Friday Open Thread

Jerome a Paris (one day, I will figure out how to get the accents in there, but you know who I am talking about) has a really cool piece today, where he details a thought experiment regarding the circumstances if Norway were to tomorrow decide to make oil a little less fungible.

Here's the link to "The Day of the Oslo Warning."

[editor's note, by Prof. Goose] yeah, we know TOD's running a little slow off and on today...appropriate authorities have been notified and are supposedly whipping the mice on the wheels back in to shape in an appropriate and timely manner.

Even Business Week is covering the Iranian oil bourse:

Analysts skeptical of Iran oil plan

Iran took a step on Friday toward establishing an oil market denominated in euros, a plan analysts described as highly unlikely to materialize but which in theory could have serious consequences for the U.S. economy.

If the market were to succeed -- or if Iran simply demanded payment for its oil in euros -- commodities experts said it could lead central bankers around the world to convert some dollar reserves into euros, possibly causing a decline in the dollar's value.

Oil is currently denominated in dollars around the globe, whether through direct sales between producers and consumers or in trades made on markets in New York and London.

But if one day the world's largest oil producers allowed, or worse demanded, euros for their barrels, "it would be the financial equivalent of a nuclear strike," said A.G. Edwards commodities analyst Bill O'Grady.

But he doesn't think it's likely:

O'Grady said there are practical reasons why the Iranian threat is an empty one.

For starters, Iran is not a very attractive site for a market, given the volatile nature of its politics, the U.S. sanctions against it and the lack of a fair legal system. Moreover, there is no indication that the European Union is interested in vying to become the world's central bank, which requires a willingness to run large currency deficits, he said. For the U.S., that has meant allowing cheap imports to undermine the strength of some major industries, including textiles, autos and electronics manufacturing.

Dubai however may be a very good place for a Euro based oil bourse however. The point is, the dollar is on its way out as a world currency.

The best write up on our fiat money system and on the petrodollar I've seen is on the site, called "Island Economics" there are two parts, I and II, and our money system is described in terms of the TV show Gilligan's Island, to make it understandable to Americans.

This is what I was getting at the Thursday Open Thread 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 it a millions of understand the real driver of global activities....FOLLOW THE MONEY!!!!

The MSM (or 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 under the noise.  Something is afoot here that is under the immediate radar.

Keep in mind that the us dollar has actually STRENGTHENED vs other currencies in the past 12 months, despite its recent slide. So viewed year over year, it take MORE euros to buy oil than dollars. Not disputing your general point but the slide of the dollar is still small and still very recent.
Menzie Chinn at Econbrowser has a nice pieceon central bank reserves and oil.  It includes this graph of global bank reserve increases lately:

Clearly, the oil exporters are becoming a growing part of the mix, with Asia becoming less important.  However, it's not at all clear that there's any relationship between the decision of what currency to use for trading oil and that of what currency to hold central bank reserves in (a point well made by Jim Hamilton back in January).

Since the Cdn dollar low in 2002, the US dollar is down 47.5%.
Pricing oil in euros makes economic sense to Europeans, because it eliminates the currency (dollar) risk. Norway is part of the European free trade zone, and has therefore most of its imports and exports other than oil priced in euros.
The same holds true for the bilateral trade between Germany and Russia
La grande nation, the French also would prefer to buy oil in their own currency. - 18k
So when Britain becomes net oil importer in the near future the switch from dollars to euros just might be a logical next step.
But the British Pound is traded separate from the Euro as well...
More MSM hogwash. Now the US current account deficit is mandatory or caused by the dollar's status as the reserve currency? Utter nonsense. The article makes me think that maybe the Iranian bourse will fly.
Chris Floyd
 on the Oil Wars:

And so the war came, with its lies, murder, ruin, and corruption. Yet how many of those now opposed to this horrific military action are prepared to pay the actual cost of ending it: i.e., relinquishing the guarantee of cheap oil and the lifestyle it sustains? The number is doubtless very small. The large remainder should perhaps be seen as the true "Bush base." For while they may oppose his tactical incompetence in this instance, they share, wittingly or unwittingly, his strategic goal. With this basic common cause between the elite and the majority, the wars for oil will go on - no matter who sits in the White House.
There's a movie out there called Why We Fight, named after the old WWII propaganda movie series, this is a modern on that's been on TV in Britain and I think in a good number of English speaking countries, certainly the Commonwealth ones, but is very underground in the USA, you'll never ever see it. It IS possible to see it, there's a low-res .ra file of it out there on the net, no I can't tell you the link, or I could tell you but then I'd have to kill you ha ha. Just look around, if you're lucky you may find it.

