DrumBeat: June 29, 2006

Update [2006-6-29 9:28:54 by Leanan]: Happy Birthday, Interstate System!

U.S. interstate system marks 50 years today

The USA a half-century ago was a place where people seldom ventured far from home. When they did, they drove on narrow, two-lane roads that moved people and goods slowly.

With the stroke of a pen 50 years ago today, President Eisenhower began to change all that. He launched the interstate highway system, a giant public works project that would speed travel and the distribution of goods, make driving safer, fuel the growth of suburbs and link far-flung regions of the nation.

But it looks like we're facing "declining marginal returns" on it:
The interstate network is getting crowded much faster than it's being expanded, and spending to expand and modernize it must increase dramatically to reduce congestion, according to a report being released today.

Travel on the 46,572-mile system increased by 51% from 1990 to 2004 while capacity grew 6%, says the report by TRIP (The Road Information Project), a Washington non-profit group that promotes transportation policies that relieve congestion and aid economic productivity. TRIP predicted interstate travel will increase an additional 60% by 2026.

The high cost of oil is part of the problem:

As Asphalt Prices Rise, Roads Crumble

For those who were wondering what happened to Tom Whipple...he's back. The Peak Oil Crisis: Our Government Forecasts the Future

Decline in Venezuelan oil production a ‘concern’ for U.S.:

The U.S. government is concerned about falling crude oil supplies from OPEC member Venezuela, a senior U.S. government official said Wednesday.

Declining oil output from Venezuela since 2001 “is a concern to world oil markets and has not been helpful to world oil consumers, particularly developing countries in our own hemisphere,” the official told Reuters on condition of anonymity.

This is sure going to help the oil industry's tattered public image: BP unit charged with price manipulation.

Fission Impossible: Nuclear power a no-go due to skyrocketing uranium costs?

Japan fights global warming by making all cars use ethanol by 2030. But the real problem is the U.S.: Half of global car exhaust produced by US vehicles.

America the Dangerous? George Soros on peak oil:

We are facing a global energy crisis which is very complex because it has many ingredients, starting with global warming and the peaking of oil discoveries. And there's the dependence of many of the major industrial countries on sources of energy from politically unstable areas of the world and the behavior of some of the energy rich countries like Iran and Venezuela and Russia exploiting the high price of oil and their control of the supply. So we are in fact in a global energy crisis. That instability has certainly added $20-$30 to the price of oil.
Anyone see this?


Federal investigators said Wednesday that BP energy traders cornered the U.S. propane market in the winter of 2004 and illegally manipulated prices, driving up heating and cooking costs for rural consumers.

"It's pretty clear as to what they were doing," CFTC attorney Paul Hayeck said in an interview.

Also on Wednesday, the        Department of Justice announced that one former BP trader implicated in the scheme, 34-year-old Dennis N. Abbott of Houston, has pleaded guilty "to conspiring to manipulate and corner the propane market." The agency said Abbott, who has agreed to cooperate with law enforcement in "an ongoing investigation," faces up to five years in prison and a fine of $250,000.

I think that this is a tempest in a teapot.  As best that I can tell, some people at BP were trying to bail themselves out of some bad pets on propane.  I think that the total size of the profits were something like $20 million.
tempest in a teapot

Categorically Correct.

The Invisible Hand is legally entitled to pinch pennies from pockets of others when it accidentally puts out scissors instead of paper and gets rocked by reality on a minor bet.

It's all in the US Constitution. Just go back and read it:

"We the BPeople, in order to form a more perfect union for ourselves, to insure domestic profitability, to promote our own welfare, do hereby ordain and establish this Constitution for the United Sneaks of America.

Fair is Fair.
Fowl is just a bunch of birds.

I'm just amazed at the microscope that the feds put private enterprise under when the feds are running the biggest financial fraud in world history--the Social Security Trust Fund.   American taxpayers--especially younger ones--are going to be taxed twice, once to build up the "Trust Fund" and then again to pay off the bonds.  
I always feel like I have to defend the Social Security system...

Everyone's long-term forecasts of SS payments show them stabilizing at just about 6.2% of GDP (versus today's roughly 4.3%). Figure II.D5 in the trustee's annual report illustrates this nicely. I assert that, as a society that places a high value on personal independence for our elderly, we can afford this, although I acknowledge that others feel that's too much to "give" to retirees. If the retirement age is raised somewhat and/or some very modest means-testing is applied to benefits, the payments stabilize at a lower rate. The SS fiscal "crisis" is due to the 12.4% total tax rate being applied to a steadily shrinking portion of the US national income. If the current 12.4% payroll tax were replaced with a 4.3% tax on all income, increasing gradually over the next 25 years to 6.2%, the system is solvent and a very large majority of those younger American taxpayers would be much better off.

Now Medicare, forecast to take an increasing share of national income forever, eventually costing far more per year than SS, whose trust fund will be exhausted decades before the SS fund, that's a real fraud.

"whose trust fund will be exhausted decades before the SS fund"

The Social Security Administration has the assets in the Trust Fund, the bonds.  

The Treasury Department has the liability, to ultimately pay off the bonds.

These are two branches of the federal government.

Therefore, the asset is offset by the liability.  

Therefore, there are no net assets in the SS Trust Fund.

The actual money is spent every year on other government programs, which allows Congress to pretend that we are building up the assets in the "Trust Fund" while actually spending the money on other programs, which constitutes a multi-trillion dollar fraud on  American taxpayers.

What you say about "assets" in the trust funds is true. Think of it as bookkeeping -- since 1983, the plan has been to collect excess payroll taxes for 20 years, then pay it back with excess income taxes (or other revenue sources) for 20 years. All out in the open, and no one who is paying attention can be fooled about what is going on (you can be pissed off about it, which you are and I am, but you can't be fooled). The economy has done quite well, so substitute 35 in place of 20 in each place. In fact, there is some probability that the bonds in the SS trust fund may never need to be redeemed. See The Bruce Web for at least one person who brings considerable knowledge about the actual basis for the SSA forecasts and some fairly serious number crunching to the problem.

I guess I mostly object to using SS as the example of "fraud" when the General Fund is currently running a deficit of >$500B per year, and the Medicare program has both long-term benefits which are simply not affordable and the payroll-to-income tax shift occurs much sooner than SS.

Of course, if the Peak Oil pessimists are correct and we're really about to charge over the edge of a production cliff, then SS isn't going to be around for long enough to worry about :^)

Perhaps our best hope is our growing obesity, which will lead to several life shortening diseases.

One can usually get to age 60 at least with obesity, but the numbers begin falling quickly after that.

yes, unless there is a breakthrough in the treatment of obesity (or a radical change in American habits), the long standing growth in American life-expectancy will likely decline due to obesity and its medical complications. here's a MSM article describing this penomenon:


On the other hand, maybe all our fat citizens will need all that blubber to make it through the winter in "The Long Emergency"...;o)
even taking peak oil out of the picture i have always considered SS to be dead already and gone long before i even reach that age.
Yes, but your belief is primarily based on the fact that one of the two political parties our country has wants to kill the program.  It's fairly easy to save SS.  It's really not that complex or difficult.  The reason we here all these complex plans is because Republicans want to find a way to get rid of the program, and they can't do so out in the open due to its popularity.  

I have to hand it to Republican propaganda on this issue.  They have been very successful.  

My proposal is that we fund Social Security/Medicare with a tax on energy consumption.
I have no problem with this. The EIA puts current spending on energy at about 8% of GDP. Current spending on SS and Medicare is about 6% of GDP, so we need roughly a 75% tax on top of current energy prices. Being self-employed, and probably making less than $93K this year, I'm paying 15% of my earned income in payroll taxes. If I can drop that in return for an energy tax that looks like about 6% of my income, I'll be better off than I am now. The poorest workers, who spend more of their household income on energy than the average, will be worse off. Poor pensioners, who pay no payroll taxes and little income tax, will be substantially worse off.
Those who wish to kill SS have an interesting definition of "broke". Even if the bonds in the trust fund are declared to be worthless and not redeemed, what would be the situation? If we use the SSA forecasts, starting in 2018 benefits would be decreased slightly so that payments did not exceed payroll tax revenues. By 2042, benefits would have decreased to about 74% of what is currently promised for 2042. Note that in the forecasts, the 74% level is still going to be a larger inflation-adjusted benefit for new retirees than is paid today. As you move beyond that in time, the forecast says the size of the benefit paid will continue to decrease slowly when measured against the size of the benefit promised, but will still grow faster than inflation for new retirees.

Consider the quality of the forecasts. Since 1996, the SSA shifted the first date out by six years, from 2012 to 2018. Since 1996, the SSA shifted the second date out by twelve years, from 2030 to 2042. The CBO, charged with forecasting the most likely outcome (and the SSA is not charged with that), says the second date is 2052 and the percentage is higher. I will cheerfully bet a beer that by the time we reach 2018, payroll tax revenue will still exceed benefits being paid, and that the forecast date for the shortfall to begin will have been pushed out to 2024 or beyond.

I have no issue with people who want to do away with SS on ideological grounds. The position that the government should not be involved in pensions is logically defensible (I happen to disagree with it, and polls suggest that 80% of the US adult population disagrees with it, but it's still a defensible position). Those who attempt to justify that position on the basis that "today's young workers won't get a dime from SS" are, however, saying something that is not even close to the truth according to anyone's forecasts, from the SSA to the CBO to the Cato Institute.

I think they cornered 90% of their target market, I could not find the transcript on the story I heard.  Then attempted to fix the prices on that market. That's illegal, just because the Feds can be a problem in one area does not mean that we need to ignore the laws.
Actually it is kind of funny, given how much is said here that big oil has no control of prices, from Marketplace

SCOTT JAGOW: Oil companies swear up and down they have no control over the price of energy. But then, this happens: Federal investigators accuse BP traders of manipulating the price of propane two years ago. Yesterday, one former trader pled guilty to being involved and there is evidence on tape that traders were thinking big. Take a listen.

    TRADER: What we stand to gain is not just that we'd make money out of it. But we would know from thereafter that we could control the market at will. If we never break the threshold, we'll never know what the answer is, do you know what I mean?

It's on tape...
har, har, har
The WSJ has a front page story on this.  The bottom line is that the traders' scheme really didn't work.   BP made very little money after it was all said and done.
I heard it on Morning Edition, I could not find the transcript.  I don't know how much money they actually made, but to actually make the move would have probably have taken someone higher up to give the OK.  The bottom line is to not trust anyone, and to question everything.
BP may have made very little money but that is aside the point...if you rob a 7-11 and there is not much cash in the till it is still a robbery.
As these BP traders learned, it's not that easy to manipulate markets, and the propane market is vastly smaller than the gasoline and crude oil markets.
Obviously the BP traders weren't very bright to begin with Rule No. 1: Don't plot on taped phone lines.
Saudi Arabia Continues to fulfill its commitment to provide oil

I was struck by the fact that the Saudis felt it necessary to state that they were meeting their contractual obligations to provide oil to customers.  

This kind of reminds me of situations where you meet someone and they start assuring you about how honest they are.  Every time that happens, I always check to make sure that I still have my wallet.


Saudi Arabia Continues to fulfill its commitment to provide oil: Turki Al-Faisal

 Saudi Press Agency - 28/06/2006

The Ambassador of the Kingdom of Saudi Arabia to US, Prince Turki Al-Faisal affirmed that Saudi Arabia continues to fulfill its commitment to providing oil since it is the largest dependable oil producer in the world.

While participating in a seminar entitled " Exploring the Future of Arab-American Energy Relations", Prince Turki Al-Faisal said that the rising prices of oil are due to instability in the Middle East and shortage of production of refineries especially in the US and not because of shortage of oil production.

Prince Turki Al-Faisal reiterated the Kingdom's commitment to invest in the field of increasing its production facilities to meet the world's future needs of energy, pointing out that Saudi Arabia is now the leading oil producer.

Directors of the largest American oil companies participated in the seminar, who stressed the importance of Arab-American relations and cooperation in the field of energy. They also affirmed that the bolstering of these relations is crucial to achieve economic and social growth and stability in the whole world.

It is amazing- it seems like yesterday when SA could drop crude prices just by making a public statement/threat about opening the taps. How the mighty have fallen.
I ran across this of interest:

Recently I interviewed four oil-tanker executives who control a combined 85 percent of the oil coming into the United States. They confirmed market rumors that the amount of oil being stored on large carriers on the high seas is abnormally high. One of the CEOs even predicted the possibility of $40 to $50 oil in the next 6 to 12 months. In another interview, Chevron CEO David O'Reilly suggested that gasoline and energy demands have flattened in the U.S., and may be showing signs of decline.


The bigger the fears, the bigger the lies.
I really do not doubt that the oil in tankers on the high seas is abnormally high. I just do not think it is that important. Oil in storage is also abnormally high, but so is oil consumption compared to recent years. I just saw an article about China's May imports being 20.4% higher. It takes more oil on the high seas to fill all those extra orders.


Maybe if they brought the tankers back to port and filled them with light sweet crude there would be plenty of willing buyers?
Isn't an oil tanker and extremely expenseive way to store oil? Not only do you have all the costs of land-based storage, but you miss out on shipping income. If these tankers were really taken out of service, wouldn't we see it in higher shipping costs?
We need $40 oil. China isn't growing fast enough.
"One of the CEOs even predicted the possibility of $40 to $50 oil in the next 6 to 12 months. In another interview, Chevron CEO David O'Reilly suggested that gasoline and energy demands have flattened in the U.S., and may be showing signs of decline."

This reminds me of Yergin's persistent predictons regarding $38 oil.

Digital Rules
Capitalism's Amazing Resilience
Rich Karlgaard, 11.01.04, 12:00 AM ET


Energy is one of the two leading risks in the global economy. (Terrorism, of course, is the other.) Just take a look at one industry already suffering from oil shock--U.S.-based airlines will lose $5 billion this year. That loss matches the bump in fuel prices. Ouch. Then there's China, which has climbed to the world's number two spot in oil consumption. China uses most of its oil wildly inefficiently to generate electricity. Oil consumption by cars barely registers--now. But during the next four years, China's oil imports will double as the Chinese give up their bicycles. Biting your nails yet? Here's one more sobering oil fact: The world has only a 1% short-term cushion. This makes for a very volatile market.

