DrumBeat: June 9, 2006

Now for some wise words from the readers of The Oil Drum...
News about Venezuela:

With Oil's Cash, Venezuelans Consume

CARACAS, Venezuela -- On a recent Sunday morning here, free-spending customers have emptied Vintage, a trendy upscale bar, of nearly all its best vodka. At the Castellana Chevrolet dealership nearby, buyers wait eight months to get the keys to cars they paid for long ago.

And on a recent weekend at the LG Digital Store and at RCA Electronics in the Sambil mall, consumer confidence has helped strip the shelves of television sets and refrigerators.

"Even our construction workers are spending their whole paychecks as soon as they get paid," said Gerardo Pereira, 33, the owner of Vintage, who says he has never seen Venezuelans of all social classes spend this much.

Fuel for Westexas' "peak export" theory?

And Greg Palast thinks "the Peak Oil crowd is crackers."  He thinks tar sands, oil shale, etc., will save us.  Which means Venezuela will be the next country to be "liberated."

Here's the case for the believers in heavy crude, tar sands and oil shale. When oil is priced at $10 a barrel, the supply is low because only the easy and cheap to extract and refine kind are economically feasible. But at $70 a barrel, it's a whole new oil market. The heavy stuff and the rest become more economical to extract and refine, and a new far higher finite supply is realized almost magically. In short, it's just a matter of supply and demand with the price of a commodity depending on how much of it consumers want. Too little demand and the price is low, but when it's high like now and rising, then so does the price.

Greg also discussed the way this relates to Venezuela and how this increases that country's available crude reserves to off-the-chart levels. I reported earlier that Venezuela may have reserves of about 350 billion barrels if all their known heavy and light crude are counted. That number is far more than is now officially recognized by OPEC which means the country has greater reserves than the Saudis by that number alone.

But there's more, a lot more. Greg reports his DOE expert believes Venezuela holds 90% of the world's super-heavy tar oil reserves which he estimates to be an astonishing total of 1,360,000,000,000 (1.36 trillion) barrels. So with a report like this coming from a source Greg feels is credible (I make no such claim), it's easy to understand why Venezuela is so strategically important to the US and why it will do whatever it takes to secure control over that supply by any means including an act of aggression to seize it. The US goal isn't access to the oil. It's the control of the supply and its price, what companies profit from it, and overall how control of as much of this resource as possible can be used as a strategic weapon. The stakes for the US are enormous, and the battle lines are drawn in the global game of where the supply of oil is located and how an aggressive and predatory US will make every effort to control as much of it as possible even if it takes waging war to do it.

(I guess we're even, because I think Greg Palast is crackers...)

As I noted before, notice how the "Unconventional Oil Will Save Us" crowed always talks about reserves and not production rates?

As I have also noted before (based on someone else's post on the Internet), Canadian oil production in 2005 was far below EIA projections made in 2003.  

In regard to Greg Palast, IMO Mr. Palast either grossly misunderstood Dr. Hubbert's work, or he deliberately misrepresented Dr. Hubbert's work.  

From the Texas/Lower 48 article:  

"To be clear, despite what is either a profound misunderstanding of or a misrepresentation of Dr. Hubbert's work in some quarters, Dr. Hubbert was not predicting the end of world oil production by 2006; he was predicting that production peaks when producing regions have consumed about half of their recoverable conventional oil reserves."

He's a sharp guy. It's highly unlikely he misunderstood.
In regard to Greg Palast, IMO Mr. Palast either grossly misunderstood Dr. Hubbert's work, or he deliberately misrepresented Dr. Hubbert's work.--westexas

BrianT -- You say "He's a sharp guy.  It's highly unlikely he misunderstood."

So basically he deliberately misrepresented Dr. Hubbert's work...?  What's his motivation in doing that?

-- I'm not disagreeing with you, I'm posing the question of his motivation in that direction.  (I had actually posted on Palast while back calling on TODs to debunk him), FYI...


I don't know for sure. My guess is money. As he has built up a certain sort of credibility among some readers, he is being paid to spin this story. When you read what he says, what it points out is how difficult his (or anyone else's) task really is. The arguments in favor of oil depletion are too strong.You don't have to be a rocket scientist to follow the reasoning. Maybe I'm wrong-maybe Greg got really stupid really fast. Maybe Yergin is mentally challenged.  
Palast also has a background in statistics. He can read the numbers. It's very odd to see this sharp guy go this way. No explanation here. It's just odd.
Bought and paid for, perhaps?
Most likely yes.
money talks and the people we are dealing with think anyone has a price.
It wouldn't be money.  Palast is a Leftist (that's no insult in my books - I'm a good deal to the Left even of him, but I come here to read up about Peak Oil rather than preach my politics) and suffers from a problem common to most people who are committed to their political ideas.  He can't accept an idea that seems to pull the rug out from under his whole philosophy.

Peak Oil challenges a lot of people on the traditional Left because they assume that:

(a) Capitalism can only be surpassed in a society of material plenty for all; and

(b) Admitting that energy consumption is way past a sustainable level and has to be cut would bar the way to socialism.

IMO, he's wrong in that (a) actually says a good deal less than he thinks because the concept of "plenty" is actually a social construct; and (b) is plain incorrect.

At a guess, his idea of "socialism" would probably have a lot more in common with the economics of the late, unlamented USSR than mine does, though I'm certainly not accusing him of supporting the political regime that existed there.

I think most humans overestimate the influence of humanity itself on daily life. I think that's a simple extension of the human ego. Particularly today, after 60 years of abundance in the west, almost none of us include material limits as a variable in our daily calculus. Also, to someone like Palast who does a lot of political commentary, most issues are simply political problems with political solutions.

The fluid flow will never end.
God gave "us" dominion over all things on this Earth.
There are plenty of alternatives for the blood that feeds our non-negotiable way of life. After the sweet and easy ones are gone, why, we'll just drive our straws into the alligators next. No worries:

(Mosquitos are We)

Palast is a disinformationalist.  He is a sheepdog or gatekeeper to herd the gullible on the left in the same manner that fellow peak oil deniers Corsi and Alex Jones herd the gullible on the religious right.  So get mad about the 2004 election in Ohio or the abiotic oil coverup or the Illuminati staging mock human sacrifices at Bohemian Grove.  But, PAY NO ATTENTION TO THE PEAK OIL BEHIND THE CURTAIN.
Venezuela has been on the crude oil radar-screen a long time. My Dad did his WWII service working for Socony-Vacuum Oil Co. in Venezuela ca. 1941-1943 until he had a ruptured appendix out in the bush and had to be transported over jeep roads to a hospital (ouch!). Venezuela's first and likely only peak was in 1970 with the heavy oil likely only to ease the downslope somewhat. This will probably be the case with Canada which is likely peaking as we are speaking :-P
In short, it is no surprise that Venezuela is contracting to buy oil from Russia. They just can't produce it fast enough.
The heavy stuff and the rest become more economical to extract and refine, and a new far higher finite supply is realized almost magically.

Classic argument that I have seen 100s of times on the web. Nobody he's questionning how large the tar sands can be. The real question behind PO he's how fast can we convert tar sands to synfuel. Here is the mistake: PO is not about How much oil is left but, I quote Colin Campbell:

What is Peak Oil?
"The term Peak Oil refers the maximum rate of the production of oil in any area under consideration, recognising that it is a finite natural resource, subject to depletion."
Oups! sorry for the typos, I hit the post button instead of preview!

Notice that people pushing the tar sands/shale oil argument never adressed the question of what will be the production rate from such sources.

Because if they did, and were honest about it, investors and the public at large would be appalled and say "Wait? That low?!?"
Maybe we should rename "PO"
as "PoW-Wo-ER":

Peak of World Wide oil Extraction Rate

(Painting: Morning Pow Wow --err)

What Palast and his ilk do not understand is the industrial system that feeds, clothes, houses, and buries them. This is what Deffreyes has to say,

"Green River oil shale has been hanging over the conventional oil industry since I was a little kid. When oil was $3 per barrel, many people thought that if oil ever reached $8 per barrel, Green River shale would have it revenge on Spindletop and shut down the oil industry."

Petroleum is the single fuel that powers everything including alternatives and as it become dearer so do it replacements. Folks who misunderstand this do not really appreciate their own place in the universe. Sadly enough, it is all about entropy.

"Green River oil shale has been hanging over the conventional oil industry since I was a little kid."

I think Deffeyes' point is that shale oil isn't very useful.  I agree.  It's really an expensive, primitive precursor to oil, like coal except not as good.

But he's not talking about energy-ROI.  

E-ROI (or EPR) has been thoroughly researched for wind. It's about 80 to 1, meaning that the power you put in is recovered in less than half a year.  Furthermore, the power you get out (electricity) is higher quality than much of the power you put in (process heat for steel & concrete, fossil fuel feedstock for carbon/plastic parts, etc), so the return is even better than that.  Solar PV is averaging around 15:1 (about 2 year payback for conventional silicon, much better for thin film and concentrating), and improving rapidly (at least 10% per year).

Labor is the big thing.  For instance, wind turbine blades still commonly use primitive, time consuming methods for producing the carbon fibre composites needed.  This will change, and continue to improve wind's cost advantage over fossil fuels (when all costs are included). Let
s assume the world oil supply drops by 25% in the next 20 years, and oil prices triple.  Because energy costs are maybe 5% of the cost of a wind turbine, some users would be squeezed out (mostly the poor), but the cost of a wind turbine would go up maybe 15% (or less, as they'd look for efficiencies they're not using now at lower prices).  So alternatives would be perfectly practical.

I've looked at almost all of the peak oil books (Kunstler, Deffeyes, Goodstein, etc), and none of them convincingly discuss the usefulness (or lack thereof) of wind and solar.   Kunstler clearly knows nothing about them - he just assumes they can't help because he wants things to collapse - wishful thinking.  Deffeyes says right out that alternative energy is not his expertise. Simpson is just dealing with oil. Goodstein simply notes that a transition to alt energies would be a very big job, and that we should get started now.  So does Hirsch.  

You mentioned entropy:

The 2nd law of thermodynamics tells us 2 things: 1) any closed system (say, the ENTIRE Universe, or for practical purposes, our solar system), will eventually run down.  This really tells us nothing about the earth, which is extraordinarily far from a closed system (the ratio of the sun's energy input to human energy use is something like 10,000 to 1).

2) Perfect efficiency is impossible.  Again, this tells us nothing useful about human energy use, which is probably about 2% efficient from a system point of view.  If human energy use were made 95% efficient (with which the 2nd law would be perfectly consistent), human energy use would drop by about 50 times.

The 2nd law tells us nothing useful about practical engineering of energy systems, or limits thereof.

Peak oil is a big problem, but there's no theoretical reason why it's the end of civilization.  It's entirely up to us, and our ability to be creative.

Just so we get our definitions straight
From our "favourite" internet look up source wikipedia

Thermodynamics is basically concerned with the flow and balance of energy and matter in a thermodynamic system. Three types of thermodynamic systems are distinguished depending on the kinds of interaction and energy exchange taking place between the system and its surrounding environment:

    * Isolated systems are completely isolated in every way from their environment. They do not exchange heat, work or matter with their environment. An example of an isolated system would be an insulated rigid container, such as an insulated gas cylinder.

    * Closed systems are able to exchange energy (heat and work) but not matter with their environment. A greenhouse is an example of a closed system exchanging heat but not work with its environment. Whether a system exchanges heat, work or both is usually thought of as a property of its boundary.

    * Open systems: exchanging energy (heat and work) and matter with their environment. A boundary allowing matter exchange is called permeable. The ocean would be an example of an open system.

Ignoring space dust, asteroids and other impacts and various other (on a percentage basis) rather small mass exchanges, the earth is considered a closed system...

hmmm.  I'm surprised.  That's not an intuitive nomenclature.

Well, in any case, I believe then that the 2nd law applies to "isolated" systems.  A system that accepts the enormous energy inputs of the sun won't run down until the sun does, in several billions years.

This is correct. A closed system is one that meets conservation of mass criteria. Energy inputs and outputs (such as heat and work) may cross it's boundaries, and it still be considered a closed system.
Entropy. Somebody told me once that he'd uncovered the purpose of life: it's to slow down the accumulation of entropy. You can see how this might make sense. In a lifeless world, sunlight energy hits the planet's surface and some net amount is radiated directly back into the featureless diffusion of space. In a world with life, a part of that sunlight energy is concentrated and channelled through the food web, each part of the trophic pyramid extracting a portion.

Each human represents a considerable accumulation of sunlight energy, energy that would have passed long ago into entropy if we were not here. As a thought exercise, ask if the release of stored energy from burning fossil fuels is compatible with the purpose of life.

"ask if the release of stored energy from burning fossil fuels is compatible with the purpose of life."

I'm not sure I want to think of my main purpose in life as hoarding energy.

OTOH,  this suggests that nature abhors inefficiency, and also that our mission in life should be to capture as much of the sun as we can.  Sounds good.

Oddly enough, Kunstler has a pretty good discussion of this in The Long Emergency.  I understood it well enough to see that SprawlMart would go out of business since it's operation is contrary to physics.
" it's operation is contrary to physics."

Kunstler's argument is very simple. 1) Suburbs and cars are bad. 2) Suburbs and cars need oil.  3) There's no replacement for oil, so peak oil is peak energy.  3) Peak energy would be bad for suburbs, therefore peak energy is inevitable.  He doesn't prove any of these assumptions, and his logic doesn't follow.

It's wishful thinking on his part - it's as simple as that.

As I discussed earlier, if you search through his book, (as well as other by Deffeyes, Heinberg, Simpson, etc) you won't find any detailed or substantive analysis of wind and solar.   Kunstler clearly knows nothing about them - he just assumes they can't help because he wants things to collapse.

oddly at one point, years ago, i thought (purely for fun) that perhaps someone could make a religion out of minimizing entropy.  entropy would be viewed as the equivalent to "sin".  well, it all worked well, exhorting the mechanically efficient masses, until we become OCD freaks about every excess movement, action and thought.  efficiency is overrated.  life is too short.  embrace your entropy.  
In a lifeless world, sunlight energy hits the planet's surface and some net amount is radiated directly back into the featureless diffusion of space.
Actually the amount of earth energy radiated into space is exactly equal to the amount directed at the earth from the sun. If not the earth would become a fireball. Currently some mini mini miniscule amount may be retained to provide for GW.
Regarding composite wind trubine blades.

Technology and industrial processes being developed for the the Boeing 787 will be easily applied to automated lay-up of carbon fibers on wind turbine blades.


As for "all energy is oil" POV, nonsense.  

Steel requires very little oil.  Underground coal is almost entirely an electrical process.  It could be transported via electrified railroads to a smelter to melt scrap Hummers into steel supports for wind turbine towers or the coal could be used to make concrete for concrete supports.

Some oil is involved but minimal amounts.

define minimial, and show us proof.
just because you think it's minimal doesn't mean it is.
Long wall mining machines are driven by electric motors.  Coal is transferred up to the surface by electric driven conveyor belt and later loaded onto rail cars by the same type convetor belts.

Coal rail cars can be pulled by electric locomotives (Lake Powell & Black Mesa RR in AZ is).

