DrumBeat: January 27, 2007
Posted by Leanan on January 27, 2007 - 10:14am
Topic: Miscellaneous
Is oil-rich Mexico spending too much?
The country saves little of its petroleum riches and spends lavishly on vanity projects. Analysts fear a day of reckoning as crude output falls.
Tank tracker Lloyds Marine Intelligence Unit said Friday that oil exports from the Organization of Petroleum Exporting Countries fell to less than 23 million barrels a day in December from just under 24 million barrels a day in November, according to a Dow Jones newswire report.Saudi Arabia, the world's largest crude oil producer and exporter, was the quickest to implement OPEC's production cuts; its exports in December were 1.1 million barrels a day lower than before the OPEC's October call for production cuts.
Nashville's Urban Development Policy Revealed: Out With the Old?
OK, the tourist thing—I have strong doubts about the long-term viability of tourism as a revenue source. I think that over the next ten or twenty years, it's going to get harder for people to move around, because the infrastructure is going to go downhill. We will see higher fuel prices, poorer roads, no money to develop large-scale public transportation—and fewer people will have the financial means to undertake travel of any sort—including business travel. The backers of this hotel are also backers of a new, larger convention center here in town, a project which I think is also sadly misguided. Nobody wants to look at the long-term trends, because they're so scary. It is not going to be business as usual any more, people, and it's time to drop the denial and get ready for a future that's going to be local and hands-on rather than global and high-tech.
Preparing for Peak Oil - local TV coverage (streaming video) from Madison, Wisconsin.
It's been less than a year since the world was nearly as awash in writings about "peak oil" as it is in crude oil itself. The psychology of the moment was so twisted that, for example, the op-ed page of the New York Times ran a 2,850-word piece titled "The End of Oil" (March 2006). It argued, among other things, that while the world's crude supplies may be more than half gone, not enough was being said about peak oil.Still, a bogus argument will always seems less so in the ears & eyes of an audience that's predisposed to believe it: oversimplification, misstatement, and ignoring the inconvenient (for starters) create nodding heads instead of furrowed brows.
Peak Oil Passnotes: Oil at $35? It's Being Said
The oil market has been shaken recently. The break down to $49.90 intraday two weeks ago was a new step after eighteen months of a $55 floor price. And on the way, what has become of the notion of ‘peak oil’? One guy I know who has been relatively at ease with the idea, who supports the idea, found himself questioning it recently. It was a surprise.
Canadian Cure for the Middle East Blues
Perhaps the most critical aspect of curbing our appetite for oil is decreasing our dependence on the Middle East. But if we are ever going to get serious about it the question then becomes, where will we make up the shortfall? The answer may lie with our neighbor to the north.
US Senators Push for Full Review of OCS Oil, Gas Resources
Some U.S. senators, realizing their plans for a new Outer Continental Shelf, or OCS, drilling bill are unlikely to succeed in a Democratic-controlled Congress, are now pushing for a more thorough review of OCS oil and gas resources.
The Merkel formula assumes that global growth will continue despite her proposed cut in emissions, so she is relying on technology change. She did not spell out the extent of emission curbs or the technologies she favours.
New life for US nuclear power plants
The US nuclear power industry is planning for a renaissance, drawing up its first applications to build nuclear plants since the 1970s.
One family unplugs from technology and lives off the land. Even the blender is pedal-powered.
Proton Power says first fuel-cell powered ship to sail in 2008
Proton Power Systems, a German developer of hydrogen fuel-cell technology, said it expects the world's first fuel-cell powered ship to operate from the middle of 2008.
Lester Brown - Davos Notes: Considering the Real Costs of Our Energy Economy
Carnegie Mellon engineers devise new process to improve energy efficiency of ethanol production
The key to the Carnegie Mellon strategy involves redesigning the distillation process by using a multi-column system together with a network for energy recovery that ultimately reduces the consumption of steam, a major energy component in the production of corn-based ethanol.
