others saw what was going on, they would realize you still had what they were having trouble keeping:  Freedom of movement, and a relatively high level of prosperity.  They would want that too.  Would they be willing to trade for some of your efforts, and maybe even join in?  Any guerrilla force needs recruits.  But the affiliation must remain loose, flexible, and fluid, as conditions change rapidly.  Some could use methane recapture from farming and sell the meat and produce, and swap for the natural gas cars you know how to keep running, which can also run on methane.  Some could build small efficient windmills, and sell the electric current in exchange for the electric "scootabout" cars.  Others would trade for a "guerrilla" energy techie who can build solar hot water heaters or an entertainment system that can run on a small cheap windmill....the exchange will be endless, but it will be all to the same goal.  To zig when others zag, to find the gaps, to look for the "counter market" and counter season" energy still out there, and to retain as much freedom and freedom of movement as possible.  Everybody on the guerrilla energy frontline will start small, and watch, learn and at first, undertake small operations.  But as freedom and purpose grows, so does confidence.  As others howl, the energy guerilla will move, build, learn, and move again, and expect no direction from the top.

 It is the ones who watch their freedom of movement get smaller, and smaller and finally, disappear who will hold out hope of rescue from a central power.  It will not come, and by the time these people realize it, their freedom to move enough to change will be gone, (unless an energy guerilla finds they have something to trade or sell in exchange for their ability to free up those "energy hostages" who cannot move, and that the hostage has something to exchange.  Like money, freedom of movement is a valuable commodity.  Prostitutes who now will trade their services for money will then be willing to trade their "services" for it.  Landowners and bankers will find some way to trade with the "energy guerilla" for the ability to move around, and for the tactics and tricks they know.  
And of course, there may be "skirmishes" as some try to take the abilities and tools of the  energy guerrilla by force, or some energy guerrillas attempt to gain full power through their knowledge of how to use and provide freedom of movement.  It may not be pretty.

But, the more distributed the power is, the less likely tyranny.  The more people that know the tricks, what fuel can be found and used, how to stay counter market and counter seasonal, how to stay flexible and keep options open, and how to build social co-ops and communities to enhance this flexibility, and keep both private and co-op options open, the more people who can play this game, the less likely that a small knowing band can rule them as overlords.

Guerrilla energy will begin long, long before fossil fuel has run out.  It will begin long, long before people stop driving. It will begin long, long before renewables are even a marginal proportion of energy production.  It will begin long before the current structure goes away, and in fact will be born and will get it's tools from the waste in the current structure, just as current guerilla war bands do.

Guerrilla energy in fact, has already began.  It has communications structures, (TOD is one, whether they know it or not), favored tools and technologies  (Diesel, propane, Methane digesters, home brewed fuels, home brew electric cars, home built solar, gardens and greenhouses, organic farms).  Some ask, "How long till Peak Oil?  How long till the oil and gas "run out", how long can we afford gasoline, or to commute to our jobs? How can I get the kids to school?"

The better question is this:  How long until the center of power is over centered, and I will have more freedom of motion by moving away from the current technology, the current methods? At what point will my freedom be enhanced by breaking off from the structure, and going my own way to retain freedom of motion?  This, after all, is the campaign of the guerrilla everywhere, in all times, whether it be a political or spiritual dissident, a "dissident artist" or a not yet well known class, the "dissident" or "guerrilla" technician, mechanic, manager, professor, or banker.  

This is what Alvin Toffler called, in his great book by that name, the "Powershift".  it does not mean the old structure is gone, or the old technology disappears.  It means that the momentum, the power, the growth, and the GROWTH OF FREEDOM TO MOVE, THE FREEDOM TO CHOSE, THE FREEDOM OF OPTIONS is now with the dissident "alternative" groups.

Many make the mistake of thinking that the leaving behind of the old energy base will mean a reduction in choice, a reduction in movement, a reduction in options.  
It cannot.  No mortal will join that quest to willingly give up choice, wealth and freedom.  The "Powershift" is about retaining freedom, choice, wealth, and options in a changing world.  It is those who are willing to speak of limited movement, limited choice, limited options, who do not have the heart, the cleverness, or the real sense of human desire to become "energy guerillas" and who will become the ones with no movement, no options, no choice, in effect, "energy hostages".

