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DrumBeat: June 3, 2008
Posted by Leanan on June 3, 2008 - 9:07am
Topic: Miscellaneous
Chile truckers launch strike to protest fuel prices
SANTIAGO (Reuters) - Thousands of Chilean drivers parked their trucks along national highways on Tuesday to protest soaring fuel prices in a tacit rejection of government fuel subsidies announced amid fanfare this week.Soaring global oil prices have provoked protests around the world and consumers in Europe and Britain called for "global solutions" to the energy crisis last week.
Each of us likely has a friend who has a fairly large garden. Ask him or her what percentage of their family’s yearly food intake comes from the garden – I would be astounded if any say more than two percent. Annual gardening, like agriculture, takes an enormous input of energy for the return you get, and that is assuming you are good at it.
Energy Department Seeks License for Yucca Mountain
(Bloomberg) -- The U.S. Energy Department submitted an application seeking to build and operate the nation's first permanent repository for used nuclear fuel at Yucca Mountain, Nevada.
Iran slams 'capitalists' for rising oil and food prices
ROME (RIA Novosti) - Iran's president told a UN-sponsored summit in Rome on Tuesday that "powerful capitalists," who are trying to stop the development of nuclear energy, are to blame for high oil and food prices.
Motiva Texas Refinery to Restore Output in `Couple of Days'
(Bloomberg) -- Motiva Enterprises LLC, a joint venture of Royal Dutch Shell Plc and Saudi Arabia's state oil company, said it expects its Port Arthur, Texas, refinery to return to full production capacity in the ``next couple of days.''
China stops refunding export tax on some vegetable oil products
BEIJING, June 3 (Xinhua) -- China will stop refunding export taxes levied on some types of vegetable oil from June 13, the Ministry of Finance (MOF) said in a statement on Tuesday.This move is part of the government's effort to control vegetable oil exports, ensure domestic supplies and stabilize prices.
Russia is eating up its oil fund assets
"At the end of the planning horizon in 2040, with passive continuation on this path, Russia could eat up its oil fund assets and other foreign exchange assets it started out with, and could reach a zero net debt position. After that, Russia could get into debt again as gross debt continues to increase while the oil fund begins to shrink since the budget transfers by that time exceed oil revenues."
Gas OPEC future unclear as meeting postponed
MOSCOW (Reuters) - The world's top gas exporting nations will postpone holding a high-level forum to October from June as the sides cannot agree on whether to form a body similar to the OPEC oil group, Russian officials said on Tuesday.
Pinched at pump, consumers warm to energy plants
SAN FRANCISCO (MarketWatch) -- Consumers are dropping some of their opposition to new energy construction projects as gasoline prices push past $4 a gallon and electricity prices accelerate, says a new survey released Monday.The change of heart could spell less opposition to coal and nuclear plants. But the building of new oil refineries, stalled for years, is likely to continue to face stiff opposition, said the survey by RBC Capital Markets.
What frightens policymakers more than institutional investment managers moving money into commodities is the possibility that average citizens may attempt to flee their own currency. The avenues open to them, however, are considerably more narrow. Certainly, those who have brokerage accounts can call their brokers and ask that their money be shifted into commodity investments. But that is a small subset of the world. The rest of the population is left with turning their ready cash or small savings accounts into real things: jewelry, coins, precious metals, even sides of beef for storage in the deep freezer. But this part of the population usually doesn't realize what is happening to them until the cost-of-living has been rising for some time, and so they are the most vulnerable segment of society. When they do realize what is happening, their collective rush to the exits is so large that it can create a very high rate of inflation and even hyperinflation as real things are bid up and money is spent as quickly as it is earned.
Empty out the Strategic Petroleum Reserve. This now holds 700 million barrels of oil; draining it could add add up to 4.3 million barrels of crude a day to the market for about five months. That's nothing to sneeze at. It's about half of what the Saudis now pump and almost twice what Kuwait puts on the market.At the very least, this would bring gasoline prices down. And if the theories of a speculator-created "oil bubble" are true (I doubt they are), it would pop the bubble and send prices tumbling.
What of the national-security risk? Another myth. As long as we're willing to pay market prices for crude oil, we can have all the oil we want, embargo or no embargo.
A real U.S. physical shortage is impossible unless a.) all international oil actors refused to do business with us, which won't happen, or b.) a foreign navy stopped oil shipments to U.S. ports, which the U.S. Navy is more than competent to prevent.
U.S. funds for roads, bridges in short supply, experts warn
Mr. Ruane, whose organization represents 5,000 public- and private-sector members with a stake in the highway and bridge program, said that in addition to the short-term funding shortage, prospects are even dimmer for the long term if the United States doesn't increase revenue. The association has recommended an increase of 10 cents per gallon to the federal fuel tax -- currently 18.4 cents -- with future increases tied to inflation.
US rail network facing congestion 'calamity'
CHICAGO: Railway executive Matthew Rose stood before fellow industry leaders, pointing to a map meant to tell the future of the U.S. rail freight network. It was drenched in red — east to west, north to south.The blotches illustrated areas where, by 2035, traffic jams could be so severe trains would grind to a halt for days with nowhere to go.
I would like to begin this brief exposition with a bizarre fairy tale that was confected by two well known energy experts, Amory Lovins and Joseph Romm, and published in Foreign Affairs (1992-93), which is the prestigious journal of the (United States) Council on Foreign Relations. It goes like this...
The world has enough food but high prices are causing hunger. It's time to stop treating food as just another commodity.
UK: Firms being driven round the bend by soaring fuel prices
WHILE many drivers can either absorb the cost or leave their cars at home, many fuel-dependent businesses are fighting for survival. Last week, a convoy of hauliers took to the streets of London to protest at a further proposed 2p hike in fuel duty.The protests might not yet be on the scale of those witnessed at Grangemouth and elsewhere at the turn of the century, but the mood is getting uglier as businesses find themselves being squeezed ever tighter.
Because trucks haul about three-fourths of all freight, rising diesel prices "have the potential to increase the cost of everything Americans consume," said Tiffany Wlazlowski, spokeswoman for the American Trucking Associations in Washington. The industry spent $112 billion on fuel in 2007 and is on a pace to spend $154 billion this year, she said."It's brutal out there," said Kerry Byrne, executive vice president of Total Quality Logistics, the fast-growing freight brokerage firm in Union Township.
Atlantans' cars idle in mid-1970s time warp
Lately the mere whiff of gas fumes, like Marcel Proust's petite madeleine, awakens dusky, archived memories. All at once I am behind the wheel of my little green Pinto, which idles monotonously in one of those mid-'70s Friday afternoon gas queues as I wait my turn to fill the tank. Sometimes the wait exceeds an hour.
They sit on the front lawns of rural North America in increasing numbers, "For Sale" signs slapped on their windows like badges of shame.It has come to this for the once-mighty sport-utility vehicle. Some auto dealers are refusing to take them as trade-ins. Those that do value them at a fraction of their previous worth. Gasoline at US$4 a gallon has turned the family hauler of choice only a decade ago into the unwanted animal of the motoring market.
Land-barge SUVs taking back seat to gas sippers
Seven days behind the wheel of a compact, fuel-efficient car clinched it for Catherine Carter.With regular gas prices at or near record highs, now was the time to buy a gas miser and relegate the massively roomy, yet enormously fuel-gulping Chevrolet Suburban to family trips.
Ford CEO says shift to small cars here to stay
Americans' switch to buying smaller, more fuel-efficient vehicles is permanent, not a temporary shunning of big SUVs while they wait for record fuel prices to drop, Ford Motor CEO Alan Mulally says.Mulally says the stampede is a "structural change" and if, as Ford (F) predicts, fuel prices stay up, "That shift to small and medium-size cars and utilities … is going to be permanent."
Money-tight car buyers looking to save money on gas are turning to fuel-efficient used models. Consumer Reports says these are good bets.
High pump prices are hitting big SUVs hard and shrinking their numbers. Here's a look at a few former kings of the road.
Wanted: Gas mileage AND all the goodies
With gas prices going through the roof, vehicles that combine high mileage with low price and loads of utility are selling like crazy.
Four ultra-fuel efficient cars hit the road to see which one was the best gas value. They all finished strong, but there was one clear winner.
End to ethanol could stave off grain crisis
BEIJING (Reuters) - Halting production of ethanol from grains would help ease global grains shortages in the short-term, the founder of the Earth Policy Institute think tank said on Tuesday.Ethanol, a fuel made from corn, accounts for a 20 million ton increase in the amount of grains consumed each year, far outpacing growth of about 2 million tonnes a year on average in demand from China, Lester Brown told reporters in Beijing.
Bush administration: Domestic sources of energy are off limits
BILLINGS, Montana (AP) -- A new report from the Bush administration says most of the oil and more than 40 percent of the natural gas beneath public lands in the United States are off limits to drilling.Opening those reserves would give energy companies access to an estimated 19 billion barrels of oil and 95 trillion cubic feet of natural gas, administration officials said.
Controversial 'Blue Energy' was just diesel
State Minister of Research and Technology Kusmayanto Kadiman, who also heads the BPPT, said the agency's research discovered that the chemical contents of Joko's fuel were no different from those of Pertamina's diesel sold on the market.... Many scientists and lawmakers have criticized Yudhoyono for looking an for easy way to cope with the energy crisis by trusting the untested fuel and neglecting to develop renewable energy sources, such as geothermal and micro-hydro, to fire power plants in place of depleting fossil fuels.
Mexico congress to substantially change oil bill
MEXICO CITY (Reuters) - A key Mexican opposition party will make substantial changes to the government's oil reform plan, but a compromise bill will be ready for a vote in Congress by September, a senior lawmaker said on Monday."We are going to make changes and the changes will be substantial," Sen. Francisco Labastida of the centrist Institutional Revolutionary Party, or PRI, said in a local radio interview.
According to prepared remarks, Soros will tell a congressional committee that while rising oil prices are the product of changes in the market, the commodity's steep price rise is partly a result of large investment institutions putting money in the oil futures market -- which is creating an oil market bubble.
Oil executives say soaring costs hurt them, too
WASHINGTON — Executives from the five biggest international oil companies on Wednesday said they are victims of high oil prices along with U.S. consumers, but Senate lawmakers showed little sympathy.
New Jersey township plans 4-day workweek to cut energy costs
The township plans to condense its work week from five to four days to save on rapidly rising energy costs and consolidate services in times of economic uncertainty.
TankDepot.co.uk Tackles Oil Tank Security
A Derwent Group business, TankDepot benefits from over three decades experience in the supply and installation of oil and liquid storage tanks. In fact, the company has been around long enough to remember the last energy crisis in the 1970s and is ideally placed to offer consumers sensible advice on the issue of oil tank security."Firstly, would you leave £1,500 in public view?", asks Philip. "Of course, you wouldn’t. Yet a typical 2,500 litre domestic oil tank can contain up to £1,500 worth of oil. Recognising the value of fuel inside a tank is the first step to securing it.
Coal put forward as alternative source of diesel
With no relief in sight for oil prices, turning Australia's vast coal stocks into diesel could be a potential solution to the energy crisis.
Nationalize all potential future fossil energy resources. Present investments in currently developed and producing energy resources should be left in the hands of the free market to realize their profits. But the free market and oil companies must not be trusted to act in our collective national best interests with regard to future energy issues.
Bush would veto U.S. climate change bill
WASHINGTON (Reuters) - Even before debate began on Monday on the first comprehensive climate change bill to reach the U.S. Senate floor, the White House said President George W. Bush would veto it in its current form.Bush himself slammed the bill, saying it would cost the U.S. economy $6 trillion. His estimate drew quick denials from those who support the legislation, including Sen. Barbara Boxer, a California Democrat and longtime environmentalist.
Few heed warnings of financial disaster
We have a good early-warning system for financial disasters. Unfortunately, very few investors or consumers pay attention.
GM to close 4 factories, may drop Hummer: Automaker to curtail truck, SUV production amid soaring fuel prices
WILMINGTON, Del. - General Motors is closing four truck and SUV plants in the U.S., Canada and Mexico as surging fuel prices hasten a dramatic shift to smaller vehicles.CEO Rick Wagoner said Tuesday before the automaker's annual meeting in Delaware the plants to be closed are in Oshawa, Ontario; Moraine, Ohio; Janesville, Wis.; and Toluca, Mexico. He also said the iconic Hummer brand may be discontinued.
Really, Really Bad News About Oil
Some years ago I wrote a paper called ‘A ‘New’ World Oil Market’ (2004), which I presented at a conference somewhere. The intention of that paper was to argue that the world oil market was in the process of a rapid transition, and the combination of resource scarcity and accelerating demand (relative to supply) would cause a fundamental shift in the market. I said in that paper essentially what I am going to say here, only at that time I couldn’t prove a few of the things that needed proving. All that has changed: it changed when the price of oil reached $100/b and continued to rise, because with that price and the present movements of global oil supply and demand, proofs are no longer necessary. This time the wolf is here!
China fuel shortage led by supply, not demand - exec
BEIJING (Reuters) - China's fuel shortage is caused more by declining supply than by increasing demand, an executive with Sinopec SenMei (Fujian) Petroleum Co said on Tuesday.
Ireland: Teagasc 2030 Foresight conference
In 2030, we are in the post-peak oil era with conventional oil production declining steadily. The Chinese and Indian economic superpowers have accelerated the increase in global energy demand. Oil prices fluctuate at around $300 per barrel.Agriculture is now centre stage in terms of global food and energy security.
Economic depression in America: Evidence of a withering economy is everywhere
In Santa Barbara parking lots are being converted into hostels so that families that lost their homes in the subprime fiasco can sleep in their cars and not be hassled by the cops. The same is true in LA where tent cities have sprung up around the railroad yards to accommodate the growing number of people who've lost their jobs or can't afford to rent a room on service-industry wages. It's tragic. Everywhere people are feeling the pinch; that's why 9 out of 10 Americans now believe the country is now headed in the wrong direction and that's why consumer confidence is at its lowest ebb since the Great Depression. This is the great triumph of Reagan's free trade "trickle down" Voodoo economics; whole families living out of their cars waiting for the pawn shop to open.
