DrumBeat: July 5, 2006

Update [2006-7-5 9:41:48 by Leanan]: Opposition demands "true" reserve figures in Kuwait
Kuwait’s opposition alliance, which swept to victory in parliamentary elections on June 30th, will reject a government plan to raise oil production capacity in the light of reports that the country’s reserves are half the official figure, a leading opposition MP said.

“We will work to introduce key changes to the government oil policy in a bid to halt plans that aim to raise oil production, because such plans are unnecessary,” liberal MP Abdullah Al Nibari said.

A group of lawmakers in the previous parliament had submitted a bill that would limit Kuwait’s annual production to 1% of proven reserves.

Based on official reserve figures this would freeze Kuwait’s production at 2.5 million barrels per day (bpd), scuppering its plans for a massive production increase.

But if lower, more conservative figures are taken into account—as some opposition leaders want to—then Kuwait would have to halve its current production, which would drive world prices higher.

Jesse Jackson Leads Anti-BP March

High energy costs hurting industry in the U.K.

Mayo Clinic collides with coal trains.

The search for alternatives is heating up...

In the U.S.: Search for New Oil Sources Leads to Processed Coal

In Indonesia, they're making biodiesel out of palm oil. But it can't compete with subsidized petroleum, and environmentalists see it as an excuse to log the rainforest.

In Vietnam, they're making biodiesel out of catfish.

The U.S. is soon to be a A nation of 300 million.

The USA is closing in on a milestone that seemed unthinkable 25 years ago. Sometime in mid-October, we will become a nation of 300 million Americans.

We will then embark on a relatively quick journey to 400 million. Target date: around 2040.

How did this young country get so big so quickly? Immigration, longevity, a relatively high birth rate and economic stability all have propelled the phenomenal growth. The nation has added 100 million people since 1967 to become the world's third-most populous country after China and India. It's growing faster than any other industrialized nation.

Update [2006-7-5 10:12:46 by Leanan]: Ex-Enron chief Kenneth Lay dead of heart attack.

Update [2006-7-5 11:51:52 by Leanan]: Oil rigs leaving Gulf of Mexico, driving up prices

Oil rigs are leaving the Gulf of Mexico in record numbers, threatening to put upward pressure on U.S. oil and natural gas prices, according to a report published Wednesday.

Drilling companies are increasingly signing long-term deals with oil firms to send their rigs to more promising drilling regions overseas, said the Wall Street Journal.

Go north, young man: Canada taps tough-to-obtain oil

Oil sands development is both more difficult and labor intensive than conventional oil drilling.

...As development accelerates, Canadian companies expect to exhaust domestic supplies of trained oil-industry craftsmen.

"I believe we will be drawing on the American workforce. Americans have the skills to build these projects," says Camarta.

Update [2006-7-5 13:56:20 by Leanan]: Oil jumps to record trading high of $75.40 on worries about Iran, North Korea.

Note to self:  Buy oil futures, launch missle.

July 5 (Bloomberg) -- Oil rose in London after North Korea fired missiles into the Sea of Japan, raising concern that fuel supplies to Asia, the fastest-growing energy consumer, could be disrupted by conflict in the region.


... I find the Korea/oil connection kind of strange, actually.

You would think that oil prices would go lower if demand from the fastest growing energy consumer would be disrupted!?
I think the article drew a tenuous connection, perhaps trying to think of some way to tie the Korean news to higher oil prices.  I mean, is it all reasonable that Korea is about to launch a war on tankers?

Maybe there'd be a higher general fear factor if people thought Korea was going to start any kind of war .. but I haven't heard that either.

1/3 of the world's oil passes through Malacca Straits, so its possible - if the range of their missiles is high enough.

Then again, a lot of 'stuff' passes through that area, so you would expect to see price rises for many security-traded items.

I would stick with the Kuwait explanation.


  The one long range missile failed, and the other six are upgunned SCUDS, so they have little accuracy. A scare tactic.

You would think that oil prices would go lower if demand from the fastest growing energy consumer would be disrupted!?


More oil for the rest of us.

The way oil (or any other futures) market works has little to do with fundamentals of supply and demand. As John Maynard Keynes pointed out back in 1936, speculative markets depend on what speculators think other speculators will do. He has a very amusing passage on this topic, and BTW was a highly successful speculator himself.

When and if I speculate, I dump all my econonic knowledge in the garbage and tap deep into what I know of social psychology (of panics, mob behavior, mass hysteria, delusions, feverish overheating of tulip markets, etc.).

Whenever folks talk about 'rational markets' I think Tulips and sockpuppets.com.
Aha, at long last, a good rational analysis on the rationality of "the market".

We can probably compile a long list of irrationally exuberant moves by "the market" to contradict those who believe that the market acts rationally. Yes, the 2001 dot.com bust and Tulip fever are part of that list as well as the build up of stock values during the roaring 1920's, but numbers one, two on my list are:

  1. Continuing to invest scarce resources and time (also a scarce resource) into the building up of our oil-based infrastructure (suburbia, superhighways to nowhere, SUV factories, etc.) when we know that this is a mad drive towards the cliffs.
  2. Continuing to pump more and more CO2 into our atmosphere when we know the Inconveniant Truth about that tactic.
  3.  Not building a de-centralized DC electric grid.
  4. Not building up intelligence and knowledge in our populations (the dumbing down of the sheeple)
  5. What's on your list???
Did you hear that Atlanta plans to expand one of its freeways to 23 lanes?  Hello?  No doubt they plan to run all those cars on peanut oil.

Frankly, I think we should be shrinking our current road system, not expanding it.  Let's convert part of those 12+ lane freeways to bus only lanes that actually get you through the whole city, not half way through, like they had in Denver when I used to take a bus to work there.  

Did you hear that Atlanta plans to expand one of its freeways to 23 lanes?
Is that in one direction or two?
Not building up intelligence and knowledge in our populations (the dumbing down of the sheeple)

Actually, it is worse than that.  The education system is teaching the wrong skills and knowledge for a post peak world while, at the same time, using information appropriate to children, i.e., dumbing down the little, meaningless crap that is taught.  At some point, people will look back (well, at least old farts like me hope they will look back) and realize that "shop" and "home economics" were far more important than diversity training.

