DrumBeat: August 15, 2006

[Update by Leanan on 08/15/06 at 3:50 PM EDT]

Could rising gas prices kill the suburbs?

When a high-cost commute reaches the point of no-return, home buyers will start finding houses closer to work. In fact, some already are.

Rising fuel costs are being blamed for everything from soaring utility costs to lower retail sales and higher airline tickets. And now, experts say high gas prices could reshape U.S. cities.

...Once the realization soaks into the American consciousness that high-cost gas is here to stay, Gabriel predicts, those high commute prices will pull more homeowners -- even young families -- to live in central cities and create a push for more public transportation.

[Update by Leanan on 08/15/06 at 9:23 AM EDT]

The Korea Herald seems to "get" peak oil.

When tomorrow brings the twilight of oil

In 1956, Shell geologist Dr Marion King Hubbert came up with starling prediction: US domestic oil production would peak in 1970 and global production would peak in 1995. The latter would have transpired if the oil shocks of the 70s - and the subsequent energy efficiency innovations that followed - had not delayed a supply crunch for 10 to 15 years.

The planet is now sitting atop an oil plateau and the only way forward is a steady downward slide.

But some people still aren't worried:

Petroleum: Why We'll Never Run Out

There's no shortage of scare stories about looming oil crises - Don't believe 'em

[Washington] ...The President has signed legislation creating the Federal Oil Conservation Board, to ration dwindling supplies of petroleum...a recent report from the US Geological Survey has indicated oil supplies may be gone entirely within six years...

Last week's newscast? Actually, it was 1924, and the President was Calvin Coolidge. An interesting story that proves little, except that scare stories about oil shortages have been around longer than any of us.

Newsweek is schizophrenic this week, with one article blaming national oil companies:

Oil's Dirty Laundry. Why are oil prices so high? Partly because the industry is dominated by incompetent monopolies.

And one blaming supply and demand:

Demand is the demon behind high gas prices: Is pipeline shutdown to blame for high prices? No, it's Econ 101.

Oil price spike to end, you can bet on it

Arab refinery output rises by 600,000 bpd

Abu Dhabi: Production from the Arab world's refineries has grown by over 600,000 barrels per day over the past five years, and capacity is set to surge by over 2 million bpd when new projects are completed, according to official data.

US envoy pushes for Turkmenistan-Pakistan gas pipeline

ASHGABAT (AFP) - Washington is pushing for a new gas pipeline from Turkmenistan to Pakistan and "strongly opposes" a rival pipeline from Iran, US diplomat Steven Mann has said after meeting with Turkman President Saparmurat Niyazov.

China mulls raising oil, power prices

DOE Funds $1.4 Million for Study of Nuclear-Powered Hydrogen Production

Iowa group to build 12 biodiesel plants

Gambled and lost: Oil companies got nothing but higher production taxes.

San Francisco's clean energy revolution is here

San Francisco took a historic step last week toward creating the city's first Green Power Community on the site of the former Hunters Point Naval Shipyard, where developer Lennar BVHP is about to begin construction of more than 1,600 new residential units and retail space.

Japanese tanker spills tons of crude oil

I have been thinking about markets in times of shortages and I have a question which I can't seem to find a logical anwser to. When shortages occur (for example gasoline) you will not see huge increases of prices at the pump, instead the pump will run out of gasoline and long lines will form. Why is this? Why doesn't the owner of the pump increase the prices untill supply meets demand?
Usually because he's not allowed to.

During the Katrina price spike, some stations raised prices to as much as $6/gallon, but those who did so ended up getting prosecuted under "anti-gouging" laws.

In Baghdad, there's an "official" price, but you have to wait in line, sometimes for days.  You can buy gasoline on the black market with no wait...but it costs 3 to 4 times as much.

It's generally accepted that the lines in the '70s were caused by rationing.  

Why do government impose price controls and rationing when they cause long lines and don't decrease consumption?  Because letting the price rise until demand matches supply often has unfortunate side effects.  Think Marie Antoinette, and "Let them eat cake."

It's intteresting to see Washington 'pick and choose' when to apply free market economy!


The vast majority of Americans do not believe in the free market, though we like to say we do.  Even the big business types, who you'd think would be most in favor of free markets, aren't really.  They don't want to be taxed and regulated themselves, but they do want the government to provide roads and bridges so they can transport their products, a military so their overseas operations are safe, law enforcement so their property is protected, etc.  Not to pick just on them; most of us are the same.  We all think someone else should be taxed and regulated, while we ourselves are not.  ;-)

For this reason, I think we are headed toward far more government regulation, despite the lip service the dominant political party gives to smaller government.  The Alaska editorial I posted above ("Gambled and Lost") is a good example.

Alaska is a solidly "red" state.  Oil has been very good to them.  But they did not like the idea of a 30-year freeze in oil production taxes, even at a much higher level.  Even without that piece of legislation, many think Big Oil is getting away with something.  

Maybe the more correct statement would be that people believe what their short-term interest dictate. When it comes down to taxes we are all for the free market, but in worse times or when we need government protection of some sort we are all becoming pro-government.

That's why I think that an ultra-liberal state where people are allowed to demand whatever they want and with no real independant leadership is doomed in the long run - it will either fail and/or will go to the other extreme.

The ultra-conservative state is a feudal plutocracy.  Think Louis XVI (followed by the terror) or that cute German guy with the little moustache (followed by the Red Army).
Yep. Both extremes are poor choices.
"Moderation in all things" is good advice, even 2500 years later.
News Bulletin, Peak Oil on MSNBC Tonight

There will apparently be a segment on Peak Oil at 9:30 PM, Eastern Time, on MSNBC (Scarborough Country).  A producer asked me if I would be interested in appearing (I would assume that I am not their first choice); she is supposed to get back with me shortly.  In any case, it will be interesting to see how they handle it.

Jeffrey Brown

Great news, Mr. Brown. Go get 'em!
First segment on Scarborough Country tonight: Is Bush an Idiot
I caught it.  It illustrates what has been happening here.  Peak oil gets bound to ideas like mud and stick houses, and composting toilets, and is marginalized as a result.

When I launched my thread about dog food and coffee yesterday I hoped I'd get at least one comment on how we are preceived.

Well, you saw it on tv.

This is going to sound a little uncouth, but John Stossel should be strung up by his scrotum.  That was the most amazing display of ignorance and stupidity.  They should have just titled the segment "What John Stossel Thinks About Oil Depletion".  As soon as I saw that moron's face on the screen, I only thought bad things.

Liberal Cornucopian Technofix Douche was just as bad.

The little peak oil girl couldn't have been more timid and unconfident.  She was very sweet and all, but that won't cut it.

I don't have much hope that the general population will take the appropriate steps to cope and adapt to oil depletion and the other catastrophes we face.  I'm pretty apathetic to the whole situation. This display was infuriating, yet a the same time hilarious to me.

To those of you that are still in the fight, don't let this get you down.  It was Scarborough Country for one.  Second, it was on MSNBC, who I'm pretty sure no one watches.  


.......UGH!!! Stossel!!! What a d***head!

If it was me, and I had been quick enough on my feet (unlikely) I would have leveraged off what Stossel said.

I would have said yes, companies and individuals can plan ahead and solve a problem ... if they see it coming.  But what if we don't hear about it?

Strossel said "high prices are good", an opportunity to agree, and ask him how high they are going, and if people know enough to be prepared.

I know people have turned sour on Jim Kunstler for his views on the Middle East, but he would be perfect for these hack TV "debate" shows.

He's not afraid to be mean.  Kunstler would definately not have hesitated to call him an "idiot", which is the only way to describe Stossel tonight.  It was so obvious that the guy didn't do a shred of research or preparation.

Kunstler comes across as quite reasonable on these shows, I agree.  Maybe he leaves his evil twin to write his Monday morning rants ...

But the thing about Stossel is that he mostly said true things which don't tell the whole story.  He threw in a few stinkers as well (oil shale), but I think the way to deal with the guy is not to call him names, but to tell the truths that complement his.

IMO "higher oil prices are good" is a very mainstream PO position.

I love JHK, but not sure he would come across as a good convincing persona on this type of show.  It would, however, be highly entertaining.   What would be good is a panel on panel discussion over at least 30 minutes or 1 hour.  What MSM show has something like that ?  
I don't have much hope that the general population will take the appropriate steps to cope and adapt to oil depletion and the other catastrophes we face.

I entirely agree, unfortunately.
For lack of alternatives a realistic solution could be to let darwinian selection work out the problem by weeding out the morons while trying to salvage some basis for the future.
And I DON'T mean back to stone age primitivism.
A tricky endeavour!

I suggest once again that we carefuly read “What normative obligations do we owe to future generations?” [PDF 41 pages].

Within my taxonomy, the most fundamental intergenerational question—“What normative obligations do we owe to future generations?”— is not an ethical question at all. The principle of reciprocity operates in very limited ways between generations. Caring for the elderly makes sense in part because the continued ethos of such care makes it more likely that we will be cared for in turn as we age—an implementation of the Golden Rule.84 We apologize for past wrongs as a way of signaling our intention to cooperate in the future.85 Apart from these and a few other discrete behaviors, little of what we commonly refer to as “intergenerational ethics” is subject to the principle of reciprocity. Regardless of how we behave, our descendants will not be able to reward or retaliate against us effectively. More fundamentally, implicit in any invocation of the principle is the premise that our well-being is as important as anyone else’s. From an evolutionary perspective, however, our well-being is irrelevant; all that is important is whether we survive and reproduce into the future. Using the Golden Rule to protect present well-being against claims by future generations is precisely what we should not be doing.


The ethos of reciprocity that operates within the We of a person’s family (e.g., “We the Setos”) may require an individual to undertake duties vis-à-vis family members that she would not feel compelled to undertake with respect to outsiders and would not, in turn, expect them to undertake with respect to her (“Of course your kids can stay at my house the week you’re in New York”). The same actor may also consider herself part of a We defined by her church (“Our prayers go out to members who are not able to be here this morning because of illness”) or other social unit, and part of another We defined by her ethnicity (“No daughter of mine is going to marry one of Them”). In international affairs, some assert that we should only protect citizens of other countries if doing so is in our “national interest”—another way of saying we owe protective duties only to members of We the people of the United States.
One of the current frontiers of ethics is whether our broadest We should extend beyond the human species.
History is, in part, a story of the expansion of We’s. From the tribe to the city-state to the ethnic group to the nation-state to the species, the set of actors to whom we feel at least some sense of ethical obligation has over the long run consistently expanded. It has done so because development of an ethos of reciprocity between groups otherwise in friction is almost always adaptive. The frictions that arise between two groups who have not yet formed a single We are analogous to those that arise between two individuals who have no ethos of cooperation. In the long run, they hurt both.
A Hobbesian international order is no more functional than a Hobbesian nuclear family.

By Theodore P. Seto

My emphasis.

The hyperbole was typical: doomsday cult, apocalypse, compost toilets, houses made of straw bales.  If you don't believe in unending capital growth, boy are you a whack-job.  I'm very disappointed.