What they said on hot energy topics
PEAK OILNobuo Tanaka, Executive Director of the International Energy Agency: "I am always asking my staff is there peak oil coming. Before 2030, we don't think we need to worry. We have abundant resources under ground, so the issue is over ground."
"I'm not siding with peak oil."
Lars Josefsson, President and Chief Executive of Vattenfall VATN.UL, Sweden's state-owned utility: "I would not get into the religious debate about peak oil, but I think the world will have big difficulties in significantly increasing its oil production."
"Global investment levels are too low .... Oil will come from places more difficult, more distant, more costly and on top of that oil is in areas that don't have stability."
Ayman Asfari, chief executive of Petrofac, UK-based oil services company: "With oil you have this finite resource. It's like hiding 100 Easter eggs and you find the first 50 with 5 or 10 percent of the effort and for the last 10 it requires 90 percent of the effort."
"The effort is translated into a lot more cost."
US Housing Industry - A Monument to Futility
The economic headwinds that have been buffeting the United States for the past several months are only increasing in velocity despite the Herculean efforts of the powers-that-be to bolster the system against collapse. At this point, the domestic economic picture can only be described as ominous. Energy prices have risen from dangerously high to prohibitively high. Housing prices are continuing to drop at alarming rates in many sections of the country. Banks remain reluctant to lend either to individuals or corporations for virtually any type of transaction. And our political and business elites remain a prosper of Hollow Men who continue to whistle past the graveyard as their limousines chauffeur them home each night to their gated mansions.
Doomsday: What happens when gas is $10 a gallon
For decades we’ve lived (and driven) in denial, somehow assuming we have the “right” to cheap gas, and therefore, low-cost transportation. Now it’s time to face reality and consider what will happen when (not if) gas hits $10 a gallon.
Congress, Regulators Target `Bad' Speculation
(Bloomberg) -- The U.S. Congress is taking time out from whatever it does in an election year to look into soaring food and energy prices. Just the thought is scary.
Australia: Fuel pain could be a blessing for public transport
While freight cost and food prices soar due to higher fuel prices, the bus industry is boosted by greater patronage and more exposure as a crucial service.The greater need for public transport unfortunately highlights the stereotypical over-crowding, unreliable service and inconvenience of users on some networks which can’t adapt quickly enough to the sudden patronage surge.
This is negative media which needs to be combated and reversed into positive spin.
Reassess I-5 bridge project, group asks
Saying that people already are driving less because of rising gas prices and a growing awareness of climate change, an advisory group recommended Monday that planners take another look at the scope of a new Interstate 5 bridge over the Columbia River.The Sustainable Development Commission, whose members are appointed by the city of Portland and Multnomah County, called for an updated traffic analysis using current gas prices and considering other factors.
New Zealand: Gearing now for peak oil shock
A movement that "stops the 'overwhelm'; the feeling 'but what can I do'? It's an opportunity for people to come from an individual standpoint and make a difference."That's how Normandale resident Juanita McKenzie describes Transition Towns. It's a model in which community-based initiatives facilitate transition from a globalised, oil-dependent society to a resilient, re-localised society that can thrive in a world where there is less abundant cheap oil.
Analysis: Oil showing classic ingredients of an asset bubble
Over the past two weeks, the crude oil forward curve has flattened dramatically. Fundamental changes cannot explain sudden, severe price or curve movements. As in the dot-com period, when 'new economy' stocks became popular, a growing number of Wall Street analysts have been repeatedly raising their forecasts as oil prices have risen. These revised forecasts have been partially responsible for new investor flows, driving prompt and forward prices to perhaps unsustainable levels, says a Lehmann Brothers Energy Special Report.
Shell, Statoil Say Strike May Cut Norway Oil Output
(Bloomberg) -- Royal Dutch Shell Plc and StatoilHydro ASA may be forced to cut as much as 220,000 barrels a day of North Sea oil production, about 9 percent of Norway's total output, if rig managers strike this weekend.
Kurdistan PM Barzani says Iraq should triple crude oil export capacity
DUBAI, United Arab Emirates: Kurdistan's Prime Minister Nechirvan Barzani said Tuesday Iraq should boost crude oil export capacity to 6 million barrels a day, three times the amount the country is exporting now."We think Iraq needs to export more oil," Barzani said to reporters after a press conference in Dubai. "Iraq has (the) capacity to export six million barrels a day, but they're happy with two million."
Dakota Oil Fields of Saudi-Sized Reserves Make Farmers Drillers
(Bloomberg) -- John Bartelson, who smokes Marlboro Lights through fingers blackened with tractor grease, may look like an average wheat farmer. He isn't. He's one of North Dakota's new oil barons.Every month, he gets a check for tens of thousands of dollars from a company in Houston called EOG Resources Inc., which drilled two oil wells on his land last year.
IEA may trim world oil demand further
LONDON (Reuters) - World oil demand is shrinking more quickly than first thought due to weak consumption in some major consuming countries, the International Energy Agency's head said on Monday.The IEA may cut its forecast for world oil demand growth further, said Nobuo Tanaka, executive director of the agency which advises 27 industrialised countries, during the Reuters Energy Summit.
He also conceded that a forecast of around 100 million barrels per day (bpd) for oil supply in 2030 was "more reasonable" than a higher IEA estimate which some industry officials doubt can be achieved.
"We are saying that we may see a further demand slowdown for the June report," Tanaka said. "How much, I don't know."
Some analysts say the prices are driven by speculators, and that they can't stay this high. But Walter Youngquist, a petroleum geologist in Eugene, says it will only get worse. We've only just begun to feel the effects of the declining supply of a finite resource."I don't think people recognize what peak world oil production really means," Youngquist said. "The peak and then decline of world oil production, which is upon us now, will affect more people in more ways than any other event in human history."
Phil Flynn: What is it all about?
Peak oil from Russia with love. Is Russia’s new President, Dmitry Medvedev, going to be friendly to foreign oil interests. Well in case you missed it, last week's Wall Street Journal reported on growing tension between BP’s partners in Russian oil ventures TNK-BP. The Journal reported that Russia sought the ouster of the unit’s CEO Robert Dudley. BP refused saying that the escalating dispute could shape BP’s future and the role of foreign companies under Russia’s new president. The Wall Street Journal says that in February, 2003 BP announced the new Russian joint venture. Then under pressure in 2007, BP agreed to sell a big stake in a big Siberian gas field to Gazprom and form a global joint venture with the Russian gas giant. Then in 2008 the Russian security services raided BP offices and questioned employees. They arrested low level employees on espionage charges. If that wasn’t enough, the Russian government also said they were investigating BP for Tax evasion. The same trumped up charge that sank YUKO’s.
What's Driving Skyrocketing Oil Prices?
Global supply is stretched thin. Some argue this is because the world is at or near "peak oil production," a tipping point when half the world's oil has been extracted, and yields begin to decline, with very major price effects.A different view is uncomfortable with the apocalyptic element of peak oil theory. From this vantage point, more oil -- or close substitutes, like tar sands or shale -- is available, but it is harder and more expensive to get. This is the preferred view of the oil industry analysts (many of whom note that much oil that is easily attained from a technological standpoint -- for example, in Iraq -- is hard to reach for political reasons).
Indonesia: President challenges experts to seek new energy
Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono again challenged experts in energy to find new energy resources to replace fossil energy, a minister said."On behalf of the people, the president asked the best experts in energy to seek and find new energy and technology to replace `peak oil`," Research and Technology Minister Kusmayanto Kadiman said after the meeting between the head of state and around 60 energy experts at the state secretariate building here on Monday.
Has Oil Production Reached a 'De Facto' Peak?
On one side of the net are analysts looking at graphs of oil production and saying something along the lines of Boone Pickins’ recent summary of world oil: we need 87 but can only produce 85. I’m not sure where Boone gets his numbers, since last I looked (see below) the all liquids graphs were showing 87 mb/d being produced in recent months. But that’s not the point. The point is that a lot of people are running around saying “peak oil is here” because, the fact is, there has been more or less of a plateau in both light sweet and all liquids production since about mid-2006, give or take a little.On the other side, looking at the same graphs, is a group yelling “it’s not peak oil, it’s speculators! speculators!!” Their point is that even though there has been a production plateau, that has nothing to do with the earth’s ability to yield higher flows of oil. In fact, they say, plenty more oil could be produced if it weren’t for hoarding, violence, and incompetence on the parts of various national oil companies…and speculators.
Don't worry about us, dear readers…we have not lost a wink of sleep to the peaks…neither Peak Oil nor Peak Food bothers us. No, it is not the peaks that disturb our sleep…it's the valleys.
Peak Everything: 8 Things We Are Running Out Of And Why
Why is everything running out at the same time? We did a series on Planet Green where we looked at why those basic things that we take for granted, like water, food and fuel are getting expensive and scarce, all at once.
Stable dollar could reverse oil run
It looks increasingly likely the Fed is through cutting rates - and that argues for a strengthening greenback and an end to surging oil prices.
Let’s Just Call It ‘Cap and Tax’
The current plan for dealing with global warming would trigger a lobbying frenzy to win new subsidies and preferential treatment.
OECD boss hails high oil prices
The soaring cost of oil is welcome as it sends a clear signal to consumers and firms to curb their use of fuel, the head of the OECD has said.Speaking at the annual meeting of the world's richest nations, Angel Gurria said it would be "disastrous" if they cut fuel taxes or subsidised prices.
"The best solution to high oil prices is high prices" to cut demand, he said.
U.N.: Food production must rise 50% by '30
ROME (AP) — World food production must rise by 50% by 2030 to meet increasing demand, U.N. chief Ban Ki-moon told world leaders Tuesday at a summit grappling with hunger and civil unrest caused by food price hikes.The secretary-general told the Rome summit that nations must minimize export restrictions and import tariffs during the food price crisis and quickly resolve world trade talks.
"The world needs to produce more food," Ban said. "Food production needs to rise by 50% by the year 2030 to meet rising demand."
Soaring inflation threatens peg to $US
Inflation for states in the Persian Gulf is still rising at breakneck speed, new data signalled yesterday, spurring calls for the gas-exporting emirate of Qatar to stop pegging its currency to the flagging American dollar – casting a shadow over U.S. efforts to restore support for the greenback.
Kuwait preparing inflation-fighting plan - minister
KUWAIT (Reuters) - Kuwait will unveil a new inflation-fighting plan next week, a government minister told Reuters on Tuesday, as price rises remain near record levels in the oil-exporting nation.Commerce & Industry Minister Ahmad Baqer, who was appointed last week, told state news agency KUNA on Monday the ministry would clamp down on price rigging and increase subsidies for basic commodities affected by a global surge in food costs.
Canada: Consumers less confident as gas prices soar
TORONTO (Reuters) - Consumer confidence dropped to its lowest level in nearly seven years in May, as concerns about future finances intensified amid record high gas prices, the Conference Board of Canada said on Monday.
Apache Explosion Affects West Australia Gas Supplies
(Bloomberg) -- Apache Corp., operator of oil and gas projects on five continents, said an explosion at its plant off the coast of Western Australia will affect natural-gas pipeline deliveries to the domestic market for ``a number of days.''
Chevron-Led Caspian Pipeline Group Posts First Profit in 2007
(Bloomberg) -- The Chevron Corp.-led Caspian Pipeline Consortium reported its first profit in 2007 after increasing the tariff to pump oil from Kazakhstan to the Black Sea.
ConocoPhillips ‘facing oil trading probe’
US supermajor ConocoPhillips said today it was subpoenaed last December by the Commodity Futures Trading Commission (CFTC) as part of the agency's six-month investigation into manipulation of the oil market.
Pickens Says CFTC Probe of Oil a `Waste of Time'
(Bloomberg) -- A U.S. probe into whether speculators manipulated oil prices up to more than $135 a barrel is a ``waste of time,'' billionaire hedge-fund manager Boone Pickens said yesterday....``There's nothing to it to start with,'' Pickens said in interviews at an American Wind Energy Association conference in Houston. ``That's not what's happened. You have 85 million barrels a day of oil available in the global energy market and 86.4 million barrels a day of demand. So the price of oil is going to go up until you can kill demand.''
Philippines: DOE to investigate oil, LPG price hikes
The Department of Energy on Tuesday said it will investigate local oil companies and distributors of liquefied petroleum gas for allegedly imposing price increases that do not reflect actual fluctuations in the world market.
In Spain, Water Is a New Battleground
FORTUNA, Spain — Lush fields of lettuce and hothouses of tomatoes line the roads. Verdant new developments of plush pastel vacation homes beckon buyers from Britain and Germany. Golf courses — dozens of them, all recently built — give way to the beach. At last, this hardscrabble corner of southeast Spain is thriving.There is only one problem with the picture of bounty: this province, Murcia, is running out of water. Swaths of southeast Spain are steadily turning into desert, a process spurred on by global warming and poorly planned development.
Tony Blair: America on the right track
The climate change bill that senators are to begin debating this week is a hugely important signal of intent on behalf of U.S. legislators. Yes, negotiations could still alter the legislation. But the bill's core proposition is correct: Unless the United States radically reduces its greenhouse gas emissions, along with other major emitters, the damage to the climate will be irreversible.
Barton a steadfast skeptic on climate change
"I don't think the U.S. is going to be able to convert its economy to get to these lower emissions levels," Mr. Barton said. Summing up the argument he'll make in the coming months, he added: "It doesn't make sense. It's not necessary. It costs a fortune."
Trouble with Congress' Green Gambit
It's a truism in politics: support for environmental causes tends to be broad, but shallow. Broad, because most voters support political action to protect the Earth, and not even the most conservative of politicians want to be seen as standing against it. Shallow, because few Americans really allow environmental issues to dictate their votes - and politicians know it.
NASA's own watchdog: Agency misled on global warming
WASHINGTON - NASA's press office "marginalized or mischaracterized" studies on global warming between 2004 and 2006, the agency's own internal watchdog concluded.In a report released Monday, NASA's inspector general office called it "inappropriate political interference" by political appointees in the press office. It said that the agency's top management wasn't part of the censorship, nor were career officials.