I would also include living on credit (both personal and agency/government) on the list list.


Maybe they meant to say "oil prices rise as Kuwait considers a 50% cut in production".
I forgot to add that oil prices actually fell in London this morning.
4 July, 9 am Brent August contract was $73.49
5 July, 9 am Brent August contract was $72.97
Because they do have an elected parliament they can demand the truth, as opposed to Saudi Arabia who is not the least bit concerned with the truth.

But if the truth ever is revealed by Kuwait, this will hopefully, cast a shadow of doubt about the rest of Middle East reserves. Then, then, then perhaps a little common sense will seep through the thick skulls of all those cornucopians who see no peak in sight.

The controversy led veteran Kuwaiti lawmaker Ahmad Al Saadun to demand that the government reveal what he calls "the truth" about the emirate's oil reserves. "This raises justified and legitimate concerns that these reserves could be depleted in a very short duration on the basis of current production figures," Al Saadun, a three-time former speaker, said in a question sent to the energy minister in March.
"We must know the full truth on the proven and non-proven reserves and other data regarding the oil wealth," Al Saadun said. The MP has not yet received an answer.

(Same link as above)

In regard to the Kuwaiti story, note that the lower estimate of remaining recoverable reserves is a close fit to Stuart's HL estimate.
After Bernanke hinted about ending the interest rate hikes, all commodities are on the rise again. In this environment we will hear all kinds of excuses for a certain price rise. People need to have some explanation, whether logical or not...

Correct, N. Korea and his fat leader have nothing to do directly with oil, but not too many TOD readers are from either Japan or S. Korea. They are not happy, hence the increase in the price of oil.

By the way, those Vietnamese catfish have shown up in our markets with the amusing name ... "white roughy."  Not at all like "orange roughy."
Well, this is no longer offtopic, but sorry anyway for duplicating messages....

I need the help of the TOD community.

We (Crisis Energética and AEREN) have translated our own Peak Oil Primer to English:

The Oil Peak and the World (pdf file, 2,5MB).

We would be very grateful to hear your opinion about this document, its contents, the translation (is there something that sounds strange), etc.

We intend to print some copies and we would be bringing some of them to ASPO in Pisa, so I would like to hear your opinion before that.

Many thanks!!!

Bad URL?

Not Found

The requested URL /ficheros/The_Oil_Peak_and_the_world.pdf was not found on this server.

Your link to the PDF doesn't work
Interesting front-cover graphics.

In looking at it, it dawned on me that there is a difference between The World As We Each Individually Know It (TWA-WEIKI) and The World As We Should Collectively Know It.

What does that mean?
Well look each of our 6,500 million citizens and how he or she sees that world from his/her viewpoint:

  1. There is gasoline for my automobile everytime I pull up to the gas station. Sometimes I have to pay more, but so what? This is how the Invisible Hand works.

  2. There are people smarter than me. Surely they are making sure that everything works out.

  3. I am a religious person and I know God is looking out for me.

  4. Even if oil/gasoline runs out, I am confident that the smarter people or God or the markets will provide alternative solutions. They always have. Worrying never helps. Therefore I will not worry or go out of my way to learn more. I am happy with the world as I individually know it. I have no intention to change it.
Oh, thank you kind sir! Now I can sleep well at night;-)
TEHRAN, Iran -- Iran, the world's second-largest holder of oil reserves, may run out of gasoline by the end of August, one month earlier than expected, as surging world prices bankrupt the government's price-subsidy program.


Pre-emptive actions continue to be contemplated.
Link courtesy of Energybulletin:

Pre-emptive Energy Security otherwise known as Might is Right

You know, this is scary at first, like something that might have been written by Japan in the 30's ...

but I think it really puts a gun to congress' head.  It says fix the nation's energy problems, of face this.

let me amend ... it is still scary, even thinking that it is about shaping domestic policy.  it's a dangerous game.
"Pre-emptive Energy Security otherwise known as Might is Right" - or "If you don't sell us what we want at price we can afford, we will invade your country and steal it"
I hope the closing paragraph is the truly operative one:

      The reality of this nation's energy situation must elevate concerns within the American public to demand a new direction. As suggested by John M. Amiden, "The current world energy situation poses a national threat unparalleled in 225 years."69 Energy is an essential component of the daily life of this nation. The realistic solution is to eliminate our reliance on oil to avoid further international incidents, reduce environmental pollutions, and lessen the cost of energy for our citizens. The President should demand an immediate reduction in all oil consumption and offer a date to render the nation completely free of foreign oil. A leader with strategic vision and strong leadership must initiate programs for increased conservation and efficiency to curb a comprehensive long-range strategy that capitalizes on technology to achieve energy independence. A national effort on the scale of the Manhattan Project is needed to shift the nation away from oil placing America on a more secure path. Because lessons of the past have not been learned, we are left in a dangerous position that may require us to act preemptively to guarantee access to sources of energy. Our leaders and citizens must fully understand the link between oil, the economy, and national security.  They must realize the costs in treasury and blood we are paying for oil. Then they will demand a new strategic direction toward energy independence. Without a change in policy, laws, habits, and attitudes, we will remain chained to oil.

BTW, lots of "end of oil" references in the footnotes.

Your link above opens to a blank browser page.  Could you provide the link to the article?
It works for me.

It's PDF, and needs the Adobe Reader to be installed.  

Hmmm...strange.  I have Adobe loaded, but still not pulling up.  May have to do with a security setting here at work.  I'll futz with it.


This graphic from the CTL article (NY Times) is of some interest.

If carbon can be sequestered and the cost of new plants lowered the promise of CTL technology is enormous

These two premises seem to quite contradict themselves, at least in the foreseeble future. If we are going to rule one of them out the obvious choice would have to be carbon sequesteration, IMO. Add to this that most of the carbon would still be released from the liquid fuel itself, and that sequesteration eliminates other sources of heat for the process (NG for example) and the CS part turns into an empty sound aimed to please the GW aware public.

