Updated for May 2006 numbers from EIA's Petroleum International Monthly, August 2nd, 2006

• "peak" oil theorists??? I thought everyone agreed it will happen and the only discussion is when.

• On the Isreal-Hezbollah conflict:
  

*The best reason why growing your own food is worth the effort: taste

Probably everyone has seen this Thomas Hardy quote.  I'm afraid all of the recent data that I have reviewed suggest something at least approaching the worst.

Based on 2004 data, the top 10 net oil exporters, in descending order were:  Saudi Arabia; Russia; Norway; Iran; Venezuela; UAE; Kuwait; Nigerian; Mexico  Algeria.  

Based on available EIA crude + condensate data (through April/May), seven of the top ten exporters are showing production declines since December.  The other three--Venezuela,  UAE and Algeria are showing no increase.   However, the WSJ reports that Venezuelan production is falling.

In a guest post on TOD, in January, 2006 (based on Khebab's technical work), I focused on the top three exporters (SA; Russia and Norway), and I predicted that we would face a net export crisis--this year--before we saw a substantial decrease in world oil production.  We knew that Norway was declining.  The two question marks were SA and Russia.  As noted above, the available EIA crude + condensate data are showing that all three have declined, relative to December.

Based on the HL plots, the Lower 48 and the North Sea peaked at about 50%.  Russia peaked at a broad plateau centered on 50%.  Based on Khebab's HL plot, Mexico is 50% depleted, and they are now declining.  

Deffeyes put the world (conventional) 50% mark in late 2005, and the world is now declining.

What about unconventional?  

The most recent EIA data on Canada are stunning.  Through May, Canadian crude + condensate production is down 11% from December.  The other great unconventional hope, Venezuela, is either down or flat.

In going about my daily activities, I am almost continually reminded of the scene in the movie "Titanic" where the ship's designer, Thomas Andrews, walked about the ship, in wonderment that it would soon be at the bottom of the Atlantic, and that most of the people on the ship would soon be dead.

Following is an excerpt from a website focused on Thomas Andrews:

http://www.geocities.com/athens/aegean/6136/index.html

Excerpt:

Knowing as he did that there was no time to lose, Andrews set out to do whatever he could to save as many lives as possible. At first he spent time searching staterooms for passengers to evacuate. Running into stewardess Annie Robinson on deck A, he told her to put her lifejacket on. "I thought it rather mean to wear it," she explained. "Never mind that!" he answered, "Put it on--walk about--let the passengers see you." When she protested further he told her again, "Put it on! If you value your life, put it on."Knowing as he did that there was no time to lose, Andrews set out to do whatever he could to save as many lives as possible. At first he spent time searching staterooms for passengers to evacuate. Running into stewardess Annie Robinson on deck A, he told her to put her lifejacket on. "I thought it rather mean to wear it," she explained. "Never mind that!" he answered, "Put it on--walk about--let the passengers see you." When she protested further he told her again, "Put it on! If you value your life, put it on."

All the technology that goes into drilling and completing oil and gas production systems, [such as] stimulation of wells, hydraulic fracturing, deep-well completion, and multiple horizontal laterals, could in principle be extended to deep heat mining. Hydraulic methods have been the ones that hold the most promise, where you go into the system and you pressurize the rock -- just water pressure. If you go higher than the confinement stress, you will reopen the small fractures. We're just talking about using a few thousand pounds per square inch pressure -- it's surprising how easy this is to do. This is a technique that's used almost every single day to stimulate oil and gas reservoirs.

This whole essay is almost a satire of bad writing.  I mean it is world class Elements of Style violation.  I can't believe the writer is a native English speaker.

Lost in the swirl of mixed constructions is the fact the Saudis could refute Simmons any time by simply opening their records.

http://www.fool.com/news/commentary/2006/commentary06080101.htm?ref=foolwatch

In this article, the author makes an argument that because US inventories are at an eight year high, then lack of supply is not much of a factor in current oil prices. I don't know much about oil inventories or what they're for, but I wonder if he is misusing this statistic. If you compare the oil inventories over the years against consumption, they're not that high. In fact they look lower than they were before about 1996.

You have to imagine companies like Southern and the public -- millions and millions of fuel cells in 30 years. Portable fuel cell cartridges, which are coming out in the market this year. Stationary fuel cells. Every home every office, every factory, every business, every industrial park has a power plant. Every car, every truck, every bus is a power plant as well as a vehicle. So that when you generate power, you become your own power company, not Southern. So then, what do you do when you generate power -- your own home, your own business, your factory, your own industrial park -- you're going to have more than you need. You're going to send it back to the grid.

So . . . everyone will buy cheap hydrogen (from where?) and sell expensive electricity to, um, everyone else!

