DrumBeat: May 24, 2006

Now for some wise words from the readers of The Oil Drum...
Troubled GM just can't seem to get a clue.
Their latest desperate attempt to get Americans to buy their massive obsolete gas guzzling clunkers:

GM incentive: A gas price cap
California, Florida buyers to pay $1.99
"General Motors Corp. is doing what politicians wish they could do: Lower the price of gas to $1.99 a gallon.

GM on Tuesday announced a promotion that caps gas at $1.99 a gallon for one year for buyers of certain full-size sport-utility vehicles and midsize cars in California and Florida."


When advertising fails, try outright bribery.
Now you know why so many of us are pleased when oil prices climb: stupid companies with stupid business practicies like these become much less practical.

Thanks for raising the news though.

So, When the year is up and folks fuel bill jumps by say 50% (assuming that the pump price is at $3.5 / gal then) that would be at the same time that lots of them have to refinance their ARM on the McMansion and find that monthly payment steps up by 50% also. Maybe just to put a head on it they will be hitting personal "peak debt" at the same time due to credit card "max out", so they now have to pay for the "other stuff" like food for example, with cash rather than plastic... Lets add that cash outflow step function on top of the other 2. Sounds like a "perfect storm" to me.
Well, as long as we're going for the gusto, let's throw in the tanking US$ which will drive up the price of all those imported goodies they have to have.
The Dollar index, which is the dollar measured against a basket of all other major currencies, sits at .85 today. This is a drop of .04, from .89 where it sat at the beginning of 2006. However at the beginning of 2005 the index sat at just above .81. It goes up and down. There is no reason to believe that the dollar will not recover as it usually does.

The ultimate cause, but not the proximate cause, of this oscillation is the inflation rate in the US as measured against the inflation rate of the other currencies. If our inflation rate is higher than theirs is, the dollar will drop, otherwise it will climb.

In the short term. In the longer term, the fundamentals will win out.
Yes, the fundamentals will always win out in the long run. However the inflation rate in the US verses the inflation rate in the rest of the world ARE the fundamentals in this case.
No. The fundamentals are the current account deficit (mainly) and the fiscal deficit. The published inflation rate in the USA doesn't have the credibility it once had.
How are they measuring it? The credibility, I mean. And where do they publish it? Somewhere near the American League East box-scores, I hope.
Don't believe everything you read.
Real inflation is approaching 10%.  Our own Fed doesn't get it right, so why should I trust any inflation number coming out of any other country?  Bottom line is countries are becoming more disinterested in our money, so the Fed is monetizing the debt.  Any other countries doing this?  I don't know, but if not I think it's safe to say we will have higher inflation than most any countries.
The published inflation rate does not matter. What matters, what moves the dollar verses other currencies is the REAL inflation rate. Currencies will always seek their own level in the world marketplace. When the dollar buys less in overseas markets, that means it is inflating faster than other currencies, therefore it will fall. If the dollar buys more it means the dollar is stronger, or rising if you will. Published reports count for nothing, real buying power, currency verses currency, determines the level of all currencies.
I completely agree.  I'm pointing out that the published rates do not jive with the reality, that's all.  So real PPP is determined on a micro level every day.
Those fundamentals include all sorts of emerging problems around the world. China has a bad loan and corruption problem. The euro is causing all sorts of problems by making the European countries have roughly the same interest rates instead of letting them float. Not a problem in America because people in America move. But Europeans stay put even if their home country's economy is in the pits (relatively speaking) and so the euro has them kicked in the shins pretty bad. Then you have Chavez making every economy around him jittery.

So in other words, the dollar won't tank, but for reasons that don't leave much for hope.

In the long term, you die.

Meanwhile the 'invisible hand' is gonna slap you silly.

If the dollar index makes a little rounded bottom at 85 on your chart then the "chartist" could see this as a head-and-shoulders bottom (on the monthly chart). -- Shoulder early 2004, head late 2004 / early 2005, and shoulder mid-2006 (now). BTW, I am not a chartist.
You forgot the increase in their utility bills.  

Most thermostats do not go high enough to make cooling said McMansion affordable with higher NG prices for those that have NG fired utilities.

And heating ??

Oil, natural gas, electricity, propane.

Chose your poison if local wood is not a viable option.

Time to pile on...

Think about the lowly folks in our society.  Not the poor, but the working high schoolers.  I worked in high school and I did so to have cash in my pocket and a car.  That will come to a stop.  Imagine when gas is $5 a gal and those high schoolers are getting paid 6-8 hour or something around that.  If they are spending an inordinate amount of cash on gas, I think many start questioning if it's worth it.  

The parents can drive them around, but what teenager wants that?  I think many will be swallowing pride to keep a job.  But it gets worse because the parents are also paying those prices and they are also making adjustments.  So how long does mom & dad cart them around in their busy lives?

When  I worked I was using those funds to pay for gas, insurance, & savings.  I saved a ton of money, but more & more will be spent on gas.  Discretionary income left over for these teens will be spent because they will try in vain to keep up with the Jones's around them.  

Restaurants are seeing the first of cutbacks in consumer spending.  People are eating out less which I surmise employs a large % of those high schoolers.  So business is slowing, paychecks may be shrinking, & gas is increasing.

There are far more people in the bottom & middle (income), so I wonder how long everything ho hums along with no one stopping to complain.

Teenagers might have to OMG, RIDE THE BUS!!!
Or ride [gasp] two or maybe even four in a car ... or cut totally optional mileage by half ... or get a bicyle or that is too un groovy even a motorcyle ... or [well you get the picture.] The horror of it all!

BTW, it ain't just the kids. If Americans adults analyzed what they were doing in terms of driving and managed that mileage / fuel consumption downward through car pooling, reasonable use of public transport and combining trips, the reduction in usage would IMO be be a very big number.

BTW, that these behaviors have not become second nature is an indication that the pricing point at which pain is clearly evident has not been reached. Further evidence is the fact that U.S. pump prices are very low by European standards.

Ride the Bus! Oh My Firkin God ! 95 cents!? I'll skate to the beach, and look better doing it.

  I saw your reply on the stale thread...I stand by my post.  The entire chain of command was responsible for not doing enough but this does not remove personal accountability to new orleaners.  All americans have a "It can't happen to me" attitude.  When there is a disaster self rescue is the preferred method.  

Chance favors the prepared mind.


The Mormons (LDS) have a scripture I enjoy a great deal:
"If ye are prepared ye shall not fear."
This is odd. At first I was going to joke, and then I read it again and got smart. Now I have a serious question. Or more. Are the Mormons Christians? If so, why are their scriptures different, and how are they different? Oh, now you've really pissed me off, I can't remember which book had that great piece on the midwest and Kansas, so now I have to go search the internet. Where the hell is Don Sailorman man you need him?

The other question is. Do you watch LOST? Did you see the season finale tonight? Episode should have been named "Prepared and Fear."

Mormons are Christians. I am not a member of the LDS sect, but my understanding is that they believe Jesus came to America back when He was in the Middle East. I don't know if the visits were supposed to be sequential or synchronous.

They have this additional Bible text, written by their spiritual founder about 150 years ago.

John Smith founded it who coincidentally was murdered here in Missouri.  Following that Brigham Young took them to the Great Salt Lake Basin and settled.  I know several Mormons.  They interpret the Bible very different, very literal.
As you all know, Mitt Romney, Republican governor of Massachusetts is most certainly running for President. Massachusetts produces both contenders and winners. He is a  Mormon, so this issue will be coming to the forefront soon.
I'm not a Mormon, either, but have a few friends who are.
They are most certainly Christians (as the Amish are), but have some secondary beliefs that go along with traditional Christiandom.  
One of their main tenants (of being prepared) is illustrated by the biblical story of Noah and his Ark.
"It wasn't raining when Noah built the ark."

I think you may enjoy this.  Kind of useful, too:

I do. I like this a lot. I downloaded it and will be reading it more slowly soon. Thanks. Funny where we get led sometimes.
So true.
That's very interesting, and I think it's a smart move from GM's perspective of trying to sell SUV's - although of course it's beyond stupid from the perspective of trying to stop global warming or wean ourselves off foreign oil.

This is a price manipulation that substitutes fixed costs for variable costs. People fixate on gas prices a lot more than any other cost of car ownership. So if GM jacks up the price of an SUV by X dollars but gives an X dollar break on gas, they'll think they're getting a deal. (It will also encourage them to drive more because, gas  being cheaper, any individual trip will be less costly.)

GM has ZERO chance of saving themselves from bankruptcy so long as they insist on trying to sell the kind of vehicles they want to sell instead of the kind of vehicles the market really wants.  There's a lot of talk in the business press about the "corporate culture" of GM needing a major makeover, and I think this refusal by GM to adapt to the new reality of higher gasoline prices shows just how desperately they need a brain transplant.

The real problem is what happens when they file for bankruptcy--customers will likely flee from the dealerships, afraid to make that large an investment in a company whose existence they doubt.  (I think GM is definitely headed for bankruptcy proceedings, but I have no doubt there will still be a company called GM in the long run.  It will be much smaller, with a much stronger emphasis on more efficient vehicles, and it will be run by a completely different set of people, but it will still say "GM" on their letterhead.)

"GM has ZERO chance of saving themselves from bankruptcy so long as they insist on trying to sell the kind of vehicles they want to sell instead of the kind of vehicles the market really wants."

Of course, the problem is that they don't make enough money on the kind of vehicles the market really wants.  They make money on large vehicles, but break even or lose money on small, fuel efficient vehicles.  You could shorten your post considerably to just "GM has ZERO chance of saving themselves from bankruptcy."

They need more than a brain transplant.  They need to shed their current contracts.  That will only happen through bankruptcy.  The problems from bankruptcy are only problems if you own GM stock or bonds, or live in an area with GM jobs.  I live in an area with GM jobs, and I'm not looking forward to that.  We've already started hearing the sarcastic "Thanks for buying American" diatribes.

GM is trapped between a rock and several hard places.  For a while they did have a profitable small car brand (Saturn), but unfortunately managment (in their public statements) saw it more as a branding triumph than a small car triumph ... and so they made it more like the rest of GM.

It's hard for them to dig out now, but I think the opportunity was there (5-10 years ago) to create a "quality small car" badge, with good margins.  This could have been done in parallel to broader GM SUV sales, and been there in reserve now.

Unfortunately, they have branded themselves too entirely as an SUV company.  And even rebuilding Saturn as a Toyota/Honda competitor would be too little too late now.

One of my favorite online automobile-centric websites is www.thetruthaboutcars.com.  Although geared mostly towards the honest review of this and that model nature (think "Car and Driver" or "Road And Track"), they're very bluntly honest about much more than many of the mainstream print publications.

One of their reoccuring features is the "GM Deathwatch", which has been an ongoing series of articles (75 now!) for a few years now, covering what's wrong with GM.
Thought you might enjoy:

Thanks, I've caught the deatwatch now and then, but not lateley.
Up until this retarded idea surfaced, I truly believed that GM would at minimum adopt some Japanese style management practices, but alas it's the same crap.  They're done, stick a fork in em baby!

Ford is in no better shape.  Reading through their capital spending they have not prepared at all for the ultra competition they are engaged in.

I ran across this article
and the best picks (those co's that make them and sell them) are Toyota, Honda, Porche and BMW. There are a few exceptions like Morgan, Panoz, Bugatti, McLaren, VW and TVR etc. but by and large most everyone else is owned by someone. A real eye opener!
If GM is have this much trouble when the economy is growing how do they think they will survive the next recession.
fallout -

Just when I thought GM couldn't get any more bone-headed.  

They must have brought Roger Smith back to come up with this little gem.

I wonder what GM's next great concept is going to be: a reintroduction of the Cadillac Cimarron?

I wouldn't be a bit surprised, Joule. Or perhaps the Hummer H8.
Well, the good thing is that Hummers get smaller with every revision.  An H8 should be about the size of a Mini.
Just wanted to relay some observations from my driving trip last week to Denver, Colorado from Kansas City, Missouri:

  • Many, many more trucks with 2 or 3 trailers attached.  It is becoming a highway railroad system.

  • More smaller-sized, European trailer trucks.

  • Oil rig pumps in Western Kansas / Eastern Colorado springing to life after years of inactivity.

  • Numerous "dancing" dust devils and rolling tumbleweeds across farmers' pastures (Western Kansas is in a 5-6 year drought).

  • Denver at 92 degrees in May (but of course, it is a dry heat).

  • A lot more Prius' and bikes in Denver than Kansas City.
 U.S. Says World Could Handle Loss of Iran Oil

http://www.rawstory.com/showoutarticle.php?src=http%3A%2F%2Fwww.defensenews.com%2Fstory.php%3FF%3D18 21394%26C%3Damerica

Couldn't find the article at Reuters, though.

Russia has announced it will open it's new commodities bourse on June 8th, considerably earlier than originally discussed.

"MOSCOW, May 22 (RIA Novosti) - The Russian Trading System, Russia's premier stock market, announced Monday that it would start trading in gold, oil and oil products on June 8."

In a recent article by Dave Kimble, "Collapse of the petrodollar looming", the author provides the details of Russia's importance to the world oil market.

"Russia's oil exports represent 15.2% of the world's export trade in oil, making it a much more significant player than Iran, with 5.8% of export volumes. Russia also produces 25.8% of the world's gas exports, while Iran is still only entering this market as an exporter.... Venezuela has 5.4% of the export market."