Bush's Dangerous Energy Proposal
Some critics are skeptical of the president's proposal to rely largely on ethanol to reduce gasoline consumption by 20 percent in a decade. Indeed, this could do more harm than good, says David Victor, director of Stanford University's Program on Energy and Sustainable Development.
Farmers can profit from biofuel growth,says European Commission president
Biofuels expansion seen raising risk of famine
Switching more land from food to biofuel production raises the risk of future famines, a conference organised by the Soil Association, the country's leading organic certification body, was told.
NTR chief warns of ‘dysfunctional consequences’ in rush to green energy
There was a risk of “dysfunctional consequences, such as rainforests being burned in South America and south-east Asia to make way for plantations to provide food oil for European biofuels,” he said.
Organic body tackles food miles
The Soil Association standard’s board has announced it will consult on a range of options to tackle the environmental impact of airfreighting organic food.
Academic predicts rising oil prices will prompt a local food renaissance
A renaissance in local food for local communities is coming and the UK will need a huge increase in the agricultural workforce to deliver it.Speaking at the Soil Association Conference in Cardiff, on 26 January, American author Richard Heinberg said the peak oil theory where production plateaus and prices sky rocket could force dramatic changes on UK and world farming.
Drilling must be part of the energy solution
The plain truth is that we can't conserve our way out of the energy crisis. The costs would cripple the economy. Everyone likes alternative energy; the trouble is, solar power and biofuels have been promoted for decades, and they still only account for a small percentage of the nation's consumption.
New Report Challenges Blair's Views on Iran
Iran holds the world's largest supplies of oil after Saudi Arabia and Iraq, and holds more oil and gas combined than any other country on the planet. As Peak Oil rapidly approaches, the US demand to control the lion's share of what is left. Iran has also just shifted its petrodollars into a Euro-based bourse. The effect on the value of the dollar will be significant.
Shell Still Eyes Russian Invest Despite Debacle - CEO
Anglo-Dutch oil major Royal Dutch Shell PLC (RSDA.LN) intends to continue searching for new investment opportunities in Russia despite recent problems with the Russian government over the management of its Sakhalin-II oil and gas project, Shell's Chief Executive Jeroen Van de Veer said Friday.
Trashing Peak Oil - Garbage will save us.
TXU lobbying Congress on coal-plant plan
TXU Corp., facing a string of global-warming bills, is ramping up efforts to lobby the new Congress over its controversial plans to build coal-fired power plants across Texas.
Green energy: Lots of choice, lots of risk
There is a slew of small -- and some not so small -- public companies trading on Canadian exchanges that are involved in the alternative energy game. They're in sectors as far reaching as hydro and wind power, geothermal power, solar energy, tidal and wave power and biofuels. There's even a tiny firm, Peat Resources Ltd., listed on the TSX Venture Exchange that is trying to make money producing and marketing peat as fuel.But investing in these companies is not for the faint of heart. Because of technological uncertainty, fickle government support programs, and an uncertain energy future, most are clearly for risk-taking investors who want to gamble on the chance for big gains in the future.
MIT had organized a dinner featuring three of its scientists and their alternative energy technologies, and you knew it was a hot ticket when you walked in the door. The grotto held only about 60 people beneath its vaulted stone ceiling, but among them were venture capitalists John Doerr and Vinod Khosla, Google co-founder Larry Page, and the shaggy, newly minted YouTube billionaire Chad Hurley. First Tom Friedman, the New York Times columnist with a gift for the marketing of ideas, riffed about the coming clean-energy revolution." Green is the new red, white and blue," he said, "and this is not your parents' energy crisis." Once he'd warmed up the crowd, the MIT scientists took turns presenting their visions of the future.
Biofuel trade disadvantages poor nations
A combination of rich nation import controls and excessive pricing power among too few western importers is disadvantaging biofuels producers in developing countries, a London-based research institute said.
Brazil Eyes Ethanol Export Boom after Bush Speech
Ethanol producers in Brazil, the world's biggest and cheapest exporter of the alternative fuel, see a fantastic business opportunity in US President Bush's aim to cut his country's gasoline use by 20 percent over a decade.