Unloaded and moved around steel plant by electric conveyor belts.  (Some times by electric cranes).

Half of US steel today comes from scrap steel, half from ore.  Scrap is collected by a variety of means (locate junk yard by rail line).  Most scrap moves by rail.

Note that ALL US railroads use 220,000 barrels/day.  So electrification is great, but we will NOT run out of diesel to run RRs and other high value/low oil transportation uses (water for example).

Most iron ore is surface mining, which can use trucks OR conveyor belts to move ore.  Giant shovels often run on diesel, but can run on electricity.  Explosives (if needed) can use nitrogen fertilizer (from NG) and diesel.  But the quantities are minimal.

my point to this post is that the presumption that highter petroleum costs make alternatives relatively cheaper is nonsence. Every alternative is designed, prototyped, manufactured, installed, maintained, and recycled or disposed of with petroleum and as the price of petroleum increases so to will the alternatives.

Petroleum is the primary energy source of this particular distributed and mobile infrastructure we've created since the industrial revolution went into high gear in the late 1800's. There is no way that this system can adapt to lesser energies or produce alternative energies. Petroleum is as much the cause of our industrial metabolism as sugar, glycose, and ATP are the basis for mammalian metabolism.

"Every alternative is designed, prototyped, manufactured, installed, maintained, and recycled or disposed of with petroleum and as the price of petroleum increases so to will the alternatives."

Well, no, not really.  "designed" with oil?  The PC's that are used for design these days maybe have $1 worth of oil-based plastics.  If the price of oil triples, PC's might go up in price by $2.   PC's run on electricity, and only 3% of electricity comes from oil.  The same kind of comments apply to most of the activities in this list.

Transportation is the one thing that depends on oil, and with a little transition time (say 10 years for the first 25%, 30 years for the rest) that can be switched to electric.

Now, fossil fuels are a bit harder.  Oil only accounts for 40% of man-made energy, FF is probably 80%.  But alternatives will work.  Replacing all FF is a much bigger job, but we have a much longer time window: peak gas is probably 15 years out, and peak coal is at least 40 years out.  

The larger problem is global warming: we need to get alternatives going much more quickly to address GW than we do for peak FF.  Fortunately, we're on our way:  planned wind generation is 40% of overall new generation in the U.S. in 2006 and 45% in 2007 (adjusted for capacity factor), and this trend is likely to continue. Wind could easily handle all new generation in the US within 5-10 years.

These come from the Nuclear Energy Institute:
http://www.nei.org/documents/Energy%20Markets%20Report.pdf on page 7, and capacity factors are here http://www.nei.org/documents/U.S._Capacity_Factors_by_Fuel_Type.pdf

(I also posted this on the EIA thread in response to a question from Calorie.  The principal point I finally hit upon regarding the March/April import anomaly was that oil prices were rising while imports were falling, which to me suggested the beginnings of a bidding war for remaining net export capacity.  Total US petroleum imports are finally up, after we bid the price of oil up by 15% to 25%, and Leanan has documented multiple examples of poorer countries experiencing unrest over energy shortages and prices. My point with the following post is that we pick the peak based on declines from recent highs, e.g., Texas oil production peaked in 1972, but 1973 production was 6.3% higher than 1971 production.)

Re:  Total Petroleum Imports

We've got 22 weeks of reported total petroleum (US) imports for 2006.  Let's look at the four week running average of total petroleum imports for these 22 weeks versus 12/30/05, and let's look at a comparable time period last year versus 12/31/04.  

Relative to 12/31/04, 19 of the 22 weeks in 2005 showed higher imports than the four week running average ending on 12/31/04.  

Relative to 12/30/5, two of the 22 weeks in 2006 showed higher imports than the four week running average ending on 12/30/05.  

Notice a pattern here, especially in light of Saudi Arabia's recent admission?

Again westexas scares me (seriously!)...Put in 2,500 gallons fuel storage-filled today. Premium $3.10 gallon, reg 2.96 gallon, truck diesel(low sulfur highway taxes incl.) $3.02 gallon, farm diesel(high sulfur, dyed( in case you try to run in your truck fine = $10,000)) $2.51 gallon.  
A few days ago there was a thread discussing why Venezuela could not effectively embargo the U.S.  I'm not sure I really see why not.  I understand that the oil is traded on an open market, but it's not as if there are a myriad of ways that the oil reaches the U.S once it is sold.  The U.S.-Venezuela market a matter of a handful of tankers.  Is it really that hard for Hugo to control a few tankers?  Furthermore, if China and India is wooing countries like Iran and a lot of oil is delivered via long-term contracts (which I presume to be outside the open market), why can't Venezuela simply contract out their oil to China or other places on long-term contracts and phase out their obligations to the U.S. as contracts expire.  In other words, couldn't they bypass the U.S. by selling their oil on long-term contracts outside the open market?
Venezuela could embargo the US but what is the point? It would be a pain in the arse for a few weeks whilst the USA found oil sources which could be redirected upon payment of the appropriate premiums. Oil would definitely be released from the SPR during this brief period.

After that, the US would have to pay more for the oil they bought, but the extra cost would be very small, and be approximately equal to the cost difference between shipping from Venezuela and shipping from the next suitable source.

But consider this. Venezuela would forever more have to accept lesser prices for their oil, approximately equal to the extra cost of shipping to the next most demanding market.

This is bad for both parties: USA pays more and Venezuela is paid less. The winners would be the shipping owners or lessors.

Furthermore, the threat of embargo against the US might be politically useful, whilst an actual embargo would probably be quite costly in political terms. It's best for Venezuela if things stay as they are, unless things start to look like they might get messy.

This is bad for both parties: USA pays more and Venezuela is paid less. The winners would be the shipping owners or lessors.

The opposite of this is exactly why globalization does make you better off.  Specialization sucks I won't disagree, but when we are still considered the money center of the universe (you know we think this way) I chose my profession accordingly.  How we continue doesn't appear promising though.  I'm almost done with my degree and just finding out about peak oil, so I'm thinking of new ways to put my skills to use.  

The problem with the people who have lost to globalization are those most suceptible due to their inability to perform in college or they are not motivated enough to try and be retrained.  A factory worker can't expect to keep being a factory worker when those jobs are vanishing.  

They have to decide another way to make a living by applying the skills they have in a different way, or learn new skills in the new competitive environment.  If they are lazy and don't ackowledge the changes around them, they won't make it.  There are more of these people who are loosing out and our manufacturing base is being stripped.

I suppose that even though the US will hurt the most, we will bring many, many economies down with us again due to globalization.

Um...you realize that the financial industry is one that is being hard hit by globalization?  Why pay a financial analyst in New York $200,000/year when you can pay one in Mumbai $20,000 for same work?  Being unable to cut it in college has nothing to do with it.
I live in Stl I have no desire to be located in NY or be a financial analyst.  As a country we are the financial capital.  I'm in corporate finance and will start my own business once I'm able.  You're saying that going to college doesn't matter?
No, I'm saying Tainter's declining marginal returns applies.  As always.

"Displaced factory workers" was the story of the '70s.  Today's displaced workers are educated.  They are engineers, computer scientists, financial analysts.  Many of them have gone back to school and been re-educated in a different field, only to lose their jobs overseas again.

And really, this is what we should have expected from globalization.  It's one thing to get a "better job" when the job lost was as a line worker in a factory.  But when the job lost requires a PhD in computer science...what do you do to "stay ahead"?  

There's a reason why "service industry" jobs have shown so much growth in the U.S.  Hard to outsource you if you have a job that requires a physical presence.  As one of my friends put it, "In a few years, we'll all be hookers and hairdressers."

That is assuming globalization continues.  I don't think it will.  Peak oil will put an end to it.  And when that happens, a lot of young people who went into debt to get that sheepskin are going to find they wasted their money.

So you have to still be proactive and do something to make your life better.  I agree that the escalating nature of requirements for higher positions of authority are getting cumbersome.  Getting the first degree is the hardest, but what would I know I dont quite have my complete.  Hopefully I can get into a position where my employer will pay for my Masters.  If not, I'm going to work on some serious hobbies to prepare for a more sustainable lifestyle.  I'm looking forward to slower times.

I also agree that globalization is not sustainable.  I think it will continue, but it will peak years after peak oil.  Container shipping is so cheap even at these prices.  When you break down the shipping cost of one mcdonalds toy made in china, it's less than a penny at per Forbes.  Trade will continue, it has for nearly all of mankind.  It provides more choices and both parties agree that they are usually better off trading.

Yes, trade will continue.  

We have always traded, but before fossil fuels, it really wasn't worth shipping anything but luxury goods.  The Silk Road was for transporting silks and spices, not turnips.

Good point.

You might enjoy this op-ed piece in today's NYT. It's about outsourcing CEO's...


"That giant sucking sound, is jobs leaving the US"  Ross Perot candidate for Pres. US.... I'm sorry I took so much shit for voting for him,  God it sucks to be right sometimes.  I wish I had the clear vision on the possiblity of inflation vrs defaltion..:-/
It appears that Mexico did not perform all that well after NAFTA was enacted. As someone here in TOD pointed out "Mexico has 16 million more people in poverty now than they did pre-NAFTA."

There is a Carnegie Endowment piece that covers a lot of the effects of NAFTA on Mexico -- and the numbers are not pretty.

Yes (NAFTA) I agree with you but- He had the right process but the wrong country(s).  Opening our country without tarrifs to account for differences in wages, enviromental protections, SS, etc. has indeed produced a giant sucking sound.  Our US companies did not have a level playing field.  Sould we blame the lobbiest for the mass marketers?  I think you need to follow the $ and this is where it leads me.  What we would have had without cheap imports I do not know.
So what country is it?  China?  Chinese manufacturing employment (BLS info) peaked in 1996, that's 10 years ago, at 130 million and had fallen to about 109 million in 2002.  This was apparently due to "sharp increases in manufacturing labor productivity".  

So the jobs got sucked to China, and then the jobs started disappearing there too.  Eventually robots could do all the work of manufacturing.  Globalization is not the problem.

Hmm...Locally yes it would be china (mostly) as they move printer/computer assemby and chip manufacturing overseas.  We see losses of the $14-17.oo hr assembly jobs.  Those who get hired (again) are finding jobs at $8-10.00 hr. range.  Yes machines do play a part but who runs these damn things US workers or someone else.  Or should I boldly question is it someone who get paid alot less so that we can buy a $29.00 microwave for our college student. I am one who thinks the $112.00 I paid 14 yrs ago for a small microwave isn't a big deal, then of course I didn't loose my job to some overseas factory.
Walmart and Huffy Bicycles was a classic forced shift to cheaper (overseas) manufacturing.  Made the papers here.  
Personally I think that when robotics get sufficiently sophisticated then manufacturing will move back to the U.S.  And robotics are advancing rather rapidly (read the first 110 pages of Ray Kurzweil's "The Singularity Is Near" for the mind-blowing numbers on this -- highly recommended).

Agriculture dropped from high percentage employment a hundred years ago to low percentage (and we are all fat now).  And manufacturing is following the same route (and our closets are stuffed).  We are going to have to accept "service" jobs until R2D2/C3PO show up.

And software development. And IT. And payroll. And accounting. And engineering. And the 'hard' sciences.


Additionally, factory workers do not necessarily have the ability to quit work, enroll in a 4 year university program, and come up with both the spare change to pay for both in the mean time.

I respect you immensely Tate, but this is an example of fallacious logic.

One thing I forgot to mention was that retraining these people should be the government's responsibility.  These desperate people have no way to get schooling without the help of the gov't.  If you gave these people losing their jobs the opportunity to learn anything new they wanted, I think many people would seize the opportunity to do something to improve their lives.  

In our current political environment, Bush is cutting funding to schooling and I firmly believe one of the most important institutions of gov't is educating their people.  Higher education should not be so expensive.  It should be accesible to everyone, especially those in the lower classes.  The middle class is getting squeezed out of college or burdened with massive debt.  The future doesn't appear as bright as it once was...damn college.

IMO, higher education is very expensive in the USA so that the intelligent, hard working sons and daughters of the poor and working class will be prevented from competing with the stupid and lazy sons and daughters of the wealthy for the prime employee positions in the economy.  
I would have to agree.  As a middle class white guy it has been difficult to get funding to complete college.  My parents did not plan for my college, as if it would have mattered anyway as I would guess that over 90% of college plans would be underfunded anyway, but all the more does help.  So I've had to rely on the Stafford Loan program.  

I'm sure someone is going to say get off you're soapbox, but after talking to a lot of my peers it's become very hard to attend college.  In the great state of Misery (MO), we've had funding cut for colleges for the last four years.  So the colleges raise tuition, but the Stafford loan amounts are dated from the 70's I understand.  It might have been nice back then to get ALL that money, but inflation has destroyed that now and no one wants to pay to educate our youth.  Education isn't a priority and it's sad.  

I will say that I'm glad I went.  Even in the face of the debt I've taken a lot of social capital in addition to understand truly how diverse a world we live in.  The business program is wonderful and it woke me up and made me interested to find out how things work.  I can apply that anywhere.

Well said.
Education is a funny thing, as it is the one thing a person possesses that cannot be taken from him.
Wealth can be squandered or lost. Luck is fleeting and fickle. A great job can be lost. Friendships and even relationships come and go. Material possessions are, well, you get the idea.

I wish you well on your quest.  

I have a daughter who is in college, toutors other people in math.  Th stories she tells me makes me remember a quote "the world still needs ditch diggers".  Sorry to rain on your parade - everyone is not created equal.
Unfortunately, the current world digs its ditches with oil power --but in the future you will be right --and then calculus will be close to useless. Can your daughter dig ditches as well as her tutorees? If not, she may be one of the "left behinds".

p.s. no ill will intended here. It's just that we do not know what skill sets will be the succesful ones in the world to come. It may not be brain power.

No ill will taken... I knew the staement "created equal" would rankle some feathers.  My point is that opening education to everyone will not get the same results- it doesn't happen- should we taxpayers be required to foot the bill when it might be a waste of money?  High school used to be enough and may be in the future.  There needs to be some darwinian process to arrive at who gets to go to college and who doesn't.  If everyone gets a college education for free then there will aways be those who want to excell and will continue beyond that.  Then this will become the new higher education.  The current system is not perfect but really what is?  I think it works for the most part.  If you really want it you can get it.  It depends on what you are willing to sacrifice and this is where most people have a problem- you cannot have it all- you have to choose.
As for my kids i do indeed wonder what they will have for options.  The one who tutors whats to become a teacher.  I hope they have a society where that is still a needed occupation. They have all worked at the family nursery-- I suspect that horticulture will have a future that they can fall back on.  It will be indeed diferent than now for the access to chemicals/fertilizers will indeed change.
A high school education is like a high school dropout of the old days whereas the college degree has become the new high school diploma.  I think it's more of a failure of the educational system because it attemps to graduate everyone, which means dumbing everything down to the "lowest common denominator."  A college degree is practically necessary now to show one's literacy.
I don't mean it should be free by any means.  It is free for those who don't do well, so that they are given a chance to get ahead.  I just wish I could get more money so that I'm not being forced to attend longer.  My situation is unique and I recognize that.  Stafford loan maximum's haven't been updated since the 70's.  Inflation, reported in error or not, has destroyed the value that this loan used to provide. I only ask for the same ability to access capital as those who attended before me.