The US Senate Commerce Committee is holding a hearing today on “Energy Market Manipulation and Federal Enforcement Regimes,” starting at 10 am EDT. I’m researching a column on the effect of speculation on oil prices, so I plan to watch the hearing at least until noon.
There will be two panels presenting to the committee. The first will have George Soros, Chairman, Soros Fund Management; Terrence A. Duffy, Executive Chairman, Chicago Mercantile Exchange Group, Inc.; and Michael Greenberger, Professor, University of Maryland School of Law.
The second panel will have Gerry Ramm, Inland Oil Company on behalf of PMAA; Lee Ann Watson, Deputy Director, Division of Investigation, Office of Enforcement, Federal Energy Regulatory Commission; and Dr. Mark N. Cooper, Director of Research, Consumer Federation of America.
From the Commerce Committee web site: “The hearing will examine energy market manipulation and federal enforcement regimes. The hearing will also consider the current state of the oil and gas markets and their impact on consumers, as well as solicit testimony and discussion as to the key factors the Federal Trade Commission should incorporate into its upcoming rulemaking on its new responsibility to prevent manipulation in the wholesale oil and petroleum distillate markets.”
The hearing will begin at 10:00 a.m. in Room 253 Russell Senate Office Building. The hearing will be available via webcast. To view the hearing, go to http://commerce.senate.gov.
I plan to post some notes periodically, below.
Please be careful to clearly separate issues of manipulation, and speculation. these two are getting continually muddled of late, i think just 'cos the same agencies are often looking at both (separately)
I love how speculation has replaced the risk premium as the conventional wisdom on prices. Was all the talk about the risk premium idle "speculation," or are we now talking speculation on top of the weak U.S. dollar, on top of the risk premium? Seems like its ability to reasonably explain reality started to weaken, and so has been quietly dropped.
James Hamilton, a professor of economics at University of California, San Diego, has a recent paper on the question of speculation driving oil prices. In his own words:
Understanding Crude Oil Prices. This paper examines the factors responsible for changes in crude oil prices. The paper reviews the statistical behavior of oil prices, relates these to the predictions of theory, and looks in detail at key features of petroleum demand and supply. Topics discussed include the role of commodity speculation, OPEC, and resource depletion. The paper concludes that although scarcity rent made a negligible contribution to the price of oil in 1997, it may be an important feature of the most recent data.
Here's the link (pdf warning):
http://dss.ucsd.edu/~jhamilto/understand_oil.pdf
My apologies if this has been posted here already. Hard to keep up with everything going on at TOD!
As background, Hamilton had a very short piece in the October '07 Atlantic Monthly on Ghawar, discussing how it has likely peaked. He talks about Stuart Staniford's work and also refers to The Oil Drum. For a magazine that has, IMO, a pronounced cornucopian inclination, this was somewhat surprising.
A nice observation.
We play spin the bottle:
risk premium
weather
exchange rate
speculation
At some point listening to the excuses will get tiresome... perhaps when we begin walking.
What I love is hearing Chavez called an incompetent socialist. I suppose that label fits the folks in Alaska too. They've been slackers lately.
Although harmful in preventing/delaying an honest discussion of our predicament, and the possible implementation of real solutions, at least the current reasons offered for high prices are essentially phantoms that we can only really talk about. Senate hearings notwithstanding, I am skeptical that any speculators will be prosecuted. And how do you target the risk premium without making it worse?
One of the things I worry about is what will happen if current prices don't go away, or especially if we move towards $200 in a sustained way. The phantoms will possibly be replaced with more tangible bogeymen... maybe called "The Supply Vampires." They will be called oil export hoarders, radical green ANWAR withholders, banana republic producers (who can't be trusted to manage their own production - we could relieve them of this onerous responsibility, to benefit of all, especially their poor downtrodden citizens). That is one of the dangers of denial and dishonesty... something that good people here at TOD are actively working to reduce. What is going on here at this site is very important (as if we didn't know that already!) The stakes are high indeed.
Yeah and it's a short step from there to the Jews / Liberals etc
I have never seen any issue which confronts people's selfishness so head on as the whole energy thing. It's an absolute classic, high % of people think we must stop driving and flying so much and an equally high % refuse to do anything themselves until they have spent their last dollar.
Once again, the director of NYMEX is absent. IMO, hearings are a waste of time without him.
Opening statements from Senators.
Maria Cantwell: "Hey we outlawed energy price manipulation after ENRON. WhY isn't the CFTC sending people to jail?"
Byron Dorgan: "Enron bad. OPEC bad. Tulip bulb bubble not so bad cause tulips don't propel the economy. Oil should be cheap."
John Sunnunu: "FTC, CFTC, SEC should prosecute someone. Speculation causes inflation! "
Amy Klobuchar: "Quel horreur! My constituents can't afford to go fishing! We should have cars running on switch grass. Oil should cost $50/barrel."
David Vitter: "Speculation is part of the problem. Maybe there is something to this whole supply/demand thing?"
As noted further down the thread, ALL spot prices are higher. This would mean that speculation MUST be occurring on ALL markets globally, not just in the Center-of-the-Universe United States. The myopia shown by these Senators is mindboggling.
Myopia?
I would say that they are being shown shiny Travel Posters by most of their Expert Witnesses, and this is supposed to inform them as to the state of the world. Cantwell has asked point-blank if it's Supply/Demand or is it Speculation. Of course, she was hoping for brief Yes/No answers, which is a good pointer to the perception problem.. they want an Either/Or, while I think it's a Chicken and Egg. It seems that the speculation and market 'froth' that Soros has called it is simply a Function of the Supply/Demand problem.. but noone at the hearing is willing to give Supply all that much weight. (Probably because the mentality of such hearings only seeks a 'solution' that will land someone in jail, to satisfy us in our Vengeful Anger that 'justice has been done')
Now Soros just (11:45am) threw in a caveat that there are truly aging fields and developing economies that add a major Supply/Demand factor into this formula, and that the speculation issue is being overplayed..
My question to others who are watching this is 'WHO should also be at this Hearing who could provide the best Supply/Demand picture in balance with the Market factors?'
Bob
Oh, OK, Greenberger just finally tossed in his 'Supply' disclaimer as well. Nothing like waiting til the last few seconds, eh?
Am I off in suggesting that the 'spec' issue and manipulation and all other price swings are very likely 'Eggs' to the Supply/Demand 'Chicken'? I can hardly believe that such wild price movements aren't simply a reaction to the much more central Supply/Demand 'forcings' in this situation. Blaming the buyers and sellers is akin to blaming the messenger. No?
Bob
You are correct. One question not asked is: How much oil must be supplied to allow for a price of $80/bbl, a price low enough IMO to allow poor countries to buy? Furthermore, what "type" of oil is being priced/supplied: All "Liquids" or Crude + Condensate, and what grade of crude?
IMO, light-sweet crude extraction would need to rise to 82Mbpd to allow the price to sink to $80. That would probably cause the All Liquids measure to reach the magical 100Mbpd level touted as necessary by IEA.
Another question not asked is: To reach the above level of supply, how much would need to be extracted to overcome the 4.5% global decline rate for light-sweet crude?
T. Boone Pickens and Matthew Simmons for starters.
Soros just debunked peak oil. He stated that it's misnomer because it implies that maximum production can peak. Sometimes, you can spend more money, and increase production. Yeah we're saved!
The witnesses they called were the ones who would confirm the conclusion that they've already reached.
That's not my interpretation at all of what he said. He did suggest the term itself might be misleading as to it actually happening now but did confirm that he thought effectively something like peak oil was happening. Unfortunately I forget to hit record.
He ended by saying we must transition to a low carbon economy.
Edit: Thanks to Carl Etnier, here's how he ended.
Oil prices: George Soros warns that speculators could trigger stock market crash
http://www.guardian.co.uk/business/2008/jun/03/commodities?gusrc=rss&fee...
Note that's stock market crash and not oil price crash. He also said during today's hearing that some quotes recently attributed to him in the press did not accurately reflect what he had said. But that's almost always true of the mainstream media.
I think it has been covered elsewhere (ref: NYT, econbrowser) , that price distortion via financial speculation using oil futures contract is not very easy and is unlikely mount to a much of the current price. Opposing views do exist and some question the price rice without taking a stand on either side). FT's blog just say it's pure speculation, nothing to do with supply/demand. It's easy to consider US senator's as demagogues, but FT journos are on the average quite astute observers of the market (unlike the CNBC bozos).
I'm not well-versed enough in derivatives market to understand if it's possible or not and if yes, to what extent. If it was possible, I'm sure the out-of-cash hedge funds and US banks are probably behind it: using more leveraged money to turn in quick profits in order to cover those margin calls coming in :)
On the other hand price manipulation due to supply changes is what OAPEC is about. However, a couple of economists offered a model suggesting that it is within the interest of oil exporting nations to keep the markets supplied as long as possible AND keep denying geological peaking of their production. That would suggest no (drastic) manipulation on part of OAPEC. Their interest is NOT get OECD countries transitioning over to alternatives (in any quantity, bad EROEI or not), until AOPEC countries have exhausted their own reserves. After this the natural decline of exports should be offset by rising prices to guarantee exporters the last long revenue stream.
No mystery here. Based on EIA data, total world net oil exports in 2007 were down by 3.3% versus the 2005 peak. As we expected, both the top five net oil exporters and total world net oil exports showed an accelerating year over year net export decline rate.
As in the movie "The Sixth Sense" (some ghosts don't know they are dead and they only see what they want to see), for most of us our old way of life is dead, but most of us see only what we want to see. The infinite growth crowd wants to see market manipulation, instead of fundamental resource constraints.
Jeffery your statement above
is something I wish people could finally get their heads around. Even many TODers don't understand what this means.
Several of us have hammered away at the reality that people need to take significant action right now! Whether its your ELP or Todd's MTTB (move to the boondocks), it's important to recognize that these kinds of actions take time. It initially takes time to psychologically accept that major change is coming and personal action is necessary, then time to decide what course of action should be pursued and, finally, additional time to implement the plan.
I've noted here and on other forums that the minimum time to establish a functioning "homestead" is about seven years - assuming everything goes right. But, I think most people who have actually pursued a more self-reliant lifestyle (I prefer self-reliant to self-sufficient) will agree that things seldom go as planned.
The same kinds of problems will occur for those who take a more modest approach. As I have recommended before, find a copy of The Integral Urban House - Self-Reliant Living in the City, ISBN 0-87156-213-8.
Accepting that oil has peaked means that time is of the essence.
Todd
The thing is, like you said, that it takes time to adapt. The problem is analog to the 7 stages of griefe, we have to mourne our old lifestyle, and too many of us are stuck in denial.
I know that I'm still there. I'm taking out a loan to finish some work on the house soon (including a heat pump, but even that's useless if TS really HTF).
I've started taking the bus to work instead of driving, and I've started a (very) small vegitable garden, but it's all I can do atm, not for physical impossibility, but because I still can't really accept the full implication of peak oil taken to it's logical conclusion (in e few years time :( ).
David
way ahead of you, WD. But what are the other two stages that I'm missing?
http://www.cafepress.com/crashdummy/3720146
I agree on both counts. And thanks to you, I've been applying EL of the ELP mantra myself for over a year now. Still missing the P part, but working on it.
However, the hard to die scientific mind within me refuses to work with single hypothesis, until all the the major outlier data have been eliminated. So academically, I'm interested in the issue of price speculation/manipulation, although for my own actions it has not that much of a significance (well perhaps a bit on the investing side).
"...for most of us our old way of life is dead, but most of us see only what we want to see..." Absolutely agree, my very intelligent wife understands PO fairly well now that I have drilled it into her but is reluctant to see what is really going to happen and start making changes. The limit of the changes is perhaps we should visit Australia and NZ again before the flights stop.
Same here. My girlfriend (and her father) understand, intellectually, what's happenning. They underdtand that our lives are very soon to take a major, ireeversable, change, and there's nothing we can do to avoid it.
But despite knowing what's coming, they cling (as I suppose I do too) to our current lives. He still loves his cars (but is keen to start experimenting with EVs), she buys useless trinkets and is planning to start investing in real estate (even though I've told here there's no point in doing so in a deflating economy). I'm taking a somewhat pragmatic approach. My debts are paid off, I'm investigating low-energy lifestyle and 'green' power production (so we can make a little bit of money from the feed-in tarrifs), and I've put my hobbies on hold, effectivly (I'm still buying materials and such, but I'm not building/painting/etc. Gotta have something to occupy the hours in the future).
I haven't done this live blogging before, and I'm afraid I underestimated how carefully I'd be taking notes and how little time that would leave for checking in here.
Let me just summarize a key exchange that took place starting at about 11:00 am:
Sen. Maria Cantwell (chairing the hearing): Do you believe current price of oil is based only on supply and demand or other things? Yes or no?
Michael Greenberger: Price is completely unmoored from supply demand. There is a supply demand factor. Exxon Mobil says $50-55, other oil executives said same range. Some believe as much as 50% premium to speculators who are operating in markets that unpoliced.
George Soros: Definitely a speculative bubble that is superimposed on fundamental trends in supply and demand. This is in the nature of markets. Markets don’t just naturally reflect fundamentals. Speculation and misconceptions also affect the fundamentals and occasionally go into self-reinforcing bubble mode. I think we’re seeing it today in the oil market.
Gerry Ramm: No.
Mark N. Cooper: $40 is physical cost, $40 is tax from cartel and oil countries, and $40 from speculation. Two thirds of price is baloney.
"I see dead lifestyles"
Westexas: As you specialize in secondary and tertiary oil recovery, I would expect you know what it costs to get that oil out of the ground. Does $40/bbl enable you to make a profit? I know it doesn't for deep sea ventures.
Why don't these idiot Senators call members of the Peak Oil Caucus as witnesses? Surely they could explain the concept/reality of falling net exports as the main driver of price?
In regard to the first question, I'm certainly not an expert on enhanced recovery projects, but they have been--and are being--widely implemented in Texas, where we have seen a long term decline rate of -4%/year.
In regard to the second question, I'll answer with a story. Years ago, one of my brother's acquaintances had his wife start divorce proceedings after only two weeks of marriage (it was something like the guy's eighth marriage). I asked my brother what in the world this guy did to the poor woman to cause her to leave after two weeks (and to cause the previous divorces). My brother responded that, "If I don't want to know the answer, I don't ask the question."
