DrumBeat: August 20, 2006

ANALYSIS - Costs surge threatens Big Oil's output plans

The world's top oil firms are struggling to expand oil and gas output, hit by a tight market for drilling rigs and rising costs, hampering development of new supply at a time of record prices.

Production is falling at many companies even as capital spending rises. Crude oil has more than tripled since early 2002 to $70 a barrel, driven by worries about supplies and growing world demand.

Violent protest in Nepal over hike in fuel prices

KATHMANDU: Violent protests erupted in the capital city Kathmandu and other prominent cities in Nepal on Saturday as the government hiked fuel prices, triggering a warning by the Maoist guerrillas that they would begin another revolt if prices were not rolled back.

ANAVATAN finds solution to exorbitant fuel prices

TURKEY - Motherland Party's (ANAVATAN) Konak branch leader Hikmet Tekcan recently appeared in a horse-drawn carriage to protest against high fuel prices, arguing that this was the best mode of transport after recent fuel-price hikes.

... Turks are used to paying for the most expensive gasoline in the world, but with the recent oil price rises gasoline has become a luxury a select few can enjoy.

Gas pipeline explodes in Turkish rebel region. The pipeline carries gas from Iran to Turkey. Kurdish separatists are suspected.

Scotland: Keep the flame alive, for peat's sake. Despite high energy prices, people aren't going out on the moors to gather free energy any more. It's more convenient to buy it. But some blame climate change, saying the moorlands are too wet now for the peat to dry properly.

Chavez seeks Chinese support, Beijing wants oil

Venezuelan President Hugo Chavez will be seeking political support as well as energy deals when he visits China from Tuesday, but Beijing is keen to stick to business and avoid antagonizing Washington, analysts say.

...Their courtship has raised hackles in U.S. corridors of power, where some officials fear the emerging Asian heavyweight is trying to edge its way into Washington's sphere of influence in South America.

A Chinese link to Middle East conflict

There is no doubt that Iran is the source of Hezbollah's arsenal of missiles, which have recently been used against Israel. But the controversial issue is whether these missiles are genuine Iranian products. Military and intelligence reports have long confirmed that they are one of the fruits of the strategic alliance between Tehran and Beijing.

Nigeria arrests over 2,000 suspected militants after kidnapping wave

Fledgling Shanghai oil exchange reports robust trade

Silicon hike hits solar energy. Solar panels now consume half the world's silicon production (up from one-fifth in 2000). The price of silicon has soared over 50% in the last year. Chinese solar cell producers are blamed for bidding up the price.

New technique promises to make oilsands extraction much greener

Brazil's Road to Energy Independence

In Brazil, the transition to the new fleet has changed the habits of many drivers and, in many cases, sharpened their math skills. Many drivers are keenly aware that ethanol has about 70 percent of the fuel efficiency of gasoline, which means they perform quick, pump-side calculations to determine whether the price of ethanol is at least 30 percent less than the price of gas. Some plot the distance of their trips and choose gasoline if it means the difference between filling up once or twice.
Saudi  5 - 12% decline rates?

I was doing a search for Saudi oil exports and ran across this on an EIA site.

This is from Aug.05. What I find interesting is that there is no mention of the 8% decline reduced to 2% by infill drilling that Saudi now quotes (seems to me a decline rate is a decline rate. Is it 8% or 2%?) The EIA last year used the full amounts quoted 5-12% to figure lost production not 2%. This may have been discussed before but I don't remember seeing it in the all  the time I have been just lurking.

"One challenge for the Saudis in achieving this objective is that their existing fields sustain 5 percent-12 percent annual "decline rates," (according to Aramco Senior Vice President Abdullah Saif, as reported in Petroleum Intelligence Weekly and the International Oil Daily) meaning that the country needs around 500,000-1 million bbl/d in new capacity each year just to compensate."


Saudi Aramco's mature crude oil fields are expected to decline at a gross average rate of 8%/year without additional maintenance and drilling, a Saudi Aramco spokesman said Tuesday.

And later in the same article:

"This maintain potential drilling in mature fields combined with a multitude of remedial actions and the development of new fields, with long plateau lives, lowers the composite decline rate of producing fields to around 2%," the spokesman said.


But to point out again, most of this new oil comes from mature fields. That is, these fields are declining, according to Aramco officials, at 8% per year. But they hope to lower that decline rate to 2% by pumping the oil out faster from these mature fields.

You are right, there is no mass of new discoveries in KSA.  So we will see a Yibal scenario for the whole of their production.  All the promises of production output increasing to 15 million barrels per day by 2020 are a sick joke.  By 2020 they will be lucky to have 5 million barrels of daily production and it will be mostly heavy sour.

Barron's take on  peak oil:

Editorial Commentary
No Peaks Without Valleys --- The price of oil follows a well-trod path
By Thomas G. Donlan
500 words
21 August 2006
(c) 2006 Dow Jones & Company, Inc.

In 1956, geologist M. King Hubbert predicted that the U.S. would hit peak oil production in 1970. He was right. No matter how fast wildcatters have found new reserves or producers have drilled wells, new supplies have not offset declining production from older wells.

Hubbert died in 1989, but his followers now make the same prediction about world oil production: Between 2004 and 2030, the world has reached, or will reach, the peak, and no amount of furious searching will ever replace all the wells that are running dry.

There's a lesson here, but not the one that oil prognosticators offer. The lesson is not to ask geologists about economics. Hubbert's prophecy holds only as long as the price of oil defines the supply.

We have no idea how much oil there is still to be found. What we do know is that the more that oil prices rise, the more oil will be produced. Furthermore, the more oil that is produced, the more likely it is that prices will fall.

A quick look around the world finds undefined oil in many places. Venezuela has more oil than Saudi Arabia, if you count its ultra-heavy crude and tar sands. Canada has more than Saudi Arabia, if you count its tar sands. The U.S. has more than Saudi Arabia twice over, if you count its oil shale and coal, which could be converted to gasoline and diesel fuel.

Price is the problem, not geology. At the $20 per barrel average market price (adjusted for inflation) that has prevailed for decades and determined what oil can be produced at a long-term profit, tar sands, oil shale and coal conversion have not looked like good investments. It costs too much to build the extraction industry and rebuild the refining industry, so these resources aren't counted as reserves.

Once upon a time, however, it cost too much to drill in a far-off desert and build a fleet of supertankers to carry the oil to customers. Once upon a time, it cost too much to drill offshore and build underwater pipelines to carry the oil to customers. Then, when some critical oil field in Pennsylvania or Texas reached peak production and market prices rose, the required investments suddenly made sense. Once the industry adapted to the new definition of producible oil, the new supplies supported by new infrastructure overwhelmed the market and the price fell back to that inflation-adjusted average of about $20.

We can't tell how high the price of oil has to go this time, but we should be nearly certain that the process of boom and bust will prevail at least once more.

Oil at $70 means oil at $20 eventually.


I may submit a guest opinion piece in rebuttal to this. The irony of course is his certainty that oil won't peak, even as the latest data show declining production.  

Donlan is a serious right winger -- of the WSJ editorial page ilk. He's kind of the editorial voice for Barron's -- a fundamentalist on a number of fronts including that "markets solve all problems". At very least you should write a good rebuttal letter. They have a good and vigorous letters section.
There is something to be said for this arguement. It would have once seemed almost impossible to pump 80 mbpd of conventional oil (I mean just try to imagine how much oil we are shifting daily - it's a massive operation). I am sure that all this unconventional oil will become viable on a larger scale eventually (it too will be a massive operation). The market does work the way this article suggests. Of course we all know that other energy sources will have to be part of the solution too.

However I think he is glossing over the fact that it takes time for this market force to play out and while we are waiting for the market to work it is likely to be painful from an economic point of view.

If climate change were not (to my mind) an even more dire threat than production declines in petroleum, I'd be enthusiastic about the possibility that perhaps he's right. But $20 CTL would be a catastrophe beyond words. Our army of cars still running yet producing several-fold more CO2?

I mean, even entertaining the notion is bat sh*t crazy. Completely detached from reality. Unless... maybe the market will solve climate change too!! (yes, that's a joke. Though I'm sure there are plenty of people who would accept it on its face.)

I agree. I don't like CTL on enviro grounds. Would rather go straight to renewables. But a fact is a fact, on economic grounds alone CTL is cheaper. Personally I'd rather pay more and have a clean enviro. I just don't think the average man in the street feels like that and I am convinced most Asians dont think like that.
"The market does work the way this article suggests."

No, it doesn't.  The discovery of oil is  historically inversely related to price for one thing, in complete contradiction to current economic dogma.  And you should take a close look at developments in the tar pits of Alberta, where the ramping up of production is small, slow and increasingly expensive.  Tar sand development, just like wind, solar and the rest, is built on a conventional oil and natural gas platform, and that platform is sinking, despite increasing prices.  And then of course there is the stress, or should I say kick to the head, that is coming from the accelerated destruction of infrastructure as the production of green house gases by the oil industry increases, due to the shift to the production of oil from degraded hydrocarbons (tar sands) and other energy intensive extraction and production efforts.  This destruction is no more than the consumption of embedded energy...gone gone gone.

What you are about to learn is that the 'free market' system is also built on a transitory platform: the increasing availability of higher and higher quality energy, a phenomenon that has marked the era from Adam Smith to about yesterday. The faster we increase the proportion of tar pit oil and coal, in particular, in our energy mix, the faster this platform will degrade and the faster the 'free market' system will erode.

The dogmatic fundamentalist writing for Barron's might have made an argument for the prolongation of the 'free market' system (do you think there is anything about our system that Adam Smith would recognize?)had he focused on the ability of creative people to leverage more goods and services from a given unit of energy.  But then, since creativity is so obviously dependent on socially provided goods such as education, I can see why he stuck with the core of his (and perhaps your) dogma.  


You know, sudden insight here, the whole Adam Smith thing is like.... growing up. You see, there's a portion of one's childhood that is a process of greater and greater resources. You get over the whole learning how to walk thing, your legs get longer and you're done losing teeth and getting your grown-up ones, and it seems like every day you can run a bit faster or climb that tree one branch higher. This is accompanied by more food, if for no other reason than you are now tall enough to see what's on the kitchen counter to snitch some, and you're enlarging your circle of friends and that means more moms to cadge from. You're learning new berries and stuff too. This is often what's considered the "formative" years, from about 8-12 years old, where much of your world-view is formed. From 13 to 19 or so, sex is a distraction but you're still getting physically bigger, stronger, and learning more. So, it's easy to see how the Adam Smith view of the world would appeal to a new American invader culture where one was an adult with adult responsibilities by age 17 or so.

Adam Smith and Ayn Rand and so on do not hold much comfort for the sick, the hungry, the old, the frail, etc. Like the modern high-tech culture, you're a superman or you're a "luser".

Rampant fundamentalism (without of course any idea of the fundamentals)!!
Mindbending economics.  The time I spent reading this would have been more productive if I had used it walking to the fridge for a chilly beverage.

There are better ways to bend the mind.

Yep. It is comforting to know that CTL fuel will be available at $20. The invisible hand is magical, usually when it is picking your pocket.
Is that $20/gal or $20/liter? :)
A news article says Oklahoma's tax revenues are booming due to a "natural gas boom".  The article does not clarify whether the revenue is coming from:
  • more gas (and oil?) extracted (more barrels), or
  • more tax dollars per barrel (e.g., if the tax is a percentage of the selling price), or
  • leases for drilling on public lands, before, and independent of, any actual production from the new wells.
So which is it?
The Louisiana state budget is not in crisis only because of much higher severance taxes (and royalities from state owned land), caused by higher oil & gas prices NOT higher volumes.
Alan, I think you guys down south in the Oil Landz should begin Succession Proceedings at once to guard your remaining precious oil resources from the lunatics in the Federal Gubermint... and from the rest of the ignorant parasites who call themselves AmeriKanz.
Texas is not self-sufficent in Oil or Natrual Gas any more.  Oklahoma is marginally so (AFAIK).  Only Alaska and Louisiana are still net exporters. (Unsure about Wyoming, Cheney's home state).
No wonder Texas wants to become the wind capital of the country/world or whatever.  I just wonder sometimes at what point our own little Super Power might dissociate and whether it will be a repeat of the last time or if we will follow the example set by the Former Soviet Union... (the "Nation of Louisiana" has a nice ring to it ;).
Wow, Texas no longer oil-self-sufficient.

Says something about how much of the extractable oil has been taken out, and how much Real Amurrikans use...... wow.

We do, IIRC, lead the nation in CO2 emisiions. Those coal-fired electric plant, you know.
Small scale public transport:

In rural and low-density suburban areas that cannot support traditional bus service, can small van-based service be viable?  Are there regulatory hurdles in the way, that could be relaxed by policy?  E.g., a need for a commercial drivers license, or onerous insurance or maintenance requirements, or anti-competitive taxi turf rules.  Here in Vermont there are "van pools", but they're not quite "public", the van belongs to the group.  There are informal car-pooling arrangements where one person drives and the other(s) pay, but that's under the radar.  Does anybody know of workable legal arrangements?

I think of them as jitneys, though there may be other or more accurate terms you would want to search under. Ideas anyone?

Here is a basic description and links to info on jitney rules past and present...