Russia's OAO Gazprom sought to assure jittery Europeans on Friday that new deals for the sale of natural gas to Belarus and Ukraine would prevent any more disruptions to western Europe.But EU Energy Commissioner Andris Piebalgs said the continent should steel itself for future disruptions regardless.
Nigeria: Fuel Scarcity is Killing the Economy, Labour Laments
The protracted fuel scarcity in the country is pushing Nigeria into zero-productivity and zero growth thereby making the nation to sink deeper into underdevelopment, the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), has warned.
Prince Charles on anti-global warming trip to US
Charles and his wife Camilla took a British Airways flight for Philadelphia, with the couple and their staff using all the first class and some business class seats, the Press Association news agency said Friday.The couple were traveling aboard a commercial flight after Clarence House announced sweeping changes to the royal household's travel plans as part of the fight against global warming.
Landowners plant trees to consume gases
Some landowners in the Pacific Northwest are planting new forests of trees to consume greenhouse gases and potentially buffer climate change, in a business called carbon forestry.
We're ruining Earth, scientists warn
Droughts will be longer, flooding rains will be rarer but heavier. Cyclones will hit harder. Violent storms and extreme heatwaves will strike more frequently. Evaporation will suck up scarce inland water. Sea levels will creep up half a metre. Oceans will be so acidic that in some places shells and reefs will dissolve.And humanity, not nature, will be to blame.
Parent demands "alternative theories" of global warming be taught in school
"No you will not teach or show that propagandist Al Gore video to my child, blaming our nation -- the greatest nation ever to exist on this planet -- for global warming," Hardison wrote in an e-mail to the Federal Way School Board.The 43-year-old computer consultant is an evangelical Christian who says he believes that a warming planet is "one of the signs" of Jesus Christ's imminent return for Judgment Day.
Has anyone reworked a graph of the all liquids based on a BTU basis yet?
WSJ: Mexico’s Oil Output Cools
Slowing of Major Field May Pressure Prices, U.S. Import Diversity
By David Luhnow, 1/27/07
The WSJ article is an update to one they did about a year ago, predicting a crash in Cantarell's production, based on leaked internal reports.
BTW, based on this article (and the previous NPR interview), it looks like Shields is predicting (at least) a net decline in Mexican production of 400,000 bpd from 12/06 to 12/07, and then another drop of 400,000 bpd from 12/07 to 12/08. Based on the NPR interview, I had been characterizing it as a 800,000 bpd drop from 2007 to 2008.
In any case, this would be a net decline of about 1.2 mbpd over a three year period (12/05 to 12/08), which would be an annual net decline rate of 15% per year. Note that if we use average annual values, we will get a lower annual decline rate, but IMO where we have declining (especially rapidly declining) production, month to month comparisons give us a better prediction of production for a given future month.
Unless Mexico drastically curtails their domestic consumption, at the projected decline rate, Mexico will effectively cease to be a net oil exporter by the end of 2008, just in time for the US presidential elections. I wonder how well efforts to curtail domestic oil consumption, in order to ship oil to the north, will go over in Mexico?
As Fireangel pointed out yesterday, there are media reports out suggesting that Saudi Arabia's crude + condensate production may have already fallen below 8 mbpd in December.
We do know that Saudi Arabia and Mexico are unilaterally curtailing crude oil shipments to refiners (below what the refiners want to buy).
FYI--exactly one year ago today I warned of a rapidly developing net oil export crisis: http://www.theoildrum.com/story/2006/1/27/14471/5832
Good story Jeffery. Well Good is a relative word here.
Mexico production has not declined that much from the start of the the year. So they have been able to compensate. However the decline is significant in terms of exports. You have made everyone an expert in considering exports rather than just total production. I know I just thought about total oil production before I read your posts.
In December of 2005 Mexico produced 3,388,000 barrels of oil per day, C+C. In December of 2006 Mexico produced 2,978,000 barrels of oil per day, C+C. That is a drop, December to December of 410,000 barrels per day.
