DrumBeat: June 13, 2006

Now for some wise words from the readers of The Oil Drum...
Did anyone watch Matthew Simmons on Glenn Beck last night?

Matthew Simmons on Glenn Beck Show - CNN, Last night

Here's a little excerpt from the transcript of the show...

BECK: Matthew, you know, I really think that we are always -- you always hear we`re 15 years away from flying cars that could be powered on SPAM.

SIMMONS: Well, that might be the case. We`re right in the middle now of the beginning of a crisis.

BECK: Right. In the beginning of the crisis. If -- if we really wanted to solve this, don`t you think we could have solved this long ago?

SIMMONS: No, I don`t.

BECK: OK. All right. Well, enough said. There you go. Why do you say that?

SIMMONS: Well, this is a physics thing. And what we`re going to have to do is learn how to use less, as opposed to invent more.

BECK: Yes. Really not going to happen. Not going to happen.

SIMMONS: We`re going to have to.

BECK: No, I`m going to let my kids worry about it. Me, I`m buying a bigger car. Matthew, thanks a lot.

SIMMONS: You`re welcome.

BECK: All right. If you listen to me on the radio, you know I really am one of these guys who`s always prepared way in advance for any crackpot doomsday scenario. I had a safe room, you know, years before nothing happened on Y2K.

I really have a Tamiflu prescription, written in 2003. I`ve had my basement stocked with food and water for -- all right. All right, I get it. Food and water stacked in my basement before, you know, nothing happened on 6-6-06.

So it only stands to reason that I`m going to be the first guy to prepare for this, you know, inevitable oil crisis. But you know, if you`re going to do that, I have to pick another energy to use, and do research and stuff. And I mean it, I am the laziest guy you will ever meet.

Beck actually ticked me off a bit with the ending statements where he jokes and said "No, I'm going to let my kids worry about it."  I know that he was kidding but he's sending the wrong message to the public.

My $.02


I saw the Simmons interview, too. There is an old saw that there is no such thing as bad publicity. And this is undoubtedly true, because anyone who is interested was directed to "Twilight in the Desert". Beck came across as a fat headed fool, and Simmons as someone who has a real point of view about fossil fuels. Beck even called himself a "conservative",bringing credo to my belief that anyone that tells you how honest they are, how Christian or how conservative does so because its not evident from their behaviour. And I believe that action rather than talk is a much more true guage of a person.
You were just ticked off a bit?  Thanks for watching that ass so I don't have to.  Is this what passes for serious debate on CNN now?  Shame on CNN for having such an ass hog up our airwaves.
I was actually flipping channels on the CNNs and saw Simmons sitting there (I've read twilight, so I wanted to see what he had to say) And after the brief dialog Beck cuts him off and says screw the world I'm buying a big car... So to me, yes Simmons did get his word out about the book; However, I personally felt Beck was pi**ing on him a bit with those final remarks... and that "final stab" is what ticked me off, fearing many in the public would shrug off concerns (if any) they had about the issue.
CNN has been turning more into Fox every day.  Good for ratings.  This tide is turning, though, the right-wingers are going to get very unhappy as all their idiotic beliefs collapse with everything else.  Before the collapse, we're going GREEEEEEEEEN.  
And don't forget Nancy Grace...kak.   I used to like CNN,  I can't stand it anymore.
If there is a hell, it'll be condos.  And Nancy Grace will be my next-door neighbor!
I've been hearing ads for this guy's new show, he's supposd to be a comedian.  Difficult to see the point of having serious guests on to laugh at them.
The last question that Larry King asked Al Gore tonight was: Do you think gas prices will go down?

In reply, Gore gave a one sentence explanation of peak oil.

I almost fell off my chair. I can't wait to see the transcript!

What did he say? You can't keep us in suspense like this.
Here's what he said:

KING: Gas prices -- we've only got a minute left.

GORE: Yes.

KING: Gas prices going to go down?

GORE: Well, I've seen a number of -- over the last several decades I've seen this happen several times, where they spike and then they do come back down.

But each time they go to a higher plateau. We almost certainly are at or near what they call peak oil, defined as having recovered a majority of the oil reserves at a certain price, affordability range. And so with the new pressure on the consumption side from China and India, if they come back down, they won't stay down long.

KING: What do you drive?

GORE: I drive a hybrid. Tipper and I got a Lexus hybrid. And we have a couple of Priuses in the family with our children. And I encourage people to make environmentally-conscious choices because we all have to solve this climate crisis.

I just posted this over on Stuart's BP Thread as well

This is an e-mail I sent out regarding my first Beck expereience a couple of days earlier:

"I don't watch (consume) much MSM anymore.  But last night, oddly, the satellite was 'out' for the two channels I do watch - FSTV and LINK - while it was working for others, including PBS and CNN. (big brother, anyone?)   So I watched the end of the PBS news talking about the assassination of Zarqawi.  Nothing illuminating.  But then there was a several-minute self promo for PBS.  Images of women, children, college students, earnest young men... soothing music in the background...text showing poll data to the effect of PBS/Newshour being "the most trusted source of news".  I was almost lulled to sleep, it was working, I was being indoctrinated, trust us... trust us... it'll all be OK... trust us...  It was just too creepy.  I honestly felt like I was being set up for THE BIG LIE.

Then I switched over to CNN Headline news - just for a peek, just for a moment.  There was a guy on - Glenn Beck - with what I can only describe as a Letterman-like take on the news.  He asked rhetorically if Americans celebrating the death of Zarqawi were the same as Palestinians dancing in the streets on 9/11 (which assumes that any really did that - unstaged, that is).  He proceeded to answer his question by stating unequivocally that no, it's not the same, because "we just got a real bad guy'.  He made mocking comments about Zarqawi not being greeted in heaven by virgins but rather being faced with some demeaning fate that was meant to be humor but that was just disgusting and that I've blocked out. Then - and I really can't believe this - he cut to his lackey on the streets of Manhattan (again, this was CNN at 7 pm and seemed really, really, like the most distasteful of late night 'comedy')  who had a pork-pie or bacon cake to mock Islam with lettering along the lines of "Happy Zarqawi Death Day".  He was to go do some "man in the street interviews".  I'd seen (way more than) enough, and turned it off at that point.

My point is that this is what's now accepted by this society.  Celebrating death.  Mocking religion. (not that I'm any fan of religion).  But juvenile, immature, sophomoric, imbecilic - we don't even have words ( or at least I don't know them) for the depths to which we have sunk.  And to quote James Earl Jones - This is CNN.  Pardon my language but WTF is going on that we accept this!?!  We pay for it.  We condone it.  We support it (if only by our silence).  We're making enemies and things worse and fools of ourselves every time our culture opens its collective mouth.  Please excuse me while I go throw up."

being "the most trusted source of news".
I was almost lulled to sleep,
it was working,
I was being indoctrinated,
trust us... trust us... it'll all be OK... trust us...

What you heard & saw was the inevitable outcome of the Invisible Hand guiding our news professionals ever so gently down that slippery slope from being "professional and trustable reporters of facts" to be becoming the pandering clowns of commercialism and infotainment.

Competition always causes us to be the best that we can be.

The best clowns and money licking fools.

Picture Congressmen on their knees, crawling after and licking the behinds of lobbyists --they're addicted to campaign contributions.

Picture Newsmen on their knees, crawling after & licking the behinds of advertisers --they're addicted to commercial contributions.

Picture us licking our TV tubes --we're addicted to crap.

Saudi Arabia May Oil Output At 9 Mln B/D - Petrologistics
on DJ Newswires (WSJ online)

Where did these numbers come from? 9 MBD, IEA says 9.35, EIA I think says 9.2... somewhere else I've heard it's less... why the disparity in numbers?


and I'm sure I saw 9.1 in a couple of places.  Whatever, look like SA is past peak.  And, as Simmons says, when SA is past peak the world is past peak.
Petrologistics is apparently a controversial "oil spying" organization. Critiqued by Simmons, but others believe the networks of oil spooks exist. The news release is on the Wall Street Journal online Dow Jones Newswires section under "Energy Industry".

The same article has the following quote "Saudi Oil Minister Ali Naimi, in an interview with The Wall Street Journal published last week, said the country's April output averaged 9.1 million b/d, its lowest level since January 2005."

Ah, I see.  Thank You kindly sir.


Further quotes from article about Petrologistics head Conrad Gerber:

Gerber said Iran was also continuing to limit its supplies so as not to be forced to sell its oil at a steeper discount, and in May produced 3.85 million b/d.

"The Iranians don't want to discount their crude and they're hoping that the differentials will go up if they withhold some of it," he said.

Iran currently has around 16 million barrels of its crude stored on its own fleet of oil tankers rather than lower the price on the international market, Gerber added.

"They're running out of storage and can't continue to do this for much longer and could be forced to shut the fields in," he said

Ah, my favorite conspiracy theory, blame the Ay-rabs.
So this is 4 days of Iranian oil or $1.1B of oil. Could they have been trying to play a game with the international nuclear negotitions? If true, will they shut oil in? Will there be a "breakthru" on the negotiations? Boy, this is entertaining...why does anyone needs "reality" shows???
For real, news is more entertaining these days.  Look at oil over there to the right... dropping...dropping...thunk... all we need is a few more near miss TS/Hurricanes in the GOM and oil will be down around $40/barrel!  (poking at some news articles saying price of oil has dropped due to the TS going away from GOM rigs/refineries)
I wouldn't blame the drop on the TS.

Looks more like Wallstreet has decided we are headed for high interest rates and a stagnant/shrinking economy.  Gold prices, the stock market and oil all collapsing at once.

I forget.  Which president was it who declared that white house staffers weren't allowed to say the word recession?  Bush 1?  They had to use the word "bannana" instead.

My point exactly... I wouldn't blame it on TS either.  I was merely pointing out the fact that some [cough] journalist try to correlate events without much thought.

Ahh Recession, yes... take a look down below as I'm really having a hard time selling my home (the bubble has a big hole in it IMO, it will within 6-12 months pop loudly)

Oil spooks! OMG what do they report?  Shhhhh! Hey GWB... these people think we are at peak just LIKE THE FUCKING HIRSCH REPORT....Holy shit! call the CIA, FBI, and the secret service.  Time for a meeting!!  We need to spend billions watching people talk about what we just spent millions having someone prepare a report about.  We better infiltrate these renagades and hope that they don't think what we think is possibly going to happen, could happen...

I think you will draw more attention by being a gay wanting to get married with this bunch (unfortunatly).

In case that sounded harsh, I don't doubt that they are watching.  What the hell for who knows.  I only hope that they read the hirsch report and fall asleep watching it get rehashed a million different ways on TOD.  If I had thier job I would shoot myself.
International Energy Agency reduces global oil demand forecast

It reduced the requirement for the group's oil to 28.8 million bpd in the third quarter and 29.5 million bpd in the fourth quarter.

The world's top exporter Saudi Arabia pumped 9.35 million barrels per day in May, up 100,000 bpd from April.

Really? 9.35 mbd?

The IEA is saying that we hit 85 mbpd in May:
"World oil supply rose by 445 kb/d in May to 85.0 mb/d, fuelled by increases from OPEC, a lull in North Sea maintenance and recovering US GOM supply. "

it was in the article I posted above as well...

World oil supply rose by 445 kb/d in May to 85.0 mb/d, fuelled by increases from OPEC, a lull in North Sea maintenance and recovering US GOM supply. A higher 2005 baseline contributes to weaker non-OPEC supply growth of 1.1 mb/d (plus 265 kb/d of OPEC NGLs) in 2006, down from 1.2 mb/d last month.

How about that, 85 MBD soon we'll hit 120 MBD right? :-/

Yes and last month they said world supply rose by 485 kb/d in April to 5.1 mb/d.


That means the April figures has been revised downward by 545 kb/d. Yes, they are admitting they were off, on the high side, by over half a million barrels per day for their April estimate. They are usually off and as of the last couple of years they have usually been off on the high side. I wonder why this is and I also wonder how much they will be off in their May estimate?

Let's see if it holds up.  As Smekhovo said at the end of the last DrumBeat:

IEA have made a huge 550kb downward revision, easily the biggest in recent times, to their April supply figure, and gone straight on without missing a beat to claim a 450kb increase for May supply.
I'm going to argue, that in the short run, these reported numbers and their revisions aren't that important. Producers are basically producing supply to meet demand. How do we know this? With all the talk of Nigerian production losses, decreased Saudi production, and both the EIA and IEA reports of the last week, the price of oil has been flat to slightly falling.
Producers are basically producing supply to meet demand. How do we know this? With all the talk of Nigerian production losses, decreased Saudi production, and both the EIA and IEA reports of the last week, the price of oil has been flat to slightly falling.

Not only that, but crude inventories remain steady at record high levels. There is no great incentive to produce much more oil as long as inventories are in this condition. If crude inventories start to fall, and you don't see production pick up, then someone can make the argument that production can't keep up and we have at the least a logistical peak.


I think the situation is clearly ambiguous. Prices are near record highs and not really falling (perhaps easing down), as they should in oversupply, but stocks are indeed high and sufficient. Days on hand of oil is steady but not growing at the moment. Production is almost exactly the same as last year (within error bars) these last couple mos, but world demand theoretically grew maybe 1.5 mbpd. We are still largely riding the stocks jump related to the warm winter (US oil stocks since Jan have only followed, not exceeded the average seasonal trend).

I can only say this is a most unusual set of circumstances that should become clearer over the next 6 mos ... maybe?

I still don't really understand the record inventories when the price is this high. Is there anyone who can offer a simple explanation for this?
The traditional explanation for high inventory when the price is high is a fear of loss of supply -- i.e. "hoarding".
That means that if the fear subsides that the inventories will be ussed and that the price can drop significantly right? So to keep prices high a constant fear is needed? Doesn't sound to healthy to me. So how to determine the price if there was no fear in the market?
I'm not sure it's fear, per se. We've gone from a demand constrained world to a supply constrained world. It's rational to run higher inventory in a supply constrained world because the cost of business discontinuity may outweigh the increased cost of holding inventory. Only if sufficient excess capacity returns would this condition reverse -- i.e. in a big recession.
I wonder if it's more to do with replacing lost inventory from last August.  There is still something like 8-10% shut in down in the GOM.  So if it's taken over 6 mos and we still aren't back at capacity, I could see many refiners or producers building up stocks to plan for this to happen again.  We are in the hurricane season and it will only take one to liquidate those inventories.  At least IMHO.
The current situation tells us nothing about whether we are at peak or not. What it I believe that it tells us is that demand destruction due to increased prices has increased to sufficient levels that the producers are now trying to walk a tightrope at the highest price they can manage with the correspondingly highest production. Will demand rise at $60 per barrel enough to ensure the same level of profits as current demand at $70 per barrel? What demand do I need at $40 per barrel to get this level of profit? If I push prices to $80 (via deliberate market manipulation) do I lose profit because demand destruction or gain? What I think I see happening here is that producers believe they are close to a "sweet spot" in demand and what they can supply in terms of maximizing profits and that they want to maintain this sweet spot as long as possible, regardless of whether we are at peak, past peak, or before peak.
Producers could discount price to stimulate demand

Lots of people in poorer countries of the world would be happy to oblige them

I think that's the last thing they want to do. I think most people in the oil business are nervous about the high inventories, and unwilling to precipitate any move that might start a downhill slide back to $50 oil. Besides that, as long as refining is a bottleneck, discounting crude won't help any. Refiners could discount gasoline, but they are already struggling to keep up.


Is the oil able to be refined?
Is the oil able to be refined?

Not in the U.S. Refineries here are running about as hard as they can, so more oil wouldn't do them any good. There may be some spare capacity overseas. I don't know for sure on that.


Iraq resumes oil exports through Turkey

ANKARA, Turkey - Oil exports from Iraq's northern fields have resumed more than four months after insurgents sabotaged twin pipelines carrying Iraqi crude to Turkey, oil officials said Tuesday.

Iraq began pumping oil on Saturday and it is currently pumping around 21,000 barrels a day -- just a trickle of the pipeline's full capacity, said oil officials in Turkey who spoke on condition of anonymity because they were not authorized to address the media. Together the parallel pipelines can carry 1 million barrels a day.

Iraq briefly resumed pumping crude via the pipeline twice in January. But the pipeline was soon sabotaged, halting shipments.

Persistent sabotage of oil facilities by insurgents and operational problems have kept the northern export pipeline shut down for most of this year and 2005.

Libya to boost oil output to 2 mln bpd in 2007, 3 mln in 2010 - NOC CHAIRMAN

TRIPOLI (AFX) - Libya plans to boost its oil output to 2 mln barrels per day (bpd) in 2007, rising to 3 mln bpd in 2010, from its current production of about 1.6 mln, National Oil Company (NOC) chairman Dr Shukri Ghanem said.

This boost in production is expected to be fuelled in the short term by modern and more effective extraction infrastructure at existing fields and in the mid-long term with new exploration and production (E&P) contracts auctioned through Libya's awaited third licensing round.

A high ranking NOC official and aid to Dr Ghanem said: 'Currently our proven reserves stand at about 38-40 bln barrels, but we have the potential to at least double that figure.'

Really?  Double proven reserves to 74 to 80 Bln barrels?

You know, I have about $180 to $200 in my walled but I have the potential to double that...

pardon my math, meant to type 76 to 80, doing to many things at once here.. :-/
I have counted Libya (all those years of sanctions), Algeria and MAYBE UAE as being the OPEC members capable of increasing oil exports.

BTW: Dubai is building an interesting, and good, Urban Rail system.  One of many reasons given to build it is that this rail system will allow more oil to be exported.

The extra oil exported should pay for the Urban Rail system.

GEE!!  Why didn't we think of that !?!

Plans are also being floated about for various Persian/Arab Gulf freight & inter-city pax rail systems.

If this with OPEC nations building railroads isn't a clue, I don't know what is. That they want to use less oil just to export it for cash is a shrewd move with a finite resource. That is, shrewd but nonetheless short-sighted unless they electrify the railroads and use an alternative (nukes count here) to oil to power it.

BTW, how much electricity would be needed to power all of our present railroads? How many nuke plants (1 GW a pop) to replace the diesel engines? HINT: You can add trolleys to diesel-electric engines to electrify them and have emergency diesel - a plug-in hybrid locomotive.

Currently 0.19% of US electricity is used for transportation.  This includes NYC's 8,000 subway cars, the ~900 cars in Washington DC, Chicago, Philly, Boston, San Francisco systems (all fairly extensive)
plus ALL of the light rail systems and subways in Miami, Atlanta, Los Angeles
plus the various commuter rail systems (including Long Island RR that carriea about 7 million/month)
plus Amtrak's NorthEast Corridor
Plus the 78 mile Black Mesa & Lake Powell coal railroad in AZ.

A MASSIVE Urban Rail program should double that 0.19% (duplicating NYC in bits & pieces around the nation would be a major step forward).

My calculations are that electrifying all US freight railroads woudltake a bit over 1% of US electricity.

Significant increases, but quite doable (minor conservation could save this much).

Just as almost all OPEC members copied KSA with their 80s "reserves" increases, so nowadays they almost all slavishly copy the Saudi claims of future increases in capacity. Even the ratio of present to promised future capacity is usually the same from one country to another.
Not very subtle, but apparently they hope it will fool some.
And we were worried...

Chevron CEO doesn't see oil crisis looming

On predictions the world will run out of oil this century, leading to a global crisis and depression:

"The worst-case doomsday scenario is highly unlikely. The world has a lot of hydrocarbon resources. Coal is a plentiful resource in the United States, where we have more reserves than any other nation.

"People who think that peak oil will occur are just looking at conventional oil. You have to think beyond that. Think of all the other hydrocarbon sources, the oil sands in Canada, the natural gas. Think of all the remote areas of the world that have not yet been explored: the whole of eastern Siberia, the Arctic, the deeper (ocean) waters.

"So there's plenty of resources. The challenge is getting it converted economically into products that people can use."

Ay, there's the rub...

"Oil companies have an image problem," says O'Reilly. "We need to remind people of the quality of life that energy brings to them.

Yes because you should savor the moment, the cheap easy energy is almost gone.  The message is really getting distorted in the media, anyone that does talk about PO, report it as "So...we're running out of oil..." instead of Production is peaking and cheap oil is going bye bye...


In other words, our opportunities for screwing up remote and pristine areas of the world are almost endless. So, don't worry. And all that coal. Oh, joy, all that coal. And all those tar sands.  Yummy.
Stephen Hawking thinks the only chance for the survival of the human race is to find somewhere else to live:

Hawking says humans must go into space

HONG KONG - The survival of the human race depends on its ability to find new homes elsewhere in the universe because there's an increasing risk that a disaster will destroy the Earth, world-renowned scientist Stephen Hawking said Tuesday.

..."It is important for the human race to spread out into space for the survival of the species," Hawking said. "Life on Earth is at the ever-increasing risk of being wiped out by a disaster, such as sudden global warming, nuclear war, a genetically engineered virus or other dangers we have not yet thought of."

Cheerful chap.
Oh, Hawking is more than just some chap.  He's the world's most brilliant physicist. Remember Einstein?  Hawking is today's Einstein.
So this pronouncement is very significant.  This is not a person who is given to flights of fancy.  He's a numbers and equations guy.  And our problems are primarily because we are ignoring the laws of physics.  Like the simple fact that the earth is round, and round things are finite!
Hawking's statement gives me chills, and I've been convinced that we're screwed for a while now...
Here's a Hawking sample:  He proved that the universe will someday completely evaporate.  There will be nothing left.  No matter. No radiation.  Nothing.  All matter will end up in black holes, but Hawking discovered that even black holes leak radiation, hence they will eventually evaporate.  I believe this will be in about 400 billion years, and the universe is still "only" 13.7 billion years old.
While I'm at it:  The first law of thermodynamics says that we do not, we can not, create energy.  All we can do is take one form of energy and turn it into another, more useful form of energy.  Always losing some in the process (second law of thermo).  All the energy creation in the universe happened at the moment of the big bang, and it's been running down ever since (entropy).  Have a nice day!
I get hung up on the big bang creating all the energy and it came from no where.  Damn chicken...wait no damn egg...i give up.
Its worse than that. According to quantum mechanics, even if you remove all the energy from the universe, there is still an irreducible "ground state" energy that is actually infinite.
Except that matter can be converted to energy (E = mc^2). That's what powers the sun.

Also, Hawking says we should start populating the moon and mars, eventually other star systems. The problem is, the technology doesn't exist and/or it is way too expensive. He's a very bright guy, but I think he's getting into the realm of science fiction here.

Yes, but when you convert matter to energy, you still must lose some of the energy.  2nd law!!  And wasted energy is usually heat, which dissipates.
Ah yes, what caused the "Big Bang" (the name was actually an insult hurled by an opponent, Fred Hoyle.  Hoyle lost).  I like the "theory" that the universe really has ten dimensions, and our 3-dimensional universe was created when two four-dimensional universes briefly intersected on one "edge", or whatever...  This caused the "BANG".  Sounds perfectly reasonable to me, ummmm, I think...
There is a possible loophole. if there is enough matter and energy in the universe (a big IF), possibly due to "dark matter", the universe may stop expanding at some point and start contracting. In that case, we would eventually have a gravitational collapse of the universe into a giant black hole. If so, would that cause another "big bang" and, therefore, another universe to be created? At present, however, the slow "heat death" of the universe seems more likely.
I read about this theory.  This came along the lines of how we're now able to create Quarks using a circle of magnets to speed up gold particles near the speed of light and slam them into each other (I think the heat from this was hotter than the sun -- measured)...I'm just going from memory on this article...

The universe expanded (bang) then eventually will collapse on itself and then bang again... (I think that's the way it goes)... this is one of the views anywho...


Sorry, you're behind the times in cosmology.  It has been determined that the expansion rate of the universe is increasing due to dark energy.  This is definite, determined from distance measurements of type 1 supernovae.  The universe will expand at an ever-increasing rate.  In about 100 billion years we will not be able to see any other galaxies because their light will have red-shifted to such an extent that the wevelength will exceed the size of the universe!! So, the "Big Crunch" is out.
Yes, Yes... but what if the core of the earth is made of cheese? :-P
As pinky would say, "then we take over the world."
That's Brain, not pinky....the weekend can't come quick enough already.
Yes, at present the expansion of the universe is accelerating. However, it all depends on what happens with the dark energy. At present the nature of dark energy is speculation. Some theories speculate that the "negative gravity" of dark energy will eventually overcome all attractive forces in the universe and lead to the "big rip". Other theories speculate that the dark energy might dissipate, or even become attractive, leading to a collapse.
And that dark energy theory gets worse. OK, at some point we see no other galaxies all right. But it still accellerates, and the galaxy dissolves into individual stars flying apart. After some more time, the solar system flies apart, then we lose the moon, and soon enough Earth dissolves into chunks of matter and eventually into separate atoms then quarks. This theory is called the "Big Rip". Wait long enough, we are doomed. But my bet is something mundane like an astroid hit, nuke war, pandemic, global warming as the sun heats up, or the like will do in the species - assuming we solve the energy problem at hand.

CAUTION: Sarcasm ahead...
If we don't solve the problem, civilisation fizzles out and 5 million years from now, two talking apes will find a fossilised derelect car and bones in the trunk. And by the hip bone will be the non-biodegradeable piece of plastic with the name "James R Hoffa" and words "Drivers License". They will find Jimmy Hoffa!

I will simply disagree with your technology assessment of our ability to migrate into space. This blog is neither the time nor place to try to cover a topic so vast. The problem is not technology but political will, just as we possess the technology right now to migrate to a far more sustainable culture and retain science and much of our current standard of living but we lack the political will for that too.

Further, I think you suffer from bad assumptions. It is not necessary for the billions here on earth to all migrate outward, only sufficient numbers to ensure the survival of the species which can be accomplished with far smaller numbers. After all, until a few tens of thousands of years ago, homo sapiens and our predecessors never numbered more than a few million max at a time on earth for a couple million years.

Well, if that is the best hope for the survival of the human race, then we're pretty well screwed.  Humans are uniquely adapted to life on this planet.  It is extremely unlikely that a human could live for more than few years at most on the moon or Mars.
Yes, better to set up some islands with concentrated technology stored and hard to get metal stockpiles.  Islands close enough to sail between and close to sustainable populations.

New Zealand, Hawaii* & Australia as a trading core, perhaps with Madagascar, Aleutian Islands etc. as well.  With Iceland being a long distance very high value only trading partner.

Perhaps Japanese population will decline enough to be sustainable.

The old lifeboat idea. Add stockpiles to existing infrastructure, develop more sustainable infrastructure.  Shut down aur travel very early in global epidemic, etc.

*Retirees repopulate by moving in, not by procreation.  Have enough stored food etc. for current population of retirees to die off.

I'll go I'll go!  I'll start the MBA (Moon Basketball Association) and grow a great big afro!  Think of the vertical jump!  I could be a superstar!!  I will take my little kitty Pawpaw and she can live on green cheese.
I appreciated a few years ago, President Bush's proposal for humans to go to Mars, as well as Hawkin's thoughts. Both are "science fiction" to me in the sense of solving no real problems we can face now, but they help us see our problems better.

For example, rather than spending $500 billion to send a dozen astronauts to Mars to try to live without oxygen, let's try a simpler goal and see if we can live in a technically advanced civilization without fossil fuels somewhere on EARTH! It's fun to point out the interesting problem that even if Mars magically had HUGE fossil fuel reserves underground, we'd have no free oxygen to burn it. It sort of gives a perspective on our assumptions of where energy comes from. (Not only do we have millions of years of solar energy in hydrocarbons, we have millions of years of solar energy in the form of free oxygen in the atmosphere.

I'm content to let our dreams fly on other worlds, as long as they bring us back to our problems on earth.

I agree - we cannot run far enough to get away from ourselves.
Mmmm.. those are all human-induced problems. We could as well try to run from our shadow. I think we should prove that we are a benign lifeform before contaminating more planets.
I know, when I read about the huge clouds of coal soot traveling across the globe from China, etc., and the fact that they are opening a coal plant every couple days, I get all optimistic about global climate change.  I'm sure we'll get it under control, no prob at all.
Speaking of climate change...

Is climate change turning polar bears into cannibals?

ANCHORAGE, Alaska - Polar bears in the southern Beaufort Sea may be turning to cannibalism because longer seasons without ice keep them from getting to their natural food, a new study by American and Canadian scientists has found.

The study reviewed three examples of polar bears preying on each other from January to April 2004 north of Alaska and western Canada, including the first-ever reported killing of a female in a den shortly after it gave birth.

Ah, burning mountains of coal! Why, it makes me long for a little more methylmercury.

Some 25,100 U.S. Deaths from Coal Use Largely Preventable
Janet Larsen

"Startling new research shows that one out of every six women of childbearing age in the United States may have blood mercury concentrations high enough to damage a developing fetus. This means that 630,000 of the 4 million babies born in the country each year are at risk of neurological damage because of exposure to dangerous mercury levels in the womb."

Perhaps this has something to do with the epidemic of autism in recent years?
Yeah, that's it - nothing at all to do with injecting it into our children.  I'm sure it doesn't help though.
That's a pretty huge acknowledgement: "People who think that peak oil will occur are just looking at conventional oil."

Yeah bub, that's peak "oil" in a nutshell.

... and as far as the other resources, I think they'll make their investors a lot of money, but it less determined that they will satisfy global dreams.

There's a big difference between conventional oil and that other crap.  Rates of extraction and EROEI are the two main problems.  If conventional oil declines at even 2%/yr, which is extremely optimistic, it will be difficult to replace that with unconventional sources, and we must get more than replacement quantities to fuel economic growth.  If conventional oil declines at more likely rates of 5-10%/yr, fagetaboutit...
I always like the "think of all the oil we haven't found" routine.
And all the lottery winnings I haven't yet won! ^_^
It's actually BS that Eastern Siberia has never been explored. The USSR took at least a first look everywhere, and they knew what they were about with exploration. There's no huge new province out there waiting to be found.
I have written about Washington DC Metro as transforming (in part) a major American city, although more could be done there.  I have also written about building a "Strategic Railcar Reserve" in case of oil shocks.
Rail Car Problems Delay Metro Relief

By Lena H. Sun
Washington Post Staff Writer
Tuesday, June 13, 2006; Page A01

Metro's plan to expand its rail car fleet and ease crowding on the trains has been slowed significantly by problems in repairing older cars and bringing new ones into service, transit officials say, increasing the likelihood that the system will be unable to cope with its growing ridership later this year.

The structural and mechanical problems affect more than one-third of the cars in the fleet or in production and have pushed back the planned expansion by at least four months. Instead of having 100 new cars ready for service by the end of the year, Metro estimates it will have half that.

Twelve new cars delivered to Metro are being tested but will be delayed being put into service because 10 have to be retrofitted with a new center pin. They will include more room to enter and exit.

Faltering Fleet
Metro has 952 rail cars, with 184 on order. Of this number, more than one-third have problems that require reconfiguration. Cars, by manufacturer, and their condition.

The logistics of scheduling the repairs threaten Metro's ability to provide relief for passengers crowding onto platforms and trains. If too many cars are out of service on any given day, passengers will wait longer on the platforms, perhaps letting several jammed trains go by before finding one they can squeeze aboard.

Metro operates its rush hour service on a relatively thin margin.

The system needs 758 of its 952 rail cars to run enough trains for the morning and evening rushes. On most weekdays, the system has six to 12 cars available as backups if problems force trains out of service, said Steven A. Feil, Metro's chief operating officer for rail.

"It's not anything to play with," he said. "If we don't meet these challenges, we're going to have some capacity issues to deal with."

Also, the availability of cars could limit the number of eight-car trains Metro had hoped to add by the end of the year. Most service consists of six-car or four-car trains, with some eight-car service on the Orange Line during morning rush.

Metro was counting on having 25 new cars to put into service by the end of June. But cracks in a critical part in the cars being built by Alstom Transportation Inc. have created a major setback.

After the cracks were found, production was halted for four to five weeks. All but two of the 184 cars -- some built, others in production -- must be retrofitted with a newly designed part.

"This will cost us three to five months," said Dan Hanlon, Metro's chief engineer.

Another class of rail car, built by Ansaldo Breda Construzioni Ferroviarie but being rehabilitated by Alstom, is showing strains in part of its primary suspension system.

And cars built by the Spanish company CAF Inc., purchased by Metro in 1998, also have flaws that must be addressed.

The timing of such problems could not be worse. Average weekday ridership on the nation's second-busiest subway system is up 4 percent over last year. Wednesday's ridership, with no special events, was 764,511, a 2 percent increase over the 750,280 on the same day last year. But last year, there was a Washington Nationals baseball game on that day. Ridership tends to drop off in the summer and pick up again in the fall.

"I don't see gas prices falling anytime soon, and we expect September also will have record ridership," said Metro interim general manager Dan Tangherlini. He said the rail car crunch is "a serious, serious issue, and we're taking it seriously. It's a core issue for the authority."

Twelve new cars delivered to Metro are being tested but will be delayed being put into service because 10 have to be retrofitted with a new center pin. They will include more room to enter and exit.

Faltering Fleet
Metro has 952 rail cars, with 184 on order. Of this number, more than one-third have problems that require reconfiguration. Cars, by manufacturer, and their condition.
Tangherlini said that he was unhappy about the delays but that the transit system should not be driven solely by deadlines. "We want these cars to be as safe and operationally successful as possible," he said.

Roelof van Ark, Alstom's president for NAFTA region operations, acknowledged "the obvious slip in the material" used for the part that must be replaced. Alstom now uses different suppliers, he said, and has taken other corrective measures. He said a Metro audit of Alstom's facility in Barcelona, where the cars are made, found the "overall quality of that rail car is very good."

Metro has been struggling with Alstom for years, and there is a long history regarding quality problems. From 2004 to 2005, the Breda cars that Alstom renovated suffered major mechanical problems 72 percent more often than those that did not undergo the expensive work, according to records. Alstom was awarded a $382 million contract to overhaul all 364 Breda cars.

Quality problems affect the entire U.S. industry, in part because so few companies make or rebuild rail cars. Unlike automobiles, rail cars are built to order, so there is little opportunity to work out kinks from one generation of cars to the next.

Metro awarded Alstom a $323.4 million contract for 184 new cars and has been eagerly awaiting delivery of the cars, which have several new designs aimed at reducing crowding. No floor-to-ceiling poles are clustered at the door. Instead of one single overhead grab bar suspended from the ceiling in the center of the cars, the new cars have a double row of overhead handrails -- one on each side -- running the length of the cars.

In February, a Metro quality control inspector at Alstom's Barcelona facility discovered a suspicious discoloration on the truck center pins, essential in enabling the trains to round curves. Further tests found cracks at a weld in the pin, officials said. Some of the steel that came from Ukraine turned out to be of inferior quality, and the welding was not done properly, Metro officials said.

Metro managers have inspected the facilities in Barcelona and Hornell, N.Y., where the cars are assembled. Today, Tangherlini and other Metro executives are meeting in New York with Alstom officials. Metro officials say that they won't accept the cars until all the defects are corrected and that Metro will not be responsible for any additional costs.

On 186 Breda cars that were refurbished by Alstom, workers must refit the primary suspension system because one part is wearing out prematurely. Metro also needs to address uneven side-bearing plates on about 60 CAF cars. The plates control car rocking and rolling.

On the Breda cars, Metro and Alstom agree that the problem stemmed from the assembly process. "This is not rocket science, nor is it detrimental," Alstom's van Ark said. "It's only going to require refitting."

If that's the case, Rich Buettner, Metro's director of quality assurance, questions why Alstom hasn't done the work properly. "They're having a heck of a time doing a good job," he said.

Metro and Alstom are working out how and where the Breda cars will be refitted to address the suspension issue. But figuring out how that will happen is a challenge, given the limited space in Metro's eight rail yards and limited time for repairs.

Rail chief Feil said he is working on a schedule for the cars to be refitted at one Metro rail yard between 8 p.m. and 4 a.m., without interfering with the regular work flow. At the rate of two cars a day, it will take more than a year to complete repairs on all affected cars.

Officials said the work on the CAF cars is less urgent, and the manufacturer will fix the problems.


Too few railcars limit ridership in Minneapolis as well
Information for May 2006 Hiawatha ridership:

Actual:              841,856 (43% ahead of forecast)
Forecast:            590,118
Average Weekday       29,307
Average Saturday      25,739
Average Sunday/Holid  18,825

This provides an interesting comparison with last August's 838,466.

Average weekday ridership is down by 752. This is not surprising as there is growing concern that ridership is dropping because of overcrowded trains. The drop in weekday ridership even with a new monthly high supports this. PHPD trains are essentially at capacity.

Average Saturday ridership is up by 2,400; Sunday up by 5,400.

On March 11, schedules were "tweaked" to eliminate one-car trains during peak hours. It was acknowledged that no more than 22 of the 24 LRVs were likely to be available. Peak hour trains were cut from 8 per hour to 7 per hour. This actually reduced capacity but did eliminate the occasional one-car train, often with a cruch load after two stops.

With a new 80th Street station planned for this summer along with decking of the 28th Avenue p-n-r in Bloomington, it would appear that 3 car trains will be needed soon. Unfortunately, aside from the two projects mentioned above, the Met Council capital budget for Hiawatha shows $0 through 2011. Three more LRTs have been ordered, the first scheduled to arrive late this year. Those will cover the 3-block extension to the Northstar Commuter Rail Station and hopefully allow a return to 8 trains per hour during the peak. I'm concerned that before long trains will be full before Minneapolis riders have a chance to get on.

I've heard talk of ordering additional LRVs for Hiawatha along with Central Corridor which remains iffy and would still be 5 or so years out at best.

John DeWitt

The old Yogism,"Nobody goes there, it's too crowded".
China's encouraging energy conservation by encouraging people not use cars, elevators, or air conditioning:

'Three-nos' call to help save energy

No cars, no lifts and no air conditioning.

These are the three "nos" the State Council has told civil servants to go without today, as part of an ongoing week-long national energy-saving drive.

In India, they are protesting the recent fuel price increase:

Left holds countrywide protests against fuel price hike

New Delhi - Left parties along with affiliated trade unions Tuesday took out marches and held public meetings in protest against the fuel price hike, affecting normal life in some parts of the country.

The Left parties are also gearing up to mount another attack on the Manmohan Singh government's economic and foreign policies at Thursday's crucial coordination committee meeting with the ruling United Progressive Alliance (UPA).

There were demonstrations and public meetings in Communist-ruled West Bengal while normal life came to a halt in states like Kerala and Tripura, which are also ruled by the Left.

The most interesting thing about the China Daily article was the statement that Civil Servants(the target of this directive) use 3 to 7 times more energy per capita than other Chinese. As China modernizes their energy consumption must go up if they  use Western methods. Oh sh**!
Wonder what "normal life" is like in this particular province?
This is my first post here - I have been following the peak oil websites for quite some time now.

Anyway, coming to the question, which "province" would you like to know about? I can tell you a lot about my state, Kerala, but then you can use Wikipedia too. Don't know about the other state mentioned, Tripura, since that is about 3000 kms. away (different languages, different cultures).

Life in Kerala was (and still is, I think) good, although I can't talk that much authoritatively now since I live and work in Singapore.

Bill McKibben's "Hope, Human and Wild" would be a good read to get an idea of what Kerala is (and is not).

The end is COMING.....


SUV owners who are faced with rising gas prices have found a new way to get out from under their high car payments -- arson.

I know many will appreciate this story!

Post of the month!
I would think it would make more sense to burn them in the winter.  Maybe I should invent an SUV stove - think of the BTUs an SUV would put out!
Get a late season hurricane to hit the bullseye, and gas prices climb some more past the summer high. That'll warm your heart with BTUs of SUV.

Speaking of hardship, a coworker of mine with a 4-gallon commute almost quit his job to work closer to the home he has a mortgage on. Some fun calculations. At 4 gallons each way, he burns a barrel a week. He spends about $500/month on gasoline. If he could bike to the new job, he could take some amount of a pay cut and still end up ahead - until the job is outsourced!

How long before the houses get hit by the SUV-trashing Greek Lightning?

I second that motion.
Definitely the most humorous and satisfying!
The price of oil is dropping like a stone today.  Theories???
Commodities are tanking today across the board.  I think traders are fearing a recession.   The inflation news was bad, which means the Fed may be raising interest rates again.  
Correct. Commodities are crashing today. Gold is currently down $36 just today, after declining over $100 in recent weeks. The markets are definitely forecasting a recession. It probably doesn't matter what the Fed does at this point.
Sounds right.  The oil markets are forecasting demand destruction.
From the US Dept of Labor's (BLS) PPI numbers, raw materials costs are going up by an annuitized rate of nearly 27%.
Welcome to the Weimar?  

"The Producer Price Index for Finished Goods rose 0.2 percent in May, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This increase followed a 0.9-percent jump in April and a 0.5-percent advance in March. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 1.1 percent in May after rising 0.9 percent in the preceding month, while the crude goods index moved up 2.0 percent following a 1.2-percent gain in April. "

+2% per month?!? That's the same as a 26.8% annual inflation rate. No wonder my home construction materials prices are soaring.


I've been waiting on this all day.  This is very, very bad.  Tomorrow CPI numbers are released and the tale of the tape can commence for another month!  

Even in the face of a collapsing housing market, the rest of the economy is facing inflation all over the place.  It can't be ignored and I think the stagflation of the 70's may be here again, albeit a different strain of the same virus.


What part of 27% is money printing and what part is supply/demand? Give the answer in the form of A% + B% = 27% if you will.

If the inflation target of 2-3 is any indication, then 25-24% is printing money.  
US money supply narrow is +1.9%, and broad is +4.9%, over year ago.
You're only counting what the US Treasury prints as "money" with those numbers, i.e. paper dollars in circulation. This is, by definition, M1, or narrow supply.
What you are quoting (and incorrectly calling broad)is M2.
M3 is no longer even being published (not since March, when it was last approaching 8%), so any guesses regarding broad supply are just that.

From Wikipedia:
"The narrow money supply or the monetary base (MO) is the term used to describe notes and coins held by the public and notes and coins held by the banking system as reserves against withdrawals."

It is also necessary to account for increasing debt loading, credit, loans, and other instruments of debt.
The US borrows, on average, $2 billion USD per day. Those dollars are not, as a general rule, printed/coined..

You need to brush up on your economics, my friend.
Recommended reading:

I was simply quoting from The Economist indicators page which literally says "broad: M2 or M3 except Britain M4." So go tell them to "brush up".

Also, can you actually buy "crude goods" with M3? I thought you had to use money.

Taking out a construction loan to build a house is technically using M3 to buy crude goods, since M3 money includes repurchase liabilities issued by depository institutions (i.e. the construction loan), and crude goods include concrete, lumber, bricks, and the like.
As a side note, no offense was intended, and I appologize if I seemed to have come off in a disrespectful manner.
It wasn't more offensive than my note to you morons.
I guess I don't follow. If it doesn't show up in M1 or M2 then who got paid?
I could be wrong, but I'm pretty sure those figures are already annualized.
I thought that too for a moment. Then I thought of what I've been paying for building materials.
Then think a moment of what you get when you buy building materials. Premium quality goods are suitable for outbuildings. To get the quality of twenty years ago you look for ultra-premium niche market specialty goods. To get the quality of forty years ago you source raw materials and learn how to process them yourself. To get Weimar German quality you find 80 year old raw materials forgotten in the back of a warehouse and find 80 year old craftsmen to work with them.
New Orleans is one of the few places with craftsman of that "old quality".  Masons that can lay a structural brick arch (your choice of curves), plasterers (instead of dry wall) that give you a choice of finishes, carpenters that can create "gingerbread" with millwork or build ornated windows from scratch, coppersmiths that could create an ornate lamp or just good gutters.

One or two handfuls in each craft, but they existed and one could find them by looking carefully.

But those that have come back are booked for at least one year doing restoration work and not all are back.

OTOH, we have always had a market for salvage building materials.  Their warehouses are full today and they are renting more.

I talked yesterday to someone who moved here from Phoenix (sold in ;ate Novemober, doubled his money in 4 years) and bought a flooded camelback house (built 1890s/1900s), 12 inches of water and roof damage, for $48,000.  He is living in the "back room" of a neighbor who has already restored his house.  They share the kitchen and bathroom.

He is amazed at the quality if construction in what was a "working class" home back then.

Negative. Those are raw numbers for the reporting period, and not annuitized.
fallout and tate423 -- you morons need to read this paraphrased quote from the Financial Times today (page 2)
Bernanke told [a CNBC reporter that] the market misinterpreted his testimony as indicating that future interest rate increases were unlikely, prompting a spike in bond yields and a sharp stock market slide. Later, in congressional testimony Bernanke explained the incident saying "That reporter has very large...um...eyes, and it's hard not to stare at them. I don't actually recall what I said to her".
This is how a man conducts monetary policy, and you two guys (and his wife) will never understand this!
So he doesn't pay attention to what he says when not in a FOMC meeting.  So what?  If he isn't testifying then I don't care.  He's flipped from inflation hawk, to dove, and now back to hawk.  I'm a contrarian so the market tends to be in opposition to my thinking.  Unless you're going to point something out, I'm still going to be missing your point.
Aw man! You didn't get my joke. I thought this was really funny when I wrote it. I couldn't stop chuckling. Go back and read it slowly. The first sentence is real (about the so-called Maria Bartoromo "affair"). The second one I made up. :-(

Actually I found the "proof" of my thinking in today's FT. This quote is real (pg 2). No funny stuff. Promise.

The Fed believes that three factors are interacting to push up prices: cyclical pressure from demand on supply, a supply shock from higher energy and commodity prices, which creates pressure for pass-through to other prices, and an increase in inflationary expectations since the start of the year. These three factors reinforce each other.

But the Fed thinks the upside surprise in inflation so far this year is mostly down to greater pass-through of energy and commodity prices. The central bank insists it will not set policy in response to current inflation data, which it cannot change owing to lags in monetary policy. But higher-than-expected inflation in the present does affect its forward-looking policy.

The phrase "supply shock" is key. I had an inkling that Bernanke is no dope. He had it right at the beginning -- "dovish" you call it. Inflation is a lagging indicator.

My only problem is that the article says "The Fed believes..." but doesn't cite anything.

  • TS missing the rigs/refineries
  • Investors moving away from commodities (interest rate hikes/inflation)
  • Inventories rise for 7th straight week
  • Demand flat

Of course that's today... tomorrow a few new incidents could send oil back over $72 :-/

My $.02


I dont know, already lost 1,50$ and probably going down more.  

I dont think we will get more than a 2$ loss in one day altough.  I'm waiting for the news as regard to the reason.

I know the Toronto TSX is down like a rock too

You can find updates trough Radio-Canada web site

Another theory on the price of oil tumbling...

Oil prices tumble after world oil forecast

JUN. 13 10:19 A.M. ET Crude-oil futures tumbled on Tuesday after the International Energy Agency said this year's world demand will be lower than previously expected. Moreover, inventories in the U.S. and Asia are at a 20-year high.

"A booming global economy continues to support demand growth, but high prices are weighing on consumption," the Paris-based IEA said in its monthly report. The agency forecast world oil demand to average 84.9 million barrels per day in 2006, or 1.5 percent more than last year.

Also on Tuesday, oil officials in Turkey said a pipeline carrying crude-oil from Iraq to Turkey is operating again after being down more than four months following insurgent attacks.

That Iraq pipeline is only at 21,000 barrels per day when it was once pumping nearly a million barrels per day.
Yep, but this is not due to geological decline, it's due to insurgents damaging pipe lines, etc... much of their production has been shut-in and are only now starting to come back online (trickle of oil flowing in the pipeline that can flow 1MB/Day)...


I figured this would happen before we talked about how the war wasn't over oil.  I actually thought that for a whole minute.
Today's my birthday!  I'm gonna try to generate an aurora tonight to celebrate!  (get it??)

I know, I know, but there are too few opportunities in life to tell Astronomy jokes...

Happy birthday.
Thanks Mr. Graph!  In the interests of full disclosure, the figure is double-nickels.  Or a full deck, both jokers, and there seems to be another card which I'm afraid to turn over.  I think I'm likely, personally, past peak...
Probably a good time to bring up my solution to the energy crisis:  simply make the minimum driving age and the speed limit the same: 55!  You kids are all too fat anyway, ride a bike!
Best wishes to you, Sunspot.  Ride a bike for your b-day!
Here's the 1Q presentation by Paramount Energy Trust, Canada's only 100% NG trust, http://www.paramountenergy.com/client/webcast/130/131/bmojune8_06webcast.pdf

There are quite a few interesting charts and discussion regarding NG as it relates to PET and the NG market as a whole. I think most will find their forward looking market outlook to be of interest. And yes, I've owned some units since 2003.

Arriving at JFK from Dubai recently, I was stopped at customs by an officer from the Department of Homeland Security and directed to a drab backroom filled with Arabs, South Asians and Africans. I wasn't surprised, really, having just spent six months working and traveling in the Islamic world - Turkey, Lebanon, Egypt and Pakistan. If ever there were a DHS red-flag candidate, I was it, and I assumed this was just protocol.

If only.


"You know, we could have you sent up to Boston for the unresolved T-shirt infractions," Malik said. "But what we're holding you for is an NYPD bench warrant from 2004. You were in a fight with a parking attendant, found not guilty and then missed a court date." All true. But how and why does Homeland Security share the NYPD's jurisdiction in cases unrelated to counter-terrorism? A fight over a parking space hardly counts as terrorism.

"We're calling NYPD to come to pick you up," Malik told me, without asking a single question about Pakistan, terrorism, Islam or madrasas.

So I sat and waited. Four DHS officers working two cases - a Senegalese guy who was caught with $100,000 in a suitcase and mine - couldn't even get the NYPD on the phone. A debate then broke out among Malik, his co-worker and their boss about how to call the NYPD. Six hours later, the DHS still hadn't gotten word from the NYPD. A shift change was coming up, and officers aren't allowed to leave until finishing all their cases.

This reminds me of Kunstler's prediction that post-peak US government won't even be able to answer the phones.

Instead of protecting the homeland from such a dangerous T-shirt-selling, off-road-rager like me, Malik set me free, so he could get home in time to watch Mike and the Mad Dog ("Eh, is Pedro pitchin' tonight?" I overheard an officer ask). As he closed out my paperwork, Malik asked, "So, ah, Mr. LeMoine, why did you miss that court date anyway?"

"I was in Iraq."

"Doing what? Like a contractor, soldier?"

"No. I had volunteered to run a humanitarian program for the Coalition Provisional Authority but left when they started killing Westerners."

"Damn terrorists. Take care of that warrant. And welcome home."

Welcome home indeed.

Homeland Security, the $40-billion-a-year agency set up to combat terrorism after 9/11, has been given universal jurisdiction and can hold anyone on Earth for crimes unrelated to national security - even me for a court date I missed while I was in Iraq helping America deter terror - without asking what I had been doing in Pakistan among Islamic extremists the agency is designated to stop. Instead, some of its actions are erasing the lines of jurisdiction between local police and the federal state, scarily bringing the words "police" and "state" closer together. As long as we allow Homeland Security to act like a Keystone Stasi, terrorism will continue to win in destroying our freedom.

http://www.latimes.com/news/opinion/commentary/la-oe-lemoine13jun13,0,1507648.story?coll=la-news-com ment-opinions

Donal -

Reading stuff like this really gets my blood boiling!

Anybody who thinks that this whole Homeland Security apparatus is solely to counter terrorists surely must have his head up his arse.

 The ink wasn't even dry on the enabling legislation for the Homeland Security Act before DOJ lawyers started giving seminars all around the country explaining creative ways in which the Homeland Security Act could be stretched to encompass all sorts of garden variety crimes and become part of local law enforcement.

Is protesting at a speech given by the President and act of terrorism? A lot of people in the Bush regime would have it so. Give it time.

There are several criteria for knowing whether you are living in a police state.

One is that the general populace has been resigned to accepting all manner of chicken shit regulations, intrusions, and indignities as a normal part of everyday life.

Another is that one finds oneself continually at the mercy of low-paid, literal-minded, humorless aparatchiks who wield enornmous power over your freedom and very life.

Another is that the government believes it is entitled to know everything about what you are doing, but that you are not entitled to know anything about what the government is doing.

And still another is a gradual but relentless intertwining of the military with civilian law enforcement, to the point where both have become blurred into one big security appartus.  

There are many more, but suffice to say that we have now largely satisfied the above criteria.

This is all extremely discouraging.

Looks like they're bulldozing that LA farming operation.  And on my birthday, what nerve.  Hope nobody gets hurt.
I wonder if the policeman are paid directly by Monsanto?
They were Sheriffs, according to the NPR report I heard.

BTW, during the discussion of the stock market, the NPR fellow was interviewing a Wall Street Journal editor, and noted that Alan Greenspan's recent dire comments about the economy were more direct than ever before. There was a pause and you could almost hear the WSJ guy swallow hard before saying, 'Greenspan is history, we're listening to Bernanke now.' (quoted to best of memory)

PS - Happy Birthday, Sunspot

This is the same line of thinking that got us into this mess.
Oh yes, what a mess...

Maybe inflation isn't so scary after all

Last week the Federal Reserve reported that at $12 trillion, U.S. household debt is just a trillion shy of gross domestic product. In all, when you add up public- and private-sector debt from all corridors of our economy, we're talking about a cool $27 trillion.

The last thing you want knocking on your door if you're saddled with this debt is deflation, when prices fall and debt loads grow.

But wait, you may be saying, we've been told that inflation is the bogeyman lurking in the woods.

The data, as they are reported, may suggest as much. But keep in mind the housing slowdown will never show up in the most closely followed inflation statistic.

"We've seen what this did to Japan," said Doug Ingram of Dallas-based Samco Capital Markets. "If people are borrowing money to spur the economy and they can no longer do this because home prices have stopped rising, that alone will cause prices to decline."

And yet the Fed sounds as if it will raise rates come what may in two weeks.

Though he's not losing sleep over the prospect of deflation, Mr. Ingram does worry that we've transitioned from Ben Bernanke to Charles Bronson.

"How do they know what they've already done isn't enough?" he asked. "What they need to do now is wait."

The only explanation I can come up with is the Fed is trying to load up the bullet chamber to fight deflation if housing does get ugly and trigger a recession.

"If Housing does get ugly..."?

I've had my house for sale in a northern suburb of Chicago since last August, I now have it 20K below appraised value (it's only six years old BTW) and I have not received one offer.  I thought at first it was just my house but as I've found out, many of the Realtors are puzzled as none of the houses in the market area are selling.

This severely sucks, I moved to Houston and I've been paying 2500/mo to keep that house just sitting up there waiting to get sold.  Of course I have to keep the heat on in the winter and that was costing me 200/mo last year :-/

I prey it sells before the end of this year, I may just bring it down another 10K soon.

Well, I just called my Realtor and told her to drop it 5K.  I will let it ride for 1 month and if it doesn't sell, drop it another 5K.  Hopefully I can get it sold before the end of the year, Geesh!
And how many people have "upside down" homes now? An awful lot of people have some bizarre mortgages so a small price drop can wreak havoc. Not that ordinary people can ever afford the houses anymore!

I was driving to an electronics store in the suburbs (GPS helps!) and saw yet more townhomes going up and the sign showed $600,000+. Who's buying this stuff amidst a sea of malls? It's looking like nobody! Today I saw a bargain in Chicago! Lofts for a mere $170,000+.

Will prices plummet until it reaches affordability? We'll sure find out!

Good find, Bradshaw. We thank you.
Damn scary is what it is.  

I'm really starting to worry whether or not I'm going to get out from under this mortgage payment!  (I will not buy another home)  I'm trying to become totally debt free (aside from renting an apartment that I now live in).


I've been reading the Housing Bubble Blog for the past year or so. It monitors what is happening to the economy and real estate as the bubble bursts.

It seems the smart money got out of real estate last August. Now people still holding houses -- especially those who were flipping using interest-only loans, etc. -- are in big trouble. Unfortunately, that means you might be in trouble, too.

Their recommendation is take a big price cut now and try to get rid of the property rather than little reductions that won't do much good. When these variable-interest mortgages start resetting this summer, there will be big problems as forclosures mount. The worst thing for sellers is that buyers are catching on that they can now sit back and wait for 50 percent reductions as the bubble deflates.

The Housing Bubble Blog is an intelligent site full of experienced people. It's a lot like the Oil Drum in that way. I would start reading it if I were you.

Sorry if this is bad news, but you might want to get ahead of the curve if you really want to sell your house sometime this decade.

Thanks for the post, I do have quite a bit I can move downward on my home as I bought it in 1999 (new home).  I was not aware the situation is so dire.
There are about 7 houses in my middle class, midwestern neighborhood that have been for sale for at least 4 months.  None have sold.  3 years ago, a house here would have been snatched in about 1 week.  3 of these houses were being sold by the owner for the first month and now have switched to realtors in hopes of a larger base of people to bring to their houses.  I am also seeing "New Price" on some of the signs signalling that they have reduced the price.

I hope you can get out from your mortgage soon.

Don in Colorado,

Do you have an "guess-timate" from the Housing Blog of the approximate percentage of people who did the smart thing and re-financed 30-yr mortgages at the low rates available over the past few years?

Also, does anyone there mention the demographic dip in population related to generation-X as a cause for weakness in entry level housing?

Just curious.

I don't know, but wages of Gen-Xers aren't enough to make hardly any of them first-time homebuyers. Even at my $45,000/yr wage, first-time homebuying is almost impossible - unless you want to settle for a fixer-upper 1br condo in a less than great area. A lot of college grads are having a hard time equalling my postal wage - plus they have that college note.

The speculators ran up the prices so bad that even with the most bizarre loans, the supply of first-time homebuyers has dried up. The housing bubble is a classic Ponzi Scheme. Consider this: At my wage, with a creative loan (which I refuse to go along with) I might qualify for a $150,000 home. Try finding one of those in Chicago!

What a paradox we've worked ourselves into.  We've been tapping equity out of our homes which have been appreciating like the last gold bar left.  In the meantime we've been adding new jobs right?  Well those jobs are tied up in housing more now than ever.  So when houses aren't being built, many of those workers get laid off.  So houses are losing their luster and the entire sector is poised for at minimum, a recession.  

Some 32pc of the 4.22m jobs created by the US economy since the expansion began in 2001 have been in the housing sector, more than four times the usual ratio, according to a study by Merrill Lynch. HSBC warns that US property has already tipped into a downturn, with the likelihood of outright price declines in the overheated markets of the East and West coast.

It get's worse, but the fun is in the article...

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/06/12/ccview12.xml&menuId=242&sS heet=/money/2006/06/12/ixcoms.html

Ian Morris, the bank's chief US economist, said the combined cost of mortgage payments and house insurance for new buyers in California takes up 70pc of pre-tax income.

I've read the max recommended debt burden for a home is 3 times household salary.  Wow, this is out of hand.

If past is prologue, we have three or four months to find shelter before the full lightning storm begins. Buy government bonds, horde cash and shun risk, advises Joachim Fels, credit strategist at Morgan Stanley.


It's real scary when you've got analysts at Morgan preparing to tell everyone to run for the hills.
Oh well!
Given a choice between inflation and recession I'll take the recession.

It will reduce oil consumption and extend the peak/plateau.  Not to mention that I'm setup better to financially weather a recession.

PS: Is the telegraph a conservative or liberal paper? Is it prone to sensationalism?
Because that's a pretty radical article.

I say you're gonna get both....stagflation.

The Telegraph is a very serious Conservative heavyweight ... it's THE paper in the UK for those in business & with money.
Right?  "Eye's closed...there's no place like home...there's no place like home..." Damn It, didn't work.
You need a pair of ruby slipper for that to work.
and a little dog named Toto.
I actually had a dog named Toto (yorky like the one in Oz)... :-) Also a German Shepard, Black Arabian Sheep dog, mastiff (throughout the years)...

Just can't bring myself to putting on ruby slippers, but hell if it will help me sell my home...WTF?

Be careful about wearing the ruby slippers to work.  They probably violate the office dress code.

An that goes for your little dog, too! {cackle}

Well, they may cut me some slack since I own the company :)
Well in that case, you don't need to worry about getting a pink slip.

But a Texan wearing ruby slippers?  
Seems a tad suicidal to me.

I've only been a Texan since Last Nov.  Will probably be here through next Spring then move to the Ozarks with any luck (battling with my wife on that move).
That's a no-brainer.  The Ozarks are beautiful.  I lived in Nacodoches, TX for a year and now live in Kansas City...a heartbeat from the Ozarks.  No comparison.
I agree, I love the Ozarks, I lived in West Plains, MO for 4 years and it's simply beautiful there... spring rivers, etc... I definately want to retire there.
Toto was actually a Cairn Terrier. Just to be pedantic about it.
Yeh I couldn't remember the breed name.  He was a Cairn Terrier.  Thx.
The end of that same article is also good
"If Ben Bernanke had guts, he would now be holding the ground he staked out to Congress in April, explaining patiently that inflation lags the cycle."
Bernanke started out with the right idea, that the economy is due to slow and the Fed is almost "done", then a few inflationary numbers pop out and Wall Street weenies started squawking, so he turns hawkish -- now he'll be a "flip flopper" if he backs off.
I was just saying the same thing over the watering hole (coffee station) in our office.   (Bernanke -- flip flopping)
Your in a pretty deplorable situation.
If the housing bubble "officially" pops or the markets do a long term swan dive you will never be able to unload it.  I would forget about trying to make a profit out of the sale and just unload it at a fire sale price.   (But then my glass is always half empty)
I am planning to do just that!  

Lower it 5K today, and I'm going to revisit in two weeks and lower it another 5K.  If it doesn't sell by then I will fire my realtor, list it FSBO just enough to cover paying the taxes and have my neighbors show the house!  

Damn the profits!  For the $2500/mo it's costing me I could have already saved $30K in the bank if I had sold it last August at cost :-/

Not sure if anyone has mentioned this yet today - but the tropics are starting to look quite scary already...


I've been paying closer attention to the hurricane season since I move to Alabama 10 years ago.
I was just thinking the same thing as that article mentioned.

"Atlantic Ocean appears to be more active than it normally is so early in the hurricane season. "


For several days I have been talking here about the possibilities we may face should we be hit by a depression in the US. The solution for the government could possibly be internment camps for the disenfranchised. Naturally I had a hard time digesting that possibility at first. It would seem that many here feel that it would not be beyond our government's capability or out of the ordinary.

The possibility that Public Works Projects similar to the ones of New Deal might prevent or soften a hard fall into depression or may help a nation in depression start to crawl back out of one seem unlikely given the responses. One of the conclusions reached regarding `New Deal' was that it by in large did not stimulate the US economy. As it turned out WW2 stimulated the economy.

I was not surprised when members showed faith in the government's ability to deal with something like depression. There are vast differences between the "Great Depression" and any depression coming. Ironically the common thread is based in resources. There were camps during the Great Depression. To get an idea of what they were like just watch an old movie called "Grapes of Wrath." This would not be the first time camps were used in the US though.

One of the first people to use camps were southern plantation slave owners. This expanded to include millions of slaves in the US. Eventually private slave holdings were banned. In skipping over a period of time we find another instance of US internment camps used to house oriental citizens during WW2.  Japanese/Americans were rounded up and put into camps since the US was at war with Japan.

During every war the US has been involved with it has improved its ability to deal with ever larger numbers of refugees, casualties and prisoners. While Japanese/Americans were not harmed by their jailers they were none the less imprisoned with no charges. If we consider slavery prior to the Civil War this was more of an anything goes affair since there were different slave owners involved.

Since I mentioned Grapes of Wrath it is important to understand the restrictions thrust upon Americans during the Great Depression. If you had a car, travel from state to state required different stickers for your car. A recent event during Katrina showed many blacks unable to walk from one end of a bridge to the other; on the other end were armed whites who fired shots in warning that none shall pass! Events like that go to the core of the Great Depression.

The other day I posted a picture and some information about Ike in WW2. The US was responsible for millions of prisoners during that war. Regardless of what you think happened to the "missing 1.7 million" German POWs it should be clear that the US like others knows how to set up camps. If we follow this up till present we wind up with practice terror drills using camps across the US.

I see history repeating itself, does anyone else?

The American people will tolerate just about any kind of behavior till a riot breaks out.  Then they want order restored at any price.  During the last depression we were an agrarian society.  We were penniless but not starving (excluding  the cities).  Now we will be broke and starving, not a good combination.

But you have to be willing to accept the premise that a depression will occur.  Remember last time the government didn't feel that it should intervene.

Check out this link:

The possibility that Public Works Projects similar to the ones of New Deal might prevent or soften a hard fall into depression or may help a nation in depression start to crawl back out of one seem unlikely given the responses. One of the conclusions reached regarding `New Deal' was that it by in large did not stimulate the US economy. As it turned out WW2 stimulated the economy.

Well, we've tried the war route and that ain't working out so well.  If we got the Public Works Projects route at least we could put people to work on rebuilding this country's railroad system.  If I was out of work and looking for something...I'd go for that in a jiffy.

Ah, but WW2 was a much bigger war ... (I should probably shut up right here before I give anyone any ideas)
There is a big difference between a WW2 project and an "Energy War 2" project. Traditional war spending is inflationary -- because resources are spent on non-productive output (like bombs and tanks). A public works project for energy would (hopefully) create productive capacity in energy -- which is "deflationary", or better "dis-inflationary".
What are you talking about? WW2 was a war. The Iraq war is a war. Public Works projects were implemented to lift the country out of a depression. First the depression existed then the programs were started. By this time the depression was nearly over.

It will be hard to tell when or if we have entered a depression today (these days) since most people agree the numbers like the GNP are false. The other factor is that for the most part unemployment is done on the phone these days. We will not see long unemployment lines like we did during the Regan years.

Should someone determine that we are in a depression odds are that we would hear that a draft is needed for the Iranian War or the N. America vs. S. America War or something along those lines.

I don't think "history will repeat itself". I am talking about the future. And since you have an aversion to "false numbers" there is hardly any way that I can respond specifically.
Hello Wstephens,
You wrote this:
"There is a big difference between a WW2 project and an "Energy War 2" project. Traditional war spending is inflationary -- because resources are spent on non-productive output (like bombs and tanks). A public works project for energy would (hopefully) create productive capacity in energy -- which is "deflationary", or better "dis-inflationary".

To me this post is confusing in several ways. I was hoping that you could explain it another way. Are you suggesting in your post that the WAR is the Public Works project? Are you suggesting that the Republican method of stimulating the economy by going to war is the best bet for all of us?

Regarding history:

  1. History must be written of, by and for the survivors.

  2. History always repeats itself, the first time as tragedy, and the second as farce.

  3. If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience?

Regarding history repeating itself here is the Great Depression:
Here is an unemployment line you will not see to many of these today since unemployment for the most part is done on the phone or online.

This is what your family goes through while you look for work.

This was segregation of the blacks.

I wanted to show a picture of the blocking of the Gretna La. Bridge here. It would have been the perfect image if I was able to find one. It seems that that image has been scoured off of the internet.  


"explain it another way"

I'll try. I was simply trying to point out the differences between (1) the "Depression" which was a deflationary event, (2) WW2 which was an inflationary event, and (3) a governmental effort to, as aforementioned, "work on rebuilding this country's railroad system" which is a dis-inflationary event.

It seems that a lot of people have the notion that government spending is always inflationary. That's all.

The only thing productive about spending is that humankind can go off the cliff quicker. The NAFTA/NASCO highway system is just such an example...

of exactly how insane everything is. Yes wstephens, I said INSANE and I mean it too. This project will not employ the disenfranchised but instead employ paving contractors. If I was a betting man I would put my money on Halliburton to be the biggest contract winner. You can bet there will be a Halliburton Paving & Curbing Inc. As it stands people don't pave roads since machines do that job.
I know, I know. Graft is graft.
Belated post relative to burning SUV's. I expect that on the
domnside of fossil fuels many structures, vehicles, tires,
biomass including corpses will be burnt in order to keep
warm, dispose of bodies and for "the hell of it". This would have to affect climate to some degree.
Whoah!!!!!! Just watching the last part of Al Gore's appearance on Larry King. When asked about high gas prices?

"We are almost certainly at or near what is called peak oil production..."

Too bad it was an aside at the end of the interview, but still...yet another high level acknowledgement of the problem.

Recently some have had worries about the amount of water needed for suburbia and for converting corn into ethanol. Researchers have found a more cost effective way of removing salt from sea water:

Cheap Drinking Water from the Ocean

water flow rates up to 10,000 times faster than would be predicted by classical equations
I love nano-technology. Eventually scientists will be able to discover all sorts of nano-technology solutions to heretofore "unsolvable" problems. As the software for modeling nano gets better (a company called Accelrys sells some) these solution may start popping out all over the place.

I wonder how much energy could be saved with cheap de-salination?

A LOT of natural gas in the Persian Gulf.
Might be a more energy efficient way of removing ethanol from water.
There's ethanol is water? I'll have a glass right now then.
It helps to add vodka to the water first. Great for a Friday or Saturday night to drink up and avoid some Calories with mixers!