World Energy 2014-2050 (Part 2)

This is a guest post by Political Economist

Nuclear Electricity

According to BP Statistical Review of World Energy 2014, world consumption of nuclear electricity reached 2,489 terawatt-hours (563 million metric tons of oil-equivalent) in 2013, 0.9 percent higher than world consumption of nuclear electricity in 2012.  In 2013, nuclear electricity accounted for 4.4 percent of the world primary energy consumption.

Figure 16 shows nuclear electricity consumption by the world’s five largest nuclear electricity consumers from 1965 to 2013.

 photo Nuclear062114-1_zps59fc6b2c.jpgAccording to the World Nuclear Association, as of January 2014, 375 gigawatts of nuclear electric power plants were operative worldwide.  75 gigawatts were under construction, 187 gigawatts were being planned, and 351 gigawatts were being proposed.  World Nuclear Association claims that most planned nuclear power plants are expected to operate within 8-10 years. Assuming that in 10 years, all of the currently constructed and planned nuclear power plants become operative, then in average the world will need to build 26 gigawatts of nuclear power plants a year in the next 10 years.  In reality, some delays are inevitable.

I assume that from 2015 to 2050, the world will build 20 gigawatts of nuclear power plants each year.  On the other hand, 2 percent of the existing nuclear generating capacity will retire each year.  Under these assumptions, nuclear electricity consumption is projected to rise to 4,648 terawatt-hours (1,052 million metric tons of oil-equivalent) by 2050.

Hydro Electricity

According to BP Statistical Review of World Energy 2014, world consumption of hydroelectricity reached 3,782 terawatt-hours (856 million metric tons of oil-equivalent) in 2013, 2.9 percent higher than world consumption of hydroelectricity in 2012.  In 2013, hydroelectricity accounted for 6.7 percent of the world primary energy consumption.

Figure 17 shows hydroelectricity consumption by the world’s five largest consumers of hydroelectricity from 1965 to 2013.

 photo Hydro062114-1_zps02929bac.jpgFrom 2000 to 2013, the average annual growth of world hydroelectricity consumption was about 90 terawatt-hours (20 million metric tons of oil-equivalent).  I assume that world hydroelectricity consumption will rise to 880 million metric tons of oil-equivalent in 2014 and will keep growing by 20 million metric tons of oil-equivalent each year from 2015 to 2050.

Wind Electricity

According to BP Statistical Review of World Energy 2014, world consumption of wind electricity reached 628 terawatt-hours (142 million metric tons of oil-equivalent) in 2013, 20.7 percent higher than world consumption of wind electricity in 2012.  In 2013, wind electricity consumption accounted for 1.1 percent of the world primary energy consumption.

In 2013, the world cumulative installation of wind power capacity reached 320 gigawatts, 12.4 percent higher than the cumulative installation in 2012.  Figure 18 shows the cumulative installation by the world’s five largest installers of wind power capacity from 1997 to 2013.

 photo Wind062114-1_zpseec678de.jpgWind electricity has grown rapidly.  But eventually, the annual installation of wind power capacity will be limited by the availability of grid connection, materials, skilled workers, and other factors.  For example, to install 100 gigawatts of wind electricity, it would require the consumption of 10 million metric tons of steel.  Beyond a certain threshold, wind electricity may undermine the reliability of electric grid because of intermittency.  World total annual installation of all types of electric power capacity is about 300 gigawatts.  Only a portion of the annual installation can be committed to the building of renewable power plants.

Figure 19 shows the historical relationship between the growth and the level of annual installation of wind power capacity from 1997 to 2013.  As the annual installation rises, the growth to level ratio (the growth of annual installation to the level of annual installation) tends to fall.  The current trend indicates the long-term “equilibrium” annual installation to be 56 gigawatts.  In 2013, the world annual installation of wind power capacity was 35 gigawatts, falling from 46 gigawatts in 2012.

 photo Wind062114-2_zps588b8e9d.jpgFigure 20 shows the world historical and projected annual installation of wind power capacity.

 photo Wind062114-3_zps1c49bdb5.jpg

The projected annual installations of wind power capacity are used to project the growth of wind electricity consumption from 2014 to 2050 using the following formula:

Annual Growth of Wind Electricity Consumption (Mtoe) = Annual Installation of Wind Power Capacity (GW) * 8.76 * 0.25 / 4.4194

In the above formula, wind power capacity utilization rate is assumed to be 25 percent (the observed world average wind power capacity utilization rate was 22 percent in 2013).  The number 8.76 = 8760 / 1000 calculates the electricity to be generated by 1 gigawatt of generating capacity operating year round and converts gigawatt-hours into terawatt hours.  The number 4.4194 converts terawatt-hours into million metric tons of oil-equivalent.

Solar Electricity

According to BP Statistical Review of World Energy 2014, world consumption of solar electricity reached 125 terawatt-hours (28 million metric tons of oil-equivalent) in 2013, 33.0 percent higher than world consumption of wind electricity in 2012.  In 2013, solar electricity consumption accounted for 0.2 percent of the world primary energy consumption.

In 2013, the world cumulative installation of solar photovoltaic (PV) power capacity reached 140 gigawatts, 36.8 percent higher than the cumulative installation in 2012.  Figure 21 shows the cumulative installation by the world’s five largest installers of solar PV power capacity from 1996 to 2013.

 photo Solar062114-1_zps07bc13b7.jpgSolar electricity has grown rapidly.  But eventually, the annual installation of solar power capacity will be limited by the availability of grid connection, materials, skilled workers, and other factors.

Figure 22 shows the historical relationship between the growth and the level of annual installation of solar photovoltaic power capacity from 2002 to 2013.  As the annual installation rises, the growth to level ratio (the growth of annual installation to the level of annual installation) tends to fall.  The current trend indicates the long-term “equilibrium” annual installation to be 108 gigawatts.  In 2013, the world annual installation of solar photovoltaic power capacity was 35 gigawatts, rising from 31 gigawatts in 2012.

 photo Solar062114-2_zps1716c07a.jpgFigure 23 shows the world historical and projected annual installation of solar photovoltaic power capacity.

 photo Solar062114-3_zpsfe367823.jpgThe projected annual installations of solar photovoltaic power capacity are used to project the growth of solar electricity consumption from 2014 to 2050 using the following formula:

Annual Growth of Solar Electricity Consumption (Mtoe) = Annual Installation of Solar PV Power Capacity (GW) * 8.76 * 0.15 / 4.4194

In the above formula, solar photovoltaic power capacity utilization rate is assumed to be 15 percent (the observed world average solar photovoltaic power capacity utilization rate was 10 percent in 2013).  The number 8.76 = 8760 / 1000 calculates the electricity to be generated by 1 gigawatt of generating capacity operating year round and converts gigawatt-hours into terawatt hours.  The number 4.4194 converts terawatt-hours into million metric tons of oil-equivalent.

Geothermal, Biomass, and Other Renewables

According to BP Statistical Review of World Energy 2014, world consumption of geothermal, biomass, and other renewable electricity reached 481 terawatt-hours (109 million metric tons of oil-equivalent) in 2013, 7.7 percent higher than in 2012.  In 2013, the consumption of geothermal, biomass, and other renewable electricity accounted for 0.9 percent of the world primary energy consumption.

From 2000 to 2013, the average annual growth of world consumption of geothermal, biomass, and other renewable electricity was 4.9 million metric tons of oil-equivalent. I assume that the world consumption of geothermal, biomass, and other renewable electricity will rise to 115 million metric tons of oil-equivalent in 2014 and will grow by 5 million metric tons of oil-equivalent each year from 2015 to 2050.

Biofuels

According to BP Statistical Review of World Energy 2014, world biofuels production reached 65 million metric tons of oil-equivalent (1.3 million barrels of oil-equivalent per day), 6.1 percent higher than world biofuels production in 2012.  In 2013, biofuels production accounted for 1.6 percent of the world oil consumption.

From 2000 to 2013, the world biofuels production grew in average by 4.3 million metric tons of oil-equivalent a year.  I assume that the world biofuels production will rise to 70 million metric tons of oil-equivalent by 2014 and will rise by 5 million metric tons of oil-equivalent each year from 2015 to 2050.

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165 Responses to World Energy 2014-2050 (Part 2)

  1. Jeju-islander says:
  2. Dennis Coyne says:

    Hi PE,

    The error bars on those growth rate projections for wind and solar would be of interest, my guess is that the 95 % confidence interval would be pretty wide.

    On the 10 million tons of steel for wind power, that sounds like a lot. It isn’t. In 2012, 1500 million metric tons of steel was produced worldwide, so 10 million metric tons is 0.6% of World output. If wind is overbuilt it can provide up to 90% of output in the Northeast United States. See

    http://www.sciencedirect.com/science/article/pii/S0378775312014759

    Excerpt from the abstract:
    “Our model evaluated over 28 billion combinations of renewables and storage, each tested over 35,040 h (four years) of load and weather data. We find that the least cost solutions yield seemingly-excessive generation capacity—at times, almost three times the electricity needed to meet electrical load. This is because diverse renewable generation and the excess capacity together meet electric load with less storage, lowering total system cost. At 2030 technology costs and with excess electricity displacing natural gas, we find that the electric system can be powered 90%–99.9% of hours entirely on renewable electricity, at costs comparable to today’s—but only if we optimize the mix of generation and storage technologies.”

    And from the conclusion:

    “At 2008 technology costs, 30% of hours is the lowest-cost mix
    we evaluated. At expected 2030 technology costs, the cost minimum
    is 90% of hours met entirely by renewables. And 99.9%
    of hours, while not the cost-minimum, is lower in cost than today’s
    total cost of electricity.”

    and

    “We find that 90% of hours are covered most cost-effectively by
    a system that generates from renewables 180% the electrical energy
    needed by load, and 99.9% of hours are covered by generating
    almost 290% of need. Only 9e72 h of storage were required to cover
    99.9% of hours of load over four years. So much excess generation of
    renewables is a new idea, but it is not problematic or inefficient, any
    more than it is problematic to build a thermal power plant
    requiring fuel input at 250% of the electrical output, as we do today.”

  3. Old farmer mac says:

    This is off topic but highly relevant to peak oil scenarios.

    http://www.nytimes.com/2014/07/01/technology/energy-sector-faces-attacks-from-hackers-in-russia.html?_r=0

    Given that modern Russia is somewhat of a fascist police state run in large part by former security types I have no doubt that most information uncovered by the hackers finds its way to Putin and his buddies.

    So he probably knows as much or more about peak oil in terms of technical data than anybody else in the world even including for instance the top management of a company such as Exon or Chevron.Those two companies probably don’t know all that much about each other in terms of what they are trying to keep secret.

    ( This leads to an interesting thought; I wonder how much spying our own government is doing on oil companies. It certainly has the technical ability to do as much as it pleases if it once chooses to do so. If I were a general in charge of defense planning or a top presidential advisor on the national security team I would sure as hell want that sort of raw data available to me rather than having to depend on publicly released documents.)

    In the event of a war hot or cold the Russians may have the ability to throw some sand and monkey wrenches into a lot of oil company gearboxes.

    At the very least they are probably stealing all the data they can to so as to avoid the expense of doing research and development on their own hook.

    They might even be in effect stealing billions of dollars. I have often thought that if I were a simple nurse in a hospital doing drug trials and happened to be helping with the trials I might figure out when a new drug is going to be a block buster and get rich by buying stock in the company.Some trials have been so spectacularly good or bad that they have been stopped very early on. I could short a stock just as easily as buying it.

    A Russian mobster with access to the inside data of an oil company that has just hit it big on a new field could buy up the stock well in advance of any public announcement thru front men. Likewise he could short it if test wells prove to be duds.

    Given the recent relevations about all the spying on other governments and organizations and individuals foreign and domestic these days in the name of national security I am willing to believe this spying extends into the business of the worlds larger oil companies as a matter of course.

    And of course it would be highly compartmentalized and thus might not ever come to light unless we are lucky enough to have another whistle blower such as Snowden.

  4. Watcher says:

    http://finance.yahoo.com/news/north-dakotas-latest-fracking-problem-232000950.html

    Stung by criticism that it has allowed oil producers to flare wells indefinitely, the North Dakota Industrial Commission on June 1 adopted rules requiring that gas-capture plans be submitted for companies to get a new drilling permits. The rules require producers to identify gas-processing plants and proposed connection points for gas lines but don’t affect permits that already had been issued.

    The commission, which promotes as well as regulates the drilling industry, on Tuesday is expected to announce measures to limit flaring of existing wells. The federal government also is considering new limits on flaring.

    . . .

    Flared gas is still subject to royalty. But XTO and Continental haven’t paid either for gas flared at the Wolff or Palmer wells, according to Mr. Kelly, the landowners’ lawyer.

    XTO said it doesn’t comment on specific contracts but is working to reduce flaring. Continental declined to comment.

    • Synapsid says:

      I seem to recall reading, a year ago or more, that in Alberta infrastructure for NG collection must be in place before a drilling permit is granted. Does anyone know if this is the case?

      • Watcher says:

        All parties have been put on the same page. They all know if drilling slows, production will fall. Period.

        North Dakota doesn’t have any sort of requirement that production rise. Current production should serve the populace just fine.

        But the leveraged companies would be looking at an Apocalypse if they are not allowed to drill at maximum speed.

        As was mentioned months ago, the choke may tell the tale.

  5. Dennis Coyne says:

    Hi PE,

    Edit: the analysis below is incorrect as was pointed out to me (very politely) by political economist. So it is best ignored.

    I question the growth to annual installation and whether this trend will be followed after a relatively short period of ramp up (as in the case of wind and solar power).

    To test this I looked at the % growth in natural gas consumption vs annual consumption of natural gas in millions of tonnes of oil equivalent over two different periods. First I looked at 1965 to 1985 and the trend points to 1700 million tonnes of oil equivalent at a zero growth rate, then I consider 1965 to 2013 which points to 3700 million tons of oil equivalent at zero growth.

    It is not clear that this method leads to reliable results for predicting future growth for wind and solar. See Chart below.

    • Political Economist says:

      Hi Dennis,

      Thank you for your (usually) very thoughtful and critical comments. I agree, that the whole exercise for wind and solar at this stage is rather tentative. R-square is low. For wind it is about 0.2 For solar, it’s in single digit. I can put the starting year at 2008 and get a much better R-square for solar (about 0.3) but then I only have 6 observations and the implied maximum annual installation would be only 50 GW. My hope is that as more and more data are accumulated, in the future we can gradually approach the truth.

      That has been said. There are a few points I would like to make.

      First, please note that the assumption there will be a maximum annual installation is in fact much more optimistic than the assumption of maximum installed capacity of a renewable resource (which I think is more reasonable in the long run, given the land and resources constraints). I am implicitly assuming no solar or wind power equipment needs to be replaced. The assumption is that solar and wind growth wll eventually become linear but the linear growth can continue indefinitely (which I think in fact it cannot happen).

      Second, in the case of wind, annual installation already declined from 45 gigawatts in 2012 to 35 gigawatts in 2013. But I Am assuming in the future it will grow towards 55 gigawatts. We’ll see if I am too optimistic.

      Third, I think at least for the next few years, actual observations may continue to pull down the solar trend line. If you look at the solar graph, the growth rate of annual installation (not the growth rate of cumulative installation) needs to be more than 25 percent to pull up the trend line.

      Fourth, I think there is a general consensus that wind is subject to much more severe land constraint than solar. See Vaclav Smir’s book, Energy Transitions (Praeger 2010), last chapter. Even at the level of theoretical maximum, only solar can provide more than a fraction of the world’s current energy consumption.

      Fifth, on solar, based on Carlos de Castro’s research:
      http://www.eis.uva.es/energiasostenible/wp-content/uploads/2011/11/solar-energy-draft.pdf
      (I think a revised version of this one is published in Energy Policy)
      When ecological and materials limits are taken into account, the global potential is only 2-5 TW (in term of annual flow, not generating capacity). That’s equivalent to about 12,000-30,000 GW of solar generating capacity. In term of electricity output, that is the same output as from 4,000-10,000 GW of conventional thermal power plants or about 80%-200% of the world’s persent electricity generation. But electricity is only about 20% of the world final energy consumption or 40% of the primary energy consumption.