BUT....The subject is being broached.  That is positive.  Now, would someone please treat the subject with the respect it deserves?

If the binding to "apocalypse" becomes too strong, that will put the kibosh on it.  Isn't that how Club of Rome went down?  It was positioned as too extreme for rational folks to worry about.

odegraph, exactly correct.

If I tell people that if they don't change, they could lose everything, and they ask, "What do we have to change or give up, and you reply "everything", it sure don't take much of a great mind to see that nothing from nothing leaves nothing.

Sometimes I love to just come by myself to listen to the sing song.....solar, pointless, too small, wind, pointless too small too localized, hybrids, give it up they consume more than they could ever save...electric cars, forget it, you will still need roads and the batteries....geothermal heat pumps...it will take Diesel to dig the holes....I mean, it gets absolutely absurd!  Even if you take the darkest case scenario there will still be billions of barrels of oil and tens of billions of feet of natural gas left in the world for most of the rest of this century, OHHHH but that's right, no matter how efficiently and cleanly you try, you can't use it because of global warming.....

No, it won't sell.  And it's not Stossel's fault it won't even thought the consensus view that he is as thick as a brick is certainly correct.

Roger Conner known to you as ThatsItImout

Even if you take the darkest case scenario there will still be billions of barrels of oil and tens of billions of feet of natural gas left...


The fact that there are billions of barrels left for the balance of the century might not matter.

We just watched (via media) Israel reduce large sections of Lebanon to rubble. We saw tanks, helicopters, and airplanes do the heavy lifting on one side and barrages of missiles from the other. Despite incredible destruction of infrastructure, the missiles never stopped.  

What do we do when the barrages of missiles seek a GOSP (gas/oil separation unit) in Saudi Arabia?

Point #1 being, the oil is not here. It is there. Those GOSP's matter more to us than the Twin Towers.

Point #2 is: the more we engage Jihad, either ourselves as in Iraq, or via proxy, in Lebanon, the more expensive and tenuous it gets. In our wonderful free market way...we have commercialized terror since 9/11. Now it is a trillion dollar industry and growing. It has  trajectory. It's embedded now... like farm subsidies. And, we are rapidly expanding a quasi-military machine via corporate contractors as well. Halliburton and Black River are but two examples. This phenomenon also has trajectory.

This trajectory, and the tragedy of it is: trillions of dollars of "national security" invested in surveillance and weapons systems, not your trains, wind and solar.

To subsist, this trajectory looks for, and requires, enemies everywhere, not friends.

Or as it was put so well in the movie "Syriana"... "When a country has 5% of the world's population but does 50% of its military spending, then the persuasive powers of that country are on the decline."

Our persuasive powers are in decline, for sure.  We lead by force, not by example.  But to lead by example, we'd have to lead the charge to alternative fuels, rather than exterting military control over the remaining oil.

First segment on Scarborough Country tonight: Is Bush an Idiot

Golly, breaking news!!

Regarding MSNBC's handling of Peak Oil, is there any surprise considering who owns them, and who their target audience is?

Turn to the Tom Whipples of the world for journalistic support of Peak Oil.  And of course TOD.

Joe broadcasts from our little town and it would be very interesting to know there is a local heavyweight who gets it.  I will make a point of watching.  Mucho thanks.

About a month ago I seem to recall seeing another local heavyweight, Mike Papantonio, as a participant at a conference that dealt with source/sink limitation issues.  Mike and Joe are partners in the same firm.  Hmmm...

Darwinian, does your social network extend into their world?


Darwinian, does your social network extend into their world?

Unfortunately BJJ, I do not have a social network.

We doomers subscribe to the anti-social network...
Isn't that the TV channel that sells jewelery for the world's misanthropes?


The "debate" theatrics that pass for news should really be between a doomer survivalist and someone who's demanding action now to preserve our way of life, and thinks we can pull it off.
I haven't heard back from the producer, so I assume that I was a backup Peakoiler, but it will be interesting to see how they handle the subject.
Jeffrey (and all),
I've also been contact by MSNBC for this segment. Apparently it's a debate with the ever-lucid champion of farness and truth, John Stossel. I'm waiting to hear whether I would have to travel to San Francisco to do this; if so, I'm likely to decline.
Richard Heinberg
Of course I meant "fairness," but "farness" might be preferable.

Well, I'm honored to be in the same group as you, but I have to assume that I am on the "Third String" team.  My "vote" is that you go.

FYI--I taped two segments on Peak Oil a couple of weeks ago (the McCuistion Program, syndicated on PBS).  It was pretty much me against ExxonMobil and Michael Lynch.  I did get Lynch to admit that some regions have peaked and declined, but he asserted that we are decades from any kind of world peak.  

I have always been confused by the Huber/Lynch position that discrete regions will peak and decline, but the world--the sum of discrete regions--will virtually never decline.  This is like saying individual oil wells will peak and decline, but the field--the sum of the output of individual wells--will never decline.  This probably a good point to use with Stossel.

One other point.  In a sense, Stossel and Huber/Lynch are correct.  We will bring on alternatives and unconventional.  The problem, as you know, is trying to replace the rapdily falling production from the big fields.   Also, if you look at total fossil fuel + nuclear energy production, if we found an entire new Saudi Arabia, it would only increase our fossil fuel + nuclear energy production rate by less than 5%.

Jeffrey Brown

Who ever gets the nod it would be nice if you could get a transcript of the debate posted here for us Luddites who don't have cable. Much appreciated
I am not sure I am a Luddite, or not, as I can not remember the difintion and have no time to look it up, nor do I really care much.  But, I as well do not have cable, will never have cable, and do not watch TV at all if I can help it.  I get most of my news off the internet or the local paper or word of mouth.

Great going for whomever gets the nod. Lynch tells people what they want to hear and gets paid to do so, it's the way of the masses.  

Hopefully over time people will realize that the peak is near LIKE so many others of us that have seen the figures.  Oh well, Either way they will see it now or after the fact and come hunting the folks that told them otherwise and those that did not tell them, and might even hate the rest of us for it happening in the first place.

People never seem to get it that WE ALL did it.

Luddite means someone who absolutely hates technology and will not touch anything like it. see the uni-bomber.

the difference between a me and a Luddite, is while i do not hate technology i do understand it has limits and those limits prevents it from saving us.

There's also people who have little understanding of technology but have blind faith that it will rescue us from the peak oil, global warming, and God knows what else. As an scientist, I'm always surprised when I meet people who have no idea how anything works but just take it for granted that when they turn their car's ignition key...something magic happens and the car starts up! Technology has given us so many miracles, so surely it will solve peak oil, right?
go out on any busy street with allot of people and ask them politely about basic things, like where our electricity comes from. many people will answer the outlet in the wall. a few will get it right but they are the minority.
Luddite means someone who absolutely hates technology and will not touch anything like it.

Actually Luddite does not mean this at all. Its use has become over-simplified and corrupted over the years.

"E. P. Thompson advances many arguments against this view of the Luddites. He shows that the Luddites were not opposed to new technology, but rather to the abolition of set prices and therefore also to the introduction of what we would today call the free market."

See Wikipedia  

Over-simplification and corruption are what creates language - and it's certainly done so in this case, even if historically it's incorrect.
The Luddites were followers of a fictition General Ludd during the indutrial revolution. They were not opposed to all technology but were against textile machines in factories that destroying what were previously home-based jobs. So they used hammers to re-arrange the factory machines.
Enjoyed the discussion of "Luddite". I used the word factitiously after hearing too many times "You don't have cable!" and worse. There is a general attitude among many that if you don't have all the technological entertainment goodies when you can afford them, you are somehow being cheap.
It is not technology that won't save us, it's the unwillingness to share which dooms us. Greed (the need to maximise profits in spite of the harm to others) and avarice (being the biggest bully on the block as the only measure of strength)are the gods the elites will have us sacrifice for.
Stop being misled by lynch. He has proven himself wrong many times
I stopped watching after John Stossel claimed both that '2006 was a record year for oil production' and that even if peak oil were true 'we have plenty of coal and uranium to supply us with energy'. No one (I got the idea it was the capitalist with a book to sell vs. a cute female peak oil nutjob and a dorky lefty) called him on either of these fantastic claims.
How are either of these claims fantastic? If you believe that we are at or near peak (most people on this site) then this year will be a record for production. As discussed last week, there seems to be enough uranium for quite a while yet, and plenty of coal. The question with coal being more to do with greenhouse gasses and sequestration, rather than peak production.

The problem we have right now is peak liquid fuel for transportation. Peak energy will not be with us for at least a few decades.

'was' a record? And as you mention, can you put uranium and coal in your tank?
I guess you had to see it. Joe asked, over and over again, if this ment the end of the 'suburban dream'. Sounds like that needs liquid fuels.
The coal and uranium claim wasn't untrue, but in the context didn't mean much.

"even if peak oil were true 'we have plenty of coal and uranium to supply us with energy."

The new Scientific American says something similar. They say coal and its derivatives can could tie the earth over for more than a century.

At what, current rates of consumption??? At least they're not saying 500 years worth anymore. How long does Scientific American think our coal reserves will last if we really ramp up production?
Funny.  When Stossel made that statement I heard Westexas saying, "that's what pundits were saying in 1970 about the East Texas field."  We will have record years every single year...until the tide starts to ebb.  So that's pure red herring.
Megan didn't look to happy as the segment cut out.
'Think Marie Antoinette, and "Let them eat cake."'

Now, now, don't get political. This is, after all, TOD. We're only interested in geologic realities. Politics and economics are not welcome here. All such intruders shall be shot.

Separating oil from politics would be like trying to separate two 'conjoined at the neck below' blue whales.:)
More like separating oil from politics and religion is like separating conjoined at the brain triplet elephants in the room. Or conjoined at the brain 800 pound gorillas in the room...
'Think Marie Antoinette, and "Let them eat cake."'

Let them burn vodka ...


Well do I remember Phase I, Phase II, Phase III of price controls and rationing during the seventies.

More of the same--except worse--is coming, and unless we get a major recession pretty soon (which could happen), I think the presidential election year of 2008 will bring competing Dem and Republican plans for both fuel rationing and price controls.

Predictions: Democratic party platform will punish wicked oil companies with excess profits taxes and explicit price controls and provide subsidies so that low-income people can continue to drive their old gas guzzlers.

Republican party platform will be more complicated and somehow try to provide tax incentives for more oil exploration and development while providing some kind of fig-leaf tax on oil companies for profits on already existing production. I expect to see quotas or outright prohibitions on the importation of cheap and economical Chinese cars to "save" the U.S. Big Three auto industry and perhaps garner some United Auto Workers votes.

Indeed, I expect Republicans and Democrats will compete in trying to stimulate the economy by keeping out cheap foreign goods--especially if the next recession turns out nasty.

"Beggar thy neighbor" policies make great politics.

BTW, of course there is going to be a recession. There are three things neither I nor anybody else knows:

  1. When it will start
  2. How severe it will be
  3. When it will end
Actually the first things are unknowable until it's too late. The last one IS knowable. It won't end until we return to the stone age! Now, that timing depends on the effectiveness of the remaining weapons of war.
I thought about saying Don's "1-2-3" list was a lot like peak oil ... but darn, I guess it is.  Recession leads to the stone age as well. :-/
...I expect Republicans and Democrats will compete in trying to stimulate the economy by keeping out cheap foreign goods...

