 | Canada as an energy superpower | The Oil Drum | Let's Discuss: H.R. 6107, the American Energy Independence and Price Reduction Act |  |
Discussion Thread for CNBC's America's Oil Crisis
Posted by Prof. Goose on May 22, 2008 - 7:00pm
Topic: Economics/Finance
Tags: cnbc, daniel yergin, john kilduff, oil, oil prices, peak oil, t. boone pickens [list all tags]
A show on CNBC tonight at 8p and again at 11p EDT, called America's Oil Crisis, may be worth discussing. Here's an open thread for you.
The first real segment of the show is John Kilduff v. Dan Yergin. It was a contrast in styles and substance, shall we say?
Very interesting, in the context of what was said and what was not. One key point for me was Treasury Secretary Paulson's comment on whether speculation is causing the recent spike. In essence, he said no, speculators are following the upward trend, not setting it.
The main take-away: more attention is going to the supply/demand equation, where it belongs. The host signed off by saying the world has reached a tipping point, and that big changes are afoot.
Very interesting, and, I thought, rather well done for what it was.
Paulson's comment about the speculation explanation was refreshing coming from a government figure. It deviated from the standard moron line that we attack the problem by attacking speculators and oil companies.
There are only 3 things that can happen to a barrel of oil when it is bought:
1. Contract delivery is taken and it is used
2. Contract delivery is taken and it is stored
3. It is sold before contract expiration
There is no speculation in #1. There is only short term speculation in #3. That leaves only #2, storage, as a playground for serious, persistant speculation. And storage isn't something you have to guess at or solve with charges about evil manipulators behind the curtain. Just look at a historical chart of oil storage (they keep track of it!) like the one I'm going to be posting next week with a look at all the shorting and "spec" longs that so many people use as an oil price prediction. If you look at such a chart, you find that there is a solid link between supply concerns and inventory levels. In the 70s, the run up in oil price was accompanied by some significant stockpiling of oil, which was undone in the mid 80s as the massive switch to smaller cars and a very bad recession finally cooled a runaway demand surge. This speculation aided the downdraft in oil that occured in early '86, when the high inventory level came sharply down and oil quickly went from $30 to $15.
In the 1990 Gulf War there was a much milder version of this. So what does this storage chart show now? It shows the oil price straying far away from any stockpiling activity. You here it often said that inventories are at their highest level in 5 or even 8 years. What these people fail to mention is that stocked oil, in terms of days of import disruption coverage, has been flat as a pancake at historical low levels for over 8 years now! There is nothing like the stockpiling episodes of the past going on. In fact, there is a strange disconnect between the historical lock-step movement between oil price and oil storage over the last 5 years. This point about speculation is further discussed by Gary Lucido at investingminds.com in the article "Oil Prices Not Driven by Speculators".
But what about all the wild gyrations in oil price we have been seeing the last couple of years? Has fundamental demand really doubled in a year? Doesn't this prove it's all just speculation? Econ 101 says that demand doesn't have to double for price to double. But as for the sharp price changes both up and down that don't seem to be linked to any fundamental like a production surge or demand ramp up, we may well be entering the condition Kenneth Deffeyes discusses in one of his books where, as demand approaches capacity, pricing becomes chaotic and volitile. It becomes a bidding war where a barrel of exported oil is worth whatever someone (or some government) is willing and able to pay for it similar to bidding on rare paintings at an auction. Here the price becomes disconnected from the normal supply/demand adjustments - you can't make up another batch of rare paintings just because more people want them. We are getting to the point where we can't whip up more oil supplies just because the demand is there. Predicting the gyrations in oil price may become like trying to predict what a rare painting will go for in the fickle hard-to-analyze minds of the bidders present.
Nicely said, Netfind. Unfortunately, I believe no one has the absolute answer(s) to your question(s). It smells like History (with a capital "H") is unfolding as we type...
I was not impressed at all with the show. No one seemed to have a clue as to what the problem really is. The Term "Peak Oil" was not uttered once and only Secretary Paulson had any indication as to what the problem really was. He correctly identified "Supply and Demand" as the culprit. The poll CNBC conducted did not even have that as one of their options.
The nation, nay the world, is about to enter a crisis of biblical proportions and only about one person in a hundred seems to have a frigging clue as to what the problem really is. We are in a world of crap.
