Interesting times get more so

Sheesh! There I was, just quietly slipped out of town for a quiet week at one or two of those conferences and westexas slips this little spark-emitting fizzy sounding thing into the comments. The FT story requires subscription, but the Mosnews seems to have most of it. The basic story itself is a dash of water in the face...all of it suggests that we are definitely entering one of those "interesting times", if we weren't in it already. (much more under the fold).
Venezuela, the world's fifth-largest oil exporter, has struck a $2bn deal to buy about 100,000 barrels a day of crude oil from Russia until the end of the year.

Venezuela has been forced to turn to an outside source to avoid defaulting on contracts with "clients" and "third parties" as it faces a shortfall in production, according to a person familiar with the deal. Venezuela could incur penalties if it fails to meet its supply contracts.

And from the Mosnews story.
Documentation obtained by the Financial Times shows that the state-owned Petroleos de Venezuela (PDVSA) made a financing arrangement this month with investment bank ABN Amro to facilitate the purchases of oil from Russia via Rotterdam.

PDVSA is believed to have dropped the Dutch bank after the Russian government agreed to provide Venezuela with an "open account" facility to buy the oil.

The Ruhr Oel refinery in Germany, in which PDVSA has a 50 percent stake, may be among the clients that are being supplied with the Russian oil.

PDVSA would not confirm on Thursday, April 27, that it was buying oil from Russia but said a statement would be issued on Friday. The company said it would be "logical" that the Ruhr refinery was sourcing some of its oil from Russia because it would be cheaper than transporting it from Venezuela.

When this is taken with the fact that the Bolivian government has just taken over the refineries and oilfields.
The measure "seeks to ensure the functioning of oil facilities to guarantee the normal supply of energy in accordance with international agreements as well and to fulfill domestic needs," an army statement said shortly after the president's announcement.
it suggests that we are definitely entering one of those "interesting times", if we weren't in it already.
On the other side of the coin, the Norwegians are now able to expand their exports of natural gas by 40% because of the start-up of two new fields. This will include an LNG facility that will supply the US among others.
Snohvit includes Europe's first large-scale liquefied natural gas (LNG) terminal with an initial capacity of 6 bcm a year and a potential expansion to 12 bcm a year. Built by Norway's Petoro and state-controlled Statoil, France's Total and Gaz de France, and Germany's Amerada Hess Corp. and RWE, the project will combine production from the Snohvit, Albatross and Askeladd fields and connect by pipeline to an onshore receiving terminal at Hammerfest. From there, the gas will be exported from the newly built Melkoya LNG facility. Destinations for the natural gas include the United States, Germany, Spain and France. The three fields have combined reserves of around 193 bcm, which at the expanded production rate gives the project a lifespan of 20 years.

This is good news and can be taken with the news that 3 new LNG facilities have been approved by the US FERC.

BP intends to build a terminal at Crown Landing in New Jersey, along the Delaware River. Its formalized risk assessment includes making the carrier berths deep enough for ships to land and unload safely at all tide levels.

Dominion's Cove Point LNG proposes expanding its existing LNG import terminal at Cove Point, Md.

Sempra Energy proposes to build a LNG terminal in Jefferson County, Tex., near the Texas-Louisiana border in two stages of 1.5 bcfd each

The Delaware facility is somewhat controversial
The terminal would stand in Logan Township, N.J., but its pier would extend into a section of the river that is inside Delaware. Tankers carrying 52 million gallons of liquid gas, enough to meet a day's energy needs for 17.3 million homes, would arrive two to three times a week in an operation worth tens of millions for each shipment and billions annually at current gas prices.

Mueller conceded that the court case could take 12 to 18 months to complete, barring the company from completing Crown Landing before 2010.

The Cove Point addition is also not without concern, although the intent to add a facility at Sparrows Point may be more controversial. Cove Point is, providing it can survive the controversy planned to come on stream in 2008.
The FEIS reveals that FERC is moving along with the Cove Point LNG expansion despite cries by Washington Gas Light (WGL) to reject the project until it can be shown that LNG deliveries from the Maryland facility are interchangeable with traditional gas and will not negatively impact the utility's distribution system. WGL in early 2005 blamed Cove Point's LNG for multiple leaks that erupted on its system. It contends that Cove Point's expansion could pose even more problems (see Daily GPI, April 7).

The expansion, which is scheduled for 2008, would increase the sendout capacity of the Cove Point LNG terminal in Calvert County, MD, to 1.8 Bcf/d from 1 Bcf/d, and would boost storage capacity to 14.6 Bcf from 7.8 Bcf. The project calls for the construction of two 160,000 cubic meter single-containment LNG storage tanks. Affiliate Dominion Transmission Inc. proposes to construct 161 miles of mostly 36-inch and 24-inch diameter pipeline in Maryland and Pennsylvania, and associated aboveground facilities in Virginia, Pennsylvania, New York and West Virginia. . . . . . . . . The Cove Point LNG terminal currently receive about 90 LNG shipments annually and would receive up to 200 shipments each year following the construction of the expansion.

Sempra's Texas facility is now scheduled to come on line in 2009.

Meanwhile the Japanese are buying more Australian LNG.

Toho has agreed to increase its LNG purchases from the North West Shelf to about 1 million metric tons a year starting April 2009, up from about 230,000 tons a year now, Woodside said Monday.
The Woodside-operated North West Shelf, offshore northwestern Australia, is negotiating new contracts with eight Japanese electricity and gas companies who originally signed up to buy a total of 7.3 million tons of LNG a year.
The 10-year Toho deal follows a March agreement with Chugoku Electric Power Co. (9504.TO), who agreed to buy up to 1.4 million tons of LNG a year from 2009 for 12 years. It also comes amid Japanese reports Woodside is looking for a 30% price rise in the talks.
And the Germans have bought into the Russian Yuzhno-Russkoye field which will provide gas for the pipeline from Russia that slips around Ukraine - maybe solving some of that problem.

WestTexas has done a great job of presenting his "ExportLand" Model" which demonstrates the reduction in supply due to an exporter reserving a greater portion of national production for domestic use.

Now we need to recalibrate that model to account for "ExportLand" making open market purchases in order to satisfy its prior contractual commitments.

Talk about interesting!!! And more than a little frightening!!

What is a bit of a thought, is that if Russia, or Saudi asked for imports to meet export demand.   You will have to write off some of the prodcution as its double billed.  If Russia sells it to Venz.  then its not selling it to others. But Venz. is making its exports.   Could we soon really see the breakup of OPEC??  
Well, surely OPEC has no more reason to exist, since they no longer have any control over the supply of oil, and never will again.

The only semi-useful function it might have, is to maintain some sort of ILLUSION of continued control. If it just dissolved itself, it might start a panic... as reality sinks in.

This is an excellent point.  If OPEC disbands, or continues in shell form setting meaningless quotas that follow the depletion curve, we know we've passed peak. This would be similar to the notification in the early 70s that allowed US lower 48 producers to ship as much oil as they could.  I forget when this actually occurred, but it was considered the sign that the US lower 48 had peaked.
Thanks for the kind words,   I started waving the red flag regarding net export capacity when I saw Khebab's HL plots of the top exporters.  

