OPEC, Tight Oil and Russia

The OPEC Monthly Oil Market Report is out with OPEC crude only production numbers for March 2015.

OPEC 12

OPEC production was up 812,000 barrels per day. The increase came primarily from three countries:

Saudi Arabia

Saudi Arabia was up 347,000 barrels per day to 10,010,000 bpd.

Iraq

Iraq was up 319,000 bpd to 3,625,000 barrels per day.

Libya

And Libya was up 165,000 bpd to 473,000 bpd.

Iran Zero

This is Iran zero based in order to show exactly how much sanctions have affected them. Iran was producing about 3.75 million bpd before sanctions. Then when sanctions the UN resolution for sanctions was passed in 2010, but before they were enforced, production began to drop, but very slightly. It was not until late 2011 and early 2012 before production began to fall rather steeply. Iranian crude only production is now around 2.75 million bpd, down about 1 million bpd, or 27 percent from their production level before sanctions.

Secondary Sources

Here is how all 12 OPEC nations fared in March. Notice Saudi Arabia says they were up a lot more than the “secondary sources” claimed they were. Iraq also claimed more increase than the secondary sources’ estimated. But Iraq is still claiming almost 300,000 bpd less than the secondary sources says they are producing.

Charts for all 12 OPEC countries can be found at on my OPEC Charts web page.

Art Berman says Saudi Arabia’s Oil-Price War Is With Stupid Money

Saudi Arabia is not trying to crush U.S. shale plays. Its oil-price war is with the investment banks and the stupid money they directed to fund the plays. It is also with the zero-interest rate economic conditions that made this possible.

Art’s point is that stupid money is funding the so called Tight Oil Revolution. This is a great article that everyone should read. Art has a chart showing that most tight oil companies were losing money even when prices were in the $90 to $100 range. And CLR, Continental Resources, seems to be the biggest loser of all.

The next two charts are from Art’s Stupid Money article.

Art 1

What does it cost to produce a barrel of light tight oil? Schlumberger says it cost around $75. The size of the bubble here represents the Exploration and Production capex spent. Tight oil is second only to the amount spent on land conventional. But land conventional produced about 42 percent of all oil produced while tight oil was about 4 percent.

Art 2

U.S. companies drilled almost 100 times more wells to reach the same daily production as Saudi Aramco. Strident claims of increased efficiency by tight oil producers sound absurd in this context.

But the Russian part of the above chart is what I wish to emphasize here. In 2014 Russia drilled 8,688 wells.

In 2009 Renaissance Capital oil and gas analyst Alex Burgansky said:

If you exclude all the drilling activity taking place every year, then Russian organic decline in production is close to 19%. To compensate for that organic decline, Russia drills somewhere between 5,000 and 6,000 wells every year.

5 to 6 thousand in 2009, 8 to 9 thousand in 2014. They are now drilling 3,000 more wells than they did five years ago and production has been flat for about a year and a half. Russia has their own version of the Red Queen.

JODI Russia

The last data point in this chart is February 2015.

This entry was posted in Uncategorized and tagged , , , , , , , . Bookmark the permalink.

446 Responses to OPEC, Tight Oil and Russia

  1. Ronald Walter says:

    Looks like the Bakken is beginning to produce more oil as time goes on. The Bakken keeps on truckin’.

    These wells are producing in the neighborhood of 30,000 bpd.

    PRODUCING WELL COMPLETED:

    #25082 – STATOIL OIL & GAS LP, FIELD TRUST 7-6 6H, SWSE 7-154N-101W, WILLIAMS CO., 2212 BOPD, 5106 BWPD – BAKKEN
    #26387 – BURLINGTON RESOURCES OIL & GAS COMPANY LP, CCU NORTH COAST 31-25MBH, NENE 25-147N-95W, DUNN CO., 2112 BOPD, 2208 BWPD – BAKKEN
    #26389 – BURLINGTON RESOURCES OIL & GAS COMPANY LP, CCU NORTH COAST 41-25MBH, NENE 25-147N-95W, DUNN CO., 1920 BOPD, 1728 BWPD – BAKKEN
    #26685 – ZAVANNA, LLC, ANGUS 3-10 5H, LOT4 3-153N-99W, WILLIAMS CO., 1543 BOPD, 1071 BWPD – BAKKEN
    #26687 – ZAVANNA, LLC, ANGUS 3-10 7H, LOT4 3-153N-99W, WILLIAMS CO., 686 BOPD, 278 BWPD – BAKKEN
    #26954 – CONTINENTAL RESOURCES, INC., RYDEN 2-24AH1, NENE 24-146N-96W, DUNN CO., BOPD, BWPD –
    #28347 – BURLINGTON RESOURCES OIL & GAS COMPANY LP, LILLIBRIDGE 41-27MBH, NENE 27- 150N-96W, MCKENZIE CO., 1656 BOPD, 432 BWPD – BAKKEN
    #28348 – BURLINGTON RESOURCES OIL & GAS COMPANY LP, COPPER DRAW 41-27TFH, NENE 27-150N-96W, MCKENZIE CO., 1920 BOPD, 432 BWPD -BAKKEN

    #28354 – BURLINGTON RESOURCES OIL & GAS COMPANY LP, CCU PULLMAN 3-8-7TFH, SESW 18-147N-95W, DUNN CO., 2445 BOPD, 2164 BWPD – BAKKEN
    #28363 – BURLINGTON RESOURCES OIL & GAS COMPANY LP, CCU PULLMAN 5-8-7TFH, SWSE
    18-147N-95W, DUNN CO., 2160 BOPD, 2808 BWPD – BAKKEN
    #28369 – BURLINGTON RESOURCES OIL & GAS COMPANY LP, CCU PULLMAN 6-8-7MBH, SESE
    18-147N-95W, DUNN CO., 2766 BOPD, 2004 BWPD – BAKKEN
    #28413 – BURLINGTON RESOURCES OIL & GAS COMPANY LP, SHENANDOAH 44-36TFH, SESE 36- 153N-96W, MCKENZIE CO., 2544 BOPD, 888 BWPD – BAKKEN/THREE FORKS
    #28414 – BURLINGTON RESOURCES OIL & GAS COMPANY LP, SHENANDOAH 44-36MBH ULW, SESE 36-153N-96W, MCKENZIE CO., 2204 BOPD, 521 BWPD – BAKKEN/THREE FORKS
    #28623 – STATOIL OIL & GAS LP, FIELD TRUST 7-6 #8TFH, SWSE 7-154N-101W, WILLIAMS CO., 1857 BOPD, 4398 BWPD – BAKKEN
    #29217 – BURLINGTON RESOURCES OIL & GAS COMPANY LP, CCU NORTH COAST 4-8-23MBH, SESE 23-147N-95W, DUNN CO., 2244 BOPD, 2363 BWPD – BAKKEN

    • Watcher says:

      Did you verify which of those are not new and merely coming off the confidential list, or not?

      Nope, those are not confidential, strike that.

      • Watcher, these were all producing wells completed and none were released from “tight hole” status.

        However there were just nine producing wells completed all of last week, so I think things are just averaging out.

        • Watcher says:

          Nod, odd density in Dunn rather than MacK and Mountrail.

          • coffeeguyzz says:

            Watcher, of more significance, perhaps, than Dunn county producing good wells (the northwest corner is actually pretty prolific), is the fact that at least five of the above wells are NOT from the Bakken play … they are in the Three Forks formation.
            The designation ‘TF’ denotes the origin, although some operators target the Three Forks without signifying such in the wells’ name.

            For those possibly not knowing, the USGS has claimed the Three Forks play has more recoverable oil than the Bakken, which is both smaller in areal extent as well as NOT having four ‘benches/layers’ as does the Three Forks.
            Operators have been targeting the TF more frequently in the past 12/18 months or so as there is a growing ‘comfort’ level now that several thousands of wells have been drilled in the area.

            The term ‘delineated’ is used to describe a hydrocarbon bearing field that is pretty well defined as to its placement and size. The Three Forks has NOT yet been delineated, and may be a few years out before it is.

    • Ronald, those wells are not producing those rates. The initial rates are for very short time periods. A fractured horizontal well is similar to a bottle of coke dropped from a second story window. Open that bottle and you’ll get a gushing geyser of coke, but it lasts a short time, and after a while you got to pump that bottle at ever decreasing rates.

      • Ronald Walter says:

        A production decrease will be what it is going to happen within a year’s time. I won’t argue, I see what happens to the numbers on a piece of paper. What begins at 400 bpd is now at 40 bpd, even less, going into the fourth year of production.

        My guess is that the wells that have initial production of 2000 bpd will be at a thousand barrels or less after one year, then after two years of production, the production will be at 500 bpd.

        Going into the fourth year of production, the well that produced 2000 bpd initially will be producing 200 bpd or less, a 90 percent reduction.

        Maybe even more. What begins at x will end up at 1/10th of x.

        The first hundred days of production will be what counts the most. A steep decline rate after that is what can be expected.

        It does happen and will happen time after time.

        The Three Forks is under the lower Bakken shale and is Bakken oil that leaks out of the the source rock. That is why the Bakken/Three Forks is together in monthly reports from the NDIC.

        • The Three Forks is under the lower Bakken shale and is Bakken oil that leaks out of the the source rock. That is why the Bakken/Three Forks is together in monthly reports from the NDIC.

          That statement makes no sense whatsoever. Could you explain in detail how this works? Or rather how you think this works?

          • Hillson says:

            It makes sense if lower layers are more permeable than cap rock. As oil forms, pressure builds and flow take path of least resistance, which is sometimes down.

            • Baloney! Source rock is always below the reservoir rock. All light oil is lighter than water and flows only upward if it flows at all. But the whole point in fracking is the oil is in the source rock and flows nowhere. Light tight oil is in tight rock and only fracking can free it from the source rock.

              Three forks was formed before the Bakken and that is why it is below the Bakken. They are unrelated except that they are in the same general area, separated by layers of strata.

              In conventional fields the pores, in porous rock, are always filled with something, they are never empty. Oil formed below is lighter than the water above therefore migrates upward, very slowly, until it reaches the cap rock and can flow no further. Oil could not possibly flow down because all the pores below are filled with water. After all, all oil is aquatic and formed at the bottom of a shallow sea. All pores at the bottom of a sea are filled with seawater, never air.

              • MBP says:

                That is not always the case. The East Texas field, one of the largest fields in the United States, produces out of the Woodbine formation that is sourced from the overlying Eagle Ford Shale. Now, it is sourced from the overlying formation because of an exposure derived unconformity during the Sabine uplift, but situations do exist where source rocks can overlie the formations they charge.

                • toolpush says:

                  MBP,

                  Yes things do get complicated. In Vietnam they produce oil from fractured granite, and it is not abotic. lol
                  The geologists claim they can explain how the oil got from the sedimentary source rock above to the granite basement below. It must have been quite a jig saw puzzle?

          • Ronald Walter says:

            Read pages 40 through 120.

            Bakken Source System

            • I asked you to give a simple explanation of this statement.

              The Three Forks is under the lower Bakken shale and is Bakken oil that leaks out of the the source rock. That is why the Bakken/Three Forks is together in monthly reports from the NDIC.

              You respond by asking me to read 80 pages of a 15 year old PDF file. No, I will not. Just explain how Bakken oil leaked out of the Bakken very tight source rock and migrated downward to supply the Three Forks, (very tight source rock), with the oil currently being fracked from that strata.

              • Ronald Walter says:

                The lower Bakken shale was a seal, the upper Bakken shale was a seal.

                Heat and pressure inside the middle Bakken which has the generated oil from the kerogen, the heat and pressure caused the volume in the middle Bakken shale to increase to a greater amount than the total volume of the middle Bakken shale.

                When the heat and pressure became too great, the lower Bakken and the upper Bakken shales cracked and fissures formed.

                The generated oil migrated to the Lodgepole above the upper Bakken shale and deposited, the generated oil migrated through the fissures of the lower Bakken shale and formed deposits in the Three Forks.

                Hence the words ‘Bakken Source System’.

        • Some Bakken oil did migrate upward to a trap where conventional wells were drilled and recovered the oil. Most of the conventional oil has already been recovered from the Bakken and very little is left.

          However no oil migrated from the upper Bakken to the lower Three Forks. Both the Bakken and Three Forks are very tight source rock. Oil never migrates downward from one source rock to another source rock.

  2. Guy Minton, CPA says:

    Probably Schlumberger is correct in that if oil was not at $75, then it would not be profitable to drill in most areas. Certainly not the price per barrel for any given well, but overall a good ballpark. As usual, a very good article.
    I have a question which does not seem to be addressed much, especially as to the future price of WTI. As you know, companies and refineries are gearing up to transition from full refinery to a “tower” with a much reduced condensate distillation process for export. One article I read stated that production capacity might exceed 3.3 million barrels a day by the end of 2016. In addition to that, I think that shale production will have a hard time getting back to the level it was in 2014 any time within the next two years. Considering these major factors, can’t you imagine WTI having a premium to Brent in the next year, or so?

    • Watcher says:

      Cue Jeffrey and the quote from Pemex about there being no need for condensate.

    • Guy, I don’t get your comment. Could you expand? What is this tower about?

      • coffeeguyzz says:

        Hey, Fernando, maybe Guy can expand upon his comments, or provide some links, but there are numerous stories out these past several weeks describing some type of minimal processing (aka cheap) of LTO that would qualify it for export, amongst other consequences.
        If I understood the gist of this, one upshot could be a much vaster market for LTO than currently exists.

      • sunnnv says:

        He means “column”, as in “distillation column”.
        IMHO, the only “towers” in an oil refinery are “cooling towers” (most are more like boxes) and the water jet towers on top of coking units.

        This EIA study talks about the whole thing of splitting or stabilizing LTO (Light Tight Oil) from the Bakken or Eagle Ford to make intermediates (i.e. napthas or other blendstocks) that can be sold, e.g. exported to foreign refineries/blenders.
        The domestic LTO has essentially replaced light crude imports,
        and trying to blend more in with heavy streams just starves the middle output streams from the ADU (Atmospheric Distillation Unit – the first step in crude oil refining),
        resulting in throughput loss/bad economics for a refinery.
        So people have built/are building simplified distillation columns to split or stabilize LTO in an attempt to make a buck by exporting. (who/size/status in table in report,
        as are cost numbers for the various possible refinery processes – good stuff).

        n.b. figure 1 is a version of the “fraction yield vs. API gravity picture” for 20.5 API Maya, 42.3 Bakken, and 55.6 Eagle Ford.

        full report:
        http://www.eia.gov/analysis/studies/petroleum/lto/pdf/lightightoil.pdf

        HTML executive summary:
        http://www.eia.gov/analysis/studies/petroleum/lto/

        Today In Energy page that got me to the report:
        http://www.eia.gov/todayinenergy/detail.cfm?id=20672

        coffeeguyzz – the gist is just that, to encourage a bigger/more profitable market for LTO, since “products” and “intermediates” don’t require presidential blessing/licenses/hassle to export like crude does. Also, maybe to put a bit of pressure on heavier crude prices by threatening to split out some heavies from LTO to replace some heavy crude unless youse guys cut yer prices even lower. Ahhh, competition. But wait, you say LTO production is falling? Hmmm, how many of these LTO stabilizer/splitter projects are now uneconomic?

        • Got it. I’m a trained process engineer (but I barely practiced it, so don’t ask me really hard questions). I’ve discussed process alternatives for the problem caused by the extra light ends in the U.S. Mix. If I were a large producer (and I mean really large, say Angola), I would study whether to strip light ends from the oil using a cut to match my crude to the Eagle Ford condensate. This would allow me to market the crude to refineries which have access to Eagle Ford and can blend the two to make an optimized feed. By splitting my crude I could ship a lighter blend to say Europe, and sell the heavier material to the USA gulf coast.

          • TechGuy says:

            Fern Wrote:
            “By splitting my crude I could ship a lighter blend to say Europe, and sell the heavier material to the USA gulf coast.”

            I am not sure that will help much. If I recall correct, Europe mostly uses diesel and not gasoline. The heavier crudes are best for diesel distillation, and the lighter crudes are better for gasoline distillation.

            • Yes, but this doesn’t mean an European refinery won’t take light ends.

              Consider this: if it’s possible to split light ends in the USA and export them elsewhere, then there’s a market for such light ends. Europe happens to import a lot of light expensive crudes and exports gasoline. Thus all I do is avoid competing with my light ends in the oversupplied USA market. I ship what they need, and ship my light ends to the same end market the Americans would ship theirs.

              Eventually this shakes down by changing prices. And I’m still for investigating if taking lights away from USA bound loads may not make sense. The least I would to is consider driving up my heater treater temperatures a bit, and taking more C4 to C8 from the overhead gas away from USA bound loads.

        • Synapsid says:

          sunnnv,

          Thanks for these links.

          • coffeeguyzz says:

            sunnnv,
            Yes, thanks big time for the info.
            So, there are plans and/or proposals, and actual construction for about 800,000 bpd additional US refinery capacity for LTO … with much in place within two years time.
            According to that fig. 1, using an el cheapo Atmospheric Distillation Unit, both Bakken 42 and Eagle Ford 56 produce as much or more diesel types than Maya 20.

            Hmmmm …

            Who’s gonna tell Watcher he can soon fire up a diesel-fueled pickup and head south to spread the news?

  3. Watcher says:

    This is Iran zero based in order to show exactly how much sanctions have affected them.

    And yet in their role as the Great Satan, and amid these supposed crushing sanctions, there seems to be no video of starvation in Tehran and they seem to still have plenty of money to be the evil funders of Yemen government overthrow. How odd.

    • Good article. But those large companies are still working on long term projects. The problem will be caused by lack of people when they want to restart.

    • sunnnv says:

      I second the thanks.

      Also found this:
      http://www.bloomberg.com/news/articles/2015-04-22/half-of-u-s-fracking-companies-will-be-dead-or-sold-this-year

      “Half of the 41 fracking companies operating in the U.S. will be dead or sold by year-end because of slashed spending by oil companies, an executive with Weatherford International Plc said.

      … Demand for fracking, … has declined as customers leave wells uncompleted because of low prices.

      There were 61 fracking service providers in the U.S., the world’s largest market, at the start of last year. … ”

      What Fernando said about the people who will go away, and not come back… bummer.

  4. Andy Hamilton says:

    For what it is worth (not very much), the latest EIA US weekly oil production data shows a second week on week fall (down 56,000 bpd) from the mid-March ‘peak’.

    • Slowly, the EIA is coming to accept the fact that US production is actually in decline. Last week’s production is exactly the same as it was week ending March 6th.

      Look back at the production numbers six months ago, on October 10, 2014. It is over 200 bpd above the 10 week moving average. I think it very likely that in six months from today, production will be over 200 bpd below the 10 week moving average.

      • Ovi says:

        Since we are trying to see what is happening in Texas and the Bakken. it would be more informative if production in the lower 48 states was tracked. The Alaska data is very volatile and drops significantly going into the summer. Currently, the lower 48 states are down 50 kb/d below the peak. Over the last two weeks there has been no change in the lower 48.

        While the difference is only 6 kb/d now, it will get bigger as Alaska shuts down for summer maintenance.

      • A. Yeats says:

        I don’t quite follow this 10 week average curve – how can an average be lower than all the numbers that go in to it?

        Edit – ignore this I think I’ve got it now – the average lags the data so on a continuously rising curve the average will always appear low.

  5. Sydney Mike says:

    If Saudi Arabia is behind the halving of the oil price and they have only produce say 300,000 barrels per day more than they did in Sep 14, what small shortage of oil supply would it take to send the price through the roof? When the tight oil producers fall over like dominoes, we could have interesting times in the oil markets and hence in our just-in-time oil based world economy.

    • Watcher says:

      Not everyone worships at the altar of supply and demand as a determinant of price. I could add “when Central Banks can define more or less anything”, but S&D was a law of nature . . . never.

      Don’t presume the price fall had anything to do with supply and demand. Money was created out of imagination. It’s not like gravity or E=Mc^2. It’s not a provable law of nature.

      • Not everyone worships at the altar of supply and demand as a determinant of price.

        Not every one does, it is only those who know anything about economics who understand that supply and demand dictate the long term price of oil. Changing the money supply affects demand. Therefore, of course, the money supply can affect the price of oil.

        Lots of things can cause short term swings in the price of oil but only supply and demand can possibly affect the long term price of oil.

        • Watcher says:

          Money supply? What’s that? Did that mean M1, M2, M3 and all other currencies? Why should that affect the price of oil? Do we have a measure of this thing called global money supply and what is its correlation?

          • Oh for goodness sake, you can’t be serious with that question. The money supply affects everything. That is what Quantitative Easing is all about, increasing the money supply, boosting the economy, enabling people to buy more stuff, including gasoline and other oil products.

            DEFINITION of ‘Quantitative Easing’
            An unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity. Quantitative easing is considered when short-term interest rates are at or approaching zero, and does not involve the printing of new banknotes.

            Watcher, I really cannot believe that you do not understand that the more money you have the more stuff you can buy, including gasoline for your car.

            • Sam Taylor says:

              Ron,

              QE is an asset swap, as the link you highlighted points out, in which the FED buys a T-Bill with central bank reserves. The T-Bill is effectively unprinted, and plays no further part in the economy, so at no point does private sector wealth increase. This is why there has been no inflation post QE, as many feared. Secondly, central bank reserves are not immediately ‘lent out’ when given to a bank, this view is based on the faulty “money multiplier” view. Banks create loans first, and then seek reserves later as needed. Increasing the amount of reserves that a bank has will not increase the demand for loans, nor make the bank more likely to create loans. Banks lend to credit worthy individuals, they do not lend because they have a surplus of reserves.

              If QE did indeed work in the manner most people think, there where on earth is the inflation that all the newly created money should have caused?

              As for supply and demand, it’s a good mind sized model, but as always the world is much more complex in reality. There’s a few economists (Brian Arthur and Ken Arrow are people who I’m aware of in this area) who’ve done work showing that lots of the conditions needed for the equilibirum assumptions behind supply and demand don’t really stand up to any realistic conditions. At best supply and demand, as taught in textbooks, is very special case which only exists under certain conditions. It’s not a law on a par with gravity. I mean, ultimately markets are just human creations. Change the markets and you’ll change the response.

              • Brian Rose says:

                This is a very accurate response.

                I’d also add that Daniel Kahnemann, a psychologist, won the Nobel Prize for Economics in 2001 because markets are not rational information processing entities; they are composed of millions of irrational people, each with their own idiosyncratic biases.

                The hope in economics has always been that if you accumulate enough irrational monkeys interpreting data that it’ll all average out and the end result is a rational market. In the long run this is generally true, but on a daily, weekly, monthly, and even yearly basis there is a significant skew in market pricing based on inherent emotional and experiential biases.

                Richard Dawkins would refer to these cultural biases as being “memes” – the original definition of a meme before the internet turned it into its current definition.

                You can make healthy sums of money by stepping out of the cultural preferences that swing markets away from “true” value. This is the basis of Warren Buffet’s quote that we should “Be fearful when others are greedy and greedy when others are fearful”.

                • Old farmer mac says:

                  My cow college instructor back in the sixties was perfectly straight forward in explaining that the so called law of supply and demand is an ABSTRACTION that explains behavior of markets in a generally accurate and useful way.

                  IN THE ABSTRACT.

                  First he says, you need to understand this as what would happen IF the abstraction held true – that everybody was well informed etc.

                  He made it clear than in the real world economists even back then took into account the market distorting effects of advertising , religions, monetary and fiscal policies. etc etc etc when ACTUALLY WORKING.

                  It could be that he was a few decades ahead of the curve since he also taught a principles of advertising class.

                  I had to take a basic business series and chose econ- and I needed one more free elective in business and took the advertising. I learned more useful stuff in these two classes than anywhere else except chemistry biology and math.

                  Micro markets where supply and demand such as Watchers example of dickering the price of a soft drink – maybe the last one available at that spot and minute – do still exist even in the USA.

                  I go to a flea market often and dicker the last dime because the old women selling tomatoes and cantaloupes there enjoy the process. Telling them they are still good looking and mean hearted as ever gets the dime off plus even gets me propositioned sometimes. ( I still get around without a cane and can wipe my own butt which is the primary criteria these vintage girls use in checking out guys.)

              • BC says:

                Yes, QE did not cause a significant increase in the money supply circulating outside the Fed, TBTE banks (including foreign banks’ US subsidiaries), and the US Treasury. Less the accumulated bank reserves/bank cash assets of ~$3 trillion, money supply has grown very little since 2007-08, primarily because bank lending growth has been subdued (until 2012-13, driven largely by C&I loans to the energy sector).

                QE did result in a decline in interest rates and the flattening of the yield curve, which (1) further discouraged bank lending by reducing the spread and net margin for banks; and (2) it lowered the cost of borrowing for large corporations to borrow at a record to GDP to buyback shares and to pay interest, dividends, and HUGE compensation to executives.

                Therefore, even the massive corporate borrowing at lower interest rates did not result in an acceleration of growth of revenues (averaging 2-3% since 2007), bank lending, money supply, and employment since 2007-08.

                Finally, QE also provided the necessary liquidity for the US gov’t to run average deficits of ~$1 trillion since fiscal 2009, increasing the US public debt by $8 trillion; otherwise, the US economy would be at least 20% smaller today.

                Now the US economy appears to be decelerating again to historical “stall speed” as of Q4 ’14 and Q1 ’15, suggesting that the Fed will not raise the funds rate this year but rather more likely resume QEternity later this year to fund the increasing fiscal deficit to GDP as GDP decelerates.

                • TechGuy says:

                  “QE did result in a decline in interest rates and the flattening of the yield curve, which (1) further discouraged bank lending by reducing the spread and net margin for banks;”

                  QE fueled the Shale bubble, by lowering borrowing costs and making easy credit available to shale drillers. The Stock market bubble is also largely driving by QE. Corporations have borrow hundreds of billions for stock buyback programs using ZIRP to finance buybacks.

                  There is significant inflation, its just not even distributed or symetrical. Stocks, and bonds are at all time highs. Without QE the valuation of these investments would be a fraction of their current valuations.

                  On the consumer side, without QE prices for may items would have been much lower, such as home prices and rent. QE has escewed the real estate properties and preventing from normalizing to real-long term affordabilty. It also also having an impact of savers, most people no longer save money because there is no return, and those living on fixed income are no longer paid interest on their retirement savings.

                  For every quick fix, there are problems. Once an nation begins QE, they can never exit without a major correction. QE distorts markets and prevent any hope of normalization. This week BoJ said it never going to end QE because it can’t without collapsing the Japanese economy. The US did QE after blowing too bubbles as a quick fix to 2+ decades of deferred market corrections. Each bubble is larger than the previous one. The current bubble (driven by QE) will even be much bigger than the first two. perhaps the mother of all bubbles depending on how this plays out.

                  • Sam Taylor says:

                    Techguy,

                    QE didn’t lower the interest rates, the federal reserve did. It’s hard to tell if QE accomplished much of anything to be honest. Now I don’t disagree that high oil price and low interest rates are major factors in the takeoff of shale, I expect that even without QE shale would still have exploded.