      Sixth, the world’s net installation of all types of power plants now is about 250 GW (about 40 percent is in China). So 150 GW from wind and solar would represent 60% of the total net installation. Even if the total net installation doubles by 2050, 150 GW from wind and solar would still represent 30%. If the intermittency constraints cannot be solved by then, 30% is not unreasonable as a limit to wind and solar.

      Seventh, yes, world steel production is 1.5 billion tons. But remember, wind and solar installations are new applications and they need to come from the growth of world steel production to not undermine other economic activities. If world steel production grows by 2% a year, the growth would be 30 million tons a year. There is research establishing that each GW of wind and solar consumes about 100,000 tons of steel (actually the research says it will take more than 100,000 tons, I choose to err on the optimistic side). So 150 GW of wind and solar will consume 15 million tons, about half of the annual growth of world steel production. By comparison, a conventional power plant consumes about 50,000 tons of steel for each GW, so the current world annual net installation of all types of power plants consumes about 250 * 0.05 = 12.5 million tons of steel.

      I have not yet talked about silver. A GW of solar PV consumes approximately 50 tons of silver. So 100 GW of solar PV would consume 5,000 tons of silver, about 20% of world annual production.

      And, by the mid-21st century, can the world steel or silver production keep growing?

      • Political Economist says:

        One more point. About the natural gas analogy. My approach of assuming maximum annual installation is more like assuming the ANNUAL GROWTH of natural gas consumption will reach the maximum.

        So this is more optimistic than assuming that the natural gas CONSUMPTION will reach the maximum.

        Also note that in the solar and wind graphs, on the vertical axis, it is not exactly the growth rates of wind or solar annual installation are shown. It is the ratio of growth of annual installation to the current level:

        (This year’s annual installation – Last year’s annual installation) / This year’s annual installation

        In the long run, it should converge towards the growth rate. But in the short run, the ratios are somewhat lower than the growth rates (and probably imply larger maximum annual installation).

        • Dennis Coyne says:

          Hi PE,

          I took this year’s consumption minus last years consumption divided by this year’s consumption, let’s say output is 10% of capacity and capacity grows from 100 to 200. Installation growth would be 100/200 or 50%, consumption growth (I assume produced electricity is consumed) is 10/20 or 50%.

          So the natural gas chart is indeed equivalent to your wind and solar charts.

          Edit the above is incorrect, I was mistaken the charts are not equivalent.

          Prices will allocate resources, if silver demand goes up so will prices and resources will be allocated appropriately, also as prices increase, more materials will be recycled if supply becomes short. For thermal power plants are you including the steel required for the extraction of fossil fuels in order to run the thermal power plants? What is the research that says thermal plants use less steel than solar?

          • Political Economist says:

            Hi Dennis, yes, prices allocate resources but there are only certain prices the economy can afford (in fact, what exactly is “price” is almost as complicated in economics as what “mass” is in physics).

            Whatever are the prices, one particular activity can only consume a limited proportion of certain resources without seriously undermining other economic activities.

            On steel requirement for coal and gas plants (it says the steel requirments are 30,000 tons/GW for gas and about 50,000 tons/GW for coal):

            Spath, Pamela L. and Margaret K. Mann. 2000. Life Cycle Assessment of A Natural Gas Combined-Cycle Power Generation System. National Renewable Energy Laboratory, NREL/TP-570-27715. http://www.nrel.gov/docs/fy00osti/27715.pdf.

            Spath, Pamela L., Margaret K. Mann, and Dawn R. Kerr. 1999. Life Cycle Assessment of Coal-Fired Power Production. National Renewable Energy Laboratory, NREL/TP-570-25119. http://efile.mpsc.state.mi.us/efile/docs/16077/0065.pdf.

            On steel requirment for wind (it says the steel requirement for wind is about 115,000 tons/GW):

            Wilburn, David R. 2011. “Wind Energy in the United States and Materials-Required for the Land-Based Wind Turbine Industry from 2010 through 2030.” U.S. Geological Survey, Scientific Investigations Report 2011-5036. http://pubs.usgs.gov/sir/2011/5036/sir2011-5036.pdf.

            On steel requirement for solar PV (it says the steel requirement is 83000-145000 tons/GW):

            Campbell, Matt. 2008. “The Drivers of the Levelized Cost of Electricity for Utility-Scale Photovoltaics.” SunPower Corporation, http://us.sunpowercorp.com/power-plant/.

          • Political Economist says:

            Hi Dennis, now continue with the capacity subject.

            Please note that the above wind/solar graphs are about ANNUAL INSTALLATION. They are not about CUMULATIVE CAPACITY

            Take the BP data as an example. Between 2011 to 2013, the relevant data for solar are as follows:

            2011
            Cumulative Capacity 71.218 GW
            Solar Electricity Consumption: 59.2 TWH
            Observed Capacity Utilization Rate: 59.2 / (71.218 * 8760 / 1000) = 9.49%
            Annual Installation: 71.218 GW – 41.33 GW = 29.888 GW
            (41.33 GW was the cumulative capacity in 2010)

            2012
            Cumulative Capacity: 102.076 GW
            Solar Electricity Consumption: 94.1 TWH
            Observed Capacity Utilization Rate: 10.5%
            Annual Installation: 102.076 GW – 71.218 GW = 30.858 GW

            2013
            Cumulative Capacity: 139.637 GW
            Solar Electricity Consumption: 124.8 TWH
            Observed Capacity Utilization Rate: 10.4%
            Annual Installation: 139.637 GW – 102.076 GW = 37.561 GW

            My assumption is that annual installation (not cumulative capacity) will reach a maximum equilibrium.

            Cumulative Capacity is (roughly) proportional to the annual solar electricity consumption (analogous to your natural gas consumption)

            Annual Installation is (roughly) proportional to the annual growth of solar electricity consumption.

            The graphs project the annual growth of annual installation again annual installation. So they are more similar to the relationship between the acceleration of natural gas consumption growth and natural gas consumption growth, rather than about the relationship between natural gas consumption growth and natural gas consumption.

            I hope that helps to clarify the confusion.

            • Greg vP says:

              Note that equilibrium annual production together with assumptions about lifetime tell us the equilibrium installed stock.

              If windmills last 25 years, 56 GW/year implies a total stock of 1400 GW capacity, 1.4 TW. Likewise, if PV panels last 30 years, 108 GW/year implies a total capacity of 3240 GW, 3.2 TW. As these are total capacity, actual electricity production needs to be derated by the capacity factor and aging losses. For wind, multiply by 0.15; for PV, by 0.067.

              I hope that the equilibrium annual production estimates turn out to be too low.

              While I agree that the annual production of wind and PV electricity production capacity will tend to a limit, like Dennis, I am sceptical that steel and/or silver availability are at all constraining with the given equilibrium annual production figures.

              The annual demand from wind and solar power is likely to be considerably smaller than the expected, and planned-for, increase in annual production of structural steel and steel for motor vehicles between now and 2050. Similar comments apply to consumption of aluminium and of toughened/specialty glass for PV modules and mirrors. I just can’t see constraints on steel production capacity being binding.

              If, as in the discussion below, the price of oil jumps by 25% – 30%, and vehicle and structural demand consequently falls and remains below trend, incremental demand from wind and solar power may come as a blessing to steel, glass and aluminium producers.

              Silver. De Castro et al. talk about silver in the context of concentrating solar power, most of which is thermal rather than photovoltaic, and which is both very much smaller than PV and growing more slowly. In any event there are several good commercially available substitutes for silver as a reflector, and once there is a big market for reflection and/or the price of silver rises high enough to provide the incentive, more reflective materials will be developed from the existing panoply of lab projects, or new ones. The availability of silver isn’t constraining either.

              De Castro’s paper is a useful reminder, though. A simple back-of-the-envelope calculation of likely PV production comes up with 3 TWe (continuous equivalent), and de Castro derates production by 2/3 to allow for aging, dirt, equipment failure, connection losses, etc., giving 2 TWe (ceq). With a derating factor of 0.067, 2 TWe (ceq) means total capacity of 30 TWe. With a 30-year life, that implies equilibrium annual production of 1000 GWe.

              • Political Economist says:

                Hi Greg, thanks for adding to this discussion.

                Again my assumption is that there will be a maximum limit to ANNUAL INSTALLATION, not a maximum limit to annual production of solar or wind.

                Although in the long run, a maximum limit to annual production is more reasonable. But in this exercise, I choose to err on the optimistic side. Moreover, I explicitly said I assume there will be no depreciation/replacement requirement for wind or solar. So all installations from now to 2050 are treated as NET Installations. Again, this is an optimistic assumption.

              • Political Economist says:

                Yes, the future world steel production will be considerably greater than the PV demands. But by how much. Currently the total steel demand by all types of power plant construction is significantly less than 1% of world steel production. How many percents will go to PV?

                World steel production in 2013 is already 1.6 billion tons (although the growht rate slows down to 1.9%). About 70% of the world steel production still comes from primary steel, which consumes huge amount of iron ore and coal.

                In 2013, the world probably burns about 800 million tons of coal for steel production. In addition, the world produces/consumes almost 3 billion tons of iron ore. World iron ore reserves are 170 billion tons with iron content of 81 billion tons (iron content ratio is 48%).

                At the current production rate, iron ore reserves can last less than 60 years.

                World iron ore resources are supposed to be more than 800 billion tons with iron content greater than 230 billion tons. Simple calculation suggest that beyond the current iron reserves, iron content ratio among the remaining iron ore resources is likely to be only (230-80)/(800-170) = 24%.

                If world steel production grows by 2% a year, and the iron ore and coal consumption grow accordingly, then by 2050, steel production will be 3.2 billion tons, coal burning for stell production alone will be 1.6 billion tons, and iron ore production will rise to 6 billion tons.

                World iron reserves will be exhausted by then. If iron ore keeps growing by 2% a year, we are going to exhuast all the remaining iron RESOURCES just a few years after 2100.

                In addition to peak oil, there will be peak coal and peak iron. Therefore, there will be peak steel. Therefore, there will be peak wind and peak PV.

                • Dennis Coyne says:

                  Hi PE,

                  As resources become depleted prices will increase and more steel will be recycled.

                  Just because most steel is currently primary steel does not mean that it will remain so.

                  At some point population will peak and growth per capita can continue will much lower rates of growth or even with negative absolute growth.
                  For example if population declines by 1% per year and growth in World GDP is 0% GDP per capita increases.

                  In addition, cement can be substituted for steel in many applications (buildings for example) as the price of steel rises, such substitution will occur.

            • Old farmer mac says:

              Good Morning PE,

              Your arguments make pretty good sense- if I am reading them correctly- on the IF/ THEN basis. If your assumptions hold your arguments probably are good ones.

              BUT I seldom see any arguments put forth by economists that I think will hold over a long period of time. The world is not a linear sort of place.People acting in crowds are predictable only in being unpredictable.

              There is going to be panic at some point when electricity supplies become intermittent or absurdly expensive simply because of intermittent and absurdly expensive coal and natural gas.

              Coal and gas in the ground are not the same thing as DELIVERED – and PAID FOR coal and gas.There are going to be wars and embargoes and national bankruptcies.There may well be resource nationalism that will prevent substantial potential exports of coal and gas and oil.

              One potential result of scenarios involving such factors is that there will be a panic based boom in the buildout of wind and solar power.

              Electricity is going to eventually – in my estimation at least- be seen as a strategic commodity in terms of national security in many or most parts of the world.

              Right now we justify the cost of a coal plant or a nuke by assuming it is going to run continuously many years;whereas we justify the cost of the MIC on the basis of having it there when it is needed and hopefully only needing a tiny bit of it to actually be put to use and only on an occasional basis.

              The utilization of our nuclear arsenal has been zero since the end of WWII.Ten percent utilization of solar power and thirty percent utilization of wind power looks pretty good in comparison!!!!!!!!!!!!!!

              I believe the solar industry is going to go hog wild eventually for another reason as well.Economic stimulus and social welfare programs are now so thoroughly embedded in our political culture that they are permanent fixtures to the extent anything is permanent in politics.

              Times are going to get hard with the growth of population overall, with an aging population on the public dime, and depleting resources of the sort that come out of holes in the ground.

              The powers that be in future times are going to be looking for public works programs to partially justify the cost of welfare for skilled and unskilled workers.Millions of them have been put to work in the past building parks and highways. In the future a millions of them will be put to work in the wind and solar industries.In functional terms this means labor costs are largely of no consequence since the labor would be living on tax money even sitting at home getting ready to riot or at least march on the legislature and burn the current governors and presidents/prime ministers/etc in effigy.

              Then there is the falling cost of the actual product( pv panels and wind turbines) and the rising value of the electricity it produces in relation to the cost of fossil fired electricity.

              I for one cannot believe the price of fossil fuel fired DELIVERED electricity for residential and industrial use is going to go up at less than three or four percent a year in constant money as fossil fuels deplete and the appetite for tax money grows.

              My point is this. How much faith can any body reasonably have in economic projections that reach much more than a decade or so into the future??

              This is not to say that your work is not of great value in helping create better insights into what the future might hold.

              I look forward to your posts with great interest.

              • Political Economist says:

                Hi Mac, thank you for your criticism of my discipline, which I think is well deserved.

                About the value of my projection, the best answers lies in how the energy reality evolves in the future. We’ll find out.

                • Old farmer mac says:

                  You are most cordially welcome lol.

                  It is not that you and MOST economists don’ t understand that all their arguments about the future are based on if and then.

                  The problem is that they know it so well that they seldom if ever bother to mention it and so assume that their readers understand this point too.

                  The public does generally does not understand anything that doesn’t smack them upside the head like a brick for the most part.

                  Consequently the public has a powerful tendency to accept such arguments at face value as if they were gilt edged securities.

            • Dennis Coyne says:

              Hi PE,

              Yes I understand, finally!

              My confusion was that I was not doing cumulative gas consumption, but the point that I was missing is that the annual output is a function of cumulative capacity, I get it now.

              Sorry for the confusion.

      • Ilambiquated says:

        The silver constraint only applies concentrated solar power, not to photovoltaics. And even for CSP, aluminum is a substitute.

      • sunnnv says:

        re de Castro’s paper:

        sigh – so much mis-information and dated material…

        Silver is currently used for the grid lines and bus bars on most silicon cells,
        but a few manufacturers are going with copper over a flash of nickel or very thin silver.
        (Copper kills the carrier lifetime in silicon, so one ought not directly contact the two).
        Silver usage has in any case declined by about 50% since 2010 due to reformulated pastes and narrower grid lines. (the lines are screen printed or ink-jet printed as a paste, then fired to (a) dissolve the silicon nitride anti-reflective coating and (b) convert the paste into a solid conductor).

        de Castro uses old numbers for efficiency, and seems to think that thin film will rule in the future because of cost, so surmises efficiency will never surpass 15%. Well, surprise (to outsiders, not to the silicon PV community), crystalline silicon is beating most all thin-film on cost, and matching First Solar. He uses 20% as the top silicon cell efficiency, but currently SunPower has 20% module efficiencies, Panasonic (nee Sanyo) is close behind, and at the recent IEEE PV Specialists Conference, Panasonic, Sunpower and Sharp all announced cells at or above 25% efficiency, on full area wafers (or essentially so).

        So de Castro’s hand-wringing about tellurium limits is non-applicable.
        (He can leave that to First Solar 😉

        I also found his arguments about land limitations unclear and unconvincing.
        If we build a pumped water storage reservoir, we can put (floating?) PV on that too.
        He apparently leaves out rooftop PV, but that’s unclear.

        The limits to PV are economic, as is, will we have an economy that can afford to do that massive build out (in time)?
        My take is take is that’s inversely proportional to the amount of denial of peak oil and climate change.