Yes, why doesn't the NYT get the obvious. There are no circumstances whereby CTL can be produced without making the release of greenhouse gases even worse.  Sequestration is partial mitigation.  The liquid fuel will still endanger the planet.  China will develop this technology to the max. That is the only way conceivable that they can take care of their plans for further expansion of their auto dependency.  

The liquid fueled auto needs to be erased from the future.  

My 5 cents would be on that there are certain commercial interests behind the article. Even the format looks more like a presentation or a commercial rather than balanced article with all the pros and cons.
You are spot on.
"A group of lawmakers in the previous parliament had submitted a bill that would limit Kuwait's annual production to 1% of proven reserves."


Imagine the PRECEDENT if a democatically elected parliament decides to limit output to that which it perceives to be in its long-term national best interest.

There could be a line of other countries itching to do the same thing ... lower production, longer life, higher prices!

That sounds la lot ike it came straight from Richard Heinberg's "oil depletion protocal."



To stockpile gasoline, use plenty of Seafoam or Equal. Then it will keep for years. Kerosene and diesel keep better than gasoline, but you can treat them too.

How well stocked is your retreat now?

Want to hire me as a consultant and tennis coach? :=)

Whoops, make that STA-BIL fuel stabilizer. I use it by the quart. BTW, fuel is cheaper if you have it delivered in thousand-gallon or more quantities.
My comment would be that any democratically elected parliament should do what is in its nation's best interest.

Therefore we (the developed/oil-consuming nations) don't have the slightest interest for a true democracy to step in the oil-producing countries (see SA, Russia, Nigeria etc.).

Which does not prevent us from criticizing those same countries all the time for their lack of democracy and/or human rights.

Talk about double talk :)

Kuwait is somewhat unique in that it has a very small population and very large oil reserves. Simply put, Kuwait does not need the dough that would accrue from higher production. Most oil-producing countries, e.g. Venezuela, are on a treadmill wherein they have become very dependent on the $$. I could see Norway following Kuwait's example, but can't think of any others.
Some of the smaller African countries might also fit into that class, although below Norway & Kuwait. Equatorial Guinea & Gabon come to mind.
Westexas (AlanFBE, RR) here is your revenue-neutral carbon tax being advocated on today's Yahoo Finance!
A carbon tax favor natural gas over coal because of the higher H:C ratio. Just what we need: push utilities to substitute natural gas which we import for coal which the U.S. has plenty. Yes, lets drive up the trade deficit even farther.
Yeah, well maybe we should be just a wee bit concerned about global warming. Even Michael Chricton says he thinks global warming is coming . . . .

In regard to our balance of trade deficits, what's to worry? We can always print more dollars. If people want to give us oil and good stuff for wallpaper, hey daddy, that's a good deal!


good to see you back, I haven't been posting much lately myself. have been really damn busy. It's kind of a long story



Do not mess with married women. Also, don't take advantage of virgins. Always use the best protection. I've lived by those three rules, and I have zero bullet holes in my body, no guilt, and I sleep well at night--except when I'm not alone;-)
Yes, I noted that with interest.

I sent him an eMail with my 10% Plan.  Plant enough seeds and some will come up ! :-)

Glad I checked in this evening. Thanks for bringing that to my attention. I hope one of the candidates does pick it up and run with it. Preferably, the one that wins.


Is this an indication that natural gas is getting harder to find?  Gas wells/derricks going up like crazy in the City of Fort Worth.

"Fort Worth's New Noisy Neighbors: Gas Derricks
Sitting atop a massive natural gas supply, the city is issuing permits for wells in residential areas. Some folks know the drill all too well."

http://www.latimes.com/news/nationworld/nation/la-na-drill5jul05,0,6334374.story?coll=la-home-headli nes

There was a somewhat similar thing happening here in Calgary. A couple of years ago Compton Petroleum Corporation wanted to drill a couple of gas well in the south east of the city.

Except, with this being Alberta, it's laced with highly toxic H2S.

Petroleum Drilling in Alberta
The releases that occur during a sour gas leak are so toxic that the Alberta Energy and Utilities Board (EUB) requires an evacuation zone surrounding sour gas wells. The Emergency Planning Zone (EPZ) is normally a 12 kilometer radius around the drill site of a sour gas well. As part of its application, Compton requested a reduced radius of 4 km for the EPZ surrounding the well. A 12 kilometer radius would require the evacuation of one of Calgary's airports, the major provincial highway and a sizable portion of the city.

Luckily Compton application was refused, but with the coming pressure on natural gas markets, one day there will be a sour gas well(s) in Calgary, and god forbid if anything goes wrong.

Oil futures are near all time highes again, prepare for more news coverage the comming weeks (but since everyone is on holliday the message won't come across).
Heck, looking at the sidebar price graph and we may hit a new high today or tomorrow. So much for the "declining prices" talk we've heard before.
Yikes.  FXStreet is showing a high of $75.20 for today.  Dunno how accurate they are, but we do seem close to another record, if we're not already there.
I posted a late night question on yesterday's Drumbeat (Thanks Odograph for answering) that got me thinking aboput several topics we have discussed over the last several days.

Amercia becoming a "thrid world nation" because we have gone to bicycles and motorbikes instead of cars.  Which I think is Hogwash, but that aside.  A family friend stopped by to chat last night, his parents were some of the "Originals" in this neighborhood when my folks became "Newcomers" 29 years ago.  He has been researching starting his own little business.  A Pedi-cab for weekends and Holidays to give people rides from far flung parking to the places they want to go.  As he said last night, "My only discision now is what colors I want to choose."  He will be buying for one of two USA Pedi-cab makers.  My dad was even thinking onw would be nice.

We are in need for more thinking like this.  Small Business ideas, that don't use gas to get around.  Sure there are imputs in the process that are from fossil fuels, but so are most of our day to day living.

Several thoughts are hammering me right now.

One idea I threw at my dad, right as he was going to bed, Hey could you make a wood one of these?  Weight would be an issue, but hey it was a thought, not a solution.