Given these facts, where will oil prices be a year from now--$75 a barrel? $100?

Wrong numbers, says Daniel Yergin. Wrong direction, too. Try $38. Yergin knows oil.  He is a founder and the chairman of Cambridge Energy Research Associates, a consultancy that has 230 employees, with offices worldwide. He is also a recipient of the United States Energy Award and a member of the Secretary of Energy's Advisory Board. A former Harvard professor, Yergin is best known for his Pulitzer Prize-winning book on oil, The Prize: The Epic Quest for Oil, Money and Power.

Yergin's prediction of cheaper oil prices is noteworthy because he doesn't dispute any of the alarming facts cited in my opening paragraph. Not that he would. The facts came straight from Yergin's own mouth at the recent Forbes Global CEO Conference in Hong Kong. I jotted down Yergin's comments while listening to him speak at a dinner. Then he gave a formal speech the next morning and, fueled this time by highly caffeinated tea, I again took notes, just to be sure. Yergin is pretty clear about his predictions. He says oil demand will rise, yet prices will drop. How can this be?

Answer: capitalism's amazing resiliency. Oil prices rise--oilmen become innovative. They work, they invest, they put their heads to the task, they apply technology, and pretty soon they'll discover how to extract oil profitably from oil sand. Or open wells in deeper water. Or scour the planet for new sources using scanners thousands of miles in space. As Yergin reminds us, oil output is 60% higher today than it was in the 1970s. Not many sages from the 1970s would have bet their reputations on this development. The opposite sentiment prevailed back then; experts said the planet was running out of oil. Wrong.

Yergin says he's always asked when oil will run out for good. He shrugs. He's willing to say the world will need 40% more oil in 2025. Hard work and technology probably will find a way to meet the demand.


I too can not believe that the tankers can be carrying anything significant though in terms of the article, i.e. problems with Iran, it would have some minor impact on supply and demand in favor of lower prices. I can see that as a hedge tactic too, but I would think the tanker fleet, except for old small ones in graveyard harbors like off Greece, are fully employed anyway with demand being what it is.

As to O'Reilly of Chevron, not Fox, and his comment. All the oil presidents have been talking for the first few months to a year when oil first started climbing that it would come back down. They were convinced that it would go back to $10-$30. Their collective mistake was in part a function of not including China and the other growing 3rd world economies. They have not left that mindset even now. It shows that it is hard to break old habits.

BUT if there is a major recession, oil will temporarily drop in price, possibly to $30-40. If we play hardball with Iran it goes over $100.

1. No. Oil cannot drop to $30 because of a US recession. What is necessary is a US depression combined with a strong US dollar (not the most likely combo).

O.K., we can argue the price - and your point is well taken, and my long suit is not economics - the dismal science - but we can agree that in a recession the price of oil will be lower.

But note: oil prices are not just a function of economics but also of politics and that might bring them lower (or higher).

No. I don't agree. The rate of real productive growth in the economies of the USA and China is not even in the same ballpark. I can easily foresee a recession in the USA coexisting with strong (>7%) real growth in China and rising oil prices.    
Any way of calculating the increased probability of this expanded flotilla of oil storage meeting up with the increasing severity of 'weather events'?

That sounds like a setup for some big spillage..

Not a problem, they have a safety program:

empty tanker

They sail 'em around empty (apologies to bradshaw, just couldn't resist)
Just insert the word "declining" in front of "oil producer" and you'll get the correct meaning...
The more he boasted of his honesty, the faster we counted our spoons... Charles Dickens
The more he boasted of his honesty, the faster we counted our spoons..  Charles Dickens
Which is cheaper, Tar Sands Or Rail ?

I posted this question and a friedn gave his analysis below.
Alan has posed an interesting analytical challenge (that I'll take up, with a little help from "La Guapa" - still need a new battery for "La Vieja").

But first: the conclusions below - whatever they work out to be - cannot be limited arbitrarily to "urban rail." The "genre," so to speak, is called "passenger rail."

If the "Pushkarev, Zupan and Cumella" thresholds are valid - and the burden is on the skeptics to demonstrate otherwise - then they are valid for any "average travel distance" for which one provides mechanized transport.

In fact, Ed T. has pointed out that, when infrastructure is shared between passenger and freight rail services, the "threshold" of 5,000 "tennysons" (pass-km per km of route) per weekday is somewhat lower - perhaps as low as 3,000 "tennysons" (pass-km per km of route) per weekday.

Thus, if demand on all rail routes radiating out of Salt Lake City works out to 3,000 "tennysons" (pass-km per km of route) per weekday, then you operate rail passenger service because doing so is economnically justified (accordiong to my recollection of Ed's comments).

(I do not believe that such demand exists beyond the Salt Lake / Utah valley commute zone, but that's beside the point.)

If demand on a transcontinental route such as Los Angeles - Miami works out to 3,000 "tennysons" (pass-km per km of route) per weekday, then you operate the service. You
don't run each and every train "through;" you serve the individual markets that exist along the route. (In this particular case, I am well aware that short-distance markets
are few, but that again is beside the point.)

In brief, as we used to say at Crenshaw High, using the following the following analysis to justify a massive investment in "urban" rail - while calling for massive
curtailment of "intercity" passenger rail on grounds of some other indicators and criteria - is "tryin' to have it both ways." Or, to paraphrase Bill Clinton, you can't love urban rail and hate intercity passenger rail if both carry more than the "minimum" number of passengers over each mile of route.


1.) Production of "synthetic" crude oil from "Athabasca" tar sands requires an upfront capital investment of US$60,000 per daily barrel (bbl) of output.

In other words, if you want to build a plant that produces 1,000 bbl per day, you'll have to spend:

US$ 60,000 * 1,000 = US$ 60 million.

According to Alan D., such a plant has a "useful life" of about 30 years. [My Guess, local depletion & technological obsolescence may limit life].

Deciding what interest rate to use is tricky. At this time, 5 percent seems a good choice for newly-issued investment-grade corporate bonds. I suspect, however, that the impact of rising oil prices on the economy will include higher interest rates. I will therefore "run" 6 percent and 7 percent.

Amount at compound interest (5 percent, 30 years): 4.3219

Amount at compound interest (6 percent, 30 years): 5.7435

Amount at compound interest (7 percent, 30 years): 7.6123

[For a risky investment, 12% seems a better discount factor]

2.) I "think" the logical "next step" is to calculate "annualized capital cost per daily bbl of output" - then divide this by 365 to get a figure that can be related to daily consumption.

One-day share of "annualized capital cost per daily bbl of output"

(5 percent, 30 years) 365 = $24 (rounded to nearest $).

(6 percent, 30 years) /365 = $31.

(7 percent, 30 years) /365 = $42.

3.) Alan D. states that "marginal production cost" of each barrel of crude from tar sands is CDN $50 per barrel - assuming "cheap natural gas" (providing the energy input
required by the refining process).

The Canadian dollar is currently worth about USD $0.90 - a singificant increase from USD $0.85 at early April. I suspect that the impact of rising oil prices on the U.S.
economy will include a weakening of the U.S. dollar relative to "other" currencies - although the current "forecast" appears to be that the CDN will weaken somewhat against the USD by November.

I'll use USD $0.90, $1.00 and $1.10. Thus:

CDN $50 /bbl = US$ 45 /bbl (CDN $1 = USD $0.90).
CDN $50 /bbl = US$ 50 /bbl (CDN $1 = USD $1.00).
CDN $50 /bbl = US$ 55 /bbl (CDN $1 = USD $1.10).

The "optimistic" scenario (relatively low interest rate and strong dollar) is $69 / bbl of synthetic crude from tar  sands. Which, according to a "quick and dirty" Internet
search, is about the level that world crude oil prices have reached (roughly $70 / bbl, as of June 28).

The "semi-pessimistic" scenario (somewhat higher interest rate and weaker dollar) is $81 /bbl of tar-sand crude.

The "pessimistic" scenario: $97 /bbl.

Thus (and rounding to a single significant digit): $70 /bbl, $80 /bbl or $100 /bbl for tar-sand crude.

4.) To calculate the potential "cost saving" from investing in electrified (urban) rail rather than tar-sand refineries, we have to decide on a "saving factor" - how many gallons of
gasoline "saved" per transit passenger-mile.

a.) One way to do this is to assume:

--20 mpg in "commute" travel
--Average vehicle occupancy = 1.1

The parameters above imply 0.045 gallons of gasoline saved per transit pass-mi.

b.) Using results demonstrated by Newman and Kenworthy (arising from reduced trip-making and trip consolidation by "transit-oriented families") gives a higher number: 0.25
gallons of gasoline saved per transit pass-mi (see Ed T.'s post no. 51074, Mon Jun 5, 2006).

5.) The next step requires information that I do not have.

Not all of a 42-gallon barrel of crude can be refined into gasoline. According to the American Petroleum Institute, each barrel of "crude" yields 19.5 gallons of gasoline. In
other words, that's a 46-percent "yield" with reference to gasoline.

It is possible to increase the gasoline "yield," but this becomes more difficult ( energy-intensive) with heavy crude. They don't call that stuff up in Canada "tar sands"
for nothing.  Thus, I will round down to a 40-percent "gasoline yield" from the crude produced from tar sands. This, however, is a guess.

6.) Saving per transit pass-mi expressed in terms of bbl of tar sands crude:

a.) (0.045 / 42) / 40 percent = 0.003 bbl per transit pass-mi.

b.) (0.25 / 42) / 40 percent = 0.015 bbl per transit pass-mi.

7.) Monetary saving per transit pass-mi implied by 6.) above.

a.) 0.003 bbl per transit pass-mi * ($70, $80, $100 per bbl, in turn)

implies $0.21, $0.24 and $0.30 per transit pass-mi.

(Keeping in mind that "method a." accounts"only" for crude motor vehicle fuel economy, and does not take into account differences in behavior of "transit-oriented" families.)

b.) 0.015 bbl per transit pass-mi * ($70, $80, $100 per bbl, in turn)

implies $1.05, $1.20 and $1.50 per transit pass-mi.

(Again, keeping in mind that "method b." accounts for "actual" differences in gasoline consumption per capita between "transit-rich" and "transit-poor" metropolitan

8.) With reference to electric urban rail transport, the "next step" is to estimate the share of total pass-mi that are diverted from autos.

I'll start by establishing a "lower bound" of 10 percent - a transit-planning rule of thumb is that transit can "capture" a 5-percent share of work trips to a given destination with buses in mixed traffic.

LRT can and does carry as much as a 50 percent share of peak-period, peak-direction traffic in (and near) major freeway corridors. Because roughly 50 percent of weekday
transit traffic occurs during peak hours, this implies "roughly" a 25 percent "diverted from autos" share.

During the early years of operation, the L.A. Blue Line carried 40 percent more boardings, and about 60 percent more pass-mi, than parallel bus lines did prior to opening.
However, the large majority of rail passengers identified themselves as "former bus passengers" in an onboard survey not long after opening. Thus, it seems safe to conclude that a good deal of this line's traffic was "additional travel" by previous transit passengers. A 50-percent "diverted from autos" share during the 'post-peak oil era" might occur,
but seems unlikely today. Thus, I'll use 30 percent as the "upper bound."

9.) To keep things simple, I'll use "average" values from "method a" and "method b" above.  In other words, each daily pass-mi diverted from autos to transit is worth either $0.25 or $1.30 in "savings," with reference to the cost of synthetic crude refined from Athabasca tar sands.

Now to determine "which is cheaper," I "think" we'll have to refer to "life-cycle" costing - that is, "over the life of the rail project or the syncrude refinery."

With reference to the "PZ&C thresholds:"

5,000 "tennysons" (pass-mi per mi of route) per weekday


($0.25 and $1.30, in turn)

  • 300 weekday equivalents per year

  • 30 years

= $11.3 million / mile; $58.5 million / mile.

Well, you can't build "low-cost" LRT for 11.3 million / mile - but $58.5 million mile is "do-able."

"Low-cost LRT" is probably better described today as "modern streetcar." That is: no separations, track built without utility relocation (as in Portland), M.U. operation "possible" but not used at first, and so forth. I believe such lines can be built for roughly $40 million per mile.

This may be interpreted as follows: If the behavior by "transit-oriented families" in metropolitan areas "well served by transit" is taken into account, the cost per
mile of building a "modern streetcar" line is less than that of building and operating a tar-sands syncrude plant, over the life of each project, with reference to gasoline saved
per passenger-mile diverted to transit.

Notice how I didn't include transit O&M costs. That's because not "all" transit passengers will be "diverted" from autos.

Ahem . . . given the existence of an electrified rail freight corridor, I would say that this exercise demonstrates the following: If passenger facilities can be added for roughly $10 million / mile (at minimum), then regional / intercity service is justified - assuming similar
relationships between regional / intercity corridors "well served" and "poorly served" by rail.

10,000 "tennysons" (pass-mi per mi of route) per weekday


($0.25 and $1.30, in turn)

  • 300 weekday equivalents per year

  • 30 years

= $22.5 million / mile; $117 million / mile.

10,000 "tennysons" (pass-mi per mi of route) per weekday is the virtual "PZ&C Threshold" for LRT with "some separation." Again, using "method b.," rail construction pencils out as
cheaper than syncrude from tar sands - "even" in L.A., LRT with "some separation" does not cost $117 million / mile (2006$s).

15,000 "tennysons" (pass-mi per mi of route) per weekday


($0.25 and $1.30, in turn)

  • 300 weekday equivalents per year

  • 30 years

= $33.7 million / mile; $175 million / mile.

15,000 "tennysons" (pass-mi per mi of route) per weekday is the virtual "PZ&C Threshold" for LRT with "extensive separation." Once again, using "method b.," rail is
cheaper than syncrude from tar sands.