    • Dennis Coyne says:

      Hi PE,

      You seem to be convinced that my chart above is different from your wind and solar charts so I decided to try to reproduce your chart for solar. I have assumed that you used the BP 2014 data and I understand that the spreadsheet gives cumulative capacity so we need to subtract the previous year to get the annual increase in capacity.

      Edit (The following paragraph is not correct ignore please.)

      Chart is below and is no different than the Natural Gas Chart which does not use cumulative consumption it uses annual consumption and the growth rate is the increase in annual consumption (similar to the increase in the annual installation) divided by annual consumption.

      • Dennis Coyne says:

        Hi PE,

        I have finally realized my mistake, my apologies. Ignore comment that follows, the analysis is incorrect.

        The Solar consumption annual growth is below:

        “Annual Growth of Solar Electricity Consumption (Mtoe) = Annual Installation of Solar PV Power Capacity (GW) * 8.76 * 0.15 / 4.4194”

        I modified this by using 0.1 in place of 0.15 because the GW consumed divided by GW of capacity increase in 2013 was only 9% so even 10% is optimistic 🙂

        Using my modified (more conservative estimate) the maximum growth would be about 20 Mtoe.

        A problem with your formula however is that it does not take into account that thermal power plants are not 100% efficient so you need to divide by about 0.4 to account for this (assuming thermal plants are 40% efficient). Note that BP uses 38% efficiency for thermal power plants in its solar and wind consumption statistics in Mtoe. Adjusting your formula we get about a 50 Mtoe annual growth in solar consumption.

        Using BP data for solar consumption we get about 70 to 90 Mtoe maximum solar consumption growth, but I still think this method will tend to underestimate potential growth in solar consumption, if natural gas is a guide then this estimate is likely to be a factor of 2 too low. See chart below

        • Dennis Coyne says:

          Analysis incorrect ignore chart below.

        • Political Economist says:

          Dennis, I see you’ve already sorted out the confusion about cumulative capacity/annual installation. Great! We agree.

          About the BP solar consumption data. Please note that the BP Mtoe data have already converted solar electricity on the basis of “thermal equivalent”.

          For example, in 2013, solar elecrtricity consumption is presented as 124.8 TWH or 28.2 Mtoe. 124.8/4.4194 = 28.2

          By using the number 4.4194, I am converting solar electricity according to “thermal equivalent”, that is, to make it comparable to thermal power plants with 38% efficiency.

          If I want to convert electricity to energy content directly, I want to use 11.63. 124.8/11.63 = 10.7 Mtoe (11.63 * 0.38 = 4.4194)

          BP converts wind, hydro, nuclear in a similar way.

          Sometimes these “official” institutions cause huge confusions. If you read IEA, they convert nuclear by assuming 33% thermal efficiency, geothermal 10% thermal efficiency, but everything else (hydro, wind, solar) is just converted by electrical energy content.

  6. Iraq Instability And Oil Prices

    If just half of Iraqi production ceases:

    1.5 million barrels per day of production would be lost. This makes up roughly 1.7% of global crude oil consumption. Econometric modeling suggests that this contraction in oil output would potentially raise oil prices by 45% or about $50 per barrel.

    If this were to occur, presumably inflation pressures would mount quickly in the United States. The potential impact on gasoline prices would be a 20% to 25% price increase.

    GDP growth in the United States could move toward 0%, threatening a new recession. If the significant upward move in oil prices turns out to be a spike, a recession would probably be averted.

    If that is truly the case then this does not bode for the world after Peak Oil. We could expect this kind of supply drop every year after year. This, if this author is just half right, would spell disaster for all the world’s economies.

    At any case it is going to be a whole lot worse than even a lot of peak oilers expect.

    • Watcher says:

      Given US GDP in Q1 reported in final revision as -2.9% (that’s minus), this person is looking for an improvement in GDP up to, not down to, 0% from an Iraq oil production loss.

    • Caelan MacIntyre says:

      At any case it is going to be a whole lot worse than even a lot of peak oilers expect. ~ Ron Patterson

      Possibly a lot worse…

      “Ukraine was clearly the Waterloo event for the USDollar… The first interruption was Cyprus, where Russian banks conduct intermediary operations and where GazpromBank has offices, and where the Russians were purchasing gold in large quantities. The second interruption was Syria, where the Russians were working steadfastly to establish the Iran Shiite gas pipelines for Gazprom system integration, which would (will) supply the Western European market. The third interruption is Ukraine, the last ditch attempt to cut Russia off from Eastern Europe, using Western energy firms as the leverage device… The key new ports will be in Syria, in Israel, with connector valves to Greece, Ukraine, and soon Pakistan. What OPEC is to the Petro-Dollar, the NatGasCoop will be to the Petro-Yuan. The risk to the Arab kingdoms is a return to desert tents and away from palaces. The coop cartel will include strange bedfellows like Iran, Qatar, Israel, Turkmenistan, Algeria, and Russia…” ~ Jim Willie

      • Watcher says:

        Not really anything in that paragraph probable and very little correct. Which is pretty typical of that guy. Gold people generally construct all scenarios that somehow evolve to make them kings of their local communities because they had some gold.

        Not real clear how that ever happens, but that’s their dream so that is how all their analysis points.

        • Old farmer mac says:

          I am not a gold nut myself and never will be. I am convinced that for my remaining years at least that a ton or two of salt in barrels or shotgun ammo or boxes of nails are going to appreciate on average as much as gold and be worth as much or more in a genuine 24 carat crisis pun intended.

          But gold still has an extremely powerful hold on the imagination of the world in general and the eastern world in particular.I think eastern governments in particular will continue to hoard it since they seem to believe it represents real power and security.It probably does but not really if you get my drift.

          Seasoned burglars know that night lights are for their convenience but they still keep the amateurs away to some extent.Perceptions tend to trump reality in todays upside down world on a lot of occasions- for a while at least. Reality is going to prevail in the end. An ounce of gold cannot buy a non existent barrel of oil or flour.

          But the government that has gold – or has fooled the rest of the world into thinking it has it – can probably pass its fiat money for a few more years longer than a government known not to have it.

  7. Caelan MacIntyre says:

    “The petrodollar system also meant that the U.S., the largest consumer of oil in the world, gained the power to buy oil with a currency it can print at will. ~ Wikipedia

    If currency can be printed at will for oil, then how does EROEI or a petroyuan happening that wrests control from the petrodollar affect/factor into things?

    • Watcher says:

      Not at all. It’s paper and imagination defining both.

      Only when use of force defines supply or demand do you get accurate measurements of anything. It’s all a matter of people, of whatever nationality, reaching the decision to conserve their oil and not ship it. When that day comes, paper won’t matter.

      • Caelan MacIntyre says:

        If you limit the US’– apparently one of, if not the, largest consumers of oil per capita– ability to purchase oil, say, via forcing a petrodollar-to-petroyuan shift, then what?

        • Watcher says:

          No difference whatsoever.

          Now if you limit the US consumption via interdicting Nigeria tankers enroute Houston and send them to Shanghai, then we’re cooking.

          • Cae says:

            😀
            Ok thanks. I’ll keep that in mind.
            It used to be that one could get a cheap ride on a freighter in the day. Unsure if its possible now, but maybe an oil freighter is less feasible in any case.

          • Old farmer mac says:

            We are still the big dogs especially in terms of blue water navy.I expect that to hold for another twenty years or so.

            One reason I really want to see the Keystone built is that once the fecal matter is well and truly in the fan having the keystone instead of Canada having west coast ports for oil means we will not have to intercept tankers headed to China. We can just refuse to load any headed that way when a really hot crisis if it is in our interest to do so.

            History ain’t over. China is a rising power and will be challenging for domination of the world if she succeeds in continued growth- which of course is not guaranteed. But we are never again going to be able to face up to her in a conventional war in her own hemisphere and she is fast cementing business relationships with exporters of natural resources that are pretty close in effect to colonialism.

            ROCKMAN’s post titled Tieing Oil Up is available here. This blog is not about farming but China is doing the same with agricultural lands and other mineral resources than oil at a blistering pace.

            I am not a gold nut but EVENTUALLY things are going to get pretty hairy and China is going to have gold on hand to pay for anything that an exporter will not sell for fiat money or barter for Chinese goods.

            China already tops the world in terms of producing all the basic goods needed to fight a conventional war.We don’t have shipyards to build liberty ships any more nor steel mills to make the steel nor even the skilled labor needed to build ships.We can’t even manufacture the heavy beams needed to build bridges any more or the the large pressure vessels needed to build oil refineries and nuclear power plants unless we have regained this ability in the last three or four years.

            • Watcher says:

              “I am not a gold nut but EVENTUALLY things are going to get pretty hairy and China is going to have gold on hand to pay for anything that an exporter will not sell for fiat money or barter for Chinese goods.”

              In such a situation, an exporter would laugh at being offered shiny metal in return for whatever, probably oil.

              There doesn’t have to be a naval confrontation at sea to re-vector tankers. Tankers are pretty easy targets. Even some imagined escort duty of US Navy ships convoying 3rd party tankers doesn’t work if there is merely an attack on one. The cargo is so valuable it must be insured. No insurer would dare do so if there were threats they would be sunk.

              What good does it do the Chinese to threaten to sink Houston bound tankers? If they can’t have it, why should they let Houston have it? There would also clearly have been a breakdown in any bidding process by then, because if you HAVE to have it, you print whatever money of whatever denomination you want to file a winning bid. China’s printing press vs the Fed. (Note the yuan does not truly float on the free market, China defines the ratio yuan/dollar, so they can print all they want to equal the needed dollars to file their own winning bid.

              It’s not really a contest that works because the world will see that the result is worthless. So that’s why the tanker gets sunk. Just one. That will be the end of insurance.

              • SRSrocco says:

                Watcher,

                LOLOL….”An exporter would laugh at being offered a shiny metal…” That has to be the silliest thing you have ever stated. It was a great laugh.

                I gather you have no clue of what’s going on during these G-12 meetings…. some of which the U.S. is not included.

                A 70% devaluation of the US Dollar is coming. After that takes place… can you come in here and tell that silly shiny metal joke again?

                Steve

                • Watcher says:

                  Now what is the legislation that devalues a dollar 70%? Which party will introduce this legislation? Whose Congress or Parliament decrees this? Will Merkel’s CDU propose this to to their Siemens and Mercedes backers?

                  Dollars are traded on the FX market, and there is no central bank in the world outside NYC, not a single one, certainly not one in Frankfurt, that would tolerate destruction of Airbus or, for the BOJ, Toyota. The SNB is not going to sit back and watch Hershey’s destroy Nestles.

      • Old farmer mac says:

        I disagree about the mechanism by which excess ( printed to cover excessive deficit spending) fiat money works. It does not ever buy goods in and of itself as if it were some sort of magic genies lantern.

        SOMEBODY is FOOL ENOUGH to buy most or at least a large portion of the bonds and notes printed by governments large and small.They are exchanging existing money or purchasing power for a PROMISE of MORE money in the future.For the most part they are going to collect both the loaned principle and the interest but the sum of the two is going to be worth only a minor fraction of what they loaned.

        The notes or bonds that are held by central banks will eventually be repudiated at the expense of the taxpayers and holders of fiat money in general and probably at a profit to the big banks that are siamesed to the central banks – unless people wise up and start putting bankers in jails instead of penthouses.

        Consider a small isolated country with its own precious metal coins.If the king collects all the coins and debases them to the tune of ten percent and puts them all back into circulation prices will rise more or less about that same ten percent according to the econ I was taught back in the dark ages – everything else held equal.

        All people and businesses owed money by a government that has allowed it central bank to accumulate bad debts will make the debts good by losing a portion of the purchasing power of whatever money they have or get. This will also include a loss of value of things such as social security checks except when indexed to inflation. (So Social Security itself is not a good example.)

        These scenarios are based on the continuation of life more or less as we know it of course. That continuation is not guaranteed by any means.

        • Cae says:

          If you don’t quite understand the rules of some game, maybe it’s not a good idea to be playing it… despite the embedded gun to your head.

          • Old farmer mac says:

            Hi Caelan,
            If your comment is in reply to my rant about inflation wiping out the value of govt issued paper the people who are buying this paper in my opinion are fully aware of the fact that it is a worse than rotten investment.

            But it is not their money that they are spending.It belongs to insurance companies and labor unions and old folks looking for safe investments.

            You can safely bet that the managers of such funds as are buying govt paper have only a very small portion of their own assets in this paper- generally just enough to provide some camouflage and a bit of the mine salting effect- as when old time crooks used to put a few nuggets in worthless mines in order to sell them to suckers.

            And some buyers are buying in the full knowledge that Uncle Sam’s paper is going to depreciate badly over the next decade or two but there is a defacto tradeoff that is little understood and seldom mentioned.

            By holding Uncle’s to be depreciated paper the holders get to shelter under our military umbrella.Given the cost of maintaining a military establishment capable of repelling aggression this is viewed as a bargain by the people holding the paper.

            The people of the East have long memories. Given the relative size of China and Japan and China’s current state of economic development what chance would Japan have to survive another half century other than turning herself into a nuclear armed and otherwise fully militarized camp?

            The Chinese teach the Rape of Nanking the way we teach Pearl Harbor except there is no PC element in China nor is China hooked on Japanese cars.The Chinese teach it in terms of revenge.

    • “The petrodollar system also meant that the U.S., the largest consumer of oil in the world, gained the power to buy oil with a currency it can print at will. ~ Wikipedia

      Sorry Caelan, but that’s a lot of crap. The US government does not buy crude oil, refineries buy crude and they cannot print money any more than you can. The US Government does not own any refineries. Saying refineries can print money to buy oil is like saying WalMart can print money to buy junk from China.

      And the “petrodollar system” has nothing to do with it. Oil is priced in dollars because the world needs some common benchmark in which to measure the price of oil. The so called “petrodollar” is the most overrated thing in the world. It means nothing except status. If the world were to switch tomorrow and start pricing oil in Euros it would mean nothing except a little loss of status for the dollar. But otherwise nothing would change. Any nation can buy oil, today, in any currency it wishes to use because any currency can be changed to dollars in milliseconds on the FOREX.

      The idea that oil, on the world market, will ever be listed in Yuan is a joke.

      • Watcher says:

        Oh, I can see it listed that way. But it would not matter if it was. Everything converts. That’s why there is an FX market.

        I mentioned above that gold people arrange all their scenarios to make gold dominant. There is a lot of this thinking in the whole KILL THE PETRODOLLAR scenario. Everything in these dreams always is supposed to make gold the decider of who has power and wealth. There is never a path provided for this. It’s just supposed to happen. Everyone is supposed to find themselves in a financial disaster and turn to the guy with gold and elect him king. Very weird.

      • TechGuy says:

        Ron Wrote:
        “The US government does not buy crude oil”
        Not to nitpick but just to point this out, The US gov’t does buy crude fill up the SPR as well as sell it from the SPR. Altough the US gov’t is one of the biggest consumer of refined oil products, mostly to support the US military.

        “If the world were to switch tomorrow and start pricing oil in Euros it would mean nothing except a little loss of status for the dollar.”

        The petro dollar is important for the US. The US has trillions in US Dollars held overseas. In order for any nation to buy oil or even refined oil products they need dollars. If for instance next week, Oil was priced in Euros, Nations would need to acquire Euros to buy oil. The value of the Euro would likely improve as nations acquire or hold Euros to purchase Oil (or refined oil products). Likewise the US dollar would decline as demand would fall, as they sell US dollars to buy Euros. Nations would also be less likely to hold on to dollars in the future.

        If the Oil trades were no longer required in US dollars the dollar would also lose it world’s reserve currency status. Its hard to believe that at least some nations holding US dollar would seek to convert there dollar holding into Euros, thus setting off a global event to dump the dollar. Much like when investors get scared during a market correction and cash out stocks at a lost because they fear stock prices will continue to fall. Thus they all rush for the exits at the same time.

        “Any nation can buy oil, today, in any currency it wishes to use because any currency can be changed to dollars in milliseconds on the FOREX.”