As Toffler points out, the human on Earth has in the end only three tools to retain power:
Knowledge, Wealth, and Violence.  The Japanese mystical triad (the mirror {self knowledge,as Socrates told us in the West, the beginning of all knowledge} the jewel {wealth} the sword {force or violence}
In the Western tradition, the Book (knowledge) the sword (violence) and the Cross {wealth, spiritual, but the Cross so often gold silver and jeweled, symbol of the wealth of a culture in both spiritual and material wealth)

No culture can survive without a mix of these three.  The balance varies, Ancient Sparta, the sword was the preeminent tool, as with Vikings and Fascists.  Other cultures, the Egyptians, with Wealth, Knowledge, a duo of virtues,and the sword only to retain the "perfection".  The ancient Greeks, knowledge first, created the tools of wealth, but it was never a virtue among the Greeks to be only wealthy.  War, the Homeric legends and heroes (Odysseus) portrayed war, violence.  Greece saw knowledge as greatest, war second (is it any surprise that Socrates was a soldiar and a philospher, but had no real wealth, or that it was Aristotle who taught Alexander the Great?

The modern Americans, like all the others, a triad, warlike, wealth producing, knowledge, but always PRACTICAL knowledge, balanced for so many years, so many years before it became nonscientific, anti-knowledge, a wealth machine, and then, Imperialism, the combination of wealth and violence not to create knowledge, but to create POWER THROUGH WEALTH.  But the underpinning knowledge is bleeding away.

For the "energy guerrilla", violence is not the chosen tool.  Wealth is in the hands of the old fossil fuel industry, and cannot be the energy guerrilla's chosen tool.  Only one remains, the greatest one, which can be converted to power and wealth:  KNOWLEDGE.
Knowing the technology, knowing the theory, knowing the practical uses and limits of energy, knowing how to use them in an applied mechanical way.  This is the central tool of the energy guerrilla.  Using a small amount of tools, technology and money, it can bring down giant firms, alter giant economies, and salvage the FREEDOM OF OPTIONS, the freedom to gain more knowledge.

It will be a challenging age.  It will also be an EXTREMELY artistic and creative age, in the truest sense of what is truly human, and truly freeing for the human spirit.
The age of convenient hedonism now ends.  History, once called dead, is reborn.
Thank you.

I am Roger Conner, better known to you as ThatsItImout

that's what I'm talkin about
get off your ass and do sumthin
Since we're talking "guerilla energy" and since we've had the pleasure of a visit from the legendary Robert Rapier (of the r² blog) who put me onto the following issue:

Has this ever been discussed here? It seems to me that a solution this potentially effective (algae biodiesel) would already have massive traction if it wasn't total BS.

Anyone out there know anything?

Frankly, I don't know much.  Diesel from algae is one of those stories that are annoying not because they seem to be false, but because they reappear every few years, no one can put up a valid argument against them, they seem to show more promise than many energy ideas the government is investing in, and then....they just sort of disappear again, until the next runup in fuel prices (they make me think of flywheel storage,which just keeps coming up as  "just around the corner", "more perfect than batteries", etc., then...they go quiet again :-(

On algae, the interesting thing is, there cannot be that many varieties of the stuff (some I know, but not an unmanagable number of types to research), so that if someone wanted to, they should be able to "reverse engineer" and find out what types are being discussed, and how a person would process them...and then, find a pond or build a reservior tank and try it themselves on  a farm....and see what you could come up with.  I dont know if even a single gallon of Diesel has actually been produced by algae that has actually been burned in a Diesel engine.  One thing for sure...with all those PDF files listed, I now have my reading assignment for the weekend!  Thanks for the food for thought. :-)

Here's a thread on the topic of algae from January:

There are people working on it, but it isn't ready for prime time.  Research funds are scarce - the government is funding hydrogen in a big way, but try and get money for anything else and you come up empty.

There are 4 groups that I know of working on algal biodiesel.  The one furthest along is this one:

We even had a discussion about this company a few months back.  With this approach, they use flue gas from coal fired powerplants as the 'feedstock' to grow algae.

The author of the article you cited is part of one of the other groups - their approach is to use agricultural runoff as 'feedstock' for algae.

NREL did a closing study on Algae awhile ago:


A Look Back at the U.S. Department of Energy's Aquatic Species Program: Biodiesel from Algae

Essentially for open systems they found that local algae always outcompeted their engineered varieties.  

