DrumBeat: September 22, 2006
Posted by threadbot on September 22, 2006 - 9:14am
A new oil discovery is great for the drillers - but may be bad for us....I happen to be reading Matthew Simmons's Twilight in the Desert, which describes how Saudi Arabia in particular and the world in general are running out of oil. This "peak theory" of oil (as in, the world has achieved peak production) would seem to be off base with the discovery of a 15 billion-barrel oilfield. And, as Nichols points out, oil alarmists have been sounding the same bell for decades.
But I'm not sure that we should be so quick to dismiss the peakists. At some point they will be right, and I believe it's important to act as if they already are. Pursuing petroleum at any cost overseas, and even domestically, exposes us to all sorts of risk and merely makes it easier to avoid the tough steps that could reduce our dependence on oil.
Surviving The Oil Crash: Leadership And Social Structure
What is most apparent is the larger problem that there is no leadership, no sense of organization, for dealing with peak-oil issues.One might consider as an analogy the Great Depression. During those ten years, everyone lived on his own little island, lost, alone, and afraid. It was a "shame" to be poor, so one could not even discuss it with one's neighbors. The press and the politicians largely denied that the Depression existed, so there was little help from them. In general, it was just each nuclear family on its own - for those who were lucky enough to have a family. Barry Broadfoot, in Ten Lost Years (p.353), records the memories of one Depression survivor:
"Every newspaper across Canada and in the United States always played up the silver lining. . . . There were no such things as starvation, hunger marches, store front windows being kicked in. Yes, they were reported, but always these were called incidents and incited by 'highly-paid professional agitators.'"
Opec production cutbacks likely to be just a question of time
Oil Companies are Split on Push by Nations for More Profits
Oil-producing nations demanding contract concessions or seeking outright expropriations have created a split in the petroleum industry, with some companies insisting a contract is a contract and others saying they are willing to renegotiate some terms to reflect higher oil prices.
Concerns Raised Over Natural Gas From Abroad: Critics say imported LNG burns hotter and pollutes more than the domestic product.
Army to test hydrogen fuel cell vehicle
Suits Say U.S. Impeded Audits for Oil Leases
Four government auditors who monitor leases for oil and gas on federal property say the Interior Department suppressed their efforts to recover millions of dollars from companies they said were cheating the government.
US DOE Releases Climate Change Technology Program Strategic Plan
House panel embraces "25 by '25" energy goal
Congress could set a goal of deriving 25 percent of all U.S. energy from renewable sources -- biofuels and hydro, wind and solar power -- by 2025 under a resolution approved by the House of Representatives' Agriculture Committee on Thursday.
Michael T. Klare: Taking Oil Out Of The Equation
Mubarak says Egypt will develop nuclear energy
Fears grow over Russia undermining EU energy strategy
Italy has sounded the alarm over Russia's recent energy deal with Algeria, amid fears that the Kremlin is undermining the EU's strategy of seeking less energy dependency on Moscow.
Heatwaves, biofuel demand push up price of wheat; Irish bread prices to rise
Brazil, Bolivia to address energy crisis
Brazilian President Luiz Inacio Lula da Silva insisted Thursday he's taking a tough line in a major energy dispute with Bolivia, and said he'll meet with Bolivian leader Evo Morales to try solve the crisis after Brazil's Oct. 1 presidential elections.
Australia: Gas could cost more in State supply plan
Australia’s peak oil and gas lobby yesterday criticised the State Government’s plan to force gas companies to develop marginal gas fields as a condition of increased LNG sales overseas, claiming it could distort the gas market, hurt producers and hit consumers with higher bills.
EU Imported More Energy in 2005
BRUSSELS, Belgium — The European Union imported more energy last year to plug a deficit after its own production of oil, natural gas, coal and nuclear power fell, the EU statistics agency Eurostat said Thursday.
[Update by Leanan on 09/22/06 at 3:07 PM EDT]
Putting ethanol in the fast lane
Despite falling oil prices and a corresponding drop in the stock price of various ethanol companies, famed venture capitalist, Sun Microsystems co-founder and ethanol investor Vinod Khosla outlined four steps he said would help the country use more of the plant-derived fuel.
Clinton debuts $1B renewable-energy fund
NEW YORK - Former President Clinton announced the launch of an investment fund expected to raise more than $1 billion for renewable energy on Friday, the final day of his global issues conference.The Green Fund would focus on reducing dependence on fossil fuels, creating jobs, lessening pollution and helping to reduce global warming, all while making a profit, Clinton said.
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http://www.aspo-usa.com/fall2006/
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Best Hopes,
Alan
This is getting to be a bit much. Reeks of desperation, IMHO.
Not desperation. We have about 250 people registered and would like to have about 500, with one month to go.
ASPO-USA has very little money.
There are about 6 people in total all volunteers organizing the Conference. The Organizer Dick Lawrence rides 30 miles to Boston University by bicycle to arrange things there.
They, and I are trying to help the situation, are you?
The Conference is primarily funded by the registration fees.
The organizers of the Conference are on the hook personally for the money it cost to put it on if it doesn't break even.
Would you do that even if you were able to?
What are you doing to help sole the Peak Oil problem beside complaining?
However, it does seem you post on this an awful lot. It seems in this case that you waited for the Drumbeat and rushed to stick in the first post. I don't think there is anything wrong with mentioning the event, but as I noted in my first comment, it is my opinion that the frequency is "getting to be a bit much". It is my right to make that observation and I stand by it.
Your defensive reply and particularly this point, do seem to reek of desperation.
Regardless, I hope the event is a success and you get your money back.
A Scholar Is Alive, Actually, and Hungry for Debate.
Nice try, Hugo.
This is GREAT stuff! This guy has cajones, that's for sure.
This may not be appropriate for this blog, but if some one would like to make a few Million before the SHTF, design a complete line of no spill coffeepots to replace the current pots supplied with Mr. Coffee and other makes. I am sure some one would like to cash in on this idea, and advertise it as the no spill replacement pot, however I have solved the problem for myself. Rip a half-inch strip of tape from a roll of duct tape and cut a 1-inch length and paste it below the lip of the pour spout so it extends beyond the spout about a 1/8th of an inch or more. Problem solved, of course my wife says, well now doesn't that look lovely, yes but look at all the spills I avoid, and the dishrags no longer turn brown. Now I am not a conspiracy advocate however I believe the paper towel Mfg.'s are subsidizing the coffee pot makers and some one is being paid off.
Good stuff. I'd give you 'Post of the Day,' but I think I already awarded it to Step Back. Runner-up.
i had an automatic coffee maker, but i have to say i prefer making it manually using a #4 paper filter.
i always wonder, what is more renewable - using water to rinse off the old filter, or using a new paper filter ?
as far as the paper towel - they come in very handy.
especially if you've run out of toilet paper 8-/
Bravo for Hugo Chavez !
Probably the most renewable thing is to compost coffee+filter.
The Bin Laden family are Royal kin-folk, and the Al Quida financing is Saudi, plus I think Osama is most likely in Saudi Arabia in one of his half-brother's homes, not in the hills of Pakistan with the Pathan tribe. Dialysis takes sophisticated medical equipment. The Neocons are protecting him.
The sulfur smell in the air isn't just from sour crude.
That's what Hugo Chavez said Wednesday at the UN, something like 'the devil was here yesterday', meaning W, and 'the smell of sulfur is still in the air'.
KSA already made its play: Decreasing demand will force production cuts across the board at OPEC. That's what they will say.
long time lurker and occasional amateur agitator, but not familiar with that one.
-PoP
http://en.wikipedia.org/wiki/Saudi_Arabia
Now it seems there's an alternative to the hobo life:
Anyone know where you sign up to be a professional agitator?
That comes as a surprise. I most sincerely doubt it.
Rat
PS When I was in school, they were called "outside agitators". I guess cuz we weren't smart enuf to agitate on our own. Which is probably why I am a Wharf Rat, and not a Maytag.
Jimmy Cliff
Though I was about to go cycling along the Moselle river on this sunny September afternoon in central Europe.
Now I'm glued to the flatscreen again ...
I wish I could have had a bike there.
Here is the Satellite picture
http://www.npmoc.navy.mil/jtwc/satshots/io0406sams.jpg
Here is the projected strength.
http://www.npmoc.navy.mil/jtwc/warnings/io0406.gif
both from the Joint Typhoon Warning Center
http://www.npmoc.navy.mil/jtwc.html
I think they should name it typhoon george. It just seem the appropriate thing to do.
http://rapidfire.sci.gsfc.nasa.gov/subsets/?ArabianSea
Be warned, these are some big files.
They are from a nasa near real time site
http://rapidfire.sci.gsfc.nasa.gov/subsets/
Yes, Yes, quite surprising. I thought I was the only one. My nephew brought me some new optical devices for my birthday. They are made in Germany by some American firms. Quite good. From my palace, I spotted something sinister. We decided to climb to the top of the Burj al-Arab Hotel to get a better look. Actually, we took the elevator.