        Unless your currency is junk. Currently Argentina is on the verge of a currency crisis again. It had been setting trades in US dollars since no one wanted Argentina dollars. There are lots of nations that need to hold dollars because its the only way the can pay for imports (not just including energy). FOREX trades also have a conversion premium as the broker handing the trade takes a cut. it cheaper to simply retain Dollars from Exports and use them to pay for imports instead of using FOREX.

        “The idea that oil, on the world market, will ever be listed in Yuan is a joke.”

        Yes, its probably unlikely that the China will succeed the US with the worlds reserve currency, as China as a credit bubble about 5 times larger than the US did back in 2008. Its Bubble is now in search of a pin.

        At this time virtually all nations are trying to weaken their currencies in order to protect their export market. However, lots of countries are setting up bilateral trade agreements to avoid settling trades in US dollars. Currently the direction is moving away from a single currency system and probably into a basket of currencies. The number of bilateral trade agreements grows every year.

        It is also disturbing that Oil exporters that announces that it no longer excepting Dollars for Oil seems to get invaded, or destabilized. For instance Iraq and Libya both were attacked by the US shortly after switching Oil Exports to Euros.

        • The petro dollar is important for the US. The US has trillions in US Dollars held overseas. In order for any nation to buy oil or even refined oil products they need dollars.

          Spoken like a man who has never heard of the FOREX, or if he has still has no idea of what it is or how it operates.

          TechGuy, no one needs to hoard dollars in order to buy oil. If they have billions in Yuan, Euros, Pounds, or any other currency on earth they can convert it all in dollars in about a millisecond, give or take a few nanoseconds. The petro dollar is important for the US. The US has trillions in US Dollars held overseas. In order for any nation to buy oil or even refined oil products they need dollars. Five trillion dollars per day, in dollars and other currencies changes hands on the FOREX.

          Now if you were a Chinese refinery owner with nothing but Yuan in the bank, and wanted to buy half a million barrels of crude, all you would need to do is pick up the phone, or do it electronically, and say “Pay from my account but in dollars.” Your banker would immediately convert your payment into dollars and pay your oil seller.

          The FOREX has been around for decades. It is beyond me how anyone still believes that very silly myth that someone needs to hold dollars to buy oil.

          • TechGuy says:

            Hi Ron,

            I don’t think you follow or read my comments entirely, or perhaps I didn’t explain it well. I think your looking at the how refineries and other business that buy crude or refined Petro externally. I am referring at the level of Central banks that settle FOREX trades. I understand that any refinery can convert local currencies into US Dollars in a jiffy, but that not the issue I am trying to convey.

            To exchange a currency requires a currency of value or something of value (Oil, Good, grain, etc). In the case of China, They hold about 1 to 1.5 Trillion in US Dollars, so they don’t need to acquire dollars externally. When Chinese Refinery needs to converts Yuan into Dollar, the Chinese Central bank processes the transaction using their enormous stockpile of US dollars.

            In the case of Argentina, its a different story since the are net short US dollars and demand for Argentine Pesos on FOREX is non-existent. The Argentina currency is worthless. Argentina has severe shortages for imported goods because the don’t have enough US dollars on hand to pay for the foreign goods they need. A refinery in Argentina can’t just go to FOREX to trade Argentine Pesos for US dollars because nobody wants Argentine Pesos and the Argentina Central Bank isn’t going to give the Refinery any of its few remaining US dollar reserves.

            The bottom line is if the Oil is no longer traded in Dollars the US is facing a currency collapse. Demand for dollar will diminish as its no longer needed to settle foreign trades for Petro as well as anything else. Without the US dollar reserve currency status, the US would need to acquire foreign currencies if they can no longer purchase goods using the US dollar. Since the US is a debtor and runs trade deficits in the trillions per year, the US faces a serious problem. Since there are already so many US dollars abroad it very likely that few Central banks are willing acquire more US Dollar for currency exchanges. Since the US is a net importer, its going to be difficult for the US to acquired Foreign currencies from trade. Weak demand for US dollars and the inability to run trade surpluses is going to cause the dollar to collapse.

            Hope that clarifies my point. Thanks for reading.

            • TechGuy, First the term “Petrodollar” and “Reserve Currency” are two entirely different things. I see now that this is where most of the confusion lies. Most people think they are the same thing.

              Now there is nothing to keep a nation, like Argentina, from buying oil with their reserve currency, which might be dollars but it also just might be euros. But just because the Argentine Peso is almost worthless does not mean they must hoard dollars. If they think the euro will suffer less from inflation they just might use euros as a currency held in to buy oil. After all, they can convert it into dollars in about one millisecond.

              Please see my chart below as to what percentage of the world’s reserve currency is in dollars. It’s about 60% And about 25 to 30% of the world’s reserve currency is euros.

              Do you know for sure that Argentina holds dollars instead of euros? But the point is it really makes no difference whatsoever.*

              *Except to the Argentina of course. If the euro suffers more inflation than the dollar then they should have held dollars. But if the dollar suffers more from inflation then they would have been better off holding euros to buy their oil with.

              • TechGuy says:

                Ron Wrote:
                “First the term “Petrodollar” and “Reserve Currency” are two entirely different things. I see now that this is where most of the confusion lies. Most people think they are the same thing.”

                Different but correlated. The loss of one, is likely to cause the other to fail.

                Ron Wrote:
                “Do you know for sure that Argentina holds dollars instead of euros? But the point is it really makes no difference whatsoever.*”

                You missed my point. whether Argentine holds Dollars or Euros is irrelevent to the point I was trying to explain.
                The Argentine Peso isn’t a reserve currency. It needs to source a foriegn currency to settle its imports because no one wants their Peso.
                If the Dollar loses it’s status, its going to run into the same problems Argentina does. Nobody is going to want US Dollars if its junk. The US is completely insolvent and must keep interest rates low with ZIRP because it can’t afford to pay its debts. Currently its the reserve currency status (Bretton Woods II) and the Petro-Dollar system that holds up the dollar because it makes up the majority of foriegn trade settlements.

                “Please see my chart below as to what percentage of the world’s reserve currency is in dollars. It’s about 60% And about 25 to 30% of the world’s reserve currency is euros.”

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

                61% for the US Dollar, Only 24% for the Euro. The rest of of the other currencies are tiny.

      • Petro says:

        -Ron, Ron, Ron… for a guy who knows oil charts thoroughly, you disappoint me!
        I understand Caelan and Watcher getting their info from wikipedia, but you…!
        -Sentences like: “…The USgovenment does not buy crude oil, refineries buy crude and they cannot print money any more than you can. The USGovenment does not own any refineries…” are naive at best!
        Please, do bear with me for a few seconds and allow me to help. No cynicism, judgement or sarcasm intended!
        -USGovmt does not own refineries, but the guys who own the USGOVmT do! They own the FederalReserve which creates the dollar (out of nothing!) and is as federal as fedex is! Indeed!
        -Roughly 65% of those $ are held outside Us and most of it is used to pay for oil-gas-coal-energy. If Ms. Merkel et al. did not need US$ to pay Putin for the gas and paid him in euros instead, those $ would come home to roost and you (and I) will not be able to buy bread to eat. The ink and paper on which those $ are printed would be worth far more than the face value!
        -The first time we destroyed iraq’s army, but not iraq. When Sadam threatened to sell oil in euros we hang him! The same with Gaddafiof Libya.
        -We consume roughly <19 mlb/day and produce roughly <9 mlb/day. None of that oil comes from iraq (and little comes fro the persiangulf for that matter).
        -We are there not for their oil. We are there to MAKE SURE they sell it ONLY in US$! The history and economics of why will take way to much time and requires knowledge that frankly speaking you do not possess ( no insult intended! Truly!)
        -China and Russia understand well the mechanism and are attacking it. Hence the latest war games in the pacific/south china sea and ukraine and syria. We will (try to) destroy anybody and everybody who threatens the link between $ and oil, or we die ourselves – from hunger!
        ThE Only true thing you said in your comment is the Last sentence, but NOT how you understand it!
        We WILL NOT see petro-yuan, or any other petro other than US$, for if we do that means 2 things: we become a proud member of 3rd world, or WWIII.
        It looks increasingly likely that those who own the govt and the dollar have chosen the second alternative and, if that indeed is the case, we might not see peak oil truly impact us as civilization after all. Sadam did not, but Putin and Xi Jingpin have nukes!
        I understand if your reply (or thinking after reading this) might not be "pleasant".
        Just trying to help. It seems Your comment is not supported by the same level of abstract thinking as your essays are. To me anyway, but I digress.
        Be well,
        Petro

        • Cae says:

          “The petrodollar regime–that oil is bought and sold globally in U.S. dollars–is easy to understand. It boils down to these two principles:
          1. Petroleum is the lifeblood of the global economy.
          2. Any nation that can print its own currency and trade the conjured money for oil has an extraordinary advantage over nations that cannot trade freshly created money for oil.
          This is why many analysts trace much of America’s foreign policy back to defending the petrodollar regime.” ~ Charles Hugh Smith

          “If the Saudis curry favor to the Russians and Chinese by accepting non-USDollar payments for oil shipments, then the Petro-Dollar is dead and buried. The rise of the Nat Gas Coop run by Gazprom is in progress, its gas pipelines to strangle the OPEC and its bastard Petro-Dollar child. The entire USDollar foundation with the USTreasury Bond bank reserve structure is at risk is collapsing, as consequence to the desperate adventure and criminal activity conducted in Ukraine.” ~ Jim Willie CB

          “Bilateral ruble/renminbi trade weakens dollar strength. Perhaps other countries may follow in their own currencies.
          India and Iran are prime candidates. Perhaps Brazil and others will follow suit.
          Washington reacted as expected. According to Zero Hedge, it threatened Russia. It did so over a ‘petrodollar-busting deal’.
          It warned against ‘possible oil barter(ing)’ transactions. It warned Iran against them. US-led Western sanctions are counterproductive.
          Perhaps Washington shot itself in the foot. Russia has plenty of retaliatory ammunition. What better way than by weakening petrodollar strength.
          It’s a pillar of America’s geopolitical/military might. It furthers US supremacy. It does so at the expense of other nations.
          It finances America’s global military machine. It advances US imperialism. It furthers financial speculation.
          It facilitates corporate takeovers. It does so at the expense of beneficial social change, human and civil rights. It prevents potential democratic change outbreaks.
          Global central banks recycle dollar inflows. They do so into US Treasuries. They finance America’s deficit. It matters with QE diminishing. Perhaps ending.
          Moscow/Beijing bilateral trade in their own currencies ‘is rapidly turning out into a terminal confirmation of (US) weakness’, said Zero Hedge.
          ‘Russia seems perfectly happy to telegraph that it is just as willing to use barter (and perhaps gold) and shortly other ‘regional’ currencies…
          According to Zero Hedge, ‘US sanctions have opened a Pandora’s box of troubles for the American currency’. Russian retaliation promises unpleasant consequences.
          What if other countries follow Russian and Chinese examples? What if avoiding dollar transactions catches on?
          What if long prevented US comeuppance happens? What if America met its match? What if it’s responsibly weakened? The sound you hear is overwhelming popular approval.” ~ Stephen Lendman

          I wonder if it’s a touch like this:
          You quit trading in governpimp-sanctioned currency and begin trading in some kind of currency that the government doesn’t sanction. Maybe that’s what’s behind Dark Wallet for example.

          I understand Caelan and Watcher getting their info from wikipedia, but you…! ~ Petro

          LOL… Well, Wikipedia does have references that have references that have references… But do you think I only do Wikipedia? Petro Petro Petro…
          Still though, the time-constraint built into the average human lifespan does suggest something about informational diminishing returns and priorities.
          Sometimes I’d rather go biking than be ball-and-chained to my laptop.

          • Petro says:

            …you missed the point of my comment!
            -I was very surprised that a man who writes “The Grand Illusion”, ” Of Fossil Fuels And Human Flash” and similar, not only does not understand the petrodollar concept, but flat out rebuffs people that MAY know (i.e. you and watcher) and tried to enlighten him on the subject (as grossly rough and shortened of an explanation as it may be!). Quoting Charles Hugh Smith and Stephen Lendman (who if you noticed quotes Zerohedge, who quotes Charles Hugh Smith and Jim Willie, who then quote zerohedge again, who quotes…see where I’m going with this?!) is the same as quoting Ron Patterson here. Charles Hugh Smith has a website just like Ron here and his understanding on things is not better than Ron’s (or maybe yours…who knows?) I have a website that caters to the same themes talked here believe it or not, and I suspect you have possibly visited it…if not you other here have.
            As far as Jim Willie is concerned the guy talks too much and for an enormously large array of subjects which he rarely thoroughly understands (if at all!). And that is proved by the fact that we will see WWIII before we will see BRICS challenge to the US$ comes to real, viable and practical fruition…which was my whole point I was trying to convey…which proves my point that is not that easy to TRULY and THOROUGHLY understand the petro$ as you and Jim Willie think it is…which makes my point redundant…
            No intent of insulting you, or anybody else!
            I am sorry for the misunderstanding.
            Regarding the last paragraph of your reply, I fail to comprehend it therefore I cannot comment on it.
            Be well,
            Petro

            • Cae says:

              Hi Petro,
              I thought I was embellishing your point, as opposed to missing it.
              It is presumed that your other, subsequent, point was about the proverbial echo chamber? Fair enough, although, Zero Hedge is not one person, is it, nor does it self-refer to those two people quoted, does it?
              But feel free to offer other references that can be understood by the general population. (I seem to recall your nickname was at one point, hypertexted, so I’ll select it when I get the chance too.)

              “As far as Jim Willie is concerned… he rarely thoroughly understands…which proves my point that is not that easy to TRULY and THOROUGHLY understand… ~ Petro

              No one can thoroughly understand ‘everything’– probably more so those who cover a broad topical range– which was part of my point. So let my quotes here from Zero Hedge, CHS, etc., on Ron’s fine site be one form of a call for a better, if not thorough, understanding. Time permitting of course.

              • petro says:

                Fair enough!
                Be well,
                Petro
                P.S.: I meant “Zerohedge” as a/the “Subject”, not as a/the “Individual(s)/person(s)”.

                • Watcher says:

                  ZH has a doomsday perspective and hypes sensationalism for traffic, but they are hands down the best source of data underneath headlines of any kind. Lots of worthless comments there, but lots of good comments there.

        • Petro, Petro, Petro…. I am shocked that anyone in this day and and age has not a frigging clue as to what the FOREX is or how it operates. But I more shocked that people, indeed it seems most people, still hold to that silly myth that people hold dollars in reserve, their reserve currency, in order to buy oil on the international market. That is truly absurd.

          No country needs to hold dollars today to buy anything on the international market. A lot of countries do hold dollars to protect their own currency against speculation as explained in the link I posted below.

          Again, it is a myth that anyone needs to hold dollars to buy oil. Yes, people all over the world hold dollars but the reason is not because they need it to buy oil.

          The dollar is not the only reserve currency. Yes, there are other reserve currencies including the Euro, The Pound Sterling. The reason people and nations hold dollars is not because they need it to buy oil. That is just absurdly silly and it is high time people got rid of this dumb ass myth.

          Please, everyone who wishes to know what a reserve currency is and why, read this Forbes article:
          The Future of the Dollar as World Reserve Currency

          What is a reserve currency? Countries all over the world hold financial reserves, in bonds or money market instruments denominated in some other currency. They also hold gold and Special Drawing Rights issued by the International Monetary Fund. The reserves protect the country’s currency against speculative outflows.

          World currency reserves photo WorldCurrencyReserves_zpsc3a7fcd4.png

          • TechGuy says:

            Ron Wrote:
            “The reserves protect the country’s currency against speculative outflows.”

            Perhaps in a few instances. In the case of China and Japan they, hold them because because it would destroy their export market. The world’s major powers hold back a sea of US dollars. A loss of the the worlds reserve currency would be a death blow to the US dollar.