As several people have pointed out, a key aspect of the Export Land model is that increasing torrents of cash flow going to the exporters dramatically increase their rate of economic growth in the exporting countries, and thus their energy consumption, e.g., car sales in Russia are up 15% year over year.

Remember, what an exporter can export is their production less consumption.  This spread is narrowing, between flat to declining production and increasing consumption.

What an importer wants to import is the opposite, domestic consumption less production.   By and large, this spread is increasing, between increasing consumption and falling production.

Another factor is the dawning realizatin that exporters now have pricing power, especially the realization that they can sell less oil now for more money per barrel, and prolong the life of their production.

As the article pointed out, a big contributing factor to the decline in oil production in Venezuela was because of technical/political problems.  On the other hand, depletion marches on regardless of technical/political problems.

I am struck by the gap between the promise of the "vast" reserve potential in both Canada and Venezuela, versus the actual production results over the past two years.   As most of us know, there is a big difference between reserve estimates and actual production.

What happens to illegal immigration rates as Cantarell crashes?

Article on Mexico's oil production & immigration:

According to Venezuela's Daily Journal (March 30): "Pemex is now seeking to replace output at Cantarell, which contained 35 billion barrels of oil when discovered in 1976. The field peaked in production at more than 2 million barrels a day in 2005 and will decline by 30 percent to 1.43 million barrels per day by the end of 2008, Pemex has forecast.
I doubt that Mexico's poor ever saw any benefit from Pemex's riches. There may be other reasons for the increase in deportations like the Border Patrol actually doing a better job.
The main point in the noted article isn't that Mexico's poor ever benefitted directly from Pemex, its that the Mexican government depends so heavily on oil production-related revenues to run the country. When production starts its projected precipitous decline in less than two years, there probably won't be enough money for even basic services. Its not a stretch of the imagination to envision the government collapsing or becoming insolvent.

Once that happens, the number of truly desperate people attempting to cross the border will swell exponentially. Given how rancorous the debate over illegal Mexican immigration is now, can you imagine what it will be with 10 times the amount of people trying to get in?

In a few years, Mexico will look like Zimbabwe - for all intends and purposes, a failed state due to Peak Oil.

A consideration regarding net export capacity:  Exporters rely on exports to provide cash necessary to maintain and improve standard of living.  As global depletion sets in, these exporters will, according to the next export capacity discussion above, reserve increasing amounts of energy (oil) production for domestic use.  But this is not sustainable, because as their exports decrease, their economies will likely recess, with the strong possibility--in my mind--of demand destruction, forcing them to maintain production for export.

In other words, there is a feedback that should be conisdered that may ameliorate the tendency to lock up production for domestic uses.

No. As their exports (in barrels) decrease, their cash flow will increase as the price per barrel will likely increase even faster (depending on a number of circumstances).
You are correct that rising prices must be considered as part of the overall equation.  But I still think the global economic response must be factored into these models if they are to have any accuracy, and though there are different debates on what the response will be.  I vote for slowing and the falling real economic activity. I still see an oscillation of sorts, in which demand destruction (recession/depression) washed across the world, capping the price on oil (or even dropping the price).  The image I've always used is slamming up against a production ceiling (which is lowering because of depletion) but then falling back.  During those time periods, the price of oil will drop from its highs and exporters will be scrambling to find someone to purchase it so they can maintain cash flows.

Your point is well taken and correct.  I just am not convinced one way or another how this will play out.  I think economic modeling efforts must account for the scenario (in some sense) as I described above.

I don't think its just a simple case of the intersection of two sloping lines.

As an example of something less linear, if a country uses an initial injection of cash to start a local economy that produces a variety of goods, keeping that economy going with energy will be more important that the cash revenue.  Energy becomes the ultimate wealth sustainer.  However it seems those in power in oil rich countries have been happy to just take the cash and not invest it in the national economy.  There are  exceptions to this, I think the Saudi petrochemical industry is one example.

While thinking of these problems as overlayed slopes is a useful modelling thought exercise I think everyone acknowledges that reality is a lot more complicated and messy.


That's the big problem with unconventional oil
sources .. oil sands, heavy oils, oil shales,
and CTL are huge resources, but they will never
scale to replace conventional crude especially
once depletion sets in ..

Triff ..  

I don't know if anyone else has posted this.

Venezuela: A Sudden Plunge In Production?
 Dr. Joe Duarte


The Venezuela oil purchase report is indeed landmark in our opinion, since it offers multiple possible lines of thought, not the least of which is the possibility that it is a sign of the peak oil phenomenon.

To be sure, Venezuela's government is increasingly adroit in the financial markets, as Mr. Chavez has reportedly shown interest in using PDVSA and his government in ways similar to hedge funds, by timing markets and moving assets rapidly from one arena to the other.

Thus, this could be a shrewd business move aimed at cutting transportation costs to some of PDVSA's clients.

 That seems to be the party line. According to the Financial Times: "PDVSA would not confirm that it was buying oil from Russia but said a statement would be issued on Friday (April 28). The company said it would be "logical" that the Ruhr refinery was sourcing some of its oil from Russia because it would be cheaper than transporting it from Venezuela."

 Yet, the other side of the coin, which must be given a fair airing, is that Venezuela's oil production is rapidly dwindling, or that at least Chavez' gifts to Cuba and other left leaning South American countries, in the form of hundreds of thousands of barrels of oil, are starting to take their toll.

 If indeed some 10,000 wells are off line, and Venezuela's technical expertise is near rock bottom, then the latter is more likely.

 Somewhere in the midst of those two extremes is the truth. Unfortunately for the oil markets, and perhaps the global economy, we are not likely to find that truth until it is upon us, or more likely, until it has been in progress for months to years.

 One thing is certain, though. If PDVSA, and Venezuela are running out of oil, the news will eventually leak out, and the situation will gather steam, with significant consequences to follow.

Another thing to remember is Venezuela's loose alliance with Iran.  Could some of "loss of production" be tied in with escalating rhetoric against Iran?  Is this some form of preparation of reprisals if sanctions or military action begin against Iran?
ExportLand indeed. To quote
With gasoline prices at historic highs in the United States and some other Western countries, Saudi King Abdullah issued a decree Sunday lowering domestic gasoline prices by about 25 percent.
Thxs for posting this, HO!

Now what will the importing countries do with energy?  Continue the Fiesta or use it wisely to bootstrap a viable future alternative?

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

What do yeast do with sugar?
Hello MicroHydro,

Thxs for responding.  Are you worried about a fast-crash like me?  It seems so from your response.  If so, then please help spread the word on the need for distinct, large biosolar habitats with Earthmarine protection for when detritus entropy really kicks in.  We need all the mitigation help we can get to ramp up biosolar Powerup, sustainable population levels, and protected biodiversity.  Unless you have a better idea to possibly make us smarter than yeast for the coming squeeze through the Dieoff Bottleneck.