One problem is that they have never devoted serious research funds into biodiesel from algae. If they devoted the kind of funds to biodiesel that they have to ethanol, we would probably start seeing a much bigger impact on our fossil fuel usage. But a big problem is that most of us don't drive diesels. That needs to change, due to the diesel engine's greater efficiency and the much higher BTU value of diesel over ethanol (and gasoline). I tried to lay out the case for biodiesel:


Thanx everyone. That helps.
Good thinking Roger

I'm just doing some sums about fuel prices. I'm feeling the pinch already, from driving to work, and from heating the house (I'm relieved the heating season's about over).

The second problem will straighten itself out somewhat because my incoming tenant (three apartments in one old farmhouse) is an agricultural worker, and between us we will be able to source and process firewood for next winter, cheaper than the fuel oil I've been burning this winter. Just need to recondition the wetback stove that's already plugged into the central heating circuit for the three apartments (fallen into disuse in recent years, due to laziness and domestic upheavals), and work out a protocol for feeding it through the winter - it's in my kitchen (I'm not home during the day, but stay-at-home Mrs Incoming Tenant can deal to it)

The first problem is tougher. A lot depends on where the diesel price is going. If it goes to 5 euros a litre within the next few years (as Matt Simmons predicted for an Irish audience, it'll be the same for me in France), then I need to get a hybrid or small diesel to cover my 600 km a week commute. I'm already spending 200 euros a week, that would go to 1000, which is not viable at all. Somewhere in between, given that my disposable income will go down the toilet anyway, I can finance a better transport option.
True, pooling vehicles with neighbours will need to be formalised somewhat. Shame I haven't finished paying off the van yet (very small camper), but it will last at least a decade longer if I stop commuting with it, and will remain a great holiday option for me and my clan.

One other interesting characteristic of diesel fuel is that its shelf life is much longer than gasoline.  I recently purchased a diesel generator first sold in 1985.  I asked the previous owner how it was on fuel and he said he'd never refueled it - only used it occasionally when he needed 220VAC for arc welding.  The fuel in the tank stunk to high heaven and the exhaust was equally stinky but the Yanmar kicked right over.

Now that's comparing fuel made in 1985 to today's formulations so there may be some antibacterial benefit from the higher sulphur content back then.  There are special additives to keep it from turning into green slime.  Boat owners have had years of experience keeping diesel from going bad.

From what I've read biodiesel has a relatively short shelf life unless one adds a fair amount of antioxidant vitamin E.

I keep between 100 and 200 gallons of diesel stored at all times.  It's much less volatile than gasoline and has longer shelf life.  With my 2001 Jetta I have between 4000 and 8000 miles sitting in a few thirty gallon barrels.

Another virtue of diesel is that theft is less likely unless you're living right next to a truck stop!

Have you considered that possibly Bush Jr. is not a deranged idiot? That maybe he knows what he is doing?
Maybe he's figured out that since the US is bankrupt and can't buy any more oil when the Chinese stop giving us free money, maybe now is the time to take the Saudi, Kuwaiti, UAE, and Iranian oil off the market to get the price of oil up to 200$ and get people to be serious about electric cars and synthetic fuels.
He may want to make sure we have a plateau rather than a peak in the oil supply because he is secretly peak oil. After all, Simmons was at that secret (after five years!) oil summit he had as soon as he was elected. Maybe they gave him the bad news then?
On the other hand, he might be a deranged idiot.
Not to mention the money he and Cheney make from the XOM (et al) investments in their "blind" trusts.  These turkeys are in a perfect position to sow FUD so oil prices will stay high.

How this plays out in mainstream murka is a different matter.  Lots of people are getting plenty PO'd.  But BushCo may not really care.  It may be that, as you say, these guys are just lining their nests.  Remember, they're republicans and money is their god.

I'm thinking about demand destruction.

People like me (middle class, steady income) can develop strategies to deal with escalating energy costs. But what about the working poor?

In Europe, most live in cities, and rely mostly on public transport anyway. In the US, I'm thinking it's going to be pretty cataclysmic.

What do you do, if you live in a trailer park, drive an elderly, inefficient vehicle, and do a lot of miles getting to intermittent, low-paid work, when the gas price goes through the roof?

Probable Republican response : Do nothing, à la New Orleans. Socially disastrous.
Probable Democratic response : subsidise their transport costs, one way or another. Economically disastrous.

Any rational response, surely, will require quite a lot of social engineering. Rural/dispersed habitat depopulation, it seems to me, is inevitable, with economic migrants arriving in the cities in large numbers. This could result in urban shanty towns, or there could be a wave of planned urban low-cost housing...

But what do I know. Thoughts, anyone?

