![]() | The Month of the Psychological Shock (Over Oil) in America? | The Oil Drum | Truth, Lies, Oil and Scotland | ![]() |
DrumBeat: June 4, 2008
Show without comments | PDF version
475 comments | Comments can no longer be added to this story.
DrumBeat: June 4, 2008
Show without comments | PDF version
475 comments | Comments can no longer be added to this story.
Advanced search
Google search
Blogroll
Energy Sites
- The Coming Global Oil Crisis
- Die Off
- Dry Dipstick
- Energy Bulletin
- OilPrice.com
- Peak Oil News and Message Boards
- Powerswitch
- Rigzone
- Wolf at the Door
Environment & Sustainability Sites
- The Daily Green
- Green Car Congress
- Green Options
- green.alltop.com
- Gristmill
- RealClimate
- Sustainablog
- Treehugger
- WorldChanging
Blogs
- Aleklett's Energy Mix
- The Archdruid Report
- Bit Tooth Energy
- Casaubon's Book
- Cleantech Blog
- Clusterf**k Nation
- The Cost of Energy
- Culture Change
- David Strahan
- Do the Math
- Early Warning
- European Tribune
- FT Energy Source
- GetRealList
- GraphOilology
- Gregor.us
- Health After Oil
- jeffvail.net
- Mobjectivist
- Our Finite World
- Peak Energy (Australia)
- Peak Energy (USA)
- Question Everything
- R-Squared
- Resource Insights
- The Oil Drum - ANZ
- WastedEnergy
Finance & Economics Blogs
- The Big Picture
- Calculated Risk
- The Crash Course
- Ecological Economics
- Econbrowser
- Environmental Economics
- Infectious Greed
- The Mess That Greenspan Made
- Mish's Global Economic Trend Analysis
Organizations
Beware email scams!
Beware email scams claiming to be from this site. We do not have any job openings. If anyone contacts you about a job at The Oil Drum, do not reply to them, and definitely do not give them any personal information or send them money. Read more here.
“My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel.”
—Saudi saying
User login
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.








GAIA Host Collective
Speaking of declining oil exports. . .
http://www.business24-7.ae/Articles/2008/6/Pages/06042008_9c3b2fe49a4a41...
Shura member calls for oil production curbs in Saudi
In related news, the Texas Railroad Commission again lowered Texas production allowables, in accordance with its 36 year policy of voluntarily lowering oil production, because of a persistent inability to find buyers for all of its production, even its "light/sweet production."
http://graphoilogy.blogspot.com/2007/07/net-oil-exports-and-iron-triangl...
Net Oil Exports and the “Iron Triangle” (July, 2007)
Fool me once, shame on you. Fool me twice, shame on me. Relying on the vagaries of the market or the vagaries of the Saudis has proven to be a recipe for doom. We cannot even get an extension of the renewable energy credits through congress. But congress is riding to the rescue with plans to strangle speculation, the obvious true cause of all our woes. Once that has been cleaned up by closing the "Enron loophole", we can all go back to $1.50 gasoline. Which reminds me. I need to check on that bid I placed for USO.
I've been wondering lately if Peak Oil will ever be recognized as a cause for high price of oil, no matter how how the price goes or how short the supply is. As you are suggesting, it will always get spun as "countries are hording", or "security premium" or "speculators" or "lack of refineries", etc. I'm really starting to think the media will always spin it in some other way than "there is less oil available".
Human nature tends to react in similar ways to disaster whatever the age.
When the Black Death came to Europe in the 14th century although many physicians correctly looked to physical causes, and even had a try at identifying them, unfortunately looking in the wrong places, overwhelmingly people blamed sin as the triggering cause.
Remedies included the flagellant movement which sought to win back God's favour through the suffering that they inflicted on themselves.
Finding a scapegoat was another option, and the Jews provided that, and they were accused of causing the plague, although many remarked that they were also suffering.
Rather better hygiene and care in the ghettos meant that they did rather better than some of the other urban populations, so that gave the rumours additional credibility.
These diversions suited the elites quite well, as in the Jewish case that conveniently cancelled debts they had built up, and the flagellants were crushed when they became too much of a nuisance and challenged the church's authority.
Perhaps something of a cautionary tale for the elites happened in come central America societies, as one of their functions was to ensure good weather, and human sacrifice was used to procure the favour of the Gods in this.
