Thursday open thread

Some suggested reads: 1. First off, we received a heads up from someone at the Council on Foreign Relations on this piece of theirs on gas prices (and then we said "holy crap, we're on the CFR mailing list?!"); 2. Good piece from Tom Whipple at FCNP (hat tip: Energy Bulletin); 3. The Energy Wars over at Newsweek; and...

... let's not forget to remind TOD readers in the Washington DC corridor of the Sustainable Energy Forum 2006 on Peak Oil and the Environment to be held May 7-9 at Washington, DC's Marvin Center. Please attend if you can, it's going to be a great conference. We know at least one TOD contibutor will be there, maybe two. [editor's note, by Prof. Goose] And, while you're there, say "hi" to Megan Quinn of Community Solution for me. She does great work...and she might be pretty close to the perfect woman. (but don't tell her I said that last part, please...)
Ha!!! New thread virgin territory!

I'm curious about something...TOD has been showing graphs on a monthly basis illustrating the "bumpy plateau" that we've been in for the last 18 months or so, but the graphs only go back a few years. I'm curious to know if there have ever been periods in the past, say, quarter century where a similar phenomenon existed? In other words, is this plateau truly new, or has there ever been a similar plateau period in the past?


Yes in some ways it is new and yes in some other ways it is not new - there are been other dips and plateau. And yes this has been before, in fact just yesterday.  See yesterday's discussion of Stuart's graph and look for Oil CEO and Stuart's response about 2/3 -> 3/4 of the way down in the comments.
Ah, you must mean this one.
Are you from Anderson Valley?
Past plateaus and dips have been due to drops in demand related to the US recessions of the 80s and the Asian recession of the 90s. The current plataeu is due to an inability to increase production.
Something that Tom Robertson of EnergyResources pointed out to me was that Howard Odum made an impression with congressional decisionmakers in the early 70s on his concept of net energy (EROI) to the point that there are actually laws on the books regarding it:

P.L. No. 93-577, Section 5(a)(5) part of the Federal Nonnuclear Energy Research and Development Act of 1974

"The potential for production of net energy by the proposed technology at the stage of commercial application shall be analyzed and considered in evaluating proposals."

wondering if we should hire a lawyer and sue Archer Daniels Midland....(of course the details of how broad the definition were never clarified, to my knowledge)

Hello theLastSasquatch,

To me: this is just more proof the topdogs in D.C. have known about Peakoil for years.  After Pres. Carter's initial efforts, our elected officials have taken us in the wrong direction.

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

Yes, the idea of "The Limits of Growth" was very well known in the '70s and the notion that also oil and gas will deplete was accepted. M. King Hubbert predicted at that time that conventional oil would peak in 2000. He was pretty well at the target, conventional, light oil peaked around that year. Now we speak about non-conventional oil, extra heavy, tar sands etc. These have much lower EROEI than conventional oil. The lower margin EROEI (EROEI of additional production) explains some of the oil price hike (price tell also something about the energy inputs). And we add some "non-oil" (NGL) in the all liquids numbers and count this as oil. This is just forging the statistics.

In fact the predictions of the '70s have been quite realistic. The main error of the authors of "The Limits of Growth" was that they didn't understand the primary role of the energy resources, but treated all natural resources as  equally potential constraints of growth. With energy it is possible to substitute one raw material with others and boost food production - but you cannot substitute energy itself. Byt the way, the Club of Rome has developed its World Model all the time, but running it crashes the simulated world just as before... (

Now, if "everybody knew", why nothing was done? A lot was actually done. There was quite ambitious alternatives reasearch - so we know already a lot. That is why there is not as much interest on that reasearch now as some could expect. There was wide discussion about alternative fuels, but the results were just the same as now: nothing much to gain there.

The Club of Rome and Limits of Growth approach was later discredited by claiming that the expected catastrophe didn't happen. Well, they gave us about 30 years of good time before we would see the impacts of the global resource depletion. So here we are.  

I would recommend reading the 30 year update. I've started and it appears to be very objective. It's not just focused on oil though oil may be a very effective limit to growth.
I am starting to wonder whether we will really witness the end of suburbia as described by Kunstler. I am sure some suburbs will be emptied, but other suburbs seem ideal if there is a social collapse.

If you split the suburbs into three categories

  1. inner suburbs - on the east coast, many were built during the 50s, 60s and have evolved into satelite cities themselves. Many have (or had) rail systems linking them to the city. Ex. Towson MD, Vienna VA
  2. outer suburbs - newer suburbs that require lots of driving. Scads of 1 story strip malls etc.
  3. exurbs - suburbs of the suburbs, communities built far from everything, many of them tiny islands of mcmansions surrounded by farmland. (or farmable land)

It seems to me that the inner suburbs and the exurbs would fare best after peak oil. I suppose it will really come down to the rate of oil's decline. If we have a slow squeeze, the exurbs would be hurt more. With a sudden collapse I wonder whether people would have time to leave the exurbs.

I suspect we will have a slow squeeze for a few years and then a sudden collapse.

I believe the exurbs (as I described them) will actually be a desirable place to start a new town. The McMansions can be converted to multi-use or multi-dwelling buildings. Use the streets for open air markets and the surrounding vacant land to grow food.

I don't wonder about the death of the 'burbs at all--I'm convinced it won't happen.

The economics of the situation very strongly favor keeping the 'burbs alive and adjusting our transportation capital and patterns to match.  If the 'burbs "collapse", as Kunstler and many others keep saying, what exactly does that mean?  People just walk away from their homes?  If they sell, who would buy if things were that bad?  About the only buyers I could imagine would be farmers, who wouldn't pay anything near what the current owners would want for the property.

Right now, a lot of people who live far from their jobs are hurting because of high gasoline costs.  But they've barely begun to exploit the first-order conservation measures: Trading in (one of) their current vehicle(s) for something with much higher fuel efficiency, car pooling, reducing non-work driving, etc.  They don't need a Prius--trading in an SUV or mid-size car for a Yaris or Fit would yield a big drop in monthly gasoline bills.

Those steps will make a huge difference, and will buy the people in the 'burbs several years, very likely enough to stretch until electric cars go mainstream, around 2010, possibly sooner, depending on gasoline prices.  Once that happens, expect many people in the 'burbs to take the next step and adopt EV's in droves for their commuting cars, and the 'burbs are effectively saved.

If hydrogen fuel cells pan out down the road, fine.  If not, people in the 'burbs, who very often have more than one car/household, can limp along for quite a long time using 150-to-200-mile/charge EV's (and that's a pretty conservative estimate on the range, given recent battery advances) for most driving and a gasoline car for those rare, long trips.

Frankly, I don't think that people like Kunstler realize just how far society in general will have to collapse before we see the widespread disappearance of 'burbs.

Just a quick thought on cars--the people in the suburbs are facing increased gas costs, increased mortgage costs where they have ARMs, increased heating costs, and increased food costs.  They owe money on their SUVs; the SUVs will be worth zilch on trade-in or for sale, so they can't get out of the payment.  How are they going to be able to add a new car payment on top of all these costs to make this smooth transition?
Yes, this is particularly scary.

I believe that high inflation is the answer:

High inflation would do the following:

  • Reduce government debt
  • Reduce consumer debt
  • Fix the housing bubble
  • boost sales of US exports
  • jumpstart domestic manufacturing (imports would be more expensive, exports would be in demand)

Maybe it is time to buy gold and silver.

It won't reduce all consumer debt.  Credit cards will just boost the interest rate.  The only way you come out ahead is with fixed-rate debt.
Yes - one of the questions is just how far over-extended are most of the people who live in the exurbs?  I often have the impression of people working 2 jobs long distances away, and leveraged up the wazoo with variable rate debit.  But I don't know how much of this is really true.

Also, if we run electric light rail lines to these communities, they will remain viable to some extent.  I would expect them to eveolve into actual towns if they are to survive.

