DrumBeat: May 27, 2006

Now for some wise words from the readers of The Oil Drum...
in friday's china view online there was an article on the EU-Russia energy summit in Sochi, with this tidbit:
" Speaking at a press conference after EU leaders' talks with Putin, European Commission President Jose Manuel Barroso said there is "a sensitive perception of energy" in Europe and also in the world that there could be a gap between demand and supply."

..unhh...that would be a definition of peak oil...right,mr. president?

that would be a definition of peak oil...right,mr. president?

Sort of. That's what I have taken to calling "Peak Lite", or a "Peak Preview":

Peak Lite

As a supply/demand imbalance starts to open up, it mimics the early effects of peak oil. If the imbalance worsens, then it continues to mimic peak oil. But, the difference here is that a supply/demand imbalance may be temporary. It may be caused by hurricanes, or problems in Nigeria, but it can ease as production comes back online. Peak Oil is for keeps.


That's what I have taken to calling "Peak Lite", or a "Peak Preview"

I thought "Peak Lite" was the 1970s. In the '00s and '10s, we get, simply, "Peak". Since the whole bell curve takes up a century, or a sizeable fraction of one, "Peak" will be kind of an indefinite plateau that lasts several years before the decline is obvious. My guess is that Deffeyes called it, give or take a year or two. As they say, we'll know it in hindsight.

Meantime, we can point at this or that little blip in production and assign blame here and there. It was a hurricane; it was Venezuela; it was BO execs; it was libberuls.

It was human nature.

In the '00s and '10s, we get, simply, "Peak".

The point I am making is that production is likely to move up somewhat from here, but as long as demand outstrips supply we will have the effects of peak, even as production is increasing. Those who are looking for a true peak may be missing the point that a peak is not necessary in order to start seeing peak effects. I think we will see the true production peak sometime between 2010 and 2020.


I respect your opinion.

Any idea just how high the peak will be ?

I kind of believe in an extended "Bumpy Plateau" with multi-year ups & downs and then a slide off the plateau before 2020 (probably by 2015).  Unconvential will take an ever larger % of the total.

Any idea just how high the peak will be ?

Nothing more than a bit of guess. If higher prices don't stem demand, then I think we can get to 90 million barrels a day of worldwide production as some new projects come online. While production appears to have turned back up in April (preliminary indications are that 85 million bpd was reached for the first time), rising inventories may result in slow production growth for the rest of this year.


does that 90 million include biodiesel, corn to ethanol, sugar cane to ethanol, coal to liquids,etc as the 85 mbd does now?

if so one has to be concerned about the NET liquids not the gross reported number

That number is based off of the baseline 85 mbd, so yes, all of the others are included. But, if you want to separate out just the petroleum derived fraction, then I believe that number will increase for a few more years.

That's my point. Production may grow a bit more, but we are starting to get a preview of what the peak will be like anyway.


I agree but 'disagree'. Our society is based on the core presumption of growth. This growth is fueled by the sweet spot of fossil fuels - the high density liquid components centered around light sweet crude - as we pass peak and head towards gas and solids, there will be a slow but spreading realization that there will either be a) no more growth or b)the possibility of growth way in the future, but with less people and time for transition.

This 'realization' will trump the facts of the remianing oil  and other 'theoretical' options. A behavioral switch will occur and our chimp DNA will revert to tribal and individualistic pursuits. Those of us working/living in 'tribal' situations (small, relatively closed system communities) will likely do fine. How many of us 'working for the man' will continue if the growth bubble that started with the ascent up the energy density ladder several hundred years ago, bursts, cognitively speaking? Would you be willing to work 50 hours a week at your firm, knowing that your company and others, could not 'grow' using the markets dividend discount model?

I think capitalism only truly works in a tribal setting with 100-150 people. It is in that setting that everyone knows everyone, our kids play with their kids, we drink the same water and eat from the same garden. Strong reciprocity then really works as we literally live together and die together. People acting in the best interests of the group are respected and rewarded. People that act against the group are ostracized or punished. In our current global system, 'cheaters' can flit from tribe to tribe, community to community, stealing from the commons, then moving on. This merry-go-round is predicated on the implicit assumption of net energy gain continuing.

We might have lots of oil (albeit lower quality), coal, stranded gas, solar, ethanol, etc left. But once society 'gets it' that net energy for humankind circa 2000 AD has peaked, the rules of the current game will change.

We might have lots of oil (albeit lower quality), coal, stranded gas, solar, ethanol, etc left. But once society 'gets it' that net energy for humankind circa 2000 AD has peaked, the rules of the current game will change.

That's one thing I have noted, though. One big difference between Peak Lite and Peak is the panic that will accompany Peak.


panic will follow both peak-lite and peak.
large amounts of people basically have two modes, complacency and panic. we are in the former right now as people just accept the prices and whats going on with the government. they will switch over to panic once we reach the threshold.
as for the threshold? your guess is as good as mine.
Call me crazy,
but I think the government is already pumping the propaganda machine to condition the next generation into accepting a life withour suburbia:

It's meant for 5 year olds. The clear messages of the recently released "Over the Hedge" movie (warning plot killer --if you can call it a "plot") is that:

  1. Suburbia is evil
  2. Consumerism is evil
  3. The Bears will control the markets
  4. Listening to the conservative reptile (turtle) is better than giving an ear to a wild eyed cornucopian (the racoon)
  5. We will be happier sticking with "family" values rather than wanting to accumulate massive quantities of processed food for our selfish bear caves.

Am I seeing too many mixed messages in this kid's eye movie?
This is a message from the same media elite that is bringing us "an inconvenient truth."  Our government seems to shy away from truths.
i doubt it was the brainchild of the government. probably some wise TOD reader.
hhmm..Why do you think that coal, wind and solar can't in the longrun provide energy growth?

I've looked at almost all of the peak oil books (Kunstler, Deffeyes, Goodstein, etc), and none of them convincingly discuss the usefulness (or lack thereof) of wind and solar.   Kunstler clearly knows nothing about them - he just assumes they can't help because he wants things to collapse - wishful thinking.  Deffeyes says right out that alternative energy is not his expertise.  Goodstein simply notes that a transition to alt energies would be a very big job, and that we should get started now.  So does Hirsch.  Simpson is just dealing with oil.

So, why so pessimistic about the growth of alternative energy?

I have looked at this in depth and am open to the possibility of society increasing net energy but entropy, population and complexity put the odds against.

Wind, especially large scale, does have high net energy compared to CURRENT oil. But as of yet its not a liquid fuel, and the point of Hirschs paper is that these things take time (alot of time) and cant be shifted instantaneously. As fossil fuels suffer from DEPLETIOn, wind and solar suffer from SATURATION. Once we have the best sites taken, the marginal benefit from putting up more windmills decreases, and certainly reaches a net marginal loss some point before every street corner sports a windmill

I dont know which is worse, not finding a high net energy replacement for fossil fuels or FINDING  a high net energy replacement. If we miraculously come up with something 20-30:1  EROI and it scales, that leverage will shoot through the system like cocaine to an addict. We might then turn Canada into a giant NASCAR track, create Fantasy Island where Richard Branson jets billionaires to have orgies with thousands of indentured prostitutes, lop of mountaintops to build bigger and pricier chalets: the sky is the limit (or maybe not) when it comes to relative fitness.

The most likely path is to use the bridge to get us closest to the energy quantity and quality we have now, and that would be coal, which means energy increases come directly from the environmental commons.

Economic hydroelectric storage sites at 1950s electricity prices are more or less saturated in the United States.

New TBM technology and better grid control makes more run-of-river power planrs possible.

We do get an almost free energy dividend every year from our established hydroelectric power plants.  This dividend is lost in the larger noise.

"point of Hirschs paper is that these things take time"

No question.  But, that's a far cry from economic doom - you seemed to be saying that people would see certain doom ahead and panic, causing economic collapse.  Hirch's scenario is very different: transitional economic problems, which in a worst case scenario COULD be very bad if there was little warning and very steep oil output decline.  It seems that the consensus of the most informed members of this website is that peak oil will cause a bumpy plateau starting 0-5 years out and lasting roughly 5-10 years.  That's a fairly wide range (5-15 years of plateau), but it doesn't look much like Hirsch's worst case scenario (HWCS).  This argument doesn't rule out HWCS,  but it does suggest that it's far from certain, or even likely.  And even the HWCS is not long-term decline which puts an end to a growth paradigm (LTDWPAETGP!)- it's just a painful transition, with a possible economic destabilization if things are handled badly (PEDITAHB!!).  I think that's what your talking about with hedge funds, and positive feedback, but again, PEDITAHB is very different from LTDWPAETGP.

"wind and solar suffer from SATURATION"

Do you have a source for this?  My understanding is that wind in the US has a potential for 2.9 TB capacity, which would generate twice the power currently used, and that solar has the potential for very roughly 100x that.  Now, wind may have intermittency and transmission problems, and solar is currently too expensive, but those are engineering problems which are very solvable (see the latest issue of the Electrical Engineering journal for a discussion of wind's intermittency and the solutions for it), not theoretical limits.

"I dont know which is worse, not finding a high net energy replacement for fossil fuels or FINDING  a high net energy replacement."

hmmm.  Are you kind of rooting for economic collapse?

"that would be coal, which means energy increases come directly from the environmental commons."

And that would certainly be bad.  But not an economic collapse.  Not good, but different.  GW would be very bad, but it would probably be good for the economy - just look what war, and disaster rebuilding, do for economies.  Again, I'm not rooting for GW, just trying to peer into our economic future...

"corn ethanol truly has an EROI of 1.34:1"

I agree that corn ethanol is not very helpful.  I view it as an agricultural subsidy, and a way of converting natural gas (and a bit of sunlight) into ethanol.  OTOH, congress would find a different way to provide agricultural subsidies if it didn't exist, so I don't think it's particularly harmful.  A bit of a distraction, perhaps.  I don't include it in my analysis of likely solutions to peak oil.

  are you making up new acronyms as you go along? (AYMUNAAYGA)
Yes - fun, isn't it?  Did you ever read Mad Magazine?  They used to refer to "coining a cliche"..

I was partly doing it for convenience, and partly for fun, but I think the last two might actually be useful:
LTDWPAETGP (long-term decline which puts an end to a growth paradigm) and
(PEDITAHB)possible economic destabilization if things are handled badly.

These two ideas seem to come up often.

Its late (or early) and my golden retriever is already snoring but I'll briefly address your points:
1) I just mean that once people get it in their craws that growth might not be forever (a seed that planted and has grown in my own brain in the past 18 months), that behavior will change - I dont know what it will be, other than something different than today. I rely on examples of human history to give me clues. When population exceeds carrying capacity (in the past) humans moved, or went to war. There is no where else to move to. We will be in new territory. Powerdown is the most LOGICAL path, but our neurochemical drives may dictate otherwise - I will post a referenced story on that soon - trying to finish up phd.

2)In theory, we could have a windmill on every house on the planet. Clearly, there is not enough steel, nor high quality wind sites that would make that possible. Too, as Cutler Clevelands study which can be viewed here, large scale turbines do better than small scale (due to cube function of wind speed at higher levels, etc). The reason there is saturation isnt space (but might be materials) but is EROI. The country is divided into different wind regime rating systems between 1 and 7. If we put windmills on low wind areas, it may not be worth the energy to do so. I am a huge fan of wind, but its not omnipotent

3)Im not rooting for economic collapse, but when would you like to see things enter a sustainable steady state system? When we have 6 billion people, or 20 billion? I was just pointing out that we can use renewables unwisely as well as fossil fuels.

But "growth" is mostly a monetary phenomenon, so there's no reason in today's paper money world it can't go on forever.

By some measures growth hasn't been positive in the US since the 1970's (when only one member of the household needed to work to make ends meet etc.), and people still work, possibly harder than ever.

People are very adaptable, and have short memories. As long as we gradually move to a world with much higher oil prices, I don't many people will ever do more than complain. For an example of complacency, despite all the hype about bio-diesel and ethanol, very few people ask whether there's a problem with oil supply. They accept it, assume the the market/government/etc. will solve the problem, and continue living in their Panglossian state.

The problem with "peak" is that the change maybe somewhat too abrupt for us to bring new coal and nuclear stations online quickly enough, introduce eletric vehicles etc. There might be some sort of break point - which could trigger the "panic" phase mentioned earlier.
We have Shell etc. are working on GTL, CTL, tar sands, deep water etc. to dampen the effects. And new nuclear stations are quietly entering the planning stages etc.

I think the shape of the "crisis" depends entirely on timing. I'm very bullish on nuclear, and have yet to see a convincing factual argument against it. The question is whether oil production can be kept at a sufficiently high level for the next 5-15 years to allow time for a gentle transition, to a coal/nuclear/wind electricity based transport economy. I'm moderately optimistic, and think it will be a great period for engineers like GE, Siemens etc.

The central banks are good at creating the illusion of growth. Most of the GDP growth right now is just monetary inflation. Our society is flawed in so many ways, but has never been challenged by major resource limitations. I don't see how real wealth can continue growing when the net energy available starts declining every year. The flaws inherent to our currency, banking system, and our way of life are going to create a continual nightmare. We are so accustomed to throwing energy at every problem. Our corporations feed on the our ability to waste more and more energy. TPTB have no ability to impose limits on their own greed. After peak oil greed won't be so much fun. Greed kills.
growth hasn't been positive in the US since the 1970's (when only one member of the household needed to work to make ends meet etc
By some measures, sure, but as I understand it, people's home sizes in square footage have about doubled in the past several decades, and those houses have many more "features" than prior houses. So people are working more -- but they have more. There was a book called "The Two Income Trap" that breaks down some of this I think. As I recall, the jist of the book is that, yes, people are working "harder than ever", but this is in order to "have it all"!
Overall I agree - people lifestyles are better than ever - although if you break it down by income deciles you find that this applies particularly to the top 40% or so of the US economy. I think Paul Krugman wrote some articles about this.

The scary think will be if permanently high oil prices start to cause a recession - with the amount of leverage in the economy at the moment the government will likely feel compelled to step in with large scale spending or money printing to prevent a downward economic spiral.

Not only could that under some circumstances smack of fascism, (or corperatism etc.) but its also likely to be quite inflationary.

The best "soft landing" argument that I can come up with is:
  • Bernanke wants "inflation" credibility, so hikes a few more times
  • This brings building permits down from 2.0 million to 1.5 rate, hopefully not quickly
  • This idles a lot of pickup trucks involved in construction
  • Energy prices ease back a bit (we also get some "conservation" at the margins)
  • Leverage in the financial system isn't as fragile as some people think, so higher "savings" results from lower spending
  • If crude rolls back to $50 per barrel this could soften up Iran, and we get a compromise
  • The Japanese and Chinese stay buyers of dollars
  • The quality of the homes has declined dramatically.  