20,000 "tennysons" (pass-mi per mi of route) per weekday


($0.25 and $1.30, in turn)

  • 300 weekday equivalents per year

  • 30 years

= $45 million / mile; $234 million / mile.

20,000 "tennysons" (pass-mi per mi of route) per weekday is the virtual "PZ&C Threshold" for "full separation," also known as "heavy rail." Once again, using "method b.," rail is cheaper than tar-sands syncrude.

Keep in mind that the above analysis is worth all you didn't pay for it until others go over the same problem and reach similar conclusions.

Leroy W. Demery, Jr.

You are making tar sands grossly unprofitable. I don't have the numbers right now but this looks extremely unlikely, considering how much is being invested and was invested in tar sands at much lower oil prices.

The biggest flow I think is here:

Notice how I didn't include transit O&M costs. That's because not "all" transit passengers will be "diverted" from autos.

And why? If not from autos then from what they were diverted? If you want to get somewhere you have just car, rail or planes to use. If some of them were diverted from air, doesn't air travel also have enormous O&M costs (per passenger-mile)?

Rail just does not make sense if you do not include those costs which are an order of magnitude lower on rail than on autos: because of economies of scale and because of the universal fuel (electricity).

Consider what are the costs to pay for and maintain a car, to build and maintain the highways, the costs of congestions and traffic patrols etc. etc. Now compare this to the cost of the rail network if properly utilised.

And this is for personal transportation, for freight the savings are much huger especially if you include the added road wear.

The few % of people that use city buses today are a good proportion of the initial rail pax.  They switch almost immediately when rail opens (and rail costs half as much to operate per pax-mile than buses at $1/gallon diesel).  As time goes on, former bus riders shrink as a % (but more people will take a short bus ride to a rail station, people that would not take a bus all the way before).

So the cost savings of rail vs. bus need to be considered.

Leroy, great work. But, on comparing apples to apples and oranges to oranges, what is the price of further refining on the syncrude-the tar is not being turned into gasoline directly but must be refined. What is the capital equipment costs on a refinery of any kind?
   And are the products of syncrude being taxed at a different rate from gasoline refined from crude ? LNG used for transportation is not subject to the $0.75/gallon on gasoline here in Texas and generally higher in other places in the world.
   And on rail you use a figure that includes in building out all of the right-of-way and construction costs, but there is no figure for the capital costs of road building included in the syncrude estimate or the personal depreciation and interest on the automobiles running all the syncrude fuel.
   So I'd give your figures a great grade for effort, but I believe they distort the real costs in favor of syncrude.  
More jockeying going in the Middle East:


Why do we want to push Iran right now, when Isreal and the Palestinians are going at it?  

The G8 have mutually conflicting interests in Iran, My assumption is that these need to be sorted with all parties looking each other in the eye around the same table prior to the impending invasion / disruption of the country
Hello John Milton,

I have posted long and hard on the G8.  Hopefully, the TOD principals have crafted a message to send to the upcoming conference for their discussion [as suggested by me].

I think it is essential that they discuss the merits of ASPO's Energy Depletion Protocols, also called the Rimini Protocols:


Failure to do so, at least in my mind, would merely confirm that our leaders are lizard-brain dominant versus grey-matter dominant.  Our genes are not our friends--ASPO's proposals are a valid alternative to induce worldwide cooperation versus continuing rampant growth and competition.  We will see, but Matt Simmons suggests that the time for action is now.  I concur.

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

Today is an ignominious anniversary for our country and certainty worthy of recognition and discussion in this forum.  On June 29, 1956 President Dwight Eisenhower signed the Federal-Aid Highway Act which created the interstate highway system.  The following is an excerpt from Jane Holtz Kay's "Asphalt Nation: How the Automobile Took Over America and How We Can Take It Back" (1997):

"The President's Adisory Committee on a National Highway Program had an even broader goal:  span the nation with concrete.  And on June 29, 1956, the year of Eisenhower's reelection, the hero president signed the greatest peacetime public works prpject in the history of the world.  Gas tax receipts, invisible in yearly budgets - not tolls - would funnel $50 billion annually into the Highway Trust Fund to build forty-one thousand miles of roads.  No river or ravine, no gorge or gully, no urban or suburban land would stand in the way of the onrushing auto age.  With Boston's Route 128 under way as the nation's first loop road, other cities followed to plunge five thousand miles of freeways through downtowns and countryside.  Before this act, less than five hundred miles of urban freeways had been built.  After it, no city would be untouched.  Urban America would empty out on the new arteries."

Without question, the coming of the interstates was a monumental development for the United States with such long lasting consequences, good and bad (depending on who you ask, of course).  To me, they were a product of good economic times and the dawn of a cheap oil age.  They put hundreds of thousands to work.  They were sold to us as a military defense necessity.  But no one in the 1950s could have envisioned their eventual primary role in the abandonment of cities and railroad systems, ubiquitious highway sprawl, and so many other deleterious social and environmental consequences.

What will the role of the interstate highway system be in the years ahead as the age of cheap oil comes to an end?  

I think your take on it is about right.  It seemed like a good idea at the time.  We just never foresaw the costs.  And we never realized the good times would one day end.  

We built the interstate system with a 30-40 year projected life, never imagining that when the time came to replace the roads and bridges, we wouldn't have the money to do it.  

Other things we never expected:

The almost doubling of traffic in a few years, as women went to work and the two-car family became the norm.

The fact that we would become so dependent on our highways that closing them to repair or replace them would become extremely difficult.  (Declining marginal returns again.)

The rise of tandem trucks and other very heavy vehicles, which would cause wear and tear on the roads the original designers never envisioned.

As for the future...my bet is the interstate system won't survive peak oil.  It won't collapse overnight, but high gas prices will eventually reduce consumption, which will reduce the funds available to build and maintain roads.  Eventually the highways will get so ratty and the bridges so unreliable that even people who can afford to drive won't trust the roads.

One of the last "missing links" of the interstate highway system was a gap between Bordentown and outside Trenton, NJ (completed about 1996).  Here, any regular user can witness the inexorable surface wear-and-tear, especially from all the heavy trucks.  In other words, after ten years of this daily pounding, it clearly needs an overhall right about now.  One wonders what the cost is going to be for what amounts to perhaps a three mile stretch.
I watched a Discovery piece about the rise of the interstate and one thing that caught me was the cheap route we took.  The autobahn is poured at twice the depth that our system is. Consequently the autobahn may need fewer maintenance and is designed to last much longer.  Had we at least started out right, the fight wouldn't be as hard as it is now.
That's true.  I believe we've adopted more European-like standards in recent years, but we didn't use them for the bulk of Interstate construction, and we usually don't use them when making repairs on existing roads.  Mostly because we want to get the road back in use ASAP.  

We use a foot of subbase with maybe half a foot of asphalt on top of it.  In Europe (and Canada, I believe), they use five feet of subbase with a foot  or two of asphalt on top of it.  Just digging that deep is a construction headache, especially if you're trying to maintain traffic on the road.  

It would be a lot easier if we could just shut the road down for repairs, but the taxpayers get extremely irate if you do that. It's a lot easier to build new highways than repair existing ones.  Declining marginal returns...

One thing I've always wondered about is why they use asphalt (bituminous concrete) on some large, heavily-traveled roads and steel mesh-reinforced portland cement concrete on others.
Mostly, it's weather.  

They used to use PCC a lot, but they found in areas with cold winters, frost heave was a problem.  The joints go bad, which not only causes rideability issues (thunk, thunk, thunk, every 66 feet), it lets water under the road.  Water is the enemy.

These days, you see PCC mostly in warmer states like California.  The northeast uses mostly asphalt.  It's flexible, and survives northern winters better.

Though there are still highways built in the old days that are PCC.  

Half a foot of asphalt, one foot of asphalt?

What have you been smoking?

Half a foot of asphalt was standard for new highways for decades.  4" base course, 2" binder, 1-1/2" top course.  Or something along those lines. I think 7-8" of base course is standard now, at least for heavily used roads.

For thicker pavements...Google perpetual pavements.  

(Despite the name, they aren't really perpetual.  They require regular repaving.)

Correct, however a lot of people think the asphalt makes the road stronger, which for the most part is not true. It's the friction surface that gradually gets worn down with traffic. Asphalt in parking lots and smaller roads may just be an inch or 2 thick. The faster the speed limit, and the heavier the traffic, the thicker it needs to be.
Its unfortunately not the only important damage mechanism. A worse one is that heavy axle loads break the macadam under the asphalt slowly grinding it down. This compresses it and makes it more mobile. You get "tracks" of worn down asphalt that also is the asphalt sinking down in the layer below that gives way to it. You fill in the tracks with strips of new asphalt and the tracks reapear faster for each time as the top of the road body weakens. The end result is that you have to rip up all of the asphalt, change the top layer to fresh macadam and repave. (Often with the old asphalt mixed with some new material. )

Its a few years since I read the summary of some research reports about this but the damage is highly dependant on the axle loads to the third or fourth power. That is a ten ton axle load makes 1000 or 10000 times the damage of a one ton axle load.

This mechanism is hurting the Swedish road network since we have large axle loads to get better capital and workforce cost efficiency by having large trucks and the older parts of the road network were not built for such high axle loads.  
The ^3 or if it were ^4 effect makes a few tons of overweight load a significant factor for road wear and it is easy to overload the very common timber transports.

Overloading have been somewhat priortized by police and large timber customers have stopped paying for overweight loads but it is still a problem. If we get a km fee instead of fuel tax when more expensive biofuels outcompete higher taxed fossil fuels I hope it will be directly related to an axle load meter. Add those pallets if you realy need to but the per km cost will increase by 500%...

If we are hit hard by peak oil and roads get too expensive to maintain I expect a quick solution will be to halve the maximum truck weight. We will need more drivers, lighter trucks and will loose efficiency but not having a good road network would anyway wear down the rolling stock, hurt the use of very light private cars and scooters and give all kinds of inefficiencies. But smaller truck would be easier to fit on railcars wich could save some oil and money for long haul transportation.

Or someone might figure out a new way to spread the load before it reaches the macadam.

Anyway I support builing more roads in my home country both during and after peak oil. There are bottlenecks and dangerous roads and the roads will be usefull for a very long time, if you build them well and dont overload them.  My impression is that our "freeway" network is about 2/3 done before we have a consistent good standard, I guess it will take 2-3 generations to finish it.

A recent thread discussed the push now on to build more freight railways to replace the fuel-inefficient semi-trailer.

If successful, and if we purchase less and eat locally-grown veggies and fruit, for instance, the heavy load on our highways, including interstates, could become much less.  In addition, fewer heavy SUVs may be seen in a few years, although perhaps we'll see more inter-city bus traffic.

The result is that the relentless pounding that our roads take may very well lessen sooner than we think if oil prices stay the same or, more likely, increase.

I heard that in some countries when a company bids on a highway contract it includes 20 years of maintanence costs. Built it right and they make less repairs and more profit.  With a 20 service life we need to repair/replace 2329 miles of interstate each year. If the rich paid taxes at the same rate as the 1950s we could easily afford it.
A note on flood damage from the New York Times this morning:

"Two truck drivers died yesterday near Sidney, N.Y., 35 miles from Binghamton, when their rigs plunged into a 50-foot-deep hole in the washed-out bed of Interstate 88 ..."

50 feet is a pretty deep for a pothole ...

I posted a photo downthread.  
I'd like to hear from rail advocates as to the feasibility of using abandoned or narrowed Interstate Highways as railbeds.
Hello Don Sailorman,

Welcome back--we all missed you!  I recall that you left to work on a fictional postPeak magnum opus--are you merely taking a break, or are you fully back to ply us with your wit and wisdom?

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

I'm now taking a break between volumes 2 and 3. Hmmm, maybe I should post these novels on a website of my own and get comments from interested TODers. Hmmm, of making many websites there is no end, but suppose some smart and rich person(s) with good connections saw my entertaining young-adult novels as a good basis for movies . . . then maybe I get richer and can give more to The Nature Conservancy.
Or perhaps an enterprising young prophet of doom? Would you mind emailing me privately? I'd email you but you don't have your addy publicly avaialble.



I'm feeling bold.

Here is my email address for all an sundry, who will be added to my "contacts" list.


No risk, no reward.

Yeah, maybe I could post my novels on your site, because I think there are way too many sites already, and yours is a popular one.

How goes your cult?

How flat are they and what are the curve radii?
The answer depends on local circumstances.
I plan to use the inside lanes of a bridge over some freight railroad tracks on Elysian Fields for a new streetcar line.  Glue some concrete ties to the pavment and lay rails.  Put up a Jersey barrier against cars.

Some isses; grades, overhead clearance, entrance/exit.

Rail can be operated with 3rd rail (some stories of drunks on Long Island urinating on 3rd rails with serious but not fatal results, and random dogs/cats dying due to access) or overhead wire.  At the midstage of building the interstate system, they thought that the US might build mobile nuke launchers driving around the interstate highway system and they raised bridge clearances.  This was later reduced back AFAIK.

IMHO, some bridges are VERY tight for OCS clearances.  Others seem OK.

With every ax;e powered, urban pax rail can climb 15% slopes in good weather and, with on-board sander, 14% in icy weather.  Safe down hill grades at ~11%. Modern Light Rail vehicles, with excess safety margins, are limited to a 6% slope.

Freight rail is generally limited to 1.5% slope (less than interstates) although electric Locos can do a bit more.  3% slope is possible with freight rail for limited stretches (momentum helps).  These slopes are less than interstate standards AFAIK, but many freeways are on flat or gently rolling terrain.  I am NOT an expert on freight rail grades.

The obvious solution is to give rail the inside lanes on highway and erect jersey barriers to keep rubber tires off.
Cars & trcuks do not need to cross the tracks.

But, at some point, rail nees to enter & exit the freeway inner lanes.  With a ~1.5% grade this means a LONG ramp up or down to give, say, 14 feet clearance + thickness of the bridge.  Even 6% grade is costly.

Plus people are repelled by highways.  Putting elevated stations in the center of freeways with walkway access is never a good idea.  Even stations on one side of a freeway lose ridership.