When eventually this dis not work, the elites seem to have been massacred by a disgruntled population.
http://www.iht.com/articles/2005/11/17/news/maya.php
So I would expect much effort to be expended on finding a scapegoat, perhaps Saudi or speculators, and popular movements to be humoured, such as fuel tax reductions.
Let's hope that we follow the example of the Mayans in dealing with our masters!
Uh, would you happen to know where I can get some really, really sharp chunks of obsidian?
Yeah, in east-central Oregon west of Burns is a place called Glass Butte, which has all sorts of multicolored obsidian right at the surface, and is open to "mining" by the public. Obsidian, as you likely know, is made sharper by flaking, as in the process of making arrowheads.
http://www.umich.edu/~urecord/9798/Sep10_97/surgery.htm
DaveMart, according to the link you provide, the Mayan royal household in question was massacred by another royal household, not by disgruntled hoi polloi.
Even so, perhaps we can learn some lessons from the Maya collapse. First, it was slow, taking over a century before the highland cities were abandoned, and much longer in the Yucatan. Second, Mayan culture didn't disappear - in fact, now that the hieroglyphs have largely been translated, we've discovered that several modern Mayan rituals are depicted in Classic-period monuments. There was still a literate class when the Spanish arrived.
Village life was much the same before and after the collapse. What disappeared was the institution of kingship, the building of cities, massive agricultural projects, and wide-scale trade.
Oh, and the population density dropped to a fraction of what it had been during the Classic period - perhaps to as little as a tenth of peak population - despite the fact that even Classic Maya civilization was primarily stone-age. After the collapse, there were no institutions with the power or authority to concentrate social capital on large-scale agriculture.
Serves me right for not reading the link properly!
I based what I said on memory of a TV program, which referred to a South American or Central American society where it was felt that the hoi polloi murdered the elite - they knew they were elite due to the way the teeth were filed, and I seem to recall had jewels implanted.
The houses of the common people were untouched, but the temples were also sacked.
When I googled to try to source my recollection that was one of the links that came up.
I suspect it was the same incident, but with a different gloss on it from different academics.
Jeff, this is big. Thanks for posting it. I found this paragraph most enlightening.
This means that Saudi may be finally "getting it!" They have been afraid, for years, that so-called "renewables" will undercut the price of oil and leave them with a lot of useless goo on their hands. Now they are obviously re-thinking that position.
This is what we have been predicting would happen. This is the beginning of the hoarding phase.
Ron Patterson
"They have been afraid, for years, that so-called "renewables" will undercut the price of oil and leave them with a lot of useless goo on their hands"
That's actually a very strange proposition to hold as there is nothing even closely resembling all applications for oil, i.e. there is no real alternative to oil. Last time I checked.
Of course there are no real alternatives to oil. But the EIA has been preaching for years that if oil ever went above a certain price that alternatives would drive the price back down. And how many times have you heard: "The stone age did not end because we ran out of stones and the oil age will not end because we ran out of oil"? That line is usually followed by something like: "The oil age will end when we develop cheaper alternatives to oil."
But I disagree with you on that being a strange position to hold. People who have no clue as to energy content and EROI of oil verses that of other products such as ethanol or biodiesel can easily believe there are alternatives to oil. It is a strange position for an informed person to hold. However if you haven't a clue as to what going on in the energy field then holding such a position is quite reasonable.
Ron Patterson
If what you mean is that alternatives cannot come on line fast enough to maintain past exponential growth or even to replace dwindling crude oil supplies and keep fuel prices from escalating, then I certainly agree with you.
However if what you mean is that once oil production slides the world will slip back to plowing with animals like some sort of prehistoric lifestyle, then I adamantly disagree with you. The higher energy prices will cause investment in new renewable technologies, and while these technologies will not be as efficient as crude oil in terms of energy realized per energy inputted, they certainly are sufficiently efficient to run our economies, which will be much more efficient than what we have now. I study renewable fuel technologies and I am very encouraged by what I am seeing. It will, however, take decades for these renewable technologies to come on line.
Oil came from biological material originally and while it will take more processing to make it into usable fuels (we will no longer solely rely on the bonanza of what Mother Earth has provided to us), the great knowledge and innovation that we posess will allow us to continue functioning with a highly technological society.
Retsel
Hi retsel,
Just a few points of difference:
re: "alternatives cannot come on line fast enough to maintain past exponential growth"
You agree with this.
Question: "exponential growth" - or any kind of growth whatsoever? Are you going to restrict the discussion to only "exponential growth"?
re: "once oil production slides the world will slip back to plowing with animals like some sort of prehistoric lifestyle"
This part of your statement comes in a couple of parts.