Even Jay Hanson, as hardcore a Doomer as they come, cannot bear to discuss his accurate predictions anymore.  Is time short, or do we really have the luxury of the free market to provide more party favors for the ongoing Fiesta?

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

Hi Bob,

I think there will be a series of crashes in the next 25 years not due to geology but due to political failure, just look at the diasters that hit the world in 1914, 1929, and 1939, and this was in an age of resource abundance.

My view is that outcomes will vary by locale.  Zimbabwe is suffering collapse (mainly due to political failure) and increased mortality already.  My location, NZ, probably has enough biosolar productivity to feed its current population size (but no food exports) even after the artifical fertilizers are gone, and enough coal to maintain a 1900 level of technology (trains, electricity, steamboats) pretty much forever, several thousand years.  In twenty years, I will be 70, so the longer term issues are academic for me anyway.  The only local worries in the next couple of decades are economic depression (likely), pandemic(?), and invasion(?).  As for Earthmarines, we only have 3 frigates to protect our habitat, not nearly enough to keep Japan, India, the US, China or even Australia out.

The US is in an intermediate situation, not as unfortunate as Zimbabwe but in many places much worse off than NZ.  It is hard to think of a worse place to be in the US than Phoenix, dependent on air conditioning, the car, and imported food and water.  Not to  mention the reconquista issue.  New Orleans was the first city to fall to climate change and political failure (which is not unrelated to PO - if the US was a creditor nation with a budget surplus, the levees would have been ready).  I would not be surprised if Phoenix is the next city to collapse, and not so far in the future either.  Have you considered relocation within the US?   As many have suggested, the temperate and well watered areas of the NE and NW have better long term prospects.

As for making us smarter than yeast, the dieoff is not the problem, it is the solution.  If planners have higher survival rates during the dieoff, the survivors might have a gene mix and culture more appropriate for the biosolar aftermath.  Of note several delphinids appear to be smarter than yeast.  Bottlenose dolphins kill their excess children.  Orcas seem to practice some form of birth control, but that is poorly understood.


Good post. One point. I do not think a budget surplus would have mattered in the case of New Orleans and the levee system. It was lack of vision. Same for a repeat major earthquake to hit near where the New Madrid did in the early 1800's (considered the most intense in historical times in the USA). St. Louis would be devastated because building codes for centuries did not take that into consideration. Interestingly Memphis has been more progressive on earthquake standards for decades than almost anyplace.

Maybe not so much a lack of vision, but a lack of interest on the part of those who controlled the money.  There was money enough for other things, but levees were not what the politicians were focused on.  What were they focused on?  Well, whatever the lobbyists and their money told them to be.

So yes, I think it was mostly a political failure.

Yes.  Remember that FEMA report, issued a few months before 9/11?  It predicted that the three mega-disasters most likely to hit the U.S. were a hurricane hitting New Orleans, a terrorist attack on NYC, and an earthquake hitting San Francisco.

They got two out of far.

oh gee, thanks for reminding me.  thumps head

San Francisco

Hello MicroHydro,

Thxs for the thoughtful response.  Yeah, the US Southwest is predicted to be hit hard and early--too reliant on detritus infrastructure, and at the ends of this infrastructure spiderweb, with vast Overshoot relative to the sparse biodiversity.  Such is Life: Dieoff IS the solution and most of us should expect to die in place.

I cannot leave till my mother expires [83 & frail], but I hope she lives forever.  My father died last Aug: I am her primary caregiver and a relocation would kill her.  I just hope things hang together while she lives.  My longtime girlfriend and her son, now 32, [I dearly love both] are in full denial-- both refuse to even discuss it, which breaks my heart.  I am highly conflicted over this--no bio-offspring of my own, but severe dopamine addiction to these precious, but deluded people.

Severely doubt if we will have the resources to relocate to a more survivable area, and our small house and lot cannot provide any significant food.  The last piece of vacant neighborhood public land, that could have provided a small community garden, was recently paved over to provide a senseless senior community center.  My emails trying to stop this from happening went unanswered by the city council. Those elderly that could afford it, relocated elsewhere: neighborhood is full of young immigrants with lots of kids/family.

My neighborhood is not wealthy, by any stretch of the imagination, with a high mix of various groups-- hopefully ethnic strife can be averted.  I have talked to all my neighbors-- they think I am nuts, just like my significant others.  I expect that they will say I was right all along when they come to forcibly take my last can of sardines.

Lots of shuttered businesses around me, but GoodWill Store and Salvation Army Store is booming.  Sadly, exurbian McMansions booming--500,000 moved to the 'Valley of the Sun' in the past five years--endless asphalt paving and bigbox malls in direct violation of Kunstler's warnings.

Those posters that can afford a survival retreat:  I am happy for them, please don't waste your opportunity.  Politically work to somehow secede your habitat from the hapless detritovores, and welcome any biosolar-minded neighbors.  You will need all the help you can get from being overrun WTSHTF.

Hopefully, my free gift of large biosolar habitats with Earthmarine protection takes root-- then maybe we can hire on as bottom-feeding serfs until the end of our days, otherwise, the coming strife in Phx will take us out early.  Such is life: the future belongs to the young--always has, always will.

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

You are with your loved ones.  I can't think of anything more important than
that.  Think of most of the people in this country (many who post here) who have family scattered all over the country and abroad.  At least in your situation, potentially dire as it may seem, you will have many precious moments together before the SHTF.
     Do you own some sort of crystal ball?  Who the hell really knows how this is all going to come out?  Maybe you are meant to be exactly where you are right now.  Granted I rate Phoenix right up there with Las Vegas as about the most unsustainable place to be in this country, but when making that assessment, I am using limited knowledge of future weather patterns and total unawareness of whatever small, non-historic niche you may fit into.
     In less than three weeks, I am breaking my lease on my "luxury" apartment in north county San Diego, quitting my $75K+ a year job (with full benefits) at Northrop Grumman, and moving to Colorado to live with my mom in close proximity to the rest of my family.  
     My mother lives in a Frank Lloyd Wright-clone house that is all brick and glass, no attic, no possibility of insulating or even closing off areas to reduce the heating costs in winter.  While she does have three acres with goats, chickens (may be a bad idea), horses and mules, there is no topsoil worth mentioning, and no independent water supply.
     My first choice to live in these "interesting" times would be a place like Minnesota, Wisconsin, Oregon or maybe Vermont (gotta love their secessionist movement).  However, my family (at this point) would never consider it, so I'm Colorado bound.  To the suburbs.  You know what?  After 30+ years of being away from my family, it's OK.  THERE IS NO BEST PLACE, just people you love.
PS.  Not a single person I work with, even when I said I had no job lined up, said anything but "Go for it."  Maybe everyone is not as clueless as I believe them to be.  
Chickens will do some fierce damage to a garden

I've been doing this sustainability/survival stuff for over 30 years, cetainly long before it had a name and became somewhat fashionable.  To me, the reality is that it doesn't really matter whether the crash is fast or slow.  There is neither the time, the will, the individual/area experise nor capital to pull it off.

