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40 comments on A small supplement on LNG supplies

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ChrisPhoenix on March 11, 2006 - 11:30am Permalink | Subthread | Parent | Comments top
Hm. This has me thinking wild suppositions. Of course I'm not an economist, and this is probably wrong. But is it possible that GWB's weakening of US economic fundamentals is crazy like a fox, playing brinkmanship with the world economy in order to force low oil prices?

Let's suppose that oil countries confronted with peak oil will want to export the minimum oil consistent with a certain income. Let's suppose further that they already know about peak oil, and know that even small cuts in supply will drive price up to levels that will give them lots more money.

The function of oil consumption vs. oil price is highly non-linear. One of the major features is that if the oil price goes too high, major economies will implode, and then the whole demand/price curve shifts majorly downward. Oil exporting countries don't want that.

A few years ago, people were thinking that $60 oil would cause a problem. Well, apparently it hasn't ... yet, at least. But $120 oil would cause a problem ... right? Well, maybe not, at least not for the US; energy is still only a fraction of our budget, and we could eliminate a lot of waste. And as long as the US economy doesn't implode, China can still sell us stuff, so they won't implode either. And with US and China going strong, the rest of the industrialized world has lots of markets.

Of course we in the US don't want $120 oil. But if we could survive $120 oil, peak-aware exporters would give us $120 oil. So what do we do? We weaken the foundations of our economy until we can't survive $120 oil. Now the oil exporters have to keep producing enough to keep the price at $60, because if they let the price get too high, demand for oil will fall along with the global economy.

Chris

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SqueakyRat on March 11, 2006 - 5:47pm Permalink | Subthread | Parent | Comments top
Try to remember who you're talking about, Chris: GWB.
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ChrisPhoenix on March 13, 2006 - 1:32am Permalink | Subthread | Parent | Comments top
Well, GWB and/or his advisors. Reminds me of recent political cartoon: Cheney tells his aide, "Tell the man in charge that I shot someone." The aide replies, "Sir, you shot someone."

So, not GWB himself, but his administration, might be smart enough to pull it off. After all, they're smart enough to make half the American public think that Iraq was involved in 9/11. They're smart enough to get budgets and plans through Congress that misstate billions upon billions of dollars.

Chris

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jkissing on March 13, 2006 - 7:14pm Permalink | Subthread | Parent | Comments top
The administration's success has more to do with the intelligence of 1/2 of the american public and congress than the intelligence of the administration.
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wkwillis on March 12, 2006 - 7:11am Permalink | Subthread | Parent | Comments top
What concerns me is that synfuel plants require steel in large quantities. We don't have a steel industry that can ramp up quickly anymore. We need all the accessory bits as well as blast furnaces, too. We need to build the plants to build the steel mills to build the synfuel industry. Figure on five years, minimum. That's assuming we have a coordinated national program with at least price rationing of critical path equipment and resources. Just building the coal industry up to the level of synfuel capability is going to be a huge job.
China has a much larger steel industry than we do and so synfuels are a simple problem for them. They even export coal. In the case of oil cuttoff from the Gulf they are much better placed to succeed then we are. Look at them as being about eighteen months from imported crude based fuel replacement at any given time.
Bush, Jr, did attempt to put a tariff/quota on steel imports before he got overrun. It wasn't much of an effort.
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Don Sailorman on March 12, 2006 - 3:34pm Permalink | Subthread | Parent | Comments top
Very good point; here in Minnesota we still have plenty of taconite (relatively low-grade iron ore, but abundant) but it would take some time to, say double, output. Also, I suspect the equipment and skills needed to get at tar sands are very similar to those needed to get the taconite out of the ground and made into pellets (which BTW are the best free slingshot ammo ever made IMO and available for the picking up along rail beds).

Also, where would we get the ore carriers and the freight cars needed to double output?

Hm, maybe I should buy another couple hundred pounds of rice and oatmeal . . . .

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wkwillis on March 13, 2006 - 7:53am Permalink | Subthread | Parent | Comments top
There are PERT charts that could be made about this...
Some things can be done in parallel, for instance, you could build a tube mill for pipe and at the same time be holding classes for welders so that when the tube mill was built, the welders would be ready to weld it into a synfuel plant. Ditto building roads to make coal mines able to get the coal to the railroad spur being built at the same time.
But some things have to be done in serial. Like first you find a mineral deposit, then you analyse it from electrical, magnetic, gravity, and seismic surveys, then you core drill anywhere interesting, then if it is indeed interesting (ie, the surveys gave you a clue about the rock, the core told you if the anomaly you were measuring was what you thought it was), then  you grid drill to find out if it's big and rich and friable enough (the mineral not only has to be there, it has to be recoverable after you grind it), then you grid drill to find out where you should start digging first, then you start digging and laying in the rail spur and building the smelter or whatever. A crash program to build a mine is five years. Usually it takes twenty if everything goes right. That's not a joke, that's the way it is.
Building a synfuel plant is a comparative cinch. Building a windmill farm or a solar field is even simpler.
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Don Sailorman on March 13, 2006 - 3:37pm Permalink | Subthread | Parent | Comments top
In Minnesota at one time we had many of the finest mining engineers and geologists in the world working on the iron ranges (There are actually 3 of them.). These guys mapped out in great detail where the ore is, how much, and how good. For example, under the town of Bovey in Minnesota is a fair amount of good ore: To get at it all you would have to do is remove the town. But there is plenty of taconite, and the technology of getting at it is pretty simple, and so I do not think it would take strip mining long to get restarted--were it not for bottlenecks in big tires, rail cars, ore boats and possibly [don't know] seamen and officers to man those ore boats.

The ships are huge, and navigating on Lake Superior in bad weather is not something you want to do with 90-Day Wonders.

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