DrumBeat: September 29, 2006

[Update by Leanan on 09/29/06 at 9:23 AM EDT]

The end of oil's stunning ride

The energy crisis is over. You just might not be that happy with the ending.

The last four years has seen a nearly unprecedented surge in oil, gasoline and natural gas prices.

A global economic boom - fueled by Brazil, China, India, Mexico and the United States, among other countries, has sparked a ravenous new appetite for fuel that left producers scrambling to meet demand.

And this summer a combination of events hit the oil market, including a messy switch in gasoline blends, fears of another tough hurricane season, unabated gasoline demand and war in the Middle East. And oh yeah, a truckload of speculators pouring "hot money" into the market.

They combined in what some analysts called a "perfect storm" to push crude oil to a record trading high of $78.40, nearly four times higher than where it began 2002, unadjusted for inflation.

[Update by Leanan on 09/29/06 at 9:23 AM EDT]

Bangladesh power shortage triggers violent protests

About 200 injured in clashes spurred by the fact that residents have been getting just two hours of electricity a day.

Blast at gas pipeline in Turkey

Criminal cases to be launched against Sakhalin energy project

Russia's environmental inspectorate plans criminal proceedings against the operator of the Sakhalin-2 oil and gas project over "barbaric" environmental damage caused by pipeline construction, a senior inspector has been quoted as saying.

GM working on plug-in hybrids as well as hydrogen

Wake up to IT's energy crisis

Winter heating bills should be lower this year

Gore's movie boosts solar sales

Statoil Looking for Canadian Oil Sands Deal

Nigeria to trim oil supply to shore up price

Coal said top enemy in fighting global warming

Boeing Says Biofuels Show Some Promise

Sugarcane and switchgrass are unlikely to fuel the next plane you ride, but Boeing Co. says development of biofuels is gaining momentum as airlines and armed forces seek alternatives to expensive jet fuel.

When Renewable Energy Is Bad For The Environment

The Heart of a Revolution

Albert Einstein said, “We cannot solve our problems with the same thinking we used when we created them.” He also said, “Any fool can make things bigger, more complex, and more violent. It takes a touch of genius-and a lot of courage-to move in the opposite direction.” I spent the weekend with genius and with courage, and I am happy to report that they are alive and well and working on our problems.

James Howard Kunstler: A reflection on cities of the future

Don't know much about the results of faith in CNN's predictive capabilities, but I do know that if you whistle as you pass a graveyard the ghost's won't attack.

Leanan, I don't have your email so I can send you articles, but there are a couple of interesting articles on the Rigzone website this AM. Statoil is looking for a tar sands deal in Alberta and has $1 billion to spend, which doesn't say much for their faith in the Jack 2 find, and Trinidad Tobaggo is extending the bid time for their offshore blocks, so they aren't getting the money they wanted or interest in enough of the acreage.

Leanan, I don't have your email so I can send you articles

It's in my public profile.

Statoil is looking for a tar sands deal in Alberta

Already posted that one.

And Statoil states it has $10 billion, meaning it has a lot more, but doesn't want to go public with that. They just got their asses kicked out of the Orinoco a few days ago.

It does give a good indication of what they expect in their own North Sea fields.

Statoil is a portrait of despair. They bet on Venezuela, and lost. They could have gotten into Alberta oilsands long ago, and declined. Now all that is "mineable" has been sold. So they try to get into 'Phase II', the stuff too deep to be mined, that won't be available for years, and requires much more up-front investment. Someone else lost $6 billion in Alberta too the other day...

Let's call it:

While waiting for the Arctic to melt

Statoil hunts for $10 billion, 2nd generation, oil sands deal

Norway's Statoil ASA is on the hunt for an oil sands project, saying it is aiming to strike a deal worth more than a billion dollars to claim a stake in Alberta's bitumen deposits.

The state-owned company -- shrugging off concerns about inflationary pressures in the sector -- said its strategy centres on building an integrated project, complete with an upgrader. Executing that strategy would eventually cost upward of $10-billion, but Statoil is looking to acquire both a project and at least one partner.

Statoil, which is among the top 10 publicly traded oil producers in the world, quietly opened an office in Calgary this spring.

There have been a flurry of oil sands deals in the past 18 months, largely involving large-scale mining efforts, and analysts have suggested the window has closed for deals to acquire that sort of project. That notion does not perturb Statoil, Mr. Sortland said.

He characterizes mining projects as the "first generation" of the oil sands; he is focusing his efforts on in situ projects -- the second generation, in his view -- that melt bitumen and pump it to the surface rather than excavating millions of tonnes of earth.

Statoil has extensive experience with Venezuela's heavy oil deposits, which pose many of the same production challenges as Alberta's oil sands -- particularly in situ projects. At the turn of the decade, Venezuela's Orinoco belt was seen as Alberta's rival for investment capital in non-conventional projects.

But the election of Hugo Chavez in that country, and a subsequent strike and abortive coup, have resulted in increasing pressure against Western oil companies operating in the region, including Statoil.

The Venezuela government is reopening operating agreements to give its state-owned firm, Petroleos de Venezuela SA, a majority stake in upstream operations. The Chavez government has also raised royalty rates, and mused about bringing criminal charges against former officials who crafted the 1990s-era policies that fostered private sector investment.

Last week, Statoil and other Western firms were shut out of the latest preliminary contract round for the Orinoco area.

Please, Oilmanbob and others, stop repeating the misinformation that Jack2 was a find.  It was a production test.  In 2004, there was a find called Jack.  

The players have indicated there will be another production test at the site next year.  Maybe it will be called Jack3.  Maybe the players will wait months to announce the results.  In the best of all possible worlds, the entire administration will be facing impeachment at that time and friends in the oil industry might be looking for another opportunity for self-serving mischief.

You're right, Jack2 was a field confirmation well. The production test was very hopefull-6,000 bbl/day for 30 days- but that doesn't make it cheap. My point, and I'm sure its valid, is that if Statoil is so sure of the Jack find why are they spending a smooth billion on second-rate hydrocarbons that will cost a minimum of $50/bbl to produce and refine? I don't think Statoil believes the media hype either.
I have a question (possibly a dumb one):  Does that 6000 barrels/day that came up for 30 days eventually get sold on the market?  Even though it was only a test?
Gotta do something with it.
In a chat with a lawyer I've known for close to 20 years, he was telling me about his wifes grandad and a converstion he had with him in the 1970's,

Asked him "what did you do for entertainment as a teen" and was told "for 5 cents we rode the inter urban out to the lake."  Turns out the interurban was owned by he electric comany...and the electric company used the train for load regulation.

The interurban ended with the public holding company act.

In Houston the interurban was ended in 1940 when the mayor, Neal Pickett, campaigned on the platform of not letting the niggers ride for free. My father talks of riding the Interurban from Houston to Galveston and renting a bathing suit at Murdock's pier.
  Isn't it amazing how the masters stir up fear and hatred so that people will vote against their  own interests ? You'd think that after thousands of years we'd have learned.
In Houston the interurban was ended in 1940 when the mayor, Neal Pickett, campaigned on the platform of not letting the niggers ride for free.

If our species survives and ever enters a 'Star-Trek'esque golden age, they will wonder at our barbarity. Talk about slicing off your nose to spite you face.

That was only 60ish years ago. Less than a century. It's hard to believe people like that existed or continue to exist. Sad.

If you think that's bad, I suggest you not look closely at what Congress has been up to this week...
Amen.  If we want to see inhumanity we don't need to look at history, we only need to look collectively in the mirror.
Could you please post the Reader's Digest version?  I don't knwo what you mean.
The reference is probably due to the very close to enabling powers (Nazi party response to terror attack) passed by congress. The ability to declare someone an illegal combatant or terrorist with unlimited detention, secret trials with absolutely no oversite and the redefinition of torture as legal as long as it causes no long term major physical disabilities.

Scarring, Mental harm, Psychologic terror, Starvation, degredation are all legal. The definition of disability and long term would probably allow the legal breakage of bones and removal of fingernails and teeth, possibly even the removal of minor digits. This can occur at any time in detention. Exactly how the torture of someone 4-5 years after capture can still yield much/any information, I have difficulty seeing. I can see it satisfying someones desire for revenge or sadistic urges.

I have a lot of problems with the law and believe it will be tossed by the supreme court as it hardly allows for equality under the law as it targets 'furiners'.

If it stands though all that is needed is an ammendment or two in the future and the law could be applied domestically. Shouldn't be hard to do with a domestic terrorist act (eg london tube bombing style). Then you've pretty well got legal nazi concentration camps. It even has massive secrecy and censorship built in, if you know someone has been arrested under the new rules and speak out, you are off to camp as well. This apparently includes the judges and lawyers associated with the cases. The law was also retrospective so Pres Bush and Co won't be put against the wall after the repubs go away.

The vote was very split along the party lines with a number of republicans breaking ranks. Personally the democrats should be using this in a huge way in the coming elections.

The vote was

Even today, a big reason people oppose public transportation is that they are afraid it will bring undesirables into their nice, safe neighborhoods.
Even today, rich neighborhoods refuse to allow mass transit in, but may allow a subway to pass IF there are no stations.

The worst case is the Red Line subway in Los Angeles was stopped from moving into Beverly Hills by Henry Waxman.  Recently, as traffic gets worse, and they see that Hollywood benefits, there are signs that the rich liberals may relent and let the Red Line go through to UCLA.

Other cases in DC area, one suburb (Georgetown ?) let the subway go through but without a station.  OTOH, Arlington embraced DC Metro.

In Dallas, the light rail goes into subway just before downtown and emerges in downtown.  They go under a rich neighborhood that refused a station (but now wants one).

I'm fairly impressed that CNN ran the story they did in your link, especially the passage below:

With many large oil fields declining in output, and talk swirling by a small yet vocal minority of people who think the world has reached it's peak oil production, and etimates from the Energy Information Administration that the world will use 50 percent more oil by 2030 - it's hard to see why investor interest would diminish.

It's almost dropped in like it's no big deal and an excellent reason to invest.

What's up with this:

It's pretty evident that supply is responding," said Pritchard Capital's Dingmann

Is there really evidence?  The context is clearly that he is saying supply is increasing, but I guess he desn't say that - he just says "responding".  I guess he could be talking about storage levels, is there evidence of extraction rate increasing ?  

Is there really evidence?

Yes, dinopello, there is plenty of evidence.  Of ignorance.

Take this sentence from the same CNN story:

"In the following years Canada's massive tar sands project and other new discoveries like Chevron's Jack field deep in the Gulf of Mexico should begin to yield oil, although prices need to remain above $50 for these ventures to be profitable."

Even the sorry-ass excuses for reporters and editors that CNN chooses to hire should know that the preceding sentence includes the contention that the tar pits should begin to yield oil in the future ("in the following years").  

Are they stupid? Lazy?  Willfully misleading?  Is there any reporting from CNN, which is worthy of public trust?