I've seen a couple of articles that may be canaries in the coal mine.  High fuel costs have resulted in school bus and public bus routes being cut.  Those affected?  Often kids who live in far-flung low-income neighborhoods populated by Mexican immigrants.  These people don't have cars, and can't drive their kids to school.  And they don't vote, many of them not being citizens, or even legal residents.  

Dunno what the result has been, but I suspect in the future a lot people faced with this issue will simply stop sending their kids to school.

Good question--what to do about the poor.

During the seventies, when prices for gasoline were not only higher (in real, adjusted for inflation terms) than they are now but expected to increase still further, some economists put out a rationing plan that would help the very poorest people the most.

Each licensed driver would get rationing coupons that allowed the purchase of a limited amount--say ten gallons a week--at a fixed price, say $3.00 (in 2006 dollars) per gallon of gasoline. Now here is the key innovation: The coupons would be marketable; people could legally buy and sell them. Presumably, rich people would buy them from poorer folk, and thus income would be redistributed from richer to poorer people. Note that the market price of these coupons would fluctuate as supply and demand changed, and thus the market is not being totally frustrated as happens with old-fashioned non-marketable coupons. The more scarce gasoline becomes, the more income is transferred from richer to poorer [or more thrifty] people.

Poor people have always born most of the cost of social changes. Here at least is a way to ensure that people at the bottom get some compensation. Note the beauties of this plan:

  1. It gives poor people a huge incentive not to drive at all, or to ride the bus, or to car pool or to move closer to their low-pay jobs or to get another low-pay part-time job or two much closer to where they live.
  2. It amounts to a hefty luxury tax on those who consume more than ten gallons of gasoline per week and thus greatly discourages excess consumption among middle-class people.
  3. Because the tax would apply only to gasoline (and diesel and probably heating oil, because you can run diesel cars on heating oil; everybody I know with a diesel car does so) but not to alternative fuels, it would be a huge boost for biodiesel, E-85, and plug-in electric hybrids.

Because prices went down in the 1980s, this plan was never implemented, but speaking as both an economist and a sociologist, I cannot see anything wrong with this approach.

Could it be implemented? Possibly--but not until gas prices approximately double from current levels and not doing anything in the way of rationing is perceived to be worse than imposing pain by law.


That reminds me very strongly of emissions trading under the Kyoto protocol, which has been one of the few pieces of it that could be considered moderately successful.  That's a great idea, Don.

I like it a lot... tradeable quota... I can even see it working in certain countries... but in the USA? I hope so.

In general, I feel that the USA is in an extraordinarily volatile position, and has become exceedingly sensitive to oil prices. Historically, the USA has drawn its strength from being very much a self-contained economy : producing most of its own energy and raw materials, and with a huge internal market, it has been able, among other things, to use its exchange rate as a tactical tool, with relatively few domestic consequences.

This era is definitely over. The combination of the trade imbalance, the energy deficit, and the dominant position of China, with an undervalued currency, means that the perfect storm can arrive at any time. Specifically : When the Chinese leadership (with their exemplary planned market economy) decide to flip the switch, and replace export-led growth with growth driven by pent-up internal consumer demand, then the dollar will lose half its value, the US deficit will be impossible to finance, etc etc...

I'm just wondering if the Chinese are actually actively working on this strategy... their biggest external constraint is now oil prices. If they can engineer massive demand destruction in the US, that would take the tension off prices rather nicely.

China's domestic consumption is growing rapidly. Currently China is the #2 consumption market and leads in the consumption of all consumer products with the exception of autos.
As poor people have no bargaining power and no real protection from the abuse of power by others, I doubt if they would get a very good deal in practice (although I readily acknowledge that the results of alternative schemes may be even worse). The idea reminds me of the coupon privatizations of Soviet assets after the collapse of the USSR, which hugely enriched the nomenklatura.
So the gas station owner is buying gas at $7.00 / gallon, and selling it at some modest mark-up above that. And these people show up every week with coupons from the government that say, "Station owner is obliged to sell this person gas at $3.00 per gallon."

That hardly sounds fair to gas station owners.

Why don't we just convert to communism outright?

Or wait, because then the terrorists would win.

Basically, for this plan to work, the government would have to reimburse the gas station owners for the difference between the market price and the $3.00.

Wouldn't it be simpler to just give everyone cash each week sufficient to buy their measly 5 gallons (or whatever), instead of handing out coupons? That's sort of what cash is anyway, right? Coupons that you can trade on the open market. And the different coupons feature different historical figures. Washington, Lincoln, Hamilton, Jackson, Douglas... and my favorite, Franklin.

