Perception Management -- CERA and IHS Energy

[Update by Dave Cohen on 08/28/06 at 4:04 PM EDT] Ken Chew of IHS Energy contacted me and told me in part the origin of the 175 Gb number cited below with regard to Esser's testimony. It is not the tar sands. When I know more details, I will revise the text of this article.

[editor's note, by Dave Cohen] This is Part 1 of what I hope will be a 2 part series. The second installment is tentatively titled Getting to Know Daniel Yergin. Enjoy and remember what's at stake.

Yet another recent CERA press release World Oil & Liquids Production Capacity to Grow Significantly through At Least 2015 denies that peak oil is a concern.

Based on the report's extensive field-by-field analysis, [Peter] Jackson and [Robert] Esser conclude that the data reinforce CERA's view that the specter of "peak oil" is not imminent, nor is the start of an "undulating plateau" pattern of supply capacity.
This latest cornucopian summary has been commented upon here at TOD and criticized directly by Kjell Aleklett, President of ASPO in CERA's report is over-optimistic courtesy of the Energy Bulletin.

This story's aim is to investigate the CERA method, provide background for these latest statements and round out Aleklett's critique. The view here is that CERA, which is wholly owned by IHS Energy, is misleading the public and our elected representatives. These two organizations are managing perceptions as they cast aspersions on the peak oil view of reality and present misleading or incomplete analysis to the media.

These half-truths have gone on long enough. A bit more in-depth analysis is required to reveal this charade for what it is. Our future energy need is put in ever greater jeopardy the longer the world waits to mitigate the crisis. One step toward changing perceptions to create a call to action is to refute deceptions, whether they are intentional or not.

A Note on the Latest Press Release

TOD contributor Khebab recently posted this graph.

Figure 1 -- Click to Enlarge

From the latest CERA press release.

CERA's examination of actual activity and production data covered existing fields and 360 new projects -- 250 new non-OPEC and 110 new OPEC development projects -- expected to start production by 2010. The analysis points to global productive capacity rising from 88.7 mbd in 2006 to 110 mbd in 2015 (Figure 1). CERA's "reference case" analysis projects strong potential growth in both the OPEC (7.6 mbd) and non-OPEC (5.7 mbd) sectors to 2010, with continued expansion of OPEC capacity by 5.3 mbd between 2010 and 2015. Non-OPEC growth is projected to be 2.7 mbd in the 2010 to 2015 time frame, lower than recent high expansion rates.
It is easy to ridicule the 88.7/mbd number until one realizes that CERA is talking about productive capacity, not actual production. In a recent TOD comment, sunshine said
think CERA is doing something like this:

84.4 (EIA) + 2.3 (disruptions) + 2.0 (Saudi spare capacity)
= 88.7 total current capacity

in response to some comments by the author. Only a slight correction is necessary. According to the EIA, the Saudi spare capacity is estimated at somewhere between 1.3/mbd and 1.8/mbd. The term productive capacity is defined by the EIA link just above as
"Capacity" refers to maximum sustainable production capacity, defined as the maximum amount of production that: 1) could be brought online within a period of 30 days; and 2) sustained for at least 90 days.
The small correction is this: 84.4/mbd (actual) + 2.5/mbd (disrupted, includes Prudhoe Bay) + 1.8 (maximum Saudi spare capacity) = 88.7/mbd. Why is CERA talking about capacity and not production? Never make something more complicated than it is. The main reason is so they can inflate the numbers. Note the use of the high-end Saudi spare capacity number. Do readers think that NPR's Robert Siegel, talking with Daniel Yergin, knows what production capacity is? No, of course not. Only aficionados will know the difference, not members of Congress, the media or the public.

However, there is a deeper reason. CERA uses at least two scenarios, a baseline "reference" case using capacity as presented in the press release and a "above-the-ground disruption" case which pertains in the real world. This latter also includes production delays for new fields or insufficient investment by IOCs or NOCs who should be but are not producing as much as they could (cf. many OPEC countries, Russia). Disruptions are presumably mostly accounted for by the troubles in Iraq and Nigeria. Could lost Iraqi production, for example, be brought onstream within a month and sustained for 3 months? Almost certainly not, even if "peace" should break out instead of incipient civil war. The EIA (link above) lists the OPEC 10 and separately, Iraq. What is Iraq's surplus capacity? It is zero just like that of every other OPEC country except Saudi Arabia. At this point, even the CERA "reference" case makes no sense. What do they mean by productive capacity?

By switching back and forth between these scenarios, CERA can "explain" tightness in the supply market and current high prices while simultaneously saying that production is not the problem. It is possible to have your cake and eat it too. As Aleklett discusses, this game can be projected into the future.

Figure 2 -- Click to Enlarge

Please read Aleklett's critique. It is certainly ironic, if not outright contradictory, that CERA employs a bottom-up analysis using the IHS database but ignores the current daily flow rates (all liquids) in their latest press release. The whole point of such databases (also see Skrebowski's Megaprojects) is to calculate such flows given a depletion rate—here, 5%—, new supply coming onstream and perhaps a disruption fudge factor. Speaking of the IHS database, let us now turn to that part of this analysis.

Robert Esser Testifies Before the House

There is a misperception, even among some of those who take peak oil seriously, that Daniel Yergin is the most important figure in the debate. He is a prominent person, especially in the media, but behind Yergin are two geologists, Peter Jackson and Robert Esser.
With a combined 70 years of experience in the oil fields, report authors Robert Esser and Peter Jackson bring extensive knowledge of petroleum geology to this study. Trained as geologists, both spent many years in the oil industry, analyzing projects, drilling oil wells, and conducting geological studies before coming to CERA.

Jackson (left) and Esser

It is illuminating to focus on Esser's testimony before the House Energy and Air Quality Subcommitee in December of 2005. PG wrote up a summary at the time. Here's the part which will be examined.

The Committee has asked us to address the question of Peak Oil. In our view, this is not a very helpful concept, nor one that provides much descriptive power. Rather than an imminent "peak," we envision an "undulating plateau" two to four decades away....

Canada. Major expansion is expected. The main story is the oil sands projects, where capacity is expected to increase from 1.2 mbd in 2005 to 2.4 mbd by 2010 and 3.4 mbd by 2015. Conventional crude capacity of 2.3 mbd will decline to 1.9 mbd by 2015.

The question of a worldwide peak in oil production continues to stimulate debate. Our outlook shows no evidence of a peak in worldwide oil production before 2020. It is true that total annual global production has not been replaced by exploration success in recent years, but production has been more than replaced by exploration plus field reserve upgrades. In 1995-2003 global production of 236 billion barrels was more than compensated by exploration success and field upgrades that collectively added 144 billion barrels and up to 175 billion barrels, respectively. Although oil is a finite resource, we still do not have an exact estimate of total reserves; meanwhile global resources should continue to expand. Many basins, even those producing significant volumes of oil, remain underexplored.

Where do the numbers come from in the bolded text? Behind Jackson and Esser is the IHS database. The 236 Gb of oil produced and consumed in the 1995 - 2003 period as well as the 144 Gb discovered appear in IHS Energy presentations. Look at this graphic from Pete Stark of IHS entitled Role of Mature Fields in Meeting the Global O&G Supply Problem (pdf).

Figure 3 -- Click to Enlarge

As the slide reveals, the discoveries comprised only 60.8% of what was produced and consumed during the period. Nevertheless, Esser is able to reassure the House subcommittee that there was indeed a surplus of new oil. As he puts it: "Our views about the peak oil debate have been reinforced by a detailed new audit of our own analysis and also further evidence that has come to light concerning the enormous scale of field reserve upgrades of existing fields". Specifically, he is referring to the "at least 175 [Gb]" of field reserves upgrades.

Where does the 175 Gb number come from? No doubt some of you have guessed the likely answer because in 2002, the Oil & Gas Journal recognized the tar sands of Canada as reserves (pdf) and these were "booked" by OGJ as reserves in 2003.

In 2002, the Oil & Gas Journal accepted Canada's classification of 174 billion barrels of oil sands as established reserves and Canada became the second largest oil reserve-holding nation in the world after Saudi Arabia.
To be exact, the reserves increase was 174.4 Gb. This rough equality seems to be more than happenstance. It is easy to contend that Esser's testimony is misleading, perhaps even deceptive, accounting on a number of grounds. Intentions are not considered here because they can not be known.

  1. There is the troubled status of the tar sands production itself, as the author has pointed out in Extreme Production Measures regarding economic and logistical problems in Alberta. Another story focusing on natural gas usage there was documented in Oh, Canada! -- Natural Gas and the Future of Tar Sands Production . Many other editors, contributors and commenters at TOD have added to our knowledge describing the problems at the tar sands. Although Esser is testifying at the end of 2005 whereas some tar sands problems arose only this year, one must ask where the realism of his assessment lies.
  2. The 175 Gb figure is cited without specifying the source. How could House committee members know the origin of the number?
  3. More misleading information involves the use of the 1995 - 2003 period, which appears to have been cherry picked to include the tar sands reserves increases—although the testimony was given on December 7th of 2005, Pearl Harbor Day.

What was not shown was this graphic from this presentation New Frontiers -Where will Tomorrow's Oil & Gas Come From? (pdf) by Tim Zoba, IHS director of business development.

Figure 4 -- Click to Enlarge

According to Figure 4, less than 50 Gb of recoverable liquids were discovered in the 2001 - 2005 period (excluding onshore lower 48 & Canada). Figure 5 below lists the leading countries where discoveries were made but includes the year 2000 as well, thus including the biggest discovery of the last 6 years—Kashagan in Kazakhstan. The cited total is 76 Gb discovered.

Figure 5 -- Click to Enlarge

Using the EIA supply data, the amount of liquids produced between 2001 and 2005 inclusive was approximately 146 Gb. Astonishingly, when the 2000 production is added in, the tally becomes 175 Gb—the same amount as the entire OGJ tar sands reserves endowment all used up in 6 years! Perhaps one of us at TOD ought to testify before the House energy subcommittee.

CERA's Perception Management

This story has touched on a number of aspects of what was termed perception management. Instances of CERA promulgating misleading information have been documented above. Perhaps the most important problem, however, is cited by Aleklett.
On August 8, 2006, CERA (Cambridge Energy Research Associates) released a new private report with the title "Expansion Set to Continue - Global Liquids Capacity to 2015". "Private report" means that CERA expects you to purchase the report for $2,500. The data files used in the report are also "private" rather than being audited or refereed like the data in normal scientific articles....

More things can be said about the report, but it is obvious that it is not worth $2,500....

In fact, the real debate ought to be whether it is worth the paper it is printed on. Lack of data transparency for oil production is one of the most serious problems in the oil industry. CERA offers their version of "transparency"—for a price. This privatization of E&P data based on the IHS database is understandable from a business point of view; to be sure, CERA is a corporation supporting a staff of about 250 people responsible for putting out misleading information. Yet, the lack of transparency is also reprehensible due to what is at stake in the world today. Now, it appears that attacking those concerned about peak oil is part of the business plan.

Rock Hammer
The author's mark

I wonder when they will start including coal to liquids plants in with the tar to liquids plants?
They appear to be including GTL

We see much of the lost ground being made up by 2010, along with an increase of about 4 mbd in our global estimate by 2015, with the inclusion of GTLs in the outlook along with new discoveries and existing field reserve upgrades in non-OPEC areas

I assume CTL will be included the next time oil production doesn't meet their expectations.

From CERA's press release:

    "During 2000, unconventional liquids represented 16% of global capacity, and by 2006 this had grown to 24% of the total," they write.  "We expect this strong growth to continue to over one-third of total global capacity (38%) by 2015, especially if E&P companies believe that the oil price will remain high."

88.7 mbpd - 24% = 67.4 mbpd. This is close to the ASPO estimate for regular oil for 2005. Anyone know if CERA is using the same definition of conventional liquids, i.e. total liquids minus tar sands, deep water and natural gas liquids?

Any research into Yergin's recent background will show he's now heavily affiliated with Carlyle, Goldman Sachs, Council on Foreign Relations, etc.

This is the military-industrial-media complex, and everything they do is based on "perception management." If they are successful, they make trillons of dollars and control the world's pipelines.

Any research into Yergin's recent background will show he's now heavily affiliated with Carlyle, Goldman Sachs, Council on Foreign Relations, etc.

Matt Simmons is a member of the Council on Foreign Relations. Care to comment on what that means, Don?

I have never completely trusted Simmons for this very reason.  In a closely related vein, his association with Cheney's infamous energy task force of Spring 2001 has also always aroused my suspicion.  If Simmons cares so much about humanity, then why does he not make a clean break with the wealthy ruling elite of which he is an organic part, and publicly speak out about anything he knows relating to the nefarious plots to gain control over oil that were undoubtedly hatched there, and that are also being continually plotted (albeit usually in less dramatic and concentrated fashion) by the CFR?

Mr. Simmons, if you read TOD, then consider this to be a public request to break completely with your own class interest by someone who is very much an admirer of yours apart from what I have just said.  (Because in fact I truly believe that you DO care deeply about humanity.)

"his association with Cheney's infamous energy task force of Spring 2001 has also always aroused my suspicion."

He has repeatedly denied this associated. He has "advised" the Bush campaign on energy, but he was not part of the secret task force.

Not that I'm that much of a Simmons fan, however. He keeps saying Iraq was about WMD. I admire his energy analysis, but I would not enjoy being in the same room as he.

How much are these denials worth, though?  That is obviously a function of how rock-solid one's overall trust in the man is.

Overall, Simmons' connections to the power elite and their foreign policy machinations remain decidedly murky - at least to myself, and probably to most other people who hail him for his almost unheard-of forthrightness on energy issues for someone of his social background.

I think that Peak Oil advocates have been too quick to give Simmons a "free pass" with regard to his murky connections to foreign policy machinations on this account, though.  For Simmons truly to live up to the hero-status that he has unquestioningly been accorded within the Peak-Oil crowd, he needs to divest himself of these morally compromising murky connections completely.

I only care if he's right or wrong with respect to the issue of peak.
The CFR has over 4000 members, it is not monolithic.

