As Cantarell goes . . .

Mark Sawusch has just pointed out the story in the LA Times today, indicating that, based on performance figures through May, it appears that Cantarell has started to go.
Production at Cantarell, the world's second-largest oil complex, in the shallow gulf waters off the shore of Mexico's southern Campeche state, averaged just over 1.8 million barrels a day in May, according to the most recent government figures. That's a 7% drop from the first of the year and the lowest monthly output since July 2005, when Hurricane Emily forced the evacuation of thousands of oil workers from the region. . . . . . . Pemex predicted that the field will produce an average of 1.9 million barrels a day in 2006, a modest 6% drop from 2005, followed by double-digit annual declines that would reduce average production to 1.4 million barrels daily in 2008.

Other studies aren't so optimistic. Seawater is threatening to swamp the wells of Cantarell as the field's pressure diminishes, a debilitating symptom of old age that makes it tougher to extract the remaining oil. Leaked internal reports of Pemex's own worst-case scenarios published in Mexican newspapers show production plummeting to about 520,000 barrels a day by the end of 2008 -- a 71% free-fall from May levels in less than three years.

Mexico City energy analyst David Shields said the swift drop over the first five months of 2006, and conversations with Pemex insiders have convinced him that prospects at Cantarell are worse than officials will admit publicly.

While not unexpected, since Khebab just wrote on this last week it is the confirmation of the bad news we have been anticipating. (See also Glenn Morton's piece).
Watch the horizon, prepare your ship and crew. The seas may reach a fury and the time to make ready is before the waves tear at the decks.

I love the roller coaster anology.

Since Mexico is our number 1 or 2 biggest supplier is it more significant that they are having supply problems while internal demand grows?
Should we worry more about the world peaking or a major supplier?

thank god for those Canadian oil sands ;) They'll save us.

Should we worry more about the world peaking or a major supplier?
Important point. Localized supply problems may become the most urgent issues. Smart strategy example? Look at China--they are lining up sources of supply everywhere.
<Look at China--they are lining up sources of supply everywhere.>

Remarks like that astound me.  The one thing everyone agrees on here is THERE ARE NO NEW SOURCES OF SUPPLY!

So where are the Chinese whipping up all this new supply?

Roger Conner  known to you as ThatsItImout

>Remarks like that astound me.  The one thing everyone agrees on here is THERE ARE NO NEW SOURCES OF SUPPLY!

 They are arranging long term contracts with existing exporters. Some of these exporters had offered oil on the open market which was available to any buyer. China has essential locked up this production for thier own consumption leaving other importers to get oil from someone else. If this continues, some importers may have difficulty obtaining oil and will be forced to power down because they won't be able to import enough oil to meet demand.

New for China (Canada, Sudan, Cuba, Venuzuela, Uzbekistan, etc), not new as in never before utilized/new discoveries.
Per memory, China was high bidder, by a wide margin, for an offshore lease off Angola.

New small fields will continue to show up.  Even in the GoM.

The bottles stand as empty
as they were filled before.
Time there was, and plenty,
but from that cup no more.
Though I could not caution all,
I still might warn a few:
Don't lend your hand to raise no flag
atop no ship of fools.
--Robert Hunter, c. 1974





Whether true or not, this will have to be confronted, as it undercuts the "immenent peak" theory to the core.

Roger Conner   known to you as ThatsItImout

As I have previously noted, the Houston consultant (recommended by Saudi Arabia) at the PBS Peak Oil debate stated several times that exporters may be cutting back on their production--look at what the Saudis have already said, in justifying their approximately 5% reduction in production since December.

It may be that OPEC would rather be hated--by claiming that production declines are voluntary--than risk military takeovers, by admitting that world oil production has peaked.   This is the basis for incorporating major oil exporters into the major oil company/major oil exporter/energy analyst leg of the "Iron Triangle," i.e. their fear of their oil fields being seized.  

ExxonMobil can say that they need all of their cash flow to bring on new oil fields outside the Middle East, and the housing/auto/finance group can say that high oil prices are temporary.  So, go ahead an buy the large SUV, to drive the long commute, to the large mortgage--all advertised by the media group.

Your analysis, I fear, is sadly absolutely correct.

The fact that major oil producing nations and their dependents are stuck in a web of fakery and illusion is only indication of the house of cards falling all the harder.

This also, as mention a bazillion times here on TOD, has the added benefit of driving up prices further. And if there is no swing producer, then all the better--none of these countries can be punished through artificial price adjustments, simply because Washington no longer has the stroke to do so.

Just look at the desperation of Dick Cheney flying over to Kazakhstan in order to secure energy. We are indeed at the stage of using every possible option at our disposal to keep our imports plentiful and "cheap" (hah!).

Whether there is peak oil imposed by nature and economics or there is peak oil imposed by a cartel would lead to the same result, an imbalance between supply and demand leading to ever higher prices.  Unless, of course, one believes that these producers can be jawboned or forced to produce more or if people get the impression that shortates are just temporary because they are dictated by politics.

In any event, however, our "leaders" (do we actually have any) could announce that either way, we must decrease our consumption for the indefinite future, because we will have less oil and because climate change mandates a decrease in the consumption of all forms of energy.

Also, in any event, this news just reiterates the fact that the world's producers have us by the gonads and we need more than some silly ass Bush vision of hydrogen and ethanol  savings said nads in twenty years.

We could start by cutting our defense budget in half -- the half that clearly isn't making a dime's worth of difference in our ability to influence world events.

Did you see this on CBS?  I haven't found anything on the web yet.
The only place I could find it is on their ad page:

"Also tonight, there are many reasons for the high cost of gas. You've probably heard about increased demand in China, lack of refineries, and trouble in the Middle East. But what's the OPEC factor? Sharyl Attkisson investigates. "

Doesn't seem like it's a major story since it's not on their front page.

I saw it on our 6:30PM National News on CBS.
It was as Roger described it.

No Peak Oil - all a group fixing of prices.



The interesting points to me that stood out were,

Saudi Arabia seemed to not be at all caught off by the story and it's release, and

The dates given.  If the dates given are accurate, it would put the start time right about the period of the "Plauteau" as described by many who closely follow world oil production. (Stuart, Simmons and others)

We have to consider the possibility that the OPEC plauteau is very planned, and they knew they had the leverage on production again with North Sea in apparent genuine geological peak.

The main point being this, that no "production stats" can be considered reliable in indicating near term peak or no near term peak, all are equally suspect, because the production volume is being played with.  Thus, many months of dropping production would indicate absolutely nothing about the ability of the field or the nation to produce, and nothing about the geology, and instead be a part of the monopoly control being reexerted by certain big players.  This is how we were caught out so badly in the 1970's-80's, and those who said fuel was short worldwide and gas and oil would NEVER get cheaper were made fools of.


Roger Conner  known to you as ThatsItImout

This is possibly the most transparent nonsense ever published, even in the US media.
You must have an impressive collection of bridges in Brooklyn, old chap.
There are actually many people (including me) who agree with Roger. The website will show you straigthline moving averages in oil (brent) and gold prices that are impossible in a natural market. It is not that the markets are controlled, it is that the extent to which they are controlled is far worse than you can possibly imagine.
How on earth could a straight line moving average be impossible in a natural market (whatever that is)? Proof, evidence or even argument from authority (if yours really is such) would be nice.
And that still wouldn't say anything in favour of this posited diabolical Norwegian plot to reduce production.
"The extent to which they (the markets) are controlled is far worse than you can possibly imagine."

What always puzzled me about the great oil price conspiracy is how long it took the conspirators to get their act together.  Oddly enough, the conspirators were finally successful in controlling the oil market--and in forcing oil prices higher--just as the world hit the conventional 50% depletion mark.  

I read an article from John Mauldin, but I can't locate it.  That article was specific about the dollar weakness, but he was pointing out something.  You want to know what helps the dollar?  Higher oil prices.  As the prices of oil go higher, demand for dollars increases to settle these transactions throughout the central banks of the world.  So the increases in oil prices just this year created a demand of Trillions of new dollars just to meet this need.  This is bad for inflation though, as you may have figured.  

My only point to this is that he also touched on how hard cornering this market would be.  If you total the daily oil bill, this needs to trade hands in some form every day.  The staggering amount of money that trades hands is so large that even a few select players couldn't manipulate it.  If barrels of oil are $75 right now and there are 85M barrels (yeh i know there are lower priced long term contracts, but we're getting a worst case) so this total is $6.375Trillion dollars.  Then again, if you control the fields, all this crap is nonsense.