As for Dingmann, I thing dingbat is the appropiate handle.

 Sure, you can believe the reports about Brad and Angela's baby pictures. The rest is bull crap.
it's hard to see why investor interest would diminish

That line explains why CNN runs a story like this. There's money to be made in Peak Oil.

Ya, but it's just dropped in so blase.  Is this how the MSM is going to expose the public to PO, like an afterthought?
No. like an investment opportunity.

Money is never an afterthought, my friend! That's blasphemy.

Ya...it all just makes me chuckle...the way MSM has tried to spin the situation as a money-making opportunity.

Great...make all the frickin money you can...it'll help start your fire in your fireplace with TSHTF.

On the day we can make a market in Peak oil and renewables, that's the day it happens, nothing else is holding it up.....time for a song

 DAR WILLIAMS Lyrics » Play The Greed Lyrics

I finally learned that the market's righteous holler
Comes from a pale face on a paper dollar
And I betcha got few bucks in your hemp wallet
So throw a tiny wrench in the fiber optic wires
Morals are cheap and you can be the buyers
We can let 'em poison and perish foreign lands
Or we can play the greed right into our hands

Everybody says it can't happen here
Things'll turn around just as sure as they said it
Hell, things change and they all take credit

So ask why there's only forty songs on a station
And ask your cafe about their coffee's plantation
And why is it Arizona hasn't gone solar?
And tell your print shop that hemp grows faster
And it doesn't mean a back room clear cut disaster
The market doesn't care but it wants to understand
And you can play the greed right into your hands

Smiling man says it can't happen here
Channel 4 says it can't happen here
Things'll turn around just as sure as they said it
Hell, the change comes and they all take credit

So roll up your pennies and do your battle
The chairman will start quoting Chief Seattle and
Put little tree frogs on their letterhead
'Cause the market resists and the market absorbs
With a five-pointed leaf on the cover of Forbes
The very same people turned valleys to dams
These are the ones that drain prairies to sand
And they'd just as soon you didn't know this land is your land
But we can play the world back into our hands

Malcom's gonna say it can't happen here
Rupert's gonna say it can't happen here
Things'll turn around just as sure as they said it
Hell, things change and they'll always take the credit

Hell the change comes
Let's let 'em take the credit

Roger Conner  known to you as ThatsItImout

Some Iran related links:



It looks like Inpex of Japan is backing off as far as investing in Iran's oil industry, demanding that they first stop enriching uranium:


 I'd be a little cautious myself when the US is threatening to bomb them "back to the stone age". Is this website a front for the CIA? It sounds like the Chelabi bunch before the US invasion.
Re: The energy crisis is over
In the following years Canada's massive tar sands project and other new discoveries like Chevron's Jack field deep in the Gulf of Mexico should begin to yield oil, although prices need to remain above $50 for these ventures to be profitable.

Couple this with a possible economic slowdown, especially in the U.S., and it's hard to see another run towards $80 like we saw over the summer.

"It's pretty evident that supply is responding," said Pritchard Capital's Dingmann, adding prices will "stay pretty much range-bound."

Well, I guess it's time to turn in my peak oil accreditation. Between Jack and those tar sands, it's all over for us now but the crying. There will be flood of new oil.

About the time we can make the
the ends meet, somebody moves
the ends -- Herbert Hoover

On the other hand, maybe I'll stick around just a bit longer to -- ahhhh, you know -- just see what happens...

The Mackenzie Valley pipeline is crucial for the oilsands projects; there is no alternative source of natural gas in sight. It runs through pristine landscapes (a miracle we have any of that left here). Exxon wants Canada to pay. Negotiations are ongoing.

So are the public consultation meetings. But they are not even mentioned by government and industry. It's a done deal.

Still, there are conflicting interests..

Tribe too busy hunting moose to go to Mackenzie pipeline hearings

A band in the Northwest Territories has asked the National Energy Board to scrap a hearing into the Mackenzie Valley Pipeline today in 82-resident Trout Lake because it'll be too busy hunting moose. In a letter to the NEB, Dennis Deneron, chief of the Sambaa K'e Dene Band in the southern Northwest Territories, said many community residents will be out on the land until the end of the month due to a late moose mating season, and it would be difficult for them to return to the community for the hearing.

Canada says no to Mackenzie pipeline subsidy

The Conservative government won't subsidize the proposed Mackenzie Valley natural gas pipeline, but taking an equity stake in the struggling project is among a range of possibilities, Ottawa's top negotiator said Wednesday.

The comments were made as Imperial Oil Ltd. prepares to resume talks with the federal government about assistance for the pipeline, the cost of which has spiralled to $7.5-billion from $5-billion and is expected to reach roughly $9-billion. The two sides appeared to be exploring positions before the negotiations begin in earnest.

Mr. Rolheiser said Imperial sees the pipeline like an oil sands project, which requires a lot of money up front with a long period before a payoff. The company wants a "fiscal framework" of royalties and taxes that recognizes the high costs and risks.

Oil sands projects enjoy a nominal royalty until capital costs are covered.

Exxon Mobil Corp., which owns 70 per cent of Imperial, is one of three companies that wants to build a pipeline from Alaska to Chicago. In that deal -- which is in limbo -- the state of Alaska wanted a 20-per-cent equity stake.

The province of Newfoundland and Labrador asked this year for a 5-per-cent stake in the undeveloped Hebron offshore oil field but the energy companies, including Exxon, refused and shelved that project.

The 1,200-kilometre Mackenzie line would connect three large natural gas fields in the Mackenzie Delta with Alberta, with an initial capacity to carry 1.2 billion cubic feet a day -- about 7 per cent of current Canadian production.

To say nothing about people wanting to use the Natl gas to heat their homes and have electricity rather than making gasoline for the US and money for the oil cos. With the rest of Canada's natl gas declining, this battle is just getting started.
Natural gas production is up slightly this year to date in Canada.  

I have no doubt that this is a temporary blip.  However, I don't think that space heating is the best use of this gas, when options for bio-mass (pellet furnaces) and ground source heat exchange are real and promise long term supply security for Canadians and possibly most Americans.  Obviously, it would be foolish to throw out still useful gas furnaces, but it is even more foolish, and selfish from an intergenerational perspective, to continue to install new gas burners.

Bio-mass fired district heating units relying on wood pellets and switchgrass pellets, are efficient and have a minimal environmental impact, especially on the GHG front.  Where district heating is not an option, individual stoves can provided household/commercial building heating. Switchgrass, unlike corn, is grown with minimal inputs and can be productively grown on marginal agriculture land and it can be grown in a regime which enhances soil quality, as well as providing wildlife habitat.  

Every effort should be made to preserve some hydro-carbons for future generations.  Canadians don't deserve them anymore than Americans.  They are humanity's endowment.

I basically agree with you. However, I feel strongly that producing gasoline from tar sands to power oversized vehicles is the worst of all possible wastes of the gas, and that it will be needed during a transition to the sources you are describing. At least natl gas furnaces can be made very efficient, and people need heat in Canada (I used to live in Minnesota) as a first priority. I was suggesting that if people realized the limited nature of the resource and the threat to what is currently a necessity for many, they wouldn't allow the tar sand use.
The Globe and Mail, Canada's newspaper of record, writes:

"Exxon Mobil Corp., which owns 70 per cent of Imperial, is one of three companies that wants to build a pipeline from Alaska to Chicago."

There is of course no want on the part of Exxon or any combination of companies to build a pipeline from Alaska to Chicago.  There is a proposal to build a pipeline down the MacKenzie Valley that would tie into the existing pipeline network in Alberta.

Maybe we need  a market-based scheme modelled on the "pizza is free if delivery not within 30 minutes" incentive that exists in the cheesy dough industry.  

Canada's newspaper of record, indeed all those purporting to bring news to the world, would make a thousand dollar donation to a program, aimed at improving the research skills of their employees, each time a factual error is found in published or broadcast reports.  

These media are invariably advocates for the market economy editorializing on its advantages in terms of productivity and efficiency.  How could they oppose a market mechanism that will tend to ensure the accuracy of news?

Perhaps with the Arctic warming, moose will stay frisky for longer.
In the following years Canada's massive tar sands project and other new discoveries like Chevron's Jack field deep in the Gulf of Mexico should begin to yield oil, although prices need to remain above $50 for these ventures to be profitable.

Ouch! So prices have to be above levels that not that long ago led to fuel protests, otherwise Jack will remain untapped.

Funny how quickly the excessive becomes the norm

Re: Funny how quickly the excessive becomes the norm

Yes. It also works the other way. An "elephant" oil field is now a field with 500 mmboe of estimated recoverable reserves. These elephants are getting smaller.

The Dwarf Elephant and Hippo of
Malta next to a Modern Indian Elephant

About the time we can make the ends meet, somebody moves the ends - Herbert Hoover

Those Were The Days
Boy the way Glen Miller played
Songs that made the hit parade.
Guys like us we had it made,
Those were the days.

And you knew who you were then,
Girls were girls and men were men,
Mister we could use a man
Like Herbert Hoover again.

Didn't need no welfare state,
Everybody pulled his weight.
Gee our old LaSalle ran great.
Those were the days.

-by Charles Stouse and Lee Adams

Wow, thanks for that.  My family watched "All in the Family" quite a bit when I was a kid.  I always wondered what that second to last line was.
I always wondered what that second to last line was.

Me too! Now we find out it was all about happy motoring!

The Buick LaSalle

 "Deep recession in 1938 stalled the nation's fragile economic recovery, and sales were well down throughout the industry...
Then in the summer of 1940, production halted abruptly and it was all over."
They combined in what some analysts called a "perfect storm" to push crude oil to a record trading high of $78.40, nearly four times higher than where it began 2002, unadjusted for inflation.

IMO the perfect storm hasn't even begun, that was just a few rain bands.

Agreed, but in the absence of war between the US and Iran, the forcast is for mostly cloudy skies for a couple of years... although expect a hellacious cold front to move in after that.
We are definitely in an interesting little lull right now...before what is the question?
The EIA, the IEA, and OPEC all agree that OECD production will ramp up production from 51.1 mb/d in '06 to 53 mb/d in '07. I have my doubts that 1) they can do it, and 2) that they'll be willing to sell it cheap if they can. Time will tell.
Ahhhh....it is the lull before the 4th QTR.
Interesting. $78.40 is a "perfect storm". OPEC calls $62 "a very low price" i.e. a "desert sky". The weathermen should get their story straight.
Recall when oil hit $62 on the way up.  That was shockingly high, threatening the foundations of the world economy.  Now it is a very low price, proof any supply scares were unfounded.  Those silly environmentalists crying wolf again.

How perspectives change.

To Recap

We have credible reports that the world's four largest producing fields are declining.

World (EIA) crude + condensate production is down by 1.25% since December, an annual decline rate of 2.50%.