It's very very well done, if you are lucky enough to find it you'll watch it several times. It interweaves the story of a man whose son was lost in 9-11 and fell for the "It's Saddam's Fault" propaganda hook line and sinker, and gradually finds out it was wrong, with a run-down on US history showing our propensity to be at war with someone, anyone, preferably anyone with oil or markets we want to exploit, on a continuous basis. No matter who is in the White House.  

Fleam's right, good movie:

Looks like the Phoenix housing market is starting to tank, just like Bob in Phoenix and Kunstler predicted.

"All buyers, not just investors, pull back"

"Speculators supposedly have fled metropolitan Phoenix's housing market, so it's no surprise that home sales have dropped as that demand has dried up.

What is surprising is that home sales and building are down more than the rate at which investors were buying last year. New-home building permits were down 16 percent for the first three months compared with a year ago, reports real estate analyst RL Brown. Resales plummeted 34 percent during the first quarter, according to the Arizona Real Estate Center at Arizona State University."

Phoenix never did make sense as a place to live for a normal person with a clean criminal record. I lived out there for a few years, yuk.

Only a manic bubble mentality could explain all the new building out there, the place is a real um, heckhole.

Dusty, hot, miserable, sprawly, just an awful place. You're running your heat or your AC all year, there are about 3 nice days when you need neither a year. I've seen it down in the 20s in the AM and up in the 90s in the sun later that same day.

Now, I said normal people. It does not make sense for them. I've met, or re-met, a few who moved out to CA about the same time I moved back to CA. They consistantly found that although rents are higher in cali, the increased pay makes up for it. One waitress told me, it's like getting free rent plus nice weather when she did the numbers and compared the two.

The two demographics that make sense in AZ are the retire-and-rot crowd, and criminals. When Three Strikes was enacted in California, over 100 thousand criminals skedaddled for AZ. Prison is such a big part of the economy and culture there that radio stations often broadcast what the day's prison meals are. Going to visit kin in the pen is as much a part of AZ culture as sittin' on the freeway is a part of CA culture. Although AZ actually has far worse traffic jams and aggro drivers.

I think AZ is the textbook example of what Kunstler is talking about.

But ... but ... but David Brooks says that the Phoenix exurbs are going to be the housing of the future:
Buckeye, Ariz. - Head west from downtown Phoenix past acres of postwar sprawl, go up over the White Tank Mountains, and there spread out before you is the future. There before you is a barren desert floor. Right now it's nothing but scrub, tire tracks and desert washes, but this land has been bought by developers, and groundbreaking is just around the corner. By 2025, a million people will be living in this now-empty space. When you are out here, you can feel America's growth.
Really, a groundbreaking is just around the corner.
Haha....yeah, right.  And I have some lovely beachfront property to sell you.

Looks like it's more than just Phoenix, too.

"Doors Close for Real Estate Speculators
After Pushing Up Prices, Investors Are Left Holding Too Many Homes"

By Kirstin Downey
Washington Post Staff Writer
Saturday, April 22, 2006; Page A01

Investors who sought quick profits buying and selling real estate in the Washington region are in full retreat, dampening demand for homes, most notably for condos."


"While condominiums were the product of choice for investors, luxury neighborhoods also fell prey to real estate speculation, leading to the prospect of price drops even in affluent subdivisions."

I hear air leaking.....

Looks like luxury home sales are headed south as well...

USA Today:
Home contracts dive 29% at Toll Brothers

NEW YORK (Reuters) -- Toll Brothers (TOL), a leading builder of luxury homes, said Friday that its signed contracts fell 29% in its second fiscal quarter, and it cut its forecast for the number of homes it expects to sell in fiscal 2006.

For the three months ended April 30, Toll projected preliminary contracts of roughly $1.56 billion, down from $2.2 billion in the year-ago period. Backlog for the quarter rose 3% to roughly $6.07 billion.

Article link
I don't like to make this kind of comment usually but David Brooks has his head so far up his ass that he has not seen the sun shine in years.
No shit.
They told me:
(1) "You don't have to shovel the heat"
(2) "It's a dry heat."
My parents moved to Midland, Texas in 1974. It's a big oil producing area - my dad was in the oil business, that's why they moved there - and after the oil shocks of the 1970s they had an incredible economic boom. New construction, new housing was going up all over town, the city itself was spreading out across the flat west Texas plains like a growing amoeba.

And then the bust came in the early 80s, when oil prices collapsed. All of a sudden those condos were not selling at all. Midland was surrounded by a ring that was a veritable ghost town, construction which had begun during the boom days and was now a white elephant. It took decades before that glut of housing was finally used up and the city returned to a semblance of normalcy.

The lesson is the economic booms and busts happen all the time, and what is (or may be) happening today in Phoenix has been repeated many times before.

