Yesterday I was at blooomberg.com and listened to a Jim Rogers phone interview. One of the the "correspondents" asked if Jim suscribed to the "peak oil theory". Jim, essentially evaded the label and said oil supply is in decline...

anyway, thought I'd mention that.

While extensively citing Matt Simmons, the article make no mention of oil peaking. This way, the rig shortage can be used to argue that there is no real peak in oil, just a temporary lack of equipment.

From a Consumer Watchdog report :

Increases in the "spot" market price of crude oil accounted for a maximum of 17 cents per gallon. Even accounting for local tax increases, most of the price increases went to refinery and marketing profit margins for the oil companies

Thinking about it, it's astonishing how hypnotised we are by
the "spot price", of a small and shrinking "benchmark crude"
 which is likely being gamed.

I suppose what I want is a discussion of how prices are really fixed, for the bulk of the oil that fuels the world economy, and what the real price trends are, and how they have historically differed from the universally-quoted spot prices.

I imagine that it is difficult or even impossible to calculate the average world price of a barrel of crude : for
one thing, the varieties of product vary a whole lot, and for another, a lot of the data is presumably unobtainable, being commercially or geostrategically sensitive. And what price would we be talking about? At the wellhead, at the refinery?

But I observe that the question of where the money goes seems to get short shrift around here. There seems to be an overriding, fatalistic assumption that the price at the pump
is geologically determined. Which is clearly not so.

What it looks like to me is :
When the spot price rises, everyone in the supply chain calculates the cost price of finished product from that barrel price, and raises their own product price to meet it.
So who is "everyone"?

• Oil majors, which are players in every stage from well to pump
  
• and all the intermediaries involved in single steps : refiners, distributors etc...

Sort of evocative.

The article talking about growing diesel trees seems interesting.  However from what I've read around the webostuff, I've found info that pushes using hemp as a fuel is THE most energy efficient plant on the planet.  I realize there are amazon plants that grow feet in a day, but when you can grow more than one rotation per season, there is some major upside to growing this en mass.  Just a thought.

BTW...anyone hear about W Nelson?  And he walks with tickets?

French Puzzle: Where are the pickup trucks?>

I just got back from my first visit to France, and in two weeks of vehicle watching, city and country, I did not see a single open-bed pickup truck. There were numerous panel vans and plenty of large trucks, and even a sprinkling of small SUVs, but I saw no pickups.

Can anyone here explain this? Are there licensing issues in France that make light trucks a non-starter for private use?

Crude up; Energy Dept. to cut 2007 output forecast
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B05C93D39%2DF6AD%2D424C%2DBBE5%2D6ED2A552488 B%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo
- Note that Thunderhose was part of the future production, which is still looking oh so rosy, right?

Amaranth Says Funds Lost 50% on Gas Trades This Month (Update3)
http://www.bloomberg.com/apps/news?pid=20601103&sid=aEV7twLA5PXY&refer=us
- Predicting prices, even in a market where suppliers have peaked, is not a cakewalk.

I've argued that the first indicator of decline will be rapidly rising prices for residual oil products that cost less then the original oil, basically the waste of the oil industry. This is driven by two factors.

1.) Refineries becoming more complex so less oil is wasted in low value products.
2.) Real shortages.

Bunker Fuel for ships has a inelastic use profile like other transportation uses for oil is a good indicator of the situation. The only controlling factor is the size of the world economy or GWP.

As we approach peak the demand for these products will outstrip supply leading to a increase in the price until
they approach the price of oil.

Now the next question is will they actually become more expensive then oil  and begin to compete with other more refined products such as gasoline ?

I argue they will because the world market for oil will fundamentally change post peak and take on scarcity economics and rationing will happen.

I feel that we will see the market become driven not by price as the primary motivator by by the need to ensure the availability of oil regardless of price. This means the spot market will basically disappear accept as a mechanism to set the price for long term contracts. Less and less real oil will actually trade on the spot market.

This results in the real prices for former wast products not only rising to the same value as crude but rising steadily above it till they are at a  refining discount vs the cost of more refined products such as gasoline. Considering that bunker fuel and other uses of residual fuel oil drive the heart of our economy this does not bode well for the future of a globalized economy.

Surprisingly I cannot find any papers on a market naturally adopting rationing it seems to be a disgusting concept to economists.

http://www.freenewmexican.com/news/48304.html

"DOE predicts gasoline shortages"

"Gasoline shortages and even higher prices loom, a new government report says, and it will take decades and trillions of dollars to replace American dependence on foreign oil.

The U.S. Department of Energy report directly addressed the concept of peak oil and how to deal with it. Peak oil means oil production is maximized and supply goes down from that point forward. Coupled with a surge in demand from countries like China and India, some energy experts say this could be a problem for America's economy.

