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DrumBeat: May 25, 2008
Posted by Gail the Actuary on May 25, 2008 - 9:06am
Topic: Miscellaneous
Where the banking meltdown has largely been confined to the paper-based hinterlands of structured debt products and banking writedowns, the ongoing surge in the oil price is very much a real-economy issue.Pemex Says April Oil Output Drop Biggest in 12 YearsWhether you subscribe to the view that the world has sufficient oil for another 50 or 200 years is immaterial. Amid surging demand from emerging economies - and undoubtedly an element of the froth that speculation has brought to the party - there is little reason to suspect that crude prices are going to experience a serious correction anytime soon.
May 23 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, said April crude production fell the most in more than 12 years as output at its largest field declined faster than the company forecast. Output at Cantarell, Pemex's biggest field, fell 33 percent to 1.07 million barrels a day, according to the Energy Ministry. That was the lowest output since March 1996 at the field, which peaked at 2.192 million barrels a day in December 2003 and once accounted for about 60 percent of the company's output.
Australia: Labor to review GST on petrol
FURTHER ways to cut the price of petrol at the bowser are under scrutiny after the Federal Government said it would look at revenues from petrol in its planned tax review.The tax review was announced in this month's Federal Budget, but ministers Jenny Macklin and Chris Bowen confirmed today the review also would investigate whether GST charged on top of the petrol excise should be scrapped.
Cheap oil is history. But why?
Shortly before dawn on the morning of May 26 1908, it came gushing out of the sands of Persia in quantities that would transform not just the region’s fortunes but the entire world.A century on, the global gushing noise is being replaced with something else. There’s plenty of the black stuff still down there, but it sounds more like someone slurping at a straw, poking around the bottom of a glass in among the ice cubes.
Ben Stein: Running Out of Fuel, but Not Out of Ideas
Gasoline is unimaginably important in our lives in the United States. Without gas in virtually limitless supply, and at prices we could afford, American life would change. We could no longer afford to live so far from one another and from our jobs. We could no longer afford to cruise in cars incomparably larger than those of our counterparts in Europe and Asia. In a way, we would stop being America as we know it.Maybe this would be a good thing. After all, do we really need to have a 6,000-pound S.U.V. take a 100-pound high school student across town to buy a Diet Coke? Do we really need cars so big that they have flat-screen televisions for the children in the back? Do we really need to pour so much carbon dioxide into the atmosphere? And it’s certainly not great to belch out immense quanta of carbon monoxide, a deadly poison. . . . So, what to do? First, we do not kill the geese — the big oil companies — that lay the golden eggs. We encourage them and cheer them on to get more oil. They need incentives, not hammer blows.
London's new mayor says oil deal struck with Venezuela will be scrapped
LONDON: The British capital's new mayor, Boris Johnson, said Sunday he was ending a controversial deal that has provided cheap Venezuelan fuel for London's transport network.The agreement, signed last year by the Conservative Johnson's predecessor and Labour Party rival, Ken Livingstone, provided discounted oil for London's iconic red buses in exchange for advice on urban planning in Caracas, the Venezuelan capital.
Tehran, May 25 (Xinhua) -- Iran's deputy oil minister said that Iran will boost its oil output to 4.3 million barrels per day by the end of March 2009, local daily Kayhan International reported on Sunday.Such a rise of oil production owes to some major projects implemented by the oil ministry this year, said Seifollah Jashnsaz at a press conference.
Oil has long been crucial to Mexico's economy. While it is less important today than in the past, oil still accounts for about 40 percent of government revenues. However, Cantarell, the world’s third-largest oil field, is facing an uncertain future.
The well hasn't run dry: deal makers set sail for North Sea
It was dubbed the "Hallowe'en massacre". But Canada's decision to impose swingeing new taxes on its oil and gas trusts could see millions of dollars heading towards the North Sea.
T. Boone Pickens' prediction: Oil production is reaching its peak
Mr. Pickens is one of several Texans who are pushing the Peak Oil theory of oil scarcity into the mainstream. He believes humans will soon use up half the oil they can extract, and oil production rates will drop, never to recover.The controversial theory gives oil investors reason to bid prices to record levels and has prompted some local officials to create contingency plans.
The cathedral-ceilinged "great room" -- a defining feature of big suburban houses for the past 15 years -- is losing favor. Owners say these double-height rooms are expensive to heat and cool. They can be drafty and reverberate noise. Cobwebs are hard to reach, painting requires long ladders and washing the second-story windows can be a nightmare. Moreover, growing numbers of home buyers think these soaring rooms waste space.
OPEC chief promises to help Ecuador increase oil production
Visiting OPEC Secretary-General Abdalla El-Badri Friday promised to help Ecuador solve "technical problems" in improving its oil production capacity.Ecuador's national oil company has witnessed a drop in output in recent years due to aging equipment and a lack of investment. Its current production remains at 170,000 barrels per day, one third of the country's total output.