The Green Line in LA is built, elevated, in the median of a freeway.  Elevated due to required elevated stations and other clearance issues.

Welcome back !! :-))

Curves on freeays seem gentle enough for freight rails without any limitations.

"Trolley Freight", running freight on Urban Rail Lines is done occasionally in Europe and perhaps in Japan.

Has anyone heard from thelastsasquatch in the past 2 days? He came to visit me a couple of days ago. I must say that I don't think there was ever a sasquatch as tall as he is. We drove around Billings, and I showed him our refinery here. But I made the mistake of driving him around the Montana Women's Prison. I noted the gleam in his eye as he studied the prison, and after I took him back to his car, that was the last I heard from him. I fear he may have broken into the prison, and can't (or won't) come out. He is working on a couple of articles for TOD, and I hate that I may have derailed him from his writing.

Please let me know of any sasquatch sightings, so I know that he made it to his destination after he left here. :)


Is that the prison without any kind of gate or fence around it?
No, it's got a fence around it. But, you can walk around a sidewalk on the outside, and see the inmates in the yard. I have seen people on the sidewalk talking to the inmates through the fence.

But, sasquatch turned back up on the radar a short while ago. He got in touch with me, so he did make it to his next destination.


Maybe we shoulf chip in and get him one of those 3D Prison Girls flicks.
Holy Crap Batman!

June 29 (Bloomberg) -- Money-supply growth in the dozen nations sharing the euro accelerated in May, expanding at the fastest pace since early 2003 after three interest-rate increases by the European Central Bank.

M3, the ECB's preferred measure of money supply, rose 8.9 percent from a year earlier, the fastest pace since April 2003, after gaining a revised 8.7 percent in April, the Frankfurt-based bank said today. The Frankfurt-based bank says M3 growth of more than 4.5 percent risks stoking inflation.

So this is roughly running double what the bank wants.  I think this would be a good indicator of the ballpark the US is operating in at the moment.  Last check M3 was around 8% YoY, and we see Europe is now @ 9%.  I propose we are closer to 10-11%, but no one can be for sure.


Good find, Tate.  I'd been expecting as much, but this confirms the rapidly increasing problem.

Speaking of which:
On Why Inflation May Be Not Be Over For A Long, Long Time

Compare the no-nonsense days of Paul Volker in 1980 to the blissfully confused current policy.

Whoops. Someone forgot to tell the Fed oil prices were spiking. Better late than never?  

And yet some here will provide a good case for deflation, but housing won't bring the whole country down.  It didn't in the S&L, and it's not going to now.  However as the housing market cools, and other various factors become more volatile, some are going to cry and ask what happened.
Mish writes:

Yesterday in Foreclosures Rise I was trying to figure out exactly what dollar amount of mortgages would have their rates reset and when. I had two numbers: $1 trillion and $2.5 trillion. Both are correct it turns out. Jack McCabe was kind enough to respond to my question with this breakdown.

2006 - $500 billion adjusts first time
2007 - $1 trillion adjusts first time
2008 - $1 trillion adjusts first time

Total: $2.5 trillion - first time adjustments
Data was from MBA earlier this year.

Bad inspections, dwindling cash, and Bernanke hiking away as rates are resetting are all going to wreck havoc. The foreclosure party has only just begun.

from http://globaleconomicanalysis.blogspot.com/2006_06_27_globaleconomicanalysis_archive.html

Take it for what it's worth. You have faith I can only marvel at. Good luck and God speed tate423.

I think that what could be happening is that Europe has noticed a strong demand for the Euro. Perhaps people are trying to sell dollars. Offcourse europe doesn't want its currency to rise any further agains the dollar (it has already won 50% since its lows a couple of years ago). So europe is starting to increase its money supply to keep its currency down.
And so the pyramid flexes....
Yesterday Lionel Jospin, former socialist prime minister of France and the defeated Presidential candidate foor years ago gave an interview which appears to be throwing his hat in the ring for Presidential election next year. Among the four major campaign issues he identified, one referred to the coming exhaustion of energy resources, especially fossil fuels. He advocates sustainable development , including alternative energies (without excluding nuclear), as a major goal for the next President of France. While  the highest priority for international co-operation should be maintaining the proper balance for the atmosphere, climates, water, and forests. These opinions are practically mainstream in France, certainly across the broad left.

Internally France has already achieved a lot:- it already produces about 80% of its electricity using nuclear stations - and 10% using hydro.
 The  Regional councils are also on the campaign. Here on the Riviera,
new electric railways and tramlines are going up.
Bus fares are now flat at about 1 dollar 70 cents US for any length of journey except for local journeys of less that one hour which  cost 1 euro, about 1 $ 26 cents US. The Regional objective is to eliminate car commuting.
Company owned vehicles with a few exceptions have to be diesel. Among the exceptions are buses that can be hydrogen powered, using off-peak nuclear electricity to create hydrogen. There are all sorts of tax incentives for hybrid cars, solar, wind and heat pumps.
And in France, I have never, ever  met a doomer. My wife and I chose to come here some 20 years ago partly to have a low energy lifestyle. It's been great, highly enjoyable. We have several businesses, the most successful being rentals of holiday accommodations. And we are confident about the future. Where did people holiday before air travel became common and how did they travel? For Europeans the answers were the French Riviera and they came by the famous blue train. Now about one third of our guests come by TGV (high speed train) using 3% of the energy per seat-mile of a 737.  When oil hits 200$ a barrel we expect the majority to come by train.

We really feel sorry for you people in the US who know that things have to change but your oligachy prefers to leave things alone and fool suckers into believing that one day they each individually will become part of the elite. In France we know how our ruling elites are selected and trained. But we also know ourselves and know that the big decisions are made where we are - in the streets. Our elites know this too and that, if necessary, we will support them with lamp-posts. Keeps them

Interesting perspective...thanks for the details on France's energy situation, which I was only vaguely aware of.
For those who need a great example of the types of derivatives that are creating the house of cards, this does an excellent job of detailing Credit Default Swaps(CDS), one of the simplest derivatives.

Ford a Bigger Default Risk Than GM, Derivatives Show (Update1)
June 28 (Bloomberg) -- Ford Motor Co., which had its credit rating cut further into junk territory by Standard & Poor's today, is now a bigger risk of default than General Motors Corp., credit derivatives show.

Investors are paying $980,000 a year to insure $10 million of Ford debt against default for five years with credit default swaps. Similar protection for GM costs about $970,000, according to JPMorgan Chase & Co. prices.

Prices for Ford default swaps are rising on speculation the company has farther to go in its turnaround than GM. S&P slashed Dearborn, Michigan-based Ford's rating to B+, or four levels below investment grade, from BB-. It has a B rating for GM.

``2006 will be a more difficult year for Ford than previously anticipated,'' S&P's analyst Robert Schulz said in a research note today.

The cost to protect Ford debt from nonpayment is up from a low of about $777,000 on Feb. 2, while for GM it's down from a high of $1.3 million in December.

Ford credit default swap prices rose above GM for the first time yesterday, according to data compiled by GFI Group Inc., a derivatives broker in New York. They were even on June 23 and GM traded at a higher price than Ford on June 26, GFI data shows.

Rising investor confidence in GM showed up in the credit derivatives market this month when dealers stopped demanding upfront payments to take the risk of a default.

Two Biggest

GM and Ford are the two biggest junk-rated companies. GM and its units had $277 billion of notes and loans payable of as of the end of March, while Ford had $151.1 billion, according to Securities and Exchange Commission filings. Junk bonds are rated below BBB- by S&P and Baa3 by Moody's Investors Service.

Ford's total U.S. vehicle sales fell 3.5 percent through May this year. Its market share dropped 0.6 percentage point to 18.5 percent, as Toyota Motor Corp. and Honda Motor Co. gained. The company plans to cut 30,000 jobs and close 14 North American manufacturing facilities by 2012.

Even with Ford's restructuring plan, ``we expect the company's financial profile to weaken further during 2006 -- a period when the U.S. economy and U.S. light-vehicle sales are robust,'' S&P said today.

GM's offer of buyout and retirement incentives was accepted by 35,000 workers, allowing it to trim annual spending by $1 billion more than planned and shed the workers two years ahead of schedule. The company is also close to completing the sale of a 51 percent stake in its finance unit, netting $7.4 billion.

Shares of Ford are down 17 percent this year, compared with a rise of 35 percent for GM.

When these companies default (which would be very ironic) the downward spiral begins.


I (still) expect to see one or the other (my money is on GM) in default within 12 months (i.e. next summer).
Ok, that's fair.  I'm on the other side of the coin though and I have to agree that Ford is worse off.  We looked at Ford in a Japanese mangement class in college and the consensus was they were doing little capital spending to improve the efficiency of their auto factories.  In addition they just don't have the ability to adapt their lines to changing trends.  A great example is the brand new ford fusion.  

If I remember correct, when it debuted there was something wrong with the grill or the front end area and Ford acknowledged the problem but said it would be 6 months before they would change it.  Now don't get me wrong, maybe it's not a priority but 6 months to adjust a minor problem?  This is indicitive of the kinds of attitude that Detroit faces, but GM has spent some coin modernizing their plants, some with heavy Japanese influence.  

We didn't invent cars, the Germans did, we simply invented an assembly line to mass produce them and have done little to alter that.  It's a shame, but near everything else we do come up with gets sent to the lowest cost producer and resold back to us.  I'll get off my soapbox now.

Here is a question that I haven't been able to find an answer for.  What are the relative production amounts of different fuel types (and energy concentrations) achievable given a barrel of oil.  For example, it is possible to refine to maximize gasoline production or diesel production.

So, for example:

Optimized for gasoline
1 barrel => A liters of gas, B liters of diesel + others products

Optimized for diesel
1 barrel => C liters of gas, D liters of diesel + others products

Obviously D > B and A > C, but the precise numbers in "typical" cases I have not been able to find.

I am curious about the overall efficiency of optimizing and using particular fuel products (in this case diesel vs gasoline) given the same petroleum input.  Diesel is more "efficient" in MPG terms in part because diesel has more energy per unit volume to begin with (11-25% more depending on the various sources.

Of course, that additional energy cannot come for free, since the same barrel of oil has the same total energy content. So what is the relative efficiency in MPG of diesel vs gasoline, where G is measured in terms of the original crude oil? (Of course, I realize that this depends on the vehicles in question, but I am using the energy contents as a rough measurement of "miles").

  It also depends on the grade of crude oil used in the refining process and the relative efficency of the refineries.
So how about an "ideal typical case" with light sweet crude?  Does the balance between the maximum amount gas/diesel production per unit of petroluem shift significantly if a different grade of crude is used?  

Perhaps the numbers are potentially variable and complex, so no hard data is really available.

If diesel is better in "miles per gallon of crude", it suggests that energy is somehow lost in refining oil to gasoline which is not lost in refining to diesel.    Alternatively, could it mean that it can be more effectively gotten from lower grades of crude oil from which gasoline could not be as effectively refined?

First off, let me qualify this-I am in oil and gas exploration and production, not marketing.
   The oil in every formation in every well is different. In a lot of big fields it is very similar, but it still varies. Yet it has to be described in a uniform way so that producers and purchasers can agree on a price. Sweet means low or no sulfur, while gravity describes how thin the oil is at a specific temperature. Motor oil is described in the same system only it is called weight.
  Crudes can also be asphaltic or parafine based. This refers to the kind of sludge that a refinery is left with after the initial distilling of the product.
  There is also natural gas liquids which drop out of natural gas when the pressure is decreased. Some of the gas liquids are in fact gasoline and people occasionally used this in old Model T and Model A ford engines straight out of the well.
  A refinery purchases a tanker full of oil and seperates the products by distilling, or fractionating. Thinner liquids rise to the top of the tower and are drawn off. The cheapest to refine and easiest to sell is gasoline. Next is kerosine, also known as jet fuel.After that comes #2 fuel oil also known as diesel.
  What's left is cracked in a pressure vessel with heat and catalists to form more saleable product.Sometimes the lighter fractions are combined to make a saleable product.
  So, oil is priced by how much  work  has to be done on it to make it into saleable products. And if the operator adds hydrogen and heat energy even the toughest crudes like that in the Canadian oil sands can become more valuable
  As I noted, I am no more than an informed layman on this. Robert Rapier I'm sure can give you a much better answer as well as other downstream folks on this forum.
!Road Wars!

China is planning to have 50,000 miles of expressways by the end of 2008 and the USA only has 46,500 miles of expressways. Surely we cannot let them surpass us in this vital  area. Our national honor and national security are at stake! It is past time that the President and Congress face up to this dangerous situation and immediately start construction on another 20,000 miles of expressways in the USA. And if "they" build 4 lane highways, we will build 6 lane highways. If they build 18 wheeler trucks then we must build 24 wheeler trucks. If they put 100,000 pound loads per truck, then we must put at least 150,000 pounds per truck. If their speed limits are raised to 75 mile per hour, then we will have to raise ours to 100 mile per hour.
More, Bigger and Faster are vital to our National Security and our National Image abroad. How can you even think about the environment during a national emergency like this?

Oh! And by the way, Happy 50th Birthday to the USA Interstate Highway System on Thursday June 29th.  You can all start breathing again now <BG>
But China really is planning to have 50,000 miles of expressways built by the end of 2008! And they aren't for bicycles! They are going to be driving cars and trucks using "our" fuels that we used to burn.
And what do you suppose they will do with all that construction equipment when they finish building the expressways - Build suburban subdivisions?

I guess China needs something to do with all those engineers.    China is obviously competing with the U.S. to be the stupides, least farsighted country in the world. And they have the history of the U.S. to help them realize the pitfalls of what they are doing --- which they are doing.  Another tragedy for China and the world in the making.  Roads are so twentieth century.  Too bad they are going to have to convert coal to run all those cars on all those highways.  We are so screwed.  
Roads are so twentieth century.