                    Stock market might or might not be a bubble. Corporate profits are high, and private equity is scarce due to buybacks, which would obviously mean higher prices. Could just be that stocks stick around their current level and underperform for a few years.

                  • TechGuy says:

                    Sam Wrote:
                    “QE didn’t lower the interest rates, the federal reserve did. It’s hard to tell if QE accomplished much of anything to be honest.”

                    It sure did lower rates. QE financed gov’t debt by gobbling up treasuries, lowering the yield on the 10yr, which is the metric used to establish US commercial and consumer loans. It also freed up liquidity at the too big to fail banks, by purchasing worthless assets. With out the asset purchases the Banks would have too much capital tied up on failing\non-performing loans which would prevented them from further lending.

          • Ilambiquated says:

            The question of how to measure the supply of money doesn’t really have much to do with the question of whether money supply influences price.

      • Sydney Mike says:

        Supply and demand is a simple law of nature: if three kids want to use the swing and there is only one swing in the playground, either war or rationing ensues. Perhaps an entrepreneur will start a business charging for the usage of swings. You’re not really disputing this very simple principle?

        • Oh but I think he is. Watcher has always disputed the fact tat supply and demand governs the price of anything.

        • Watcher says:

          When you go to Walmart to buy a bottle of Pepsi, do you pay a price based on how many bottles are on that shelf, or do you pay the price labeled on the shelf $/bottle?

          Ever go to Burger King and order some item on the menu and have them tell you . . . “Sorry, we’re out of those.” Well, the previous customer who bought that last one, did he pay the menu price or did he pay a price higher than what is listed?

          Planet-wide, of all transactions that take place buying and selling items in commerce, the overwhelming majority of those transactions take place at a published price and not at a price defined by how much supply the seller has on hand. Billions of transactions at the supermarket take place day to day at a listed price without regard to how many are in the store’s inventory that moment.

          Billions upon billions. There might be a few hundred transactions day to day where someone tries to charge more for something he has few of. The buyer may walk away. In which case there would be even fewer of such transactions, since it did not complete.

          Contrast all of the above with gravity. Billions and billions of times you can drop an object in a vacuum from a certain height and d = 1/2 g*t^2 every single time, for every circumstance, no matter how many objects or how few objects you drop.

          • Ronald Walter says:

            If you are snake bit by a water moccasin cobra rattler coral and the anti-venom is immediately available, the supply, will the demand be there, it’ll save your life, do you demand it or say ‘no thanks, I’d rather die’?

            You’ll pay the price, no matter what the supply is, just so there is enough to matter, a matter of life and death. The neurotoxic effects are taking hold, everything is getting dark, the efficacious anti-venom is here now.

            Last one on the shelf, how much will you be willing to pay?

            Will there be any demand for the only anti-venom that is there here and now?

            No anti-venom, you’ll die. Is there a demand or not?

            At what price?

            If you live, you’ll pay the price.

            It is a law of nature.

            What’dya thunk, is it a law of nature or knot?

          • Watcher, you are not going to get many converts with such very silly examples. You are trying to make supply and demand at the micro level wen it is obviously at the macro level. McDonald’s has 35,000 restaurants, they know what price they can get for a hamburger before people start going to Burger King or someone else.

            Pepsi knows what they can get for a two liter bottle. But individual stores figure they can get a higher price, or offer a lower price to get customers in for a sale. And if the price is cheaper at Dollar General than Kroger, then people will go to Dollar General for their Pepsi. That is supply and demand mitigated by price.

            Bye now, this debate is so damn silly that I refuse to engage in it further.

            • Watcher says:

              Why did you engage it at all?

              • Glen Calvin McMillian says:

                ”Why did you engage it at all?”

                Because as the host Ron has an obligation to himself to not let bullshit comments go unchallenged.

                Serious people who happen across this forum and read your comments might take the whole forum as bullshit otherwise.

                Now as for why I respond-I am stuck in the house too many hours playing nurse with nothing more interesting to do at this particular minute.

                • Han Neumann says:

                  “Because as the host Ron has an obligation to himself to not let bullshit comments go unchallenged.”

                  Or even delete it. Better challenge it though, to show the foolishness of it.

          • Frugal says:

            Yet if a billion cattle die because of an epidemic, the published prices of burgers will go up and the number of burgers eaten will go down, and this is exactly how supply and demand works.

            • Watcher says:

              Are there a billion cattle? That’s a lot.

              Far more transactions take place day to day at a price unrelated to the supply available than take place with the price negotiated for that transaction based on anything other than the price sticker.

              Oh and btw if your competitor charges a lower price than you, regardless of your supply, that’s what you have to charge — unless you can pretend you aren’t selling the same thing. Which is why the burger king vs mcd’s issue is invalid and pepsi/coke ditto.

              Another example is rent. You have rental property . . . say 2000 sq feet of it. There are several other such properties around of that size. You charge $1200/mo for it. So do they. You also have rental property of 3000 sq feet. There are several other properties of that size around. You charge $1400/mo for that. You have another that is 4000 sq ft. There are very few other such properties that size around you. But you still charge $1400/mo for it, just like your 3000 sq ft property. Why?

              Because that’s the limit of local income. They can’t pay more. Demand is constant, supply is lower. But the price didn’t change.

              The only reason you folks worship at this altar is you were told it’s true, despite all the evidence to the contrary. It’s just not gravity. It’s not a law of nature.

              • Ilambiquated says:

                Here’s some statistics on cattle.

                http://www.statista.com/statistics/263979/global-cattle-population-since-1990/

                About supply, demand and price, Ron is basically right, but the devil is in the detail. There are several issues:

                Market mechanisms are aggregate, and don’t pretend to predict individual transactions any more than the temperature of a liquid can predict the heat content of a given molecule.

                Supply and demand determine price when markets “clear” but no economics book can tell you how long that will take.

                For example “sticky” labor costs are usually seen as the root cause of unemployment (which cannot exist according to “classical” economics). That’s one of the main arguments of 20th century economics in a nutshell. Real estate is another market where long term contracts muddy the waters.

                Competing products that aren’t identical make things even more cloudy. And as you point out, so does incomplete information and bad choices (“irrationality”), which market theory assumes does not exist.

                Other distortions are caused by externalities and transaction costs. In both cases the price does not cover the whole cost. Again, market theory assumes this does not exist.

                Once you start adding all that in, it is hard to see the signal for the noise.

              • SW says:

                THere is a drought in Texas and Oklahoma. Ranchers can’t afford to buy feed for their cattle. They send not just their yearling steers to slaughter but a good deal of their breeding cows. That reduces the size of their herds. Within a couple of years there is a shortage of yearling steers. The price of beef goes way up. Ranchers wish they had their breeding cows back to satisfy this increased demand (as a consequence of the reduced supply of steers).

              • TechGuy says:

                Watcher wrote:
                “Another example is rent. You have rental property . . . say 2000 sq feet of it. There are several other such properties around of that size. You charge $1200/mo for it. So do they. You also have rental property of 3000 sq feet…”

                Not quite. In that case, the homeowner simply splits the home into multifamily building. rates stay the same, but the space per unit declines. No owner is going to keep a 3K sq foot home as a single family rental, especially as property taxes rise.

                Other Examples: 5 Pound Bag of sugar now sold as 4 Pound bag at the same price. Orange juice sold in 64 ounce (half gallon) now sold as 54-56 ounces (same price) as well adding in High Fruitose corn syrup, adding water and artificial flavoring (fake OJ)
                As far as hamburgers at McDonalds, they are no longer real beef. only about 15% of a McDonalds burger is real beef, the rest is filler and junk. I could go on, but you get the idea. The prices haven’t changed, but the the quality and amount of the product has declined to mask rising input costs.

                The Price of Oil is falling because the global economy is falling into a recession and the US Fed talking about future rate hikes has temporarily strengthen the dollar. The Euro was about at about $1.30 a year ago. today its about $1.08 as the ECB started using QE. QE solved nothing, it just deferred the day of reckoning. ZIRP is about done and Central banks are working on NIRP.

                • Old farmer mac says:

                  ” No owner is going to keep a 3K sq foot home as a single family rental, especially as property taxes rise.”

                  There are probably well into the millions of three thousand square foot rental homes in the USA.

                  Splitting them into duplexes or triplexes etc is forbidden by law in most cases.. In places where it can be done it often is.

                  But by the time the market for rentals starts justifying this practice , and it starts happening, most cities pass ordinances against it. There are usually a few grandfathered duplexes and triplexes around.

                  And in some cities there are lots of houses that have been converted illegally.Most of the time one complaint from a neighbor is enough to get you hauled into court if you pull this trick.

                  I realize things are different in other countries.

          • Glen Calvin McMillian says:

            Watcher you are getting to be an incredible bore with your constant insistence that supply and demand do not matter.

            You are sounding like a preacher. Even worse than a preacher. Just believe what preacher tells you no matter how unlikely it is to be true and live like a king forever and ever and ever.( After you are dead of course..)

            You are attributing god like powers to government – powers that government does not have.

            Now it is true to some extent that government can institute a policy that allows businesses to produce goods or services at prices that would ordinarily be impossibly low.

            There is a name for this sort of thing. It is called SUBSIDY.

            If UNCLE pours money into a given industry, that industry produces more. But we ALL OF US pay the price in terms of the subsidy not being spent on US as individuals rather than the individual or business that collects it.If UNCLE prints three hundred million and gives it to a particular business then that costs each of the rest of us yankees about a dollar apiece.

            There are some corn pone sayings in trade work that apply to your soap box pronouncements. One of them is that if you can’t dazzle them with your brilliance you can baffle them with your bullshit.

            Now I can get rid of all sorts of worries and aches and pain with a pint of bourbon. It takes away the backache and the worries about the bills. For a little while. The more you use it the worse the problems really get.

            The problem with your sort of preaching is that a hell of a lot of less than brilliant or uninformed people are apt to fall for your variety of bullshit and start believing the impossible because your BULLSHIT sure does SMELL LIKE ROSES to somebody who wants to believe it. And most people want to believe in free lunches. I would LIKE to believe in them myself but I know better.

            Yes Uncle and other governments can temporarily TEMPORARILY make supply of some certain service or good grow as if by magic by robbing the COLLECTIVE PETER, meaning everybody, to pay the Paul who supplies that good or service. TEMPORARILY.

            And given that the collective Peter generally does not even understand he IS BEING ROBBED by such schemes he does not even protest- if he is listening to somebody preaching your sort of shooting cannons at the sky to make it rain.

            Peter doesn’t realize because he is being bled to death by the death of ten thousand cuts and one more cut is trivial.

            Another saying is that a man’s professional qualifications are proportional to his distance from home. This actually makes a good deal of rule of thumb sense. You don’t find welders working a couple of thousand miles from home unless they are GOOD welders. If a contractor is willing to bring in electricians from a couple of thousand miles away – or even farther – you can BET they will be good ones.

            On the other hand any half assed welder or electrician can get some local work when times are good.

            In a forum such as this one we are all a long way from home in a metaphorical sense. People who are not economists are apt to believe your bullshit but those of us who know some basic economics understand that you are DELUDED in the same sense that a drunk is when he thinks another drink solves his problems.

            If it were possible to just fucking magically conjure up goods and services from a vacuum then we would all have quit work before now.

            Only a person who has NEVER taken a basic course in economics would run his mouth the way you do about supply and demand. You understand about as much about it as I do about reading Chinese script- which is to say NEXT TO NOTHING.

            I think Twain is one of the people credited with the quote that you should never argue with a fool in public-BECAUSE THE PUBLIC WILL NOT KNOW WHICH IS THE FOOL.

            ”Ever go to Burger King and order some item on the menu and have them tell you . . . “Sorry, we’re out of those.” Well, the previous customer who bought that last one, did he pay the menu price or did he pay a price higher than what is listed?”

            If I have ever heard a fools argument in respect to supply and demand this is it.

            Now I better shut up because most of the membership has probably already likely concluded that BOTH of us are fools. You for saying supply and demand don’t matter and me for even dignifying such twaddle with a reply.

          • Lloyd says:

            Watcher said:When you go to Walmart to buy a bottle of Pepsi, do you pay a price based on how many bottles are on that shelf, or do you pay the price labeled on the shelf $/bottle?

            I agree with Ron that this is a bad example; but in thinking about it, I have come up with some grounds on which Watcher’s ideas can be supported.

            I think that Supply and Demand, as an ideal, is being debased by inequality in the marketplace. The effects of advantages in time and scale are twisting markets in ways that make them ineffective.

            Supply and Demand has never functioned as a platonic ideal. For the system to operate perfectly, you would need perfect information: cost to produce, cost to transport, number who desire the product, etc., and a level playing field. This is not the case: food is produced in the hope that the eventual price will cover it’s costs, cars are designed and tooled based on assumed production volumes that may or may not be met, and we drill oil wells not knowing what the total production will be or what price the oil will bring. There is an element of chance involved. Gambles on the future price of apples are time-based with roughly equal information for both sides of the deal.

            Michael Lewis’ excellent “Flash Boys” discusses the use of high speed trading algorithms to front run the stock market: using a tiny sliver of time, they were able to gain an information advantage. How many other areas of the economy are affected by this kind of unequal information? This throws any idea of Supply and Demand being a fair, platonic system out the window.

            I also think that unequal size of participants causes Supply and Demand to function in ways that are not in accordance with the ideal. A buyer for Ikea has advantages over smaller suppliers: they don’t actually care if the smaller company has to agree to terms that may result in the demise of the smaller company. They may be removed from the social costs of their choices because of internationalization. They may have cash reserves that allow them to make decisions that are more strategic than economic: they may, in fact, be playing a different game entirely.

            So we have a system where people have unequal information, unequal size and influence, and where people may be using markets to accomplish goals other than a good price on the immediate deal. And throw in the speed of modern technology as an unknown leaning towards the bad.

            While it may not mean, as Watcher claims, that Supply and Demand don’t work anymore, it does suggest that it no longer even pretends to function as we expect it to, and behaves in ways which cannot be controlled or predicted (which, come to think of it, is pretty close to what Watcher says…).

            -Lloyd

      • Ilambiquated says:

        Money was created out of imagination. It’s not like gravity or E=Mc^2. It’s not a provable law of nature.

        More to the point, there are no conservation laws in economics that restrict the money supply. This is the real difference to physics (where things like charge, energy, spin, hadron number etc are conserved).

        That does not mean that increasing the money supply has no consequences. It’s just not impossible.

        • Brian Rose says:

          Correct me if I am wrong, but lower interest rates pull forward future demand – units at the margin can’t afford a house or new car at 7% interest, but can at 2% thus purchasing earlier and increasing demand. Basically the same with business purchases although the need for more, newer, or more efficient equipment must also exist, which conveniently tends to happen due to the consumer impact of lower rates.

          Interest rates are lowered through reducing the prime rate or, more recently, through QE. These policies are enacted when the Central Bank believes there is “slack” in the economy. This is determined by inflation, unemployment, labor participation, and a combo of other measures that indicate if growth is running at its maximum potential.

          To me this is identical to how biology and physiology work – organisms raise/lower various hormone levels to change behavior. The end result is changes in behavior that maximize growth and reproduction.

          The ultimate “goal” for both an organisms metabolism and an economies interest rates is to maximize the speed of growth/reproduction while keeping enough reserve capital/resources for a potential shock to the system (like a period of food scarcity or a negative economic event).

          I feel that both economics and biology are at nascent stages of development into true hard sciences because they are the complex, dynamic accumulation of physics and chemistry interacting. Defining gravity or ideal gases through immutable equations is easy compared to the dynamism of a complex system.

          Whether it is a biological system, a human industrial economy, or a weather pattern, we currently only have the mathematical fortitude to predict outcomes statistically by using a normal curve of distribution.

          With the ideal gas law we can say, for certain, 100% of the time, what temperature a system will end at when we change pressure, moles, or volume. For complex systems we must revert to statistics and say “24% of the time this will happen” without having a solid conclusion of how any specific event will conclude.

          To me this means that Calculus (the mathematical basis for our incredibly precise physics and chemistry) is but a stepping stone to a more rigorous mathematical system; just as Calculus simplified Algebra.

          Perhaps AI can invent this new mathematical system that turns a 1,000,000 variable system into a simplified equation, but with that thought I’d be leaping faithfully into extraordinary conjecture without a shred of evidence. AI is the holy frail of possibility, but I feel that genuine AI on the level I am speaking (inventing entirely novel mathematical doctrines) is more myth than foresight.

  6. Watcher says:

    Re: Russia

    Domestic consumption about 3.5 mbpd. They can fall from 10 to 3.5 before anyone there starves.

    OTOH if they take 6.5 mbpd off the market, some non Russian is likely to starve somewhere.

    Interesting item — they seem to have 5.4 mbpd of refining capacity.

    • Petro says:

      If only those supply and demand numbers (and especially those pesky M1, M2, M3… numbers ) were easy to understand, we would all be joining the kinds of Irving Fisher and Ludwig von Mises.
      If only…

      -Russia is a $2.2 trillion economy. Russia is also a commodity producing/exporting country (akin to Australia, SArabia, etc). The “commodity producing/exporting” part constitutes 60%-70% of that $2.2 trillion.
      -The reason Russia consumes 3.5 mbd ( as you say) is BECAUSE of those 10 mbd it produces/sells (among other things like: CH4, grains, tanks, pplutonium, etc) .
      If Russia were to drop from 10 mbd to 3.5 mbd (as per your hypothesis) it would not be consuming those 3.5 mbd (no need to do so!) and it would be already starving!
      That is called collapse and they had one from 1991-2000. Especially bad during 1997-1998-1999.
      You know what happened then?
      Their population dropped 10%-20% (depends on who or what you read); a large portion of their beautiful XX chromosomed population (and believe me: they are beautiful!) filled whore houses and intersections of Europe; the largest land mass on Earth with 11 time zones (12 if Kaliningrad is included and almost twice the size of US) and more nukes than ALL the other nations combined, was headed by a fat, disgusting drunkard called Yeltsin and NATO expanded from Germany to Ukraine.
      They defaulted on their debt as a nation and experienced hyperinflation and starvation.

      -Those supply and demand numbers are indeed tricky, but to help a little understanding them consider this:
      if Russia were to drop from 10 mbd to 3.5 mbd immediately (as you say), it would be unlikely that you and I would have the electricity and/or the internet connection to write these silly verses…
      I suspect we would be concerned with finding our next meal…

      And by the way, there are roughly 1.5 Billion cattle roaming (or confined) on planet Earth.

      Be well,

      Petro

  7. Hillson says:

    Saudi Arabia / Iraq

    Do you think either/both of these countries are buying ISIS production at a discount but reporting it as their own, then selling on the world market and just pocketing the difference? Gives the SA, U.S. cabal a back channel to profit off Iraq oil where they’ve been edged out for official purposes.

    Certainly seems likely SA would do this, not as clear Iraq would.

  8. Andy Hamilton says:

    In case you are wondering why the shale oil industry has not gone global (supposidly):
    http://fuelfix.com/blog/2015/04/22/ceraweek-oil-chiefs-explain-why-u-s-shale-boom-hasnt-gone-global/

    No mention of the fact that free money has been the prime enabler in the US…..

    • Andy Hamilton says:

      But this guy is on to it:
      ”Mark Lewis from Kepler Cheuvreux said on Monday that the boom in U.S. shale gas production over the last few years that had helped push down oil prices was partly driven by the Fed’s “very, very low interest rates.”

      “The financial dimension to the shale story is hugely important,” he told CNBC. “I think it’s questionable whether we would ever have had the increase in oil production we’ve had out of the shale plays over the last three or four years if we hadn’t been in this environment.”

      http://www.cnbc.com/id/102600440

      • Jeffrey J. Brown says:

        Mark Lewis is a very sharp energy analyst. Incidentally he gave a presentation at the ASPO-USA conference in Austin, Texas, in 2012.

        His more recent work is on the challenges facing the fossil fuel industry, in an era of falling costs for renewable energy.

        • BC says:

          I fully concur. Fed QEternity was a kind of financialization of the US energy/commodity sector at a discount of 0% at an infinite term.

          How much future demand can we bring forward at a 0% discount at an infinite term?

          Clearly far more than the economy has the capacity to demand at anywhere near the rate of growth of “unprofitable” and “unaffordable” supply.

          Of course, the problem is that the value-added real output capacity per capita since the onset of Peak Oil and ZIRP and QEternity is well below 1% and near 0%.

          This is what we get when economists are “educated”, socialized, credentialed, and allocated to ignore the limits of debt to wages and GDP, as well as have little or no understanding of thermodynamics, net energy, entropy, and exergy.

    • Andy, I don’t agree with one point in the article. Private ownership isn’t required in countries where the oil fields are located in rural areas and the laws allow eminent domain. I’ve worked in those countries and we reach a balance, pay the landowner a cash bonus and sometimes a rental for the use of the surface, and eventually can take them to court using eminent domain. The key is for the government to have a slightly lower tax rate so we can afford to pay landowners, and the courts working properly so that if necessary we take them to court. Another practice which really helps is to have the central government allocate a percentage of the tax proceeds to the state/province/county/municipal budgets. When everybody gets cash the industry can work out these minor problems.

    • Brian Rose says:

      Yes, because it’s not like Europe has lower interest rates…

      Interest rates impact shale extraction at the margin. Prices are the primary driver in the U.S.

      If it costs $75 barrel to produce shale oil and prices are $100 barrel I will produce regardless of interest rates. Let’s not forget that oil first hit $75 in 2007.

      After this checkpoint is law and policy. In Europe it is simply illegal. In the U.S. Dick Cheney exempted fracking from the Clean Water Act. Had this policy change not occured fracking would still be unprofitable.

      This move helped make Dick Cheney a very wealthy man considering his monetary interests, but it also made the fracking boom possible (given first and foremost high oil prices).

      It’s weird to say, but Dick Cheney seems to have single handedly postponed peak oil by declaring that everyone except fossil fuel extractors have to obey the Clean Water Act. Frankly, looking at global production data, the world economy would be hell in a hand basket were it not for this seemingly minute executive action.

      Yet no one. anywhere, mentions this. Whenever I mention this incredibly important fact I am ostracized because people take it politically, and instead of understanding it neutrally as data and information they transform it into a position driven by emotion and political affiliation.

      Science and data don’t have positions. My family is Republican and they think I mention this is an assault (even though it concludes that Dick Cheney prevented a global economic catastrophe) and my Democrat friends… Well, if I say that anything Dick Cheney did is even remotely beneficial, I have clearly gone insane.

      Then, there is reality. Where potentially, bit not definitely, someone’s actions were guided by self interest and by chance happened to postpone economic mayhem by radically increasing oil and nat gas production in the U.S.

      I would have opposed the policy change when it happened, had it been reported on at all. Almost a decade later I’ve found an odd peace with it as I see that such a self serving, seemingly shortsighted executive action had given the world valuable years of breathing room to develop renewables and EVs.

      I highly doubt that Dick Cheney’s intention was to but time for renewables to become affordable, but all that matters is the end result.

      • Boomer II says:

        It’s weird to say, but Dick Cheney seems to have single handedly postponed peak oil by declaring that everyone except fossil fuel detractors have to obey the Clean Water Act. Frankly, looking at global production data, the world economy would be hell in a hand basket were it not for this seemingly minute executive action.

        I highly doubt that Dick Cheney’s intention was to but time for renewables to become affordable, but all that matters is the end result.

        That’s an interesting take on it. I’m in a place where a number of communities have been fighting fracking. Water pollution is one of the issues.

        The bad economics of fracking have slowed things down, and perhaps there won’t be fracking now in communities that don’t want it.

        I’m inclined to think that the breathing room that fracking provided renewables wasn’t needed, but I suppose if one believes that fracking was necessary to prop up economies and without it there would have been no advance in renewables, then fracking was a good thing.

        Basically, where I live, it’s a a matter of “not in my backyard.” Let them frack somewhere else.

      • Old farmer mac says:

        I am very glad to see that at least one other person appreciates the paradox and the irony involved in the renewables versus fossil fuels debate and actually SAYS SO in so many words. Most of us understand it of course but there seems to be a reluctance to talk about it.

        Our only real hope of ever having a viable industrial economy based on renewables is that fossil fuels will remain plentiful enough and affordable enough for the renewables industries to grow like kudzu on steroids for a couple of decades at least. Just throwing money at renewables deployment is not going to be enough.

        Part of the solution is going to have to be found in advances in the basic sciences. Any particular field or industry depends on advances in other fields as well as the basic sciences. Doctors for instance did not invent the microscopes that allowed physicians (biologists ? todays terminology does not fit well) to come up with germ theory. People who manufacture wind turbines owe a hell of a lot to materials researchers who invented composites used in turbine blades.

        Pouring money into basic research is an exceptionally good use of it but it takes a good while for new discoveries to make it from the lab to the construction site or retail store. Decades in most cases. Centuries sometimes.

        A few more decades of business as usual with luck will provide us with renewables technologies that are cheap enough to deploy them at the necessary level.

        I mean a LOT of luck.

  9. Dr. Don says:

    Guys there is no natural price signal. Why is the price of gold and silver hitting multiyear lows with explosive demand from China, Russia etc.? It is because the HFT (high frequency trading) and spoofing and all the corruption coming from the banks who have become wards of the deep state. The NY Fed has an Army of 75 traders that show up at 4:30 AM and coordinate (collusion) with the banks how the day will go. There is no longer a free market in the U.S. but a cesspool of collusion, front running, insider information, HFT, spoofing, etc. Supply demand died with the repeal of Glass Steagall.

    • BC says:

      Dr. Don, well said. What you describe is what I refer to as the Anglo-American and European rentier-socialist corporate-state in which an equivalent of all growth of annual value-added output is pledged, and thus flows to, the financial and gov’t sectors (and its top 0.001-1% owners), precluding any growth or real value-added output net of the financial sector and gov’t.

      Then add the net energy constraint per capita from Peak Oil and the constraint is structurally permanent.

    • Watcher says:

      Not a good idea to fling out too very much detail about such things. One such might be wrong, and then the rest of it is dismissed.

      Better one thinks about systemic forces than agreement among too very many people, any one of whom might decide to write a book.

    • Old farmer mac says:

      The price of gold and silver are determined mostly by FEAR. When things seem to be really iffy for the financial systems in place in large countries the price of gold shoots up. When the people as a whole get over being afraid of cash and bonds and the stock market etc the price of gold drifts back down.

      Of course the price of gold can be manipulated to some extent. The price of anything can be manipulated to some extent if enough people with enough clout blow enough smoke and erect enough mirrors.

      But so long as people in the west think things are stable and their money is safe in stocks or bonds or cash then they don’t want to hold gold. Gold doesn’t pay any interest. Everything else pays at least a little interest or profit in normal times, even a few bucks in a savings account.

      People in the east keep on buying it because they believe it will always be accepted by just about anybody anytime when paper or electronic money loses its value.