Since Matt Simmons' book, which warned of a possible decline in Saudi oil production, was published in May, 2005, Saudi crude + condensate  production is down by 5.2% (to 9.2 mbpd in  June).   Petrologistics reports suggest current production levels are close to 9.0 mbpd.

Russia has reported an 11.5% decline in oil exports from 7/05 to 7/06.  (Given the Russian government's financial interest in the largest IPO in Russian history, one has to wonder about reported Russian production numbers, especially given the very sharp decline in oil exports.)

I estimate that net (crude + condensate) oil exports by the top 10 net oil exporters (based on 2004 exporters) are down by 4.6% from 12/05 to 6/06, an annual decline rate of 9.2%.  

In the first seven months of 2006, oil prices traded at the highest (nominal) levels in history, yet we saw declining production.  When and where have we seen this pattern before?


how would you characterize the surge of deep sea oil, per ASPO, Skrebowski & RR?

Is is possible that KSA and Russian oil is starting to decline, but that decline is cancelled out by deep sea?

Could it be that, in conjunction with a slowing economy, that is why we have storage surpluses and declining prices?  

Jim: The MSM is overstating the storage surpluses of oil. In the USA, the current days supply is less than at ANY TIME during the period 1982-1998.
Is is possible that KSA and Russian oil is starting to decline, but that decline is cancelled out by deep sea?  

Could it be that, in conjunction with a slowing economy, that is why we have storage surpluses and declining prices?

IMO, in regard to the first question, no--but time will tell.

In the Seventies, when we saw a 1,000% increase in oil prices, we saw both a supply response (more production) and a demand response (less consumption).  

IMO, going forward oil prices will be determined by a series of auctions for declining oil production and especially for declining net oil exports.  If demand is low enough, it is not necessarily a given that oil prices will always go up.  But I do not expect to see production increases, and I especially do not expect to see increasing net oil exports.

Just because B follows A does not mean that B is caused by or related to A (post hoc ergo proctor hoc); however, in January I predicted, based on Khebab's HL work, that Russia and Saudi Arabia would show production declines this year.  So far, through June, that is what we have seen (although Russia has recently reported--suspiciously IMO--production increases, while showing double digit year over year declines in oil exports)

In regard to the Russian question, let's assume that the US government and key government officials participated in the largest IPO in US history, for a US oil company that produced only US oil.  Would we be somewhat suspicious of the EIA production numbers?

In the Seventies, when we saw a 1,000% increase in oil prices, we saw both a supply response (more production) and a demand response (less consumption).

As Tate noted, we did not see a positive production response from Texas.   Rising production from Saudi Arabia, Russia and the North Sea more than offset the Texas and Lower 48 declines.   The problem is that the world is now where the Lower 48 was in 1970.

1971...East Tx?  Do I get to pick from what's behind some doors?
Based on our mathematical models, Saudi Arabia and the world are now at about the same stage of depletion at which Texas and the Lower 48 peaked and started declining.  

And Saudi Arabia and the world are showing declining crude + condensate production (EIA).

I've read all the discourse between yourself and mr RR, and while I firmly respect his position on the matter, I am convinced you are right WT.  It makes most sense on the declinging NE, part.  Even if production increases in small territories, the increasing internal energy use will also climb.  In a world staring at peak oil, it doesn't take much to figure out that consumption and production gaps are moving futher apart, faster.  I think it will be about 2 years before we start to bite down on the other side when cantarell and ghawar can not produce and it's clear.

However in those same two years I see deflation everywhere as the housing sector tanks and the jobs that go with it will be a drag on demand for all types of things.  However when PO firmly takes hold, the ensuing inflation in this commodity and the printing presses of Bernanke will take us into inflation and correspondingly I wonder if we'll have another mini boom as this new money POURS into alterntaive energy and COAL.  

But what about these declines (ME, Russia etc.), in relation to the surge in deep sea oil predicted by Colin Campbell, Skrebowski and RR?

ASPO, for instance, decided after studying Skrebowski, to shift peak back from 2007 to 2010. This is not a trivial matter, at least in the short term.

But what about these declines (ME, Russia etc.), in relation to the surge in deep sea oil predicted by Colin Campbell, Skrebowski and RR?

Thunderhorse is delayed until at least 2008.  The new Caspian Sea production is delayed until at least 2010.  Also, I continue to wonder if there is some kind of unexpected deep sea corrosion problem at work at Thunderhorse--that may be a problem with all of these ultra-deep water projects.   The corrosion problem at Thunderhorse is completely unrelated to the hurricane damage.

However, my key point is that I think that Chris, et al, are underestimating the decline in production from the old large fields.  

In 1972, production from the East Texas Field hit a secondary peak, close to 40 years after its previous peak in the Thirties.  What would Chris, et al, have predicted for the East Texas Field from 1973 to 1982, given that production had been increasing for the past 10 years, up to 1972?

When Ghawar was producing 5 mbpd, it accounted for about the same percentage of total world crude + condensate production that East Texas accounted for, relative to Texas production, in 1972 (around 7% or so).  

Interesting comment regarding oil prices on CNBC by Cumberland Advisors

The recent decline in oil prices is the seventh decline of 15% or more (I don't know over what time frame).  The prior six declines of 15% or more all resulted in new oil price highs within a few months.  

An optimistic report on Ghawar in the Middle East Economic Digest still points to high depletion rates:

Middle East Economic Digest,Volume 50; Issue 34

Plumbing the depths: Saudi Aramco has unveiled further details of a major upstream investment programme that is already yielding results. At the heart of the programme is the giant Ghawar field

"Twilight at Ghawar is fast approaching," predicts Twilight in the Desert--the Coming Sandi Oil Shock & the World Economy. "Some day (and perhaps that day will be soon), the remarkably high well flow rates at Ghawar's northern end will fade, as reservoir pressures finally plummet below bubble point and head towards dew point. The death of this great 'king' will leave no field of vaguely comparable stature in the line of succession."

This diatribe was soon challenged by Saudi Aramco. "We have a lot of areas to explore and to find a lot of oil and gas," vice-president of exploration Mahmoud Abdul Baqi said at the Washington-based Centre for Strategic & International Studies in August 2005. "Our track record shows we have delivered for the past 70 years and will continue to deliver in the next 70 years and beyond."

Ghawar continues to account for about 52 per cent of Saudi Arabia's total output, and is expected to do so for many years. The prime reasons are Aramco's aggressive application of myriad new technologies and remedial measures. "An extensive observation and drilling programme is in place at Ghawar and is supplemented with permanent down-hole monitoring and intelligent well completions," says the spokesperson.

There are two main targets: stemming the rate of decline in production; and increasing the reserves recovery period. "Drilling in mature fields and the development of new fields with long plateau lives will lower the composite decline rate of producing fields to about 2 per cent," the spokesperson says. Given Saudi Arabia's current 5-10 per cent annual rate of decline, this would be quite an achievement. Aramco's policy of producing oil "gently" looks as though it is beginning to pay off. "Our reserves are recovered over a 60-80-year period, compared to 20-30 years by many international producers," the spokesperson adds.

A reader just e-mailed me the following link:

An Open Letter to Vinod Khosla

This letter, from a fellow Indian émigré, makes a number of important points that Mr. Khosla should heed. Some excerpts:

Now you have become the prophet of alternative fuels that, you believe, are going to revolutionize the energy industry, much as the internet revolutionized communications. You are impatient to cut by half President Bush six-year timetable to bring cellulosic ethanol produced from farm waste to the market.

But, with all due respect, even a man of your stellar track record can't simply will markets to do his bidding; an economy is not a machine that can be manipulated according to its maker's grand designs. If it were, India's central planners would have made rivers of energy flow into every Indian home.

Granted, you are not advocating a total government takeover of the energy sector as in India. But the combination of taxes, subsidies and mandates you are proposing has striking similarities to India's socialistic approach--and will produce similar results.

Proposition 87--which you are personally spending $1 million to promote--would force oil companies to pay taxes (or royalties, as you call them) for drilling privileges until the state has raised $4 billion for seed money toward alternative fuel ventures. You argue that California is the only state that does not collect drilling royalties, something that oil companies can well afford to pay given their "abnormally" high profits. But California imposes all kinds of other taxes that make its oil among the highest taxed in the country. Proposition 87 would raise these taxes another 50 percent, forcing Californians, who are already paying among the most exorbitant gas prices in the country, to forego energy consumption.

Your cause might involve very cutting-edge technologies, but you are promoting it with curiously outmoded economic thinking. It might be worth questioning your Prop 87 crusade by revisiting the lessons of failed policies from home.

RR: Good letter but somewhat unrealistic. Transferring taxpayers' money into your own pocket is an important part of the business game (especially in the USA)and suggesting that Khosla is somehow morally above this practise as he is from India is ridiculous.  
Transferring taxpayers' money into your own pocket is an important part of the business game (especially in the USA)and suggesting that Khosla is somehow morally above this practise as he is from India is ridiculous.

My reading of the letter is that it was more meant to convey to Khosla that he, of all people, should know better because India has tried similar policies and failed.

Another part of the letter that reiterates some of the things I have said/written to Khosla:

Yet, the issue is, if ethanol has all the advantages you says it does--if it is renewable, cleaner, less volatile, more reliable, easily transportable etc.--surely you of all people could convince enough investors to cough up the $4 billion that Prop 87 would raise. Are you not turning to taxpayers because you don't want to assume that kind of risk--and can't convince fellow investors to either? That is hardly socially responsible.
By the way, I only just now realized that the letter in Reason links back to The Oil Drum. It links to my essay on Breaking Down Prop 87. Small world.
Oh man, Roel, I thought I was the Picture King but you're good!

best --

I just stole it, Dave.

The Pied Piper of Ethanol

You are still the king. By far.

Quick quiz. Who said this? "Contrary to what you might believe, I think it's extremely unlikely that in 20 years we will be using any ethanol in cars."

Hint: It was in a Red Herring article from just a couple of days ago. A reader brought it to my attention just a few minutes ago.

I guess it's not the Deffeyes quote I put up somewhere here today?!

OK, while in the process of  giving up, my last desperate gamble has to be:

you guessed

In the strange but true category, that quote was made by Vinod Khosla. I simply don't know what to make of this. He is pushing us to spend billions of dollars to roll out all of this ethanol infrastructure, and he thinks ethanol won't be fueling our cars in 20 years? What about all of those charts and graphs showing us making 200 billion gallons of ethanol in 20 years? Has he had a change of heart? I don't know, but this is about the last thing I expected to come out of his mouth.

The link: Khosla: Ethanol Not Final Fuel

I was right!!
But I didn't guess...
I simply don't know what to make of this.

Non paranoid honest people well NEVER be a match to the true "dominant alpha males" of the monkey tribe.

But corn-based ethanol—and even cellulosic ethanol, made from plant waste—are only steps along a larger trajectory toward other fuels, he said.