Seriously...they should be building flying cars.  :)

The new NAFTA superhighway from the Mexican border to Canada will be a mile wide, according to sources.
Let's see 'em top that!
On the flip side, where the heck will we get the asphalt?
The same way we plan to get the remaining oil.
We can simply extrude the Athabasca tar sands into a mile-wide ribbon. Should be easier than converting them to oil.
From Venezuela of course :-)


The news is full of stories about China negotiating long-term contracts with supplier nations all over the world to import oil at fixed prices.   That's smart. As the inevitable shortages develop, nations will scramble increasingly to line up contracts.  Those that don't will be relegated to an ever-shrinking spot market where prices will become exceedingly spiky.

What is the U.S. strategy?  Where do we read about the U.S. (or U.S. based corporations) approaching Chavez or Putin hat-in-hand to line up contracts?   What happens when the spot price lurches toward $200 / bbl?  What do importing nations do as the spot market evaporates and oil becomes pretty much unavailable at any price?

As the world's one and only great Imperial power, the U.S. is evidently too proud to negotiate contracts with "inferiors."

What conclusion are we left with?  That the U.S. strategy is ultimately to seize foreign oil fields by military force?  We've taken the obvious first step in Iraq.   Jimmy Carter has left us a convenient "doctrine" that our rulers can and will use to justify the invasions of choice.

Well, thank you TOD for letting me vent..

What is the U.S. strategy?  Where do we read about the U.S. ... approaching Chavez or Putin hat-in-hand to line up contracts?

Fearless Leader has a well defined strategy.

I believe his words were, "Bring it on."

Hello Stepback,

Instead, I wish he, and other leaders had the big brass balls to 'bring it on' for detritus Powerdown and biosolar Powerup.  He needs to understand that our genes are not our friends-- radical 'outside the box' thinking is the only solution that might optimize our decline.  Simmons is thankfully thinking ahead of the curve--everyone must be willing to cooperate and radically change from lizard brain living to grey-matter living.

The Maximum Power Principle {MPP} states that all open systems (Bernard cells, ecosystems, people, societies, etc.) evolve to degrade as much energy as possible while allowing for the continued existence of the larger systems they are part of. [[1]]

"The Easter Islanders, aware that they were almost completely isolated from the rest of the world, must surely have realized that their very existence depended on the limited resources of a small island. After all, it was small enough for them to walk round the entire island in a day or so and see for themselves what was happening to the forests. Yet they were unable to devise a system that allowed them to find the right balance with their environment."
-- Clive Ponting

So even if we had total situational awareness and data, as Stuart and Matt Simmons suggests, unless we full-tilt shift to rebelling against our genetic nature, it will be woefully insufficient.  Thus, I remain a fast-crash doomer in beliefs, but desperately trying to conceive an alternative path in support of Simmons's latest slide presentation.  To derail MPP: we must be willing to derail the continued existence of the larger artificial detritus systems.

On the macro-scale: after voluntary birth control education first, the proactive labor shift to permaculture, humanure, and drastic water conservation should be next to support ELP and reduce future violence.  This directly drives resource limit awareness and conservation.  In short, we must forcibly collapse the artificial, detritus-driven humanimal ecosystem faster than Nature's geologic ability to do the same.

The US should immediately institute policies to drastically accelerate the 2% farm labor to 20% in the next three years to get ahead of the predicted Hubbert depletion rate, i.e,  Westexas's prediction of college grads and illegals working together to bring in the crops as official policy.  This will additionally help increase emergency foodstores for the downslope ahead.

This can be easily done by declaring illegal tanning salons, car washes, green lawns, swimming pools, and other totally unjustified economic waste combined with drastically higher farm pay so that humans will chose physical labor over detritus driven convenience.

Yes, it sounds harsh and draconian, but this is preferable to everyone hobbling about with machete wounds Hutu-Tutsi style, excessive births from stupid rapes, and Soylent Green fast-food induced by other lifeform extinctions.

This 20%, or 60 million Americans rapidly converting urban and suburban spaces to local permaculture and/or natural habitat follows Simmons's urgent plea to everyone to grow local food.  Starting early will also allow us to use cheap-energy heavy equipment to remove concrete and asphalt versus using picks and shovels later.

I believe conventional market driven solutions are pointless because it doesn't disable MPP-- it is only a continuance of our lizard brain genetic drive.

C'mon Pres. Shrub--live up to your ecological nickname!

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

Can Venezuela afford to shut off the oil to the U.S.

Can Venezuela really afford to blockade the U.S. oil market. I have argued in the past that a Venezuela boycott would be meaningless because if they sold to someone else, at a much higher shipping cost, it would simply free up more oil not imported by those countries, to be imported to the US. Of course this would increase the shipping cost for everyone involved and would thus add a few bucks per barrel to the overall cost.

But Venezuela could just stop shipping to anyone, pulling their oil off the market until the U.S., in their eyes, straightened up and flew right. But what permanent damage would this do to Venezuela's enormous assets in the U.S.? The privately owned CITGO stations in the U.S. would have to find another source of oil and gasoline. And would pissed off Americans boycott CITGO? Highly likely in my opinion. And would such action by Venezuela spur Congress to force Venezuela to sell their refinery interest and sell to someone more cooperative? It probably would. I know some would say that would be illegal but the government has already shown that in case of an emergency they can do just about any damn thing they like. At any rate most U.S. interest has already been kicked out of Venezuela, so this would just be tit for tat.

Bottom line, I don't think there is any damn way Venezuela can afford such a stunt. But then their president is a madman so there is no way of telling what he really might do.

For a rough summation of Venezuela's interest in the U.S. refineries and retail market, see excerpt from the GAO's just released Energy Security: Issues Related to Potential Reductions in Venezuela's Oil Production. Of course most everything in this article applies whether any reduction in Venezuela's production is caused by Chavez deliberately closing the taps, or by natural depletion. The speculation about boycotts is my own and probably would not happen if any reduction was due to natural depletion and not a deliberate act by Chavez.

In 2005, Venezuela was the world's eighth largest exporter of crude oil. Most of Venezuela's crude oil that is not consumed domestically in Venezuela is exported to the United States because of its close proximity, additionally, Venezuela owns significant refining assets in the United States and the U.S. Virgin Islands that can refine its heavy sour oil. In the 1980s and 1990s, PDVSA bought CITGO, Inc. and acquired interest in several other U>S> refineries that had the ability or could be reconfigured to refine such crude oil. Today, the refining capacity of PDVSA's share of the nine U.S. refineries in which it has an interest is about 1.3 million barrels per day. For example, CITGO's five wholly-owned refineries have a refining capacity of about 750,000 barrels per day and market their refined petroleum products in the United States through about 14,000 independently owned service stations using the CITGO name. In addition, PDVSA partners directly, or through CITGO, with ExxonMobil, Lyondell, ConocoPhillips, and Amerada Hess in the U.S. Virgin Islands. These nine refineries buy most of the crude oil and refined petroleum products exported by Venezuela.

Most of Venezuela's crude oil that is not consumed domestically in Venezuela is exported to the United States. The United States is a natural market for Venezuelan oil because it is so close--about 5 days by tanker to the U.S. Gulf Coast compared to about 30 to 40 days for supplies coming from the Middle East.


"But then their president is a madman so there is no way of telling what he really might do."

Ah, here we go again: ad hominem attacks on Hugo Chavez masquerading as analysis!

Chavez is certainly prone to bombast, but I'd like to see some sort, any sort, of documentation of his "insanity".

He certainly has a different set of values than the current US administration. He professes a strong Christian ethic to help the poorest of his society, using the profits from Venezuela's oil industry. He correctly points out that two decades of Washington Concensus, neo-liberal trade policy has left the vast majority of South Americans much worse off. The president of the World Bank has made the same statement: is he also a "madman"?

When examined closely, Chavez' political-economic policies are not much different from those of Norway: he's basically a Social-Democrat.

Just because the US media continuously parrot Administration sound-bites railing against "radical populism" and claiming that Chavez represents a "growing threat to democracy", does not make a documented case that Chavez is a madman.

Please refrain from slandering the democratically elected leader of another country without supplying any factual support for your claims...

Just for the record, every reference to Hugo Chavez "threatening" to cut off oil to the US that I've seen, when read in its entirety, features him saying that VZ has no intention of doing so unless the US attacks his country or foments a coup or performs a presidential assasination!


"Jesus Christ was a Socialist"

I dind't have the time to defend him...glad someone did.
Thanks for the positive comments.  


Okay, if he is not a madman, then if he did decide to completely shut down Venezuelan oil production, would this be a rational decesion? What would this do the the Venezuelan economy?

That was my point. If he does not decide to shut down production, wrecking his country, then he is not a madman. But if he does.....?

However discussing Chavez's state of mind is simpy to avoid the question which I posed. Would you care to address that question Larry instead of the mind of Chavez?


Yes, I would take up your challenge.

First, is it not possible that Venezuela could subsist upon on its own production? I suspect many in Venezuela have been doing so for generations.

As for "wrecking his country," what do you mean? Does not Venezuela have enough resource to grow food and power transport and build housing and educate its population and provide the basics of health care? Your nuts, he sounds far saner than you.

If by "wrecking his country" his country you mean he fails to play the game whereby great advantage is given to foreign corporations for the benefit of said corporations and the few within the host nation who sponsor such relationships, then, fair play to him. He's truly a "madman" if he can balance the needs of the electorate against the needs of the robber barons such that the electorate come out ahead. Even if the robber barrons do too, great! Then, at last, we've found a version of Corporate Capitalism that works. If it only works for Venezuela then tough shit for the corporations. After all, Venezuela is a collection of humans, corporations are a collection of share holders. Give me people over shares any day.

Talk about an ad hominem attack! No, I am not nuts and it is not polite to tell people on this list that they are nuts simply because you do not agree with their argument.

No, the Venezulean economy could not survive losing all its oil export money any more than Saudi Arabia could. If they never had oil exports then their economy would have evolved in a different manner. But that was not what happened. Their economy, as currently constructed, could not survive the loss of all oil export profits or the profits from their overseas refineries and distribution network.

And by "wrecking his country" I menat nothing more than what would happen if he cut off all oil exports. That was obvious from my post, or at least should have been to anyone who could read. It had nothing to do with other oil companies.

Venezuela also has a fortune invested in the oil industry in the US and the US Virgin Islands. So Goritsas, please reply to what I say in my posts if you reply at all and don't try to surmist that perhaps that I mean something else. I did not mention anything about other oil companies operating in Venezuela. That had absolutely nothing with my post. So your robber baron is all wet if you think that had anything to do with my post.

"Talk about an ad hominem attack!"

Guess you would know. Chavez is a mad man, thus everything he does smacks of lunacy. Yes, I read your post again.

"But then their president is a madman so there is no way of telling what he really might do."

Your words, not mine.

If your qualified to render a psychiatric or psychological diagnosis that would confirm him as a "madman," assuming such a clinical category exists, then please, by all means, share your findings. If not, then why attempt to render such a judgement at all?

"I did not mention anything about other oil companies operating in Venezuela."

I didn't mention oil companies either. I mentioned all foreign corporations operating in Venezuela, i.e. Robber Barons.

Keep up the good work Darwinian, I enjoy your take on things. Sorry if I offended you. I'll try to only read and not reply in future.

Your basing his insaneness on pandering to his people.  Others are basing his mental stability on his actions to help his people (remember he answers only to Venezuela) with oil money.  Actions speak louder than his words, and thus far he speaks loudly and carries no stick.  
Darwinian, you've been commenting on the unlikeliness of a Venezuelan oil embargo against the US for a while, and I must say you've finally convinced me that Hugo couldn't really do it.  What I didn't previously consider (and what I now consider to be the nail in the coffin on this debate) is that Venezuela- through Citgo and Venezuela's refineries- has so much else tied up in its oil exports to the US.  I was thinking Hugo might nevertheless sell his oil to China at a lower profit (even though the ultimate effect on the US might be miniscule) just to piss off the US and gain further support at home for standing up to US imperialism.  But his interest in the US oil market is not just a few tankers a day that could easily be rerouted west to China but also the refining and ultimate point of sale of the end product.  He's too entangled in the US market.

So in answer to you question Anyone...anyone...  I say, not me.

"...if he did decide to completely shut down Venezuelan oil production, would this be a rational decesion? What would this do the the Venezuelan economy?"

Sure, I'd be happy to discuss actual question that started this: Could it be construed as a rational decision to cut off oil exports to the US? (Not the straw man "completely shut down VZ oil production" you switched to...)

And the answer is trivial: Yes, classical economics teaches us that a rational person could conclude that VZ would be be better off leaving that fraction of oil (that's currently exported to the US) in the ground for 5-10 years, until depletion rates of Ghowar and Cantrell fields really kick in. That oil would then be worth X times as much money. A simple NPV calculation might very well (depending on the discount rate you assume) show it to be not only rational but highly profitable to cut off current exports to the US.

It might well require some serious belt-tightening in the current VZ economy, but some rational people chose to put their children's survival above their own current comfort level.

"Rational" is not defined as "Helpful to US interests"...


But then their president is a madman

On what basis is he a madman?

I've read the linked article "Fission: Impossible"

Empty bunk and unsupported libel.  There is plenty of uranium and we've only begun to understand the geology and variety of ore bodies.

Prices are going up as a price signal to mining companies to start new mines to meet growing demand.  That's how the market system works. Yellowcake prices peaked well above today's prices during the 70's with the last rapid expansion of demand and with the existance of an international cartel, since exposed.

If even uranium gets too expensive, there's always thorium which is 4 times as common.

I'm not aware of any economically viable thorium-fueled reactors operating in the world, past or present. Could you enlighten me regarding the viability of such, based on previous work in this regard?  
Previous attempts have all been failures.

"Over the decades, several nations, including the United States, experimented with thorium-uranium fuel, but the economics of it never seemed to work, in part because
the physics of thorium and uranium differed greatly, thus leading to inefficient operation. And, too, most thorium-cycle schemes relied on reprocessing, and in the
late 1970s the United States came to oppose the recycling of nuclear fuel because of proliferation concerns. Today, only India remains a strong proponent of the thorium fuel

India's demonstration program reactor still is not operating.