Iran's deputy oil minister said that Iran will boost its oil output to 4.3 million barrels per day by the end of March 2009, local daily Kayhan International reported on Sunday. . . .Rebuilding America Special Report: How to Fix U.S. InfrastructureIran's current oil output is 4.207 million barrels per day, and the increased output will be supplied from Darkhovein, Shademargan and Hengam oil fields in southwestern Khuzestan province, Jashnsaz said.
American infrastructure is in trouble, from collapsed bridges to leaking dams. In a yearlong investigation, Popular Mechanics uncovered the fresh ideas, smart engineering and new technology we need to fix it. Here’s the plan.Caution Urged in Signing Leases for Tapping Natural Gas
With more than 900 oil and gas well permits expected in New York State this year and booming interest in the Marcellus shale deposit extending across West Virginia, Ohio, Pennsylvania and New York's Southern Tier, local landowners could soon be talking like Texas oil men. But minerals experts signal caution and urge landowners to get educated, learn how to negotiate and think about forming a cooperative of landowners before signing the first lease offered by a natural gas company.
Energy fears looming, new survivalists prepare
My worst fears are wrapped up in that story. Not my expectations, but my worst fears. But one has to take the worst case scenario into account when preparing - lest they be caught in the hurricane with no supplies on hand.
Robert - The idea of survivalism is no new passion. My best friend in High School was Mormon and they have been encouraged by the church to prepare for bad times ahead going back decades. He still works a regular job (Security Mgr. for a Casino)but from what I understand they are beginning now to prepare for the worst. Globilization cannot survive in it's present form with $10.00 gas.
Perhaps people should be frightened. No?
Rumor you can dispel, maybe.
Safeway Supermarket came out of Mormon stockpiling.
Far out, PeakOil.com picked up by the AP. Maybe that's why the site's down at the moment...
We're much leaner now on survivalists than a couple years ago. Surprising we never had a form your own militia thread.
What bothered you about the story, Robert? In lean times you'll get a segment of the populace locking and loading, sure, but the story also talks about people learning how to make soap and herbal medicines.
Hmm, what's this, "peakoil.com hits MSNBC.COM"? Now that'll do a job on your site traffic!
Yes, PO.com is being hammered, ever since the story came out yesterday. It's even worse today.
I agree - the peakoil.com site is sloooooow. I posted a request for questions for James Howard Kunstler there but the site is not responding.
Very good to see links to these sites on mainstream media!
Can you help me out? Here is my request:
Mr. Kunstler commented on my show in a recent podcast. I provided a video response/request and he has agreed to an interview. I would like to hear the thoughts of this community: what questions do you have for Mr. Kunstler?
I know this oil drum may not be the site for such a request so feel free to comment at http://www.kriscan.com or wait for peakoil.com to come back online.
Thanks for all you do!
Kris
Nice web site. You remind me of Obama girl for some reason. Go Peak Oil Girl!
Ya...are you the woman that did the PO video/strip dance thing not too long ago? Good PR stunt I thought.
LOL, the peak oil strip video was my favorite, I didn't understand a single word she was saying... lol, just kidding, it is nice to see women so passionate about a subject like this.. All the college women my age are too into getting wasted at frat parties to consider, much less understand, such issues. Good work though
Kris,
I run a Peak Oil website (http://www.lifeaftertheoilcrash.net) and am starting a cult . . . excuse me - "post oil sustainable commune" - in the woods here in Northern California. Perhaps you'd be interested in being the cult's . . . excuse me "community's" Alpha-Female. If so, feel free to contact me via the website.
http://tinyurl.com/6mzwkm
Best,
Matt
Ha...Matt,
You have no scruples whatsoever. I think she's a bit too intelligent for your band of monkeys!!
Attn Kris & Matt:
I think you two would make an excellent match--just an opinion from an older guy--hope you two can somehow meet & greet in person.
Why, you dirty old man. Wish I had thoght of that.
I'm 29.
If I was 29, I'd be a dirty old man, too. Now, at 63, I'm just old and dirty.
Dude, you are true visionary!!
Until now, I've been concerning myself with oil supplies and boring stuff like that. The real solution is for the "enlightened" to form cults and let the vast majority of people die.
New Cult Checklist
--------------------
1) need a name (Calgary Cargo Cult?)
2) some land (shouldn't be a problem)
3) cult vision (repopulating the planet)
4) supreme leader (I was just elected)
5) female/male ratio (10:1, 20:1, 50:1 ?)
6) financing (I'll think of something)
Great time to be starting a cult.
After all, somebody has to do it. :))
From page 311 of The Entropy Law and the Economic Process by Nicholas Georgescu-Roegen:
"..only in the late twilight ofthe human species, when human society will very likely disintegrate into small packs of humans, will the social factors which produce the circulation of elites fade away, too."