  10. BC says:

    What few will say at this point, i.e., they won’t be paid if they do, is that an increasing majority share of US “oil” extraction since 2012 was consumed in order to extract the unprofitable incremental supply at $75-$100/bbl that is not affordable to the rest of the economy to burn and grow real GDP per capita AND sustain unprofitable “oil” extraction at today’s $45-$55/bbl.

    What some call a “glut” of “oil” is actually an unprofitable supply at which neither the shale “oil” sector can afford to produce and consume to produce “growth” of supply that the economy can afford to consume and “grow” real GDP per capita.

    In the meantime, the “reality” of our situation is that we are at, or near, the log-limit bound of maximum systemic entropy, near zero exergy, and thus at the net energy equilibrium per capita, i.e., “Limits to Growth” (LTG).

    The central banks, including the Fed, increasing bank reserves at a 0% discount and at an effective infinite term will not increase profitable supply of “oil” at a price we can afford to burn to grow, or even maintain, real GDP per capita.

    But all of the trillions in bank reserve printing to avoid a global debt-deflationary wipeout larger than 2008-10 has provided gross distortions to market price signals of all kinds, encouraging MASSIVE MISALLOCATION of resources, savings, credit, and labor, including unprofitable production of shale and tar sands “oil” at an average price we can’t afford to burn and grow the economy.

    Until this is understood and internalized, the disinformation, misinformation, and confusion will persist and serve as a novel topic of discussion and debate.

    • Dennis Coyne says:

      Hi BC,

      Are you seriously arguing that the entire world economic system is operating at near zero exergy?

      I think you would need to substantiate such a bold claim. I do agree exergy is falling as fossil fuel resources deplete.

      There is a fair amount of solar input into the system (at least 110 million TW-h), as the price of fossil fuels increases more of this energy (both as wind and solar) will be utilized, there is also nuclear power (though this would not be my first choice), which will undoubtedly be needed.

      I agree that there are limits to growth, but it is not clear that we are as close to those limits as some believe. Higher prices will lead to more efficient allocation of energy resources (less waste.)

      • Nick G says:

        I suspect you’re quite clear on this point, but it’s worth clarifying for other readers that total Fossil Fuel resources amount to perhaps 3 months of the Earth’s solar insolation.

        So, depletion of Fossil Fuel reduces the total exergy available by a very small percentage.

        • sam Taylor says:

          Nick,

          For completeness why not list the energy of the total neutrino flux through the planet as well?

          • Nick G says:

            Well, heck, show me a neutrino collector at Radio Shack or Home Depot, and I will. PV has been available at Radio Shack for 40 years, though of course the cost per watt has dropped dramatically in that time.

            What is the neutrino energy level, by the way?

            • Brian Rose says:

              Well they are massive particles moving at great speed, so surely they must have a lot of energy!

              Thus concludes this weeks edition of The Armchair Scientist.

              *A program intended for those among us who are just educated enough to fall for such dribble*

        • BC says:

          Total available, usable, affordable per capita at necessary scale.

          • Nick G says:

            Yup, wind and solar are all of those.

            Scalable, available, usable, affordable.

            Heck, wind is cheaper than coal in the US. Solar is much cheaper than oil for power generation everywhere.

            Both are cheaper than FF, when you include all the costs.

      • BC says:

        http://questioneverything.typepad.com/question_everything/2010/10/work-exergy-the-economy-money-and-wealth.html

        Yes, available, usable, affordable exergy capacity per capita to permit further real growth per capita of value-added output.

        To scale the seemingly infinite energy from the Sun, the economy has to grow per capita to service the unprecedented debt, replenish the physical capital stock, sustain the fossil fuel infrastructure indefinitely at existing scale and rate per capita, and then provide the necessary funding to build out and maintain the renewable infrastructure.

        Ain’t gonna happen.

        The hyper-financialization of the western economies and gov’t, financial services, health care, education, and household debt service being equivalent to ~56% of GDP is masking the underlying lack of growth of real GDP per capita, capital formation, real household income. These sectors are now a net cost to the rest of the economy, with the Fed printing and gov’t programs such as Obamacare exacerbating the drag from financial services, gov’t, and health care.

        Add peak Boomer demographic drag effects and Peak Oil, and LTG and the maximum entropy limit bound per capita is becoming well established and decelerating to equilibrium or stasis around the ~0% rate of real GDP per capita and trade since 2007-08.

        Growth is done. Today. Now.

        • Dennis Coyne says:

          The IMF real GDP statistics and UN population statistics do not really confirm your story, real GDP per capita growth has not slowed to zero, money invested in solar and wind will be exergy positive especially as technology improves and economies of scale make solar, wind, and the HVDC grid upgrades that will help support it take place. Do you have good data on exergy values? People throw this term around a lot with very little data to back it up.

          The piece by George Mobus was pretty good. It is not clear that the exergy of non-fossil fuel energy will not continue to grow as the price of fossil fuel increases and the economy substitutes these forms of energy for fossil fuels over time. This is simply assumed.

          There are other studies that have suggested solar has very low exergy, but these studies are flawed by including long lived assets such as roads and fences in the cost of solar at their full cost over a 25 year life of the solar panels, not really a proper way to do the analysis.

          • Old farmer mac says:

            Right on Dennis,
            When a solar farm is supposedly at the end of its usefulness at twenty five or thirty years the panels will still be worth half what they were the day they were NEW.

            And a few guys with a pickup truck will go in and start taking out bad components as they find them without ever shutting down the solar farm. It will continue to produce even as it is refurbished with the latest generation of new panels and auxiliary equipment.

            This is not your grandfathers coal fired plant that will have to haul the coal an ADDITIONAL thousand miles because the sun is worked out and no longer shines in the local area. It won’t take three or four or ten years to tear it down and rebuild it. And except for a little diesel for the maintenance trucks it will run basically oil free more or less FOREVER so long as panels and converters etc can be manufactured.

            The naysayers just don’t want to face up to the basic facts which are as obvious as the sun at noon. We CAN adjust to energy that is double or triple todays energy costs GIVEN TIME.

            When I was a little kid we used three times as much firewood as we do now to keep a much smaller house warm.

            As Alan used to point out at TOD railroad tunnels dug well over a hundred years ago are just as useful today as they were then.

            Resources diverted from mindless current consumption to long term durable goods are not wasted except in the minds of people who refuse to think.

            Folks who think renewables are a boondoggle never seem to think the same thing about another football stadium or ski resort or shopping mall or another ten million cars. They have no problem with destroying a billion dollars worth of capital flying to the sun and snow. A week later only the memory of such a trip still exists.

            Money spent on renewables is still circulating in the economy. It is still providing jobs and the renewables that get built supply local tax revenues.

            • Brian Rose says:

              “Resources diverted from mindless current consumption to long term durable goods are not wasted except in the minds of people who refuse to think.”

              This one sentence says it all OFM. Brilliant in its simplicity.

              We’ll extract as many barrels of oil as fast as we possibly can; the only question is what we do with them. Burn it frivolously for immediate gratification, or constructively building a future; burn it for this moments pleasure, or tomorrows comfort. The barrel is burnt in both instances, but how that energy is directed dictates the comforts and sufferings of every generation that proceeds us.

              That being said, who can’t wait to get the $10,000 Gold Apple Watch!?

              I’ll be back after locking up my snowmobile for the year, and getting my jet ski ready for some fun. I work so hard; better spend my extra cash buying toys that make me forget about how dreadful work is. Afterall, my home has increased in value o much that I can just finance it all with a HELOC. Rates are so low nothing could ever go wrong! Right?

  11. shallow sand says:

    Is Russian oil production primarily secondary and tertiary recovery? It is my understanding they have primarily mature onshore fields. Is this accurate?

    • Watcher says:

      A lot of talk about Russia’s big shale.

      They simply have all that surface area. They are going to go dry last. And before that happens they are going to assert dominance to ensure maximum comfort and pride for their own citizens.

      The price for their oil will become more than monetary. It will involve disarmament, and maybe slave labor of those who imposed sanctions or inflicted any other slight. They thus have every incentive to keep all conflict non military and let the wheels of time grind their enemies to beggars. Hard to see how this isn’t inevitable.

      • Миша says:

        Золотые слова 🙂

        • Caelan Макинтайр says:

          Россия является большое место. Это и хаос трудно управлять. И золото плавится. ^u^

      • Nick G says:

        Or, you could drive a Chevy Volt, which costs less to own than the average car.

        I don’t think Russia really has much leverage, after “the wheels of time” grind away oil demand.

    • Shallow, it’s mostly secondary recovery, water floods. But it’s important to realize that most countries require water injection at an early date, this means reservoirs aren’t allowed to reach bubble point as they were in the USA.

      The new areas (Timan Pechora, Vankor, Eastern Siberia) are developed using fairly modern techniques. I don’t think they are using “tertiary” methods at large scale, , but I don’t follow Russia closely anymore.

      Russia’s oil industry is an odd creature, it has a mix of soviet and modern methods.

    • MBP says:

      I read somewhere about Russia trying plasma-pulse EOR on some wells, but I don’t know where or to what effectiveness. But most Russian fields are mature waterfloods, I don’t know of any CO2 floods that they currently run.

      • I would rather call it pressure pulsing. I have seen the lab and field test results, and it works. Don’t keep up with the science anymore, but the last time I read about it or discussed it in a meeting nobody had a sound theoretical basis to explain it. Dr Dussault showed me a draft paper he had, and it didn’t convince me. But I think I know why it works.

        The Russians try just about everything. Nowadays there’s a pretty decent technology flow into Russia. And they love to copy our ideas when we are dumb enough to expose them for free.

        • Old farmer mac says:

          I am somewhat of an independent scholar in that I have spent at least a couple of hours almost every day just reading anything that interested me for half a century plus.

          At one time I was burning with desire to prove to lefty liberals that communism WAS a real threat to us .

          – Nobody on the left I ever met back then ever seemed to take into account the reality of COMMIE empires. They were all focused exclusively on their mostly imaginary AMERICAN empire even though we generally brought our troops home and left things in the countries we occupied at the end of WWII mostly to the local people in very short order.

          The Russians did not.They erected the IRON CURTAIN.. I have basically ever since had nothing but contempt for academic liberals the way liberals have contempt for pious Christians . Nobody can ever be as blind as those who REFUSE to see.

          One thing that I learned was that both the Russian and the Chinese maintained ( and most likely still maintain) a MASSIVE intelligence operation targeted at NONCLASSIFIED information. This meant obtaining copies of just about every technical publication printed and having somebody read and summarize just about every piece of technical news.

          The intent of course was to save their own country the expense of doing research domestically.Reverse engineering a machine such as a pump is a hell of a lot faster and easier than designing one from scratch.

          Having an actual pump is best but just having the service manual with diagrams and exploded views is enough to get you ninety nine percent of the way to setting up to manufacture.

          Incidentally the Russians at one time maintained entire towns constructed and staffed with security service people just to train jung ho young commies how to live as sleepers inside western countries. These towns were duplicates of American towns right down to the newspapers. Movie sets if you please would describe them very well.

          Noboby seems to know how many sleepers they might have trained or how many made it into western countries. But I will bet most of them are were not interested in doing what they were trained to do after living free for a while.

          This is getting to be old stuff now. Thirty years or forty years or more.

          Now I am getting a little far afield but I will say I thank SKY DADDY every time it crosses my mind that todays terrorists are underachievers. The Russians had entirely practical and entirely workable plans that would have basically wiped out entire small cities that would have required only half a dozen young physically fit men using things they could have bought no questions asked at any hardware store – even today.

          If anybody challenges this last statement and Ron does not object I will post the details. I found them in a dog eared English language translation of a Russian training manual.

          You could find amazing things in used book stores back in the Vietnam era.

          • Hillson says:

            Did you ever consider that manual might have been CIA PsyOps meant to convince Americans the COMMIE threat was as dangerous as claimed by the oh so benevolent US govt?

            • Old farmer mac says:

              I did not at that time but I have since. I question just about everything. This sort book was right in there with publications such as the Anarchists Cookbook.

              Military people I know ( retired lifers , some of them relatives) tell me such things are common place in special ops troops training regardless of the country. You train people to create mayhem behind the lines using whatever can be found to work with.

              In the Russian case the only real difference was that the ” troops” were to be infiltrated into the country well ahead of the conflict as part of established doctrine for spreading revolution.

              I have read a number of books written by Russians who ought to know about such things considering their experiences. You might start with Solzenstysn. I can never remember how to spell the authors name but the best place to start is ” The Gulag Archipelago”.

              Of course the MIC exaggerates and tells some lies to get its own way. But this is not proof that the old USSR was run by saints.

              Remember the cops rule of thumb. HIS story HER story THE STORY. In many many cases both sides are telling at least a few self serving lies.

              Cut and dried black and white behavior is rare in high level political maneuvering.

              Since this sort of thing is now easily found on the net there is no reason to think any would be terrorist who is open minded about methods hasn’t found it already.

              Any tradesman or engineer who hangs out here could come up with it in an few hours brainstorming. Wimbi would figure it out in five minutes or less being an inveterate tinkerer and out of the box thinker.

          • Sometimes Mac, you really go off the deep end. Communism is not a threat anymore as both China and Russia moving toward capitalism. Our liberal president is doing exactly what he should do in normalizing relations with Cuba.

            You should stop living in the past. What you can show happened three decades or more ago may very well be true, but no one lives in that world anymore. You should let it go and start living in the present.

            I am one of those liberals you have, or had, so much contempt for, though I am not an academic. Anyway it turns out those liberals were right all along, communism was not the threat all you right wingers thought it was.

            • Boomer II says:

              I’m another who doesn’t consider “communism” high on the list of global threats. Sure, there are communists still in existence, but many of the power-hungry have found better ways to gain control.

              The primary problem I have with focusing on “communist threats” is that it diverts attention from other threats. Which, I suspect, is precisely why some folks want to stir up the pot over communists. If they tell you that your enemies are the communists, you might overlook what the pot-stirrers themselves are trying to hide from you.

              Also, if you want to greatly increase the military budget and surveillance, you need to have enemies to point to, and some people will pull out the communist threat to do that.

              And of course, we have a lot of folks who don’t want to see any changes to BAU and therefore they will suggest that communists and socialists are behind the proposed changes. The watermelon concept.

            • Old farmer mac says:

              Hi Ron,

              I do not believe communism is a threat to us now – nor that it has been a threat to us domestically in the USA at any time ever except maybe if the ICBM’s had been launched.

              The ATLANTIC and the Pacific are pretty wide and not easily crossed by communist types.

              When it comes to understanding – opening one’s eyes and LOOKING at the raw evidence – look at ANY PLACE ON THE PLANET where WE have had troops stay until things were STABLE .

              Look at any place where the Russians stuck around.

              Is this to say that banana republics in South America were well governed? No. But they were no worse governed that say Albania or Yugoslavia.

              Venezuelans are not threatened by American tanks. If they have miserable government it is basically their own fault and their own misfortune. It could be that the Castro regime does have a lot of influence there as Fernando says. I would not be surprised.

              EVERY last place I can think of we have kept troops until stability was achieved is or was better off than the places Russian or Chinese backed people took over.

              Yes – we were chased out of Vietnam. Pleasant and prosperous place ,Vietnam, compared to a nearby neighbor such as South Korea I would say , for the last forty or fifty years. SARC LIGHT ON.

              And as far as NK?

              You have not heard me say anything bad about Obama opening up relations with Cuba because I never have.

              In this forum- your own- I have commented on the amazing durability of the Castro regime and remarked that maybe opening up relations will get the Cuban people their freedom sooner than embargoing them. I certainly hope so.

              If you care to invest the time in reading what the academic left has historically had to say about communism previous to the last decade or so you will find yourself forced to agree with me that the academic left had its head up its collective ass from the twenties to the nineties or later when it comes to communism.

              AS A MATTER OF FACT , the PC dominated academic left – academics in general taken as a group in the social sciences – has its collective head up its collective ass TODAY in respect to a particular religion or culture about which you yourself have had some EXTREMELY harsh things to say here in your own forum.

              Do you realize that it is virtually FORBIDDEN to say the things you say here in this forum about Islam on a university campus in this country?

              You would be drummed out of just about any program in the country for saying the things you say here in an undergrad classroom.At the very least you would be sentenced to a defacto American academic version of a reeducation camp.

              If you don’t think communism was ever a threat explain why you could not visit Russia or China (except with an escort to keep you from talking to local people privately etc) until the hard core commies were gone – why the people living in the countries controlled by communists were shot trying to escape ?

              Why the old USSR maintained a military apparatus capable of overrunning Western Europe as easily as Hitler did? You don’t need that level for defense.

              Now if you WANT to believe right wingers in this particular debate have OUR own heads up our asses you are of course free to do so.

              We yankees have an empire of a sort but it is a soft type of empire. We have not enforced it with barbed wire and gun towers except to a very minor extent to keep people OUT rather than IN – that being at our southern border.

              Any body who has ever read even the basic history of communism MUST understand that the entire philosophy is based on expansionism and violence.

              Fortunately except for a very few places communism is history , having died out and been replaced by something akin to it but more practical as in Cuba and China today.

              I am NOT living in the past.

              I am REMEMBERING the past.

              Fortunately it IS the past. Mostly.

              Nor I am blind to the realities of AMERICAN sins.

              I feel in many ways about my country the way a good hearted simple country boy feels about his girl when he finds out she is a gold digging whore sleeping with another guy while pretending to him she doesn’t believe in sex before marriage.

              But the fact that we have grave faults of our own is not evidence that communist governments – when they did have power in Russia China and other countries were not MUCH MUCH MUCH WORSE..

              Other days,lots of days, I have things to say about so called conservatives aka as republicans – which I usually spell repuglitans – which are as just as harsh.

              Incidentally I have commented here more than once that I think Obumbler is a better prez that that whats his name idiot would have been. And Sky Daddy alone would be our only hope if that idiot Palin got to be prez.

              I don’t have any beef with run of the mill liberalism in terms of day to day issues such as the environment, health care, etc. As a matter of fact I am often taken for a liberal myself because I believe in global warming resource depletion liberalization of criminal drug laws etc etc . I believe in socialized medicine even though I have often remarked that OCARE is or was a short to medium term disaster for the democrats.

              But there are sufficient and very sound reasons for a conservative to believe in such things depending on how the word is defined. The words liberal and conservative are not much use anymore except as clubs to beat each other over the head.

            • Ron, communism is a threat, simply because it regenerates and grows internally within society. I just saw how communists running in stealth mode destroyed Venezuela. And I’m watching them closely operate here in Spain. They rewrote their strategic manual, lie, cheat, use populism, but eventually go for society’s throat. The key tactic is taking over education and brainwashing new generations. Their focus is public schools and universities.

              I keep track of nests of communists working in the USA. They usually form covens in universities.

              But they leak information using their Twitter accounts to jabber and chat, and this allows me to map their links.

              In quite a few cases I can track them back to Venezuela. It seems the missing petrodollars weren’t all stolen, some of them are used to extend their tentacles everywhere.

              • I keep track of nests of communists working in the USA. They usually form covens in universities.

                Coven – noun – an assembly of witches, especially a group of thirteen.

                I understand where you are coming from Fernando… unfortunately.

              • Boomer II says:

                I keep track of nests of communists working in the USA. They usually form covens in universities.

                But they leak information using their Twitter accounts to jabber and chat, and this allows me to map their links.

                It’s not high on my list of concerns. The US has been letting the “communist threat” dictate domestic and foreign policies for decades. As a result we’ve had witch hunts, unwinnable wars, a bigger military industrial complex, and so on.

                The “communist threat” feeds into the mentality of doing whatever it takes and using whatever power and control is necessary to fight it. I suppose one could say that approach has been working in that the communists don’t control the world, but it’s been a tremendous (and perhaps unwise) cost to do so.

                Seems like we accomplished our goal in Vietnam better by pulling out and then setting up business relationships than staying there. Similarly, we seemed to have opened up China much more by trading with the country than with our previous policies.

                • Boomer II says:

                  Also, one tactic could be for a small group of people to amplify their perceived threat so that their target spends all its resources protecting itself against the threat rather than using its resources for most productive activities.

                  If you make the US think it is at risk of being invaded by a group of people (however small and unpowerful they might be in reality), then the US amps up its military, monitors its civilians, and spends lots of money patrolling its borders, rather than improving basic infrastructure, spending more on R&D, and keeping its citizens healthy, productive, and happy.

                  Having the US be the world’s policeman has freed other countries from having to do that themselves. What they might have had to spend on beefing up their own military can be spent on other activities.

                  • Boomer II says:

                    Yet another way for a small group of people to undermine a much bigger country is by creating a sense of distrust.

                    So if you tell a country that within their midst are “communists” trying to take over, then the citizens of the country start to distrust each other and cohesion within the country falls apart.

                    The actual threat was never significant, but by suggesting that the threat is much larger and dangerous, you do damage to the country.

                  • Boomer II says:

                    In other words, how do we know that you, Fernando, are not the enemy and using the “communist threat” as a ploy for your own ulterior motives?

          • thrig says:

            Nobody seemed to take into account the reality of CAPITALIST empires. They were focused exclusively on their mostly imaginary COMMIE foes, and engaged in such hijinks as suberting the Democratically elected govenrment in Iran, weaponizing Afganistan, and wasting a life or two romping around in such places as Vietnam and North Korea. Also, the McCarthy fuss. As for MASSIVE intelligence operations, uh, consider the NSA, Stringray phone trackers, etc.

            • Old farmer mac says:

              Hi Thrig, You are quite right of course about what you say – but mostly about NOW whereas I pointed out that I was talking about half a century ago.

              • Nick G says:

                Overthrowing the democratically elected government of Iran was 60 years ago. Vietnam was 50 years ago.

                Heck, stealing half of Mexico happened 170 years ago.

                • Old farmer mac says:

                  Nick is right too. Nobody is fit to throw the first stone. But at different times different countries occupy the higher moral ground RELATIVELY speaking.

                  Just about every body is a liar at least part of the time when it comes to serving his own ends.

                  I know people (academics almost exclusively ) who get bent totally out of shape about the relative second class status of women here in the USA who go fucking ballistic if you happen to say it is a FACT that western culture is superior to certain other cultures that treat women almost exclusively as property.

                  One of them gave me the only C awarded that semester to my knowledge in the graduate school of education there for saying this.. The only customary grades are A and B. I had no trouble earning A’s in chemistry and biology and English in a much tougher undergrad environment at Tech where there was an actual bell curve in the grade distribution.

                  This would basically have disqualified me for a degree in the program but I was only taking the class to punch my ticket as a professional educator as required in Virginia every other year or so. So the grade didn’t matter to me.

                  Ya see in academia all the kids are above average. All the time. Lots of class sections posted grades ( using code numbers for students) were almost ALL A’s .

                  This sort of thing bothers me greatly because while I am being accused of being an isolationist and a xenophobe or a war monger in such social encounters the people tarring and feathering ME are essentially saying to hell with the problems of people in other countries -shut your damned mouth.

                  We PRETEND here in this classroom and here at this faculty sponsored student party that these countries and societies are morally equal to our own.

                  If you are not willing to PRETEND with us that this is true then we will get rid of you.

                  I have seldom ever heard anybody who protested the Vietnam War have anything honest to say about the plight of the people in South Vietnam for the twenty or thirty years after we pulled out.

                  They virtually always choose to paint it in terms of American Empire – blindly REFUSING to recognize that there were at that time Chinese ( budding ) and Russian ( mature ) empires.

                  The one exception to this rule is that a lot maybe most of them have been in favor of opening up relations with Cuba. It may be awfully cynical of me to think so but it seems to me that this has more to do with opposing republicans than it has with supporting the Cuban people.

                  I hope the Cubans get their freedom soon. Embargoing them has not worked. Hopefully the new Obama policy will.

                  • Nick G says:

                    Mac,

                    I suspect that it would be helpful to acknowledge that *many* (not all) people who have argued that “Western” culture is superior to M.E. (and other) culture were really claiming that was ok for the UK (and later the US, in part) to colonize the M.E. (and other countries)…for their own good.

                    This really was a staple element of justifications for the British Empire invading and colonizing.

                    The people who made this argument were, of course, just rationalizing, and obviously they didn’t care at all about women’s rights.

                    ———————————

                    It might also help to keep in mind the kind of cautions that you have written about not criticizing other people’s religions – it closes them off, right?

                  • Bill Workman says:

                    This spate of Red-Baiting is quaint and all, but rather a distraction from the real issues at hand. Fernando is the point man, and he awoke Mac from his sleeper cell hibernation!

                    “For the woods are lovely, dark, and deep, and I have Miles to go before I sleep……

  12. Oskar DeSilvo says:

    BC,

    I would be interested in reading your elaboration of your post, particularly your third paragraph.

    My first blush interpretation is that you are saying that humanity is close to reaching the point of zero net energy growth? Or zero net energy growth per capita? I imagine this is related to EROEI? The upshot is that further increases in human civilization complexity (in total, not for select subsets of the population) is nearing an end? Can you cite facts and math to illustrate the veracity of your assertion?

  13. I prepared a couple of graphs and wrote a description of how they work. I also put up a page in my blog describing how I prepared them. These aren’t very sophisticated, but they may give you a slightly different look about what happens on a worldwide basis. Here’s one of the two graphs.

    The comment about this graph is:

    The first graph shows oil prices bounded in a plus/minun $10 barrel per dollar envelope from 1987 to 2004 (with one exception). Starting in 2002 we see prices increase gradually, there´s a dip during the 2008 and 2009 economic crisis, and then they fail to increase for two years (followed by the 2014 and ongoing 2015 dip).

    What makes this plot interesting is the combination of the green dots (the oil price changes) and the yellow dots. Those are the average change in oil rate for the countries/groups in the BP data base. The average of all these countries declines over time (the dotted line is a linear fit), Crucially, when oil prices begin to climb in the 21st century, the average swings from positive to negative after 2005.

    The link to the page is

    http://21stcenturysocialcritic.blogspot.com.es/p/change-in-oil-price-versus-time.html

  14. islandboy says:

    Reading all this stuff about QE and low/no interest financing and how unprofitable this whole LTO debacle is got me to thinking, what if all this money had been thrown at renewables, solar PV, CSP, Wind. micro hydro, geothermal etc. Would the long term net effect on the US economy have been better than spending all this money and effort on extracting stuff that, once burned is gone forever (as fa as anybody alive today is concerned)?

    Fernando keeps harping on the fact that renewables don’t make economic/financial sense. Seems to me some of this very costly to extract “oil” don’t make economic/financial sense either. Given the choice, I’d rather spend money on the gift that keeps on giving (renewables), than a one shot high from fossil fuels. For each gallon/litre of fuel burned without making a profit, there is no hope of ever making a profit, while there’s always the chance that an investment in renewable energy will reap handsome rewards before the renewable energy power plant reaches it’s expiry date. Just a thought.

    • Island boy, the LTO, like any other business, involves risks. I understand the easy financing drove some overzealous developments, but I notice very solid companies like ExxonMobil are developing tight oil. This tells me the developments do generate profits. And of course generate a lot of employment.