If the dollar collapses overnight you don't need to worry about credit card debt. We are in completely uncharted territory.
The most dangerous words in financial booms are "This time it's different!". But the bust after the boom is always different. Compare 1900+, 1929+, 1966+, and 2001+. Each was different.
I think that is what will happen, but the big downside is that it will mean the US becomes much weaker internationally (ie other countries can buy up US industry very cheaply). I would expect the administration to resist that by putting in some form of control on purchasing (whether ad hoc, as with Unocal recently, or more systematically). But we then get the worldwide abandonment of free trade, and the re-run of the 1930s....
Don't expect to have an administration that would do anything like that. If something hits the media in a big way (like the Ports story or China buying an oil company)they will block it for PR gain but basically the days are long past when the USA was concerned about where the money comes from. In fact, with the exception of some tax havens like the Caymans, the global elite have more control over the USA than any other first world country and they have no intention of giving it up.  
I think TPTB will eventally choose to cut the credit fueling the American way of life. I think we will face conditions much like the collapse of other unsustainable frauds like the UUSSR and Argentina. I think a depression and loss of confidence in the currency are almost guaranteed. I think energy is the new standard for measuring wealth.
Kohesion -

You should have gotten in to silver and gold last year - the price for each has almost doubled this year....and oil companies have also done really well...

I actually did start last year. I wish I had started in 2001 when my paranoid (I thought) economist friends told me to.
I got in last year as well. My savings portfolio is split between precious metals (gold/silver mainly) and energy (oil sands, coal, and "big oil").

I think this up cycle still has a long way to go.

i dont think big oil is good investment - too many risks of overspending with declining net energy and being nationalized - small- medium north american plays are better

One of the replies to this situation that is starting to occur here, though I am not sure at what scale, and does require you not being up to your neck in debt - i.e. some disposable income that you can maneuver with is:

Buying a third car. I spoke with a couple yesterday in which both used their vehicles for work (not just to commute). Hers was a good Toyota, his a Silverado. He needs his to make deliveries occasionally. That is the operative word - occasionally. So he is thinking of a Prius for his regular work car and call on the Silverado when he needs it (1 day a week?).

To haul your boat or trailer, you need the gas guzzler, so maybe we just up the number of vehicles at home.

Lou... your answer to Kunstler is buy another car. He must be rolling on the floor laughing.
"If they sell, who would buy if things were that bad?  About the only buyers I could imagine would be farmers, who wouldn't pay anything near what the current owners would want for the property."

Selling is not the only option. You can default on your mortgage and walk away from the home. It's an economically rational thing to do anytime the value of your home falls far below the mortgage amount. Lenders spend a great deal of effort figuring out exactly when, why, and how people "choose" to default.

The "suburban wipeout" theory posits that many defaults would occur simultaneously, flooding the markets with repossesed homes and further depressing prices, leading to still more rational defaults. With their paper equity lost, and their credit scores in the garbage, home "owners" would need to seek alternative living arrangements (renting) and would likely have far less spending power for things like riding lawn mowers, plasma tvs, H-3s, etc. Voila, demand destruction.

"Flooding the market": There is an assumption there that the McMansion will be fit for sale...

If I've lost my service job, or likly to, maxed out my credit cards, and staring down the barrel of Repo. on the house with no equity build up why not "strip" the asset I "own" for cash rather than just give it back to the bank "as is"?

Gut out the water pipes and electrical wires for the copper scrap, sell off the high end bath and lighting fixtures to a "dont ask dont tell"  contractor for reuse, same with that high end kitchen stuff like the granite countertops and Stainless dishwasher and cooktop.

Next to go is that "floating floor" system thats wall to wall in the whole place (hardwood plywood strips) they can be removed without destroying them, and sold off.

At this point its pretty much a shell, but you'd never know from the outside...

Now I'm down to the "dive bar" and sell the front door keys to a local hood looking to site his pot "grow" house or crystal meth lab (make sure to leave the main breaker panel in place for him to hook up his sodium lights to he'll pay more that way).

It'll be at least 90 days post default untill "they" send someone around to actually check the house, maybe longer if you get the demand letters fwd'd to a mail "dead drop" and spin them a line of bullsh*t, by which time I'm long gone out of state.

Maybe drug guy has burned it down by then and the fire insurance may actually pay off the bank, "who cares", I'm broke...

We really don't know what "big bad" looks like, but this story goes on now below the radar of main stream media in small quantity, no reason to think it won't scale up" in my opinion.

I've actually seen just what you describe, on several houses that were reposessed in the next cracker-box neighborhood over.  The family dissappeared, the grass grew to be thigh high, the house was gutted, local kids broke in and vandalized everything, you name it.  Even the kitchen cabinets, A/C unit, and toilets were gone.

When the bank finally found buyers, they had to renovate before they could even move in.

Can you send photos? C'mon. We love you. Or at least send me the photos. You know I never publish what is not my own. I totally protect sources on anything. I have armies of tanks protecting my flanks and your flanks. And you know I love tanks.
i get you, lou.  that all makes sense assuming a downward slope in oil production.  it makes even more sense if people get scared into action bt some geopolitical high prices before the true peak.

this "roving bands" stuff is maybe an exciting idea, but depends on a real production drop-off.

Re: Kunstler.  He has a range of predictions regarding suburbs in various regions.  Phoenix, Vegas, Albuquerque and other big soutwest sprawls have double and triple threats of commuting+water issues+greater dependance on air conditioning.  K is more optimistic about smaller cities that have better water situations.  
The post-carbon institute/Richard Heinberg vision of re-localization imo is the most realistic future.  Either as a conscious choice or even as the end result of simply allowing greater pressure to force us into a shift.  
I think there will be "refugees"--not unlike the people who lost so much in Louisiana and fled not realizing that they would never return--who will find that life just isn't working in the SW desert metroplexes.  It won't happen overnight, just as Detroit didn't die overnight, but it is basically dead now.  
Matt, DC
The Detroit suburbs though are very much alive. Southfield, MI is on a par with Beverly Hills, CA in per capita income. It is home to two owners of NFL franchises, the Lions and that other dead rustbelt city Buffalo.
What does Kuntzler say about enclaves of the super rich?
EVs are not "free energy".  In particular, batteries are very expensive both in money and in energy terms.  The batteries in a Prius are about $4000 to replace.  And they are relatively small.  Let's assume that a pure EV with decent range is developed with batteries that cost "only" $20,000.  And assume those batteries last 10 years.  That's $2000 per year, which at today's prices buys one 600+ gallons of gasoline, or enough to drive well over 20,000 miles in an economical ICE-based car.  And that's just the cost of the batteries, not the electricity to charge them etc etc.  And as energy costs will increase, so will the cost of batteries, since their cost is largely a result of the energy of manufacture.  (And if the environmental costs of handling all those chemicals were ever truly internalized, the price would be higher yet.)

Another point: EVs, like PVs, even if they pay off eventually, are a method of putting up a large investment up front, for savings years later.  People who are in dire economic straits, struggling in an unsustainable exurb, or in a national or worldwide depression, will not be able to make such investments.

I also don't understand where people think the power for all electric vehicles is going to come from. Electric grids everywhere would need 10 times the capacity. WE already have a looming electicity supply crisis before running electric milkfloats everywhere.
As for those people who think Prius batteries etc. will become cheap - not a chance. Powered pallet trucks are used worldwide for loading/unloading 2 ton pallets in warehousing. An old fashioned lead/acid battery for one of those suckers is £1000 - 2000
Electric grids everywhere would need 10 times the capacity.

This is simply not true. Even in gas-guzzling US we can replace all our light vehicle fleet with only a moderate expansion of the electric grid.

US gasoline usage ~ 9.5 mln.bpd = 665 GW x 15% (gasoline-to wheels efficieny) ~ 100 GW net power

So, if electric cars are 70% efficient (including recharging losses etc.) we will need additionally 100 / 70% = 143 GW to power them.

Currently the US electricity grid has 700GW peak capacity and is providing 450GW on average yearround. We will need to expand it by only 32% to handle the electric cars. Sounds too far from impossible, IMO.

Regarding battery costs you are both assuming that they will stay the same after batteries become mass produced by millions and after every car producer in the world starts investing billions in researching and improving them.

Unfortunately, EV's are not anywhere near 70% efficient. Try 30%-40%.
A link? A typical DC electric motor efficiency is around ~90% and the cycle efficiency in a lead-acid battery is 85-95%. Lithium-Ion batteries should perform even better. Yes there would be also losses in the charger, the transmission etc., but they will be less significant and the overall efficiency should be no less than 50-60%, IMO.

But even if we take the 30-40% as a worst case, it will translate in 250-333 GW needed additionaly. By building some additional power plants and utilising the current grid (recharging the cars at night etc.) the task would be well within reach. And of course we will have to learn to conserve - not such a pain to do, or a thing that would force you out of your home.

Perhaps you are equating fuel cells with storage batteries. 3-phase motors are over 90% efficient and batteries give back over 80% of charge. Coal plants are 30-40% efficient which is twice that of most car engines.
I also think suburbs will like as not turn into satellite mini-towns. Lots of land to grow stuff, more if you break up driveways etc., and those big houses can hold chicken coop, storage, etc.