    A 1930s bungalow should last at least 300 years with relatively minor repairs (shutters for example, new roof every 30 to 40 years). (I own half of a rental house built in 1930).

    A new McMansion will be in need of a LOT of TLC within 50 or 60 years.  Teardown is an option by then.  And they do not have functional shutters.

    I have seen the "added features" and they are all surface glitz over particleboard.  I much prefer simple quality and fewer sq ft to heat, cool and keep clean.

    I agree at the low end. I know of some friends who bought a new middle-class home with studs 24" on center rather than 18" on center. The builder said that it is up to code, of course. At the McMansion level, I see a lot of brick, stone, and stucco, hardwood floors, granite counter tops, tile bathrooms, stainless steel range tops, low-E windows, #90 carpet, Hardie board trim (or redwood), and copper gutters (yes, copper gutters).

    It will be interesting in the future after PO, if vinyl flooring and carpeting are seen as more "luxious" that hardwood floors. :-)

    Both of my brother's have upper middle class "McMansions" with granite counter tops, slate/granite entrances.  Selected hardwood floors in certain areas. Thick carpet.  No copper gutters.

    Quality where it can be seen.

    They also have particle board underneath the granite countertops & in the cabinets & structurally, goldplated but cheap (troublesome already) plumbing fixtures, marginal electrical systems with 49¢ switches & outlets, plumbing where one dares not flush while another is showering, 1/2" drywall.  I suspect three and not 5 or 6 tacks/roofing shingle.  I do not know about stud centers but the interior walls feel "weak".

    Cheap as code allows where one cannot see it.

    One of the neighbors for one brother (same builder) is having slab problems.

    Right. I've seen this cost "shaving" approach more in the national mcmansion builders with the computer design systems to minimize various items than with the traditional independent large house spec builder -- who can't/don't have this micro-manage approach. My builder lives in my neigborhood, so what kind of houses do you think he built?

    Also, you forgot about "lot size" shaving. My family is in the building business and say that local governments have driven up the cost of development with set-asides and regulations. There are a lot of farmers out there who get very disappointed when they find out how much of their land has effectively been expropriated by their local government.

    The local area has been in the midst of a massive "housing boom" for about 10 years now. This manifests itself primarily in terms of either large shapeless blobs of brick homes (with steeply sloped, complex rooflines that leak and moldering asphalt shingles) or popsicle colored plastic siding cookie cutter row houses.  Both feature particleboard over subgrade dimensional lumber framing, with pink or blue foamboard substituting for the particleboard in up to 80% of the surface area, thin poorly mixed slab foundations with multiple visible cracks before the flooring is even in, non-compacted landfill under the foundation, toliets that won't flush charmin, hot water heaters in the attic (good luck servicing that!), exterior doors that are not above grade, unuseable upstairs "bonus rooms" (translation: 6 month of the year sauna, even with the A/C on) and tacky interior features like compressed sawdust wooden trim and decorative interior columns.  
    Junk that wouldn't pass homebuyer or bank inspector (much less building code inspection) 30 years ago is now all the rage, primarily because there are no other choices, and most buyers shrug their shoulders and say "hey, I'm only going to be living here for a few years anyway, so who cares?" and then run out and get an interest-only jumbo loan to cover it.
    " once people get it in their craws that growth might not be forever"

    But where did you get this idea?  Who or what's the source?  None of the peak oil books I have read gave a credible reason why new energy sources couldn't replace oil (see my earlier post).  Is this based on non-peak oil problems?

    "When population exceeds carrying capacity"

    Is this based on peak-oil? If so, why?

    "Clearly, there is not enough steel, nor high quality wind sites that would make that possible."

    Why do you say this? Do you have a source?  The AWEA says that wind could supply at least 300% of US electrical demand - see http://www.awea.org/faq/tutorial/wwt_potential.html.  That's based just on reasonably high quality wind sites - it doesn't assume turbines on every house.

    "If we put windmills on low wind areas, it may not be worth the energy to do so.".

    No question the return is less - that's a problem in Europe, though they still find it worth while.  High quality wind has an E-ROI of 80:1, so low quality might be as low as 10 or 20:1. Still as good as oil.

    OTOH, this is not a problem in the US.  We truly are the Saudi Arabia of wind.  Further, we're also the SA of solar...

    " I was just pointing out that we can use renewables unwisely "

    Well, sure.  I'd love to see people on a higher level of emotional development, but if they're using renewables, that's a different problem.  Not a crisis, just a loss of potential.

    Let me add something else in support of Nick...
    "once people get it in their craws that growth might not be forever"
    According to the peak oil presentation by Dr Al Bartlett the number of litres of oil production per person (world) peaked in the 1970s at 2.2 liters per person (per day). Also according to Bartlett, it was down to 1.7 liters per person in 2004. So peak oil mitigation has actually been happening since the 1970s.

    How long does it take for people to "get it in their craws"? -- If they haven't realized it already, they are 30 years out of touch!

    That was a GREN (good rational essay Nick).  The thing that keeps coming through for me is that the more pessimistic are not looking at depletion curves, and totalling the energy remaining or needed for society.  They feel in their gut an impending doom (FITGAID).
    Could you give me specifics on that "latest issue of the Electrical Engineering journal" so that I cna look it up at the library ?


    Here's the link:

    As I understand it, they think that a reasonable limit to wind market share (in the reasonably near future, with relatively minor modifications to the grid) is 20% of peak capacity, or about 180 GW.

    I have read that the 2005 Federal energy bill mandated time of day metering for residential electrical users.  That would certainly facilitate the kind of demand management that would help wind integration.  I know that California's big tutility PG&E is installing them.  I haven't really heard much about other utilities, for whom this is a new requirement, though an Exelon (big midwest power company) rep didn't seem to be aware of it.  Anybody heard details about that - actual implementation timetables?

    coal is limited just like oil.
    wind and solar rely on the oil economy a great deal for their manufacture and maintenance.
    "coal is limited just like oil."

    Sure.  But it's peak is 50 years further out, which gives lots of time for transitioning to something else.

    "wind and solar rely on the oil economy a great deal for their manufacture and maintenance."

    Do you have a source for this?  My understanding is that wind has an E-ROI of about 80:1.  That means that if energy prices tripled, wind turbine prices would maybe go up 5%.  Lot's of other uses of oil & gas would go away first, and free them up for wind turbines.  I also understand that wind turbines require almost no maintenance.

    Now, solar does require relatively more energy than wind: I believe solar's E-ROI is about 10:1, so solar would work.  Again, I'd estimate that that means that energy is only 5% of it's price, so rationing of energy through increased energy prices won't make much difference to solar.


    The supply of coal is 250 years at current rates of consumption
    100 years when you account for demand growth

    That means a peak would be in 50 years. But a massive coal-to-liquids would bring that down to less than 10-15 years or less.

    Major problem is we already have (some) trouble generating enough electriticy and we get about 40% of that from coal.



    If we assume coal production follows a similar curve would the midpoint not be halfway from the begining not half way from the current projected end.  I mean if we have 100 years left (according to you) and you split that that puts the peak in 50 years.  But in ten years we would have ninety years left and following your logic peak in 45.

    If CTL technology needs 10 years to come online how could that possibly cause us to run out in 10-15 years?

    That almost makes a timeline. ;-)

    The interesting thing is that the progression from 250, to 100, to 50, to 10-15 assumes a few things:

    • investment is ready
    • plants can be built en-masse
    • infrastucture (rail, water, etc.) will support it
    • that coal is all of the 'quick mining' variety
    • higher coal prices will not slow the process
    both wind and solar have not been proven to be made without any inputs of any kind from fossil fuels. remember oil and gas are not just used for energy.
    we are not just facing a energy problem but a energy & raw material problem here.
    another thing that is important to point out is that the net energy or EROI of ethanol, biodiesel, solar, etc is not really the issue. Its what they are replacing that is relevant.

    If corn ethanol truly has an EROI of 1.34:1 (I doubt this, if we widen the boundaries and fully account for all replacable inputs), this net energy gain of .34 would represent an energy bonanza to people just 500-1000 years ago that would have allowed them to collectively live like kings.

    Unfortunately, 1.34:1 is 60 times lower than 20:1 of oil. Enter the absolute vs relative game on a large scale.

    IF society could restructure and prove they could live and live happily at an EROI of 3 or 4:1 (and I believe this is in theory completely possible), then we could probably come up with this energy using the flows of the sun, with energy to spare. Our 'fixed' infrastructure is orders of magnitude higher than this currently though. Hospitals, racetracks, and shopping centers do not properly run on distilled corn...

    If all of the best suggestions were being acted on (wind, solar, nuclear, energy conservation), and combined with a reasonable program of birth control, then yes, I think our civilization could get through this without major disaster. It wouldn't be easy, and would require jolting changes in our lifestyle, but it's doable.

    Unfortunately, I see almost no sign of it happening. The bad joke that we call our "political leadership" isn't even interested. Which makes me think that we our civilization is indeed doomed.


    I don't think Kunstler wants things to collapse. He knows that, being a middle age man with a hip replacement, his goose is cooked in a collapse situation.



      I is not a logical thought to want things to collapse but some people do regardless.  Sometimes people analyze a situation and estimate the worst then afterwards hope for it only so they will be right.  Some of your posts seem anticipant at times.  If there truly is a collapse it will suck for everyone, not equally, but it will suck.
    Actually it IS logical for some people to wish for collapse. I quite strongly believe humans and non-human primates have relative fitness algorithms driving our behaviours and this is prevalent in all apects of our society (including this board).  Peak Oil has the ability to be the great equalizer. Farmer Green jeans trumps Donald Trump.

    If person A's perceived relative fitness in the current neo-classical growth world is an 18 on a scale of 1 to 100, and he/she cant afford a car but does grow alot of vegetables,etc, peak oil tide goes out and all boats are lower in the water. This persons relative fitness might now be a 9 out of a maximum 25. Still below average and kind of sucky on an absolute level, but higher on a relative fitness metric than before. His/her fitness (or desirability, status, etc) got cut in half whereas most people got cut by 3/4. Schadenfreude at its finest.

    Peak Oil, Y2K, etc have these sorts of denizens. It is unavoidable. Of course, a whole other subgroup is those that ACT like they're in the above camp but when peak oil does come, lifes really gonna suck and they will pine for the days when they could plunk their thoughts down willynilly on internet blog sites. (translation: the real dopamine crash of harder living will trump their apriori expectations of higher relative status)


    Exactly. I think many people who gravitate towards this information do so because they percieve a major shake up in the status quo will convey upon themselves (relative) benefits in social status.

    For some people, this MIGHT be the case. But for 99% of us on this list, attending peak oil conferences, etc. our social status is as tied up in the petroluem-banking system as anybody else. So our status is going to tank when the system tanks.

    The person who teaches permaculture may be under the impression they will be better off in the future but when nobody can afford $2,000 for a permaculture intensive, where does that leave the permacultue teacher? Where are they going to get all the things like prescription medication, toilet paper, etc that they depend on to live as they do?

    Somebody emailed me to congratulate me over appearing in the "Oil Crash" film. I replied "what's there to be happy about?" That a film like this is gaining in popularity just means we are even closer to the edge of the cliff.  I guess it's good for my relative social status in the short term but that's not much comfort given the collosal nature of the catastrophes we're facing.

    Something that greatly disturbed me at meetings and conferences I've attended is people who say they are looking forward to this mess because they think that it will "force" people to live a certain way. Oh boy, where does one even begin deconstructing such thinking?



    The answer to the conundrum you raise is to reduce ones own expectations and desires by whatever means possible. And stock up on toilet paper.
    Actually it IS logical for some people to wish for collapse. I quite strongly believe humans and non-human primates have relative fitness algorithms driving our behaviours and this is prevalent in all apects of our society (including this board).  Peak Oil has the ability to be the great equalizer. Farmer Green jeans trumps Donald Trump.

    I think it might qualify as irrational to choose a low-probabiliy event, outside of your own control, as your path to "fitness."

    It is obviously better to plan for success in the real world, and hedge for possible futures that loom.

    Clearly so. But some have tried this path, to no avail.
    Oil Rig Medic Matt

    I think what people do is project. You are projecting an "anticipation" into my posts as a way of being able to dismiss what I say with greater ease.

    In a collapse scenario, I'm dead-meat and I know it. So I'm not looking forward to it at all.



    Usage: To Anticipate, Expect. These words, as here
                compared, agree in regarding some future event as
                about to take place. Expect is the stringer. It
                supposes some ground or reason in the mind for
                considering the event as likely to happen. Anticipate
                is, literally, to take beforehand, and here denotes
                simply to take into the mind as conception of the
                future. Hence, to say, "I did not anticipate a
                refusal," expresses something less definite and strong
                than to say, " did not expect it." Still, anticipate
                is a convenient word to be interchanged with expect in
                cases where the thought will allow.
                [1913 Webster]

    (Civilization as we know it is coming to an end soon. This is not the wacky proclamation of a doomsday cult, apocalypse bible prophecy sect, or conspiracy theory society. Rather, it is the scientific conclusion of the best paid, most widely-respected geologists, physicists, and investment bankers in the world. These are rational, professional, conservative individuals who are absolutely terrified by a phenomenon known as global "Peak Oil.")

    I am "projecting" something you openly declare.  You clearly believe the end drweth nigh, and make money off the prospect.  How you make money is your business, if it prepares you for PO or whatever the future may hold then good. If you assume you are dead meat, why all this preparation, why not party and enjoy the present?  Your words contradict your actions.


    Oil Rig Medic Matt,

    Let's say your spending $5 for every $1 you have in income, your savings is depleting rapidly, and you have no significant alternative income streams coming online in the foreseeable future.

    I "anticipate" you will go bankrupt soon. That is simple logic. It doesn't mean I "want" you to go bankrupt.

    However, if you need a bankruptcy attorney I'm perfectly willing to bill you at $400/hour to point out that you're going to go bankrupt soon. =)



    "If you assume you are dead meat, why all this preparation, why not party and enjoy the present?  Your words contradict your actions."


    Actually, they don't.  You simply don't know my actions. Or at least at this point planned actions.

    I'm in the process of outsourcing the commercial aspect of my site with the hope that I will be able to pay somebody/people to add content. This will free me from 85%-to-90% of my current responsibilities but maintain the revenue generated from my business endeavors.