      The solar panel and wind businesses get subsidies and yet they are not being funded because they just lack the proper returns. And the USA isn’t a communist nor a neo fascist nation like say China, where central power allocates financial resources.

      The fundamental problem with renewables is the lack of energy storage, and their cost. The USA also has a disadvantage because the high end sophisticated components tend to be imported. I made fun of this point in one of my posts, pointing out a campaign to install renewables using imported goods would lead to a Chinese imperial hegemon in the 22nd century.

      • Sam Taylor says:

        Ridiculous. You might as well argue that Saudi Arabia will one day take control of the USA because America buys oil from them.

        The USA gives China bits of paper with pictures of dead white men on it, and in return the USA recieves large quantities of hi-tech goods and materials. It’s fairly obvious who the winner is here.

        • islandboy says:

          What’s more as I point out in my post below, every gallon of gasoline derived from the oil bought from Saudi Arabia will a large SUV less than 20 miles and then it’s back to the drug dealer for more. Each kW of solar PV installed will harness far more energy than the fuel that can be bought for the same money over it’s lifetime.

          So, while the Saudis are getting IOUs for energy (that they will not be able to supply forever), the Chinese are getting IOUs for a means of harnessing a never ending supply of energy!

        • Sam, Saudi Arabia doesn’t have the population, manufacturing, agriculture, social norms, culture, nuclear weapons, net war capabilities, imperial penetration, and other factors China has.

          I think solar power and wind would make more sense for nations such as the USA if there were an intense focus in developing internal capabilities as well as some sort of coherent plan. Alas, there isn’t anything, nor do I expect anything.

          A country led by politicians whose main talent is making blunders doesn’t have a chance against the Chinese in the 22nd century, unless it wakes up.

          • Sam Taylor says:

            Why bother making it yourself, when the Chinese are perfectly happy to do it for you on the cheap, and in the process are sending you all their natural resources and manufactured goods and are seriously degrading their own environment in the process. Chinas own worst enemy is themselves, since as far as I can tell they seem to be intent on rendering their country uninhabitable as quickly as possible so that they can make cheap smartphones for Americans.

        • Glen Calvin McMillian says:

          I agree about the pieces of paper with dwm pictures but China is has gotten and is getting more by light year.

          From a long term American domestic interest point of view – an isolationist pov if you will but still a legitimate view- we have given away our major advantage that made us wealthy – the skills and work ethic of our working class people and all the businesses that employed them that have gone overseas.

          It doesn’t take too long to learn to run a sewing machine – you can get good at it in a few months and turn out good work almost immediately but not very fast. But our sewing machine operators were not really trainable for high tech work. Our furniture people are out of work. This put the mechanics and engineers in those businesses out of work. The local machine shops and industrial supply in the small manufacturing town near where I live are on the brink of closing.

          The Chinese now know how to run all these businesses and all these machines and we provided them with the opportunity to do so well before they could have done so without the flood of dollars. Our working classes took it up the butt no vaseline.

          This economic destruction has in turn contributed heavily to all our social ills ranging from crime to drug addiction.

          The BENEFITS of globalization have flowed almost exclusively to the people from the middle on up to the top. No body with a professional license or a government job needs worry about immediately losing his job due to sending our manufacturing to China. But I know people right and left who have taken it in the solar plexus.

          Economic muscle is sort of like a military secret in some respects. If you can build a bomb but the enemy can’t you have the advantage. Once the enemy knows HOW your advantage is gone pretty soon. In the case of our manufacturing base we are even worse off due to political considerations. The working classes don’t have anybody to look after them in Washington. The democrats are as eager to sell them out to big business as the republicans and have done so without a second thought.

          • Nick G says:

            Glen,

            Sad to say, most of those people were going to lose their jobs eventually – China just sped up the process.

            Look at farming: we need about 1% as many people to produce food as we did 100 years ago. The same thing is happening with manufacturing.

            • Old farmer mac says:

              Yes they would have lost them eventually but the process would have been much slower and time is the great lubricant of peaceful social change.

              Now we are supporting them on welfare or as prisoners in all too many cases.

      • islandboy says:

        Funny you should mention jobs:

        US Solar Jobs Growing Ten Times Faster than National Average Employment Growth

        and

        Solar adds more US jobs than fossil fuel extraction”

        The main point I am trying to make though, is that a 30kW solar PV system installed in the South-west US today, will probably still be able to produce well over 150 kWh daily in 25 years time. This could charge the a 60kWh EV battery (every day) with power to spare. A tankful of fuel burned today, has no utility beyond the length of time it takes to burn it. What then is the relative value of the 30kW PV system?

        • Sam Taylor says:

          Is the absolute number of jobs added necesarilly that useful a metric? If we went back to peasant farming for food production it would create loads of jobs. I thought the purpose of most activities like this was to help improve wellbeing, not just to create jobs.

          • Fred Magyar says:

            I thought the purpose of most activities like this was to help improve wellbeing, not just to create jobs.

            You are wrong! Well being has nothing to do with it. The purpose of jobs is to allow consumers to buy more shit!

          • Sam, a guy like me usually worries more about GDP and corporate profits. But when I take a long term view I tend to advocate job creation, with jobs paying good wages. This reduces poverty, increases government ability to collect taxes (and reduce rates), increases the savings rate, and gives the population much better dental health.

            These are all positive outcomes we really need to advocate. They keep the communist menace under control. As you know I’ve already fled countries taken over by communists, and it wasn’t something I wish on future generations.

            • Sam Taylor says:

              I have to admit that I don’t always think GDP is that great a metric either. The old “smashing windows” argument. However, at least in the UK, we’ve started trying to measure other statistics than just GDP, which I think is part of the way forward to a more nuanced attitude towards how we determine what things we should be trying to maximise.

              In general I’d be more in favour of jobs which enrich people’s lives and help improve the lives of others too. Too many of the jobs we seem intent on creating these days seem to accomplish exactly the opposite, however.

      • Fred Magyar says:

        The solar panel and wind businesses get subsidies and yet they are not being funded because they just lack the proper returns.

        HUH?!

        And the oil business gets subsidized to the tune of US $ 4 billion annually and I have a hunch some of their returns are getting pretty lousy too… Are you suggesting we shouldn’t subsidize oil businesses?

        If society needs energy and subsidies help it get energy then there will be subsidies end of story!

        • Sam Taylor says:

          The EIA published a report on energy subsidies, including a sectoral breakdown, which you can read here:

          http://www.eia.gov/analysis/requests/subsidy/

          I’m not sure that wind a solar would do that well on a kwh per $ subsidy basis, to be honest.

        • We shouldn’t subsidize any energy businesses. If you wish, a carbon tax can be used to encourage renewables. If you wish to make the carbon tax be used to reduce global warming then just tie the rate of increase to the historical increase over the five previous years.

          For example, if in 2016 the surface temperature average over the previous five years increased 0.01 degrees C per year, then the carbon tax can increase by 1%. Something like that ought to work.

          • Old farmer mac says:

            Fernando you seem to understand the way humans think pretty well- to understand that we are not apt to do things unless they are immediately profitable or enjoyable or pay off in some other way that encourages us to do them.

            Now I am not an engineer but I do know a little about what they do and have worked closely with some. An engineer builds in some safety mechanisms and even doubles up on some parts of his designs to make sure they will work in a jam.

            The simplest case I can think of is when Volvo automobiles used double v belts instead of just one like American manufacturers. If one broke you still had a functioning water pump and alternator. No fried engine or dead battery.

            The problem with dealing with fossil fuels and letting the market decide without subsidies when to switch to renewables is that the market works very slowly in terms of building out any new industry that requires extensive heavy duty infrastructure. We could go from no cell phones to cell phones out the ying yang because it really doesn’t take much – just a tower every few miles. The phones are small and easy to make by the millions and cheap enough to throw them away.

            Now if we leave it up to the market to supply us with a renewables industry while fossil fuels are still cheap the market will leave us without a renewables industry when fossil fuels are too scarce and to expensive to for us to manage the transition.

            As some of the regulars here have pointed out often, the price of oil has jumped multiple times without production increasing significantly if at all.

            We are just nekkid apes and left to our own devices and allowing the market to determine when we get renewables – We will not get them. We will be like a bunch of rats in a corn crib. We will use up the entire crib of corn at an accelerating rate and we the collective rats will be without any corn at all. This makes for a pretty nasty set of circumstances for the rats involved.

            I personally believe we have less than twenty years worth of more or less affordable oil and gas. Maybe a little longer in the case of coal.

            Tell us all in so many words what YOU think about the long term supply of fossil fuel – in the absolute meaning in terms of daily production and in terms of per capita availability.

            If you believe we have ample fossil fuels to last us fifty years then you are justified in saying renewables should not be subsidized IN PRINCIPLE.

            If you believe we have maybe ten or twenty or thirty years worth of affordable fossil fuels then I cannot see how you can reach any conclusion other than that we need to keep on subsidizing wind and solar power hoping to get them scaled up enough to keep us human rats from crashing like the rats in the corn crib.

            As an engineer you have helped build an industrial infrastructure world wide dependent on fossil fuels.

            As an engineer tell us what the xxxx we are going to do when we run out of AFFORDABLE fossil fuels over a future period of a decade or less -which seems to be a VERY REAL possibility.

            We are not going to build out renewables in a decade starting from a small base.

            I believe in the Wonderful Wonderful Market and the Invincible Invisible Hand to about as great an extent as a realist CAN believe in them. BUT the market and the hand can only work so fast.

            Doing without is NOT a viable option. When things start getting desperate rats fight for the dregs.

            Maybe I am wrong as wrong can be but I believe prudence dictates that we keep the pedal to the metal when it comes to renewables. With a LOT of luck we might have enough renewables to keep the lights on when fossil fuels are more or less all gone or being hoarded and rationed.

            • Yes Mac, but there’s no need to subsidize anything. A shift can be encouraged with a simple carbon tax. I’m going by Roger Pielke Junior’s work on this topic.

              • Boomer II says:

                A carbon tax would find great support among the environmentalists and the renewable energy supporters. But getting Congress to pass it would be very difficult.

              • Dennis Coyne says:

                Hi Fernando,

                Most people agree that a carbon tax makes more sense than subsidies, it is only that most politicians do not understand this point. Subsidies are only used in the US because a carbon tax has not been implemented. Often too many exemptions are written into the carbon tax regulations and effectively subsidize those industries with good lobbying efforts. A carbon tax should allow no exemptions and should simply be based on the fuel’s carbon dioxide emissions.

                • Old farmer mac says:

                  Hi Dennis,

                  In the rough and tumble Darwinian world of politics the primary goal is simply to stay in office. Everything else is secondary, must be secondary. You cannot accomplish anything while out of office.

                  Bottom line in the existing real world you can cut deals on subsidies and get away with voting for subsidies.You can even run on the basis of supporting subsidies depending on WHICH ones and WHICH district.

                  BUT I don’t think there is a congressional district in this country where you could run successfully on the basis of a carbon tax.

                  • Dennis Coyne says:

                    Hi OFM,

                    I agree. I also think a carbon tax would be better, but you are right that it won’t happen in the US. Perhaps in Europe though, they are a little smarter there, imo.

              • Nick G says:

                Fernando,

                Let’s be clear: carbon taxes are very hard to implement because…they work! The FF industry knows very well that a carbon tax would accelerate the transition away from FF, so they’ve worked over decades to make taxes of any kinds poison, and fuel taxes in particular.

                It’s no accident that the Koch’s made their money in oil.

                • Nick, I don’t think the oil and gas industry gives a hoot about a reasonable carbon tax. Evidently they don’t want to be put out of business. But gasoline is already taxed really high, and nobody even bothers to comment about it. I think you guys are way too deep into bs about oil industry conspiracy theories. We just have lousy politicians, and that’s it.

                  • ChiefEngineer says:

                    Then tell me why the oil men Bush and Cheney made fun of Kerry in the 2004 election about a gas tax ?

                    Or,

                    Why Republicans have to demonize Al Gore about the environment ?

                    Fernando, let’s keep it real. Gasoline in America isn’t hardly taxed at all.

                  • Captain Fact Checker says:

                    Uhhh, Fernando, how did you come to the conclusion that gasoline taxes are high in the U.S?

                    Western Europe Gasoline Tax
                    US Cents/Liter

                    Italy 116
                    UK 123
                    Netherlands 139
                    France 121
                    Belgium 125
                    Germany 128
                    Finland 129
                    Portugal 122
                    Sweden 120
                    Spain 90
                    Austria 100
                    Average 119

                    U.S. 13

                  • U.S. Taxes are about 50 cents per gallon, on average. I think that’s pretty high. Europeans have incredibly high taxes, which is fine with me. And the oil industry doesn’t care either. They compete against each other anyway. The gasoline retail business is a money loser, the profits come from selling coke, chips, donuts, and in Texas we sell belt buckles, beef jerky and knives.

                    http://www.api.org/oil-and-natural-gas-overview/industry-economics/fuel-taxes/gasoline-tax

                  • Cracker says:

                    To CFC and Fernando,

                    In Florida, USA, the federal and state taxes are 38.7 cents US as posted on gas pumps. At their option, local governments can add up to 10 cents per gallon, most are in the lower half of that range. Other states vary, with predominantly liberal states on the left and right coasts usually considerably higher, so Fernando’s 50 cents is in the ballpark.

                    Jim

                  • toolpush says:

                    So every one agrees with everyone?

                    13c per litre = approx 50c per US gallon.

                    Note all those European number are per litre!

                    3.76 litres per US Gallon

                  • Nick G says:

                    Kind’ve. The revenue raised is substantially less than the cost of road construction and maintenance. Roads don’t pay property taxes, like railroads and any other property owner would.

                    And, the total indirect costs of fuel are much higher than that, including pollution, security, etc.

                    So, any way you look at it, the oil, car and truck industries are getting a very big free ride.

              • Old farmer mac says:

                A carbon tax would work just fine if it were implemented on a wide enough basis and a high enough tax.

                Now not to quibble TOO MUCH but to my way of thinking a carbon tax would still be a defacto renewables subsidy.

                Most environmentally inclined folks think this way when they say we are subsidizing fossil fuels Not many ff companies actually get a subsidy in the form of a check that can be deposited. They do generally get subsidies indirectly by being able to avoid paying for the health care and environmental damages they cause.

                There is no tax on coal for instance devoted to paying for the health care problems that arise from burning it.

                Unfortunately the political calculus is such that getting such a tax passed is next to impossible.

                Getting direct subsidies passed in support of renewables is doable.

                The tax subsidy game is one worthy of some serious contemplation. Hardly anybody understands it at the basic psychological level at which it works.

                The person or industry seeking a subsidy has an enormous incentive to pour huge amounts of resources into getting the subsidy in question approved.

                A local manufacturer recently got about five million bucks in economic development money. He could have spent a million in various ways making donations, hiring lobbyists, etc etc and made gotten five times his investment.

                But since my share of his gift was trivial ,a penny or two, I could not as a practical matter do anything to keep my government from gifting him with a few cents of my money.

                But mention adding a dollar to the gas tax and EVERYBODY who buys gas will go ballistic.

                Subsidies are doable. A carbon tax probably is not.

                This is unfortunate to say the least.

                • Mac, the carbon tax works better because it doesn’t involve a jerk sitting in Sacramento or Austin deciding which gadget gets the subsidy. Every time politicians start laying those golden subsidy eggs (or mandates) we end up with a crappy solution.

                  • Old farmer mac says:

                    Hi Fernando,
                    I agree that a carbon tax would work very well – maybe even better. Probably better in my opinion.

                    BUT in order for it to work it must first be passed.

                    I just don’t see any likelihood of a comprehensive carbon tax high enough to matter being enacted – at least not in the USA.

                    Such a tax might be a realistic possibility in a few western European countries but I am not well enough acquainted with European politics to have firm opinion either way.

                    One excellent point in favor of the tax rather than subsidies is the one you just made- the decisions as to what renewables get built, and where, would be far more realistic.

                    Wind farms would mostly only get built where the wind resource is good and solar farms would mostly only get built where the sun shines just about every day.

                    Nobody would be buying solar in rainy Scotland or putting in solar in the shadows of tall buildings in rainy Portland.

                    I have seen many pictures of solar installations that were installed in such a fashion as to be utterly worthless.

            • ChiefEngineer says:

              We as humans subsidies the oil industry everyday:

              1. Local effects -e.g. poisoning humans breathing bad air.

              2. Regional effects – fallout from airborne pathogens – infections, particles, chemicals.

              3. Global effects – changing interactions between the atmosphere, oceans and the sun, weather effects, effects on plants and the ocean biosphere.

              The true cost of fossil fuel are not paid for by the industry everyday

              • That’s not a subsidy. Eating McDonald’s French fries makes you fat, gives you high cholesterol, heart attacks, and so on. But you don’t subsidize the restaurant chain. You guys are pushing your definitions all the way to Narnia.

                • Nick G says:

                  If the consumer doesn’t know about those effects, you might call it fraud.

                  But, as long as the benefits and costs accrued to the same person, there’s no subsidy.

                  When an industry, and it’s consumers, get a benefit, and the rest of society pays the costs, then there is a subsidy.

                  Do you see the difference ?

                • No nick, I don’t. You are reinventing a definition , I suppose motivated by the need to show renewables ought to get a subsidy because everything else gets a subsidy. I don’t buy it.

                  • ChiefEngineer says:

                    Oh Fernando, let’s try this again.

                    You pay $6 for your Big Mac, fries and Coke. But the real cost of this meal after 20 years is your monetary amount plus “high cholesterol, heart attacks, and so on”(including a $50K hospital visit which cost your insurance company).

                    Myself on the other hand, doesn’t believe in socializing(or communism) my cost to others. So I eat only fruits and vegetable with no need for heart bypass surgery.

                    Now, every month I pay my health insurance premium which cost more than it could because the insurance co. has to cover the cost of your McDonald’s habit.

                    The true cost of eating McDonalds includes poor health and high insurance cost for all. Which is not included in your $6 purchase. We are all subsidizing you and McDonalds behavior with higher insurance cost.

                    What’s your next big idea Fernando, a capitalist system that offers below poverty level wages with no health insurance to work at McDonalds to subsidize your heart attack ?

                  • Nick G says:

                    Fernando,

                    I’d love to take credit for the idea of Externalities: costs which are not properly accounted for, and which are incurred by one group but paid by another.

                    But I can’t. It’s an old and very well accepted concept. The most conservative of economists agrees with the general concept, though of course everyone has their own idea about what to include and how to value it.

                    “A Pigovian tax (also spelled Pigouvian tax) is a tax applied to a market activity that is generating negative externalities (costs for someone other than the person on whom the tax is imposed). The tax is intended to correct an inefficient market outcome, and does so by being set equal to the social cost of the negative externalities. In the presence of negative externalities, the social cost of a market activity is not covered by the private cost of the activity. In such a case, the market outcome is not efficient and may lead to over-consumption of the product.[1] An often-cited example of such an externality is environmental pollution.[2]

                    In the presence of positive externalities, i.e., public benefits from a market activity, those who receive the benefit do not pay for it and the market may under-supply the product. Similar logic suggests the creation of a Pigovian subsidy to make the users pay for the extra benefit and spur more production.[3] An example sometimes cited is a subsidy for provision of flu vaccine.[4]

                    Pigovian taxes are named after economist Arthur Pigou who also developed the concept of economic externalities.”

                    “The Pigovian tax is a commonly used method by government as it has relatively low transaction costs associated with implementation. Other methods such as command and control regulations or subsidies assume that government have a complete knowledge of the markets which is almost never the case, and can often lead to inefficiencies and market failure though rent seeking behavior by individuals and firms.”

                    http://en.wikipedia.org/wiki/Pigovian_tax

                    In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit.[1]

                    For example, manufacturing activities that cause air pollution impose health and clean-up costs on the whole society, whereas the neighbors of an individual who chooses to fire-proof his home may benefit from a reduced risk of a fire spreading to their own houses. If external costs exist, such as pollution, the producer may choose to produce more of the product than would be produced if the producer were required to pay all associated environmental costs. Because responsibility or consequence for self-directed action lies partly outside the self, an element of externalization is involved. If there are external benefits, such as in public safety, less of the good may be produced than would be the case if the producer were to receive payment for the external benefits to others. For the purpose of these statements, overall cost and benefit to society is defined as the sum of the imputed monetary value of benefits and costs to all parties involved.[2][3] Thus, unregulated markets in goods or services with significant externalities generate prices that do not reflect the full social cost or benefit of their transactions; such markets are therefore inefficient.

                    http://en.wikipedia.org/wiki/Externality

                  • wimbi says:

                    Nick. Thanks much for the note on Pigouvian tax. Seems it needs repeating over and over here. People don’t want to think about it, but VERY important.

                    I am suggesting to the local faith groups that they voluntarily pay their own P tax, since, as the Pope says, not to do so is a SIN.

                    (Pardon me, Pope, for distorting your actual extremely careful words to my own sinful intents.)

            • wimbi says:

              I read all this discussion on solar and am puzzled that such a group as this, with tons of information and analytical minds, seem to presuppose the future as anything like the present, when all over the world the solar revolution is accelerating, propelled by its intrinsic merits.

              I know from direct experience how much even a tiny (by our standards) amount of electricity is appreciated by many millions of the poor who now have none at all.

              And also, I know from personal experience how easy it is for a person like me with some disposable capital, to simply redirect usual purchase priorities to go all the way -or nearly- to off-grid solar- copious and long lasting.

              There are some aspects of such energy independence not often noted. I for example, find it indeed odd that after a life of avoiding coal electricity, I find myself searching for MORE ways to use solar electricity, since so often it pours into our house in considerable excess of need, even tho we have switched to all-electric everything, including car.

              That’s why I have those two assistants out in the shop working on demos of heat/cool storage devices to allow use of the oversupply to coast thru the times of undersupply.

              With all this talk about difficulty with government and BAU resistance, we should keep in mind that individual choices can and will have an accelerating effect.

              And BTW, I know at least a dozen folks nearby who have made the same decisions as I have, independently, and often ahead of me. I am not just an isolated, irrelevant outlier.

          • Ilambiquated says:

            We shouldn’t subsidize any energy businesses.

            Yes we should.

            • Caelan MacIntyre says:

              If ‘we’ do, it needs to be ethical, thus, non-coercive. Good luck with that.

      • islandboy says:

        Despite everything you say about the lack of economic sense for solar PV, the 30% federal tax credit for commercial projects seems to be all that is necessary to provide an adequate incentive for the commercial market. See: (bold mine)

        SolarCity $1B Fund To Spur Commercial Installation

        “SolarCity (NASDAQ:SCTY) announced Wednesday a $1 billion fund to finance commercial solar energy systems — including battery storage systems.

        Investment firm Credit Suisse is among the investors.

        The No. 1 U.S. residential solar installer noted in a press release that it chose Earth Day to activate the fund, which it says is expected to finance more than 300 megawatts of new commercial solar projects over the next two years.

        San Mateo, Calif.-based SolarCity has installed more than 1,800 commercial solar projects in 21 states, the company says.

        “We’ve barely scratched the surface of the addressable market,” SolarCity CFO Brad Buss said in the press release.”

        If anyone has problems viewing the article, I was referred by yahoo finance so the following link might work better

        http://news.investors.com/042215-749044-solarcity-billion-dollar-fund-to-expand-commercial-installations.htm?ven=yahoocp&src=aurlled&ven=yahoo

        The 30% tax credit drops to 10% in 2016 by which time the tax credit for residential will no longer exist. I am increasingly getting the feeling that when it comes to solar PV there are a number of people who are going to wake up one day and wonder what hit them!

        Solar City is another Elon Musk initiative, Tesla Motors and SpaceX being the ones he has hands on involvement with so, he’s either an idiot or a genius.

        • Boomer II says:

          I would say that incentives to move to renewable energy fall under the category of strategic planning and defense.

          Just as military spending isn’t based on its commercial sustainability, renewable energy has enough value as a way to prepare for declining fossil fuels that there are merits in encouraging and expanding its use even if government incentives are necessary in the beginning.

          Now, that doesn’t mean renewable energy projects should be blindly supported. Using corn as a source of ethanol is proving to be a poor use of resources and should be phased out in favor of other renewable energy projects.

          Economics alone are starting to favor many renewables over fossil fuels and we probably could step back and let the market take over. But the market may not be move as fast as we deem necessary. And we may decide legislation needs to be added to discourage energy use that results in major environmental damage.

          As the US military has already indicated, if it is up to them to develop an energy policy that aids their efforts to defend the country, more use of renewables would be part of the mix.

          • Fred Magyar says:

            I would say that incentives to move to renewable energy fall under the category of strategic planning and defense.

            I would agree!

            I happened to be in Germany around the time when the Bundeswehr released its strategic analysis of the consequences of peak oil back in 2010 and clearly remember what was reported by the global MSM at the time… ‘crickets’ However that might have been just around the time when Angela Merkel, the German military and their Green party formed a subversive alliance to really start pushing solar and wind energy >;-)

            http://goo.gl/1leUdz

            • Old farmer mac says:

              I agree as well and have remarked many times that wind and solar farms mean the countries that possess them need fewer tanks and destroyers to protect their access to energy.

              A country able to supply its own energy is one that does not have to depend on buying it from potential enemies.

              And the folks who are renewables naysayers never seem to believe in the prices of coal, oil , and gas going up at the rates they have gone up in the past.

              Inflation can reasonably be expected out any societal debt involved in subsidizing a wind farm.

              The effect that renewable energy has on fossil fuel markets – depressing both the sale and the price of fossil fuels – is probably more than big enough to cover the cost of such subsidies as we are paying these days.

        • Yes, the solar tax credit is a subsidy. Without the credit and other goodies the solar panels are a waste of money. The waste doesn’t become apparent until there’s enough customers trying to parasite off the grid. But eventually, like happened here in Spain, the parasite load becomes too much, policies change, and the solar investors lose their shirts.

          • Boomer II says:

            The waste doesn’t become apparent until there’s enough customers trying to parasite off the grid.

            That’s going to be dealt with, one way or another. In the US more companies are looking to move off the grid entirely.

            • Boomer II says:

              I suggest that for people who want to know upcoming trends for the grid, research distributed generation.

              Right now it is happening more with companies. They use renewable sources whenever possible, but if those are not available for some reason, they can run their own backup power sources, such as generators.

              Saying that solar won’t work with the grid suggests that it is the grid, not solar, that is likely to be phased out.

          • Nick G says:

            The Spanish experience doesn’t tell us much about solar subsidies: the initial rates were far too high. When that became clear, the rates were cut sharply, and also partly cut retroactively.

            Start by paying your suppliers way too much, then drastically cut the payments, and you’ll make investors lose a lot of money. Guaranteed.

            • Ok, so avoid the problem by giving them a tiny subsidy, wait five years and see how that works.

              • Nick G says:

                That works fine if you don’t really care about the program, and don’t really want it to have a significant impact.

                The alternative: do what the Germans did, and start the subsidy at a more reasonable level. Then, be happy when the program is *more* successful then you expected, and reduces the cost of new PV dramatically.