I don't want to get started on Kunstler here, but I will say: Scroll down a bit in the clusterfuck archives to where he had to endure a day or so without electric power in his hometown.

What do you think will happen when people lose their jobs and begin to miss payments on their mortgages and cars?  Do you think that the bank will just let them squat there for free, until they "get back on their feet"?  Or do you think that it won't matter b/c the banks will be in as sad shape as the general population?

I have the feeling that many of the neighborhoods in the burbs and exurbs that no longer have viable work within a close radius will have trouble staying viable.  It is nice to talk about ripping up the concrete and roads to grow crops, and using 3 acre exurb estates, but I'd have to believe that the people who own them (the rich, the banks, etc.) would have something to say about it.

Does anyone know the historical presidence of the depression?  Were families evicted from their homes?  Did a higher population own their homes outright?  I think that the economic impact of job losses will be more devistating than the personal pain of paying more for a gallon of gas.

(this isn't so much directed at you fleam, as the rest of the thread.  I just had to fit it in somewhere.)

I look to the model of what happened post-WW II to pre-WW II housing.  With the help of several forms of g'ovt. support, people were induced to leave well built homes in established neighborhoods (with excellent commuting often times) to new built (and increasing poorly built) homes.  Once a few % of homes were abandoned, or the "wrong people" moved in, real estate values plummetted.  Entire neighborhoods were abandoned, with much lower density, to poor people.

In Phoenix, there is a bias against "old homes" (apparently old starts somewhere between 20 and 30 years) because they are  a problem to upkeep and they are "too small".  The current standard of construction is quite low and will not "hold up".

My prediction is that once growth stalls in Phoenix, the rate of shrnkage in population will match the prior growth.  The 20% of the labor force in construction will move away first.  Retirees, with limited transportation needs (and Phoenix has almost zero heating needs) will move close to the VERY limited light rail lines.  Existing homes will be rebuilt into multi-family housing.  Vast stretches will be row after row of mainly abandoned homes with the odd hold-out here and there.

Who wants to live in a neighborhood with 1/3 of the homes empty ?  1/2 ? 2/3 ? 4/5 ?

Declining urban services will drive more away.

Yes, electric cars will appear, but older, poorly constructed homes in empty neighborhoods will appeal to few.

There is a "stampede" herd mentality in real estate.  The herd has stampeded to Phoenix, they will stampede away just as quickly.

Yes, the suburbs and exurbs have lots of land, but did the developers leave the topsoil in place?  It depends on how much earth was moved to smooth out the building sites.  In the wake of converting rolling farmland to townhome developments, I've seen a lot of exposed orange soil just seeded with grass and covered with straw.  I wouldn't count an a quarter acre lot of that stuff being particularly fertile.

Even resodding won't return much topsoil, though it probably makes for a prettier lawn.

It could be even more barren under bituminous driveways and roads.  What is the effect of leaching that stuff into the soil for a few decades?

Whoever thought to snag all that topsoil will be sitting pretty.

The topsoil was trucked away, bagged, and sold at Garden Centers prior to construction. This strip mining of fertility is the first stage of "profit taking" in the process of suburb construction. 4" or so is put back down around the houses after build to "sort of sustain" the lawn sod.

"Rip up the roads" and start farming again? well fine, you'll find 6" of compacted gravel under the pavement, and infertile "sub soil" under that. I say infertile because it has no "tilth", no large size organic components to hold water, provide PKN to plants, or sustain soil critters (from microbes through to worms and bug larva, all of which are part of the working community that is soil.

Yes the top soil can be "rebuilt", but to do so in a way that will "scale" i.e. not just trucking in "good soil" from some other exburb strip mine, requires Pemaculture methods which are very slow.  You need to work back up a sucession of plants species that can grow on marginal and damaged lands until you can get it to the point of being marginal pasture (i.e. goats not sheep or cows) That will start getting some manure on the land which is good!

Then we can start the nitrogen fixing cover crops etc. Think in terms of a few millimeters of net topsoil buildup each year, with hard effort from skilled farmers. Maybe "Grade B" land after a century of proper management a a smile from mother nature!

The legacy of fertile soils is more valuable than we really know how to calculate in an age of overshoot and impending price spike demise of chemical intensive farming in my opinion, and the trashing of the now exburb lands of North America a crime against our grandchildren of huge magnitude.

But at least they will have plenty of work to do  < black humor

I am familar with the efforts to recover the degraded lands and environment left by their sheep farming ancestors.

Planting nitrogen fixing lupines (with a bit of fertilizer) is the usual first step, then shrub trees.

They have only been doing this for ~50 years, so they are still experimenting with the Steps 3 & 4.

Sure, we would expect different Permaculture choices for rehabilitation to be made in say Texas than Toledo, different again in Toronto. I was just trying to make the point that some folks "don't get" that the process of suburb creation does not just cover over the good land that was there with a thin layer of plastic and concrete that can be peeled off and we're back at "square 1", rather it more or less destroys the qualities of the place that allowed our species, and many others to make a living growing our food crops in it.
when i picture suburbs, i see typical lawn-shrub-tree landscaping on increasingly small lots.  and a lot of "yard waste" exported each week.  i'd think a garden club could bootstrap such a community with vegetables, fruits, and nuts pretty easily.  it's a smaller problem than acres scraped flat and left that way.
I suspect Kunstler would argue that exurbs are as bad as rural living.  He believes there will be roaming gangs of heavily armed people that will be hard for individual families to fight off, no matter how heavily armed they are.
How far can these roaming gangs move in a day? Without cars maybe 15 miles. How would they decide which way to go? Of the upper middle class expects these gangs to be mostly black teenagers so shoot first and talk later will be considered self defense.
The roaming gang theory is just a fantasy of racist enculturation.
How far can these roaming gangs move in a day? Without cars maybe 15 miles.

Who says they'll be without cars?  The "Mad Maxing" around scenario sort of implies that there are still cars.  

How would they decide which way to go?

Where the food is, presumably.  

Of the upper middle class expects these gangs to be mostly black teenagers so shoot first and talk later will be considered self defense.

In that case, white gangs will have no trouble at all.  ;-)

I don't think that would be an effective defense, anyway.  Farmers have a serious disadvantage against raiders.  They have a lot of property to protect, and a relatively low population density.  Raiders aren't planning to stay, so they'd be willing to do things settlers would be reluctant to do.  Shooting missiles at the house from far away.  Sabotaging water supplies.  Burning forests and fields.  Destroying infrastructure.

Tainter found that people moved closer to cities as collapse approached - because isolated farms and villages were vulnerable to raids.  I bet it wasn't just gangs of urban teens, either.  It was probably the armies of neighboring cities/states.  

Bikes, scooters?
Hi all.  The topic of using intermittent sources (ie. wind, solar) to provide baseline power came up yesterday, so I thought I'd post a question for you.

I've heard that states like Illinois have passed reverse-auction rules for selling electricity (buyers bid on how much energy they want and when they want it, sellers pick and choose the offers) that seem to be written to stamp out the use of things like wind power, which would normally be great for a region like this.  What are your thoughts on this?  Are there rules like this in other places you know of?  Perhaps rules beneficial to wind?

Disclosure: I'm not an energy-economist person.  I was told about the reverse-auction effect by someone who is.
It would seem to encourage installing a battery farm. Nickel-iron batteries are a good choice, from what I've heard -- if you can find them.
Yeah.  I'm hearing a lot about using renewables to charge up energy storage devices.  It'd just be nice if there was a good way to hook them up directly to the grid so that we didn't have to pay storage/retrieval penalties on the energy.
In regards to oil prices (and in turn gas prices), we seem to be following the rule of "2 steps forward, 1 step back".  Things ramp up and get everyone all excited and then there's a breather and prices relax just a bit, but not back to where they were.

It is a perfect example of the "slow squeeze" described earlier at TOD.

d'fly this is no secret, the only amazing thing about it to me is, how people really do fall for it, year after year. $2.50 gas would be considered really cheap right now.
Ya, you can almost hear someone saying "Hmmm...they seemed to tolerate $75 pretty well.  I'll let them rest awhile and then lets see what happens at $80.  I know we got to hit Demand Destruction at some price pretty soon."
Yeppers!! Of course it does beat the alternative, which is ppl getting all ticked off at how high it has gone, and being good Americans not blaming their SUV and how things are laid out to all but force the use of cars here - instead they'd firebomb city hall or some damned thing.