            The only reason why they haven’t dumped them as the major reserve holders would loose a boat load of value and destroy their export market. The dollar system (aka Bretton Woods II) is unsustainable and will fail at some point. Sooner or later someone is going to head for the exit and everyone else will follow to cash out their Dollar reserves just like investors do during a stock market crash. When currencies do collapse its usually happens in a day.

            Ron Wrote:
            “Again, it is a myth that anyone needs to hold dollars to buy oil. Yes, people all over the world hold dollars but the reason is not because they need it to buy oil.”

            Yes, but oil is probably the most importantly traded commodity. It’s hard to believe that if Oil trades are no longer settled in Dollars, that everything else still will be traded in dollars. The loss of the Petro dollar will set off a chain of dominoes.

            Lets suppose that Oil is no longer traded in US dollars starting next week and the Euro becomes its replacement (for simplicity). What do you think would happen to the value of the dollar and why? Consider that the US still imports about 7 Mbpd (~$700 million USD per day). Last month the US trade Deficit was $44 Billion. What direction would the cost of Oil go, priced in dollars if the Oil was traded in Euros?

            Thanks

            • A loss of the the worlds reserve currency would be a death blow to the US dollar.

              Why would that happen? Please explain what a “death blow” really means. Could I still buy a Whopper at Burger King with a few dollars? I have no idea what you are talking about.

              The dollar is only 61% of the world’s reserve currencies. It could and will fluctuate, perhaps 65% in a few years or perhaps 55%. If it went to 35% it would not be a death blow to the US dollar. In fact it would likely mean a great boost to the US balance of trade.

              Yes, but oil is probably the most importantly traded commodity. It’s hard to believe that if Oil trades are no longer settled in Dollars, that everything else still will be traded in dollars. The loss of the Petro dollar will set off a chain of dominoes.

              Oh please! Everything else is not traded in dollars. And it makes not one whit of difference what currency they are traded in. From my Time Link:

              85% of foreign exchange transactions are conducted in dollars; and 45% of all debt securities are dollar denominated.

              There is no rule that says anything has to be traded in dollars. Most commodities are priced in dollars. They can all be traded in any currency the traders wish to use. But they are priced in dollars because that is basically the index currency. That is, when the price is given in dollars everyone knows immediately the price in their local currency. It is a convenience and nothing more. There is no international rule that says trades must be “settled” in dollars. 15% of all trades are not in dollars.

              If nations decided to trade oil in euros, and they very well could do that, then nothing would happen to the dollar. It would not mean, and could not mean, that oil could not be traded in dollars. It would simply mean that countries would choose to use euros instead. If every European country decided to pay for their oil in euros, and they could get the seller to agree, a barrel of oil would still cost refineries about $110 a barrel, or whatever the going rate happen to be on that day.

              The going rate for crude oil on the TOCOM is 68,130 Japanese Yen per Kiloliter (today). Because most of the world trades oil in dollars does not mean that the Japanese cannot trade oil in Yen. It is their choice. It is the choice of any nation what currency they trade oil in.

              • TechGuy says:

                Ron Wrote:
                “Why would that happen? Please explain what a “death blow” really means. Could I still buy a Whopper at Burger King with a few dollars? I have no idea what you are talking about.”

                Sure,
                The US is by far a net importer and runs annual trade deficits of about $500 Billion per year. For now, the US does not need to settle its debts. In fact the US gov’t benefits from these large trade deficits because exporters simply purchase US bonds with their excess Dollar reserves. So for every dollar in trade deficit the US gets them back to expand their debt.

                Imagine if I sold you a car, but you could only pay for half of it. I loan you the money and then give the money back so you use it to buy more stuff.

                At some point, high inflation is going to happen, either because the Fed keeps interest rates too low for to long, Prints too much, executes even worse economic policies, or the US is no longer seen as a safe harbor to park capital in. A loss in faith in the dollar will likely cause a collapse in the dollar value. Perhaps a $4 Burger from Burger King today, (BTW: which is only about 7% beef, the rest is filler) may cost $25 after a dollar crisis and continue to increase in price until the dollar stabilizes.

                A loss of faith in the US dollar will create a crisis for the US, just like Russia in the 1990s when the Ruble crashed. The week before the Ruble crashed, 1000 Rubles brought a two week vacation. After the crisis, 1000 Rubles couldn’t buy a loaf of bread.

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

                “An important symptom of Russian macroeconomic instability has been severe fluctuations in the exchange rate of the ruble. From July 1992, when the ruble first could be legally exchanged for United States dollars, to October 1995, the rate of exchange between the ruble and the dollar declined from 144 rubles per US$1 to around 5,000 per US$1. Prior to July 1992, the ruble’s rate was set artificially at a highly overvalued level. But rapid changes in the nominal rate (the rate that does not account for inflation) reflected the overall macroeconomic instability. The most drastic example of such fluctuation was the Black Tuesday (1994) 27% reduction in the ruble’s value”

                The issue I see with the US dollar is that its completely fiat, and is only backed up by debt. In the case of the Chinese Yuan, its at least backed up on Chinese Exports.

                Ron Wrote:
                “There is no international rule that says trades must be “settled” in dollars. 15% of all trades are not in dollars.”

                I never said that, or even suggested that all trades are in dollars. In a different thread, I had discussed earlier that nations are setting up bilateral trade agreements to avoid US dollar settlements. I am not sure global trade settlements is even at 85% with the USD, with all of the new bilateral trade agreements.

                But the majority of foreign trade is still settled in US dollars. Having the majority of foreign trade in US dollar makes it much easier for the US to run huge trade deficits without its currency from collapsing.

                Ron wrote:
                “The going rate for crude oil on the TOCOM is 68,130 Japanese Yen per Kiloliter (today). Because most of the world trades oil in dollars does not mean that the Japanese cannot trade oil in Yen.”

                Japan is poor comparison to the US, since its a net exporter (or has been until very recently). Japan does not run $500 Billion USD or 53 Trillion Yen annual trade deficits, the US has been running large trade deficits for over 3 decades, while Japan has been a net exporter for nearly the past 50 years. That said Japan’s day of reckoning is coming because of its unsustainable gov’t spending. Japan now has a gross gov’t debt to GDP of 238%

                Ron Wrote:
                “It would not mean, and could not mean, that oil could not be traded in dollars”

                If Oil is no longer priced or settled in Dollars is probably because no one wants US dollars anymore. If Oil trades are settled in Euros or something else, there is no reason for any nation to hold dollar reserves. Thus, less demand for dollars, resulting in dollar devalution. There is so much dollars being held overseas and the US has little to offer in exchange since most of its manufacturing has moved to Asia and the US can’t export Oil or NatGas.

                I fear that at at some point foreign Central banks will head for the exits and dump dollars. All it takes is one Central bank to start the sell off. Maybe it will be China when US foreign policy pushes them into a corner. Or perhaps there is a debt crisis in Japan that forces them to sell off their dollar reserves to stabilize its economy. I cannot pinpoint the beginning of a dollar crisis, I can only identify the risks associated with running Trillion dollar deficits that are unsustainable.

                • Petro says:

                  Tech Guy,
                  you are trying to juggle more details than needed to prove your case and that is keeping you disorganized.
                  Think of it this way:
                  For simplicity, lets say there are 10$ in circulation -4$ here and 6$ in the rest of the world. Now think of each of those dollars as claims on real assets/things, i.e. oil, Big Macs and so on.
                  As long as things proceed normally and those 6$ are kept outside of the country (i.e. needed by Ms. Merkel to pay Mr. Putin for the gas and oil) there will be ONLY 4$ (give or take the normal rate of inflation on any given year) competing for that Big Mac, there fore the Big Mac will cost 4$ ( give or take the rate of inflation).
                  Now, if Ms. Merkel were allowed to pay Mr. Putin in euros for the russian gas instead of dollars she would then take those dollars and, since she did not need them anymore to pay for oil, she would give those back to us CLAIMING REAL assets/things in exchange (remember: dollars are claims on real goods and services!). So suddenly there would be 10$ competing for that Big Mac instead of 4$ previously therefore all things equal that Big Mac wold cost 150% more!
                  Now this is the “amount” aka controllable part of the equation. In the bigger picture this is the side of the equation the FED controls by printing/creating it at will. As long as this freshly created or brought from the outside in our case-study amount of $ is ‘parked” somewhere i. e.; stock, bonds, fed reserves, etc we will not see big inflation in real terms (i.e everyday life) NO mATTER HOW MUCH THE FED PRINTS – we WILL se asset inflation (i.e stocks, bonds, etc) – exactly the situation we have today.
                  The most important part of the equation is what in finance is called the VELOCITY of MONEY. In simpler terms: the amount of circulations any given dollar currency unit makes in a given period of time (from your pocket – to the Big Mac store- to the bank- to your employer – to your pocked again lets say) In a developed consumption based economy i.e. n.america and w.europe, this part (velocity) is almost completely controlled by the psyche and the mood of the consumer: the happier and more confident we are about the economy, the more we spend the money – the faster it circulates and vice versa. That’s why Yellen et al pay attention to “consumer sentiment” you so often hear on cnbc and bloomberg! When the $ held outside will come inside (since they will not be needed for oil/energy payments by others: i. e. Merkel and Putin) our confidence in our currency will fall as we will have much more currency units that suddenly our trading partners around the world DO NOT NEED ANYMORE. Thinking it will get worse, we start to spend it quicky for REAL goods and services which will suddenly cost a lot more! This will be like an avalanche with the ultimate result very high inflation (if not hyperinflation) and the destruction of the value of currency. So would you be kind enough to tell Ron that he will be paying not $25 but $ 25million and then $25billion and then $ 25trillion for his burger and then NOBODY will sell him anything for dollars as they will become worthless. The currency is destroyed! Exactly what the “death blow” that you mention in your comment and Ron did not understand will look like but developed through a much more complex pathway than the one I described above!

                  Be well and Happy 4th

                  Petro

                  • Cae says:

                    I’m halfway through this comment of yours, Petro, and will be rereading the thread, but I have to log off. It’s interesting so far, maybe illuminating and likely very important, such as to energy crony-capitalism and governpimpism, so kudos to you and to Ron for enduring some pies and keeping stiff upper lips. Just to suggest; maybe ask what kind of pies each of you like. For the future, in case anyone’s inspired in my case, I like pecan, but the nuts would probably be too painful, so consider making mine lemon meringue, unless you think I really deserve it. And for heaven’s sakes, make them scratch and organic! None of that Monsanto Mix!

          • Petro says:

            “…none are more hopelessly ignorant than those who falsely believe they know; none are more hopelessly enslaved than those who falsely believe they are free…” Goethe.
            -That delightful quote goes perfectly well with your reply, and most importantly your attitude and ultimately your character, dear Ron!
            Well, I co-manage a website with quite a few more visitors than yours; co-own a successful LLC with exposure to currency and energy trading in several countries (among other things); coauthored 2 published and decently received books on banking, energy and asset management; coauthored and/or edited numerous published articles (some of those quoted as reference on your site – and at least one by you personally!!!); set in meetings with Colin Campbell and Matt Simmons (among others); worked and got rewarded handsomely in currency units (you call them dollars, or money – for you clearly know not the difference!) for 25+ years in investment banking, which (I hope you would agree with me here) includes Forex trading among other things and, unlike Tech Guy who may have a broad grasp (a good one I might add!) on currencies and trade, I do know them inside and out at some detail that is extremely likely you and most (if not all) of the readers and commentators here do not! So let me tell you something my friend: your ignorance on the topic baffles me. Indeed!
            – Since the birth of Monte Dei Paschi Di Siena (just to enlighten you, or try anyway, since enlightening might be a very ambitious goal: the oldest bank in the world and the birth of the modern banking and finance as we know it today!) there have been 6 countries which currencies were world’s reserve currency ( in the order listed): Portugal, Spain, Netherlands, France, UK, US.
            -I cannot be simple enough for you to understand me (even if you had the will and desire to, and even if we had the time and space here), so I will be very quick. After WWII we were the ONLY country that had >80% of the world’s gold -in the monetary useful form (i.e. not necklaces on a woman’s neck in India) – and the only major industrial country that was not destroyed by the War (au contraire, came out of it stronger!). So in Bretton Woods, everybody agreed to peg all world currencies to gold THROUGH the US$. THAT is the Reason the US$ became a reserve currency, not the “status” of it!
            -In 1971, because we lost 3/4 of the gold due to dollar devaluation and Charles De Gaulle et al. not trusting us anymore (paying for vietnam, the great society, etc), R.Nixon un-pegged the dollar from gold (and EVERY currency as a result) and since then EVERY CURRENCY in the world is free floating!
            -Now here it becomes interesting and very few understand it (clearly not you, so do pay attention as this part is not explained by Forbes either!) The reason why STILL today the dollar is used in >60% of the world’s trade and is not in par with euro, lets say (which represents an economic unit Larger than the size of the USEconomy) and the reason we control monsters such as FOREX and SWIFT payment systems and therefore the capability to sanction countries that defy us and fine in billions of dollars banks in other jurisdictions, is that UNLIKE euro, pound sterling, swiss franc, etc., MR. KISSINGER , King Faisal et al. backed by Ghawar production (and other factors which far exceed your level of comprehension to be mentioned and explained here!) reached an agreement (more like: Kissinger dictated it actually, but nonetheless – result is the same!) by which dollar was anchored to a different kind of gold: a smelly, sticky, nasty and black looking one. You and your followers might know it as petroleum. Without this anchorage, dollar would the same percentage (at best!) of World’s trade as USeconomy size, and euro Would be the bigger guy in town!
            -Now this is personally for you, so that you may not die ignorant regarding this topic (although, judging from your comments here that is in serious doubt!): having dollars outside the US as reserve does not mean that some refinery guy has to hide them in some safe or mattress somewhere (which is your meaning of the reserve currency and the petro$…sad indeed!). Instead it explains why the Chinese refinery guy has to call his banker to trade the YUAN in his account FOR DOLLARS and THEN and ONLY THEN be able to buy oil from Saudis lets say, VS. the Houston, TX refinery guy who just peaks up the phone and simply buys oil without trading dollars for something else on FOREX!
            -So let me try again to make it more simple for you and alike to understand (or try at least: at the risk of being redundant, that might be a very ambitious goal!): the Chinese do not hold several Trillion dollars and dollar denominated instruments because of the dollar’s “status” – to quote you- they are not such snobs as you think they are!!! They hold it because they CANNOT buy oil (and because what I explained above- other assets/resources, as well!) directly in YUAN. Contrary to your belief, Ms. Merkel is not dumb enough to incur enormous transaction fees and time loss converting euros in dollars to pay Mr. Putin who will incur the same losses in reverse IF she could do otherwise. The dollar “status” is not that important to her. She is not the guy/gal who stays in line for days to buy the new iPhone.
            -So in conclusion, dollar is indeed hoarded but not in the twisted sense upon which you try to mock and insult us (the get it inside your purse and take it with you everywhere you go – hoarding type of thing). The USDollar is in such a demand and constitutes 60% (and falling) of the world’s currency not because -to quote you, again: “the world needs a status, a reserve currency”, but because THROUGH controlling oil and energy, it controls SWIFT, FOREX and the majority of the worlds trade!!!!!
            Is that simple enough for you! I doubt it!
            …And, no, Forbes article will not tell you that, even if somebody at Forbes truly knew that- which I doubt, as well! Neither will anybody else for that matter. I had to learn it through experience, something you lack – among a lot of other things.
            This is the last exchange of mine with you so go ahead and reply me with your vast “knowledge” and of course, a dose of insult, too!
            I am looking forward to it, for as a result of what I explained above coming to an end we ALL shall learn soon enough the practical meaning of A. Rand’s genial prophecy:
            ” one can ignore the reality, but one cannot ignore the consequences of ignoring reality”!
            I am afraid that this time you are the “ridiculous” and “dumb” one, my friend!
            Happy Independence Day!
            Be well,
            Petro

            • Petro, your rant made no sense whatsoever. You did not dispute that the dollar is only 61% of the world’s reserve currencies. And you did not dispute that the Chinese could not buy oil in yuan, only that he had to call his bank to do that. Well hell, that is exactly what I said he had to do.