                Next, reduce the subsidies for new PV in a sensible, gradual manner, and don’t cut the subsidies retroactively.

                It’s true that the German program, due to it’s somewhat unexpected success, caused somewhat more PV installation than expected (though nothing like the 10x excess that happened in Spain). Some Germans, who don’t really like solar anyway, complain about that, and they grumble about their residential power bills being a little higher But, many other Germans are quite happy about that.

              • Fred Magyar says:

                Just because you keep repeating something doesn’t necessarily make it true. Northern Germany may not be the best place in the world for solar PV but Southern Germany is quite good.

                Recent Facts about Photovoltaics in Germany
                http://goo.gl/Rn8EgZ

                • islandboy says:

                  Sorry Fred but, I must admit that when looked at from the perspective of the world map from the same source, the resource in Germany pales in comparison to better locations like the south western US. According to the world map the best location in the world for solar is the Atacama desert in Chile, where some of the largest solar power projects in Latin America are being built.

                  World Map

                  • Fred Magyar says:

                    Well, I’ve been to Germany a few times and I’ve personally seen working PV systems there, so while there may be many places in the world that are better suited, the Germans still manage to produce electricity there with photovoltaics.

                  • It’s not whether they work or not. It’s mostly whether the investment is intelligent. I don’t think it is. As I explained to Ebenezer Rabbit, wind doesn’t blow very well in Kinshasa, nor does it get much sun when it’s raining.

                  • Nick G says:

                    Ask yourself – after being held hostage by Russia for Natural Gas (or watching other countries going through that), would you want to be dependent on imported power, if it wasn’t absolutely essential?

                  • Ilambiquated says:

                    The German government’s stated goal when it started encouraging solar was to bring down the price of solar. This succeeded spectacularly well. But the point was to replace other forms of energy as part of reducing large scale energy projects.

                    Claiming that the government failed because energy is too expensive makes no sense. The government never had the goal of providing cheap energy. In fact, part of the original package was a massive increase in taxes on electricity and liquid fuel. The money is used to top up social security.

                    The result of increased prices to consumers has been increased investment in efficiency.

                    Energy production is not an end in itself unless you are on the supply side, like most folks around here. Consumers want energy services, (like heat, light, transportation, mechanical work, and increasingly intelligence) not energy per se.

      • Nick G says:

        Wind is more important than solar. It’s also cheaper than coal.

        Wind turbine components for installation in the US are mostly manufactured in the US.

    • Nick G says:

      This is confusing two very different things.

      Electric Vehicles and rail are pretty much all that’s needed to deal with Peak Oil – 70% of oil consumption is transportation, and 70% of that is personal transportation. EVs are cheaper and better than ICEs right now, and they’re fully ready – we “just” need to deploy them ASAP.

      Renewable energy sources don’t deal with PO, for the most part. Solar competes with about 10% of oil consumption, as PV is much cheaper than oil-fired generation. That gives PV a strong “market-cost” justification in a lot of areas, but non-FF sources (wind, solar, hydro, nuclear, etc.) are needed primarily to deal with non-market costs, like “criteria” pollution, Climate Change, energy security, etc., not PO.

      • Political Economist says:

        Transportation is only 60% of total oil consumption. The rest if industrial/chemical/agricultural uses.

        Within transportation, passenger cars account for maybe 60% of the fuel consumption. The rest is trucks/ships/airplanes.

        EV is currently just a small fraction (1 million?) of the world’s annual auto production (50 million and growing), not to say to replace the 800 million on road. And, where is the lithium to replace 50 million autos every year?

        • Nick G says:

          I suggest you re-check your consumption numbers, using the EIA website.

          Yes, EV sales are relatively small. That’s why we need to ramp them up, ASAP. And no, lithium supply isn’t a serious problem.

        • Jeffrey J. Brown says:

          I think that total light vehicle sales are forecast to be on the order of 90 million globally this year, and last year I believe that 0.5% of global sales were EV or plug-in hybrid.

          http://www.autoblog.com/2015/02/03/global-auto-sales-forecast-growth-ihs/

          • Nick G says:

            Yes. As a society we don’t recognize the true costs of oil addiction, and we have not prioritized the transition away from it.

            On the other hand, we have better and cheaper alternatives, right now. It takes a while for people to get used to new things, and there’s vicious political opposition. In some places you’re labeled a “liberal” or worse if you drive a hybrid or EV.

          • John B says:

            Yes, but sales have been doubling every year. Solar power doubles every 2 years. Do the math.

            • Fred Magyar says:

              http://goo.gl/uc69Oo

              China Adds Equivalent of France’s Entire Solar Capacity in Three Months

              China is seeking to approve and install as much as 17.8 gigawatts of solar power this year, or nearly 2 1/2 times the capacity added by the U.S. in 2014. The push is part of the Asian nation’s plans to cap carbon emissions in the next decade and a half.

              • Jeffrey J. Brown says:

                Following is a link to NYT story about a Chinese documentary on pollution, “Under the dome.” The title refers to some Chinese schools that are literally under a sealed airtight dome, with air filters, designed to keep air pollution out. The Chinese government has tried to eliminate domestic Chinese access to the documentary.

                http://www.nytimes.com/2015/03/19/opinion/why-under-the-dome-found-a-ready-audience-in-china.html

              • Kam says:

                Renewables are just decreasign efficiency of fossil fuel power generation, and are making collapse even closer.

                • Nick G says:

                  I’ve heard this argument before, but never seen any good numbers or sources.

                  Seen any data?

                  • Old farmer mac says:

                    I have been looking for good numbers for a long time when it comes to the amount of ADDITIONAL fossil fuel that must be purchased and burnt to supply hot spinning reserve for wind and solar on the grid.

                    The amount that must be burnt to back up hydro is obviously very small since hydro plants are the most reliable of all large generating facilities. If they do run short of water the operators know this well in advance.

                    Now since wind and solar are seriously intermittent on a minute to minute basis sometimes there must be SOME additional hot spinning reserve on the grid above and beyond the amount needed when the grid is supplied with only coal, gas , hydro , or nuclear.

                    There is no doubt whatsoever in my mind that management at every utility that is feeding a grid with significant amounts of wind and solar power on it KNOWS THE ANSWER TO THIS QUESTION on a minute to minute and day to day and month to month basis.

                    But I have never been able to get an answer from a utility or from a wind or solar energy manufacturing company – or from an environmental organization or an organization of wind and solar manufacturers and businesses.I have asked many many times.

                • Boomer II says:

                  I don’t see how. If fossil fuels are running out and something slows down their use, how does that increase the rate of collapse?

                  • Nick G says:

                    Boomer,

                    The argument is that the power provided by wind and solar is less than the power lost to reduced efficiency because FF power plants have to vary their output more often than before.

                    There is a grain of truth to the argument, but I haven’t seen any evidence that the effect is very large.

                  • Boomer II says:

                    But even if fossil fuel users become less efficient because of renewables, if total consumption of fossil fuels goes down, then it extends fossil fuel resources.

                    So it would be a numbers game. Seems like with enough wind and solar added, at some point they save fossil fuels, even if fossil fuels become increasingly inefficient. In fact, I suppose it becomes an accelerating situation. Add renewables. Fossil fuels become less efficient. Use less fossil fuels, which makes them even more inefficient. Mission accomplished. Less reliance on fossil fuels.

              • wharf rat says:

                China Could Get 85 Percent Of Its Electricity From Renewables By 2050, Report Finds

                http://thinkprogress.org/climate/2015/04/24/3650526/chinas-renewable-potential/

            • Sam Taylor says:

              And in just a few more doublings the entire surface of the earth will be covered in solar panels!

              • Fred Magyar says:

                Yeah but then you still have the surface of the ocean, maybe another doubling and a half >;-)

              • Dennis Coyne says:

                Hi Sam

                not much area is needed.

              • Dennis Coyne says:

                Hi Sam,

                If we assume solar panels are 10% efficient and average insolation is about 240 W/m2, about 0.5% of the Earth’s land area could provide total primary energy from 2013 using solar alone.

                This does not account for the reduction in primary energy needed by a factor of 3 due to fewer thermal losses in thermal power plants and internal combustion engines. There are also efficiency improvements, but we will ignore those. So only 0.17% of the earth’s land area would be needed, if solar was the only source of energy.

                Clearly there would still be some energy provided by wind, hydro, and nuclear. Not many realistically expect a world where solar provides all energy.

                • But we would need to peel the earth’s surface and lay it out flat to make sure it faces the sun all the time.

                  • islandboy says:

                    That would cause a whole host of other problems, including frying every living thing on earth when the global frying resulting from such a stunt took place. On the other hand, if we could “peel the earth’s surface and lay it out flat” it shouldn’t be too much of a stretch to have a portion of it flip away from the sun for 12 hours so we could still have nights and get the cooling effect, as well as some sleep. Oh wait! Then we’d be back to the problem of no solar power at “night”! Forget it!

                  • Dennis Coyne says:

                    Hi Fernando,

                    The 240 W/m2 is the average insolation per day, so no you do not have to have the sun facing the entire earth’s surface at all times.

                    For a smart guy you say some not very smart things.

      • Han Neumann says:

        ” EVs are cheaper and better than ICEs right now, and they’re fully ready – we “just” need to deploy them ASAP.”

        Nick, ‘ASAP’ you wrote more than five years ago already. Now, with ‘low’ oilprices, a lot of people change to ICE’s again. That “just”, what does it take to achieve ?

        • Nick G says:

          Education.

          FF interests (Kochs and others) have mis-educated people for decades, but gradually people are realizing.

          At some point there will be a critical mass, and things will change very quickly. Look what’s happened with marihuana legalization recently.

          • Caelan MacIntyre says:

            Get the all-new Nissan Roadkill EV for next hunting season!

            • Mike says:

              The photo of the tractor trailer in the tree was an informative contribution to the conversation of peak oil; I doubt the driver was killed in that accident, but maybe.

              This photo, above, is an invaluable contribution to the conversation of peak oil. Moose don’t fall out of trees. There is no doubt the driver in this photo was killed hitting this young moose in the highway. Vehicular deaths involving moose occur far too often and I find no humor in this whatsoever.

              I assume it takes a lot of time sitting at a computer all day long to find this kind of stuff; that’s big work you’re doing.

              Mike

              • Caelan MacIntyre says:

                Last I looked, apparently vehicular accidents worldwide are second in mortality statistics after natural causes, like cancer and heart attacks and whatnot.
                Never mind serious-injury statistics that include pedestrians without cars, like women and children. Never mind gridlock or roadkill.

                Never mind hypothetical ‘dn_girls’ and the ‘big-work’ fracking-industry dreamscape that Mike effectively suggests they should go for, despite his own antithetical contentions about it, as expressed hereon in bold, livid color no less. (hugs)
                ‘Gotta lay off a few more kids? I hate that? Boo-hoo?’ Ring a bell?

                No, just white-/green-washed BAU and sparkling dreamland images of deathmobiles driving along pristine nature-lined newly-paved traffic-free, roadkill-free single-lane roadways.

                This (honesty-in-advertising) moose represents/metaphorizes several relatively-mindless forms in many our good ship lifestyle takes, such as with regard to roadkill numbers; habitat encroachment and destruction, including our own; natural resource depletion, plunder and squander (i.e., peak oil); and of course climate change, etc..

                It’s sad that it behooves me to feel I have to spell out somethings like these to some ostensible adults whose ostensible industries are in part responsible for fueling these kinds of things.
                That’s ‘big work’ being done and one kind of ideological mindfuck, as if working small, humbly, intelligently, lightly and with conscience on Mother Earth is somehow far less valid work. Well I suppose it is in this sociopathological cultural context.

                Hey, Mike, Mother Earth is a she. Gotta be extra-polite to women as you’ve suggested, right? Especially to Mom?
                Drill baby drill?

                This naturally feeds into some people’s pseudo dripping concerns, oozing from their every fracked pore of their being, since a lot of ‘big work’ is directly responsible for these kinds of things and for peak oil.

                “I find no humor in this whatsoever.” ~ Mike

                I hope not, because you’re not supposed to. It’s a kind of inverted anti-humor.
                And it’s a large part of the context that’s swept under the carpets, some of which are woven of crocodile tears and what some call, ‘diplomacy’.

                “Anti-humor is a type of indirect humor that involves the joke-teller delivering something which is deliberately not funny…” ~ Wikipdia

              • Caelan MacIntyre says:

                BTW…

                “I assume it takes a lot of time sitting at a computer all day long to find this kind of stuff; that’s big work you’re doing. ~ Mike”

                Google Images + “moose OR deer OR animal car crash OR accident” = that image (and many others)

                Time taken: A few seconds over a nice tea in living room on couch.

                But if it consoles you to think I spent all day on it, then feel free.
                I’d rather spend all day on it, anyway, than to wage-slave some kids for some industry, and then lay them off– throw them away like some oil rags when they’ve been used and are not needed anymore.

                • DuaneX says:

                  The lady doth protest too much, methinks.

                  Caelan, I didn’t get a whit of your later justifications from the initial image and caption, “Get the all-new Nissan Roadkill EV for next hunting season!”

                  Further this comes in a thread on switching to EVs. So was there some particular point you were trying to make about labeling this an EV alongside this pic? Just don’t get it at all, and gotta go with Mike on this one. Maybe your caption/intent needs to be less opaque if you don’t want to come across as trying to be funny in a context that isn’t.

                  • Caelan MacIntyre says:

                    War is often sanitized, including the crony-capitalist plutarchy war on Mother Earth.

                    Try sticking your neck out a little further than this, DuaneX. Actually, a lot further. If you dare, of course.

                    Some people won’t want to get it, while others will pretend not to get it, or whatever. We can’t help everyone.

                    (The so-called American population had their money stolen from them as taxes that paid for things they didn’t get or thought they got. [Methinks they don’t protest enough.])

                    That kid in the image is one of ours. Some people are not going to get that, either, and that’s a tragedy.

                    Caption of the photo:
                    “An Iraqi girl screamed after her parents were shot and killed by American soldiers during a dusk patrol on Jan. 18, 2005 in Tal Afar. The troops fired on the Iraqi family’s car when it failed to stop, despite warning shots.”

          • Han Neumann says:

            “At some point there will be a critical mass,….”

            ‘At some point’ is not ASAP. And ASAP is what you wrote 6-7 years ago and write now.

            • Nick G says:

              Absolutely. Obviously, we’re not there yet: ASAP is a policy prescription, not a forecast.

              On the other hand, we’ve made enormous progress since 10 years ago, and large progress since 5 years ago. Look at the pure EVs, and plug-ins available from every car maker – it’s a big change.

  15. toolpush says:

    Indications Bakken oil is preferring pipelines rather than rail.

    Crude slump sidelines thousands of rail tank cars – E&E News
    Oil producers’ rush to the rails has tapered off in recent months, dragging thousands of crude tank cars off the tracks in North Dakota’s Bakken Shale play.
    Rail industry and government data show that shippers have lost some of their appetite for railing crude out of the Bakken amid increased pipeline capacity, a sustained oil price slump and slimmer discounts for inland crude.

    – See more at: http://www.noodls.com/viewNoodl/27888213/dakota-resource-council/crude-slump-sidelines-thousands-of-rail-tank-cars-8211-e#sthash.in6TyLB3.dpuf

  16. Jeffrey J. Brown says:

    Long and thoughtful article by Brian Kaller:

    Peak Oil, Ten or So Years On

    http://www.resilience.org/stories/2015-04-20/peak-oil-ten-or-so-years-on

    Some of my retrospective comments:

    Almost exactly 10 years ago, I emailed Matt Simmons and Jim Kunstler and asked if they would be interested in a joint appearance in Dallas, Texas (they both enthusiastically said yes). After a good deal of effort by several parties, especially a professor at Southern Methodist University (SMU), we organized a symposium at SMU on November 1, 2005. Among those in attendance were Boone Pickens and Herbert Hunt. Despite several notifications, no mainstream media people found time in their busy schedules to attend the event (which is curious since a couple of billionaires found time in their schedules). I believe that the sole media coverage of the event (other than a magazine article on Jim that referenced the event) was the SMU student newspaper.

    Following is the transcript of an interview with Matt & Jim that was broadcast on the local NPR station, prior to the event. It’s interesting to look back about 10 years after the interview and contrast what has happened, versus what Matt and Jim were foreseeing.

    http://www.resilience.org/stories/2006-08-26/simmons-kunstler-interview

    What I most remember about this event was the car ride from the airport to the hotel, after I picked up Jim and a reporter (who was doing a story on Jim). Jim immediately adopted an exaggerated Southern accent and launched a hilarious and profanity laced series of stream of consciousness comments on the Dallas/Fort Worth suburban sprawl.

    I unsuccessfully tried to get my daughter and her boyfriend (now husband) to attend the event and/or have dinner with Jim, but they were busy with college work. I sometimes remind them that they were somewhat notable, in that they turned down the opportunity to meet Matt Simmons, Jim Kunstler and Boone Pickens.

    • Paulo says:

      Mr Brown and other posters,

      Thank you for the Brian Kellar link. It is a wonderful article with a ring of truth. I also liked the 12 comments, particularly the one about people moving on with their own preparations and lives.

      This blog of Ron’s has done a terrifc job of filling the TOD hole, and does so without the narrow focused censorship TOD editors often imposed.

      It is great to read new ideas by familiar older and wiser writers that have contributed to this dialogue over the past decade, even if I limit my participation to lunch, breakfast coffee, or while I wait for the bread to bake. Now, I will head out to finish my shingle siding mural on the very last wall of my country energy efficient house. No suburban sprawl here!! (Lunch is over) Thousands and thousands of local cedar shingles all lined up and deadly level, and finally on the last 10′ wall section I am making/building a mural of mixed red and yellow cedar wave patterns, with starfish, a good sized rock cod, and a couple of gulls in front of a yellow cedar sun. Scale 1:1. Rockfish, a 15 lbs monster.

      regards

      • Caelan MacIntyre says:

        It would be nice to see a pic of it (or link thereof) posted hereon once your shingle/mural-work is done, Paulo. When is its completion expected?

        • Paulo says:

          Maybe tomorrow. It will give me an opportunity to practice imbedding a photo. Having said that, maybe I will wait until I get the Sikkens on. It looks pretty cool.

          • Caelan MacIntyre says:

            Thanks, it sounds quite nice. I actually have my eyes on an old saltbox fixer-upper, much of it requiring the replacement of a lot of its cedar shingles and so forth. It might be a fun and interesting learning process.

  17. Ronald Walter says:

    BNSF weekly report 15

    10,811 petroleum cars, up about 40 compared to week 15 of 2014.

    44,223 coal cars, up about 500 from week 15 of 2014.

    The demand is steady and the supply keeps rollin’ to the destinations.

    The trains do stop and deliver the oil and coal, they just don’t drive the trains on the tracks for fun.

    Warren Buffett the Gandy Dancer gets it done.

  18. SAWDUST says:

    We need a break of 59.27 to clear the way to 66-67

    • Jeffrey J. Brown says:

      Looks like Brent will average around $60 or so for April, so the short term (three month) annualized rate of increase in monthly Brent crude oil prices will be around 90%/year, 1/15 to 4/15 ($48 to $60), versus the 43%/year rate of increase in monthly Brent crude oil prices from 12/08 to 2/11 ($40 to $104).

    • Han Neumann says:

      SAWDUST, it was going down after SA announced ending of bombing in Yemen.

  19. Longtimber says:

    Walmart’s Hybrid Carbon Fiber – Turbine Truck for delivery of Cheeze Doodles.
    https://www.youtube.com/embed/NER9X4_gtYk?feature=player_detailpage

    • Unfortunately the video lacks technical details. Engine horsepower, torque, fuel efficiency, battery description, etc.

      • ChiefEngineer says:

        Another example why Doomers are wrong. Life after oil.

        http://www.huffingtonpost.com/2015/04/21/drumi-washing-machine_n_7100020.html

        You will adjust!

        • Watcher says:

          Personally I don’t have an oil fueled washing machine.

          And things like that gizmo have been around 20 yrs.

          A modern human eats about 2.5 pounds of food per day, including packaging and moisture content.

          NYC has 8.5 million people. That’s 21 million pounds of food going in every day. On trucks.

          Diesel fueled trucks.

          Shut off diesel tomorrow, they’ll be dead in 2 weeks. Shut it off in a year, they’ll be dead in 54 weeks.

          Shut it off in 3 years, 8 of the 8.5 million will starve in 158 weeks. The other 500K will die from breathing the flies growing on the corpses.

          Maybe you can adjust to breathing flies.

          • Han Neumann says:

            “Diesel fueled trucks”.

            Watcher, there are companies that have electric trucks. I understand the ‘peak oil’ problem, but don’t exaggerate.

            • Caelan MacIntyre says:

              The exaggeration seems worth it, such as for poetic license, given the truck is typically presented, like many things like it, out of its full BAU (dumbfuck planetwrecking) context, which is, itself of course, an exaggeration.

              On a brighter side of bleak, the streamlining of the truck may prove to render roadkill merely roadmaim. (Hey, the glass is half-full, right?)

              Bring the people to the food, not the other way around (with a monoculture flourish to help people realize that it’s backward).

            • Watcher says:

              How many of them haul refrigerated food?

              • Nick G says:

                Probably best left to refrigerated railcars.

                • Caelan MacIntyre says:

                  Probably best left to growing food locally.

                  Reverse exodus out of the cities. Wait for it.

                  (And reverse mining of those very cities for their materials).

                  • Watcher says:

                    Now which congressman is going to vote to fund such a thing when it will rob his or her district of votes?

                  • Caelan MacIntyre says:

                    Collapse/Decline is already well-funded of course. ;P

                    (Incidentally, where does a truck get the name, Con-way?)

                  • Old farmer mac says:

                    If and when it happens either by force or by necessity an exodus from the cities on the grand scale is going to be the greatest humanitarian disaster in modern history , exceeding even such events as Stalins purges or the Holocaust or the killing fields of Pol Pot.

                    It is not going to happen because it simply CANNOT happen. There is no housing no infrastructure out in the boonies to support the city dwellers. The parts of the earth where they could grow their own food successfully are far fewer far smaller than needed. The staple foods such as wheat are grown in places not well suited to small scale farming growing highly diversified crops.

                    We are in a hell of a fix. The food supply versus population problem given resource depletion may be insoluble in humanistic terms. Mother Nature is not even capable of giving a damn of course but she does have a solution. We call it die off.

                  • Boomer II says:

                    Yes, I am curious how the transition from business as usual to eco-villages is supposed to progress. The people who want to create and participate in eco-villages are free to do so now. Is there any particular advantage to have the entire world drop what they are doing right now to go out into the countryside and set up eco-villages?

                    Seems like what works best for eco-villages is for them to get established on a small scale by committed people rather than pressuring everyone in the world to simultaneously abandon everything that is currently functioning so they can all adopt the same lifestyle right now.

                  • Boomer II says:

                    I mentioned before that not all food growing will happen outside of cities. Some of it is happening now within cities.

                    Here’s a new article on the subject.

                    Urban farming is booming, but what does it really yield? | Ensia

                • toolpush says:

                  Nick,

                  I think inter-model containers, is what you mean? One quick lift from rail to truck for the “last mile/s” delivery. They come in either 20ft. 40ft or especially for the US of A, 53ft boxes.

                  • Nick G says:

                    Well, inter-modal shipping does work well, as you say. Much food is delivered in refrigerated shipping containers that can go by ship, rail or truck.

                    But the majority of freight in the US is delivered by rail, and much of that goes directly to the interior of big cities. Many of the spurs that went directly to factories and warehouses have been torn out, of course, and replaced by trucks. That’s a choice: you could rebuild the spurs, or you could use electric trucks for the last mile.

                  • toolpush says:

                    Nick,

                    I think you maybe living in the past, when it comes to each factory having their own rail spurs.

                    If you hadn’t noticed the “unit train” is what is making rail work. The days of a few freight cars to each siding are gone. 100 car unit trains, are the economic way to run the railway, and there are few products and factories able receive 100 car trains.
                    Another plus for inter-model is that these cars are often double stacked, doubling the carrying capacity of a train.

                  • Nick G says:

                    I think you maybe living in the past, when it comes to each factory having their own rail spurs.

                    Sure. That’s why I said you’d have to rebuild them, if you wanted them. Many of those rights-of-way still exist, albeit in use by bikes. That will happen way before cities collapse for lack of food, which was the topic of conversation.

                    On the other hand, the much more likely thing is electric trucks, or highly efficient trucks running on synthetic fuel.

                    http://www.greencarcongress.com/2015/04/20150421-audi.html

                    http://bravenewclimate.com/2013/01/16/zero-emission-synfuel-from-seawater/

      • toolpush says:

        Fernando,

        Here are some details,

        http://www.greencarcongress.com/2014/03/20140328-wave.html

        Walmart showcases WAVE tractor-trailer at MATS; micro-turbine range extended electric vehicle with 45.5 kWh Li-ion pack

        Capstone turbine, Li batteries, aerodynamics.

        • It’s a gimmicked truck. The turbine delivers most of the power, the batteries store 45 kWh. The truck is supposed to be fort short haul near and intra urban. This means the aerodynamic shape is just makeup.

          They don’t report mileage, range, or anything really useful because they are probably average or worse. The light trailer is a different matter. That may be a good idea if the cost isn’t excessive.

        • I researched the topic of large vehicle fuel efficiency today. Read a master’s thesis to understand the engine hp requirements, research reports on drag reducers, drag coefficient versus speed, fuel consumption versus speed, engine weight versus hp ratios, etc.

          The Walmart truck uses a turbine, and that turbine burns diesel. But it seems to me a truck owner will prefer a diesel to a turbine any day. They are sturdier, easy to maintain, and fuel efficient.

          So, after reading all that material it seems to me the better approach is a simple diesel hybrid. Take a 250 hp diesel, a large generator, put two 67 hp electric motors, a 100 kWh battery pack, some drag reducing tricks, and keep the truck max speed at say 60 mph and you get a much better result.

          They don’t have to parade that futuristic show truck around, just start buying hybrids, put drivers on a lower speed schedule, and teach them to drive properly.

          • coffeeguyzz says:

            Fernando, ‘driverless’ truck convoys should start appearing on US interstates within the next 3/5 years … sooner on the autobahns.
            The lead vehicle of a four truck convoy has a driver (for now), with three following trucks equipped with sensors. The sensors mimic precisely the lead truck’s movements. Advanced testing is already showing that it is workable.

            Combining cost savings in personnel with, say, LNG or CNG fuel – already well underway – transporting goods overland may be way cheaper in future years than at present.

          • Caelan MacIntyre says:

            “… and teach them to drive properly.” ~ Fernando

            LOL

    • Old farmer mac says:

      You can increase the fuel efficiency of a heavy truck by about twenty five percent by simply slowing down. When the oil depletion shit hits the economic fan speed limits will be lowered again. Some of us are old enough to remember the old ” double nickel”. You couldn’t get some heavy trucks in top gear at fifty five. With ten to thirteen top gears you wound up cruising in ninth or twelfth. But it sure saved a lot of fuel.

