DrumBeat: May 15, 2006

Now for some wise words from the readers of The Oil Drum...
Interesting set of stories about potential future scenarios from Beyond Peak. Definitely worth a read.
Excerpts from an AP article that I got this morning:

Oil Prices Tumble Nearly $2 on Forecast

Despite shortfalls due to Nigerian unrest - which Vienna's PVM Oil Associates put at 550,000 barrels a day - high prices have pushed oil demand downward, increasing sentiment that global supplies were outpacing demand.

"There is no lack of capacity right now," Saudi oil minister Ali Naimi told reporters on the sidelines of an energy conference in Amman, Jordan. Asked about the impact of high prices, Naimi said: "In general, when prices are high, people check their pockets and when they are lower, they open them."

But the main focus appeared to be on the IEA projections.

The Paris-based IEA said in its monthly oil market report Friday that high prices and mild temperatures curbed U.S. oil demand in the first quarter. The agency also noted strong exports from former Soviet countries and concluded that this implied weakening demand.

Specifically, the energy watchdog cut 220,000 barrels a day off its demand growth forecast for the year, trimming it to 1.25 million barrels a day and thus putting average daily demand at 84.84 million barrels.


"There is no lack of capacity right now," Saudi oil minister

So does this mean they have spare capacity - And if they do, why haven't they brought it to the market to reduce the price?

I am skeptical that there is "no lack of capacity" - I would have thought at current prices all nations would bringing as much to the market as they can sell?

Why would the Saudis want to reduce the price of a commodity they are selling?

The Saudi strategy appears to have shifted with their new King.  The old king allowed US forces to be stationed in SA, and kept oil prices low.  The new King facilitated the removal of US forces and sees the higher prices as being in his country's best interest.

So does this mean they have spare capacity - And if they do, why haven't they brought it to the market to reduce the price?

"Why would the Saudis want to reduce the price of a commodity they are selling?"

IMO, large, militarily weak exporters like Saudi Arabia are afraid of military takeovers; therefore, they are always trying to talk down Peak Oil theories.

It's also possible that they are trying to talk down oil prices, while they are secretly going long on the oil markets.  

In any case, depletion marches on--the world is consuming (from fossil fuel + nuclear sources) the energy equivalent of a billion barrels of oil every five days.

At current rates of fossil fuel + nuclear use, we consume the energy equivalent of all of Texas' oil production to date (about 60 Gb)--every 10 months.  We consume the energy equivalent of all the North Sea's oil production to date about every seven months.

I think Peter Maass had it right about Saudi thinking on prices in his NY Times article The Breaking Point (published August 2005) and worth another look.
The onset of triple-digit prices might seem a blessing for the Saudis - they would receive greater amounts of money for their increasingly scarce oil. But one popular misunderstanding about the Saudis - and about OPEC in general - is that high prices, no matter how high, are to their benefit.

Although oil costing more than $60 a barrel hasn't caused a global recession, that could still happen: it can take a while for high prices to have their ruinous impact. And the higher above $60 that prices rise, the more likely a recession will become. High oil prices are inflationary; they raise the cost of virtually everything - from gasoline to jet fuel to plastics and fertilizers - and that means people buy less and travel less, which means a drop-off in economic activity. So after a brief windfall for producers, oil prices would slide as recession sets in and once-voracious economies slow down, using less oil. Prices have collapsed before, and not so long ago: in 1998, oil fell to $10 a barrel after an untimely increase in OPEC production and a reduction in demand from Asia, which was suffering through a financial crash. Saudi Arabia and the other members of OPEC entered crisis mode back then; adjusted for inflation, oil was at its lowest price since the cartel's creation, threatening to feed unrest among the ranks of jobless citizens in OPEC states.

"The Saudis are very happy with oil at $55 per barrel, but they're also nervous," a Western diplomat in Riyadh told me in May, referring to the price that prevailed then. (Like all the diplomats I spoke to, he insisted on speaking anonymously because of the sensitivities of relations with Saudi Arabia.) "They don't know where this magic line has moved to. Is it now $65? Is it $75? Is it $80? They don't want to find out, because if you did have oil move that far north . . . the chain reaction can come back to a price collapse again."

So, they believe there is a magic price above which recession and dropping demand cause prices to fall. We know for sure in May 2006 that $70/barrel is not high enough. Personally, I believe a price collapse of the magnitude they are worried about is impossible. And of course the ongoing irony--the Saudis were very happy when oil was at $55/barrel, a price I think the world will never see again.
How low would the price have to go to get the Republican reelected?
Re:  Saudi Arabia

Texas and the Lower 48 as a Model for Saudi Arabia and the World

Khebab and I have been working on another paper.  Above is a link to the graphs (all done by Khebab).   The premise is quite simple.  In terms of depletion, Saudi Arabia and the world are now where Texas and the Lower 48 were at in 1972 and 1970, respectively.  The swing producers apparently tend to peak later than the overall regions do.  However, note that Texas' decline rate has been much steeper than the Lower 48 overall.

There have only been two swing producers of any consequence, Texas and Saudi Arabia.  The new "swing producer" consists of releases from emergency reserves.  Note that the problem is replenishing the reserves (which Bush has already postponed).

Its interesting to see how norway's income surges as its production declines, no doubt a continuing trend. Why not show what has been happening in texas since the 1971 peak - producing increasing amounts of water with decreasing oil production, but with total revenues surging, at least now?

(Higher prices don't immediately generate a recession because some regions are benefitting from the higher prices.)

Is this some new definition of the word 'Tumble'?
I was thinking the same thing - someone mentioned this on TOD the other day too - that we should all watch for the hype when oil prices "plummet" or "tumble" or "free fall"  or god knows what other feel good word they can come up with - down to around $70.

I swear I can't read anything from the MSM anymore about this (and many other) subject without thinking it's complete propoganda - in an effort to keep giving the stock market verbal CPR.  So annoying...

Once you become POA (Peak Oil Aware) you undergo a major paradigm shift.
Almost nothing is the same any more.

  1. The carefree "cult of comfort" stories that MSM pumps out to the lay public about their PP (Pain at the Pump) now appear as raw propaganda rather than as incisive reporting (we reporterize, you moterize and then decide ... as if, ha, you actually have a functional brain once we get through with you).

  2. Those muscular Hemmi engine Hummers now look like like starving dinasours instead of the engineering marvels they once were.

  3. Wal-Mart is the country too far instead of the local mega-depot for all things consumable.

I liked the old American "Dream" better. Becoming POA killed it for me. Sad. I wish I didn't know. But how do you unring the bell?
or as Savinar would say, how do you unbitchslap someone?
found on bloomberg.com :

OPEC's Oil Expansion Plans May Be Delayed Due to `Rig Shortage'
May 15 (Bloomberg) -- Oil expansion plans by members of OPEC, which pumps 40 percent of the world's oil, may be delayed because of a shortage of drilling rigs, Qatar's energy minister said.