And incidentally, Midland is a crappy place to live, too, in my opinion - freezing winters and boiling summers. At least, compared to where I live in coastal California, it's very unpleasant there in west Texas. Phoenix is even worse.

I grew up in Pampa, TX, and my parents took the family to Mass at St. Vincent de Paul's Catholic Church.  St. Vincent's is a large, almost cathredal sized church.  One time, I asked my dad why such a big church was built in such a small town.  He said during the oil boom, people assumed Pampa would grow into a major boom town.  I think the population is now well under 20,000 people.  It's still a nice town, though.  I remember I could ride my bike from one end of the town to the other with no problems.  And because of the chemical plants outside of town, the town population has a larger percentage of educated people than is typical for a small Texas panhandle town, and it is diverse also, since the chemical plants recruit employees from all over the world.  Sometimes I think about quitting the law firm I manage and opening a solo practice there, so my kids can grow up there.  
Thanks for the link, PG. I really wish the Norwegians did this. They would deserve the Nobel Peace Prize for it.
it's really a good piece.  as I said over at your place, we need more of these kinds of thought experiments/counterfactuals.  Of course, that requires thinking...and that's definitely not what you're gonna get out of the MSM, etc.
Based on my HL plot, the North Sea is two-thirds depleted, with only 20 Gb in remaining recoverable reserves.
M. King Hubbert's Lower 48 Prediction Revisited
By:  Jeffrey J. Brown & Khebab


"We are deeply concerned that the world is probably facing an imminent and catastrophic collapse in net oil export capacity because of declining production and increasing domestic consumption in the top exporting countries."

How come export capacity as a percentage of world production has been rising?
I'd have to see the numbers.  I haven't found any export numbers later than 2004.  What we do know is that the top exporters--Saudi Arabia; Russia; Norway & Iran--are farther down the decline curve than the world is overall.  IMO, decliing exports are a mathematical certainty.
I will completely work with you on this. You got me. Tell me where to start. Me and my team of Special Operations Oil Elves will hit any depth up to 15,000 feet - after that we need to negotiate bonus packages. I'm serious. What do I need to do, email you?
A great tale!  I think the description of the reation may be quite realistic, but I think the catalyst is likely to be military action, not something so benign.
Jerome's "The Day of the Oslo Warning" is online at at least three sites, so if one is slow you can try another:

Daily Kos
Energy Bulletin (with JoP's permission)
European Tribune

As this frightening and entertaining fiction (for now) slowly seeps its way into the MSM, as it will surely do, what do TOD folks think will be its effect on the real world?  (as if....)  Meaning: will it give ideas to someone (e.g., 'sh_t, that makes sense, maybe WE should stop exporting')?  Might it help explain to the sheeple why the Evos and Hugos of the world are acting as they are, even the Iranians, with their quest for non-oil-based energy?  Might the story itself become an "Oslo warning"?
Thought-provoking stuff.
Nice, JaP, nice.
I re-post this at the request of TG80, who thought it posed a good question deserving a considered, thoughtful TOD response. HO's response (the only one except TG80's) is below, but the link ("Ocober 1999") will not work.  While HO's is a nice response, it doesn't address the question directly, and the link is mostly about gore v bush.  The question again is: could it really be true that there are very large oil/gas fields to be found in the US OCS?  and if so, what are the implications?

Original POP post (5/4/06):

greetings all-
i went to a sustainable energy and development panel discussion last night and an issue was raised about which some clarification, confirmation or debunking, would be appreciated. i assume the oil industry types may be able to respond.
the nut of it is that the USA forbade exploration and drilling in the outer continental shelf (ocs) in the 1970s and that therefore no such (or very limited) activity has taken place, and that there is believed to be a great deal of oil 'n' gas in the ocs, and particularly off the coast of georgia/sc, and the west coast. further, that the US MMS is surreptitiously loosening restrictions.
is any of this so? makes intuitive sense, in the sense that one would expect more off-shore drilling everywhere absent such a restriction. and if it is true, should this suggest a re-thinking of the timing of the peak, whether geological or logistical? and what about collapse and the natural strategic reserve (unpumped fields)? global climate change implications are obviously negative.

HO's response:
There are various reasons why drilling off-shore has been banned in the coastal regions around the country. There is some explanation of the situation off-California from October 1999 where you might note that both the Governor Bush, and Vice President Gore favored the moratorium on drilling off the California Coast.

"Vice President Al Gore pledged yesterday to permanently ban offshore oil drilling in California and Florida, states critical to his bid for the presidency. . . . . . . . .Margita Thompson, Bush's California campaign spokeswoman, said, ``Gov. Bush has consistently supported and will continue to support the current moratorium. As a governor, he understands the importance of listening to local concerns. As president, he will take a hard look at current leases on a case-by-case basis, with a strong deference to local concerns.''
The issue of offshore oil drilling has been the focus of decades of environmental debate in California, where there are 43 active drilling sites. Owners of another 36 still have drilling rights.