 "A share taxi is a mode of transport that falls between private transport and conventional bus transport, with a fixed route, but the convenience of stopping anywhere to pick or drop passengers, etc. Share taxis often have unfixed time schedules. Another type of share taxi has no fixed route. The difference with a regular taxicab is the fact that the taxi is shared.
 Share taxis are the main system of public transport in many countries (especially developing countries). They are known by different names in different countries (see table).....Over the last few years the attitudes of planners and policy makers is beginning to look on them as solutions as well as sources of problems. This interest is also starting to take shape in the more advanced economies which are looking more closely at movement solutions which are better than an average of 1.2 people per vehicles as is the case with the private car."
<Table has many names with Jitney used in english speaking ones>

Legal requirements and definitions from US city

IGT taxibus (system from England)

US anti-jitney laws from history

Interesting, I've never heard of a 'jitney'. There was a grocery store where I grew up in Mississippi called Jitney Jungle. It's since been bought out.
I lived for a couple of years in the Philippines.  "Jeepneys" are a Philippine signature:

Called "jeepneys" because they were originally modified Jeeps.  And yes, they are all colorfully decorated like that.  Elaborately painted, with fancy horns, flags, streamers, etc.  It's a Filipino art form.

There are two benches running along either side, but it's not unusual to see people packed in like sardines, hanging out windows and out the back, etc.

"Tricyles" (motorcycles with sidecars) are also used.  Taxis are common as well, though they were considered expensive compared to tricyles and jeepneys.

Jitney's the term all right, there was a bus strike in Hawaii and TPTB there was kinda encouraging the public to, if they liked, operate their own cars as "jitneys" and saying not to charge more than the customary bus fare. This to help out those without cars who need to get to work etc. I'm not sure how many "jitneys" actually ended up in service, and the strike was eventually resolved.
Found a couple other good bits on jitneys and shared-taxis (a Canadian term)....

  "In chapter 14, Daniel Klein, Adrian Moore, and Binyam Reja (KMR) explain how urban transit can be improved by making scheduled fixed-route transport economically compatible with jitney transport (essentially shared-ride cabs traveling along quasi-fixed routes). Ideally, jitneys and scheduled fixed-route transit are complementary. In practice, however, jitneys can impede fixed-route transport by swooping in just before scheduled service to grab up waiting customers. Such "claim-jumping" has driven some scheduled transportation out of the market, prompting some cities to ban jitneys. Other cities, often in developing countries with overburdened police and courts, have let jitneys run free at the expense of scheduled, fixed-route transport. Neither response is optimal.
  KMR would resolve this dilemma by creating a new property right, "curb rights." A curb right would give the owner the right to use a certain section of the curb to pick up and drop off transit passengers at a certain time. Curb rights would give owners of scheduled services the incentive to invest in getting customers while also avoid monopoly and would allow jitneys to retain their place in the transit system. Despite billions spent on public transit, city transportation remains a vexing problem in most American cities. Curb rights are a promising innovation that transcends the usual debate."


  "Taxicab regulation too often works at cross-purposes from the environmental and conservation interests that various governments claim to support and promote. While governments encourage the use of car pools to reduce vehicle emissions and relieve pressure on crowded roads and highways, they refuse to re-introduce the car pool concept to taxicabs by allowing for shared-ride services. A shared ride allows a driver to realize greater efficiencies in his vehicle by picking up and dropping off passengers along a loosely defined route. Passengers willing to share a taxicab and accommodate a slight deviation from their route to drop off customers would benefit from a lower fare than if they used a taxicab exclusively. During the Second World War, drivers in Washington, D.C., created a hybrid between the exclusive cab and the jitney by displaying destination signs in their front window for passengers to hail a cab that was going in their direction.
   A shared-ride policy would also promote local transit and intercity commuter systems by feeding passengers into railway and subway stations and main bus lines -- ironic, given that in the 1930s, private streetcar operators and public transit commissions pressured city councils to ban jitneys and shared-ride services. The shared-ride service also relieves peak demand on local transit systems. Not surprisingly, neither the TTC nor GO Transit have conducted studies into how their monopoly approach to service cutbacks could be softened by encouraging a more efficient and competitive taxicab industry in the GTA."

Seems like there may be a lot of unwanted SUVs available in the US in the near future that would make serviceable jitneys...

I drove a 15-passenger van in a van pool for many years.  The van pool was sponsored by my employer, the University of Iowa.  The regular driver rode free and needed a class D commercial license. Substitute drivers didn't need one. The link to the program is  here.

The vans got about 10mpg and we probably had 10 riders on any particular day (out of 15 signed on). This would give an average of 100 passenger miles per gallon.  The current cost of my van is $50.00 per month for a 72 mile daily round trip. Riders pay by the month and there's no rebate for days not used. The payment is pre-tax.

The University pays all costs and the vans are retired after 60-70,00 miles. The van pool currently has 72 vans serving around 30 different communities. The 15 passenger vans use 10% ethanol and the mini-vans (7 passenger?)use E85.

The program has been running for at least 20 years.  The original motivation for setting up the vans was to relieve parking congestion.

I can't remember what they were called in the DR, perhaps "mobilos" - it was a long time ago - little ten passenger japanese minivans fitted for passengers, that would travel around and around fixed routes. They were not much regulated, but they worked just fine. The issues of regulation, certification, insurance and so forth - those are going to have to be much simplified. The regulatory system right now is more about market protection for existing businesses, so this might take a while. When fuel gets expensive enough, it will happen under the table. The whole regulatory system is going to collapse as prices rise and people can no longer afford to pay the Man.

cfm in Gray, ME

In Chile they are called "Collectivos".  They have set routes that take about 30 minutes for each cab (subcompact sedans) to complete, and there are several on each route, so a passenger never has to wait more than 5 minutes.  The driver can decide to wait for a few minutes at a given stop for additional passengers, so he is not obligated to leave immediately when you get in, if there is still room.  Collectivos and taxis and buses use the same stops, as part of different routes or less frequent schedules (the buses).  The taxis service the less busy areas.  Some collectivo drivers have day jobs, and just work rush hours.  Fare is about a quarter of that of regular taxis. I spent a few weeks at a processing plant with 500 employees, that had fewer than 20 cars in the parking lot. I suspect that large employers here (eg Boeing)could fund fleets of these cars for less money than they would make by developing their parking lots.

Also the the benifit of electric drive increases dramatically for taxi's even if you have to change out the batteries.

Additional cost to increase say battery capacity or use lighter materials such as carbon fiber for construction makes a lot more sense since the cost of transport is shared.

Even larger transport such as vans can really benifit from electric conversion.

Private rentals also are cost effective.

I recently used a shared taxi in downtown Tel Aviv. They are minivans with fixed routes along the main streets, you wave them and they stop, then you pay a fixed amount and tell them where you want to stop.
Several people have proposed, as well, two man self propelled rail cars (can be doubled up if demand requires) that shuttle between major regional cities with "whistle stops" at unmanned stations to pick up whoever is waiting.  Using existing railroad ROW & something like Colorado Railcars.


A step above jitneys, with higher capacity and longer range.

In Cambodia and the Phillipines, bamboo platforms (extra money for shade) on homemade trucks* travel over nearly abandoned rail lines.  When two meet, the lighter one is lifted off the tracks (both sets of pax help) and lets the other passs, and then lift the lighter one back back on.

I have joked that this is the desired future of Amtrak by the current Administration.

**trucks are the wheels and chassis below the railcar  

After the Soviet Union collapsed in 1991, regular bus service in many FSU cities had to be scaled down due to local government revenue shortfalls, and marshrutkas had become very popular. These are normally mini-buses carrying up to 10 people, sometimes more during the rush hour. In my home city of St. Petersburg, a lot of Ford Transit vans were converted into marshrutkas. It is a convenient way for getting around, although not as cheap as the metro, tramway and trolley buses. Still, eletrified mass transit remains more popular; St. Petersburg still has the largest light rail network in the world with over 1,000 kilometers of track.
Acquiring a CDL for a van based cost sharing operation is not that difficult or expensive. If you can see good enough and can keep your blood pressure under 140/90 you can pass the physical. The big obstacle would be liability insurance.
Explosion rocks pipeline in Turkey

 Rex Nutting, MarketWatch
Last Update: 4:32 PM ET Aug 19, 2006

WASHINGTON (MarketWatch) -- An explosion started a large fire in a pipeline that brings natural gas from Iran to Turkey, the Associated Press reported Saturday, quoting the Turkish Energy Ministry.
Sabotage is suspected, private NTV television reported, according the AP.
Earlier, the fire was reported to be on a separate pipeline that brings crude oil from the Caspian Sea to the Mediterranean Sea. That pipeline was newly inaugurated.
The explosion occurred in eastern Turkey near the town of Patnos in the province of Agri. Kurdish rebels are active in the area.
A paramilitary police official in Patnos said the fire was visible from miles away, AP reported.  
http://www.marketwatch.com/news/story/Story.aspx?guid=%7B30070BB2%2D59C7%2D43CE%2D917D%2D72D37048939 9%7D&siteid=

I believe Turkey is a US ally, right?
Gosh I sure enjoyed the Yergin thread. Lots of energy expended on that thread. As far as prognostications go it kind of reminds me of when I leave with fishing poles in hand, never know what I will have till I return. Some days all the signs are great and nothing, other days the signs are depressing and the old stringer is full. Ever see the look on a clients face when you show them the empty open hole logs on a wildcat. Kind of reminds me of a kids face when a dog eats his ice-cream cone. Never under-estimate the shallow mind of the American public, 4-cable news channels Jo-Benet Ramsey 24/7 for three days!   As far as when the peak occurs my odds on favorite Westexas  with 51%, because of the export thing. Yesterday read CFN thread, what a waste, it's amazing how much bad tech data is spread around on that blog. Then I went to Jeff Masters blog on weather underground, where all the hurricane hopers hang out, seems there are a lot of disappointed folks on that thread so far. Some day they may experience their wish and invert their hopes. As for shallow minds, they are few and far between here on TOD, that's why I comment only intermittently. If I wait, someone always expresses my opinion more eloquently. Cheers.
Agreed. I have little useful to say to this group, and much to learn.

Someone smart please address the miracle "surfactant" the Canadians have discovered that allows recovery of process water from oil sands production.  

True?  Effective?  Oil sands more useful than ever before --allows even more rapid accumulation of carbon dioxide in the atmosphere?

I just read the article in Science describing the work. The surfactant is a long-chain alkyl amidine compound which switches between emulsifier and a demulsifier functions. Amidines form soluble salts in water (and alcohol) when exposed to CO2.

Their compound, when reacted with CO2 at 1 atmosphere, forms a water soluble salt, and a mixture of oil, water, and the surfactant mixes readily. Bubbling air, nitrogen, or argon through the mix reverses the effect by removing the CO2, and the oil and water reseparate.

In fact, the separation between oil and water is improved in the presence of the switched-off surfactant vs. just oil and water alone--hence the term demulsifier. Water recovery is simplified, though they didn't provide any data on how clean it is, and I'm not sure how easy it is to remove the surfactant from the oil for reuse. But very cool chemistry.

Could this have potential for improving the yield of old wells  with a high water-cut too?
I'm working on a multifaceted update to my January, 2006 post on oil exports.  The proposed title is:  "Net Oil Exports Revisited; The No Down Payment Disaster and A Proposed Triage Plan"

The no down payment segment is based on a guest column by Lon Witter in the current issue of Barron's.  I highly recommend that everyone read Mr. Witter's column.

A compelling argument. This could trigger a world wide recession, lower the price off oil and give us more time not to prepare for peak oil.
You gotta be carefull what you wish for;   I kept wishing for some rain for the last 4 years, as the drought deepened.  Now after 8 1/2 inches in the past 5 weeks, I'm wondering when it's gonna stop.

I live in Southeastern Arizona.

Hope you had your cistern ready.
I hope you put in lots of dams in the washes and other things to hold that water long enough to soak in!
Concerning your lead story which also had this quote:

Oil and gas output at eight major European oil firms dropped a collective 530,000 barrels of oil equivalent a day in the second quarter, Deutsche estimates. That is equal to half of daily oil demand in The Netherlands.

Well hell, why are we surprised? We keep hearing about a "field by field analysis" which shows production growing by leaps and bounds. However even CERA admits that existing fields are declining by 5%. Now some question that 5% figure, saying it is probably more like 8%.

But accepting the 5% figure, with deep reservations, let's look at the situation a little closer. We have heard that for several years now, we have been finding new reserves at a rate of 1 barrel for every 4 barrels consumed. That is one out of every four barrels consumed comes from new production. Yet a "field by field" analysis shows that in the future, new oil production, not just keeps up with demand but actually grows by about 3 million barrels per day per year. How is this possible?

Well, it is technically possible. It just means that three fourths of this new production must come from fields already in production. That is, three fourths of all new production must come from fields already declining by about 5% per year. If we are pulling much more oil from fields already declining by at least 5% per year, then in each proceeding year, the decline rate must be much higher.

Perhaps this is why Saudi Arabia is reporting existing fields are declining by 8% or more. They have been keeping production at above 9 million bp/d by putting more wells in existing fields. The decline rate from these fields increases a little each year.

If total reserves are "large" compared to production and discovery (as is the case), then I don't think 1/4 of current production is from "new" discoveries.  In other words I think much less the 25% of our current reserves were found "recently" (say less than 10 years ago.)
Amusing picture at the head of this story:

REC Silicon breaks ground on $600 million expansion

There is a silicon shortage, but it seems like the price rises quoted in the Independant story above are leading to some action.


Japanese Silicon Manufacturer Increases Production

Secretive Solar Start-up Aims for Silicon Production

Apropos the Chinese link to Iran above. Iran has been working on and making changes/improvements on weapon systems that it has obtained from China. And they have done some of their own work.

I see today on the TV they launched a missile (Tactical surface-to-surface Iranian-made Saeqa (Thunderbolt)) we have not seen much of in the West during their wargames noted below.

As to some of the hype on the news about the signifigance of August 22 and Mohammad's night flight, I do not think we should consider this too significant.

It is interesting to note that if Iran manages to shut down oil from the Gulf in some sort of stand-off with the UN that it will impact the economies of Asia MORE 60% of the oil coming out of the Straits is going EAST.:


Iran will launch a new round of war-games later this week, putting on display new Iranian-make armaments, a top military commander announced on Wednesday.