By saying this he vindicates his own view about the "trajectory", emphasize the "temporary" nature of ethanol, comfort the would be co-investors about his "wisdom" and cover his arse in case of any failure (he's been doing his "best").

Learn from that kind of guys if you want to counter them...

RR (and everybody else:

IMHO ethanol and biodiesel are on the same track as the Green Revolution.

In the beginning, the Green Revolution dramatically increased yields, alleviated famines, and got Dr. Norman Borlog a Nobel Peace Prize.

In time, the Green Revolution was derided as the "Black revolution," and the miracle seeds became "frankenfoods". Monsanto, the market leader, lost heavily due to the controveries.

Now we have ethanol and biodiesel, which at the moment are the darlings of the greens. But once the slack is gone and people are going hungry, you can bet that Khosla and other market leaders are going to wear a similar label: ie baby killers, starvation profiteers, etc., due to --

FTF: Food to Fuels

We'll be treated to ads and cartoons of starving people being fed into the gas tanks of trucks and cars.

IMHO I think whoever is on the forefront of this bio fuels crusade is going to suffer tremendously, in time. This is undoubtedly a monumental dead end for this reason. Who wants to make money off starving babies?


What evidence do you have that ethanol is the darling of the greens. Maybe some greens, but isn't this a gross generalization?  I am a green and ethanol is most emphatically not my darling.
When I was at Earth Day this past year, there was a biodiesel booth, and the local greens were very respectful and eager.  I didnt' get very far in arguing against it.

There's no point, really. Right now it's at the stage of using french fry grease to power your van. THat's commendable. It's the next step that isn't necessarily being thought through.

But this is in a small town, and it is perhaps different in Berkeley, where people are more in tune to the dangers of ramping up such a technology.

On the European market it's well past Fench fry grease. Palm plantations destroying rainforest to meet market demands. More to come.
Starving babies!!!  Don't believe it for a second.  The FTF crisis is a myth and Jim doesn't want to tell you how heavily sudsidized and protectionist 1st world trade policies have decimated 3rd world domestic agro economies.
The FTF crisis is a myth and Jim doesn't want to tell you how heavily sudsidized and protectionist 1st world trade policies have decimated 3rd world domestic agro economies.

Well, here is someone who mildly disagrees at Gristmill:

Schizophrenic biofuels

Growing our own just forces others to grow their own. You cannot put the same bean into both your stomach and gas tank. When a biofuel profit taker tells you that biofuels do not compete for food, they are lying through their teeth. 70% of a corn kernel is lost to the human food chain when you use it to make ethanol.


"....how heavily sudsidized and protectionist 1st world trade policies have decimated 3rd world domestic agro economies."

You are absolutely right, there are enormous distortions in the power and money relationships between first and third world, such as 3rd world landowners growing export crops, while the workers have no land.

But FTF will merely make things worse. For instance, "biodiesel" is also known as "cooking oil". If enough 1st world car owners convert to biodiesel, the poor in Lima, Lagos and etc. will starve.

Same with ethanol. Cheap American corn soybeans dominate the markets; but what happens when they become car fuel? The international price of grains will skyrocket, and the poor starve.

"Proposition 87 would raise these taxes another 50 percent, forcing Californians, who are already paying among the most exorbitant gas prices in the country, to forego energy consumption."

Isn't that what Californians are trying to do anyway with their anti global warming initiative?  This may not be the best approach to cut energy consumption, but I consider the unintended result good news, if true. Keep it in the ground. Their grandchildren may need it in 50 years.

Furthermore, isn't the implied goal of this proposition to get people to substitute ethanl for oil.  If that is the goal, what is the problem with reduced fossil fuel energy consumption?

If that is the goal, what is the problem with reduced fossil fuel energy consumption?

You hit upon EXACTLY why I am torn by the initiative. Will it reduce consumption? Yes, I believe it will by making gasoline more expensive. And I support that. However, the proponents are conducting a misleading campaign. How will the public react when they realize they have been misled? Will there be a backlash against alternative fuels?

I think it is a pretty inefficient way to reduce energy usage. You could have probably gotten twice the reduction at a much lower cost by writing a different initiative.

Reason, the magazine, is just right winger boilerplate. The people who read it and the people who compile it are those who suspect Dick Cheney of being soft on Communism. No point in debating with them. Free Minds and Free Markets. Oh, please.
Wanted: Enlightenment

I have read that Goldman Sachs re-allocated the % of unleaded in their GSCI from around 8% to close to 2% causing a sell-off of contracts (Sept. and Oct) by hedge fund managers, traders,etc.  The implication was that this act had political motivations.  Any comments?  Has this been addressed already?

Here is a link: http://www.financialsense.com/Market/kirby/2006/0925.html

Yosemite: It has been discussed in the threads from a few days ago.  
Check out WED's drumbeat.  People were all over it!


Thanks to both!
www.theoildrum.com currently has a Google PageRank (PR) toolbar value of 2. that's a fairly anemic PR ...

webmaster forums are reporting that Google is updating PR. based on the results available at this page, it looks to me like the Oil Drum homepage is going to see a nice bump in PR ... to a 7. IP is supposed to be offering a glimpse into the future.

if that holds, expect to start seeing visits/traffic from Google grow in the future. looks like all those backlinks are starting to pay off in Google's eyes

Many refineries are install delayed cokers which allows them to process heavy crude. This may be some of the reason crude has dropped in price.Also natural gas has dropped in price. To crack the oil the feed goes through numerous heaters which are fired by natural gas.
For a time there I really thought we might not attack Iran.  I've changed my mind again, I think we'll see it after the Nov. elections.  Apologies if this article has already been referenced:


Bombing Iran certainly should push us over some sort of "tipping point".

Also, isn't it likely that the money going into the stock market is money fleeing real estate?  A desperate search for profitability...

I suppose under threat Iran would embargo any oil exports except to 'Iran friendly countries'. In the global marketplace it has been argued as to whether this would be effective or not as a tactic, as oil could be bought by proxy anyway.

However, there is growing dissent in the middle east because of the wests foreign policy in the area so how would other OPEC countries respond? Is ther much love lost between Iran and it's OPEC buddies? (Ignore Iraq as friend of! Or maybe not!) Could anothe OPEC oil embargo happen?


I don't think that Iran would try a selective embargo, it wouldn't be effective.  I believe that Iran's trump card is that they feel that they can cut off all oil exports through the Strait of Hormuz.  Not just their own oil, but KSA's, Kuwait's, and Iraq's exports as well.

If the US bombs Iran, look for the Iranians to call for the end of Middle East occupation, and a pan-Gulf export halt until the US withdraws.

...that being said, I don't think the US administration is dumb enough to do it.  Iran isn't Iraq.  Iraq was low hanging fruit, an easy score, even if it didn't work out that way.  The professional military has been screwed in Iraq, and they want no part of a widdened war when they are already near their breaking point.  Attacking Iran would cause open revolt within the ranks.

I'd be interested to see the reaction of many European and Asian countries who buy oil from Iran. I can't imagine they're going to be too happy with the US when our attacks delay delivery of oil to these countries. Do you think any of them would stand should-to-shoulder with Iran against the US? I can think of a few: China, Russia, maybe Japan and France?

Tom Anderson-Brown

This is exactly what worries me. Iran are not stupid enough to cut off supply through the straits of Hormuz. They know that this would give the global community an excuse to take multilateral action. However America is stupid enough to just drop a few bombs on selected Iranian targets knowing Iran could not (easily) retaliate other through oil embargo. They [Iran] are also likely to play the martyr in this event occuring anyway, calling for Coffee and Nan to do something against the Iperial warmorgers:)


Well...with Bush pushing so hard to get the Military Commissions Act to pass (which could possibly be used against US citizens...btw http://balkin.blogspot.com/2006/09/does-military-commissions-act-apply-to.html), I've got to wonder what he's up to.  

All I can say is, the 4th QTR starts next Monday and I have this sickly gut-feeling, it's going to be memorable in so many ways.

Apologies if this article has already been referenced

It is true that there is a lot of duplicate postings on TOD but whenever in doubt anyone can use something like this :

http://www.theoildrum.com/?op=search&offset=0&old_count=30&type=comment&topic=&s ection=&string=20061009%2Flindorff&search=Search&count=30

That is, search for all or a substring of the link URL.
You don't need to type all this, just go to Your comments in the right column type in the key string and switch to 'Comments' instead of 'Comments by' in the 'Find' menu before hitting the Search button.

Hey, thanks. This is going to make my propagandizing much easier and more effective. My paymasters will be delighted.
My paymasters will be delighted.

That was on purpose, so they won't replace you by someone less obtuse.  

After the election, won't the President have enough troubles, shielding himself from congressional investigations?

... maybe I haven't kept up with projected Democratic gains, bõãÂqhat's what the pundits were saying a month or two ago.

Hello TODers,

The power outages in Bangladesh, with the resulting protests, is an interesting illustration of the relentless march to Duncan's Olduvai Gorge.  The trashing of electric utility infrastructure is tantamount to beating a cow senseless because her milk production has decreased below expectations.  Obviously, this will not increase output.

It will be fascinating to see if the Bangladeshi PTB jumpstart a massive educational campaign to inform the unwashed masses of Peakoil, Duncan's Theory, and Overshoot & Dieoff to increase societal cooperation levels and decrease the violence.  Past examinations of human history suggests that the PTB will instead stupidly resort to incredible violence, to facilitate and accelerate the overall decline rate for everyone, versus a methodically planned withdrawal to the lifeboats.

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

The trashing of electric utility infrastructure ... will not increase output.

Ahhh, but why should 'the rich' have electrical power, when 'the poor' lacks it?

Such an action lets the pain be shared and makes the matter something beyond a 'why should I care I have money' type issue.   not to mention the whole 'smashing things makes one feel better' line of thinking.

When you are at the bottom, the only spot lower is 6 feet under.   And when you decide that such would be a release from your existance at the bottom, what do you have to loose?

Hello Eric Blair,

Thxs for responding. Destruction of infrastructure only lowers detritus carrying-capacity making the wise transition to optimal biosolar living that much more difficult.  The poor, by losing the limited leverage provided by their FFs, are ignorantly forcing themselves to ransack all remaining biotic resources in their environment far more than a carefully planned transition would.  In short, they are not acting smarter than their genes.  

Ever since Malthus wrote his crucial work, we have had ten generations, or more, that have refused to heed his lessons, thus greatly expanding our Tragedy of the Commons and present Overshoot.

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

So are all these poor rioting Bangladeshis as dumb as yeast??
The poor, by losing the limited leverage provided by their FFs, are ignorantly forcing themselves to ransack all remaining biotic resources in their environment far more than a carefully planned transition would. In short, they are not acting smarter than their genes.