This could be very important, if all goes as planned.  
Or not. Time will tell.

Is the timing of this news coincidental to the events in Iran?

If so, is this Russia's way of showing support for Iran?

The article states it will begin trading gold contracts on June 8. It says nothing about when oil starts to be traded, only that it will. I assume the currency used for these transactions will be rubles, but this is not indicated at all.
That is correct, as I've seen it stated so previously, Putin's May 10th State of the Nation address, for one.

Looks like they plan to start off with gold, and add other commodities from there. A wise choice, from their perspective...it is what I would do.

"Looks like they plan to start off with gold, and add other commodities from there. A wise choice, from their perspective...it is what I would do."

Why is this a wise idea? What is the purpose of a rouble-based gold exchange in Moscow?

I think the main impact of all of these various bourse ideas is the chatter after the announcement - which is why the announcement to bourse ratio is infite. Lot's of announcements, no bourses.

They want to strengthen their currency. If gold, oil, etc. has to be purchased in rubles, other currencies have to be sold to buy rubles. The ruble moves up against other currencies. Also, if Russian banks are negative on the U.S. dollar they can reduce U.S. dollar reserves.
No, no and no. And not really an anser to my question - which was: Why start with gold.

The concept is that this is an exchange, not just Russia selling its own output. The buyer still buys from a third paty seller, but has to convert into Roubles, which the buyer must accept.

There is no benefit to either the buyer or the seller. So why would anyone choose to take on rouble currency risk just to buy a commodity that can be bought at the same price anywhere, the only difference being currency exposure?

Currency transactions are effectively instantaneous and all countries hold currencies based on strategic considerations. No one is going to hold a major reserve of roubles because they may need to buy gold later. Likewise no one is going to hold roubles just because they received them in a transaction.

Is there any record of a country increasing the value of their currency by acting as an exchange betweeen external buyers and sellers? If it could work why doesn't everyone do this? Especially countries with a stronger currency and legal framework.

If Rusian banks want to reduce dollar holdings they can do so now just by exchanging them for another currency. So the only benfit could be that the exchange somehow allows them to get a higher price for the dollars they unload. I don't see how it does this.

I maintain my position that the main impact of bourse announcements is exited chatter about how powerful the exchange planners are and how weak the dollar is. Again, lot's of bourse talk but no bourses.

Let's see who is right on June 6.

The rouble has for some time been stronger than the dollar or even the euro. Were it not restrained by the central bank, it would have risen far higher than it has against those currencies. So paying for commodities in roubles would enable you to take on less currency risk than paying for them in dollars.
The aim of opening a bourse is not for the host nation to increase the value of its currency. Most nations do not even want to increase the value of their currencies.
It is a way of projecting influence on the world arena, not worth it for many countries, but Russia looks like an exception.
Incidentally, there was a hilarious speech by a Russian deputy yesterday, who proposes doubling the punishment for those convicted of a bribe - if it was given in dollars or euro instead of rubles.
Your first sentence undermines your credibility about currencies. You meant to say 'stronger relative to its own previous position to' rather than 'stronger than' - right?

We'll see who is right on June 6th

What's the difference? Your comment is peculiarly pointless.
Arrrrgggh! More on this the next time it comes up. I thought I was being very specific. We are on different pages.
IFeelFree has the meat of it here, and is absolutely correct, at least regarding intentions.
The main impetous is to strengthen the rouble, particular vs. US currency. Recently, Putin has basically outlawed the USD, which is fairly prevalent 'on the street', thanks largely to over a decade of western investment, acquisition, and outright purchases of F.S.U. (former soviet union) origin goods and services. Petroleum products being a sizeable portion of this.
It also gives Russia some economic clout and leverage with those FSU republics that Russia is close to.  
Finally, specifically with Russia, the banks are quite negative on the US dollar presently, and would like to reduce their exposure.

"According to Deputy Prime Minister Alexander Zhukov, the RTS gold and oil trading would support rouble's demand as the government decides to introduce full convertibility of the Russian currency."

Whether or not the exchange has its intended effect or not remains to be seen, as Jack has alluded to.

Full disclosure:
I personally do a fair amount of business with a few Russian contacts, thanks to a longstanding and unhealthy love of Russian and Soviet militaria, so I'm marginally interested on a personal level.
For me, this would be less than desireable. But from a Russian standpoint, I can see both the why and the goal as laudable.

"Currency Reserves Jump to $225Bln

Russia's foreign currency and gold reserves rose to a record $225.7 billion on surging oil and natural gas prices, giving the country cash to pay off its foreign debts early.

The reserves jumped by $8.6 billion by April 28, the 23rd consecutive weekly gain and the biggest increase since January 2005, the Central Bank said in an e-mailed statement Thursday. The country's reserves are now the fourth-largest in the world, behind China, Japan and Taiwan."


Russia is awash (relative to their internal economy) in foreign currency and hard assets presently from oil and gas after the price of Urals, its main export blend of crude, more than doubled in the last two years.
The stockpile prompted President Vladimir Putin to say on April 27 that he wants to pay off the country's debt to the Paris Club of creditor nations ahead of schedule.
It seems logical to me that they would desire to leverage some of these non-Russian assets to increase the relative worth of their own currency. Hence the exchange.
They're starting with gold, because trading currency for gold (and vice versa) is far from 'revolutionary' (pun intended), and they already have experience in this area.  Starting soft, as they say. From there, they will add other commodities.

I want to highlight fallout and Jack's discussion here. I am a longtime follower and fan of both. So how do I deal with it? I  agree and disagree with points that both have made. I might even have opinions that are different. But it takes paragraphs to articulate these things. Who has time for that? I don't want to take sides and I don't want to risk offending. So I stay silent. Just keep it clean, fellas.
Russia is getting aggresive!  An official ban on the dollar in Russia...


My husband and I decided to seriouly consider having solar panels installed on our house for electricity.  We live in New York, one of the better states for solar rebates. We had a very nice salesman who has a degree in philosophy, drives a Prius and has a solar "pathfinder," laptop computer, Blackberry and cellphone in his Sierra Club backpack price out a system for us. The system would cost $90,000, $50,000 which would be out of pocket (the rest rebates and tax deductions).  This would provide us with 2/3 of our electricity and would be tied into the grid.  We have a 2600 sq.ft. house with a finished basement that is rarely used.  Our electricity usage is "average" for the size of our house with all electric appliances.

I think Kunstler is right.  We (as a society) are screwed!  How many middle-class people are going to be able to afford to buy solar? Or other alternative energy systems? And this doesn't even included heating!  It sure makes me realize how cheap energy still is.

We're building a new home next year (on the farmland I bought last year), and I'm in the same boat regarding PV.  Georgia offers very little in terms of financial incentive, so I plan to roll it into the home construction cost (i.e. loan).
My preselected PV supplier has told me that not only are PV costs rising, but there is now a significant waiting period....he's booked solid through the end of this year already.
Please don't mistake "prices" for "costs." These two terms are only synomous in the context of sales by a seller and acquisition cost of a buyer at a single point in time.

If the pattern followed by semi conductors and the general rule economies of scale holds true the costs of manufacturing solar panels will fall and fall by a large factor over time.

Prices ... well prices depend in the short run on what the market will bear. Over time and on average, the prices of the inputs necessary to produce a product [including an amount for profit / return on capital] should be sufficient to purchase the product in a competitive environment. One of you economists can probably attach the appropriate name to this economic "law".

If I was a betting man, I would wagerthat barring a panic, the real manufacturing cost and consequently the price of solar panels will provide one of the few pleasant surprises of the upcoming journey through peak oil.

Unfortunately the solar panel industry does not benefit from the same 'economies of scale' as the semiconductor industry. A square meter is still a square meter. The only dimension they can reduce is the thickness.

But there will no doubt be a price spike and shortages as the big hump of middle-adopters follows us into buying solar.

My solar guy alluded to slight increases in manufacturing costs (demand for refined silicon rising), but major increases in "price" due to supply (pretty flat) vs. demand (soaring, especially in Europe and Japan).
DIY design and installation is much cheaper.

How is wind in your area ?  I expect wind to be better than PV in most places.  Add batteries (Ni-Fe best but expensive).

Dual wind-PV doable as well.  Perhaps 2/3 wind and 1/3 PV.

I would consider dual voltage system without grid intertie.  Run limited loads on 12 V and grow as time goes on.

I've been thinking about this "tied to the grid" idea.  I've read several articles of people who have switched to renewable energies and they stay tied to the grid though.  In times that they produce more energy than they need, they receive a check in the mail from the energy co.  How reasonable is this to scale?

I know the costs are HUGE, but entertain this for a second.  If all of us were setup in this way, couldn't energy co's be middle men in transporting energy from (home)producers to those who consume more?  I'm not stating that people can maintain the same lifestyle, but what is the collective power of millions of homes wired up?

A lot more than the collective power of millions of non-wired up homes!  Any bit helps.

Our plan is to go this route, PV grid tied, despite the presently higher than grid power cost. Gotta' start somewhere.

I don't know about other states, but here in California you'll see no check for excess energy produced! We have a largish grid-tied PV array on the house (5kw) and here in Ca you get credit applied against your account for any excess power produced and fed back into the grid. If there is a surplus of production these credits accumulate which offset the slower-producing times of the year. The rub is that the credits re-set to "0" annualy, and that excess production is turned into "free generation" for PG&E. I hope that this will change legislativly in the near future--and CA can join many other states compensating those who help take pressure off the grid and invest in alt. energy.
I'm in the midst of going solar. If they still paid, I would have gone with a bigger system, but I'll be damned if I  am gonna give welfare payments to PGE.


2600 square feet house? 65 x 40 ft. 21 x 13 meters. I don't know if that is commom in the US, but if it is, you all need serious downsizing!

FWIW, me, my wife and 2 kids live in a 2 story 6 x 9 meters house, which is a common standard here in Holland.

5000 sq ft houses are not uncommon in the burbs.
The median size (a SWAG) is probably between 2,500 & 3,000 sq.ft. for new construction of single family homes in the suburbs.  Divide sq ft by 10 for m2.

Much smaller in my neighborhood :-)

EVERYTHING is oversized here -- houses, cars, meals, bellies, the military, the budget deficit, the prison system, etc.

Well, not everything -- vacations, health and unemployment benefits, etc.

I never thought about this until someone brought it up, but how many BUFFETS are outside the US?
I never saw one in the year and a half I lived in the UK (mid 1980's).  
Nor did I see one on my recent visit to Australia (Christmas).
That's the point.  Buffets are a sign of the excess that we live in everyday.  There was a story about a Chinese  buffet refused service to several people due to their wasteful habits.  People were eating not even half their plates and go for another round.  

However if you talk to and American about a buffet it seems trivial that we shouldn't have them.  Buffets will wane as food becomes increasingly influenced by higher & higher prices.  Restaurants are already noticing the drop off in revenues to to lower discretionary spending by consumers.  Watch as they close their doors.

In Thailand I eat at buffet outside tourist area. Customers were mainly locals.
Pricing was interesting:
99 bath (approx 2 €) if you eat everything,
double price 198 bath if u left food on your plate.
"if you eat everything"

What the hell does that mean? Awww, you win, man. Funniest post of the day. You had some tough ones to beat, but you get first place.

Also, I wish you would post more. Like every day. Don't be shy.
My wife and I also live in NY, and we did a similar analysis of going solar PV.  We also rejected it for economic reasons.

But I would definitely not say that the current high price of solar PV means Kunstler is right.  For one thing, there's a huge amount of R&D going on to lower the cost of solar PV, so today's price could be a very bad prediction of prices 5 or 10 years from now.  (One company projecting a big decline in consumer costs for their new PV module facility is Honda.)  

For another, there are many other opportunities for conservation and alternatives.  E.g. in NY, as I'm sure you're aware, wind turbines are popping up all over.

But it really annoys me that solar PV is too expensive in this part of the country.  I would love to have a big ol' set of panels on the roof and know how much good it was doing.

Owl and Lou,

I also did the cost shopping scenario.  Big dissappointment.

Two thoughts;

One - spending a lot less money to make your house passive solar and retrofitting appliances to get the absolute best efficiency seems the way to go.  Everything I have researched says reduce energy consumption first, and then go for alternative energy solution. I am doing the passive solar approach by redoing an existing sunspace that was built in the 70's.  It was an energy drag that I hope to make into an energy gain via very high insulation and well thought out tile floor.  Capture heat in the winter from the sun (less heating required) and accept heat from the rest of the house in summer to reduce airconditioning.  Lots of little cheap upgrades may make might energy usage go down without impacting quality of life very much.  Maybe someday my reduction in usage will meet the financial ability to install energy production.

Two - what you both say about the cost of solar is directly attributable to our not staying focused on the alternative energy arena post President Carter.  In my opinion lack of high efficiency cars, cheap solar, cheap wind turbines, few commercial residential hydraulic rams, etc is because everyone who has started one of these businesses has gotten killed when energy prices were allowed to drop.  (Even Vermont castings which make a super efficient wood stove almost went under in the early 1990's.  They are currently booming again like when they started in the 70's.) We have not fostered the same kind of competiveness in the energy markets as we have in the telecommunications market.  All kinds of philisophical reasons to break up the phone carriers (Ma Bell and ATT) to allow innovation but not a similar focus on curtailing the influence of fossil energy companies.

Number two is why I dispair about our political focus at present.  Allowing the business community to sort out the best options enables the really big guys (like GM) to prevent new ideas from getting mainstream.  Ultimately I think GM is doomed but they have stifled innovation in their arena for decades now under the guise that no one would want anything different than what they are offering.  