There was mentioned in a column in PM a 3 wheeled scooter that a Japanese company had come out with,  2 wheels on the front using a paralellegram suspension system to allow a 40 degree tilt for turning.  In production in Japan soon for Export.  

Build a few car free cities with roads only for pedi-cab and bike traffic, nothing else.

North Little Rock and it's bigger sister Little Rock have been adding lots of downtown features, pushing for a total rebuild of the downtowns.  The Clinton Library, New ball parks, New stadiums, Historic Districts on both sides of the river.  Even a Trolley line serving both sides of the river.  They have talked about a light rail for years, but I have not looked into what has gotten done about it.

Things are looking up for more walking less driving.  Except for the fact that the whole Central Arkansas region is like one big spread out city now, Several counties wide.

And Last but not least.

I never stop being nice to strangers,  my family and freinds almost expect it of me, but its strangers that need it more than those close to you, they are the ones that might need the smile, and door opened for them. Being Niceness is not a chore if you do automatically no matter what.  

As I understand it, governments frequently seek to ban pedicabs, at least the non-motorized variety, saying, in part, that they are "inhumane" or are "affronts to human dignity"...
They work fine in Honolulu. Actually, it is a pretty good job if you want to get into shape and know how to give people a great experience so they give you outrageously huge tips.
I'd guess it's a road-space issue in a lot of places.

They have them in Skagway Alaska too ... fit young riders hauling heavier older tourists from the cruise ships into town ... quite the image.

Fifty dollar tips for a ten block trip are common from guys trying to impress their dates with how rich and generous they are. And guess what, it is easy to forget that tip income when doing taxes. Just slips our minds . . . .
So far my friend has had only people saying, "Huh?  We did not know we had a way to tax that in our city goverment, wow!"  He has scoped out all the taxes and fees and things he needs signed and costs.  He drives from a county over in to work everyday, if he got this business up and running he is also thinking of moving closer in.

I will tell him the if he gets his charm and facts up to par he can make a lot more than stocking shelves in a hardware chain.

I would like to know everyone's comments on Amory B. Levins and his book Winning the Oil Endgame.. Is it a realistic look at what the future could hold or just more wishful thinking on his part??
I saw it as an attempt to paint a technological solution to the peak oil problem. In some areas he may prove right but I don't think he put enough emphasis on mass transit, denser living arrangements, and I think he put way too much faith in biofuels (25% of our energy use someday??). He did have good points about conservation and about how further technology could be applied to give us basically another doubling of efficiency. I found him entirely too optimistic, for placing too much faith in technology, and worse, for placing far too much faith in human nature. Part of the appeal of his book is that much of what he recommends is clearly doable as-is, without great breakthroughs. But it's that tough nut called human nature that I think he failed to adequately crack.

Actually I think technically we will meet the challenges of peak oil but only for a few.

That's the underlying problem we can have advanced solutions but there expensive and I assure the few that can afford it, it won't be the whole population of the US but a small fraction of those that currently enjoy the good life.
Theres plenty of oil once a good fraction of americans and europeans are forced into poverty.

The ony real issue is that the road infrastructure will not be maintained for the elite forcing them to use the 4WD in the SUV's and worse get the dirty on occasion.

The ony real issue is that the road infrastructure will not be maintained for the elite forcing them to use the 4WD in the SUV's and worse get the dirty on occasion.

memmel, the future mode of transport for the elite is already here -- the private jet.  They'll be able to hopscotch from one gated community to another, without getting dirty at all.

For a time...yes.  But not forever.

Actually in a weird kind of way flying would probably actually become more resonable. There is no reason for large corporations not to subsidize a more extensive fleet of fuel efficient planes to handle needed flights.

Bypassing the current civilian airline industry.

As long as civilization exists some will have to fly.
I think for the rest of us the cattle haulers for major routes will continue to fly with trains to the regional cities.

Ship travel may come back for more mundane travel.

Hell we might get more vacation time alloted since travel times would proabably at least double.

In Brazil it is private helicopters for the rich. Because of lawlessness and very frequent kidnappings, it is cheaper to travel by helicopter than in an armored limo with four bodyguards.
I am a Lovins fan.  Sure he leans heavily on technology.  What else, for gods sake, he is a physics guy. And he is maybe too hopeful about some things.  That balances the people who are too unhopeful.

And he has done the effort to make a coherent story.  One story, Let's hear others.

A while back I wrote a little science (?) fiction on solving the mess we are in.  In it I had the science people do the science, the engineers do the engineering, the economists do something sane in economics instead of the vodoo we have now, and the psychologists and so on; everybody solved their little part of the puzzle, and a committee of the wisest people in the world (almost all of whom were grandmothers)  put it all together and shook it around until it fit.  And so we all lived happily ever after.

No one has to be perfect to make a real contribution.

Pretty please with sugar on top, post your story where we can read and comment on it (not necessarily on TOD, though you could do 500 word daily installments).

If you show us yours, I'll show you and others my science fiction novels. Should we start a new science fiction site linked to TOD?

Why not?

Something is missing. Of course I speak a little bit blindly, but at first sight your initial premise looks pretty much like the one we have now. Even more - each of those groups has come up with some kinds of solutions in their own field: the economists have the invisible hand, the scientists have fusion, engineers have some smart toys, so what is the problem? The way I see it, it is the other way around - the key to the house is that scientists and engineers don't understand economics and psychology and vice versa. And all of them together seem to understand too little of sustainability (if there is such a science yet?).
The Blind Men of Babbylon circling the Elephant, eh?
LevinK -

It hardly matters at all what the scientists and engineers think about anything.

What matters is what the people who own and control resources (which includes but is not limited to money) think. And they do not think like scientists and engineers.  These people truly understand what power is all about; most scientists and engineers do not. Engineers and scientists can't seem to come to grips with the fact that there is nothing rational or logical about the ways of power. Power is power, period.

So, one cannot lay too much blame at the feet of scientists and engineers ..... because, for the most part, they are merely the hired help.

Though it may be an old cliché, you can't go too far wrong in finding out what is really going on by following the money.  That will tell you who is doing what to whom and why.