``We see that there are big shortages in rig providers because of the huge demand, so these logistical problems are delaying some projects,'' Abdullah bin Hamad al-Attiyah said in an interview in the Jordanian capital Amman, where ministers from the Organization of Arab Petroleum Exporting Countries are meeting.

The Organization of Petroleum Exporting Countries has kept its official quotas unchanged at 28 million barrels a day for 10 months as some members including Saudi Arabia pump more than their allotment to make up for members such as Venezuela and Nigeria, which aren't meeting their share.

The group's next policy-setting meeting is on June 1 in Caracas.

Qatar's oil minister said prices around $70 a barrel may slow global economic growth and demand for crude oil.

The International Energy Agency last week lowered its estimate for crude demand by 200,000 barrels a day to 84.83 million barrels a day, reducing this year's growth to 1.5 percent.

Al-Attiyah said that oil producers are already over-supplying the market, with as much as 2 million barrels a day ``floating'' around in search of a home.

double speak ?

I would like to know where 2 million barrels a day are floating around. If this goes on since a month, there are 60 million barrels floating around ? Anyone who saw some these days ?

P.S thanks to RR for explaining argonne acounting rules. I can now tell my wife she shouldn't feel cold when its 20°C at home because 68°(F) is >> 20° :-).

Do you realize how little 2 million barrels is? It fits on one  VLCC super-tanker. That might be a clue as to where it is "floating" around. There are plenty of tankers in the world - more than enough to hold an extra 60 million barrels, or even 120.
Nice point about the supertankers. Now, the supertankers in the aggregate serve as the pumps of a pipeline. If they slow down to save diesel, that'll slow delivery but the in-transit crude remains the same - just like slowing pipeline pumps.

However, just like a pipeline, that crude-in-transit isn't like a SPR where you can vary the "reserve" from zero to full. Becuse these ships are slow in the first place, there is no JIT delivery. The ships have a top speed of like 15 knots (17mph) so a trip across the Atlantic is no crosstown drive.

There was also a Reuters story, that has some additional information. Note the last sentence.

Oil tumbles. Gold, silver fall too
$2 slide follows comments that high prices could hurt economic growth and demand. Precious metals also dive.

May 15, 2006: 11:00 AM EDT

LONDON (Reuters) - Oil fell towards $70 a barrel, gold dropped almost 4 percent and copper plunged on Monday as investors feared a rally that has taken many commodities to or near record highs may slow economic growth.

U.S. crude dropped three percent after reports signaled last week that energy costs were hitting global fuel demand and consumer confidence. Greece's finance minister said on Monday that oil is as a downside risk to "strong" global growth.

"Everybody has got a bit jumpy," said Mark Mathias, managing director of Dawnay Day Quantum hedge fund. "We've seen very sharp rises over the last couple of months on equities and commodities, so it's no surprise it's being marked down a bit."

Oil prices are however unlikely to fall too far and may go even higher in future, investors say.

Supply losses in Nigeria, Africa's largest oil exporter, and concern that the standoff between Iran and the West over Tehran's nuclear work could cut exports from the OPEC member have supported oil prices this year.

"The fundamentals are still for the price to go up," Dawnay Day Quantum's Mathias said. "If it drops much below $70 it's a good buying opportunity.

"We're still looking at $100 oil in a couple of years time, because there just isn't enough oil to go around."


A possible solution to peak oil (to at least mitigate the peak or face it) would be to plan for or head for an economic downturn, thus destroying demand growth and perhaps demand overall. It could be happening now....
This is a duplicate from PO.com:

After its launching 8 days ago at Évora, ASPO-Portugal is starting its activities with a bilingual version of its website (www.aspo-portugal.net) and the release of the DVD on the IV International Workshop on Oil and Gas Depletion.

The DVD contains for each address made during the two days of the conference, a movie, a slide show and a written paper (if delivered). Many hours of footage are included with the addresses of Colin Campbell, Jean Laherrère, Robert Hirsch, Chris Skebrowski, Matthew Simmons, Richard Heinberg and many other specialists on Peak Oil - an invaluable media document on the subject.

You can watch a digest of the footage included in the DVD here: http://video.google.com/videoplay?docid=1771926373635406046

To order a copy of the DVD please visit http://www.aspo-portugal.net/

To know more about the IV International Workshop on Oil and Gas Depletion visit http://www.cge.uevora.pt/aspo2005/

And don't forget that the V International Workshop on Oil and Gas Depletion will be held next July in Pisa, organized by ASPO-Italia, more here: http://www.aspoitalia.net/

Hi SuperG this threadbot idea is really good.
Anybody up on talking about the fact that the Gulf of Mexico temperatures have appeared to be consitently about 2-3 deg C above last year temperatures. Does this portend an earlier hurricane season? Or just stronger hurricanes?

Temperatures in 2006
Temperatures in 2005

Don't forget that the scale has been changed by 2 degrees or so. 2005 starts at 20 degrees celsius and 2006 starts at 22.
The 2-3 deg C figure I said takes into account the changed scale
Well, if they are Jeff Master's blog at Weather Underground would be the place to find it. He has recently made a very interesting post about the  loop current and how it affects Hurricane formation. I think he probably has some Hurricane season predictions there somewhere aswell.
Although SSTs in the GOM are hotter than they were last year, SSTs in the tropical Atlantic and Caribbean sea are cooler (but still above average). Jeff Masters thinks that this hurricane season won't be as bad as 2005:
The key things to look at are the SSTs in the Caribbean and the tropical Atlantic between Africa and the Antilles Islands, since this is where 85% of all major hurricanes form. While SSTs are .5 to 1.5 degrees above normal--which is a lot!--SSTs are a full degree Centigrade cooler this year than last year at this time. This reduction in SSTs should keep this year's hurricane season from producing early major hurricanes, like Dennis and Emily of July 2005. However, once we enter the prime hurricane months of August through October, expect another above normal year for hurricanes and intense hurricanes.
His bottom line:
My worst-case scenario for 2006 is a year similar to 2004, which was awful, but modest compared to 2005.
You should look at temps in 2004 as well. April 2004 was WARMER than April 2005, but the 2004 hurricane season was LESS SEVERE than 2005. So there may not be that much correlation between springtime GOM temps and severity of hurricane season.
Global Warming Threatens Millions

Millions of people around the world face death and devastation due to floods, famine, drought and violence caused by global warming, according to a report by a charity group.

A report to be released Monday by Christian Aid said 162 million people in sub-Saharan Africa alone could die of disease directly attributable to global warming by the end of the century.

It urged the British government to lead the world's richer countries in taking urgent action to curb global warming.

Poorer regions, the charity added, should be encouraged to use renewable energy sources.

If sub-Saharan Africa switched from fossil fuels to other sources of energy, including solar, wind and water, the environment would benefit and there would be more jobs, better health and enhanced opportunities for learning, the report said.

It estimated that every household in Africa could change to clean, renewable energy sources for less money than it would take to pay the region's oil bill for the next decade.

I need to blog on this pretty soon. I am far more concerned about global warming than TEOTWAWKI due to Peak Oil. There are technologies (GTL, CTL, tar sands) that will mitigate the effects of Peak Oil for a while. But these technologies are very unfriendly with respect to greenhouse gas emissions.