This is the very reason that there will ALWAYS be social inequalities no matter what.
Ignorance is just a positive feedback with negative consequences which results in the hardening of the boundary between the have and the have not, between the (somewhat) enlightened and the "masses".
It will never be the case that everybody is "enlightened" and that gives SO MUCH opportunities and incentives to the "enlightened" to abuse their already existing advantage that this will never go away.

My only concern is that in spite of this we should manage to avoid crashing the whole specie by bowing too easily to the whims of either the "elites" or the "masses".

This is the very reason that there will ALWAYS be social inequalities no matter what.

Yea, because inequalities would never come about by deception...it has to be one group is destructive and the other is not.

Thank you for clearing that up.

it has to be one group is destructive and the other is not.

Are you misreading me on purpose or are you THAT dumb?

I say BOTH groups are destructive, the masses by ignorance (enhanced by deception from the elites), the elites by deception fuelled by greed.
The elites/masses difference has some basis in intrinsic capabilities (genetics) augmented by cultural reinforcements (self-serving). Whenever the elites loose any real effectiveness thru degenerescense and corruption they get flushed by revolution like in 1789 France or China periodic dynastic breakups.

I am afraid that the current US elites smell much of corruption and are likely to get dumped in spite of their frantic attempts to keep in command thru hardening of government control.
Detainee Bill and the Dawning of a Fascist America
Shitstorm ahead...

it has to be one group is destructive and the other is not.
Are you misreading me on purpose or are you THAT dumb?

Nice try.  Rather than admit what you wrote is a tragically flawed argument, you go for 'that dumb'.

Nice to see the insult, because you than admit the rest of the quote Yea, because inequalities would never come about by deception...it has to be one group is destructive and the other is not. you agree with when you say the elites by deception

Glad I gave you the oppertunity to clarify your point.   You are welcome.

Rather than admit what you wrote is a tragically flawed argument


I am not sure of whether or not we are "somewhat" in agreement because you seem to lean more toward the culpability of the elites.
I will restate my point, hopefully more clearly:
  • There is no hope to ever cure the stupidity and ignorance of the masses, making them of course a prey of choice for the elites or whoever else is just a little more clever like snake oil salesmen.

  • There is no hope to ever cure the greed of ANY men, especially the elites, though there might be some way to tame the greed thru institutional arrangements, the points being WHICH institutional arrangements, HOW to bring them up and how to MAINTAIN them, "standard" democracy is showing its limits.
This is exactly right. We normally call it Vengance and Mel Gibson has made a career out of promoting it as a solution to all problems. (along with others).

Mutually Assured Destruction is another form of the same basic strategy. Basically "If I lose, I will make sure you also lose".

What is facinating about these riots - is that they show that a market based solution that rations energy by price will not work. Those who lose will just tear down the system.

Which says that to avoid collapse, we must ration gasoline by need.

Didn't England have huge riots over rising fuel costs?

We normally call it Vengance

In a less "monolithic" environment it used to make sense.
Whenever there were loosely similar "tribes" which were not punished by vengeance due to some happy circumstances preventing them to encounter denial of life for the most unfavored, these "lucky tribes" got a positive evolutionary selection for whatever factors were the source of the "happy circumstances".

As we are now, more or less, a single global worldwide tribe any serious "punishment" will wipe out the whole "human tribe" except may be for the Sentinelese and somesuch.

Hail Mel Gibson!

I was looking at the picture that Leanan posted above, thinking:

'Today Bangla Desh, tomorrow....."

So what do we have so far on our Olduvai Countdown, Bob?

  • Zimbabwe, Bangla Desh are confirmed

  • Tanzania a likely candidate.

  • Pakistan, nation wide blackout a few days ago, 160 million people!, and Pakistan is not a poor country compared to Bangla Desh (saw Musharraf on TV a few times -Daily Show- and thought: what a smart man). They'll crawl back from the whole, but for how long?

Who else has announced their candidacy? Let's not forget blackouts that don't involve entire nations.
I know, I should take some time for a "blackout' google. Soon.
A lot of African nations are having difficulties.  South African mines and factories are being affected by electricity rationing.  Students in Kenya recently went on a rampage, protesting power outages.  Nigeria is suffering a variety of fuel shortages (ironically, since they export oil).  

What fascinates me is the way these shortages tend to cause other shortages.  For example, the lack of electricity caused everyone to run out and buy generators, leading to gasoline and diesel shortages.  

Pakistan and India have been struggling with power shortages for awhile now.  I foresee a lot of coal burning in their future.

Hello Leanan,

Thxs for responding.  Yep, desire for detritus MPP only reinforces the 'diminishing return' feedback loops leading to ever more problems.  ASPO Depletion Protocols, if adopted by leaders worldwide, would do much to jumpstart the transition to alternative living, but I don't see these topdogs being eager for this change.  But it really is as simple as Pres. Bush watching topdog Barney taking a crap in the White House's Rose Garden -- if all of nature instinctively seeks a rough equilibrium of close-coupled biosolar feedback loops, we should be doing the same too.  I would be much more optimistic for our future if Bush would imitate Barney with humanure leadership.

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

W H A T ' S   W R O N G   W I T H   Y O U   P E O P L E ? ?

A summary of the articles below:

Anybody think it's a coincidence that legalizing the crackdown on immigrants coincides with legalizing the crackdown on the domestic population?

Congress is writing into law what would seem to be as un-constitutional as it gets. Unlimited spying on your own people? How far are you from the point where neighbors start informing on each other for unpatriotic behavior?

Not that Congress matters anymore; it's up to the Executive to interpret the Constitution. The same Executive who volunteered to interpret the Geneva Convention, which he deemed "vague". That comment specifically targeted the term "human dignity". Yes, that is very vague, isn't it? What on earth could that mean?

Apparently, what comes in from Mexico are not terrorists, but criminals. And gardeners and cleaning ladies taking away American jobs. Don't give us your huddled masses, we are the huddles masses.

Wait till the remaining contents of Cantarell fit in the palm of your hand, and then try to stop them. How many refugees are you prepared to kill? Thousands of Africans have died this year already trying to cross into Europe in leaky bathtubs and cookie jars. 99% are desperate people, not tourists or fortune seekers. Either we provide them with human dignity at home, or they will come get it here. That's the only choice.

From Canada come the terrorists. Live ammo practice on the Great Lakes?! For what? "I don't know what it is, but I know I want to be prepared for it when it happens." What kind of logic is that?
There's a doc on PBS sometime this week, by Lowell Hoffman, if I remember correctly, that is based on research into terrorists and their sleeping cells. Conclusion: They don't exist. Nobody's able to find any.

Are there potential terrorists in Canada? Maybe two or three, maybe none. But how does that justify cracking down on the lives of hundreds of milions of people, to the tune of hundreds of billions of dollars, writing laws that make it legal to lock people up without trial for the rest of their lives? The disappearing crowds in places like Myanmar, North Korea and China have nothing on you.

900 watchtowers, and talk of an actual fence on the US-Canada border, the more I read it, the more I get convinced it's to keep people from fleeing, not entering. Who from Canada wants to flee to the US? Two or three 'perhaps terrorists' that likely don't even exist? For that you need live ammo? 900 towers? Sensors, motion detectors, cameras and unmanned aircraft?

No guys, there is no longer any risk that the US will degrade into a police state. It already is. And you were the sleeper cells while it happened.

House approves warrantless wiretap law

The bill, sponsored by Rep. Heather Wilson, R-N.M., that give legal status under certain conditions to Bush's warrantless wiretapping of calls and e-mails between people on U.S. soil making calls or sending e-mails and those in other countries.

Under the measure, the president would be authorized to conduct such wiretaps if he:

  • Notifies the House and Senate intelligence committees and congressional leaders.

  • Believes an attack is imminent and later explains the reason and names the individuals and groups involved.

  • Renews his certification every 90 days.

"Democrat Minority Leader Nancy Pelosi and 159 of her Democrat colleagues voted today in favor of more rights for terrorists," [Speaker Dennis] Hastert said in a statement. "So the same terrorists who plan to harm innocent Americans and their freedom worldwide would be coddled, if we followed the Democrat plan. "

Congress moves on scaled-back U.S. immigration agenda

As Congress heads for the exits to campaign, Republicans maneuver to pass a pre-election immigration agenda that falls short of their get-tough rhetoric but is enough, they hope, to satisfy voters upset about illegal immigrants.

The House of Representatives and Senate are maneuvering to speed construction on a 700-mile (1,125-kilometer) fence along the United States' southern border aimed at keeping Mexicans and criminals from entering the country illegally.

A House-Senate compromise homeland security funding bill that contains $1.2 billion (€940 million) to begin building the fence comes before the House on Friday, with Senate action possible later in the day.

U.S. uses Great Lakes for weapons training

The United States Coast Guard have started to patrol the Great Lakes with machine guns mounted on their vessels and are conducting live-ammunition training drills on the U.S. side to prepare officers to combat terrorists flooding across the border from Canada by boat.

The automatic-weapon drills started earlier this year but came to light only in the past two weeks after information about the Coast Guard's move to create 34 permanent live-fire training zones in the Great Lakes was published in the U.S. federal register.

"We're trying to be prepared in case something happens," said a U.S. Coast Guard spokesman, Chief Petty Officer Robert Lanier.

"I don't know what it is, but I know I want to be prepared for it when it happens. We need to conduct these live-fire exercises so we are prepared for whatever it may be. If we are not prepared for it, there are going to be questions about why we weren't prepared for it."

U.S. to build 900 watchtowers along Canadian border

The Canadian border could be lined with as many as 900 surveillance towers designed to track illegal immigrants attempting to sneak south under a contract expected to be awarded today by the U.S. government to a consortium led by defence and aerospace giant Boeing Co.

The contract is part of the Department of Homeland Security's Secure Border Initiative, which will use sensors, motion detectors, cameras and unmanned aircraft to spot illegal entrants into the United States from Mexico and Canada. Published reports say the initial contract will be worth $80-million (U.S.), and a Boeing spokesman said it could rise to as much as $2.5-billion during the next several years.

PS while he's busy at it, the Executive might want to interpret the national anthem as well. Let's be honest, 'The Land of the Free?'

Wow. I can understand USA citizens wanting to vote Republican if it helps their personal finances (lower taxes) but it certainly looks like things are speeding up toward TSHF. Terrorists flooding over the border from Canada in boats? If the American public buys that then they will definitely buy into throwing homegrown dissidents ("terrorists") into Haliburton camps.    
Like I said further up...this will be a memorable 4th QTR for SOOOOOO many reasons.
Elway drops back to pass...

Oh, no!  It's peak oil!  The housing bubble!  Iran!  Tuna!  Chavez!  The 12th Imam!  Touchdown!  The Broncos win!  What a throw!

SAT...you forget November elections.

Do you hail from Denver, SAT-dude?  If so, I will have to despise you since I am from KC and Elway robbed so many games from us.

Don't worry, I hate the Broncos.  It's just that, when you mentioned the 4th quarter...
I think Elway makes his living these days selling cars and peddling medication for acid reflux disease.
Some important points made in this article Leanan provided a link to above.