Hopefully the message does eventually sink in though. It did, over time, in the past. Look back over the last 30 years or so and you see big cars, small cars, big cars, small cars, big cars (the present and passing SUV craze) and we're just heading into small cars again.

As you note, oil prices dropped a little over the last few days but are bouncing back today.  Probably a lot of investors have a buy order for oil when it drops below $70 now.  All the cornucopian talking heads still fixate on the robust stockpiles are refer to the "fundamentals" supporting lower prices even though there are some "geopolitical risks" driving up prices.  The distinction between fundamentals and geopolitical risks strikes me as absurd.  Geopolitical risk is and always has been one of the basic peronality traits of the oil industry.  Geopolitical risk is as much a fundamental as stockpiles are at this point so the fundamentals do support the current high prices.
Good point. Another thing missed is that it has been a long time since the Saudis were not running full out. Anyone who thinks they will keep supplying at this level were prices to fall below $50 is very foolish.OPEC can no longer keep prices from rising but they still set the floor and the floor is rising every minute.
They are quite distinct. Geopolitical risk is not a fundamental because it is an abstract, you cannot put a number to it. Stockpiles can be counted as barrels.

Geopolitical risk is "felt" to be relatively high now, putting upward pressure on the price. Stockpiles are relatively robust(now), putting some downward pressure on the price.

The distinction between fundamentals and geopolitical risks strikes me as absurd.

Agree and disagree.  Some portion of the price of oil today is directly related to the U.S./Iran situation.  If Iran decides tomorrow to stop enriching uranium, a huge risk premium will evaporate overnight.  While "geopolitical risks," generally, are part of fundamental picture with oil, any particular geopolitical risk factor, such as Iran, is not.

Hence, it does make some sense to distinguish between the two.

JCK, no argument with you, it's just that I think we need to accept geopolitical risk as a fundamental, not as just some strange fluke.  To pretend that risks as a whole are temporary, as the cornucopians do, is naive.  Sure the Iran risk may improve.  Nigeria may improve.  Chavez may decide he loves George Bush after all.  But there will always be several risks factor by the nature of the game.  Maybe a hurricane, maybe tightening control by the russian gov't. Maybe a coup somewhere else.  The particular risks fluctuate, but without spare capacity they will be with us one way or another from here on out.
What were the risks between say 1992 and 1999?
You might find this link of interest, if you haven't seen it.

Some of the "risks" listed for 1992-1999:

UN sanctions threatened against Libya

Saudi Arabia agrees to support OPEC price increase

Nigerian oil workers' strike

Extremely cold weather in the US and Europe

U.S. launches cruise missile attacks into southern Iraq following an Iraqi-supported invasion of Kurdish safe haven areas in northern Iraq.

Prices rise as Iraq's refusal to allow United Nations weapons inspectors into "sensitive" sites raises tensions in the oil-rich Middle East.

My point was that (1) risk cannot be a fundamental since you cannot measure it in any standardized way like you can barrels of oil, and (2) that if you use comparative methods to measure it, 1992-1999 offers a good counter-example to today.

The list of risks that you present makes this clear. I'm assuming those risks were spread out over that (roughly) decade period. The geopolitical risks we face today alone are greater than all those combined by a factor of about 5.

I think part of the problem here is what people are using for a definition of fundamental. Because one feels that geopolitical risk has always been fundamental to oil does not in any way mean that it is "a" fundamental which is the way oil analysts would be using it.

Think of the the tech-stock bubble. When it was all said and done, investors started talking about getting back to using the "fundamentals"(i.e. P/E, cash flow, etc.) to analyze stock prices. Previous to this people were bidding up stocks  with no profits and no proven record to astronomical levels based on the notion that the "fundamentals" didn't matter anymore and we needed a "new way" to value internet/tech-stocks.

I don't think it really matters what you call it.  The fact is, outside factors like weather and politics have always been part of the price of oil.

And that's going to be even more true in the future.  The political risk, IMO, won't go down.  It's not a coincidence that the political risks are so high right now.  The fact that the oil supply is so tight has emboldened the oil producers, from Russia to Iran to Venezuela to Nigeria.  They wouldn't be doing what they are doing if oil were $20/barrel.

Of course, but this is somewhat of a tautology. You are saying that the political risk is high because the price is high. The price is high because the supply is tight. The supply is tight due, among other things, largely to what particular belligerent and important suppliers are doing - the same ones who are causing the geopolitical risk. Maybe tautology was the  wrong term, downward spiral of death is more like it ;-)

I'm a little more optimistic. I don't think the risk will go away, but our tolerance for it may strengthen greatly. And, personally, I think $60 $70/barrel is very cheap, by about $90.

The supply is tight due, among other things, largely to what particular belligerent and important suppliers are doing - the same ones who are causing the geopolitical risk.

I disagree. I think supply constraints are essentially geological.  Saudi Arabia or Kuwait can no longer open up the taps and drive prices down.  That's the essential difference.

See - there's a reason I have always liked you. I can use this line, finally.

"You just like to argue."

If you admit you've heard that, then we know each other. If not, I'll respond to contraints, essentially, and geological by Monday morning, Professor.

All this talk about "fundamentals" and doing things "by the numbers" is psycho-babble comfort noise. People like to hear high faluting noises that make the speaker sound as if they know what they are talking about when in fact the speaker is trying desparately to be as ambiguous as possible and say nothing.

Let's look closer at "P/E, cash flow, etc.". Earnings and cash flow are "numbers" babbled out by so-called accountants who claim to be following GAAP (Generally Accepted Accounting Principles). Well guess what? The accounts at Enron, at WorldCom and lots of other companies were spewing out comforting "numbers" ... so-called fundamentals. But everything was a lie. They used "numbers" to perpetrate a fraud.

The next time you hear a TV pundit start babbling on about "fundamentals" and the "numbers" and "expectations", these words should feel like finger nails scratching across the blackboard for you and not like a pigeon's comfort coo's. They should be red flags that you are listening to a fraud.

P.S. "Risk" has always been a "fundamental" of doing business. It's called "insurance premiums"  and it is a measurable number.

No disrespect to you Oil CEO, but even from the times that wooden ships were sailing across the oceans to deliver spices or other exotic commodities, business people have been obtaining insurance policies so as to hedge their gambles and thereby account for the above ground risks of storms, pirates (terrorists), etc.

Almost any argument in support of the TV psycho-babblers can "sound" good. It's "sound logic." However, when it is parsed and looked at under a microscope, one can see that it is filled with the seeds of horse manure.

As I said, if you hear a TV "expert" pontificating about the "fundamentals" being solid, the "numbers" being good, and "expectations" being met, alarm bells should go off in your head. Enjoy the show. But understand the sound of bullshit even though you can't smell its stink.

As far as I'm concerned the only expert on TV is Jack Bauer.
You got it. Torturing a new terrorist for the truth every week. Only on Fox. Thanks for the link.

Secret Post.

This is an excellent point, however many of you seem to be ignoring the salient point that the Hedge funds now have over $120 Billion dollars fueling the ups and downs of oil prices. They make money on the fluctuation. Maybe the answer is to restrict who can invest in oil futures, a solution that does not sit well with the uncaring, shortsighted,Capitalist scum who run the Hedge Funds. Supply and demand are not the driving features of this market, but rather manipulating the fears of the sheep.
     A perfect example is what happened to Natural Gas Futures in the California Energy Crisis engineered by the traders. The companies raked off huge profits both on driving up the price and watching it collapse. Hogs are slaughtered and sheep are shorn by their parasitism.
Actually oil prices have not fluctuated greatly since 1998. All the movements have been one way.
Wrong. Since 1998 they have doubled, then been halved, then tripled. Huge fluctuations.
When were they cut in half?  
Sept 2000 to Nov 2001
You're right. I should have said oil prices have not fluctuated greatly since 2001. My mistake.
Nobody would have caught it, except the graph burnt its way through my retina and onto the back of my skull. It only goes away when I'm looking at girls - then I remember everything.

Jack Bauer

On the topic of hedge funds, I have read a little about the players in these "funds without rules".  Basically, if you have enough money to get into one (like George Soros), you can pretty much play the game however you want.

Is it possible that governements can participate directly in hedge funds or would they have to work anonymously through a third party?

In the same vein of oil prices:

When the value of the dollar drops (as it has been recently), but the price of oil valued in dollars ($70.30 right now) stays the same, what is happening to the true cost of that barrell of oil valued in US dollars?