Maybe, but they'll be fighting the WalMart lobby, which has been actively promoting its "green" initiative as it prepares for this battle.

Will the "give it to me as cheap as possible" demographic be the next "soccer mom" electorate?

I think pricing people out the market
and people just simply running out with price controls

both are probably equally devestating to the economy

If the commodity is of critical importance usually the goverment steps in and prevents what would have otherwise been the logical development.

Think what will happen if we allowed people to be priced out of food, water, basic healthcare etc. Our civilised society would fall apart very quickly.

Learn to conserve water, food, oil, and even basic healthcare.  Wait I'm asking too much already.
"priced out of food, water, healthcare"
This is just a restatement of current policy.
In the US only being priced out of healthcare is at the front of the popular mind, certainly abroad privatisation of water and rising cost of food(energy) is front and center.
Chris Skrebowski on OPEC trends and CERA's new report

Note comments about Yergin.  Chris agrees with Simmons regarding Saudi Arabia.

"This raises two immediate questions: First, did CERA just start with the answer -- 110 million b/d in 2015 -- and then work backwards to fit? Second, on whose behalf or behest are they issuing this nonsense?" -Chris Skrebowski

That's a damned fine question and one we're never likely to see answered truthfully either.

Did you note where Chris says:

"Very briefly, consider a few of the key facts from CERA's summary:

    * CERA has higher Russian production than the Russian government.
    * CERA projects higher OPEC production than even OPEC claims on its website. In terms of some individual fields they have higher output than OPEC claims.
    * In 2009 they project production from Uruguay, despite the fact that the Petrobras house magazine (latest issue) says it's a 2011 start-up for a project they've only just sanctioned.
    * BP's start up in Angola by 2009 is another implausibility zone (among many).

As if that was not enough they have global production several million b/d higher in 2011 than the IEA's new Medium Term Market Report (this only goes to 2011). As the IEA is usually criticized (correctly) for being too optimistic, CERA's estimates (which escalate dramatically after 2011) are frankly just plain fantasy."

He doesn't have much good to say about CERA, does he?

My guess is that CERA is talking about "Productive capacity" (i.e. production + spare capacity) which is an upper bound for future production levels.
Great. "What could be" instead of "what is".  
I could claim my productive capacity is a billion widgets a month, even though I struggle to make a million widgets, and be just as truthful as they are.

I'm seeing more and more articles in mainstream newspapers endorsing the view that high gas prices are here to stay. This one in the Chicalo Tribune, Key to energy reform: Let our oil prices soar (which I hope hasn't been posted already) says, in part:

Having higher oil prices now is the only way to brake oil consumption and develop other ways to fuel America. No amount of government decrees will do it. No recycling or conservation. No appeals to give up Humvees and other rolling tanks. Money being the biggest economic motivator, $5- to $10-a-gallon gasoline would be crippling now to a world economy built on oil. But it would be the only way to set off an energy revolution of the sort that changed American in the mid-1800s when we began our oil dependency.

I applaud the writer's sentiments, but his main argument seems to be that high prices will stimulate research into alternative sources of energy and somehow save society from its heretofore glutinous ways without a complete meltdown.

Personally, I think its too late for the sort of transition he envisions, or any kind of orderly changeover to alternative fuels that will allow the current system to remain intact. I guess that makes me a "doomer," but I don't see any way around the fact that as far no viable replacement for cheap oil has been found, or will be discovered in time to prevent large-scale breakdown.

Allow me to respond to this without getting in to politics:

.      ,              ;,                                              (                    )      ,                                 '         '.


How illuminating.

Even Charles Krauthammer supports a gas price floor, although at a lowly $3/gal.


Win $10 within the next three years!

My e-mail to Paul Higgins

Hi Paul,

From your Oil price spike to end, you can bet on it

AT RECENT conferences on the future of biofuels, I have offered a $10 bet to anyone in the room that the West Texas intermediate oil price will be less than US$40 a barrel within three years. So far only three people have taken up the bet.
You are most definitely on. Concerning your arguments:

1) tar sands -- production there is in trouble. Are you following the issue?
2) Venezuela -- have never gotten back to production levels prior to the PDVSA strike. Hugo Chavez. Foreign investors are nervous. More heavy oil production from Orinoco is years off.
3) "Operating costs have been reduced in recent years" -- no one familiar with the oil industry would make such a statement -- see deepwater and ultra-deepwater production, tar sands, etc. Rig shortages, higher capital costs (eg. steel), scarcity of skilled labor, more extreme (physically and politically) production environments. I could go on.
4) "we have significant development of biofuels occurring to replace fossil fuels" -- biofuels from corn is a loser. Outside Brazil, Thailand and a few other places, biofuels have hardly gotten off the ground. Ethanol is an additive in the US and replaced the use of MTBE. See multiple stories at The Oil Drum. Link below.

So, I'm happy to take your bet.


Dave Cohen
Senior Contributor

Send your bet to Paul Higgins at paul@emergentfutures.com

Oh, before anyone points out that technically you can't win the money before August 2009, I figure that once oil is at $100+ per barrel, he'll just give up  

Good for you, Dave!
I've got a portrait of Alexander Hamilton that agrees with your points completely.
From 1962 to 1972, Texas oil production increased at an average rate of 100,000 bpd per year (from 2.5 to 3.5 mbpd).  One of the slides I show is a linear extrapolation of this increase out for 30 years, when Texas would be producing 6.5 mbpd.  

The reality?  Texas oil production was about one mbpd--versus the "cornucopian" trend line of 6.5 mbpd.

You know, I'd be willing to bet him, as long as we can also have a bet that oil will break $100/barrel in the same interval.  There is a chance that we'll have a hard enough recession in the next three years to drop oil back down to the $40 mark.  It isn't looking like it at the moment, but all it would take is a silkworm or sunburn missile flying through the Strait of Hormuz to set off a nasty recession.
That's the only way I lose IMO. I certainly won't lose based on the supply & demand fundamentals. By the time new production comes onstream 2007 / 2008, prices will be in the $90 to $110 range if the current trend is any indicator. Assuming the bottom price in this range, the price would have to fall a bit over 55%. Let's look at that.

I don't see a 3 year period where that happened since 1947. WTI averaged about $18.50/barrel in January of 2002. Today, we're at $73.20. The price has quadrupled in 4 years and 8 months.

Paul Higgins

Cheney and Rumsfeld could bomb Iran, demand could plummet and a severe magnitude could ensue. I might lose. At that point -- who would care anyway?

More importantly, when you take inflation out of the calculations, you really see what has happened to the price of  oil.  Energy is THE leading component of inflation over the past 30 years, primarily because it takes energy to make or do anything.  It is a massive hidden cost in all goods and services, some more so than others (granted), and attempts by some (not you, Dave) to explain away more than a token portion of its price rise as the effects of inflation is disingenious at best.
To give an example to illustrate: If you factoring out inflation, the "real return" of the DJIA has shown an average annual yield of scarcely 2% over the last 90 years.  Clearly this is not a viable reflection of stock performance.  
On the flip side, if you do buy the arguement that energy costs should be adjusted for inflation, does that not say something about the very policies that are creating the (rampant) inflation in the first place?  Clearly, energy prices are soaring, leaving only two explainations:
1) Inflation is out of control, explaining the higher cost.
2) Energy is becoming more dear, explaining the higher cost.

Neither looks like good news from where I'm standing.

or some combination of 1 & 2
Ding! Ding! Ding!  We have a winnah!
When I bust out with the 1.5% DJIA argument over the ninety years, people argue all day.  Then I send them to itulip.com and they click on the box and BOOM, they come back with "holy shit."
Thanks for the link.  I'll spend some more time on that site, but for now, how legitimate is it?  I just skimmed a little bit; it looks somewhat like the stuff you see at financialsense.com.
USA TODAY wrote about this guy Janzen (misspelled maybe but in a hurry) and he was one of the guys screaming about the tech bubble prior to it.  I wasn't around then (high school), but he sources his credibility with that.  He actually took this site down following the tech bust, but reactivated it within the year back in Mar 06 I believe.  He's now screaming about the fiscal & monetary policies run amuck.  He is now on the housing bubble big time though and there are some articles about fannie mae and freddie mac that will blow your mind away with raw numbers backed up and sourced.  It sucks knowing the truth sometimes.

I like the site for it's anti spin.  They've got a forum that I don't subscribe too, but here's an interesting developement in the last couple days.  They are joining some network wherby people can loan money directly to people without bank involvement and stuff.  I have no clue what that is about, but the site is updated haphazardly and with no real schedule.  I check it once a day, but sometimes the updates are at night and I miss them.

Cheney and Rumsfeld could bomb Iran, demand could plummet and a severe magnitude could ensue.

I am no economist but assuming this scenario AND the Strait of Hormuz closed, when does the demand destruction from a recession takes over the supply shortage?
Prices look like they have fairly unstable dynamics and could veer either up or down.
Any economist here at TOD? And I don't mean Sailorman :

Since you would effectively cut off 2/3 of your energy supply, you would at minimum suffer 2/3 loss in GDP or at least it would seem so.  While this may be deflationary the remaining oil would get so out of whack b/c the remaining 2/3 would still be demanding it, so the prices would have to rise and the remaining co's and people and gov't would be left to bid over it.  Thus the prices would rise and carry through to the entire economy as the energy source would probably be at least double if not triple the price.  I'm rambling and am a student of economics, so I'll step aside for those in the know.
I am not an economist either, although I do have a couple of years -- some time ago --  as an economics major at the undergraduate level.  I then  moved on to what I considered (wrongly) to be less boring inquiries.

The way the term "demand destruction" is thrown around, I don't see it applying to short term events.  It seems to refer to a change in the demand curve in response to medium-to-long term changes in supply.  Not short term effects. i.e. "demand destruction" implies an adjustment of expectations on the part of the public at a fairly deep level.

So, if the Strait of Hormuz is closed for 3 months:  no demand destruction.  The price just spikes short term.  December 2011 futures barely budge.

Closed for a decade paints a different picture.   (But can't they go around??)


To "go around" Saudi Arabia would have to negotiate agreements with its southern neighbors, build pipelines through those neighbors, see those neighbors build deepwater ports to load the crude... it's not a trivial undertaking and would cost a tremendous amount to accomplish. Then note that this makes the Saudis own facilities useless and thus the capital investment in those existing facilities is totally lost.

Short answer... no, they cannot just go around.

In that case, it may be question of how long the Strait can be closed or how can it be opened if closed?

So, instead of economists, we may need to ask, "Are there any generals at TOD?"

Not because I support military intervention.  But because military intervention, in this scenario, seems inevitable.