There's the issue of "oil production slides" - and *how long* until there are deleterious effects (AKA "slip back to...some sort of prehistoric lifestyle")
Will it occur "once oil production slides"? Or will it take a bit longer? How long?
And then there's whether this "slip back" will occur. Not when, but if it will.
Many clarifications necessary in order to talk about the statements you present.
So, let me just ask:
re: "these technologies will not be as efficient as crude oil in terms of energy realized per energy inputted, they certainly are sufficiently efficient to run our economies, which will be much more efficient than what we have now."
Do you have references for these statements?
Well, just because these newer technologies cannot deliver energy returns at a 10 to 1 rate does not mean that they are not viable. A return on energy invested of 2 to 1 is sufficient, but it will just be more expensive.
If you are looking for "referencable reports" in this area, I would suggest the work done by Robert Hirsch of SAIC. Because we have started so late to mitigate the affects of peak oil, he has outlined in his report that the US economy in particular will be hit hard by peak oil. However, he also lays a scenario for how new technologies could come on stream to replace the energy supplied by petroleum, and how fuel efficiency can cause a huge amount of energy savings. I would not refer to his earliest report as he later admits that the first report was overly optimistic. His later report is more reasonable.
Keep in mind that petroleum is not going away, natural gas will be around for at least a decade after oil peaks - although more expensive for the US market because of the need to import LNG. Also there is lots of coal, although we will have to reconcile the use of coal with its greenhouse gas affects.
I think that Hirsch stated in one of his reports that 2/3s of motor vehicle trips in the US are discretionary. Imagine that if energy prices go high enough, that people will radically change their driving habits resulting in large energy savings. We area already seeing the start of a major shift in driving habits as SUV and pickup truck sales are way down in the U.S., despite efforts by the motor vehicle manufacturers to practically give them away.
Retsel
'We' know that. Saudi probably believed our TV/internet/etc. like many others in the world do. So they read about wind, solar, wave power, etc. and all the other 'Tech fixes' and panic as the price of oil goes up. Then its, "oil is well supplied" "everything is fine" "costs are in line with, blah blah blah".
For a while they wait for the 'shift to other technologies' as the price goes up, surprise, they don't see the shift. So they do a little research, hmm read TOD, and realize the shift isn't coming.
Now they understand where the driver seat really is. I bet ELM kicks into high gear now as more countries come to the same conclusion.
I'm not so sure that Russia and Venezuela haven't come to that same conclusion also.
ceiii2000...Saudi Arabia is not a country that depends on 'our TV/internet/etc' for their information and research into alternative energy sources. To the contrary, the Saudi's have conducted many large and small scale experiments to determine the potential of alternative energy sources, including solar powered salt to fresh water conversion. Some of the experiments in SA have been done independently, some in concert with other countries. Contrary to what many Americans believe the 'rest of the world' is not a huge teeming mass of ignorance...although some parts of it are...just as are some parts of the US.
Here is a site that explains alternative energy experiments and actual applications in SA. It appears to me that SA has a great desire to find out what works in the real world, not what some idiot politicians and lobbyists demand be implemented regardless of practicality. It appears that the 21 projects in SA in the link below only list projects completed or underway by 1997. I have read of other projects underway in the KSA since '97 and they could be found by a Google search. As you can see at the link solar testing has been going on in SA since at least 1981. I have an interest in salt to fresh water solar conversion so listed one from SA link below...
'Solar Powered Water Desalination Projects. A solar thermal seawater desalination pilot plant was completed by SOLERAS in 1984 in Yanbu. It uses an indirect contact heat transfer freeze process to produce 200 m3 of potable water per day. The operation, maintenance, and performance results enabled collector component manufacturers to use the project as test bed for new concepts. A glass manufacturer investigated solution to mirror edge protection against environment. Other organizations learned more about the freeze desalination process and developed new commercial equipment. This plant, however, was closed down for economic reasons (Huraib 1989).
