DrumBeat: June 26, 2006

Update [2006-6-26 9:35:39 by Leanan]: US military sees oil nationalism spectre
Future supplies of oil from Latin America are at risk because of the spread of resource nationalism, a study by the US military that reflects growing concerns in the US administration over energy security has found.

An internal report prepared by the US military’s Southern Command and obtained by the Financial Times follows a recent US congressional investigation that warned of the US’s vulnerability to Venezuelan President Hugo Chávez’s repeated threats to “cut off” oil shipments to the US.

California most vulnerable to disruption in global oil
Just two Arab countries have supplied almost 50 percent of California's imported oil over the past five years, a dependence that leaves the state more vulnerable than the rest of the country to disruptions in the world oil markets.

The finding, based on an analysis of state and federal crude oil import statistics, underscores the challenges confronting California — the biggest gas-consuming state in the United States — and the country as a whole as lawmakers grapple with consumer outrage over high prices at the pump and a U.S. deficit that has widened on the back of high crude prices.

Update [2006-6-26 9:55:14 by Leanan]: Lots of China news....

Sinopec drilling for gas in Saudi Arabia

Kremlin gives go-ahead for China oil deal:

ENERGY-hungry China gained its first stake in a Russian oil field last week, signalling a reversal in the Kremlin’s attitude to its long-time rival and launching Russia’s new energy partnership policy.
China's May oil demand growth quickens to 13.5%

And elsewhere....

Power crisis pushing Uganda into recession

In Canada, Alberta's energy profits near bottom of barrel. The problem? "Unconventional production methods are deemed too expensive to charge the company traditional royalties."

In the U.K., Labour MP Michael Meacher says, Our only hope lies in forging a new energy world order.

Interesting article about Matthew Simmons (from Culture Change, via Energy Bulletin).

From the Cleveland Plain Dealer, Shippers hop aboard railroads:

Shippers across the country have been putting more and more freight on trains as the economics of hauling by rail have become more favorable.

The increased traffic has meant strong profits for the railroads. But for many who rely on trains to ship their goods it has been -- at times -- a hassle.

Congestion on the tracks and a shortage of rail cars, not to mention rising prices, have all contributed to headaches for shippers and their customers. It has also brought to a head the need for improved rail infrastructure in the United States and perhaps a public-private partnership when it comes to paying for it.

Update [2006-6-26 10:43:36 by Leanan]: Supreme Court to Hear Global Warming Case
WASHINGTON - The Supreme Court agreed Monday to consider whether the Bush administration must regulate carbon dioxide to combat global warming, setting up what could be one of the court’s most important decisions on the environment.

A dozen states, a number of cities and various environmental groups asked the court to take up the case after a divided lower court ruled against them.

Anyone know why there are no current PO articles by Tom Whipple in the Falls Church News-Press?
Maybe they told him, "No more of those articles or you're fired"?
Maybe he's taken his family to the beach for a week or two.
Be a good time, much of D.C. is under water.
Rumor has it a White House "shrub" was toppled by effects of Global Warming.
The adminstration is weathering the latest rumor as with all other such rumors by refusing to confirm or deny the allegations pending further investigation by unbiased specialists.
Hope Whipple returns...he's one of the most elegant at putting pieces together without sounding too Kunstleresque!!
Iraqi Minister Says Oil Production Increased

Iraq's new oil minister says the country's oil production has reached two-and-a-half million barrels a day.

Speaking Sunday on the U.S. Cable News Network, Oil Minister Hussein Shahristani said Iraq expects its daily oil production to reach nearly three million barrels a day by the end of this year and about four million barrels a day by the year 2010.

How long can they keep production at those levels?  Or is 4 MB/Day even possible?

In Forbes:

Oil steady as increase in Iraqi output offsets supply risks elsewhere

Oil Minister Hussein Shahristani said Iraq hoped to be producing 4.3 mln barrels by 2010 and to be challenging Saudi Arabia as the world's largest producer by 2015.

Challenging Saudi Arabia as the worlds largest producter by 2015?



It seems to me that any statements about future oil production by a government official should be cut in half to get a more realistic figure.  I'm only kidding - cut it by 1/3 ;)
I was just wondering if the former Bagdad Bob and Hussein Shahristani might be one and the same person. Probably not, I think Bagdad Bob had more credability.
Interesting indeed. A 'democratic', pliant client state is what this whole Iraq adventure was about.

The insurgency, however, isn't going away. And oil pipelines are vulnerable.  

Don't forget the neighborhood.  Not only does Iraq have a lot of oil and natural gas, but those permanent bases the US is building there will be ever so handy thanks to their proximity to the Caspian Sea fields.
This is picture worthy.

2.5/mbd - oh yeah!

I'm looking for a little independent confirmation aside from, say, Dick Cheney.

Anyone else see this?


Iran plans to ration gasoline.

Officials said Iran, hampered by a shortfall in funding, would halt the import of 200,000 barrels per day of gasoline on Sept. 23, 2006. They said no decision has been made on when to begin gasoline rationing.
Despite its status as the fourth largest oil producer in the world, Iran lacks refining capacity to meet the nation's fuel needs.

The announcement to end gasoline imports -- most of it from Western Europe -- stemmed from a decision by parliament to reduce the budget for gasoline imports to $2.5 billion from $4 billion, Middle East Newsline reported.

A key parliamentarian has already dismissed the prospect of rationing in the near term.

"Next week will be time to decide when we start rationing," Iranian Oil Minister Kazem Vaziri-Hamaneh said on June 23.

"Because there is no budget for importing gasoline in the second half of the year, naturally imports will be stopped and gasoline will be supplied by rationing."

So are we peaking or what?

I believe it was posted, and that it was suggested that the Iranians are trying to remove a vulerability that the US has discussed trying to exploit.  IMHO this sounds correct.


comes from a product-blog, but I think it is an interesting entry.  It relates to something I/we have talked about before ... that electric bicycles might be more efficient (in upstream fossil fuel energy) than the plain old peda kind(?).

I have no relation to the company, product, etc.

I assume we're talking marginal cost of the mileage, i.e. food, not total cost of ownership (you'll still be needing that body whether you ride a bike or not)

And it depends entirely on what you eat. The advantage of the human motor is that it can transform such a wide variety of feedstocks. Doesn't need to be an energy-intensive Big Mac. You can go a long way on potatoes and cabbage from the garden.

Your mileage may vary.

Yup, that seems to be the conversation.
If as a bike rider you just putt along, you use what feels like just about no energy. Imagine those old films of Vietnamese and Chinese just putting along, getting to work etc and you get the idea. Unfortunately they're all getting cars if they can and just zooming along.

I myself just can't believe a bicycle with a motor and batts is kinder to the environment than a simple bike, ridden at a reasonable pace.

Does this come up as a direct link?


You can play with some values, but it looks like speeds under 15 mpg are all similar on a calories-per-mile basis.  But 40 calories per mile isn't much, combined with short distances.

Even moderate exercise will build up muscle and reduce fat.  The end result is an increase in overall metabolic rate, which means a somewhat increased food intake, that is if the rider is not trying to lose weight.
I've been building and riding electric bikes for several years.  For over 3 years I've relied on them exclusively for my transportation needs having retired my motorcycles, cars, and a van.

An electric bike certainly has a bigger environmental impact than a regular bicycle which I'm sure is worse than just walking, all of which are staggeringly better than driving a car which is better than driving a truck.

The key is to use transportation appropriate to your needs.  My guess is that most non-commercial trips taken by truck could have used a car and that a large percentage of trips taken by car could now be satisfied by walking and biking.  Electric bikes have the potential to satisfy an even greater percentage of trips than a regular bike (100% for me).

Electric bikes could become an excellent mainstream addition to our transportation mix.  While walking is great, most folks won't consider it for trips in excess of a mile or two.  Much less if any significant amount of cargo is to be carried.

Most people will find that with a normal bicycle they can easily manage trips of 5 to 10 miles and they can haul 40 lbs of cargo on a rack or 100 lbs in a trailer.

On my latest electric bike I can haul 500 lbs of cargo in a trailer at 30 mph.  Or I can carry 50 lbs of additional cargo directly on the bike and cruise at 35 to 40 mph with a solid range of 50+ miles.  If I slow down to 25 mph and travel light I can easily do 100+ miles.  For rare trips in excess of 100 miles I either take the bike part way on a train or I carry a charger and take occaisional rest/recharging stops.

Just for grins I'm building a trailer for my bike that will carry a live 3 piece band plus  a 1200 watt sound system for use on our monthly critical mass rides.

Dewalt has recently released a line of cordless tools using batteries with a bit over 3 times the energy density of the ones I'm currently using that are capable of absurdly high discharge/recharge rates (full recharge in 3 minutes with access to high enough powered charger).  As soon as these batteries are made available in quantity at reasonable cost it will be possible to build an electric bike of astounding performance.

My guess is that if energy costs continue to increase dramatically faster than inflation then we will see a plethora of ever smaller, lighter, lower powered and more efficient cars.  My guess is  fuel efficiency could be increased by a factor of 5 to 10  without any exotic technology, simply by getting by with less, ie building very small underpowered cars.