    This will free me up to do two things:

    1. Have fun, enjoy my relative youth (27 going on 28 but still young and spry like a 21 year old) in case we have a rapidly catastrophic collapse. I hope to move somewhere near the beach for obvious reasons.

    2. Take classes with an eye to become what WT calls a "primary producer of essential services." Bike repair, organic gardening, alternatgive medicine etc. This will be prepare me for a slower collapse.

    So, if my "plan" works out, I will soon be spending my 112 waking hours per week as follows:

    45% partying in case of a rapid and catastrophic collapse in which my days are numbered.

    45% preparing in case of a slower collapse in which case I might get to live a relatively long life.

    10% making money in order to fianance what I do with the other 90% of my time.



    you should still find time to write. I think our views are similar, but you are a better writer. Youre funny as hell.
    You are way too young to be so defeatist. Sometimes you sound like an 85 year old.
    Being pragmatic (Matt) is not the same as being defeatist.
    A true defeatist would not even bother to post on TOD.
    There would be no point in it, after all.
    I think capitalism only truly works in a tribal setting with 100-150 people. It is in that setting that everyone knows everyone, our kids play with their kids, we drink the same water and eat from the same garden.

    Just to comment on the terminology, that's not capitalism, but some kind of steady-state market economy, which predates capitalism. Capitalism is inherently based on exploitation of the work force by the owners of the means of production, which is not a steady-state order in the long term, since it accumulates the generated wealth to the capitalists. Capitalism has prevailed in the last three centuries or so just because there have been enough human and natural resources to exploit to maintain growth.

    I suppose we'll go back to some kind of feudal order (actually we already have gone, to some degree, by externalising the production to third-world countries), when there's absolutely no room for further growth.

    85 mbd right now doesn't include biodiesel or XTL, so your 90 mbd target shouldn't include them either.
    Where do you think the net 5 mbd increase will come from, geographically?
    USA? OPEC? Former USSR? Rest of world? Because when you break it down like that, I can't see which it would be reasonable to expect that from.
    actually it does
    from EIA site (open top spreadsheet)

    (from above EIA links)

    1 "Oil Supply" is defined as the production of crude oil (including lease condensate), natural gas plant liquids, and other liquids*.

    *Other Liquids:  Ethanol, liquids produced from coal and oil shale, non-oil inputs to methyl tertiary butyl ether (MTBE), Orimulsion, and other hydrocarbons.

    You are quite right, thanks!
    This is so illogical that I had assumed it was not the case without checking, never a good idea.
    They forgot to include emulsified bullshit.
    RR: How many years do you think we can stay above 80 mbpd (total liquids)?
    I really don't know enough about that to guess. I would have to pull a lot of information together to come up with a guess, and even then I wouldn't have confidence in the number. It is hard to look out more than just a few years.


    I agree that peak effects preceed actual peak. My fear is that peak action won't.
    By the same token, I suppose, when we go past the Peak, if the worldwide economy takes a nosedive and consumption plunges below production, we will have the effects of Pre-Peak with crude surplus on the market looking for buyers and low gasoline prices.
    "Those who are looking for a true peak may be missing the point that a peak is not necessary in order to start seeing peak effects."

    9-11, for example, regardless of how you interpret the events of that day -
    Scenario #1 - 19 crazed Muslims hijack 4 planes.  why do they hate us ?  because our troops occupy their land.  why do our troops occupy their land ?  because that's where the oil is.
    Scenario #2a - "Let it Happen on Purpose" - 19 crazed Muslims hijack 4 planes.  CheneyCo. had several dozen warnings, including the detail that the perpetrators of the 1993 b*mb attack had in their possession plans regarding flying planes into buildings.  Why LIHOP ?
    Scenario #2b - "Make it Happen on Purpose" -  Why MIHOP ?

    - - -

    America's real foreign policy ?  you're watching it.  Iraq has 100 Billion barrels of oil, most of which will be sold when the price is above $100 a barrel.  call it $10 Trillion, worth of oil that is.

    people talk about the "resource wars" as if it were some future event.

    the Resource Wars started on 9-11-2001, if not sooner.  We have been living with the effects of Peak since 9-11 - if not sooner.

    as far as the actual date of the Peak of production, i suggest people have the courage to believe their own eyes.  Ghawar is in (production) decline.  Burgan (in Kuwait) is in decline & Kuwait recently down-stated reserves by 50%.  the North Sea is in decline.  Cantarell has/had an 825 foot gap between water on the bottom and the well ceiling, with water rising at the rate of 300 feet per year.  that was 3 months ago - 3 months ago, Cantarell had 2 years 9 months left.

    when the major oil fields in the world are past peak production, we are past peak.  we don't need Matt Simmons & Ken Deffeyes to ring a little silver bell, to announce the event.

    judging by the actions of the US government, part of the plan for Peak is population reduction.  i suggest we not acquiesce to this - it is too similar to the "Good Germans" acquiescing to the mass murder of the Jewish population.

    For example, a choice between electricity for air-conditioning in Texas, vs. electricity for a well for a village in India.  let the Texans use fans & ground-effects air conditioning.  let the Indians have electricity for their well.

    The most depressing thing I read this morning was the Death of Biosphere...http://www.nytimes.com/2006/05/28/realestate/28nation.html
    Seems the project is being sold to developers of suburban sprawl (Bioshpere Estates?!!).  The placement in the Real Estate section of the Times is entirely correct; the article is more about how the explosive growth between Phoenix and Tucson will eventually join the two cities than it is about the death of science, although you could argue that this is a fine example of our priorities in the US. Pinal County, currently 250,000, is projected to reach one million by 2020.   I suppose the growth machine will have to hit the wall before we see the end of this stuff.  
    Unbelievable. I can remember 5 years ago when I was there, it was quite a distance outside from Tucson.
    Ever sprawl will come to an end. Then it is unlikely that the size of the "settlement" will keep to be the same size.

    Phoenix and Tucson growing together? Is there actuallly enough water for this? There has been a very dry perdiod over the last years I heard.....?

    And: Will be so many dwellers who want to live in such a dry and hot place?

    cheers from berlin

    Don't worry real estate is already crashing in Phoenix.
    really? can you expand on that? I live in Vermont
    For much entertaining reading on the housing market in Phoenix and elsewhere, check out:


    Around DC, I see a number of high-rise condo buildings still under construction.  Some of these are going to turn out to be total flops.  Others are walking distance from Metro, and may do OK as long as they aren't priced obscenely high.

    For a more entertaining look at the housing bubble, look here:


    Essentially a list of the worst of the worst in the housing market, with plenty of snark.

    Bad link -

    Not Found

    The requested URL was not found on this server. Please visit the Blogger homepage or the Blogger Knowledge Base for further assistance.

    The link works fine.
    Good site.
    There is still QUITE a bit of land between Phoenix and Tucson... Plus there is a large Indian reservation between them that will prevent contigious growth (the south border of Phoenix is already hampered by this boundry). However, the urban sprawl will definitely continue.

    On another note, a large source of Phoenix's power (Palo Verde Nuclear Plant) currently has three reactors and produces just over 2,000 megawatts. There has been talk recently of adding two more reactors to meet future energy demand. It will be interesting to see if this happens, though we certainly could use the energy... It takes alot of power to cool a few million buildings when the outside temperatures get up to 110, let alone if we ever want plug in hybrids or electric cars...

    Is there enough water to cool the atomic plants? What happens to Phoenix dwellers when these power plants cannot work for any kind of reason?Indeed Phoenix is the only american city where I spent a couple of days. I think it wouldn't be very pleasant to spent some days with rolling blackouts there, especially in the hot summer days!
    It's Bob Shaw's bio-solar habitat idea come to life!!!

    Where are the Earth Marines?



    Hello Matt,

    I realize that was a humorous tongue-in-cheek remark, but I want to make it clear to other readers that when we finally start building these habitats-- it will be a very serious life and death proposition in its consequences.

    I would never advocate building a biosolar habitat in the scorching Asphalt Wonderland.  Mike Ruppert was smart to relocate to the Oregon area where people might have a chance to build some future sustainability.  Things are predicted to get much worse for the Southwest:


    I believe the rise of the state of Jefferson is inevitable.  It is too early to tell whether this will accomplished by a grass roots effort, or by corporate entities shifting detritus wealth into real biosolar assets, or maybe a symbiotic combination.

    I think most Americans are not considering how PO & GW will setoff massive migrations and its sad ramifications.

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

    Hello TODers,

    One other brief comment:  please think of the lack of water caused by drought, desertification, and/or water infrastructure failure as Nature's NEUTRON BOMB--very quickly kills most species by dehydration, heatstroke, and bodily heat exhaustion, but leaves buildings intact.

    Hurricanes and earthquakes are like hydrogen bombs--screws up all infrastructure [besides the species].  Viruses are like precision GPS bombs--explode only in specific genetic targets.

    More people are killed by the sudden onset of heat or water shortages than anything else short of war on a yearly basis:
    Heat danger

    As dramatic as the recent hurricanes have been, it is perhaps surprising that droughts and heat waves cause the most damage and deaths.

    In both 1980 and 1988, severe drought and heat ravaged the central and eastern parts of the country. They were the only billion dollar events on the list for those two years, yet they alone made 1980 and 1988 the two costliest years on the list - $48 and $62 billion, respectively, in 2002 dollars.

    These heat waves also were the deadliest weather or climate events of the study period - with estimated deaths due to heat stress approaching 10,000 in each case.

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

    Hello Bob,

    I've followed the Arcosanti experiment north of Phoenix since its inception. "The Bee Hive City" in the middle of the wild Arizona desert.

    There was a time in the late '70s, early '80s when Honeywell Corp. actually considered buying it and turning it into worker housing for a tech factory.

    Visions that never happened ...

    Here's the vision, by the way:


    Hello Don in Colorado,

    Thxs for responding.  Great idea for a walkable city, but poor high desert location with inadequate surrounding farmland [if they grow to 5,000 people], therefore I believe it is not sustainable.  It will mostly be a bizarre postPeak ghost town.  The encroachment from surrounding towns and increasing water shortages across AZ are only going to make things worse.  The first rule of survivable sustainability is access to non-pumped potable water--Arizona is rapidly depleting higher elevation acquifers so that even streams won't flow.  Currently, lawyers arguing bigtime over water rights, but eventually we will go back to the earlier historical model of shooting wars over water.  It will be postPeak ugly.

    Couple of dated links, but still valid info:


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

    Balanced supply and demand means "exponential" growth must end, but "linear" growth can potentially continue due to higher prices encouraging new production.

    I see the precursor to "peak oil production" (where first derivative goes to zero) could be called "peak oil production growth rate" (where second derivative goes to zero) after which the growth rate slows towards zero and the final peak production.

    Optimists can keep betting for higher prices to lead to new production and pessimists can bet on higher prices leading to demand suppression, and both will be partially right. Messy data still doesn't allow either zero points to be proven except as a curve fit after the fact.

    Great post over at The Energy Bulletin:  http://www.energybulletin.net/16459.html.  It overlays US lower 48 production history with SA production.  
    From none other than frequent posters here: WesTexas and Khebab.

    Interesting article. I still think the conclusion it suggests, ie vis a vis taxing energy, even if proposed as a substitute tax to replace the payroll tax, etc., would not fly in the current political environment.

    It will take a few more hits before such a course would be politically acceptable. By hits:

    1. like the acceptance of SA oil production decline.
    2. a bunch of Katrina's.
    3. Major ice melting and warming summers and winters that can not be explained away.

    for example of continuing stupidity, this morning on the FOX talking heads on the economy, Gore's new movie and global warming came up, and it/he was dismissed as bunk. GW in key circles has not yet been accepted and certainly the fix has not.
    You see, comments like yours are what make me a "doomer" at heart. I agree with your comments but it comes down to psychology and sociology and not technology. We can, right now, create a comfortable and sustainable global civilization if we really wanted to do so. But we're actively refusing to do so, holding on to silly dreams of endless growth (see the Tucson/Phoenix example above), and hoping that some "silver bullet" saves the day downstream. All the while, energy consumption growth continues, population growth continues, soil depletion continues, GHG emission growth continues, etc.

    I have always believed that solving this problem on the technical side was doable in some form. I have also always believed that human psychology being what it is, we won't try to solve this until it has become a crisis so large that we might not be able to solve it at all. And the continued head-in-sand approach of the powers that be reinforce this viewpoint.


    Very understandable. It will take political will to achieve what needs to be done. Right now in the USA it is not there yet. There are too many people living in Red States that claims this is malarky. Heck my local Edward Jones stock mkt. gal laughs at me when I talk about global warming (but she likes my stock picks).

    What is positive out there is a lot of nations in Europe, like Denmark, Sweden, and France, are buying into global warming and are doing something about it. So that is good.

    By the way, off topic, but I spoke with some local solar people and they told me that getting PV panels is still difficult and there are supply delays, because of the supply is being bought and shipped to Europe, especially Germany.

    Could not agree more, Greyzone.  Even the "solutions" currently posed (E85) are ridiculous boondoggles that will just hasten our plunge off the cliff.
    Tim Dyson wrote a paper that was my own personal "doomer tipping point"

    Apropos carbon emissions and climate change, however, it is argued here that not only is major behavioral change unlikely in the forseeable future, but it probably wouldn't make much difference even if it were to occur. In all likelihood, events are now set to run their course.


    To date, your post is the only one in this entire thread that has mentioned the word "population." If there is a root cause of our worldwide environmental predicament, overpopulation has to be a leading contender. Oil made that possible, but mankind could have done the smart thing and learned to conserve resources so as to prevent overshoot.

    If zero or negative world population growth is not achieved soon, efforts at sustainability cannot succeed, as they will always be aimed at a moving population target, growing at a compound rate, in the face of finite world resources. The cry to power down must include a worldwide admonition to take cold showers, use condoms, douche, or whatever it takes.

    I didn't search for the word "railroads" in this thread, but I'd be surprised if it appears.


    As William Jefferson Clinton said recently, at Davos, and was roundly attacked by right-wing radio pundits like Hannity, the following are the three largest problems, in order, facing humanity:

    1. Global Warming
    2. Over Population
    3. Terrorism

    Railroads may not be on this post but TOD covers them a great deal.
    Couldn't agree more, squiggy.

    I asked in a prior thread why population growth had not been given full attention.  According to what I understand, world population will hit 9 billion by 2050.  Some think that is not an accurate number.

    Actual population and its expected growth should frame all discussions of energy and resource needs.