They don't even have to close the Straits. They just have to turn off the tap. Everyone here missed it because the story broke at the same time as BP/Prudhoe: it is now Iran's stated policy to deploy the oil weapon - turn off the tap - if we keep pushing them over uranium enrichment.
There will be a demonstration effect. If Iran looses the oil weapon on the infidel others will follow.
What will the generals do? Certain to be interesting.
Very hard for me to imagine Iran made a public statement before thorough consultation with China.
Well they already have a pipeline that runs from the oil producing East of Saudi to Yanbu, Saudi's port on the red sea.

Petroline runs from Abqaiq to Yanbu. Built in 1981 with the capacity to move more than 1.8 million bpd of crude oil, Petroline was expanded to handle 3.2 million bpd in 1987. The expansion consisted of laying a new pipeline parallel to the original. Further development plans call for additional capacity to raise overall throughput to 4.5 million bpd. This project will give Saudi Aramco greater flexibility to move different grades of crude oil to its western export terminals. Security concerns have largely motivated this expansion because the kingdom's foreign customers have shown less enthusiasm for lifting crude oil from the Red Sea port as a result of the higher cost of cargoes.


Thanks for the information, Darwinian. So Saudi Arabia can move less than half of its current exports to the western coast of Saudi Arabia in the event of the Persian Gulf being closed by military activity? Such a closure would leave the world short about 4mbpd, wouldn't it?
Remember Saudi domestic consumption.  They have some Red Sea refineries (Yanbu ?) to fill that need on the west. My GUESS is over half of their internal demand goes through these pipelines.  So subtract, perhaps, 1 million b/day from the total when calculating export capacity.
Their southern neighbour is the Red Sea. There is already a major port - Jeddah.
Their southern neighbour is the Red Sea. There is already a major port - Jeddah.

Well no, the Red Sea is their western neighbor. Their southern neighbors are Yemen and Oman. Catch the map here:


Their western oil port is Yanbu. I think there is a port in Jiddah, it just doesn't handle oil tankers.

Saudi Arabia would have to negotiate agreements with its southern neighbors

Their southern neighbour is the Red Sea.


Their (single) southern neighbour is Yemen... pipeline over the Rhub' Al Khali, anyone? And besides, Saudi & Yemen not exactly friends since Yemen "sided" with Saddam in 1st Gulf War...

Their WEST coast is the Red Sea.

Well to be picky - the Red Sea is southwest.  

The important point is that, as Yemen is mountainous, the shortest and easiest route to the Red Sea, which Iran can't block, is totally through Saudi Territory. It is over 600 miles but it beats dodging Silkworm missiles with Oil tankers.

BTW. When I lived in Saudi, many years ago, half the work force was from Yemen

when does the demand destruction from a recession takes over the supply shortage?

A good sign would probably be the packs of wild dogs that rule the streets.

Another anecdotal observation, but it seems to me that the number of empty strip center storefronts is slowly, but steadily, increasing, at least here in the Dallas area.
The Bennigans here in Champaign-Urbana closed. Sad. I miss the Monte Cristo. :-(
I'm starting to notice some empty houses on my drive home from the Detroit area... and they are obviously "bank owned" by the way the lawns / outsides look.

Maybe it's time to get out of automotive...

Well, anecdotally speaking, San Antonio is still considered a "hot" market: seems that some people have discovered our historically low housing prices and are (somewhat) bidding up the average house price lately. No sign whatsoever of growth slowing at this point: much commercial/resedential construction on at least three points of the compass.
Down below I linked that home sales are declining in 28 states, but the article does note that markets that are behind the national average are still doing well. Here in Texas, most urban markets remain somewhat behind the national average, probably because of the lagging prices induced by the 1980s S&L scandal. Texas and other such states may avoid some of the unpleasantness of the housing bubble bursting because of this.
We haven't had the skyrocketing increases that the left and right coasts have had, so no, I don't think we'll be following that "trajectory," as a certain venture capitalist might put it.
They're still building like crazy here, but the strip malls and subdivisions built 2-5 years ago are either mostly empty (strip malls) or rapidly deteriorating and full of "for sale/for rent signs" (subdivisions).
Fallout, are you in the metro Atlanta area or elsewhere?
Houston county, central Georgia. About 100 miles south of Atlanta (75 if you count the suburbs.
The state's single largest employer is here, though, and we've been in a steady building boom for over 10 years or so now.
I suspect that long before there are significant packs of wild dogs roaming the streets, most dogs will have been lunch.
My pet theory is that the dogs will be "freed" and be wild once the shelters are overloaded as people can't afford to keep them. Once as strays, they become prey and end up as "health soup".
But at this rate,  you will only win $3 in inflation adjusted dollars...maybe.    Not even a starbucks coffee...;-P

If he really believe his statement,  he should put up at least $100 bucks, then you could get a couple of loaves of bread at least.  Maybe some ice cream.

It's all about population!

Almost exactly a year ago a gentleman on another board bet me that oil would be below $70 in three years.  The bet is a barrel of oil - if it is over $70 he buys me one, if it's under that mark I buy him one.  From the looks of things, I think I'm going to win.
I took that bet as well. $10 is easy to pay out. Let's see how Paul feels about paying out lots of $10 losses though if they mount up.
Dave, I applaud you taking Mr. Higgins up on his offer.  Certainly, you have all the right reasons. And if he really believed what he was saying, don't you think he'd be offering the bet for more than $10?

I see one potential reason why oil could go much lower -- I don't know about $40 -- and that would be a global recession.  Supply is only one part of the equation.  Demand is the other part. If a recession cut deep enough, it would crimp demand.

That said, I think the odds of a global recession are slim.  I'm leaning more toward inflation being our next crisis.  Did you see this from Goldman Sachs:

  DJ MARKET TALK: US Housing Slowdown To Fuel Fed Cuts-Goldman 
1131 GMT [Dow Jones] The direct hit from the US housing slowdown is already substantial, says Goldman Sachs, noting real residential investment fell at a 6.4% annual rate last quarter. With more consumption weakness to come, housing and consumer spending will exert a significant drag on US growth in 2007. This should reduce real GDP growth to 2% by 2Q and prompt the Federal Reserve to cut interest rates by 125 bp to 4% next year, Goldman says. With the rest of the world holding up relatively well in the face of a US slowdown, it expects EUR/USD to hit 1.37, and USD/JPY to touch 98 on a 6-month basis, versus 1.2727 and 116.56 now.

Lower interest rates would likely lead to an increase in inflation, but I think it might be a trade-off the Fed and the White House are willing to make to keep the economy humming.  And inflation would help you on your bet, because Mr. Higgins didn't state that the price of oil would hit $40 in inflation-adjusted dollars.

The fed will happily print more money & fight deflation with all it's might.  However if the housing sector collapses, deflation will be unstoppable.  Ever read of Freddie Mac and it's larger sister?  Their bond obligations are like $600B and total debt obligations outstanding between both entities right now is close to $6T or half our housing stock.  When the people are pinched so hard en mass, they won't be paying their mortgages.  When the Mae's and Mac's can't make bond pymts, b/c the people can't make their pymts default starts and there goes deflation!  Its a possibility, but again I lean to inflation also as I see the FED propping up the home lenders at all costs, including printing funny money.
tate you are right, they are committed to fighting a recession, but they're kind of out of bullets - they avoided one right after 9-11 by lowering interest rates until they ran out of that type of bullets, they were able to raise it steadily over the last year or two, but they can't do that any more now because raising the central rate makes all the rates for things like credit cards and car loans and mortgages go up, and people are dyin' out here. So, the fed decided to not raise the rate again this last time, but keep it the same, and that to me really says something - they're worried now about people not being able to pay their debts at any higher interest rate than they're at now, and they should be, since people can't pay for stuff as it is now and are bailing out (foreclosures are very high and rising right now).

I'd expect to see, in terms of man-hours, essentials getting more expensive, and the extras like cheezy wal-mark earrings, getting cheaper. Eventually everything gets much more expensive in terms of man-hours. I like to think of the price of things in terms of the man-hours it takes to earn it, since the zeros on the scraps of paper that litter our pockets can be juggled around, but the amount of work a person can do is firmer.

Fleam I'm with you.  I literally broke down the man hours it took for my step grand father to earn his house, his two cars & the food his family ate all the while sending both his kids (my step dad included) to private school all on one income.

Suffice it to say it was mind boggling and it really pissed my step dad off.  While I agree it says something about what the FED will do, I really think they are trying to soothe markets with rhetoric in a way.  I think it's too late like you said, the bullets have ran out and now we sit and wait for the masses to rush.

First a tip toward deflation then flat out inflation.  it will be "inflate or die(deflate)". And they will choose to inflate even if it pisses off thier banker friends( and they have a lot to say about things)
The Fed is now pushing on a string. They've lost the ability to significantly direct the economy, thanks to years of runaway liquidity infusion (money printing/borrowing).

Inflation is the great hidden tax.  That's the way things will go, after (or before, depending on who you ask) a short period of deflation.  Weimar Germany is our future.

they are committed to fighting a recession, but they're kind of out of bullets

So what?
There is an old "military dumbness" joke that goes:

What do you do when you are out of ammo?
Keep firing so the enemy won't notice!

This starkly reminds of some actual policies...

Just what is the threshold percentage of foreclosures which will bring down the economy? Michigan has what is considered a high rate at 0.4%. My WAG is at least 10 times that rate.
With Fannie Mae and Freddie Mac being federally owned corporations, the Fed will have to defuse their own financial weapon of mass destruction. A deflation will make the already unpayable bar tab called the National Debt ridiculous - another financial WMD that we can thank the "small government" GOP for.

If the Fed installing gas turbines on the printing presses yet?

They aren't federally owned corp's.  You can buy into Fannie Mae right now on the NYSE, symbol FNM.  They pay dividends and their source of capital is Mortgage backed securities (MBS), & debt security instruments.  They do not seek capital FROM the government any longer.  They access public cash and after reading Fannie Maes own website info and their debt instruments, I'm more terrified.  I really didn't realize all the ways they've come up with to access more cash now.  This isn't the same ownership as the Post Office which is a federally owned corporation.

No need for the gas turbines....I'm sure their 10 key skills are among the best in the world. :)

He's an idiot I will bet him $50,000 that oil wont be $40 in 2009 Barring an oil induced depression.
Light crude would have a gravity value beyond 31.1 degrees API, while heavy crude's gravity value would be below 22.3 degrees API.

With the world running out of light, medium and heavy crudes, oil is being sought from tar sands endowed with API values of between 7 and 12 degrees.

Is there a stacked area graph or stacked percentage area graph that shows global production categorized by API gravity?

Cars that keep going . . . and going

Student tinkerers from around the world have descended on MIT to build five cars powered so efficiently that they would not need to stop for fuel even once on a trip from Boston to Seattle.

The 50 students are taking part in an eight-week summer program called the Vehicle Design Summit , the inspiration of two MIT students, senior Anna Jaffe and junior Robyn Allen , and Olin College sophomore Matthew Ritter . They expect each car to get at least 300 miles to the gallon, or the equivalent.

