The Oil Drum | Wednesday Open Thread

248 comments on Wednesday Open Thread

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dsemenov on May 10, 2006 - 10:41am

There is more interesting bits.

In Russian State of the Nation address this morning Putin proposed to create oil and gas exchange in Russia denominated in russian currency, also issued a veiled but clear response to Vice President Dick Cheney's accusations that Moscow is rolling back on democracy and strong-arming its ex-Soviet neighbors.

``Where is all this pathos about protecting human rights and democracy when it comes to the need to pursue their own interests?'' said Putin, who also used a fairy-tale reference to criticize the aggressive U.S. course in global affairs.

``We are aware what is going on in the world,'' he said. ``Comrade wolf knows whom to eat, it eats without listening and it's clearly not going to listen to anyone.''

Putin proposes creation of ruble-denominated oil, gas exchange

MOSCOW, May 10 (RIA Novosti) - President Vladimir Putin said Wednesday that a ruble-denominated oil and natural gas stock exchange should be set up in Russia.

Speaking before both chambers of parliament, cabinet members, and reporters, Putin said: "The ruble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for with rubles."

"Our goods are traded on global markets. Why are not they traded in Russia?" Putin said.

http://en.rian.ru/russia/20060510/47915635.html

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Leanan on May 10, 2006 - 10:50am

Hoo, boy. You think Dick Cheney ticked him off?

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MUDLOGGER on May 10, 2006 - 11:41am

Yes, and look what the Chinese are doing:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/10/cngold10.xml

Looks like they should have gone for a State Dinner after all...

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Descolada on May 10, 2006 - 1:13pm

Holy...

They're wanting to buy the equivelant of 9 months of worldwide production, I assume with dollars. Gold is getting ready to skyrocket, and the dollar is going to plummet. I think this consitutes the first battle of the new economic cold war.

Anyone know how a young person with absolutely no assets and no savings could perhaps borrow around $100,000? =D I don't think I've ever seen such a good investment. Appreciating gold versus depreciating dollar.

Fun times.

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TrueKaiser on May 10, 2006 - 6:14pm

it's already over $700 a ounce. thats what they said on npr on my ride home from work tonight.

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westexas on May 10, 2006 - 11:28am

I suspect that the US will increasingly have to exchange dollars for something else in order to buy imported oil--unless the US seizes control of the Middle Eastern oil fields.

BTW, I postulated a theory regarding BCR (Bush/Cheney/Rumsfeld) some time ago, to-wit: they knew about Peak Oil from day one; they knew the federal debt would never be repaid; therefore, why not run the debt up and in effect borrow the money to deploy a permanent military force to the Middle East, with the aim of securing the oil fields in Iraq, Iran and Saudi Arabia, the most valuable real estate in the world in a post-Peak Oil age? In addition, I theorized that BCR would in effect renege on the debt, either explicitly, or through inflation and/or by crashing the dollar.

Events in the first few months of this year don't seem to offer much contradiction to the theory. What concerns me is that BCR may--and probably do--believe that that have no choice but to proceed with he plan. If they don't seize control of the oil fields, they will have bankrupted the country and turned the whole world against us, without having control of the oil fields. An interesting question is whether Bush is part of the plan or if he has been duped by Cheney and Rumsfeld (I keep thinking of Bush as playing the part of the governor in "Blazing Saddles"). Bush apparently believes that he is on a mission from God to bring democracy to the Middle East. Therefore, to oppose Bush is to oppose God.

In any case, the above article on the US's geopolitical nightmare is very good.

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alistairC on May 10, 2006 - 12:04pm

Well, yeah I guess so.

Great strategic thinking; just "thousands of little tactical errors" as somebody said.

I've been mulling over a little epiphany I had the other day (now that I'm re-interpreting modern history in light of the oil peak).

I was struck by the odd symmetry between the USA and Russia :

USA : oil men take over the government, by fair means or foul
Russia : government takes over the oil men, by fair means or foul

Khodorovsky is rotting in jail, and what was his crime? Standing against Putin? No, trying to internationalize Russia's oil industry (in particular, with US partners).

Putin has been strikingly more successful than Bush in his oil strategy : he's created a powerful geopolitical tool, which a "free market" would have taken out of his hands.