I think we have the same issue with entrenched energy companies.  "No one would want any alternative to coal, NG and oil because you would live in a cold house and have to walk everywhere."  They have been in the business of convincing people to use more energy for greater than 50 years because that is how they make money.  I don't think they can change that mindset or message for years into the future.  There is a middle ground between conspicuous consumption of energy and no energy use at all.  That is where we need to go and there is precious little discussion on how to do that from existing energy companies or politicians.

According to Ted Trainer (I've posted the link some days ago) the main cost of a PV infrastructure is the Balance of System cost.

The framing and support is made of aluminium, price for aluminium has increased 2 fold since last year.

Wiring is made of copper, and copper prices went trough the roof and even with the last week drop it is quite high and will go further up.

Batteries are made out of lead, I don't track lead prices but I guess it is still very high.

I know that people connect to their house very much and their neighbours also but the best advice I could give you is to evaluate the possibilities of building a low energy consumption house

Energy is cheap mostly because it is not up to you to produce it for yourself. If you also had to go produce your own car, build your own oil well to, find and drill for oil and refine it, how much do you think it would cost you?

I am always amazed at the reasoning of people buying solar panels that don't have even a slightest chance to pay off. What do we prepare for with solar panels? If society collapses will you be able to make our own food, medicine, transportation, clothing?

If you truly expect a societal collapse, then I suggest you a much better deal: you give me this 50K, I'll buy you a beautiful house and a piece of land in a scenic village in Bulgaria. You will live naturally, grow your own food, never ever really need fuel (or even electricity) and you will have enough money left to buy everything else you need for the rest of your life from the local store you will be walking to.

Energy is cheap mostly because it is not up to you to produce it for yourself.

When one produces something for themselves you have 2 thinks working against you.

  1. economy of scale
  2. externalization of cost.

In the case of oil/gas/coal the external cost of CO2 is shifted elsewhere.   In the case of Nuclear Fission, the costs of waste storage and the upper-bound risks are bore by the government.

I've yet to see the 'Lets build Nukes!' crowd accept the exteral cost of the waste stream, in thier back yeard.  And having their childern and their childern's childern guard that waste.

What do we prepare for with solar panels?

Having electrial power to keep lights on at night and refrigration.

If society collapses will you be able to make our own food, medicine, transportation, clothing?

Most - although it would be fibers from sunflower stalks because hemp is not legal.

Socialtal collapse is more likely to have us dead over local robbery-type violence.  

In the case of Nuclear Fission, the costs of waste storage and the upper-bound risks are bore by the government.

Sorry to disappoint you but this is entirely wrong. Nuclear industry is the only industry which is paying for the decomissioning and the waste disposal from its current cash flow. In the US there are currently some 23$ billion accumulated in a government controlled fund for that, but the government is simply not fullfilling its obligations - a think that hardly astonishes me at all.

The real mistake of the industry is that it accepted to delegate the handling of this problem to the govt. If it was a private company, we'd already have a secure waste disposal and processing plants and nobody would have even noticed it. Of course now it is a national problem and people keep repeating same old lies hoping they turn true.

For more details you can read the complete story (a pretty dirty one IMO), written by our co-blogger and nuclear industry insider whitehall:


Some. Most

I suppose you read JHK? Well if you do then I'll be happy to see that simple pencil you are able make up all by yourself. I'd also be happy to see what kind of medicines, clothes or transportation you will be able to master out.

In the case of Nuclear Fission, the costs of waste storage and the upper-bound risks are bore by the government.

Sorry to disappoint you but this is entirely wrong.

This link shows how the US Government DOES take on the upper boound risk for US Reactors.

From that link "any claims above the $10 billion would be covered by the federal government"

Why, do you happen to know about claims above $10 billion payed by the US taxpayers?

I told you once - believe what you want to believe, it is fine for me. Future will tell.

Why, do you happen to know about claims above $10 billion payed by the US taxpayers?

I told you once - believe what you want to believe, it is fine for me. Future will tell.

I exist in the reality community on this one.   The US Government provides an upper-bound liability limit for fission based nuclear power.   The limitation is coddified in law.

Nuclear power admits that the free market does not work WRT generation of energy by splitting the atom.   They NEED government intervention to have a viable business model.

Interesting article in todays Daily Telegraph re the return of Nukes:


And I see you link and raise you this one:


which links here
suggesting "that if the uranium being mined has an ore purity of less than 0.05%, then nuclear power would be detrimental to our society because it would use more energy to refine the uranium than the energy produced by the uranium fuel"

So much for the long term future of nuclear power.  

Back to the mopther of this thread,,,,
LevinK likes economic arguments when he feels they favor his position:
"solar panels that don't have even a slightest chance to pay off." and doesn't believe in economic arguments when it comes to paying the full load for fission-nuke insurance.

The highest yeild nuclear material is to salvage it from warheads.   Wonder how desperate the civilian/industrial parts of humanity will have to be to get the military to give up its fission based weapons?

Ha Ha.
The more I look at PO combined with GW, the more I think we are in a maze with no out- door.
I think some people are trying hard to close the obvious exits from the maze, pushing us in the dead-end directions instead. The reason? I'll let you decide, but my version is they totally dislike our current arrangement, and hope that if they succeed in breaking it down completely, what will emerge will match their eco-utopist delusions.

But what does history tell us? Roman empire was not a good thing, no second opinion for that. But was "breaking it down" a step forward for the mankind? Hell NO, what followed were 1000 years of dark ages and enormous amounts of human misery, suffering and deceptions that keep chasing us even in the 21st century. Will history repeat itself? Hope not.

The present economic model is based on fiat money, which needs a growing economy to keep the game going.

How can the game be kept going when the input - cheap oil energy - is taken away?  Or when releasing geologic-stored carbon is considered bad form?

And what shall be the reaction of people when the 'rules of the game' have changed?

Oh, don't forget to add:
Asteroid (or comet bits) impacts
Earth magnetic field collapse
Solar flares
Parts of islands falling into the sea, creating a tidal wave

The hits can just keep comming eh?

ore purity of less than 0.05%
Isn't typical uranium 0.10%? If 0.05% is breakeven, then wouldn't 0.10% be a 100% return on energy invested?
On a linear basis, sure.  But .1% means less overall rock having to be moved for extraction VS energy, assuming same location and otherwise equal effort.
Who the hell believes in that "free market" tale? (except a  handful of economists I guess). Where have you seen a "free market" around you? In our subsidised agriculture? In our subsidised and military backed oil&gas industry? In our subsidized and heavily regulated auto, air travel, housing etc. etc. industries? In our military industry fueled by tax dollars?

So far in my life I haven't seen that free market beast yet, have you? The notion that the "free markets" "provide us" with everything we need is simply an ideology, much like in ex-communist countries governments claimed that we were having a "socialism" or "communism" instead of government enforced partocracy. The truth is that all of the major industries in US have been started or have been supported by the govt along the way. If you believe anything else - I guess we don't live in the same Universe.

The liability cap for the nuclear industry is a very essential one for it to exist. The fact is that it has not costed a single dollar to anyone, unlike oil&gas&wind&solar subsidies which have costed us billions (trillions incl. military) so far. If it was not for it, the insurers would not have agreed to insure the  nuclear utilities because of their internal regulations (can not insure for more than your capital). If the nuclear utilities did not have insurance they would not get license  from that same govt. It's a simple logic and if you took the time to think about it without leaning on your sentiments you would have to accept it.

The liability cap for the nuclear industry is a very essential one for it to exist.

Then perhaps such an industry doesn't need to exist if there are so dangerous as to need government protection.

It is not like there is no other known ways to make electricity.

The fact is that it has not costed a single dollar to anyone, unlike oil&gas&wind&solar subsidies which have costed us billions (trillions incl. military) so far.

You are willing to allocate NO military 'budget' to nuclear power issues?   How ya going to file an attack on Iran?  How much are you allocating in resources to defend nuke plants and waste storage from 'terrorists'?   Still at $0?  

But here's a quote that shows you are wrong yet again.
"Nuclear power already has had 50 years of subsidy totaling over 140 billion dollars, dwarfing subsidies to wind and solar during the same time period. It is a mature industry that should not receive any more taxpayer funding."  - Cindy Folkers NIRS.

How about:
"Nuclear Industry to Receive More Than $10 Billion in Tax Breaks and Subsidies in Senate Energy Bill"

Amazing how you can claim "not costed a single dollar to anyone,".   I guess if you borrow the money in the form of a bond, is THAT how it 'costs not a single dollar'?

I suggest you try reading my posts before replying.

When I said "The fact is that it has not costed a single dollar to anyone" it was about the liability cap I referred in the previous sentence, you are so much fond about.

Regarding the other subsidies they are simply dwarfed by what we spend for oil&coal&gas etc. And most of them were dedicated not because of the nuclear industry itself, but because of the government goal of producing nuclear weapons, which ironically are used to defend the security of the oil and gas supply.

In the end when you do the cost/benefit analysis you can not avoid the conclusion that govt support for nuclear is far more justified than for all other energy sources.

In the end when you do the cost/benefit analysis you can not avoid the conclusion that govt support for nuclear is far more justified than for all other energy sources.

If I want to burn oil, gas or coal for electricity, I as an individual can do that w/o the need of a special law shielding  my liability.

Same with wind, hydro or solar.   Please show me where, as a citizen, I can generate my own electricity via fission?

Considering one estimate of damage from a nuclear incident could be upwards of $600 billion, no sane and rational person can conclude that a proper cost/benefit analysis results in nuclear fission power 'is more justified'.   Not to mention how any citizen can implement their own power generation w/o any govermnent subsidies in all cases BUT using nuclear fission.

You HAVE admitted that without the special government protection, there is no civilian nuclear power.    

Without govt wind & solar would be dead too. You are circling around, applying double standarts and doing all you can to convince yourself in what you have decided to believe. It is fine with me, but I see continuing such discussion pointless.
Without govt wind & solar would be dead too.

Again, you are wrong.

Solar (passive heating) has been done long before there were 'governments'.   Solar (PV) was done by Bell Labs, without any government money that I am aware of.   Of course, goverment allowed the corporation ot exist and allowed it to be a monopoly (with regulation of course)


Two people who have 'done wind power' without government.  

I can understand your confusion.   When the government takes taxes and gives it to large corporations for large corporation benefit you ignore the small wind people/firms like Mike Bergey.   The handouts to small wind don't compare to the handouts to GE/Westinghouse/Enron.

You are circling around, applying double standarts and doing all you can to convince yourself in what you have decided to believe.

Interesting claim.   Got proof that isn't my reply to your wanting to argue using money (per free market arguement) then turn around and cry when you are called out?

Or are you just making a statement and hope others accept it as true?

continuing such discussion pointless.

Understandable.   What with being on the loosing end.   You admitted that without the government backing limiting the liability of nuclear fission power, there would be no civilian nuclear power.  

The sad part is, when accidents or terrorism happens with nuclear power or its waste, it won't be you or your childern who will shoulder the burden for your position.   You'll leave it for others to shoulder that burden.   Rahter easy for you to support what you won't have any responsibility for, isn't it?

How much are the taxpayers paying for each kwth produced by wind turbines in US? Answer: 1c /kwth.
(If they did it for the nukes it would have costed $10 billion each and every year. Your $140 billion would have gone for a slightly more than a decade - and nukes are around fo 40 years)

How much am I paying from my tax bill so that some small group of people can install solar panels that never pay? Answer: I don't know but it seem to be growing.

Will Denmark, Germany or Japan have been the leaders in the renewable industry without government support? Answer: NO.

Are you just willing to argue, when all facts are against you? Answer is obviously YES.

The next 6,000 MW of US nuclear power will also get a quite large gov't subsidy.  All the current interest is to becomc eone of the 5 or 6 next plants.  I strongly suspect once the subsidy is exhausted, that interest will decline.

6,000 MW is comparable to the installed US wind power plants (actually more MWh/year x 2).

So new nukes without 1) gov't liability limits and 2) massive gov't subsidy despite being a fairly mature technology.

OTOH, when the gov't subsidy expired in the past, new wind farms were still built; just not very many of them.

Today, without subsidies, a still sizeable # of wind turbines would be installed in, say, 2008 due to the high price of competing natural gas.

Subsidies give us much more wind than without, less natural gas consumption and less global warming.

One of the key virtues of wind is it's quick response.  There are cases where it took 12 months from financial decision to power production for expansion of an existing wind farm and 25 months from financial decision to "green field" wind farm.

A new US nuclear plant ?  None at commercial power before 2019 IMHO.

x2? wrong multiplier! make it 3 (25-30% vs 85-90%).

Unfortunately I have to agree with the year of 2019 - not because of the so much cited technological lead time (we can very easily the nukes in 6-7 years, if we wanted to), but because such discussions convince me that the road to sanity in this country will be a long and a very tough one.

Wind - 9,149 MW as of December 31, 2005 and probably another 1 GW by today.  30% is probably a good average for a new US wind turbine (they are bigger & taller today, which tends to increase load factors).

Nukw 6,000 MW with 85% to 90% load factors.

x2 is about right without adding anotehr digit :-)

OK, I grant you this one :) After 2 decades of investments our wind farms produce the equivelent of 3 nuclears reactors - not impressive but could b worse. I'll grant you also that this is just the beginning.