What is more damning of Yergin is his continued media prominence considering his track record.  In the free market for subscription investment newsletters, economic feedback is swift and merciless.  Investment gurus who  repeatedly influence subscribers to lose money end up losing subscribers and going broke.   Yergin has been disasterously wrong for years.  Anyone who followed his advice is broke already.  Yet Yergin has not vanished into oblivion, his star keeps rising.  Therefore his paymasters are happy.  Simmons has avered that CERA is employed by KSA.  Yergin is a paid propagandist, and good at his job.  Yergin's job is to baffle the masses with bullshit.

what's KSA?
Kingdom of Saudia Arabia?
Yes, KSA = Kingdom of Saudi Arabia
Hello MicroHydro,

Excellent points!  Dave, excellent keypost!  As an increasingly upset taxpayer--I sure wish you could testify to Congress to offset CERA's misinformative testimony.

Khebab's graph says it all in regards to Yergin & CERA!

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

Don't waste your time testifying. Remember, it's the "military-industrial-congressional-media" complex.

I've been finding the whole concept of 4th generation warfare - between the global elite and the rest of us suckers - particularly explanatory of late. Warfare extends in depth throughout all of society. Think Lebanon.

There is no end to which the global corpos will not go, said a relatively conservative member of Maine's Fair Trade Commission recently.

"We" just are not doing a good enough job competing, that's how the corpos would frame it. And if we are not matching the Yergins appropriately, well, it sucks to be us. We lose.

Lifeboats - the global corpos will smash them. Unless we build community defenses and use the states (at least here in US) to protect the communities. But testifying doesn't cut it, because you leave the decision making in the hands of those who profit by smashing your lifeboat. Via the Commerce Clause in US Constitution, WTO or GATS. And we need to get much more creative about taking the offense - best defense is a good offense. You might want to debate Yergin on the facts, but he is only one of the many points of attack on the cultural front. There's economicfare, legalfare and real warfare. And borders don't matter, because it's not state vs state, but class vs class. Oh, now I'm depressed.


....and you guys accused me of being a "conspiracy theorist"!!!!

Roger Conner  known to you as ThatsItImout

From what I have read, Daniel Yergin attended Bilderberg in 2004.  Wonder if he told them the same thing he is telling us. If he did attend, I suppose he got his marching orders then. And the arrangements were made to make sure his was the voice the world heard about oil.

Bilderberg Group. Follow the link to Daniel Yergin.

Danny Boy!

A nice smile, don't you think? I'm not a conspiracy theory kind of person myself but some things are just too much fun! A kind of stooge, kiss-ass, brown-nose, toady, sycophant, self-serving kind of smile! Oh my -- that could be construed as some kind of personal attack but really it was merely my first impression upon seeing the photograph.... So well-adapted, socially successful, financially well off ... I hope he's happy! I know I am!

== Dave

I don't know dude.  Can you really write a post like that without damaging the credibility of your analysis in the article at the top?

BTW, I'm by no means unfriendly to the project of PO awareness.  I just don't think this sort of thing helps.

Yes, that was a bit over the top. However, in reference to attending Bilderberg, the sycophant is
a servile self-seeker who attempts to win favor by flattering influential people...

Thus the term has come to mean one who seeks to please people in positions of authority or influence in order to gain power themselves, usually at the cost of pride, principles, and peer respect.

A popular synonym for the term is "toady" or "toadying", derived from the term "toad eater".

Brown-nose, a verb meaning "To curry favor with in an obsequious manner; fawn on". Synonyms or close meanings include
To support slavishly every opinion or suggestion of a superior: bootlick, cringe, fawn, grovel, kowtow, slaver, toady, truckle. Informal apple-polish, cotton. Slang suck up. Idioms: curry favor, dance attendance, kiss someone's feet [ass], lick someone's boots.
In the energy realm in a declining Empire, the proper role of such a person is to kowtow to the powers that be whilst carrying out their agenda. Apparently, the agenda of those running the government and the big energy corporations (often the same people) is to consistently deny the problems staring us in the face regarding energy supply.

Who is doing the damage here? Yergin or me? I stand by my statements. I don't express opinions in TOD articles that I write -- I stick to the facts and reasoned analysis. But I also have an opinion. If that damages the credibility of what I wrote in the article in your view, so be it.

What I see here are word games or what the Rockridge Institute calls framing. Yergin emphasises 'reserves' and 'capacity' while peak oilers emphasis 'production' and 'conventional sources of petroleum'. Yergin and his friends want to make us believe it is the rules that is holding back production while we want to prove that it is geology. If certain rules like environmental laws and Kyoto were changed then plenty of cheap fuel would be available for everyone. Yergin is trying to take the focus off of the Arabs and big oil companies as the cause of current prices. We just need to keep saying "It's the geology, stupid!"
Your point that "it's the geology, stupid" seems superficially like an easy and an attractive way to dispute the CERA viewpoint.  But unfortunately the analysis of CERA's logic is that the projected 5% decline rate used by CERA is consistent with the best guesses around here.  So CERA really is not impugning the reality of decline rates; rather they are:
   1. confusing "oil" with anything (gas, coal, oil sands, corn, etc) that can be made into oil or into the same products that oil can be made into,
   2. exagerating the number of new drilling projects available for exploitation, the speed at which new oil projects can be brought on stream, and the maximum productivity of such projects, and
   3. possibly forgetting to project decline rates for the new projects they projecting to come on stream.  Remember, some of these projects, may emulate a number of recent smaller and deep offshore projects that rise and fall rapidly, so have limited lifetimes.  CERA seems to project them all to come on stream and to be productive at the "platau" rate for the duration of the period being projected, which is clearly an exageration for some projects.

So the bottom line is not that CERA ignores geology.  Rather it is that CERA simply exagerates future exploitation opportunities.

Danny has always reminded me of the chap in the TV series Babylon 5, the one who was head of PsiCore or whatever and in more ways than slight physical resemblance. Apologies to any caused troubled and sleepness nights by this observation.
No, not Bester, you may be thinking of the smarmy frontman for the Shadows (can't you just imagine the cloaking field failing and Yergin's evil masters flickering into existence around him?)

Our problem in this corner of the galaxy may be that we have too many Shadows but not enough Vogons. No wait, those were the hyperspacial bypass engineers with the really bad poetry. Got plenty of them.

Not enough Vorlons. I think Morden is the more accurate character for Danny Boy, but looks more like Bester facially.
This sort of analysis is derogatory, and a waste of time. CERA has taken a clear position: oil will not peak or plateau for at least a couple of decades. Whether that is true or not will be settled by the future production profile, not by "analysis" by Dave. No analysis can settle who is right and who is wrong here. We simply have to wait. If it turns out that CERA was right, I'll be expecting an apology from you Dave -- for being wrong, and for being arrogant about it.
The world consumed the entire OGJ reserves endowment from the tar sands -- 174.4 Gb -- in the period 2000 to 2005 inclusive, a mere 6 years. Perhaps there is something to worry about?

It''s certainly nice to hear from you again, JD. I must have touched a nerve.  

Arrogant? You don't know the half of it -- but Oh, my, go on! Flattery will get you nowhere.

You'd better be careful, Dave.  JD is affiliated with Goldman Sachs and CFR!

I'm a relatively new kid on the block, but I've read some of your articles on your old site.  I'm glad there are optimists like you in this debate.  I like to hear from both sides so I can come to my own conclusions.  I would enjoy seeing you post on this forum to present your views.  

On that note, I don't find this analysis derogatory or a waste of time.  Both sides are simply presenting their perception based on the facts.  Obviously, Dave's perception of the facts is that peak oil is imminent and it will be a huge problem.  I think that perception is based in honesty, and if so, don't you think that he is justified in his anger that Cera is looking at these facts and presenting them optimistically to our Congress?  Is it not at least a reasonable inference that somebody with the extensive knowledge that Cera SHOULD have be pointing out the holes that Dave has just pointed out--like all the non exploratory reserve growth is simply booking the sands as reserves?

Cera's perception of the facts is obviously optimistic and that peak is a long way away and will be a plateau.  We all have no idea if that perception is baseed in honesty, but assuming it is, I think they are entitled to take shots at people like Colin Campbell and Matt Simmons as chicken littles.  Mike Lynch has certainly put together some pieces blasting the credibility of Mr. Campbell.  

I think the analysis is far from a waste of time JD.  It is simply peer review.  Dave has found holes in their analysis and has exposed them.  Maybe they could come back (or you) and expose the holes in Dave's analysis.  These critiques are important--maybe Roscoe Bartlett could use this information (somebody ought to email it to him)to testify to Congress about why Cera might be wrong, and hopefully, Congress could do something that might be beneficial like increase wind tax credits, increase CAFE standards, commission some urban rail, whatever.  

Where you are absolutely right, however, is that nobody really knows and only time will tell.  I think we all know we all will be waiting and checking to see where it goes.

In fact, I just did.  While not overly optimistic, hopefully it does some good.  Here is the body of the email:

Congressman Bartlett:

I do not live in your voting district, however, I know that you are an avid supporter of alternative energy and understand the concept of peak oil. I am a citizen who has become aware of the challenges posed by peak oil and therefore wanted to forward information that I have become aware of.  

Cambridge Energy Research Associates (CERA) recently testified before the House Energy and Air Quality Subcommitee on December 2005.  CERA painted a very optimistic picture of future oil production growth.

Below is a link to a critique of that testimony and the most recent CERA report.

The Oil Drum is a website dedicated to the exploration of energy issues particularly peak oil.  I have found the analysis there solid and worth reviewing.  The linked story shows that many holes exist in CERA's optimistic predictions.  I forward this to you in the hope that Congress can hear another side of the story.

Very truly yours,

If it turns out that CERA was right, I'll be expecting an apology from you Dave -- for being wrong, and for being arrogant about it.

That sounds very reasonable!

And if it turns out that CERA is wrong and we hit the wall like a ripe tomato, and the disaster that analysts like Hubbert, Simmons, Westexas, and my old geology professor from Toledo have been trying to awaken us to for years actually happens--then I expect people like Yergin--and you, JD--to be hanged by the neck until you're dead.

Hey mikeB

I'm a 1976 UT grad with an MS in Geology. That wouldn't be Dr. R would it?


Hi! That would be Craig Hatfield. I just visited him recently. He gave up trying to warn about peak oil about six years ago, because, as he says, "it's too late. I'm retired now. It's time to have some fun."

See this pdf for further.

rockdoc: contact me at mikeB "at" foxhill "dot" com. I'd love to chat about Toledo, geology, and my eyeopening chat with professor Hatfield.
Just read Hatfield's piece; a superb and prescient summary of the problem from the late 90s days of $10/barrel oil.  Good piece to sway peak oil doubters that people may know.
Here's something to contemplate, Phil: I visited Hatfield three weeks ago at his home in Toledo. I hadn't seen him in 27 years. We had a very interesting chat... He told me he stopped writing about oil depletion in 1999 because it was too late!!! I have an envelope full of articles he has written for NYT, Wash Post, Nature mag, etc. He gave a speech at the Gordon Research Conference in 97(?). He campaigned tirelessly early on in the game. For him to say, "it's too late," is a real shocker. Hatfield is by no means a morose or morbid man. In fact, he was as friendly and interesting as I remember him being in geology class. I wish more people would read his work. He was a maverick, like Campbell.
That's an excellent speech (the pdf above) Hatfield penned, seems to me we've barely moved on in our knowledge and awareness compared with what he knew 9 years ago, scary that. If you have any further links to works of his online I would most appreciate the chance to read them.

Could have been a very interesting chat you and he had, did he say much about how he sees things now or how they will pan out?

"did he say much about how he sees things now or how they will pan out?"

He did not! I tried to gather if he had any predictions to make, but he wouldn't go there. The most he said was, (to paraphrase) "It would be interesting to have a crystal ball, to see if the population curve moves downward with the oil depletion curve."

I was a little shocked at how OVER peak oil he is. In fact, the Hirsch report is news to him. It felt odd for me, an English teacher, to be informing him of later developments of an issue he began studying decades ag! This is a man who knows both Campbell and Deffeyes, but doesn't keep up with the latest.

I repeat: he is over it. "I got very angry in the 80s that no one was listening to these warnings, then in the 90s I realized it's too late to do anything about it."

I want to reemphasize that Prof Hatfield is a delightful and engaging man. For the last half hour of our talk, he was more interested in learning what it's like to live in Maine!

I envy the man's peace and equanimity.  I'm quite angry about many aspects of Peak Oil, as are many others who post on TOD - but what's the use?  It seems to me that Hatfield has become very wise in his old age.  (Of course, he does have the advantage of probably being gone by the time TS-REALLY-HTF.)
Can't say I blame him, I'll probably have had enough of peak oil in 20 years time - whichever way it goes, lol.

One doesn't need a crystal ball to see that the population will almost certainly follow the oil depletion curve down if that begins within the next decade. We have left it too late to avoid it.

A 175 Bbrl oil field in Alberta that is projected to produce 3.5 Mbrls/day in 10 years provided that NG is not more dear than oil by that time. 15 years ago an 83 Bbrl field in SA was producing 8 Mbrls/day from 800 wells. Gosh how things have changed in 15 years.
Moreover, the projections from Canada I've seen called for 3mbpd by 2015, not 3.5.  And that was before the locals recently called for a slowdown because the infrastructure is getting stretched too thin.   It would be more realistic, I would guess, for oil sands production to be closer to 2.5 mbpd in 2015.

There also should be a discount applied to oil sands production because of the heavy energy content of of the required refining process, whether that energy source is NG or the process of using part of the bichethane itself to refine the sands into crude.   So I am guessing that 1 barrel of oil sands reserves = about .7 barrels of light sweet.   Maybe less.  No doubt someone else here would have a better guess.

Does Yergin ever admit he is wrong about his price predictions in the public media?

This is a double standard to require Dave to apologize when Yergin does not.

JD - "This sort of analysis is derogatory, and a waste of time. "

How is it a waste of time?  If this group is putting out misleading information then it should be exposed.

Rather that insulting Dave perhaps you should detail where this analysis is wrong and CERA is correct. When I saw a 24% rise projected in GTL I scoffed a bit.  That would be interesting and not a waste of time.