The military exercises involving land and air combat forces will begin Saturday in several border provinces where anti-government protests have been most rampant.

"We must show the enemies the Islamic Republic's military capability", the deputy commander of the regular armed forces, Brigadier General Mohammad-Reza Ashtiani, told reporters.

P.S. The wargame is called "The Blow of Zolfaghar," in reference to a sword that belonged to Imam Ali, one of the most revered figures of Islam for Shi'ite Muslims

"It is interesting to note that if Iran manages to shut down oil from the Gulf in some sort of stand-off with the UN that it will impact the economies of Asia MORE 60% of the oil coming out of the Straits is going EAST"

Should the flow of oil to Asia be interrupted it will also be interesting to see at what point the Asians cut off the welfare cheques they send to the USA each day.

toilforoil -

Since the destination of super tankers is generally not all that difficult to determine, might not Iran attempt a selective cutoff of tanker traffic through the Strait of Hormuz?  In other words, only attack those super tankers known to be bound for the West rather than those going to Asia.  I don't think that would be too difficult to do.

Of course, there is nothing to stop the owners of the oil going to Asia from selling their oil to the West, but that is not too likely to happen, as they need if for their own use.

 I'm sure the DOD has war-gamed a shutdown of the Strait of Hormuz and has contingency plans for trying to keep it open.  But war games and real war don't always have the same outcome, so if it does happen, I think it could get real messy.

Furthermore, in this age of cruise missiles, homing torpedoes, etc, and given the size of a super tanker  (is there a larger moving target in all the world?), I think it would be very difficult to ensure complete protection for all the tanker traffic going through the Strait.  If just one tanker gets popped, the global oil markets would go absolutely nuts.

Our leaders no longer pay attention to our wargamers.
oldhippie -

Good point.

I understand that there were a number of war games conducted regarding a possible war with Iran, and that none had a final outcome that was very attractive for the US. Evidently, that has not hindered the Bush regime's steady drumbeat against Iran.

I personally feel that they might just roll the dice and do it. Iraq is a damnable mess and getting worse by the day; Afganistan appears to be badly slipping; the Israeli/Hezbollah conflict was indecisive and has all the signs of turning  into a permanently infected sore. The Bush regime will be out of power in a little over two years. So, what have they got to lose?


At least not ancient.

Supertankers can be redirected en route (and are).  If Iran decided to attack all tankers headed for the USA, it would be a simple matter for all loads to be auctioned off during the transit through the Persian Gulf and only committed once the ship was clear.

The Iranians and the Chinese have thought this out much further than has our Dear Leader. They are acting in concert.

Dude, what are you talking about? Welfare from asia to the US? I think you mean it's going the other way. Welfare from walmart to China perhaps. It seems to me that we pay them good money for cheap crap, we're the ones getting shafted here, not them.
What good money?

We're giving them IOUs.  Paper, that's all.

OK it's been half an hour and I can't believe no one else has applauded the genius of Leanan's comeback here. Bravo!
Yeah, we send them paper. They are our bankers.
When you're overdrawn it's not so smart to tick off your banker.
Oh yeah, someone told me yesterday that what the Chinese and other foreigners are doing is taking their American dollars and spending them on American land. Yeah, that's allowed.
You are selling the family silver to the Chinese for cash. You then give half of that cash to the Arabs to fill up your SUV and go to Walmart. When you are there you give the other half of the cash back to the Chinese to buy some goods. Then you go home to see if you can find some more family silver that you can sell to the Japanese. Your forefathers worked hard for that silver.
Not quite exactly. While all the above is happening you are concurrently giving your banker (China) the ability to crash your currency, crash your economy, twist and lever your affairs to their advantage.
How exactly would China crash the U.S. dollar and what good would it do them?


Economically it does them little good. But as the city fathers of Carthage discovered, not everyone has an economic viewpoint as their primary perspective. Destroying Carthage probably did Rome more immediate economic harm than good but it accomplished political and military goals, which for the Romans were of higher priority than the economic goals.
You are right!
The Chinese have been good at strategic thinking for at least 3 millenias.
No one should be complacent and fooled by their apparent failure in the last 150 years or so.
They missed out on technology, now they are up to that, and do you think that they would mind about a few hundred millions of them starving?
Soccer moms don't drive the politics over there!

What is your point, please? This site is about oil. If you wish to post something completely unrelated, please do us the favor of making your points rather then making us spend so much as half a second trying to figure them out. We would rather be told what to believe than have to guess which drugs you're on. This way we can choose to not believe you rather than being wrong. Catch my drift? Stupid question.

Any real keeper would have crippled that forward by this stage. Any real forward could have put a dozen balls by that keeper, half his size, and the obviously non-existent defense. Clearly an advertising firm's photography. So I'll lead out the same way. Your point?

What is your point, please?

As per Jack statement:

How exactly would China crash the U.S. dollar
and what good would it do them?

My point is that in the competition for ressources ("This site is about oil.") China is much more strategically clever that the US and all Westernites.
China will not hesitate to "crash the U.S. dollar" in spite of severely adverse SHORT TERM effects on their own population if this is is an adequate way to weaken the US and ensure a LONG TERM advantage in securing ressources.

Given that it is obvious that a direct military confrontation is at their disadvantage this is a very plausible option for China.

guess which drugs you're on.

My guess is that you should have another shot of your own drug today, not warm enough, or are you already in overdose?

You let yourself be defined by this statement. So I will kill you with it. Hoisted on your on petard. Try again. Uggh.

"China is much more strategically clever that the US and all Westernites."

Booooooring. Nobody gives a shit. Don't you realize how many asymetrical(sp?) assymetrical wars the US has fought and "lost." How many more do we have to "lose" before you get the point?

How many more times does Israel have to "lose" to Hezbollah before Hezbollah ceases to exist? Ehh?

But this will take the cake. And I'll warn you before I tell this joke two things. First, It's not a joke. And second it's real. How many more Iraqis do Iraqis have to slaughter to get the Americans to leave? Answer: As many as they want. And three...It's not a joke...do you fucking get it? Here's an alternate answer:none - we're gonna leave anyway.

A huge amount of time is spent talking about how much we understand Arab/Muslim culture. How much do they try to understand ours?

Hoisted on your on petard.

No, I gave up 30 years ago when I left working in Holland.
But you still appear to be on meth or is it crack?
Not good for you, switching to marijuana will be much better for your health and, incidentally, your TOD readers.
Alas you will still be supporting terrorism or the CIA or both...

Not if you grow home-grown.  

In fact, that way there is no waste in transport and you can make your Green friends happy because you are being very "organic" about it - composting whatever waste there is after making rope and such - you know, the more "traditional uses" of hemp.  

Of course, you should only do this if it is perfectly legal in your state, or country or whatever jurisdiction you currently still respect or fear.  

Here's the kicker.

I've done crystal-meth several times. I think of all the drugs I have done, crystal is my favorite. If somebody were to offer it to me right now, I would accept it, without any questions...whatsover. I would take it and do it. It is a helluva lot better than wine.

However, I haven't. I haven't either sought it out, or been offered it, or felt the desire, or, to tell you the truth, thought about it at all for between, I dunno, I would have to think about this as well, but for now, I'd say it was about 12-15 years ago when I last experienced that pleasure.

As far as a high goes, meth is way better than weed. Otherwise it is useless. On overall "balance" - heroin has a much better EROEI - and we can try to quantify these things - but I doubt it will work. Especially since this is a site about oil, and you clearly don't even have the ability to discuss even that. Now you want to get into what are called illicit drugs. You clearly have no experience, so why would anybody want to accept your opinion on this topic, never mind listen to it. You are clearly uninformed. I'll be waiting for the informed to respond.

As for you, try to keep your response as diplomatic as possible. I have a limited amount of patience.

If the Chinese dumped their US$ dollar reserves and sold our bonds en masse as they threatened to do last fall/winter, the dollar would tank.  

Their economy would take a huge hit in the decline of exports to the US that would result.

War is normal.  War is Hell. This TRANSITION will be hell.

Peak Oil is complicated by poliTICs.  Homo Sap the Barbarian in a suit does the poliTICs.

Bet AGAINST the dannyboy yerginz of the world and bet ON History and Nature.

Screw all this sh*t.  I'm moving to Tasmania.
If you owe your banker $1000, and you can't pay, you're in trouble. If you owe your banker $1,000,000,000 and can't pay, your banker is in trouble.
Asia is of course more than China, but even China produces many high quality products in addition to the garbage available in Walmart. The welfare cheque comes in the form of cash spent on US treasury paper. There is a mutual dependency between between Japan, China, Taiwan, etc, and the USA (and countries like Canada dependent on trade with the USA): they have a production machine and we have a consumption machine; they send us goods and ensure that we have the purchasing power via the purchase of Treasury notes.  
All countries except the US that are net commodity importers must run a surplus in manufactures goods to pay for their commodities. Only the US is exempt because our role is to furnish the world with liquidity, which we do extremely well. So, Japan, Germany and China, for example, desperately export goods to us so they can obtain the $ to pay for their oil.
The way it works is that we import labor from China. If we import low paid labor, the low paid labor in America doesn't get as much work, lowers it's prices, and gets paid even less. Say, 1 billion dollars in low paid labor imports lowers wages for 10 billion dollars of low paid labor, so every 1 billion dollars of low paid labor we import saves middle and high paid labor people by 10 billion dollars.
That's why our balance of payment deficit is so important. It's not the amount of stuff we import and pay for with IOUs, it's the knockon effect of lowering wages for low paid labor in America.
Reminds me after 1914 when we stopped importing low paid labor in the form of immigrants and manufactured imports. It caused the roaring twenties and massive standard of living rises in America. Huge numbers of rural people moved to the cities and made more money. People talk about how they were forced off the farms, but really it was that the low paid farm help that left and forced the farmers to do all the work themselves that impacted them.
Well, there were other effects connected to automobiles and nitrogen fertilisers that piled on to the farmers around then, too.
"we pay them good money"

We haven't had good money since we went off the gold standard.  In 5 years, all those IOUs owned by foreign governments won't be worth enough to fill one walmart with stuff from China.

I don't really see how their bad investments are our problem.

Actually, I do, but on the very basic level, if they are making bad loans, its worse for them than it is for us. If they stopped doing it, then our trade balance would equalize and there would be jobs for americans again. Hardly the apocalypse that you seem to forsee.

Basically, the issue is that the stuff we import from China just isn't very important. We don't import food or fuel, or anything that we really can't do without from them. If our trade with China shuts down I dare say it would be good for us, not bad. It's partially Asia's enabling role (and the leadership of our oil-barron-in-chief, of course) that has caused our extreme trade imbalances.

That's all well and good, but if China, Japan, or anyone else that has large USD reserves decides to start unloading them, they could cause some significant damage in terms of it's (the currency's) absolute value.
The fact that 60% of oil through the Hormuz goes to Asia is not really a concern just for Asia. Cutting traffic through the Hormuz will have immediate, global repercussions.

Thinking that Asia would suffer and not the west is like thinking: 'ha! your end of the boat is sinking!'.

Found this on the Hugg feed:

Wind turbine ready for sea trip

The first of two of the world's biggest offshore wind turbines is expected to leave a former Highlands oil fabrication yard on Sunday.


It is hoped the site will be capable of generating one Gigawatt of electricity, enough renewable energy to power the city of Aberdeen.

The turbines will be tested in depths of about 45m, with the hubs rising to 88m above sea level. The blades will be 63m long.

The numerous giant offshore wind farms in the North Sea are all in delay on account of problems with anchoring turbines in the deep ground ground, like 45m. However, several news (like this one) show there is at least some progress going on.

Eventually these offshore wind farms will be a a new magnitude of wind energy and contribute to the base load.


My third attempt,
Guys, I am making a powerpoint presentation on peak oil. Anyone has a link to Yibal production profile/ figure?
Thanks in advance.

An example to explain the worry

The Shadow of Yibal

Jean Laherrère (pdf -- contains image above)

That should get you started. Horizontal drilling increased the recovery rate but led to steep declines later.

The Saudis objected to Simmons' use of Yibal as a model for Ghawar, but Simmons pointed out that the basic principle is the same in both cases--horizontal wells into rapidly thinning oil columns.  

If we measure from the EIA number of about 9.5 mbpd for Saudi Arabia (crude + condensate) in December, to the most recent Petrologistics actual estimate of less than 9 mbpd in July (assume 8.9), Saudi oil production is reportedly dropping at an annual rate of more than 10%.  Note that Petrologistics is forecasting higher production for the Saudis, but it is my understanding that this is not an actual estimate.  There is also the lingering question of what the Saudis are doing with their storage.  

Westexas, you write:

The Saudis objected to Simmons' use of Yibal as a model for Ghawar, but Simmons pointed out that the basic principle is the same in both cases--horizontal wells into rapidly thinning oil columns.  

The question is: how typical is this phenomenon (i.e. basically the claim that advanced technology merely means getting the stuff out faster and thus speeding up resource exhaustion)? Is Yibal a representative sample, so to speak? Or is it one that has been cherry-picked to substantiate at a foregone conclusion?

Simmons isn't exactly crystal-clear about all this. Here is what he writes about the topic of horizontal drilling and other advanced technologies in `Twilight':

"Repeatedly over the past decade, the best technical experts at the finest Western oil and gas companies assumed the new technical tools were facilitating production gains. Too often, however, the new tools merely acted as super-straws that quickly extracted the targeted oil and then led to decline rates steeper than the industry had ever seen. The gains were shortlived and in most cases probably reduced the amount of oil that would ultimately be recovered from a  field or reservoir." (P. 116 of TITD)

Later on he states:

"A new reality is now taking hold. The industry is beginning to appreciate that advanced technologies, particularly extended reach - multilateral horizontal wells and hydraulic fracturing, are essentially turbo-charged super-straws designed to suck out the recoverable oil faster -- not miracle drugs that prolong field life and recover far higher percentages of the original oil-in-place. The concept of reserves appreciation resulting from technological advances may not be a myth, but it would seem to have narrower application than the industry has assumed." (P. 279 of TITD)

Are we to believe that reserves appreciation is a myth, or isn't it?