This is a transparent attempt to create "bad guys" who can later be vilified and thus attacked. Gee... Saudi Arabia is holding out on us! Let's "nuke their ass and take the gas" (as one popular T-shirt says).

You're being manipulated, Roger.

It seems to me that the "Iron Triangle" is developing a two-fold strategy to combat Peak Oil:  (1)  Oil traders are bidding oil prices to irrational levels and (2)  Oil production is down because of voluntary cutbacks by exporters, in an attempt to drive oil prices higher and/or in an attempt to prolong the life of the fields (take your pick).  

As I said above, from the exporter's point of view it is better to be hated than to be militarily occupied.  

If people truly believed that Peak Oil is at hand, they would implement ELP (Economize/Localize/Produce), and stop buying and financing large SUV's to travel long distances to large mortgages.  The auto/housing/finance industries would stop advertising, and many members of the MSM would be out of work.

By the way, I was interviewed at length by a reporter for a major paper (not one here in Texas) for a long article on where our oil comes from and on the pros and cons of Peak Oil.  From what he has told me, it looks like his editors are sitting on the story.  


Once again, the mainstream media is selling a wild wholly unsupported conspiracy theory so ridiculous that it would embarass even the hard core tinfoil hat brigade.  (Maybe space aliens are using mind control rays to make Norway, Russia, Angola, Saudi, and Mexico cooperate?)  But mainstream media conspiracy theories are always treated with great respect.  LOL!
Right. This is unmitigated crap. I can just see the Russians, the Saudis, the Norwegians, the Mexicans and the rest sitting down together to fix prices.

To what lengths will the denial go? Probably we haven't seen anything yet.

Canterell has peaked! It's declining! Rapidly! Therefore, let's talk conspiracy. ******* idiots.

As always, a proud member of Homo Sapiens.

The whole problem with a conspiracy theory is that the length of time any secret can be kept is in inverse proportion to the number of people knowing the secret. There are just too damn many co-conspirators in this story.
  I think WestTexas is right, its just the latest story by the iron triangle. And it won't hold up very long. But some people will believe it because it reenforces their opinions.
"And it won't hold up very long"

Actually I think this is not even the start of it...


Some of the dieoff/conspiracy stories floating around here are much more ridiculous and embarrassing than this MSM story.


HongKong Trader --

This is community website focusing on "discussions about energy and our future". We talk about Peak Oil. Those of us who contribute make our case using the best methods at our disposal, through knowledge, data, theory and analysis.

There is no conceivable way that such controversial subjects are not going to attract some real whackos, wing nuts, crazies, call them what you want. I don't apologize for these people and I don't approve either. That's just the way it is. As far as the MSM goes, there will be great resistance until the tipping point has occurred. That said, I can only quote Alfred, Lord Tennyson.

"Forward, the Light Brigade!"
Was there a man dismay'd?
Not tho' the soldier knew
Someone had blunder'd:
Their's not to make reply,
Their's not to reason why,
Their's but to do and die:
Into the valley of Death
Rode the six hundred.

Cannon to right of them,
Cannon to left of them,
Cannon in front of them
Volley'd and thunder'd;
Storm'd at with shot and shell,
Boldly they rode and well,
Into the jaws of Death,
Into the mouth of Hell
Rode the six hundred.

Kind of inspiring, isn't it?

HK: Agreed. However, if you took the most absurd theories written on TOD and had the MSM endorse them through Mike Wallace or Dan Rather, etc. you would be surprised how well they would fly. If any of us had floated this absurd theory last week we would have been shouted down as moronic, but even on TOD the MSM has a seductive power than is often subtle but always present.A bonus is they can always bring on "experts" with lots of "credentials" a la Yerginize the story.  
Dave, BrianT,

Being still quite new to this I have been trying to politey point out the flaws in the whackos scaremongering stories. But it seems they have made up their mind about what the outcome is and peakoil is an excuse to rationalise it. I guess you are right that it is just how it is. I think from now on I will just pass over any of that BS. Some of you are really doing a great job.

I have a feeling that PO is starting to get more and more traction with the public.


The old wacko, scaremongering story in the United States for many years was that someday Americans would be fighting wars in the Middle East over oil.

It DID sound pretty outrageous at the time ...


a) goiny to war in the middle east is not whacko.

b) dieoff is whacko.

c) pointing to (a) as if it justifies (b) is whacko.

I have a horrible feeling we're going to experience both of these wacko things before it's all over ...
Yes, and I  believe it was the former great Senator from Colorado, Gary Hart, who had the foresight to warn us. He also warned us about 9/11. Man, the guy must be tired of being so right with so few people listening.
About 18 months ago I had a chance to listen to Gary in the context of a graduate class on national security. His big concern about the next major terrorist strike was a dozen or two people injected with smallpox and then walking across the Mexican border. Each would then be taken to a major city and spend as much time as possible strolling around and coughing at crowded public venues -- museums, sporting events, etc. He had visited Russia and was not impressed by the accounting for the viral stocks maintained there. It is my understanding that smallpox is not very contagious while the disease is incubating, so actually spreading it might be difficult.
The fate of all Cassandras throughout history.
In the end, they were still right.
It's available on their website now.  It didn't seem very persuasive though.  OF COURSE OPEC tried to restrain production, including appeals to non-OPEC producers for help back in the late '90's and into 2001.  Prices were getting HAMMERED again, and their recent cutbacks had had only modest impact.  

So someone in Florida is suing because of this major stunner that OPEC would like to constrain competition?  DUH!  I can't imagine this will go very far, but who knows.

Anyway, I think the real news from 2001 until now has been the surprisingly rapid growth in demand from the US and Asia.  Oil production has increased (until lately) and so the idea that collusion has driven up the prices isn't as persuasive as the argument that it has been demand-driven.  From 2006 and beyond, the story may be changing, but the demand has grown despite rising prices until now.  Canterell is the real news.

I have to be careful not to pat myself on the back (because that is a good way to fall on my posterior), but the increase in U.S. consumption of gasoline came as no surprise to me--nor to any other economist I know of.

Aggregate nominal incomes are up, way up.

Unemployment is down.

Car (and especially SUV) sales have been going gangbusters for the past ten years, despite cars lasting longer and longer.

Commutes are getting longer and longer as people willingly drive for more than an hour each way to get decent schools for their kids and to get away from life in central cities and close-in suburbs. Much of this is "white flight" which has abated not one whit.

All economists know that gasoline demand is extremely price inelastic in the short run.

So why should we be surprised that Americans keep buying more and more gasoline? I do not know of a single economist who predicted a decline in U.S. gasoline sales during the past twelve months, a decline based on a price increase to levels only half what people pay in Europe.

At some price, quantity demanded will go down significantly and fairly quickly. My WAG is that level is $4.50 per gallon of gasoline in the U.S. When we reach that level depends upon the weather, among other unpredictable variables.

IMO we are right now at the beginning of a recession, though the National Bureau of Economic Statistics probably won't call one until after January. If indeed a serious recession materializes, that decline in GDP will shift the whole demand curve for gasoline downward and to left--and could cause an abrupt fall in gasoline prices for a short period of time.

All right, I have stuck my neck out now--a most uncomfortable posture.

You might be right about the recent expectations for gasoline demand growth, but the many commentators whose work I read (not here) have often mischaracterized the rise in oil prices to date as a supply shock, or a shift up of the supply curve.  They come to the erroneous conclusion that quantity demanded (over time) will drop in response.  Because the demand has led (upward shifting demand curve) to higher prices, it is illogical to assume that higher prices will cause demand to fall.  The other idea is that more supply will be coming on the market at the current high prices, causing prices to fall.  Thanks to TOD, we know that supply is now also becoming inelastic, and maybe for the long run too.

It's a low probability bet to get an actual recession out of the next two quarters, but growth is definitely slowing so your neck isn't so far out there.  After a Q1 real gdp of +5.6%, the consensus forecase Q2 of +3.1 % allows for a significant slowing, and Q3 numbers are already coming in lower, excepting jobless claims.  Negative numbers still seem a ways off though.....

Granted a recession would slow gasoline demand, but simply higher gas prices are unlikely to have much impact well beyond $4.50 a gallon.   To see this, just do the arithmetic.  An exurban commuter at the extreme end drives 2 hours or roughly 100 miles each way, 200 per day, five days a week.  His car gets a measly 20 mpg, using 50 gallons a week.  The current cost: $150.   At $4.50: $225 or $75 a week difference.   This is about the cost of a meal for two at Appleby's (one reason restaurant sales figures are getting a bit weak).  It won't stop anyone from commuting or staying in the exurbs, though it will increase the marginal shift to higher mileage cars which will have a small impact after several years of the trend growing.  