Please do not call our wonderful Senators, "idiot's. You are giving them way too much credit and insulting the real idiots. Congress needs to just go home......
LMFAO
Right at the end Soros was asked directly his views on Peak Oil. He replied that "something like" peak oil is occurring right now (he still hopes that increased spending can ease things, at least in the short term, so the term "Peak Oil" itself he says might be slightly misleading). Add to that global warming which he says is a serious threat we have to get used to getting by on less fossil fuels and that overshadows everything being talked about.
Speculation is really just more of a froth than a bubble on top of the current oil price he added.
Quoted from memory.
The hearing just finished, and it’s time for me to get to my next gig. George Soros is the person in the room who exhibited the greatest awareness of fundamentals of supply and demand. Here’s a rough summary of his opening testimony and comments he made later:
After hearing Mark Cooper say “40-40-40” ($40 for cost of producing oil, $40 for cartel, and $40 for speculators) too many times, Soros breaks in at 11:40 am and says
At 11:44 am, Soros again grows tired of the emphasis on speculation and says:
At 12:06 pm, in response to a question about his assertion that the term “peak oil” is misleading:
Thanks very much for providing this synopsis.
Thanks for that and I agree. George Soros has a clue. As for the others...
"So these are the facts. There is something like peak oil that is occurring."
- George Soros
carl
i didn't tape/record but listened carefully & soros about here;
"If taken literally, it means at some point that total volume of production declines. May not be the case. If you spend more money, you can increase production."
caught himself -as i remember- almost say the typical economist statement of 'more $ there is always[paused & questioned himself here], more... whatever'.
your quote summarises well the overall guist.
& then he argued something like ...it'll be a lot more expensive but we are kinda of out of more supply for now, until we do more...
so i think he is still working out his investment side[economist] with the realities he sees... deep drilling etc.
he seemed really worried global warming will be the death of our civilization- that came across.
good catch, thanks.
Creg,
Yes, I heard that and didn't catch it in my notes. It was interesting to hear Soros move from the phrase that economists are accustomed to using to one that he thought more accurately reflected conditions.
From the recording: "Peak oil, if taken literally, means at some point the total volume of production declines. That not be the case, because if you spend more money, you can always – ah, ah — not always but you can still increase production."
UPDATE: I may be guilty of projection here, but I understood him to mean "That may not be the case [at the moment]...", leaving unstated the assumption that the peak oil will eventually be reached. The interpretation makes sense, given the way he finished the sentence.
if soros is "a doomer" investment wise -i have read such[ i presume re US economy & global warming- what i heard that today] i think if he believed fully in peak oil , global warming would not be his primary worry/fear; particularly in this testimony. and as u say i too may be projecting onto his non-verbals[maybe he'll read u'r piece or this & tell us[own up!].
CNN just parroted the 40-40-40 baloney sound bite. Nothing more.
Yeah, Thanks Carl for the Details.
I still can't get what Soros is trying to say in his quibble with the term 'Peak Oil'.
He admits that it gets 'more expensive' to produce, which should make it fairly clear that at some point (not to far off, it would seem), the cost would predicate the limit on the oil that companies will be lifting. Why is that not a Peak? Or is he just allergic to the concept of 'Less', like everyone else in the room, as much as he seems to keep his senses right up to the edge of that particular conclusion?
jokuhl
"Or is he just allergic to the concept of 'Less', like everyone else in the room, as much as he seems to keep his senses right up to the edge of that particular conclusion?"
as i remember he stopped his sentence after he said the word 'always' & paused [i hope this was him caught by his use of 'ALWAYS'- this was soon after the word investment or similar.
so , yes it appears he can't quite let that 'less'; 'declining [from now on no matter the $$$ or consequences]' into his consciousness.
My take is that he is OK with the term "peak oil;" he just believes that it is being applied prematurely now. He thinks the world is not yet at peak, because production could be boosted with further investment. He seems to agree that, at some point, further investment will not raise production further. See Creg's comment just upthread and my reply.
I think he is trying to avoid being labeled as a PO believer. I think we are still considered by most as "fringe". And he is hedging, it is still possible that the actual peak could be several years away.
I'm not even convinced that we won't see a substantial price retrenchment, perhaps for a year or two, as I suspect demand destruction may be greater than currently thought. I'm hoping for somewhat of that myself (but not so much that the price signal is forgotten or ignored.
All of these economists and the speculator Soros operate on the assumption that oil is infinite and that the binge that we've been on will increase into the future, you cannot expect men like that to advise Congress in any meaningful way, other than fooling them into making stupid decisions that will divert time and energy away from the real issue of hydrocarbon depletion.
Neither can you expect Congress to think for itself.
If this were slashdot, there would be a tag on this article of: "Suddenbreakoutofcommonsense"
We need more people like this! I certainly don't believe the invisible hand to be the solution to all things, but it certainly has its place. Financial reasons can be a great way to cut oil use and switch to renewables. If I install a solar and wind power generation system on my new home (which I am) and then ammortize the costs over the life of the system, I know my expenses will be less than what I currently pay for electricity, knowing full well that the price for electricity will rise!
~Durandal (http://www.wtdwtshtf.com)
High, or (hopefully not) even higher oil prices will bring the minor side effect that the whole third world will collapse economically. Same goes to those in between the third and the first world, and these are the majority. The ideology of the free market is absolutely right in that the people will adjust. What it conveniently misses is that people will adjust differently - Americans will adjust by buying Priuses and Chevy Volts while Kenyans will adjust by expiring all together.
The same ideology will inevitably lead us to a war between us and them. We can't simply plan to outbid them to get "our oil" until alternatives emerge. This path is going to get us collectively into much deeper trouble than the PO problem will directly cause.
Spot on LevinK.
This needs to considered with every call for mitigation, conservation, demand destruction.
It is little more than a way to buy more time for those who have the proper amount of wealth.
IMO alot more of us fall into the catagory of not having the proper amount of wealth than we think, or are soon to fall into that catagory and only THEN be calling foul.
Actually, I hold little optimism that a majority of Americans will be able to adjust by buying a Prius or Volt as they don't have the means to do so, just like the second, third and fourth worlders. The positive feedback on the economy driven by ever higher energy costs will drive higher unemployment and inflation causing ever more business failures, etc. Before the economy can be reconstructed to acomodate the new energy paradigm, it must be deconstructed; we are just at the beginning of this process, which has a long way to go.
Thanks you Karlof1...I am so glad that some on TOD understand the relationship between the US economy and what mitigating steps are possible, regarding energy, with various levels of economic constraints.
There is no pie in the sky. The only money the US Government has is taxes raised on citizens and businesses and what it borrows from abroad. Borrowing from abroad will become problematic as foreigners watch the stupidity level rising in the US Government and the US Fed, Treasury, et al. Foreigners will not support us unless they have confidence in us. Foreigners have access to consumer sentiment and all other non government issued (government massaged) stats. Businesses will struggle in coming years to simply keep their doors open. Some biz, related to proven, practical, improvements in cutting imports of foreign FFs will fair better than others. A capitalist economy is supposed to direct capital to where it can do the most good. Is a bail out of a banking system that caused the train wreck the best use of capital? If the Fed will get the hell out of the way and let the system cleanse itself...the system will do what it does naturally. The Fed has done far more harm than good from the time Greenspan took over until today.
The Fed has done far more harm than good from the time Greenspan took over until today.
Why not just say
The Fed has done far more harm than good since 1913. and make it complete?
Because it would be difficult to defend. Recessions under the Fed have been fewer and briefer than before the Fed.
I guess you're excluding the Great Depression. You must also be excluding the "jobless recovery" since the 2001 recession. During that putative recovery, economic growth has been positive in only one quarter (3Q04), when inflation is calculated by the same algorithm used to calculate inflation prior to 1990. Without getting into whether current or past inflation calculations are better or worse, I think it is still worthwhile to compare apples to apples. And to do that you need to use the same algorithms to figure inflation.
I would also note that preventing recessions is not the only thing in the Fed charter. They are also supposed to be looking at price & dollar stability, and under the Fed, the dollar has declined 95% or so after remaining pretty stable for the century+ before the Fed. The Fed has demonstrably been a miserable failure at doing the things it was (putatively) created to do.
Before 1913 recessions were called Panics. Look 'em up. They were killers for the working class, and happened often. One really bad one happened 3 years before the Civil War. It was a good time to be a robber baron or a Communist organizer. Anyone who thinks that's what we should return to will get what they deserve.
The Fed was established by the very same robber baron families that deliberately caused the 1907 panic. Tell me again how the Fed accomplishes anything positive other than robbing us all, year after year, by debasing the currency they promised to defend and stabilize?
Funny thing, before the Fed came about, those same robber barons were accused of malfeasance for RESISTING all attempts to debase the dollar (google for the "Cross of Gold" speech.)
How about Paul Volker?
Samsara...I appreciate the suggestion but I was attempting to avoid opening the can of worms that someone else subsequently opened. :)
No harm done.
Hi River, Thanks for the reply. I also see ability to borrow overseas savings being rapidly constrained. Like the UK after the two wars and Russia after the USSR's collapse, the USA will become a huge Pawn Shop, with its remaining viable capital assets being bought at fire sale prices.
When the Overseas Empire becomes an Anchor causing the Ship of State to sink, you cut the Anchor loose. Every previous Empire learned this lesson the Hard Way; I expect the US Empuire will be no different, as we see abundant evidence of this being true.
Give the Swedes credit; they quit while they were still slightly ahead. They were the terror of Europe before they invaded Peter the Great's Russia in the Great Northern War and got hammered. They had ruled what are now Scandinavia, Finland, the Baltic States and Poland. Afterwards the dismantling began, but I think they didn't lose Norway until Napoleon's time, so it was not a sudden collapse.
June 7, 1905 is Norwegian Independence Day.
*SO* much oil lost for Sweden.
Alan
Technically, but syttende mai - 5/17, Constitution Day - is the big celebration day both there and over here.
Actually, IMO, the winners at the Empire Game were the Mongols.
Heh. I'm so tired of random people coming to tell me what a great man Chingis Khaan was. It really happens a lot here in Ulaanbaatar. There was even a magazine article that seriously claimed that academic research had shown that Chingis had an IQ of at least 217, and that he was probably the most intelligent man ever to have lived. Well, I suppose since the country is not exactly happy now, that's something to cling to.
Just an example: the airport in Ulaanbaatar was recently renamed Chingis Khaan International Airport!
I never said he was a "great man." Hell, they renamed the main airpoort if DC after Reagan, a very inferior mind/intellect. If I had continued my analysis, I would have said the Mongol lineage lives on in China, not Mongolia.
Norway went to Sweeden after the Napoleon wars ..
Norway was in a union alliance with Denmark for some 400 years until the later part of the Napoleon wars. Denmark-Norway was neutral during the wars, but was forced to pick side by the British, but Denmark-Norway didn’t comply, which in turn made Nelson fed up and resulted in a big loss under the Brits in the Copenhagen battle ( lasting only 3 days or so)
Nelson confiscated almost the entire DAN-NOR trading- and war fleet as a trophy – 100 big ships made up from some 100 000 logs of oak ……
In the Treaty of Kiel, after the Napoleon wars, Norway was seeded to Sweden (under conditions agreed upon from the Norwegian side) ……
The Danish state went bankrupt due to the losses of both Norway and the ships. At the time of this transition “we” the Norwegians forgot to bring with us Greenland and Iceland into the Swedish Union, which had been with us since the time of the Vikings …
Nelson also burned the forests of Denmark to keep them from building new ships. So the King of Denmark founded the Royal Danish Forestry Service. 15 or so years ago, the head of the Forestry Service sent a letter to the Queen and the Royal Navy, saying that the trees were now ready.
BTW, The Icelanders were VERY pleased to stay with Denmark and get away from Norway. Now, if only the Danes would return all the sagas they took ...
Best Hopes for Norwegian, and Icelandic, Independence,
Alan
Interesting .... saying that the trees were now ready ? For building new ships :-)
Actally I reckon most of them 100 000 oaks were of Norwegian origin b/c Denmark have beed "almost three free" for centuries now .. (just my guess though)
How come the Iclanders were more pleased with the Danes ? B/c the da facto Norwegian rulings over Iceland ended at the doorsteps of the Kalmarunionen (1397–1523) ..... thus Iceland was governed from Copenhagen ever since - until 1944 (independency). Most of the Icelenders are actually descendants from western parts of Norway
Maybe their collective genetic memory is strong ......... going all the way back to the times of the barbarians ) :_)
I told this story about the Danish Forest Service (it was a bit of a bureaucratic joke) by the Asst Head of the Icelandic Forest Service, Þröstur Eysteinsson as we were enjoying drinks in Snorri Sturluson's 900 year old laugar (hot tub) in Reykholt (Snorri wrote the history of Norwegian kings).
The Icelanders have a LONG memory, and are still not fond of Norwegians, they like Danes much better.
And only the men came from Norway, according to deCode, 80% of the women came from Celtic countries. Thus, the Icelanders claim, they are more musical.
Best Hopes for Icelandic history,
Alan
Oh, right. Look upthread to LevinK's observation about what the 'system does naturally'. Hint.... it includes the 4 horsemen.
How clever of you to observe that 'congress cannot be depended on to think for itself' at the same time that you think that the Federal Reserve is doing such a wonderful job of managing our economy.
At least we had an opportunity to vote for the worthless congress now sitting, did anyone ask your opinion of the appointed Fed Governors?
If the Fed would adhere to their mandate we would not be involved in the current train wreck...obviously, they don't give a hoot about their mandate.
What proceedure would you recommend for dealing with CEOs that are not doing their jobs? Fire them? With the Fed Impeachment is what comes to my mind.
You are about to witness a deflationary resession the likes of which no one has ever seen for their has never been a credit leverage wind like the one that exists now. The Fed allowed the current situation to develop and did nothing until the bubble in housing began to deflate. Tell me again in two years how great the Fed is...if you can still afford electricity and an esp.