    To a large extent, population size, expected growth, and composition define the need.

    I honestly believe it will take some leadership.  Deep down many of us, Americans, know that not all is well in the land.  I have made it my life's mission to speak to as many people who will listen about Peak Oil, Global Warming, and our current unsustainable economic paradigm.  I do get frustrated at the reaction I get.  Most people tell me that they are too busy trying to put food on the table and live in the modern American paradigm, my words not theirs, to pay much attention if any at all of this Peak Oil business.

    But we Americans are not as defunct materially as one might think.  If one resolute, articulate and strong leader would emerge to take us to task as a nation I think we would respond.  Heck, we like nothing more than a challenge.  I think under the current climate of "we must keep the voter fat and happy, so don't tell them any bad news" is not only wrong but deep down not want we want to hear.  I think most people want the truth and a direction to fix the situation.  I think John Kennedy sparked this energy in us by challenging us to "Send a man to the moon".  We did send a man to the moon and we can find a sustainable way of life too.

    Taxes are indeed a dicey subject at best.  But this is not out of the question for this country.  If framed correctly and supported with steadfast determination the American people just might see the sanity in its details.  Perhaps it will take a few more "hits" on this country to wake fully up.  But we will wake up and we will find a sustainable solution good for humans, nature and the fragile earth we all call home.

    With that said, I am going to grab another beer!

    Could that leader be Al Gore?

    Regardless, a leader needs a specific goal to lead us out of the wilderness.  Man on the moon was a specific goal.  Stopping global warming is not.  Hillary Clinton has a specific goal of reducing oil consumption by 50%, but she gets there with the fantasy of biofuel.  

    The specific goal needs to be: reduce GHG emissions by 70% by some date (2015?).  Then we need to go through each sector and define outcomes.  For example, one outcome for the housing sector might be: provide PV to 50% of homes by 2015.  Then we need a clear strategy for each sector outcome.  This needs to be rolled up in one package and legislated.

    But we and our politicians have to be serious and actually want to achieve the outcome. Obviously, this won't occur under the administration.  They have been wildly unsuccessful about even those things they claim to be serious about, much less those things they don't care about, which are most of our problems.

    We need a leader with a serious vision who actually wants results and not just power.  Then he/she needs to kick ass 24/7 until all this gets done. Al Gore might be that man. Hillary Clinton will not be the one; I fear she is more interested in power that what one can do with that power.


    There is a very simple way to see if Al Gore might be in step with the American people. Let us see how well his movie does the next few weeks. If it is wildly successful and compared in box office gross to Michael Moore's Fahrenheit 911 (which cost the Democratic Party the 2004 election in my mind), than America will be close to making the move.

    One caveat, if the movie is bad as a movie, bets are off.

    The movie is very good. It is not a thriller and it helps if you like documentaries. The arguments are simple. He doesn't go into the specifics of coal, for example.

    The information he does provide is difficult to dispute. He presents the mainstream scientific view. At one point he contrasts that with the MSM view nicely.

    You would have to be pretty cynical yourself to see this movie as a calculated political ploy.

    The specific goal needs to be: reduce GHG emissions by 70% by some date (2015?).  Then we need to go through each sector and define outcomes.  For example, one outcome for the housing sector might be: provide PV to 50% of homes by 2015.  Then we need a clear strategy for each sector outcome.  This needs to be rolled up in one package and legislated.

    You cant legislate technical development and the future sucess of implementations! It dident even work during word war II, you had dozens of crash technology projects in USA and quite a lot did not work out. You can not say wich aeroplane will fly best, you have to test them all in parallell.

    Figure out the limitations in your legal system, lower them, set lofty non numerical goals and reward success as sucess comes, preferably in a market driven way.

    Rambling again sigh

    It sounds like you and I are reading from the same page.

    As I've said on my site, and here, I believe, the market isn't inherently good or evil, but it can definitely be harnessed for good with the right public policy.  Let policy set strategic directions--heavy emphasis on conservation, greater vehicle fuel efficiency, etc.--and let the market work out the tactics and details.  Gov'ts can offer subsidies to accelerate the process without picking winners and losers--e.g. impose a gas guzzler tax on vehicles that get less than X MPG, and offer a slight rebate (10%?) on those that get over Y MPG.  

    I'm amazed at how many people I talk to online or in real life leap to the conclusion that "free market" nevessarily means "greedy, myopic idiots running wild".  With a complete lack of policy and leadership, it can mean that, but with just a little enlightenment in the right office holders, things can be much better.

    "e.g. impose a gas guzzler tax on vehicles that get less than X MPG, and offer a slight rebate (10%?) on those that get over Y MPG."

    This has been my position for a couple years.  Why is it so rarely mentioned by actual politicians?  I'm afraid it isn't as good for shaking down campaign contributions as a plan that names specific makes and models.

      The point of the tax would be to encourage fuel efficient vehicles...right?

    Would a universal say 100% gas tax not do the same thing?

    Matt in GOMEX are citizens smarter than politicians?

    I say 'my position' above, and it's true.  The thing is, I've got my core position that's never going to happen anyway, and then a handfull of other positions I'd accept in the horsetrading of politics.  If the path is credits and taxes on vehicles, I think it should be on measured efficiency and not targeting technology, makes, or models.  If we have the guts for a gas tax that will be good too.  I'm afraid it is a sliding scale though ... because what we are likely to get will probably be a distance from my ideal solution.
    <quote> one resolute, articulate and strong leader would emerge to take us to task as a nation I think we would respond.</quote>


    Do I even need to explain why?



      Is this an END TIMES ALERT? I thought you were no religious....


    No, the poster's description fits Hitler, Mao, etc. perfectly.



    True, but could also be a Lincoln or Roosevelt.
    The description also fits that of the antichrist, as described in both the Old and New Testaments.
    I think he means that this is an invitation for a demagogue.  He may also mean that he feels that it describes the current occupant of the oval office, in terms of authoritarian leadership style..
    It's an invitation. And a commentary on the subconsious desires of the person sending the innvitation. (Hint: secretly, they want to be the dictator.)

    As far as Bush: I think he is bad. Real bad. But nothing compared to what we could see when our true chimp DNA kicks in.



    That's why democracy works as well as it does (I realized that is a two-edged complement).  We all get our 1/n-millionth chance at being dictator (not "decider"?), and at the same time, reduce all other chimps to the same 1/n-millionth role.

    ... might explain why some think "the decider" is overstepping his role.

    I'd love it if we could head-off RED ARLERT with a "coalition" government, if possible. Using currently available "front-runners", I could believe Gore+McCain would suffice. McCain occasionaly talks straight about his own party's dumbo ideas. And Gore would be "trust-worthy" to the left.
    Thanks for the comment.  One minor point.  We were overlaying Texas production with SA and Lower 48 with the world.  

    Our premise is that Texas is to the Lower 48 as SA is to the world.  Mathematically, SA and the world are now at about the same points at which Texas and the Lower 48 started terminal declines in production.

    It was a year ago when one of the prinicpals of this website posted a note that he or she would be offline for a few days for the Memorial Day holiday.  In the note he or she mused whether or not we would be able to afford to go anywhere a year later.

    Well, we are here, and yes I think we are able to still afford to go places.  But fuel prices are very high and bordering I think the region where fuel costs start to factor in much more into people's plans.

    What do others think?

    This is difficult, if not impossible to know, and when the local businesses here around Acadia National Park, who rely on summer visitors, examine the entrail of their season they may pin a disappointing season on high fuel prices. So far those I know seem relatively unconcerned. A few thoughts: $3/gal gasoline was a shocker last Labor Day but no longer is; we've all grown accustomed to it. $3.50 to $4/gal would have to provide the same psychological jolt. As for what is affordable, rather than simply painful: those who can afford it will; and those who realistically cannot will spend on automobile costs higly disproportionate to financial sense because the car provide psychological freedom in its mobility and peronal power.
    I am in the consumer electronics retail business in upstate NY and business has been flat since 4/1/06.    Which was about the time of the latest run-up in gasoline prices.     I talk to reps and business owners like myself every week and it is the same in PA, NJ and New England.   I can't speak for the rest of the US.   Gas prices are on the minds of all my customers.   As I became PO aware last fall, I think people sense something is different this time around from the energy run up of prices.
    I own a wholesale plant nursery.  Sales are up very slightly and weather is a huge factor for us. I was wondering if people will stay home more and work in thier yards.  My customers are telling me that they are seeing alot more phone calls checking availability before driving to the retail store.  I think that any of us(me included) who sell non esential products and services are going to feel it first.  
    Oh forgot!...I don't mention the PO thing too much.  Most peoples eyes glaze over....but, but,  when talking to other people in the trade when fuel prices come into the conversation they all say that they think it will only get worse.  They ar essentiallly agreeing with you on the feeling that is out there - that it is diferent this time.
    I own a wholesale plant nursery.

    I think that any of us(me included) who sell non esential products and services are going to feel it first.  

    Maybe you should start selling wholesale essential plants...

    Perhaps an ad (if you advertise) and a sign at the nursery, saying "Grow Your Own Food" for fruit & nut trees, blackberry bushes, etc.
    Already have purchased stock plants for divisions :)
    Big D,

    I don't know anything about the nursery business, but I would think you could move into selling people stuff to grow their own food, couldn't you?



    On the radio today, Air America (supposedly Left) no less, the "word" is that although prices are up, Amurrikans are still going to go out and drive around this weekend! Bring it on! Yeahhhh!!

    For those not in the US, the Memorial Day holiday is the biggest driving holiday in the US (and there are many hehe). In the USSR they'd have a big parade with some tanks and missile carriers and stuff, with thousands who'd walked or bused etc there watching. In the US, we prove we're Better - we all get in our cars and drive around like mad. That uses much more fuel!

    Wow...... yep listening to this radio stn. now and right now, more ranting, about how oil prices aren't due to any shortage, they're those damn oil co's (translation: ay-rabs) jacking up prices. And prices are supposed to be low, not high! This is an outrage! yadda yadda.... And this is our leftist media, you can imagine how the mainstream righties feel.

    Yep, we're going to keep right on living right as we've been, until we hit a wall.

    Wouldn't a leftist be more likely to blame high prices on gouging by rich higher ups in the business?

    This is one of the reasons I don't like the left-right classification scheme. It just doesn't mean anything. It doesn't even work for fiscal policy and government controls anymore.

    "...more ranting, about how oil prices aren't due to any shortage, they're those damn oil co's (translation: ay-rabs) jacking up prices."

    Huh?  Can we at least wait until someone actually says something racist before we accuse them of it?  And since when do Americans equate oil companies with Arabs?  I sure as heck don't, and I don't know anyone who does.  I know a lot of people who are screaming about ExxonMobil's profits and Raymond's obscene retirement package, but literally NOT ONE person I've talked to has even mentioned any exporting countries.


    You really need to start listening to evangelical right wing radio.



    For racism or random frivolous accusations of it?
    Or just to get a better idea of the effects of chimp DNA on public discourse? (I can do that on usenet)
    Yep, we're still getting around, and in mass numbers, but I respectfully disagree that "fuel prices are very high".

    They're certainly starting to inflict economic pain, but they're not yet at what I would consider truly high.  For the US, I guesstimate that would be around $5/gallon for gasoline, possibly somewhat less.  Once we hit a sustained price in that range we'll start to see some serious inflationary effects, people in bidding wars over high MPG vehicles, etc.

    Ok this is a weird question (but what better place to pose it...?)

    I am writing a paper on biomass and water per capita for various regions in US. (On the presumption that biomass and land viability will become increasingly important as traditional fossil fuels deplete)

    As a thought experiment, I am looking at other macro scale events that may come into play in next 20 years, all in an attempt to figure out where the best place to live might be (and Ive concluded that I cant pass for a Latino so Brazil and Ecuador are out).

    Jay Hanson once showed me fallout patterns for nuclear conflict and historical jet stream patterns. If what Ive been reading (and thinking) recently is correct, the United States is going to move towards coal, first slowly but eventually, in a massive way. Even to the extent of people using coal to heat their homes again, the way we started to in the 1970s.

    Question: does anyone have references or even personal insight into the coal particulate and waste patterns via wind and other sources in USA? I know that the Gary IN industrial complexes and others in the midwest have contributed to acid rain in the Adirondacks and NY, VT,etc lakes. If we went coal in a big way, which areas would have the most outsized impact? Clearly the whole planet would be worse off, as GHGs would increase, but I am curious as to more local effects. Any insights? Will peppered moths move through natural selection again?  Thanks

    We will be building clean coal plants. They will cause global warming, but not acid rain or basic rain. I would worry more about being downwind from a nuclear target, and the target would not necessarily be a city.
    I wouldn't be downriver from a dam, either.
    we will be building clean coal plants at first, but economically how we will compete with China and India who do not account for negative externalities and dont build clean coal plants? And CTL is hardly a clean process.
    My opinion too is in favor of coal in the medium run (10-15 years).

    The good new is that coal infrastructure has already begun sqeaking from the high pressure exercised upon it - mines are working near max capacity, railways are also going this way (and will become jammed as we move more freght to them even faster IMO). I simply don't see how we will be able to increase coal production that much as to cover for the increased demand and for the falling NG and oil supplies. Yes, there will be 5-10 years in which coal will help meet both ends; Then after chronic shortages begin the nukes will come. With or without vengeance :)

    I am still mulling over the nameplate #s for new wind in 2006 and 2007.  Nameplate 10 GW = 3 GW average seems likely in 2008 and more beyond.

    This level of installed wind by, say 2012, begins to show on the national grid and supplant natural gas at first.  But 80 GW of installed wind will become a major factor.

    Not that much pumped storage beyond existing can be built by 2012.  H'mmm...

    You know I am also in favour of wind, to some extent.

    80GW is eight times our current capacity, and will produce (back of the envilope) about 5% of the US electricity. IMO, due to the uneven distribution of wind resources IMO you will need to factory in a high-voltage national network to get to there. As a minimum you will have to connect states with high hydro to states with high wind. Fortunately we can do it relatively easy, connecting the Dakotas, MN and IA with IL and MI. But you must include some delay in the plan IMO.

    But again I'm not an expert...

    Have some problems with the English language today sorry :)
    I've always wondered if it would make some sense to connect the Dakota wind farms to pumped storage at the western end of Lake Superior.  The pumped storage there could take anything extra, store it, then send it back to the Dakotas or distribute it to Wisconsin, Minnesota and Illinois.  I'm afraid that only the Upper Peninsula of Michigan would be much benefit from this.