Regardless, I think history has shown that this will not prevent us from diving in with both feet, exacerbating an already alarming trend. If the public showed the same kind of outrage over global warming that they show toward high gas prices, then Peak Oil would get top billing on my worry list.


As far as I know, the public is unconcerned with global warming. I have actually met people who think it is a positive change (unbelievable as this is).
talk to them again in august ;-)

seriously, risk is a hard question.  if one can exclude the possibility of tipping-points (big question), then it breaks out to winners and losers on a regional scale.  certainly it is foolish to simply assume that you'll be one of the winners.

blythe optimism may be a good survival strategy in general, but not in ever specific.

I could believe that that statement is an American view. I think very few Europeans would say they are unconcerned or view it as a positive change. Most Europeans, in my view, are concerned with GW, but possibly think it won't affect them but certainly their children or grand children.

The Met Office are running simulations, the predictions at the moment are that the very hot European summer of 2003 will be an average summer somewhere around 2060, and a cool summer from 2070 onwards. That, of course, depends on how much CO2 is in the atmosphere and how much global dimming is reduced. That leaves a very wide range of temperatures possible.

My gut feeling is that we will be in the upper range of CO2 predictions because the public won't want to implement to changes needed to reduce CO2 emissions (i.e. a big power down in society/economy to reduce CO2 emissions).

The BBC are running a series of GW programs using the music saying "its the end of the world as we know it" with George Bush in an SUV grinning and giving a thumbs up. This is fairly typical of the BBC running GW programs every now and again.

Robert -

Do you have any thoughts on how the public might receive the new movie, An Inconvenient Truth, from Al Gore that's coming out in June ?

It's been getting pretty good buzz so far from what I've read - but that's probably from those who are already concerned with the issue.

Maybe this movie can help raise additional awareness regarding climate change and can get expanded distribution across the country after its limited release.

Or perhaps there will be yet another collective yawn...

Thanks for the pointer.
Movie Trailer here

I passed by the billboards at the movie theater this weekend and didn't realize this was an Al Gore production. Al Gore may be just the right kind of person to pass this "Inconvenient" truth onto the mesmorized masses.

Saving humanity may be Mission Impossible IV.

No problem on the movie tip

From what I've read Gore comes across as serious (obviously due to the content) but likable with a pretty good sense of humor in certain parts of the film.  Apparently he shows alot of a side of him that wasn't so visible during his presidential campaign.

I'm looking forward to seeing it.

Climate Change is certainly a threat for all of us and it is so very unfortunate that so many will suffer from the effects. I found another article about peak oil climate change (from the PetroCollapseDC Conference) on this peak oil news website. A great place to find the latest

The original article is found here: Climate Change and Peak Oil

One of the points I haven't seen made too often is that the greatest negative impact of global warming will occur in the third world. Western countries won't be as badly hit, plus we can afford to deal with the problems. Third Worlders are going to be in big trouble if the climate changes. I don't have any references for this right now but I read a very detailed analysis recently that highlighted this aspect of the problem.

I think it is being downplayed, perhaps because of a concern over "compassion fatigue"; with people tired of being asked to fix Somalia and Rwanda and Darfur and everything else, now we've got to fix global warming because of Africa? So activists are playing up the impact to the West, trying to scare people into thinking their own lives will take a hit.

But that may not be scientifically correct, from what I've read, or at least it is not the whole story. The truth is that the whole world will be affected, and the worst impact will be in those countries least able to deal with challenges.

AFAICT the third world is already suffering from Climate Change and Energy Depletion.  While the US as a whole is better able to deal with the problems, I think our poor will suffer a great deal. Katrina gave us a glimpse as to how the better off will react.
Money will not insulate you. Sorry.
It will if I stuff it between the studs. :-)
At the rate inflation is going, it won't be that much longer before stuffing it between the studs will be a better use for it than purchasing actual insulation.  
I'm building a house soon, and have been pricing materials. Good God everything is pricey now!  At my local home depot, 2"x4"x8' studs are up +66% since last spring! (when I last bought them)
Almost everybody alive today will be dead by the end of the century. It seems more and more I see stats meant to shock placed in the context of 5 or 10 or 95 years. The total amount is emphasised while the per year number, which really isn't that significant, is ignored.
A few days ago I read that global warming was making India drier and the Sahel wetter which should slow the Sahara's southward expansion if not reverse it. Shouldn't this make life better for these poor folks.
So global warming will kill an extra 1% of the population of sub-saharan Africa each year at most.
People like to think of the climate in long, slow terms but according to the data we have, that's likely not the case.  There have been periods in history (primarily in proxy data through ice cores) where the temperature has changed greatly within a span of 10 years.  Basically a snap from interglacial to ice age temperatures within 10 years.  That's why people talk with such concern about "crossing a climate threshold"  The past several thousand years have been uniquely stable.
I was drawing a blank on the prominent example but just remembered...a period called the Younger Dryas:


Senator Luger and Tom Friedman doing their Geo-green Corn Ethanol dance on CSPAN-2. Chevron CEO answering more "tough questions" from Matt Lauer on NBC Today show. The Oil Crunch is becoming more and more a common MSM noise buzz.
And I can already see how they will frame that tough question : Are we running out of oil??  
Even though we won't "run out of oil" any time soon, I hope the MSM keeps framing it that way.  They'll inevitably say that we're not, but then resort to their knee-jerk reaction of giving all major views equal time ("faux balance").  This is when they'll talk about peak oil and the end of cheap energy, which is the real message that needs to get out to the mainstream consumers--start taking steps NOW as a consumer and political participant to help alleviate your own and everyone else's looming pain.
Reposting a post from Bados from a weekend thread :

This is interesting: first (yes?) biodiesel from algae as a commercial enterprise.

They are only talking about miniscule amounts to start but you could see a future where every town's sewage works is a 'refinery' producing clean water and biodiesel as byproducts of the same process.


I read the article, looked around some more
and I'm all excited...

When I read the quote

"We expect to produce at least 1,000,000 litres of bio-diesel per year from Blenheim"

I did a double take, and a couple of sums on the back of an envelope, and frankly I would have written it off as a hoax or a bunch of dreamers...

... but it's Barrie Leay who's saying it. Vicki Buck is also on board. These people are not flaky freaks. They are serious and successful alternative-energy energy entrepreneurs (check out http://windflow.co.nz/ which is a NZ company producing an innovative two-bladed wind turbine).

Of course, you need to know more about the economics, and especially the energy inputs, of their process, but if it's viable it's a bleedin' miracle.

Bearing in mind that Bleinheim is a small town of about 35000 inhabitants (and assuming that they are all hooked up to the sewers), that represents something like 300 litres of diesel per year from every man, woman and child! (DON'T throw that nappy in the rubbish... scrape it out carefully into the toilet!)

And with 300 litres of diesel per year, with a suitable small efficient diesel car consuming say 2l / 100 km, we're looking at a seriously interesting post-peak-oil transport option.