By collusion between the Fed, Wall St, and Congress, the banking laws that were instituted after the great depression were repealed. It took less than 10 years to undo the Glass-Steagell Act and the results are now obvious to anyone with a pulse. Here is what a conservative Minn banker had to say back in 2001...
'CONNECT: The Gramm-Leach-Bliley Act of 1999?
GAULT: It undid much of the Glass-Steagell Act of 1933, and allows bank involvement in insurance and securities. Bankers are supposed to be conservative, but with this I feel very much like a liberal. I have been very much opposed to banks entering other industries because there is the potential for banks to acquire too much control. We’re seeing that with the news media. For instance, Dow Jones, which owns The Wall Street Journal, also owns a nearby local newspaper. And we’ve seen evidence of too much power in Washington recently, where political power has been abused.
Banks have a large degree of power now — and it’s almost unleashed. As I view it, the real danger with banking lies in the industry having consolidated down to about 15 banks nationwide. That scares me. Out-of-state bankers have too much power over farmers in Minnesota. An abuse of power may not have happened yet, but the potential certainly exists.'
http://connectbiz.com/2001/05/z-sam-gault/
Yes, the potential certainly did exist and now the train wreck exists!
The bottom line is that the Fed is worse than the robber barons that proceeded them IF the Fed fails to stick to its mandate. When the Fed begins asset targeting, repealing laws that have stood the test of time and propping up failed banks with toxic waste on their books then the Fed is not adhereing to its mandate.
Well, you apparently don't get it either. We're going to lose a large number of people in my opinion, simply due to overshoot coupled with habitat destruction (including our own). Some people are NOT getting through the bottleneck and the problem now is to start triage to decide who gets through.
That's an ugly thing, isn't it? Even the voices here on TOD don't want to face that so nothing useful will occur and the holocaust may be larger than needed just because of that reluctance to act.
Even *IF* you are right, which is of greater value, preserving morality or the greatest possible # of people ?
Alan
I'm guessing that the quantity of either value preserved will be a serious disappointment to you. Sorry.
Trying to preserve the greatest number may well result in the smallest number actually surviving. Where's the morality in that? Oh yeah, short term "feel good" morality.
Like I said, even posters here at TOD refuse to consider this problem meaning it will be far worse than otherwise.
Triage. Where is Garret Hardin when we need him.
Grey,
What are the actions of the "reluctance to act" that might - (or you say definitely, would?) - result in something "useful" and a "smaller" not "larger" holocaust.
Who decides, who chooses? Of what do the choices specifically consist?
Implied in your post is that high oil prices will lead to lower oil prices due to expanded supply of either oil or real alternatives. But therein lies the dilemma. If we let the market bring the prices back down, the world will continue consumption as usual. We need a tax regime that keeps those prices up so that people like you will be confident that they have made the right choice by doing things like installing solar.
Nothing,however, will be done to keep those prices up. If, however, we are at or close to peak oil, then prices will be kept up without a drastic cut in demand. This may be fine as far as it goes but we will continue to hand a substantial chunk of our national income to exporters in the ME and elsewhere.
The great fear of those who are trying to pass the latest anti global warming bill is that people will balk if it is perceived to raise energy prices. Yesterday,they made great pains to say that it would have a minimal impact on gas prices (2 cents per year) but then prices would come back down if we fully implemented alternatives. Message: We can deal with global warming but me must guarantee cheap energy forever simultaneously.
It's all about the money. People support green initiatives as long as it doesn't affect the green in their wallet.
My intent was that people would move to either conservation or alternatives. The price shouldn't fall back much, and I don't want it to, either. Prices can only fall so far when high prices are a result of supply/demand dynamics and not a result of manipulation of price due to other reasons. (Lack of alternatives, political reasons, etc.)
British Airways ready to ground flights as oil crisis bites
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/02/bcnba1...
Argentine alert as inflation spectre stalks half the world
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/02/ccview...
The Bank of England must be brave and raise interest rates
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/02/ccom10...
US staring at double-dip recession as calls for higher interest rates grow
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/01/ccliam...
After a pause, gas prices set new mark
http://money.cnn.com/2008/06/03/news/economy/gas_prices/index.htm
GM to close 4 truck plants
http://money.cnn.com/2008/06/03/news/companies/gm_announcement/index.htm...
Fat pensions spell doom for many cities
http://money.cnn.com/2008/06/02/pf/retirement/vallejo.moneymag/index.htm...
Crude Oil Falls After Storm Misses Mexico Field, Investors Sell
http://www.bloomberg.com/apps/news?pid=20601086&sid=aZbjFld7MI9k&refer=news
Geothermal Electricity Booming in Germany
http://www.renewableenergyworld.com/rea/news/story?id=52588
Microgeneration could rival nuclear power, report shows
http://www.guardian.co.uk/environment/2008/jun/02/renewableenergy.altern...
Government backflip on solar panel policy
http://www.telegraph.co.uk/earth/main.jhtml?xml=/earth/2008/03/03/easola...
The Self-Limiting Future of Nuclear Power
http://www.americanprogressaction.org/issues/2008/nuclear_power_report.html
Great posts, thanks.
On the airline industry.
It's sad and funny at the same time.
There is overcapacity in the industry. Tickets are already too cheap, airlines going bankrupt all over the world and fuel prices still rising.
How do the airlines respond?
Wouldn't the obvious move be to raise prices?
Nope.
They death spiral together until the lowest flying ones crash and remove the over-capacity. Until then, they all bleed and blame each other.
So much for rising fuel prices cutting into the mad flying we've now grown accustomed to.
I should mention that in the same news conference the GM exec said that oil prices will stay high - they have finally realised!
What happens with airlines is exactly what economic theory predicts. In a competitive market they can't just raise prices by the amount of their raised costs, because there are all those competitors who are positioned to undercut them. Basically the market is putting upper floor on how much they can pass it on consumers.
First they will try to economize, then they will cut service. In the end the weakest players will go out of business or be bought on the cheap. This will reduce competition and make them more capable to raise prices and pass it on us. So don't worry we'll get our fare hikes. It will just take time...
I imagine the same can be said about refineries.
True, and that's why refining margins have been suffering lately.
Having said that the airline business is much more fragmented. Fuel represents 20-30% of the airlines costs, which leaves 70-80% on which they can try to save on. While crude + taxes take ~95% of the refined product costs, so this gives little option to refiners when crude rises but to raise prices collectively. There is simply no room to economize in a refinery. But even there some refiners are positioned with long term oil contracts or get discounted oil as a part of integrated oil companies, so refiners also get their share of competition induced pain.
In other news, GM has announced that it will be closing the barn door now that the horse has left.
Will all of the big three survive peak oil? Maybe, maybe not. I'm still waiting for the news article showing off the 40 mpg sexy roadster from one of them. Somehow I don't think that this is the right way to go about it.
At the weekend Prof. Goose posted several videos, one by Dr. Hirsh gave some succinct information on peak oil, see here.
However, people coming to TOD and learning about peak oil for the first time may think the situation is less bad than actual since Dr Hirsch shows typical oil fields peaking at around 50% of Ultimately Recoverable Resources, (URR) more information here..
In his optimistic predictions Dr Hirsch mostly only considers peaking of crude oil, but these production curves generally also apply to any resource that is consumed faster than it is created – current examples would be … sea fish, oil, natural gas, coal, indium, lead, credit, fossil fresh water, PHOSPHATES etc.
In reality, since the 1980s oil companies have used Enhanced Oil Recovery (EOR) techniques to boost flow rates from many wells – EOR can result in a ‘shark fin’ shaped curve with a peak at substantially more than 50% of URR (instead of the 50% obtained using earlier techniques.) more information here.
Since I am British I will use the UK as an example (there are others!)
according to UK Government expectations the North Sea field peaked at around 75% of URR!
More information here.
If you look at published data for individual wells or countries you can see this effect, so we should expect world peaking to be similar – the steep decline rate that Matt Simmons and others expect because of this has severe implications for ‘net importers’ of oil. It isn’t speed that kills you in a car crash, it’s the sudden stop! – and the same is true for oil.
If you live in an oil importing country Peak ‘Net Exports’ of Oil is the problem, not Peak Oil itself. For more graphical information see here
"EOR can result in a ‘shark fin’ shaped curve with a peak at substantially more than 50% of URR (instead of the 50% obtained using earlier techniques.)"
your example may apply to some fields, but this is not in any way general.
EOR (meaning Enhanced Oil Recovery), applied in a conventional sense is designed to increase urr, so when you say 50% of urr, which urr are you refering to (before or after eor)?
i suppose that you could argue that enhanced recovery means recovery at an "enhanced" rate, but this is not what the term is intended to mean, imo.
what you seem to be refering to would be aor (accelerated oil recovery).
i was around when it was primary(depletion), secondary(waterflood) and tertiary(more exotic) oil recovery. the term enhanced oil recovery became popular in the '80's.
I know that EOR is designed to increase URR but I'm not sure how you could prove that the URR is actually increased and that the oil wouldn't have come out of the ground eventually if EOR isn't used, it certainly accelerates production to some extent which is especially vital in expensive offshore production.
My point is that peaking at >50% URR (whether due to EOR or not) certainly applies to the UK North Sea over a large number of wells and also has a steep decline rate post peak - you might care to check out Canterelle as well for another example.
It is not wise to assume that at 'world peak' we are just half way through the oil that can be profitably produced.
"It is not wise to assume that at 'world peak' we are just half way through the oil that can be profitably produced."
i dont disagree.
as far as proving eor works, i dont know that it can be proven. within the context of the older nomenclature - primary, seconday and tertiary, it was not dificult because each process was applied at or near the economic limit. and for that matter, it cannot be proven that waterflood works*.
the only reason we think eor (in whatever form) works is by analogy with similar fields. reservoir numerical simulation can help.
i believe the 50% example is based on texas or the lower 48. these provinces are fine examples of the primary, seconday and tertiary model.
offshore production is more like discovery, developement and eor. and i dont see why this couldn't produce a peak at > 50% recovery.
* i know of too many examples where it didnt.
From the article by Tony Blair:"Round the planet, people are developing exciting technologies, changing their behavior and agitating for action so that responsibility on the environment will come in a way that is consistent with necessary economic growth."
That's where I stopped reading..:-(
What does it mean 'necessary economic growth'? Who is it necessary for? What happens if we discover that economic growth exactly correlates with expansion of the energy supply and that goes into reverse?
How do we repay massive amounts of debt in a decreasing NET energy world if exapnsion and energy supply ARE linked? What happens to the supply of money (debt)?
Ho hum, stick around a couple of decades and find out for yourself...
Nick.
"What happens if we discover that economic growth exactly correlates with expansion of the energy supply and that goes into reverse?"
We already know that economic growth doesn't exactly correlate with economic growth. There's lots of energy wasted because it's been cheap and people expect it to become cheap again. Economic growth will necessarily be more difficult with flat and declining (fossil) energy supply, but not necessarily impossible.
Mark Folsom
Yes, it is more difficult to win the Indy 500 by getting out and pushing your dead car, but not necessarily impossible.
The guy is just about fit to be a country-town lawyer. Why do they give him this prominence in domains that are well beyond his limited area of competence?
The Times has an article about how even the wealthy are being forced to cut back. Only they can't let it show, so they are doing it odd and secretive ways. Selling things they think their friends won't notice. Scheduling appointments with personal trainers at times they know are already taken. Looking at luxurious homes, then claiming it's not to their taste. Taking out loans to buy expensive art...then using the money for other expenses.
It’s Not So Easy Being Less Rich
I've previously described the story in "D" Magazine ("D" as in Dallas), from a few months ago.
Husband, the author of the article, said that they "needed" a bigger SUV, because of arrival of second child. The truth was that they had the smallest SUV in their peer group. Husband suggested new Buick SUV, plenty large and half the price of full size Lexus SUV's. Wife replied that she could not drive a Buick. Husband responded that Ross Perot drives Ford Crown Victoria. Wife responds, "Ross Perot can drive whatever he wants to, he's a billionaire!" So, there it was, they were not rich enough to drive a Buick, because people would whisper that they were having to cut back--so they bought the $80,000 full size Lexus.
I detect a common element in many many of these stories.
Wives are a problem! Peak wives, anyone?
Well, in order to be gender neutral, I have referred to SNS--Spousal Nesting Syndrome--which refers to the desire to hold on to a large debt financed McNest. Of course, in our particular case, I am not the the spouse that wants the big nest.
And regarding SUV's/Pickups, note that the argument over the SUV in the referenced story was not size, but cost.
Translation: SNS is apparently caused by the spouse's fear that people will have the perception that the partner is not up to snuff in the size department. Whether we are talking about cost or size, we are still talking about size. Or did I miss your point?
It's not the size of the wand; it's the skill of the magician.
Rat
I think Paul Daniels proves your point. Unfortunately.
This quote coming from someone using a small animal as a handle is not suprising.
Aw, like I'm kidding myself...
http://www.youtube.com/watch?v=iXSueu_O79E
WT...Here is one at your back door...
'Meanwhile the US’ deregulated crony capitalist crack up boom economy continues to suffer from “unexplained” prices surges on numerous fronts. This one might be hard for most to understand, but regular Winter Watch readers should be able to put two and two together. Someone big is putting electricity into their trading account in lieu of 2% T-bills and CDs. Various utilities around the US are seeking and getting double digit rate increases.
WSJ: Wholesale power prices in Texas have surged to new heights, confounding market officials and worrying regulators who see early signs that the situation could destabilize the state’s deregulated electricity markets. The spikes in wholesale power prices — ominous and so far unexplained – could take a big toll on both power providers and electricity customers if they persist. The state’s utility commission held an emergency meeting Thursday, “which shows the level of concern,” said commission spokesman Terry Hadley.
Of course Texas is one of those locales where if the mainstream media is to be believed, the economy is strong. One of my litmus tests of o que aconteceu economic conditions are local and state budgets, and once again we see the familiar pattern, even in Texas.