You know it was me that decided to name it 'George.' My first choice was Muhammed. But that's so cliche. And it's not what you think. I had Democracy in mind. George Washington was the idea.
weather machine
But as a peak oil advocate, at least I can look forward to being tortured with green power. When the electrodes are clamped on my testicles, I will be secure in the knowlege that the amperage is provided by Gitmo's large, earth friendly wind turbines
Although I doubt that the insurance companies will be happy if you use a super tanker to play tag with a cyclone. I imagine that the sea's will be pretty rough, even outside the storm.
"social responsibility and surviving the oil crash"
the following quote:
"The press and the politicians largely denied
that the Depression existed". I think we are seeing
a repeat of this concerning peak oil. The Iron
Triangle existed even in the 1930's.
The following is an exerpt from a speech FDR gave at Madison Square Garden in Oct. 1936. It was the last speech of his 2nd presidential campaign. There is no denial.
He also bucked every trend of his generation, Congress, the businessman, everyone. The media was almost as corporate controlled then as now, and everything else was ran by corprocrats. So, while FDR was working hard to change things, the spinmeisters were working hard to undermine him. That is the source behind all the newspaper articles etc, that were mentioned earlier.
Things were so bad back then that corporate farmers who couldn't sell their crops at a profit dumped kerosene on them and burned them, rather than letting starving people eat them. (BTW, a good ficitional account of these days is Steinback's The Grapes of Wrath.)
Can you imagine this rhetoric today??? And he carried 67% of the vote in 1936. Come to think of it... he does sound a bit like Fidel doesn't he? <bg>
"The Business Plot or the The Plot Against FDR was a conspiracy against President Franklin D. Roosevelt by a group of millionaire businessmen, led by the Du Pont and J. P. Morgan empires. Alarmed by the President's plan to redistribute wealth from the rich to the poor, they plotted to overthrow Roosevelt with a military coup and install a fascist government. The businessmen tried to recruit General Smedley Butler, promising him an army of 500,000, unlimited financial backing and generous media spin control. The plot was foiled when Butler reported it to Congress." Attempted Coup Against Franklin D. Roosevelt
And remember FDR was the only president to serve 4 terms. The laws were changed to a max of 2 terms after his presidency.
"Things were so bad back then that corporate farmers who couldn't sell their crops at a profit dumped kerosene on them and burned them..."
I recall that Carter said his father was ordered by govt planners to destroy some cotton crops and his father thought it was a sinful act but had to comply.
Carter also said the govt work programs were not effective in helping the unemployed. I was surprised to hear a former Dem president make such an admission.
When I finished the book I had the sense that what got most people through those difficult times was a strong sense of community and a level of personal responsibility that we rarely see today.
I have spoken with elderly relatives who grew up on farms and had a lifestyle very much like Carter's. I still smile when I think about one of these relatives telling me when the doctor made a house call he would leave with a live chicken as payment for his services and this was considered a very generous level of compensation.
I thank My lord and Personal saviour that "business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering" are standing tall again.
The denial issue is really during 1930, 1931, and 1932. Of course there were the nasty aristocrats who privately thought the Depression was a good thing because it would starve the unworthy. There are a lot of Americans who think that way, perhaps now more than ever. Every person who professes hatred of FDR is professing utter indifference over the fate of the millions of Americans who went hungry under Hoover, no matter how much he hides behind the Gold Standard, the Founding Fathers, and that Austrian autistic Hayek. Maybe that's how superior humans think. In that case, I'm cheering for our extinction, because our evolution into libertarian humanoids is not worth the current suffering of most of us.
Peak Oil has forced me to look at the New Deal differently, though. Of course if Communists or right-wing fascists had taken over America instead we would still have burned up oil and polluted the land. There's no point faulting FDR for believing in infinite growth when gas was 10 cents a gallon. The capitalists of that time were so arrogant and violent (the National Guard was called out about twice a year to suppress strikers) that they had no choice but to promise a future of infinite growth to get their wage slaves to tolerate them. Anytime a country suffered a long downturn it ended up on the verge of revolution.
The problem is that the forced-growth Keynesian liberalism of FDR, later the official theology of Marshall Plan Europe and Japan, was so successful that it ensured the resource crises would start decades sooner. The alternatives to FDR would have given us more time thru sheer incompetence and meanness, but only until revolution broke out. So I am rather suspicious of people at this site who think we can return to medieval steady-state economics while smugly preserving the fantastic inequality found with private property.
I'm with you on most of your post but would rather make my original point over and stronger. Will started this by saying there was no Depression denial and then backed it up with "evidence" that was just meaningless, beside the point and thoughtless. tate423 gets in and says he thought everyone loved FDR.
There's leftist history and Marxist history and jingo history and Hollywood history and there's total bullshit.
Was there denial? Jesus Fucking H Christ there is always denial. Was there a time when everyone loved just one politician? Maybe if you believe the fantasies of Joe Stalin or Saddam Hussein. Or Karl Rove. My own grandfather, who lived through the Depression, at the absolute bottom of the lower middle class, relentlessly claimed that Hoover did no wrong, that FDR initiated the Depression in 1932. History at TOD is scarcely a hair better than what granpa talked. Few here have a concept what history is and everyone seems to believe that if you can supply a quote or a link you've established something. Wrong.
(Click to learn why 1984 is one of my favorite books. It did happen. It happened here. It happened to us. Only a few elders remain & remember.)
http://www.iht.com/articles/2006/09/19/business/rglover.php
From Singapore, where the IMF and World Bank are meeting.
Will we slow or tip into a recession?
Reasons:
WeatherGlass: "There is no evidence AFAIK that any application of technology yields abundant, cheap energy."
Nick: "Wind power has an energy ROI of around 60. Solar PV is 10-20+."
WeatherGlass: "nobody has so much as come with a signficant, viable improvement for electricity storage over the lead-acid battery"
Nick: "Both NIMH, LI-ion are improvements. Batteries are improving 7-15% (depending on chemistry) per year - it's more reliable than Moore's law.
I'm not saying that we're home free - we have to spend the time and money to implement these things, and we're racing some clocks, but the technology is there. "
My (WeatherGlass) reply today:
Then where are they? Why doesn't wind produce more than 0.1% of our electricity? Why can't I pull into to a Goodyear service center and have the guy install a 600 Amp-hr Li-ion battery into my Honda for $200 and a 60,000mile/5 year warranty?
It's one thing to assert a technology has an EROI of such-and-such, or that the charge density developments of Li-ion batteries are even exceeding Moore's law (which, BTW, I thought meant semiconductor densities doubled every 18 months, or 60% annual increase, associated with concommitant decreases in retail cost, since the mid 1960's. Battery technology is not advancing anything remotely like this).
There is vast wealth to be made if you can scale it and sell it, it's not as if nobody is trying. But these things are not scaling because of significant, barriers, technological and otherwise. A lab bench demonstration is light years from retail shelves.
I remember reading popular science 25-30 years ago. Wonderful developements in energy production and storage were just around the corner, and anticipated to be old hat long before 2006.
They did this with coal, mules and sweat.
That nation was the United States of America, 1897-1916.
BTW, US wind production is now over 0.1% and growing quickly.
And hydro pumped storage is an excellent way to store electricity.
That's interesing (FWIW, I vaguely remember the last few red trolley cars in Anaheim, CA in the early 1960's).
It seems technically and financially feasible (compared to the $500 billion Iraq war, and $200 billion savings and loan bailout - remember?) to reproduce the electric trolley system.
The benefits seem so obvious, and the barriers seem so tractable, I wonder why it's not being done? Or is it quietly?
Secondly, someone (probably me) should sit down with a paper and pencil and calculate just how much energy we could store in water towers. Maybe there is a practical solution to electricity storage under (over?) our noses, at least for residential use.
And Light Rail is slowly growing (Phoenix, Charlotte & Seattle first lines under construction; additional lines about to open in St. Louis & Denver, others under construction (Portland, Los Angeles, Dallas, etc).
MUCH more is desired, but the Bush Administration is promoting birth control. Get 80% or better fed funding if a city builds improved bus; 50% or less if they build Urban Rail. A special small streetcar funding grant was blocked by Bush Admin rules.
We could start on about $120 billion worth of Urban Rail within 1 to 3 years used existing (some old) plans. Everything from NYC 2nd Avenue subway to New Orleans Desire Streetcar Line.
I also question your claim that batteries have not improved. Why do cell phone batteries keep shrinking while lasting longer? How about new appliances like hand-held cordless saws?
This does not mean I think electricity is the answer to all our problems, but wind is a silver BB in the shot gun load.
The American Wind Energy Association site is impressive, I only perused it and couldn't find those 10% numbers for TX and CA; I'm a bit skeptical. The 0.1% figure (for combined wind/solar) I recall from a year ago from presentations posted(if memory serves) by Matt Simmons, and Stuart Staniford. I'll stand corrected if newer figures are better :o)
Still, they are building the heck out of windmills, everybody loves them in West Texas because they pay about $1500 a month per windmill to the ranchers (conversation with a landowner) and add non-resident taxable value to all the schools, as well as good paying jobs for local residents. They are helping to offset declining oil and gas production. And , unlike oil wells or George W. Bush, there is no lingering sulfur smell.
Alan is fighting the good fight with the notion of pumping water into energy reservoirs. This on the surface looks just like the kind of technology solution that has an outside chance of working. Investments in low technology are probably more likely to benefit society over time than high tech solutions. Still, I would like to see some numbers.