When Renewable Energy Is Bad For The Environment

The German parliament on Thursday started a debate over a quota law requiring biofuels -- organic, renewable sources of energy -- to make up a small percentage of the nation's energy supply. Current targets call for them to comprise at least 4.4 percent of the market by 2007. Biofuels burn cleaner than petroleum, and many are derived from crops which can be grown again and again -- guaranteeing business for local farmers...

But just because something is a renewable energy source, doesn't automatically mean it's good for the environment. In fact, if you ask environmental groups, palm oil diesel can be extremely detrimental to the environment...

The problem is that in order to grow more of the lucrative crop, environmental groups fear Indonesia will clear rainforest land. Earlier this year, Indonesia's government tossed plans to develop the world's largest palm oil plantation -- nearly 2 million hectars -- by clearing one of the most diverse rainforest areas in the world only after it was proven that much of the proposed area was too high and steep for cultivation. But in order to supply just 1 percent of the EU's fuel needs, a 3 million hectar plantation would be required, according to a new study by the World Wide Fund for Nature (WWF)...

...Germany could find itself in an odious position. Because palm oil diesel, like all biofuels, is a renewable energy source, it would be subsidized. In effect, Germany could be indirectly financing the clearing of the Indonesian rainforest.

It seems all too commonplace that people and governments are attempting to deal to deal with energy issues without seeing the bigger picture. They can't see the rainforest for the biomass.

Why do they always have to say stuff like "environmentalists fear bla bla bla".  Just state the facts. In the example cited, it was crystal clear that Indonesia intended to clear rainforest. It is also crystal clear that rainforest and other forest will be clearned all over the world for this monster called renewable fuels.

So called  renewable fuels are trotted out everywhere by politicians everywhere, because they can convince people it is a free lunch and they can pretend they give a damn about energy and the enviroment  at the same time. They cannot admit that they do not have a solution that does not have negative impacts because they would finally have to get around to the obvious approach that we need to quit consuming so much of everything. Any "solution" from their perspective cannot have a remote chance to having the slightest nano size impact on the GDP.

I will send money to the first politician who stands up and tells his/her constituents.  "Quit having babies, stay away from the mall, and junk your SUVs."  

Pleaes don't make arbitrary generalizations about an industry you don't understand.

Politicians on the other hand... feel free.

They cannot admit that they do not have a solution that does not have negative impacts because they would finally have to get around to the obvious approach that we need to quit consuming so much of everything...

I will send money to the first politician who stands up and tells his/her constituents.  "Quit having babies, stay away from the mall, and junk your SUVs."


We need to cut population drastically so that we CAN consume less and avoid using several planets worth of resources.
What can we say?

It was nice knowing you.

Thanks for volunteering.

I will send money to the first politician who stands up and tells his/her constituents. "Quit having babies, stay away from the mall, and junk your SUVs."

<sarcasm>Hypocrisy, you are not taking ANY risk with this statement.</sarcasm>

It seems all too commonplace that people and governments are attempting to deal to deal with energy issues without seeing the bigger picture. They can't see the rainforest for the biomass.

Nicely put.

As Garrett Hardin wrote: "You can't do just one thing".

But try explaining that to the general public.

So, how many millions of hectares has nuclear reactor waste contaminated this year?

Oh wait, maybe 10.

When are people going to start believing the laws of physics, and physicists?

  1. energy density matters
  2. population matters
Say we decided not to burn oil but extract it only for materials, eg plastics, carbon fibres, synthetics etc - is this doable? This would be CO2 neutral (ie not fry the planet) and give us useful materials, especially if they were designed (like Nylon 6) to be truly recyclable. But is it possible? Or are plastics etc just a by-product of refining fuels? TIA...
The problem with this is not so much technical, I would think (for if they were "just" by products we could still do the refining and just store the fuels). The problem is the political and social will to do so. How many people do you know that know where plastic comes from? pesticides? paraffin candles? Vaseline? any number of household or industrial chemicals? and so on. Would they be willing to give up their cars to keep there plastic crap?
Thirty years from now, oil will be little used as a source of energy.

Our grandchildren will say: you burned it?

All those beautiful molecules? You burned it?

Kenneth Deffeyes speaking at Alaska Fairbanks University.

Let's hope are grandchildren are that aware - because we sure as hell aren't (present company excluded, of course ;-)).

When applying Chapstick, I like to say, "How many lives? One, Two, Three, Four..." with each stroke.

Kind of sadistic. Perhaps exaggerated. But true.

Tom Anderson-Brown

Jim Capaldi had an album back in 74? entitled "Whale Meat Again"

- at least we've come a little way since then and women aren't unwittingly smearing their lips with the blubber of an endangered species.

Over at Econ Browser TOD is getting a shout out about the GSCI!


It's a econ POV into why Amaranth failed so big!  Basically they really concentrated their positions and they flipped the other way.  Now I read about Pirate Capital is imploding as half of their staff has walked!


Sept. 28 (Bloomberg) -- Pirate Capital LLC, a $1.7 billion hedge fund, said five of its 10 investment professionals resigned, two weeks after the firm came under regulatory scrutiny for possible securities- law violations.

And now I read there's another Hedge Fund "taking a break" and they might return. WTF?  Tremors....Beginnings?


Yo Tate, did you notice this line in the first article?

"But then I saw this detail, which brings the story closer to home. It seems that $175 million of the cash that Amaranth had to play with came from the San Diego Employees Retirement Association, which may have lost $87 million on their Amaranth investment."

Reminds me of how we were talking about figuring out where pension funds are invested, how deep their necks are in risk etc. So much to do..

I remain convinced that a lot of people will lose their pensions this way.

Hopefully they were diversified.  

IIRC, the New York State Retirement system lost more than that on Enron and Worldcom.

Tate and me were 'talking' a while back about the fact that many of these funds, some are huge, were not content with their investment restrictions once the real booms and big returns started happening, especially the turn of the century one.

Many governments loosened the restrictions. We have to find out yet, but I'm sure lots of the funds are invested in risky propositions.

The San Diego case looks like a good example. Investing retirement money in hedge funds?!

My suspicion is that if you are under 50 you can forget about ever collecting a pension. If you're over 50, I wouldn't plan on collecting past the next 10 or 15 years. It is clear that this is one area that corporate America has found that it can cut costs. And the public employers will be forced to follow suit eventually.
Roel, I remember that exchange.  I also remember still that Pensions are limited by what they can put in since once they reach a certain % of funds, a transfer of responsibility happens to the hedge fund.  I can't remember who limits who, but I would think Hedge Funds do know how much they can take from a Pension system, but these are institutional investors. They have a different risk profile entirely from the people who want in on hedge funds.  

I personally think if everyone had a firmer understanding of WHY hedge funds make money the way they do ,(trading on high risk debt, er I mean assets), many would realize the giant game.  It's a ponzi scheme and the earliest entrants have been handsomely rewarded.  I also want to reinterate that if Amaranth lost $6B in the options market, then someone made $6B, so there would be little net affect.  I know no one MADE $6B, but it's a zero sum game so there is a winner somewhere.

The little itty-bitty problem is that the money is not invested by the people who have to live off it when they're all shrinking and wrinkly.

There was a moment (1990's) when there were profits to be had that they didn't want to be left out of (yes, there is/was a logic there, and a surge in high-risk investments). Many pension systems have so many billions "under their command" that they can make and shake things. Some have tried to influence corp's 'green' policies just with the power of numbers.

But in the end, what it comes down to now, is gambling with grandmother's nest-egg, and she ain't even your granny. The galls and guys running the day-to-day control of all that cash come from the same schools as the ones running private funds, and they want in on the bragging games.

When you have $100 or $800 billion in your portfolio, who's going to call you back? Some civil servant who never had more than $20K in the bank? There is a chance they will do well, but no guarantee. One more complication is that many pension systems foresee a future full of problems, graying population etc. So there's pressure from within to make more than the usual percentage.

I'll stop for now, it's an interesting subject.

Tate: There's a flip side to that zero-sum game. When the fund wins, the manager takes from 20-33% of the winnings from you. When the fund loses, you eat it. As you state, the rules of the game make it imperative that the manager swing for the fence. Putting pension funds in "hedge" funds (I love that name-kinda like "fighting for freedom")is ethically criminal but legally OK.
Very few Americans work for employers that offer pensions any more.  I was in a financial planning class a couple of years ago, and the instructor asked how many people expected to draw a pension when they retired.  Only two or three out of 20 students raised their hands.  He'd been teaching the class for years, and said he'd been watching the number go down, year after year after year.
And even many of the large companies that still do offer them, or offered them in the past, are trying to get out of them. The most pathetic ones are the ones who claim they can't afford to pay all their pensioners because they are living too long.
It's my opinion also that pension funds are worthless and becoming worthlesser. My in-laws are retired teachers with boku pensions and they're living well right now. But I foresee the day when we all move in together just to keep a roof over our heads.

Many companies offer 401k plans that are considered by most employees to be bomb-proof as a source of income after "retirement". It is my view that retirement won't be an option for people my age (29), and that 401k's and mutual funds won't provide jack for anyone planning to retire after about 2010.

I cashed mine out to pay off debt and procure more stable forms of wealth.

Tom Anderson-Brown

The pension funds are mostly for the currently retired currently drawing pensions. Or those very close to it. Many in both categories will be disappointed.
This is why people need to go the material goods they will need to survive now, while the dinero can purchase something helpful.

Fix your house up, build a garden, buy solar panels if possible, buy some emergency supplies, and lots of chocolate bars.

That's a bit too survivalist for me. There is an unstated assumption in that strategy that the "crisis period" will come to an end and things will return to "normal."

My personal preference is for solutions that will help my children and grandchildren live lives worth living. Of what value is a solar panel if the solar industry collapses? Of what value is a chocolate bar once I've eaten it?

davidsmi...quit being so practical...I just love chocolate, so I would need to stock up...fixing up the house would benefit your family now and in the future if the kids/grandkids had to keep living in it.

What I'm trying to say is, if you believe your retirement is not going to be valuable when you retire, pull out what you can right now and use it for material goods you may need later while the money still has purchasing power.

what, me being practical? If my wife heard that she'd laugh till she cried.

I also love chocolate (especially the Lindt 80% bars - yum!) so I'm trying to learn how to grow the cacao. I'm in a reasonably good place to grow it (Fla), but the bugger is a tough one to get to grow well. And getting the seeds to sprout is a b&^%*. Plus, where we are aiming to move to it will be a greenhouse plant, which I don't know that well, (My wife does know greenhouses- but she's not a chocolate person, keeps pushing me to learn how to grow dates!)