    One problem is that the wind in the Dakotas is fairly seasonal.  The high point is winter, with a shoulder season in either the fall or spring.  High demand ususally occurs in the summer cooling season.  

    A solution would be to increase the use of heat pumps, both air and geothermal, in the area.  A couple of years ago on the net, there was considerable discussion about a company from New England that had developed an air source heat pump maximized for heat.  It was tested in North Dakota, and seemed to be able to heat homes in winter conditions.  Of course, most people would want a reliable backup.  Air source heat pumps are easier to install than geothermal because there is no call to bury pipes a few feet in the yard.

    Environmental issues are clearly a drawback to a Lake Superior pumped storage.  For example, a pumped storage facility was built in the late '60s--early '70s on Lake Michigan, just south of Ludington, Michigan.  The design disregarded the problems of fish being chopped up in the intake and outflow.  I'm from the area, and my friends told me that it was absolutely blood in the water.  A huge lawsuit ensued, which the environmentalistswon.  The damage award was enormous.  The plant has continued to operate, and , there have been continuous efforts to decrease the fish kill, which have greatly lessened the impact of the facility on acquatic life.

    The plant runs very, very well.  It takes off-peak electricity from a nuclear plant further south, and, I believe, from some of the coal powered plants located in southern Michigan.  Some of the best windpower sites in Michigan can be found in the vicinity, so perhaps when those are developed, the pumped storage will serve a new purpose--that is if pluggable hybrids suck up a large amount of off-peak electricity.  

    Heat pumps (or the much simpler alternative 2-way AC-s) can effectively replace some of the natural gas demand in the winter with demand for electricity. Two concerns:
    1. NG prices need to become much higher than that and it is certain to stay that way, so that people consider making the necessary investments
    2. The energy gap for the hot, dry and calm summer promises to be horrendous. Fortunately we can fill it up by preserving the NG fired plants and burning some of the gas we saved through the winter (more underground storage will be needed).

    I see 1) effectively managable by the local governments providing tax incentitives for heat pumps, and openly admitting that, well it looks like we are going to have NG problems in the years to come.

    2) would be harder to contemplate with, as you would have to persuade utilities to make additional investments, and forego some savings (this on the top of wind farms, pumped storage and a national electric grid) while several nukes would be able to do the same thing much more cheaply.

    Ultimately what I think will happen is the path of least resistance - utilities will buy as much wind, as their local grid will be able to handle without modifications (5-10% depending on many factors).

    No national grid will be built and no additional pumped storage either - too much investments without reasonable payback; and too much cooperation on national level needed for our quite individualistic system to provide for.

    Coal, and then nuke will come to replace the falling NG supplies.

    I think that what you refer to as the 2-way AC is the air source heat pump to which I refer.

    I agree that we will probably hoard scarce NG for use as peaking plants in the summer, at least in some areas.  However, as the price of NG goes up, alternatives may become more viable.  In fact, the Ludington project to which I refer, was built during tht time that NG could not be used for electrical generation.  Scarcity and high prices might have the same effect.

    Pumped storage built on a large body of fresh water uses the body of water as the lower basin, thus dramatically reducing construction costs.  

    Pumped storage also works extremely well with nukes and coal, because it stores eletricity generated off-peak for use on peak.  The Ludington project was built to complement a nuke and some coal generation.  And it was built by two power companies acting together.  When there's money to be had or saved, you'd be surprised what people can do.  

    Building more of these on the Lakes would take a considerable amount of political and legal maneuvering.  I don't discount that.  Also, I certainly would not want to crowd the shores of the Lakes with these like condos in south Florida.

    I hope that you will keep an open mind about this type of electric storage, depending on location.  I don't think that we can rule out any silver BBs at this point.


    There is a lot of pumped storage potential in UP Michigan (Ontario should be interested among others).  Potential power gain from pumping from Lake Superior and letting it out into the lower Lake Michigan.

    I have come to the conclusion that for seasonal storage (winter, spring > summer) in places like Texas, pumped air (using depleted NG fields or structures like NG but no gas) will be required.  Only 60% out for 100% in, but the storage medium is vast and relatively cheap.  High density cold air injected in the winter will help efficency a bit.

    Nuclear is a bad choice to meet the air conditioning needs of a Texas afternoon.  French nuclear only works because they sell several nukes worth at night to Switzerland, who then hold their hydro water for later peak sale to Germany and Italy (and back to France).

    In other words, nuclear is only good for base load (24 hour demand).  Raccoon Mountain Pumped Storage (hydro) was built by TVA within sight (I have seen them from the top) of three nuclear power reactors,  Sequoyah I & II 2,320 MW and Watts Bar 1,167 MW and supposedly Brown's Ferry 2,285 MW can sometimes be seen.  Pumped storage works VERY well with nuclear as well as wind.

    It will be an economic competition between wind, coal and nuclear with short lead times of wind (1-2.5 years) giving them an advantage over coal (4-6 years) and nuclear (7-15 years) as NG spikes in price.  I also see a competition between coal and pumped storage for peak demand.

    How does coal handle peak output?  I had the impression that modulating the output of coal plants was inefficient...
    Depends upon plant design.  Modulating output by a limited amount (10% is easy) can be done by a base load plant.

    Gasified coal feeding a combined cycle plant would act much like an NG plant (expensive if ever built commercially).

    Yes, coal has "issues" load following but it can be done.

    If NG is $20+, wind cannot be scheduled, hydro is limited locally, nuke is worse than coal for variable load; then one is left with an economic choice between coal, pumped storage and load management for peak demand (except when wind is near peak production by happenstance).

    I agree that the Lake Superior coast of Michigan has some good sites, but I don't quite get making power from a drop between Superior and Michigan.

    As to Superior and Huron, the Soo Locks at Sault Ste. Marie and the need to keep the shipping channel going between Superior and Huron (Huron then leading to Michigan and Erie), would take up considerable water.  The parallel run down the St. Mary's River and its rapids could only be converted to electrical generation with a costly earth-moving project that would dwarf any pumped storage facility on any of the Lakes.

    On another note, I've read recently that large server farms are becoming more expensive to cool.  I suggest that we move them all to the Lake Superior coast!  It is really cold up there all the time, and a few pipes into Lake Superior would undoubtedly take care of any cooling needs.  You'd have to have generous vacation time so that the engineers and technicians could take several vacations south to thaw out!

    My bad, I was assuming geothermal heat pumps when you were referring the broader term - heat pumps, which include ACs (and also freezers, refridgerators etc.).

    I hope that you will keep an open mind about this type of electric storage, depending on location.  I don't think that we can rule out any silver BBs at this point.

    Yes, I'm keeping it. For many reasons I believe that in the next couple of decades many nuclear and wind power plants will be built, and they both lead to that same direction.

    I dont know much about biomass and water in the States but up here, in Quebec, Canada we have lots of water, lots of biomass and futher more, large hydroelecticity complex and infrastructure.  We didnt had a blink when New-York and Ontario went dark a few years ago.

    Were I live in Roberval, we dont have much sprawl, we have large fields and very large forest.  The St-John Lake feels like a small inland sea of unsalted water.

    I'm working toward making lots of people acquainted with the Peak Oil notions.  I will probably be the next Chamber of commerce (or Board of trade) President, I'm currently the general manager.  My next work will be for comming with new policies and strategies for coping with this.  

    June 5 I will give a speach in front of our annual general assembly stating the next chalenge we will have to go trough on the next 5 years.  It will also focus on positive changes and opportunities.  I hope the message will go far enough but just enough to make people work toward solution instead of being just plain scared.  

    In maybe 1 or 2 years, depending on federal elections, I will run for the Mayor Office.  This is because there is very good chance our current mayor will run for Tories in the next federal elections.

    We will see!


    Ahh, I see you wish to be dictator.

    I'm considering setting up a demagogue-dictator consulting service. You see, I have no desire to be one myself. Just not my style. I'm more of a cult in the woods type of guy anyways. But I've studied these matters quite extensively and think I could help (for a fee) those who wish to be localized dictators themselves.

    If you're short on funds, perhaps we could barter? I could exchange my consulting services in return for you allowing me to relocate my cult to the abundant woods that surround your fiefdom.



    Even to the extent of people using coal to heat their homes again, the way we started to in the 1970s.

    Please, let's do this indirectly through systems such as electric ground-source heat pumps. We do not need 10 million small-scale coal burners where there's no scrubber and no chance for sequestration. A good GSHP has a 3:1 ratio for heat energy delivered versus energy input. If the overall system for coal to delivered electricity is even 33% efficient, the GSHP is as effecient as local coal heat can ever be.

     thelastsasquatch  :Re wind patterns here are the 2 links I keep bookmarked for emergencies:  http://weather.unisys.com/upper_air/ua_vect_300.html

    Re coal I worked at a big new early 70's coal plant and it killed plants up to a couple miles away even with 500 ft. stacks;raised them to 1000 a few yrs. later.Good luck re your chosing & relocating.

    Top choice British Columbia north of vancouver
    Second choice Oregon coast
    Third choice southeast Alaska
    Fourth choice Western Montana
    Fifth choice Vermont
    Sixth Choice south island New Zealand
    Seventh choice Ecuador
    Eighth choice northern Wisconsin

    checking them all out during next 6 months on mega road trip. Will be using IRA to buy a farm somewhere, or go in with someone.

    I love Montana but the future water/coal issues scare me.

    Let us know what you find on this trip, please.
    You might also check the following site for additional, good US locations



    I'm in Auckland, New Zealand, come and have a coffee/chat
    when you visit.

    I'm Heading off to have a look around Alberta/Oilsands
    from 24th June 06 to 9th July 06 to learn more about the OS industry and investment opportunities.

    Also, I will be in San Fran from 6th August to 9th August
    If TODers are keen to hook-up have a drink/chat. Would be great

    Looking forward to the trip. And it makes sense to do it now, while we still have cheap-fast international travel.
    Cheers! Clint

    Sixth Choice: South Island New Zealand:

    You need to be under 55, healthy, and either:
    1) Have NZ$ 2 million to invest for 5 years
    2) A skill which is in short supply in NZ
    3) Marry a Kiwi (either opposite sex or same sex)


    I've been looking into becoming a "mail order husband" for some nice woman in NZ. Figure at near 200 pounds, I want to do this before shipping costs become cost-prohibitive.



       Are you going to sell yourself in dollars, or bourse and go with another currency?


    Oh, yeah. Yeah, right. This gets hilarious post of the day.

    All I could think of was Bob Dylan's Jet Pilot. Good Luck, Big Fella.

    Well, she's got Jet Pilot eyes from her hips on down.
    All the bombardiers are trying to force her out of town.
    She's five feet nine and she carries a monkey wrench.
    She weighs more by the foot than she does by the inch.
    She got all the downtown boys, all at her command
    But you've got to watch her closely 'cause she ain't no woman
    She's a man.


    I have a lovely blonde divorced nurse at the office, aged 25 who "owns" her home.  However, no chance of a sale without a test drive.  Also there is a shortage of single men in this town.  You would just have to show up here on holiday and do the chimp courtship ritual.
    New Zealand just jumped to 4th from 6th...;)
    Multiple test drives are provided free of charge.



    Now why didn't I think of that.   I've been in N.Z. a couple of times.  However, I think I would prefer to live on the N.Island.   Just wonder if it would work? -:)
    IMO an across-the-board global sell-off is beginning, starting with stocks, real estate and commodities. The flood of liquidity injected into global markets in recent years appears to be ebbing. Emerging markets are leading the way, particularly in the Middle East and south Asia (Dubai down 65%, Saudi Arabia down 54%, Egypt down 37%, Turkey down 27%, India down 22%, Pakistan down 16%), which could lead to substantial domestic unrest there. Hedge funds are the real danger zone given the degree of leverage involved and the correspondingly huge impact even one hedge fund collapse would have. I am expecting a deflationary spiral of involuntary debt liqudation to begin this year and continue for at least the next several years. Anyone who shares this view of the future should be in cash (demand for cash should ironically be good for the dollar). I wouldn't want to be Ben Bernanke right now, as he's likely to get much of the blame for the developing debacle.
    I am expecting a deflationary spiral...  

    If this is true wouldnt you want to own an instrument of duration , like a 30 year treasury bond that will appreciate in face of deflation?

    No, I wouldn't want to own 30 year bonds - I personally wouldn't go for anything with a maturity greater than about 3 months in order to guarantee liquidity. Buying 30 year bonds would mean betting either on the probability of Uncle Sam repaying those debts in 30 years time (pigs will fly first), or finding someone else to buy them from me before then.

    I think we will see interest rates rise substantially as the bond market demands increasing risk premiums, which means that later bonds of only marginally longer maturity will be paying a higher rate of interest. I would expect that trend to continue for quite some time, which would depress the price of 30 year bonds bought now at a low risk premium. It might eventually  depress them enough for long bonds to become effectively illiquid, but even if that did not occur it would still be necessary to sell them at a substantial loss. Capital preservation is the name of the game in a deflationary crash, which means cash and cash equivalents IMO. I would expect investors to go from worrying about the return ON capital to worrying about the return OF capital.

    30 year bonds are extremely liquid - you can get in and out in the cash or futures market for 1/32 of 1%. If you expect deflation, the longer duration instruments you have the better. Credit risk aside. Period.

    If interest rates rise dramatically, then how are we in a deflationary period?

    Personally, I think PO brings on deflation first (as you say), because of worldwide recession or worse. Then once demand recharges due to lower oil prices, etc. and we are that much beyond hubberts peak, the early stages of hyper inflation set in.  Therefore Id be bullish on bonds short term and bearish long term

    If interest rates rise dramatically, then how are we in a deflationary period?

    Because the money supply will be contracting due to (largely involuntary) debt liquidation.

    I know that 30 year bonds are extremely liquid right now and it would take a crisis of epic proportions evolving over a long time to alter that. I wouldn't rule that out completely, even though I don't regard it as likely, especially any time soon. What would be more likely in the shorter term (IMO) would be falling long bond prices due to over-leveraged investors selling the family silver, so to speak, to meet margin calls or pay off other debts.

    By the way, I agree with you that hyperinflation may well follow deflation.

    I am in agreement with Stoneleigh. I also don't think it is possible to know the mid-term (let alone long term) ramifications, which is why our money is in short term CDs.

    Let's say it's 1928, and you have a pretty good idea what may be coming; the best thing to be in is cash. The more liquid and safe the better. By 1932, you can buy just about anything  you might want with far less money than it costs presently.  

    If I wanted to hold cash in a period of uncertainity, it would not be US $.

    If a single currency, it would be Swiss francs.  However, a good argument can be made for a nasket of currencies, but half the basket should be CHf !