You are correct that future production will answer the questions however by then the world's population will be in real trouble due to lack of liquid fuels and Daniel Yergin's backers will have made enough money to retreat to their own Green Zones with their own private security forces.  Do you think that you or I will get an invite?

Yes. We are not here to turn off our brains and believe "experts" whether Yergin, Simmons or Skrebowski. We are looking at data. When the data don't fit, (especially when they are kept "proprietary") we want to understand what is wrong. If you can analyze the criticism you see here and point out what's wrong with Dave's critique, that would be a contribution. I actually keep my mind open to evidence. I haven't seen CERA provide data that makes their prediction make sense yet. And we all have seen that claims of larger reserves don't always translate into increased production rates when applied to existing fields.
JD accusses others of being "deragatory"??? LOLOLOLOLOL!
He's called me  a "peak oil dead ender", Richard Heinbger "just another poser", Julian Darley and Colin Campbell "greened up fascists" said The Oil Drum was "swirling down the drain of doom"  (classic one btw) and now he's accussing others of being deragotory!? too funny.
This is the real problem with JD. He treats Peak Oil as an issue that is based on culture and psychology rather than economy and geology.

The worst part is that he wants us to wait and see, in other words not to act until its too late. I wonder if JD has insurance, or if he also wants to wait and see if something happens to him.

Perhaps JD is a doomer. The kind of doomer who wants everything to go wrong. Telling people not to worry and rolling on the floor laughing when TSHTF.
Their own Green Zones? Maybe that is what Halliburton is building those camps for. The ultimate gated communities for the elites to rule from while we peasants starve.
It's in your face:

But some can't see it:

"All this was inspired by the principle - which is quite true in itself - that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying. These people know only too well how to use falsehood for the basest purposes."
~Adolf Hitler "Mon Kempf"

Enter Zogby stage left:

The Government's 9/11 Facade is Crumbling
First things first:

Any time two or more people are knowingly involved in the commission of a crime, there is, by definition, a conspiracy. This is not a theory, folks. It's a stone-cold, undeniable fact. So the real question about 9/11 is not whether there was a conspiracy, but indeed exactly who the conspirators are.

Crunch the numbers on that TOD...


I have no opinion about 9/11 conspiracies at this juncture.

But I have made this point: the idea that conspiracy theories are "nuts" because people "can't keep secrets" is a damned lie, an awful lie, a killing lie.

Anyone who thinks people can't keep secrets: post your sexual indiscretions on the web now.

But I have made this point: the idea that conspiracy theories are "nuts" because people "can't keep secrets" is a damned lie, an awful lie, a killing lie.

I believe this perception comes from watergate. Nixon and his people could not keep secrets, and they seemed a lot smarter than the current administration.

Nixon was not popular with the Republican establishment, primarily because of that incident when he broke into the Watergate hotel suite belonging to the Democratic Party HQ and stole the Democratic Party Platform.
Between 1968 and 1975 we
  1. Went off the gold standard.
  2. Withdrew from Vietnam.
  3. Made peace with China.
  4. Stopped supporting Israel during the 1973 war.
  5. Put in quotas for racial and sexual integration.
  6. Established the EPA.
  7. Accepted inflation to pay the cost of Vietnam instead of increasing taxes on poor people.
  8. Allowed real wages in America to increase dramatically.
  9. Subsidised lower middle class kids going to college.
  10. Increased welfare payments and mandated states do same.
  11. Allowed the stock market to collapse without a plunge protection team to artificially prop it up.
  12. etc, etc, etc.
Think of him as a Republican version of Bill Clinton. No wonder the Democratic leadership hated him so much and he got impeached and resigned because he couldn't get Republican support.
Re. <7) Accepted inflation to pay the cost of Vietnam instead of increasing taxes on poor people.>
 Inflation is a tax that hits poor people the hardest. People that live from paycheck to paycheck and need that paycheck to cover expenses feel the pain of inflation first and are harmed most by it's bite.
 It is especially harsh when a person on a fixed or low income has little prospects to increase their weekly wage but they see the cost of the things they need increasing in price.
 Inflation has been called the cruelest tax of them all. Unfortunatly, it is also the preferred tax of politicians because they deny responsibility for it.
Hello AC,

Great Post!  Like Peakoil, we can only hope that people will care enough to do their own research, and ask the key questions like Lou Dobbs.  I fear genetic lizard brain levels of misconceived political control and ineptitude is leading us inexorably on the '3 Days of the Condor' path versus slamming on the brakes to mitigate.  My hope is that a scientifically based Foundation and widespread education could be a better solution. Time will tell.

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


Another great post!  Keep up the good work.

I don't understand how an administration leader, a mediocre C student of limited intellect that has lead this nation to a long string of screw-ups, Example: Iraq, Lebanon, New Orleans, Energy bill, and other things too numerous to mention, can pull off the perfect crime in NYC 7 months after assuming the Presidency. IMO incompetence nearly always trumps conspiracy theories. Especially since nearly half of congress would like nothing better than to nail him to the wall, most of who are far more knowledgeable and intelligent. After all there are people in this world that would like nothing better than to kill Americans, I saw them dancing in the streets on 9/11.
"I don't understand how an administration leader, a mediocre C student of limited intellect that has lead this nation to a long string of screw-ups, Example: Iraq, Lebanon, New Orleans, Energy bill, and other things too numerous to mention, can pull off the perfect crime in NYC 7 months after assuming the Presidency."

If you think Bush made the decisions to undertake the above mentioned decisions you need to brush up on how this government works.  Bush is there to try to SELL the policies that are made by people much more important them him to the hapless proles.  He admittedly does a horrible job of it.

The crime in NYC is FAR from perfect. It's astonishing obvious what happened once you take a serious look at the available evidence.  What makes it seem like a perfect crime is the MSM complicity in covering up the events.  Once again understand Bush himself most likely knew very little about the attacks or the plan to carry out the attacks.  It was the job of the administration to cover it up and protect the secret government.

"IMO incompetence nearly always trumps conspiracy theories."

What exactly does this mean?  9/11 was without a doubt a conspiracy.  More than one person colluded together to make 9/11 happen.  It's a question of who the conspirators are.  You can believe the OFFICIAL conspiracy theory that makes no practical sense whatsoever or you can go find the answers yourself.  The latter is not the hallmark of a dumbed-down fattened up and fluoridated United States population.

"After all there are people in this world that would like nothing better than to kill Americans, I saw them dancing in the streets on 9/11."

Ya there was a lot of dancing;


Perhaps you could explain the purpose of this conspiracy, and what was to be gained by its success. Being that I am one of the naive dumbed-down fattened up and fluoridated members of the United States population, perhaps I should be enlightened, along with 66% of the rest of the population of this country.
Perhaps you could explain the purpose of this conspiracy, and what was to be gained by its success.

Not being a member of the conspirator's inner circle, I can only look at the events following 9/11 to divine its purpose. It is crystal clear that the watershed event was used as an excuse to invade and occupy the middle east. Numerous sources have indicated that an attack against Iraq was "on the books" long before 9/11. These sources include former Bush administration insiders like ex-Treasury Secretary Paul O'Neill:

"From the very beginning, there was a conviction, that Saddam Hussein was a bad person and that he needed to go," says O'Neill, who adds that going after Saddam was topic "A" 10 days after the inauguration - eight months before Sept. 11.

"From the very first instance, it was about Iraq. It was about what we can do to change this regime," says Suskind. "Day one, these things were laid and sealed."

As treasury secretary, O'Neill was a permanent member of the National Security Council. He says in the book he was surprised at the meeting that questions such as "Why Saddam?" and "Why now?" were never asked.

"It was all about finding a way to do it. That was the tone of it. The president saying `Go find me a way to do this,'" says O'Neill. "For me, the notion of pre-emption, that the U.S. has the unilateral right to do whatever we decide to do, is a really huge leap."

After 9/11, elected officials lied openly and frequently in linking Saddam to 9/11, and this flimsy pretext was utilized to go forward with the invasion.

IMO, 9/11 is inextricably linked to Peak Oil because the invasion and occupation was planned to initiate a chain of events which would ultimately place control of the regions oil resources in American hands. Witness the fact that the Iraqi Oil Ministry was virtually the only government entity that was actively protected in the initial stages of the invasion. The bottom line is that the elites wanted control over the oil spigots in the middle east and 9/11 gave them the excuse to go forward.

In a nutshell, that was the purpose of the 9/11 conspiracy. Its success in radicalizing enough of the American electorate to allow it to go forward with the Iraq attack is obvious. Strange as it may seem, to those who organized the invasion, Iraq has been a success. The military-industry complex has made money hand over foot and now have American "boots on the ground" in the very place that contains most of the world's oil. It isn't a coincidence.

If it was all a big conspiracy to gin up an invasion of Iraq, then why were the hijackers Saudi?  
Besides, 9/11 was the centerpiece of bin Laden's strategy - launch an attack on the US that we had to respond to, in order to lure the US into a quagmire war of attrition.  We didn't take the bait in Afghanistan, largely using local allies there, but have fallen hard for it in Iraq.

I'm not going to get too deeply into this, so as not to offend the sensibilities of those who feel that this is all a "CT" and thus inappropriate for this board, but apparently the FBI doesn't agree with you because bin Laden has never been indicted for 9/11. From Wikipedia:

Bin Laden has not been formally indicted, and evidence has not been mentioned that he was involved, in the United States criminal justice system for the September 11, 2001 attacks; he is officially still only a suspect in 'other terrorist attacks throughout the world'.
I assume you are referring to (former?) CIA employee Bin Laden?
Use his asset name "Tim Osman"...


Pardon me for saying so, but that question makes no sense whatsoever. Leaving aside whether there really were any hijackers at all, just because individuals of a certain nationality were purportedly linked with the attack doesn't mean that it was officially sanctioned by the Saudi government. If an American commits a crime in a foreign country does that mean he or she did so with the blessing of the American government?

You obviously haven't delved much further than the official "conspiracy theory".  You need to do some research on how the various intelligence agencies work.  There were no "19 Saudi hijackers".  If there were any of those individuals on the planes that they name, several of the perps turned up alive after the fact, they were mostly like though they were going to land somewhere.  Many stories like this:

The supposed kingpin Mohamed Atta took a connecting flight from Portland to Boston.  What would have happened if that flight got delayed?  Doesn't sound like planning of top notch international terrorist.


Alright, look. I'm too lazy to "delve." But the suspense is killing me.

Will you just tell me what actually happened. I don't care why. At least not right now. Just tell me exactly what happened. Who did it. The real time line. The actual events.

Just the basics. Whatever you can fit into 1000 words or less. No links, no videos, no cut-and-paste. Just tell us whatcha got.

Oil CEO,

I have read many of your post and it is evident you are very intelligent individual.  I have absorbed a great deal of knowledge from your postings.  I'm not sure if what you ask is serious or sort of a "ruse".  
Either way I do not have time right now to type out an SA that could properly answer your question of "Just tell me exactly what happened".  Not that I know, or anyone for that matter, knows exactly what happened.  What I do know is that we can rip the "official conspiracy theory" to ribbons.  Anybody could which makes you wonder why the MSM has remained conspicuously silent all this time. I have read dozens of books relating to 9/11 and books relating to how intelligence agencies work the government works etc.  To ask me to sum it all up in a 1000 words is not reasonable.  I'm not trying to dodge what you are asking but I fell it would be largely a waste of my time to reiterate what has been thoroughly covered by hundreds of other people that have published entire books on the subject.


No, I meant it in all seriousness. I appreciate your answer and understand your concern. We'll approach this again. I know it's not a dodge. I was hoping to get lucky. But I'll lead you on like this for now. Are you saying that there is "an official conspiracy theory" but then a second "real" conspiracy behind that? You've mentioned "19 Saudis." Is that a lynch-pin? What are others? 1000 words is too much, you're right. I didn't mean to put you on the spot.
No easy answer to this one, Oil CEO, for me anyhow. I have seriously trawled around a couple of times in the last 4 years to see if a coherent picture is emerging and one isn't.

I've not seen a conspiracy theory that I find sufficiently substantiated but nor is the 'official' story sufficiently credible. Things like why the towers collapsed, why WTO building 6 (or whatever it was called) came down, certain deliberate security compromises at the towers in the weeks prior, why high Sauds were the only ones allowed to fly out of US in the immediate aftermath, failure to intercept the planes, probable deliberate destruction of physical evidence immediately afterwards, the continued existence of several of the terrorists who were reportedly on the planes...

Maybe one day the truth will become known, maybe not. If some in the US govt were involved or complicit then I guess most of us will be seriously fucked before too long since they might do almost anything to acheive whatever it is they seek and one would be wise to presume they have the US 'democracy' (and perhaps more) pretty well sown up. I don't really want to know that the worst case conspiracy theories are true, even if they are, what should I do then? Join al Qaeda?

I really don't know. Currently I believe no one on this. A CERA statement would be helpful, then I'd know what not to believe. Danny boy, where are you when you're really needed?

Y'know, this might be the most important statement in this thread: "A CERA statement would be helpful, then I'd know what not to believe."

I had this thought earlier, but couldn't phrase it like you did. As you see I haven't commented yet on this whole CERA thing. I do, however, have a bunch to say on the topic. Maybe tomorrow.

Maybe people are paying $5000 to hear what Yergin has to say, and making a ton of money on what they hear. You may have figured it out, Agric.

I'm too busy paying attention to the cease-fire. World War III is over! What shall we call it? VH Day? The Peace of August? August the 14th?

Can I just say - I'm in love with Hala Gorani.

...oh, wait, ok, hold on, this coming in live, we've got an incident...looks like, some, uh, well,

Stay tuned, I guess.

"I don't really want to know that the worst case conspiracy theories are true, even if they are, what should I do then? Join al Qaeda?"

I think this is a key statement.  I think most that want to look deeper into 9/11 will have this feeling packed away somewhere in the back of their mind.  It is sort of a subliminal switch that will always steer someone away from accepting the cold hard reality of 9/11.  Nothing rings truer than what Hitler said in the Big Lie:

"Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying."