FORT WORTH — The city will eliminate hundreds of positions as it copes with a budget shortfall and a slowdown in tax revenue, City Manager Dale Fisseler said in a letter to employees.'
http://wallstreetexaminer.com/blogs/winter/?p=1689#more-1689
This is just an offhand comment, certainly with no relation to your better half, but I was just idly thinking about the scene in The Day After, that 1983 TV movie about nuclear war, when the missiles are already sailing through the sky. The farmer's wife is in the bedroom making the bed and straightening the sheets, refusing to leave.
The husband has to pull her into the cellar kicking and screaming.
If we could just harness that energy which fuels denial, we'd be saved.
I'm noticing this happening more & more and I have to say that this IS a gender neutral phenomena.
An awful lot of my acquantainces are more and more telling me how they are worth close to - or even over - $1million (at least on paper anyway). My friends just tell me that times are tough.
I think that Alexis de Toucqeville (?spelling?) probably had the answer nearly 200 years ago: that the big indicator of social status in the young U.S.A. was the appearance of wealth. (Heck there was no aristocracy, so what else could one use?)
Alexis de Toqueville also said that 'the US system will work until the politicians discover that they can buy the votes of the citizens'. (paraphrase) That sounds like a simple observation but is more profound than it seems at first glance.
"so they bought the $80,000 full size Lexus."
what we have here is a case where the wife wears the pants.
I will laugh when their Lexus is reposessed.
These kind of people will need to hire security details to protect them from the formal middle class that will be inspired to smash their Lexus with whatever they can find when it passes by. People love to destroy what they can't have. (Not that I blame them.)
How can it be "reposessed" if they have "bought" it?
Nick.
Do you really think they paid cash for it. More likely they bought it on credit. Just like their house and probably everything else they "own".
What happens when you don't pay your exorcist? You get repossessed. :)
This is why I absolutely will not leave the North. Here in Yankee Boston I was able to ride a bike to a job interview and have it mark me as frugal and not loser. In Texas, frugality appears to be a real liability for ambitious job seekers.
Also not an issue in New Orleans (if you bike in the months October-March/April).
The number of suits bicycling in my neighborhood is dropping now as heat and humidity increases. Streetcar is the acceptable option.
Best Hopes for Biking to Work,
Alan
A couple of weeks ago in a post I said that I had not yet seen ANY ordinary 45+ people riding bikes in my town - just kids and the spandex-clad twenty- & thirty-somethings. That has now changed. I am now starting to see older people (and I mean even 70+ year olds) riding bikes in my town. I also continue seeing more scooters too, ridden by all ages, even 70+ folks.
As far as I know, I may still be just about the only person in town walking to work so far. I am starting to get noticed and commented upon - all positive so far.
Some thing happening in the KC Metro and outlying suburbs areas. More walking, biking, scooters and such. And many more people biking, not for excercise, but for a trip to the store or what not. Also saw my first Prius Yellow Cab in the KC Metro. Probably commonplace in the big, big cities, but here in KC, it was unusual. Looked pretty nice decked out in yellow and black.
There are certainly regional factors as to what is considerd *cool*. For example, today there was a guy selling electric bicycles in the lobby of our building (oil company downtown Calgary).
Maybe a sign of peak oil awareness or just environmental PR. Anyway, it is considered *ok* to ride a bike in this town.
Bluster and Buster..
Texan: Tell you Boy, I can drive my truck all day long, and never hit the end of my property!
Mainer: Oh yah, I had a truck like that once, too.
This is the upper middle class in action. Image obsessed and highly leveraged. These are not the true rich.
Ross Perot drives his Ford because he doesn't give a damn about expressing himself through trifling objects like cars or the like. A family member drives a 8 year old Merc base E class but earns $8m+ annually, another a Citroen MPV and is worth $100m+ - truly rich people do not care.
The upper middle class will be cutting back drastically as the costs escalate but they won't go down unless they have borrowed insanely.
In my family as well, there is an inverse relationship between wealth and value of car driven. I have the nicest car and the least wealth (because I'm a car guy, not a show-off). My rich relatives all drive POS's.
Which is the cause and which is the effect? For some people, who just gotta have a fancy car to show off, wasting that kind of money on cars prevents them from accumulating wealth. I'm not saying this is the case in your family, but I bet there are a lot of people who could have been pretty well off, if only they had been thrifty instead of spendthrift.
It's not just Perot. The billionaire by the name of Bass (if my memory recall is working) - the guy who funded the Biosphere II experiment - used to (and may still) drive an economy car and looked like the average guy off the street (from what I read).
I also read that Howard Hughes had to borrow dimes from his assistant, Noah Dietrich, in order to use pay-toilets (before he developed that aversion to shared facilities).
It's not a bad idea from a security standpoint to travel in a crappy car. Maybe why Muammar Quadafy used to own a customized VW Beetle. I've seen Howard Hughes' frumpy Dodge sedan in Las Vegas. Its entire trunk is filled by a sophisticated air filtration system.
There was a recent series of interviews with Warren Buffett and his three children. Really down to earth people. Apparently, Warren's idea of a good time is to treat everyone in the family to Saturday night at the movies - they go to the local cinema, IIRC.
And money doesn't seem to have destroyed Bill Gates either - he's still the same geek as he was thirty years ago.
Both these guys control their money rather than it controlling them. We need more people like that.
Bill Gates has built an obscenely large house, though. And it would have been even bigger, except his wife put her foot down.
Warren Buffet, OTOH, still lives in the same 5-bedroom house in Omaha that he bought in 1958 for $31,500. It's worth a lot more now, of course, but is nothing like the Gates' 50,000 square foot mansion.
Buffett also has a pad in California that at last estimate was worth $3.5 mill.
That's a relatively modest house in many parts of California. (Which is one reason "drive till you qualify" was so common.)
Definitely chump change compared to the $147.5 million Gates' mansion has been assessed at.
IIRC, Bill wanted a house filled with the latest Microsoft toys to demonstrate the wonderful world of technology.
But his wife wanted a home instead of a company showroom. He's lucky to have married someone like her.
He also wanted a house with a kidnapper-proof perimeter, and for him and his kids, that is eminently justifiable.
But it's true that he is not a glutton, nor a show-off.
That's so sad. It turns out the middle class is more prone to the "status symbol" desease than the ultra-rich.
To the credit of the USA, this is one of the things I like most about this country - nobody cares much what kind of car you drive or house you live in. In my home country it is common that you must have the latest cell phone model (costing usually a wage or two out there... imagine paying say 5K for a cell phone!), even if you can hardly pay your rent. It's sad to see this mentality has certain roots here too.
And then there is Tom Perkins: http://www.cbsnews.com/sections/i_video/main500251.shtml?id=4143154n
Hello Ptoemmes,
At least his megayacht is sail-powered. I expect this sailboat to be quite profitable postPeak hauling goods like the old Clipperships.
Families are forced to take on a lot of debt to buy stuff they can't afford to prove to the neighbors they can afford a lot of stuff.
Sort of a reverse potlach.
Except the fire comes when you hire an arsonist for the insurance money.
"Affluenza", I think it is called.
You mean these people aren't loved for their personalities and character?
Thanks, tstreet, for what I consider the sanest comment on this thread.
Some TOD readers will likely be familiar with Paul Fussell's sharp wit and clever examination of US middle class pretensions and dispositions in his *Class*. He makes the wonderful comparison of the ultra-rich and ultra-poor - you never see them and neither cares what you think of them.
Yesterday I noticed that Upstream Crude had Indonesian Minas up $10.60. I assumed this was an error similar to the one we saw in Oman Crude a couple of weeks ago. However today they have it up another 57 cents to $130.63 a barrel. This is still confusing because they have not updated the previous days close to the correct figure so I guess we will have to wait until tomorrow to see if this is the correct figure or a reporting error of some kind.
All that being said, I did some figuring with oil prices three years ago comparing them with those of today. I found that every other crude had gained, percentage wise, on WTI.
For instance, three years ago, Brent Blend sold at a 7.45 percent discount to WTI. Today it is selling at a .73 percent discount. Three years ago Malaysian Tapis sold at a .83 percent discount to WTI. Today it is selling at a 5.1 percent premium to WTI. Dubai Crude sold at a 10.77 percent discount to WTI while today it sells at a 5.05 percent discount. Oman Crude has gone from an 8.24 percent discount to a 3.8 percent discount to WTI. Likewise with all the rest, even Alaska North Slope and Louisiana Sweet, they all have gained on WTI.
So basically WTI is not pulling the world oil price higher. It is, if anything, a drag on world oil prices. Supply and demand are pulling all oil prices higher while the NYMEX auction market is holding WTI back slightly when compared to all other spot prices.
Ron Patterson
Inventory at Cushing has been building, while inventory on the Gulf Coast and elsewhere has been falling sharply. (My feeling is that the closing of refineries that use Cushing supply has been deliberate. Saudi prices for the U.S. are set by WTI.)
More important, speculators (who look at charts, not fundamentals) are locked into this mindset that the whole thing's a bubble. The near months all moved into full-out contango today. Commercials simply won't sell at this price. Essentially they're paying a premium to speculators to get them to short.
Open interest dropped by 23,490 contracts yesterday. If you've been following the weekly Commitment of Traders reports (http://www.cftc.gov/dea/futures/deanymesf.htm), commercials have been steadily closing out shorts while speculators have been steadily closing out longs.
All this is a long way of saying that you're right, and that speculators are currently suppressing prices.
Interesting One Year Snapshot:
Here is what we have seen for the week ending 5/23, versus one year ago (weekly, except for Refinery Utilization, which is four week running average):
Net Oil Exports: As Datamunger noted, an accelerating net export decline rate in 2007, with a total decline of 3.3% from 2005
Crude Oil Prices: $130 (WTI), versus $65 one year ago
Refinery Utilization: 87%, versus 90% one year ago
Product Prices (Gasoline, Gulf Coast Wholesale): $3.22 per gallon, versus $2.31 one year ago
Total Product Inventories: 657 mb, versus 661 mb one year ago
This is consistent with what I expected (in 9/07) to see in response to declining net oil exports:
http://www.theoildrum.com/node/2975
Hmmm, some more interesting numbers. Total world net oil exports in 2005 about 46.3 mbpd. The shortfall between what exporters would have exported at the 2005 rate and what the EIA shows was 184 mb in 2006. It tripled in 2007 to 551 mb, for a two year shortfall of 735 mb. IMO, one does not have to search further for an explanation for rising oil prices.
Too bad you aren't testifying at the Senate Hearing noted upthread.
That privelege is reserved for Papa Soros.
Moe_Gamble -
Now I am really confused!
The ovewhelming concensus here at TOD is that the actions of speculators did not and cannot cause a sharp run-up in oil prices. Some very persuasive arguments were put forth, I think some by you yourself. Now here comes George Soros, a man known to be right far more often than he is wrong, saying just the opposite, i.e., that speculators ARE a cause. One of you must be wrong.
Not having a firm grasp of the way the commodity markets work, I don't feel I'm in a position to decide the question on my own. I am very interested in seeing what the upshot of these hearings will be, assuming one can wade through all the political posturing and general BS. My totally subjective gut feel is starting to tell me that while speculators cannot actually control the market, they might in some way be able to put their thumb on the scale just a little bit here and there and thus nibble away at the margins.
Soros is claiming that speculation is only a small part of the price increase. He used the term "frothy". It seemed to me that he placed more emphasis on the fundamentals: aging oil fields, increased production costs, increased demand etc. The first thing Soros said was that he was not an expert in energy.
For my money, Rick Santelli has had the best read on the influence of speculators on oil prices. This CNBC video is a hoot:
http://www.cnbc.com/id/15840232?video=753754816&play=1
Look at the other pundits struggling to wrap their heads around what he's saying...
I think there may be something to the speculation argument, but it goes along this analogy:
I'm a drug dealer. I sell you heroin for $3/kg. You buy it every week. One week, I decide to try to charge $4/kg. Lo and behold, you still buy it. I have just taken a speculative risk and it paid off. Now, I'd like to keep trying this, but I'm not keen on taking the risk all myself. So, I set up a futures market and let anyone bid on my heroin. Even non-heroin users can buy and sell futures. They do so in droves and the front month contract is driven up in price to $8/kg. Come the expiration date, these speculators don't want to take delivery (and risk jail), so they have to vacate their contract positions. The spot price is at $8 and they have to sell. Lo and behold, the heroin addict STILL pays the price, and the speculators made money. They could have lost a lot of money if the addicts had said "no way, I'm not paying $8, I'm gonna try some coke instead". Now, the heroin gets consumed, there is no hoarding, but now the going price of heroin has doubled virtually overnight with seemingly no dramatic change in supply/demand.
Now, the explanation - the futures market, and as we now have, a far more liquid futures market - has essentially done a better job of finding the real price of oil. Suppliers and users did not do a good job of finding the real equilibrium price point of oil, and thus, it was a distorted price (too low). Suppliers weren't willing to risk losing money by raising prices. Speculators have come in and taken on the risk. In the last 3-4 years, you can see this dynamic if you look at the price of oil along with the volume of futures trading - it has exploded. It is not a "bubble", because there is no mechanism to flood the market with excess oil, but it is the speculation, the investment money, that has helped the oil market find it's correct price.
Now, imagine if they opened ETF's for gasoline, the finished product (if there is one, I'm not aware of it). The price of gas would rise dramatically as well, IMO, because I think we have right now a similarly distorted gas price (too low), and suppliers that aren't willing to risk unilaterally raising their prices. Instead, they reduce their utilization rate and we risk shortages of gas.
speek, I think that's a fair analogy. It makes us examine our terms. By your implied definition, "speculation" is merely the normal mechanism of the market as it tries to properly value a barrel of oil(and I agree with that), but most commentators seem to be using it in a different sense: that it's an abnormal activity causing the market to overvalue oil, implying a speculative premium, or a bubble (and I disagree with that).
There is a simpler explanation: when the market produces prices that we like, we call it fair and normal; when it produces prices we don't like, even by exactly the same mechanisms, then we call it unfair and abnormal. If speculative shorts were able to drive the price of oil down $40 from here, how many Congressmen would suggest an investigation into the "interference" of speculators?
So if someone makes a bet that a horse will win a race, that's gambling.
If someone buys an oil ETF because they want to hedge against rising oil prices, that is speculation.
