The Oil Drum | Open Thread and News Drop

Open Thread and News Drop

Posted by Prof. Goose on January 9, 2006 - 1:13am
Topic: Miscellaneous

Cheers...

75 comments on Open Thread and News Drop

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Prof. Goose on January 9, 2006 - 1:17am

A conversation from a thread below (Stoneleigh, Sunlight, et al):

for several years the Chinese have accepted our essentially worthless dollars in order to keep their export-led growth going. They will keep doing that until they decide, that they won't. And when the markets wake up to that (before or after the fact, I can't say) everything will change. No one can say how it will look, but it won't be pretty. For some interesting (if economically heterodox) thinking on the subject, try this: http://www.business-in-asia.com/dollar_crisis.html

Here's a link to the article I remember by Mandelbrot: http://www.elliottwave.com/education/SciAmerican/Mandelbrot_Article2.htm

I think Richard Duncan's work helps to bridge the gap between the economics camp and the energy camp in order to build a realistic scenario for the future. Whether we will have inflation or deflation is a crucial distinction when it comes to planning for the future as the strategies one would employ are very different. Personally, I am convinced that we are headed towards an extremely severe global economic depression. This topic of discussion, and Sunlight's link to the Richard Duncan interview, would make a good separate thread.

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GreyZone on January 9, 2006 - 4:23am

Resource depletion is going to change things in unexpected ways, but even without that, I've been expecting a shift in the early 21st century from the dollar to another currency. And my bet has been on the yuan, not the euro. This may be very similar to the transition from the pound to the dollar in the early 20th century.

Note: Whenever I see the name "Richard Duncan", my first thoughts are of the electrical engineer who proposed the Olduvai Theory. For better or for worse, that's the first association that pops into my mind when I see that name.

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Stoneleigh on January 9, 2006 - 9:54am

That's exactly why every time I mention Richard Duncan I point out that it's not the same Richard Duncan as the one associated with Olduvai theory. This one is a former World Bank economist if memory serves.

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LJR on January 9, 2006 - 7:42pm

Not me, I thinkuv Dunkin Donuts. Gotta go now.

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TI on January 9, 2006 - 5:39am

Duncan says: "The origins of China's rapid growth--credit creation and trade surpluses--are both unhealthy and unsustainable." The real origins of Chinese growth is coal. China can cover 96% of its energy demand from domestic sources, the share of coal is about 70%. Chinese coal production has grown about 10% every year during the '00s and at the level of 2 billion tons - twice the US production. The growth of the Chinese coal production is so huge that it shows as an upward trend break in the total world energy consumption statistics (look at BP). Combined with growing global oil supply it has made possible the current global economic recovery. This way the Chinese coal is an important reason for rising oil prices. We didn't, yet, have an oil peak but increasing production combined with rising prices from 2001 - 2002 onwards.

The growth of the Chinese coal production has made possible the huge and very energy-intensive infrastructure and manufacturing investments. It is true that the Chinese economic boom has created overheating and financial risks. But they will not realize as long as the real growth is robust - and this will go on as long as the coal production can keep growing at present pace.

The problem is that we know that the growth rates of the Chinese coal production is unsustainable in the long run. At this pace it would reach 3 billion tons in few years. This will not happen. Chinese coal is rapidly depleting. Production is moving to Outer Mongolia which is farther away from the industral centers. China is beginning coal mining in Mongolia, too. This means importing coal. The offcial Chinese sources cite far smaller coal production growth rates in the near future. China has a considerable amount of coal deposits left. But coal has its Hubbert curve, too. Mining becomes more expensive and growth rates will drop.

When this happens, we will have the last rapid burst of energy growth and hence economic growth behind us. That is when we are nearing the global total energy peak. What we will experince, will most likely be a global financial crisis. We will see.

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strandk on January 9, 2006 - 7:27am

According to this calculation, US coal peak seems to fall between 2032 and 2060 (http://www.fromthewilderness.com/free/ww3/052504_coal_peak.html). I know that US coal reserve is bigger than Chinese coal reserve. Since China is producing coal twice as much as USA, Chinese coal production peak should happen much earlier than US peak. Is there any mathematical analysis about Chinese coal production in the future?

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TI on January 9, 2006 - 11:50am

Actually remaining Chinese and US coal reserves are roughly same size, if we discount lignite and count only recoverable coal. But the difference is that Americans have used their deposits far longer than the Chinese. This means that the best and most easily extractable deposits have already depleted. The US coal production growth has been rather slow during many years.

Calculating Peak Coal seems rather difficult. I have seen the From The Wilderness article. To me the estimate seems far too optimistic. The Chinese coal production grew from 1 billion tons to 2 billion tons a year during 2000-2004 (BP). Now the production is double the US production and about 35% of the world production. And the Chinese share of world coal production growth in 2003-2004 was 65%. This means that when the Chinese production growth slows down so will the global production. When the Chinese production peaks - at about 3 billion tons? - the production of the rest of the world will not be able help much. If the Chinese try to maintain the very high growth they will reach the limits soon enough.

The Chinese production will probably peak in 10 years time - or reach a high level, where the growth is slow. This means that world coal cannot contribute much to world energy after that - and this means it cannot offset the decrease in oil (and gas) production after the Peak Oil. This makes the World Total Energy Peak quite likely relatively soon (5 - 10 years) after the Peak Oil. That is why Chinese coal is important.

The Chinese economic growth has been facilitated by the enormous growth of domestic energy supply. The Chinese economy has kept the US economy afloat. When this is no more possible - you guess...

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galacticsurfer on January 9, 2006 - 9:12am

Hello- First comment in TOD

After I googled China and coal I got this link to a good article at GreenLeftweekly by Eva Cheng on Chinese energy problems with all sorts of details from May 30,2004.

http://www.countercurrents.org/peakoil-cheng300504.htm

(copy it into browser- I could not figure out how to show it as a link)

What will trigger what first? Will the US housing bubble burst and reduce US imports thereby busting the boom in China(also India) or will high oil prices(american car habit) and falling coal availability (chinese factory production) cause busts in both countries simultaneously.

At any rate the idea of a global central bank(with global money?) replacing US Dollar/IMF is interesting from an economic standpoint as well as the explanation of US export bubbles for Japanese and East Asian collpases in 1989 and 1997.