Now at $10 a gallon, our friend will be shelling out $500 a week for his commute.  At a cost diffference of $350 a week for commuting (although his salary will have gone up with inflation, assuming he still has a job), that could make a difference.  But that would put the price of oil at about $250 a barrel.   So my own WAG is that an oil price of $250 a barrel is where things will start to get very hairy, but not at $4.50 a gallon (still less than the Europeans pay currently), which assumes an oil price of about $112.

Why do the European prices keep cropping up as relevant?  They do pay much more than we do; they also have per capita energy use of half of what we have yet have the same quality of life.  But they aren't built on a suburbia model either which may be because of their gas prices but is also why they lifestyle is good despite lower gas usage.  So the fact that they pay more and use half is irrelevant.  Because we are built on a suburbia model, we cannot go to using half as easily.

And $300 a month lost discretionary income will have an impact on families, especially as higher gas prices become higher prices for goods and services and as adjustable mortgages go up to take away even more discretionary income.  Eventually, the people run out of income or max out the credit cards they have been using to cover the shortfall up to now.  At that point, any increases in gas prices will bite them big-time.

European prices are relevant. They have led Europe to develop a car fleet that looks completely different than the US fleet: much smaller cars, much smaller engines, and far more diesels that get much better economy. European new cars (ex-UK) are about 45% diesels, with France at about 60%. The US is about 3%.

Yes, Europeans drive less--partly shorter distances, and probably partly the cost of fuel. But a lot of their economy comes from more efficient vehicles. If the US had comparable gasoline prices to Europe, car manufacturers and buyers would have been acting far differently. Europe never saw anything like the sadly-missed 9 passenger, 19 foot long, 9200 pound, 44 gallon tank Ford Excursion.

And if gas prices were high, different real estate development patterns would have occurred--more density, fewer exurbs. How America developed, and how it uses energy, were the result of naive choices. Bad choices in the past means bigger problems to fix in the future.

Now it will take a LONG time to fix [per Hirsch 2005]: 9-14 years to replace half of the car fleet, and 10-15 years to replace half of the light truck fleet. And at the end of that period, the US fleet will still be far less efficient than the European fleet already is today.

The logical thread after "gas prices will bite them big-time" is recession/depression, loss of real estate values, abandonment of parts of exurbia/suburbia.  It is going to happen regardless.

If we wait for free market prices to do it, that will be the worst of all worlds and we maximize the chances of TSHTF.

However, if we move up the price signals a few years (my favorite is increasing gas taxes 2 cents/gallon every month, with quarterly inflation adjustments, for 20 to 25 years).

Free market forces will likely exceed this; BUT it gives a clear price signal to make structural adjustments NOW or ASAP.  And we can use the additional taxes in a wide variety of ways.

You seem to assume that suburbia is built and will stay there.  I disagree and point to US gov't policies that trashed our pre-WW II housing stock in favor of suburbia.  Now is the time to to the reverse.  Use gov't policies to "induce" the boarding up and trashing of suburbia & shopping malls (as we did to all of our downtowns and most of our old neighborhoods).

I do not know where you live, but I suspect that you have a downtown dead or dying (with some small gov't. activity to bring it back) surrounded by "bad" neighborhoods.

Think back 55 years.  And think forward 20 years, when downtown is the palce to shop and the best homes are within walking distance of downtown and the farmers market.  Meanwhile, shopping malls become storage places and homeless shelters.

I think that $4.50 gas might pinch a bit more than that. Generally only about 30 percent of trips are trips to work; life in suburbia generally means that doing anything -- getting kids to school, buying groceries, running errands, visiting family or friends -- involves a car trip.

Also, the cost of gasoline will mean higher prices for all of the stuff moved around in automobiles and trucks.

I saw this story on CBS and saw it for what it was, pure bullshit. I did not catch all the non-OPEC countries because the flashed them all at once, for about one second, but I did catch Russia, Angola and Mexico. And they said this grand conspiracy, to cut oil production, started in 2002, soon after 9/11. Well, Russia, Angola and Mexico all increased production in 2002, 2003 and 2004. Angola and Russia are still increasing their production. Mexico peaked in 2004.

I just don't see how one can conspire to cut production while all the time increasing production. That is the dumbest damb thing I have ever heard of.

Oh yeah, I forgot to mention, Norway was among the grand conspirators. Norway had peaked the previous year. They have been showing a slow decline ever since. A sure sign of a conspiracy to cut production.

Yeah Right!

So now all that talk from the Saudis and the CFR that it wasn't a production problem but instead was a refinery problem is, I suppose, inoperative? l

Prices of crude oil are high these days not because oil reserves are waning -- in fact, they are plentiful -- but because inadequate refining capacity has limited the quantity of crude available on the world market.

In an interview after a meeting here of the Organization of Petroleum Exporting Countries, Ali Naimi said other cartel members are having trouble finding buyers for all the crude they are producing, at a time when global stores are near full and many refiners have closed facilities for routine maintenance. One Saudi official said an estimated three million barrels a day of refining capacity is out of action and unable to process crude, at a time when the world is using some 84 million barrels a day of oil products like gasoline and jet fuel.

"It's not just heavy oil. Even light oil is having problems" finding buyers, Mr. Naimi said, referring to premium grades of crude known as light crude that are highly prized by refiners because they have high gasoline yields.

Asked if the kingdom was easing up on supply because of concern about the buildup of inventories in the U.S. and other importing countries, Mr. Naimi rejected such a motive, replying: "At $70 a barrel?" Mr. Naimi suggested that producers will sell all the oil they can at such high prices.

The shift in excuses from "we're pumping flat out but there's not enough refinery capacity" to "price fixing" happened within a very short space of time.  fishier and fishierer

This raises a question:

Is the stuff pulled out of the ground (we'll call it raw crude) always refined in some way before it is sold on the commodities market?

In other words, it seems to me that if raw crude were sold & shipped to be refined at destination, then a reduction in refining capacity would mean a glut of the raw stuff (assuming production rates aren't changed). Shouldn't this lead to a lower price for the raw crude (due to the glut)?

How does a refining capacity shortage = higher prices for crude oil (such as WTI)?


yes, I think your logic is exactly right.   i've never understood the concept of oil being expensive because refinery capacity is limited.   it should be exactly the opposite.
There is apparently a capacity shortage for refining heavy, sour crude. This has resulted in lower prices for the heavy sour crude that most refineries can't use (as you'd expect), and higher prices for the light sweet grades that they need (also as you'd expect). There is now more or less a record price spread between the grades(in $, though perhaps not in %).
When this spread starts hitting records in terms of %, we should start paying close attention.
While i consider this story just another example of the unlimited levels of inanity that pervade the MSM, what difference does it make what causes the peak? The supply will still not be there, the price will still go up, and we are still screwed.
IMO, the main difference is, unlike a geological limitation being explained to the US public, a list of evildoers is being read to the US public (mostly A-rab, you can throw in left-wing Mexicans if you want). The broadcast was designed to enrage the viewer and focus the blame, along with implying that things will get fixed once we straighten out those bastards/cheaters.
Yep, those damn Czechs. Now we just need to seize the Sudetenland, for a little more elbow room....
So I'm curious.  I'm still unable to find any coverage at all of this CBS story on the web.  What evidence did CBS cite for their conclusions?  (I know it's terribly old-fashioned, but I really like to understand the facts before making up my mind about some new idea that comes along).  Certainly with the exception of Saudi Arabia, you can make an argument from rig counts that the OPEC countries are not making much of an effort to increase/maintain production.
Stuart, you can see footage here:

CBS news: The OPEC factor

This is pretty funny stuff. It's not reported as 'possible' or speculative at all. Apparently the non-OPEC conspirators are getting sued! Funny stuff.

I hope this does end up in court. Having to explain to Joe Sixpack in simple diagrams and words why oil production eventually falls in oil fields could be one of the best ways of bringing Peak Oil to the public. I wonder how scared the brighter members of the general public will get, when the realise how useful to society, oil and oil products are and how much is remaining that can be extracted.

Makes you wonder if Norway et al are going to have to mention the words Peak Oil in court to defend themselves. Also, having to admit that many big oil fields having falling production levels because they are passed their prime should help move the markets.

Thanks for the link to the video.