Ron Patterson
You give too much credit. In my experience working at a truck stop and hearing a truckload of opinions/rants on a daily basis, I'd have to put the figure at closer to one in ten thousand who actually are knowledgeable on the subject.
This is why the CNBC special was important: it lays the ground work for easing Joe Sixpack into Peak Oil awareness.
Joe Sixpack watch CNBC!?! You've got to be kidding. If they were watching anything, it was the NBA playoff game.
Sometimes when I have a spare moment, I post at the forums at gasbuddy.com. It amazes me the nonsense that people come up with. Talk of gas boycotts, adding acetone or some other crap into the fuel. Lots of those folks are hurting, but they don't know who to blame. Thus you get rants against OPEC, Exxon, the Government, Hippies, Environmentalists. Many of these don't make any logical sense, but if you consider that most of the people in the country are apparently ignorant of how supply and demand actually work, I guess it shouldn't surprise us..
I wouldn't say that everyone over there is that ignorant - there are a handful of people who try and keep the discussions reality-based...
Of course not, heh. What I was attempting to communicate is that this opens the door for more discussion in the media -- and in the general direction that it needs to go. Once it saturates the media, it will become the new "Global Warming." Not everyone will be an it-getter, but it will be more prominent in the Collective Conscious.
Sort've a trickle-down effect, if you will.
Well, I was trying to tune to the game when the remote went dead and the TV was stuck on CNBC. I was too lazy to get up and change the channel. While I was waiting for the wife to go to the store and get batteries, I watched the show long enough to learn a few things.
When you travel, don’t put stuff on top of your vehicle. This causes drag and uses more fuel.
There is some web site I can go to that will give me the location of the cheapest gas prices in my area. Forgot what it was.
Keep the tires in your vehicle fully inflated to reduce road drag. I will have to have the little lady check that….
Just a lot of high decibel screaming and shouting, it seems to bear out what James Kunstler says, most people believe we will either "organize" our way out of the problem; example, use "gasbuddy" to find the cheapest gas on our route or technology will save us, example "coal to liquids"
A few years ago there was a rather sensible Australian government move to create a CNG (compressed natural gas) vehicle infrastructure. Then they lost interest. One reason might have been an important bureaucrat testifying before parliament, and saying that the oil price can't go much over $40/barrel because "at that price coal to oil becomes profitable". Well that's a long way back in the rear view mirror. I presume it is profitable at $130/barrel. So why are the South Africans so grumpy. I presume that fear of a collapse in the price of oil has stopped others from doing it. Now that there is a wider expectation that the oil price will stay reasonably high, why won't CTL projects spring up everywhere that has coal? It is surprising how fast American business moves when it senses a profit. The rest of us try to catch up (or, in the case of bio-ethanol, try to avoid the mistake).
Which brings me to another coal question. There seems to be a lot of coal that is too deep for coal miners. Surely we can replace humans with robots in underground mining?
CNG is a sensible medium term option for Australia because its clean(ish) and we have a lot of gas.
Oh I don't know, maybe its this climate change thing people keep talking about?
The first fully automated (read remotely operated or robotic) longwall was run in the United Kingdom in the 1960's. It was called ROLF . The deepest mine was apparently at 5,000 ft in the UK, though until I looked I hadn't thought they mined deeper than 3,000 ft, in Kent. The main reason that mines don't go deeper, at present, is that there is enough coal, closer to the surface, that is a whole lot cheaper to mine. It is only when the coal is exceptionally good, or the country is desperate for the resource (e.g. Ukraine which now has mines that I seem to remember go down to 4,500 ft) that mines start to go very deep.
Slowly remote and robotic control are coming to mining, but the changing geological conditions make it more difficult to program machines to work effectively, and in the varying geometry (seams can go from 5 ft thick to 18 inches in less that 150 ft) human miners are just that much more flexible.
I think a review of the ethanol financial debacle is in order. Great interest and government mandates and subsidies still can't make these companies profitable. Look at PEIX. The own the west coast for ethanol and can't earn a dime. Most plants on the board for 09 and out have been cancelled due huge losses in the industry.
American business moves fast when is senses a profit is correct.
Maybe they don't sense a profit.