Or is it just a myth for certain oilfields and a non-myth in others?

When you subtract the myths from the non-myths, is the result plus or minus?

Is Yibal merely anecdotal, or is truly exemplary?

Copelch, it is just plain common sense, if you pump the oil out faster, then the faster it will be depleated.

And yes reserves appreciation is a myth. Reserves do not grow. More plain common sense. Oilfields, in the past, were sometimes upgraded in UUR because of very conservative early estimates. That was basically a characteristic of publically traded oil companies. National oil companies however, have no need to do that. In fact, there is a far greater chance that their reserves will be overestimated. Witness the massive upgrades in the 80's by OPEC countries to increase their quota.

Mexico on the other hand, have in the past, downgraded their reserves as better data came in.

But reserves do not appreciate. Bad or intentionally conservative early estimates were sometimes revised upward. But today reserves have a far greater chance of being downgraded than upgraded.

Darwinian. I think the Copelch question has merit. Given the URR is a fraction of the Original oil in place, much oil is left behind. So the question is more broadly is there ANY EVIDENCE (over and above the one field, Yibal) as to whether more/less oil is extracted and/or depletion is ultimately accelerated using these techniques. Yibal by itself is not enough to convince an outsider. It is completely plausible that other factors are at play for this one field. I just think we need something a bit more substantive than just Yibal.

I have read Matt Simmons book from cover to cover and although I believe him that there are many reasons to be suspicious of the Saudi's and I am a "peak-oiler", I have to say I find his writing quite slippery. He never comes up with the killer blow that is absolutely definitive. It is very much based on conjecture.

HongKong, of course his question has merit, and I answered with the respect the question deserved.

But basically your question seems to be:

is there ANY EVIDENCE (over and above the one field, Yibal) as to whether more/less oil is extracted and/or depletion is ultimately accelerated using these techniques.

What techniques. Are you talking about water flooding, horizontal drilling, christmas tree wells? In Texas and California, as well as many other places, they simply drill wells every few yards or so. This puts as many points of extraction in the ground as does Saudi with their Christmas tree horizontal wells. Of course this gets a little more oil out of the ground by pulling from more points, just like they do in Texas with many more wells.

Basically there is nothing new here. Whether more wells or more points on the same well, all you are doing is pulling the oil out faster. Any additional oil one gets by pulling from more points at the same time will neglable.

The other question has to do with reserve growth. No, reserves do not grow. How difficult is that to understand? True, original estimates, by publically owned companies, have often been low-balled....deliberately. Later those estimates were upgraded and gave the impression that the reserves were growing. But even a child should be able to understand that there was no real growth here, only upgrading of the original low estimates.

Which brings up one very important point. Will the size of existing and currently producing fields grow. Well no, we know they will not grow, but will the estimate of their size be increased. The answer is a dramatic no, they will shrink. The reason is that two thirds of all estimated reserves are in the eleven OPEC countries. The estimated size of these reserves are from 40% to 50% too high. Kuwait is a perfect example, and may be the first to downgrade their reserves by 50%.

My point is, any so-called reserve growth in non-OPEC countries will more than offset by reserve shrinkage in OPEC countries. For those counting on reserve growth, you have backwards, we will have reserve shrinkage instead.

The point I think is this: taking out other factors like deliberate over and under reporting of reserves is there any scientific research or survey that gives an independent insight into whether any of these techniques (ie all those you mentioned which are designed to extract oil at a faster rate than would otherwise be achievable) have any effect, either positive or negative, on the Ultimately Recoverable reserves.

That is other than the possible example of Yibal or you telling me it is "common sense" are there any other reasons to believe the notion that these techniques (say horizontal drilling) impact the URR or rate of depletion.

I am on the same page as you here, I believe they probably do have a negative affect, but that is just instinct. Is there anything definitive that PROOVES this is the case?

"Is Yibal merely anecdotal, or is truly exemplary?"

There are several interesting aspects to the Yibal story.  One is that Shell was expanding their surface production facilities to handle an expected flood of new oil just as the production decline hit with full force.

The analogy I've used before is a (black) bottle, with some volume of a fluid in it.  You can pour the fluid out at anything from a tiny trickle to the maximum pour rate.  If you are pouring out the fluid at a maximum rate, it looks like the bottle has a lot of fluid in it.  But note that the pour rate does not affect the volume of fluid in the bottle.

If--and this is a big "If"--an operator does not produce a field at a high enough rate to damage the reservoir, the production rate tends not to have a major impact on the recovery rate.  IMO, horizontal drilling is just increasing the "pour rate" without increasing the volume of fluid in the bottle.

Westexas, Darwinian,

Thanks for your replies.

If you don't acknowledge the reality of reserves appreciation you risk being ridiculed as flat-earthers by the Huberians, Odellians, Lynchists, and Yerginians! There are enough good arguments for peak oil without having to resort to dubious ones. It's not just a matter of emptying black bottles faster but of determining (a) how much  of the sticky stuff you can get out of each bottle and (c) how big the bottles actually are (you're wearing a blindfold and groping as well!).

There's a fascinating PowerPoint slideshow on the topic by F. Harper ("Oil Reserves Growth Potential"), presented at the ASPO 2004 conference in Berlin (25 May 2004):


Chief conclusions:
*There is a general tendency for reserve estimates to grow; this is true both for 2P preserves where the primary driver may be technological development and increased spend and for proved reserves where an additional driver may be reporting conservatism.
*Growth occurs by a combination of adding new oil-in-place and increasing recovery factor (and by under-reporting/back-booking for groups of fields)
*Growth is measured by comparing forecast and actual or by tracking annual estimates of historical discoveries.
*Reserves growth is a potentially important component of the oil resource but its magnitude is poorly known.

If you have time for heavier stuff, you might enjoy David Morehouse's article entitled `The Intricate Puzzle of Oil and Gas `Reserve Growth'":



I am a little confused as to what point you are trying to make.  

If we integrate the area under a production versus time graph, you get URR, or what Deffeyes calls Qt.    The best method that I have seen for estimating Qt is the HL (Hubbert Linearization) method.  

Based on our historical analogues and based on the HL method, the world should be peaking, and the EIA data show declining world production.  

If your argument is that technology will increase recoverable reserves, this is true to some extent, but the effect has not really been measurable in the Lower 48.  The North Sea peaked, 29 years after the Lower 48, at about the same stage of depletion that the Lower 48 peaked, and the North Sea, as predicted by the HL method, is down about 25% since peaking.  So much for better technology.

In any case the question I was addressing was whether horizontal wells--in a high porosity and high permeability reservoir--will increase URR.  IMO, no.  Or not enough to make a real difference.  

Technology will help tremendously with unconventional reserves, but these are slow rate of production resources (Canada and Venezuela are showing declining production currently) and hugely expensive.  

Arguing about whether conventional reserves "grow" with time, at this point of depletion, is like arguing about the deck chairs on the Titanic after the ship and broken in two, as the stern is about to go under.

"Arguing about whether conventional reserves "grow" with time, at this point of depletion, is like arguing about the deck chairs on the Titanic after the ship and broken in two, as the stern is about to go under."

Now THAT's a real argument for peak oil. THAT'S THE CORE ISSUE and it can hardly be put better than that.

I disagree with some of the other points you made, but it's after 10.00 pm here in the heart of Europe so I'll leave it to another day.

Recommended reading:

Cleveland, Cutler J. and Robert Kaufmann. Forecasting Ultimate Oil Recovery and Its Rate of Production: Incorporating Economic Forces Into the Models of M. King Hubbert. The Energy Journal, 12: 17-46 (1991). (Winner of "Outstanding Paper for 1991" Award, International Association of Energy Economists)


Laherrere has a very good and detailed discussion of both reserves appreciation/depreciation and technology factors in the link, which is a large 70 page pdf. Especially see the pages 20 to 40 or so. His style is dense, with huge numbers of graphs and a choppy outline style, but it is extremely informative with very exact, specific information on many sites, and discussion of discrepancies in the literature.

He goes over exactly your questions, showing fields where tech helped and where it hurt. Overall he doesn't see reserve appreciation as a valid concept, nor does he think tech will save us. He also believes we will peak in the 2010's with an undulating plateau.

His Saudi creaming curve also show 80% of Saudi oil found with the first 20 wildcats, while the last 20 (with all the tech available) only found an additional 1%. Lots of gems in there.

Thank you so much. I am making a presentation on peak oil in a university. I thought Yibal is good crash example. I was aware of what happened there but did not have year by year figures.
One important piece of data that most discussions of peak oil neglect is the amount of "traded oil" or oil available on the world market.  Every oil producing country consumes some of its production for domestic use and for every producer this is a larger amount every year (possible exception is Norway).  
Many of these oil exporters are having economic growth that is creating larger wealth amoung the populations, which in turn spend it on buying automobiles.  Venezuela, Mexico, Iran and others have seen great increases in automobile ownership, often in the range of 15 to 30% per year, which thus increases domestic oil consumption.  Even Dubai of the UAE is increasing domestic oil consumption by growing its jumbo jet fleet to bring tourists to its newly built resort complexes.
At some point for these countries the growth of domestic consumption will equal domestic production especially when many are in declining oil production.  Indonesia has already made this transition and has been an oil importer for two or three years.  Mexico will likely join the club in less than ten years, perhaps six or eight.  The US was the leader in domestic oil cunsumption exceeding domestic supply back in 1956 or 1957 I believe.  This predated US peak oil by 13 years.  
So the real problem as I see it is the world's traded oil hitting a peak sooner than total world oil production hitting a peak in five or ten years.  Perhaps we have already seen the peak in traded oil.  If so its all downhill from here for the USA.

Mark in St Louis, MO USA

I do find it slightly odd how Dubai is racing to become a world city with an emphasis on resorts instead of an oil-funded economy, while approaching the day when the jet-setting culture dies.  The high tech portion could survive, but you can't get your beach condo fix through a wire.
1)They are living in the past, but do not yet realise they are living in the past.
  1. They are a commercial hub, effectively a 'city state' acting as a regional commercial hub, with relatively relaxed cultural constraints.
  2. As a commercial hub at the centre of the world's Oil and Gas Industry they do not see the problems that will hit in the next two decades.
  3. It is also a regional ''pleasure hub''. You can fly in, drink whiskey, get laid and be back in time for Friday prayers.
This info was in the form of a post that has been in the editing queue for a while, but it is relevant to the lead article in this post

 Project Economics for the IOCs - Or why increasing prices will ultimately have no (or limited) impact on global supplies

Classical economics tells us that these quarterly-reported record cash flows and profits that the oil industry is experiencing in connection with $70/bbl oil will cause a reaction on both the supply and demand side and ultimately dampen the long term price increases.  However, the price of oil has been increasing pretty steadily since the beginning of 2002, and if we look at the production response from the IOC's, we see no supply response.   Why is that?  

Ultimately, the answer to that question is relatively complicated, and depends to a large degree on the way oil companies run economics on future projects.  

The big international oil companies (IOCs - ExxonMobil, Shell, BP, ChevronTexaco, Total, etc) are only interested in mega-projects.Ultimately they have to invest their cash flow (or give it back to the shareholders), and they have to find projects that are material to the company.  They might be able to drill a couple oil wells onshore in Texas and make a quick 100% return on investment, but such an investment is like giving a single drop of water to a giant to slake his thirst.  Ultimately the giant needs to find a much larger source of water or it will die.

Much has been written recently about these mega-projects.  One thing is for sure - they take a long time from concept to payout, from discovery to production.  They require billions of dollars of capital (as much as $20 billion in the case of Sakhalin II).  They tend to be fraught with cost overruns.  

How do you plan for a project that has a 15 year lag from concept to payout where analogs have shown that the project will likely cost much more than my engineers are telling me today?  The answer is very conservatively.  You plan for the downside.  You don't plan with the thought - How much money will I make if the price of oil is $100/bbl?   Instead you plan, based upon your experience that oil might go back to $15/bbl, and test your project's economics on this downside scenario.  

In a world of stable prices this all works out OK.  But with oil prices going up an average of $10 to $15/bbl/year how does this all play out?

Well first of all, although individuals in the oil industry talk about Peak Oil (I even saw a Peak Oil poster on the wall in our office the other day!), and there is much private discussion about the likelihood of high prices continuing long into the future, official corporate policy is that "Everything is Fine" and oil prices will come back to earth in the near future (thank you very much Daniel Yergin!!!)

In my own company we have a large number of mega-projects in the planning stages.  Most of these projects would not have any production on stream before 2010.  The production lives of these projects would mostly be between 2010 and 2030.  When we forecast profitability for these projects they always look very marginal.  Why?

Well we use a conservative price premise (let's say something less than $45/bbl) for selling the oil during this 2010-2030 time period.   In the mean time, we are requesting cost estimates from vendors and contractors who deal on a much shorter time scale.  Their investment horizons are between now and 2010.  They are living in a $70/bbl world heading north.  Their services are in demand.  Their customers are flush with cash.  It has been more than 20 years since this situation has existed.  Consequently, they are going to charge a substantial premium for their products and services.

So what do we have - a supplier living in a $70/bbl world trying to get while the getting is good, and a buyer living in a $20 to $45/bbl world pretending that "Everything is Fine" and that life-as-we-know-it will go on forever.  So each year we re-look at these projects, re-run the economics, changing the product price from $18 to $25 to $35 etc. but also having gotten new cost estimates, and the profitability never looks any better.   Consequently, we sit on our hands and mope about not having any good-looking projects to move forward with.  