You are probably looking at the average for 2005 verses 2006. They had hurricane Emily, plus platforms were abandoned for Katrina, Rita and Wilma for a short time. This caused the 2005 average to be quite lower than normal. That plus the fact that Mexican production decline has accellerated in the last three months. They have dropped 280,000 barrels per day in only the last three months. I would cause that very significant.
Ron Patterson
Hmmm...even though I've sworn off predictions as of late...I'm going to put my toe back in the water for this little prediction.
I am not 100% sure that we have passed world peak on C+C, we may know for sure in a year or two.
I am pretty sure that 2007 will be the year of "Peak Oil Awareness" in the general public and not just pockets of interested groups and communities. The "spillover" is ripe and there are more and more receptive ears even though gasoline prices are lower.
The public knows that something is not on the level with the war in Iraq and the threats to Iran from our President. They are starting to put the dots together.
Just a hunch.
Dragonfly,
"I am pretty sure that 2007 will be the year of "Peak Oil Awareness"
IMO it will not have to be a reduction in imports, climbing gas prices at the pumps, or any of the other that will be the cause for hysteria and resulting chaos.
It will simply have to be the acceptance by the public that WE ARE RUNNING OUT OF OIL.
Once that sinks into JoeSixPack's brainpan then he will become hysterical and start hoarding. All the rest will do likewise.
We will rapidly circle the drain as Amurkans realize that what they have been hearing is suddenly going to happen.
I believe this because over 30 yrs ago I was out and about when the oil embargo was put in place and what I witnessed then will be multiplied many many times over.
It will begin to feed on itself fanned by the MSM and their blowdried reports earnestly leaning into the camera and speaking of doom and armegeddon. The public like all good sheeple will respond. Where it goes from there is an unknown.
Once you see violence, chaos and other events up close you never forget just how little it takes to set one off.
Putting the dots together..yes...but only until the MSM goes nutso will the people believe anything. Thats the way they are now wired.
Those yelling doomer at me weren't here during WWII or Pearl Harbor or the backside of the depression and most likely have no recollection of 1973.
Recognition of Peak Oil could be delayed by an economic recession. Demand can drop faster than production if the economy sinks. This would totally cloud the issue. It is bad news either way. I keep wondering which TPTB would prefer. It kind of looks like they would prefer to keep the economy humming as fast as energy production allows. Damn the consequences. The choice over the last decade is obvious now. TPTB wanted economic growth over everything else. Eventually growth bumps into limits to growth. Peak Energy and environmental destruction are here.
The reign of King Dumbo has been a complete failure for those who dream of peace and environmental sanity.
Continuous recessions, followed by short revivals are the only serious scenarios about how PO will play out economically. One would be a fool to think that oil can get to $200 or even $100 and stay there without the this breaking the back of the economy along.
Those periods should continue until we complete our transition to an oil-free economy. Of course economic scenarious can not predict resource wars or the amount of suffering of the world's poor... economics usually shies away from such "externalities".
Hi Oaksmoke,
Thanks. Yes. "Recognition of Peak Oil could be delayed by an economic recession."
And, in addition, as someone may have already suggested, it's even possible we'll see on-going economic upheaval, without any general understanding of the underlying reasons.
>Once that sinks into JoeSixPack's brainpan then he will become hysterical and start hoarding. All the rest will do likewise.
I wouldn't be so certain of this. For one, I suspect the majority of public still believes that we can use technology to replace oil. The media, gov't and so called "experts" will flood the airwaves that a tech. solution is just a year or two away. So instead of hoarding or making any prepations they'll go on about their daily lives. Plus Joe Six pack is up to his eyeballs in debt and can't afford to hoard anything, except hoarding even more debt.
>I believe this because over 30 yrs ago I was out and about when the oil embargo was put in place and what I witnessed then will be multiplied many many times over.
For this to begin there would need to be shortages. I suspect that this time oil prices will rise resulting in decreased consumption rather than like sudden shortages during the 1970s. The only what I see this re-ocuring is when exporters begin to husband remaining reserves or if war breaks out in the middle east that disrupts exports. Not to say that these events won't occur, but I just don't see an crisis begining because of US public exceptance of PO. Hell, Most americans believe that the Oil companies have been suppressing technology that could replace oil. Another words, a crisis will orignate overseas do to a severe decline in exports, not because of US public sentiment.