Further, my experience with relocalization efforts is that the groups (who you would expect to be in the forefront of the crash issue) never, ever take the time to prioritize what needs to be done in order to survive.  I've written a number of essays on this topic that have been posted on other forums or circulated by email.  My concern is that the groups give their members a false sense of security while wasting time on peripherial/warm-fuzzy issues.  If concerned people are going in what I consider to be the wrong direction based upon my actual experience "doing it", the remainder of society is doomed.

You use words that no other poster uses.
Biosolar habitat.
The lack of use of such terms by others makes understanding what you write extremely difficult and therefore meaningless. Could you please find better known terms so we know what the hell you are saying?
Here I'll sell you a clue -- at a discount price:

Detritovore: Someone who survives off the leftovers of gone by ecosystems. Dumbed down: addicted to fossil fuels.

Earthmarine: Military operatives whos mission is to protect the habitat (place of living) of those who want to maintain a Biosolar lifestyle. The protectors of the future society that we must build. Service will be mandatory. Like in Isreal (except we'll be the good guys)

Biosolar Habitat: A place of living for people who wish to survive off the daily input of the Sun, with very careful management of detritus energy sources, with the goal of fully weaning off detritus.

And Bob ain't the only person who is using these terms. These are the terms of the revolution.

Don't you think your hopes perhaps imply and presuppose an excessively optimistic view of human nature?

There is actually a whole world out there that does not assume people are nice.  There have been unending discussions/debates on

between Jay Hanson and others.  Jay's position is that people will try to take you out because it's in their genes.  He also has his own forum on yahoo - dieoff_Q&A.

There are also untold forums such as  and

who discuss the nitty-gritty of security, that is, weapons and tactics among other things.

One of my essays (mentioned above) dealt with priorities. The first item on the list is personal and area security.  I live in the boondocks and I assure anyone that it would be a mistake to come up our private road if TSHTF.  FWIW, the second item is potable water.

To get a feel for what is out there, here is a story, novel actually since it's close to 300 pages, about what happens after an EMP.

Here is a short one about a Bugout gone bad:

My point is that there are a lot of people, although they are a small percentage of the population, who take a societal crash seriously.  I am reminded of a sign that used to be in every country car repair shop:  "In God we trust. all other pay cash."

Hello Anonymoose,

Thxs for the definitions--could not have said it better myself!

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

Earthmarines? As Cherenkov points out often war is self serving, why would earthmarines be better than detritovores. And any detritores will have much better weapons than Biosolars.  Tanks don´t run on tofu and bushido culture is dead.  The Industrial era has destroyed the noble warrior class.  No samurai no jedi.  This Biosolar/Earthmarine jazz is science fiction nonsense.  Wars will be fought over oil between oil consuming nations.  The invisible hand will push alternatives to the forefront.  
Hello Oilrig Medic,

Thxs for responding.  If enough people can be informed by Peakoil Outreach efforts then they will realize war will only result in the fast-crash scenario lickety-split.  Hopefully, they love their children more than that and purposely chose Powerdown.  Would you rather have your child die in your arms or bleed-out in some forsaken sand dune 8,000 miles from your last embrace?  We will soon have to make this godawful Dieoff decision.  Choose wisely please.

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

   I think your either/or argument oversimplifies the situation.  We have a whole lot of coal.  Not estimated reserves or something another country claims...its ours.  Do I think we should burn it and keep up our pace of living no but I do think we should us it to transition to solar/hydro nuke and continue research on efficiency.  No parent wants to bury a child and I don't think it will com to that.  At some point there is a diminishing return both of drilling for oil and going to war for it.  So I don't believe we have to choose between death here or there.  Incidentally I am glad we have alarmists to draw attention to the cause but I think Earthmarine/Biosolar/Detritovore could easily be labeled "crazy" and draw attention from the real goal.  Steady progressive powerdown to a sustainable level.  I am in Sao Paulo, Brazil today and I have not been in a private auto for 2 weeks.  There is no AC in my fiance's house and no water heater.  But the beer is cold and the food is great and I walk or bike everywhere. Its a nice lifestyle.  I see this as the future not roving bands of pirates.
Matt in Brazil
Humans are smart enough to make beer from yeast.
When I read today about Bolivia it made me think of the  Will Hutton column that was discussed in an earlier post, in particular my interpretation that he was arguing a nationalist and protectionist line, e.g. maintain the supplies for the nation.

Though nationalization of energy does not directly imply that they will be secured for national use.  It could just mean that the fields are exploited for a different group of people, whether the population at large or those who inhabit the power centers of government.

Another though: nationalization could result in (a) decreased production because of inefficiencies, leading to slower depletion or (b) gross mismanagement and damaging of the fields, as apparently occured in Iraq, though I'm not sure whether one can damage a gas well in the same way that one can an oil field.

I think the "gross mismanagement" was not due to nationalization so much as to the U.N. sanctions.  
The growing trend toward nationalizing or otherwise "securing" or regulating precious natural resources, especially energy sources, seems to be gaining ground (Gazprom, Venezuela, Bolivia, Iraq).  I would suspect that oil will start to become far less fungible if this trend continues.
Nationalizing = less fungible?

Not necessarily. They will probably continue to sell to the highest bidder. Mostly, I think it's a matter of who gets the windfall profits.

Nationalizing = less fungible?

Not necessarily, but a lot more likely.  Corporations raison d'etre is to maximize profits.  Governments operate very differently.  They MAY still sell to the highest bidder, but already you can see that Venezuela is operating differently.  They sell some of their resources to the highest bidder, but they also provide some at a lower price to their own citizens and to their allies at a lower cost.

And when energy is being taken out of the export market and being provided to the people who couldn't afford it at market price it meands less for the USA.

A revolution is happening in South America.  It started with Hugo Chavez, and is spreading throughout the region to Argentina, Peru, and Bolivia.  And one implication of the revolution is that more energy will stay in South America, and less will be exported to North America.  

I agree with Testudo. Government seizure of oil resources will alter their distribution, not just redistribue the profits.

See Jane Jacobs terrific little book, Systems of Survival: A dialogue on the moral foundations of politics and commerce. She says there are only two sources of wealth: trading or taking. (what about growing?) Anyway, Traders (the world of commerce) and protectors (or "takers") have distinct, internally consistent value systems.

The trader values honesty (keeping contracts), ingenuity, dealing openly with strangers, work ethic,...

The protector (politicians, churches, military,..) value prowess, ostentation (to convince others of your power), largess (ditto), deceiving the "enemy", loyalty,..

so government ownership of resources will have different values and different results. I am not making a value judgment about whether the change will be good or bad.

Interesting concept. I assume you classified Wall Street as "protectors".
Jim Jubek's column (below) supports this assertion.
Reading this paper'natural%20gas% 20%20depletion'
suggests that the gas in Australia's North West will soon be needed in the South East where the population is. I understand the thinking is not LNG shipments around the coastline but connecting to pipelines from depleted fields. It would be strange if one side of the country exported gas while the other side  was in crisis.  
It would be strange if one side of the country exported gas while the other side  was in crisis.