First we had Bretton Woods/gold standard and then after Peak US oil we had the USD/Saudi oil(petrodollar recycling and Japanese cheap imports followed by East Asian imports and now Chinese imports). In the last phase we will switch maybe to a world currency and solar / wind power and sustainability without any country/power bloc(US or EU,etc.) dominating. I also like idea of creating world minimum wage ( you also need global unions, same eco and social regulations to make level playing field) to create demand.

Last paragraph is pie in the sky of course if real chaos and olduvai are more likely. But it could be the way ahead after some sort of WWIII to compete for last drop of oil post peak oil in the years ahead as in following article looks more likely:

http://www.globalresearch.ca/index.php?context=viewArticle&code=%20CH20060103&articleId=1714

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Magnus Redin on January 9, 2006 - 9:43am

> I also like idea of creating world minimum wage ( you also need global unions, same eco and social regulations to make level playing field) to create demand.

You need a very large steam roller to make the world a level playing field.

A lot of people are already complaining about the much more gentle globalization flattening the world.

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galacticsurfer on January 9, 2006 - 10:25am

Yeah I agree. Killercoke for example (now being boycotted in many US Universities) knows how to exploit the lack of environmental protection (india) or worker's rights (colombia). If the 3rd world somehow had the might to stand up to industrial country Megacorporations all that cheap labour and resources would not be so easily exploited for such very short term gain to sell dirt cheap manufactured goods to us, with all of us saying like Ronald Reagan, "trickle down will help those poor bastards in the 3rd world someday be as rich as we are". Fat chance. Wal-Mart and company will exploit them then move on, like the aliens in Independence Day, when the planet is dead and barren they go on to the next one. Maybe Morgan Stanley has learned the public mood on this one with their new green policy http://www.truthout.org/issues_06/010306EB.shtml and shell the advantages of it too http://www.climateark.org/articles/reader.asp?linkid=50400.

Finally Chavez, Morales and others resist IMF and Chevron, Exxon-Mobil and Private water companies, etc. to take back their resources.

The world bank is really US led and the basis of the world exploitation is an industrial economy based in the north on oil - now out of USA and Europe's greedy grasp. So the new colonialism has already started(USA-with Iraq war, China- by buying up all the oil through special contracts). When the oil is gone the USA will be out of the picture as the New Rome. A global currency on equal footing for all or total decentralization with local currencies depending on real resource availability will start. (Maybe all those SUVs can be torn apart for scrap metal and sold to Africans or Asians where they can build huts or something to live in, what else will the USA have left to offer?)

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Stoneleigh on January 9, 2006 - 12:06pm

Here's an excerpt from the interview with Richard Duncan:

"Question 1: In the book [The Dollar Crisis] you argue that the current International monetary system is in danger of collapse. Could you explain why you believe the present international trade system is a danger to all of us?

Answer: It is the imbalances in the international trade system rather than the system itself that poses the danger. The United States' Current Account deficit is now $60 million AN HOUR! It increased 28% in 2002 to half a trillion dollars, an amount roughly equivalent to 5% of US GDP. This unprecedented trade imbalance has created extraordinary disequilibrium in the global economy. The countries that build up large stockpiles of international reserves due to large current account or financial account surpluses--such as Japan in the 1980, the Asia Crisis countries in the 1990s and China today--develop bubble economies. When those bubbles pop, as they inevitably do, they leave behind banking crises and excess capacity. The governments of those countries must then go deeply into debt to bail out the depositors of the failed banks. At the same time, the excess capacity in the economy results in deflation. Economic bubbles and systemic banking crises can be expected to reoccur and deflationary pressure can be expected to persist so long as the US Current Account deficits continue to flood the world with dollar liquidity."

Chinese coal supply, as well as world oil supply, may hold up longer than currently seems likely if deflation causes involuntary demand reduction. China is as vulnerable to the effects of an unwinding of the global financial imbalance as the US (and others). I can imagine a great deal of social unrest and upheaval in China, exaccerbated by an excess of unmarriagable young men at a loose end. Political destabilization through extreme economic dislocation in China and the US simultaneously would be a dangerous development indeed, and that is what we are facing.

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TI on January 9, 2006 - 2:37pm

"China is as vulnerable to the effects of an unwinding of the global financial imbalance as the US (and others)." Not exactly so. The US has a huge trade deficit, the Chinese a surplus. It is the real production, real economy that really matters. China is very much like the US in the end of the 19th and in the beginning of the 20th century - a rapidly growing coal-based industrial society - and a very robust economy that could survive various financial disruptions.

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Stoneleigh on January 9, 2006 - 4:06pm

I agree with you that China is like the US in the early 20th century. That's the point. China has just had its version of the Roaring Twenties (the party) and is about to go through their equivalent of the Great Depression (the hangover), just like America did at the dawn of the American Century. The global depression to come may save enough fossil fuels to power the Chinese Century eventually, if they develop ways to use energy efficiently.

Hegemonic powers-to-be often seem to have an initial setback after the first flush of optimism, then they go on to become global powerhouses, before ending up in the position of America today - essentially bankrupt. I'd recommend a book called The Wealth and Poverty of Nations by David Landes for a historic view of the progression from one hegemonic power to another in the last millenium. It's a fascinating read.

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Sunlight on January 9, 2006 - 6:56pm

When the current trade situation corrects, we will no longer buying so much from China. China will lose a heck of a lot of business, and they will be hurt badly, short to intermediate term. I don't see how they can avoid a severe recession. I also think, that given China's need to feed its people, and the high expectations they may have, that could lead to poltical instability over there.

This won't be just China's problem. The US current account deficit in recent years has been tended to be roughly equal to total economic growth in the WORLD. In other words, our consumption is what fuels growth everywhere else. Take away the stimulus from our deficit and a protracted global adjustment will be inevitable.

On the other hand, the Chinese know that the US consumer is getting closer to being tapped out anyway, and that while the US will pay interest in dollars on our Treasury debt when due (we can always print more) the question is, do the Chinese care. No other country settles its international debts with paper denominated in its own currency. We cannot settle our international debts with foreign exchange, and by that standard we are in a slow motion liquidity crisis. China can decide to take the hit (that is, write down its dollar holdings) now, or write down more of them later.

They could also try to push for a gradual adjustment (which for all I know is what they are doing) -- the best of all possible worlds. However as I said in the previous thread, the signals they are sending now, may engender a market reaction that gets out of control.