So despite all of the remonstrations by these companies that they are doing all they can to supply oil to the market, the reality is that, though they may be spending more money than they had forecast a couple years ago, they are not moving projects through the development and construction process any faster than they would be if oil was at $25/bbl.  

Note that total capital costs per bpd of production from tar sands are now, at least in some cases, in the vicinity of $100,000 per bpd, or a million bucks in capital costs--not counting operating costs--per 10 bpd of production.
A nice trajectory in oil sands capital costs can be seen with Shell. Their Athabasca project estimate to add 100,000 bpd has gone from $3.5 billion in 1999 to 6.5 billion 2005 and now $11.3 billion. (113,000 per bpd). Shortages of skilled labor and materials and soaring prices for materials like copper, nickel and iron  are all driving costs higher. I am guessing ctl will have a higher cost per barrel because it is chemically more removed from coal. At the same time a program to ramp up syntehtic oil projects like ctl is going to accelerate cost increases. We don't have the capacity to ramp up the supply chain for raw materials as fast as we will want to build these facilities. Nor skilled labor.  
Should read coal is more chemically removed from synthetic oil than oil sands are.
Nice explanation, Bubba.

I hope the irony is not lost on readers here. Low future price assumptions informing the estimated profitability of E&P megaprojects stymie development of those same projects. Thank you, indeed, Dr. Yergin!

On the other side of the equation, high short-term costs also discourage investment. Why not go for it? Get while the getting is good because those costs are skyrocketing compared with inflation. Those logistical & material costs will get only marginally better over time.

Another sign of the times.

I don't think TOD should be a censor or enforce a party line, but . . . you guys might want to think about whether you really want a blogroll link to Kunstler's site. Since the recent unpleasantness between Israel and Lebanon, his writings on US foreign policy have become -- well, demented is the word that springs to mind. It's sad.
I agree...it should be taken down.  He no longer talks about oil.

Rick D.

Why was this not a problem when he was talking about urban planning.
I think that you have to look at the totality of Jim's work.  "End of Suburbia" was basically built around an interview with Jim Kunstler.  I don't agree with all of Jim's writings on the Middle East, but your position is that because he has taken a strong pro-Israel stance, he should be banned from The Oil Drum?

Let's see what did someone once say "I disagree with what you say, but I shall defend to the death your right to say it."  

Let not someone's unrelated worldview detract from the interesting, and more importantly useful/influential, positions they have held.  A blogroll is not a political party, to be reined in when they say something crazy.

Your quote is from a journalist putting words into Voltaire's mouth, if you're curious.

Well, I sympathize with that, but being on a blogroll  is not exactly what I would call a "right." I agree that Kunstler's body of work earns him some respect. But his recent Clusterfuck Nation posts are truly ghastly.
Ghastly in your opinion. Fortunately I don't think Prof. G., or the rest of the editors here are likely to come to the same conclusion as you.
Let Kunstler keep ranting and they might.
They haven't stopped you yet.
Just read the last four or five JK posts--I couldn't find the objectionable parts.  He has a personal viewpoint when describing the radical islamic world, but it probably isn't very far from reality.  
Beyond his comments, it's hard to see how Israel's situation can possibly improve.  I am extremely pessimistic that any solution will more than temporarily halt the attacks on Israel, as most of their attackers are committed to seeing nothing less than Israel's total destruction.  Why would this change any time soon?   If anything, their enemies (esp. Iran) seem to be gaining power.
I don't think it'll be voted on, but if it is, I will vote to keep him right where he is on the sidebar.  He is listed as a DefCon 1, Which means he thinks things are in dire straights, so leave him he is a voice.  All of the posters on here have had simular odd things to say, read the records, I am almost sure I have read a few Pro-whites-are-the-best posts in months past.  This is a gathering of the minds, some sane and others not as sane.  Its a slice of the real world.  After All Freddy Hutter can post here and I am almost positive that Mr. Yergin reads here, or someone close to him does, and lets him know what we say about him.   Just let it be.  We are the voices we are and it all amounts to a good mix.  You might not like what someone has to say, so don't read them, its a free world, even if some of us might not live in free countries.

My 2.3575 cents worth, inflation adjusted and gas tax added.
Charles E. Owens Jr.  Author at large.

I think it's also wise to remember that people can change their mind or be convinced by solid arguments to change their mind.  

The world is full of "second" chances (even third and fourth chances) after having made a blunder.  I would not be around today if that weren't true.  

Jim's not perfect and I don't necessarily like his recent writings either, but he's had some good ideas in the past.  He's worth giving a chance.  I, for one, won't toss him aside just yet.  I'm going to wait and see where his future posts go.

I suggest in the same spirit, we have a link to www.nazi.org now before you all get your panties in a bundle go read the site! They're the fuzziest warmest greenest Nazis the world has ever known, they don't even appear to be white or "aryan" supremecist. They're publishing some good articles, and seem to have members and fans from all races. Weird stuff huh? More like a world-green-nazism instead of the German-centered one we fought against in WWII. They publish some very good stuff about the way our form of society is hurting the Earth and ourselves, and like Kunstler, have some very good points about the suburbs. So, in the spirit of fairness..........
Well...reading the FAQ section of this site I read a couple of knee-jerk things that said "Whoa, boy...stop now!!"

Just because they want to save Nature and think continued capital growth (especially globally) is bad doesn't mean I buy what they say hook, line and sinker.

And my point is, they have as much "right" to be linked here as Kunstler. I love much of Kunstler's writings, and agree with much of what he says, but disagree with a good part of it too. Nazi.org is actually writing more about trees and lawns and so on lately lol.
Oh my godz this is funny - "recent unpleasantness between Israel and lebenon" ...

Squeaky, apparently you and DannyBoy "Jerkin'" Yergin both come from the Planet Vacuum where nasty things like geopolitics do not directly affect you and your insulated little lives and quaint 'projections.'.

But guess what Squeaks, this planet Earth does NOT exist in a vacuum.  The "recent unpleasantness" in the middle east is Directly Related to Oil and the current Energy Crisis. Without oil revenues and the growing energy crisis the Witches of Persia and their "Demented" religion would be nothing but an embarrasment.  But Because of their oil revenues the Freaks and Shieks who worship the Allah-Horror ARE a danger to the rest of the world.  They are The Reason for the "unpleasantnesses" known as Hezbollah and other Iranian Minion Armies of Moronic Martyrs.

Kunstler sees the Big Picture and the many interconnections to politics.  Unlike some little data-lint-picking pseudoscientific types who apparently feel safe and Insulated from Reality.

Count your blessings little Squeak, apparently you have not YET Personally had any experience with the crazy Allah-ittes and their weapons bought with Persian Oil Revenues. I honestly hope you are never unlucky enough to wake one morning to find your Mr. Roger's neighborhood is being held hostage the oil-rich Demented Freaks.

Well, Sendoilplease, I guess I have to confess to not knowing just what it is you're talking about. My "recent unpleasantness" phrase was intended as a figure of speech known as "litotes," or, for those who need it explained to them, "rhetorical understatement." As for the "Freaks and Sheiks," the "Allah-Horror," and the "Iranian Minion Armies of Moronic Martyrs" mentioned in your comment, I leave the interpretation of your interest in them to those with stronger stomachs than mine.
Well since you confess to not knowing what I am talking about, I guess I will confess that most of the time I don't either ;0.  Fortunately in this case I do have a vague memory of my previous train of thought (it was an electric train of thought - "look ma- no CO2!"):

I'm glad you intended the "recent unpleasantness" as an understatement.  Sometimes intent is lost in the print medium - and unfortunately I know of quite a few people who lead such sheltered lives that they would use the same words but mean it literally.

I thought you suggested dropping Kunstler's link because he has been harping on the recent Israeli-Hezbo war and the geopolitics behind it, and you felt that strayed too far from the specifics of peak oil.  My point is that mess is a symptom of energy crisis and so Kunstler's take on the situation is appropriate for this forum.

"Freaks and sheiks" = the religious zealots who believe the murder of innocents is rightous and that using their wives and children as bombs is a good idea that is encouraged by their Allah-Horror.  And the oil-rich funders of the religious zealots.

"Allah-Horror" =  the bizarre mutant form of the Muslim Phantasm that the Freaks worship (as oppossed to the more aloof and cute godz like Jehovah, chubby smilin' asian guyz or even other, less  malignant brands of Allah).

"Iranian Minion Armies of Moronic Martyrs" = the various suicidal terrorist groups like the Hezbos in Lebanon that are made up mostly of Freaks (see above) who are trained, equiped, funded by, and act as an extension of Iran's military.  Sorta like the French Foreign Legion (that's the the only branch of the french military that actually has testicles) except they smell worse.

Again, I sincerely hope you never have to experience personally - and godz-forbid, directly - the "geopolitics" of the oil/energy crisis as practicec by the Freaks and Shieks.

I don't think TOD should be a censor or enforce a party line, but . . .

But !
But this is hypocrisy and censorship.

Is it? My question is: Why have a blogroll link to someone who seems to be descending into gross racist fantasy? I read The Long Emergency, The Geography of Nowhere, and lots of other stuff by Kunstler. I was impressed, I agreed, I sympathized; though I don't think it contains a lot of real argument, if you know what I mean. But now ? Go to his site, read the stuff, make up your own mind.
Does he really think Israel will be sustainable when TSHTF?

I mean, Kunstler's pretty much a doomer.  He doesn't think we'll have a long, slow, catabolic collapse.  He thinks it's going to be Mad Max in our lifetimes.

So what does he think is going to happen to Israel, when they can't get fuel or parts for their tanks and warplanes and helicopter gunships, and the U.S. is too busy to with its own problems to help out?

He doesn't seem to have thought this far out in front. Surprising, given what he does for a living. Or not.
IIRC, he's also said that when TSHTF that the guys with the guns are just going to take all the oil.  Israel only consumes around 300,000 bpd vs our 20mbpd, so he might think they have a longer lifetime than us.
Leanan again you're the clear bright light of truth. And whether or not Kunstler worries about it, Israel should - if the US has a major depression or crisis, we're not going to be able to FedEx 'em extra cluster bombs overnight. Israel does have an economy and exports, but much, perhaps most, if it is selling to the US, and much of it is subsidized. The storage racks I use here and love turn out to be made..... you-know-where. There's no way it's cheaper to make them There and ship 'em here rather than employ Americans in say Kentucky, to make the darned things. But add the right subsidies.....

If the US stops the gravy train stops.

well if you have bought a laptop with a Pentium-m then your buying a product made in Israel. fyi allot of amd's chips are made in Dresden Germany.
Hmm .... don't have one of those..... good to know though - although we should keep in mind, that it's illegal to advocate boycotting Israel yep it sounds loonier than hell but it's written into US trade law and punishable by hefty fines and imprisonment. There was a whole discussion of this on Peakoil.com, fascinating.
can you provide any sources on that?
i have been sujesting to people i know not to buy any pentium-m's because of them being made in israel.

Here's the link: There's a 6 to 1 chance I'll screw it up, but I'm only typing this monster once. I may get it right, but at least it will you an idea of where to look.


Yay I got it right! Go thou and read......
Hey fleam, just highlight the link in the address bar and copy and paste it into your text.
Censoring "gross racist fantasy" is STILL censorship.
And the "other side" is not bad either on the subject of racist propaganda.
We would anyone want to take side in this dog fight?

Um, this word "censorship"... if you're using it in this context -- removing a blog link to someone because they have begun to sound like a lunatic -- I'm not so sure you know what it means...
I agree. If he has gone off the deep end cut him loose.  That's not censorship, it's just distancing yourself from a lunatic.  On the other hand has he really gone off the deep end?  Lets face it, people think we are nuts when we talk about peak oil.

On yet another hand this quote from his latest post seem kind of silly:

"Ideologically, Jihad despises Israel because Hebrew culture represents the basis of notions central to western civilization -- that there should be rules regarding decent human conduct beyond whatever raw power itself may assert; that we are responsible for our conduct; and that someone above is watching our conduct and weighing our responsibility. "

The Arabs hate Israel because it they has a functional government and rule of law?????
That's like Bush saying they hate us for our freedom.

That's like Bush saying they hate us for our freedom.

It's worse.  I think an objective observer would agree that the average American does have more freedom than the average Saudi.  (Whether this causes hatred is a whole 'nother story, of course.)

But he's basically saying Arabs not only don't believe in the rule of law, they don't believe in god.  


And "Western" civilization actually owes the most to the pantheistic Greeks and in the US owes a surprising lot to the cultures of our own animistic aborigines. We owe the Hebrews something, but no more than we owe the Arabs, and possibly less, remember the Arabs have named the stars down to some dimness no one in a modern city can even see, and gave us algebra.
We owe the Hebrews something, but no more than we owe the Arabs, and possibly less,

We owe more, we owe less, blatant Western "competition mania".

We owe EVERY previous human SOMETHING, even from Gengis Khan and YOU (and ME, and THEM...) may unknowingly hold a few genes from the most disgusting characters in history, which means we would not even be there to bicker if these "horrible people" hadn't lived.

There is NO POINT trying to rank "cultural merits" nor even to try separating the grain from the chaff.

We owe the Hebrews something, but no more than we owe the Arabs, and possibly less ..

... yeah, think of all those great Arab scientists and philosophers -- Einstein, Feynman, Sagan, Teller, Prusiner, Boas, Samuelson, Spinoza, etc etc.

But all this is so off-topic and low level saloon bar stuff.

What about returning to the oil rigs?


But he's basically saying Arabs not only don't believe in the rule of law,

It is somehow WORSE than that but it applies to Muslims, not Arabs.
Did you look at what Taqiya entails for "the rule of law" or even plain honesty?