To respond to your last question first: Yes, the coal industry (at least in the US) HAS gotten away from the old deep coal mining using human labor scheme, and they've done it rather destructively by using a technique known as 'mountain top removal'. It's fairly self-explanatory: they dynamite the tops off of mountains in Appalachia, pull the coal seams out using heavy equipment, and dump the remains in nearby rivers and streams. Real nice solution.
That aside, I think the coal industry is already poised to make a resurgance. Every other side ad in CCN's website lately tends to be from this Orwellian thinktank called "America's Power" (http://www.americaspower.org/). Their point for existence seems to be to try to remake the coal industry's image with a load of "greenwash". Look for a lot more of this as the coal monster awakens.
hey come on. just the use of the terms supply and demand and saying that it's NOT speculation is a big deal.
they probably had an agreement beforehand--no one utters the words "peak oil"!
I agree that it's slow, but understand...Joe Six Pack isn't anywhere close to being ready for any of this knowledge or change in mindset.
That only 15% of their poll blamed the consumer says it all.
Hell is anyone, really?
Well if you include Congress with us consumers, you get up to 45% in the poll. Still an awful small number.
Frankly, I was disappointed in the show. The Glenn Beck segment with T. Boone Pickins was much more informative I thought.
Agreed. T Boone and Beck at least echoed a lot of the sentiment I read here on TOD.
Agreed. Ironic that Beck's show was much better than the show on the same day presumably dealing with "America's Oil Crisis."
Boon talked about PO and oil decline -- says he thinks we reached PO in 2006 or 7. Beck in agreement, and mentioned PO as well.
Beck's show had some great video clips of a couple of members of Congress (Democrats) laying into the oil companies, clearly pandering for re-election, and not telling the truth about PO. Boon keeps repeating that they are not working to solve the basic problem -- oil supply is dwindling. Congressional leaders could have started promoting renewable energy decades ago, but didn't, and still ain't. Amazing.
Boon is investing over a billon on wind farms in TX. Very basic message: we have a problem, let's start working to solve it. I really like Boon's calm, "just the facts, mam" straight forwardness. Quite a contrast to the histrionics and near-sighted spin on CNBC. The degree of mania almost looks like an unconscious reaction to mounting anxiety. And, were I a Freudian (I'm not), one might suspect that this is reaction formation. They know about peak oil "theory," but are afraid of it.
Mike
http://drmillslmu.com/peakoil.htm
Michael, the contents in the page you link are excellent! I have a long history of peak oil and energy research in the Internet and this is going to be one of my favorites! Bravo!
"Agreed. T Boone and Beck at least echoed a lot of the sentiment I read here on TOD."
Is that the new measuring stick of informative, that it "echoes" what I already believe?
RC
Well ... no. But I am leaning towards information that I am reading and learning here...and seems they hit the nail on the head for me. This thread was about our opinions on some TV events dealing with the Oil crisis. Nothing more.
So tell me, PG, what happens after you actually convinced Joe Sixpack that this is a problem? Let me ask that another way - what utopian dreams do you have that are about to get smashed by red clawed apes?
GZ, I am not advocating the convincing of Joe Sixpack--and that's never been the goal of why we do this (at least not for me), in fact I fear the day he starts coming to grips with the problems that confronts him.
Surely we all understand by now that it will be the elites who learn about resource depletion first, and they will do all they can with that knowledge to exploit it to feather their own beds. After they're done, that's when I become worried. It will be an odd game of king of the mountain, but with resources.
I have no utopian dreams GZ. I am merely compelled by the potential transitions of our culture, the potential destruction of our middle class, the potential devolution of our institutions and rights...to what point? Do you hear me expressing hope? I think not. I see ways that the culture that emerges from this transition will be better, and I see ways that it will be much much worse.
In other words, something will come out the other end of this cow--it's just a matter of what goes in and what comes out after going through all six stomachs...
Then why worry about whether Joe Sixpack ever understands this? In a world of population overshoot and resource scarcity, luxuries like "human rights", "liberty", and "democracy" will very probably all be sacrificed on the altar of "save my ass", so why does Joe Sixpack learning about this matter at all?
Remember, you were the one that raised the issue of Joe Sixpack learning about this stuff, not me. Why does he even matter?
of course, taken to its logical extreme, yes.
actually, I was responding to tongue-tied and twisted up above in his parlance...but (and I get where you're going) of course JSP matters because he is what keeps the machine running, GZ. on the other hand, the elites can obfuscate for as long as they wish...until they can't...
At the end of the day, this is still human life we are talking about...and the amount of suffering that this could bring absolutely haunts me. That's why I do this...because we have to try, even if it's futile.
Some think that foolish.
The tsunami is visible in the bay. You can grab the hands of those nearest to you and run inland and for higher ground right now, hoping that at least a few of you make it, or you can stand on the beach sounding an alarm that will get ignored and go down with all those others on the beach with you.
No one here is yet willing to use the word triage. And I mean that literally. We're past the point of no return. If we really wanted to save global civilization, we'd have to let the weakest parts of it die to focus on those we choose to save. Since we (collective we) are unwilling to make that choice, the entire structure is in trouble instead. Instead we (collective we again) keep lying to ourselves, telling us a hero's tale that we can actually save everyone if only, if only, if only... something (choose your favorite remedy here).
We (collective we) will have finally grown up when we realize that we do not have that option and instead must make very hard decisions. We're not yet willing to make those hard decisions and if we wait too long, the decisions will be made by nature for us. I've seen this immaturity before, in young soldiers who think they can save the world and all their squad buddies too. Then they finally wake up and when they do, the depth of pain in their souls is truly harrowing as they realize that someone, someone they know, may have to die that others may live.
But carry on. Keep pretending that everyone can get through the coming bottleneck. Keep lying to yourself that trying to shove everyone through actually matters. Triage. That word means real pain, personal and otherwise. Until global civilization faces that word squarely we don't have a chance in hell.
In regard to the tsunami allegory:
You could also run like hell whilst yelling the alarm and get the best (worst) of both worlds.
PG GZ both your perspectives are valid, so why not do the tango (or contango if you prefer)
This life is temporary for all beings, so it becomes a question of what choices one is comfortable with ethically/morally for oneself.
Myself, I can't wait for the riots to begin so I've got some moving targets to practice on, my wife tends the critically ill and thinks I'm The Devil, we still love each other very much.
Transience - There is no pain, only disappointment knowing that great potential has been wasted.
All must be swept away so a new cycle can begin. Rejoice, Mother Nature is composting in preparation for a fresh planting in spring.
If we'd all stop eating meat right now, did a crash programm on solar, wind, dam projects and "nucular" plus a railroad building programm we could nearly make it. Conservation is as well important. Also, free condoms and free sex/contraception education for everyone. Hell, we should play the Bartlett video to anyone on earth at the age at 15.
Given the influence wishful thinking, stupid planning and religion/ideologies have, this won't happen. :-((
Joe,
Frankly I don't think you get it either. What you are proposing is that if we piss around the edges, we can maintain business as usual (BAU). I would suggest it is BAU that has to go which gets into the areas of economic systems, governance and societal philosophies. To me, this is what GZ is suggesting with triage.
I've posted numerous times that I have lived in the boondocks for a long time since I left the chemical industry. I live in a different reality than urban and suburban people. I know this is the case because I've lived in both worlds including time near NYC and other large cities. I want to emphasize that this is a different reality. In fact, I've been working on a post I've tentatively titled "A Sense of Place and Your Future" because of the large numbers of negative responses to a post I made on Monday's DB. I've held off posting it since there have been a bazillion posts about the increased price of oil.
As someone noted down thread, most relocalization efforts are also pissing around the edges. GZ'z triage is coming and people will be either on the bus or off the bus. The ones who will most likely make it are those who have already come to grips with what will come down and made concrete changes yesterday or the year before. The laggards are doomed.
Todd
No one here is yet willing to use the word triage.
Interesting point. While digging up the ground on the property to get seeds in the ground I was pondering my experience with the local Peak Oil group.
In the tradition of 'lets solve a problem' - they wanted us to visualize what the city will be like in "the future". Ok fine. At the end, I came to "If we do not know the population level or the overall energy aviable - how can one have this vision?"
Tonite, while digging, I thought about attending the screenings of some movies they are going to preview. And my thoughts came back to the meeting - to a point about "if electrical power stops for a week in the -40 deg weather - what's the plan?" And Alan/New Orleans.
And I used the word triage in my head. And pondered:
1) if 25% of the citizens work directly for the government - where do they fall in triage?
2) If one has a criminal record?
3) If one does not have tax payments under X? Over Y?
4) Gender, race, religious belief?
5) How about simply free booze/drugs so that many just kill themselves via their use?
6) Various illnesses?
Do keep mentioning Triage in drumbeats - and any ideas you have on how to do that.
Peak Oil triage will be self selecting. In medicine the doctors do the selecting, but in the Post Peak Oil world individuals and coutries do their own triage selecting. The world just has to let it happen. That is the best thing to do and is the reason doctors do triage.
Haiti has decided to self destruct. So has Zimbabwe. Egypt subsidizes food for urban residents and imports it as well. Bangladesh: need I give more examples?
Individuals do the same thing all the time: drug users, cigarette smokers, over eaters like myself, and many others have evils and vices that self select the next to die.
Some Peak Oil aware also self select to die. They are called doomers. They reject mitigation with ethanol. They reject using the U.S.'s considerable resources to its own best advantage in the name of vague benefits that supposedly accrue to the starving in other countries or the environment. Some insist that conservation is the only solution which imposes even more stringent constraints on mitigation. In effect they are selecting death.
Others overgeneralize that the problems in some parts of the U.S. are true throughout the country. Regions that are trying to deal with the situation by rapidly developing wind energy or ethanol are dismissed as too small to mean anything in the big picture.
Maybe so, but for certain parts of the country it will mean survival. Locally, Winnebago Industries is practically shut down during its normally busiest time of the year. Corn is no longer exported. It goes to the ethanol plants. Giant wind turbines are being erected. My place will have about half a dozen a quarter mile across the fence. It is changing the whole feel of the countryside.
Hopefully northern Iowa has self selected to be surviver of Peak Oil triage.
Ethanol is self-selection to ecological catastrophe. This has been demonstrated multiple times over yet you, kdolliso, and the other ethanol propaganda pushers keep pushing your lies, just so you can feed at the public trough.
I realize that the original discussion of triage was in regard to population, but here is my August, 2006 discussion of the topic in regard to the 'burbs. I frequently call Alan Drake my Peak Oil Tranquilizer. At least he has a plan for making things "Not as bad as they would otherwise have been."
http://www.energybulletin.net/19420.html
Net Oil Exports Revisited
Published on 21 Aug 2006 by GraphOilogy / Energy Bulletin. Archived on 21 Aug 2006.
by Jeffrey J. Brown
Triage sounds great -- until you realize that YOU might be the one to be "triaged".
I think the Americans with Disability Act is going to fall by the way side pretty quickly. The capital needed to upgrade streets and buildings is already disappearing.
I was once a Joe Sixpack, and have voiced umbrage at that misleading, sterotypic, moniker. There was once a time in my life where I had to work two full-time jobs to earn enough cash to provide for myself and pay my debts during which I had no opportunity to remain informed unless I forced myself. When I worked 60-70 hours per week as a restaurant manager, my leisure time consisted of going to the beach, getting high and making love to my wife, not trying to figure out how the world worked. I look back on those days as blissful. It turns out I was lucky enough to attend upscale public schools at a time when they actually taught something, even though my behavior caused my expulsion. Circumstances allowed me to embark on my collegiate career in a self-taught, self-directed manner while still working 50+ hours a week. I then re-entered college and graduated 4.0 Summa Cum Laude by making sure I treated every course as grad level by piling on additional texts, and used semester breaks to self-learn subjects I was interested in, like microbiology, that my educational plan didn't have room for during the regular academic year. My point is that if I can do it--understand the world's intricacies and parse its problems--then any Joe Sixpack can--even the brain damaged, 70 IQ men that worked for me, and the ADHD college students I worked with. You put us down, count us out, and treat us with the sort of contempt Orwell did of the Proles in 1984. That's unacceptible.
Rant over. The program stunk, although I admit to watching only a few minutes when it was about half over and the admittedly felonious stock-price manipulator Jim Cramer appeared.
By the tale of your very interesting life's story, you're obviously not joe sixpack, a moniker for one who lacks the will to learn the depth of complex systems.
Wow. I haven't been reading TOD much and comments like this only support my decision. Not everyone has the capability or time to learn the depth of complex systems to the extent of most readers here. But what I do see with many people who lack a formal education, work two jobs, etc... is that they have skills that many elite, educated folks lack AND an attitude to roll up their sleeves and get things done when needed. Best to be in camp with them...
My experience with so-called "progr