    The balance of payments issues are NOT going to disappear.

    but unless you buy a futures contract, or actually fly to switzerland and open an account, any exposure to swiss franc is in a dollar denominated account!!
    Try an EverBank account.
    My portfolio is built around this.  

    Hydroelectric utilities produce something that competes with NG, is an essential economic good and does not deplete.  And they pay dividends (unlike gold).  Geographic diversity.

    Railroads provide an essential economic activity while using far less oil than their competition.  Even if overall transportation demand drops, they can grow and one day electrify.  Some diversity and they pay dividends.

    US based exporters of mainly noncyclical products will be helped with a weaker US dollar.  Some diversity (medical products & heavy industry) and small dividends.

    And one multinational with an interest in renewables, GE.

    A different approach than just buying gold, and more flexiable.

    what railroads do you own Alan?  I own RAIL, which is partly owned by a former client of mine - they make aluminum rail cars which means an engine can carry more cars of coal than traditional cars. But I own no rails directly but see the validity of it.

     And nice to meet you by the way in DC. Sorry I didnt have more time...hope it was worth your trip

    Sorry we did not visit more.  

    Most rail I own is FLA, Florida East Coast Railroad.  They might "sell" southern tip to public for a better commuter rail/Urban rail for 1/2 to 3/4 billion $ AND still get to use it for freight (more so at night/weekends).  That is a 50% to 80% kicker to total value.  They also own lots of Florida real estate (mostly commerical which is better than residential) which I am uncertain about.  Well managed.

    And a small bit of Genessee & Wyoming, a collection of short haul lines ALL over.

    Almost bought Norfolk-Southern but it ran away from me.  Should have but ...

    ATM, I am waiting for ECA at about $40.  Bought some recently at 45.01

    I dividend reinvest everything.


       Interestingly there is no mutual fund that is built around rail (which would include GE in my opinion as they make locomotive.)

    Florida and Genesee are not rated high - both are given a 3 rating (1-5 with 5 being bad) on one table I work from.

    CSX is an 1, as is Norfolk Southern, and the two Canadian rail companies. I think that is in part due to the increase in their ability to haul truck trailers long distances which will become more and more important.

    Personally, I would hold off on ECA until the high or late summer. See where NG is then.

    If we have an average to mild summer and no hurricanes disrupting production, we should saturate storage (perhaps not 100%, but enough that buyers will be looking for bargains).

    That will be the time to load up on ECA and sell other assets to buy more.  But the above conditions may not come to pass.

    So I will buy a bit more at ~$40 if it drops that low.  And more below that.

    FLA does a good business with intermodal truck business (partner N-S).  And the market overlooks the long term potential of selling the southern tip of it's ROW (while still using it outside commuting hours).  High PE due to real estate holdings.

    Genessee has more track per $ of share value than anyone else,  This potential can be exploited as fuel costs rise.

    Both are long term holdings.  FLA will not sell ROW before 2008 and likely 2010+.

    As I said I ALMOST bought N-S (limit order in from memory) but it took off and I did not chase it :-((

    A selection of RRs is often the best way to go.  Each is unique in it's own way.


    It appears you have a good insight on the RR stuff. I certainly agree that a mix of RR is good.

    As a sleeper, and it is good for me thinking good green thoughts/feelings, I like Railpower Technologies (RLPPF) and the Green Goat switcher locomotives. I was amazed to see the number of 1950 technology switchers that are out there - The DOD has 800, many from that era. I think the figure for Union Pacific is 500.

    I was trying to investigate passenger / trolley car manufacturers like Bombardier and Skoda.  Both are diversified manufacturers, however, so it's not a pure railcar play.  Any thoughts from you or Jack on this?
    Forgot to mention two shares of Berkshire Hathaway B (Warren Buffet) and some in Corning Glass (strong position in a diverse technology centered on glass).  Exporter as well.

    Absent are consumer products (some exposure via GE), retailers (some exposure via Berkshire). auto makers.  One Canadian reaource producer/real estate company that owns a lot of hydro (BAM).

    All in all a defensive portfolio where different parts will do well under different scenarios. All should retain value as long as we have a money economy.  And I have no moral qualms about what any of them do.

    Alan, have you had to a chance to review my figures?  I have to confess, I'd like someone to look over the NEI figures, (http://www.nei.org/documents/Energy%20Markets%20Report.pdf, see page 7) which they got from a 3rd party.  I haven't been able to find a comparable overview of planned generation capacity elsewhere, and yet I'm puzzled by their wind figures, which are higher for 2006 than the AWEA figure of 3 GB.  At this point I'm assuming a bias, perhaps caused by the inclusion of projects which have been announced but not started, a bias which I'm assuming is the same for the other fuel sources.  That would allow a comparison, which is all I want.

    Anybody seen an analysis of overall new electrical generating capacity planned for 2006, 2007, etc?

    No, and I want to.  I am heading out the door for a couple of days in the country.  Will review them next week.

    Yes, I follow AWEA #s as best source.  They are a bit slow in logging new projects (I have seen announced projects take 3 months to get on their list), but otherwise good #s there.

    $14 NG surely got more projects going ! :-)

    Please note that you can't click through on the NEI URL because this website included the comma at the end in the URL, so you'll have to cut and paste.

    Alan, I saw your comment after I finished posting the previous one..

    I should add that I'm not too bothered by the discrepancy I discussed above - the difference is only one years worth of growth, which is currently above 50% per year.  At this rate ( doubling every 2 years or less) wind installations could easily be at 35 GB per year in 7 or 8 years, which would provide 2.2% growth in electrical production (after figuring in load factors, you get 10GB production increase relative to a 450 GM average load), and provide for all new needed generation. Then the only problem is intermittency, which could be handled by the storage provided by PHEV's and just a little innovation in demand management.

    I find this analysis both realistic and reassuring.

    Hydroelectric utilities produce something that competes with NG, is an essential economic good and does not deplete.

    Uruguay produces 80% of its electricty from hydro. They've recently had to restrict usage because of a drought. While hydro may not deplete in the sense of being gone forever, it can substantially diminish depending on weather conditions. Who know what the fate of various hydro facilities will be as global warming changes precipitation patterns.

    Very reasonable comment. The wind industry (also Alan's favourite) is also in danger, at least long term.
    Brazil had the same problem a few years ago.  They built some thermal plants which are idle in wet years and used seasonally in normal years.  Full blast during droughts.

    They are currently "over building" hydro (Iceland also does this) and this will restrict thernmal plant use even more.

    One has to look at all the factors and decide how much insurance to buy, by building standby thermal and over building hydro.

    This in why it is a good reason to geographically diversify hydro holdings.
    US based exporters of mainly noncyclical products will be helped with a weaker US dollar.

    Unfortunately my bet here is that the military will be the best investment among them all. I'm not such buying stocks though, probably for idealistic reasons to some extent...

    Do you expect interest rates to rise dramatically?  Wouldn't the Fed lower short term rates dramatically?
    IMO the bond market will effectively tell the Fed what to do, not the other way around. The US needs foreign funds and foreigner investors will demand an appropriate risk premium on long bonds.

    The Fed may drop its short term lending rates, but deflation will result in high real interest rates even if nominal rates are very low. When inflation is positive, subtracting inflation from the nominal rate of interest in order to determine the real rate yields a smaller number. However, when inflation is negative, subtracting it from the nominal rate yields a larger number. Even nominal rates set at zero can represent a high real interest rate when inflation is negative. (As the Japanese discovered, zero percent interest may not be low enough.) High real interest rates are why debts become such a millstone round one's neck during deflation while savings appreciate in value (as long as they aren't held in a bank which collapses, because deposit insurance wouldn't be worth the paper it was written on if we see bank failures).

    Even nominal rates set at zero can represent a high real interest rate when inflation is negative. (As the Japanese discovered, zero percent interest may not be low enough.)

    Exactly. And in the 90s there were HUGE returns from owning fixed income long duration bonds in Japan. If you bought at 3% and sold at 1% you more than doubled your money.

    It's certainly possible that the same thing might happen in the US for a while, but knowing when to get out might present a challenge. I'm sure the professionals will play that game, but I would rather not gamble with what I can't afford to lose. I don't think dramatic interest rate rises would happen quickly, at least not with treasuries (I do think it would happen quickly with junk bonds, and many more bond issues are likely to acquire that status over the next few years IMO). The widening of credit spreads in a flight to quality could even depress long term treasury rates for a while, but ultimately long term rates are likely to reflect increased risk and prices are likely to fall as desperate over-leveraged investors sell everything in order to stave off bankruptcy. I don't have a good feel for the relative timescales though.

    I would be interested in discussing your views on the financial situation since your background has involved being much closer to the 'coal face' than I - an observer rather than a participant - have been. What do you think of the future of hedge funds for instance? How severe do you think the consequences of a hedge fund collapse would be?

    I think whatever surprises in store for the planet will be surprises (sounds like Yogi Berra). The nature of markets is very lemming-like. My historical success was when i followed trends, irrespective of what I thought the fundamentals said - I am VERY bearish US stocks, but wont invest heavily that way until they start to crack (acutally have recently).

    The combination of Peak Oil and hedge funds have the ability to bring down the system. Most are still stock based but derivatives have positive feedback loops in the system as a whole. Im not sure I beleive in the "Plunge protection Team" that suggests if things get out of balance there exists a deep pocketed government entity to take the other side.

    I do know, that in pursuit of the modern metric of inclusive fitness, economic growth and the digitized bank account score cards, many multi-millionaires have 100%! of their assets in 'digits' and zero in real assets like gold, garden, bicycles, bullets, trees, fish, etc. This tipping point could happen relatively quickly if the financial intelligentsia take Richard Rainwaters viewpoints seriously. Alot of money could be chasing semi-rural retreat land, even in the face of general real estate malaise. Most will be deer in the headlights though.

    Bottom line: peak oil ultimately will spell end of capitalist system (perhaps 10 years post all liquids peak), but other financial land mines loom before that (Iran, Russia, global warming, US dollar, trade deficit, bird flu, etc). Interesting times. I think US mkt will hold up until the last moment then the exits will seem pretty small.

    Your near Hamilton right? Im coming through there next week -do you shave your dogs in summer?

    LOL! Shaved huskies would really be a sight to see! They shed their winter undercoats in summer, but keep their guard hairs all year round. Right now there's dog hair in the very air you breathe in my house sometimes because it's shedding season. I have to keep vacuuming the coils under the refrigerator or they become very well insulated indeed. I do shave my sheep and alpacas in summer, but the dogs get to keep their dignity.

    I'm not near Hamilton I'm afraid, I'm in rural eastern Ontario. Whether or not you consider that to be close depends on your perspective (being British it still feels like a long way to me). It would be several hours drive at least, but if you're in the neighbourhood (relatively speaking) then feel free to drop by.

    For what it's worth I don't believe in a plunge protection team at all. I think it's just a convenient myth that the Powers-That-Be find helps prop up confidence, or complacency depending on how you look at it.

    Devil's Advocate time hehe!

    Over on That Other Site, among the 9-11 conspiracies, quests for girlfriends, and other Weekly World News junk, there has emerged a gem: One of the more intelligent posters has unearthed some Kunstler rants about Y2K. Now, doing this is not easy, which is why this stuff hasn't emerged to the ligtht of day since, well, Y2K. It's all been expunged from the internet 99.999% of us get to see. However, it's been dug up, and is there, plus a rare intelligent conversation on it, for the rest of us to see, at least until Kunstler starts suing.

    The long and short of it are that Kunstler's been making a tidy little living off of ranting about whatever people have been worried about for quite a while. Suburbia, Y2K, these days it's Peak Oil and them damn ay-rabs.

    This is not to say the suburbs aren't rather miserable (I'd choose them over the city any time though if I were raising kids!), Y2K wasn't a real problem (that was fixed) and Peak OIl isn't real, I guess it's just that no one heard Deffeyes or Heinberg ranting about Y2K.......

    I don't see how the fact that JHK is making a living from world  problems, makes PO "unreal" problem. Y2K was real, though perhaps exaggerated (for obvious reasons). PO is also real and at least IMO with potentially much harsher consequences than Y2K.

    Personally, I have put JHK in some farway corner of my mind, where reside some wacky scenarious of the sort "what will happen to suburbs if we get a revolution in SA, and a war in Iran and a fascist govt, determined to get rid of its own people by starving them to death through hyperinflation or whatever, all at the same time...".  

    I prefer not to dismiss such ideas, but I also do not spend a lot of time concentrating on them. I assign them the same probability as to the scenario where PO goes by unnoticed (which is obviously not a truth already) and try to cope with them in terms of being prepared for the worst while hoping for the best. Which is the worst case to prepare for is a whole science of balancing costs vs. benefits and I guess everyone does different calculations for themselves.

    Kunstler is more than a bit wacked (IMHO), but he can be vastly entertaining, which is why I periodically read him.
    He is a very talented writer. My guess is he believes about 50% of the stuff he writes, the rest is written to get a response and attention.
    I'd not say he's talented, but he's mastered a certain sensationalistic style. And he's even useful, in getting people who've never thought about PO at all, to think about it. Sort of like the Rich Dad Poor Dad guy is useful for waking up people to financial thinking if they've never done it at all. Some noisemaker has to sound the alarm. (I understand Kiyosaki has changed from being a real estate booster to a real estate bear, you can read about his career at johntreed.com)

    I just think it's funny that these old files have been  dug up, I'll have  to repeat this for some of you; I don't remember Deffeyes for instance going nutzo over Y2K. He was busy studying oil production.

    Ok, I'll bite...what's this "other site?"
    Links are always nice. Maybe these are what fleam means...
    Fringey forum on "other site" (N.B. this doesn't look like the sort of link that will stay valid for long.)
    Post about Kunstler article.
    Actual Kunstler Y2K Doom Article:
    ...I certainly haven't changed my view in the past year. Only I now see Y2K as the mechanism that will force events to a tipping point much more quickly and surely. Over the next year, many elements of "normal" American life are going to hit a wall of dysfunction. The need to change ways of doing business will butt up against a desperate desire to preserve business as usual. These events will challenge our democratic institutions...
    I guess his "tipping point" has yet to be reached.
    yes there are similarity's between y2k and peak oil. both are due to lack of foresight, but that is where the similarity's end.
    y2k as you should know was caused by programmers who needed to save every bit they could so they decided to use a two digit year in their software and not a four digit one. the fix was simple but just time consuming. fixing y2k had some advantages over peak oil. mainly; tptb had the most to loose in that without electronic banking they would of lost their wealth, one did not need to follow natural laws to understand the problem and work to mitigate the impact of it.
    so basically your post is nothing but a ad-honiom
    Two thoughts... one, the urgency for the fix wasn't so much from business, it was the auditors/consultant community who certified systems. They were in a once in a lifetime position to make a "killing". Two, at least in my own code-work, date routines weren't scattered willy-nilly through code, they were maintained in libraries and called. That was pretty standard  procedure way back into the 1980's, even for analysts (as I was). The true pro's were Nazis about proc-libs. So the mystique of scanning millions of lines was, for the most part BS.