I know private colleges graduate higher quality students than do state schools(aggregate).  I'm fine with that and those who can afford to pay, should continue to do so.  I think all those who have the desire and motivation should be able to attend a state college at a minimal cost so they can build their skills.  College is the new high school diploma and while I'm being forced to attend to "level" my playing field, I shouldn't have to constantly have to worry how I'm going to pay for it.

Make sure to take Econ 101 (microeconomics) so that you fully understand how the Invisble Hand guides us to our prosperous destiny.

Also, Financial Forensics 506 will be a good course so that you can learn how to cook the books even better than the Enron raptors did. We need people who know how to produce "good numbers".

best of luck

So I take it you think ALL finance/econ majors are selfish?  You'd be right, only I don't intend to do it by making any one worse off....If you were an Econ guy you would really appreaciate that last part.
Everyone is created equal

Everyone is not created the same

indeed, everyone is born with "inalienable rights".  we are not given the same talents, opportunities, or predilections.  
The opposite of this is exactly why globalization does make you better off.

Who is better off? Careful. Just because someone is better off, doesn't mean everyone is. It is possible, for example, to argue that large scale international trade provides exploitable advantages prinicpally to large scale multinational companies. There may be other considerations as to whether these advantages trickle down to the majority of the citizens of countries harbouring those multinationals.

I obviously agree that trade provides mutual benefits. But, to whom do those benefits accrue? Would any of the parties actually be better off in the absence of the trade? Interesting questions, if only marginally related to peak oil.

Economics sets out to make someone better off but not at the expense of anyone else.  That's the goal anyway.  I'm stating pure theory.  In reality there will always be someway to define the other side as losing.

I disagree that most of the advantages have gone to large companies.  Their bottom lines have improved no doubt, but consumers have watched durable goods prices plummet in the last 15 years.  We're now seeing inflation hitting these durable goods, but the consumers also benefited by lower cost products and better products at marginally higher prices.  The "exploited" workers are better off making more money in a factory than the farm.  I don't give a damn what they are WILLING to work for (low wages compared to the high US standard of living).  If they make more money in the factory than the farm, they are better off in economically speaking.

I read that these 3rd world sweatshops have a high employee turnover rate. After a few months of being subjected to lower and lower piece rates and other management abuses they go back to the farm.
That assumes they have a farm to go back to. Frequently they don't. Agricutlural reform is a major plank of NAFTA and CAFTA, trade agreements with agricultural planks that basically seem to be an assault on sustainable family farms and a complete embrace of US petrolium based farming practices.

I don't have the citations but I have heard Arundati Roy speak on globalization's impact on India and she said that over 10,000 small farmers have gotten so despondent they have killed themselves in recent years.

Mexico has 16 million more people in poverty now than they did pre-NAFTA. And with Monsanto selling all the seed, Mexico has all but eliminated native drought resistant strains of corn that used to be sustainably grown by compesinos.

I'm in a country that will probably be suffering under CAFTA (called TLC here) pretty soon. CAFTA seeks to do things like bust up and privitize state-owned public utilities and the healthcare system, socialist systems that work very well here. You only have to travel to Panama or Nicaraugua to see just how well they do function. The vote will be close, as was our last election, but it will probably pass.

Yeah, I know, I am an anti-corporate, pro-worker, pro-union, anti-globalization, left-wing loony. Obsolete, probably, but still functioning, most days.

Back to cervezas and the World Cup!

You miss my point. Try this.

Would peak oil threaten such significant consequences in the absence of extensive globalization?

I am not supposing that either party to a trade loses. It is the third parties that I am refering to.

I've been listening to this worker retraining bullshit for over 30 years. Workers need to be retrained so often that a guy could have spent more time in training than earning a living by the time of retirement. Only a small percentage of the world's population needs to understand robotics or nanotechnology for all the world's manufacturing needs to be satisfied. There is only so much demand for the skills to design and build machines that put more people out of work.
My brother worked for ten years at McDonalds while studying for his business computer degree.  He was a systems analyst for 15 years when the company eliminated his position. He's back working at McDonalds.
There is another facet to the "retraining" lie.

Think about it.
A baby learns a new language in one year.
How long does it take for a 40 year old?
How long does it take for a 60 year old?

Don't give me that BS about the older ones having their minds "clogged" with accumulated info.

The adage is true.
You can't teach an old dog new tricks.

P.S. I was looking for that Far Side strip with picture like the one above except dog is peddling his carnival troop across a circus high wire (no safety net below) on a unicycle and the caption reads:

Despite things going well, Rex could not get rid of that nagging thought: this was a new trick and after all, he was an old dog.

Language may not be the best example of a retraining challenge for adults.  There clearly seems to be a "developmental window" for language that vanishes at or around puberty in the after puberty learning a new language, especailly with regard to acquiring appropriate pronunciation and syntax becomes significantly more difficult. However, in other respects, adolescents learn quite rapidly as do young adults.  
However, in other respects, adolescents learn quite rapidly as do young adults.


I'll concede that sponge-like learning can go on until young adulthood (age 25). Hell, I switched careers at age 30-something.

But a lot of these "retraining" programs promise to take a 40 year old male who has worked in a steel mill the last 15 years and make him into a C++ programmer. Give me a break. I've seen too many of these geezer boot camps to fall for the BS that it is "just a matter of retraining". There are just somethings that a 40+ year old man will never "get" no matter how many hours he spends in geezer re-training class while a young pup will pick it up in minutes.

BTW, I come not here to deprecate geezers --I'm one myself, well at least according to ARP.

The point is that all this "retraining" and reallocating of our human assets from one slot in the economy to another is pure political BS. It just doesn't happen in real life.

Step back, I do agree with you that there is a certain "loss of flexibility (and speed) with age that can make new learning more difficult. I was just making a point that language learning is a special case, but your overall argument is well taken.  


I learned proper working German (NOT "school German"!) in about 2 years at the age of 39.

I then changed career from software developer to a medical profession at 49.

Neither was especially easy - but I had no major problems ... except the cost for the career change ... about $60k total.

Too many people give up when they reach 40.

Ok thats fine that you don't like retraining.  So what.  As a business owner, if someone will do something cheaper I want that person.  What don't you get?  So what that he went from Mcdonalds to computers to Mcdonalds.  He picked the wrong industry, so he went back to the service economy.  In case you haven't heard they are farming these jobs as as well.


Santa Maria, California (January 13, 2005) - All of us, at one time or another, have been served at McDonalds by ordering food at their Drive-Thru window. What you may not realize is that for the last three months in Santa Maria, the person you ordered from was not in the McDonalds restaurant, but instead was in the Bronco Communications Call Center a few miles away on Skyway Drive.

Do you think your employer ever has your best interests in mind? Businesses will find ways to lower costs.  Labor is usually the highest % of operating expenses.  It's more cost effective to hack your largest cost down.  If you get knocked down get your ass up.  Go into business for yourself and exploit those workers too then.  Whining about what is happening is like crying over spilled milk.  Clean up the mess and move on.

The optimism of youth.  I wish you the best, but I can tell you the picture looks different a couple of decades on with a family and debts and obligations.  You are certainly correct that the corporations could give a shit about their workers (at least larger corporations).  It's quite clear to me that the purpose of globalization is to force workers into a race for the bottom.  The cheap goods we get as compensation are just that - short term gratification that distracts, but is of no real value.  Just like the couple of hundred bucks thrown our way as a tax cut (while other taxes went up to more than offset), so we would say nothing about the huge giveaways to the wealthy.  Watch the birdie!

Don't get me wrong, I will never give up and lie down, but I know the system is rigged against me (cynical old fart that I am).  As a trained and experienced product development engineer, ostensibly in the prime of my working career, I will be dropping out of that line of work shortly.  So will most of the guys I work with, whether they want to or not, and once that group is scattered something of value will have been lost.  The work we did created the new products that kept a manufacturing site going, and kept quite a few employees (also quite skilled) working.  Most of our salaries will probably never be as high as they are now, and it remains to be seen what kinds of contributions we will all be able to make to the society in general.  This kind of thing is happening all over, and overall it's a net loss to our society.  Is the fact that I can buy a cheap DVD player at MalWart fair compensation, either on a personal level or on a society level?  Wait until the price of fuel goes higher, and the masses cannot refinance their homes again, and see where our economy goes.  

Look at the reality of the massive accumulation of wealth at the top of society, while more and more people slip in the "have not" regions.  Tell me again how globalization is a good thing?  Actually, don't bother.

Ok, but those problems that we are having as a sociery is because their are failures where globalization has holes.  I'm not saying it's the end all be all, just that everyone does benefit someway.  On the flip side people probably lose out in another way and that loss can't be recaptured in many instances.  I think the reality of how globalization has been applied has holes.  Those holes aren't being plugged by anyone.  

In the end I think it will hurt us due to the accumulation of lost intellectual capital.  Just like you are telling me our engineers are leaving.  As an engineer, is there an excess in the supply of engineers world wide? Can you INCREASE those engineering skills to set yourself above the crowd?  This is what it would take.  If there is a glut of xxx engineers, then wages must fall.  If you seperate yourself by adding on to your existing skills, you are more valuable.  

Oh and about my youth.  I know I feel the way I do b/c I am young.  Up until a few months ago I honestly felt I was living in the greatest time of all.  Those cheap consumer goods have worked in fooling the masses though, eh?  

I predict a boom market for free market fundamentalist theology. The worse things get the more market there will be for economists who purvey this line. Even after TSHTF. Then maybe 2 years into the crash everyone will experience total amnesia and forget the free market chapter ever happened. Some economists will retrain as preachers, many will sing a different tune without missing a beat and if we're lucky a few will be obliged to seek honest work.
Free markets and trade will be fundamental for survival and prosperity after the peak in oil production. Amen!
Free markets, as opposed to capitalism.
Capitalism withouth free markets is a perversion.

And if you have free markets capitalism will reinvent itself asap.

"Capitalism withouth free markets is a perversion."

Indeed. Just look at the state the world's in.

The market is not free because many people have no choice but to sell their labor or even themselves. There is no alternative. Those who would like to live self-sufficiently and not participate in the capitalist economy cannot do so without accumulating a pile of money first (to buy land).

Now you start to sound like some young socialists I have met that were complaining that our whole country need to change to a system that takes care of their needs for them to be able to start a small collective and live according to their dreams. I do not know how hard it would be in other countries but it would not be that expensive in Sweden. The main problem must be that they are lazy or scared that it wont work to move out to the cheap farming areas in decline far from large towns.

It would be better with more labour buyers giving the choices needed to get better working conditions, start a career and so on. I got the impression that the worst of the partly industrialized developing countries are those where the state authorities stop such developments to keep the economy static and easy to control.

You have to understand that the problems my development group are experiencing have nothing to do with our skills. Actually, my specialty is designing equipment for the electric utility transmission and distribution system.  My skills and that of my group are high, and will be needed in the coming years.  I could easily translate to the kinds of electric light rail projects we should be building.  But I will not - the abilities of this and other groups around the nation will be dissipated.  They will simply vanish.  While my abilities will remain the same (I will forget things in time), the group will be gone, and with it the dynamics and working relationships that made it more than the sum of its parts.  Poof.

As we have become part of a large corporation, we have less money available for people who DO things because more must be spent on nonproductive parasites within the organization.  The best and most expensive employees have left or been forced out.  The solution for this is to contract out the productive parts to "Low Cost Countries", and keep the overhead.  It does not matter how skilled I become, I will not provide such services for the kind of wages paid in the LCCs, nor will I even get the choice.  I will use my skills instead for my own direct benefit, and if I must work for some other company, I will provide just as much in return for whatever I am paid as I think it's worth.  

I look at people busting their asses for the company - getting jerked around in all manner of ways, sacrificing their precious time that could be spent with their kids and families or learning new skills useful in the coming times - they think they are getting ahead, that they are buying something with this effort.  But their pay is dropping in real terms, the cost of living is rising, and yet the company clearly sees them as just an expendable commodity - something to be used up and discarded.

I will always be increasing my skills in one way or another.  I just won't be looking to further specialize in the area I've been working in.  Instead I'm planning to broaden my skills into other areas, and I don't plan on working for any corporations if that can be avoided. I know my income is likely going to be much reduced, at least for some time, and I may as well embrace that reality and deal with that on my own terms.

I happen to share Twilight's sentiments on this matter completely, and can back up everything he has said as reality-based fact, from my own personal experiences.

There are days when I feel that a life of crime might be more rewarding than continuing with the race to the bottom. But then I just exploit my fellow man, the way corp-jerks exploit their "human capital".

"Go into business for yourself and exploit those workers too then."

Did you really intend to say this? Yes I understand this is the way the world works, but it doesn't make it any less sad. Do you really support the notion of setting out to exploit someone?

Having seen how organizations based on exploitation function (poorly), I certainly want nothing to do with them.  I want to set something up that is small, where a few people work together for a long time, for the mutual benefit of everyone involved.  I've been part of company set up that way (until the original owners grew old and sold out), and I know how it can work.  I hope to replicate it on a smaller scale.  It means taking care of employees, and not maximizing short term personal profit.  It also makes for a great working environment, strong worker loyalty, and very high quality work.  
>I want to set something up that is small, where a few people work together for a long time, for the mutual benefit of everyone involved.

The trouble is finding people with the same motive or sufficient skills to make it happen. 99% of the workforce lives paycheck to paycheck. As the employeer, expect to bankroll thier wages unless you have sufficient revenues at the start.

>It also makes for a great working environment, strong worker loyalty, and very high quality work.

I wouldn't count on that. Generally, most people are only as loyal when they believe its in their short term interest.

 I've been in business for nearly a decade, operating a small business. I tried to do that same thing your about to. The issue is finding people with entrepreneur spirit that you can used to grow your business. What your likely to endure is a give take relationship with co-workers. You give, they take and rarely do they assist you outside of their job responsiblities. They'll quickly latch on, and ride on your efforts, hoping to cash in on a startup. Rarely will they put in the effort to help grow or expand your business.

This is why most businesses operate as they do with a central authority making the decisions and taking all the risks. If your fellow employees are not willing to share in the risks than they don't reserve the rewards.

If do decide to start your own small business, I would advise that you remain as the business authority. If you find that your employees make the cut you can always tender them an partnership position. I would also recommend that you build up some savings in the corp accts rather than pay out everything to your employees. You will need savings to draw from when your reveneue is lower than payroll, and you want to avoid dipping into your own personal savings to keep the business afloat.

It depends on whether the exploitation is self-imposed. Immigrant labor is obviously exploited, but it is largely a matter of immigrants choosing the terrible conditions rather than the employers forcing those conditions on them.