Unfortunately, none of them will be "road legal". Much like those built for the "Sunrayce" series back in the 1990's.
Yeah, I'd guess they won't be legal until gas hits $30/gal
More evidence of Americans on edge (just wait until gasoline gets really expensive):

From Drudge:

 Police have been looking for a disgruntled McDonald's customer who ran into two other customers with her car after a dispute over who was next in line.
 Melinda Ann Thomas, 34, and Linda Ann Thomas, 51, were standing in a crowded line around 8:30 a.m. Saturday as they waited to order breakfast, police said. A cashier opened a new line and they stepped to the front of it _ a move that angered another customer who was waiting to order.
 According to the report, the unidentified woman started yelling at them and threatened to kill them.
 The woman then left the restaurant before the Thomases and stayed in the parking lot, sitting in her dark blue Jeep Cherokee, witnesses told police. As the Thomases made their way to their car, witnesses said the woman pulled out of her parking space and sped toward the women, striking them both with the passenger side of the Jeep.
 Neither woman was badly injured, the police report said.
 The woman is being sought by police on charges of aggravated assault.
 On May 23 at a McDonald's in Covington, about 30 miles southwest of Athens, a man ran over two women and their three children, killing a 2-year-old. A suspect is facing murder and aggravated assault charges in the attack, for which authorities have said they have no motive.

Is there yet a twelve-step program to help conquer addiction to fast food in general and McDonald's in particular?

Clearly, one is needed.

"more evidence that Americans are on edge" or just "evidence that the mentally unstable stop for gas, like everyone else?"

For what it's worth, I think we do have smoldering economic problems, but picking a point case of a mad-woman is confirmation bias at its worst.

Bingo!  A single incident isn't data, it's an anecdote.
Righto - crazy things like this happen in the go-go good years too, in fact I think more so because people are more frantic. I remember in the mid-80s, a family in affluent Irvine CA killed themselves because "things were so good, they felt everything would be downhill from there". There are just a certain number of crazy people no matter how the economy is doing.
I guess gas prices will pour some gas onto the embers causing a good backdraft. That 30' by 30' shack's price of 2/3 of a million is (more than) a little ridiculous. My question is how someone is supposed to make $160,000/year without being a major-league bookie or mobster?

Chicago's housing market is not as ridiculous, but once you can't afford to get in, subsequent price rises are academic and totally moot.

An automobile is a gun with a gas pedal for a trigger.
"Happiness is a warm gun."
Happiness is a gun with a hemi, A/C, 4 wheel drive, 18 cup holders, a 600 watt 6 speaker stereo, a DVD player in the back, cruise control, disc brakes, a radar detector, a GPS navigation system, and an iPod connection. Never mind that the gun gets 8mpg.
Get your new Hummer H8 today!
Ah, people from Georgia!  More crazed mofos.

There is a growing sense of directionless anger amongst the populace of the US recently. It's almost like folks, going about their daily drudge and grind, can sense an undercurrent of ill wind.  Frustration, anger, dissappointment, and powerlessness in the face of external circumstances manifesting itself.

"growing sense of directionless anger"

... but with a continuing fall in violent crime?


Those stats are two years old.   Violent crime is headed up again:

Violent crime takes first big jump since '91

OK.  I did surf but I didn't find the latest news.  That does make a better case for trends that point cases.
"Frustration, anger, disappointment, and powerlessness in the face of external circumstances manifesting itself."

I agree, and I think that we will see more and more examples of Americans lashing out irrationally, commonly manifested as road rage.  

The American consumer is basically standing at a four way intersection with four 18 Wheelers headed his way in the form of rising interest rates; rising food & energy prices; rising health care costs and flat to falling incomes.

Hmm.  Need a bigger intersection.  Baby boomer retirement and associated social security and medicare problems would be another semi.  Maybe that one would be a chinook helicopter coming down on them.  Hey, I bet that's the one that Bernanke will use to throw money out the window!

I suppose we could throw climate change in there and make it 110F in the shade, with no shade, so they have sunstroke and are too lethargic to move.

Oy, and we could count consumer debt as an earthquake shaking their legs out from under them!

Don't forget falling home prices!

As more and more Americans find them selves "upside down" (owing more than the property is worth) on their home mortgages, the sugar is going to hit the turbine big time.

Already tens of millions of Americans are upside down on their car loans, and this fact does not enhance auto sales. For years salesmen hid upside down loans with exceptionally creatve financing deals and exaggerated estimates of the worth of traded in vehicles, but this game is about over, because it has been pushed farther and farther--to the point where you have to be ready to commit felony fraud to finance car deals for a lot of multithousand dollar upside down customers these days.

New housing sales in the toilet, auto sales about to hear that gigantic flushing sound . . . these do not bode well for the economy.

Yes I'll agree with Popeye here, house prices are going down and this is a shock to average McMerican that should not be underestimated.

You see, people really only seem to have a memory that goes back 5 years!

This is why in a recent poll, a huge number of people can't remember what year 9-11 was in (it was in 2001), and can't remember real estate ever-ever going down (it in fact has, it follows a general roller-coaster pattern, with I believe a real appreciation of about 5%).

So, you have all these fat, dumb, and happy McMericans buying RE and buying more RE, or their jobs depending on RE, in fact the whole economy is being held up by the RE bubble, and when that bubble begins to deflate....... things start looking very shakey for those who install granite countertops for a living, and house-stagers, and the folks at Home Depot (once upon a time there were far fewer of these home-improvement type places, and before that, there were just regular old hardware stores) and all the rest of it, oh yes and car dealers - I mentioned this in another post in another thread, buying/selling a house is such an involved and for a lot of people, traumatic process, that when they're done, they often reward themselves by buying a car or two! The price of one seems like a bar tip after dealing with the huge amount of money needed to buy a house, and when you're talking about spending $25k or $50k to re-do the kitchen or landscape the garden and put on a new roof, a car seems cheap.

And it's been drummed into us for the last decade that we can't expect to do as well as our parents or grandparents, because it's true, but now it's beginning to sink in because McMericans are starting to see the signs of it in their own lives, you know, little things like being 2-3 mortgage payments behind, having the car repo'd etc.

I've been watching this feed, and it has given me the promised feed of bad news ;-)


If your watching that then you must be watching this as well: http://globaleconomicanalysis.blogspot.com/. If not, you might want to add it to your list of required reading.
Yet another blog that bears the same message:
I would add to that unrealized dreams, closed opportunities, dissappearing social safety net, an undercurrent of disillusionment with materialism (these things don't make me happy! Why not?), and a general feel that world events are spiraling out of control (no doubt related to the growth of the security state/"external threat"/boogieman complex).
Seems to me that you guys are underestimating the power of television
Oh, yeah!  ... And they're too busy watching don't-worry-be-happy MSM TV to have any idea that any of it is happening!
westexas said;

I agree, and I think that we will see more and more examples of Americans lashing out irrationally, commonly manifested as road rage.

I also agree:   That's the reason I flatly refuse to go up to Phoenix anymore, even though a lot of my family and friends live up there.

Here's another.  Hold onto your AC (air conditioner, not Angry Chimp) :-)

13 AC units taken from complex

"Thieves once again have struck at a west Montgomery apartment complex, stealing 13 outdoor air-conditioning units and a pickup this week.

"Rising copper prices have led to a rash of thefts of air conditioners, copper pipes and wiring and anything else that might have the metal. Abandoned apartments, homes and businesses have been sources of stolen copper."

I first heard of this in a Detroit paper, and there are news references to it from Las Vegas as well.  

It's a sure bet that gasoline theft is on the rise.

Things will escalate..........

"A vessel on its way to Al-Fujayrah (UAE) illegally entered waters of Iran's Hangam gas field and towed the oil rig out of Iranian waters,"


re the oil spill from the Japanese tanker:

Why is it that oil production is always given in barrels while oil spills are always reported in terms of gallons?  Who cares about a gallon?  I hate to be one of those people who beat up on the media, but it seems alarmist to report "1.4 million gallons" instead of "33,000 barrels".

Both are "funny units", cubic meters for large spills and liters for very small would be the only sensible units.
One April 1st, I sent a calculation to Iceland on water flow in "acre-ft/day" (the common measure for reservior use in the US) instead of "cubic meters/second" >:-)

I got a VERY quick response !

I find the common EU use of Gl for water to not be useful, in that I cannot understand or picture a gigaliter.

640 acres to the sq mile.  Acre-ft is one acre, one foot deep.

A gigalitre (about $900,000,000 of gas in America) is a million cubic meters, or a Rubik's Cube 100 meters to a side. It would cover more than 2 football fields and be 30 storeys high! That's a big tank o' gas! One cubic meter is, conviently, 1,000 litres.  
I have come to think of a Gl as 1 sq km of water, 1 meter deep (or a 100 hectacres-m).  This applies better to a reservior drawdown than cubic measurements.

2,100 Gl of workable storage with a 55 km2 surface area reservior at max and 45 km2 at minimum gives a rough idea of head reduction during the winter drawdown.

Still, it was fun to send data in acres-ft/day :-)

You should have sent it in cubic lightyears per week ;)
May I suggest a brief experiment?  Take one (1) gallon of oil and pour it on your person, then walk around your house/apt for an hour.  Sounds like a hell of a mess to me.  :-)
why has the nymex price of gasoline gone down so much
like 20-30 cents
An acquaintnace with ties to the military told me Homeland Security has delivered millions of gasoline ration coupons around the country. true?? A good idea if we are preparing something for Iran.
<Homeland Security has delivered millions of gasoline ration coupons around the country. true??>

 Can anyone confirm this?

It wouldn't bother me that they were printed and waiting somewhere.  If we got one of the solid runs of bad luck shown in disaster movies, we'll need them.
 I agree with you..but..
The Dept of Homeland Security has such a long "To-Do List"  it makes me wonder why, as they sit around the conference table, they chose to get this item done.
 It may not be true
 If it is true , it may be nothing.
 It would be interesting to know what the deal is.
I wouldn't read too much into what DHS does and doesn't do as a way of deciphering their priorities.

Compared to some other things--figuring out how to screen passengers, figuring out how to check bazillions of containers coming into US ports every day--designing and printing a gaggle of tickets and drop-shipping them around the US is pretty simple stuff.

I'm in DOD, and have not heard anything regarding this.
Trivia on a Tue morn:Of the total global oil consumption to date, 90% has occurred since Hubbert made his landmark prediction. So consumption-wise, the oil age had not even started when he made his prediction. A lot of you are already aware of this, but I thought the numbers were interesting when I crunched them.  
Consumption is growing in an out of control manner. Not only do we have a world population that has grown from about 2 billion when Hubbert made his predictions, we have more people from more cultures wanting to improve their living standards and viewing oil/fossil fuel consumption as a route to an improved life style.

So, we need a change in world values that sees a lower energy life style as having more value than one that values higher consumption. What is of more value to people? Working 60 plus hours a week to support a mortgage on a 4,000 square foot McMansion that requires an additional 12 hours a wek to comute to, or living close to work in a 1,000 square foot house that I can pay for working 1/2 of the hours? Paying for and insuring a $60K SUV or having enough prosperity to retire?? The Buddah was right, we are slaves to desire and fear.  What would you rather have-two well educated, well fed , healthy children or half a dozen children starving? How in the world can we sell this to the rest of the world? This is the spiritual challenge of peak oil.