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BrianT on May 10, 2006 - 1:42pm

Putin has been more "successful" because his goals are obviously different. He is attempting to increase the economic and geopolitical strength of Russia. BCR are like CEOs with lots of stock options-if what they do results in long-term strength for the company it is a side effect not the main intention. BCR have been extremely successful at making money for themselves and their friends. Isn't this what American success is all about?

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dsemenov on May 10, 2006 - 2:07pm

Good logical explanation of reasons behind Putin actions:
http://geostrategymap.com/freepdfs/Guest_May07_06.pdf

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smekhovo on May 10, 2006 - 1:48pm

I don't actually think oil men have taken over the US government. We might all be at least somewhat better off if they had.
Oil is merely one of several businesses Bush junior dabbled in, with conspicuous lack of success.
Cheney has no deep roots in oil.
No-one says pharmaceutical executives have taken over, though that was Rumsfeld's job.

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beechdriver on May 10, 2006 - 8:32pm

Amen to that.
If the Pres was T B Pickens & vice was Simmons - we would be well on the way to trying to fix this mess.

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fallout on May 10, 2006 - 1:35pm

Interesting times, indeed.....

Westexas, I have to congratulate you, as I have slowly but surely come around to your theory, as outlined above (and previously). Still hope you are wrong, but no longer think so.

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Jack Greene on May 10, 2006 - 8:34pm

Westexas is interesting but still wrong. Or at least I still hold that he is wrong.

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toonsmith on May 10, 2006 - 4:32pm

I appreciate westexas' theory on BCR. I have had a had time putting the pieces together. His theory helps in that egad. I just read the Asia Times article about the failing BCR agenda. I was a bit shocked at the orchestrated insult to Hu during his White House visit. As a funny aside, I had dinner with an old buddy of mine during Hu's DC visit. He was back in town interviewing for a Dept. of Homeland Security job. He is a good friend but totally unqualified for the job, but when did competence come into play for BCR gov't jobs. Anyway, we wrapped up our dinner and were heading back to his room at the Washington Hilton along Conn. ave just as Bush's motorcade came down the street, returning from a reception at the Chinese embassy. He waved happily and I flipped Bush off, happily, at the same time standing side by side. I just hope Bush saw it but I doubt it. lo, I digress.

The insult to Hu I suspect was to harden Chinese resistance to sanctions against Iran. The BCR clan can then claim diplomacy has failed and we have no choice but to move unilaterally against Iran. Cheney's insult to Putin the other day was another calculated attempt to piss off Russia so they too will block any sanction vote in he UN against Iran.

Perhaps the bigger picture is coming into focus. Any thoughts on my theory?

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MicroHydro on May 10, 2006 - 6:16pm

"BTW, I postulated a theory regarding BCR (Bush/Cheney/Rumsfeld) some time ago, to-wit: they knew about Peak Oil from day one; they knew the federal debt would never be repaid; therefore, why not run the debt up and in effect borrow the money to deploy a permanent military force to the Middle East, with the aim of securing the oil fields in Iraq, Iran and Saudi Arabia, the most valuable real estate in the world in a post-Peak Oil age? In addition, I theorized that BCR would in effect renege on the debt, either explicitly, or through inflation and/or by crashing the dollar."

Jeffrey, I don't doubt that you could have come to this conclusion on your own. But for the record, this is what Mike Ruppert has been telling his subscribers for the last 5 years. While Ruppert is not infallible, I have made a windfall 400% profit investing on the insights gained from his "map" of what is going on in the world. Of note, the subtitle of Ruppert's book, "Crossing the Rubicon" is "The Decline of the American Empire at the End of the Age of Oil". Of course the rest of the story is about the means utilized to mobilize Americans in favour of an invasion of OPEC.

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westexas on May 10, 2006 - 6:36pm

I check out Ruppert's summaries every once in a while, but I'm not a subscriber. I'm sure a lot of people have come to very similar conclusions. As Ayn Rand (and I think Aristotle) said, if you have evidence of a contradiction, you should check your premises, because you will find that one of them is wrong.