That someone would believe that they could successful sue [in a U.S. court and presumably recover from] what has always been a cartel [comprised of sovereign countries] operating outside the U.S. alleging price fixing and collusion [which is what cartels do] is beyond insane.

Insane, certainly. Possible under US law, very probably :-)
The video refers for sources mainly to "Internal OPEC bulletins obtained by CBS news", suggesting that it is some secret thing CBS cleverly gained access to.  However, a graphic shows a periodical titled "OPEC bulletin".  The OPEC bulletin is a periodical available on the web here.  So I think we can assume that CBS is actually just coming up with a sensational characterization of OPEC's normal operation (which historically aimed to maintain prices in the $22-$28 range, but which has broken down of late because they were all producing more or less flat-out).

Here's some text from the December 2001 issue which seems to be at the heart of CBS's "news" report:

A quick search for the sort of documents which might refer to the "price fixing" story found this:

in the OPEC website archives from 2002. Contains the following:

OPEC and Russia in talks on second-quarter market-stabilization measures

No 1/2002

Vienna, Austria, 1st March 2002

A top-level OPEC delegation is to begin two days of talks on Monday (4 March) with their Russian counterparts on measures to ensure stable and reasonable oil prices during the second quarter of this year.

OPEC President Dr. Rilwanu Lukman, Secretary General Dr. Alí Rodríguez Araque and Director of Research Dr. Adnan Shihab-Eldin, will urge senior Government and energy officials, from the world's second-largest oil-producing nation, to extend its policy of restricting crude oil exports into the second quarter. This will be to maintain market stability, in view of the expected seasonal weakness in the next three months.

Late last year, Russia, along with some other leading non-OPEC producers, offered strong support for OPEC's market-stabilizing initiatives, by agreeing to cut its crude oil exports by 150,000 barrels a day, with effect from 1 January. However, Russia indicated that its decision covered only the first quarter of 2002, but that it would review prevailing market conditions before deciding whether to extend export restrictions to the middle of the year.

"We welcome the contribution that Russia and other non-OPEC producers are making towards stabilising oil prices," Shihab-Eldin said recently. "This is exactly the kind of cooperation we in OPEC are attempting to foster." He maintained that the welfare of the international oil market was the responsibility of all producers.

During the talks, OPEC will review, with Russia, its oil market outlook, especially the supply and demand balance, and will seek to ascertain what action Russia plans to take during the second quarter.

"It is imperative that the cuts already in place are continued into this period, to ensure that a concrete floor remains firmly under prices ahead of the summer months, " Shihab-Eldin added.

Earlier this week (27 February), Conference President Lukman welcomed a decision by the Government of another leading non OPEC producer, Norway, to carry over its first-quarter commitment to cut output by 150,000 b/d to the second quarter.

"In taking this action, "he said, "Norway will be greatly supporting OPEC's efforts to balance global supply and demand, which is necessary for stabilising crude oil prices."

If other leading non-OPEC producers followed Norway's example, "a concerted and coordinated effort can be sustained in the market, at least for the first half of this year," Lukman added.

There is, however, a growing consensus among forecasters that the world economy will begin to recover in the second half of this year, increasing the call on oil and triggering a rebound in prices.

"Cooperation is necessary to maintain stability in the market until well into 2003, by which time sufficient demand may have developed to allow both OPEC and non- OPEC producers to relax reductions," says Secretary General Rodríguez Araque.

Other visits to Moscow are planned by senior officials from OPEC Members Algeria and Venezuela, in the build-up to the forthcoming Meeting of the OPEC Conference, which begins on 15 March in Vienna, Austria.

Background information
OPEC reduced production by a total of 3.5 million b/d last year, in a bid to stabilise the oil market, which was then thrown into turmoil by the events of 11 September. Within a month, the price of OPEC's Reference Basket had fallen by around US $5 per barrel from the near-$25/b average of the first eight months of 2001; further falls in the ensuing weeks took the price briefly below $17/b.

OPEC's Conference in mid-November agreed to cut output by an additional 1.5 mb/d for six months from 1 January 2002 - making a total reduction of 5 mb/d - but only if non-OPEC responded with a commitment to a total cut of ten per cent of that figure. When non-OPEC finally made such a commitment, to the tune of 462,000 b/d, OPEC implemented its new agreement.

This eased the pressure on prices. So far this year, the Basket price has averaged around $18.5/b, well above the averages for November and December.

Another release from the OPEC archives later in 2002 refers to some of the other countries refered to in the CBS story. From this URL

We find this:

119th Meeting of the OPEC Conference
OPEC Quotas

No 3/2002

Vienna, Austria, 15 March 2002

The 119th Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) convened in Vienna, Austria, on 15 March 2002, under the Chairmanship of its President, HE Dr. Rilwanu Lukman, Presidential Adviser on Petroleum & Energy of Nigeria and Head of its Delegation.

The Conference extended a warm welcome to HE Sheikh Ahmad Fahad Al-Ahmad Al-Sabah, Acting Minister of Oil of the State of Kuwait, and to all other Heads of Delegation.

The Conference welcomed high-level representatives from Angola, the Arab Republic of Egypt, Mexico, the Sultanate of Oman, the Syrian Arab Republic, and the Russian Federation, whose presence at the Meeting is seen as confirmation of their solidarity with the objectives of the Organization to stabilize the market.

 The Conference renewed the expression of its appreciation of the pledges made by Angola, Mexico, Norway, Oman and the Russian Federation and recognized their contribution made so far to the Organization's efforts to stabilize the market.

The Conference reviewed the Secretary General's report, the report of the Economic Commission Board, the report of the Ministerial Monitoring Sub-Committee (MMSC), and various administrative matters.

The Conference also reviewed the current market situation and its immediate prospects, and noted the encouraging signs of world economic recovery and its effect on the oil market. The Conference further noted the positive market consequences of the actions taken by OPEC and non-OPEC producers to bring about stability to the market.

In view of the uncertainties and the seasonal, low demand in the second quarter, Member Countries strongly emphasized their firm commitment to their Agreements of November and December 2001, until 30 June 2002, and expressed commitment to continue maintaining full compliance. They further urged non-OPEC producers/exporters to continue to co-operate in efforts to maintain market stability.

The Conference agreed that market conditions should continue to be closely monitored and decided to hold an Extraordinary Meeting of the Conference in Vienna, Austria, on Wednesday, 26 June 2002, in order to review the situation.

The Conference expressed its appreciation to the Government of the Federal Republic of Austria and the authorities of the City of Vienna for their warm hospitality and the excellent arrangements made for the Meeting.

The Conference passed Resolutions that will be published on 15 April 2002, after ratification by Member Countries.

The next Ordinary Meeting of the Conference will be convened in Vienna, Austria, on Wednesday, 18 September 2002.

Apparently price and production agreements were made between OPEc and several other nations in 1999. Here is a list of old NYTimes articles, alas behind a pay wall, and one states:

Oil Countries Approve World Cutback of 3% By YOUSSEF M. IBRAHIM Eleven-member Organization of Petroleum Exporting Countries quickly and easily reaches accord with Norway, Mexico, Russia and Oman to cut world oil output by 2.1 million barrels a day, or about 3 percent, for year, meeting, Vienna; expects accord, effective Apr 1, to push up oil prices to $17 to $18 a barrel from current $14 to $15 by summer; gasoline prices, which have risen in anticipation of cuts, could rise further 10 cents a gallon; table of planned cuts by nation

Does someone know more about this? At the very least it could mean that there is a possibility that it might be true.

OF COURSE IT IS TRUE!  OPEC very existance, their goal, is to maintain higher prices for themselves.  This was thought necessary when the world seemed awash in oil.  Honestly, if you look at the price history, it wasn't very effective as a cartel because of cheating among its members and rising production in non-OPEC countries.  Demand growth has pushed up the prices, beyond their expectations, but probably not beyond their aspirations.

They are a cartel, on purpose.  This is not a news story, this is history.

Those prices seem so long ago, don't they?   $20 a barrel?
Wish I had bought more.....

Er ... check the dates on those documents, people :-)

My point simply was to show production cutbacks were negotiated a while ago between OPEC and other oilproducing nations. Just for your information.

The odd thing now offcourse is that prices recently exploded while production actually rose. That suggests that against a negotiated cutback. Furthermore, the negotiations I and John Milton refer to were public. I find it extremely hard to believe that there were production cutback negotiations that were kept secret.

Ladies & Gentlemen, News Flash:   Production cutbacks, especially by the swing producers, are nothing new.  