Nevertheless it looks like the utilities have made up their mind where the future will be: according to this paper there are 19 nuclear units being planned with filing dates in 2007-2008 and first commissioning dates expected somewhere around 2014. I suspect that with the skyrocketing NG and coal prices there will be a mass rush for nuclear by the end of this decade (absent economic meltdown of course).

Meanwhile 2006 will likely see another 3,000 MW of new wind turbines and more than that in 2007.  2008 ?  2009 ?  ...

I am quite skeptical about more than 6 GW of new nukes coming on-line.  I think the $10 billion (from memory) federal tax credits got peoples attention and there is a race to get part of that pie.

The not so long ago sales prices of used US nukes (often a half billion) leads me to question if any will be built past the tax credot limit of 6 GW.

And I question 2014 as a start date.  A bit too optimistic for me (I remember delays and cost overruns in SO many nukes !).

And then they were not restarting a moribund industry, but following two decades of active nuke building with "hot" production lines !

And I question 2014 as a start date.  A bit too optimistic for me (I remember delays and cost overruns in SO many nukes !).
Well China plans to triple its fleet by 2020, are we so much behind China already?

The not so long ago sales prices of used US nukes (often a half billion) leads me to question if any will be built past the tax credot limit of 6 GW

It makes sense a nuke near the end of its projected life to be cheap. The new owner will have to factor in the decomissioning costs in the sale price. And the waste storage costs until that Yucca Mountain storage is built... someday.

I am quite skeptical about more than 6 GW of new nukes coming on-line.  I think the $10 billion (from memory) federal tax credits got peoples attention and there is a race to get part of that pie.

You are mistaken (probably from the liability cap). The tax break is 1.8c / kwth for the first 8 years corresponding for 6 GW roughly to $6.8 bln. Personally I oppose this tax break because it would make the utilities profits obscene, given that the operating cost of a nuke are in the range of 1-2c/kwth. Your claim would be tested in the next two years - apparently 19 reactors is quite more than 6, and apparently the utilities know about their competition and that there are so much eggs in the basket. Something is got to give.

My version is that the utilities went this way because the govt finally gave green light to that almost heretical for the last 20 years technology. It's all opinions at this point.

solar panels that never pay? Answer: I don't know

If you don't know if solar panels pay, why do you keep saying they "do not pay"?

Nuclear - 1-4 EROEI
Solar PV  3-5 EROEI

Looks like solar 'pays' just fine on a EROEI basis.   Which must be the only basis you were talking about because you have rejected a 'free market' basis for comparison.

How much are the taxpayers paying for each kwth produced by wind turbines in US? Answer: 1c /kwth.

Whatever a kwth is....

Energy Policy Act of 2005 includes a 1.8 cent per Kwh production tax credit (PTC) for electricity produced from nuclear power.

1.8 is greater than 1.  Its got truthieness.  Therefore nuclear power has more of a subsidy than big wind.   And small wind gets almost no government kickbacks.

Are you just willing to argue, when all facts are against you? Answer is obviously YES.

For there to be an argument, there would have to be a disagreement.  

We are in agreement that without goverment protection, there would be no civilian nuclear power.  We are in agrewement that Price-Anderson libality limitation exists to provide cover due to the government stated potentional damage of $600 billion of just one nuclear failure.

We are in agreement that nuclear power is more expensive.  

All you are doing is making posts that make Fission based nuclear power look less and less attactive when it comes to economic arguments.

Last post here, I'm tired of you not reading my comments.

If you don't know if solar panels pay, why do you keep saying they "do not pay"?

Now reread my original text:
How much am I paying from my tax bill so that some small group of people can install solar panels that never pay? Answer: I don't know but it seem to be growing.

That leads us to nowhere and citing ridiculous EROEI estimates too. Sorry.

Last post here,

So you accept that nuclear power has a larger tax credit than wind.

Glad we've got that in agreement also.

That leads us to nowhere

Actually  what leads to nowhere is you making a statement of "solar panels that never pay" and not actually backing it up.

But given how you had an original postition that Nuclear power pays for its insurance and that wss shown to be wrong, and how  you were claiming that wind got more of a tax kickback than nuclear power and how THAT claim is wrong, the readers of you should take your blanket claims with a big hunk of NaCl.

citing ridiculous EROEI estimates too.

You are the one who rejected using money as a metric due to the lack of a free market.   If you don't want to use money or EROEI for comparison, is the metric "I'm LevinK and what I say is right"?

I would argue that while USSR has collapsed from communism, it has moved more towards democracy.  At the same time we have moved from democracy, more towards socialism of some sort.  We've moved from free towards control...more & more of it.

A quick note about free markets.  They start out free, but once an achilles heal is found, we try and patch it with government intervention.  It's not that Adam Smith didn't want government intervention, just only when necessary.  

Is it really all that bad that the NYSE has loss limits instuted by the SEC to prevent another collapse?  It's an attempt to cool things off, so we can stop and think for a minute.  When an active market is in panic mode, no one is thinking.  I will say that the government has gotten carried away, but I'm merely stating all gov't intervention isn't bad.

I can't stand when the GW crowd can't understand that we can align profits with "greener" ways.  Take the acid rain argument.  I don't care if we really needed it, thats water under the bridge.  The EPA didn't know what to do late 80's early 90's because the energy lobby was terrified of the cost of installing these scrubbers.  The lobby couldn't provide the real cost of these things because they weren't being used.  SO what does the EPA do?  They said fine, we'll auction of credits for each ton of smog produced and they set the price @$750 per ton.  The free market determined very quickly, that these were overpriced.  

Remember no one knew what the real cost of those scrubbers were.  Once companies realized it would be cheaper to install scrubbers instead of buying these credits, they quite buying them and installed the scrubbers.

Two things: Gov't intervention was needed to spur this and that shouldnt be needed, but so what.  Following the introduction of these, the free market price of these credits plummeted to under $250 a ton due to the over abundance of supply and the demand erroded.  Therefore there are companies that still pollute, but the credits are finite and eventually all of them will end and the plants will all have scrubbers.  There is no current economic reason to be green.  


This article bashes Wal Mart for being greedy and in turn pushing for greener business practices.  I don't get it!  Why are we mad because Wal Mart wants to make more money and they do it by becoming greener?  So what!

A basic economic tenant is based on making no one worse off, while making someone better off.  Wal Mart sees the economic benefit of becoming more eco friendly so who is losing?

We are entirely on the same side side here. Government regulations/interventions are more than needed in every place, where unrestricted private interests are able to hurt the common good. But you are wrong about Adam Smith - he considered government intervention a bad thing, probably a necessarry evil and bashed it apriori. Putting evil in front of necessarry. While I think that if something is necessarry it can not be evil, right? The result is our ideology that govt must not interfere by all means.

Personally I dispise the double talk on this matter. So many good things are bashed because they require government intervention or regulation. This is sorely true especially in developing countries suffering from the ideological tirany of the IMF and the World Bank (essentially Washington). At the same time we are constantly forgetting that the entire framework we are functioning as a society is created, maintained and guaranteed with the help of those same state regulations we keep denying others the right to have.

Adam Smith was not COMPLETELY anti gov't - I pulled this from Wiki...

(However, it must be remembered that Smith advocated for a Government that was active in sectors other than the economy: he advocated for public education of poor adults; for institutional systems that were not profitable for private industries; for a judiciary; and for a standing army.)


Well... I guess it makes him a moderate according to the 18 century standards, though by todays standards he would be looking more like an ultra-right conservative.

The question is why are we still following his lesse fair (sp?) principles, which in their deep roots are obviously not enough in the world today. Why do we keep judging so many things with the sole criteria how much "free-market" is this or that? Is the "free market" a value alone by itself? I think the quality of life (how subjective it is) can be a value by itself not some abstract mental constructs, that exist only in the books anyway.

The founding fathers of the US republic abhored a tyranical governement and yet they understood that government regulation was a "necessary evil".

To keep government from getting too big and too powerful, they divided control between the Federal system and among the states. Your local State goverenment for example, is supposed to control public education and decise whether Terri Schiavo gets her tube pulled or not. (No Child Left Behind and Frist-4-Shiavo were really unconstitutional intrusions by the Federal governement into the sovereign domain of the states. We'll see in the future if the "purist "judges on the Supreme Court allow these attempted bastardizations of the US Constitution to continue.)

The founding fatehrs also gave the US Congress a certain list of "enumerated powers".

This talk about "free trade" and keeping the government out of the way is all right-wing BS talk. The US Constitution includes a "Commerce Clause" which empowers Congress to regulate trade among the several states and with foreign nations. The founding fathers never expected to have a free for all where businessmen can do as they please without regard to how their actions may promote or detract from "the general welfare". Read the Preamble to the US Constitution. You may become "enlightened".

- although it would be fibers from sunflower stalks because hemp is not legal.

Not if society collapses; who will enforce it?

Hello LevinK,

Good points!  Food & water will be the crisis point for most postPeak--thus my advocating of building biosolar habitats and protecting them with Earthmarines.  Zimbabwe's Pres. Mugabe stupidly tried the opposite: he ran off the good farmers, and assigned his military to grow the crops.

RESULT: only 10 tons of maize vs. the expected 10,000 tons!


Now they are rationing water in capital city of Harare:


Stay tuned, the *#@! is about to hit the fan.  Calmly extrapolate to postPeak America, if you can, roughly twenty years from now.

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


  Do you have access to mescaline in Phoenix? I ask this because of your cyclic converstation about abstracts (detrivores, Earthmarines and isolated pockects of "biosolars").

  1.  If there were to be a SHTF situation those with military training will stay where they are and or become the brigands you speak of.  

  2.  In a collapsed post PO world new solar equipment will be difficult to build and transport without fossil input.

  3.  Do you realize how many farmers are neccesary to support 1 properly trained soldier?  A group of roving pirates could sustain themselves by grazing village now and again.  But one village can only support a few dedicated warriors.

  4.  With no new solar equipment being built and the lifespan of such things 20-30 years after one generation all our technology would be artifacts of the "old" people.

   There is a possibility for the entire society to switch gradually to renewable energy but isolated pockets of haves will be looted.  So I calmly extrapolate 20 years into the future.......
CTL plants all over america.
Production of the FL and Cuba coast is rising.
www.TheCoalBarge.com discussions about peak coal reaches and all time high for daily hits.
Osama Bin Laden is moved from GITMO to levinworth due to rising sealevels.  
I get in my pickup truck and stop off for some syn diesel on the way to work......
Sometimes the conversation here straddles the line between sharp comments and outright rudeness.  I found the "mescaline" reference inappropriate for TOD.  I suggest the poster consider frequenting a place like peakoil.com, where there seems to be plenty of "energy sources" for flames.

Representing a minority viewpoint on this forum is not an excuse for insults.

Wow, The disadvantage to this format is body language and tone of voice do not allow someone to know when you are kidding....Bob if I came accross as rude I apologize.
It is all good, Matt. I had a strong suspicion you were being sarcastic, but as you say it is often hard to tell with such an impersonal medium, and perception is key.
Its just every time he types "Earthmarine" I think of my camp counselors from gradeschool with combat burkinstocks and cheesy indian warpaint.  I can't get the visual out of my head and can't take the concept seriously.
Hello OilRig Medic,

No offense taken--I am textually safe on this side of my monitor.   =) My hypothetical Earthmarines and biosolar habitats may never arise, just speculation on my part--please keep that in mind.  Who knows what the future will really bring?  I certainly do not have the power to drastically restructure our future.  I just hope we have the wisdom to decline more sensibly than Zimbabwe and other discouraging historic examples.  I think there is a certain inherent logic to my 'land lifeboat' speculations, and I try to support that with documentation [when I can find it], but we already know that in a crisis: calm, rational logic is the first thing abandoned by humanity.  I will be greatly interested to see if Don Sailorman's postPeak fictional novel dovetails with any of my speculation.  We will see. BTW, how do you see this all unwinding?  I am always interested in reading about new scenarios that have not been imagined and discussed before.  I bet the classified world milgov thinktanks and Pentagon/CIA/NSA orgs have scenarios that would collectively blow all our minds here at TOD, but we will never, ever see them.

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

I don't know the kilowatt rating of the system you were quoted, but based on the price it's a very large one. You really need to look at ways of conserving power. Solar really only makes economic sense in combination with efficient appliances and conservation measures.
Efficiency is the cheapest way to "produce" new energy (infamous negawatts). I suggest you head over to rmi.org (Rocky Mountain Institute).

A geothermal heat pump would probably be a better first investment than PV. Of course it won't allow you to go off grid, but it could reduce the amount of energy you use to heat and cool the place by 2/3 or more (depending). Much easier after that to go PV...

That probably depends heavily, like so much of this topic of conversation, on individual needs and location.
In my case, I live in the Deep South, residential heating is the last thing I'm concerned with. It only gets below freezing a couple of nights a year.  Meanwhile, the incredibly bright hot orb in the sky is blazing away most every day, and will BBQ exposed humans in a few hours.
Insulation is still your best bet, at least initially. Once you get above R50 or so, though, it has a declining margin of return on investment (ROI), time to go after inefficient appliances.  CFT or array led lighting is always a good retrofit that can be done almost at any time.  

How big of a system are you putting in? The price sounds awfully high to me.  I know costs have gone up but that far?