A PV powered brackish water desalination plant was installed in 1994 at Sadous Village in collaboration with the National Renewable Energy Laboratory (NREL), USA. The plant has two separate PV fields. One (980 Wp) is to energize a submersible pump for pumping water from a well, and the other (10.08 kWp) is to provide power to a reverse osmosis unit (R.O.U) and to other accessories and equipment. The preliminary investigation has shown an excellent overall performance of PV plant for water pumping and desalination, however, the potable water recovery rate is only about 30%. Further work is underway in order to increase this recovery rate. Simultaneously, a separate study also seeks to incorporate a solar thermal desalination system (probably a pilot plant of solar stills) with the existing PV powered R.O.U in order to use the high rejection rate of brine (70% of input water to R.O.U) for water distillation.'
http://www.un.int/saudiarabia/solar1
You didn't accuse me personally of this but I will say that I do not believe the entire world is a 'teeming mass of ignorance.' Just as most Americans never travel and see the world for themselves, many from the 'rest of the world' don't come here. I put the word we in quotes meaning TOD readers. I know that they aren't all American.
What many in the world see as ‘America’ is what Washington and Hollywood show them. I have spent many a night in Italy, Turkey, Morocco, and other places with a beer and food trying to convince people that these are the absolute wrong places to get an idea about Americans and America.
I do think our government believes that outside of DC everybody is a teeming mass of ignorance.
Finally the #1, by far, use of oil in the US is transportation. Finding ways to get potable water and power etc. is good. I hope they research further and find themselves able to keep the lights on and the thirst away. None of these address transportation though.
They still could believe some of our press about the technocopian fixes in the future. (I used to, then I started reading TOD.)
Ron,
I assume that you concur that this would probably not be happening if the King had not already approved.
Well, we have already heard that the King wishes to keep all new discoveries in the ground for future generations. So the King is quite receptive to such ideas and it is quite possible that he has already approved a cutback.
The question now is: Will this cutback, if and when it happens, be due to depletion or to save the oil for the future when prices are much higher. I would guess....it is a little of both. That is they are already in a desperate struggle to keep production high so now they will say: "Let's not try so hard to keep production high. Why struggle to keep production up and world prices down when we can just cut back a little and make even more money.
Ron Patterson
I think this is a GREAT sign - because the more fossil fuels we burn now, the longer BAU continues, the more population grows and thus the more humans will suffer. Ironically the sooner civilization is forced to cope with the finiteness of our sphere via high prices, etc., the less the amount of suffering will be in the future. Because we add 70 MILLION people to the planet each year, and who here can honestly forecast a wonderful life for them with the way the biosphere is crumbling under the constraints of human overpopulation already?
I can. The growth of population has been continually revised down as has the maximum population. You know why that is?
Because they are getting wealthier, their lives are getting longer, their women are starting to get some rights and they are starting to get some education. Less affordable fuel means lower living standards which means more kids, not less. The only way in which poverty combats birth rates is by an even larger increase in death rates.
We may get that as well.
Time for a little game of football .
I posted this yesterday, but it was on Oil Drum Europe, and it seems appropriate here:
But maybe the exporters have finally realized that they have nothing to fear from “alternative energies.” If they are at or near Peak, the Saudis surely know that it will be absolutely impossible for wind and solar to be expanded on the enormous scale needed even to provide any substantial supply of electricity that still would be less than to-day’s output. I’m sure the Saudis are also aware of the general worthlessness of Ethanol and biofuels in general, and that most other technologies are either in the lab or extant only as a “demo”; thus, even under the most realistically optimistic scenarios several decades away from large scale commercial production. And other than biofuels, virtually all the alternative energies produce only electricity, which, while we will need all we can get, is not a liquid fuel especially convenient for transportation. So I think they realize that their oil will ALWAYS be in demand, and at ever higher prices; naturally they’d want to make the bonanza last as long as possible. And when supply gets REALLY tight, they can blame the producers of the alternative energies for failing to live up to whatever hype they have put out in their marketing campaigns.
Antoinetta III
The Saudi's seem determined to lead the world to believe that they have plenty of oil.
This would be a good move to provide cover for an actual inability to maintain production, and string people along for a while more as they could say that any drop was a planned one to conserve supplies.
It does not seem likely to me that substantial reserves have been kept back from the market, so unless we see falls in Saudi deliveries of a lot more than west texas has projected then this seems to be an attempt at keeping the illusion of huge untapped reserves going.
Kinda like Saddam's illusion of weapons of mass destruction...?
Hope we don't decide to invade the KSA and later find that what we were looking for doesn't exist...
I would guess that they are heavily mined with just that eventuality in mind.
Probably with those pesky Iraqi WMD's...
On a serious note, I've heard that there are plans to have the wells remotely detonated in case TSHTF in the KSA.
'I would guess'? Please, enough with the guessing. The list of reasons that SA might retard oil production is as long as one with a normal imagination would care to construct.
Are the fields mined? I don't know...you don't know. Why guess?