Technology, or the lack thereof, is hardly the limiting factor in our collective well-being. Human nature is, and, sadly, that is not going to change any time soon.

Well it looks this is what seems to be missing in the initial picture - powers interested and willing to work for the long-term well being of humanity. Of course just ranting at the status quo leads us to nowhere, if it was not for the responsibility of those same scientists, engineers, economists etc. to innovate and suggest new solutions for fixing our current ways.

And here it comes again to the interdisciplinary approach: for the economist PO is economic problem; for the geologist it is a geological problem, for the politic a political problem etc. While indeed it is all of them together. What I hope for is, broadly speaking physicists, economists and politics to start living all in the same world. After all the long-term survival and well being of our species is a thing of common interest, isn't it?

Well-said! I agree with you 100% on this.
Now, folks, remember I was writing FICTION, and there you can do any damn thing you want, no matter how unconnected with reality, right?  Like for example, assuming that the people in it started off with  "We are all brothers and sisters, we all are working for a better world, good for one has to be good for all, now and in the future. We have accumulated a lot of knowledge and even a little wisdom in the last 10,000 years, so let's spend some serious time together,  toss out the old superstitions, constraints and cliches, put our brains in gear and talk it over, restructure the whole shebang, and make it work."

The title was "The Report of the Millennium Jubilee Committee", which kinda gives away  the tone and the plot.  Fun to write. Cathartic. Harmless. I'll put it on my website. Anybody is free to steal it.

Don.  Welcome back.  I presume you were at an ashram on K2, striving for  wisdom on things like modesty, understatement, forbearance, brevity,  reticence, and we all know what else.

Sorry, did not aim it to sound like a distructive critics, just another chance for discussion.
LevinK-  I am with you all the way.  Sure, we gotta get it ALL together, My little fiction effort was to that effect- all the narrow experts had their say, then the wise ones got it all together, with the expert's help so as to avoid simple goofs of fact or logic.

As for me, I would like to see econ become an experimental science instead of alchemy.  You could look for things going on places and ways that might approximate a controlled experiment, and/or cook up simulations that might approximate the enormously complex interactions of the real world.----?  

 Ho, Ho.  How you gonna simulate that nut in North Korea????  Or the guy in Kansas in his huge pickup as he goes to get a loaf of bread and a dozen bananas???????

ICBM's are soooo easy. Just  a stick with a nice round rock tied to the end of it.  That's where we grew up.

I'm going to have to get my own website or . . . wait a minute. I could post the first chapter of the first novel or my series in little 350+ or - word-chunks, for maybe a total of roughly 700 words (one scene) on each open thread. Then if there is popular demand for more . . . .

It sure would beat wading through the paranoid muck of some of the delusional 1,000+ word rants that for some reason are not edited down on this site.

Again, I suggest, how about an informal limit of 350 words on each comment (or thereabouts).

Damn...let's just get you your own thread for this.  You can post the paragraphs as you write.
Crude oil on the NYMEX closed at an all time high today of $75.19, up $1.26. The previous high close was $75.17 on April 21st.
I forgot to mention that T. Boone Pickens was on CNBC this morning. He said we are producing as much oil today as we will ever produce. In other words, he is saying that we are at the peak. He said we would see $80 oil before the end of the year. He said it may not be at or above $80 at the end but it would be there sometime this year.
So we have a two-fer today.  Intraday record high, and a record high close.
Interesting why this spike is happening today, as it appears that nothing has changed significantly in the meantime. Could there be some information leaking for the EIA report tomorrow, or just the recent commodities rally is boosting oil too?
It's the Iran fear factor again. Iran has been given, I believe, a July 12th deadline to halt enrichment activities or face sanctions. This has been the driver the last few days, at least so far as I can tell. Fear is in the air at the moment.
We are now past "peak fear".  On Bloomburg today the "fear premium" is now at $10.00 (down from it's previous highs.)
Once peak oil is understood by more players I wonder what the  fear premium will be. I would guess that 2-5 years after peak everyone will know and understand peak oil. Since it will be well known that there will be less oil every year the game changes radically from the past. The comments made by the Kuwait guy definitely scared me and I have been expecting this.
I'm about 85% certain that it is mostly speculators thinking that other speculators think that still other speculators think the price is going to go up.

Fasten seatbelts.

Yeah it's going to be a very bumpy ride. The worst part is that this volatility is in the worst interest to everyone - producers, consumers, developers of alternatives, you name them.

Maybe the next biggest favor for our kids (that we will not do) after a carbon tax would be regulating the oil market.

I see nothing particularly bad about a bumpy market, but a lot of good.  Speculative building of inventories before Katrina & Rita saved us, quite frankly.

An occasional spike will scare consumers into "pre-mature" conservation.

Regulation of oil prices would be a TERRIBLE disaster !!


you are leaning on that side of the volatility which favors what you think (and me too) is good for the long term.

Now consider for a moment what will be the long term consequences if Iran fears fade away (very likely IMO), US economy goes belly up (also very much possible) and SA floods the market with sour oil. Oil will very easily hit 10$/barrel for quite a long time and all the projects for electrified rail, super-efficient cars, wind turbines etc. etc. will be abandoned for the indefinite future.

IMO, $50 oil is a reasonable possibility in a severe world-wide recession. Make it a depression and I could see $35 oil.  $10 oil is simply impossible under any even semi-realistic scenario.

$50 oil would slow things down but not stop long lead time conversions.

I'm not so certain. Markets are quite often irrational and prone to panicks. An aggressive interest rate rise coupled with unwinding of speculative positions (which are likely to build up in future) is quite possible IMO. The potential for undershoot in such situation we can hardly estimate from the point of view of the current bull market. I get the feeling that many producers are also stopped by such fears (e.g. Venezuela's heavy oil).
there is nothing particularly "volitile" or "bumpy" about the oil market. if you haven't looked at a chart of the oil market look here. changing the range to 3 years provides the long term picture. introduction of trendlines (annotate), one connecting highs and another connecting lows frames the bull market in an upchannel. currently that channel is $68 on the low side and $80 on the upside. todays close is just about in the middle. very well behaved over a period of 3 years. this is about as predictable a bull market as i have observed in 30 years of looking at charts.
I think you are not looking at the correct timeframe. Considering the investment lags and pay-off times me thinks that the volatility should be measured within a multidecadal scale.  