What has puzzled so many people is Bush's out of control spending. But if BCR know that the federal debt will never be repaid, post-Peak Oil, it makes a lot more sense. Why not borrow the money from foreign creditors to finance the takeover of the Middle East? BCR would have control of the true capital, energy, while creditors of the US were left with piles of rapidly depreciating paper. Debts are always paid--if not by the debtor, then by the creditor.

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R W Reactionairy on May 10, 2006 - 7:51pm

Thanks for your post. I have pondered whether some subset of Greenspan / Busher II / Cheney / Rummy / & a bunch of "leading" Democrates were following the John Galt model by actively bringing forward the day when the status quo ceases to work by deliberately destructive behavior.

Are the contradictions that are visible everywhere indicators of a grand conspiracy of merely overwhelming evidence of a culture of gross stupidity?

Who really knows [but my guess is a vote for "gross stupidity" in the general case --- but in regard specifically to peak oil, more likely almost the entire political class knows at a minimum that something is wrong but don't want to be the ones that break the news to the masses]?

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marielle on May 10, 2006 - 9:25pm

In addition to Ruppert, this theory also sounds what the author of this article is theorizing:

http://www.countercurrents.org/eriqat130306.htm

Here is an excerpt:

But what if there really were no tomorrow, financially speaking? In that case, the reckless economic policies of today would not only be irrelevant, but might actually be shrewd. I mean, if one knows that he is not going to have to pay back his debts tomorrow, then why not borrow money like crazy today? In fact, if civilization is coming to an end, then why not use all that borrowed money to stock up on guns and vital resources, such as oil?

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Dragonfly41 on May 10, 2006 - 9:26pm

Ruppert's site is all pay, all the time now. Because of this, he has been deleted from my favorite bookmarks. His news was usually about 1 week later than here anyhoot.

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Oil CEO on May 11, 2006 - 1:36am

What exactly do you get when you pay? And how much is it? Is there a menu? This is the funniest thing I've heard all day.

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fallout on May 11, 2006 - 9:23am

Same here, Dragonfly. American Samizdat is also a pretty sharp source for the political news.

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bradshaw on May 10, 2006 - 12:44pm

All of the focus of oil in other regions, I came across this article that says we have 2 Trillion barrels of oil in Colorado... albeit shale oil, but still Shell Oil Company has a method of heating the shale releasing the oil... we could be seeing this go main stream by 2010...

http://www.rinf.com/columnists/news/the-us-governments-secret-colorado-oil-discovery

Why is this not in the news, as we all panic over the Middle East oil?

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Leanan on May 10, 2006 - 12:56pm

It was in the news.

But I think most people have an intuitive understanding that heating up the ground in order to extract the oil is not going to provide cheap oil.

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Mad Maxout on May 10, 2006 - 7:15pm

You're right. It won't be cheap - even if you get really creative. I have thought of a way to get that oil, but it's not cheap. What you do is build powerplants that burn the shale crushed up like they do in Estonia. Powerplants make waste heat with coolant and its "car exhaust". While coolant temp is too low, the car exhaust temp can heat up shale to make oil as you make electricity. It's cogeneration though imperfect. The coolant temp can distill ethanol using waste heat.

Not perfect, but more efficient than otherwise - but way not cheap. Note I'm using the word "car exhaust" generically for the gaseous waste of fossil fuel burning devices due to chemical similarity.

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StoneDog on May 10, 2006 - 9:07pm

I've always thought RF was black magic.....just not with shale.

Nuke Oil From Shale

Sounds like a microwave for oil shale but I'm sure the details will be long and involved.

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Engineer-Poet on May 10, 2006 - 2:18pm

If Shell is actually going to do this as a venture with a positive EROI, they're going to have to power those heaters with something like massive wind farms in Wyoming or Kansas. I don't see this happening.

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The Interloafer on May 10, 2006 - 2:43pm

Maybe they'll do it for a negative EROEI - just to prove that it can be done.

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TrueKaiser on May 10, 2006 - 6:18pm

if all else fails, they can just let it lay in the sun here in eastern kansas on a typical summer day and it will melt on it's own. :P

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Engineer-Poet on May 10, 2006 - 6:30pm

Yeah, I remember driving through Kansas as a teenager once and I just about had a meltdown myself.