Canada could end up in this position due to our NAFTA commitments to the US.

Petrofuels was the whole point of NAFTA and the coding of CAFTA in the first place. To the oil-unaware, free trade between a developed country and a third world cesspool of a country makes no sense due to labour imbalances. Mexico's economy is puny compared to its population.

With South America wising up, you can see why CAFTA was pushed. We merely wanted free-trade access to the oil and NG! My most any measure, Mexico is a failed state or close to it. Corruption is rampant from Vince Fox on down to the workers in the water departments. Despite the oil, Mexico is about diet-poor. No wonder Mexicans risk life and limb to come here by the millions. People don't risk life and limb en masse for nothing. A failed state and its escape is a great motive!

Ahaaaa! Got it! Thank you Max.

I always assumed that the US had a neo-colonialist agenda with respect to creating the pan-American free trade zone, but I could never put my finger on it. All about oil after all... Or mostly.

Hence the activism of Chavez in preventing the conclusion of such a treaty, which would have given the US access to South American hydrocarbons at the same price as domestic consumers. Yes Westex, this net-export thing is certainly a key concept. If if turns out that the whole of South America ends up with preferential prices on Venezuelan oil, perhaps the entire continent will no longer be a net exporter?

That would be my thought, yes.
To me, this illustrates a weakness in Westexas' arguments. He suggests that increased demand on the part of exporting countries will mean less oil is available for the rest of the world. This is true as far as it goes, but it only sees part ofthe picture. What this overlooks is that increased demand on the part of any country means less oil available for the rest of the world. Whether the oil goes to satisfy internal demand or demand elsewhere, it amounts to much the same thing.

This story illustrates how this works. The fact that Venezuela is (normally) an oil-exporting country makes the story interesting, but that isn't all that relevant. Any country setting up a contract to receive Russian oil will mean less available for everyone else.

I don't see any conflict between your statements and those of Westexas'.

The shocker is that a key exporter has entered the open market not as a vendor but as a buyer. I guess tomorrow we find out that Saudi Aramco is starting to fill a strategic petroleum reserve. I understand Ghawar has characteristics that would make it a great SPR resevoir.
You mean their going to extract oil from Ghawar and then pump it back in? I can think of an easier way . . .
I think the big question is why is Venezuela having to import to meet contracts?  Did its demand increase that dramatically, did it contract for more than it was producing, is their production becoming increasing heavy sour allowing total production numbers to remain consistent but not to meet contracts, or is total production declining?
i assume that hugo and the outside oil companies are playing poker, and that hugo guessed wrong.
In looking at VZ production levels, you have to keep in mind the Oil Strike of 2002-3 (aka Oil Lock-Out, aka Oil Sabotage).

After the management of PDVSA shut down production and sabotaged computer control systems, and after Chavez fired 40,000 PDVSA employees, they have had a very hard and slow time attempting to get production back up to pre-strike levels.

The oil's still there, but they just can't produce it very fast. That's one (of several) reasons that Chavez has wanted oil prices to stay as high as possible : maintain cash-flow while trying to recover production levels.

So once again (just like with 'Global Warming' vs 'Global Climate Change'), we need to be careful with our terminology. Yes, global oil supplies are about to peak, but from time to time (like right now) other factors (refinery capacity, available drilling rigs) will be the proximal cause of supply tightness and high prices.

If we harp constantly about 'Peak Oil', it just gives detractors an opening to deny the concept by claiming that it's "just oil companies refusing to build new refineries in order to drive prices up".

The more obfuscation that we enable, the less we can focus public attention on coming to grips with necessary and ineveitable changes...


Agreed - there are a lot of detailes about this that may not be representative of some sudden decline of their wells.  We'll have to keep an eye on it longer tern to see if it keeps up, and hopefully learn more.  
The other side of the coin is that coin is that things are NEVER perfect everywhere in the Oil Patch.  There are always "unexpected" reasons for production & refining shorthfalls somewhere in the world; usually several.

So blaming quite normal problems for production shortfalls obscures the underlying geological issues.

That said, the actual peak in world oil production will occur just before some medium to major supply interruption.  By the time that problem is cleared up (and before another one occurs), natural depletion elsewhere will decline more than the recovered oil production.

I've often thought of this concept of a declining natural "Capacity Ceiling".  That is the geological production that would be possible if you took out all the political, technical, etc supply issues out.

Like WHT's oil shock model, each non-geological disruption  (ie war in Iraq) will extend reserve ammounts and raise the height of the future ceiling a bit from its pre-disruption level.  But eventually decline will continue to lower this ceiling eventually.

As you say, by the time the disruption is resolved, the ceiling may have lowered to a point where a fix to the disruption won't result in increasable production.

I think this also applies to the demand side.  If there is a major economic recesion just as or after peak kicks in, we will see a lot of head room in the supply side as demand greatly reduces.  But by the time the economy might be set to recover, the geological factors will have lowered the ceiling such that this headroom is gone and production to fully complete the recovery is not possible. This would lead to another crash resulting in a ever downward occilation.

I too think the crash will come in a waves of crashes, with each recovery not reaching as "high" (whatever that quite means? Avg standard of living?) as the last.

This also means that the overall timeframe of descent could be much longer than if it were just one long gradual descent, as the Oilshock model shows that even short major disruptions can lock up some serious reserve volume and significantly delay the next supply and demand collision.


To me, the key strength of westexas' theory is that it is the revenue windfall going to the net exporters that stokes their demand.

A recent Wall Street Journal article on the Iranian situation explained this effect quite nicely:

You are correct it is of no concern where the oil is produced or consumed when looking at the worldwide picture.  However, when you say that " whether the oil goes to satisfy internal demand or demand elsewhere, it amounts to much the same thing"  that entirely depends on exporting countries continuing to permit a free global market for their oil.  When any exporting country protects their own consumption, provides oil for their internal market at less than the free market price, or uses cheap oil as leverage over other states, then this whole question becomes very relevant.  The call in the Will Hutton article for UK depletion to be reduced and a SPR established is also a clear request for interference in the free market to the benefit of the UK.  Whether that would be legal in UK or what the impact on the econony would be is open to question, but that call is going to be repeated with increasing frequency in many countries.
Once possible scenario is that an exporter not only transitions some production from export to internal comsumption, but that it cuts back overall production so as to provide a longer period of internal consumption.  This reduction may be over and above natural decline rates.  
Cutting back + creating an SPR would almost certainly require:

-An act of parliament
-Nationalisation of private companies, or at least a golden share for the UK Gov.
-compensation of said companies
-Voluntary production restrictions.

This would have been possible two decades ago, and Indeed was a serious item (British National Oil Corporation or BNOC). It was scrapped in the 80's.

Whether or not Nationalisation would have led to the development of the latter extensions of field life or alternatively led to stagnation in the low oil price era is something we will never really know.

I dont think Hutton's proposition is valid now.
He did write a pretty decent book though.