              Of course the dollar is hoarded. I never once said that it was not. And there is a damn good reason the dollar is hoarded. And that is not because the Chinese need it to buy oil.

              Again, your rant made no sense whatsoever.

              • Petro says:

                …either you did NOT read and/or comprehend a word of what I wrote, or you MUST be a different Ron from the one who wrote the essays listed at this site’s head!
                -That is the ONLY way you cannot see the advantage/difference of the guy trading oil from TX directly in $ vs. the guy trading it from Peking going through FOREX (which we control, because of the PETRO$…imagine that!) and back and NOT being able to trade it DIRECTLY just like the guy in TX!
                …oh, there is another way…seriously thin “Gray Matter”, but I truly doubt that is the case with you.

                Be well,
                Petro

                P.S.: …you did like the “rant”? Different “tone” from my first comment to you, n’est pas?!?
                Well, hint: next time try to read what you write to others before you click the “Post Comment” button, as they might be better than you at sarcasm and mocking!

                • I read your post. The point is I really don’t think it’s that great a task to tell your banker to pay the bill from your Yuan account. You seem to think the guy from Texas has a tremendous advantage because he does not have to do that. I do not.

                  going through FOREX (which we control, because of the PETRO$…imagine that!)

                  Errr… Just who are “we”. I really don’t think “we” control anything about the FOREX, unless by “we” you mean the US FOREX member banks. And we are only four of the largest ten FOREX member banks. And the Texas guy would still have to go through a FOREX bank to make an international transaction as all the large international banks are FOREX banks. So what’s your point?

                  From Wiki: The foreign exchange market (forex, FX, or currency market) is a global decentralized market for the trading of currencies. The main participants in this market are the larger international banks. Financial centers around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.

                  • Petro says:

                    ..yeah, one guy buys whatever he wants in the currency unit he can create/print at will, and the other guy HAS TO buy the same thing in the currency the first guy controls – after exchanging his currency (…and showing proof that his currency is worth the exchange to the first guy!!!) for the first guy’s currency through a system the first guy controls and uses it as economic/sanction weapon anytime he pleases by naming others terrorists, invaders, dictators, etc, at will…you nailed it! There is no difference! None!
                    -As far as the table you presented…boy you do not have a clue, do you?!?
                    You are one of those guys who thinks that the <2% inflation and <6.1% unemployed number that Yellen puts out every month is true and accurate, aren't you? Sure, this month's job number was 280K+ and economy is recovering and All the numbers JPM and GOLDMAN SUCKS show are true and accurate, too! Sure Sherlock…!
                    …the guy who analyses the numbers from Bakken…EIA…, etc…, MUST INDEED BE A DIFFERENT ONE!
                    …and out!
                    Be well, happy 4th
                    Petro

                  • Petro says:

                    …oh, and one more thing since I made my point to educate you today (…impossible task it seems….redundant enough for you…are I?):
                    “And the Texas guy would still have to go through a FOREX bank to make an international transaction as all the large international banks are FOREX banks. So what’s your point?”
                    -You got that completely wrong (…no wonder…you’re quoting wikipedia…you know dear “all knowing” Ron? Wikipedia is an OPEN Source info site…meaning: you, and/or I…and/or anybody can be a PROFESSOR/Teacher there…that should have told you something and the fact that it did not tells me something about you!)
                    -Allow me to help, please:
                    if the Texas guy has enough Dollar currency units in his account to satisfy the trade HE DOES NOT NEED TO GO THROUGH FOREX as Forex is mostly a currency exchange system and NOT a transfer one (although the two co-mingle in the process!)
                    He can transfer his Dollar currency units through SWIFT (or to a lesser extent, other transfer systems which he controls, as well!) DIRECTLY to the other trading party.
                    The NEED to go through Forex is ONLY if ONE NEEDS to exchange currency: i.e. the chinese refinery guy.
                    -If only you grasped this part of the equation, then you WILL rethink the whole thing we have discussed today and CERTAINLY change your mind with regard to it! I doubt that will happen, for you see…you perceive yourself as a “strong personality” guy who “holds his own” to the end!
                    But seriously, IF you still fail to see the difference between the Texas guy and the Chinese guy after what I just wrote, You truly are hopeless! Sorry, there is no other gentler way of putting it!
                    -Not your usual reader/commentator, are I?!?
                    I know…and you’re welcome, for what I taught you today through our discourse has taken me years to learn (and profit handsomely from it, I must add!) and is not taught in ANY PhD in economics course and certainly not in a Forbes article (let alone wikipedia…)
                    Good night…for good!
                    Be well,
                    Petro

                  • -As far as the table you presented…boy you do not have a clue, do you?!?

                    Good God, the damn table is from Wikipedia, not me. And it is just numbers, nothing more, numbers telling us the bank’s percentage of international currency exchange.

                    Petro you have gone off the deep end for sure.

                    Bye now.

                  • Petro says:

                    “…Good God, the damn table is from Wikipedia, not me. And it is just numbers, nothing more, numbers telling us the bank’s percentage of international currency exchange.”
                    …table from wikipedia…
                    …for a guy (you) who is brilliant with oil chart numbers (truly!), you say: ” and it is just numbers, nothing more…”
                    I REST MY CASE!
                    Petro

                • Cae says:

                  Unsure about your bit of a ‘pie-in-the-face’ deliveries, Petro, but anyway, your nickname link is not working. All I am getting are dollar signs surrounded by asterixes and a ‘can’t find server’ page.

                  Incidentally, I often harp on the issue of complexity precisely because of these kinds of issues. Specialization seems to disempower us.

                  • Petro says:

                    ..forced to…if you read my first reply was quite “gentlemanly”…
                    -You see Cae: arrogance by itself is annoying, but tolerable. Ignorance by itself is annoying, but tolerable. Arrogance and ignorance together…errr…NOT tolerable!!!
                    And that is why I had that cascade of exchange with Ron, not because I am this arrogant prick who is at this certain pinnacle of knowledge and experience on the subject and suddenly has the urge to intellectually “crush” the other guy! As presumptuously bad as it may sound, that is easy for me with regard to 99.9% of the regular citizens!
                    -But I have been there with some of the Greats (Matt Simmons, Colin Campbell et al.) in the subject and being mocked (without a good reason!) by a guy (who I truly think is brilliant with oil chart numbers by the way!) just because he read wikipedia…kinda ignited me.
                    And to think that I taught and explained to him in VERY simple terms something that countless PhDs spend hundred of thousands of dollar currency units and years of schooling and never properly learn (I told you: is not as simple as JimWillie and CHS think it is!!!)…I was expecting a “thank you!” – not insults!
                    Ferocious aren’t I?!?
                    I know, but I am calm now and I will not again have the same day on this site…but I will continue to read it with pleasure as I have done without commenting for months thus far.
                    The $ signs on my credentials are intentional and will stay that way. Sorry!
                    I am open to humbly give my opinion on matters if requested though, so feel free to ask.
                    Be well and Happy 4th

                    Petro

                  • Cae says:

                    Hi Petro, understood…
                    You mentioned your ostensible credentials and something about a website if recalled, so I presumed some of it could be arrived at via your linked nickname. So how do I get to it given the link doesn’t work?

                    “…is not as simple as JimWillie and CHS think it is!…”

                    Here’s a quote from something I’m writing:

                    “…terrestrial flora and fauna don’t know or care about human finance, governance, technology or other intricate nuances, complexities and idiocies that no one human can possibly entirely comprehend anyway, despite their books, articles and Russia Today talking-head appearances. Flora and fauna do, however, respond instinctively, intuitively, adaptively to the environment, and this is part of what I am talking about. (Yeasts don’t naturally belong in a petri-dish, incidentally. It’s also a prison.)”

                    “Be well and Happy 4th” ~ Petro

                    Thanks, but 4rth?

      • SRSrocco says:

        Ron,

        God bless ya. When the Petro-Dollar system dies…. you might have to eat those words.

        Besides that… you’re still DOPE in my book. That means CHOICE.

        Steve

        • Steve, as I explained in another post, the Petrodollar and the Reserve Currency are two entirely different things. The confusion probably arises because people mistakenly believe that countries must hold dollars in reserve in order to buy oil. Of course they do not.

          I explained a couple of post above this one what the term “Reserve Currency” means. Now here is what “Petrodollar” means.

          Definition of ‘Petrodollars’

          The money earned from the sale of oil. The term “petrodollars” was coined when the price of oil rose sharply in the 1970s. It resurfaced in the new millennium, when prices rose once again. Although petrodollars initially referred primarily to money that Middle Eastern countries and members of OPEC received, the definition has broadened in recent years.

          Investopedia explains ‘Petrodollars’

          Petrodollars are the primary source of government revenue in many Middle Eastern countries. In fact, these funds represent a massive amount of investment capital and, in fact, are often traded on the eurocurrency market. They are also used for development purposes. In the 1970s and 1980s, Bahrain was able to improve its industrial capacity through the use of petrodollars.

          You see, there is almost no connection between the two.

    • Caelan wrote:

      The petrodollar system also meant that the U.S., the largest consumer of oil in the world, gained the power to buy oil with a currency it can print at will. ~ Wikipedia

      You left off the most important part of that quote [citation needed]

      • Cae says:

        Yes, I thought I’d let you and/or any of the blog-members provide it. ^u^

        …Because the more I look into this, the murkier and chaotic it gets, the more I don’t like it and the more it looks really bad for the US, and everyone else.

        We ‘in the peak oil know’ knew that stuff like this might happen, but peak oil has only just begun…
        I’m getting references (some already known of course) to currency wars, proxy wars, gold hoarding, state-theft, manipulations and de-/re-valuings; petrodollar collapse; oil-barter and oil-gold trade; and capitalists/banks/elites ‘playing both-sides’.

        It may turn out to be a harder and faster long emergency.

        “In retaliation, Russia could opt to only accept gold bullion for payment for their gas, oil and other commodity exports. This would likely lead to a sharp fall in the dollar and a surge in gold prices… The petrodollar system is based on one, and only one, thing: trust. As soon as trust fades, the whole system collapses. That is the unspoken Achilles heel of the US…” ~ GoldSilverWorlds

        “Heads of state from around the world, including Putin, as well as international bankers and IMF representatives have all publicly called for the IMF to take charge of the global economic system through its Special Drawing Rights currency program.
        However, for the SDR to become a dominant currency, certain issues must be resolved. Here’s a short list.
        The U.S. Dollar Must Fall
        …lose its world reserve status, and most likely collapse in relative value, before the SDR can be elevated. This is where mainstream pundits lose track of the facts. For them, the dollar is an invincible monetary element, a currency product as infinite as time. Their normalcy bias prevents them from ever acknowledging the many weaknesses of the Federal Reserve note, including our country’s inability to ever service its more than $200 trillion debt. Others believe the dollar is the NWO currency, and that the globalists are somehow U.S.-centric. The evidence posted above suggests otherwise. Globalists have no loyalty to any nation or culture. Their only loyalty is to the progression of their own power. If sacrificing the dollar or the U.S. as a whole furthers that power, then they will have no problem cutting us loose like a rotting appendage…” ~ Brandon Smith

        “The Russians are actually making a move against the petrodollar… The largest natural gas producer on the planet, Gazprom, has signed agreements with some of their biggest customers to switch payments for natural gas from U.S. dollars to euros… the Russian government holds a majority stake in Gazprom. There hasn’t been a word about this from the big mainstream news networks in the United States, but this is huge. [Gazprom] is one of the largest companies in the entire world and it makes up 8 percent of Russian GDP all by itself. It holds 18 percent of the natural gas reserves of the entire planet, and it is also a very large oil producer. So for Gazprom to make a move like this is extremely significant…

        For those that don’t think that all of this could hurt the U.S. economy or the U.S. financial system, you really need to go back and read my previous article entitled ‘De-Dollarization: Russia Is On The Verge Of Dealing A Massive Blow To The Petrodollar’. The truth is that the U.S. economic system is extremely dependent on the financial behavior of the rest of the globe.” ~ Michael Snyder

        “What do all men with power want? More power.” ~ The Oracle, ‘The Matrix Reloaded’

        • The petrodollar system is based on one, and only one, thing: trust. As soon as trust fades, the whole system collapses. That is the unspoken Achilles heel of the US…” ~

          Cae, that is true of every currency in the world. No currency, not one, is based of precious metals or anything else. They are all based on trust, or faith as I like to put it. Faith that the government will stand behind the currency. Even the “Pound Sterling” is not based on silver as you might expect.

          From Wiki: At various times, the pound sterling was commodity money or bank notes backed by silver or gold, but it is currently fiat money, backed only by the economy in the areas where it is accepted.

          All fiat currencies are based of faith and nothing more. That is the unspoken Achilles heel of every currency on earth…” ~

          I fail to understand why so many people have such animosity toward the dollar. Why? It just doesn’t make any sense to me.

          • robert wilson says:

            I don’t have specific animosity toward the US dollar but I am aware that when I was a child one could purchase a post card for a penny. That included the card and the stamp. They were actually called “penny post cards”. As a young adult I recall the price of a cup of coffee where I interned being raised from a nickel to a dime. I switched to hot tea. One who did express animosity toward most currencies was he late Dr. Franz Pick (1898 – 1985). He was at one time the world’s most prominent currency analyst . He had personally experienced the famous European inflations. A half century ago the dollar was king. Travel on the US dollar was an extreme bargain. I read Frommer’s well known book – “Europe on Five Dollars a Day”. ——-Why does our current government hope to have two percent inflation compounded yearly?

          • Cae says:

            I think I understand that, Ron, thanks, and it looks like some nation-states are aiming to transcend a certain trust or faith behind a common-standard currency (‘petrodollar’?), through, in part, (considering) trading in other currencies and/or bartering. It is not so much the currencies, but the control exerted on/behind them.
            Trade, using particular currencies, are, like a lot of aspects of our lives, enforced by force/coercion/violence under the nation-state system. So we trust/have faith in something that’s, behind it, enforced, essentially by ‘gunpoint’. Funny that. That sounds like a recipe for chaos– and animosity; ‘Use this currency, or else, and/or if you use that currency, make sure we can control it.’ Taxation seems to be the main point behind this desire for currency-control, since, if you can use a currency that can’t be skimmed (taxed), then you don’t have a governpimp, do you?
            …Under-the-table, underground economies… These sorts of things would seem to need to be brought to the surface… Cryptocurrencies and Dark Wallet as an example that seems to plug into the
            Bitcoin protocol is an intriguing development in this regard. Cryptography says it all perhaps.
            And this has been begging the questions in my mind about the fundamentals of trust, too, vis-a-vis how a permaculture network that has, as its operatives, ’embedded trust’, in its basic tenets of Care of Earth and of People and how it might use, manage and/or create a currency of its own.

  8. cytochromeC says:

    I wonder if this is going to effect the pipeline?

    Denali Park Alaska:

    • Watcher says:

      No idea, but since the mountains in the background indicate the same piece of land is not in those photographs, probably don’t matter.

  9. Political Economist says:

    May 2014 is the hottest May since temperature record began in 1880:

    http://data.giss.nasa.gov/gistemp/tabledata_v3/GLB.Ts+dSST.txt

    • Doug Leighton says:

      Not true, this is obviously part of a conspiracy by the US government, NASA, hundreds of climate scientists, all people who keep weather records, Al Gore, that satellite crap, the wackos on this Blog, (especially Steve), and every nut who believes in Climate Change. I know this because Old Farmer Perkins who lives down the road told me that he remembers May being warmer when he was a kid.

      • Old farmer mac says:

        Old Farmer Mac had to install windshield wipers on his safety glasses to work at remodeling his old house almost every day this past May because other wise the sweat blinded him to the point he couldn’t see.

      • SRSrocco says:

        Doug,

        Precisely. Global warming, Peak oil & Sound Gold-Silver money are all beliefs by those who suffer from BRAIN DAMAGE.