I put in a 3.6kW system around '98 or '99*.  It cost around $40+k and included $6k worth of batteries. There was no labor cost since I installed it myself.  It was installed mainly because we are in the boondocks and power is unreliable since storms knock it out frequently.  We have TOU metering and our system is mainly used as a "peaker" from noon to 6PM when the rates go up (although I usually switch to it around 9AM and shut it down around 7PM during the summer).  We, too, have an all electric house (we heat with wood though).  It's 2,200sf.

You might also consider a solar water heating system.  I installed our first one about 25 years ago and an updated design about 6 years ago (It's a semi-concentrator that I designed that sits low on the roof because I hate those ungainly 4x8'/4x9' units.)

*Actually, I put in our first PV system around '82.  It was a "giant" 77watts with a 550watt inverter and two truck batteries.  As small as it was, it keep the freezer from thawing when the power went out.

owl, ouch on the $90K!

I think the key thing to do is to calculate ROI on the alternatives (efficient appliances, insulation, etc., etc.) and see if solar (especially in your area) wins.

A Kill-A-Watt monitor only costs $25, and if you don't have one before spending a few $K, you probably should.

BTW, I don't think we'll get to a Kunstler-esqe scenario, but if we did ... I think we'd see a lot of houses run with much less expensive yacht-sized dc systems.  That can be done.  Boat people do it.

Although we have replaced many lightbulbs with the efficient ones, I know there are many things we can do to conserve. As we replace appliances we will certainly get energy star ones but I can't really see replacing ones that work.  We already have a well-insulated house -- 6 inches of insulation in the walls and 10 inches in the roof.  A few years ago (even before I was aware of Peak Oil) we installed a wood-burning insert into the fireplace and have since installed interior doors to close off rooms.  Our two kids are homeschooled and so we are at home most days, all day, using heat, lights and appliances.  We also each have a computer that is used for school/work/fun.  So, that is hard to reduce. My husband converted the living room into an office to reduce commuting costs (although as a landlord there is only so much one can do from a distance).  We could theoretically downsize and build a more energy efficient home but the price of a building lot in our town costs more than what we paid for our house on three acres eight years ago.  I have put in a garden and expanded it this year.  We have planted several fruit trees and berry bushes.  I have learned to can:  we are still eating raspberry jam and tomato bruschetta from last year. And we have some dandelion wine fermenting in the dining room along with 10 pounds of sauerkraut. I experimented with cold storage and we ate from a 50-pound bag of onions I purchased locally for $5 (we live near the black dirt farming area in NY) and 50 pounds of potoatoes for $10 plus homegrown butternut squash and pumpkins throughout the winter.  We compost, buy locally as much as possible, have no debt and plan to install solar for electricity and hot water when we can pay for it outright.  But still, $50,000 is a lot of money!  So many people talk about the "alternatives" but how many people are really going to be able to afford to invest in alternatives while paying the increase costs of energy and food and insurance and health care etc.  It was a shock to me when I got the actual quote on installing solar panels.  Perhaps, the prices will come down or maybe they will go even higher.  Maybe the technology will improve but they don't look that much different than systems that were installed in the 70's.  It was just shocking.  There is a big disconnect between spouting off about alternatives and plunking down the money to actually do it.  And it just made me realize how dire the situation really is.  I never turn on a light switch, flush the toilet or drive 10 miles without being incredibly grateful for what I am consuming!
I know it hurts to replace appliances that work, but that's where the kill-a-watt comes in.  I found I could replace my refrigerator for a bigger and more efficient one, and have it pay for itself in about five years.  Two down, three to go.

The old fridge itself cost about $20/mo on each electric bill.

I'll order the Kill-A-Watt and test everything. Do you leave it on the refrigerator overnight?  How does one test a dishwasher? Thanks.
Cool.  The Kill-A-Watt totals everything up for however long you leave it plugged in.  It tells you the hours and the kWh.  I ran it attached to my refrigerator for a few days and then looked at the totals.

I wrote some little on-line calculators that save me doing the math:


I did test my dishwasher too  (it's a switched outlet under the sink).  There's a "duty cycle" calculator on that page above, from that:

"Alternatively we can use the monitor to measure the kWh for one duty cycle, just plug it in and check at the end of duty. This works for things like a bread machine (mine uses 0.37 kWh) or dishwasher (mine uses 0.62 kWh) where the issue is per-use rather than per-hour."

At 10 cents a kWh, a diswasher run is only 6 cents.

(They do caution against testing clothes washing machines ... that much power blows it up, I guess.)

WOW! - Our 2500 watt system meets almost all our needs (including AC) in a home not unlike yours, cost $20,000, with $10,000 out of pocket after rebates - and we did it before before the federal rebate was passed. We're outside Sacramento Ca.
The one I've priced is 3KW, for roughly $30,000 (USD) and based on my previous electric bills will meet on average 2/3rds of our needs.  We can cut back on the rest.
I made a little passive solar guest house for my motherinlaw in the '70's, and it still sits there using no heat at all in pretty cold winters (-15C not unusual) and is also exceptionally quiet.  We also use a pool heater (roll of plastic sheet with tubes in it) for hot water in summer, and wood stove for space and water in winter in our 180 sq. meter house, pretty well insulated but 100 yrs old. 200 kw-hrs/ electric/month, and could be a lot less with no pain, but good deal more attention from lazy Poppy (me).

I don't like PV because I spend my professional time trying to invent competition to it, and believe I am getting there (supersimple stirling engine, of course) This thing will be WAY cheaper than PV. But don't hold your breath.

My own casual observation is that the sample  of persons I know in USA is so fat, so ignorant, so wasteful and so lazy that cutting half of present fossil energy used would be beneficial for one and all here, not to mention rest of planet.

Applause given for that last comment...my belief also.  We are way too fat in most ways here in the US; that will have to change, voluntarily or forcibly.
You're falling into "the" trap.  The same type of trap that just attemps to find renewable replacements without looking at the whole system.

I'd bet that if you took $20,000 (or even less) and started picking through your house to find ways to reduce your energy consumption, which includes not only efficient appliances, but personal habits, as well as learning how evil things like AC/DC adapters and standby on VCR's microwaves et. al. draw power all the time, tons of insulation if you have air conditioning (will also save on heating bill)... You could probably reduce your electricity usage by 2/3 (the same amount that the PV system would offset), and you would have $30,000 left...at which point you could probably buy a slightly smaller PV system that would supply all of your electricity.

Anyone that depends on a PV system or some other remote power generation knows that you throw the money at being as efficient as possible first, so that the system you get later will be the least expensive and work the best.

First time poster; long time lurker. Thanks to all for the general excellence of discourse on what has become one of my most-visited URLs.

There's been plenty of discussion re: finances in light of PO and general economic situation. And I feel like I have a pretty good grasp on short-med term. But I'm unsure what to do with my IRA; I'm tempted to cash it out after a pretty good run over the past few years (mostly in energy stocks) and use the proceeds to invest in our homestead (ya' know, in-ground pool, wide screen tv, etc). However, I can't quite get over the penalites and general acceptance of doom such an action would infer.

Curious what other folks are doing with these sort of long term investments. BTW, I'm 34.


Mix of hydroelectric utilities in diverse but relatively safe post-Peak Oil places.  Brazilan utilities CIG & CPL very weak right now. (Not more than 10-15% in Brazil IMHO).

A couple of railroads.

US based exporters in businesses likely to survive post-Peak Oil.

ECA for gas and some oil.  My "pick of the litter".

Brazil has a decent energy plan, but if america craps out economically and the global economy is sliding won't brazil seize all foriegn investments.  Latin american countries have been nationalizing energy assets recently right?



Swiss utilities are safe but low yielding.  Canadian are perhaps best balance.

Brazil will need new capital for new dams.

These companies (and Verbund of Austria) are unusual, 51% state owned (state not national gov't).

State realized that 100% state owned companies are wasteful and inefficient.  Solution: Sell off minority share to investors and transform utility into more efficient organization; and get capital for expansion at the same time.  PetroBras same thing.

So, IMHO, the chances of nationalization are far less than foreign companies coming in.  Investors were invited in.

Brazil is #3 agricultural exporter and will find a market for that.

Again, put just one egg into Brazil !

Also a small holding of GE.  New president is emphasing right things (more fuel efficient locos, wind turbines) and they are diverse multinational.

If doomers are right, my holdings of Swiss hydroelectric utilities will be the last stock worth anything anywhere in the world.

Also, stock up on nickels and pennies when things get worse.  They will retain their value.

  I've seen the nickel penny comment before. Why would they be worth that much?  If the economy bombs industrial production will too and there is plenty of metal lying around for what production remains.  500$ worth of shotgun and ammo would be more beneficial to negotiate with (both to barter or threaten).


I second Matt's opinion. In fact, even rolls of toliet paper will be more valuable (and useful) than rolls of nickels.
In Germany's hyperinflation, minor coins as well as silver & gold coins kept their value.

Per my understanding, 100 bronze pfennigs could still buy a silver mark.  Change was made in between hard coins.

We have no more silver or gold coins in circulation, but we still have minor coins with intrinsic value.

It depends just how far we slide down the doomer scale.  Ia gree that canned goods (especially exotics like pineapple), tobacco, alcohol and toilet paper are good mediums of exchange.  But minor coins have a place as well.

Precious metals (gold, silver, platinum) will skyrocket if we have a dollar crash or hyper-inflation. If we have deflation due to the economy stalling out, precious metals will first go down, then climb as fear mounts. Precious metals have always been a safe haven in uncertain times. I started buying gold/silver coins 3 years ago and have more than doubled my money.
Depending on your expectations, that 10% penalty for early withdrawal might not be such a big deal. If you expect inflation to be a big problem in coming years as many people do, for example, moving those assets into something tangible might be a decent idea.
I transferred my 401k to a precious metals IRA. Basically, this IRA holds physical coins for you in a safety deposit box. You don't take any tax penalties this way. So far the value of my account has increased significantly.
Hilary proposes Energy Plan to reduce oil consumption.

"Our present system of energy is weakening our national security, hurting our pocketbooks, violating our common values and threatening our children's future," she said in a speech at the National Press Club. "Right now, instead of national security dictating our energy policy, our failed energy policy dictates our national security."

With the energy sector under fire as soaring prices for crude oil and natural gas push industry profits to record highs, Mrs. Clinton proposed imposing a two-year fee on oil companies to create a $50 billion fund to help spur research into new conservation approaches and alternative energy sources.

"Now, the oil companies would have the option," she said, referring to the fees companies would be required to pay. "They wouldn't have to invest if they did this themselves, if they began making investments in bio-fuels, in other forms of renewable energy, in new, cleaner refining capacity, solar, wind. If they did it themselves, then they wouldn't have to pay into the fund."

New home Sales are surging again...WTF?  
Sales of new homes rose unexpectedly in April to the fastest pace this year as the housing sector showed resilience in the face of rising mortgage rates. But the price of homes sold last month fell and the level of unsold homes rose to a record high.

The Commerce Department reported that sales of new single-family homes increased by 4.9 percent last month to a seasonally adjusted annual rate of 1.198 million units, the highest rate since last December.

In other economic news, orders to U.S. factories for big-ticket manufactured goods fell in April by the largest amount in three months as aircraft orders plunged and demand for computers and other electronic products dropped by the largest amount in nearly six years.

The Commerce Department reported that demand for airplanes, appliances and other durable goods decreased by 4.8 percent last month, much larger than Wall Street had been expecting. Orders had posted strong gains of 6.6 percent in March and 3.6 percent in February.

The unexpected jump in April home sales was not likely to change the overall view that the booming housing industry is beginning to cool off after setting sales records for five straight years.

The backlog of unsold homes rose by 2.4 percent to a new record of 565,000 homes on the market at the end of April. At the April sales pace, it would take 5.8 months to deplete that backlog.

Economists believe the slowdown in housing will be gradual as long as inflation pressures remain moderate enough to allow the Federal Reserve to soon take a pause in its two-year campaign to push interest rates higher.

Massive price slashing on overinflated, overpriced new homes has finally started attracting a few buyers again.
Think of it as a clearance sale. One shot deal, mostly.  Note the still soaring "unsold" (backlog) inventories.
A rise from nearly flat sales is not that difficult to achieve.
Good point.  It won't matter anway as the overall decline is still in effect.
This may also reflect the fact that real estate is still a local market. Home sales in my area are still booming with  an annual price appreciation of 5%. But housing is historically much cheaper here than in most of the rest of the country and the median price of a home here is $50K less than the national average. Add to that, we are getting an influx of retirees who are no longer excited about retiring to Fla and retirees from the coast who are fleeing to higher ground.
thanks for comments re: IRAs.

Quick word on solar pv. We've lived off-grid for nearly a decade with a modest, 1.2kw system. Works great 9 mos of 12; during the winter, the generator runs at least 8 hrs/week.

My thoughts on the matter go something like this: If you're already grid-connected, I'd first recommend that you try to live as if you were limited to the power produced by a modest pv system (the average US family burns through about 29 kw hours/day; we use about 2.5). Even if you go whole hog and replace all your appliances and lightbulbs, you'll spend a fraction of what you would on a pv system. Then, when and if you do decide to go pv, you'll have your ducks in a row.

Top advice. Figuring out where to get the money for 40kW worth of PV panels to power your suburban pleasure dome is missing the point.
AlphaMaleProphetOfDoom said yesterday
The only reason ANY of us care about [peak oil] in the first place is because (subconsciously) we perceive a way to benefit from being concerned about it.