    I did enjoy Kunstler's Y2K rant, though. It's sort of like early craft. A warm-up for where he is today. I would be most pleased if he took the opportunity to comment on it. I think he's big enough to poke some fun at himself, or at least... rant on the rant.    

    Re:  Kunstler & Y2K

    Making predictions is a tough business.  Everyone makes mistakes.  I think that you have to look at the totality of someone's track record.  In regard to Jim's PO/Çlimate concerns, just look at the oil price spike and weather catastrophes that we have had since his last book came out.

    Also, you have to look at the quality of Jim's "fan base."  First and foremost in that group is Richard Rainwater, who has a long track record of consistently making accurate--and extremely profitable--predictions.   Rainwater turned every dollar that the Bass brothers inherited into one hundred dollars.  

    But don't you think it would be nice if Kunstler were more forthright about his past mistakes - like by keeping his failed Y2K predictions online at his own website so that people who want to take his present prognostications seriously have the Y2K stuff available as a benchmark?
    I was expecting, through watching The Energy Bulletin.net, that there would a gradual, perhaps linear (or even exponential) awakening of the MSM about the reality of Peak Oil.

    Instead, a number of heavy hitting publications are coming out strongly against the reality of PO.

    The senior editor of The Atlantic weighed in by saying

     " There will be enough fuel from those sources to meet the world's needs as far into the future as one cares to look--even if no brand-new energy-producing technologies emerge anytime soon."

    Harpers (sorry, I can't figure out their website) just published a hack job by Greg Palast called "Heavy Hitter" centered around this graph from the EIA pg. 18, showing oil production more than tripling to 2055, then crashing by 70% in 20 years.

    What I find interesting about this graph is what it represents about our society's desires. It obviously is "optimistic," in that it pushes the peak as far off as possible, which is what is desperately desired. However, the drop off is so steep that it is unlikely that civilization could avoid collapsing. This then, should it make it "pessimistic," in that it is predicting long term doom.

    From this, it would appear that the members of our society don't really care if their children and grandchildren are plunged into one of the great disasters of human history, as long as they won't live to see it.

    (P.S., I spent half an hour trying unsuccessfully to get the graph onto this comment. Could anyone point me to instructions as to how to load graphic elements? Thanks)


    "I was expecting, through watching The Energy Bulletin.net, that there would a gradual, perhaps linear (or even exponential) awakening of the MSM about the reality of Peak Oil.  Instead, a number of heavy hitting publications are coming out strongly against the reality of PO."

    The "Iron Triangle" at work again.  Having said that, the Dallas Morning News, one of the targets of my "Open Letter" missive, has asked me to write a 900 word Op-Ed piece.  The planning to publish pro and con Peak Oil columns.  We will see if they follow through.  I'm finishing up the draft of the Op-Ed piece this weekend.

    Speaking of the media, I highly recommend two articles in the 5/29/06 issue of Barron's--one on the unfolding collapse in second home prices (down 40% in some markets) and the other an interview on gold.   They have a very good chart showing oil in terms of dollars and grams of gold--pretty interesting.  

    The gold interview was with james Turk.  The headline of the interview is "Yes, $8,000 an Ounce."    

    Excerpt:  "There are problems with the dollar, and that's being reflected in a higher gold price.  So, truth be told, it's not that gold is going higher --it's that the dollar is going lower."  

    Turk is preditcting a strong possiblity of capital controls, i.e., the amount of capital that you will be able to move out of the US will be severely curtailed.  

    Hi Westexas,

    I know you would like that the MSM start to talk frankly about the PO problem but I think they are going trough the same patern everyone has when dealing with it.

    They are in rebutal/bargaining phase.

    Before, they were just in denying, wich is much profond then rebutal.  Denying implies doing nothing at all.  Dont even bring the subject (pro or con)  They don't argue, it is not on their radar.

    When in the rebutal phase, they will come up with lots arguments against.  It will then elevate the status of the pro PO because they will have a confrontation.  That confrontation trough the media will leave people ponder the possibilities and wondering if it were really true.  

    For that matter, I'm against pink elephant.  Now I tell you all to stop thinking about a pink elephant.  Pink elephant are not true, we are eons away from having a pink elephant.

    How many of you are not thinking of a pink elephant?

    That is the point.

    (replace pink elephant by peak oil, there you have it)

    Following is the "con" argument regarding Peak Oil that I am responding to.  I am building my case based on HL, Texas/Lower 48 and the North Sea, with some quick comments on unconventional.  I am only allocated about 900 words.  

    By Ron Bailey

    The Princeton geologist Ken Deffeyes warns that the imminent peak of global oil production will result in "war, famine, pestilence and death." Mr. Deffeyes, author of 2001's Hubbert's Peak: The Impending World Oil Shortage and 2005's Beyond Oil: The View from Hubbert's Peak, predicted that the peak of global oil production would occur this past Thanksgiving.

    Mr. Deffeyes isn't alone. The Houston investment banker Matthew Simmons claims in his 2005 book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy that the Saudis are lying about the size of their reserves and that they are really running on empty; last September he announced that "we could be looking at $10-a-gallon gas this winter." Colin Campbell, a former petroleum geologist who is now a trustee of the U.K.-based Oil Depletion Analysis Centre, warned way back in 2002 that we were headed for peak oil production, and that this would lead to "war, starvation, economic recession, possibly even the extinction of homo sapiens."

    And James Schlesinger, the country's first secretary of energy, declared in the Winter 2005-06 issue of the neoconservative foreign policy journal The National Interest that "a growing consensus accepts that the peak is not that far off." He added, "The inability readily to expand the supply of oil, given rising demand, will in the future impose a severe economic shock."

    Even some traditionally calm voices are starting to sound panicky. In March 2005, the New York investment bank Goldman Sachs issued a report suggesting that oil prices would experience a "super spike" in 2006, reaching up to $105 per barrel. ChevronTexaco's willyoujoinus.com campaign, featuring a series of full-page newspaper ads that urge Americans to conserve energy, flatly declares, "The era of easy oil is over."

    Such forecasts have been bolstered by a steep rise in oil prices over the last three years, going from $18 a barrel in 2002 to $70 last fall. If the price of something goes up, after all, that means it's becoming scarcer.

    The good news is that the peak oil doomsters are probably wrong that world oil production is about to decline forever. Most analysts believe that world petroleum supplies will meet projected demand at reasonable prices for at least another generation. The bad news is that much of the world's oil reserves are in the custody of unstable and sometimes hostile regimes. But the oil producing nations would be the ultimate losers if they provoked an "oil crisis," since that would spur industrialized countries to cut back on imports and develop alternative energy technologies.

    Predictions of imminent catastrophic depletion are almost as old as the oil industry. But most of today's petro-doomsters base their forecasts on the work of the geologist M. King Hubbert, who correctly predicted in 1956 that U.S. domestic oil production in the lower 48 states would peak around 1970 and begin to decline. In 1969 Mr.. Hubbert predicted that world oil production would peak around 2000.

    Mr. Hubbert argued that oil production grows until half the recoverable resources in a field have been extracted, after which production falls off at the same rate at which it expanded. This theory suggests a bell-shaped curve rising from first discovery to peak and descending to depletion. Mr. Hubbert calculated that peak oil production follows peak oil discovery with a time lag. Globally, discoveries of new oil fields peaked in 1962. The time lag between peak global discoveries and peak production was estimated to be around 32 years, but peak oilers claim that the two oil crises of the 1970s reduced consumption and thereby delayed the peak until now. Mr. Hubbert's modern disciples argue that humanity has now used up half of the world's ultimately recoverable reserves of oil, which means we are at or over the peak.

    The prophets of oily doom are opposed by preachers of energy abundance. Chief among the latter is the energy economist Michael Lynch, president of the Massachusetts-based Global Petroleum Service consultancy. "Colin Campbell has the worst forecasting record on oil supply," says Mr. Lynch, "and that's saying a lot." He points out that in a 1989 article for the journal Noroil, Mr. Campbell claimed the peak of world oil production had already passed and incorrectly predicted that oil would soon cost $30 to $50 a barrel. As for Matthew Simmons, Mr. Lynch dismisses him with a sneer: "Petroleum engineers know a lot more about petroleum engineering than a Harvard MBA."

    One petroleum engineer-- Michael Economides of the University of Houston--calls peak oil predictions "the figments of the imaginations of born-again pessimist geologists." Like Mr. Lynch, Mr. Economides, who worked in Russia to boost that country's oil production in the last decade, rejects Mr. Simmons' analysis. Saudi Arabia, which currently produces about 10 million barrels of oil a day, "is underproducing every one of their wells," he claims. "I can produce 20 million barrels of oil in Saudi Arabia."

    So who's right? Fortunately, it looks like humanity is at least a generation away from peak oil production. Unfortunately, there could be another "oil crisis" any day now.

    The world consumes about 87 million barrels of oil per day, or nearly 30 billion barrels of oil per year. How much oil is left? It's hard to be sure. Proven oil reserves--i.e., oil that is recoverable under current economic and operating conditions--are estimated to be 1.1 trillion barrels by the industry journal World Oil, 1.2 trillion by the oil company BP, and 1.3 trillion by the Oil and Gas Journal. In March 2005 the private U.K.-based energy consultancy IHS Energy estimated that the world's remaining recoverable reserves, excluding unconventional sources such as heavy oil or tar sands, are between 1.3 trillion and 2.4 trillion barrels.

    But are proven reserves all that's left? Several analyses put ultimate reserves at much higher levels. For example, the USGS undertook a comprehensive analysis of world oil reserves in 2000. It calculated that the total world endowment of recoverable oil is 3 trillion barrels, and that the total world endowment of conventional oil resources is equivalent to about 5.9 trillion barrels of oil. Proven reserves of oil, gas, and natural gas liquids are equivalent to 2 trillion barrels of oil. The USGS calculates that humanity has already consumed about 1 trillion barrels of oil equivalent, which means 82 percent of the world's endowment of oil and gas resources remains to be used.

    In its 2005 Energy Outlook, ExxonMobil estimates "global conventional oil resources total 3.2 trillion barrels...with non-conventional `frontier' resources such as heavy oil bringing that total to over 4 trillion barrels." In November 2005, the International Energy Agency, an organization created in 1974 by 26 industrialized countries to assess global energy issues, released its annual World Energy Outlook report, which accepted the USGS numbers and concluded that "the world's energy resources are adequate to meet projected growth in energy demand" until at least 2030.

     The report predicted that oil production would grow from the 2004 level of 82 million barrels a day to 115 million barrels a day and that any "peak" would occur after 2030. At the Montreal Climate Change Conference in December, Claude Mandil, head of the International Energy Agency, declared: "We don't share the tenets of the peak oil theory. We feel that they underestimate technological developments. For many decades to come there is no geological problem."

    Probably the most respected private oil consultancy in the world is Cambridge Energy Research Associates (CERA) in Boston. On December 7, 2005, CERA senior consultant Robert W. Esser testified at a House Energy and Air Quality Subcommittee hearing on the peak oil theory. "CERA's belief is that the world is not running out of oil imminently or in the near to medium term," Mr. Esser said.

    Peak oilers discount these rosy scenarios, insisting the relevant fact is that new oil discoveries have been falling during the last couple of decades. But the petroleum optimists, such as the analysts at the USGS, say there is more to it than that. They point out that reserve growth and new discoveries have been outpacing oil consumption. (Reserve growth is the increase in production in already discovered and developed fields.) The increase in production is a result of improved recovery technologies, further discoveries in the field, and improved field management.

    By 2004, technological advances enabled engineers to recover 35 percent of a conventional reservoir's oil, up from an average of 22 percent in 1980. If this recovery factor can be increased by another five percentage points, that would boost worldwide recoverable reserves by more than all of Saudi Arabia's current proven reserves. Mr. Economides points out that in 1976 the U.S. was estimated to have 23 billion barrels of reserves remaining. In 2005 it still had 23 billion barrels of oil reserves, even though American oil fields produced almost 40 billion barrels of oil between 1976 and 2005.

    So if the world has adequate oil supplies for the next generation, can we all go back to driving Hummers? Not so fast.

    The International Energy Agency calculates that $3 trillion must be invested in oil production and refining facilities during the next 25 years to meet world demand in 2030. In principle that target could easily be met, since producing 1 trillion barrels at $30 per barrel yields $30 trillion in income over 25 years.

    The problem is that the vast majority of the world's remaining oil reserves are not possessed by private enterprises. Seventy-seven percent of known reserves belong to government-owned companies. That means oil will be produced with all the efficiency associated with central planning. Michael Economides estimates, for example, that it will take $4 billion in investment to keep Venezuela's oil production at current levels. Yet that country's Castro-wannabe president, Hugo Chavez, is investing just half that.

    If ChevronTexaco, ExxonMobil, or other private companies actually owned the reserves, the world would be in a much more secure position with regard to oil production. Instead, we are subject to the whims of figures like Mr. Chavez, Russia's Vladimir Putin, and Iran's Mahmoud Ahmadinejad, and must worry about the doubtful stability of their personalities and regimes. In the mid-1990s, the world had more than 10 million barrels per day of spare production capacity. That figure has fallen to between 1 and 2 million barrels, which means that any significant disruption in supplies can cause prices to soar.

    Mr. Economides worries that the conventional wisdom that oil-producing countries do not want to cause a global economic recession is wrong. "The danger posed by the axis of energy militants--Venezuela, Iran, and, increasingly, Russia under President Vladimir Putin--is that they could not care less," he says. "These militants hardly have functioning real economies whose workings would be adversely affected by a recession." Mr. Economides' views looked prophetic when oil prices jumped to a three-and-half-month high after Iran's threat in January to retaliate against any United Nations sanctions imposed to curb its nuclear ambitions by cutting its oil exports.