Prior to 1970, the Texas Railroad Commission effectively controlled the world price of oil.  If you look at a table of Saudi oil production, their big increase in production neatly overlaps with the Texas peak.

What CBS is doing is taking old news about discussions about voluntary production cutbacks--in order to prevent price collapses--and insinuating that the reason for the current price increase is voluntary production cutbacks.  

However, OPEC--and especially Saudi Arabia--may have decided that it is in their own self-interest to suggest that their production declines are voluntary.

The auto/housing/finance group wants to keep selling large vehicles, houses and debts.  

CBS wants to keep selling advertising.

ExxonMobil is afraid of punitive taxation; Saudi Arabia is afraid of military takeovers; the energy analysts are hired guns.

Given the reality of Peak Oil, I suspect that our friends in the Iron Triangle are going to find it advantageous to push the story that the recent prices increases are temporary--as a result of voluntary producion cutbacks.

This was pretty much all unstuck by mid 2002 however, if in fact it ever got implimented at all, seen by following the timeline here:

and the "concern" about sub $17 oil is ummm... not really at the top of the list right now.

But folks love a good conspiracy theory:
"National Enquirer" circualtion: 2,760,000  

That would be my main objective against this conspiracy theory: it wouldn't hold. Norway, or some other country would be tempted to produce more since it would mean large income. But we should allow the possibility to be considered. That way we could debunk and be sure we truely did debunk it

The price rising steadily since 2001 IMHO is a good indicator.

Since I opened this can of worms by watching CBS News, and seeing the report (purely be accident, I was not searching for it or any other conspiracy theory), I will finish my part in the string, with a few quick observations....

  1.  To the theory, "Roger you've been had....", not so quick there, my fellow students of the oil biz....I do not and did not say that I agree with the report in question, but simply that it is now out there, so folks are going to use it and others like it as part of the world view, whether we insist they should or not.

  2.  If there is even a few percent chance that the production is being "handled", it does invalidate most of the stat stacking.  There simply is no way to really use the production stats for anything but a guess.

  3.  The part of the story that everyone here seems to find most hilarious is the one part that no one accused in the story denied.  That there were meetings on production by the parties mentioned, that agreements between OPEC and non OPEC occurred, and that at least some parties seemed to carry out thier part of the bargian was not disputed by Saudi Arabia or other parties, they simply argued that there was nothing wrong with it, it happens all the time, and does not constitute any type of "fixing" but instead, simply insures market "stability"

  4.  The story does not factually invalidate "peaking" worldwide" it simply indicates that any type of peaking would be completely impossible to prove, one way or the other.

  5.  Peaking by certain large producers (Canterell and North Sea) would make the ability and the desire of the other large players with oil production to spare to gain leverage and control pricing all the more pronounced.

Lastly, we cannot ignore the lessons of the past.  We have been led down this path before, with a massive drop in production that lasted a half decade, in the 1980's.  We were all but certain then that the peak had occurred.  Then, when the price collapsed, attempting to get anyone to believe that fossil fuel actually was in crisis over the longer haul became all but impossible, as it still is.  I cannot stress this last one enough:  If we have another similiar event, and prices do in fact collapse after the creating of hysteria again, then conservation, efficiciency, and alternative technology will be thrown in the garbage and it will be burn as you can afford.  Perhaps global warming would put some reason to slow off on consumption, but right now, it is not being taken seriously.  We simply must be VERY, VERY CAUTIOUS ABOUT CREATING ANOTHER FALSE ALARM.

It already makes many people who are deeply concerned about oil depletion very worried when we have to notice that most of the "Peak oil" movement is actually the oil industry.  From Campbell to Deffeyes, to Boone Pickens to Matt Simmons, to Will You Join Us dot com, the core intellectual position of the movement that says the age of oil is over are people with a vested interest in the age of oil (!?).  Even for those of us who accept the major premises, this is discomforting.  

The fact is, we simply have almost no "FACTS" to go on.

If accepting that fact means I have been had, so be it.
Again, EXTREME CAUTION is the order of the day, we are running completely blind here.

Roger Conner  known to you as  ThatsItImout

The ratchety ratchety sound of the drive chain on that first killer roller coaster hill has suddenly stopped. For a moment we hear nothing but a few piercing cries from circling vultures, then the screaming starts.

And, thus goes the Canterell Thrill ride, just as predicted.

The one thing I have learned while reporting for CBS is that nothing happens until someone says it happens, unless you are standing right next to the blast. Reporters are loathe to simply research their topics and even more loathe to think about it. They want some "authority" to speak clearly into the mike, so that the reporter can then edit it down to the exact right spin clip that fits with what the reporter knows is management's particular desire.

Thus we often see for ourselves without the intervention of "experts" what is actually happening, but see nothing of it from the MSM.

You may have noticed today that the ongoing power outage in Queens is FINALLY being reported. Though I spent many years as a working journalist, I must admit that most journalists are among the most ill-informed, biased, lazy, and downright stupid people I have had the misfortune to work with.

The Oil Drum and its contributors are providing invaluable information that will likely not be seen by the average person -- maybe not ever. Unfortunately, even if the public were to see these informative pieces, they would not understand the information because most Americans are science illiterate.

So, there you go. I say "good work" to the helpful people at TOD. But your task is perhaps like hammering a railroad spike into a block of granite with a sock filled with meatballs.

But if every time you raise the sock you hit yourself in the head, before you know it all will be well.
Well, if you can't split granite lick the gravy!
 I certainly love these wonderful semiles !
Though I spent many years as a working journalist, I must admit that most journalists are among the most ill-informed, biased, lazy, and downright stupid people I have had the misfortune to work with.

Tell us how you really feel! :-)

Journalists aren't trained to be experts -- they're jacks of all trades, masters of none. Couple that with the motivation to meet deadlines, editors' expectations, pack competition, and the need to feed the beast of daily reporting then it's little wonder the MSM is as bad as it is.

Frankly, the best TV journalism in the US today is the PBS Newshour and PBS' Frontline series.

I agree.

I believe Frontline is probably the best documentary series ever to be filmed.

Gunga2006, we can prepare the crew all we want be the question is; can we survive the coming storm.
We won't know until we are through it. In the meantime, it's smart to do everything we can to increase our chances.
All hands, prepare to repel boarders!
We're going to need a bigger boat.
1100 men went into the water, 360 came out and the sharks took the rest.
"The thing about a shark, he's got lifeless eyes, black eyes, like a doll's eyes. When he comes after you, he doesn't seem to be living until he bites you, and those black eyes roll over white. . . ."
And more hands to do the repelling.
The good ship United States was designed to carry 100 passengers & crew. The captains have been adding more passengers regularly for a long time. Now with almost 300 passengers the ship is riding very low in the water and there is a big storm brewing on the horizon.
The captain can save the ship, crew and 100 passengers by throwing 200 passengers overboard or he can steam into the storm grossly overloaded with the certainty that the ship will sink and all the passengers and crew will drown.
Do you think the captain really realizes how great the danger is, and if he does, what will he do about it?
The captains plan is to let the stowaways say on board, add more coal to the furnaces, full steam ahead!  But he hasn't seen the storm up ahead--the first mate has him firing all cannons at every dingy within sight.
The first mate rushes in, "Captain, there are 2 enemy vessels in our path". Captain says to first mate, "Get my red shirt ready". "Why" asks the first mate. "In case I am wounded in battle, I don't want the men to see me bleeding and give up the fight".

The next day the first mate rushes in again, "Captain, 20 enemy vessels have been spotted on the horizon". Captain says to first mate, "Get my brown pants ready".

The "other meaning" of a Red shirt
I'm getting a helpless , there is nothing we can do kinda vibe from this thread today.

The captain I care nought for what he sees or does. I am bundling my  wife and children up and strapping them in to a life boat as I make preparations to guide.
Are you placing your hopes for survival in the hands of others? Some Captain? &^%$ that.
Stow your gear, and chart a course. If you're at TOD you have a better idea than most  what is to come and with that you can prepare and increase your chances.

Hello TODers,

This means badnews for Mexico's future.  I have been exchanging posts with a fellow Yahoo:AlasBabylon forum member who lives in the mountains down South.  He says Peakoil awareness is much less in Mexico than even the US's abyssmal awareness-- many are already struggling to just eak out their daily existence.  But he feels that everyone in Mexico, even the wealthy and Peakoil informed minority WILL NOT want Gringo investment and possible loss of control of their oilfields.  They remember very well how the US has treated them over the last 200 years.