At the same time we'll see ever more capable bicycles, tricycles, quadricycles, etc. assisted by small electric motors and/or gas engines.  At some point these will start sporting body shells similar to the pedal only velomobiles of Europe and they will merge into the continuum of vehicles represented by the ever shrinking cars.

Getting by with less fuel/energy isn't a technical problem.  It is a cultural one.  The rich and powerful will want to retain their large powerful vehicles while ever greater numbers of the less advantaged will want more efficient vehicles.  The difficultly will be in sharing the public ways such that smaller slower vehicles don't unduly impede the larger faster ones and that large fast machines don't squish and intimidate too many others into bigger, faster vehicles than they would otherwise need.

Actually, some fellow in Texas makes Alleweders with electric motors right now:


Getting by with less fuel/energy isn't a technical problem.

I think so too. If you want a car that does 50 mpg, you can buy it now, and it doesn't have to be a hybrid. Just a small car with a small engine. This technology was already available in the 70's. The citroen deux-chevaux, although hopelessly outdated, does the trick.

Further, there is a lot of room in applying conventional technologies. For instance, it's quite easy to make the car lighter, using carbon fiber. Or, implement a 'stop & go' mechanism (you know, it turns off the engine when you stop and starts it when you push the peddle) I don't think the technology is going to be the problem.

My guess is that if energy costs continue to increase dramatically faster than inflation then we will see a plethora of ever smaller, lighter, lower powered and more efficient cars.  My guess is  fuel efficiency could be increased by a factor of 5 to 10

It doesn't even have to go that fast. 7% increase in price per year, about 2-3 times inflation, will double the price in 10 years. So by the time you buy your next car, in a few years from now, you buy a small one.

But, but, but...haven't you heard.  Our whole society only exists because of cheap energy.  When oil peaks we're all going to die off and the power is going to go off everywhere.  Alternatives are pointless because nothing can replace oil...

Thank goodness there are at least a few others who see our coming energy woes to be a problem which can be addressed with advances in technology and efficiency.  All the talk from doomers who think we're going to die off and revert to the stone age is driving me crazy!  

plug your ears and hum all you want, it ain't going to change reality.
hybrids and electrics won't solve anything, they will just prolong this lifestyle a few more years making the other end all the more harsh. they just shift the problems to the less obvious production and manufacture,
you know the old saying, out of sight out of mind.
We are all going to die. The trick is to make it easier for the next generation and so on with the resources that are available.
"...won't solve anything, they will just prolong this lifestyle a few more years making the other end all the more harsh."

I do find this doom whining tedious. You are not allowed in my cave post peak. You would drive me nuts.

Solar will solve.

Solar-produced electricity routed into rechargeable electric vehicles will solve.

Wind power will solve.

Wind powered electricity routed into rechargeable electric vehicles will solve.

Wave power will solve.

Wave powered electricity routed into rechargeable electric vehicles will solve.

so how do you plan on solving the problems in manufactureing and maintianing them?
wind solar and wave all need the cheap oil and gas system we have right now to be made and maintained. at most you bought 20 years, that is of course if we all drop what we are doing now and go about completely redesign our infrastructure and at the same time building these devices.
making them? --maybe yes we need oil or coal to kick strart the process

maintaining them? --there should be enough excess energy from those mills that are going to energize the maintenance of those that are down

We have a solid core of hydroelectric power that can serve as a base. (Even more in Canada)

Today speciality steels (Iceland has a ferro-silicon smelter) are driven by electricity.  As are some steel recycling plants (lower energy required for recycling).

Add a large wind turbine production to that and it "could" work.

Terrific post! Lots to chew on from technical, cultural and economic perspectives.

I've shared your concern with the size/speed inequality issuses during transitional times. A greater variety of vehicles will be sharing the road.
My initial feeling was that cities would begin to more tightly restrict speed in areas where Godzilla would potentially meet Bambi. We already try to prevent the car on pedestrian mishap this way.

Also (with PO) maybe we can look forward to Peak vehicle weight!

The pedal crowd will grow and naturally become more activist. More 'share the road' (save the fuel) mentality. Maybe like what's happened in China except with HPV's ascending.

Thank's again for the great post.  

For the micro-car/electric car in the US ,for instance, cities may begin to legalize them with relaxed standards within the 35 mph zone. Happens in many other places in the world.
Before Katrina, GEM EVs were beginning to show up in my neighborhood (easier to park is one reason).  They fit nicely into the older neighborhhods of New Orleans.
Interesting that, like with electric cars, the main issue is battery technology.  Except that e-bikes use much smaller batteries.

My experience with my NiMH-powered e-bike is that it is a lot less work than the non-motorized bike, so I use it a lot more often, rather than the car, and that's what really counts.

Battery-assisted bicycles will be better for those of us with bad knees, bad hips or those who are getting up in age.

I am intimately acquainted with the former.

Also, the battery assist will help folks arrive at their destination in a drier and less "fragrant" condition.  

Just by helping with these issues, the battery-assist would probably increase bicycle useage.

Kinda funny really...even those of you who aren't econ freaks can appreciate this graph....I don't think I need to elaborate.

Amazing, isn't it, how good the economy is at supplying the necessities of life? .. and it's an exponential scale..
It looks like there is some room for "sustainable education" activists to take root.  There's no reason higher education had to spike like that.
When there's price dropping pressure on products (eg due to switching to low cost Asian manufacturing), then if the Fed manages the overall economy to keep the CPI moderate, something else has to go up to compensate.
Strange reasoning. You think someone decided the price of an education or doctor's appointment would have to rise to compensate for cheaper televisions? Who, where and when?
The important thing is each citizen has at least one viewscreen, er, television. It's cheap social control.
What is your rationale for this statement?  Check out this quote...

"In perhaps what must be the greatest irony of economic policymaking, success at stablization carries its own risks.  Monetary policy - in fact all economic policy- to the extent that is successful over a prolonged period, will reduce ecnomic variability and, hence, perceived credit risk and interest rate term premiums."

- Alan Greenspan

The conclusion seems to be that there is no "bubble" in the costs of medical care or education.  So don't expect them to come down anytime soon.
So annualized...

  • College 8% per year
  • Medical 6% per year
  • Housing 4.2% per year
  • Food 3.8% per year

    And according to BEA data...

  • Economy 6.48% per year (nominally since 1978)

    So the only thing that has "outpaced" the economy is the cost of a college education. Right?

  • Or better perhaps...

  • Per capita income growth 5.28% per year (since 1978)

    So two things have gone up faster -- College and Medical.

  • So the only thing that has "outpaced" the economy is the cost of a college education. Right?

    No. You have to substract population growth from nominal economy growth to make the comparison for every person.

    US population growth (1978-2005): 1.09%
    Nominal GDP/person: 5.39% / year

    As a cost of living we were getting worse in college and medical all these years and better on housing and food.

    I caught this myself in a post above -- per capita.

    It's interesting that the government is involved in both education and health care spending.

    Actually, I've read that college education may have been "under-priced" in the 1970s or 1980s -- and that the rapid increase is "catch-up". I'd have to dig to find the data though.

    I am not sure what the term "underpriced" would mean in this context. If price was much lower back then, I suspect this was reflecting the supply/demand equations at that time.

    As for the government influence - I find it deminishing both in healthcare and education during the timeframe you look at. I have an alternative explanation for the phenomenon but I'm not sure you'll like it - because of withdrawal of the government from those sectors (which have explicitely unelastic "demand" for obvious reasons) the prices are being set by the suppliers and allowed to rise exponentially until the lower income people are priced out from healthcare and education. In the case of healthcare I guess this gives additional meaning to the term "demand destruction".

    You made me go find my ref. The Higher Education Price Index (HEPI) measures costs specific to educational institutions (it advanced 1% faster than GDP per year for the last 36 year period). During the 1970s specifically, higher education experienced very high inflation and poor endowment investment returns. Universities apparently kept their endowment distributions higher than investment returns would warrant -- i.e. they spent down the pricipal. This policy caused pricing to students to be lower than what the actual costs would indicate. Subsequent to the 1970s then, pricing could be viewed as "catching up" from an "underpriced" level.

    Re the government involvement. I have quotes for this one:

    #1 "In their extensive study of the American research university, Hugh Graham and Nancy Diamond note that federal support for research resulted in 'increased congressional involvement, an emphasis on targeted research, and a general trend toward government regulation of the private sector.' During the late 1960s and early 1970s federal regulation of universities slowly but steadily embraced issues such as hiring, promotion, and firing of university personnel (including faculty); research; admissions; toxic waste disposal; human and animal subjects of research; access for the disabled; wage and salary administration; pensions and benefits; plant construction and management; record keeping; athletics; fund raising; and, in some cases, curricula."

    #2 "In a widely quoted claim, Harvard president Derek Bok noted that compliance with federal regulations at Harvard consumed over sixty thousand hours of faculty time and cost almost $8.3 million in the mid-1970s. A 1980 study found that meeting regulatory costs absorbed as much as 7 to 8 percent of total institutional budgets".

    I just moved to Pittsburgh and according to Men's Health magazine, we ranked 98th out of 100 cities rated for air quality. What makes this relevant can be found from these quotes in the Pittsburgh Post Gazette.
    "One thing that pulled it down was traffic congestion," said Matt Marion, the magazine's features editor. "The Texas Transportation Institute's Travel Time Index ranked Pittsburgh in the bottom 20 percent of cities evaluated. Relative to other cities, Pittsburgh had a higher traffic-congestion rate."