New drilling is on hold until the Interior Department's Minerals Management Service finishes a $1.5 million feasibility study."  (Quote from 10/99 SF Gate article, which is the linked article)


I think the general consensus is that there's more oil in the off-limits coastal regions of the lower 48 than there is in ANWR...but still not enough to make a real difference.  

You might find this article of interest:

At current consumption rates, the untapped and undiscovered resources in the Gulf would supply the nation's oil needs for five years - 10 years if produced from all areas of the outer continental shelf.

That assumes energy companies would exploit all potential resources, which is unlikely.

From the Houston Chronicle:

Shell says reserves may slip more

Royal Dutch Shell, struggling to replace its aging oil and gas fields, said Thursday that new developments may fail to keep pace with production for the next three years, signaling its reserves may fall further.

Projects may be delayed because of short supplies of materials and rising prices for contractors and services, Chief Executive Officer Jeroen van der Veer told reporters in London. Meeting a goal of replacing 100 percent of the oil and gas pumped from its fields from 2004 to 2008 is "less likely" as a result, he said.

Hi Toders!

(Ok I borowed it from Totoneila but I think it's best to greet all the people around!)

I read the essay made by Jerôme à Paris regarding the fictional stopping of oil exportation from Norway.  Just Imagine what a less friendly country will a huge demand could do to the market if it were to happen.

On a bright side, I met my hometown mayor this morning with the general manager.  I had produced a report in french just to state the PO problem with criticts and analisys of alternatives.  We only could go trough the conclusions of the report wich are :

  1. PO is happening shortly or has already happened
  2. Growth and oil are closely related and diminution of oil production will lead to economical collapse.
  3. Alternatives are at most questionable at worst ineficient.

The general manager went trough the report in one night wednesday and he had marked key points.  The mayor, Denis Lebel, will read it and asked for my copy of "Twilight in the Desert" when I will finish it.  We had an half hour meeting and it was really a good meeting.

From the start they say they will take a torough look at the issue and think of what can be done from our perspective. I guess they need some time to chew it and sink it for themselves.  

The general manager is somewhat of a friend (as someone 20 years older can be a friend!) and told me her girl and their friends are making 2 big gardens for 4 families and expect to be self sufficient this winter.  He's grandson has not ever eated industrial farming products, cow milk or ice cream.

Since I'm deeply involved in my hometown, the message was really taken seriously.  Also I didnt took the environmental way nor did I had to go deeply in the consequences. Merely stating that if a spike would occur between september and april, there could be food shortage and life threathning hunger.

What they offered already is some arable land owned by the city could be made available to grow food.  Tractors, fuel and seeds could be given by the city.  People would have to fill in for benevolent work.  Also we agreed that before getting the normal citizen to learn about it, we would have to put up a plan so we could prevent hysteria and panic.
They also saw that taking first step toward readying our city would entice green people to establish around here and geting an influx of youth people (we had an youth exodus dating from 12 years ago)

The Quebec goverment has just realeased their new energy  strategy yesterday and they asked me what I did think of that strategy.  I said that they talk about ethanol from wood waste and oil exploration under the Saint-Lawrent River.  I told them that ethanol was an energy looser and that wood harvesting industry has an 30% input in fuel. Wood harvesting industry, already hurted by scores of bad news (tariff barrier with US, raising of dollar from 0,60$US to 0,90$US in 3 years, a cut in the available wood alotment, you know real stinky bad news) would be about the first to fold in the advent of rise in oil price. Also we have good hydro electric dams but they are located way up north.  I told them that it TSHTF, there is not much hope from keeping them running easylly. I told them to read the part regarding alternatives.

Since I'm the general manager of the Chamber of commerce, I also told all administrator about the PO problem and talked the president into thinking there was an opportunity when there is a crisis (he's a buisness man, so to win a buisness man, you have to talk buisness).  And I told him about the post carbon institute and that they advocate relocalization.   Since, like me, he has our city engraved in his heart, that soothed him a lot.  I also told him that in 3 to 5 years at most there is no hope for most (if not all) buisnesses around here.  I also told him that while buisiness would be dead, people would still needing food, toothpaste, tools, woods, etc and that new buisiness would incur, no matter what we will have to go trough.

Because I can go and talk to almost anybody important around town and they let me in without a warning call, I had met the general manager of the Union Bank (caisse populaire Sieur de Roberval, I know it's a weird name, but we like it a lot) last friday.  Apart from asking him money for one of my involment I talked to him about the pending PO problems.  I didnt had the time to go trough it toroughly but he was receptive.  I advanded the idea of putting forward a new local currency, like the one in Salt Spring, BC.  I had not completed the report and wanted to meet with the mayor before showing it to him.  He think that I have a very inovative Idea and not current way of thinking but he is open to that idea.

I have already given copies of my report (I will put up a website shortly to make it available to all, creating websites is my sideline job) to all the administrator of the Chamber of commerce and I have put up a presentation next tuesday (may 9th).  I will use power point slides and photos of main PO actors and players (Roscoe Bartlett, Simmons, Campbell, Deffeyes, Kunstler, Hubbert, Rainwater, Hirsch, etc) graphics and such.  I think some already take my findings seriously and I what to steer them to do stuff regarding this.

I know it will not be easy to steer them toward a new paradigm (a new way of thinking abour their like) but since I make the emphasis in the way I care for them, they will get it.

Also I tell them that there is no real way of telling when TSHTF but that preparing for at least food security might not be too hard to do while they keep on doing what they do best already to earn their life. I have put forward just a few important things to do to cope with PO problems :

  1. Ensure food security from local producers
  2. Bring forward a local currency network
  3. Entice people to learn stuff that could be usefull in the next economy.

It's a simple broad plan, I hope we can put it up before TSHTF.
Please keep posting what happens in your community.
Yes indeed, what a terrific effort and reception.
Saudi oil minister claims 4% depletion instead of 8%. I got this second hand from Lynn Cook, a reporter at the Houston Chronicle. Check my math below.

This is a matter of contention and what answer you get depends on who you talk to.

>From what I remember from the speech -- and I didn't write down every single number -- Al-Saif claimed many fields were not depleting at 8%. I think he said the average was more like 4%. He also said that new fields that came online in 2004 and 2005 are more than making up for depleting reserves. So his contention is that Saudi will be actually producing 12.5 million barrels of oil a day in 2009. Obviously, some people look at the numbers and disagree that this will actually happen.

Lynn J. Cook
Energy Reporter
Houston Chronicle
801 Texas Ave. - 9th floor
Houston, Texas 77002

-----Original Message-----
From: Robert
Sent: Tuesday, May 02, 2006 8:44 AM
Subject: Al-Saif

Lynn, Great story on the new Saudi oil production. From your article I understand that they are adding 2.7mb/day from Khurais, Abu Jifan and Mazalif fields by 2009. According to Platts the existing fields are depleting at 8% annually so if you take that as 750,000mb/day, then by 2009, the total output will be 9.8 + 2.7 - 3*0.75 = 10.1mb/day. Do I have that right? I didn't take into consideration filling of tank farms, could that be the source of error?

-Robert, oil futures trader

cue Dave C and his picture...right...about...
or does he have a picture of al-Saif?  It's usually al-Naimi, isn't it?  
More juice from Lynn, is she refering to TOD?
You and a lot of others. Which is why so many are questioning Saudi's insistence that they'll get to 12.5M.

Lynn J. Cook
Energy Reporter
Houston Chronicle

-----Original Message-----
From: Robert
Sent: Friday, May 05, 2006 3:57 PM
To: Cook, Lynn (Business)
Subject: Re: Al-Saif

Lynn, I see, so 4% annual deletion at 9.5 mb/day (according to IEA) would be 0.38 mb/day which that changes my calculation to 9.5 + 2.7 - (3 * 0.38) = 11mb/day.

I still don't see how he gets 12.5mb/day.

Source of data IEA


My 1994 oil blog

Here it is OTC: Aramco developing fields, boosts drilling.
Rigs in growing numbers are conducting both exploration and development drilling in Saudi Arabia, said Abd Allah S. Al-Saif, Aramco senior vice-president exploration and producing....

Al-Saif listed five developments that will increase production capacity. These are Haradh (300,000 bo/d in 2006), Khursaniyah (500,000 bo/d in 2007), Nuayyim expansion (100,000 bo/d in 2008), Shaybah expansion (250,000 bo/d in 2008), and Kurais (1.2 million bo/d in 2009). The Kurais development includes the 2.6 billion bbl Abu Jifan, 22.8 billion bbl Khurais, and 1.4 billion bbl Mazalij oil fields. Khurais, in addition to the 1.2 million bo/d, is expected to produce 350 MMcfd of gas and 70,000 b/d of NGL.

4% depletion instead of 8%

It would be irresponsible of me to shirk my responsibilities in this area....