Technically you are right in that other commodities like NG have behaved much more unpredictably. What makes oil more special IMO is that both the supply and the demand side seem to be incredibly slow in adapting to the price signals and therefore my idea for some regulations (as broad as possible). For example if OECD makes a long-term agreement with OPEC + Russia for some "price floor" (of say 50-60$), many projects and alternatives which are now still on paper could become true by the time we are past peak and we need them the most.

Would "everyone" include those invested in the oil market?  
I think a lot of it's political.  Iran, Korea.  Plus that shipping channel still being limited.

Markets were closed because of the holiday, so there may have been a lot of pent up anxiety.  

Look on the bright side-the hurricanes haven't started yet.
What about the news that Kuwait may cut production by 50%?
Hello TODers,

I believe Asimov's Foundation concepts of predictive collapse and directed decline are tailor-made for the coming detritus decline to minimize postPeak violence.

IF full FFs transparency can be achieved, and world depletion rate roughly predicted: these tools can provide the basis for Foundation planning as codified in ASPO's Depletion Protocols.  The entropic extrapolation to each country down to each distinct habitat is then possible by scientic supercomputer simulation.  Overshoot is obvious, optimizing decline is the goal.  A gradual evacuation to the lifeboats should be preferred by all, instead of a headlong rush induced by last moment genetic competition and the insurmountable forces of Mother Nature.

I believe the US is in a very precarious position due to our elevated consumptive rate vis-a-vis the world.  Our national 'metabolic rate' is like a rabbit running in circles versus other countries, like TODer Magnus Redin's Sweden, or TODer AlanfromBigEasy's expose' on Switzerland, which appear to be planning and moving straight ahead to adopt the methodical turtle strategy.  We all know who wins this race.

Migration will be a natural result induced by detritus entropy and global warming, scientists daily document this already occurring among many species as their naturally tight feedback loops with reality force them to proactively seek optimum habitats.  Foundation, properly designed and applied, can optimize human migration to minimize the rise of Earthmarines' force application.

Hanson and Kunstler are correct, IMO, that huge Northern migrations from the US lower latitudes are inevitable.  As I have posted before, thermodynamic efficiency is optimized by packing a house full of people in a cold climate versus packing a house full of people, then trying to keep them cool with A/C, assuming equal levels of eco-tech design/sq. ft of living space.  Global Warming predictions of increased drought and spread of tropical diseases as already evidenced by the West Nile Virus will further impel migration.

Foundation can mitigate the tendency for business as usual until that habitat's Olduvai Crash and last-chance migration.  My earlier post went into brief detail of a planned AZ to WA migration.  This gradual migration should be preferred to the alternative sudden rise of the State of Cascadia, and/or the state of Jefferson, resulting in a desperate Civil War for Survival [both sides lose as the desired habitat quickly declines below biosolar optimality].

On the international scale: Foundation concepts, judiciously applied, can prevent the '3 Days of the Condor' scenario, freeing every country to seek their individual detritus Powerdown optimality and the resulting Paradigm shift to maximum Biosolar Powerup.  This can free the funds from current military assignment to the HELP strategy.

The rich and powerful, if they understand Foundation, should be eager to jumpstart this institution as it is the best way to protect themselves and their families.  They have a historic opportunity to jumpstart a scientific process of ecological designers/philosophers that will be seeking to protect all possible species, and humanely reduce our numbers to prevent our genetic tendency towards violence.  A world wide understanding that our genes are not our friends to promulgate a yearning for Foundation solutions needs to begin now. Time will tell.

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

Great concepts.  How do we get an entrenched political system, with a culture that cares more about porperty values than anything else, to voluntarily give up not only their way of life - but their very homes?

I said a few weeks ago that the price of oil would pass $75 and that the oil price was not in a bubble - but in an anti-bubble.  That is -  small events can cause the price of oil to rise upwardly fast.

Even so - we are only one major world crisis away from  this presently workable free market system of supply allocation breaking down.  After that, I envision national governments everywhere taking control of the entire oil-based energy distribution process.  That is, your quota will determine how much gasoline you can get at your local gasoline station.

Perhaps then we will listen to more rational voices on the issue of PO within the US, but I expect even then most will still blame the problems of PO on the Arabs, Russians, Chinese, etc..


   I'm new on this blog, and this is the first timeI've seen someone say something about rationing as a way to alleviate peak oil.  I'm old enough to remember gasoline rationing during World War 2,and I expect we'll have to go back to that again.  With price controls, of course.  Getting the American people to accept something like that will not be so difficult, as the price of gasoline would be kept constant and people would be assured of getting some minimum amount for necessary travel.  (If there is some extra gasoline, they might be able to buy more than their ration at several times the ration price.)  It means breaking the power of the oil companies; they're too big and powerful to be controlled, so they'll have to be nationalized.
     Another advantage of setting a controlled price for oil, is that oil producing countries would then be willing to make the necessary investments to develop lower quality crude.  The price of oil goes up and down so much now that a country like Venezuela doesn't dare to invest huge amounts in their heavy oil deposits because a decline in the price (which could accompany an economic downturn) could make the whole project a big money loser.
     This is similar to Heinberg's proposal, except it has to cover all major industry (everything that uses lots of energy), and to be effective has to be taken out of the hands of the capitalists who are, and must be, interested primarily in maximixing short-term profits.  If that sounds like a socialist world state, it is.  Nothing else can get us through the crisis (and even this doesn't come with any guarantees).  Impossible? You'd be surprised what people can do when they're put in a situation where their lives depend on doing the impossible. But things have to get a lot worse, first.
IMO, gasoline rationing in the USA is a major reach. That is quite a socialist step and even the Dems are not that left wing anymore (IMO).
Hello Charles Mackay,

Thxs for responding.  Obviously, if the world's leaders jumpstarted this Foundation, it would be so much easier.  Somehow the Japanese leadership started, then directed their people during the 250 years of the largely sustainable Edo period.  I think education & MSM needs to massively shift to inform and prepare everyone for the path ahead.