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

US investment to empty Mexico's oil fields wouldn't appear to be in Mexico's interest.  They are better off developing their resource slowly and extending its life.  The rise in oil prices will offset their declining exports, at least to a degree.  It is in Mexico's interest to have this natural resource being used by the next generation of Mexicans instead of this generation of Americans.  

It can be argued that the US currently uses oil so wastefully, that it is imorale to export any oil to them at all.  Hugo told me so.

Does anyone have a good perspective on how Cantarell oil production plays into Mexico's public finances?  How disruptive to Mexican society is a rapid decline in their oil production likely to be?  (Presumably, the worse it is, the more attempted immigration to the US we'll see).
I would assume a similar model to that of Russia, except for the lack of an entire infrastructure.
Considering that over 50% of Mexico's population make less than $2/day, Cantarell's demise isn't going to hurt them much. As for exports, there's a problem with cutting and keeping them for domestic consumption--NAFTA. For Mexico to actually have sovereignty over its resources--all of them--a unilateral withdrawl from NAFTA would need to be announced by the Mexican government, which is why US Imperialists are keen to have Calderon declared the winner of July 2's election. Given the massive fraud in the election and wishes to avoid a repeat of 1988, a true, impartial recount might--ought to, actually--be ordered by Mexico's Supreme Electoral Court, which would likely find Lopez-Obrador to be the true winner. (I find NarcoNews to be a good source covering the Other Mexico's politics.) The election result will go a long ways toward determining how declining oil production will affect Mexico and its people. Pulling out from NAFTA is clearly in Mexico's interest. Either way, it's clear that the US will be getting smaller exports from Mexico; it's a question of how quickly and how much smaller they become.
Unlike Canada, Mexico did not agree to the restrictions on controls over energy exports in Chapter 6 (605) of NAFTA and so would not have to withdraw from NAFTA to regain energy sovereignty. See Annex 602.3, Resevations and Special Provisions; 603.6, Exception to Article 603; Annex 6065.6, Exception to Article 605; and Annex 607: National Security.
I thought there was some caveat put forth by Mexico about "underground resources" for constitutional reasons; thanks for providing that confirmation. Still, withdrawing from NAFTA would be in Mexico's interest due to the sharp agricultural imbalances alone.

I see another ~85MBOE have been used as another day dawns to use yet another ~85MBOE--"Time Waits For No One."

The LA article (read it during lunch) says Mexico takes 55 billion/year, maybe pemex keeps around 20 billion for their overmanning/corruption, leaving nothing at all for maintenance, much less new equipment/exploration. Breakdowns are happening 24/7, production might be declining even without cantarell collapse.
From memory, 60% of the Federal Budget comes from Pemex.

Pemex borrows for capital needs and sends free cash flow to the gov't.  Not very sustainable with steady production; less so now.

"Despite lofty prices for oil, Pemex has seen little of the roughly $9 billion windfall above its expected revenue. It is heavily taxed - the government relies on it to finance about one-third of the national budget."

Very interesting point that falling Mexican govt. revenue from oil could increase the emigration stream.  Another thought: if (when) the US becomes serious about halting illegal immegration from Mexico, thus seriously p***ing off a lot of Mexicans, the good citizens south of our border may not want to see their oil getting a free passage accross the border when their people cannot.
Reviewing NAFTA, "super NAFTA", and other such ideas coming from Washington, it is apparent to me that the US government has no real interest in stopping illegal Mexican immigration - because it won't matter if they can reach their objective anyway. And what is that? A massive North American trade bloc where citizens of Canada, the US, and Mexico can pretty much come and go in each country as they please. The neocons have already written about how a more stable Mexican economy would be good for the US and how defending Mexico's narrow southern border is far simpler than closing our huge open border with Mexico. And it actually does make sense if you buy into the entire globalization mindset anyway.
  1. PEMEX is the single largest employer in Mexico.
  2. PEMEX represents the second largest source of Mexico's GDP (remittances from Mexican citizens working in the US are #1)
  3. PEMEX provides 36% of the Mexican government's annual tax revenue.
  4. PEMEX is technically (by US accounting standards) bankrupt already.
  5. Cantarell alone provides more than half (nearly 60%) of PEMEX's annual production.

Mexico is a failed state, with high unemployment, rampant corruption and incompetance, violence, drugs, and few opportunities for its citizens. In a recent poll, more than half of its citizenry said they would like to leave if they could. If it had not been able to export its poverty, it would have already collapsed.

Cantarell is to Mexico as Ghawar is to Saudi Arabia. . .
Yet, when I check one of the oil industry's online news sources, I see this:

(quoting Xinhua of all sources - are there any Mexican news bureaus?)

So Pemex has brought in all this extra cash... but what happens to it?    The State siphons off a large chunk for some socialist inspired temporary bribes to the masses?   Payoff to corrupt local authorities?     Will there be significant reinvenstment in infrastructure for future production?   ( Or, I suppose, if it really is the end of Mexican Gulf oil production then perhaps further investment would not make so much sense...)

What I'd like to see in the media at large (both "main stream" and industry specific) is the closing of the loop on stories like these....  Would love to have seen Xinhua dig into where all that money went.

I would say the money is going here

Chavez nonetheless has been using surging oil revenues to modernize Venezuela's military, signing multibillion-dollar defense deals with Russia and Spain, among others. Venezuela is buying 100,000 Kalashnikov assault rifles and hopes to set up factories to produce more.


Isn't it nice how all the money for what could be invested into productive work (wind generators all around the globe?) instead gets sucked up by the international arms industry?

This has been happening all my life, and I'm over 50.

War is simply a racket, as General Butler pointed out long ago.

But just think of all the oil we are getting from Iraq.  And look how we pacified Afghanistan.  And Iran, I can't wait for all that oil from Iran.  Man, this 5 zillion dollar defense budget is really paying off.
First Cantarell, then Ghawar?

This is why I have repeatedly expressed astonishment that anyone could seriously talk about rising oil production when all four of the largest oil fields in the world are almost certainly declining.  

At the PBS Peak Oil debate, I raised the question (off air) of Ghawar and Cantarell with the ExxonMobil guy.  He claimed to have "no knowledge" of how these fields were doing--IMO, as in "See no evil; Hear no evil; Speak no evil."  

I think that we are at the point in the movie "Titanic" where the passengers are just beginning to realize that they damned well better hurry up and get to the lifeboats.  You do recall what happened to those who didn't act fast enough.

On CNBC this morning, the talking heads were speculating about what life would be like without electricity.  They said it was unimaginable.

Having went through Hurricane Iniki, in 92, we had no running water for 3 weeks and no power for 3 months. I can assure you it is not life as usual. The only thing that gets you through is the reasonable hope that things are about to get better. This crisis puts a whole new slant on that, which is why I worry much more about the socio/economic reaction to the lightbulb coming on concerning peak oil, than the actual shortage induced problems. I can't even imagine the reaction in the LA basin where a guy getting beat up on TV can spark destructive riots. There is no track at the bottom of the first hill on that roller coaster.
Yes, being in a crowded city with far more people than the tiny arable land could support is very, very dangerous.
One argument is that suburban market gardens/farms would bring the food to city's market areas for local purchase.  The cities would continue producing manufactured goods, bastions for schools of higher learning, seat of state governments, just as in the early Industrial era. (Note: this is purely conjecture at this point :-)
If you're going to put farms in suburbia, where are you going to put all the houses? It's kind of hard to plow between starter mansions ... :)
Orchard farming seems the only practical use of suburbia/exurbia.  Perhaps limited acreage could be returned to row farming, but that is likley to be a special case.  Removing houses, driveways, streets, underground utilities is exensive and energy & labor intensive
Your preconceptions are biasing you away from what is actually possible in urban gardening. The linked example is extreme (for today) but shows just how much use can be gotten from a small lot in a suburban setting if people are willing to work it.
>Your preconceptions are biasing you away from what is actually possible in urban gardening. The linked example is extreme (for today) but shows just how much use can be gotten from a small lot in a suburban setting if people are willing to work it.

Try if for a few years without the use of fertializer inputs and limited irrigation.

Urban roofs with gutters are ideal for cistern catchments -> irrigation.
West Texas,
I'm turning in grades at the end of the month.
You get A+.
Khebab gets A+.
Leanan gets A+ plus lots of extra credit.

Myself I'm giving a "B" to, because some of my posts are not as good as others.

"Myself I'm giving a "B" to, because some of my posts are not as good as others."