Man does not possess wealth, it possesses him. - Benjamin Franklin

Speaking of consumption, I think this chart speaks volumes:

what does it speak to you? To me it almost seems that in real terms, oil consumption GOES UP with oil increases and DOWN with decreases?
Or... the oil goes UP with increase of consuption and DOWN with decrease of it :)
Interesting to note that when oil last shot up to $70 in real terms, it had a very marked affect on consumption, but this time there's not much change. Is this down to the amount of easy credit Americans have access to or are they just so much richer the price will have to rise further to reduce demand.

I would guess a mixture of the two, but once the credit card has maxed out we might see a change.

Yeah, there is definitely more of a buffer this time. Many people mistakenly believe Americans somehow got magically used to the higher prices overnight but in fact, people are still hoping for the spike to be temporary. If it turns out not to be there will be a deep and widespread impact - it will simply arrive later thanks to the advanced debt infrastructure.
The plastic funny money is acting like a timer or a long wick on a time bomb. While we all know better, people are swiping their credit cards at the pump like I do the debit card. The difference is it comes out of my account immediately, while the credit cards create a financial bomb. When they max it out, the pump will say "DISAPPROVED" and they get stuck with a still empty tank. Soon enough, things will get fun. In the mean time, they pay a "mortgage" on the gas they burn!
I think it's the difference between a relatively gradual rise vs. a sharp jump.  When the price rises gradually, people have time to get used to it.  Financially and psychologically.  They're more likely to cut back when the price jumps overnight.  
I suspect also that people have less discretion to decrease their consumption than in the 70s :
  • people now live further from their jobs, no alternative to car for getting there
  • job market tighter, can't flip jobs to lessen commute
  • housing market bad, can't flip houses to lessen commute

But living in delusion/debt is a major, modern component... which will, mechanically, lead to economic contraction when people reach the end of the borrow-and-hope phase.
I saw an article recently stating that Americans have not paid for the gas they bought last year yet, thanks to easy credit.
When the time comes to pay the piper, something will have to give.
Fortune has this article, about BP:

Beyond Prudhoe: Why BP should go back to being an oil company

It's about all the things that BP has done wrong, despite trying to pose as a "green" oil company.  But what struck me was this bit:

The Thunder Horse platform, damaged in last year's hurricanes, will not be reopened until 2007 at the earliest, much later than originally forecast.

I missed that news, which was apparently announced in late July.  Last I heard, they were predicting it would be producing in "the second half of 2006."  Which many analysts were assuming was July 2006.

This is why I think we're probably at peak about now.  There's lots of new production expected in the next few years, but whether it will come online according to schedule is a whole different story.

The problem is apparently leaky pipes:

Where Hurricane Katrina had blasted in late 2005, BP found two leaks this May in subsea equipment at Thunder Horse, an offshore drilling site southeast of New Orleans. The company expects to replace the damaged pipes and start production in 2007.

Business Week

News from the Orinoco oil belt. Looks like CERA is going to get that big jump in reserves I predicted.


Can someone confirm if this is the really heavy stuff?
Is there any way to determine what the net production and resultant net reserves are for all of this heavy stuff?  Just like Athabasca it shouldn't be assumed equivalent to WTI in terms of energy production or reserves.
I think you really have to specify which of the many oil products you're looking for the yield of - one heavy crude might make 50% asphalt, 20% diesel, 20% heating oil, 10% gasoline, a light crude might make 20% kerosene, 30% diesel, and 50% gasoline.  These numbers are made up (don't know much about actual yields), but the point is that potential products vary a lot with what type of oil you're getting.

"gasoline percentage yield" might be what you're asking for?

Solar has not really broken through from being "almost" ready for widescale use, but the promise is always there:

Silicon-based solar panels today cost close to $3 per watt to produce, SolFocus will manufacture solar systems at $2 per watt when it opens its first concentrator plant next year. Larger scale production (in the area of gigawatts) will cut the cost per watt to just 50 cents. The second generation should cut costs further, says Conley, to as low as 32 cents per watt.


32 cents per watt would really change things.

It could change things, but I am always leery of these types of weasel-word-preductions.  Once they get close to actually delivering these things it will be easier to get excited.
I was amusing myself as I posted that, with the many meanings and implications of the word "promise"
Like many, I go from doomer to optimistic to doomer, depending on the day and the stuff I read, but I do believe that we will soon be able to use A123 type Nanotech lithium ion batteries to run a car and that the decreasing cost of solar will allow at least a reasonable amount of the charging to be done at home off the grid.( spare battery pack.) Perhaps even grid coupled to produce more power for the grid and even out the load. I also think that if we only had the types of automobiles that are in use in Europe, specifically small diesels, there would be a few million barrels a day spare capacity. We tend to underestimate how much we will be able to conserve as the prices drive us to increased motivation. Today I am optimistic, but then it just may be that I noticed I am getting good germination on my 40,000 oil palm seeds.
Wow, 40,000 oil palm seeds.  Congratulations.
This makes nice contrast to the Nanosolar story posted earlier this week. The CPV vs. thinfilm race is fascinating and I can't wait to see how it pans out. SolFocus' Gen 2 cells are beautiful in their ingenuity and I really wish the company best. The Nanosolar technology is less sexy (what? no heliostat?) but if they can cover entire cities with the stuff, more power to them - quite literally :-)

And, of course, there are the Stirling guys and Evergreen Solar with their silicon-on-a-string... No matter how this Peak Oil thing turns out it is all darn interesting.

Thanks for this, Khebab.  Here's a quicky I did with your data, looking at the annual delta in production:

You're fast! what is the intersection with the x-axis if you use a straight line?
2006.  Maybe the day before yesterday?
Sorry, 2006 is the x-intercept using the poly.  A linear regression gives an x-intercept of about 2013.
Doesn't that mean that according to this graph, the 0% "growth", the peak is 2013?

If we assume a logistic model, we sould fit a hyperbolic tangent function on the P'/P vs time plot (can be localy approximate by a polynom). A striaght line will probably overestimate the peak date.
That's my thought as well, though I can't muster the mathematical justification for it.  I think this demonstrates (yet again) that the statistical peak is between now and 2012, with sane statisticians (are there any such?) betting on 2008-2010 as always.
I was planning a quick post on that approach (second order Hubbert Lineariation).
That's a really telling graph.
How does the picture change if you take out the known sketchy outliers (i.e. the oil shocks in the mid 70's and early 80's...I'm guess the Depression era had a few abnormal lows) ?

Might stretch things a few years, might not...but it'd be good to filter out some geopolitical strife and see a clearer picture of the underlying geologic constraints.

I tried setting the deltas in 1930, 1931, 1932, 1942, 1980, 1981 and 1982 to zero. That pushed the x-intercept for the linear regression out to 2015, and the intercept for the polynomial to 2007.  All in all, not much difference.
Thanks. Hmmm...interesting.  Not much difference to us, anyway.  But I'm with RR in believing there may be some new production highs in the next couple of years, and to call now "it" would be a bad idea due to the "one missed prediction = whole theory not true" phenomena.  So, one more year could make all the difference in that regard.  For all of the data that I've seen and everything I've read, my bet is on 2008 and downhill from there.  Doesn't mean it won't be a squeaker from now till then though.
Did anyone read that DailyTech article? Some really priceless stuff, but the best part was the incredibly delusional comments at the end.    I think we've reached a peak in silliness.
I think we've reached a peak in silliness.

Sorry, this begs the quote:

"Two things are infinite: the universe and human stupidity; and I'm not sure about the universe."
Albert Einstein

Don't underestimate human silliness, we may be well below it's peak.

If we could turn stupidity into motor fuel, we'd have 3 cents a gallon fuel - and we'd all fly Harriers to and from work. And we'd be complaining about 3 cents a gallon fuel!
I especially appreciated this:

"The Germans were making synthetic diesel for military use in WW2. With enough cheap energy, it can be done with no raw materials but water and carbon dioxide.  Best yet -- the process is carbon neutral... the CO2 generated when the oil is burned is equal to the CO2 used to produce it."

I don't see what is so funny in this quote. Such process can be easily implemented today and we may be using nuclear energy or even solar concentrators as a source of the heat needed.
I agree.  It isn't funny.  It's pathetic.

When you can take water, combine it with carbon dioxide, create oil and do so with a net energy gain, oh... and have it be carbon neutral, let me know.  I want to invest my entire, pathetic little retirement nest-egg with your company.

Do you mean to say that now we are pumping oil, shipping, refining and distributing it with a net energy gain? Does the gasoline have more energy content than the original oil in the ground?...

The process might be useful to convert one form of energy (nuclear, sunlight) to another (liquid) and as such is completely viable proposal. How good it is is arguable and it should be compared to the alternatives, but I don't see any reason for dismissing it altogether.

Do you mean to say that now we are pumping oil, shipping, refining and distributing it with a net energy gain?

Absolutely we are, LevinK. Otherwise, why would we do it?

Again - the oil in the ground has more energy content than the energy in the end product we are using minus the energy cost to produce it. It is the form of energy that matters in every case - obviously the oil in the ground has not much of a value for us.

The same with any industrial process actually - we are transforming one form of energy to another, but we never "create" energy - it is against the laws of thermodynamics. My only point is that the requirement for "net energy gain" is meaningless; what we need to talk about is efficiency of conversion.

Again - the oil in the ground has more energy content than the energy in the end product we are using minus the energy cost to produce it.

Nobody is going to argue over that.  But this loss of energy that you refer to, while not irrelevant, is not critical because Mother Nature bequeathed us the oil in the first place. It was a gift.  We didn't invest anything in its production.  Nothing.  Nada.  Rien de tout. Therefore, anything that we get out of burning it is pure gain.

Now; I want to hear more about this carbon-neutral process that you have for combining water and carbon dioxide into a petroleum-like product that I can burn in my Hummer.

Peak-Oil Tarzan  - I wouldn't laugh if I were you, there's probably a pretty penny to be made in the near future on perpetual-motion schemes like this.
The only carbon neutral thing that happened here was me lighting my own fart:)

Viva la zero point energy and alchemists.

Ummm...unless you created the spark by banging two rocks together, it wasn't likely carbon neutral.
There are so many things wrong with that comment....I don't know where to start!
Is there any recent data on bbl per foot drilled? The chart I saw was for the lower 48 and showed a drop from over 300 in the 1940s to only 7 in the mid 1980s.


I am flying out tomorrow to spend about two months helping my father and mother after my father's knee replacement surgery.  Limited internet access, hence reading & posting @ TOD.

Alan Drake

Well, it *is* an open thread. :-)

Take care Alan.  Come back safe, we need our transit experts!  I hope you're headed somewhere inland a bit...

God...hope you're not flying.  I just got back from Montreal on Sunday and it took 2 hours to get through the stinking mess of security.

I believe that will be my last airplane excursion in the near future and perhaps ever.

On the upside of my trip, Montreal was fantastic.  They have excellent mass transit, are close to fresh water, and love life in general.

Oh...you are flying...read your post again.  I hope things are better than they were last weekend and I'm sure they are.
dragonfly41 -

Good for you!  