Tin foil hat time...
Can anyone else see a line between the Cantarell crash and this Halliburton Press release?
I've been beating this drum for a while. Here's how I see it playing out, in an article I've posted in various places on the net:
Peak oil, global warming, food, biofuels and fascism - all rolled up into one neat but ugly little package. Coming to a border near you within 5 years.
Does anyone know where these detentions camps will be located?
I don't know how reliable the information is, but this site gives a list and a map. They seem to be mostly in the south, with the highest concentration (pun unintended) in Texas.
http://www.geocities.com/theawakeningnews/Police_State-Concentration_Cam...
I don't know how reliable the information is, but this site gives a list and a map. They seem to be mostly in the south, with the highest concentration (pun unintended) in Texas.
We have plenty of current inventory down here, and we should be able to keep these facilities full at the rate they countinue to pour in the country. I've lived in Central Texas most of my life, and can vouch that during the last 5 years the area has been completely transformed.
The map certainly has a lot of concentration camps. If there were that many, it would seem like employees involved with them would start leaking out the word.
Alternatively, if they exist at this time, they may not be staffed. Finding staff would seem like it would be tricky - unless Halliburton does it all.
Hi Gail,
A current detention facility (non-profit?)
http://www.ice.gov/pi/news/factsheets/huttodetentionfac.htm
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/26/AR200701...
A Culinary and Cultural Staple in Crisis
Mexico Grapples With Soaring Prices for Corn -- and Tortillas
By Manuel Roig-Franzia
Washington Post Foreign Service
Saturday, January 27, 2007; A01
Good find.
The Economist a few days back very rapidly dismissed the ethanol-white corn connection. So rapidly that I became suspicious that they had done zero real homework on the issue.
We definitely need more info on this. This begs as many questions as it answers.
Asebius,
Unless the white corn fetches the same price as the yellow(lower for white) this I would assume the wise farmer would fill his planter hoppers with yellow corn next year.
Simple market economics I suppose. We use plenty of white corn for ourselves so I think both prices will be in lockstep.
Since we raise none in my area, popcorn yes, then I can't get a good read on what the locals may do. Barring that I think they will go with the good prices.
Already plenty of winter wheat is in the ground due to the wheat runup last year however they might even rip that out and plant corn if wheat looks to be a loser. I have seen them do that before.
Mexico is going to be a handy barometer for us up north to see which way the cat is swinging on the line. Will it land on its feet? My childhood tests on the farm from throwing cats out the hayloft proved you can't tell precisely.
Sheesh.
Let the games of bait and delude begin.
Follow the yellow-caked road.
Airdale,
You wrote:
For sure. Even if world peak is down the road, Mexico's peak will provide a taste of the future.
BTW, Mexico has it's own migration problem with desperate folks crossing it's southern border in large numbers wanting access to the US.
In tomorrow's NYT:
http://www.nytimes.com/2007/01/28/world/americas/28mexico.html?ex=157680...
Typically white corn is priced at a premium to yellow corn because it yields less. Farmers have to be compensated for the lower yield with higher prices in order to be incented to plant the white corn. (Premiums used to be at least 25% I'm not currently knowledgable at what the current market premiums are) The primary reason for the lower yield is the lower focus by the plant breeders on white corn because it is typically less than 2% of the total corn crop. (White corn is primarily used as a human food. I.e. Tostitos, White Corn Meal and other ethnic foods.) Why is white corn inferior to yellow dent? As an animal feed it is at a disadvantage to yellow corn because its amino acid profile is short an essential amino acid required in the livestocks digestion. Since most corn in the U.S. has been grown to date for livestock feed white corn is disadvantaged.