What is behind the recent loss of US dollar's value?  You would think this would be front and center news on sites like  I haven't heard much in the way of explanations.

One thing never mentioned is the oil price feedback mechanism. The higher the oil price goes (in US dollars) the lower the US dollar goes as the country needs to pay more for the imported oil.There are many other fundamental weaknesses of the US dollar, but the recent weakness is tied to the run-up in oil prices (and its large negative effect on the current account deficit).Not a pretty picture for the future of the USA.
Well, the principle reason for the dollar tending down is that we are not exporting enough. The cure for that is for the dollar to go down enough that we start exporting again.
Say, 80%?
But we will probably overshoot to 90%.
That is the MSM theory. In reality the USA's deficit is structural and would not right itself no matter how low the dollar goes. You can take the dollar down 90% and you will be exporting less than today (and oil will be priced at $700).
Concerning the falling US Dollar:

Some of the increase in the price of oil is due to the decrease in the value of the US dollar.  It is taking more dollars to buy the same unit of oil, but it's taking fewer euros to buy the same amount of oil.

I believe some of what is going on is the decreased holdings of US dollars at various national banks throughout the world.  What's replacing those reserves?  Gold, euros, and a basket of asian currencies?  You bet.  As I've heard a millions of understand the real driver of global activities....FOLLOW THE MONEY!!!!

The MSM (and the federal gov't.) do not want people to recognize this due to its ramifications.

And even though the IOB seems to have lost some steam, I keep feeling it's lurking below the noise.  Something is afoot here that is under the immediate radar.

The BBC is reporting that following Bolivia's nationalisation of it's oil & gas industry four South American countries have reached an energy deal.

The leaders of Argentina and Brazil have accepted Bolivia's nationalisation of its gas industry but want talks on future prices and foreign involvement. ...

"The important thing is that gas supplies for the countries needing them have been guaranteed and that prices will be discussed in the most democratic form possible between all parties involved," Brazilian President Luiz Inacio Lula da Silva said following the meeting. ...

Venezuela has South America's largest reserves of oil and gas, and it has pledged to help Bolivia in the nationalisation of its own energy industry.

BBC: South Americans reach energy deal

So here we have a South American Energy Pact to guarantee supplies with perhaps an exclusive regional price to be negotiated. I think this makes a nice corollary to westexas' net export capacity theory. Brazil, Argentina, Bolivia and Venezuela will be looking out for number one (or is that number one through four?).

With the Iranian Oil Bourse back on the table, regional conflicts in the Middle East, China's locked in deals and today's discussion about Russia, I'm wondering if this may be a signal that OPEC's days are numbered in favour of regional arrangements and perhaps the end of a single worldwide oil price.


Bolivia's reserves are mainly natural gas, and the main direction of imports is to Brazil.  So it's primarily a regional matter for good and sufficient reasons.
OPEC's days were numbered when they could not increase supplies enough to drive down the markets. The Iranian Bourse is the real reason that the neocon-artists are beating the war drums for Iran. How long until the U.S. dollar is replaced by the Euro? This will cause hyper-inflation and the collapse of the value of the dollar until we mend our ways. The Arabic and Farsi speaking world hates us for any number of reasons,and will preferentially give the business to their Persian colligues.
Dear West Texas,

In the thread about Friedman's call for a Third Party, you gave me this link,which I have given much thought to.

Re:  Texas Oilmen
Subject: What Are Two Texas Billionaires,
Richard Rainwater & T. Boone Pickens,
Saying About Peak Oil & Why Aren't You Listening?

As someone who leans towards being a "green democrat," I should be in favor of revenue neutral gas taxes, paid for by cutting the regressive payroll tax.

I should also be in favor of it because my wife and I are homesteaders with a fixed income, are not dependent on fossil fuels but are threatened by out of control urban sprawl.

We built our modest adobe house, off the grid, with our own hands; and we have a small orchard/permaculture garden.  But though we are 100 miles from Tucson, the bulldozers are only 15 miles away, and, barring a property crash and/or peak oil, they'll be wrecking our quiet stretch of desert within a year or two.    

I would love for gas to hit $5/gallon, for the yahoos who race down our country roads in their huge pickups at 70 mph to be constrained, and for the leading edge of urban sprawl to go bust. In fact, I see it as inevitable.

But I would prefer it be an "act of nature" rather than being something I needed to campaign for.

Let's face it, if we raise gas taxes, and Ford and GM gobust, we will be blamed, not nature and decades of bad management by Detroit.

Think of the hundreds of thousands of auto workers who would lose pensions and health care; the millions of car buyers who paid premium prices for gas guzzlers, the property speculators who would go bust, the construction workers suddenly unemployed.  

If I was a senator I wouldn't want these multitudes thinking that I was responsible for ruining their lives.  Ditto with the bond holders, and victims of a possible risk market meltdown.

In any case, politicians are scrambling to lower gas taxes; I think gas tax increases have no chance of becoming law.

Also, with Bush  dead in the water and Congress in chaos, I don't see much coming out of Washington before 2009. And by then presumably gas taxes would have become so erratic and expensive that people will start to put 2 and 2 together.

Unfortunately, without education they are liable to come up with the wrong answer.


Mr. West Texas, I believe the best thing that can be done is continuing education, by people like you and your friends, who have credibility and clout. And that is going to be extremely challenging. Peak oil goes counter to virtually everything we have ever heard from the media, political and economic authorities, and from the daily deluge of advertising.

America has a monumental amount of waste which will need to be wrung out of the system; but every person's waste is another person's job.

Most people have yet to reach the "anger and denial" part of Elizabeth Kubler-Ross's stages of coming to grips with reality. And when they do, I don't want to be in the way. And actively raising their gas prices is getting directly in their way.

Instead, how about an advertising campaign that shows the peak oil curve, and then superimposes that on the supply/demand price curve; then asks something like "if you know that your personal energy costs are going to skyrocket in the next few years, what will you do right now to prepare?" Or, "If you knew that gas will soon be $6.50 a gallon (which is what  other countries pay right now), how would that knowledge affect your decisions?"

Or something like that. The solution - if there is to be one -- must be based upon the actions of hundreds of millions of consumers; and these actions need to be based on reality, rather than myth. On personal responsibility, rather than government sponsored boondoggles.

Perhaps an educational foundation could be set up, with a whole list of very influential names attached, backing a very simple graphic message? And that image, with the right advertising, could become ubiquitous, unavoidable.

The message could be framed around Hubbert, to show that oil people have been working on understanding this problem for half a century. And now that the pieces of the puzzle are  finally put together it is imperative that the knowledge be promptly disseminated -- as a public service and a patriotic duty.

I'm afraid that in the absence of a very frank dialog, we're setting ourselves up for a massive "stab in the back" syndrome in the future.

As I'm sure you are aware, in World War I the Germans told their people up until the moment of surrender that they were winning. That massive break in the credibility of authority set the stage for the rise of the Nazis, who blamed the sudden and inexplicable defeat on Jews, socialists and other traitors.

Imagine what will happen after peak oil sets in, when the anger and denial in our country boils over. Much of what they've been told (and are still being told) will prove to be wrong. Years of work and investment will prove to be largely wasted, going in the wrong direction. The rage of tens of millions of citizens will most likely be aimed at oilmen, investors, the wealthy in general, the Republican Party (because they are in power), and George W. Bush. I suspect that Bush will become the scapegoat for peak oil, just as Nixon was scapegoated for Vietnam.

I urge all oil people to get massively involved in public education, or you risk becoming the primary scapegoats.  

Yours sincerely,

Jim Burke


My premise is that all of the negatives associated with a much higher Gas Tax/Energy Tax are going to come to pass anyway; therefore, why not accelerate the response, so that we can start preparing now?  

Also, we can now do a carrot and stick approach.  Note that I am not talking about a net increase in taxes.  I am talking about taxing energy consumption to fund Social Security/Medice instead of taxing the wages of lower and middle income taxpayers.   If we do nothing, we will have both higher energy prices and our existing Payroll Tax.

In the recent NYT article on how people were responding to higher gasoline prices, I was struck by the fact that just about the only people who sharply curtailed their driving were the ones who were financially incapable of buying gasoline.   I suspect that this is the pattern that we will see going forward.  

There have been some polls suggesting that if we present the Energy Tax the right way, i.e., as a way to sharply curtail our oil imports, the Energy Tax idea actually gets some positive responses.  As you said, the key is eduction.  We have to confront the  myth that we can have infinite growth against a finite resource base.  