"The world is consuming more oil than it is finding, and at some point within the next decade or two, world production of conventional oil will likely peak," the report says.

A DEO report accepting PO?  This seems newsworthy to me!  But I don't see this story anywhere else.  I googled the news tab for "DOE report gas shortages", and it's a googlewhack, I only get the New Mexican article.  Shouldn't this info generate some sort of media interest?  I've gotta think John Q (I call him Joe Sixpack myself) would be interested.

... Commercial silicon cells have efficiencies of 15% to 20%. In the laboratory, some have been made with an efficiency of 30%. The figure for non-traditional cells is far lower. A typical cell based on electrically conductive plastic has an efficiency of just 3% or 4%. What is needed is a way to boost the efficiency of cells made from cheap materials, and three new ways of doing so were unveiled this week in San Francisco, at the annual meeting of the American Chemical Society.

Solar cells work by the action of light on electrons. An electron held in a chemical bond in the cell absorbs a photon (a particle of light) and, thus energised, breaks free. Such electrons can move about and, if they all move in the same direction, create an electric current. But they will not all travel in the same direction without a little persuasion. With silicon, this is achieved using a secondary electrical field across the cell. Non-silicon cells usually have a built-in "electrochemical potential" that encourages the electrons to move away from areas where they are concentrated and towards places where they have more breathing space.
...

Kwanghee Lee of Pusan National University, in South Korea, and Alan Heeger of the University of California, Santa Barbara, work on solar cells made of electrically conductive plastics. (Indeed, Dr Heeger won a Nobel prize for discovering that some plastics can be made to conduct electricity.) They found that by adding titanium oxide to such a cell and then baking it in an oven, they could increase the efficiency with which it converted solar energy into electricity.

The trick is to put the titanium oxide in as a layer between the part of the cell where the electrons are liberated and the part where they are collected for dispatch into the wider world. This makes the electrically conductive plastic more sensitive to light at wavelengths where sunlight is more intense. Pop the resulting sandwich in the oven for a few minutes at 150°C and the plastic layer becomes crystalline. This improves the efficiency of the process, because the electrons find it easier to move through crystalline structures.

The technique used by Dr Lee and Dr Heeger boosts the efficiency of plastic cells to 5.6%. That is still poor compared with silicon, but it is a big improvement on what was previously possible. Dr Lee concedes that there is still a long way to go, but says that even an efficiency of 7% would bring plastic cells into competition with their silicon cousins, given how cheap they are to manufacture.

A second approach, taken by Michael Grätzel of the Swiss Federal Institute of Technology, is to copy nature. Plants absorb solar energy during photosynthesis. They use it to split water into hydrogen ions, electrons and oxygen. The electrons released by this reaction are taken up by carrier molecules and then passed along a chain of such molecules before being used to power the chemical reactions that ultimately make sugar.

Dye-sensitised solar cells seek to mimic this assembly line. The dye acts like chlorophyll, the pigment that makes plants green and that is responsible for absorbing sunlight and liberating electrons. The electrons are passed via a semiconductor to an electrode, through which they leave the cell. By using a dye called phthalocyanine, which absorbs not only visible light but also infra-red wavelengths, Dr Grätzel has been able to raise the efficiency of the process to 11%. That, he says, should be enough to make dye-sensitised cells competitive with silicon.

The third technique, being developed by Prashant Kamat of the University of Notre Dame, Indiana, and his colleagues, uses that fashionable scientific tool, the carbon nanotube. This is a cylinder composed solely of carbon atoms, and one of its properties is good electrical conductivity. In effect, nanotubes act as wires a few billionths of a metre in diameter.

Dr Kamat and his team covered the surface of an experimental cell made of cadmium sulphide, zinc oxide and titanium dioxide with nanotubes, so that the tubes stuck up from the surface like hairs. The tubes then eased the passage of the liberated electrons from the cell to the electrode that collected them. Using this technique doubled the efficiency of Dr Kamat's cell from 5% to 10% at ultraviolet wavelengths and he reckons it would create similar increases in efficiency in both plastic and dye-based cells....

Al Gore speech New York University September 18

Many scientists are now warning that we are moving closer to several "tipping points" that could -- within as little as 10 years -- make it impossible for us to avoid irretrievable damage to the planet's habitability for human civilization.

... after all, because the world still regards us -- in spite of our recent moral lapses -- as the natural leader of the community of nations.

.....we should start by immediately freezing CO2 emissions and then beginning sharp reductions...

It is true that not all countries are yet on track to meet their targets, but the first targets don't have to be met until 2008 and the largest and most important reductions typically take longer than the near term in any case.

As pointed out by the "25 by 25' movement (aimed at securing 25% of America's power and transportation fuels from agricultural sources by the year 2025)...

We can restore the health of depleted soils by encouraging and rewarding the growing of fuel source crops like switchgrass and saw-grass...

Nevertheless, it is time to recognize that the phrase "clean coal technology" is devoid of meaning unless it means "zero carbon emissions" technology.

For the last fourteen years, I have advocated the elimination of all payroll taxes -- including those for social security and unemployment compensation -- and the replacement of that revenue in the form of pollution taxes -- principally on CO2. The overall level of taxation would remain exactly the same. It would be, in other words, a revenue neutral tax swap.

What is motivating millions of Americans to think differently about solutions to the climate crisis is the growing realization that this challenge is bringing us unprecedented opportunity.

You obviously think that the only way to sell this to Americans is by dangling a new kind of American Dream in front of them, a carrot bigger and better than ever or something. Maybe you're right in that assessment, but doesn't it defeat its own purpose? It's tempting to deliver visions of tens of millions of new cars that use less fuel, and save GM/Ford, but is that realistic in 10 years? How many windmills and solar panels can you produce in 10 years? And isn't all that production terribly polluting? What do you propose to offset that additional pollution?

I know it's political suicide to tell people they'll get much less, and very soon, but you're not in politics anymore, am I right? You can tell the truth now?!

Thunder Horse still in the stall

Corrosion could slow startup of BP Gulf platform

Corrosion may be to blame for yet another problem for oil giant BP, this time a lengthy delay in the startup of its already overdue Thunder Horse platform in the Gulf of Mexico.

The company said Monday a key piece of undersea production equipment, called a manifold, failed during testing, possibly the result of a kind of corrosion that made the steel brittle.

The company plans to retrieve all four manifolds -- equipment resting on the ocean floor that helps control the flow of oil and natural gas from multiple wells -- for tests onshore.

Retrieving them is far from simple or cheap. The multimillion-dollar manifolds are sitting in about 6,000 feet of water, weigh 635,000 pounds each and are about the size of two tractor-trailer trucks parked side by side.

I didn't see this mentioned elsewhere on DrumBeat, maybe I missed it.

I was surprised at the frankness of the AP headline using the term "survive".  Looks like the auto and airline industries are soon to be dead men walking and the media is getting ready to write them off.

I find the name for Ford's plan to slash jobs, The Way Forward, to be a mildly amusing case of doublespeak.  They should have called it The Path Towards The Abyss, maybe a little dramatic but more accurate.

One has to wonder if a massive scaling down of auto production will translate into much higher prices due to a loss of economies of scale.  Higher prices would also seem to be a likely outcome of a further loss of competition.  Add to all that rising fuel prices feeding into production costs and autos may become a luxury item sooner rather than later.

As a side note, I think domestic automakers have seen the writing on the wall for some time.  A few years ago I read an article in Newsweek about how GM was on the verge of losing its number one position to Toyota.  I was shocked that the GM executive in the interview didn't try to put an optimistic face on the competition and suggest his company would rally to the challenge.  Instead, he just said that he saw GM's loss of world market share as inevitable.  I wondered when they started teaching the class 'Defeatism' to MBA students.

http://www.space.com/spaceshuttle/

WTF?

Harle said that at 2:45 a.m. EDT (0645 GMT), just after Atlantis completed a check of its reaction control thrusters, the instrumentation and communications officer at NASA's shuttle Mission Control room at Johnson Space Center noted an object between the orbiter and Earth, and traveling at about the same speed of the spacecraft.

Flight controllers are now using video cameras mounted along Atlantis' robotic arm and payload bay to survey visible areas of the orbiter, including its wing leading edges and other vital heat shield areas, Harle said.

Anyone care to offer their opinions as to what this could be?

The Russian ministry responsible for industry and energy has released its fourth quarter schedule for oil exports via pipeline, according to today's issue of Lietuvos Rytas ( http://www.lrytas.lt , subscription unfortunately required). Apologies in advance for inaccurate placename spellings -- I'm going from Lithuanian into English, so the Russian placenames may be off a bit.

The details:
To be exported to non-CIS countries: 54.205 million tons.
To be exported to CIS countries: 9.9 million tons.

For the non-CIS, the routes will be as follows:
Primorsk terminal - 17 million tons
Novorossisk - 11.4 million tons
Odessa - 3.8 million tons
Ukraine's Yuzhny - 3.7 million tons
Gdansk - 1.864 million tons
Tuapse - 1.23 million tons
to Germany - 5.976 million tons
to Poland - 4.935 million tons
to Hungary - 1.75 million tons
to Czech Republic - 1.35 million tons
to Slovakia - 1.2 million tons
(These numbers add to 54.205 million tons.)

Okay, notice the absence of Lithuania from this list. The local refinery has a capacity of 27,000 tons per day. Since the pipeline cutoff in late July, crude has been imported by tanker. Last week, a shipment came in from Venezuela (??). Here's an example of where increased bidding for exports (per Khebab and westexas) would start. In order to replace the volume of crude not received from Russia, the local refinery has to go out on the world market and bid the crude away from somebody else.

This is why it's important to keep an eye on Russian exports. If they drop (and I'm not saying they are!), that would have consequences -- namely, disappointed buyers going out onto the world market and finding alternative suppliers. Sure, much of the oil brought in by tanker since late July is in fact Russian crude -- but if Russian net exports decline (an if), the absence will have to be made up somehow. As last week's Venezuelan shipment shows.

Or so says the article. <snort>We'll see</snort>

How do you convince consumers that what's bad for you is good for you? You feed them a load of bull, and hope they don't catch on. So it is with the Ontario and federal governments, which are spinning their pro-ethanol campaigns as consumer-friendly solutions to our energy and environmental problems.

Ontario's new ethanol pamphlet is a masterpiece of creative propaganda. The pamphlet is to be distributed at gas stations between now and January, when gas containing 5-per-cent ethanol -- that's the law -- arrives at a pump near you. The ad features a little girl in a pink sundress. She's frolicking in a green field and carrying a butterfly net. "Feel better about filling up," the ad says.

http://video.google.com/videoplay?docid=-3719132275557884702&sourceid=docidfeed&hl=en

or
http://tinyurl.com/jt8jc

Homepage:

http://www.freedomtofascism.com

I just heard United Nations Secretary John Bolton on CNN say "Iran says they want nuclear power because they are running out of oil and natural gas. According to our caculations they will run out of oil and natural gas in about 300 to 400 years."

Just thought I would pass that on, for what it's worth.

Yesterday Zimbabwe, today it's Bangla Desh

We can call this the Duncan (or Olduvai) countdown: 2 down, 200 to go. Unless I missed some.

At Kansat, a village in northern Bangladesh, hundreds of demonstrators agitating over power shortages fought pitched battles with the police. Several people were killed in the violence.

In Phulbari, a small town in northern Bangladesh, police fired on protesters worried that that an open pit coal project would eat up their land and destroy their homes and livelihood.
At least five people were killed.

The country has acute energy shortages, with hardly any office or factory not being affected by power cuts, sometimes lasting several hours.

The benefits of more energy are obvious: offices with air conditioning, homes with lights for children, and farms with irrigation pumps. But on the other hand, open pit coal projects - and other forms of energy development - are not environmentally friendly. They eat up scarce land resources and destroy homes.

NOTE: Bangla Desh population density is 32x that in US

What do you business types make of this?

I think everyone is scared after Amaranth lost billions on natural gas speculation. Everybody thought it could only go up. Probably a lot of hedge funds still out there with long positions who are jumping ship now. This should produce a shor-term spike down and then over the next few weeks it should restrain upward pressure. It's going to be some time before the market forgets this event and everyone rushes back in.

Welcome to boomtown. Fort McMurray is a town of 65,000 in northern Canada. Temperatures drop to 40 below in the winter. And now housing prices have skyrocketed, food prices are double what they are elsewhere and the tiny airport has 30 flights a day. Workers from four continents flock to the town. The reason? Oil, of course. But it's oil mixed with sand, which makes it expensive to extract. But high oil prices are driving billions of dollars every year to this town on the edge of a frozen wasteland. NPR's Frank Langfitt paid a visit and came back with an extraordinary report. One excerpt from him:

    I'm standing here in the bottom of one of Syncrude's oil sands pits. It's about 250 feet deep. And coming by right now is a giant dump truck -- it's got to be over 20 feet tall. And it's piled high with black oil sands. It looks about the size of a house. And the weight is so much; you can see the wheels sinking into the road. The people who drive these trucks make 80,000 to 100,000 a year with overtime in Canadian dollars.

Thanks

Has this been discussed before on TOD?
----------------------
Raphial Morgado, inventor of the Massive Yet Tiny (MYT) engine claims this minuscule 32-cylinder powerplant, just 14 inches in diameter and weighing 150 pounds, can crank out 850hp. The MYT engine is the result of a $4 million dollar R&D project undertaken by Angel Labs LLC to build the ultimate internal combusion engine. Inspired by drag racing, inventor Raphial Morgado designed the engine with a focus on power, torque, and fuel-efficiency to meet the hefty demands of the today's automotive applications in a lightweight package. The result was a revolutionary design with a power-to-weight ratio up to 40 to 1, over 3,000 ft/lbs of torque, and a diesel-mode mileage in excess of 150 mpg!
-------------------------
This is truly fascinating if it is as efficient as claimed.

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

Imagine what a CVT tranny could do for a bicycle, car, or windmill.  Read this Motortrend article and check out this wiki.

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