True. However, as Westexas is based in the USA (as are a lot of the posters)where the increased demand is coming from is relevent (i.e.another source of increased future demand, other than China or India, has been identified). The MSM has yet to mention this. As the USA is a net importer, it is relevant for those based in the USA (but as you state, irrelevent for the whole globe).
I think you are missing the strongest point of WT's argument. The exporters that control their own oil are able to use MORE oil, i.e. develop, build a middle class that consumes the way we do.
Venezuela has sufficiently mismanaged its fields that production has declined to the point that she cannot meet current contracts... or, new very heavy oil has not been developed fast enough to replace natural depletion of lighter oil fields... what difference does it make? Russian oil now going to satisfy V contracts is not available for world markets. Looks like a reduction in oil available to importers...
V production will likely continue to decline as big oil sours on investing there. If I were a stockholder, I would certainly vote against putting another dime in, regardless of the effect on world supplies. Morales may find similar attitudes following his nationalization of ng fields...
How were the fields mismanaged?

While totoneila's comments may have some weight in Venezuela's case, I think it is more relevant to the USA and Canada (Europe?).

In the case of Venezuela it is called good old politics. When Chavez was in the process of consolidating his power, he was opposed by the Venezuela Oil Industry leaders. They were part of the old guard who were happy with most of the money going to, as a rule, to the lighter skinned part of the middle and upper classes.

So Chavez had to purge some of the top end of management and some of the labor aristocracy within the Venezuela oil industry - hence a decline in production.


Looks like a reduction in oil available to importers...

i don't think so, we see above...

Venezuela, the world's fifth-largest oil exporter, has struck a $2bn deal to buy about 100,000 barrels a day of crude oil from Russia until the end of the year.

I imagine if an 'importer' offered to pay 2.1 billion, then Venezuela would be looking somewhere else... It's just a matter of adding up the global supply and demand, and who's willing to pay the price (at least in this instance)

see also: related comment

Did I punch some numbers wrong or is that really $54.80/barrel ?  I think Venezuela's getting a deal.
"until the end of the year"

Curse those little details... about $82/barrel or so depending on when exactly that starts...not so great a deal after all.  But why above market, then?

Hello JKissing,

From the link provided by Westexas:

Quote: "Under President Hugo Chavez, PDVSA's oil output has declined by about 60 percent, a trend analysts say has accelerated in the past year because of poor technical management."

I believe it was Matthew R. Simmons that talked about how many key energy employees would be retiring, and how the massive layoffs in the '80& '90s severely impacted the required and extensive training to bring the younger generation up the technical and financial detritus management ladder.  Perhaps this decline in Venezuelan output is partly attributable to this whipsawing effect in the petroleum employment history, and will it possibly start showing up in other locales?

Sounds like a statistical endeavor for the always impressive TOD data freaks to dissect.

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

Could any of the info here be the reason the Citgo refinery in Texas City is for Sale?
There was an article recently indicating one reason teh Citgo refinery was being sold was that it meant that Chavez no longer had to provide info to the SEC. Probably others too but given that there has been mention about him shifting exports from USA to China it may make sense that he doesn't want assets in the USA in the future. One always wonders what deals they make when the Chinese come to visit these leaders.
Hello TODers,

Interesting times indeed!  The rising political firestorm over illegal immigration, if events sadly turn tragic, may  eclipse the Peakoil Outreach discussion.  The US has to be very careful in how the illegal immigrant issue is handled.

My fear is that radical elements on either side may get out of control and do something drastic to rapidly polarize society.  If all of a sudden the immigrants cannot safely do their jobs for fear of radical reprisal-- millions of us native born citizens may have to suddenly work the fields, the fish packing plants, and the animal slaughterhouses to keep ourselves from starving.  Recall that a Halliburton subsidiary: Kellog, Brown, and Root [KBR] has an open-ended, no bid contract for $385 million to build and maintain 'camps' if required.  

Hopefully, cooler heads will prevail. How many of us can slit the throat of a lamb or calf to provide lambchops and veal to the elites?

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

385 million aren't going to cut it, at keeping a camp open.  might do for keeping a prison going at say a state level.  Just turn the inmates of the state pens out to work the feilds, alah the neck bands of the movie "running man" .  Its not that bad, most inmates don't do a lot of work these days.
there's only about 2.2 million inmates being held and about 12 million illegal immigrants, prison labor would fall way short
I think what we are saying here is that there are not enough potential "slave" / "psudo-slave" human workers in the pool (convicts and undocumented, thus exploitable, migrants) to replace the virtual "energy slaves" that fossil fuels have acted as for the last century.  

Further: the rising cost of fuels depeletes the available quantity of "offshored slave labour" in the poor parts of the world available to we, the  rich "slave owners", as these folks are going to need to devote more and more of thier labour to subsistance tasks, leaving less to be taken by us. (By this I mean IMF & world bank  "debt repayment" and the continued supply of very cheaply produced offshore goods and services)

And also: The number of "energy slaves" available to us will reduce due to the double effects of post peak output depletion and reduced export/doestic consumption ratios within producing staes due to the demands of their internal demographics and economics as has been well documented here.

Thus we in the european colonised states are faced with finally leaving the age of being the global slave owning class and actually making our own "living" off of our own domestic resources, such as they are.

Now thats a thought which, when it really sinks in, will scare the hell out of people, to actually have to return again to the kind of reality that 3/4 of the global population never left, but that we have not seen ourselves in 2 centuries or so, as the doomers say, its likly to get very bloddy.

I've been thinking a lot about this, J.M., especially because I live in a region where migrant labor does a lot of the apple and peach picking, as well as a lot of hoeing in the spring.

I've done that sort of work, and its tough.

The civilian inmate camps to me are interesting. As U.S. citizens begin to fall off the economic wagon (and I can see it coming), these camps might provide them and their families with a place to live and work as a last resort.

Remember when all the Okies fired up the Model Ts and headed for California during the Dust Bowl? Well, that caused a huge social upheaval, and there really is no "California" to escape to today. So freedom camps around the country might not only be voluntary, they might be seen as salvation for millions of people.

Voluntary serfdom might be in our future.

The US CCC camps of the 1930's spring to mind, actually.
indeed, well put, especially the last couple of paragraphs

I for one am hoping the outcome of oil depletion brings on that very thing, a return to being forced to actually work for our lives without the crutch that petroleum has become. I say bring it on. I have my doubts that it will turn out to be what any of us can imagine though.

Given the nature of the US finances and just general way we do things these days I have a hunch if oil prices climb quickly enough even say 10-15% a year on top of the real inflation rate thats running at like 8-9% it may be one of the driving forces that may very well break this country. The ruling class has a tenuous hold on things now, it can get out of hand very very quickly.

Like the US military, our country in general may be quite powerful and broad, but it has little depth, no savings, and no stocks of much of anything saved up.

I think it will be quite interesting in say 30 years or so to sit back and compare and contrast how the big industrialized debtor nations handled all this versus how other countries have. So far we have Russia's collapse and Cuba to see what happens when your energy is abruptly shut off. We live in interesting and possibly tragic times.