Just can't make this stuff up....
At CSIS US-Saudi Energy Dialog, Secretary Bodman was asked about peak oil:
"SEC. BODMAN: Well, the theory is, I think, accurate insofar as any theory. And that is eventually - as the minister has said, eventually, we're going to run out of oil. We will have produced that which we can. We've seen, for example, in the United States - we have seen production decline. And we had peak oil in our country - in the lower 48 anyway - 1980 roughly?
SEC. BODMAN: 1970, thank you. Well, I was within 10 years..."
I am very happy with that response. The fact that there is a general understanding of peak oil is more important than not getting a date right.
Still - he obviously hasn't thought nearly as hard about the US oil production curve as I would expect of the US Secretary of Energy.  I think he should be lying awake at 3am thinking about it.
Like the rest of us who can't sleep
at night thinking about PO.
I second that emotion, Stuart.

And being off by 10 years on such an important and recent milestone in US energy history seems like a VERY big deal to me.

Just another Bush-oid who can't be bothered with all those pesky details, I suppose.

There's an important communication issue here.  Most Americans know we import a lot of oil, but are mixed up over "energy independence" especially if they think we can achieve it by producing more oil domestically.  So, I think we need to drive home at every opportunity that U.S. production peaked in 1970 and it's only going one way -- DOWN.  
It is this fact of great strategic vulnerability which the U.S. elite conceals from the American people because it exposes the elite's own incompetence and vulnerability.  Every malefactor in the world knows what Uncle Sam wants and how badly he needs it....just give me one more fix, Mister.
Summer skiing suspended in French Alps
Global warming blamed for Glacier Instability
Long a tradition in the French Alps, summer skiing at France's Alpe d'Huez provided glacier skiing for skiers and snowboarders from all over the world. There was also a circuit that provided rare summer cross country skiing. And now resort officials have announced that summer riding will be halted for the foreseeable future, perhaps forever, until the melting glacier is stabilized. Apparently, global warming (or similar) is wreaking havoc on the resort.
Most websites specialising in discussion of peak oil had crashed early on, as millions of people were directed to them by Google searches.

Better have a high-availability plan in place!

that would be us after Katrina and Rita.  We got crushed.
I'd contribute to a special appeal fundraiser just for this.  I bet a lot of other TODers would too.

You wouldn't be able to run the forums but you could get contributor analysis posted up (even just in flat text), which would be valuable during a time of fog.

On the other hand, since I'd be cowering down in my spider hole  where the wireless connectivity sucks, I wouldn't get to see that much of it.

A few days back there was a discussion of what to invest in before TEOTWAWKI. Things like owning some productive land was a good idea and owning things like unproductive gold was a bad idea. When I look at some third world countries I see their economic troubles are rooted in an inability to import replacement parts for whatever their economy needed to work well. It's like the inability of some ME countries to make their own lightbulbs.
 Owning a small foundry, a lathe, a milling machine, and other assorted tools means you and yours will lead a community to a localized economy. Keeping your neighbors tractor running on homemade fuel means he makes sure you don't go hungry.
Making horseshoes puts you on good terms with your Amish neighbors. I keep seeing Amish in so many places these days. Having never become dependent on petroleum makes them a repository of skills suburbanites never thought about. Any folks at TOD know how to make linen from home grown flax and the soap to keep it clean. Where will you get your tallow? What about lye needed to make your biodiesel?
How are you going to lubricate the gears in your wind generator? What you gonna do when the bottom of your woodstove rusts through? The guy who can turn a junk SUV into the things you really need will be sitting pretty.

In recent months, traffic has been inching back up though.  Don't know how much longer it will be until we exceed last Sept.
i thought this was a good article:

i'd say it is consistent with tertzakian's supply chain and break point argument.  a moderate expectation of a couple decades of rising prices, no silver bullets, but (grudging?) adjustment.

Yeah I agree. There's TONS of room to conserve, something like 2/3 of the oil use in the US is cars, mostly single drivers driving where they can, or could with some minor changes in infrastructure, bus bike or walk. Add in conservation in oil use in heating, etc and the US could actually be independent of outside oil if it really wanted to be. So, the author's premise that there will be gradual increase in gas prices up to where they are in England now and on higher after that, just a slow, gradual, increase in energy prices which the public just deals with, sounds about right.

And of course the observation that even with gas prices up around $7 a gallon, Brits drive all they possibly can. This point needs to be hammered on repeatedly even more than it already is. I honestly thing there's maybe a percentage like .001% of humanity who would turn their noses up at having a car, and driving it everywhere, and that includes to the mailbox 100 ft from their front door. Heck I live in an apartment complex and people get their mail from their car door, parking in front of the mailboxes, rather than just park the damned thing and get the mail as they're walking from their parking spot to the door. New immigrants are as addicted to this habit as any 400lb Wisconsinite. Cars as crack indeed.  