If you google, Sharman why wind power works for Denmark, you can see another way to optimize wind power.
If anyone is aware of better batteries in the 12 volt/ 300 Ah category, please let me know, and I will convert (unless it is orders of magnitude more expensive).
I put in a 3.6kW system 6+ years ago. It operates at 48volts DC through dual Trace (now Zantrex - sp) 5548 inverters to give 220volts AC. My battery bank consists of 32 L-16, 6volt lead-acid batteries in four banks of 8 batteries each, wired in series for 48volts DC. I also use desulfonators (Solargizer) to extend the battery life. The Solargizers are for 24volt DC systems so I use two that I rotate through the battery banks (one week per bank). The Solargizer comes with a little PV panel but I set mine up via transformers so they run 24/7 rather than just a few hours a day.
L-16's are about the best battery choice for AE storage systems since the other lead-acid choices don't last - like golf cart batteries. There are far more expensive lead-acid choices, for example, the ones made by Pacific Chloride.
FWIW, I also used to have a 1.5kW Whisperwatt wind generator. I sold it because I either had to go to a much higer mast or move it to another hill about 1,000' feet away. I didn't feel like additional work and expense.
I don't know if this helps or not.
Todd; a Realist
With all the talk about upscaling NIMH's and Li-Ion, I figured I'd troll around and see if anyone had any knowledge of whether, even for a tiny system such as ours, these could be made to work.
Until someone like me can store electricity in an advanced battery, I'm saying that they are still in the toy stages.
It's big because it has high loads. We are on the grid in the boondocks on top of a mountain, in fact we are the end of the line. We use it when the grid goes down which is more often than is nice. Also, we have TOU metering (the PV isn't grid tied)and we run the PV system every day from about 10:30AM until 6 or so PM (peak rate is from noon to 6PM weekdays).
We have a 450' deep well with a 2hp pump. The system is also used to run the 40 gallon electric hot water heater. Now, even my system won't run these things continuously so I have some work-arounds so they cycle to allow the batteries to recover. As far as regular household stuff goes, we have a 25cu ft freezer and a 25cu ft fridge/freezer. All the lighting is CFLs and has been for years. Although the inverters will produce 10k watts continuously, I really try to never pull more than 5k watts to save the batteries. But, sometimes I screw up and both the well pump and water heater come on a the same time and it's a little over 10k then.
We can run the electric range on the PV too - just not all the burners at once. BTW, we have a back-up 6 burner wood cookstove in the kitchen too.
One of the minor household demands is the little circulating pump on our solar hot water system. This is usually only used in the summer and drained down for winter since we have a heat exchanger in our wood heater and it would drive the differential temperature controller nuts trying to do two systems at once.
Todd; a Realist
http://www.pgecorp.com/corp_responsibility/reports/2003/env_expanding.html
Pacific Gas and Electric Company Adds More Renewable Geothermal Energy to Electric Mix
New Agreement to Provide Enough Renewable Electricity for More than 125,000 PG&E Customers
PG&E has a long history of developing, generating, and purchasing renewable power. The utility currently supplies 32% of its customer load from renewable resources: 20% from its large hydroelectric facilities and 12% from smaller renewable resources that qualify under the State's Renewable Portfolio Standard (RPS) Program.
http://www.pge.com/news/news_releases/q3_2006/060728b.html
2004 energy portfolio
http://www.pge.com/education_training/about_energy/how_electric_system_works/2004_generation_portfol ...
about potentially groundbreaking electric auto development, possibly based upon using a capacitor.
As I analyzed the electricity requirements of this thing (if it works), I woke up to the enormity of the disruption this thing would cause.
The average household uses about 20 KWh/day, but if the homeowner gets an electric car that holds a 52 KWh charge, they could instantly double or triple their electricity usage.
Since our grid is in very poor shape, any sudden surge of electric car usage may well crash the grid.
Who would pay to upgrade the grid? Where would the additional fuel come from? Would this be self directed(by the power companies and their associations), or would the government get involved and mandate a stronger and larger grid? Would this mandate hold water?
Reflecting on the realities surrounding the grid, as it exists, is a conversion to electric vehicles a realistic option?
What is more likely-the automobile industry goes out of business because of lack of gasoline, the road building industry collapses, the refining/marketing segments shrink to provide products only for the rich, or do we start finding something else ? Electric cars look like a pretty good bet to me, considering our society.
But of course, if we were rational and elected honest, smart leaders we would have electric rail mass transit. . And if frogs had wings they wouldn't bump their butts when they hopped.
Could I encourage you to remove the value judgement from this statement? Whether or not their lifestyle will be "improved" is a matter of what you are measuring. Perhaps you could sat that they "want to live a hugely western lifestyle"?
I don't think most people in the world want all this.
I would hope not.
But those that sell it want everybody to want it, and that is enough.
our desires are so easy to manipulate.
Well said.
Saw a headline somewhere this morning:
Reminds me of what Lou Reed said 20 years ago about Americans:
Which is exactly what was said. It is more work to stay fit, than to get fat and this isn't localized to only the US. Kinda funny, but sadly true.
Great minds, etc.
And just for the record - an easy life is not an "improved" life. Nor is eating too much necessarily and "improvement" over eating too little.
"But of course, if we were rational and elected honest, smart leaders we would have electric rail mass transit."
Matt Simmons has been arguing for this and for revitalization of rail for cargo. Of course long-distance rail could also be revived to displace air travel (airline consume 10% of world oil production, no?).
Simmons is an insider, so I wonder why these things are not being done.
TPTB surely must see the sh*t making a bee-line for the fan. It would be a simple matter to launch an ad campaign to mobilize public support, allocate the money and give out the contracts.
Are TPTB just going to let TSHTF? If so is it because they are stupid, feel they can't, or that they are just fine letting this go down?
I think y'all perhaps overestimate the value that these masses have in the future US economy. There is no more large scale manufacturing base, no productive workplaces to bring people to and from.
Those same people will to a large extent live on the brink of insolvency, so they have no money to spend in the destinations the transit would deliver them to.
Why construct such facilities for people who can neither produce nor consume? It makes no economical sense.
In our society, your economical value is your main, even only, value. Those that still do produce and consume have a highway system at their disposal that will have lots of empty space soon.
Dude don't be a dumbass. It should be obvious what the plan of TPTB is. TPTB are invested heavily in weapons technologies. The U.S. spends something like $100 on war for every $1 on renewable energy and that's not even counting the costs of Iraq, Afghanistan, or black book operations that don't appear in publicly available sources of information. The plan is stunningly clear: make money from resource wars. Everbody, including lots of intelligent TOD members, seem to think, "well if we just alerted the proper people . . . " or "once TPTB understand the severity of the situation, I'm sure we can get them to suppert sensible response X or reasonable mitigation strategy Z."
I wonder if these people with this attitudes are paying the slightest bit attention to world events sometimes. I know they are since they're posting on TOD so I'm left a bit befuddled how they could hold on to hopes/ideas that are so incredibly contradicted by easily obtainable facts about global financial flows.
'Our Defense budget is 3/4 of a trillion dollars. Profits margins are up by 25%,
If war is that profitable, you can be sure we'll see a lot more of it.'
Bechtel and Halliburton pick up the pieces.
Now-now-now. The implicit understanding is that TPTB are a giant parasite. No argument here. But a parasite that kills its host is one dead parasite.
There is no way advanced weapons technologies can be developed and deployed without a semi-intact ecomony supporting them, never mind the costs of actual war.
Money as we know it loaned into existence on the expectation that tomorrow's growth will pay the interest. If the underlying economy goes 'phffft', there goes your capacity to wage a resoure war.
If there is no provision for the economic consequences of peak, then that is the end of economic growth, money as we know it, capitalism, the whole shebang. If TPTB are simply letting us run into a brick wall, they must have plan in place for picking up the peices, and starting all over as in retro-feudalism.
If that really is what planned, I don't see how they intend to preserve the apparatus of repression that would be required for this new order. This view makes no sense.
I have no doubt the "ship of state" has a direction, but from all the evidence, I can't really make heads or tails of it. If they plan to run it on the rocks and enslave the survivors, I don't think it will work in the long run, but God help us all.
Leaving aside the level of paranoia such a belief seems to suggest, it does hint at a similar "concern" when it comes to globalization of the western capitalist economy. Many people continue to talk about nations or nation-states as if they had any meaning to TPTB. Globalization means that they don't have to care. Those who manage this system are just as happy to move the corporate infrastructure whereever they can make a buck. They will not, as a class (group if you don't like the Marxist overtone), necessarily look out for the future of the american nation (though they are likely to continue to use the U.S. government to advance their cause). If they can make more money by employing people in outer elbonia than they can in north america, know with certainty that they will do it. Nor do they have to protect North America as the primary consuming location, their are plenty of places where people are just as happy to buy their plastic crap.
I think this points to one thing that we can count on in the post oil world, the nation states that we now know will not exist in the same configuration in the future.