Rationing and price controls go together: You have rationing BECAUSE you have price controls. If the retail price of gasoline was fixed at $3.00 per gallon, then the wholesale price could be fixed at, say, $2.80 per gallon to give the retailer a reasonable markup.

I do not believe there is any logical or practical flaw in the marketable-ration-coupon idea; it is a far, far better idea than nonmarketable coupons, such as we had in World War II.

... the wholesale price could be fixed at, say, $2.80 per gallon...

Well, that hardly seems fair to Oil company CEOs.


Ohhhh... Maybe this is something the democrats could get behind after all.

No but seriously, I didn't get that you're saying we should have across the board price controls, at gas stations, distributors, refineries, all the way back to the producers.


Hot dang! Why didn't we think of this before? Just tell OPEC they have to sell at whatever price we decide is affordable to the poor people of America.

I like it!

Actually, I guess it's obvious. I don't really like it. But I think Breshnev might :)

p.s. Were he alive today.

Rationing keeps the price of labor lower than it would otherwise be. Rationing means that lower paid people can go to work every day. No rationing means that all lower paid people get raises, or they don't show up for work and some other lower paid person gets a raise sufficient to buy gasoline! And since some lower paid people can walk to work, lower paid people get net income from peak oil.
A very similar (in terms of actual participant behavior) system worked during WW2, as well.  Those who could spare it or do with less sold their ration stamps for "luxuries" (on a semi-black market basis, not really opposed or enforced) like butter and meat, to those who were willing to pay for them.
>But what about the working poor?

I see dead people, millions of them.


Rural depopulation....alistairC
why? why would you leave an area that might have food growing capacity, wood, water?  If it really gets that rough meaning that fuel is too expensive (or not available)what kind of economy do you think we are going to have anyway?  Move to town to starve and freeze in an apartment?
 My guess is that people will stay where they are. Some in town and some out in the country as each location has advantages and disadvantages.  
As my brother said about Nam- there are two kinds of fighters in the army -guys who want to be in a fortress and and guys who want to be in the field.  Fortress guys want protection even if it means the emeny knows where you are.  Field fighters don't want to be a sitting duck.  Doesn't have anything to do with population movement just in different mindsets
I look at plastic inflatable kid play pens at the local box store and wonder?  When the SHTF are we going to buy this crap and coffee latte's or stay home and get real again.
I love the debate on the "peak" of oil.  I would imagine 20/20 hindsight is where it is at.  If we are off 1-4 years who cares in the big picture...this has got to get really rough its just a matter of when....
I live in the Coast Range Mountains of northern California and I anticipate a huge exodus of people.  There are a number of reasons this will occur.  First, while they have sufficient water for household use and to grow dope, they have nowhere near enough water to grow food.  Peak evapotranspiration in my area is about 1/2 an acre-foot per month or somewhat over 5,000 gallons of water per acre per day.  Almost no springs around here produce that much and even fewer people have wells that would produce that much.  Further, pumping requires energy adding to the cost.  As an aside, I have a 3hp pump in my well (450' deep) and it produces 10-12gpm.  Fortunately, I can run it off my PV system if the grid goes down.

Second, they use really significant amounts of gasoline/diesel/propane.  Just the two trips a day to the school bus stop uses a ton of fuel.  And, they are totally dependent upon propane for refigerators and stoves if they are off the grid.

Third, most of the people who have moved to my area within the last 10 years have any useful skills.  They rely upon others just like city people.  To carry it a step further, they don't even know how to preserve/can food much less have canning jars.

Lastly. long time rural residents have a different psychology or mind-set compared to the newer people.  I don't quite know how to explain this other than to say that there is a difference.  The old-timers will ride it out but I doubt that the newer people will.


I suspect many of the newbies are older retired people (a 60-year old friend just retired to Ft. Bragg.) and many of the new people are not hunters, which the old timers are. Good insight.


I live in the hills north of Laytonville and have been in the area almost 33 years.  There are actually very few retired people who move here, especially the higher elevations (I'm at 3,060' and had 4-5" of snow last weekend).  One reason is that winter can be rough.  We have friends who live 6 or so miles as the crow files get snowed in for three weeks this winter and they are only 1,000' higher.

Further, unlike small cities such as Fort Bragg, there are few services that retired people need.  My GP is a 60 mile round trip and any kind of specialist is a 120 mile round trip.