I used to be fascinated with this issue. I think this comes down to the question of "are there truly so-called "liberal" people out there"? I ran across a speech a long time ago by a libertarian guy named Peter Breggin that affected me greatly on this subject (BTW, I am not a libertarian). The most interesting part of the speech is the psychology behind people who want to help other people even if it costs themselves to do so. The speech covers who these people are and what motivates them.

Here is the quickest possible rundown on the speech:

  • (1) Most people think of themselves as "advantaged" (psychologists consider it"normal" the idea that we all think of ourselves as "above normal").
  • (2) Most people have "fellow feeling" and experience "guilt" about the condition of other people that they consider "dis-advantaged".
  • (3) Some people (called "Advantaged Idealists" here) feel that their "advantage" is un-deserved. That their advantage is essentially random. That they didn't really do anything to deserve their "advantage". (BTW, "Conservatives" will tend to cite their values, work ethic, character, etc. to explain their advantage.)
  • (4) Advantaged Idealists will also tend to believe to some extent in zero-sum -- that their advantage comes at some cost to the disadvantaged. Consider many liberals problems adjusting to concepts in economics regarding "win-win". These liberals tend to believe that the rich are always taking advantage of the poor.
  • (5) Advantaged Idealists wish to mitigate their "guilt" by trying to provide advantages to the disadvantaged.

    Applying this concept to "peak oil" means the advantaged idealists need to "powerdown" so that they are not consuming the energy that the disadvanted need in order to survive. In addition, since the science of peak oil is saying that zero-sum is reality, there would be a tendency to head in the direction of dictatorial enforcement of the solutions -- they now "know" there can be no "win-win" solutions.

  • Interesting, I quite recognize myself in that thought process.

    Thanks for that input.

    During my obsession some time ago with this concept I created a quiz that I "administered" to people in casual conversation without their being aware of my investigation. You can try this on your friends and colleagues.

    Somehow you have to ask them:

    (Question #1) Are you an advantaged person or a dis-advantaged person?
    The answer will always be "advantaged". Proceed to question #2.
    (Question #2) Why are you advantaged? How did you get this way? Why is it you?
  • If the answer to #2 is one of the following: my values, hard work, character, belief in God, natural/genetic ability, parents teachings, etc. Then you have a convervative, libertarian, or at least a moderate liberal. This group of people feel that they have accomplished something in their life by behaving/believing in a certain way, and wish that other people -- the disadvantaged -- would behave/believe the same way. In other words, it is up to the disadvantaged to create this condition for themselves. This concept is very very key!
  • If the answer to #2, is "I don't know -- just lucky I guess", or something like that. Then you are on your way to finding an "advantaged idealist". Proceed to question #3.
    (Question #3) What advantages have you had?
    You'll get all kinds of answers here, which are not important in themselves. Proceed to question #4.
    (Question #4) If you could have given away some of your own advantage, so that other people could have had it instead of you, would you have done so?
  • If the answer is "not a zero-sum" game answer, then you may still have a conservative, libertarian, or moderate liberal.
  • If the answer is YES, zero-sum, then ding-ding-ding we have a winner! -- an "advantaged idealist". Ask them how "guilty" they feel about this, and sit back for a possible rant about the world.
  • So what am I? I'm a bit confused.

    I recognize I do have (material) advantages: was born healthy and in the richest country in the history of the world, among other things.

    I think the world is entering a zero-sum game, but this was not the case on upslope of the global energy/resource production curves. On the downslope, however, it is worse than just a zero sum game as the pie is shrinking.

    Would I give my advantages up? Hell no. I wouldn't have given them up on the upslope and I certainly won't give them up on the downslope.



    Your initial question was essentially whether anyone cares about PO in an altruistic fashion. Drawing from psychology it would appear that some people (who you can find with this quiz) are at least partly self-sacrificing. You might also try to find these people with a Myers-Briggs Type Indicator (sp?) test (the Mother Theresa category).

    But the larger point is that most people answer these questions in such a way that demonstrates "fellow feeling". Why? Good question. "Human nature" is the lousy answer because we all know about other less altruistic natures of humans. Anyhow Matt, you have "fellow feeling". As do we all. We care. Kum-baya. Whatever.

    The even larger point regards dictators. History says that when things start to go bad politicians will find someone to blame -- and we may see a lot of that soon. But hopefully the scientific, mathematical reality of peak oil will convince enough people (soon enough) to prevent them from desiring dictatorship (people say Adolf was elected, right?) -- because NO ONE IS TO BLAME.

    Here is your mission if you choose to accept it -- convince the public that "no one is to blame". Powerdown, if that is the requirement, will be a lot better if we do not have to suffer the political blame game. Tell people that "we ALL missed it" until now -- because if we lurch-to-the-left, and outlaw SUVs, and so on, then people will feel blamed. Blame will create enemies.

    Slight problem with the idea of subconscious "perception". I've noticed the doomers are very big on the subconscious...but then they seem to like indulging in scary nightmares.
    Any ideas on Gold's retreat?  I figure it has to cool a bit before it takes off again.  I've read several economists who have recommended gold, but to wait for these pauses.  Seems like they are here now.


    The recent volatility in markets will cause positions to be reduced in order to achieve the target risk level of each asset. Additionally, the increased correlation in all markets will cause positions to be reduced to achieve desired portfolio risk levels. This becomes a positive feedback system if levered market participants themselves have correlated positions -- volatility and correlation causing more volatility and correlation.
    Well it's been on the downhill for what 10 days or so.  It topped at near 800, now retreating to the mid 650's.  I'm long, and waiting for disaster in Qtrs 3 & 4.  
    I think gold may go much farther down in the short run. Everybody is so negative on the dollar that the dollar may continue to rise relative to assets (even though the dollar may fall a bit relative to other currencies, or remain somewhat stable relative to other currencies).

    Market observers have been making the argument for some time that the Asian central banks may stop holding dollar denominated instruments (with their $2.6 trillion in dollars) and buy gold or whatnot. And they may have done this at the margins.

    However, the ranting over the imbalances, especially by the English publications, and the belief in negative correlation of commodities to stocks, may have caused institutional money (who manage around $18 trillion) to bet heavily and in a leveraged way on gold, silver, and other commodities. It is this money that could un-wind positions as positive correlation becomes the norm.

    Anybody buy the gold conspiracy?
    It seems to me that the traditional central bank holders of gold would have seen decreasing gold leasing rates over the decades. And since the "income" from gold on this measure approached zero (gold can't be a true asset class because it has no theoretical income) then the politicians may have caused the central banks to sell gold to support currencies from time to time. Hence, the central banks "conspired" against gold. Politics really.
    What about the derivatives surrounding gold swaps on paper?  

    Here is one article about the derivates and gold swaps.


    Also - http://gata.org/CentralBanksToldUs.html

    Oh jeez. I dunno. I'm not into derivative conspiracy theories. I'm into Occam's Razor -- i.e. supply and demand. Let's see...here's a quote from Jim Rogers who seems to know commodities "While investment in base metals mines and exploration has been down across the board for years, more than half the existing metals exploration in recent years has been for gold." Think about that -- half the exploration -- even when gold prices were really low. This is a gold-bug mentality. Gold isn't consumed, it's mostly stock-piled. Everything else was the other half. Exploration for those sank, but gold just kept on going.
    It is important to read smart people with whom you disagree. If you cannot figure out why they are wrong, then you need to change your opinions.  - John Mauldin

    I try to follow this even when the people have an intelligent argument.  If you simply rely on facts, GOLD has been manipulated in the past especially at the turn of the century.  What's stopping that from happening now?

    I don't consider that these conspiracy theories come from "smart people", so I don't worry about disagreeing with them. As I remember it, the Europeans had some agreements about gold selling. There was planned selling wasn't there? And since the Chinese and Indians have become wealthier, gold has gone up. Supply/demand seems enough explanation, but I don't follow the gold market.

    Anyhow, who really cares about the price of gold? My dentist doesn't even use the stuff to do crowns in all cases anymore. Aside from supply/demand all other gold speculating is either (1) hoping that someone else buys the gold from you for more money, i.e. "momentum" trading, "greater fool" theory or (2) betting on a "paradigm shift" i.e. that people will start using gold as a currency again and disavow fiat money. Paradigm shift betting has a very poor history -- with an emphasis on poor.

    Why aren't they smart?  Because they sound crazy? What's the rationale, because there are many who call us crazy, yet we have facts to back up our arguments.  If you take the time to read, you'll find their are indisputable facts regarding gold as well.  Ignorance is bliss.
    I can't believe I'm continuing this. Your website info states says that gold is "a price-fixing case involving some very powerful people and institutions" OK, let's accept all their evidence and say that it is price fixing. For what purpose? So what? -- if *they* control the price of gold? What is being accomplished? I don't get it!
    If you can control the price of an asset, you can make a lot of money on the futures market. The allegation is that there are consipirators, including some large banks like J.P. Morgan and possibly the Fed, who are engaged in keeping the price of gold down by taking out massive short positions on the futures market. I'm very dubious of the claim. It's certainly not a reason to invest, or not invest in gold. In any case, gold has tripled in price in recent years so, even if there were a conspiracy, its not working. The price of gold is going up mainly due to supply and demand. The rising standard of living in China and India is allowing more of its citizens to be able to purchase precious metals, among other things. Asians and Europeans tend to value gold more than Americans. Maybe they know something we don't?
    The way to make money in the markets is to buy under-valued, un-loved assets and holding them patiently. Commodities were the underdogs for 20 years before coming back to life a few years ago. Gold is still undervalued. Gold is also real money, which means its a medium of exchange (money) and the supply can't be artificially inflated like fiat (paper) money. The "paradigm shift" that you mention would be the collapse of the US dollar - which could happen for several plausible reasons: (1) The US debt situation gets out of control, (2) oil starts trading more in other currencies besides the US dollar (so that foreigners dump US dollars), (3) foreign governments stop buying US treasuries so that the $3 billion a day inflow of foreign money we depend upon drys up, (4) peak oil causes a collapse of the economy, etc.
    I will state emphatically that gold is not "real" money in the sense that there is essentially nowhere in the world in which you can conduct ordinary retail transactions with gold. Not at Wal-mart. Not at the gas pump. Not at my bank.

    I understand the "paradigm shift" theory that people are talking about these days with respect to gold. I also understand the "paradigm shift" theory that people are talking about with respect to oil. Oil is the only one, in my opinion, that has any chance of causing a paradigm shift. There appears to be lots of evidence available over time to support an eventual peak in oil. For gold, there is no evidence that anyone cares about it except for the gold bugs. What economic activity is dependent on gold?

    Further in my opinion, every oil-importing country central bank in the world would be emptied of gold to buy oil if and when TSHTF. You won't take our money for oil? How about all our gold? Here have it! Don't I remember that the South Koreans sold their personal gold holdings in order to help their government during the Asian financial crisis? Did it wreck them? Once most of the gold is in the hands of the Saudis and Russians what are they going to do with it?

    I can't go to Wal-Mart to buy things with my gold coins, but if I stop off at the coin store on the way and sell some coins, I'll have plenty of cash to do my shopping. Liquidity is not a problem with gold.

    A good example of what can happen in a dollar crash would be the Wiemar Republic in Germany after WWI. Citizens there endured a blistering rate of hyper-inflation that made paper money worthless. (Employees had to be paid twice per day so that they could quickly spend their pay before it became worthless.) Gold kept its value. Its value in German marks rose rapidly as their paper money became worthless. Throughout history many fiat currencies have fallen and gold has kept its value. Given the high debt levels in the US, peak oil, trade deficit, terrorism, etc., it is prudent to keep a small amount of gold.

    Right, you have to go to the "coin store" first. So, the gold bugs are not exactly correct about the "real money" story. And also, this relies on someone buying the coins from you for more than you paid for them, or it's a loser to hold gold -- which looks just like the "momentum" or "greater fool" theory in practice. Without the "paradigm shift" story the gold bugs stories don't hold water.

    And also right, "a small amount" of gold can be kept. So why should the gold bugs worry *so much* about this "small amount" all the time? Unless they've got more than a small amount?

    I think that most of the gold bugs are libertarian sympathizers, who love conspiracy theories and call central banker, economists, and politicians idiots all the time. Didn't the Germans lose some wars during this period? Did that make a difference? Aside from Weimar there are plenty of other currency "collapses" in the past 100 years -- didn't England (remember Soros), some Asian countries, Argentina, Brazil, etc "collapse" as well. It's interesting that these countries didn't experience gold revolutions as a result.

    If the U.S. dollar crashes, there will be no shortage of buyers of my gold coins. People will seek a safe haven for their wealth.

    Yes, the conspiracy-loving gold-bugs are a bit crazy, but that doesn't necessarily mean they're wrong. LOL In the months after Soros broke the Bank of England, the price of gold rose against the British pound, 20% higher than since the beginning of the 1st Gulf war. Also, in the late 80s several South American countries, including Argentinia, Bolivia, Brazil, experienced hyperinflation. The price of gold soared in those countries.

    Quite simply, gold is a hedge against currency devaluation. It doesn't take a complete collapse of a currency and revolution. Even during times of inflation, the price of gold tends to rise. (For example, during the 70s in the U.S.) Of course, like anything else, it has its cycles. The period from 1982 - 2000 was a period of falling gold price. Gold is now rising in price and the demand from the growing economies of Asia will support a continued rise for at least another 5 - 10 years, in my view.

    How skinny will this thread get?

    I'm agreed that gold may rise for several years for a variety of reasons. I just tend not to bet on "paradigm shifts", 'cause you hear that stuff when markets get expensive rather than at the dull bottom.