Widescale Biodiesel Production from Algae
by Michael Briggs

As more evidence comes out daily of the ties between the leaders of petroleum producing countries and terrorists (not to mention the human rights abuses in their own countries), the incentive for finding an alternative to petroleum rises higher and higher.

The environmental problems of petroleum have finally been surpassed by the strategic weakness of being dependent on a fuel that can only be purchased from tyrants. The economic strain on our country resulting from the $100-150 billion we spend every year buying oil from other nations, combined with the occasional need to use military might to protect and secure oil reserves our economy depends on just makes matters worse (and using military might for that purpose just adds to the anti-American sentiment that gives rise to terrorism). Clearly, developing alternatives to oil should be one of our nation's highest priorities.

In the United States, oil is primarily used for transportation - roughly two-thirds of all oil use, in fact. So, developing an alternative means of powering our cars, trucks, and buses would go a long way towards weaning us, and the world, off of oil. While the so-called "hydrogen economy" receives a lot of attention in the media, there are several very serious problems with using hydrogen as an automotive fuel. For automobiles, the best alternative at present is clearly biodiesel, a fuel that can be used in existing diesel engines with no changes, and is made from vegetable oils or animal fats rather than petroleum.

In this paper, I will first examine the possibilities of producing biodiesel on the scale necessary to replace all petroleum transportation fuels in the U.S.

I. How much biodiesel?

First, we need to understand exactly how much biodiesel would be needed to replace all petroleum transportation fuels. So, we need to start with how much petroleum is currently used for that purpose. Per the Department of Energy's statistics, each year the US consumes roughly 60 billion gallons of petroleum diesel and 120 billion gallons of gasoline. First, we need to realize that spark-ignition engines that run on gasoline are generally about 40% less efficient than diesel engines. So, if all spark-ignition engines are gradually replaced with compression-ignition (Diesel) engines for running biodiesel, we wouldn't need 120 billion gallons of biodiesel to replace that 120 billion gallons of gasoline. To be conservative, we will assume that the average gasoline engine is 35% less efficient, so we'd need 35% less diesel fuel to replace that gasoline. That would work out to 78 billion gallons of diesel fuel. Combine that with the 60 billion gallons of diesel already used, for a total of 138 billion gallons. Now, biodiesel is about 5-8% less energy dense than petroleum diesel, but its greater lubricity and more complete combustion offset that somewhat, leading to an overall fuel efficiency about 2% less than petroleum diesel. So, we'd need about 2% more than that 138 billion gallons, or 140.8 billion gallons of biodiesel. So, this figure is based on vehicles equivalent to those in use today, but with compression-ignition (Diesel) engines running on biodiesel, rather than a mix of petroleum diesel and gasoline. Combined diesel-electric hybrids in wide use, as well as fewer people driving large SUVs when they don't need such a vehicle would of course bring this number down considerably, but for now we'll just stick with this figure. (note - my point here is not to claim that conservation is not worthwhile, rather to strictly look at the issue of replacing our current use of fuel with biodiesel - to see how achievable that is). I would like to point out though that a preferable scenario would include a shift to diesel-electric hybrid vehicles (preferably with the ability to be recharged and drive purely on electric power for a short range, perhaps 20-40 miles, to provide the option of zero emissions for in-city driving), and with far fewer people buying 6-8,000 pound SUVs merely to commute to work in by themselves. Those changes could drastically reduce the amount of fuel required for our automotive transportation, and are technologically feasibly currently (see for example Chrysler's Dodge Intrepid ESX3, built under Clinton's PNGV program - a full-size diesel electric hybrid sedan that averaged 72 mpg in mixed driving 6, 7).

One of the biggest advantages of biodiesel compared to many other alternative transportation fuels is that it can be used in existing diesel engines without modification, and can be blended in at any ratio with petroleum diesel. This completely eliminates the "chicken-and-egg" dilemma that other alternatives have, such as hydrogen powered fuel cells. For hydrogen vehicles, even when (and if) vehicle manufacturers eventually have production stage vehicles ready (which currently cost around $1 million each to make), nobody would buy them unless there was already a wide scale hydrogen fuel production and distribution system in place. But, no companies would be interested in building that wide scale hydrogen fuel production and distribution system until a significant number of fuel cell vehicles are on the road, so that consumers are ready to start using it. With a single hydrogen fuel pump costing roughly $1 million, installing just one at each of the 176,000 fuel stations across the US would cost $176 billion - a cost that can be completely avoided with liquid biofuels that can use our current infrastructure.

With biodiesel, since the same engines can run on conventional petroleum diesel, manufacturers can comfortably produce diesel vehicles before biodiesel is available on a wide scale - as some manufacturers already are (the same can be said for flex-fuel vehicles capable of running on ethanol, gasoline, or any blend of the two). As biodiesel production continues to ramp up, it can go into the same fuel distribution infrastructure, just replacing petroleum diesel either wholly (as B100, or 100% biodiesel), or blended in with diesel. Not only does this eliminate the chicken-and-egg problem, making biodiesel a much more feasible alternative than hydrogen, but also eliminates the huge cost of revamping the nationwide fuel distribution infrastructure.

II. Large scale production

There are two steps that would need to be taken for producing biodiesel on a large scale - growing the feedstocks, and processing them into biodiesel. The main issue that is often contested is whether or not we would be able to grow enough crops to provide the vegetable oil (feedstock) for producing the amount of biodiesel that would be required to completely replace petroleum as a transportation fuel. So, that is the main issue that will be addressed here. The point of this article is not to argue that this approach is the only one that makes sense, or that we should ignore other options (there are some other very appealing options as well, and realistically it makes more sense for a combination of options to be used). Rather, the point is merely to look at one option for producing biodiesel, and see if it would be capable of meeting our needs.

One of the important concerns about wide-scale development of biodiesel is if it would displace croplands currently used for food crops. In the US, roughly 450 million acres of land is used for growing crops, with the majority of that actually being used for producing animal feed for the meat industry. Another 580 million acres is used for grassland pasture and range, according to the USDA's Economic Research Service. This accounts for nearly half of the 2.3 billion acres within the US (only 3% of which, or 66 million acres, is categorized as urban land). For any biofuel to succeed at replacing a large quantity of petroleum, the yield of fuel per acre needs to be as high as possible. At heart, biofuels are a form of solar energy, as plants use photosynthesis to convert solar energy into chemical energy stored in the form of oils, carbohydrates, proteins, etc.. The more efficient a particular plant is at converting that solar energy into chemical energy, the better it is from a biofuels perspective. Among the most photosynthetically efficient plants are various types of algaes.

The Office of Fuels Development, a division of the Department of Energy, funded a program from 1978 through 1996 under the National Renewable Energy Laboratory known as the "Aquatic Species Program". The focus of this program was to investigate high-oil algaes that could be grown specifically for the purpose of wide scale biodiesel production1. The research began as a project looking into using quick-growing algae to sequester carbon in CO2 emissions from coal power plants. Noticing that some algae have very high oil content, the project shifted its focus to growing algae for another purpose - producing biodiesel. Some species of algae are ideally suited to biodiesel production due to their high oil content (some well over 50% oil), and extremely fast growth rates. From the results of the Aquatic Species Program2, algae farms would let us supply enough biodiesel to completely replace petroleum as a transportation fuel in the US (as well as its other main use - home heating oil) - but we first have to solve a few of the problems they encountered along the way.