What we are seeing are people in their late 20's to mid-30's.  Most of them drive big SUV's/ fact they drive them too fast and washboard the county road.  The reality is that many of them moved here to grow marajuana since there are few jobs.  These people are totally unprepared to survive.

You mentioned hunting.  I have been told that during the Depression every deer here was killed within 6 months and the stock didn't rebuild for ten years.  Deer populations can also be wiped out by pedators.  I used to have deer herds of 20-30 head.  However, a number of mountain lions started to kill them which was bad enough but we also have a lot of bears.  The lions would kill a deer and the bears would take it away so the lion would kill again. A large herd now is only six deer.  At that time, my wife stopped walking our private road for exercise since I had tracked lion prints around the house and she was afraid of being attacked.

As an aside, bears in our orchard and vineyard are a serious problem most years.  The biggest bear we had trapped here was around 500lbs.

Many of us expect our area which covers about 600 square miles and has, perhaps, 3000 residents to depopulate to around 500 to, at the very most, 1,000 people once the full force of peak energy hits.

Yes what you say is accurate.  We live in a remote area and the newby's move out with thier city ways. They last from 4-10 yrs and then move back again. Guees I was thinking of how we live not how the other newcomers do(drive 30 miles round trip because they wanted taco-bell for lunch).  Canning smoking meat and fish, making sausage, heat with wood gravity feed water systems.  I guess this is beyond the bulk of people. Oh well...
My mother lived during the great depression( luckily on a farm).  The "will work for food" was a little to real back then.  She cut envelopes apart and used the inside for scratch paper.  I think we are heading to some thing like and when???

Ok, we both understand rural living, now what?  How do you make non-rural people understand what it is like?  I think this is really important  because "rural living" will probably become "suburban" living in the not too distant future.

This is why I mentioned "mind-set."  Rural living is damn hard both mentally and physically.  I think what people need to recognize is the difference between feeling satisfaction for a job well done even though you had to do it and some kind of pat on the back.  You and I do what we have to do because the work has to be done whether we want to do it or not.  And, we have to do it even when we don't know how to do it.

As far as people lasting in the boondocks, my experience is that most realtionships break up after 5-7 years when one of the people wants out.

Maybe there should be a thread some time dealing with this topic so those of us who are actually "doing it" can write in more detail.  I have a lot more to say but this isn't the right thread.  I post on another forum and my comments/articles/ramblings run far too long for here.  Maybe I'll post some links to my stuff on another open thread on TOD.

obviously you live remote and yes I agree that`there is a huge gulf between us and city people.  I have a niece( who lives in a city of 2 million) that thinks we live in a "cool" area.  This is usually during the summer which is nice.  Funny she never says that when it is a 25 degree night, 13" of snow and the electricity is out, the road is blocked by fallen tree's.  She thinks "biology" is cool but has never smelled a freshly killed deer, let alone cut it up.  They all( my siblings) like our sausage and have some Martha Stewart idea that this is "fun" not "work" to butcher and process meat (except my mother who butchered beef on the dinning room table).  If they ever call when we are butchering however they never offer to help only after the fact when it is too late. (Hmm this is good!!!  call us if you need help...(yea right))
So how do you teach city people all this? I haven't a clue and neither do they.  You are right it is an enourmous amount of work.  Like the post about the lady who cried about filling her SUV(lol)...god help us all...  

We're obviously lost brothers.  If you want to make them go YUCK, give them the link to...

where they can learn to use the animal's brains to tan the hide.  Right on!  Make those city people puke :)

PS Although given Sudden Wasting Disease, I'd stay away from brains for the time being.  It could be that prions might transfer.  BTW, I used to have a trap line as a kid.

I understand you two. I'm in a rural area and understand the hardships. I've been working my ass off for about thirty years now.
but something funny happened today, I sat down at the computer with my six year old son and his best bud Crowe to teach them how to play a video game ( that's another story). but before I taught them I wanted to look up the word haggis
 I've heard the word before but until I saw the guy whose handle is haggisblogger I realized I wasn't sure what it was. after describing it to them and asking if they thought it sounded good, you know their response,gross nasty dad, typical.
but the thing is this, we discard so much butchered animal to dog food and the like it would make our ancestors look away with shame. the city folks are going to have a hard time swallowing these realities (pun??!) don't get me wrong, I'm not looking forward to blood pie or any of that but what are we going to do?
  by the way my neighbor brain tans most of his hides, they're very nice. he sells some of them as chamois and he also makes "indian clothing" for movies
I'm looking forward to trading my veggies and beer for his fine crafted wares wtshtf
I could be wrong but I belive you can compost all the stuff that you dont really want to eat and use it as nutrients in your plant farming.
no it just doesn't "go off" in a pile like other stuff. best to feed it some other animal (not a six year old apparently) let their system start the process and finish the process with their waste in a pile
More complaints about gas prices...