The 100+ year-old push-pull affect of the US economy on Mexican migration is a very well documented historical phenomenon. This time circumstances are somewhat different. Many Mexican campesinos--subsistence farmers that own their own land or jointly in a collective called an ejido--were forced off their land due to NAFTA rules that allowed the dumping of highly subsidized, below market-priced US corn on the Mexican market; however, the land is still there, idle. I would expect a return to the land before a large influx into El Norte. You see, there's a communication grapevine that provides information about conditions both north and south, and conditions for the undocumented migrant are not good in El Norte and unlikely to improve for some time. Further, traditional campesinos use very few fossil fuel imputs; in a very real sense, the idea of permaculture comes from Mexico's terraced gardens and the complementary growing system of beans, squash and corn. Why risk death crossing the border or incarceration if you make it when it's much easier to return to the farm?
Pemex's bankruptcy and Cantarell's crashing presents a political crisis for Mexico's elite and threatens the stabilty of the small middle class, and the same can be said of El Norte. Their crisis presents a great opportunity for the long downtrodden majority to gain power a la Bolivia, Ecuador and Venezuela.
Personally, I find it rather ironic that Bush's ethanol policy will destabilize Mexico's illegitimate president after he did so much to have him installed in the first place. Considering the great lack of corporate media coverage of events in Mexico unless you know Spanish, it will be hard to see the precursors of the coming revolution beyond those that are already there and very active.
Karlof1,
I think it would be great if the Mexican peons and farmers could return to their previous way of life and a more sustainable one. This could then serve as a model for ours as we begin to circle the drain.
Maybe it isn't too late for them. Maybe they will decide that the gringos are rather stupid after all.
Perhaps we inadvertenly did them a favor by dumping that corn on them.
I thought Calderon was a rather savvy dude. Surely he can see what our future could possibly be up here. Then he might have to build his own wall and detention camps in the future to keep out the gringos who can't even raise corn anymore.
Joseph Palmer...your link is merely a link in look...for whatever reason there is no web address associated with it. What is the actual address of that halliburton press release?
I'll try it another way...
http://www.halliburton.com/default/main/halliburton/eng/news/source_file...
... for what ever reason
joe, the href= out is missing in your anchor tag: {a href=""}{/a}
Thanks!
I have no way to prove or verify this, so take this with a grain of salt:
I suspect that this may be in prepration for the collapse of the Mexican gov't. If Mexico does collapse there probably be a large number of people who wish to flee the chaos. The US would be a likely destination. The purpose of the detention camps would to be deal with this situation. Since Mexico is largely dependant on Oil exports, a production collapse definately has the potential to create a collapse.
Good god Jeffery, there you go again, posting more gloom. Don't you know by now that increased production is right around the corner because we have a "history" of the last 20 years that says this will not be a problem. We will drill deeper, colder, faster and increase production so much we can't use it up. Get a little faith will ya? The Mexicans and thier gov't are going to be fine and they will not try to sneek into the US. Our Haliburton "hospitality centers" will be empty - just another waste of taxpayer money. So, could you please get with the program here.
Yeah, I told Ron that he and I need to get with the program--crashing super giant oil fields = higher aggregate world oil production.
As part of my continuing efforts to get someone else to do the hard work (Khebab?), it would be interesting to plot the total annual production from the super giants (one mbpd and more), presumably excluding Ghawar, since the data are so nebulous regarding Ghawar.
I have been pushing for a Net Oil Export panel at the ASPO 2007 meeting, but I told one of the organizers last week that by the time the convention rolls around, this fall, declining net oil exports may not be a debatable point any longer.
As I have been noting for a while, I'm sure it's just one of many "coincidences" that we are seeing a massive US military mobilization in the Middle East, just as we see rapidly accumulating evidence of rapidly declining net oil export capacity.
IMO, the big "surprise" this year will be Russia, along with the "shock" that Saudi Arabia is in decline. Finite limits in a finite world. And Peak Oilers are called cultists?
Hello Westexas,
You are probably right. Given that this is the case, no one needs to debate this point ad infinitum here on The Oil Drum any longer. If Hothgor and Freddy Hutter are skeptical, let them remain skeptical. Time will resolve the argument more effectively than any overheated rhetoric ever could.
David Mathews
http://www.geocities.com/dmathew1