I think in 12 months, your going to see oil down to 35-40 dollars US a barrel.

(Steve Forbes speaking during the Forbes Conference, Sydney, Australia, August 30th 2005).

We just need oil to be at 80$ by the end of the month.

http://www.armytimes.com/story.php?f=1-292925-1684093.php

Shortages in U.S. stocks of specialty metals are leading to critical spare parts shortages for Army helicopters flying in Iraq, a top Army aviation general said.

Spare parts manufacturers are unduly constrained by the Berry Amendment -- it contains the so-called "Buy American" rules for Pentagon purchases -- and it is causing critical shortages in the specialty steel that goes into bearings used in helicopters, said Maj. Gen. James Pillsbury, commander of the Army's Aviation and Missile Command.

Pillsbury said shortages in U.S. stocks of other specialty metals, such as titanium, are also leading to supply chain backups. Titanium shortages in the aerospace industry are getting worse and the problems are likely to multiply in the future, Pillsbury said. He advised manufacturers to increase their stocks of specialty metals in anticipation of future spare parts needs for Army helicopters that will be flying in Iraq for years to come.

http://www.aluminum.org/Template.cfm?Section=Home&template=/ContentManagement/ContentDisplay.cfm &ContentID=6700

http://www.alacom.com/jetmetal.htm

http://efoia.bis.doc.gov/shortsupply/mallory.pdf

http://www.manufacturingtalk.com/news/lag/lag101.html
Over the past year, much has been said about the rise in oil prices and shortages of supply. For the engineering sector there has been an even bigger concern. The price of many metals has risen beyond comprehension.

http://www.theaustralian.news.com.au/story/0,20867,19582738-12342,00.html
Commodity price rises were fuelled by a combination of acute shortages and hedge fund buying. Those metal shortages will diminish somewhat in a slowdown.

http://www.manufacturing.net/ind/article/CA439067.html
While China was listed as a top concern, distributors also pointed to other issues that are affecting their ability to compete. Steel prices, surcharges, shortages, and scrap metal prices are creating havoc in the channel, according to respondents.

"Scrap metal shortages are dramatic-ally increasing material costs and decreasing product availability," said one Midwest distributor.

http://www.metalfinishing.com/editors_choice/articles/060106_Stevenson.htm
Unprecedented inflation strained economic gains in 2005. Metal prices continued to rise coupled with metal shortages due to increasing global demand, particularly in China and the greater Pacific Rim. Utility prices have skyrocketed, increasing 50% from 2004 to 2006. Both electric and particularly natural gas will continue to drive up the cost of sales. Battening down the hatches to benefit from solely internal efficiency gains can't possibly offset the onslaught of unprecedented inflation expected to continue to rise well into 2006. Prices will have to increase and be passed on to our customers.

Oil CEO...from price vs. production...is this historical, price increasing, yet supply falling?

http://www.aramcoexpats.com/Pipeline/InSearchOfOil/CategoryID/15/ContentList.aspx

Here is the latest on the Mexican saga, where tourism declines is also putting the hurt to the economy.

Excerpt:
-------------------
MEXICO CITY -- A human head washes up on an Acapulco beach. Protesters hassle visitors at makeshift checkpoints in the colonial city of Oaxaca. And in Mexico City, leftist demonstrators turn the tourist draws of Reforma Avenue and the Zocalo plaza into sprawling, ragtag protest camps.

Growing political unrest and drug violence are making foreigners think twice about visiting Mexico, where the $11.8 billion tourism industry is the country's third-largest legal source of income, after oil and remittances from migrants in the United States.

Mexico has been struggling since last fall, when Hurricane Wilma hit the country's biggest tourism moneymaker, Cancun.
-----------------

So we have rapid Mexican oil depletion, rising poltical polarization, increasing drug violence and corruption, decreasing remittances going south from increasing US-mexican unemployment as construction decreases here in real estate, US inflation is reducing their monetary ability to create discretionary income to fund their remittances home, and the Mexican population is severely straining water and electricity availability.  Not a pretty picture at all, and decreasing tourism leverages Mexico into decline even more.

The next Presidente' is facing increasing pressure to roll back NAFTA.  AMLO protestors blockaded the Mexican stock market today, and  they hope to blockade the airports next.  Oh, joy!?

This STRATFOR Article posits that the oil infrastructure may be next for political shutdown.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast>

YUKOS declared bankrupt--Is PEMEX to soon follow in the Global Oil Endgame?

Quote from the Kommersant article:
--------------
 "The YUKOS case will enter the textbooks not as a unique case of the bankruptcy of an oil company, but as an example of economic, political and juridical conniving."
---------------

Putin's economic hitmen must be celebrating.  Makes one wonder what the economic hitmen from the IMF, WTO, and World Bank are planning for PEMEX so its assets can be scooped up for pennies on the dollars.

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

http://www.latimes.com/business/la-fi-restaurants3aug03,1,6052517.story?coll=la-headlines-business&a mp;ctrack=1&cset=true
Gas Costs Eat Into Restaurant Sales
Excerpt:

Same-store sales at Macaroni Grill, which like Chili's is owned by Dallas-based Brinker International Inc., are falling at an almost 5% clip.

Applebee's International Inc., P.F. Chang's China Bistro Inc. and even the typically successful Calabasas Hills-based Cheesecake Factory Inc. all have fallen victim to the same trend.

"The restaurants first started to see this in May. It was worse in June and the few numbers we have seen for July show that it is accelerating," Smith said.

Almost 30% of respondents in a June survey of 680 Californians by BIGresearch said they had cut back on eating out in response to high gasoline prices. That's up from 21% in the same survey a year earlier.

The rate of Peakoil denial in the average citizen and our Govt. is shocking -- ideally every American should have read the Hirsch Report and Carter's 1977 Sweater Speech by now.  But I doubt if most of Congress has carefully considered these two vital studies, and state and local authorities are probably even more unaware of their existence.  You would think at a very minimum that all govt. employees would receive these in their govt. email accounts to promulgate change.  Such is life.

Instead, as Matt Savinar suggests, we need to follow the money and the inherent corruption that arises from greed.  I think Zimbabwe is an instructive example as this former breadbasket of Africa could have easily hired the best economic advice possible years ago, but purposely chose not to do so.  Over twenty years of ignoring proper and realistic policy planning. The resulting economic decline and deprivation is shocking to outsiders, yet the insiders are still advancing their personal agendas for profit.

Excerpts from the editorial:
-----------------
Over the last 26 years of independence he {Mugabe} has not been able to overcome the inertia of ZANU PF's encumbering liberation war or historical ties and the party's politics of patronage.

After all, some of the ministers are his liberation war colleagues who could, from a political point of view have helped him to exploit the power of incumbency to remain in the catbird seat. From that point of view, his situation is akin to that of someone who has malignant lung cancer. He knows he needs the lung. But if it is not removed then its malignancy spells doom.

This is why I, and indeed millions of Zimbabweans, feel that these failed ministers should simply walk the plank. Hoping that they will change is to me, hopefulness bereft of realism. It is not possible for them to change because they do not give a damn about the people. Self-enrichment is all that matters to them. And President Mugabe has acknowledged as much.  Or else plans to arrest the accelerating economic meltdown will go down the plughole because his ministers have now become the problem.
------------------

Zimbabwe has blown it for 26 years, yet America has blown it even longer since the the first oilshock and US Lower 48 peaked in the early seventies 35 years ago, or two whole generations of citizenry.  Thirty years minimum since the Sweater Speech and our leaders have further jeopardized our national security as we are now more dependent on energy imports than ever before.  Pres. Carter understood Prof. Bartlett's exponential growth, but every leader since then has preferred to remain silent while TPTB silently feathered their nests.

Are we better off than we were 35 years ago?  Is the US a more secure, happier, and more equitable society widely admired by the World at large?  Recall the recent MSNBC study that points to most Americans feeling that their children will be worse off than previous generations--they know something is up, but most just can't put their fingers on the exact reasons.

The Zimbabwean leaders had good and honest intentions since their independence so long ago, as did ours since the first OPEC oil shock.  What went so wrong that Americans are now willing to sacrifice their children's blood to an Iraqi sand dune?  Why can't people resist MPP and the Tragedy of the Commons if they understand these principles?

Zimbabwe has now shifted over 66% of their labor force {source CIA Factbook} to agricultural labor, yet they still must import food.  Will the postPeak US leadership have adequate Foundation plans ready-to-go to provide sufficient localized permaculture food growth and distribution?  Or is our leadership only looking out for themselves?  The CIA Factbook again states that farming, forestry, and fishing is only 0.7% of the US labor force, where are the postPeak plans for 66% of us to labor daily for our food?  WTSHTF, the world will have very little food to import to our shores.  Will our breadbasket go postPeak empty?

https://www.cia.gov/cia/publications/factbook/geos/us.html

Our leaders take a pledge to defend the US Constitution and promote the general welfare-- I suggest they get moving to mitigate detritus entropy with proactive planning to ease, as peacefully as possible, the coming Paradigm Shift.  My theory is that Foundation planning of predictive collapse and directed decline is the best path forward.  Otherwise, Zimbabwe's paradigm shift will look like a picnic compared to ours.  'Nuke their Ass--I want Gas' and the '3 Days of the Condor' scenario is not a viable postPeak solution compared to localized permaculture.  Hoes and shovels grow more food than a gun ever will.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?