Topic: Saw woman crying on TV.....cost $87 to fill up her SUV..... _no=1&FAV=N

The thread started back on Sept 1, but was somehow resurected in the past couple of days or so.  Some of the comments are just whining.  Others are from people who have no sympathy for SUV drivers in general, correctly in my view calling them "status symbols".

The more serious issue that I see in reading all of these comments (and similar things in other places) is sort of a 'stubbornness' of sorts - people don't want to change, or they haven't thought it through.  A refusal to think outside of the box as it were, but I suppose part of it is that people haven't yet accepted that cheap gas prices are gone forever.  It won't be until people accept that these higher prices are the new 'normal' that people get serious about looking for solutions.

Some information from the local paper/dpa -

According to Barbara Meyer-Bukow of the Mineralölwirtschaftsverband (MWV - call it the oil sellers in short), consumption fell more than expected last year. Gasoline sales (Benzinabsatz - a bit tricky, but in this case, I would bet on them measuring sales in liters, not euros) fell 6.3% in the first quarter. And according to the article (without quoting sourcing), German refineries were more than 99% utilized (ausgelastet), and posted good/excellent earnings.

What is interesting is to see how flexible German gasoline sales seem to be in comparison to what one reads coming form the U.S. Even more interesting, if German sales actually declined 6.3%, and German refineries are essentially running non-stop, I would guess that Germany / Europe is currently able to deal with rising crude costs a touch better, as they then turn around and sell the U.S. higher valued products, thus earning a small 'discount' in their total energy bills.

In my opinion, peak is here, and America seems to be about at the level of preparation which one would expect from a society which seems to be ruled by the idea that the market (or prayer) is the most powerful force in human affairs. How much have gasoline sales in terms of volume declined due to higher prices there? Of course, you can also see Jevon's paradox at work in the real world - conceptually, all of the 'excess' German gasoline was consumed by others.

Personally, I still think anyone living in the United States is in for a world of hurt over the next decade, partially because of an utter failure to accurately view and prepare for the future over a generation (1976-2006) This may become one of those historical breakpoints in human history, somewhat like Rome around the birth of the Empire and Jesus Christ. (Trying to include the foreseeable and the unforeseeable in that perspective - these decades are likely to form a very real before and after in human affairs.)

And for the doomers - considering how much the U.S. has done for climate change, I would expect more of the same as America finds energy independence in coal. But as you can see, other people do seem to be able to live in a more rational framework of supply and demand without anyone feeling the collapse of society is around the corner, or the need to start strip mining.

Absolutely... I heard on the radio an almost identical figure for French consumption (6% decline in 2005 on 2004)... OK so I've looked up some numbers for France :

Overall cost of energy increased 35% in 2005
Consumption of "essence" (=gasoline = benzin) down 6%
Consumption of diesel up 0.9%
Biofuels up 18% (off a very low base)
3% decline in private vehicle kilometers
1% decline in overall vehicle fuel sales

Compared to the US, the "old" countries have much better prospects of weathering price shocks, both economically (much lower energy input per unit of economic output) and individually (distribution of habitat). Also, traditionally higher gas prices have limited urban sprawl and resulted in a higher density of population than in the US.

However, over these last 15 years of cheap gas, individual houses have sprung up like mushrooms in the rural surrounds of French cities, and these will have the same viability problems as the US suburbs.

I take exception to the accuracy of this website, comments by ryvr the temp of coastal waters of Pensacola Fl, 84 F currently.

According to this website the Temp offshore Pensacola Fl is 72F

I Down loaded temp history for Pensacola Fl for the month of April from weatherunderground into XL and found the Avg. mean temp for Pensacola Fl, it is 72 F. So where is all this heat energy coming from when all other stations have normal temps? After all Hurricanes need the energy from the entire Gulf not just coastal waters of Pensacola Fl. Someones thermometer has failed!

Here is weatherunderground SST map Eastern Gulf 4-22-06

Good catch.  The site that lists 84 degree temperature has this disclaimer right beneath:

Use the near real time water temperature data with discretion, because they have NOT been quality control processed and may contain errors.
As of 2003, the U.S. consumed 20 million barrels of oil per day. With a population of 300 million, that is 0.07 barrels of oil per day per person.