Your Quote: "How do we get an entrenched political system, with a culture that cares more about property values than anything else, to voluntarily give up not only their way of life - but their very homes?

As understanding of the facts of 'our genes are not our friends', Peakoil, Global Warming, Olduvai Theory, etc, quickly spreads, people's value system will change commensurately.  Consider the displaced hurricane, tsunami, and earthquake victims worldwide: they accepted their losses, then they seek out the next best place to live.  Humans are quite adaptable.

America is a nation of immigrants; a nation always on the move, Foundation concepts can be used to take advantage of this mindset.  If supercomputer simulations indicate that multi-millions of Southwesterners [NM, AZ, NV, southern Cal]will head north: the tax codes, zoning laws, and other socio-political constructs can be changed to create a differential to induce a gradual, largely peaceful migration.

In the worst case scenario: the southwest towns rapidly become mostly ghost towns, and the northern areas have vastly insufficient housing of non-optimal design and related infrastructure sprawl. Northern prices go through the roof and/or tremendous violence ensues.

Instead, if the aforementioned created socio-political differential [between N & S] is realistic: it will create an incentive to dis-assemble the southern resources, then move them north with the migrants; like a turtle carries his house on his back, but the northern zoning laws will require those resources to be used in a sustainable manner for permaculture intense, walkable urban areas, highly efficient mass transit, intense recycling...and so on.

Voluntary birth controls should be sufficient if the educational message is widely understood, but if need be, they can be incentivized by offering preferential tax rates or housing location preference to those that procreatively restrain themselves.

So a family of three or four currently living in an unsustainable 3600 sq/ft or larger Phx McMansion with the ubiquitous 3-car garage [and vastly upside down on the mortgage], when moving North would be zoning law required to live in a sustainable eco-tech 800-1000 sq/ft condo with no cars.  They would get a material credit for their migrational 'turtle downsizing', and for having the carefully recycled Phx 'large turtle' moved north to help provide 'small turtles' for others and reducing their housing costs.  The material credit may be sufficient to set them up with a positive equity mortgage.

Another example: A similar-sized Phx family, living in a mortgage-free smaller house, would get a porportionately smaller material credit, but would get a equity credit that would allow them to buy and be mortgage free, but give them a source of investment funds to open a small shop or store in the walkable community.

The Phx cars would be recycled to provide the steel for the needed northern mass-transit and the other highly efficient infrastructure desired.  The fact that minimal cost moving of all these recycled 'turtles' is required would drive the need for rapid rebuilding and expansion of the national electrified railroads for freight and passengers.

The energy savings associated with all this Foundation downsizing, population birth constraints, and HELP implementation may match the depletion rate of the Hubbert Downslope: keeping available energy/capita constant thereby precluding much mindless violence.

Figuring out the proper financial formulas, zoning laws, new urban designs, associated logistics, and other minutiae to drive this sustainable change is beyond my ability to achieve this properly-->that is task of the Foundation.

But I would like to see this discussed much more here on TOD.  Input from other TODers could greatly expand and improve my feeble ideas.  The much admired TOD data freaks could have great fun presenting graphs of how this could be possible.

Now if we could only get Stuart and Khebab a full top-notch staff of statistical simulation programmers and a world-class supercomputer....I think Asimov would be proud!

Bob Shaw in Phx  Are Humans Smarter than Yeast?

I suspect that the PHX move-out will be multistage and without central direction.

Step 1) Corporate relocations to the Valley slows or stops. Better places to go.  Recession as well.

Step 2) Construction slows (except along new light rail line).  Since 30% of labor force is in construction they move to where the action is.

Step 3) Empty houses of former construction workers dot neighborhoods, prices plummet.  Recession layoffs and construction almost stops.  Phoenicians never had deep roots and they "move on".

Step 4) Taxes increase and services plummet as abandoned houses (never built that well) replace "For Sale" houses.  Financial crisis due to upside down foreclosures.  Established corpoerations pull out.  Conversely retirees move in for cheap housing. sunny climate and air is cleaner with fewer people.  Only "hot spot" is near light rail line (retirees don't have to drive to get some place, University also on the line).  First and second light rail line built.  No money for more.

Step 5) Phoenix shrinks by half and becomes what it was, primarily a retirement haven and the services that support retirees.  Lower social services and higher taxes though with so much lost population.  Many retirees lose their savings in the series of financial disasters.  So the retiree population is aging and (largely) impoverished.  Pressure on water reduced with half the population but extended summer blackout kills thousands and chases retirees that can move out.  Those that earn living servicing them follow them.

Step 6) Phoenix and Arizona in financial crisis.  Last corporations move out.  Federal help to deal with residual impoverished retired population.  They fairly quickly die off.  Population finally stabilizes at 250,000 or so and clusters along light rail lines.  Growth returns from that low level and reclaims in more renewable ways the rest of town.  Perhaps citrus farming old suburbs ?

Financially and physically strong population self migrates.  Rest that can struggle out (perhaps Grapes of Wrath type migration).  And the weak stay behind and largely die-off.

External events can scramble this scenario (Matthew Simmons is right about depletion cure for example, or timing of depression/financial crisis).

Thanks for the interesting and lengthy responses.

Clearly we have to totally reverse the role of government in allowing and even promoting unsustainable development (thinking mostly about the desert SW here) and towards sustainable communities.  

Tax credits and other incentives for large families must also be reduced and even reversed.  

The trick is not to heavily penalize those that have already made the wrong choices, least new incentives become deemed politically incorrect.  For example, there is already a widespread opinion, not supported by hard facts, that enough oil to sustain the country for many years is just laying there to be found.  Tree huggers, environmentalists, and shore communities are the only thing stopping the development of large new oil fields.  The same misconceptions will be applied to population control, food production, and technology to combat GW and PO.

Hope we make it through the age of delusion.