For a description of the "Iron Triangle" forces aligned in favor of the status quo, see the following article:

"What the mainstream media are not telling you. . . "

Dear Westexas

Thank you for the response and added link.

From your energy bulletin report, it seems clear that oil imports are falling rather steeply, which accounts for the recent run up in gas prices. I would imagine that if this trend continues, gas may be $4/gal or greater by summer. If speculators try to profit by cornering the market (if they aren't already), this summer could see huge price spikes and gas lines  -- and a lot of enraged people.

Let's assume that at some point this summer prices go above $5/gal. Do you really think many of these people will see the benefits of a large tax on top of what they are already paying? Do you really think any any congressman or senator will commit professional suicide by proposing such a thing?

Do you really think Mr. Bush would sign a $1/gal gas tax into law?

What I am suggesting is that the huge price increases, which will change people's behavior (and possibly bankrupt Ford & GM) may be inevitable anyway. And could come our way much faster than any possible gas tax increase.

Pushing for any remedy is very consuming of personal time and  energy, and it is clear that you have given a great deal of thought to this, and have put an immense amount of yourself into this.

I am merely (and sympathetically) suggesting that you might reconsider the object of your attentions.

I am suggesting that by the end of the driving season, people's driving behavior may already be reconsidered.

I am also suggesting that tens of millions of people will be enraged, and it is of the utmost importance that this rage be redirected, or mollified by the understanding of what is really happening to them.

Right now, as you so clearly pointed out, the MSM is not telling people what is really happening. SO naturally they are going to suspect some sort of conspiracy, some sort of "stab in the back" by oil companies, businessmen and Republicans.

What I am suggesting is that you and your friends and contacts pool your resources, create an educational foundation, to bring the truth to the people.

Otherwise I fear an enormous, powerful, irrational, and very negative reaction, focused at all people involved in oil production and investment  -- unless those people follow Matthew Simmons' example and innoculate themselves through public education.

Yours sincerely,

jim burke


The reality of Social Security/Medicare is that it has to be paid for somehow, so why not tax energy consumption instead of wages?

However,  I am actually pushing two things:  the Energy Tax/Abolish the Payroll Tax idea and Alanfrombigeasy's Electrification of Transportation Proposal.

In regard to imports, IMO we are in the early stages of a global bidding war for a declining net export capacity.  Time will tell, but what we do know is that no large region has ever shown higher production than what they had in the vicintiy of 50% of Qt, based on the HL technique.  Deffeyes' work puts us past the 50% of Qt mark worldwide (for crude + condensate) and the top exporters are farther down the depletion curve than the world is overall.

Russians in response to attack by Cheney:

"Moscow has always suspected that the USA needs an enemy to maintain its identity. Now we have proof of it."

Things are heating up. 5/ixworld.html

On Lehrer Hour (think that's where I saw it) the Russians stated that Cheney's comments were totally incomprehensible.   Can't somebody shut that nut up?
Hello SuperG,

So the CFR mailed TOD this info?  Interesting, did they say why?  I read the article and related links, as far as possible: yada,yada,yada-- all stuff we have flogged before on this forum.  It seems that, if anything, they are trying to discount our analysis efforts:

Quote from initial CFR article: "Leonardo Maugeri, an executive at the Italian energy company ENI, recently wrote in Foreign Affairs that this is already starting to happen:"

generates this next CFR link: l
In other words, what little is known about the world's underground oil resources justifies a positive view of the future, not the alarmist vision of oil catastrophists. The pessimists assume that the world has been fully explored, that neither the dynamic of crude prices nor technological progress has any bearing on the "finite" nature of oil resources, and that consumption is bound to increase more and more, inexorably depleting the existing oil stock. Their pseudoscientific fatalism, camouflaged with quasi-sophisticated models, has ...
The article continues behind a paywall, so I did not go any further.  But it seems clear that they give no credence to the Hubbert Linearization Method and other statistical graphs that the widely admired TOD data freaks work so hard to generate.

So, do they know something 'special' about Peakoil, and are trying to clue us in, OR is it just run-of-the-mill elite propaganda trying to sidetrack our efforts?

Now what would be really interesting is if the CIA/NSA emailed TOD something to counter the CFR email!?!

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

So, do they know something 'special' about Peakoil, and are trying to clue us in, OR is it just run-of-the-mill elite propaganda trying to sidetrack our efforts?
Bob, you're asking exactly the same question I did...and I'll be damned if I know the answer.
Hello Goose,

Yeah, how can the US military have official position papers talking about Peakoil, and then the CFR having an opposing view?  Where does the IMF, WTO, CIA, NSA, KGB, MI6, MSM, OPEC, PNAC, MOSSAD, World Bank, Bilderbergers... endlessly on and on---> just where do all these groups stand on Peakoil, and why won't they give us the crucial data and the answers?

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

It's obvious TPTB know about peak oil. It appears that the plan is to maximize the power and wealth of those who control the oil. TPTB are incapable of taking any action that might undermine their own wealth and power. The greed for wealth and power has no limits. TPTB don't really want the stupid sheep to know what is going on.
Prof. Goose & Totonelia,

What I understood is that Robert Rapier has some knowlegde that convinces him that at present we are NOT at PO, yet. Some may just have amazingly interesting information of not publicly known new oil to come on line in a few years. RR has also stated that he cannot reveal that info, unfortunately.

Let's hope it is true.

Knowing where the exact peak is isn't going to help us. I think many agree that the optimal time to start preparing is far in advance of the actual peak.
The Peak might have been Dec 2005. However, the assumption that once the world is past the peak everything quickly goes to hell is yet to be tested. As an example, Germany's oil consumption is 22% below its peak reached in 1978 and the place is still holding together.
So far no month has surpassed Sept '05 so that is only peak we can be sure of so far.
Right.  And if we were in an artificial peak right now, then it would actually be good to keep us here (with taxes if the prices fall), because it's making alternatives become more cost-efficient.
I will have to paraphrase something else that Robert said, to-wit, that there is little difference between demand exceeding a slowly growing supply of oil and demand exceeding a slowly falling supply of oil.  In both cases, the price has to go up to equalize supply and demand.

The bottom line is that all of the large oil fields in the world, except for the Caspian Sea stuff, are old, and the Cantarell Field is a ticking time bomb about to go off right at our back door.  We are looking at the prospect of losing about 20% of our daily imports (from Mexico) by about the year 2010 (Khebab has posted some very good info on this).


Clearly demand outpacing supply(up- or downslope)should cause higher prices; I just argued, IIRC, that according to RR we have not reached PO.

But just as you & Khebab showed, the world is around 50% of Qt. I think we have reached PO. I thank you for everything you have posted here; it is very important to me. ELP advise in particular.

And indeed the USA is in trouble with shrinking net export capacity. But so are we in Europe, especially now the play on Iran is deteriorating. My guess is, and has been, war is inevitable, and high prices as well as diminishing US imports will be blamed on the consequent fall of ME oil production, not PO. I won't give a time lime, but expect the first nukes about the time Ghawars' spectacular collapse becomes appearant.

I agree there are many similarities between a supply/demand gap and peaking, but I think there is also a significant difference. As long as supply continues to rise, even slowly, pundits like Yergin can continue claiming more will be produced, the belief that the problem is temporary will get perpetuated, and the real solutions will be put off.

Once production is in fact clearly declining, I hope that the alarm bells will go off and the issue will be taken with the seriousness it deserves. I think there is a significant psychological difference between an ongoing, relentless decline and an ongoing, gradual increase that falls just short of demand. People only really react to a crisis, it seems.

I suspect that even in the face of an undeniable decline in production, the cornucopians will be in denial for years.

Look at the North Sea.  Peaked in 1999, but many did not believe it for several years. Some are still hoping that production can be raised with the right combination of technology and tax incentives.

And probably still will, 10 years from now.  Some people never come out of denial.
I've long believed that the CFR are not an august sanhedrin of illuminati but a random collection of clueless hacks.
Quotes like this one do nothing to change my view.
Hello Smekhovo,

I assume you have not googled the CFR yet:

Sorry, looks like a topdog group to me!

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

Oh, the suits are good all right.
But there's nothing inside them.
That's impressive.  Anybody know how people get to be members of this?  Do people in power join before or after they are in power?
Yeah.  No mention of depletion.  And take this part, which I guess is supposed to imply that the gas tax is a bad thing:

taxes currently account for about 19 percent of the retail price Americans pay for gas... That 19 percent is down from a 27 percent national average in 2003. But given the near doubling of the price of gasoline, the number of tax dollars collected from gasoline sales has risen in both real and absolute terms.