Just zero turmoil where I was with the immigrant thing, I wanted to eat at Little Michoacan tonight but they were closed, that's a kind of dodgy neighborhood (Fair Oaks and Sunnyvale Ave.) and may have had a rock tossed through their window or worse, a boycott by the locals if they didn't close. I wish they'd make their flan in smaller batches, they sell it in mini tubs good for 2-3 people.

I took a look at the gas station and gas is up a dime from where it was when I last gassed up on Friday. This is what the average person notices. Depending on business I may have to gas up again tomorrow or not for a week, I wonder how much higher it will be then? It was still only $13 in gas for me to go to Sonoma for the weekend.

I've got the squawk box on Air America and wow is it depressing. Bush, bush, bush, if the guy's such an idiot then why does he hold your attention so much when there are much bigger fish to fry? There was a glowing review of a book called The End of Poverty, that's right, ain't no one gonna be po' no mo'. I guess this is why global poverty is far worse than it was 30 years ago, and those who study such things have found that a slave, yes an honest to goodness slave, is cheaper in inflation-adjusted money than EVER.

Sounds like business to me, rather than any strategic "Great Game".

What does all this illustrate (geographic oil swaps, LPG shipments)? Increased liquidity/fungibility of fossil fuel supplies. The market correcting imbalances : gas is expensive enough in N America to justify shipping it from Norway, even though Norway is interconnected with the rest of Eurasia.

This sort of activity, surely, is indicative of the futility of trying to "secure" supply? The market rules OK.

Interesting piece in the Times today:,,8210-2160509,00.html

End paragraph: ' The Stone Age did not end because it ran out of Stones' (yawn...)

The FT article can be read here (no subscription necessary):

Dunno if it has anything MosNews doesn't.  It is missing the graphs from the FT original (or so it says).

Jim Jubak at MSN Money has a new oil column out today:

The oil world's new bullies

Hysterical stuff in there. Yergin predicts 97 mbpd production by 2010? Let me laugh a bit more here. And here's the sad thing - when Yergin is wrong  in 2010, he will still be highly paid for giving his incorrect opinions on a subject about which his own track record grows progressively worse. People will still publish his useless statements and people will risk fortunes and lives on his bad advice.
Jubak's article says (on page 2):
...most oil experts are predicting that production from the big oil fields of the North Sea and Alaska will peak by 2010 or 2015...

I wonder which oil experts these would be?

Interesting times yes.
The political animals are starting their panic stampede up on Capital Hill in Washington.
Blood must flow for the surprise surprise increase in gasoline prices. Should it be Republican blood that flows at the November guillotines or Democratic blood? Whom will the people "blame"? The Republicans offer $100 bribes to every man, woman and child in order to save the Republican neck lines from the blade of voter outrage. The Democrats crow about how they voted to raise CAFE standards before they voted against it. Decrease tarrifs on Brazillian ethanol so as to bring in more "energy" to the USA or raise the tarrifs so that the "free markets" in the USA will start making ethanol of their own? Drill ANWR now? Drill offshore Florida and California now? What should we do, what should we do? Oh My. Oh My. Somebody's to blame, but it ain't "us". Blame "them". Kill "them". Don't look at "us". Kill "them". Blame them.

Run and shreik.
Run and shreik.
Oh my.
Oh my.
Intersting times.
The monkeys are on the run.
The lemming herd smells the edge of the ledge.
Panic is here.

When in danger
when in doubt
run in circles
scream and shout

I would not expect the "powers that be" to wait around to be blamed.  From an internal political perspective, there are always some individuals that can be sacrificed.  But what is really needed is an external enemy to point to deflect the people's anger.  It will need to be something that can be set up quickly.  Let's see now......who could it be.....

Who to blame? 1.Iran 2.Iraqi "insurgents" 3.Tree-hugging econuts 4. Russia 5.China 6.Venezeula 7."Liberals" 8. Arabs in general 9."Peak Oil Conspiracy Nuts" 10. Big Oil 11.Illegal immigrants. The list keeps growing. Remember when only Russians (better dead than Red) were evil?  
My point is that we human animals are crazed creatures who run in circles, stampede, shreik, point fingers, and finally kill each other all in hopes of saving our own skin.

None of this will rationally solve "The Problem", namely the failure of Oil Extraction rates to keep up with Oil Burn up rates.

When will we start holding hands again and working on a rational solution instead of accelerating our mindless stampede towards the edge of the cliff?

My guess would be "never."

Either we'll do the crazed monkey thing, or we'll vote in/allow an autocratic central government/dictator who will save us from ourselves, at the cost of our freedom.

Of course, as Heinberg points out, "rights" cannot be divorced from resources.

Moyers asked Asimov, "What happens to the idea of the dignity of the human species if this population growth continues at its present rate?" Asimov replied:

It will be completely destroyed. I like to use what I call my bathroom metaphor: if two people live in an apartment and there are two bathrooms, then both have freedom of the bathroom. You can go to the bathroom anytime you want to stay as long as you want for whatever you need. And everyone believes in freedom of the bathroom; it should be right there in the Constitution. But if you have twenty people in the apartment and two bathrooms, no matter how much every person believes in freedom of the bathroom, there is no such thing. You have to set up times for each person, you have to bang on the door, Aren't you through yet? and so on. In the same way, democracy cannot survive overpopulation. Human dignity cannot survive [overpopulation]. Convenience and decency cannot survive [overpopulation]. As you put more and more people onto the world, the value of life not only declines, it disappears. It doesn't matter if someone dies, the more people there are, the less one person matters.

Great segment, Leanan. Thank you for this one, it is going on the wall here.
Step back is right.

The human animal has never been one to solve geopolitical resource squabbles with anything other than force.

If exporting countries start witholding oil for domestic consumption and it affects the good ole US of A, we will see military action post haste.

Last man standing.


The human animal has never been one to solve geopolitical resource squabbles with anything other than force.

Pretty sure Venezuela offered us discounted oil this winter to alleviate stress on poor people....Venezuelans are human aren´t they?  Anybody have a # on how many million tons of food th US gives away?  

Who to blame?

What about the French? Surely it's their fault somehow.

Yes, the blame game was certainly played out to a bloody extreme during the French Revolution, but in the end, all that blood letting did not produce a "solution". It merely hurried the collapse of an unsustainable older organization (the 3 estates) among those of us human animals who spoke French.

We are now at yet another turning point in human history. The old capitalist and communist systems are no longer sustainable because the resources for sustaining them are drying up. The communists collapsed first because their systems were far more inefficient and corrupt than the capitalist systems. But the capitalist systems are collapsing also.

How do we know that that the Aemrican capitalist system is now collapsing? Because you see American Senators running around like French aristocrats without head on shoulder. They run in confusion not knowing how to make the correct appologist noises for what is going on. If global "free trade" is the golden answer, then how can you vote for raising tariffs against Brazillian ethanol? How can you admit the Brazillians did it right and we did it wrong? How can you vote for bribing American voters with a return of $100 of their own money? How is running the money in circles going to solve anything? Hell, even Joe-6-pack American understands that the $100 rebate is a scam. If the Markets always provide, then why are they not providing now, in our time of need? Something is wrong. And yet the Congressmen, the President, and all his think tank advisers cannot put their fingers on it. They have to frame the question and answers in the context of the capitalist Market System. That system does not allow for the concept of no more cheap & abundant oil and what do we do now?