One number says it all: 2%

This is the percentage of the cost of running a nuclear power plant that goes for the uranium fuel.

Now it doesn't take a nuclear engineering degree to figure out that with just 2% of the costs going for fuel, there is almost no incentative for anybody either to look for more uranium deposits, build breeder reactors, convert thorium for fuel or whatever. It is as simple as that.

While I can't claim any special expertise, the main problems are three.

First, with the abundance of uranium and solid methods for converting it to electricity, there has not been an incentive to do the investment in the specific development of the reactors and the fuel cycle.  India has some interest because they have such huge thorium resources and government policy has been protectionist.

Secondly, the cycle is not very proliferation resistant.  Spent thorium fuel can be chemically reprocessed into U233 which is even easier to work with than plutonium.

Thirdly, you need to bootstrap the fuel cycle to get a Th232 to U233 process going.  That would take a lot of money and fissile material to get off the ground when more attractive and less capital-intensive fuel cycles exist based on uranium.

With no fundamental technical challenges, no economic incentive, and a very long development horizon (and little grant money), it's a subject for deep nerds.

If we decided to go this route, we could probably field the first commercial plant in 20 to 30 years, sooner if arush effort.  With 50 to 85 years of uranium proven resources, we'd have plenty of time.

These guys are gung ho on thorium.  I do love the molten salt reactor - it's sooo cool!

http://www.thoriumpower.com/files/tech%20publications/nuclear%20engineering%20radkowsky%20article.pd f

How can you chemically change thorium into uraniun? If I remember Chem 101 correctly, chemistry only deals with combining atoms and/or breaking apart molecules, not changing the nucleus of the atom. Thorium and uranium are different elements, which as far as I understand, cannot be changed by chemical reactions.
Thorium 232 absorbs a neutron and becomes Thorium 233.  This has a short half-life and emits an electron and Uranium 233.

What goes on in an nuclear reactor has more to do with physics than chemistry.  When uranium fissions, or splits, it becoems two more or less random atoms, which then decay into stable or long lived isotopes.

Hence Nuclear reactions, meaning reactions in the nucleus of an atom, rather than regular chemical reactions which deal exclusively with the electrons surrounding the nucleus.

All 'heavy' atoms are created in nuclear fusion reactions from long-dead distant stars, including the elements that make up living organisms. We are made of stardust. Kinda cool.

I suspect mining companies will be very slow in the response. NIMBYsm follows nuclear power at all stages - from uranium mines to waste disposal.

As a result I expect the prices will continue to rise in the medium term, reinforcing the idiots shouting "uranium is running out, running out" to continue so.

It would have been funny if it was not indicative to the state we've reached as a society - asleep at the wheel and entangled in our own delusions.

NIMBYsm follows nuclear power at all stages - from uranium mines to waste disposal.

Huh.   It is like you find people's desire to not have toxic material in their environment an irrational choice.

Or not wanting the terrorist targets nuclear plants represent.

Regular readers here know you like to encourage nuclear poliferation with the CANDU fuel cycle.

Huh.   It is like you find people's desire to not have toxic material in their environment an irrational choice.

Then we should definately abandon the project called "civilisation". All you eat, wear, drive envolved production and disposal of toxic materials. It has always been a question of trade-offs, but we have become too lazy and too unconcerned about the realities of the world.

Regular readers here know you like to encourage nuclear poliferation with the CANDU fuel cycle.


First: I never talked about CANDU fuel cycle.
Second: You definately need to do some reading. CANDU fuel cycle does not include uranium enrichment and hence the chances for nuclear proliferation are the lowest among all nuclear designs we have today.

All you eat, wear, drive envolved production and disposal of toxic materials.

Really?   Then I guess the spinach I ate this morning grown with composted humanure + spent brewing grain and leaves was just a non-toxic dream.

So much for All.

First: I never talked about CANDU fuel cycle.

Considering this is not a speaking medium that is correct.  However you HAVE linked to people who use the CANDU cycle as the reason why a lack of Uranium ore was not a problem.  

Do you now dis-avow that defense position you once took?

Second: You definately need to do some reading. CANDU fuel cycle does not include uranium enrichment and hence the chances for nuclear proliferation are the lowest among all nuclear designs we have today.

But they do generate plutonium which is VERY popular for bomb making.   And, one can say 'but we plan on converting that plutonium into electrical energy'.

I note how you ignore the issue of adding to the potentional terrorist targets.   Is that because you feel the US policy on terrorism is effective?

Eric it is utterly pointless with talk to you. Ooops not "to talk" but "to write". That was a thing of great significance we just got our first agreement on.

Consider this my last reply, I really don't have the time for this.

I really don't have the time for this.

I understand.   When called out on your use of the term 'nimby' via pointing out the valid reasons people don't want Nuclear Fission, you can't defend your position, hence you go away.   All the time saying 'the fears of nuclear power are irrational' as your justification.

Things like:
Toxic mining tailings
VERY toxic by-products of the energy generation cycle
The generation plants being tempting targets for the evil terrorists
An industry unable to function without the law offering to bail it out in case of accident.  
Generation of materials which can be derverted into a very effective class of WMDs.   WMD is something no one wants USED in their back yard.

One can also expect the exporting countries to use restrictions on exploration, mining, and export permits to restrain the supply and keep prices high and their royalties coming in.

They did this (in cohouts with the mining companies like Rio Tinto, Cogema, and Broken Hill (BHP)) back in the '70s.  One of the reasons we so little US domestic production is that US companies are prohibited by our antitrust laws from playing in this game.

There are already hints about a hidden scandal involving Cogema (a French company part of Areva), Niger, yellowcake, Saddam Hussein, and Joe Wilson.

The world of yellowcake is a shadowy one.

Technically exporting countries would get more money if they permitted production expansion to meet rising demand. Protectionism in case of artificial shortage wouldn't make sense.

IMO it is already becoming evident where things are headed and hence the price rise. But the major players will wait until governments provide enough support - which will take quite a while of course.

Actually I was considering some domestic or Canadian mining stock, but the general feeling of overvaluedness of the whole market made me wait for now.

Economy Zips Ahead at a 5.6 Percent Pace

The economy sprang out of a year-end rut and zipped ahead in the opening quarter of this year at a 5.6 percent pace, the fastest in 2 1/2 years and even stronger than previously thought.

The new snapshot of gross domestic product for the January-to-March period exceeded the 5.3 percent growth rate estimated a month ago, the Commerce Department reported Thursday.

People need to wake up.  Who the hell cares about a 1/4 ago, when this quarter is closing tomorrow.  The second half slide is right over the next slope up....I hear September is shaping up to be a real hell of a month, maybe even a day to forget.
Weapons of mass destruction are in Iraq, so says American government.

Global warming is a liberal fantasy, so says much of conservative America and up until very recently the American government.

Bush won election to the presidency of the United States.

Yes, let's rely on government information.

I know I'm going to get ripped to shreds for this comment, but here it goes anyway:

I've been following peak oil now for 2 and 1/2 years.  This entire time, the collapse of the American economy was always one quarter away.  At first I was really frightened, but now 10 quarters later, my fear has been dulled.  Read through Kunstler's archives.  He's been predicting the imminent collapse of the American economy next quarter since at least 2003.  Read the commentaries on from the wilderness.  It's always just about to happen.  It's not that I don't agree that the US economy is on thin ice and that there won't be some extremely painful adjustments in order at some point but do we always have to say that it's next quarter?  Can we at least admit that this is a little bit of an inexact science?

Steven Roach of MS admitted right before the May downturn that we weren't headed for a recession and that positive growth was ahead.  Contrarians are fundamentally right, but we all know that markets are irrational and this is rarely planned for.
"Contrarians are fundamentally right"

Guess Chicken Little wasn't contrarian enough.

So, when the majority of any group express one opinion, the correct opinion is that in opposition to the majority? In every case and in every situation. Is that what your saying?

I'm sorry, purely economic.  Markets are irrational and I'm pointing out that in most cases Contrarians scream that things can't continue going the same way due to fundamental or technical research (ratios analysis, Discounting future Cash Flows, etc).  Fundamentals do not allow abnormal high P/E ratios for very long, especially like we are in now.  What I'm saying is that the fundamentals are right, but the timing is wrong.  I've read countless stories of those contrarians who get fired b/c they were right, but months or a year too late.  When the fundamentals are imbalanced, the economy has to adjust but we rarely know how long.
Based on my reading, I'd say the problem of predictions, and saying in retrospect who was "right" is confounded by two things:

  • a very poor popular understanding of probability
  • a very poor estimate of the "predictability" of the system

People make predictions every day about things that are unpredictable.  At the end of the year, magazines write up who was "right."

Pfft.  They do this without any mechanism whatsoever to differentiate between "right" and "lucky."

I think history shows that energy changes are usually slow (trending over decades), but that they are occasionally fast (70's and 80's gas crises).

So I think it's most likely that the scale should be "decades" but that there is a smaller possibility that a "quarter" will jump up and surprise us.

That's why Kustler is wrong to be on every quarter ;-)

pfft. "be on" / "bet on"

No shredding here. Relax.

It's not that I don't agree that the US economy is on thin ice ... [B]ut do we always have to say that it's next quarter?  Can we at least admit that this is a little bit of an inexact science?

"Thin Ice" is a good way to phrase it.

Jared Diamond makes the point in his "Collapse" book that one never knows which factor will be the straw that breaks the camel's back. As the ice under a civilization gets thinner and thinner, it is more prone to being tipped over due to any one of a number of possible stress factors:

  1. Climate Change
  2. Loss of trading partners
  3. Internal fighting over diminishing resources
  4. ??? can't think of of another yet

It really does not matter which stress factor finally brings the house of cards down (earthquakes, fires, storms, etc.). The point is that the civilization becomes more and more vunerable, and eventually --per Murphy's LAw, something goes so bad the civilization can no longer rebound from that next punch or series of punches.

You are correct. No one knows for sure ahead of time which punch will be the TKO.

I agree. The economy seems to be more resilient to rising ennergy costs than most have predicted. In general, economic predictions is a difficult business anyway. However, historically, higher oil prices are well correlated with periods of slower GDP growth and recessions. I think that the long term economic effects will be slow to appear and will be mainly the result of a creeping inflation.
Well hell Phineas, are you talking about the collapse of the U.S. economy due to poor government policy, or are you talking about the collapse of the economy due to peak oil.

For my part, I would just as soon people stop slamming the government about policy and concentrate on peak oil. The economy is far more residual than most people think. No, the economy is not going to collapse until after peak oil. In fact it will not collapse until the public realizes the full ramifications of peak oil which may be a year or two, or even longer after the peak. Then and only then will people panic, sell their stock, buy all the guns they can possibly can and make plans for the coming anarchy. But it will be way too late for that unfortunately.

A personal question Phineas, have you read "Descartes Error" by Antonio Damasio. He uses Phineas Gage as one of his two main subjects when making his case. A live patient named Elliot is the other. I haven't read it but am thinking about ordering it.

Well hell Phineas, are you talking about the collapse of the U.S. economy due to poor government policy, or are you talking about the collapse of the economy due to peak oil. /

I'm talking about the former, or rather I'm talking about those who constantly make predictions about the former.  But I suppose these 2 aspects of the economy are not easily separated.

/For my part, I would just as soon people stop slamming the government about policy and concentrate on peak oil. The economy is far more residual than most people think. No, the economy is not going to collapse until after peak oil.

Exactly my point.  Why do so many people here at TOD have to keep predicting over and over again that the US economy is going to completely collapse tomorrow?  It seems so far this thread seems to support my (and your?) supposition that these predictions are made mostly by catastrophists who, knowing very little about economics, simply enjoy the thought of the world going to hell in a handbasket.

Also thanks for the book tip.  Sounds fascinating.  I just skimmed the review you linked, it's so complete I fear that if I read the entire review, I would lose motivation to read the book itself.

oops, messed up my backslashes and my italics are all messed up!
IMO, we will be farther down the post-peak slope than most expect before the average US citizen realizes what is happening. Don't underestimate the power of the MSM. Look at the current situation: we are basically at peak, and maybe 2% of the US population is aware of this. As Westexas says,they are still talking about hitting new highs in Texas production more than 30 years post-peak.  

Darwinian, to your remark, "No, the economy is not going to collapse until after peak oil. In fact it will not collapse until the public realizes the full ramifications of peak oil which may be a year or two, or even longer after the peak..."

It will be much longer.  When the U.S peaked in 1970, the U.S. government did not admit any such thing until 1979 and then said that the U.S. "may have peaked on oil production." (!!)  Some people do not accept it to this day, and are certain there are oceans of oil out there in the U.S. capped off that the oil companies just won't drill so they can control the price.

The world peak will be almost impossible to prove for decades, due to the ability to use seasonal variation in demand, short term weather advantages and storage to mask the real amount of oil produced and consumed, along with "fuel switching" operations.  We already see those in the ethanol rush, the "dash to gas" natural gas chase, the bio-diesel and methane options  (was someone here even talking about bio-butanol the other day?!) and the NGL (Natural Gas Liquids) and GTL (Gas to Liquids) switching possibilities.

This is why the whole concept of "peak" oil actually tells us little, and is in a technical sense almost useless.  Light sweet oil has almost certainly peaked already.  Now we begin moving down the scale....has all liquid crude oil peaked?  Probably not yet, since the refinery capacity to handle it has just now started to come onstream in a big way, but it has always been used as heavier oil for heavy Diesel engines, and for asphalt and lubricating oil, all of which have been growing industries.  We know that truly "Heavy oils" are still available in large quantity, but dirty and and more difficult to extract from the EROEI basis, but they will begin to come onstream and confuse the supply picture.  Tar sand oil?  Yes, at least some.  One can see the oil industry becoming more a maker of "witches brew" liquid fuels, oil/gas/heavy oil/tar sand/biofuel mixes that will mean the "all liquids" catagory means more, and
recently Jean Laherrere predicted a peak in the "all liquids" catagory around 2020 with only a 5% drop by 2030.