      If a truck were deliberately built so it could not exceed forty five mph it could be built somewhat lighter and could haul a bit more net cargo weight as well.

      • ChiefEngineer says:

        You are absolutely right Old Timer. When the shit hits the fan, there will be plenty of waste to ring out of our current energy habit.

        Contrary to Caelan’s plea to move humans to the country. Keeping humans confined to the city is much better for the environment, wild life and mother earth in general. But than again Caelan may not know how to drive a truck, but he can sure write like one.

        • Caelan MacIntyre says:

          “[Derrick Jensen] …describes the linguistically and historically defensible definition of civilization as ‘a culture — that is, a complex of stories, institutions, and artifacts — that both leads to and emerges from the growth of cities (civilization, see civil: from civis, meaning citizen, from Latin civitatis, meaning state or city)’, and the definition of city as a group of ‘people living more or less permanently in one place in densities high enough to require the routine importation of food and other necessities of life.’ He explains that, by such definitions, civilizations and cities are both unsustainable:

          Two things happen as soon as you require the importation of resources. One of them is that your way of living can never be sustainable, because, if you require the importation of resources, it means you’ve denuded the landscape of that particular resource, and, as your city grows, you’ll denude an ever-larger area. […] And the other thing it means is that your way of life must be based on violence, because if you require the importation of resources, trade will never be sufficiently reliable because, if you require the importation of resources and the people in the next watershed over aren’t going to trade you for it, you’re going to take it…” ~ Wikipedia

          This doesn’t even touch on the curious mention of ‘confining’ people to cities and its implications or viability, nor of, for example, J.H. Kunstler’s take on the unviability of high-rises, to say nothing of issues of waste and the energies/resources required for the importation of resources; or that the development of many cities and surrounding sprawl were structured hardly around decentralized agro or people per se, but around oil, the automobile and remote monied/vested interests; etc..

          “Keeping humans confined to the city is much better for the environment, wild life and mother earth in general.” ~ ChiefEngineer

          It’s a very questionable assumption, borne in part perhaps of looking at the world through the myopic lens of engineering.

          • ChiefEngineer says:

            Caelan, you missed the point of my post. I’m not saying the current population is sustainable. I’m saying pushing huge amounts of city dwellers out of the city and into the country will only destroy the environment outside the city.

            • Caelan MacIntyre says:

              Yes and I’m in part suggesting that the surrounding countryside is already a mess– you know– sprawl/suburbanization? And what Jensen et al. write about?

              If people actually started focusing more on real community and growing their own food locally– self-empowerment and all that– rather than being all caged/cooped up like rabbits/chickens in hutches/coops and other forms of cookie-cutter developer schlock that they have no democratic say in, and depending, like infants yet again, on their trucked-in Monsanto/corporate pablum, then it may nurture a better appreciation for the lands that surround them and their own abilities. Stuff like that. Adult stuff.

              • Boomer II says:

                If people actually started focusing more on growing their own food locally– self-empowerment and all that– rather than being all caged up like rabbits in hutches or cooped up like chickens in coops and other forms of cookie-cutter developer schlock that they have no say in, and depending, like infants, on their pablum from the corporates, then it may nurture a better appreciation for the lands that surround them.

                Land prices are a problem for many. They may want to be able to grow their own crops, but can’t afford the land to do so.

                I am very interested in efforts to turn vacant city lots into gardens. I have been watching what Detroit has been doing.

                Another effort that could be done right now, but hasn’t totally caught on and even runs into resistance in some communities, is turning lawns into gardens. I’d love to see less bluegrass and a lot more vegetables and fruits.

                Finally, I have been following some of the urban rooftop and warehouse gardens. The rooftop gardens make use of otherwise underutilized space. The warehouse gardens are good for food localization but can be energy intensive if they require lighting rather than natural light.

                At any rate, the more everyone can do to grow more crops locally the better.

                • Boomer II says:

                  I have no idea how many people in the US localized food production can sustain.

                  However, I do believe we haven’t maxed out what we could be doing.

                  If we had fewer lawns and more gardens, we’d have more and fresher food.

                  If we turned vacant dirt lots into gardens, we might bring some food into food “deserts.”

                  We could turn golf courses into gardens.

                  We could do more of this, too:

                  Seattle’s Ambitious Plan to Build a Food Forest

      • Exactly. I didn’t see your comment before I wrote mine. Hell I spent hours reading reports when I just had to read what you wrote.

  20. The Wet One says:

    I see headlines like this, and I wonder, why don’t people really try to be informed and come here to know this stuff months in advance of the headlines?

    http://www.bloomberg.com/news/articles/2015-04-22/half-of-u-s-fracking-companies-will-be-dead-or-sold-this-year

    I guess folks enjoy their ignorance.

    So it goes.

    Of course, this isn’t a commercial website with advertisements and it’s probably a bit hard to find, but still.

    I know, I expect too much of people don’t I? Think of all the things I’m ignorant of. It’s just staggering.

  21. Guy Minton says:

    Hilarious. Not only are they really ramping up on the real simple distillation of condensate, it becomes the Wild Wild West.
    4:22 PM ET April 23, 2015 Market is Closed Help

    CORRECTED-UPDATE 1-Shell exports first U.S. condensate cargo from Corpus Christi – ClipperData

    6:16 pm — (Corrects in paragraphs 2 and 3 to say dock is shared, not just NuStar’s)
    April 7 (Reuters) – Royal Dutch Shell has exported the first cargo of ultra-light U.S. oil from Corpus Christi, Texas, ClipperData said on Tuesday, as shippers find new avenues to get swelling shale supplies to the global market.
    Shell loaded 480,000 barrels of stabilized condensate from the Eagle Ford shale in South Texas on April 1 at a dock in Corpus Christi, Texas, shared by NuStar Energy LP and Martin Midstream Partners, according to ClipperData, which tracks crude tanker movements.
    NuStar said on Tuesday that it did not load the cargo, as the company won’t have infrastructure necessary to keep exportable condensate separate from other crude until this summer. Martin didn’t immediately respond to an inquiry about whether it loaded the cargo.
    Before Shell’s shipment last week, previous condensate exports loaded at Enterprise Products Partners/ docks in Texas City, Texas, or at the company’s Oiltanking assets at the Houston Ship Channel, ClipperData said.
    Processed condensate must be handled separately from other domestic oil in order to avoid violating a partial ban on U.S. crude oil exports.
    The cargo was declared to U.S. Customs for Singapore but the vessel has since changed its destination broadcast on the onboard signal transponder to Durban in South Africa.
    Data available via ThomsonReuters’ Eikon database showed the vessel in the south Caribbean en route to Durban, where Shell co-owns a refinery.
    Shell is among several companies that received approval from the U.S. Department of Commerce to export minimally processed condensate. The level of processing in a stabilizer, which removes natural gas liquids, qualifies condensate as a refined product, allowing it to be shipped out internationally without violating the decades-old U.S. crude export ban. (Reporting by Kristen Hays in Houston)

    • coffeeguyzz says:

      Guy Minton

      That “stabilizing process equates to exportable condensate/oil” description was considered a big factor in the Bakken guys not contesting having to stabilize their oil before loading on trains, a ruling in effect these past few weeks.
      I’ve seen almost no discussion – certainly not definitive, suthoritive statements – on whether or not this is true.
      If it is, Bak At The Wellhead Price may have just increased significantly.

    • toolpush says:

      Shell is among several companies that received approval from the U.S. Department of Commerce to export minimally processed condensate. The level of processing in a stabilizer, which removes natural gas liquids, qualifies condensate as a refined product, allowing it to be shipped out internationally without violating the decades-old U.S. crude export ban. (Reporting by Kristen Hays in Houston)

      Maybe the Bakken players could just stabilize their “condensate” to a greater extent than what they are currently required to do now. Call it “a refined Product”, making it much safer to transport by rail, and we can have a face saving win win outcome?

      Or is that cheating the system?

      Edit: Coffee, I see we are both thinking on the same lines! Interesting story to watch.

      Edit #2
      https://rbnenergy.com/what-condition-my-condensate-was-in-growing-exports-seek-new-buyers
      Table #1 shows ClipperData numbers for condensate exports by load port and discharge country so far (June 2014 through March 2015). Texas City has the largest throughput – close to 8MMBbl. The stealth player among export ports has been Brownsville on the Gulf Coast Texas/Mexico border with close to 3 MMBbl loaded – more than Houston or Corpus. The emergence of the Transmontaigne (part of NGL Energy Partners) terminal in Brownsville as an export port for condensate took many by surprise. The facility is a rail-to-ship transloading point – meaning that processed condensate has to be shipped there by rail.

      I wonder where this was “condensate” came from?

      • Guy Minton, CPA says:

        The article was funny to me, because it indicated obliquely that maybe it was not “condensate”. However, as to the Port of Brownsville, I own some property down there on Padre Island, and try to keep up with what is happening in the area. For about 8 years Carlos Cascos, CPA was head of the County where Brownsville is located. He has recently been tapped as the Texas Secretary of State (also oversees relations with Mexico). During those eight years, the second causeway to Padre Island is being finalized and should be online by 2019 or 2020. It is connected as a tollway to the new I69 which runs from Brownsville to the Great Lakes (part of Rick Perry’s old project). Elon Musk’s new space station is next to where the entrance to the Port. The new Mexican Superhighway from Guadalajara does not end up at Laredo, as previously planned. It ends at Brownsville. Essentially, all major roads now in Mexico, can intersect now at Brownsville. New crossings for railways now go through Brownsville and close to the Port of Brownsville. Plans were to expand the Port to allow for more Mexican international shipments, which included plans for new NGL shipments, or even oil. There are some pipelines which run west of Brownsville, but I imagine if there was any condensate from the Eagle Ford it came via rail or road. I am not surprised that they are capturing interest from the Eagle Ford on shipping. There is a lot of room for expansion along the port. First I heard about it, was when I was reading the same article above.

  22. Frugal says:

    Saudi Arabia’s Solution to Global Oil Glut: Pump Ever More Crude

    With no group accord to restrain output, Saudi Arabia will choose to tap its spare capacity, according to UBS. The kingdom has about 2.2 million barrels a day in reserve, the IEA estimates.

    Some people actually believe Saudi has a production capacity of 12.5 million barrels/day. I’m surprised they can actually crank out 10.3 million barrels/day, but for how long. We’ll soon find out. Maybe they’re just draining their storage tanks?

    • Fred Magyar says:

      Some people actually believe Saudi has a production capacity of 12.5 million barrels/day. I’m surprised they can actually crank out 10.3 million barrels/day, but for how long. We’ll soon find out. Maybe they’re just draining their storage tanks?

      No there is another even better explanation!

      And as a consequence of that explanation I am afraid I must say goodbye to Peak Oil Barrel! The Saudis have finally proven abiotic oil is real. In a rigorous scientific study just released! A group of Saudi petroleum geologists from the King Fahd University of Petroleum and Minerals working closely with scientists from the United Kingdom have been able to show that their capped wells which were formerly dry of oil, have been found to be plentiful again after many years, They have solid evidence that the replenished oil is manufactured by natural forces deep within the Earth’s mantle and refills their wells every few years, by spontaneous regeneration. Therefore their supplies have been shown to be limitless! See explanation at the link below.

      http://www.petroleum.co.uk/abiotic-oil-formation

      Until now, I too had mistakenly believed that “abiotic oil” was just pseudo science but — alas — this new study has proven my beliefs to be incorrect! I had no choice but to do as the late Matt Simmons always told us to do. ” look at the data, look at the data again and then look at the data a third time and then form your own conclusions That is what I did and so if I wished to remain intellectually honest with myself I had to admit that I have been wrong all these years!

      • Thomas says:

        This post is a joke, right?

        • toolpush says:

          Is that a doubting Thomas, I hear?

          My money is on it being a joke, as well, they just forgot the smiley face!

        • Fred Magyar says:

          …And, fellow Texans, I’m for progress and the flag- long may it fly.
          I’m a poor boy, come to greatness. So, it follows that I cannot tell a lie.

          Ooh I love to dance a little sidestep, now they see me now they don’t-
          I’ve come and gone and, ooh I love to sweep around the wide step,
          cut a little swathe and lead the people on.

          Musical: Best Little Whorehouse in Texas, The > Song: The Sidestep

      • ERRATA says:

        http://www.petroleum.co.uk/abiotic-oil-formation
        Here, lack of support for abiogenic – theory.
        IF abiogenic – theory were true, (even at very slow process) is the 3,000,000,000 – 4,000,000,000 years, on the surface of the Earth, would create / mustered up the ocean of oil, rather than ocean water.

        • Fred Magyar says:

          LOL! I had no idea my comment would be taken so seriously. Maybe I should become a full time minister and start a flock of my own. It might be fun to fleece the sheep.

      • BS, “abiotic oil” is male cattle dung.

        • Fred Magyar says:

          Fernando you must be confused. Male cattle dung is a ‘green’ biotic fuel…

  23. Citi Issues Warning About Latest EIA Oil Production Data

    Oil investors are watching these weekly EIA estimates for any indication that U.S. oil production has peaked. Negative production growth will be a critical step in eliminating the current oil oversupply glut that has caused a collapse in crude prices.

    Why Investors Should Be Careful With The EIA Numbers

    Citi analysts believe that the weekly EIA numbers can be a useful tool for investors if they know how to use them properly. Analysts point out that the EIA weekly production number is not hard data; it is an estimate generated from a model.

    “An analysis of historical short-term supply estimates against more complete lagged data (which come several months later) shows the more short-term EIA estimates underestimated final data by as much as 200-k b/d over the last year,” they explain.

    Analysts believe that weekly fluctuations less than 200,000 b/d in the EIA production estimates are within the estimate’s margin of error, and should not be relied upon as significant production changes.

    200,000 barrels per day error in one a single week is a huge error. Compound that over several weeks and the error is so large that the data becomes meaningless. I think the EIA missed the decline back in January and have compounded that error ever since.

    Last year they were underestimating production. I guess they vow not to make that mistake again so this year they are going in the opposite direction, they are overestimating production.

  24. “Last year they were underestimating production. I guess they vow not to make that mistake again so this year they are going in the opposite direction, they are underestimating production.”

    One of those unders is an over, right?

  25. islandboy says:

    In the comments under the post that Ron did previous to this one, the following comment was posted:

    Ilambiquated says:
    April 21, 2015 at 4:47 pm

    Meanwhile electricity prices are going negative in West Texas.

    which prompted the following response:

    Fred Magyar says:
    April 21, 2015 at 5:42 pm

    Offer a prize to anyone who can come up with ways to put all that excess energy to good use, for crimminy’s sake! Maybe offer it to artists who do things like weld giant metal sculptures or artisans who work with furnaces to melt glass. Start a new renaissance or something!

    Well, the prize goes to…… (drum roll), Sunfire and Audi!

    Research facility in Dresden produces first batch of Audi e-diesel; Sunfire’s power-to-liquid technology

    A pilot plant in Dresden has started production of the synthetic fuel Audi e-diesel using water, CO2 and green power—i.e., power-to-liquid (PtL). After a commissioning phase of just four months, the research facility in Dresden started producing its first batches of high‑quality diesel fuel a few days ago.

    Maybe this sort of thing will introduce a novel concept, “Make hay when the sun shines”. If this power-to-liquid/power-to-gas gets big enough, maybe the Germans can make enough e-diesel/e‑gas (synthetic methane) in the summer to provide fuel for turbines to produce electricity during the periods in winter when there’s not enough wind!

    • Jeffrey J. Brown says:

      I’ve wondered for a while about using excess wind/solar generated electricity to make synthetic methane gas. Wouldn’t that be less expensive and less energy intensive than producing synthetic liquids? Basically, excess wind/solar power could be stored in the form of synthetic gas, using, and probably expanding, the existing natural gas storage and distribution system.

      • Nick G says:

        Absolutely! Synthetic methane makes much more sense for wind/solar balancing.

        In the very long term it will make sense to produce *some* liquids – maybe 15% of what we produce now, for aviation, long distance water freight, seasonal agriculture, a little personal transportation.

        On the other hand, these people claim 70% efficiency, which is much higher than I expected, and a cost of 1 Euro per liter, which is less than I expected. Might make it a little more widely useful than I would have thought.

        • wimbi says:

          Well, now, think of that, I have been working with my tiny budget to get a gasifier- gas sack- tractor diesel- pto generator to tide my pv system over the cloud months. So far, so simple!

          Just let the idling diesel sniff the wood gas into its inlet, and off you go.

          Of course I don’t like diesel, so am working on an old tech- freepiston stirling, that has proven good performance for very long unattended life as certified by NASA space power program. this one eats any dirty fuel with the greatest of ease, and to boot, is silent and vibration-free.

          See Sunpower, inc web site for refs. and description of design of NASA version.

          Why people don’t use these things is a total puzzle to me. Yet another 100$ bill just lying on the sidewalk for anyone to pick up.

    • Kam says:

      “The plant is set to produce more than 3,000 liters (792.5 gallons US) of Audi e‑diesel over the coming months.”
      They’ve certainly spent more money on this, than 3000 liters of diesel is worth. So for now it’s useless.

  26. shallow sand says:

    Question about ND site which currently lists rig count at 84.

    I see several starting dates from early March or even earlier. Why are those wells taking so long, or is there another explanation that maybe I have missed?

    • I am no oilman and we do have several that posts here. But every well is different and no well takes the exact same amount of time to drill. Some encounter serious problems, have to replace the bit and other problems. So it should not be a surprise when many take over a month. It is a bit surprising to see one with a start date of 11/28/2014 however.

    • toolpush says:

      Shallow,

      I see several companies are drilling 4 well pads with batch drilling. eg, drill top hole well #1,#2, #3, #4 by walking the rig, then intermediate starting 4,3,2,1, then bottom hole 1,2.3.4.
      I would suspect they would not be updating ND govt site every hole section, therefore they would remain on the one location while drilling 4 wells.
      Hopefully Coffee, or Alex will be able to confirm this.

      • shallow sand says:

        Thanks Ron and Toolpush.

        For those interested in the financial aspects of “shale oil” check out Continental Resources April investor presentation. If I am reading 2014 10K and the investor presentation correctly, CLR drew a little over $600 million on its line of credit from 1/1/15 to 2/17/15 or in 48 days. That is a cash burn of $12.5 million per day, or over $4.5 billion in one year.

        I must be missing something in my calculations. Otherwise, why is their stock trading about $20 higher than its low?

        I do note Williston Basin sweet has seen about a $4 basis improvement over a short time. That helps.

        Someone with more finance ability than me look that over please?

        • shallow sand says:

          I am wrong above. Dug through 10K again They had $165 million on line as of 12/31/14. As of 2/17/15 had $605 million drawn on line. So drew $440 million in 48 days, or average of $9.167 million per day, annualized $3.346 billion dollars of line draws.

          I also note their revolver was increased to $2.5 billion, so they can still draw another $1.9 billion.

          I continue to be baffled.

      • coffeeguyzz says:

        Shallow,
        Your question got me checking as I never looked at that page before. As per Push’s thought re batch drilling, a few on that list are being done that way as the well names’ are a tipoff – only a number differential being assigned to two/three adjacent wells, but the true tell is the next column. the location. If the wells are being batch drilled, the pad will show identical township/section numbers as is the case with several on that list.
        As far as that Ensign 67 being on location since November, beats me. Sounds like an huge amount of NPT if it’s a screwup. Gotta be some logical explanation.
        Quick aside regarding the distance between wells on the same pad … The permit applications give precise – to the foot (bout 60′) distance – as in FNL 1,400′ … (next well) FNL 1,460′ describing 1,400′ from north line, 1,460′ etc.

  27. Cracker says:

    Interesting notes from CERAWeek. I found it particularly noteworthy that banks are flush with cash and ready to lend once oil prices rebound.

    http://finance.yahoo.com/news/oil-gas-power-prices-big-160130956.html

    Also posted this at the end of the last thread, in error.

    Jim

  28. The Baker Hughes Rig Count is out. Oil rigs down 31, gas rigs up 8. Permian down 12, Eagle Ford down 8, Williston down 5.

    • shallow sand says:

      Williston Basin could get to 50 in June, as was predicted by local service company owner a few months ago. Thus far his prediction appears to be more accurate than ND state officials.

    • toolpush says:

      The 3 big shale oil plays seem to have been the target of the rig count drop. Bakken. Permian and Eagle Ford all too big hits, but strangely, gas rigs are up by 8, with the price of Nat Gas around $2.50.

      It is hard to see too many gas wells making money at these prices, especially with Marcellus gas in the low $1 range. Injections were 90 bcf last week. Much higher than previous years. I can only think that the gas drillers are preparing for LNG exports to start, along with an up swing of the Nat Gas price?

      • shallow sand says:

        I don’t understand the gas rig situation either. I know Marcellus wells
        are prolific and are cheaper to drill but I don’t see how $1.50
        mcf or even $2.50 mcf
        works. But I don’t know much about gas outside of Hugoton. I know that area is hurting.

        • coffeeguyzz says:

          Push, shallow, I’ve been trying to read up on the Marcellus these past months as the numbers seem large, perplexing, and somewhat non transparent.
          What is clear is that the area is huge, the operators took on massive amounts of leased acreage that they are struggling – unsuccessfully in growing number of instances – to hold with retention wells, and the ridiculously low price for gas is hurting their ability to borrow.
          One of the mineral owners’ forums had people saying the 60 month time frame to drill was closing and operators were attempting to re-sign with the cash amount being paid out of future (potential) earnings when wells would eventually be developed. Not a good sign for the operators.
          Some guys have hedges that give decent price protection, but they are diminishing in number as well.

  29. Watcher says:

    http://www.zerohedge.com/news/2015-04-24/electric-car-sales-plunge-4-year-lows

    Some choice items:

    Ford told workers and notified the state of Michigan that it will lay off 700 workers, starting June 22. The decision affects 675 hourly workers and 25 salaried employees who make the Focus, Focus ST, Focus Electric, C-Max hybrid and C-Max Energi plug-in hybrid at the Wayne plant.

    Ford expects that the first 200 laid-off workers will be redeployed quickly across the roughly 15 assembly, stamping, engine and transmission plants in southeast Michigan, filling in for workers on vacation, said Ford spokesman Kristina Adamski.

    “All our other plants are doing well,” Adamski said. “We can’t build enough trucks or SUVs.”


    Sales of new electric cars and hybrids, according to automotive research and shopping site Edmunds.com, are at their lowest level since 2011 — the first full year of sales for the groundbreaking Chevrolet Volt plug-in hybrid and Nissan’s all-electric Leaf. So carmakers are paring prices in an effort to get them moving.

    Furthermore, motorists who leased those first-generation cars, and have decided not to buy them, are turning them in. They’re on dealer lots with still relatively low mileage, and at prices considerably cheaper than the new ones.

    [One does wonder where ppl will get spare parts for these clunkers when no one makes them anymore.]

    Used plug-in car values have been much lower than comparable combustion engine vehicles since launching, due to heavy federal tax credits and inflated pricing, according to Kelly Blue Book director of residual value consulting, Eric Ibara.

    “All along, we had a very strong suspicion that they wouldn’t hold the same (residual value) percentage with traditional vehicles,” he said.

    • Nick G says:

      It never made any sense to calculate residual values on the list price – who’s going to pay more for a used car than a new car??

      where ppl will get spare parts for these clunkers when no one makes them anymore

      So, you’re predicting that oil prices will never rise again?

      • Caelan MacIntyre says:

        A little tweak of the metric here, a little tweak there, a few wishes and lies thrown in, and maybe we can sell ’em on Hope.

    • Boomer II says:

      The low prices for used EVs and hybrids is good news for people like me. My car is a 1997 and has 170,000 miles on it. I drive it as little as possible, but it is getting to the point where I’ll likely have to replace it unless I go totally car-less.

      EVs aren’t really an option for me because I don’t have access to an outside plug (I use a parking lot). But getting a hybrid on the cheap would be fantastic.

      For those of us who never got a hybrid when they first came out, this is a good opportunity.

    • HVACman says:

      “Sales of new electric cars and hybrids, according to automotive research and shopping site Edmunds.com, are at their lowest level since 2011 — the first full year of sales for the groundbreaking Chevrolet Volt plug-in hybrid and Nissan’s all-electric Leaf. So carmakers are paring prices in an effort to get them moving.”

      This is a blatant and intentional lie. Non-plug-in hybrid sales may be down since 2011, but electric vehicle and plug-in electric hybrid sales are WAY up from 2011. To arbitrarily combine two statistical trends with opposing trajectories and make a summary conclusion for both based on the overall sum is lying-by-statistical-manipulation.

      Per InsideEV’s monthly plugin sales scorecard, US plug-in hybrid and EV sales have grown from 17K vehicles in calendar year 2011 to 123K in 2014, with another 23K sold in just the first 3 months of 2015. Hardly the lowest sales level since 2011.

      http://insideevs.com/monthly-plug-in-sales-scorecard/

      • Watcher says:

        “EVs are just not selling; even hybrids and plug-ins are slow,” said Caldwell. “There’s some concern.”

        http://www.detroitnews.com/story/business/autos/2015/04/19/electric-vehicles-lose-buzz/26050135/

        • Watcher says:

          BTW, when the SHTF and you decide you have addressed it by having an EV, and the store shelves are empty because shipping has stopped, just where is it you thought you were going to drive 40 miles? You have nowhere to go. The stores don’t have anything.

          Victory is a far better option than this lifestyle austerity people want to impose.

          • Nick G says:

            1) buy a Volt: 400 mile range.

            2) why would shipping stop?? Shipping only accounts for 20% of oil consumption – it’s SUVs that will get junked first.

            • Caelan MacIntyre says:

              “Chevrolet Volt that caught fire after the pole test in June 2011. Top: before the NHTSA’s pole test. Below: After the fire.

              In June 2011 a Volt that had been subjected by the National Highway Traffic Safety Administration (NHTSA) to a 20 mph (32 km/h) side pole impact crash test followed by a post-impact rollover, caught fire three weeks later in the test center parking lot, burning nearby vehicles. ” ~ Wikipedia

              Wow lol 20 mph. That’s breakneck speed that is.
              Burned surrounding cars too.

              “After the Volt’s sales price was announced in July 2010, there was concern expressed of the launch price of the Volt and its affordability and resulting popularity, especially when the federal subsidies of US$2.4 billion were taken into account in the development of the car.

              Corporate welfare, of course… Which means we all get a free Volt… right? No?

              …Despite the federal government being the major GM shareholder due to the 2009 government-led bankruptcy of the automaker, during a press briefing at the White House a Treasury official clarified that the federal government did not have any input on the pricing of the 2011 Chevrolet Volt.