Is NOW the "late twilight" that G-R means?
Anyone else read this book? I found it haunting, interesting, prescient. It was published in 1971, by the way!
I thing you are going to need more than a website and some land.
The culture hasn't yet made the shift to: sustainable lifestyle = superior mate.
During this transition period, you are probably going to have to spice up your offer with some of the more traditional attractants. Diamonds and gold make good bait, especially in an inflationary environment.
Now you just hold on one minute, Matt Savinar! I'm the one that's gonna be puttin' together the post apocalyptic peak oil cult! I'm gonna call it "The Church of Unlimited Credit," and I'm the "All Knowing, All Seeing One Of Great Vision."
Just so we have that understood...
SubKommander Dred
Well, now you've done it!
As a good looking intelligent women in a room full of nerds, it is only a mater of time before the marriage proposals start.
Hey Kris;
Thanks for posting here. Sorry to see that noone really tried to give you any Kunstler Questions.
I don't know what to ask him myself. I don't really find his tone useful.. while he does get a lot of attention with it. There's something to be said for that, I guess.
I've heard him say he lives in, if not suburbia, then a populated area. Aside from his writing, what does he do to get his household AND his community more prepared for what might be coming?
Good luck with the interview.
Many Thanks for your efforts to get the word out.
Bob
What bothered you about the story, Robert?
My fear has always been that the Doomers are right. This story gives a taste of the world in case they are. The suffering will be unbelievable, and I have to try to navigate my family through this. That's why I pay close attention to stories like this. I want to know what people are doing; how they are preparing.
My hope is different. My hope is that we will muddle through this, and while we no doubt have some difficult times ahead of us, we have a massive amount of fat to cut.
In fact, I just posted a thought experiment on my blog:
Coping with Gas at $100 a Gallon
The purpose of the thought experiment is quite simple. I want to find out - in desperate times - just how much people can cut. Interested in your thoughts on that if you want to post them. For me, it's a window into whether the Doomer view is more or less likely. When people say "I just don't have much room to cut", then I am more pessimistic. But in my own life - and I have already made major cuts - I still have a ways to go before I have cut out all the fat.
Robert, lots of people can cut lots of spending and lots of driving. The problem is that lots of people will then no longer have a job. I fear that anything other than exponential growth in energy usage and spending will almost immediately result in a depression or worse in the United States. This country will not cope well with a economic collapse.
i think an additional issue is that people will have lost their financial ability to put alternatives in place to allow themselves to maintain some features of their current standards of living. In other words, most alternatives aren't free. Further, time is of the essence. You can't immediately install a PV system or solar hot water or start to grow a large proportion of your food, much less, preserve it.
To me, the word "doomer" prevents/puts off many people from taking needed action from a risk management perspective. It biases discussions in much the same way that "peak oil theory" is used to deflect the serious issues raised by reduced energy supplies. I feel self-reliant is a better word without the baggage that doomer carries.
Todd
"i think an additional issue is that people will have lost their financial ability to put alternatives in place "
I think this is a hugely important point that the technocornucopians seem to willfully ignore.
And not just on an individual homeowner basis...
nobody ignores it. if anything the doomers ignore the fact that you need peak oil to make these new energy sources viable.
there will always be people with money. think how many cars and homes will be bought this year even though there are high gas prices and the worst housing market in forever.
there is always the old technologies of conservation, car pooling, cutting back and etc.
If they are not able to replace fossil fuels now, they will be even less viable once the full effects hit.
In my 2006 Net Oil Exports Revisited article, I talked about "tiny houses," as small as 100 square feet, along mass transit lines, as huge swaths of the 'burbs are basically written off:
http://www.energybulletin.net/19420.html
I see the future for Mr. and Mrs. Westexas:
http://www.youtube.com/watch?v=Lomy7xAVDKE
That was pretty much the response when I first raised the subject in 2006, but I somehow suspect that super efficient small, low cost, houses are looking more and more attractive now.
Having said that, what is preventing us from downsizing is what the commercial showed--SNS, Spousal Nesting Syndrome. The cost of admission to a New Urbanism community, where I could walk to my office is a townhouse which costs twice what our current abode costs, so we have a stalemate.
I was recently chatting with a senior petrochemical executive and his wife, who live in Detroit. They bought a McMansion in 2005. When I suggested that they sell now for whatever they can get, the wife almost screamed (I am not exaggerating) "House prices will recover!" Cognitive Dissonance in full force. Two problems: they would have to take a huge loss and it would be a loss of social standing, to move a smaller house than their peers.