    When traffic is congested, vehicles spew exhaust into the atmosphere, he said....

    Although much has been done to improve air quality in the city, problems continue because of its geographic location.

    "As much as has been done, you still find poor air quality and one reason is Pittsburgh sits in the valley to the east of the Midwestern [coal-fired] power plants and in direct path of prevailing winds from those power generators," he said.

    "Southwestern Pennsylvania always has been plagued by issues of air quality related to problems beyond its borders," Mr. Knaus said.

    What is necessary, he said, is federal programs to limit pollution that crosses state boundaries.

    Traffic congestion and pollution from coal-fired plants to the west. This has been aggravated by the flight to the suburbs and exurbs. The city itself has a small population. Sigh. And I thought Boulder was bad.

    I walk a lot now (driving is painful) and now these guys are telling me exposure to the air is bad for me. You just can't get away from this crap, can you?

    Some interesting (Richard Duncan type) numbers

    World population is showing a net increase of about one million people every five days.

    The world is consuming, from fossil fuel + nuclear sources, the energy equivalent of about a billion barrels of oil every five days.

    Place your bets....


    The strategy of Fairfield, Connecticut-based GE, the world's most valuable company after ExxonMobil Corp., is for its water division to invest in desalinization and purification plants in countries that lack freshwater. Saudi Arabia, the world's biggest source of oil, is a potential customer.

    The kingdom needs to spend more than $80 billion by 2025 on desalinization plants and sewer facilities as its population grows to about 30 million by 2020 from about 26 million today, according to UN forecasts.

    Water is a finite resource

    Might be a little off on that last one.

    They should probably invest some of that money in new desalination technology:  Carbon nanotube-based membranes will dramatically cut the cost of desalination

    Should say 'potable water' or 'fresh water' is a finite resource....but otherwise that's quite true.
    'Any cause is a lost cause without population
    Remember that one?
    On the other hand, world population growth RATES continue to fall. More and more countries are falling below the replacement rate and finding their populations beginning to decline. This trend will only accelerate over the next few decades.

    Though, as Jared Diamond points out in Collapse, even if the overall population replacement rate hit zero tomorrow (i.e., about 2.1 births per female), we'd be in for about 70 years of expanding population due just to the bulge in the lower end of the age curve.  
    Another doomer, predicting a gloomy future. :-)

    I don't think you have enough evidence to
    make that assumption.


    Neither do I, which is why I used a smiley. ;-)
    Hello Halfin,

    Big thxs for posting this!  Just more proof of Hans Seleye's General Adaptation Syndrome.  According to theory as explained by Reg Morrision, declining genetic fertility plus peakoil-induced death rate increases should hopefully cause pop. curve matching to the Peak Everything Downslope.

    Now, what are the best estimates for all vital resources aggregate depletion rates and collapse of shared carrying capacity?  If Hubbert Downslope is 6% a year--Does that mean aggregate depletion is 10%/yr, 15%/yr, or hopefully 4%/yr?

    I think we need Asimov's Second Scientific Foundation to supercomputer simulate this.

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

    Well I don't read that as that optimistic. The real-world data (up to 2005) shows growth rate of 1.5%, equal to the 1959/60 value. The rest of the graph looks like an extrapolation from the previous growth rates, but the fact is that the recorded annual additions from the 60s up to today have been essentially flat (in the range of 70-80 mln/an). I suspect the sustained drop in additions, expected in the future is related to expected increased living standard worldwide - very optimistic assumption but shall we live to see it happening?

    But even if we accept this projection, from the graph I eyeball a decrease in growth of 0.75 mln. per year after 2010. If this is correct we are going to hit 0 growth by the year of 2103, by which time the world population will peak at some 9.8 bln from the current 6.5 bln. If we suppose that the worst effects of peak oil and peak natural gas (as long as some other non-renewable resources) will start after 2020, by that time we are still going to have 7.2 bln people to feed and quite a lot of projected natural growth ahead. Sounds like a sure recepe for future resource wars, doesn't it?

    Of course the future is unknowable but it doesn't hurt to plan for the worst.

    Well of course US oil imports are going to be increasingly at risk.  

    What else would you expect after the Bush regime has done its all out best to antagonize, alienate, or otherwise offend practically every country on the face of the earth (with the notable exception of the Brits and the Israelis, neither of whom supply us with any oil).

    China is busy making oil deals; the US is busy making enemies.

    "China is busy making oil deals; the US is busy making enemies."

    Absolutely perfect framing of the situation.

    I hadn't seen this posted yet:

    GM Plans a Plug-in Hybrid Vehicle
    Source: International Herald Tribune
    Publication date: 2006-06-24

    General Motors, losing sales to fuel-efficient cars from Toyota Motor, is developing a hybrid-electric vehicle with a battery that recharges at any outlet, GM executives familiar with the plan said.

    The so-called plug-in hybrid would travel more than 60 miles on a gallon of gasoline, or 3.92 liters per 100 kilometers, said the executives, who asked not to be identified because the research is secret. GM, which had the first modern electric car in 1996, the EV1, lags behind Toyota in hybrids, which combine electric motors and gasoline engines.

    A 28 percent rise in U.S. gasoline prices this year helped bolster sales of the Toyota gasoline-electric models by 37 percent, giving the Japanese automaker almost three-fourths of U.S. retail hybrid sales. GM does not make market competing vehicles now. Automakers are trying to raise fuel efficiency as U.S. lawmakers consider tougher requirements for cars and trucks.

    "There is rising regulatory demand and consumer demand for improved fuel economy and lower emissions," said John Casesa, an auto analyst at the New York-based Casesa Shapiro Group. "There's a lot of pressure to show you're responsive."

    The plug-in designs that GM is testing may be ready in time for the Detroit auto show in January, the executives said. Any commercial production is at least a year away, they said, while declining to say how much the company was investing.

    Chris Preuss, a spokesman for GM, declined to comment on any plans or research involving a plug-in hybrid.

    Plug-in hybrids recharge when the vehicle is not in use. Automakers quit making cars powered solely by batteries in the late 1990s because they were expensive and needed recharging for as long as six hours to travel 75 miles, or 120 kilometers.

    "Range is not an issue with a plug-in hybrid because you always have the engine if you need it," said Bruce Belzowski, assistant research scientist at the University of Michigan Transportation Research Institute.

    Regular hybrids use friction from braking and power from the internal combustion engine to recharge the batteries that drive electric motor. The motor is used at start-up and lower speeds, and the engine powers the vehicle at higher speeds.

    Fuel economy in the GM car will significantly exceed 60 miles a gallon, the officials said, declining to be specific. The Toyota Prius, the best-selling hybrid, is rated at 55 miles a gallon in combined city and highway driving. The Prius does not use plug-in technology.

    Toyota, which is second to GM in vehicle sales worldwide, plans to spend a record 920 billion, or $7.9 billion, on research and development this year. GM spent $6.7 billion last year and has not released a 2006 figure.

    (c) 2006 International Herald Tribune. Provided by ProQuest Information and Learning. All rights Reserved.

    How much you wanna bet GM's plug-in is an SUV?

    The report said the vehicle would exceed 60 mpg. If they can develop an SUV that can get that kind of mileage, I want one.


    sign me up
    Considering that the couple of Priuses that have been converted to plug-in status are attaining 100 - 150 mpg, the likelyhood that it would be an SUV is pretty good.
    I'm sure there are engineers within GM who want to do a "great leap forward."  It remains to be seen if management will commit to such a thing, but I'd think they have to create a viable small car division ... even if they hope for the return of the SUV(*).

    * - kind of like "the return of the buffalo"

    Exactly. GM's management has consistently shown itself to be the worst in the world. Even if GM came up with a miracle car  I wouldn't trust them enough to buy one. The Japanese are way   ahead in this area.
    I think the 60MPG figure and the economic realities mean that it almost has to be an SUV.

    The cost of the hybrid system including a large batterypack will be too much of an increase for small or even midsize cars, as well as minivans, which are usually bought by families with small kids who need the highest utility/dollar ratio possible.

    Luxury cars will sell with or without 60MPG--people who can afford that kind of vehicle don't care if gasoline is $3 or $4 or $5 a gallon.

    It will be seen as too wimply a feature for pickup truck buyers.

    I'm guessing it's something like the Chevy Trailblazer.

    I think it's ridiculous to put this technology in that kind of vehicle first, but what the hell--if it gets people to save gasoline, I don't give a flying you-know-what about what they're driving.

    Perhaps a modification of the Vue hybrid.


    My first thought was that they must be working, at least internally, on a next generation small car.

    But you're right that 60 mpg should be doable (esp. given the fuzzy way mpg is calculated for plug-in-hybrids).

    After all, the Electric Ranger did pretty well without a gas engine.  Maybe a "Half-Electric Ranger" (I realize that was Ford, not GM) would fit the bill.

    "Luxury cars will sell with or without 60MPG--people who can afford that kind of vehicle don't care if gasoline is $3 or $4 or $5 a gallon."

    Too true. However, when enough people become convinced that global warming needs to be controlled, conspicuous gasoline consumption will become anathema, an antisocial activity. If we can get to the point where the neighbours look at a 20 mpg vehicle with disdain, sales of anything like the current versions of luxury vehicle will plummet.  

    Given GMs track record, I'll believe it when I see it.
    I'm with you...I'm in the Show Me State.
    3.92 liters per 100 kilometers

    I really don't see what all the fuss is about.

    A plain ol' Toyota Yaris already gets 5.5 litres per 100 km, and the diesel version (sadly only avail. in Europe at the moment) gets 4.5 litres per 100 km. Even if gas were to double in price, assuming a daily round trip commute of 100kms, that's only going to save a commuter $15 a week.

    How much more will I have to shell out in return for an extra litre or so of efficiency? A Prius costs twice as much as a Yaris.

    I've been very pleased with my "plain ol' Toyota Yaris" since I bought it (a diesel one would have been even better). It carries 5 people comfortably, as long as they aren't toting too much stuff. I certainly don't miss the old minivan it replaced.
    By the way, I should mention that mine is a base-model 4-door hatchback with three full seatbelts (including shoulder belt) in the back seat. It cost me almost exactly $20,000 Canadian dollars, including rust-proofing, taxes and delivery charge.

    My kids prefer to travel in the Yaris than in our old Subaru Legacy, because they say it feels like there's more room in the back seat. The smart airbag also means that I feel comfortable having an older child in the front seat. I can get my whole family of 5 in it with a moderately stuffed school backpack for each child in the trunk. I couldn't carry us all and a week's worth of groceries though, or all of us and even one of our dogs.

    Have you seen one in person yet?  The Yaris makes me feel like my Prius is BIG.

    I do like the Yaris, but I don't think many people are as ready to go as small as the liftback.

    Yaris Length/width/height:  150.0/66.7/60.0 in.
    Prius Length/width/height:  175.0/67.9/58.1 in.

    So the "footprint" is 18.8% larger on the Prius.

    By the way, this is my US-based perception, that we're lucky when we can get people out of an SUV into something Prius-sized.  More power to you if you own, or live in a place where people already accept, smaller cars.
    Yes odo, I've seen and rented one from Autoshare. They've become quite popular here, and the Yaris did win European car of the year way back in 2000. Like Morrissey says, America is not the world.

    Besides the hatch, (we have the 4 door version in Canada), did you know there's also the Yaris sedan? I assume Toyota brought it to market since you Americans just lurrrrve your bigass cars. It's is 169 inches long, if that makes you feel any better.

    But if size=safety, shouldn't you be driving an Escalade?

    Nope. A tiny little Honda Fit gets 5.6 litres on the highway and got 5 stars in the NCAP ratings, better than the Prius in fact. Including taxes, it costs just $21,165.75.

    As I say below, I just can't see a financial argument for buying a hybrid - now or even in a $210/barrel world.

    The Fit is a very clever little design. My wife is looking for a new small car - the Fit is one of the two we've narrowed down to. Noticeably more room inside for people and stuff than a Yaris, in a package of about the same size, and acceptable fuel economy (in today's terms).
    I've been meaning to snap a photo of a billboard near me.  It somehow combines an environmental message with flames and a sport image.  Pretty cool, and even better if it clicks with buyers.
    Except that it's a bit expensive, the Fit sounds like a real winner. And people will buy any Toyota because it's a Toyota with few qualms because of their excellent reliability record.
    A "financial argument" is always about trade-offs.  In this case it's the typical male need to "haul stuff" versus the cost of ownership issues.

    I did look at the Honda Insight, are read of what people had to do to carry a bike.  I learned you could fit one inside if you took off both(!) wheels, and that putting a roof-rack and two bike on dropped you below 30 mpg (!!!).

    I can fit one bike in pretty easily:


    and I bought a hitch rack (yes my prius has a trailer hitch for it, LOL) that rides in the slip stream.  Even with a bike on the back, people and luggage, I can score 50 mpg cross-country.

    (I do many of my in-city errands by bike, and use the Prius for longer runs and road-trips.  My trip to the market this morning was by bike.)

    It makes more sense as "I did look at the Honda Insight, and read of what ...'
    Nice photo Odo, I'm not sure you even need take the front wheel off to put a bike in a Prius very easily. They rock!
    Besides the size and reliability arguments pointed below you have to consider that 3.92 l/km is still 40% better mileage than 5.5 l/km. FWIW this is the difference between the 20 mpg Ford Explorer 4WD and the 28 mpg Toyota Camry (both highway).
    Sure 40% sounds like a lot, and it is when you're talking about monster trucks, but when you measure this efficiency gain in dollars and litres (1.58 litres per 100km) in the sedan category, it's unremarkable.

    My point is that even if the price of crude were to rise dramatically, there are already run of the mill, gasoline vehicles available that make more financial sense than these wonderful new hybrids GM is talking about.

    Let's say the price of gas were to triple in price. In Ontario, Canada, that would mean $3 a litre (that'd be $11.36 per US gallon).

    Yaris cost of commuting 100kms, 5 days a week, average hwy mileage 5.5 litres:

    27.5 litres at $3/litre = $82.50 weekly, $4290 annually

    Hybrid cost of commuting 100kms, 5 days a week, average hwy mileage 3.92 litres:

    20 litres at $3/litre = $60.00 weekly, $3120 annually

    Annual hybrid fuel savings amount to just $1170.

    Now since we don't know the purchase price of GM's funky new hybrid, I'll base the price on that of a Toyota Prius, which including taxes and minus the $2000 Ontario gov't rebate sells for $35,413. The Yaris (4dr sedan, "package c" w/ ABS, AC) purchase price, including taxes, is just $20,387.

    So even if crude reaches $210 a barrel, I have to keep a Prius for 13 years just in order to break even compared to a Yaris sedan. Start bringing over the European diesels and there's really no financial argument for a hybrid unless prices drop significantly.

    Hey, good on you if you're driving a Prius. My lungs thank you. But at current MSRPs I don't see how driving one of these amazing new 3.92 l / 100 km hybrids is going to help anyone save money - even a triple today's prices.

    Oh, these assumptions my friend... You consider it unlikely for the price to triple, because it sounds a lot now, am I right?

    Allow me to speculate a little and assert that if/when shortages start to happen there will be two possible scenarios to evolve:

    1) If left unchecked prices will skyrocket to heights where real demand destruction prices out the least able to afford it and restores the balance. Here I'm talking about prices in the range of 10-20 dollars a gallon at the least. I know it sound absurd currently, but considering the average household income in US I don't see demand destruction playing significant role at lower heights.

    The side effect of this scenario is that the rich guys will drive SUVs as usual, while the poor guys will byte the dust.

    2) Government imposes rationing, for example fixed quantity for every household.

    In this case it makes a huge difference if you have a 40 or 60 MPG car. In case you have 60 MPG you will be able to drive 50% more and you may be even able to live as usual. The value of a car that allows you to do that will be dramatically higher than the other one, not mentioning SUVs etc.

    Of course in the short to medium term I am not expecting any of these to happen, so I agree with you that currently the hybrids simply don't pay off. But in 5-10-15 years, this will change dramatically - in all cases for a company it is a very wise idea to be positioned with superefficient models for the time they are needed.

    You consider it unlikely for the price to triple, because it sounds a lot now, am I right?

    The opposite, in fact. I'm counting on the price tripling, and that the average cost of oil will be $210/barrel over the next 10 years (using the top range of Econbrowsers' Gaussian random walk as a rough guide).

    If the cost of gas skyrocketed to your worst case scenario of $20 US a gallon tomorrow and stayed there (and in my opinion that's unlikely) it would still take 6 years before I'd see any kind of payoff for buying a hybrid vs. a typical subcompact.

    So yes, if you forsee a huge (6 times), sustained increase in the price of gas over next ten years, anyone in the market for a car should go out an buy a hybrid since it would generate comparative profit of about $10k using a $6 litre rate in the scenarios I posted above.

    I ultimately win in all scenarios, though, since I don't own a car.


    I ultimately win in all scenarios, though, since I don't own a car.

    Very true :)

    I agree with your calculations, though the Prius has some of extras compared to the Yaris which you need to substract from the price difference to make the comparison fair. And there is also some "avangardist premium" that many people seem to be willing to pay. FWIW the most popular Toyota model is Camry and it has similar parameters and not such a huge price difference with the Prius.

    The usual argument goes that with time the technology will evolve and the hybrid prices will drop; personally I expect that the 60 mpg for a plug-in hybrid is not even the start. Like I said I expect that in future the availability of the fuel to get a higher weight in choosing the car, not only the price by itself.

    As a side note I just returned from my home country (Bulgaria) where I could say that PO is already kicking in - already some half of the fleet is running on diesel or propane. I was even driven by a taxi fueled on natural gas and I expect the diversification trend to continue. Ultimately I think all ground transportation should go to electricity and therefore plug-ins are a perspective area for the car companies. It needs some time for them to become attractive for the public, but eventually this time will come.

    By the way, the Toyota will be making a hybrid Camry this fall.  Although, not as good of mileage as the Prius, it will also look more "normal" for those squimish about the futuristic look of the Prius.
    I would agree that basically these hybrids are increasing gas mileage very marginally.  When you look at the marginal difference between the two, MSRP's tend to be priced thousands higher than non hybrid vehicles.  So the savings even at doubled rates now, sometimes don't add up.  Here's the thing though....my buddy just bought a flippin SUV b/c the deal was too good (I tried talking him out of it b4, but it was the wife's vehicle).

    I asked him if he could afford the gas and he said yeh, it's not too bad.  I said great, but what about if it's $4/gal.  That's only a 25% increase and it became real clear to him he just bought a toilet for his cash.  How many people sit and figure out the savings of mileage before they buy a vehicle, let alone a hybrid?  I know ALL of them are HERE though.....

    I'll start by reminding the reader that I consider myself to be a "car guy" and that I like a lot of different cars, for a lot of different reasons.

    But if you are going to make comparisons between the Prius and anything else, I think you have to reduce the other variables.  You have to find a car that is like a Prius in all other respects (mainly size/capacity, and reliability) and then see how the hybrid aspect changes the picture.

    If you are going to compare a Prius with a smaller car ... you might as well compare a Lotus with a slower car ... if you get my drift.

    Now since we don't know the purchase price of GM's funky new hybrid, I'll base the price on that of a Toyota Prius, which including taxes and minus the $2000 Ontario gov't rebate sells for $35,413. The Yaris (4dr sedan, "package c" w/ ABS, AC) purchase price, including taxes, is just $20,387.

    Maybe that explains part of our different persepctives.  My 2005 Prius only cost 25,263.44 CAD (22,500 USD).

    I did stop in to see when the Fit was due, but I couldn't get a firm date (a year ago).

    Maybe that explains part of our different persepctives.  My 2005 Prius only cost 25,263.44 CAD (22,500 USD).

    Definitely helps to explain the difference!

    The Yaris fits nicely in the "modernized Geo Metro" category (inexpensive, functional, efficient, simple, reliable) and I've been looking at one as a likely replacement for my existing vehicle, when the time comes.  A better choice than a Prius, in terms of value for the dollar.
    Cartergan - wait a minute, a Prius costs 2X what a Yaris costs? Someone on here said a Yaris is $21k, a Prius is about $23k. They're roughly the same.
    In Ontario, Canada:

    A Prius costs $35,413 CDN including taxes and minus the $2k rebate.

    The Yaris (4dr sedan, "package c" w/ ABS, AC) purchase price, including taxes, is just $20,387 CDN.

    You can price it out for yourself on the Toyota Canada web site if you don't believe me.

    I think Cartergansweater is talking Canadian $$ for both cars.  In American $$ Yaris= approximately $13k, vs. $24ish for Prius.
    Yes, quite right. Canadian dollars in all cases. My apologies if anyone was confused.

    Didn't I already mention that America is not the world?

    Oh OK you guys aren't using real money.

    One of these days I'll raid the Monopoly game set for the play paper money and go to Canada and have a nice vacation.

    Make sure you do it before the US dollar is worth less than the loonie.
    How many more coal fired power plants will we need to build to charge them?

    Prediction - by the year 2020 everyone is going to yelling about all the used batteries and how to dispose of them? I know for the most part they should be recycled - but the problem there is going to be NIMBY. Who wants a big battery recycling plant as a neighbor?

    If at all possible, the US will export this type of pollution elsewhere.  so we'll ship the batteries to china or somewhere like that and they'll be recycled their and shipped back or put in unregulated dumps.
    Excellent points.  God knows we can't generate electricity with anything but coal, and we'll never figure out how to incorporate the facilities for recycling those batteries into our modern world.

    Best to just sit in a corner, wimper, and wring our hands until we die.

    Are you being ironic or describing observed behavior?
    Is there a difference?
       well, nice to see some true awareness that the world is starting to be bigger than the U.S.

    I looked at the Yaris around the same time I looked at Prius (original version) - 3? 4? years ago. The Yaris cargo model was also interesting a few months later. Europe or Japan tend to get the pick of automobiles, except for SUVs, minivans, and pickups. America's auto market is not very representative of what the world buys. The quantity of electronics bothers both my wife and I, though.

    Battery recycling is, at least in the sense of collection, very serious in Germany - most current batteries are really, really nasty mixtures of metals (all electronics basically suffer from this - recycling, in terms of collection and at least basic materials recovery is also normal practice here).

    Batteries are seen as a major problem and as something to be resold at a minimum level as basic materials - at a guess, the Chinese or Russians do the smelting.

    This is one reason that any doomer perspective has to be a balanced one - the U.S. could certainly become more like Europe, though it would involve so many things it is impossible to imagine it happening in any realistic time frame.

    Still, the U.S. could actually develop a long term view, even as the short term turns grim. Not that I believe it will happen, personally, but the collapse of the U.S. in any sense is not a collapse of the entire world.

    A number of places are doing a better job of looking at and preparing for the coming challenges. They never had the luxury of getting out of practice in meeting long term problems, as the U.S. seems to have. Or which the U.S. may have never actually developed - this could be a sort fitness test - most North American civilizations seem to have had unstable lifespans, without developing sustainability. Who knows how the last major expression of humanity's ability to fill in a total ecosystem will work out.

      And any of those cars will give you chronic back trouble if you attempt to fool around in the back seat. I suppose they will help the world population problem.
    Ah yes.  You could fit an entire Yaris in the backseat of a '68 Chrysler Newport and still have room for some creative positioning :-D
    Um, not that I really want to get into this subject - Germans first get a license at 18 - broadly speaking, they don't wait until a car's backseat is available. There are also clever ads all over the place advocating using condoms - the new billboard I saw yesterday at the train station has a nice yellow banana covered with a green tinted condom, next to a brown no longer attractive brown one, with a text which roughly said 'No rotten excuses.'
    Expat, I think your comparisons of Europe and the States are interesting. Would you consider writing a more complete article how differences in lifestyle etc. effect energy consumption?
    Westexas in particular may be interested in a recent comment in Investors Chronicle in UK. Behind a pay wall but the interesting paragraph is
    TNK-BP has long been sparring with Russian state gas company Gazprom over development plans for the vast Kovykta gasfield in Siberia. TNK favours more lucrative exports to China and Korea, while Gazprom prefers internal sales.
    They were making a point about the future growth of TNK-BP in Russia but the Russian reasoning is in tune with what is regularly said here.
    The issue with Kovitka is that it is the logical first development for the China/Korea export market. There are other large gas fields in the area, but Kovitka is nearest to the border.

    It's not exactly the case that Gazprom prefers domestic over export sales. Why would they, when the Russian domestic price is tightly regulated? There just isn't any money to be made selling gas in Russia. Which is why they are quite happy for foreign oil companies to be stuck in the domestic market, with the export market reserved for Gazprom.

    In other words, Gazprom wants export sales to happen on Gazprom's schedule, with the profits going to Gazprom. The recent legislation giving them de-facto regulatory control over exports is simply a step in that direction. And Gazprom is quite happy to wait, as it simply doesn't have the cash to finance major export projects at the moment.

    The reason could be I suspect nothing to do with capitalist economics and a lot to do with keeping the peasants from the gates of the Kremlin. Gazprom is effectively the Russian State in the same way as Sinopec or Saudi Aramco. The Kremlin must first ensure that its VERY cold areas are heated, albeit inefficiently. A gas shortage at 50 below would very likely cause civil unrest particlarly if it was thought that foreigners (of any kind) were getting "our" (Russian) gas while we (the Russian people) freeze.
    After 250 years of grinding the faces of the provincial peasantry, Moscow isn't suddenly showing its human side in the form of subsidized gas supplies! Local demand is trivial and can be met by the infrastructure already in place (paid for, built, operated and maintained by TNK-BP). It's all about keeping control of the export market in the hands of the State.

    This PDF http://www.tnk-bp.com/common/en/press/presentations/Ferguson-BaikalEcForum-16.09.pdf shows the situation quite nicely. Kovytka (at the NE end of lake Baikal) is nearest (by about 600km) to the Chinese border and is the obvious choice for getting gas quickly to the Chinese market (i.e. in 3-5 years instead of 10-12 years). Unfortunately for Gazprom, Kovytka is operated by TNK-BP; Gazprom's fields are a lot further away. So Gazprom is using its political influence to prevent TNK-BP from going ahead with its export plans, and holding out for as big a share as it can get. TNK-BP has already offered Gazprom 51% of Kovytka, but clearly that isn't enough.

    From Leanan's link above

    Sinopec will pay an estimated $1.5-$2bn for the 49% of Udmurtneft that belongs to the Russian-British joint venture TNK-BP. The deal marks the start of a stregic partnership with the Russian government, as state-owned company Rosneft will buy the remaining 51%.
    Hello Jamie,

    ...and from the St. Petersberg Times of Russia: the G8 leaders are going to have to learn to 'Grin and Bear It' as Putin repeatedly thrusts his energy agenda forward:

    A Grin and Bear It Summit

    By Georgeta Pourchot [Georgeta Pourchot is senior associate at the Center for Strategic and International Studies in Washington.]

    The Russian agenda for the G8 summit next month is taking shape. From the Kremlin's perspective, the St. Petersburg summit will be a public relations opportunity to restate known positions, propose a few new initiatives and do so looking like a great power again.