Think you should recheck your curve there Don, as I read it its a toss up for you between an "A" for "arrogance" and a "T" for "Troll" ;)

I'm certainly in very good company (I suspect that I pull down the average, but I like to "hang out" with people smarter than me).  
Welcome back after your long absence!
Both Sides Now
(With profound apologies to Joni Mitchell)

Rows and flows of angel's hair
And icecream castles in the air
And feathered canyons everywhere
I've looked at Peak Oil that way

But Peak Oil only blocks the sun
It rains and snows on everyone
So many things I would have done
But Peak Oil got in my way.

I've looked at Peak Oil from both sides now
From up and down, but still somehow
It's Peak Oil illusions I recall
I really don't know Peak Oil at all.

Moon and Junes and Ferris wheels
That dizzy dancing way you feel
As every fairy tale comes real
I've looked at Peak Oil that way.

But now it's just another show
You leave them laughing when you go
And if you care, don't let them know
Don't give yourself away.

I've looked at Peak Oil from both sides now
From give and take, but still somehow
It's Peak Oil's illusions I recall
I really don't know Peak Oil at all.

Tears and fears and feeling proud
To say "I love you" right out loud
Dreams and schemes and circus crowds
I've looked at Peak Oil that way

But now old friends are acting strange
They shake their heads, they say I've changed
Well something's lost, but something's gained
In living every day.

I've looked at Peak Oil from both sides now
From win and lose, but still somehow
It's Peak Oil's illusions I recall
I really don't know Peak Oil at all.

WesttexasThat's good, I can't wait to have my daughter accompany me on the piano while i sing it.
Re:  First Cantarell, then Ghawar?

Based on recent production numbers, these two fields (the two largest producing fields in the world) accounted for close to 10% of total world crude + condensate production.

As I understand it, the problem in both cases is a rapidly thinning oil column between a water leg and a gas cap.  

Another key point that I have made before:  from this point forward, high production rates are the enemy of (remaining) high recovery rates.  If the respective operators continue to pull oil out at high rates, oil will be more and more likely to be bypassed by water and gas.  (The relative permeability to water and gas is higher than to oil.)

We do have new projects coming on line, but this is the basis for the Peak Oil theory and Hubbert Linearization (HL).  When a region hits the vicinity of 50% of Qt mark, the decline from the large, old oil fields overwhelms the production from newer, smaller fields.  The mistake that Yergin, et al, are making is in vastly underestimating depletion.

Texas peaked at the same time as its largest oil field, East Texas, had its final peak.  And the future of Ghawar and Cantarell can be seen in the current production of the once mighty East Texas Field--99% water and 1% oil.


Thanks for staying focused on the issue of oil depletion numbers.  I know you keep saying the same thing over and over again but it is important to keep everyone focused on the geology.  Some people are slow to accept data that doesn't fit their hypothesis and want to change the subject.

I will make up my own mind about what will happen after peak oil.  I need to understand when that event has/will occur.

Keep the rational presentation of facts coming with respect to oil production vs field size vs extraction rate.

Watch your back. You might become too threatening to some powerful people with your message about how peak oil will unfold.

I gave a talk at a Rotary Club meeting a few weeks ago (advising everyone to stop spending, get out of debt and simplify their lives). One of the guys--who agreed with me--came up to me after the meeting and asked why someone hadn't assassinated me yet.  

I gave a similar spiel to a guy last year.  He thought about it for a moment and then said, "What happens to the economy if everyone stops borrowing and spending?"  How far has our once great nation fallen when to suggest that one spend less than one's income is now considered to be vaguely un-American?

I agree with you.

"A penny saved is a penny earned" doesn't carry much weight these days.

I can't even hold conversations with people anymore about living within their means.  No one wants to, or thinks they need to.  Debt is the only way to go to have a good life.


On CNBC this morning, the talking heads were speculating about what life would be like without electricity. They said it was unimaginable.

You would start to reappreciate salt as an important substance. Because salt would give you a way to preserve meat (salted porc actually is nice) and cabbage as sauerkraut.

After staring at a blank wall for a solution to all of this, it seems very apparent to me (without envisioning a soluution) that a few more months or years into the decline portion of the curve, the military would make a major imapct on slope of the curve because where will we find aviation fuel for national security.

A doomsday question: Will the country that owns all of the gold, own the world; a minor player now, but later the guy with all the marbles?

Nothing has changed history yet. "The Golden Rule" Them with the gold make the rules.
Iraq is a good source of aviation fuel.
iran's not, but they have the makings...

Vote for me, we'll take the lot.  (I'll get the SUV votes, the other side gets the prius ones... if they bother to vote at all.)
Bloody hell, Bush already said it, and years ago.  Good to get ther first, I suppose.

The military is already ahead of you on this. Note this DARPA solicitation from July 12th for the production of military aviation biofuels.
Anyone here surprised that the oil experts and analysts are painting this gloomy picture?

It seems like they have multiple scenarios and rate them with percentage of likely outcomes.  The worst and best are presented in this article.  To me, this means they are not surprised and are closely monitoring their fields.

Anyone know what is the official production numbers projected by PEMEX and which scenario did they use?  
It seems to be the most optimistic?  Either way, they are expecting several hundred thousand barrels of new production to come online.  People know where these fields?

From memory, Mexico discovered an oil field in the 1920s.  Small, hard to find reserviors full of thick oil. "Like chocolate chips in a cookie". Typical well less than 100 barrels/day; but long production life.

Mexico was producing well less than 100,000 b/day (27,000 ?) from this field.  BUT LOTS of new wells possible with new seismic technology and Mexico can certainly produce much more oil from this field.  All of it gunk, but gunk has value today.

How quickly can Mexico drill 1,000+ wells ?

Put another way: how quickly can a bankrupt oil company finance, build, and deploy the new rigs needed for 1,000+ wells? With rig costs soaring, and a big price spread between light and heavy grades, a low output gunk well may not yet be economically viable in a net present value calculation.
   Mexico is not just short of capital for E & P, but also trained personel. I'm working in the Permian Basin and have been hearing employment ads in spanish from oilfield service companies. Considering the pay differentials I suspect that their oil workers are headed north. Not every illegal immigrant is a poor Indian peon.
In "The Prize", Yergin talks about Mexico's so-called Golden Lane, near Tampico, discovered by Sir Weetman Pearson in 1910 when his Potrero del Llano 4 flowed at 110,000 barrels per day.  He notes that 70,000-100,000 bpd wells were not uncommon in the area.  By 1921, Mexico was the world's second largest producer.  FYI.
On another note, I have been followng David Pimentel and Tad Patzek a lot ever since the guy from has interviewed them. Today he published another article with David Pimentel defending his 2005 ethanol paper. Its a good read, but I dont think his defense is persuadable to the skeptic...

Did anyone happen to see tonites 7/24 CBS news? They claim they uncovered "secret" documents showing beginning in 2001 OPEC colluded with Non OPEC exporting countries to reduce the supply of oil. They claim these documents support the fact they(cooperating countries) reduced pumping by 1.8 million barrels per day. I went to CBS news website and found every item but that one. Is this the "Iron Triangle" in the most perverse way?
See comments above.
Read the comments about half way down.  :-)


I saw the CBS bite again, the number was 1.95 million barrel reduction/day OPEC got Non-OPEC to agree. Apprx 1.00$/gallon is because of this collusion. The CBS website still has no text, although they have a video.
does anyone know the average API of Mexican crude and specifically from Cantarell.
Cantarell is heavy, sour.  
does anyone know what the breakdown of haevy and light is globally and how fast heavy is growing. I think the decline of Canterell leaves the market short heavy which puts the Saudi claims of having spare unwanted heavy to the test...
I've already expressed my doubts that light sweet oil is really running out faster than heavy sour (not counting sands or tar). Except for the Caspian, all the provices which still have some potential for growth actually produce light sweet (West Africa, Algeria, South China Sea).
I thought that global production was on a flat TREND with light sweet in decline. That implies the heavy is still growing?? If both light and heavy were in decline then totalglobal would be in decline. The decline we have seen since Dec are noise not a trend.
That light sweet is declining is what I am disputing.
I just don't know for sure what the answer is here to be honest, but I think I remember data here on TOD to the effect that light sweet crude had been in decline for a few years. Does anyone know for sure?
OPEC Reveal Global Light Sweet Crude Peaked

Published on 19 Aug 2005 by Vital Trivia. Archived on 19 Aug 2005

Interesting. After looking at the OPEC document I see strong signs that it is deliberately misleading readers so as to falsely paint OPEC as the source of most new light sweet oil. Both suppressio veri and suggestio falsi seem to be involved.
I should have mentioned Brazil as the other province which produces light sweet and still has potential for expansion.
Why not type

cantarell api

into Google?