So this is great news right?  We won't even know "oil"per se has peaked, and even at that, Laherrere gives us to 2030 for a drop of 5%, that's less than we suffered in the 1980's!!  GREAT NEWS!!

WELL, not exactly.  We still have the problem of massive growth all over the world in "all liquid" consumption.  We still have the problem of funnelling  money to nations and groups who hate us to the core of their being.  We still have the problem of the need for massive investment, and by massive we mean MULTI TRILLIONS of dollars in infrastructure investment to maintain and expand our "all liquid" fuels base.  

And perhaps biggest of all, we will finally have to take sides and decide once and for all whether CO2/Greenhouse Gas release is a world threatening event.  If it is, then the ALL LIQUIDS miracle will NOT get us out of trouble, but very well could get us much deeper in it.  So, how long after peak will we know we have peaked?  If we peaked yesterday, we may not be able to demonstrate it until 2020 or 2030, and even then it could be hard to define.  Will it really matter?  No.  If we have done nothing to address the massive waste and ineffeciency of the way we consume fuel, and have not made our hard decisions on CO2, we are up the smelly creek without a paddle, peak yesterday or peak 2030....25 years is barely an eyeblink when confronting issues of this scale if you waste the time.  That's why the goal should be CHANGE, not running for the hills or whipping up hysteria.

Roger Conner  known to you as ThatsItImout

"Decartes Error" is an excellent book as is his "The Feeling of What Happens".  However, I think that people are inate dualists with a very strong disposition to believe that mind is fundamentally different and somehow independent from brain, of a separate substance--despite the increasing evidence to the contrary in neurology, cognitve neuroscience and psychiatry. In an odd way,this may contribute to the economic conceit that our minds and their wishes/desires can rise above or transcend any inconvenient material, biological, geological, or climatological constraints and if we have problems with this we can pray and God--the ultimate immaterial mind--will do it for us.  
I do not think there is evidence to support the hypothesis that there is an innate tendency to believe in mind/body dualism. Plato was a dualist, Aristotle most emphatically was not, and he held that the soul and the body lived and died together because they were inseparable. Dualism is an idea very alien to hunting and gathering cultures, and indeed, it seems to be a relatively recent idea--first clearly enunciated by Plato.
Most cultures in the world tend to endorse some kind of "spirit world", and much of religion, particularly of the tribal, non-formal, variety tends to be oriented toward manipulation of that spirit world--a world often believed to be populated by ancestral spirits.  This is not to say that most peoples have formally developed a "dualism" hypothesis simply that there exists a strong tendency to believe in a persistence of consciousness/mind beyond the death of the body--in short the existence of a soul or spirit.  
O.K., but the "dualism" you refer to here is much much different from the radical and extreme dualism of Plato and Descartes. Of the famous Greek philosophers, most did not believe in a "life" of any kind after death, nor did the famous Roman thinkers. The main point of dualism is to justify immortality of the soul.

Somewhat by an accident of history, Christianity picked up on neo-Platonism with its dualism rather than Aristotelianism with its pluralistic view of reality--but where the soul died with the animal (including humans).

Jewish doctrine is generally silent or ambiguous on the topic of an afterlife. Many (perhaps most) rabbis believe references to afterlife to be metaphorical stories--very helpful for teaching children, parables.

I do not recall any dualism in Confucianism, nor in Taoism, and Hinduism and Buddhism have complicated views. There are at least 57 varieties of Buddhism, and in general I think their beliefs are antithetical to a split between "animal" and "spirit."

You are correct in that the dualism I am referring to is not of a formal or theoretical nature.  It is more of a tendency to view mind as separable from body/brain--subject as fundamentally separate from object as a kind of  pervasive/commonsensical experience for majority of people. I am looking for a paper I recenctly read on the cognitive neuroscience of religious belief addressing this topic.  If you are interested I will pass along the citation.  I guess we are departing "a bit" ;o) from the main thread of TOD but I really enjoy this type of discussion.
I think I know the paper you refer to. Cognitive neurobiology has been one of my central interests for at least the last twenty years. One of the things we know so much more about than twenty years ago is the brain.

And of course this is on topic for TOD:) If we learn enough about the brain, maybe we can make smart pills that will enable us to solve peak oil, global warming, and all other social problems . . . .

Seriously, however, there is nothing more interesting than delving into the brain and trying to figure out emotions and thoughts as they connect to anatomy and physiology.

The path to the "hearts" and minds of the masses, eh?
Re:  phineas gage

Andrew McKillop, in 2004, predicted that rising oil prices would initially increase economic activity--until oil goes over $100.

Economy restructuring and peak oil
Published on 22 Sep 2004

by Andrew McKillop


Increasing oil and gas prices, up to levels around $75/bbl or barrel-equivalent ($10-13/million BTU) will certainly be called `extreme', but will not in fact choke off world energy demand.

The likely net impact of price rises to $75/bbl, if interest rates in the OECD countries are not `vigorously' increased to double-digit base rates, will be increased world oil demand due to continued and strong economic growth. This `perverse' impact of higher prices will therefore tend to reduce the time available for negotiating and planning energy and economic transition.

Only at genuinely `extreme' oil prices, well above US$100-per-barrel, will the pro-growth impact of increasing real resource prices be aborted by inflationary and recessionary impacts on the world economy.

This will come too late to offer any chances of organized and efficient economic and energy restructuring, especially in the OECD economies and societies, which are the most oil-dependent due to their high or extreme average per capita rates of oil demand.

Laisser-faire scenarios will necessarily include a new `Great Depression' to a backdrop of already serious tension and low-level international warfare (`war on terror'). Increased local self-reliance or `autarchy', and de-globalization will necessarily feature in longer-term restructuring of the world's energy and economic systems.

The sooner that frameworks and structures for managing transition can be set and agreed, on a world wide basis, the more fossil energy resources can be retained for smoothing adjustment in the necessarily long-term projects and programs that will be needed for achieving sustainability.

Making the case for energy transition and sustainable development is difficult, if not impossible, with political leaderships in the richworld drugged by the irrational slogans of `New' Economics and the supposed inevitable and welcome effects of `conventional' globalization.

The likely, near-term oil spikes and shocks due to emerging supply deficits (which also apply to natural gas) may break the policy stranglehold that has descended like night on serious study, and following action to head off irremediable crisis.

Interesting, but how does he say this

In fact the real world, real economy does not operate this way. Increasing oil prices in fact tend to reinforce and increase economic growth at the world level, leading to further oil demand growth. This process will continue until oil prices greatly exceed US$75/barrel

without any explantion of why it works this way.  His prediction seems uncanny, given that everyone else in sept '04 was saying higher oil prices would wreck the economy.

The first time I came accross Andrew McKillop's claim that oil price increases (so long as they don't push prices to extremely high levels, ie. well over $100 a barrel) tend to increase economic growth rather than suppress it, was in early 2002, and I am sure this wasn't the first time he made the prediction. So it is fair to say that he has proven to be very, very right.

Essentially his argument is that oil price increases transfer wealth to poorer countries (both oil producers, and producers of commodities) who have a greater propensity to consume that the much wealthier western consumer. He says that the recessions which followed oil price increases in the 1970s were caused mainly by interest rate increases, not the price of oil. He said, in April 2002:
"Both oil shocks vastly increased world liquidity and transferred spending power to countries and social groups with much higher marginal propensities to consume - so they could ONLY increase world economic growth."

I would add, in support of McKillop's conclusion, the following observation: the US is the world's largest importer, and also produces the world's reserve currency the dollar. When the price of oil increases, the US trade deficit tends to increase too, sending more dollars abroad that would otherwise have occurred. These ultimately end up as reserves in central banks around the world. These central banks then permit an expansion of their own money supply since they have more reserve currency to defend their own currency. This then feeds through into higher economic growth, higher demand and an even higher oil price, etc. As the Eurozone, which supplies the world with the second most important reserve currency, is also a large oil importer, this also a similar but less important effect.

In countries, like China, which have actually linked the value of their currency to the dollar, the effect is even clearer: The higher the price of oil, the more dollars there are in circulation on the international market, because the US is an oil importer. The more dollars there are in circulation, the more yuan must be put in circulation to buy up the dollars in order to keep the yuan-dollar exchange rate from increasing. The more yuan are put in circulation, the more the Chinese consume. The more the Chinese consume, the higher the price of oil goes, etc. This is more or less exactly what has been happening the past five years or so.
 Interest rate increases may now be aimed at breaking this upward spiral.

People who saved and bought silver, gold, or energy investments 2.5 years ago based on peak oil analysis are very happy right now.  They have increased their personal savings, and the lights are still on (*unless you are trapped in Iraq or Zimbabwe) that sounds like win-win to me.  Those people who feel let down that June 2006 still isn't the post disaster land of their nightmares are invited to move to New Orleans.
That is the problem with the Internet. Extreme opinions are the only ones that get published, and quite often they are incorrect, inflammatory or just terrorise the public.

Whatever flaky opinion one holds, a little searching will bring up sites to justify it and strengthen those views, however marginal they are.

Hence the increasing polarisation of politics, the any-day-now-economic crash, the ongoing nonsensical bird flu panic, and to a certain extent the 'peak oil' doomers.

It is best to take everything with a LARGE grain of salt, as the joke goes "I read it on the Internet, so it must be true!"

Intellectually, the Internet is the raw material. The Internet is like walking into a grocery store and buying the food you want to cook for dinner. The recipe you use, any changes you make to the recipe, etc. are up to you. The cooking (thinking) is left up to you. You can buy the rotten tomatoes or the fresh ones. The MSM is like McDonalds. You walk in, quickly get some cheap crap (a lot of people even realize it is crap but prefer the convenience) and walk out. You don't even care what they put in it, because it is so easy.
I guess being socially active and listening to word-of-mouth news must correspond to "doing your own gardening."
"That is the problem with the Internet. Extreme opinions are the only ones that get published, and quite often they are incorrect, inflammatory or just terrorise the public."

Two words for you: Fox News



Shouldn't population growth and inflation be subtracted, in some way, to get the real number? For what it's worth..
Real per capita GDP corrects for both population increase and inflation. True, the GDP concept has some serious issues, and getting a precisely correct GDP price deflator is impossible, but at least there is an attempt to make appropriate adjustments.

"Nominal" GDP does not correct for price-level changes.

Also the widely quoted quarterly fluctuations in real GDP do not take into account population increase.

Sailorman's Second Conjecture: The more attention a number receives, the less it means.
Corallary 1: You need a whole bunch of numbers to understand most problems or topics.
Corallary 2: Accountants uniquely understand accounting numbers; Astronomers uniquely understand astronomical numbers, . . . Population geneticists uniquely understand the numbers in population genetics, and only some TOD posters understand everything;-)

Why does the Blogroll reorder itself with every click?  I'd prefer it to be alphabetized or have some other meaningful fixed order.
Nature is pissed....(no I don't think everything has to do with "fill in the blank here.")


WINTER PARK, Fla. -- Lightning from Tuesday night's storms sparked a fire at a 10,000-square foot manor home in Winter Park. Firefighters spent Wednesday morning walking around the mansion along Preserve Point Drive looking for hotspots.

This is suppose to be "Art", no wonder I don't get it.

That's another reason I don't think the Interstate system is going to last forever.  Things like this happen:

Eventually, we may not have the ability or will to make repairs.  Especially if driving is a privilege reserved for the wealthy.

I know floods. Anyone remember 1993 flooding in St. Louis?

Looked like this in St. Paul, too.
Exactly, eventually all the great structures will turn to rubble.

After a few generations, they might come to believe that the rubble amid which they live is the remains of cities built by gods.


Seen on Environmental News Network (ENN):
Oil Prices Artificially High Due To Lack Of Economic Freedom:

"While the world has enough proven and unproven reserves of oil to meet demand for the next 100 years, much of it lies under countries with economies that do not provide market incentives to encourage production, according to a new report by the National Center for Policy Analysis (NCPA). The report also points out that the lack of incentives increases the importance of tapping resources in countries with free economies, such as Canada and the United States.

"'We have the oil to fuel our future energy needs,' noted NCPA Senior Fellow H. Sterling Burnett, who authored the report. 'Unfortunately, a lot of it is artificially out of reach due to a lack of economic freedom in the Middle East and South America, or a hyper-sensitivity to environmental activists in the U.S.'"

So, as long as we increase "freedom," we'll be just fine, thank you....

I hereby nominate NCPA Senior Fellow H. Sterling Burnett for the "most laughable frickin' thing said all year" award:  
"While the world has enough proven and unproven reserves of oil to meet demand for the next 100 years"

Look into his eyes - is it just me or is that pure idiocy emanating from them?

Actually he looks stoned if you ask me...
Of the many frauds being perpetrated by the Bush White House, one of the most ridiculous is the idea that the United States has an interest in improving the lot of those who are rich in oil but poor in freedom and opportunity. In fact, as westexas as repeatedly pointed out, only countries whose production exceeds domestic use can effectively export.  Therefore, I maintain that it is -- and has long been -- in the industrialized world's best interest to suppress economic development the oil exporting countries.
They are certainly accomplishing this in Iraq.
So, I'd like him to give me a loan. My collateral is unproven, but that seems to be no problem for him. Please, don't let this guy sit in a jury.
Relevant to both the discussion about "economic growth" and (in recent past) discussion of air conditioning, is an excellent article on Alternet (linked from Energy Bulletin).  An excerpt:

As a device explicitly designed to outrun the Second Law of Thermodynamics, an air-conditioner vividly illustrates the inevitable destruction caused by all economic activity, ...

Georgescu-Roegen wrote in his 1971 book "The Entropy Law and the Economic Process" that despite the neat, closed-loop flow charts depicted in textbooks, the economic process "is not circular but unidirectional. As far as this facet alone is concerned, the economic process consists of a continuous transformation of low entropy into high entropy, that is, into irrevocable waste."