    The DJIA/Gold ratio rose from 10 to 40 in 8 years (1992-2000), and it is halfway back now at 20. So you could get 4 more years of 19% per year to get back to 10. If the DJIA itself drops by 20% then you'd get 12% per year in gold alone when the ratio hits 10. Not a bad trade, but no paradigm shift.

    Re the currency collapse thing, hyperinflation etc, the Federal government's debt is dollar denominated. What appears to have troubled the Brazilians et al, is foreign currency denominated debt. Also, the U.S. federal debt was over 60% of GDP in the 1950's, and we didn't collapse then (vs less than 40% now).

    The DJIA and gold approached parity sometime during the late 70s/early 80s. If that were to happen again, either the DJIA would have to completely crash, or gold would have to go up many times, or possibly both. I'm not betting on it but, if it happened before...

    Debt is debt. If foreign central banks (Japan, China, Saudi Arabia, Europe, etc.) holding massive quantities of our treasuries were to stop buying them, and begin to sell, the U.S. dollar would be in big trouble. They probably won't for the simple reason that if they trash our economy, it will hurt their economies as well. Still, it leaves us vulnerable to some extent.

    It's true that the Federal debt as a percentage of GDP was higher in the period after WWII. However, it could be argued that our economy was stronger then, and entitlements are presently soaring (due partly to demographics). Add in spending on the Iraq war, the trade deficit, gutting of American manufacturing, escalating energy costs, etc., and the picture is worrisome. I'm not saying the US dollar is going to crash, but some smart people (like Soros) are saying it. I feel its better to take some steps to protect your finances. Holding some physical gold seems prudent to me.

    "The DJIA and gold approached parity sometime during the late 70s/early 80s. If that were to happen again,...". That value is the lowest point on a 32 year chart -- in 1980 as gold soared. My father, who was a stock broker then, remembers hearing in a barber shop that the guy had mortgaged his house to buy gold bullion. If I were you I wouldn't count on gold going any better than a DJIA/Gold ratio of 10, not 1. The recent Saudi stock market debacle has perhaps caused many Saudis to load up on gold as their paradigm has shifted. :-)

    Federal debt as a percentage of GDP was almost 50% in 1995 as well, and we didn't collapse then either. Soros is probably right, but he knows that for the currency to collapse then there are steps that have to be made. See my post in this thread about Bernanke.

    For several years following the Argentinian currency collapse (1999-2003, massive devaluation of the currency, resulting in hyperinflation), the only medium of exchange other than out and out barter most Argentinians would accept was cheap gold and silver jewelry.
    People were mistrustful of large precious metals (bars, ingots, etc) but would happily accept coins and jewelry in exchange for commodities (food, clothing, etc), and the currency was scorned.


    Is gold money?

    I was standing in line in a Mexican bank in about 1979 to cash a travellers check. A rather attractive young Mexican lady in front of me exchanged her paper pesos for Mexican gold bullion coins [I believe that these all were dated 1945 whether they were minted in '45 or '79 and contain fine gold equivalent to a fixed conversion value of paper pesos at that earlier time.] Being as I was an obviously harmless if clueless gringo, she informed me when I asked that these gold pesos could be bought & sold for paper pesos at small commission at most banks based on the spot bullion price. Further she made it clear that gold was considered a store of value. Paper pesos were something to be used in daily commerce but not necessarily a store of value. It has obviously been a while, but I suspect that the same is true today in Mexico.

    BTW, although gold was not a screaming deal in 1979 in terms of U.S. dollars, in terms of Mexican pesos the lady was making a wise decision over the long haul.

    I see no rational basis for attaching more objective worth to paper dollars than to paper pesos at an appropriate exchange rate.

    Given that these things labelled as dollars are only redeemable for others just like them, can be printed at will [and if necessary dropped in large quantities from helicopters], don't meet the constitutional requirements for even being called money, and rely on the "full faith and credit" of a largely insolvent state that does not even issue them for whatever value they are supposed to have --- I would ask you the question: Are U.S. dollars really money?

    One MUST pay taxes with them and nothing else.  That makes them "money".
    Thanks Alan. For what it is worth, I didn't write that the damned things they weren't useful ... at least for now.

    Your comment did get me thinking and I can now add a item to the list of things that are certain or maybe more correctly perceived to be inevitable. Death ... taxes ... and Federal Reserve Notes. Given the theme of this forumn, I suppose I should also add "geology." :-)

    There has been a lot of discussion lately on this "store of value" money issue -- and also on the "if necessary dropped in large quantities from helicopters" concept. I remember an interview of a colleague of Bernanke who said essentially that she had worked with Bernanke for years (I underline years) before she realized that Bernanke was a libertarian.

    And after the "Bartoromo affair", where Bernanke said that the market "got it wrong" when they thought he would be soft of inflation, I believe that perhaps a lot of people have pegged Bernanke wrong -- and that it is entirely possible that the guy is a hawk.

    Bernanke may be an academic who talks theoretically about all sorts of stuff, but is still perhaps a hawk. He may not do politics that well, but may jack rates until the politicians scream bloody murder. It is possible.

    You may well be right about Bernanke. However, he's in a difficult situation in that if he is too aggressive in raising rates, he will likely kill the real estate market (which is presently looking somewhat shaky) and put us into a recession. That would kill inflation, at least for a while, but escalating energy prices and overall higher commodity prices due to growth in China and India would re-assert themselves at some point. We might well end up with a bad case of stag-flation - rising prices and a stagnant economy. It seems to me that if peak oil is here, or imminent, oil prices will tend to trend upward over time(although not in a straight line) and this will ultimately doom our economy. I don't see how we can avoid a "paradigm shift" of some sort, although I don't know the timing.  
    Oh my god! A recession! Say it isn't so!

    If the housing market rolls over to 1.6 million starts (back to 1999 levels) from currently 2.1 million starts then there will be a lot of pickups trucks not burning petrol! How many pickup trucks per start? How much petrol do they burn? How much copper? How many roofing shingles? Insulation? Energy? Hmmm.

    Ben may be happy with starts at 1.5 million. Gosh, since housing creates money (via debit/credit on the balance sheet of banking ledgers) then raising rates enough to kill this monster may be all he needs! Thingaboutit. As housing rolls back he can say "I'm not tightening, the market is just returning to more sustainable levels, blah, blah, blah...".

    Perhaps Ben hates Alan and his pump and dump scheme.

    This is a typical correction in gold that you get in bull markets. The current pull-back is fueld by fears that the Fed will be more aggressive in fighting inflation, and today's weak durable goods data which suggests a weakening economy. However, long term, expect gold to go much higher. This is probably a good buying opportunity.
    What would be the medium though ?

    Coins / bars / futures (and which kind of those ?) ?

    That depends, to some degree, on your personal outlook.
    Do you see precious metals as an investment, or as security?
    If investment, and you plan to sell your assets again in the near future, futures are the way to go.

    If you are buying for longer term (i.e. security), you want coins or bars 'in hand', or at the very least in a secure 3rd party location (security box, bank vault, etc).
    In a crash scenario, your paper futures will be worthless, precious metals are typically oversold (Comex, for instance) and whoever has physical access to them will have them, not you.  As Matt Savinar said previously, the brokers will turn off the computers, take the assets, and be long gone before you can scrounge up enough fuel to drive up and burn down the exchange.

    I buy 1 ounce gold U.S. Eagles, Canadian Maple Leafs, etc., 1 ounce silver Eagles, 10/100 ounce silver bars. Also, the Central Fund of Canada is a way to hold gold/silver out of the U.S. It trades like a stock. (There's also the gold/silver ETFs.) I would stay away from futures. If you decide to try futures anyway, you must be disciplined enough to place small bets (in relation to your account balance) and hold on through the big swings. Otherwise, the leverage will wipe you out.
    Gold bullion
    I ues stockcharts.com
    Watch the RSI at the top of the page. In the top grey area, is not a good sign. Also the chart shows a good head and shoulder shape. I think is shows promise. BTW I bought 20oz's at $380 when it really was starting to rock. IMHO buy anytime. A post here on the drum by "enviro attny", showed the actual value of gold today, should be $1400-$1500.



    A statement out of China today, regarding their energy future:
     "China still has great potential in its domestic supply," said Zhang Guobao, vice minister of the National Development and Reform Commission(SDRC), China's main planning body." ....
    "China has abundant coal resources, with the proved amount accounting for a small percent of the total reserve, Zhang said. "Thus, coal will still constitute the basis of China's energy.""

    And in other news, the Chinese economy is growing a bit faster than earlier reported:
    while in the Beijing area the growth is at over 13% over the previous year!

    Someone earlier asked about their retirement plan - perhaps they should be looking at long term investments in the coal industry?

    Yes, not much slowing yet - coal production up 17%, steel 20%, cement 30% from year-before in april.
    Folks, got a question in the email box today, anyone have an idea?
    Do you know what percent of our oil is imported on the spot market as opposed to long-term contracts?  I haven't seen any consistent numbers on the internet, nor do I really know who to call to get that information accurately. Any chance you guys can help?
    I must confess that I do not know the answer but I would venture a guess. I doubt very seriously that ANY oil is imported for the spot market. Only domestic oil would be sold on the spot market. Who would contract a tanker load of oil from Saudi Arabia, or even Venezuela, in hopes of making a profit by selling it on the spot market? They would have to unload it and store it somewhere and would incur storage costs. And if the price dropped while in shipment or in storage, they could incur huge losses.

    Imported oil most likely has a predetermined destination even before it is loaded on the tanker. The oil is bought by contract by the refineries.

    re: 'The World' business program regarding Venezuala on public radio yesterday

    Anybody hear the above-mentioned yesterday? It was a story about the state subsidy for gasoline that sets the price at, get this, $.12/gallon. To parrot the report, as a result there is a massive increase in auto buying and driving and a concomitant increase in air pollution. Meanwhile, almost one out of ten gas stations in the capital have closed because they can't break even. Chavez is up for reelection soon (?), and there were riots some time ago when the government tried to raise gas prices. The article said that the subsidy equalled $8 billion last year. But I guess that's peanuts compared to export revenues.


    I don't know if this has already hit the Drum yet, but Greg Palast just published a two-part article on GNN about Peak Oil:




    GNN is a large source of readership for TOD as it often leads its readers over here.  Any thoughts about these articles?

    I think Palast's article was just so stunningly poor that it merited a whimper.  I like most of what he has done in the past, but this one was almost too easy to pick apart.
    Simply atrocious.
    My favorite line: "That is why economics is called "the dismal science."
    I'm currently reading Undercover Economist by Tim Harford.  It's mostly laymen understanding and it's great.  He talks about the success of Starbucks and landlord rents.  He talks about energy and global warming!  There are ideas to make GW a competitive advantage, mostly through EPA auctions that worked to pretty much elimate acid rain.  He talks about the SUCCESS of the London city driving zone restictions.  It's very real world oriented and not a bunch of charts and graphs.

    It's worth a read, although it may seem a bit trivial to those well versed in economics.  I'm still starting out so I want as much info as possible.

    That sounds like a great read for someone like me who is looking to consume as much econ info as possible.  Thanks for the heads up.

    If you read the comments under the Palast articles on GNN, you'll see that most of the readers are also Peak Oilers, and even those who aren't recognize that Palast has, in his article, created a "straw-man argument" designed only to be refuted.  I am not too familiar with his other work, but it seems odd to me that someone with his reputation would be so careless with his facts, figures, quotes and context.  He clearly misunderstands the arguments that Peak Oil has put forth.......The real question is, then: what is his motivation for writing these disparaging articles?


    Carculture I remember you were asking for a primer on Econ that could help you understand things better.  THIS IS THE BOOK.  It's funny b/c I got this as a gift @ christmas.  With school I haven't had a chance to read it, but I started reading it a few nights ago and I'm nearly done.

    You would enjoy the easy analogies that he uses.  The actual title of the book is "Undercover Economist, why the rich get richer, the poor are poor and why you can never buy a decent used car.

    Check out his post over at Forbes yesterday.

    http://www.forbes.com/home/workspecial/2006/05/20/executive-compensation-tournament_cx_th_06work_052 3pay.html

    I like most of what he has written in the past. Maybe he bought a new house or found an expensive girlfriend.
    No, he's just a 24-carat Zionist, and so needs a conspiracy theory about oil companies and Ay-rabs.
    Palast's Attack Blast on Peak Oil is proof positive that the flip side of Adam Smith's "specialization" theorem is true.

    Recall that Smith said the needle-maker will become better and better at the making of needles by specializing in his craft.

    The "flip side" of this specialization coin is that the needle-maker will become ever more ignorant and incompetent at everything else.

    Palast's speciality is persuasive writing.
    Need we say anything more?

    Palast uses all the tricks of his specialized craft to persuasively misdirect his readers', keep them off balance and out of touch with reality. Take for example, this opening touche' by writer-excellant Palast:

    In his 1956 treatise, Hubbert wrote that Planet Earth could produce not a drop more than one and a quarter trillion barrels of crudeIn his 1956 treatise, Hubbert wrote that Planet Earth could produce not a drop more than one and a quarter trillion barrels of crude [Implied Logic: and since Hubbert was wrong on this he was clearly wrong about everything else]

    Well wait a minute. If you go back to Palast's set up of the strawman for reaching this twisted reframing of Hubbert's words and if you underline certain words that Palast conveniently chose to skim by, you see that there is no promise by Hubbert that the world would produce the stated amount and not one drop more:

    In his 1956 paper, Hubbert wrote:

        On the basis of the present estimates of the ultimate reserves of world petroleum and natural gas, it appears that the culmination of world production of these products should occur within a half a century [i.e., by 2006]. [underlining added]

    Palast is supposed to be a Master of the King's English. So which part of the word "estimates" does he fail to comprehend?