Thank you
Out of curiosity, what are the four largest fields in the world?  OK, Ghawar, Cantarel, what else?  Is there a FAQ on this somewhere?
Ghawar, Cantarell, Burgan, Daqing.  We are certain that but Ghawar are declining.  IMO, it is  near-certainty that Ghawar is also declining.   Ghawar is light, sweet.  Cantarell is heavy, sour.

In round numbers, Ghawar makes--or made--more than the sum of the other three fields put together.

See Greyzone's work hosted here.
Like I posted before it truly is TCOYOA time!  The lemmings are at the cliff.  Question is where is the best place to ride out the storm?  Can anyone imagine how many Mexicans will come across the border when their oil fields go!  Better yet what will life be like here with $10 a gallon gasoline.  Don't worry though 'market forces will take care of everything'.

Actually that's a interesting question.

I don't think much of Mexico's oil money makes it out of the top 1% of the population.
And I doubt much of that money is reinvested in Mexico itself.

I suspect it will cause hardship for the top elite who won't pour over the border and for the government. Generally though in countries outside of the US very little of the oil revenue is put back into economy with the exception of the North Sea regions and the ME.

Eventually this massive loss of wealth will have a effect but I don't see pouring over the borders.

As a case study take Nigeria I think oil has little impact short term on most Nigerians. I'd not call it the trickle down effect but the random drip effect.

Now that's the initial effect in time the losses will build and cause true hardship but I think it will take years.

Looking at the numbers you really run out about 2008 add in the lack of reinvestment your looking at 2010 I think by 2010 there will be a lot more problems going on.

So in general Mexicans pouring over the border is probably going to be the least of the US problems by 2010.

If things continue GW and the real effects of Peak Oil seem to be hitting at the same time which at the minimum is interesting.

At a personal level you have to figure out whats going to make it.

Basic good and services sure. I used to live in Vietnam one of the richest persons there sold milk.

But I think most peak oilers discount mobile communications.
Incorrectly I'm and expert in the area. Its the one high tech thing that really keeps people going. If you have ever seen a blackberry owner going you understand. Once long commutes on public transport become common I think you will see that high tech will do well. Its going to be based of of remote work mobile communications and conferencing.

Basically the white  collar worker of the future will be envious of the criminal with there leg bracelet.

Telecoms equipment today is readily run of of wind/solar and the server farms are already moving to hydro. So power is not a issue until you hit the home. That's where I have extreme interest which is to develop software/hardware that can run off a few solar panels.

My point is it won't be a run to the past as a lot of people predict but a fusion of current and future tech that makes sense with concepts from the past. The number one thing we have over our ancestors is communication we ain't giving that up.

As far as manufacturing is concerned there is no real reason that we don't have robotic factories except for the fact that overseas labor + cheap oil makes robotics expensive so I expect when localization takes place robotics will boom.
Finally the vast majority of manufactured goods could last far longer.  For example in electronics you could readily meet say a 99 year lifespan with just a 50% increase in cost. The only reason not too is that capabilities have increased so much it does not make sense but in the real world usability case this has declined. How much computer do you really need to run a web browser its finite.

I'm as much of a doomer as many here but I can easily see a robust high tech civilization running on less then 25% of our current energy usage.  So on that aspect were fine we can technically continue. But no matter how I run the numbers I just don't see running that type of civilisation with our current population that the real problem of peak oil.

Few consider what would have happened if the world had stabilized at 2 billion in population world wide it would have been a very very nice place. Sure we would have used some hydrocarbons for some endeavors but we would be setting on a  500-1000 year supply.

I guess I'm even more depressed thinking about what we could have had if we had even simply been realistic even 50 years ago.

Memmel, Keep thinking like that and you will get depressed. Go back and read Yergin for awhile, while wathing the Miss Universe pageant. Then a couple of hummer ads and a interview with Britney Spiers or any one of the host of other mindless twits that grace our airways routinely. You'll feel better, trust me! (Desperate Housewives maybe?)

p0rn is the geeks salvation :)

No seriously I'm pretty high up the technical ladder and I know that you can use technology to solve all the worlds problems today but you can only solve them for n people and n ain't 6 billion.

We can and will eventually have a high tech energy neutral economy at least on earth there are great reasons to move energy intensive operations off earth.
But its just not a society that can support anywhere near our current population. At the end of the day the peak oilers preocupation with SUV ignores the real proble of billions dying. It like fiddling while Rome burns and the biggest argument is what the brand of fiddle was.

Also I think we bash our goverments to much since at the end of the day everyone knows in there heart that in the next 20 years the SHTF so were just educated people along for the ride.

Back to technology I dabble doing research into affordable solar energy check out.

Liquid nitrogen is the one true way to balance natural energ sources IMHO.

The reason its not advances is it won't replace the gasoline economy and can offer at most 50% of the capabilites which is not of intrest today but if you don't have a hydrocarbon economy it is really attractive.

The next thing is self replicating engineering i.e. its factories that can make factorries not neccesarily nano but nano help its about developing closed system.

I have a degree in chemistry and spend a lot of time working through integrated cycles for chemical synthesis which is fascinating the inputs are syn gas H2 CO C02 plus N2 outputs or anything.

I'm convinced you could build  Microfluidic based systems,subjectCd-CH72,descCd-authorInfo.html

These would take up maybe the size of a large fridge but could output reasonable volumes of any industrial chemical
give the simple initial inputs.

Since I'm one of the few people in our society that actually knows how to build high tech I assure you its possible.

For 2 billion people.

Memmel, I'm with you man. I also believe we could support a smaller society, with higher tech than today and with unreal advantages to both mankind and the rest of the species. I'm not so sure we will. I've got 7 grandkids and kids from 17-40. The kids all understand peak oil, only a couple don't yet believe seriously enough. I live on an island with a small enough population that we could relatively easily sustainably exist. We can grow food year round, there is no need for AC or heat or clothes for that matter. We have abundant water, My company is presently installing a 130kw hydro plant, a 9 megawatt biomass facility, 10 megawatts of wind,  and 40,000 oil palm which here should supply about 350,000 gallons of diesel fuel. Were growing hops.And we are arming. 100 miles away, over water fortunately, are 1,000,000 people who  not far into the crisis will get hungry and jealous. We will not be able to support them all. Such, I fear, is the world we will live in, not because we have to, but because the masses will chose the "last man standing" to "the power down". I wish it were not so but sociologically we just can't cut it.
Could you feed and power 5-10% of the closest migratable populations? If the other 90-95% then starts to move those will probably loose their food source. It would perhaps be good to get a contract for biodiesel for their fire brigades, ambulances and police? And why not basic foodstuff for schools and police? Be more usefull for them alive and well off then run over with broken infrastructure.

If lots of groups tries this strategy instead om maximising armement there will be resources to produce more and get more people thru lean times.


"Liquid nitrogen as an energy store has a low energy density."

Forget it!
Geeks tend to dismiss any other factors than "it works", burning cow pies "works", can't fly planes with it.

I've got my old Mac G3, a telephone that connects into the wall and a 27-inch television.

Really, I don't anything else ... other than some good books ...

The cell-phone thing doesn't make sense to me.

As a case study take Nigeria I think oil has little impact short term on most Nigerians. I'd not call it the trickle down effect but the random drip effect.

I did a country study on Nigeria for a PoliSci class.  While most of the direct revenues from oil production go to the government and various leaders/criminals, ordinary Nigerians are seriously impacted by the oil industry in the country.  Environmental damage ruins their lands, health, and livelihoods; lack of investment in the country's infrastructure due to revenues being funneled to corrupt officials impacts their quality of life (healthcare, education, transportation, economic development, etc.); resulting poverty leads to high rates of crime; rebels/gangs in the Delta have killed hundreds of innocent Nigerians in attacks on the oil infrastructure and each other; the government has attacked and killed villagers who support or harbor the rebels; hundreds died recently in a fiery explosion while trying to collect leaking oil and gas to use or sell.  It remains to be seen whether the increased revenues due to higher prices will be responsibly used by the current leadership.  Based on the country's history, I fear not.

The oil industry has always carried "unintended" consequences for the average inhabitant of every "third world" country in which it has operated.  For the sake of these people, the sooner it becomes defunct, the better.