I have had so many people watch videos of tower 7 collapsing and went into great detail of 9/11 and even when confront with strong evidence of the deliberate implosion of WTC 7 most will come up with an idea that makes no sense at all even though "facts which prove this to be so may be brought clearly to their minds".  "It just happened it was a fluke"," The foundation was weakened from the collapse of the other buildings", There was diesel fuel in the building", "The other towers fell on it", it goes on and on.

It reminds me of the movie the Matrix when Neo asks Morpheus why can't we just tell everyone what is really going on and he replies:

"The Matrix is a system... That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system that they will fight to protect it."
~ Morpheus

That is what it boils down to.  It is a denial mechanism similar to what most people do when confronted with peak oil.  But peak oil is easier to "accept" because it implies that we are all equally at fault and it is a natural event that if we work collectively we may POSSIBLE soften the impact.  9/11 on the other hand destroys any notion about ones belief in the system they were raised to trust and love.  It leaves you cold wet and all along shivering in the cold.  It opens a Pandora's box of questions.  How deep does the rabbit hole go?  What else has been lies?  What is left if everything you believed about this government, this country, its people, is all a collective illusion and you have been duped your entire life?  What do you have left?  What value does knowing these things add to your life?  For most denial is the ONLY option.  

"Nor did a prince ever lack legitimate reasons by which to color his bad faith. One could cite a host of modern examples and list the many peace treaties, the many promises that were made null and void by princes who broke faith, with the advantage going to the one who best knew how to play the fox. But one must know how to mask this nature skillfully and be a great dissembler. Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions."
-- Niccolò Machiavelli

It has been pointed about many times before that we deceive ourselves about our origins to help us deceive others better.  The truth generally doesn't increase your inclusive fitness:

"What modern evolution theory brings to Goffman's observation is an explanation of the practical function of self-deception: we deceive ourselves in order to deceive others better. In his foreword to Richard Dawkins' THE SELFISH GENE, Robert Trivers noted Dawkins' emphasis on the role of deception in animal life and added, in a much-cited passage, that if indeed "deceit is fundamental to animal communication, then there must be strong selection to spot deception and this ought, in turn, to select for a degree of self-deception, rendering some facts and motives unconscious so as not to betray -- by the subtle signs of self-knowledge -- the deception being practiced." Thus, "the conventional view that natural selection favors nervous systems which produce ever more accurate images of the world must be a very naive view of mental evolution."

Does knowing the truth about 9/11 increase you fitness?  No of course not, it actually decreases your chances of "moving on" your genes.  One is genetically biased to not face up to harsh reality;

"Since we are genetically inclined to deceive ourselves into believing in gods -- just as a child believes in Santa Claus -- we naturally prefer to remain ignorant of our true natures. When confronted with "harsh reality", we demand scientific proof that Santa doesn't exist. Of course, it's impossible to prove that Santa doesn't exist. So we ignore the harsh reality and believe that Santa (either as "the market", or as some marvelous new "technology") will deliver the goods."

Just like our species desperate want to believe in gods of all sorts to help us escape from the reality of life, people will do anything not to believe what really happiness on 9/11 to hold on to any quant notions that had about the system they live under.

"The war, therefore, if we judge it by the standards of previous wars, is merely an imposture. It is like the battles between certain ruminant animals whose horns are set at such an angle that they are incapable of hurting one another. But though it is unreal it is not meaningless. It eats up the surplus of consumable goods, and it helps to preserve the special mental atmosphere that a hierarchical society needs. War, it will be seen, is now a purely internal affair. In the past, the ruling groups of all countries, although they might recognize their common interest and therefore limit the destructiveness of war, did fight against one another, and the victor always plundered the vanquished. In our own day they are not fighting against one another at all. The war is waged by each ruling group against its own subjects, and the object of the war is not to make or prevent conquests of territory, but to keep the structure of society intact."
~George Orwell


I second CEO's question.

To ask me to sum it all up in a 1000 words is not reasonable.

You are asking us to accept an alternative reality which is substantially different to what the rest of us have been living through, these past five years. If you can't sum it up in 1000 words, after five years, then it isn't coherent, and deserves no credence.

For me, there are no show-stopping plausibility problems with the official version. On the other hand, what sort of narrative do you have to substitute for it?

Who, for example, flew the planes into the towers? Did the CIA (or whatever "deep" organisation organised the hijackings) have suicidal fanatics wired up to do it for them? In what world is that idea plausible?

"Who, for example, flew the planes into the towers? Did the CIA (or whatever "deep" organisation organised the hijackings) have suicidal fanatics wired up to do it for them? In what world is that idea plausible?"

I'm at work right now so please excuse me for being brief.  It will get back tonight with more links on the topic.
It should come as no surprise to you that technology has existed for quite some time in commercial aircraft for the autopilot to fly the plane (with the exception of landing).  How hard would it have been to take control of the flight computers and give them coordinates to fly into the buildings?   The plane that struck the Pentagon did maneuvers that would challenge the best pilots in the world...

Home Run and Global Hawk
If the supposed pilots are impossible or unlikely prospects for flying a Boeing 757 or 767 through sharp turns and complex maneuvers, how COULD those airliners otherwise have been flown?
In an interview with the German newspaper Tagesspeigel on January 13, 2002, Andreas von Buelow, Minister of Technology for the united Germany in the early 1990s, a person who first worked in West Germany's Secretary of Defense 30 years ago, told about a technology by which airliners can be commanded through remote control.
The former Minister of Technology said: '"The Americans had developed a method in the 1970s, whereby they could rescue hijacked planes by intervening into the computer piloting."'
Andreas von Buelow said that this technology was named Home Run.
The German went on to give his Tagesspeigel interviewer his overall perspective of the 9/11/01 attacks: '"I can state: the planning of the attacks was technically and organizationally a master achievement. To hijack four huge airplanes within a few minutes and within one hour, to drive them into their targets, with complicated flight maneuvers! This is unthinkable, without years-long support from secret apparatuses of the state and industry¦. I have real difficulties, however, to imagine that all this all sprang out of the mind of an evil man in his cave"'

"Col. Donn de Grand Pre - former top US Pentagon arms salesman under the Ford and Carter administrations

A group of military and civilian US pilots, under the chairmanship of Colonel Donn de Grand, after deliberating non-stop for 72 hours, has concluded that the flight crews of the four passenger airliners, involved in the September 11th tragedy, had no control over their aircraft.

In a detailed press communiqué the inquiry stated: "The so-called terrorist attack was in fact a superbly executed military operation carried out against the USA, requiring the utmost professional military skill in command, communications and control. It was flawless in timing, in the choice of selected aircraft to be used as guided missiles and in the coordinated delivery of those missiles to their pre-selected targets."

The report seriously questions whether or not the suspect hijackers, supposedly trained on Cessna light aircraft, could have located a target dead-on 200 miles from take off point. It further throws into doubt their ability to master the intricacies of the instrument flight rules (IFR) in the 45 minutes from take off to the point of impact. Colonel de Grand said that it would be impossible for novices to have taken control of the four aircraft and orchestrated such a terrible act requiring military precision of the highest order.

A member of the inquiry team, a US Air Force officer who flew over 100 sorties during the Vietnam war, told the press conference: "Those birds (commercial airliners) either had a crack fighter pilot in the left seat, or they were being manoeuvred by remote control."

Further pilot comments: "I seriously question whether these novices could have located a target dead-on 200 miles removed from takeoff point...-- much less controlled the flight and mastered the intricacies of 11FR (instrument flight rules) -- and all accomplished in 45 minutes."

"If there was an AWACS on station over the targeted area, did it have a Global Hawk capability? I mean, could it convert the commercial jets to robotic flying missiles?

"The fact is, all the transponders were turned off on the doomed flights virtually at the same time." Look at their departure times -- two from Logan (Boston), one from Newark, another from Dulles (Washington DC) -- all between 8 am and 8:15."

"We were totally trained on the old type of hijack where you treat the hijacker cordially, punch a 4-digit code into your transponder to alert ground control you're being hijacked, and then get him where he wants to go, set the plane safely on the ground and let them deal with it on the ground. However, this is a totally new situation... Not one of the planes alerted ground control that they were being hijacked." Why?

"I became more convinced that the four commercial jets were choreographed by a "conductor" from a central source, namely an airborne warning and control system (AWACS). They have the electronic capability to engage several aircraft simultaneously, knock out their on-board flight controls by EMP (electro-magnetic pulsing) and assume command and remote control of these targeted aircraft"

Remote Control  

Based upon the evidence, we can safely say that two airliners hit the World Trade Center. That part was filmed and/or witnessed by many people. There is, however, no footage of Flight 77's famed aerial maneuver just as there is no footage that shows an airliner actually hitting the Pentagon. The only thing ever produced was a film that showed the side of the Pentagon and then a large ball of flame.

Flight 77 remains the greatest unsolved mystery of 9/11 but that does not alter my belief in the guilt of the suspects.

What we have, however, is a feat of airplane driving that far exceeds the skills reportedly possessed by any of the alleged hijackers. In fact, the flying skill required for such a maneuver surpassed even those of commercial airline pilots."

Are you giving up on me alistairC??


"The individual is handicapped by coming face-to-face with a conspiracy so monstrous he cannot believe it exists."
~J. Edgar Hoover

Dipchip that would be too easy if I gave "the game" away to the "naive dumbed-down fattened up and fluoridated" 66% without them having to do some leg work.   If you want to understand what the purpose of this conspiracy, and what was to be gained by its success you would need to understand the true power structure running the world.  The above clip is one of their best "front men" telling you what they are trying to achieve.  Watch the date Poppa Bush gave that famous speech, September 11, 1991.

Do you take the red or the blue, probably the only real choice you have left...

"This means that terrorism is not something independent of world politics but simply an instrument, a means to install a unipolar world with a sole world headquarters, a pretext to erase national borders and to establish the rule of a new world elite. It is precisely this elite that constitutes the key element of world terrorism, its ideologist and its "godfather". The main target of the world elite is the historical, cultural, traditional and natural reality; the existing system of relations among states; the world national and state order of human civilization and national identity."
~General Leonid Ivashov



Here is a nice little primer about the "secret government" by Bill Moyers.  It was well done;


When he discussing the US backed coup in Guatemala do not overlook the role that George H Bush's stake in United Fruit through Zapata Petroleum played...

Do you think we could leave 9/11 and Pearl Harbor alone for a few weeks (forever would be OK too). We just flogged those issues thoroughly last week. And got exactly nowhere.

If you've got to lead with conspiracy Chimp, go after ethanol.

Surely there's a money trail from ADM and Cargill to Congress. Surely Hillery Clinton is in the muck somewhere. I bet Tom Tomorrow has even done some revealing cartoons. is getting money somewhere, flesh it out for us, if you will.

But stop with 9/11. I send friends and neighbors here and to Matt Simmon's site (for the powerpoint pdfs). We get nowhere real fast when they run into 9/11 rants or crude language. It's not helpful. And it taints the good posts about field depletion, extraction technology, and fossil fuel alternatives.

Your consideration would be appreciated.

"I send friends and neighbors here"

I understand your concerns Will.  We wouldn't want "friends and neighbors" who are just getting their first whiffs of the impending collapse and destruction of everything they hold near & dear in their lives to be exposed to something as "disturbing" as 9/11 truth.  In the end you are of course correct because this is not the proper forum for this discussion, and for that, I apologize...

"Our lives begin to end the day we become silent about things that matter."
~Martin Luther King Jr.

It's not about being disturbed by the truth. And for the record... I agree with a lot of what you post and I certainly agree with your MLK quote.

But talking about 9/11 on a peak oil is similar to injecting gay marriage, birth control, or evolution into national politics.

It starts a big row and pressing issues: energy policy, health and Iraq get remaindered.


I seem to remember a graph(*) showing that the IEA has gotten progressively more pessimistic on future production with each passing year.

I kind of wonder if they have become bigger pessimists in private, but are conservatively moving their predictions just a little bit each year.

* - posted in a comment to a previous TOD article

I'm not sure what you're referring to but in this regard I want to say something. Who is the most pessimistic among the editors & contributors to TOD? Surprisingly, it's not me. It's Stuart, who wrote Why peak oil is probably about now on March 1st, 2006. He has not retracted it nor should he. He is probably the most respected person here and I also hold his views in high regard, even when I disagree with him. For example, I don't think we've reached the peak yet. I expect some production increases in the 2007 to 2008 period but not nearly as much as some others (including Skrebowski). Yet, when I say that peak oil is a clear & present danger, some folks lose their grips.

Go figure.

I am thinking of a traditional graph that shows million barrels per day on the y axis, and years on the x axis.  From 19xx to today of course those are historic values, but there forward it is the projected (IIRC) IEA trend.  The thing about this graph though was that it showed a fan out with a series of curves branching out from the present.  The highest future curve was from the oldest IEA prediction, then the next most recent prediction, and so on, ... down to the most recent prediction as the lowest curve.

I hope I'm not imagining that, and that someone else remembers the graph.

As far as who's pessimistic amongst the TOD editors, I wouldn't know how to call that.  IMO it's a combinatino of how soon and how bad (global depletion rates).  If Stuart things soon but shallow (again IIRC) ... that might not be so bad.

Was this the graph?

That's a comparison of the EIA's IEOs though.

That's the kind of thing ... but that one doesn't show anything as dramatic as I remembered.  I better discount that memory until proved otherwise.
I'm confused by Figure 3 - it says that resource growth was 457 billion barrels.  What is this and how does it compare to the 175 billion barrels of field upgrades?
That was pre-1995. I have a slide about that. I will post it tomorrow.

I guess you will clarify it then but I think it means additional declared reserves on fields found before 1995, but its not clear to me if they were upgraded pre 1995 or in the '95-'03 timeframe.
I wonder how does Daniel Yergin explain his failures to
  1. predict prices
  2. predict increase in capacity even after compensating for geopolitical events and hurricanes

Not to mention CERA in 2000 was thinking we will have so much natural gas to that they may have to pass a fine for passing gas.
BTW anyone read the Economist article which printed sometime in april 2006? They have said that Deffeyes was wrong about the peak. I do not know how they made such a statement considering nobody really knows for sure.
I saw Deffeyes in 2004. He said that the peak would be Nov 2005 +/- 3 weeks. I have since seen that he has stated in the press that it was in December 2005.  Looking at Saudi production in the EIA, one can see that at a time of record prices, the production is dropping.  I think Deffeyes is correct
I agree but the claim in the article was that he was wrong without even some kind of explanation. Why am I quoting people who thought "we will be drowning in oil"
I looked at the CERA report and they continually deny reality in the UK. They have a relatively flat UK production out to 2011 and slightly declining thereafter. The problem is that the UK is declining at 11% per annum and the Norwegian production has been dropping since the mid 90's.

They also make no provision for the decline of Ghawar, Burgan and Cantarell, all of which has been widely reported

This isn't in response to any particular post, i'm just continuing my train of thought (hope that's ok)...

As I mentioned in my first post here on TOD, my pseudonym was chosen as a reaction to a comment that Mathew Simmons made in Twilight in the Desert to the effect that, "only self-aggrandizing traders continue to promulgate the idea that oil is just another commodity."

I have stated that, from my point of view, oil has, in fact, continued to behave as, "just another commodity," seeing about an equal run-up, percentage wise, as the other commodities (gold, copper, etc.) during the first 3 or 4 years of this new commodities bull market.  

Since oil hasn't shown me that it is anything other than, "just another commodity," I have continued to treat it as such, predicting a short term pullback (along with other commodities) to $57 by mid-November.

I have recieved some criticism for this prediction.  Most people don't seem to agree with it (although when I floated this idea with AngryChimp yesterday, he seemed willing to entertain it) but I think there is some real room here for common ground.  

After all wouldn't most of you agree with me that oil prices do not currenlty reflect PO?  I think we can all agree that, if markets were forseeing PO in the near future, oil prices would probably be at least double what they are today.

Given that $75 a barrel does not reflect PO, it seems that there are only two possibilities as far as future oil prices are concerned.

  1. At some point in the future, markets will "realize" that PO is at hand, and oil prices will rise substantially.

  2. Oil prices will continue to be subject to the same up and down fluctuations of all other commodities.

For those who are convinced of PO, these two possibilities could be rewritten as a single, combined statement:

"At some point in the future, markets will 'realize' that PO is at hand, and oil prices will rise substantially, but until this realization occurs, oil prices will continue to be subject to the same up and down fluctuations of all other commodities."

So, unless you've convinced yourself that the markets are on the verge of suddenly becoming "PO aware" during the very short period of time between now and mid-November, my prediction of $57 a barrel oil isn't so very absurd after all, now is it?

In fact, given the herd mentality and complacency which have invaded commodities markets in recent years (with every Tom, Dick, and Harry, grocery baggers, night watchmen, latecomers and amateurs of all makes and models, the people who pass out the "fly-in underwear" at airports, bed-ridden grannies acting on a tip they saw in the latest issue of Reader's Digest suddenly becoming convinced -- in mass, as if brainwashed -- as they typically do, that commodities have nowhere to go but up and, to top it off, that there's no risk involved!) I have half a mind to lower my target price to $56!

Why are commodities prices currently at record highs?  Speculation, baby!
Why have we entered a new commodities bull market?  Because of a longterm shift in sentiment.
Why has sentiment shifted?  Nobody knows.
Will it shift again in the future? Yes.
Will commodities go up forever? No.
Within the context of longterm commodities bull markets, why do commodities periodically experience pronounced, sharp downturns?  To shake out the latecomers and amateurs!
Why do the latecomers and amateurs need to be shaken out? It's a way of transfering wealth to the insiders and professionals.
Why do "markets" exist at all? It's a way of transferring wealth to the insiders and professionals (read: "to the rich").

AngryChimp, can I get an amen?

God help us when the markets realize peak oil. My guess is 2008-2009 there slow :)

Actually I suspect when the price of oil starts going through the roof the free market for oil will disappear. What it will be replaced with would be what I call the lead based market.
Depleted uranium might also become a big force in this new enlightened market.

Depleted uranium might also become a big force in this new enlightened market

For breeders or for amunitions?

It is possible that when Simmons cautioned against viewing oil as just another commodity he was pointing out that economists and their bethren tend believe that everything is infinitely substitutable.  In the case of fossil fuels, their versatility is unmatched and the very structure of our economy and our society is dependent on their affordability and abundance.

Furthermore, the current "affordability" of oil is largely due to taxpayer subsidies for: oil companies, foreign aid to curry favor with oil exporters, military endeavors to secure foreign oil.  The aggregate cost of these subsidies is staggering and may be one reason Simmons claims that the true market cost of oil should be much higher.  Also, the real worth is masked by geopolitical maneuvering.

Barring massive demand destruction from a catastrophic event, it is hard to imagine the price of oil dropping substantially.  

In the long view, when the massive debt of the U.S. finally deals a lethal blow to the "strong dollar policy" all bets will be off on the affordability equation.


Its all supply and demand. If the price is rising,as it has been, the world wants more than it is getting at the current price. imo, this will continue as long as the plateau continues because the major importers, esp. china, want more than they are getting... and, china is beginning to fill spr's.  I would not bet much on falling prices until seeing increasing supplies.  If 1.80/month continues, we will be at 100/b mid 07.
In fact, given the herd mentality and complacency which have invaded commodities markets in recent years (with every Tom, Dick, and Harry, grocery baggers, night watchmen, latecomers and amateurs of all makes and models, the people who pass out the "fly-in underwear" at airports, bed-ridden grannies acting on a tip they saw in the latest issue of Reader's Digest suddenly becoming convinced -- in mass, as if brainwashed -- as they typically do, that commodities have nowhere to go but up

I don't think this is important. Tom, Dick and Harry put all their dumb money into the housing bubble. For them to go out and invest in comodities they would have to put it on their credit cards, and even if they did they would most likely buy stocks in commodity companies not the commodities themself.

SelfAggrandizedTrader, until angrychimp gets here I will give you an "Amen!"

First, to your pseudonym, at the end of the day, we are ALL "self aggrandized traders" (imagine an investment banker using a hippie beatnik term like that!)

Now to your issue of price.  It is fascinating to me that some here seem to think that people in the energy industry do not have any idea about what oil and gas is available a year or two down the road, when in many industries, they are having to plan and contract for it now!  To this point, they seem to be showing no real sense of fear that the fuel for their business won't be there.  

But some ask, "Well, if peak oil isn't real, what has caused the run up in price?
The other day, a poster on TOD asserted that "we know what has caused the price rise, thank you...", and became annoyed at anyone who would suggest "we" didn't.  I suggested that I didn't "know", but I was becoming suspicious that a lot of people who thought they did in fact, did not know either.

But, what the helll, let's play out some possibilities:

*As you say, speculation.  In the late 1990's, if a speculator had fished about for something that had been laying in the crapper, cheaper than dirt, he/she the enterprising soul would have ambled right into commodities in general and energy cmmodities in particular, at almost historic inflation adjusted lows, despite rising demand.  Isn't that the definition of a great speculative play?  It would have been just too juicy to pass up.  Given the news since that time, we actually should have already went well over $100 to $120 a barrel for sustained periods.  The fact that we have not is one of the first things that has caused me to re-question imminent peak oil.  In a world of no transparency or valid information, the price signal is the only usable  thing we have.

*Rising demand.  Could it be that the liberalization and rapid expansion of two billion person economies has anything to do with it?  China and India have opened their economies, and went to a policy of Western style market growth goal setting.  With or with out "peak" per se, this, plus the opening of the Eastern European former Comcon economies should have sent the oil price through the roof.  That it did exactly that is now seen as a major surprise (??)

*Needed investment.  If the trucking industry drove it's trucks until they all but fell to pieces, and then had to replace the equipment across the industry with new, now even more expensive and high tech trucks, would it surprise anyone that the cost would be passed to the customer in higher prices?  No it would not.
If the oil and gas industry spent two decades at inflation adjusted low prices for it's products, and then had to replace and expand it's wells, drills, exploration gear, transportation networks, pipelines, all at the same time mind you, thus driving prices up for metals, pumps, compressors, pipe, valves, water separators, on and on....would it surprise anyone that they would pass the cost on to their customers?  It must have, because everyone seems surprised!!

*Geo-political issues.  Yes, they do actually exist.  No the CIA agent at the Algerian McDonalds does not create them all for his own amusement, some would exist without him.  Having a terror attack (and I lay aside the Martians conspiring with the Dick Chaney to auto pilot the planes into the buildings just for the moment) of the greatest death toll in U.S. history come, maybe by coincidence from the minds of those reared in the world's lynchpin oil producer, followed by a bloody bog of a war right in the heart of the world oil patch, and a left leaning populist and fan of the Castro become leader of one of our most reliable oil suppliers over the years can have some effect.  Throw on Nigieria, Angola, and the Ruskie nat gas is possible there is a geo-political premium on the price of oil right now.  Just possible.

*Weather.  Yep, there have been two record Gulf coast hurricane seasons.  Could have had an effect.  Nuf said.

So we see, that even without "impending peak oil", there are plenty of reasons for the price of oil to be greatly higher than it is.  We also see that there is no assurance that if it was, demand would drop greatly.  I have long held that the world can sustain $100 barrel oil, especially if we rise to it gradually, and it actually would have some very positive benefits (technology improvements on efficiency, alternatives beig competitive, and possible reduction in consumption to help on the CO2 front....not guaranteed, but possilble.

Does this mean, that like Danny Yergin, I would say "peak is not at hand"?

No, of course not.  I cannot possibly know if peak is at hand.  It could even be behind us. The information is so crapped up that any guess about that is just that, a pure guess.  The most useful line by Dave Cohen was this:
"Lack of data transparency for oil production is one of the most serious problems in the oil industry."

But that knife cuts both ways.  It makes attempting to prove impending doom just as fruitless as attempting to prove impending ongoing safety and security of energy.  Both are equally suspect.

Blaming "peak" for the price increase in energy however, is not a provable argument either.  Likewise, using "plateau" as a proof of peak cannot be accepted.  Saudi Arabia has been in "plateau" for a decade at a time, and then, when the need arose, come rising out of it.  This is where Yergin's point about "productive capacitiy" should not be so easily ridiculed.  Many are saying that the world has "no spare capacity", without possibly being able to prove that this is true.

We are fast approaching winter, with our stockpiles of oil/gas in historically pretty fair shape.  There is to this point no disruptions of fuel supply, and the price of crude oil has managed to hold a lower price to this point in the summer than the doomers expected.

 It is fully possible for there to be a sizable drop in crude oil prices.  How long it will last, I don't know, but I for one am hoping it does not occur.  The economy has proven it can sustain the current oil price, in fact, still waste huge amounts of fuel at this price.  A drop in price would only increase the waste and the environmental problem.

  We need to be prepared for disruptions of any magnitude at any time.  We need to "case harden" America and the world against fuel cutoff and extreme price swings in both directions.  We need to increase energy diversity, and increase alternatives.  Because peak or no peak, we are running completely blind at the mercy of those who may not have our best interests at heart.

In the meantime, look for the speculative opportunity that is cheap, and that everyone has forgotten and overlooked.  Right now, oil and gas are certainly  not it.

Roger Conner  known to you as ThatsItImout

I admire your uncertainty, an agree completely when you say:

But that knife cuts both ways.  It makes attempting to prove impending doom just as fruitless as attempting to prove impending ongoing safety and security of energy.  Both are equally suspect.

Unfortunately on the one below you are sure again ;-).

It is fully possible for there to be a sizable drop in crude oil prices.  How long it will last, I don't know, but I for one am hoping it does not occur.  The economy has proven it can sustain the current oil price, in fact, still waste huge amounts of fuel at this price.  A drop in price would only increase the waste and the environmental problem.

FWIW, I think the economy has maybe proved that it can take higher energy prices this long.  Unproven is how much longer it can take them, or how much invisible damage is being baked in even now.

The NY Times today contains the S. Bernstein prediction of lower oil prices based primarily on the fact that inventories are somewhat higher than normal.  This is supposed to "prove" speculation.  

But I think high inventories and tight supply/demand are totally consistent.  Remember, oil is a global market and the inventories cited are only US inventories.   So what may be happening is that price is starting to allocate scarce supplies in poorer countries.  Meanwhile in wealthy countries which can easily afford current oil prices like the US, knowledgeable users are building inventories against the very real possibility of a further supply crunch.

One example of this phenomenon that is clear to all:  the national inventory buildups of SPR's in US, China, Japan, and probably other places.

All that said, futures markets are always subject to sharp counter-trend swings.  So a fall in price to $59 would not shock me.  

I've heard the higher inventory story for some time. Unfortunately, its not true... total us stocks, including teh spr, are almost exactly the same as last year because loans from the spr to the commercial stocks make last fall, around 12mmb, have not been repaid.  
SAT said "every Tom, Dick, and Harry, grocery baggers, night watchmen, latecomers and amateurs of all makes and models, the people who pass out the "fly-in underwear" at airports, bed-ridden grannies acting on a tip they saw in the latest issue of Reader's Digest suddenly becoming convinced -- in mass, as if brainwashed -- as they typically do, that commodities have nowhere to go but up and, to top it off, that there's no risk involved!"

This is a very strange statement on many levels.

Frankly, I strongly disagree with the view that the hoi polloi are commodity aware.  I saw that behaviour in 1979-1980, when every jerk in the disco was wearing a krugerrand, grandma was cleaning out the attic to find silver for the smelter, and the singer John Denver got in trouble in Aspen for trying to install a commercial sized gasoline storage tank at his house.   We are nowhere near that point now.  The public is still hanging on to real estate, the 401k, and Google - that would be those who actually have a positive net worth.  The grocery baggers and night watchmen are debtors, not investors.

More importantly, it simply doesn't matter what the public thinks.  Very few people have any way of playing in commodity markets, their assets are encumbered and they have no clue how to trade commodities.  The ETFs have attracted a few early adopter smart individual investors and possibly have effected the very small silver market.  But hardly anyone actually trades full sized crude oil contracts on the NYMEX.  You can see that in the COT data.  Most retail brokers don't even offer commodity trading accounts, they want to put people in stock mutual funds.

Full disclosure, while I felt there were some screaming buys in energy and metal commodities in November and June, I am personally neutral on most of the markets at the moment.  I am only holding on to the long term energy plays as I had cheap entry points and can ride out any corrections.  Agree with Jim Rogers that the only really cheap stuff left at the moment is some of the agricultural products.  Maybe soybeans, wheat, cotton..?

Is The Last Sasquatch out there?   How about a second opinion on this issue.

Traders get paid their bonuses at the end of the year based on that years performance. They are also assessed monthly on performance. If they are wrong about short term moves they aren't kept around to be congradulated on their long term predictions. The system isn't conducive to long term projecting. Traders look for trends and whatever data which will reinforce or change that trend in the short term. They focus on the now which is currently geopolitical and logistical in nature. To the extent peak oil is a reality it is coming in under most radar screens. I would guess Yergen provides geopolitical and logistical analysis to many of his clients. This is the candy they are after for short term profits.
The grocery baggers don't have credit. Credit is for young middle class people going to college, buying houses, paying for kids. That and rich people leveraging their assets.
Amen brother!!

I would like to add that there are so many worthless "tally sticks" sloshing around in the system that like in housing excess liquidity is being funneled into the commodity market causing imbalances.  TPTB need high oil prices right now to mop up the purchasing power of the proles to tame inflation.   What goes up must come down.

Don't forget that the "dollar" is nothing more than a modern day "tally stick".  The only thing maintaining the illusion is the demand created by taxation and legal tender laws.

From a previous post:

Below is a snip from Richard Kelly Hoskins' book "War Cycles Peace Cycles";

"When the crusaders first left their homelands in Europe for the crusade to the Holy Land, they took with them almost the entire circulating supply of gold and silver coins. This left western nations, England in particular, with no money.

In the year 1100 A.D. Henry I, 4th son of William the Conqueror, ascended the throne of England. Finding the treasury empty and his needs great, he cast about for a source of income. Having wise advisors he soon hit on a plan. The plan, with a few refinements, remained in effect for the next 726 years - and can be reinstated tomorrow. He issued "tallies".

A tally was a stick about nine inches or so long with each of the four sides about 1/2 inch wide. On two of the sides, the value of the "tally" was carved into the wood. On the other two sides, the amount was printed in ink.

The tally was then split in half lengthwise. One half remained in the treasury and the other half was given to soldiers for their pay, to farmers for wheat, to armorers for armor, and to laborers for their labor.

At tax time, taxpayers were required to bring in one half of a tally to pay their taxes. Woe unto the man who did not have the required number of tally sticks. As a consequence, these intrinsically worthless sticks of wood were in great demand. Gold and silver coins were fine if you traveled abroad for a crusade or something, but at home if you did not have your tax-tally at tax time - you were done.

Upon receipt of a tally the treasurer would immediately match the presented half with the half stored in the treasury. THEY HAD TO TALLY - which is what gave it the name. Counterfeiters lost their heads! Actually, it was practically impossible to counterfeit a tally. The wood grain had to match - the notches had to match - and the ink inscriptions had to match. This could only come about if both pieces came from the same split tally stick.

There you have it! An inexhaustible source of revenue for the government. The means were available to make tallies as long as there were trees. There was a demand as long as the government required the tallies for taxes. The system flourished as long as tax-evaders and counterfeiters were punished and they always were. For 726 years the system flourished."

Not only does taxation supports the currency due to the need to obtain the currency in order to pay the tax, it also supports it by creating an overall belief that the currency actually has some sort of "value". The government could very well just PRINT all the money it needs to operate the government without directly taxing the people. The problem there is that the proles would figure out rather quickly that money really is worthless and why should you work so hard for something the government can just produce in unlimited amounts at no cost to itself. It would destroy the illusion they have worked so hard to create. Direct taxation is just another part of the grand illusion....


That it worked so well and for so long shows the value of the system. Presumably, the kings managed to control their urge to make too many tallys.  

Hope ours does as well, but our kings are not so good at controlling their urges... the price of a democracy, where we are all kings wanting more tallys.

If they had access to the vast pools of ancient detritus that we have had for over the last 100 years they probably would have chopped down every tree in Europe to keep the tallies going...



Interesting tidbit, AC. I had never heard of this before, and consider myself quite knowledgeable regarding history.  Thank you for sharing.
TOD should tap SAT to write a series of articles about the nature of oil commodity trading.  And aaybe an ongoing series about current events in the markets.
Hello SelfAggrandizedTrader,

I believe it all depends upon how close the markets are to aggregate Malthusian pressures on pricing.  Consider the war for water ongoing in northern Sri Lanka-- its local water market has made a paradigm leap beyond a peaceful supply and demand negotiation curve to a lethal winner takes all competition.  Water now has an infinite price until a new equilibrium of supply and demand is established.

Your projected mid-Nov $57/barrel is possible if adequate aggregate percerptions of extra supply and reduced demand permeate the market mindset.  But from my viewpoint:  increasing Malthusian pricing pressure tends to put a bottom floor to the energy market.  Those countries seeking to build their own SPR is a new Malthusian response abnormal to past oilmarket pricing decisions when hoarding was not seen as required.

The 'fear premium' often discussed is directly due to rising Malthusian pressures.  The fact that the US invaded Iraq for oil is just another Sri Lankan event writ large on a global scale.  If our leaders decided that if we withdrew the US would be adequately supplied with FFs by the generosity of ME inhabitants, and no other countries sought control of ME oil, then we could easily see the price/bbl collapse to a new equilibrium as the fear premium was mentally extinguished.  But this seems increasingly unlikely as ever more common Malthusian-level events unfold.

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

<Why has sentiment shifted?  Nobody knows>
 Perhaps some do. Sentiment has shifted to commodities because they are a real asset that are not overpriced by historical standards. US Real estate and US equities are overpriced by most measures.
 The movement of money from financial assets to real assets over the past 20 years is because the real interest rate (Fed Funds Rate- inflation) has been  negative and declining.
 When real interest rates are negative inflation is decreasing the future value of money and increasing the future cost of goods purchased with that money.

<Will it shift again in the future? Yes.>
 Smart money will move away from real assets and into financial assets when the real interest rate turns positive. With + real interest rates investors can count on money increasing in value over time.
 Do you believe the money you use to buy a  Tbill at X% today will have more purchasing power when it is redeemed with the current interest available at it's redemption date?
I'd argue a lot of people don't believe these financial assets will increase in value, so they put their money in  real assets whose price increases at least to match the current rate of real inflation.

What about the growth of demand from China and India as a major part of the reason for current prices. And of course geology.
 The supply/ demand relationships of any specific commodity or item certainly impact the price as well.
There are lots of ways to lie. "Lack of transparency" is a euphemism for deliberately obscuring the truth. Wilfully creating confusion is lying. Pretending that "production capacity" means anything when it is being used as an obfuscational term is a lie. The orchestra is playing in harmony, but the score is a network of carefully selected notes designed to produce that soothing CERA melody.

It is hard (but not impossible) to imagine that the CERA bigwigs are sincerely mistaken. I tried to imagine what else except flat-out dishonesty could produce year after year of errors--systematic errors, all leaning in one direction. It is possible that self-deception has unintentionally caused the deception of the public. The self-deception (or "denial" or "wishful thinking") hypothesis is the only one that to me makes any sense--except for the alternative hypothesis of direct, well-thought-out, orchestrated and systematic lies. Because where there is any doubt at all, I prefer to give people the benefit of the doubt, I do not assert that those who glibly project no peak oil for twenty years are consciously lying. It is possible--perhaps plausible--that psychological processes of rationalization, repression, ego-defense-through-selective-blindness, and a desperate attempt to maintain self-esteem and the illusion of integrity mean that CERA spokespeople are not conciously lying.

I'd be interested to hear from psychologists and psychiatrists as to their opinions in regard to the plausibility of the self-deception hypothesis.


I don't see self-deception. I see someone in an important position who has been employed to ensure that world markets don't panic because oil depletion seems right over the horizon.

If Simmons gets on CNBC, he'll be followed up by Yergin saying everything's okay. Who do you think market traders want to believe?

The lies are not to avoid panic, except to the extent that the result of the panic would be to reduce oil consumption.  SA wants more suv's, large homes, long commutes, etc etc, not less.  And, the oil patch wants the same.  

Cera is behaving exactly as if they are being paid by SA/opec and/or the rest of oil patch.  Maybe they are.

I tried to imagine what else except flat-out dishonesty could produce year after year of errors--systematic errors, all leaning in one direction.

FWIW, I think the easiest way to produce this effect is to believe the schedules of all new projects.  X barrels in Y years?  Believe it, put it on the chart, and extrapolate from there.

When something less than X appears (just because we engineers have a poor record of hitting our schedules), move out X to Y+n years, and plot/extrapolate again.

That's a forumla for a happy graph, but one that shifts with time.

Be realistic, odograph. If you made that prediction based on that information and you were wrong, would you do the exact same thing again next year? And if you were wrong again the second time, would you do it again and again and again and again?

Your line of thinking would be plausible for the first or second time that such incorrect pronouncements might be made but to ignore your own errors and make the same kinds of predictions for years on end being wrong each time - wouldn't you eventually question your own methods?

I have to agree with Don here - they either believe the happy horse manure they are shoveling or they are being paid to shovel it regardless.

Does anyone know when the tar sands projects will run out of natural gas. And what are their plans then? Coal, nuclear, the tar sand itself?
Will probably not run out of natural gas. There is enough in the sense for the projects themselves. The question is what will happen to NG prices as demand in north america tightens. Over the next 3 years supply should be down 3-5% and the oil sands could add an incremental 1% demand. Coupled with population increase we could see the market alot tighter. Many oil sands operators produce a lot of NG and so are "effectively hedged". Still it is possible that if NG starts trading at a 3.5:1 ratio to oil (highly unlikely in the short run) it could make these operators direcly produce the NG and cut down oil sands production.
I believe tar sands have 2 major uses for natural gas. One is to create steam for melting bitumen. The other is as a source of hydrogen in breaking down long chain molecules to form them into synthetic crude. There should be easy substitutes for the former, anything you can burn to produce heat, including using the bitumen itself. This would greatly lessen the need for natural gas as a source of hydrogen. Nexen has program planned to gasify bitumen and use it as a heat source. (I am not invested and havn't looked at the profitability of it.) I believe anything they use to substutute for natural gas apart from nuclear energy will add apprecialby to their global warming profile  
As we know, adding to the confusion is the fact that there are several types of peaks. ASPO goes through great lengths to emphasize the peak of "conventional" oil (CO), provides an in-depth definition of the term, and an explanation of why that metric was chosen. Every other category is no more than a prop to support depletion of the primary source, the source that fueled our industrial boom and its baggage. I'm somewhat surprised that CERA didn't include the Orinoco heavy oil, but that was probably an oversight. Look for reserves to take another large yet unexplained leap soon. IMO, Venezuela isn't mentioned due to politics.

Pricing: I would expect price to rise at the same rate of CO depletion as margins get squeezed as higher cost unconventional production has to increase to mask CO depletion. If the price were to fall, those whose demand has been curtailed due to higher price will re-enter the market to buy on the dips, thus keeping upward pressure on price.

Recession: Some folk think that when the US goes into recession demand will be curtailed and price will fall. Beyond what I mentioned above, I would expect any softening in demand to be exploited by China as it has mucho dollares to fill its SPR and will be happy to get it done sooner than later--WallMart's helping China fill its SPR; who will help the USA refill its with something other than heavy sour?

Intangibles: Escalation of the Oil War? The Oracles are all saying something different, and my crystal ball is filled with fog. The polls are very bad for Republican chances in the election, and seeing that Cheney and crew are trying to rollback the War Crimes Act before November makes me nervous. I hate to say it, but their only choice seems to be creating more war, which will drive up prices no matter who's attacked.

Increased consumption by expoters. Most oil exporters' economies are booming and their domestic consumption is soaring, which will continue regardless of any US recession. Crude exports only grew by 1.9% from 2004-2005, the last years data was available (BP Stats), whereas 2003-2004 grew by 4.5%; economic growth for 2005 was impressive and, as noted by several observers ("The Econmist," World Bank, IMF) would likely have been greater if more crude had made it to market. This imporatnt item seems missed by CERA.  

Dave Cohen did a great job. Yergin is a writer/propagandist and a proven very poor hydrocarbon analyst. And while JD is right to say that time will tell for total overall peak, I think the focus on CO to be proper. The longterm future of oil production is in heavy sour, and the language to learn for that is Spanish.


My heart throbs for the peak oil community but we are not infallible.

So may I submit a few criticisms of your otherwise excellent critique?

1) CERA's emphasis on capacity rather than de facto demand is commonsensical.

All serious forecasters make this distinction - As Skrebowski states in his recent Megaprojects article, "It is virtually impossible to predict demand growth". Ditto Laherrere on modelisation of future growth (Lyon, May 2006): "But obviously if there is demand constraint [...] the peak will transform itself into an undulating plateau" (FR: "Mais evidemment s'il y a contrainte par la demande [...] le pic va se transformer en plateau en tole ondulee."). Etc. etc. Demand constraint is the joker in the pack because of its downward unpredictability.

2) CERA's estimates of `potential capacity growth' from 2006 to 2010 are 13.3mb/d, while Skrebowski's latest estimate for the same period is  9.15 mb/d (1.985 + 2.140 + 1.456 + 2.150 + 1.420). His article is actually entitled "Prices holding steady, despite massive planned  capacity additions" (my italics).

Is that a huge difference? Is ASPO-friendly Skrebowski also trying to deceive the public, albeit it to more moderate extent?  Why the dual standards?

3) CERA's evil intent: ad personam or credibility arguments (Yergin-baiting) cut both ways. CERA charges a small fortune for its research findings and presumably those who buy them would be pretty upset if its predictions were always wide of the mark. Indeed one could argue that a private research firm is MORE likely to be truth-seeking than the unpaid peak-oil public intellectual, precisely because the former are `just in it for the money' - a profit-motivated research firm that gets its predictions wrong will eventually go bankrupt as clients withdraw their custom.