I used to do a great deal of business travel, but fortunately haven't set foot on a plane since before 9/11. And I plan to keep it that way.

Airline security is a Kafkaesque farce. Yet most people have become very docile and will put up with all manner of pointless indignities.

What this country needs is a nationwide boycott of air travel.

"What this country needs is a nationwide boycott of air travel."

I think you will get that, not for the altuistic goal of saving fuel, but because "flying" in general is losing the convenience it once provided.

Here's what we have lost in the last 5 years:

  • More hassle boarding a plane (takes longer than the flight itself).
  • Less leg room.
  • No free food (or very little).
  • No pillows.
  • Less bathrooms (economy class can now only use the rear one).
  • Less friendly service-providers (you should have seen the overworked counter/custom agents in Montreal on Sunday morning).
  • Longer inflight delays.
  • More lost luggage.
  • More people bumped from flights due to overbooking (make sure and get an assigned seat when booking a flight).
  • More irritated flyers (customers).

Now, I don't need to be coddled when I travel, but I will seriously look at alternative travel possiblities next time I make a trip.  I hope one day, the US brings back domestic train travel in a large way.
Well said...I loathe flying these days, just gets more expensive, inconvenient, time-consuming, and humiliating every time I try it.
Dragonfly41 -

Travel was bad enough when I did most of mine (1970s through 1990s), but it is obvious that is has gotten several levels worse.

In my opinion, to be a good airline traveler, one must have:

  1. A very high aggrevation threshold.

  2. An ability to sleep at will under  bad circumstances.

  3.  An iron stomach to cope with all the bad airline and airport food.

  4.  An ability to cross many time zones without major ill effect.

  5.  A reslient personality that doesn't take indignities personnally.

  6. A total lack of imagination, that is helpful in tuning out your immediate horrible surroundings.

Unfortunately, I fail at all six criteria. That's why I've always hated travel and just don't do it anymore.

If people did indeed boycott US air travel, I think the flight mix would be reduced mostly to essential coast-to-coast and long-distance north-to-south travel, as commuter travel will have largely dried up.

I say, let's do it! And isn't this a perfect example of 'letting the market decide'?  

I for one, am no longer in the market for air travel. So, I have indeed voted with my feet.

Here, here...I'm all for the "Anti-Air Travel" movement.  We do, however, need a better title.

Any suggestions....?

2 weeks ago I had the "opportunity" to go through the airline travel experience for the first time since before 9/11.

I would add
- A good sense of humor -
to your list.  
It was the funniest gawdamned spectacle I've seen in many years.
Though I suppose if I had succumbed to the desire to bust out laughing at the absurdity of it all some officious bastard woulda popped outta nowhere and made sure it was no longer so funny to me.

They probably have a sign for that next to the other thing not allowed: Absolutely no joking!
Absolutely no joking!

Then get some help from the brits.
I would REALLY like to see how such prank would come out in the US.
Red alert may be?

My recent air travel experiences (before this latest debacle) convince me that I will never voluntarily fly anywhere ever again. No way, no how, fuggedaboutit.  I can only imagine how truly Kafkaesque it has become now, the "new normal".
I'll have to keep your list at hand in order to use it as excuses. I've just been going with "I'm to old to go bouncing around in the sky in an aluminum tube"...
Take good care Alan!

I'm convincing a lot of people to implement a light rail passenger train around here in Roberval.

It might be used for tourism at first but ultimately it will be used for ordinary travel.  Many mayors are with me on this.

I will let you know in two month.

I hope your father will do good with this surgery.


Have a safe trip, Alan, and post when you are able. God speed and may your father recover quickly.
How do you figure production on Canada's oil sands?
Gaslady, meaning potential or current production?
Potential, I know it is complicated for oil fields but I am sure it is even more complicated for the oil sands.  I just do not see how they could ever know how much is in the sand.
Venezuela Declining Oil Production

Venezuela, who's oil production has held pretty well steady since the strike about three and one half years ago, now sees oil production starting to decline.

IEA, an organization of oil consuming countries, said in its monthly report that Venezuelan output in May was 2.6 million bpd. In June, it averaged 2.59 million bpd and in July it was 2.47 million bpd.


Based on the 2004 list of top net oil exporters, eight out of the top ten are now showing declines since December.   The other two are flat.
They're still up in 20 states though!

(I had to put the same spin I heard on the radio this afternoon on your post... sorry)

Any well read people care to recommend a good overview of peak oil for a friend of mine. I was thinking of recommending The Party's Over and one other. Thanks
I'd recommend "Beyond Oil" by Ken Deffeyes.
Deffeyes' second book, "Beyond Oil."
great, you will be getting a book club thinking about this

"Plan B 2.0" by Lester Brown.  It isn't limited to peak oil, but discusses all kinds of the ways we are up against the limits that this planet has placed upon us.
The ideal book is one that has not yet been compiled: About sixty thousand words from the best posts on TOD during 2006.

Come ON, somebody, step up to the plate: Here we would have a likely best-seller that would help to educate a wide public of what some bright and knowledgeable people think about peak oil.

The logical person to do this is Leanan, because she is, after all, the editor of TOD. I hereby nominate her. (This is not, IMO, a project to be done by a committee.)

In terms of getting copy rights to what we have posted, we have gone there before, though I do not recall any lawyers offering any definitive opinions.

This could very well be an "annual editions" type of anthology.

Most folks will probably say, "oh it's no big deal to me. I do it for the community." Or at least that's what they say until it starts to sell or somebody starts making some real money. Then people all of a sudden start to care. Weird how that works. ;)

And I shan't be offering any opinions because then somebody will rely on them and then we have the potential start of problem should anything eventually sell enough that people start to care.

What I would say is Nolo Press has some very good intros written in plain English: "Getting Permission" and whatever they call their "Introduction to Copyright Law."

Currently working on setting up a wiki for the community to track the whole area - the crisis of peak oil, the alternative energy sources and what's standing in the way of adopting them, conservation.

We have some amazing posters, some great articles, but the fact that they disappear after a week of new ones, instead of being a constant reference, is disappointing.  I'm finding great stuff in searches of old TOD posts.

Copyright isn't difficult to solve in the longterm - put an "all contributions are public domain" under the post button.

Copyright isn't difficult to solve in the longterm - put an "all contributions are public domain" under the post button.

I think that's a terrible idea.

Don't get me wrong.  I'm pretty much in the "information wants to be free" camp, and I think intellectual property law will probably be one of the casualties of peak oil.

But in the here and now, it's still a pretty contentious area.  Until the Internet, nobody much cared.  It was a backwater in the field of law.  Not a specialty that attracted the best and the brightest.  That is changing, but it's still an area with a lot of shades of gray.

I am not certain that the disclaimer you describe would hold up in a court of law...and it may be expensive to find out.  Morever, we have no way of knowing that the people who post here own the copyright to what they are posting.  Some people post entire articles copied and pasted from news sources or other blogs or mailing lists.  Do they become "public domain"?  Not likely.  

I like the idea of a wiki much better.  Not least because there's no profit involved.  Not making money does not protect you from being sued for copyright infringement, but it does make it a lot less likely.  

In either case, the right thing to do is the polite thing to do: get permission.  If you can't get permission, don't use it.

Hi all:  I loaned "The End of Suburbia" to our (small) city manager earlier in the summer, then approached him with the idea of holding a town forum on the matter.  He agreed, and tonight's the night.  I've prepared a handout with a wide-ranging list of internet resources, and plan to pretty much jump right in with showing the DVD, then open up for discussion.

I was going to open up by asking people to fill out a short survey, obviously to get a snapshot of PO awareness prior to seeing the DVD.  Of a million questions I'd want to ask (e.g., how much people use mass transit), here's what I've come up with.  I'd really appreciate feedback from TODers (the formatting may be screwed up but not to worry).  (I'm uneasy abt. #10, seems too confusing.)  I've got about 4 hrs. before the meeting.

Please assist me in getting a better handle on public opinion and perception of oil depletion by taking a moment now to respond to the following questions.  Your participation is of course not only voluntary but also entirely confidential.  Thanks in advance!

Age _       
Gender _
Race/Ethnicity _
I live in: [local cities mentioned]
Occupation ________
Estimated total miles you drive per week _
Estimated average miles per gallon of these vehicle(s) _
Current price of a barrel of crude oil. _

Percentage of oil the US now imports from other countries _
Percentage of US oil consumption devoted to commercial and personal transportation _

Please respond to the following questions using the following scale:  
1 Strongly Agree       2 Mildly Agree      3 Neutral    4 Mildly Disagree   5 Strongly Disagree

  1.  I am well informed about peak oil issues.  _
  2.  Most people with whom I interact are well informed about peak oil issues. _
  3.  We can solve economic, social and other problems resulting from oil depletion and roughly maintain our
    current standard of living. _
  1.  The price of a barrel of crude oil will pass $100 by this time next year (August 2007). _
  2.  Recent higher gasoline prices have caused me to change my driving habits. _
  3.  The prospect of higher fossil fuel prices has caused me to rethink my spending on:
    housing/home improvements _
    medical/hospital expenses _

    work-related expenses (e.g., commuting) _

    vacation/recreation _

    other _
7.  I have installed energy efficiency items in my house. _
    Describe these ______________________
  1.  Federal government leaders are working hard on how to transition to alternative energy sources. _
  2.  The Federal government should impose higher vehicle fuel efficiency (CAFÉ) standards. _
  3.  The Federal government should gradually impose a market-related carbon tax so that gasoline prices
    stay at $5/gallon and devote funds generated to alternative fuel development. _
  1.  Local government leaders are working hard on how to transition to alternative energy sources. _
  2.  We must increase domestic production of oil, even if it means opening up the Arctic NWR and/or
    the continental shelf off the west coast. __  
Ask them to estimate the number of gallons (not barrels) of oil the world uses per day. That always shocks people when they find out.

85 mbd x 42 gallon/barrel = almost 3.5 billion gallons per day

Then ask how  much the world consumed in the mid 1950s as a point of reference. 15 mbd approximately, don't know the exact number.

Gallons is something people are familar with. a "barrel" means little to nothing to the average person.

Other questions to get them thinking:

How many pounds of fossil fuels does it take to construct a microchip?
Answer: 3.5 pounds
Source: http://www.enviroliteracy.org/article.php/1275.html

How many pounds of fossil fules does it take to construct a desktop computer?
Answer: 350 pounds on average. 10 times the computer weight and the average desktop computer weighs 35 pounds. (Somebody correct me on the weight, I might be wrong)

On average, how far is food transported from where it is produced to where it is consumed?
For the U.S., 1,500 miles.