The most perfect form of slavery is one where the yoke of oppression is so light that it is barely noticed. All the more so when that yoke is chosen by the person bearing it.

ah yes, the indigent immigrant workers that choose to let themselves be exploited.  i'm sure they also chose to live in hopeless countries with massive debt/currency devaluation/corruption, etc.  it wasn't international and central banks controlling our economies and leveraging debt, multinationals sucking up resources and people, or governments destroying people's livelihoods with "free trade" agreements.  no, i'm sure the immigrants really wanted all those things in the first place.  
No, I'm brutally honest and don't care how you FEEL about something.  
You describe the problem in a nutshell - "Go into business for yourself and exploit those workers too".  The system - no, not capitalism, but any form of centralized authority - requires that the many be exploited for the benefit of the few.  It happens in this country, of course, as well as everywhere.  But it's less noticeable here, in spite of the HUGE disparity in relative income, because as a nation we are effectively exploiting the rest of the globe, so even the poor here benefit from the exploitation of the third world, to generalize.  It's a system reliant on submission to power, in many forms.  One of those forms is that the powerful have control of the energy.  Hence the Great Game unfolding before our eyes.  I recommend "The Culture of Make Believe" by Derrick Jensen and "Ishmael", "My Ishmael" and "The Story of B" by Daniel Quinn.
It is also a very good system for getting things done while optimizing resource use.

We globaly and locally need to get a lot of things done.

Go into business myself? Sure, but for a 40-something former steel worker who is desperate the best job may in fact be stealing from you, the young, go-getting entrepreneur.

When communism collapsed in Eastern Europe and the former Soviet Union a free-market utopia didn't take over -- the mafia did. People forget that a public social safety net for the disenfranchised and dispossessed is in reality an insurance policy against social revolution. Take that net away and those folks will very quickly find no problem using blunt, medeival weapons to relieve you of your property.  

If I am assaulted by thugs with canopeners I will beat them back with Tupperware!
:-) Tupperware is indeed a mighty weapon.
And so resilient!
Please step into my giant tuperware.  I will "burb" the lid and you will suffocate.  Haha try using your can opener now!
tom deplume -

I agree wholeheartedly!

The limiting thing in the current US economy is NOT that people lack the proper training for all those good jobs out there; it's that 'all those good jobs out there' just ain't! There are already to many people who are far too educated and far too overqualified for the jobs they are doing.

It should be abundantly obvious that if say an auto company no longer needs 10,000 assembly line workers, it sure as hell isn't going to need 10,000 robotic engineers, computer programers, or financial analysts. The whole purpose of automation is to replace labor with technology, not to create an equivalent number of highly specialized and highly paid jobs. The whole purpose of outsourcing is to replace expensive labor with cheap labor.

In many people's minds there is a sort of built in assumption that there will always be as many jobs as there are people who need jobs - a constant one-to-one correspondence. This notion is also rubbish. If the purpose of high-tech manufacturing is to replace labor with technology, then why should it be surprising that there are now more people than there are decent-paying jobs?  Let's face it: the world probably has at least a billion superfluous people - people who are literally not needed for anything. What becomes of them? And what becomes of US when THEY realize that fact?

More interestingly, what becomes of US when we realize "we" are THEM?
Let's face it: the world probably has at least a billion superfluous people - people who are literally not needed for anything. What becomes of them? And what becomes of US when THEY realize that fact?

Oh, I think it's more like 5 billion superfluous people out there. Gaia is groaning under their weight right now...

Just rely on the invisible hand of market forces to care for them. Or was it that other invisible hand?
Both invisible hands come together to squash them like a bug.  

"If they are going to die let them do it and decrease the surplus population" -- E. Scrooge, CEO

Certain amount of species hubris to think that any humans are "needed" by the galaxy.

... I thought they only needed one, to pilot that Last Starfighter or something ...

Venezuela can sell its oil to anyone it wishes. The point is this would make no difference to the world market. Suppose Venezuela decides to sell only to China at a given contract price. Other world users, unable to get Venezuelan oil, would have to bid the price up in order to get oil, from other exporters, to replace the oil they are no longer getting from Venezuela. The result would be that oil normally flowing to China from other exporters, would now go to the highest bidder in other parts of the world.

China would get their oil for less and Venezuela would sell their oil for less, if they stuck to the contract. But it would make no difference to the rest of the world, except perhaps a few ticks in the price of the oil.

Why is this so difficult for some people to understand?

Hugo's proposal last week that OPEC cut its production made a lot of sense.

The price would rise, and the oil-producing countries would have more high-priced oil for the future.

Why should they sell such a valuable resource so cheap? Are they crazy?

No, they're not crazy. They're afraid that upsetting the status quo in any way will make them a target. And that the enforcer could act very crazy.
Just slow to adjust, like all mankind. It will take a long long time for the new reality to sink in.
Because it is just not as simple as you represent. Crude oil differs quite a lot in its grade, weight, contaminants, and therefore in what kind of refinery can handle it. Crude oil also differs quite a lot in how easy it is to get from point of extraction to its first processing point (I understand Kashagan oil is largely de-sulfered near the point of extraction). All these things, and the politics take a part in determining the 'spread' of prices, light vs heavy vs sweet vs sour vs bitumen etc. Saying crude oil is fungible, without any qualifications, is like saying crude oil is fungible with respect to switchgrass, after all, they are both energy sources- right? I can easily envision a situation where the logistics and politics make it possible for crude oil blackmail to take place. It may not be possible in the case of Venezuela, but it would be because of the relative fungibility of Venezuelan crude with respect to other sources at this time. This situation can change easily.
ET, your post explains absolutely nothing. Of course there are different grades of crude oil. However the grade is immaterial in this case. If China gets more oil of any particular grade from Venezuela, then there would be more of this particular grade, which China bought from Venezuela, available on the world market, from other producing nations.

Right now the average sulfur content of world traded oil is rising and the average grade is getting heavier. (We used the best stuff first.) This does NOT make oil one iota less fungible. It simply means we must pay more for the good stuff but if we build a refinery that can handle the heavy sour stuff then we can by that grade cheaper.

In order to have a valid argument ET, you must explain why, if China buys more of any particular grade from Venezuela, that other producers of that particular grade would be preventing from selling, at a higher bidding price, their oil to another importer.

Simply stating the well known fact that there are different grades of oil does not change the fact that ANY grade of oil must compete on the world market for the best price against nations producing that same grade of oil.

Simply stating the well known fact that there are different grades of oil does not change the fact that ANY grade of oil must compete on the world market for the best price against nations producing that same grade of oil.

This statement actually makes my point. A quantity of the same grade of crude is obviously going to be relatively more fungible with another equal quantity of the same grade with the difference largely in shipping cost. I can see a point coming where say light-sweet crude is only available from certain ME countries potentially hostile to the US. This would raise the scenario of no crude of that type available at any price to the US but only to neighbors friendly to the producing countries. My point is simply that the political factors become a larger influence to the fungibility issue as depletion continues. Why do you think US politicians beat the 'energy independence' drum so loudly. And, correspondingly, why are the Saudis wary of customers switching to 'other' types of energy?

True, "the day may come" when oil is not fungible. But that day is not yet. Who know what the collapse of globalization may bring? Nothing is likely to be fungible between nations in those days. But it makes absolutely NO difference if Venezuela decides to sell only to China "today". The oil we do not get from Venezuela can simply be gotten from another exporter.

What you apparently don't realize is that most of the oil coming out of Venezuela is extremely heavy and sour. Right now there is a glut of heavy sour crude in the world and a scarcity of light sweet crude. The margin between "heavy sour" and "light sweet" has went from about $5 a barrel to over $15 a barrel in the last two years. The oil coming out of Venezuela is definitely fungible if any oil in the world is fungible. That is, there is more of it, (mostly heavy sour), available from more sources than any other grade of oil.

Political factors do not affect the fungiblity of oil any more than they affect the fungiblity of lumber. Lumber is considered a fungible commodity but everyone knows mahogany is not interchangeable with knotty pine. The word "fungible" does not mean that there are no different grades of the fungible commodity, political factors notwithstanding.

This link gives the different grades of oil coming from most exporting nations.

Why is this so difficult for some people to understand?

I don't think we fail to understand it, it's just that if the amount of oil available for export is dwindling and there is greater and greater competition, I'm wondering if making 1,500,000 barrels a day of oil and products from this shrinking pool off limits to the U.S. might do more than just slightly increase the cost for the U.S.  There would be a huge psychological effect on the markets and it would force the U.S. into an even more frenzied bidding war with other countries.  

Phineas Gage, love your net name but wonder why you chose it. Phineas Gage, while tapping dynamite for railroad blasting, had an iron rod driven through his skull, and lived. But his friends said of him, Gage simply was not Gage anymore. Formerly he was an easygoing loveable guy. Then after his accident he became an aggressive and irritable sonofabitch. Perhaps Peak Oil has had the same effect on you, you are just not you anymore after having had Peak Oil dumped onto your brain. ;-)

But you do not understand the impact that Venezuela selling only to China would have. Venezuela produces mostly heavy sour crude. Shipping it all the way to China, instead of closer markets, would simply mean Venezuela would get less for their oil. Then if Middle East exporters shipped more of their heavy sour to the US, it would add a few cents, or perhaps a dollar or so, to the shipping cost. The impact would not be that great.

Adding the distance tankers must travel would definitely raise the total cost of ALL oil on all markets. But not that much. In the grand scheme of things it would make little difference, if any at all.

thanks for helping those of us who are laypersons to the oil industry understand things better.

Also, thanks for noticing the hole in my head ;)  I did not choose the name bc/ discovering peak oil has had a Jekyl and Hyde (or phineas gage) effect on me.  I am concerned, however, that our society may have that type of reaction once they get hit upside the head by peak oil. I am a by training a physician and part of what I do is take care of people with traumatic brain injuries and strokes.  I've always been fascinated with how the brain works and how injuries can alter its function in surprising ways.  Obviously you don't want to be one of my interesting cases!

For those who don't know who phineas gage really is, his story is fascinating, here's a link:


Here's an image of what happened to phineas gage:

Do you have any information on a story, supposedly in the New York Times, about a man who was mentally disturbed and having reached his wit's end, pointed a gun into his mouth and shot himself. The bullet passed through the brain and he survived, but with the odd side effect that he cured himself of the disorder. The article had something to do with self-administered brain surgery. I was told this story but have never found the reference.
I have a patient who had a stimulator implanted into his brain to treat parkinson's disease.  I think Michael J Fox had one of these.  This patient's surgery was complicated by bleeding into his brain.  He has some substantial cognitive deficits now but his tremor and rigidity from the Parkinson's is dramatically better from the hemorrhagic stroke!  The stimulator has not even been hooked up to the battery yet.  There are many things about the way our brains are wired that we still don't understand.

sorry never answered your question. Never heard of that case, can't seem to find it.  It's certainly believable but with a couple of caveats.  We typically think of frontal lobe injuries causing emotional lability and poor impulse control.  Somtimes with a right frontal lobe injury, the opposite occurs and the individual suffers from a flat affect and the inability to experience (or to detect in others) the usual range of emotions.  These people usually speak in a strane, monotone voice devoid of any inflection.  They lose the ability to use or understand the 90% of language that is non-verbal.  So this could "cure" someone of depression but only at the cost of losing all ability to experience and comprehend emotion.  Certainly not a recommended treatment.  

This is my favorite case of acquired anti-social personality disorder due to severe damage to the orbitofrontal cortex.  Sometimes it seems like America as a whole has a kind of frontal cortex impairment (inability to prioritize, discounting the future in favor of the immediate present, and an endless desire for immediate gratification.  Energy depletion is NOT going to go well for us..
An interesting and insightful observation ! This is not true for all human societies (I would point to Switzerland, which passed by referundum in 1998 a 20 year, 31 billion Swiss franc program to improve their (hydro)electric rail system. The largest goal was to take freight off of heavy trucks and put it on rail, but many other benefits as well). An equivalent program, adjusted for population and currency, would be the US voting for a $1 trillion, 20 year program to improve our railroads with gov't money. I cannot imagine such a program in 1998, or today, in the US. :-((
I suspect that the constant barrage of carefully designed media campaigns that are carefully designed to stoke a desire to consume and obtain instant gratification are contributing to a kind of "Great American Lobotomy".  
Who said the frontal cortex has final say in how we behave?
Why should it have all the fun?

To SUV or not to SUV?
That is the question
--for my primitive brain to decide.

(Ask people in your sales department what part of the brain they appeal to in order to close a sale.)

A pyschologist was involved in the design of the H2 & H3. He wanted to appeal to the "reptile Brain". Bigger (notice vertical lines), Uglier, more intimidating. So think "Reptile Brain" anytime you see a Huummer driver. As they consume 9 mpg.
I have a "reptile brain" living right down the street.  And the little 6-yr old boy has one of those little electric powered Hummers he drives around on the sidewalk, same color as his daddie's H2!
Awwww - isn't that cuuute!  The term "rude awakening" somehow comes to mind.
we ALL have a reptile brain.

and karl rove knows it.

(Beware. Out "there" are the "them" who hate the freedoms of your inner lizard. "They" are out to cage and grill your lizard if you don't french fry "them" first. You love life. Remember? YOU hate them. Remember? Now go forth my minions and ... kill, kill, kill, ... hee ha ha --evil laugh. And don't forget to drive safely.)

Passed a church yesterday where a wedding was going on - they had a line of decorated huge SUVs, and at the front, of course, was a Hummer H2.  Wanted to puke.
David JM,

Sometimes it seems like America as a whole has a kind of frontal cortex impairment

well said

The people who would purchase this product apparently do:

Jesus Loves A Machine Gun
It's the new "Left Behind" video game, where you maim and murder and hate, all in God's name. Praise!

They told us in neurophysiology sometime last century that this led to the development of the frontal lobotomy. May not be correct, tho...

It is occasionally suggested that Gage's case inspired the development of frontal lobotomy, a now-obsolete psychosurgical procedure that leads to a blunted emotional response and personality changes. However, historical analysis does not seem to support this claim. It seems that consideration of Gage's injury had little influence on the development of this practice.


But I'd rather have a bottle in front of me than a frontal lobotomy.

But I'd rather have a bottle in front of me than a frontal lobotomy.
 - Dorothy Parker
In Australia, people are getting irate:

Long weekend's inflated petrol prices fuel mounting anger

Oil companies should "give motorists a break" over the long weekend by having a sale at the bowser instead of putting petrol prices up, according to Australia's peak motoring body.

Australian Automobile Association executive director Lauchlan McIntosh said petrol prices had reached record highs ahead of the Queen's Birthday long weekend, despite world benchmark prices steadying in the past month.

In Canberra yesterday, the average price at Shell service stations was more than $1.45 a litre and there were reports some stations were charging as much as $1.50 a litre.

And Bangladesh has been forced to raise prices again - one of the biggest fuel increases in the country's history:

The Bangladeshi government has increased petrol prices by a third, and diesel and kerosene by 10%.

The increases are designed to offset the surge in oil prices on world markets, and were announced by the Energy Minister, Mahmudur Rahman,

As some have commented earlier, watch the poorer countries and how they suffer, due to losing the bidding wars, as to what will happen in 1st world countries down the road.
Just noticed that gasoline prices in some areas of North Dallas are back over $3.  I wonder if this is due to continuing problems with ethanol supplies?
I don't know but here in the STL we're usually in the bottom 5 of expensive gas, but it shot up from $2.69 to $2.89 a gallon a couple days ago.  I'm waiting to hear if the national avg hit over $3 if the same ratings still hold true.
2.90/ gallon according to this site:


2.89/ gallon on this one:


These 2 sites update their numbers frequently and usually reflect a change before AAA or other organizations release their weekly average.