For example, if ASPO's predictions for 2010 are wrong, who'll remember?  

But if CERA's predictions for 2010 are wrong, who'll forget?

Presumably not those who have paid $2500 for their report of $5000 to attend one of their energy conferences.

Re: we are not infallible

Thanks for your thoughtful reply. Only the Pope is infallible and one nickname for Yergin is "the Energy Pope". As to the question of my own infallibility, that is not in dispute.  

Now to the substance of what you said.

Re: CERA's emphasis on capacity rather than de facto demand is commonsensical

Where to begin? First, everyone should read the Aleklett critique that I provide a link to. The question revolves around whether the CERA emphasis on production capacity is realistic. For example, they include the Noxal-1 Mexico find in their projections. But as I said in a previous story Trouble South of the Border -- Mexico's Oil Production concerning this find:

In April of this year, Mexico's president Vincente Fox announced a major new discovery in the Gulf of Mexico by the state-owned oil company Petroleos Mexicanos (PEMEX). This new field, announced a scant few months before Mexico's national presidential elections, was said to contain a potential URR of 10 Gb (billion barrels) of oil...

HOUSTON -- Noxal-1, a deepwater Gulf of Mexico well trumpeted in March by Mexican President Vicente Fox as being a major oil discovery, appears to be a modest gas find.

Speaking on Mar. 14 from the drilling rig in 935 m of water 63 miles off Coatzacoalcos, Fox said the then as-yet-untested well had the potential to produce 10 billion bbl of oil (OGJ, Apr. 17, 2006, p. 35).

However, after the well operated by state-owned Petroleos Mexicanos reached a total depth of 4,000 m, the fourth interval tested has flowed 9 MMcfd of gas from a reserve estimated at 245 bcf, said IHS Energy, Houston.

Note the statement from IHS Energy. Somebody needs to get their story straight. People are paying $2500 for the CERA report. Aletlett's analysis and my own are free of charge.

Re: CERA and Skrebowski

I disagree with Skrebowski too. It seems that those with databases fall in love with them and all sorts of optimistic numbers result.

Re: CERA's evil intent

I was very careful to avoid attribution of bad intentions to CERA. This is a very interesting statement you made; it bears repeating.

... presumably those who buy them would be pretty upset if its predictions were always wide of the mark. Indeed one could argue that a private research firm is MORE likely to be truth-seeking than the unpaid peak-oil public intellectual, precisely because the former are `just in it for the money' - a profit-motivated research firm that gets its predictions wrong will eventually go bankrupt as clients withdraw their custom.
CERA doesn't actually make specific predictions. In this sense, Jeffrey Brown's "Daniel Yergin Day" is somewhat off the mark. Sorry, Westexas. CERA has a range of scenarios--this is what their private pay clients see presumably. The "reference" scenario, the "disruption" scenario, probably others which I can not see because of lack of transparency. Now, is a private research firm more likely to make good predictions? Not if you don't actually make predictions! Because if you make predictions, as you point out, you could be entirely wrong. And that, as you say, is bad for business.

== Dave


Thanks a lot for you detailed reply.  One point: you write:

"I disagree with Skrebowski too. It seems that those with databases fall in love with them and all sorts of optimistic numbers result."

I've had a closer look at Skrebowski's figures and can only confirm your distrust. Here's a comparison of Skrebowski 2004 with Skrebowski 2006:

In early 2004, ODAC reported as follows on the results of the initial Skrebowski/Megaprojects study:

"ODAC analysed a total of 68 `mega projects' with publicly announced start-up dates from 2004 through 2010. In total, these projects would add around 12.5 million barrels a day to world oil supplies by the turn of the decade." [see footnote 1]

In other words, as reported in early 2004 Skrebowski/Megaprojects estimated that over a period of seven years the annual average gross capacity increase would be approx 1.8 mbd. (12.5 / 7).

But as reported in April 2006, Megaprojects estimated total new capacity from 2005 thru 2010 to be 20.12 mbd [2,576 (2005); 3,385 (2006); * 3,740* (2007); 3,206* (2008); 3,950* (2009); 3,270*(2009)]. That gives an annual average gross capacity increase of approx. 3.35 mbd (20.12/6). [see footnote 2]

If I've interpreted this correctly, Skrebowski/ Megaprojects' estimated annual capacity increase has almost doubled in two years ... if anything is optimistic, that certainly is! (But what if he's right????)

Hope I got the figures right ...

[2] [click for pdf link at "Petroleum Review April 2006 Megaprojects Update"]

I tend to agree with your point. I think knowing actually capacity is not only relevant but essential in understanding the status of oil. Then you look at the factors affecting actual production (disruptions, economics, demand, etc) to get the full picture.

I disagree about CERA's accuracy and its consequences, however. I have been watching the oil/gas situation closely since 2000 and CERA's reports have consistently been wrong about both price and production - they have never been accurate, but it hasn't seemed to affect their business. I first noted this when in 2000 Simmons was stating he felt the US had hit its peak in Natl gas production. CERA was predicting significantly increased supply through most or all of the decade, given the increased drilling activity, coal bed methane, etc. It turns out Simmons was right, but CERA's complete failure was forgotten.

Part of cera's prediction was that ng prices would collapse from the burden of hugely increased supplies.

THe avg price in 2000 and 2001 was 4/mcf.

Is a Futures Stampede Keeping Oil Prices High?

"according to a recent Energy Department report. Growth in global demand has cooled, and new oil supplies have padded what had been a threadbare cushion of supply over demand."

I think that report has the dog wagging the tail! I would surmise that growth in global demand has cooled because of the price increases and therefore new oil supplies have not been needed in order to stop further oil price increases.

If the 'future' and 'spot' prices were wider then I might agree more with the article. However future is still only trailing spot slightly which means that the markets see limited scope to hedge oil price rises.


Plus we are still growing demand and whether we are growing supply is debatable.
I meant the 'tail wagging the dog'! The excitement of typing!
The arguments brought forth in this article are far from covincing. In fact they seem to illustrate perfectly what Simmons mean when he says that economists treat oil as every other commodity.

Mr. Dell said that current oil prices were a bubble comparable to the tech investment bubble of several years ago -- and that the oil bubble was likely to burst before very long.

Oil is a finite resource, stocks and futures are not. To compare the two there would have to be a swing producer who could flood the marked with oil.

Mr. Brown of WHB Energy Research supports Mr. Dell's view of current price levels. He has studied the historical correlation of oil prices with inventory levels and, at current levels, oil should sell for just $27 a barrel, he said.

So I am to believe that $74 - $27 = $47 is due to speculation. This sort of stuff actually makes me hope oil will keep going up. Those who invest based on garbage like this deserve to loose their shirt.

It is also a good example of MSM manageing perception. We don't have to worry, it is all speculation. Oil prices will soon be back to normal. We can continue borrowing on our home equity lines to go on vacation, and as a country spend more than we create.
Well!  A lot of good stuff  to think about as I start my day.   I'm going to go out cut some wood and work in my garden.  Another great post Dave Cohen, Roger Conner and Angry Chimp.
Hi Hurin. I'm glad you brought economics into the discussion because the oil supply siders like Yergin (and TOD) should take a look at the demand side occasionally. Let's see if Yergins's supply growth can keep up with potential demand:

Global economic growth from 1993 to 2003 averaged 3.6%pa (source: The Economist), so the global economy has growth 58% since then. Growth is now running at 4.5%pa by the way - we don't get to see much of it but we're not Chinese.

Oil production (= demand) in 1993 was 66mbpd (source BP). Had GDP/bbl remained constant then demand in 2006 would now be 104mbpd. It's not; it's 85mbpd. The price has balanced supply and demand. Why the surprise that the oil price has risen?

Looking forward - In 2006 we're using 85mbpd. If you project global growth and oil demand forward at 3.6%pa you get 101mbpd in 2001, 121mbpd in 2016 and 198mbpd in 2030.

Is Yergin promising us 198mbpd on his 'undulating plateau' after 2030? Nope. Is Saudi Arabia? Nope. So why do they say there is enough oil? Enough for who?

OPEC has lost control of the oil price because demand is capable of growing faster than any conceivable increase in supply. From now on oil will be priced at the MARGIN where the economic cost of using more oil balances the opportunity cost or not doing so. Yes, GBP/bbl isn't fixed but that is what the price mechanism is varying. If the price of gas[olene] isn't hurting it's not working. It will do what it takes.

I look at Stuart's oil production curve and see a demand curve, not a supply curve, and it will stay that way until peak oil arrives.

So they are now saying that $47 is "real". These are the same analysts who thought at $25 oil was $10 overvalued. You know if we could just get these 20-40 analysts educated we could start saving the world.
Forbes is another idiot. He says oil is in a bubble now and should go to $40. That is double the price he expected it to go down to a couple of years back.
Look, FireAngel, so the guy jumped the gun a little bit when he said that oil was overpriced.  Now he's saying that it's in a bubble and should fall to $40.  Does this really mean that he's an idiot?  (note: i'm not saying that he's not an idiot, he is, but not because of this)

After all, Warren Buffet jumped the gun with the Nasdaq bubble.  That "idiot" was saying as early as 1997 that technology stocks were ridiculously overvalued.  What a moron!  He had to sit there and watch for three years, with everyone saying that he had lost his mind ("Of course tech will go up forever!  It's a new paradigm!") as values became even more ridiculous, but in the end he was right.

In the world of PO Doomers, investing is a snap. Since we all know that commodities will go up forever because of geology, all we have to do is plow all our money into commodities and wait a few years until we're all millionaires.  There's no risk at all involved, of course, since geologists are well known as the world's best financial advisors.        

The edifice is groaning already.

Soon you will hear it cracking.

Then you will see it crumbling.

I agree I kinda lost it. But your arguement does make some interesting points. The difference here is that the mainstream (the collective including forbes) thinks that oil is in a bubble and the few the chosen and the proud think that $500 is not a pipe dream.
What irritates me is that they still make ridiculous claims
1)Speculators are responsible..( why then have they been short,)
2)We have 2 million barrels of spare capacity ( where is it..
3) Saudi Arabia can increase capacity to 15 million barrels a day ( which fields).

Its all fluff.

Well done on linking that FSO article, it's said with feeling gave me a chuckle too, read it y'all. You can fool...

As The Lord (according to Bill Cosby) said: "Noah, how long can you tread water?"

Ah, Esser. You can hear and read his testimony of 7th December 2005 to the 'First Hearing by Congress on Understanding Peak Oil' here:

Though it could make you feel a little sick and angry. As I consequence I proposed my 'Two planet hypothesis' - there are two Earth's and the one that Esser, CERA / IHS inhabit is not the same as the one I inhabit.

You can listen to a 40+ minute interview / phone in with Danny boy here:

Stuart Staniford compared Hubbert linearisation calcs for CERA and others here back in September 2005:

There is some that can be criticised as blatantly inaccurate in CERA's projections - North Sea and Mexico production and depletion, for example. However, much of their projections are almost within the bounds of credibility IFF (if and only if) the most favourable estimates of discovery, enhanced recovery, reserve upgrades, depletion rates, come to pass.

This troubles me. Scientific method involves projecting observed data to predict the most probable conclusions. Although we don't have full public access to the data that CERA are using our knowledge from publically available data seems to indicate that CERA may be projecting about the 95% most favourable case rather than the 50%, average or median, case. Hence I am very wary of what CERA are saying and must suspect some ulterior motives.

For now I would take CERA's projections as being the upper bound of possible outcomes with a probability of happening of perhaps 1%.

We could, of course, attempt an 'antiCERA' projection based on the 5% worst case probabilities for discovery, new production, EOR, reserve upgrades, depletion - like 20%+ depletion rates for Ghawar, Burgan, Cantarell - etc. I'd WAG that would result in a peak of less than 86 mbpd pretty damn soon and a decline rate of close to 10% not long thereafter. I don't expect that to happen but its probability is about as likely as CERA's projection.

Many thanks DC for digging around and putting this post together, I think your analysis and data are accurate and fair, some might argue with your slant but I think I share your perception.

   As pressing as the problems of peak oil are, there may be an energy crisis approaching that's even more dangerous for America than the oil problem. I'm not alone in sounding an alarm about an impending North American gas crisis. Former Secretary of Energy Spencer Abraham and Alan Greenspan and others have warned about this.
   Oil supply historically has grown along with natural gas supply. The gas has always been viewed as a byproduct of oil production, and the general perception is that both will increase in supply for many years until our grandkids will witness both of them topping out at about the same time when we're all driving hydrogen and corn powered cars. But the most reliable and history tested prediction method we have, the Hubbert method, paints quite a different picture. Natural gas does not lend itself to Hubbertarian analysis as well as oil does, but if HL is applied to global gas production to date and a global peaking of gas is compared to the global peaking of oil, you get this:

Up until the present, oil and gas have pretty much grown in unison, but look at what happens from 2007 onward - a big change. Oil supply is going flat against a still sharply climbing gas supply. And the difference is going to get much more acute in just a few years. Natural gas has always been thought of as a secondary energy source, but the chart shows that gas may be on a par with oil within about 10 years and may, in fact, be the world's primary energy source in 20 years. And gas is also a big part of our oil supply via NGL (natural gas liquids), which are a byproduct of raw gas processing and are included as a critical part of our precariuosly maintained 85 mbd oil habit:

Here we see how closely the Hubbert math fits reality. Hubbert's method uses cumulative past data to project the future and as such doesn't account well for sudden new sources (as, for example, the Alaska Prudhoe oil suddenly entering the U.S. picture at around the U.S. peaking timeframe in the early '70s). The major sudden new source in the global peak is the red blob in the above chart - deepwater oil. Thanks to the natural gas byproduct NGL component in our oil supply, deepwater is saving our bacon for awhile from what would ordinarily be a normal Hubbert topping process at around a 72 mbd supply, which would really mess up our 85 mbd world. It's worth noting that these sudden new supplies near the peak have nil effect on the peak year in the math. It didn't budge the U.S. peak time calculated by Hubbert clear back in 1956 as being early '70s even though Prudhoe was yet to be discovered. And, as Deffeyes points out, even if we get some Caspian Sea miracles now, it will have no effect on the peak time, just a lessening of the downslope.