        Whord to your mother…

        Steve

    • Drk Horse says:

      The beauty of the ‘climategate’ fiasco is that it so thoroughly exposed to us Real Americans who can think for ourselves and not have to rely on some supposed 97% ‘consensus’ that the NASA temperature dataset is a laughable forgery. The so-called temperatures they have recorded are pure fantasy, meant to continue to perpetuate the globalists’ religion of global warming, or should I say ‘climate change’ that they will do anything to have the rest of us believe.

      Let’s talk about the real story here. NASA is an extremely politicized agency of the federal government primarily responsible for driving the climate con to gain centralized control over the economies of the West. There’s really no hope for you if you honestly still trust them over the parties who thoroughly debunked the 97% ‘consensus’ claim and all the other major claims of the anthropogenic climate change religion.

      This is not a conspiracy. It’s common knowledge to those who are able to see what’s really going on. Why else would NASA and other completely corrupt agencies spend billions per year for fraudulent scientific results and energetically suppress dissenting research? They are supposed to be faithful to science, but in reality they are anything but!

      Go ahead and look into the 97% ‘consensus’ claim. You’re about to learn something about the real world. By the way, ‘climate science’ isn’t the only area beset by fraud. A huge percentage of ‘science’ is fraudulent, but most of that fraud is for personal gain. The difference with ‘climate science’ is that it’s the only branch that has been completely hijacked by governments and ideologues to drive their disastrous economic policies.

      http://co2insanity.com/2013/03/08/the-amazing-nasa-cant-figure-out-whats-going-on-with-the-sun/

      • Doug Leighton says:

        Yes, I agree, it’s all a fraud: Biology, Physics, Chemistry, the whole lot. Even my wife is part of this with her stupid Quantum Field Theory nonsense, pages and pages and pages of equations to trick people into false beliefs. Maybe she’s slipping arsenic into my coffee, Jesus………….

      • Dave Ranning says:

        Satire?

      • petro says:

        Drk Horse:
        Doug is teasing you. He means well!
        But just FYI, Let me make it simple so you can better understand…hopefully!
        -Doug means Exactly the Opposite of what he wrote in your reply!
        Think better…or try at least.. and be well!
        Petro

        • Lloyd says:

          Petro! Ixnay on the explain-ay!
          If we keep him busy here, he can’t go to forums that cater to the more gullible.
          -Lloyd

          • Petro says:

            …c’mon Lloyd, be nice – will ya?
            We are not here to deny another soul the right enlighten and learn, are we?
            I am only trying to make DRK HORSE and al. make an informed decision (…well on a second thought, that is a stretch, but…how about a MORE informed ones) and then they can in all earnest decide to go somewhere where his/their needs for intellectual info are catered better!
            How does that sound?
            Be well,
            Petro

      • SRSrocco says:

        Drk horse,

        By the way… we never went to the moon. NASA used minitures such as Lincoln Logs and Gumbi stick figures to recreate the moon landing.

        Steve

    • Thomas Meervan says:

      A few points, if I may:

      1) The global temperature has seen no statistical warming for 17 ± 3 years according to the 5 major global data sets. All global data sources show cooling from at least 1997.

      2) Global sea ice is nearly 1 million square km above normal according to NSIDC data.

      3) Tornadoes set a record for the fewest on record in 2013.

      4) We are still extending the record for years without a major hurricane striking the United States.

      5) Antarctic land ice accumulation is well above average based on a peer reviewed study of 67 ice cores looking at the past 800 years. The only land ice losses are due to variable glacial flow rates.

      6) There has been no increase in extreme weather events as documented to a US senate committee in August 2013 by Dr. Roger Pielke.

      7) A billion dollars a day is spent on AGW related issues. This money could be used for real environmental problems. Instead, most of it is funneled to wealthy 1%ers.

      8) An estimated 80% of climate science jobs would evaporate if the climate change agenda disappeared.

      9) Peer review science finds a warming of 3C (5.4F) to be a net benefit to society. This was highlighted in a recent paper by Dr. Richard Tol that summarized the findings of 14 peer reviewed papers.

      10) Global temperature correlates with natural ocean cycles much better than CO2 emissions. A recent paper by Dr. Marcia Wyatt and Dr. Judith Curry highlighted this “stadium wave” effect.

      11) A 14 year study trying to measure the actual greenhouse effect by a team from the University of Wisconsin found that the greenhouse effect has no meaningful impact on temperatures.

      12) A recent study of 117 climate scenarios looking at the past 15-20 years with modern climate models found 114 of them failed to meet a 95% confidence level. That is, 97% of climate models have failed to make accurate predictions so far.

      13) The UN wants to increase the already-preposterous $1 billion/day funding that already goes into climate scare tactics.

      14) The vast majority of historical proxies show modern warming is still less that previous warm periods. This includes the Medieval Warm Period, the Roman Warm Period, the Minoan Warm period and the Holocene Optimum.

      15) The coldest period of the last 10,000 years occurred 300-500 years ago and is named the Little Ice Age (LIA). While many claim the few years of warming in the 20th Century is unprecedented they fail to mention that global temperatures are still lower than those that existed prior to the LIA.

      16) A recent poll by the American Meteorological Society (meteorologists and climate scientists) found only 52% believe man was primarily responsible for the recent warming. The UNIPCC claimed they were 95% confident of humans causing warming. How can they make such a claim when the experts themselves don’t believe it? Following the money?

      17) A new paper has found sea level rise has decreased by 31% returning to its normal rate of around 6-7” per century. Al Gore’s seaside residence will be safe for another thousand years.

      18) Additional CO2 in the atmosphere greatly benefits society as it allows global agricultural output to increase, which means less malnutrition, hunger, and starvation in the world.

      See the truth about the not-so-warm May temperature readings at Climate Comment Sense.

      • Dave Ranning says:

        All global data sources show cooling from at least 1997.

        10 warmest years on record (°C anomaly from 1901–2000 mean)
        Year Global[66] Land[67] Ocean[68]
        2010 0.6590 1.0748 0.5027
        2005 0.6523 1.0505 0.5007
        1998 0.6325 0.9351 0.5160
        2003 0.6219 0.8859 0.5207
        2002 0.6130 0.9351 0.4902
        2006 0.5978 0.9091 0.4792
        2009 0.5957 0.8621 0.4953
        2007 0.5914 1.0886 0.3900
        2004 0.5779 0.8132 0.4885
        2012 0.5728 0.8968 0.4509

        • Jill_Oz says:

          I know this comment is going to get binned, but I need to write it anyway. How can you possibly use our 200 years of climate data (and that is being quite generous with the number of years of data we have) and show that the earth is warming due to humans? The world has been around for 5 million years and has always been going through warming and cooling periods, and always will regardless of what we do. All of this is simply nothing new. At this point I feel only the ‘true believers’ with a radical economic agenda to push are the ones failing to realise that the sample size on climate is just too inadequate to come to any conclusions with real confidence.

          • Doug Leighton says:

            Scientists who study Climate Change have access to vast amounts of data going back eons; they come to conclusions studying data. If you’re sick do you get advice from your garage mechanic or your doctor?

            • Dave Ranning says:

              Actually, it appears we warmer now than in the last 100,000 years.

              “The world has been around for 5 million years and has always been going through warming and cooling periods, and always will regardless of what we do.”

              5 million?
              Try 4.5 billion.

          • petro says:

            Other than writing 5 million instead of 5 Billion (roughly) years old, you are absolutely correct. The climate has cooled and warmed throughout Earths history and, at some kind of regularity we might add depending on the Sun cycles (mostly) and other factors, i.e.: volcano activity, asteroid activity/crush, etc. Whoever believes differently is an ignorant moron at best!
            BUT (…and read attentively now, because the following part often misses even from analysis of the most knowledgeable climate change supporters! ) the change ALWAYS happened during the course of MANY MILLENNIA (if not longer!) and was ALWAYS accompanied by an almost TOTAL extinction of life on Earth (at least the majority of species that did not adapt during the change).
            NEVER BEFORE the change has occurred at this accelerated pace:give or take 2 centuries! – AND NEVER BEFORE such an environmental devastation and species extinction occurred PRIOR to the climate change itself – always resulted as a CONSEQUENCE.
            -The detailed explanation of what I wrote will FAR exceed the space, time of this site and most importantly the understanding of the commentators (most of them) here, so I will not go there.
            The conscientious and intentional effort/activity of the only species capable of abstract thinking on this planet (i.e. humans) is THE ONLY scientific and logical explanation of this accelerated change which ultimately will not allow Any species to be able to adapt enough in order to survive the brave new climate we are creating. What comes after, I don’t know, but I can guess: NOT GOOD for us humans (and life in general).
            One of the best and most accurate/detailed FREE analysis of peak oil and peak energy out there is Steve at SrsRoccoReport, BUT just like you (and most other people, sadly) he does not believe in human made climate change. Inexplicable for a smart guy like that and the reason he is not taken seriously (enough).
            Be well,
            Petro
            P.S.: your comment did not “…get binned…”, did it?

            • Watcher says:

              Too bad.

              I was just surfing over on a climate blog and there is a veritable war going on concerning the merits of sand vs ceramic proppant.

              • petro says:

                …I strongly suspect that in the next…oh, let say 10-20-30 years (and possibly earlier!), they and All of us will be concerned with our own survival (be it financially/economically/resource/energy war or social tumult; OR ultimately environmental and climate disaster driven!) and the ONLY way the “…sand vs. ceramic proppant…” will ever again cross the mind of some of them is when they see the reality outside and finally realize what ignorant, moronic, presumptuous pricks they were. Way too late then, too late now! We have crossed the point of no return the Rubicon, if you will! Most if any fine minds commenting on this delightful site do not realize that What We See Now Is The Result Of What We Burned 40 Years Ago. And We Burned More In the Last 30 Years than In the Previously 200+ Combined!!!
                Be well and drink that fine wine you been saving… The next 20 years will not be anything like the las 20…or50…or 100…
                Petro

              • Aws. says:

                Watcher,

                I do believe I have encountered you discussing topics not specifically related to oil production.

                • Watcher says:

                  It’s possible.

                  So with that as numerical precedent, let’s adhere to it. However many such you saw — achieve parity.

          • Cae says:

            “How to annoy a climate scientist – a guide” ~ Jill Oz

      • Dave Ranning says:

        Additional CO2 in the atmosphere greatly benefits society as it allows global agricultural output to increase, which means less malnutrition, hunger, and starvation in the world.

        “In their most recent study, Bloom’s team examined the influence of elevated carbon dioxide levels and, in some cases, low atmospheric oxygen concentrations, on nitrate assimilation in wheat and Arabidopsis plants using five different methods.

        Data from all five methods confirm that elevated levels of carbon dioxide inhibit nitrate assimilation in wheat and Arabidopsis plants. The researchers note that this effect could explain why earlier studies by other researchers have documented a 7.4-percent to 11-percent decrease in wheat grain protein and a 20-percent decrease in total Arabidopsis protein under elevated carbon dioxide levels.

        http://www.news.ucdavis.edu/search/news_detail.lasso?id=9479

      • Old farmer mac says:

        I guess Sandy in 2012 was only a thunderstorm.
        Here is an excerpt from the AMS website- which happens to be the professional organization representing meteorologists for the most part.

        spacer
        Climate Change
        An Information Statement of the American Meteorological Society
        (Adopted by AMS Council 20 August 2012)

        pdf version

        The following is an AMS Information Statement intended to provide a trustworthy, objective, and scientifically up-to-date explanation of scientific issues of concern to the public at large.

        Background

        This statement provides a brief overview of how and why global climate has changed over the past century and will continue to change in the future. It is based on the peer-reviewed scientific literature and is consistent with the vast weight of current scientific understanding as expressed in assessments and reports from the Intergovernmental Panel on Climate Change, the U.S. National Academy of Sciences, and the U.S. Global Change Research Program. Although the statement has been drafted in the context of concerns in the United States, the underlying issues are inherently global in nature.
        How is climate changing?

        Warming of the climate system now is unequivocal, according to many different kinds of evidence. Observations show increases in globally averaged air and ocean temperatures, as well as widespread melting of snow and ice and rising globally averaged sea level. Surface temperature data for Earth as a whole, including readings over both land and ocean, show an increase of about 0.8°C (1.4°F) over the period 1901─2010 and about 0.5°C (0.9°F) over the period 1979–2010 (the era for which satellite-based temperature data are routinely available). Due to natural variability, not every year is warmer than the preceding year globally. Nevertheless, all of the 10 warmest years in the global temperature records up to 2011 have occurred since 1997, with 2005 and 2010 being the warmest two years in more than a century of global records. The warming trend is greatest in northern high latitudes and over land. In the U.S., most of the observed warming has occurred in the West and in Alaska; for the nation as a whole, there have been twice as many record daily high temperatures as record daily low temperatures in the first decade of the 21st century.

        The effects of this warming are especially evident in the planet’s polar regions. Arctic sea ice extent and volume have been decreasing for the past several decades. Both the Greenland and Antarctic ice sheets have lost significant amounts of ice. Most of the world’s glaciers are in retreat.

        I suppose the ships transiting the Northwest Passage this very day are a figment of my imagination.

        You will find your bs welcome at the Washington Times.

        • Old farmer mac says:

          I could rip every claim you make up like a chicken on a cow pie but it is a waste of time since the audience here is scientifically literate.

        • Doug Leighton says:

          Mac,

          Thanks for adding this excellent summary: I’m becoming too lazy about refuting Climate Change denier claims: Or maybe it just seems like a total waste of time.

          Doug

          • CaveBio says:

            I am with you Doug; I am having a very tough time keeping my patience with all of the denier nonsense. I have to constantly reign myself in, especially when teaching. I am currently writing a book on the topic. It will probably never be published, but it is cathartic.

            Best,
            Tom

        • aws. says:

          Thanks Mac.

      • Dave Ranning says:

        Antarctic land ice accumulation is well above average based on a peer reviewed study of 67 ice cores looking at the past 800 years. The only land ice losses are due to variable glacial flow rates.

        Actually, Antarctica is losing mass:

        http://www.nasa.gov/mission_pages/Grace/news/grace20121129.html

        Dam those science guys and their GRACE Satellites!

        http://www.csr.utexas.edu/grace/gravity/

      • aws. says:

        18) Additional CO2 in the atmosphere greatly benefits society as it allows global agricultural output to increase, which means less malnutrition, hunger, and starvation in the world.

        Global warming makes drought come on earlier, faster, and harder

        Posted by John Abraham, The Guardian, Climate Consensus – the 97%, Monday 30 June 2014

        A very recent study tries to do just this. Published in the Journal of
        Climate, authors Richard Seager and Martin Hoerling cleverly used climate models forced by sea surface temperatures to separate how much of the past century’s North American droughts have been caused by ocean temperatures, natural variability, and humans. What they found was expected (all three of these influence drought), but it’s the details that are exciting. Furthermore, the methodology can be applied to other climate phenomena at other locations around the globe.

        As drought hits corn, biotech firms see lush field in GMO crops

        But for all their efforts, researchers say even drought-hardy varieties are not guaranteed to survive an extended drought.

        “There’s only so much you can do,” said Renee Lafitte, a research fellow at Pioneer’s Woodland research facility who has studied drought tolerance for almost three decades. “This is not cactus.”

        Following on the theme of drought, and so that Watcher doesn’t feel left out.

        Energy – Water Nexus: Texas, Drought, Fracking, and Water

        Houston Geological Society, from the Editor – February 2014 by Michael Forlenza

      • SRSrocco says:

        Thomas,

        Excellent points. Well done. No doubt ELMER FUDD would totally agree with all of your climate common sense points. Why?

        Because all cartoons think alike.

        Stebe

    • Bookerman says:

      More fiddled global warming data I see!