But it is extremely unfair to confuse ethnicity and religion even in cases where there is a strong correlation because correlation is not causation.
It is also unfair to ascribe to individuals or groups the flaws (or qualities, BTW) of the memes which are "possessing" them.

they don't believe in god.

Nothing wrong with that, it should be counted as positive (if it were true...)

Well, under present circumstances, there is an astounding irony in statements like:

"there should be rules regarding decent human conduct beyond whatever raw power itself may assert; that we are responsible for our conduct; and that someone above is watching our conduct and weighing our responsibility."

Please, please read the Human Rights Watch testimony about what Israel has been doing.


For Israel, innocent civilians are fair game
Peter Bouckaert International Herald Tribune
TYRE, Lebanon Mideast I


Israel's claims about pin-point strikes and proportionate responses are pure fantasy. As a researcher for Human Rights Watch, I've documented civilian deaths from bombing campaigns in Kosovo and Chechnya, Afghanistan and Iraq. But these usually occur when there is some indication of military targeting: high-ranking members of Saddam Hussein's regime present in a house just before it is hit, for example, or an attack against militants that causes the collateral deaths of many civilians.

In Lebanon, it's a different scene. Time after time, Israel has hit civilian homes and cars in the southern border zone, killing dozens of people with no evidence of any military objective.

My notebook overflows with reports of civilian deaths. On July 15, Israeli fire killed 21 people fleeing from Marhawin, including 13 children; no weapons, no Hezbollah nearby. On July 16, an Israeli bomb killed 11 civilians in Aitaroun, including seven members of a Canadian-Lebanese family on vacation; again, no Hezbollah, no weapons. On July 19, at least 26 civilians were killed in Srifa when Israeli bombs flattened an entire neighborhood; no evidence of military targets. On July 23, at least seven civilians were killed when Israeli warplanes bombed dozens of cars trying to flee the south after receiving Israeli instructions to evacuate immediately; no indication of weapons convoys in the vicinity. The list goes on, with about 500 civilians killed so far.

Israel says the fault for the massive civilian death toll lies with Hezbollah, claiming its fighters are hiding weapons inside civilian homes and firing them from civilian areas. But even if the Israeli forces could show evidence of Hezbollah activity in some civilian areas, it could not justify the extensive use of indiscriminate force that has cost so many lives.

I just reviewed his last several posts. Racist? In whose mind? Yours?

Your blatant refusal to take the fanatic Muslims at their word seems utterly incredible, given that these same sorts of Muslims did exactly what these ones say they want to do, oh... about 14 centuries ago. So don't say it can't happen because they did it once before. And yes these fanatics talk openly about "taking back" the entire Mediterranean and imposing fundamentalist Islam from Pakistan to Spain. Those people are at war and intend to stay at war til they get their way (or they are defeated).

Yes, isn't this strange. Kunstler, who has been the darling of the Peak-Oil community for as long as I can remember is suddenly being trashed because of his views on Israel. I'm just speaking generally, it's not in reference to anything anyone in particular said. I know where I stand. I like what you and Dan Ur had to say.

I've got an idea. Let's get rid of the link to Savinar's site and replace it with one to Sailorman's. :) Or, at least, let's try it out. Neither one is a racist, and I know Matt wouldn't mind. Freedom of speech.

Two dead prophets in one week: Kunstler and Hirsh. It is fatal straying from the party line.

Savinar is fairly clever in this regard. Pure party line. I'm not even sure he believes any of it, but it pays the bills and pleases the masses. He's the crowd's mirror messiah and they will always love him for it.

For the past 1400 years Muslims have been so caught up in fighting each other that any threat they make against  Europe and America can't be taken seriously.
OK, I'm sorry I brought it up. Really. Let's link to anyone who might have something interesting to say. That's probably the best principle. Kunstler is a fine writer, a genuine wit, and an ally in the long haul. I'm personally quite distressed that he turns out to be a Likudnik nutbag as well, but maybe that's just my problem.

The DoE expects Saudi Arabia to be producing 22.5 mb/d by 2025. I would expect the amount to be less than 5 mb/d by 2025.

To appreciate fully Saudi Arabia's pivotal role, it is useful to consult the projections of future supply and demand released each year by the DoE. In 2004 it predicted that world oil demand would rise by 57% between 2001 and 2025, from 77m to 121m barrels per day (mbd). In response to this, Saudi oil output was expected to rise by 120% during this period, from 10.2mbd to 22.5mbd, a net increase of 12.3mbd. No other country or group of countries came close in anticipated growth rates. Russia and the former Soviet republics of the Caspian Sea region have a combined anticipated increase of 8.5mbd; Iran, Iraq, and Kuwait were jointly projected to achieve an increase of 7.6mbd; and Nigeria, the leading producer in Africa, was expected to gain only 1.6mbd.


I finally decided to watch the DVD recording of the Peak Oil debate (yours truly versus ExxonMobil and Michal Lynch, et al), to be shown on PBS (I don't have the dates yet).  I actually think I did a pretty good job.  A totally unbiased observer, my wife, agrees.  

At the debate, I can't overemphasize enough how much the Houston consultant--recommended by Saudi Aramco--talked about Middle Eastern producers vountarily cutting back on production.  I think that we will soon see a new propganda line from the Saudis, that they are voluntarily cutting back on production to prolong the lfie of the fields.  In Kuwait, they are debating this very topic in the open.  

I estimate that net exports from the top ten oil exporters are currently dropping at double digit rates per year.

Would that be such a bad thing?

It would be rough now, but probably better than the alternative.  It would be, unintentionally, an act to smooth out the peakiness of Peak Oil and give civilization time to deploy capital to mitigate the effects.

If on the other hand it was taken by conservative investors as a sign that "In the future, the Saudis might decide to pump hard to crash the price, and make alternative energy unprofitable", then that would be bad.

To me, this is the essential reason why it is essential to convey scientifically accurate facts about peak oil so that long-term investors in alternative methods do not take that fear seriously.   The only ""upside"" is that you can convince such investors that it will be physically impossible for the Saudis to crash the oil price.

I see also perhaps a more mature political attitude by Saudis.   They are intensely focused on domestic politics as they know their position as monarchs is very precarious.
If they are preparing to limit production then I bet it is a consequence of their Kuwaiti neighbors' controversy.

I believe that current assumption is that if they admit that their oil production is going into irreversible decline that there would be a fundamentalist revolution and they'd have their heads chopped off. (literally!)  

Perhaps they feel a more realistic attitude developing among their people? In which case they can try to look like the good guy as in "we are managing this for the long term prosperity for all of you, we really do care about you and not just our luxury yachts, (so don't kill us)".

I think the Kuwaiti oppostion in parliament bringing up the oil depletion question may turn out to be a very major geopolitical shift as seen in 50 years.

Any other major OPEC states think the same way?

The question is not whether voluntary production cuts are good or bad.

Westexas implies that they are not voluntary. The cuts are caused by decline/depletion and presented by spin doctors as something else than what they really are..

And that in turn implies that all-out production goes on as before, just to keep production decline rates as low as possible, like out of double-digit rates.

Any other major OPEC states think the same way?

A month or so ago I read where one of the Iranian legislators who was involved with oil production said something to the affect " He didn't know why Iran was still a member of OPEC. All they do is push us to produce more oil when we should be saving it for our children". I don't know how long Iran has been in decline but it has been quite a while.

the article above that most interested me was the shanghai oil exchange story..i would assume oil contracts are being traded in yuan...is this not so?..this far overshadows any third world bourse like iran..dollars?...we don't want your stinkin' dollars!!

"According to a secret report to Kamenei, American and Israeli planes flew over Tehran in the past few nights including one at around 6 am Tuesday morning. To avoid the spread of this news and thereby causing chaos in Tehran and to prevent the publication of this news Khamenei has ordered that publishers of this news will be severely punished.

In the secret report, it is reported that similar flights over Damascus have also been made and on some occasions the planes broke the sound barrier."

see:  http://ardeshird.blogspot.com/2006/08/american-and-israeli-planes-fly-over.html#links

steverino, the last time I looked, the ability to destroy an asset carries a great deal of weight.

Hello TODers,

This will probably turn out to be a scam, but who knows? --they could be ranked with Newton and Einstein, and hire Bill Gates to be their gardener!  Some Irish guys claim to have invented a greater than unity gain device and are challenging the world's best scientists to prove them wrong.  If, in fact, this discovery is true, then crude oil will only be needed for lubrication and making plastics, etc.

Most likely a scam, but we will see:


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

My first question (as suggested by automotive journalist Ed Wallace) would be to ask if the inventors are still connected to the grid.  If they have a free, unlimimted source of energy, why are they still paying for electricity?
Hello Westexas,

Good point!  Maybe they haven't yet figured out the technical details to scale this up, but they have applied for patents.  I remain skeptical, but hopeful.  If it is a remarkable, astounding breakthrough--we still have to solve our overpopulation problem to prevent ecosystem collapse-- this will be the toughest nut to crack!

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

We'll have to rewrite every single physics book too. And figure out what to do with those flying pigs.
Roel, you are exactly correct. And we will have to serve notice to every academic institution in the world that the laws of thermodynamics have been repealed.
We'll have to tell our kids that Einstein was useless, and not very smart. He said that of all physical laws, Thermodynamics were the only ones he was sure would never be repealed.

My silly non-physicist self has wondered for years why people chase cold fusion (which they habitually describe as an "endless" form of free energy), for exactly the same reason(s).

"We'll have to tell our kids that Einstein was useless, and not very smart. He said that of all physical laws, Thermodynamics were the only ones he was sure would never be repealed."

I believe Einstein's reference was to the second law.

"Classical thermodynamics is the only physical theory of universal content concerning which I am convinced that, within the framework of its basic concepts, it will never be overthrown."
Albert Einstein
Thanks, I've been looking for this quotation.
You may want to google it. I got a whole bunch of different versions googling "quote, einstein, thermodynamics" quickly a few days ago, and picked the best one I saw.

There are more scientists who commented, and "left" quotes, on the fundamental importance of thermodynamics. That might be worth another rsearch.

I'm a big fan of:

If someone points out to you that your pet theory of the universe is in disagreement with Maxwell's equations -- then so much the worse for Maxwell's equations. If it is found to be contradicted by observation -- well, these experimentalists do bungle things sometimes. But if your theory is found to be against the second law of thermodynamics I can give you no hope; there is nothing for it but to collapse in deepest humiliation.
-- Sir Arthur Eddington
hmm i like that one too.
i think it should be put on the side bar with the rest that have been rotating.
You're right, they could do with more and/or refreshing views. Wasn't there a call recently from the editors for some?

Will try and collect a few. promise.

I find the Saudi "saying" the worst, the camels and airplanes one.

Once you realize how many Saudi's there are these days, and how many camels are left, that gets to sound real smart.

I love the Saudi one.  

I don't think it's meant to literally mean everyone's going to be riding camels.  Rather, it shows that the Saudis are painfully aware that the oil won't last forever.

I know, and you are right.

But it underestimates/misrepresents reality: they will all be walking and crawling. And I don't believe many people understand these things. The downward slope will not be paved with camels.

Population growth over there is between 6 and 7 percent (doubling appr. every decade). They have been running deficits for a long time, despite oil revenues. There are no economic sources except for oil, no industries, nada.

A lot of our western problems stem from this, and there's lots more on the way.

The sense of what is real is missing. But yes, as a saying it is still cute.

Peak camel?
Delicious.  Thanks even more.
One more on thermodynamics. Daly and Townsend's corollary needs much more attention; it describes the petri-dish bacteria, the wine-vat yeast, and our present and future.

Erwin Schrodinger (1945) has described life as a system in steady-state thermodynamic disequilibrium that maintains its constant distance from equilibrium (death) by feeding on low entropy from its environment--that is, by exchanging high-entropy outputs for low-entropy inputs.

The same statement would hold verbatium as a physical description of our economic process. A corollary of this statement is that an organism cannot live in a medium of its own waste products.
VALUING THE EARTH, Daly and Townsend

A corollary of this statement is that an organism cannot live in a medium of its own waste products.

This of course is THE point about all questions of peak, growth, collapse, etc...

But WHEN will the cornucopians and other "optimists" (EROEI deniers among many others) understand thermodynamics?
STL, Shit To Liquids anyone?

Ya must be dreamin! (me too, sigh...)

Don't speak to me of shortage.
My world is vast
And has more than enough-
for no more than enough.
There is a shortage of nothing,
save will and wisdom;
But there is a longage of people.
             Garrett Hardin



Glad to come across somebody else who's familiar with Hardin's term 'longage' --- only 512 Google hits, BTW, most of which are misprints of 'language' or 'long-age', or are surnames or place names.

British quality press:

The Times  ------   0 hits
Daily Telegraph --  0 hits
The Independent  -- 0 hits
The Guardian ------ 1 hit (letter column only)

Google scores again:
Cameron Diaz --- 10 400 000
Longage -----------     512

We're done for.

Gödel would disagree with Einstein.
If there were such disagreement we would have heard of it, they were close friends.

Hello Roel,

That would be tragically ironic if the human population could burn all the electricity we wanted from PHEVs to enjoying lavish heat or A/C, but fighting to the death for the last scraps of food or potable water.

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

Other way around. With free electricity the cost of desalinating sea water is so low that it doesn't pay to pump the Colorado to Los Angeles any more, so we just use it to grow food in Imperial County (where my family used to farm), and food prices collapse. Ditto for air conditioning greenhouses for greater production in the summer, and year round electrically lighted greenhouses in the northern areas.
If we get free electricity, or even if we lower wholesale electricity prices by a factor of ten, then you are going to be eating a huge variety of different foods from all over the world that are finally economical to grow in America.
No hunger, no thirst, and no global warming.
Why no global warming? Because after we go to greenhouses, the farmland gets abandoned as no longer economical and reverts to forest, sucking huge amounts of CO2 out of the atmosphere. We won't be burning coal to replace it anymore, either.
Too bad it's a scam.
Don't disparage flying pigs.
This is serious matter.