This means that for each dollar increase in oil prices, it costs each American 7 cents a day. If oil goes up $15/bbl, it costs the average American a dollar a day, or $365 per year.

Presumably the impact is much less for people in other countries, who consume less oil than Americans.

Today is Earth Day and I'm going to ride my bike.  I guess one of you will have to pick up my 7 cents ;-)

Of course if you go from the long term average of $20/bbl(*), we're up $55/bbl, $1400/yr per capita.

* - I think this is the 1945-2005 average, but interestingly that price was seen as recently as 1999/2000.  That makes it rough for folks that organized their lives in 1999/2000 for those energy prices.

Fellow Toders,

Here's an attempt at optimism in these dire, murky and gloodmy times. This is mostly sweet, but with a tiny bit of sour at the end.

In Denmark, in the north of the Jutland peninsula they've built the world's most efficient coal-powered electric power station. It's taken them over twenty years to develop the technology required for this state of the art project.

The station is currently around 50% more efficient, at turning coal into electricity and hot water, than most US coal-fired stations. If one includes the production of hot water, used for central heating, the station is between 93% to 94% efficient. When only producing electricity efficiency fall to 47%.

If all US coal-fired stations were able to match this particular Danish station, the United States could probably reduce its CO2 emissions by 25%. Of course, this would reguire enormous and co-ordinated investment.

The Danes have achieved this high level of efficiency by utilizing far high temperatures and pressures than one normally uses in power stations. This has necessitated the use of ultra high quality japanese steel, which can withstand these greatly increased temperatures and pressures. Apparently one is using temperatures of 600 degrees and pressures of over 300 bars.

The Chinese have shown enormous interest in the design of these Danish super-stations and it would appear the next generation of Chinese stations will, in part, be based on Danish experience and know how. Clearly there are massive savings to be made in electricity generation, if one can produce the same ammount using substantially less coal. Not only that, the level of investment in infrastructure to supply these new stations, is also smaller.

According to the Danes, at Elsam Engineering, the level of Chinese interest, is far higher than that currently shown by the United States. Not really surprising, is it?

Dont know if you guys saw this in the SF Chronicle today.
Sorry about that. I've been a long time lurker here. Never posted.

Welcome to you, then. Thanks for the link. It shows that some people are starting to change their behavior. Hopefully those changes will be permanent, even if gas prices do start to come back down.


I assume you are tied to the engineering/management side of oil.  In the hubert site they relate to everything in BTU's.  Oil contains a lot of BTU's and to try and replace it?  What would even come close and what are the real options/prospects of being able to do this?
It looks like we are heading for a world of hurt beyond the imaginations of people, even those who see it coming.  Is this accurate or are they trying to sell books?  Your postings seem more educated about the working of the oil business than anything else I read.  Can you eleborate? Thanks
In honor of Earth Day, CNN is rerunning "Melting Point," their special on global warming.  

They covered the Artic and Tuvalu, and that Pentagon prediction of widespread disruption and civil unrest due to climate change.  

Now they talking about increased hurricanes, and what that means for New Orleans.

RR says: "Well, right now all we have is a bit of a plateau, that wouldn't even be a plateau if you added Nigeria and the GOM back in."

This is not a good argument. There will always be some factors that contervail the underlying trend, one way or the other. If there were enough of a buffer, then GOM and Nigeria would not be so influential.

I do admit, however, that peak could be difficult to pin down. For one thing, as someone mentioned, heavy can make up for light, and so forth. Second, a world-wide economic slowdown can also change the equation. Third, in the case of the US at least, there is a HUGE amount of waste, and reining even some of it in could cut demand significantly.

Do I believe we'll go another ten years before hitting peak? No. At this point, I think the shoe is on the other foot. Someone would have to show me how or why we are NOT at or near peak. As so many have pointed out, there are so many major fields acknowledged to be in decline that anyone who argues against peak has their work cut out for them. And lurking in the shadows may be fields that are not yet acknowledged to be decline.

This is not a good argument.

Not if that is taken as the sum total of the argument, no. But it isn't. Another big piece is that producers allowed supply and demand to tighten up, because the price of oil was predicted to be depressed. They calculated wrong. So, they are bringing new projects online later than they needed to be.


Then it becomes a race between the declining fields and whatver new production can be brought online. That's where we'll need to see what you have: how it is you think increases will prevail over declines in the coming decade or so. And this in the face of declines that may not all have been acknowledged.