NREL's research focused on the development of algae farms in desert regions, using shallow saltwater pools for growing the algae. Using saltwater eliminates the need for desalination, but could lead to problems as far as salt build-up in bonds. Building the ponds in deserts also leads to problems of high evaporation rates. There are solutions to these problems, but for the purpose of this paper, we will focus instead on the potential such ponds can promise, ignoring for the moment the methods of addressing the solvable challenges remaining when the Aquatic Species Program at NREL ended.

NREL's research showed that one quad (7.5 billion gallons) of biodiesel could be produced from 200,000 hectares of desert land (200,000 hectares is equivalent to 780 square miles, roughly 500,000 acres), if the remaining challenges are solved (as they will be, with several research groups and companies working towards it, including ours at UNH). In the previous section, we found that to replace all transportation fuels in the US, we would need 140.8 billion gallons of biodiesel, or roughly 19 quads (one quad is roughly 7.5 billion gallons of biodiesel). To produce that amount would require a land mass of almost 15,000 square miles. To put that in perspective, consider that the Sonora desert in the southwestern US comprises 120,000 square miles. Enough biodiesel to replace all petroleum transportation fuels could be grown in 15,000 square miles, or roughly 12.5 percent of the area of the Sonora desert (note for clarification - I am not advocating putting 15,000 square miles of algae ponds in the Sonora desert. This hypothetical example is used strictly for the purpose of showing the scale of land required). That 15,000 square miles works out to roughly 9.5 million acres - far less than the 450 million acres currently used for crop farming in the US, and the over 500 million acres used as grazing land for farm animals.

The algae farms would not all need to be built in the same location, of course (and should not for a variety of reasons). The case mentioned above of building it all in the Sonora desert is purely a hypothetical example to illustrate the amount of land required. It would be preferable to spread the algae production around the country, to lessen the cost and energy used in transporting the feedstocks. Algae farms could also be constructed to use waste streams (either human waste or animal waste from animal farms) as a food source, which would provide a beautiful way of spreading algae production around the country. Nutrients can also be extracted from the algae for the production of a fertilizer high in nitrogen and phosphorous. By using waste streams (agricultural, farm animal waste, and human sewage) as the nutrient source, these farms essentially also provide a means of recycling nutrients from fertilizer to food to waste and back to fertilizer. Extracting the nutrients from algae provides a far safer and cleaner method of doing this than spreading manure or wastewater treatment plant "bio-solids" on farmland.

These projected yields of course depend on a variety of factors, sunlight levels in particular. The yield in North Dakota, for example, wouldn't be as good as the yield in California. Spreading the algae production around the country would result in more land being required than the projected 9.5 million acres, but the benefits from distributed production would outweigh the larger land requirement.

III. Cost

In "The Controlled Eutrophication process: Using Microalgae for CO2 Utilization and Agircultural Fertilizer Recycling"3, the authors estimated a cost per hectare of $40,000 for algal ponds. In their model, the algal ponds would be built around the Salton Sea (in the Sonora desert) feeding off of the agircultural waste streams that normally pollute the Salton Sea with over 10,000 tons of nitrogen and phosphate fertilizers each year. The estimate is based on fairly large ponds, 8 hectares in size each. To be conservative (since their estimate is fairly optimistic), we'll arbitrarily increase the cost per hectare by 100% as a margin of safety. That brings the cost per hectare to $80,000. Ponds equivalent to their design could be built around the country, using wastewater streams (human, animal, and agricultural) as feed sources. We found that at NREL's yield rates, 15,000 square miles (3.85 million hectares) of algae ponds would be needed to replace all petroleum transportation fuels with biodiesel. At the cost of $80,000 per hectare, that would work out to roughly $308 billion to build the farms.

The operating costs (including power consumption, labor, chemicals, and fixed capital costs (taxes, maintenance, insurance, depreciation, and return on investment) worked out to $12,000 per hectare. That would equate to $46.2 billion per year for all the algae farms, to yield all the oil feedstock necessary for the entire country. Compare that to the $100-150 billion the US spends each year just on purchasing crude oil from foreign countries, with all of that money leaving the US economy.

These costs are based on the design used by NREL - the simple open-top raceway pond. Various approaches being examined by the research groups focusing on algae biodiesel range from being the same general system, to far more complicated systems. As a result, this cost analysis is very much just a general approximation. Some systems could be considerably more expensive, but could also see considerably higher yields, resulting in less land being required. How exactly the economics play out will hopefully be decided over the next few years as some of these groups research algal biodiesel bring their systems to commercialization status.

IV. Other issues

To make biodiesel, you need not only the vegetable oil, but an alcohol as well (either ethanol or methanol). The alcohol only constitutes about 10% of the volume of the biodiesel. Among the most land-efficient and energy-efficient methods of producing alcohol is from hydrolysis and fermentation of plant cellulose. In the early days of the automobile, most vehicles ran on biofuels, with Henry Ford himself being a big advocate of alcohol produced from industrial hemp (not to be confused with marijuana). The Department of Energy's "Mustard Project" has focused on the prospect of growing mustard for the dual purposes of biodiesel and organic pesticide production. Their process focused on alternating mustard crops with wheat. One nice effect of this is that the biomass from the mustard (after harvesting the seed ) could be used as the cellulose feedstock for producing alcohol for biodiesel production.


What is the energy efficiency for producing biodiesel? Based on a report by the US DOE and USDA entitled "Life Cycle Inventory of Biodiesel and Petroleum Diesel for Use in an Urban Bus"5, biodiesel produced from soy has an energy balance of 3.2:1. That means that for each unit of energy put into growing the soybeans and turning the soy oil into biodiesel, we get back 3.2 units of energy in the form of biodiesel. That works out to an energy efficiency of 320% (when only looking at fossil energy input - input from the sun, for example, is not included). The reason for the energy efficiency being greater than 100% is that the growing soybeans turn energy from the sun into chemical energy (oil). Current generation diesel engines are 43% efficient (HCCI diesel engines under development, and heavy duty diesel engines have higher efficiencies approaching 55% (better than fuel cells), but for the moment we'll just use current car-sized diesel engine technology). That 3.2 energy balance is for biodiesel made from soybean oil - a rather inefficient crop for the purpose. Other feedstocks such as algaes can yield substantially higher energy balances, as can using thermochemical processes for processing wastes into biofuels (such as the thermal depolymerization process pioneered by Changing World Technologies). Such approaches can yield EROI values ranging from 5-10, potentially even higher.