I'm in complete agreement with you on "investing" in your house, if you are where you think generations can make a go of it. My current house is not that, but I hope to make that move in the next year or two. But even more important than fixing your home is learning how to fix your home. I'm a fair handyman, but have a lot to learn (e.g., I can repair a roof, but putting on a new one is beyond me.) And even more important than learning these things yourself is arranging to allow your children and grandchildren to learn them. Something tells me you won't be able to go to the local Home Debit to contract out your home repairs come 2050.

As for our savings, we are pretty much split between gold/silver on the one hand and short term CDs, notes, etc on the other. The short term stuff is aimed at that new house I was talking about. The gold is aimed at the days when paper and electronic cash are useless.

Good moves all around.  Let me know how the cacao growing proceeds.  Can't you make other things from cacao besides chocolate?
I find it funny that three are turning up in the first waves.  How many more to go?  7997? I'm sure a few might survive.
Interesting articles.  More commodity related failures going back in a long line to Refco last year end and further.

If Amaranth lost $6 billion, and all those contracts were closed out on the futures exchange, then we also have other investors who made $6 billion.  Unfortunately the losers will be those public retirement plans, who invested in Amaranth, that have no business investing in black box hedge funds.  The winners will probably be the larger Wall Street firms.  Yes, in a way commodities are a zero sum game sometimes, but while the game is on the underlying commodity - in this case natural gas - could have wild price swings unrelated to changes in supply and demand.  

"...then we also have other investors who made $6 billion.?

Who do you think?  The people who RUN the show.
You know, the (some of the) ones who OWN the FED.

Amaranth's Effect on the Market
by Richard Appel

Finally, the banks and financial institutions that financed Amaranth called their loans. This forced Amaranth to sell their energy book. Interestingly, it was reportedly purchased by J.P. Morgan Chase and the Citadel Investment Group. I suspect that they were two of if not the largest shorts in the market.


In my opinion, Citadel and J.P. Morgan Chase played the game brilliantly. They garnered huge profits while Amaranth's investors suffered incredible losses.


Another one.


September 28, 2006 -- A week after Amaranth lost $6 billion on natural gas, another billion-dollar hedge fund is closing its doors after investments turned sour.

New York-based firm Narragansett Asset Management, run by 41-year-old Joseph Dowling III, told investors in a letter earlier this month that it has liquidated about 80 percent of its holdings and will return a "substantial" part of the $1 billion fund to investors by the end of September.

Narragansett's returns over the last two years have not been up to snuff and, through the first eight months of this year, the firm is down 2 percent, Dowling said in the letter.

While most of Narragansett's employees are being shown the door, the firm will technically remain open while Dowling, an avid surfer, goes on vacation for 12 to 18 months.

"Toward the end of my sabbatical, I expect to take a fresh look at our historical investment results and fine-tune my investment strategy and portfolio management before returning," he said in the letter.

Sources inside Narragansett said traders and other employees, who have some of their money tied up in the fund, are fuming at the way Dowling suddenly dropped the bomb on them earlier this month.

Last November, Dowling actually opened the fund back up and collected about $250 million from 67 investors, according to public filings.

Dowling did not return calls for comment. It's unclear who Narragansett's investors are but sources said Swiss bank Credit Suisse had invested in the firm through a fund-of-funds.

Dowling cut his teeth as a healthcare investor with Texas investor Richard Rainwater and Thomas Frist of hospital giant HCA. He also worked at Larry Feinberg's Oracle Partners, a private investment firm that placed bets on health care and bioscience companies.


These kinds of news articles trying to explain why oil prices went up just f*cking crack me up:

UPDATE 7-Oil up after BP shuts Alaska crude, cuts pledged

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=MTFH0765 2_2006-09-29_19-55-29_SP44592

NEW YORK, Sept 29 (Reuters) - Oil prices rose to near $63 a barrel on Friday, after BP Plc shut in output at an oil field in Alaska and OPEC members Nigeria and Venezuela pledged to cut production.

--skip down--

BP has been restoring output at the giant Prudhoe Bay field in Alaska after pipeline corrosion forced the shut in of production at the nation's biggest oil field last month.

The news came after a spokesman for the Organization of Petroleum Exporting Countries said Venezuela told the producer group it will join fellow member Nigeria in cutting back production.

What I think more explains the end of the session rise was the fact that the 3rd QTR has ended and people were buying into the 4th QTR, where as I've said before, things will be interesting.

I missed this little snippet before:

Oil fell in early activity but reversed direction after BP said it had shut in 25,000 to 30,000 barrels per day of oil output in Alaska following a natural gas leak at its Lisburne oil field.

Interesting.....all these little accidents and pipeline problems in Alaska and Russia.

New EIA numbers out

They have revised June numbers of crude + condensate down by 243,000 barrels. However the July numbers are up quite dramatically. They are 73,796,000 barrels. That is up 414,000 barrels from the old June numbers but up 657,000 barrels from the new June numbers.

The numbers all the way back to December of 05 have been revised. Some upward, some downward. I haven't looked at the "all liquids" numbers yet. I will post more on this tomorrow after I have had time to digest the numbers and run them through my Excel spreadsheets and see who is up and who is down.

Ron Patterson


All monthly numbers, crude + condensate, December 05 thru June of 06 were revised Downward an average of 243,000 barrels per day per month.

Ron Patterson

Re: were revised Downward

Oh, Mama! Whoops!

Earth to optimists, Earth to Optimists, are you there? Get back? Get back...

Wait, is this thing on?

Well...that's a lovely little bombshell to drop at the end of the day on a Friday on the last day of the 3rd QTR...I can feel the 4th QTR excitement building.
As it is said: Timing is Everything.

Apparently...but no one would time the release of information like that in order to manipulate the "market" would they?

Naaa.......of course not.

No Way! What are you talking about -- manipulate the market? I know that I've never talked about anything like that. Never happens, never has, never will. Just ask our irreplaceable and deceased friend John Kenneth Galbraith...

And while we're on the subject, does anyone around here still remember the Dot-Com Bubble? Just asking... Not much manipulation of stock prices went on there...

OK, stop it now...the sarcasm is dripping off my screen and I must find a paper towel to wipe it off.
I start with a wet or dry vac and then switch to terry towels.
The donward revisions, December thru June, was most all from Russia.

Russia production, Old and Revised in thousands of barrels.
Dec 9,500...9,240..-260
Jan 9,310...9,030..-280
Feb 9,330...9,040..-290
Mar 9,360...9,150..-210
Apr 9,370...9,170..-200
May 9,390...9,160..-230
Jun 9,450...9,260..-190

Uhmmm, this is interesting... and maybe postworthy. Russia? I'll have to get the best data I can. Lots of fields there. Saudi Arabia is down but no mention? Maybe somebody has a problem with Vladimir? Forbes says...

I'm on the case

You asked for it, Dave

I certainly did ask for it.

2006 (7 month average, world)  =  84219/mbpd (all liquids)

2005 (year, world)  =  84338/mbpd (all liquids)

I'm not a very smart guy -- as most of you here already know -- but I do know how to subtract.

Yes, it is interesting, and most definitely postworthy.  
Interesting. Westexas was just saying today that he questions Russian production numbers.
So Deffeyes ain't wrong yet?
No, Deffeyes is not wrong yet. Even with the huge jump in July production, July was still down 254,000 barrels from December 05. And reports are that August production will be down by about 400,000 barrels from July.

Ron Patterson

Which chart are you looking at? I am looking at the bottom one - 1.4 - which says World Oil Supply. That chart shows December 2005 at 84,766 and July 2006 (estimated) at 85,031. We apparently aren't looking at the same spreadsheets, but 1.4 has always been the one I looked at for world production numbers.
See my comment above.

I am looking at crude plus concentrate. You are looking at all liquids. All liquids include ethanol, biodiesel and bottled gas and even Orimulsion. Orimulsion, as you know, is Orinoco bitumen mixed with water and used as a boiler fuel.

Deffeyes predicted the peak in Crude Oil. He did not pick the peak of ethanol, palm oil, bottled gas or Orimulsion.

Ron Patterson

Obviously I meant condensate, not concentrate. That is the second time I have made that damn fool mistake.

Ron Patterson

Ron, it still isn't clear to me which chart you are looking at. Is crude + condensate at the link you provided above?
Never mind, I found it. I believe you are looking at:


Well, I gave all of you the important bottom-line numbers here above (all liquids).

So, if we throw in the kitchen sink, as the EIA does, we're still down.

Sometimes it makes me want to beat my head against a wall. Sometimes.

That's the same chart I was originally looking at (1.4), which is why I asked (since it showed July estimates higher than December). I guess the really important numbers are crude plus condensate, because I think total liquids involves some double-dipping (which I think has been discussed here before). If petroleum is refined to diesel, and this is used in the production of ethanol, it gets counted twice.
I really do not believe that "all liquids" jumped .929 mb/d in one month. I expect that it will be reivised downward next month. And since there is no country by country breakdown of all liquids, we don't know where the increase came from like we would if it were crude + condensate. All we know is that OPEC increased by .233 mb/d and the rest of the world increased by .696 mb/d, or so they say.

At any rate, 06 year to date average is below 05 total year by .119 mb/d for all liquids and .120 mb/d for crude + condensate.

Ron Patterson

"I really do not believe that "all liquids" jumped .929 mb/d in one month. I expect that it will be reivised downward next month"

If the facts don't fit the agenda - refute. Nicely done.

I agree with Ron regarding crude + condensate (I define "oil" as the stuff that oil companies buy to refine into petroleum based products), but the key point is that we are seeing virtually no production response after oil prices traded in a record high (nominal) range--even if we look at total liquids.  

Note that the initial Texas decline, following the 1972 peak, was only 0.6%.   Texas production didn't fall below the 1971 level until 1976.

Also, if my math is correct the EIA estimate of 12/05 to 6/06 Russian oil production was off (on the high side) by about 50 million barrels.

In regard to my prior comments about Russian production, I didn't have any inside knowledge, but I knew that the Russian government did the largest IPO in Russian history in July for Russian oil company Rosneft--which made me wonder about the reported Russian numbers.  I also questioned the double digit decline rate in Russian oil exports (7/05 to 7/06) versus recent reports of rising production.


Ummm...I think I've said it about 10 times in this thread...but here it is one more...it's going to be a MEMORABLE 4th QTR this year.  It all starts on Monday and the horses (or bulls in this case) are stamping in the gate ready to run.
WT, I've asked this before, but never got an answer...where the heck is Stuart?  Have I missed something?  We need his analysis, especially after today's data release.
Maybe he has a case of Peak Oil Burnout that he is recovering from??  (That's a feeling I know myself....)
Oh ya...that's what Peak Oil Blues website is for...a little R & R for the PO Burnout Syndrome.

It's healthy to take a break from here, definitely, but also addictive.

Hope he's doing OK and pursuing his analyses even if he is not sharing here at the moment.

Best to you Stuart if you are lurking still.

Venezeula and Nigeria said today they will cut 170 (50+120) in Oct.
Nigeria will cut production? It has been done for them...