And to illustrate that point here is an article describing how the VP has placed a large amount of his assets into " high-quality foreign bonds (predominantly in Europe)"
http://www.kiplinger.com/personalfinance/features/archives/2006/05/president.html
I completely agree that TPTB don't care where their bread is buttered, so long as it is buttered by someone, and for that reason, old concepts of national boundaries and allegiances have often been de-emphasized or derided as antiquated (recall GHW Bush's "New World Order", Clinton's NAFTA, or Bush Jr's current "humanitarian" appeals for legalizing the importation of large numbers of low-wage workers from south of the border). So, the problem isn't one of maintaining national boundaries and identities -- after all, those things often get in the way of western economic goals (recall Cheney's reaction to Putin's moves to exert control over Russian energy supplies). The problem is making sure that that TPTB have the first pick of the goodies.
It has been speculated by some on TOD that Bush/Cheney are in the "Doomer" camp. In unrelated posts TOD'ers have suggested that TPTB have access to much more information than we "little people" have and so they (TPTB) should be in a better position to know whether there were indeed new technologies coming down the pike that would save western civilization. I would suggest that both are true and that the strongest evidence that species homo is in for an ugly future is to be found in the futile American/European military adventures currently underway in the Middle East and S. Asia.
I would suggest that both are true and that the strongest evidence that species homo is in for an ugly future is to be found in the futile American/European military adventures currently underway in the Middle East and S. Asia. " >>
I mentioned that they have more info than us, and I agree with your conclusion. There are a lot of things coming to a head at this point in time. Peak Oil, The Dollar staying up, the FED Raise rates, kill economy, Lower Rates, Kill the $USD, The Middle East/IRAN/IRAQ...,
I am keeping my ears perked for the next 6mos/yr.
Okayyy.....
I don't argue that the TPTB are wedded to any particular nation-state.
But they do need one thing at a minimum: They need sufficient social cohesion and organization through which they can exercise power. Even as basic a construct as "ownership" pre-supposes a functioning society. If you just let TSHTF with peak oil, you endanger this big-time.
You can't "make money" without society and economic growth.
For the life of me, I can't see how the direction things are heading will suport this.
Peak oil/nat gas are immanent or here. For a few years there will be adjustments, efficiency improvements, pricing out the 3rd world and so on. Then there will be year-on-year "demand destruction" because all they easy efficincy gains and adaptations are wrung out. Now loans/bonds can't be repaid, loans can't be made etc.... There will be increasing crises and dysfunction. Then at some point, the economic/social organization of capitalism will be over, period.
TPTB must know this, and must be planning for it. So shouldn't they be trying to delay it? (e.g. electric trolleys, conservation and such) I don't see the evidence. So are they putting together a plan to re-introduce feudalism? Apart from last year's bankruptcy "reform", I don't see any steps that might suggest this sort or preparation.
Being cynical to the max is not sufficient to understand things. The stuff (the war, economic decisions, debt, environmental, transportation/energy policies...) going on makes no sense to me.
You don't join TPTB by being technically literate. You get there by being a ruthless narcissist who is good at acquiring power and money. It is possible to be powerful, ruthless, intelligent and clueless at the same time.
If you're right, we're screwed. Soon probably.
Then can one organize a life-boat party, and build a life-boat with one's self, loved ones, and minimal community in it? With luck, said Powers That Be might not survive (in organized form at least) the consequences of their own cluelessness.
You seem to have thought about this. If you believe it, what are your plans to cope?
I'm not ready to rely only on prayer.
Every action has an equal and opposite reaction, and every revolution has a counter revolution.
We had a earth-shaking cultural revolution centered around the year 1968. And when it ran out of steam, the reactionaries joined forces and counter attacked.
Using W as a flag, they've seized most levers of power. But as we know from history, counter revolutions burn out as well, and they're usually replaced with moderates who have learned from both swings of the pendalum.
As fortune would have it, the reactionaries have total control just when global civilization (starting with Columbus and gathering force for 500 years) is peaking.
Therefore, they will get all the blame for both the peak and whatever follows it. More importantly, they have it in their power to set the course, so that the initial stages of what is to come is determined by them.
They can't be. Why invade Iraq if you're cornucopian?
Bush-the-first is an oil man, and former CIA head, Bush II, Cheney, Condi Rice et al are all from the oil business. If they were cornucopian, they'd still be in business raking it in. The MSM wouldn't be in overdrive trying to discredit peak-oil if TPTB felt threatened by the public realizing it (although I grant westexas in his Iron Triangle hypothesis has a highly plausible explanation for this latter phenomenon).
I don't think it's a coincidence we have this constellation of faces, events, and peak oil at this time.
As for the Life boats, they are expensive and kind of pointless. I read an article years ago about what happened in Bosnia when things fell apart. The basic point was that individuals do not survive only communities. A man or family living alone will eventual fall prey to nature or their neighbors. There is a reason mankind originally organized into tribes and villages.
As for me, I have a little food and a lot of guns, but I'm not under the delusion either will save me. I've also planted my backyard with about a dozen fruit and nut trees and have been experimenting with gardening.
Try this link
http://independencejournal.com/
scroll down and click on the WHAT IF links.
I know it is just a means of expression, but to be accurate, there never was any decision to organize into tribes or villages, there never was any "original" in this sense.
By the time you can meaningfully talk about human beings, homo sapiens sapiens, we were already group oriented animals, tied by kinship and shared activities. Our socialness goes way back beyond our humanity.
Well, that's if you accept some form of evolution, if you think the world is only 6000 years old, then all bets are off.
We are apes, and not so terribly different from other apes in our basic living arrangements, if you strip away all the crap and think it through.
Which notion, if you are a biologist (as I am) does not necessarily fill you with hope that we will come to some graceful "solution" to our "problem". Primates are wired to the max, in general. I should know, some of my best friends are primates :-)
What is "natural" for us? What is a "proper" way for us to live? We are so smack in between the real world and our own virtual world that, in my opinion, these questions represent the maddening crux of the human condition.
Whatever is "best" for "us", I have a strong sense that it's not where we're at now. I have a strong sense that we've been working on entirely the wrong project for the past several millennia. We've applied ourselves diligently, efficiently, and seemingly effectively, but alas, it was the wrong project.
Just sayin'.
Back to your regularly scheduled virtual reality. :-)
- sgage
We crave fat because it was difficult to get in our Stone Age past, and necessary to support our large, expensive brains. That's not a problem today, but that ancient hardwiring leads us to suck down Doritos even if we're overweight.
In developing countries, the poor sometimes sell their blood or use money that should buy food for their children to buy movie tickets. This seems highly maladaptive at first blush...until you realize that our chimpanzee brains don't distinguish between the pretty images on the screen and real people. We are hard-wired to be interested in our fellow primates, especially attractive ones. And keeping up on our neighbors' doings was once a matter of life or death. What Tom Cruise does really doesn't affect the average Joe, and Paris Hilton is not a potential mate for anyone except hunky young tycoons...but don't tell our Stone Age brains.
and definately don't tell Oil CEO.
By the way, I partially disagree on the fat craving. I think it's also habit. Same with sugar. Once you cut out sugar, cut down fat and eat wholoegrains, that's what your body associates with food.
What if you are in the community yet do not PRODUCE? Too old,crippled, deaf and dumb, or in any manner NOT able to carry the load required?
Suppose you have quite a few of these types or they began to become more prevalent?
Suppose an alpha male arouse and your loved ones(females) transferred their allegance to that male?
My point is the rules and regs. How do they come about?
I think far better is ONE family unit. More than one you get wife-swapping and all other nasties. (Obligatory smiley here).
Just wondering how this all works out. Seems a mite tricky. The one with the biggest gun rules? The one with the most testerone? Whatever?
Don't you think that 'communities' might war on each other?
"lets take what they got,,get some female slaves too,come on lets roll"
I think where your disconnect comes in (I don't believe its a lack of understanding, you seem to get it pretty well) is in the belief that, looking at the same information, that TPTB would draw the same conclusions you do. If we start from the assumption that they are "true believers" in the current economic system (a fair assumption given that it has benefitted them so), then why would you expect them to act in any way other than in an attempt to perpetuate it? There is no master plan here, it is the logic of the system itself. They believe that the end result of this logic is global trade system with them at the top. They will also continue to believe that any setbacks suffered by, say, the american middle class is a temporary adjustment to globalization.
Oh, and just for the record, I'm way past cynicism and into the amused observer stage ;-)
Thank you for defining my current state of mind. After a number of years of research & background reading.
Somewhere past cynicism.
Amused observer.
I am hoping Kunstler proves to be right when he said that "They will be lucky to be able to answer the phones"
And After watching Katrina/Rita and what resources were brought to bear on New Orleans, I asked myself, what if 10-50 cities went code red.
One way or an other, things might get tough.
What we have is just endless black reaction, endless counterrevolution. The current crowd could care less if things fall apart. They figure they still have the guns and the only game in town.
Yes. Is Bush's rationale for torture and wiretapping one whit more or less than "L'etat, c'est moi"? And Bush surrounds himself with nutjobs far to the right of that>
They just take up space. In an economy such as this that is all that ultimately counts. It's not your pretty blue eyes, it's 'what have you done for me lately?'