In the long run though I agree with you, Stoneleigh, that the Chinese will emerge stronger than ever (assuming the world doesn't crash for lack of oil). US, Japanese, and other corporations have built ultramodern facilities in China. The technology they need has been transferred to them, and they can be expected to take things from there.

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Stoneleigh on January 9, 2006 - 8:25pm

The US has acted as the consumer of last resort for a long time, but that role is coming to an end as the debt burden finally strangles the US consumer. China may pre-empt the final stages by moving it's reserves out the dollar. When the US stops importing, China will be facing excess capacity and a shortage of demand for its goods on a grand scale. Despite their surplus, this cannot help but be deflationary - their version of the 1930s. I would expect their 1930s to end as ours did - with perhaps a decade of economic dislocation, leading to social unrest and finally to war of some kind. When the dust settles, China could be poised to become even more of an economic powerhouse than before, but less so (I would expect) than the US used to be because they will not be awash in cheap energy and will therefore have to be more parsimonious in their use of it. Their environment may also be highly degraded.

The US is in a much worse position in my opinion. Its economy has been hollowed out as manufacturing has been exported. The much vaunted service economy amounts to little more at the end of the day than trying to make a living by taking in each other's laundry. The erstwhile middle class has been living the high life on a gigantic credit binge fueled by a global excess of dollar liquidity and the financial system is now a giant Enron waiting to implode, probably quite soon and with relatively little notice. Deflation must be far worse in the US than in China due to the depressing effect of a crushing debt burden (government, corporate and personal) on purchasing power and therefore on demand. A full blown liquidity crunch is very likely in my opinion.

With the basis for wealth creation long gone, the credit markets down and out, the workforce deskilled, no means to repair crumbling infrastructure, domestic resources depleted and access to foreign resources curtailed by lack of purchasing power, the US is likely to languish in an economic depression for a very long time - I would think several decades at least. During that time social unrest would be endemic and politics (of either the left or the right) should become nothing short of pathological, with severe consequences for the rest of the world.

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creg on January 9, 2006 - 10:05pm

Stoneleigh ;Well put . I think we could go down hardest. We are so spoiled and that won't be something we can get over quickly, or quietly.
"A full blown liquidity crunch is very likely in my opinion." Lack of $, capital ?

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Sunlight on January 9, 2006 - 11:21pm

I'm right with you on that. In a way I feel our current problems go back to the early 70s. We had Vietnam, Watergate, the oil shocks, and the first "invasion" of Japanese cars. We really had a chance to respond to the energy challenge, and the challenge of real economic competitors, and we backed down in a way that Americans just didn't used to do. This at a time when we had all the resources we needed. We just didn't use them. Yes, the country stood behind Paul Volcker when he broke the inflation of the '70s, but that is about all we got right. The country simply hasn't recovered what used to be called, its moral strength since that time. We've become a coast-to-coast shopping mall instead. I think the Chinese, who are still used to tough times, will know how to tough things out better than we. I only hope we'll manage our decline at least as gracefully as Britain has -- they've still remained a fairly powerful and influential country even if their power is not what it once was.

I know far too many very intelligent people who seem to think the only way to exhibit strength, at least in international politics, lies in brute force. How will they feel when we can no longer afford the kind of military we have now, and who will they take their anger out on then?

If you allow me to finish wringing my hands: we have no cohesion, no vision of what we want things to be. The Japanese have fought tooth and nail to hang on to their industrial base despite the challenge of lower wage competitors. They remember what effort it took to build it and they still have most of it. We don't even seem to think it's important. If you go to a place like India (I visited in 2003 and 2004 for one month, both times), you find that most educated people want to do things that make the country strong and fulfill its ancient potential.

So much militates against a national vision in the US. The right's extreme vision of economic freedom means that companies can offshore all they want to, and pay CEOs a thousand times what the assembly line worker makes. No wonder nobody buys into anything other than maybe the flag anymore. The media will tear apart any candidate with idealism -- venality is what they are used to, they understand it all too well. They'd rather support a crook they understand than an idealist who wants to do right at least some of the time.

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george in vermont on January 10, 2006 - 10:10am

Good Lord, Stoneleigh, I sure hope you're wrong. However your insightfulness here and in other posts lends credence to your forecast. How can we reconcile this dire outlook with recent economic growth touted by the administration? Is the growth a mirage? Are they fooling around with the numbers? Are they factoring in increased real estate valuations as the basis for growth? Or has the growth been real but is now about to come to an abrupt end?

DIFFERENT TOPIC: I've been having a discussion with someone here in another thread who has touted the merits of in-ground or in-pond heat exchangers as a reliable source of residential and business heating in the future. I have my doubts about the usefulness of this technique in cities such as New York, due to the density of apartment buildings and office towers, however a business here locally does have a heat-exchange pond built into their new environmentally-sensitive headquarters, which I hear works for them. They refer to it as a heat sink, so perhaps it is used more for cooling than heating.

The website referenced by the poster is here. I'm wondering, with all of your experience with alternative home energy sources, do you think this technique has merit, especially here in the Northeast, and in towns and suburbia?

I'm looking out my window and if there's any heat left in the ground I think I'd extract most of it pretty quickly. Here of course it often falls below 0 degrees F and winters are lengthy. I'm perhaps more preoccupied than others here about heating as I live in a cold climate, and I'd hate to see the mountains stripped again for firewood if the natural gas runs out.

Also, and if you don't mind a compliment, you recently referred to yourself as perhaps being considered by others a "jack of all trades, master of none." I would counter that you are a master of many trades, and that this trait was common among our founding fathers and the people who built this country. This is a personal virtue that I believe we will again need among our populace if our society becomes less complex in a potentially less energy rich environment.

The level of specialization that now exists in corporations today worries me, because once a person is forced to step out of their area of expertise, they're helpless. When I lived in Europe, the Europeans (and Commonwealth folk) that I worked with had respect for Americans' depth of expertise in arcane areas, but ridiculed them as well for being clueless about history and lacking a general knowledge of world affairs. Should there be a major economic downturn, and these "specialists" are forced permanently out of their nests, it could be very messy indeed as people search for new livelihoods. We can't all open Bed and Breakfasts!

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Stoneleigh on January 10, 2006 - 2:42pm

I fervently hope I'm wrong. If TOD contributors think that I am, perhaps they could explain why. I imagine many people here must think I'm a lunatic, but are too polite to say so.

In ecological systems, the specialist species often become extinct when the environment changes. The generalists - those who can counter uncertainty with flexibility - have a better chance. The greater the range of conditions that can be accommodated, the better the chances should be, although there are no guarantees. Unfortunately, intellectual flexibility, though useful, is not sufficient - one must also have practical skills. That's what I'm currently concentrating on, but it's an uphill battle sometimes, to put it mildly. There are times when I don't feel like shovelling out the barn again, digging over the vegetable garden, attempting to shear sheep, hauling firewood or stacking square bales in the hayloft during a heatwave, but such is life. Hopefully it's a viable strategy.

On the subject of geothermal energy, I do think it's a viable option for some, but you'd need a reliable source of electicity to run it if you're planning to depend on it for heating during a Northeast winter. I doubt if it would be enough on its own that far north, unless the house was small and very well insulated, but it could be a useful complement to other things like a good woodstove. The forests would last longer that way.

I have a geothermal system that came with the house, but it's an old and inefficient (once-through) design. The house is a hundred years old as well, and has a high surface area to volume ratio (good for natural light, but bad for insulation). Consequently, my geothermal system eats electricity like there's no tomorrow and can't keep the house even vaguely warm by itself unless the outside temperature is above freezing. Needless to say, I don't use it much - really only for a little cooling in the summer. My primary winter heat source is an outdoor wood-burning furnace.

If I could have afforded to upgrade the geothermal system (and the house) without going into debt, I might have done so, but I'm not sure the power to run it would always be available. I don't know off hand if one could cost-effectively run such a thing - even an efficient model attatched to an efficient house - from a renewable energy system. That would mean having a battery bank with quite a large capacity in case the grid went down for any length of time. I anticipate difficulties in maintaining the grid, especially in far-flung rural areas.

In areas of high population density (if many people tried to use geothermal in a small area) I think the heat requirement could locally eat into the heat differential between the surface and below. I don't have any figures on the various rates involved, but it's something one might need to think about. Geothermal systems, especially the horizontal ones, can also take more space than would typically be available in town. In older suburbs, where lots tend to be much larger than newer ones, it might be possible, but probably not for everyone.

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apsmith on January 10, 2006 - 11:54pm

Hi guys - thought I'd add a bit to this...

While it may cost a lot in electricity to heat an old house with geothermal energy, it would also cost a lot in oil. Typically geothermal systems add heat energy to a building equivalent to 4 to 5 times the input electric energy. One gallon of oil is equivalent to about 40 kWh of energy, so the electricity required to be equivalent to burning one gallon of heating oil would be 8 - 10 kWh. Even here on Long Island with 15 cent/kWh electric rates, that's only $1.20 to $1.50, while we're paying $2.50 per gallon for heating oil. In other parts of the country with 5 cent/kWh electricity the advantage would be very much greater. So a geothermal system (apart from the installation cost) should save you a lot of money.

Similar considerations (electric energy provides about 3 times the equivalent energy content as gasoline for motor vehicle propulsion) make electric cars cheaper to run too - except for the battery issues.

What you are effectively doing is using the ground as a long-term energy storage system that absorbs heat through the summer and returns it for your use in the winter. Details would depend on water content and thermal conductivity, but there's plenty of thermal energy down below us to make use of - thousands of miles of planet beneath our feet, after all!

Even in cold parts of the country, the ground a few feet down rarely goes below freezing - it's only the permafrost regions in the north that have the problem. According to the "geoexchange" people there are over a million installations already around the country, so it really does work...

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Stoneleigh on January 11, 2006 - 9:21am

I agree that the concept works. The temperature below the ground is usually about 10 degree Celsius all year round, which represents a good temperature differential with the surface in both winter and summer in the Northeast. The Earth is a great heat source/sink for evening out seasonal temperature variations. My concern is primarily with the long-term reliability (and perhaps affordability) of the electricity supply required to run it. I would recommend that people using geothermal make sure they have either a generator and stored fuel for it, a battery bank, or an alternate heat source such as wood as a backup. Otherwise they may be risking having their pipes freeze during a blackout.

It may be possible (I have no figures on this) to run an efficient geothermal system from an off-grid power supply, if the house were small and well-insulated and the capacity of the off-grid supply were sufficient. I suspect the investment required would be very large however. I couldn't do this with my geothermal system as the house is too poorly insulated and the geothermal design too old and inefficient. For me it makes more sense to heat with wood, especially as my wood furnace provides my hot water in the winter as well.

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george in vermont on January 11, 2006 - 10:16am

apsmith - So what's the maximum temperature you can derive from one of these geothermal systems? Is it only 10 C, or does the mechanical process increase the temperature delivered? Is it possible to maintain a 62 degree F interior just by drawing heat from the ground, even when it's below 0 F? Or do you need a supplemental heating source to get the temperature up to a comfortable level? Are these really more suited to more temperate climates? I could see these being useful where there are generally warm days with occasionally chilly nights.

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Stoneleigh on January 11, 2006 - 10:41am

You can achieve a comfortable temperature, as the system uses electricity to drive heat uphill (against the gradient) and concentrate it in the house. If heat can be pumped in at a higher rate than your house can dissipate it, for a given ambient temperature, then your house will warm up. The difference between those two rates would determine by how much. The problem with my house is that it's much too good at dissipating heat for the geothermal system to be able to keep up if the ambient temperature is below freezing. Down to the freezing point, I could maintain my house at a perfectly comfortable temperature using geothermal alone (although I would get a large electricity bill as a result). At a lower outside temperature than that, the temperature inside would start to slip. I'm not sure how low it would get during a real cold snap as I've never been tempted to find out.

Newer geothermal systems deliver more heat than mine for the same input of electricity. Also, your house may be better than mine at retaining heat, in which case geothermal may be sufficient for you all winter - perhaps even without incurring an enormous electricity bill. I would just make sure that you have some kind of backup system either for the heat or for the electricity in case of a blackout.

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apsmith on January 11, 2006 - 1:16pm

Well, you can run out of oil or wood to heat your place too, or your burner can fail in some way. In fact, our oil burner at home won't run without an electric current to supply the spark, so we're no better off than we would be with a geothermal system. The geo-exchange stuff claims to be extremely reliable.

I've lived with electric grids all my life and while there have been short blackouts here and there, the only long blackout that would have made our pipes freeze etc was about 25 years ago when I lived in Newfoundland with my parents, and an ice storm came through knocking out most of the power lines for almost a week. My father had for some reason installed a plain electric furnace (not efficient at all) - we heated our house from the fire place, and it got pretty cold, but didn't have any pipes freeze. In fact, I'd never heard of that happening until I returned to the US, must be some difference in plumbing standards.

The electric grid is incredibly versatile - it will work the same no matter what the ultimate energy sources are. I'm quite happy trusting myself to it.

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tom deplume on January 11, 2006 - 12:01pm

Ground source heat pumps can work anywhere you are willing to drill deep enough. At depths between 10 to 20 feet the ground temp is nearly constant and it slowly increases as you go deeper. At oil well depths of 7500 to 15,000 feet the temp is several hundreds of degrees F.
Large urban areas have heat island effects some of which has been conveyed downward by commercial sized air conditioning systems using ground water as a heat sink. Over the decades this has significantly raised ground water temps enough that now they could be used as a source of building heat in the winter without the use of heat pumps.

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Agric on January 14, 2006 - 8:47pm

George, you answered your own questions, rhetorically, and you probably know it. Dissecting and confirming:

How can we reconcile this dire outlook with recent economic growth touted by the administration? (the growth is mostly fiction)
Is the growth a mirage? (Investigate the GDP inflation deflator)
Are they fooling around with the numbers? (Only the inflation, employment, GDP ones - that I am aware of, on a serious scale)
Are they factoring in increased real estate valuations as the basis for growth? (real estate asset re-mortgage has funded near 50% of US GDP growth over the last 4 years)

-Or has the growth been real but is now about to come to an abrupt end? (Changes in US econostats make me think that reported growth of 2% is equivalent to recession, I expect US growth to average 1% in 2006 by current econostats. The growth was not really real and is really ending)

Yes, the future does get painfully messy, work out the skills you may need and get proficient in them where you can. Clock ticks, you have between 6 months and 5 years IMO.

Most americans are incredibly unaware of geography and history, much more so than europeans. That will hurt them in the coming years. In contrast, some travelling americans have shamed my ignorance. I would say that the most aware americans are the equal and better of most but the average american is less aware than a Kalahari bushman (except on significant issues like movie and TV stars).

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creg on January 9, 2006 - 9:49pm

Thanks for your info/opinions. They will also have steel, buying scrap rapidily( like the oil contracts), and the assembly lines. I think it was Kunstler who said all shoe manuf. is overseas. It won't be easy to restart w/o cheap oil or capital.

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BabyPeanut on January 9, 2006 - 9:09am

Delicous article on coal:

When Rick Honaker was growing up in coal country, his grandmother would dispatch him to the backyard, pail in hand, to scoop up the shiny, black rocks that fed her stove. It was the only fuel in a home that had long sent its men to the mines.
Now, a generation later, the only time Honaker's own children have ever seen a lump of coal is when he brings one home. Honaker, who teaches mining engineering at the University of Kentucky, figures his kids need to see where they came from - and where we all may be going.
...skip...
"The problem is, it's not burned by us directly. It's burned in power plants. And because of that we can live with the illusion that coal is the fuel of the past," says Barbara Freese, author of "Coal: A Human History," a book documenting the rock's role in industrialization.

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galacticsurfer on January 9, 2006 - 9:13am

oh the link seemed to have worked even though it did not show up when I first typed my post

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BabyPeanut on January 9, 2006 - 10:10am

Living without a car.

Any car addicts out there starting to work on living without one? My weekend included 400 mile round trip thrown together with no avanced warning and no use of my personal car.

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Donal on January 9, 2006 - 10:52am

I was googling alternative vehicles for most of 2005. My only fear of riding a bicycle is slippery roads, so I test rode three wheel recumbents:

http://www.donalfagan.com/html/trikes.html

As with recumbents and velomobiles, I look at all these electric cars, Zap, Tango, Smart, etc., and wonder about the COG in relation to the narrow wheelbase. Even heavy SUVs can be prone to rollover:

http://www.consumeraffairs.com/news04/ford_sporttrac.html

I like the look of the Twike, which is finally available for ordering in the US, but getting facts/prices out of the US dealer is like pulling teeth. I'd be interested in test riding one to see how it handles in turns. I'd rather not tip over in traffic and get squashed by an Escalade.

My latest plan is to simply convert our Elantra to electric, and ride my bike as much as possible. I'll probably have to get a folding bike this spring.

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dizzysaurus on January 9, 2006 - 2:15pm

Sorry to see you had trouble with the trikes. I'd really been hoping the recumbent trike would be my saviour in the years to come.

sigh

Maybe Ann Arbor city council can be convinced to put stables downtown ;-)

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Donal on January 9, 2006 - 3:44pm

You might google Tripendo, a recumbent trike that leans into the turns. I'm not sure when it will be available, but it might be a lot safer for COG-challeged riders.

There are also a lot of four-wheel recumbents which should be marginally more stable than trikes: QuadraSprint, Rhoades Car, PedalCoupe, Lightfoot, QuadriBent.

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BabyPeanut on January 9, 2006 - 5:31pm

Why do people think EV's are energy efficient and non-polluting when most electricity is made from burning coal, line loss throws away so much power and lead-acid batteries are toxic?

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Donal on January 9, 2006 - 8:55pm

EVs aren't perfect, but if I can charge one during slack periods of the grid and avoid sitting in line for $5.00 gasoline, they're an improvement for me.

BTW, on Mhz channel, the Euro news show "Journal" just announced rumours that Daimler-Chrysler is going to spin off the Smart Car division.

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BabyPeanut on January 10, 2006 - 9:47am

When gasoline is $5/gallon what will electricity cost (if it's still being delivered?)

The Twike folks claim 4 - 8 kWh for 100 km. I'm guessing that the pedals are factored in.

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Twilight on January 9, 2006 - 11:07am

30mi each way to a job I hate! But this is temporary while I make preparations to live more cheaply, and to work out a new, more local way to make a living. I figure my job will disappear at the first sign of serious economic problems, so I'm not interested in moving to the sprawl zone to be closer to it. At least I'm getting 36mpg on the commute.

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light299 on January 9, 2006 - 12:03pm

Simply put, can't. No bus lines where I live and many miles seperate me from anywhere I need to go. Definitely will re-locate in the coming years. Oh as for ev's - Anybody remember GM's EV1. Great little car, good range, powerful (with the govener removed one did 180) and even had inductive charging (just park in the special place - no plugs!). GM rounded them all up and is currently compacting every last one. Meanwhile Dodge introduces a 6.1L V-8 Challenger.

Anybody know of a good online ev forum? Or for that matter a place where I can buy 200ah 6 or 12 volt batteries for a good deal?

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westexas on January 9, 2006 - 1:11pm

"Free Urban Adventure Weekends"

In cities where mass transit is lightly used, I think it would make sense for transit authorities to implement Free Urban Adventure Weekends, where people could use mass transit one weekend per month at no charge. The purpose would be to get people to learn how to use mass transit in a low stress environment, literally an "Urban Adventure."

Transit authorities could presumably get corporate sponsors for the additional cost, which should be fairly modest. For example, we might have the Dallas Free Urban Adventure Weekend, brought to you by ExxonMobil.

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Leanan on January 9, 2006 - 1:25pm

I went home to Kona, Hawai`i, for the holidays, and was surprised to find the public bus system was free. They suspended the usual fares due to high gas prices. To encourage more people to take public transportation.

The Big Island is still kind of rural for public transportation. The bus doesn't run very often. Still - you can't beat the price.

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westexas on January 9, 2006 - 2:42pm

Leanan,

Could you send me an e-mail at westexas@aol.com? I have some questions about Kona.

Jeffrey Brown

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RickD on January 9, 2006 - 7:08pm

Sam's Club for the batteries.

Rick

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reno on January 9, 2006 - 11:08am

Excuse me if this subject has come up before but at another forum the subject of Carbon sequestration has come up.

Is it a feasible plan??

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westexas on January 9, 2006 - 1:15pm

Good 1/9/06 WSJ front page story:

Brazil Fills Up on Ethanol

After nearly three decades of work, Brazil has succeeded where much of the industrialized world has failed: It has developed a cost-effective alternative to gasoline. Now, the country expects to become energy independent this year.

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Reed on January 9, 2006 - 4:40pm

You might consider the link below. This kind of insanity is the limited future we will create.

http://groups.yahoo.com/group/energyresources/message/86509

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george in vermont on January 9, 2006 - 7:52pm

I read the print version this morning - a breathless, glowing account of an alternative to gasoline, without a single reference to energy inputs! Anyone here know how the Brasilians fertilize their sugar cane?

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Leanan on January 9, 2006 - 8:15pm

There's something just plain wrong about people who are starving growing sugar for biofuel. But I expect it will accelerate.

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tom deplume on January 11, 2006 - 12:14pm

It is a byproduct of sugar refining that is fermented into ethanol not the part used for human consumption.

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Leanan on January 11, 2006 - 2:07pm

I still think there's something wrong. Sugar cane is a luxury crop, no matter how you dice it.

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Agric on January 14, 2006 - 9:11pm

No, Leanan, sugar in some form has been a fundamental part of human diets for a couple of thousand years and more. Our urge to consume it is a genetic disposition, it is a very efficient fuel source for our metabolism. That we have disovered and exploited sugar cane as a source is an example of human ingenuity. That we have over used sugar while becoming more sedentry is a misfortune that we must struggle to counteract.

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Hugo Chavez on January 9, 2006 - 3:20pm

Interesting article from Saturday's NYT

January 7, 2006

World Bank Suspends Loans to Chad Over Use of Oil Money

By CELIA W. DUGGER
WASHINGTON, Jan. 6 - Paul D. Wolfowitz, the World Bank president, on Friday suspended all loans to the central African nation of Chad, including one that helped finance a $4.2 billion oil pipeline, on the ground that it had broken an agreement to largely dedicate its oil revenues to alleviating the country's extreme poverty.
Chad's Parliament voted last week to allow the country's substantial oil income to be spent on the military as well as on schools, hospitals and roads. It also voted to double the percentage of money that can be spent with no oversight from a committee of government and civilian representatives.
In a conference call with reporters, Mr. Wolfowitz said he spent two hours on the phone on Thursday night with Chad's president, Idriss Déby. Mr. Wolfowitz said he saw no alternative to suspending the bank's $124 million in loans to Chad, even as he held open the door to further negotiations.
"I think it's very much in the interests of the Chadian government to establish in the eyes of everybody that they are honorable parties to the agreements that they undertake," he said.
Chad's ambassador to the United States, Mahamoud Adam Bechir, reached on his cellphone, said he would comment on the bank's decision only in a face-to-face interview, but added that he could not do so until Monday.
Mr. Wolfowitz said President Déby had told him that Chad had a sovereign right to decide how to spend the oil money - a position that Mr. Wolfowitz accepted while insisting that it violated Chad's agreement with the bank and that it entitled the bank to suspend its loans.
Chad's actions are a serious blow to the bank's attempt to break the so-called natural resources curse, which has so often doomed African countries endowed with oil, diamonds and gold to deepening corruption and violent conflict. Transparency International, an independent anticorruption organization, last year ranked Chad and Bangladesh as the world's most corrupt countries.
When the World Bank extended a $39.5 million pipeline loan to Chad as a portion of the larger financing package, the bank's managers reasoned that the country's most realistic hope of fighting poverty was to harness the billions of dollars its oil fields could produce for development. Chad, with 10 million people, is largely a desert where 8 in 10 people live on less than $1 a day.
In exchange for the loan, Chad agreed that all payments from the consortium that built the pipeline, which runs from Chad through Cameroon, would go into an escrow account at Citibank in London, and that taxes on the oil profits would go directly into the national treasury. Chad promised to spend 72 percent of the money from the escrow account to reduce poverty.
A spokeswoman for ExxonMobil, which led the consortium, declined on Friday to comment on the bank's decision. Before the World Bank approved the pipeline loan, some antipoverty groups recommended that it wait until the country had tackled corruption and improved its ability to manage such a large project. And some in Chad worried that the government would abandon its promise to spend the revenues on the poor once the pipeline was finished.
In 2004, Emil Salim, an independent consultant commissioned by the bank to advise it on its energy investments, strongly recommended that the bank stop supporting oil projects by 2008, advice that the bank's governing board rejected.
Ian Gary, a policy adviser at the relief organization Oxfam America, said, "The Chad case is emblematic of the problems in the World Bank's support to oil and mining in countries where there are severe governance and human rights problems."
In his comments on Friday, Mr. Wolfowitz did not address the broader issues. He was clearly still hoping to salvage the bank's agreement with Chad. He expressed sympathy for Chad's position that it needed to spend more money on security because of turmoil in the neighboring Darfur region of Sudan, which has spilled over into Chad.
Still holding out the possibility of a compromise, he said some donors might consider additional assistance to help Chad cope with its security problems. But for now, he said, the loan suspension stands.
"It's my decision as the president," he said, "but we briefed our board this morning, and I would say that it was a consensus, absolutely solid consensus around the room, that this was the appropriate and necessary action."

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alan on January 9, 2006 - 4:31pm

"Chad's Parliament voted last week to allow the country's substantial oil income to be spent on the military"
Wolfowitz doesn't want an oil exporting country spending money on the military. Why would that be?

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Hugo Chavez on January 9, 2006 - 5:29pm

So that oil-rich, corrupt authoritarian regimes don't simply spend the money keeping themselves in power and they're people poor. See Saudia Arabia and Nigeria for examples. We here in Venezuela are committed to helping the poor, that's why I have plans to expand my heating-oil-for-the-poor program in the Northeast United States.

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daveoz on January 9, 2006 - 7:32pm

http://ogj.pennnet.com/articles/article_display.cfm?article_id=245094

Venezuela regains control of 32 oil fields

Peter Howard Wertheim, OGJ Correspondent

RIO DE JANEIRO, Jan. 9 -- Thirty-two privately operated Venezuelan oil fields returned to state control with the start of the new year, the government said.

The deadline expired at midnight on Dec. 31, 2005, for all private companies with contracts to independently produce oil. The companies will now have to agree to joint ventures that will give Venezuela's state oil company, Petroleos de Venezuela SA (PDVSA), majority control.

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Dave Cohen on January 9, 2006 - 7:15pm

That's interesting considering that China has an interest in importing oil from Africa including Chad.

China currently derives a quarter of its oil imports from Africa, with oil interests in Algeria, Angola, Chad and Sudan and increasing stakes in Equatorial Guinea, Gabon, and Nigeria. China's energy interests in Chad are of particular interest, given that Chad still maintains diplomatic relations with Taiwan.

Look here for a summary of China's oversea oil E&P investments from CNPC. Just today, CNOOC purchased a large stake in a Nigeria offshore block. And a recent news story.

In 2004, 25% of oil imported by Beijing came from Sudan, Chad, Libya, Algeria, Equatorial Guinea, Gabon and Angola. China imports a quarter of Angola's oil, and 60% of that in Sudan.

So, it's time to crack down on those African countries. Too bad the Sudan is out of bounds because they are officially not invited to the party since they are very bad people (Darfur and all that). On the other hand, China doesn't much care.

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BabyPeanut on January 9, 2006 - 5:19pm

Testing some HTML

click to enlarge

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BabyPeanut on January 9, 2006 - 5:24pm

Browser scaled version:

click to enlarge

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ziply123 on January 9, 2006 - 5:56pm

Hi all, I'm new at this site and am pleased with the level of discourse and technical knowledge. I'm interested in any extended policy papers/diaries you've posted here (or elsewhere) on a comprehensive national energy policy for mid-century and beyond. I'll appreciate any links you care to supply. Thanks.

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Prof. Goose on January 9, 2006 - 7:41pm

ziply, about all I can suggest is reading the whole thing, sadly. however, there's been a set of policy discussions over at dailykos in Darksyde's diary of late...

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Liz on January 9, 2006 - 9:57pm

Here's the link:
Energize America - A Blueprint for U.S. Energy Security (Fourth Draft)

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shez on January 9, 2006 - 7:11pm

http://www.atimes.com/atimes/Central_Asia/HA10Ag01.html

Interesting opinion piece on energy geolpolitics and the political advantage Russia gains from its large energy resources.

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daveoz on January 9, 2006 - 7:27pm

If you tell a few porkies, someone is going to get angry:
Dutch pension funds sue Shell over reserves

By OGJ editors
HOUSTON, Jan. 9 -- A group of 26 Dutch pension funds, led by Stichting Pensioenfonds ABP, filed a shareholder securities fraud suit against Royal Dutch Shell PLC seeking "hundreds of millions of dollars" in damages for what it calls improper accounting for oil and gas reserves during 1997-2003.

http://ogj.pennnet.com/articles/article_display.cfm?article_id=245091

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RussianCrude on January 9, 2006 - 9:00pm

I posted this at the last open thead, but no one replied:

Here's a thought:

So we are told Iraq's reserves are 112.5 bbl. Now this figure date's during Saddam's regime, and we all know is over estimated.

What happens to this figure once foreign companies re-evaluate the fields?

Comments anyone?

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Hugo Chavez on January 10, 2006 - 11:45am

There's a small security issue in Iraq. When that gets resolved sometime in the next 10 years we'll talk about re-evaluating. Until then, Halliburton/KBR will be doing the majority of the work, and Iraq will pump between 0-2.5 million barrels per day. The problem isn't their reserves in the near to mid-term, it is the dilapidated infrastructure and the gross overproduction that happened in some fields calling for enhanced services that Western powers aren't too keen on investing in right now, given aforementioned security problem.

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alan on January 10, 2006 - 1:29am

Santos, Chevron, BHP Shut Oil Fields as Cyclone Nears
Jan. 9 (Bloomberg) -- Santos Ltd., Chevron Corp. and BHP Billiton shut down oil fields off Australia's northwestern coast because of Tropical Cyclone Clare, which is approaching the area.

http://www.bloomberg.com/apps/news?pid=10000081&sid=aW6jhU57m8ds&refer=australia

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galacticsurfer on January 10, 2006 - 5:44am

I have a question about transport costs America/EU/Japan:

I talked to my brother in USA in the fall and he had oil shock over USD 3.00/gallon. I don't drive but as I live in Germany it costs here maybe €1.00/Liter at USD1.20/EURO and about 4 liters/gallon. 4 x 1,20 = 4.80USD/ gallon. I also read on a site all the prices worldwide and they say USD5.50/ gallon in Germany. Other people say USD7/gallon in UK.

My question is basically this. Why do Americans get shcoked by gas/petrol prices of half those elsewhere? I suspect they get half the mileage with their SUVs and pickups and also have to drive twice or three times as far generally so that their consumption(gallons) is 6 times the Japanese/European consumption. Presuming that Americans use 6 times the transport gasoline daily any price increase really hits. I had the idea that you could set up a chart of where economic adjustments/demand destruction hits depending on the current barrel price at USD 25 increments. 50/75/100/25/150/175/200, etc. The first and worst hit person is the guy in the exurb using 40% of his disposable income for a mortgage and driving 100 miles per day to the office and back in a hummer. You could calculate at what USD/gal. price(derived from USD/barrel) he would have to start carpooling or switch to a higher mileage car. Basically this is a flexible idea. He could still live in the exurbs if he used a Prius or in the city with a hummer but not both if say the price of gas was $5/gallon. So either the exurbs take the hit or the SUVs or maybe a bit of both. Basically you could calcualte the likely housing demand fall in specific areas(distance from jobs/cities) and the demand fall for specific model cars according to make and mpg on a table according to the current price of gasoline/(barrel or gallon). This could be done for USA markets and for Europe/Japan. In this way we could guesstimate how peak oil really looks on the ground year for year(presuming a certain % rise per annum in USD barrel/oil of say 20-30% postpeak for example). So first the exurbs go bust at 100/barrel and GM /Ford go bankrupt. Toyota and the normal suburbs last till 200/barrel. Of course those are just guesses. Here where I live in Germany housing prices are flat. However in areas with no public transports(comparable to exurbs in USA) housing prices are expected to fall up to 40% by 2020. This is due to several factors. First energy prices going up, secondly the government eliminated the tax deduction for driving to work and thirdly unemployment is high 10-11% so that jobs are uncertain and a single job can't feed a family which is typical for an exurb lifestyle (according to local newspaper story in the section on housing). It is more flexible to live in town closer to many job possibilities and have more time available for family, work etc. and not just for commuting.

Anyway we talk very generally on such sites about demand(from mild problems with adjustment to olduvai scenario) but very specifically with heavy charting about supply. It would be interesting to see more math/economics applied to what I have discussed above to see how peak oil will really play out in the next 5-15 years(depending on oil prices in respective time periods). As I work in the auto parts supply business this is interesting to me. I know we are selling fewer cars and parts in Germany generally. My boss talked to the purchaser at the biggest parts chain here who said to him that in the last few years people had reduced driving mileage by some large percentage(30% perhaps) and therefore were replacing less parts due to high prices and general recession here. What will peak oil do to exacerbate this whole situation in 3-5 years?

Now personally I ride a bike 7 km to work and 7 km back and live in a big city with access by foot and bike to everything( schools, shops, cinemas, doctors) and good public transport right in front of my door. I walk my kids to school(10 minutes) before I bike to work. I did not grow up that way but in small town America where I also used a bike to go to school or walked and there was nowhere to go really.It does not get too cold here and it is insulated in my apartment building so I just don't turn on the heating even winters(no midwest -40F° here). I have a low ecological footprint(TV and PC, cooking and refrigerator). MAybe it won't hit me too hard till 200/barrel in my situation.

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ericy on January 10, 2006 - 10:10am

Fuel economy is a big part of it, of course. The worst offenders are the big SUVs - in US units they get perhaps 10-15 miles per gallon, which would correspond to somewhere between 15 and 23 liters per 100 km. Not everyone drives one of these things though...

Increased distances are also a part of it, but not for everyone.

Another factor is that our mass transit infrastructure is pretty poor over here, which forces people into driving their cars.

I was reading somewhere that the energy usage per capita in the United States was about double the usage in Europe.

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Agric on January 14, 2006 - 9:25pm

Japan is marginally more effecient, in terms of oil usage per unit of GDP, than is EU, which is almost twice as efficient as USA.

Several reasons:

the availability of said fuels within the country
the size of country (increasing size -> greater travel / transport cost)
historical usage
political influence of relevant industries

Note that 1 US gallon is 0.75 UK gallon is approx 3.5 litres.

UK prices peaked at about EU 1.75 per litre, US prices peaked at about $3.05 / US gallon = EU 1.0 per litre, approx.

In Europe we have taxed oil and its products appropriately, partly in the knowledge of the damage they may be doing to the environment. In the US this has not happened. The US has sought to exploit cheap energy to gain competitive advantage, now the chickens will come home to roost and the US economy will have to adjust much faster than EU countries.

Why are americans shocked? Because the price of oil / gasolene has been insignificant previously, now it is becoming significant. They must change their lives in the ways europeans and japanese already have and then keep changing further, as we must do, or become a poor country again due to their failure to adapt. In the next 20 years I think that the US needs to reduce its dependency on oil by 50% or more (unless geopolitical events force a greater reduction).

What you describe in your life is mostly alien to most US folks. That will, of necessity, change; energy profligacy = financial insolvency for many in the US soon.

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BabyPeanut on January 10, 2006 - 9:45am

Heinberg to speak in Eugene, OR

"Even if I have solar panels and drive a biodiesel car or walk to work, if I'm living in a community coming apart at the seams because the city can't afford to keep the firetrucks rolling, that affects my quality of life," he said.

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whitneyville on January 10, 2006 - 10:13am

Ames, Iowa - Recycling Town

I'm not from Ames, but I travel there occasionally. I am quite impressed by their trash recycling program. They have free pick up, the metal/plastic is recycled and everything else is burned for electricity. They tried burning the trash my town, but it was shut down because of mercury pollution.

Is any one having success with trash recycling?

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BabyPeanut on January 10, 2006 - 10:25am

I put it out but don't know what happens to it.

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BabyPeanut on January 10, 2006 - 10:27am

As Seen On TV! (not)

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davidsmi on January 10, 2006 - 4:32pm

Yikes! US$20,000 for something I wouldn't dare take on the road for fear of getting smushed by an SUV?

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BabyPeanut on January 11, 2006 - 12:55am

Buy it now and put it away for when there's no more SUVs. Then drive it down the road being shot at by maurading gangs that wish they had your foresight and want to take it from you.

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