Georgescu-Roegen went on to demonstrate the futility of growth-dependent economic systems, showing that in human societies, "production" is a phantom, that economic activity can be represented by just two factors: consumption of resources -- concentrated energy, useful materials and our ecological life-support system -- and elimination of useless or less useful wastes. When all is said and done, he argued, an economy's only product is nonmaterial "enjoyment of life," which can be banked only in the form of memories.

As it creates fleeting enjoyment through a state of low entropy (in this case, an island of coolness in a sea of heat) but only by increasing entropy at an even faster rate elsewhere (by using up fuels and materials and releasing useless wastes), air-conditioning is a poster child for the inevitable decay that, according to Georgescu-Roegen, is a defining characteristic of economic growth.

It's no coincidence that when the first modern central air-conditioning system was installed back in 1902, it was to cool the New York Stock Exchange.

This even links to our debates about ethanol:

Meanwhile, the high standard that's been set for passenger comfort is helping doom efforts to run cars and trucks on alternative fuels. In 2005, air-conditioners in U.S. vehicles burned up the equivalent of the nation's entire fuel-ethanol production -- twice.

Not sure what you're getting at here.
Maybe we should not use heating oil either and instead accept the temperatures that Mother Nature offers us during those cold Vermont winters? Heating our homes also runs against entropy. So what?

Humans want to be comfortable. We want food in our bellies when hungry. We want warmth when the air outside gets cold. We want cooling when the air outside gets too hot to handle. Nothing wrong with that.

BTW, the government does push the A/C industry to higher efficiencies by increasing the required SEER number.

The background on air conditioning is interesting, but the leap for air conditioning to all "economic activity" falls flat for me:

As a device explicitly designed to outrun the Second Law of Thermodynamics, an air-conditioner vividly illustrates the inevitable destruction caused by all economic activity, a process first described by Nicholas Georgescu-Roegen, the godfather of ecological economics.

I guess something like a composting company (living as it does on increased entropy) is a form of nevitable destruction, but customers are often pleased with that result.

Entropy is not uniformly bad, any more than order is uniformly good.

Human society spends a lot of energy to fight entropy.  The only way to maintain complex systems against their natural tendency to "fall apart" is to constantly input more energy to maintain the "stability" of that complex system.

Case in point, our highways systems.

Society spends a lot of money to increase entropy (we like our coffee hot) ;-)

I don't think these broad-brush entropy arguments have a firm grounding in physics.

odograph -

I agree.  A lot of people (mostly non-technical) seem to get into trouble when they use the concept of entropy metaphorically in an attempt to describe the relentless degradation of this thing or that thing.

As I recall, the concept of entropy largely came into being (at least in a formal mathematical sense) at around the time that people were trying to understand the flow of energy through a steam engine and how a steam engine might be made more efficient. It gradually spread to other areas of science, such as chemistry and theoretical physics.

The concept was never originally intended as something philosophical or theologic; it was merely a convenient physical concept that furthered the analysis of thermodynamic systems, particularly those involving the burning of fuels in a heat engine or the expansion and compression of gases.

I once heard someone say that the concept of entropy owes more to the steam engine than the steam engine owes to entropy. In other words, the steam engine wasn't invented using the concept of entropy, but rather the concept of entropy, in part, evolved out of work with steam engines.

That is why I try to avoid using entropy in a metaphorical sense. If one really wants to say, 'This situation will eventually  to turn to shite', then that is exactly what one should say, rather than make some tortured metaphor about entropy increasing.

OK, sorry.  I apologize to the literalists out there. I used entropy = disorder and I guess that's a no-no.

Let me re-write my statement:

Human society spends a lot of energy to fight the ever-growing tendency of complex systems wanting to revert back to simple systems.  The only way to maintain complex systems against their natural tendency to "fall apart" is to constantly input more energy to maintain the "stability" of that complex system, thereby increasing the amount of random heat released to the environment (entropy).

Case in point, our mega-cities and highways systems.

That better?

Sure, but it's not just humans.  Non-living systems form certain types of order.  Certainly all life takes that further.  A redwood tree must "fight the ever-growing tendency of complex systems wanting to revert back to simple systems.  The only way to maintain complex systems against their natural tendency to 'fall apart' is to constantly input more energy to maintain the 'stability' of that complex system, thereby increasing the amount of random heat released to the environment (entropy)."

... though in that case the energy input is solar, and the "heat released" is less obvious.

Oh, I agree whole-heartedly.  I just believe humans have expended a HUGE amount of high-density energy in a small amount of historic time to create HUGELY complex and unnatural systems and then try to maintain or expand these systems.

These systems are constantly trying to become less complex due to natural tendencies to revert to a "natural state."  The cement and steel in buildings and bridges, if left alone over time, will dissolve into their basic elements.  We must constantly repair them to maintain their complex structure.  

For plants, this is not an issue because to them sunlight is free.  There is a natural energy state to which all elements will achieve (equilibrium) in the absence of externally-applied work energy maintaining the element within a more complex structure.

So for complex systems built by humans, what happens when the cost of maintenance exceeds what we are willing to pay?  The maintenance will be neglected and the systems and elements will start to flow towards their natural equilibrium.

So, energy prices go higher.  States cut back on maintenance of state infrastructure.  Companies cut funds to their operations budgets. Homeowners cut back on repairs.  Federal government cuts back on levee and dam repairs.

This doesn't add up to a pretty picture.  It leads one to ask, "In the new world of every increasing energy prices, how can we sustain these complex systems?"  Do we accept less complex systems that require less work energy to maintain?  Do we drain the energy resources of the world trying to maintain these systems.

If we are indeed at a energy crossroads then we will have to answer these questions.

If we are not, we can just continue with business as usual.

I think questions of our society's energy balance are better argued directly.  I don't see the the entropy thing bearing much moral weight, as those articles way up above imply it should.

Ten million years ago a redwood tree (and our ancestors) faught against the ultimate decline of their bodies, and lost.  We repeat that, as part of a natural cycle, today.

I won't try to build this into a morality tale pointing in the other direction, but it's true that building order is life.

What we should be looking at is how to build order (and a happy life for future generations) on our energy budget.

Converting fructose to plastics or diesel fuel:


Mine that topsoil! :)

Has anyone else noticed that the per unit difference in crude price and NYMEX gasoline price has doubled recently?  Gasoline was over $95/bbl earlier today. Is it just speculators or harder to refine heavy/sour the cause?
I think it's the Calcasieu Ship Channel, shut down due an oil spill.  It's a connector between the Gulf and the Lake Charles refining hub.  

Bodman has announced SPR loans will be available, but traders don't seem all that reassured.

I think it's the Calcasieu Ship Channel, shut down due an oil spill.  It's a connector between the Gulf and the Lake Charles refining hub.  

Bodman has announced SPR loans will be available, but traders don't seem all that reassured.

It was a trifecta. The ship channel, the unexpected draw in gasoline inventories (showing demand is still strong), and the long holiday weekend. I was expecting this result yesterday, actually, but the market didn't react as quickly as I thought it would. I guess it took a day for all of this to soak in and panic traders.

I know somebody who made a crapload of money today as a result of all of this.


Gasoline hit a new high.
Oil at 73,5 approaching a new high.
Dow surges 200+ because some obscure words from Fed bureucrats.
This is not denial. This is Nero singing while Rome burns.
And there's a strange audience that likes the tune.
Saw an eybrow-raising video on the Middle East Media Research Institute website.  It's about 5 to 6 minutes in length.  This is an excerpt from a sort of talk show, and a debate is ensuing between a female Arab-American Psychiatrist and a Muslim leader.  

See if you don't agree?



Hello Plunsfo,

By being labeled a Heretic by the Imam on the show: unless this woman is given immediate protection, she will probably be shortly killed by radicals.  Sad, unless there is more Islamic tolerance for freedom of speech than I am assuming presently exists.  If so, then she has performed a valuable public service by jumpstarting this discussion in her country.

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

"Only Muslims defend their beliefs by burning down churches". (to which I added, "and residents of some small towns in the US heartland"), but yeah, she was on a roll. Notice how the Imam just looked down and started writing notes ...


What exactly is "waste oil", like that which just spilled off the Louisiana coast. Is there no use for this waste oil? Could someone explain?
I never heard of it either geewiz, so I Googled it. Turns out it is used oil, like burnt motor oil or other oil that is contaminated and can no longer be used for what it was originally intended to be used for.

I found a lot of "waste oil" heaters on the net. You can heat your home with burnt motor oil or other throwaway oil.

Now why would our lawmakers';plpl g[;uPP  do this if there is plenty of oil left right ?


"why would our lawmakers do this if plenty of oil left right?"

There are several reasons:

  1.  To have the oil source much closer to the U.S. for security and strategic reasons.
  2.  To help on the balance of trade problem caused by imported oil.
  3.  To get natural gas because:
  4.  The LNG program is proving more complicated, expensive, and subject to opposition and litigation than expected, and ready sources of natural gas to import in shorter supply than expected.
  5.  To build for the future.  Without the ability to do test and exploratory drilling, there is no way to really know how much oil and gas is there.
  6. And of course, for the true "peak" believers, the government knows that we are past peak on world production, and feels they might as well allow the oil/gas drillers to "throw everything open".

Most experts were convinced that the OCS would have already been open by 2005.  The NPC (National Petroleum Council) report "Balanced Options for Natural Gas" for example, took as prime assumption that OCS drilling would be allowed all years post 2005, and even then, came to a shocking projection:  We would STILL face a major natural gas shortfall, even if OCS drilling were allowed.  The amazing thing is, it is still not open, and the Senate may not go with opening it.  If not, it will be one of the greatest victories (at least for now) for the environmental community in their history.  To be able to hold the moratoria areas of the Outer Continental Shelf right into the teeth of a major oil and gas price emergency (and possibly world peak?) would be a victory against all odds, whichever side you take in this fight, you would have to admire the Green set if they pull it off!  My bet is against them doing it, but they have astounded me in being able to hold on this long.

Roger Conner  known to you as ThatsItImout

It passed the House yeaterday, with a sweetner that the  states getting a % of offshore royalties (Louisiana has lost over $50 billion).

Louisiana has sworn to block new lease sales unless we get a %.

I don't know if anyone noticed, but the Supreme Court effectively closed Guantanamo Bay yesterday. At least in its present form. Can Bush and friends appeal to a higher authority?
Bush frequently appeals to a Higer Authority. He is a Republican.
I was curious what it costs to pave roads and got a bit carried away here:

Newspaper article about expensive asphalt in Atlantic city:


so my calculation is:

USD 450,000 per mile at 1,5 inch and every 15 years
2,27 million miles * 450,000 USD/mile makes
USD 1,021,500,000,000/15 years comes to
68,100,000,000 per year to maintain USA roads
That's 68 billion USD per year.

Asphalt is mostly recycled and has only 5% oil content.

That 68 billion USD annual repair and maintenance cost goes up continuously due to increasing energy costs of 10-15% per year so for a road paved this year costs 8 times as much in 15 years to repair as 15% inflation doubles costs every 5 years(2 x 2 x2 8)
100 x 1,15 x 1,15 x 1,15 x 1,15 x 1,15 x 1,15 x 1,15 x1,15 x 1,15 x1,15 x1,15 x1,15 x1,15 x1,15 x1,15 = ca. 800

So the cost of maintaining the USA roads in 15 years would be ca. 544,8 Billion US Dollars.
Presuming that the US economy grows at 3%/annum for the next 15 years.

12.5 trillion USD x 1,03 x1,03 x1,03 x 1,03 x1,03 x1,03 x1,03 x1,03 x1,03 x1,03 x1,03 x1,03 x1,03 x1,03 x1,03 12.5 trillion x 1.558=19.47 trillion

So current percent of  GDP required to be spent to pave roads is
68.1 billion/12.5 trillion = .545%
In 2021 however544.8 billion/19.4 trillion = 2.8%
2.8 / .545 = 5.14 times as expensive to the economy to maintain the roads.

A bit of background and history of asphalt:


On Costs of roads/infrastructure: o+us+roads+cost+annually&hl=en&gl=de&ct=clnk&cd=5&lr=lang_en

Quote from Above:

"Bottom Line
Report" estimates that capital outlays by all levels of government would have to increase by
42% to reach the projected $92 billion Cost to Maintain level, and by 94% to reach the $125.6
billion Cost to Improve level"

So I guess that means they are spending about 65 billion dollars, maybe just for the asphalt and forgetting all real repairs to bridges or improvements of any sort at all and the more expensive asphalt get the less improvements will be made to anything else.

Further they analyze all USA infrastructure  and conclude:

In 2001, the estimated cost for infrastructure renewal was $1.3 trillion over a five-year period.
Today, that cost has risen to $1.6 trillion over a five-year period. While solutions to repair our
crumbling infrastructure can be addressed through a renewed partnership between citizens, the
private sector, and local, state and federal governments, reauthorization of TEA-21, and
passage of the Clean Water Act and the Safe Drinking Water Act can provide critical funding to
repair our transportation, water and dam infrastructure.
The trends for renewal of the 12 infrastructure areas were assessed by a panel comprised of 20
eminent civil engineers representing the broad spectrum of civil engineering. The forecasted
trends were based on the condition and performance of each infrastructure area as reported by
federal sources; capacity of infrastructure versus need; and current and pending investment of
state, local and federal funding for infrastructure versus need.

I bet the costs will just keep going up with thee energy costs and what will get done  will be less and less until the whole infrastructure gets so decrepit that everything gradually falls apart like in soviet union,e.g. roads, sewers, water, electricity, schools and hospitals, dams, etc. 1.6 Trillion/12.5 Tillion= 12.8% / 5 years = 2.56% per year of GDP for renewal and maintenance of all infrastructure. But now of course with big tax cuts, new wars planned and everybody going into retirement spending on infrastructure is impossible. As I speculated above with increasing costs to maintain roads, as the infrastructure falls more apart and the population grows and the energy costs increase the gap between reality of what we need to spend and what we are spending will get bigger all the time until it is all a big joke like medicare or social security. We will need to spend 10% of GDP to repair and improve infrastructure but everybody will be starving and the infrastructure like highways will be superfluous when nobody can afford to drive anyway.