With sufficient thrust, pigs fly just fine.
However, this is not necessarily a good idea.
It is hard to be sure where they are going to land,
and it could be dangerous sitting under them as they fly overhead.

P.S. I really wonder what the scam is, fleecing VCs?

No disparaging here. We would have to get used to that lighter-then-air bacon, is all, watch where we sit down.

The scam? The brilliant inventors will likely promise to get off the grid as soon as the equally brilliant investors fork over. Soon after, they'll also get off the radar.

We can expect to see more and more of these perpetual-energy scams in the future, and otherwise intelligent people get all hot and bothered about them.

If I were a little less ethical I'd come up with one or two myself and cash in.

If I understand the patent description, it works by sequentially "shielding" permanent magnetic fields.  In that case, moving the shields in/out of place will require as much energy as the machine produces.  EM perpetual-energy machines can't work because EM fields are conservative!

Right.  These, and many other, poorly-educated free-energy charlatans do not seem to actually understand the implication of Maxwell's laws, and in particular the interactions with matter.

They do not seem to be able to understand that electric and magnetic fields, both in free space, and especially in interaction with electrically/magnetically responsive materials, possess and transmit both energy and momentum which can be interchanged with matter's energy and momentum.

It appears to be a rather persistent blindness.  I'm guessing that it's because such concepts are somewhat more advanced than the E&M discussed in elementary physics, but it is nevertheless orthodox undergraduate physics.

On a completely different note, it is true that in full General Relativity there is not a complete notion of "conservation of energy".  This is quite surprising even to many scientifically educated people, but it is also true.  The implications theoretically are unclear, but of course in "nearly flat" space-time, like all of us not near black holes or neutron stars, the concept of global conservation of energy is of course true.

Now it is also true that the true theory of unified general relativity and particle physics has not been accomplished, so conceivably, if you want to make a sci-fi premise, there may be some bizzare interaction with the vacuum or the "dark energy" fields which are apparently there cosmologically.

But this would only occur in some extremely unusual physical circumstances; one guesses that superconductivity---which is the only macroscopic manifestation of quantum mechanics---would have to play an essential role in technology.  For example, a recent experimental group has found an anomalous enhancement of gravitomagnetism beyond classical Einstein theory in superconductors.  (it is still extremely tiny).

This is all BSing for a slightly plausible sci-fi story, by the way.

Here's the patent application for this device:

[LOW ENERGY MAGNETIC ACTUATOR HTTP://v3.espacenet.com/origdoc?DB=EPODOC&IDX=WO2006035419&F=0&QPN=WO2006035419]

It appears to be just a couple of magnets with a metal shield attached to a slider. Extremely simple. It can't possibly be what they claim. Expect this to be debunked quickly.
How come the HTML formatting doesn't work?
Because you didn't format your link correctly.

Try <a href="linkstuff">descriptive text</a>

Think we should check on IFeelFree? He posted this on Sunday. What if he crossed a couple of wires? ....Hey! You OK, buddy?...yeah, that html will bite you...

...Error...Error...did not format correctly...

The article that has me thinking is the Brazil Energy Independence one in the Washington Post. Naturally, it's all about ethanol, and not about Brazil's oil and gas reserves' part in that independence. Just another rosy dribble to promote US ethanol interest. Sugarcane ethanol has an EROEI of 830:1. Yadda yadda. Yawn.

Anyway, what caught my eye was the fact that the dawn of democracy "coincided" with the collapse of a solid ethanol industry in the 1980's. Which in turn led to a huge boom in oil imports.

This may be a good forum to ask if anyone has ever looked into the possibility of the IMF/World Bank/Chicago School scheme, which had its big field day all over South America then, being the agent of that collapse.

Vinod Khosla just sent me an e-mail calling my attention to it. He wrote "See, Brazil replaced 40% of their gasoline." I have't written him back yet, but there are 2 problems with that. He has been claiming "40% of their petroleum." Also, gasoline is a minority fuel, so the 40% replacement number, is misleading. By volume, the number from the Brazilian Ministry of Mines and energy, is 53.9% diesel, 26.2% gasoline, and 17% ethanol. However, the ethanol has less energy, so 17% ethanol only displaced about 10% gasoline 10% gasoline. The 40% number comes up because 17/26 is 40%, but that is highly misleading for the reasons I have given.
Hey Robert, thanks again. That was about what I remebered.

Yes, this stuff is misleading in more than one way, and it's hard to figure out if it's just that the writer doesn't know, or doesn't care to address it. But it sure happens a lot, this singular focus on Brazil ethanol rather then their whole energy package.

You being the ethanol man (and we did some yesterday), any thoughts on the 830:1 EROEI for sugarcane in the article?


The article actually gets around to some balanced treatment on page 2. It points out that we could only replace 12% of gasoline demand by converting all of our corn into ethanol. However, that is not a net number, as it doesn't consider the energy inputs, and the fact that for the most part they can be used as transportation fuels. The article also states that the energy balance for corn ethanol is not very good.

The 830% claim is an interesting way to put it. It is just another was to exaggerate in the minds of the public how efficient ethanol actually is. First, what does 830% mean? If you invested 1 BTU, and got back 9.3 BTUs, then you gained 830%. I have seen an EROEI mentioned of 8.3/1, which would imply a 730% return. My guess is that someone flubbed up the math. However, I have never been able to verify the 8/1 claim by looking at the energy balance from an operating sugarcane ethanol plant. It might fall into the same category as "they displaced 40% of their petroleum." While there is a grain of truth, the claim is written isn't true.

From the New York Times of April 10, 2006:

Ethanol can be made through the fermentation of many natural substances, but sugar cane offers advantages over others, like corn. For each unit of energy expended to turn cane into ethanol, 8.3 times as much energy is created, compared with a maximum of 1.3 times for corn, according to scientists at the Center for Sugarcane Technology here and other Brazilian research institutes.
"There's no reason why we shouldn't be able to improve that ratio to 10 to 1," said Suani Teixeira Coelho, director of the National Center for Biomass at the University of São Paulo. "It's no miracle. Our energy balance is so favorable not just because we have high yields, but also because we don't use any fossil fuels to process the cane, which is not the case with corn."
Brazilian producers estimate that they have an edge over gasoline as long as oil prices do not drop below $30 a barrel. But they have already embarked on technical improvements that promise to lift yields and cut costs even more.
In the past, the residue left when cane stalks are compressed to squeeze out juice was discarded. Today, Brazilian sugar mills use that residue to generate the electricity to process cane into ethanol, and use other byproducts to fertilize the fields where cane is planted.
Some mills are now producing so much electricity that they sell their excess to the national grid. In addition, Brazilian scientists, with money from São Paulo State, have mapped the sugar cane genome. That opens the prospect of planting genetically modified sugar, if the government allows, that could be made into ethanol even more efficiently.
"There is so much biological potential yet to be developed, including varieties of cane that are resistant to pesticides and pests and even drought," said Tadeu Andrade, director of the Center for Sugarcane Technology. "We've already had several qualitative leaps without that, and we are convinced there is no ceiling on productivity, at least theoretically."
http://www.nytimes.com/2006/04/10/world/americas/10brazil.html?ei=5070&en=24a79c1bc95740cd&e x=1145851200&pagewanted=print

I am aware that 8.3 to 1 is claimed. I have just never seen an energy balance to verify it for myself. All I have ever seen are the claims. Also, what I was pointing out is 8.3 to 1 is 730% return, not 830% at the article stated.

Sugar cane ethanol has a big advantage because they burn the residue to fuel the boilers. Is that sustainable in the long run? It would seem to me that this is topsoil mining, unless they are rotating crops or allowing fields to lay fallow for a season.

Devils and details: the article says it this way:
The ethanol extracted from corn yields only about 15 to 25 percent more fuel than the fossil fuels that were used to produce it. In Brazil, according to industry studies, the sugar-based ethanol yields about 830 percent more.

In other words, the suggestion is that the return is some 40 times better, the difference between 15-25% and 830%, But wait, then, based on the 8.3:1, corm ethanol comes to a negative EROEI of 0.15/25 to 1.

It's just how you write it down. Or to give the writer some slack, how much you understand. Either way, it's truly misleading.

If they recycle the ash from burning the residues, then the minerals are returned. A secondary crop like soybeans for nitrogen will make biodiesel for crop rotation? Corn or cassava or the new bioengineered high sugar content sweet potatos?
Robert, may I propose that you contact Milton Maciel, a Brazilean sugar cane farmer and consultant who has been involved with ethanol for some 30 years.  You can contact him via the Energy Resources group.

He may be able to source an english language version of
EROEI analysis of Brazilean ethanol production.  He can deal with your concern about mining the soil.

Actually, I think TOD would be well served if Milton could be convinced to prepare a paper summarizing his knowledge of Brazilean ethanol production.  Or perhaps someone with more time than I could review his posts at Energy Resources and prepare a summary.  Always glad to recommend work to others.

Milton has posted innumerable times on the Yahoo Energy Resoures forum.
I posted several links above that provide huge amount of detail on the Bazilian ethanol case. Integrated sugar and ethanol facilities can use almost entirely waste products as inputs, including energy. It seem to make a lot of sense that they could have EROEI's at or above the frequently claimed 8-10:1.

However, I don't think that a real energy balance study has been done.  

Interesting letter about corn ethanol in this week's barron's:

Some further observations on ethanol:

Investors shouldn't be scared away by analysts in New York skyscrapers. You don't make ethanol there.

Corn prices were twice as high in the early 'Nineties before the genetically-modified strains really took hold. Corn-based fuels couldn't be considered without the genetically modified strains. Ethanol plants in South Dakota don't pay Chicago prices for their corn. They pay 45 cents to 50 cents less than in Chicago.

It costs 50 cents to ship corn to Chicago, so don't think you are going to ship it to Ethiopia. In fact, America's farm bounty does little for any part of the world that can't pay the shipping fees. It feeds only the developed world, which can afford to pay for the shipping. Dumping cheap grain in the third world destroys indigenous farmers and boosts populations in regions that can't sustain them. You're actually feeding famine, not people.

Note that the futures price presumes a "perfect" product, but corn isn't perfect. The price is discounted, perhaps as much as 50 cents, based on many naturally occurring defects. Fuel ethanol plants can use corn that food producers would never touch. Corn can be contaminated with aflatoxin from naturally occurring soil bacteria, for example. Eating that corn can be a religious experience, but my engine is unrepentant. Give it all you want.

Corn has always been subsidized. Illinois estimates that corn cost $2.20 to $2.40 per bushel in 2004, but sold for under $2. By late 2005, farmers' cost rose to $3, but it sold for $2.05.

Robert F. Clayton

Belleair Shore, Fla.

i think your also forgeting the impact of global warming on this.
mainly this little effect of it.

"Each crop was found to have its own optimal mean daily temperature (OMDT) for seed yield. As temperatures rose, yields decreased, dropping to zero at about 18˚F above each crop's specific OMDT." Seed productivity generally decreased by about 6 percent for every 1˚F (0.55 °C) above a given plant's OMDT. Current summer temperatures in the southern United States are 2-4˚F (1.1-2.2 °C) higher than optimum for most grain crops.

Have you read this report?

The following URL is for a report from the USDA on "Then Economic Feasibility of Ethanol Production from Sugar in the United States". Dated July 2006
[Warning 78 page PDF]


I have not read that one. I have seen some excerpts. I will get around to reading it when I get a chance.

Here are five studies that all cite figures of positive 8-10 EROEI for ethanol from sugar cane. I have given page references for three of them and will find and post the others later.

1) FO Licht presentation to METI,

EROEI Calcs: Page 20

2) IEA Automotive Fuels for the Future

3) IEA: Biofuels for Transport

EROEI calcs: page 60

4) Worldwatch Institute & Government of Germany: Biofuels for Transport  (Link to register - study is free)


EROEI Calcs (for 12 fuel types): Page 17

5) Potential for Biofuels for Transport in Developing Countries

http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2006/01/05/000090341_20060105 161036/Rendered/PDF/ESM3120PAPER0Biofuels.pdf

Also, gasoline is a minority fuel, so the 40% replacement number, is misleading.

Shall we assume that Khosla is stupid or deeply dishonest or ...
Is there really any other alternative?

Someone who knows him told me the other day "Sometimes he just hears what he wants to hear."
A behavior shared by most of the populace in my neighborhood.
From an article in the Local newspaper about fishing.  Jellyfish now make more money than other fish stocks because those other fish are hard to find.  Jellyfish used to be food for other fish, but now they are the crop we are harvesting.   Climate change, and over fishing I believe are to blaim for this.  Lucky this one fisherman can still make a living off the Sea, but what of the fish we used to get from the Ocean?

In a quick Google of News headlines early this morning I noticed that "Peak Oil" Actually made it to the Business subsection listings.    But then in the last few days of Headlines, we have pundits telling up don't worry be happy now cause in 2007 and 2008 the prices are going to go down and everyone can get back to business as usual.   My Opinion is that if the prices go down, it will be because of a massive amount of Demand Destruction.  No jobs, no need to drive, no need to buy fuel, no need for 20 million barrels a day.  Enough Said, lower prices are coming our way, but you might have to walk to the store to get your food, you can't afford to drive there too.

So before the manure gets stuck on the fan blades, let us keep on driving those SUV's from Ford Motors while they still make them.  Oh Right, thats not going to be a long time now, that they are shutting down some plants and laying folks off.

Happy Sunday!