You keep a bunch to work the land, a few to clean, a few more to protect you, and the rest will be in coal-pits, in the army, in brothels, in their mass-graves, or beating each other's heads in over scraps of food, or shoesoles, in some landfill.
That is an accurate picture in quite a few places in the world today, not some made-up dark fantasy.
The whole thing can go many ways, and what do I know, but it's naive to presume that most people over here will be an asset by 2020, or that anyone cares to keep all this alive because it's so beautiful or valuable.
We have lived almost solely off credit for 2 decades. The credit is gone. How will you produce what you need to pay back what you owe? Not just your personal obligations, the federal ones must be paid as well.
This land is your land, and this debt is your debt.
This society has been kept alive by:
This is of them.
Of course, YOU will survive what's to come, because YOU aren't 'worthless', YOU have skills, and YOU are oh so superior to all the others out there who don't have your brains, cunning, and foresight.
Have I hit the nail on the head?
Who are YOU to decide who is worthless or not, who is needed or not, and who should live and die? You basically state that a good portion of the country should be killed -and good riddance. (Though of course YOU wouldn't be one of them.)
Another assumption is that the only ones to survive the coming 'kill or be killed' ethos are the 'fit' ones. Survival of the fittest? That ways lies madness, darkness, destruction, and the downfall of the human race.
The ones who will not just survive, but prosper, in what is coming will be the ones who recognize that survival lies not just in themselves, but in a group, and who band together to form communities.
Your own head perhaps. You read presumptions in my words that are simply not there. I have never said that I am better than anyone else, or have a better chance of surviving, or that I decide who is worthless. And I certainly haven't said that "a good portion of the country" should be killed, and you should be careful when you put that kind of words in other people's mouths. That is not a joke, and I resent it. There are limits.
I paint a picture that repeats itself all over the world and through history, and there is no value judgment anywhere in there. I'm trying to say that this can happen here too, and it's not bright to have too rosy a picture. Down the line, people are simply resources, and we are no different. I could have quoted Hanson's words about a bio-weapon used against a population, and chose not to. I try to say that when a mass of us neither consume nor produce in this world of ours, it's time to watch over our shoulders.
Personally I'd give the best chances to the richest and the poorest in the world, the first because it's easiest for them to adapt, the latter beacause the have the least adapting to do. The first have the most resources, the latter need the least.
I have no illusions about my survival.
The reason I find it important to write a post like the one above is that I see a lot of easy assumptions being made, that in my view lack the full scale of what is happening. The developments in the North American economy point down, and only down, and people are too complacent about that.
To see the reality of declining resources is not the whole story; there are a lot of things that exist only by the grace of a century of abundance, and one of those things is people, billions of them. Nothing arrogant about noticing that. Our problems are much more complex than can be solved by putting some corn in your vehicle, or changing a light-bulb. It's far too late for that kind of stuff, our cradle is 50 years of denial.
"I could have quoted Hanson's words about a bio-weapon used against a population, and chose not to"
Dang, I was going to post the link of those dioff.com articles as a possible scenario, but now it would be a cheap shot to say..
http://cryptome.org/bioweap.htm
http://www.emergency.com/1999/alibek99.htm
And also remind everyone about the only bio-attack on the US of A, The forgotten/CollectiveMemoryErased...
"Anthrax Letters" (aka the Ames strain from Ft. Detrick).
Which just happened to arrive in Leahy's mail box by chance a couple of days ahead of him surprisingly voting YES for the patriot act. Hmm..
Who did that foul deed anyway, Did anyone get the conclusion on that one???
Anyway... Dang.
Maybe, but holding onto power still requires social organization and resources to support and equip your minions. The Nazi's had years of preparation with "clubs" that were really networking/education organizations that prepared members to step into the German beauracracy once the Nazi's had power. Then they established "Hitler Youth" corps to condition young people to cruelty, and so on.
True, the US military is clearly planning for a energy-strapped future.
But it takes an awful lot of planning to organize the survival of a select minority, never mind preserving power in the event of a "die off", if indeed that is what's planned.
Again, events have the appearance that we are collectively going to run off the cliff, with no signs of preparation for ANY future. But I just don't believe that is reality, and wonder what is really going on.
My experience of pols is that their most consistent trait is alcoholism. Lechery number 2. Salemanship 3. These folks are not planning past the next election. They hire RAND and other like them to do the deep thinking for them. And ignore that advice anyway.
"Are TPTB just going to let TSHTF? "
In a simple word. Yes.
They are driving the car into the wall on purpose at this point. They know all we know and more. PO, Financial Crisis, GW, Housing bubble, etc.
Imagine if there is a huge global meltdown in the financial Markets, The dollar becomes worthless.
China implodes with it's population.
Unemployment 10,20,30%.
People loosing their homes...
Hmmm. $USD becomes worthless. Good time to institute the Amero new currency for North America.
Consolidate Canada, US, and Mexico.
180 Days - A Critical Time In Economic History
<SNIP>
I truly believe right now - today - we are entering into a 6 month period where world government's responses to economic conditions will determine if we move into the "end game" of our US dollar fiat currency in 2007 or if it gets delayed until 2008/09. This time period we are now living in is critical. Here I believe is why:
<SNIP>
This essay does not even cover the geopolitical games that are in dangerous phases (Iran's nuclear program, Iraq's instability, Israel's conflict with the Arab world) that could precipitate a move to the end game. What is certain however is that the end game - if it comes within the next 6 months or 6 years - will not be pretty. It will be a time of turmoil and volatility the likes of which we haven't seen in decades. The powers that be are not yet ready for the Amero. The Security and Prosperity Partnership ( http://www.spp.gov/ ) isn't set to have real legs under it until 2010. The question dead ahead is - will the global markets cooperate?
http://www.financialsense.com/fsu/editorials/2006/0921c.html
Everything from the Patriot Act (that was approved the day after Leahy and Daschle got their mail with some Ft. Detrick Ames strain Anthrax, Hmm I wonder why we NEVER hear that brought up by George(nor ANYONE) when talking about the terrorist threats? ), SPP, Code yellow, code orange, code Red...
Moving along quite on schedule.
From a personal standpoint, it won't be the cost of fuel that forces me to abandon my automobile (theoretically, at least, I could limit my driving to the amount of fuel that I can afford), but it will be the associated costs of automobile ownership - care and upkeep (a car ages even when parked), insurance, licensing, etc. Once we reach this point, the auto industry will have a hard time selling the average person a new car -- at any price.
Currently, my wife and I each spend about $5,000 per year to operate our vehicles (both are long since paid for). This works out to roughly 15 percent of our take home pay. We're very close to saying we're going down to one vehicle.
Why not replace gas stations with these "powerblock" stations, whereby you hotswap powerblocks on demand. The used powerblocks could then be transported via light/freight rail back to recharging stations located near powerplants so that the only additional infrastructue needed would be more powerplants, and the distribution wiring from the powerplant to its nextdoor neighbor the "powerblock" recharging plant. Recharged powerblocks then get shipped to powerblock distribution stations(future "gas" stations), and the cycle repeats. Instead of paying for gas, you pay to "rent" powerblocks.
An implementation of standards might be needed so that all car companies have to use the same(compatible) types of powerblocks so that there won't be monopolistic oppurtunities, but solving that, consumers would then be able to be presented with choices in powerblock providers. If I wanted powerblocks recharged purely by Green energy, I could pick a powerblock station that caters to that desire.
Electric vehicles have a fatal flaw vis a vis scaling. Once enough people convert to them, the grid crashes and not only does transport suffer, but the entire electic based system crashes as well.
Coal production is going to have to grow at an alarming rate just to cover for declining natural gas; while hydro is static, and unless nuclear is be resurrected, there will be an additional hole left by decommissioning old nukes.
Meanwhile, solar, wind and other alternatives will have to grow exponentially just to be relevant.
So, any electric vehicles for the foreseeable future will be just one more burden on an increasingly overtaxed grid. Without fusion or some such pie in the sky alternative, it won't work without taking the entire system down.
... Except for marginal users such as myself; we have an electric scooter for short runs, powered by our PV system. We'd love to have something more substantial, powered by PV electricity, but I don't see it.
The "powerblock" device whatever it turns out to be is just half a solution. And my reply was geared more towards how do we manage this half of the solution.
I'll be the first one to agree that we still need options to deal with the other half solution in that we need more generating capacity if we pursue this on a <bold>scale that meets current demand</bold>.
But then, I'm not sure, or even in favor of supporting levels of current demand for mass levels of individual transport. Hence I think that is where AlanfromBigEasy and his rail push comes into play.
The fact that we built the Interstate system, suburbia, the electrical grid, and whole lotta rail in the first 2/3 of the 20th century does not mean we could easily do so now. Even with our larger population, better technology, etc. Tainter's declining marginal returns applies.
Westexas, as well as others, have made the arguemnt that it all ready is, and I tend to agree.
I don't think TSHTF yet, though. We may be like Wile E. Coyote, already over the edge of the cliff, but still running, not realizing there's no ground beneath our feet.
Now we got an alternative, the electric car. What uphill battles does the Electric car have to face? Roads? Nope.. already there. Factory improvements? Not really.. the grunt work has been done by its ancestor. The money being poured into Oil? Well won't need as much of that since we are going electric. BAM you have a source of funds. Powerblock rentals can be a revenue source to fund additional powerplants, recharging stations, and distribution centers(hell you could turn existing gas stations into distribution centers if you wanted to save money).
I'm not denying there are hurdles to jump. But the problem isn't insurmountable especially since a lot of the grunt work as already been done by the current ICE cars.
Coal will have to expand dramatically to replace the void left by declining natural gas. Coal will have to be converted to liquid fuels.
The problems have NOT been mostly solved, unless you're claiming the grid is robust and can expand dramatically without crashing.
How much has BMW paid towards the road system? How much has Kia paid for the road system? Should American workers be put on the street by those freeloaders, or should they pay their fair share?
This would be a clumsy awkward way to operate a fleet of electric cars, but possible. It also avoids the distribution losses of our electric grid.
But this brings up an interesting point...that I have never seen mentioned on TOD...
Do you really think TPTB are going to let us charge our cars with cheap domestic electricity that doesn't include some form of "gas tax"... or to put it another way... if we all switch to EV...where is the lost gas tax revenue coming from???
<shrug> You could just increase vehicle registration, and solve two problems at once.
You will not hear about a program to cut 25% of our automobile use by 2025 or, with the exception of California, any program to cut 70% of our carbon production by any date much less 2025. You will only hear about alternatives and about technology initiatives from the Bush administration. None of these people are serious about addressing the problem and are more than willing to sacrifice the future to continue business as usual and to stay in power.
The window is closing. Any program that just talks about ten years of technology, including Branson's, is just whistling past the graveyard.
I spent yesterday tooling around Boulder on the best technology yet invented to address peak oil and global warming -- the bicycle. And I feel better to boot.
It is not or shouldn't be about the technology.
Nate and I had a discussion yesterday concerning the pricing and nature of options. Having traded options for years, with some success but truthfully not very much, I feel I know options. (I did slightly better than break even over the years, but not very much.) And having read Nate's opinion that options have a formula that can give you the fair price for an option, I feel that I know options a bit better than he does. Don't get me wrong, I know there is a formula that is supposed to give you the fair price but in actuality that formula is not worth a tinkers dam. Explanation below.
Options come in two types, puts and calls. Unlike stocks or futures, which have only two positions you can take, short or long, options have four positions you can be in. You can either sell or buy puts and you can either sell or buy calls.
If you buy a put or call, you have the right, but not the obligation to exercise that call. That is, provided the put or call has interstice value, (is in the money). (Even out of the money options can be exercised but it would foolish to do that.) To exercise an option one must convert that option into the underlying stock or contract. Options are always exercised at the strike price. That is, if you buy an Call for XYZ stock at$30 when XYZ is trading at $28 then you have the right, but not the obligation to convert that call into 100 shares of XYZ at $30, any time you please prior to or at the expiration of that Call. If XYZ is trading at $40 prior to the expiration of your call, you can convert that call to 100 shares of XYZ at $30. You then have a paper profit of $10 per share minus the price you paid for the out of the money option.
A seller of an option, a put or a call, has the obligation to sell you that underlying stock, if you exercise a call, or buy that stock from you if you have a put, at the strike price which he purchased the option at, if you choose to exercise your option. All options that expire out of the money disappear into thin air. However the buyer of that option is out the entire purchase price and the seller of that option gets to keep the entire amount he received for it. Most options, like most futures contracts, either expire worthless or are settled for cash. That is, they are never exercised.
Now it would take a book for me to give you all the ins and outs of options trading. But I could do it if I so desired, having traded options for years and read several books on the so-called profitable strategies for trading options. But a general rule of thumb is; "sellers of options usually make money, provided their pockets are deep enough, and buyers of options usually lose money."
But here is the point of contention between Nate and myself, how to determine the fair price of an option. Nate contends there is a formula that one can use and I contend that the formula is virtually worthless. There are services and programs you can buy that will give you the so-called fair price of an option and even alert you when an option becomes under priced for buyers or overpriced for sellers.
Three things determine the price of an option. 1, the interstice value, or the amount the option is either in or out of the money. 2. The time left before expiration, (time premium). And 3. The volatility of the underlying stock or contract. There are three serious problems with any formula that uses these three pricing inputs. (Of course the price of the underlying security is also an input. That is a stock priced at $100 a share will usually have options priced about twice as high as a stock priced at $50 a share. But that is a given.)
The first is with #3, volatility. Volatility is like the weather, it changes daily. You may buy an option on a highly volatile stock only to then have the volatility disappear overnight and your option will wither away to worthlessness.
The second problem with the formula is that it ignores the trend. For instance during the last five weeks, had you a service that alerted you to over-priced or under priced option, it would have alerted you that calls on WTIC crude oil were dramatically under-priced and puts were dramatically over-priced. But had you bought one of those under-priced calls you would have lost your entire investment. And likewise had you sold one of those formula-derived priced puts, you would have been taken to the cleaners.
The third problem with formula priced options is execution. If you see an under-priced option and put in a market order to buy that option, the option will seldom, if ever be bought at the desired price. (A market order means buy or sell at the price the market gives you at the moment.) And if you place a limit order to buy at the desired price, you will find that the order will be executed only if and when the market moves against you. And if the market moves in your favor, you will find that your order is seldom, if ever, executed.
As I said earlier, pricing options using any formula is not worth a tinkers dam* and any trader will lose his ass if he tries to trade using over-priced or under-priced option alerts.
This is my last post on options and Nick or anyone else may have the last word. I was a little insulted by his insinuation that I did not know options. Having studied and traded them for many years, I do know options. I learned one thing during my trading years. That is you cannot understand options by only studying them. To truly understand the problems of option pricing, you must trade them. Though I primarily traded only stock and index options, the principle is the same.
Ron Patterson
*Tinkers used to make a dam of clay on the bottom of the pot he was mending. He would then pour the molten patch metal into the dam. After it hardened he would knock the used dam off to be trampled into the dirt. It was then worthless, just like any formula that attempts to determine the fair price of an option.
I think if you re-read what Nate wrote, you will see that that wasn't Nate's main point (although it was a secondary point).
Nate's main point was that by buying a put or a call, you indirectly have an effect on the underlying commodity because of the way the seller has to hedge. You also disagree with this, but didn't explain why Nate's argument on this point was wrong.
Nate says it works like this: as you know, the buyer of a put or call only stands to lose the money they he/she spends to buy the put or call, whereas the seller stands to lose a lot more. Nate says that the sellers try to hedge this risk by buying or selling the underlying commodity accordingly.
For instance, he says that if a company sells oil call options, then they stand to lose money on this deal if the price of oil increases and the call option is then 'in the money'. This is because the person they have sold the call options to then has the right to buy oil from them at a price which is lower than the price of oil. The way sellers of such call options hedge against this is by buying oil (or oil futures) when they sell call options, so that if the price of oil goes up, they win back some/all of the money they have lost on the call options on their oil futures.
Therefore, when someone buys oil call options, they indirectly drive the price of oil up since the company they have bought from buys oil futures for hedging purposes. Similarly, when someone buys put options, they indirectly drive the price of oil down.
I have seen this argument made quite a few times by those who say the trade in options does have an effect on the underlying commodity, and it makes a lot of sense to me. What I have not seen, is a proper response to this argument by those who claim that the trade in options has no effect on the underlying commodity.
That being said, my buying a call is not really moving the market. However if I exercise that call then I am moving the market. However I am moving the market because I am buying the stock, or futures by exercising the call, not because I am buying the call. Exercising a call and buying a call are two entirely different things. Likewise a man who buys a stock or futures contract then covers it with an option moves the market in one direction when he buys the stock, and it is moved in the other direction when and if the option is exercised. (The stock is bought or sold by the option being exercised.) Buying or selling the option itself however does not move the underlying stock one whit. Only buying or selling the stock or futures can actually move the market.
Now you may say that is splitting hairs. However I do not think so. My contention is that buying or selling the option, even if the option is a covered option, does in itself not move the market. It is foolish, to my way of thinking, to say that it is the buying or selling of option that moves the market. It clearly is not. It is the buying or selling the stock or futures that moves the market, even if it is done in conjunction with the selling of an option or the exercise of one.
The vast majority of people who sell calls or puts sell naked puts or calls. They get around the risk problems by selling puts and calls on a vast number of stocks or futures and doing it over a long period of time. If they lose on one stock or future they gain it back in another, or gain it back another day.
Selling naked puts and calls is a very lucrative practice if you have deep pockets. In the long run, option sellers make money and they make a lot more than the T-bill rate. One could probably make 20 to 30 percent per year on their money by writing naked options. The most successful traders anywhere are naked option writers. There are two parts to the price of any option, the inartistic value (amount in the money) and the time premium. The time premium ultimately always goes to zero. So if you write enough naked puts or calls you will always make money. And most option writers write only out of the money options. That is they have no interstice value, only a time premium. A time premium that will ultimately go to zero.
Sorry, I know I said I would not post on this subject again but as Coilin pointed out, I neglected to cover this point on Nate's contention.
Ron Patterson
Yes, but no one said it did. The point is that, indirectly, buying covered options moves the market, because the seller is buying the underlying commodity.
You say: "The amount of stock or the amount of futures traded using covered calls is not very great. I don't know what the percentage of calls written are covered calls, but I would guess it is around 10% or less." and you say: "So if you write enough naked puts or calls you will always make money. And most option writers write only out of the money options."
I don't know what percentage of options sold are 'covered' and what percentage are 'naked', but I'll take your word that most are naked. What you say about naked options being sold 'out of the money' is definitely true, but if subsequent price movements result in the options moving into the money, then presumably the seller will then have to hedge, or will hedge in some cases. If this subsequent hedging occurs, then the original buying/selling of the options will ultimately have had an impact on the price of the underlying commodity, albeit indirectly.
And naked option sellers do not hedge by buying the underlying stock if their option moves into the money, as you suggested. Sellers, just like futures traders are required to put up margin money. They simply forfit part of their margin money if the put or call moves into the money. And if it moves further into the money than their margin can cover, they get a margin call. And if they fail to answer that margin call their position is simply closed out.
A naked seller of options would never hedge by buying the underlying stock because that would require far more money, with no gurantee of more profit or less loss, than simply closing the position.
Ron Patterson
Ron, nobody said that you did say this.
inartistic = intrinsic? Kind of like inartistic though :)
Edwards sees threat to oil sands projects
DAVE EBNER
FROM FRIDAY'S GLOBE AND MAIL
Excerpt:
- Dave Cohen has asked here where the natural gas will come from in the near future, and nobody knows
- The amount of fresh water used boggles the mind, and the forecast for the Prairies is drought
- Shell, Total have already halted/postponed projects, so Ebner is wrong in his claim that "It was the strongest public declaration yet from a senior industry executive that some projects may not go ahead as planned.". There is not nearly enough personnel, equipment, infrastructure, gas, water and go on. Quadrupling output? With what?
- Former premier Lougheed, the big driver 2 decades ago, has called for a slowdown/moratorium, as has just about everybody else by now, including the communities that get rich off the developments
- First Nations will start raising their land rights and claims. Their elders will point to the obligation to respect the land and conserve it for future generations.
- Protests over the destruction and pollution will soar all over Canada
They're trying to squeeze far too much through a narrow bottleneck, and as they keep squeezing, the bottle will break. And then all that's left will be a trickle.If the EROEI is good enough, they will end up using part of the oil to fuel the process. But the water issue is another matter entirely.
I feel like I'm sitting back wondering where the balloon will burst. Looking at the devastation, I'm not so sure it's a bad thing if it does.
IMO the oil from the tar sands is going to be extremely valauble and thus profitable. This value will override all of your arguments. Everyone in the know knows that oil prices are heading higher. This blib of a downtrend in prices is going to be very short.
Once prices start rising again, these Tar Sand projects will go forward at a robust pace.
Hedge Funds Withdraw SEC Registrations After Ruling
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEXf9rYuF6wQ&refer=home
Sept. 22 (Bloomberg) -- Dozens of hedge funds are reducing the information they provide regulators after a court said the U.S. Securities and Exchange Commission can't enforce a rule that required more disclosure by the industry.
D.B. Zwirn & Co. and Mason Capital Management LLC, which together manage almost $7 billion of assets, are among 106 hedge funds that withdrew registrations since the federal appeals court in Washington made its ruling in June, the SEC reported.
Some opted out this month, while Greenwich, Connecticut- based Amaranth Advisors LLC was losing about $6 billion on bad bets in the natural-gas market. The SEC wanted hedge funds to report their size, number of employees and types of clients, and submit to random inspections.
``I have said for a long while that a train wreck might well occur because of a failure of adequate regulatory oversight,'' said former SEC Commissioner Harvey Goldschmid, who voted for the agency's hedge fund rule. ``Amaranth only indicates the continuation of that concern.''
Yup, I think the housing bubble is definitely popping:
I am Facing Foreclosure.com
I knew the dot-com boom was a bubble when everyone from my mail carrier to the teenager who delivers papers in my neighborhood got into day-trading. Similarly, real estate has become the hot new investment. Which means if you're in it, time to get out of it. If you're not in it, now's not the time to get in.
How right you are! Excellent comment!
Which make me remember that
Actually, I don't think the majority of the increase in oil prices has been due to an asset bubble. I think supply constraints and growing demand have structurally changed the market and prices will stay at higher levels than historic trends. I am not claiming to have seen a price drop in advance.
My guess (which I think is a better way to refer to it than a prediction - at least in the short term) is that prices will continue to fall a bit over the next few weeks, before bottoming out and going back up.
If the world economy stays strong, I expect the annual average price next year will be at or above the average price this year. If not, I don't see any reason why we could not have $50 a barrel oil for a while.
I am a peak oil believer, but think the world will survive it. Shrinking oil supplies and a world economy that continues to grow will result in sustained high oil prices. So, I see a long-term bias upwards.
My views can and will change. If we had a poll to predict the oil price in one year from today, we would declare the winner a genius. If we had a poll to guess a random number, we would call the winner lucky. But I don't think there is much of a difference.
So I think everyone who was making money on short-term oil investments up until last week was lucky. Last week they were unlucky. But they weren't the first to be Fooled by Randomness, so I don't fault them.
Your turn.
"Funshway" - putting the fun back into getting out of debt. (Feng shui).
If that doesn't work, of course there's praying.
If that doesn't work, it probably won't matter because you're in jail for all kinds of fraud.
Help! Home for sale
This couple paid $167,000 for a four bedroom, two-and-a-half bath, 2,861 square foot house, on the last day of 2002.
Now they want to buy a bigger, $562,000 home. Because they hope to start a family one day, and obviously, you can't be expected to raise kids in a puny little 4-bedroom, 2,861 square foot house.
They hoped to sell their old home for $402,000. They did make some improvements, but jeez. Hoping that a house that was $167,000, brand new, three years earlier, will go for $402,000? Even their "reduced" price of $349,000 is more than double what they paid.
Yuppies run wild. My house is 3 bedrooms, 2 baths, and 1,000 square feet -and I'd be perfectly happy to raise 3 or 4 kids in it!
Here is a vivid image of Iraqi domestic oil consumption:
http://news.bbc.co.uk/2/hi/in_pictures/5371064.stm
And here is an article about Iran's Jewish population. It does appear to undermine claims of Jewish and Christian zionists that a resurrected Hitler is running that country: http://news.bbc.co.uk/2/hi/middle_east/5367892.stm
Isn't it a great confidence booster to see Vinod Khosla and the World Bank line up to save the planet?
Is there any significance, you think, in the bizarre lineage of names, Wolfensohn to Wolfowitz, for the World Bank presidency?
$1B from Clinton plus $3B from Branson this week alone and you don't think this is good news?
This is what I call Kabuki theatre.
These are the firefighters who set the fire.
- You know Khosla from Robert's posts. He's at best deluded, but he may well have an agenda. And you ain't the beneficiary. Save the world by making a profit.
- The World Bank was set up for one goal: bleed the third world. The havoc they have left in their wake is hard to describe.
- Branson puts $3 billion into the development of "green" fuels for his jets. How is that good?
The bottom line is we get dragged further into the quagmire.Meanwhile $4 billion literally drops out of the sky for renewable fuel development and you think it will drag us further into a quagmire. Methinks the only deluded one around here is you.
Look at what he says:
He also said the current government ethanol subsidy of 50 cents a gallon should be based on a sliding scale corresponding to the price of oil: 25 cents a gallon if oil is at $75 a barrel ranging up to 75 cents a gallon if oil falls to $25 a barrel.
That is NOT what he told me. He said he thinks the subsidy should be eliminated for corn ethanol. He said it is so much cheaper to make ethanol than gasoline, they don't need any subsidies. So which is it, Mr. Khosla?
I think way back a few weeks ago, when you were all excited about making contact with this Very Important Person, Vinod Khosla, I expressed some thoughts to the effect that you should beware of him and not to be sucked into his sales pitch promoting the ethanol agenda. I think I more or less said that he is not to be trusted.
Now tell me: Am I wrong?
This guy is a far better BS artist than you or I ever will be (is it possible that that is one of the reasons he's become such a financial success?) Such people are extremely subtle and highly expert in co-opting opposing opinions. I think you came pretty close to going over to the Dark Side, but I am glad that you have not (so far).
It is axiomatic that where big bucks are at stake, the devious and the ruthless come out of the woodwork. That is what's happening here, and the big play appears to be taking advantage of the government's ethanol subsidy. That's about all there is to it. Without that subsidy EtOH from corn is dead on arrival.
No, I listened to him with an open mind, and gave him the opportunity to make his case to TOD viewers. But my opinion is still the same as it was when I wrote the first debunking essay on him. If I wanted to go over to the dark side, I have had many, many opportunities to date.
3. Gasoline prices have fallen because speculators have decided that Iranian supplies won't be blockaded. We're talking about real money. The oil traders must have gotten the news from some very good sources.
Somebody decided not to do Iran?
In case you wondered, they are not talking about water.
They are very deep into analysis of reports and market their advice to farmers and other ancillary areas.
The subject will center around ethanol and biodiesel. I am not an expert by any means but it appears that I am the only one who speaks of issues that they are apparently unware of or have entirely different views of.