If someone buys shares of XYZ stock because they think it will go up in price, that's investing.
Right, perfectly clear!
They do have an ETF for gasoline now.
How long do you think the current situation will last?
Inventory at Cushing has been building, while inventory on the Gulf Coast and elsewhere has been falling sharply. (My feeling is that the closing of refineries that use Cushing supply has been deliberate. Saudi prices for the U.S. are set by WTI.)
This WSJ article (http://online.wsj.com/article/SB119162309507450611.html)from last fall mentions that:
"In Cushing, most storage tanks are owned by four entities: oil giant BP PLC, and energy-transport and logistics firms Enbridge Energy Partners (an affiliate of Canada's Enbridge Inc.), Plains All American Pipeline LP, and SemGroup Energy Partners LP.
"
and
"Bruce MacPhail, who manages Enbridge's U.S. oil-terminal leasing, estimates financial firms now lease 25% to 35% of the company's storage. Enbridge, which bought several Shell tank farms in 2004, has gone from having no presence in Cushing to owning just over one-third of the town's tanks. One of Enbridge's clients is Morgan Stanley, people familiar with the matter say. The investment bank recently helped Enbridge bankroll the construction of new tanks."
Given the heavy ownership (and construction of new storage tanks) by financial firms, it seems that Cushing's oil owners are interested more in storing lately. It would be interesting to see what percentage of Gulf Coast storage is owned by financial firms and middlemen.
the_rage -
Well, that is VERY interesting information indeed!
One of the arguments frequently heard at TOD is that speculators cannot heavily influence the price of oil because in order to do so they would have to have the capability of storing significant amounts of oil ..... because if they did not, then they would be subject to periodic 'corrections' when it's time to pay the piper as the contracts expire.
Now, if it is indeed true that financial firms now lease 25 to 35% of the storage capacity at Cushion, then that would appear to at least partially satisfy the necessary condition of having storage cability. Whether that constitutes both a necessary and sufficient condition for significant price influence, I do not know. But in my mind at least, my confidence in the argument regarding speculators' lack of storage capability has been shaken a bit more.
Maybe we shouldn't refer to what is going on as 'speculation' in the normal trader sense of the word, but rather something else (e.g., 'resource control?).
Comments?
But, the storage capacity of cushing hasn't changed (correct me if I'm wrong), but the ownership has. The new owners may very well hoard the oil, but that just has the effect of reducing commercial inventories by the amount the banks control. The bank is in no hurry to sell the oil, they want to see if they can get the price bid up to $200 before they sell it.
One article mentioned that new tanks had been financed by a Wall Street firm (Morgan Stanley ?).
Not dramatic, but some.
Alan
Interestinger and interestinger. I do think one of the results of peak oil will be the arrival of the hoarders, and thus real speculation. I did not expect it to get started so soon.
This is an old article (2004) but may be pertinent to this discussion;
http://business.timesonline.co.uk/tol/business/article481363.ece
But, the storage capacity of cushing hasn't changed (correct me if I'm wrong), but the ownership has.
The article does mention new tanks - the photo captions are:
"David Bryson of Enbridge Energy Partners is overseeing work in Cushing, Okla., on a new cluster of tanks that each can hold 575,000 barrels."
"Storage operators are busy building more tanks. Today, industrial construction firm Matrix Service Co. has overtaken the Cushing schools and hospital systems as the town's largest employer."
Thank you.
This whole storage argument doesn't make sense. The more you have in storage, the less it's worth. If people ever found out Morgan Stanley had 10 billion barrels in storage, the price would fall to 10 dollars.
Ask any business owner, high inventories is a prelude to a sale and not higher prices.
Hello Jteehan,
Your Quote: "The more you have in storage, the less it's worth."
Just the opposite effect applies in topsoil: the richer and thicker the mulch, micro-organisms, worms, and embedded NPK and other trace minerals--the more valuable the farm.
IMO, we need to energy-transform billions of barrels of FFs to infuse/hoard below ground the I-NPK and O-NPK that makes for rich topsoil. Burning FFs for merely heat or car movement is like burning precious art--makes no sense when our global topsoils are in terrible shape.
Now that is VERY interesting.
Leanan posted this story in the Oct 6, 2007 Drumbeat.
Rust never sleeps.
Sure wish I had time to read them all!
Matt Simmons posted a paper on his company web site; "Oil and Gas Rust - An Evil Worse than Depletion." He used the phrase, "Rust never sleeps."
http://www.simmonsco-intl.com/research.aspx?Type=msspeeches (May 5, 2008)
speek -
Geez, my paranoia meter is just about to get pegged!
The obvious (and therefore probably wrong) conspriracy theory would be: the financial sector has just about gone bust selling worthless paper to the public and each other and now wants to get into something that people really can't do without, i.e., oil. Could this be a massive takeover of our resources by the powers of darkness, aka Wall Street?
"There's something happening here, and you don't know what it is ....
Do you ...... Mr. Jones?"
Apologies if this has been posted before, but here's a link
http://video.energypolicytv.com/displaypage.php?vkey=d018912c116bf2783e9...
to a recent interview with T Boone Pickens in which he predicts US gasoline at $14 per gallon by this summer and $18-$20 by winter.
The consequences of such a rapid run up in prices are mind boggling.
I believe Pickens was referring to the price of natural gas, not gasoline.
-best,
Wolf in YVR BC
Sorry, my mistake!
RE: Soaring Inflation Threatens Peg To $US
Fuel prices at the pumps are peanuts now compared to what they will be if all Mid East oil producers remove their currency pegs to the US Dollar.
Anyone that fails to understand the relationship between the effect of dollar pegs in oil producing countries should brush up on the subject. A good place to start is:
'From a political perspective, there is a serious question as to whether Saudi Arabia, the largest economy in the region, will wish to deliver a quick victory to the Kingdom’s nemesis, Iran’s president Mahmoud Ahmadinejad, who, together with his “brother” Hugo Chavez, called in the recent oil summit in Riyadh to ditch the dollar “as a worthless piece of paper.” SAUDI ARABIA MAY ALSO BE THINKING ABOUT THE HARMFUL EFFECT A DECISION TO PUT AN END TO THE DOLLAR PEG WOULD HAVE ON THE AMERICAN CURRENCY AND ITS STRATEGIC RELATIONS WITH THE US (caps mine). [See our previous editorial on “The Oil Summit Rebuffs Iran and Venezuela”'
http://memrieconomicblog.org/bin/content.cgi?comment=21
and here...
' A former president of the Federal Reserve Bank of New York described fixed currencies as follows:
"Fixing the value of the domestic currency relative to that of a low-inflation country is one approach central banks have used to pursue price stability. The advantage of an exchange rate target is its clarity, which makes it easily understood by the public. In practice, it obliges the central bank to limit money creation to levels comparable to those of the country to whose currency it is pegged. WHEN CREDIBLY MAINTAINED (caps mine), an exchange rate target can lower inflation expectations to the level prevailing in the anchor country. Experiences with fixed exchange rates, however, point to a number of drawbacks. A country that fixes its exchange rate surrenders control of its domestic monetary policy."[1]'
SA is between a rock and a hard place...Iran on the one hand, a US sinking dollar plus the Carter Doctrine on the other. In his recent trip to the Mid East Tresury Sec Paulson was offering advice about what the ME countries should do with their soverign wealth funds. Of course Paulson is probably the biggest liar that has ever held the office but you gotta give him credit for grit...advising soverign countries on how to manage their soverign wealth funds.
http://en.wikipedia.org/wiki/Fixed_exchange_rate
and finally...
'Gulf dollar peg is sovereign issue: US treasury chief'
When the US Government starts using the word 'soverign' trouble is on the horizon...and, not a receeding horizon...imo.
http://www.metimes.com/Politics/2008/05/31/gulf_dollar_peg_is_sovereign_...
Saudi Arabia may be in for *interesting* times. My understanding of their current situation is as follows:
In short, BAU in the Persian Gulf is now on the endangered species list.
General Motors Announces it is closing Truck-SUV plants in Ohio, Wisconsin, Canada and Mexico after 2010 model year.
http://www.daytondailynews.com/b/content/oh/story/business/2008/06/03/dd...
So where are the four EV plants to replace them?
Nowhere?
Its easy to cut, harder to build. Wake me up when GM takes the shift in requirements seriously enough to really invest.
When will GM finally wise up. They said the EV1 wouldn't sell. Well of course - the physical size limits potential buyers. How may people want a two seat car with limited range and carrying capacity? The same is true of the Volt except for the range.
Any new concept should be targeted at fleet sales:
1. they buy in large quanties thus lower production costs
2. They will be serviced and fueled in central locations - thus no need for vast infastructure changes
3. they will be driven and maintained by professionals
4. if there is a problem - like a battery fire - they will not rush to the phone and call "1-800-lawyers".
Good ideas. I'm sure some Japanese company will be quick to implement them.
Are you in Dayton RT as you are linking to the worst newspaper in the WORLD.
after [2009 or] 2010 model year
Why wait one or two years ?
"After 2008 model year" i.e. in 3 or 4 months would be a bater decision.
Alan
They could do that if they really wanted to. The real kicker here for me is that Ford in particular makes wonderfully fuel efficient vehicles in Germany. Why can't they use those designs here in the U.S.?
Because the US government won't let them import them!
Take the Smart car. In Europe it gets 50+ miles per gallon with the small diesel engine. The USA version gets about 30 MPG with a big gasoline engine. They can't import the model with the small diesel engine because "it pollutes too much".
I can't imagine why anyone would want to buy the Smart car with only 30 MPG when the new VW with the TDI diesel gets almost twice the fuel milage?
It's mostly stupid politics.
For the same price as the smart car, you can get a nice new Corolla that gets 40mpg. Must be the engineer in me, but I just do not get the smart car.
The smart car was not designed to be an efficient vehicle. It was designed to be a small nimble vehicle that can navigate crowded European city centers.
Why its being marketed in the US as a green car is beyond me.
I think you really need quote marks around the name.... that is "Smart" car.
We have a friend who paid 40k for one to get one of the first ones in the country. She drove over in it and showed it off, noting that it might get as much as 40mpg. Parked next to it was the 2002 Hyundai Accent which I bought for $1100 since it had been sideswiped and vandalized, and then spent $30 to fix. I point out that I was getting 43mpg in it, and it had a hatchback and twice the hauling capacity. She was not entirely amused I think. Nice lady though.
Meanwhile Porsche is eyeing up a larger stake in VW.
Niche firm Porsche sets big goals
There's no mention of oil prices in the article, only a reference to the possible effects of the 'credit crunch'. It doesn't look like PO is currently on the company's radar. However, selling luxury cars to oil exporting nations is probably one of the better post-peak business strategies for car manufacturers. According to the CEO Mr Wiedeking they may even "have to build some products in the US".
I know Cheney is peak oil aware, I'm guessing this is maybe a peak oil reference, very subtle though..
http://www.msnbc.msn.com/id/24939201/
This is the main reason I still have a car. I don't feel safe on the roads - or even off the roads - without my metal shell.
Car crashes into bike race; one dead
Cycling fatalities only represent about 2% of all traffic deaths.
Thanks, I feel much better about my dead father now that I know the %.
Sorry to hear about your father. Obviously there is no way I could anticipate someone taking offense by me quoting a statistic. One of my best friends (who never owned a car) was killed by a bad driver 13 years ago. If you were offended I apologize.
That would only be meaningful if you knew what percentage cyclists are of all travelers.
From this:
That seems to suggest if bikers are 2% of the fatalities, then bikes are proportionally more dangerous since they're being used by less than 1% of the trips.
From here, there's a completely different statistic:
The bold part seems to imply bikes are safer.
Lies, damn lies, statistics.
It may look less but that is per person traveling on each conveyance. If you factor in how man miles each person was traveling biking would be a lot worse because each person travels a far less mean distance than driving a car.
What's the point of this argument? People die all the time from a variety of causes.
The picture is what I would expect and actually did hear from the MSM during bike week last month. The guy in SF just couldn't help but end each segment with some bad news about an accident.
I'd rather die a nice violent bicycle death then be a fat, diabetic, heart disease ridden, arthritic, wheezing, loser who sit in their SUV loaded with a SuperSized sack of McSnacks on the way home to the McMansion complaining of high gas prices the whole way.
Wear a helmet, take a bike safety course, don't react to rednecks no matter how much they piss you off, stop at stop signs, yield to everyone, hit the damn squirrels head on, don't freak when the dog runs out, and enjoy the ride. Or don't.
And what % of vehicle traffic?
Ah, but what fraction of passenger miles do bicycles represent? 2001 figures from the Bureau of Transportation Statistics indicate that they were only 0.2% of the passenger miles of motor vehicles. Combined with your figure, that suggests that riding is much more dangerous than driving. Except for special circumstances, I admit that I'm a traffic hazard on my bike. In particular, I can't keep up with cars, especially on the uphill bits. If traffic is heavy and there is no separate bicycle lane, drivers are forced to either slow way down or perform potentially dangerous maneuvers to get around me. From my house to my work, there is no route that does not force me to put in a mile or more in heavy traffic with no bike lane.
OTOH, Denver and its surrounding suburbs have an extensive network of bicycle trails for entertainment/exercise riding. Unlike Leanan, I am more than happy to shed my metal shell and put in 20 or 30 miles on the trails on a Saturday morning. I only wish they connected to the major job or shopping centers in an intelligent and safe fashion.
The roads in US are simply not made for cyclists. Even dedicated bike lanes don't provide enough safety, and I always slowdown and even go into the next lane (even if it's the opposite direction) when I see a cyclist - I've been a cyclist and I know what kind of stress is to have 3000lbs of steel passing you by at 50mph at one foot distance.
The solution I think is dual or multi mode mode transportation, like it is in Europe. In dense environments priority must be given to pedestrians, bikes and mass transit, otherwise they will always lose out safety and convenience wise. In suburban environments I think bikes don't have a place at all. PO will force us to go dense in the US, but it would probably take decades until we rebuild it all.
We don't have to rebuild it all. We only have to rebuild 5%, and then you can move there and leave the other 95% to the slow learners.