Oh cool--an Australian solution:  let's have a SALE!! HUGE MARKDOWNS ON GAS FOR THE WEEKEND!!!  Guess it beats praying for lower gas prices like here in the US...

Two oil tankers collide off British coast

LONDON (Reuters) - Two oil tankers collided on Friday in the English channel, one of the world's most heavily used shipping lanes, but there were no injuries and no sign of any oil spill, the coast guard said.

The vessels collided off the southern English port of Dover. There was no immediate indication of what caused the collision on a clear day in calm seas.

...The coast guard said the tankers involved were the Willy and the Shakhdag. Willy is Gibraltar-flagged and Shakhdag is Malta-flagged, according to Lloyd's Casualty Reporting.

There is an artical in my local newspaper (Ottawa Citizen) today on the new "Rabbit" that VW is replacing the Golf with in North America. No diesel engine, and less fuel efficient than the old gas model.  What the hell are they thinking?  They've thrown away the only advantage they had over Toyota and Honda.  Ah well. At least I still have my old oil burner.
Canada harmonized its emissions standards with those of the US several years ago. The US emissions standards are too complex to describe briefly. Suffice it to say that the 2006 Golf, etc. diesel engine is emissions-certified under a temporary "certification bin" (Bin 9, for anyone who cares) that is being phased out with the 2007 model year.

The emissions standards for diesels in both the USA and Canada are tighter for the 2007 model year than in 2006. The big problem will be NOx, with particulates (soot) a lesser issue. In VW's case, the company has to develop an ultra-high pressure injection system to improve combustion efficiency to the point where a new engine might meet the standards.

VW is planning to stock up with 2006 model year Golf, etc. diesels until the end of this year. After they're gone, sometime next year, there will be no more until at least 2008, except for the Touareg SUV. The Touareg diesel faces a different standard until 2009, I think, because it weighs over 6,000 lbs (shudder).

VW sells only about 25,000 diesel cars a year in the US. There's no doubt that VW, as a company, must have seen this problem coming. The reason we will have this hiatus is related to the low sales volume: it's not cost effective to develop a new engine for North America alone. The EU is planning to tighten its NOx standard for diesels in the not too distant future (years, though) and any redevelopment VW undertakes will probably be done with that market in mind.

VW is not alone in having this problem. Jeep will discontinue the small diesel in the Liberty, though they have announced a new, larger one based on Daimler-Chrysler technology.

Food for thought, or food to burn?

On German TV there were a couple of reports recently about farmers who burn wheat for heating. Grown your own, CO2 neutral, renewable, etc.

What started as a protest due to low wheat prices is turning into a trend as other farmers take notice. They claim to save substantial amounts of money in comparison to the use of heating oil.

But one man's solution to high energy prices is another's moral outrage. Burning food when so many people are going hungry.

A fascinating debate.

Guns or butter?
Buck Futter! (sean connery character on SNL)
-- sorry I couldn't resist.
Glad you brought this up. I've always had this question. How many different people have played the Sean Connery-on-Jeopardy character on SNL?
In other news, long term drought in Australia could cut wheat production.  The world has gone insane as India says they want to replace 50% of their oil will biofuel.  The world population is increasing by millions of souls a day and we are talking about converting food to oil, in a country of malnourished children yet.  The world will not end with a bang, but a whimper.
Last time i checked it was 200,000 souls each day, which is a million every five days. If I've told you once i've told you a thousand times, don't exaggerate...

Scary numbers indeed.

A side note to this is the number of other great apes in the world, Bonobos, Chimps, Gorillas and Orangutans, combined, total approximately 200,000 animals. In other words the human population increases daily by the amount of all other great apes in the world combined.

Yes, I find that extremely scary, and sad.

OH Hell!  That really is depressing! Sorry, I guess I just don't like humans all that much.
Also, not only are we adding unbelievable numbers to the globe's population every year--but by WHO statistics (I wrote this on another recent  drumbeat) there are two humans starving to death every second... Just take the global annual starvation statistic and divide by the number of seconds in a year.

You'll get two humans every second.

We can't be controlled...

We can't be controlled...

I know a mysterious lady who would like to offer a bet in regard to this matter

Pulled this straight from urbansurvial.com

OK, this is one of the most interesting emails in quite a while - check this one out:


Thought you'd like the comparison of net search trends for US vs Russia on Google:

America: Gaining Search Queries: Week Ending June 5, 2006

1. the omen 2. french open 3. father's day 4. katie couric 5. jaleel white 6. anna nicole smith 7. michelle wie 8. sarah silverman 9. criss angel 10. pirate bay 11. AFI 12. ncaa baseball 13. miami heat 14. maria sharapova 15. spelling bee

(Yeah, usual entertainment BS)

Russia - Popular Queries: April 2006 (last available) 1. Íîóòáóêè â êðåäèò (Credit line for laptops) 2. Ïàñõà (Easter) 3. Íå ðîäèñü êðàñèâîé (Name of the TV show) 4. Øâåéöàðñêèå ÷àñû (Swiss watches) 5. Êàê îòêðûòü ñ÷åò â å -gold (How to open e-gold account) 6. Ñèñòåìà î÷èñòêè âîäû (Water filtration system) 7. òäûõ â ïîäìîñêîâüå (Vacation near Moscow) 8. Âåòðÿíàÿ îñïà (Smallpox) 9. Ìîþùèé ïûëåñîñ (Carpet cleaner) 10. Ñâàäüáà (Wedding) 11. ×åðíîáûëü (Chernobyl) 12. Êàðòà ìèðà (Map of the world) 13. 1 ìàÿ (May 1) 14. Òóðû â Èòàëèþ (Tours to Italy) 15. Áàíÿ (Sauna)

Hmmm, online banking, e-gold, swiss watches, smallpox, and water filtration? What do the Russians know that most Americans don't?!


I keep hearing that song from school(the one from english class...."consumption junction what's your function..."  Anyone remember this?  Maybe it was taught to indoctrinate us to consume as much as possible.  It appears to have worked better on some than others.

And people think doomers are crazy?
I wonder if there is a parady or something I've seen along the way.
Yes. What in the comments above gives evidence to the contrary?
I remember the School House Rock and it's Conjuction Junction... :-)


I remember it.  It's Conjunction junction, not consumption.  About grammar, not about spending:


No-one looking for porn in either place, I see.
Heck, you do not have to look hard for porn on the internet these days.
Yeh I got it from the web!  Wow, I'm glad it's a Friday!  A friend of mine sent me something from there and I must say it makes you wonder.
Look at Google Trends for the term "Peak Oil"

Top regions (normalized)    

  1. New Zealand  
  2. United States  
  3. Australia  
  4. Canada  
  5. Sweden    
  6. Finland    
  7. United Kingdom  
  8. Switzerland  
  9. Netherlands  
  10. Germany  
I'm sure they're looking up maria sharapova because they like tennis...
I agree with the Russians that water filtration is a good thing to be thinking about. We take water for granted in the developed world, but our supply of clean drinking water could be more vulnerable than we would like to think (eg Camelford, UK, or Walkerton, Ontario). A water filtration unit is pretty cheap insurance (about $250, plus $100 for a replacement set of filters that should last a couple of years).

Here's a water filter link: http://www.countrylivinggrainmills.com/pricing.html
Scroll down until you see The Big Berkey and replacement filters.

You can also google British Berkefeld water filters for other places that sell a variety of models in different sizes.

Stoneleigh, do you have one of these, or know anyone who does?

I'd stumbled across this (very old) technology some time back, and wondered if it worked, compared to, say, a First Need or Katadyne filtration unit.

Any information would be greatly appreciated.

Yes, I do have one (ordered from the site I linked to), but it only arrived recently and I haven't set it up yet. Apparently aid agencies swear by them. There are two different kinds of filters - white and black. The white ones last twice as long, but don't filter out as many things. Both are available for the same price on the site linked to.

According to the box they come in, the black ones will filter out pathogenic bacteria, cysts, parasites, trihalomethanes, radiologicals, inorganic minerals, volatile organic compounds and heavy metals (95% reduction), while reducing or removing nitrates, nitrites, rust, silt and sediment.

I've had rust and sulphur problems with my well lately, which is what made me think this might be a good idea. At the moment I can treat the well and take in water samples for analysis regularly, but I might not always be able to do that. Also, the pump on my well requires electricity (which I supply with PV and a battery backup) and won't last forever. If for any reason I can't replace it when it eventually fails, then I could rely on water from the old hand-pumped dug well on my property for drinking and cooking by using a water filtration system.

I like the fact that it's low tech and has no moving parts. It's also relatively small and portable (there are larger sizes available on other sites that sell British Berkefeld). The availability of a clean water supply is absolutely fundamental, and this is a relatively cheap and effective means of achieving it.

Thank you, Stoneleigh.  Locating an affordable source of "alternative" (beyond the badly stretched city water line system) water is one of my big stumbling blocks here.
We really cannot put in a PV-powered well, as the water table is 200+ feet below us, and that is also too far to pull it up by handpump, so my tenative plans involve catching and treating rainwater from the (metal) roof.
Wasn't it "conjunction junction"?  I recall it being about grammar.
Conjunction Junction, what's your function?
Hooking up words and phrases and clauses.
Conjunction Junction, how's that function?
I got three favorite cars
That get most of my job done.
Conjunction Junction, what's their function?
I got "and", "but", and "or",
They'll get you pretty far.

That's an additive, like "this and that".
That's sort of the opposite,
"Not this but that".
And then there's "or":
O-R, when you have a choice like
"This or that".
"And", "but", and "or",
Get you pretty far.

Conjunction Junction, what's your function?
Hooking up two boxcars and making 'em run right.
Milk and honey, bread and butter, peas and rice.
Hey that's nice!
Dirty but happy, digging and scratching,
Losing your shoe and a button or two.
He's poor but honest, sad but true,

Conjunction Junction, what's your function?
Hooking up two cars to one
When you say something like this choice:
"Either now or later"
Or no choice:
"Neither now nor ever"
Hey that's clever!
Eat this or that, grow thin or fat,
Never mind, I wouldn't do that,
I'm fat enough now!

Conjunction Junction, what's your function?
Hooking up phrases and clauses that balance, like:
Out of the frying pan and into the fire.
He cut loose the sandbags,
But the balloon wouldn't go any higher.
Let's go up to the mountains,
Or down to the sea.
You should always say "thank you",
Or at least say "please".

Conjunction Junction, what's your function?
Hooking up words and phrases and clauses
In complex sentences like:

Conjunction Junction, what's your function?
Hooking up cars and making 'em function.
Conjunction Junction, how's that function?
I like tying up words and phrases and clauses.
Conjunction Junction, watch that function.
I'm going to get you there if you're very careful.
Conjunction Junction, what's your function?
I'm going to get you there if you're very careful.
Conjunction Junction, what's your function?
I'm going to get you there if you're very careful.


"conjunction junction"  :  I think from Electric Company, teaching grammar
Citigroup ups oil forecasts from 2006 to 2009

LONDON (MarketWatch) -- Citigroup upgraded its oil price forecasts from 2006 to 2009, even as it says it's cautious on the direction of crude. It raised its forecast for WTI crude to $66 from $60 in 2006, to $60 from $53.50 in 2007, to $55 from $48 in 2008 and to $50 from $45 in 2009. "While we continue to monitor the factors we believe are responsible for oil prices at current levels, a limited frame of reference on the long-term impact of $70 oil leads us to retain a conservative view on the duration of current price levels and to expectations we acknowledge remain materially below the futures strip. In our view, one of two things can break this cycle: a meaningful increase in spare capacity and/or a material decline in demand," the broker said
DOE is higher "The West Texas Intermediate (WTI) crude oil spot price is projected to average $68 per barrel in both 2006 and 2007."

This from the latest Short-Term Energy Outlook, http://www.eia.doe.gov/emeu/steo/pub/contents.html

interesting prediction given this trend line:


Party time after "Zarqawi" killed again.
Also, Bloomberg claims Iraq production ticked down again in May.

Speaking of trade, how about Gold for Food...

As gold rush ends, meltdown begins

Four rings and a bracelet were sold in previous visits, melted down to feed the couple and their two children, aged 18 and four months.

"I have no choice but to sell this ring," said Mr Derdisawi. "We've no money left at home. I'm just a labourer, but there's no more work for me. All my friends have had to do the same thing."

I finished that article feeling personally pissed, and saddened for the families in Gaza. They're cut off and being slowly sqeezed to death.
I agree.  I really couldn't provide a comment to the article.  What can you say in a situation such as this?

I was speechless.


Oil Prices Up...

Also, a Nigerian government official said more than 800,000 barrels a day of the country's oil production was shut _ about 60 percent more than previously reported _ because of violence in the Niger Delta, Dow Jones Newswires reported. "This is a huge loss to Nigeria and we don't know what to do about it," said Tony Chukwueke, director of Nigeria's Department of Petroleum Resources.

Anyone else hear about this? 60% more than previously reported... maybe I've been asleep at the wheel...


Article just posted a few minutes ago...

Nigeria Niger Delta shut in over 800,000 barrels per day

LAGOS (MarketWatch) -- A Nigerian government official said Friday that a shut-in at the country's oil rich Niger Delta is in fact 800,000 barrels a day and higher than previously reported.
Speaking at an industry event in Lagos, Tony Chukwueke, director of Nigeria's Department of Petroleum Resources, said "as I speak to you now, Nigeria has shut in over 800,000 b/d. This is a huge loss to Nigeria and we don't know what to do about it."


And the USA expects 25% of its oil imports to come from
Nigeria in 10 years? Somewhat unwise methinks.

(It does explain the presence of US warships stationed off Nigeria ... uninvited)

I guess it's time for Saudi Arabia to ramp their production back up.

Sorry to be redundantly tautologous, but IMO we are going to have to keep bidding up the price of light sweet oil in order to keep the oil coming our way.  

As Leanan has noted, there are lots and lots of case histories of poorer countries reducing their petroleum use so that we can keep our import levels up.   However, at some point US consumers are going to be forced to curtail their petroleum use.   The poorer importers are providing a glimpse of our future.

Very true.  And each such news item concerning diminished supplies plays further into your export model arguement.

there are lots and lots of case histories of poorer countries reducing their petroleum use so that we can keep our import levels up.

Another dynamic that's beginning to happen
is that various governments can no longer
afford to directly susidize low domestic prices

Demand destruction will occur in 3rd world
countries as fuels prices are allowed to
rise closer to actual market prices

Expect to see increasing reports of local unrest
as prices are allowed to float ..

Imagine Venezuela with $3.00/gallon gas

In the short run, it might actually increase
the amount of crude available for export if
countries were forced to adopt true market
pricing in their domestic markets ..

Triff ..

Right. People keep posting these "Bangalesh oil prices rise" and "fuel protests in Thailand" articles. But a simple scan shows that the governments are taking the wise steps of reducing subsidies so that those countries can better adjust to an era of higher prices.

I maintain that policies that subsidize oil use increase consumption and reduce the ability to develop alternatives. This is true in the developed and developing world equally.

The removal of subsidies in most countries seems to have gone over very smoothly in most of the countries mentioned and is probably an important part of why they are reducing their oil use and the negative impact that high oil prices have on all of their citizens - rich and poor.

Hopefully governments will compensate the poor in a fuel nuetral way. Most poor people would rather have a dollar than a dollar worth of fuel. That is a far better way to support them and the cost to the government (in non-producing countries) is the same.

Most poor people would rather have a dollar than a dollar worth of fuel.

Agreed. But maybe it's easier to subsidize food/energy than it is to distribute dollars? I am drawn to the idea of a Basic Income (preferably global, but that would be harder to pull off) to replace welfare in the West and to replace subsidies in non-welfare nations.

Imagine Venezuela with $3.00/gallon gas

Wouldn't gas in the US be about $1.50 a gallon if it wasn't subject to state/federal taxes? Hmm, just checked NYMEX unleaded gas, it's $2.15 a gallon. I guess this is the price without taxes and retail markup?

The wholesale price for unleaded on NYMEX
would be the better benchmark price ..

Either way it doesn't negate the point I was
trying to make about countries that subsidize
domestic fuel prices at substantial discounts
to market .. ie Venezuela for example ..

Triff ..

Subsidized Gasoline in Iraq

Here is a long article from Last Sunday's NYT on the massive problems subsidized gasoline has been causing in Iraq. In my opinion is is probably one of the larger factors financing the insurgency as well as providing the insurgency with something to do when they are not busy blowing up civilians.

There is some really good stuff here. It is free now, but I think these articles usually disappear behind a paywall after about a week.

No, it's not just you:-)
Since Shell admits to 500mb+ shut in just of their own, and Chevron, Total, Exxon and ENI also have big Delta operations, the new figure seems plausible.
I wonder if EIA and IEA will go back and revise their figures downwards?
News comes to us, via ASPO, that Venezuela is buying oil from Russia. No mind you, they are not buying it in order to meet domestic demand, they are buying about 100,000 barrels a day from Russia in order to meet contractual obligations. In other words, they had contracted to deliver about 100,000 barrels per day more than they could deliver. That means their fields are being depleted a bit faster than they had expected.

All that heavy oil, or more accurately "tar", does not appear to be helping them very much. I don't think any of it is being turned into regular crude and sold to refineries. Some of it is being mixed with water and sold for boiler fuel however. I wonder how long it would take them to gear up to convert any of it to regular crude and how many barrels per day could they produce by say.... 2020.

Venezuela peaked in 1970 at just over 3,700,000 barrels per day and are currently producing about 2,540.000 barrels per day, crude and condensate only.

the ASPO article can be found at: http://www.peakoil.ie/newsletters/773

This was actually discussed big style a while back.
Saudi Arabia admits their existing super giant fields are declining by about 8% per year. But, they say, by drilling more wells in existing fields, in order to suck the oil out faster, they hope to decrease the decline rate to 2% per year.


Matt Simmons said that when Saudi peaks, the world peaks. Wake up and smell the coffee, Saudi Arabia is post peak and we will enter the down-slope of peak oil production this year.

Yup, when you start to get down to the bottom of your milkshake, if you just suck harder everything will be ok......
I've got my seatbelt on....
"Saudi Aramco's mature crude oil fields are expected to decline at a gross average rate of 8%/year without additional maintenance and drilling, a Saudi Aramco spokesman said Tuesday."

--Is this sourced? Searched google news and could find no such thing, and the article does not cite the source or the person quoted. Let me know if you have another source aside from ASPO on this, I'm interested in getting this verified because if it is true then I have no idea why we haven't experienced a black tuesday in the markets...

The Saudi's have been saying this repeatedly. Keep looking and you will find it (I'm not going to look for you). However, it is only part of the story. They always add that with infill drilling of current projects, decline will be constrained to 2% per year, and with the addition of new projects, they should have net production in the vacinity of 12mbpd by 2010. It isn't as  alarming from that perspective.
Platts pulled the original but here it is anyway:

Saudi Aramco boosts drilling efforts to offset declining fields

Dubai (Platts)--11Apr2006

Saudi Aramco's mature crude oil fields are expected to decline at a gross
average rate of 8%/year without additional maintenance and drilling, a Saudi
Aramco spokesman said Tuesday.
     But Saudi Aramco has taken a number of measures to offset a decline in
output from the country's aging oil fields, the spokesman added.
     "A variety of remedial activities are always being taken in oil fields
influencing their effective decline rates," the spokesman said. "The drilling
of additional development wells in the producing fields is Saudi Aramco's
standard practice to offset normal declines of older wells."
     This is particularly important when oil fields are progressively depleted
under a well thought out strategy of maximizing the sweep and displacement
efficiencies, leading to high ultimate oil recovery, the spokesman said.
     "This maintain potential drilling in mature fields combined with a
multitude of remedial actions and the development of new fields, with long
plateau lives, lowers the composite decline rate of producing fields to around
2%," the spokesman said.
     Underscoring these efforts, Saudi Aramco signed two contracts with J. Ray
McDermott Middle East and McDermott Arabia Company Ltd, subsidiaries of J. Ray
McDermott, to detail design, procure, fabricate, transport and install
offshore facilities for the Maintain Potential and Khursaniyah Upstream
Pipeline programs, Saudi Aramco said April 6.
     The first contract includes two drilling support structures in Zuluf
field to be installed in December 2006 and one new wellhead production
platform in the Central Safaniya oil field to support onstream start-up in May
2007, Saudi Aramco said.
     Three additional wellhead platforms will be installed in the Central
Safaniya and Zuluf fields by December 2007. New associated flowlines will
connect these platforms to existing offshore tie-in (manifold) platforms.
     To support increasing production in the Central Safaniya field, a new
tie-in platform (Safaniya TP-18) will also be engineered, procured, fabricated
and installed by December 2007, along with a 24-inch trunkline between it and
a subsea connection on the new 42-inch trunkline flowing to the onshore
Safaniya GOSP-1, installed under a separate contract.
     The second contract is associated with the subsea portion, some 22 km (14
miles) long, of the 30-inch gas pipeline from Abu Ali Island to an onshore
site at Khursaniyah to be installed by May 2007.
     This subsea portion is part of the new 66 km BKTG-1 pipeline that will
transport 220 million cubic feet/day of gas from Abu Ali Plant to Khursaniyah
Gas Plant.

--Glen Carey, glen_carey at platts.com

For more news, request a free trial to Platts Oilgram News at

Does anyone have the answe to this question:

Who Killed the Electric Car?

New Movie coming out later this month

The answer to is from the Simpsons TV show:

19: Stonecutters' Song - The Stonecutters

Who controls the British crown?
Who keeps the metric system down?
We do! We do!
Who leaves Atlantis off the maps?
Who keeps the martians under wraps?
We do! We do!
Who holds back the electric car?
Who makes Steve Guttenberg a star?
We do! We do!
Who robs the cave fish of their sight?
Who rigs every Oscars night?
We do! We do!

This song is the ancient drinking song for the Stonecutters. The Stonecutters are a 1500 year old secret organisation "who, since ancient times, have split the rocks of ignorance that obscure the light of knowledge and truth" (according to "Number One" - the Springfield Stonecutters' leader). The aim of the society is for the members to get drunk, play ping-pong and find the Chosen One who has the Stonecutters symbol for a birthmark. This turns out to be Homer.
2F09 - Homer the Great

I remember that episode. Good memory, Amy!
Good Answer!
Sorry if this has already been talked about.
For years the price differential here in N Atlanta are has always been 10 cents a gallon between regular and mid-grade & mid-grade to premium.
A few days ago a lot of the stations suddenly jumped to a differential of 14-16 cents a gallon between mid-grade and premium. (still 10 cents for regular to mid).
What's up with that?
Have they realized that people with vehicles that require high test are probably better off and can handle it? Or are the additives suddenly more expensive?
Probably the former rather than the latter.  The book undercover economist pointed out something about Starbucks pricing power.  They know that their fix costs per cup of coffee.  Adding small trivial things to your coffee doesn't cost Starbucks hardly anything, so the marginal costs are minimal.  How do you get people who don't care about price to pay more?  

You add marginally low cost items that are marginally high profit items.  Whipped Cream, sprinkles, & any thing else you've seen there.  It doesn't cost them hardly anything at all per cup and they know it. Even if it costs a quarter more to add something, and it cost Starbucks .02, that's a profit of 1250% on an "extra."  The people who don't care and want the "experience" will indict themselves by buying more than coffee.  Those who just need coffee will prefer a lower price.  They single these people out and they gladly pay more.  There's also little nuances like getting rid of the word small.  Small is grande!

According to this article, polical support for the farmers is waning.  I've read that the major dispute right now at the WTO is over Europe and US agriculture programs.  Europe is worried to death that we will kill them in agriculture(i would have to agree, but who knows) and they have been fighting tooth and nail to prevent free trade of agriculture and they point out our massive subsidies that make our farming so dominating.  

If both sides stop pumping money into this market, what happens when they compete?  The US and the Europeans both think they will be losers, so they've talked about this for years.  The last meeting was suppose to address this, but many now believe a deal won't be reached.


Farm subsidies were established during the Great Depression and have been a favored form of federal spending ever since. In the Senate, every lawmaker has farmers back home, albeit in dwindling numbers - 2% of the population is tied to farming today, compared with 25% in the 1930s.

The last farm bill, passed in 2002, was among the most generous. Subsidies hit a record $23 billion in 2005. And disaster payments were added in 16 of the past 17 years.

"The politics of it is pretty simple," says Douglas Holtz-Eakin, an economist at the Council on Foreign Relations and former director of the Congressional Budget Office. "There are farmers everywhere. They're the ultimate coalition."

In recent years, that coalition has cracked. Traditional commodities such as wheat and corn are subsidized, while farms that grow fruit and vegetables or raise livestock are left out. "Small farmers and ethnic minority farmers get virtually nothing," says Antonio Gonzalez, president of the William C. Velasquez Institute, which conducts research on Latino issues.

There actually has been a slow movement to gradually reduce or phase out many US farm subsidies, price supports, and quotas over the last two decades. Compared to when I started working for the USDA (1997), soybean subsidies have been cut, cotton subsidies have been cut, and peanut and tobacco federal quotas reduced, just to name a few.
Tobacco quotas were bought out two years ago (payments over ten years) and abolished as well as the Tobacco Market Stability Fund (for price supports).  Now grow as much as the market will bear and take whatever the market gives you.

I caught this story on PBS last night. It appears he has made considerable progress in the 3 years since this was written. He has a working model in his lab using NaOH as the absorbent. CO2 levels at the intake were about 540ppm, due to the presence of humans in a closed environment. Outflow levels were about 150PPM. I didn't catch what you do with the resulting product, but it seems a really interesting idea.

Synthetic trees could purify air
Last Updated: Friday, 21 February, 2003, 10:10 GMT
By Molly Bentley

The invention is confined to paper so far
A scientist has invented an artificial tree designed to do the job of plants.
But the synthetic tree proposed by Dr Klaus Lackner does not much resemble the leafy variety.

"It looks like a goal post with Venetian blinds," said the Columbia University physicist, referring to his sketch at the annual meeting of the American Association for the Advancement of Science in Denver, Colorado.

But the synthetic tree would do the job of a real tree, he said. It would draw carbon dioxide out of the air, as plants do during photosynthesis, but retain the carbon and not release oxygen.

If built to scale, according to Dr Lackner, synthetic trees could help clean up an atmosphere grown heavy with carbon dioxide, the most abundant gas produced by humans and implicated in climate warming.

He predicts that one synthetic tree could remove 90,000 tonnes of CO2 in a year - the emissions equivalent of 15,000 cars.

"You can be a thousand times better than a living tree," he said.

Carbon sinks

For now, the synthetic tree is still a paper idea. But Dr Lackner is serious about developing a working model. His efforts suggest the wide net of ideas cast by scientists as they face the challenge of mitigating climate change.

Dr Lackner believes that carbon sequestration technology must be part of the long-term solution. Global reliance on fossil fuels would not decrease any time soon, he said, and developing countries cannot be expected to wait until alternatives are available.

The technology calls for two things: seizing carbon and then storing it. Direct capture of CO2, from power plants for example, is the simplest, according to Dr Lackner. But this doesn't work for all polluters. A car can't capture and store its carbon dioxide on-board; the storage tank would be too large.

"It's simply a question of weight," he said. "For every 14 grams of gasoline you use, you are going to have 44 grams of CO2."

The alternative is to capture emissions from the wind. In this case, a synthetic tree would act like a filter. An absorbent coating, such as limewater, on its slats or "leaves" would seize carbon dioxide and retain the carbon.

Dr Lackner predicts that the biggest expense would be in recycling the absorber material.

"We have to keep the absorbent surfaces refreshed because they will very rapidly fill up with carbon dioxide," he said. If an alkaline solution such as limewater were used, the resulting coat of limestone would need to be removed.

Dr Lackner is considering other less-alkaline solutions to prevent carbonate precipitation.

"There are a number of engineering issues which need to be worked out," he said.

Home use

A synthetic tree could be planted anywhere. A small one could sit like a TV on the lawn to balance out the CO2 emitted by one person or family.

But more practically, said Dr Lackner, a device the size of a barn would sit in the open air, near repositories for easy transportation and storage of carbon.

He estimated that 250,000 synthetic trees worldwide would be needed to soak up the 22 billion tonnes of CO2 produced annually.

But not everyone is rooted to the idea. Massachusetts Institute of Technology engineer Howard Herzog thinks Dr Lackner's design will not hold together on the scale he proposes.

He said you would expend more energy in capturing the CO2 - in keeping the slats coated in absorbent and disposing of it - than you would save.

"Once the solvent captures the CO2, it holds it on tight," said Dr Herzog, "and it's going to take a lot of energy to break those bonds."

He said that much more research was needed on the technology.

"The idea of air capture is seductive and would really be great to have," said Dr Herzog, "but it's important to separate out the concept from the technical details."

'Early days'

Meanwhile, Dr Lackner is pursuing his idea for carbon storage. While he was at the US Department of Energy's Los Alamos National Laboratory, his team worked on a storage method based on a natural chemical process known as rock weathering.

When CO2 binds with magnesium, it creates carbonate rocks which, according to Dr Lackner, retain carbon permanently and safely.

Currently, he said, the process is still too expensive to develop on a large scale.

But Dr Lackner is optimistic that the costs for carbon capture and storage will come down.

"This is still the early days of climate solutions," he said.

Interesting - but I would be concerned about the energy inputs to make this work too.  Wasn't the CO2 put into the air by breaking the bonds that held it where it used to be, and releasing energy in the process?  Wouldn't you have to put energy back in to bind it again?  Hey, I'm just askin', I sucked at chem and stuff!
No, you're quite correct and you don't need anything more than a decent grip of reality to figure that out - no grades.

So the guy has made an artificial kind of "tree", that needs to be manufactured, transported and probably replaced after a while too.
If he went out of his lab for a moment, he could become of aware of the existence of real trees, that capture co2, produce oxygen, clean the air, regulate moisture in the air and the soil, support fauna, produce food, produce wood, give shade, smell good and look nice. Furthermore they maintain and reproduce themselves, are not poisonous, don't require an energy supply, don't require resources and recycle all by themselves.

Sigh. Another techno-junkie looking for his fix.

six -

This 'artificial tree' concept looks like a very bad idea to me, solely from a technical standpoint.

If you use an alkaline chemical solution, such as sodium hydroxide (NaOH) to absorb the CO2,  then you are faced with having to produce an amount of that chemical directly proportional to the amount of CO2 removed.

NaOH + CO2 > NaHCO3 (sodium bicarbonate)

Unfortunately, the manufacture of NaOH from brine (via the chlor-alkali process) uses quite a bit of electricity and is relatively energy-intensive. So, the production of that additional electricity will result in a proportionate increase in CO2.  Then, to remove that extra CO2 you will need more NaOH, and the thing becomes a sort of vicious circle.

Using lime is even worse, and in fact totally absurd, because to get lime (CaO) you need to calcine limestone, the very process of which releases an amount of CO2 that is exactly as much CO2 as you can absorb from the lime you just made, as below:

calcination:   CaCO3 + heat > CaO + CO2.

CO2 absorption; CO2 + CaO > CaCO3

This is chemically the equivalent of digging a hole and filling it back up again.

Of course this doesn't include the amount of CO2 produced from burning the fuel to operate the lime calcination kiln. So, it would be even worse.  

I suspect that some of these academics are just trying get on the CO2 sequestration bandwagon to get their noses into the government funding trough and keep some graduate students busy.

I think that making trees obsolete would be the biggest catastrophe to ever befall mankind.  We could then cut down every single tree on Earth and replace them with a artificial nightmare landscape.
Possibly the worst idea I've seen this year (and that's saying  a lot). Artificial trees?!? You can't make this stuff up!
When we discussed sequestration a while back, one of the frequent visitors to TOD mentioned the actual chemistry used in scrubbing stack gases. I don't recall the exact details, but it involves a 'sponge' liquid which absorbs CO2 from stack gases, and then, using waste heat from the same plant, releases the CO2 into some sort of plumbing designed to capture it (a 'stripper'). The technology is known.

They don't use NaOH or CaO for scrubbing because, although they work very well in a laboratory, the reagents are consumed in the process and cannot be obtained in sufficient quantity to do any good on a global scale. A coal-fired electric generating plant can consume a trainload of coal in a day, and by simple stoichiometry, would produce about 4 trainloads of CO2 (if converted to dry ice). The scrubbing activity described above might "cost" about 40% of the plant's power output. You can see that it would take several more trainloads of NaOH to absorb it all. Then there's disposal...

As for sequestration after-the-fact, I'd like to see them explore this technology a little more. But the real bottom line is, we're going to have to consume less.

Nitrogen was injected into Cantarell after it's first, "natural" peak and helped create a second peak.

Other oil fields have seen much better recovery with CO2 injection (scrubbing effect of super critical liquid as I vaguely understand it).

The Chinese had good results with injecting power plant exhaust (N2 + CO2 + a bit of argon) into oil fields.

I suspect that injecting total exhaust volume is often the better solution EXCEPT

for under development GE combined cycle coal fired plants.  This (AFAIK) requires burning coal in oxygen. About 20% less coal burned.

Removing nitrogen before combustion rather than after may be the way to go.

But you still have to obtain (16/12)= 1.33 tons of O2 for every ton of coal you burn. Might be more efficient overall than the stack-scrubbing route, but that's gonna take one heckuva big liquid air plant. :)

And there's the disposal problem again ... liquid carbonic certainly makes a good solvent for depleted oil fields, tar sand, etc. but my gut feeling is that there will only be a market for a smallish fraction of the total CO2 produced. Even if we use depleted reservoirs for sequestration, it's not gonna be easy. Return oil tankers to the Middle East full of CO2? Or LNG carriers, maybe? You'd probably still have trainloads of leftover carbonic.

Another suggestion I've heard is to pump it to the ocean floor, where it will take hundreds of years to make its way back to the atmosphere. Probably not the best idea, but hey.

Scuse me, I just can't let that go. My chemistry may be rusty but it isn't gone yet. That's (2*16/12) = 2.67 tons of O2 for every ton of coal. We're making CO2 here, not CO.
Makes me think of the Emperor's golden tree with singing birds of precious stones in Constantinople ...

Plugging into the future

Jun 8th 2006
From The Economist print edition

Electric cars: A grassroots movement is building hybrid petrol-electric cars that can be recharged from the mains. Why?


WITH a licence plate that reads "I00 MPG", Greg Hanssen is used to his car attracting attention. Even so, he seemed especially pleased by the crowd that gathered around his modified Toyota Prius at a hotel parking lot in San Diego, during a recent conference held there by the Society of Automotive Engineers. They poked at various parts of the car with vigour, and positively gushed when he opened the back to reveal what any punter would have described as an ordinary-looking electrical plug.

Such enthusiasm is surprising, since automotive engineers are a hard bunch to impress. The technologies involved in cars have been refined countless times since the first internal-combustion engine appeared over a century ago. It would take a pretty big breakthrough to take their breath away today. And yet that is what happened in San Diego, at a conference devoted to hybrid cars.

Hybrid technology, pioneered by Toyota with its Prius, combines the usual petrol engine with an electric motor and battery that never need to be plugged in. The resulting gain in fuel economy is impressive: the Prius achieves over 40 miles per gallon, perhaps 20% more than it would without hybridisation. But the gathered petrol-heads, almost all of them men, yawned through presentations on various aspects of hybrids until the final topic: "plug-ins". As experts described efforts to connect hybrids to the electrical grid, those in the audience scribbled furiously and asked eager questions. And when Mr Hanssen, a plug-in pioneer, was pointed out in the audience, the room gave him an ovation. Why all the hoopla, when his big idea--plugging the car into the mains for recharging--seems to some people to be a big step backward?

Electric sceptics
For one thing, say the sceptics, plugging in will be expensive and will stress the already overloaded power grid. Actually, that is unlikely. Because drivers will mostly plug in their cars overnight, they will benefit from cheaper off-peak power rates. In America, using cheap electricity to power cars can reduce the cost per mile by 75% compared with petrol (or even more, given current high petrol prices). The savings are even greater in Europe, which has high petrol taxes. True, if many drivers plugged in during the day it would raise peak demand, but software in the cars could prevent daytime charging.

Sceptics also argue that electric cars are misleadingly clean: they are "pollute somewhere else" machines, they scoff. While running on battery power they produce no tailpipe emissions but, critics note, the coal-intensive grid electricity they use surely produces more greenhouse gases than a petrol engine does. Again, that turns out to be wrong: studies by California's Air Resources Board confirm that generating the electricity to power cars in pure-electric mode produces only about half of the greenhouse gases of typical petrol vehicles. This assumes the power grid is half coal-fired, as America's is today. As the grid "decarbonises" over time, such emissions will fall.

Fine, but surely few people want a car you have to keep plugging in--what happens when the battery runs out? According to Bill Reinert of Toyota, one of the great advantages of the Prius electrical system--in which the battery is charged by the petrol engine and using energy recaptured during braking--is the fact that you never need to plug it in and that it never runs out of juice. That is far more convenient for drivers, insists Toyota, which has opposed the idea of plug-ins.

But Mr Hanssen notes that even if the battery pack in his modified Prius goes flat, it simply switches over to the petrol engine, just as a normal Prius does. The difference is that his car can go much further on battery power alone. That is because he has replaced the original nickel-metal hydride (NiMH) battery with a higher-capacity lithium-ion battery, and has hacked the control software to prevent the petrol engine kicking in until the car is moving at high speed. As a result, his modified Prius can travel over 30 miles in all-electric mode, compared with a mile or so for a standard Prius.

Toyota did not provide the software source code, but Mr Hanssen and his colleagues at EnergyCS, a firm outside Los Angeles, managed to trick the Prius's computer into thinking that his giant battery is really a factory-installed battery that mysteriously happens to be full of charge much of the time. Even when the petrol engine kicks in (as the master computer requires on all Prius cars at higher speeds), electric power is still blended in to improve fuel economy and provides up to 75% of the total power at 55mph.

Riding with Mr Hanssen from San Diego to Los Angeles in his hacked Prius, your correspondent saw the other reason he is a hero to the engineers. The detailed diagnostics screen on his dashboard verified that his licence plate does not lie: his car really does achieve 100mpg. Given that the average fuel economy of new American vehicles is less than 30mpg, that is quite an achievement.

EnergyCS has handled the conversion of around half a dozen Prius cars already. With the help of Clean Tech, a systems integration firm, it plans to offer plug-in retrofits to the general public this year for around $12,000. The company hopes to plug in Europeans through Amberjac, its European partner. It may find a receptive audience: Priuses in Europe already have a button allowing drivers to go into all-electric mode for brief periods. (The button is not wired up in American Priuses, though it can be activated.)

Blame it on the hydrogen
EnergyCS is at the forefront of a clean-car revolution, but it is not alone. A motley crew of hackers, entrepreneurs and idealists has sprung up to boost the nascent technology of plug-in hybrids. Most of these enthusiasts are in, or from, California--not surprising, given the state's greenery and its love of electric cars. Curiously, another common thread is a passionate hatred for hydrogen fuel cells.

As a forthcoming documentary film "Who Killed the Electric Car?" (released later this month) makes clear, this crowd does not blame the failure in the 1990s of battery cars--such as GM's EV1, the most aerodynamic production car ever made--on the limitations of battery technology or a lack of customer interest. Chelsea Sexton, a former marketer of EV1 cars and a star of the film, typifies the view of the plug-in crowd when she blames gullible regulators and cynical carmakers for abandoning electric cars for the distant dream of hydrogen. Inspired by the hacking of Priuses, various lobbying groups have sprung up hoping to entice manufacturers to produce plug-ins and to push politicians to support them. Ms Sexton, for example, now helps run Plug In America, a group that includes Jim Woolsey, a former head of the CIA.

Felix Kramer runs the California Cars Initiative (CalCars), a non-profit advocacy group that promotes plug-ins. With help from EnergyCS, his outfit created the first plug-in Prius--though it used cheap lead-acid batteries, which are much heavier and shorter-lived than lithium-ion ones. During Earth Day celebrations in April, Ron Gremban, CalCars' technology guru, led a group that converted a Prius into a plug-in in three days, while the public watched. In co-ordination with the Electric Auto Association, CalCars now plans to release a free "open source" version of its conversion instructions.

Plug-In Partners, which counts many electric utilities and green groups as members, is drumming up "pre-orders" for fleets of plug-in vehicles to prove that demand for them really exists. That is important not only because carmakers are notoriously risk-averse (given the huge sunk costs of existing capital stock). Battery enthusiasts whisper darkly that the car companies never wanted battery cars to succeed, and so lied about a lack of consumer demand. Ms Sexton and other former insiders point to long waiting lists they say were ignored by the big car companies, who chose instead to shut down their electric programmes and to crush most of those electric cars.

All this talk of the obstinacy and ruthlessness of Detroit comes as no surprise to Andrew Frank, an engineering professor at the University of California at Davis. The oil shocks of the 1970s inspired him, he says, to pursue technologies to make a big car capable of 100mpg. For three decades, he has been advocating hybrid technology--and seemingly getting nowhere with the big car manufacturers.

And yet Dr Frank has persevered. Visitors to his lab today find a plug-in Ford Explorer sports-utility vehicle (SUV) equipped with a giant 16 kilowatt-hour (kWh) battery designed for long range--a conventional Prius battery has a capacity of 1.3kWh. He has replaced the original 3.5-litre internal-combustion engine with a frugal 1.9-litre version, thus boosting fuel economy, but the added kick from the electric motor means this SUV can still accelerate to 60mph faster than an ordinary Explorer. He has made similar modifications to a Mercury saloon, so it can travel 40 miles in all-electric mode and achieve an astounding 200mpg.

Dr Frank draws inspiration from "The Great Race", a film from 1965 in which the offbeat Professor Fate takes on a conventional challenger in an automobile race. Team Fate, as Dr Frank's researchers are called, has won a number of contests with its hybrid vehicles--as the black victory banners depicting skulls and crossbones (Professor Fate's insignia) on the lab's walls attest. "In the movie the professor is really wacky," jokes one of his students, "and that's right on the money."

Dr Frank seems comfortable with his image as the absent-minded professor. "I've been Professor Fate a long time," he says with a smile. Even when he got somewhere with the big car firms, he thinks he got cheated. He showed off his technology years ago to visitors from Toyota. At the time they expressed no interest, he says, but he was struck by the similarity of the Prius technology later unveiled.

Hymotion, a Canadian firm, has also converted a Prius into a plug-in. Rather than retrofitting cars on-site, this firm has developed a modular kit that is intended to be installed (in just two hours, supposedly) by authorised garages around North America. Ricardo Bazzarrella, Hymotion's president, hopes his kit will fall in price from $12,000 today to $6,500 by 2008. He plans to develop similar kits for the hybrid versions of the popular Ford Escape SUV and the bestselling Toyota Camry saloon. "Every new hybrid that comes out, we're looking to make into a plug-in," he says.

Entrepreneurs and academics are not the only ones plugging in. The Electric Power Research Institute (EPRI), the research arm of America's power utilities, has joined up with DaimlerChrysler for a trial in which over two dozen of its Sprinter vans will be converted into plug-ins. It expects them to be used primarily as fleet vehicles, such as delivery trucks, that return to a depot for recharging every night.

The plug-in crowd may be paranoid and conspiratorial, but it is nevertheless effective. Thanks to its efforts, the number of vehicles converted to plug-in status seems likely to soar from a handful today to hundreds within a year. And if, as plug-in advocates hope, some of the big carmakers develop official, commercial versions of these plug-in vehicles, then this niche technology could hit the big time over the next few years.

Enough juice?
Grand ambitions are fine, but there is still one snag that could yet keep plug-ins from hitting the big time: batteries. Energy storage has long been the Achilles heel of electric cars. Have batteries really become cheap, reliable and compact enough? The answer is a definite maybe. Earlier versions of electric cars (such as the ill-fated EV1) used lead-acid batteries. This old technology is cheap and safe, but cannot compete with newer technologies on weight, range and life. With the first-ever hacked Prius, CalCars found that its 135kg lead-acid battery provided barely 10 miles of all-electric range, performed poorly at lower temperatures and wore out within a year.

"A motley crew of hackers, entrepreneurs and idealists has sprung up to boost the nascent technology of plug-in hybrids."

Hope springs eternal, however. Firefly, a firm spun off from Caterpillar, an industrial-machinery giant, has developed a radical new approach to lead-acid batteries. The firm replaces the conventional lead plates with graphite foam, which carries a slurry of chemically active materials. The foam increases the area of contact between the electrodes and the active chemicals, and greatly reduces the problem of corrosion. The firm claims that this new approach reduces weight and matches the performance of NiMH at one-fifth of the cost. It hopes to apply this technology to hybrid-car batteries.

It sounds promising, but has yet to be proven in the field. In contrast, NiMH batteries are battle-tested and safe (unlike some lithium-battery technologies, which have an unpleasant tendency to explode). Toyota's conventional Prius has a NiMH pack that weighs 35kg or so and costs around $1,600. Putting NiMH batteries into a plug-in Prius, as CalCars has done with the help of Electro Energy, a battery-maker, means carrying a lot more weight around. Such a battery costs around $5,000 and weighs 180kg--though CalCars hopes to reduce that weight by half with its next prototype. Stan Ovshinksy, who pioneered the NiMH battery, says he has now come up with a radical improvement on that technology that would be perfect for plug-in cars--if only his firm ECD Ovonics (partly controlled by Chevron, an oil giant) would let him go ahead.

Yet the future may belong to lithium technology after all. One reason, says Menahem Anderman of Advanced Automotive Batteries, a consultancy, is that recent increases in the price of nickel and cobalt have limited the opportunity for further cost reduction of NiMH and made lithium batteries, which have traditionally been far more expensive, more competitive. Alan Mumby of Johnson Controls, a big car-parts supplier, agrees. His firm has recently entered into a joint venture with Saft, a French battery giant, to produce lithium-ion batteries for hybrid cars. Mr Mumby maintains that "the lithium-ion battery both delivers and accepts power very readily, making it ideal for hybrids with regenerative braking. Lithium-ion technology is the wave of the future." Lithium also has the crucial advantages of low size and weight. Hymotion's production-ready battery kits, due later this year, will feature lithium-ion batteries weighing just 70kg but delivering an all-electric range of 25-30 miles.

Dead end or stepping-stone?
Even if the battery woes that have long bedevilled electric cars can be solved, however, such progress may yet prove a stepping-stone to hydrogen--the bête noire of the electric-car crowd. "Long term, plug-ins with fuel cells may be the ideal vehicles," says Mr Graham of the EPRI. Dr Frank agrees, noting that the hybridisation would mean cars would need less hydrogen on board, and smaller (and thus cheaper) fuel cells. Dr Ovshinsky even stood up after the New York premiere of "Who Killed the Electric Car?" to lecture the film's director and audience that batteries and hydrogen can work smoothly together.

The Prius hackers get to work

Everyone is agreed on the need for better batteries, however. And A123 Systems, a spin-off from the Massachusetts Institute of Technology, is now promoting a new lithium battery technology which combines a novel lithium-ion phosphate chemistry with nanoscale materials that increase the surface area of the electrodes. Although it is still unproven in hybrid cars, even the sceptical Dr Anderman thinks this chemical cocktail is "considerably less volatile" than conventional lithium approaches; furthermore, it has potential for lower cost and long life. A123's batteries can already be found in some Black & Decker power tools, where they deliver two to three times the run-time and peak power as rival batteries. A123 plans to supply Hymotion with batteries for plug-ins, and says it has the manufacturing capacity to make 10,000 such batteries a year.

Given that there are only a handful of plug-in cars on the road today, that figure sounds rather ambitious. Even so, the lesson offered by Professor Fate is that thinking big can eventually pay off. "The automobile business is a gigantic battleship, and after 30 years I may have moved it an inch," reflects Dr Frank. That inch may yet grow to a mile. If the EPRI trial of plug-in Sprinter vans ends successfully, says Mr Graham, DaimlerChrysler is likely to produce a commercial version. Having long been dismissive of plug-ins, Toyota has confirmed that it is now seriously working on a plug-in Prius. Even Ford's boss, Bill Ford, has made encouraging noises about plug-in hybrids. Rising fuel prices and improving battery technology only strengthen the case for them. "This is here-and-now technology," says Dr Frank with some satisfaction.

but software in the cars could prevent daytime charging.

What if I work at night and sleep during the day?

Then you charge your car at work?
What if I sleep at work?
The realistic answer to this is time-of-day pricing.  The grid transmits to your car the current price of electricity, and the car (based on the preferences you enter) chooses whether to buy or make it's own.  Most of the time grid power will be less than the $.35 it costs to generate using a car ICE, but at peak times the car will stop charging.
The other side of time-of-day pricing is that you could set the car to preferentially charge when rates are at their lowest in early morning, and get really cheap power, and really smooth out the grid's variations.

This kind of thing makes PHEV's a natural match for wind power.

Another innovative lead-acic battery intended for hybrid electrical wehicles built as a stack of lead infiltrated ceramic bipolar plates used as partitioning walls between the cells.


My guess is that parallell inroduction of four kinds of fuels makes most sense:
Mixable with gasolene, for instance ethanol.
Mixable with diesel, for instance RME.
Mixable with natural gas, biogas.
Electricity for plug in hybrids using other fuels.

And at a later date when things shake down perhaps DME depending on the development of syntehis processes.

Bernanke quote on energy and inflation (FT 6/6 pg 1):
"The best way to prevent increases in energy and commodity prices from leading to persistently higher rates of inflation is by anchoring the public's inflation expectations" -- Bernanke
Did you see this tate423? This is a glimmer that I'm going to be right about Bernanke being a hawk. What concerns me is that Bernanke's only tool to control these increases in prices is to "anchor" the housing market.
Just how is he going to "Anchor" expectations?
I think he means 'inflation targeting'.  I guess the Fed will periodically announce the target inflation rate they would like to achieve at a future date.  Well, why did they get rid of M3?  


Bernanke wrote a book on it:


DISINFORMATION!!  The sole purpose of a central bank's existence is to INFLATE!!!  Only a free banking, no special government meddling or privileges whatsoever, could control inflation.  Under free banking system banks would be forced not to recklessly inflate the currency or face insolvency as a consequence.  Are current system is government enforced embezzlement.   If only we could find a way to get millions of Americans to go to the bank and withdraw their savings all at once...


Ummmm, what savings would those be, there, chimpboy? Wasn't aware we had any...
inflate or deflate.  either way they win.  how can you not win when you know what cards are about to be played?
This was basically Thomas Jefferson's arguement against a US Central bank, 200 years ago.

"The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered." - Thomas Jefferson.

More here:

Reducing US housing starts from 2 million a year to 1 million a year will reduce demand for oil, oil products, copper, aluminum, lumber, PVC, steel, concrete, brick (a big natural gas user), etc. and lower prices a little or a lot for the various commodities mentioned.  It will surely reduce inflationary pressure.

Construction labor costs will also likely decline.

I suppose he'll keep raising rates until he gets a series of "core CPI" numbers that are lower than the expectations he wants people to have.
I'm not endorsing, just predicting.
That's my thinking about Bernanke -- this is a clue that perhaps he understands the price shock situation surrounding energy and commodities. That perhaps he is going to take that "core CPI" approach.

There has been a lot of bits spilled talking about Bernanke's helicopters and 1920's deflation, but no one writes about his thinking on the 1970's inflation.

Bernanke has been talking to Greenspan.  Anchor the housing market, eh.  Let's be a little more vague.  I'm still in the inflation runaway camp.  Did you suggest large scale deflation rather than inflation?  I tried searching for that string of conversation but couldn't find it.  I have some more info for why inflation, rather than deflation would be probable.

Oh an anchor the housing market as in how?  Rates have to go up to protect the dollar against inflation.  He has to raise rates and crimp the housing bubble.  I can't wait to see May inflation numbers on Wed.

My camp is that you'd need to get some robust financial asset "deflation" in order to shift the Fed to reverse toward inflationary interest rates.  Right now the Fed doesn't have to choose between the dollar and the economy.

The Fed may be happy with building permits back to late 1990s levels (half a million lower) and a slower economy.  This may temporarily solve some commodity/oil/CPI issues via decreased demand.  U.S. rates are higher than Euro and Yen, so the dollar shouldn't get too soft too quickly, plus financial de-leveraging creates dollar demand.  A slower economic pace would likely put more pressure on emerging markets, and therefore their currencies, causing some additional dollar support. All of this is "soft landing" and cannot be dismissed outright.

The worries are employment (esp. housing related), unexpected energy shock, Japanese monetary tinkering again, etc.  Will we get to the point where the Fed has to choose between the dollar and the economy?  Perhaps, but not right now.  

What have you got on the inflation front?

Have you ever talked to anyone who was seriously into gambling? Or who played the lottery obsessively? They are always winners. They are constantly hitting the number for $500, $1000, $10,000. It has often been said that the lottery is a tax on people who are bad at math. They can tell you in great detail everything about those winning numbers, or scratch-tickets, or spins-of-the-wheel, and how many times they've won in the last month. But if you ask them exactly how many $1 bets they've placed in the last year, or how many times they came back broke from the casino - there isn't much information. Conveniently missing.

Winnings are exaggerated and always reported to anyone within earshot. Losses are never reported (unless something is to be gained tax-wise). What I have found to be the case with oil-production figures is the exact opposite.

If, in any given month, Country A experiences a production loss of say 400,000 barrels per day at the beginning of the month, you will see all kinds of headline articles on this development and the 400,000 figure is immediately applied to all current and near-future estimates of oil-production. Even if the shortfall only lasts a couple of weeks, the initial estimate is immediately applied to the entire month. My guess is that these initial estimates are almost always inflated for dramatic effect. In the name of full disclosure, my evidence for this is purely anecdotal and based on personal experience with the energy press. I would suggest Iraq and Nigeria as good places to start if you want to see what I'm getting at.

Also, if this theoretical shortfall is the result of some political development or military crisis, or the result of some planned, voluntary reduction - it is still "counted" as proof of "decline/depletion" within the Peak Oil Community.

If, in the same month, Countries B, C, D, and E experience production increases of 100,000 barrels-per-day each based purely on investment, exploration, and drilling - you will hear nothing about it. Maybe a small blurb in some trade publication, but not here.

This is partially a response to Westexas' questions from yesterday, and partially just me trying to form up some thoughts I've been working on recently.

To be clear(and it is sad that I feel the need to state this), I am neither a doomer nor a denier, I am quite a believer in Peak-Theory. I am also quite happily sitting on the fence as far as what all this means - for now or the future.

I've got much more to say about this and will be posting more soon, but for now I will throw out a question to see if anyone is paying attention.

Stuart posted the monthly update to the EIA global oil production numbers. These were the numbers for March. They showed a roughly 400,000 barrel-per-day decrease from February. Which country contributed the most to this decline?

Saudi. Do I win a prize?
Damn! That didn't work out the way I expected. You win a prize. You get the annual "smartest-TOD-member-of-the-day for June 9th" award.

On one condition. You have to name number two to prove you weren't just guessing.

Not sure of month-to-month declines, but Nigeria has seen some steep declines.  They just admitted to -800,000 barrels/month.
Remember, I'm just looking for month-to-month declines, March from February. Non-revised(at this point). Good guess. It could turn out later that you were right, when numbers are revised. But for now, my numbers show Nigeria at number 5.

Old Hippie is still in first place.

Norway had a bunch of maintenance in March and/or April, none in May. More in June.
Norway, Feb to Mar, registers a decline of 10,000 barrels per day according to EIA. This would put them far down the list, probably past 15th place, but I would have to spend some time checking, as my spreadsheet is not setup to rank like this, I'm just eyeballing it.

Interestingly though, Norway had some absolutely huge declines in 2005(as well as upticks to match) that would knock Nigeria and others off the map were they to have happened this year.

I am still working on postable spreadsheet numbers, hopefully ready by tomorrow's threadbot. Stay tuned and keep guessing.

Honestly don't know #2. The Saudi drop was all over yesterdays board. And yes, I checked before I guessed. Spent 3 minutes on this site & it's links & couldn't find firm #2.
I work way too much from 'general knowledge'. The answer you want I don't know how to locate.As a guess Nigeria. Or Russia. Iraq bounces up & down. Maybe you could tell us where to look & why #'s from places like Nigeria or Iraq are trustworthy.
I'm not sure if I read anything yesterday. I've been looking at this since I saw the "news" of Saudi dropping to 9.1 mbpd in April. I usually do a followup to Stuart's monthly graph, but frankly got bored and couldn't see much point in it this month. That's when I started to look more into these numbers.

I would love to post who number two is, but have gotten too many responses on this one to give it away. It's not Russia, Nigeria, or Iraq.

I am definitely not making the case that anybody's numbers are trustworthy. I'm just working with what is presented to me.

I actually thought number two was number one. When I went to verify, after you guessed Saudi, I saw that you were right. They are very close. I had done this work in the last week and (assuming Saudi should be number one) was over-influenced by the fact that number two was actually who they were. This was what caused me to mistakenly believe they were number one.

This is just one month, anyway. When I post data in next day or two, I'll do last 15 months.

Venezuela? Just a wild guess...
Sorry. Venezuela is pretty steady usually.
The obvious guesses would be Mexico (Cantarell) or Kuwait (Burgan)....
Mexico had a net increase for the month. Kuwait comes in about 7th or 8th.
Chad cut off exports for a few weeks recently in a tiff with the World Bank because the World Bank was infrocing rpovisions requiring that the oil money go towards education, roads, wells and such.  Chad has Sudan as a neighbor and wanted arms as well.  So they stopped exporting for a while.  Forgot month.

Chad only exports about 300,000 barrels/day.

The answers to who were the biggest contributors to the total global production decline of 363,000 barrels per day in March are as follows:

  1. Saudia Arabia: 150,000 barrels per day

  2. United States: 136,000 barrels per day

  3. Canada:         59,000 barrels per day

  4. Iran:           50,000 barrels per day

Iraq had an increase of 100,000 barrels per day. All other contries had increases or decreases of less than 50,000 barrels per day.
I don't see the same bias you do at all.
Have you noticed that when a large project is scheduled to come on line, the advance projection of how much and how soon it will add to production almost always turns out to be too optimistic?
But I'm not looking at projections. I'm looking at actuals. I'm looking at the present and very-near past. Reality.

I agree with your assessment of project projections. But they include a whole other dynamic.

Back to reality. I'm just using the EIA numbers. Nothing more or less. Freely available to anybody. As I have said a couple of times in the last few days, I don't know what level of faith we should place in these numbers.

An issue that I brought up a long time ago, and hope to revisit soon in detail, is an oil "buffer." I think Saudi is a good example of how strong an effect a buffer can play.

Another issue is Saudi's numbers when viewed in relation to those of other nations. People like to give the Saudis crap for how steady and even their numbers appear. Why don't those same people direct some of their concern to the numerous other countries in the world who do the same?

On a side note, I appreciate your responding. Don't take me busting your balls on a number of issues personally. I will continue to do so. I know you will do the same. We disagree on some things and there is no good reason why we shouldn't continue to fight about it :)

I've commented on Saudi production "flatness" previously, and attributed it to their 90 million barrel storage capacity, acting as a buffer to smooth out production numbers, notibly here:
This is just good business, to smooth out natural variations and provide steady output.
I agree. Where did you get the 90 million number? I would guess it would be a lot higher since our own SPR is at least 600 million barrels. But I have no idea as I've just started looking into the subject.
To be clear(and it is sad that I feel the need to state this), I am neither a doomer nor a denier, I am quite a believer in Peak-Theory. I am also quite happily sitting on the fence as far as what all this means - for now or the future.

That makes two of us.

Hopefully there are more. Somedays I believe one thing. Somedays the opposite.

Let me give you an example of irony. I read Deffeyes and was convinced. I read Simmons and was ten times as convinced. (This is two and three years ago now). I come here and have had nothing but doubts ever since.

Interestingly, I used to think CERA was full of crap, but now believe they are full of shit.

But at the same time I believe Yergin's 'The Prize' is one of the best history books ever written. Go Figure.

I read "rigzone" on a daily basis, for new production hits.