    Other than stepped-up rhetoric, it is unlikely that Western partners will have much influence over this G8 agenda. That became clear at the Sochi summit, where Russia rejected the Energy Charter, the one mechanism that would have made Europe and Russia's dependency mutual. In the energy sector, Russia retains the upper hand in decisions about how much, to whom and how it is going to deliver its natural resources.

    The agreement and subsequent start of construction of the North European Gas Pipeline marked the moment when Russia decided to use natural resources for political ends. The North European Gas Pipeline kills two birds with one stone: It makes the European Union even more dependent on Russian energy resources and East European countries less energy secure. It also shows former communist countries such as Poland that their anti-Russian rhetoric has a price.

    Overall, Russia is likely to host its first G8 summit amid broad international media attention, high security, anti-American popular demonstrations and official smiles that lack substance. The Kremlin will, however, have shown its public that Russia is back on the world stage as a great power and that the recognition of its status was worth the cost of hearing a few uncomfortable truths.

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

    Peak Oil Scenario (posted on a transportation planning board that I belomng to) (Any comments from TODers ?)

    The future of world oil production has many variables (TOO many) and cannot be reliably predicted. However, for discussions with Leroy Demery, and to inform others, I am going to outline a "middle ground" scenario below.

    This is an "All Liquids" forecast. Ethanol volumes are reduced to reflect their lower energy density. Tar sands, coal to liquids, natural gas to liquids are included.

    2007 - Peak World Oil Exports
    2009 - Peak World Oil Production (the difference is growing internal demand for oil exporters. All are booming today and have growing internal demand).
    2010 - PO -1%
    2011 - PO -3%
    2012 - PO -5%
    2013 - PO -8%
    2014 - PO -11%
    2015 - PO -14%
    2016 - PO -17%
    2017 - PO -20%
    (Convential oil down -1/3 in 2017, balance made up by "other")
    2018 - PO -22%

    All efforts at conservation are inadequate on a global scale (despite successes in some nations) and the method of last resort, recession/depression is used worldwide. The US dollar crashes and might reach €40¢ (US$2.50 = 1 euro). Oil rises to 1.5 euros/liter or close to US$500/barrel by 2018.

    As I said, a middle range estimate.

    So far, US oil demand has increased, slightly, with higher prices. We are likely to have to reduce our oil use by more than the global average since we do not export enough to pay for what we want.  
    Imagine the US reducing total oil consumption (transportation (2/3) & non-transportation (1/3)) by 1/3 in a dozen years ! What economic forces would be required ?

    Mandates do work as long as the big stick is used.
    We need to kill consumption, before consumption kills us.
    I tried to "split the difference" between you & Robert.  I did an "All Liquids" curve since that has the most economic & social effect.  Convential oil down by 1/3 by 2017 (deep water everywhere helps a bit, atripper, CO2 recovery, etc.)

    Prices, at the end, are almost "out of the hat".  REALLY hard to judge that.  Tell me US & global unemployment and I will give better #s.

    What did you think of the depletion curve  as a planning tool ?

    I'd like to see the graphologists weigh in.  That looks steep to me, but I'm really a graph consumer, and not a maker.  Great work Alan.
    Perhaps we should limit our consumption to delay 'peak graphs'?
    "What did you think of the depletion curve  as a planning tool?"

    All I know is that a fossil fuel use + nuclear use of a billion barrels of oil equivalent is not sustainable.  

    You mean it doesn't make sense for Americans to spend $24.95 on patriotic Disney figurines manufactured in China?

    What's more grotesque?

    A. Hallmark and Disney contracted out to CHINA to make these.

    B. A worker in China watches these these words flash by on an assembly line.

    C. Oil is burnt to make and then ship these things to American consumers.

    At least its a fullproof way to get those words through the giant Chinese firewall.
    I often wonder what the Chinese workers think of all the crap that they are making to ship over to American consumers.
    It's insane. Why not have a 'Tolerance' figurine manufactured by workers in Saudi Arabia?
    It would not do any good. If there were such a plant in Saudi Arabia it would be manned entirely by Filipinos, Pakistanis Indians or expats from some other undeveloped country. Working in such plants is manual labor you know. Saudi's don't do that. That is why they have a 30% unemployment rate. There are only so many jobs for "bosses".

    For those who think I am joking, I am not. There are manufacturing plants in Saudi Arabia. There are plants that make concrete blocks and other building materials. There are plants that manufacture other things for local consumption. Every manual labor job is filled by an expat from another country.

    How do I know this. I lived there for five years while working for Aramco, 1980-1984. My son has lived there since 1991. He says it is still the same. When I was was there, there were roughly 5 million foreign workers in the country. Today there are 5.5 million foreign workers in the country. Saudiazation of Aramco, as well as in other places is the aim but they are really not making much progress.

    Everyone I've known who's been there has said the same thing - Doing real work is for other people. This is just how middle eastern culture works. Keep in mind Middle Eastern includes all those countries, including Israel. All the groups see themselves as Chosen and "work" to them is getting others to do the work. The deeper you dig into the cultures, their holy books, their laws (Americans tend to think other countries have the same laws we do, but they don't.) the uglier it gets.
    Is it any different in the United States?  Bush keeps saying we need to let the Mexicans in to do jobs Americans don't want to do.
    It is very different. Look up statistics on how many Americans vs. Saudis are employed, employed in the private sector, etc. The oil rich gulf states are fairly unique.

    The percentage of American private sector workers who are temporary immigrants is microscopic compared to several gulf states.

    I've often wondered the same thing.  Some of the total junk that makes it here is AMAZING.  The thing is...it costs less than a penny a toy for shipping on all the happy meal toys.
    If only they could come to PETCO at christmas and watch people lined up with thier dogs, cats, etc for a picture with Santa.  

    "I can't buy shoes and you get a picture of your dog???"

    What's sad is that many American dogs probably eat better and recive better health care than most African children.
    If by some miracle we were to be visited by the Rational Planning Fairy, consumption could easily be cut by the amounts suggested in Alan's figures. If we want to panic and fight we can do that too.
    See my post below.
    "Rational Planning Fairy"  LOL OMG that is funny!!  
    Could you explain your rationale that the US dollar 'crashes' against the Euro?

    The European Union has worse demographics than the US in terms of retirement, is probably in worse energy shape than the US, has generally higher rates of unemployment as well as longer lasting unemployment, and, if you remove Germany which is a huge export machine, the economic numbers are generally worse than ours as well.

    Finally, they have one heck of a time agreeing on things over there, as several hundred years of history make clear.

    Perhaps he was hinting at the success of an oil bourse denominated in Euros?
    Your certainly do seem to have learned your facts from the American media.

    The EU does have more energy problems than the U.S., which forced decades of efficiency - it also has a wind turbine and solar cell industry on an industrial scale - even if a pittance in comparison to other energy sources, the EU is the place to buy. And in typical EU fashion, they plan to support and protect this export market.

    The EU does have a non-growing population - while this creates a retirement 'crisis', it also avoids a lot of other growth connected questions in a world faced with the end of liquid fossil fuel based growth.

    Germany's economic numbers are quite comparable to the U.S. in most ways - the distortions in the standard U.S. press are well handled by Dean Baker at beatthepress.blogspot.com. Both countries are world leaders too - the Germans in export, the U.S.A in debt.

    The U.S. would be lucky to have Germany's problems - spoken as an American living in Germany for more than a decade.

    There will be massive problems everywhere with peak oil - but the fundamental question of infrastructure is definitive to me.  

    My dad stays in Germany 6 mos out of the year.  He loves it.  More recently it hasn't been as much fun though due to lower exchange rates.  He was used to making A LOT more money staying over there, but it's being eaten away as the exchange rates worsen for those hoarding US bills.  I lived in Germany for 5 years and it was amazing.  For starters, they don't license idiot drivers (for the most part).  Driving in Europe is treated more as a privelage, not as the "right" we have all bought into.  The autobahn is a thrill, although now I read it is clamming up with TRAFFIC.

    For one you can't BUY your way out of tickets.  Everything counts and it hurts a lot more when you get a ticket.  I mean think about it, Germans are intelligent enough to let me go as fast as I want to, but just not 2 feet behind another car (I've seen the strips in the road with cameras to catch tailgaters).  So for those of us who want to go balls out, fine, just don't get close to anyone!  I like....Europe in general has even stricter biking laws that WORK!  

    My first bike was a superbike 04 GSXR750.  I should have died learning to ride a motorcycle on that.  I was sitting on 120hp transfered to ONE wheel.  In Europe you have to start small and take tests all the way to full License.  Makes a lot more sense, but not near as "free" as we like it here.

    hmmm.  22% reduction in 12 years, or less than -2% per year.  

    Well, the US reduced it's oil consumption by 15% from 1979 to 1983(-4.0% per year, average), with economic growth of 7.4% (1.8% per year, average).  So, I think we could manage 2% per year, while still growing.

    Here's the numbers. They exclude electrical generation, which would have made the numbers look even better, but might be misleading, because substitution of gas for oil was a one-time thing.  Of course, you could make the same argument for industrial consumption, but I think that would be overadjusting, as there are further substitutions that could be made.  The GDP is inflation adjusted.