The idiots Cheney/Blair/Bush guessed that wmd existed in Iraq based on cooked intelligence. That has certainly worked out well, has it not?
Alternative Guesses regarding the motivations of the KSA:
SA is unhappy with the one sided stance of the US in the Israeli/Palestinian conflict and has decided to apply slow pressure to the US, via oil constraint, possibly in covert cooperation with Nigeria and Venesuela, untill the US shows that it is willing to take a more balanced approach to the issue.
SA is unhappy with the hard line stance of US foreign policy toward Iran and wishes for a negotiated settlement between the US/Iran...especially since the SA has announced that it too wishes to build nuke power plants.
SA is unhappy about the devaluation of the US dollar by the Fed and resulting inflation that is being imported into SA and other ME countries. In fact, the SA has already stated that for every 1% drop in the value of the dollar against the euro that crude on the spot market would increase about one dollar a bbl. The SA does not control the oil/dollar price directly but they can certainly effect it through oil production constraints...absent demand destruction.
I could continue all day with more guesses...to what purpose?
Please do not take this post as a personal insult for it was meant to show how fruitless guesses are...and, I am as guilty of anyone of an occasional guess. A great deal is riding on western intelligence services getting the real, unvarnished facts before we in the west enter into another debacle like Iraq...and, my guess :) is that intelligence in the west is just as bad as prior to Iraq. Best hopes for good intel.
It is my guess that the Saudi fields are mined for the simple reason that that is what any responsible military organisation would do - they would want to ensure that Saudi is not a profitable target for military adventurism.
However, the Iraquis did not do a very thorough job of it, so maybe the Saudi military are sunny optimists - not a disposition to be encouraged in Generals.
The Iranians would also be rather foolish if they have not taken similar steps.
I believe technically the term is "Sunni" optimists. But yes, in the calculus of denying spoils to any enemy, I suspect the Saudi's have a way to destruct. Since they have the bucks, it may be nuclear, which would be less easy for someone else to detonate. I offer this as a wild-ass guess, nothing more. Alternately, they may simply have the capability and have not deployed it.
The odds of the Saudi refineries being in one piece in 20 years seems remote.
No, the Saudis are not sunny optimists. They are Sunni optimists... :P
(Sorry, could not resist.)
As I was typing I saw what I was writing, but decided not to put a (sic) there to see if others picked up - I am so pleased that others here are as childish as me! Life is much more fun that way! :-0
I know you know this River, but do recall the "Facts were being fixed around the policy," and the policy goal was clearly stated by the Project for the New American Century prior to Bush's selection by the USSC. BTW, Clinton's policy goal was the same.
I hate these people, they lie about their numbers then try to manipulate the market further by holding back their production.
Hate is such a useful emotion, especially for a "seeker."
You talking about the slackers in Alaska again?
Thanks for that link, Westexas!
There's a behaviourial trend developing based upon recent Saudi statements about "preservation of their oil".
Recently, Saudi Arabia's King said "we should preserve some oil for our children". Now, Marri is saying that oil should be preserved to get a higher price later and to reduce inflation.
What's next? Saudi will probably say that they need to preserve oil to reduce greenhouse gases which would reduce global warming.
In addition, the the six month delayed Khursaniyah project was supposed to have started producing in Dec 2007. It might start this month and only produce 0.3 mbd initially.
The statements above make my Saudi forecast below more likely now. The chart assumes total economic ultimate recoverable reserves (URR) for Saudi Arabia of 185 Gb. For more info about Saudi Arabia, please see section 5 of http://www.theoildrum.com/node/3623
An important point in the chart below is that, from Jan 2005 to Dec 2007, the average depletion rate of remaining reserves was 4.4%/yr as shown by the dashed green line. In Jun 2008, it is likely that the depletion rate will be about 5%/yr which is a big 14% increase from 4.4%/yr. The increased depletion rate of 5%/yr could indicate that Saudi Arabia is producing at economic capacity and should not overproduce oil from their fields which causes irreversible reservoir damage.
(click to enlarge)
Saudi Arabia's production rate is likely to continue declining. Russia's production is now in slow decline. Consequently, world total liquids production is now more likely to follow the red line in the chart below.
(click to enlarge)
Very Well Done, Ace!
Between you, WT/Khebab, Darwinian, Memmel, WHTelescope, JoulesBurn, and significant other TOD statistical data-freaks--IMO, you guys are doing a hell of a bangup job on the Hubbert Curve!
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?