#1. www.nrel.gov/docs/legosti/fy98/24190.pdf
#2. www.nrel.gov/docs/legosti/fy98/24190.pdf
#3. www.unh.edu/p2/biodiesel/pdf/algae_salton_sea.pdf
#4. www.osti.gov/fcvt/deer2002/eberhardt.pdf
#5. www.nrel.gov/docs/legosti/fy98/24089.pdf
#6. www.autointell.net/nao_companies/daimlerchrysler/dodge/dodge-esx3-01.htm
#8. www.eere.energy.gov/hydrogenandfuelcells/hydrogen/iea/pdfs/honda.pdf
#10. www.caranddriver.com/article.asp?section_id=27&article_id=4217&page_number=2

~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~

Article cut for length, see link for additional text on problems of producing and using hydrogen as a fuel. -LJ

"The UNH Biodiesel Group is working on improving the technology for growing algae on waste streams for biodiesel production. UNH has filed a provisional patent application and is seeking partners to develop the technology. For more information contact:
Michael Briggs 603-862-2828;
email msbriggs@unh.edu"

Original article available here.


I have blogged on this, prominently mentioning this article. I have had some correspondence with Briggs. Seems like a pretty sharp guy, and he is passionate about his work. My understanding is that the primary problem is that native algae tend to outcompete the high oil-yielding varieties.


Robert Rapier -

Regarding growing algae for biodiesel, do you (or anyone else out there) have any reliable information as to what is considered a realistic maximum concentration of algae in the aqueous medium in which it is grown?  

Being that algae is an aerobic organism, it requires oxygen, and that fact alone must impose certain mass transfer limitations as to how densely the algae can be grown. Past a certain concentration vigorous mechanical aeration become necessary. Even when using mechanical aeration it become increasingly difficult to transfer oxygen to the growth medium as the biomass concentration increases.  

Then we have the problem of sunlight transfer. Unless the growth pond is vigorous agitated the algae at the lower depths will essentially be in the dark as the light is blocked out by the algae in the shallow zone. Even with perfect mixing there must be some biomass concentration whereby the algae just doesn't get enough sunlight.

For these reasons, I find it very difficult to see how one can successfully grow algae at a concentration of much more than  3%  to 4% by weight. I could be wrong, but that is my gut feel based on my experience with aerobic biological waste treatment processes.

The concentration question is very important, because it determines the size and hence the capital cost of the pond, vessel, or whatever holding container the algae is grown in.  

I have only anecdotal evidence about that. When I was a kid growing up on a farm in Oklahoma, we had a pair of stock ponds. In the summer, they would get so thick with algae you couldn't even fish in them.

As far as the mass transfer problem, see the post below by louGrinzo. This discusses the approach being pioneered by MIT's Isaac Berzin, in which power plant exhaust is being bubbled through reactors. This exhaust will have some level of oxygen, and it may be enough to keep the algae alive. In fact, the process is being tested now. The theoretical potential is 15,000 gallons of biodiesel per acre (I presume annually), so it is worth investigating in great depth.


Robert Rapier -

I checked the link in that post by louGrinzo, but there was no mention about the algae concentration.

 If I am not mistaken, the work being done at MIT is the one where they bubble the stack gas up through a bank of vertical plexigas tubes that appear to be roughly 1 foot in diameter by about 20 feet high. Not sure though.

I strongly suspect that the reason they use multiple tubes of relatively small diameter rather than a large-diameter reactor is to enable enough sunlight to uniformly penetrate a relatively thin later of growth medium. While this might work out fine for a research pilot plant, obviously it can get very expensive providing enclosed plastic tubes (or similar thin-layer transparent growth enclosures) for a large-scale operation.

You can grow algae in a relatively deep pond if the algae concentration is low, and you can grow algae at high concentrations if the pond is very shallow  but you will run up against some serious limitation when you try to grow high concentrations of algae in a deep pond.

I currently don't have a feel for i)  what is a reasonable growth rate in terms of dry pounds of algae per cubic foot of water, or ii) how many square feet of water surface needs to be exposed to sunlight for each pound-per-day of algae production.

Check here (and links within):

In my quick scan, I didn't see a concentration of the algae or their math, but they say:
"NREL's research focused on the development of algae farms in desert regions, using shallow saltwater pools for growing the algae."
"NREL's research showed that one quad (7.5 billion gallons) of biodiesel could be produced from 200,000 hectares of desert land (200,000 hectares is equivalent to 780 square miles, roughly 500,000 acres), if the remaining challenges are solved (as they will be, with several research groups and companies working towards it, including ours at UNH)."

Biologyfool -

Thanks for the additional info re biodiesel from algae.

The numbers cited of 7.5 billion gallons (per year I assume) from 500,000 acres works out to be about 15,000 gallons per year per acre. That's considerably more intensive than ethanol from terrestrial crops. But then again, it costs considerably more to excavate, grade, and line an algae pond than it does to simply clear some farm land. So, the production per acre in and of itself is probably not such a great measure of cost-effectivness.  

Since algae doesn't normally self-flocculate and settle very readily (as say activated sludge in a sewage treatment plant), there must be several liquid-solid separation steps in the process, such as clarifiers, belt filters or filter presses and the like, prior to the actual lipid extraction step.  I am not familiar with how this final step is accomplished.

 However, all the steps require some expenditure of energy.  I think what is critical is to be able to grow the algae at a low enough density so that you don't require mechanical aeration and mixing, which would really eat into the net energy gain, possibly to such an extent as to push the EROEI down to less than unity.  

On a positive note, the nice thing about algae is that it is a real sponge for soluble nitrogen and phosphorus, so the nutrients could be supplied from treated sewage or waste from animal feedlots. Also, once the lipids are extracted, the remaining bio residue is still rich in both nitrogen and phosporus, so maybe it could be used a a low-grade fertilizer of sorts. Maybe.

From the little I have read so far about biodiesel from algae, I am a bit more optimistic about it than ethanol from corn, but doing it on a large scale in open ponds is a far cry from cultivating precise strains of algae in closed, sterile laboratory vessels.

has anyone looked at the use of greenhouses to treat sewage?  There was a big project a few years ago in California, and the artist studio offices for "Garfeild" were supposed to be using the method of natural treatment of raw sewage.

My thoughts are, what if we used these systems in everyones homes or apartment buildings, grew the oil rich algea, and then made it at home, being our own processors?

I'll have to look into it, I have written about it in a Sci-Fi story but have not completed the real world research.

( in my trip i am 1,200 miles still to go, stop over at parents house. ))

Hmmm, I wonder if a low yielding variety would still be economic. What does low yield mean?
And surely something useful could be done with the algae after the oil has been pressed out, perhaps ethanol or even better butanol production?
Regarding ethanol, one of the claims that Isaac Berzin made was that the leftover biomass could be used to make ethanol. I mentioned it in my essay on biodiesel:

Biodiesel: King of Alternative Fuels


OK now i know where you stand.

your in the: lets switch to bio-diesel and continue on our happy consumer life's camp.

all you did was just double check his math, you went no further in dissecting the whole process for any fossil fuel inputs. thats the key for kingship, any alternative fuel that needs any input from fossil fuels can't be a alternative because it can't done without them. if it's natural gas then it's a non-starter, if it's oil then we would be better off from a energy standpoint by continuing to make normal gas and diesel. though you could use it to make it kind of like using solar power to make the electricity to make solar panels, but then you get into the chicken and egg problem.

i know this sounds lint a illogical doomer/realist rant, but really could someone who is so intelligent fall so easily hook line and sinker for something that needs further investigation. also please don't give me the 'a bad solution is better then no solution' it isn't. in this situation making the wrong choice can be much worse then no choice at all.

i know this sounds lint a illogical doomer/realist rant, but really could someone who is so intelligent fall so easily hook line and sinker for something that needs further investigation.

Consider the alternative explanation: You don't actually know where I stand. You have clearly read very, very little of what I have written if you think I am in the "lets switch to bio-diesel and continue on our happy consumer life's camp". My position is simply from an alternative energy standpoint, biodiesel is much better than ethanol. That doesn't mean I believe we can fuel our society with it, nor does it mean that I think our current standard of living is sustainable. So, be more careful about throwing people into various camps.


no i fully read it.
and i got the gist that you were in somthing is going to help save us group before you posted that. what the article did was fill in the rest for me. even then i do understand you, it's just now i can put the proper value on your writings.
I have made it quite clear that I am not a "doomer":

Peak Oil: End of the World?

However, I have no illusions that things aren't going to be tough, and that things won't be drastically different.

even then i do understand you, it's just now i can put the proper value on your writings.

Likewise, the fact that you were so quick to incorrectly snap-judge me means that I can put the proper value on your writings.


Gentlemen, please.
TrueKaiser, Robert is a bit more optimistic than he probably should be. That is a personal decision, not one open to scrutiny and snap judgements.  Do not be so quick to judge, or critical of others on a personal level.
Biodiesel is a MUCH better solution than ethanol conversion, but there simply is not as much evidence out yet regarding actual field trials, productivity, yields, and inputs required.  Time and future work will tell whether or not there is any merit to the algae-to-biodiesel (and similar) approaches or not. Nothing will change by arguing about it here.

Robert, you have sometimes come across as a bit in the "all could be well" camp. I've taken the time to read your writings and grown to appreciate and enjoy both your commentary and your well thought out and researched publications, but once assumed much as TrueKaiser just did. I was mistaken. Likewise I would caution you against being too quick to anger, or to judge. It is an easy mistake to make.  But so is placing too much stock in 'promising biofuel technologies'.  As a fellow man of science, you are SUPPOSED to be skeptical. Until such claims are feasible, reproduceable, scaleable, economocial, and transferable, they are nothing more than an isolated laboratory experiment and not a solution. Fusion, plasma, and even primitive life can be created under laboratory conditions. Extraordinary claims require extraordinary proof, remember? Brigg's faith in Changing World Technology's thermal depolymerization process has already been misplaced, even as a waste disposal process it has been unable to turn a profit.

Robert, you have sometimes come across as a bit in the "all could be well" camp. I've taken the time to read your writings and grown to appreciate and enjoy both your commentary and your well thought out and researched publications, but once assumed much as TrueKaiser just did. I was mistaken. Likewise I would caution you against being too quick to anger, or to judge. It is an easy mistake to make.  But so is placing too much stock in 'promising biofuel technologies'.  As a fellow man of science, you are SUPPOSED to be skeptical.

Oh, don't think I am not skeptical. I have already noted the problem of native species outcompeting the high oil-yielding varieties. I had some correspondence with the author, and asked a number of questions. I think this system will be very labor intensive, and may not pan out. I just thought it was one of the more interesting ideas out there, and one that can in theory supply a substantial amount of our fuel needs.

If you want to think of me in any "camp", think of me in the "let's figure out how are we going to fuel our society in the future" camp, as opposed to the "we're all doomed" camp. The "how we are going to do it" is going to be a combination of many things, including substantial conservation. That does not imply that we won't have major hardships and that energy costs won't become incredibly expensive.


Well said, Robert, well said.
Thanks for the link. I posted on Pond Scum as a source of biofuels sometime back.
Algae cleaning up smokestack emissions, too:

"Algae -- like a breath mint for smokestacks"



As I keep saying over on my web site, the two technologies that will play enormous roles in our energy future are biotech (enzymes to help convert cellulose into ethanol, algae that turn waste into fuel), and nanotech (better batteries, like the new "M1" lithium ions, and lighter, stronger materials for vehicles, wind turbine blades, etc.).

These are prime examples of why I believe that the longer you study energy issues in a broad context, and keep an open mind, the less pessimistic you'll be.  I'm nowhere near being a cornucopian, and I think peak oil, peak natural gas, and global warming will give us all the challenges we could hope to deal with.  But I think the evidence strongly suggests that predictions about the suburbs disappearing or people being limited to eating food grown within 100 miles of their home, etc. are seriously misguided.

We're just beginning to see the first signs of a convergence of technologies, a multidisciplinary approach, that I'm convinced will combine with human flexibility and adaptability to make the PO doomers look just as silly as the Y2k crowd.

Isn't it more like 30 liters per person which would be somewhat less than 8 gallons?  But, as you recognize, that's 8 gallons toward a solution to both energy and sewage problems.
bzzzt... I checked the back of my envelope and you're right...

30 litres per year, not 300. Oh well. That would still cover a reasonable post-oil personal travel requirement... i.e. about 10% of my daily commute.

I suppose it's a pretty high-tech business, it would be too good to be true if it could be down-scaled to village or household level...

Finding suitable vast expanses of land close to the sources of nutrients is a major challenge WRT mass production. The advantage of deserts is you've got the sunshine, and you're not competing with agricultural uses. But I suppose you need to build pipelines.

Has anyone taken a look at the Swedish government report on PO--suppossedly debunking it and siding with what they define as "The Establishment"--aka cornicopians? D
Is it out yet?
I've seen all the webcasted hearings, but theres no report on the webpage.
I saw it mentioned on the Energy Bulletin site and on Peakoil.com.  The peak oil site was linked through energy bulletin.  D
New article in this week's Newsweek magazine:


The headline is:

Griping About Gas Prices ... in a New SUV
Crisis? What crisis? Fuel use rises, Escalade sales soar.

when i'm on my bicycle i find Escalade drivers to be the most consistently dangerous people out there.  even in crowded conditions only about 1 in 30 drivers seems out to get me ... but it seems even money that they'll be in an Escalade.
GM sales in April were down by 5% overall, but Escalade sales were up by 127% versus year ago. Pull out your body armour.
World revolves around 'em, don't ya know?
Black Escalades & black BMWs. Give 'em a wide berth.
I had an utterly unconscious driver in a minivan try their best to wipe me and my car against the center divider on Lawrence Expressway today, I don't think they had any idea they did it.

Part of the allure of these fullsize vehicles is "never having to say you're sorry" - being able to just blithely wallow around without worrying about the smaller cars and things (pedestrians, bikes, other ppl's kids) around you. Read the book High And Mighty about SUVs if you think this is hyperbole :-P

From today's WSJ, behind paywall: http://online.wsj.com/article/SB114764742575852460.html?mod=hps_us_editors_picks

Extolling the virtues of booming economic growth in Texas:

Unlike California or the Northeast, Texas has few of the constraints that squeeze development and push up housing prices. Thousands of relatively affordable homes are being constructed each year on the fringes of the state's major cities.  "We basically have an unlimited supply of land," said Mark Dotzour, chief economist of the Real Estate Center at Texas A&M University. "And we have a population that doesn't mind getting in their big pickup truck and driving a long ways to work each day."

The future is bright indeed!

I've posted before, some information anout the quantity of each end product that we get from a barrel of oil.  Naturally, those numbers will vary depending on the grade of crude.  So my question is, do heavier grades of crude, including tar sands, produce more diesel?
The Los Angeles Times had an article yesterday about new "boom towns" due to the oil shortage:


"Calgary, Canada's energy capital, is arguably North America's fastest-growing major city. Located near the vast oil sands of Alberta province, the city is deluged with thousands of new residents from throughout Canada and from around the world seeking jobs and opportunities... Calgary's downtown has the lowest office vacancy rate -- a paltry 1.7%, according to one estimate -- of any North American city. More than a million additional square feet are planned for downtown and another million for the city's burgeoning suburbs. The big problem in Calgary is not finding a job but finding workers. From March 2005 to March 2006, the city added almost 45,000 full-time positions -- about an 8% growth rate. The manpower shortfall is felt across Alberta."
"Perhaps the biggest long-term winner in the energy sweepstakes will be Texas, where job growth has languished under the presidency of its former governor. Until recently, West Texas oil-exploration firms, said Midland oilman Mike Bradford, had held back from drilling because they feared the high oil prices would not last.

"Now they are convinced that the energy market has broken free of OPEC control and that prices will remain high. 'We think high [oil and gas] prices are for real -- and we're going nuts,' said Bradford, who also sits on the Midland County Commission.

"Bradford said there were barely 100 houses available for sale in Midland, down from 500 about a year ago. Unemployment, once well above the national average, is virtually nonexistent. Office vacancy rates, near 50% a few years back, have dropped to about 10%."

My parents moved to Midland in the 1970s, when my dad was promoted to VP of UNOCAL in charge of exploration and production in the western U.S.  I've visited there a number of times over the years and seen the boom and bust cycles. The interesting part to me was the quote suggesting that the industry has finally become convinced that it's for real this time, that the high prices are here to stay, and that it's time to get serious again about investing in oil and energy.

Let's hope they're right. Another collapse in oil prices is going to mean a whole new generation of business people who won't be willing to invest in long term energy. We're finally putting the collapse of the 80s behind us. Things are gearing up again, aggressively hiring, luring people into the field. College graduates will switch back to petroleum engineering and energy fields. All this takes time but in a few years we are going to see an outpouring of investment and creativity into energy resources like we've never imagined.

If there is no significant hurricane damage in the GOM this season, we could be looking at a major--but not long term--drop in natural gas prices by September.  
What happens if the air conditioners have to spin a little faster than normal this summer? Would that change your natural gas forecast?
Sure if natural gas demand goes up, it will cut down on the surplus storage, but a natural gas insider told me one time that the difference between a glut and a shortage in the natural gas business is about 2%.
If there is a surplus, would consumers actually see a rate reduction?
Texas oil production will so totally surge.
This is getting scarier. Even stalwart optimists like Groppe appear to be more pessimistic:

http://www.mywesttexas.com/site/news.cfm?newsid=16628751&BRD=2288&PAG=461&dept_id=475626 &rfi=6

And the award for the "Back to the Future" Award goes to the...Texas Highway Department!  
In this stunningly obtuse move, they've now raised the speed limit up to 80 mph in some areas of our benighted state.
Taionale seems to be, according to the spokesman, "we set speed limits based on what you're already driving."  Well, I suppose 120 mph limits are soon to follow...

As a side note, back in the day, when I was growing up, the "slogan" on the signs found alongside Texas highways was "drive friendly."  Now its "don't slow Texas down"--no use caring about that gas mileage anymore, I guess, or congeniality either.

I'm looking for the graphic of a guy holding a petrol bowser to his head, I've seen this simple design on websites and T-shirts. Would appreciate if anybody can direct me to it!
The one from the T- shirt this guy is wearing.
Hilarious picture. Time to fire up PhotoShop or the like to design my own. A similar picture is shown on a recent edition of an oil peak/civilisation collapse book. (The Party's Over)

I designed one shirt showing an oil drum spilling out blood and showing the barrels of American blood spilled in Iraq. Pretty soon the death toll will equal 100 barrels of blood.

The ill-advised punishment begins. US halts arms trade with Chávez

I can't meet my
current contracts!
Big deal, it was only about 18 million dollars and whatever Hugo needs is for protection from the Mafia hitman from the northern hemisphere.
I said begins. I am sure there is more to follow. Next thing you know Venezuela will join the "Axis Of Evil" club.
I think they have already joined. You hear a lot more MSM complaining about Venezeula than North Korea. In any event, North Korea should be dropped. I don't think you can be a true member of the Axis without substantial oil reserves.
The real trouble will begin when Russia joins the club. The first signs are already in place.
That is bad news. BCR is making yet another oil-laced enemy. Be prepared for Hispanicist terrorism. Latin American people are (more than) starting to hate Bush and the United States. Is the attempt at securing the border all of a sudden an attempt to keep future Spanish-speaking terrorists out? Unlike the Islamic variety, Hispanic terrorists would have an EASY time blending in. And Hispanic airline pilots are ALREADY behind the flight yoke zooming around. (as if airline financial woes weren't enough!)

OBL must be laughing his turban off!

It seems like Chavez is fully aware of what's really happening:
Either way, he predicted, the energy crisis will deepen. He described capitalism as "extreme individualism," which is using up the world's non-renewable energy reserves at an alarming pace. He said the twin towers of the World Trade Center consumed more energy than do some entire countries in Africa. In addition, the fact that 90 percent of vehicles carry no more than one person is "a stupid thing," he said. "Our planet will not put up with this," he said. "We're all in peril."
Source: http://www.cnn.com/2006/WORLD/europe/05/15/britain.chavez/index.html
This is slightly random, but has anyone else heard of the 1909 Baker Electric that Jay Leno owns?  It goes 110 miles per charge.  The thing is that it still runs on it's original, nearly 100 year old batteries (lead acid) because they can be serviced.  They can be cleaned and put back together like new.  It pisses me off that the batteries of today are totally sealed and unserviceable...what if you never had to buy new batteries for an EV?
Heres the article in Popular Mechanics.


Jay also has a nice spiel about how the US should be producing low-sulphur diesel fuel and buying more diesel cars.

Those are Edison batteries, not good ol' Lead-Acid. Edison batteries are nickel-iron alkaline batteries - the forerunner of NiCd batteries. NiFe batteries have quite the voltage drop as they discharge, which is why someone invented NiCd later on. But I'd rather have that voltage drop if I could clean off the plates every time they stop holding a charge!
A nice editorial in the Daily Yomiuri, the Japanese USA-today lookalike.