Other good stats to work in:

1. During all of World War II, the allies used 7 billion barrels of oil to defeat Germany and Japan. 6 billion were pumped from U.S. soil. Today, of course, the world uses 30 billion barrels per year.

your article is a tad bit missleading. the 3.5 pounds of fossil fuels per chip is for the memory/ram chips.
ram chips don't have as high of a tollerence as cpu/gpu/northbridge/southbridge chips.
opps should of used preview :P
should be intolerance, as in they can take more defects and still run fine which is why you have different grades of ram.

you see all ram is made the same but before they package the ram they test it. depending on how many non-critical tests they fail they get thrown into different bins

One time I saw a site called "the megapenny project" showing the volumes of carefully stacked pennies in various huge amounts. I always preferred to think in terms of pennies in gallons ($60/gal) and barrels once I came across PO. (pennies are $2,500/bbl) That shack above costs 300bbl of pennies!
Some more info:  

From fossil fuel + nuclear sources, worldwide we use the energy equivalent of a billion barrels of oil every five days.  This is equivalent to using all of ExxonMobil's proven oil and gas reserves in less than four months.  If we found an entire new Saudi Arabia, it would only increase the fossil fuel + nuclear energy production rate by less than 5%.

The key point, IMO, is to push Alan Drake's Electrification of Transportation proposals.    FYI--a trolley on rails is five to eight times more efficient that a bus on tires, even comparing diesel to diesel.  If we use an electric trolley, there is another efficiency factor (numbers from Alan).  IMO, the only real growth is going to be along mass transit lines.  

In regard to the survey, you might consider doing a multiple choice for some of the questions.

I'm fascinated by the calculations in the article about people shortening their commute.  They assume $3 gas, 26MPG, and $.50/mile in maintenance, for a total cost of about $.62/mile.

According to these costs, when gas went from $1.50 to $3.00, the total cost per mile only went from $.56 to $.62.  That wouldn't be much of a change.

In fact, maintenance cost per mile is in the rough range of $.10-.15.  Very sloppy article.

Quick question on ethanol and EROEI - if the ethanol EROEI is indeed right around or less than one...does that mean that there is no economic gain to be made?
More specifically - from what I gather there is some type of subsidy that makes ethanol refining (and/or corn growing) much more lucrative than petroleum refining - without this subsidy would it even be economically viable to run an ethanol operation?
Unless ethanol is inherently a more valuable fuel than its inputs - wouldn't the negligible EROEI of ethanol production signify a poor economic choice as well?


It may be profitable without the subsidy because liquid fuels sell at a higher price than non-liquid fuels.  For example in South Africa there are plants that convert coal into liquids (F-T diesel). The liquids have less energy than the the coal did. It is still profitable because the diesel is higher in value than coal because it can be used as a substitute for fuel refined from oil which is more expensive for South Africa to purchase to produce than it is for them to produce coal. Also the liquid fuel produced can be used to power automobiles while coal can't at least not until there are a significant number of electric cars on the road.
I have been reading the Drumbeat for a couple of months and have been dealing with the full realization of the potentially bad events to happen in our near future due to several declining or near declining resources.  So, please forgive my lack of technical knowledge, this is an intense time for me.

Given all of the objective information out there from many respected sources regarding peak production light crude oil, it still astounds me that some of the supposedly highly educated individuals or entities still refute the situation.  Until now, I have been sufficed to read the news items and posts, but after having read an article that appears in the most recent issue of "The Economist" I am frankly angry.  I will post the link here:


The author essentially gives the impression that Saudi Arabia alone could supply the world for "several decades".  If we agree that the world is now consuming approximately 31 billion barrels per year and that Saudi Arabia has an optimistic CIA fact book figure of 261.7 billion, the Saudis can give the world ~8.5 years of oil.  And this is only one oversight or is it?  Granted, this appears in a magazine that is unlikely to attract the interest of the vast majority of people, including me, but my local paper, THE STAR TRIBUNE, ran this nonsense in the business section!  Now greater than several handfulls of people probably believe that the evil empires in Saudi Arabia, and the other Nationalized Oil Companies are just being lazy.  If I didn't know any better, they are still trying to prove their original prognostication from the late ninties correct and they could then take their foots out of their mouths.  At worst, this gives people yet another "reason" to dislike people of the middle east for being the greedy people they are even though they are already giving us all their infrastructure will allow.

If anyone else with a greater level of knowledge has read this piece, please let me know if I am off base on this.

You are not off base. The article is a typical ECONOMIST piece of crap. The several decades line is pretty funny. If you start reading MSM articles about oil reserves you will often see a figure of 7 trillion barrels of "estimated" undiscovered oil. Never any breakdown as to where this could be hiding.
Very well written though. I would believe all the writers have PhD's in English Lit. (Stopped subscribing when oil was $10 and they were warning it could go to $5)
If we know where it is it wouldn't be undiscovered. It's like saying the way to use grass clippings for cold fusion is undiscovered.
Is your local paper the Minneapolis Star Tribune (a.k.a. The Strib)? If so, I have some good news: While the rest of the U.S. may indeed go down the tubes, Minnesota will do just fine. Why? We have timber, diverse crops, much livestock, iron ore and a relatively well-educated and nonviolent population (except for some neighborhoods of Minneapolis).

Now, about the article from "The Economist":
First thing I noticed is that it is unsigned. Second thing is that there will be irate letters to the editor pointing out the error--the egregious error--that you indicated. Finally, "The Economist" is a fine newspaper, within its limits, but its limits do not extend to good reporting on oil, as I mentioned in another comment a few days ago.

I think it is understandable but a huge mistake to waste emotional energy worrying about an uncertain future. Example: As a young person I spent many sleepless nights worrying about a seemingly inevitable war between the U.S.S.R. and the U.S. The smart money was on World War Three, and the consensus was Doom.

Will there be future tribulations?

You bet.

Where will they be? Mostly, where they are already, among the poorest peoples of the world in Africa, Asia, and Latin America. Some wonderful countries, such as Jamaica, are already being hit hard by recent increases in the price of oil.

Lots of rich and well-to-do folk in the U.S. will become poor. This has happened before, within the lifetime of some now living, during the Great Depression. For what it is worth, my guess is that the human suffering from Peak Oil in the U.S. will be (on a per capita basis) somewhat less than that of the Great Depression.

As I've stated a couple of times before, in terms of preparation for the future, I think it works well (at least for me) to pretend that there is a fifty percent chance that the next fifty years will be pretty much business as usual (in the U.S.) and a fifty percent chance of The End Of The World As We Know It.

BTW, the world of 1956 As We Knew It has Ended--and a good thing, too. Except for increased population, the world today is generally a better place than it was in 1956.

Last thought for now: IMO the "St. Paul Pioneer Press" is now a better newspaper than is the Strib.  

Saudi Aramco's proved reserves alone could keep the world supplied for several decades.

It is written and it is true.
Your biggest problem is that you think you understand what words mean. Do you?

I can buy a quart of motor oil at my local gas station and also keep the world "supplied" for the next couple of decades.  

Mind you I never said anything about meeting "demand". All I need is a tiny liquid dropper and to dole out a small amount each year. I'm "supplying", ain't I? Not my fault you misoverestimated the meanings of my words.

You are definintely correct about the
ability of SA to supply the world for
decades if demand were at a certain
level.  I fully admit my own mistake.
However, could we not agree that the words
are EXTREMELY misleading to the average
person.  Yeah, the world could be supplied
with a quart of motor oil, but what would
such a world look like?  Are we saying that
there exists some advance knowledge about
a dramtic event that will take demand to
some tragic low?  If not, the insinuation
that the wording was justified is flat
wrong in my opinion.

Thank you for pointing out my mistake.

However, could we not agree that the words
are EXTREMELY misleading to the average

Absolutely. Who's an average person? Clearly you weren't mislead. We're all propagandists here.

By the way, Step Back, have you finished SciAm yet? How about those articles on Transportation and Coal? Not bad, I thought. Very well written, concise, covered all major points, without even a whiff of peak-oil.

sorry, not posting much lately. family member in hospital. On page 47 (IIRC) they poo poo peak oil. But no matter. As Alan-Big-O-Easy says, its getting the solutions in place that matters, no matter what the justification.
yup. went back & checked. Scientific American, Sept. 2006, pg 47, middle column: "Even if oil production peaks soon --a debatable contention given Canada's oil sands , ... --coal & its derivatives could tide the earth over for more than a century"
Re: If we agree that the world is now consuming approximately 31 billion barrels per year and that Saudi Arabia has an optimistic CIA fact book figure of 261.7 billion, the Saudis can give the world ~8.5 years of oil. And this is only one oversight or is it?

It most emphatically is an oversight. Several decades?

Saudi Aramco's proved reserves alone could keep the world supplied for several decades. But it is only exploiting ten of its 80 or so fields, so will be able to pump at the present rate for about 70 years even if it never discovers another drop of oil. In fact, Aramco and other NOCs are likely to find plenty more if they look, since their territory has not been very thoroughly explored. Only 2,000 wildcat wells have ever been dug in the countries around the Gulf, according to Leonardo Maugeri, an Italian oilman, compared with more than 1m wells in the United States.
The bolded text is false. The world is well-explored as far as looking for oil plays is concerned. There is such a thing as 2-D and 3-D seismic imaging and every other trick of the trade that petroleum geologists have ever used. Read this nonsense with a grain of salt. The discoveries curve tells you all you want to know.

By the way, Leonardo Maugeri is an interesting choice. He's with ENI (Italy). Look at Oil, Oil Everywhere from Forbes Magazine -- where dreams come true. Maugeri is one of Europe's leading Cornucopians.

By the way, Stepback (below) is correct regarding demand. If supply & demand were balanced at 200/mbd, we world would consume 71 Gb of oil each year. That would quite a dent in the world R/P ratio. How long could Saudi Arabia supply the world at that level of consumption? Or if demand is 1 barrel a day, then Saudi Arabia could supply us for N days, where N is a really big number. You get the idea.

Just came accross this weblink:


CERA's capacity report based on february 2005 figures, for free instead of 2500-3500 dollars.



Very interesting reading.  Looks like they're only counting on SA to maintain production levels.  Predictions for Iraq, Iran, and Kuwait were funny.  A lot has gone wrong since that report was written.  

Look like the North East passage is now open in the Artic
North West next year maybe ?


I wonder what the particulate carbon from burning bunker fuel will do to the remaining ice once ship travel starts through the artic in earnest not to mention the other effects of pollution small spills etc.

Wow, last year it didn't open until September.
Speaking of September,

Just got my Sci American in the mail

Page 102: Plan B for Energy by W. Gibbs
Table of Contents: Sci Am Sept. 2006

Yeah, I just got mine on Monday. In September 1970, the theme was "The Energy Crisis". That was where I first heard of M. King Hubbert. It had articles on a hydrogen economy and lots of the speculative stuff we've discussed on TOD. In the decades between then and now, I've lived a life and the problems discussed in that issue were largely ignored. Yeah, I knew what a jerk Reagan was, canceling the conservation initiatives of Carter. But I had a life to live.

Then as the hurricanes of last fall were bearing down on the Gulf Coast, I went a-googling for a site which would track them and stumbled on TOD. Which reminded me of Hubbert and got me to wondering, "What ever happened to that bell curve? Wasn't it supposed to peak about 2000?". So I kept reading. And exclaiming, "Holy s**t!". I'd say I'm at about a Defcon 3, and trying to decide where to go from here. ... Anybody got a nice country retreat and want to adopt an old nerd? I'll help ya wire it for WiFi or something ...