   While natural gas supply looks rosy for the next 20 years globally, it looks just the opposite for North America. One of history's best guides to predicting future resource production is the shifted discovery curve. Resource production has a very strong tendency to replicate the history of field discovery 25 to 40 years later. If you chart the history of U.S. natural gas production and superimpose the discovery curve from 26 years earlier, you get this:

This chart clearly predicts a drastic decline in domestic gas production soon that makes the global oil peak very mild by comparison. The U.S. is importing from Canada, but if you do a similar chart for Canada+U.S.+Mexico, you get a similar picture. These global/North American gas curves suggest a serious redistribution of the world's gas resources is in order very soon. Gas is plentiful globally, but on a cliff edge in North America. The only way to get gas from where it is plentiful but with no market for it to where it is in short supply is LNG (liquified natural gas). This has been a global industry for many years supplying Japan, Europe, and many other places without bountiful supplies at home. It's basically liquefaction of gas where it is chilled down to -260 degrees F turning it into a liguid. It's then loaded into LNG tankers, delivered across the ocean (there are no transocean gas pipelines) and loaded into storage/regasification plants. Now, because of the changing relationship with oil, the global need for LNG is perhaps on the verge of rapid growth and the need in North America may get desperate quickly. As the chart shows, the measly ramp up in LNG imports pales in comparison to the monstrous drop off in domestic production soon to be experienced.
  If you total up the most optimistic projections for all the North American alternative energy startups put together, it just about covers this huge drop in gas. But it does not cover the likely drop off in oil or the growth in demand out to 2020. And the vast majority of this alternative energy total is the Canadian oil sands, which take vast amounts of natural gas to turn the sand into oil. So, it's no big help in the gas shortage that's looming unless they build nuclear power plants up there to steam the sand with, which will take many years even if approved. There is only one heavyweight on the energy block with the mass to step in and fill the imminent gas gap anytime soon and that's coal - already supplying 25% of the world's energy. Fortunately, the home of the gas gap ia also the Saudi Arabia of coal - America. So why we want to free ourselves of foreign energy dependence by going out of our way around our mountain of coal here at home to make us dependent on foreign natural gas is beyond me. It will likely be a scramble between coal and LNG to fill the gas gap.
  A nice side effect of the LNG process is that it condenses out sulfur and a lot of pollution making it ultra clean. But historically, there have been two major roadblocks to LNG in America. First is price. Until '01, LNG was priced well above domestic gas nixing capital spending. But that's changing fast. As with any new high-tech product, economies of scale are bringing prices down. Meanwhile, domestic gas has burst up out of the stable '90s $2 range to where it's gyrating between $6 and $18 depending on the weather. Global LNG is now very competitive with the supply challenged American gas. The second roadblock to American LNG has been the "Cleveland Syndrome". The first LNG storage facility in the U.S. was built in 1939 by East Ohio Gas, who then built a second one in Cleveland. WWII was causing a steel shortage, and constuction compromises were made. In 1944, the botched tanks failed depositing a cloud of gas in a square mile of the city, which was promtply leveled. The Cleveland disaster has been held up as a flag amonst the anti-LNG activists. They point out that some of the land based regasification plants proposed would hold 75 times what blew up in Cleveland. But since 1944, the LNG industry has actually compiled a safety record superior to the refineries and all other petrochemical plants. If Cleveland had been built right, it would have worked. LNG tankers have been crossing the seas for 40 years without a single onboard fatality. Furthurmore, a new class of tanker is being implemented that does all the storage/regasification onboard while it's steaming across the ocean so that all that's done at port is delivery into the domestic pipeline system. So if another Cleveland bomb goes off, it will be in the middle of the ocean where it hurts nothing but a tanker and maybe some fish. The world's first LNG tanker conversion to a Floating Storage and Regasification Unit (FSRU) is being built in Singapore for a Norwegian company and will be done by mid '07. So the two big blockages to American LNG, price and Cleveland bombs are being swept aside. CNG (compressed natural gas) as a motor fuel is much cleaner and already half the price per mile vs gasoline. But with the huge price difference between oil and LNG of the future, CNG for the highway will get way cheaper and probably be a big growth business.
   If you look at global charts on who are the big users of natural gas, North America and Russia stand alone far above the other regions - one is the world's largest reserves of gas and the other is at the edge of severe depletion. You would think that the fat user on the edge would be far ahead of the pack on LNG importation instead of way behind and producing movies stirring up resistance to LNG based on the archaic Cleveland problem. I won't say who the idiot fat user on the edge and making anti-LNG movies is; but I think you can guess.

Hello Netfind,

Excellent and very informative post!  I recommend you keep posting on this LNG issue every chance you get.  I agree that US nat gas problems will be a primary concern soon and could contribute to much unneeded violence.

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

Yes, but I hope Netfind will post this stuff on the Drumbeat open threads. That's what they're for. This thread is about CERA, IHS and related subjects.

The biggest issue concerning the natural gas problem is the way it throws the monkey wrench in the works on so many planned alternatives.

We have to remember the lead time issue applies to renewables/alternatives just as it does to fossil fuel projects.  Most of the alternatives we now see gaining any traction at all were planned some 4 to 6 years ago.  At that time, the belief still existed that we (North America) and the world had plentiful and cheap natural gas.  To tie CERA back in to this, in 2000 CERA was issuing the kind of glowing reports about natural gas that they now issue about crude oil.  That should make you think hard before you accept at face value the projections of CERA.  By 2003, they were starting to sing a different tune, and moved over to Matt Simmons position  (along with the above mentioned Spencer Abraham and Fed Chairman Alan Greenspan, based on a report requested from the NPC, National Petroleum Council, replacing the now useless rosy scenario report of 1999) than North American natural gas production had essentially peaked, perhaps as long as a decade or more ago, and that if if you took out offshore, onshore production may have peaked in the 1970's not long after crude oil. (!!!)

Thus, the best laid plans of the alternatives were now in serious question:

#Ethanol-to tie this to a favorite TOD discussion.  Let's be honest, if we get desperate enough for liquid fuel, it will be damm the soil and water depletion, we will try to live with that, pour on the fertilizer and make ethanol!  There is the most daunting problem however, because the fertilizer comes from natural gas.  The corn growers themselves have been to Washington to say that without cheap imput of natural gas, they cannot hope for the ethanol industry to grow, something so ironic as to be bizarre, but something that our ethanol fan Vinod Khosla never mentions and is interestingly, mentioned in perhaps one post in a long string arguing Vinod's ethanol dreams right here on TOD
It is safe to say that if nat gas production in North America is peaked, the ethanol program is dead and only running on momentum like a shot elephant, because ethanol is essentially a gas to liquid fuel switching operation.

#Tar sand oil.  The imput of gas needed is legendary.  Right now, it is an industry blessed by running on "stranded gas" in the region, but this is known to be depleting.  The McKenzie Bay pipeline dream (expensive and needing long lead time) is now seen by the tar sand crowd as essentially dedicated gas to go their industry, but this was gas that only a few years ago was dreamed of to relieve the U.S. natural gas crisis, and maybe heat some Canadian homes.  There is the idea of using gas from the tar sand itself, but that is extremely complex, in that what you are doing is creating a "CTG" coal to gas industry using the very dirty and carbon heavy bitumen to provide the gas.  The carbon release issue then becomes critical, and to get past that one, you have to create a sequestering technology/industry.  The whole thing becomes Rube Goldberg engineering, a mousetrap fastened to a mousetrap to a mousetrap.  Only cheap natural gas makes tar sand viable at all.

#The Hydrogen economy.  Almost all the Hydrogen ever extracted/seperated has come from natural gas.  There is the dream (and it can be done, but not cheaply or easily) to someday extract hydrogen renewably, but for at least the first 2 decades of the "hydrogen economy" it was going to be cheap abundent natural gas that would carry the day.  If we assume North American peak, that is NOT going to happen.  Likewise, the growth of the fuel cell in transportation is now in extreme doubt.  Recaptured methane in stationary installations creates a market for fuel cells (and interestingly, possibly a farm equipment market using farm byproduction for the methane imput to the fuel cell), but fuel cells now do not look promising as transport energy conversion, not for al very long time anyway.

#The "dash to gas".  Nothing in the alt energy trade has collapsed faster than the CNG for transportation business, and nothing has created more pressing concern than the 20 year "dash to gas" for electric power production, here in North America and as well as in Britain and Europe.  This was done at a time when gas was percieved as "cheap, clean and plentiful" another half century.
Of those three, it is still clean, but the cheap and plentiful part is coming into grave question.

A return to coal without a great advance in carbon sequestering would be catastrophic.  But, it is massive growth in coal consumption that is foreseen if gas becomes harder to get.  Canada, which basically constructed what became the Kyoto Accords in Ottawa, because they just "knew" they had the gas card, are having to back up fast, as are most of the Kyoto boosters.
Everyone knows, whether they say it or not, that without the "dash to gas" Kyoto is dead.  Almost no one can make those targets.

The problem is this:  Many of the planners of the above schemes have either not yet understood, or refuse to accept the changing conditions.  Britain, in it's latest projections, (see TOD UK for very interesting news and thoughts) still plans on building more Combined Cycle natural gas plants, with no assurance of the gas to run them (the decline in North Sea production is coming on much faster and harder than projected only 5 years ago), and the U.S. continues on the natural gas dream because the resistance to coal fired plants is so great.  Astoundingly, President G.W. Bush seems to be more in tune with the truth (through information provided him by Matt Simmons, and the NPC report) with the natural gas problem, thus his rush expediation of the LNG program.

The LNG program is frought with peril, however, first being gaining the massive investment needed.  As we have seen recently, a few warm winters in a row, and the nat gas price drops, thus reducing the possibility of return on investment for a long time.  LNG is a very capital intensive long range business.  It cannot succeed in an environment of wildly fluctuating pipeline gas competition  (which it never has to face in Japan or Korea, the two biggest markets for LNG)

The other problem is an assured supplier of the gas.  Fortunately we think we have one in Qatar, the nation with the third largest known reserves in the world, a tiny home population, a staunch U.S. alley, and host to the largest presence of American fighting power in history outside the U.S. (CentCom, the base of the Iraq occupation.  Unfortunate is where they are located....literally within binocular view distance of Iran.  Our whole LNG program relies on this tiny spot, so poorly placed strategically.

Kind of explains a lot, don't it?  :-)

ACTION STEP:  Among our biggest efforts right now as a nation should be, no, must be, the reduction of natural gas waste and inefficient consumption.  Insulation, solar hot water in the sun belt, geo-thermal ground coupled heat pumps for climate control in malls, stores, office parks and homes, with possible solar thermal assist, assistance on photovoltaic development, and the continuence of wind development to replace gas fired electric generation, etc.  These are the ways we can flatten the upward "TRAJECTORY" (to use a word suddenly popular among the "alt energy" billionaires :-) of natural gas consumption.  The remaining natural gas we have in America, so easily wasted for so long, is now priceless.  

The good news:  We can't say we don't have things to do! :-)

Roger Conner  known to you as ThatsItImout

What is the purpose of CERA?

I would contend that the purpose of CERA is to put out a credible alternative narrative to the idea of a near term peak in oil production in order to justify the continuation of "business as usual".

There are strong inertial forces in the economy.  Entrenched interests that benefit from the status quo.  In addition, there is a fear of panic in the financial markets.  I think that a decision was made that ambiguity was the best course of action.  You can't suppress the truth but you can generate plausible disinformation that clouds the truth.  Human nature being what it is, many will chose to believe the reassuring message.  This takes the edge off of a potential panic.  The aware are still free to capitalize on their knowledge and understanding.  This is a means of smoothing out the public response.

I think that what CERA is doing represents something of a phy-ops move by the government.  Follow the money as they say.  I think they've been a front group for years.

I think Don the Sailorman and I have had the same idea, that in a free market you have "markets in everything."  People can do pretty well selling "good news" as a packaged product.  Just as others can market "bad news."

They may not even consciously do it, they may simply fall into a value network that reinforces it.

Navel gazing question of the day, do we build a value network here?

Hm, a value network--yet another new phrase for an idea that has been around for more than half a century.

By itself, TOD cannot become a value network, but as a resource for one's business it certainly can.

One thing that has struck me is that many commenters on TOD are in business for themselves--farmers, consultants, independent geologists, and of course the oil "bidiness" in various forms. Thus many of us are actively building our own value networks.

And yes indeed, I do agree that there is a market for good news. In the olden days of kings and courts, the courtiers were obliged to tell the king nothing but good news. I recall a marvelous passage in one of Alexander Dumas novels about the three musketeers where King Louis casually mentions to his superintendent of finance that he's going to have another war or build another palace, something along those lines, and France is broke, has no credit and the people are taxed beyond reasonable limits. The Superintendent of Finance (Fouquet?), of course, says none of this to King Louis but secretly claws his chest til the blood comes as he remains outwardly cheerful and affirmative of the King's plans that will wreck public finances so badly that it is one more big step toward the Revolution. To keep power and prestige and wealth, give good news to those in supreme power.

Ah, but then, what happens after the Revolution?


I think non-profits (churches?) and semi-profits (blogs w/ ads?) can build or be part of value networks, but I agree that the name just plays old ideas into our "network friendly age."

On a similar note, I tried telling my sister that "multitasking" was an old comp-sci term, and she wouldn't believe me.  But it's another example of humans seeing them in terms of the technology of the day.

Thats what swiss bank accounts are for.  Think SA princes.
(I guess if CERA is "self aware" of their role in the "good news" value network that might support (at least a mild version) of "psy-ops")
Upon review of the source documents, methinx that u (kheabab) will find that capacity is stated at 94.8-mbd for 2008, 101.0 in 2010 & 110.0 in 2015.
Hi Freddy, I replied a few days back on climate change, CO2 etc, with lots of links which I think are good:

No reply needed, just didn't want it lost in the seas of TOD time, I hope some of the info is of use.