Therefore I am going to draw heavily on the information I find in this forum/website and links it has to other valuable information. Information such as charts and commentary. This is so that I do not have to travel about the net securing them and wasting a huge amount of time and resources in the process.
So my question is , am I doing anything illegal or stepping on any toes in pursuing it in this manner? The charts and other commentary may have been in the past used on other sites and I am not sure of possible copyright violations etc.
Any advice in this area would be appreciated. As I have been a user of the internet since its inception and even before(BBS,IBM Teleprocessing,Ham Radio networks,etc) I am vague as to what laws if any cover this area. Its seems to be very open IMO.
I would be willing to give credit where credit is due.
I am uncertain as to whether the presentation will actually take place so at this time I will just be gathering data in a preliminary format. In fact I do not like presentations and prefer to just talk extemporaneously , and then hold a roundtable discussion. I used to be an instructor and hate formal presentations as they come off rather stiff and too preset for my likes even though that was part of my job requirements.
I could probably talk a long time about Peak Oil and have been doing so but never to a largish(unsure of the number) captive audience. I therefore intend to use technology and my laptop with a large screen projector.I will NOT be using PPT for I detest it having seen so many foil presentations and the like with my previous employer.
If am wondering if anyone else has already gathered such material for a presentation and wish to share it.
Its a very long URL so an alternative is to just go to
http://www.farmfutures.com
..and click on wilson Weekly. The subject article "The Bio Fuel Revolution" can be easily found then as well as others. His most recent in the Oct issue is "Unleashing the bio beast", not on the web site as yet.
http://www.farmfutures.com/ME2/dirmod.asp?sid=43CF0BC83E0F40E4A8D1D9169C0EB31A&nm=Wilson+Weekly& amp;type=Blog&mod=View+Topic&mid=34A5B201939F4AF7BB2D398CBD0B5CA7&tier=7&id=6FFEDD46 6F3E43D3A9CBB8DEC448B349
And the RFA has some good resources at: http://www.ethanolrfa.org/
Being AG, I imagine that ethanol talk will center on fermentation so make sure to incorporate RR's work on BTUs for corn ethanol and Jack's commentary/references for sugarcane ethanol. For 2nd gen ethanol processes, check:
www.iogen.ca
www.bluefireethanol.com
www.syntecbiofuel.com
IOGEN I am aware of. The Brazil scenario I am somewhat tuned into the conjecture.
REG is getting ready to plunge into a proposed site in southern Illinois very soon, partnered with Bunge. Right now the politicos are grandstanding about it.
S. Illinois is a very big corn state.
Sugar cane? Tell me honestly just how far north can it be profitably grown? My understanding is that it requires a very long growing season. Perhaps 9 months being the minimum. Kentucky likely can't make that. Also we have some very high winds, enough to blow corn down and lodge wheat as well as soybeans. Right now we have 8 inches of rain , flooding and quite high winds. Very much more and the soybeans may get in trouble. Today I saw many fields flooded.
http://www.journeytoforever.org/biofuel_library.html
You will get more info than you will outta TOD.
And yes, sugar cane is not an option for most of the US of A. Sugar beets are, as is jererlsum artichokes and even cattails as starch/sugar source for making ethyl alcohol.
Oil seed path for the farmers - press the oil seed - save the oil and use the cake as critter feed.
Regarding the US, the problem is not so much climate as the tariff regime. Sugar prices are supported at such a high level that diverting any production for ethanol is unprofitable.
I would also look at Engineer Poet's blog. He has made me realize that ultimately the best pathway from biomass to vehicle fuel is electricity.
*
Here are five studies that all cite figures of positive 8-10 EROEI for ethanol from sugar cane. I have given page references for three of them and will find and post the others later.
1) FO Licht presentation to METI,
http://www.meti.go.jp/report/downloadfiles/g30819b40j.pdf
EROEI Calcs: Page 20
2) IEA Automotive Fuels for the Future
http://www.iea.org/textbase/nppdf/free/1990/autofuel99.pdf
3) IEA: Biofuels for Transport
http://www.iea.org/textbase/nppdf/free/2004/biofuels2004.pdf
EROEI calcs: page 60
4) Worldwatch Institute & Government of Germany: Biofuels for Transport (Link to register - study is free)
http://www.worldwatch.org/node/4078
EROEI Calcs (for 12 fuel types): Page 17
5) Potential for Biofuels for Transport in Developing Countries
http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2006/01/05/000090341_20060105 161036/Rendered/PDF/ESM3120PAPER0Biofuels.pdf
Coshocton, Ohio......Harrison Ethanol LLC
Hereford, Texas......Panda Ethanol
I believe Robert pointed this out as E3(?) and with more possibilities that a plain ethanol plant.
In many cases the environmental impacts can be extreme. For example biodiesel in Malaysia and Indonesia look like to could be a massive threat to what little of the rain forest still exists there. I also don't dispute Robert Rapier's key points regarding EROEI and US policies.
However, I do believe in peak oil and think we need to be pretty agressive in looking for solutions. I am sure ethanol will provide a partial solution in tropical countries, where sugar cane makes it work.
I am not expert enough to even comment on the US. I do agree that the US policy is ridiculous. The offsets that allow car companies to produce more cars of poor standards if they produce ethanol capable vehicles that never use ethanol is a scam. I don't think E85 will ever work and doubt even tropical countries will get over 25% of their gasoline equivalent BTUs from ethanol. It is also clear that ethanol has less BTUs per unit, so mileage results will be worse.
However, the benificial impacts of sugar cane ethanol are immense, not only as a gasoline substitute, but as one that hugely reduces climate impacts. In order to be a good solution in the US, I think fossil fuel input has to be lessened and environmental impacts reduced.
I am not an advocate either way. I do think the studies I linked to are a great resource. I hope they are useful and help you reach a solid conclusion, whatever it is.
Hawaii, Louisiana, Texas, Florida and California can plant cane, while all the northern states can plant beet, however, in the face of a) US sugar demand b) US sugar subsidies (kudos Jack) c) US corn subsidies
The end result is:
- political and economic support for artificially 'cheaper' to produce corn ethanol
- the simultaneous decimation of both Cuban(Sugar) and Mexican(Corn) interests
This is where the food vs. fuel debate as it relates to increased ethanol usage becomes a total strawmen because if it weren't for US protectionism -insofar as Cuba and Mexico are concerned- then there would be plenty of sugar and corn available albeit from non US origin.
Ironically though, it is US policy once more (this time through mandatory ethanol usage in the RFS) that may ultimately lead to a re-invigorated Cuban and Mexican sugar and corn sector as demand for the ETOH feedstocks pushes depressed world prices high enough to sustain domestic production.
This is the specific job and it looks horrible: http://www.uprr.com/employment/jobdescription/trainservice.shtml
You would be on call 24/7 for 12 to 15 years???
One good point, rail employees get out of Social Security and into what is generally considered a better system.
Best Hopes,
Alan
Why hasn't the Iranian Oil Bourse occurred? If these 2 countries want to put the hurt on the USA, wouldn't the Iranian oil bourse be a good start?
If you ever get an interview for a finance job, I suggest you keep that little observation to yourself.
Boone objects to the term "wind farm" as sounding too comforting. He says he is not against wind power, but he feels that the companies behind wind development in Pennsylvania (Enron remnants and BP) are behaving recklessly while trying to portray wind as a benign source of energy. Frankly, this sounds routine for energy companies, if not corporations in general.
PA seems to be about the most promising place on the East Coast for wind, but Boone claims that putting 420-foot turbines on forested ridgetops will hurt both migrating raptors and bats, and the nesting birds within the newly eviscerated forests below. Boone also cited the usual concerns about noise, but surprised me with his calculations of the thousands of turbines required to match the electrical output of one of PA's large coal-fired or nuclear-powered generating plants.
Boone presented charts comparing low wind production during summer doldrums against peak electrical loads of air conditioning. I think we must adjust to life without A/C, but unless and until we let go of the status quo, wind production is not reliable enough to be the primary source of energy.
Boone challenged claims that using wind energy would reduce our dependence on coal or oil, noting that clean-burning, but expensive, natural gas would be the first fuel to be cut back if and when wind comes on line. He even slipped in an
implicit plug for new, clean-scrubbed coal. His arguments are valid at present, but don't hold up in an energy-depleted scenario.
In short, Boone made a lot of excellent points against wind turbines. But, as others were asking questions, it occured to me that there were probably equally good, if not better presentations to be made, against nuclear power, against coal, against wthanol, etc. Being PO aware, I couldn't help but feel that we're going to need wind energy (and coal, and nukes) anyway, but it would be preferable to put up turbines without despoiling the forests.
Ideally, someone would advocate for forward-thinking development of wind energy the way AlanfromBigEasy does for public transit, but it seems that Corporate Wind is primarily interested in profits and tax write-offs.
http://www.energybulletin.net/3161.html
CHARLES T. MAXWELL is a senior energy analyst at Weeden & Co., in Greenwich, Conn. He has been working in the energy field for 36 years.
Here is a link to Bill's Huffing-and-Puffing (on Willie's biodeisel bong)