I commute by bike five miles each way most days for most of the year and have done so regularly for the last three years. Come later this month of next, I'll cut back because it gets so hot! Some of my route is on secondary streets with bike lanes, but about half is on primary streets (three lanes each direction) with a 45 MPH speed limit. Drivers in my city seem particularly aggressive towards cyclists.
Is it dangerous? Maybe, but so is driving at 75 or 85 MPH surrounded by other vehicles doing the same. Nobody suggests that they quit driving because of its hazards.
I just have an agreement in principal with a bicycle consulting firm to model & policies required to maximize bicycle use post-Peak Oil. Pro Bono publico to their credit till we get some funding.
Best Hopes for Rational Planning Before TSHTF,
Alan
Actually, the roads are just fine for biking. The problem is that they aren't made for motorists to always be able to easily pass cyclists, and motorists assume that they always have a right to pass. That assumption is a social assumption; it isn't what the law says. To change that assumption, we need to have the police enforcing the law, not motorist privilege. If (when) gas prices get high enough, we'll get there.
What I meant by that is that the roads here allow much higher speeds. If the speed limit is 20 to 30mph as is common in urban environment in Europe, and a bicycle travels with 10mph, the maximum speed difference is 10 or 20mph... much safer to pass and a possible collision at 15mph is much less dangerous. In US the speed limits in roads with bikes on them are most often 35 to 45mph, but drivers are regularly driving 50-55. A collision with 30mph relative speed will definitely kill you, while at 10mph you may get out with just a few scratches.
There are other issues, that cyclists can further expand on; for example I've always wondered what is it to make a left turn on a multi-lane crossroad. Cyclists regularly use cars to support themselves on traffic lights, and I can't help but think how dangerous this is, especially if the driver does not notice.
"Bike Boxes" and "Bikes first" greens (1.3 seconds before cars) help make biking safer.
A Bike Box is for multi-lane avenues at signaled intersections. Cars stop about 20' back from where they used to stop and only bicycles can stop in either traffic lane inside the Bike Box. Thus a left hand turn bike goes from the bike lane into the left hand lane of the bike box. Even if the bicyclist arrives at a green light, it is best to wait for a red light.
And a short head start gets the bicyclist on his way with all to see (all cars red for 1.3 seconds).
Also, the speed limit for most New Orleans streets is 25 mph and 35 mph for streets with neutral grounds (medians).
Best Hopes for Real World Solutions,
Alan
That sounds cool. But I usually wait to the rear of the line of cars and use the last one as a blocker, while checking to make sure I don't become the meat in an SUV sandwich. Part of my defensive riding techniques that I've learned dodging beer bottles in Texas and drunk drivers in California. Or was it the other way around?
The more we get out there on bikes, the more the cars will learn to deal with us. And unfortunately, the more of us will become road kill. It's just the way things are.
One of the greatest irritations are weight activated turn signals. I have to make an illegal turn nearly every day, because I don't weigh enough to trip the signal (and it would never turn green otherwise). I have also heard the same complaint from motorcyclists.
I don't think its weight that sets them off, but the steel in the car. There is a loop in the asphalt and the steel of the car interrupts the magnetic field.
Your bike doesn't have enough (or any) steel to set it off.
For motorcycles one trick is to turn your bike on and off. Somehow the starter motor will trip the sensor that way.
Sometimes magnets work as well.
Alan
There are several different methods used, but inductive loops are probably the most common. They are around here, anyway.
True - The problem is they have all those damn cars on them.
Indeed, but for how much longer? ;)
Because you're afraid you might decide to be part of a bike race that's hit by a drunk driver?
Because you're afraid of drunk drivers falling asleep behind the wheel of large sedans? I hope you have a large metal shell. I could have sworn that motorists are killed by drunk drivers as well. Silly me. I guess it's only bicyclists.
If we find a picture of a car plastered by a drunk driver collision, will you give up your car out of fear and only get around by bus/train/tank?
In most modern cars, with air bags and your belt on you can take a hell of an impact-on a bicycle, you get hit by a car doing any speed at all and it is over.
Of course, most people regularly do very high speeds in cars and need to be able to take a hell of an impact. And we still have over 40,000 motorists dying in car crashes every year.
On my bike, I'm never going over 30mph. You don't need much crash protection at 10mph. OTOH, I've been hit a couple of times in my 22 years of biking to work and never got more than a scratch. Maybe I'm actually one of those ghosts Jeffrey keeps mentioning but I don't know it? Or maybe you shouldn't make such blanket statements?
You can be going 10 mph on a bicycle (or 2 mph) -if an SUV hits you going 50 mph you might get scratched real good.
If an SUV hits you going 50mph, you'd better be in a bus. Duh. Have you ever seen what happens to just about anything when plowed into by an SUV traveling 50mph? Something tells me that you won't feel good no matter what you're in.
Typical. We all must drive tanks because of the vanishingly remote possibility that we may be hit by another tank traveling at 50mph. That was a so-so plan when gas was $1 per gallon. It apparently falls completely apart at $4 and up, since SUV sales are dropping like a rock.
I never said you should drive a tank-I support your right to play hopscotch in the middle of the freeway if you need that.
"Have you ever seen what happens to just about anything when plowed into by an SUV traveling 50mph?"
or better yet a ready-mix concrete truck.
This reminds me of the argument made by people who are afraid of air travel. It may be statistically safer to fly, but if you crash, there's little chance for survival.
Fear has nothing to do with it-if someone believes that they are physically safer riding a bicycle on a road rather than driving a car nothing will convince them otherwise (obviously).
Exactly.
I remember reading about the first crash between two cars with airbags, when I was doing research for a legal case, several years ago. It was a head-on collision at high speed. Both drivers walked away with barely a scratch. The cops were just astounded. They couldn't believe it.
Weren't they both Chrysler Lebaron's as well? I seem to recall Iococa showing the picture to all who would look.
Wrong conclusion. I been hit, I'm here. Even look at that picture: lots of bikes in air, only one dead.
Even after you get hit, you still have choices. Most often (yes, I've survived more than once) you will be thrown clear and you need to think how you land it. Deciding in advance that it's just going to be a fatal collision substantially reduces your odds. If you think that way, don't ride.
And don't talk about it.
Best of luck, Evil Kneivel.
Statistically of course you are right.
But then those I've known who've died in car crashes are dead while those who've died in bike accidents have this odd habit of fooling the docs who make them DOA and getting back on the bike.
I'm just happier with the bike than with fear.
Also I would say it's much safer now than in years past, at least where I live. I certainly remember a time when I'd hear the tick of a derailleur, or even the tick of a 3-speed, and it was 50/50 I knew that rider. Now I might see a couple hundred riders a day and only know 3 or 4. Bikes are just normal traffic in Chicago. Drivers expect to see us, and they do see us. Even the riders behave better when what they do becomes normal. Bikes are on the radio traffic reports here. We aren't all Evel Knievel.
There was a time it felt a little like that and only certain personality types would play. Thankfully now you meet all types out on the bike. All types but the fearful.
Actually, most of the time, everything misses you, and you're so relieved that you forget to pop your feet out of the clips, fall, and end up with a sprained wrist.
At least that's my MO.
only get around by bus/train/tank?
Or Streetcar. 1923/24 St. Charles streetcars have 1/2" steel plate below the windows, 2004 Canal streetcars have 3/4" Corten steel plate.
Garbage truck hit St. Charles streetcar at 90 degrees (rear of garbage truck backing up). Garbage truck driver shaken up, no injuries on streetcar. Garbage truck totaled, streetcar back in service in a few weeks.
Alan
A horrific photo. I bike race about every other weekend through the summer. This is my worst nightmare. When I ride to work I'm always looking out for traffic. When I race I'm much less aware of traffic as I assume they will know better then do get in the way of a pack of 100 cyclists.
Statistics for bike fatalities is lowest in those countries where bicycle usage is highest. The more bikes on the road, the more aware and considerate motorist become. Don't have a source for that right now but I'll find it if anyone is interested.
I've been knocked off my bike twice by motorist and once by a bus and consider myself lucky to still be walking. I've not lost anyone close to me but I've known a couple of guys that have been killed by motorist. One just a couple of weeks ago. He swerved to avoid someone opening their car door only to get smucked by a dump truck. Very sad, father of 2 young kids.
http://www.projectfreeride.org/team/cycling_health_and_safety/
Here's a link to a study that has all sorts of interesting tidbits. It's way safer in to ride a bike in Germany than in the US.
That's an interesting point. There's some research that suggests cyclists are actually more likely to be injured on bikeways and such than on the road. Possibly because we tend to let our guard down.
"He swerved to avoid someone opening their car door only to get smucked by a dump truck."
This drives me nuts. No cyclist with basic Road I training would ever be in this situation. Motorists have to take driver's ed, but cyclists don't have to take anything. A few poor, clueless cyclists get themselves hurt or killed doing something dumb and the rest of us that would never make such a basic error get to hear about how incredibly dangerous biking is.
A cyclist should never, *ever* have to swerve to avoid someone opening their car door. If you do, you are biking way too far into the door zone. Basic, basic mistake. Every manual for safe cycling I've ever seen strongly advises against biking in the door zone for this very reason, but you still hear about it.
In downtown Toronto, the gap between the "door zone" and the dump truck zone is about two feet.
Then you should bike in the middle of the lane, and make the dump trucks wait behind you.
Not very pleasant, I admit.
I haven't actually seen anyone try that-if I was forced to bike on a lot of these streets I would be up on the sidewalk-better to be judged by 12 than carried by 6.
Riding on the sidewalk is actually more dangerous than riding on the street. (Unfortunately, around here, the sidewalks are the legal bike lanes.)
Drivers just don't see you on the sidewalk. They pull out of driveways or sideroads, or turn in front of you, and nail you. At least if you ride in the middle of the travel lane, they'll see you. They'll be cursing you, but they'll see you.
But holy crap, it's an unpleasant way to live - spending 30-90 minutes a day riding your bike in mortal fear like that.
Try it for a week and you'll be over the "mortal fear" thing for the rest of your life. The vast majority are fair and reasonable about it. The few that are a**holes are a**holes to everyone, motorist or cyclist, and they aren't willing to do anything more than sometimes blow their horns. The rare cyclist that's hit from behind is usually biking at night in a rural area without lights.
I biked in Toronto a few years ago, and it was one of the most pleasant places I've ever biked. Of course, that was downtown and the inner suburbs. The outer suburbs looked just like biking around here.
speek writes:
John Forester in EFFECTIVE CYCLING writes of the condition as "cyclist inferiority complex." It stems from the feeling that cyclists are sneaks on the road and take whatever space the motoring public graciously offers.
John's prescription is that cyclists should act as if they were in vehicles. When cyclists comply with state law and ride similarly as vehicles are driven then all parties know what to expect and how to negotiate lane changes and other transitions.
Cycling advocates say the road is for ALL travelers. We also say that time is on our side.
Leanan writes:
In some states like Georgia it's illegal to ride on a sidewalk. But push come to shove we all do it when necessary. Georgia law states that cyclists should ride on the road and to the right as far as is practicable. And when encountering debris or poorly positioned drainage grates to take the lane when safe.
For anyone who cares the bible of cycling is John Forester's EFFECTIVE CYCLING. It's about 600 pages covering all aspects of cycling and cycling advocacy. This book should be on the shelf of all serious cyclists.
Yes, I learned growing up in Hawai`i that bikes were not allowed on the sidewalk. And as a pedestrian, I prefer it that way. Being run over by a bicycle is usually not fatal, but it's freakin' painful.
But in parts of the northeast, they build bike lanes as part of the sidewalk. The sidewalk will be 8' wide instead of the usual 5', and will be posted with occasional "bike lane" signs. Otherwise, it looks just like a normal sidewalk.
Most cyclists don't use them, which greatly aggravates the DOT engineers who designed them. They think it's because cyclists are lazy and don't want to ride up and down driveway cuts. Personally, I suspect the cyclists know something the DOT engineers do not: that it's more dangerous on the sidewalk than in the street.
While you're legally correct, I must point out that this does place you in the middle of the objects thrown by pissed off passing motorist zone.
Where is the follow-up pictures of the motorist being beaten to death by the other cyclists?
Today's Peak Oil News carries an item from NY Times regarding IATA appraisal of profit outlook given high fuel prices:
IMO, businesses unwilling to raise prices to clients so they can remain solvent don't deserve to remain in business. The airline industry already gets a global break on its fuel price as most tax--especially in Europe--isn't levied.
Airlines Forecast to Lose $6.1 Billion in '08
Stories like this and the ones posted by DaveMart above seem to indicate the velocity of turmoil in the business world is increasing. I wonder if anyone really has a handle on the broad picture across all industries. When someone sits down to write the business history of these years, there will be tens or hundreds of thousands of stories and reports to wade through.
I Googled TOD and was unable to find these 2 interesting articles about solar in the FT of yesterday. Apologies if they have already been posted:
Silver lining in solar power storm clouds
Squeeze is on as interest grows in solar sector
It would seem that it is good news. Naturally, I would like to know whether it is too early to take a deep breath.
Tis actually a needed thing. It is not healthy if anyone can produce mediocre product and make a profit. Besides the increase in demand at $1.40 will be very large. I bet many of us are just waiting to PV to get cheaper before investing in a system.
I follow most of these solar company stocks, and if anything, prices and margins have been going up. Hence the rise in stock prices and the dropping of stock PEs.
I think these stories are just part of the wishful thinking peddled as news because of what is supposed to be rather than what is. Just go online and search the entire internet for solar panels and tell me if you find anything resembling a deal. Prices are still going up, not down.
Believe me, I'm not happy about this. I'd rather prices go down. Read the quarterly reports for inventory numbers. If they ever start to rise, then maybe the price will start falling.
TOTAL, the French oil company, admits Peak Oil
http://www.spiegel.de/wirtschaft/0,1518,557435,00.html
Here are some quotes from the article, from a slightly corrected computer translation:
The RV industry getting pinched
http://www.businessweek.com/ap/financialnews/D9125PPO2.htm
The smartest of these outfits will transition into high-efficiency mini-home production, right quick.
You're on to something. With the housing market in the toilet, folks might go super-small if located super-close.
Here we go again--Bakken: