DrumBeat: July 23, 2006
Posted by threadbot on July 23, 2006 - 9:50am
"Peak Oil" and should gas prices be higher?
A roundup of peak oil in the media. Features a video interview with Dr. David Goodstein, Professor of Physics and Vice-Provost at CalTech, and author of Out of Gas: The End of the Age of Oil. Also links to TOD and mentions Prof. Goose and Robert Rapier by name.
(You may need to use Internet Explorer to see the video.)
Power problems continue in California and New York.
Senate Bill Would Open Gas and Oil Fields in Gulf
Senate Republicans have agreed on legislation that would open four times as much of the Gulf of Mexico to oil and gas drilling as the Bush administration was seeking, and a vote on the bill is expected next week.
Refineries: The Achilles' heel of US oil industry
Iranian army chief: Arab states should cut oil supply to Israel
Oil wealth causes angst for Norway
The Saudi Arabia of the north is struggling to work out what to do with the $1billion it earns each week. Should new reserves be left untapped or its citizens made even richer?
Oil spawns new wave of newly rich in Venezuela
Amazon rainforest 'could become a desert'
The vast Amazon rainforest is on the brink of being turned into desert, with catastrophic consequences for the world's climate, alarming research suggests. And the process, which would be irreversible, could begin as early as next year.Studies by the blue-chip Woods Hole Research Centre, carried out in Amazonia, have concluded that the forest cannot withstand more than two consecutive years of drought without breaking down.
Shanghai company starts small with hydrogen-powered car
Technology aims to convert solar energy on large scale
Promising approach may make sun-fed power competitive with fossil fuels for the first time, experts say
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Indianopolis gives up on Light Rail, will use only buses.
Some excerpts:
$3.5 billion in federal money for mass transit is still up for grabs over the next two years, but competition for it will be fierce.
[That is $1.75 billion/year available for a 50% Federal match; down from 80%. A trivial amount in the larger Federal Budget ! By comparison, a recent topic here, US Aid to Isreal was $2.63 billion in 2005. Many other examples exist as well.]
The process has been under way for several years, but got sent back to "Go" about a year and a half ago when the federal government stiffened its ridership projection criteria. According to IMPO assistant manager Philip Roth, the organization hopes to complete those projections by the
end of the year and choose an optimum route and mode -- or check "None of these" -- by spring. Then, it must find funding.
[Note that "stiffened federal requirements" was the key to birth control in Indianapolis]
http://www.wishtv.com/Global/story.asp?S=5158565&nav=0Ra7
http://www.wishtv.com/Global/story.asp?S=5130717&nav=0Ra7
http://www.indystar.com/apps/pbcs.dll/article?AID=/20060713/OPINION/607130394/10\
He thinks that we are wasting a lot of fuel because of the number of vehicles stuck in traffic. His solution--drumroll please--more roads. If we vastly expand the number of roads, cars will travel faster, thus saving fuel.
He knows Peak Oil is decades away, because ExxonMobil tells him so.
This is the predominate message that Americans are getting--buy and finance the large home and mortgage and continue with the long commute.
The New York Times has a story this morning about mortgage debtors refinancing their adjustable rate debts, often taking money out to live on, so that they can get a new lower payment. Basically, they are just postponing the day of reckoning. One mortage banker said that it had been 15 years since a prospective debtor asked how fast they could pay off their mortgage debt.
If this is true, then paying on a mortgage is really the same as rent -- you can be evicted at any time -- then it would make sense to treat a mortgage that way and postpone the day of reckoning -- either mortgage payoff or eviction, depending on the twists of fate, not excellent financial planning.
Dealing with the present economic situation (from the individual's point of view) would seem to be like cancer chemotherapy -- the best you can hope for is to prolong life a little and to hope for quality remaining time. In any case, what would it mean to "pay off your mortgage" if the government causes hyperinflation and then raises property taxes to unsustainable levels? You lose your property anyway.
Most people don't understand that a bank or mortgage lender can forclose on you at anytime, even if all your payments are on time. If the lender feels that the risks are rising, such as a substantial rise in unemployment in your area, they might just forclose your home. This is because the fear that home prices in your area may become depressed and they don't want to be stuck with the home if you lose your job in the future.
>If this is true, then paying on a mortgage is really the same as rent -- you can be evicted at any time -- then it would make sense to treat a mortgage that way and postpone the day of reckoning
Absolutely. When you have a mortgage, the lender owns the home until you pay off the mortgage. I find it ironic that most people consider their home, their biggest asset that they don't really own.
> In any case, what would it mean to "pay off your mortgage" if the government causes hyperinflation and then raises property taxes to unsustainable levels? You lose your property anyway.
In hyperinflation, wages rise on a daily basis to adjust for it. If property taxes or other taxes are impossed to the extent that people can't afford it, then it would trigger deflation. Imagine what happens when millions of home owners turn in their keys to the lender. It would cause massive unemployment and cripple the economy.
However I don't subscribed that hyperinflation will happen. If the gov't was to start printing money, every lender would immediate impose draconan interest rates. Japan for instance has tried a similar tactic and they still remained in a state of deflation for about 20 years.
This is incorrect. A Mortgage lender can forclose at anytime. They are lending you money just like a bond investor, If they no longer wish to loan money to you they can withdrawl from the loan at anytime. A borrowers option would be to find another lender.
In the special case of convertiable bonds, the bond holder can convert their bond to stock in the company at the holders option. Again with clearly spelled out dates and conversion ratios.
Alan, you are on your game here, your right, despite the hysteria loose in these part of the woods, the power of contract still stands for something....on someone being a few payments shy of being payed off and being foreclosed upon, where did thier equity go? One assumes that that they could take a loan for some portion of the property and shake off the first lender....
Of course, if they have already refinanced multiple times they could not, given that they may be within a few payments of having the first mortgage paid, but still owe a considerable amount on the property, perhaps even more than it is worth....
Roger Conner known to you as ThatsItImout
Actually, the solution is less lanes for cars and bus only/carpool lanes as a substitute. Let's start by dismantling or at least changing the use of mega freeways like they have in L.A., Atlanta , and many other cities.
You don't get people to use the bus or other mass transit by building more roads and temporarily lessening the pain, what we need is more pain for the driver, so that the advantages of rapid transit become more obvious.
In any event, by the time all those additional lanes are laid down or new freeways constructed, we will already be well on our way down the oil reduction slope.
Combine this with the almost daily news of accelerating global warming, and it is outrageous that anyone would suggest that we do anything to make it easier to drive. We need a moratorium right now on new road construction. While we're at it, let a lot of those secondary and tertiary asphalt roads devolve back into gravel. I would nominate the highway that goes by my town as the first candidate. My grandparents could handle it and so can I.
http://arctic.atmos.uiuc.edu/cryosphere/archive.html
The July 22 image shows fractures that haven't appeared in previous years. It appears that the central polar sea ice shelf could breakup this year.
It must be that the pictures are not updated daily - any ideas?
Surely it must be an artefact - neither nature nor a ship can do that in just 24 hours can it?
I would love to have some more insight on this from anyone knowledgable - it sure as hell looks frightening.
No, this could not be. The trail of an icebreaker would not be visible from outer space. The thin line running toward the North Pole must be at least several miles wide, many times wider than the trail of icebreaker.
Note: The astronauts regard it as a joke that the Great Wall of China is the only man made structure that can be seen from outer space. It cannot be seen from outer space. In fact the widest freeways, many times wider than the Great Wall cannot be seen from outer space.
What can be seen with a telescopic camera is of course a different matter. But even their ability is often greatly exaggerated by people who do not know the facts. Atmospheric diffusion and distortion makes it impossible to see anything really small. They can make out a truck but they cannot read anything written on the truck.
Also Note: This photograph is of the whole earth and is not magnified.
I could not find another picture that showed a similar channel developing though...
http://arctic.atmos.uiuc.edu/cryosphere/IMAGES/ARCHIVE/20060723.jpg
Not something that happens too frequently in the earlier images.
I had never heard of that site, but it must be pretty popular because I started getting a lot of traffic last night as a result of the story.
I actually learned something from that story about Professor Goose that I didn't know: He is a strong advocate of higher gasoline taxes. That is not surprising, as I bet most here would take that position. I just didn't know he had advocated it in strong terms before. For the record, I am 100% on board with that idea. In fact, I think that is the single most important thing we could do to give us more time before we have to deal with the worst of Peak Oil.
Cheers,
RR
Sadly, it seems that the only message the Proles understand is spendable income.
Reduce the spendable income drastically and the Proles might take notice.
One wonders though, what kind of overreaction might occur when the Proles finally march on Washington?
One can only ponder the poorly written legislation that might result and unintended consequences that could ensue.
Speaking of proles and spendable income:
Yesterday my wife and I went to a surprise 80th birthday party for one of her aunts. It was held in a big rented tent in the backyard of her son's house, and there were about 70 guests. A big expensive catered affair.
The son is a 44-year-old union carpenter who works as an employee of an industrial construction firm. He makes good money for a tradesman but surely nothing special.
However, he lives in a large house that is probably worth at least $600,000 (northern New Jersey). He drives a full-size 4x4 pickup, and his wife drives a brand-new Chevy Suburban SUV. He's got a huge garage equipped with a lift so he can engage in his expensive hobby, cars. He's got a 1972 Corvette with the rare 454 engine, a full-bore Camaro dragster plus a huge covered trailer with which to tow it to the track, and finally, a top-of-the-line Harley Davidson. (Talk about family average gasoline consumption!)
How does he do it? Simple: he married well. His wife's father is a successful retired cardiologist who essential bought the house for them as a wedding present and appears to frequently help them out financially. There is no way in the world he'd be able to live like this without major injections of cash, even with a string of maxed-out credit cards.
What struck me about this whole situation is that this guy is essentially living the American dream almost solely on the wealth created by his father-in-law. This life styles appears to suit the couple just fine, and they probably genuinely believe that they are entitled to have it all.
What happens when and if daddy's investments go south, and he can no longer afford to keep them (and his other grown children) afloat?
I tend to have a rather morbid imagination, but I just got the feeling that this big party at this big expensive house was an example of one of those end-of-an-era type of things before it all turns to shite. Sort of like the elaborate ball scene in Gone with the Wind when someone runs it and shouts, "We're at War!"
This won't work! You folks need to have a better understanding of economics.
- Does not curb overseas consumption.
- Does not curb diesel and kerosine use (Trucks, jets & heating oil)
- Does nothing to curb consumption of natural gas
- Consumers will adjust to the higher costs and demand higher wages to offset costs. Manufacturers adjust by rising price. The end result causes inflation but does not decrease consumption.
- Leads to increased gov't spending, as the increased revenues are funneled to entitlements and subsidies that aid encumberment re-elections.
- Does not curb consumption for the Wealthly.
- Deeply punishes the poor and retired who lack the capacity to adjust to rising costs.
The only realistic polic change to curb consumption is to rates interest rates. Raise rates forces businesses and consumers to become more froogle and spend money wisely. It also drives them to become more energy efficient, not just with driving, but with all of their energy consumption. It is also the only policy that can curb global consumption.I believe that most of the supporters of a gas tax are middle to upper middle class that have the capacity to adjust to rising energy costs and also have substantial debt. This is why the oppose interest rate hikes as the proper solution.
I would raise gas taxes by 1.5¢ to 2¢/gallon/month for 20 years (with quarterly inflation adjustements). This gives a clear warning of higher gas prices coming. World oil price increases will likely exceed my proposed tax; but that increase is less certain.
A phased in tax minimizes the direct pain but atill effects structural change (if only begging for better bus service).
Since the US uses 1/4 of the world's oil; should we be THAT concerned about the other 75% of oil used by the rest of humanity ? We are the 389 lb gluttons at the table !
I discount any concern about "them" not conserving !
How does that curb global consumption?
As I stated, the US is the 389 lb glutton at the table. Reduce our per capita consumption to that of Brazil and we can join OPEC.
And what would happen to consumption in India, China, and other developing world countries when US consumption is reduced? If US consumption declines what happens to crude oil prices?
FWIW curbing US consumption is in the best of interest primarily to the US itself, and to a smaller extent to the rest of the world. Americans will get rid of the soulless suburban pattern, probably lose some weight and maybe learn to smell the roses. Instead of collapsing, the country will adapt in advance and gain economical advantage when the oil starts getting really tight.
The rest of the world will win a smoother peak, developing countries will have the chance to use the energy more rationally, and we all will have a breath of relief that USA will choose getting rid of oil instead of going to SUV saving wars.
It is a win-win-win proposal, but unfortuantely ain't likely to happen.
No. Its pointless to use a tax to just curb consumption when someone else will just consumpt it for us.
Imagine if there is a community well that has a finite amount of water. You discover that the water is running low, and you enact a policy in your household to restrict water use. However this policy doesn't affect other households. Now your next door neighbor has just build a pool and starts draining the well to fill it. Will your consumption policy affect the outcome?
Instead of using taxes it would be far better to use interest rates which will curb consumption globally. A policy of raising US interest rates would force all Industrialized nations to raise rates, causing a decline in economic expansion and consumption.
Besides stemming consumption, a gas tax would also influence our behaviors in such a way as to better prepare us for Peak Oil. Take Europe, for example. They have very high gas taxes. By your logic, that is pointless, since that helped keep oil prices low so we could just consume it in the U.S. However, high gas prices have caused them to adopt a lifestyle that is much less dependent on fossil fuels. If gas double or triples, they will cope much better than we will. High gas prices have prevented them from wasteful use of their land. They don't have Houston or L.A. style suburbs that go on forever.
So, I don't think your argument is valid.
Cheers,
RR
It will not stem consumption globally. Nor would it prepare the nation for Peak Oil for the reasons I have already stated earlier in the thread. The only realistic solution is to raise interest rates, period.
>However, high gas prices have caused them to adopt a lifestyle that is much less dependent on fossil fuels.
It will not. Consumers will adjust to rising costs. Since 2002 prices have more than doubled and demand did not decline. As long as credit is cheap the money supply will continue to expand that people will be able to afford thier high consumption ways. The only group people that will be forced to cut back consumption is the very poor and retired who lack the ability of wage growth.
>High gas prices have prevented them from wasteful use of their land.
This has a lot to do with social development. Canada has similar housing to Europe, yet fuel prices are cheaper than the US.
>They don't have Houston or L.A. style suburbs that go on forever.
This is the result of cheap and easy credit, low not gasoline taxes. Without ridiculously low interest rates people would not able to secure financing to purchase those homes.
Basicly both things will lead to demand reduction and lower oil prices. Of course interest rates will be much more effective - as much as using a steam hummer to kill a fly could be.
The point is that from the two evils a higher gas tax is the much lesser one; taxed gasoline and strong economy will result in investment in alternatives. Higher interest rates and lower oil prices will result in investment in shelters for millions unemployed.
The tax will get us away from oil for the long term, the IR will postpone and make the problem harsher the next time the economy rebounds.
One can safely exit Light Rail in most places (overhead, no 3rd rail). And New Orleans streetcars have windows that open.
West of Portland, there are two Intel fab plants close to Light Rail stops. DC, Dallas and Miami have office building booms near rail stations. The addition of a new station to an old line in DC (New York station on Red Line) started a massive office building boom. This I have seen with my own eyes.
IMO, there needs to be a "critical mass" (Minneapolis is not there yet with a single line) where an employer can think "If I build close to a rail stop; 10% of my employees can come by rail and this will help recruit and retain people. Therefore I will pay a small premium to get close to a station". Raise 10% to 15% and the premium rises. In DC, over 40% take Metro, so the office space premium for getting close to a station is large.
What really is a problem, is that it gives a competitive advantage for air travel. Planes have always dodged gas taxes, they just refuel where it's cheapest... that's why european countries don't even bother with taxes on aviation fuel anymore.
If a gas tax would get people over to diesel, a lot would be saved. 5 is just an old political talking point which has little to do with "economics".
Arguments 1,2 and 3 ... well, who said one policy could solve everything?
I'm not an economist (but I have something like "economics 101", not completely illiterate), but I am deeply suspicious of using interest rates to solve this problem. First of all, political control of interest rates has been acknowledged as a problem, which is why we have left it to central bankers. Also, increasing interest rates causes problems with, whatever you call it in english, present value estimates? The interest rate is a baseline for that; if a business know they can get 13% interest from just placing the money in the bank, this ensures that long-term plans better had be very profitable to get a go. That would mean trouble for all the promising technologies that could help us.
Khosla Talks Ethanol
It is a one-hour presentation, and I have been working my way through it in little chunks. I think a response will be worthy of an upcoming TOD essay. This guy is telling about a lie a minute, and basically assuring his audience that we can transition right from petroleum to ethanol. He claims that it is cheaper to produce ethanol than gasoline, yet is asking for all of this legislation to promote ethanol.
Khosla is a billionaire. I think he should put his money where his mouth is and build his own cellulosic ethanol plant. His enthusiasm will wane as he loses his shirt, but that's what needs to happen. For some reason, people trust him, but if you know a bit about ethanol, you will be astounded at his claims. He actually forecasts that we can produce 150-200 billion gallons a year of ethanol by 2030. We currently produce 4 billion gallons and consume 15% of the corn crop.
Watch the presentation. Take notes. I think you will see why I have such a problem with Khosla's claims. People will hear him and think everything is going to be just fine. Not only are we going to transition to ethanol, but by golly it's going to be cheaper than gasoline.
RR
then the world will not need ethanol or oil. Maybe Khosla could put his billions into saving the Amazon.
Climate change may soon trump peak oil.
Meanwhile, most are still worried about maintaining their comfort levels.
perhaps scientists are not sure enough its true - only 90-% sure..
It's been obvious to me for decades and I could show you literature from the early 1960's that forecasts this with some accuracy.
I don't want to criticize you or anyone else, I really would like to know how so many just don't get it.
The Amazon thing may or may not pan out. Anyone not expecting environmental catastrophe is in deep deep denial. Or something like denial.
http://www.amazon.com/gp/product/0812976088/sr=1-3/qid=1153717074/ref=sr_1_3/103-7228489-6515029?ie= UTF8&s=books
I believe based on what I have seen over the last few months, I can confidently assume they would all decide that it won't hurt us much.
It appears clear that global warming is likely to cause unimagineable upheaval within the next couple of years, with most populated areas of the planet looking like New Orleans last fall.
Yeah, it's clearly bigtime, runaway, out of control. Too late.
What is the shortfall risk of betting everything on the come?
Vinod states outright that cellulosic ethanol is cheaper than sugar cane ethanol. That's a lie. He trashes biofuels. He justs makes all kinds of statements without backing them up. If our governments are listening to people like him, we're screwed.
This is certainly one major thrust. But in promoting Brazil, he repeats the false claim that Brazil has replaced 40% of their petroleum usage with ethanol. As I showed, going back to actual production numbers, it is about 10%:
Ethanol Investing
The other major thrust is the one thelastsasquatch points out: He is betting the farm on the success of cellulosic ethanol. As you say, he is claiming that it is cheaper to produce than gasoline. People should immediately wonder why the industry needs so much legislation if that is the case.
If our governments are listening to people like him, we're screwed.
They are listening to him. That's why I am challenging him to debate his claims. Most of them are just like his claim of 40% displacement of petroleum in Brazil. These claims are highly exaggerated, or flat out untrue, and we are betting our future on him being correct.
Cheers,
RR
- roughly the same land area as the lower 48
- large areas with year round growing season
- large areas suited to sugar cane
- plenty of ill-paid stoop labor to tend and harvest sugar cane
- 2/3 the US population
- 1/15 the gross number of private cars (1/10 per capita)
- half the gross number of commercial vehicles
- 1/20 the gross passenger-km of aviation
- a newly found large oil field
(Population/transport statistics credit - World Almanac 2006.) So if Vinod wants to set an example by stopping flying and driving, maybe then 90% of the US population will follow suit. See, we can do it too. LOL.Ethanol is rediculous. Wouldn't rickshaws be more effective for moving rich privliged people to the shopping malls? Just ask Tom Delay, he is the congressman from Sugarland who opposed mass transit in the Houston area.
Wheat price soars as world granaries run low
http://www.theaustralian.news.com.au/story/0,20867,19864824-36375,00.html
India grows a grain crisis - about India needing to import wheat for the first time in six years.
http://www.atimes.com/atimes/South_Asia/HG21Df01.html
Rice crop smallest on record - For Louisiana, that is. For US in total, crop is expected to be down 14% from 2005.
http://www.theadvertiser.com/apps/pbcs.dll/article?AID=/20060716/BUSINESS/607160354/1046
I saw a lot of others also - about decreases in wheat production in the US, and about concerns in Europe regarding the recent high temperatures and the impact on crops.
wheat is high but much below 5 years ago ($6 then)
soybeans are actually near the lows for the year
http://www.newscientist.com/article/dn9374-overconfidence-is-a-disadvantage-in-war-finds-study.html
I think its very applicable to peak oil also.
The one recurring theme that seem to crop up when talking to Joe six pack is, "We'll find something to replace oil". Yet the study shows:"... that positive attitude - which is generally a [beneficial] feature of human behaviour - may lead to overconfidence and [damaging] behaviour in the case of war,"
Litle is apparently assuming that it will be many years before the effects of peak oil will take place. However many believe we are already there and much of today's price per barrel is the result of the approaching peak.
But just look at the news today:
In other words Norway is considering cutting back, saving its reserves for the future. The Kuwaiti parliament is considering doing the exact same thing. M. King Hubbert suggested many years ago that the US do exactly that:
Just as soon as it becomes apparent to the world that we are even approaching peak oil, many other oil exporting nations will begin to do exactly that, husband their oil. And when that happens the shit will most definitely hit the fan. And I firmly believe that day, the realization by all but the most fanatical cornucopians that peak oil is upon us, will happen sometime within the next 18 months.
What I am saying folks, is there will not be a slow decline down the backside of the peak oil slope. The effects of the knowledge of peak oil will, in itself, be devastating. Nations will begin to husband their oil, dramatically increasing the decline rate. Also people who hold a share or shares in this great phenomenon of capitalism will begin to dump those shares causing the mother of all stock market crashes. After all, people invest for growth, not eternal shrinkage. Then the recession will turn to a deep depression. What next? I can only speculate but there is one thing I am absolutely sure of; it will not be pretty.
When supplies become tight, the demand premium goes to the producers. If we had taxed petroleum instead of, or in addition to, the misguided CAFE regulations, that money would instead be kept at home; this would have benefitted the domestic economy. Instead, we are going to pay a whale of a lot of money (IOW, goods and services) to other nations - most of which have a lot less good will toward us than Norway.
Gas tax funds are limited to the Highway Trust fund and small portion is used to fund Mass Transit.
So while it might go to pork barrel projects, eg. Alaska's "Bridge to Nowhere", it won't fund canals or the military.
In the majority of states, their constitution requires the expenditure of state gas tax on road projects. Many won't allow the funds to be used on transit.
'Fargo' happens to be one of about a dozen movies I can watch over and over again and still enjoy. Though I suspect one of the Cohn brothers' main reasons for making 'Fargo' was just to make fun of people from Minnesota and the way they talk.
However, when you get right down to it, the way people have migrated all over the US since after WW II, people's attitudes, mannerisms, and accents are getting more and more homogenized. This mainly true in and around urban areas, but less so in deep rural areas, where you still have pockets of highly distinct regional types. I'm talking here about English-speaking native-born Americans, not recent immigrants.
Now I like the idea of a rationing system better, but one that allows people a certain amount of fuel per month at whatever market prices are. After that you could still get more fuel, but it would cost a lot more.
Rationing looks "fair", but in reality it's a nightmare to set up and administer. Much simpler to add relatively simple tweaks to taxes we already have, which also makes the system much harder to game.
I have almost the opposite observation. First, poor to lower middle class people (say <60K/household) can not afford a house near downtowns and buy houses out in the nowhere. In addition poor people tend to have bigger families and so they buy more minivans and SUVs.
Higher income families can choose better locations with shorter commutes and if gas prices get higher have no problems for trading in their cars.
In conclusion - if applied straightforwardly the tax will be highly regressive. In Europe the problem is solved by providing an alternative to cars - namely adequate mass transit for everyone. IMO the best think to do is the money from the tax to be invested in mass transit and part of the tax to be offset by lowering other regressive taxes.
On the other hand, if you mean some kind of World War II style system where rationing boards give different people different amounts (A, B, and C in those days), fuhgeddaboudit. People who never lived through that like to romanticize it as some sort of juvenile college-classroom socialist solidarity, but when you talk to the remaining old-timers at length, you eventually find out about all the informing, backstabbing, and so on, as well as all the tyrannical arbitrariness and petty personal vindictiveness of some of the local rationing boards. In today's much more diverse society, that will work even less well and lead to violence. We have too much violence already. No thanks.
Nowadays it will not look like that. Here is an example how it may work:
- The tax is 2$/gallon applied to all sales
- You have 300 gallons/year/vehicle tax-free allowance
- When you pay the taxes for your car the inspector checks the mileage you made from last year and estimates the gallons consumed by the official EPA esimates.
- The tax credit (maximum of $600) will be then refunded back to you.
- Commercial vehicles are not eligeble for a tax refund
The schema is not precise as it penalises mileage instead of real consumption but unless we install gasoline meters in each car or personal identification devices on each gas pump nothing could be done about it.I only use ~72 gallons/year. I do NOT want to pass up that $600 just because of my virtue. Bet I can get 300+ mpg ! (Diesels idle VERY efficiently).
Also a good reason NOT to give up a car and just use "CarShare" occasionally.
IMO, just tax gasoline heavily (see phase in) and reduce payroll taxes, etc.
The simpler the scheme the better.
Have you ever tried to go "backwards" in a relationship? ever get a demotion? ever move into worse house in a worse neighborhood? It completely changes your level of hope and incentive structure for the future.
Growth is the fundamental driver of capitalism. You take hope away as an incentive and things just fundamentally change.
And, to EP just below: couldn't have said it better myself. Gas taxes are the only band-aid. And it's just a band-aid. Hard to put a band-aid on a gushing wound.
Also, thanks for that Hubbert quote Darwinian. Dead on.
In 1988, during the long post-1985 deflationary period in the oil and gas industry, I proposed a 50% cut in salary, in exchange for an equity interest in oil deals I generated. I knew that layoffs were coming, and I wanted to move myself from one of the more expensive employees to the least expensive employee.
In 1989, I found a five million BOE field at a depth of 2,200' (tiny by world standards, but quite nice for the onshore Lower 48). At peak cash flow, for every dollar I gave up in salary, I was making about $25 in oil and gas income.
So, when I talk about assuming a 50% drop in income, I have walked the walk. I did have an equity interest, but that would be worth zero if I didn't find oil and gas.
In any case, the post-Peak Oil world will give a whole new meaning to the phrase, "Produce or perish."
If the post-peek world is a negative sum game will humans be driven to "play" only by the base drive for survival?
I think we are more "flexable" than that mentally...
Consider a casino as a metaphore. This is a known negative sum game from the point of view of the gamblers. Everyone knows that most players will leave poorer than when they arrived, yet even so people continue to see this as "entertainment" and come back time after time in the face of prior losses.
I think that observations have shown that as long as there are both wins and losses at the "fine grain" level, with enough short term gains to deliver the necessary mental "kick" of happy hormones, or whatever is going on between folks ears, the longer term / larger scale realities of what is going on are easy to ignore for many.
Are we all collectivally in such a place now? Is "mother nature" about to padlock the doors and lock us all in?
Hmmm.... "Hit me, and bring me another drink honey" ;)
I tend to produce just gas. But after enough jalapenos I can produce something similar to oil.
I think this is the whole ball of wax. There is the geologic peak oil and there is the societal peak oil, when the media and majority of people recognize the oil is finite. The reactions and implications of the latter will probably overwhelm the former.
Peak oil = geologic production peak
Peak lite = Supply exceeds demand
Peak exploitation = Exporting countries put their own long term needs before their customers.
It's really kind of fascinating that suppliers may be to the ones who force a modification of the US's gluttonous ways.
Venezuela
Bolivia
Kuwait
Norway
Nigeria?
Russia?
Iran?
Of course this only counts is word become actions on their part.
Cheers,
RR
They need to produce enough energy to allow some growth yet keep the price rising. What's different now from previous episodes is that the energy producers have a rational explanation for their actions - they are husbanding their resources for the future.
However, as we see in the US housing market, when the turn comes the psychology changes overnight. I doubt Saudi Arabia still worries about expensive oil causing a rush for cheaper alternatives that would eventually make oil obsolete.
There's an old saying in the EE trade. Design an amplifier and you'll get an oscillator.
And that's why trying to throttle but not kill growth is tricky business. The economic system is similar to an amplifier with tremendous phase shift at the higher frequencies. As long as the inputs change slowly all is well. Step functions can trigger nasty oscillation.
Lost income. SHTF big time, for any number of reasons.
The optimism that one can succeed with fixer upper in a run down neighborhood. Planning for the long term.
In practical terms, the young couples that are starting to move north in Manhattan, NY.; towards Washington Heights. Affordable, LMAO, never mind, it is cheaper than NJ or Yonkers and a long commute to Lower Manhattan.
If Norway limits natural gas exports then the UK might get a bit dark at nights!
I notice that Venezuela is taking a different, perhaps shrewder course. They are committing to long-term contracts with China. It may be that those contracts do not mean maximum production. If so, those contracts extend reservoir benefits AND they provide insurance from the wrath of certain former customers.
To my way of thinking Hubbert was implicitly assuming this would happen when he guessed that the production curve would probably be symetrical. If it didn't happen I would be much more worried that someday global production would suddenly go into freefall like the UK's.
By what logic did you arrive at this conclusion? A gentle decline would be holding at about 2% per year. A sharp decline would be 5% per year or greater. If several exporting nations started to hold back production, then the sudden drop would be perhaps 10% the first year and holding at about that amount as, as time past, more and more nations begin to "husband" their oil, or hold back more and more of their production. Such a policy of less and less oil as nations begin to hoard can only mean a sharper decline. Only if everyone continues to produce flat out can we hope for a gentle 2 to 3% decline.
What such a policy would do would be to lengthen the tail. That is a much sharper decline during the first few years, as hoarding began, then a much longer lasting drawn out tail on the depletion curve.
No, it would rather be 1% the first year, than 2% next year, than slowly accelarating to precipitous levels (10%?).
If producers begin to husband oil, we will get a managed relatively constant decline of say 4-5% for a very long time. In addition the foregone production will act as a cushion if things get really tight.
The first scenario will let us waste more time in trying to keep business as usual until the declines become disastous, and the second one will allow us to plan for the migration away from oil. The difference will be like between planning for a disaster and letting the disaster plan for you.
I agree that the knowledge of peak oil will, in itself, be devastating.
The net present value of future earnings ( or future dividends) is vastly lower, once a person understands peak oil. Thus, the stock market will crash.
Bond prices will also drop for companies (like Ford and GM) that depend on cheap oil for the continued viability of their companies.
The deriviatives market and the futures market are likely to have huge problems, when there are sudden changes in values, and investors cannot make the cash calls. It would seem like there would be major bankrupticies relating to both the derivatives and futures markets.
Banks will suddenly become much less willing to make 20 or 30 year loans for any purpose - residential mortgages or business loans. People will be unable to sell their homes, without a viable mortgage market.
Second homes and time-share condos will no longer make much sense. SUVs will also be of less value. People will try to sell these, but will find fewer buyers. Those holding the loans on these items will find many defaults, but little value from reposessing them.
With all of these issues, I wonder whether there will be major currency problems very early on - when the whole idea of peak oil starts to sink into the consciousness of the people at high levels in businesses. That could be as soon as within the next year, if oil production in Saudi Arabia continues to decline, or if there are other major peak oil stories (Cantrell decline, less oil from Venezuela, etc.) getting into the MSM.
I don't think so. As oil depletes, it will become incredibly valuable. Oil companies will be printing money. That will also give them the cash reserves to get into any alternative fuel market they desire. The wild card is whether government will take drastic action when gasoline is $10/gallon and ExxonMobil is making $100 billion a year.
Cheers,
RR
And what better place to look for oil than in an oilfield? Why have a disincentive if the goal is energy independence?
I think energy independence is a chimera, as do most of the folks that read the oil drum. But I know we could make a whole lot more oil by going in old fields and redeveloping them. It would sure help smooth off that peak into a parabola instead of a cliff. Robert, I know with you I'm preaching to the choir. I'm just hoping some of TOD folks can get the word to their representatives to do a few things for incentives in the tax structure instead of "punishing" the oil companies.
I suggest limiting depletion to 100% unless the money is spent on new oil wells or alternatives like wind or solar. How about taxing imports? That's where the majors make their money. How about not calling royalties paid to foreign governments taxes and letting the majors not pay taxes on their profits on cigarettes and beer?
It will probably start with airline and automotive stocks, the most vulnerable to high fuel costs.
point out how good the place is, layout a very brief and simplified idea of whats on the drawing board showing no proof that it works while saying it's better then what came before again with no proof, say with the proper investments this could be on the shelves in a very short time and you can get people to throw money at it expecting a very short return on investment.
also i am sure west-texas and rr will love this. bp has started to take out full page newspaper ads for their bio-fuels
They are starting a small scale biobutanol plant in the UK that will be online in the next year (<100k bpy); and are pushing for the holy grail of cellulose feed stocks to biofuels.
Of course, it will be years before anything close to meaningful production-wise is online.
http://www2.dupont.com/Biofuels/en_US/
But a square meter or two can probably be made to work great on a trade-show floor where wind loads, thermal stresses, rain, snow, dust, aging, deterioration, and so on, are minimal. And that's what counts in gee-whiz press releases.
So I'm not feeling a strong urge to put retirement money into it. Cheers.
PLEASE, when you are talking about solar keep in mind:
don't despair.
people do read older threads.
keep evangelizing. you're doing your part in trying to make this a better world.
--best, SB
Expedite smart bomb deliveries to Israel AND send the Sec. of State to broker a cease-fire.
Everybody's happy.
I guess we know how resilient the Amazon is to drought -- not very.
For years now, climate-vegetation dynamics models have been studying how regional deforestation can lower rainfall and cause a "flip" in the vegetation.
Now we may witness it. I sure hope not.
Ever been to the Amazon?
To consider its loss is just totally gut wrenching.
Like many of the earlier barbarian assaults against Rome, I expect this particular problem to be fixed and for the world to move on as if nothing was wrong. Perhaps nothing fundamental is wrong or perhaps we have actually reached a level of complexity that will become increasingly difficult to sustain in a world of diminishing resources and rising costs.
http://www.msnbc.msn.com/id/7137552
Deregulation and The Invisible Hand finding a way to squeeze costs right under Mother Natures' watchful eyes.
The simple problem is this - "free" market supporters make the argument that the market is more "efficient" than any other system. This may or may not be true depending on what we are measuring but it also hides something else very important - sometimes the most important quality of a system is not efficiency.
Consider the electric grid - efficiency is important but is it as important as reliability? And what track record does the market present about reliability? None in particular, whereas regulated state-granted monopolies did display an astounding degree of reliability, although at a cost in efficiency. Interestingly though, the efficiency is most often dollar efficiency rather than, say, energy efficiency.
My point here is that some things are best left to the "market" but others are not, precisely because the community's goals are not the same as the goals of the market (profit seeking). So in this case the fault is not the market itself or even our engineering, but that we, as humans, applied the market process to a system that should not have been managed in that manner. That process sought to maximize profits and did so... at the expense of maintenance (reliability). The correct answer, despite howls from the free market drones, is to re-regulate utilities.
Let's not flatter ourselves.
A clap of applause from the Invisible Hand is more than we can handle as it is.
Besides, arrogance is the epitome of ignorance.
And we are well beyond arrogant.
Imagine an extinction level asteroid heading our way.
Imagine that we seek out the most "cost efficient" solution.
Imagine that it will destroy our civilization.
... it will kill our families, our loved ones.
... it will be TEOTWAWKI.
Imagine that we while away the last remaining hours debating over what the most "cost efficient" solutions will be.
That is an ending that would make Milton Freedman proud.
Damn ... I was hoping to fling the monkey feces (aka blame) at our stars
GreyZone,
At minimum, these are some good thought provoking observations.
Why is there a one and only, "The answer"? What makes the tunnel vision result a "correct" one? Something more to exercise our collective Grey Matter on. Thanks.
Note that I am not suggesting that things can stay as they are for the long run. But if we intend to keep any form of civilization, even through an overshoot dieoff event, then we cannot rely solely on the market for solutions.
I am currently unaware of any other means of ensuring this reliability that also has a proven track record historically, hence my focus on regulation. When facing the consequences of overshoot (and peak oil is just one of those), do we want to gamble on unproven ideas? I might be able to support some other method of managing such a system but given homo sapiens tendency to find Murphy around every other corner, I'm not sure I would want to take that chance.
http://www.timesonline.co.uk/article/0,,2087-2281620,00.html
Air travel is now a sin, as is ownership of an SUV.
Now which airline / SUV would Jesus use?
it's no WWJD marketing-wise, but I guess it will have to do.
Attaching a "business" label to a trip does nothing whatsoever to make it intrinsically essential. Sure, face-to-face is nice to have, but when push comes to shove it is merely a luxury made possible by cheap air travel.
The same holds for the secular "conference and convention" circuit, as well as "book touring" and the like. Nearly all of that, when you get down to brass tacks, is quite expendable. Most if it would cease instantly if the relevant government subsidies and grant addenda were simply cancelled. And few would miss the endless hours and days utterly wasted cooling their heels amidst the shiftless, shuffling incompetence that's constantly on display at today's airports.
In truth, the world might be a better place if more people went abroad on holiday once or twice in a lifetime. It is not, however, improved even one iota by the act of travelling thousands of miles merely to view a PowerPoint one could have received by email and probably was an utter waste of time to view anyhow. Or merely to "shake hands" on an already done deal that fiduciary responsibility would have legally compelled anyhow, even had cheap air travel never been invented.
What we have here is "you proles stay home amid your four walls while I prance off to my 'conference' - do as I say, not as I do". That it comes directly from Mother Church makes it especially naughty.
And in the end, that's the flaw in this whole style of argument. No sacrifice is too great for somebody else to make.
If only we could pick who gets to make it!
The mega-chain is undergoing an extreme enviro makeover. Even Al Gore is on board. But will Wal-Mart keep its promises?
By Amanda Griscom Little
Picture Al Gore standing in a modest auditorium deep in America's heartland before an exultant crowd of Wal-Mart employees, comparing their campaign to lighten the company's environmental footprint to the Allies' righteous struggle in World War II. This after Rev. Jim Ball, head of the Evangelical Environmental Network, likened the giant retailer's greening efforts to the work of Jesus Christ.
This strange scene unfolded last week in Bentonville, Ark. The occasion was an environmental strategy meeting of some 800 Wal-Mart execs, managers, suppliers and partners, where the heads of the corporation's various divisions -- from seafood and textiles to transportation and packaging -- outlined their respective green agendas.
The assembled employees did high-energy renditions of the Wal-Mart cheer, complete with fist-raising, grunting, and even a group wiggle. "Gimme a W! Gimme an A! Gimme an L! ... Whose Wal-Mart is it? Who's No. 1?" CEO H. Lee Scott pumped his team up further by calling Wal-Mart's newfound environmental focus a "higher purpose." There was also a rare appearance from company chair Rob Walton Jr. -- son of Wal-Mart's legendary founder and, as it happens, a member of Conservation International's board -- who beamed, "I love, love hearing the progress that is being made."
Mid-afternoon brought a screening of "An Inconvenient Truth"; more than a few audience members could be seen dabbing teary eyes as the documentary drew to a close. Then the entire crowd erupted into a standing ovation when the lights came back on and Gore trotted up to the stage, Tipper in tow.
"That's a larger round of applause than we gave for Wayne Newton!" joked Scott while introducing Gore, who, in turn, showered the audience with reciprocal cheer: "Doesn't it feel good to have this kind of [environmental] commitment? Don't you feel proud?"
Sporting a curiously thick Southern drawl, Gore heaped praise on Wal-Mart's green goal-setting. His Allies analogy was particularly striking: "Look at what [the Allies] did with their victory. They found after winning that they had gained the moral authority and vision to lift up from their knees our defeated adversaries ... And by taking this climate crisis on frontally and making this commitment, you will gain the moral authority and vision as an organization to take on many great challenges."
Keenly aware of his Arkansas audience's Christian inclinations, Gore peppered his hourlong commentary with religious references. He quoted Scripture, told a Bible story, and then offered a nonapologetic apology for the sermonizing: "I don't mean to proselytize here on my religious faith ... If you're an atheist or agnostic" -- dramatic pause -- "God bless you!"
Gore also waded into politics. He called the partisan bickering in Washington "pitiful, seriously pitiful," and mocked national leaders for "borrowing a ton of money from China to buy a ton of oil from Saudi Arabia to burn it in ways that destroy the inhabitability of the planet -- not a good pattern!" He also called for a radical overhaul of the American tax system: "We should sharply reduce payroll taxes and make it all up in CO2 taxes so the low- and middle-income people don't bear the cost burden of this big transition in energy sources."
His whole spiel sounded like a dry run for red-state campaigning in 2008. So it only made sense when, in bidding Gore adieu, Scott asked the big question: "Are you going to run for president?" Wild applause ensued, but Gore's response was predictably understated: "There's a lot about the political system that I think is really toxic ... [and] that I don't think I'm good at," he said. "I really believe that the highest and best use of my experience and skills may be to concentrate all-out on changing the minds of the American people about the [climate] crisis. That way, whoever does run for president faces an electorate that flat-out demands that they make this their priority."
The pairing up of Gore, this season's It Boy in Hollywood and other left-leaning circles, and Wal-Mart, the goliath retailer loved in red states and loathed in blue cities, seems bizarre on its face -- and couldn't have happened before this year. But now, with Gore trying to spread climate awareness beyond the choir and Scott trying to give Wal-Mart a high-profile green makeover, the match actually makes sense.
Last October, Scott pledged to transform his sprawling company, which employs 1.8 million people worldwide and ranks No. 2 on the Fortune 500 list, into a lean green machine powered exclusively by renewable energy, producing zero waste, and selling sustainable products. Those goals are so lofty they sound downright deluded, but Scott has followed them up with specific, seemingly achievable commitments and timetables. He aims, for example, to reduce greenhouse-gas emissions at Wal-Mart's existing stores and distribution centers 20 percent by 2012, and invest $500 million in environmental improvements each year.
Andy Ruben, Wal-Mart's vice president for corporate strategy and sustainability, reasons that the 100 percent renewable-energy goal could be met largely with greater efficiencies. "We can use 70 percent less energy to do what we're doing today, and supply the rest with renewables," Ruben suggested at last week's meeting.
The gathering brought forth more green goals from divisions throughout the company. In the area of seafood, Wal-Mart is working with the World Wildlife Fund to identify, and purchase exclusively from, sustainable fisheries. It's moving toward organic cottons in its apparel and bedding lines. The jewelry division is developing a sustainable certification program for the gold mines it works with, and exploring outlets for recycled gold. The transportation division is planning to double the efficiency of its truck fleet, one of the largest in the U.S., within a decade. The construction division is developing prototype stores that are 30 percent more energy-efficient than current stores, and the company also aims to improve efficiency at existing stores by 20 percent. The packaging department is working to eliminate its waste stream by 2015, using reusable, recycled and biodegradable containers.
The produce division is ramping up its organic offerings, and plans to move toward more local farm purchases in order to save money on truck fuel costs and refrigeration. Ron McCormick, an executive in Wal-Mart's produce division, said he plans to purchase a broader variety of produce based on what's available in each region, rather than insisting on a "monoculture" of produce at stores nationwide. "Our whole focus is: How can we reduce food-miles?"
These internal aims aside, Scott said Wal-Mart's most meaningful environmental impact will be in nudging its 60,000 suppliers toward more eco-friendly practices -- working with them, for instance, to reduce packaging, which in turn would mean fewer raw materials consumed, less energy expended in transit, and, in the end, lower prices for consumers. "Ninety percent of the impact Wal-Mart can have is on the supply chain," he said.
Wal-Mart's Ruben, who this spring testified before a Senate committee in favor of federal greenhouse-gas regulations, also acknowledged that in addition to the 23 million tons of CO2 equivalent that Wal-Mart emits each year, there are an estimated 220 million tons of annual greenhouse-gas emissions in the company's supply chain.
Scott's grand goal, as he explained it in an interview this spring, is to "democratize sustainability." To wit: He wants to use Wal-Mart's unparalleled economies of scale to put everything from organic T-shirts to compact fluorescent light bulbs to pesticide-free foods within reach of the masses.
Of course, he believes this green push will make the company money. "The benefits of the strategy are undeniable, whether you look through the lens of greenhouse-gas reduction or the lens of cost savings. What has become so obvious is that [a green strategy] provides better value for our customers."
Another unspoken effect is likely a boost to employee morale. In recent years, the company seemed beset from all sides by impassioned detractors and bad publicity -- the 2005 documentary "Wal-Mart: The High Cost of Low Prices," sexual-harassment lawsuits filed in 2004 and 2005, ubiquitous union campaigns protesting poor worker treatment, and fights against proposed stores in communities from California to Maine.
Now, Wal-Mart bigwigs -- and maybe even lowly "associates" -- finally have something they can feel good about: being part of the biggest corporate greening in history. If the energy in the room at last week's meeting was any indication, Wal-Mart managers these days are feeling right fine about their jobs.
Many of Wal-Mart's multitudinous critics aren't mollified, of course. The company's environmental goals are not being accompanied by notable progress in other areas like labor standards and gender equity. And so far the green talk is largely just that -- talk.
But some environmentalists are hopeful. "If they do even half what they say they want to do, it will make a huge difference for the planet," said Ashok Gupta of the Natural Resources Defense Council, who attended the meeting. "It definitely seems that Wal-Mart is really serious."
Former Sierra Club president Adam Werbach, who's reportedly signed on to work as a consultant for Wal-Mart, has also lent his cred to the retailer's green goals. Environmental Defense is so optimistic that it's opening an office in Bentonville, with an employee wholly dedicated to coordinating with Wal-Mart. (Can it be a coincidence that Sam Walton Jr., son of board chair Rob Walton, sits on the board of Environmental Defense?)
Maybe these enviros can push the company even further -- to site its stores in downtown, mixed-use neighborhoods, set green requirements for all its suppliers, add green roofs and other eco-friendly features to all its facilities, not just pilot projects, and educate its 176 million weekly customers about the virtues of sustainable living.
In the meantime, though, Gore's got some advice for Wal-Mart's leaders: "Following through [on your environmental goals] is the single most important thing that can be done in this country to transform the relationship between NGOs and business," he said, explaining that critics will otherwise be able to say, "'See there, I told you they weren't serious.'"
Gore was quick to add that he, for one, is not a cynic: "Have you ever known Wal-Mart not to follow through on a big commitment of this kind? I have not myself. I believe it's the kind of journey that once you start, you continue."
-- By Amanda Griscom Little
http://www.salon.com/
http://www.siliconinvestor.com/readmsg.aspx?msgid=22650273
Wally World is the Whore of Babylon!
But if it escapes to the atmosphere without being burned, it can trap heat rapidly because it is a greenhouse gas at least 20 times stronger than carbon dioxide.
Source
There ya have it! (as I smack the palm of my hand against my forehead!)
By NOT eating Mexican food, refried beans, and consuming Cerveza (beer), we can help cool the planet!
oh yeah, those darn Cows, need to remove them too.
Sheeps can harm too, this is not a joke :
"New Zealand is unique in that over 50 percent of its greenhouse gas emissions arise from methane released by enteric fermentation,"
The true problem is overpopulation, including cattle.
We discuss often the malignancy of the status quo.
Soon we vote who are our congress and senators for 2 and 6 years respectively.
With the polls showing the Republicans out of favor...
What terrorist act do you think they will pull to maintain control and status as protectors for the people?
I'll start this off with a guess the Mall of America is going to get a suicide bomber surprise.
If I have gone to far or if
Especially when members of Congress like Nancy Pelosi are blathering this kind of nonsense.
Nah, that would not be sensible move.
Too many Republican voters there, in the Heartland.
Figure the "Left Coast" as a better target.
Can't be LA, cause we need them to make propaganda films.
That leaves San Francisco as the obvious place, home of the godless ones who fail to understand that marriage is only between a Republican girlie-man and his harem of 72 experienced virgins.