What the heck does "both real and absolute terms" means?  Did they mean relative and absolute perhaps?  (Great editing?)  And AFAIK, both federal and state gasoline taxes (in most states) are a fixed number of cents per gallon, not a percentage (wish it was!), which helps explain that drop from 27 to 18 percent they mentioned.  And which has led to the absurd idea in Oregon to tax drivers by the mile instead of the gallon, in response to a DROP in gas taxes collected (due to slightly decreased demand) while highway maintenance costs are soaring.  And never mind that taxing by the mile instead of the gallon would eliminate the bit of tax incentive we have now to drive smaller cars.

Alas the sheeple are mostly against the gas tax.  We had a big fight recently in Vermont over a proposal to raise the tax 4 cents a gallon (and specifically to pay for highway maintenance).  What we've seen in "letters to the editor" and call-in shows seems to indicate that people do NOT understand "revenue neutral", do not get that "fees" come out of the same pocket as "taxes", and so forth.  It's a completely emotional debate, and alas an indication of the stupidity with which this society will try and handle the real crisis ahead.

Michigan has a 6% sales tax as well as a 17 cent/gal tax. 3/4 of our sales tax goes to the schools.
The CFR is a large organization composed of a mix of neocon and neoliberal corporatists.  Only a small fraction would qualify as actual masters of the universe.  IMO 99% of the members are just along for the ride.  Katie Couric is a member.  Likewise most of the scores of thousands of CIA and NSA employees are Dilbertesque cubicle dwelling drones.  They spend a lot of time online, play office politics, go to meetings, and write a lot of memos.  The handful that actually do the field work are a small minority, and the dirty work is done by contractors not even on the official payroll.

In other works, getting email from someone at the CFR, NSA, or CIA is no big deal.  No reason to lose sleep.

Hello TODers,

WHAT THE HELL!!!  Can some members from down under tell me this clown is not serious?

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

"There's minerals there, there's gold, there's iron ore, there's coal, there's huge fish resources," he said.

"What you have to ask is: do I turn my head and allow another country exploit my resource or do I position myself in such a way as I'm going to exploit it myself before they get there?"
:Barnaby Joyce.

Hi Bob,

Mr J is a real 'Lord has given us dominion' kinda fella...

You have to love his 'logic'...  though I believe that the Antarctic (unlike the Arctic) has an International Treaty covering it... but then they don't seem to mean much sometimes.  I think recently countries without an offically recognised territory on the Antarctic have established some bases (on other territorial claims).  Anyway, with GW starting to kick in he'll be able to get at all that coal all the sooner! I was about to say that his electorate might be underwater - but he's from waaaay outback in western Queensland

Well if 'we' did take it, perhaps this time the concept of terra nullius might actually apply - unlike the first time.

You can send him an email through his website:

I should add that he probably is serious but he does add colour to the local political scene.
Dear Bob, Perhaps you could focus on some problems closer to home.

Water Supply A Mirage In Phoenix Arizona

Phoenix, a desert city, is becoming infamous for its conspicuous consumption of water.

"As cities in other parts of the West struggle to conserve water in the face of a drought that has been gripping the region for years, Phoenix is going about business as usual....Not only are there no mandatory water restrictions, but some people who let their lawns die from lack of watering are ticketed. Some homeowners associations are requiring lawns even to be kept up during winter....Phoenix isn't as vulnerable as some cities to running out of water because multiple sources supply the metropolitan area of about 3 million people....But even with the searing temperatures, including days on end of triple-digit heat in Phoenix and a lack of rainfall, you can sometimes almost forget that the nation's sixth-largest city rests in the middle of miles of sand."

Hello Realist,

Thxs for responding.  I have posted for several years in the Yahoo forums about Phx's water wastage, and also here on TOD where I have broached the subject covered in the Humanure Handbook.  I have posted info on AZ's water distribution system, specifically the Central Arizona Project [CAP], and our continuing drought and fire hazards.  I have emailed officials, local media, and posted on a local Phx forum.  It is very difficult to overcome denial here because the economy is booming and the ever-shining sun puts most people in a optimistic mood.  500,000 have moved here to the Asphalt Wonderland in the last five years.  Kunstler predicts we will be mostly ghost town in the future along with Las Vegas. I can only do so much to warn the locals, but I keep trying.

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

Realist - it is a global peak oil issue, and it is global warming.  ;-)
And to both of you here are some links on Melbournes (pop~3 M) response to water shortages.
Melbourne Water
Southeast Water
Savewater Initiative

From one of these sites...
"Are there penalties for breaching the Permanent Water Saving Rules?
The penalties are in the order of:
1. First offence $1,000."

Will similar intiatives by started for PO??

Does anybody know offhand why Nigeria's oil production dropped from 2.3mbpd in 1979 to 1.3mbpd in 1982?
 As much as I would like to attend this weekend's conference in DC, I am afraid that the price is admission is a bit steep for your humble working boy (that's me). Having been out of work for the past several months, funds are rather tight at present. As it so happens, I have just started work again recently, and look forward to being a part of our dynamic, global economy. Why, just the other day our glorious leader said the American economy is doing great. Now, if only the doom and gloom, liberally biased media would report that news, instead of all the "for sale" signs on homes and increasing foreclosures they seem to have fixated on, at least in my town. Damned commie sons'a'bitches!

Subkommander Dred

Heard some numbers yesterday from someone who works at the New York State Dept. of Transportation.  The bridge and highway project bids came in 24% higher than expected last year.  They said it was almost entirely due to higher oil prices.
That fits well with the recent news of the financial performance of trucking companies vs railroads. The railroad industry stock prices went up 50% in the last year; trucking only increased 10%. (from

I guess it is cheaper to maintain 2 steel rails and rubberless wheels, than 18 wheeled trucks which can only carry relatively small loads and require lots more fuel to run.

Hemp is biomass. Like corn or switchgrass or sugar cane.

There is no reason to think it will require any less cultivation and fertilizer than the others -- meaning, you're going to be doing less combustion in the future than you do now. Of whatever variety.

I posted this earlier.Corn is a poor choice of feedstock for ethanol. Hemp has 10X EROEI.
I suspect that corn talk is a result of ADM, Monsanto, and Cargill exerting political influence. Had this exchange with a friend on another site...

Soybeans ~40 gal/acre
Corn ~60 gal/acre
Mustard ~140 gal/acre
Jatropha~160 gal/acre
PalmOil ~650 gal/acre

algae 10-20000 gal/acre

Do a google on GreenFuel Technologies Corp ..
They've got a continuous bioreactor going commercial ..

The 'algae' folks claim that all motor fuels and
heating oil can be replaced with the equivalent of
500,000 acres of closed-loop algae production ..
who knows .. Ford also looked at Mustard plants as
a source of biofuel back in the day ..

and my answer, re hemp...

Hemp is a viable source of woody biomass, no deforestation necessary. In fact, while an acre of trees is about 60% cellulose, and acre of hemp is nearly 75%. How much hemp is necessary to meet current US energy needs? Somewhere between 10 million and 90 million acres, depending on how efficient the production is. Every year, the US government pays farmers (in cash or "kind") to not farm what they call the "soil bank", which happens to be about 90 million acres of farmland. The math is pretty simple.

Hemp seed oil is very similar to petroleum diesel fuel, and produces full engine power with reduced carbon monoxide and 75% less soot and particulates. Hemp stalk (different than the part that can make paper and textiles) can be converted into 500 gallons of methanol/acre. US energy consumption is responsible for 80% of the world's air pollution. The use of hemp biomass fuel would be a globally responsible evolution.

Hemp as Biomass for Energy

Tim Castleman

© Fuel and Fiber Company, 2001

Industrial hemp can be grown in most climates and on marginal soils. It requires little or no herbicide and no pesticide, and uses less water than cotton. Measurements at Ridgetown College indicate the crop needs 300-400 mm (10-13 in.) of rainfall equivalent. Yields will vary according to local conditions and will range from 1.5 to 6 bone dry tons of biomass per acre. California's rich croplands and growing environment are expected to increase yields by 20% over Canadian results, which will average at least 3.9 bone dry tons per acre.