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jeffcc on May 10, 2006 - 6:46pm

Shell actually owns a 50 MW windfarm in Wyoming. It's at Arlington in Carbon County (http://www.awea.org/projects/)

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Engineer-Poet on May 10, 2006 - 7:29pm

Let's see. At 1 million barrels/day and 6.1 GJ/bbl, the production might get up to 6.1e15 J/day or 70.6 GW. If we assume a 3:1 EROEI for fossil-fired electric or ~9:1 EROEI for the electricity itself, the electrical input required would be 7.8 GW. Producing this from wind at 35% capacity factor needs 22.4 GW of wind capacity.

That's about 2.5 times the total US installed wind generation capacity; they've got just a bit of expanding to do.

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mcain6925 on May 10, 2006 - 4:27pm

In a question and answer session at Colorado School of Mines, Shell engineers admitted that for equal amounts of energy input, coal-to-liquids technology currently produces more liquid fuels than their in situ oil shale extraction. IIRC, if you scaled their current technology up to a million barrels/day, it would require roughly as much electricity as is currently generated in the entire state of Colorado. I have to believe that either plug-in hybrids or all-electric vehicles would be a more efficient way to use that electricity for transportation.

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bradshaw on May 10, 2006 - 4:36pm

Thanks for your comments. I found a new article where they are using radio waves to heat the oil versus the Shell methods.

"The process proposes using radio waves to heat buried oil shale to about 700 degrees, separating the petroleum from the surrounding rock. So-called "critical fluids" -- liquids and gases that will expand and compress -- would then direct the freed oil to wells where it is pumped to the surface and refined into gasoline, heating oil and other products.

Can it work? The Raytheon scientists said this week they have already proved it does. The company, in collaboration with CF Technologies Inc., a Hyde Park company that provided the critical-fluids expertise, recently applied to patent the process and is also actively shopping it to prospective partners in the energy industry."

They make reference to Shell's method as well...

"It's sort of the difference between using a regular oven and using a microwave," Silvestre said.

Shell's method would take 3 years VS a few months with the radio wave method...?

Interesting read...

http://www.ecnnews.com/cgi-bin/15/etstory.pl?-sec-Biz+fn-fn-fn-fn-fn-fn-oilshale.0510-20060510-fn

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fleam on May 10, 2006 - 5:41pm

Oh man. Radio waves.

Keep on dreaming!

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R W Reactionairy on May 10, 2006 - 7:59pm

Blasting source rock with radios waves. Hmmm. Might as well try for AM modulation of something appropriate. Maybe a continuous rendition of Subteranean Homesick Blues? :-)

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tom deplume on May 11, 2006 - 11:08am

A microwave oven is more efficient because it is tuned to the resonant frequency of water. The food absorbs just as many btus as it would in a conventional oven. Rock conducts heat very well so if they use the resonant frequency of kerogen the heat will quickly conduct into the rock negating much of the hoped for efficiency gain.

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Subkommander Dred on May 11, 2006 - 7:23am

It's not news because it's a fairy tale, Bradshaw. Oil from shale will never be economically feasible, and always be environmentally disastrous.

Subkommander Dred

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bradshaw on May 11, 2006 - 12:53pm

Thanks Guys for your comments. I'm new to Peak Oil and have really just started down this road. I have read Twilight in the Desert - Matthew Simmons, as well as The Long Emergency - J.H. Kunstler. After reading these books if any of you know them, I pretty much wanted to "run for the hills." But then after the shock subsided, I began scouring the web for as much information as possible. I'm trying to have an unbiased and just really want to know the truth... of course the Saudis are going to keep that a secret until they no longer can :(

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bradshaw on May 11, 2006 - 12:54pm

Sorry, I should have reviewed my post.. .I meant to say unbiased "view".... please forgive :-P

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BioDiesel on May 10, 2006 - 1:44pm

Funny that the few MSM articles I found on his speech made no mention of this. Isn't this, like, a big deal?

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248 comments on Wednesday Open Thread

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“To be thrown upon one's own resources, is to be cast into the very lap of fortune; for our faculties then undergo a development and display an energy of which they were previously unsusceptible.”

—Benjamin Franklin