    I might be out of line here-I have not worked as a journalist. I assume Greg was given an assignment by his superiors to write an article refuting oil depletion, and he did the best he could on short notice. Like I said, maybe he has a mortgage.
    You are never out of line because TOD is a free (civilized) speech site.

    I came not to attack Palast actually, but rather to shine the spotlight on the "Adam Smithian" system that generates this type of "journalistic"/manipulative end product.

    IIRC, this same Palast is author of numerous investigative pieces on voting machine fraud and also of the book, "Best Government Money Can Buy" --exposing our lobbyist controled "Democracy". IMO Palast has contributed positively in the past to showing how the political "machine" operates.

    I was trying to explain that "specialization" --while it may have positive attributes-- also has huge negative aspects to it. The journalist who is expert at writing persuasively and craftily, generally does not have a solid educational foundation in science and math. Your average Journalist often comes from the left-brain part of our human population.

    (right click & View Image for bigger view)

    They are verbal, artistic and have strong people skills. Those skills have always (in the past) worked for them. They fail them now.

    Peak Oil is not a people skills issue. It is geology, science, math and economics all mixed togetehr on the global  level. Writers like Palast, or Tom Friedman or whoever chimes in to scribe on the PO issue are ill equipped to understand PO.

    Many of the folk at this site have spent great quantities of time coming to grips with the nuances of Peak Oil. The name, "Peak Oil" does not per se give a newcomer clear clues about all that is involved. It's not just about the "commodity", oil alone but rather about our whole way of life.

    In his second article (Palast criticizes Palast), he mixes mention of hemmoroid creme as being a limited resource just like "oil" is a limited resource. What Palast misses is an understanding of where the chemical constituents of hemmoroid creme come from, of where the plastic tubing that holds your medical creams and ointments come from. Yes without hemmoroid cream we may face a pain in the ass hard time ahead of us. With the end of cheap oil, ditto.

    Step Back: You make good points. I was just reminding the honest posters on TOD that when you are reading professional journalists you never know for sure what they are actually thinking. Like the saying goes-"the bad thing about money is it makes you do things you wouldn't do otherwise". When articles as absurd as Greg's are written you wonder if this is the case.
    It's noticeable that some of the main far-left wing commentators are very suspicious of Peak Oil: Doug Henwood at Left Business Observer, Alexander Cockburn at CounterPunch and now Greg Palast. I think they all need to see Al Bartlett's 'exponential function' lecture!!! It seems to me these people would be better spending time on thinking how the less well-off might be helped if there is a serious collapse.
    Just got the latest issue of EOS, the weekly newspaper of the American Geophysical Union... and to my pleasant surprise, there is an article "Reevaluating Hubbert's Prediction of Peak oil". Its a short thing, mostly dismissing the arguments of cornucopoians like SERA.  

    Not online yet, and when it is you can only view it if you are an AGU member I think (at http://www.agu.org/pubs/eos/). But this is good news - it's the first I've seen of the peak being seriously discussed in a peer-reviewed geoscience journal.

    Anybody heard we know where Osama is?  This is crazy!


    "According to Pakistani government sources...." he is anywhere and everywhere.  That's not news anymore.
    The Pakistani military and intelligence service are sympathetic to OBL's cause, and are not about to reveal his location to infidel westerners.

    To quote from the commentors over on ABC:

    "If it were even remotely true, then I would find it amazing that OBL is alive and free in the territory of an "ally".
    Restart the draft, and tell Pakistan "Here we come!". Oh, wait - that would require leadership...
    Could it be that the administration wants him free? What else to explain this debacle?"

    "We've been hearing "rumors" about where OBL is for six years. Publish the news when he's caught or dead!"

    "Perhaps if we had spent $300,000,000,000 hunting down Osama instead of invading Iraq, I'll bet we would have caught him by now. Plus, think of the thousands of military personnel who would still be alive for their families."

    Osama has been the Immanuel Goldstein of the neocons for years now. Don't expect the rumors of his whereabouts to cease the first century or so.
    Shell Oil Company Refuses to Pay Fine

    Last Friday a Nigerian court ordered the Shell Oil Company to pay 1.5 billion dollars to the ethnic Ijaw communities in the Niger Delta as compensation for environmental damage caused by drilling and exploration. Shell was to deposit the money in the Nigeria Central Bank by midday Monday but has refused to pay the fine until the court rules on its appeal. The actions of the oil company have caused outrage among environmentalists and community officials.
    I thought I saw last week in the Financial Times that a group connected with the Ijaw had received the rights to 1 drilling lease. This could get interesting -- a militant group becomes a militant group with money! This has the possiblility to become something other than the placation that it seems to be. The politicians are trying to buy off these guys.
    Hey WesTexas,

    I am anxiously awaiting your weekly analysis of the EIA data!


    Today I have received a call from the financial ministry. Starting July 1 all my company's new contracts for oil delivery must be denominated in the rubles.
    My foreign partners will have to hedge the currency risk.
    Seems that the dollar and the euro are out of favor in Russia.
    Sounds like a return to the ruble being non-convertable except through the State at an artificial rate. What it means is that the consumers of about 25 million barrels a day won't want dollars or euros.The chinese may have to sell their bonds and will really take a bath. The U.S. economy will begin to really tank while our inflation rate goes through the roof. To quote that great sage Chicken Little: " The sky is falling".  
    Thank you for the news, RussFag. I'm very interested to see how this plays out.
    Anybody seen much about this movie, "Who Killed The Electric Car?"?  The trailer is available here.

    The website doesn't address the question of where the electricity for the car comes from.  They suggest plugging in overnight would be best, but that's about it.

    At one point, the site even calls nuclear a clean and renewable energy source.  :(

    I bring it up here because this movie worries me as seeming to promise a silver bullet to energy depletion, and permitting folks to think the long emergency is the fault of oil and car companies instead of their own lifestyles.  I'm all for being upset with those Mammon-lovin' scalliwags, but as all know the issues aren't quite that simple.  "The fault, dear Brutus, is not in our stars, but in ourselves."

    Luckily, the response to those who will reference this movie will be easy for peakniks: "Okay, so where does the electricity come from?"

    In a sense, it doesn't really matter where the electricity comes from.

    If you can design a functional electric car, you have decoupled the transport problem from the energy generation problem. The point is that you then have two smaller and less complex problems to deal with:

    1. The best way to do electric cars
    2. The best way to generate electricity.

    The question of "how do you generate the electricity" is then a separate and somewhat unrelated problem.
    If one has two decades, yes.

    But 94.5% of the new electric power plants in 2004 were fired by natural gas.

    There is a LARGE installed base and it takes significant amounts of time to "decouple" from this installed base.

    Time we are unlikely to have.

    On the other hand, the grid infrastructure is already in place. Change can happen incrementally, wind turbine by wind turbine, vehicle by vehicle. What is required is the right set of incentives.

    (Partial) solutions that require entirely new infrastructure, such as hydrogen are in my opinion NOT going to happen.

    That leaves us with electric grid infrastructure and liquid fuels (meaning biofuels) infrastructure. I am not convinced that biofuels are a good idea.

    I took your analysis a step further, in part as a response to GW and in part as a response to a likely decline in a major economic input.

    Couple electrification with MUCH higher efficiency,

    Diesel 18 wheelers take 8 times as much fuel as diesel railroads to move a ton-mile (gross #s from 2002).

    An electric RR (with regenerative braking) uses about 1/3 the non-oil energy of a diesel RR.

    Shifting half the freight ton-miles from 18 wheelers to electric RR in a decade seems like a workable goal.  Growing RR freight by 9%-11% per year is doable.  Russian rates of electrification are doable and probably twice as fast.

    Electric Urban Rail creates it's own ridership over time.  It alters the urban form away from sprawl with "natural" market forces.  It's called TOD (Transit Orientated Development).

    As with freight RRs, major savings directly.  Perhaps 1/12th the energy (non-oil) to commute by Light Rail than by car/SUV.  But double that savings with changes in urban development.

    The electricity demands to cut US Oil concumption by 10% are likely less than 2% of our total electricity used.  Small enough to be "created" by slightly better conservation or new wind turbines.

    OTOH, plug in hybrids have no associated efficiency gains, other than a shift to smaller cars.  Batteries lose energy when stored and add weight to move around.

    Plug-in hybrids are a "half measure" and they should be, IMO, a minor supplement to a major thrust for electric RRs and MUCH more Urban Rail,  Plug-in hybrids, because they are not a significant step up in efficiency, are less sustainable and this will lead to further pronlems in a generation.

    We will soon be engaged in a race between the decling volumes of oil that we can afford and our demand for oil while maintaining a reasonable level (severe recession ?) of economic activity.

    Gains of 24:1 are likely to be much more important than 3:2 and 2:1 gains.

    Planned wind generation is 40% of overall new generation in 2006 and 45% in 2007, and this trend is likely to continue. Wind could easily handle all new generation in the US within 5-10 years.

    Plug-in hybrids provide the storage and demand-management that wind needs: the two complement each other perfectly.

    Plug-ins provide the perfect transition to electric cars: as batteries get better, the % of miles powered by electricity/wind rises.  Further, plug-in's could/should be designed to allow upgrading of the battery, so that an oil shock wouldn't require changing the whole vehicle inventory.

    You are using nameplate ratings.

    When a 500 MW coal fired plant is built, in say Texas, you cna expect it to produce that naemplate rating for over 90% of the hours in a year.  An average of, say, 465 MW.

    When a 100 MW wind farm is built; you can expect to get a 30% load factor, or an average output of 30 MW.

    Sorry, wind is doing VERY well, but the US is not doing as well as you project.

    Well, actually my numbers are adjusted for load factor.  Here are the numbers (for the major sources):
                            2006    2007
    Natural Gas     9,886   8,921
    Coal                   637     1,508
    Wind                5,368   8,574
    Hydro                   118       409

    Here are the load factors:

    Natural Gas   0.2
    Coal              0.71
    Wind            0.32
    Hydro           0.296

    And here is the result, adjusted for load factor:

                     2006       2007
    Natural Gas   45.7%      29.5%
    Coal               10.5%      17.7%
    Wind             39.7%      45.3%
    Hydro             0.8%        2.0%

    These come from the Nuclear Energy Institute:

    You can see that wind is pulling in front.  Later years see more growth in planned coal installations, which conceivable could limit wind to roughly 40-50% of new generation:  this depends on policy: basically whether the very high pollution costs of coal get a free ride.

    Nice work (and link).  I will try and review whikst out of town this weekend.

    Best Hopes,


    Last I heard, 2006 wind was scheduled at high 3 GW.  The growth to 5.4 GW shows the FAST response time of installing new wind.

    I should note that the planned capacity numbers are on page 7 of the link, and the capacity factors are here.

    I put the two together, using an estimate of the average load factor of gas by estimating the market share of combined cycle and steam turbine (roughly 75% steam) - changing that estimate would change the numbers a little.

    I wanted to pass this on. It's Bill Moyers commencement speech to some college who's name escapes me right now.

    So I have been thinking seriously about what I might say to you in this Baccalaureate service. Frankly, I'm not sure anyone from my generation should be saying anything to your generation except, "We're sorry. We're really sorry for the mess you're inheriting. We are sorry for the war in Iraq. For the huge debts you will have to pay for without getting a new social infrastructure in return. We're sorry for the polarized country. The corporate scandals. The corrupt politics. Our imperiled democracy. We're sorry for the sprawl and our addiction to oil and for all those toxins in the environment. Sorry about all this, class of 2006. Good luck cleaning it up."

    You're going to have your hands full, frankly. I don't need to tell you of the gloomy scenarios being written for your time. Three books on my desk right now question whether human beings will even survive the 21st century. Just listen to their titles: "The Long Emergency: Surviving the Convergence Catastrophe"; "Collapse: How Societies Choose to Fail or Succeed"; "The Winds of Change: Weather and the Destruction of Civilizations."

    Reading something like that is really gut wrenching.  My graduation will be right around the corner, and I can imagine the effect a speech like this would have on a group sitting through it.  The truely unfortunate thing is that the majority of them won't even know all of these problems facing us.

    Hello Descolada,

    Yes, it is absolutely gut-wrenching, yet it needs to be taught to everyone if we hope to mitigate what lies ahead.  Long ago, I emailed the National Parent-Teacher Assoc. [PTA] asking for massive reform of the student curriculum to feature PO & GW and it ramifications--No reply.  Like Bill Moyers -- I am truly sorry.

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

    Damn!  That's an amazing find, Descolada.  
    For someone of Mr. Moyer's stature and fame to say that.....ouch.
    I have the greatest respect for Bill Moyers - the man has class and integrity, and he said what needs to be said.  I'm sure it's depressing to some, but when was it that someone was going to spell it out for them?  I look at my own kids and think the same - they will have their hands full.  Would it be better to let them think it's business as usual, and that they should go out and repeat the same mistakes we have?  At 42 I can expect to be facing these issues myself, and I'd certainly appreciate finding out sooner than later.
    "Tis better to know useless things than to know nothing at all." - Seneca, "Epistles," c. A.D. 50