Yeah, we can all live in tiny super efficient housing and mine oil shale/sands for a living just like 1750's London when coal mining/burning was the trendy thing to do. I think when people look at the tech fixes such as super efficient housing ect they underestimate the amount of people that are going to be unemployed in the future. I know people can't predict the future, but I wouldn't think it too much of a stretch to say that. Think of all those people working at the hordes of restaurants, spa's/salons, coffee shops, car dealerships, advertising, retail sales and a plethora of service/luxury jobs that encompasses the entire American economy. With the Fed building up the debt and altering interest rates and keeping economic downturns since the 1930's rather small by comparison, we have taken out the natural selection of the economy, meaning the businesses that shouldn't be there have been aloud to prosper because of a huge debt build-up. The economy works a lot like an ecosystem when hard times happen those that are most fit to survive will and keep the population lean and smart, but all our businesses have fattened up just like our people. When the inevitable down-turn starts like it has, recession, much more businesses are going to be weeded out and more people laid-off, because their are too many restaurants and coffee shops. People are not going to live in ultra efficient housing because they can't afford any housing cause they don't have jobs. They won't be able to afford PHEV's either, so those won't be saving the day anytime soon. I think perhaps a government CCC or something might help where people can work decent probably hard jobs building new energy infrastructure and can live in government small ultra-efficient housing. I don't know if I like that proposition but that's better than nothing. I wasn't directing anything towards you westexas, just speaking in general.
What do you guys think?
No, ultra efficient housing will not be stopped by a weak economy-a weak economy will kill large, energy inefficient houses of low property value, i.e. once the cost to heat and/or cool a dwelling exceeds a certain % of the dwellings value the dwelling value quickly spirals to zero (Detroit has more than a few of these buildings).
Maybe there is a good employment opportunity in converting all of those wasteful "cathedral ceiling" spaces into accessory apartments.
I think you don't make enough allowances for human ingenuity.
You don't need to insulate the whole darn house - if money is tight then people will live in single rooms, and insulating those will not cost a fortune.
So there is a job - insulating properties.
If EV cars are not affordable then electric bikes and scooters will lead the way.
There are jobs there.
So there is some chance that not everything will be kaput, and so maybe we can move on form humble beginnings to EV cars and efficient houses.
We had massive unemployment in the UK in the 80s - on the whole people cope better with adversity than prosperity.
I think that last sentence is profound and very true. It's the waiting thats killing me....
You had massive unemployment in the UK in the 1980s while at the same time global oil prices were collapsing and oil availability was increasing. Given the incredible reliance our entire civilization has upon oil, you might want to ponder that fact a bit longer.
I don't believe that I indicated in any way that the high unemployment in the UK was caused by oil.
The reference was simply that people are quite ingenious at getting by, and that some of the thought processes of an informal economy took root at that time, and may be helpful in any depression caused on this occasion by peak oil.
So you might want to ponder a bit longer on making your post relevant to the discussion at hand.
And you miss the point entirely. The unemployment was not caused by oil but the entire scenario was softened by a rising global energy profile. Will the ingenuity you saw be possible in a world of shrinking energy availability?
The key question is "What is the decline rate?" And we do not know. A very low decline rate and the world has time to adapt. Above some threshold though, adaptation cannot occur rapidly enough and the result is disaster. You cannot simply assume that everything will be ok, which is exactly what you are doing. You are whistling as you stroll past the graveyard, hoping, praying, believing any belief-based thing you can grasp that it will all turn out fine.
That's not exactly a heartening prescription for adaptation now, is it?
If you would address what is actually written rather than continually re-interpreting my statements into something else then the discussion might be more productive.
In no way did I imply that anything would be easy, and in no way do I predict outcomes, as they are dependent on a lot of choices which we don't know how they will be made in the future.
In fact we don't even know for sure such basic parameters as how expensive or cheap solar energy is likely to be in five years time or what price great new insulation materials such as aerogel will sell for.
I am at a loss to understand why you conceive that ingenuity will not be important whatever the future holds.
In five minutes in the local pub I got more sensible responses - an older couple when I said that their pensions might not be worth very much and heating might be dear said that in that case they would have to wrap themselves in their duvets in the evening, and do more on their allotment.
I did not say that oil caused previous unemployment nor am I saying that adjustment will be easy or predicting how successful it will be.
If you actually want to address what I did say, fine, but please don't simply invent things I haven't said.
I never once claimed that you said that the unemployment was caused by oil. That is your interpretation of what I said and how you are getting that I have no idea. What I have said twice is that the unemployment of that era occurred during a period of rising global energy, not during a period of declining global energy. That is a very different situation, one in which simply ingenuity may not be sufficient. The general assumption that we can just tighten our belts a bit and all will be fine is one that should be challenged. Without active mitigation, including the adoption of new energy sources at least close to the quality and volume of fossil fuels, just tightening out belts may not be sufficient at all.
However, it appears that we're not communicating here, for whatever reason. And rather than waste your or my time further, I'll leave you to your assumptions.