                  Oil          GDP
    1980    -5.2%    -0.0%
    1981    -3.9%    1.2%
    1982    -5.1%    -1.4%
    1983    -1.6%    7.7%

    Nick, great post and I agree with your figures. However there is a world of difference between the oil crisis of 79 to 83 and the coming decline. For starters we knew then that the crisis in the Middle East would pass and things would eventually get back on an even keel. They knew that "this too will pass". The stock market new this and no one panicked. All world's other oil exporters kept right on pumping at full tilt.

    This time it will be entirely different.  This time people will know "this too will not pass". They will know that the world's liquid fuel supply will now be shrinking.....forever.

    People invest in the stock market for growth. But with a forever shrinking energy supply, most savvy investors will now realize that the economy will now begin to shrink.....forever. People do not knowingly keep their money in an investment that they know will shrink instead of grow. Most everyone will pull their money out of the market. This will result in the mother of all stock market crashes.

    The second thing that will happen is that exporting nations will start to husband their own oil. They will keep as much of it as possible for their own use. Kuwait is already talking about doing this. They are simply the first domino that will fall, pulling more and more oil off the market. This will accelerate the decline greatly.

    No Nick, it will not be business as usual this time like it was during the 79 to 83 crisis. This time it will be dramatically different.

    "we knew then that the crisis in the Middle East would pass and things would eventually get back on an even keel"

    Not so much.  A lot of people, perhaps most,  thought that oil prices would never come back down - that's part of the reason why the response in 79 was so strong, vs these last two years when people started out assuming a temporary spike.

    "But with a forever shrinking energy supply, most savvy investors will now realize that the economy will now begin to shrink.....forever."

    I think most savvy investors recognize that peak oil is not peak energy.  Look at the enormous amount of money that VC's are putting into solar: they recognize the future when they see it.

    Further, even peak energy input doesn't mean no economic growth.  For instance, in the US the car market is mature, but car stocks don't crash (unless they meet a better competitor - GM is down, Toyota is up...).  Biotech is not resource intensive, nor are other services which are the future of GDP growth.

    more later..

    Just a note, but as someone getting his driver's license in the 70's ... I thought V-8 engines were on their way out for good.  I thought we were looking at a small-car future.

    I was somewhat amazed (mid 90's) when good times started to roll again.

    Here's another report about the penetration of Peak Oil into mainstream consciousness.  I just returned from a mind-bending three day conference in Toronto called IdeaCity. You can read about it here.  It's similar in concept to the TEDCity conferences, and revolves around three days of 20-minute talks about great ideas from luminaries in the arts, sciences, technology, politics, etc.  Among the 55 talks and presentations, there were about 20 that could potentially have touched on PO or related isssues, and of them at least six did.

    There were the ones I would have expected, such as the marketing director of an English company that's developing a fuel-cell motorcycle.  As well we heard from Spider Robinson, an SF writer who is completing an unfinished novel by his hero Robert Heinlein.  He has been a long time champion of the idea of the resource limitations that are inherent in living on a sphere, as well as solutions to them like Solar Power Satellites and asteroid mining.  He was especially emphatic about this being our last chance to assure our survival as a species.

    Then there were the ones that came out of left field.  A comedian named Peter Bergman (a Firesign Theatre alumnus for those of you who dimly remember the late '60s) did a comedy schtick called "The Nervous Optimist".  And the one thing that makes him most nervous is oil depletion.  In the middle of the performance, with no real introduction of the notion, he said, "And this should come as no surprise.  We've known this was going to happen since 1956, but here we are, sliding down Hubbert's Peak!"  Of course, the 1956 reference being to Hubbert's seminal paper on the topic.

    Then there was the deep-sea explorer who discovered both the Titanic and the Bismarck, who listed PO and GW along with global terrorism as the big challenges of our age.  I took issue with him on terrorism, and he agreed that it didn't have the whole-species implications of the other two.

    In addition it was mentioned by William Samson, a prisoner of the Saudis for almost three years, Mike Papantionio of Air America Radio and Samantha Nutt, a doctor with NGOs who mentioned it in the context of resource wars.

    In conversations during the breaks and at the evening schmooze-parties, the level of awareness was extremely high, and the amount of concern was palpable.  Now this isn't a blue-collar crowd by any stretch of the imagination, so their knowledge was no big surprise.  What was surprising was the consistently expressed view that this is one of the fundamental challenges humanity is facing.  The fact that so many attendees are in a position to do helpful things was even more gratifying.

    I mentioned to the conference organizer, Moses Znaimer, that we ought to have a speaker at next year's conference talk specifically about Peak Oil.  He said, "Find me the right person, and I'll invite them.

    Any takers?

    I might be interested.  I would rather speak to the totality of solutions (use Swiss WW II experience, etc.) and "easy" and "hard" cases for solution.
    Richard Heinberg.
    Without a doubt,  Matt Simmons.

    He will be taken more seriously, by this crowd and he carries an increasingly sobering message in his talks.

    On another note,  Dr. Bartlett would be a great speaker for that crowd,  a real eye-opener.

    It's all about population!

    Jolie says 50 children.  A million more are born. Pretty hopeless, I'd say.  And what will those 50 children's future be like.  We hear nothing about population these days whereas it was all the vogue in the early 70s.  I guess we must have fixed the problem.  Thank George Bush for asbtinence.
    We can thank him for reinstating the gag order
    too.I think it was his first official act.


    I'd like to attend next years event if you let us know when and where it will held. Meeting a few TOD people at an event like that would be great as well. I'm sorry I missed it this year.
    Oil Sands' Production Costs

    I have always been a little suspicious of the $25/bbl Oil Sands Production costs commonly thrown around.  It is unclear to me whether this included payback of the capital infrastructure costs, which are very large at about $40,000/barrel/day.

    Anyway, interesting numbers contained on page 2 of this article from The Edmonton Journal

    Oilsands plants are charged a nominal one-per-cent until the cost of their construction is paid off. Afterwards, the rate jumps to 25 per cent, but only on net revenues after production costs.

    The 25-per-cent royalty paid by the largest owner of the Syncrude plant, Canadian Oil Sands Trust, is forecast to average $5.16 per barrel this year. That's seven per cent of the gross price of the $77 a barrel fetched in mid-June. The net, after-expenses price divvied up between the company and the province was only about $21.

    Even with the construction costs paid off, the net production costs appear to be $71 - $21 = $56/bbl ($50 USD).

    Still not sure if "construction costs" are the total capital infrastructure costs.  

    Reinforces my skepticism of arguments like Nonconventional fuels such as CTL are economic when crude oil prices exceed $30/bbl


    That should be $77 - $21 = $56 (all Canadian dollars, not that there is much difference these days!)

    I am beginning to wonder if Canada will have to build a fence to keep Yanks from heading north. . .

    I've seen total capital costs of about $60,000 (US) per bpd of oil from tar sands.

    With Harper and Bush being such great buddies,  I imagine they will only build a sign saying "Welcome to Canada! Take what you need"


    It's all about population!

    It seems the capital costs are going up as we speak...
    I'll meet you in Vancouver...absolute gem of a city.  The party is there!
    Moscow surpasses Tokyo as world's most expensive city

    The vodka may be cheap, but according to the latest cost-of-living survey from Mercer Consulting, Moscow now ranks as the world's most expensive city, edging out Tokyo, which held the No. 1 spot for four straight years.

    Moscow ranked No. 4 last year, but rose through the ranks for a few reasons, according to Mercer senior consultant Rebecca Powers. The currencies of Tokyo, Osaka and London -- the top 3 cities last year -- fell relative to the dollar, while the Russian ruble remained fairly stable. Plus, Powers added, the price of housing for expatriates in Moscow has risen considerably in the past 12 months.

    A drawback to the oil boom?

    Highest prices.
    Worst traffic, bar none.
    Most arrogant inhabitants.

    "Worst traffic, bar none."

    How do you like that cab ride from the airport to Moscow?  Every time I visit Moscow I kiss the ground when exiting the cab.  The drivers are insane there, it appears there is no traffic law.  Aside from that, I most often used Bus & Metro so I was able to get around quite easily :)


    The only time to make that journey is 4am. If you spent as much time as those drivers going nowhere, you'ld go nuts too. How much did they make you pay, by the way?
    I didn't pay actually, My wife (Russian) has family in Moscow, so when I visit they take a cab to the Airport and pick me up they always insist on paying.


    Brine stained with oil

    Simmons tells it like it is.

    "The best Saudi oil is gone... Middle East production will go down by one third by 2012." He reported that an Occidental Petroleum official told him that they're in the business of producing "brine stained with oil." Saudi Arabia has been depleting its precious fresh water by pumping it into its aging oil fields, and this has meant using more and more salt water to the detriment of the fields and the equipment.


    Hello Darwinian,

    Yikes!  Is that >13% a year? 72/12= 6.0 years, but 2012-half done 2006 = 5.5 years.  72/13 =5.54 years.  No way to mitigate that decline rate--worst case scenario ahead?

    Please tell me my math equation is wrong!

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

    Well, the Middle East, counting Bahrain and Oman, produce about 24 million barrels per day, all liquids. So that would be a decline of about 8 million barrels by 2012. That's a decline of just under 1.5 million barrels per day, per year. That would hit pretty hard, but we could handle it.