              There have also been complaints regarding price markups due to the initial limited availability in 2010 of between US$5,000 to US$12,000 above the recommended price, and at least in one case a US$20,000 mark up in California…

              In May 2011 the National Legal and Policy Center announced that some Chevrolet dealers were selling Volts to other dealers and claiming the US$7,500 federal tax credit for themselves. Then the dealers who bought the Volts sell them as used cars with low mileage to private buyers, who no longer qualify for the credit. General Motors acknowledged that 10 dealer-to-dealer Volt sales had taken place among Chevrolet dealers

              In September 2012, Reuters published an opinion/editorial article where it claimed that General Motors, nearly two years after the introduction of the car, was losing US$49,000 on each Volt it built. The article concluded that the Volt is ‘over-engineered and over-priced’ and that its technological complexity has put off many prospective buyers, due to fears the car may be unreliable…” ~ Wikipedia

              • manybytes says:

                The National Highway Traffic Safety Administration in January 2012 found that the Volt and other electric vehicles to have no higher risk of fires than gasoline-powered vehicles. Here we are in 2015 and this is all you have?

                • Caelan MacIntyre says:

                  My comment(s) didn’t just mention(/illustrate) fires.

                  Here we are in 2015 and this is all you notice?

                • Caelan MacIntyre says:

                  Too tired to edit this last night at the last minute, so here it is this late morning over tea:
                  One might be forgiven in thinking that an electric car would have better than a, as you write, ‘no higher risk of fires’ than a car that drives around with a flammable liquid (gasoline).
                  But then maybe batteries are as flammable as gasoline?

              • Old farmer mac says:

                Among my other less than noteworthy accomplishments as a rolling stone, I have gotten by choice and necessity to be a pretty fair mechanic. Most farmers are.

                I have personal knowledge of at least a dozen gasoline fueled cars burning to the ground , as well as a few diesel fueled trucks and other diesel fueled machines. Some of them burned because a gasoline or diesel fuel line rotted or rusted thru or broke due to metal fatigue.

                A couple burned because of a cigarette getting into the upholstery. At least one burned because hydraulic oil from the power steering pump leaked onto the hot engine exhaust manifold.

                A couple of them burned due to careless so called mechanics working on them or refueling them in a reckless manner.

                Battery electric vehicles are very likely to prove to be substantially less likely to burn than gasoline or even diesel fueled vehicles.

                And there won’t be any fires started due to careless transport or storage of liquid fuels with battery electrics. There are many such fires. A casual acquaintance burned down his garage and burned up his almost new riding mower pouring gasoline into the tank before allowing the engine to cool.

            • Watcher says:

              Shipping stops because the SUVs already used it up.

              And when it stops, there’s no point having an EV because there’s nowhere to go.

              • Nick G says:

                Prices go up, SUV drivers switch to more efficient cars, freeing up fuel for trucks.

                Trucks will pay $7 per gallon. They won’t be happy, but $7 fuel won’t stop trucking. But a lot of SUV drivers will dump the SUV and take back the Corolla from the teenager.

                • Watcher says:

                  If you are KSA and Russia and you want to destroy shale, why would you charge more for oil? Regardless of supply and demand, why not keep the price low?

                  You have enough for your own people. And may simply decide you don’t need more pieces of printed paper. Those two are 20some% of world production. They can do this. In fact, as shale dies, that percentage rises.

                  In fact, KSA is Sunni, and so is ISIS. Maybe they are funded to sell oil below market price. Further influence.

                  Supply falls, population grows, demand grows, but they keep selling it for $50 or lower.

                  Who would insist on paying more?

                  • I started to say “that’s a good theory but it just don’t work like that”. But then I thought better of it, that’s not a good theory at all and it sure as hell don’t work like that. Saudi gets the same price as everyone else in the Middle East gets, they get the OPEC basket price.

                  • Watcher says:

                    Well, the point is those two are so large and determinant that they define or strongly influence the basket price. The rest would like more, but as long as KSA charges lower, the others have to do the same or they will lose share.

                    Predatory pricing is just another of the long list of examples showing how supply and demand is not a law of the universe.

                  • clueless says:

                    Here is a scenario that everyone can guess at. What if Russia said that they were going to a monthly posted price for exported crude ( 5 million bb/ day??) starting at $80? Do not want to pay that price, do not buy it. If Russia has the currency reserves to export zero barrels for 90 days, I predict that the price of oil will be at least $80/bbl at the end of 90 days. 90 days times 5 million is 450 million bbls off the market.

              • Old farmer mac says:

                Watcher you sound more like a smart alec nincompoop kid every day.

                It is VERY hard to refrain from insulting somebody who makes continuous smart alec half witted comments.

                But please note that I have only said you are acting like dimwitted smart alec teenager. I believe you have a brain and wits. Maybe you think your comments are funny. They would be easier to take if you added funny faces.

        • Boomer II says:

          The article also says this:

          Dan Aliff, pre-owned vehicle manager at the dealership, said he’s had a hard time keeping used Volts in stock, due to their pricing. “They don’t stay around very long,” he said. “They definitely perceive them as good deals.

          That’s been my impression (I’m shopping for cars now). There are some good prices. The fact that cars are rolling off leases and they are priced very well should allow them to move out quickly.

          I don’t see that is a problem. Seems like it expands the market for them.

          • Old farmer mac says:

            People who really need cheap running cars have not yet even had a chance to test drive a plug in hybrid or pure electric at all and seldom a chance to test drive a used hybrid such as a Prius.

            This is because they can’t afford new cars and there are NONE of these cars at ALL on the vast majority of car lots.

            ONCE there is a sufficient supply of plug ins and pure electrics available used in older higher mileage models the cash strapped working class public will take to them like a hound to a buttered biscuit.

            Assuming they prove to be durable and reliable of course. I believe they will prove to be both.

            A Volt with a couple of hundred thousand miles on the odometer that has been driven mostly short trips might have only fifty thousand miles or less on the gasoline engine. If the battery won’t hold a charge you still have a forty mpg car with a just about new engine given that GM engines nowadays average close to two hundred k before they need work.

            Ditto a plug in Prius.

            A new battery for a LEAF will cost a damned sight less that a rebuilt engine and transmission and maintenance on them plus gasoline.

            I am a redneck conservative in some respects but I do have eyes to see with and anybody that cannot see that electrics are the future has his head up his butt due to his prejudices.

            IF the world economy ever gets rocking again oil will soon hit onefifty in current day dollars and stay there just like it went from twenty to forty to a hundred for a while.Getting to one fifty probably won’t take more than five years in my humble opinion. Depletion never sleeps. The population is still growing. And even though the overall world economy is slow most of the lesser developed parts of the world are growing economically.

            Every price cycle brings a new higher bottom. The current bottom at fifty to sixty will be eighty or ninety or ever higher when oil prices crash again five or ten years down the road.

            • Boomer II says:

              What appeals to me about a Prius is that Consumer Reports rates them so highly as used cars. Not just among hybrid used cars, but among all used cars.

              They have been built very well. So it turns out that if you want a reliable used car, a Prius is one you should consider.

    • islandboy says:

      Surprise, surprise! Sales of models, some of which have had no significant redesigns/refreshes since their introduction, are stagnating in the face of anticipated new models! Case in point, GMs marketing disaster with the outgoing Chevy Volt.

      They have been showing off the new 2016 Volt way ahead of it’s availability and sales of existing Volts have tanked. The Nissan Leaf has had only minor revisions since introduction in late 2010 so, a updated model is now due and even though Nissan has not repeated the missteps made by GM, savvy consumers will be holding off to see what the yet to be announced gen II Leaf will be like. In addition the Leaf is facing competition from recently introduced competitively priced offerings from Kia (Soul EV) and Volkswagen (eGolf).

      In the meantime, Tesla Motors has sold over ten thousand of their expensive, (starting at 75 grand) large. five seater sports sedan for the first quarter of 2015, having recently introduced some significant upgrades. If Ford is not careful, they could end up being “the next Kodak” while new entrants like Tesla and maybe Apple eat their lunch. IMHO Ford is precisely why Elon Musk decided to start Tesla Motors!

      • Old farmer mac says:

        Islandboy , Why do you say ” Ford ” in particular?

        • islandboy says:

          Watcher’s original post that started this particular thread includes:

          Some choice items:

          Ford told workers and notified the state of Michigan that it will lay off 700 workers, starting June 22. The decision affects 675 hourly workers and 25 salaried employees who make the Focus, Focus ST, Focus Electric, C-Max hybrid and C-Max Energi plug-in hybrid at the Wayne plant.

          Ford expects that the first 200 laid-off workers will be redeployed quickly across the roughly 15 assembly, stamping, engine and transmission plants in southeast Michigan, filling in for workers on vacation, said Ford spokesman Kristina Adamski.

          “All our other plants are doing well,” Adamski said. “We can’t build enough trucks or SUVs.”

          Now, all of that strikes me as the attitude of an organisation that does not really want to see a change in the status quo. They would much rather take the easy convenient and less risky route of going with the flow and doing what they’ve always done best.

          Since the F 150 is the best selling vehicle in the US, if the desire on the part of consumers is not driven by intense marketing, why not spend some of that marketing budget trying to create a desire for some of the models they’re caning/reducing production of. It just stinks of a strong desire to maintain BAU and take no risks. Precisely the attitude that results in decimation of the incumbent when disruptive change enters the arena and that is why I singled out Ford.

          • Boomer II says:

            I think Ford may just be conceded that market to Tesla and Toyota.

            Detroit lost the small car market to the Japanese by not responding quickly, and has never really become a leader in it.

            And I think that the US companies have produced small cars primarily to generate better overall gas mileage numbers of their fleets.

            I don’t think it matters if Ford doesn’t produce EVs and hybrids as long as other companies do.

          • Old farmer mac says:

            You may be right.

            Or it could be that Ford is more forward looking but pragmatic than you think as evidenced by going to aluminum on their pickup trucks.

            The plan might be to just wait out the current low oil price and wait for the consumer to better accept the idea of electrics. By this I mean that Ford can let GM and Nissan etc do the heavy lifting involved in getting the public used to buying electrics and then when the time is ripe put a heavy emphasis on selling electrics.

            This might just be in the eyes of management a more practical solution.

            It would be allowing the competition to gain the early foothold of being established first but Ford has the clout when the time comes to sell a new model.

            I don’t know about car buyers in other countries but in this country there are still tens of millions of people who would rather walk than buy a new Chevrolet for half price – and ditto that many more who wouldn’t take a new Ford for a gift.

            GM and Nissan are not YET making good use of the capital they have invested in electric manufacturing capacity and their labor costs per car for Volts and Leafs are probably high due to low production.

            Personally my guess is that Ford will have very competitive electrics on Ford dealership lots in a few years.

            I personally do not believe Ford management is so inept as to have missed the writing on the wall involving the long term price of oil.

            Ford has invested VERY heavily in going to the aluminum bodied f 150 basically for reasons of fuel economy above all else. Likewise Ford has sunk huge amounts of money into building more efficient engines.

            I have not yet bought any pv stuff because all the other people out there are doing the early heavy lifting for me. I will wait another year or two in the expectation of getting a better deal for myself.

            The better deal for Ford may be to postpone investment in electrics.

            Incidentally being a gear head working type guy I don’t believe Ford trucks are the most popular vehicle because of the advertising.

            Just about every body I know in believes they are the best truck for the money in terms of long term costs of ownership and operation. Farmers and small tradesmen have sharp pencils.

            You hear a lot less horror stories about Ford trucks than other makes. I don’t live in a place that is especially bad in terms of road salt use for instance but I have seen dozens of Toyotas that have frames rusted out beyond any hope of repair. I have never seen a Ford rust that way unless it came from someplace way up north. I got my own Chevy dirt cheap because of a badly rusted frame.It was a local truck. I cut her in half right behind the cab and welded on the back half of a good frame salvaged from a wreck.

          • Watcher says:

            First rule of marketing. You cannot create a desire. You can only direct one.

            Ford has no obligation to do anything but provide what the people want. They do that well.

            They take a risk every time they build an F150. Their shareholders are not interested in larger risks. They build cars and make a profit.

            And without government bailout.

            • toolpush says:

              Watcher,

              Ford has no obligation to do anything but provide what the people want. They do that well.

              Well they do have the obligation to meet current and future CAFE standards. Though they may have figured saving a few mpg on an aluminium F-150, their largest selling vehicle, is more productive than building a couple of thousand of zero fueled vehicles?
              I guess they have made an each way bet, and with the low current, fuel price, the Aluminium F-150 bet is winning, at least in the short term.

              • Watcher says:

                CAFE standards are traditionally delayed and waived, depending on if it’s profitable or easy (or both).

            • Fred Magyar says:

              First rule of marketing. You cannot create a desire. You can only direct one.

              Really?

              http://goo.gl/RSpHSM

              • Caelan MacIntyre says:

                Ah yes, Bernays… Good vid, Fred.

                …Wow, ya, freedom, leisure and happiness… Hell no, don’t be silly, what was I thinking, let’s have Bernays…

            • clueless says:

              Watcher. So, assuming you are a male, and I send you a totally nude picture of the Playmate of the year. I am not creating desire, I am directing it?? WTF?? I do not comprehend [I am clueless] what you mean.

              • Ilambiquated says:

                It isn’t just private industry that pushes oversized vehicles on the American public. Cities punish themselves with 12 foot lanes and oversized parking spots to accommodate these behemoths, the federal government would rather go broke than tax gas, roads are being straightened supposedly for safety reasons, oversized roads with “courtesy lanes” accommodate poorly maneuverable vehicles, individuals are allowed to drive with licenses commercial drivers cannot use for the same vehicles and so on.

                A whole generation of Americans that probably should be driving golf carts any more are stuck in their suburban homes with SUVs and long drives to the supermarket.

              • The Man They Call Zazelle says:

                Could it be that the desire can only be created by the person’s own mind? That desire doesn’t exist outside of the mind; that it depends on it?

    • wimbi says:

      Better? And real simple, right now. Any biomass to pyrolyzer to fuel gas and carbon. Use the fuel gas for whatever, and store the carbon.

      Then use the carbon when PV/wind not up to the job, burn it in whatever fast response closed cycle thermal machine- stirling, brayton, rankine, for load matching.

      Carbon (charcoal) is great for heat engines. Very easy to handle and feed, stores forever in an open box.

      Ha! Air, plus water, plus solar energy = fuel. So what else do we need? Oh, yes, wisdom. Well, ok, maybe next cycle of evolution.

      That’s what I am playing with now, using stirling. MUCH easier than my previous efforts with wood gas, which I found hard to keep at right fuel/air ratio to avoid smoke- and also hard to store.

    • Fred Magyar says:

      The Pullman battery uses vanadium salts for its energy-producing reactions, a chemistry that was developed at the Pacific Northwest National Laboratory. (At a White House business forum four years ago, President Obama mentioned the vanadium process and commented, “That’s one of the coolest things I’ve ever said out loud.”)

      Hmmm! Might be time to get my old ascidian farm project off the ground… well of course it has to be off the ground, ascidians are marine organisms fer crimminy’s sake! Oh yeah, not to mention that ascidians are considered a pest at mussel-farming aquaculture operations so we don’t even need to figure how to grow them, all we have to do is process them for the vanadium. Ain’t nature great?!

      Vanabins (also known as vanadium-associated proteins or vanadium chromagen) are a specific group of vanadium-binding metalloproteins. Vanabins are found almost exclusively in the blood cells, or vanadocytes of some ascidians and tunicates (sea squirts). The vanabins extracted from tunicate vanadocytes are often called hemovanadins. These organisms are able to concentrate vanadium to a level more than 100 times higher than in the surrounding seawater. Vanabin proteins seem to be involved in collecting and accumulating this metal ion. At present there is no conclusive understanding of why these organisms collect vanadium, and it remains a biological mystery. Source Wikipedia

      Well Duh! It is obvious that the reason ascidians accumulate vanadium is because GOD wanted us to dominate nature and he knew that sooner or later we would run out of cheap oil and he wanted us to have a backup energy source. Mystery Shmystery! It’s all part of GOD’s plan!

      BTW a little biology trivia for the engineering types… Ascidians are protochordates, is that just way cool or what? Though the question still remains, are geniuses smarter than protochordates? My unscientific hunch is: Probably not! Bummer!

      On the other hand who knows once big business corporate types finally figure out that you can’t raise ascidians in overly acidic oceans maybe they will make it a priority to get serious about preserving marine ecosystems… Ascidians are actually quite beautiful once they settle down and become sessile.
      … not to be confused with fossil >;-)

  30. ezrydermike says:

    “The best estimate of the human-induced contribution to warming is similar to the observed warming [from 1951 through 2010].” IPCC 2013, Summary for Policy Makers.(1) This statement differs radically from the almost ubiquitous understanding that part of global warming has been caused by humanity and part is natural. In reality however, humanity’s excess greenhouse gas emissions have caused about 35 percent more than all of the observed warming and our climate is naturally cooling – there is no natural warming. Therein lies the rub. How can the human-induced contribution be similar to observed warming if more than all of the warming has been caused by humanity?

    ….
    Humanity has caused some 35 percent more warming than is evident in the temperature record.

    ….

    This is how observed warming can be less than what our greenhouse gas emissions have caused: some of our climate pollution emissions are global cooling emissions. In the past, the science did not portray a good understanding of a lot of these cooling and warming forcings; we only knew that our climate was naturally cooling, so warming must be more than observed. Now we have a much better understanding and can say how much warming and cooling comes from what source.

    ….

    Since about 2000, Eastern Nations (China and India, etc.) have seen a very rapid industrialization without the benefit of air pollution control rules. The IPCC statement that 57 percent of warming that should have already occurred is significantly caused by this new phase of air pollution from Eastern Nations.

    These nations are currently suffering extreme air pollution in many heavily populated regions and are in the beginning stages of regulation. As these regulations evolve and as sulfates are regulated more stringently, warming from greenhouse gases already emitted will be unmasked. Combining this unmasking with the current rapidly increasing rate of greenhouse gas emissions means the global temperature will climb at a rate that will make the increase from 1951 to 2010 pale in comparison.

    Hidden in this masking, and in the current state of climate pollution control policy, is an unseen and very counter-intuitive reality. Climate pollution policy is no longer about reducing carbon dioxide as fast as possible. Emissions reductions timing is paramount. Without understanding the net impact of all air pollutants – warming and cooling – emitted from coal, using the almost universally proposed method of shutting down coal generation as a primary climate change policy measure, it is entirely possible that we could actually see more warming than if we did nothing at all

    http://www.truth-out.org/news/item/30402-ipcc-more-than-all-of-observed-warming-has-been-caused-by-mankind-s-greenhouse-gas-emissions

    • clueless says:

      “God” wants you to stop breathing. That will cut down on CO2.

      • Ilambiquated says:

        Burning a gallon of gas produces about as much carbon dioxide as an adult exhales in ten days.

        • Fred Magyar says:

          True! But an adult who stops exhaling CO2 for ten days probably won’t be burning too many gallons of gas either.

      • Kam says:

        Humans, and other animals absorb as much CO2, as they release by breathing.

        • Kam, you should not just make shit up because it sounds good. The human body does not absorb CO2.

          Do you understand why you exhale CO2? It is spent body fuel. Carbohydrates and fats oxidize in the blood and become CO2 and water. You basically burn the carbon. It oxidizes giving off heat. You don’t get to burn the hydrogen because it is already in the form of water, or is the “hydrate” in carbohydrates. It is just excreted as urine.

          But the point is you burn carbon, that is where all your energy comes from. You lose weight by burning carbon or gain weight because you do not burn enough carbon. Your body temperature is kept at 98.6 degrees F by burning carbon. So you exhale an awful lot of CO2, that is where your spent energy goes. Your body does not absorb CO2.

          The average human exhales about 2.3 pounds of carbon dioxide on an average day. (The exact quantity depends on your activity level—a person engaged in vigorous exercise produces up to eight times as much CO2 as his sedentary brethren.)

          • Nick G says:

            Uh, Ron, I think Kam simply meant that CO2 is constantly recycled by animals exhaling it and plants absorbing it.

            And, of course, he’s right: lately I’ve been hearing a right-wing meme about how environmentalists are trying to tell humans to stop breathing…..just silly.

            • Well, my apologies then. But what animals do is simply recycle the carbon, not the carbon dioxide. Plants absorb the CO2, free the oxygen and hold the carbon. Animals eat the plants and absorb the carbon. They then burn the carbon and exhale it as CO2.

              So my apologies to Kam but you simply used the wrong phase. Animals eat and in turn absorb carbon, not CO2. They do form part of a contentious cycle of carbon to CO2, then back to carbon again. They actually do not add CO2 to the total amount. It basically a wash.

              They do add methane however.

    • Ezry, the IPCC position is based on climate models which may have miscalibbrated aerosol and feedback forcings. Not too long ago I read an article in Scientific Anerican which misrepresented what may be happening, and after looking into the subject prepared a short review of the change in aerosol impact on climate model performance:

      http://21stcenturysocialcritic.blogspot.com.es/2015/04/globalwarming-102-another-tutorial-by.html

  31. ezrydermike says:

    A fossil fuel subsidy is any government action that lowers the cost of fossil fuel energy production, raises the price received by energy producers or lowers the price paid by energy consumers. There are a lot of activities under this simple definition—tax breaks and giveaways, but also loans at favorable rates, price controls, purchase requirements and a whole lot of other things.

    http://priceofoil.org/fossil-fuel-subsidies/

  32. Old farmer mac says:

    Concerning the sale of plug in cars- ONE Tesla Taxi that is busy will introduce more people to plug in cars in a year than a hundred or maybe five hundred or a thousand plug ins actually sold. It is hard to say how many people the owner of a new car gives rides but my guess is less than ten in a year except for a immediate family and maybe a couple of close friends. I doubt very seriously if I have more than three or four strangers or casual acquaintances in my car in a typical year.

    Taxis haul around a LOT of different people in the course of a year.

    Teslas are being used now as luxury level taxis – on call limos.

    http://www.ibtimes.com/tesla-taxis-china-adds-growing-list-countries-hailing-model-s-cab-service-1895993

    • Fred Magyar says:

      From the article:

      The Tesla Model S with the 85 kWh battery can travel 270 miles per charge, comfortably inside the distance a New York City taxi would travel on a typical day. And unlike urban apartment dwellers who can’t easily plug in privately owned electric cars, fleet owners can juice up their electric rides at a central location where the cars are parked when they’re not in use. One concern is traffic, especially in crowded cities. A Tesla Model S limo in a big city would give up a chunk of its range waiting to move forward.

      I find that really hard to believe! I was driving an ICE powered Volvo wagon in Germany a couple years ago that was designed to shut down and restart when stopped at red lights. I can’t imagine why an all electric would consume power if it were at a standstill.

      • wimbi says:

        Of course! My Leaf STOPS its motor when the car stops. Initially I tended to react with “omygod the dam engine has quit” but of course I soon got used to no movement, no noise. I like it.

        I also like the fact that it is so easy to really creeeep along in tight spots with never a fear of any stall at all.

        It’s a puzzle to me why certain well known people here seem to have a visceral hatred of EV’s when to me they are so obviously the future for vehicles.

        I easily understand why dealers don’t like them- no maintenance.

        • Old farmer mac says:

          Wimbi is dead on about why car dealers do not want to promote electrics. I know lots of people in the car biz and every last one of them is adamant that you SELL new cars more to generate business in the shop than otherwise. The shop is the real profit center.

          There are always a few fools out there that will pay more than necessary but most people these days are able to negotiate a good price that doesn’t leave much mark up for the dealer.

          Their own advertising campaigns are based as much on price as anything else , or more so.When you stop to look at new BELCHFIRE SPECIALS at a particular dealer just because that dealer ran an ad about how he sells CHEAPER than anybody else…..

          • Boomer II says:

            I know lots of people in the car biz and every last one of them is adamant that you SELL new cars more to generate business in the shop than otherwise. The shop is the real profit center.

            A car salesman at a dealership said that very thing to me yesterday.

            I mentioned that his dealership, Nissan, offered a better warranty on the used cars it sells than the Toyota dealership down the block.

            He said it because his dealership wants the business. In other words, wants to sell the car to get you to come in for service under the warranty.

        • clueless says:

          Assume that “some” people on this site believe in UFO’s.
          In that case, for at least all of them, they would “obviously” believe that EV’s are not the future.

        • Ilambiquated says:

          No maintenance and probably a much longer life. That means new cars sales will take a hit as well. Remember how steel radials almost killed the tire business?

          LEDs are also set to kill the light bulb business for the same reason.

          The economy is dematerializing fairly quickly. That means that although the value of the good we produce continues to increase, their weight is stagnating or even falling.

          It also means the age of gizmos is ending. Complex machines that mechanically “calculate” their behavior are being replace by servomotors and electronics.

          All this means that resource extraction and manufacturing will continue to shrink as a percentage of the total economy.

  33. Boltzmann Brain III says:

    http://www.nytimes.com/2015/04/23/business/international/gazprom-european-antitrust-european-union.html?_r=0

    Speaking of Russia…..

    I wonder how Russia will behave in an ELM scenario where their exports become indispensable…….Wait look how they are acting now!

    • The article’s author doesn’t understand the industry very well. To move Azerbaijan gas to Europe the need to install gas pipelines (Azerbaijan is landlocked). To ship Iranian gas the either build pipelines or LNG terminals.

      Given the size of what they are discussing my guess is the mega projects to replace 50 % of Russian gas would take say 10 to 15 years. Meanwhile Russia would be busy laying pipe to China.

  34. Boltzmann Brain III says:

    Speaking of Russia…..

    What is Russia and USA’s (NATO) strategy in light of Peak Oil….Let’s look at the pattern of undeniable events:

    1) Invading the Ukraine….suspicious and costs a lot of money to be a casual choice, so there must be a VERY GOOD reason.

    2) Forming the Eurasian (Don’t say the word Soviet) Economic Union…awfully suspicious (almost like someone who is trying to build buffer states or something?)
    http://www.independent.co.uk/news/world/asia/putin-suggests-single-currency-for-eurasian-economic-union-10123676.html

    3) Nuclear Threats to NATO aligned countries
    http://www.dailymail.co.uk/news/article-3022793/Putin-threatens-nuclear-war-Russian-leader-necessary-step-drive-Nato-Baltics-defend-Crimea.html

    USA:

    1) NATO building a missile shield
    http://www.telegraph.co.uk/news/worldnews/europe/denmark/11487509/Russia-warns-Denmark-its-warships-could-become-nuclear-targets.html

    2) USA (NATO), in massive debt, suddenly cares about CUBA
    http://in.rbth.com/news/2015/04/24/russia_to_carry_on_with_modern_weapons_supplies_to_cuba_defense_minister_42821.html

    3) China building artificial islands in the South China Sea (obvious)…

    http://thediplomat.com/2015/04/china-is-building-giant-floating-islands-in-the-south-china-sea/

    My Thesis:

    1) The major militaries of the world know Peak Oil is imminent.

    2) Vladimir Putin sees his opportunity to go down in the history books as the guy that got “revenge” on the USA and Europe by rebuilding the “EURASIAN” (Don’t say Soviet) Union and seeing the financial collapse of NATO.

    3) Vladimir Putin knows based on the LAWS OF MATHEMATICS that oil Importing NATO is in massive inescapable debt.