Overfishing herring and anchovies also removes competetors for those jellyfish, and the jellyfish move in.  It's another sad example of why overfished species don't always "come back."  If their competetor is not harvested, it will come back stronger.

Similar story at the BBC:

Overfishing meant that the jellyfish's predators and its competitors were being removed from the sea, he said.

Jellyfish are themselves voracious eaters, and experts say that because they consume fish at a very high rate it may be hard for the fish they replace to re-establish themselves.

Jellyfish numbers have grown as commercially important fish such as herring and sardines have reduced.


From the very highly recommended recent LA Times series Altered Oceans:

In many places -- the atolls of the Pacific, the shrimp beds of the Eastern Seaboard, the fiords of Norway -- some of the most advanced forms of ocean life are struggling to survive while the most primitive are thriving and spreading. Fish, corals and marine mammals are dying while algae, bacteria and jellyfish are growing unchecked. Where this pattern is most pronounced, scientists evoke a scenario of evolution running in reverse, returning to the primeval seas of hundreds of millions of years ago.[..]

"We're pushing the oceans back to the dawn of evolution," [...] "a half-billion years ago when the oceans were ruled by jellyfish and bacteria."


"That's the smell of money," Simpson said, all smiles at the haul. "Jellyballs are thick today. Seven cents a pound. Yes, sir, we're making money."

Simpson would never eat a jellyfish. But shrimp have grown scarce in these waters after decades of intensive trawling. So during the winter months when jellyfish swarm, he makes his living catching what he used to consider a messy nuisance clogging his nets.

It's simple math. He can spend a week at sea scraping the ocean bottom for shrimp and be lucky to pocket $600 after paying for fuel, food, wages for crew and the boat owner's cut.

Or, in a few hours of trawling for jellyfish, he can fill up the hold, be back in port the same day and clear twice as much. The jellyfish are processed at the dock in Darien, Ga., and exported to China and Japan, where spicy jellyfish salad and soup are delicacies.

"Easy money," Simpson said. "They get so thick you can walk on them."

Jellyfish populations are growing because they can. The fish that used to compete with them for food have become scarce because of overfishing. The sea turtles that once preyed on them are nearly gone. And the plankton they love to eat are growing explosively.

As their traditional catch declines, fishermen around the world now haul in 450,000 tons of jellyfish per year, more than twice as much as a decade ago."


Pauly, 60, predicts that future generations will see nothing odd or unappetizing about a plateful of these gelatinous blobs.

"My kids," Pauly said, "will tell their children: Eat your jellyfish."

Ewwwwwwwwwwwwwwwww!! That is so gross!!

But, who am I to talk? I like blue cheese......

New sandwich: PB&JF
I was happily eating something like a crunchy noodle salad at a Vietnamese wedding when someone said "oh, you like jellyfish?" ... "ah, yeah I do!"

(I think I've eaten jellyfish lots of times ... but I'm not sure when.  It never looks like jellyfish.)

Do we have a biologist and/or food expert around to explain about the omega-3 and fatty acid benefits of jellyfish? For all I know, they may save world hunger
They're a fairly "top" predator though, eat small fish etc. Krill would be more likely to solve world hunger, oops according to Lovelock we're doing all we can to make sure as little of the ocean is cool enough to produce life as possible....

The real thing that would reduce world hunger is reduce the huge population overshoot. Western culture is just like one of those crazy old ladies they find periodically that lives in a filthy place with 63 cats, they find shit 6 inches deep, dead cats, cats with missing legs and eyes, malnourished cats eating other cats, cats with gaping pustilent wounds.... but it's all OK with the old lady running the show because it's more cats.

Hello TODers,

AMLO says Mexico needs a revolution and tanks take up position around the capital building.

from UK Financial Times Interview:
Mexico poll loser vows fight `on street'
By Adam Thomson in Mexico City

Published: August 20 2006 20:54 | Last updated: August 20 2006 20:54

Mexico's leftwing presidential candidate vowed at the weekend to continue to reject last month's election result with increasingly radical tactics conducted "from the streets".

Mr López Obrador said he would take his so-called "civil resistance" movement "to its ultimate consequences" in his effort to defend democracy.

"The most important changes in Mexico have never come about through conventional politics but rather from the streets," he told the FT in a rare interview. Asked whether there was a danger that people would brand him a revolutionary, he replied: "Mexico needs a revolution."

From Los Angeles Times:
Mexico Bracing for Social Unrest
Tanks are deployed as the nation awaits a ruling on who won the July 2 presidential vote.
By Héctor Tobar, Times Staff Writer
August 20, 2006

MEXICO CITY -- A line of armored vehicles awaits outside Mexico's Congress building. Most are brand-new and have never seen action. But many Mexicans wonder whether their menacing presence is a harbinger of this divided country's future.

Federal authorities deployed the tanks to prevent supporters of leftist presidential candidate Andres Manuel Lopez Obrador from shutting down Mexico's legislature in a bid to pressure the Federal Electoral Tribunal to order a full recount of all 41 million votes in the disputed July 2 presidential election.

They are also having another ugly election down south in Chiapas state.  Gee, can hardly wait till Peakoil hits Mexico with Cantarell collapsing.  =(

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

Thanks for keeping us informed about what's going on in Mexico, Bob. Are they a harbinger of our future?

I thought about going to Acapulco to watch the cliff-diving this winter, since I never seem to get away from the ranch and cattle feeding.

But maybe I'll shoot for the beaches of Venezuela instead. Might try to catch a Chavez speech.

thanks. it's amazing the news media blackout that has happened after the election ended.
Below is a draft of my response to the author's of the DoE study (Hirsch, Bezdek & Wendling).

I am TRYING to persuade them to include my concepts with their own (this would be much easier than setting up a competing meme and then slugging it out).

Comments & critique appreciated.  Tomorrow (Monday) is my father's surgery, so limited response time.

Dear Mr. Bezdek:

The Peak Oil mitigation strategies that Hirsch, Wendling and you have evaluated in two DoE papers have overlooked the "best" approach, most probably due to a lack of expertise in that specific area.  An approach that can realistically replace 10% of current US oil consumption in ten to twelve years (see attached paper) with oil "production" naturally increasing over time rather than depleting.  The worse the oil supply situation becomes, the more this approach will "produce", thus providing a "safety net" for the worst case.  In an oil supply interruption, "production" can, in the vast majority of cases, be scaled up 50% to 100% within a week or two.

I have not calculated the cumulative twenty year savings from my proposals, but they will be a very large percentage of 44 billion barrels of oil and quite possibly larger from this overlooked approach.

This approach, comprehensively implemented over decades, allowed Switzerland to survive a six year, 100% oil embargo and maintain an advanced industrial society with a decent quality of life with ~1/600th of current US per capita oil use.

I respectfully request that your co-authors and you incorporate this approach with your tar sands/heavy oil, coal-to-liquids, enhanced oil recovery and vehicle fuel efficiency options.  Understandingly, this approach is beyond your experience and expertise and is unfortunately not commonly discussed.  It's ancillary environmental and economic advantages should make this approach the first alternative implemented on a crash scale and the alternative most aggressively pursued in anticipation of Peak Oil and post-Peak Oil.  Electrifying our inter-city rail freight lines and building Urban Rail on a crash basis are better solutions than those listed (only slightly better than improved vehicle efficiency).  The crisis of Peak Oil may require that all viable solutions be applied, not just the best.  (On the other hand, a la Switzerland, no other approach may be needed). But the best solutions should never be ignored in favor of sub-optimal solutions !

Shell Oil recently announced that their current, under development tar sands project is experiencing 60% cost over runs and will cost Can$110,000 for each barrel/day of capacity.  This clearly demonstrates a need to "hedge our bets" in dealing with Peak Oil.  Limitations on the rate of expansion of tar sands appear to be already developing.  Coal-to-Liquids and Oil Shale will use many of the same industrial resources as Tar Sands and shortages of key components, materials and personnel are likely to slow your proposed build-up for the first decade below your hypothesized output.  The industrial supply chain and personnel should, in my opinion, "catch up" in the second decade.

The two overlooked mature technologies that I espouse can cost effectively mitigate Peak Oil in the medium and longer term and utilize an entirely different supply chain.  Many of the resources, physical and personnel, that are currently used for highway construction can be redeployed for Urban Rail. Since Western Europe (except UK) and Japan have largely electrified their railroads and Russia and India are currently doing so, specialists can be readily imported.  All technical problems are already solved, given the very large installed base and century of experience.  Existing overseas support infrastructure can supplement domestic shortfalls.

There are historical and modern precedents for such crash programs of Urban Rail.  "Peak Streetcar" construction in the US was roughly between 1897 and 1916. In a nation of little less than 100 million citizens, an inflation adjusted GNP of perhaps 2% of today [need data anyone] and still predominantly rural, over 500 streetcar systems were built with most towns over 25,000 getting electrified transportation.  Thailand, a 3rd World economy with 60 million people, has recently budgeted 550 billion baht (~US$14 billion) for mass transit.  France has recently been building a new tram line for every city (that "voted correctly") of 150,000 and two lines for those with 250,000 or more.

A backlog of viable Urban Rail projects in the USA, with detailed (if sometimes dated) routes and studies exist for over $100 billion of investment.  (A synopsis is attached).  Construction on almost all of these could start within 1 to 3 years and completion within six years (on a crash basis).  This interlude of postponed construction would allow for detailed planning and evaluation of the second wave that could adopt criteria similar to that of France.  Twenty years is long enough to have a significant impact on national living patterns.  See the United States of 1970 versus 1950, two decades when almost every "downtown" died, many established neighborhoods declined and suburbia & shopping malls became dominant.

Parallel to the Urban Rail build-out, a massive electric trolley bus and transportation bicycling initiative could also be built-out.  The cumulative results of many local projects can have a global impact !

The impact of these initiatives is proportional to the resources used to build them out and inversely proportional to the availability of oil.  The worse things get, the better Urban Rail, electrified inter-city rail and even bicycling and trolley buses will perform !

In a "bad case", the Urban form and shipping will quickly adapt itself to the non-oil transportation alternative !   Necessity will drive adaptation.  The same is true of milder scenarios resulting from Peak Oil; just at a slower rate of adaptation.

Again, I respectfully suggest that you expand the scope of viable alternative strategies in dealing with Peak Oil.

Alan Drake

Below is a synopsis of Urban Rail projects that the author is aware of from memory, and is not a comprehensive list of

New York City - 2nd Avenue Subway, 3rd PATH Tunnel under Hudson, Staten Island Light Rail
Los Angeles - Red Line "Subway to the Sea", Vermont Avenue subway, over 100 miles of Light Rail  
Washington DC - Dulles extension, Purple Line, 40 miles of streetcar lines
Miami - 103 miles of elevated Rapid Rail (subway type), Miami Beach streetcar (already locally funded)  90% of the population would be within 3 miles of a station and half within 2 miles of a station.
Denver - 117 miles of Light Rail and Commuter Rail (already locally funded)
Salt Lake City - 90 miles of Light Rail, streetcar and Commuter Rail (vote soon)
San Jose - BART extension, several Light Rail extensions
Minneapolis-St. Paul - Central Light Rail connector between the cities
Atlanta - Beltway Light Rail or streetcar, Northern Light Rail extension
Portland - Green Line (both routes, one funded, other "studied" for future build)
Austin - Two Light Rail Lines plus Commuter rail and streetcars
Dallas - All plans through 2015 and all 2015-2030 options (roughly 145 mile system)
Houston - All plans voted for
St. Louis - All plans evaluated, perhaps 100 mile system
Buffalo - Planned extensions to current light rail subway
Boston - All rail plans promised as offset to "Big Dig".
Charlotte - All plans currently scheduled

Hello AlanfromBigEasy,

Brilliant!  I hope they respond back to you with a positive reply, or else a highly detailed explanation why they don't agree with you.  Then we TODers can email them en masse with our requests.  Best of all, maybe they will come to TOD itself to debate the issue.

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

P.S.  Give your father my best wishes!

OK, Alan.

I'll try to get the ball rolling.

Also, I sent you some e-mail.

Good show Alan;  Lets hope they look at it with an unbiased mind.   And best of all to your father on his sugury.
I think the message is good, but it needs more concise presentation to have the punch it deserves.  Start with a three or four sentence executive summary and expand from there.
Alan, two thoughts:  in addition to "see attached paper" in your first paragraph you should specify that you are talking about electrification of freight plus expanding urban rail.  Also, what about mentioning somewhere that this approach involves much lower CO2 emissions?  
I just finished The Revenge of Gaia by James Lovelock, bought it yesterday in hardcover, $25 seemed a bit steep for such a small book, but dynamite comes in small packages too. There more "mind candy" and well, scare-you-shitless stuff in there than you can believe. All I can advise is, buy it.
Evening TODers. I just got back from my vacation a few hours ago and am, of course, thoroughly exhausted. I think I need a vacation to recover from my vacation!

Anyway, I have spent the last ten days completely off grid -no phone, tv, internet, or newspaper. Would someone be willing and able to give me a quick summary of developments in the peak oil and energy world while I was gone? I'll never have time to go back through two weeks worth of messages. Thanks.

Well the big piece of news while you were away was the (partial) closure of Purdhoe Bay (sp?) because of pipeline corrosion.  The news sent the barrel price up over two 'Yergins' again, although it's come back down now.

There was speculation that BP was deliberately deferring maintenance because it thought the pipeline would outlast the rapidly declining field production, but some particularily nasty bacteria, plus a slowing of the flow through the pipes, accelerated the corrosion, causing minor spills and a complete shutdown.

I've heard that the replacement pipes will be 18" diameter instead of the current 34", so that does not say much for BP's projection of field production in the future.

Of course there's the whole Israel/Hizbollah thing, but that is only vaguely connecting with oil.