I sent the following letter to Sect'y of Transportation, the Honorable Norman Mineta today. For your reading pleasure....
We must reduce our oil consumption. 70% of a barrel of oil goes to transportation fuels in this country. The U.S. Department of Transportation stands to provide the biggest impact on reducing our levels of consumption.

Here are some proposals to help you out:

1. We can substantially reduce oil consumption (and improve safety records) by immediately reinstating the 55mph speed limit nationwide, or at least on all interstate highways.

2. Radically enlarging the nation's rail system is an even bigger and very crucial method of reducing future oil consumption, especially for the hauling of freight. In the U.S., freight rail carried 27.8% of the ton-miles at 220,000 barrels/day while trucks carry 32.1% of the freight miles with 2.07 million barrels/day [all 2002 data.] We should start to run as many rail services on electricity as possible. We should include the addition of significant separate lines for long-distance, high-speed passenger rail. We are about the only western country without a good rail system and we are going to suffer severely in the near future if we don't do something about it.

3. Some complain that acquisition of real estate for rail tracks is one of the most significant hurdles -- they're wrong; we have a massive interstate highway system that could be modified to accommodate track. It would take train service to virtually every city of significant size in the country and could be built in a relatively short period of time compared to acquiring new real estate and rights of way. Provide incentives to the States to begin building feeder rail lines to other cities off the interstate system. Fund it with a gas tax increase of twenty cents per gallon, or more. That should get you at least $100 million of additional funding a year at current fuel consumption rates. Such a tax (billed as a new "fuel saving" rail initiative) would be better received by Americans than a so-called "carbon tax".

4. Reduce Interstate Highway vehicle lanes in exchange for rail lanes and mandate HOV lanes for every interstate highway to emphasize conservation. As another incentive, HOV lanes could be entitled to a higher speed limit privilege as well. This would encourage HOV and rail use as solo drivers looked out the windows of their cars, stuck in slow traffic, and watching high occupancy vehicles and trains whizzing past.

Americans aren't going to change their habits until the alternatives are less painful than existing habits. You, sir, can go a long way towards "motivating" motorists and freight forwarders to modify their transportation habits, especially in better-gas-mileage vehicles. Conservation, given the world oil situation, is not a dirty word. I encourage you to move swiftly; the clock is ticking.

Lou Dobbs had Newsweek editor Jonathan Alter on his show tonight.  He was plugging his new book, The Defining Moment: FDR's Hundred Days and the Triumph of Hope.  

Alter thinks we came very close to TEOTWAWKI during the Great Depression.  He said in some areas, unemployment was as high as 85%.  Families had their whole life savings wiped out in the banking crisis, and the threat of mass violence loomed.  Many felt capitalism had failed, and that democracy was failing, too.  He claims FDR even considered imposing martial law.

Haven't read the book, but he seemed to be crediting FDR, not so much for his actual policies, but for his leadership.  For giving America hope.

FYI-The CBS tv show 60 Minutes will have a story about ethanol for fuel on May 7th.
Aggressive action against Riyahd?? There is no end to it.

Actually, Saudi Arabia probably is the endgame.  I think that the Neocon want control of Iraq, Iran and Saudi Arabia.
Actually, the U.S. had a large military presence in Saudi Arabia, and withdrew it all in 2003.
Neocon want control of Iraq, Iran and Saudi Arabia.

Want VS Reality

(assumption:  Iraq was about oil control)


The US can't get oil out of Iraq with the present troop levels.

Exactly HOW does oil flow out of Iran and Saudi Arabia if the US attacks them?   How would increased troop levels stop attacks on the oil infrastructure?

I'm not seeing a viable plan to execute to 'control' Iran and Saudi Arabia oil based on the Iraq performace.

Yes, but no one else (China) gets it either.

BTW, the plan does not have to make sense to us, it is sufficient that it make sense to those who get to make the decision.  We just get to deal with the results.

Executive Summary for people who don't want to read the whole post: North American natural gas production has peaked and the U.S. is likely to endure a 3-4% drop in natural gas supply this year compared with 2005. Natural gas storage is likely to be sufficient to avoid a short-term crisis. In the medium and long term time frames, the reduction in natural gas supply will create stress on our ability to generate electricity.

U.S. Natural Gas Production in billion cubic feet
2003    24, 118     Peak
2004    24, 055     -0.2%
2005    23, 500     -2.3%
2006 Jan/Feb        -3.0%

The U.S. apparently peaked in natural gas production in 2003. Production has not been able to re-attain the 2003 level despite an increasing price and an increased number of wells. In 2005, the U.S. was producing at a level of about 0.4% below 2004, until the hurricane season hit and made the situation worse. Natural gas production from the Gulf of Mexico is not, however, as large a factor as oil production in the Gulf. The current 3% decline may be due to residual effects from the hurricane season, but these are likely to linger through at least the first half of the year, after which the comparison with 2005 may improve - but only if we are spared more Gulf hurricanes.

Canadian natural gas production has been on a ragged plateau since 2000, at roughly one quarter of U.S. production. Some significant discoveries early this decade may have prevented an earlier peak. Slightly more than half of the natural gas produced in Canada is exported to the U.S. This contributes to the U.S. supply as shown below:

Natural Gas Imports from Canada in billion cubic feet
2004     4258
2005     4285     0.2%
2006 Jan/Feb    -17.3%

Canada supplies about 15% of the natural gas used by the U.S. The sharp reduction in 2006 Jan/Feb imports is immediately suspicious, and is probably due in large part to the unusually warm Jan/Feb months in the U.S. However, December imports were also down 6%, and December was not a warm month. Whether or not this is a trend of reduced natural gas imports from Canada is probably too soon to tell. Imports of liquid natural gas make up about 2.6% of the U.S. supply, and will remain too small in 2006 to significantly affect the total.

The combination of reduced U.S. production and reduced Canadian imports will likely create a situation where total U.S. supply is down about 4% from last year.

Current U.S. natural gas storage as of the end of Feb 2006 is 6090 billion cubic feet, or about 3 months supply. Measured in terms of months of supply, this is quite a bit more supply than oil inventories, which only run around 3 weeks. It is also quite large compared to what happened with natural gas in England this winter, where they got down below two weeks supply, I believe. The shortfall in 2005 production was completely mitigated by the warm weather in the winter, with stocks now 5.5% above last year's levels. They had been below the previous year's levels in December.

Gas usage in the U.S. breaks down as follows:
Residential    22.1%
Commercial     13.9%
Industrial     30.2%
Electricity    26.4%  
Other          the rest

Looking at the electricity component, natural gas now supplies 18.6% of the electricity generated in the U.S. This is an annual figure, but the seasonal variation is large. In the summer, natural gas supplies about 25% of the electricity, primarily due to air conditioning. In the winter, the figure drops substantially as natural gas is applied to heating rather than electricity.

The electricity component is the most sensitive area in the short and medium term, because any shortfall in natural gas supply will be taken from electricity. Utility companies are very sensitive to the issue of cutting residential or commercial supply - interruptions in gas supply will cut off supply to burning units and pilot lights, and resumptions will fill buildings with gas, creating health and fire hazards. Industrial users of natural gas are not usually very flexible with alternatives to natural gas. As a result, any shortfall will be taken almost entirely from the electricity supply, since there are alternate sources of electricity, and the consequences are less severe - at least at first.

The problem is likely to develop in the medium and long term. Two thirds of the new electricity generation supply since 2000 has come from natural gas, and now it appears that this source of supply will decline. Furthermore, most of the new power generation capability scheduled to come on line this year is based on natural gas. Electricity generation capacity has been an issue already this year, with rolling blackouts in Texas a few weeks ago. California had a worse experience several years back. Supply is somewhat tight. The natural gas situation will not help.

Most of the figures on this post come from the EIA site:


I was reading somewhere about how the power companies want to build a large number of coal burning plants in the next ten years.  My gut tells me that they see the writing on the wall, and want to get off of natural gas.  Or at least have the option of getting off of the stuff.
And it takes roughly 2 Mcf of natural gas to generate 1 barrel of syncrude from tar sands.  Any Canadian gas used in Alberta cannot be sold to the US.  And syncrude production is rising.

Will VERY high NG prices slow down/idle tar sands operations ?

Actually, US natural gas production peaked in about 1972 as this old EIA chart shows:

Otherwise, I agree with your points. We've discussed it quite a bit before (eg see this post of Dave's)

MMS May 3 2006 Accumulated losses since Katrina Off Shore GOM.
Oil  153.5 million brls  7.3 days 2% annual US consumption
NG  749 bcf  11.4 days 3.1%  annual US consumption
I was doing my weekly read of the James Randi Education Foundation (JREF) website ( when the following quote caught my eye:

Why are we still debating climate change? How soon will we hit peak oil supply? When politics mix with science, what is being brewed? Join speakers from the left & the right, from the lab & the field, from industry & advocacy, as we air the ongoing debate about whether human activity is actually changing the climate of the planet.

The quote is right from the website of an environmental conference taking place June 2 - 4, 2006 at CalTech. It's hosted by the Skeptics Society and includes some big names on the speaker's list (John Stossel, Michael Crichton, Nobel lauriate Dr. David Baltimore, with Michael Shermer acting as host).

The site for the conference:

Well, that will settle it then. If there's one thing we know in the USA, it's when you have a thorny problem, get some experts like a TV talking head, a fiction writer, and someone with a Nobel in something, they'll get to the truth!