Hello Charles Mackay,

Thxs for responding again.  I agree with your points.

If the Pentagon can supercomputer wargame all kinds of scenarios involving conflict, I see no reason why a Foundation couldn't supercomputer simulate extensive scenarios for mitigation.

That is my hopeful method to reverse the role of govt to promote sustainability.

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

Hello AlanfromBigEasy,

Thxs for the addition to this discussion--I appreciate your expert input: your familiarity with Phx combined with your vast general infrastructure knowledge.

Do you think a Foundation; a non-politicized scientific effort to mitigate decline by purely ecologic/economic/engineering/etc methods is possible?

The Hirsch Report, among others, urges for mitigation, as does Heinberg.  But I fear the growing grass-roots efforts will not be able to generate sufficient political change momentum before the Hubbert Downslope and Olduvai kicks in.

Somehow, someway, it needs to be kicked up to the top-level, and soon.

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

Do you think a Foundation; a non-politicized scientific effort to mitigate decline by purely ecologic/economic/engineering/etc methods is possible?

Not easily.  On occasion a set of experts come up with a solution (military base closings come to mind) and then it goes to the politicans to ratify.

I think the smell of pork (see ADM) is just TOO strong now.  As we get into deeper troubles, this may happen.

I want to create a national dialogue (TOD is a potential spark for that) and let that influence the politicans.

I do hope and pray for a 2010 peak.  The later the better, IMHO.  And "sky high" prices ASAP !

Anyone care to speculate on what is going on here?
No. Other than it looks like its time to buy Toyota and short GM.  
GM hit a 5 year low around March while Toyota were close to a 5 year high.  Toyota have traded side ways since then while GM have recovered from an oversold position.  Replot the chart on a 5 year time scale to get the true picture.

By the way, automobile, aircraft, airline, tourism and all other energy intensive industries have been earmarked for extinction.

I'd bet on Toyota and British Airways surviving.  Maybe Boeing too as Airbus are in a mess now.

Even a dead cat will bounce when it lands.
Ya, but will it still land on its feet?
Not sure about British Airways. It has a market capitalisation of £300 + millions and a deficit on one of its pension funds of £3000+ millions. It hasn't paid a dividend in years and IMO is unlikely to ever do so again. The nineties were spent claiming to be the world's most profitable airline while making minimal employers contribution to pensions because it claimed stocks were doing great. There will be a BRITISH national carrier but who it will be is uncertain. Swissair is gone. Belgium's Sabena is gone. Most US airlines are in the hospice awaiting death. Without re-nationalisation, I fear that BA will go too.
You may be right about BA - just that they still provide a great service.  You forgot to mention KLM - that other great European carrier, now part of AirFrance.

So it looks like Virgin will carry the UK flag.

Does TOD have a view on massive taxes on jet fuel?  The French have just introduced a new airtraveller tax.

I don't see why aviation fuel isn't taxed. After all, you have to operate airports. It would be like the road tax for road-going fuel. To discourage use, all the energy should be taxed like the tax tradeoff for gasoline. With plane rides being a luxury, it should be taxed good and hard. It'll cut traffic jams on the taxiways!
Aviation fuel is taxed in the US by both the IRS and the various states.  There are also a number of direct taxes (perhaps 20% to 25% of my average ticket is taxes & fees) and indirect taxes.

In addition, airlines pay rent on gates and landing fees (based on a/c weight).  In addition that $4.25 airport hamburger ends up supporting the airport, as well as parking fees and every other income source that they can find.

For the half dozen years, aviation taxes pay for the air traffic control system.  Basically, aviation "pays it's way".

Betting on mandatory ethanol :-0
Seriously, that is a good bet.

Corn growers and processors have great political clout in the U.S., and by any reasonable standard, corn prices are now ridiculously low.

Sort of. Corn prices have been ridiculous many years. Now they are preposterous, incredibly low. Can the great economist explain to me why the clout heavy corn growers/processors are so wedded to low prices? I used to think it was so they could drive out small producers but isn't that long since accomplished? Mysterious to me.
It is not that complicated, but the explanation is LONG and goes back to farm subsidies during the Great Depression. Very briefly, and to oversimplify, the government gave farmers subsidies and incentives to grow less corn. The farmers outwitted the language intended to cause them to grow fewer acres and fewer bushels of corn, and went greedy, greedy, greedy to the subsidy trough.

Result? Overproduction, year after year after year after year.

Overproduction shifts supply curve down and to the right, thus resulting in lower corn prices.

My farming friends & family (actually everyone has sold out/shut down past 10 years) would sharply dispute that. Not that I ever believed their self-interested harangues.
To a man they will tell you the gummint is the enemy and no one but Mr. Big sees the subsidy. Birds gotta swim, fish gotta fly and Iowa/Illinois farmer gotta grow corn.
Oh. Thank you for the quick reply. Maybe a few more words. The subsidy/farm price thing has always been like a hall of mirrors to me. I think to a lot of people. I've heard a million words on the topic and none add up.
IANAF (I am not a farmer) so maybe someone else can confirm this, but I have heard that it is tricky to go off corn if a field has been in it using chem. intensive methods for many years.

I remember seeing a slide at a talk some years back showing a section taken through a field where they were doing a new crop on an old corn field. The roots got as far down as the top of the Atrazine layer, then just turned sidways like a horizontal well bore (otherwise they would be in the "killing zone").

This left them too shallow to get at the water table during the dry periods, leading to failure

IANAF either but it can't be that tricky to go off corn. Most fields in my area rotate between corn and soybeans.

I suspect that if you are big and grow a lot of corn that you benefit from the farm subsidies much better than a smaller farmer would. I have a fellow alumni from Walla Walla who has a farm in Pomeroy, Washington (Wheat) and I doubt he knows how to grow, but gets $100,000 a year not to. For at lest 30 years worth!

Some would argue that Archer Daniel Midlands (ADM) is the biggest beneficiary to the latest laws passed by Congress on alternative fuels.

Unused farm land: anyone know where to get stats on this? Thanks.
IMO you are 100% correct on both counts.