    Despite the recent jump in oil prices, the world's economy has not slowed down. Why not? Goldman Sachs notes that oil is less important than it was a generation ago. At the height of the Iranian oil crisis in 1980-81, paying for gasoline took up 4.5 percent of U.S. GDP and 7.2 percent of U.S. consumer expenditures. In 2005, even though U.S. gas prices peaked at $3.07 per gallon after Hurricane Katrina, only 2.6 percent of GDP went to pay for gas and consumers spent only 3.7 percent of their incomes to fuel their cars and SUVs. Goldman Sachs believes gasoline prices would need to exceed $4 per gallon before consumers really started to cut back.

    As the oil crisis of the 1970s demonstrated, while the demand for oil is inelastic in the short run, consumers do eventually adjust to higher prices. U.S. oil consumption declined by 13 percent between 1973 and 1983. According to Frederick Cedoz, vice president of the D.C.-based energy and political risk consulting group Global Water and Energy Strategy Team, "We get three times more GDP out of a barrel of oil than we did in the 1970s."

    The higher prices of the 1970s led eventually to an oil glut and prices below $10 a barrel by 1986. Should one or more of the "energy militants" choose to deploy the "oil weapon" again, they will cause considerable economic pain to the developed countries. But detonating the oil weapon would end up disarming the energy militants for a generation, after consumer cutbacks produce a new glut.

    One day, the oil age will end. As with all resources, there is ultimately a finite supply of oil. So it is not yet clear how the world will power itself for the bulk of the coming century. But we have at least another three decades to find alternatives to petroleum. "Trusting markets is the only way we can assure energy abundance in the future," notes the University of Houston's Economides. "It's also the only way that we will ever transition to something other than oil and gas."

    Ronald Bailey, the science correspondent for Reason magazine, is author of "Liberation Biology: The Scientific and Moral Case for the Biotech Revolution" (Prometheus). This essay was adapted from a longer version available online at www.reason.com.

    That shouldn't be too hard to respond to.  It basically has 5 arguments:  1.  Proven oil reserves are highest ever.  Stuart's "Do Oil Reserves Prove Anything" from a month ago or so showed how reserves are always highest right before a peak. 2.  There are many non-conventional reserves.  We all know that non-conventional are not going to be producing enough to make up for depletion and they all rely on cheap and plentiful natural gas supplies to make then usable. 3.  The USGS estimates there are 5.9 trillion barrels of conventional oil.  Not even the USGS believes the USGS anymore.  4.  CERA believes that the world is not running out of oil imminently.  PO doesn't claim that were running out of oil imminently. 5.  Technological andanves increase production.  Maybe, but they do not increase URR and just make the decline more severe.    
    I would bring out your comment about the "export capacity" of these countries.  That should make the tin roof a little hotter.
    "Most analysts believe that world petroleum supplies will meet projected demand at reasonable prices for at least another generation."

    This Fox-News-like statement would appear to be a fault line in the column.

    A line (or paragraph) like this is inserted in every anti-peak article I have read. It is one of the reasons I began to find the subject very interesting (starting in 2002).  
    It's striking how Bailey never actually says what the doom he is refuting is supposed to be, beyond that one fleeting sentence: "production falls off at the same rate at which it expanded".  He just drives straight on to the more assailable question of "when", and then (this is "Reason" magazine?) makes a run right out of the ballpark towards this "axis of energy militants".
    Ah, Russia, Venezuela and Iran, then new axis of evil!

    My experience is that some people actually click onto what p.o. is when you mention the "We've already picked the low-hanging fruit" analogy. That makes sense to them and is easy to visualize.

    Consider starting with the following.

    Take yourself back in time.  You are a Texas oilman in 1972.  You are justifiably proud that Texas oil production has just hit yet another record high, the Xth record in as many years. (or 11th record in 13 years whatever)

    Then this analyst hands up a forecast for the next ten years.  Prices will skyrocket to 10 times today's world price. GREAT !
    Texas will have the greatest drilling boom in it's history.  Of course.
    The number of producing wells will increase by 14%.  H'mmm, Probably a bit low.
    Texas oil production will fall by 30%. WHAT !!! You are a charalton (spelling) and a D**N FOOL !

    Yet you have just been handed the most accurate forecast in history, but like Cassandra, no one believes the prophecy.

    L.King Hubbert, a senior geologist at Shell, predicted an oil production peak for Texas in 197x, the Lower 48 US in 197y and a world oil production peak in 199z.  He was right two out of three times with a global statistical analysis that assumes that the largest oil fields will be found first and exploited first and the smallest fields last.  So, no matter how hard be look at the end; all we will find will be ever smaller fields.

    Our conservation after the oil shocks of 1973 and 1979 reduced demand below Hubbert's predictions and has apparently shoved the world production peak into the future; but how far ?

    It is now clear that production of the best oil, light sweet, is declining worldwide.  It follows that the peak for the least desirable crudes is not that far off and that total crude production (good & poor quality) will peak before that.

    Much has been written about the promise of Canadian tar sands, but they will increase, if all goes well, from 1.2 million barrels/day today to 3 million/day in 20xx.  Etxracting and upgrading tar takes VERY large quantities of natural gas, and supplies of that are limited.

    Peak Oil will be seen in the rear-view mirror, it is difficult to predict PRECISELY when it will occur.  But it will be soon and the peaking of light sweet crude is an ominous sign.

    The second and third highest producing oil fields in 2004 are now both in decline.  Remember Prudhoe Bay ?  Now at 20% of it's peak and falling quickly.  Great Britain is now importing oil again as the North Sea declines 5% every year.

    It takes time (20 years would be ideal) to prepare for a decline in world oil production and the Peak is likely to arrive and leave before we are ready for it.

    If we are ready for Peak oil two or three years early, there is only a small cost.  But if we are slightly late, it will damage the economy.  And the later we get serious, the worse it will become.

    Anyway that is my first draft suggestion.  No word count !

    I woudl like to talk with you.  Please send me your phone #.

    Best Hopes,


    WT I like Alan's begin tack + your personal experience in the oilfields, as ways of  connecting  with the readers.

    He presents a no. of facts- I read only quickly- that seemed accurate.Maybe you can build off his(he doesn't have yours?). I think your theory on  export decreases + political might catch someone's attention.I hope you'll include some mitigation , maybe personal prep. Listing the wells re decline is also something I have found more thought provoking with the  new to peak oil, lately. Good Luck, We'll look for a post?, link, copy.


    Great minds think alike.  I'll e-mail you my most recent draft. Bart, over the Energy Bulletin, suggested that I eliminate as many numbers as possible, which I tried to do.

    The Dallas Morning News guy was actually quite supportive.  He said that he really wanted to get my views into the paper.  (I may be in the process of being co-opted into the MSM!)

    << One day, the oil age will end. As with all resources, there is ultimately a finite supply of oil. So it is not yet clear how the world will power itself for the bulk of the coming century. But we have at least another three decades to find alternatives to petroleum. "Trusting markets is the only way we can assure energy abundance in the future," notes the University of Houston's Economides. "It's also the only way that we will ever transition to something other than oil and gas." >>

    So 100 million young Saudis read this and their first thought will be "it's back to the camels when I get to middle age".  Markets are made up of willing buyers and willing sellers, and I just don't see how Saudis will remain willing to maximize production and sell their sole asset, their future, over the next 30 years.

    "By 2004, technological advances enabled engineers to recover 35 percent of a conventional reservoir's oil, up from an average of 22 percent in 1980. If this recovery factor can be increased by another five percentage points, that would boost worldwide recoverable reserves by more than all of Saudi Arabia's current proven reserves."

    One of my persistent complaints about the imminent Peak Oil argumentation is the lack of attention paid to claims by Cornucopians that improved technology can substantially increase overall recovery percentages.  Bailey does not merely make this claim, but backs it up with what appears to be solid evidence.  900 words is not much to work with, but I think this is an important issue that warrants a 100-150 word rebuttal paragraph.

    "The problem is that the vast majority of the world's remaining oil reserves are not possessed by private enterprises. Seventy-seven percent of known reserves belong to government-owned companies. That means oil will be produced with all the efficiency associated with central planning....  If ChevronTexaco, ExxonMobil, or other private companies actually owned the reserves, the world would be in a much more secure position with regard to oil production. Instead, we are subject to the whims of figures like Mr. Chavez, Russia's Vladimir Putin, and Iran's Mahmoud Ahmadinejad, and must worry about the doubtful stability of their personalities and regimes."

    It looks to me like Bailey is trying to condition the minds and hearts of the masses for the eventual military takeover of these places by the US so that ChevronTexaco, ExxonMobil, Halliburton, etc., can reap profits beyond the dreams of avarice.

    Talk about the MSM not covering peak oil.  I read that there is a new episode on the "If" series on BBC2 this tuesday May 30 called "IF THE OIL RUNS OUT"


    Since I live the USA I hope that some UK residents can watch it and report back.  From the write up on the web site, it does not sound as if the overall message will be denial.  Good for the Beeb.

    Will do, but I think some other UK TODers have got the gist of the program and think it won't be very revelatory. Probably Peak Lite or Peak Very Lite. I'll post my comments in a DrumBeat, probably Wednesday's one or late Tuesday depending on time zones. I am sure other UK TODers will add a few comments of their own.
    Jim, there was a short discussion about posting images here http://www.theoildrum.com/comments/2006/1/15/05035/7522/7/
    There is a guy I know who works for an engineering consulting company for the power generation industry.  The other day, he showed a couple of us the Harper's thing - it was the first I had heard that Harpers even had something in there.  I didn't get a chance to look at it closely, but it didn't really impress me much.  

    This guy's (the one I know, not Palast) mindset is that with tar sands and other such unconventional sources that we will be fine - that peak oil is nothing to worry about.  He is also of the opinion that there isn't a natural gas problem - that LNG imports will solve any supply shortfalls (ignoring the question of how much LNG there will be to export).  I suppose what I get from him is the mindset from the power generation industry.  No need for wind power - plenty of coal, natural gas and all the rest.

    The Harpers thing was really a two-page spread, talking a bit about the Orinoco stuff in Venezuela.  I asked him about Vanadium and other metals in the stuff, and it was clear he knew the stuff had real problems.  I don't know what it would realistically cost to process and turn into a clean fuel, but it can't be cheap.

    TOD readers understand the context for gasoline price increases better than most, if not the actual causes. On Thursday, the Harris polling organization released the results of a survey that reveals what the rest of America thinks.

    It shows that many Americans seem more willing to fund the increased costs by cutting back in other areas rather than driving less.  A quarter of respondents were cutting back on groceries to buy gasoline.

    Harris asked who or what was the biggest influence on rising prices.  Well over a quarter of the respondents fingered world oil prices and other relevant factors. With the numbers below adding to 88%, however, some people were not prepared to say.  Maybe these were the peak oil supporters, because that phrase doesn't occur in the Harris report.

    Two in five (39%) adults think that the profits of the oil and natural gas industry have the greatest influence on rising gas prices. Just over one-quarter (27%) say the greatest influence is from world crude oil prices; smaller numbers say it is due to instability in oil producing areas (7%) and federal and state taxes (6%). Lingering refinery outages from last year's hurricanes is cited by five percent as the greatest influence on rising prices, while upcoming changes in fuel requirements (2%) and other refining costs (2%) were also cited as having the greatest influence.

    Opinions on who might be able to stop the price rise are divided.  Still, a surprising proportion thinks consumers can.

    When asked who can best stop these rising gas prices, one-third (34%) of adults think the oil and gas industry can do so while 29 percent believe the federal government has that ability. One in five (22%) think consumers can best stop rising gas prices while very small numbers say state and local governments (3%) or the automotive industry (3%) can stop the rise of gas prices.

    Most people think we haven't seen the end of rising prices.  Three-quarters think that gasoline prices will be higher by Labour Day, and 81% think that the heating bills for next winter will be higher than for the season just passed.  This is a good context for the self-fulfilling prophecy.

    I just took a similar poll online the other day, except mine was from Gallup.  It, among other things asked to what extent you thought each of a list including Bush, the Democrats, Republicans, Congress, the oil companies, etc., was responsible for high gasoline prices.  Nowhere in the survey was there even a suggestion of Peak Oil being a factor.  At the end of the survey there was a space to make a general comment, so I sent Gallup the following message:

    "The real cause of gaoline prices was, unfortunately, not even referred to in the survey.  This is Peak Oil, which is imminent; crude oil production will be levelling off then gradually declining in the years ahead.  Demand continues to rise and supply is unable to keep up, and soaring prices, then actual shortages are the result.  This is inevitable, for more on this, check out www.theoildrum.com"

    Antoinetta """

    Speaking of surveys, I saw one on CNN, not sure if it was their poll or somebody else's, but the question was: What is the cause of the high gas prices?  A. Price gouging or B. Supply and Demand.
    What would you guess the percentages would be??

    86% A     14% B   sigh......

    It brought to mind the results of a study a few years ago by the National Science Foundation.  The decided that 87% of the adult American population was effectively scientifically illiterate. I think they were being too kind myself, but the similarities are perhaps more than coincidental.
    Then again, the result of the new Zogby 911 poll are quite interesting and, I think, surprising.  Don't quite know what to make of that...

    And people wonder why the rich get richer and the poor get poorer. The rich see the future and know where to invest - the poor are more interested in the next Idol winner. sigh again.
    What do expect non-energy geeks to say?  They see news articles everywhere about oil company profits and a $400,000,000 retirement package for Lee Raymond, so they know for a fact a lot of their money is flowing in that direction.  And they have no ready source of information about oil supply and demand, so they jump to the easy, obvious conclusion.

    Try this on a non-energy geek friend: Ask him or her how many barrels of oil the world consumes every day.  Let the person take a few guesses, then tell them 85 million, and watch the look on his or her face.

    You can repeat this exercise with consumption of natural gas and coal, or the emission of CO2 (5,781 million metric tons/year from the US alone), or the production of high-level radioactive waste from nuclear power plants (2,200 tons/year).  


    Try asking them gallons of oil. A barrel doesn't have any emotional impact to people. But we all use gallons to measure gas so they have some understanding of what a gallon is and thus the impact is even bigger. 42 gallons per barrel times 85 million barrels = 3.2 billion gallons of oil per day.

    That's almost 42,000 gallons per second.



    I think this comes from Tzerkan book: one olympic swiming pool full of oil is drained every 15 seconds.

    I would like to film a swiming pool like those being drained and then edit the speed of the movie, paint the water black and make a infinitum loop, convert the movie to a web format and put that in a webpage.

    I know he had a 9/11 poll in 2004. What are the results of the new poll?
    Matthew Simmons' May 8th 2006 presentation here...


    that was quite sobering. His analogy near the end of gas tank not having guage hit home.