      When future generations try to understand how the world got carried away around the end of the 20th century by the panic over global warming, few things will amaze them more than the part played in stoking up the scare by the fiddling of official temperature data. There was already much evidence of this seven years ago, when I was writing my history of the scare, The Real Global Warming Disaster: Is the Obsession with “Climate Change” Turning Out to Be the Most Costly Scientific Blunder in History?. But now another damning example has been uncovered by unbiased researcher Steven Goddard, showing that the graph of US surface temperature records published by the National Oceanic and Atmospheric Administration (NOAA) has been blatantly and shamelessly manipulated.

      Goddard shows how, in recent years, NOAA’s US Historical Climatology Network (USHCN) has been “adjusting” its record by replacing real temperatures with data “fabricated” by computer models. The effect of this has been to downgrade earlier temperatures and to exaggerate those from recent decades, to give the impression that the Earth has been warming up much more than is justified by the actual data. In several posts titled “Data tampering at USHCN/GISS,” Goddard compares the currently published temperature graphs with those based only on temperatures measured at the time. These show that the US has actually been cooling since the 1930’s, the hottest decade on record, despite the “official” graph, nearly half of it based on “fabricated” data, shows the US to have been warming at a rate equivalent to more than 3 centigrades per century.

      When I first began examining the tactics of the global warming fearmongers, I found nothing more puzzling than the way officially approved scientists kept on being shown to have finagled their data, as in that ludicrous “hockey stick” graph, pretending to prove that the world had suddenly become much hotter than at any time in 1,000 years. Any theory needing to rely so consistently on fudging the evidence, I concluded, must be looked on not as science at all, but as simply a rather alarming case study in the aberrations of group psychology.

  10. islandboy says:

    Hi PE,

    Is there any particulart reason that Concentrated Solar Thermal was omitted from your analysis? I have been following recent trends and it is worthy of note that, the US has added some 922 MW of capacity since October last year (2013). Spain has been doing a lot of development as well, with some 2,200 MW of capacity currenly in operation. The interesting thing about CSP is that, it can use thermal storage to extend the hours of operation beyond nightfall. The Gemasolar plant in Spain is an extreme example of this, in that it is able to run for up to 15 hours after the removal of it’s solar feed and late last year, set a record by generating power 24 hours a day for 36 consecutive days. The relative cost of adding thermal storage appears to be much lower than trying to store electricity produced by PV or wind.

    Anyone who’s interested can have a look at the following Wikipedia page which list plants in operation, under construction and proposed:

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

    In my opinion, electricity utilities will be more open to this technology in that it is compatible with their current model of large, central facilities generating electricity and distributing it to a dispersed customer base. The problem with PV, as far as utilities are concerned is that, it is not significantly more cost prohibitive to set up relatively small facilities near to where the power is consumed than it is to set up a 500 MW central facitlity. That means that a commercial or industrial enterprise can invest in their own roof top PV plant, relegating the electricity utility to a backup role. As an example the following story from my neck of the woods illustrates the threath PV poses to the entrenched players:

    http://jamaica-gleaner.com/gleaner/20140602/news/news1.html

    A CSP plant with thermal storage would facilitate the local electricity utility maintaining their monopoly on the provision of electricity and there is little threat of individual customers investing in their own CSP plants.

    It is interesting that, when I first discovered Peak Oil and theoildrum.com back in late 2007 ground had not yet been broken on the bulk of current US CSP capacity.

    Alan from the islands

    • Political Economist says:

      Islandboy, thanks for the comments on CSP.

      There is no particular reason. Simply because BP does not include it. EIA supposedly provide data for all social capacity. But EIA’data are usually one or two years behind.

      Interestingly, EIA’s total capacity of solar, tides, and waves are usually smaller than BP data for solar PV only for the same year.

  11. Ulenspiegel says:

    @political economist

    Your assumption in respect to nuclear energy are too optimistic, in respect to wind too pessimistic and in respect to PV wrong:

    1) Nobody really assumes that we will see a net addition of NPPs in the next decade. Under construction are many reactors for decades and will not produce one kWh. Planned reactors die like flies due to economic reasons. IIRC even the IAEA assumes stagnation. A net gain of 10 GW p.a. is IMHO wrong.

    2) You can add RE up to 40% of the energy production without any problem, more transmission lines and more storage reduce the problems of higher penetration with REs. Therefore your argument, that net stability will curtail wind power is IMHO bogus.

    BTW The demand for steel is not that high and steel can be substituted with concrete. See “hybrid towers” used in Europe.

    Minor issue: the capacity factor of new turbines is increasing at a high rate as slow wind turbines come on-line and much more off-shore turbines are build. Therefore, a more useful approch would be to think about added energy (TWh), not power (GW).

    3) PV can produced in large factories and the installation and O&M is low-tech, therefore, the assumption of slightly more than 100 GW p.a. as maximum is IMHO far off the mark.

    At the moment it looks like we will see a doubling of module production until 2020. An addtitional doubling until 2030 is not unlikely.

    100 GW anually added PV capacity mean an global steady state of only 3 TW PV (30 years life span), that sounds very wrong. 60 GW wind turbines per year mean a steady state of only 1.5 TW wind power (25 years liefe span), this sounds wrong again. Germany is expected to run 100 GW windpower without real problems and has only ~2% of the global energy demand. 🙂

    • Political Economist says:

      Yes, agree. I am guilty of too optimistic about nuclear.

      I’ve done this partly because when you’re doing this kind of exercise you want to use official sources, and partly because over over-optimism in one case may help to offset underestimation in other cases (say, solar, wind).

      If, even with obviously optimistic assumptions about nuclear, global economy still cannot avoid depression after peak oil, it would be more convincing. We’ll see that in Part 3.

      • Old farmer mac says:

        I believe the future of nuclear power depends mostly on two factors. One is the possibility of another major clusterxxxx such as Fukushima. If there isn’t one nuclear will probably experience a great revival – after the spot shortages of coal and gas start biting chunks out of the world public’s backside.

        Price is only truly important on something you buy on a regular basis and use on a regular basis- which certainly applies to electricity.

        The price people are willing to pay for things that they fear they may not even need but are considered essential is of little consequence if they are afraid of not having it and thus purchase it as insurance. I know a bunch of people who have paid out fifty grand in health insurance premiums while collecting only a few flu shots.

        They are afraid of getting sick or hurt.

        Once people get to be afraid in respect to their electricity the cost of nuclear power will not stop the public from supporting building new nukes.

  12. Anon says:

    Why does this blog attract so many science-denying moonbats? Oil industry trolls who lost the plot??? Conspiracy minded prepped colonies???

    Resource depletion is not conspiracy theory material. It happens and is well understood. That the world’s scientific community is somehow conspiring with greens to sabotage whatever IS a crank conspiracy theory.

    Some of the tinfoil could be…pruned and nothing of value would be lost.

    • Ezrydermike says:

      i’m beginning to think there are programs that one can run that search the web using keywords or something similar for blogs / sites / etc. Then trolls, paid or otherwise, can jump in and add to the “discourse”.

      and that makes me cranky

      • Watcher says:

        Over on that climate blog, there is rage at the trolls claiming ceramic is better than sand proppant.

        • That’s what I thought, these are all multiple sockpuppets of probably the same guy.

          I keep at the AGW deniers at the Climate Etc blog. Oh boy do they just despise me over there. My specialty is pointing out all the “own goals” that they score on themselves. It really gets them frothing.

          Goooooaaaaallllll !

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  14. Old farmer mac says:

    The spare export capacity meme is going to be put to the test pretty soon.

    http://www.bloomberg.com/news/2014-07-02/oil-risk-flares-in-iran-nuclear-talks-amid-unrest-in-iraq.html

    • Watcher says:

      If I were Russia, I would give in on a lot of things in order to keep draining money (assuming that matters in a printed world) from my enemies while my own people are well fed. Iran could get oil shipped through Russian terminals on the Caspian Sea. Iran has a Caspian shoreline. Or now, Iran could get oil shipped from Basra if the Iraqi government is friendly enough. In either case the sanctions are somewhat meaningless, and one can safely ignore all occasions of the word “crippled” for various parts of Iran’s economy. Personally I have seen no video of starving Iranians.

      Either approach allows the US to avoid loss of face. Optimally, from the Russian/Iranian/Iraqi POV, that Iraqi oil should be going to US refineries in order for Iran/Iraq to “drain money from its enemies”. But per Ron’s point that refineries are not government owned that could be fuzzy, but only slightly so because exports minus imports are explicitly in the GDP equation. No matter. The sanctions are defeated, regardless.

  15. Mike says:

    http://fuelfix.com/blog/2014/07/01/bakken-shale-oil-explorers-told-to-cut-flaring-or-face-punishment/

    A bit off the current topic but relevant, none the less; an example of “extenuating circumstances” that alter the development of any oilfield, in this case new and ever increasing regulations.

    Wells that depend on proppant of fractures, or micro fractures, to increase fluid conductivity (flow) to the well bore, when shut in often face something called, fracture closure. When this occurs, pre-shut in rates are seldom re-achieved when the well is brought back on line, or if the well is produced periodically.

    This news from ND is a big deal to me. Or might be.

    Mike

    • Aws. says:

      Mike,

      Can you elaborate, I don’t understand the mechanics. How does reducing flaring lead to wells being shut in? I assume that your referring to NoDak penalizing operators who don’t reduce flaring by forcing them to shut in their wells. Or is it something else.

      • Old farmer mac says:

        I am not an oil expert but perhaps an analogy to plumbing will do to illustrate the problem.A pipe with a constant and adequate flow of dirty water in it will keep the sediments in the water in suspension. But if you slow the flow enough, or stop it the sediments tend to accumulate at certain spots and close off the flow.

        I think as long as the oil is flowing it will keep the fractures open. Once it slows too much or stops the various little particles of rock and dirt will settle at tight spots and hang up and cement themselves together from the pressure of the oil behind them and that will be that. Plugged up plumbing.

        Refracking the well might fix it. Somebody with actual experience hopefully will know and post a better answer. Mine is based mostly on random reading in various oil forums. This is the only one where I post comments.

        • Watcher says:

          The article posted somewhere above laid it out.

          Natgas is a necessary side effect of oil production. The companies can’t slow down long enough to get pipelines in to capture it or the decline rates will kill them. So they must drill frantically and just vent the gas.

          I’ll be surprised if NDIC closes the choke on this, but a quiet little discussion using this as some sort of palatable reason to do the conserve-for-grandchildren concept might very well wield powerful weight and make that spigot turn much easier.

          A fairly important question is the nature of the Commission and if they are elected and when they are up for election — and if they’d like their campaign funded.

      • Mike says:

        Aws, the posts below are well thought out. An operator can not really reduce flaring unless it can capture the gas stream altogether. It would take a great deal of time to develop the infrastructure to capture all the flared gas in ND. If an operator attempts to reduce the flow of associated gas with the liquid stream, it must reduce the liquid stream and that increases the likelihood the well will load up (the hydrostatic weight of the column of fluid above the lateral is greater than bottom hole pressure) and the well will cease to flow. By “penalizing” operators the implication is that if they cannot capture associated gas that is vented, or flared, they will not be able to produce at the same rates. Shutting in a flowing well is often very detrimental to its short and long term performance, for the reasons OFM described.

        In my opinion this new rule might significantly change UR of these shale wells. I can assure everyone that when it comes to matters of regulation of the oil and gas industry, anything goes and common sense does not even register on the radar screen.

        Mike

    • Enno says:

      Based on the individual well data from NDIC, I made an estimate of total gas flared in ND. The estimate is maximum 5% off (as confidential well data is not available for this data). I belief Hess just completed a gas plant, so that, and these new regulations, might push total gas flaring down in the time to come. Still, it is an enormous amount of gas that has been burned, both in quantity and $ (more than $4/MCF * 3m = 12 million $ / day recently, if I have the numbers right).

  16. Frugal says:

    New company snaps up gas-weighted Shell assets

    “The opportunity to sell Deep Basin North and select acreages in Deep Basin East was unsolicited but aligns well with our business strategy of monetizing some of our dry gas assets and pursuing profitable growth in select liquid rich shale plays and integrated gas opportunities,” he said in an e-mail.

    More asset dumping by a multinational oil company. This time it’s a gas field being dumped by Shell. The people buying this field must believe that Shell is incompetent at making money off North American gas and that they can do much better themselves.

    • Perk Earl says:

      Could it also be a numbers game, in which what the numbers needed to justify drilling for Shell differs from a smaller drilling company? Some profit to a small driller might seem like a fortune, but to Shell it might not justify the effort due to much higher overhead.

  17. Old farmer mac says:

    A smaller company can sometimes operate a lot more efficiently than a really big one so the new owners may make a go of it.

    Opinions are what make horse races. I guess the new owners are more optimistic about gas prices going up than Shell management.

    I don’t usually put much faith in anything I hear from the top management of any oil company but they big boys have all said they can’t make it in natural gas at under current conditions.

    And the pessimists at forums such as this one seem to mostly believe that companies operating in tight gas fields are losing money in real terms once everything is properly accounted for.

    If this is true – and I suspect it is- then gas prices are going to go up before too much longer. They might go up quite a bit.

    Shell management is under a lot of pressure to show some current income and may be selling good assets a little too cheap in order to show that much demanded income.

    Maybe the owners of this new company are thinking more long term.Maybe they are paying a lot less in rent in Class A office parks and pensions to retirees and a lot less to everybody working there from the janitor to the CEO.

    And maybe not of course.Fools rush in where angels fear to tread.

    • Frugal says:

      From what I’ve experienced on a personal level (having worked for several of them), almost all new companies are overly optimistic about the future. We’ll see how this one pans out, and yes, gas prices will be a huge factor.

    • Watcher says:

      “I don’t usually put much faith in anything I hear from the top management of any oil company but they big boys have all said they can’t make it in natural gas at under current conditions.”

      If there ain’t no liquids, there ain’t no drilling.

      This btw is why the ND production reports are soooooo shaky. You have rail cars blowing up. You have humongous amounts of flaring. And we hear NOTHING about huge NGL production out of the Bakken?

      All it takes is a little API tweaking and presto, every cubic centimeter in those trucks is “oil”.

      The gubmint knows. They were pointed mostly at the EF when they said distillate oil could export provided it was refinery processed for safety.

      There is a lot of lying going on the world about just about every number we hear from anyone measuring anything.

  18. Hey, all you folks who think the dollar would collapse if for some reason it was not the world’s premiere reserve currency please read this article:

    Is the dominance of the dollar bad for America?

    But Michael Pettis, a finance professor at Peking University, offered just the opposite view in a recent essay in the Financial Times. Pettis argues that the U.S. would be better off if the dollar wasn’t the world’s premier reserve currency, and that the U.S. should actively work towards ending dollar dominance:

    Conspiracy theory notwithstanding, claims that the reserve status of the dollar unfairly benefits the US are no longer true. On the contrary, it has become a burden, both forAmerica and the world.

    This is all very interesting, but for me, Pettis’s argument raises two important questions. First, how does the U.S. actively work towards ending the global dominance of the U.S. dollar? Shaw details just how dominant the greenback is: more than 61% of official reserves are held in dollars; 85% of foreign exchange transactions are conducted in dollars; and 45% of all debt securities are dollar denominated.

    And here is the article from the Financial Times that started the debate, requires registration:
    America must give up on the dollar

    The large imbalances that this system has permitted now destabilise the world. If forced to give up the dollar, the world might reduce global trade somewhat, and it would probably spell the end of the Asian growth model. But it would also lower long-term costs for the US, and reduce dangerous global imbalances.

    • robert wilson says:

      Is it not true that entities in the US were able to trade this fiat currency for real goods or services? To the extent that value has not been inflated away, is the possible reversal of this process potentially destabilizing?

  19. robert wilson says:

    I have a vague memory of seeing an article in Fortune Magazine about the accelerating outflow of gold from the US. I believe that the date was late 1959 or early 1960. Until the beginning of that outflow the US had cornered most of the world’s gold. Does anyone have a special interest in the history of post WWII gold flows or know a good link. As is well known, Nixon ended Gold/Dollar convertibility in 1971.
    –Incidentally Fortune Magazine was once among the most prestigious financial publications, at one point costing $1 when Life and Look cost a dime.

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