Concerns pressure on Iran re: nuclear program leading to supply disruptions: Crude oil futures top $74 a barrel

While in Venezuela they are just giving it away: Cheap Gas Fuels Fracas in Caracas

Dime a gallon gasoline. Makes you wish you owned and had a license to fly Steve Fossett's Global Flyer. Clean out the tanks and fill it with a quarter-load of premium unleaded, drive to Caracas's airport, fill 'er up with premium unleaded, drive back to siphon it off until you have a quarter-load left. Then, you repeat the trip to get another "tank o' gas". If I was Steve Fossett, I'd consider it.

Given frustration with gas prices, when I mention that scenario, it strikes a chord with motorists. Given how commuters wish to overfly traffic, the Steve Fossett -mobile only adds fantasy points becuse you can drive it to get cheap gas. On a more serious note, when Steve Fossett made his round the world drive, he could have stopped off in Caracas to start the drive itself, using cheap fuel.

Caracas - we have a problem.

Chavez fired 18,000 coup-supporting oil industry management workers in 2002. Isn't it about time they got someone to replace them?

Reported on the Department of Energy website on May 1:

"Traders Expect U.S. Gasoline Imports from Venezuela to Slow to a Trickle as Refinery Problems Continue

According to traders, gasoline shipments from Venezuela to the United States are expected to slow significantly in the coming months if problems at refineries in Venezuela persist. Experts have already expected the Venezuelan import flow to slow due to stricter U.S. fuels standards. Shipments are down to 3 to 4 cargos per month from 10 cargoes per month (about 100,000 b/d) before refinery problems began last year.

Reuters, 16:17 April 28, 2006."

I don't know about you, but I think of this as a good thing for the long term: oil not used now is saved for later. No doubt there is a little of this kind of thinking going on in ruling circles with respect to Iraq, where enormous permanent military bases outside of major population centers are going up within striking distance of sabotaged (=saved) oil fields.
I don't think its a good thing at all. Iraq's oil may be "saved for later", but not for use by America. Forget the fact that you're apparently glossing over the criminality involved in the near complete destruction of Iraq's infrastructure and the wholesale murder of its citizens, there is absolutely no guarantee that those "permanant bases" will be permanently staffed. There were a number of "permanent bases" built in Vietnam as well. I wonder what happened to those?

The fact is, when the US is uncermoniously kicked out of Iraq, someone else is going to control all that oil. I'd place my bets on China.

I didn't say I agreed with the Iraq strategy in the slightest. I gave a public antiwar speech in February 2003 before the invasion. I'm just observing. And you are correct that the US military was not expecting to have to evacuate Vietnam either. All I am saying is that at the current point in time, the enormous Iraq air bases and Green zone 'embassy' are designed to be permanent.
EIA just put out Feb world liquids production numbers.

Bottom line is over 300,000 bpd less than peaks last Dec and May.

There was something on CSPAN last night:

where the CEO of Exxon and the president of Saudi-Aramco Services were on giving their spin.  Their positions are quite predictable.  The Exxon guy mentioned peak oil, but only in passing and to suggest that it is wrong.

I only tuned in towards the end, so I only heard Tillerson and the Q/A at the end.

Unfortunately I cannot find a video download of the thing, nor have I found a transcript.

Does anyone else think that this is turning into the world of Atlas Shrugged?


  1. Rampant Socialism throughout the world with many national corporations or the nationalizing of previously privately held resources.

  2. Government incompetance due to cronyism and doubletalk about how good current events are while they truely are not.

  3. Decline of fiat currencies with a return to gold as a holder of wealth.
Well, Russia circa 1990 to 1995 did look a little that way, as if Ayn Rand was channeling what would happen after her death.
Add a few other things:

Instead of rampant socialism call it indigenous peoples trying to keep some of their own wealth while it exists.

Aging western and Japenese population
Burgeoning, youthful demographics in the emerging world
Religious extremism in Christianity and Islam
Fake Inflation rates (wealth extraction)
Degenerate currency (=wealth extraction)
Equity Pyramid scheme (=wealth extraction)
Price Tilt to oil producers (
wealth extraction)
and so on
It makes gold look very attractive. Just remember though that the gold hoards of the dark ages found in the UK were found because whoever hid them never made it back to collect them...

 We are probably seeing "Energy Atlas Shrugged," i.e., the Energy Atlas holding the world on his shoulders can't handle the load any longer.   It does fit the overall theme of the book that the energy producers are being bitterly denounced by consumers who have never given any thought to where their energy actually comes from.
but Rand was a cornucopian, and Galt's engine ran on free energy
Galt's engine ran on free energy.....the ultimate energy socialism, eh?

Corporatism (fascism) seems to me to be the natural outcome of Ayn Rand's ideas.

It's been too long since I read "Atlas Shrugged" and some of her other work, but I've always felt that Rand had a kind of blind faith in corporatism.

Of course Rand did sesne some ironies of mass consumerism and the sense of entitlement that develops rather quickly when energy was cheap and abundant.  I don't think Rand got the connection between energy and our species, but she was stuck in the old "capitalist versus communist" arguement that always seemed bogus to me.

This chatter about Chavez and the resurgent Latin American socialism seems all too easy to me.  None of the leaders or governments are pure or perfect, but it is too easy to draw a caricature of the world that justifies our noble crusades against evil-doers, and incidently grab the oil under their soil.

Rand was most certainly a neo-fascism proponent.
my thought at the time that Rand was a good post-graduation antidote to public schools (and state univ.)

maybe that makes sense as Rand was writing her own antidote to her soviet youth.

if the reader is not making such a transition from state to individual care, i think the books are less applicable (and more frequently misapplied).

Call it "corportism", communism, country-ism or what have you; it's all about the power elite manipulating the mindless masses with one type of Animal Farm fable or another. In the end, some pigs always end up being more equal than others.
>>Venezuela, the world's fifth-largest oil exporter, has struck a $2bn deal to buy about 100,000 barrels a day of crude oil from Russia until the end of the year.<<

That works out to about $83 a barrel -- a 14% premium to current prices.

Why are they paying so much?

Both the size of the deal ($2bn) and the volume (100,000) are provided with 1 decimal place of precision.  Calculating a per barrel cost to 2 decimal places is meaningless.  
Over the weekend Energy Secretary Bodman said things would be rough for about three years before getting better.

What do you think he believes will be happening in three years that things will get better, i.e. lower prices?

Maybe he believes Yergin's 97 mbpd forecast for 2010.
Or else there will have been so much demand destruction that the price will come down for those still able to afford it.
Bush admin will be out of office in the quoted 2-3 year time period. Then, as far as Bodman is concerned: Not my problem anymore.