Up top. Leanan is on top of it (no pun intended).
Nigeria is currently supplying 2.4 million barrels per day (bpd) to the world market, so the reduction of 120,000 bpd would bring its output down to about 2.28 million bpd, the Nigerian industry source said.

Nigeria's formal OPEC quota is 2.306 million barrels per day.

I write about oil supply issues, so I've heard stuff like this before. Nigeria is off by about 6 to 7 hundred thousand barrels a day. But, this may take the cake. This may be the biggest bunch of bullshit I've ever heard...

Dave:Are you saying the announced reduction will not occur because Nigeria is already pumping less than they would prefer? Please clarify for us non-oil supply experts.  
So demand is down.  I'll buy all TODers a drink if we just had peak oil.
I'm counting on that drink, Euan.

Don't forget to shout out "Peakoil" when your glass reaches half-empty.  I really want this to become a cultural tradition on the Hubbert Downslope.

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

You're going to toast Peak Oil with a Budlight?

What are you worried about, fat grams?

Christ...give me a shot of Tequila and pass the lime.
Cry Wolf: It was Dec 05. I'll just have a coffee, but it will cost you about a grand (I want to drink it in Maui).
I just got a copy of today's OPIS report. An interesting excerpt:

In other news, we've watched oil markets long enough to know that "radical fundamentalism" can often lead to misguided conclusions in assessing price movements. Market moves in this century have more to do with crowd behavior, money flow, sentiment, and headlines.

But there is one pressing fundamental that may have a lot to do with oil prices in October. The upper levels of U.S. storage capability may be tested for the first time in several decades. There is no available listing of what
represents maximum clean or dirty primary storage in the U.S., but some analysts believe that the clean storage tanks - - for gasoline, diesel, heating oil, and jet fuel - - are nearly full.

On an aggregate level, consider that total U.S. crude (including the SPR) and products' inventory rose to 1.77-billion barrels last week. Energy Information Administration data for some products doesn't go back more than sixteen years, but last week's total is believed to be the highest aggregate inventory account on record.

On an aggregate level, consider that total U.S. crude (including the SPR) and products' inventory rose to 1.77-billion barrels last week. Energy Information Administration data for some products doesn't go back more than sixteen years, but last week's total is believed to be the highest aggregate inventory account on record.

We have added about 100 million barrels to the SPR since 1990, so the 1.77 Gb number is misleading.

Crude oil inventories--when we had lower levels of consumption--have frequently been higher than our current level.   The only really meaningful comparison is on the basis of days consumption.

Also, the historically high spread between light, sweet and heavy, sour crude oil prices suggests that we don't have a lot of excess light, sweet crude.  And as I have frequently pointed out, I suspect that building inventories of heavy, sour crude are obscuring flat to declining inventories of light, sweet crude.  

80 days worth of fuel.
That 'pressing fundamental' certainly seems like real news -- as opposed to the noise emanating from monthly production/consumption statistics.

My fear is that quite a number of contributors seem to be fooled by randomness (title of a book by  Nassim Nicholas Taleb), with the result that they cannot always distinguish between a blip and a bombshell.

Re:  blip and a bombshell

Blip:  The Jack "Discovery"

Bombshell:  credible reports that all four of the largest producing oil fields in the world are now declining.  The only question is Ghawar.  We know the other three are declining or crashing.  

That's huge news if true.
not here it ain't
Good one.
New Simmons & Co. Power Point presentation, "Summer's Over: Preparing for a Winter of Discontent":


Hello SAT,

It is always good to post the latest and greatest from St. Matthew.  I believe the title of this latest presentation was carefully chosen so as to be directly related to St. Matthew's reindeer.

Matt is trying to get the word out that we are basically screwed unless all hands get to work on mitigation.  I commend him and his organization for this action.  If the MSM was actually doing their job: he would now be getting more press coverage than the threesome of Bush, Putin, and Paris Hilton.

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

1/ The timing of this advisory means that the "industry" has concluded that the US population has been bled for all it's worth. Make no mistake. All suckers are sucked in, and the industry is getting ready to shut the tap. Christmas shopping credit card debts will pass, just to squeeze 'em some more, and January '07 will bring a bleak new world. Part 1 of the game is done, they're ready for Part 2: collecting.

2/ All "experts" involved in this bleeding, private and fed, deserve to be hung from a bungie cord tied around their balls. It's been a 5-year premeditated extortion scheme, and millions will never recover. Now the facade (the housing market) is coming down, they issue the warning that was due 5 years ago. No use now. As they know very well. Who are they? Look:

The new guidance was issued jointly by the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the National Credit Union Administration.

"Feds" worried about mortgage free-for-all

Federal regulators directed banks on Friday to properly explain the risks posed to borrowers from interest-only and other nontraditional mortgages.

The guidance was aimed at addressing the fear that consumers don't understand all the repayment risks involved in these mortgages, including rising interest rates which could greatly increase their monthly payments.

The regulators said that banks needed to make sure that the loans they made were "consistent with prudent lending practices, including consideration of a borrower's repayment capacity."

Howard Glaser, an industry analyst with the Glaser Group in Washington, said he believed the new guidelines reflected "deep concern by federal regulators not just about the impact of exotic mortgages on borrowers but also on bank risk."

But the Mortgage Bankers Association said that delinquency and foreclosure rates remained "well with the range of historical norms." The organization criticized the regulators' action.

"The guidelines propose a one-size-fits-all underwriting standard that will unnecessarily choke industry innovation and diminish consumer choice," said Regina M. Lowrie, chairman of the mortgage group. "We do not believe these products present unreasonable risk.

The new guidance will be used as a benchmark for audits of banks' operating procedures performed by the regulatory agencies.
There has been an explosion of nontraditional loans in recent years, raising worries about the risks to the financial system should there be a sizable number of defaults if borrowers are unable to meet rising mortgage payments.

The new guidance was issued jointly by the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the National Credit Union Administration.

"The marketing and use of nontraditional mortgage products _ particularly interest-only and payment-option adjustable rate mortgages _ have expanded rapidly to a wider spectrum of borrowers who may not otherwise qualify for more traditional mortgages of similar size," John C. Dugan, the comptroller of the currency, said in a statement.

Maybe the Savings and Loan scandal was just a preview of coming attractions.

The Big Show: Indentured servitude for millions of former middle-class Americans.

... For the rest of their lives ...

You sound to me like someone providing Material Support to Known Terrorists. An Enemy Combatant. Be careful what you say.
I thought hippies had a sense of humour:).. Point is we did it to ourselves. No one held a gun to our heads and said 'Take the money or i'll pull'.

We took and used and the party was great. We will pay the price now and there is no asprin for the hangover.


Old Hippie, I've got this terrible feeling it's already too late for me.

I've been making very public comments about this crew for what, the last 26 years. It's been very depressing watching the Republic die.

Hello TODers,

I think it is important to consider everything in today's Drumbeat, then refer to the beating of African wardrums and people to help understand our future:"Abuses of Power".

Broken bones, head injuries, battered feet, beatings to the point of unconsciousness - these forms of torture were inflicted by Zimbabwean police on 15 Zimbabwean trade union leaders last week (13 September), according to their lawyers and doctors.

The Zimbabwean president, Robert Mugabe, blithely dismissed the abuse as the work of "one or two overzealous" officers, in a rare interview while at the United Nations on Thursday. Significantly he did not say that any police would be punished for the torture.

I have interviewed many survivors including a teenager who survived electric shocks that caused him to bite through his tongue and a policeman whose penis was skinned. These people want to tell their stories so the world will know the atrocities being committed in Zimbabwe.

Reuters reports that Pres. Mugabe says assaulted unionists deserved the beating:

Mugabe, who is on his way home from the United Nations General Assembly in New York, was quoted by Zimbabwe's official Herald newspaper on Monday as saying from Cairo "the police were right in dealing sternly with the ZCTU leaders".

"Some people are now crying foul that they were assaulted, yes you get a beating. When the police say move, move," he said.

"If you don't move, you invite the police to use force."

Critics say Mugabe has used tough policing, including strict media and security laws, to keep his opponents in check and to stifle criticism.

"Those Were Unpresidential Remarks, Mr President" by AllAfrica.com:

The point must be made that there is a vast difference between the constitutional right to express one's opinions on one hand and violence on the other. The ZCTU protest was intended to be a peaceful one. It was never the intention of the marchers to cross the dividing line between peaceful and violent protest. It was not a call to arms but a call to march peacefully in order to highlight in general the poverty, financial hardships, HIV and AIDS and the sense of hopelessness that is currently stalking this land. What was so wrong with that?

Suppressing people's right to merely express themselves with such inexcusable ferocity is unforgivable. Not only was the police action a flagrant violation of international and regional human rights standards and norms, it also represented a total rejection of the terms of the Constitution of Zimbabwe which provides for the right to freedom of expression, association and assembly.
Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

I can't wait for the next drumbeat, but this article was near the top of Google Sat morning:

Is the world about to run out of oil?

Cambridge Energy Research Associates (CERA) sees potential for exceptional growth in non-OPEC oil production in 2006 and 2007  --  a cumulative two-year increase of approximately 2.5 to 3 million barrels of oil per day. CERA concludes that the world's oil-production capacity could increase by as much as 15 million barrels per day between 2005 and 2010  --  the biggest surge in history. However, this thesis is not borne out by experience.

First, India must work out the EROEI before venturing into additives.

Second, as no fuel in sight could fairly substitute liquid hydrocarbons (60 to 80 per cent of hydrocarbons use is for transportation), conservation and research in alternate fuels need precedence.

Third, India should initiate studies for oil price and oil demand forecasting for the next two decades.

Last, peaking is bound to occur; the question is of timing. India should commence preparations to mitigate peaking immediately.


He seems to have all the peak oil buzzwords down pat, but plays a bit loose with his facts.

I understand India's primary efforts to develop biofuels is sugar cane based ethanol. India is the world's second largest sugar producer. Sugar has an EROEI of 1:8.5 of more. Most tropical biodiesel seems to run in the range of 1:4 or 1:5.  

The only negative EROEI figures I have seen for biofuels is from Pimental's corn ethanol work.

The EROEI factor

India is going ahead with the additives, methanol and ethanol, from jatropha plant without applying the concept of "energy returned on energy invested" (EROEI). When we substitute a source of energy  --  that is, oil  --  with a positive EROEI with another such as ethanol with a negative EROEI, there is a loss of gross energy produced.

An EROEI of one means that for every unit of energy spent or invested, you get back one unit of usable energy. When the EROEI is negative, you are actually burning up more energy than you are getting for use

The US figures for EROEI for non-renewables are all "plus", while for renewables, these are less than one for ethanol, switch grass and wood and negative for bio-diesel..

Here are five studies that all cite figures of positive 8-10 EROEI for ethanol from sugar cane and positive but lower figures for other biofuels.  I have given page references for three of them.

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