    4) NATO sees this as well, that is why they are building a MISSILE SHIELD ( a massively expensive, geopolitically risky, and decadal program) to try to pin RUSSIA from rebuilding the “Eurasian” Union (don’t say the word Soviet).

    http://www.military.com/daily-news/2015/04/09/us-russian-war-games-rekindle-cold-war-tensions.html

    5) ELM and Putin (who is notorious for using energy power to manipulate) is NASTY NASTY for NATO aligned countries.

    Guaranteed 100% correct (lol),
    Botlzman Brain

    • John B says:

      Speaking of Russia:

      Clinton gives away 20% of US Uranium reserves to Russia, whilst collecting millions in Clinton Foundation donations.

      http://www.nytimes.com/2015/04/24/us/cash-flowed-to-clinton-foundation-as-russians-pressed-for-control-of-uranium-company.html?_r=0

    • Boltzmann Brain III says:

      By ELM I am referring to Jeff’s Export Limited Model.

      Don’t confuse my idears with his brilliant work on this topic. I am just a bar monkey and probably one of the least intelligent guys on this site and Jeff’s ideas are great IMO.

      But I never hear anyone discuss this…What happens in an ELM situation if Russia cuts off their exports….

      GULP!!!!!

      humbly thankful for this wonderful site.

      • Old farmer mac says:

        I have mentioned that I believe the Germans understand the situation you describe VERY VERY well indeed.

        The Germans are not so stupid as to believe the Russians have forgotten WWII and the siege of Stalingrad.

        I am sure Fernando is right IN PART when he cynically says the Germans are pedal to the metal on renewables for reasons involving current day politics but I am also sure the country as a whole – the thinking part of it at least- understands the reality of peak fossil fuels.

        Their very survival as a prosperous and powerful country depends on a successful transition to renewables. Their exporting economy will eventually have to be shifted away from ordinary cars to electrics if it cars remain part of the mix. But they will do ok with electrics and wind and solar goods if they can compete with Asian wages in these areas.

        At some point it time I believe there will be a political revolution based on protectionism rather than globalism, with western countries protecting themselves.

        Right now the working classes in the west are being subjected to endless involuntary dry sex while the rest of the people enjoy the benefits. But the rest of the people have not yet figured out why the former working classes are now the welfare and criminal classes. It takes a while for the truth to sink in in such situations.

        If we were to have to go to war with China we would have to try to buy steel and computer chips from our enemy. The Chinese own these two industries now.

        Only an idiot believes you can survive long term exporting electronic dollars, movies and computer programs and services. Once a country like China has one copy they have a million or ten million for pennies apiece.

        When I try to explain fossil fuel depletion in general and oil in particular to hard core right wingers I come down hard on security and barely mention global warming. I have succeeded in getting some to accept peak oil as a near term reality using this argument.

        • Boomer II says:

          When I try to explain fossil fuel depletion in general and oil in particular to hard core right wingers I come down hard on security and barely mention global warming. I have succeeded in getting some to accept peak oil as a near term reality using this argument.

          I accept the climate info the scientists are putting out, but I, too, think its a hard sell in terms of changing energy usage. It feels to far in the future for most people to care. And changing behavior isn’t going to bring immediate measurable results.

          The strategic realities of energy are a very real issue and can be understood by people across the political spectrum.

    • Boltzmann Brain III says:

      Speaking of Russia…

      http://www.theguardian.com/world/2015/apr/25/us-set-to-revive-propaganda-war-as-putin-pr-machine-undermines-baltic-states

      Not sure this is living in the past anymore.

      Eurasian Economic Union + Invasion of Ukraine + Peak Oil + Major Oil, Gas, Uranium Exporter

      Hmmm…I wonder what Vlad is thinking…….

      • Hillson says:

        Hmm… NATO + Ukraine coup + Peak Oil + Major Oil, gas importers…

        I wonder what Obama and Merkel are thinking.

        • Boltzmann Brain III says:

          Easy (lol!).

          NATO wants to contain Russia by putting pressure at their borders. Using financial sanctions (and other techniques) try to disrupt Russia in hopes of getting Putin out of power and replaced by someone with a Western mentality.

          Putin wants to rebuild the “Eurasian” (Don’t say Soviet) Union using his energy power. He also is in survival mode.

          NATO countries are in awful debt and are mostly oil importers.

          But NATO’s conventional military options are much better than Russia’s.

          Let the games begin (err…umm….continue). LOL!

          thanks!

    • Russia didn’t invade Ukraine. It’s trying to hang on to strategic territory, which happens to be full of Russian speakers, to keep NATO away from the Russian heartland. What we are seeing is a neocon move to attack Russia. They realize they need to take action, and they are taking it.

  35. Ronald Walter says:

    Not that oil isn’t important anymore, it’s just that other happenings can’t be ignored either.

    Nepal is buried in rubble, avalanche at Mt. Everest, people in Chile are busy shoveling volcanic ash off of their roofs, a very active volcano in Antarctica.

    Then there’s Maggie’s Farm.

    “We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn’t pay attention very well, especially the dogs. Each one of us does “try my best to be just like I am,” and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.”

    The world has gone from ludicrous speed to plaid.

    • Caelan MacIntyre says:

      Nice stockings. It might make a cute tongue-in-cheek advert for an ecovillage.
      Feeling bummed out about the world? Drop everything and join an ecovillage for Christ’s sake. And others’ sakes too. Occupy a nice ghost town with a determined, committed group with fire in their hearts and a decent tool-chest.
      Stop letting governpimps steal your prostituted labor as taxes for their foreign genocides and domestic population-controls.

      “Each one of us does ‘try my best to be just like I am’…” ~ Maggie’s Farm

      Koko Kuva (‘The Whole Picture‘)

    • Longtimber says:

      It will be all OK: with GWR ( Global Warming Ready ) Prep-up Fashion Gear by who else but DIESEL.

    • clueless says:

      Stop breathing – it is all due to CO2.

      • Longtimber says:

        Rodger Breath Taking Rodger, Last Breath POV a Camel in MENA working for BlackRock. Nein Danke. Jeans Blue please. A Better End? Perhaps under an Ozark Oak on a Ridge, BTW, Drop the 72 Virgins. As in the Oil Patch, Experience matters.

  36. Dean says:

    If we analyze the recently published “Weekly Preliminary Crude Imports by Top 10 Countries of Origin” by EIA, we find some interesting results. It is crystal clear why crude stocks keep increasing, but not (yet) why the US imports so much oil right now. Here are Saudi imports,

    • Dean says:

      here are imports from Canada,

    • Ovi says:

      Thanks for this info. SA is part owner of the Motiva refinery in Texas and they have plenty of storage. They also understand that the WTI market reacts to inventory builds every Wednesday. So essentially they are pouring in more crude than the US needs to influence prices. My scarier scenario is that they are trying to fill all of the storage in the US and that will cause US producers to sell on the open market, which will result in a price collapse in the US.

      For the last six weeks, the US has imported daily extra kb/d of crude, starting the week of Feb 20 1,204, 1,177, 681, 1,564, 185, 759. Except for the week when only 185 kb/d were imported, the market reaction has been a drop in the price for WTI.

      On the other hand one could say that they are getting ready for the driving season.

      Take your pick.

      • aws. says:

        On the other hand one could say that they are getting ready for the driving season.

        … clever

    • toolpush says:

      Thanks Dean,

      I have been waiting to see this type of data. I was thinking that the increase of imports had been coming from Canada, due to the recent opening of the Flanagan and Seaway Twin pipelines, plus recent rail loading capacity, but from your/EIA charts, Saudi is the obvious culprit.

      Do you know if we can determine the grade of this Saudi oil? Heavy to compete with, Canada, Vz and Mexico, or light to compete with the shale plays? It may tell a story and show what sort of game is being played.

      • toolpush says:

        It looks like the numbers on imports on API gravity will not be in for February until the end of the month.

        The PADD destination may actually give some idea as well. PADD 1 or the East coast seems to have a small increase, up till January, at least. Once again, we will have to wait until the end of the month to get it confirmed.

        If the new Saudi oil has gone to the East Coast, then that would indicate light oil is being imported and displacing LTO from the refineries.

  37. Jeffrey J. Brown says:

    The Texas Railroad Commission said Friday that it was considering shutting down two wastewater disposal wells in North Texas’ Barnett Shale after they were linked to seismic activity in the area:

    http://www.dallasnews.com/business/energy/20150424-railroad-commission-moves-to-shut-down-wells-linked-to-quakes1.ece

  38. NOTICE:

    I should be putting up a new post today or tomorrow but I have been sick with some kind of bug and I really don’t feel like doing anything. If I had some kind of data base where I could make a lot of charts it would be easy but when you have to dig for something to post it gets to be tiring and I really don’t feel up to it. I just don’t feel like doing anything right now so it will be days before I have any post on anything.

    If anyone has a guest post, on subject of course, please post it to me and I may make a guest post of it. But otherwise it will be sometime next week before I have anything.

    Sorry,

    Ron

  39. Dennis Coyne says:

    Get better soon. I will try to come up with something tomorrow.

  40. Andy Hamilton says:

    A suggestion (and hope you recover quickly). If no other posts are available why not just post an ‘open’ thread, which will at least enable new news items from contributors to get posted. After 3 days or so existing posts get ‘stale’ with several hundred posts (many of which involve arguments of little interest to the general reader) and genuine news gets smothered in the deluge (I for one find it trying to trawl through stuff once the post count goes above 200).

    • coffeeguyzz says:

      Mr. Hamilton, that is what the ‘old’ Zero Hedge would do on occasion and it was remarkable what informative creativity regularly emerged.
      Mr. Patterson, like all here, I wish you a speedy recovery and thank you once again for your efforts related to this site.
      Gerard

  41. Boomer II says:

    HSBC Warns Clients of Fossil Fuel Investment Risks

    The paper proposes three options for investors – divesting completely from fossil fuels; shedding the highest risk investments such as coal and oil; or staying the course and engaging with fossil fuel companies as an investor. The report argues that investors who stay in fossil fuels “may one day be seen to be late movers, on ‘the wrong side of history’”.

    • toolpush says:

      Kuwait finds four new oilfields with huge volumes

      “The (new) fields will be developed and production will start briefly,” he said, adding that the new discoveries had been announced after two years of exploration activities had proved positive.
      Two reservoirs for unconventional oil in the north of the country were also discovered, Hashem said.

      The grades found in the fields were both light and heavy oil, with preliminary results showing “huge commercial volumes”, KUNA quoted Hashem as saying.

      Kuwait plans to boost its oil and gas drilling rigs by 50 per cent by early 2016 as it seeks to boost crude and gas production despite low oil prices, Hashem said in February.

      Kuwait has been looking for help to produce from their northern fields for many years. I am not sure what technology they required off the western oil companies that they could not purchase from the Halliburtons of the world.
      I am wondering if these are new oilfields, or oilfields that have been known but Kuwait have been unable to develop until now?

      • Camel dinky. Pure propaganda to discourage drilling elsewhere. On top of that the Kuwaitis are incredibly bureaucratic, slow, inept, and convoluted. And no, Halliburton can’t help them.

    • Watcher says:

      Pretty good material in there about how oil majors are borrowing at 0%, and then spending it on dividend service rather than capex.

      This is the story of other industries, too. Borrow. Buy back shares. Shrink the company while declaring growth in earnings/share (as the denominator shrinks). No hiring. No business expansion.

      This is all symptomatic of onrushing death.

      • SAWDUST says:

        Yeah the only way those companies doing all those buybacks can ever repay what they’ve borrowed is to sell. Maybe they hope to keep rolling it over indefinitely. At some point they wont be able to service their debt an we will get a long list of bankruptcies. Or the FED will go all in and by unlimited amounts of stocks. All CB’s will loose all credibility before this thing is over.

        • Watcher says:

          Pretty much. FYI the BOJ is explicitly authorized to buy equity ETFs. They do so, in large amounts. The Nikkei’s rise is largely a result.

  42. SW says:

    Get well Ron. I think I wrestled with that little monster a month ago or so. Just completely drained every ounce of energy out of me for a few weeks.

  43. islandboy says:

    Here’s an opinion piece from a former Prime Minister of Jamaica who was considered somewhat of a finance wizard by his supporters/fans.

    Edward Seaga: Why the economy can’t grow now

    In recent months, there have been repeated cries for growth to be added to the International Monetary Fund (IMF) austerity agenda. The IMF agreement requires creating as much revenue as possible (taxes, etc), spending as little as possible and using the surplus to pay down the enormous debt, which is some 135 per cent, or more, of GDP.

    The degree of indebtedness, one of the highest globally, is a great strain on the economy, because after payment of debt, very little remains to build infrastructure and provide services, both of which are very important to the operation of government. With little attention to roads, health care, education and the control of crime, no wonder the outcry is becoming sharper by the month. Two more years of this stringent life will leave the people shouting louder for growth to ease the suffering…..snip

    This argument is not based on the complexities of rocket science. It is straightforward and simple. Can we now, therefore, hold the exchange rate of the Jamaican dollar steady to allow the economy to grow? The answer will be no, despite the fact that there is little left of the manufacturing sector, which is the only sector with possible increase in exportable goods, and that won’t happen until the sector gets cheap funds to modernise equipment like Trinidad, and likewise cheaper power. Meanwhile, there is little or no export functioning sector to protect by devaluation.

    Awaiting the full story

    I am awaiting the result of a study that I have commissioned to determine, among other things, how much of the GDP (growth) of Jamaica has been lost to higher costs in increased prices and debt payments between 1990 and 2014. Then the full story will be told on why the economy is not growing and whether, with devaluation as a strategy, the economy can appreciably grow in the two remaining years of stringent IMF strategy, or would have to further tough it out.

    For those who want to know how I handled the same IMF programme in the 1980s, I took the bitter medicine ‘up front’ in two years, not four, and growth began immediately after that in year three. Make no mistake about it, this strategy was bitter, but the country came out of its downward spiral and resumed its upward path by year three.

    The ability to absorb suffering and wait for blessings will determine the outcome of the Jamaican economy for the near future.

    The only mention of the cost of energy I could find is in the following sentence: The answer will be no, despite the fact that there is little left of the manufacturing sector, which is the only sector with possible increase in exportable goods, and that won’t happen until the sector gets cheap funds to modernise equipment like Trinidad, and likewise cheaper power.

    Otherwise no mention and so, the beat goes on.

    • I think you guys need to see if you can couple a high efficiency supercritical coal fired plant with a long term coal supply contract from Colombia to some wind and pumped storage. Otherwise you are toast.

    • Watcher says:

      Trinidad has oil. Jamaica doesn’t. Trinidad about 150K bpd. Jamaica 2K bpd.

      The rest of the analysis is pointless hand waving.

  44. Old farmer mac says:

    Way up above somebody debating Nick argued that local ”to the loading dock” train service is history, that the future of railroads is in unit trains hauling one commodity long distances.

    Nick argues that spurs and short distance service can come back in a big way.

    I am with Nick in this case. The primary reason trucks took over so much business from trains at medium and long distances from the thirties right on thru the present day is than trucks are so flexible in terms of being dispatched at will from any place to anyplace – where as trains were extremely slow in terms of making up diversified car loads and delivering these cars to many different cities.

    The first few people that tried to haul lettuce from California to New York packed in ice had it rot on the way because although the trip would have taken only three days at forty or fifty mph the lettuce sat on sidings for a couple of weeks.

    Railroads ever since then have been getting a little better at getting loads on board and to the desired destination a little faster and a little more reliably.

    Computerized management of trains and the tracks they run on is now maturing. Pretty soon if the necessary investments are made it will be possible to make up a train and drop off single cars to attach them to other trains with a substantial degree of efficiency- meaning quickly . Getting one carload of apples from Roanoke to Atlanta- even a particular part of Atlanta – in a timely fashion will be possible.

    Trains can come back with a vengeance. Laying spur tracks is not that big a deal compared to maintaining a highway and paying truck drivers and insurance and buying diesel fuel and replacing trucks. Tracks and cars last just about forever compared to pavement and trucks.

    If computerized cars can work then self driving trains are a piece of cake. A car- or half a dozen cars – can be dropped off at a siding and pulled by a tiny self driving locomotive a mile or two to its precise destination.. One freight car can haul as much as four trucks in dead weight.Freight cars will basically be able to come and go without human intervention except to load and unload them.Forklifts may eventually drive themselves too insofar as that goes.

    Tracks will not have to be extended EVERYWHERE. Businesses needing lots of goods delivered or shipped will move to an existing spur or pay to have it extended if possible, given the potential savings in freight costs.

    • They need overhead cranes to pick up containers from trains like they do in seaports. A decent crane can pick off 10 containers and reload 10 in 40 minutes.

      • Old farmer mac says:

        I have seen such cranes in operation myself at a seaport. They loaded directly off a ship to a tractor trailer truck. Not quite that fast , about five minutes per container off loaded.

        This would be the ideal for long distance transport by train and local transport by truck but long spurs and detached cars would allow diversified loads to be unloaded directly from rail cars to receiving docks – assuming the receiving business is located on the spur of course.

        My thinking is that lots of spur lines will be reclaimed and lots of new ones built so as to eliminate a good bit of even local truck traffic. The expense of transferring loads between train and truck is high enough that taking the rail car right to the final destination is going to work a lot of the time.

        Businesses that can move will have to move to the tracks.

        • I think i can speed up the load and unload. I used to work on a drill ship and watched the way different crane operators did their job. The trick is to have two hands ready to hook up the load, unhook, and move off. The best solution is a parallel set up with a small crane with a two man basket. This just needs to be laid out and clocked properly to allow two cranes, one basket crane, and some low boys available at each of these load transfer stations. It’s doable.

    • Old farmer mac says:

      It is not the fault of the renewables industries that the Germans shut down their nukes prematurely.

      And while coal and gas are affordable by now – they will not ALWAYS be affordable.

      On the other hand there is no doubt in my mind that the renewables transition has been mismanaged to a substantial extent. Most large undertakings ARE mismanaged to a substantial degree.

      The Germans import more energy than just about anybody in relation to their economy and population. If they hope to survive as a rich powerful country they are going to have to bring the transition to a successful conclusion.

      One of these days the Russians are apt to cut off the gas. The oil too.

      The old reds were as bloody as the nazis but the nazis did attack Russia rather than the other way around. The Russians will never forget the siege of Stalingrad.

      If the Germans are smart they will not forget it either.

      • Mac, I just keep reading bad news coming out of Germany. Let’s see if they get rid of Greece and we can get back to stopping the illegal alien invasion.

    • Boomer II says:

      “We’re just fifteen years into a 150-year process,” said Steve Mueller, head of Southwestern Energy, the fourth biggest producer of gas in the US .

      Is this for real or are the economics going to be such that the US ends up with terminals that don’t get used? Or if they do get used, will the price of gas rise so high that it’s no longer a bargain in the US?

      • It’s bombast. Anti patriotic mercenaries and neocons want to give the impression that USA gas reserves will last forever. This allows them to obtain gas export licenses. The mercenary aim is to increase gas prices. The neocons want to give the impression that USA can take up the slack and allow Europe to cut off Russian gas supplies. This is really transparent.

        If you have any doubts, please estimate how much gas the USA will consume if coal use is reduced, as required by Obama, and 6 billion cubic feet per day are exported. Just work out your own numbers.

      • Longtimber says:

        SWN – Buy Hold or Sell ??
        First Job out of Engineering School was building US 2nd large LNG Terminal, IIRC numbers out of the vaporizers was like > $7.00/MMCF ~1984. The big fuss was supplier contract terms. North Africa LNG suppliers were in the Catbirds seat in those days.

    • Watcher says:

      Lukoil analysts say Russian extraction costs for shale are four times higher that those of US wildcat drillers. Sanctions currently prevent the Russians importing the know-how and technology to tap its vast Bazhenov basin at a viable cost.

      John Hess, the founder of Hess Corporation, said it takes a unique confluence of circumstances to pull off a fracking revolution: landowner rights over sub-soil minerals, a pipeline infrastructure, the right taxes and regulations, and good rock. “We haven’t seen those stars align yet,” he said.
      Above all it requires the acquiescence of the people. “It takes a thousand trucks going in and out to launch a (drilling) spud. Not every neighbourhood wants that,” he said.

      The only confluence of circumstances is 5% high yield bonds (instead of 9%) and $110 oil.

    • Jeffrey J. Brown says:

      The lead paragraph from the Telegraph article:

      The United States is poised to flood world markets with once-unthinkable quantities of liquefied natural gas as soon as this year, profoundly changing the geo-politics of global energy and posing a major threat to Russian gas dominance in Europe.

      Wasn’t the US still a net natural gas importer in 2014?

      • Jeffrey J. Brown says:

        Copy of comment I made on the Telegraph website:

        Re: “. . . poised to flood world markets with once-unthinkable quantities of liquefied natural gas”

        The EIA shows that US natural gas consumption exceeded US dry natural gas production by about 3 BCF/day in 2014 (excluding any year over year changes in inventory), i.e., the US was a net natural gas importer in 2014 (as well as a very large net crude oil importer).

        And a recent report by Citi Research estimated that the underlying decline rate from existing US natural gas production is about 24%/year. At this decline rate*, in order to maintain US production, the US would have to replace about 100% of current gas production over the next four years.

        The observed decline in Louisiana’s natural gas production supports this estimate. The EIA shows that Louisiana’s natural gas production fell at 20%/year from 2012 to 2014. This was the net decline rate, after new wells were added. The gross decline rate from existing wells in 2012 and 2013 would be even higher.

        *Of course, existing production would not decline by 100% in four years, since we would be declining against a declining production volume, but I am stipulating a “steady state” production scenario.

      • Jeffrey J. Brown says:

        I guess we are going to “flood” world markets with exports of gas that we import from Canada.

  45. Landowner rights over minerals aren’t required at all. Mr John Hess knows very little about international onshore oil and gas operations. He’s out of his environment.

  46. SunShine says:

    Japan Now Has More EV Chargers Than Gas Stations

    At the same time, current driving range is already sufficient for almost all daily trips. Consider that Americans drive the farthest worldwide, but only 12% drive more than 100 km (62 miles) each day, which almost all EVs can meet already now. And with improved apps and on-board information systems, drivers can more accurately plan trips and optimize charging patterns. Nevertheless, of course, we all still want battery technology development to continue unabated with improved cycles, range, and cooling objectives.

    http://blogs.scientificamerican.com/plugged-in/2015/04/26/japan-now-has-more-ev-chargers-than-gas-stations/

    Soon everyone will realize it’s only going to be EV’s

    We have no other choice, just accept it. The sooner, the better.

      • Fred Magyar says:

        That’s old news and the devil is in the details! In case you didn’t get the memo BAU is in the ICU and hasn’t got long to go.

        • Boomer II says:

          That’s right. Business as usual won’t be supported with or without renewable energy. If there is no increase in renewable energy, our lives will change even more dramatically when fossil fuels run low.

          So it is either make adjustments to maintain some sort of modern lifestyle, or go back to a pre-oil and then a pre-coal lifestyle.

      • Old farmer mac says:

        There are coal mines near where I live that cannot be worked any longer because the remaining coal is way too deep and the seams are way too thin.

        Will burning coal work long term?

        Every oil field and every gas field eventually runs dry. Will burning oil and gas work long term?

        I do not know exactly what assumptions these Google people made in coming to the conclusions they reached but for now I am assuming they presumed a continuation of business as usual – doing things the way we have been doing them for the last century.

        This will bear looking into but everything I have run across so far indicates that wind and solar power have adequate and IMPROVING energy returns on the energy and materials invested to work at the grand scale.

        And so far as storage is concerned- Life can and will continue if we never have storage adequate to keep power on demand 24/7/365 a reality.

        My guess at the moment is they failed to take into account ANYTHING that reduces the need for CONSTANT power supply other than ELECTRICAL storage. That they assume constant or rising per capita energy consumption. Etc etc.

        But a refrigerator can be made to stay cold days at a time by incorporating a cold pack of a couple of cubic feet of well chilled ice. A house can have thermal mass added for extremely low cost during construction. Insulation and triple paned glass are dirt cheap already in comparison to the cost of fuel for heating and air conditioning.
        Cars don’t have to weigh a couple of tons or have more conveniences built in than a king could enjoy a century ago. A perfectly viable car – better than walking a long way – need not weigh much over half a ton and it need not go over forty or fifty mph.

        AND IF it is PROPERLY CONSTRUCTED of lightweight corrosion proof materials and DESIGNED to be EASILY REPAIRABLE – there is no reason a car cannot last like a HOUSE or a good piece of furniture – which is to say , indefinitely, or at least a couple of human lifetimes.

        Most of what gets transported these days is nearly useless consumer junk – throwaway furniture , throw away clothing, throw away the packaging highly processed foods.

        Most of the energy consumed in a house is wasted due to inefficient lighting, inefficient appliances, careless habits on the part of the residents, shoddy construction standards, and above all the due to the fact that for now energy is cheap enough for most westerners to waste it.Lights on nobody around. AC on nobody home.

        A large part of my own furniture was locally made out of locally milled lumber and will last centuries barring a house fire. It has never been in a box, never been in a store.I have been offered enough for ONE piece of it to buy a HOUSE FULL of new throwaway furniture that if used gently might last twenty years or thirty max.Such furniture is not ordinarily very expensive. Ordinarily it is cheaper than the junk you expect to throw away. But my own was all made by a local master craftsman who turned out only a few hundred pieces over his lifetime working at it part-time to supplement his income as a one horse farmer.

        As Fred points out BAU is pretty damned sick. I am not sure I would say in the ICU yet but headed that way for sure.

        We have maybe twenty more years of affordable fossil fuels.

      • Nick G says:

        This article is dishonest or negligent – it relies on a review that completely mis-states the findings of the Google engineers.

        The Google project was intended to develop renewable energy that was cheaper than dirty coal, not taking into account any of the external costs of coal: “criteria” pollution (sulfur, mercury, etc.,) or CO2. This was a very high bar, and they concluded it was unrealistic.

        The Google project *did not* find that renewable power had low E-ROI/net energy. That’s a complete fabrication.

  47. Ronald Walter says:

    I was reading here the other day that Bakken wells are 70 to 80 percent depleted after one year. Not a little, a lot!

    A hundred barrels per day down to 20 or 30 is not a good sign. Have to remember that the first Bakken well drilled in 1951 lasted 28 years and pumped out 585,000 barrels. Not a hare, a turtle, terrapin. Anybody can use 585,000 barrels of oil per farm of original biofuel, oil. After 28 years, there might be some of it left yet. Set up a refinery and let ‘er rip.

    When the Williston Basin was underwater, the entire 250,000 square miles of the basin, the position of the basin that is filled with earth ten thousand feet thick, the sea that covered the basin below the equator was at 5 degrees South or so.

    Devonian geography

    Hydraulic Fracturing

  48. Pingback: Pieolie nieuwsupdate: week 17 | Stichting Peakoil Nederland

  49. Pingback: Is groei economie China minder rooskleurig dan wordt voorgespiegeld? | Paradoxnl's Blog

Comments are closed.