    But what if the rest of the world declines by an equal amount. That puts the drop at 3 million barrels per day per year. But I don't think the rest of the world will fall that fast, more like half a million barrels per year. That's an overall drop of about 2 million barrels per day each year. I believe that is managable.

    Well, perhaps not. The realization that we are post peak will send the world's stock markets into a tailspin. And it will cause many oil exporting nations to start to husband their oil, keeping more in the ground for future domestic use. This would cause a major worldwide depression, and who knows what else.

    Hey, it ain't gonna be pretty.

    Interesting that you should use the terminology of a "tailspin" because to get a plane to spin, you must first stall the wings (usually slowing too much and exceeding the critical angle of attack trying to maintain altitude).  On top of that, in most situations if you have enough altitude to play with you can still recover from it.  But stall/spin too close to the ground (where most occur because they tend happen during a botched approach) and it's time to kiss your a$$ goodbye.
    Darwinian -

    I just happen to have finished reading Simmons' book, 'Twilight in the Desert', and I must say: it's quite convincing and also pretty scary stuff!

    Simmons goes into great length discussing the ever-increasing water cut of Saudi oil and the massive efforts at injecting water to maintain pressure and to (hopefully) sweep oil from the periphery of the fields to the production wells. It was a real eye-opener to see the extent that water management is such an integral part of operating a mature oil field and how easy it is to irreversibly screw up an oil field.

    Saudi Arabia has built some truly huge water treatment plants for oil field injection. I would guess that at the very mininum the water treatment process must include sand filtration to remove particulate matter that would plug up formation pore space. Perhaps some lime treatment to remove scale-forming calcium and magnesium? Then maybe some pH control? Just a guess.

    Is anyone out there familiar with exactly what steps the Saudi injection water treatment process consists of? (This is mainly professional curiosity on my part, as I was once in the water and waste treatment field.)

    Looks like they just filter out the sand and other suspended solids to prevent plugging of the well. See page 4 of the PDF file, URL below.


    Alan you hear about this?

    http://www.neworleanscitybusiness.com/uptotheminute.cfm?recid=4912&userID=0&referer=dailyUpd ate

    NEW ORLEANS -- Robyn Lewis, owner of Dark Charm fashion and accessories for women, represents the first line of defense for the Magazine Street shop owners. She is the first to see them come strutting in their pumps down St. Andrew Street, the bewigged pack of thieves who have plagued the Lower Garden District since May.

    Like an SOS flare, Lewis grabs her emergency phone list and starts calling.

    "They're coming," she warns Eric Ogle a salesman at Vegas, a block down Magazine Street. Ogle, who was terrorized by the brazen crew two months earlier, alerts neighboring Winky's where manager Kendra Bonga braces for the onslaught.

    Soon every shop owner in the 2000 block of Magazine Street has been alerted.

    Sarah Celino at Trashy Diva eyes the door, ready to flip the lock at the first sight of the ringleader's pink jumpsuit and fluorescent red wig.

    Down at Turncoats, where the fashion-happy gang once made off with more than $2,000 in merchandise, store manager Wes Davis stands ready.

    Davis said it wasn't supposed to be like this. They survived Hurricane Katrina's Category 3 winds and the ensuing looters. They reopened despite the long odds of doing business in a devastated city. The last thing the Magazine Street shop owners expected to threaten their survival was a crime ring of transvestites.

    "They're fearless," said Ogle. "Once they see something they like they won't stop until they have it. They don't care, they'll go to jail. It's really gotten bad. You know it's ridiculous when everyone on the block knows who they are."

    Expensive tastes

    The transvestites first appeared in March when they raided Magazine Street like a marauding army of kleptomaniacal showgirls, said Davis, using clockwork precision and brute force to satisfy high-end boutique needs.

    They first hit Vegas March 31 while Ogle was working.

    "They come in groups of three or four. One tries to distract you while the others get the stuff and run out the door. It's very simple," Ogle said.

    Next door at Winky's, Bonga heard people screaming inside Vegas, then saw a blur of cheap wigs and masculine legs in designer shoes streak past her door.

    "All of a sudden our UPS guy dove out of the store and tried to tackle them and there's little Eric from next door on the sidewalk with a bunch of stuff he managed to grab from one of the guys," Bonga said. "The other two guys took off down the street and jumped into a car driven by a real girl."

    Ogle gave police a description of the perpetrators -- African-American males ranging in height from 6 feet to 6-5. They all wore the same midriff shirts and wigs with twisted, dreadnaught hair.

    "They're all very skinny and very flamboyant," Ogle said.

    Two hours after the police left, the transvestites returned to Magazine Street to storm Turncoats just a block away from Vegas, and made off with more than $2,000 in merchandise.

    "They move like clockwork," Davis said. "Two thousand dollars is a lot for our store to lose, especially being in the slow summer season. It makes it so I can't even mark my stuff down as much as I want to because I'm trying to make up for what I lost."

    In the ensuing weeks, the gang of transvestites continued their reign of terror. Sometimes they come dressed as men, though Bonga said it is obvious who they are based on their delicately plucked eyebrows. Sometimes they bring 2-year-old children to add to the level of distraction. They once returned to Vegas holding an "infant" that really was a Cabbage Patch doll wrapped in a blanket.

    "They'll make themselves scarce for a few weeks and then one day you'll be busy with a customer and all of a sudden there's a whole slew of them in your store and there's nothing you can do because you're there by yourself," Lewis said.

    Scarce evidence

    The New Orleans Police Department investigated the Turncoats robbery but unless police catch a shoplifter in the act or in possession of stolen property there is little they can do besides take a report, said NOPD spokeswoman Bambi Hall.

    "If store security states that someone took something, and then by the time we apprehend them they don't have the property, then there's really nothing we can do because it's their word against the (suspect)," Hall said.

    Lewis said she understands the understaffed NOPD has bigger priorities than to "catch a drag queen running down the street with an armful of clothing." So the store owners created their own watchdog system unofficially known as the "Drag Queen Alert List," a comprehensive phone roster of every business on the block with stars next to those who carry guns.

    When one shop owner spots a gang member, they immediately warn everyone on the block and raise their defenses in unison.

    When they enter Turncoats, Davis said he locks them inside the store, which "freaks them out," and they leave.

    Celino said she doesn't even wait for them to enter the store.

    "A couple weeks ago, a group of them was outside and one looked like the guy who came in here and ripped us off so I locked the door on them," Celino said. "I know maybe that's rude, if they really were innocent people, but there's nothing else we can do. You look like the queens who ripped us off so I'm sorry but I have to lock the door."

    Ogle and Bonga say they regret being forced to resort to such profiling but they feel they have no other choice. The transvestites, Ogle said, appear to be drug-addicted and fearless in their lust for designer shoes, jackets and jewelry.

    "The city's not functioning the way it was and I'm sure a lot of them were getting some kind of government aid, which they probably aren't getting any more so they're incredibly desperate," Ogle said.

    And sometimes violent.

    When Lewis co-owned Trashy Diva, they attacked one of her partners in the French Quarter location, throwing her to the ground and tossing a heavy mannequin on top of her.

    "They're kind of confused because they think they're women so they don't mind hitting women, but they're dudes. If you get hit by one it's like getting hit by a dude. ... Because the police are so poorly staffed, we're kind of on our own but the system we have seems to be working. I haven't seen them in at least a week but they'll be back. They're never gone for long."

    Couldn't pass it up....

    Snipers on the rooftops would take care of that you know. The National  Guard are being deployed to NO again I hear, hopefully some of those guys with on the job trainin back from Iraq.
    I live on St. Andrew, 2.5 blocks from Magazine.
    Amazing - sounds like "Dawn Of The Dead" ...

    If you sent that snippet back via Time Machine to someone in say 1945, the recipients would probaly simply kill themselves!

    "Did we just fight a world war and lose millions of dead in order for THAT to be happening in 60 years time?"


    Before WW II, New Orleans was known as the most gay friendly city in the US (or whatever term would be used then for a city that wuld tolerate "faggots').

    As noted, I live on St. Andrew 2.5 blocks from Magazine and have not heard or seen anything (but I do not frequent those particular shops).  I knew a couple of transvestites before Katrina but I think that they have not come back yet.  Both worked in restaurants and "were not the type" described.

    Coulda swore it was San Fransisco.
    Frisco took the title after WW II.

    Gay young men that volunteered or were drafted and then discovered in the Pacific Theater during WW II were brought to SF and discharged there.  Many did not return home but found local employment in the WW II boom.

    Interestingly, William Manchester in his Pacific War history/autobiography 'Goodbye Darkness' briefly looks at this topic. I find what Alan said about SF very interesting as well. I was not aware of that. A history probably most Americans are unaware of.
    I had higher hopes based on that headline.  Unfortunately all he did was lie:

    "I have said consistently that global warming is a serious problem. There's a debate over whether it's manmade or naturally caused," Bush told reporters.

    and pretend the Philip Cooney episode never happened.  Rat ba....

    "Rat ba.... "

    Thanks. You stopped just in time :>)


    Oh I agree but he said it and the sound bite got coverage, for what it's worth.

     But it sounds like the captain of the Titanic saying I think we have a serious problem, but people could argue that the iceberg ran into us.

    "It's OK, we're unsinkable."