Hemp seed oil for BioDiesel

Production of oil

Grown for oilseed, Canadian grower's yields average 1 tonne/hectare, or about 400 lbs. per acre. Cannabis seed contains about 28% oil (112 lbs.), or about 15 gallons per acre. Production costs using these figures would be about $35 per gallon. Some varieties are reported to yield as much as 38% oil, and a record 2,000 lbs. per acre was recorded in 1999. At that rate, 760 lbs.of oil per acre would result in about 100 gallons of oil, with production costs totaling about $5.20 gallon. Sales of the remaining stalk material at $72 per ton will provide another source of income. It is estimated that a crop grown for both seed and fiber will produce about 3 tons of stalk, which is selling for about $72 per ton, resulting in a $216 per acre credit. This will reduce the cost of the oil to about $3 per gallon. Further reductions will accrue as the agronomic knowledge base is enlarged, and economies of scale are realized, lowering production costs while improving yields.

This oil could be used as-is in modified diesel engines, or be converted to biodiesel using a relatively simple, automated process. Several systems are under development worldwide designed to produce biodiesel on a small scale, such as on farms using "homegrown" oil crops.

Production of Bio-Diesel

Basically methyl esters, or biodiesel, as it is commonly called, can be made from any oil or fat, including hemp seed oil. The reaction requires only oil, an alcohol (usually methanol) and a catalyst (usually sodium hydroxide [NaOH, or drain cleaner]). The reaction produces only biodiesel and a smaller amount of glycerol or glycerin.

The costs of materials needed for the reaction are the costs associated with production of hemp seed oil, the cost of methanol and the NaOH. In the instances where waste vegetable oil, or WVO, is used, the cost for oil is of course, free. Typically methanol costs about $2 per gallon and NaOH costs about $5 per 500g or about $0.01 per gram. For a typical 17-gallon batch of biodiesel, you would start with 14 gallons of hemp seed oil; add to that 15% by volume of alcohol (or 2.1 gallons) and about 500g of NaOH. The process takes about 2 hours to complete and requires about 2000 watts of energy. That works out to about 2kw/hr or about $0.10 of energy (assuming $0.05 per kw/hr). So the total cost per gallon of biodiesel is $? (oil) + 2.1 x $2 (methanol) + $5 (NaOH) + $0.10 (energy) / 14 gallons = $0.66 per gallon, plus the cost of the oil.

Hemp Cellulose for Ethanol

Another approach will involve conversion of cellulose to ethanol, which can be done in several ways including gasification, acid hydrolysis and a technology utilizing engineered enzymes to convert cellulose to glucose, which is then fermented to make alcohol. Still another approach using enzymes will convert cellulose directly to alcohol, which leads to substantial process cost savings.

Current costs associated with these conversion processes are about $1.37 per gallon of fuel produced, plus the cost of the feedstock. Of this $1.37, enzyme costs are about $0.50 per gallon; current research efforts are directed toward reduction of this amount to $0.05 per gallon. There is a Federal tax credit of $0.54 per gallon and a number of other various incentives available. Conversion rates range from a low of 25-30 gallons per ton of biomass to 100 gallons per ton using the latest technology.

In 1998 the total California gasoline demand was 14 billion gallons. When ethanol is used to replace MTBE as an oxygenate, this will create California demand in excess of 700 million gallons per year. MTBE is to be phased out of use by 2003 according to State law.

In this case we can consider biomass production from a much broader perspective. Sources of feedstock under consideration for these processes are:

We will address these in turn and show why a dedicated energy crop holds important potential for ethanol production in California, why hemp is a good candidate as a dedicated energy crop, and how it may represent the fastest track to meeting 34% of California's upcoming ethanol market demand of at least 580-750 million gallons per year.

I'm still looking for BTU figures, and petrochemical and water inputs for the various biocrops. I'm also thinking about a weed called teasel, since I'm hacking down plants taller than me in the garden. Problem is, that it is a biennial.But, in Cal,you can walk on it for a year, and then it shoots up during late winter/ early spring, right when fields get planted. Maybe in the rows?
There is currently a hemp industry bill in the Calif. lege.
Problem I have pushing hemp is everybody says "But it will seed my crop." :-)

Algae appears to be the best.

10-20,000 gals/ acre yields claimed


Algae is not the answer, and neither is hemp.  They will both have the same problems that any crop grown in monoculture has.  In the lab, or a small field, is very different from a real monoculture crop.  (One of the major problems with biodiesel from algae is that weeds tend to take over.  That is, algae that does not make good biodiesel.  Perhaps they could find an herbicide that only kills "bad" algae, but chemical pesticides are something we are trying to get away from, right?)        

Then there's the fertilizer and water biofuel crops require - which we may need to save for food crops.

Perhaps the best argument against biodiesel is that turkey parts plant.  In theory, they figured they could make oil for $15/barrel.  In reality, it was more like $80/barrel.  They lost money on every barrel until the government offered subsidies.  

And that was with a ready-made feedstock - slaughterhouse waste.  Having to grow your own feedstock would make the numbers significantly worse.

Not that I'm entirely against biofuels, mind.  But it's a huge mistake to think we can use biofuels to replace petroleum and continue on with the happy motoring lifestyle.

Leanan -

I think the key phrase in your comments is "the happy motoring lifestyle". It's our massive consumption for both personal travel and transport of goods via highways that are the source of our "addiction".

Assuming we wanted to change, the only change available to most of the US is to change to a Hybrid; EV's are not for sale yet, commuter rail is not viable except in certain areas of the country, long distance rail is also shot, there isn't enough ethanol to make a dent in our problem, mass conservation isn't possible without government intervention, etc.

So, we have a problem, we know how to work around it, but the tools aren't there.

This is the crux of our problem, and why we are so incredibly vulnerable to societal chaos. What nobody seems to be acknowledging is that this problem is one of overshoot. You can say population overshoot, or you can say resource depletion. Each is dependent on the other, two sides of the same coin, thanks to the Gods of Growth Eternal.

And that is one of the reasons I fear collapse is inevitable. I'm just hoping for a slow one.

Assuming we wanted to change, the only change available to most of the US is to change to a Hybrid; EV's are not for sale yet, commuter rail is not viable except in certain areas of the country, long distance rail is also shot, there isn't enough ethanol to make a dent in our problem, mass conservation isn't possible without government intervention, etc.

People have other options.  Move closer to the workplace, for one.  Doesn't work for everyone, of course, but every bit helps, and the government doesn't need to lift a finger.

I'm still stickin' by my assertion that you will be combusting less. Biomass requires much effort for little yield.
Someone posted this Blast From the Past from Barron's at yesterday.  

From March 15, 2004:

OIL PRICES HAVE CLIMBED to levels not seen since the Iraq war -- the first or the second. But the market doesn't believe they can last. The benchmark crude currently fetches about $35 a barrel, but the futures market thinks the price will retreat below the $30 barrier next year and will be around $28 in five years. Industry executives pencil in an even lower price, something in the low-to-mid-$20 range, when they make their long-term plans.

(Despite that beginning, the article does take peak oil seriously.)

A Cartoon

For some reason, PO came to mind.

Very good cartoon.  I always mention the New Yorker cartoon that has the Chairman of the Board addressing his Board of Directors, "Gentlemen, while the end of the world scenarios are quite grim, we have found the pre-end of the world scenarios to be quite profitable."

All of us are wondering what might happen in the Gulf of Mexico this hurricane season - will we get one that kicks us up to $7/$8/$10 gas?

I think these two satellite images (365 days apart) speak volumes about the potential for hurricane strengthening in the Gulf of Mexico...

From Newsweek's Energy Wars article:
"Welcome to the age of energy insecurity," says [J. Robinson West], a former Reagan administration official (and friend of Dick Cheney's, the man who once dismissed energy conservation as a "personal virtue"). "Worldwide production will peak. The result will be skyrocketing prices, with a huge, sustained economic shock. Jobs will be lost. Without action, the crisis will certainly bring energy rivalries, if not energy wars. Vast wealth will be shifted, probably away from the U.S. For the last 20 years, U.S. policy has discouraged production and encouraged consumption. If we dither any more, we will pay a terrible price, the economic equivalent of a Category 5 hurricane. Katrina was Category 4."
From The Fix for High Gas Prices That Congress Won't Touch
Analysis: Conservation is one of the few things that would actually help drive down prices at the pump. Too bad most politicians are scared to utter the word.

... Tell Americans to drive less? Though a fractional reduction in driving across the country would dramatically reduce demand and prices, few things are more frightening to public officials, especially six months before an election, than telling Americans to conserve. ...
Quite good, too bad it's marked "web exclusive".
This week's BusinessWeek cover story is called Why You Should Worry About Big Oil.  It is a good article but does not dwell on peak oil or even use the term, for that matter.  Quotes from J. Robinson West and T. Boone Pickens, among others.